Loss and Loss Adjustment Expense Reserves

3 Months Ended

Mar. 31, 2021

Loss and Loss Adjustment Expenses Reserves [Abstract]

Loss and Loss Adjustment Expenses Reserves

Loss and Loss Adjustment Expense Reserves — Activity in the loss and loss adjustment expense reserves is summarized as follows:

	March 31,
(millions)	2021		2020
Balance at January 1	$	20,265.8	$	18,105.4
Less reinsurance recoverables on unpaid losses	3,798.2		3,212.2
Net balance at January 1	16,467.6		14,893.2
Incurred related to:
Current year	6,986.1		6,011.1
Prior years	124.4		144.1
Total incurred	7,110.5		6,155.2
Paid related to:
Current year	3,029.3		2,916.4
Prior years	3,453.7		3,269.2
Total paid	6,483.0		6,185.6
Net balance at March 31	17,095.1		14,862.8
Plus reinsurance recoverables on unpaid losses	3,968.6		3,443.7
Balance at March 31	$	21,063.7	$	18,306.5

We experienced unfavorable reserve development of $124.4 million and $144.1 million during the first three months of 2021 and 2020, respectively, which is reflected as “Incurred related to prior years” in the table above.

First Quarter 2021

•Approximately 34% of the unfavorable prior year reserve development was attributable to accident year 2020, 34% to accident year 2019, and the remainder to accident years 2018 and prior.

•Our personal auto products incurred about $92 million of unfavorable loss and loss adjustment expense (LAE) reserve development, with about 60% attributable to the Agency business. The unfavorable development was primarily attributable to a higher than anticipated frequency of reopened personal injury protection (PIP) claims, primarily in Florida, and higher than anticipated late reported losses occurring toward the end of 2020 but not reported until 2021.

•Our Commercial Lines business experienced about $29 million of unfavorable development, primarily due to the emergence of large injury claims at rates higher than originally anticipated.

•Our special lines business experienced about $5 million of favorable development and our Property business experienced about $8 million of unfavorable development during the first quarter.

First Quarter 2020

•Approximately 52% of the unfavorable prior year reserve development was attributable to accident year 2019, 36% to accident year 2018, and the remainder to accident years 2017 and prior.

•Our personal auto products incurred about $104 million of unfavorable loss and LAE reserve development, with the Agency and Direct auto businesses each contributing about half. The unfavorable development was primarily attributable to revised estimates of our per claim settlement costs and late reported losses occurring toward the end of 2019 but not reported until 2020.

•Our Commercial Lines business experienced about $54 million of unfavorable development, primarily due to increased injury severity and the emergence of large injury claims at rates higher than originally anticipated.

•Our special lines business experienced about $14 million of favorable development and our Property business had minimal development during the first quarter.