Note 3 - Workers’ Compensation Claims

The following table summarizes the aggregate workers’ compensation reserve activity (in thousands):


	Three Months Ended September 30,						Nine Months Ended September 30,
	2016			2015			2016			2015
Beginning balance
Workers’ compensation claims liabilities	$	277,050		$	239,245		$	255,675		$	225,278

Add: claims expense accrual:
Current period		38,094			29,723			103,875			84,943
Prior periods		(999	)		(2,424	)		(1,547	)		(9,659	)

		37,095			27,299			102,328			75,284

Less: claim payments related to:
Current period		5,596			4,974			10,565			8,730
Prior periods		16,618			13,799			55,507			44,061

		22,214			18,773			66,072			52,791

Ending balance
Workers’ compensation claims liabilities	$	291,931		$	247,771		$	291,931		$	247,771

Incurred but not reported (IBNR)	$	145,722		$	125,574		$	145,722		$	125,574

The states of California, Maryland, Oregon, Washington, Colorado and Delaware required us to maintain specified investment balances or other financial instruments totaling $159.0 million at September 30, 2016 to cover potential workers’ compensation claims losses related to the Company’s current and former status as a self-insured employer. In addition to restricted cash and investments held to satisfy these requirements at September 30, 2016, we have provided surety bonds and standby letters of credit totaling $152.9 million, including a California requirement of $147.2 million.

The Company also operates a wholly owned insurance company, Ecole Insurance Company (“Ecole”). Ecole is a fully licensed insurance company holding a certificate of authority from the Arizona Department of Insurance. Ecole provides workers’ compensation coverage to the Company’s employees working in Arizona, Utah and Nevada. The surplus of Ecole was $10.8 million and $9.5 million at September 30, 2016 and December 31, 2015, respectively, and is included in long-term restricted cash and investments in our condensed consolidated balance sheets.

As part of its fronted workers’ compensation insurance program with Chubb Limited (“Chubb”, formerly ACE Group) in the states of California, Delaware, Virginia, Pennsylvania, North Carolina, New Jersey, West Virginia and the District of Columbia, the Company makes payments into a trust account (“the Chubb trust account”) to be used for the payment of future claims. The balance in the Chubb trust account was $235.2 million and $166.6 million at September 30, 2016 and December 31, 2015, respectively. The Chubb trust account balances are included as a component of the current and long-term restricted cash and investments in the Company’s condensed consolidated balance sheets.

Note 3 - Workers’ Compensation Claims (Continued)

At September 30, 2016 the Company recorded an asset of $13.2 million related to a payment remitted to Chubb on September 29, 2016 but not deposited into the Chubb trust account until October 2016. This amount is included in other assets in the condensed consolidated balance sheet.