9.	Loss and Loss Adjustment Expenses

The following development tables provide the incurred and paid claims and allocated claim adjustment expenses, net of reinsurance, for workers’ compensation and general liability for accident years 2008 through 2017. The incurred but not reported (“IBNR”) claims and claims frequency is included for each accident year presented.

	Incurred Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance																				As of
	For the Years Ended December 31,																				December 31, 2017
	(Dollars in thousands)																				Total IBNR
																					Plus
																					Expected		Cumulative
																					Development		Number of
Accident	Unaudited (1)																				on Reported		Claims
Year	2008		2009		2010		2011		2012		2013		2014		2015		2016		2017		Claims		Reported
2008	$	196,923	$	200,371	$	195,619	$	190,905	$	187,695	$	184,547	$	182,846	$	183,608	$	182,901	$	182,646	$	2,649		6,487
2009		-		185,359		188,746		188,462		187,943		184,006		182,274		177,795		176,586		177,015		3,345		5,371
2010		-		-		179,156		202,479		208,035		205,769		198,861		193,029		191,000		189,403		5,805		5,971
2011		-		-		-		196,384		199,522		199,163		198,213		195,262		192,988		191,126		6,968		6,041
2012		-		-		-		-		222,549		222,075		212,738		193,515		184,460		182,859		7,840		5,746
2013		-		-		-		-		-		241,810		241,811		233,656		220,457		214,701		10,501		5,762
2014		-		-		-		-		-		-		268,846		268,846		249,097		235,058		13,503		5,827
2015		-		-		-		-		-		-		-		262,573		262,573		252,514		22,863		5,506
2016		-		-		-		-		-		-		-		-		250,491		250,491		17,066		5,346
2017		-		-		-		-		-		-		-		-		-		244,094		7,964		4,919
																	Total		$	2,119,907	$	98,504

	Cumulative Paid Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance
	For the Years Ended December 31,
	(Dollars in thousands)

Accident	Unaudited (1)																				Claim
Year	2008		2009		2010		2011		2012		2013		2014		2015		2016		2017		Frequency (2)
2008	$	47,685	$	103,057	$	132,515	$	147,377	$	157,388	$	163,933	$	166,814	$	170,347	$	171,496	$	173,138		20.98
2009		-		42,332		96,173		123,946		142,667		150,925		155,365		158,214		159,345		160,580		19.82
2010		-		-		47,520		108,714		141,029		156,974		165,834		169,565		172,426		175,019		24.94
2011		-		-		-		53,329		111,029		140,831		153,968		161,639		165,967		167,757		22.81
2012		-		-		-		-		50,579		107,467		133,658		149,161		154,553		157,206		18.72
2013		-		-		-		-		-		51,396		119,507		150,304		165,994		172,479		16.54
2014		-		-		-		-		-		-		53,060		119,820		153,320		169,736		14.96
2015		-		-		-		-		-		-		-		54,141		121,599		151,818		14.22
2016		-		-		-		-		-		-		-		-		52,238		115,713		14.11
2017		-		-		-		-		-		-		-		-		-		56,951		13.86
																	Total			1,500,397
All outstanding claim liabilities before 2008, net of reinsurance																				67,446
Liabilities for claims and claim adjustment expenses, net of reinsurance																				686,956

(1) Data presented for these calendar years is required supplementary information, which is unaudited.
(2) Frequency, as calculated above, refers to reported claims divided by gross premium earned.

The average annual percentage payout of incurred claims by age, net of reinsurance, for workers’ compensation and general liability as of December 31, 2017 is summarized below. Since workers’ compensation has long payout periods, the table below shows less than 100% in the years disclosed. This is required supplementary information, which is unaudited.

Average Annual Percentage Payout of Incurred Claims by Age, Net of Reinsurance (Unaudited)
Year 1	Year 2	Year 3	Year 4	Year 5	Year 6	Year 7	Year 8	Year 9	Year 10
24.3%	29.6%	14.9%	8.1%	4.1%	2.4%	1.4%	1.3%	0.7%	0.9%

The following table provides a reconciliation of the beginning and ending reserve balances, net of related amounts recoverable from reinsurers, for 2017, 2016 and 2015:

	Year Ended December 31,
	2017			2016			2015
	(in thousands)
Balance, beginning of period	$	742,776		$	718,033		$	687,602
Less amounts recoverable from reinsurers on unpaid loss and loss adjustment expenses		78,256			64,858			59,334
Net balance, beginning of period		664,520			653,175			628,268
Add incurred related to:
Current accident year		244,094			250,337			262,387
Prior accident years		(34,770	)		(51,306	)		(47,814	)
Total incurred		209,324			199,031			214,573
Less paid related to:
Current accident year		56,951			52,085			53,955
Prior accident years		129,937			135,601			135,711
Total paid		186,888			187,686			189,666
Net balance, end of period		686,956			664,520			653,175
Add amounts recoverable from reinsurers on unpaid loss and loss adjustment expenses		84,889			78,256			64,858
Balance, end of period	$	771,845		$	742,776		$	718,033

The foregoing reconciliation reflects favorable development of the net reserves at December 31, 2017, 2016 and 2015. The favorable development reduced loss and loss adjustment expenses incurred by $34.8 million in 2017, driven primarily by accident years 2013, 2014 and 2015 of $5.8 million, $14.0 million and $10.1 million, respectively. In 2016 and 2015, the Company recorded favorable development of $51.3 million and $47.8 million, respectively. The revisions to the Company’s reserves reflect new information gained by claims adjusters in the normal course of adjusting claims and is reflected in the financial statements when the information becomes available. It is typical for more serious claims to take several years or longer to settle and the Company continually revises estimates as more information about claimants’ medical conditions and potential disability becomes known and the claims get closer to being settled. Multiple factors can cause loss development both unfavorable and favorable. The favorable loss development we experienced across accident years was largely due to favorable case reserve development from closed claims and claims where the worker had reached maximum medical improvement.

Reserves established for workers’ compensation insurance have included the exposure to occupational disease or accidents related to asbestos or environmental claims. The exposure to asbestos claims emanate from the direct sale of workers’ compensation insurance. These claims resulted from industry workers who were exposed to tremolite asbestos dust and electricians and carpenters who were exposed to products that contained asbestos. There has been no known exposure to asbestos claims arising from assumed business. The emergence of these claims is slow and highly unpredictable. The Company estimates full impact of the asbestos exposure by establishing full case basis reserves on all known losses. Reserves for losses incurred but not reported (IBNR) include a provision for development of reserves on reported losses. Reserves are established for loss adjustment expenses (LAE) associated with these case and IBNR loss reserves.

The following table details our exposures to various asbestos related claims:

	Year Ended December 31,
	2017			2016			2015
	(in thousands)
Reserves for loss and LAE at beginning of year	$	1,487		$	958		$	819
Incurred losses and LAE during the current year		556			816			444
Loss and LAE payments		(295	)		(287	)		(305	)
Reserves for loss and LAE at end of year	$	1,748		$	1,487		$	958

The Company has historically written general liability coverages that are reported in other liability lines of business. These coverages may be associated with the property and casualty industry’s exposure to environmental claims. However, the Company has not been notified by any insured for which exposure exists due to these types of claims. Company management believes potential exposure to environmental claims to be remote. Therefore, the Company has no loss or loss adjustment expense reserves for such liabilities.

The anticipated effect of inflation is implicitly considered when estimating liabilities for loss and loss adjustment expenses. Average severities are projected based on historical trends adjusted for implemented changes in underwriting standards, policy provisions and general economic trends. These anticipated trends are monitored based on actual development and are modified if necessary.