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Liability for Unpaid Losses and Loss Adjustment Expenses | 9 Months Ended
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Sep. 30, 2015
Liability for Unpaid Losses and Loss Adjustment Expenses | 7. Liability for Unpaid Losses and Loss Adjustment Expenses Activity in the liability for unpaid losses and loss adjustment expenses is summarized as follows:
|  | Quarters Ended September 30, |  |  | Nine Months Ended September 30, |
(Dollars in thousands) |  | 2015 |  |  | 2014 |  |  | 2015 |  |  | 2014 |
Balance at beginning of period |  | $ | 769,299 |  |  | $ | 754,595 |  |  | $ | 675,472 |  |  | $ | 779,466 |
Less: Ceded reinsurance receivables |  |  | 138,497 |  |  |  | 178,998 |  |  |  | 123,201 |  |  |  | 192,491 |
Net balance at beginning of period |  |  | 630,802 |  |  |  | 575,597 |  |  |  | 552,271 |  |  |  | 586,975 |
Purchased reserves, gross |  |  | 1,119 |  |  |  | — |  |  |  | 89,489 |  |  |  | — |
Less: Purchased reserves ceded |  |  | (1,119 | ) |  |  | — |  |  |  | (12,800 | ) |  |  | — |
Purchased reserves, net |  |  | — |  |  |  | — |  |  |  | 76,689 |  |  |  | — |
Incurred losses and loss adjustment expenses related to: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Current year |  |  | 86,203 |  |  |  | 36,501 |  |  |  | 244,041 |  |  |  | 119,464 |
Prior years |  |  | (8,512 | ) |  |  | 153 |  |  |  | (17,171 | ) |  |  | (5,969 | )
Total incurred losses and loss adjustment expenses |  |  | 77,691 |  |  |  | 36,654 |  |  |  | 226,870 |  |  |  | 113,495 |
Paid losses and loss adjustment expenses related to: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Current year |  |  | 53,512 |  |  |  | 15,480 |  |  |  | 113,573 |  |  |  | 39,472 |
Prior years |  |  | 56,385 |  |  |  | 28,704 |  |  |  | 143,661 |  |  |  | 92,931 |
Total paid losses and loss adjustment expenses |  |  | 109,897 |  |  |  | 44,184 |  |  |  | 257,234 |  |  |  | 132,403 |
Net balance at end of period |  |  | 598,596 |  |  |  | 568,067 |  |  |  | 598,596 |  |  |  | 568,067 |
Plus: Ceded reinsurance receivables |  |  | 130,913 |  |  |  | 171,864 |  |  |  | 130,913 |  |  |  | 171,864 |
Balance at end of period |  | $ | 729,509 |  |  | $ | 739,931 |  |  | $ | 729,509 |  |  | $ | 739,931 |
When analyzing loss reserves and prior year development, the Company considers many factors, including the frequency and severity of claims, loss trends, case reserve settlements that may have resulted in significant development, and any other additional or pertinent factors that may impact reserve estimates. In the third quarter of 2015, the Company decreased its prior accident year loss reserves by $8.5 million, which consisted of a $7.3 million decrease related to Commercial Lines and a $1.2 million decrease related to Reinsurance Operations. The $7.3 million decrease related to Commercial Lines primarily consisted of the following:
| • |  | Professional: A $3.5 million decrease in aggregate primarily related to better than anticipated loss emergence in accident years 2006 through 2012.
| • |  | General Liability: A $3.8 million decrease in aggregate primarily related to accident years 1999 through 2013 primarily due to better than anticipated frequency and severity in construction defect.
The $1.2 million decrease in aggregate related to Reinsurance Operations was primarily due to improved results reported by the Company’s cedants on property catastrophe contracts for accident years 2009 to 2013. In the third quarter of 2014, the Company increased its prior accident year loss reserves by $0.2 million, which consisted of a $0.02 million increase related to Commercial Lines and a $0.1 million increase related to Reinsurance Operations. The $0.02 million increase related to Commercial Lines primarily consisted of the following:
| • |  | General Liability: A $5.4 million increase primarily due to higher than anticipated loss emergence in recent accident years.
| • |  | Professional: A $6.4 million reduction is primarily due to lower than expected severity from accident years 2007 through 2011.
| • |  | Property: A $0.5 million increase primarily due to increased severity in accident years 2011 through 2013.
| • |  | Asbestos: $0.2 million increase primarily related to accident years prior to 1990 due to recent development on several claims.
| • |  | Other: A $0.3 million increase primarily due to accident years 2011 through 2013.
The $0.1 million increase related to Reinsurance Operations primarily consisted of the following:
| • |  | Property: A $3.4 million reduction is due to less catastrophe losses than anticipated primarily from accident year 2013.
| • |  | Commercial Auto: A $0.5 million increase due to increased severity primarily from accident years 2009 and 2010.
| • |  | Marine: A $3.0 million increase is primarily related to increased severity on accident years 2011 and 2012. These treaties are in runoff. Several claims have recently settled for amounts higher than expected.
In the first nine months of 2015, the Company decreased its prior accident year loss reserves by $17.2 million, which consisted of a $12.9 million decrease related to Commercial Lines and a $4.3 million decrease related to Reinsurance Operations. The $12.9 million decrease related to Commercial Lines primarily consisted of the following:
| • |  | Property: A $0.8 million decrease in aggregate primary related to better than anticipated loss emergence in the 2011 through 2014 accident years.
| • |  | Umbrella: $0.3 million decrease primarily related to accident years 2003 through 2005 as a result of better than anticipated loss emergence.
| • |  | Professional: $6.4 million decrease in aggregate primarily related to better than anticipated frequency in accident years 2006 through 2012.
| • |  | General Liability: A $5.7 million decrease in aggregate primarily related to accident years prior to 2013 due to better than anticipated frequency and severity in construction defect.
The $4.3 million decrease in aggregate related to Reinsurance Operations was primarily due to improved results reported by the Company’s cedants on property contracts for accident years 2009 through 2014. In the first nine months of 2014, the Company reduced its prior accident year loss reserves by $6.0 million, which consisted of a $5.0 million decrease related to Commercial Lines and a $1.0 million decrease related to Reinsurance Operations. The $5.0 million decrease related to Commercial Lines primarily consisted of the following:
| • |  | Property: A $0.7 million increase primarily due to increased severity in accident years 2007, 2012, and 2013.
| • |  | General Liability: A $5.3 million increase primarily due to higher than anticipated loss emergence in recent accident years.
| • |  | Professional: A $18.1 million reduction due to lower than expected severity primarily from accident years 2007 through 2011.
| • |  | Asbestos: $7.1 million increase primarily related to accident years prior to 1990 due to recent development on several claims.
The $1.0 million decrease related to Reinsurance Operations primarily consisted of the following:
| • |  | Property: A $4.7 million reduction driven by less catastrophe losses than anticipated primarily from accident years 2012 and 2013.
| • |  | Marine: A $3.0 million increase primarily related to increased severity from accident years 2011 and 2012. These treaties are in runoff. Several claims have recently settled for amounts higher than expected.
| • |  | Commercial Auto: $0.7 million increase is primarily due to increased severity primarily from accident years 2009 and 2010.

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- Definition The entire disclosure for liabilities related to future policy benefits and unpaid claims and claim adjustments. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 944 -SubTopic 40 -Section 50 -Paragraph 6 -URI http://asc.fasb.org/extlink&oid=6482852&loc=d3e14931-158439 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 944 -SubTopic 40 -Section 50 -Paragraph 1 -URI http://asc.fasb.org/extlink&oid=6482485&loc=d3e14754-158437 Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 944 -SubTopic 210 -Section S99 -Paragraph 1 -Subparagraph (SX 210.7-03.13(a)(1),(b)) -URI http://asc.fasb.org/extlink&oid=6879938&loc=d3e572229-122910 Reference 4: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 944 -SubTopic 40 -Section 50 -Paragraph 3 -URI http://asc.fasb.org/extlink&oid=6482485&loc=d3e14764-158437 + Details
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