Liability for Loss and LAE (Tables)

9 Months Ended

Sep. 30, 2012

Activity in Liability for Loss and Loss Adjustment Expense

Activity in liability for loss and LAE in the first nine months of 2012 and 2011 is summarized as follows (in millions):


	Nine Months Ended September 30,
	2012			2011
Reserves as of January 1	$	2,313.0		$	2,328.7
Less: reinsurance recoverables⁽¹⁾		831.8			847.4

Net reserves		1,481.2			1,481.3


Reserves acquired⁽²⁾		9,156.1			—


Incurred loss, net of reinsurance, related to:
Current year⁽³⁾		1,594.6			344.9
Prior years		(6.8	)		(29.5	)

Total incurred loss and LAE, net of reinsurance		1,587.8			315.4


Paid loss, net of reinsurance, related to:
Current year⁽³⁾		1,324.4			52.3
Prior years		285.1			257.0

Total paid loss and LAE, net of reinsurance		1,609.5			309.3


Foreign exchange effect⁽³⁾		(17.1	)		—


Reserves, net of reinsurance recoverables, as of September 30		10,598.5			1,487.4
Reinsurance recoverables as of September 30⁽¹⁾		1,232.3			840.8

Reserves, gross of reinsurance recoverables, as of September 30	$	11,830.8		$	2,328.2

(1)	Reinsurance recoverables in this table include only ceded loss reserves.

(2)	Represents the carrying value of Transatlantic’s net reserves acquired in the merger. Gross loss reserves and ceded loss reserves as of the Acquisition Date were $9,627.8 million and $471.7 million, respectively.

(3)	Includes amounts from Transatlantic from the Acquisition Date through September 30, 2012.

- Definition

Tabular disclosure of the activity in the reserve for settling insured claims and expenses incurred in the claims settlement process for the period. The estimated liability includes the amount of money that will be required for future payments of (a) claims that have been reported to the insurer, (b) claims related to insured events that have occurred but that have not been reported to the insurer as of the date the liability is estimated, and (c) claim adjustment expenses. Claim adjustment expenses include costs incurred in the claim settlement process such as legal fees; outside adjuster fees; and costs to record, process, and adjust claims.

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