Liability for Unpaid Claims and Claim Adjustment Expenses

9 Months Ended

Sep. 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):



	Nine months ended September 30,
	2019			2018
Unpaid claims balance, beginning	$	1,305,396		$	1,218,652
Less reinsurance recoverables	254,466			241,301
Net beginning balance	1,050,930			977,351
Incurred related to
Current	917,048			897,901
Prior years	(47,048		)	(11,101		)
Total incurred claims	870,000			886,800
Paid claims related to
Current	482,729			481,199
Prior years	370,807			338,946
Total paid claims	853,536			820,145
Net balance	1,067,394			1,044,005
Plus reinsurance recoverables	247,174			266,780
Unpaid claims balance, ending	$	1,314,568		$	1,310,785

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 $47,048,000 during the first nine months of 2019 and decreased by $11,101,000 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. The decrease for the first nine months in 2018 reflects lower-than-anticipated losses in our workers compensation, other commercial, business owner and commercial package policy line 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 September 30, 2019 was $21,362,000.