NOTE 7. 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, 2018 and 2017:

	For the Six Months Ended June 30,
amounts in thousands	2018			2017
Net Reserves for Losses and LAE at Beginning of Year	$	1,705,380		$	1,510,451
Acquired Net Reserves		16,159			—
Provision for Losses and LAE for Claims Occurring in the Current Year		379,158			331,595
Increase (Decrease) in Estimated Losses and LAE for Claims Occurring in Prior Years		3,320			15,115
Incurred Losses and LAE	$	382,478		$	346,710
Losses and LAE Paid for Claims Occurring During:
Current Year		(32,832	)		(47,235	)
Prior Years		(292,843	)		(249,895	)
Losses and LAE Payments	$	(325,675	)	$	(297,130	)
Foreign Currency Adjustment		(3,310	)		3,432
Net Reserves for Losses and LAE at End of Period		1,775,032			1,563,463
Reinsurance Recoverables on Unpaid Losses and LAE		799,084			782,864
Gross Reserves for Losses and LAE at End of Period	$	2,574,116		$	2,346,327

For the six months ended June 30, 2018, our Incurred Losses and LAE increased $35.8 million as compared to the same period in 2017, primarily due to growth in Net Earned Premium over the prior year.

In addition, we incurred $3.3 million of net prior AY reserve strengthening for the six months ended June 30, 2018 due to net unfavorable non-catastrophe related loss emergence of $11.8 million primarily within our Int’l and U.S. Insurance reporting segments, partially offset by net catastrophe loss releases $8.5 million primarily related to Hurricanes Harvey, Irma and Maria (the “Hurricane events”) and the Puebla, Mexico Earthquake that occurred in the third quarter of 2017. This compared to $15.1 million of net prior AY reserve strengthening for the same period in 2017 related to unfavorable loss emergence within our Int’l Insurance and GlobalRe reporting segments.

For the six months ended June 30, 2018, our Losses and LAE Payments increased $28.5 million as compared to the same period in 2017, primarily due to increased claim payments associated with the catastrophe activity occurring in the third quarter of 2017.

Our June 30, 2018 Net Reserves for Losses and LAE includes estimated amounts for numerous catastrophe events. We caution that the magnitude and complexity of losses arising from these events inherently increases the level of uncertainty and therefore the level of management judgment involved in arriving at our estimated Net Reserves for Losses and LAE. As a result, our actual losses for these events may ultimately differ materially from our current estimates.