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Unpaid losses and loss expenses | 3 Months Ended
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Mar. 31, 2019
Liability for Claims and Claims Adjustment Expense [Abstract] |
Liability for Future Policy Benefits and Unpaid Claims Disclosure [Text Block] | Unpaid losses and loss expenses The following table presents a reconciliation of beginning and ending Unpaid losses and loss expenses:
| Three Months Ended March 31 |
(in millions of U.S. dollars) | 2019 |  |  | 2018 |
Gross unpaid losses and loss expenses – beginning of period | $ | 62,960 |  |  | $ | 63,179 |
Reinsurance recoverable on unpaid losses - beginning of period (1) | (14,689 | ) |  | (14,014 | )
Net unpaid losses and loss expenses – beginning of period | 48,271 |  |  | 49,165 |
Net losses and loss expenses incurred in respect of losses occurring in: |  |  |
Current year | 4,326 |  |  | 4,358 |
Prior years (2) | (228 | ) |  | (256 | )
Total | 4,098 |  |  | 4,102 |
Net losses and loss expenses paid in respect of losses occurring in: |  |  |
Current year | 785 |  |  | 809 |
Prior years | 3,234 |  |  | 3,433 |
Total | 4,019 |  |  | 4,242 |
Foreign currency revaluation and other | 86 |  |  | 292 |
Net unpaid losses and loss expenses – end of period | 48,436 |  |  | 49,317 |
Reinsurance recoverable on unpaid losses (1) | 14,707 |  |  | 13,822 |
Gross unpaid losses and loss expenses – end of period | $ | 63,143 |  |  | $ | 63,139 |
(1) | Net of provision for uncollectible reinsurance.
(2) | Relates to prior period loss reserve development only and excludes prior period development related to reinstatement premiums, expense adjustments and earned premiums totaling $24 million and $47 million for the three months ended March 31, 2019 and 2018, respectively.
Gross and net unpaid losses and loss expenses increased slightly in the quarter as the underlying reserve increase of $557 million was mostly offset by the favorable impact of prior period development and catastrophic and crop insurance payments in the quarter. Prior Period Development Prior period development (PPD) arises from changes to loss estimates recognized in the current year that relate to loss events that occurred in previous calendar years and excludes the effect of losses from the development of earned premium from previous accident years. Long-tail lines include lines such as workers' compensation, general liability, and professional liability; while short-tail lines include lines such as most property lines, energy, personal accident, and agriculture. The following table summarizes (favorable) and adverse PPD by segment.
| Three Months Ended March 31 |
(in millions of U.S. dollars) | Long-tail |  |  | Short-tail |  |  | Total |
2019 |  |  |  |  |
North America Commercial P&C Insurance | $ | (65 | ) |  | $ | (66 | ) |  | $ | (131 | )
North America Personal P&C Insurance | — |  |  | (10 | ) |  | (10 | )
North America Agricultural Insurance | — |  |  | (61 | ) |  | (61 | )
Overseas General Insurance | — |  |  | (4 | ) |  | (4 | )
Global Reinsurance | (1 | ) |  | (7 | ) |  | (8 | )
Corporate | 10 |  |  | — |  |  | 10 |
Total | $ | (56 | ) |  | $ | (148 | ) |  | $ | (204 | )
2018 |  |  |  |  |
North America Commercial P&C Insurance | $ | 8 |  |  | $ | (109 | ) |  | $ | (101 | )
North America Personal P&C Insurance | — |  |  | (6 | ) |  | (6 | )
North America Agricultural Insurance | — |  |  | (76 | ) |  | (76 | )
Overseas General Insurance | — |  |  | (22 | ) |  | (22 | )
Global Reinsurance | — |  |  | (14 | ) |  | (14 | )
Corporate | 10 |  |  | — |  |  | 10 |
Total | $ | 18 |  |  | $ | (227 | ) |  | $ | (209 | )
Significant prior period movements by segment, principally driven by reserve reviews completed during each respective period, are discussed in more detail below. The remaining net development for long-tail lines and short-tail business for each segment and Corporate comprises numerous favorable and adverse movements across a number of lines and accident years, none of which is significant individually or in the aggregate. North America Commercial P&C Insurance 2019 For the three months ended March 31, 2019, net favorable PPD was $131 million, which was the net result of several underlying favorable and adverse movements, and was driven by the following principal changes:
• | Net favorable development of $65 million in long-tail business, primarily from:
• | Net favorable development of $57 million in professional liability (errors & omissions and cyber), mainly in the 2015 and prior accident years where case activity was less than expected, partially offset by adverse development in the 2016 accident year, which was driven by several large adverse claim developments;
• | Net favorable development of $31 million in commercial excess and umbrella portfolios, driven by the 2013 and prior accident years, where case emergence was less than expected and greater weight was given to experience-based methods; this was partially offset by higher than expected claim activity in the 2015, 2016, and 2018 accident years which led to reserve strengthening in those years;
• | Net favorable development of $30 million in our construction workers' compensation lines, impacting accident years 2015 and prior, and was driven by both lower than expected reported development and related favorable updates to development patterns used in our loss projection methods;
• | Net adverse development of $50 million from the aggregation of general liability and automobile liability coverages within construction and wholesale portfolios, mainly impacting the 2013 through 2018 accident years, and largely the result of higher than expected reported loss development; and
• | The remaining $3 million of adverse development was due to several underlying favorable and adverse movements, none of which were significant individually or in the aggregate.
• | Net favorable development of $66 million in short-tail business, primarily from:
• | Net favorable development of $49 million in surety business, mainly in the 2017 accident year, driven by lower than expected reported loss activity; and
• | Net favorable development of $17 million was due to several underlying favorable and adverse movements, mainly driven by favorable development in A&H lines, primarily in accident years 2015 through 2017.
2018 For the three months ended March 31, 2018, net favorable PPD was $101 million, which was the net result of several underlying favorable and adverse movements, and was driven by the following principal changes:
• | Net adverse development of $8 million in long-tail business, primarily from:
• | Net favorable development of $29 million in commercial excess and umbrella portfolios, driven by the 2012 and prior accident years where the cumulative emergence over time has been less than expected overall and an increase in weighting towards experience-based methods, partly offset by several large settlements; additionally there was adverse claim activity in the 2014 and 2015 accident years which led to reserve strengthening in those years;
• | Net favorable development of $3 million on several lines of business due to favorable claim development on the 2017 natural catastrophes; and
• | Net adverse development of $40 million, mainly in 2015, 2016 and some older accident years, partially offset by favorable development in other periods, particularly in the 2014 accident year. This net adverse development consisted of several underlying favorable and adverse movements by portfolio, principally including $16 million of adverse development in wholesale general liability lines.
• | Net favorable development of $109 million in short-tail business, primarily from:
• | Net favorable development of $75 million in commercial property and marine businesses due to favorable claim development on the 2017 natural catastrophes; and
• | Net favorable development of $34 million, principally including $19 million in surety business. The remainder was due to several underlying favorable and adverse movements, none of which were significant individually or in the aggregate.
North America Personal P&C Insurance 2019 For the three months ended March 31, 2019, net favorable PPD was $10 million in homeowners and valuables reflecting favorable claim development of $132 million on the 2017 and 2018 natural catastrophes mostly offset by adverse development of $122 million for the 2018 accident year, due to elevated non-catastrophe activity. 2018 For the three months ended March 31, 2018, net favorable PPD was $6 million, and was driven by claim development on the 2017 natural catastrophes. North America Agricultural Insurance For the three months ended March 31, 2019 and 2018, net favorable PPD was $61 million and $76 million, respectively. Actual claim development relates to our Multiple Peril Crop Insurance (MPCI) business and is favorable due to better than expected crop yield results in certain states at the prior year-end period (i.e., 2019 results based on crop yield results at year-end 2018). Overseas General Insurance 2019 For the three months ended March 31, 2019, net favorable PPD was $4 million, comprising of $3 million of adverse claim development on the 2018 natural catastrophes, and $7 million of favorable development, which was the net result of several underlying favorable and adverse movements, none of which were significant individually or in the aggregate. 2018 For the three months ended March 31, 2018, net favorable PPD was $22 million, which was primarily driven by $12 million of claim development on the 2017 natural catastrophes. Global Reinsurance 2019 For the three months ended March 31, 2019, net favorable PPD was $8 million, which was the net result of several underlying favorable and adverse movements, and was driven by the following principal changes:
• | Net favorable development of $7 million in short-tail business, primarily from:
• | Favorable development of $12 million, principally driven by marine, energy and surety business primarily from a favorable court ruling on an open claim; and
• | Adverse development of $5 million in property catastrophe lines related to the 2018 natural catastrophes.
2018 For the three months ended March 31, 2018, net favorable PPD was $14 million, which was primarily driven by $10 million of claim development on the 2017 natural catastrophes. Corporate For the three months ended March 31, 2019 and 2018, adverse development was $10 million for both periods, principally related to unallocated loss adjustment expenses due to run-off operating expenses paid and incurred.

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- Definition The entire disclosure for liabilities related to future policy benefits and unpaid claims and claim adjustments. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 944 -SubTopic 40 -URI http://asc.fasb.org/subtopic&trid=2560295 + Details
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