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 2017.

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, 2017
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		2017
2012	$	322,579	$	309,119	$	297,037	$	298,262	$	299,098	$	297,688	$	24
2013			349,262		332,907		338,977		336,552		336,436		164
2014					407,953		411,373		396,383		397,151		1,597
2015							459,524		460,917		465,167		3,809
2016									500,843		499,785		23,149
2017											485,442		200,109
									Total		$	2,481,669



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		2017
2012	$	109,323	$	222,139	$	243,890	$	252,018	$	258,297	$	263,565
2013			114,457		248,828		277,130		285,817		292,067
2014					128,813		304,578		337,081		349,078
2015							146,196		360,658		407,282
2016									184,940		392,517
2017											189,853
									Total		$	1,894,362
			All outstanding claims prior to 2012, net of reinsurance								208,874
	Liabilities for claims and claim adjustment expense, net of reinsurance										$	796,181


(1)	2012-2016 Unaudited.



Asia Pacific													As of
(in thousands)													December 31, 2017
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		2017
2012	$	230,295	$	309,090	$	313,862	$	317,536	$	325,992	$	336,901	$	13,196
2013			324,334		346,886		336,531		333,639		347,865		21,310
2014					306,919		332,718		294,049		300,025		27,113
2015							308,517		284,871		277,166		44,713
2016									252,197		228,342		62,959
2017											235,146		140,159
									Total		$	1,725,445



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		2017
2012	$	54,638	$	149,912	$	205,303	$	247,028	$	269,808	$	287,941
2013			55,175		159,799		231,919		261,359		289,472
2014					38,241		150,295		196,570		228,405
2015							54,241		131,364		185,393
2016									42,440		108,310
2017											39,262
									Total		$	1,138,783
			All outstanding claims prior to 2012, net of reinsurance								144,984
	Liabilities for claims and claim adjustment expense, net of reinsurance										$	731,646


(1)	2012-2016 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 as of December 31, 2017 and 2016, are as follows:



	2017
Liabilities for claims and claim adjustment expense, net of reinsurance:
U.S. and Latin America	$	796,181
Asia Pacific	731,646
Liabilities for claims and claim adjustment expense, net of reinsurance	1,527,827
Adjustments to reconcile to total policy claims and future policy benefits:
Reinsurance recoverable	17,940
Effect of discounting and unallocated claims adjustment expense	(146,331		)
Total adjustments	(128,391		)
Other short-duration contracts:
Canada	150,248
Europe, Middle East and Africa	346,916
Other	122,690
Total short-duration contracts	2,019,290
Other than short-duration contracts	25,336,025
Total future policy benefits and other policy claims and benefits	$	27,355,315

The following is unaudited supplementary information about average historical claims duration as of December 31, 2017:



Average Annual Payout of Incurred Claims by Age, Net of Reinsurance
Years	1		2		3		4		5		6
U.S. and Latin America	35.1	%	41.9	%	8.5	%	2.8	%	2.0	%	1.8	%
Asia Pacific	16.5	%	30.3	%	18.0	%	10.5	%	7.6	%	5.4	%