• Filing Date: 2014-03-12
  • Form Type: 10-K
  • Description: Annual report
Losses and Loss Adjustment Expenses
12 Months Ended
Dec. 31, 2013
Insurance [Abstract]  
Losses and Loss Adjustment Expenses

Note 12 — Losses and Loss Adjustment Expenses

The liability for losses and loss adjustment expenses (“LAE”) is determined on an individual case basis for all claims reported. The liability also includes amounts for unallocated expenses, anticipated future claim development and losses incurred, but not reported.

Activity in the liability for losses and LAE is summarized as follows:


     Years Ended December 31,  
     2013     2012     2011  

Balance, beginning of year

   $ 41,168      $ 27,424      $ 22,146   










Incurred related to:


Current year

     67,579        66,425        43,613   

Prior years

     (2,456     (115     4,630   










Total incurred

     65,123        66,310        48,243   










Paid related to:


Current year

     (40,240     (36,914     (26,132

Prior years

     (22,365     (15,652     (16,833










Total paid

     (62,605     (52,566     (42,965










Balance, end of year

   $ 43,686      $ 41,168      $ 27,424   










The significant increase in the Company’s liability for unpaid losses and LAE from 2011 to 2012 is primarily due to the increase in policy base as a result of the HomeWise assumption in November 2011 and the Citizens assumption in November 2012.

The establishment of loss reserves is an inherently uncertain process and changes in loss reserve estimates are expected as such estimates are subject to the outcome of future events. Changes in estimates, or differences between estimates and amounts ultimately paid, are reflected in the operating results of the period during which such adjustments are made. During the year ended December 31, 2013, the Company experienced favorable development of $2,456 with respect to its net unpaid losses and loss adjustment expenses established for the year ended December 31, 2012. Factors attributable to this favorable development include a lower severity of claims and reduced frequency of reported claims.


The Company writes insurance in the state of Florida, which could be exposed to hurricanes or other natural catastrophes. The occurrence of a major catastrophe could have a significant effect on the Company’s yearly results and cause a temporary disruption of the normal operations of the Company. However, the Company is unable to predict the frequency or severity of any such events that may occur in the near term or thereafter.