Losses And Loss Adjustment Expenses

12 Months Ended

Dec. 31, 2013

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,
	2013			2012			2011
	(Amounts in thousands)
Gross reserves at January 1	$	1,036,123		$	985,279		$	1,034,205
Less reinsurance recoverable	(12,155		)	(7,921		)	(6,805		)
Net reserves at January 1	1,023,968			977,358			1,027,400
Incurred losses and loss adjustment expenses related to:
Current year	1,959,730			1,919,116			1,810,711
Prior years	2,960			42,332			18,494
Total incurred losses and loss adjustment expenses	1,962,690			1,961,448			1,829,205
Loss and loss adjustment expense payments related to:
Current year	1,354,074			1,314,748			1,265,188
Prior years	607,527			600,090			614,059
Total payments	1,961,601			1,914,838			1,879,247
Net reserves at year-end	1,025,057			1,023,968			977,358
Reinsurance recoverable	13,927			12,155			7,921
Gross reserves at year-end	$	1,038,984		$	1,036,123		$	985,279

The increase in the provision for insured events of prior years in 2013 of approximately $3 million primarily resulted from Florida claims that were re-opened from prior years due to a state supreme court ruling that was adverse to the insurance industry.

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 Company experienced estimated pre-tax losses and loss adjustment expenses from severe weather events of $17 million, $39 million, and $18 million in 2013, 2012, and 2011, respectively. The losses in 2013 were primarily due to tornadoes in Oklahoma and severe storms in the Midwest and the Southeast regions during the second quarter. 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.