The Company establishes reserves for unpaid losses and LAE which represent the estimated ultimate cost of all losses incurred that were both reported and unreported (i.e., incurred but not yet reported losses, or “IBNR”) and LAE incurred as well as a provision for estimated future costs related to claim settlement for all claims that remain unpaid at the balance sheet date. The Company’s reserving process takes into account known facts and interpretations of circumstances and factors including the Company’s experience with similar cases, actual claims paid, historical trends involving claim payment patterns and pending levels of unpaid claims, loss management programs, product mix and contractual terms, changes in law and regulation, judicial decisions, and economic conditions. In the normal course of business, the Company may also supplement its claims processes by utilizing third party adjusters, appraisers, engineers, inspectors, and other professionals and information sources to assess and settle catastrophe and non-catastrophe related claims. The effects of inflation are implicitly considered in the reserving process.

Reserves are estimates of unpaid portions of losses that have occurred, including IBNR losses, therefore the establishment of appropriate reserves, is an inherently uncertain and complex process. The ultimate cost of losses may vary materially from recorded amounts, which are based on management’s best estimates. The highest degree of uncertainty is associated with reserves for losses incurred in the current reporting period as it contains the greatest proportion of losses that have not been reported or settled. The Company regularly updates its reserve estimates as new information becomes available and as events unfold that may affect the resolution of unsettled claims. Changes in prior year reserve estimates, which may be material, are reported in the results of operations in the period such changes are determined to be needed and recorded.

Management believes that the reserve for losses and LAE, any related estimates of reinsurance recoverables, is appropriately established in the aggregate and adequate to cover the ultimate net cost of reported and unreported claims arising from losses which had occurred by the date of the consolidated financial statements based on available facts and in accordance with applicable laws and regulations.

There was $24.3 million, $19.4 million, and $15.6 million of adverse development on prior accident year reserves in 2022, 2021 and 2020, respectively. There were no significant changes in the key methods utilized in the analysis and calculations of the Company’s reserves during 2022, 2021 or 2020.

Of the $24.3 million of adverse development in 2022, $1.8 million was related to the 2021 accident year, $4.0 million was related to the 2020 accident year, $9.6 million was related to the 2019 accident year, $5.2 million was related to the 2018 accident year, and $3.7 million was related to 2017 and prior accident years. The adverse development was mostly related to the Company's commercial liability lines and was driven by multiple factors including significant social inflation generating higher severity than historical experience, and longer tail exposure than anticipated, particularly in certain jurisdictions.

In 2021, the adverse development consisted of $18.5 million from commercial lines and $957,000 from personal lines. Of the $18.5 million of adverse development in commercial lines, the Company experienced $12.0 million and $6.5 million of adverse development in its hospitality and small business lines of business, respectively.

The Company experienced $2.0 million of catastrophe losses, net of reinsurance recoverables, during the first quarter of 2021 from winter Storm Uri.

In 2020, the adverse development consisted of $15.2 million from commercial lines and $352,000 from personal lines. Of the $15.2 million of adverse development in commercial lines, the Company experienced $12.0 million and $3.2 million of adverse development in its hospitality and small business lines of business, respectively. The $352,000 of adverse development in personal lines mostly was related to wind-exposed business.

The following tables represent cumulative incurred loss and allocated loss adjustment expenses ("ALAE"), net of reinsurance, by accident year and cumulative paid loss and ALAE, net of reinsurance, by accident year, for the years ended December 31, 2013 to 2022, as well as total IBNR and the cumulative number of reported claims for the year ended December 31, 2022, by reportable segment and accident year (dollars in thousands). The tables do not include reinsurance recoverables from the LPT.


Commercial Lines
			Incurred loss and allocated loss adjustment expenses, net of reinsurance																		Total IBNR		Cumulative number of reported claims
Accident
Year	2013*		2014*		2015*		2016*		2017*		2018*		2019*		2020*		2021*		2022		2022		2022
2013		10,018		9,435		9,893		10,237		11,252		11,218		11,624		11,804		11,867		12,046		—		613
2014				19,709		19,907		22,711		26,367		28,145		28,766		29,045		29,175		29,011		—		1,754
2015						22,442		26,633		31,861		34,478		36,372		37,795		38,824		39,093		26		2,361
2016								32,396		34,935		40,440		44,355		46,089		46,993		48,677		201		3,557
2017										44,251		44,495		49,749		51,883		55,589		56,649		671		5,832
2018												42,624		42,432		49,741		55,261		60,102		1,637		6,124
2019														41,286		42,129		46,329		55,263		4,529		6,320
2020																33,867		35,328		39,193		3,787		3,830
2021																		40,388		42,266		8,744		2,861
2022																				41,708		16,067		1,965
																	Total		$	424,008	$	35,662


Commercial lines
Cumulative paid loss and allocated loss adjustment expenses, net of reinsurance
Accident
Year	2013*		2014*		2015*		2016*		2017*		2018*		2019*		2020*		2021*		2022
2013		3,979		6,211		7,643		8,622		10,147		10,650		11,137		11,620		11,702		11,935
2014				8,715		13,977		17,458		22,446		25,609		27,544		28,389		28,648		28,608
2015						10,470		17,817		22,549		30,475		34,497		35,833		37,563		38,685
2016								10,255		19,135		27,785		37,967		41,945		43,644		46,957
2017										12,448		23,020		34,205		42,308		47,148		52,800
2018												10,375		19,799		31,633		41,577		50,508
2019														10,078		20,462		28,958		39,893
2020																10,217		17,332		24,225
2021																		12,870		21,313
2022																				12,839
																	Total		$	327,763


	Net Unpaid losses and ALAE, years 2013 through 2022																		$	96,245
	Unpaid losses and ALAE, prior to 2013*																			177
	Unpaid Losses, LPT																			(25,913	)
	Unpaid losses and ALAE, net of reinsurance																		$	70,509

* Presented as unaudited required supplementary information.


Personal Lines
			Incurred loss and allocated loss adjustment expenses, net of reinsurance																		Total IBNR		Cumulative number of reported claims
Accident					For the years ended December 31,
Year	2013*		2014*		2015*		2016*		2017*		2018*		2019*		2020*		2021*		2022		2022		2022
2013		18,034		17,996		18,925		19,138		19,167		19,202		19,222		19,226		19,227		19,365		—		5,208
2014				17,951		17,471		17,735		17,880		17,929		18,082		18,095		18,097		18,052		—		3,737
2015						10,877		13,445		14,721		15,285		15,364		15,427		15,427		15,448		—		2,152
2016								11,619		13,418		14,949		15,550		15,655		15,634		15,679		—		1,814
2017										14,058		13,550		14,493		14,793		14,911		14,957		—		2,917
2018												5,893		6,378		6,283		6,382		6,298		—		803
2019														3,099		2,712		2,898		2,862		—		342
2020																2,339		2,590		2,636		—		366
2021																		4,409		4,332		116		580
2022																				9,404		1,427		652
																	Total		$	109,033	$	1,543


Personal lines
Cumulative paid loss and allocated loss adjustment expenses, net of reinsurance
Accident					For the years ended December 31,
Year	2013*		2014*		2015*		2016*		2017*		2018*		2019*		2020*		2021*		2022
2013		9,955		15,883		18,052		18,600		19,014		19,174		19,214		19,222		19,227		19,365
2014				12,819		16,515		17,260		17,746		17,855		18,047		18,068		18,070		18,025
2015						7,771		11,873		13,844		15,159		15,250		15,290		15,416		15,444
2016								7,119		11,238		14,442		15,110		15,351		15,452		15,679
2017										8,320		12,944		14,004		14,526		14,866		14,957
2018												4,296		5,618		6,100		6,242		6,244
2019														2,119		2,604		2,692		2,850
2020																1,307		2,455		2,605
2021																		3,022		3,980
2022																				5,397
																	Total		$	104,546


	Net Unpaid losses and ALAE, years 2013 through 2022																		$	4,487
	Unpaid losses and ALAE, prior to 2013*																			—
	Unpaid losses and ALAE, net of reinsurance																		$	4,487

* Presented as unaudited required supplementary information.


Total Lines
Incurred loss and allocated loss adjustment expenses, net of reinsurance																					Total IBNR		Cumulative number of reported claims
Accident	For the years ended December 31,
Year	2013*		2014*		2015*		2016*		2017*		2018*		2019*		2020*		2021*		2022		2022		2022
2013		28,052		27,431		28,817		29,375		30,419		30,420		30,846		31,030		31,094		31,411		—		5,821
2014				37,660		37,378		40,446		44,247		46,074		46,848		47,140		47,272		47,063		—		5,491
2015						33,319		40,078		46,581		49,763		51,736		53,222		54,251		54,541		26		4,513
2016								44,015		48,353		55,389		59,905		61,744		62,627		64,356		201		5,371
2017										58,309		58,045		64,242		66,676		70,500		71,606		671		8,749
2018												48,517		48,810		56,024		61,643		66,400		1,637		6,927
2019														44,385		44,841		49,227		58,125		4,529		6,662
2020																36,206		37,918		41,829		3,787		4,196
2021																		44,797		46,598		8,860		3,441
2022																				51,112		17,494		2,617
																	Total			533,041		37,205


Total lines
Cumulative paid loss and allocated loss adjustment expenses, net of reinsurance
Accident			For the years ended December 31,
Year	2013*		2014*		2015*		2016*		2017*		2018*		2019*		2020*		2021*		2022
2013		13,934		22,094		25,695		27,223		29,162		29,824		30,351		30,842		30,929		31,300
2014				21,534		30,492		34,718		40,192		43,464		45,591		46,457		46,718		46,633
2015						18,241		29,690		36,393		45,634		49,747		51,123		52,979		54,129
2016								17,374		30,373		42,227		53,077		57,296		59,096		62,636
2017										20,768		35,964		48,209		56,834		62,014		67,757
2018												14,671		25,417		37,733		47,819		56,752
2019														12,197		23,066		31,650		42,743
2020																11,524		19,787		26,830
2021																		15,892		25,293
2022																				18,236
																	Total		$	432,309


	Net Unpaid losses and ALAE, years 2013 through 2022																		$	100,732
	Unpaid losses and ALAE, prior to 2013*																		177
	Unpaid losses, LPT																			(25,913	)
	Unpaid losses and ALAE, net of reinsurance																		$	74,996

* Presented as unaudited required supplementary information.