• Filing Date: 2015-03-10
  • Form Type: 10-K
  • Description: Annual report
Losses and Loss Adjustment Expenses
12 Months Ended
Dec. 31, 2014
Insurance [Abstract]  
Losses and Loss Adjustment Expenses

Note 11 — 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,  
     2014      2013      2012  

Balance, beginning of year

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










Incurred related to:

Current year

  75,810      67,579      66,425   

Prior years

  3,658      (2,456   (115










Total incurred

  79,468      65,123      66,310   










Paid related to:

Current year

  (47,650   (40,240   (36,914

Prior years

  (26,596   (22,365   (15,652










Total paid

  (74,246   (62,605   (52,566










Balance, end of year

$ 48,908    $ 43,686    $ 41,168   










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, 2014, the Company experienced unfavorable development of $3,658 with respect to its net unpaid losses and loss adjustment expenses established for the year ended December 31, 2013. Factors attributable to this unfavorable development include a higher severity of claims and increased 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.