Loss And Loss Adjustment Expense Reserves

6 Months Ended

Jun. 30, 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:


	Six Months Ended June 30,
	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	1,847,123		1,597,354
Prior years	(19,784)		51,359
Total incurred losses and loss adjustment expenses	1,827,339		1,648,713
Loss and loss adjustment expense payments related to:
Current year	874,245		738,472
Prior years	820,341		735,058
Total payments	1,694,586		1,473,530
Net reserves, end of period	2,692,341		2,360,236
Reinsurance recoverables on unpaid losses, end of period	27,666		26,586
Gross reserves, end of period	$	2,720,007	$	2,386,822

The decrease in the provision for insured events of prior years during the six months ended June 30, 2023 of $19.8 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 property line of insurance business. The increase in the provision for insured events of prior years during the six months ended June 30, 2022 of $51.4 million was primarily attributable to higher than estimated losses and loss adjustment expenses in the private passenger automobile and commercial property lines of insurance business, partially offset by favorable development in the commercial automobile and homeowners lines of insurance business. Extreme rates of inflation in 2022 have begun to moderate in 2023 but remain elevated. The impact of the inflationary pressures on loss severity in the automobile line of insurance business increased losses and loss adjustment expenses for the insured events of the current accident year for the six months ended June 30, 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 six months ended June 30, 2023 and 2022, the Company incurred catastrophe losses net of reinsurance of approximately $190 million and $43 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 six months ended June 30, 2023 resulted primarily from winter storms and rainstorms in California, Texas and Oklahoma. Catastrophe losses during the six months ended June 30, 2022 resulted primarily from winter storms, rainstorms and hail in Texas and winter storms in California. The Company experienced favorable development of approximately $1 million and unfavorable development of approximately $3 million on prior years' catastrophe losses for the six months ended June 30, 2023 and 2022, respectively.