4. RESERVE FOR LOSSES, LAE AND FUTURE POLICY BENEFIT RESERVE

Activity in the reserve for losses and LAE is summarized for the periods indicated:


	Three Months Ended			Twelve Months Ended
	March 31,			December 31,
(Dollars in thousands)	2019			2018
Gross reserves at January 1	$	13,119,090		$	11,884,321
Less reinsurance recoverables		(1,619,641	)		(1,212,649	)
Net reserves at January 1		11,499,449			10,671,672

Incurred related to:
Current year		1,050,116			5,264,327
Prior years		(1,566	)		387,076
Total incurred losses and LAE		1,048,550			5,651,403

Paid related to:
Current year		103,688			1,700,765
Prior years		817,006			3,011,175
Total paid losses and LAE		920,694			4,711,940

Foreign exchange/translation adjustment		(1,496	)		(111,686	)

Net reserves at December 31		11,625,810			11,499,449
Plus reinsurance recoverables		1,621,292			1,619,641
Gross reserves at December 31	$	13,247,102		$	13,119,090

(Some amounts may not reconcile due to rounding.)

Incurred prior years losses decreased slightly by $1,566 thousand for the three months ended March 31, 2019 and increased by $387,076 thousand for the twelve months ended December 31, 2018, respectively. The increase for the twelve months ended December 31, 2018 was mainly due to $561,197 thousand of adverse development on prior years catastrophe losses, primarily related to Hurricanes Harvey, Irma and Maria, as well as the 2017 California wildfires. The increase in loss estimates for Hurricanes Harvey, Irma and Maria was mostly driven by re-opened claims, loss inflation from higher than expected loss adjustment expenses and in particular, their impact on aggregate covers. This reserve increase was partially offset by $174,121 thousand of favorable development on prior years attritional losses which mainly related to U.S. and international property and casualty reinsurance business, as well as favorable development in the Insurance segment which largely related to workers' compensation business.