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Reserve for losses and loss expenses (Tables)
 6 Months Ended
Jun. 30, 2016
Liability for Future Policy Benefits and Unpaid Claims and Claims Adjustment Expense [Abstract]  
Reserve for losses and loss expenses
The following table represents an analysis of paid and unpaid losses and loss expenses incurred and a reconciliation of the beginning and ending unpaid losses and loss expenses for the three and six months ended June 30, 2016 and 2015:
 
Three Months Ended June 30,
 
Six Months Ended June 30,
 
2016
 
2015
 
2016
 
2015
Reserve for losses and loss expenses, beginning of period
$
2,980,300

 
$
3,207,885

 
$
2,996,567

 
$
3,243,147

Loss reserves recoverable
(370,689
)
 
(375,882
)
 
(350,586
)
 
(377,466
)
Net reserves for losses and loss expenses, beginning of period
2,609,611

 
2,832,003

 
2,645,981

 
2,865,681

Increase (decrease) in net reserves for losses and loss expenses in respect of losses occurring in:
 
 
 
 
 
 
 
Current year
369,911

 
336,864

 
648,097

 
661,352

Prior years (a)
(62,781
)
 
(70,718
)
 
(116,520
)
 
(154,277
)
Total incurred losses and loss expenses (a)
307,130

 
266,146

 
531,577

 
507,075

Less net losses and loss expenses paid in respect of losses occurring in:
 
 
 
 
 
 
 
Current year
(45,882
)
 
(28,965
)
 
(61,655
)
 
(42,065
)
Prior years
(176,775
)
 
(260,027
)
 
(430,079
)
 
(496,260
)
Total net paid losses
(222,657
)
 
(288,992
)
 
(491,734
)
 
(538,325
)
Foreign exchange (gain) loss
(14,354
)
 
6,841

 
(6,094
)
 
(18,433
)
Net reserve for losses and loss expenses, end of period
2,679,730

 
2,815,998

 
2,679,730

 
2,815,998

Loss reserves recoverable
442,987

 
376,665

 
442,987

 
376,665

Reserve for losses and loss expenses, end of period
$
3,122,717

 
$
3,192,663

 
$
3,122,717

 
$
3,192,663

Incurred losses and loss expenses comprise:
 
Three Months Ended June 30,
 
Six Months Ended June 30,
 
2016
 
2015
 
2016
 
2015
Gross losses and loss expenses (a)
$
397,863

 
$
303,771

 
$
667,716

 
$
568,567

Reinsurance recoverable
(90,733
)
 
(37,625
)
 
(136,139
)
 
(61,492
)
Net incurred losses and loss expenses (a)
$
307,130

 
$
266,146

 
$
531,577

 
$
507,075


(a)
Upon closing the acquisition of Western World, an adjustment of $15,586 was made to increase net reserves to reflect fair value. This adjustment was amortized to income through a reduction in losses and loss expenses of $2,892 and $6,115, respectively, during the three and six months ended June 30, 2015, benefiting the loss ratio by 4.4 and 4.6 percentage points, respectively. The remaining fair value adjustment of $4,864 was fully amortized during 2015.
Prior year development by segment and line of business
The net favorable development on prior years by segment and line of business for the three and six months ended June 30, 2016 and 2015 was as follows:
 
Three Months Ended June 30, 2016
 
Property
 
Marine
 
Specialty
 
Liability
 
Total
Validus Re
$
(9,468
)
 
$
(10,018
)
 
$
(11,391
)
 
$
—

 
$
(30,877
)
Talbot
(10,094
)
 
(8,928
)
 
(9,306
)
 
—

 
(28,328
)
Western World
(1,582
)
 
—

 
—

 
(1,576
)
 
(3,158
)
AlphaCat
(296
)
 
—

 
(122
)
 
—

 
(418
)
Net favorable development
$
(21,440
)
 
$
(18,946
)
 
$
(20,819
)
 
$
(1,576
)
 
$
(62,781
)
The net favorable development of $62.8 million for the three months ended June 30, 2016 was primarily due to favorable development on attritional losses and prior year event and non-event reserves. The Validus Re and Western World segments experienced favorable development on prior years primarily due to favorable development on attritional losses; whereas, the Talbot segment experienced favorable development on prior years primarily due to favorable development on event and non-event reserves.
 
Three Months Ended June 30, 2015
 
Property
 
Marine
 
Specialty
 
Liability
 
Total
Validus Re
$
(15,928
)
 
$
(11,099
)
 
$
(3,852
)
 
$
—

 
$
(30,879
)
Talbot
(16,683
)
 
(13,810
)
 
(5,093
)
 
—

 
(35,586
)
Western World (a)
(866
)
 
—

 
—

 
(3,387
)
 
(4,253
)
Net favorable development (a)
$
(33,477
)
 
$
(24,909
)
 
$
(8,945
)
 
$
(3,387
)
 
$
(70,718
)

(a)
Upon closing the acquisition of Western World, an adjustment of $15,586 was made to increase net reserves to reflect fair value. This adjustment was amortized to income through a reduction in losses and loss expenses of $2,892 during the three months ended June 30, 2015, benefiting the loss ratio by 4.4 percentage points. The remaining fair value adjustment of $4,864 was fully amortized during 2015.
The Validus Re segment experienced favorable development on prior years primarily due to favorable development on attritional losses; whereas, the Talbot segment experienced favorable development on prior years primarily due to favorable development on attritional losses and certain events, including the Thailand floods. The Western World segment experienced favorable development on prior years primarily due to the amortization of the fair value adjustment made at the acquisition date as well as favorable development on attritional losses.
 
Six Months Ended June 30, 2016
 
Property
 
Marine
 
Specialty
 
Liability
 
Total
Validus Re
$
(32,300
)
 
$
(6,463
)
 
$
(17,798
)
 
$
—

 
$
(56,561
)
Talbot
(28,540
)
 
(5,964
)
 
(16,544
)
 
—

 
(51,048
)
Western World
(2,023
)
 
—

 
—

 
(5,561
)
 
(7,584
)
AlphaCat
(477
)
 
—

 
(850
)
 
—

 
(1,327
)
Net favorable development
$
(63,340
)
 
$
(12,427
)
 
$
(35,192
)
 
$
(5,561
)
 
$
(116,520
)

The net favorable development of $116.5 million for the six months ended June 30, 2016 was primarily attributable to net favorable development in the Validus Re, Talbot and Western World segments. The Validus Re net favorable development was primarily attributable to favorable development on attritional losses or non-event reserves; whereas Talbot's favorable development was due to favorable development on attritional losses along with favorable development on prior year event reserves. Western World's net favorable development was attributable to favorable development on attritional losses.


 
Six Months Ended June 30, 2015
 
Property
 
Marine
 
Specialty
 
Liability
 
Total
Validus Re
$
(30,824
)
 
$
(15,669
)
 
$
(9,082
)
 
$
—

 
$
(55,575
)
Talbot
(37,435
)
 
(36,324
)
 
(13,514
)
 
—

 
(87,273
)
Western World (a)
(3,594
)
 
—

 
—

 
(6,991
)
 
(10,585
)
AlphaCat
(844
)
 
—

 
—

 
—

 
(844
)
Net favorable development (a)
$
(72,697
)
 
$
(51,993
)
 
$
(22,596
)
 
$
(6,991
)
 
$
(154,277
)
(a)
Upon closing the acquisition of Western World, an adjustment of $15,586 was made to increase net reserves to reflect fair value. This adjustment was amortized to income through a reduction in losses and loss expenses of $6,115 during the six months ended June 30, 2015, benefiting the loss ratio by 4.6 percentage points. The remaining fair value adjustment of $4,864 was fully amortized during 2015.