Reserves for Unpaid Losses and Loss Adjustment Expenses

3 Months Ended

Mar. 31, 2014

Insurance Loss Reserves [Abstract]

Unpaid Loss and Loss Adjustment Expense (LAE) Reserves

Unpaid Loss and Loss Adjustment Expense (LAE) Reserves

Loss and LAE reserve summary - Ongoing Business

The following table summarizes the loss and LAE reserve activities of OneBeacon's insurance subsidiaries for the three months ended March 31, 2014 and 2013:

	Three months ended March 31,
	2014				2013
	($ in millions)
Gross beginning balance	$	1,054.3			$	1,000.0
Less beginning reinsurance recoverable on unpaid losses	(80.2		)		(107.3		)
Net beginning loss and LAE reserves	974.1				892.7
Loss and LAE incurred relating to:
Current year losses	150.8				151.8
Prior year losses	(1.4		)		(2.9		)
Total incurred loss and LAE from continuing operations	149.4				148.9
Loss and LAE paid relating to:
Current year losses	(18.3		)		(19.8		)
Prior year losses	(115.5		)		(117.3		)
Total loss and LAE payments from continuing operations	(133.8		)		(137.1		)
Net loss and LAE reserves	989.7				904.5
Total incurred loss and LAE from discontinued operations	—				—
Total loss and LAE payments from discontinued operations	(11.1		)		(45.7		)
Net loss and LAE reserves	978.6				858.8
Net change in loss and LAE reserves reported in liabilities held for sale	11.1			(1)	45.7			(2)
Net ending loss and LAE reserves	989.7				904.5
Plus ending reinsurance recoverable on unpaid losses	80.1				105.8
Gross ending loss and LAE reserves	$	1,069.8			$	1,010.3

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⁽¹⁾ Consists of the change in net loss and LAE reserves to $177.3 million from $188.4 million, which amounts were classified as held for sale as of March 31, 2014 and December 31, 2013, respectively, in connection with the Runoff Transaction.

⁽²⁾ Consists of the change in net loss and LAE reserves to $166.1 million from $211.8 million, which amounts were classified as held for sale as of March 31, 2013 and December 31, 2012, respectively, in connection with the Runoff Transaction.

Loss and LAE development - Ongoing Business

Loss and LAE development—2014

During the three months ended March 31, 2014, OneBeacon experienced $1.4 million of favorable net loss and LAE reserve development on prior accident year reserves. The development primarily related to the Ocean Marine business included in the International Marine Underwriters underwriting operating segment and the Technology underwriting operating segment.

Loss and LAE development—2013

During the three months ended March 31, 2013, OneBeacon recorded $2.9 million of favorable loss and LAE reserve development on prior accident year reserves driven by our medical facilities and managed care errors and omissions lines in our healthcare business, which is included in the Professional Insurance underwriting operating segment.

See Note 15—"Discontinued Operations" for a discussion of impacts to reserves for unpaid losses and LAE related to discontinued operations.