10-K Reserve for Losses and Loss Adjustment Expenses

6 Months Ended

12 Months Ended

Jun. 30, 2024

Dec. 31, 2023

Reserve for Losses and Loss Adjustment Expenses

The table below provides a reconciliation of the beginning and ending reserve balances for the six months ended June 30, 2024 and June 30, 2023:


	June 30, 2024		June 30, 2023
	($ in thousands)
Gross reserves for losses and loss adjustment expenses, beginning of year	$	431,186	$	207,051
Reinsurance recoverable on unpaid losses, beginning of year	136,273		63,381
Net reserves for unpaid losses and loss adjustment expenses, beginning of year	$	294,913	$	143,670

Net incurred losses and loss adjustment expenses related to:
Current accident year	113,338		70,411
Prior accident years	—		457
	113,338		70,868
Net paid losses and loss adjustment expenses related to:
Current accident year	874		532
Prior accident years	9,502		6,092
	10,376		6,624

Net reserves for unpaid losses and loss adjustment expenses, end of period	$	397,875	$	207,914
Reinsurance recoverable on unpaid losses, end of period	190,030		93,588
Gross reserves for losses and loss adjustment expenses, end of period	$	587,905	$	301,502

During the six months ended June 30, 2024 and 2023, there was nil and $0.5 million of prior accident year unfavorable loss development, respectively.

Reserves for Losses and Loss Adjustment Expenses

a)Reserve Roll Forward

The table below provides a reconciliation of the beginning and ending reserve balances for the years ended December 31, 2023 and 2022:


As of and Years Ended December 31,	2023		2022
	($ in thousands)
Gross reserves for losses and loss adjustment expenses, beginning of year	$	207,051	$	47,952
Reinsurance recoverable on unpaid losses, beginning of year	63,381		13,945
Net reserves for unpaid losses and loss adjustment expenses, beginning of year	$	143,670	$	34,007

Net incurred losses and loss adjustment expenses related to:
Current accident year	166,282		114,067
Prior accident years	—		(2,306)
	166,282		111,761
Net paid losses and loss adjustment expenses related to:
Current accident year	1,814		1,030
Prior accident years	13,225		1,068
	15,039		2,098

Net reserves for unpaid losses and loss adjustment expenses, end of year	$	294,913	$	143,670
Reinsurance recoverable on unpaid losses, end of year	136,273		63,381
Gross reserves for losses and loss adjustment expenses, end of year	$	431,186	$	207,051

During the year ended December 31, 2023, there was no prior accident year loss development.

During the year ended December 31, 2022, prior accident year losses developed favorably by $2.3 million driven by lower emergence of reported losses than expected on claims made policies for the 2021 accident year.

b)Net Incurred and Paid Claims Development by Accident Year

The Company measures claim frequency information on an individual claim count basis. Any claim that is reported to the Company is included in the count unless it is subsequently settled without liability to the Company.

The following tables disclose by underwriting division, the development of net losses and loss adjustment expenses incurred and paid claims by accident year, IBNR, cumulative number of reported claims and average annual percentage payout of incurred claims by age.

The first loss development table within each underwriting division section presents cumulative net losses and loss adjustment expenses. The sum of the current accident year row ties to net losses and loss adjustment expenses disclosed in the Consolidated Statements of Income and Comprehensive Income (Loss). The second loss development table within each underwriting division section presents cumulative net losses and loss adjustment expenses that have been paid to date. The difference between cumulative net losses and loss adjustment expenses in the first table and cumulative net losses and loss adjustment expenses paid to date represent the Company’s net reserves for unpaid losses and loss adjustment expenses. Note 6 c) reconciles net reserves for unpaid losses and loss adjustment expenses included in these loss development tables to reserves for losses and loss adjustment expenses reported in the Consolidated Balance Sheet.

Casualty


	Net Losses and Loss Adjustment Expenses Incurred
	For the Years Ended December 31,						As of December 31, 2023
Accident Year	2021 (Unaudited)		2022 (Unaudited)		2023		IBNR		Cumulative Number of Reported Claims
	($ in thousands)
2021	$	14,248	$	13,640	$	16,003	$	13,556	23
2022			55,606		58,427		51,426		111
2023					93,028		91,370		124
Total incurred					$	167,458


	Cumulative Net Paid Claims and Claims Adjustment Expenses
	For the Years Ended December 31,
Accident Year	2021 (Unaudited)		2022 (Unaudited)		2023
	($ in thousands)
2021	$	16	$	220	$	352
2022			256		6,072
2023					326
Total paid					6,750

Net reserves for unpaid losses and loss adjustment expenses					$	160,708


	Average Annual Percentage Payout of Net Losses and Loss Adjustment Expenses Incurred by Age (Unaudited)
Years	1	2	3
Casualty	0.3%	5.6%	0.8%

Professional Liability


	Net Losses and Loss Adjustment Expenses Incurred
	For the Years Ended December 31,						As of December 31, 2023
Accident Year	2021 (Unaudited)		2022 (Unaudited)		2023		IBNR		Cumulative Number of Reported Claims
	($ in thousands)
2021	$	10,152	$	15,484	$	13,368	$	12,626	88
2022			39,442		37,129		26,013		199
2023					43,765		38,232		999
Total incurred					$	94,262


	Cumulative Net Paid Claims and Claims Adjustment Expenses
	For the Years Ended December 31,
Accident Year	2021 (Unaudited)		2022 (Unaudited)		2023
	($ in thousands)
2021	$	213	$	518	$	643
2022			419		6,846
2023					1,034
Total paid					8,523

Net reserves for unpaid losses and loss adjustment expenses					$	85,739


	Average Annual Percentage Payout of Net Losses and Loss Adjustment Expenses Incurred by Age (Unaudited)
Years	1	2	3
Professional Liability	1.7%	9.8%	0.9%

Healthcare


	Net Losses and Loss Adjustment Expenses Incurred
	For the Years Ended December 31,						As of December 31, 2023
Accident Year	2021 (Unaudited)		2022 (Unaudited)		2023		IBNR		Cumulative Number of Reported Claims
	($ in thousands)
2021	$	10,117	$	3,088	$	2,841	$	1,986	23
2022			19,019		18,511		17,078		163
2023					29,489		24,561		318
Total incurred					$	50,841


	Cumulative Net Paid Claims and Claims Adjustment Expenses
	For the Years Ended December 31,
Accident Year	2021 (Unaudited)		2022 (Unaudited)		2023
	($ in thousands)
2021	$	282	$	841	$	854
2022			355		1,067
2023					454
Total paid					2,375

Net reserves for unpaid losses and loss adjustment expenses					$	48,466


	Average Annual Percentage Payout of Net Losses and Loss Adjustment Expenses Incurred by Age (Unaudited)
Years	1	2	3
Healthcare	4.5%	11.8%	0.5%

c)Reconciliation of Net Incurred and Paid Claims Development to Consolidated Balance Sheet

The following table reconciles total reserves for losses and loss adjustment expenses, net of reinsurance, included in the loss development tables to reserves for losses and loss adjustment expenses reported in the Consolidated Balance Sheet at December 31, 2023 and 2022:


	December 31, 2023
Line of Business	Net Reserves for Unpaid Losses and Loss Expenses		Reinsurance Recoverable on Unpaid Losses		Gross Reserves for Losses and Loss Expenses
	($ in thousands)
Casualty	$	160,708	$	63,710	$	224,418
Professional Liability	85,739		47,197		132,936
Healthcare	48,466		25,366		73,832
Total	$	294,913	$	136,273	$	431,186


	December 31, 2022
Line of Business	Net Reserves for Unpaid Losses and Loss Expenses		Reinsurance Recoverable on Unpaid Losses		Gross Reserves for Losses and Loss Expenses
	($ in thousands)
Casualty	$	68,770	$	26,504	$	95,274
Professional Liability	53,989		26,208		80,197
Healthcare	20,911		10,669		31,580
Total	$	143,670	$	63,381	$	207,051