LOSS AND LOSS ADJUSTMENT EXPENSE RESERVES

There were no significant changes in the actuarial methodology or assumptions relating to the Company’s loss and loss adjustment expense reserves for the nine months ended September 30, 2017.

At September 30, 2017 and December 31, 2016, loss and loss adjustment expense reserves were comprised of the following:



Consolidated	September 30, 2017		December 31, 2016
	($ in thousands)
Case reserves	$	179,911	$	98,815
IBNR	265,867		207,826
Total	$	445,778	$	306,641

At September 30, 2017 and December 31, 2016, the loss and loss adjustment expense reserves relating to health were $21.6 million and $19.0 million, respectively.

A summary of changes in outstanding loss and loss adjustment expense reserves for the nine months ended September 30, 2017 and 2016 is as follows:



Consolidated	2017			2016
	($ in thousands)
Gross balance at January 1	$	306,641		$	305,997
Less: Losses recoverable	(2,704		)	(3,368		)
Net balance at January 1	303,937			302,629
Incurred losses related to:
Current year	360,102			254,211
Prior years	19,644			29,300
Total incurred	379,746			283,511
Paid losses related to:
Current year	(130,207		)	(126,296		)
Prior years	(128,937		)	(175,126		)
Total paid	(259,144		)	(301,422		)
Foreign currency revaluation	2,792			(4,997		)
Net balance at September 30	427,331			279,721
Add: Losses recoverable	18,447			3,220
Gross balance at September 30	$	445,778		$	282,941

The changes in the outstanding loss and loss adjustment expense reserves for health claims for the nine months ended September 30, 2017 and 2016 are as follows:



Health	2017			2016
	($ in thousands)
Gross balance at January 1	$	18,993		$	21,533
Less: Losses recoverable	—			—
Net balance at January 1	18,993			21,533
Incurred losses related to:
Current year	33,463			20,907
Prior years	2,949			(266		)
Total incurred	36,412			20,641
Paid losses related to:
Current year	(15,019		)	(9,150		)
Prior years	(18,832		)	(11,646		)
Total paid	(33,851		)	(20,796		)
Foreign currency revaluation	—			—
Net balance at September 30	21,554			21,378
Add: Losses recoverable	—			—
Gross balance at September 30	$	21,554		$	21,378

For the nine months ended September 30, 2017, the net losses incurred relating to prior accident years increased by $19.6 million, which primarily related to the following:


•	$4.2 million of adverse loss development associated with motor contracts;


•	$3.0 million of adverse loss development associated with specialty health contracts;


•	$2.9 million of adverse loss development relating to Florida homeowners’ insurance contracts, largely driven by “assignment of benefits” issues in the state whereby homeowners assign their rights for filing and settling claims to attorneys and public adjusters; and


•	$2.0 million of adverse loss development due to large claims reported on a surety contract.

The remaining $7.5 million of adverse development for the nine months ended September 30, 2017, was due to development across various other casualty and multi-line contracts.

For the nine months ended September 30, 2016, the net losses incurred relating to prior periods was $29.3 million, which primarily related to the following:


•	$19.0 million of losses resulting from the loss portfolio transfer and subsequent novation of the legacy construction defect liabilities;


•	$5.5 million of adverse loss development relating to our Florida homeowners’ insurance contracts as a result of deterioration of sinkhole claims and an increase in the practice of “assignment of benefits” whereby homeowners assign their rights for filing and settling claims to attorneys and public adjusters; and


•	$4.5 million of adverse loss development on an excess of loss contract relating to losses resulting from the U.S. sub-prime crisis.

There were no other significant developments of prior period reserves during the nine months ended September 30, 2016.