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.

The Company primarily writes insurance in states 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 quarterly 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.

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


	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2022			2021			2022			2021
Net balance, beginning of period*	$	179,837		$	144,630		$	172,410		$	141,065
Incurred, net of reinsurance, related to:
Current period		78,448			51,310			148,524			93,230
Prior period		8,382			4,607			11,010			8,438
Total incurred, net of reinsurance		86,830			55,917			159,534			101,668
Paid, net of reinsurance, related to:
Current period		(37,627	)		(20,006	)		(56,423	)		(27,602	)
Prior period		(32,626	)		(25,640	)		(79,107	)		(60,230	)
Total paid, net of reinsurance		(70,253	)		(45,646	)		(135,530	)		(87,832	)
Net balance, end of period		196,414			154,901			196,414			154,901
Add: reinsurance recoverable before allowance for credit losses		42,410			48,884			42,410			48,884
Gross balance, end of period	$	238,824		$	203,785		$	238,824		$	203,785

* Net balance represents beginning-of-period liability for unpaid losses and LAE less beginning-of-period reinsurance recoverable for unpaid losses and LAE.

The establishment of loss and LAE reserves is an inherently uncertain process and changes in loss and LAE reserve estimates are expected as these 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 estimates are adjusted. During the three and six months ended June 30, 2022, the Company recognized losses related to prior periods of $8,382 and $11,010, respectively, primarily to increase the reserve resulting from increased litigation. Loss and LAE expenses for the three and six months ended June 30, 2022 included estimated losses, net of reinsurance, of approximately $10,438 and $23,399, respectively, related to policies assumed from United. In addition, the Company recognized $5,811 and $11,932, respectively, of losses related to weather events in Florida during the three and six months ended June 30, 2022.