Reserves for Unpaid Losses and Loss Adjustment Expenses

3 Months Ended

Mar. 31, 2021

Reserves for Unpaid Losses and Loss Adjustment Expenses

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):

	March 31,		March 31,
	2021		2020
Balance at January 1	$	789,768	$	620,355
Less reinsurance recoverable		349,585		272,604
Net balance at January 1		440,183		347,751
Incurred related to:
Current year		72,989		84,846
Prior years		(2,086)		8,559
Total incurred		70,903		93,405
Paid related to:
Current year		7,067		14,525
Prior years		52,360		80,888
Total paid		59,427		95,413
Net balance at March 31		451,659		345,743
Plus reinsurance recoverable		360,613		307,747
Balance at March 31	$	812,272	$	653,490

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

	March 31,
	2021		2020
Specialty Commercial Segment	$	(1,899)	$	3,153
Standard Commercial Segment		(1,361)		125
Personal Segment		1,174		5,281
Corporate		—		—
Total (favorable) unfavorable net prior year development	$	(2,086)	$	8,559

The following describes the primary factors behind each segment’s prior accident year reserve development for the three months ended March 31, 2021 and 2020:

Three months ended March 31, 2021:

● Specialty Commercial Segment. Our Commercial Auto business unit experienced net favorable development in the 2020 and 2019 accident years both in the primary and excess commercial automobile liability lines of business, partially offset by net unfavorable development in the excess commercial automobile lines of business in the 2018, 2017 and 2016 accident years. Our E&S Casualty business unit experienced net unfavorable development primarily in our primary liability line of business in the 2018 and prior accident years, partially offset by net favorable development in the 2019 accident year. We experienced net favorable development in our E&S Property, Professional Liability and Aerospace & Programs business units.

● Standard Commercial Segment. Our Commercial Accounts business unit experienced net favorable development for all lines of business in total, primarily due to net favorable development in our commercial property lines of business in accident year 2020, partially offset by net unfavorable

development in the general liability lines of business in accident years 2020 and 2017. 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 attributable to the 2020 and prior accident years. The net development during the three months ended March 31, 2021 was driven predominately by unfavorable development attributable to the 2020, 2019 and 2017 accident years.

Three months ended March 31, 2020:

● 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 and excess commercial automobile lines of business in the 2019 and 2018 accident years. 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 2017, 2016, 2015 and 2013 and prior accident years, partially offset by net favorable development in the 2019, 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, 2016, 2015 and 2013 and prior accident years, partially offset by net favorable development in the 2019, 2017 and 2014 accident years primarily in the general liability line of business. Our Commercial Accounts business unit experienced net favorable development in the 2015 accident year, partially offset by net unfavorable development in the 2014 accident year in the occupational accident line of business. The run-off from our former Workers Compensation operating unit experienced net favorable development in the 2013 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 for the first quarter of 2020 was driven predominately by unfavorable development attributable to more recent treaty years where we retain a greater portion of the claims.