Losses and Loss Adjustment Expenses Incurred and Paid

6 Months Ended

Dec. 31, 2011

Losses and Loss Adjustment Expenses Incurred and Paid [Abstract]

Losses and Loss Adjustment Expenses Incurred and Paid

9. Losses and Loss Adjustment Expenses Incurred and Paid

Information regarding the reserve for unpaid losses and LAE is as follows (in thousands).

	Six Months Ended			Year Ended June 30,
	December 31,
	2011			2011			2010			2009
Liability for unpaid losses and LAE at beginning of period, gross	$	68,424		$	73,198		$	83,973		$	101,407
Reinsurance balances receivable		(133	)		(46	)		(78	)		(259	)
Liability for unpaid losses and LAE at beginning of period, net		68,291			73,152			83,895			101,148
Add: Provision for losses and LAE:
Current period		60,162			130,888			138,218			160,659
Prior periods		5,591			(1,721	)		(11,223	)		(11,382	)
Net losses and LAE incurred		65,753			129,167			126,995			149,277
Less: Losses and LAE paid:
Current period		32,022			84,736			87,097			103,566
Prior periods		32,773			49,292			50,641			62,964
Net losses and LAE paid		64,795			134,028			137,738			166,530
Liability for unpaid losses and LAE at end of period, net		69,249			68,291			73,152			83,895
Reinsurance balances receivable		187			133			46			78
Liability for unpaid losses and LAE at end of period, gross	$	69,436		$	68,424		$	73,198		$	83,973

The unfavorable change in the estimate of unpaid losses and loss adjustment expenses of $5.6 million for the six months ended December 31, 2011 was primarily related to the strengthening of loss adjustment expense reserves for prior accident periods and included amounts related to the settlement of claims for extra-contractual damages (see Note 16). The favorable change in the estimate of unpaid losses and loss adjustment expenses of $1.7 million for the year ended June 30, 2011 was due to lower than anticipated severity of accidents occurring during the fiscal 2009 and 2010 accident years, specifically in bodily injury coverage in Texas, Tennessee and South Carolina and physical damage coverages in Georgia, partially offset by higher loss adjustment expenses specific to bodily injury and Florida no-fault coverages. The favorable change in the estimate of unpaid losses and loss adjustment expenses of $11.2 million for the year ended June 30, 2010 was due to lower than anticipated severity of accidents occurring during the fiscal 2007 and 2008 accident years, primarily in bodily injury coverage in Georgia and South Carolina, an improvement in the Company’s claim handling practices and a shift in business mix toward renewal policies, which have lower loss ratios than new policies. The favorable development of $11.4 million for the year ended June 30, 2009 was primarily due to both lower than anticipated severity and frequency of accidents, most notably in the Company’s property and physical damage coverages.