Property and Casualty Insurance Reserves

9 Months Ended

Sep. 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 nine months ended September 30, 2019 and 2018 was:



	Nine Months Ended
(Dollars in Millions)	Sep 30, 2019			Sep 30, 2018
Property and Casualty Insurance Reserves:
Gross of Reinsurance at Beginning of Year	$	1,874.9		$	1,016.8
Less Reinsurance 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			682.9
Incurred Losses and LAE Related to:
Current Year:
Continuing Operations	2,140.1			1,412.7
Prior Years:
Continuing Operations	(55.8		)	(1.2		)
Discontinued Operations	—			(0.5		)
Total Incurred Losses and LAE Related to Prior Years	(55.8		)	(1.7		)
Total Incurred Losses and LAE	2,084.3			1,411.0
Paid Losses and LAE Related to:
Current Year:
Continuing Operations	1,128.8			770.9
Prior Years:
Continuing Operations	850.7			533.1
Discontinued Operations	2.4			2.2
Total Paid Losses and LAE Related to Prior Years	853.1			535.3
Total Paid Losses and LAE	1,981.9			1,306.2
Property and Casualty Insurance Reserves - Net of Reinsurance at End of Period	1,879.0			1,751.4
Plus Reinsurance Recoverables at End of Period	62.6			67.7
Property and Casualty Insurance Reserves - Gross of Reinsurance at End of Period	$	1,941.6		$	1,819.1

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 nine months ended September 30, 2019, the Company decreased its property and casualty insurance reserves by $55.8 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 $19.6 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 $5.6 million due primarily to the emergence of more favorable loss patterns than expected for liability insurance related to 2018 and 2017 accident years. Homeowners loss and LAE reserves developed favorably by $13.6 million primarily due to the net of reinsurance impact from the sale of subrogation rights related to the 2017 and 2018 California Wildfires. Other personal lines loss and LAE reserves developed favorably by $5.0 million due primarily to the emergence of more favorable loss patterns than expected for 2018 and 2017 accident years. Commercial automobile insurance loss and LAE reserves developed favorably by $11.1 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 nine months ended September 30, 2018, the Company decreased its property and casualty insurance reserves by $1.7 million to recognize favorable development of loss and LAE reserves from prior accident years. Specialty Personal automobile insurance loss and LAE reserves developed adversely by $3.1 million due primarily to the emergence of more adverse loss patterns than expected for liability insurance for the 2017 accident year. Preferred Personal automobile insurance loss and LAE reserves developed favorably by $3.6 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 $10.1 million due primarily to the emergence of loss patterns that were worse than expected for the 2016 and 2015 accident years, partially offset by favorable development on catastrophes of $6.5 million related to the 2017 accident year. Other personal lines loss and LAE reserves developed favorably by $2.9 million due primarily to the emergence of more favorable loss patterns than expected for the 2016 and 2015 accident years. Commercial automobile loss and LAE reserves developed favorably by $1.4 million due primarily to the emergence of loss patterns that were more favorable than expected for the 2015 and 2014 accident year.

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.