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Unpaid losses and loss expenses | 6 Months Ended
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Jun. 30, 2019
Liability for Claims and Claims Adjustment Expense [Abstract] |
Liability for Future Policy Benefits and Unpaid Claims Disclosure [Text Block] | Unpaid losses and loss expenses The following table presents a reconciliation of beginning and ending Unpaid losses and loss expenses:
| Six Months Ended June 30 |
(in millions of U.S. dollars) | 2019 |  |  | 2018 |
Gross unpaid losses and loss expenses – beginning of period | $ | 62,960 |  |  | $ | 63,179 |
Reinsurance recoverable on unpaid losses - beginning of period (1) | (14,689 | ) |  | (14,014 | )
Net unpaid losses and loss expenses – beginning of period | 48,271 |  |  | 49,165 |
Net losses and loss expenses incurred in respect of losses occurring in: |  |  |
Current year | 9,224 |  |  | 9,026 |
Prior years (2) | (411 | ) |  | (437 | )
Total | 8,813 |  |  | 8,589 |
Net losses and loss expenses paid in respect of losses occurring in: |  |  |
Current year | 2,288 |  |  | 2,346 |
Prior years | 5,823 |  |  | 6,269 |
Total | 8,111 |  |  | 8,615 |
Foreign currency revaluation and other | (1 | ) |  | (96 | )
Net unpaid losses and loss expenses – end of period | 48,972 |  |  | 49,043 |
Reinsurance recoverable on unpaid losses (1) | 14,233 |  |  | 13,735 |
Gross unpaid losses and loss expenses – end of period | $ | 63,205 |  |  | $ | 62,778 |
(1) | Net of provision for uncollectible reinsurance.
(2) | Relates to prior period loss reserve development only and excludes prior period development related to reinstatement premiums, expense adjustments and earned premiums totaling $19 million and $37 million for the six months ended June 30, 2019 and 2018, respectively.
Gross and net unpaid losses and loss expenses increased $245 million and $701 million, respectively, for the six months ended June 30, 2019, reflecting an increase in the underlying reserves, partially offset by favorable prior period development. Prior Period Development Prior period development (PPD) arises from changes to loss estimates recognized in the current year that relate to loss events that occurred in previous calendar years and excludes the effect of losses from the development of earned premium from previous accident years. Long-tail lines include lines such as workers' compensation, general liability, and professional liability; while short-tail lines include lines such as most property lines, energy, personal accident, and agriculture. The following table summarizes (favorable) and adverse PPD by segment.
| Three Months Ended June 30 |  |  | Six Months Ended June 30 |
(in millions of U.S. dollars) | Long-tail |  |  | Short-tail |  |  | Total |  |  | Long-tail |  |  | Short-tail |  |  | Total |
2019 |  |  |  |  |  |  |  |  |  |  |
North America Commercial P&C Insurance | $ | (206 | ) |  | $ | 21 |  |  | $ | (185 | ) |  | $ | (271 | ) |  | $ | (45 | ) |  | $ | (316 | )
North America Personal P&C Insurance | — |  |  | (16 | ) |  | (16 | ) |  | — |  |  | (26 | ) |  | (26 | )
North America Agricultural Insurance | — |  |  | — |  |  | — |  |  | — |  |  | (61 | ) |  | (61 | )
Overseas General Insurance | — |  |  | (20 | ) |  | (20 | ) |  | — |  |  | (24 | ) |  | (24 | )
Global Reinsurance | (33 | ) |  | 33 |  |  | — |  |  | (34 | ) |  | 26 |  |  | (8 | )
Corporate | 33 |  |  | — |  |  | 33 |  |  | 43 |  |  | — |  |  | 43 |
Total | $ | (206 | ) |  | $ | 18 |  |  | $ | (188 | ) |  | $ | (262 | ) |  | $ | (130 | ) |  | $ | (392 | )
2018 |  |  |  |  |  |  |  |  |  |  |
North America Commercial P&C Insurance | $ | (104 | ) |  | $ | (51 | ) |  | $ | (155 | ) |  | $ | (96 | ) |  | $ | (160 | ) |  | $ | (256 | )
North America Personal P&C Insurance | — |  |  | 7 |  |  | 7 |  |  | — |  |  | 1 |  |  | 1 |
North America Agricultural Insurance | — |  |  | — |  |  | — |  |  | — |  |  | (76 | ) |  | (76 | )
Overseas General Insurance | (2 | ) |  | (70 | ) |  | (72 | ) |  | (2 | ) |  | (92 | ) |  | (94 | )
Global Reinsurance | (30 | ) |  | 14 |  |  | (16 | ) |  | (30 | ) |  | — |  |  | (30 | )
Corporate | 45 |  |  | — |  |  | 45 |  |  | 55 |  |  | — |  |  | 55 |
Total | $ | (91 | ) |  | $ | (100 | ) |  | $ | (191 | ) |  | $ | (73 | ) |  | $ | (327 | ) |  | $ | (400 | )
Significant prior period movements by segment, principally driven by reserve reviews completed during each respective period, are discussed in more detail below. The remaining net development for long-tail lines and short-tail business for each segment and Corporate comprises numerous favorable and adverse movements across a number of lines and accident years, none of which is significant individually or in the aggregate. North America Commercial P&C Insurance 2019 For the three months ended June 30, 2019, net favorable PPD was $185 million, which was the net result of several underlying favorable and adverse movements, and was driven by the following principal changes:
• | Net favorable development of $206 million in long-tail business, primarily from:
• | Net favorable development of $163 million in our workers’ compensation lines. This included favorable development of $61 million related to our annual assessment of multi-claimant events including industrial accidents, in the 2018 accident year. Consistent with prior years, we reviewed these potential exposures after the close of the accident year to allow for late reporting or identification of significant losses. This development in accident year 2018 was partially offset by some higher than expected activity from other claims and from involuntary pools. The remaining overall favorable development was mainly in accident years 2014 and prior, driven by lower than expected loss experience and related updates to loss development factors;
• | Net favorable development of $50 million in our general liability portfolios, mainly driven by lower than expected paid and reported loss experience in accident years 2015 and prior, partly offset by adverse developments in more recent accident years; and
• | Net adverse development of $25 million in automobile liability, driven by adverse paid and reported loss experience mainly in accident years 2014 through 2018.
• | Net adverse development of $21 million in short-tail business, which was the result of several adverse movements, in lines such as automobile physical damage and involuntary pools, none of which were significant individually or in the aggregate, mainly impacting accident year 2018.
For the six months ended June 30, 2019, net favorable PPD was $316 million, which was the net result of several underlying favorable and adverse movements, and was driven by the following principal changes:
• | Net favorable development of $271 million in long-tail business, primarily from:
• | Net favorable development of $200 million in our workers’ compensation lines, mainly due to the same factors experienced for the three months ended June 30, 2019, as described above;
• | Net favorable development of $54 million in professional liability (errors & omissions and cyber), mainly in the 2015 and prior accident years where case activity was less than expected, partially offset by adverse development in the 2016 accident year, which was driven by several large adverse claim developments;
• | Net favorable development of $31 million in commercial excess and umbrella portfolios, driven by the 2013 and prior accident years, where case emergence was less than expected and greater weight was given to experience-based methods; this was partially offset by higher than expected claim activity in the 2015, 2016, and 2018 accident years which led to reserve strengthening in those years; and
• | Net adverse development of $31 million in automobile liability, mainly due to the same factors experienced for the three months ended June 30, 2019, as described above.
• | Net favorable development of $45 million in short-tail business, primarily from favorable development of $49 million in surety business, mainly in the 2017 accident year, driven by lower than expected reported loss activity.
2018 For the three months ended June 30, 2018, net favorable PPD was $155 million, which was the net result of several underlying favorable and adverse movements, and was driven by the following principal changes:
• | Net favorable development of $104 million in long-tail business, primarily from:
• | Net favorable development of $118 million in our workers’ compensation lines with favorable development of $56 million in the 2017 accident year mainly related to our annual assessment of multi-claimant events including industrial accidents. Consistent with prior years, we reviewed these potential exposures after the close of the accident year to allow for late reporting or identification of significant losses. The remaining favorable development is mainly in accident years 2011 and prior, and was principally due to lower than expected loss experience; and
• | Net adverse development of $14 million, mainly in our automobile liability, commercial-multi peril (CMP) liability, products and general liability lines, driven by adverse paid and reported loss activity relative to prior expectations in accident years 2015 through 2017, partly offset by favorable emergence in older accident years.
• | Net favorable development of $51 million in short-tail business, primarily from:
• | Net favorable development of $40 million in our commercial property and marine businesses due to favorable claim development on the 2017 natural catastrophes.
For the six months ended June 30, 2018, net favorable PPD was $256 million, which was the net result of several underlying favorable and adverse movements, and was driven by the following principal changes:
• | Net favorable development of $96 million in long-tail business, primarily from:
• | Net favorable development of $138 million in our workers’ compensation lines mainly due to the same factors experienced for the three months ended June 30, 2018, as described above;
• | Net favorable development of $29 million in our commercial excess and umbrella portfolios, driven by the 2012 and prior accident years where the cumulative emergence over time has been less than expected overall and an increase in weighting towards experience-based methods, partly offset by several large settlements; additionally there was adverse claim activity in the 2014 and 2015 accident years which led to reserve strengthening in those years;
• | Net favorable development of $3 million on several lines of business due to favorable claim development on the 2017 natural catastrophes; and
• | Net adverse development of $74 million, mainly in our automobile liability, commercial-multi peril (CMP) liability, products and general liability lines, due to the same factors experienced for the three months ended June 30, 2018, as described above.
• | Net favorable development of $160 million in short-tail business, primarily from:
• | Net favorable development of $115 million in our commercial property and marine businesses due to favorable claim development on the 2017 natural catastrophes; and
• | Net favorable development of $45 million in other short-tail business, including $19 million in surety and also including several smaller net favorable movements from lower than expected case activity in other classes, such as accident and commercial automobile physical damage, none of which were significant individually or in the aggregate.
North America Personal P&C Insurance 2019 For the three months ended June 30, 2019, net favorable PPD was $16 million, which was the net result of several underlying favorable and adverse movements predominantly in the automobile and recreational marine lines. For the six months ended June 30, 2019, net favorable PPD was $26 million due to the same factors experienced for the three months ended June 30, 2019 as described above and favorable claim development on homeowners and valuables lines in the 2017 and 2018 accidents years. In total, there was favorable claim development of $134 million on the 2017 and 2018 natural catastrophes, offset by net adverse development of $108 million mainly from elevated non-catastrophe activity in homeowners and valuables in the 2018 accident year. 2018 For the three and six months ended June 30, 2018, net adverse PPD was $7 million and $1 million, respectively, which were the net results of some modest net adverse and favorable movements by class and accident year, including favorable development of $5 million and $11 million, respectively, on the 2017 natural catastrophes. North America Agricultural Insurance There was no PPD in both the three months ended June 30, 2019 and 2018. For the six months ended June 30, 2019 and 2018, net favorable PPD was $61 million and $76 million, respectively. Actual claim development relates to our Multiple Peril Crop Insurance (MPCI) business and was favorable due to better than expected crop yield results in certain states at the prior year-end period (i.e., 2019 results based on crop yield results at year-end 2018). Overseas General Insurance 2019 For the three and six months ended June 30, 2019, net favorable PPD was $20 million and $24 million, respectively, principally driven by favorable development of $27 million and $31 million, respectively, in accident and health business, mainly due to favorable loss development in Continental Europe and Latin America in accident years 2015 through 2018. 2018 For the three months ended June 30, 2018, net favorable PPD was $72 million, which was the net result of several underlying favorable and adverse movements, and was driven by the following principal changes:
• | Net favorable development of $2 million in long-tail business.
• | Net favorable development of $70 million in short-tail business, primarily from:
• | Net favorable development of $40 million in property and marine (excluding technical lines), primarily in accident years 2014 through 2016, driven mainly by favorable loss emergence across all regions, including favorable claim-specific loss settlements; and
• | Net favorable development of $30 million, including $17 million in personal business and $16 million in A&H business.
For the six months ended June 30, 2018, net favorable PPD was $94 million, which was the net result of several underlying favorable and adverse movements, and was driven by the following principal changes:
• | Net favorable development of $2 million in long-tail business.
• | Net favorable development of $92 million in short-tail business, due primarily to the same factors experienced for the three months ended June 30, 2018 as described above, and due to $12 million of favorable claim development on the 2017 natural catastrophes.
Global Reinsurance 2019 For the three months ended June 30, 2019, net PPD was nil, which was the net result of several underlying favorable and adverse movements, and was driven by the following principal changes:
• | Net favorable development of $33 million in long-tail business, primarily from our casualty and automobile lines, primarily impacting treaty years 2013 and prior, principally resulting from lower than expected loss emergence.
• | Net adverse development of $33 million in short-tail business, which included $32 million of adverse development primarily on 2017 and 2018 natural catastrophe events.
For the six months ended June 30, 2019, net favorable PPD was $8 million, which was the net result of several underlying favorable and adverse movements, and was driven by the following principal changes:
• | Net favorable development of $34 million in long-tail business, primarily from our casualty and automobile lines, due to the same factors experienced for the three months ended June 30, 2019, as described above.
• | Net adverse development of $26 million in short-tail business, which included $37 million of adverse development primarily on 2017 and 2018 natural catastrophe events.
2018 For the three months ended June 30, 2018, net favorable PPD was $16 million, which was the net result of several underlying favorable and adverse movements, and was driven by the following principal changes:
• | Net favorable development of $30 million in long-tail business, primarily from $32 million favorable development in our casualty and professional liability lines, primarily impacting treaty years 2013 and prior, principally resulting from lower than expected loss emergence.
• | Net adverse development of $14 million in short-tail business, which included $9 million of adverse claim development on the 2017 natural catastrophes.
For the six months ended June 30, 2018, net favorable PPD was $30 million, which was the net result of several underlying favorable and adverse movements, primarily from long-tail business lines discussed above, and in short-tail business due to $1 million of net favorable claim development on the 2017 natural catastrophes. Corporate 2019 For the three and six months ended June 30, 2019, net adverse development was $33 million and $43 million, respectively, from the non A&E run-off casualty exposures, including workers' compensation, driven by increased claim costs and net adverse settlements on a limited number of claims. The net adverse development also included charges relating to unallocated loss adjustment expenses due to run-off operating expenses of $9 million and $19 million, respectively. 2018 For the three and six months ended June 30, 2018, net adverse development was $45 million and $55 million, respectively, from the non A&E run-off casualty exposures, driven by recent net adverse settlements on a limited number of claims and reinsurance collection activity. The net adverse development also included charges relating to unallocated loss adjustment expenses due to run-off operating expenses of $10 million and $20 million, respectively.

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- Definition The entire disclosure for liabilities related to future policy benefits and unpaid claims and claim adjustments. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 944 -SubTopic 40 -URI http://asc.fasb.org/subtopic&trid=2560295 + Details
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