Reserve for Losses and Loss Adjustment Expenses (Tables)

12 Months Ended

Dec. 31, 2019

Liability for Claims and Claims Adjustment Expense [Abstract]

Schedule of reconciliation of beginning and ending reserve balances for losses and loss adjustment expenses

The following table provides a reconciliation of the beginning and ending reserve balances for losses and loss adjustment expenses, net of reinsurance, to the gross amounts reported in the consolidated balance sheets:

	Year Ended December 31,
	2019		2018		2017
	(in thousands)
Reserve for losses and loss adjustment expenses net of reinsurance recoverables at beginning of period	$	1,194,088	$	989,825	$	761,128
Add: Incurred losses and loss adjustment expenses net of reinsurance:
Current year	603,094		582,604		533,905
Prior years	69,008		17,672		21,472
Total incurred losses and loss and adjustment expenses	672,102		600,276		555,377
Deduct: Loss and loss adjustment expense payments net of reinsurance:
Current year	75,249		86,355		103,205
Prior years	413,480		309,658		223,475
Total loss and loss adjustment expense payments	488,729		396,013		326,680
Reserve for losses and loss adjustment expenses net of reinsurance recoverables at end of period	1,377,461		1,194,088		989,825
Add: Reinsurance recoverables on unpaid losses and loss adjustment expenses at end of period	668,045		467,371		302,524
Reserve for losses and loss adjustment expenses gross of reinsurance recoverables on unpaid losses and loss adjustment expenses at end of period	$	2,045,506	$	1,661,459	$	1,292,349

Schedule of incurred losses and loss adjustment expenses, net of reinsurance

Excess and Surplus Lines — Excluding Commercial Auto

Incurred losses and loss adjustment expenses, net of reinsurance (in thousands)

Accident Year	2010		2011		2012		2013		2014		2015		2016		2017		2018		2019
2010	$	78,424	$	80,569	$	78,117	$	73,035	$	69,080	$	69,964	$	70,294	$	70,913	$	71,312	$	69,594
2011			111,190		119,927		114,473		106,564		106,381		106,130		106,643		106,536		105,173
2012					97,908		98,672		97,829		96,497		97,306		99,619		101,271		103,061
2013							96,729		96,064		85,433		81,009		82,830		83,855		82,732
2014									114,942		104,092		90,267		82,232		84,074		88,904
2015											126,443		113,417		104,847		102,434		103,688
2016													138,507		125,093		126,050		126,971
2017															144,349		131,897		132,136
2018																	167,004		158,458
2019																			214,653
Total																			$	1,185,370

 

Cumulative paid losses and loss adjustment expenses, net of reinsurance (in thousands)

Accident Year	2010		2011		2012		2013		2014		2015		2016		2017		2018		2019
2010	$	13,673	$	26,418	$	35,812	$	45,641	$	52,071	$	57,371	$	61,307	$	64,214	$	65,246	$	65,915
2011			27,684		53,109		72,732		81,696		90,884		94,998		98,684		99,798		101,728
2012					6,944		33,757		49,604		63,216		74,869		82,545		88,812		94,588
2013							3,867		14,509		30,382		44,421		59,641		66,553		71,035
2014									3,412		16,969		28,212		43,891		58,774		71,549
2015											4,048		17,164		34,801		55,911		73,455
2016													5,180		22,852		46,045		70,105
2017															5,290		22,956		42,764
2018																	6,000		26,160
2019																			8,235
Total																			$	625,534
All outstanding losses and loss adjustment expenses prior to 2010, net of reinsurance (60 claims outstanding)																			$	8,978
Total outstanding losses and loss adjustment expenses, net of reinsurance																			$	568,814

Excess and Surplus Lines — Commercial Auto

Incurred losses and adjustment expenses, net of reinsurance (in thousands)

Accident Year	2013		2014		2015		2016		2017		2018		2019
2013	$	1,255	$	1,300	$	1,451	$	1,351	$	1,301	$	1,277	$	1,277
2014			20,487		14,071		17,233		18,953		19,779		18,303
2015					30,109		33,113		35,149		36,139		36,636
2016							74,340		109,286		126,791		147,122
2017									207,355		208,743		272,421
2018											255,881		230,220
2019													262,306
Total													$	968,285

Cumulative paid losses and loss adjustment expenses, net of reinsurance (in thousands)

Accident Year	2013		2014		2015		2016		2017		2018		2019
2013	$	60	$	1,182	$	1,285	$	1,291	$	1,275	$	1,275	$	1,275
2014			6,166		8,645		12,679		16,359		18,678		17,745
2015					8,356		15,234		24,282		31,592		34,819
2016							18,295		54,054		89,381		125,108
2017									41,467		107,377		192,961
2018											45,136		119,099
2019													44,225
Total													$	535,232
Total outstanding losses and loss adjustment expenses, net of reinsurance													$	433,053

Specialty Admitted — Individual Risk Workers’ Compensation

Incurred losses and loss adjustment expenses, net of reinsurance (in thousands)

Accident Year	2010		2011		2012		2013		2014		2015		2016		2017		2018		2019
2010	$	27,209	$	28,736	$	30,464	$	30,373	$	28,963	$	28,938	$	27,590	$	27,098	$	27,099	$	27,099
2011			37,834		41,421		40,154		38,999		38,311		37,455		36,594		36,593		36,593
2012					32,116		32,420		31,490		29,689		28,255		28,174		28,186		28,186
2013							12,525		13,668		12,786		11,578		10,907		10,909		10,909
2014									16,638		16,652		14,620		13,890		12,704		12,704
2015											20,938		21,274		19,741		18,376		17,626
2016													21,678		20,299		18,050		15,800
2017															24,869		22,071		19,779
2018																	16,432		16,288
2019																			20,253
Total																			$	205,237

Cumulative paid losses and loss adjustment expenses, net of reinsurance (in thousands)

Accident Year	2010		2011		2012		2013		2014		2015		2016		2017		2018		2019
2010	$	7,157	$	16,245	$	21,805	$	23,898	$	25,210	$	25,477	$	26,345	$	26,352	$	26,358	$	26,365
2011			10,123		23,127		29,021		33,204		34,240		34,287		34,334		34,614		34,638
2012					9,222		20,308		24,755		26,435		26,897		26,932		26,963		26,994
2013							4,487		8,723		9,846		10,246		10,263		10,309		10,337
2014									4,633		10,648		12,041		12,236		12,282		12,282
2015											6,604		13,285		15,118		15,889		15,901
2016													4,664		10,227		12,135		12,432
2017															6,546		12,782		14,285
2018																	4,497		9,034
2019																			5,473
Total																			$	167,741
All outstanding losses and loss adjustment expenses prior to 2010, net of reinsurance (4 claims outstanding)																			$	1,039
Outstanding losses and loss adjustment expenses assumed from involuntary workers’ compensation pools																			$	4,656
Total outstanding losses and loss adjustment expenses, net of reinsurance																			$	43,191

Specialty Admitted — Fronting and Programs

Incurred losses and loss adjustment expenses, net of reinsurance (in thousands)

Accident Year	2013		2014		2015		2016		2017		2018		2019
2013	$	104	$	80	$	52	$	52	$	52	$	52	52
2014			3,460		3,468		3,818		3,425		3,228		3,083
2015					7,136		9,632		9,358		8,974		8,384
2016							11,542		15,670		14,682		15,522
2017									21,229		24,271		25,201
2018											21,758		20,677
2019													18,832
Total													$	91,751

Cumulative paid losses and loss adjustment expenses, net of reinsurance (in thousands)

Accident Year	2013		2014		2015		2016		2017		2018		2019
2013	$	28	$	52	$	52	$	52	$	52	$	52	52
2014			883		1,687		2,369		2,728		2,854		2,916
2015					2,058		4,666		6,165		6,919		7,329
2016							1,894		5,123		6,888		10,732
2017									1,223		6,682		13,065
2018											885		4,972
2019													4,358
Total													$	43,424
All outstanding losses and loss adjustment expenses, net of reinsurance													$	48,327
Outstanding losses and loss adjustment expenses, assumed from involuntary pools													$	400
Total outstanding losses and loss adjustment expenses, net of reinsurance													$	48,727

Casualty Reinsurance

Incurred losses and loss adjustment expenses, net of reinsurance (in thousands)

Accident Year	2010		2011		2012		2013		2014		2015		2016		2017		2018		2019
2010	$	64,413	$	60,476	$	61,068	$	62,714	$	61,344	$	60,949	$	60,978	$	61,619	$	62,605	$	63,357
2011			114,908		103,123		97,366		97,812		98,993		99,282		101,276		103,196		105,333
2012					148,251		132,388		131,281		135,594		136,813		139,978		143,305		146,045
2013							133,230		130,361		131,352		134,446		137,801		143,124		146,760
2014									118,881		115,927		114,636		116,981		121,200		126,160
2015											119,157		108,870		108,699		109,117		114,517
2016													112,759		105,533		103,544		108,222
2017															134,628		128,472		129,800
2018																	121,529		119,098
2019																			86,022
Total																			$	1,145,314

Cumulative paid losses and loss adjustment expenses, net of reinsurance (in thousands)

Accident Year	2010		2011		2012		2013		2014		2015		2016		2017		2018		2019
2010	$	21,918	$	31,500	$	38,430	$	44,921	$	49,263	$	52,761	$	54,659	$	57,013	$	58,707	$	59,634
2011			48,688		61,922		68,616		78,164		87,267		90,287		94,627		97,715		99,511
2012					73,124		81,859		97,215		113,943		121,026		128,567		133,606		137,430
2013							59,756		75,094		93,902		108,396		119,256		127,732		134,644
2014									41,421		58,601		76,302		89,899		101,366		110,374
2015											40,021		53,986		68,002		80,208		90,661
2016													36,268		50,905		65,409		78,145
2017															47,739		72,891		90,117
2018																	30,903		50,274
2019																			12,646
Total																			$	863,436
All outstanding losses and loss adjustment expenses prior to 2010, net of reinsurance																			$	1,798
Total outstanding losses and loss adjustment expenses, net of reinsurance																			$	283,676

Schedule of reserve for losses and loss adjustment expenses

The reconciliation of the net incurred and paid claims development tables to the reserve for losses and loss adjustment expenses in the consolidated balance sheet at December 31, 2019 is as follows (in thousands):

E&S – excluding commercial auto	$	568,814
E&S – commercial auto	433,053
Specialty Admitted – individual risk workers’ compensation	43,191
Specialty Admitted – fronting and programs	48,727
Casualty Reinsurance	283,676
Net reserve for losses and loss adjustment expenses	1,377,461
Reinsurance recoverables on unpaid losses	668,045
Gross reserve for losses and loss adjustment expenses	$	2,045,506

Schedule of average annual percentage payouts of incurred claims by age, net of reinsurance

The following is unaudited supplementary information about average annual percentage payouts of incurred claims by age, net of reinsurance, for the Excess and Surplus Lines segment and the Specialty Admitted Insurance segments as of December 31, 2019.

	Year 1		Year 2		Year 3		Year 4		Year 5		Year 6		Year 7		Year 8		Year 9		Year 10
E&S – excluding commercial auto	9.5	%	15.7	%	17.2	%	18.5	%	14.5	%	8.0	%	5.4	%	3.8	%	2.0	%	1.1	%
E&S – commercial auto	20.4	%	38.1	%	16.0	%	14.1	%	7.2	%	2.6	%	1.5	%
Specialty Admitted – individual risk workers’ compensation	27.9	%	30.9	%	16.0	%	10.2	%	7.2	%	1.2	%	1.7	%	0.9	%	0.1	%	1.3	%
Specialty Admitted – fronting and programs	18.7	%	22.4	%	24.3	%	16.1	%	10.5	%	5.3	%
Casualty Reinsurance	21.1	%	16.4	%	12.2	%	8.9	%	6.4	%	5.3	%	4.3	%	3.6	%	3.5	%	3.2	%

Schedule of incurred but not reported liabilities and claims frequency

The table below provides information on IBNR liabilities and claims frequency for: (1) the Excess and Surplus Lines segment split between commercial auto and all non commercial auto, and (2) the Specialty Admitted Insurance segment split between individual risk workers’ compensation and fronting and programs:

Excess and Surplus Lines — Excluding Commercial Auto

Accident Year	Incurred Losses and Loss Adj Expenses		IBNR		Cumulative # of Reported Claims
	($ in thousands)
2010	$	69,594	$	1,347	1,429
2011	105,173		2,380		1,480
2012	103,061		2,042		1,806
2013	82,732		5,493		2,396
2014	88,904		9,855		2,162
2015	103,688		7,681		2,531
2016	126,971		23,882		2,933
2017	132,136		53,525		2,898
2018	158,458		95,477		3,935
2019	214,653		178,172		4,038

Excess and Surplus Lines — Commercial Auto

Accident Year	Incurred Losses and Loss Adj Expenses		IBNR		Cumulative # of Reported Claims
	($ in thousands)
2013	$	1,277	$	1	54
2014	18,303		150		7,763
2015	36,636		337		41,757
2016	147,122		5,258		89,003
2017	272,421		11,473		133,654
2018	230,220		34,896		95,889
2019	262,306		167,476		67,380

Specialty Admitted - Individual Risk Workers’ Compensation

Accident Year	Incurred Losses and Loss Adj Expenses		IBNR		Cumulative # of Reported Claims
	($ in thousands)
2010	$	27,099	$	698	$	1,604
2011	36,593		1,879		1,814
2012	28,186		1,090		1,323
2013	10,909		572		540
2014	12,704		423		850
2015	17,626		1,440		975
2016	15,800		3,245		836
2017	19,779		3,888		1,092
2018	16,288		3,495		1,230
2019	20,253		2,965		1,482

 

Specialty Admitted — Fronting and Programs

Accident Year	Incurred Losses and Loss Adj Expenses		IBNR		Cumulative # of Reported Claims
	($ in thousands)
2013	$	52	$	—	22
2014	3,083		147		857
2015	8,384		432		1,362
2016	15,522		1,861		2,807
2017	25,201		6,751		6,706
2018	20,677		10,142		7,158
2019	18,832		10,961		5,695

The table below provides information on IBNR liabilities for the Casualty Reinsurance segment:

Accident Year	Incurred Losses and Loss Adj Expenses		IBNR
	($ in thousands)
2010	$	63,357	$	723
2011	105,333		1,184
2012	146,045		2,025
2013	146,760		2,631
2014	126,160		3,487
2015	114,517		9,957
2016	108,222		18,720
2017	129,800		36,167
2018	119,098		29,472
2019	86,022		68,499