
	Three months ended March 31,
	2020		2019

Gross reserve for losses and loss expenses, beginning of period	$	12,752,081	$	12,280,769
Less reinsurance recoverable on unpaid losses and loss expenses, beginning of period	(3,877,756)		(3,501,669)
Net reserve for unpaid losses and loss expenses, beginning of period	8,874,325		8,779,100

Net incurred losses and loss expenses related to:
Current year	914,186		678,700
Prior years	(6,113)		(14,672)
	908,073		664,028
Net paid losses and loss expenses related to:
Current year	(19,081)		(37,600)
Prior years	(652,014)		(691,558)
	(671,095)		(729,158)

Foreign exchange and other	(130,609)		6,460

Net reserve for unpaid losses and loss expenses, end of period	8,980,694		8,720,430
Reinsurance recoverable on unpaid losses and loss expenses, end of period	4,101,579		3,555,341
Gross reserve for losses and loss expenses, end of period	$	13,082,273	$	12,275,771

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 three months ended March 31, 2020, the Company recognized catastrophe and weather-related losses, net of reinstatement premiums of $300 million, including $235 million attributable to the COVID-19 pandemic. These losses were primarily associated with property related coverages, but also included event cancellation, and accident and health coverages, and considered a global shelter in place order that remains in effect until July 31, 2020. The remaining losses of $65 million were attributable to other weather-related events including regional weather events in the U.S., floods in the U.K. and wildfires in Australia. During the three months ended March 31, 2019, the Company recognized catastrophe and weather-related losses, net of reinstatement premiums of $11 million.

At March 31, 2020, net reserves for losses and loss expenses included estimated amounts for numerous catastrophe events. The magnitude and complexity of losses arising from certain of these events inherently increase the level of uncertainty, and therefore, increase the level of management judgment involved in arriving at estimated net reserves for losses and loss expenses. These events include the COVID-19 pandemic which occurred in 2020, Japanese Typhoons Hagibis, Faxai and Tapah, Hurricane Dorian, and the Australia Wildfires which occurred in 2019, Hurricanes Michael and Florence, California Wildfires, and Typhoon Jebi which occurred in 2018, and Hurricanes Harvey, Irma and Maria, and the California Wildfires which occurred in 2017. Actual losses for these events may ultimately differ materially from the Company's current estimates.

The estimate of net reserves for losses and loss expenses related to the COVID-19 pandemic represented the Company's best estimate of losses and loss adjustment expenses that have been incurred at March 31, 2020 assuming a shelter in place order through July 31, 2020, where relevant. The determination of the Company's net reserves for losses and loss expenses for its insurance segment was based on its ground-up assessment of coverage from individual contracts, including a review of contracts with potential exposure to the COVID-19 pandemic. The determination of the Company's net reserves for losses and loss expenses for its reinsurance segment was largely based on a range of industry insured loss estimates and market share analyses, supplemented by a review of in-force treaties that may provide coverage and catastrophe modeling analyses, where appropriate. In addition, the Company considered preliminary information received from clients, brokers and loss adjusters.

The estimate of net reserves for losses and loss expenses related to the COVID-19 pandemic was subject to significant uncertainty. This uncertainty was driven by the inherent difficulty in making assumptions around the impact of the COVID-19 pandemic due to the lack of comparable events, the ongoing nature of the event, and its far-reaching impacts to world-wide economies and the health of the population. These assumptions include:

While the Company believes its estimate of net reserves for losses and loss expenses is adequate for losses and loss adjustment expenses that have been incurred at March 31, 2020 based on current facts and circumstances, the Company will continue to monitor the appropriateness of its assumptions as new information comes to light and will adjust its estimate of net reserves for losses and loss adjustment expenses, as appropriate. Actual losses for these events may ultimately differ materially from the Company's current estimates.

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:

Insurance segment

Reserve class and tail

Property and other

Marine

Aviation

Credit and political risk

Professional lines

Liability

Short

Short/Medium

Medium

Long

Reported lines of business

Property

Marine

Terrorism

Aviation

Credit and political risk

Professional lines

Liability

Accident and health

Discontinued lines - Novae

Reinsurance segment

Reserve class and tail

Property and other

Credit and surety

Professional lines

Motor

Liability

Short

Medium

Long

Reported lines of business

Catastrophe

Property

Credit and surety

Professional lines

Motor

Liability

Engineering

Agriculture

Marine and other

Accident and health

Discontinued lines - Novae

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 March 31, 2020, these reserve classes contributed net favorable prior year reserve development of $10 million, including net favorable prior year reserve development of $13 million contributed by the insurance property and other reserve class, partially offset by of net adverse prior year reserve development of $4 million recognized by the reinsurance property and other reserve class.

For the three months ended March 31, 2019, these reserve classes recognized net adverse prior year reserve development of $33 million, including net adverse prior year reserve development of $22 million recognized by the insurance property and other reserve

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 months ended March 31, 2020, the insurance professional lines reserve class recorded net adverse prior year reserve development of $5 million reflecting reserve strengthening associated with recent accidents years.

For the three months ended March 31, 2019, the insurance professional lines reserve class recorded net favorable prior year reserve development of $6 million reflecting generally favorable experience on older accident years as we continued to transition to more experienced based actuarial methods.

Reinsurance professional lines reserve class recorded net favorable prior year reserve development of $5 million for the three months ended March 31, 2020, reflecting generally favorable experience on older accident years as we continued to transition to more experience based actuarial methods.

For the three months ended March 31, 2020, the reinsurance credit and surety reserve class recorded net favorable prior year reserve development of $5 million (2019: $10 million) reflecting better than expected loss emergence.

For the three months ended March 31, 2020, the reinsurance liability reserve class recognized net adverse prior year reserve development of $17 million due to reserve strengthening within the European and U.S. books of business.

For the three months ended March 31, 2019, the reinsurance liability reserve class recognized net favorable prior year reserve development of $12 million due to increased weight given by management to experience based indications on older accident years.

For the three months ended March 31, 2020, the reinsurance motor reserve class recognized net favorable prior year reserve development of $13 million (2019: $12 million) primarily attributable to non-proportional treaty business on older accident years.