Loss and Loss Adjustment Expense Reserves

9 Months Ended

Sep. 30, 2020

Loss and Loss Adjustment Expenses Reserves [Abstract]

Loss and Loss Adjustment Expenses Reserves

Loss and Loss Adjustment Expense Reserves — Activity in the loss and loss adjustment expense reserves is summarized as follows:


	September 30,
(millions)	2020		2019
Balance at January 1	$	18,105.4	$	15,400.8
Less reinsurance recoverables on unpaid losses	3,212.2		2,572.7
Net balance at January 1	14,893.2		12,828.1


Incurred related to:
Current year	18,073.6		18,108.2
Prior years	116.1		215.2
Total incurred	18,189.7		18,323.4
Paid related to:
Current year	10,615.2		10,864.9
Prior years	6,682.8		6,061.7
Total paid	17,298.0		16,926.6
Net balance at September 30	15,784.9		14,224.9
Plus reinsurance recoverables on unpaid losses	3,804.3		3,145.1
Balance at September 30	$	19,589.2	$	17,370.0

We experienced unfavorable reserve development of $116.1 million and $215.2 million during the first nine months of 2020 and 2019, respectively, which is reflected as “Incurred related to prior years” in the table above.

Year-to-date September 30, 2020

•Approximately 80% of the unfavorable prior year reserve development was attributable to accident year 2018, with the remainder primarily related to accident year 2017 and prior accident years. During the second and third quarter 2020, we experienced favorable development on accident year 2019, primarily due to higher than anticipated salvage and subrogation recoveries, which almost fully offset the unfavorable development related to accident year 2019 we experienced during the first quarter 2020.

•Our personal auto products incurred about $47 million of unfavorable loss and loss adjustment expense (LAE) reserve development, with the Agency and Direct auto business each contributing about half. The unfavorable LAE development was primarily attributable to revised estimates of our per claim settlement costs taken during the first quarter. We also experienced higher than anticipated frequency of reopened personal injury protection (PIP) claims, primarily in Florida, and late reported losses occurring toward the end 2019 but not reported until 2020, which was partially offset by higher than anticipated salvage and subrogation recoveries.

•Our Commercial Lines business experienced about $104 million of unfavorable development, primarily due to increased injury severity and the emergence of large injury claims at rates higher than originally anticipated.

•Our special lines and Property businesses experienced about $22 million and $13 million, respectively, of favorable development.

Year-to-date September 30, 2019

•About 50% of the unfavorable prior year reserve development was attributable to accident year 2018, 30% to accident year 2017, and the remainder to accident years 2016 and prior.

•Our personal auto products incurred about $108 million of unfavorable loss and LAE reserve development, with the Agency and Direct auto businesses each contributing about half. The unfavorable development was primarily attributable to increased injury severity, a higher than anticipated frequency of reopened PIP claims, primarily in Florida, and late reported losses occurring late 2018 but not reported until 2019.

•Our Commercial Lines business experienced about $71 million of unfavorable development, primarily due to increased injury severity and more emergence of large injury claims than originally anticipated.

•Our Property business experienced about $19 million of unfavorable development, primarily due to higher than originally anticipated homeowner and dwelling costs and fire liability costs.

•Our special lines business experienced about $17 million of unfavorable development, primarily due to less salvage and subrogation recoveries than originally anticipated.