Loss and Loss Adjustment Expense Reserves

9 Months Ended

Sep. 30, 2023

Loss and Loss Adjustment Expenses Reserves [Abstract]

Loss and Loss Adjustment Expense Reserves

LOSS AND LOSS ADJUSTMENT EXPENSE RESERVES

Activity in the loss and loss adjustment expense reserves is summarized as follows:


	September 30,
(millions)	2023		2022
Balance at January 1	$	30,359.3	$	26,164.1
Less reinsurance recoverables on unpaid losses	5,559.2		4,733.6
Net balance at January 1	24,800.1		21,430.5
Incurred related to:
Current year	33,035.0		28,245.4
Prior years	1,147.0		52.8
Total incurred	34,182.0		28,298.2
Paid related to:
Current year	18,581.3		15,712.4
Prior years	11,764.7		9,418.5
Total paid	30,346.0		25,130.9
Net balance at September 30	28,636.1		24,597.8
Plus reinsurance recoverables on unpaid losses	4,941.2		6,034.0
Balance at September 30	$	33,577.3	$	30,631.8

We experienced unfavorable reserve development of $1,147.0 million and $52.8 million during the first nine months of 2023 and 2022, respectively, which is reflected as “incurred related to prior years” in the table above.

Year-to-date September 30, 2023

•The unfavorable prior year reserve development included approximately $929 million attributable to accident year 2022, $108 million to accident year 2021, and the remainder to accident years 2020 and prior.

•Our personal auto products incurred about $866 million of unfavorable loss and loss adjustment expense (LAE) reserve development, with the Agency and Direct auto businesses each contributing about half. Over half of the unfavorable development was attributable to higher than anticipated severity in auto property and physical damage coverages, while the remaining unfavorable development was primarily due to increased loss costs in Florida injury and medical coverages and, to a lesser extent, higher than anticipated late reported injury claims; partially offset by lower than expected loss adjustment expenses.

•Our Commercial Lines business experienced about $277 million of unfavorable development, primarily driven by higher than anticipated severity and frequency of late reported injury claims, with about half of the unfavorable development attributable to our transportation network company (TNC) business.

Year-to-date September 30, 2022

•Approximately $45 million of the unfavorable prior year reserve development was attributable to accident year 2021 and $29 million to 2019 and prior accident years, partially offset by $21 million of favorable development attributable to accident year 2020.

•Our personal auto products incurred about $28 million of favorable loss and LAE reserve development, with about $25 million attributable to the Direct business. The favorable development was primarily attributable to more subrogation and salvage recoveries and lower LAE than originally anticipated, partially offset by higher than anticipated severity and frequency of auto property damage payments on previously closed claims and late reported injury claims.

•Our Commercial Lines business experienced about $77 million of unfavorable development, primarily due to higher than anticipated severity of injury case reserves and higher than anticipated severity and frequency of late reported claims in our TNC business.