Reserves for Unpaid Losses and Loss Adjustment Expenses (Tables)

12 Months Ended

Dec. 31, 2018

Reserves for Losses and Loss Adjustment Expenses

Activity in the Reserves for Unpaid Losses and Loss Adjustment Expense

Activity in the consolidated reserves for unpaid losses and LAE is summarized as follows (in thousands):

	2018		2017
Balance at January 1	$	527,100	$	481,567
Less reinsurance recoverable		154,612		123,237
Net balance at January 1		372,488		358,330
Incurred related to:
Current year		250,075		248,203
Prior years		5,953		40,105
Total incurred		256,028		288,308
Paid related to:
Current year		90,640		92,873
Prior years		232,345		181,277
Total paid		322,985		274,150
Net balance at December 31		305,531		372,488
Plus reinsurance recoverable		221,716		154,612
Balance at December 31	$	527,247	$	527,100

Schedule Of Net Prior Years’ Loss Development On Each Reporting Segment

	December 31,
	2018		2017
Specialty Commercial Segment	$	16,457	$	40,477
Standard Commercial Segment		(8,993)		(970)
Personal Segment		(1,511)		598
Corporate		—		—
Total unfavorable net prior year development	$	5,953	$	40,105

Schedule of Incurred and Paid Claims Development

The following tables also include IBNR reserves plus expected development on reported claims and the cumulative number of reported claims as of December 31, 2018 ($ in thousands):

Specialty Commercial Segment

Incurred Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance																					As of December 31,
																							Cumulative
																							Number of
	For the Years Ended December 31,																						Reported
Accident	Unaudited																				IBNR		Claims
Year	2009		2010		2011		2012		2013		2014		2015		2016		2017		2018		2018		2018
2009	$	60,950	$	62,679	$	61,196	$	59,471	$	59,831	$	59,635	$	59,988	$	61,361	$	61,761	$	62,509	$	—	5,389
2010				74,187		78,089		75,695		77,593		78,003		77,972		77,631		78,253		77,647		231	5,071
2011						88,679		87,558		91,059		90,713		89,737		87,793		87,833		89,815		98	5,852
2012								106,371		111,253		111,841		115,709		116,320		117,925		117,469		(172)	7,424
2013										140,546		135,114		137,230		143,983		150,177		151,471		336	9,294
2014												144,996		133,464		138,842		144,728		152,025		(800)	10,242
2015														147,304		146,610		162,616		171,315		854	11,057
2016																151,494		157,836		164,570		5,527	11,750
2017																		170,622		162,193		17,247	11,806
2018																				170,926		87,288	9,702
																		Total	$	1,319,942

Cumulative Paid Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance
	For the Years Ended December 31,
Accident	Unaudited
Year	2009		2010		2011		2012		2013		2014		2015		2016		2017		2018
2009	$	21,259	$	34,411	$	45,757	$	53,135	$	56,791	$	57,641	$	59,149	$	60,785	$	61,202	$	61,397
2010				24,818		45,234		58,139		68,625		73,398		74,513		75,787		76,906		77,075
2011						27,454		53,509		71,697		80,004		83,787		84,936		85,845		87,200
2012								37,655		60,923		82,066		97,680		109,060		113,909		116,607
2013										40,475		76,366		101,725		126,025		139,759		148,706
2014												42,097		73,631		99,521		123,649		146,290
2015														39,515		74,906		125,514		159,707
2016																41,397		84,616		143,685
2017																		45,477		109,220
2018																				42,359
																		Total	$	1,092,246
								All outstanding liabilities before 2009, net of reinsurance												693
				Liabilities for claims and claim adjustment expenses, net of reinsurance															$	228,389

Standard Commercial Segment

Incurred Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance																					As of December 31,
																							Cumulative
																							Number of
	For the Years Ended December 31,																						Reported
Accident	Unaudited																				IBNR		Claims
Year	2009		2010		2011		2012		2013		2014		2015		2016		2017		2018		2018		2018
2009	$	44,719	$	45,674	$	46,772	$	46,778	$	45,970	$	44,159	$	43,851	$	43,107	$	42,168	$	41,513	$	139	2,644
2010				45,263		45,235		44,847		43,164		43,459		42,426		42,175		42,880		42,427		146	2,920
2011						60,236		56,489		55,156		49,268		47,266		47,423		46,841		45,244		478	3,583
2012								51,998		52,554		48,222		45,990		44,272		42,986		41,421		736	3,228
2013										55,482		57,528		56,703		53,174		52,076		49,039		596	3,924
2014												55,488		55,808		53,568		53,882		54,125		1,990	3,571
2015														49,571		49,857		50,053		47,277		1,873	3,181
2016																46,880		48,182		46,348		1,900	2,822
2017																		41,393		43,169		8,000	2,556
2018																				42,898		16,384	2,165
																		Total	$	453,461

Cumulative Paid Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance
	For the Years Ended December 31,
Accident	Unaudited
Year	2009		2010		2011		2012		2013		2014		2015		2016		2017		2018
2009	$	15,242	$	28,313	$	32,075	$	35,818	$	38,316	$	40,389	$	40,575	$	40,629	$	40,835	$	40,991
2010				21,302		28,342		30,957		33,428		37,166		39,115		39,706		40,937		42,063
2011						24,899		35,119		38,909		40,301		41,140		42,441		43,680		43,794
2012								23,445		32,203		34,789		37,191		38,526		40,408		40,646
2013										23,123		36,411		41,809		44,575		46,756		47,853
2014												24,255		37,122		41,514		45,779		48,395
2015														19,085		34,245		38,302		43,287
2016																21,508		32,006		38,778
2017																		16,755		28,984
2018																				19,233
																		Total	$	394,024
								All outstanding liabilities before 2009, net of reinsurance												2,499
				Liabilities for claims and claim adjustment expenses, net of reinsurance															$	61,936

Personal Segment

Incurred Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance																					As of December 31,
																							Cumulative
																							Number of
	For the Years Ended December 31,																						Reported
Accident	Unaudited																				IBNR		Claims
Year	2009		2010		2011		2012		2013		2014		2015		2016		2017		2018		2018		2018
2009	$	40,436	$	42,092	$	46,244	$	47,977	$	48,930	$	49,694	$	49,772	$	49,891	$	49,971	$	50,005	$	—	21,056
2010				63,862		78,294		80,765		84,724		83,903		84,252		84,591		84,808		84,867		—	30,180
2011						75,746		77,652		87,810		86,757		86,804		86,948		86,853		87,199		—	31,615
2012								58,604		73,795		70,552		71,513		72,042		72,037		72,076		—	23,939
2013										55,706		59,132		60,100		60,211		60,379		60,328		—	23,471
2014												5,452		5,340		6,243		6,699		6,504		—	19,293
2015														23,104		25,682		25,307		25,136		120	23,370
2016																32,260		32,893		32,728		129	23,745
2017																		23,342		21,968		208	16,748
2018																				18,334		2,613	14,248
																		Total	$	459,145

Cumulative Paid Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance
	For the Years Ended December 31,
Accident	Unaudited
Year	2009		2010		2011		2012		2013		2014		2015		2016		2017		2018
2009	$	23,306	$	37,621	$	44,689	$	47,967	$	49,287	$	49,539	$	49,704	$	49,853	$	49,957	$	49,992
2010				38,643		67,755		75,199		82,624		83,511		84,111		84,556		84,717		84,768
2011						46,416		67,939		83,497		85,533		86,217		86,593		86,660		86,989
2012								37,860		64,278		68,849		70,807		71,995		72,055		72,094
2013										45,901		54,514		58,047		59,775		60,277		60,297
2014												2,515		4,418		5,631		6,428		6,566
2015														11,570		22,281		24,262		25,243
2016																21,669		30,646		32,260
2017																		15,776		21,061
2018																				11,137
																		Total	$	450,406
								All outstanding liabilities before 2009, net of reinsurance												5
				Liabilities for claims and claim adjustment expenses, net of reinsurance															$	8,743

Reconciliation of Claims Development to Liability for Unpaid Losses

The reconciliation of the net incurred and paid development tables to the liability for unpaid losses and LAE in our consolidated balance sheets is as follows (in thousands):

	2018		2017
Net outstanding liabilities for losses and LAE
Specialty Commercial Segment	$	228,389	$	275,436
Standard Commercial Segment		61,936		78,119
Personal Segment		8,743		11,505
Liabilities for unpaid losses and allocated loss adjustment expenses, net of reinsurance		299,068		365,060
Reinsurance recoverable on unpaid losses and LAE
Specialty Commercial Segment		198,802		137,975
Standard Commercial Segment		9,783		6,051
Personal Segment		13,131		10,586
Total reinsurance recoverable on unpaid losses and LAE		221,716		154,612
Unallocated loss adjustment expenses
Specialty Commercial Segment		2,550		3,377
Standard Commercial Segment		2,958		3,153
Personal Segment		955		898
Total unallocated loss adjustment expenses		6,463		7,428
Total reserves for unpaid losses and loss adjustment expenses	$	527,247	$	527,100

Annual percentage payout of incurred losses and ALAE

The following table provides supplementary unaudited information about the annual percentage payout of incurred losses and ALAE, net of reinsurance, as of December 31, 2018:

	Average Annual Percentage Payout of Incurred Claims by Age, Net of Reinsurance (1)
	Unaudited
	Year 1		Year 2		Year 3		Year 4		Year 5		Year 6		Year 7		Year 8		Year 9		Year 10
Specialty Commercial Segment	27.1	%	24.0	%	20.5	%	13.6	%	7.9	%	2.7	%	1.7	%	1.8	%	0.4	%	0.3	%
Standard Commercial Segment	45.3	%	25.2	%	9.2	%	6.9	%	4.8	%	3.7	%	1.3	%	1.0	%	1.4	%	1.2	%
Personal Segment	53.7	%	28.0	%	10.2	%	5.4	%	1.5	%	0.3	%	0.3	%	0.3	%	0.1	%	0.2	%

The average annual percentage payout is calculated from a paid losses and ALAE development pattern based on an actuarial analysis of the paid losses and ALAE movements by accident year for each disaggregation category. The paid losses and ALAE development pattern provides the expected percentage of ultimate losses and ALAE to be paid in each year. The pattern considers all accident years included in the claims development tables.