Reserves for Unpaid Losses and Loss Adjustment Expenses

6 Months Ended

Jun. 30, 2023

Reserves for 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):

	2023		2022
Balance at January 1	$	880,869	$	816,681
Less reinsurance recoverable		420,693		387,915
Net balance at January 1		460,176		428,766
Incurred related to:
Current year - continuing operations		54,916		56,835
Prior years - continuing operations		11,600		55,193
Continuing operations		66,516		112,028
Current year - discontinued operations		2,733		55,848
Prior years - discontinued operations		(7,720)		8,081
Discontinued operations		(4,987)		63,929
Total incurred from continuing and discontinued operations		61,529		175,957
Paid related to:
Current year - continuing operations		21,431		24,139
Prior years - continuing operations		80,988		59,362
Continuing operations		102,419		83,501
Current year - discontinued operations		2,367		8,629
Prior years - discontinued operations		52,030		41,799
Discontinued operations		54,397		50,428
Total paid from continuing and discontinued operations		156,816		133,929
Net balance at June 30		364,889		470,794
Plus reinsurance recoverable		419,957		377,413
Balance at June 30	$	784,846	$	848,207

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

	Six Months Ended June 30,
	2023		2022
Commercial Lines Segment	$	769	$	(51)
Personal Lines Segment		2,992		3,408
Runoff Segment		7,839		51,836
Corporate		—		—
Total unfavorable (favorable) net prior year development	$	11,600	$	55,193

The following describes the primary factors behind each segment’s net prior accident year reserve development for the six months ended June 30, 2023 and 2022:

Six months ended June 30, 2023:

● Commercial Lines Segment. Our Commercial Accounts business unit overall experienced net unfavorable development driven by accident year 2022 events stemming from both CAT and non-CAT related activity offset, in part, by our Aviation business unit’s net favorable development which also primarily originated from accident year 2022 activity. The Aviation unit’s net favorable development

exclusively centered around non-CAT events. Workers Compensation operating unit was relatively flat experiencing $0.1 million of net unfavorable development.

● Personal Segment. Net unfavorable development in our Specialty Personal Lines business unit was driven predominately by unfavorable development attributable to the 2021 and 2022 accident years due in part to rising inflationary trends, specifically loss costs, that the industry began experiencing in 2021.

● Runoff Segment. Net unfavorable development in our Runoff lines of business was solely attributable to the binding commercial automobile liability line of business with multiple accident years experiencing unfavorable development, primarily concentrated in the 2020 and prior accident years.

Six months ended June 30, 2022:

● Commercial Lines Segment. Our Commercial Accounts business unit overall experienced net favorable development primarily from accident year 2021 events related to our Aviation business operations. The Aviation business unit’s net favorable development was partially offset by our Commercial accounts units unfavorable net development also stemming from accident year 2021 events.

● Personal Segment. Net unfavorable development in our Specialty Personal Lines business unit was driven predominately by unfavorable development attributable to the 2021 and 2022 accident years due in part to rising inflationary trends, specifically loss costs, that the industry began experiencing in 2021.

● Runoff Segment. Net unfavorable development in our Runoff lines of business was attributable to the binding commercial automobile liability line of business with multiple accident years experiencing unfavorable net development, primarily concentrated in the 2020 and prior accident years, and our senior care facilities liability business, with unfavorable net development primarily concentrated in accident years 2019 through 2021.