Run-off Lines

12 Months Ended

Dec. 31, 2022

Discontinued Operations and Disposal Groups [Abstract]

Run-off Lines

Run-off Lines

We have discontinued active underwriting of certain lines of business, including those lines that were previously recorded in Argo Group’s risk-management segment. All current activity within these lines is related to the management of claims and other administrative functions. Also included in Run-off Lines are other liability reserves, which include exposure to claims for asbestos and environmental liabilities written in past years. The other liability reserves are often characterized by long elapsed periods between the occurrence of a claim and ultimate payment to resolve the claim. We use a specialized staff dedicated to administer and settle these claims.

The following table presents our gross reserves for Run-off Lines:

	December 31,
(in millions)	2022		2021
Asbestos and Environmental:
Reinsurance assumed	$	31.1	$	29.6
Other	34.4		34.2
Total Asbestos and Environmental	65.5		63.8
Risk-management	144.6		162.6
Run-off reinsurance lines	0.4		0.5
Other run-off lines	22.6		34.3
Gross reserves - Run-off Lines	$	233.1	$	261.2

We have received asbestos and environmental liability claims arising from other liability coverage primarily written in the 1960s, 1970s and into the early 1980s. Asbestos and environmental claims originate from policies directly underwritten by us and from reinsurance assumed during this period, including a portion assumed from the London market. Reserves for other run-off lines relate to other liability coverage primarily written in the 1970’s, with recent claim activity relating to abuse claims.

The following table represents the total gross reserves for our asbestos exposure:

	December 31,
(in millions)	2022		2021		2020
Direct written
Case reserves	$	3.2	$	3.0	$	3.1
Unallocated loss adjustment expense ("ULAE")	0.5		0.5		0.5
Incurred but not reported ("IBNR")	17.4		19.9		20.2
Total direct written reserves	21.1		23.4		23.8
Assumed domestic
Case reserves	6.8		7.4		8.4
ULAE	0.8		0.8		0.8
IBNR	13.0		11.9		12.8
Total assumed domestic reserves	20.6		20.1		22.0
Assumed London
Case reserves	2.4		2.1		1.4
IBNR	2.6		2.3		1.6
Total assumed London reserves	5.0		4.4		3.0
Total asbestos reserves	$	46.7	$	47.9	$	48.8

The following table presents our underwriting losses for Run-off Lines: 

	For the Years Ended December 31,
(in millions)	2022		2021		2020
Asbestos and Environmental:
Reinsurance assumed	$	3.5	$	4.7	$	5.7
Other	7.0		10.0		11.7
Total Asbestos and Environmental	10.5		14.7		17.4
Risk-management	1.4		9.9		(7.6)
Run-off reinsurance lines	—		—		(0.4)
Other run-off lines	(8.3)		20.1		3.4
Total underwriting loss - Run-off Lines	$	3.6	$	44.7	$	12.8

Reserves for asbestos and environmental claims cannot be estimated with traditional loss reserving techniques that rely on historical accident year loss development factors. The uncertainty in the asbestos and environmental reserves estimates arises from several factors including lack of actuarially credible historical data, inapplicability of standard actuarial projection techniques, uncertainty with regards to claim costs, coverage interpretations and judicial, statutory and regulatory provisions under which the claims may be ultimately resolved. It is impossible to predict how the courts will interpret coverage issues and these resolutions may have a material impact on the ultimate resolution of the asbestos and environmental liabilities. We use a variety of estimation methods to calculate reserves as a whole; however, reserves for asbestos and environmental claims were determined using a variety of methods which rely on historical claim reporting and average claim cost information. We apply greatest weight to the method that projects future calendar period claims and average claim costs because it best captures the unique claim characteristics of our underlying exposures. Although management has recorded its best estimate of loss reserves, due to the uncertainties of estimation of liability that may arise as discussed herein, further deterioration of claims could occur in the future.

Please see Note 7, “Reserves for Losses and Loss Adjustment Expenses” for further discussion.