RESERVES

Short Duration Contracts

The Company’s short duration contracts are mainly comprised of disposed and runoff business. The principal products and services included in these categories are described in the summary of significant accounting policies. See Note 2 to the Financial Statements for further information.

Disposed and Runoff Short Duration Insurance Lines

Disposed business includes certain medical policies no longer offered and AEB policies disposed of via reinsurance. Reserves for previously disposed business are included in the Company’s reserves in accordance with the insurance guidelines. The Company maintains an offsetting reinsurance recoverable related to the AEB reserves. See Note 8 to the Financial Statements for further information.

Long Duration Contracts

The Company’s long duration contracts are primarily comprised of life insurance policies (no longer offered), and AEB, FFG and LTC disposed businesses. The principal products and services included in these categories are described in the summary of significant accounting policies. See Note 2 to the Financial Statements for further information.

Disposed and Runoff Long Duration Insurance Lines

Reserves for previously disposed AEB, FFG and LTC are included in the Company’s reserves in accordance with the insurance guidance. The Company maintains an offsetting reinsurance recoverable related to these reserves. See Note 8 to the Financial Statements for further information.

Reserve Roll Forward

The following table provides a roll forward of the Company’s beginning and ending claims and benefits payable balances. Claims and benefits payable is the liability for unpaid loss and loss adjustment expenses and is comprised of case and IBNR reserves.

Since unpaid loss and loss adjustment expenses are estimates, the Company’s actual losses incurred may be more or less than the Company’s previously developed estimates, which is referred to as either unfavorable or favorable development, respectively.



	Years Ended December 31,
	2017			2016			2015
Claims and benefits payable, at beginning of year	$	96.7		$	107.1		$	108.4
Less: Reinsurance ceded and other	(96.5		)	(42.5		)	(38.1		)
Net claims and benefits payable, at beginning of year	0.2			64.6			70.3
Incurred losses and loss adjustment expenses related to:
Current Year	0.3			5.6			12.3
Prior year's interest	—			0.5			3.1
Prior years	—			(2.9		)	0.6
Total incurred losses and loss adjustment expenses	0.3			3.2			16.0
Paid losses and loss adjustment expenses related to:
Current year	0.3			5.5			7.6
Prior years	0.1			62.1			14.1
Total paid losses and loss adjustment expenses	0.4			67.6			21.7
Net claims and benefits payable, at end of year	0.1			0.2			64.6
Plus: Reinsurance ceded and other	89.2			96.5			42.5
Claims and benefits payable, at end of year	$	89.3		$	96.7		$	107.1

The Company experienced net favorable development in 2016 and net unfavorable development in 2015. Since most of the Company's business is now related to discontinued operations, development in the current year was less than $0.1 million. The discontinued Assurant Health and AEB businesses had a substantial contribution to the overall favorable development. Combined, the favorable development for Assurant Health and AEB was $2.7 million in 2016. The unfavorable development for Assurant Health and AEB was $0.3 million in 2015. For Assurant Health the favorable development in 2016 was attributed to lower medical provider utilization and lower medical inflation than assumed in the Company’s prior-year pricing and reserving processes. For AEB, the favorable development in 2016 was attributed to lower mortality rates and higher claim recovery rates than assumed in the Company’s prior year reserving processes.