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Unpaid losses and loss expenses | 9 Months Ended
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Sep. 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:
| Nine Months Ended September 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 | 14,484 |  |  | 14,186 |
Prior years (2) | (619 | ) |  | (729 | )
Total | 13,865 |  |  | 13,457 |
Net losses and loss expenses paid in respect of losses occurring in: |  |  |
Current year | 4,920 |  |  | 4,522 |
Prior years | 8,374 |  |  | 8,596 |
Total | 13,294 |  |  | 13,118 |
Foreign currency revaluation and other | (162 | ) |  | (440 | )
Net unpaid losses and loss expenses – end of period | 48,680 |  |  | 49,064 |
Reinsurance recoverable on unpaid losses (1) | 14,332 |  |  | 13,965 |
Gross unpaid losses and loss expenses – end of period | $ | 63,012 |  |  | $ | 63,029 |
(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 $60 million and $86 million for the nine months ended September 30, 2019 and 2018, respectively.
Gross and net unpaid losses and loss expenses increased $52 million and $409 million, respectively, for the nine months ended September 30, 2019, reflecting an increase in the underlying reserves, partially offset by favorable prior period development and payments related to catastrophic events. 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 September 30 |  |  | Nine Months Ended September 30 |
(in millions of U.S. dollars) | Long-tail |  |  | Short-tail |  |  | Total |  |  | Long-tail |  |  | Short-tail |  |  | Total |
2019 |  |  |  |  |  |  |  |  |  |  |
North America Commercial P&C Insurance | $ | (197 | ) |  | $ | 88 |  |  | $ | (109 | ) |  | $ | (468 | ) |  | $ | 43 |  |  | $ | (425 | )
North America Personal P&C Insurance | — |  |  | (62 | ) |  | (62 | ) |  | — |  |  | (88 | ) |  | (88 | )
North America Agricultural Insurance | — |  |  | 18 |  |  | 18 |  |  | — |  |  | (43 | ) |  | (43 | )
Overseas General Insurance | (66 | ) |  | 41 |  |  | (25 | ) |  | (66 | ) |  | 17 |  |  | (49 | )
Global Reinsurance | (25 | ) |  | — |  |  | (25 | ) |  | (59 | ) |  | 26 |  |  | (33 | )
Corporate | 36 |  |  | — |  |  | 36 |  |  | 79 |  |  | — |  |  | 79 |
Total | $ | (252 | ) |  | $ | 85 |  |  | $ | (167 | ) |  | $ | (514 | ) |  | $ | (45 | ) |  | $ | (559 | )
2018 |  |  |  |  |  |  |  |  |  |  |
North America Commercial P&C Insurance | $ | (170 | ) |  | $ | (46 | ) |  | $ | (216 | ) |  | $ | (266 | ) |  | $ | (206 | ) |  | $ | (472 | )
North America Personal P&C Insurance | — |  |  | 58 |  |  | 58 |  |  | — |  |  | 59 |  |  | 59 |
North America Agricultural Insurance | — |  |  | (1 | ) |  | (1 | ) |  | — |  |  | (77 | ) |  | (77 | )
Overseas General Insurance | (49 | ) |  | (23 | ) |  | (72 | ) |  | (51 | ) |  | (115 | ) |  | (166 | )
Global Reinsurance | (39 | ) |  | 15 |  |  | (24 | ) |  | (69 | ) |  | 15 |  |  | (54 | )
Corporate | 12 |  |  | — |  |  | 12 |  |  | 67 |  |  | — |  |  | 67 |
Total | $ | (246 | ) |  | $ | 3 |  |  | $ | (243 | ) |  | $ | (319 | ) |  | $ | (324 | ) |  | $ | (643 | )
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 September 30, 2019, net favorable PPD was $109 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 $197 million in long-tail business, primarily from:
• | Net favorable development of $94 million in workers' compensation business mainly impacting accident years 2015 and prior, driven by lower than expected paid and reported loss activity, and related improvements in loss development factors;
• | Net favorable development of $39 million in our foreign casualty business, impacting accident years 2015 and prior, driven by reported loss activity that was generally lower than expected;
• | Net favorable development of $36 million on large multi-line prospective deals in the 2015 and prior accident years, due to lower than expected reported loss activity. These structured deals typically cover large clients for multiple product lines and with varying loss limitations; this development is net of premium returns of $34 million tied to the loss performance of the particular deals; and
• | Net favorable development of $32 million in U.S. commercial excess and umbrella portfolios, mainly in accident years 2013 and prior, driven by lower paid and reported loss activity relative to prior expectations as well as an increase in weighting towards experience-based methods, partly offset by modestly adverse development in more recent accident years, mainly in 2018, due to higher than expected large loss activity.
• | Net adverse development of $88 million in short-tail business, primarily in our property and marine portfolios from:
• | Net adverse development excluding catastrophes of $116 million, with adverse development of $154 million across our retail, wholesale, and program distribution channels in accident year 2018, primarily due to a higher than expected severity of non-catastrophe claims, partly offset by favorable development of $38 million in 2017 and prior accident years on non-catastrophe claims; and
• | Net favorable catastrophe development of $27 million. There was $41 million of favorable development on the 2017 and 2018 natural catastrophes, mostly in 2017, partly offset by some adverse development on older catastrophe events.
For the nine months ended September 30, 2019, net favorable PPD was $425 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 $468 million in long-tail business, primarily from:
• | Net favorable development of $294 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 2015 and prior, generally driven by lower than expected loss experience and related updates to loss development factors;
• | Net favorable development of $63 million in U.S. commercial excess and umbrella portfolios due to the same factors experienced for the three months ended September 30, 2019, as described above with a similar result of favorable development in older accident years, partly offset by some adverse development in several of the more recent prior accident years which led to reserve strengthening in those years;
• | Net favorable development of $53 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 $39 million in our foreign casualty business due to the same factors experienced for the three months ended September 30, 2019, as described above;
• | Net favorable development of $36 million on large multi-line prospective deals due to the same factors experienced for the three months ended September 30, 2019, as described above; and
• | Net adverse development of $31 million in automobile liability, driven by adverse paid and reported loss experience mainly in accident years 2014 through 2018.
• | Net adverse development of $43 million in short-tail business due to the same factors experienced for the three months ended September 30, 2019, as described above, which was partly offset by 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 September 30, 2018, net favorable PPD was $216 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 $170 million in long-tail business, primarily from:
• | Favorable development of $93 million in commercial excess and umbrella portfolios primarily in accident years 2012 and prior driven by lower than expected reported loss activity, and an increase in weighting towards experience-based methods;
• | Favorable development of $45 million in workers' compensation lines mainly impacting accident years 2014 and prior, driven by lower than expected paid and reported loss activity, and related updates to development patterns used in our loss projection methods for select portfolios; and
• | Net favorable development of $28 million in our foreign casualty lines, primarily impacting accident years 2014 and prior, driven by reported loss activity that was generally lower than expected.
• | Net favorable development of $46 million in short-tail business, primarily from:
• | Net favorable development of $41 million in commercial property and marine businesses due to favorable claim development, including $42 million favorable development on the 2017 natural catastrophes.
For the nine months ended September 30, 2018, net favorable PPD was $472 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 $266 million in long-tail business, primarily from:
• | Net favorable development of $183 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 net remaining favorable development of $127 million was principally due to lower than expected loss experience, mainly impacting accident years 2014 and prior;
• | Net favorable development of $123 million in our commercial excess and umbrella portfolios, primarily in accident years 2012 and prior. This was driven by lower than expected reported loss activity, and an increase in weighting towards experience-based methods, partially offset by higher than expected claim activity in the 2014 and 2015 accident years which led to reserve strengthening in those years;
• | Favorable development of $28 million in our foreign casualty lines due to the same factors as experienced for the three months ended September 30, 2018 as described above;
• | 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 $71 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 $206 million in short-tail business, primarily from:
• | Net favorable development of $156 million in our commercial property and marine businesses due to favorable claim development, including $157 million favorable development on the 2017 natural catastrophes; and
• | Net favorable development of $50 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 September 30, 2019, net favorable PPD was $62 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 $36 million in our homeowners lines, including valuables, mainly in accident year 2018. Non-catastrophe loss emergence was generally lower than expected in recent accident years. Losses arising from accident year 2017 natural catastrophes developed adversely; however, this was mostly offset by favorable development on the 2018 catastrophe events; and
• | Net favorable development of $26 million in our personal excess lines primarily impacting the 2016 accident year, due to lower than expected loss emergence and an increase in weighting towards experience-based methods, partly offset by adverse emergence in accident year 2015.
For the nine months ended September 30, 2019, net favorable PPD was $88 million, which was the net result of several underlying favorable and adverse movements, and was driven by the following principal changes:
• | Net favorable claim development of $132 million on the 2017 and 2018 natural catastrophes for all lines;
• | Net favorable development of $26 million in our personal excess lines due to the same factors experienced for the three months ended September 30, 2019, as described above;
• | Net favorable development of $16 million, which was the net result of several underlying favorable and adverse movements predominantly in the automobile and recreational marine lines; and
• | Net adverse development of $82 million in our homeowners lines, including valuables, arising from non-catastrophe loss emergence, mainly in the 2018 accident year.
2018 For the three months ended September 30, 2018, net adverse PPD was $58 million, which was the net result of several underlying favorable and adverse movements, and was driven by the following principal changes:
• | Net adverse development of $80 million in our homeowners and valuables lines, primarily impacting the 2017 accident year. Overall, non-catastrophe losses were $137 million higher than expected, partially offset by favorable claim development of $57 million on the 2017 natural catastrophes. The higher than expected non-catastrophe homeowners losses were primarily severity driven and included water related claims, large fire losses, and non-catastrophe weather claims; and
• | Net favorable development of $24 million in our personal excess lines primarily impacting the 2015 accident year, due to lower than expected loss emergence and an increase in weighting towards experience-based methods.
For the nine months ended September 30, 2018, net adverse PPD was $59 million, primarily due to the same factors as experienced for the three months ended September 30, 2018 as described above, including $68 million of favorable claim development on the 2017 natural catastrophes. North America Agricultural Insurance 2019 For the three months ended September 30, 2019, net adverse PPD was $18 million, mainly impacting accident year 2018, across multiple product lines in our Farm and Commercial Agriculture businesses. For the nine months ended September 30, 2019, net favorable PPD was $43 million, which is the net of the adverse activity noted above and favorable claim development in our Multiple Peril Crop Insurance (MPCI) business, which was 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). 2018 For the three months ended September 30, 2018, net favorable PPD was $1 million, primarily due to favorable claim development on the 2017 natural catastrophes. For the nine months ended September 30, 2018, net favorable PPD was $77 million, including $1 million favorable claim development on the 2017 natural catastrophes. Actual claim development relates to our Multiple Peril Crop Insurance (MPCI) business and is favorable due to better than expected crop yield results in certain states at the prior year-end period (i.e., 2018 results based on crop yield results at year-end 2017). Overseas General Insurance 2019 For the three months ended September 30, 2019, net favorable PPD was $25 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 $66 million in long-tail business, primarily from:
• | Net favorable development of $101 million in casualty lines, including favorable development of $123 million in accident years 2015 and prior, due to lower than expected loss emergence mainly across primary lines in Continental Europe, U.K., and Asia Pacific, partially offset by adverse development of $22 million in accident years 2016 through 2018, primarily due to adverse attritional and large loss experience in Continental Europe; and
• | Net adverse development of $50 million in financial lines, with favorable development of $75 million in accident years 2015 and prior, due to lower than expected loss emergence across most regions in Directors and Officers (D&O) and Professional Indemnity, which was more than offset by adverse development of $125 million in accident years 2016 through 2018, primarily due to adverse large loss experience in D&O in the U.K. and Asia Pacific.
• | Net adverse development of $41 million in short-tail business, primarily due to net adverse development of $27 million in Surety, driven by adverse large loss experience across Continental Europe and Latin America in accident years 2017 and 2018.
For the nine months ended September 30, 2019, net favorable PPD was $49 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 $66 million in long-tail lines due to the same factors experienced for the three months ended September 30, 2019 described above; and
• | Net adverse development of $17 million in short-tail lines.
2018 For the three months ended September 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 $49 million in long-tail business, primarily from:
• | Net favorable development of $54 million in casualty lines, with favorable development of $92 million in accident years 2014 and prior, resulting from lower than expected loss emergence across primary and excess lines in the U.K., Continental Europe and Asia Pacific, partially offset by adverse development of $38 million in accident years 2015 through 2017, primarily due to large loss experience in U.K. excess lines and wholesale business, and adverse development in certain Latin America excess lines;
• | Favorable development of $33 million, primarily including $12 million in political risks, $10 million in aviation and $10 million in environmental; and
• | Net adverse development of $38 million in financial lines, with favorable development of $93 million in accident years 2014 and prior, resulting from lower than expected loss emergence including favorable development due to specific large claim reductions in Asia financial institutions including wholesale bankers Directors and Officers (D&O) and bankers professional indemnity, and adverse development of $131 million in accident years 2015 through 2017, primarily due to adverse large loss experience in specific D&O and financial institutions portfolios in Australia, Continental Europe and the U.K.
• | Net favorable development of $23 million in short-tail business, primarily from:
• | Favorable development of $21 million in marine, primarily across accident years 2012 through 2015 driven mainly by favorable loss emergence in Latin America including favorable salvage/subrogation recoveries; and
• | Adverse development of $4 million from claim development on the 2017 natural catastrophes.
For the nine months ended September 30, 2018, net favorable PPD was $166 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 $51 million in long-tail business, driven by the same factors as experienced for the three months ended September 30, 2018 as described above.
• | Net favorable development of $115 million in short-tail business, primarily from:
• | Net favorable development of $50 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 salvage/subrogation recoveries;
• | Favorable development of $8 million from claim development on the 2017 natural catastrophes; and
• | Net favorable development of $57 million, primarily including $17 million in personal business, $17 million in surety,$16 million in A&H business, and $13 million in energy lines.
Global Reinsurance 2019 For the three months ended September 30, 2019, net favorable PPD was $25 million, in long-tail business, primarily from professional liability, medical malpractice, and workers' compensation lines primarily from treaty years 2013 and prior principally due to lower than expected loss emergence. For the nine months ended September 30, 2019, net favorable PPD was $33 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 $59 million in long-tail business, primarily in our casualty, professional liability, medical malpractice, and workers’ compensation lines primarily from treaty years 2013 and prior principally due to lower than expected loss emergence; and
• | 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 September 30, 2018, net favorable PPD was $24 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 $39 million in long-tail business, in our professional liability, medical malpractice, and workers' compensation lines primarily from treaty years 2013 and prior principally resulting from lower than expected loss emergence; and
• | Net adverse development of $15 million in short-tail business, due to claim development on the 2017 natural catastrophes.
For the nine months ended September 30, 2018, net favorable PPD was $54 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 $69 million in long-tail business, primarily in our casualty, professional liability, medical malpractice, and workers' compensation lines primarily from treaty years 2013 and prior principally resulting from lower than expected loss emergence; and
• | Net adverse development of $15 million in short-tail business, which included $14 million of net adverse claim development on the 2017 natural catastrophes.
Corporate 2019 For the three months ended September 30, 2019, net adverse development was $36 million, driven principally by adverse development in environmental liabilities of $27 million due to case specific settlements and higher than expected remediation expense and defense costs, generally impacting larger modeled accounts. The net adverse development also included charges relating to unallocated loss adjustment expenses due to run-off operating expenses of $9 million. For the nine months ended September 30, 2019, net adverse development was $79 million, driven principally by adverse development on non A&E run-off casualty exposures, including workers' compensation, and by the adverse development in environmental liabilities as described above. The net adverse development also included charges relating to unallocated loss adjustment expenses due to run-off operating expenses of $28 million. 2018 For the three months ended September 30, 2018, net adverse development was $12 million, driven principally by adverse development in environmental liabilities of $54 million due to case specific settlements and higher than expected remediation expense and defense costs, generally impacting larger modeled accounts. This adverse development was partially offset by a favorable adjustment in our estimate of reinsurance recoverables. For the nine months ended September 30, 2018, net adverse development was $67 million, driven principally by adverse development on non A&E run-off casualty exposures and by the adverse development in environmental liabilities as described above.

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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://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 944 -SubTopic 40 -URI http://asc.fasb.org/subtopic&trid=2560295 + Details
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