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:




Nine months ended September 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	1,818,672			1,855,482
Prior years	(165,804		)	(193,385		)
	1,652,868			1,662,097
Net paid losses and loss expenses related to:
Current year	(185,953		)	(202,364		)
Prior years	(1,293,776		)	(1,165,215		)
	(1,479,729		)	(1,367,579		)

Foreign exchange and other	(183,360		)	(139,313		)

Net reserve for unpaid losses and loss expenses, end of period	7,696,296			7,837,233
Reinsurance recoverable on unpaid losses, end of period	2,007,287			1,914,670
Gross reserve for losses and loss expenses, end of period	$	9,703,583		$	9,751,903

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 September 30,				Nine months ended September 30,
	2015		2014		2015		2014

Insurance	$	2,444	$	9,488	$	21,225	$	54,059
Reinsurance	42,681		55,050		144,579		139,326
Total	$	45,125	$	64,538	$	165,804	$	193,385

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 in liability, motor, credit and surety and professional reinsurance lines in the three and nine months ended September 30, 2015 also contributed. The net favorable prior year reserve development was partially offset by net adverse prior year reserve development in the professional and liability insurance lines in the three and nine months ended September 30, 2015, and the credit and political risk line which impacted the nine months ended September 30, 2015.

For the three and nine months ended September 30, 2014, net favorable prior year reserve development was also reported in the professional, motor and liability reinsurance lines. The net favorable prior year development in the three and nine months ended September 30, 2014, was partially offset by net adverse prior year reserve development in the liability insurance line.

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 $38 million and $61 million of the total net favorable prior year reserve development for the three months ended September 30, 2015 and 2014, respectively. For the nine months ended September 30, 2015 and 2014, these short-tail lines contributed $112 million and $162 million, respectively, of the 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. In the three and nine months ended September 30, 2015, the reinsurance professional lines contributed $1 million and $25 million of net favorable development, respectively, and in the three and nine months ended September 30, 2014, these lines contributed $10 million and $22 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 net favorable development. In the three and nine months ended September 30, 2015, the insurance professional lines recorded adverse prior year reserve development of $15 million and $16 million, respectively. This adverse development was primarily the result of strengthening in our Australian book of business during the third quarter of 2015.

In the three and nine months ended September 30, 2015, the credit and surety lines recorded net favorable prior year reserve development of $7 million and $19 million, respectively. This net favorable development reflected the recognition of better than expected loss emergence. In the nine months ended September 30, 2015, we recorded net 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 net favorable prior year reserve development of $20 million and $8 million in the three months ended September 30, 2015, and 2014, respectively. In the nine months ended September 30, 2015 and 2014, these long-tail lines contributed $64 million and $19 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 nine months ended September 30, 2015, we recorded net adverse prior year reserve development of $6 million and $23 million, respectively, in our liability insurance lines, while in the three and nine months ended September 30, 2014, we recorded net adverse prior year reserve development of $14 million in both periods. The net adverse development in the insurance liability lines related primarily to an increase in loss estimates for specific individual claim reserves as well as a higher frequency of large auto liability claims.

The frequency and severity of catastrophe and weather-related activity was high in recent years and our September 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, the three New Zealand earthquakes and the Tianjin port explosion, 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.