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Liability for Loss and LAE
 6 Months Ended
Jun. 30, 2020
Insurance [Abstract]  
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 for the six months ended June 30, 2020 and 2019:

 

 

 

Six Months Ended

 

 

 

June 30,

 

 

 

2020

 

 

2019

 

 

 

($ in millions)

 

Reserves as of January 1

 

$

11,928.4

 

 

$

12,250.3

 

Less: reinsurance recoverables(1)

 

 

1,583.9

 

 

 

1,857.4

 

Net reserves as of January 1

 

 

10,344.5

 

 

 

10,392.9

 

 

 

 

 

 

 

 

 

 

Other adjustments

 

 

(2.3

)

 

 

(1.4

)

 

 

 

 

 

 

 

 

 

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

 

 

 

 

 

 

 

 

Current year

 

 

2,145.5

 

 

 

1,683.3

 

Prior years

 

 

(93.7

)

 

 

(94.0

)

Total incurred loss and LAE, net of reinsurance

 

 

2,051.8

 

 

 

1,589.3

 

 

 

 

 

 

 

 

 

 

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

 

 

 

 

 

 

 

 

Current year

 

 

271.0

 

 

 

248.0

 

Prior years

 

 

1,523.7

 

 

 

1,651.5

 

Total paid loss and LAE, net of reinsurance

 

 

1,794.7

 

 

 

1,899.5

 

 

 

 

 

 

 

 

 

 

Foreign currency exchange rate effect

 

 

(18.5

)

 

 

(6.6

)

 

 

 

 

 

 

 

 

 

Net reserves as of June 30

 

 

10,580.8

 

 

 

10,074.7

 

Reinsurance recoverables as of June 30(1)

 

 

1,470.5

 

 

 

1,557.1

 

Reserves as of June 30

 

$

12,051.3

 

 

$

11,631.8

 

 

(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, 2020 increased from December 31, 2019, primarily reflecting the impact of growing net premiums earned and catastrophe losses incurred in the first six months of 2020, partially offset by payments on catastrophe losses incurred primarily in 2017, 2018 and 2019 and 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, 2020 and 2019:

 

 

 

Three Months Ended

 

 

 

Six Months Ended

 

 

 

 

June 30,

 

 

 

June 30,

 

 

 

 

2020

 

 

 

2019

 

 

 

2020

 

 

 

2019

 

 

 

 

($ in millions)

 

 

Reinsurance Segment

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Property:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Catastrophe events

 

$

0.5

 

 

 

$

(9.9

)

(1)

 

$

(31.9

)

(2)

 

$

(1.5

)

(3)

Non-catastrophe

 

 

(13.5

)

(4)

 

 

(6.3

)

(5)

 

 

(27.8

)

(4)

 

 

(25.4

)

(6)

Total

 

 

(13.0

)

 

 

 

(16.2

)

 

 

 

(59.7

)

 

 

 

(26.9

)

 

Casualty & other:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Malpractice Treaties(7)

 

 

—

 

 

 

 

(1.4

)

 

 

 

-

 

 

 

 

(1.4

)

 

Catastrophe events

 

 

(3.8

)

 

 

 

0.7

 

 

 

 

(2.4

)

 

 

 

(0.5

)

 

Other

 

 

(34.4

)

(8)

 

 

(27.9

)

(9)

 

 

(46.8

)

(10)

 

 

(52.4

)

(11)

Total

 

 

(38.2

)

 

 

 

(28.6

)

 

 

 

(49.2

)

 

 

 

(54.3

)

 

Total Reinsurance Segment

 

 

(51.2

)

 

 

 

(44.8

)

 

 

 

(108.9

)

 

 

 

(81.2

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Insurance Segment

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

RSUI:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Casualty

 

 

16.5

 

(12)

 

 

(12.1

)

(13)

 

 

15.5

 

(12)

 

 

(17.7

)

(13)

Property and other

 

 

—

 

 

 

 

(0.4

)

 

 

 

(0.5

)

 

 

 

1.5

 

(14)

Total

 

 

16.5

 

 

 

 

(12.5

)

 

 

 

15.0

 

 

 

 

(16.2

)

 

CapSpecialty

 

 

—

 

 

 

 

0.7

 

 

 

 

0.2

 

 

 

 

3.4

 

(15)

Total incurred related to prior years

 

$

(34.7

)

 

 

$

(56.6

)

 

 

$

(93.7

)

 

 

$

(94.0

)

 

 

(1)

Primarily reflects favorable prior accident year loss reserve development related to wildfires in California in the 2018 accident year.

(2)

Primarily reflects favorable prior accident year loss reserve development related to Typhoon Hagibis in the 2019 accident year and, to a lesser extent, catastrophic events in the 2018 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 in the 2017 and 2019 accident years.

(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 2018 accident years.

(7)

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.

(8)

Primarily reflects favorable prior accident year loss reserve development in the longer-tailed lines of business in the 2016 and earlier accident years and in the shorter-tailed lines of business in the 2017 accident year, partially offset by unfavorable prior accident year development in the shorter-tailed lines of business in the 2018 and 2019 accident years.

(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 longer-tailed lines of business in the 2013 and earlier accident years and in the shorter-tailed lines of business in the 2017 accident year, partially offset by unfavorable prior accident year development in the shorter-tailed lines of business in the 2014 through 2016, 2018 and 2019 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 in the shorter-tailed lines of business in the 2012 through 2014 accident years.

(12)

Primarily reflects unfavorable prior accident year loss reserve development in the professional liability lines of business in the 2017 through 2019 accident years, partially offset by 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.

(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 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.

(15)

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.