Losses And Loss Adjustment Expenses

12 Months Ended

Dec. 31, 2011

Losses And Loss Adjustment Expenses [Abstract]

Losses And Loss Adjustment Expenses

11. Losses and Loss Adjustment Expenses

Activity in the reserves for losses and loss adjustment expenses is summarized as follows:

	Year Ended December 31,
	2011			2010			2009
	(Amounts in thousands)
Gross reserves at January 1	$	1,034,205		$	1,053,334		$	1,133,508
Less reinsurance recoverable		(6,805	)		(7,748	)		(5,729	)
Net reserves at January 1		1,027,400			1,045,586			1,127,779
Incurred losses and loss adjustment expenses related to:
Current year		1,810,711			1,838,824			1,840,268
Prior years		18,494			(13,058	)		(58,035	)
Total incurred losses and loss adjustment expenses		1,829,205			1,825,766			1,782,233
Loss and loss adjustment expense payments related to:
Current year		1,265,188			1,240,696			1,246,804
Prior years		614,059			603,256			617,622
Total payments		1,879,247			1,843,952			1,864,426
Net reserves at year-end		977,358			1,027,400			1,045,586
Reinsurance recoverable		7,921			6,805			7,748
Gross reserves at year-end	$	985,279		$	1,034,205		$	1,053,334

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 is 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 decrease in the provision for insured events of prior years in 2010 of approximately $13 million primarily resulted from the re-estimate of accident year 2009 California BI losses which have experienced lower average severities and fewer late reported claims than were originally estimated at December 31, 2009. In addition, the Company experienced favorable development on New Jersey personal automobile reserves, resulting from more aggressive handling of litigated claims, which includes a high percentage of favorable results in cases brought to trial. The favorable development was partially offset by unfavorable development on Florida reserves, which included approximately $3 million of unfavorable development on the homeowners line of business, primarily related to sinkhole claims.

The decrease in the provision for insured events of prior years in 2009 of approximately $58 million primarily resulted from the re-estimate of accident years 2008 and 2007 California BI losses which have experienced both lower average severities and fewer late reported claims than were originally estimated at December 31, 2008. In addition, there was favorable development from a recovery of approximately $5 million related to losses incurred on 2007 wildfires. The favorable development was partially offset by adverse development on New Jersey loss adjustment expense reserves that resulted from the re-estimate of the expected costs to aggressively defend BI and PIP claims.

The Company experienced estimated pre-tax losses from severe weather events of $18 million, $25 million, and $0 in 2011, 2010, and 2009, respectively. The losses in 2011 primarily related to severe losses due to California wind storms, Hurricane Irene, and Georgia tornadoes. The losses in 2010 primarily related to severe losses from California rainstorms.