Reserves for Unpaid Losses and Loss Adjustment Expenses

6 Months Ended

Jun. 30, 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):

	June 30,		June 30,
	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		112,683		144,924
Prior years		63,274		1,044
Total incurred		175,957		145,968
Paid related to:
Current year		32,041		37,041
Prior years		101,888		91,689
Total paid		133,929		128,730
Net balance at June 30		470,794		449,806
Plus reinsurance recoverable		377,413		360,943
Balance at June 30	$	848,207	$	810,749

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

	June 30,
	2022		2021
Specialty Commercial Segment	$	59,658	$	(772)
Standard Commercial Segment		208		(1,343)
Personal Segment		3,408		3,159
Total unfavorable (favorable) net prior year development	$	63,274	$	1,044

The following describes the primary factors behind each segment’s prior accident year reserve development for the six months ended June 30, 2022 and 2021:

Six months ended June 30, 2022:

● Specialty Commercial Segment. Our Commercial Auto business unit experienced net unfavorable development in the 2020 and prior accident years primarily in the exited contract binding commercial automobile liability line of business due in part to exceeding the aggregate limit of the loss portfolio transfer agreement covering accident years 2019 and prior entered into during 2020, 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 unfavorable development in the general liability line of business  in all accident years,  partially offset by net favorable development in the property and commercial auto liability lines of business primarily in

accident years 2021 and 2020. The run-off from our former Workers Compensation operating unit experienced net unfavorable 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.

Six months ended June 30, 2021:

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

● 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 years 2020, 2016 and 2015, partially offset by net unfavorable development in the general liability lines of business in accident years 2019, 2018, 2017 and 2014 and prior accident years. 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 2020 and 2019 accident years.