Property and Casualty Insurance Reserves

3 Months Ended

Mar. 31, 2020

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

Property and Casualty Insurance Reserves

Property and Casualty Insurance Reserves

Property and casualty insurance reserve activity for the three months ended March 31, 2020 and 2019 was:

	Three Months Ended
(Dollars in Millions)	Mar 31, 2020		Mar 31, 2019
Property and Casualty Insurance Reserves:
Gross of Reinsurance at Beginning of Year	$	1,969.8	$	1,874.9
Less Reinsurance Recoverables at Beginning of Year	65.6		101.9
Property and Casualty Insurance Reserves - Net of Reinsurance at Beginning of Year	1,904.2		1,773.0
Incurred Losses and LAE Related to:
Current Year	738.1		687.6
Prior Years	0.9		(21.4		)
Total Incurred Losses and LAE	739.0		666.2
Paid Losses and LAE Related to:
Current Year	257.0		223.5
Prior Years	505.8		445.4
Total Paid Losses and LAE	762.8		668.9
Property and Casualty Insurance Reserves - Net of Reinsurance at End of Period	1,880.4		1,770.3
Plus Reinsurance Recoverables at End of Period	61.2		98.4
Property and Casualty Insurance Reserves - Gross of Reinsurance at End of Period	$	1,941.6	$	1,868.7

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 three months ended March 31, 2020, the Company increased its property and casualty insurance reserves by $0.9 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 $18.0 million due primarily to the emergence of more adverse loss patterns than expected. Commercial automobile insurance loss and LAE reserves developed favorably by $12.5 million due primarily to the emergence of more favorable loss patterns than expected for commercial automobile liability insurance. Preferred Personal automobile insurance loss and LAE reserves developed adversely by $2.1 million due primarily to the emergence of more adverse loss patterns than expected. Homeowners loss and LAE reserves developed favorably by $5.0 million primarily due to the emergence of more favorable loss patterns than expected. Other personal lines loss and LAE reserves developed favorably by $1.8 million due primarily to the emergence of more favorable loss patterns than expected for prior accident years. 

For the three months ended March 31, 2019, the Company decreased its property and casualty insurance reserves by $21.4 million to recognize favorable development of loss and LAE reserves from prior accident years. Specialty Personal automobile

Note 3 - Property and Casualty Insurance Reserves (continued)

insurance loss and LAE reserves developed favorably by $14.3 million due primarily to the emergence of favorable loss patterns for liability insurance related to the 2018 accident year and, to a lesser extent the 2016 and 2015 accident years. Commercial automobile loss and LAE reserves developed favorably by $3.8 million due primarily to the emergence of favorable loss patterns for liability insurance related to the 2018 accident year. Preferred Personal automobile insurance loss and LAE reserves developed favorably by $1.3 million due primarily to the emergence of favorable loss patterns for liability insurance related to 2018 and 2017 accident years. Other personal lines loss and LAE reserves developed favorably by $1.8 million due primarily to the emergence of more favorable loss patterns than expected for the 2017, 2016 and 2015 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.

Receivables from Policyholders - Allowance for Expected Credit Losses

The following table presents a rollforward of the receivables from policyholders, net of the allowance for expected credit losses including the changes in the allowance for expected credit losses for the three months ended March 31, 2020.

(Dollars in Millions)	Receivables from Policyholders, Net of Allowance for Expected Credit Losses		Allowance for Expected Credit Losses
Balance at Beginning of Year	$	1,117.1	$	22.3
Current Period Change for Expected Credit Losses			11.9
Write-offs of Uncollectible Receivables from Policyholders			(11.1		)
Balance at End of Period	$	1,219.1	$	23.1