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:




Six months ended June 30,	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	1,213,160			1,238,883
Prior years	(120,679		)	(128,847		)
	1,092,481			1,110,036
Net paid losses and loss expenses related to:
Current year	(86,827		)	(93,218		)
Prior years	(915,124		)	(857,004		)
	(1,001,951		)	(950,222		)

Foreign exchange and other	(125,666		)	35,122

Net reserve for unpaid losses and loss expenses, end of period	7,671,381			7,876,964
Reinsurance recoverable on unpaid losses, end of period	2,022,059			1,929,024
Gross reserve for losses and loss expenses, end of period	$	9,693,440		$	9,805,988

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 June 30,				Six months ended June 30,
	2015		2014		2015		2014

Insurance	$	15,421	$	32,963	$	18,783	$	44,571
Reinsurance	49,192		52,391		101,896		84,276
Total	$	64,613	$	85,354	$	120,679	$	128,847

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 liability, professional and motor reinsurance lines in the three and six months ended June 30, 2015 and 2014, also contributed. The net favorable prior year reserve development in the three and six months ended June 30, 2015, was partially offset by net adverse prior year reserve development in the liability and credit and political risk 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 $40 million and $73 million of the total net favorable prior year reserve development for the three months ended June 30, 2015 and 2014, respectively. For the six months ended June 30, 2015 and 2014, these short-tail lines contributed $74 million and $101 million, respectively, of net favorable prior year reserve development. 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. For the three months ended June 30, 2015 and 2014, our professional lines reinsurance business contributed net favorable prior year reserve development of $4 million and $6 million, respectively. For the six months ended June 30, 2015 and 2014, the reinsurance professional lines contributed $24 million and $12 million, 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 six months ended June 30, 2015, we recorded adverse prior year reserve development of $15 million in our credit and political risk insurance lines relating primarily to an increase in loss estimates for one specific claim.

Our long-tail business consists primarily of liability and motor lines. Our liability reinsurance lines and motor business contributed additional favorable prior year reserve development of $25 million and $6 million in the three months ended June 30, 2015, and 2014, respectively. In the six months ended June 30, 2015 and 2014, these long-tail lines contributed $44 million and $12 million, respectively. The net favorable development for these classes primarily reflected the greater weight management is giving to experience based indications and our experience which has generally been favorable for the 2003 through 2010 accident years.

In the three and six months ended June 30, 2015, we recorded adverse prior year reserve development of $6 million and $17 million, respectively, in our liability insurance lines relating primarily to an increase in loss estimates for specific individual claim reserves.

The frequency and severity of natural catastrophe and weather activity was high in recent years and our June 30, 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.