4. Reserve for Losses and Loss Adjustment Expenses

The following table represents a reconciliation of changes in the ending reserve balances for losses and loss adjustment expenses:


	Three Months Ended March 31,
	2020		2019
		(in thousands)
Reserve for losses and loss adjustment expenses net of reinsurance recoverables at beginning of period	$	3,869	$	4,165
Add: Incurred losses and loss adjustment expenses, net of reinsurance, related to:
Current year		2,179		278
Prior years		(316)		38
Total incurred		1,863		316
Deduct: Loss and loss adjustment expense payments, net of reinsurance, related to:
Current year		351		106
Prior years		883		2,043
Total payments		1,234		2,149
Reserve for losses and loss adjustment expense net of reinsurance recoverables at end of period		4,498		2,332
Add: Reinsurance recoverables on unpaid losses and loss adjustment expenses at end of period		13,854		10,296
Reserve for losses and loss adjustment expenses gross of reinsurance recoverables on unpaid losses and loss adjustment expenses at end of period	$	18,352	$	12,628

Considerable variability is inherent in the estimate of the reserve for losses and LAE. Although management believes the liability recorded for losses and LAE is adequate, the variability inherent in this estimate could result in changes to the ultimate liability, which may be material to stockholders’ equity.

The Company experienced favorable development of $0.3 million in the three months ended March 31, 2020 and adverse development of $0.04 million in the three months ended March 31, 2019 related to prior year losses.

Favorable development in the three months ended March 31, 2020 was primarily due to lower than anticipated frequency and severity of claims in the specialty homeowners and residential flood lines of business.

Unfavorable development during for the three months ended March 31, 2019 was primarily due to development of a Hurricane Michael claim offset by favorable development in the Specialty Homeowners line of business due to lower than originally anticipated frequency and severity of claims.