RESERVE FOR CLAIMS AND CLAIM EXPENSES

9 Months Ended

Sep. 30, 2024

The Company believes the most significant accounting judgment made by management is its estimate of claims and claim expense reserves. Claims and claim expense reserves represent estimates, including actuarial and statistical projections at a given point in time, of the ultimate settlement and administration costs for unpaid claims and claim expenses arising from the insurance and reinsurance contracts the Company sells. The Company’s reserve for claims and claim expenses are a combination of case reserves, additional case reserves (“ACR”), and incurred but not reported losses and incurred but not enough reported losses (collectively referred to as “IBNR”). Case reserves are losses reported to the Company by insureds and ceding companies, but which have not yet been paid. If deemed necessary and in certain situations, the Company establishes ACR which represents the Company’s estimate for claims related to specific contracts which the Company believes may not be adequately estimated by the client as of that date or within the IBNR. The Company establishes IBNR using actuarial techniques and expert judgement to represent the anticipated cost of claims which have not been reported to the Company yet, or where the Company anticipates increased reporting. The Company’s reserving committee, which includes members of the Company’s senior management, reviews, discusses, and assesses the reasonableness and adequacy of the reserving estimates included in our unaudited consolidated financial statements.

The following table summarizes the Company’s reserve for claims and claim expenses by segment, allocated between case reserves, additional case reserves and IBNR:



At September 30, 2024	Case Reserves		Additional Case Reserves		IBNR		Total
Property	$	1,998,266	$	1,988,935	$	2,952,955	$	6,940,156
Casualty and Specialty	2,994,087		285,466		11,001,485		14,281,038

Total	$	4,992,353	$	2,274,401	$	13,954,440	$	21,221,194

At December 31, 2023
Property (1)	$	2,461,580	$	2,401,911	$	2,970,129	$	7,833,620
Casualty and Specialty (1)	2,801,016		331,345		9,520,888		12,653,249

Total	$	5,262,596	$	2,733,256	$	12,491,017	$	20,486,869

(1)The previously reported amount has been adjusted to reclassify certain reserves from IBNR to additional case reserves.

Activity in the liability for unpaid claims and claim expenses is summarized as follows:



Nine months ended September 30,	2024		2023
Reserve for claims and claim expenses, net of reinsurance recoverable, as of beginning of period	$	15,142,583	$	11,181,648
Net incurred related to:
Current year	4,347,097		2,888,784
Prior years	(497,858)		(294,797)
Total net incurred	3,849,239		2,593,987
Net paid related to:
Current year	252,103		181,155
Prior years	2,336,002		1,880,700
Total net paid	2,588,105		2,061,855




Foreign exchange and other (1)	78,840		(11,874)
Reserve for claims and claim expenses, net of reinsurance recoverable, as of end of period	16,482,557		11,701,906
Reinsurance recoverable as of end of period	4,738,637		4,253,259
Reserve for claims and claim expenses as of end of period	$	21,221,194	$	15,955,165

(1) Reflects the impact of the foreign exchange revaluation of the reserve for claims and claim expenses, net of reinsurance recoverable, denominated in non-U.S. dollars as at the balance sheet date, as well as deals accounted for under retroactive reinsurance accounting.

Prior Year Development of the Reserve for Net Claims and Claim Expenses

The Company’s estimates of claims and claim expense reserves are not precise in that, among other things, they are based on predictions of future developments and estimates of future trends and other variable factors. Some, but not all, of the Company’s reserves are further subject to the uncertainty inherent in actuarial methodologies and estimates. Because a reserve estimate is simply an insurer’s estimate at a point in time of its ultimate liability, and because there are numerous factors that affect reserves and claims payments that cannot be determined with certainty in advance, the Company’s ultimate payments will vary, perhaps materially, from its estimates of reserves. If the Company determines in a subsequent period that adjustments to its previously established reserves are appropriate, such adjustments are recorded in the period in which they are identified. On a net basis, the Company’s cumulative favorable or unfavorable development is generally reduced by offsetting changes in its reinsurance recoverable, as well as changes to loss related premiums such as reinstatement premiums and redeemable noncontrolling interest, all of which generally move in the opposite direction to changes in the Company’s ultimate claims and claim expenses.

The following table details the Company’s prior year net development by segment of its net claims and claim expenses:



Nine months ended September 30,	2024		2023
	(Favorable) Adverse Development		(Favorable) Adverse Development
Property	$	(470,801)	$	(257,209)
Casualty and Specialty	(27,057)		(37,588)

Total net (favorable) adverse development of prior accident years net claims and claim expenses	$	(497,858)	$	(294,797)

Changes to prior year estimated net claims and claim expenses increased net income by $497.9 million during the nine months ended September 30, 2024 (2023 - $294.8 million), excluding the consideration of changes in reinstatement, adjustment or other premium changes, profit commissions, redeemable noncontrolling interests - DaVinci, Fontana and Vermeer and income tax.

Property Segment

The following tables detail the development of the Company’s liability for net unpaid claims and claim expenses for its Property segment, allocated between large catastrophe events and other small catastrophe events and attritional loss movements:



Nine months ended September 30,	2024
	(Favorable) Adverse Development
Catastrophe net claims and claim expenses
Large catastrophe events
2023 Large Loss Events (1)	$	(21,316)
2022 Weather-Related Large Losses (2)	(137,657)
2021 Weather-Related Large Losses (3)	(69,618)
2020 Weather-Related Large Loss Events (4)	(35,514)
2019 Large Loss Events (5)	(15,864)
2018 Large Loss Events (6)	(32,448)
2017 Large Loss Events (7)	(17,631)

Total large catastrophe events	(330,048)
Small catastrophe events and attritional loss movements


Other small catastrophe events and attritional loss movements	(150,715)
Actuarial assumption changes	9,962
Total small catastrophe events and attritional loss movements	(140,753)

Total net (favorable) adverse development of prior accident years net claims and claim expenses	$	(470,801)

(1)“2023 Large Loss Events” includes earthquakes in Southern and Central Turkey, Cyclone Gabrielle, flooding in northern New Zealand, various wind and thunderstorm events in both the Southern and Midwest U.S, severe weather events in Texas and other Southern and Central U.S. states, wildfires in Hawaii, Hurricanes Idalia and Otis, Storm Ciaran, and certain aggregate loss contracts triggered during 2023.

(2)“2022 Weather-Related Large Losses” includes Hurricanes Ian, Fiona and Nicole, floods in Eastern Australia, Storm Eunice, severe weather in France, typhoons in Asia, Winter Storm Elliott, and loss estimates associated with certain aggregate loss contracts.

(3)“2021 Weather-Related Large Losses” includes Winter Storm Uri, European Floods, Hurricane Ida, hail storm in Europe, wildfires in California, tornadoes in the Central and Midwest U.S., the Midwest Derecho, and losses associated with aggregate loss contracts.

(4)“2020 Weather-Related Large Loss Events” includes Hurricanes Laura, Sally, Isaias, Delta, Zeta and Eta, the California, Oregon and Washington wildfires, Typhoon Maysak, the August 2020 Derecho, and losses associated with aggregate loss contracts.

(5)“2019 Large Loss Events” includes Hurricane Dorian and Typhoons Faxai and Hagibis and certain losses associated with aggregate loss contracts.

(6)“2018 Large Loss Events” includes Typhoons Jebi, Mangkhut and Trami, Hurricane Florence, wildfires in California, Hurricane Michael and certain losses associated with aggregate loss contracts.

(7)“2017 Large Loss Events” includes Hurricanes Harvey, Irma and Maria, the Mexico City Earthquake, wildfires in California, and certain losses associated with aggregate loss contracts.

The net favorable development of prior accident years net claims and claim expenses on the large catastrophe events was driven by better than expected loss emergence across the 2017 to 2023 accident years.

The net favorable development on other small catastrophe events and attritional loss movements was primarily related to lines of business where the Company principally estimates net claims and claim expenses using traditional actuarial methods. Partially offsetting these net favorable developments was net adverse development related to actuarial assumption changes.



Nine months ended September 30,	2023
	(Favorable) Adverse Development
Catastrophe net claims and claim expenses
Large catastrophe events
2022 Weather-Related Large Losses	$	6,501
2021 Weather-Related Large Losses	(24,931)
2020 Weather-Related Large Loss Events	(28,824)
2019 Large Loss Events	(37,934)
2018 Large Loss Events	(37,847)
2017 Large Loss Events	(31,922)
New Zealand Earthquake (2010)	(10,397)
Other	696
Total large catastrophe events	(164,658)
Small catastrophe events and attritional loss movements
Other small catastrophe events and attritional loss movements	(93,391)
Actuarial assumption changes	840
Total small catastrophe events and attritional loss movements	(92,551)
Total net (favorable) adverse development of prior accident years net claims and claim expenses	$	(257,209)

The net favorable development of prior accident years net claims and claim expenses was largely driven by better than expected loss emergence.

The net favorable development on other small catastrophe events and attritional loss movements was related to lines of business where the Company principally estimates net claims and claim expenses using traditional actuarial methods.

Casualty and Specialty Segment

The following table details the development of the Company’s prior accident years net claims and claim expenses for its Casualty and Specialty segment:



Nine months ended September 30,	2024		2023
	(Favorable) Adverse Development		(Favorable) Adverse Development
Actuarial methods - actual reported claims less than expected claims	$	(62,170)	$	(40,498)
Actuarial assumption changes	35,113		2,910
Total net (favorable) adverse development of prior accident years net claims and claim expenses	$	(27,057)	$	(37,588)

The Company principally estimates net claims and claim expenses for the Casualty and Specialty segment using traditional actuarial methods.

The net favorable development of prior accident years net claims and claim expenses in the nine months ended September 30, 2024, was primarily due to reported losses generally coming in lower than expected on attritional net claims and claim expenses and was driven by favorable experience within the Company’s other specialty and credit classes of business, partially offset by actuarial assumption changes.

The net favorable development of prior accident years net claims and claim expenses in the nine months ended September 30, 2023 was primarily due to reported losses generally coming in lower than expected

on attritional net claims and claim expenses driven by favorable experience, principally within the Company’s other specialty and credit classes of business.