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Property and Casualty Insurance Reserves
 3 Months Ended
Mar. 31, 2025
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, 2025 and 2024 was:
 Three Months Ended
(Dollars in Millions)Mar 31,
2025		Mar 31,
2024
Property and Casualty Insurance Reserves:
Gross of Reinsurance at Beginning of Year$2,611.9 $2,680.5 
Less: Reinsurance Recoverables at Beginning of Year24.3 27.8 
Property and Casualty Insurance Reserves, Net of Reinsurance at Beginning of Year2,587.6 2,652.7 
Incurred Losses and LAE related to:
Current Year698.7 686.1 
Prior Years(1.1)8.8 
Total Incurred Losses and LAE697.6 694.9 
Paid Losses and LAE related to:
Current Year192.5 213.9 
Prior Years480.4 562.9 
Total Paid Losses and LAE672.9 776.8 
Property and Casualty Insurance Reserves, Net of Reinsurance at End of Period2,612.3 2,570.8 
Plus: Reinsurance Recoverables at End of Period25.3 26.4 
Property and Casualty Insurance Reserves, Gross of Reinsurance at End of Period$2,637.6 $2,597.2 
    
Property and Casualty Insurance Reserves are estimated based on historical experience patterns and current economic trends. Actual loss experience and loss trends may 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. Additionally, the Company reviews if any premium revisions are appropriate as a result of any incurred losses and loss adjustment expenses (“LAE”) related to prior years recorded in the current period. For the three months ended March 31, 2025 and 2024, no additional premiums or return premiums were recorded.
For the three months ended March 31, 2025, the Company recognized $4.9 million of favorable reserve development on prior accident years attributable to improved loss patterns related to personal injury protection, property damage, and bodily injury coverages in the Specialty Personal Automobile product line. Additionally, the Company experienced $1.4 million of favorable development driven by improved prior year catastrophe loss experience and lower prior year claim administrative costs within Non-Core Operations. This development was partially offset by adverse development on the Commercial Automobile product line of $5.3 million, which was primarily attributable to evolving loss patterns and higher defense costs associated with attorney-represented bodily injury coverages.
For the three months ended March 31, 2024, the Company recognized $7.1 million of adverse development within the Specialty Personal Automobile product line, primarily driven by higher than expected settlements for extra-contractual demands related to prior year claims. In addition, the Company experienced adverse development of $2.9 million within Non-Core Operations due primarily to higher than expected losses associated with third quarter of 2023 catastrophe events and a higher than expected large loss emergence. This development was partially offset by favorable development on the Commercial Automobile product of $1.1 million, which was primarily attributable to favorable emergence in loss patterns related to bodily injury coverages.
The Company cannot predict whether loss and LAE reserves will develop favorably or unfavorably from the amounts reported in the Condensed Consolidated Financial Statements. The Company believes that any such development will not have a material effect on the Company’s Shareholders’ Equity, but could have a material effect on the Company’s consolidated financial results for a given period.
Liability for Future Policyholder Benefits
The Company’s Life Insurance Reserves are reported using the Company’s estimate of its liability for future policyholder benefits. The liability for future policyholder benefits is grouped by contract type and issue year into cohorts consistent with the grouping used in estimating the associated liability. Significant assumption inputs to the calculation of the liability for future policyholder benefits include mortality, lapses, and discount rates (both accretion and current). The Company’s actuaries review assumptions used to measure the liability for future policyholder benefits for nonparticipating traditional and limited pay long-duration contracts at least annually. If there is a change, assumptions are updated with the recognition and remeasurement recorded in the Company’s Condensed Consolidated Statements of Income. The Company’s actuaries use a variety of generally accepted actuarial methodologies, in accordance with Actuarial Standards of Practice, in determining the assumptions.
A key assumption in these estimation methodologies is that patterns observed in prior periods are indicative of how policyholder benefits are expected to develop in the future and that such historical data can be used to predict and estimate future losses. However, changes in the Company’s business processes and the macroeconomic environment, by their very nature, are likely to affect the actual to expected experience which generally results in the historical experience factors becoming less reliable over time in predicting how cash flows will ultimately develop. The Company’s actuaries use professional judgment in determining how much weight to place on the actual to expected experience based on the older historical data and how much weight to place on more recent experience data. In some cases, the Company’s actuaries make adjustments to the assumptions to estimate losses. These assumptions are reviewed by the Company’s actuaries and corporate management who apply their collective judgment and determine the appropriate assumptions to adopt for the underlying business. Numerous factors are considered in this determination process, including, but not limited to, the assessed reliability of key assumptions that may be significantly influencing the current actuarial indications, changes in pricing and product offerings, changes in customer base, changes in agency operations or other changes that affect the timing of payments, the policyholder behaviors observed over the recent past, the level of volatility within a particular line of business, and the improvement or deterioration of actuarial indications in the current period as compared to prior periods. Changes in the Company’s assumptions underlying these liabilities over time will occur and may be material.
Note 5 - Liability for Future Policyholder Benefits (Continued)
The following tables summarize balances and changes in the present value of expected net premiums, present value of expected future policyholder benefits and net liability for future policyholder benefits as of and for the three months ended March 31, 2025 and 2024:
Three Months Ended
(Dollars in Millions)Mar 31, 2025Mar 31, 2024
Present Value of Expected Net PremiumsBalance, Beginning of Year$646.1 $675.4 
Beginning Balance at Original Discount Rate$681.0 $694.7 
        Effect of Changes in Cash Flow Assumptions— — 
        Effect of Actual Variances from Expected Experience9.8 5.3 
Adjusted Beginning of Year Balance690.8 700.0 
         Issuances20.4 38.2 
         Interest Accrual7.3 7.6 
         Net Premiums Collected(23.5)(22.7)
Ending Balance at Original Discount Rate695.0 723.1 
         Effect of Changes in Discount Rate Assumptions(26.8)(33.0)
Balance, End of Period$668.2 $690.1 
Present Value of Expected Future Policyholder BenefitsBalance, Beginning of Year$3,295.9 $3,613.2 
Beginning Balance at Original Discount Rate$3,812.1 $3,835.9 
        Effect of Changes in Cash Flow Assumptions— — 
        Effect of Actual Variances From Expected Experience10.0 5.5 
Adjusted Beginning of Year Balance3,822.1 3,841.4 
         Issuances 20.4 38.2 
         Interest Accrual42.0 42.6 
         Benefit Payments(61.0)(56.5)
Ending Balance at Original Discount Rate3,823.5 3,865.7 
         Effect of Changes in Discount Rate Assumptions(490.0)(377.5)
Balance, End of Period$3,333.5 $3,488.2 
Net Liability for Future Policyholder Benefits, pre-flooring$2,665.3 $2,798.1 
Cumulative impact of flooring the future Policyholder Benefits Reserve— — 
Net Liability for Future Policyholder Benefits, post-flooring2,665.3 2,798.1 
Less: Reinsurance Recoverable— — 
Net Liability for Future Policyholder Benefits, After Reinsurance Recoverable$2,665.3 $2,798.1 
The weighted-average liability duration of the liability for future policyholder benefits as calculated under current rates is as follows:
Mar 31, 2025Mar 31, 2024
Weighted-Average Liability Duration of the Liability for Future Policyholder Benefits (Years)13.814.6
Note 5 - Liability for Future Policyholder Benefits (Continued)
The reconciliation of the net liability for future policyholder benefits to Life and Health Insurance Reserves in the Condensed Consolidated Balance Sheets is as follows:
(Dollars in Millions)Mar 31, 2025Mar 31, 2024
Net Liability for Future Policyholder Benefits, post-flooring$2,665.3 $2,798.1 
Deferred Profit Liability428.8 357.5 
Other1
135.4 138.7 
Total Life and Health Insurance Reserves$3,229.5 $3,294.3 
1Other primarily consists of Accident and Health and Universal Life reserves
The amounts of expected undiscounted future benefit payments, expected undiscounted future gross premiums and expected discounted future gross premiums, is as follows:
(Dollars in Millions)Mar 31, 2025Mar 31, 2024
Expected Future Benefit Payments, undiscounted$10,137.4 $10,225.9 
Expected Future Gross Premiums, undiscounted$4,002.1 $4,136.0 
Expected Future Gross Premiums, discounted$2,671.6 $2,758.3 
The amount of revenue and interest recognized in the Condensed Consolidated Statements of Income is as follows:
Three Months Ended
(Dollars in Millions)Mar 31, 2025Mar 31, 2024
Gross Premiums or Assessments $101.7 $101.3 
Interest Expense $34.7 $35.0 
The weighted-average interest rate is as follows:
Mar 31, 2025Mar 31, 2024
Interest Accretion Rate4.53 %4.55 %
Current Discount Rate5.72 %5.40 %
Significant assumption inputs to the calculation of the liability for future policyholder benefits include mortality, lapses, and discount rates (both accretion and current). The Company did not make any changes to mortality and lapse assumptions during the three months ended March 31, 2025 and 2024. Market data that underlies current discount rates was updated as of March 31, 2025.
The balances of and changes in Deferred Profit Liability as of and for the periods indicated are as follows:
Three Months Ended
(Dollars in Millions)Mar 31, 2025Mar 31, 2024
Balance, Beginning of Year$412.1 $337.8 
Profits Deferred40.8 41.8 
Interest Accrual4.8 4.0 
Amortization(28.7)(25.9)
Effect of Actual Variances from Expected Experience and Other Changes(0.2)(0.2)
Balance, End of Period$428.8 $357.5