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RESERVE FOR LOSSES AND LOSS EXPENSES | 3 Months Ended
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Mar. 31, 2023
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 reserve for unpaid losses and loss expenses:
|  | Three months ended March 31, |  |
|  | 2023 |  | 2022 |  |
| Gross reserve for losses and loss expenses, beginning of period | $ | 15,168,863 |  |  | $ | 14,653,094 |  |  |
| Less reinsurance recoverable on unpaid losses and loss expenses, beginning of period | (5,831,172) |  |  | (5,017,611) |  |  |
| Net reserve for unpaid losses and loss expenses, beginning of period | 9,337,691 |  |  | 9,635,483 |  |  |
| Net incurred losses and loss expenses related to: |  |  |  |  |
| Current year | 724,680 |  |  | 741,655 |  |  |
| Prior years | (4,038) |  |  | (8,956) |  |  |
|  | 720,642 |  |  | 732,699 |  |  |
| Net paid losses and loss expenses related to: |  |  |  |  |
| Current year | (38,662) |  |  | (32,477) |  |  |
| Prior years | (574,538) |  |  | (750,969) |  |  |
|  | (613,200) |  |  | (783,446) |  |  |
| Foreign exchange and other | 46,094 |  |  | (71,661) |  |  |
| Net reserve for unpaid losses and loss expenses, end of period | 9,491,227 |  |  | 9,513,075 |  |  |
| Reinsurance recoverable on unpaid losses and loss expenses, end of period | 5,823,417 |  |  | 4,957,080 |  |  |
| Gross reserve for losses and loss expenses, end of period | $ | 15,314,644 |  |  | $ | 14,470,155 |  |  |
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, 2023, the Company recognized catastrophe and weather-related losses, net of reinstatement premiums, of $38 million (2022: $60 million). Estimates for Significant Catastrophe Events At March 31, 2023, 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, the level of management judgment involved in arriving at estimated net reserves for losses and loss expenses. These events include New Zealand floods and Cyclone Gabrielle in 2023, Hurricane Ian, Winter Storm Elliot, June European Convective Storms, the Russia-Ukraine war and COVID-19 in 2022, Hurricane Ida, U.S. Winter Storms Uri and Viola and July European Floods in 2021, and the COVID-19 pandemic, Hurricanes Laura, Sally, Zeta and Delta, the Midwest derecho and wildfires across the West Coast of the United States in 2020. As a result, actual losses for these events may ultimately differ materially from current estimates. 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:
|  | Net Favorable Prior Year Reserve Development |
|  | Insurance |  | Reinsurance |  | Total |
| Three months ended March 31, 2023 | $ | 1,041 |  |  | $ | 2,997 |  |  | $ | 4,038 |  |
| Three months ended March 31, 2022 | $ | 7,062 |  |  | $ | 1,894 |  |  | $ | 8,956 |  |
The following sections provide further details on net prior year reserve development by segment, line of business and accident year: Insurance Segment: The following table maps the Company's lines of business to expected claim tails:
| Insurance segment |  |  |  |  |  |
|  | Expected claims tail |
|  | Short | Medium | Long |  |  |  |
| Lines of business |  |  |  |  |  |  |
| Property | X |  |  |  |  |  |
| Accident and health | X |  |  |  |  |  |
| Marine and aviation | X |  |  |  |  |  |
| Cyber |  | X |  |  |  |  |
| Professional lines |  | X |  |  |  |  |
| Credit and political risk |  | X |  |  |  |  |
| Liability |  |  | X |  |  |  |
Prior year reserve development by line of business was as follows:
|  | Three months ended March 31, |  |  |  |  |  |
|  | 2023 |  | 2022 |  |  |  |  |  |  |  |  |  |
|  | Favorable (Adverse) |  | Favorable (Adverse) |  |  |  |  |  |  |  |  |  |
| Property | $ | 5,900 |  |  | $ | 8,060 |  |  |  |  |  |  |  |  |  |  |
| Accident and health | (304) |  |  | 3,632 |  |  |  |  |  |  |  |  |  |  |
| Marine and aviation | 13,221 |  |  | 14,647 |  |  |  |  |  |  |  |  |  |  |
| Cyber | 8,452 |  |  | (687) |  |  |  |  |  |  |  |  |  |  |
| Professional lines | (12,594) |  |  | (5,936) |  |  |  |  |  |  |  |  |  |  |
| Credit and political risk | 4,519 |  |  | 895 |  |  |  |  |  |  |  |  |  |  |
| Liability | (18,153) |  |  | (13,549) |  |  |  |  |  |  |  |  |  |  |
| Total | $ | 1,041 |  |  | $ | 7,062 |  |  |  |  |  |  |  |  |  |  |
For the three months ended March 31, 2023, the Company recognized $1 million of net favorable prior year reserve development, the principal components of which were: •$13 million of net favorable prior year reserve development on marine and aviation business primarily due to better than expected loss emergence mainly related to 2021 and 2022 accident years. •$8 million of net favorable prior year reserve development on cyber business primarily due to better than expected loss emergence mainly related to 2019 and older accident years. •$6 million of net favorable prior year reserve development on property business primarily due to better than expected loss emergence attributable to 2018 and older accident years, partially offset by reserve strengthening related to the 2021 accident year. •$5 million of net favorable prior year reserve development on credit and political risk business primarily due to a decrease in the loss estimate attributable to a specific large claim related to the 2020 accident year and better than expected loss emergence attributable to the Lloyds book of business related to several accident years. •$18 million of net adverse prior year reserve developmen t on liability business primarily due to reserve strengthening within the U.S. primary casualty book of business mainly related to the 2015, 2018 and 2021 accident years. •$13 million of net adverse prior year reserve development on professional lines business primarily due to reserve strengthening within the U.S. commercial management solutions book of business mainly related to several accident years and U.S. financial institutions book of business mainly related to the 2018 accident year. For the three months ended March 31, 2022, the Company recognized $7 million of net favorable prior year reserve development, the principal components of which were: •$15 million of net favorable prior year reserve development on marine and aviation business primarily due to better than expected loss emergence attributable to the marine cargo and marine offshore energy books of business mainly related to the 2018 and 2021 accident years. •$8 million of net favorable prior year reserve development on property business primarily due to decreases in loss estimates attributable to specific large claims related to the 2017 accident year, and better than expected loss emergence attributable to 2018 catastrophe events. •$14 million of net adverse prior year reserve development on liability business primarily due to reserve strengthening within the program book of business mainly related to the 2016 and 2018 accident years and an increase in the loss estimate attributable to a specific large claim related to the 2017 accident year. •$6 million of net adverse prior year reserve development on professional lines business primarily due to increases in loss estimates attributable to specific large claims related to the 2015 and 2017 accident years, and reserve strengthening within runoff lines of business mainly related to the 2016 and 2018 accident years. Reinsurance Segment: The following table maps the Company's lines of business to expected claim tails:
| Reinsurance segment |  |  |
|  | Expected claims tail |
|  | Short | Medium | Long |
| Lines of business |  |  |  |
| Accident and health | X |  |  |
| Agriculture | X |  |  |
| Marine and aviation | X |  |  |
| Professional lines |  | X |  |
| Credit and surety |  | X |  |
| Motor |  |  | X |
| Liability |  |  | X |
| Run-off lines |  |  |  |
| Catastrophe | X |  |  |
| Property | X |  |  |
| Engineering | X |  |  |
Prior year reserve development by line of business was as follows:
|  | Three months ended March 31, |  |  |  |  |  |
|  | 2023 |  | 2022 |  |  |  |  |  |  |  |  |  |
|  | Favorable (Adverse) |  | Favorable (Adverse) |  |  |  |  |  |  |  |  |  |
| Accident and health | $ | 6,988 |  |  | $ | (499) |  |  |  |  |  |  |  |  |  |  |
| Agriculture | 11,891 |  |  | 1,231 |  |  |  |  |  |  |  |  |  |  |
| Marine and aviation | (250) |  |  | 497 |  |  |  |  |  |  |  |  |  |  |
| Professional lines | (3,225) |  |  | (24,522) |  |  |  |  |  |  |  |  |  |  |
| Credit and surety | (546) |  |  | 7,465 |  |  |  |  |  |  |  |  |  |  |
| Motor | (17,122) |  |  | (1,730) |  |  |  |  |  |  |  |  |  |  |
| Liability | (32,853) |  |  | (4,105) |  |  |  |  |  |  |  |  |  |  |
| Run-off lines |  |  |  |  |  |  |  |  |  |  |  |  |
| Catastrophe | 31,058 |  |  | (246) |  |  |  |  |  |  |  |  |  |  |
| Property | 6,883 |  |  | 22,539 |  |  |  |  |  |  |  |  |  |  |
| Engineering | 173 |  |  | 1,264 |  |  |  |  |  |  |  |  |  |  |
| Total run-off lines | 38,114 |  |  | 23,557 |  |  |  |  |  |  |  |  |  |  |
| Total | $ | 2,997 |  |  | $ | 1,894 |  |  |  |  |  |  |  |  |  |  |
For the three months ended March 31, 2023, the Company recognized $3 million of net favorable prior year reserve development, the principal components of which were: •$12 million of net favorable development on agriculture business primarily due to better than expected loss emergence mainly related to the 2022 accident year. •$7 million of net favorable development on accident and health business primarily due to better than expected loss emergence mainly related to the 2022 accident year. •$33 million of net adverse development on liability business primarily due to reserve strengthening to reflect increased estimates of future loss trend due to inflation, increases in loss estimates attributable to one large claim within the European book of business related to the 2021 accident year and reserve strengthening within the U.S. proportional book of business related to 2019 and older accident years. •$17 million of net adverse development on motor business primarily due to reserve strengthening to reflect increased estimates of future loss trend due to inflation. Run-off lines •$31 million of net favorable development on catastrophe business primarily due to better than expected loss emergence mainly related to the 2022 accident year. •$7 million of net favorable development on property business primarily due to better than expected loss emergence attributable to 2022 catastrophe events. For the three months ended March 31, 2022, the Company recognized $2 million of net favorable prior year reserve development, the principal components of which were: •$7 million of net favorable prior year reserve development on credit and surety business primarily due to better than expected loss emergence related to recent accidents years. •$25 million of net adverse prior year development on professional lines business primarily due to an increase in loss estimates attributable to one cedant related to the 2016 to 2018 accident years and a specific large claim related to the 2017 accident year. •$4 million of net adverse prior year development on liability business primarily due to an increase in loss estimates attributable to a specific large claim related to the 2018 accident year. Run-off lines •$23 million of net favorable prior year development on property business primarily due to better than expected loss emergence attributable to 2018, 2019 and 2021 catastrophe events, and an aggregate excess of loss treaty.

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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 https://asc.fasb.org/subtopic&trid=2560295 + Details
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