Reserve for Losses and Loss Adjustment Expenses

6 Months Ended

Jun. 30, 2020

Liability for Claims and Claims Adjustment Expense [Abstract]

Reserve for Losses and Loss Adjustment Expenses

Reserve 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 condensed consolidated balance sheets. Reinsurance recoverables on unpaid losses and loss adjustment expenses are presented gross of a $335,000 allowance for uncollectible reinsurance balances at March 31, 2020 and June 30, 2020.

	Three Months Ended June 30,				Six Months Ended June 30,
	2020		2019		2020		2019
	(in thousands)
Reserve for losses and loss adjustment expenses net of reinsurance recoverables at beginning of period	$	1,351,689	$	1,221,652	$	1,377,461	$	1,194,088
Add: Incurred losses and loss adjustment expenses net of reinsurance:
Current year	97,620		144,738		193,602		283,697
Prior years	1,126		2,315		2,000		3,283
Total incurred losses and loss and adjustment expenses	98,746		147,053		195,602		286,980
Deduct: Loss and loss adjustment expense payments net of reinsurance:
Current year	2,337		20,575		6,609		25,254
Prior years	108,564		110,200		226,920		217,884
Total loss and loss adjustment expense payments	110,901		130,775		233,529		243,138
Reserve for losses and loss adjustment expenses net of reinsurance recoverables at end of period	1,339,534		1,237,930		1,339,534		1,237,930
Add: Reinsurance recoverables on unpaid losses and loss adjustment expenses at end of period	727,437		545,404		727,437		545,404
Reserve for losses and loss adjustment expenses gross of reinsurance recoverables on unpaid losses and loss adjustment expenses at end of period	$	2,066,971	$	1,783,334	$	2,066,971	$	1,783,334

The Company experienced $1.1 million of adverse reserve development in the three months ended June 30, 2020 on the reserve for losses and loss adjustment expenses held at December 31, 2019. This reserve development included $2.8 million of favorable development in the Excess and Surplus Lines segment, $1.0 million of favorable development in the Specialty Admitted Insurance segment due to favorable development in the workers' compensation business for prior accident years, and $5.0 million of adverse development in the Casualty Reinsurance segment.

The Company experienced $2.3 million of adverse reserve development in the three months ended June 30, 2019 on the reserve for losses and loss adjustment expenses held at December 31, 2018. This reserve development included $1.2 million of adverse development in the Excess and Surplus Lines segment, as adverse development in the 2016 and 2017 accident years for commercial auto business were largely offset by favorable development in the 2018 accident year for commercial auto business. The Specialty Admitted Insurance segment experienced $1.2 million of favorable development due to favorable development in the workers' compensation business for prior accident years. The Company also experienced $2.4 million of adverse development in the Casualty Reinsurance segment primarily related to losses from risk profiles and treaty structures that the Company no longer writes.

The Company experienced $2.0 million of adverse reserve development in the six months ended June 30, 2020 on the reserve for losses and loss adjustment expenses held at December 31, 2019. This reserve development included $2.9 million of favorable development in the Excess and Surplus Lines segment, $2.0 million of favorable development in the Specialty Admitted Insurance segment due to favorable development in the workers' compensation business for prior accident years, and $6.9 million of adverse development in the Casualty Reinsurance segment.

The Company experienced $3.3 million of adverse reserve development in the six months ended June 30, 2019 on the reserve for losses and loss adjustment expenses held at December 31, 2018. This reserve development included $1.2 million of adverse development in the Excess and Surplus Lines segment, as adverse development in the 2016 and 2017 accident years for commercial auto business was largely offset by favorable development in the 2018 accident year for commercial auto business. The Specialty Admitted Insurance segment experienced $3.3 million of favorable development due to favorable development in

the workers' compensation business for prior accident years. The Company also experienced $5.3 million of adverse development in the Casualty Reinsurance segment primarily related to losses from risk profiles and treaty structures that the Company no longer writes.