The following table represents a reconciliation of changes in the ending reserve balances for losses and loss adjustment expenses (“LAE”):


	Three Months Ended June 30,						Six Months Ended June 30,
	2026			2025			2026			2025
	($ in thousands)						($ in thousands)
Reserve for losses and LAE net of reinsurance recoverables at beginning of period	$	341,016		$	182,661		$	275,959		$	155,299
Add: Balances acquired(1)		—			—			22,178			6,788
Add: Incurred losses and LAE, net of reinsurance, related to:(2)
Current year		113,312			52,698			210,741			95,757
Prior years		(14,324	)		(6,515	)		(24,656	)		(10,830	)
Total incurred		98,988			46,183			186,085			84,927
Deduct: Loss and LAE payments, net of reinsurance, related to:
Current year		7,262			17,659			27,980			22,657
Prior years		11,795			12,000			35,295			25,172
Total payments		19,057			29,659			63,275			47,829
Reserve for losses and LAE net of reinsurance recoverables at end of period		420,947			199,185			420,947			199,185
Add: Reinsurance recoverables on unpaid losses and LAE at end of period		523,790			399,471			523,790			399,471
Reserve for losses and LAE gross of reinsurance recoverables on unpaid losses and LAE at end of period	$	944,737		$	598,656		$	944,737		$	598,656

(1)

Represents amounts recognized in Reserve for losses and LAE net of reinsurance recoverables upon acquisition of Gray Surety and FIA on 1/31/2026 and 1/1/2025, respectively, in accordance with ASC 805, Business Combinations. See Note 23 of the Notes to the Consolidated Financial Statements in our 2025 Annual Report on Form 10-K and Note 14 of this Quarterly Report on Form 10-Q for additional information regarding the acquisitions.

(2)

Losses for the three months ended June 30, 2026 and 2025 include $6.2 million and an insignificant amount, respectively, of losses on derivative instruments. Losses for the six months ended June 30, 2026 and 2025 include $18.5 million and an insignificant amount, respectively, of losses on derivative instruments.

Considerable variability is inherent in the estimate of the reserve for losses and LAE. Although management believes the liability recorded for losses and LAE is adequate, the variability inherent in this estimate could result in changes to the ultimate liability, which may be material to stockholders’ equity.

The Company experienced favorable prior year development of $14.3 million and $6.5 million during the three months ended June 30, 2026 and 2025, respectively.

The Company experienced favorable prior year development of $24.7 million and $10.8 million during the six months ended June 30, 2026 and 2025, respectively.

Favorable prior year development during the three months ended June 30, 2026 was primarily due to lower than anticipated severity of attritional losses, particularly in Inland Marine and Property lines and previous year’s Crop results. Favorable prior year development during the three months ended June 30, 2025 was primarily due to lower than anticipated severity of attritional losses.

Favorable prior year development during the six months ended June 30, 2026 was primarily due to lower than anticipated severity of attritional losses, particularly in Inland Marine and Property lines and previous year’s Crop results. Favorable prior year development during the six months ended June 30, 2025 was primarily due to lower than anticipated severity of attritional losses.