Policy Liabilities and Short Duration Contracts

Various assumptions used to determine the future policy benefit reserves of life insurance include the following: a) valuation interest rates from 2.5% to 6.75% per year; b) mortality assumptions are from the 1955 to 1960, 1965 to 1970, 1975 to 1980 and 2001 Select and Ultimate mortality tables; and c) withdrawals are based primarily on actual historical termination rates.

The following table presents information on changes in the liability for life, accident and health and property policy and contract claims for the years ended December 31, 2016, 2015 and 2014.



	Years ended December 31,
	2016			2015		2014
	(In thousands)
Policy claims payable at January 1	$	9,653		9,560		9,488
Less: reinsurance recoverable	543			950		686
Net balance at January 1	9,110			8,610		8,802
Acquisition of MGLIC	—			—		40
Add claims incurred, related to:
Current year	26,000			26,911		24,541
Prior years	(493		)	(197	)	(33	)
	25,507			26,714		24,508
Deduct claims paid, related to:
Current year	18,681			19,584		17,691
Prior years	6,805			6,630		7,049
	25,486			26,214		24,740
Net balance December 31	9,131			9,110		8,610
Plus: reinsurance recoverable	407			543		950
Policy claims payable, December 31	$	9,538		9,653		9,560

The Company experienced favorable development in 2016 of $493,000 and favorable development in 2015 of $197,000. No unusual claims or trends have been noted.

Short Duration Contracts

The Company's short duration contracts consist of credit life and credit disability in the Life segment and property insurance in the Home Service segment. The credit insurance lines are an immaterial part of short duration contracts so the following disclosures cover only the property insurance line of business in the Home Service segment.

Special Property Insurance (Allied and Fire)

The following table presents incurred claims development as of December 31, 2016, net of reinsurance, as well as cumulative claim frequency and the total of incurred-but-not-reported liabilities plus expected development on reported claims included within the net incurred claims amounts. This information is presented for the last five years as these claims rarely pay out over a longer period of time. Claims data for 2012 through 2015 is supplementary information to the consolidated financial statements and is unaudited.



											As of December 31, 2016
	Incurred Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance										Total of Incurred-but-Not-Reported Liabilities Plus Expected Development on Reported Claims		Cumulative Number of Reported Claims
	Years ended December 31,
Accident Year	2012		2013		2014		2015		2016
(In thousands)	(Unaudited)
2012	$	2,511	$	2,445	$	2,448	$	2,440	$	2,440	$	—	898
2013			2,058		1,977		1,970		1,964		—		328
2014					1,744		1,650		1,575		—		254
2015							1,777		1,731		10		356
2016									2,071		175		463
Total									$	9,781

The following table presents paid claims development as of December 31, 2016, net of reinsurance. Claims data for 2012 through 2015 are unaudited.



	Cumulative Paid Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance
	Years ended December 31,
Accident Year	2012		2013		2014		2015		2016
(In thousands)	(Unaudited)
2012	$	2,144	$	2,428	$	2,440	$	2,440	$	2,440
2013			1,751		1,964		1,964		1,964
2014					1,361		1,556		1,560
2015							1,410		1,637
2016									1,680
Total									9,281
All outstanding liabilities before 2012, net of reinsurance									—
Liabilities for claims and claim adjustment expenses, net of reinsurance									$	500

The reconciliation of the net incurred and paid claims development tables to the liability for claims and claim adjustment expenses in the consolidated statement of financial position is as follows.



	Year Ended December 31,
	2016
	(In thousands)
Net outstanding liabilities
Special property	$	500
Other short-duration insurance lines	43
Liabilities for unpaid claims and claim adjustment expenses, net of reinsurance	543

Reinsurance recoverable on unpaid claims
Special property	—
Other insurance lines	340
Total reinsurance recoverable on unpaid claims	340

Insurance lines other than short duration	8,655

Total gross liability for unpaid claims and claim adjustment expenses	$	9,538

The following is supplementary information to the consolidated financial statements about average historical claims duration as of December 31, 2016.



Average Annual Percentage Payout of Incurred Claims by Age, Net of Reinsurance (Unaudited)
Years	1		2		3		4		5

Special Property	85.25	%	12.00	%	0.16	%	—	%	—	%