Reserves

6 Months Ended

Jun. 30, 2020

Reserve Roll Forward

The following table provides a roll forward of the Company’s beginning and ending claims and benefits payable balances. Claims and benefits payable is the liability for unpaid loss and loss adjustment expenses and is comprised of case and incurred but not reported (“IBNR”) reserves.

Since unpaid loss and loss adjustment expenses are estimates, the Company’s actual losses incurred may be more or less than the Company’s previously developed estimates, which is referred to as either unfavorable or favorable development, respectively.

The best estimate of ultimate loss and loss adjustment expense is generally selected from a blend of methods that are applied consistently each period. There have been no significant changes in the methodologies and assumptions utilized in estimating the liability for unpaid loss and loss adjustment expenses for any of the periods presented.



	For the Six Months Ended June 30,
	2020			2019
Claims and benefits payable, at beginning of period	$	2,687.7		$	2,813.7
Less: Reinsurance ceded and other	(1,900.0		)	(2,053.7		)
Net claims and benefits payable, at beginning of period	787.7			760.0
Incurred losses and loss adjustment expenses related to:
Current year	1,242.1			1,339.4
Prior years	(43.1		)	(37.7		)
Total incurred losses and loss adjustment expenses	1,199.0			1,301.7
Paid losses and loss adjustment expenses related to:
Current year	786.9			882.9
Prior years	399.4			409.2
Total paid losses and loss adjustment expenses	1,186.3			1,292.1
Net claims and benefits payable, at end of period	800.4			769.6
Plus: Reinsurance ceded and other (1)	1,868.7			1,952.6
Claims and benefits payable, at end of period (1)	$	2,669.1		$	2,722.2


(1)	Includes reinsurance recoverables and claims and benefits payable of $72.0 million and $83.2 million as of June 30, 2020 and 2019, respectively, which was ceded to the U.S. government. The Company acts as an administrator for the U.S. government under the voluntary National Flood Insurance Program.

The Company experienced favorable development in both periods presented in the roll forward table above. Global Lifestyle contributed $29.0 million and $30.3 million to the net favorable development during the six months ended June 30, 2020 and 2019, respectively. The net favorable development in both years was attributable to nearly all lines of business across most of the Company’s regions with a concentration on more recent accident years and based on emerging evaluations regarding loss experience each period. Many of these contracts and products contain retrospective commission (profit sharing) provisions that would result in offsetting increases or decreases in expense dependent on if the development was favorable or unfavorable. Global Housing contributed $4.3 million and $3.9 million of net favorable development for the six months ended June 30, 2020 and 2019, respectively. The net favorable development in 2020 was primarily attributable to Lender-placed Insurance products from accident year 2019 due to lower than expected claim frequency for water damage and other claims. The net favorable development in 2019 was primarily attributable to prior catastrophes, whereby increased subrogation associated with the 2017 and 2018 California wildfires was partially offset by net unfavorable development from Hurricane Michael. Global Preneed and other contributed $9.8 million and $3.5 million in net favorable development for the six months ended June 30, 2020 and 2019, respectively.