Reserves for Unpaid Losses and Loss Adjustment Expenses

9 Months Ended

Sep. 30, 2023

Reserves for Losses and Loss Adjustment Expenses [Abstract]

Reserves for Unpaid Losses and Loss Adjustment Expenses

8. 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		90,810		85,335
Prior years - continuing operations		15,179		75,833
Continuing operations		105,989		161,168
Current year - discontinued operations		2,254		82,829
Prior years - discontinued operations		(4,057)		12,345
Discontinued operations		(1,803)		95,174
Total incurred from continuing and discontinued operations		104,186		256,342
Paid related to:
Current year - continuing operations		35,916		41,816
Prior years - continuing operations		112,080		79,948
Continuing operations		147,996		121,764
Current year - discontinued operations		4,669		13,738
Prior years - discontinued operations		73,009		65,106
Discontinued operations		77,678		78,844
Total paid from continuing and discontinued operations		225,674		200,608
Net balance at September 30		338,688		484,500
Plus reinsurance recoverable		381,299		374,388
Balance at September 30	$	719,987	$	858,888

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

	Nine Months Ended September 30,
	2023		2022
Commercial Lines Segment	$	1,594	$	250
Personal Lines Segment		3,982		5,218
Runoff Segment		9,603		70,365
Corporate		—		—
Total unfavorable net prior year development	$	15,179	$	75,833

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

Nine months ended September 30, 2023:

● Commercial Lines Segment. Our Commercial Accounts business unit overall experienced net unfavorable development driven by accident year 2022 events stemming primarily from CAT events but with non-CAT related activity also experiencing unfavorable development 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.

Nine months ended September 30, 2022:

● Commercial Lines 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, 2020 and 2019. Our Aviation business unit experienced net favorable development in the 2021 accident year, partially offset by net unfavorable development in the 2020 and 2019 accident years. 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.

● Runoff Segment. Our binding commercial automobile liability line of business experienced net unfavorable development in the 2020 and prior accident years due in part to exceeding the aggregate limit of the loss portfolio transfer agreement covering accident years 2019 and prior entered into during 2020. We experienced net unfavorable development in our senior care facilities and satellite launch business, as well as commercial automobile liability program.