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Reserve for Losses and Loss Adjustment Expenses
 3 Months Ended
Mar. 31, 2021
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,
20212020
Reserve for losses and loss adjustment expenses at beginning of period
$16,513,929 $13,891,842 
Unpaid losses and loss adjustment expenses recoverable
4,314,855 4,082,650 
Net reserve for losses and loss adjustment expenses at beginning of period
12,199,074 9,809,192 
Net incurred losses and loss adjustment expenses relating to losses occurring in:
Current year
1,244,772 1,134,442 
Prior years
(41,672)(19,023)
Total net incurred losses and loss adjustment expenses
1,203,100 1,115,419 
Retroactive reinsurance transactions (1)
(183,893)60,635 
Net foreign exchange (gains) losses
(46,877)(142,573)
Net paid losses and loss adjustment expenses relating to losses occurring in:
Current year
(58,984)(41,260)
Prior years
(585,118)(561,947)
Total net paid losses and loss adjustment expenses
(644,102)(603,207)
Net reserve for losses and loss adjustment expenses at end of period
12,527,302 10,239,466 
Unpaid losses and loss adjustment expenses recoverable
3,916,650 4,070,114 
Reserve for losses and loss adjustment expenses at end of period
$16,443,952 $14,309,580 
(1)     During 2021 first quarter, the Company entered into a reinsurance to close and other related agreements with Premia Managing Agency Limited (“Premia”), in connection with the 2018 and prior years of account related to the acquisition of Barbican Group Holdings Limited (“Barbican”). During the 2020 first quarter, the Company entered into a reinsurance to close agreement of the 2017 and prior years of account previously covered by a third party arrangement.

Development on Prior Year Loss Reserves

2021 First Quarter

During the 2021 first quarter, the Company recorded net favorable development on prior year loss reserves of $41.7 million, which consisted of $4.1 million favorable development from the insurance segment, $26.8 million from the reinsurance segment and $10.9 million from the mortgage segment, partially offset by $0.1 million unfavorable from the ‘other’ segment.
The insurance segment’s net favorable development of $4.1 million, or 0.5 loss ratio points, for the 2021 first quarter consisted of $25.0 million of net favorable development in short-tailed and $20.9 million of net adverse development in medium-tailed lines. Net favorable development in short-tailed lines reflected $14.6 million of favorable development from property (excluding marine), primarily from the 2019 and 2020 accident years (i.e., the year in which a loss occurred), $8.0 million of favorable development in lenders products, primarily from the 2020 accident year, and $2.5
million of favorable development in travel and accident, primarily from the 2020 accident year. Net adverse development in medium-tailed lines included $10.8 million of adverse development in program business, primarily from the 2016 to 2020 accident years, $6.0 million of adverse development in professional liability business, primarily from the 2019 accident year, and $5.0 million of adverse development in surety, primarily from the 2019 accident year.

The reinsurance segment’s net favorable development of $26.8 million, or 4.2 loss ratio points, for the 2021 first quarter consisted of net favorable development in short-tailed, medium-tailed and long-tailed lines. Net favorable development of $17.5 million in short-tailed lines reflected $23.3 million of favorable development related to property other than property catastrophe business, primarily from the 2016 to 2019 underwriting years (i.e., all premiums and losses attributable to contracts having an inception or renewal date within the given twelve-month period), and $16.6 million of favorable development from other specialty,
primarily from the 2018 and 2019 underwriting years, partially offset by $22.5 million of net adverse development related to property catastrophe, primarily from the 2020 underwriting year. Net favorable development of $9.3 million in medium and long-tailed lines reflected favorable development in casualty across most underwriting years.

The mortgage segment’s net favorable development was $10.9 million, or 3.2 loss ratio points, for the 2021 first quarter, primarily driven by favorable development in the credit risk transfer and international portfolios. Subrogation recoveries on second lien and student loan business also contributed.
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 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. 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 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 and student loan business.