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Reserves for Losses and Loss Adjustment Expenses
 6 Months Ended
Jun. 30, 2018
Insurance [Abstract]  
Reserves for Losses and Loss Adjustment Expenses
Reserves for Losses and Loss Adjustment Expenses
The following table provides a reconciliation of reserves for losses and loss adjustment expenses (“LAE”):
 
 
For the Six Months Ended June 30,
(in millions)
 
2018
 
2017
Net reserves beginning of the year
 
$
2,488.0

 
$
2,180.2

Net Maybrooke reserves acquired
 
—

 
132.6

Net Ariscom reserves acquired
 
49.4

 
—

Add:
 
 
 
 
Losses and LAE incurred during current calendar year, net of reinsurance:
 
 
 
 
Current accident year
 
487.1

 
447.4

Prior accident years
 
(4.4
)
 
5.7

Losses and LAE incurred during calendar year, net of reinsurance
 
482.7

 
453.1

Deduct:
 
 
 
 
Losses and LAE payments made during current calendar year, net of reinsurance:
 
 
 
 
Current accident year
 
152.1

 
88.9

Prior accident years
 
327.0

 
290.8

Losses and LAE payments made during current calendar year, net of reinsurance:
 
479.1

 
379.7

Change in participation interest (1)
 
(29.4
)
 
(23.2
)
Foreign exchange adjustments
 
(24.0
)
 
1.8

Net reserves - end of period
 
2,487.6

 
2,364.8

Add:
 
 
 
 
Reinsurance recoverables on unpaid losses and LAE, end of period
 
1,755.3

 
1,268.0

Gross reserves - end of period
 
$
4,242.9

 
$
3,632.8

(1) 
Amount represents the change in reserves due to changing our participation in Syndicates 1200 and 1910.
Reserves for losses and LAE represent the estimated indemnity cost and related adjustment expenses necessary to investigate and settle claims. Such estimates are based upon individual case estimates for reported claims, estimates from ceding companies for reinsurance assumed and actuarial estimates for losses that have been incurred but not yet reported to the insurer. Any change in probable ultimate liabilities is reflected in current operating results.
The impact from the (favorable) unfavorable development of prior accident years’ loss and LAE reserves on each reporting segment is presented below: 
 
 
For the Six Months Ended June 30,
(in millions)
 
2018
 
2017
U.S. Operations
 
$
(4.1
)
 
$
(18.0
)
International Operations
 
(3.3
)
 
19.6

Run-off Lines
 
3.0

 
4.1

Total (favorable) unfavorable prior-year development
 
$
(4.4
)
 
$
5.7


The following describes the primary factors behind each segment’s prior accident year reserve development for the six months ended June 30, 2018 and 2017:
Six months ended June 30, 2018:
•
U.S. Operations: Favorable development in liability and surety lines, partially offset by unfavorable development in commercial multi-peril lines.
•
International Operations: Favorable development in property lines, partially offset by unfavorable development within specialty lines.  
•
Run-off Lines: Unfavorable development in risk management lines and other run-off lines.
Six months ended June 30, 2017:
•
U.S. Operations: Favorable development for workers compensation, surety, commercial auto, and commercial multi-peril lines.
•
International Operations: Unfavorable development in the property, liability, and specialty lines
•
Run-off Lines: Unfavorable development in risk management lines and other run-off lines.
In the opinion of management, our reserves represent the best estimate of our ultimate liabilities, based on currently known facts, current law, current technology and assumptions considered reasonable where facts are not known. Due to the significant uncertainties and related management judgments, there can be no assurance that future favorable or unfavorable loss development, which may be material, will not occur.