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Unpaid losses and loss expenses | 3 Months Ended
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Mar. 31, 2020
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) | 2020 |  |  | 2019 |
Gross unpaid losses and loss expenses – beginning of period | $ | 62,690 |  |  | $ | 62,960 |
Reinsurance recoverable on unpaid losses - beginning of period (1) | (14,181 | ) |  | (14,689 | )
Net unpaid losses and loss expenses – beginning of period | 48,509 |  |  | 48,271 |
Net losses and loss expenses incurred in respect of losses occurring in: |  |  |
Current year | 4,605 |  |  | 4,326 |
Prior years (2) | (120 | ) |  | (228 | )
Total | 4,485 |  |  | 4,098 |
Net losses and loss expenses paid in respect of losses occurring in: |  |  |
Current year | 920 |  |  | 785 |
Prior years | 3,335 |  |  | 3,234 |
Total | 4,255 |  |  | 4,019 |
Foreign currency revaluation and other | (565 | ) |  | 86 |
Net unpaid losses and loss expenses – end of period | 48,174 |  |  | 48,436 |
Reinsurance recoverable on unpaid losses (1) | 14,040 |  |  | 14,707 |
Gross unpaid losses and loss expenses – end of period | $ | 62,214 |  |  | $ | 63,143 |
(1) | Net of valuation allowance 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 $2 million and $24 million for the three months ended March 31, 2020 and 2019, respectively.
Gross and net unpaid losses and loss expenses decreased $476 million and $335 million, respectively for the three months ended March 31, 2020, reflecting favorable foreign exchange movement, partially offset by an increase in underlying reserves. 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 |
2020 |  |  |  |  |
North America Commercial P&C Insurance | $ | (43 | ) |  | $ | (62 | ) |  | $ | (105 | )
North America Personal P&C Insurance | — |  |  | 1 |  |  | 1 |
North America Agricultural Insurance | — |  |  | (14 | ) |  | (14 | )
Overseas General Insurance | — |  |  | (4 | ) |  | (4 | )
Global Reinsurance | — |  |  | (7 | ) |  | (7 | )
Corporate | 11 |  |  | — |  |  | 11 |
Total | $ | (32 | ) |  | $ | (86 | ) |  | $ | (118 | )
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 | )
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 2020 For the three months ended March 31, 2020, net favorable PPD was $105 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 $43 million in long-tail business, primarily from:
• | Net favorable development of $66 million in professional liability (errors & omissions and cyber), driven by accident years 2016 and prior, which saw lower than expected emergence;
• | Net favorable development of $43 million in voluntary environmental lines, driven by accident years 2016 and prior, which saw lower than expected emergence and a favorable revision to loss development patterns;
• | Net favorable development of $28 million in construction workers’ compensation, mainly seen in accident years 2016 and prior, which saw lower than expected reported loss emergence and a favorable revision to loss development patterns;
• | Net adverse development of $49 million in excess and umbrella portfolios, with accident years 2015 through 2019 experiencing higher than expected reported development, partially offset by lower than expected emergence in accident years 2014 and prior;
• | Net adverse development of $23 million in wholesale general liability coverages, driven by higher than expected reported loss emergence in accident years 2014 through 2019; and
• | Net favorable development of $62 million in short-tail business, primarily from:
• | Net favorable development of $36 million, in accident & health, mainly in accident years 2018 and 2019, driven by lower than expected paid loss emergence; and
• | Net favorable development of $31 million in surety, driven by accident year 2018, where loss emergence was lower than expected.
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
• | 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.
North America Agricultural Insurance For the three months ended March 31, 2020 and 2019, net favorable PPD was related to our Multiple Peril Crop Insurance (MPCI) business and was $14 million, related to the 2019 crop year, and $61 million, related to the 2018 crop year, respectively.

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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://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 944 -SubTopic 40 -URI http://asc.fasb.org/subtopic&trid=2560295 + Details
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