Property and Casualty Insurance Reserves

6 Months Ended

Jun. 30, 2019

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

Property and Casualty Insurance Reserves

Property and casualty insurance reserve activity for the six months ended June 30, 2019 and 2018 was:



	Six Months Ended
(Dollars in Millions)	Jun 30, 2019			Jun 30, 2018
Property and Casualty Insurance Reserves:
Gross of Reinsurance and Indemnification at Beginning of Year	$	1,874.9		$	1,016.8
Less Reinsurance and Indemnification Recoverables at Beginning of Year	101.9			53.1
Property and Casualty Insurance Reserves - Net of Reinsurance at Beginning of Year	1,773.0			963.7
Property and Casualty Insurance Reserves Acquired, Net of Reinsurance	3.6			—
Incurred Losses and LAE Related to:
Current Year:
Continuing Operations	1,419.4			742.3
Prior Years:
Continuing Operations	(34.6		)	2.0
Discontinued Operations	—			(0.4		)
Total Incurred Losses and LAE Related to Prior Years	(34.6		)	1.6
Total Incurred Losses and LAE	1,384.8			743.9
Paid Losses and LAE Related to:
Current Year:
Continuing Operations	636.6			335.1
Prior Years:
Continuing Operations	696.9			361.6
Discontinued Operations	1.6			1.7
Total Paid Losses and LAE Related to Prior Years	698.5			363.3
Total Paid Losses and LAE	1,335.1			698.4
Property and Casualty Insurance Reserves - Net of Reinsurance at End of Period	1,826.3			1,009.2
Plus Reinsurance Recoverables at End of Period	85.6			50.5
Property and Casualty Insurance Reserves - Gross of Reinsurance at End of Period	$	1,911.9		$	1,059.7

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

For the six months ended June 30, 2019, the Company decreased its property and casualty insurance reserves by $34.6 million to recognize favorable development of loss and LAE reserves from prior accident years. Specialty Personal automobile insurance loss and LAE reserves developed favorably by $18.0 million due primarily to the emergence of more favorable loss patterns than expected for liability insurance related to the 2018 accident year. Preferred Personal automobile insurance loss and LAE reserves developed favorably by $5.0 million due primarily to the emergence of more favorable loss patterns than expected for liability insurance related to 2018 and 2017 accident years. Other personal lines loss and LAE reserves developed favorably by $2.7 million due primarily to the emergence of more favorable loss patterns than expected for the 2018 and 2017 accident years. Commercial automobile insurance loss and LAE reserves developed favorably by $8.8 million due primarily to the emergence of more favorable loss patterns than expected for liability insurance related to the 2018 accident year.

Note 4 - Property and Casualty Insurance Reserves (continued)

For the six months ended June 30, 2018, the Company increased its property and casualty insurance reserves by $1.6 million to recognize adverse development of loss and LAE reserves from prior accident years. Specialty Personal automobile insurance loss and LAE reserves developed adversely by $4.2 million due primarily to the emergence of worse loss patterns than expected for liability insurance for the 2017 accident year. Preferred Personal automobile insurance loss and LAE reserves developed favorably by $1.0 million due primarily to the emergence of loss patterns that were better than expected for liability insurance for the 2016 and prior accident years, partially offset by the emergence of less favorable loss patterns than expected for both physical damage and liability insurance lines for the 2017 accident year. Homeowners insurance non-catastrophe loss and LAE reserves developed adversely by $8.3 million due primarily to the emergence of loss patterns that were worse than expected for the 2017 and 2016 accident years, partially offset by favorable development on catastrophes of $6.4 million related to the 2017 accident year. Other personal lines loss and LAE reserves developed favorably by $2.2 million due primarily to the emergence of more favorable loss patterns than expected for the 2017 and 2016 accident years. Commercial automobile loss and LAE reserves developed favorably by $0.9 million due primarily to the emergence of loss patterns that were more favorable than expected for the 2014 accident year and, to a lesser extent, the 2017 and 2016 accident years.

The Company cannot predict whether loss and LAE reserves will develop favorably or adversely 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.