The Company's reserves for losses and loss expenses are comprised of case reserves and incurred but not reported liabilities (IBNR). When a claim is reported, a case reserve is established for the estimated ultimate payment based upon known information about the claim. As more information about the claim becomes available over time, case reserves are adjusted up or down as appropriate. Reserves are also established on an aggregate basis to provide for IBNR liabilities and expected loss reserve development on reported claims.

Loss reserves included in the Company’s financial statements represent management’s best estimates based upon an actuarially derived point estimate and other considerations. The Company uses a variety of actuarial techniques and methods to derive an actuarial point estimate for each business. These methods may include paid loss development, incurred loss development, paid and incurred Bornhuetter-Ferguson methods and frequency and severity methods. In circumstances where one actuarial method is considered more credible than the others, that method is used to set the point estimate. The actuarial point estimate may also be based on a judgmental weighting of estimates produced from each of the methods considered. Industry loss experience is used to supplement the Company’s own data in selecting “tail factors” in areas where the Company’s own data is limited. The actuarial data is analyzed by line of business, coverage and accident or policy year, as appropriate, for each business.

The establishment of the actuarially derived loss reserve point estimate also includes consideration of qualitative factors that may affect the ultimate losses. These qualitative considerations include, among others, the impact of re-underwriting initiatives, changes in claims handling procedures, changes in the mix of business, changes in distribution sources and changes in policy terms and conditions.

The key assumptions used to arrive at the best estimate of loss reserves are the expected loss ratios, rate of loss cost inflation, and reported and paid loss emergence patterns. Expected loss ratios represent management’s expectation of losses at the time the business is priced and written, before any actual claims experience has emerged. This expectation is a significant determinant of the estimate of loss reserves for recently written business where there is little paid or incurred loss data to consider. Expected loss ratios are generally derived from historical loss ratios adjusted for the impact of rate changes, loss cost trends and known changes in the type of risks underwritten. Expected loss ratios are estimated for each key line of business within each business. Expected loss cost inflation is particularly important for the long-tail lines, such as excess casualty, and claims with a high medical component, such as workers’ compensation. Reported and paid loss emergence patterns are used to project current reported or paid loss amounts to their ultimate settlement value. Loss development factors are based on the historical emergence patterns of paid and incurred losses, and are derived from the Company’s own experience and industry data. The paid loss emergence pattern is also significant to excess and assumed workers’ compensation reserves because those reserves are discounted to their estimated present value based upon such estimated payout patterns.

Loss frequency and severity are measures of loss activity that are considered in determining the key assumptions described in our discussion of loss and loss expense reserves, including expected loss ratios, rate of loss cost inflation and reported and paid loss emergence patterns. Loss frequency is a measure of the number of claims per unit of insured exposure, and loss severity is a measure of the average size of claims. Factors affecting loss frequency include the effectiveness of loss controls and safety programs and changes in economic activity or weather patterns. Factors affecting loss severity include changes in policy limits, retentions, rate of inflation and judicial interpretations.

Another factor affecting estimates of loss frequency and severity is the loss reporting lag, which is the period of time between the occurrence of a loss and the date the loss is reported to the Company. The length of the loss reporting lag affects our ability to accurately predict loss frequency (loss frequencies are more predictable for lines with short reporting lags) as well as the amount of reserves needed for incurred but not reported losses (less IBNR is required for lines with short reporting lags). As a result, loss reserves for lines with short reporting lags are likely to have less variation from initial loss estimates. For lines with short reporting lags, which include commercial automobile, primary workers’ compensation, other liability (claims-made) and property business, the key assumption is the loss emergence pattern used to project ultimate loss estimates from known losses paid or reported to date. For lines of business with long reporting lags, which include other liability (occurrence), products liability, excess workers’ compensation and liability reinsurance, the key assumption is the expected loss ratio since there is often little paid or incurred loss data to consider. Historically, the Company has experienced less variation from its initial loss estimates for lines of businesses with short reporting lags than for lines of business with long reporting lags.

The most commonly used claim count method is by event. Most of the Company's businesses use the number of events to define and quantify the number of claims. However, in certain lines of business, where it is common for multiple parties to claim damages arising from a single event, a business may quantify claims on the basis of the number of separate parties involved in an event. This may be the case with businesses writing substantial automobile or transportation exposure.

Claim counts for assumed reinsurance will vary based on whether the business is written on a facultative or treaty basis. Further variability as respects treaty claim counts may be reflective of the nature of the treaty, line of business coverage, and type of participation such as quota share or excess of loss contracts. Accordingly, the claim counts have been excluded from the below Reinsurance & Monoline Excess segment tables due to this variability.

The following tables present undiscounted incurred and paid claims development as of December 31, 2021, net of reinsurance, as well as cumulative claim frequency and the total of incurred but not reported liabilities (IBNR). The information about incurred and paid claims development for the years ended December 31, 2012 to 2020 is presented as supplementary information. To enhance the comparability of the loss development data, the Company has removed the impact of foreign exchange rate movements by using the December 31, 2021 exchange rate for all periods.


Loss and Loss Expenses Incurred, Net of Reinsurance																					As of December 31, 2021
For the Year Ended December 31,
	Unaudited																				IBNR		Cumulative Number of Reported Claims
Accident Year	2012		2013		2014		2015		2016		2017		2018		2019		2020		2021
2012	$	692,236	$	700,946	$	701,634	$	707,937	$	711,876	$	722,092	$	716,643	$	714,681	$	712,984	$	708,031	$	16,190	24
2013			750,501		791,016		783,199		783,020		803,974		810,344		804,919		809,119		811,143		29,110		26
2014					847,878		849,690		847,719		852,171		864,965		871,130		866,292		864,787		51,651		28
2015							951,915		987,552		962,470		965,725		967,764		977,944		984,528		64,794		27
2016									1,018,792		1,011,800		1,020,679		1,032,035		1,046,122		1,062,023		117,676		28
2017											1,066,950		1,100,790		1,123,297		1,140,112		1,179,982		171,499		27
2018													1,105,223		1,132,810		1,122,423		1,157,499		264,059		27
2019															1,242,139		1,238,948		1,239,419		440,178		27
2020																	1,341,042		1,214,463		749,747		21
2021																			1,537,062		1,269,718		17
Total																			$	10,758,937


Cumulative Paid Claims and Claim Adjustment Expenses, Net of Reinsurance
For the Year Ended December 31,
	Unaudited
Accident Year	2012		2013		2014		2015		2016		2017		2018		2019		2020		2021
2012	$	57,589	$	157,389	$	298,293	$	416,187	$	511,933	$	579,062	$	621,012	$	651,584	$	667,147	$	673,555
2013			63,322		188,374		331,309		472,142		587,822		648,699		694,234		720,773		741,756
2014					79,008		191,072		338,740		481,002		595,187		681,278		731,588		761,143
2015							82,763		211,030		382,589		538,647		676,714		758,115		816,955
2016									69,532		209,118		390,465		558,896		677,852		767,795
2017											80,127		256,176		453,790		639,775		775,705
2018													86,931		264,541		436,100		616,293
2019															88,369		275,680		471,687
2020																	72,302		225,344
2021																			76,838
Total																			$	5,927,071
	Reserves for loss and loss adjustment expenses before 2012, net of reinsurance																		117,839
	Reserves for loss and loss adjustment expenses, net of reinsurance																		$	4,949,705


Loss and Loss Expenses Incurred, Net of Reinsurance																					As of December 31, 2021
For the Year Ended December 31,
	Unaudited																				IBNR		Cumulative Number of Reported Claims
Accident Year	2012		2013		2014		2015		2016		2017		2018		2019		2020		2021
2012	$	501,681	$	501,810	$	503,956	$	503,863	$	509,167	$	512,707	$	508,169	$	506,730	$	506,827	$	504,409	$	13,830	48
2013			552,570		547,295		546,995		543,238		547,000		542,274		541,926		540,322		538,503		17,768		53
2014					639,436		637,307		627,767		617,242		615,435		604,030		600,194		602,000		29,314		57
2015							712,800		690,525		650,997		641,169		626,432		620,741		617,478		40,553		58
2016									702,716		696,339		684,700		660,520		651,278		657,972		46,447		58
2017											762,093		733,505		689,622		673,216		683,880		54,759		58
2018													778,964		724,697		715,055		724,056		62,856		56
2019															784,281		721,018		732,762		89,294		54
2020																	725,245		716,430		156,496		42
2021																			742,687		340,879		42
Total																			$	6,520,177


Cumulative Paid Claims and Claim Adjustment Expenses, Net of Reinsurance
For the Year Ended December 31,
	Unaudited
Accident Year	2012		2013		2014		2015		2016		2017		2018		2019		2020		2021
2012	$	115,536	$	255,063	$	339,560	$	387,368	$	419,588	$	437,196	$	451,991	$	459,119	$	466,028	$	470,850
2013			117,900		277,538		363,028		414,160		447,894		466,580		479,104		489,075		496,809
2014					148,405		319,743		412,611		471,235		503,915		521,141		531,475		538,914
2015							139,320		323,744		421,734		477,541		512,933		531,512		544,849
2016									142,998		338,835		446,072		504,850		537,861		558,934
2017											153,456		362,299		468,817		525,753		559,198
2018													171,006		397,464		508,546		574,889
2019															184,715		397,376		515,914
2020																	172,478		380,454
2021																			172,730
Total																			$	4,813,541
			Reserves for loss and loss adjustment expenses before 2012, net of reinsurance																229,691
			Reserves for loss and loss adjustment expenses, net of reinsurance																$	1,936,327


Loss and Loss Expenses Incurred, Net of Reinsurance																					As of December 31, 2021
For the Year Ended December 31,
	Unaudited																				IBNR		Cumulative Number of Reported Claims
Accident Year	2012		2013		2014		2015		2016		2017		2018		2019		2020		2021
2012	$	240,363	$	243,987	$	267,284	$	252,531	$	240,785	$	247,348	$	246,116	$	246,731	$	249,539	$	250,231	$	6,098	6
2013			271,758		249,477		245,263		251,249		273,074		281,652		286,875		284,479		284,610		6,488		7
2014					255,364		248,723		261,937		245,768		241,329		260,106		258,937		258,330		13,311		7
2015							261,238		259,868		276,829		277,962		293,558		284,747		285,255		24,656		8
2016									312,109		326,427		363,221		404,271		441,535		470,950		40,227		9
2017											334,509		333,657		339,781		378,640		385,450		70,978		10
2018													336,524		323,759		334,854		360,815		104,215		10
2019															338,217		334,821		347,585		127,500		11
2020																	396,508		377,674		243,075		11
2021																			528,128		447,919		10
Total																			$	3,549,028


Cumulative Paid Claims and Claim Adjustment Expenses, Net of Reinsurance
For the Year Ended December 31,
	Unaudited
Accident Year	2012		2013		2014		2015		2016		2017		2018		2019		2020		2021
2012	$	21,895	$	87,248	$	128,924	$	160,044	$	191,500	$	215,952	$	225,186	$	233,379	$	236,216	$	236,972
2013			24,215		64,245		120,081		178,367		208,123		250,294		259,735		265,007		271,867
2014					19,584		84,141		139,340		176,915		200,319		217,322		228,815		238,121
2015							20,517		85,761		140,253		188,258		217,238		234,207		241,413
2016									28,783		103,108		202,545		256,725		299,198		359,386
2017											36,744		96,818		163,454		244,025		262,273
2018													28,360		100,087		155,836		199,461
2019															31,978		98,260		148,934
2020																	28,357		81,026
2021																			28,854
Total																			$	2,068,307
	Reserves for loss and loss adjustment expenses before 2012, net of reinsurance																		24,145
	Reserves for loss and loss adjustment expenses, net of reinsurance																		$	1,504,866


Loss and Loss Expenses Incurred, Net of Reinsurance																					As of December 31, 2021
For the Year Ended December 31,
	Unaudited																				IBNR		Cumulative Number of Reported Claims
Accident Year	2012		2013		2014		2015		2016		2017		2018		2019		2020		2021
2012	$	314,309	$	326,831	$	342,588	$	355,609	$	364,237	$	364,483	$	366,704	$	365,971	$	366,128	$	365,910	$	218	41
2013			327,514		349,136		368,894		377,050		367,456		367,027		366,165		365,100		365,338		731		44
2014					363,952		385,302		418,639		416,613		414,105		413,953		409,498		408,640		394		47
2015							389,829		417,771		423,928		432,160		433,227		431,675		428,813		1,371		53
2016									432,214		431,939		443,275		444,322		441,122		440,819		3,145		52
2017											431,059		428,988		430,782		434,717		440,610		6,890		47
2018													442,838		462,821		479,257		494,623		12,573		46
2019															483,259		488,562		505,028		36,513		45
2020																	523,746		428,769		82,221		30
2021																			614,424		279,892		34
Total																			$	4,492,974


Cumulative Paid Claims and Claim Adjustment Expenses, Net of Reinsurance
For the Year Ended December 31,
	Unaudited
Accident Year	2012		2013		2014		2015		2016		2017		2018		2019		2020		2021
2012	$	136,844	$	215,214	$	273,446	$	312,342	$	344,478	$	355,786	$	360,842	$	361,919	$	363,073	$	363,034
2013			142,929		218,596		267,253		322,624		343,742		353,623		362,358		363,118		363,505
2014					155,596		237,723		328,589		365,849		394,562		402,524		405,226		406,228
2015							160,148		265,766		325,697		370,773		398,423		411,898		417,721
2016									185,253		280,373		342,437		391,396		410,843		421,388
2017											181,023		267,859		327,411		372,324		402,422
2018													180,196		281,707		350,368		413,150
2019															185,378		290,306		374,653
2020																	142,822		228,366
2021																			180,863
Total																			$	3,571,330
			Reserves for loss and loss adjustment expenses before 2012, net of reinsurance																1,869
			Reserves for loss and loss adjustment expenses, net of reinsurance																$	923,513


Loss and Loss Expenses Incurred, Net of Reinsurance																					As of December 31, 2021
For the Year Ended December 31,
	Unaudited																				IBNR		Cumulative Number of Reported Claims
Accident Year	2012		2013		2014		2015		2016		2017		2018		2019		2020		2021
2012	$	531,725	$	539,963	$	540,845	$	536,151	$	508,139	$	507,093	$	508,988	$	508,058	$	508,815	$	507,683	$	801	24
2013			579,486		589,447		580,445		554,736		553,233		549,728		547,806		547,066		546,765		1,424		25
2014					710,530		716,253		666,259		664,951		665,820		666,063		668,510		666,738		1,956		30
2015							744,761		733,145		729,326		727,861		719,612		718,104		716,332		4,505		32
2016									774,764		778,059		765,044		759,531		753,991		756,378		5,444		34
2017											754,050		754,300		748,516		747,861		747,453		9,657		42
2018													761,015		750,095		747,393		745,726		16,064		48
2019															722,118		702,271		692,033		27,521		43
2020																	901,702		905,441		56,083		37
2021																			829,194		222,879		31
Total																			$	7,113,743


Cumulative Paid Claims and Claim Adjustment Expenses, Net of Reinsurance
For the Year Ended December 31,
	Unaudited
Accident Year	2012		2013		2014		2015		2016		2017		2018		2019		2020		2021
2012	$	282,573	$	456,559	$	507,382	$	518,135	$	498,826	$	499,978	$	504,243	$	504,973	$	506,095	$	506,144
2013			315,019		490,363		539,588		532,472		539,324		540,583		541,182		542,378		543,806
2014					373,791		602,682		614,832		634,310		649,632		656,913		659,487		660,031
2015							396,128		613,338		669,076		691,093		700,867		706,707		713,522
2016									417,882		671,886		713,506		728,853		733,951		740,703
2017											445,934		690,502		719,434		731,588		735,430
2018													415,578		662,714		709,230		726,169
2019															405,592		616,757		646,287
2020																	460,749		785,227
2021																			405,859
Total																			$	6,463,178
	Reserves for loss and loss adjustment expenses before 2012, net of reinsurance																		2,523
	Reserves for loss and loss adjustment expenses, net of reinsurance																		$	653,088


Loss and Loss Expenses Incurred, Net of Reinsurance																					As of December 31, 2021
For the Year Ended December 31,
	Unaudited
Accident Year	2012		2013		2014		2015		2016		2017		2018		2019		2020		2021		IBNR
2012	$	333,116	$	337,114	$	332,252	$	325,045	$	333,992	$	338,118	$	336,201	$	332,861	$	335,933	$	337,124	$	11,446
2013			320,581		271,557		274,682		284,710		295,143		300,778		305,290		303,563		304,709		14,065
2014					321,644		321,504		320,902		332,730		326,964		326,496		338,190		339,321		20,465
2015							260,768		233,204		231,859		253,982		294,804		304,972		306,358		23,525
2016									242,375		254,415		246,947		269,481		303,385		303,036		29,111
2017											232,886		222,888		240,900		263,476		283,323		48,441
2018													222,959		212,101		232,643		249,019		68,680
2019															238,411		232,709		241,187		104,193
2020																	302,420		295,992		192,023
2021																			364,611		325,434
Total																			$	3,024,680


Cumulative Paid Claims and Claim Adjustment Expenses, Net of Reinsurance
For the Year Ended December 31,
	Unaudited
Accident Year	2012		2013		2014		2015		2016		2017		2018		2019		2020		2021
2012	$	22,419	$	62,289	$	112,036	$	153,349	$	188,208	$	220,821	$	242,644	$	258,404	$	277,926	$	282,363
2013			28,982		63,939		110,735		144,985		178,889		206,595		227,087		243,100		255,948
2014					21,340		69,248		116,424		155,908		199,109		228,728		253,573		273,024
2015							17,894		48,628		91,566		141,855		179,308		206,222		234,736
2016									19,939		61,940		100,578		140,897		172,489		206,266
2017											16,490		40,310		69,844		124,265		148,128
2018													11,144		41,213		77,939		110,082
2019															14,612		39,297		64,306
2020																	20,803		49,871
2021																			10,984
Total																			$	1,635,708
	Reserves for loss and loss adjustment expenses before 2012, net of reinsurance																		385,481
			Reserves for loss and loss adjustment expenses, net of reinsurance																$	1,774,453


Loss and Loss Expenses Incurred, Net of Reinsurance																					As of December 31, 2021
For the Year Ended December 31,
	Unaudited
Accident Year	2012		2013		2014		2015		2016		2017		2018		2019		2020		2021		IBNR
2012	$	72,366	$	73,230	$	73,670	$	75,274	$	74,061	$	67,878	$	69,361	$	67,205	$	66,269	$	65,686	$	7,617
2013			63,995		50,355		48,143		44,162		38,551		35,120		31,752		29,758		25,701		7,609
2014					63,561		57,650		49,570		45,758		41,671		42,541		42,618		40,652		10,922
2015							69,977		57,897		50,099		45,115		39,682		39,781		36,774		13,941
2016									72,657		70,281		71,404		64,957		65,485		65,222		18,607
2017											76,701		80,508		70,749		71,025		66,795		23,023
2018													77,820		72,505		71,448		66,180		28,214
2019															78,929		77,482		76,242		29,909
2020																	84,354		83,468		43,519
2021																			98,109		75,305
Total																			$	624,829


Cumulative Paid Claims and Claim Adjustment Expenses, Net of Reinsurance
For the Year Ended December 31,
	Unaudited
Accident Year	2012		2013		2014		2015		2016		2017		2018		2019		2020		2021
2012	$	1,127	$	6,097	$	10,815	$	11,167	$	13,234	$	15,738	$	17,982	$	20,004	$	22,528	$	24,365
2013			647		1,897		2,158		3,008		3,396		4,418		5,349		6,476		8,805
2014					377		1,729		3,354		4,175		5,808		7,595		11,154		11,938
2015							2,069		2,481		3,272		4,099		4,416		5,083		5,421
2016									2,498		4,783		5,573		5,928		7,685		9,883
2017											6,282		12,810		15,356		17,327		18,375
2018													6,141		8,230		9,368		10,359
2019															6,241		10,884		12,728
2020																	4,869		8,699
2021																			4,586
Total																			$	115,159
	Reserves for loss and loss adjustment expenses before 2012, net of reinsurance																		716,077
	Reserves for loss and loss adjustment expenses, net of reinsurance																		$	1,225,747


Loss and Loss Expenses Incurred, Net of Reinsurance																					As of December 31, 2021
For the Year Ended December 31,
	Unaudited
Accident Year	2012		2013		2014		2015		2016		2017		2018		2019		2020		2021		IBNR
2012	$	103,984	$	94,860	$	86,525	$	85,548	$	84,010	$	84,020	$	84,950	$	84,759	$	91,078	$	89,460	$	591
2013			141,705		112,805		114,245		112,054		112,687		112,006		109,814		107,669		106,436		567
2014					113,373		96,894		97,509		100,255		99,508		99,171		99,572		97,640		1,049
2015							127,387		117,724		131,963		130,553		129,668		131,342		130,933		1,157
2016									168,347		174,793		182,026		181,291		186,605		184,600		2,039
2017											206,795		200,656		199,645		198,251		192,014		2,784
2018													108,436		112,243		103,386		105,447		2,904
2019															103,305		77,255		81,994		4,475
2020																	114,807		118,039		6,928
2021																			134,134		86,160
Total																			$	1,240,697


Cumulative Paid Claims and Claim Adjustment Expenses, Net of Reinsurance
For the Year Ended December 31,
	Unaudited
Accident Year	2012		2013		2014		2015		2016		2017		2018		2019		2020		2021
2012	$	15,690	$	51,802	$	64,282	$	70,725	$	77,604	$	79,166	$	81,874	$	82,745	$	88,932	$	89,461
2013			36,620		74,650		92,728		101,651		104,437		106,157		107,721		104,521		104,506
2014					38,919		67,041		82,380		88,561		91,701		93,409		94,893		95,523
2015							53,508		89,251		109,217		118,733		122,763		125,663		127,086
2016									78,994		133,740		157,734		168,884		176,358		178,508
2017											72,160		141,484		171,880		179,997		182,799
2018													34,116		65,313		82,509		88,050
2019															23,078		54,577		68,557
2020																	26,599		65,718
2021																			15,243
Total																			$	1,015,451
	Reserves for loss and loss adjustment expenses before 2012, net of reinsurance																		2,474
	Reserves for loss and loss adjustment expenses, net of reinsurance																		$	227,720


(In thousands)		December 31, 2021
Undiscounted reserves for loss and loss expenses, net of reinsurance:
	Other liability	$	4,949,705
	Workers' compensation	1,936,327
	Professional liability	1,504,866
	Commercial automobile	923,513
	Short-tail lines	653,088
	Other	105,259
	Insurance	10,072,758
	Casualty	1,774,453
	Monoline excess	1,225,747
	Property	227,720
	Reinsurance & Monoline Excess	3,227,920
Total undiscounted reserves for loss and loss expenses, net of reinsurance		$	13,300,678


(In thousands)		December 31, 2021
Due from reinsurers on unpaid claims:
	Other liability	$	693,801
	Workers' compensation	247,361
	Professional liability	851,485
	Commercial automobile	42,991
	Short-tail lines	426,003
	Other	56,660
	Insurance	2,318,301
	Casualty	107,593
	Monoline excess	40,313
	Property	76,319
	Reinsurance & Monoline Excess	224,225
Total due from reinsurers on unpaid claims		$	2,542,526


(In thousands)		December 31, 2021
Loss reserve discount:
	Other liability	$	—
	Workers' compensation	(12,338)
	Professional liability	—
	Commercial automobile	—
	Short-tail lines	—
	Other	—
	Insurance	(12,338)
	Casualty	(97,202)
	Monoline excess	(342,776)
	Property	—
	Reinsurance & Monoline Excess	(439,978)
Total loss reserve discount		$	(452,316)
Total gross reserves for loss and loss expenses		$	15,390,888


Insurance
Average Annual Percentage Payout of Incurred Claims by Age, Net of Reinsurance
Years	1		2		3		4		5		6		7		8		9		10
Other liability	7.2	%	14.1	%	17.1	%	16.2	%	13.0	%	8.7	%	5.8	%	3.7	%	2.4	%	0.9	%
Workers' compensation	23.2	%	29.5	%	15.9	%	9.2	%	5.6	%	3.2	%	2.3	%	1.5	%	1.4	%	1.0	%
Professional liability	7.8	%	19.1	%	18.1	%	15.5	%	9.3	%	10.0	%	3.5	%	2.9	%	3.1	%	0.3	%
Commercial automobile	37.1	%	21.0	%	15.5	%	11.3	%	6.5	%	2.7	%	1.4	%	0.2	%	0.2	%	—	%
Short-tail lines	55.4	%	33.0	%	6.1	%	1.8	%	0.4	%	0.7	%	0.6	%	0.1	%	0.2	%	—	%

Reinsurance & Monoline Excess
Average Annual Percentage Payout of Incurred Claims by Age, Net of Reinsurance
Years	1		2		3		4		5		6		7		8		9		10
Casualty	6.1	%	11.3	%	13.3	%	13.9	%	10.9	%	9.5	%	7.5	%	5.2	%	5.0	%	1.3	%
Monoline excess	5.2	%	4.9	%	2.9	%	1.9	%	2.3	%	3.5	%	4.2	%	3.1	%	6.5	%	2.8	%
Property	30.7	%	33.2	%	15.5	%	6.4	%	3.7	%	1.7	%	1.8	%	1.5	%	1.2	%	0.9	%


(In thousands)	2021		2020		2019
Net reserves at beginning of year	$	11,620,393	$	10,697,998	$	10,248,883
Cumulative effect adjustment resulting from changes in accounting principles (1)	—		5,927		—
Restated net reserves at beginning of period	11,620,393		10,703,925		10,248,883
Net provision for losses and loss expenses:
Claims occurring during the current year (2)	4,921,191		4,432,937		4,057,989
Increase in estimates for claims occurring in prior years (3)	863		627		34,079
Loss reserve discount accretion	31,906		35,142		39,048
Total	4,953,960		4,468,706		4,131,116
Net payments for claims:
Current year	887,896		921,054		985,599
Prior year	2,777,798		2,677,595		2,673,803
Total	3,665,694		3,598,649		3,659,402
Foreign currency translation	(60,297)		46,411		(22,599)
Net reserves at end of year	12,848,362		11,620,393		10,697,998
Ceded reserve at end of year	2,542,526		2,164,037		1,885,251
Gross reserves at end of year	$	15,390,888	$	13,784,430	$	12,583,249

Net change in premiums and losses occurring in prior years:
Increase in estimates for claims occurring in prior years (3)	$	(863)	$	(627)	$	(34,079)
Retrospective premium adjustments for claims occurring in prior years (4)	7,510		16,807		53,511
Net favorable premium and reserve development on prior years	$	6,647	$	16,180	$	19,432

The COVID-19 global pandemic has impacted, and may further impact, the Company’s results through its effect on claim frequency and severity. Loss cost trends have been impacted and may be further impacted by COVID-19-related claims in certain lines of business. Losses incurred from COVID-19-related claims have been offset, to a certain extent, by lower claim frequency in certain lines of our businesses; however, as the economy and legal systems have reopened, the benefit of lower claim frequency has begun to abate. Although as populations have continued to be vaccinated against the virus and the effects of the pandemic have receded in many jurisdictions, most particularly the United States, it remains too early to determine the ultimate net impact of COVID-19 on the Company. New variants of the COVID-19 virus, including the “Omicron” variant, and the slowing of vaccination rates among certain populations continue to create risks with respect to loss costs and the potential for renewed impact of the other effects of COVID-19 associated with economic conditions, inflation, and social distancing and work from home rules.

Most of the COVID-19-related claims reported to the Company to date involve certain short-tailed lines of business, including contingency and event cancellation, business interruption, and film production delay. The Company has also received COVID-19-related claims for longer-tailed casualty lines of business such as workers’ compensation and other liability; however, the estimated incurred loss impact for these reported claims are not material at this time. Given the continuing

The Company has estimated the potential COVID-19 impact to its contingency and event cancellation, workers’ compensation, and other lines of business under a number of possible scenarios; however, due to COVID-19’s continued evolving impact, there remains a high degree of uncertainty around the Company’s COVID-19 reserves. In addition, should the pandemic continue or worsen as a result of new COVID-19 variants or otherwise, governments in the jurisdictions where we operate may renew their efforts to expand policy coverage terms beyond the policy’s intended coverage. Accordingly, losses arising from these actions, and the other factors described above, could exceed the Company’s reserves established for those related policies.

As of December 31, 2021, the Company had recognized losses for COVID-19-related claims activity, net of reinsurance, of approximately $274 million, of which $233 million relates to the Insurance segment and $41 million relates to the Reinsurance & Monoline Excess segment. Such $274 million of COVID-19-related losses included $239 million of reported losses and $35 million of IBNR. For the year ended December 31, 2021, the Company recognized current accident year losses for COVID-19-related claims activity, net of reinsurance, of approximately $58 million, of which $54 million relates to the Insurance segment and $4 million relates to the Reinsurance & Monoline Excess segment.

Insurance – Reserves for the Insurance segment developed favorably by $20 million in 2021 (net of additional and return premiums). The overall favorable development in 2021 was attributable to favorable development on the 2020 accident year, partially offset by adverse development on the 2016 through 2019 accident years.

The favorable development on the 2020 accident year was largely concentrated in the commercial auto liability and other liability lines of business, including commercial multi-peril liability. During 2020 the Company achieved larger rate increases in these lines of business than were contemplated in its budget and in its initial loss ratio selections. The Company also experienced significantly lower reported claim frequency in these lines in 2020 relative to historical averages, and lower reported incurred losses relative to its expectations. We believe that the lower claim frequency and lower reported incurred losses were caused by the impacts of the COVID-19 pandemic, for example, lockdowns, reduced driving and traffic, work from home, and court closures. However, due to the uncertainty regarding the ultimate impacts of the pandemic on accident year 2020 incurred losses, the Company elected not to react to these lower reported trends during 2020. As more information became available and the 2020 accident year continued to mature, during 2021 the Company started to recognize favorable accident year 2020 development in response to the continuing favorable reported loss experience relative to its expectations.

The adverse development on the 2016 through 2019 accident years is concentrated largely in the other liability line of business, including commercial multi-peril liability, but is also seen to a lesser extent in commercial auto liability. The adverse development for these accident years is driven by a higher than expected number of large losses reported, and particularly impacted the directors and officers liability, lawyers professional liability, and excess and surplus lines casualty classes of business. We also believe that increased social inflation is contributing to the increased number of large losses, for example, higher jury awards on cases which go to trial, and the corresponding higher demands from plaintiffs and higher values required to reach settlement on cases which do not go to trial.

Reinsurance & Monoline Excess – Reserves for the Reinsurance & Monoline Excess segment developed unfavorably by $13 million in 2021. The unfavorable development in the segment was driven by the non-proportional reinsurance assumed liability and other liability lines of business, related primarily to accident years 2017 through 2019, and was partially offset by favorable development in excess workers’ compensation business which was spread across many prior accident years. The unfavorable non-proportional reinsurance assumed liability and other liability development was associated with our U.S. and U.K. assumed reinsurance business, and related primarily to accounts insuring construction projects and professional liability exposures.

Insurance - Reserves for the Insurance segment developed favorably by $24 million in 2020 (net of additional and return premiums). Continuing the pattern seen in recent years, the overall favorable development in 2020 resulted from more significant favorable development on workers’ compensation business, which was partially offset by unfavorable development on professional liability, including excess professional liability.

For workers’ compensation, the favorable development was spread across almost all prior accident years, including prior to 2011, but was most significant in accident years 2016 through 2019. The favorable workers’ compensation development reflects a continuation of the benign loss cost trends experienced during recent years, particularly the favorable claim frequency

initiatives such as medical case management services and vendor savings through usage of preferred provider networks and pharmacy benefit managers. Reported workers’ compensation losses in 2020 continued to be below our expectations at most of our businesses, and were below the assumptions underlying our initial loss ratio picks and our previous reserve estimates for most prior accident years.

For professional liability business, unfavorable development was driven mainly by large losses reported in the directors and officers (“D&O”), lawyers professional and excess hospital professional liability lines of business. For these lines of business, we continue to see an increase in the number of large losses reported and a lengthening of the reporting “tail” beyond historical levels. We believe a contributing cause is rising social inflation in the form of, for example, higher jury awards on cases that go to trial, and the corresponding higher demands from plaintiffs and higher values required to reach settlement on cases that do not go to trial. The unfavorable development for professional liability affected mainly accident years 2016 through 2018.

Reinsurance & Monoline Excess - Reserves for the Reinsurance & Monoline Excess segment developed unfavorably by $8 million in 2020. The unfavorable development in the segment was driven by non-proportional assumed liability business written in both the U.S. and U.K., and was partially offset by favorable development on excess workers’ compensation business. The unfavorable non-proportional assumed liability development was concentrated in accident years 2014 through 2018, and related primarily to accounts insuring construction projects and professional liability exposures.

Insurance - Reserves for the Insurance segment developed favorably by $21 million in 2019 (net of additional and return premiums). This overall favorable development resulted from more significant favorable development on workers’ compensation business, which was partially offset by unfavorable development on professional liability and general liability business.

For workers’ compensation, the favorable development was spread across many accident years, including prior to 2010, but was most significant in accident years 2014 through 2018, and particularly 2017 and 2018. The favorable workers’ compensation development reflects a continuation during 2019 of the benign loss cost trends experienced during recent years, particularly the favorable claim frequency trends (i.e., number of reported claims per unit of exposure). The long term trend of declining workers’ compensation frequency can be attributable to improved workplace safety. Loss severity trends were also aided by our continued

investment in claims handling initiatives such as medical case management services and vendor savings through usage of preferred provider networks and pharmacy benefit managers. Our initial loss ratio “picks” for this line of business over the past few accident years have contemplated an increase in loss cost trends and reflect decreasing premium rates in the marketplace; reported workers’ compensation losses in 2019 continued to be below our expectations at most of our businesses, and were below the assumptions underlying our initial loss ratio picks and our previous reserve estimates.

For professional liability business, the unfavorable development was driven mainly by an increase in the number of large losses reported in the lawyers professional liability and directors and officers (“D&O”) liability lines of business. Many of the lawyers large losses involved claims made against insured law firms relating to work performed on matters stemming from the 2008 financial crisis. These claims affected mainly accident years 2013 through 2016. In addition, for both of these lines of business, we have seen evidence of social inflation in the form of higher jury awards on cases that go to trial, and corresponding higher demands from plaintiffs and higher values required to reach settlement on cases that do not go to trial. The unfavorable development for D&O affected mainly accident years 2014 through 2017.

For general liability business, most of the unfavorable development emanated from our excess and surplus lines (E&S) businesses, and was driven by an increase in the number of large losses reported. Many of these large losses were from construction and contracting classes of business, which have also been impacted by social inflation. The general liability unfavorable development impacted mainly accident years 2015 through 2018.

Reinsurance & Monoline Excess - Reserves for the Reinsurance & Monoline Excess segment developed unfavorably by $2 million in 2019. The unfavorable development in the segment was driven by non-proportional assumed liability business in both the U.S. and U.K., and was largely offset by favorable development on excess workers’ compensation business. The unfavorable non-proportional assumed liability development was concentrated in accident years 2015 through 2018, and included an adjustment for the Ogden discount rate in the U.K.

Environmental and Asbestos — To date, known environmental and asbestos claims have not had a material impact on the Company’s operations, because its subsidiaries generally did not insure large industrial companies that are subject to significant environmental or asbestos exposures prior to 1986 when an absolute exclusion was incorporated into standard policy language.

The Company’s net reserves for losses and loss expenses relating to asbestos and environmental claims on policies written before adoption of the absolute exclusion was $20 million at December 31, 2021 and $19 million at December 31, 2020. The estimation of these liabilities is subject to significantly greater than normal variation and uncertainty because it is difficult to make an actuarial estimate of these liabilities due to the absence of a generally accepted actuarial methodology for these exposures and the potential effect of significant unresolved legal matters, including coverage issues, as well as the cost of litigating the legal issues. Additionally, the determination of ultimate damages and the final allocation of such damages to financially responsible parties are highly uncertain.

Discounting — The Company discounts its liabilities for certain workers’ compensation reserves. The amount of workers’ compensation reserves that were discounted was $1,387 million and $1,655 million at December 31, 2021 and 2020, respectively. The aggregate net discount for those reserves, after reflecting the effects of ceded reinsurance, was $452 million and $483 million at December 31, 2021 and 2020, respectively. At December 31, 2021, discount rates by year ranged from 0.7% to 6.5%, with a weighted average discount rate of 3.4%.

Substantially all discounted workers’ compensation reserves (97% of total discounted reserves at December 31, 2021) are excess workers’ compensation reserves. In order to properly match loss expenses with income earned on investment securities supporting the liabilities, reserves for excess workers’ compensation business are discounted using risk-free discount rates determined by reference to the U.S. Treasury yield curve. These rates are determined annually based on the weighted average rate for the period. Once established, no adjustments are made to the discount rate for that period, and any increases or decreases in loss reserves in subsequent years are discounted at the same rate, without regard to when any such adjustments are recognized. The expected loss and loss expense payout patterns subject to discounting are derived from the Company’s loss payout experience.

The Company also discounts reserves for certain other long-duration workers’ compensation reserves (representing approximately 3% of total discounted reserves at December 31, 2021), including reserves for quota share reinsurance and reserves related to losses regarding occupational lung disease. These reserves are discounted at statutory rates prescribed or permitted by the Department of Insurance of the State of Delaware.