Loss And Loss Adjustment Expenses

12 Months Ended

Dec. 31, 2011

Loss And Loss Adjustment Expenses [Abstract]

Loss And Loss Adjustment Expenses

10. Loss and Loss Adjustment Expenses

The following table provides a reconciliation of the beginning and ending reserve balances, net of related amounts recoverable from reinsurers, for 2011, 2010 and 2009:

	Year Ended December 31,
	2011			2010			2009
	(In thousands)
Reserves for loss and loss adjustment expenses ("LAE")	$	532,204		$	534,655		$	531,293
Less amounts recoverable from reinsurers on unpaid loss and LAE		65,536			60,435			56,596
Reserves for loss and LAE, net of related amounts recoverable from reinsurers, at beginning of year		466,668			474,220			474,697
Add:
Provision for loss and LAE for claims occurring in the current year, net of reinsurance		196,269			179,022			185,201
Change in estimated loss and LAE for claims occurring in prior years, net of reinsurance		(6,563	)		(21,634	)		(21,885	)
Incurred losses during the current year, net of reinsurance		189,706			157,388			163,316
Less loss and LAE payments for claims, net of reinsurance, occurring during:
Current year		53,213			47,385			42,174
Prior years		125,884			117,555			121,619
		179,097			164,940			163,793
Reserves for loss and LAE, net of related amounts recoverable from reinsurers, at end of year		477,277			466,668			474,220
Add amounts recoverable from reinsurers on unpaid loss and LAE		60,937			65,536			60,435
Reserves for loss and LAE	$	538,214		$	532,204		$	534,655

The foregoing reconciliation reflects favorable development of the net reserves at December 31, 2011, 2010, and 2009. The favorable development reduced loss and loss adjustment expense incurred by $6.6 million, $21.6 million and $21.9 million in 2011, 2010 and 2009, respectively. The revisions to the Company's reserves reflect new information gained by claims adjusters in the normal course of adjusting claims and is reflected in the financial statements when the information becomes available. It is typical for more serious claims to take several years to settle and the Company continually revises estimates as more information about claimants' medical conditions and potential disability becomes known and the claims get closer to being settled.

The anticipated effect of inflation is implicitly considered when estimating liabilities for loss and loss adjustment expenses. Average severities are projected based on historical trends adjusted for implemented changes in underwriting standards, policy provisions and general economic trends. These anticipated trends are monitored based on actual development and are modified if necessary.