Reserves for Unpaid Losses and Loss Adjustment Expenses

9 Months Ended

Sep. 30, 2019

Reserves for Unpaid Losses and Loss Adjustment Expenses [Abstract]

Reserves for Unpaid Losses and Loss Adjustment Expenses

6. Reserves for Unpaid Losses and Loss Adjustment Expenses

Year to date activity in the consolidated reserves for unpaid losses and LAE is summarized as follows (in thousands):

	September 30,		September 30,
	2019		2018
Balance at January 1	$	527,247		527,100
Less reinsurance recoverable		221,716		154,612
Net balance at January 1		305,531		372,488
Incurred related to:
Current year		214,080		185,506
Prior years		7,781		6,062
Total incurred		221,861		191,568
Paid related to:
Current year		75,834		56,687
Prior years		146,929		184,337
Total paid		222,763		241,024
Net balance at September 30		304,629		323,032
Plus reinsurance recoverable		260,667		207,784
Balance at September 30	$	565,296	$	530,816

The year to date impact from the unfavorable (favorable) net prior years’ loss development on each reporting segment is presented below:

	September 30,
	2019		2018
Specialty Commercial Segment	$	11,232	$	15,730
Standard Commercial Segment		(3,508)		(8,829)
Personal Segment		57		(839)
Corporate		—		—
Total unfavorable net prior year development	$	7,781	$	6,062

The following describes the primary factors behind each segment’s prior accident year reserve development for the nine months ended September 30, 2019 and 2018:

Nine months ended September 30, 2019:

· Specialty Commercial Segment. Our Commercial Auto business unit experienced net unfavorable development in the 2017 and prior accident years primarily in the primary commercial auto liability line of business, partially offset by net favorable development in the primary commercial auto line of business in the 2018 accident year. Our E&S Casualty business unit experienced net unfavorable development primarily in our E&S package insurance products in the 2017 and prior accident years, partially offset by net favorable development in the 2018 accident year. We experienced net favorable development in our E&S Property and Professional Liability business units, partially offset by net unfavorable development in our Aerospace & Programs business unit.

· Standard Commercial Segment. Our Commercial Accounts business unit experienced net favorable development in the 2018, 2017, 2014 and 2012 and prior accident years primarily in the general liability line of business, partially offset by net unfavorable development primarily in the general liability line of business in the 2016 and 2015 accident years. Our Commercial Accounts business unit experienced net favorable development in the 2017 and 2015 accident years in the occupational accident line of business. The run-off from our former Workers Compensation operating unit experienced net favorable development in the 2015 and 2012 and prior accident years, partially offset by unfavorable net development in the 2014 and 2013 prior accident years.

· Personal Segment. Net unfavorable development in our Specialty Personal Lines business unit was mostly attributable to the 2018, 2016, 2014, 2012 and prior accident years, partially offset by favorable development in the 2017, 2015 and 2013 accident years.

Nine months ended September 30, 2018:

· Specialty Commercial Segment. Our Commercial Auto business unit experienced net unfavorable development in the 2016 and prior accident years primarily in the commercial auto liability line of business, partially offset by favorable development primarily in the commercial auto liability line of business in the 2017 accident year. We experienced net unfavorable development in our E&S Property, Professional Liability, E&S Casualty and Aerospace& Programs business units.

· Standard Commercial Segment. Our Commercial Accounts business unit experienced net favorable development in the 2016 and prior accident years primarily in the general liability line of business, partially offset by net unfavorable development primarily in the commercial property line of business in the 2017 accident year and net unfavorable development in the 2017 and prior accident years in the occupational accident line of business. The run-off from our former Workers’ Compensation operating unit experienced net favorable development in the 2016 and prior accident years.

· Personal Segment. Net favorable development in our Specialty Personal Lines business unit was mostly attributable to the 2013 through 2017 accident years, partially offset by unfavorable development in the 2012 and prior accident years.