INSURANCE

We use a combination of insured and self-insurance programs to cover workers’ compensation, general liability, automobile liability, property damage, and other insurable risks. For the majority of these insurance programs, we retain the initial $1.0 million of exposure on a per-occurrence basis, either through deductibles or self-insured retentions. Beyond the retained exposures, we have varying primary policy limits between $1.0 million and $5.0 million per occurrence. To cover general liability losses above these primary limits, we maintain commercial umbrella insurance policies that provide aggregate limits of $200.0 million. Our insurance policies generally cover workers’ compensation losses to the full extent of statutory requirements. Additionally, to cover property damage risks above our retained limits, we maintain policies that provide limits of $75.0 million.

The adequacy of our reserves for workers’ compensation, general liability, automobile liability, and property damage insurance claims is based upon known trends and events and the actuarial estimates of required reserves considering the most recently completed actuarial reports. We use all available information to develop our best estimate of insurance claims reserves as information is obtained.

During the three months ended January 31, 2016, an actuarial review was performed for the majority of our casualty insurance programs and indicated unfavorable developments in our estimates of ultimate losses related to certain general liability, workers’ compensation, and automobile claims.

For our general liability program, claim frequency was generally consistent with our expectations; however, the review identified adverse developments in prior year claims. The adverse developments can be largely attributed to increases in the projected costs to resolve several high exposure claims within our retained limits, coupled with increases in the average incurred cost for our less severe claims.

In addition, our workers’ compensation estimate of ultimate losses was negatively impacted by increases in projected costs for a large population of prior year claims in New York. These claims have been impacted by increases in the statutory benefits paid to the claimants and a slowing of closures in which settlements cannot be quickly attained. In California, we have experienced similar increases in severity for claims and increases in frequency beyond that projected for the 2015 policy year.

The increase in the projected estimates for our automobile liability program was primarily due to significant claim reserve adjustments for a small population of high exposure claims within the 2013 policy year and for increases in frequency experienced in the 2015 policy year.

As a result of this actuarial review, we increased our total reserves for claims related to prior periods by $6.0 million at January 31, 2016. During the third quarter of 2016, comprehensive actuarial evaluations are expected to be completed for our significant programs using recent claims data. We will continue to monitor subsequent developments, which may result in further adjustments to earnings.

We are also self-insured for certain employee medical and dental plans. We retain up to $0.4 million of exposure on a per-participant, per-year basis with respect to claims under our medical plan.

At January 31, 2016 and October 31, 2015, we had insurance claim reserves totaling $392.7 million and $387.4 million, respectively, which include $8.7 million and $8.1 million in reserves, respectively, related to our medical and dental self-insured plans. At each of January 31, 2016 and October 31, 2015, we also had insurance recoverables, which we include in “Other current assets” and “Other noncurrent assets” on the accompanying unaudited consolidated balance sheets, totaling $65.9 million.

Instruments Used to Collateralize Our Insurance Obligations



(in millions)	January 31, 2016		October 31, 2015
Standby letters of credit	$	121.2	$	105.4
Surety bonds	55.9		55.9
Restricted insurance deposits	11.4		11.4
Total	$	188.5	$	172.7