Insurance Reserves and Policyholder Funds

12 Months Ended

Dec. 31, 2021

Insurance Reserves and Policyholder Funds [Abstract]

Insurance Reserves and Policyholder Funds

Note 5. Insurance Reserves and Policyholder Funds

The following table presents the Company’s reserves for life, accident and health, and property and casualty losses, claims and loss adjustment expenses at December 31, 2021 and 2020.

					Amount of Insurance In Force, Net
	2021		2020		2021		2020
Future policy benefits
Life insurance policies:
Ordinary life and annuities	$	51,947	$	54,442	$	194,210	$	199,827
Group life		1,094		91		212,783		83,533
		53,041		54,533	$	406,993	$	283,360
Accident and health insurance policies		34,307		36,339
		87,348		90,872
Unearned premiums		27,469		27,131
Losses, claims and loss adjustment expenses		85,620		79,147
Other policy liabilities		1,360		1,526
Total insurance reserves and policyholder funds	$	201,797	$	198,676

Annualized premiums for accident and health insurance policies were $101,315 and $109,430 at December 31, 2021 and 2020, respectively.

Future Policy Benefits

Liabilities for life insurance future policy benefits are based upon assumed future investment yields, mortality rates, and lapse rates after giving effect to possible risks of unexpected claim experience. The assumed mortality and lapse rates are based upon the Company’s experience modified as necessary to reflect anticipated trends and are generally established at contract inception.  The interest rates assumed for life, accident and health future policy benefits are generally: (i) 2.5% to 5.5% for issues prior to 1977, (ii) 5.5% to 7.0% for 1977 through 1979 issues, (iii) 9.0% for 1980 through 1987 issues, (iv) 5.0% to 7.0% for 1988 through 2009 issues, (v) 4.0% for 2010 through 2012 issues, (vi) 3.5% to 4.0% for 2013 through 2020 issues, and (vii) 3.0% for 2021 issues.

Loss and Claim Reserves

Loss and claim reserves represent estimates of projected ultimate losses and are based upon: (a) management’s estimate of ultimate liability and claims adjusters’ evaluations for unpaid claims reported prior to the close of the accounting period, (b) estimates of incurred but not reported (“IBNR”) claims based on past experience, and (c) estimates of loss adjustment expenses. The estimated liability is periodically reviewed by management and updated, with changes to the estimated liability recorded in the statement of operations in the year in which such changes are known.

Activity in the liability for unpaid loss and claim reserves is summarized as follows:

	2021			2020
Balance at January 1	$	79,147		$	81,448
Less: Reinsurance recoverable on unpaid losses		(17,600	)		(18,339	)
Net balance at January 1		61,547			63,109
Incurred related to:
Current year		134,284			122,626
Prior years		(3,415	)(1)		(3,480	)(2)
Total incurred		130,869			119,146
Paid related to:
Current year		89,838			84,518
Prior years		34,648			36,190
Total paid		124,486			120,708
Net balance at December 31		67,930			61,547
Plus: Reinsurance recoverable on unpaid losses		17,690			17,600
Balance at December 31	$	85,620		$	79,147

(1) Prior years’ development was primarily the result of better than expected development on prior years loss and claim reserves for certain lines of business in American Southern, somewhat offset by unfavorable development on prior years’ loss and claim reserves for the Medicare Supplement line of business in Bankers Fidelity.

(2) Prior years’ development was primarily the result of favorable development in the loss and claim reserves for the Medicare supplement line of business in Bankers Fidelity.  Rate increases on existing business and the resultant improvement in rate adequacy was more favorable than expected.  Additionally, the Company experienced favorable development in the surety line of business in American Southern due to a reduction in exposure coupled with recoveries on certain prior year losses.

Following is a reconciliation of total incurred losses to total insurance benefits and losses incurred:

	2021			2020
Total incurred losses	$	130,869		$	119,146
Cash surrender value and matured endowments		2,179			1,198
Benefit reserve changes		(1,354	)		(468)
Total insurance benefits and losses incurred	$	131,694		$	119,876

Liability for Unpaid Losses, Claims and Loss Adjustment Expenses

The following is information, by significant product lines, about incurred and paid claims development as of December 31, 2021, net of reinsurance, as well as the cumulative number of reported claims and the total of IBNR reserves plus expected development on reported claims included within the net incurred claims amounts. The information presented for the years ended December 31, 2015 and prior is presented as supplementary information and is unaudited.

Medicare Supplement

	For the Years Ended December 31,																				As of December 31, 2021
	Incurred Losses, Claims and Allocated Loss Adjustment Expenses, Net of Reinsurance																				IBNR Reserves		Cumulative Number of Reported Claims
Accident Year	2012		2013		2014		2015		2016		2017		2018		2019		2020		2021
2012	$	50,021	$	50,996	$	51,021	$	50,998	$	50,989	$	50,987	$	50,985	$	50,984	$	50,984	$	50,984	$	—		867,053
2013				56,974		56,970		57,034		57,023		57,021		57,016		57,015		57,014		57,014		—		957,374
2014						57,179		56,938		56,981		56,981		56,976		56,977		56,976		56,976		—		939,488
2015								55,482		54,939		54,993		54,990		54,984		54,985		54,985		—		898,393
2016										58,849		59,851		63,226		63,225		63,221		63,221		—		1,036,917
2017												67,960		69,655		69,643		69,635		69,633		—		1,512,362
2018														79,140		80,404		80,361		80,357		2		2,051,656
2019																88,765		87,028		86,988		10		2,244,326
2020																		75,857		75,715		188		1,848,987
2021																				65,267		15,070		1,560,365
																			$	661,140

	Cumulative Paid Losses, Claims and Allocated Loss Adjustment Expenses, Net of Reinsurance
Accident Year	2012		2013		2014		2015		2016		2017		2018		2019		2020		2021
2012	$	42,267	$	50,996	$	51,021	$	50,998	$	50,989	$	50,987	$	50,985	$	50,984	$	50,984	$	50,984
2013				47,770		56,970		57,034		57,023		57,021		57,016		57,015		57,014		57,015
2014						48,024		56,938		56,981		56,981		56,976		56,977		56,976		56,976
2015								45,430		54,876		54,993		54,990		54,984		54,985		54,985
2016										49,165		59,747		63,226		63,225		63,221		63,221
2017												57,696		69,517		69,643		69,635		69,633
2018														66,565		80,222		80,361		80,355
2019																72,333		86,856		86,978
2020																		63,129		75,527
2021																				50,197
																			$	645,871
Liabilities for losses, claims and loss adjustment expenses, net of reinsurance																			$	15,269

The cumulative number of reported claims for the Medicare supplement line of business is the number of distinct claims incurred and submitted to Medicare for payment in the given year. Multiple payments on the same claim are not counted in the frequency information. Estimated ultimate claims incurred, using claims data reported during each month of any given year, are calculated using the chain ladder method modified to use seasonality and trend-adjusted expected claims for the most recent four-month period prior to the statement date. Additional adjustments to the estimated ultimate claims incurred are then applied to account for seasonal changes in claim experience and in the rate of claim processing. The IBNR liability is calculated as estimated ultimate claims less paid claims and claims in course of settlement. Thirty-six months of loss data are used to develop the estimated ultimate incurred claims. Similar approaches are used for other less significant health products, subject to modifications to account for unique aspects of the products.

Automobile Liability

	For the Years Ended December 31,																				As of December 31, 2021
	Incurred Losses, Claims and Allocated Loss Adjustment Expenses, Net of Reinsurance																				IBNR Reserves		Cumulative Number of Reported Claims
Accident Year	2012		2013		2014		2015		2016		2017		2018		2019		2020		2021
2012	$	12,980	$	15,007	$	14,108	$	13,707	$	13,313	$	13,343	$	13,357	$	13,373	$	13,373	$	13,366	$	—		2,349
2013				18,664		20,702		21,096		21,823		21,352		21,020		20,972		20,972		20,970		—		3,270
2014						20,812		21,881		22,041		22,353		21,682		22,080		22,100		22,125		56		3,545
2015								18,521		19,857		20,017		20,007		20,086		20,680		20,849		21		3,530
2016										20,549		21,275		21,846		22,388		22,245		22,310		84		3,852
2017												22,179		24,212		23,766		25,180		26,009		164		3,793
2018														24,284		25,682		27,338		30,013		1,784		3,629
2019																25,241		24,045		25,724		2,113		3,573
2020																		22,416		16,442		2,167		2,438
2021																				25,887		13,147		2,422
																			$	223,695

	Cumulative Paid Losses, Claims and Allocated Loss Adjustment Expenses, Net of Reinsurance
Accident Year	2012		2013		2014		2015		2016		2017		2018		2019		2020		2021
2012	$	4,627	$	8,791	$	11,507	$	12,932	$	13,197	$	13,211	$	13,288	$	13,373	$	13,373	$	13,365
2013				5,144		12,193		16,782		19,407		20,382		20,982		20,972		20,972		20,970
2014						6,822		13,807		17,554		20,177		20,878		21,735		21,813		21,786
2015								6,226		11,878		14,938		17,612		19,557		20,234		20,726
2016										6,796		13,141		16,397		19,613		21,408		21,809
2017												7,401		16,317		20,221		22,778		25,023
2018														6,989		15,647		21,121		24,662
2019																7,305		14,694		19,384
2020																		5,172		9,941
2021																				6,242
																			$	183,908
Liabilities for losses, claims and loss adjustment expenses, net of reinsurance																			$	39,787

Automobile Physical Damage

	For the Years Ended December 31,										As of December 31, 2021
	Incurred Losses, Claims and Allocated Loss Adjustment Expenses, Net of Reinsurance										IBNR Reserves		Cumulative Number of Reported Claims
Accident Year	2017		2018		2019		2020		2021
2017	$	6,257	$	5,933	$	5,857	$	5,860	$	5,860	$	—		1,324
2018				7,805		7,530		7,447		7,430		—		1,455
2019						8,526		8,026		7,914		1		1,486
2020								10,288		10,080		16		1,629
2021										14,296		227		1,748
									$	45,580

	Cumulative Paid Losses, Claims and Allocated Loss Adjustment Expenses, Net of Reinsurance
Accident Year	2017		2018		2019		2020		2021
2017	$	5,215	$	5,914	$	5,856	$	5,860	$	5,860
2018				6,344		7,510		7,446		7,433
2019						6,360		8,005		7,906
2020								8,347		9,952
2021										11,993
									$	43,144
All outstanding liabilities before 2017, net of reinsurance										12
Liabilities for losses, claims and loss adjustment expenses, net of reinsurance									$	2,448

General Liability

	For the Years Ended December 31,																				As of December 31, 2021
	Incurred Losses, Claims and Allocated Loss Adjustment Expenses, Net of Reinsurance																				IBNR Reserves		Cumulative Number of Reported Claims
Accident Year	2012		2013		2014		2015		2016		2017		2018		2019		2020		2021
2012	$	4,055	$	1,305	$	1,269	$	1,270	$	1,214	$	1,333	$	1,344	$	1,377	$	1,388	$	1,349	$	—		162
2013				3,461		728		926		817		865		820		945		904		868		—		198
2014						3,744		501		557		476		406		497		523		519		4		199
2015								4,421		1,037		1,227		1,044		867		855		855		—		146
2016										3,119		1,148		736		608		621		619		—		93
2017												1,490		488		513		738		738		10		83
2018														1,656		333		198		128		—		75
2019																1,916		707		455		101		85
2020																		2,223		670		150		87
2021																				2,567		1,746		59
																			$	8,768

	Cumulative Paid Losses, Claims and Allocated Loss Adjustment Expenses, Net of Reinsurance
Accident Year	2012		2013		2014		2015		2016		2017		2018		2019		2020		2021
2012	$	371	$	707	$	847	$	1,034	$	1,113	$	1,219	$	1,260	$	1,269	$	1,280	$	1,349
2013				104		339		579		811		791		803		805		855		867
2014						171		299		331		369		373		493		498		502
2015								98		259		464		664		863		855		855
2016										116		203		568		608		617		619
2017												75		136		365		556		696
2018														65		90		115		128
2019																41		209		242
2020																		208		385
2021																				364
																			$	6,007
All outstanding liabilities before 2012, net of reinsurance																				519
Liabilities for losses, claims and loss adjustment expenses, net of reinsurance																			$	3,280

Surety

	For the Years Ended December 31,																				As of December 31, 2021
	Incurred Losses, Claims and Allocated Loss Adjustment Expenses, Net of Reinsurance																				IBNR Reserves		Cumulative Number of Reported Claims
Accident Year	2012		2013		2014		2015		2016		2017		2018		2019		2020		2021
2012	$	4,979	$	4,767	$	5,396	$	5,345	$	4,869	$	4,880	$	4,892	$	4,925	$	4,944	$	4,993	$	1		90
2013				3,060		2,007		2,743		2,947		2,866		2,809		2,765		2,757		2,753		—		60
2014						3,214		3,130		2,990		2,760		2,685		2,617		2,818		2,782		37		54
2015								1,902		1,630		1,400		1,359		1,406		1,310		1,307		5		50
2016										3,314		1,812		1,865		1,876		1,865		1,678		—		47
2017												4,677		3,671		3,799		3,629		3,514		12		63
2018														3,528		1,938		1,381		956		3		63
2019																2,130		657		630		17		30
2020																		2,263		574		56		23
2021																				2,936		1,948		27
																			$	22,123

	Cumulative Paid Losses, Claims and Allocated Loss Adjustment Expenses, Net of Reinsurance
Accident Year	2012		2013		2014		2015		2016		2017		2018		2019		2020		2021
2012	$	2,257	$	4,581	$	4,856	$	5,331	$	4,869	$	4,880	$	4,878	$	4,916	$	4,934	$	4,985
2013				323		1,010		1,369		2,763		2,789		2,749		2,765		2,757		2,753
2014						1,331		2,327		2,727		2,739		2,664		2,593		2,562		2,562
2015								641		856		1,127		1,125		1,128		1,271		1,273
2016										1,054		1,732		1,772		1,873		1,862		1,677
2017												1,971		3,255		3,523		3,545		3,442
2018														1,157		1,454		1,361		941
2019																259		395		568
2020																		97		460
2021																				156
																			$	18,817
All outstanding liabilities before 2012, net of reinsurance																				85
Liabilities for losses, claims and loss adjustment expenses, net of reinsurance																			$	3,391

For the property and casualty lines of business, the number of claims presented above equals the number of occurrences by type of claim reported to the Company. The number of claims reported during a given year corresponds to the number of claims records opened during the year. Frequency information is maintained on a cumulative basis by accident year by line of business. For automobile claims, a claim count is separately maintained for bodily injury, property damage and physical damage claims. The Company has consistently monitored claim frequency on this basis, and believes this provides more meaningful information than using claimant count which can change over the course of settling a claim.

In general, when a claim is reported, claims representatives establish a “case reserve” for the estimated amount of the ultimate payment based on the known information of the claim at that time. Claims managers review and monitor all property and casualty claims in excess of $25,000. As new information becomes available or payments are made on a claim, the case reserve is adjusted to reflect the revised estimate of the ultimate amount to be paid out. Estimates and assumptions pertaining to individual claims are based on complex and subjective judgments and subject to change at any time as new information becomes available.

In addition to case reserves, IBNR reserves are established to provide for claims which have not been reported to the Company as of the reporting date as well as potential adverse development on known case reserves. IBNR reserve estimates are derived through a number of analytical techniques. Actuarial data is analyzed by line of business, coverage and accident year. Qualitative factors are also considered in determining IBNR reserves and include such factors as judicial decisions, general economic trends such as inflation, changes in policy forms, and underwriting changes. Reserves are reviewed quarterly and any indicated adjustments are made.

Because of the inherent uncertainties in establishing both case and IBNR reserves, ultimate loss experience may prove better or worse than indicated by the combined claim reserves. Adjustments to claim reserves are reflected in the period recognized and could increase or decrease earnings for the period.

The following is supplementary information about average historical claims duration as of December 31, 2021.

	Average Annual Percentage Payout of Incurred Claims by Age, Net of Reinsurance (Unaudited)
Reserve Line	1st Year			2nd Year			3rd Year			4th Year			5th Year			6th Year			7th Year			8th Year			9th Year			10th Year
Medicare Supplement		82.4	%		16.8	%		0.1	%		0.0	%		0.0	%		0.0	%		0.0	%		0.0	%		0.0	%		0.0	%
Automobile Liability		28.6	%		30.3	%		17.5	%		12.0	%		6.0	%		2.4	%		0.8	%		0.2	%		0.0	%		-0.1	%
Automobile Physical Damage		84.3	%		16.1	%		-1.0	%		-0.1	%		0.0	%		0.0	%		0.0	%		0.0	%		0.0	%		0.0	%
General Liability		21.8	%		22.3	%		23.1	%		16.3	%		8.0	%		6.3	%		1.1	%		2.4	%		1.1	%		5.1	%
Surety		45.7	%		35.2	%		10.2	%		3.3	%		-2.4	%		-0.8	%		-0.1	%		0.2	%		0.1	%		1.0	%

The reconciliation of the net incurred and paid claims development tables to the liability for losses, claims and loss adjustment expenses is as follows:

	December 31, 2021
Net outstanding liabilities
Medicare Supplement	$	15,269
Automobile Liability		39,787
Automobile Physical Damage		2,448
General Liability		3,280
Surety		3,391
Other short-duration insurance lines		1,598
Liabilities for unpaid losses, claims and loss adjustment expenses, net of reinsurance		65,773
Reinsurance recoverable on unpaid losses:
Medicare Supplement		10,753
Automobile Liability		4,506
Automobile Physical Damage		274
General Liability		2,157
Total reinsurance recoverable on unpaid losses		17,690
Unallocated claims adjustment expenses		2,157
Total gross liability for unpaid losses, claims and loss adjustment expenses	$	85,620