Reserve For Losses And Loss Expenses

6 Months Ended

Jun. 30, 2013

Reserve For Losses And Loss Expenses [Abstract]

Reserve For Losses And Loss Expenses

7. RESERVE FOR LOSSES AND LOSS EXPENSES

The reserve for losses and loss expenses consists of the following:

	June 30,		December 31,
	2013		2012
Outstanding loss reserves	$	1,509,350	$	1,539,114
Reserves for losses incurred but not reported		4,187,515		4,106,435
Reserve for losses and loss expenses	$	5,696,865	$	5,645,549

The table below is a reconciliation of the beginning and ending liability for unpaid losses and loss expenses. Losses incurred and paid are reflected net of reinsurance recoverables.

		Three Months Ended				Six Months Ended
		June 30,				June 30,
		2013		2012		2013		2012
Gross liability at beginning of period		$	5,673,220	$	5,331,418	$	5,645,549	$	5,225,143
Reinsurance recoverable at beginning of period			(1,163,503)		(1,056,780)		(1,141,110)		(1,002,919)
Net liability at beginning of period			4,509,717		4,274,638		4,504,439		4,222,224
Net losses incurred related to:
	Current year		323,556		282,302		622,804		546,986
	Prior years		(48,428)		(41,922)		(92,498)		(81,404)
	Total incurred		275,128		240,380		530,306		465,582
Net paid losses related to:
	Current year		21,003		18,226		24,584		19,840
	Prior years		241,764		186,891		482,885		362,411
	Total paid		262,767		205,117		507,469		382,251
Foreign exchange revaluation			(4,738)		(5,995)		(9,936)		(1,649)
Net liability at end of period			4,517,340		4,303,906		4,517,340		4,303,906
Reinsurance recoverable at end of period			1,179,525		1,073,612		1,179,525		1,073,612
Gross liability at end of period		$	5,696,865	$	5,377,518	$	5,696,865	$	5,377,518

For the three months ended June 30, 2013, the Company had net favorable reserve development in each of its segments due to actual loss emergence being lower than initially expected. The majority of the net favorable reserve development was recognized in the 2007 through 2010 loss years across most lines of business. In addition, the reinsurance segment recognized net favorable reserve development for the 2012 loss year due to the low level of reported property losses. This was partially offset by adverse development in the U.S. insurance segment in the 2011 and 2012 loss years.

For the six months ended June 30, 2013,the Company had net favorable reserve development in its international and reinsurance segments due to actual loss emergence being lower than initially expected, primarily for loss years 2004 to 2008. The reinsurance segment recognized net favorable reserve development for the 2012 loss year due to the low level of reported property losses. This was partially offset by adverse development in the U.S. insurance segment in the 2011 and 2012 loss years for certain errors and omissions and director's and officers' classes of business.

For the three months ended June 30, 2012,the Company had net favorable reserve development in each of its segments due to actual loss emergence being lower than initially expected. The majority of the net favorable reserve development was recognized by each segment in the 2004 through 2009 loss years across most lines of business.

For the six months ended June 30, 2012,the Company had net favorable reserve development in each of its segments due to actual loss emergence being lower than initially expected. The majority of the net favorable reserve development was recognized in the international insurance and reinsurance segments in the 2004 through 2008 loss years.

While the Company has experienced favorable reserve development in its insurance and reinsurance lines, there is no assurance that conditions and trends that have affected the development of liabilities in the past will continue. It is not appropriate to extrapolate future redundancies based on prior years' development. The methodology of estimating loss reserves is periodically reviewed to ensure that the key assumptions used in the actuarial models continue to be appropriate.