Loss and Loss Adjustment Expense Reserves

6 Months Ended

Jun. 30, 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:

	June 30,
(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
Net loss and loss adjustment reserve acquired1	732.5		0
Total beginning reserves	17,200.1		14,893.2
Incurred related to:
Current year	15,319.9		11,360.5
Prior years	197.0		116.1
Total incurred	15,516.9		11,476.6
Paid related to:
Current year	7,849.6		6,180.4
Prior years	5,436.7		5,180.1
Total paid	13,286.3		11,360.5
Net balance at June 30	19,430.7		15,009.3
Plus reinsurance recoverables on unpaid losses	4,464.9		3,502.7
Balance at June 30	$	23,895.6	$	18,512.0

1 Net reserves acquired in Protective Insurance acquisition.

We experienced unfavorable reserve development of $197.0 million and $116.1 million during the first six months of 2021 and 2020, respectively, which is reflected as “Incurred related to prior years” in the table above.

Year-to-date June 30, 2021

•Approximately $100 million of the unfavorable prior year reserve development was attributable to accident year 2019 and $114 million to 2018 and prior accident years, partially offset by favorable development attributable to accident year 2020.

•Our personal auto products incurred about $111 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 bodily injury severity, partially offset by less late reported claims than anticipated for accident year 2020.

•Our Commercial Lines business experienced about $73 million of unfavorable development, primarily due to increased injury severity, and the emergence of large injury claims at rates higher than originally anticipated primarily in Texas and Florida.

•Our Property business experienced about $20 million of unfavorable development, primarily due to higher than anticipated severity, reopen activity in Florida, and loss adjustment expense for prior loss years.

•Our special lines business experienced about $7 million of favorable development.

Year-to-date June 30, 2020

•Approximately 68% of the unfavorable prior year reserve development was attributable to accident year 2018, while only 1% was attributable to accident year 2019, with the remainder related to 2017 and prior accident years. During the second quarter 2020, we experienced favorable development on accident year 2019, primarily due to higher than anticipated salvage and subrogation recoveries, which almost fully offset the unfavorable development from accident year 2019 we experienced during the first quarter 2020.

•Our personal auto products incurred about $37 million of unfavorable loss and LAE reserve development, with about two thirds attributable to the Agency business. The unfavorable LAE development was primarily attributable to revised estimates of our per claim settlement costs taken during the first quarter. We also experienced higher than anticipated frequency of reopened PIP claims, primarily in Florida, and late reported losses occurring toward the end 2019 but not reported until 2020, which was significantly offset by higher than anticipated salvage and subrogation recoveries.

•Our Commercial Lines business experienced about $98 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 and Property businesses experienced about $15 million and $4 million, respectively, of favorable development