Loss and loss adjustment expense reserves

12 Months Ended

Dec. 31, 2019

Loss and Loss Adjustment Expense Reserves [Abstract]

Loss and loss adjustment expense reserves

As of December 31, 2019 and 2018, loss and loss adjustment expense reserves in the consolidated balance sheets was comprised of the following:

	2019		2018
Case loss and loss adjustment expense reserves	$	148,166	$	125,456
Incurred but not reported loss and loss adjustment expense reserves	963,359		811,280
Deferred gains on retroactive reinsurance contracts	167		421
	$	1,111,692	$	937,157

Reserving methodologies

The Company’s methodology for reserving for its reinsurance contracts and determining its loss and loss adjustment expense reserves, including incurred but not reported reserves, is as follows:

The Company’s actuaries perform an actuarial projection of the Company’s reserves quarterly and have a third-party actuarial review performed periodically. Reserves are estimated on an individual contract basis. The Company typically initially reserves individual contracts to the expected loss and loss expense ratio in its pricing analysis. The Company also considers the level of adequacy of the pricing loss ratio estimates, and may make upward or downward adjustments in the aggregate reserves if there is evidence that the pricing loss ratio estimates are biased in one direction or the other. As loss information is received from cedents, the Company incorporates other actuarial methods into its projection of ultimate losses and, hence, reserves.

In the Company’s pricing analyses, there is a significant amount of information unique to the individual client and, when necessary, the analysis is supplemented with industry data. Industry data primarily takes the form of paid and incurred development patterns from statutory financial statements and statistical agencies. For the Company’s actuarial reserve projections, the relevant information received from clients includes premium estimates, paid loss and loss adjustment expenses and case reserves. The Company’s actuaries review the data for reasonableness and research any noted anomalies. On each contract, the Company’s actuaries compare the expected paid and incurred amounts at each quarter-end with actual amounts reported. The Company’s actuaries also compare premiums received with projected premium receipts at each quarter end.

There is a time lag between when a covered loss event occurs and when it is reported to the Company’s cedents. There is also a time lag between when clients pay claims, establish case reserves and re-estimate their reserves, and when they notify the Company of the payments and/or new or revised case reserves. This reporting lag is typically 60 to 90 days after the end of a reporting period, but can be longer in some cases. The Company’s actuaries use techniques that adjust for this reporting lag. While it would be unusual to have lags that extend beyond 90 days, the Company’s actuarial techniques are designed to adjust for such a circumstance.

The principal actuarial methods (and associated key assumptions) used to perform the Company’s quarterly loss reserve analysis may include one or more of the following methods:

A priori loss ratio method

To estimate ultimate losses using the a priori loss ratio method, the Company multiplies earned premiums by an expected loss ratio. The expected loss ratio is selected as part of the pricing and utilizes individual client data, supplemented by industry data where necessary. This method is often useful when there is limited historical data due to few losses being incurred.

Paid loss development method

This method estimates ultimate losses by calculating past paid loss development factors and applying them to exposure periods with further expected paid loss development. The paid loss development method assumes that losses are paid at a rate consistent with the historical rate of payment. It provides an objective test of reported loss projections because

paid losses contain no case reserve estimates. For some lines of business, claim payments are made slowly and it may take many years for claims to be fully reported and settled.

Incurred loss development method

This method estimates ultimate losses by using past incurred loss development factors and applying them to exposure periods with further expected incurred loss development. Since incurred losses include payments and case reserves, changes in both of these amounts are incorporated in this method. This approach provides a larger volume of data to estimate ultimate losses than paid loss methods. Thus, incurred loss patterns may be less varied than paid loss patterns, especially for coverages that have historically been paid out over a long period of time but for which claims are incurred relatively early and case loss reserve estimates are established.

Bornhuetter-Ferguson paid and incurred loss methods

These methods are a weighted average of the a priori loss ratio method and the relevant development method. The weighting between the two methods depends on the maturity of the business. This means that for the more recent years a greater weight is placed on the a priori loss ratio method, while for the more mature years a greater weight is placed on the development methods. These methods avoid some of the distortions that could result from a large development factor being applied to a small base of paid or incurred losses to calculate ultimate losses. This method will react slowly if actual paid or incurred loss experience develops differently than historical paid or incurred loss experience because of major changes in rate levels, retentions or deductibles, the forms and conditions of coverage, the types of risks covered or a variety of other factors.

IBNR to outstanding ratio method

This method is used in selected cases typically for very mature years that still have open claims. This method assumes that the estimated future loss development is indicated by the current level of case reserves.

Key to the projection of ultimate loss is the amount of credibility or weight assigned to each actuarial method. Each method has advantages and disadvantages, and those can change depending on numerous factors including the reliability of the underlying data. The selection and weighting of the projection methods is a highly subjective process. In order to achieve a desirable amount of consistency from study to study and between contracts, the Company’s actuaries have implemented a weighting scheme that incorporates numerous “rules” for the weighting of actuarial methods. These rules attempt to effectively standardize the process used for selecting weights for the various methods. There are numerous circumstances where the rules would be modified for specific reinsurance contracts; examples would include a large market event or new information on historical years that may cause us to increase our a priori loss ratio.

As part of the Company’s quarterly reserving process, loss-sensitive contingent expenses (e.g., profit commissions, sliding-scale ceding commissions, etc.) are calculated on an individual contract basis. These expense calculations are based on the updated ultimate loss estimates derived from the Company's quarterly reserving process.

The Company’s reserving methodologies use a loss reserving model that calculates a point estimate for the Company’s ultimate losses. Although the Company believes that its assumptions and methodologies are reasonable, the ultimate payments may vary, potentially materially, from the estimates that the Company has made.

Catastrophe event estimates

Some of the Company’s contracts are exposed to losses from catastrophes (either natural catastrophes or man-made catastrophes). Given the high-severity, low-frequency nature of these events, the losses typically generated therefrom do not lend themselves to traditional actuarial reserving methods, such as those described above. Therefore, our reserving approach for these types of coverages is to estimate the ultimate cost associated with a single loss event rather than analyzing the historical development patterns of past losses for estimating ultimate losses for an entire contract. We estimate our reserves for these catastrophe events on a contract-by-contract basis by means of a review of policies with known or potential exposure to a particular loss event. We consider the following information when making these contract-by-contract estimates of catastrophe event losses: information provided by cedents and brokers; industry loss estimates; catastrophe model output; and the terms and conditions of the contracts with exposure to those events. Initial

estimates are established in the period that a catastrophe event occurs and are then monitored each subsequent quarter, considering the latest information available.

There were no significant changes made to the Company’s methodology for calculating loss and loss adjustment reserves for the year ended December 31, 2019.

Roll forward of loss and loss adjustment expense reserves

The following table represents the activity in the loss and loss adjustment expense reserves for the years ended December 31, 2019, 2018 and 2017:

	2019			2018			2017
Gross reserves for loss and loss adjustment expenses, beginning of year	$	937,157		$	720,570		$	605,129
Less: loss and loss adjustment expenses recoverable, beginning of year	(2,031		)	(1,113		)	(1		)
Less: deferred charges on retroactive reinsurance contracts	(3,847		)	—			—
Net reserves for loss and loss adjustment expenses, beginning of year	931,279			719,457			605,128
Increase (decrease) in net loss and loss adjustment expenses incurred in respect of losses occurring in:
Current year	489,994			434,276			422,801
Prior years	(86,495		)	4,138			(52,743		)
Total incurred loss and loss adjustment expenses	403,499			438,414			370,058
Net loss and loss adjustment expenses paid in respect of losses occurring in:
Current year	(63,638		)	(85,173		)	(110,799		)
Prior years	(188,392		)	(132,336		)	(162,447		)
Total net paid losses	(252,030		)	(217,509		)	(273,246		)
Foreign currency translation	16,686			(9,083		)	17,517
Net reserves for loss and loss adjustment expenses, end of year	1,099,434			931,279			719,457
Plus: loss and loss adjustment expenses recoverable, end of year	5,520			2,031			1,113
Plus: deferred charges on retroactive reinsurance contracts	6,738			3,847			—
Gross reserves for loss and loss adjustment expenses, end of year	$	1,111,692		$	937,157		$	720,570

Changes in the Company’s loss and loss adjustment expense reserves result from re-estimating loss reserves and from changes in premium earnings estimates.  Furthermore, many of the Company’s contracts have sliding scale or profit commissions whereby loss reserve development can be offset by changes in acquisition costs that vary inversely with loss experience. In some instances, the Company can have loss reserve development on contracts where there is no sliding scale or profit commission or where the loss ratio falls outside of the loss ratio range to which the sliding scale or profit commission applies.

The $86.5 million net decrease in prior years’ reserves for the year ended December 31, 2019 includes $98.5 million of net favorable reserve development related to decreases in loss reserve estimates, partially offset by a $12.0 million increase in loss reserves resulting from increases in premium earnings estimates on certain contracts. The net decrease in loss reserves as well as the impact of any offsetting changes in acquisition costs as a result of sliding scale or profit commissions is explained as follows:

• The $98.5 million of net favorable prior years’ reserve development for the year ended December 31, 2019 was accompanied by net increases of $100.9 million in acquisition costs and net increases of $7.8 million in earned premium, resulting in a $5.4 million improvement in the net underwriting results, primarily due to:

• $0.5 million of improvement in net underwriting results due to net favorable loss development on one retroactive reinsurance contract as a result of reported loss experience that was less than expected. This retroactive reinsurance contract had profit commission terms such that the net favorable reserve development associated with this contract of $69.4 million was offset by an increase in acquisition costs of $68.9 million;

• $14.9 million of improvement in net underwriting loss development relating to our workers’ compensation contracts as a result of better than expected loss experience;

• $3.5 million of improvement in net underwriting loss development relating to our non-standard auto contracts as a result of better than expected loss experience; partially offset by

• $8.8 million of net adverse underwriting loss development relating to our general liability contracts, as a result of worse than expected loss experience; and

• $8.1 million of net adverse underwriting loss development relating to our multi-line contracts as a result of worse than expected loss experience.

• The $12.0 million net increase in loss and loss adjustment expenses incurred resulting from increases in premium earnings estimates was accompanied by a $7.2 million decrease in acquisition costs, for a total of $4.8 million increase in loss and loss adjustment expenses incurred and acquisition costs. The increase in loss and loss adjustment expenses incurred and acquisition costs was due to an increase in prior period earned premium of $3.1 million. The increase in prior period earned premium was the result of changes in ultimate premium and earning pattern estimates. The net impact was a $1.7 million increase in net underwriting loss for the year ended December 31, 2019.

• In total, the change in net underwriting loss for prior periods due to loss reserve development and adjustments to premium earnings estimates resulted in a $3.7 million improvement in the net underwriting results for the year ended December 31, 2019.

As of December 31, 2019, the Company had unamortized deferred charges of $6.7 million (December 31, 2018 - $3.8 million) relating to retroactive reinsurance contracts. Deferred charges on retroactive contracts are recorded in other assets on the Company’s consolidated balance sheet.

The $4.1 million net increase in prior years’ reserves for the year ended December 31, 2018 includes $12.9 million of net favorable reserve development related to decreases in loss reserve estimates and $17.0 million increase in loss reserves resulting from increases in premium earnings estimates on certain contracts. The net increase in loss reserves as well as the impact of any offsetting changes in acquisition costs as a result of sliding scale or profit commissions is explained as follows:

• The $12.9 million of net favorable prior years’ reserve development for the year ended December 31, 2018 was accompanied by net increases of $7.7 million in acquisition costs, resulting in a $5.2 million improvement in the net underwriting results, primarily due to:

• $15.8 million of net favorable underwriting loss development relating to workers’ compensation, multi-line and credit and financial lines contracts. The favorable development was the result of better than expected loss experience and was partially offset by;

• $10.5 million of net adverse underwriting loss development primarily relating to our general liability and homeowners’ contracts, as a result of worse than expected loss experience.

• The $17.0 million net increase in loss and loss adjustment expenses incurred resulting from increases in premium earnings estimates on certain contracts was accompanied by a $5.4 million increase in acquisition costs, for a total of $22.4 million increase in loss and loss adjustment expenses incurred and acquisition costs. The increase in loss and loss adjustment expenses incurred and acquisition costs was due to an increase in prior period earned premium of $23.4 million. The increase in prior period earned premium was the result of changes in ultimate premium and earning pattern estimates. The net impact was a $1.0 million improvement in the net underwriting results for the year ended December 31, 2018.

• In total, the change in net underwriting loss for prior periods due to loss reserve development and adjustments to premium earnings estimates resulted in a $6.2 million improvement in the net underwriting results for the year ended December 31, 2018.

The $52.7 million net decrease in prior years’ reserves for the year ended December 31, 2017 includes $22.3 million of net favorable reserve development related to decreases in loss reserve estimates and $30.4 million decrease in loss

reserves resulting from decreases in premium earnings estimates on certain contracts. The net decrease in loss reserves as well as the impact of any offsetting changes in acquisition costs as a result of sliding scale or profit commissions is explained as follows:

• The $22.3 million of net favorable prior years’ reserve development for the year ended December 31, 2017 was accompanied by net increases of $19.8 million in acquisition costs, resulting in a $2.5 million improvement in the net underwriting results, primarily due to:

• $5.8 million of net favorable underwriting loss development relating to several workers’ compensation contracts written from 2012 to 2014, driven by better than expected loss experience;

• $1.3 million of net favorable underwriting loss development from several other contracts as a result of better than expected loss experience; partially offset by

• $4.6 million of net adverse underwriting loss development relating to non-standard auto contracts, primarily due to the inability of cedents to promptly react to increasing frequency and severity trends, resulting in underpriced business and adverse selection.

• The $30.4 million net decrease in loss and loss adjustment expenses incurred resulting from decreases in premium earnings estimates on certain contracts was accompanied by a $21.7 million decrease in acquisition costs, for a total of $52.1 million decrease in loss and loss adjustment expenses incurred and acquisition costs. The decrease in loss and loss adjustment expenses incurred and acquisition costs was due to a decrease in prior period earned premium of $50.0 million. The decrease in prior period earned premium was the result of changes in ultimate premium and earning pattern estimates. The net impact was a $2.1 million improvement in the net underwriting results for the year ended December 31, 2017.

• In total, the change in net underwriting loss for prior periods due to loss reserve development and adjustments to premium earnings estimates resulted in a $4.6 million improvement in the net underwriting results for the year ended December 31, 2017.

Incurred and paid development tables by accident year

The Company manages its business on the basis of one operating segment, property and casualty reinsurance. The Company has disaggregated its loss information presented in the tables below by prospective and retroactive reinsurance. For its prospective reinsurance business, the Company further disaggregated by the different lines of business included in this segment. The Company’s retroactive reinsurance contracts have been presented by year of inception. The Company’s retroactive reinsurance contracts within each inception year share similar characteristics and as a result, have not been disaggregated further. The Company has presented the below development tables for all accident years shown using exchange rates as at December 31, 2019. All accident years prior to the current year have been restated and presented using the current year exchange rate.

The Company’s loss reserve analysis is based primarily on underwriting year data. The preparation of accident year development tables requires an allocation of underwriting year data to the corresponding accident years. For instance, a contract written in one particular underwriting year may have exposure to losses from two or more accident years. These allocations are done using accident year loss payment and reporting patterns, along with premium earnings patterns. These patterns are derived from either company-specific or industry historical loss data, depending on availability and applicability. The Company believes that its allocations are reasonable; however, to the extent that the Company’s allocation procedure for loss and loss adjustment expenses incurred differs from actual historical development, the actual loss development may differ materially from the loss development presented.

As described in the roll forward of loss and loss adjustment expense reserves section above, changes in the Company’s loss and loss adjustment expense reserves result from both re-estimating loss reserves as well as changes in premium estimates. In addition, many of the Company’s contracts have sliding scale or profit commissions whereby loss reserve development can be offset by changes in acquisition costs. See additional disclosure above on the net impact on underwriting income after considering the impact of changes in premium estimates and the impact of acquisition costs for the years ended December 31, 2019, 2018 and 2017.

Property and Casualty Reinsurance - Prospective Reinsurance Contracts

The following tables provide a breakdown of the Company’s loss and loss adjustment expenses incurred, net and net loss and loss adjustment expenses paid by accident year by line of business for the Company’s prospective reinsurance contracts for the year ended December 31, 2019. The information related to loss and loss adjustment expenses incurred, net and net loss and loss adjustment expenses paid for the years ended December 31, 2012 through 2018 is presented as supplementary information and is unaudited:

Property Catastrophe

Loss and loss adjustment expenses incurred, net
Accident year	2012		2013		2014		2015		2016		2017		2018		2019		IBNR loss and LAE reserves, net
	<----------------------------------------------- Unaudited ----------------------------------------------->
2012	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—
2013	—		—		—		—		—		—		—		—		—
2014	—		—		—		—		—		—		—		—		—
2015	—		—		—		—		—		—		—		—		—
2016	—		—		—		—		—		—		—		—		—
2017	—		—		—		—		—		—		—		—		—
2018	—		—		—		—		—		—		—		—		—
2019	—		—		—		—		—		—		—		39,251		38,529
Total															$	39,251	$	38,529
Cumulative net losses and loss adjustment expenses paid
Accident year	2012		2013		2014		2015		2016		2017		2018		2019
	<----------------------------------------------- Unaudited ----------------------------------------------->
2012	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—
2013	—		—		—		—		—		—		—		—
2014	—		—		—		—		—		—		—		—
2015	—		—		—		—		—		—		—		—
2016	—		—		—		—		—		—		—		—
2017	—		—		—		—		—		—		—		—
2018	—		—		—		—		—		—		—		—
2019	—		—		—		—		—		—		—		470
Total															$	470
Property Catastrophe - net reserves for loss and loss adjustment expenses, end of year															$	38,781

Other Property

Loss and loss adjustment expenses incurred, net
Accident year	2012		2013		2014		2015		2016		2017		2018		2019		IBNR loss and LAE reserves, net
	<----------------------------------------------- Unaudited ----------------------------------------------->
2012	$	10,917	$	8,672	$	9,375	$	9,353	$	9,416	$	9,472	$	9,501	$	9,490	$	—
2013	—		27,765		24,980		25,766		25,882		25,785		26,170		26,051		7
2014	—		—		40,256		40,920		41,336		44,627		46,500		46,303		725
2015	—		—		—		50,330		52,533		54,635		56,313		56,201		1,533
2016	—		—		—		—		45,415		43,038		43,799		43,733		2,906
2017	—		—		—		—		—		41,237		41,833		41,753		3,120
2018	—		—		—		—		—		—		54,084		52,343		14,267
2019	—		—		—		—		—		—		—		53,590		26,305
Total															$	329,464	$	48,863
Cumulative net losses and loss adjustment expenses paid
Accident year	2012		2013		2014		2015		2016		2017		2018		2019
	<----------------------------------------------- Unaudited ----------------------------------------------->
2012	$	4,656	$	8,381	$	9,075	$	9,186	$	9,352	$	9,400	$	9,482	$	9,483
2013	—		14,635		22,229		24,023		25,167		25,406		25,815		25,993
2014	—		—		19,420		34,381		38,448		42,775		44,533		45,312
2015	—		—		—		22,706		43,382		48,360		51,783		53,924
2016	—		—		—		—		21,593		31,871		37,044		39,651
2017	—		—		—		—		—		24,713		33,436		37,171
2018	—		—		—		—		—		—		26,458		35,169
2019	—		—		—		—		—		—		—		22,624
Total															$	269,327
Other Property - net reserves for loss and loss adjustment expenses, end of year															$	60,137

Workers’ Compensation

Loss and loss adjustment expenses incurred, net
Accident year	2012		2013		2014		2015		2016		2017		2018		2019		IBNR loss and LAE reserves, net
	<----------------------------------------------- Unaudited ----------------------------------------------->
2012	$	4,037	$	4,534	$	5,066	$	5,596	$	5,715	$	5,720	$	5,874	$	5,938	$	6
2013	—		27,449		28,616		33,365		33,449		33,252		33,067		32,741		286
2014	—		—		40,247		46,568		47,200		43,470		42,037		41,115		1,699
2015	—		—		—		35,749		37,138		34,800		32,529		31,116		2,723
2016	—		—		—		—		40,433		39,205		36,475		31,047		4,159
2017	—		—		—		—		—		41,075		40,459		34,453		9,205
2018	—		—		—		—		—		—		27,753		25,050		10,630
2019	—		—		—		—		—		—		—		26,889		18,758
Total															$	228,349	$	47,466
Cumulative net losses and loss adjustment expenses paid
Accident year	2012		2013		2014		2015		2016		2017		2018		2019
	<----------------------------------------------- Unaudited ----------------------------------------------->
2012	$	93	$	624	$	3,017	$	4,280	$	4,969	$	4,796	$	5,110	$	5,347
2013	—		2,587		9,142		16,840		22,826		26,956		29,082		30,377
2014	—		—		4,073		15,947		24,280		29,573		34,112		36,262
2015	—		—		—		2,669		10,755		17,001		22,432		24,942
2016	—		—		—		—		3,985		13,236		18,346		21,754
2017	—		—		—		—		—		4,586		11,868		16,908
2018	—		—		—		—		—		—		2,552		7,089
2019	—		—		—		—		—		—		—		2,639
Total															$	145,318
Workers’ Compensation - net reserves for loss and loss adjustment expenses, end of year															$	83,031

Auto

Loss and loss adjustment expenses incurred, net
Accident year	2012		2013		2014		2015		2016		2017		2018		2019		IBNR loss and LAE reserves, net
	<----------------------------------------------- Unaudited ----------------------------------------------->
2012	$	13,247	$	12,264	$	11,777	$	11,534	$	11,433	$	11,333	$	11,356	$	11,349	$	—
2013	—		20,830		19,990		19,472		19,338		19,483		19,534		19,489		7
2014	—		—		104,896		103,473		103,568		103,661		103,822		103,623		53
2015	—		—		—		82,677		88,705		89,550		89,459		89,241		119
2016	—		—		—		—		77,785		85,903		86,434		86,511		343
2017	—		—		—		—		—		48,682		50,793		50,698		809
2018	—		—		—		—		—		—		45,145		43,039		1,602
2019	—		—		—		—		—		—		—		29,051		11,593
Total															$	433,001	$	14,526
Cumulative net losses and loss adjustment expenses paid
Accident year	2012		2013		2014		2015		2016		2017		2018		2019
	<----------------------------------------------- Unaudited ----------------------------------------------->
2012	$	5,619	$	9,989	$	11,387	$	11,450	$	11,382	$	11,318	$	11,348	$	11,349
2013	—		8,673		17,244		18,686		19,066		19,363		19,463		19,479
2014	—		—		45,766		97,651		101,626		102,868		103,379		103,515
2015	—		—		—		42,451		80,765		86,100		88,168		88,630
2016	—		—		—		—		38,059		77,511		82,556		85,027
2017	—		—		—		—		—		23,546		45,196		48,665
2018	—		—		—		—		—		—		21,182		38,918
2019	—		—		—		—		—		—		—		10,951
Total															$	406,534
Auto - net reserves for loss and loss adjustment expenses, end of year															$	26,467

Other Casualty

Loss and loss adjustment expenses incurred, net
Accident year	2012		2013		2014		2015		2016		2017		2018		2019		IBNR loss and LAE reserves, net
	<----------------------------------------------- Unaudited ----------------------------------------------->
2012	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—
2013	—		—		—		—		—		—		—		—		—
2014	—		—		5,480		7,519		7,316		4,903		5,584		5,849		1,302
2015	—		—		—		45,558		48,315		33,396		37,113		38,970		10,435
2016	—		—		—		—		63,082		52,118		54,990		56,774		23,647
2017	—		—		—		—		—		70,158		71,091		75,334		48,072
2018	—		—		—		—		—		—		120,553		124,859		99,737
2019	—		—		—		—		—		—		—		95,975		87,236
Total															$	397,761	$	270,429
Cumulative net losses and loss adjustment expenses paid
Accident year	2012		2013		2014		2015		2016		2017		2018		2019
	<----------------------------------------------- Unaudited ----------------------------------------------->
2012	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—
2013	—		—		—		—		—		—		—		—
2014	—		—		16		340		1,390		2,226		3,104		3,685
2015	—		—		—		310		3,612		9,053		15,781		20,550
2016	—		—		—		—		621		6,165		13,467		20,783
2017	—		—		—		—		—		1,418		6,231		12,798
2018	—		—		—		—		—		—		1,674		9,968
2019	—		—		—		—		—		—		—		3,626
Total															$	71,410
Other Casualty - net reserves for loss and loss adjustment expenses, end of year															$	326,351

Credit & Financial Lines

Loss and loss adjustment expenses incurred, net
Accident year	2012		2013		2014		2015		2016		2017		2018		2019		IBNR loss and LAE reserves, net
	<----------------------------------------------- Unaudited ----------------------------------------------->
2012	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—
2013	—		364		408		113		107		99		77		80		2
2014	—		—		5,774		2,643		2,416		2,203		1,384		1,454		95
2015	—		—		—		5,234		5,032		4,752		4,007		3,127		517
2016	—		—		—		—		10,726		10,721		10,816		6,560		1,751
2017	—		—		—		—		—		13,740		13,773		7,313		3,364
2018	—		—		—		—		—		—		17,715		10,940		6,482
2019	—		—		—		—		—		—		—		17,990		14,341
Total															$	47,464	$	26,552
Cumulative net losses and loss adjustment expenses paid
Accident year	2012		2013		2014		2015		2016		2017		2018		2019
	<----------------------------------------------- Unaudited ----------------------------------------------->
2012	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—
2013	—		—		11		66		74		78		77		77
2014	—		—		42		784		1,038		1,318		1,322		1,344
2015	—		—		—		402		1,128		2,045		2,328		2,503
2016	—		—		—		—		1,013		2,326		3,419		4,196
2017	—		—		—		—		—		1,100		2,332		3,031
2018	—		—		—		—		—		—		897		2,717
2019	—		—		—		—		—		—		—		1,900
Total															$	15,768
Credit & Financial Lines - net reserves for loss and loss adjustment expenses, end of year															$	31,696

Multi-line

Loss and loss adjustment expenses incurred, net
Accident year	2012		2013		2014		2015		2016		2017		2018		2019		IBNR loss and LAE reserves, net
	<----------------------------------------------- Unaudited ----------------------------------------------->
2012	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—
2013	—		9		4,272		4,564		4,564		4,564		4,564		4,564		—
2014	—		—		47,493		35,651		40,095		35,747		37,547		37,759		16,870
2015	—		—		—		86,003		108,581		106,957		107,292		116,499		37,445
2016	—		—		—		—		119,902		120,774		116,702		124,262		35,944
2017	—		—		—		—		—		100,304		107,485		110,994		30,137
2018	—		—		—		—		—		—		90,463		101,510		43,334
2019	—		—		—		—		—		—		—		129,248		105,338
Total															$	624,836	$	269,068
Cumulative net losses and loss adjustment expenses paid
Accident year	2012		2013		2014		2015		2016		2017		2018		2019
	<----------------------------------------------- Unaudited ----------------------------------------------->
2012	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—
2013	—		—		1,243		4,563		4,563		4,563		4,563		4,563
2014	—		—		1,179		14,242		20,782		18,803		20,536		20,822
2015	—		—		—		30,620		65,309		73,844		76,564		78,443
2016	—		—		—		—		30,640		76,034		84,047		87,192
2017	—		—		—		—		—		53,789		74,191		79,660
2018	—		—		—		—		—		—		30,497		48,060
2019	—		—		—		—		—		—		—		19,328
Total															$	338,068
Multi-line - net reserves for loss and loss adjustment expenses, end of year															$	286,768

Other Specialty

Loss and loss adjustment expenses incurred, net
Accident year	2012		2013		2014		2015		2016		2017		2018		2019		IBNR loss and LAE reserves, net
	<----------------------------------------------- Unaudited ----------------------------------------------->
2012	$	52,105	$	49,942	$	50,055	$	50,055	$	50,065	$	50,104	$	50,104	$	50,104	$	—
2013	—		25,582		24,274		23,450		23,138		23,135		23,138		23,125		—
2014	—		—		—		—		—		—		—		—		—
2015	—		—		—		—		—		—		—		—		—
2016	—		—		—		—		—		—		812		730		691
2017	—		—		—		—		—		4,033		3,544		4,025		447
2018	—		—		—		—		—		—		6,213		6,866		2,573
2019	—		—		—		—		—		—		—		9,048		7,358
Total															$	93,898	$	11,069
Cumulative net losses and loss adjustment expenses paid
Accident year	2012		2013		2014		2015		2016		2017		2018		2019
	<----------------------------------------------- Unaudited ----------------------------------------------->
2012	$	2,666	$	48,455	$	50,024	$	50,025	$	50,067	$	50,103	$	50,103	$	50,103
2013	—		—		22,232		23,138		23,134		23,135		23,137		23,127
2014	—		—		—		—		—		—		—		—
2015	—		—		—		—		—		—		—		—
2016	—		—		—		—		—		—		—		—
2017	—		—		—		—		—		4		261		575
2018	—		—		—		—		—		—		957		2,109
2019	—		—		—		—		—		—		—		1,640
Total															$	77,554
Other Specialty - net reserves for loss and loss adjustment expenses, end of year															$	16,344

Property and Casualty Reinsurance - Retroactive Reinsurance Contracts

The Company writes reinsurance contracts that provide limited protection against adverse development on loss originating from multiple accident years. The Company has other retroactive exposure within contracts that provide primarily prospective coverage. These contracts are included in the prospective reinsurance tables above. These contracts are typically part of prospective reinsurance contracts with a small portion of retroactive exposure resulting from the delay between the dates when the relevant contract was bound and the dates on which each incepted. The information below includes loss and loss adjustment expenses incurred, net and loss and loss adjustment expenses paid, net, by accident year for the Company's retroactive reinsurance contracts presented by year of inception of the retroactive reinsurance contracts.

The Company's estimate for loss and loss adjustment expenses incurred, net, at inception of all retroactive reinsurance contracts entered into to date was the same when the contract incepted and at the relevant year end position. As a result, there was no development in the year of inception for any of the Company's retroactive reinsurance contracts written to date. In addition, there were no loss and loss adjustment expenses paid, net, at inception of the Company's retroactive reinsurance contracts. The information related to loss and loss adjustment expenses incurred, net and net loss and loss adjustment expenses paid for the years ended December 31, 2012 through 2018 is presented as supplementary information and is unaudited.

Retroactive contracts incepting in the year ended December 31, 2012

The Company did not enter into any retroactive reinsurance contracts during the year ended December 31, 2012.

Retroactive contracts incepting in the year ended December 31, 2013

Loss and loss adjustment expenses incurred, net
Accident year	2013		2014		2015		2016		2017		2018		2019		IBNR loss and LAE reserves, net
	<---------------------------------------- Unaudited ---------------------------------------->
2010	$	914	$	704	$	704	$	704	$	704	$	704	$	704	$	—
2011	5,419		4,173		4,173		4,173		4,173		4,173		4,173		—
2012	10,197		7,853		7,853		7,853		7,853		7,853		7,853		—
2013	4,908		3,779		3,779		3,779		3,779		3,779		3,779		—
2014	—		—		—		—		—		—		—		—
2015	—		—		—		—		—		—		—		—
2016	—		—		—		—		—		—		—		—
2017	—		—		—		—		—		—		—		—
2018	—		—		—		—		—		—		—		—
2019	—		—		—		—		—		—		—		—
Total													$	16,509	$	—
Cumulative net loss and loss adjustment expenses paid
Accident year	2013		2014		2015		2016		2017		2018		2019
	<---------------------------------------- Unaudited ---------------------------------------->
2010	$	—	$	279	$	704	$	704	$	704	$	704	$	704
2011	—		1,654		4,173		4,173		4,173		4,173		4,173
2012	—		3,113		7,853		7,853		7,853		7,853		7,853
2013	—		1,498		3,779		3,779		3,779		3,779		3,779
2014	—		—		—		—		—		—		—
2015	—		—		—		—		—		—		—
2016	—		—		—		—		—		—		—
2017	—		—		—		—		—		—		—
2018	—		—		—		—		—		—		—
2019	—		—		—		—		—		—		—
Total													$	16,509
Net reserves for loss and loss adjustment expenses from 2010 to 2019													—
Net reserves for loss and loss adjustment expenses prior to 2010													9,524
Retroactive contracts incepting in the year ended December 31, 2013 - net reserves for loss and loss adjustment expenses, end of year													$	9,524

Retroactive contracts incepting in the year ended December 31, 2014

Loss and loss adjustment expenses incurred, net
Accident year	2014		2015		2016		2017		2018		2019		IBNR loss and LAE reserves, net
	<------------------------------ Unaudited ------------------------------>
2010	$	444	$	—	$	—	$	—	$	—	$	—	$	—
2011	4,239		3,455		3,057		3,252		2,884		1,529		1,529
2012	12,173		10,794		9,553		10,162		9,011		4,778		4,778
2013	18,907		16,929		14,982		15,938		14,132		7,493		7,493
2014	10,700		9,590		8,487		9,028		8,005		4,245		4,245
2015	—		—		—		—		—		—		—
2016	—		—		—		—		—		—		—
2017	—		—		—		—		—		—		—
2018	—		—		—		—		—		—		—
2019	—		—		—		—		—		—		—
Total											$	18,045	$	18,045
Cumulative net loss and loss adjustment expenses paid
Accident year	2014		2015		2016		2017		2018		2019
	<------------------------------ Unaudited ------------------------------>
2010	$	—	$	—	$	—	$	—	$	—	$	—
2011	—		—		—		—		—		—
2012	—		—		—		—		—		—
2013	—		—		—		—		—		—
2014	—		—		—		—		—		—
2015	—		—		—		—		—		—
2016	—		—		—		—		—		—
2017	—		—		—		—		—		—
2018	—		—		—		—		—		—
2019	—		—		—		—		—		—
Total											$	—
Net reserves for loss and loss adjustment expenses from 2010 to 2019											18,045
Net reserves for loss and loss adjustment expenses prior to 2010											—
Retroactive contracts incepting in the year ended December 31, 2014 - net reserves for loss and loss adjustment expenses, end of year											$	18,045

Retroactive contracts incepting in the year ended December 31, 2015

Loss and loss adjustment expenses incurred, net
Accident year	2015		2016		2017		2018		2019		IBNR loss and LAE reserves, net
	<------------------- Unaudited ------------------->
2010	$	5,324	$	5,324	$	3,932	$	3,561	$	2,225	$	2,225
2011	10,165		10,165		7,703		7,318		4,509		4,509
2012	14,952		14,952		11,470		11,132		6,817		6,817
2013	18,435		18,435		14,162		13,779		8,432		8,432
2014	40,654		40,654		31,500		31,098		18,953		18,953
2015	2,596		2,596		1,788		1,395		913		913
2016	—		—		—		—		—		—
2017	—		—		—		—		—		—
2018	—		—		—		—		—		—
2019	—		—		—		—		—		—
Total									$	41,849	$	41,849
Cumulative net loss and loss adjustment expenses paid
Accident year	2015		2016		2017		2018		2019
	<------------------- Unaudited ------------------->
2010	$	—	$	—	$	—	$	—	$	—
2011	—		—		—		—		—
2012	—		—		—		—		—
2013	—		—		—		—		—
2014	—		—		—		—		—
2015	—		—		—		—		—
2016	—		—		—		—		—
2017	—		—		—		—		—
2018	—		—		—		—		—
2019	—		—		—		—		—
Total									$	—
Net reserves for loss and loss adjustment expenses from 2010 to 2019									41,849
Net reserves for loss and loss adjustment expenses prior to 2010									1,757
Retroactive contracts incepting in the year ended December 31, 2015 - net reserves for loss and loss adjustment expenses, end of year									$	43,606

Retroactive contracts incepting in the year ended December 31, 2016

The Company did not enter into any retroactive reinsurance contracts during the year ended December 31, 2016.

Retroactive contracts incepting in the year ended December 31, 2017

Loss and loss adjustment expenses incurred, net
Accident year	2017		2018		2019		IBNR loss and LAE reserves, net
	<--- Unaudited --->
2010	$	442	$	371	$	237	$	237
2011	1,648		1,567		966		966
2012	2,185		2,110		1,295		1,295
2013	3,358		3,264		2,000		2,000
2014	9,582		9,453		5,768		5,768
2015	12,597		12,398		7,570		7,570
2016	23,854		23,617		14,397		14,397
2017	48,877		48,888		29,719		29,719
2018	—		—		—		—
2019	—		—		—		—
Total					$	61,952	$	61,952
Cumulative net loss and loss adjustment expenses paid
Accident year	2017		2018		2019
	<--- Unaudited --->
2010	$	—	$	—	$	—
2011	—		—		—
2012	—		—		—
2013	—		—		—
2014	—		—		—
2015	—		—		—
2016	—		—		—
2017	—		—		—
2018	—		—		—
2019	—		—		—
Total					$	—
Net reserves for loss and loss adjustment expenses from 2010 to 2019					61,952
Net reserves for loss and loss adjustment expenses prior to 2010					256
Retroactive contracts incepting in the year ended December 31, 2017 - net reserves for loss and loss adjustment expenses, end of year					$	62,208

Retroactive contracts incepting in the year ended December 31, 2018

Loss and loss adjustment expenses incurred, net
Accident year	2018		2019		IBNR loss and LAE reserves, net
	Unaudited
2010	$	221	$	147	$	140
2011	200		131		128
2012	442		367		103
2013	2,230		2,007		148
2014	5,809		5,288		241
2015	12,754		11,692		331
2016	19,431		17,871		364
2017	17,257		15,889		279
2018	14,880		13,759		101
2019	—		—		—
Total			$	67,151	$	1,835
Cumulative net loss and loss adjustment expenses paid
Accident year	2018		2019
	Unaudited
2010	$	—	$	7
2011	—		3
2012	—		264
2013	—		1,859
2014	—		5,047
2015	—		11,361
2016	—		17,507
2017	—		15,610
2018	—		13,658
2019	—		—
Total			$	65,316
Net reserves for loss and loss adjustment expenses from 2010 to 2019			1,835
Net reserves for loss and loss adjustment expenses prior to 2010			208
Retroactive contracts incepting in the year ended December 31, 2018 - net reserves for loss and loss adjustment expenses, end of year			$	2,043

Retroactive contracts incepting in the year ended December 31, 2019

Loss and loss adjustment expenses incurred, net
Accident year	2019		IBNR loss and LAE reserves, net
2010	$	945	$	945
2011	2,064		2,064
2012	1,211		1,211
2013	1,983		1,983
2014	4,328		4,328
2015	6,197		6,197
2016	10,858		10,858
2017	12,908		12,908
2018	16,769		16,769
2019	35,527		35,527
Total	$	92,790	$	92,790
Cumulative net loss and loss adjustment expenses paid
Accident year	2019
2010	$	—
2011	—
2012	—
2013	—
2014	—
2015	—
2016	—
2017	—
2018	—
2019	—
Total	$	—
Net reserves for loss and loss adjustment expenses from 2010 to 2019	92,790
Net reserves for loss and loss adjustment expenses prior to 2010	1,643
Retroactive contracts incepting in the year ended December 31, 2019 - net reserves for loss and loss adjustment expenses, end of year	$	94,433

Reconciliation of loss development information to loss and loss adjustment expense reserves

The following table provides a reconciliation of the Company's loss and loss expense reserves as of December 31, 2019:

	2019
Prospective reinsurance contracts
Property Catastrophe	$	38,781
Other Property	60,137
Workers’ Compensation	83,031
Auto	26,467
Other Casualty	326,351
Credit & Financial Lines	31,696
Multi-line	286,768
Other Specialty	16,344
Retroactive reinsurance contracts
Retroactive contracts incepting in the year ended December 31, 2012	—
Retroactive contracts incepting in the year ended December 31, 2013	9,524
Retroactive contracts incepting in the year ended December 31, 2014	18,045
Retroactive contracts incepting in the year ended December 31, 2015	43,606
Retroactive contracts incepting in the year ended December 31, 2016	—
Retroactive contracts incepting in the year ended December 31, 2017	62,208
Retroactive contracts incepting in the year ended December 31, 2018	2,043
Retroactive contracts incepting in the year ended December 31, 2019	94,433
Net reserves for loss and loss adjustment expenses, end of year	1,099,434
Loss and loss adjustment expenses recoverable
Property	5,520
Deferred charges on retroactive reinsurance contracts	6,738
Gross reserves for loss and loss adjustment expenses, end of year	$	1,111,692

Cumulative claims frequency

The Company determined that the disclosure of claim frequency analysis was impracticable. As a result, no claims frequency information has been disclosed. The Company’s business is primarily comprised of reinsurance contracts written on a quota share or aggregate loss basis and the underlying claim count information is not provided for most contracts. Furthermore, even if claim counts were made available by the Company’s cedents, the quota share cession percentage varies for each contract, resulting in the cedent claim counts not being a meaningful measure of the Company’s loss exposure.

Claims duration

The following table is presented as supplementary information and presents the Company’s historical average annual percentage payout of loss and loss adjustment expenses incurred, net by age, as of December 31, 2019:

	Year 1		Year 2		Year 3		Year 4		Year 5		Year 6		Year 7		Year 8
	(Unaudited)
Prospective reinsurance contracts
Property Catastrophe	1.2	%	—	%	—	%	—	%	—	%	—	%	—	%	—	%
Other Property	48.6	%	28.4	%	8.8	%	5.4	%	2.6	%	1.3	%	0.8	%	—	%
Workers’ Compensation	9.3	%	21.8	%	22.5	%	16.2	%	10.8	%	2.9	%	4.6	%	4.0	%
Auto	45.4	%	43.6	%	7.0	%	1.8	%	0.5	%	—	%	0.2	%	—	%
Other Casualty	1.5	%	7.4	%	13.4	%	14.8	%	13.6	%	9.9	%	—	%	—	%
Credit & Financial Lines	9.3	%	23.6	%	28.5	%	12.7	%	3.6	%	0.1	%	(0.3	)%	—	%
Multi-line	21.1	%	27.3	%	21.8	%	(0.1	)%	2.1	%	0.4	%	—	%	—	%
Other Specialty	6.2	%	42.1	%	3.7	%	—	%	—	%	—	%	—	%	—	%
Retroactive reinsurance contracts
Retroactive contracts incepting in the year ended December 31, 2012	n/a		n/a		n/a		n/a		n/a		n/a		n/a		n/a
Retroactive contracts incepting in the year ended December 31, 2013	4.4	%	23.9	%	31.7	%	4.7	%	3.5	%	2.6	%	3.3	%	n/a
Retroactive contracts incepting in the year ended December 31, 2014	—	%	—	%	—	%	—	%	—	%	—	%	n/a		n/a
Retroactive contracts incepting in the year ended December 31, 2015	—	%	—	%	—	%	—	%	—	%	n/a		n/a		n/a
Retroactive contracts incepting in the year ended December 31, 2016	n/a		n/a		n/a		n/a		n/a		n/a		n/a		n/a
Retroactive contracts incepting in the year ended December 31, 2017	—	%	—	%	—	%	n/a		n/a		n/a		n/a		n/a
Retroactive contracts incepting in the year ended December 31, 2018	—	%	97.0	%	n/a		n/a		n/a		n/a		n/a		n/a
Retroactive contracts incepting in the year ended December 31, 2019	—	%	n/a		n/a		n/a		n/a		n/a		n/a		n/a

The Company was incorporated on October 6, 2011, commenced underwriting operations in January 2012 and predominantly writes a mix of personal and commercial lines. As a result, the Company has limited historical data and is unable to present a full cycle of claim payments.