Reserves for unpaid losses and loss adjustment expenses

The following table presents a reconciliation of consolidated beginning and ending reserves for unpaid losses and loss adjustment expenses:



	September 30,
	2018			2017
	(in thousands)
Net reserves for unpaid losses and loss adjustment expenses, beginning of year	$	267,493		$	194,602
Commutation of MLQS	—			27,929
Adjusted net reserves for losses and loss adjustment expenses, beginning of year	267,493			222,531
Incurred losses and loss adjustment expenses:
Current year	96,673			87,365
Prior years	(5,722		)	(11,831		)
Total net losses and loss adjustment expenses incurred	90,951			75,534

Payments:
Current year	4,095			4,317
Prior years	52,056			28,763
Total payments	56,151			33,080
Net reserves for unpaid losses and loss adjustment expenses, end of period	302,293			264,985
Reinsurance recoverable on unpaid losses	63,521			45,949
Gross reserves for unpaid losses and loss adjustment expenses, end of period	$	365,814		$	310,934

During the nine months ended September 30, 2018, the reserves for unpaid losses and loss adjustment expenses held at December 31, 2017 developed favorably by $5.7 million. The favorable development was primarily attributable to the 2017 accident year of $4.8 million and the 2016 accident year of $3.3 million, which resulted from reported losses emerging at a lower level than expected. This favorable development was offset in part by adverse development of $2.4 million from the 2011 through 2015 accident years .

During the nine months ended September 30, 2017, the reserves for unpaid losses and loss adjustment expenses held at December 31, 2016 developed favorably by $11.8 million. The favorable development was attributable primarily to the 2016 accident year of $8.6 million, the 2015 accident year of $4.8 million and the 2014 accident year of $1.8 million, which was due to reported losses emerging at a lower level than expected. This favorable development was offset in part by adverse development of $3.4 million from the 2011 through 2013 accident years.

Multi-line quota share reinsurance

Effective January 1, 2017, the Company commuted its multi-line quota share treaty ("MLQS") covering the period January 1, 2015 to December 31, 2015, which reduced reinsurance recoverables on unpaid losses by approximately $27.9 million. The commutation did not have any effect on the Company's results of operations or cash flows for the applicable period.