The reserves for unpaid losses and loss adjustment expenses represent the Company's estimated ultimate cost of all unreported and reported but unpaid insured claims and the cost to adjust these losses that have occurred as of or before the balance sheet date. Reserves are estimated using individual case-basis valuations of reported claims and statistical analyses. Case reserves are established for individual claims that have been reported to the Company, typically by the Company's insureds or their brokers. Based on the information provided, case reserves are established by estimating the ultimate losses from the claim, including defense costs associated with the ultimate settlement of the claim. Incurred-but-not-reported ("IBNR") reserves are determined using actuarial methods to estimate losses that have occurred but have not yet been reported to the Company. The incurred Bornhuetter-Ferguson actuarial method ("BF method") is used to arrive at the Company's loss reserve estimates for each line of business. This method estimates the reserves based on the initial expected loss ratio and expected reporting patterns for losses. Because the Company has a limited number of years of loss experience compared to the period over which losses are expected to be reported, the Company uses industry and peer-group data, in addition to its own data, as a basis for selecting its expected reporting patterns.

As part of the reserving process, the Company reviews historical data and considers the effect of various factors on claims development patterns including polices written on a "claims made" versus "occurrence" basis. Policies written on a claims made basis provide coverage to the insured only for losses incurred during the coverage period, and only if the claim was reported during a specified reporting period. Policies written on an occurrence basis provide coverage to the insured for liabilities arising from events occurring during the term of the policy, regardless of when a claim is actually made. Accordingly, claims related to policies written on an occurrence basis may arise many years after a policy has lapsed. Property losses, while written on an occurrence basis, are generally reported within a short time from the date of loss, and in most instances, property claims are settled and paid within a relatively short period of time.



	December 31,
	2019			2018			2017
	(in thousands)
Net reserves for unpaid losses and loss adjustment expenses, beginning of year	$	313,763		$	267,493		$	194,602
Commutation of MLQS	—			—			27,929
Adjusted net reserves for losses and loss adjustment expenses	313,763			267,493			222,531
Incurred losses and loss adjustment expenses:
Current year	178,986			135,078			114,960
Prior year	(9,423		)	(7,037		)	(11,280		)
Total net losses and loss adjustment expenses incurred	169,563			128,041			103,680
Payments:
Current year	19,054			14,118			13,792
Prior year	74,006			67,653			44,926
Total payments	93,060			81,771			58,718
Net reserves for unpaid losses and loss adjustment expenses, end of year	390,266			313,763			267,493
Reinsurance recoverable on unpaid losses	69,792			55,389			48,224
Gross reserves for unpaid losses and loss adjustment expenses, end of year	$	460,058		$	369,152		$	315,717

During the year ended December 31, 2019, our net incurred losses for accident years 2018 and prior developed favorably by $9.4 million. This favorable development included $13.0 million for the 2018 accident year and $1.6 million for accident year 2017. This favorable development was primarily due to reported losses emerging at a lower level than expected on the other liability and products liability lines of business. The favorable development was offset by adverse development of $5.2 million for the 2011 through 2015 accident years. The unfavorable development was primarily attributable to the other liability occurrence line of

business. This adverse development largely resulted from management’s decision to lengthen the actuarial loss development factors to provide for emergence of reported losses over a longer period of time based on trends observed in loss experience, which added a modest amount of conservatism to the Company’s IBNR reserves.

During the year ended December 31, 2018, our net incurred losses for accident years 2017 and prior developed favorably by $7.0 million. This favorable development included $6.8 million for the 2017 accident year, $3.8 million for the 2016 accident year. This favorable development was primarily due to reported losses emerging at a lower level than expected, across most lines of business. The favorable development was offset in part by adverse development of $3.6 million for the 2011 through 2015 accident years. The unfavorable development was primarily attributable to the other liability occurrence line of business.

During the year ended December 31, 2017, our net incurred losses for accident years 2016 and prior developed favorably by $11.3 million. This favorable development included $9.4 million for the 2016 accident year and $6.0 million of favorable development for accident years 2015 and 2014. The favorable development was primarily due to reported losses emerging at a lower level than expected, across most lines of business. The favorable development was offset in part by adverse development of $4.1 million for the 2011 through 2013 accident years. The unfavorable development was primarily attributable to the other liability occurrence line of business.

Prior to 2017, the Company participated in a multi-line quota share treaty ("MLQS") that transferred a portion of its risk related to certain lines of business to reinsurers that received a portion of the direct written premiums on that business. Effective January 1, 2017, the Company commuted the remaining outstanding MLQS covering the period January 1, 2015 to December 31, 2015, which reduced reinsurance recoverables on unpaid losses by approximately $27.9 million. The commutation did not have any effect on the Company's results of operations or cash flows for the applicable period.

The following is information about incurred and paid claims development as of December 31, 2019, net of reinsurance, as well as cumulative claim frequency and the total of IBNR liabilities plus expected development on reported claims included within the net incurred claims amounts. The development and claims duration tables below exclude commuted MLQS contracts, which would distort development patterns related to those transactions. Cumulative number of reported claims is reported on a per claim basis.



	Incurred Claims and Claim Adjustment Expenses, Net of Reinsurance
	For the Years Ended December 31,										As of December 31, 2019
Accident Year	2015 Unaudited		2016 Unaudited		2017 Unaudited		2018 Unaudited		2019		Total of IBNR Liabilities Plus Expected Development on Reported Claims		Cumulative Number of Reported Claims
	($ in thousands)
2015	$	1,394	$	880	$	857	$	872	$	869	$	—	63
2016			4,177		3,392		3,301		3,278		14		286
2017					12,473		11,705		11,676		65		1,038
2018							11,559		12,004		236		643
2019									14,914		2,384		598
							Total		$	42,741



	Cumulative Paid Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance
	For the Years Ended December 31,
Accident Year	2015 Unaudited		2016 Unaudited		2017 Unaudited		2018 Unaudited		2019
	($ in thousands)
2015	$	584	$	706	$	832	$	865	$	869
2016			1,867		3,257		3,265		3,265
2017					9,938		11,233		11,602
2018							9,132		11,646
2019									9,852
							Total		37,234
			All outstanding liabilities before 2015, net of reinsurance						—
			Liabilities for claims and claim adjustment expenses, net of reinsurance						$	5,507



	Incurred Claims and Claim Adjustment Expenses, Net of Reinsurance
	For the Years Ended December 31,																				As of December 31, 2019
Accident Year	2010 Unaudited		2011 Unaudited		2012 Unaudited		2013 Unaudited		2014 Unaudited		2015 Unaudited		2016 Unaudited		2017 Unaudited		2018 Unaudited		2019		Total of IBNR Liabilities Plus Expected Development on Reported Claims		Cumulative Number of Reported Claims
	($ in thousands)
2010	$	778	$	805	$	679	$	737	$	946	$	916	$	894	$	883	$	876	$	872	$	13	14
2011			4,246		3,844		3,646		3,609		3,560		3,374		3,261		3,225		3,206		102		76
2012					7,913		5,749		4,205		3,102		2,845		2,477		2,314		2,207		261		138
2013							15,238		11,639		9,113		7,917		7,002		6,463		6,128		629		228
2014									18,847		14,289		11,748		11,217		10,948		10,988		1,239		273
2015											18,883		16,777		14,896		13,583		13,942		2,024		257
2016													19,170		14,694		14,675		14,322		3,248		309
2017															18,116		17,096		16,121		5,024		366
2018																	22,429		20,235		10,949		448
2019																			34,693		27,450		504
																	Total		$	122,714



	Cumulative Paid Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance
	For the Years Ended December 31,
Accident Year	2010 Unaudited		2011 Unaudited		2012 Unaudited		2013 Unaudited		2014 Unaudited		2015 Unaudited		2016 Unaudited		2017 Unaudited		2018 Unaudited		2019
	($ in thousands)
2010	$	—	$	79	$	368	$	393	$	862	$	859	$	859	$	859	$	859	$	859
2011			139		1,037		1,392		2,116		3,044		3,042		3,042		3,065		3,104
2012					153		475		877		1,024		1,090		1,882		1,946		1,946
2013							499		1,915		4,436		5,070		5,320		5,439		5,482
2014									435		1,865		5,039		6,384		8,290		9,415
2015											217		4,496		7,562		9,238		11,371
2016													1,158		3,015		6,907		9,839
2017															340		4,897		8,252
2018																	507		5,030
2019																			2,487
																	Total		57,785
			Liabilities for claims and claim adjustment expenses, net of reinsurance																$	64,929



	Incurred Claims and Claim Adjustment Expenses, Net of Reinsurance
	For the Years Ended December 31,																			As of December 31, 2019
Accident Year	2010 Unaudited		2011 Unaudited		2012 Unaudited		2013 Unaudited		2014 Unaudited		2015 Unaudited		2016 Unaudited		2017 Unaudited		2018 Unaudited	2019		Total of IBNR Liabilities Plus Expected Development on Reported Claims		Cumulative Number of Reported Claims
	($ in thousands)
2010	$	843	$	771	$	531	$	460	$	458	$	404	$	406	$	429	402	$	406	$	59	49
2011			5,839		5,940		5,757		7,340		7,613		8,142		8,375		9,023	9,379		471		226
2012					16,977		17,436		18,803		20,401		20,579		22,001		22,401	23,223		1,716		581
2013							30,616		28,771		28,037		29,039		31,731		33,248	33,973		4,016		840
2014									47,805		40,668		38,049		36,678		39,313	41,859		7,980		1,158
2015											59,717		51,739		49,122		52,100	54,697		13,117		1,322
2016													61,440		55,680		53,549	55,534		19,588		1,318
2017															71,126		67,151	68,985		33,798		1,373
2018																	86,157	78,331		56,169		1,297
2019																		112,266		99,970		951
																	Total	$	478,653



	Cumulative Paid Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance
	For the Years Ended December 31,
Accident Year	2010 Unaudited		2011 Unaudited		2012 Unaudited		2013 Unaudited		2014 Unaudited		2015 Unaudited		2016 Unaudited		2017 Unaudited		2018 Unaudited	2019
	($ in thousands)
2010	$	4	$	37	$	59	$	113	$	263	$	261	$	273	$	313	346	347
2011			207		1,596		2,519		3,788		4,575		6,363		6,868		8,510	8,693
2012					757		4,441		7,850		11,238		14,382		16,474		19,383	20,707
2013							1,099		4,469		7,957		14,890		21,348		26,715	28,248
2014									698		3,081		8,489		17,576		23,771	31,026
2015											941		3,161		12,685		28,385	37,690
2016													1,099		6,015		17,225	28,924
2017															1,581		9,352	22,407
2018																	2,638	10,995
2019																		3,944
																	Total	192,981
					Liabilities for claims and claim adjustment expenses, net of reinsurance													$	285,672



	Average Annual Percentage Payout of Incurred Claims by Age, Net of Reinsurance
	(Unaudited)
Years	1		2		3		4		5		6		7		8		9		10
Casualty - claims made	4.5	%	20.2	%	25.3	%	12.5	%	20.4	%	9.5	%	0.9	%	0.2	%	0.6	%	—	%
Casualty - occurrence	2.4	%	9.9	%	13.7	%	19.0	%	18.3	%	12.1	%	6.3	%	11.1	%	5.1	%	—	%



(in thousands)	December 31, 2019
Net outstanding liabilities
Property	$	5,507
Casualty - claims made	64,929
Casualty - occurrence	285,672
Liabilities for unpaid claims and claim adjustment expenses, net of reinsurance	356,108

Reinsurance recoverable on unpaid claims
Property	3,119
Casualty - claims made	9,852
Casualty - occurrence	56,821
Total reinsurance recoverable on unpaid claims	69,792
Unallocated claims adjustment expenses	34,158
Gross liability for unpaid claims and claim adjustment expense	$	460,058