SHORT-DURATION CONTRACTS

The Company uses several actuarial methods to compute incurred-but-not reported liabilities. These methods use historical claim reporting patterns to develop a triangle of reported claim amounts. The claim triangle is then used to develop the ultimate claims amount and the incurred-but-not reported liabilities. Expected claim methods use exposure data such as premiums to develop the ultimate claim amount. The final method blends the estimates from the development and the expected claim methods. The Company did not make significant changes to the methods used to compute the incurred-but-not reported liabilities in 2016.

The following tables provide information on incurred and paid claims development, net of retrocession, for short-duration reinsurance contracts for the Company’s U.S. and Latin America and Asia Pacific Traditional segments, which primarily relate to group life and health (including disability) business. The short-duration business for the Company’s other segments is immaterial. Liabilities for claims and claims adjustment expenses, net of reinsurance equals total incurred claims less cumulative paid claims plus outstanding liabilities prior to 2012.

The Company provides reinsurance on large quota share transactions. It is common industry practice for cedants to provide loss information on a bulk basis without comprehensive claim details. Additionally, a claim under aggregate stop loss coverage may be the result of thousands of claims, but the Company only pays the excess amount. Therefore, it is impractical to provide meaningful claim count detail by accident year in the tables shown below.



U.S. and Latin America											As of
(in thousands)											December 31, 2016
Incurred Claims and Allocated Claim Adjustments, Net of Reinsurance ⁽¹⁾											Total of Incurred-but-Not-Reported Liabilities Plus Expected Development on Reported Claims
	For the Years Ended December 31,
Accident Year	2012		2013		2014		2015		2016
2012	$	322,579	$	309,119	$	297,037	$	298,262	$	299,098	$	98
2013			349,262		332,907		338,977		336,552		1,263
2014					407,953		411,373		396,383		4,284
2015							459,524		460,917		26,531
2016									500,843		220,381
							Total		$	1,993,793



Cumulative Paid Claims and Allocated Claim Adjustment Expense, Net of Reinsurance ⁽¹⁾
	For the Years Ended December 31,
Accident Year	2012		2013		2014		2015		2016
2012	$	109,323	$	222,139	$	243,890	$	252,018	$	258,297
2013			114,457		248,828		277,130		285,817
2014					128,813		304,578		337,081
2015							146,196		360,658
2016									184,940
							Total		$	1,426,793
	All outstanding claims prior to 2012, net of reinsurance								239,700
	Liabilities for claims and claim adjustment expense, net of reinsurance								$	806,700


(1)	2012-2015 Unaudited.



Asia Pacific											As of
(in thousands)											December 31, 2016
Incurred Claims and Allocated Claim Adjustments, Net of Reinsurance ⁽¹⁾											Total of Incurred-but-Not-Reported Liabilities Plus Expected Development on Reported Claims
	For the Years Ended December 31,
Accident Year	2012		2013		2014		2015		2016
2012	$	212,571	$	285,302	$	289,707	$	293,097	$	300,903	$	15,050
2013			299,373		320,189		310,631		307,961		27,764
2014					283,298		307,111		271,418		43,893
2015							284,773		262,946		82,199
2016									232,788		139,345
							Total		$	1,376,016



Cumulative Paid Claims and Allocated Claim Adjustment Expense, Net of Reinsurance ⁽¹⁾
	For the Years Ended December 31,
Accident Year	2012		2013		2014		2015		2016
2012	$	50,433	$	138,375	$	189,503	$	228,016	$	249,043
2013			50,928		147,500		214,070		241,245
2014					35,298		138,728		181,441
2015							50,066		121,254
2016									39,173
							Total		$	832,156
	All outstanding claims prior to 2012, net of reinsurance								171,608
	Liabilities for claims and claim adjustment expense, net of reinsurance								$	715,468


(1)	2012-2015 Unaudited.

The reconciliation of the net incurred and paid claims development tables to the liability for claims and claim adjustment expense in the consolidated balance sheets are as follows:



	December 31, 2016
Liabilities for claims and claim adjustment expense, net of reinsurance:
U.S. and Latin America	$	806,700
Asia Pacific	715,468
Liabilities for claims and claim adjustment expense, net of reinsurance	1,522,168
Adjustments to reconcile to total policy claims and future policy benefits:
Reinsurance recoverable	20,009
Effect of discounting and unallocated claims adjustment expense	(141,433		)
Total adjustments	(121,424		)
Other short-duration contracts:
Canada	155,520
Europe, Middle East and Africa	312,947
Other	117,977
Total short-duration contracts	1,987,188
Other than short-duration contracts	21,857,411
Total future policy benefits and other policy claims and benefits	$	23,844,599

The following is unaudited supplementary information about average historical claims duration as of December 31, 2016:



Average Annual Payout of Incurred Claims by Age, Net of Reinsurance
Years	1		2		3		4		5
U.S. and Latin America	34.3	%	42.1	%	8.0	%	2.6	%	2.1	%
Asia Pacific	16.4	%	31.4	%	18.1	%	10.8	%	7.0	%