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Reserve for losses and loss expenses (Tables)
 9 Months Ended
Sep. 30, 2016
Liability for Future Policy Benefits and Unpaid Claims and Claims Adjustment Expense [Abstract]  
Summary of reserve for losses and loss expenses
The following table summarizes the total reserve for losses and loss expenses as at September 30, 2016 and December 31, 2015:
 
September 30, 2016
 
December 31, 2015
Case reserves
$
1,295,385

 
$
1,278,697

IBNR
1,740,602

 
1,717,870

Total reserve for losses and loss expenses
$
3,035,987

 
$
2,996,567
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 nine months ended September 30, 2016 and 2015:
 
Three Months Ended September 30,
 
Nine Months Ended September 30,
 
2016
 
2015
 
2016
 
2015
Reserve for losses and loss expenses, beginning of period
$
3,122,717

 
$
3,192,663

 
$
2,996,567

 
$
3,243,147

Loss reserves recoverable
(442,987
)
 
(376,665
)
 
(350,586
)
 
(377,466
)
Net reserves for losses and loss expenses, beginning of period
2,679,730

 
2,815,998

 
2,645,981

 
2,865,681

Increase (decrease) in net reserves for losses and loss expenses in respect of losses occurring in:
 
 
 
 
 
 
 
Current year
311,279

 
349,759

 
959,376

 
1,011,111

Prior years (a)
(52,885
)
 
(93,749
)
 
(169,405
)
 
(248,026
)
Total net incurred losses and loss expenses (a)
258,394

 
256,010

 
789,971

 
763,085

Less net losses and loss expenses paid in respect of losses occurring in:
 
 
 
 
 
 
 
Current year
(178,709
)
 
(63,151
)
 
(240,362
)
 
(105,216
)
Prior years
(166,537
)
 
(207,802
)
 
(596,618
)
 
(704,062
)
Total net paid losses
(345,246
)
 
(270,953
)
 
(836,980
)
 
(809,278
)
Effect of foreign exchange rate movements
(1,500
)
 
(13,982
)
 
(7,594
)
 
(32,415
)
Net reserve for losses and loss expenses, end of period
2,591,378

 
2,787,073

 
2,591,378

 
2,787,073

Loss reserves recoverable
444,609

 
385,212

 
444,609

 
385,212

Reserve for losses and loss expenses, end of period
$
3,035,987

 
$
3,172,285

 
$
3,035,987

 
$
3,172,285

(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 $2,524 and $8,639, respectively, during the three and nine months ended September 30, 2015, benefiting the loss ratio by 3.9 and 4.4 percentage points, respectively. The remaining fair value adjustment of $2,340 was fully amortized during 2015.

Net incurred losses and loss expenses comprise:
 
Three Months Ended September 30,
 
Nine Months Ended September 30,
 
2016
 
2015
 
2016
 
2015
Gross losses and loss expenses (a)
$
284,413

 
$
283,623

 
$
952,129

 
$
852,190

Reinsurance recoverable
(26,019
)
 
(27,613
)
 
(162,158
)
 
(89,105
)
Net incurred losses and loss expenses (a)
$
258,394

 
$
256,010

 
$
789,971

 
$
763,085


(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 $2,524 and $8,639, respectively, during the three and nine months ended September 30, 2015, benefiting the loss ratio by 3.9 and 4.4 percentage points, respectively. The remaining fair value adjustment of $2,340 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 nine months ended September 30, 2016 and 2015 was as follows:
 
Three Months Ended September 30, 2016
 
Property
 
Marine
 
Specialty
 
Liability
 
Total
Validus Re
$
(19,736
)
 
$
(8,504
)
 
$
(4,793
)
 
$
—

 
$
(33,033
)
Talbot
(2,429
)
 
(4,547
)
 
(11,715
)
 
—

 
(18,691
)
Western World
(553
)
 
—

 
—

 
(327
)
 
(880
)
AlphaCat
(265
)
 
—

 
(16
)
 
—

 
(281
)
Net favorable development
$
(22,983
)
 
$
(13,051
)
 
$
(16,524
)
 
$
(327
)
 
$
(52,885
)
The net favorable development of $52,885 for the three months ended September 30, 2016 was primarily attributable to favorable development within Validus Re and Talbot of $33,033 and $18,691, respectively. The Validus Re favorable development was attributable to favorable development on event reserves of $18,200, related primarily to Tianjin and the 2015 Chilean earthquake, and $14,800 of favorable development on attritional losses. The favorable development related to Talbot was attributable to favorable development on attritional losses.
 
Three Months Ended September 30, 2015
 
Property
 
Marine
 
Specialty
 
Liability
 
Total
Validus Re
$
(27,613
)
 
$
(13,556
)
 
$
(9,306
)
 
$
—

 
$
(50,475
)
Talbot
(9,706
)
 
(14,854
)
 
(11,412
)
 
—

 
(35,972
)
Western World (a)
(1,054
)
 
—

 
—

 
(4,000
)
 
(5,054
)
AlphaCat
(2,248
)
 
—

 
—

 
—

 
(2,248
)
Net favorable development (a)
$
(40,621
)
 
$
(28,410
)
 
$
(20,718
)
 
$
(4,000
)
 
$
(93,749
)

(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 $2,524 during the three months ended September 30, 2015, benefiting the loss ratio by 3.9 percentage points. The remaining fair value adjustment of $2,340 was fully amortized during 2015.
The Validus Re segment experienced favorable development on prior years primarily due to favorable development on attritional losses and event specific reserves; 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.
 
Nine Months Ended September 30, 2016
 
Property
 
Marine
 
Specialty
 
Liability
 
Total
Validus Re
$
(52,036
)
 
$
(14,967
)
 
$
(22,591
)
 
$
—

 
$
(89,594
)
Talbot
(30,969
)
 
(10,511
)
 
(28,259
)
 
—

 
(69,739
)
Western World
(2,576
)
 
—

 
—

 
(5,888
)
 
(8,464
)
AlphaCat
(742
)
 
—

 
(866
)
 
—

 
(1,608
)
Net favorable development
$
(86,323
)
 
$
(25,478
)
 
$
(51,716
)
 
$
(5,888
)
 
$
(169,405
)

The net favorable development of $169,405 for the nine months ended September 30, 2016 was primarily attributable to favorable development within Validus Re, Talbot and Western World of $89,594, $69,739 and $8,464, respectively. The favorable development across all operating segments was primarily attributable to favorable development on both attritional losses of $160,400 and event reserves of $9,000.
 
Nine Months Ended September 30, 2015
 
Property
 
Marine
 
Specialty
 
Liability
 
Total
Validus Re
$
(58,437
)
 
$
(29,225
)
 
$
(18,388
)
 
$
—

 
$
(106,050
)
Talbot
(47,141
)
 
(51,178
)
 
(24,926
)
 
—

 
(123,245
)
Western World (a)
(4,648
)
 
—

 
—

 
(10,991
)
 
(15,639
)
AlphaCat
(3,092
)
 
—

 
—

 
—

 
(3,092
)
Net favorable development (a)
$
(113,318
)
 
$
(80,403
)
 
$
(43,314
)
 
$
(10,991
)
 
$
(248,026
)
(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 $8,639 during the six months ended September 30, 2015, benefiting the loss ratio by 4.4 percentage points. The remaining fair value adjustment of $2,340 was fully amortized during 2015.