NOTE 5. LOSS RESERVES

We establish reserves for the estimated unpaid ultimate liability for losses and LAE under the terms of our policies and agreements. The determination of Reserves for Losses and LAE is partially dependent upon the receipt of information from agents and brokers. Reserves include estimates for both claims that have been reported and for those that have been incurred but not reported (“IBNR”), and include estimates of expenses associated with processing and settling these claims. Reserves are recorded in Reserves for Losses and LAE in the Consolidated Balance Sheets. Our estimates and judgements may be revised as additional experience and other data become available and are reviewed, as new or improved methodologies are developed, or as laws change. Frequency/severity analyses are also performed for certain books of business. To the extent that reserves are found deficient or redundant, a strengthening or release is recognized as a charge or credit to earnings.

The following table summarizes our Company’s Reserves for Losses and LAE activity for the six months ended June 30, 2017 and 2016:

	For the Six Months Ended June 30,
amounts in thousands	2017			2016
Net Reserves for Losses and LAE at Beginning of Year	$	1,510,451		$	1,393,126
Provision for Losses and LAE for Claims Occurring in the Current Year		331,595			330,775
Increase (Decrease) in Estimated Losses and LAE for Claims Occurring in Prior Years		15,115			(10,613	)
Incurred Losses and LAE	$	346,710		$	320,162
Losses and LAE Paid for Claims Occurring During:
Current Year		(47,235	)		(37,641	)
Prior Years		(249,895	)		(212,938	)
Losses and LAE Payments	$	(297,130	)	$	(250,579	)
Foreign Currency Adjustment		3,432			(8,207	)
Net Reserves for Losses and LAE at End of Period		1,563,463			1,454,502
Reinsurance Recoverables on Unpaid Losses and LAE		782,864			814,261
Gross Reserves for Losses and LAE at End of Period	$	2,346,327		$	2,268,763

For the six months ended June 30, 2017, our Incurred Losses and LAE increased $26.5 million as compared to the same period in 2016.

The Provision for Losses and LAE for Claims Occurring in the Current Year increased primarily due to growth in production increasing Net Earned Premium. This increase was partially offset by $10.9 million less of additional net current AY loss activity primarily related to a lower level of large event losses during the six months ended June 30, 2017 compared to the same period in 2016, which included the Alberta Wildfires, Ecuador Earthquake and Taiwan Earthquake.

In addition, we incurred $15.1 million of net prior accident year (“AY”) reserve strengthening for the six months ended June 30, 2017 primarily related to attritional loss development in our Int’l Insurance reporting segment and the settlement of a large claim in our GlobalRe reporting segment compared to $10.6 million of net prior AY reserve releases for the same period in 2016 attributable to better than expected loss emergence within all three reporting segments.

For the six months ended June 30, 2017, our Losses and LAE Payments increased $46.6 million as compared to the same period in 2016, primarily due to increased claim payments in our Int’l Insurance reporting segment.