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Reserve for Losses and Loss Adjustment Expenses
 3 Months Ended
Mar. 31, 2020
Liability for Future Policy Benefits and Unpaid Claims and Claims Adjustment Expense [Abstract]  
Reserve for losses and loss adjustment expenses Reserve for Losses and Loss Adjustment Expenses
The following table represents an analysis of losses and loss adjustment expenses and a reconciliation of the beginning and ending reserve for losses and loss adjustment expenses:
 
Three Months Ended
 
March 31,
 
2020
 
2019
Reserve for losses and loss adjustment expenses at beginning of period
$
13,891,842

 
$
11,853,297

Unpaid losses and loss adjustment expenses recoverable
4,082,650

 
2,814,291

Net reserve for losses and loss adjustment expenses at beginning of period
9,809,192

 
9,039,006

 
 
 
 
Net incurred losses and loss adjustment expenses relating to losses occurring in:
 
 
 
Current year
1,134,442

 
757,964

Prior years
(19,023
)
 
(39,432
)
Total net incurred losses and loss adjustment expenses
1,115,419

 
718,532

 
 
 
 
Retroactive reinsurance transactions (1)
60,635

 
(225,500
)
 
 
 
 
Net foreign exchange (gains) losses and other
(142,573
)
 
(504
)
 
 
 
 
Net paid losses and loss adjustment expenses relating to losses occurring in:
 
 
 
Current year
(41,260
)
 
(64,340
)
Prior years
(561,947
)
 
(427,312
)
Total net paid losses and loss adjustment expenses
(603,207
)
 
(491,652
)
 
 
 
 
Net reserve for losses and loss adjustment expenses at end of period
10,239,466

 
9,039,882

Unpaid losses and loss adjustment expenses recoverable
4,070,114

 
2,970,159

Reserve for losses and loss adjustment expenses at end of period
$
14,309,580

 
$
12,010,041

(1)
During 2020 first quarter, a subsidiary of the Company entered into a reinsurance to close agreement of the 2017 and prior years of account previously covered by a third party arrangement, while in the 2019 first quarter, a subsidiary of the Company entered into a retroactive reinsurance transaction with third party reinsurer to reinsure run-off liabilities associated with certain U.S. insurance exposures.

Development on Prior Year Loss Reserves

2020 First Quarter

During the 2020 first quarter, the Company recorded net favorable development on prior year loss reserves of $19.0 million, which consisted of $1.1 million of favorable development from the insurance segment, $11.6 million from the reinsurance segment, $6.1 million from the mortgage segment and $0.2 million from the ‘other’ segment.
The insurance segment’s net favorable development of $1.1 million, or 0.2 loss ratio points, for the 2020 first quarter consisted of $3.9 million of net favorable development in short-tailed lines, $7.9 million of net adverse development in medium-tailed lines and $5.2 million of net favorable development in long-tailed lines. Net favorable development in short-tailed lines primarily resulted from lenders products and property (including special risk other than marine) reserves across 2018 and prior accident years (i.e., the year in which a loss occurred). Net adverse development in medium-tailed lines included $13.2 million of adverse development in contract binding business across most accident years, partially offset by
$5.1 million of favorable development in professional liability business. Net favorable development in longer-tailed lines primarily related to construction business driven by the 2017 accident year.
The reinsurance segment’s net favorable development of $11.6 million, or 2.1 loss ratio points, for the 2020 first quarter consisted of $21.5 million of net favorable development in short-tailed and medium-tailed lines and net adverse development of $9.9 million in long-tailed lines. Net favorable development in short-tailed and medium-tailed lines reflected $11.9 million of favorable development in other specialty lines across most underwriting years (i.e., all premiums and losses attributable to contracts having an inception or renewal date within the given twelve-month period) and $10.5 million of favorable development from property catastrophe business, primarily from the 2015 to 2019 underwriting years. Such amounts were partially offset by $4.3 million of adverse development in property other than property catastrophe business, driven by the 2018 underwriting year. Adverse development in long-tailed lines reflected an increase in casualty reserves from various underwriting years.
The mortgage segment’s net favorable development was $6.1 million, or 1.8 loss ratio points, for the 2020 first quarter. The 2020 first quarter development was primarily driven by subrogation recoveries on second lien business and student loan business.
2019 First Quarter
During the 2019 first quarter, the Company recorded net favorable development on prior year loss reserves of $39.4 million, which consisted of $4.4 million of favorable development from the insurance segment, $36.6 million from the mortgage segment and $0.1 million from the ‘other’ segment, partially offset by $1.7 million of adverse development from the reinsurance segment.

The insurance segment’s net favorable development of $4.4 million, or 0.8 loss ratio points, for the 2019 first quarter consisted of $9.7 million of net favorable development in short- tailed lines, $7.0 million of net adverse development in medium-tailed lines and $1.7 million of net favorable development in long-tailed lines. Net favorable development in short-tailed lines primarily resulted from property (including special risk other than marine) reserves from the 2017 accident year (i.e., the year in which a loss occurred). Net adverse development in medium-tailed lines primarily resulted from $7.7 million of adverse development on program business and $6.0 million of adverse development on contract binding business. Such amounts were partially offset by $6.7 million of net favorable development in other medium-tailed lines, including professional liability and surety business, across most accident years.
The reinsurance segment’s net adverse development of $1.7 million, or 0.5 loss ratio points, for the 2019 first quarter consisted of $6.2 million of net adverse development from short-tailed lines, partially offset by $4.5 million of net favorable development from long-tailed and medium-tailed lines. Net adverse development in short-tailed lines included $13.8 million from property catastrophe and property other than property catastrophe reserves, primarily due to an increase in reserves on Typhoon Jebi of $16.0 million based on receipt of updated information from cedents and additional updated industry data. Such amounts were partially offset by net favorable development of $9.6 million from other specialty reserves, primarily from the 2016 and 2018 underwriting years (i.e., all premiums and losses attributable to contracts having an inception or renewal date within the given twelve-month period). Favorable development in long-tailed and medium tailed lines reflected reductions in casualty and marine reserves from most underwriting years.

The mortgage segment’s net favorable development was $36.6 million, or 11.3 loss ratio points, for the 2019 first quarter. The 2019 first quarter development was primarily driven by continued favorable claim rates on first lien business and subrogation recoveries on second lien business.