HISTORICAL LOSS AND LAE DEVELOPMENT

9 Months Ended

Sep. 30, 2017

HISTORICAL LOSS AND LAE DEVELOPMENT

HISTORICAL LOSS AND LAE DEVELOPMENT

4. HISTORICAL LOSS AND LAE DEVELOPMENT

The following table is a reconciliation of our unpaid losses and settlement expenses (LAE) for the first nine months of 2017 and 2016.

	For the Nine-Month Periods
	Ended September 30,
(in thousands)	2017		2016
Unpaid losses and LAE at beginning of year
Gross	$	1,139,337	$	1,103,785
Ceded		(288,224)		(297,844)
Net	$	851,113	$	805,941
Increase (decrease) in incurred losses and LAE
Current accident year	$	343,535	$	288,749
Prior accident years		(36,608)		(29,410)
Total incurred	$	306,927	$	259,339
Loss and LAE payments for claims incurred
Current accident year	$	(37,333)	$	(36,972)
Prior accident year		(158,052)		(170,313)
Total paid	$	(195,385)	$	(207,285)
Net unpaid losses and LAE at September 30,	$	962,655	$	857,995
Unpaid losses and LAE at September 30,
Gross	$	1,253,729	$	1,150,938
Ceded		(291,074)		(292,943)
Net	$	962,655	$	857,995

As disclosed in the 2016 Annual Report on Form 10-K, our actuaries have historically performed a ground up reserve study of the expected value of unpaid losses and LAE using multiple standard actuarial methodologies three times a year. As a result of efficiency improvements in our reserving process, our actuaries began performing ground up reserve studies on a quarterly basis during the first quarter of 2017. We continue to perform an emergence analysis on a quarterly basis to determine if further adjustments are necessary. We then review all of the various estimates of ultimate loss by accident year and determine the appropriateness of the reserve balance as we have done in the past.