Reserves (Tables)

9 Months Ended

Sep. 30, 2024

Schedule of Roll Forward of Claims and Benefits Payable

The following table provides a roll forward of the Company’s beginning and ending claims and benefits payable balances. Claims and benefits payable is the liability for unpaid loss and loss adjustment expenses and is comprised of case and incurred but not reported (“IBNR”) reserves.

Since unpaid loss and loss adjustment expenses are estimates, the Company’s actual losses incurred may be more or less than the Company’s previously developed estimates, which is referred to as either unfavorable or favorable development, respectively.

The best estimate of ultimate loss and loss adjustment expense is generally selected from a blend of methods that are applied consistently each period. There have been no significant changes in the methodologies and assumptions utilized in estimating the liability for unpaid loss and loss adjustment expenses for any of the periods presented.


	For the Nine Months Ended September 30,
	2024		2023
Claims and benefits payable, at beginning of period	$	1,989.2	$	2,210.0
Less: Reinsurance ceded and other	(886.6)		(1,228.8)
Net claims and benefits payable, at beginning of period	1,102.6		981.2
Incurred losses and loss adjustment expenses related to:
Current year	2,194.9		1,953.4
Prior years	(98.9)		(30.7)
Total incurred losses and loss adjustment expenses	2,096.0		1,922.7
Paid losses and loss adjustment expenses related to:
Current year	1,315.2		1,250.8
Prior years	570.6		511.8
Total paid losses and loss adjustment expenses	1,885.8		1,762.6
Net claims and benefits payable, at end of period	1,312.8		1,141.3
Plus: Reinsurance ceded and other (1)	1,736.2		869.5
Claims and benefits payable, at end of period (1)	$	3,049.0	$	2,010.8

(1)Includes reinsurance recoverables and claims and benefits payable of $905.6 million and $104.9 million as of September 30, 2024 and 2023, respectively, which was ceded to the U.S. government. The Company acts as an administrator for the U.S. government under the voluntary National Flood Insurance Program.

Schedule of Balances and Changes in Long-Term Care Future Policy Benefits and Expenses Reserve

The following table presents the balances and changes in the long-term care future policy benefits and expenses reserve:


	September 30, 2024		December 31, 2023
Present value of expected net premiums
Balance, beginning of period	$	36.4	$	34.2
Beginning balance at original discount rate	36.5		33.4
Effect of changes in cash flow assumptions (1)	—		1.5
Effect of actual variances from expected experience	—		3.5
Adjusted beginning of period balance	36.5		38.4
Experience variance (2)	0.1		—

Interest accrual	2.6		2.8
Net premiums collected	(4.5)		(4.7)

Ending balance at original discount rate	34.7		36.5
Effect of changes in discount rate assumptions	0.9		(0.1)
Balance, end of period	$	35.6	$	36.4

Present value of expected future policy benefits
Balance, beginning of period	$	450.6	$	462.4
Beginning balance at original discount rate	453.0		444.4

Effect of actual variances from expected experience	—		4.4
Adjusted beginning of period balance	453.0		448.8
Experience variance (2)	(1.3)		1.0

Interest accrual	19.6		19.5
Benefit payments	(19.3)		(16.3)

Ending balance at original discount rate	452.0		453.0
Effect of changes in discount rate assumptions	19.2		(2.4)
Balance, end of period	$	471.2	$	450.6

Net future policy benefits and expenses	$	435.6	$	414.2
Related reinsurance recoverable	435.6		414.2
Net future policy benefits and expenses, after reinsurance recoverable	$	—	$	—

Weighted-average liability duration of the future policy benefits and expenses (in years)	11.5		12.0

(1)The increase in the effect of changes in cash flow assumptions is due to historical experience reflecting a decreasing trend in lapse and mortality rates on the long-term care insurance products for the year ended December 31, 2023.

(2)Experience variance includes adverse development resulting from the allocation of the premium deficiency reserve to the cohort level for issue years where net premiums exceed gross premiums.

The following table presents a reconciliation of the long-term care net future policy benefits and expenses to the future policy benefits and expenses reserve in the consolidated balance sheet:


	September 30, 2024		December 31, 2023
Long-term care	$	435.6	$	414.2
Other	68.4		73.0
Total	$	504.0	$	487.2

The following table presents the amount of undiscounted expected future benefit payments and expected gross premiums for the long-term care insurance contracts:


	September 30, 2024		December 31, 2023
Expected future benefits payments	$	814.2	$	829.3
Expected future gross premiums	$	64.7	$	69.4

The following table presents the amount of long-term care revenue and interest recognized in the consolidated statements of operations:


	September 30, 2024		September 30, 2023
Gross premiums	$	1.5	$	1.6
Interest expense (original discount rate)	$	5.7	$	5.6

The following table presents the weighted-average interest rate for long-term care insurance contracts:


	September 30, 2024		September 30, 2023
Interest expense (original discount rate)	5.95	%	5.95	%
Current discount rate	5.45	%	5.45	%