Insurance Reserves and Policyholder Funds

12 Months Ended

Dec. 31, 2022

Insurance Reserves and Policyholder Funds [Abstract]

Insurance Reserves and Policyholder Funds

Note 6. 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, 2022 and 2021.

					Amount of Insurance In Force, Net
	2022		2021		2022		2021
Future policy benefits
Life insurance policies:
Ordinary life and annuities	$	50,660	$	51,947	$	186,863	$	194,210
Group life		2,533		1,094		474,150		212,783
		53,193		53,041	$	661,013	$	406,993
Accident and health insurance policies		32,371		34,307
		85,564		87,348
Unearned premiums		28,348		27,469
Losses, claims and loss adjustment expenses		87,484		85,620
Other policy liabilities		1,255		1,360
Total insurance reserves and policyholder funds	$	202,651	$	201,797

Annualized premiums for accident and health insurance policies were $89,471 and $101,315 at December 31, 2022 and 2021, respectively.

Future Policy Benefits

Liabilities for future benefits on life and accident and health policies are based upon assumed future investment yields, mortality rates, morbidity rates, and lapse rates after giving effect to possible risks of unexpected adverse claim experience. The assumed mortality, morbidity, and lapse rates are based upon the Company’s experience and are modified as necessary to reflect anticipated trends and are generally established at contract inception. The assumptions include a margin for adverse experience development.  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 and 2022 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:

	2022			2021
Balance at January 1	$	85,620		$	79,147
Less: Reinsurance recoverable on unpaid losses		(17,690	)		(17,600	)
Net balance at January 1		67,930			61,547
Incurred related to:
Current year		125,754			134,284
Prior years		(4,228	)(1)		(3,415	)(2)
Total incurred		121,526			130,869
Paid related to:
Current year		82,002			89,838
Prior years		37,617			34,648
Total paid		119,619			124,486
Net balance at December 31		69,837			67,930
Plus: Reinsurance recoverable on unpaid losses		17,647			17,690
Balance at December 31	$	87,484		$	85,620

(1) Prior years’ development was primarily the result of better than expected development on prior year’s loss and claim reserves for the Medicare Supplement line of business in Bankers Fidelity, as well as the surety line of business in American Southern.

(2) Prior years’ development was primarily the result of better than expected development on prior year’s 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.

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

	2022		2021
Total incurred losses	$	121,526	$	130,869
Cash surrender value and matured endowments		1,598		2,179
Benefit reserve changes		332		(1,354	)
Total insurance benefits and losses incurred	$	123,456	$	131,694

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, 2022, 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, 2022
	Incurred Losses, Claims and Allocated Loss Adjustment Expenses, Net of Reinsurance																				IBNR Reserves		Cumulative Number of Reported Claims
Accident Year	2013		2014		2015		2016		2017		2018		2019		2020		2021		2022
2013	$	56,974	$	56,970	$	57,034	$	57,023	$	57,021	$	57,016	$	57,015	$	57,014	$	57,014	$	57,014	$	—		867
2014				57,179		56,938		56,981		56,981		56,976		56,977		56,976		56,976		56,976		—		957
2015						55,482		54,939		54,993		54,990		54,984		54,985		54,985		54,985		—		939
2016								58,849		59,851		63,226		63,225		63,221		63,221		63,221		—		898
2017										67,960		69,655		69,643		69,635		69,633		69,633		—		1,037
2018												79,140		80,404		80,361		80,357		80,351		—		1,512
2019														88,765		87,028		86,988		86,986		1		2,052
2020																75,857		75,715		75,730		20		2,245
2021																		65,267		61,579		228		1,852
2022																				58,777		12,666		1,768
																			$	665,252

	Cumulative Paid Losses, Claims and Allocated Loss Adjustment Expenses, Net of Reinsurance
Accident Year	2013		2014		2015		2016		2017		2018		2019		2020		2021		2022
2013	$	47,770	$	56,970	$	57,034	$	57,023	$	57,021	$	57,016	$	57,015	$	57,014	$	57,015	$	57,014
2014				48,024		56,938		56,981		56,981		56,976		56,977		56,976		56,976		56,976
2015						45,430		54,876		54,993		54,990		54,984		54,985		54,985		54,985
2016								49,165		59,747		63,226		63,225		63,221		63,221		63,221
2017										57,696		69,517		69,643		69,635		69,633		69,633
2018												66,565		80,222		80,361		80,355		80,351
2019														72,333		86,856		86,978		86,985
2020																63,129		75,527		75,710
2021																		50,197		61,350
2022																				46,111
																			$	652,336
Liabilities for losses, claims and loss adjustment expenses, net of reinsurance																			$	12,916

The cumulative number of reported claims for the Medicare Supplement line of business is the number of distinct claims incurred and submitted to the Centers for Medicare and Medicaid Services 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 reflect 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 changes in the rate of claim processing. The IBNR is calculated as the estimated ultimate claims less the total of paid claims through the valuation date and claims in the course of settlement as of the valuation date. Thirty-six months of loss data are used to develop the estimated ultimate incurred claims. For other accident and health products that have very small claim volumes, similar approaches are used and modified to reflect the unique aspects of the products.

Automobile Liability

	For the Years Ended December 31,																				As of December 31, 2022
	Incurred Losses, Claims and Allocated Loss Adjustment Expenses, Net of Reinsurance																				IBNR Reserves		Cumulative Number of Reported Claims
Accident Year	2013		2014		2015		2016		2017		2018		2019		2020		2021		2022
2013	$	18,664	$	20,702	$	21,096	$	21,823	$	21,352	$	21,020	$	20,972	$	20,972	$	20,970	$	20,958	$	—		3,278
2014				20,812		21,881		22,041		22,353		21,682		22,080		22,100		22,125		22,165		35		3,558
2015						18,521		19,857		20,017		20,007		20,086		20,680		20,849		20,955		9		3,537
2016								20,549		21,275		21,846		22,388		22,245		22,310		22,448		—		3,862
2017										22,179		24,212		23,766		25,180		26,009		26,153		74		3,813
2018												24,284		25,682		27,338		30,013		30,464		466		3,650
2019														25,241		24,045		25,724		28,042		1,725		3,599
2020																22,416		16,442		20,137		1,815		2,494
2021																		25,887		21,172		2,415		2,707
2022																				28,860		14,911		2,532
																			$	241,354

	Cumulative Paid Losses, Claims and Allocated Loss Adjustment Expenses, Net of Reinsurance
Accident Year	2013		2014		2015		2016		2017		2018		2019		2020		2021		2022
2013	$	5,144	$	12,193	$	16,782	$	19,407	$	20,382	$	20,982	$	20,972	$	20,972	$	20,970	$	20,958
2014				6,822		13,807		17,554		20,177		20,878		21,735		21,813		21,786		21,958
2015						6,226		11,878		14,938		17,612		19,557		20,234		20,726		20,904
2016								6,796		13,141		16,397		19,613		21,408		21,809		22,448
2017										7,401		16,317		20,221		22,778		25,023		25,712
2018												6,989		15,647		21,121		24,662		27,671
2019														7,305		14,694		19,384		22,868
2020																5,172		9,941		14,693
2021																		6,242		13,918
2022																				7,023
																			$	198,153
Liabilities for losses, claims and loss adjustment expenses, net of reinsurance																			$	43,201

Automobile Physical Damage

	For the Years Ended December 31,										As of December 31, 2022
	Incurred Losses, Claims and Allocated Loss Adjustment Expenses, Net of Reinsurance										IBNR Reserves		Cumulative Number of Reported Claims
Accident Year	2018		2019		2020		2021		2022
2018	$	7,805	$	7,530	$	7,447	$	7,430	$	7,461	$	—		1,461
2019				8,526		8,026		7,914		7,881		1		1,493
2020						10,288		10,080		10,047		3		1,634
2021								14,296		13,385		10		1,880
2022										10,962		232		1,617
									$	49,736

	Cumulative Paid Losses, Claims and Allocated Loss Adjustment Expenses, Net of Reinsurance
Accident Year	2018		2019		2020		2021		2022
2018	$	6,344	$	7,510	$	7,446	$	7,433	$	7,461
2019				6,360		8,005		7,906		7,867
2020						8,347		9,952		10,008
2021								11,993		13,277
2022										8,475
									$	47,088
Liabilities for losses, claims and loss adjustment expenses, net of reinsurance									$	2,648

General Liability

	For the Years Ended December 31,																				As of December 31, 2022
	Incurred Losses, Claims and Allocated Loss Adjustment Expenses, Net of Reinsurance																				IBNR Reserves		Cumulative Number of Reported Claims
Accident Year	2013		2014		2015		2016		2017		2018		2019		2020		2021		2022
2013	$	3,461	$	728	$	926	$	817	$	865	$	820	$	945	$	904	$	868	$	867	$	—		199
2014				3,744		501		557		476		406		497		523		519		511		3		203
2015						4,421		1,037		1,227		1,044		867		855		855		870		4		148
2016								3,119		1,148		736		608		621		619		620		—		94
2017										1,490		488		513		738		738		839		23		84
2018												1,656		333		198		128		183		—		76
2019														1,916		707		455		515		60		89
2020																2,223		670		657		93		89
2021																		2,567		1,329		327		94
2022																				2,770		1,780		77
																			$	9,161

	Cumulative Paid Losses, Claims and Allocated Loss Adjustment Expenses, Net of Reinsurance
Accident Year	2013		2014		2015		2016		2017		2018		2019		2020		2021		2022
2013	$	104	$	339	$	579	$	811	$	791	$	803	$	805	$	855	$	867	$	867
2014				171		299		331		369		373		493		498		502		502
2015						98		259		464		664		863		855		855		854
2016								116		203		568		608		617		619		620
2017										75		136		365		556		696		741
2018												65		90		115		128		183
2019														41		209		242		354
2020																208		385		462
2021																		364		646
2022																				402
																			$	5,631
All outstanding liabilities before 2013, net of reinsurance																				296
Liabilities for losses, claims and loss adjustment expenses, net of reinsurance																			$	3,826

Surety

	For the Years Ended December 31,																				As of December 31, 2022
	Incurred Losses, Claims and Allocated Loss Adjustment Expenses, Net of Reinsurance																				IBNR Reserves		Cumulative Number of Reported Claims
Accident Year	2013		2014		2015		2016		2017		2018		2019		2020		2021		2022
2013	$	3,060	$	2,007	$	2,743	$	2,947	$	2,866	$	2,809	$	2,765	$	2,757	$	2,753	$	2,751	$	—		60
2014				3,214		3,130		2,990		2,760		2,685		2,617		2,818		2,782		2,852		48		54
2015						1,902		1,630		1,400		1,359		1,406		1,310		1,307		1,280		—		50
2016								3,314		1,812		1,865		1,876		1,865		1,678		1,670		—		47
2017										4,677		3,671		3,799		3,629		3,514		3,440		6		63
2018												3,528		1,938		1,381		956		767		1		64
2019														2,130		657		630		513		11		31
2020																2,263		574		465		—		23
2021																		2,936		1,455		318		35
2022																				3,202		1,476		36
																			$	18,395

	Cumulative Paid Losses, Claims and Allocated Loss Adjustment Expenses, Net of Reinsurance
Accident Year	2013		2014		2015		2016		2017		2018		2019		2020		2021		2022
2013	$	323	$	1,010	$	1,369	$	2,763	$	2,789	$	2,749	$	2,765	$	2,757	$	2,753	$	2,751
2014				1,331		2,327		2,727		2,739		2,664		2,593		2,562		2,562		2,568
2015						641		856		1,127		1,125		1,128		1,271		1,273		1,279
2016								1,054		1,732		1,772		1,873		1,862		1,677		1,670
2017										1,971		3,255		3,523		3,545		3,442		3,402
2018												1,157		1,454		1,361		941		760
2019														259		395		568		446
2020																97		460		464
2021																		156		803
2022																				970
																			$	15,113
All outstanding liabilities before 2013, net of reinsurance																				31
Liabilities for losses, claims and loss adjustment expenses, net of reinsurance																			$	3,313

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, 2022.

	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	%		16.9	%		0.2	%		0.0	%		0.0	%		0.0	%		0.0	%		0.0	%		0.0	%		0.0	%
Automobile Liability		27.2	%		29.9	%		17.6	%		12.2	%		7.3	%		2.9	%		1.4	%		0.2	%		0.4	%		-0.1	%
Automobile Physical Damage		83.1	%		15.5	%		-0.5	%		-0.3	%		0.4	%		0.0	%		0.0	%		0.0	%		0.0	%		0.0	%
General Liability		20.1	%		20.7	%		21.9	%		16.5	%		11.6	%		5.9	%		0.3	%		2.1	%		0.7	%		0.0	%
Surety		49.2	%		38.0	%		10.1	%		-3.0	%		-4.8	%		-1.0	%		-0.2	%		0.1	%		0.0	%		-0.1	%

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, 2022
Net outstanding liabilities
Medicare Supplement	$	12,916
Automobile Liability		43,201
Automobile Physical Damage		2,648
General Liability		3,826
Surety		3,313
Other short-duration insurance lines		1,212
Liabilities for unpaid losses, claims and loss adjustment expenses, net of reinsurance		67,116
Reinsurance recoverable on unpaid losses:
Medicare Supplement		9,382
Automobile Liability		5,086
Automobile Physical Damage		334
General Liability		2,451
Other short-duration insurance lines		394
Total reinsurance recoverable on unpaid losses		17,647
Unallocated claims adjustment expenses		2,721
Total gross liability for unpaid losses, claims and loss adjustment expenses	$	87,484