Non-life and Life and Health Reserves (Tables)

12 Months Ended

Dec. 31, 2020

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

Components of non-life reserves

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, 2020 and 2019 was as follows (in thousands of U.S. dollars):

	December 31, 2020		December 31, 2019
Case reserves	$	4,646,633	$	4,203,052
ACRs	171,381		158,220
IBNR reserves	6,577,307		6,002,111
Non-life reserves	$	11,395,321	$	10,363,383

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, 2020, 2019 and 2018 was as follows (in thousands of U.S. dollars): 

	2020		2019		2018
Gross liability at beginning of year	$	10,363,383	$	9,895,376	$	10,102,172
Reinsurance recoverable at beginning of year	754,795		850,946		719,998
Net liability at beginning of year	9,608,588		9,044,430		9,382,174
Net incurred losses related to: (1)(2)
Current year	3,945,248		3,716,988		3,417,366
Prior years	71,456		(56,848)		(248,719)
	4,016,704		3,660,140		3,168,647
Net paid losses related to:
Current year	(459,718)		(439,285)		(336,584)
Prior years	(2,772,886)		(2,651,385)		(2,585,403)
	(3,232,604)		(3,090,670)		(2,921,987)
Retroactive reinsurance recoverable (2)	—		(81,013)		—
Change in Paris Re reserve agreement (3)	—		—		(397,493)
Effects of foreign exchange rate changes and other	220,303		75,701		(186,911)
Net liability at end of year	$	10,612,991	$	9,608,588	$	9,044,430
Reinsurance recoverable at end of year	782,330		754,795		850,946
Gross liability at end of year	$	11,395,321	$	10,363,383	$	9,895,376

(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 and $9 million at December 31, 2019 and 2018, respectively. There were no incurred losses or non-life reserves allocated to Corporate and Other during 2020.

(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 reinsurance recoverable of $81 million and a related deferred gain of $14 million, which was included in Accounts payable, accrued expenses and other in the Consolidated Balance Sheet at December 31, 2019. In the fourth quarter of 2020, the Company completed a business transfer to extinguish the remaining$70 million of non-life reserves and derecognized the $70 million of related reinsurance recoverables. As a result, during 2020, the $14 million deferred gain was recognized within Losses and loss expenses in the Consolidated Statement of Operations. At settlement, $64 million of invested assets were transferred, and there was a corresponding decrease in Other reinsurance balances payable.

(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, 2020, 2019 and 2018 was as follows (in thousands of U.S. dollars):

	2020		2019		2018
Gross liability at beginning of period	$	2,417,044	$	2,198,080	$	2,098,759
Reinsurance recoverable at beginning of period	16,183		11,829		9,287
Net liability at beginning of period	$	2,400,861	$	2,186,251	$	2,089,472
Net incurred losses (1)	1,318,196		1,263,016		1,024,608
Net losses paid	(1,230,383)		(1,071,487)		(818,916)
Effects of foreign exchange rate changes and other	179,893		23,081		(108,913)
Net liability at end of period	$	2,668,567	$	2,400,861	$	2,186,251
Reinsurance recoverable at end of period	35,662		16,183		11,829
Gross liability at end of period	$	2,704,229	$	2,417,044	$	2,198,080

(1)During 2020, certain life and health treaties in the European region were recaptured, resulting in total gains upon recapture of $28 million, recorded as a reduction to net incurred losses.

Components of losses and loss expenses by segment

Losses and loss expenses in the Consolidated Statements of Operations for the years ended December 31, 2020, 2019 and 2018 were comprised as follows (in thousands of U.S. dollars): 

	2020		2019		2018
Non-life (1)	$	4,016,704	$	3,660,140	$	3,168,647
Life and Health	1,318,196		1,263,016		1,024,608
Losses and loss expenses	$	5,334,900	$	4,923,156	$	4,193,255

(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 2019 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, 2020
Accident year	2012		2013		2014		2015		2016		2017		2018		2019		2020		Total of IBNR plus expected development on reported claims
2012	$	2,639,688	$	2,448,003	$	2,290,439	$	2,185,285	$	2,153,160	$	2,184,735	$	2,161,359	$	2,128,131	$	2,113,301	$	56,549
2013			2,878,960		2,701,251		2,524,503		2,471,199		2,438,378		2,410,942		2,407,964		2,389,223		93,466
2014					2,832,489		2,613,300		2,502,796		2,471,459		2,484,045		2,476,974		2,455,964		127,048
2015							2,884,189		2,593,622		2,488,546		2,504,538		2,505,549		2,481,206		171,655
2016									2,913,005		2,679,891		2,620,822		2,635,472		2,644,764		214,995
2017											2,955,964		2,937,200		2,894,231		2,881,721		336,779
2018													3,025,845		3,157,015		3,158,785		661,933
2019															3,438,573		3,666,589		1,322,179
2020																	3,964,240		2,790,092
Total																	$	25,755,793	$	5,774,696
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		2020
2012	$	282,336	$	1,051,844	$	1,435,654	$	1,602,522	$	1,706,226	$	1,797,329	$	1,846,856	$	1,903,538	$	1,924,585
2013			243,125		1,295,766		1,647,638		1,849,033		1,979,137		2,072,228		2,138,888		2,173,004
2014					302,881		1,311,827		1,616,215		1,825,493		1,967,077		2,076,264		2,154,230
2015							302,359		1,216,114		1,615,865		1,837,345		2,007,020		2,109,694
2016									322,009		1,363,347		1,721,704		1,997,281		2,125,590
2017											385,968		1,501,428		1,952,096		2,240,013
2018													258,601		1,430,969		2,010,369
2019															376,937		1,578,528
2020																	445,338
Total																	$	16,761,351
Net reserves for Accident Years and exposures included in the triangles																	$	8,994,442
All outstanding liabilities before Accident Year 2012, net of reinsurance																	1,242,482
Total outstanding liabilities for unpaid claims																	$	10,236,924
AVERAGE ANNUAL PERCENTAGE PAYOUT OF INCURRED CLAIMS BY AGE, NET OF REINSURANCE - NON-LIFE
Years	1		2		3		4		5		6		7		8		9
Non-life	11%		38%		16%		9%		6%		4%		3%		2%		1%

NET INCURRED LOSSES AND LOSS EXPENSES DEVELOPMENT TABLE - PROPERTY
For the year ended December 31,																			December 31, 2020
Accident year	2012		2013		2014		2015		2016		2017		2018		2019		2020		Total of IBNR plus expected development on reported claims
2012	$	669,251	$	665,457	$	585,528	$	569,161	$	553,571	$	553,162	$	541,206	$	530,578	$	529,800	$	1,389
2013			688,562		583,828		550,859		535,390		531,092		520,552		518,273		517,995		9
2014					517,561		471,863		450,396		448,016		444,502		442,768		441,020		958
2015							591,817		548,716		523,677		516,138		510,688		506,222		3,806
2016									726,247		684,070		637,316		617,028		613,810		(1,802)
2017											1,016,229		1,066,376		982,359		951,418		6,426
2018													854,166		899,055		886,662		82,052
2019															797,247		848,801		90,827
2020																	1,183,875		656,924
Total																	$	6,479,603	$	840,589
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		2020
2012	$	100,426	$	358,758	$	452,456	$	486,598	$	498,174	$	507,557	$	510,674	$	518,029	$	517,970
2013			90,133		341,662		442,974		477,517		495,869		498,952		503,187		505,337
2014					91,891		323,437		388,024		414,395		424,068		429,160		432,996
2015							96,019		354,874		443,500		472,059		483,099		488,049
2016									137,065		459,492		541,070		579,666		592,826
2017											223,598		729,810		839,658		891,247
2018													77,248		573,855		715,182
2019															69,729		479,960
2020																	108,876
Total																	$	4,732,443
Net reserves for Accident Years and exposures included in the triangles																	$	1,747,160
All outstanding liabilities before Accident Year 2012, net of reinsurance																	96,511
Total outstanding liabilities for unpaid claims																	$	1,843,671
AVERAGE ANNUAL PERCENTAGE PAYOUT OF INCURRED CLAIMS BY AGE, NET OF REINSURANCE - PROPERTY
Years	1		2		3		4		5		6		7		8		9
Property	15%		52%		15%		6%		2%		1%		1%		1%		—%

NET INCURRED LOSSES AND LOSS EXPENSES DEVELOPMENT TABLE - CASUALTY
For the year ended December 31,																			December 31, 2020
Accident year	2012		2013		2014		2015		2016		2017		2018		2019		2020		Total of IBNR plus expected development on reported claims
2012	$	687,962	$	673,952	$	645,961	$	606,043	$	588,811	$	597,170	$	592,669	$	577,494	$	569,594	$	41,729
2013			800,809		796,525		747,617		729,592		725,500		721,980		719,484		705,107		77,368
2014					901,424		877,191		857,330		863,051		879,547		873,227		857,663		103,508
2015							899,355		840,261		816,250		858,788		861,603		855,377		147,031
2016									849,717		801,939		822,539		850,527		856,372		174,156
2017											761,089		729,564		757,962		767,640		216,810
2018													941,900		957,888		975,851		418,539
2019															1,214,328		1,223,746		745,117
2020																	1,278,149		1,073,385
Total																	$	8,089,499	$	2,997,643
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		2020
2012	$	51,015	$	134,416	$	203,970	$	276,902	$	333,006	$	391,406	$	422,362	$	449,854	$	467,395
2013			50,172		158,781		266,697		348,233		418,556		480,167		521,355		547,056
2014					71,742		209,570		313,465		413,742		501,473		573,308		637,432
2015							67,091		187,339		300,083		398,324		501,468		575,490
2016									33,049		163,317		263,687		380,668		468,089
2017											61,811		180,400		292,946		399,268
2018													62,403		238,134		375,961
2019															89,228		294,178
2020																	97,584
Total																	$	3,862,453
Net reserves for Accident Years and exposures included in the triangles																	$	4,227,046
All outstanding liabilities before Accident Year 2012, net of reinsurance																	1,059,637
Total outstanding liabilities for unpaid claims																	$	5,286,683
AVERAGE ANNUAL PERCENTAGE PAYOUT OF INCURRED CLAIMS BY AGE, NET OF REINSURANCE - CASUALTY
Years	1		2		3		4		5		6		7		8		9
Casualty	7%		16%		13%		12%		11%		9%		6%		4%		3%

NET INCURRED LOSSES AND LOSS EXPENSES DEVELOPMENT TABLE - SPECIALTY
For the year ended December 31,																			December 31, 2020
Accident year	2012		2013		2014		2015		2016		2017		2018		2019		2020		Total of IBNR plus expected development on reported claims
2012	$	1,282,475	$	1,108,594	$	1,058,950	$	1,010,081	$	1,010,778	$	1,034,403	$	1,027,484	$	1,020,059	$	1,013,907	$	13,431
2013			1,389,589		1,320,898		1,226,027		1,206,217		1,181,786		1,168,410		1,170,207		1,166,121		16,089
2014					1,413,504		1,264,246		1,195,070		1,160,392		1,159,996		1,160,979		1,157,281		22,582
2015							1,393,017		1,204,645		1,148,619		1,129,612		1,133,258		1,119,607		20,818
2016									1,337,041		1,193,882		1,160,967		1,167,917		1,174,582		42,641
2017											1,178,646		1,141,260		1,153,910		1,162,663		113,543
2018													1,229,779		1,300,072		1,296,272		161,342
2019															1,426,998		1,594,042		486,235
2020																	1,502,216		1,059,783
Total																	$	11,186,691	$	1,936,464
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		2020
2012	$	130,895	$	558,670	$	779,228	$	839,022	$	875,046	$	898,366	$	913,820	$	935,655	$	939,220
2013			102,820		795,323		937,967		1,023,283		1,064,712		1,093,109		1,114,346		1,120,611
2014					139,248		778,820		914,726		997,356		1,041,536		1,073,796		1,083,802
2015							139,249		673,901		872,282		966,962		1,022,453		1,046,155
2016									151,895		740,538		916,947		1,036,947		1,064,675
2017											100,559		591,218		819,492		949,498
2018													118,950		618,980		919,226
2019															217,980		804,390
2020																	238,878
Total																	$	8,166,455
Net reserves for Accident Years and exposures included in the triangles																	$	3,020,236
All outstanding liabilities before Accident Year 2012, net of reinsurance																	86,334
Total outstanding liabilities for unpaid claims																	$	3,106,570
AVERAGE ANNUAL PERCENTAGE PAYOUT OF INCURRED CLAIMS BY AGE, NET OF REINSURANCE - SPECIALTY
Years	1		2		3		4		5		6		7		8		9
Specialty	12%		46%		17%		8%		4%		2%		1%		1%		—%

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, 2020 was as follows (in thousands of U.S. dollars):

	December 31, 2020
Total outstanding liability for unpaid claims
Property	$	1,843,671
Casualty	5,286,683
Specialty	3,106,570
Total outstanding liabilities for unpaid claims	$	10,236,924
Unallocated loss expenses	$	186,523
U.S. health net reserves (1)	188,879
Other	665
Total other liabilities	$	376,067
Net liability at end of year	$	10,612,991
Reinsurance recoverable on paid and unpaid claims
Property	$	327,935
Casualty	166,494
Specialty	287,901
Reinsurance recoverable at end of year	$	782,330
Gross liability at end of year	$	11,395,321

(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.