Losses and Loss Adjustment Expenses

9 Months Ended

Sep. 30, 2014

Insurance [Abstract]

Losses and Loss Adjustment Expenses

Note 8 — Losses and Loss Adjustment Expenses

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

Activity in the liability for unpaid losses and loss adjustment expenses is summarized as follows:

	Three Months Ended September 30,						Nine Months Ended September 30,
	2014			2013			2014			2013
Balance, beginning of period	$	43,044		$	44,749		$	43,686		$	41,168
Incurred related to:
Current period		21,643			14,851			59,205			50,213
Prior period		348			(362	)		(266	)		(2,438	)
Total incurred		21,991			14,489			58,939			47,775
Paid related to:
Current period		(3,461	)		(12,628	)		(22,296	)		(25,880	)
Prior period		(13,920	)		(3,086	)		(32,675	)		(19,539	)
Total paid		(17,381	)		(15,714	)		(54,971	)		(45,419	)
Balance, end of period	$	47,654		$	43,524		$	47,654		$	43,524

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. 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 three months ended September 30, 2014, the Company experienced unfavorable development of $348 with respect to its net unpaid losses and loss adjustment expenses established as of June 30, 2014. During the nine months ended September 30, 2014, the Company experienced favorable development of $266 with respect to its net unpaid losses and loss adjustment expenses established as of December 31, 2013. Factors attributable to this favorable development may include a lower severity of claims and reduced frequency of claims.

The Company writes insurance in the state of Florida, 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 monthly or 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.