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RESERVE FOR LOSSES AND LOSS EXPENSES
 12 Months Ended
Dec. 31, 2018
Insurance Loss Reserves [Abstract]  
RESERVE FOR LOSSES AND LOSS EXPENSES
Reserving Methodology
Sources of Information

The Company's reserving process begins with the collection and analysis of paid and incurred claim data for each of the Company's segments. The segmental data is disaggregated by reserve class and further disaggregated by underwriting year and accident year. Underwriting year information is used to analyze the Company's business and subsequently allocate reserves to the respective accident years. Reserve classes are selected to ensure that the underlying contracts have homogeneous loss development characteristics, while remaining large enough to make the estimation of trends credible. The Company's reserve classes are reviewed on a regular basis and adjusted over time as the Company's business evolves. The paid and incurred claim data, in addition to industry benchmarks, serves as a key input to many of the methods employed by the Company's actuaries. The relative weights assigned to the Company's own historical loss data versus industry data vary according to the length of the development profile for the reserve class being evaluated (refer to 'Net Incurred and Paid Claims Development Tables By Accident Year' below for further details by reserve class).

The tables below map the Company's lines of business to reserve classes and the expected claim tails:
Insurance segment
 
 
 
 
 
 
Reserve class and tail
 
 
 
 
 
 
 
 
Property and other
Marine
Aviation
Credit and political risk
Professional lines
Liability
 
 
 
 
 
 
 
 
Short
Short
Short/Medium
Medium
Medium
Long
 
 
 
 
 
 
 
Reported lines of business
 
 
 
 
 
 
Property
X
 
 
 
 
 
Marine
 
X
 
 
 
 
Terrorism
X
 
 
 
 
 
Aviation
 
 
X
 
 
 
Credit and political risk
 
 
 
X
 
 
Professional lines
 
 
 
 
X
 
Liability
 
 
 
 
 
X
Accident and health
X
 
 
 
 
 
Discontinued lines - Novae
X
 
 
 
X
X

Reinsurance segment
 
 
 
 
 
Reserve class and tail
 
 
 
 
 
 
 
Property and other
Credit and surety
Professional lines
Motor
Liability
 
 
 
 
 
 
 
Short
Medium
Medium
Long
Long
 
 
 
 
 
 
Reported lines of business
 
 
 
 
 
Catastrophe
X
 
 
 
 
Property
X
 
 
 
 
Credit and surety
 
X
 
 
 
Professional lines
 
 
X
 
 
Motor
 
 
 
X
 
Liability
 
 
 
 
X
Engineering
X
 
 
 
 
Agriculture
X
 
 
 
 
Marine and other
X
 
 
 
 
Accident and health
X
 
 
 
 
Discontinued lines - Novae
X
 
 
X
X
Actuarial Analysis
Multiple actuarial methods are available to estimate ultimate losses. Each method has its own assumptions and its own advantages and disadvantages, with no single estimation method being better than the others in all situations and no one set of assumption variables being meaningful for all reserve classes. The relative strengths and weaknesses of the particular estimation methods when applied to a particular group of claims can also change over time.

The following is a brief description of the reserve estimation methods commonly employed by the Company's actuaries including a discussion of their particular strengths and weaknesses:
 
•
Expected Loss Ratio Method ("ELR Method"): This method estimates ultimate losses for an accident year or underwriting year by applying an expected loss ratio to the earned or written premium for that year. Generally, expected loss ratios are based on one or more of (a) an analysis of historical loss experience to date, (b) pricing information and (c) industry data, adjusted as appropriate, to reflect changes in rates and terms and conditions. This method is insensitive to actual incurred losses for the accident year or underwriting year in question and is, therefore, often useful in the early stages of development when very few losses have been incurred. Conversely, the lack of sensitivity to incurred/paid losses for the accident year or underwriting year in question means that this method is usually inappropriate in later stages of an accident year or underwriting year’s development.

•
Loss Development Method (also referred to as the "Chain Ladder Method" or "Link Ratio Method"): This method assumes that the losses incurred/paid for each accident year or underwriting year at a particular development stage follow a relatively similar pattern. It assumes that on average, every accident year or underwriting year will display the same percentage of ultimate losses incurred/paid at the same point in time after the inception of that year. The percentages incurred/paid are established for each development stage (e.g. 12 months, 24 months, etc.) after examining historical averages from historical loss development data and/or external industry benchmark information. Ultimate losses are then estimated by multiplying the actual incurred/paid losses by the reciprocal of the established incurred/paid percentage. The strengths of this method are that it reacts to loss emergence/payments and that it makes full use of historical claim emergence/payment experience. However, this method has weaknesses when the underlying assumption of stable loss development/payment patterns is not valid. This could be the consequence of changes in business mix, claim inflation trends or claim reporting practices and/or the presence of large claims, among other things. Furthermore, this method tends to produce volatile estimates of ultimate losses where there is volatility in the underlying incurred/paid patterns. In particular, where the expected percentage of incurred/paid losses is low, small deviations between actual and expected claims can lead to very volatile estimates of ultimate losses. As a result, this method is often unsuitable at early development stages for an accident year or underwriting year.

•
Bornhuetter-Ferguson Method ("BF Method"): This method can be seen as a combination of the ELR and Loss Development Methods, under which the Loss Development Method is given progressively more weight as an accident year or underwriting year matures. The main advantage of the BF Method is that it provides a more stable estimate of ultimate losses than the Loss Development Method at earlier stages of development, while remaining more sensitive to emerging loss development than the ELR Method. In addition, the BF Method allows for the incorporation of external market information through the use of expected loss ratios, whereas the Loss Development Method does not incorporate such information.

As part of the loss reserve review process, the Company's actuaries employ the estimation method(s) that they believe will produce the most reliable estimate of ultimate losses, at that particular evaluation date, for each reserve class and accident year or underwriting year combination. Often, this is a blend (i.e. weighted average) of the results of two or more appropriate actuarial methods. These ultimate loss estimates are generally utilized to evaluate the adequacy of ultimate loss estimates for previous accident or underwriting years, established in the prior reporting period. For the initial estimate of the current accident or underwriting year, the available claim data is typically insufficient to produce a reliable estimate of ultimate losses. As a result, initial estimates for an accident or underwriting year are generally based on the ELR Method for longer tailed lines and a BF Method for shorter tailed lines. The initial ELR for each reserve class is established collaboratively by actuaries, underwriters and management at the start of the year as part of the planning process, taking into consideration prior accident years’ or underwriting years' experience and industry benchmarks, adjusted after considering factors such as exposure trends, rate differences, changes in contract terms and conditions, business mix changes and other known differences between the current year and prior accident or underwriting years. The initial expected loss ratios for a given accident or underwriting year may be modified over time if the underlying assumptions, such as loss development or premium rate changes, differ from the original assumptions.
Key Actuarial Assumptions
The use of the above actuarial methods requires the Company to make certain explicit assumptions, the most significant of which are: (1) expected loss ratios and (2) loss development patterns.

In earlier years, significant reliance was placed on industry benchmarks in establishing expected loss ratios and selecting loss development patterns. Over time, more reliance has been placed on historical loss experience in establishing these ratios and selecting these patterns where the Company believes the weight of its own actual experience has become sufficiently credible for consideration. The weight given to the Company's experience differs for each of the three claim tail classes. In establishing expected loss ratios for the insurance segment, consideration is given to a number of other factors, including exposure trends, rate adequacy on new and renewal business, ceded reinsurance costs, changes in claims emergence and underwriters’ view of terms and conditions in the market environment. For the reinsurance segment, expected loss ratios are based on a contract-by-contract review, which considers information provided by clients together with estimates provided by underwriters and actuaries about the impact of changes in pricing, terms and conditions and coverage. Market experience of some classes of business as compiled and analyzed by an independent actuarial firm has also been considered, as appropriate.



Claim Tail Analysis

Short-tail Business

Short-tail business generally includes exposures for which losses are usually known and paid within a relatively short period of time after the underlying loss event has occurred. The key actuarial assumptions for short-tail business in early accident years were primarily developed with reference to industry benchmarks for expected loss ratios and loss development patterns. As the Company's own historical loss experience amassed, it gained credibility and became relevant for consideration in establishing these key actuarial assumptions. As a result, the Company gradually increased the weighting assigned to its own historical experience in selecting the expected loss ratios and loss development patterns utilized to establish estimates of ultimate losses for an accident year. Due to the relatively short reporting and settlement patterns for short-tail business, more weight is generally placed upon experience-based methods and other qualitative considerations in establishing reserves for recent and more mature accident years. The majority of development for an accident year or underwriting year is expected to be recognized in the subsequent one to three years.
Medium-tail Business

Medium-tail business generally has claim reporting and settlement periods longer than those of short-tail reserve classes. For the Company's earliest accident and underwriting years, initial key actuarial expected loss ratio and loss development assumptions were established utilizing industry benchmarks. Due to the longer claim tail, the length of time required to develop its own credible loss history for use in the reserve process is greater for medium-tail business than for short-tail business. As a result, the number of years where the Company has relied heavily on industry benchmarks to establish its key actuarial assumptions is greater for medium-tail business.

Long-tail Business

In contrast to short and medium-tail business, the claim tail for long-tail business is expected to be notably longer, as claims are often reported and ultimately paid or settled years, or even decades, after the related loss events occur. As a general rule, estimates of accident year or underwriting year ultimate losses for long-tail business are notably more uncertain than those for short and medium-tail business. To date, key actuarial assumptions for long-tail business have been derived extensively from industry benchmarks supplemented with the Company's own historical experience. Given the Company's relatively short operating history in comparison to the development tail for this business, the Company does not believe that its own historical loss development for long-tail business has amassed an appropriate volume to serve as a fully credible input into the key actuarial assumptions previously outlined. While industry benchmarks that the Company believes reflect the nature and coverage of its business are considered, actual loss experience may differ from the benchmarks based on industry averages. Due to the length of the development tail for this business, reserve estimates for most accident years and underwriting years are predominantly based on the BF Method or ELR Method and the consideration of qualitative factors.

Reserving for Significant Catastrophic Events

The Company cannot estimate losses from widespread catastrophic events, such as hurricanes and earthquakes, using the traditional actuarial methods described above. Loss reserves for such events are estimated by management after a catastrophe occurs by completing an in-depth analysis of individual contracts which may potentially have been impacted by the catastrophic event. This in-depth analysis may rely on several sources of information including:

•
estimates of the size of insured industry losses from the catastrophic event and the Company's corresponding market share;
•
a review of portfolio of contracts performed to identify those contracts which may be exposed to the catastrophic event;
•
a review of modeled loss estimates based on information previously reported by customers and brokers, including exposure data obtained during the underwriting process;
•
discussions of the impact of the event with customers and brokers; and
•
catastrophe bulletins published by various independent statistical reporting agencies.

A blend of these information sources is generally used to arrive at aggregate estimates of the ultimate losses arising from the catastrophic event. In subsequent reporting periods, changes in paid and incurred losses in relation to each significant catastrophe are reviewed and adjustments are made to estimates of ultimate losses for each event if there are developments that are different from previous expectations. Adjustments are recorded in the period in which they are identified.

Selection of Reported Reserves – Management’s Best Estimate

The Company's reserving process involves the collaboration of underwriting, claims, actuarial, legal, ceded reinsurance and finance departments, includes various segmental committee meetings and culminates with the approval of a single point best estimate by the Company's Group Reserving Committee, which comprises senior management. In selecting this best estimate, management considers actuarial estimates and applies informed judgment regarding qualitative factors that may not be fully captured in these actuarial estimates. Such factors include, but are not limited to; the timing of the emergence of claims, volume and complexity of claims, social and judicial trends, potential severity of individual claims and the extent of internal historical loss data versus industry information. While these qualitative factors are considered in arriving at the point estimate, no specific provisions for qualitative factors are established.

With regard to establishing the fair value of reserves for losses and loss expenses for Novae at the acquisition date, weight was given to the observable value of these reserves based on the RITC transaction which was completed prior to the allocation of purchase price. Management made no change to the initial estimate when establishing its best estimate of reserves for losses and loss expenses at December 31, 2017. This is consistent with the Company's general approach of recognizing all or part of the anticipated cost of third party liability commutations if the transaction has either completed or is considered sufficiently likely to be completed in the near term. 

Reserve for Losses and Loss Expenses

Reserve for losses and loss expenses comprise the following:
 
 
 
 
 
 
 
As of December 31,
2018
 
2017
 
 
 
 
 
 
 
 
Reserve for reported losses and loss expenses
$
4,626,204

 
$
5,137,659

 
 
Reserve for losses incurred but not reported
7,654,565

 
7,859,894

 
 
Reserve for losses and loss expenses
$
12,280,769

 
$
12,997,553

 
 
 
 
 
 
 

Reserve Roll-forward

The table below provides a reconciliation of beginning and ending net reserves for unpaid losses and loss expenses for the years indicated:
 
 
 
 
 
 
 
 
 
Year ended December 31,
2018
 
2017
 
2016
 
 
 
 
 
 
 
 
 
 
Gross reserve for losses and loss expenses, beginning of year
$
12,997,553

 
$
9,697,827

 
$
9,646,285

 
 
Less reinsurance recoverable on unpaid losses, beginning of year
(3,159,514
)
 
(2,276,109
)
 
(2,031,309
)
 
 
Net reserve for unpaid losses and loss expenses, beginning of year
9,838,039

 
7,421,718

 
7,614,976

 
 
 
 
 
 
 
 
 
 
Net incurred losses and loss expenses related to:
 
 
 
 
 
 
 
Current year
3,389,949

 
3,487,826

 
2,496,574

 
 
Prior years
(199,662
)
 
(200,054
)
 
(292,377
)
 
 
 
3,190,287

 
3,287,772

 
2,204,197

 
 
Net paid losses and loss expenses related to:
 
 
 
 
 
 
 
Current year
(724,199
)
 
(703,796
)
 
(428,153
)
 
 
Prior years
(2,368,615
)
 
(1,880,882
)
 
(1,763,696
)
 
 
 
(3,092,814
)
 
(2,584,678
)
 
(2,191,849
)
 
 
 
 
 
 
 
 
 
 
Foreign exchange and other
(1,156,412
)
 
1,713,227

 
(205,606
)
 
 
 
 
 
 
 
 
 
 
Net reserve for unpaid losses and loss expenses, end of year
8,779,100

 
9,838,039

 
7,421,718

 
 
Reinsurance recoverable on unpaid losses, end of year
3,501,669

 
3,159,514

 
2,276,109

 
 
Gross reserve for losses and loss expenses, end of year
$
12,280,769

 
$
12,997,553

 
$
9,697,827

 
 
 
 
 
 
 
 
 
 
The Company writes business with loss experience generally characterized as low frequency and high severity in nature, which can result in volatility in its financial results. During 2018, 2017 and 2016, the Company recognized net losses and loss expenses, net of reinstatement premiums, of $430 million, $835 million and $204 million, respectively, attributable to catastrophe and weather-related events.

On April 16, 2018, the Company entered into a quota share retrocessional agreement with Harrington Re, a related party, which was deemed to have met the established criteria for retroactive reinsurance accounting. The Company recognized reinsurance recoverable on unpaid losses of $108 million related to this reinsurance agreement. This transaction was conducted at market rates consistent with negotiated arms-length contracts.

On January 1, 2018, AXIS Managing Agency Ltd., the managing agent of Syndicate 2007 entered into an agreement for the RITC of the 2015 and prior years of account of Syndicate 2007. This agreement was accounted for as a novation reinsurance contract. At December 31, 2018, foreign exchange and other included a reduction in reserves for losses and loss expenses of $819 million related to this transaction.

On October 2, 2017, the Company acquired 100% ownership interest in Novae. At December 31, 2017, foreign exchange and other included reserves for losses and loss expenses of $2,126 million and reinsurance recoverables on unpaid and paid losses of $788 million related to this acquisition.

On April 1, 2017, the Company acquired 100% ownership interest in Aviabel. At December 31, 2017, foreign exchange and other included reserves for losses and loss expenses of $79 million and reinsurance recoverables on unpaid and paid losses of $5 million related to this acquisition.

The transfer of the insurance business of AXIS Specialty Australia to a reinsurer was approved by the Irish High Court on February 1, 2017 and the Federal Court of Australia of February 10, 2017. Consequently, the insurance policies, assets and liabilities of AXIS Specialty Australia were transferred to the reinsurer with effect from February 13, 2017. This resulted in the reduction of reserves for losses and loss expenses by $223 million and a reduction in reinsurance recoverables on unpaid and paid losses by $223 million.

During April 2016, the Company entered into a quota share and adverse development cover reinsurance agreement, a retroactive contract which was deemed to have met the established criteria for retroactive reinsurance accounting. At December 31, 2016, foreign exchange and other included reinsurance recoverables of $150 million related to this reinsurance agreement.

Prior Year Reserve Development

Prior year reserve development arises from changes to loss and loss expense estimates related to loss events that occurred in previous calendar years. The following table presents prior year reserve development by segment:

 
 
 
 
 
 
 
 
 
 
Insurance
 
Reinsurance
 
Total
 
 
 
 
 
 
 
 
 
 
Year ended December 31, 2018
$
92,806

 
$
106,856

 
$
199,662

 
 
Year ended December 31, 2017
60,459

 
139,595

 
200,054

 
 
Year ended December 31, 2016
48,978

 
243,399

 
292,377

 
 
 
 
 
 
 
 
 


Short-tail Business

Short-tail business includes the underlying exposures in property and other, marine and aviation reserve classes within the insurance segment and the property and other reserve class within the reinsurance segment.

These reserve classes contributed $86 million of net favorable prior year reserve development in 2018 reflecting the recognition of overall better than expected loss emergence related to the 2017 catastrophe events. These reserve classes contributed $60 million and $148 million of net favorable prior year reserve development in 2017 and 2016, respectively, reflecting the recognition of better than expected loss emergence.

Medium-tail Business

Medium-tail business consists primarily of the insurance and reinsurance professional reserve classes, the insurance credit and political risk reserve class and the reinsurance credit and surety reserve class.

For the year ended December 31, 2018, the reinsurance professional reserve class recognized net favorable prior year development of $21 million (2017: $44 million, 2016: $30 million). For the year ended December 31, 2018, the insurance professional reserve class recognized net favorable prior year development of $32 million (2017: $26 million, 2016: $14 million). The net favorable prior year loss development on these reserve classes continued to reflect the generally favorable experience on older accident years as the Company continued to transition to more experienced based methods.

For the year ended December 31, 2018, the reinsurance credit and surety reserve class recorded net favorable prior year reserve development of $33 million (2017: $33 million, 2016: $10 million). The net favorable prior year reserve development was due to the recognition of generally better than expected loss emergence.

Long-tail Business

Long-tail business consists primarily of the insurance and reinsurance liability reserve classes and the reinsurance motor reserve class.

For the year ended December 31, 2018, the reinsurance liability reserve classes contributed net favorable prior year development of $23 million (2017: $43 million, 2016: $44 million). For the year ended December 31, 2018, the net favorable prior year development was due to progressively increased weight given by management to experience based indications on older accident years. For the years ended December 31, 2017 and 2016, the net favorable prior year development was primarily due to progressively increased weight given by management to experience based indications on older accident years, which have generally been favorable.

For the year ended December 31, 2018, the insurance liability reserve class recorded net adverse prior year development of $22 million (2017: $8 million, 2016: $8 million). The net adverse prior year reserve development on the insurance liability reserve class in 2018 was primarily related to reserve strengthening within the Company's U.S. excess casualty book of business. The net adverse prior year reserve development in 2017 and 2016 was primarily attributable to reserve strengthening within the Company's run-off Bermuda excess casualty book of business.

For the year ended December 31, 2018, the reinsurance motor reserve class contributed net favorable prior year reserve development of $23 million (2017: $1 million 2016: $55 million). The net favorable prior year reserve development on the motor reserve class in 2018 was primarily attributable to U.K. non proportional treaty business on older accident years. The net favorable prior year development in 2017 was adversely impacted by the decrease in the discount rate used to calculate lump sum awards in U.K. bodily injury cases, known as the Ogden Rate, which changed from plus 2.5% to minus 0.75% effective March 20, 2017. The net favorable prior year reserve development on the motor reserve class in 2016 related to favorable loss emergence trends on several classes of business spanning multiple accident years.

At December 31, 2018, net reserve for losses and loss expenses includes estimated amounts for numerous catastrophe events. The magnitude and/or complexity of losses arising from these events, in particular the California Wildfires and Hurricanes Michael and Florence which occurred in 2018 as well as Hurricanes Harvey, Irma and Maria, and the two earthquakes in Mexico which occurred in 2017, inherently increase the level of uncertainty and, therefore, the level of management judgment involved in arriving at estimated net reserves for losses and loss expenses. As a result, actual losses for these events may ultimately differ materially from current estimates.

Net Incurred and Paid Claims Development Tables by Accident Year

The following tables present net incurred and paid claims development by accident year, total incurred-but-not-reported liabilities plus expected development on reported claims, cumulative reported claims frequency and claims duration for each reserve class. The loss development tables are presented on an accident year basis for the insurance and reinsurance segments. The Company does not discount unpaid losses and loss expense reserves.

Non-U.S. dollar denominated loss data is converted to U.S. dollar at the rates of exchange in effect at the balance sheet date for material underlying currencies. Fluctuations in foreign currency exchange rates may cause material shifts in loss development. Reserves for losses and loss expenses disclosed in the consolidated balance sheets are also revalued using the exchange rate at the balance sheet date.

At December 31, 2018, the Company included Novae and Aviabel business in the relevant loss development tables retrospectively from the date of acquisition.

With regard to Novae, the Company entered into an agreement for the RITC of the 2015 and prior years of account of Syndicate 2007 on January 1, 2018. This agreement was accounted for as a novation reinsurance contract which resulted in a reduction in reserves for losses and loss expenses of $819 million. Consequently, the retrospective treatment for the acquisition of Novae was adopted at December 31, 2018 as the data necessary to produce the loss development tables by accident year was available.

With regard to Aviabel, the retrospective treatment for the acquisition was also adopted at December 31, 2018 as the data necessary to produce the loss development tables by accident year was available.

To the extent that the Company enters into a disposition, the effects of the disposition are reported on a retrospective basis by removing the balances associated with the disposed of business.

There are many considerations in establishing loss reserves and an attempt to evaluate loss reserves using solely the data presented in these tables could be misleading. The Company cautions against mechanical application of standard actuarial methodologies to project ultimate losses using data presented in this disclosure.

Insurance Segment

The reporting of cumulative claims frequency for the reserve classes within the insurance segment has been measured by counting the number of unique claim references including claim references assigned to nil and nominal case reserves. Claim references are grouped by claimant by loss event for each reserve class. For certain insurance facilities and business produced by managing general agents where underlying data is reported to the Company in an aggregated format, the information necessary to provide cumulative claims frequency is not available therefore reporting of claims frequency is deemed to be impracticable.

Insurance Property and Other

This reserve class includes property, terrorism, accident and health, and discontinued lines - Novae.

The property line of business provides physical loss or damage, business interruption and machinery breakdown cover for virtually all types of property, including commercial buildings, residential premises, construction projects and onshore energy installations. This line of business includes primary and excess risks, some of which are catastrophe-exposed.

The terrorism line of business provides cover for physical damage and business interruption of an insured following an act of terrorism and includes kidnap and ransom, and crisis management insurance.

The accident and health line of business includes accidental death, travel insurance and specialty health products for employer and affinity groups. The accident and health line of business contributed net premiums earned of $208 million to this reserve class for the year ended December 31, 2018. A large increase in reported claims related to this line of business was observed from 2012. In particular, an increase in limited benefits medical business written in 2017 has resulted in a significant increase in reported claims observed in that year.

The discontinued lines - Novae includes the international direct and facultative property line of business that Novae exited or placed into run-off in the fourth quarter of 2016.
In general, reporting and payment patterns are relatively short-tailed although they can be volatile due to the incidence of catastrophe events.

Insurance property and other
 
Incurred claims and allocated claim adjustment expenses, net of reinsurance
At December 31, 2018
 
For the years ended December 31,
Total of incurred-but-not-reported liabilities plus expected development on reported claims
Cumulative number of reported claims
Accident year
2009 unaudited
2010 unaudited
2011 unaudited
2012 unaudited
2013 unaudited
2014 unaudited
2015 unaudited
2016 unaudited
2017 unaudited
2018
2009
$
117,309

$
99,079

$
89,768

$
82,460

$
80,461

$
78,269

$
78,490

$
78,150

$
78,395

$
77,338

$
83

3,201
2010
 
175,012

155,032

147,426

122,111

116,562

115,635

115,316

114,866

113,767

867

4,422
2011
 
 
359,132

338,220

306,114

285,745

282,755

281,405

281,866

279,996

979

6,348
2012
 
 
 
391,646

399,473

381,746

361,476

357,267

351,673

350,827

8,992

29,931
2013
 
 
 
 
308,359

297,713

271,157

267,022

266,727

276,940

6,687

53,172
2014
 
 
 
 
 
360,130

354,219

343,333

327,389

326,100

5,917

62,444
2015
 
 
 
 
 
 
277,332

268,897

257,927

253,729

5,642

47,052
2016
 
 
 
 
 
 
 
349,152

376,458

367,362

12,290

92,867
2017
 
 
 
 
 
 
 
 
882,968

825,176

42,188

663,914
2018
 
 
 
 
 
 
 
 
 
712,082

187,391

730,832
 
 
 
 
 
 
 
 
 
Total
$
3,583,317

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Insurance property and other
 
Cumulative paid claims and allocated claim adjustment expenses, net of reinsurance
 
For the years ended December 31,
Accident year
2009 unaudited
2010 unaudited
2011 unaudited
2012 unaudited
2013 unaudited
2014 unaudited
2015 unaudited
2016 unaudited
2017 unaudited
2018
2009
$
31,360

$
60,085

$
68,653

$
72,499

$
73,387

$
74,453

$
76,673

$
76,980

$
77,248

$
77,252

2010
 
48,575

86,886

94,912

105,719

109,933

110,008

109,794

109,837

110,171

2011
 
 
84,811

192,892

249,162

271,451

270,309

269,994

270,666

270,946

2012
 
 
 
77,088

213,138

277,230

300,129

307,639

312,818

312,894

2013
 
 
 
 
75,214

197,898

236,405

247,393

258,435

261,266

2014
 
 
 
 
 
131,991

258,098

304,609

311,730

315,797

2015
 
 
 
 
 
 
98,366

201,166

225,593

239,989

2016
 
 
 
 
 
 
 
122,407

287,049

327,706

2017
 
 
 
 
 
 
 
 
251,358

625,027

2018
 
 
 
 
 
 
 
 
 
276,472

Total
 
2,817,520

 
 
All outstanding liabilities before 2009, net of reinsurance
 
5,862

 
 
Liabilities for claims and claim adjustment expenses, net of reinsurance
 
$
771,659

 
 
 
 
 
 
 
 
 
 
 


Insurance property and other
Average annual percentage payout of incurred claims by age, net of reinsurance (unaudited)
Year 1
Year 2
Year 3
Year 4
Year 5
Year 6
Year 7
Year 8
Year 9
Year 10
34.5%
40.2%
13.2%
5.8%
2.0%
0.8%
0.7%
0.2%
0.3%
—%


Insurance Marine

This reserve class includes the marine line of business which provides cover for traditional marine classes, including offshore energy, cargo, liability, recreational marine, fine art, specie, and hull and war. Offshore energy coverage includes physical damage, business interruption, operators extra expense and liability coverage for all aspects of offshore upstream energy, from exploration and construction through the operation and distribution phases. The complex nature of claims arising under marine policies tends to result in reporting and payment patterns that are longer than those of the property and other class. Exposure to natural perils such as windstorm and earthquake can result in volatility.

Insurance marine
 
Incurred claims and allocated claim adjustment expenses, net of reinsurance
At December 31, 2018
 
For the years ended December 31,
Total of incurred-but-not-reported liabilities plus expected development on reported claims
Cumulative number of reported claims
Accident year
2009 unaudited
2010 unaudited
2011 unaudited
2012 unaudited
2013 unaudited
2014 unaudited
2015 unaudited
2016 unaudited
2017 unaudited
2018
2009
$
80,615

$
74,181

$
69,862

$
64,477

$
57,106

$
54,906

$
53,514

$
52,400

$
52,283

$
50,735

$
359

3,220
2010
 
68,528

70,394

66,389

53,388

51,483

48,650

47,249

45,543

45,125

643

3,196
2011
 
 
90,717

78,700

72,530

65,766

65,769

65,983

68,140

68,829

1,005

3,830
2012
 
 
 
89,639

82,648

68,715

70,855

71,823

74,445

72,585

12,055

4,134
2013
 
 
 
 
79,610

100,767

96,210

97,265

82,547

82,136

2,729

2,351
2014
 
 
 
 
 
59,558

44,463

48,481

44,392

45,980

5,454

2,157
2015
 
 
 
 
 
 
158,755

140,050

136,827

129,627

8,498

2,219
2016
 
 
 
 
 
 
 
86,264

78,779

76,743

12,819

2,795
2017
 
 
 
 
 
 
 
 
171,936

170,085

49,990

3,863
2018
 
 
 
 
 
 
 
 
 
178,709

113,414

3,250
 
 
 
 
 
 
 
 
 
Total
$
920,554

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

Insurance marine
 
Cumulative paid claims and allocated claim adjustment expenses, net of reinsurance
 
For the years ended December 31,
Accident year
2009 unaudited
2010 unaudited
2011 unaudited
2012 unaudited
2013 unaudited
2014 unaudited
2015 unaudited
2016 unaudited
2017 unaudited
2018
2009
$
17,394

$
30,297

$
39,674

$
43,147

$
45,159

$
45,775

$
48,321

$
48,587

$
48,920

$
50,244

2010
 
18,029

28,631

33,298

42,364

45,194

45,976

46,940

43,346

43,433

2011
 
 
26,435

44,218

54,930

58,025

59,862

60,572

64,868

66,913

2012
 
 
 
10,711

38,545

44,800

49,523

50,331

52,724

54,721

2013
 
 
 
 
18,982

44,087

54,898

63,128

65,822

76,856

2014
 
 
 
 
 
6,349

15,172

26,838

26,924

35,987

2015
 
 
 
 
 
 
21,426

54,869

108,152

111,027

2016
 
 
 
 
 
 
 
12,486

31,981

57,745

2017
 
 
 
 
 
 
 
 
14,472

68,563

2018
 
 
 
 
 
 
 
 
 
23,016

Total
 
588,505

 
 
All outstanding liabilities before 2009, net of reinsurance
 
8,619

 
 
Liabilities for claims and claim adjustment expenses, net of reinsurance
 
$
340,668

 
 
 
 
 
 
 
 
 
 
 


Insurance marine
Average annual percentage payout of incurred claims by age, net of reinsurance (unaudited)
Year 1
Year 2
Year 3
Year 4
Year 5
Year 6
Year 7
Year 8
Year 9
Year 10
21.9%
27.3%
20.8%
7.2%
6.2%
4.1%
4.0%
(1.5)%
0.5%
2.6%


Insurance Aviation

This reserve class includes the aviation line of business which provides cover for hull and liability, and specific war cover primarily for passenger airlines but also for cargo operations, general aviation operations, airports, aviation authorities, security firms and product manufacturers. The claims reporting pattern varies by insurance coverage provided. Losses arising from war or terrorism and damage to hulls of aircraft are generally reported quickly compared with liability claims which involve passengers and third parties which generally exhibit longer reporting and payment patterns. To date, the claims reported to the Company have predominantly related to damage to hulls, therefore, reporting and payment patterns have typically exhibited a relatively short tail.

Insurance aviation
 
Incurred claims and allocated claim adjustment expenses, net of reinsurance
At December 31, 2018
 
For the years ended December 31,
Total of incurred-but-not-reported liabilities plus expected development on reported claims
Cumulative number of reported claims
Accident year
2009 unaudited
2010 unaudited
2011 unaudited
2012 unaudited
2013 unaudited
2014 unaudited
2015 unaudited
2016 unaudited
2017 unaudited
2018
2009
$
17,468

$
14,560

$
18,752

$
18,090

$
16,743

$
16,618

$
15,437

$
14,604

$
14,330

$
13,821

$
41

1,659
2010
 
12,922

11,699

11,422

9,749

8,769

8,699

8,744

8,548

8,900

78

1,950
2011
 
 
17,723

15,390

12,779

9,552

8,422

7,275

7,242

7,203

205

2,145
2012
 
 
 
12,789

10,668

10,791

8,708

7,758

7,804

7,695

200

2,242
2013
 
 
 
 
15,651

16,327

15,199

15,243

15,618

15,502

292

2,320
2014
 
 
 
 
 
20,432

23,028

24,339

22,104

22,183

425

2,717
2015
 
 
 
 
 
 
29,761

28,479

30,363

30,135

1,480

3,484
2016
 
 
 
 
 
 
 
29,154

34,328

34,513

2,845

3,456
2017
 
 
 
 
 
 
 
 
56,565

63,295

7,676

3,452
2018
 
 
 
 
 
 
 
 
 
57,955

12,452

2,280
 
 
 
 
 
 
 
 
 
Total
$
261,202

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

Insurance aviation
 
Cumulative paid claims and allocated claim adjustment expenses, net of reinsurance
 
For the years ended December 31,
Accident year
2009 unaudited
2010 unaudited
2011 unaudited
2012 unaudited
2013 unaudited
2014 unaudited
2015 unaudited
2016 unaudited
2017 unaudited
2018
2009
$
2,081

$
3,583

$
7,026

$
12,780

$
13,902

$
14,266

$
14,203

$
13,700

$
13,665

$
13,616

2010
 
1,037

4,131

6,312

6,886

7,551

7,670

8,113

8,221

8,423

2011
 
 
638

2,822

4,512

5,028

5,562

5,811

6,042

6,188

2012
 
 
 
953

2,858

4,147

5,941

6,822

7,146

7,263

2013
 
 
 
 
4,399

7,326

9,746

11,444

13,594

14,200

2014
 
 
 
 
 
3,987

8,019

11,687

14,167

14,824

2015
 
 
 
 
 
 
8,084

16,155

21,507

23,797

2016
 
 
 
 
 
 
 
10,407

20,113

27,120

2017
 
 
 
 
 
 
 
 
22,512

41,671

2018
 
 
 
 
 
 
 
 
 
21,058

Total
 
178,160

 
 
All outstanding liabilities before 2009, net of reinsurance
 
8,362

 
 
Liabilities for claims and claim adjustment expenses, net of reinsurance
 
$
91,404

 
 
 
 
 
 
 
 
 
 
 


Insurance aviation
Average annual percentage payout of incurred claims by age, net of reinsurance (unaudited)
Year 1
Year 2
Year 3
Year 4
Year 5
Year 6
Year 7
Year 8
Year 9
Year 10
22.3%
24.8%
20.0%
15.5%
8.6%
3.1%
2.3%
(0.1)%
1.0%
(0.4)%


Insurance Credit and Political Risk

This reserve class includes the credit and political risk line of business which provides credit and political risk insurance products for banks, commodity traders, corporations and multilateral and export credit agencies. Cover is provided for a range of risks including sovereign default, credit default, political violence, currency inconvertibility and non-transfer, expropriation, aircraft non-repossession and contract frustration due to political events.

The credit insurance coverage is primarily for lenders seeking to mitigate the risk of non-payment from their borrowers. In order to claim compensation under a credit insurance contract, the insured (most often a bank) cannot assign, without the Company's prior agreement, the insured contract (most often a loan) to any third party and is normally obliged to hold a material portion of insured asset on their books, unhedged and uninsured. Claims for this business tend to be characterized by their severity risk, as opposed to their frequency risk. Claim reporting and payment patterns are anticipated to be volatile. Under the notification provisions of credit insurance policies issued by the Company, it anticipates being advised of an insured event within a relatively short time period. Consequently, the Company generally estimates ultimate losses based on a contract-by-contract analysis which considers the contracts’ terms, the facts and circumstances of underlying loss events and qualitative input from claims managers.
Insurance credit and political risk
 
Incurred claims and allocated claim adjustment expenses, net of reinsurance
At December 31, 2018
 
For the years ended December 31,
Total of incurred-but-not-reported liabilities plus expected development on reported claims
Cumulative number of reported claims
Accident year
2009 unaudited
2010 unaudited
2011 unaudited
2012 unaudited
2013 unaudited
2014 unaudited
2015 unaudited
2016 unaudited
2017 unaudited
2018
2009
$
248,083

$
305,282

$
326,024

$
335,536

$
334,965

$
335,271

$
335,291

$
339,570

$
339,534

$
340,648

$
3,600

24
2010
 
62,415

63,179

63,259

65,596

64,977

65,011

72,101

90,880

99,416

1,316

6
2011
 
 
58,154

48,665

47,706

48,361

48,333

45,036

33,604

27,899

268

4
2012
 
 
 
32,602

15,672

12,435

12,447

10,320

44

197

155

4
2013
 
 
 
 
26,439

25,684

9,759

9,880

14,941

14,065

5,759

1
2014
 
 
 
 
 
38,825

70,712

67,109

68,320

69,586

1,136

6
2015
 
 
 
 
 
 
30,329

30,368

27,513

26,001

2,703

2
2016
 
 
 
 
 
 
 
45,907

44,639

42,184

17,704

1
2017
 
 
 
 
 
 
 
 
36,563

34,631

28,083

3
2018
 
 
 
 
 
 
 
 
 
46,172

33,079

1
 
 
 
 
 
 
 
 
 
Total
$
700,799

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

Insurance credit and political risk
 
Cumulative paid claims and allocated claim adjustment expenses, net of reinsurance
 
For the years ended December 31,
Accident year
2009 unaudited
2010 unaudited
2011 unaudited
2012 unaudited
2013 unaudited
2014 unaudited
2015 unaudited
2016 unaudited
2017 unaudited
2018
2009
$
92,842

$
344,652

$
346,254

$
346,221

$
341,577

$
345,521

$
345,520

$
345,567

$
341,231

$
340,785

2010
 
50,000

85,418

90,729

106,767

101,786

101,948

102,154

102,196

102,514

2011
 
 
32,788

37,205

27,636

27,636

27,636

27,636

27,631

27,631

2012
 
 
 
—

—

—

—

38

39

42

2013
 
 
 
 
745

2,235

3,726

5,216

11,768

13,826

2014
 
 
 
 
 
1,924

39,952

61,108

57,855

57,855

2015
 
 
 
 
 
 
—

23,309

23,298

23,298

2016
 
 
 
 
 
 
 
—

24,445

24,479

2017
 
 
 
 
 
 
 
 
1,504

5,589

2018
 
 
 
 
 
 
 
 
 
4,294

Total
 
600,313

 
 
All outstanding liabilities before 2009, net of reinsurance
 
(1,475
)
 
 
Liabilities for claims and claim adjustment expenses, net of reinsurance
 
$
99,011

 
 
 
 
 
 
 
 
 
 
 


Insurance credit and political risk
Average annual percentage payout of incurred claims by age, net of reinsurance (unaudited)
Year 1
Year 2
Year 3
Year 4
Year 5
Year 6
Year 7
Year 8
Year 9
Year 10
21.7%
38.9%
1.6%
3.1%
9.9%
3.3%
0.4%
—%
(0.5)%
(0.1)%


Insurance Professional Lines

This reserve class includes the professional line of business which provides directors’ and officers’ liability, errors and omissions liability, employment practices liability, fiduciary liability, crime, professional indemnity, cyber and privacy insurance, medical malpractice and other financial insurance related covers for commercial enterprises, financial institutions, not-for-profit organizations and other professional service providers. This reserve class also includes discontinued lines - Novae specifically
the financial institutions and professional indemnity lines of business that Novae exited or placed into run-off in the first quarter of 2017. This business is predominantly written on a claims-made basis. Typically this reserve class is anticipated to exhibit medium to long tail claim reporting and payment patterns.

With respect to key actuarial assumptions, the Company is progressively giving more weight to its own experience when establishing expected loss ratios and selecting loss development patterns, though it continues to consider industry benchmarks. Loss reporting patterns for professional lines business tend to be volatile, causing instability in actuarial indications based on incurred loss data until an accident year matures. Consequently, initial loss reserves for an accident year are generally based upon an ELR Method and the consideration of relevant qualitative factors. As accident years mature, the Company increasingly gives more weight to methods that reflect its actual experience until its selections are based almost exclusively on experience-based methods. The Company evaluates the appropriateness of the transition to experience-based methods at the reserve class level, commencing this transition when it believes that its incurred loss development is sufficient to produce meaningful actuarial indications. The rate at which the Company transitions fully to sole reliance on experience-based methods can vary by reserve class and by year, depending on its assessment of the stability and relevance of such indications. For some professional lines in the insurance segment, the Company also relies upon the evaluation of the open claim inventory in addition to the commonly employed actuarial methods when establishing reserves.
Insurance professional lines
 
Incurred claims and allocated claim adjustment expenses, net of reinsurance
At December 31, 2018
 
For the years ended December 31,
Total of incurred-but-not-reported liabilities plus expected development on reported claims
Cumulative number of reported claims
Accident year
2009 unaudited
2010 unaudited
2011 unaudited
2012 unaudited
2013 unaudited
2014 unaudited
2015 unaudited
2016 unaudited
2017 unaudited
2018
2009
$
240,092

$
243,522

$
243,978

$
244,466

$
253,979

$
236,657

$
236,751

$
212,994

$
220,524

$
224,778

$
13,640

5,889
2010
 
230,353

235,610

233,407

204,744

181,917

157,921

179,517

167,038

186,340

18,897

5,690
2011
 
 
312,805

314,466

331,800

324,739

329,318

342,598

351,247

351,747

33,877

7,215
2012
 
 
 
327,590

372,782

374,315

373,306

360,596

362,606

351,498

50,067

8,300
2013
 
 
 
 
382,270

394,548

394,461

361,785

351,330

353,112

70,914

9,409
2014
 
 
 
 
 
408,103

407,688

418,164

389,610

369,129

111,975

9,766
2015
 
 
 
 
 
 
374,209

373,747

380,265

355,300

127,537

10,379
2016
 
 
 
 
 
 
 
346,289

349,223

355,601

152,080

11,632
2017
 
 
 
 
 
 
 
 
375,397

393,443

256,260

12,903
2018
 
 
 
 
 
 
 
 
 
357,398

304,926

12,392
 
 
 
 
 
 
 
 
 
Total
$
3,298,346

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

Insurance professional lines
 
Cumulative paid claims and allocated claim adjustment expenses, net of reinsurance
 
For the years ended December 31,
Accident year
2009 unaudited
2010 unaudited
2011 unaudited
2012 unaudited
2013 unaudited
2014 unaudited
2015 unaudited
2016 unaudited
2017 unaudited
2018
2009
$
1,657

$
20,619

$
44,065

$
68,690

$
96,631

$
106,985

$
126,542

$
165,088

$
177,492

$
184,577

2010
 
7,850

27,815

53,458

72,554

88,585

99,082

109,668

114,710

136,252

2011
 
 
7,399

32,812

73,940

107,980

165,206

237,804

282,907

294,043

2012
 
 
 
7,801

41,021

99,486

183,295

229,932

252,937

272,298

2013
 
 
 
 
17,633

72,784

128,858

174,759

211,931

241,074

2014
 
 
 
 
 
23,450

70,266

129,160

191,437

222,692

2015
 
 
 
 
 
 
19,976

67,313

137,145

168,627

2016
 
 
 
 
 
 
 
15,846

70,947

146,342

2017
 
 
 
 
 
 
 
 
20,812

71,495

2018
 
 
 
 
 
 
 
 
 
19,098

Total
 
1,756,498

 
 
All outstanding liabilities before 2009, net of reinsurance
 
45,848

 
 
Liabilities for claims and claim adjustment expenses, net of reinsurance
 
$
1,587,696

 
 
 
 
 
 
 
 
 
 
 


Insurance professional lines
Average annual percentage payout of incurred claims by age, net of reinsurance (unaudited)
Year 1
Year 2
Year 3
Year 4
Year 5
Year 6
Year 7
Year 8
Year 9
Year 10
4.1%
11.8%
15.7%
13.4%
11.6%
9.1%
8.2%
7.7%
8.6%
3.2%


Insurance Liability

This reserve class includes the liability line of business which primarily targets primary and low/mid-level excess and umbrella commercial liability risks in the U.S. wholesale markets in addition to primary and excess of loss employers, public and products liability predominately in the U.K. This reserve class also includes discontinued lines - Novae specifically the international liability line of business that Novae exited or placed into run-off in the fourth quarter of 2016. Target industry sectors include construction, manufacturing, transportation and trucking and other services. The delay between the writing of a contract, notification and subsequent settlement of a claim in respect of that contract results in claim reporting and payment patterns that are typically long-tail in nature. A consequence of the claim development tail is that this line of business is particularly exposed, among a number of uncertainties, to the potential for unanticipated levels of claim inflation relative to that assumed when the contracts were written. Factors influencing claim inflation on this class can include, but are not limited to, underlying economic and medical inflation, judicial inflation, mass tort and changing social trends.

Insurance liability
 
Incurred claims and allocated claim adjustment expenses, net of reinsurance
At December 31, 2018
 
For the years ended December 31,
Total of incurred-but-not-reported liabilities plus expected development on reported claims
Cumulative number of reported claims
Accident year
2009 unaudited
2010 unaudited
2011 unaudited
2012 unaudited
2013 unaudited
2014 unaudited
2015 unaudited
2016 unaudited
2017 unaudited
2018
2009
$
61,469

$
64,017

$
67,410

$
67,869

$
75,883

$
83,281

$
101,179

$
98,384

$
98,999

$
97,964

$
9,450

4,093
2010
 
79,407

94,220

98,635

98,112

99,570

98,061

105,119

104,258

103,906

11,742

3,670
2011
 
 
72,586

75,329

83,118

87,059

85,242

83,730

82,127

82,625

17,357

3,222
2012
 
 
 
70,861

70,631

73,281

70,770

68,180

75,341

72,514

23,236

2,837
2013
 
 
 
 
92,150

94,178

94,253

87,498

93,216

95,632

21,345

3,520
2014
 
 
 
 
 
106,148

122,643

128,524

130,021

131,539

31,126

4,614
2015
 
 
 
 
 
 
127,319

125,819

136,305

164,036

52,818

5,975
2016
 
 
 
 
 
 
 
123,243

129,139

128,172

73,747

6,628
2017
 
 
 
 
 
 
 
 
161,211

165,061

107,070

5,842
2018
 
 
 
 
 
 
 
 
 
166,659

141,099

3,725
 
 
 
 
 
 
 
 
 
Total
$
1,208,108

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

Insurance liability
 
Cumulative paid claims and allocated claim adjustment expenses, net of reinsurance
 
For the years ended December 31,
Accident year
2009 unaudited
2010 unaudited
2011 unaudited
2012 unaudited
2013 unaudited
2014 unaudited
2015 unaudited
2016 unaudited
2017 unaudited
2018
2009
$
726

$
4,646

$
13,305

$
26,754

$
31,865

$
41,322

$
44,105

$
83,991

$
84,975

$
86,231

2010
 
1,030

15,966

30,788

53,581

61,029

66,114

71,788

86,433

87,981

2011
 
 
2,761

10,540

20,190

38,376

46,074

54,996

60,263

62,152

2012
 
 
 
1,630

5,514

15,411

30,145

37,139

42,745

46,545

2013
 
 
 
 
2,360

23,281

33,320

42,051

60,017

66,976

2014
 
 
 
 
 
1,415

18,645

49,840

71,617

84,397

2015
 
 
 
 
 
 
5,438

22,308

39,557

92,557

2016
 
 
 
 
 
 
 
6,318

23,286

36,406

2017
 
 
 
 
 
 
 
 
5,404

29,529

2018
 
 
 
 
 
 
 
 
 
8,704

Total
 
601,478

 
 
All outstanding liabilities before 2009, net of reinsurance
 
43,840

 
 
Liabilities for claims and claim adjustment expenses, net of reinsurance
 
$
650,470

 
 
 
 
 
 
 
 
 
 
 


Insurance liability
Average annual percentage payout of incurred claims by age, net of reinsurance (unaudited)
Year 1
Year 2
Year 3
Year 4
Year 5
Year 6
Year 7
Year 8
Year 9
Year 10
2.8%
11.8%
12.9%
19.4%
10.0%
8.1%
5.0%
19.0%
1.3%
1.3%


Reinsurance Segment

The presentation of net incurred and paid claims development tables by accident year for the reinsurance segment is challenging due to the need to allocate loss information related to proportional treaties to the appropriate accident years. Information related to proportional treaty reinsurance contracts is generally submitted to the Company using quarterly bordereau reporting by underwriting year, with a supplemental listing of large losses. The large losses can be allocated to the corresponding accident years accurately. However, the remaining losses can generally only be allocated to accident years based on estimated premiums earned and loss reporting patterns. To the extent management’s assumptions and allocation procedures differ from the actual loss development patterns, the actual loss development may differ materially from the net incurred and paid claims development presented in the tables below.

The reporting of cumulative claims frequency for the reserve classes within the reinsurance segment is deemed to be impracticable. The information necessary to provide cumulative claims frequency for these reserve classes is not available to the Company.

Reinsurance Property and Other

This reserve class includes catastrophe, property, engineering, agriculture, marine and other, accident and health, and discontinued lines - Novae.

The catastrophe line of business provides protection for most catastrophic losses that are covered in the underlying insurance policies written by the Company's cedants. The underlying policies principally cover property-related exposures but other exposures including workers compensation and personal accident are also covered. The principal perils covered by policies in this portfolio include hurricane and windstorm, earthquake, flood, tornado, hail and fire. In some instances, terrorism may be a covered peril or the only peril. The Company underwrites this business on a proportional and an excess of loss basis.

The property line of business provides protection for property damage and related losses resulting from natural and man-made perils contained in underlying personal and commercial lines insurance policies written by the Company's cedants. The predominant exposure is to property damage, but other risks, including business interruption and other non-property losses, may also be covered when arising from a covered peril. The most significant perils covered by policies in this portfolio include windstorm, tornado and earthquake, but other perils such as freezes, riots, floods, industrial explosions, fires, hail and a number of other loss events are also included. The Company underwrites this business on a proportional and excess of loss basis.

The agriculture line of business provides protection for risks associated with the production of food and fiber on a global basis for primary insurance companies writing multi-peril crop insurance, crop hail, and named peril covers, as well as custom risk transfer mechanisms for agricultural dependent industries with exposures to crop yield and/or price deviations. The Company underwrites this business on a proportional and aggregate stop loss reinsurance basis.

The engineering line of business provides protection for all types of construction risks and risks associated with erection, testing and commissioning of machinery and plants during the construction stage. This line of business also includes coverage for losses arising from operational failures of machinery, plant and equipment, and electronic equipment as well as business interruption.

The marine and other line of business includes marine, aviation and personal accident reinsurance.

As a result of the realignment of the Company's accident and health business, this reserve class also includes the accident and health line of business specifically specialty health, accidental death, travel, life and disability reinsurance products which are offered on a proportional and catastrophic or per life excess of events loss basis. The accident and health line of business contributed net premiums earned of $300 million to this reserve class for the year ended December 31, 2018.

The discontinued lines - Novae includes the international facultative property line of business that Novae exited or placed into run-off in the fourth quarter of 2016.

In general, reporting and payment patterns are relatively short-tailed and can be volatile due to the incidence of catastrophe events such as hurricanes and earthquakes.
Reinsurance property and other
 
Incurred claims and allocated claim adjustment expenses, net of reinsurance
At December 31, 2018
 
For the years ended December 31,
Total of incurred-but-not-reported liabilities plus expected development on reported claims
Accident year
2009 unaudited
2010 unaudited
2011 unaudited
2012 unaudited
2013 unaudited
2014 unaudited
2015 unaudited
2016 unaudited
2017 unaudited
2018
2009
$
340,527

$
284,210

$
246,047

$
232,639

$
223,245

$
204,560

$
198,498

$
200,422

$
197,779

$
198,189

$
1,722

2010
 
612,614

600,219

569,357

582,855

585,247

579,065

571,120

569,043

568,179

5,532

2011
 
 
1,109,682

1,116,708

1,124,792

1,083,492

1,066,384

1,040,470

1,038,726

1,040,130

10,579

2012
 
 
 
555,241

523,310

507,750

477,145

461,255

456,334

457,703

8,446

2013
 
 
 
 
578,645

560,227

529,463

509,179

503,203

502,642

5,140

2014
 
 
 
 
 
540,406

560,478

534,229

521,797

519,967

43,358

2015
 
 
 
 
 
 
477,608

463,996

459,017

453,628

14,117

2016
 
 
 
 
 
 
 
614,940

633,597

620,702

30,481

2017
 
 
 
 
 
 
 
 
1,076,458

1,080,319

123,562

2018
 
 
 
 
 
 
 
 
 
880,269

492,589

 
 
 
 
 
 
 
 
 
Total
$
6,321,728

 
 
 
 
 
 
 
 
 
 
 
 
 

Reinsurance property and other
 
Cumulative paid claims and allocated claim adjustment expenses, net of reinsurance
 
For the years ended December 31,
Accident year
2009 unaudited
2010 unaudited
2011 unaudited
2012 unaudited
2013 unaudited
2014 unaudited
2015 unaudited
2016 unaudited
2017 unaudited
2018
2009
$
56,420

$
129,397

$
160,284

$
178,388

$
188,919

$
188,240

$
191,046

$
192,728

$
191,900

$
190,174

2010
 
116,143

310,268

403,566

435,155

481,009

510,061

534,893

540,616

542,909

2011
 
 
251,538

587,390

793,972

893,041

922,456

995,795

1,010,611

1,013,191

2012
 
 
 
122,688

294,436

367,055

389,461

404,019

413,789

415,831

2013
 
 
 
 
107,085

324,443

440,804

470,990

480,712

482,114

2014
 
 
 
 
 
101,937

352,361

434,354

451,890

458,032

2015
 
 
 
 
 
 
71,244

265,569

368,360

400,615

2016
 
 
 
 
 
 
 
126,404

375,374

519,223

2017
 
 
 
 
 
 
 
 
252,008

722,835

2018
 
 
 
 
 
 
 
 
 
194,154

Total
 
4,939,078

 
 
All outstanding liabilities before 2009, net of reinsurance
 
11,126

 
 
Liabilities for claims and claim adjustment expenses, net of reinsurance
 
$
1,393,776

 
 
 
 
 
 
 
 
 
 
 


Reinsurance property and other
Average annual percentage payout of incurred claims by age, net of reinsurance (unaudited)
Year 1
Year 2
Year 3
Year 4
Year 5
Year 6
Year 7
Year 8
Year 9
Year 10
22.2%
39.9%
19.1%
6.5%
3.8%
2.9%
1.9%
0.7%
—%
(0.9)%


Reinsurance Credit and Surety

This reserve class includes the credit and surety line of business which provides reinsurance of trade credit insurance products and includes proportional and excess of loss structures. The underlying insurance indemnifies sellers of goods and services in the event of a payment default by the buyer of those goods and services. The Company provides credit insurance cover to mortgage guaranty insurers and government sponsored entities. Cover for losses arising from a broad array of surety bonds issued by insurers to satisfy regulatory demands or contract obligations in a variety of jurisdictions around the world is also offered.

Initial and most recent underwriting year loss projections are generally based on the ELR Method, with consideration given to qualitative factors. Given that there is a quicker and more stable reporting pattern for trade credit business, the Company generally commences the transition to experience-based methods sooner for trade credit business than for the surety business.
Reinsurance credit and surety
 
Incurred claims and allocated claim adjustment expenses, net of reinsurance
At December 31, 2018
 
For the years ended December 31,
Total of incurred-but-not-reported liabilities plus expected development on reported claims
Accident year
2009 unaudited
2010 unaudited
2011 unaudited
2012 unaudited
2013 unaudited
2014 unaudited
2015 unaudited
2016 unaudited
2017 unaudited
2018
2009
$
143,398

$
122,111

$
105,827

$
105,062

$
104,236

$
98,958

$
95,726

$
95,321

$
93,688

$
92,519

$
1,304

2010
 
119,152

100,047

93,548

90,657

86,528

79,047

77,732

75,716

74,430

4,092

2011
 
 
121,471

107,811

105,955

112,964

111,019

102,529

100,718

100,146

5,770

2012
 
 
 
160,109

148,566

151,141

148,363

140,000

131,963

128,323

8,830

2013
 
 
 
 
165,413

153,616

144,472

140,589

136,402

125,112

8,083

2014
 
 
 
 
 
135,732

136,346

143,515

139,857

128,404

11,280

2015
 
 
 
 
 
 
160,837

166,951

161,789

157,612

26,891

2016
 
 
 
 
 
 
 
142,245

141,780

149,054

38,746

2017
 
 
 
 
 
 
 
 
135,750

134,063

38,299

2018
 
 
 
 
 
 
 
 
 
111,969

53,762

 
 
 
 
 
 
 
 
 
Total
$
1,201,632

 
 
 
 
 
 
 
 
 
 
 
 
 

Reinsurance credit and surety
 
Cumulative paid claims and allocated claim adjustment expenses, net of reinsurance
 
For the years ended December 31,
Accident year
2009 unaudited
2010 unaudited
2011 unaudited
2012 unaudited
2013 unaudited
2014 unaudited
2015 unaudited
2016 unaudited
2017 unaudited
2018
2009
$
32,479

$
76,440

$
78,378

$
80,574

$
84,401

$
87,047

$
87,180

$
87,089

$
87,594

$
87,238

2010
 
28,218

48,715

59,776

60,452

62,144

63,279

64,710

65,724

66,023

2011
 
 
22,449

54,012

70,850

78,477

83,036

85,242

87,571

89,004

2012
 
 
 
49,631

85,701

99,705

105,551

109,073

110,844

112,118

2013
 
 
 
 
32,447

77,059

91,902

98,517

106,202

108,062

2014
 
 
 
 
 
35,570

61,440

86,539

95,675

103,272

2015
 
 
 
 
 
 
32,935

82,174

100,464

117,594

2016
 
 
 
 
 
 
 
42,069

73,603

92,788

2017
 
 
 
 
 
 
 
 
37,311

74,341

2018
 
 
 
 
 
 
 
 
 
38,975

Total
 
889,415

 
 
All outstanding liabilities before 2009, net of reinsurance
 
13,274

 
 
Liabilities for claims and claim adjustment expenses, net of reinsurance
 
$
325,491

 
 
 
 
 
 
 
 
 
 
 


Reinsurance credit and surety
Average annual percentage payout of incurred claims by age, net of reinsurance (unaudited)
Year 1
Year 2
Year 3
Year 4
Year 5
Year 6
Year 7
Year 8
Year 9
Year 10
29.9%
30.0%
12.6%
5.5%
4.3%
1.9%
1.3%
0.9%
0.5%
(0.4)%


Reinsurance Professional Lines

This reserve class includes the professional line of business which provides cover for directors' and officers' liability, employment practices liability, medical malpractice, professional indemnity, environmental liability and miscellaneous errors and omissions insurance risks. The underlying business is predominantly written on a claims-made basis. The Company underwrites this business on a proportional and excess of loss basis. Typically, this reserve class is anticipated to exhibit medium to long-tail claim reporting and payment patterns.
With respect to key actuarial assumptions, the Company is progressively giving more weight to its own experience when establishing expected loss ratios and selecting loss development patterns, though it continues to consider industry benchmarks. Loss reporting patterns for professional lines business tend to be volatile, causing instability in actuarial indications based on incurred loss data until an accident year matures. Consequently, initial loss reserves for an accident year or underwriting year are generally based upon the ELR Method and the consideration of relevant qualitative factors. As accident and underwriting years mature, the Company increasingly gives more weight to methods that reflect its actual experience until its selections are based almost exclusively on experience-based methods. The Company evaluates the appropriateness of the transition to experience-based methods at the reserve class level, commencing this transition when it believes that its incurred loss development is sufficient to produce meaningful actuarial indications. The rate at which the Company transitions fully to sole reliance on experience-based methods can vary by reserve class and by year, depending on its assessment of the stability and relevance of such indications.
Reinsurance professional lines
 
Incurred claims and allocated claim adjustment expenses, net of reinsurance
At December 31, 2018
 
For the years ended December 31,
Total of incurred-but-not-reported liabilities plus expected development on reported claims
Accident year
2009 unaudited
2010 unaudited
2011 unaudited
2012 unaudited
2013 unaudited
2014 unaudited
2015 unaudited
2016 unaudited
2017 unaudited
2018
2009
$
211,420

$
211,191

$
215,827

$
218,469

$
208,338

$
208,693

$
193,803

$
189,991

$
180,862

$
179,945

$
4,495

2010
 
210,016

210,238

211,409

214,439

214,161

196,770

189,263

179,604

165,864

10,034

2011
 
 
201,457

201,735

202,815

211,459

208,828

207,946

200,168

177,163

22,132

2012
 
 
 
209,889

216,415

221,808

223,813

222,499

212,485

213,850

33,873

2013
 
 
 
 
209,538

214,624

215,544

213,765

213,142

205,586

67,043

2014
 
 
 
 
 
219,378

219,332

219,286

219,109

233,427

48,605

2015
 
 
 
 
 
 
212,030

212,150

214,310

225,003

84,299

2016
 
 
 
 
 
 
 
195,061

196,246

199,879

84,621

2017
 
 
 
 
 
 
 
 
155,211

155,892

109,070

2018
 
 
 
 
 
 
 
 
 
146,558

142,282

 
 
 
 
 
 
 
 
 
Total
$
1,903,167

 
 
 
 
 
 
 
 
 
 
 
 
 

Reinsurance professional lines
 
Cumulative paid claims and allocated claim adjustment expenses, net of reinsurance
 
For the years ended December 31,
Accident year
2009 unaudited
2010 unaudited
2011 unaudited
2012 unaudited
2013 unaudited
2014 unaudited
2015 unaudited
2016 unaudited
2017 unaudited
2018
2009
$
914

$
8,588

$
32,306

$
63,066

$
83,703

$
108,373

$
128,071

$
138,247

$
143,732

$
150,811

2010
 
1,758

12,029

31,245

52,129

76,763

107,270

123,889

130,487

137,917

2011
 
 
1,510

11,825

30,273

57,182

84,776

102,938

119,643

129,920

2012
 
 
 
779

10,400

29,616

53,587

85,921

107,173

131,770

2013
 
 
 
 
1,062

12,070

30,495

64,966

81,641

104,883

2014
 
 
 
 
 
2,019

13,066

48,814

74,542

109,129

2015
 
 
 
 
 
 
3,134

13,505

41,524

79,270

2016
 
 
 
 
 
 
 
1,772

20,516

52,588

2017
 
 
 
 
 
 
 
 
2,814

14,918

2018
 
 
 
 
 
 
 
 
 
273

Total
 
911,479

 
 
All outstanding liabilities before 2009, net of reinsurance
 
47,397

 
 
Liabilities for claims and claim adjustment expenses, net of reinsurance
 
$
1,039,085

 
 
 
 
 
 
 
 
 
 
 


Reinsurance professional lines
Average annual percentage payout of incurred claims by age, net of reinsurance (unaudited)
Year 1
Year 2
Year 3
Year 4
Year 5
Year 6
Year 7
Year 8
Year 9
Year 10
0.9%
5.9%
12.1%
14.4%
13.3%
12.7%
10.5%
5.2%
3.8%
3.9%


Reinsurance Motor

This reserve class includes the motor line of business which provides cover to insurers for motor liability and motor property damage losses arising from any one occurrence. A loss occurrence can involve one or many claimants where the ceding insurer aggregates the claims from the occurrence. This reserve class also includes discontinued lines - Novae specifically the motor reinsurance line of business that Novae exited or placed into run-off in the first quarter of 2017. The Company offers traditional proportional and non-proportional reinsurance as well as structured solutions predominantly relating to European exposures. The business written on a proportional basis has expanded significantly since 2010 and now represents the majority of the premium written within this line of business. Most of the premium relates to a relatively small number of large United Kingdom ("U.K.") and, to a lesser extent, Greek quota share treaties. The motor proportional class generally has a significantly shorter reported and payment pattern, relative to the motor non-proportional class. In 2017, the U.K. Ministry of Justice announced a decrease in the discount rate to be used to calculate lump sum awards in U.K. bodily injury cases, known as the Ogden Rate. Effective March 20, 2017, the Ogden rate changed from plus 2.5% to minus 0.75%. This resulted in an increase in projected ultimate losses, particularly related to recent accident years.

The motor non-proportional business consists of standard excess of loss contracts written for cedants in several European countries with most of the premium related to two major markets, U.K. and France. Since 2009/2010, an increasing number of large bodily injury settlements in the U.K. market were settled using indexed annuities (Periodical Payment Orders "PPOs"). This led to a materially longer development tail on the older accident years for the U.K. non-proportional motor book. This also resulted in a move towards generally lower treaty attachment points and the inclusion of capitalization clauses on a number of U.K. motor treaties to help mitigate the lengthening of the development tail on more recent accident years. Despite the trend toward a greater number of claims settlements using PPOs, there has been a trend towards generally quicker and more adequate reporting of losses in recent years.


Reinsurance motor
 
Incurred claims and allocated claim adjustment expenses, net of reinsurance
At December 31, 2018
 
For the years ended December 31,
Total of incurred-but-not-reported liabilities plus expected development on reported claims
Accident year
2009 unaudited
2010 unaudited
2011 unaudited
2012 unaudited
2013 unaudited
2014 unaudited
2015 unaudited
2016 unaudited
2017 unaudited
2018
2009
$
81,369

$
79,515

$
87,140

$
89,057

$
90,860

$
92,158

$
83,517

$
77,943

$
80,204

$
77,829

$
17,628

2010
 
98,704

105,669

106,092

104,993

99,061

93,919

84,535

81,228

78,575

19,993

2011
 
 
156,069

158,750

162,586

168,436

164,559

155,948

145,482

140,191

24,417

2012
 
 
 
178,052

167,788

156,460

149,100

144,164

134,768

131,690

22,562

2013
 
 
 
 
162,681

158,632

147,139

137,695

134,200

131,081

21,880

2014
 
 
 
 
 
182,625

182,555

177,575

174,457

169,776

9,307

2015
 
 
 
 
 
 
222,768

216,808

220,527

221,982

29,755

2016
 
 
 
 
 
 
 
245,899

261,369

263,168

43,569

2017
 
 
 
 
 
 
 
 
363,651

371,089

84,007

2018
 
 
 
 
 
 
 
 
 
357,187

172,384

 
 
 
 
 
 
 
 
 
Total
$
1,942,568

 
 
 
 
 
 
 
 
 
 
 
 
 

Reinsurance motor
 
Cumulative paid claims and allocated claim adjustment expenses, net of reinsurance
 
For the years ended December 31,
Accident year
2009 unaudited
2010 unaudited
2011 unaudited
2012 unaudited
2013 unaudited
2014 unaudited
2015 unaudited
2016 unaudited
2017 unaudited
2018
2009
$
2,709

$
6,830

$
8,012

$
9,523

$
12,933

$
19,066

$
21,368

$
25,910

$
29,144

$
31,650

2010
 
7,075

11,951

17,066

20,387

23,554

27,766

30,977

32,015

33,083

2011
 
 
23,788

46,979

61,309

71,664

78,202

84,067

88,630

89,619

2012
 
 
 
29,162

52,736

67,254

76,875

83,232

87,244

89,492

2013
 
 
 
 
33,807

52,639

66,119

75,865

81,388

86,832

2014
 
 
 
 
 
43,325

73,572

92,721

100,607

110,562

2015
 
 
 
 
 
 
57,809

92,778

112,584

129,661

2016
 
 
 
 
 
 
 
60,829

104,342

127,970

2017
 
 
 
 
 
 
 
 
72,226

133,842

2018
 
 
 
 
 
 
 
 
 
83,854

Total
 
916,565

 
 
All outstanding liabilities before 2009, net of reinsurance
 
146,464

 
 
Liabilities for claims and claim adjustment expenses, net of reinsurance
 
$
1,172,467

 
 
 
 
 
 
 
 
 
 
 


Reinsurance motor
Average annual percentage payout of incurred claims by age, net of reinsurance (unaudited)
Year 1
Year 2
Year 3
Year 4
Year 5
Year 6
Year 7
Year 8
Year 9
Year 10
19.5%
14.1%
8.6%
5.8%
4.7%
4.9%
3.0%
2.6%
2.8%
3.2%


Reinsurance Liability

This reserve class includes the liability line of business which provides cover to insurers of standard casualty business, excess and surplus casualty business and specialty casualty programs. The primary focus of the underlying business is general liability, although workers' compensation and auto liability covers are also written. This reserve class includes discontinued lines - Novae specifically the general liability reinsurance line of business that Novae exited or placed into run-off in the first quarter of 2017.

Claim reporting and payment patterns are typically long-tail in nature and, therefore, subject to increased uncertainty surrounding future loss development. In particular, claims can be subject to inflation from a number of sources including, but not limited to, economic and medical inflation, judicial inflation and changing social trends.

Reinsurance liability
 
Incurred claims and allocated claim adjustment expenses, net of reinsurance
At December 31, 2018
 
For the years ended December 31,
Total of incurred-but-not-reported liabilities plus expected development on reported claims
Accident year
2009 unaudited
2010 unaudited
2011 unaudited
2012 unaudited
2013 unaudited
2014 unaudited
2015 unaudited
2016 unaudited
2017 unaudited
2018
2009
$
172,680

$
174,121

$
180,945

$
178,149

$
184,811

$
204,531

$
192,287

$
178,260

$
168,917

$
175,770

$
13,563

2010
 
171,634

170,784

182,515

183,056

201,329

190,959

181,938

165,990

159,156

14,137

2011
 
 
172,431

172,399

174,124

191,761

197,871

194,715

193,830

191,962

24,450

2012
 
 
 
167,290

163,625

167,887

172,491

173,645

171,121

164,357

27,789

2013
 
 
 
 
172,784

176,465

182,428

184,467

184,147

177,273

53,822

2014
 
 
 
 
 
200,203

203,136

204,871

200,819

199,583

75,626

2015
 
 
 
 
 
 
214,942

215,273

216,201

215,997

97,353

2016
 
 
 
 
 
 
 
240,411

246,024

251,087

131,475

2017
 
 
 
 
 
 
 
 
277,034

270,564

176,854

2018
 
 
 
 
 
 
 
 
 
264,450

209,612

 
 
 
 
 
 
 
 
 
Total
$
2,070,199

 
 
 
 
 
 
 
 
 
 
 
 
 

Reinsurance liability
 
Cumulative paid claims and allocated claim adjustment expenses, net of reinsurance
 
For the years ended December 31,
Accident year
2009 unaudited
2010 unaudited
2011 unaudited
2012 unaudited
2013 unaudited
2014 unaudited
2015 unaudited
2016 unaudited
2017 unaudited
2018
2009
$
1,704

$
17,102

$
44,473

$
56,623

$
73,229

$
103,662

$
122,704

$
127,009

$
132,996

$
136,539

2010
 
2,481

17,654

46,201

62,291

83,826

97,457

108,770

119,693

128,399

2011
 
 
5,189

21,273

39,981

70,102

92,466

112,328

123,387

135,625

2012
 
 
 
3,541

12,798

28,388

58,735

78,190

101,115

115,571

2013
 
 
 
 
5,969

22,236

52,327

69,052

88,264

102,588

2014
 
 
 
 
 
7,083

28,663

48,415

70,143

89,436

2015
 
 
 
 
 
 
7,271

27,457

54,524

80,865

2016
 
 
 
 
 
 
 
11,861

37,688

69,526

2017
 
 
 
 
 
 
 
 
12,424

42,092

2018
 
 
 
 
 
 
 
 
 
19,305

Total
 
919,946

 
 
All outstanding liabilities before 2009, net of reinsurance
 
54,315

 
 
Liabilities for claims and claim adjustment expenses, net of reinsurance
 
$
1,204,568

 
 
 
 
 
 
 
 
 
 
 


Reinsurance liability
Average annual percentage payout of incurred claims by age, net of reinsurance (unaudited)
Year 1
Year 2
Year 3
Year 4
Year 5
Year 6
Year 7
Year 8
Year 9
Year 10
3.4%
9.2%
13.1%
12.0%
11.2%
11.6%
8.1%
5.2%
4.5%
2.0%





















Reconciliation of Loss Development Tables to Consolidated Balance Sheet

The following table reconciles the reserves for loss and loss expenses at December 31, 2018 included in the loss development tables to the reserves for loss and loss expenses reported in the consolidated balance sheet:
Reconciliation of the disclosure of incurred and paid claims development to the liability
for unpaid claims and claim adjustment expenses
 
 
 
 
 
At December 31, 2018
 
 
Net outstanding liabilities
 
Reinsurance recoverable on unpaid claims
 
Gross outstanding liabilities
 
 
 
 
 
 
 
Insurance segment
 
 
 
 
 
 
Property and other
 
$
771,659

 
$
482,207

 
$
1,253,866

Marine
 
340,668

 
187,164

 
527,832

Aviation
 
91,404

 
14,310

 
105,714

Credit and political risk
 
99,011

 
24,536

 
123,547

Professional Lines
 
1,587,696

 
1,005,316

 
2,593,012

Liability
 
650,470

 
978,719

 
1,629,189

Total insurance segment
 
3,540,908

 
2,692,252

 
6,233,160

 
 
 
 
 
 
 
Reinsurance segment
 
 
 
 
 
 
Property and other
 
1,393,776

 
435,671

 
1,829,447

Credit and surety
 
325,491

 
36,180

 
361,671

Professional lines
 
1,039,085

 
81,608

 
1,120,693

Motor
 
1,172,467

 
128,575

 
1,301,042

Liability
 
1,204,568

 
127,383

 
1,331,951

Total reinsurance segment
 
5,135,387

 
809,417

 
5,944,804

Total
 
$
8,676,295

 
$
3,501,669

 
12,177,964

Unallocated claims adjustment expenses
 
 
 
 
 
145,768

Foreign exchange and other(1)
 
 
 
 
 
53,695

(Ceded)/assumed reserves related to retroactive transactions
 
 
 
 
 
(96,658
)
 
 
 
 
 
 
 
Total liability for unpaid claims and claims adjustment expense
 
 
 
 
 
$
12,280,769

 
 
 
 
 
 
 
(1)
Non-U.S. dollar denominated loss data is converted to U.S dollar at the rates of exchange in effect at the balance sheet date for material underlying currencies. Fluctuations in currency exchange rates cause material shifts in loss development. Reserves for losses and loss expenses, disclosed in the consolidated balance sheets, are also revalued using the exchange rate at the balance sheet date.