Liability for Unpaid Claims and Claim Adjustment Expenses

6 Months Ended

Jun. 30, 2019

Liability for Unpaid Claims and Claim Adjustment Expenses

The liability for unpaid claims and claim adjustment expenses (“claims”) for health and property and casualty insurance is included in “Policy and contract claims” in the consolidated statements of financial position and is the amount estimated for incurred but not reported (“IBNR”) claims and claims that have been reported but not settled. The liability for unpaid claims is estimated based upon American National’s historical experience and actuarial assumptions that consider the effects of current developments, anticipated trends and risk management programs, less anticipated salvage and subrogation. The effects of the changes are included in the consolidated results of operations in the period in which the changes occur. The time value of money is not taken into account for the purposes of calculating the liability for unpaid claims. There have been no significant changes in methodologies or assumptions used to calculate the liability for unpaid claims and claim adjustment expenses.

Information regarding the liability for unpaid claims is shown below (in thousands):



	Six months ended June 30,
	2019			2018
Unpaid claims balance, beginning	$	1,305,396		$	1,218,824
Less reinsurance recoverables	254,466			241,302
Net beginning balance	1,050,930			977,522
Incurred related to
Current	591,073			586,516
Prior years	(30,691		)	(2,501		)
Total incurred claims	560,382			584,015
Paid claims related to
Current	272,650			261,019
Prior years	276,738			268,116
Total paid claims	549,388			529,135
Net balance	1,061,924			1,032,402
Plus reinsurance recoverables	249,245			255,684
Unpaid claims balance, ending	$	1,311,169		$	1,288,086

The net and gross reserve calculations have shown favorable development as a result of favorable loss emergence compared to what was implied by the loss development patterns used in the original estimation of losses in prior years. Estimates for ultimate incurred claims attributable to insured events of prior years decreased by approximately $30,691,000 during the first six months of 2019 and decreased by approximately $2,501,000 during the same period in 2018. The favorable development in 2019 was a reflection of lower-than-anticipated losses in the workers compensation and agribusiness lines of business.

For short-duration health insurance claims, the total of IBNR plus expected development on reported claims included in the liability for unpaid claims and claim adjustment expenses at June 30, 2019 was approximately $23,627,000.