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Liability for Loss and LAE
 6 Months Ended
Jun. 30, 2019
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 six months ended June 30, 2019 and 2018:
                 
 
Six Months Ended
June 30,
 
 
2019
   
2018
 
 
 
 
 
 
 
 
($ in millions)
 
Reserves as of January 1
  $
12,250.3
    $
11,871.3
 
Less: reinsurance recoverables
(1)
    
1,857.4
     
1,650.1
 
                 
Net reserves as of January 1
   
10,392.9
     
10,221.2
 
                 
 
 
 
 
 
 
 
 
 
Other adjustments
   
(1.4
)    
2.0
 
 
 
 
 
 
 
 
 
 
                 
Incurred loss and LAE, net of reinsurance, related to:
   
     
 
Current year
   
1,683.3
     
1,546.7
 
Prior years
   
(94.0
)    
(137.9
 )
 
                
Total incurred loss and LAE, net of reinsurance
   
1,589.3
     
1,408.8
 
                 
Paid loss and LAE, net of reinsurance, related to:
(2)
    
     
 
Current year
   
248.0
     
237.6
 
Prior years
   
1,651.5
     
1,366.1
 
                 
Total paid loss and LAE, net of reinsurance
   
1,899.5
     
1,603.7
 
                 
Foreign currency exchange rate effect
   
(6.6
)    
(24.2
 )
 
 
 
 
 
 
 
 
 
                 
Net reserves as of June 30
   
10,074.7
     
10,004.1
 
Reinsurance recoverables as of June 30
(1)
    
1,557.1
     
1,511.4
 
                 
Reserves as of June 30
   $
11,631.8
     $
11,515.5
 
                 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(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 as of June 30, 2019 decreased from December 31, 2018, primarily reflecting payments on catastrophe losses incurred in prior years and, to a lesser extent, favorable prior accident year loss reserve development.
 
(b) Liability Development
The following table presents the (favorable) unfavorable prior accident year loss reserve development for the three and six months ended June 30, 2019 and 2018:
                                         
 
Three Months Ended
June 30,
 
 
  
Six Months Ended
June 30,
 
 
2019
 
2018
 
2019
 
2018
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
($ in millions)
 
 
Reinsurance Segment
   
 
 
    
 
 
    
 
 
    
 
 
Property:
   
 
 
    
 
 
    
 
 
    
 
 
Catastrophe events
  $
(9.9
)
(1)
 
 
$
5.1
(2)
 
 
$
(1.5
)
(3)
 
 
$
(25.3
)
(4)
 
Non-catastrophe
   
(6.3
)
(5)
      
(18.8
 )
(6)
 
    
(25.4
 )
(7)
 
    
(29.8
)
(6)
 
                   
 
        
 
        
 
Total
   
(16.2
)      
(13.7
 )
 
    
(26.9
)
 
    
(55.1
 )
 
                   
 
        
 
        
 
Casualty & other:
   
       
 
 
    
 
 
    
 
 
Malpractice Treaties 
(8)
    
(1.4
)      
(3.4
 )
 
    
(1.4
)
 
    
(3.4
 )
 
Other
   
(27.2
)
(9)
      
(33.6
)
(10)
 
    
(52.9
)
(11)
 
    
(63.8
)
(12)
 
                   
 
        
 
        
 
Total
   
(28.6
)      
(37.0
 )
 
    
(54.3
)
 
    
(67.2
 )
 
                   
 
        
 
        
 
Total Reinsurance Segment
   
(44.8
)      
(50.7
 )
 
    
(81.2
)
 
    
(122.3
 )
 
                   
 
        
 
        
 
                   
 
        
 
        
 
Insurance Segment
   
       
 
 
    
 
 
    
 
 
RSUI:
   
       
 
 
    
 
 
    
 
 
Casualty
   
(12.1
)
(13)
      
(1.5
)
(14)
 
    
(17.7
)
(13)
 
    
(12.5
)
(14)
 
Property and other
   
(0.4
)
 		      
0.1
 
 
    
1.5
(15)
 
    
-
  
 
                   
 
        
 
        
 
Total
   
(12.5
)
 
    
(1.4
 )
 
    
(16.2
)
 
    
(12.5
 )
 
         
 
        
 
        
 
        
 
CapSpecialty
   
0.7
(16)
 
    
(0.1
 )
 
    
3.4
(17)
 
    
(3.1
)
(18)
 
         
 
        
 
        
 
        
 
Total incurred related to prior years
  $
(56.6
)
 
   $
(52.2
 )
 
   $
(94.0
)
 
   $
(137.9
 )
 
         
 
        
 
        
 
        
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
  
     
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(1)
Primarily reflects favorable prior accident year loss reserve development related to wildfires in California in the 2018 accident year.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(2)
Primarily reflects unfavorable prior accident year loss reserve development related to Hurricane Maria in the 2017 accident year, partially offset by favorable prior accident year loss reserve development related to Hurricane Harvey in the 2017 accident year and catastrophes in the 2016 accident year.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(3)
Primarily reflects favorable prior accident year loss reserve development related to wildfires in California in the 2018 accident year, partially offset by unfavorable prior accident year loss reserve development related to Typhoon Jebi in the 2018 accident year.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(4)
Primarily reflects favorable prior accident year loss reserve development related to Hurricanes Harvey and Maria in the 2017 accident year and catastrophes in the 2016 accident year.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(5)
Primarily reflects favorable prior accident year loss reserve development in the 2018 accident year.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(6)
Primarily reflects favorable prior accident year loss reserve development in the 2016 and 2017 accident years.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(7)
Primarily reflects favorable prior accident year loss reserve development in the 2016 through 2018 accident years.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(8)
Represents certain 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.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(9)
Primarily reflects favorable prior accident year loss reserve development in the longer-tailed lines of business in the 2013 and prior accident years.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(10)
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.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(11)
Primarily reflects favorable prior accident year loss reserve development in the longer-tailed lines of business in the 2013 and prior accident years and the shorter-tailed lines of business in the 2012 through 2014 accident years.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(12)
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.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(13)
Primarily reflects favorable prior accident year loss reserve development in the directors’ and officers’ liability and umbrella/excess lines of business in the 2011 through 2015 accident years, partially offset by unfavorable prior accident year loss reserve development in the professional liability lines of business in recent accident years.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(14)
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 recent accident years.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(15)
Primarily reflects unfavorable prior accident year loss reserve development related to the assumed property reinsurance lines of business from catastrophe losses in recent accident years, partially offset by favorable prior accident year loss reserve development related to Superstorm Sandy in the 2012 accident year and by Hurricane Harvey in the 2017 accident year.
 
 
 
 
 
 
 
 
 
 
 
 
 
(16) Primarily reflects unfavorable prior accident year loss reserve development in the professional liability lines of business in the 2016 accident year.
 
 
 
 
 
 
 
 
 
 
 
 
 
(17) Primarily reflects unfavorable prior accident year loss reserve development in certain specialty lines of business written through a program administrator in connection with a terminated program in the 2009 and 2010 accident years.
 
 
 
 
 
 
 
 
 
 
 
 
 
(18) Primarily reflects favorable prior accident year loss reserve development in the surety lines of business in the 2016 and 2017 accident years.