HISTORICAL LOSS AND LAE DEVELOPMENT

9 Months Ended

Sep. 30, 2019

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 2019 and 2018:

	For the Nine-Month Periods
	Ended September 30,
(in thousands)	2019		2018
Unpaid losses and LAE at beginning of year
Gross	$	1,461,348	$	1,271,503
Ceded		(364,999)		(301,991)
Net	$	1,096,349	$	969,512
Increase (decrease) in incurred losses and LAE
Current accident year	$	362,395	$	342,807
Prior accident years		(55,189)		(38,502)
Total incurred	$	307,206	$	304,305
Loss and LAE payments for claims incurred
Current accident year	$	(51,270)	$	(45,008)
Prior accident years		(176,957)		(171,725)
Total paid	$	(228,227)	$	(216,733)
Net unpaid losses and LAE at September 30	$	1,175,328	$	1,057,084
Unpaid losses and LAE at September 30
Gross	$	1,557,358	$	1,377,111
Ceded		(382,030)		(320,027)
Net	$	1,175,328	$	1,057,084

For the first nine months of 2019, incurred losses and LAE included $55.2 million of favorable development on prior years’ loss reserves. The majority of products experienced modest amounts of favorable development on prior accident years, with notable contributions from transportation, general liability, commercial excess and personal umbrella, professional services, small commercial and surety. Executive products and medical professional liability were the exceptions and experienced adverse development.

For the first nine months of 2018, incurred losses and LAE included $38.5 million of favorable development on prior years’ loss reserves. Commercial excess and personal umbrella, general liability, marine and surety were drivers of the favorable development. Executive products, transportation and medical professional liability experienced adverse development.