Non-life and Life and Health Reserves (Tables)

12 Months Ended

Dec. 31, 2019

Liability for Future Policy Benefits and Unpaid Claims and Claims Adjustment Expense [Abstract]

The Company’s gross liability for non-life reserves reported by cedants (case reserves) and those estimated by the Company (ACRs and IBNR reserves) at December 31, 2019 and 2018 was as follows (in thousands of U.S. dollars):



	December 31, 2019		December 31, 2018
Case reserves	$	4,203,052	$	4,217,068
ACRs	158,220		174,713
IBNR reserves	6,002,111		5,503,595
Non-life reserves	$	10,363,383	$	9,895,376

Reconciliation of the beginning and ending gross and net liability for non-life reserves

The reconciliation of the beginning and ending gross and net liability for non-life reserves for the years ended December 31, 2019, 2018 and 2017 was as follows (in thousands of U.S. dollars):



	2019			2018			2017
Gross liability at beginning of year	$	9,895,376		$	10,102,172		$	9,247,200
Reinsurance recoverable at beginning of year	850,946			719,998			295,388
Net liability at beginning of year	9,044,430			9,382,174			8,951,812
Net incurred losses related to: ⁽¹⁾
Current year	3,716,988			3,417,366			3,453,725
Prior years	(56,848		)	(248,719		)	(448,158		)
	3,660,140			3,168,647			3,005,567
Net paid losses related to:
Current year	(439,285		)	(336,584		)	(472,291		)
Prior years	(2,651,385		)	(2,585,403		)	(2,506,760		)
	(3,090,670		)	(2,921,987		)	(2,979,051		)
Retroactive reinsurance recoverable ⁽²⁾	(81,013		)	—			—
Change in Paris Re reserve agreement ⁽³⁾	—			(397,493		)	(3,481		)
Effects of foreign exchange rate changes	75,701			(186,911		)	407,327
Net liability at end of year	$	9,608,588		$	9,044,430		$	9,382,174
Reinsurance recoverable at end of year	754,795			850,946			719,998
Gross liability at end of year	$	10,363,383		$	9,895,376		$	10,102,172

(1) Net incurred losses include favorable loss development of $3 million during the year ended December 31, 2019, which are allocated to Corporate and Other as disclosed in Note 18. Non-life reserves allocated to Corporate and Other totaled $6 million, $9 million and $nil at December 31, 2019, 2018 and 2017, respectively.

(2) In the fourth quarter of 2019, the Company entered into a loss portfolio transfer agreement transferring 100% of liabilities, including profit commissions, related to its wholesale managing general agent portfolio. As a result of the transaction, the Company recorded a deferred gain of $14 million, which is included in Accounts payable, accrued expenses and other in the Consolidated Balance Sheet.

(3) The change in reserve agreement includes adverse development on Paris Re’s reserves which were guaranteed by Axa under the reserve agreement. In 2018, this balance also includes the reduction of the guaranteed reserves following the commutation of the agreement in the fourth quarter of 2018.

Reconciliation of the beginning and ending gross and net liability for life and health reserves

The reconciliation of the beginning and ending gross and net liability for life and health reserves for the years ended December 31, 2019, 2018 and 2017 was as follows (in thousands of U.S. dollars):



	2019			2018			2017
Gross liability at beginning of period	$	2,198,080		$	2,098,759		$	1,722,330
Reinsurance recoverable at beginning of period	11,829			9,287			2,726
Net liability at beginning of period	$	2,186,251		$	2,089,472		$	1,719,604
Liability acquired related to the acquisition of Aurigen	—			—			67,916
Net incurred losses	1,263,016			1,024,608			835,415
Net losses paid	(1,071,487		)	(818,916		)	(714,151		)
Effects of foreign exchange rate changes	23,081			(108,913		)	180,688
Net liability at end of period	$	2,400,861		$	2,186,251		$	2,089,472
Reinsurance recoverable at end of period	16,183			11,829			9,287
Gross liability at end of period	$	2,417,044		$	2,198,080		$	2,098,759

Components of losses and loss expenses by segment

Losses and loss expenses in the Consolidated Statements of Operations for the years ended December 31, 2019, 2018 and 2017 were comprised as follows (in thousands of U.S. dollars):



	2019		2018		2017
Non-life⁽¹⁾	$	3,660,140	$	3,168,647	$	3,005,567
Life and Health	1,263,016		1,024,608		835,415
Losses and loss expenses	$	4,923,156	$	4,193,255	$	3,840,982

(1) Net incurred losses include favorable loss development of $3 million during the year ended December 31, 2019, which are allocated to Corporate and Other as disclosed in Note 18.

Incurred and paid claims development and average annual percentage payout of incurred claims by age, net of reinsurance

The information presented below for incurred and paid claims development for each of the years ended December 31, 2012 through 2018 and the average annual percentage payout of incurred claims by age, net of reinsurance, is presented as supplementary information and is unaudited. The tables below reflect losses incurred and paid losses translated to U.S. dollars at the exchange rate as of the balance sheet date whereas the losses and loss expenses in the Consolidated Statement of Operations reflect losses incurred at the average exchange rate for the period.



NET INCURRED LOSSES AND LOSS EXPENSES DEVELOPMENT TABLE - NON-LIFE
For the year ended December 31,																	December 31, 2019
Accident year	2012		2013		2014		2015		2016		2017		2018		2019		Total of IBNR plus expected development on reported claims
2012	$	2,647,806	$	2,459,009	$	2,303,222	$	2,196,596	$	2,164,135	$	2,195,163	$	2,172,148	$	2,139,972	$	79,953
2013			2,880,337		2,706,850		2,528,689		2,475,252		2,441,912		2,414,380		2,411,641		124,904
2014					2,839,909		2,623,230		2,511,859		2,479,721		2,492,027		2,484,866		172,037
2015							2,894,162		2,603,297		2,497,256		2,512,588		2,514,275		245,645
2016									2,920,285		2,687,055		2,627,830		2,642,625		305,985
2017											2,979,457		2,944,385		2,900,190		519,547
2018													3,032,976		3,157,151		1,111,071
2019															3,380,372		2,599,954
Total															$	21,631,092	$	5,159,096

NET PAID LOSSES AND LOSS EXPENSES DEVELOPMENT TABLE - NON-LIFE
For the year ended December 31,
Accident year	2012		2013		2014		2015		2016		2017		2018		2019
2012	$	284,166	$	1,056,888	$	1,442,587	$	1,610,064	$	1,713,934	$	1,805,174	$	1,854,934	$	1,910,828
2013			243,466		1,296,424		1,648,668		1,849,929		1,980,425		2,073,929		2,139,380
2014					305,500		1,316,469		1,621,164		1,830,516		1,972,511		2,079,766
2015							303,258		1,220,915		1,620,950		1,842,331		2,009,107
2016									325,991		1,371,581		1,729,815		1,999,489
2017											386,724		1,505,014		1,947,279
2018													258,686		1,402,377
2019															373,408
Total															$	13,861,634

Net reserves for Accident Years and exposures included in the triangles															$	7,769,458
All outstanding liabilities before Accident Year 2012, net of reinsurance															1,390,371
Total outstanding liabilities for unpaid claims															$	9,159,829

AVERAGE ANNUAL PERCENTAGE PAYOUT OF INCURRED CLAIMS BY AGE, NET OF REINSURANCE - NON-LIFE
Years	1		2		3		4		5		6		7		8
Non-life	11%		39%		15%		9%		6%		4%		3%		3%



NET INCURRED LOSSES AND LOSS EXPENSES DEVELOPMENT TABLE - PROPERTY
For the year ended December 31,																	December 31, 2019
Accident year	2012		2013		2014		2015		2016		2017		2018		2019		Total of IBNR plus expected development on reported claims
2012	$	662,441	$	661,245	$	583,098	$	566,540	$	551,100	$	550,829	$	538,974	$	528,350	$	1,763
2013			680,224		577,101		544,546		529,252		524,956		514,569		512,280		637
2014					516,850		472,237		450,682		448,212		444,769		443,084		1,273
2015							590,183		547,728		522,565		515,050		509,581		4,681
2016									725,033		682,433		635,793		615,922		689
2017											1,028,702		1,066,528		982,534		9,914
2018													853,796		895,740		143,479
2019															769,345		508,751
Total															$	5,256,836	$	671,187

NET PAID LOSSES AND LOSS EXPENSES DEVELOPMENT TABLE - PROPERTY
For the year ended December 31,
Accident year	2012		2013		2014		2015		2016		2017		2018		2019
2012	$	100,087	$	357,186	$	450,730	$	484,755	$	496,024	$	505,112	$	508,155	$	515,287
2013			88,592		337,128		437,950		472,219		490,491		493,544		497,536
2014					93,141		324,074		388,404		414,611		424,255		429,061
2015							95,097		354,291		442,619		471,072		481,885
2016									135,797		458,282		540,023		577,319
2017											223,070		729,584		838,023
2018													76,543		552,879
2019															69,397
Total															$	3,961,387

Net reserves for Accident Years and exposures included in the triangles															$	1,295,449
All outstanding liabilities before Accident Year 2012, net of reinsurance															98,817
Total outstanding liabilities for unpaid claims															$	1,394,266

AVERAGE ANNUAL PERCENTAGE PAYOUT OF INCURRED CLAIMS BY AGE, NET OF REINSURANCE - PROPERTY
Years	1		2		3		4		5		6		7		8
Property	17%		51%		15%		6%		3%		1%		1%		1%



NET INCURRED LOSSES AND LOSS EXPENSES DEVELOPMENT TABLE - CASUALTY
For the year ended December 31,																	December 31, 2019
Accident year	2012		2013		2014		2015		2016		2017		2018		2019		Total of IBNR plus expected development on reported claims
2012	$	691,612	$	677,836	$	650,181	$	609,784	$	592,346	$	600,562	$	596,124	$	581,746	$	57,791
2013			802,811		799,292		750,054		732,098		727,631		724,046		721,739		103,987
2014					904,048		879,775		859,778		865,219		881,493		874,893		143,527
2015							901,313		842,230		818,099		860,334		863,757		198,744
2016									850,575		802,362		823,050		851,402		243,580
2017											761,332		730,116		758,644		310,148
2018													942,480		958,819		556,588
2019															1,206,641		1,034,865
Total															$	6,817,641	$	2,649,230

NET PAID LOSSES AND LOSS EXPENSES DEVELOPMENT TABLE - CASUALTY
For the year ended December 31,
Accident year	2012		2013		2014		2015		2016		2017		2018		2019
2012	$	51,617	$	135,521	$	205,350	$	278,348	$	334,492	$	392,972	$	424,029	$	451,205
2013			50,730		159,533		267,552		349,230		419,638		481,271		521,963
2014					72,033		210,083		314,019		414,479		502,072		573,236
2015							67,148		187,592		300,608		398,833		501,185
2016									36,648		166,265		266,382		382,219
2017											61,252		179,150		290,131
2018													62,265		235,579
2019															88,066
Total															$	3,043,584

Net reserves for Accident Years and exposures included in the triangles															$	3,774,057
All outstanding liabilities before Accident Year 2012, net of reinsurance															1,235,855
Total outstanding liabilities for unpaid claims															$	5,009,912

AVERAGE ANNUAL PERCENTAGE PAYOUT OF INCURRED CLAIMS BY AGE, NET OF REINSURANCE - CASUALTY
Years	1		2		3		4		5		6		7		8
Casualty	7%		16%		13%		12%		10%		9%		6%		5%



NET INCURRED LOSSES AND LOSS EXPENSES DEVELOPMENT TABLE - SPECIALTY
For the year ended December 31,																	December 31, 2019
Accident year	2012		2013		2014		2015		2016		2017		2018		2019		Total of IBNR plus expected development on reported claims
2012	$	1,293,753	$	1,119,928	$	1,069,943	$	1,020,272	$	1,020,689	$	1,043,772	$	1,037,050	$	1,029,876	$	20,399
2013			1,397,302		1,330,457		1,234,089		1,213,902		1,189,325		1,175,765		1,177,622		20,280
2014					1,419,011		1,271,218		1,201,399		1,166,290		1,165,765		1,166,889		27,237
2015							1,402,666		1,213,339		1,156,592		1,137,204		1,140,937		42,220
2016									1,344,677		1,202,260		1,168,987		1,175,301		61,716
2017											1,189,423		1,147,741		1,159,012		199,485
2018													1,236,700		1,302,592		411,004
2019															1,404,386		1,056,338
Total															$	9,556,615	$	1,838,679

NET PAID LOSSES AND LOSS EXPENSES DEVELOPMENT TABLE - SPECIALTY
For the year ended December 31,
Accident year	2012		2013		2014		2015		2016		2017		2018		2019
2012	$	132,462	$	564,181	$	786,507	$	846,961	$	883,418	$	907,090	$	922,750	$	944,336
2013			104,144		799,763		943,166		1,028,480		1,070,296		1,099,114		1,119,881
2014					140,326		782,312		918,741		1,001,426		1,046,184		1,077,469
2015							141,013		679,032		877,723		972,426		1,026,037
2016									153,546		747,034		923,410		1,039,951
2017											102,402		596,280		819,125
2018													119,878		613,919
2019															215,945
Total															$	6,856,663

Net reserves for Accident Years and exposures included in the triangles															$	2,699,952
All outstanding liabilities before Accident Year 2012, net of reinsurance															55,699
Total outstanding liabilities for unpaid claims															$	2,755,651

AVERAGE ANNUAL PERCENTAGE PAYOUT OF INCURRED CLAIMS BY AGE, NET OF REINSURANCE - SPECIALTY
Years	1		2		3		4		5		6		7		8
Specialty	12%		48%		16%		8%		4%		2%		2%		2%

Reconciliation of net incurred and paid claims development to Non-life reserves

The reconciliation of the net incurred and paid claims development information above to the Non-life reserves in the Consolidated Balance Sheet at December 31, 2019 was as follows (in thousands of U.S. dollars):



	December 31, 2019
Total outstanding liability for unpaid claims
Property	$	1,394,266
Casualty	5,009,912
Specialty	2,755,651
Total outstanding liabilities for unpaid claims	$	9,159,829
Unallocated loss expenses	$	164,021
U.S. health net reserves ⁽¹⁾	281,022
Other	3,716
Total other liabilities	$	448,759
Net liability at end of year	$	9,608,588

Reinsurance recoverable on paid and unpaid claims
Property	$	340,926
Casualty	86,940
Specialty	326,929
Reinsurance recoverable at end of year	$	754,795
Gross liability at end of year	$	10,363,383

(1) U.S. health business is not meaningful to include in the development tables as the estimated average duration of the health reserves is less than one year and substantially all claims are expected to be paid within two years, based on historical payout patterns.