

	Year Ended December 31,
	2019			2018			2017
	(Amounts in thousands)
Gross reserves at January 1	$	1,829,412		$	1,510,613		$	1,290,248
Less reinsurance recoverables on unpaid losses	(180,859		)	(64,001		)	(13,161		)
Net reserves at January 1	1,648,553			1,446,612			1,277,087
Incurred losses and loss adjustment expenses related to:
Current year	2,696,230			2,483,693			2,390,453
Prior years	9,794			93,096			54,431
Total incurred losses and loss adjustment expenses	2,706,024			2,576,789			2,444,884
Loss and loss adjustment expense payments related to:
Current year	1,651,550			1,543,828			1,550,789
Prior years	857,872			831,020			724,570
Total payments	2,509,422			2,374,848			2,275,359
Net reserves at December 31	1,845,155			1,648,553			1,446,612
Reinsurance recoverables on unpaid losses	76,100			180,859			64,001
Gross reserves at December 31	$	1,921,255		$	1,829,412		$	1,510,613

The increase in the provision for insured events of prior years in 2019 of approximately $9.8 million primarily resulted from higher than estimated defense and cost containment expenses in the California automobile line of insurance business, partially offset by favorable development on prior years’ loss and loss adjustment expense reserves, including catastrophe losses, in certain of the Company's other lines of insurance business.

The increase in the provision for insured events of prior years in 2018 of approximately $93.1 million primarily resulted from higher than estimated California automobile losses resulting from severity in excess of expectations for bodily injury claims as well as higher than estimated defense and cost containment expenses in the California automobile line of insurance business.

The increase in the provision for insured events of prior years in 2017 of approximately $54.4 million primarily resulted from higher than estimated losses in California automobile and property lines, which experienced higher loss severity on liability coverages including bodily injury and property damage and higher loss adjustment expenses than previously estimated.

The Company recorded catastrophe losses net of reinsurance of approximately $53 million, $67 million, and $79 million in 2019, 2018, and 2017, respectively. Catastrophe losses due to the catastrophe events that occurred in 2019 totaled approximately $57 million, with no reinsurance benefits used for these losses, resulting primarily from wildfires and winter storms in California, a hurricane in Texas, and tornadoes and wind and hail storms in the Midwest. These losses were partially offset by favorable development of approximately $4 million on prior years' catastrophe losses, primarily from reductions in the Company's retained portion of losses on the Camp and Woolsey Fires, as described further below. Catastrophe losses before reinsurance benefits totaled approximately $289 million in 2018, primarily resulting from wildfires in Northern and Southern California and weather-related catastrophes across several states. Catastrophe losses before reinsurance benefits totaled approximately $168 million in 2017, resulting primarily from wildfires in Northern and Southern California, severe rainstorms in California, and the impact of hurricanes in Texas, Florida and Georgia.

During the first quarter of 2019, the Company completed the sale of its subrogation rights related to the 2018 Camp and Woolsey Fires and the 2017 Thomas Fire (which was a component of the "2017 Southern California fires") to a third party. The Company’s reinsurers were the primary beneficiaries of this transaction, as they had absorbed most of the losses under the terms of the Treaty. The Company re-estimated its gross and net losses from the 2018 Camp and Woolsey Fires and the 2017 Southern California fires in conjunction with this sale, and its total gross losses from these catastrophes, after accounting for the assignment of subrogation rights and adjustments made to claims reserves as part of normal reserving procedures, were approximately $208 million, and its total net losses, after reinsurance benefits, were approximately $40 million at March 31, 2019. The Company benefited by approximately $10 million, before taxes, in the first quarter of 2019 from the sale of the subrogation rights, including adjustments made to the associated claims as a result of normal reserving procedures, reductions in the Company's retained portion of losses on the Camp and Woolsey Fires, and reduced reinstatement premiums recognized.

The following is information about incurred and paid claims development as of December 31, 2019, net of reinsurance, as well as cumulative claim frequency and the total of incurred-but-not-reported liabilities plus expected development on reported claims included within the net incurred claims amounts for our two major product lines: automobile and homeowners lines of business. As the information presented is for these two major product lines only, the total incurred and paid claims development shown below does not correspond to the aggregate development presented in the table above, which is for all product lines and includes unallocated claims adjustment expenses. The cumulative number of reported claims represents open claims, claims closed with payment, and claims closed without payment. It does not include an estimated amount for unreported claims. The number of claims is measured by claim event (such as a car accident or storm damage) and an individual claim event may result in more than one reported claim. The Company considers a claim that does not result in a liability as a claim closed without payment.



Incurred Losses and Allocated Loss Adjustment Expenses, Net of Reinsurance (Automobile Insurance)																					As of December 31, 2019
																					Total of Incurred But Not Reported Liabilities Plus Expected Development on Reported Claims		Cumulative Number of Reported Claims
Accident Year	For the Years Ended December 31,
Accident Year	2010⁽¹⁾		2011⁽¹⁾		2012⁽¹⁾		2013⁽¹⁾		2014⁽¹⁾		2015⁽¹⁾		2016⁽¹⁾		2017⁽¹⁾		2018⁽¹⁾		2019
	(Amounts in thousands)																				(Amounts in thousands)
2010	$	1,367,547	$	1,357,750	$	1,364,307	$	1,374,638	$	1,379,336	$	1,381,056	$	1,386,105	$	1,388,077	$	1,388,055	$	1,388,086	$	43	184
2011			1,343,919		1,367,000		1,380,557		1,388,363		1,393,878		1,398,518		1,405,112		1,401,178		1,401,151		73		181
2012					1,424,754		1,408,222		1,409,104		1,414,878		1,426,735		1,436,034		1,438,250		1,439,660		493		181
2013							1,448,567		1,431,058		1,447,881		1,458,421		1,464,071		1,468,294		1,468,237		1,149		185
2014									1,467,175		1,454,366		1,473,545		1,486,322		1,498,504		1,501,075		3,469		180
2015											1,551,105		1,588,443		1,610,839		1,634,435		1,645,950		9,132		170
2016													1,672,853		1,669,642		1,713,696		1,731,997		22,097		154
2017															1,703,857		1,727,277		1,741,825		58,648		149
2018																	1,781,817		1,773,502		139,022		146
2019																			1,916,269		438,858		140
																	Total		$	16,007,752



Cumulative Paid Losses and Allocated Loss Adjustment Expenses, Net of Reinsurance (Automobile Insurance)
	For the Years Ended December 31,
Accident Year	2010⁽¹⁾		2011⁽¹⁾		2012⁽¹⁾		2013⁽¹⁾		2014⁽¹⁾		2015⁽¹⁾		2016⁽¹⁾		2017⁽¹⁾		2018⁽¹⁾		2019
	(Amounts in thousands)
2010	$	908,954	$	1,143,984	$	1,268,142	$	1,335,871	$	1,365,464	$	1,375,799	$	1,384,333	$	1,387,835	$	1,388,140	$	1,388,322
2011			926,983		1,152,459		1,277,808		1,347,082		1,378,920		1,391,101		1,394,684		1,400,441		1,400,958
2012					955,647		1,194,648		1,304,511		1,372,828		1,409,911		1,422,705		1,434,956		1,438,686
2013							974,445		1,217,906		1,340,724		1,413,999		1,447,004		1,460,352		1,464,277
2014									967,481		1,231,413		1,358,472		1,432,472		1,476,944		1,490,366
2015											1,040,253		1,336,223		1,466,368		1,560,480		1,614,188
2016													1,094,006		1,395,199		1,554,217		1,656,192
2017															1,076,079		1,399,202		1,561,850
2018																	1,082,127		1,417,637
2019																			1,134,859
																	Total		$	14,567,335
							All outstanding liabilities before 2010, net of reinsurance												(557		)
							Loss and allocated loss adjustment expense reserves, net of reinsurance												$	1,439,861



Incurred Losses and Allocated Loss Adjustment Expenses, Net of Reinsurance (Homeowners' Insurance)																					As of December 31, 2019
																					Total of Incurred But Not Reported Liabilities Plus Expected Development on Reported Claims		Cumulative Number of Reported Claims
Accident Year	For the Years Ended December 31,
Accident Year	2010⁽¹⁾		2011⁽¹⁾		2012⁽¹⁾		2013⁽¹⁾		2014⁽¹⁾		2015⁽¹⁾		2016⁽¹⁾		2017⁽¹⁾		2018⁽¹⁾		2019
	(Amounts in thousands)																				(Amounts in thousands)
2010	$	165,727	$	157,566	$	160,983	$	160,472	$	160,206	$	160,015	$	159,608	$	159,662	$	159,720	$	159,652	$	1	21
2011			167,414		170,623		170,052		169,600		169,390		169,621		170,126		170,334		170,174		75		23
2012					196,063		188,010		190,376		191,548		192,057		191,804		192,905		192,790		6		25
2013							191,903		188,915		188,026		186,795		187,165		188,014		187,147		42		23
2014									199,298		202,621		203,218		202,513		204,986		208,003		3,259		25
2015											234,800		234,881		233,501		236,855		238,652		1,978		24
2016													250,691		259,489		259,497		259,708		2,092		24
2017															309,491		295,163		288,322		4,310		30
2018																	311,798		308,361		15,686		25
2019																			359,643		64,136		28
																	Total		$	2,372,452



Cumulative Paid Losses and Allocated Loss Adjustment Expenses, Net of Reinsurance (Homeowners' Insurance)
	For the Years Ended December 31,
Accident Year	2010⁽¹⁾		2011⁽¹⁾		2012⁽¹⁾		2013⁽¹⁾		2014⁽¹⁾		2015⁽¹⁾		2016⁽¹⁾		2017⁽¹⁾		2018⁽¹⁾		2019
	(Amounts in thousands)
2010	$	95,057	$	137,628	$	149,084	$	155,191	$	156,853	$	158,053	$	158,943	$	159,268	$	159,435	$	159,491
2011			111,909		153,845		162,870		166,375		167,806		168,621		168,914		169,757		169,899
2012					128,618		175,029		182,756		188,121		190,373		190,649		191,660		192,362
2013							133,528		174,295		180,858		183,860		185,168		186,132		186,494
2014									139,615		186,996		194,605		198,758		202,193		203,333
2015											163,196		213,994		224,178		230,480		234,683
2016													173,537		234,215		245,878		253,919
2017															217,900		269,254		278,341
2018																	213,038		271,534
2019																			240,240
																	Total		$	2,190,296
							All outstanding liabilities before 2010, net of reinsurance												576
							Loss and allocated loss adjustment expense reserves, net of reinsurance												$	182,731



	December 31, 2019
	(Amounts in thousands)
Net outstanding liabilities
Automobile insurance	$	1,439,861
Homeowners' insurance	182,731
WAIC automobile insurance	16,576
Other short-duration insurance lines	106,002
Loss and loss adjustment expense reserves, net of reinsurance recoverables on unpaid losses	1,745,170
Reinsurance recoverables on unpaid losses
Automobile insurance	22,060
Homeowners' insurance	52,317
Other short-duration insurance lines	1,723
Total reinsurance recoverables on unpaid losses	76,100
Insurance lines other than short-duration	629
Unallocated claims adjustment expenses	99,356
	99,985
Total gross loss and loss adjustment expense reserves	$	1,921,255