Liability for Unpaid Losses and Loss Adjustment Expense

3 Months Ended

Mar. 31, 2026

Liability for unpaid losses and loss adjustment expense

LIABILITY FOR UNPAID LOSSES AND LOSS ADJUSTMENT EXPENSE (LAE)

The Company determines its 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 the Company's reserve for unpaid losses for the three months ended March 31, 2026 and 2025:


	2026			2025
Balance at January 1	$	165,701		$	322,087
Less: reinsurance recoverable on unpaid losses		116,772			249,276
Net balance at January 1		48,929			72,811

Incurred related to:
Current year		11,909			13,583
Prior years		(1,666	)		(2,194	)
Total incurred		10,243			11,389
Paid related to:
Current year		8,236			10,714
Prior years		10,589			10,435
Total paid		18,825			21,149

Net balance at March 31		40,347			63,051
Plus: reinsurance recoverable on unpaid losses		86,643			193,238
Balance at March 31		126,990			256,289

Composition of reserve for unpaid losses and LAE:
Case reserves		17,070			42,845
IBNR reserves		109,920			213,444
Balance at March 31	$	126,990		$	256,289

Based upon the Company's internal analysis and the Company's review of the annual statement of actuarial opinion provided by its actuarial consultants at December 31, 2025, the Company believes 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, the Company had favorable development in the first three months of 2026 and 2025 related to prior year losses. This development came as a result of re-estimating ultimate losses in 2026 and 2025 based on our initial reserves being higher than ultimate settlements. Current year loss payments made by the Company during the three months ended March 31, 2026 have decreased compared to the same period in 2025. Case and IBNR reserves on unpaid losses decreased when compared to the prior period as a result of the continued settlement of claims and no new catastrophe events. Reinsurance recoverable on unpaid losses decreased in line with this decrease in case and IBNR reserves.