Reserves for Insurance Losses and Loss Adjustment Expenses

The following table shows cumulative incurred claims and allocated loss adjustment expenses, net of reinsurance.



	For the years ended December 31, ($ in millions)										December 31, 2016 ($ in millions)
Accident year (a)	2012 (b)		2013 (b)		2014 (b)		2015 (b)		2016		Total of incurred-but-not-reported liabilities plus expected development on reported claims (c)		Cumulative number of reported claims (c)
2012	$	435	$	430	$	423	$	423	$	423	$	4	772,536
2013			376		365		370		370		2		672,247
2014					390		389		388		—		525,235
2015							274		271		—		342,054
2016									326		$	24	453,807
Total									$	1,778


(a)	Due to the discontinuation of various product lines and sale of certain international operations, information prior to 2012 has been excluded from the table in order to appropriately reflect the number of years for which claims are typically outstanding. In addition, given the short tail of our insurance contracts, the table above reflects the combined presentation of all business lines.


(b)	Information presented for the years 2012 through 2015 is unaudited supplementary information.


(c)	Claims are reported on a claimant basis. Claimant is defined as one vehicle for guaranteed asset protection (GAP) products, one repair visit for vehicle service contracts (VSCs) and vehicle maintenance contracts (VMCs), one dealership for dealer inventory products, and per individual/coverage for run-off personal auto products.

The following table shows cumulative paid claims and allocated loss adjustment expenses, net of reinsurance.



	For the years ended December 31, ($ in millions)
Accident year (a)	2012 (b)		2013 (b)		2014 (b)		2015 (b)		2016
2012	$	391	$	412	$	416	$	418	$	419
2013			347		364		366		368
2014					369		388		388
2015							252		272
2016									302
Total									1,749
All outstanding liabilities for loss and allocated loss adjustment expenses before 2012, net of reinsurance									9
Reserves for insurance losses and allocated loss adjustment expenses, net of reinsurance									$	38


(a)	Due to the discontinuation of various product lines and sale of certain international operations, information prior to 2012 has been excluded from the table in order to appropriately reflect the number of years for which claims are typically outstanding. In addition, given the short tail of our insurance contracts, the table above reflects the combined presentation of all business lines.


(b)	Information presented for the years 2012 through 2015 is unaudited supplementary information.

The following table shows the average annual percentage payout of incurred claims by age, net of reinsurance. The information presented is unaudited supplementary information.



Year	1		2		3		4		5
Percentage payout of incurred claims	93.4	%	5.5	%	0.4	%	0.5	%	0.1	%

The following table shows a reconciliation of the disclosures of incurred and paid claims development to the reserves for insurance losses and loss adjustment expenses.



December 31, ($ in millions)	2016
Reserves for insurance losses and loss adjustment expenses, net of reinsurance	$	38
Total reinsurance recoverable on unpaid claims	108
Unallocated loss adjustment expenses	3
Total gross reserves for insurance losses and loss adjustment expenses	$	149

The following table shows a rollforward of our reserves for insurance losses and loss adjustment expenses.



($ in millions)
Total gross reserves for insurance losses and loss adjustment expenses at January 1, 2016	$	169
Less: Reinsurance recoverable	120
Net reserves for insurance losses and loss adjustment expenses at January 1, 2016	49
Net insurance losses and loss adjustment expenses incurred related to:
Current year	345
Prior years (a)	(3		)
Total net insurance losses and loss adjustment expenses incurred	342
Net insurance losses and loss adjustment expenses paid or payable related to:
Current year	(320		)
Prior years	(30		)
Total net insurance losses and loss adjustment expenses paid or payable	(350		)
Net reserves for insurance losses and loss adjustment expenses at December 31, 2016	41
Plus: Reinsurance recoverable	108
Total gross reserves for insurance losses and loss adjustment expenses at December 31, 2016	$	149


(a)	There have been no material adverse changes to the reserve for prior years.