Losses and Loss Expenses

The following table represents a reconciliation of the beginning and ending balances of unpaid losses and loss expenses, including an analysis of the Company’s paid and unpaid losses and loss expenses incurred for the years indicated:



(U.S. dollars in thousands)	2017		2016
Unpaid losses and loss expenses at the beginning of the year	$	25,939,571	$	25,439,744
Unpaid losses and loss expenses recoverable (1)	5,480,300		5,248,905
Net unpaid losses and loss expenses at the beginning of the year	$	20,459,271	$	20,190,839
Acquired reserves	—		101,315
Increase (decrease) in net losses and loss expenses incurred in respect of losses occurring in:
Current year	1,559,452		1,425,897
Prior year	24,004		(43,412		)
Total net incurred losses and loss expenses	$	1,583,456	$	1,382,485
Foreign exchange and other	56,244		32,268
Less net losses and loss expenses paid in respect of losses occurring in:
Current year	106,472		104,681
Prior year	1,222,119		1,067,056
Total net paid losses	$	1,328,591	$	1,171,737
Net unpaid losses and loss expenses at March 31	20,770,380		20,535,170
Unpaid losses and loss expenses recoverable at March 31 (1)	5,674,744		5,378,314
Unpaid losses and loss expenses at March 31	$	26,445,124	$	25,913,484

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(1) Property and Casualty business only.

Net unfavorable prior year reserve development of $24.0 million for the three months ended March 31, 2017 was mainly attributable to $28.6 million adverse development in the Reinsurance segment, partially offset by $4.6 million of favorable development in the Insurance segment.

For the Reinsurance segment, net adverse prior year development was primarily due to the impact of the decrease to the discount rate used to calculate lump sum awards in U.K. bodily injury cases ("Ogden Rate") of $75.0 million. This adverse development was partially offset by favorable development in property other, property catastrophe, and specialty lines.

For the Insurance segment, the favorable development was mainly attributable to casualty lines of business.

Net favorable prior year reserve development of $43.4 million for the three months ended March 31, 2016 was mainly attributable to $32.1 million of favorable development in the Reinsurance segment, plus $11.4 million of favorable development in the Insurance segment.

For the Reinsurance segment, the favorable prior year development was mainly attributable to better than expected development in short-tail lines, the largest contributor being property catastrophe. Additionally, the favorable development in the Insurance segment was mainly attributable to a release in specialty lines.