Loss and Loss Adjustment Expense Reserves

9 Months Ended

Sep. 30, 2023

Loss and Loss Adjustment Expense Reserves

9. Loss and Loss Adjustment Expense Reserves

The reconciliation of the beginning and ending reserve balances for losses and loss adjustment expenses (“LAE”), net of reinsurance is summarized as follows for the nine months ended September 30, (in millions):


	2023		2022
Reserve for losses and LAE gross of reinsurance recoverables on unpaid losses and LAE as of beginning of the period	$	293.8	$	260.8
Less: Reinsurance recoverables on unpaid losses and LAE	(228.8)		(217.0)
Reserve for losses and LAE, net of reinsurance recoverables as of beginning of the period	65.0		43.8
Add: Incurred losses and LAE, net of reinsurance, related to:
Current year	153.0		84.9
Prior years	(2.1)		(9.3)
Total incurred	150.9		75.6
Deduct: Loss and LAE payments, net of reinsurance, related to:
Current year	89.8		45.9
Prior years	15.7		15.7
Total paid	105.5		61.6

Reserve for losses and LAE, net of reinsurance recoverables at end of period	110.4		57.8
Add: Reinsurance recoverables on unpaid losses and LAE at end of period	249.5		263.7
Reserve for losses and LAE gross of reinsurance recoverables on unpaid losses and LAE as of end of the period	$	359.9	$	321.5

Loss development occurs when actual losses incurred vary from the Company’s previously developed estimates, which are established through the Company’s loss and LAE reserve estimate processes.

Net incurred losses and LAE experienced favorable development of $2.1 million and $9.3 million for the nine months ended September 30, 2023 and 2022, respectively. The favorable development of $2.1 million was driven primarily by the 2022 accident year, resulting in a net release of $1.0 million from catastrophe reserves, and $1.1 million from attritional reserves, which were recorded in the first six months of 2023. These changes are a result of ongoing analysis of claims emergence patterns and loss trends.

The prior period’s favorable development of $9.3 million was driven primarily by the 2021 accident year, resulting in a net release of $5.0 million from attritional reserves and $4.3 million from catastrophe reserves. These changes are a result of ongoing analysis of claims emergence patterns and loss trends.