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RESERVE FOR LOSSES AND LOSS EXPENSES | 9 Months Ended
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Sep. 30, 2019
Insurance [Abstract] |
RESERVE FOR LOSSES AND LOSS EXPENSES | Reserve Roll-Forward The following table presents a reconciliation of the Company's beginning and ending gross reserve for losses and loss expenses and net reserves for unpaid losses and loss expenses:
|  | Nine months ended September 30, |
|  | 2019 |  | 2018 |
| Gross reserve for losses and loss expenses, beginning of period | $ | 12,280,769 |  |  | $ | 12,997,553 |  |
| Less reinsurance recoverable on unpaid losses, beginning of period | (3,501,669 | ) |  | (3,159,514 | ) |
| Net reserve for unpaid losses and loss expenses, beginning of period | 8,779,100 |  |  | 9,838,039 |  |
| Net incurred losses and loss expenses related to: |  |  |  |
| Current year | 2,252,424 |  |  | 2,323,028 |  |
| Prior years | (65,021 | ) |  | (160,083 | ) |
|  | 2,187,403 |  |  | 2,162,945 |  |
| Net paid losses and loss expenses related to: |  |  |  |
| Current year | (329,519 | ) |  | (381,158 | ) |
| Prior years | (1,791,233 | ) |  | (1,770,667 | ) |
|  | (2,120,752 | ) |  | (2,151,825 | ) |
| Foreign exchange and other | (53,037 | ) |  | (1,040,999 | ) |
| Net reserve for unpaid losses and loss expenses, end of period | 8,792,714 |  |  | 8,808,160 |  |
| Reinsurance recoverable on unpaid losses, end of period | 3,705,793 |  |  | 3,217,787 |  |
| Gross reserve for losses and loss expenses, end of period | $ | 12,498,507 |  |  | $ | 12,025,947 |  |
The Company writes business with loss experience generally characterized as low frequency and high severity in nature, which can result in volatility in its financial results. During the nine months ended September 30, 2019, the Company recognized net losses and loss expenses of $206 million (2018: $162 million) attributable to catastrophe and weather-related events. On April 16, 2018, the Company entered into a quota share retrocessional agreement with Harrington Re, a related party, which was deemed to have met the established criteria for retroactive reinsurance accounting. The Company recognized reinsurance recoverable on unpaid losses of $108 million related to this reinsurance agreement. This transaction was conducted at market rates consistent with negotiated arms-length contracts. On January 1, 2018, AXIS Managing Agency Limited, the managing agent of Syndicate 2007 entered into an agreement for the RITC of the 2015 and prior years of account of Syndicate 2007. This agreement was accounted for as a novation reinsurance contract. At September 30, 2018, foreign exchange and other included a reduction in reserves for losses and loss expenses of $819 million related to this transaction. Prior Year Reserve Development The Company's net favorable prior year reserve development arises from changes to estimates of losses and loss expenses related to loss events that occurred in previous calendar years. The following table presents net prior year reserve development by segment:
|  | Three months ended September 30, |  | Nine months ended September 30, |
|  | 2019 |  | 2018 |  | 2019 |  | 2018 |
| Insurance | $ | 14,609 |  |  | $ | 13,478 |  |  | $ | 42,849 |  |  | $ | 60,547 |  |
| Reinsurance | 12,118 |  |  | 32,182 |  |  | 22,172 |  |  | 99,536 |  |
| Total | $ | 26,727 |  |  | $ | 45,660 |  |  | $ | 65,021 |  |  | $ | 160,083 |  |
The following tables map the Company's lines of business to reserve classes and the expected claim tails:
Insurance segment |  |  |  |  |
| Reserve class and tail
| Property and other | Marine | Aviation | Credit and political risk | Professional lines | Liability
| Short | Short | Short/Medium | Medium | Medium | Long
Reported lines of business |  |  |  |  |  |
Property | X |  |  |  |  |
Marine |  | X |  |  |  |
Terrorism | X |  |  |  |  |
Aviation |  |  | X |  |  |
Credit and political risk |  |  |  | X |  |
Professional lines |  |  |  |  | X |
Liability |  |  |  |  |  | X
Accident and health | X |  |  |  |  |
Discontinued lines - Novae | X |  |  |  | X | X
Reinsurance segment |  |  |  |
| Reserve class and tail
| Property and other | Credit and surety | Professional lines | Motor | Liability
| Short | Medium | Medium | Long | Long
Reported lines of business |  |  |  |  |
Catastrophe | X |  |  |  |
Property | X |  |  |  |
Credit and surety |  | X |  |  |
Professional lines |  |  | X |  |
Motor |  |  |  | X |
Liability |  |  |  |  | X
Engineering | X |  |  |  |
Agriculture | X |  |  |  |
Marine and other | X |  |  |  |
Accident and health | X |  |  |  |
Discontinued lines - Novae | X |  |  | X | X
Short-tail business Short-tail business includes the underlying exposures in property and other, marine and aviation reserve classes in the insurance segment, and the property and other reserve class in the reinsurance segment. For the three months ended September 30, 2019, these reserve classes contributed net favorable prior year reserve development of $2 million, including net favorable prior year reserve development of $11 million contributed by the insurance property and other reserve class and net favorable prior year reserve development of $3 million contributed by the insurance marine and aviation reserve classes, partially offset by of net adverse prior year reserve development of $12 million recognized by the reinsurance property and other reserve class. For the nine months ended September 30, 2019, these reserve classes recognized net adverse prior year reserve development of $50 million, including net adverse prior year reserve development of $71 million recognized by the reinsurance property and other reserve class and net adverse prior year reserve development of $4 million recognized by the insurance property and other reserve class, partially offset by net favorable prior year reserve development of $24 million contributed by the insurance marine reserve class. The net adverse prior year reserve development of $71 million recognized by the reinsurance property and other reserve class reflected overall better than expected loss emergence related to the 2018 catastrophe events and reserve strengthening within our European proportional book of business. For the three and nine months ended September 30, 2018, these reserve classes contributed net favorable prior year reserve development of $12 million and $92 million, respectively, reflecting overall better than expected loss emergence related to the 2017 catastrophe events. Medium-tail business Medium-tail business consists primarily of insurance and reinsurance professional lines reserve classes, insurance credit and political risk reserve class and reinsurance credit and surety reserve class. For the three and nine months ended September 30, 2019, the insurance professional lines reserve class recorded net favorable prior year reserve development of $4 million (2018: $10 million) and $14 million (2018: $12 million), respectively, reflecting generally favorable experience as we continued to transition to more experienced based actuarial methods. For the three months ended September 30, 2019, the reinsurance professional lines reserve class recorded net adverse prior year reserve development of $7 million primarily due to reserve strengthening within the Company's European book of business. For the three and nine months ended September 30, 2018, the reinsurance professional lines reserve class recorded net favorable prior year reserve development of $10 million and $18 million, respectively, reflecting generally favorable experience on older accident years as the Company continued to transition to more experience based actuarial methods. For the nine months ended September 30, 2019, the insurance credit and political risk reserve class recorded net favorable prior year reserve development of $10 million, respectively, reflecting the recognition of better than expected loss emergence. For the three and nine months ended September 30, 2019, the reinsurance credit and surety reserve class recorded net favorable prior year reserve development of $6 million (2018: $6 million) and $33 million (2018: $21 million), respectively, reflecting the recognition of better than expected loss emergence. Long-tail business Long-tail business consists primarily of insurance and reinsurance liability reserve classes and reinsurance motor reserve class. For the three months ended September 30, 2019, the insurance liability reserve class recorded net adverse prior year reserve development of $4 million (2018: $11 million). For the nine months ended September 30, 2018, the insurance liability reserve class recorded net adverse prior year reserve development of $18 million. This net adverse prior year reserve development was primarily due to reserve strengthening in the Company's U.S. excess casualty book of business. For the nine months ended September 30, 2019, the reinsurance liability reserve class contributed net favorable prior year reserve development of $26 million due to increased weight given by management to experience based indications on older accident years. For the three and nine months ended September 30, 2018, the reinsurance liability reserve class contributed net favorable prior year reserve development of $11 million and $19 million, respectively, largely associated with multi-line contracts due to overall better than expected loss emergence related to the 2017 catastrophe events. The net favorable prior year reserve development for the nine months ended September 30, 2018 was also due to increased weight given by management to experience based indications on older accident years. For the three and nine months ended September 30, 2019, the reinsurance motor reserve class contributed net favorable prior year reserve development of $23 million (2018: $7 million) and $34 million (2018: $15 million), respectively, primarily attributable to non proportional treaty business. At September 30, 2019, net reserves for losses and loss expenses included estimated amounts for numerous catastrophe events. The magnitude and/or complexity of losses arising from certain of these events, in particular Hurricane Dorian, Japanese Typhoons Faxai and Tapah which occurred in 2019 together with the California Wildfires, Hurricanes Michael and Florence, and Typhoons Jebi and Trami which occurred in 2018 as well as Hurricanes Harvey, Irma and Maria and the California Wildfires which occurred in 2017, inherently increase the level of uncertainty and, therefore, the level of management judgment involved in arriving at the estimated net reserves for losses and loss expenses. As a result, actual losses for these events may ultimately differ materially from the Company's 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/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 944 -SubTopic 40 -URI http://asc.fasb.org/subtopic&trid=2560295 + Details
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