Losses And Loss Adjustment Expenses

12 Months Ended

Dec. 31, 2012

Insurance Loss Reserves [Abstract]

Losses and Loss Adjustment Expenses

Losses and Loss Adjustment Expenses

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

	Year Ended December 31,
	2012			2011			2010
	(Amounts in thousands)
Gross reserves at January 1	$	985,279		$	1,034,205		$	1,053,334
Less reinsurance recoverable	(7,921		)	(6,805		)	(7,748		)
Net reserves at January 1	977,358			1,027,400			1,045,586
Incurred losses and loss adjustment expenses related to:
Current year	1,919,116			1,810,711			1,838,824
Prior years	42,332			18,494			(13,058		)
Total incurred losses and loss adjustment expenses	1,961,448			1,829,205			1,825,766
Loss and loss adjustment expense payments related to:
Current year	1,314,748			1,265,188			1,240,696
Prior years	600,090			614,059			603,256
Total payments	1,914,838			1,879,247			1,843,952
Net reserves at year-end	1,023,968			977,358			1,027,400
Reinsurance recoverable	12,155			7,921			6,805
Gross reserves at year-end	$	1,036,123		$	985,279		$	1,034,205

The increase in the provision for insured events of prior years in 2012 of approximately $42 million primarily resulted from the re-estimate of accident years 2010 and 2011 California BI losses which have experienced higher average severities and more late reported claims than were originally estimated at December 31, 2011. Additionally, the Company experienced unfavorable development on the run-off of California commercial taxi business and Florida homeowners business, both of which the Company ceased writing in 2011. 2012 accident year losses were also impacted by higher loss severity and frequency on the California private passenger automobile line of business.

The increase in the provision for insured events of prior years in 2011 of approximately $18 million primarily resulted from the re-estimate of accident years 2008 through 2010 California BI losses which have experienced higher average severities than were originally estimated at December 31, 2010. Partially offsetting this increase was favorable development on loss adjustment expenses reflecting cost savings from the transition of a large portion of litigated cases from outside counsel to in-house counsel.

The decrease in the provision for insured events of prior years in 2010 of approximately $13 million primarily resulted from the re-estimate of accident year 2009 California BI losses. In addition, the Company experienced favorable development on New Jersey personal automobile reserves, resulting from more aggressive handling of litigated claims, which includes a high percentage of favorable results in cases brought to trial. The favorable development was partially offset by unfavorable development on Florida reserves, which included approximately $3 million of unfavorable development on the homeowners line of business, primarily related to sinkhole claims.

The Company experienced estimated pre-tax losses from severe weather events of $39 million, $18 million, and $25 million in 2012, 2011, and 2010, respectively. The losses in 2012 were primarily due to Hurricane Sandy and wind and hail storms in the Midwest region. The losses in 2011 related to California wind storms, Hurricane Irene, and Georgia tornadoes. The losses in 2010 primarily related to California rainstorms.