Property and Casualty Insurance Reserves

9 Months Ended

Sep. 30, 2011

Liability for Future Policy Benefits and Unpaid Claims and Claims Adjustment Expense [Abstract]

Property and Casualty Insurance Reserves

Note 4 - Property and Casualty Insurance Reserves

Property and Casualty Insurance Reserve activity for the nine months endedSeptember 30, 2011 and 2010 was:

	Nine Months Ended
(Dollars in Millions)	Sep 30, 2011			Sep 30, 2010
Property and Casualty Insurance Reserves - Gross of Reinsurance at Beginning of Year	$	1,118.7		$	1,211.3
Less Reinsurance Recoverables at Beginning of Year	78.1			77.4
Property and Casualty Insurance Reserves - Net of Reinsurance at Beginning of Year	1,040.6			1,133.9
Incurred Losses and LAE Related to:
Current Year - Continuing Operations	1,038.4			983.7
Prior Years:
Continuing Operations	(30.1		)	(19.5		)
Discontinued Operations	1.9			0.4
Total Incurred Losses and LAE Related to Prior Years	(28.2		)	(19.1		)
Total Incurred Losses and LAE	1,010.2			964.6
Paid Losses and LAE Related to:
Current Year - Continuing Operations	636.7			579.0
Prior Years:
Continuing Operations	399.9			425.3
Discontinued Operations	22.1			32.5
Total Paid Losses and LAE Related to Prior Years	422.0			457.8
Total Paid Losses and LAE	1,058.7			1,036.8
Property and Casualty Insurance Reserves - Net of Reinsurance at End of Period	992.1			1,061.7
Plus Reinsurance Recoverable at End of Period	71.5			69.7
Property and Casualty Insurance Reserves - Gross of Reinsurance at End of Period	$	1,063.6		$	1,131.4

Property and Casualty Insurance Reserves are estimated based on historical experience patterns and current economic trends. Actual loss experience and loss trends are likely to differ from these historical experience patterns and economic conditions. Loss experience and loss trends emerge over several years from the dates of loss inception. The Company monitors such emerging loss trends on a quarterly basis. Changes in such estimates are included in the Condensed Consolidated Statements of Income in the period of change.

For the nine months endedSeptember 30, 2011, the Company reduced its property and casualty insurance reserves by $28.2 million to recognize favorable development of losses and loss adjustment expenses (“LAE”) from prior accident years. Personal lines insurance losses and LAE reserves developed favorably by $27.6 million and commercial lines insurance losses and LAE reserves developed favorably by $0.6 million. The personal lines insurance losses and LAE reserves developed favorably due primarily to the emergence of more favorable loss trends than expected for the 2010, 2009 and 2008 accident years.

For the nine months endedSeptember 30, 2010, the Company reduced its property and casualty insurance reserves by $19.1 million to recognize favorable development of losses and LAE from prior accident years. Personal lines insurance losses and LAE reserves developed favorably by $19.2 million and commercial lines insurance losses and LAE reserves developed unfavorably by $0.1 million. The personal lines insurance losses and LAE reserves developed favorably due primarily to the emergence of more favorable loss trends than expected for the 2009, 2007 and 2006 accident years.

The Company cannot predict whether losses and LAE will develop favorably or unfavorably from the amounts reported in the Company’s Condensed Consolidated Financial Statements. The Company believes that any such development will not have a material effect on the Company’s consolidated shareholders’ equity, but could have a material effect on the Company’s consolidated financial results for a given period.