Loss And Loss Adjustment Expense Reserves

9 Months Ended

Sep. 30, 2021

Loss And Loss Adjustment Expense Reserves

Loss and Loss Adjustment Expense Reserves

The following table presents the activity in loss and loss adjustment expense reserves:


	Nine Months Ended September 30,
	2021		2020

	(Amounts in thousands)
Gross reserves, beginning of period	$	1,991,304	$	1,921,255
Reinsurance recoverables on unpaid losses, beginning of period	(54,460)		(76,100)
Cumulative effect of adopting ASU 2016-13 for reinsurance recoverables on unpaid losses (1)	—		149
Reinsurance recoverables on unpaid losses, beginning of period, as adjusted	(54,460)		(75,951)
Net reserves, beginning of period, as adjusted	1,936,844		1,845,304
Incurred losses and loss adjustment expenses related to:
Current year	2,005,233		1,740,116
Prior years	(23,714)		25,511
Total incurred losses and loss adjustment expenses	1,981,519		1,765,627
Loss and loss adjustment expense payments related to:
Current year	1,088,285		937,373
Prior years	739,385		786,180
Total payments	1,827,670		1,723,553
Net reserves, end of period	2,090,693		1,887,378
Reinsurance recoverables on unpaid losses, end of period	51,428		54,608
Gross reserves, end of period	$	2,142,121	$	1,941,986

__________

(1) See Note 1 for additional information on adoption of ASU 2016-13.

The decrease in the provision for insured events of prior years during the nine months ended September 30, 2021 of $23.7 million was primarily attributable to lower than estimated losses and loss adjustment expenses in the private passenger automobile and homeowners lines of insurance business, partially offset by unfavorable development in the commercial automobile line of insurance business. The increase in the provision for insured events of prior years during the nine months ended September 30, 2020 of $25.5 million was primarily attributable to higher than estimated losses and loss adjustment expenses in the homeowners and commercial automobile lines of insurance business, partially offset by favorable development in the California private passenger automobile line of insurance business.

For the nine months ended September 30, 2021 and 2020, the Company recorded catastrophe losses net of reinsurance of approximately $85 million and $43 million, respectively. Catastrophe losses due to the events that occurred during the nine months ended September 30, 2021 totaled approximately $91 million, with no reinsurance benefits used for these losses, resulting primarily from the deep freeze and other extreme weather events in Texas and Oklahoma, wildfires and winter storms in California, and the impact of Hurricane Ida in New Jersey and New York. These losses were partially offset by favorable development of approximately $6 million on prior years' catastrophe losses. Catastrophe losses due to the events that occurred during the nine months ended September 30, 2020 totaled approximately $48 million, with no reinsurance benefits used for these losses, resulting primarily from wildfires and windstorms in California and extreme weather events outside of California. These losses were partially offset by favorable development of approximately $5 million on prior years' catastrophe losses.