The Company regularly updates its reserve estimates as new information becomes available and further events occur which may impact the resolution of unsettled claims. Reserve adjustments are reflected in results of operations as adjustments to losses and loss adjustment expenses (“LAE”). Often these adjustments are recognized in periods subsequent to the period in which the underlying policy was written and loss event occurred. These types of subsequent adjustments are described as “prior years’ loss reserves”. Such development can be either favorable or unfavorable to the Company’s financial results and may vary by line of business. In this section, all amounts presented include catastrophe losses and LAE, unless otherwise indicated.

The table below provides a reconciliation of the gross beginning and ending reserve for unpaid losses and loss adjustment expenses.

	Three Months Ended
	March 31,
(in millions)	2019			2018
Gross loss and LAE reserves, beginning of period	$	5,304.1		$	5,058.5
Reinsurance recoverable on unpaid losses		1,472.6			1,455.0
Net loss and LAE reserves, beginning of period		3,831.5			3,603.5
Net incurred losses and LAE in respect of losses occurring in:
Current year		712.8			677.4
Prior years		(13.2	)		(6.5	)
Total incurred losses and LAE		699.6			670.9
Net payments of losses and LAE in respect of losses occurring in:
Current year		175.3			181.0
Prior years		459.1			425.5
Total payments		634.4			606.5
Net reserve for losses and LAE, end of period		3,896.7			3,667.9
Reinsurance recoverable on unpaid losses		1,484.9			1,420.0
Gross reserve for losses and LAE, end of period	$	5,381.6		$	5,087.9

As a result of continuing trends in the Company’s business, reserves including catastrophes have been re-estimated for all prior accident years and were decreased by $13.2 million in 2019 in comparison to a decrease of $6.5 million in 2018.

For the three months ended March 31, 2019, net favorable loss and LAE development was $13.2 million, primarily as a result of favorable catastrophe development due to anticipated subrogation recoveries on the 2017 and 2018 California wildfires. Our current estimate of these subrogation recoveries was informed by the recent sale of our subrogation rights for certain of these events to a large financial institution. In addition, higher than expected losses in our personal and commercial automobile lines were substantially offset by lower than expected losses in our workers’ compensation and commercial multiple peril lines.

For the three months ended March 31, 2018, net favorable loss and LAE development was $6.5 million, primarily as a result of favorable catastrophe development related to the 2017 hurricanes and California wildfires.