Reserves for Unpaid Losses and Loss Adjustment Expenses

6 Months Ended

Jun. 30, 2020

Reserves for Unpaid Losses and Loss Adjustment Expenses [Abstract]

Reserves for Unpaid Losses and Loss Adjustment Expenses

7. Reserves for Unpaid Losses and Loss Adjustment Expenses

Year to-date activity in the consolidated reserves for unpaid losses and LAE is summarized as follows (in thousands):

	June 30,		June 30,
	2020		2019
Balance at January 1	$	620,355	$	527,247
Less reinsurance recoverable		272,604		221,716
Net balance at January 1		347,751		305,531
Incurred related to:
Current year		168,930		141,909
Prior years		19,348		1,404
Total incurred		188,278		143,313
Paid related to:
Current year		38,143		38,563
Prior years		143,967		107,899
Total paid		182,110		146,462
Net balance at June 30		353,919		302,382
Plus reinsurance recoverable		317,017		249,161
Balance at June 30	$	670,936	$	551,543

The year to date impact from the unfavorable (favorable) net prior years’ loss development on each reporting segment is presented below:

	June 30,
	2020		2019
Specialty Commercial Segment	$	12,468	$	5,203
Standard Commercial Segment		919		(3,583)
Personal Segment		5,961		(216)
Corporate		—		—
Total unfavorable net prior year development	$	19,348	$	1,404

The following describes the primary factors behind each segment’s prior accident year reserve development for the six months ended June 30, 2020 and 2019:

Six months ended June 30, 2020:

● Specialty Commercial Segment. Our Commercial Auto business unit experienced net unfavorable development in the 2018 and prior accident years both in the primary and excess commercial automobile liability lines of business, partially offset by net favorable development in the excess commercial automobile lines of business in the 2019 accident year. Our E&S Casualty business unit experienced net unfavorable development primarily in our primary liability line of business and our E&S package insurance products in the 2019, 2017, 2016, 2015 and 2013 and prior accident years, partially offset by net favorable development in the 2018 and 2014 accident years. We experienced net favorable development in our E&S Property and Professional Liability business units, partially offset by net unfavorable development in our Aerospace & Programs business unit.

● Standard Commercial Segment. Our Commercial Accounts business unit experienced net unfavorable development primarily in the general liability line of business in the 2018, 2017, 2016, 2015 and 2013

and prior accident years, partially offset by net favorable development in the 2019 and 2014 accident years primarily in the general liability line of business. Our Commercial Accounts business unit experienced net favorable development in the 2016 and 2015 accident years, partially offset by net unfavorable development in the 2017 and 2014 accident years in the occupational accident line of business. The run-off from our former Workers Compensation operating unit experienced net favorable development in the 2014 and prior accident years.

● Personal Segment. Net unfavorable development in our Specialty Personal Lines business unit was mostly attributable to the 2019, 2018, 2017 and 2016 accident years, partially offset by favorable development in the 2015 and 2013 and prior accident years. The net development during the six months ended June 30, 2020 was driven predominately by unfavorable development attributable to more recent treaty years where we retain a greater portion of the claims.

Six months ended June 30, 2019:

● Specialty Commercial Segment. Our Commercial Auto business unit experienced net unfavorable development in the 2017 and prior accident years primarily in the primary commercial automobile liability line of business, partially offset by net favorable development in the primary commercial automobile line of business in the 2018 accident year. Our E&S Casualty business unit experienced net unfavorable development primarily in our E&S package insurance products in the 2017 and prior accident years, partially offset by net favorable development in the 2018 accident year. We experienced net favorable development in our E&S Property and Professional Liability business units, partially offset by net unfavorable development in our Aerospace & Programs business unit.

● Standard Commercial Segment. Our Commercial Accounts business unit experienced net favorable development in the 2018, 2017, 2014 and 2012 and prior accident years primarily in the general liability line of business, partially offset by net unfavorable development primarily in the general liability line of business in the 2016 and 2015 accident years. Our Commercial Accounts business unit experienced net favorable development in the 2017 and 2015 accident years in the occupational accident line of business, partially offset by net unfavorable development in the 2016 accident year. The run-off from our former Workers Compensation operating unit experienced net favorable development in the 2015 and 2012 and prior accident years.

● Personal Segment. Net favorable development in our Specialty Personal Lines business unit was mostly attributable to the 2018, 2017, 2015, 2013 and prior accident years, partially offset by unfavorable development in the 2016 and 2014 accident years.