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Reserve for Unpaid Losses and Loss Adjustment Expenses | 12 Months Ended
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Dec. 31, 2017
Liability for Unpaid Claims and Claims Adjustment Expense, Activity in Liability [Abstract] |
Reserve for Unpaid Losses and Loss Adjustment Expenses | Property and Casualty Insurance Products Roll-forward of Liabilities for Unpaid Losses and Loss Adjustment Expenses
| For the years ended December 31,
| 2017 | 2016 | 2015
Beginning liabilities for unpaid losses and loss adjustment expenses, gross [1] | $ | 22,545 |  | $ | 22,568 |  | $ | 22,579 |
Reinsurance and other recoverables [1] | 3,488 |  | 3,625 |  | 3,814 |
Beginning liabilities for unpaid losses and loss adjustment expenses, net | 19,057 |  | 18,943 |  | 18,765 |
Add: Maxum acquisition | — |  | 122 |  | — |
Provision for unpaid losses and loss adjustment expenses |  |  |  |  |  |
Current accident year | 7,381 |  | 6,990 |  | 6,647 |
Prior accident year development | (41 | ) | 457 |  | 250 |
Total provision for unpaid losses and loss adjustment expenses | 7,340 |  | 7,447 |  | 6,897 |
Less: payments |  |  |  |  |  |
Current accident year | 2,751 |  | 2,749 |  | 2,653 |
Prior accident years | 3,828 |  | 4,219 |  | 4,066 |
Total payments | 6,579 |  | 6,968 |  | 6,719 |
Less: net reserves transferred to liabilities held for sale | — |  | 487 |  | — |
Ending liabilities for unpaid losses and loss adjustment expenses, net | 19,818 |  | 19,057 |  | 18,943 |
Reinsurance and other recoverables [1] | 3,957 |  | 3,488 |  | 3,625 |
Ending liabilities for unpaid losses and loss adjustment expenses, gross | $ | 23,775 |  | $ | 22,545 |  | $ | 22,568 |
[1] | Reflects the addition of $688, $712 and $743 into Property & Casualty Commercial Lines of gross reserves and reinsurance recoverables for 2017, 2016 and 2015, respectively, for structured settlements reserves and recoverables due from the Company's life and annuity run-off business now classified as held for sale. These amounts were previously eliminated in consolidation.
Property and Casualty Insurance Products Reserves, Net of Reinsurance, that are Discounted
| For the years ended December 31,
| 2017 | 2016 | 2015
Liability for unpaid losses and loss adjustment expenses, at undiscounted amounts | $ | 1,387 |  | $ | 1,504 |  | $ | 1,607 |
Less: amount of discount | 410 |  | 483 |  | 523 |
Carrying value of liability for unpaid losses and loss adjustment expenses | $ | 977 |  | $ | 1,021 |  | $ | 1,084 |
Discount accretion included in losses and loss adjustment expenses | $ | 30 |  | $ | 29 |  | $ | 38 |
Weighted average discount rate | 3.06 | % | 3.11 | % | 3.24 | %
Range of discount rates | 1.77 | % | - | 14.15 | % | 1.77 | % | - | 14.15 | % | 1.77 | % | - | 14.15 | %
The current accident year benefit from discounting property and casualty insurance product reserves was $15 in 2017, $27 in 2016 and $35 in 2015. The reduction in the discount benefit in 2017 as compared to 2016 and in 2016 as compared to 2015 reflects lower claim volume and a shorter than expected payment pattern. Reserves are discounted at rates in effect at the time claims were incurred, ranging from 1.77% for accident year 2012 to 14.15% for accident year 1981. The reserves recorded for the Company’s property and casualty insurance products at December 31, 2017 represent the Company’s best estimate of its ultimate liability for losses and loss adjustment expenses related to losses covered by policies written by the Company. However, because of the significant uncertainties surrounding reserves it is possible that management’s estimate of the ultimate liabilities for these claims may change and that the required adjustment to recorded reserves could exceed the currently recorded reserves by an amount that could be material to the Company’s results of operations or cash flows. Losses and loss adjustment expenses are also impacted by trends including frequency and severity as well as changes in the legislative and regulatory environment. In the case of the reserves for asbestos exposures, factors contributing to the high degree of uncertainty in the ultimate settlement of the liabilities gross of reinsurance include inadequate loss development patterns, plaintiffs’ expanding theories of liability, the risks inherent in major litigation, and inconsistent emerging legal doctrines. In the case of the reserves for environmental exposures, factors contributing to the high degree of uncertainty in gross reserves include expanding theories of liabilities and damages, the risks inherent in major litigation, inconsistent decisions concerning the existence and scope of coverage for environmental claims, and uncertainty as to the monetary amount being sought by the claimant from the insured. (Favorable) Unfavorable Prior Accident Year Development
| For the years ended December 31,
| 2017 | 2016 | 2015
Workers’ compensation | $ | (79 | ) | $ | (119 | ) | $ | (37 | )
Workers’ compensation discount accretion | 28 |  | 28 |  | 29 |
General liability | 11 |  | 65 |  | 8 |
Package business | (25 | ) | 65 |  | 28 |
Commercial property | (8 | ) | 1 |  | (6 | )
Professional liability | 1 |  | (37 | ) | (36 | )
Bond | 32 |  | (8 | ) | (2 | )
Automobile liability - Commercial Lines | 17 |  | 57 |  | 62 |
Automobile liability - Personal Lines | — |  | 160 |  | (8 | )
Homeowners | (14 | ) | (10 | ) | 9 |
Net asbestos reserves | — |  | 197 |  | 146 |
Net environmental reserves | — |  | 71 |  | 55 |
Catastrophes | (16 | ) | (7 | ) | (18 | )
Uncollectible reinsurance | (15 | ) | (30 | ) | — |
Other reserve re-estimates, net | 27 |  | 24 |  | 20 |
Total prior accident year development | $ | (41 | ) | $ | 457 |  | $ | 250 |
2017 re-estimates of prior accident year reserves
• | Workers’ compensation reserves were reduced in Small Commercial and Middle Market, given the continued emergence of favorable frequency, primarily for accident years 2013 to 2015, as well as a reduction in estimated reserves for unallocated loss adjustment expenses ("ULAE"), partially offset by strengthening reserves for captive programs within Specialty Commercial.
• | General liability reserves were in creased for the 2013 to 2016 accident years on a class of business that insures service and maintenance contractors. This increase was partially offset by a decrease in recent accident year reserves for other Middle Market general liability reserves.
• | Package business reserves were reduced for accident years 2013 and prior largely due to reducing the Company’s estimate of allocated loss adjustment expenses incurred to settle the claims.
• | Bond business reserves increased for customs bonds written between 2000 and 2010 which was partly offset by a reduction in reserves for recent accident years as reported losses for commercial and contract surety have emerged favorably.
• | Automobile liability reserves within Commercial Lines were increased in Small Commercial and large national accounts for the 2013 to 2016 accident years, driven by higher frequency of more severe accidents, including litigated claims.
• | Asbestos and environmental reserves were unchanged as $285 of adverse development arising from the fourth quarter 2017 comprehensive annual review was offset by a $285 recoverable from NICO. For additional information related to the adverse development cover with NICO, see Note 8 - Reinsurance and Note 14 - Commitments and Contingencies of Notes to Consolidated Financial Statements.
• | Catastrophes reserves were reduced primarily due to lower estimates of 2016 wind and hail event losses and a decrease in losses on a 2015 wildfire.
• | Uncollectible reinsurance reserves decr eased as a result of giving greater weight to favorable collectibility experience in recent calendar periods in estimating future collections.
2016 re-estimates of prior accident year reserves
• | Workers' compensation reserves c onsider favorable emergence on reported losses for recent accident years as well as a partially offsetting adverse impact related to two recent Florida Supreme Court rulings that have increased the Company’s exposure to workers’ compensation claims in that state. The favorable emergence has been driven by lower frequency and, to a lesser extent, lower medical severity and management has placed additional weight on this favorable experience as it becomes more credible.
• | General liability reserves in creased for accident years 2012 - 2015 primarily due to higher severity losses incurred on a class of business that insures service and maintenance contractors and increased reserves in general liability for accident years 2008 and 2010 primarily due to indemnity losses and legal costs associated with a litigated claim.
• | Package business reserves increased due to higher than expected severity on liability claims, principally for accident years 2013 - 2015. Severity for these accident years has developed unfavorably and management has placed more weight on emerged experience.
• | Professional liability reserves d ecreased for claims made years 2008 - 2013, primarily for large accounts, including on non-securities class action cases. Claim costs have emerged favorably as these years have matured and management has placed more weight on the emerged experience.
• | Automobile liability reserves increas ed due to increases in both commercial lines automobile and personal lines automobile. Commercial automobile liability reserves incre ased, predominately for the 2015 accident year, primarily due to increased frequency of large claims. Personal automobile liability reserves increas ed, primarily related to increased bodily injury frequency and severity for the 2015 accident year, including for uninsured and under-insured motorist claims, and increased bodily injury severity for the 2014 accident year. Increases in automobile liability loss costs were across both the direct and agency distribution channels.
• | Asbestos and environmental reserves were increased during the period as a result of the second quarter 2016 comprehensive annual review.
• | Uncollectible reinsurance reserves decr eased as a result of giving greater weight to favorable collectibility experience in recent calendar periods in estimating future collections.
2015 re-estimates of prior accident year reserves
• | Workers' compensation reserves decreased due to an improvement in claim closure rates resulting in a decrease in outstanding claims for permanently disabled claimants. In addition, accident years 2013 and 2014 continue to exhibit favorable frequency and medical severity trends; management has been placing additional weight on this favorable experience as it becomes more credible.
• | Package business reserves increased due to higher than expected severity on liability claims, impacting recent accident years.
• | Professional liability reserves decreased for claims made years 2009 through 2012 primarily for large accounts. Claim costs have emerged favorably as these years have matured and management has placed more weight on the emerged experience.
• | Automobile liability reserves within Commercial Lines were increased due to increased severity of large claims predominantly for accident years 2010 to 2013.
• | Asbestos and environmental reserves were increased during the period as a result of the 2015 comprehensive annual review.
• | Catastrophe reserves decreased primarily for accident year 2014 as fourth quarter 2014 catastrophes have developed favorably.
• | Other reserve re-estimates, net, decreased due to decreased contract surety reserves across several accident years and decreased commercial surety reserves for accident years 2012 through 2014 as a result of lower emerged losses. These reserve decreases were offset by an increase in commercial surety reserves related to accident years 2007 and prior, as the number of new claims reported has outpaced expectations.
Reconciliation of Loss Development to Liability for Unpaid Losses and Loss Adjustment Expenses As of December 31, 2017
| Losses and Allocated Loss Adjustment Expenses, Net of Reinsurance |  |  | Subtotal |  |
Reserve Line | Cumulative Incurred for Accident Years Displayed in Triangles | Cumulative Paid for Accident Years Displayed in Triangles | Unpaid for Accident Years not Displayed in Triangles [1] | Unpaid Unallocated Loss Adjustment Expenses, Net of Reinsurance | Discount | Unpaid Losses and Loss Adjustment Expenses, Net of Reinsurance | Reinsurance and Other Recoverables | Liability for Unpaid Losses and Loss Adjustment Expenses
Workers' compensation | $ | 18,351 |  | $ | (10,945 | ) | $ | 2,242 |  | $ | 346 |  | $ | (394 | ) | $ | 9,600 |  | $ | 2,166 |  | $ | 11,766 |
General liability | 3,473 |  | (1,894 | ) | 500 |  | 88 |  | — |  | 2,167 |  | 239 |  | 2,406 |
Package business | 6,553 |  | (5,198 | ) | 46 |  | 99 |  | — |  | 1,500 |  | 45 |  | 1,545 |
Commercial property | 3,263 |  | (2,898 | ) | 15 |  | 10 |  | — |  | 390 |  | 53 |  | 443 |
Commercial automobile liability | 3,446 |  | (2,559 | ) | 17 |  | 23 |  | — |  | 927 |  | 41 |  | 968 |
Commercial automobile physical damage | 238 |  | (227 | ) | 2 |  | — |  | — |  | 13 |  | — |  | 13 |
Professional liability | 1,647 |  | (1,146 | ) | 43 |  | 17 |  | — |  | 561 |  | 282 |  | 843 |
Bond | 598 |  | (333 | ) | 4 |  | 17 |  | — |  | 286 |  | 15 |  | 301 |
Personal automobile liability | 12,363 |  | (10,749 | ) | 19 |  | 74 |  | — |  | 1,707 |  | 21 |  | 1,728 |
Personal automobile physical damage | 1,884 |  | (1,856 | ) | 1 |  | 3 |  | — |  | 32 |  | — |  | 32 |
Homeowners | 7,588 |  | (7,161 | ) | 4 |  | 40 |  | — |  | 471 |  | 50 |  | 521 |
Other ongoing business |  |  | 204 |  | — |  | (16 | ) | 188 |  | 308 |  | 496 |
Asbestos and environmental [2] |  |  | 1,452 |  | — |  | — |  | 1,452 |  | 765 |  | 2,217 |
Other operations [2] |  |  | 402 |  | 122 |  | — |  | 524 |  | (28 | ) | 496 |
Total P&C | $ | 59,404 |  | $ | (44,966 | ) | $ | 4,951 |  | $ | 839 |  | $ | (410 | ) | $ | 19,818 |  | $ | 3,957 |  | $ | 23,775 |
[1] | Amounts represent reserves for claims that were incurred more than ten years ago for long-tail lines and more than three years ago for short-tail lines.
[2] | Asbestos and environmental and other operations include asbestos, environmental and other latent exposures not foreseen when coverages were written, including, but not limited to, potential liability for pharmaceutical products, silica, talcum powder, head injuries, lead paint, construction defects, molestation and other long-tail liabilities. These reserve lines do not have significant paid or incurred loss development for the most recent ten accident years and therefore do not have loss development displayed in triangles.
The reserve lines in the above table and the loss triangles that follow represent the significant lines of business for which the Company regularly reviews the appropriateness of reserve levels. These reserve lines differ from the reserve lines reported on a statutory basis, as prescribed by the National Association of Insurance Commissioners ("NAIC"). The following loss triangles present historical loss development for incurred and paid claims by accident year. Triangles are limited to the number of years for which claims incurred typically remain outstanding, not exceeding ten years. Short-tail lines, which represent claims generally expected to be paid within a few years, have three years of claim development displayed. IBNR reserves shown in loss triangles include reserve for incurred but not reported claims as well as reserves for expected development on reported claims. Workers' Compensation
Incurred Losses & Allocated Loss Adjustment Expenses, Net of Reinsurance
| For the years ended December 31, |  |
| (Unaudited) |  |  |
Accident Year | 2008 | 2009 | 2010 | 2011 | 2012 | 2013 | 2014 | 2015 | 2016 | 2017 | IBNR Reserves | Claims Reported
2008 | $ | 1,456 |  | $ | 1,444 |  | $ | 1,456 |  | $ | 1,470 |  | $ | 1,473 |  | $ | 1,477 |  | $ | 1,477 |  | $ | 1,492 |  | $ | 1,493 |  | $ | 1,493 |  | $ | 123 |  | 141,627 |
2009 |  | 1,462 |  | 1,455 |  | 1,478 |  | 1,493 |  | 1,504 |  | 1,504 |  | 1,519 |  | 1,529 |  | 1,522 |  | 166 |  | 135,731 |
2010 |  |  | 1,560 |  | 1,775 |  | 1,814 |  | 1,858 |  | 1,857 |  | 1,882 |  | 1,881 |  | 1,878 |  | 242 |  | 156,515 |
2011 |  |  |  | 2,013 |  | 2,099 |  | 2,204 |  | 2,206 |  | 2,221 |  | 2,224 |  | 2,232 |  | 361 |  | 177,652 |
2012 |  |  |  |  | 2,185 |  | 2,207 |  | 2,207 |  | 2,181 |  | 2,168 |  | 2,169 |  | 443 |  | 171,021 |
2013 |  |  |  |  |  | 2,020 |  | 1,981 |  | 1,920 |  | 1,883 |  | 1,861 |  | 510 |  | 150,884 |
2014 |  |  |  |  |  |  | 1,869 |  | 1,838 |  | 1,789 |  | 1,761 |  | 638 |  | 125,487 |
2015 |  |  |  |  |  |  |  | 1,873 |  | 1,835 |  | 1,801 |  | 806 |  | 112,970 |
2016 |  |  |  |  |  |  |  |  | 1,772 |  | 1,772 |  | 944 |  | 110,072 |
2017 |  |  |  |  |  |  |  |  |  | 1,862 |  | 1,349 |  | 102,626 |
Total |  |  |  |  |  |  |  |  |  | $ | 18,351 |  |  |
Cumulative Paid Losses & Allocated Loss Adjustment Expenses, Net of Reinsurance
| For the years ended December 31,
| (Unaudited) |
Accident Year | 2008 | 2009 | 2010 | 2011 | 2012 | 2013 | 2014 | 2015 | 2016 | 2017
2008 | $ | 264 |  | $ | 581 |  | $ | 781 |  | $ | 917 |  | $ | 1,015 |  | $ | 1,089 |  | $ | 1,146 |  | $ | 1,190 |  | $ | 1,216 |  | $ | 1,242 |
2009 |  | 265 |  | 587 |  | 792 |  | 937 |  | 1,042 |  | 1,115 |  | 1,170 |  | 1,208 |  | 1,242 |
2010 |  |  | 316 |  | 709 |  | 970 |  | 1,154 |  | 1,287 |  | 1,374 |  | 1,439 |  | 1,489 |
2011 |  |  |  | 371 |  | 841 |  | 1,156 |  | 1,368 |  | 1,518 |  | 1,622 |  | 1,690 |
2012 |  |  |  |  | 359 |  | 809 |  | 1,106 |  | 1,313 |  | 1,436 |  | 1,529 |
2013 |  |  |  |  |  | 304 |  | 675 |  | 917 |  | 1,071 |  | 1,175 |
2014 |  |  |  |  |  |  | 275 |  | 598 |  | 811 |  | 960 |
2015 |  |  |  |  |  |  |  | 261 |  | 576 |  | 778 |
2016 |  |  |  |  |  |  |  |  | 255 |  | 579 |
2017 |  |  |  |  |  |  |  |  |  | 261 |
Total |  |  |  |  |  |  |  |  |  | $ | 10,945 |
General Liability
Incurred Losses & Allocated Loss Adjustment Expenses, Net of Reinsurance
| For the years ended December 31, |  |
| (Unaudited) |  |  |
Accident Year | 2008 | 2009 | 2010 | 2011 | 2012 | 2013 | 2014 | 2015 | 2016 | 2017 | IBNR Reserves | Claims Reported
2008 | $ | 501 |  | $ | 457 |  | $ | 468 |  | $ | 454 |  | $ | 451 |  | $ | 416 |  | $ | 398 |  | $ | 401 |  | $ | 398 |  | $ | 394 |  | $ | 40 |  | 21,374 |
2009 |  | 382 |  | 398 |  | 394 |  | 382 |  | 359 |  | 348 |  | 347 |  | 346 |  | 341 |  | 33 |  | 20,530 |
2010 |  |  | 355 |  | 362 |  | 352 |  | 355 |  | 343 |  | 345 |  | 376 |  | 377 |  | 33 |  | 18,729 |
2011 |  |  |  | 353 |  | 343 |  | 323 |  | 316 |  | 315 |  | 320 |  | 318 |  | 49 |  | 16,637 |
2012 |  |  |  |  | 321 |  | 315 |  | 310 |  | 295 |  | 304 |  | 298 |  | 66 |  | 11,614 |
2013 |  |  |  |  |  | 318 |  | 321 |  | 332 |  | 352 |  | 344 |  | 88 |  | 9,715 |
2014 |  |  |  |  |  |  | 317 |  | 318 |  | 336 |  | 342 |  | 128 |  | 10,048 |
2015 |  |  |  |  |  |  |  | 316 |  | 346 |  | 345 |  | 194 |  | 10,326 |
2016 |  |  |  |  |  |  |  |  | 352 |  | 351 |  | 262 |  | 11,028 |
2017 |  |  |  |  |  |  |  |  |  | 363 |  | 302 |  | 8,823 |
Total |  |  |  |  |  |  |  |  |  | $ | 3,473 |  |  |
Cumulative Paid Losses & Allocated Loss Adjustment Expenses, Net of Reinsurance
| For the years ended December 31,
| (Unaudited) |
Accident Year | 2008 | 2009 | 2010 | 2011 | 2012 | 2013 | 2014 | 2015 | 2016 | 2017
2008 | $ | 31 |  | $ | 69 |  | $ | 141 |  | $ | 216 |  | $ | 270 |  | $ | 300 |  | $ | 318 |  | $ | 330 |  | $ | 337 |  | $ | 343 |
2009 |  | 22 |  | 63 |  | 124 |  | 181 |  | 227 |  | 256 |  | 277 |  | 287 |  | 297 |
2010 |  |  | 14 |  | 51 |  | 115 |  | 181 |  | 224 |  | 259 |  | 314 |  | 331 |
2011 |  |  |  | 11 |  | 47 |  | 93 |  | 154 |  | 198 |  | 234 |  | 252 |
2012 |  |  |  |  | 8 |  | 39 |  | 75 |  | 124 |  | 167 |  | 198 |
2013 |  |  |  |  |  | 7 |  | 35 |  | 95 |  | 152 |  | 207 |
2014 |  |  |  |  |  |  | 11 |  | 31 |  | 88 |  | 142 |
2015 |  |  |  |  |  |  |  | 7 |  | 32 |  | 80 |
2016 |  |  |  |  |  |  |  |  | 8 |  | 32 |
2017 |  |  |  |  |  |  |  |  |  | 12 |
Total |  |  |  |  |  |  |  |  |  | $ | 1,894 |
Package Business
Incurred Losses & Allocated Loss Adjustment Expenses, Net of Reinsurance
| For the years ended December 31, |  |
| (Unaudited) |  |  |
Accident Year | 2008 | 2009 | 2010 | 2011 | 2012 | 2013 | 2014 | 2015 | 2016 | 2017 | IBNR Reserves | Claims Reported
2008 | $ | 667 |  | $ | 703 |  | $ | 709 |  | $ | 677 |  | $ | 675 |  | $ | 674 |  | $ | 676 |  | $ | 673 |  | $ | 675 |  | $ | 674 |  | $ | 16 |  | 58,109 |
2009 |  | 587 |  | 584 |  | 584 |  | 572 |  | 578 |  | 577 |  | 576 |  | 576 |  | 574 |  | 20 |  | 50,351 |
2010 |  |  | 657 |  | 662 |  | 654 |  | 652 |  | 652 |  | 651 |  | 653 |  | 651 |  | 24 |  | 52,345 |
2011 |  |  |  | 810 |  | 792 |  | 790 |  | 800 |  | 808 |  | 814 |  | 813 |  | 37 |  | 60,892 |
2012 |  |  |  |  | 736 |  | 725 |  | 728 |  | 731 |  | 736 |  | 735 |  | 38 |  | 59,621 |
2013 |  |  |  |  |  | 579 |  | 565 |  | 573 |  | 585 |  | 586 |  | 50 |  | 43,284 |
2014 |  |  |  |  |  |  | 566 |  | 578 |  | 601 |  | 602 |  | 86 |  | 42,718 |
2015 |  |  |  |  |  |  |  | 582 |  | 588 |  | 585 |  | 137 |  | 41,202 |
2016 |  |  |  |  |  |  |  |  | 655 |  | 638 |  | 228 |  | 42,042 |
2017 |  |  |  |  |  |  |  |  |  | 695 |  | 348 |  | 39,524 |
Total |  |  |  |  |  |  |  |  |  | $ | 6,553 |  |  |
Cumulative Paid Losses & Allocated Loss Adjustment Expenses, Net of Reinsurance
| For the years ended December 31,
| (Unaudited) |
Accident Year | 2008 | 2009 | 2010 | 2011 | 2012 | 2013 | 2014 | 2015 | 2016 | 2017
2008 | $ | 278 |  | $ | 451 |  | $ | 510 |  | $ | 562 |  | $ | 595 |  | $ | 620 |  | $ | 633 |  | $ | 643 |  | $ | 649 |  | $ | 652 |
2009 |  | 227 |  | 351 |  | 411 |  | 463 |  | 503 |  | 527 |  | 539 |  | 547 |  | 550 |
2010 |  |  | 270 |  | 414 |  | 487 |  | 539 |  | 570 |  | 601 |  | 613 |  | 618 |
2011 |  |  |  | 377 |  | 555 |  | 621 |  | 684 |  | 727 |  | 748 |  | 762 |
2012 |  |  |  |  | 286 |  | 486 |  | 560 |  | 616 |  | 652 |  | 673 |
2013 |  |  |  |  |  | 225 |  | 339 |  | 414 |  | 467 |  | 504 |
2014 |  |  |  |  |  |  | 226 |  | 345 |  | 416 |  | 468 |
2015 |  |  |  |  |  |  |  | 212 |  | 332 |  | 383 |
2016 |  |  |  |  |  |  |  |  | 225 |  | 353 |
2017 |  |  |  |  |  |  |  |  |  | 235 |
Total |  |  |  |  |  |  |  |  |  | $ | 5,198 |
Commercial Property
Incurred Losses & Allocated Loss Adjustment Expenses, Net of Reinsurance
| For the years ended December 31, |  |
| (Unaudited) |  |  |
Accident Year | 2008 | 2009 | 2010 | 2011 | 2012 | 2013 | 2014 | 2015 | 2016 | 2017 | IBNR Reserves | Claims Reported
2008 | $ | 478 |  | $ | 465 |  | $ | 465 |  | $ | 464 |  | $ | 467 |  | $ | 464 |  | $ | 464 |  | $ | 463 |  | $ | 464 |  | $ | 464 |  | $ | — |  | 31,995 |
2009 |  | 267 |  | 264 |  | 259 |  | 258 |  | 251 |  | 257 |  | 257 |  | 257 |  | 257 |  | — |  | 28,286 |
2010 |  |  | 286 |  | 283 |  | 279 |  | 282 |  | 284 |  | 284 |  | 284 |  | 284 |  | — |  | 28,515 |
2011 |  |  |  | 357 |  | 356 |  | 356 |  | 362 |  | 361 |  | 360 |  | 359 |  | — |  | 29,103 |
2012 |  |  |  |  | 329 |  | 301 |  | 301 |  | 305 |  | 306 |  | 305 |  | 1 |  | 25,785 |
2013 |  |  |  |  |  | 234 |  | 218 |  | 219 |  | 220 |  | 216 |  | — |  | 20,287 |
2014 |  |  |  |  |  |  | 268 |  | 260 |  | 262 |  | 264 |  | — |  | 19,742 |
2015 |  |  |  |  |  |  |  | 264 |  | 264 |  | 268 |  | 3 |  | 19,031 |
2016 |  |  |  |  |  |  |  |  | 328 |  | 331 |  | 6 |  | 19,868 |
2017 |  |  |  |  |  |  |  |  |  | 515 |  | 81 |  | 18,883 |
Total |  |  |  |  |  |  |  |  |  | $ | 3,263 |  |  |
Cumulative Paid Losses & Allocated Loss Adjustment Expenses, Net of Reinsurance
| For the years ended December 31,
| (Unaudited) |
Accident Year | 2008 | 2009 | 2010 | 2011 | 2012 | 2013 | 2014 | 2015 | 2016 | 2017
2008 | $ | 280 |  | $ | 422 |  | $ | 449 |  | $ | 459 |  | $ | 464 |  | $ | 464 |  | $ | 464 |  | $ | 465 |  | $ | 466 |  | $ | 465 |
2009 |  | 179 |  | 247 |  | 252 |  | 256 |  | 256 |  | 257 |  | 257 |  | 257 |  | 257 |
2010 |  |  | 198 |  | 266 |  | 276 |  | 281 |  | 283 |  | 284 |  | 284 |  | 284 |
2011 |  |  |  | 231 |  | 332 |  | 350 |  | 355 |  | 358 |  | 359 |  | 360 |
2012 |  |  |  |  | 171 |  | 279 |  | 294 |  | 300 |  | 304 |  | 303 |
2013 |  |  |  |  |  | 157 |  | 208 |  | 216 |  | 218 |  | 215 |
2014 |  |  |  |  |  |  | 168 |  | 243 |  | 258 |  | 264 |
2015 |  |  |  |  |  |  |  | 172 |  | 239 |  | 255 |
2016 |  |  |  |  |  |  |  |  | 188 |  | 285 |
2017 |  |  |  |  |  |  |  |  |  | 210 |
Total |  |  |  |  |  |  |  |  |  | $ | 2,898 |
Commercial Automobile Liability
Incurred Losses & Allocated Loss Adjustment Expenses, Net of Reinsurance
| For the years ended December 31, |  |
| (Unaudited) |  |  |
Accident Year | 2008 | 2009 | 2010 | 2011 | 2012 | 2013 | 2014 | 2015 | 2016 | 2017 | IBNR Reserves | Claims Reported
2008 | $ | 303 |  | $ | 311 |  | $ | 304 |  | $ | 303 |  | $ | 304 |  | $ | 304 |  | $ | 302 |  | $ | 307 |  | $ | 306 |  | $ | 306 |  | $ | 4 |  | 43,885 |
2009 |  | 306 |  | 292 |  | 287 |  | 287 |  | 297 |  | 301 |  | 302 |  | 302 |  | 302 |  | 1 |  | 38,688 |
2010 |  |  | 277 |  | 280 |  | 296 |  | 319 |  | 323 |  | 328 |  | 327 |  | 324 |  | 7 |  | 38,112 |
2011 |  |  |  | 272 |  | 310 |  | 356 |  | 356 |  | 366 |  | 365 |  | 362 |  | 7 |  | 39,262 |
2012 |  |  |  |  | 311 |  | 376 |  | 390 |  | 401 |  | 394 |  | 390 |  | 14 |  | 35,970 |
2013 |  |  |  |  |  | 309 |  | 314 |  | 329 |  | 336 |  | 335 |  | 24 |  | 31,881 |
2014 |  |  |  |  |  |  | 306 |  | 314 |  | 328 |  | 333 |  | 48 |  | 29,171 |
2015 |  |  |  |  |  |  |  | 302 |  | 353 |  | 368 |  | 99 |  | 27,928 |
2016 |  |  |  |  |  |  |  |  | 372 |  | 380 |  | 155 |  | 27,771 |
2017 |  |  |  |  |  |  |  |  |  | 346 |  | 243 |  | 22,665 |
Total |  |  |  |  |  |  |  |  |  | $ | 3,446 |  |  |
Cumulative Paid Losses & Allocated Loss Adjustment Expense, Net of Reinsurance
| For the years ended December 31
| (Unaudited) |
Accident Year | 2008 | 2009 | 2010 | 2011 | 2012 | 2013 | 2014 | 2015 | 2016 | 2017
2008 | $ | 61 |  | $ | 124 |  | $ | 185 |  | $ | 238 |  | $ | 270 |  | $ | 289 |  | $ | 295 |  | $ | 299 |  | $ | 300 |  | $ | 302 |
2009 |  | 56 |  | 115 |  | 175 |  | 237 |  | 274 |  | 291 |  | 298 |  | 300 |  | 301 |
2010 |  |  | 55 |  | 125 |  | 188 |  | 252 |  | 289 |  | 300 |  | 308 |  | 313 |
2011 |  |  |  | 62 |  | 133 |  | 211 |  | 273 |  | 315 |  | 339 |  | 348 |
2012 |  |  |  |  | 65 |  | 142 |  | 233 |  | 306 |  | 345 |  | 358 |
2013 |  |  |  |  |  | 61 |  | 128 |  | 199 |  | 255 |  | 289 |
2014 |  |  |  |  |  |  | 58 |  | 129 |  | 195 |  | 249 |
2015 |  |  |  |  |  |  |  | 61 |  | 141 |  | 204 |
2016 |  |  |  |  |  |  |  |  | 62 |  | 140 |
2017 |  |  |  |  |  |  |  |  |  | 55 |
Total |  |  |  |  |  |  |  |  |  | $ | 2,559 |
Commercial Automobile Physical Damage
Incurred Losses & Allocated Loss Adjustment Expenses, Net of Reinsurance
| For the years ended December 31, |  |
| (Unaudited) |  |  |
Accident Year | 2015 | 2016 | 2017 | IBNR Reserves | Claims Reported
2015 | $ | 74 |  | $ | 75 |  | $ | 75 |  | $ | — |  | 26,812 |
2016 |  | 79 |  | 78 |  | — |  | 26,320 |
2017 |  |  | 85 |  | 4 |  | 22,965 |
Total |  |  | $ | 238 |  |  |
Cumulative Paid Losses & Allocated Loss Adjustment Expenses, Net of Reinsurance
| For the years ended December 31,
| (Unaudited) |
Accident Year | 2015 | 2016 | 2017
2015 | $ | 69 |  | $ | 75 |  | $ | 75 |
2016 |  | 71 |  | 78 |
2017 |  |  | 74 |
Total |  |  | $ | 227 |
Professional Liability
Incurred Losses & Allocated Loss Adjustment Expenses, Net of Reinsurance
| For the years ended December 31, |  |
| (Unaudited) |  |  |
Claims Made Year | 2008 | 2009 | 2010 | 2011 | 2012 | 2013 | 2014 | 2015 | 2016 | 2017 | IBNR Reserves | Claims Reported
2008 | $ | 281 |  | $ | 253 |  | $ | 244 |  | $ | 274 |  | $ | 280 |  | $ | 276 |  | $ | 276 |  | $ | 282 |  | $ | 277 |  | $ | 284 |  | $ | 16 |  | 4,959 |
2009 |  | 254 |  | 251 |  | 244 |  | 266 |  | 257 |  | 263 |  | 255 |  | 257 |  | 257 |  | 19 |  | 5,114 |
2010 |  |  | 202 |  | 211 |  | 212 |  | 205 |  | 201 |  | 200 |  | 195 |  | 199 |  | 31 |  | 4,890 |
2011 |  |  |  | 226 |  | 228 |  | 232 |  | 226 |  | 219 |  | 219 |  | 220 |  | 44 |  | 4,707 |
2012 |  |  |  |  | 174 |  | 172 |  | 168 |  | 149 |  | 146 |  | 144 |  | 33 |  | 3,729 |
2013 |  |  |  |  |  | 136 |  | 136 |  | 123 |  | 110 |  | 103 |  | 35 |  | 2,782 |
2014 |  |  |  |  |  |  | 116 |  | 123 |  | 118 |  | 114 |  | 44 |  | 2,878 |
2015 |  |  |  |  |  |  |  | 104 |  | 113 |  | 113 |  | 51 |  | 2,943 |
2016 |  |  |  |  |  |  |  |  | 106 |  | 106 |  | 66 |  | 3,090 |
2017 |  |  |  |  |  |  |  |  |  | 107 |  | 82 |  | 2,733 |
Total |  |  |  |  |  |  |  |  |  | $ | 1,647 |  |  |
Cumulative Paid Losses & Allocated Loss Adjustment Expenses, Net of Reinsurance
| For the years ended December 31,
| (Unaudited) |
Claims Made Year | 2008 | 2009 | 2010 | 2011 | 2012 | 2013 | 2014 | 2015 | 2016 | 2017
2008 | $ | 13 |  | $ | 61 |  | $ | 126 |  | $ | 166 |  | $ | 202 |  | $ | 221 |  | $ | 230 |  | $ | 260 |  | $ | 264 |  | $ | 266 |
2009 |  | 17 |  | 69 |  | 127 |  | 177 |  | 194 |  | 226 |  | 225 |  | 226 |  | 235 |
2010 |  |  | 22 |  | 62 |  | 103 |  | 137 |  | 148 |  | 157 |  | 162 |  | 166 |
2011 |  |  |  | 11 |  | 57 |  | 100 |  | 128 |  | 163 |  | 170 |  | 173 |
2012 |  |  |  |  | 11 |  | 41 |  | 60 |  | 89 |  | 97 |  | 107 |
2013 |  |  |  |  |  | 4 |  | 19 |  | 31 |  | 39 |  | 55 |
2014 |  |  |  |  |  |  | 4 |  | 21 |  | 40 |  | 64 |
2015 |  |  |  |  |  |  |  | 4 |  | 23 |  | 49 |
2016 |  |  |  |  |  |  |  |  | 4 |  | 25 |
2017 |  |  |  |  |  |  |  |  |  | 6 |
Total |  |  |  |  |  |  |  |  |  | $ | 1,146 |
Bond
Incurred Losses & Allocated Loss Adjustment Expenses, Net of Reinsurance
| For the years ended December 31, |  |
| (Unaudited) |  |  |
Accident Year | 2008 | 2009 | 2010 | 2011 | 2012 | 2013 | 2014 | 2015 | 2016 | 2017 | IBNR Reserves | Claims Reported
2008 | $ | 75 |  | $ | 67 |  | $ | 62 |  | $ | 52 |  | $ | 47 |  | $ | 47 |  | $ | 44 |  | $ | 47 |  | $ | 48 |  | $ | 46 |  | $ | 7 |  | 3,450 |
2009 |  | 71 |  | 71 |  | 69 |  | 58 |  | 57 |  | 51 |  | 49 |  | 49 |  | 49 |  | 4 |  | 3,309 |
2010 |  |  | 71 |  | 75 |  | 80 |  | 79 |  | 73 |  | 69 |  | 70 |  | 90 |  | 24 |  | 2,670 |
2011 |  |  |  | 72 |  | 76 |  | 76 |  | 75 |  | 70 |  | 70 |  | 69 |  | 10 |  | 2,126 |
2012 |  |  |  |  | 69 |  | 69 |  | 60 |  | 53 |  | 48 |  | 48 |  | 16 |  | 1,719 |
2013 |  |  |  |  |  | 63 |  | 58 |  | 54 |  | 48 |  | 48 |  | 29 |  | 1,452 |
2014 |  |  |  |  |  |  | 69 |  | 65 |  | 65 |  | 66 |  | 20 |  | 1,362 |
2015 |  |  |  |  |  |  |  | 65 |  | 65 |  | 62 |  | 29 |  | 1,347 |
2016 |  |  |  |  |  |  |  |  | 59 |  | 59 |  | 45 |  | 1,227 |
2017 |  |  |  |  |  |  |  |  |  | 61 |  | 53 |  | 1,018 |
Total |  |  |  |  |  |  |  |  |  | $ | 598 |  |  |
Cumulative Paid Losses & Allocated Loss Adjustment Expenses, Net of Reinsurance
| For the years ended December 31,
| (Unaudited) |
Accident Year | 2008 | 2009 | 2010 | 2011 | 2012 | 2013 | 2014 | 2015 | 2016 | 2017
2008 | $ | 5 |  | $ | 18 |  | $ | 23 |  | $ | 30 |  | $ | 32 |  | $ | 34 |  | $ | 39 |  | $ | 39 |  | $ | 39 |  | $ | 39 |
2009 |  | 9 |  | 32 |  | 45 |  | 46 |  | 44 |  | 43 |  | 44 |  | 44 |  | 44 |
2010 |  |  | 13 |  | 46 |  | 59 |  | 58 |  | 59 |  | 63 |  | 66 |  | 66 |
2011 |  |  |  | 12 |  | 39 |  | 51 |  | 56 |  | 57 |  | 59 |  | 59 |
2012 |  |  |  |  | 12 |  | 25 |  | 26 |  | 24 |  | 25 |  | 25 |
2013 |  |  |  |  |  | 3 |  | 9 |  | 17 |  | 18 |  | 18 |
2014 |  |  |  |  |  |  | 18 |  | 31 |  | 40 |  | 43 |
2015 |  |  |  |  |  |  |  | 9 |  | 19 |  | 23 |
2016 |  |  |  |  |  |  |  |  | 2 |  | 11 |
2017 |  |  |  |  |  |  |  |  |  | 5 |
Total |  |  |  |  |  |  |  |  |  | $ | 333 |
Personal Automobile Liability
Incurred Losses & Allocated Loss Adjustment Expenses, Net of Reinsurance
| For the years ended December 31, |  |
| (Unaudited) |  |  |
Accident Year | 2008 | 2009 | 2010 | 2011 | 2012 | 2013 | 2014 | 2015 | 2016 | 2017 | IBNR Reserves | Claims Reported
2008 | $ | 1,253 |  | $ | 1,249 |  | $ | 1,227 |  | $ | 1,207 |  | $ | 1,197 |  | $ | 1,196 |  | $ | 1,192 |  | $ | 1,191 |  | $ | 1,188 |  | $ | 1,188 |  | $ | 3 |  | 248,990 |
2009 |  | 1,351 |  | 1,305 |  | 1,280 |  | 1,255 |  | 1,256 |  | 1,260 |  | 1,259 |  | 1,257 |  | 1,257 |  | 3 |  | 254,551 |
2010 |  |  | 1,346 |  | 1,321 |  | 1,293 |  | 1,287 |  | 1,282 |  | 1,275 |  | 1,265 |  | 1,265 |  | 3 |  | 248,944 |
2011 |  |  |  | 1,181 |  | 1,170 |  | 1,180 |  | 1,173 |  | 1,166 |  | 1,154 |  | 1,154 |  | 7 |  | 221,879 |
2012 |  |  |  |  | 1,141 |  | 1,149 |  | 1,146 |  | 1,142 |  | 1,133 |  | 1,130 |  | 8 |  | 210,740 |
2013 |  |  |  |  |  | 1,131 |  | 1,145 |  | 1,144 |  | 1,153 |  | 1,152 |  | 14 |  | 205,428 |
2014 |  |  |  |  |  |  | 1,146 |  | 1,153 |  | 1,198 |  | 1,200 |  | 34 |  | 208,817 |
2015 |  |  |  |  |  |  |  | 1,195 |  | 1,340 |  | 1,338 |  | 92 |  | 216,189 |
2016 |  |  |  |  |  |  |  |  | 1,407 |  | 1,402 |  | 235 |  | 213,563 |
2017 |  |  |  |  |  |  |  |  |  | 1,277 |  | 554 |  | 175,871 |
Total |  |  |  |  |  |  |  |  |  | $ | 12,363 |  |  |
Cumulative Paid Losses & Allocated Loss Adjustment Expenses, Net of Reinsurance
| For the years ended December 31,
| (Unaudited) |
Accident Year | 2008 | 2009 | 2010 | 2011 | 2012 | 2013 | 2014 | 2015 | 2016 | 2017
2008 | $ | 469 |  | $ | 861 |  | $ | 1,031 |  | $ | 1,121 |  | $ | 1,160 |  | $ | 1,175 |  | $ | 1,181 |  | $ | 1,183 |  | $ | 1,184 |  | $ | 1,184 |
2009 |  | 492 |  | 888 |  | 1,083 |  | 1,171 |  | 1,223 |  | 1,240 |  | 1,246 |  | 1,250 |  | 1,251 |
2010 |  |  | 496 |  | 915 |  | 1,108 |  | 1,202 |  | 1,239 |  | 1,251 |  | 1,256 |  | 1,258 |
2011 |  |  |  | 447 |  | 826 |  | 1,006 |  | 1,088 |  | 1,126 |  | 1,140 |  | 1,145 |
2012 |  |  |  |  | 441 |  | 818 |  | 986 |  | 1,067 |  | 1,104 |  | 1,114 |
2013 |  |  |  |  |  | 442 |  | 816 |  | 1,002 |  | 1,091 |  | 1,121 |
2014 |  |  |  |  |  |  | 430 |  | 843 |  | 1,032 |  | 1,125 |
2015 |  |  |  |  |  |  |  | 475 |  | 935 |  | 1,142 |
2016 |  |  |  |  |  |  |  |  | 505 |  | 968 |
2017 |  |  |  |  |  |  |  |  |  | 441 |
Total |  |  |  |  |  |  |  |  |  | $ | 10,749 |
Personal Automobile Physical Damage
Incurred Losses & Allocated Loss Adjustment Expenses, Net of Reinsurance
| For the years ended December 31, |  |
| (Unaudited) |  |  |
Accident Year | 2015 | 2016 | 2017 | IBNR Reserves | Claims Reported
2015 | $ | 629 |  | $ | 632 |  | $ | 630 |  | $ | — |  | 395,923 |
2016 |  | 665 |  | 656 |  | 2 |  | 406,162 |
2017 |  |  | 598 |  | (8 | ) | 343,178 |
Total |  |  | $ | 1,884 |  |  |
Cumulative Paid Losses & Allocated Loss Adjustment Expenses, Net of Reinsurance
| For the years ended December 31,
| (Unaudited) |
Accident Year | 2015 | 2016 | 2017
2015 | $ | 610 |  | $ | 630 |  | $ | 629 |
2016 |  | 634 |  | 653 |
2017 |  |  | 574 |
Total |  |  | $ | 1,856 |
Homeowners
Incurred Losses & Allocated Loss Adjustment Expenses, Net of Reinsurance
| For the years ended December 31, |  |
| (Unaudited) |  |  |
Accident Year | 2008 | 2009 | 2010 | 2011 | 2012 | 2013 | 2014 | 2015 | 2016 | 2017 | IBNR Reserves | Claims Reported
2008 | $ | 742 |  | $ | 768 |  | $ | 777 |  | $ | 778 |  | $ | 779 |  | $ | 779 |  | $ | 779 |  | $ | 779 |  | $ | 780 |  | $ | 779 |  | $ | — |  | 165,108 |
2009 |  | 757 |  | 777 |  | 776 |  | 772 |  | 772 |  | 772 |  | 772 |  | 769 |  | 768 |  | — |  | 149,790 |
2010 |  |  | 838 |  | 850 |  | 838 |  | 840 |  | 840 |  | 840 |  | 836 |  | 834 |  | — |  | 161,581 |
2011 |  |  |  | 955 |  | 920 |  | 919 |  | 916 |  | 914 |  | 911 |  | 908 |  | 1 |  | 179,377 |
2012 |  |  |  |  | 774 |  | 741 |  | 741 |  | 741 |  | 739 |  | 738 |  | 2 |  | 142,804 |
2013 |  |  |  |  |  | 673 |  | 638 |  | 637 |  | 634 |  | 632 |  | 4 |  | 113,469 |
2014 |  |  |  |  |  |  | 710 |  | 707 |  | 702 |  | 700 |  | 5 |  | 121,809 |
2015 |  |  |  |  |  |  |  | 690 |  | 703 |  | 690 |  | 9 |  | 119,722 |
2016 |  |  |  |  |  |  |  |  | 669 |  | 673 |  | 20 |  | 118,748 |
2017 |  |  |  |  |  |  |  |  |  | 866 |  | 96 |  | 115,488 |
Total |  |  |  |  |  |  |  |  |  | $ | 7,588 |  |  |
Cumulative Paid Losses & Allocated Loss Adjustment Expenses, Net of Reinsurance
| For the years ended December 31,
| (Unaudited) |
Accident Year | 2008 | 2009 | 2010 | 2011 | 2012 | 2013 | 2014 | 2015 | 2016 | 2017
2008 | $ | 548 |  | $ | 721 |  | $ | 750 |  | $ | 764 |  | $ | 773 |  | $ | 775 |  | $ | 777 |  | $ | 777 |  | $ | 778 |  | $ | 778 |
2009 |  | 559 |  | 727 |  | 749 |  | 759 |  | 763 |  | 765 |  | 766 |  | 766 |  | 767 |
2010 |  |  | 599 |  | 789 |  | 815 |  | 825 |  | 829 |  | 832 |  | 833 |  | 833 |
2011 |  |  |  | 709 |  | 871 |  | 891 |  | 899 |  | 903 |  | 905 |  | 908 |
2012 |  |  |  |  | 547 |  | 696 |  | 719 |  | 727 |  | 731 |  | 734 |
2013 |  |  |  |  |  | 467 |  | 590 |  | 611 |  | 622 |  | 626 |
2014 |  |  |  |  |  |  | 526 |  | 663 |  | 684 |  | 691 |
2015 |  |  |  |  |  |  |  | 487 |  | 645 |  | 665 |
2016 |  |  |  |  |  |  |  |  | 481 |  | 621 |
2017 |  |  |  |  |  |  |  |  |  | 538 |
Total |  |  |  |  |  |  |  |  |  | $ | 7,161 |
Property and casualty reserves, including IBNR reserves The Company estimates ultimate losses and allocated loss adjustment expenses by accident year. IBNR represents the excess of estimated ultimate loss reserves over case reserves. The process to estimate ultimate losses and loss adjustment expenses is an integral part of the Company's reserve setting. Reserves for allocated and unallocated loss adjustment expenses are generally established separate from the reserves for losses. Reserves for losses are set by line of business within the reporting segments. Case reserves are established by a claims handler on each individual claim and are adjusted as new information becomes known during the course of handling the claim. Lines of business for which reported losses emerge over a long period of time are referred to as long-tail lines of business. Lines of business for which reported losses emerge more quickly are referred to as short-tail lines of business. The Company’s shortest tail lines of business are homeowners, commercial property and automobile physical damage. The longest tail lines of business include workers’ compensation, general liability and professional liability. For short-tail lines of business, emergence of paid loss and case reserves is credible and likely indicative of ultimate losses. For long-tail lines of business, emergence of paid losses and case reserves is less credible in the early periods after a given accident year and, accordingly, may not be indicative of ultimate losses. The Company’s reserving actuaries regularly review reserves for both current and prior accident years using the most current claim data. A variety of actuarial methods and judgments are used for most lines of business to arrive at selections of estimated ultimate losses and loss adjustment expenses. While actuarial methods used and judgments change depending on the age of the accident year, in 2017, there were no new methods or types of judgments introduced or changes in how those methods and judgments were applied. The reserve selections incorporate input, as appropriate, from claims personnel, pricing actuaries and operating management about reported loss cost trends and other factors that could affect the reserve estimates. For both short-tail and long-tail lines of business, an expected loss ratio is used to record initial reserves. This expected loss ratio is determined by starting with the average loss ratio of recent prior accident years and adjusting that ratio for the effect of expected changes to earned pricing, loss frequency and severity, mix of business, ceded reinsurance and other factors. For short-tail lines, IBNR for the current accident year is initially recorded as the product of the expected loss ratio for the period, earned premium for the period and the proportion of losses expected to be reported in future calendar periods for the current accident period. For long-tailed lines, IBNR reserves for the current accident year are initially recorded as the product of the expected loss ratio for the period and the earned premium for the period, less reported losses for the period. For certain short-tailed lines of business, IBNR amounts in the above loss development triangles are negative due to anticipated salvage and subrogation recoveries on paid losses. As losses for a given accident year emerge or develop in subsequent periods, reserving actuaries use other methods to estimate ultimate unpaid losses in addition to the expected loss ratio method. These primarily include paid and reported loss development methods, frequency / severity techniques and the Bornhuetter-Ferguson method (a combination of the expected loss ratio and paid development or reported development method). Within any one line of business, the methods that are given more weight vary based primarily on the maturity of the accident year, the mix of business and the particular internal and external influences impacting the claims experience or the methods. The output of the reserve reviews are reserve estimates that are referred to as the “actuarial indication”. Paid development and reported development techniques are used for most lines of business though more weight is given to the reported development method for some of the long-tailed lines like general liability. In addition, for long-tailed lines of business, the Company relies on the expected loss ratio method for immature accident years. Frequency/severity techniques are used predominantly for professional liability and are also used for automobile liability. For most lines, reserves for allocated loss adjustment expenses ("ALAE", or those expenses related to specific claims) are analyzed using paid development techniques and an analysis of the relationship between ALAE and loss payments. Reserves for ULAE are determined using the expected cost per claim year and the anticipated claim closure pattern as well as the ratio of paid ULAE to paid losses. In the final step of the reserve review process, senior reserving actuaries and senior management apply their judgment to determine the appropriate level of reserves considering the actuarial indications and other factors not contemplated in the actuarial indications. Those factors include, but are not limited to, the assessed reliability of key loss trends and assumptions used in the current actuarial indications, pertinent trends observed over the recent past, the level of volatility within a particular line of business, and the improvement or deterioration of actuarial indications. Cumulative number of reported claims For property and casualty, claim counts represent the number of claim features on a reported claim where a claim feature is each separate coverage for each claimant affected by the claim event. For example, one car accident that results in two bodily injury claims and one automobile damage liability claim would be counted as three claims within the personal automobile liability triangle. Similarly, a fire that impacts one commercial building may result in multiple claim features due to the potential for claims related to business interruption, structural damage, and loss of the physical contents of the building. Claim features that result in no paid losses are included in the reported claim counts.
Average Annual Percentage Payout of Incurred Claims by Age, Net of Reinsurance
| (Unaudited) |
Reserve Line | 1st Year | 2nd Year | 3rd Year | 4th Year | 5th Year | 6th Year | 7th Year | 8th Year | 9th Year | 10th Year
Workers' compensation | 16.0 | % | 19.9 | % | 13.1 | % | 9.2 | % | 6.4 | % | 4.7 | % | 3.5 | % | 2.7 | % | 2.0 | % | 1.7 | %
General liability | 3.7 | % | 9.0 | % | 16.0 | % | 17.4 | % | 13.8 | % | 9.4 | % | 7.7 | % | 3.6 | % | 2.2 | % | 1.6 | %
Package business | 38.9 | % | 22.0 | % | 10.3 | % | 8.3 | % | 5.5 | % | 3.6 | % | 1.9 | % | 1.2 | % | 0.7 | % | 0.4 | %
Commercial property | 61.8 | % | 27.8 | % | 4.6 | % | 1.6 | % | 0.5 | % | 0.1 | % | 0.1 | % | 0.1 | % | — | % | — | %
Commercial automobile liability | 17.4 | % | 20.5 | % | 20.3 | % | 18.1 | % | 11.0 | % | 5.0 | % | 2.3 | % | 1.1 | % | 0.4 | % | 0.5 | %
Commercial automobile physical damage | 90.1 | % | 8.2 | % | (0.3 | )% |  |  |  |  |  |  |
Professional liability | 5.5 | % | 18.5 | % | 18.7 | % | 16.2 | % | 10.3 | % | 6.8 | % | 1.6 | % | 4.3 | % | 2.4 | % | 0.4 | %
Bond | 14.6 | % | 26.8 | % | 13.6 | % | 3.7 | % | 0.9 | % | 2.0 | % | 3.8 | % | — | % | (0.1 | )% | 0.6 | %
Personal automobile liability | 37.6 | % | 33.1 | % | 15.4 | % | 7.4 | % | 3.2 | % | 1.1 | % | 0.4 | % | 0.3 | % | 0.1 | % | — | %
Personal automobile physical damage | 96.5 | % | 3.1 | % | (0.2 | )% |  |  |  |  |  |  |
Homeowners | 72.1 | % | 20.8 | % | 3.1 | % | 1.3 | % | 0.6 | % | 0.3 | % | 0.1 | % | 0.1 | % | 0.1 | % | — | %
Group Life, Disability and Accident Products Roll-forward of Liabilities for Unpaid Losses and Loss Adjustment Expenses
| For the years ended December 31,
| 2017 | 2016 | 2015
Beginning liabilities for unpaid losses and loss adjustment expenses, gross | $ | 5,772 |  | $ | 5,889 |  | $ | 6,013 |
Reinsurance recoverables | 208 |  | 218 |  | 209 |
Beginning liabilities for unpaid losses and loss adjustment expenses, net | 5,564 |  | 5,671 |  | 5,804 |
Add: Aetna U.S. group life and disability business acquisition [3] | 2,833 |  | — |  | — |
Provision for unpaid losses and loss adjustment expenses |  |  |
Current incurral year | 2,868 |  | 2,562 |  | 2,447 |
Prior year's discount accretion | 202 |  | 202 |  | 214 |
Prior incurral year development [1] | (185 | ) | (162 | ) | (146 | )
Total provision for unpaid losses and loss adjustment expenses [2] | 2,885 |  | 2,602 |  | 2,515 |
Less: payments |  |  |
Current incurral year | 1,528 |  | 1,327 |  | 1,257 |
Prior incurral years | 1,451 |  | 1,382 |  | 1,391 |
Total payments | 2,979 |  | 2,709 |  | 2,648 |
Ending liabilities for unpaid losses and loss adjustment expenses, net | 8,303 |  | 5,564 |  | 5,671 |
Reinsurance recoverables | 209 |  | 208 |  | 218 |
Ending liabilities for unpaid losses and loss adjustment expenses, gross | $ | 8,512 |  | $ | 5,772 |  | $ | 5,889 |
[1] | Prior incurral year development represents the change in estimated ultimate incurred losses and loss adjustment expenses for prior incurral years on a discounted basis.
[2] | Includes unallocated loss adjustment expenses of $111, $100 and $96 for the years ended December 31, 2017, 2016 and 2015, respectively, that are recorded in insurance operating costs and other expenses in the Condensed Consolidated Statements of Operations.
[3] | Represents Aetna U.S. group life and disability business reserves, net as of the acquisition date, subject to final purchase accounting.
Group Life, Disability and Accident Products Reserves, Net of Reinsurance, that are Discounted
| For the years ended December 31,
| 2017 | 2016 | 2015
Liability for unpaid losses and loss adjustment expenses, at undiscounted amounts | $ | 9,071 |  | $ | 6,382 |  | $ | 6,565 |
Less: amount of discount | 1,536 |  | 1,303 |  | 1,382 |
Carrying value of liability for unpaid losses and loss adjustment expenses | $ | 7,535 |  | $ | 5,079 |  | $ | 5,183 |
Weighted average discount rate | 3.5 | % | 4.3 | % | 4.4 | %
Range of discount rate | 2.1 | % | - | 8.0 | % | 3.0 | % | - | 8.0 | % | 3.0 | % | - | 8.0 | %
Reserves are discounted at rates in effect at the time claims were incurred, ranging from 2.1% for life and disability reserves acquired from Aetna based on interest rates in effect at the acquisition date of November 1, 2017, to 8.0% f or the Company’s pre-acquisition reserves for incurral year 1990, and vary by product. Prior year's discount accretion has been calculated as the average reserve balance for the year times the weighted average discount rate. The decrease in the weighted average discount rate for 2017 was primarily due to the fact that reserves for the Aetna U.S. group life and disability business are discounted at market rates in effect as of the acquisition date. Re-estimates of prior incurral years reserves in 2017 was driven by the following:
• | Group Disability- Prior period estimates decreased by approximately $125 driven by group long-term disability favorable claim incidence for incurral year 2016 and claim recoveries higher than prior reserve assumptions.
• | Group Life and Accident (including Group Life Premium Waiver)- Contributing to an approximately $60 decrease in prior period reserve estimates was favorable claim incidence on group life premium waiver for incurral year 2016.
Re-estimates of prior incurral years reserves in 2016 was driven by the following:
• | Group Disability- Prior period estimates decreased by approximately $90 largely driven by group long-term disability claim recoveries higher than prior reserve assumptions, particularly in the older incurral years. This favorability was partially offset by lower Social Security Disability approvals driven by lower approval rates and backlogs in the Social Security Administration.
• | Group Life and Accident (including Group Life Premium Waiver)- Contributing to an approximately $75 decrease in prior period reserve estimates was favorable claim incidence on group life premium waiver for incurral year 2015.
Re-estimates of prior incurral years reserves in 2015 was driven by the following:
• | Group Disability- Prior period estimates decreased by approximately $90 largely driven by updated assumptions related to the probability and timing of long-term disability claim recoveries, which were updated to reflect recent favorable trends. This favorability was partially offset by lower approval rates and backlogs in the Social Security Administration.
• | Group Life and Accident (including Group Life Premium Waiver- Prior period estimates decreased by approximately $50 largely driven by favorable claim incidence and recovery experience on group life premium waiver.
Reconciliation of Loss Development to Liability for Unpaid Losses and Loss Adjustment Expenses as of December 31, 2017
| Losses and Allocated Loss Adjustment Expenses, Net of Reinsurance |  |  | Subtotal |  |
Reserve Line | Cumulative Incurred for Incurral Years Displayed in Triangles | Cumulative Paid for Incurral Years Displayed in Triangles | Unpaid for Incurral Years not Displayed in Triangles | Unpaid Unallocated Loss Adjustment Expenses, Net of Reinsurance | Discount | Unpaid Losses and Loss Adjustment Expenses, Net of Reinsurance | Reinsurance and Other Recoverables | Liability for Unpaid Losses and Loss Adjustment Expenses
Group long-term disability | $ | 10,511 |  | $ | (5,138 | ) | $ | 2,651 |  | $ | 166 |  | $ | (1,383 | ) | $ | 6,807 |  | $ | 207 |  | $ | 7,014 |
Group life and accident, excluding premium waiver | 5,839 |  | (5,350 | ) | 138 |  | 3 |  | (21 | ) | 609 |  | 1 |  | 610 |
Group short-term disability |  |  | 99 |  | 5 |  | — |  | 104 |  | — |  | 104 |
Group life premium waiver |  |  | 869 |  | 7 |  | (132 | ) | 744 |  | 1 |  | 745 |
Group supplemental health |  |  | 39 |  | — |  | — |  | 39 |  | — |  | 39 |
Total Group Benefits | $ | 16,350 |  | $ | (10,488 | ) | $ | 3,796 |  | $ | 181 |  | $ | (1,536 | ) | $ | 8,303 |  | $ | 209 |  | $ | 8,512 |
The following loss triangles present historical loss development for incurred and paid claims by the year the insured claim occurred, referred to as the incurral year. Triangles are limited to the number of years for which claims incurred typically remain outstanding. For group long-term disability, the Company has provided seven incurral years of claims data as data for earlier periods was not available with respect to the U.S. group life and disability business acquired from Aetna. Short-tail lines, which represent claims generally expected to be paid within a few years, have three years of claim development displayed. Group Long-Term Disability
Undiscounted Incurred Losses & Allocated Loss Adjustment Expenses, Net of Reinsurance
| For the years ended December 31, |  |
| (Unaudited) |  |  |
Incurral Year | 2011 | 2012 | 2013 | 2014 | 2015 | 2016 | 2017 | IBNR Reserves | Claims Reported
2011 | 1,917 |  | 1,761 |  | 1,660 |  | 1,659 |  | 1,669 |  | 1,660 |  | 1,649 |  | 1 |  | 39,149 |
2012 |  | 1,829 |  | 1,605 |  | 1,539 |  | 1,532 |  | 1,530 |  | 1,515 |  | — |  | 37,438 |
2013 |  |  | 1,660 |  | 1,479 |  | 1,429 |  | 1,429 |  | 1,416 |  | 2 |  | 31,752 |
2014 |  |  |  | 1,636 |  | 1,473 |  | 1,430 |  | 1,431 |  | 2 |  | 32,936 |
2015 |  |  |  |  | 1,595 |  | 1,442 |  | 1,422 |  | 15 |  | 33,349 |
2016 |  |  |  |  |  | 1,651 |  | 1,481 |  | 38 |  | 33,413 |
2017 |  |  |  |  |  |  | 1,597 |  | 687 |  | 23,158 |
Total |  |  |  |  |  |  | $ | 10,511 |  |  |
Cumulative Paid Losses & Allocated Loss Adjustment Expenses, Net of Reinsurance
| For the years ended December 31,
| (Unaudited) |
Incurral Year | 2011 | 2012 | 2013 | 2014 | 2015 | 2016 | 2017
2011 | 118 |  | 508 |  | 743 |  | 886 |  | 996 |  | 1,087 |  | 1,167 |
2012 |  | 108 |  | 483 |  | 708 |  | 835 |  | 933 |  | 1,014 |
2013 |  |  | 102 |  | 443 |  | 664 |  | 791 |  | 881 |
2014 |  |  |  | 103 |  | 448 |  | 675 |  | 801 |
2015 |  |  |  |  | 108 |  | 460 |  | 687 |
2016 |  |  |  |  |  | 112 |  | 479 |
2017 |  |  |  |  |  |  | 109 |
Total |  |  |  |  |  |  | $ | 5,138 |
Group Life and Accident, excluding Premium Waiver
Undiscounted Incurred Losses & Allocated Loss Adjustment Expenses, Net of Reinsurance
| For the years ended December 31, |  |
| (Unaudited) |  |  |
Incurral Year | 2015 | 2016 | 2017 | IBNR Reserves | Claims Reported
2015 | $ | 1,983 |  | $ | 1,919 |  | $ | 1,921 |  | $ | 8 |  | 47,954 |
2016 |  | 1,974 |  | 1,919 |  | 23 |  | 44,762 |
2017 |  |  | 1,999 |  | 401 |  | 35,592 |
Total |  |  | $ | 5,839 |  |  |
Cumulative Paid Losses & Allocated Loss Adjustment Expenses, Net of Reinsurance
| For the years ended December 31,
| (Unaudited) |
Incurral Year | 2015 | 2016 | 2017
2015 | $ | 1,541 |  | $ | 1,889 |  | $ | 1,911 |
2016 |  | 1,529 |  | 1,888 |
2017 |  |  | 1,551 |
Total |  |  | $ | 5,350 |
Group life, disability and accident reserves, including IBNR The majority of Group Benefits’ reserves are for long-term disability ("LTD") claimants who are known to be disabled and are currently receiving benefits. A Disabled Life Reserve ("DLR") is calculated for each LTD claim. The DLR for each claim is the expected present value of all estimated future benefit payments and includes estimates of claim recovery, investment yield, and offsets from other income, including offsets from Social Security benefits and workers’ compensation. Estimated future benefit payments represent the monthly income benefit that is paid until recovery, death or expiration of benefits. Claim recoveries are estimated based on claim characteristics such as age and diagnosis and represent an estimate of benefits that will terminate, generally as a result of the claimant returning to work or being deemed able to return to work. The DLR also includes a liability for payments to claimants who have not yet been approved for LTD either because they have not yet satisfied the waiting (or elimination) period or because the approval or denial decision has not yet been made. In these cases, the present value of future benefits is reduced for the likelihood of claim denial based on Company experience. For claims recently closed due to recovery, a portion of the DLR is retained for the possibility that the claim reopens upon further evidence of disability. In addition, a reserve for estimated unpaid claim expenses is included in the DLR. For incurral years with IBNR claims, estimates of ultimate losses are made by applying completion factors to the dollar amount of claims reported or expected depending on the market segment. IBNR represents estimated ultimate losses less both DLR and cumulative paid amounts for all reported claims. Completion factors are derived using standard actuarial techniques using triangles that display historical claim count emergence by incurral month. These estimates are reviewed for reasonableness and are adjusted for current trends and other factors expected to cause a change in claim emergence. The IBNR includes an estimate of unpaid claim expenses, including a provision for the cost of initial set-up of the claim once reported. For all products, including LTD, there is a period generally ranging from two to twelve months, depending on the product and market segment, where emerged claim information for an incurral year is not yet credible enough to be a basis for an IBNR projection. In these cases, the ultimate losses and allocated loss adjustment expenses are estimated using earned premium multiplied by an expected loss ratio. The Company also records reserves for future death benefits under group term life policies that provide for premiums to be waived in the event the insured has a permanent and total disablement and has satisfied an elimination period, which is typically nine months ("premium waiver reserves"). The death benefit reserve for these group life premium waiver claims is estimated for a known disabled claimant equal to the present value of expected future cash outflows (typically a lump sum face amount payable at death plus claim expenses) with separate estimates for claimant recovery (when no death benefit is payable) and for death before recovery or benefit expiry (when death benefit is payable). The IBNR for premium waiver death benefits is estimated with standard actuarial development methods. In addition, the Company also records reserves for group term life, accidental death & dismemberment, short term disability, and other group products that have short claim payout periods. For these products, reserves are determined using paid or reported actuarial development methods. The resulting claim triangles produce a completion pattern and estimate of ultimate loss. IBNR for these lines of business equals the estimated ultimate losses and loss adjustment expenses less the amount of paid or reported claims depending on whether the paid or reported development method was used. Estimates are reviewed for reasonableness and are adjusted for current trends or other factors that affect the development pattern. Cumulative number of reported claims For group life, disability and accident coverages, claim counts include claims that are approved, pending approval and terminated and exclude denied claims. Due to the nature of the claims, one claimant represents one event.
Average Annual Percentage Payout of Incurred Claims by Age, Net of Reinsurance
| (Unaudited)
| 1st Year | 2nd Year | 3rd Year | 4th Year | 5th Year | 6th Year | 7th Year
Group long-term disability | 7.2 | % | 24.4 | % | 15.3 | % | 8.7 | % | 6.5 | % | 5.4 | % | 4.8 | %
Group life and accident, excluding premium waiver | 79.2 | % | 18.4 | % | 1.1 | % |  |  |  |
Changes in Reserves for Future Policy Benefits [1]
Liability balance as of January 1, 2017 | $ | 322 |
Acquired [2] | 346 |
Incurred | 86 |
Paid | (50 | )
Change in unrealized investment gains and losses | 9 |
Liability balance as of December 31, 2017 | $ | 713 |
Reinsurance recoverable asset, as of January 1, 2017 | $ | 28 |
Incurred | (1 | )
Paid | (1 | )
Reinsurance recoverable asset, as of December 31, 2017 | $ | 26 |
Liability balance as of January 1, 2016 | $ | 492 |
Incurred | (139 | )
Paid | (45 | )
Change in unrealized investment gains and losses | 14 |
Liability balance as of December 31, 2016 | $ | 322 |
Reinsurance recoverable asset, as of January 1, 2016 | $ | 27 |
Incurred | 1 |
Paid | — |
Reinsurance recoverable asset, as of December 31, 2016 | $ | 28 |
[1] | Reserves for future policy benefits includes paid-up life insurance and whole-life policies resulting from conversion from group life policies included within the Group Benefits segment and reserves for structured settlement and terminal funding agreement liabilities retained which are in the Corporate category.
[2] | Represents reserves, net, related to the U.S. group life and disability business acquired from Aetna, as of the acquisition date. For additional information. see Note 2 - Business Acquisitions of Notes to Consolidated Financial Statements.

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