Reserves for Insurance Losses and Loss Adjustment Expenses

12 Months Ended

Dec. 31, 2020

Short-duration Insurance Contracts, Liability for Unpaid Claims and Allocated Claim Adjustment Expense, Net [Abstract]

Reserves for Insurance Losses and Loss Adjustment Expenses Disclosure

Reserves for Insurance Losses and Loss Adjustment Expenses

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

	For the years ended December 31, ($ in millions)																		December 31, 2020 ($ in millions)
	(unaudited supplementary information)																		Total of incurred-but-not-reported liabilities plus expected development on reported claims (b)		Cumulative number of reported claims (b)
Accident year (a)	2012		2013		2014		2015		2016		2017		2018		2019		2020
2012	$	435	$	430	$	423	$	423	$	423	$	422	$	422	$	421	$	421	$	—	772,554
2013			376		365		370		370		369		368		368		368		—		672,279
2014					390		389		388		388		388		388		388		—		525,298
2015							274		271		272		272		272		272		—		342,275
2016									326		327		328		328		328		—		476,050
2017											310		314		315		315		—		481,716
2018													271		272		272		—		506,325
2019															303		306		—		541,221
2020																	343		26		472,184
Total																	$	3,013

(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)Claims are reported on a claimant basis. Claimant is defined as one vehicle for GAP products, one repair for VSCs and VMCs, one dealership for dealer inventory products, and per individual/coverage for run-off personal automotive products.

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

	For the years ended December 31, ($ in millions)
	(unaudited supplementary information)
Accident year (a)	2012		2013		2014		2015		2016		2017		2018		2019		2020
2012	$	391	$	412	$	416	$	418	$	419	$	421	$	421	$	421	$	421
2013			347		364		366		368		368		368		368		368
2014					369		388		388		388		388		388		388
2015							252		272		272		272		272		272
2016									302		327		328		328		328
2017											289		315		315		315
2018													245		273		273
2019															278		306
2020																	313
Total																	$	2,984
All outstanding liabilities for loss and allocated loss adjustment expenses before 2012, net of reinsurance																	8
Reserves for insurance losses and allocated loss adjustment expenses, net of reinsurance																	$	37

(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.

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		6		7		8		9
Percentage payout of incurred claims	92.5	%	6.8	%	0.3	%	0.2	%	—	%	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)	2020		2019		2018
Reserves for insurance losses and loss adjustment expenses, net of reinsurance	$	37	$	32	$	35
Total reinsurance recoverable on unpaid claims	90		88		96
Unallocated loss adjustment expenses	2		2		3
Total gross reserves for insurance losses and loss adjustment expenses	$	129	$	122	$	134

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

($ in millions)	2020		2019		2018
Total gross reserves for insurance losses and loss adjustment expenses at January 1,	$	122	$	134	$	140
Less: Reinsurance recoverable	88		96		108
Net reserves for insurance losses and loss adjustment expenses at January 1,	34		38		32
Net insurance losses and loss adjustment expenses incurred related to:
Current year	360		321		291
Prior years (a)	3		—		4
Total net insurance losses and loss adjustment expenses incurred	363		321		295
Net insurance losses and loss adjustment expenses paid or payable related to:
Current year	(328)		(295)		(263)
Prior years	(30)		(30)		(26)
Total net insurance losses and loss adjustment expenses paid or payable	(358)		(325)		(289)
Net reserves for insurance losses and loss adjustment expenses at December 31,	39		34		38
Plus: Reinsurance recoverable	90		88		96
Total gross reserves for insurance losses and loss adjustment expenses at December 31,	$	129	$	122	$	134

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