Reserves for Unpaid Losses and Loss Adjustment Expenses

3 Months Ended

Mar. 31, 2022

Reserves for Unpaid Losses and Loss Adjustment Expenses [Abstract]

Reserves for Unpaid Losses and Loss Adjustment Expenses

6. 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,
	2022		2021
Balance at January 1	$	816,681	$	789,768
Less reinsurance recoverable		387,915		357,200
Net balance at January 1		428,766		432,568
Incurred related to:
Current year		56,333		71,565
Prior years		7,691		(2,086)
Total incurred		64,024		69,479
Paid related to:
Current year		12,757		7,067
Prior years		62,213		52,360
Total paid		74,970		59,427
Net balance at March 31		417,820		442,620
Plus reinsurance recoverable		380,518		369,652
Balance at March 31	$	798,338	$	812,272

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

	March 31,
	2022		2021
Specialty Commercial Segment	$	6,380	$	(1,899)
Standard Commercial Segment		(262)		(1,361)
Personal Segment		1,573		1,174
Total unfavorable (favorable) net prior year development	$	7,691	$	(2,086)

The following describes the primary factors behind each segment’s prior accident year reserve development for the three months ended March 31, 2022 and 2021:

Three months ended March 31, 2022:

● Specialty Commercial Segment. Our Commercial Auto business unit experienced net unfavorable development in the 2020 and 2019 accident years primarily in the exited contract binding commercial automobile liability line of business, partially offset by net favorable development in both the primary and excess commercial automobile lines of business in the 2021 accident year. Our E&S Property business unit experienced net unfavorable development due to the development of catastrophe-related losses in the 2021 and 2020 accident years. We experienced net unfavorable development in our E&S Casualty and Professional Liability business units. We experienced net favorable development in our and Aerospace & Programs business unit..

● Standard Commercial Segment. Our Commercial Accounts business unit experienced net favorable development in our commercial auto liability and property lines of business in accident years 2021 and 2020, partially offset by net unfavorable development in the general liability lines of business in accident

years 2019 and 2016. The run-off from our former Workers Compensation operating unit experienced net favorable development in the 2015 and prior accident years.

● Personal Segment. Net unfavorable development in our Specialty Personal Lines business unit was driven predominately by unfavorable development attributable to the 2021 and 2020 accident years due in part to rising inflationary trends, specifically loss costs, that the industry began experiencing in 2021.

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 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 driven predominately by unfavorable development attributable to the 2020, 2019 and 2017 accident years.