

	Six months ended June 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	1,374,784			1,482,409
Prior years	(38,293		)	(114,423		)
	1,336,491			1,367,986
Net paid losses and loss expenses related to:
Current year	(132,111		)	(186,576		)
Prior years	(1,304,413		)	(1,233,793		)
	(1,436,524		)	(1,420,369		)

Foreign exchange and other	10,832			(985,628		)

Net reserve for unpaid losses and loss expenses, end of period	8,689,899			8,800,028
Reinsurance recoverable on unpaid losses, end of period	3,564,812			3,152,706
Gross reserve for losses and loss expenses, end of period	$	12,254,711		$	11,952,734

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 six months ended June 30, 2019, the Company recognized net losses and loss expenses of $36 million (2018: $73 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 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 June 30, 2018, foreign exchange and other included a reduction in reserves for losses and loss expenses of $819 million related to this transaction.

The Company's net favorable prior year reserve development arises from changes to loss and loss expense estimates related to loss events that occurred in previous calendar years. The following table presents net prior year reserve development by segment:



	Three months ended June 30,				Six months ended June 30,
	2019		2018		2019		2018

Insurance	$	21,326	$	24,294	$	28,240	$	47,068
Reinsurance	2,295		35,822		10,053		67,355
Total	$	23,621	$	60,116	$	38,293	$	114,423



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 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 June 30, 2019, these reserve classes recognized net adverse prior year reserve development of $19 million including $30 million of net adverse prior year reserve development recognized by the reinsurance property and other reserve class, partially offset by net favorable prior year reserve development of $6 million contributed by the insurance property and other reserve class and net favorable prior year reserve development of $5 million contributed by the insurance marine reserve class.

For the six months ended June 30, 2019, these reserve classes recognized net adverse prior year reserve development of $52 million including $59 million of net adverse prior year reserve development recognized by the reinsurance property and other reserve class and $16 million of net adverse prior year reserve development recognized by the insurance property and other reserve class, partially offset by net favorable prior year reserve development of $22 million contributed by the insurance marine reserve class.

For the three and six months ended June 30, 2018, these reserve classes contributed net favorable prior year reserve development of $43 million and $81 million, respectively, reflecting the recognition of better than expected loss emergence.

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 six months ended June 30, 2019, the reinsurance credit and surety reserve class recorded net favorable prior year reserve development of $17 million (2018: $9 million) and $27 million (2018: $14 million), respectively, reflecting the recognition of better than expected loss emergence.

For the three and six months ended June 30, 2019, insurance credit and political risk reserve class recorded net favorable prior year reserve development of $7 million and $9 million, respectively, reflecting the recognition of better than expected loss emergence.

For the three and six months ended June 30, 2019, the insurance professional lines reserve class recorded net favorable prior year reserve development of $4 million and $10 million, respectively. For the three and six months ended June 30, 2019, the reinsurance professional lines reserve class recorded net favorable prior year reserve development of $6 million and $8 million (2018: $8 million). The net favorable prior year reserve development on these reserve classes continued to reflect generally favorable experience on older accident years as the Company continued to transition to more experience based actuarial methods.

For the three and six months ended June 30, 2019, the reinsurance liability reserve class contributed net favorable prior year reserve development of $11 million (2018: $6 million) and $23 million (2018: $8 million), respectively. The net favorable prior year reserve development was due to increased weight given by management to experience based indications on older accident years.

For the six months ended June 30, 2018, the insurance liability reserve class recorded net adverse prior year reserve development of $7 million primarily related to reserve strengthening in the Company's U.S. excess casualty book of business.

For the six months ended June 30, 2019, the reinsurance motor reserve class contributed net favorable prior year reserve development of $11 million (2018: $9 million). For the three months ended June 30, 2018, the reinsurance motor reserve class contributed net favorable prior year reserve development of $5 million. The net favorable prior year reserve development was primarily attributable to non proportional treaty business on older accident years.

At June 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 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.