Losses and Loss Expenses Payable Losses and Loss Expenses Payable

9 Months Ended

Sep. 30, 2018

Losses and Loss Expenses Payable [Abstract]

Liability for Future Policy Benefits and Unpaid Claims Disclosure [Text Block]

. Losses and Loss Expenses Payable

The following table sets forth the activity in the liability for losses and loss expenses for the nine months ended September 30, 2018 and 2017:

($ millions)	2018			2017
Losses and loss expenses payable, at beginning of period	$	1,255.6		$	1,181.6
Less: reinsurance recoverable on losses and loss expenses payable	3.1			3.6
Net balance at beginning of period	1,252.5			1,178.0
Incurred related to:
Current year	678.7			752.8
Prior years	(57.6		)	(34.6		)
Total incurred	621.1			718.2
Paid related to:
Current year	314.1			302.0
Prior years	365.8			318.3
Total paid	679.9			620.3
Net balance at end of period	1,193.7			1,275.9
Plus: reinsurance recoverable on losses and loss expenses payable	5.0			4.9
Losses and loss expenses payable, at end of period	$	1,198.7		$	1,280.8

The Company recorded favorable development related to prior years’ loss and loss expense reserves for the nine months ended September 30, 2018, of $57.6 million compared to favorable development of $34.6 million for the same 2017 period. Favorable development of prior years' unallocated loss adjustment expenses was approximately $6.7 million of the 2018 development. Partially offsetting the favorable development was $1.3 million of unfavorable development in catastrophe reserves. Favorable development of prior accident years' non-catastrophe loss and ALAE reserves was primarily due to $56.4 million of favorable development in the personal and commercial insurance segments. In the personal insurance segment, personal auto contributed $18.5 million of favorable development, primarily attributable to lower than anticipated severity from the 2016 and 2017 accident years, and homeowners contributed $7.2 million of favorable development, spread across several accident years. In the commercial insurance segment, workers' compensation, small commercial package, commercial auto, and middle market commercial contributed $8.4 million, $6.5 million, $5.7 million, $5.3 million, and respectively, of favorable development. Slightly offsetting the favorable development was adverse development in the specialty insurance segment of $4.2 million. The specialty insurance segment was impacted by $3.4 million and $0.9 million of adverse development in E&S casualty and programs, respectively. The E&S casualty adverse development for prior accident years was due primarily to development within our healthcare and general liability books of business. The programs quarter and year to date 2018 adverse development for prior accident years was driven by increased ultimate loss estimates for commercial auto coverages.

The Company recorded favorable development related to prior years’ loss and loss expense reserves for the nine months ended September 30, 2017 of $34.6 million compared to adverse development of $33.4 million for the same 2016 period. Favorable development of prior years' unallocated loss adjustment expenses and catastrophe reserves was approximately $4.4 million and $1.8 million, respectively, for the nine months ended September 30, 2017. The favorable development of prior accident years' non-catastrophe loss and ALAE reserves was primarily due to $33.1 million of favorable development in the commercial insurance segment. Slightly offsetting the favorable development was adverse development in the specialty and personal insurance segments of $2.6 million and $2.1 million, respectively. The specialty insurance segment was impacted by $3.0 million of adverse development in E&S property, driven by higher than anticipated severity for liability coverages on business in run-off. The personal insurance segment, homeowners contributed $1.9 million of adverse development, primarily from accident year 2016, and other personal contributed $2.5 million of adverse development, driven by higher than anticipated severity emerging from accident years 2015 and 2016. Slightly offsetting the adverse development was $2.3 million of favorable development in personal auto, primarily driven by lower than anticipated severity emerging from accident years 2014 and 2015.