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 September 30,						Nine Months Ended September 30,
	2017			2016			2017			2016
	(in thousands)
Reserve for losses and loss adjustment expenses net of reinsurance recoverables at beginning of period	$	839,508		$	689,631		$	761,128		$	653,534
Add: Incurred losses and loss adjustment expenses net of reinsurance:
Current year	158,009			88,659			396,161			248,239
Prior years	(7,564		)	(5,333		)	(9,263		)	(14,748		)
Total incurred losses and loss and adjustment expenses	150,445			83,326			386,898			233,491
Deduct: Loss and loss adjustment expense payments net of reinsurance:
Current year	21,305			10,734			38,911			21,624
Prior years	65,349			43,847			205,816			147,025
Total loss and loss adjustment expense payments	86,654			54,581			244,727			168,649
Reserve for losses and loss adjustment expenses net of reinsurance recoverables at end of period	903,299			718,376			903,299			718,376
Add: Reinsurance recoverables on unpaid losses and loss adjustment expenses at end of period	283,949			156,286			283,949			156,286
Reserve for losses and loss adjustment expenses gross of reinsurance recoverables on unpaid losses and loss adjustment expenses at end of period	$	1,187,248		$	874,662		$	1,187,248		$	874,662

The Company experienced $7.6 million of favorable reserve development in the three months ended September 30, 2017 on the reserve for losses and loss adjustment expenses held at December 31, 2016. This reserve development included $5.1 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 2016 accident year. This favorable development occurred because our actuarial studies at September 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 $3.0 million of favorable development, primarily due to favorable development in the workers' compensation business for the 2015 and 2014 accident years. The Company also experienced $581,000 of adverse development for the Casualty Reinsurance segment. The development was primarily related to the 2011 and 2013 contracts with one reinsured.

The Company experienced $5.3 million of favorable reserve development in the three months ended September 30, 2016 on the reserve for losses and loss adjustment expenses held at December 31, 2015. This reserve development included $5.8 million of favorable development in the Excess and Surplus Lines segment, primarily from the 2013, 2014, and 2015 accident years. This favorable development occurred because our actuarial studies at September 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. The Company also experienced $1.6 million of favorable development in the Specialty Admitted Insurance segment primarily from the 2013, 2014 and 2015 accident years. The Casualty Reinsurance segment experienced $2.0 million of adverse development on prior accident years primarily from two contracts from 2012 and 2013 underwriting years that had higher than expected reported losses in the quarter.

The Company experienced $9.3 million of favorable reserve development in the nine months ended September 30, 2017 on the reserve for losses and loss adjustment expenses held at December 31, 2016. This reserve development included $9.8 million of favorable development in the Excess and Surplus Lines segment, primarily from the 2014 through 2016 accident years. This favorable development occurred because our actuarial studies at September 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 $2.1 million of favorable development, primarily due to favorable development in the workers' compensation business for the 2016, 2015, and 2014 accident years which was partially offset by adverse development in programs for the 2016 accident year. The Company also experienced $2.6 million of adverse development for the Casualty Reinsurance segment. The development was mostly related to the 2011 through 2013 contracts with one reinsured.

The Company experienced $14.7 million of favorable reserve development in the nine months ended September 30, 2016 on the reserve for losses and loss adjustment expenses held at December 31, 2015. This reserve development included $13.8 million of favorable development in the Excess and Surplus Lines segment, primarily from the 2013, 2014, and 2015 accident years. This favorable development occurred because our actuarial studies at September 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. The Company also experienced favorable development of $2.5 million in the Specialty Admitted Insurance segment primarily from accident years 2010 through 2014. The Casualty Reinsurance segment experienced $1.5 million of adverse reserve development on prior accident years primarily from two contracts from the 2012 and 2013 years that had higher than expected reported losses in 2016.