6. Liability for Unpaid Losses and Loss Adjustment Expenses

Set forth in the following table is the change in liability for unpaid losses and LAE for the periods presented (in thousands):

	Three Months Ended					Six Months Ended
	June 30,					June 30,
	2018			2017		2018			2017
Balance at beginning of period	$	129,637		$	31,463	$	248,425		$	58,494
Less: Reinsurance (recoverable)/payable		(70,351	)		2,353		(182,405	)		(106	)
Net balance at beginning of period		59,286			33,816		66,020			58,388
Incurred (recovered) related to:
Current year		87,532			79,075		163,502			149,549
Prior years		2,310			1,109		2,266			1,205
Total incurred		89,842			80,184		165,768			150,754
Paid related to:
Current year		50,572			62,141		67,979			85,031
Prior years		43,373			30,607		108,626			102,859
Total paid		93,945			92,748		176,605			187,890
Net balance at end of period		55,183			21,252		55,183			21,252
Plus: Reinsurance recoverable/(payable)		96,733			1,393		96,733			1,393
Balance at end of period	$	151,916		$	22,645	$	151,916		$	22,645

The Company’s losses incurred for the three and six months ended June 20, 2018 include prior year net reserve development of $2.3 million which was principally caused by loss reserve development of $5.3 million on a direct basis ($2.6 million on a net basis) for the fourth quarter 2016 storm, Hurricane Matthew. Reserve strengthening on Hurricane Matthew is based on our revised estimate to settle the remaining 78 open claims. The three and six months ended June 30, 2017 included prior year loss reserve development of $6.6 million on a direct basis ($1.1 million on a net basis), also reflecting strengthening of reserves for the fourth quarter 2016 storm, Hurricane Matthew.

Also, during the second quarter in 2018, the Company increased its estimate of ultimate losses on the third quarter 2017 storm Hurricane Irma to $603.5 million for both Insurance Entities from $447.4 million recorded in the first quarter in 2018. The prior year development of $156.1 million in gross losses resulted in a net retention benefit of $0.3 million after cessions to the Company’s reinsurers. The increase in the ultimate loss and LAE for Hurricane Irma was the result of continuation of new reported claims and the aggressive nature of plaintiff attorneys on claims in Florida.