Loss And Loss Adjustment Expense Reserves

3 Months Ended

Mar. 31, 2023

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:


	Three Months Ended March 31,
	2023		2022

	(Amounts in thousands)
Gross reserves, beginning of period	$	2,584,910	$	2,226,430
Reinsurance recoverables on unpaid losses, beginning of period	(25,322)		(41,377)
Net reserves, beginning of period	2,559,588		2,185,053
Incurred losses and loss adjustment expenses related to:
Current year	945,013		769,022
Prior years	(15,484)		52,911
Total incurred losses and loss adjustment expenses	929,529		821,933
Loss and loss adjustment expense payments related to:
Current year	310,102		261,115
Prior years	531,755		471,258
Total payments	841,857		732,373
Net reserves, end of period	2,647,260		2,274,613
Reinsurance recoverables on unpaid losses, end of period	30,301		33,213
Gross reserves, end of period	$	2,677,561	$	2,307,826

The decrease in the provision for insured events of prior years during the three months ended March 31, 2023 of $15.5 million was primarily attributable to lower than estimated losses and loss adjustment expenses in the homeowners line of insurance business. The increase in the provision for insured events of prior years during the three months ended March 31, 2022 of $52.9 million was primarily attributable to higher than estimated losses and loss adjustment expenses in the automobile and commercial property lines of insurance business. The U.S. inflation rate accelerated to its highest level in decades in 2022, and had a significant impact on the cost of auto parts and labor as well as medical expenses for bodily injuries. Bodily injury costs were also under pressure from social inflation. The inflationary pressures continued to have a negative impact on loss severity in the automobile line of insurance business and increased losses and loss adjustment expenses for the insured events of the current accident year for the three months ended March 31, 2023 compared to the corresponding period in 2022. The Company has increased rates and filed for additional rate increases in many states and is taking various non-rate actions to improve profitability.

For the three months ended March 31, 2023 and 2022, the Company incurred catastrophe losses of approximately $98 million and $22 million, respectively. No reinsurance benefits were available for these losses as none of the catastrophe events during these periods individually resulted in losses in excess of the Company's retention limit. Catastrophe losses during the three months ended March 31, 2023 resulted primarily from winter storms and rainstorms in California, Texas and Oklahoma. Catastrophe losses during the three months ended March 31, 2022 resulted primarily from winter storms in Texas and California.