Loss and Loss Expense Reserves

12 Months Ended

Dec. 31, 2012

Loss and Loss Expense Reserves [Abstract]

Loss and Loss Expense Reserves

Note C - Loss and Loss Expense Reserves

Activity in the reserves for losses and loss expenses is summarized as follows. All amounts are shown net of reinsurance, unless otherwise indicated.

		2012		2011		2010
Reserves at the beginning of the year		$ 290,092		$ 218,629		$ 203,253
Provision for losses and loss expenses:
Claims occurring during the current year		147,963		225,251		154,775
Claims occurring during prior years		(9,875)		(9,696)		(8,823)
Total incurred		138,088		215,555		145,952
Loss and loss expense payments:
Claims occurring during the current year		44,942		71,699		56,394
Claims occurring during prior years		94,002		72,393		74,182
Total paid		138,944		144,092		130,576
Reserves at the end of the year		289,236		290,092		218,629
Reinsurance recoverable on unpaid losses at the end of the year	166,218		131,464		125,891
Reserves, gross of reinsurance
recoverable, at the end of the year		$ 455,454		$ 421,556		$ 344,520

The table above shows that a savings of $9,875 was developed during 2012 in the settlement of claims occurring on or before December 31, 2011 with comparative developments for the two previous calendar years. The net savings for each year are composed of individual claim savings and deficiencies which, in the aggregate have resulted from the settlement of claims at amounts lower than previously reserved and from changes in estimates of losses incurred but not reported as part of the normal reserving process.

The major components of the developments shown above are as follows for the years ended December 31:

	2012			2011			2010
Property and casualty insurance	$	(7,111	)	$	(7,417	)	$	(6,567	)
Reinsurance		(2,764	)		(2,279	)		(2,256	)
Totals	$	(9,875	)	$	(9,696	)	$	(8,823	)

Favorable loss development is influenced by the Company's long-standing policy of reserving for losses realistically and a willingness to settle claims based upon a seasoned evaluation of its exposures. Loss reserves pertaining to the Company's property reinsurance business are established partially by the ceding reinsurers although the Company routinely adjusts such reserves if management determines that additional reserves could be necessary. Accordingly, there is potential for fluctuations in loss developments related to reinsurance assumed to be more pronounced than those experienced on directly produced business which is reserved entirely by Company personnel. In addition, changes in the Company's net retention under reinsurance treaties will impact developments as more or less business is retained. These trends were considered in the establishment of the Company's reserves at December 31, 2012 and 2011.

Loss reserves on certain permanent total disability workers' compensation reserves have been discounted to present value at pre-tax rates not exceeding 3.5%. At December 31, 2012 and 2011, loss reserves have been reduced by approximately $6,118 and $6,642, respectively. Discounting is applied to these claims since the amount of periodic payments to be made during the lifetime of claimants is fixed and determinable.

Loss reserves have been reduced by estimated salvage and subrogation recoverable of approximately $7,839 and $7,158 at December 31, 2012 and 2011, respectively.