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Liability for Loss and LAE (Tables)
 6 Months Ended
Jun. 30, 2018
Activity in Liability for Loss and Loss Adjustment Expense

The following table presents the activity in the liability for loss and LAE in the six months ended June 30, 2018 and 2017:

 

     Six Months Ended
June 30,
     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  
  

 

 

 

  

 

 

 

Other adjustments

      2.0       -      
  

 

 

 

  

 

 

 

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

     

 Current year

      1,546.7       1,545.6  

 Prior years

      (137.9 )      (111.4 ) 
  

 

 

 

  

 

 

 

Total incurred loss and LAE, net of reinsurance

      1,408.8       1,434.2  
  

 

 

 

  

 

 

 

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

     

 Current year

      237.6       242.7  

 Prior years

      1,366.1       1,190.1  
  

 

 

 

  

 

 

 

Total paid loss and LAE, net of reinsurance

      1,603.7       1,432.8  
  

 

 

 

  

 

 

 

Foreign currency exchange rate effect

      (24.2 )      55.4  
  

 

 

 

  

 

 

 

Net reserves as of June 30

      10,004.1       9,907.8  

Reinsurance recoverables as of June 30(1)

      1,511.4       1,152.4  
  

 

 

 

  

 

 

 

Reserves as of June 30

     $ 11,515.5      $ 11,060.2  
  

 

 

 

  

 

 

 

 

(1) Reinsurance recoverables in this table include only ceded loss and LAE reserves.
(2) Includes paid losses, net of reinsurance, related to commutations.
(Favorable) Unfavorable Prior Accident Year Loss Reserve Development

The following table presents the (favorable) unfavorable prior accident year loss reserve development for the three and six months ended June 30, 2018 and 2017:

 

     Three Months Ended
June 30,		     Six Months Ended
June 30,		  
     2018     2017     2018     2017  
     ($ in millions)  

Reinsurance Segment

         

Property:

         

Catastrophe events

      $     5.1( 1)      $     (4.0) (2)      $ (25.3) (3)      $ (4.4) (2) 

Non-catastrophe

      (18.8) (4)      (18.9) (5)      (29.8) (4)      (50.0) (5) 
  

 

 

    

 

 

    

 

 

    

 

 

  

Total property

      (13.7)       (22.9)       (55.1)       (54.4)  
  

 

 

    

 

 

    

 

 

    

 

 

  

Casualty & other:

         

Malpractice Treaties(6)

      (3.4)       (2.0)       (3.4)       (2.0)  

Ogden rate impact(7)

      -           -           -           24.4   

Other

      (33.6) (8)      (27.7) (9)      (63.8) (10)      (58.9) (9) 
  

 

 

    

 

 

    

 

 

    

 

 

  

Total casualty & other

      (37.0)       (29.7)       (67.2)       (36.5)  
  

 

 

    

 

 

    

 

 

    

 

 

  

Total Reinsurance Segment

      (50.7)       (52.6)       (122.3)       (90.9)  
  

 

 

    

 

 

    

 

 

    

 

 

  

Insurance Segment

         

RSUI:

         

Casualty

      (1.5) (11)      (9.5) (12)      (12.5) (13)      (21.6) (12) 

Property and other

      0.1        (0.8)       -           2.9( 14) 
  

 

 

    

 

 

    

 

 

    

 

 

  

Total RSUI

      (1.4)       (10.3)       (12.5)       (18.7)  
  

 

 

    

 

 

    

 

 

    

 

 

  

CapSpecialty

      (0.1)       (0.2) (15)      (3.1) (16)      (0.8) (15) 

PacificComp

      -           (0.5) (17)      -           (1.0) (17) 
  

 

 

    

 

 

    

 

 

    

 

 

  

Total incurred related to prior years

      $      (52.2)       $      (63.6)       $      (137.9)       $      (111.4)  
  

 

 

    

 

 

    

 

 

    

 

 

  

 

 

(1) Primarily reflects unfavorable prior accident year loss reserve development related to Hurricane Maria that occurred in the 2017 accident year, partially offset by favorable prior accident year loss reserve development related to Hurricane Harvey that occurred in the 2017 accident year and catastrophes that occurred in the 2016 accident year.
(2) Primarily reflects favorable prior accident year loss reserve development related to catastrophes that occurred in the 2010 through 2016 accident years.
(3) Primarily reflects favorable prior accident year loss reserve development related to Hurricanes Harvey and Maria that occurred in the 2017 accident year and catastrophes that occurred in the 2016 accident year.
(4) Primarily reflects favorable prior accident year loss reserve development in the 2016 and 2017 accident years.
(5) Primarily reflects favorable prior accident year loss reserve development in the 2013 through 2016 accident years.
(6) Represents certain medical malpractice treaties pursuant to which the increased underwriting profits created by the favorable prior accident year loss reserve development are largely retained by the cedants. As a result, the favorable prior accident year loss reserve development is largely offset by an increase in profit commission expense incurred when such favorable prior accident year loss reserve development occurs.
(7) Represents unfavorable prior accident year loss reserve development related to the U.K. Ministry of Justice’s significant reduction in 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 to negative 0.75 percent as of March 20, 2017 from 2.50 percent.
(8) Primarily reflects favorable prior accident year loss reserve development in the shorter-tailed casualty lines of business in the 2015 and 2017 accident years and the longer-tailed lines of business in the 2008 through 2010 accident years.
(9) Primarily reflects favorable prior accident year loss reserve development in the longer-tailed U.S. professional liability lines of business in the 2005 through 2014 accident years, partially offset by unfavorable development in the shorter-tailed casualty lines of business in the 2015 accident year in the U.S. and in the U.K.
(10) Primarily reflects favorable prior accident year loss reserve development in the shorter-tailed casualty lines of business in the 2016 and 2017 accident years and the longer-tailed lines of business in the 2008 through 2010 accident years.
(11) Primarily reflects favorable prior accident year loss reserve development in the umbrella/excess lines of business in 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 in the 2012 accident year.
(12) Primarily reflects favorable prior accident year loss reserve development in the umbrella/excess lines of business in the 2005 through 2011 accident years.
(13) Primarily reflects favorable prior accident year loss reserve development in the umbrella/excess lines of business in 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 in the 2009 and 2012 accident years.
(14) Primarily reflects unfavorable prior accident year property loss reserve development in the binding authority lines of business in the 2015 and 2016 accident years.
(15) Primarily reflects favorable prior accident year loss reserve development in the casualty lines of business in the 2010 and 2015 accident years.
(16) Primarily reflects favorable prior accident year loss reserve development in the surety lines of business in the 2016 and 2017 accident years.
(17) Primarily reflects favorable prior accident year loss reserve development in the 2013 and prior accident years.