The Company accrues for losses and loss adjustment expenses (“LAE”) in the period in which the underlying loss event occurred. LAE are costs associated with the investigation, evaluation, adjustment, and settlement of insurance claims and can be either allocated, costs directly attributable to a specific claim, or unallocated, costs that cannot be directly attributed to a specific claim. Reserves for losses and LAE are determined by establishing liabilities in amounts estimated to cover incurred losses and LAE. Such reserves are determined based on the assessment of claims reported and the development of pending claims. These reserves are based on individual case estimates for the reported losses and LAE and estimates of such amounts that are incurred but not reported.

The estimates of unpaid losses and LAE are subject to trends in claim severity and frequency and are continually reviewed. As part of the process, the Company reviews historical data and considers various factors, including known and anticipated regulatory and legal developments, changes in social attitudes, inflation and economic conditions. As experience develops and other data becomes available, these estimates are revised, as required, resulting in increases or decreases to the existing unpaid losses and LAE. Adjustments are reflected in the results of operations in the period in which they are made and the liabilities may deviate substantially from prior estimates. Losses and LAE ceded to or recovered from reinsurers are recorded as a reduction to losses and LAE on the consolidated statements of income. Accordingly, losses and LAE in the consolidated statements of income are net of reinsurance.

Activity in the liability for losses and LAE is summarized as follows:


	Three Months Ended
	March 31,
	2026			2025
Net balance, beginning of period (a)	$	314,357		$	323,335
Incurred, net of reinsurance, related to:
Current period		65,600			59,291
Prior periods		—			—
Total incurred, net of reinsurance		65,600			59,291
Paid, net of reinsurance, related to:
Current period		(18,428	)		(13,095	)
Prior periods		(41,537	)		(52,970	)
Total paid, net of reinsurance		(59,965	)		(66,065	)
Net balance, end of period		319,992			316,561
Add: reinsurance recoverable before allowance for credit losses		246,847			481,585
Gross balance, end of period	$	566,839		$	798,146

(a) Net balance represents beginning-of-period liability for unpaid losses and LAE less beginning-of-period reinsurance recoverable for unpaid losses and LAE.

Losses and LAE increased from the three months ended March 31, 2025 to the three months ended March 31, 2026 primarily due to a higher volume of policies in force as well as weather-related events in the northeast during the three months ended March 31, 2026. There were no losses from catastrophic events during the three months ended March 31, 2026 and 2025.