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.