Reserve for Loss and Loss Adjustment Expenses

General

The Company believes the most significant accounting judgment made by management is its estimate of loss and LAE reserves. Loss and LAE reserves represent estimates, including actuarial projections of the ultimate settlement and costs for unpaid loss and LAE arising from the reinsurance contracts entered into by the Company. The Company establishes its loss and LAE reserves by taking losses reported to the Company by insureds and ceding companies, but which have not yet been paid ("case reserves"), adding estimates for the anticipated cost of claims incurred but not yet reported to the Company, or incurred but not enough reported to the Company (collectively referred to as "IBNR") and, if deemed necessary, adding costs for additional case reserves which represent the Company’s estimates for claims related to specific contracts previously reported to the Company which it believes may not be adequately estimated by the client as of that date, or adequately covered in the application of IBNR.

Our reserve for loss and LAE comprises:



December 31,	2017		2016
Reserve for reported loss and LAE	$	1,925,151	$	1,617,956
Reserve for losses IBNR	1,622,097		1,278,540
Reserve for loss and LAE	$	3,547,248	$	2,896,496

The following table represents a reconciliation of our beginning and ending gross and net loss and LAE reserves:



For the Year Ended December 31,	2017			2016			2015
Gross loss and LAE reserves, January 1	$	2,896,496		$	2,510,101		$	2,271,292
Less: reinsurance recoverable on unpaid losses, January 1	99,936			71,248			75,873
Net loss and LAE reserves, January 1	2,796,560			2,438,853			2,195,419
Net incurred losses related to:
Current year	1,802,118			1,600,454			1,558,704
Prior years	357,893			219,452			74,866
	2,160,011			1,819,906			1,633,570
Net paid losses related to:
Current year	(634,371		)	(430,707		)	(457,517		)
Prior years	(948,000		)	(1,006,884		)	(892,840		)
	(1,582,371		)	(1,437,591		)	(1,350,357		)
Effect of foreign exchange movements	55,437			(24,608		)	(39,779		)
Net loss and LAE reserves, December 31	3,429,637			2,796,560			2,438,853
Reinsurance recoverable on unpaid losses, December 31	117,611			99,936			71,248
Gross loss and LAE reserves, December 31	$	3,547,248		$	2,896,496		$	2,510,101

The Company uses both historical experience and industry-wide loss development factors to provide a reasonable basis for estimating future losses. In the future, certain events may be beyond the control of management, such as changes in law, judicial interpretations of law, and inflation, which may favorably or unfavorably impact the ultimate settlement of the Company’s loss and LAE reserves.

The anticipated effect of inflation is implicitly considered when estimating liabilities for losses and LAE. While anticipated changes in claim costs due to inflation are considered in estimating the ultimate claim costs, changes in the average severity of claims are caused by a number of factors that vary with the individual type of policy written. Ultimate losses are projected based on historical trends adjusted for implemented changes in underwriting standards, policy provisions, and general economic trends. Those anticipated trends are monitored based on actual development and are modified if necessary.

The reserving process begins with the collection and analysis of paid losses and incurred claims data for each of our contracts. While reserves are reviewed on a contract by contract basis, paid losses and incurred claims data is also aggregated into reserving segments. The segmental data is disaggregated by reserving class and further disaggregated by either accident year (i.e. the year in which the loss event occurred) or by underwriting year (i.e. the year in which the contract generating the premium and losses incepted). The Company uses underwriting year information to analyze our Diversified Reinsurance segment and subsequently allocate reserves to the respective accident years. The reserving lines of business are selected to ensure that the underlying business have homogeneous loss development characteristics, while remaining large enough to make the estimation of trends credible.

9. Reserve for Loss and Loss Adjustment Expenses (continued)

Actuarial Methods Used to Estimate Loss and Loss Adjustment Expense Reserves

The Company utilizes a variety of standard actuarial methods in its analysis of loss reserves. The selections from these various methods are based on the loss development characteristics of the specific line of business and significant actuarial judgment. The actuarial methods the Company utilizes include:

The Expected Loss Ratio ("ELR") method is a technique that multiplicatively applies an expected loss ratio to earned premium to yield estimated ultimate losses. The ELR assumption is generally derived from pricing information and historical experience of the business. This method is frequently used for the purpose of stability in the early valuations of an underwriting year with large and uncertain loss development factors. This technique does not take into account actual loss emergence for the underwriting year being projected. As an underwriting year matures and actual loss experience becomes more credible, other methods may be applied in determining the estimated ultimate losses.

The Loss Development ("LD") method is a reserving method in which ultimate losses are estimated by applying a loss development factor to actual reported (or paid) loss experience. This method fully utilizes actual experience. Multiplication of underwriting year actual reported (or paid) losses by its respective development factor produces the estimated ultimate losses. The LD method is based upon the assumption that the relative change in a given underwriting year’s losses from one evaluation point to the next is similar to the relative change in prior underwriting years’ losses at similar evaluation points. In addition, this method is based on the assumption that the reserving and payment patterns as well as the claim handling procedures have not changed substantially over time. When a company has a sufficiently reliable loss development history, a development pattern based on the company’s historical indications may be used to develop losses to ultimate values.

The Bornhuetter-Ferguson ("BF") reserving technique is used for long-tailed or lower frequency, more volatile lines. It is also useful in situations where the reported loss experience is relatively immature and/or lacks sufficient credibility for the application of methods that are more heavily reliant on emerged experience. The BF method is an additive IBNR method that combines the ELR and LD techniques by splitting the expected loss into two pieces - expected reported (or paid) losses and expected unreported (or unpaid) losses. Expected unreported (unpaid) losses, estimated by the use of loss development factors, are added to the current actual reported (or paid) losses to produce an estimate of ultimate losses by underwriting year. The BF method introduces an element of stability that moderates the impact of inconsistent changes in paid and reported losses.

The average frequency and severity ("FS") technique is used for lines where claim count is available, and the estimate of loss development factors is more difficult due to volatility in historical data. The available data for such lines is usually more volatile in the estimation of future losses using the LD and BF reserving methods. The frequency and severity method uses historical data to estimate the average number of ultimate claims (frequency) and the average costs of closed claims (severity). The estimate of ultimate losses by underwriting year is the result of the multiplication of the ultimate number of claims and the average cost of a claim.

With the guidance of the methods above, actuarial judgment is applied in the determination of ultimate losses. In general, the Company’s segments have varying levels of seasoning with which the Company has direct experience and as a result, differing methods are utilized to estimate loss and LAE reserves in each segment.

In the Diversified Reinsurance segment, the Company’s executive and technical management, including Claims, Underwriting and Actuarial, have significant experience with this book of business, which also has more than 30 years of loss experience associated with it. In general for the Diversified Reinsurance segment, the Company utilizes the ELR approach at the onset of reserving an account, the BF method for business with less but maturing loss experience, and as the experience matures the LD method. For proportional or pro-rata business, the Company typically relies heavily on the actual historical contract experience to estimate reserving parameters such as loss development factors, whereas for excess of loss business there will be more usage of industry and/or Company benchmark assumptions.

The Company has underwritten the AmTrust Reinsurance segment since July 1, 2007. The majority of the exposure in the underlying book of business has significant seasoning, and allows for a significant amount of credibility in using parameters derived from historical experience to calculate reserve estimates. Some segments of the book are a result of recent acquisitions or newer markets for AmTrust. These segments require a greater level of assumptions and professional judgment in deriving ultimate losses, which inherently implies a wider range of reasonable estimates. As a result, we have tended to rely on a weighted approach which primarily employs the LD method for aspects of the segment with ample historical data, while also considering the ELR or BF method for exposure resulting from recent acquisitions, or a relative business with a more limited level of experience. The FS method is also considered for segments of the AmTrust book of business for which claim count information is available. The Company’s actuarial analysis of this book of business is more refined in that it utilizes a combination of quarterly and annual data instead of contract period data in totality. Additional data detailing items such as class of business, state, claim counts, frequency and severity is available, further enhancing the reserve analysis.

9. Reserve for Loss and Loss Adjustment Expenses (continued)

Prior Year Development

Prior period development arises from changes to loss estimates recognized in the current year that relate to loss reserves in previous calendar years. The development reflects changes in management's best estimate of the ultimate losses under the relevant reinsurance policies after review of changes in actuarial assessments. The following table summarizes adverse prior period development experienced in each of our reportable segments for the years ended December 31, 2017, 2016, and 2015:



For the Year Ended	Diversified Reinsurance			AmTrust Reinsurance			Other			Total
December 31, 2017	$	(71,384	)	$	(239,896	)	$	(10,214	)	$	(321,494	)
December 31, 2016	(96,788		)	(54,000		)	(14,556		)	(165,344		)
December 31, 2015	(49,856		)	(9,100		)	(12,202		)	(71,158		)

During 2017, the Company increased incurred losses for 2016 and prior accident years by $357,893 or 12.8% of prior year net loss and LAE reserves compared to $219,452 or 9.0% in 2016 and $74,866 or 3.3% in 2015. The increase in prior year incurred losses was primarily due to the $321,494 of adverse development driven by $239,896 of adverse development in the AmTrust Reinsurance segment but also contributed to by $71,384 in the Diversified Reinsurance and $10,214 in the Company's run-off business within the Other category. In addition, some premium for prior accident years is reported to us in subsequent periods. This leads to increases in the provision for loss and LAE in prior years during current periods, which is not considered adverse development. During 2017, incurred losses in the AmTrust segment increased $37,212 associated with $57,026 of earned premium reported during 2017 attributable to 2016 and prior accident years.

Due to loss sensitive features of certain contracts, favorable (or unfavorable) loss reserve development does not necessarily result in a commensurate amount of additional (or reduced) underwriting income, as ceding commission may be adjusted proportionally to the amount of loss development, pursuant to the terms of the individual contracts.

In 2016, the Company recognized approximately $165,344 of adverse prior year development, net of commission changes on adjustable contracts largely due to significant fourth quarter adverse development in commercial auto liability in both the Diversified Reinsurance and AmTrust Reinsurance segments.

In the Diversified Reinsurance segment, the adverse prior year development was $71,384 for the year ended December 31, 2017 which was largely due to higher than expected loss emergence emanating primarily from Commercial Auto. Casualty Commercial Auto Liability development during 2017 was $58,776, with $37,485 coming from two accounts which are no longer in-force but which had significantly greater loss emergence during 2017 than expected. In 2016, the development was due to significant fourth quarter adverse development in commercial auto liability.

In the AmTrust Reinsurance segment, the adverse prior year development was $239,896 for the year ended December 31, 2017 largely related to the Workers' Compensation of $126,603 and General Liability of $90,784, and to a lesser extent Commercial Auto liability of $19,877. The loss development observed was in part attributable to staffing and other claims operation changes in the cedant's claims department which have distorted historical loss patterns. In 2016, the adverse development largely came from program commercial auto as well as program general liability.

Our Other category also incurred adverse prior year development of $10,214 for the year ended December 31, 2017 (2016 - $14,556, 2015 - $12,202) due to increased reserves in the remaining run-off litigated U.S. E&S property claims and increased reserves in the run-off of the NGHC Quota Share Reinsurance Agreement.


a)	Claims Development

The following is a summary of the Company's incurred losses and paid losses development by accident year, net of reinsurance, from the last seven calendar years including the total reserve for losses, IBNR, plus development on reported loss and LAE for both of our reportable segments, Diversified Reinsurance and AmTrust Reinsurance, as of December 31, 2017. Information prior to 2017 is included as unaudited supplementary information. Seven years of information has been presented only as it was impractical to obtain the sufficiently detailed additional information on those earlier years. The incurred and paid amounts have been translated from the local currency to U.S. dollars using the December 31, 2017 spot rate for all years presented in the table below in order to isolate changes in foreign exchange rates from loss development. Information regarding our Other category has not been presented in the development tables below but is included in the reconciliation, as these losses include amounts from our former NGHC Quota Share segment and the remnants of the U.S. excess and surplus business, which are in run-off and related IBNR amounts are not currently material. As a reinsurer of primarily quota share contracts, claim counts are available on a very limited basis. Therefore claim counts have not been provided in the tables below as it is impractical to do so.

9. Reserve for Loss and Loss Adjustment Expenses (continued)

The Diversified Reinsurance segment incurred losses and paid losses are analyzed by the following lines of business: (1) Pro-rata Property; (2) Pro-rata Casualty (a) Personal Auto, (b) Commercial Auto, (c)Workers' Compensation and Other Liability; (3) Excess of Loss ("XOL") Property; (4) XOL Casualty, (a) Commercial Auto, (b) Workers' Compensation, (c) Other liability; (5) Accident and Health ("A&H"); and (6) International.

The AmTrust Reinsurance segment incurred losses and paid losses are analyzed by the following lines of business: (1) Workers’ Compensation; (2) Commercial Auto Liability; (3) General Liability; (4) European Hospital Liability; and (5) All Other Lines.

There are a number of factors to consider when evaluating the information in these tables:

•

In the Diversified Reinsurance segment, contracts are written on both an accident year and underwriting year basis, many are multi-line and the majority of the premium is associated with proportional contracts. Many proportional treaty reinsurance contracts are submitted using quarterly bordereau reporting by underwriting year. However, the remaining losses can generally only be allocated to accident years based on estimated premium earning and loss reporting patterns. Further estimates are required to allocate losses to line of business. Multi-line accounts are generally analyzed on an individual basis by line of business, but are booked in the Company’s records to a contract, rather than to each individual line of business within a contract. For the purpose of this disclosure allocations are made to the various lines of business. Management’s assumptions and allocation procedures for these tables may produce results that differ from the actual loss emergence reported by line of business each quarter;

•

The AmTrust Reinsurance segment consists primarily of two contracts, the European Hospital Liability quota share and a much larger quota share that includes all other covered business, the AmTrust Quota Share Reinsurance Agreement ("Reinsurance Agreement"). There is also a small amount of excess of loss business that has not been written since 2009 which is included as a reconciling item. Maiden receives several cession statements and uses these to report premiums in three categories - Small Business Commercial, Specialty Program and Specialty Risk and Extended Warranty in Note 3 Segment Information. The tables provided include allocations of IBNR reserves to line of business by accident year. Management’s assumptions and allocation procedures for these tables may produce results that differ from the actual loss emergence reported by line of business each quarter;


•	For both segments, the premium and exposure for prior accident years is often reported to us in subsequent periods, as reporting lags exist from an insurer to a reinsurer. This leads to increases in the provision for loss and LAE in prior years, but does not reduce expected income (and in many cases can result in additional income);


•	In the Diversified Reinsurance segment, our U.S. operations have adjustable commission features on a significant portion of its business which is not reflected in this loss disclosure, but mitigates the effect of changes in the estimates of ultimate loss on underwriting income; and


•	Some Excess of Loss business written in the Diversified Reinsurance segment contains Annual Aggregate Deductibles which apply on a contract, not line of business, basis. These deductible further complicate the allocation to line of business.

Diversified Reinsurance Segment

The following table represents information on the Company's incurred losses and LAE and cumulative paid losses and LAE, both net of reinsurance, since 2011 for our Diversified Reinsurance segment. The development tables below included reserves acquired from the loss portfolio transfer agreement associated with the GMAC RE business as at October 31, 2008 of $755,554 and reserves acquired from the loss portfolio transfer agreement associated with the GMAC International Insurance Services ("IIS") business as at November 30, 2010 of $98,827. For the purposes of the disclosure, the reserves from each of the loss portfolio transfers were allocated to the original accident year.

Many pro-rata contracts are big enough that specific company development patterns are used. The ELR from the pricing of the account is typically used for the first year or more until the data suggests an alternative result is likely. Use of the ELR method transitions to the BF and then the LD method. For smaller contracts, benchmark development patterns may be used in both the pricing to establish the ELR and the reserving. The use of benchmark patterns is more prevalent in excess of loss business and the movement to experience based methods is slower.

9. Reserve for Loss and Loss Adjustment Expenses (continued)

Diversified Reinsurance: Property Pro-rata

The majority of our pro-rata Property business is the property component of multi-line quota shares. In the Diversified Reinsurance segment, most of this exposure comes from Private Passenger Auto quota shares that include coverage for both casualty and automobile physical damage. Private Passenger Auto quota shares typically have either a property occurrence limit or have reinsurance that protects the Company's exposure. This reinsurance can be either purchased by the cedant or by the Company. Property exposures other than auto are written with an occurrence limit.

Our initial underwriting year loss projections are generally based on the ELR method, derived from account pricing analyses. Payment and reporting patterns are relatively short-tailed, allowing for rapid movement to loss development methods.



Diversified Reinsurance - Property - Pro-rata	Incurred losses and loss adjustment expenses, net of reinsurance														At December 31, 2017
For the Year Ended December 31,	2011		2012		2013		2014		2015		2016		2017		Total IBNR
Accident Year:	(Unaudited)		(Unaudited)		(Unaudited)		(Unaudited)		(Unaudited)		(Unaudited)
2008	$	8,600	$	8,748	$	8,735	$	8,710	$	8,695	$	8,687	$	8,687	$	10
2009	62,906		63,421		63,078		63,223		63,345		63,256		63,092		81
2010	83,101		86,056		85,243		85,067		85,019		85,117		85,687		214
2011	93,969		101,907		100,241		100,635		99,902		100,154		100,174		177
2012			96,681		95,977		94,837		95,160		95,755		96,667		614
2013					55,222		50,476		47,220		47,833		46,258		413
2014							75,027		77,207		77,703		77,001		1,707
2015									55,642		57,320		56,454		3,039
2016											53,917		53,265		10,970
2017													89,120		29,514
Total													$	676,405	$	46,739

	Cumulative paid losses and LAE, net of reinsurance
For the Year Ended December 31,	2011		2012		2013		2014		2015		2016		2017
Accident Year:	(Unaudited)		(Unaudited)		(Unaudited)		(Unaudited)		(Unaudited)		(Unaudited)
2008	$	7,913	$	8,333	$	8,527	$	8,571	$	8,601	$	8,659	$	8,659
2009	53,847		58,920		61,053		61,955		62,463		62,667		62,832
2010	59,259		73,510		79,660		82,256		83,239		85,132		85,234
2011	44,437		72,600		88,796		96,306		98,084		98,970		99,504
2012			44,152		66,148		84,466		90,071		92,958		94,885
2013					18,952		28,607		43,035		45,232		45,406
2014							27,901		51,896		66,675		73,404
2015									19,603		42,930		51,707
2016											17,849		34,847
2017													40,573
Total													$	597,051
Total net reserves													$	79,354

9. Reserve for Loss and Loss Adjustment Expenses (continued)

Diversified Reinsurance: Casualty - Personal Auto Pro-rata

All of the pro-rata Personal Auto in this category is the liability portion of Personal Auto quota shares. The majority of this business is non-standard Personal Auto which has very low, typically minimum financial responsibility limits which vary by state. The balance is standard or preferred business with higher limits. Personal injury protection, medical payments and uninsured motorists are also covered.



Diversified Reinsurance - Casualty Personal Auto - Pro-rata	Incurred losses and loss adjustment expenses, net of reinsurance														At December 31, 2017
For the Year Ended December 31,	2011		2012		2013		2014		2015		2016		2017		Total IBNR
Accident Year:	(Unaudited)		(Unaudited)		(Unaudited)		(Unaudited)		(Unaudited)		(Unaudited)
2008	$	34,433	$	34,271	$	33,762	$	33,684	$	33,672	$	33,621	$	33,573	$	38
2009	50,752		50,982		51,488		51,335		51,285		51,281		51,258		20
2010	52,068		52,307		53,983		53,652		53,526		53,392		53,255		30
2011	95,183		100,051		100,154		97,956		96,740		96,898		96,661		221
2012			97,561		94,870		93,430		91,612		91,800		92,233		66
2013					88,567		84,759		78,156		78,085		77,834		217
2014							116,887		119,267		121,538		121,068		12
2015									87,420		94,363		98,637		1,493
2016											113,617		113,609		29,308
2017													161,355		46,835
Total													$	899,483	$	78,240

	Cumulative paid losses and LAE, net of reinsurance
For the Year Ended December 31,	2011		2012		2013		2014		2015		2016		2017
Accident Year:	(Unaudited)		(Unaudited)		(Unaudited)		(Unaudited)		(Unaudited)		(Unaudited)
2008	$	32,151	$	32,908	$	33,192	$	33,251	$	33,309	$	33,581	$	33,534
2009	46,510		49,547		50,482		50,675		51,180		51,192		51,216
2010	32,427		44,877		48,814		52,933		52,990		53,212		53,212
2011	59,279		87,558		87,649		94,042		95,771		96,369		96,427
2012			53,807		66,419		78,000		90,438		90,657		91,850
2013					55,816		56,683		75,542		77,236		77,266
2014							78,169		91,181		118,728		119,924
2015									26,564		89,940		97,825
2016											78,465		74,988
2017													119,775
Total													$	816,017
Total net reserves													$	83,466

9. Reserve for Loss and Loss Adjustment Expenses (continued)

Diversified Reinsurance: Casualty Commercial Auto - Pro-rata

All of the pro-rata Commercial Auto in this category is the liability portion of Commercial Auto quota shares. This business is separated from our Personal Auto liability due to the higher limits typically written on Commercial Auto exposures. Coverage is primarily for the service and commercial vehicle classification and to a lesser extent long haul trucking, common carrier or large fleet exposures. Commercial Auto has been an area of focus due to overall industry concerns regarding increases in loss frequency and severity.

Our initial underwriting year loss projections are generally based on the ELR method, primarily derived from individual account pricing analyses. Payment and reporting patterns are can be variable depending on the cedant, class of business, and venue. Transition to BF method and ultimately to LD method can vary in timing depending on our assessment of the stability of such indications.



Diversified Reinsurance - Casualty Commercial Auto - Pro-rata	Incurred losses and loss adjustment expenses, net of reinsurance														At December 31, 2017
For the Year Ended December 31,	2011		2012		2013		2014		2015		2016		2017		Total IBNR
Accident Year:	(Unaudited)		(Unaudited)		(Unaudited)		(Unaudited)		(Unaudited)		(Unaudited)
2008	$	26,291	$	27,299	$	26,480	$	26,157	$	25,893	$	25,892	$	25,904	$	31
2009	14,312		16,867		16,139		16,196		16,251		16,282		16,332		5
2010	21,950		28,798		27,040		27,288		28,609		28,570		28,246		58
2011	49,018		54,980		55,466		57,776		57,208		59,221		59,938		281
2012			39,912		43,776		45,616		47,465		53,443		57,393		1,916
2013					38,203		38,256		41,071		44,645		53,463		5,528
2014							47,198		48,635		49,719		58,335		10,605
2015									39,924		43,933		49,078		5,696
2016											27,256		27,313		5,652
2017													27,180		17,124
Total													$	403,182	$	46,896

	Cumulative paid losses and LAE, net of reinsurance
For the Year Ended December 31,	2011		2012		2013		2014		2015		2016		2017
Accident Year:	(Unaudited)		(Unaudited)		(Unaudited)		(Unaudited)		(Unaudited)		(Unaudited)
2008	$	16,359	$	19,468	$	25,695	$	25,754	$	25,790	$	25,802	$	25,803
2009	7,253		12,644		15,715		16,035		16,179		16,215		16,227
2010	9,721		16,941		25,396		26,807		27,981		28,127		28,137
2011	6,344		23,776		38,394		39,776		51,084		55,199		57,290
2012			6,807		15,715		24,721		42,384		42,690		47,493
2013					4,312		11,360		24,003		29,720		41,317
2014							5,264		23,095		24,311		39,826
2015									8,026		10,415		13,041
2016											978		646
2017													8,308
Total													$	278,088
Total net reserves													$	125,094

9. Reserve for Loss and Loss Adjustment Expenses (continued)

Diversified Reinsurance: Property - XOL

This category is composed of Property business that is either part of a multi-line or a Property only excess of loss treaty. Large limits with high attachment points are generally avoided. Excess of loss Property exposures are written on a per risk basis with an occurrence limit that applies to the aggregation of all Property losses associated with a particular event. This mitigates the Company’s exposure to losses from catastrophes.



Diversified Reinsurance - Property - XOL	Incurred losses and loss adjustment expenses, net of reinsurance														At December 31, 2017
For the Year Ended December 31,	2011		2012		2013		2014		2015		2016		2017		Total IBNR
Accident Year:	(Unaudited)		(Unaudited)		(Unaudited)		(Unaudited)		(Unaudited)		(Unaudited)
2008	$	7,451	$	7,263	$	7,198	$	7,275	$	7,227	$	7,245	$	7,597	$	48
2009	46,589		45,983		45,419		46,001		46,465		46,095		45,983		244
2010	39,922		38,690		35,536		35,483		35,785		36,147		36,319		271
2011	59,512		57,472		60,344		61,403		61,057		60,834		61,103		786
2012			51,286		68,537		67,303		67,487		66,219		68,224		1,261
2013					54,354		68,893		69,009		68,540		69,976		1,927
2014							49,067		65,025		65,853		65,552		3,487
2015									55,875		57,652		58,675		3,807
2016											38,563		33,067		1,847
2017													33,256		3,705
Total													$	479,752	$	17,383

	Cumulative paid losses and LAE, net of reinsurance
For the Year Ended December 31,	2011		2012		2013		2014		2015		2016		2017
Accident Year:	(Unaudited)		(Unaudited)		(Unaudited)		(Unaudited)		(Unaudited)		(Unaudited)
2008	$	6,467	$	6,722	$	6,914	$	6,992	$	7,027	$	7,082	$	7,470
2009	36,636		42,022		43,126		44,509		45,146		45,266		45,388
2010	25,373		30,650		33,135		34,266		34,968		35,553		35,888
2011	22,923		43,849		53,325		57,121		58,038		59,362		59,755
2012			25,811		48,818		57,227		59,611		62,845		65,007
2013					21,675		49,324		58,938		61,942		64,996
2014							20,105		44,629		56,169		58,251
2015									13,854		33,338		44,379
2016											3,919		18,054
2017													12,677
Total													$	411,865
Total net reserves													$	67,887

9. Reserve for Loss and Loss Adjustment Expenses (continued)

Diversified Reinsurance: Commercial Auto - XOL

The Commercial Auto class of business provides auto liability and physical damage coverages, but the vast majority of the losses emanate from liability exposures. Coverage includes service and commercial vehicle classification and also long haul trucking, common carrier or large fleet exposures. This category is composed of Commercial Auto business that is either part of a multi-line or a Commercial Auto only excess of loss treaty or a facultative certificate. Facultative certificates are policies written to cover individually underwritten and priced specific risks for a ceding company. The rest of the excess commercial auto business is written as part of a treaty where the Company underwrites the ceding company but not each individual risk.

Our initial underwriting year loss projections are generally based on the ELR method, derived either from account pricing analyses or historical performance metrics. Payment and reporting patterns are medium-tailed, and the movement away from the ELR to the BF or the LD methods may take several years. In some cases, due to changing development characteristics in the line of business, an average FS methodology may be employed.



Diversified Reinsurance - Commercial Auto - XOL	Incurred losses and loss adjustment expenses, net of reinsurance														At December 31, 2017
For the Year Ended December 31,	2011		2012		2013		2014		2015		2016		2017		Total IBNR
Accident Year:	(Unaudited)		(Unaudited)		(Unaudited)		(Unaudited)		(Unaudited)		(Unaudited)
2008	$	45,465	$	40,837	$	40,781	$	41,861	$	41,761	$	41,936	$	42,070	$	334
2009	39,452		35,925		41,326		44,478		43,496		44,081		44,042		776
2010	35,691		28,826		28,379		33,487		35,891		37,611		37,855		577
2011	45,054		44,651		48,073		53,108		57,620		59,931		60,957		1,263
2012			43,445		42,995		44,323		51,793		55,352		55,266		2,751
2013					54,131		52,533		69,732		94,178		100,326		7,849
2014							57,566		62,156		75,867		88,298		11,720
2015									47,445		48,355		59,457		7,060
2016											36,304		37,081		2,252
2017													25,333		4,186
Total													$	550,685	$	38,768

	Cumulative paid losses and LAE, net of reinsurance
For the Year Ended December 31,	2011		2012		2013		2014		2015		2016		2017
Accident Year:	(Unaudited)		(Unaudited)		(Unaudited)		(Unaudited)		(Unaudited)		(Unaudited)
2008	$	26,199	$	32,110	$	36,455	$	39,165	$	41,074	$	41,246	$	41,436
2009	8,956		18,865		27,059		27,096		29,956		33,122		41,760
2010	1,900		7,957		17,089		25,500		30,921		34,956		36,310
2011	1,012		5,462		16,955		31,556		49,640		52,774		58,139
2012			1,496		4,099		26,337		39,634		40,909		45,001
2013					1,181		10,359		40,021		51,333		72,202
2014							1,574		17,830		24,520		43,614
2015									5,261		8,435		9,718
2016											849		2,241
2017													1,643
Total													$	352,064
Total net reserves													$	198,621

9. Reserve for Loss and Loss Adjustment Expenses (continued)

Diversified Reinsurance: Workers' Compensation - XOL

The Workers' Compensation and employers liability treaty exposures focus primarily on regional or super-regional insurers with low to medium hazard exposures for small to medium sized employers. All Workers' Compensation excess coverages are written on an occurrence basis. This category is composed of Workers' Compensation business that is either part of a multi-line or a Workers' Compensation only excess of loss treaty or a facultative certificate. Facultative certificates are policies written to cover individually underwritten and priced specific risks for a ceding company. The rest of the excess workers' compensation business is written as part of a treaty where the Company underwrites the ceding company but not each individual risk. Reinsurance is used to limit the Company’s exposure when higher treaty limits are written.

Our initial underwriting year loss projections are generally based on the ELR method, derived either from account pricing analysis or historical performance metrics. Excess workers' compensation exposures typically have long claim payment and reporting patterns, even with the modest limits written. Claims can change due to many factors including, but not limited to, changes in medical inflation, judicial inflation and changing social trends. In addition, ceding company claim practices can influence the ultimate severity of excess claims. The ELR method is generally used for longer periods than for other lines.



Diversified Reinsurance - Workers' Compensation - XOL	Incurred losses and loss adjustment expenses, net of reinsurance														At December 31, 2017
For the Year Ended December 31,	2011		2012		2013		2014		2015		2016		2017		Total IBNR
Accident Year:	(Unaudited)		(Unaudited)		(Unaudited)		(Unaudited)		(Unaudited)		(Unaudited)
2008	$	26,823	$	27,963	$	26,736	$	25,534	$	24,731	$	23,955	$	22,873	$	3,129
2009	24,618		23,583		21,720		23,153		21,125		22,241		22,502		3,003
2010	24,132		19,270		16,921		12,674		13,140		15,598		17,104		1,441
2011	37,335		39,719		40,274		39,434		40,057		40,744		40,796		12,675
2012			30,759		31,353		26,093		23,801		23,300		21,013		6,700
2013					39,892		36,328		32,218		23,252		21,659		9,333
2014							47,333		42,982		37,544		39,542		13,145
2015									38,583		34,290		33,028		15,998
2016											47,869		40,459		25,573
2017													55,194		39,689
Total													$	314,170	$	130,686

	Cumulative paid losses and LAE, net of reinsurance
For the Year Ended December 31,	2011		2012		2013		2014		2015		2016		2017
Accident Year:	(Unaudited)		(Unaudited)		(Unaudited)		(Unaudited)		(Unaudited)		(Unaudited)
2008	$	5,659	$	7,316	$	10,530	$	11,105	$	14,094	$	15,236	$	15,543
2009	2,027		3,389		4,890		6,524		15,679		16,239		16,386
2010	661		1,244		1,999		3,301		3,870		11,804		13,394
2011	514		2,122		5,216		8,656		11,426		11,834		13,976
2012			546		1,318		2,364		4,220		8,327		8,960
2013					890		2,931		4,636		6,191		7,743
2014							2,003		3,030		10,526		14,670
2015									341		5,634		7,495
2016											4,561		4,614
2017													3,309
Total													$	106,090
			All outstanding liabilities prior to 2008, net of reinsurance										74,903
Total net reserves													$	282,983

9. Reserve for Loss and Loss Adjustment Expenses (continued)

Diversified Reinsurance: Excess of Loss - Other Liability including Umbrella

The coverages in this category are written on an occurrence basis. The umbrella class of business is primarily written for small to medium sized regional and some super regional companies on either a stand-alone basis or in support of a treaty covering other exposures. The other liabilities class of business also includes general liability. Most business is from regional companies which include coverage for artisan contractors, but higher severity exposures, such as heavy products liability or completed operations exposures are typically avoided. Professional, Directors and Officers and Errors and Omissions exposures are also typically avoided. This category is composed of excess of loss Other Liability including umbrella business that is either part of a multi-line or an excess of liability or umbrella only excess of loss treaty or, occasionally, a facultative certificate. Facultative certificates are policies written to cover individually underwritten and priced specific risks for a ceding company. The majority of this business is written as part of a treaty where the Company underwrites the ceding company but not each individual risk. Reinsurance is used to limit the Company’s exposure when higher treaty limits are written.

Excess other liability and umbrella exposures can have long claim payment and reporting patterns, even with the relatively modest limits written. Our initial underwriting year loss projections are generally based on the ELR method, derived either from account pricing analyses or historical performance metrics. Transitions to the BF method may take a few years, but are typically faster than for workers' compensation.



Diversified Reinsurance - Other Liability - XOL	Incurred losses and loss adjustment expenses, net of reinsurance														At December 31, 2017
For the Year Ended December 31,	2011		2012		2013		2014		2015		2016		2017		Total IBNR
Accident Year:	(Unaudited)		(Unaudited)		(Unaudited)		(Unaudited)		(Unaudited)		(Unaudited)
2008	$	29,961	$	29,052	$	29,362	$	30,086	$	29,659	$	30,336	$	30,374	$	1,163
2009	25,801		23,927		24,070		23,541		25,574		24,889		26,281		836
2010	25,939		23,157		20,348		19,736		20,399		20,896		21,204		1,429
2011	34,374		35,463		33,085		29,281		28,843		27,490		27,936		953
2012			35,609		36,096		30,291		31,509		30,073		30,884		2,473
2013					42,600		40,698		38,331		38,548		40,319		12,947
2014							43,305		46,021		48,809		52,737		12,655
2015									31,791		31,282		33,377		13,916
2016											32,657		30,190		15,994
2017													24,089		49,695
Total													$	317,391	$	112,061

	Cumulative paid losses and LAE, net of reinsurance
For the Year Ended December 31,	2011		2012		2013		2014		2015		2016		2017
Accident Year:	(Unaudited)		(Unaudited)		(Unaudited)		(Unaudited)		(Unaudited)		(Unaudited)
2008	$	18,230	$	21,186	$	23,528	$	25,002	$	27,076	$	27,694	$	28,383
2009	8,850		13,035		16,025		18,209		20,522		22,722		24,558
2010	6,430		9,751		11,995		15,513		17,221		18,281		19,543
2011	3,694		8,288		12,480		17,181		19,348		24,742		25,988
2012			3,385		9,841		12,140		15,469		23,662		25,976
2013					6,253		13,086		20,111		24,665		26,998
2014							5,321		24,146		33,013		39,339
2015									10,489		17,312		21,118
2016											10,552		15,441
2017													12,059
Total													$	239,403
Total net reserves													$	77,988

9. Reserve for Loss and Loss Adjustment Expenses (continued)

Diversified Reinsurance: Accident and Health

The A&H class of business specialize in reinsuring employer medical stop loss and other A&H lines. The majority of the portfolio is medical stop loss, however, there is expertise to selectively write accident, disability and other ancillary A&H products.

Our initial underwriting year loss projections are generally based on the ELR method, derived either from account pricing analyses or historical performance metrics. Payment and reporting patterns are very short-tailed, with most claims completely paid within 18 months of the underlying policy effective date. The movement away from the ELR to BF or LD methods typically happens very rapidly.



Diversified Reinsurance - A&H	Incurred losses and loss adjustment expenses, net of reinsurance														At December 31, 2017
For the Year Ended December 31,	2011		2012		2013		2014		2015		2016		2017		Total IBNR
Accident Year:	(Unaudited)		(Unaudited)		(Unaudited)		(Unaudited)		(Unaudited)		(Unaudited)
2008	$	11,153	$	11,147	$	11,133	$	11,111	$	11,106	$	11,106	$	11,106	$	—
2009	80,424		79,810		79,604		79,601		79,666		79,657		79,645		1
2010	43,582		43,271		43,048		43,281		43,366		43,366		43,364		—
2011	31,461		32,302		32,003		31,994		31,999		31,999		31,962		9
2012			29,270		31,725		31,860		31,816		31,815		31,811		10
2013					24,995		26,171		23,751		23,558		23,535		—
2014							27,851		28,839		25,750		26,223		493
2015									39,768		42,209		38,493		466
2016											53,164		52,983		17,376
2017													63,328		11,704
Total													$	402,450	$	30,059

	Cumulative paid losses and LAE, net of reinsurance
For the Year Ended December 31,	2011		2012		2013		2014		2015		2016		2017
Accident Year:	(Unaudited)		(Unaudited)		(Unaudited)		(Unaudited)		(Unaudited)		(Unaudited)
2008	$	11,145	$	11,142	$	11,128	$	11,106	$	11,106	$	11,106	$	11,106
2009	79,918		79,776		79,634		79,432		79,654		79,640		79,644
2010	33,498		42,809		42,995		43,095		43,365		43,365		43,364
2011	8,924		24,105		31,837		31,915		31,990		31,959		31,953
2012			7,407		23,362		31,733		31,824		31,821		31,800
2013					6,246		17,710		23,125		23,542		23,535
2014							8,001		16,909		25,009		25,713
2015									8,170		29,251		37,869
2016											12,974		32,699
2017													23,659
Total													$	341,342
Total net reserves													$	61,108

9. Reserve for Loss and Loss Adjustment Expenses (continued)

Diversified Reinsurance - International

The international business written by our IIS team is mainly proportional treaty business, a significant portion of which is Personal Auto quota share but also comprises credit life quota share. Life and personal accident business is also written on a direct basis by Maiden LF. Maiden works with insurance partners, automobile manufacturers and their related credit providers and other organizations to design and implement insurance programs in both auto distribution-related and other consumer insurance products.

For the auto quota share exposure, our initial underwriting year loss projections are generally based on the ELR method, derived from account pricing analyses. Payment and reporting patterns are short-tailed, and the movement away from the ELR to BF or LD methods typically happens very rapidly. Credit life reserves are primarily a function of reporting lag, typically only one or several months on average. The reserves are calculated using a FS methodology, where the frequency is a function of the average claims lag and the average per claims severity.



Diversified Reinsurance - International	Incurred losses and loss adjustment expenses, net of reinsurance														At December 31, 2017
For the Year Ended December 31,	2011		2012		2013		2014		2015		2016		2017		Total IBNR
Accident Year:	(Unaudited)		(Unaudited)		(Unaudited)		(Unaudited)		(Unaudited)		(Unaudited)
2010	$	84,588	$	84,206	$	84,115	$	83,760	$	81,873	$	84,095	$	86,237	$	(616	)
2011	53,773		52,314		52,316		52,537		52,488		52,305		52,714		(25		)
2012			53,888		52,141		52,487		52,629		52,705		52,976		90
2013					48,082		53,708		55,168		54,687		55,323		249
2014							45,402		51,681		51,614		51,529		855
2015									45,693		47,228		47,792		(1,102		)
2016											41,231		43,310		1,718
2017													39,459		12,339
Total													$	429,340	$	13,508

	Cumulative paid losses and LAE, net of reinsurance
For the Year Ended December 31,	2011		2012		2013		2014		2015		2016		2017
Accident Year:	(Unaudited)		(Unaudited)		(Unaudited)		(Unaudited)		(Unaudited)		(Unaudited)
2010	$	36,609	$	46,130	$	51,165	$	52,964	$	54,664	$	56,286	$	57,886
2011	26,316		48,729		50,506		51,869		52,320		52,564		52,714
2012			25,533		43,510		46,136		47,336		47,688		48,288
2013					26,056		46,827		49,544		50,998		51,491
2014							25,391		44,970		47,434		48,757
2015									23,259		42,044		44,258
2016											24,023		39,033
2017													20,522
Total													$	362,949
Total net reserves													$	66,391

The following tables represent information on the Company's incurred losses and LAE and cumulative paid losses and LAE, both net of reinsurance, by significant line of business since 2011 for our AmTrust Reinsurance segment. All data shown for the AmTrust in the tables that follow are from the Company’s quota share contracts with AmTrust, both the multi-year Reinsurance Agreement and the annually renewable European Hospital Liability Quota Share contract. AmTrust purchases significant reinsurance for losses above $10 million covered by the Reinsurance Agreement. The Company’s share of AmTrust’s loss net of reinsurance in the Reinsurance Agreement is 40%.

9. Reserve for Loss and Loss Adjustment Expenses (continued)

AmTrust Reinsurance: Workers’ Compensation

This reserve class consists of the Workers’ Compensation portion of the quota share Reinsurance Agreement. The business is written in the U.S. by AmTrust from their Small Commercial Business and their Specialty Program business units. AmTrust’s Small Commercial Business unit focuses on writing smaller, niche workers' compensation exposures in generally low-hazard occupations. Workers’ Compensation business written in the Specialty Program unit is typically part of programs consisting of multiple lines of business. The business is produced by managing general agents with AmTrust regularly adding new programs and terminating or renegotiating unprofitable ones.

Our initial underwriting year loss projections are generally based on the ELR method, derived from historical performance after the consideration of loss and premium trends. Since it is proportional exposure, and due to the size and the classes of business insured by AmTrust, this reserving class is much shorter tailed than a traditional workers compensation book, and the transition to the BF and the LD methods happens relatively quickly, within the first several years.



AmTrust Reinsurance Workers' Compensation	Incurred losses and loss adjustment expenses, net of reinsurance														At December 31, 2017
For the Year Ended December 31,	2011		2012		2013		2014		2015		2016		2017		Total IBNR
Accident Year:	(Unaudited)		(Unaudited)		(Unaudited)		(Unaudited)		(Unaudited)		(Unaudited)
2008	$	80,800	$	81,493	$	82,438	$	81,240	$	82,301	$	83,039	$	83,622	$	83
2009	102,240		102,245		103,864		109,213		106,204		105,901		107,165		1,418
2010	106,799		113,880		118,209		120,243		125,020		124,073		123,968		1,835
2011	104,923		125,549		130,712		132,728		133,995		133,916		135,379		1,411
2012			136,960		168,016		173,946		171,040		172,692		181,616		5,141
2013					237,019		245,765		238,392		242,447		261,915		11,293
2014							379,589		365,515		382,260		419,748		24,366
2015									474,140		474,212		526,269		59,563
2016											528,906		568,006		88,243
2017													615,957		285,521
Total													$	3,023,645	$	478,874

	Cumulative paid losses and LAE, net of reinsurance
For the Year Ended December 31,	2011		2012		2013		2014		2015		2016		2017
Accident Year:	(Unaudited)		(Unaudited)		(Unaudited)		(Unaudited)		(Unaudited)		(Unaudited)
2008	$	68,400	$	72,823	$	76,018	$	77,370	$	78,161	$	79,230	$	81,159
2009	71,963		83,464		89,462		93,425		96,396		98,811		100,103
2010	61,322		82,614		95,120		103,280		108,171		114,639		115,014
2011	33,089		69,357		91,414		105,584		114,107		115,966		122,579
2012			45,030		88,382		119,059		138,706		150,543		158,807
2013					56,249		121,182		168,785		199,300		216,527
2014							69,512		189,954		268,467		321,258
2015									86,695		246,616		338,642
2016											110,051		284,501
2017													111,508
Total													$	1,850,098
			All outstanding liabilities prior to 2008, net of reinsurance										617
Total net reserves													$	1,174,164

9. Reserve for Loss and Loss Adjustment Expenses (continued)

AmTrust Reinsurance: General Liability

This reserve class consists of the General Liability portion of the Reinsurance Agreement. The business is written in the U.S. by AmTrust from their Small Commercial Business and Specialty Program segments. The Small Commercial Business unit focuses on writing smaller, niche business typically underserved by the broader insurance market, which typically have limits of $1,000. General Liability business written in the Small Commercial business unit grew substantially following AmTrust’s renewal rights acquisition in 2014. Specialty Program business may contain a mix of exposures from retail operations, contractors, manufacturer, and other premises.

Our initial underwriting year loss projections are generally based on the ELR method, derived from historical performance after the consideration of loss and premium trends. This proportional exposure is relatively short tailed, and the transition to the BF and the LD methods happens relatively quickly, within the first several years.



AmTrust Reinsurance General Liability	Incurred losses and loss adjustment expenses, net of reinsurance														At December 31, 2017
For the Year Ended December 31,	2011		2012		2013		2014		2015		2016		2017		Total IBNR
Accident Year:	(Unaudited)		(Unaudited)		(Unaudited)		(Unaudited)		(Unaudited)		(Unaudited)
2008	$	28,786	$	31,921	$	33,051	$	33,792	$	34,169	$	35,985	$	36,627	$	274
2009	19,311		28,384		29,123		30,902		32,418		34,040		34,863		271
2010	15,783		28,850		34,761		36,455		38,536		38,298		41,597		1,003
2011	11,334		24,731		35,628		40,557		42,100		45,303		49,338		2,291
2012			21,281		33,445		42,450		48,851		50,800		55,991		2,715
2013					42,021		43,116		66,869		68,641		79,731		5,476
2014							65,469		66,558		77,930		99,873		16,909
2015									118,111		95,766		122,942		30,023
2016											98,149		114,864		58,221
2017													116,158		86,190
Total													$	751,984	$	203,373

	Cumulative paid losses and LAE, net of reinsurance
For the Year Ended December 31,	2011		2012		2013		2014		2015		2016		2017
Accident Year:	(Unaudited)		(Unaudited)		(Unaudited)		(Unaudited)		(Unaudited)		(Unaudited)
2008	$	20,935	$	26,288	$	29,384	$	32,849	$	32,423	$	32,765	$	34,935
2009	7,840		13,904		19,727		24,298		28,312		30,924		32,878
2010	5,140		11,187		19,010		26,429		30,948		34,125		37,317
2011	2,813		6,072		12,158		22,963		31,619		39,350		41,257
2012			5,084		13,224		18,020		29,752		40,864		45,775
2013					4,996		10,226		32,249		44,698		58,377
2014							3,503		24,581		36,026		57,678
2015									20,849		33,963		52,350
2016											6,402		21,959
2017													6,967
Total													$	389,493
			All outstanding liabilities prior to 2008, net of reinsurance										251
Total net reserves													$	362,742

9. Reserve for Loss and Loss Adjustment Expenses (continued)

AmTrust Reinsurance: Commercial Auto Liability

Commercial Auto Liability is written in the U.S. and included in the Small Commercial Business and Specialty Program segments. The Small Commercial Business unit focuses on writing smaller, niche business typically underserved by the broader insurance market, and policies typically have limits of $1,000. Auto Liability business written in the Small Commercial business unit grew substantially following AmTrust’s renewal rights acquisition in 2014. Commercial Auto business written in the Specialty Program unit is typically part of programs consisting of multiple lines of business.



AmTrust Reinsurance Commercial Auto Liability	Incurred losses and loss adjustment expenses, net of reinsurance														At December 31, 2017
For the Year Ended December 31,	2011		2012		2013		2014		2015		2016		2017		Total IBNR
Accident Year:	(Unaudited)		(Unaudited)		(Unaudited)		(Unaudited)		(Unaudited)		(Unaudited)
2008	$	29,890	$	32,769	$	33,700	$	34,522	$	34,584	$	35,975	$	35,521	$	179
2009	22,183		26,275		28,551		30,812		31,024		30,468		30,919		788
2010	26,239		33,457		37,154		38,043		40,193		40,523		42,146		2,093
2011	16,193		24,292		29,577		32,578		33,839		34,790		36,149		2,286
2012			20,863		32,691		40,076		44,812		48,116		46,150		110
2013					33,473		44,771		50,647		59,702		63,162		1,588
2014							47,525		55,023		73,966		82,427		3,346
2015									66,967		92,955		106,560		17,881
2016											121,828		118,210		30,881
2017													156,575		90,420
Total													$	717,819	$	149,572

	Cumulative paid losses and LAE, net of reinsurance
For the Year Ended December 31,	2011		2012		2013		2014		2015		2016		2017
Accident Year:	(Unaudited)		(Unaudited)		(Unaudited)		(Unaudited)		(Unaudited)		(Unaudited)
2008	$	25,207	$	29,386	$	30,975	$	32,643	$	33,536	$	34,074	$	34,803
2009	14,532		18,736		22,959		26,975		29,226		29,829		29,842
2010	14,203		21,050		28,602		34,855		37,734		39,413		39,750
2011	5,721		12,333		18,813		25,808		29,769		32,362		33,130
2012			6,693		14,979		26,508		35,460		43,745		44,165
2013					8,267		19,865		34,379		48,122		57,349
2014							8,450		22,858		42,960		64,459
2015									13,102		39,179		62,945
2016											19,071		48,595
2017													26,863
Total													$	441,901
			All outstanding liabilities prior to 2008, net of reinsurance										330
Total net reserves													$	276,248

9. Reserve for Loss and Loss Adjustment Expenses (continued)

AmTrust Reinsurance: European Hospital Liability

AmTrust entered this line of business in Italy in 2010 when it believed there were significant opportunities in what had traditionally been an under-performing market. European Hospital Liability policies are written on a claim made basis. Maiden wrote a separate annually renewable contract covering this exposure a year later. It is not part of the Reinsurance Agreement. Currently, most exposure remains in Italy with a modest amount of other European exposure. The European Hospital Liability Quota Share exposure results in many instances where claims are eventually closed with no liability. As a claims made exposure, there is also minimal to no "tail" that would result in IBNR. The net result is a significant amount of negative IBNR accounting for claims with case reserves established that are expected to be closed with no payment.

Our initial underwriting year loss projections are generally based on the ELR method, derived from historical performance after the consideration of loss and premium trends. Loss reporting for this line is unique, as a large proportion of claims are initially reserved but eventually closed with no payment, as the insurer is found to have no liability after investigation of the fundamentals of the claim. In addition, the underlying insurance policies we assume are both per claims and aggregate. For these reasons, the LD method is not typically employed in the estimate of loss. After the first several years, we utilize a FS methodology; frequency is estimated on a reported claim basis and adjusted for an estimate of the proportion of claims which will close with no payment, while severity is estimated on both a gross and net of deductible basis.



AmTrust Reinsurance European Hospital Liability	Incurred losses and loss adjustment expenses, net of reinsurance														At December 31, 2017
For the Year Ended December 31,	2011		2012		2013		2014		2015		2016		2017		Total IBNR
Accident Year:	(Unaudited)		(Unaudited)		(Unaudited)		(Unaudited)		(Unaudited)		(Unaudited)
2011	$	52,759	$	24,644	$	38,147	$	52,706	$	50,134	$	69,034	$	66,939	$	4,607
2012			84,708		86,334		85,497		109,629		98,068		92,858		(17,642		)
2013					52,045		65,386		68,208		89,607		81,933		(16,629		)
2014							54,147		57,017		61,072		67,954		(9,999		)
2015									50,481		49,011		63,813		3,546
2016											47,264		54,411		5,336
2017													43,512		18,423
Total													$	471,420	$	(12,358	)

	Cumulative paid losses and LAE, net of reinsurance
For the Year Ended December 31,	2011		2012		2013		2014		2015		2016		2017
Accident Year:	(Unaudited)		(Unaudited)		(Unaudited)		(Unaudited)		(Unaudited)		(Unaudited)
2011	$	1,165	$	4,614	$	13,615	$	24,985	$	30,563	$	37,974	$	43,935
2012			5,106		16,324		37,152		48,389		62,213		73,357
2013					3,172		15,958		27,456		41,892		52,662
2014							4,465		12,578		26,145		37,212
2015									3,687		11,726		24,209
2016											3,805		11,303
2017													1,358
Total													$	244,036
Total net reserves													$	227,384

9. Reserve for Loss and Loss Adjustment Expenses (continued)

AmTrust Reinsurance: All Other Lines

This category includes all lines except Workers' Compensation, General Liability and Commercial Auto from the AmTrust Small Business Commercial and Specialty Program Divisions. The predominant exposures are property and auto physical damage.



AmTrust Reinsurance All Other Lines	Incurred losses and loss adjustment expenses, net of reinsurance														At December 31, 2017
For the Year Ended December 31,	2011		2012		2013		2014		2015		2016		2017		Total IBNR
Accident Year:	(Unaudited)		(Unaudited)		(Unaudited)		(Unaudited)		(Unaudited)		(Unaudited)
2008	$	27,630	$	28,724	$	28,715	$	29,149	$	29,237	$	29,070	$	29,576	$	75
2009	12,516		20,349		11,959		13,329		14,309		14,492		16,088		663
2010	14,440		15,182		24,718		15,484		16,078		16,105		17,071		1,110
2011	18,822		19,948		26,343		27,509		22,359		22,616		23,376		769
2012			14,697		18,443		19,426		21,898		18,673		19,850		1,430
2013					17,806		17,630		28,058		22,918		21,313		961
2014							20,597		25,268		26,021		24,958		2,938
2015									52,706		54,857		49,631		8,098
2016											79,654		74,948		31
2017													104,637		35,063
Total													$	381,448	$	51,138

	Cumulative paid losses and LAE, net of reinsurance
For the Year Ended December 31,	2011		2012		2013		2014		2015		2016		2017
Accident Year:	(Unaudited)		(Unaudited)		(Unaudited)		(Unaudited)		(Unaudited)		(Unaudited)
2008	$	25,776	$	29,710	$	29,900	$	31,217	$	29,388	$	29,177	$	30,833
2009	7,891		8,084		8,743		11,093		13,105		13,870		15,224
2010	12,373		12,332		13,012		15,375		15,748		16,058		16,919
2011	13,840		16,424		17,571		21,279		22,044		22,715		23,892
2012			10,308		14,031		16,033		16,936		17,946		18,205
2013					11,877		15,997		17,509		20,258		20,456
2014							12,028		20,277		20,940		22,018
2015									28,929		45,208		42,631
2016											42,795		69,805
2017													48,903
Total													$	308,886
			All outstanding liabilities prior to 2008, net of reinsurance										2
Total net reserves													$	72,564

9. Reserve for Loss and Loss Adjustment Expenses (continued)

Reconciliation of Development Tables to Consolidated Balance Sheet

The following table represents a reconciliation of the net incurred and paid claims development tables to the reserve for loss and LAE in the Consolidated Balance Sheet at December 31, 2017:



	As at December 31, 2017
	Total Net Reserves		Reinsurance Recoverables on unpaid claims		Total Gross Reserves
Diversified Reinsurance
Property - Pro-rata	$	79,354	$	2,101	$	81,455
Casualty Personal Auto - Pro-rata	83,466		13,438		96,904
Casualty Commercial Auto - Pro-rata	125,094		1,592		126,686
Property - XOL	67,887		—		67,887
Commercial Auto - XOL	198,621		—		198,621
Workers' Compensation - XOL	282,983		—		282,983
Other Liability - XOL	77,988		25,446		103,434
A&H	61,108		—		61,108
International	66,391		2,051		68,442
Total	1,042,892		44,628		1,087,520
Other Diversified	99,851		—		99,851
Total Diversified Reinsurance - Segment	1,142,743		44,628		1,187,371

AmTrust Reinsurance
Workers' Compensation	1,174,164		—		1,174,164
General Liability	362,742		—		362,742
Commercial Auto Liability	276,248		16,991		293,239
European Hospital Liability	227,384		—		227,384
All Other Lines	72,564		—		72,564
Total	2,113,102		16,991		2,130,093
Other reconciling items	155,048		5,840		160,888
Total AmTrust Reinsurance - Segment	2,268,150		22,831		2,290,981

Other	18,744		50,152		68,896
Total reserves and LAE	$	3,429,637	$	117,611	$	3,547,248

9. Reserve for Loss and Loss Adjustment Expenses (continued)


b)	Claims duration disclosure

The following unaudited supplementary information represents the average annual percentage payout of net loss and LAE by age, net of reinsurance, for both our reportable segments at December 31, 2017:



	Average annual payout of incurred claims by age, net of reinsurance
	Year 1		Year 2		Year 3		Year 4		Year 5		Year 6		Year 7
Diversified Reinsurance
Property - Pro-rata	41.1	%	28.0	%	19.8	%	6.4	%	2.0	%	1.2	%	0.8	%
Casualty Personal Auto - Pro-rata	62.0	%	15.8	%	16.3	%	4.3	%	0.4	%	0.8	%	0.1	%
Casualty Commercial Auto - Pro-rata	12.0	%	15.8	%	16.9	%	21.5	%	12.9	%	8.4	%	8.1	%
Property XOL	31.0	%	35.7	%	16.7	%	6.0	%	3.8	%	2.9	%	1.6	%
Commercial Auto XOL	3.1	%	9.0	%	20.2	%	22.2	%	20.7	%	9.0	%	11.3	%
Workers' Compensation XOL	4.8	%	5.2	%	9.4	%	8.0	%	5.5	%	0.7	%	0.6	%
Other Liability - XOL	21.6	%	19.3	%	12.5	%	10.3	%	7.0	%	15.6	%	6.8	%
Accident & Health	28.1	%	42.2	%	28.1	%	1.1	%	0.5	%	(0.1	)%	—	%
International	49.9	%	37.4	%	4.1	%	2.2	%	0.5	%	1.3	%	4.6	%

AmTrust Reinsurance
Workers' Compensation	20.2	%	27.5	%	17.5	%	11.1	%	6.1	%	3.3	%	3.4	%
General Liability	7.6	%	12.2	%	14.9	%	19.4	%	17.3	%	11.1	%	7.8	%
Commercial Auto Liability	14.2	%	20.3	%	21.5	%	19.7	%	14.0	%	6.6	%	5.0	%
European Hospital Liability	4.8	%	11.9	%	17.9	%	15.7	%	12.1	%	11.5	%	8.9	%
All other lines	53.9	%	25.2	%	3.2	%	7.1	%	6.8	%	3.6	%	5.1	%

The average annual payout of incurred claims by age, net of reinsurance, is calculated using the amount of claims paid in each development year and is compared with the estimated incurred claims as of the most recent period presented.