Loss and Loss Adjustment Expense Reserves

6 Months Ended

Jun. 30, 2024

Loss and Loss Adjustment Expenses Reserves [Abstract]

Loss and Loss Adjustment Expense Reserves

LOSS AND LOSS ADJUSTMENT EXPENSE RESERVES

Activity in the loss and loss adjustment expense reserves is summarized as follows:

	June 30,
(millions)	2024		2023
Balance at January 1	$	34,389.2	$	30,359.3
Less reinsurance recoverables on unpaid losses	4,789.0		5,559.2
Net balance at January 1	29,600.2		24,800.1
Incurred related to:
Current year	23,629.4		21,683.6
Prior years	(62.5)		1,110.5
Total incurred	23,566.9		22,794.1
Paid related to:
Current year	11,470.3		10,789.5
Prior years	9,606.6		9,115.8
Total paid	21,076.9		19,905.3
Net balance at June 30	32,090.2		27,688.9
Plus reinsurance recoverables on unpaid losses	4,515.0		5,064.4
Balance at June 30	$	36,605.2	$	32,753.3

We experienced favorable reserve development of $62.5 million during the first six months of 2024, compared to unfavorable development of $1,110.5 million for the same period last year, which is reflected as “incurred related to prior years” in the table above.

Year-to-date June 30, 2024

•The favorable prior year reserve development included approximately $60 million of favorable development attributable to accident year 2023 and $20 million to accident year 2022; partially offset by unfavorable development attributable to accident years 2021 and prior.

•Our personal auto products incurred about $235 million of favorable loss and loss adjustment expense (LAE) reserve development, with about 60% attributable to the Agency auto business and the balance in the Direct auto business. The favorable development was, in part, due to lower than anticipated frequency in Florida following tort reform that passed in the first quarter 2023 and lower than anticipated property damage severity across the majority of states.

•Our Commercial Lines and Property businesses experienced about $140 million and $30 million, respectively, of unfavorable development, with the Commercial Lines development primarily driven by higher than anticipated severity in our commercial auto business for California and New York.

Year-to-date June 30, 2023

•The unfavorable prior year reserve development included approximately $910 million attributable to accident year 2022, $81 million to accident year 2021, and the remainder to accident years 2020 and prior.

•Our personal auto products incurred about $870 million of unfavorable loss and LAE reserve development, with the Agency and Direct auto businesses each contributing about half. About half of the unfavorable development was attributable to higher than anticipated severity in auto property and physical damage coverages, while the remaining unfavorable development was primarily due to increased loss costs in Florida injury and medical coverages and, to a lesser extent, higher than anticipated late reported injury claims.

•Our Commercial Lines business experienced about $224 million of unfavorable development, primarily due to higher than anticipated severity and frequency of late reported injury claims.