
	Year Ended December 31,
	2021		2020		2019
	(In thousands)
Gross reserves, beginning-of-period	$	540,367	$	324,362	$	296,230
Less: reinsurance recoverable (1)	(358,128)		(164,429)		(166,396)
Net reserves, beginning-of-period	182,239		159,933		129,834

Net reserves from the Maison Companies acquisition	—		—		11,825

Incurred loss, net of reinsurance, related to:
Current year	226,537		358,952		262,118
Prior year loss development (redundancy) (2)	6,305		18,367		13,460
Ceded losses subject to offsetting experience account adjustments (3)	(68)		(816)		(2,489)
Prior years	6,237		17,551		10,971
Amortization of acquisition fair value adjustment	(14)		(54)		(9)
Total incurred loss and LAE, net of reinsurance	232,760		376,449		273,080

Paid loss, net of reinsurance, related to:
Current year	105,017		253,344		173,313
Prior years	125,295		100,799		81,493
Total paid loss and LAE, net of reinsurance	230,312		354,143		254,806

Net reserves, end-of-period	184,687		182,239		159,933
Plus: reinsurance recoverable (1)	554,107		358,128		164,429
Gross reserves, end-of-period	$	738,794	$	540,367	$	324,362

The establishment of loss reserves is an inherently uncertain process and changes in loss reserve estimates are expected as such estimates are subject to the outcome of future events. The factors influencing changes in claim costs are often difficult to isolate or quantify and developments in paid and incurred losses from historical trends are frequently subject to multiple interpretations. Changes in estimates, or differences between estimates and amounts ultimately paid, are reflected in the operating results of the period during which such adjustments are made.

During the year ended December 31, 2021, the Company experienced $6.3 million of net unfavorable loss and LAE reserve development on prior accident years, primarily in its homeowners line of business as a result of higher than expected catastrophe loss development from accident year 2020.

During the year ended December 31, 2020, the Company experienced $18.4 million of net unfavorable loss and LAE reserve development on prior accident years, primarily in its commercial general liability lines of business as a result of higher than expected late reported claims across a number of accident years during 2020.

During the year ended December 31, 2019, the Company experienced $13.5 million of net unfavorable loss and LAE reserve development on prior accident years, primarily in its personal automobile and commercial line of business. The development in commercial general liability was driven by late reported claims as well as large losses that drove up the overall severity metrics. Additionally, the unfavorable automobile development primarily related to 2017 accident year from our auto programs in the states of Georgia and Texas, and was driven by claims reopening and higher severity.

The Company entered into 30% and 10% retrospectively-rated Florida-only property quota-share treaties, which ended on July 1, 2016 and 2017, respectively. These agreements included a profit share (experience account) provision, under which the Company will receive ceded premium adjustments at the end of the treaty to the extent there is a positive balance in the experience account. This experience account is based on paid losses rather than incurred losses. Due to the retrospectively-rated nature of this treaty, when the experience account is positive we cede losses under these treaties as the claims are paid with an equal and offsetting adjustment to ceded premiums (in recognition of the related change to the experience account receivable), with no impact on net income. Conversely, when the experience account is negative, the Company cedes losses on an incurred basis with no offsetting adjustment to ceded premiums, which impacts net income. Loss development can be either favorable or unfavorable regardless of whether the experience account is in a positive or negative position. Effective February 28, 2021, the Company commuted the 30% agreement and subsequently received $11.2 million as settlement.

AOB is a legal construct that allows a third party to step into the shoes of the insured and is then paid directly by an insurance company for services rendered on behalf of the insured for a covered loss. Absent an AOB, the insured would pay the third party and those costs would be reimbursed by the insurance company to the insured. AOB is commonly used when a homeowner experiences a water loss, for example a leaky pipe, an overflow from a sink, or a damaged appliance, and contacts a contractor or water remediation company. Misuse of this legal construct has led to contractors over inflating costs of claims and/or submitting improper claims, causing insurance companies to have to either pay the overinflated claim, fight the claim in court, or both. In all cases, AOB claims cost the insurance company, on average, more than five times the cost to settle non-AOB claims, which has been a primary driver the increase to our overall loss and loss adjustment in comparison to historical severity averages.

The following tables provide incurred losses and allocated LAE ("ALAE") and cumulative paid losses and ALAE, net of reinsurance, for the prior 10 accident years, and the total of gross IBNR reserves plus expected gross development on reported claims and the cumulative number of reported claims (in thousands, except number of reported claims), as of the most recent reporting period, by the Company’s significant lines of business, which are homeowners, commercial general liability and automobile.


																					IBNR & Expected		Cumulative
	Homeowners Incurred Losses and ALAE, Net of Reinsurance																				Development on		Number of
	For the Years Ended December 31,																				Reported Claims		Reported Claims (1)
	(Unaudited)
Accident Year	2012		2013		2014		2015		2016		2017		2018		2019		2020		2021		2021		2021
2012	$	23,032	$	23,301	$	24,186	$	24,468	$	25,889	$	26,356	$	26,836	$	26,951	$	26,984	$	26,935	$	27	2,692
2013			43,807		42,021		35,834		35,859		37,185		37,880		37,978		38,088		38,141		28		3,443
2014					64,312		63,300		61,770		62,206		61,817		62,043		62,535		62,533		488		7,656
2015							99,497		92,411		95,129		94,760		94,703		96,144		96,189		1,203		13,228
2016									171,264		162,043		158,764		157,880		156,316		156,493		2,180		23,996
2017											202,844		192,769		188,548		179,327		178,890		48,811		67,453
2018													210,158		213,128		216,570		218,267		19,174		38,289
2019															257,644		261,541		260,089		10,861		22,774
2020																	342,119		349,456		125,767		71,508
2021																			227,685		302,033		23,296
																	Total		$	1,614,678



	Homeowners Cumulative Paid Losses and ALAE, Net of Reinsurance
	For the Years Ended December 31,
	(Unaudited)
Accident Year	2012		2013		2014		2015		2016		2017		2018		2019		2020		2021
2012	$	13,693	$	20,728	$	23,120	$	23,923	$	25,186	$	26,113	$	26,777	$	26,861	$	26,901	$	26,909
2013			19,986		31,606		33,867		35,123		35,803		37,473		37,688		37,915		37,952
2014					37,033		53,831		57,891		59,722		60,555		61,441		61,692		62,039
2015							52,214		79,359		86,647		90,415		92,327		93,405		94,281
2016									102,556		142,716		148,274		152,258		153,997		155,152
2017											135,589		176,580		179,327		178,013		179,102
2018													141,173		194,160		206,133		212,935
2019															157,768		236,090		252,608
2020																	236,197		330,656
2021																			105,969
																			$	1,457,603


All outstanding liabilities for unpaid claims and ALAE prior to 2012, net of reinsurance																			68
Total outstanding liabilities for unpaid claims and ALAE, net of reinsurance																			$	157,143


																					IBNR & Expected		Cumulative
	Commercial General Liability Incurred Losses and ALAE, Net of Reinsurance																				Development on		Number of
	For the Years Ended December 31,																				Reported Claims		Reported Claims
	(Unaudited)
Accident Year	2012		2013		2014		2015		2016		2017		2018		2019		2020		2021		2021		2021
2012	$	5,279	$	4,952	$	4,801	$	4,700	$	4,658	$	4,346	$	4,509	$	5,109	$	6,431	$	6,430	$	926	854
2013			7,095		5,069		5,221		5,502		5,704		5,580		5,984		7,588		7,588		913		967
2014					7,475		7,709		6,384		6,620		6,348		6,697		9,028		9,027		694		1,012
2015							8,082		7,008		6,020		5,377		7,947		9,141		9,141		1,597		966
2016									10,727		5,809		6,561		8,502		12,267		11,903		4,525		922
2017											8,289		7,853		6,558		8,519		8,518		2,675		642
2018													6,553		6,233		7,280		7,276		2,801		456
2019															1,604		2,535		2,487		944		79
2020																	37		68		—		8
2021																			17		—		4
																	Total		$	62,455


	Commercial General Liability Cumulative Paid Losses and ALAE, Net of Reinsurance
	For the Years Ended December 31,
	(Unaudited)
Accident Year	2012		2013		2014		2015		2016		2017		2018		2019		2020		2021
2012	$	871	$	1,714	$	2,632	$	3,342	$	3,686	$	3,841	$	4,098	$	4,521	$	4,790	$	5,047
2013			882		2,233		3,366		3,867		4,606		5,033		5,467		5,847		6,112
2014					717		2,593		3,855		4,375		5,130		6,270		6,901		7,316
2015							798		2,296		3,249		3,827		5,866		6,566		6,840
2016									1,515		3,657		5,088		6,606		8,382		8,841
2017											1,592		2,478		3,293		4,225		4,643
2018													963		1,554		2,604		2,928
2019															147		424		598
2020																	5		52
2021																			2
																	Total		$	42,379

All outstanding liabilities for unpaid claims and ALAE prior to 2012, net of reinsurance																			3,561
Total outstanding liabilities for unpaid claims and ALAE, net of reinsurance																			$	23,637


																					IBNR & Expected		Cumulative
	Automobile Incurred Losses and ALAE, Net of Reinsurance																				Development on		Number of
	For the Years Ended December 31,																				Reported Claims		Reported Claims
	(Unaudited)
Accident Year	2012		2013		2014		2015		2016		2017		2018		2019		2020		2021		2021		2021
2012	$	1,735	$	1,741	$	1,717	$	1,424	$	1,455	$	1,491	$	1,448	$	1,444	$	1,448	$	1,447	$	4	824
2013			1,517		1,863		1,826		1,829		2,161		2,123		2,127		2,127		2,128		6		3,472
2014					2,038		3,213		3,551		4,315		4,379		4,417		4,413		4,410		4		6,021
2015							3,045		2,882		2,781		2,878		2,915		2,944		2,945		10		6,561
2016									13,414		20,205		24,346		25,918		25,923		25,930		34		76,660
2017											20,411		22,472		24,579		24,669		24,253		169		61,751
2018													3,513		4,623		4,439		4,062		104		10,937
2019															(3)		—		—		2		103
2020																	—		—		—		6
2021																			—		—		6
																	Total		$	65,175



	Automobile Cumulative Paid Losses and ALAE, Net of Reinsurance
	For the Years Ended December 31,
	(Unaudited)
Accident Year	2012		2013		2014		2015		2016		2017		2018		2019		2020		2021
2012	$	867	$	1,293	$	1,333	$	1,384	$	1,393	$	1,430	$	1,444	$	1,447	$	1,449	$	1,449
2013			907		1,609		1,906		2,069		2,109		2,112		2,116		2,116		2,116
2014					1,455		3,120		3,678		4,122		4,291		4,383		4,396		4,396
2015							1,393		2,293		2,670		2,807		2,890		2,897		2,897
2016									8,084		17,258		23,053		25,582		26,132		26,294
2017											12,821		20,762		23,860		24,468		24,599
2018													2,331		3,626		3,137		3,076
2019															(5)		—		—
2020																	—		—
2021																			—
																	Total		$	64,827

All outstanding liabilities for unpaid claims and ALAE prior to 2012, net of reinsurance																			20
Total outstanding liabilities for unpaid claims and ALAE, net of reinsurance																			$	368


	December 31,
	2021		2020
	(In thousands)
Liabilities for unpaid losses and ALAE:
Homeowners	$	157,143	$	149,314
Commercial general liability	23,637		28,328
Automobile	368		1,388
Flood	—		—
Total liabilities for unpaid losses and ALAE, net of reinsurance	181,148		179,030

Reinsurance recoverables:
Homeowners	553,689		353,741
Commercial general liability	—		—
Automobile	352		1,424
Flood	66		2,963
Total reinsurance recoverables	554,107		358,128

Unallocated loss adjustment expenses	3,539		3,209
Gross liability for unpaid losses and LAE	$	738,794	$	540,367

Management establishes a liability on an aggregate basis to provide for the estimated IBNR. The estimates of the liability for loss and LAE reserves are subject to the effect of trends in claims severity and frequency and are continually reviewed. As part of this process, we review historical data and consider various factors, including known and anticipated legal developments, inflation and economic conditions. As experience develops and other data become available, these estimates are revised, as required, resulting in increases or decreases to the existing liability for loss and LAE reserves. Adjustments are reflected in results of operations in the period in which they are made and the liabilities may deviate substantially from prior estimates.

Various actuarial methods are utilized to determine the reserves that are booked to our financial statements. Weightings of tests and methods at a detailed level may change from evaluation to evaluation based on a number of observations, measures and time elements. On an overall basis, changes to methods and/or assumptions underlying reserve estimations and selections as of December 31, 2021 and 2020, were not considered material, except for our commercial general liability line of business during 2020. For this line of business, we updated our actuarial assumptions to reflect the new, emerging trend relating to the increased level of new claims being reported related to construction defects, as the new development patterns are different than the historical patterns.

IBNR reserves are established for the quarter and year-end based on a quarterly reserve analysis by our actuarial staff. Various standard actuarial tests are applied to subsets of the business at a line of business and coverage basis. Included in the analyses are the following:

•Reported Loss Development Method: A reported loss development pattern is calculated based on historical loss development data, and this pattern is then used to project the latest evaluation of cumulative reported losses for each accident year or underwriting year, as appropriate, to ultimate levels;

•Paid Development Method: A paid loss development pattern is calculated based on historical paid loss development data, and this pattern is then used to project the latest evaluation of cumulative paid losses for each accident year or underwriting year, as appropriate, to ultimate levels;