Historical Loss And LAE Development

9 Months Ended

Sep. 30, 2022

Historical Loss And L A E Development Disclosure [Abstract]

Historical Loss And LAE Development

3. HISTORICAL LOSS AND LAE DEVELOPMENT

The following table is a reconciliation of our unpaid losses and settlement expenses (LAE) for the first nine months of 2022 and 2021:

	For the Nine Months
	Ended September 30,
(in thousands)	2022		2021
Unpaid losses and LAE at beginning of year
Gross	$	2,043,555	$	1,750,049
Ceded		(608,086)		(443,729)
Net	$	1,435,469	$	1,306,320
Increase (decrease) in incurred losses and LAE
Current accident year	$	491,559	$	452,542
Prior accident years		(103,032)		(96,968)
Total incurred	$	388,527	$	355,574
Loss and LAE payments for claims incurred
Current accident year	$	(52,435)	$	(58,411)
Prior accident years		(219,682)		(172,120)
Total paid	$	(272,117)	$	(230,531)
Net unpaid losses and LAE at September 30,	$	1,551,879	$	1,431,363
Unpaid losses and LAE at September 30,
Gross	$	2,322,737	$	2,033,517
Ceded		(770,858)		(602,154)
Net	$	1,551,879	$	1,431,363

For the first nine months of 2022, incurred losses and LAE included $103.0 million of favorable development on prior years’ loss reserves. General liability, professional services, transportation, executive products, commercial excess, marine and surety were drivers of the favorable development. No products experienced significant adverse development.

For the first nine months of 2021, incurred losses and LAE included $97.0 million of favorable development on prior years’ loss reserves. General liability, transportation, professional services, small commercial, commercial excess, personal umbrella and marine were drivers of the favorable development. No products experienced significant adverse development.

Actuarial models base future loss emergence on historical experience, with adjustments for current trends, and the appropriateness of these assumptions involved more uncertainty as of September 30, 2022. We expect the timing of loss emergence and ultimate loss ratios for certain coverages we underwrite will be affected as a result of COVID-19 and the related economic impact. The industry is experiencing new issues, including the postponement of civil court cases, the extension of various statutes of limitations and changes in settlement trends. Our recorded reserves include consideration of these factors, but the duration and degree to which these issues persist, along with potential legislative, regulatory or judicial actions, could result in loss reserve deficiencies and reduce earnings in future periods.