Loss and Loss Adjustment Expense Reserves — Activity in the loss and loss adjustment expense reserves during the nine month periods is summarized as follows:



	September 30,
(millions)	2017		2016
Balance, Beginning of period	$	11,368.0	$	10,039.0
Less reinsurance recoverables on unpaid losses	1,801.0		1,442.7
Net balance, Beginning of period	9,567.0		8,596.3
Net loss and loss adjustment expense reserves disposed¹	0		(2.5		)
Total beginning reserves	9,567.0		8,593.8
Incurred related to:
Current year	13,886.3		12,577.5
Prior years	42.5		(22.9		)
Total incurred	13,928.8		12,554.6
Paid related to:
Current year	8,379.4		7,768.2
Prior years	4,387.8		3,986.2
Total paid	12,767.2		11,754.4
Net balance, End of period	10,728.6		9,394.0
Plus reinsurance recoverables on unpaid losses	2,624.7		1,834.2
Balance, End of period	$	13,353.3	$	11,228.2

¹ During 2016, $2.5 million net reserves were disposed by ARX in an exchange transaction.

We experienced unfavorable reserve development of $42.5 million and favorable reserve development of $22.9 million for the first nine months of 2017 and 2016, respectively, which is reflected as “Incurred related to prior years” in the table above.

Year-to-date 2017


•	Approximately $51 million of unfavorable prior year reserve development was attributable to accident years 2016 and 2015. This unfavorable development was partially offset by $8 million of favorable development attributable to accident year 2014 and prior accident years.


•	Our personal auto businesses incurred $76 million of unfavorable loss and loss adjustment expense (LAE) reserve development for the first nine months of 2017, primarily in the Agency business, in part reflecting an increase in costs related to property damage and higher LAE costs.


•	Our Property business experienced $24 million in favorable development primarily due to the identification of prior year losses eligible to be ceded under our catastrophe bond reinsurance program and lower severity and frequency than anticipated for accident year 2016.


•	The remaining favorable development for the first nine months was attributable to both our special lines and commercial auto products.

Year-to-date 2016


•	Approximately $30 million of the favorable prior year reserve development was attributable to accident year 2015, partially offset by $26 million of unfavorable development attributable to accident year 2014; we had favorable development for 2013 and prior accident years.

•

Our Personal Lines and Property businesses incurred $9 million and $46 million, respectively, of favorable loss and LAE reserve development for the first nine months of 2016, partially offset by the unfavorable loss and LAE reserve development in our Commercial Lines business of $31 million. In our Property business, both the severity and frequency of late reported claims was less than anticipated.


•	Our personal auto product favorable development was in our Direct auto businesses.


•	Our personal auto and Commercial Lines businesses incurred unfavorable IBNR loss reserve development, primarily due to a higher severity and frequency of late reported claims than anticipated for accident year 2015, driven in part by storms in late December 2015, resulting in a greater number of claims being reported in January 2016 than anticipated.


•	In addition, our Commercial Lines business experienced unfavorable case reserve development for accident year 2014 primarily due to a higher severity than anticipated on our largest limits, while case reserve development for accident years 2015 and 2013 and prior was favorable.