Reserve for Loss and Loss Expense

3 Months Ended

Mar. 31, 2020

The table below provides a roll forward of reserve for loss and loss expense balances:



	Quarter Ended March 31,
($ in thousands)	2020			2019
Gross reserve for loss and loss expense, at beginning of year	$	4,067,163		3,893,868
Less: reinsurance recoverable on unpaid loss and loss expense, at beginning of year¹	547,066			537,388
Net reserve for loss and loss expense, at beginning of year	3,520,097			3,356,480
Incurred loss and loss expense for claims occurring in the:
Current year	407,276			397,253
Prior years	(6,952		)	(10,674	)
Total incurred loss and loss expense	400,324			386,579
Paid loss and loss expense for claims occurring in the:
Current year	70,610			73,964
Prior years	281,736			246,168
Total paid loss and loss expense	352,346			320,132
Net reserve for loss and loss expense, at end of period	3,568,075			3,422,927
Add: Reinsurance recoverable on unpaid loss and loss expense, at end of period	535,560			543,582
Gross reserve for loss and loss expense at end of period	$	4,103,635		3,966,509

¹Includes an adjustment of $2.9 million related to our adoption of ASU 2016-13. Refer to Note 2. "Adoption of Accounting Pronouncements" for additional information.

Our current year incurred losses of $407.3 million include an estimate of $10.0 million for COVID-19-related losses related to a small portion of our policies that include a $25,000 sub-limited coverage for specified extra expenses to clean or disinfect a property when ordered by a Board of Health. In most instances, COVID-19 does not cause a direct physical loss to property,

and when combined with other policy wording requirements, we do not expect material business interruption losses from COVID-19. We also attach a regulatory approved virus exclusion to all standard commercial lines property and businessowners policies.

Prior year reserve development in First Quarter 2020 was $7.0 million and included $10.0 million of favorable casualty reserve development in our workers compensation lines of business that was partially offset by $3.0 million of unfavorable property reserve development. Prior year reserve development in First Quarter 2019 was $10.7 million, driven by favorable casualty reserve development of $8.0 million in our workers compensation line of business and $2.0 million in our general liability line of business.