XML 36 R22.htm IDEA: XBRL DOCUMENT v3.25.0.1
Reserves For Losses And Loss Expenses
 12 Months Ended
Dec. 31, 2024
Insurance [Abstract]  
Reserves For Losses And Loss Expenses Reserves for Losses and Loss Expenses
The Company's reserves for losses and loss expenses are comprised of case reserves and incurred but not reported liabilities (IBNR). When a claim is reported, a case reserve is established for the estimated ultimate payment based upon known information about the claim. As more information about the claim becomes available over time, case reserves are adjusted up or down as appropriate. Reserves are also established on an aggregate basis to provide for IBNR liabilities and expected loss reserve development on reported claims.
Loss reserves included in the Company’s financial statements represent management’s best estimates based upon an actuarially derived point estimate and other considerations. The Company uses a variety of actuarial techniques and methods to derive an actuarial point estimate for each business. These methods may include paid loss development, incurred loss development, paid and incurred Bornhuetter-Ferguson methods and frequency and severity methods. In circumstances where one actuarial method is considered more credible than the others, that method is used to set the point estimate. The actuarial point estimate may also be based on a judgmental weighting of estimates produced from each of the methods considered. Industry loss experience is used to supplement the Company’s own data in selecting “tail factors” in areas where the Company’s own data is limited. The actuarial data is analyzed by line of business, coverage and accident or policy year, as appropriate, for each business.
The establishment of the actuarially derived loss reserve point estimate also includes consideration of qualitative factors that may affect the ultimate losses. These qualitative considerations include, among others, the impact of re-underwriting initiatives, changes in claims handling procedures, changes in the mix of business, changes in distribution sources and changes in policy terms and conditions.
The key assumptions used to arrive at the best estimate of loss reserves are the expected loss ratios, rate of loss cost inflation, and reported and paid loss emergence patterns. Expected loss ratios represent management’s expectation of losses at the time the business is priced and written, before any actual claims experience has emerged. This expectation is a significant determinant of the estimate of loss reserves for recently written business where there is little paid or incurred loss data to consider. Expected loss ratios are generally derived from historical loss ratios adjusted for the impact of rate changes, loss cost trends and known changes in the type of risks underwritten. Expected loss ratios are estimated for each key line of business within each business. Expected loss cost inflation is particularly important for the long-tail lines, such as excess casualty, and claims with a high medical component, such as workers’ compensation. Reported and paid loss emergence patterns are used to project current reported or paid loss amounts to their ultimate settlement value. Loss development factors are based on the historical emergence patterns of paid and incurred losses, and are derived from the Company’s own experience and industry data. The paid loss emergence pattern is also significant to excess and assumed workers’ compensation reserves because those reserves are discounted to their estimated present value based upon such estimated payout patterns.
Loss frequency and severity are measures of loss activity that are considered in determining the key assumptions described in our discussion of loss and loss expense reserves, including expected loss ratios, rate of loss cost inflation and reported and paid loss emergence patterns. Loss frequency is a measure of the number of claims per unit of insured exposure, and loss severity is a measure of the average size of claims. Factors affecting loss frequency include the effectiveness of loss controls and safety programs and changes in economic activity or weather patterns. Factors affecting loss severity include changes in policy limits, retentions, rate of inflation and judicial interpretations.
Another factor affecting estimates of loss frequency and severity is the loss reporting lag, which is the period of time between the occurrence of a loss and the date the loss is reported to the Company. The length of the loss reporting lag affects our ability to accurately predict loss frequency (loss frequencies are more predictable for lines with short reporting lags) as well as the amount of reserves needed for incurred but not reported losses (less IBNR is required for lines with short reporting lags). As a result, loss reserves for lines with short reporting lags are likely to have less variation from initial loss estimates. For lines with short reporting lags, which include auto, primary workers’ compensation, other liability (claims-made) and property business, the key assumption is the loss emergence pattern used to project ultimate loss estimates from known losses paid or reported to date. For lines of business with long reporting lags, which include other liability (occurrence), products liability, excess workers’ compensation and liability reinsurance, the key assumption is the expected loss ratio since there is often little paid or incurred loss data to consider. Historically, the Company has experienced less variation from its initial loss estimates for lines of businesses with short reporting lags than for lines of business with long reporting lags.
The key assumptions used in calculating the most recent estimate of the loss reserves are reviewed each quarter and adjusted, to the extent necessary, to reflect the latest reported loss data, current trends and other factors observed.
A claim may be defined as an event, as a claimant (number of parties claiming damages from an event) or by exposure type (e.g., an event may give rise to two parties, each claiming loss for bodily injury and property damage).
The most commonly used claim count method is by event. Most of the Company's businesses use the number of events to define and quantify the number of claims. However, in certain lines of business, where it is common for multiple parties to claim damages arising from a single event, a business may quantify claims on the basis of the number of separate parties involved in an event. This may be the case with businesses writing substantial auto or transportation exposure.
Claim counts for assumed reinsurance will vary based on whether the business is written on a facultative or treaty basis. Further variability as respects treaty claim counts may be reflective of the nature of the treaty, line of business coverage, and type of participation such as quota share or excess of loss contracts. Accordingly, the claim counts have been excluded from the below Reinsurance & Monoline Excess segment tables due to this variability.
The claim count information set forth in the tables presented below may not provide an accurate reflection of ultimate loss payouts by product line.
The following tables present undiscounted incurred and paid claims development as of December 31, 2024, net of reinsurance, as well as cumulative claim frequency and the total of incurred but not reported liabilities (IBNR). The information about incurred and paid claims development for the years ended December 31, 2014 to 2023 is presented as supplementary information. To enhance the comparability of the loss development data, the Company has removed the impact of foreign exchange rate movements by using the December 31, 2024 exchange rate for all periods.
Insurance
Other Liability
(In thousands)
Loss and Loss Expenses Incurred, Net of Reinsurance As of December 31, 2024
For the Year Ended December 31,
UnauditedIBNRCumulative Number of Reported Claims
Accident Year2015201620172018201920202021202220232024
2015$934,138 $969,246 $944,351 $948,706 $951,981 $963,118 $969,789 $999,316 $1,005,801 $1,019,173 $32,718 28
20161,003,192 995,148 1,005,560 1,018,025 1,032,281 1,048,121 1,079,436 1,121,260 1,122,233 59,052 29
20171,055,253 1,088,787 1,111,550 1,129,392 1,169,138 1,238,759 1,256,832 1,289,349 79,218 28
20181,095,529 1,123,152 1,113,675 1,148,972 1,225,588 1,291,745 1,374,348 98,378 28
20191,232,661 1,228,679 1,230,016 1,286,835 1,362,171 1,396,012 139,046 30
20201,330,660 1,204,248 1,148,852 1,157,392 1,187,560 181,892 24
20211,522,682 1,378,751 1,332,486 1,352,616 285,076 26
20221,810,560 1,815,653 1,798,403 688,730 28
20232,111,178 2,075,065 1,312,841 25
20242,379,621 2,070,647 18
Total$14,994,380 
Cumulative Paid Claims and Claim Adjustment Expenses, Net of Reinsurance
For the Year Ended December 31,
Unaudited
Accident Year2015201620172018201920202021202220232024
2015$80,079 $205,207 $374,666 $528,935 $665,272 $745,994 $804,340 $862,557 $916,787 $948,434 
201667,290 203,890 383,909 550,589 667,761 757,110 860,423 944,014 996,649 
201777,719 251,172 447,743 632,721 767,665 922,090 1,038,695 1,119,123 
201885,148 261,789 432,148 611,323 801,409 979,311 1,122,768 
201986,531 271,854 467,267 699,906 902,686 1,073,894 
202070,540 222,274 417,860 614,351 812,453 
202175,101 265,080 484,588 794,392 
202292,248 352,886 704,307 
202391,733 366,496 
202495,137 
Total$8,033,653 
Reserves for loss and loss adjustment expenses before 2015, net of reinsurance178,312 
Reserves for loss and loss adjustment expenses, net of reinsurance$7,139,039 
Workers' Compensation
(In thousands)
Loss and Loss Expenses Incurred, Net of Reinsurance As of December 31, 2024
For the Year Ended December 31,
UnauditedIBNRCumulative Number of Reported Claims
Accident Year2015201620172018201920202021202220232024
2015$712,800 $690,525 $650,997 $641,169 $626,432 $620,741 $617,477 $612,687 $603,731 $604,806 $14,681 58
2016702,716 696,339 684,700 660,520 651,278 657,972 654,385 641,549 639,412 15,340 58
2017762,093 733,505 689,622 673,216 683,880 682,153 675,871 669,988 15,800 58
2018778,964 724,697 715,055 724,056 721,170 715,018 708,336 14,769 56
2019784,281 721,018 732,762 734,034 722,456 714,086 18,751 54
2020725,245 716,430 704,008 668,222 652,424 12,026 42
2021742,687 701,703 667,517 649,222 22,916 46
2022772,620 745,218 715,578 56,385 46
2023784,906 758,657 146,880 45
2024811,614 378,116 46
Total$6,924,123 
Cumulative Paid Claims and Claim Adjustment Expenses, Net of Reinsurance
For the Year Ended December 31,
Unaudited
Accident Year2015201620172018201920202021202220232024
2015$139,320 $323,744 $421,734 $477,541 $512,933 $531,512 $544,849 $557,215 $564,658 $570,125 
2016142,998 338,835 446,072 504,850 537,861 558,934 572,669 584,330 591,005 
2017153,456 362,299 468,817 525,753 559,198 583,258 603,006 617,243 
2018171,006 397,464 508,546 574,889 613,675 642,292 660,237 
2019184,715 397,376 515,914 581,003 618,324 644,772 
2020172,478 380,454 485,203 548,585 579,332 
2021172,729 384,867 490,648 547,863 
2022180,982 408,929 527,145 
2023195,204 418,788 
2024196,104 
Total$5,352,614 
Reserves for loss and loss adjustment expenses before 2015, net of reinsurance246,975 
Reserves for loss and loss adjustment expenses, net of reinsurance$1,818,484 
Professional Liability
(In thousands)
Loss and Loss Expenses Incurred, Net of ReinsuranceAs of December 31, 2024
For the Year Ended December 31,
UnauditedIBNRCumulative Number of Reported Claims
Accident Year2015201620172018201920202021202220232024
2015$256,877 $255,638 $272,360 $274,229 $289,722 $281,461 $281,906 $286,203 $285,591 $285,252 $11,809 8
2016307,902 322,107 359,228 400,178 437,690 467,183 462,868 449,033 452,769 15,280 10
2017331,362 330,753 337,256 376,096 383,246 392,447 401,170 401,789 26,447 11
2018333,254 320,784 332,201 358,676 381,613 397,102 393,029 59,723 11
2019334,137 330,146 344,036 353,131 362,333 364,231 62,324 12
2020391,532 373,550 336,231 312,169 299,806 56,121 11
2021521,744 468,567 444,060 408,536 119,166 12
2022644,950 582,764 553,174 307,294 12
2023642,582 634,269 404,820 13
2024648,064 499,645 13
Total$4,440,919 
Cumulative Paid Claims and Claim Adjustment Expenses, Net of Reinsurance
For the Year Ended December 31,
Unaudited
Accident Year2015201620172018201920202021202220232024
2015$20,271 $85,061 $139,244 $186,834 $215,640 $232,187 $239,162 $246,160 $258,640 $265,643 
201628,432 102,079 200,949 254,694 296,742 356,717 404,669 412,243 421,639 
201736,381 96,025 162,469 242,696 260,764 306,270 329,021 349,406 
201828,072 99,433 154,953 198,351 243,813 283,349 315,361 
201931,563 97,082 147,500 199,942 234,789 270,623 
202027,895 79,968 128,579 168,670 196,332 
202128,465 85,661 152,764 219,932 
202233,336 90,416 160,965 
202340,973 121,991 
202440,200 
Total$2,362,092 
Reserves for loss and loss adjustment expenses before 2015, net of reinsurance49,908 
Reserves for loss and loss adjustment expenses, net of reinsurance$2,128,735 
Auto
(In thousands)
Loss and Loss Expenses Incurred, Net of ReinsuranceAs of December 31, 2024
For the Year Ended December 31,
UnauditedIBNRCumulative Number of Reported Claims
Accident Year2015201620172018201920202021202220232024
2015$374,801 $398,090 $403,449 $411,886 $412,416 $410,762 $407,874 $409,797 $409,329 $410,218 $784 50
2016414,205 415,208 425,808 426,365 423,216 423,171 425,063 426,814 425,280 1,648 48
2017412,917 410,409 412,760 417,010 423,180 427,474 428,064 429,646 2,931 44
2018423,120 443,203 459,826 474,469 502,221 511,283 513,458 5,358 43
2019462,866 465,817 483,438 508,501 525,110 532,292 9,383 43
2020493,527 396,616 407,515 433,980 440,625 5,170 29
2021552,002 517,233 552,219 583,693 26,200 35
2022723,266 740,688 763,806 83,225 41
2023890,682 907,503 226,458 43
20241,062,427 569,636 41
Total$6,068,948 
Cumulative Paid Claims and Claim Adjustment Expenses, Net of Reinsurance
For the Year Ended December 31,
Unaudited
Accident Year2015201620172018201920202021202220232024
2015$155,699 $255,990 $310,923 $353,772 $379,779 $392,093 $397,747 $401,130 $402,938 $405,009 
2016178,350 270,304 330,222 375,891 394,720 404,241 412,624 418,672 421,309 
2017173,668 256,952 314,336 356,864 385,822 403,421 414,033 421,898 
2018173,779 272,020 337,599 397,517 445,527 479,144 493,942 
2019179,847 279,858 360,921 423,225 473,940 499,996 
2020136,899 213,638 285,875 346,892 402,177 
2021168,497 289,016 379,966 476,462 
2022237,885 394,136 531,324 
2023271,552 467,227 
2024295,450 
Total$4,414,794 
Reserves for loss and loss adjustment expenses before 2015, net of reinsurance2,295 
Reserves for loss and loss adjustment expenses, net of reinsurance$1,656,449 
Short-tail lines
(In thousands)
Loss and Loss Expenses Incurred, Net of ReinsuranceAs of December 31, 2024
For the Year Ended December 31,
UnauditedIBNRCumulative Number of Reported Claims
Accident Year2015201620172018201920202021202220232024
2015$718,877 $708,711 $705,938 $704,501 $697,123 $695,584 $693,963 $694,284 $699,018 $697,949 $1,485 29
2016752,238 756,684 744,208 738,577 732,853 735,299 733,993 734,306 732,544 1,814 31
2017730,239 729,675 723,989 722,967 722,697 723,925 722,551 722,138 2,262 39
2018741,002 731,643 728,426 726,956 724,399 723,401 718,987 4,803 46
2019703,177 684,671 674,717 668,632 668,628 658,367 4,744 41
2020882,508 887,821 905,858 909,800 912,987 3,715 36
2021805,048 809,924 793,394 790,478 11,207 33
2022904,554 889,173 880,040 25,611 31
20231,035,378 997,176 66,732 28
20241,254,576 450,792 24
Total$8,365,242 
Cumulative Paid Claims and Claim Adjustment Expenses, Net of Reinsurance
For the Year Ended December 31,
Unaudited
Accident Year2015201620172018201920202021202220232024
2015$380,892 $592,871 $647,710 $669,556 $678,891 $684,679 $691,365 $691,545 $700,792 $702,432 
2016403,529 652,336 693,535 708,340 713,193 719,883 720,716 725,721 727,943 
2017429,132 667,750 695,566 707,472 710,624 717,788 723,111 725,516 
2018401,547 645,228 691,499 708,449 707,471 712,526 715,238 
2019392,083 600,257 629,427 641,809 649,886 651,960 
2020447,105 768,617 829,586 884,460 888,746 
2021388,917 677,015 732,996 755,877 
2022440,856 761,924 827,552 
2023531,838 846,828 
2024559,186 
Total$7,401,278 
Reserves for loss and loss adjustment expenses before 2015, net of reinsurance5,937 
Reserves for loss and loss adjustment expenses, net of reinsurance$969,901 
Reinsurance & Monoline Excess
Casualty
(In thousands)
Loss and Loss Expenses Incurred, Net of ReinsuranceAs of December 31, 2024
For the Year Ended December 31,
Unaudited
Accident Year2015201620172018201920202021202220232024IBNR
2015$285,491 $261,479 $260,696 $281,470 $321,934 $331,370 $333,368 $335,541 $336,653 $346,178 $9,461 
2016265,059 277,255 269,643 292,188 325,777 325,590 332,538 328,079 332,140 12,449 
2017255,303 245,631 263,327 285,053 304,542 320,518 334,003 344,072 19,683 
2018245,491 235,054 254,696 270,699 282,547 310,129 327,489 26,167 
2019260,178 257,452 264,664 265,001 294,105 315,025 35,101 
2020333,743 329,319 327,257 346,355 345,540 62,760 
2021425,922 428,105 421,190 423,874 118,203 
2022488,982 501,517 474,466 208,624 
2023472,810 466,192 305,158 
2024429,455 382,444 
Total$3,804,431 
Cumulative Paid Claims and Claim Adjustment Expenses, Net of Reinsurance
For the Year Ended December 31,
Unaudited
Accident Year2015201620172018201920202021202220232024
2015$24,672 $61,106 $110,230 $163,728 $203,940 $232,001 $260,577 $278,540 $295,608 $308,837 
201626,599 73,546 115,017 159,651 193,167 228,163 249,017 267,375 279,490 
201725,295 54,395 86,509 143,838 169,379 198,517 233,096 269,239 
201818,921 52,668 93,211 128,691 163,823 207,435 245,037 
201921,506 52,609 81,222 116,579 170,169 219,777 
202028,291 66,937 109,396 171,527 217,958 
202124,649 76,977 145,859 211,884 
202228,029 83,590 159,100 
202317,622 66,568 
202416,794 
Total$1,994,684 
Reserves for loss and loss adjustment expenses before 2015, net of reinsurance357,939 
Reserves for loss and loss adjustment expenses, net of reinsurance$2,167,686 
Monoline Excess
(In thousands)
Loss and Loss Expenses Incurred, Net of ReinsuranceAs of December 31, 2024
For the Year Ended December 31,
Unaudited
Accident Year2015201620172018201920202021202220232024IBNR
2015$69,977 $57,897 $50,099 $45,115 $39,682 $39,781 $36,774 $32,604 $33,590 $28,220 $5,749 
201672,657 70,281 71,404 64,957 65,485 65,222 63,932 59,804 55,371 5,800 
201776,701 80,508 70,749 71,025 66,795 65,147 62,213 57,073 8,242 
201877,820 72,505 71,448 66,180 60,347 58,244 54,784 14,257 
201978,929 77,482 76,242 76,478 73,571 70,929 13,613 
202084,354 83,468 82,952 80,946 70,219 23,018 
202198,110 90,980 89,220 84,681 27,325 
2022128,923 101,725 100,612 26,481 
2023110,446 86,901 41,059 
2024120,046 98,632 
Total$728,836 
Cumulative Paid Claims and Claim Adjustment Expenses, Net of Reinsurance
For the Year Ended December 31,
Unaudited
Accident Year2015201620172018201920202021202220232024
2015$2,069 $2,481 $3,272 $4,099 $4,416 $5,083 $5,421 $6,457 $6,844 $7,402 
20162,498 4,783 5,573 5,928 7,685 9,883 11,819 13,569 16,872 
20176,282 12,810 15,356 17,327 18,375 19,275 21,275 23,523 
20186,141 8,230 9,368 10,359 12,414 13,583 14,952 
20196,241 10,884 12,728 15,436 18,836 21,094 
20204,869 8,699 10,471 12,869 15,427 
20214,586 6,026 8,872 11,412 
20225,898 10,564 17,778 
20236,390 12,471 
20245,723 
Total$146,654 
Reserves for loss and loss adjustment expenses before 2015, net of reinsurance577,639 
Reserves for loss and loss adjustment expenses, net of reinsurance$1,159,821 
Property
(In thousands)
Loss and Loss Expenses Incurred, Net of ReinsuranceAs of December 31, 2024
For the Year Ended December 31,
Unaudited
Accident Year2015201620172018201920202021202220232024IBNR
2015$141,484 $132,570 $146,437 $145,422 $144,486 $146,140 $145,697 $146,346 $146,893 $146,485 $444 
2016185,533 191,947 198,909 198,523 204,004 201,996 203,070 204,190 203,198 781 
2017227,950 223,315 222,463 221,413 215,295 215,723 216,854 215,714 347 
2018125,574 128,611 120,284 121,985 120,254 118,633 117,569 918 
2019119,838 93,038 97,748 96,681 96,575 95,708 1,282 
2020131,649 133,897 132,670 137,504 136,155 844 
2021156,046 168,265 165,760 161,699 2,766 
2022205,886 205,569 202,600 24,379 
2023176,457 172,995 37,096 
2024255,770 137,881 
Total$1,707,893 
Cumulative Paid Claims and Claim Adjustment Expenses, Net of Reinsurance
For the Year Ended December 31,
Unaudited
Accident Year2015201620172018201920202021202220232024
2015$64,495 $103,634 $123,995 $133,605 $137,708 $140,564 $141,963 $143,103 $143,999 $144,369 
201691,514 150,326 174,449 185,937 193,595 195,736 200,070 201,985 202,409 
201787,892 162,814 194,150 202,436 206,018 209,232 211,837 212,577 
201846,892 80,976 98,416 103,833 112,061 113,418 114,035 
201935,563 69,694 83,990 86,633 88,628 90,550 
202039,652 81,238 102,593 111,508 118,503 
202131,624 92,579 130,371 145,315 
202256,483 128,640 152,174 
202358,316 110,095 
202469,379 
Total$1,359,406 
Reserves for loss and loss adjustment expenses before 2015, net of reinsurance1,971 
Reserves for loss and loss adjustment expenses, net of reinsurance$350,458 
The reconciliation of the net incurred and paid claims development tables to the reserves for losses and loss expenses in the consolidated balance sheet is as follows:
(In thousands)December 31, 2024
Undiscounted reserves for loss and loss expenses, net of reinsurance:
Other liability$7,139,039 
Workers' compensation1,818,484 
Professional liability2,128,735 
Auto1,656,449 
Short-tail lines969,901 
Other180,628 
  Insurance13,893,236 
Casualty2,167,686 
Monoline excess1,159,821 
Property350,458 
  Reinsurance & Monoline Excess3,677,965 
Total undiscounted reserves for loss and loss expenses, net of reinsurance$17,571,201 
(In thousands)December 31, 2024
Due from reinsurers on unpaid claims:
Other liability$1,044,974 
Workers' compensation175,244 
Professional liability1,148,320 
Auto82,331 
Short-tail lines434,368 
Other121,010 
  Insurance3,006,247 
Casualty104,928 
Monoline excess36,042 
Property54,172 
  Reinsurance & Monoline Excess195,142 
Total due from reinsurers on unpaid claims$3,201,389 
(In thousands)December 31, 2024
Loss reserve discount:
Other liability$— 
Workers' compensation(11,662)
Professional liability— 
Auto— 
Short-tail lines— 
Other— 
  Insurance(11,662)
Casualty(68,788)
Monoline excess(324,110)
Property— 
  Reinsurance & Monoline Excess(392,898)
Total loss reserve discount$(404,560)
Total gross reserves for loss and loss expenses$20,368,030 
The following is supplementary information regarding average historical claims duration as of December 31, 2024:
Insurance
Average Annual Percentage Payout of Incurred Claims by Age, Net of Reinsurance
Years12345678910
Other liability5.7 %13.2 %15.8 %16.2 %13.2 %10.6 %8.6 %6.5 %5.0 %3.1 %
Workers' compensation24.7 %31.1 %16.3 %9.1 %5.2 %3.5 %2.5 %2.0 %1.1 %0.9 %
Professional liability7.3 %16.0 %16.3 %14.8 %9.0 %10.1 %6.7 %3.1 %3.2 %2.5 %
Auto33.7 %20.4 %14.8 %12.1 %8.2 %4.2 %2.2 %1.4 %0.5 %0.5 %
Short-tail lines53.1 %33.6 %6.2 %2.8 %0.7 %0.8 %0.5 %0.3 %0.8 %0.2 %
Reinsurance & Monoline Excess
Average Annual Percentage Payout of Incurred Claims by Age, Net of Reinsurance
Years12345678910
Casualty6.3 %11.0 %12.7 %14.5 %11.7 %11.2 %9.0 %7.1 %4.3 %3.8 %
Monoline excess7.3 %5.1 %3.3 %2.7 %3.1 %2.6 %2.7 %3.6 %3.7 %2.0 %
Property34.4 %32.1 %15.1 %5.6 %3.7 %1.5 %1.2 %0.7 %0.4 %0.3 %
The table below provides a reconciliation of the beginning and ending reserve balances:
(In thousands)202420232022
Net reserves at beginning of year$15,661,820 $14,248,879 $12,848,362 
Net provision for losses and loss expenses:
Claims occurring during the current year (1)7,083,999 6,311,780 5,774,713 
Increase in estimates for claims occurring in prior years (2)14,350 29,681 54,511 
Loss reserve discount accretion33,246 30,681 32,526 
Total7,131,595 6,372,142 5,861,750 
Net payments for claims:   
Current year1,278,585 1,217,078 1,068,577 
Prior year4,205,845 3,764,532 3,279,333 
Total5,484,430 4,981,610 4,347,910 
Foreign currency translation(142,344)22,409 (113,323)
Net reserves at end of year17,166,641 15,661,820 14,248,879 
Ceded reserve at end of year3,201,389 3,077,832 2,762,344 
Gross reserves at end of year$20,368,030 $18,739,652 $17,011,223 
Net change in premiums and losses occurring in prior years:
Increase in estimates for claims occurring in prior years (2)$(14,350)$(29,681)$(54,511)
Retrospective premium adjustments for claims occurring in prior years (3)18,782 10,782 18,106 
Net premium and reserve development on prior years$4,432 $(18,899)$(36,405)
_______________________________________
(1)Claims occurring during the current year are net of loss reserve discounts of $49 million, $47 million and $35 million in 2024, 2023, and 2022, respectively.
(2)The change in estimates for claims occurring in prior years is net of loss reserve discount. On an undiscounted basis, the estimates for claims occurring in prior years increased by $13 million in 2024, decreased by $13 million in 2023, and increased by $16 million in 2022.
(3)For certain retrospectively rated insurance polices and reinsurance agreements, changes in loss and loss expenses for prior years are offset by additional or return premiums.
The ultimate net impact of COVID-19 on the Company’s reserves remains uncertain. As of December 31, 2024, the Company had recognized losses for COVID-19-related claims activity, net of reinsurance, of approximately $381 million, of which $326 million relates to the Insurance segment and $55 million relates to the Reinsurance & Monoline Excess segment. Such $381 million of COVID-19-related losses included $379 million of reported losses and $2 million of IBNR.
Favorable prior year development (net of additional and return premiums) was $4 million in 2024.
Insurance – Reserves for the Insurance segment developed unfavorably by $8 million in 2024 (net of additional and return premiums). The adverse development was driven by the commercial auto liability and other liability occurrence lines of business, and was largely offset by favorable development for workers’ compensation, professional liability, products liability, and commercial property lines of business.
The adverse commercial auto liability development was concentrated in accident years 2021 through 2023, while the adverse other liability occurrence development was focused across accident years 2015 through 2022. The majority of the other liability occurrence development was driven by umbrella and excess liability claims, of which a significant portion related to underlying commercial auto exposures. The Company believes that commercial auto-related claims are being particularly impacted by social inflation, which is contributing to an increase in the frequency of large losses beyond expectations. Social inflation can include higher settlement demands from plaintiffs, use of aggressive actions by the plaintiffs’ bar such as litigation funding, negative public sentiment towards large businesses and corporations, and erosion of tort reforms, among other factors.
The favorable workers’ compensation development for the Insurance segment was mainly related to accident years 2016 through 2023, with accident years 2020 through 2023 contributing the most. For workers’ compensation, favorable reported claim frequency, below expectations, continued to be the main driver of the favorable reserve development. The
favorable development for both the professional liability and products liability lines of business was related mainly to accident years 2020 through 2023. For both of these lines, reported claim frequency and incurred losses for accident years 2020 through 2023 were better than expected, which drove the favorable reserve development. Business written in these years also benefitted from significant price increases, which the Company now believes will result in higher profitability than initially anticipated. The favorable development for commercial property was mainly associated with the 2023 accident year, and resulted from better than expected settlements for both catastrophe related and non-catastrophe claims.
Reinsurance & Monoline Excess – Reserves for the Reinsurance & Monoline Excess segment developed favorably by $12 million in 2024 (net of additional and return premiums). The favorable development was driven mainly by excess workers’ compensation business, partially offset by adverse development in the non-proportional reinsurance assumed liability line of business. The favorable excess workers’ compensation development was driven by continued lower claim frequency and reported losses relative to expectations, and favorable claim settlements spread across many prior accident years. The unfavorable development for non-proportional reinsurance was concentrated mainly in accident years 2015 through 2019 and was associated primarily with our U.S. and U.K. excess general liability reinsurance businesses, including coverage for cedants insuring construction projects.
Unfavorable prior year development (net of additional and return premiums) was $19 million in 2023.
Insurance – Reserves for the Insurance segment developed unfavorably by $21 million in 2023 (net of additional and return premiums). The unfavorable development for the segment was concentrated in the early part of the year. A key driver of the unfavorable development early in 2023 was property catastrophe losses related to 2022 events which were still being adjusted and settled during the early part of 2023. In particular, losses related to U.S. winter storms which occurred during the month of December 2022 were a significant contributor to the development, as information gathering and evaluation of many of these claims were still ongoing into the new year.
In addition to the property prior year development discussed above, during 2023 the Insurance segment also experienced adverse prior year development on casualty lines of business for the 2016 through 2019 accident years, which was offset by favorable prior year development on casualty lines of business for the 2020 through 2022 accident years. The unfavorable development on the 2016 through 2019 accident years was concentrated in the general liability and commercial auto liability lines of business. The development, which particularly impacted business attaching excess of primary policy limits, was driven by a larger than expected number of large losses reported. The Company believes social inflation is contributing to an increase in the frequency of large losses for these accident years. Social inflation can include higher settlement demands from plaintiffs, use of tactics such as litigation funding by the plaintiffs’ bar, negative public sentiment towards large businesses and corporations, and erosion of tort reforms, among others.
The favorable prior year development on casualty lines for the 2020 through 2022 accident years in the Insurance segment was concentrated in the professional liability, workers’ compensation, and general liability lines of business. Due to elevated uncertainty regarding incurred loss frequency and severity as a result of ongoing social inflation and the impacts of the COVID-19 pandemic, the Company set its initial loss ratios for the 2020 through 2022 accident years prudently, and largely maintained these estimates through the end of each respective accident year. The reported loss experience to date for these lines of business for the 2020 through 2022 accident years has been significantly better than was expected, and the Company has begun to react to this favorable emergence as the accident years mature beyond the age of twelve months. It should also be noted that commercial auto liability experienced adverse prior year development for the 2020 through 2022 accident years, which partially offset the favorable development discussed above; the adverse development was driven by a larger than expected number of large losses reported.
Reinsurance & Monoline Excess – Reserves for the Reinsurance & Monoline Excess segment developed favorably by $2 million in 2023 (net of additional and return premiums). The overall favorable prior year development for the segment was driven mainly by favorable development in excess workers’ compensation, substantially offset by unfavorable development in the non-proportional reinsurance assumed liability, excess general liability (including umbrella), and commercial auto liability lines of business. The favorable excess workers’ compensation development was driven by continued lower claim frequency and reported losses relative to our expectations, and to favorable claim settlements. The favorable development was spread across many prior accident years. The unfavorable development for non-proportional reinsurance assumed liability and excess general liability was associated primarily with our U.S. assumed reinsurance business, and related to accounts reinsuring excess and umbrella business and construction projects. The adverse development was concentrated mainly in accident years 2017 through 2020. The unfavorable development for commercial auto liability was concentrated in the 2022 accident year and related to commercial auto program business.
Unfavorable prior year development (net of additional and return premiums) was $36 million in 2022.
Insurance – Reserves for the Insurance segment developed unfavorably by $41 million in 2022 (net of additional and return premiums). The unfavorable development in the segment primarily related to COVID-19 losses at two businesses. These businesses wrote policies providing coverage for event cancellation and film production delay which were heavily impacted by losses directly caused by the COVID-19 pandemic. Most of this COVID-19 related unfavorable development emerged during the third quarter as a result of settlements of claims at values higher than our expectations. However, the Company believes that
as a result of these settlements the remaining level of uncertainty around the ultimate value of its known COVID-19 claims has been significantly reduced.
The unfavorable development mentioned above also includes favorable prior year development for the Insurance segment primarily attributable to the 2020 and 2021 accident years and unfavorable development on the 2015 through 2019 accident years. The favorable development on the 2020 and 2021 accident years was concentrated in certain casualty lines of business including general liability, professional liability, and workers’ compensation. The Company experienced lower reported claim frequency in these lines of business during 2020 and 2021 relative to historical averages, and continued to experience lower reported incurred losses relative to its expectations for these accident years as they developed during 2022. These trends began in 2020 and we believe were caused by the impacts of the COVID-19 pandemic, including for example, lockdowns, reduced driving/traffic and increased work from home. Due to the uncertainty regarding the ultimate impacts of the pandemic on accident years 2020 and 2021 incurred losses, the Company was cautious in reacting to these lower trends in setting and updating its loss ratio estimates for these years. As these accident years have continued to mature, the Company has continued to recognize some of the favorable reported experience in its ultimate loss estimates made during 2022.
The unfavorable development on the 2015 through 2019 accident years was concentrated in the general liability and professional liability, including medical professional, lines of business, as well as auto liability. The development was driven by a larger than expected number of large losses reported. The Company believes social inflation is contributing to an increase in the frequency of large losses for these accident years. Social inflation can include higher settlement demands from plaintiffs, use of tactics such as litigation funding by the plaintiffs’ bar, negative public sentiment towards large businesses and corporations, and erosion of tort reforms, among others.
Reinsurance & Monoline Excess – Reserves for the Reinsurance & Monoline Excess segment developed favorably by $5 million in 2022 (net of additional and return premiums). The overall favorable development for the segment was driven mainly by favorable development in excess workers compensation, substantially offset by unfavorable development in the professional liability, non-proportional reinsurance assumed liability, and commercial auto liability lines of business. The favorable excess workers’ compensation development was spread across most prior accident years, including 2012 and prior years, and was driven by a review of the Company’s claim reporting patterns as well as a number of favorable claim settlements relative to expectations. The unfavorable professional liability and non-proportional reinsurance assumed liability development was concentrated mainly in accident years 2016 through 2018 and was associated primarily with our U.S. assumed reinsurance business and related to accounts insuring construction projects and professional liability exposures. The unfavorable development for commercial auto liability was concentrated in the 2021 accident year and related to commercial auto program business.
Environmental and Asbestos — To date, known environmental and asbestos claims have not had a material impact on the Company’s operations, because its subsidiaries generally did not insure large industrial companies that are subject to significant environmental or asbestos exposures prior to 1986 when an absolute exclusion was incorporated into standard policy language.
The Company’s net reserves for losses and loss expenses relating to asbestos and environmental claims on policies written before adoption of the absolute exclusion was $16 million and $17 million at December 31, 2024 and 2023, respectively. The estimation of these liabilities is subject to significantly greater than normal variation and uncertainty because it is difficult to make an actuarial estimate of these liabilities due to the absence of a generally accepted actuarial methodology for these exposures and the potential effect of significant unresolved legal matters, including coverage issues, as well as the cost of litigating the legal issues. Additionally, the determination of ultimate damages and the final allocation of such damages to financially responsible parties are highly uncertain.
Discounting — The Company discounts its liabilities for certain workers’ compensation reserves. The amount of workers’ compensation reserves that were discounted was $1,358 million and $1,352 million at December 31, 2024 and 2023, respectively. The aggregate net discount for those reserves, after reflecting the effects of ceded reinsurance, was $405 million and $390 million at December 31, 2024 and 2023, respectively. At December 31, 2024, discount rates by year ranged from 0.7% to 6.5%, with a weighted average discount rate of 3.6%.
Substantially all discounted workers’ compensation reserves (97% of total discounted reserves at December 31, 2024) are excess workers’ compensation reserves. In order to properly match loss expenses with income earned on investment securities supporting the liabilities, reserves for excess workers’ compensation business are discounted using risk-free discount
rates determined by reference to the U.S. Treasury yield curve. These rates are determined annually based on the weighted average rate for the period. Once established, no adjustments are made to the discount rate for that period, and any increases or decreases in loss reserves in subsequent years are discounted at the same rate, without regard to when any such adjustments are recognized. The expected loss and loss expense payout patterns subject to discounting are derived from the Company’s loss payout experience.
The Company also discounts reserves for certain other long-duration workers’ compensation reserves (representing approximately 3% of total discounted reserves at December 31, 2024), including reserves for quota share reinsurance and reserves related to losses regarding occupational lung disease. These reserves are discounted at statutory rates prescribed or permitted by the Department of Insurance of the State of Delaware.