Property and Casualty Insurance Reserves

9 Months Ended

Sep. 30, 2022

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, 2022 and 2021 was:


	Nine Months Ended
(Dollars in Millions)	Sep 30, 2022		Sep 30, 2021
Property and Casualty Insurance Reserves:
Gross of Reinsurance at Beginning of Year	$	2,772.7	$	1,982.5
Less Reinsurance Recoverables at Beginning of Year	41.9		50.1
Property and Casualty Insurance Reserves - Net of Reinsurance at Beginning of Year	2,730.8		1,932.4
Property and Casualty Insurance Reserves Acquired, Net of Reinsurance	—		211.1
Incurred Losses and LAE Related to:

Current Year	3,125.0		2,885.7



Prior Years	(22.5)		107.9
Total Incurred Losses and LAE	3,102.5		2,993.6
Paid Losses and LAE Related to:

Current Year	1,748.9		1,503.9



Prior Years	1,406.6		1,080.4
Total Paid Losses and LAE	3,155.5		2,584.3
Property and Casualty Insurance Reserves - Net of Reinsurance at End of Period	2,677.8		2,552.8
Plus Reinsurance Recoverables at End of Period	42.5		43.4
Property and Casualty Insurance Reserves - Gross of Reinsurance at End of Period	$	2,720.3	$	2,596.2

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 ended September 30, 2022, the Company decreased its property and casualty insurance reserves by $22.5 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 $31.6 million due primarily to the emergence of more favorable loss patterns than expected for liability and physical damage insurance. Commercial automobile insurance loss and LAE reserves developed adversely by $7.5 million due primarily to the emergence of more adverse loss patterns than expected for liability insurance. Preferred personal automobile insurance loss and LAE reserves developed adversely by $1.9 million due primarily to the emergence of more adverse loss patterns than expected for liability insurance. Homeowners loss and LAE reserves developed favorably by $6.1 million due primarily to the emergence of more favorable loss patterns than expected. Other lines loss and LAE reserves developed adversely by $5.8 million due primarily to the emergence of more adverse loss patterns than expected for prior accident years.

For the nine months ended September 30, 2021, the Company increased its property and casualty insurance reserves by $107.9 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 $97.0 million due primarily to the emergence of more adverse loss patterns than expected for liability insurance. Commercial automobile insurance loss and LAE reserves developed adversely by $8.3 million due primarily to the emergence of more adverse loss patterns than expected for liability insurance. Preferred personal automobile insurance loss and LAE reserves developed adversely by $4.9 million due primarily to the emergence of more adverse loss patterns than expected for liability insurance. Homeowners loss and LAE reserves developed favorably by $4.3 million due primarily to the emergence of more favorable loss patterns than expected. Other lines loss and LAE reserves developed adversely by $2.0 million due primarily to the emergence of more adverse loss patterns than expected for prior accident years.

Note 6 - Property and Casualty Insurance Reserves (Continued)

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 Condensed 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 receivables from policyholders, net of the allowance for expected credit losses including a rollforward of changes in the allowance for expected credit losses for the nine months ended September 30, 2022.


(Dollars in Millions)	Receivables from Policyholders, Net of Allowance for Expected Credit Losses (1)		Allowance for Expected Credit Losses
Balance at Beginning of Year	$	1,418.7	$	13.6
Provision for Expected Credit Losses			36.7
Write-offs of Uncollectible Receivables from Policyholders			(37.8)
Balance at End of Period	$	1,349.1	$	12.5
(1) Includes receivables classified as Held-for-Sale Assets on the Condensed Consolidated Balance Sheets. See Note 4, “Dispositions,” for more information.


(Dollars in Millions)	Receivables from Policyholders, Net of Allowance for Expected Credit Losses		Allowance for Expected Credit Losses
Balance at Beginning of Year	$	1,194.5	$	20.9
Provision for Expected Credit Losses			36.7
Write-offs of Uncollectible Receivables from Policyholders			(44.9)
Balance at End of Period	$	1,481.2	$	12.7