Reserve for Losses and Loss Adjustment Expenses

The following table provides a reconciliation of the beginning and ending reserve balances for losses and loss adjustment expenses, net of reinsurance, to the gross amounts reported in the condensed consolidated balance sheets:



	Three Months Ended June 30,					Six Months Ended June 30,
	2017		2016			2017			2016
	(in thousands)
Reserve for losses and loss adjustment expenses net of reinsurance recoverables at beginning of period	$	791,781	$	672,588		$	761,128		$	653,534
Add: Incurred losses and loss adjustment expenses net of reinsurance:
Current year	129,369		81,407			238,152			159,580
Prior years	1,715		(4,748		)	(1,699		)	(9,415		)
Total incurred losses and loss and adjustment expenses	131,084		76,659			236,453			150,165
Deduct: Loss and loss adjustment expense payments net of reinsurance:
Current year	13,908		8,946			17,606			10,890
Prior years	69,449		50,670			140,467			103,178
Total loss and loss adjustment expense payments	83,357		59,616			158,073			114,068
Reserve for losses and loss adjustment expenses net of reinsurance recoverables at end of period	839,508		689,631			839,508			689,631
Add: Reinsurance recoverables on unpaid losses and loss adjustment expenses at end of period	221,553		153,706			221,553			153,706
Reserve for losses and loss adjustment expenses gross of reinsurance recoverables on unpaid losses and loss adjustment expenses at end of period	$	1,061,061	$	843,337		$	1,061,061		$	843,337

The Company experienced $1.7 million of adverse reserve development in the three months ended June 30, 2017 on the reserve for losses and loss adjustment expenses held at December 31, 2016. This reserve development included $1.4 million of favorable development in the Excess and Surplus Lines segment, primarily from the 2015 and 2014 accident years which were partially offset by unfavorable development in the 2006 accident year. This favorable development occurred because our actuarial studies at June 30, 2017 for the Excess and Surplus Lines segment indicated that our loss experience on our casualty business continues to be below our initial expected loss ratios. The Specialty Admitted Insurance segment experienced $949,000 of adverse development, primarily due to adverse development in the programs business for the 2016 accident year. The Company also experienced $2.2 million of adverse development for the Casualty Reinsurance segment. The development was mostly related to the 2010 and 2012 contracts with one reinsured.

The Company experienced $4.7 million of favorable reserve development in the three months ended June 30, 2016 on the reserve for losses and loss adjustment expenses held at December 31, 2015. This reserve development included $3.6 million of favorable development in the Excess and Surplus Lines segment, primarily from the 2014, 2013, and 2008 accident years. This favorable development occurred because our actuarial studies at June 30, 2016 for the Excess and Surplus Lines segment indicated that our loss experience on our casualty business continues to be below our initial expected loss ratios. Favorable reserve development of $617,000 in the Specialty Admitted Insurance segment was primarily from the 2013, 2011 and 2010 accident years, partially offset by adverse development in the 2015 accident year. The Company also experienced $520,000 of favorable development on prior accident years for the Casualty Reinsurance segment.

The Company experienced $1.7 million of favorable reserve development in the six months ended June 30, 2017 on the reserve for losses and loss adjustment expenses held at December 31, 2016. This reserve development included $4.7 million of favorable development in the Excess and Surplus Lines segment, primarily from the 2014 through 2016 accident years which were partially offset by unfavorable development in the 2006 accident year. This favorable development occurred because our actuarial studies at June 30, 2017 for the Excess and Surplus Lines segment indicated that our loss experience on our casualty business continues to be below our initial expected loss ratios. The Specialty Admitted Insurance segment experienced $907,000 of adverse development, primarily due to adverse development in the programs business for the 2016 accident year which was partially offset by favorable development in the 2015 and prior accident years. The Company also experienced $2.1 million of adverse development for the Casualty Reinsurance segment. The development was mostly related to the 2010 and 2012 contracts with one reinsured.

The Company experienced $9.4 million of favorable reserve development in the six months ended June 30, 2016 on the reserve for losses and loss adjustment expenses held at December 31, 2015. This reserve development included $8.0 million of favorable development in the Excess and Surplus Lines segment, primarily from the 2014, 2013, and 2012 accident years. This favorable development occurred because our actuarial studies at June 30, 2016 for the Excess and Surplus Lines segment indicated that our loss experience on our casualty business continues to be below our initial expected loss ratios. Favorable development of $928,000 in the Specialty Admitted Insurance segment was primarily from the 2013, 2012, 2011 and 2010 accident years, partially offset by adverse development in the 2015 accident year. The Company also experienced $483,000 of favorable development on prior accident years for the Casualty Reinsurance segment.