Losses and Loss Adjustment Expenses

6 Months Ended

Jun. 30, 2023

Note 13 -- Losses and Loss Adjustment Expenses

The liability for losses and loss adjustment expenses (“LAE”) is determined on an individual case basis for all claims reported. The liability also includes amounts for unallocated expenses, anticipated future claims development and losses incurred but not reported.

The Company primarily writes insurance in states which could be exposed to hurricanes or other natural catastrophes. The occurrence of a major catastrophe could have a significant effect on the Company’s quarterly results and cause a temporary disruption of the normal operations of the Company. However, the Company is unable to predict the frequency or severity of any such events that may occur in the near term or thereafter.

Activity in the liability for losses and LAE is summarized as follows:


	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2023			2022			2023			2022
Net balance, beginning of period*	$	246,051		$	179,837		$	246,546		$	172,410
Incurred, net of reinsurance, related to:
Current period		60,968			78,448			117,666			148,524
Prior periods		922			8,382			4,789			11,010
Total incurred, net of reinsurance		61,890			86,830			122,455			159,534
Paid, net of reinsurance, related to:
Current period		(27,105	)		(37,627	)		(38,215	)		(56,423	)
Prior periods		(37,250	)		(32,626	)		(87,200	)		(79,107	)
Total paid, net of reinsurance		(64,355	)		(70,253	)		(125,415	)		(135,530	)
Net balance, end of period		243,586			196,414			243,586			196,414
Add: reinsurance recoverable before allowance for credit losses		505,369			42,410			505,369			42,410
Gross balance, end of period	$	748,955		$	238,824		$	748,955		$	238,824

* Net balance represents beginning-of-period liability for unpaid losses and LAE less beginning-of-period reinsurance recoverable for unpaid losses and LAE.

The establishment of loss and LAE reserves is an inherently uncertain process and changes in loss and LAE reserve estimates are expected as these estimates are subject to the outcome of future events. Changes in estimates, or differences between estimates and amounts ultimately paid, are reflected in the operating results of the period during which such estimates are adjusted. During the three and six months ended June 30, 2023, the Company recognized losses related to prior periods of $922 and $4,789, respectively, primarily to increase reserves in response to litigation. Losses and LAE for the three and six months ended June 30, 2023 included net estimated losses of approximately $13,700 and $35,335, respectively, related to United policies assumed, renewed and/or replaced. Lower losses and LAE for the three and six months ended June 30, 2023 primarily resulted from a decrease in claims and litigation related to Florida policies.