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RESERVE FOR LOSSES AND LOSS EXPENSES | 3 Months Ended
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Mar. 31, 2015
Insurance Loss Reserves [Abstract] |
RESERVE FOR LOSSES AND LOSS EXPENSES | The following table presents a reconciliation of our beginning and ending gross reserve for losses and loss expenses and net reserve for unpaid losses and loss expenses for the periods indicated:
| Three months ended March 31, | 2015 |  | 2014 |
| Gross reserve for losses and loss expenses, beginning of period | $ | 9,596,797 |  |  | $ | 9,582,140 |  |
| Less reinsurance recoverable on unpaid losses, beginning of period | (1,890,280 | ) |  | (1,900,112 | ) |
| Net reserve for unpaid losses and loss expenses, beginning of period | 7,706,517 |  |  | 7,682,028 |  |
| Net incurred losses and loss expenses related to: |  |  |  |
| Current year | 568,988 |  |  | 587,700 |  |
| Prior years | (50,051 | ) |  | (43,493 | ) |
|  | 518,937 |  |  | 544,207 |  |
| Net paid losses and loss expenses related to: |  |  |  |
| Current year | (23,527 | ) |  | (13,249 | ) |
| Prior years | (485,315 | ) |  | (444,466 | ) |
|  | (508,842 | ) |  | (457,715 | ) |
| Foreign exchange and other | (162,969 | ) |  | 14,501 |  |
| Net reserve for unpaid losses and loss expenses, end of period | 7,553,643 |  |  | 7,783,021 |  |
| Reinsurance recoverable on unpaid losses, end of period | 1,889,579 |  |  | 1,884,820 |  |
| Gross reserve for losses and loss expenses, end of period | $ | 9,443,222 |  |  | $ | 9,667,841 |  |
Prior year reserve development arises from changes to loss and loss expense estimates recognized in the current year but relating to losses incurred in previous calendar years. Such development is summarized by segment in the following table:
|  | Three months ended March 31, |  |
|  | 2015 |  | 2014 |  |
| Insurance | $ | 3,361 |  |  | $ | 11,608 |  |  |
| Reinsurance | 46,690 |  |  | 31,885 |  |  |
| Total | $ | 50,051 |  |  | $ | 43,493 |  |  |
The majority of the net favorable prior year reserve development in each period related to short-tail lines of business. Net favorable prior year reserve development for professional and liability reinsurance lines in the three months ended March 31, 2015 and 2014, also contributed. The net favorable prior year development in the liability reinsurance lines in the three months ended March 31, 2015, was offset by net adverse development in the liability insurance lines. The underlying exposures in the property, marine and aviation reserving classes within our insurance segment and the property reserving class within our reinsurance segment largely relate to short-tail business. Development from these classes contributed $28 million and $29 million of the total net favorable prior year reserve development for the three months ended March 31, 2015 and 2014, respectively. The net favorable development for these classes primarily reflected the recognition of better than expected loss emergence. Our medium-tail business consists primarily of professional insurance and reinsurance lines, credit and political risk insurance lines and credit and surety reinsurance business. Our professional lines reinsurance business contributed further net favorable prior year reserve development of $20 million and $6 million in the three months ended March 31, 2015, and 2014, respectively. This prior year reserve development was driven by increased weight being given to experience based actuarial methods in selecting our ultimate loss estimates for accident years 2010 and prior. As our loss experience has generally been better than expected, this resulted in the recognition of favorable development. In the three months ended March 31, 2015, we recorded adverse prior year reserve development of $11 million in our insurance credit and political risk lines relating primarily to an increase in loss estimates for one specific claim. Our liability lines reinsurance business contributed additional favorable development of $12 million and $6 million in the three months ended March 31, 2015, and 2014, respectively, primarily reflecting the greater weight management is giving to experience based indications and our experience which has been favorable for the 2005 through 2009 accident years. In the three months ended March 31, 2015, we recorded adverse prior year reserve development of $11 million in our insurance liability lines relating primarily to an increase in loss estimates for one specific claim. The frequency and severity of natural catastrophe and weather activity was high in recent years and our March 31, 2015 net reserve for losses and loss expenses continues to include estimated amounts for numerous events. We caution that the magnitude and/or complexity of losses arising from certain of these events, in particular Storm Sandy, the Japanese earthquake and tsunami and the three New Zealand earthquakes, inherently increases the level of uncertainty and, therefore, the level of management judgment involved in arriving at our estimated net reserves for losses and loss expenses. As a result, our actual losses for these events may ultimately differ materially from our current estimates.

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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/presentationRef -Publisher SEC -Name Regulation S-X (SX) -Number 210 -Section 03 -Paragraph 13 -Article 7 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 944 -SubTopic 40 -Section 50 -Paragraph 3 -URI http://asc.fasb.org/extlink&oid=6482485&loc=d3e14764-158437 Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 944 -SubTopic 40 -Section 50 -Paragraph 6 -URI http://asc.fasb.org/extlink&oid=6482852&loc=d3e14931-158439 Reference 4: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 944 -SubTopic 40 -Section 50 -Paragraph 1 -URI http://asc.fasb.org/extlink&oid=6482485&loc=d3e14754-158437 Reference 5: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 944 -SubTopic 210 -Section S99 -Paragraph 1 -Subparagraph (SX 210.7-03.13(a)(1),(b)) -URI http://asc.fasb.org/extlink&oid=6879938&loc=d3e572229-122910 + Details
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