Liability for Unpaid Losses and Loss Adjustment Expenses

6 Months Ended

Jun. 30, 2020

Liability for unpaid losses and loss adjustment expenses

LIABILITY FOR UNPAID LOSSES AND LOSS ADJUSTMENT EXPENSE (LAE)

We determine the reserve for unpaid losses on an individual case basis for all incidents reported. The liability also includes amounts for incurred but not reported (IBNR) claims as of the balance sheet date.

The table below shows the analysis of our reserve for unpaid losses for the six months ended June 30, 2020 and 2019 on a GAAP basis:



	June 30,
	2020			2019
Balance at January 1	$	760,357		$	661,203
Less: reinsurance recoverable on unpaid losses	482,315			477,870
Net balance at January 1	$	278,042		$	183,333

Incurred related to:
Current year	206,482			199,832
Prior years	(1,952		)	20,967
Total incurred	$	204,530		$	220,799
Paid related to:
Current year	96,282			108,042
Prior years	101,188			98,143
Total paid	$	197,470		$	206,185

Net balance at June 30	$	285,102		$	197,947
Plus: reinsurance recoverable on unpaid losses	398,369			379,402
Balance at June 30	$	683,471		$	577,349

Composition of reserve for unpaid losses and LAE:
Case reserves	$	307,425		$	257,873
IBNR reserves	376,046			319,476
Balance at June 30	$	683,471		$	577,349

Based upon our internal analysis and our review of the annual statement of actuarial opinion provided by our actuarial consultants at December 31, 2019, we believe that the reserve for unpaid losses reasonably represents the amount necessary to pay all claims and related expenses which may arise from incidents that have occurred as of the balance sheet date.

As reflected in the table above, we had favorable development in 2020 related to prior year losses. This favorable development came as a result of strengthening of our case reserves throughout 2019 based on a review of historical loss trends. The incurred losses and LAE and payments made during the six months ended June 30, 2020 were in line with our incurred losses and LAE and payments made during the six months ended June 30, 2019.