The Company accrues for losses and loss adjustment expenses (“LAE”) in the period in which the underlying loss event occurred. LAE are costs associated with the investigation, evaluation, adjustment, and settlement of insurance claims and can be either allocated, costs directly attributable to a specific claim, or unallocated, costs that cannot be directly attributed to a specific claim. Reserves for losses and LAE are determined by establishing liabilities in amounts estimated to cover incurred losses and LAE. Such reserves are determined based on the assessment of claims reported and the development of pending claims. These reserves are based on individual case estimates for reported losses and LAE and estimates of amounts incurred but not reported.

The estimates of unpaid losses and LAE are subject to trends in claim severity and frequency and are continually reviewed. As part of the process, the Company reviews historical data and considers various factors, including known and anticipated regulatory and legal developments, changes in social attitudes, inflation, and economic conditions. As experience develops and other data becomes available, these estimates are revised, as required, resulting in increases or decreases to the existing unpaid losses and LAE. Adjustments are reflected in the results of operations in the period in which they are made and the liabilities may deviate substantially from prior estimates. Losses and LAE ceded to or recovered from reinsurers are recorded as a reduction to losses and LAE in the consolidated statements of income. Accordingly, losses and LAE in the consolidated statements of income are net of reinsurance.

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


	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2026			2025			2026			2025
Beginning balance, net (a)	$	329,778		$	321,557		$	314,357		$	323,335
Incurred, net of reinsurance, related to:
Current period		72,397			67,486			209,073			191,234
Prior periods		(7,038	)		(1,333	)		(7,038	)		(1,333	)
Total incurred, net of reinsurance		65,359			66,153			202,035			189,901
Paid, net of reinsurance, related to:
Current period		(37,237	)		(42,674	)		(90,545	)		(78,826	)
Prior periods		(19,542	)		(24,731	)		(87,489	)		(114,105	)
Total paid, net of reinsurance		(56,779	)		(67,405	)		(178,034	)		(192,931	)
Ending balance, net (a)		338,358			320,305			338,358			320,305
Add: reinsurance recoverable before allowance for credit losses		211,249			295,330			211,249			295,330
Ending balance	$	549,607		$	615,635		$	549,607		$	615,635

(a)

Liability for unpaid losses and LAE net of reinsurance recoverable for unpaid losses and LAE.

Incurred losses and LAE decreased for the three months ended September 30, 2026 compared to the three months ended September 30, 2025 primarily due to favorable development from prior years, partially offset by an increase due to a higher volume of policies in force. Incurred losses and LAE increased for the nine months ended September 30, 2026 compared to the nine months ended September 30, 2025 primarily due to a higher volume of policies in force, partially offset by favorable development from prior years. There were no losses from catastrophes occurring during the three and nine months ended September 30, 2026 and 2025.