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Liability for Loss and LAE
 3 Months Ended
Mar. 31, 2018
Liability for Loss and LAE

5. Liability for Loss and LAE

(a) Liability Rollforward

The following table presents the activity in the liability for loss and LAE in the three months ended March 31, 2018 and 2017:

 

    Three Months Ended
March 31,		  
    2018     2017  
    ($ in millions)  

Reserves as of January 1

     $     11,871.3         $     11,087.2    

Less: reinsurance recoverables(1)

     1,650.1         1,236.2    
 

 

 

    

 

 

  

Net reserves as of January 1

     10,221.2         9,851.0    
 

 

 

    

 

 

  

Incurred loss and LAE, net of reinsurance, related to:

    

Current year

     756.3         747.0    

Prior years

     (85.7)        (47.7)   
 

 

 

    

 

 

  

Total incurred loss and LAE, net of reinsurance

     670.6         699.3    
 

 

 

    

 

 

  

Paid loss and LAE, net of reinsurance, related to:(2)

    

Current year

     100.5         114.0    

Prior years

     690.8         647.2    
 

 

 

    

 

 

  

Total paid loss and LAE, net of reinsurance

     791.3         761.2    
 

 

 

    

 

 

  

Foreign exchange effect

     49.9         (12.2)   
 

 

 

    

 

 

  

Net reserves as of March 31

     10,150.4         9,776.9    

Reinsurance recoverables as of March 31(1)

     1,563.9         1,213.0    
 

 

 

    

 

 

  

Reserves as of March 31

     $ 11,714.3         $ 10,989.9    
 

 

 

    

 

 

  

 

(1) Reinsurance recoverables in this table include only ceded loss and LAE reserves.
(2) Includes paid losses, net of reinsurance, related to commutations.

Gross loss and LAE reserves and reinsurance recoverables as of March 31, 2018 decreased from December 31, 2017, primarily reflecting payments on catastrophe losses incurred in 2017 and favorable prior accident year loss reserve development. The decrease in net losses and LAE reserves was partially offset by the collection of reinsurance recoverables related to catastrophe losses incurred in 2017.

 

(b) Liability Development

The following table presents the (favorable) unfavorable prior accident year loss reserve development for the three months ended March 31, 2018 and 2017:

 

    

Three Months Ended

March 31,

  
     2018     2017  
     ($ in millions)  

Reinsurance Segment

     

Property:

     

Catastrophe events

      $     (30.4) (1)      $ (0.4) (2) 

Non-catastrophe

      (11.0) (3)      (31.1) (4) 
  

 

 

    

 

 

  

Total property

      (41.4)       (31.5)  
  

 

 

    

 

 

  

Casualty & other:

     

Ogden rate impact(5)

      -            24.4   

Other

      (30.2) (6)      (31.2) (7) 
  

 

 

    

 

 

  

Total casualty & other

      (30.2)       (6.8)  

Total Reinsurance Segment

      (71.6)       (38.3)  

Insurance Segment

     

RSUI:

     

Casualty

      (11.0) (8)      (12.2) (9) 

Property and other

      (0.1)       3.8( 10) 
  

 

 

    

 

 

  

Total RSUI

      (11.1)       (8.4)  

CapSpecialty

      (3.0) (11)      (0.5) (12) 

PacificComp

      -             (0.5) (13) 
  

 

 

    

 

 

  

Total incurred related to prior years

      $      (85.7)       $      (47.7)  
  

 

 

    

 

 

  

 

 

(1) Reflects favorable prior accident year loss reserve development primarily related to Hurricanes Maria and Harvey that occurred in the 2017 accident year.
(2) Reflects favorable prior accident year loss reserve development from several catastrophes that occurred in the 2010 through 2016 accident years.
(3) Reflects favorable prior accident year loss reserve development primarily related to the 2016 and 2017 accident years.
(4) Reflects favorable prior accident year loss reserve development primarily related to the 2014 through 2016 accident years.
(5) Represents unfavorable prior accident year loss reserve development arising from the U.K. Ministry of Justice’s decision to significantly reduce the discount rate, referred to as the Ogden rate, used to calculate lump-sum bodily injury payouts in personal injury insurance claims in the U.K. As of March 20, 2017, the Ogden rate changed from 2.50 percent to negative 0.75 percent.
(6) Primarily reflects favorable prior accident year loss reserve development in the shorter-tailed lines of business related to the 2016 and 2017 accident years, and in the shorter-tailed and longer-tailed lines of business related to the 2005 through 2013 accident years.
(7) Generally reflects favorable prior accident year loss reserve development in a variety of casualty & other lines of business primarily related to the 2010 through 2016 accident years.
(8) Primarily reflects favorable prior accident year loss reserve development in the umbrella/excess lines of business related to the 2005 through 2012 accident years, partially offset by unfavorable prior accident year loss reserve development in the directors’ and officers’ liability lines of business related primarily to the 2009 accident year.
(9) Primarily reflects favorable prior accident year loss reserve development in the umbrella/excess lines of business related to the 2005 through 2011 accident years.
(10) Primarily reflects unfavorable prior accident year property loss reserve development in the binding authority lines of business related to the 2015 and 2016 accident years.
(11) Primarily reflects favorable prior accident year loss reserve development in the surety lines of business related to the 2016 and 2017 accident years.
(12) Primarily reflects favorable prior accident year loss reserve development in the casualty lines of business related to the 2005, 2006 and 2012 accident years.
(13) Primarily reflects favorable prior accident year loss reserve development related to the 2013 accident year.