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Reserves For Losses And Loss Expenses | 12 Months Ended
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Dec. 31, 2023
Insurance [Abstract] |
Reserves For Losses And Loss Expenses | Reserves for Losses and Loss Expenses The Company's reserves for losses and loss expenses are comprised of case reserves and incurred but not reported liabilities (IBNR). When a claim is reported, a case reserve is established for the estimated ultimate payment based upon known information about the claim. As more information about the claim becomes available over time, case reserves are adjusted up or down as appropriate. Reserves are also established on an aggregate basis to provide for IBNR liabilities and expected loss reserve development on reported claims. Loss reserves included in the Company’s financial statements represent management’s best estimates based upon an actuarially derived point estimate and other considerations. The Company uses a variety of actuarial techniques and methods to derive an actuarial point estimate for each business. These methods may include paid loss development, incurred loss development, paid and incurred Bornhuetter-Ferguson methods and frequency and severity methods. In circumstances where one actuarial method is considered more credible than the others, that method is used to set the point estimate. The actuarial point estimate may also be based on a judgmental weighting of estimates produced from each of the methods considered. Industry loss experience is used to supplement the Company’s own data in selecting “tail factors” in areas where the Company’s own data is limited. The actuarial data is analyzed by line of business, coverage and accident or policy year, as appropriate, for each business. The establishment of the actuarially derived loss reserve point estimate also includes consideration of qualitative factors that may affect the ultimate losses. These qualitative considerations include, among others, the impact of re-underwriting initiatives, changes in claims handling procedures, changes in the mix of business, changes in distribution sources and changes in policy terms and conditions. The key assumptions used to arrive at the best estimate of loss reserves are the expected loss ratios, rate of loss cost inflation, and reported and paid loss emergence patterns. Expected loss ratios represent management’s expectation of losses at the time the business is priced and written, before any actual claims experience has emerged. This expectation is a significant determinant of the estimate of loss reserves for recently written business where there is little paid or incurred loss data to consider. Expected loss ratios are generally derived from historical loss ratios adjusted for the impact of rate changes, loss cost trends and known changes in the type of risks underwritten. Expected loss ratios are estimated for each key line of business within each business. Expected loss cost inflation is particularly important for the long-tail lines, such as excess casualty, and claims with a high medical component, such as workers’ compensation. Reported and paid loss emergence patterns are used to project current reported or paid loss amounts to their ultimate settlement value. Loss development factors are based on the historical emergence patterns of paid and incurred losses, and are derived from the Company’s own experience and industry data. The paid loss emergence pattern is also significant to excess and assumed workers’ compensation reserves because those reserves are discounted to their estimated present value based upon such estimated payout patterns. Loss frequency and severity are measures of loss activity that are considered in determining the key assumptions described in our discussion of loss and loss expense reserves, including expected loss ratios, rate of loss cost inflation and reported and paid loss emergence patterns. Loss frequency is a measure of the number of claims per unit of insured exposure, and loss severity is a measure of the average size of claims. Factors affecting loss frequency include the effectiveness of loss controls and safety programs and changes in economic activity or weather patterns. Factors affecting loss severity include changes in policy limits, retentions, rate of inflation and judicial interpretations. Another factor affecting estimates of loss frequency and severity is the loss reporting lag, which is the period of time between the occurrence of a loss and the date the loss is reported to the Company. The length of the loss reporting lag affects our ability to accurately predict loss frequency (loss frequencies are more predictable for lines with short reporting lags) as well as the amount of reserves needed for incurred but not reported losses (less IBNR is required for lines with short reporting lags). As a result, loss reserves for lines with short reporting lags are likely to have less variation from initial loss estimates. For lines with short reporting lags, which include auto, primary workers’ compensation, other liability (claims-made) and property business, the key assumption is the loss emergence pattern used to project ultimate loss estimates from known losses paid or reported to date. For lines of business with long reporting lags, which include other liability (occurrence), products liability, excess workers’ compensation and liability reinsurance, the key assumption is the expected loss ratio since there is often little paid or incurred loss data to consider. Historically, the Company has experienced less variation from its initial loss estimates for lines of businesses with short reporting lags than for lines of business with long reporting lags. The key assumptions used in calculating the most recent estimate of the loss reserves are reviewed each quarter and adjusted, to the extent necessary, to reflect the latest reported loss data, current trends and other factors observed. A claim may be defined as an event, as a claimant (number of parties claiming damages from an event) or by exposure type (e.g., an event may give rise to two parties, each claiming loss for bodily injury and property damage). The most commonly used claim count method is by event. Most of the Company's businesses use the number of events to define and quantify the number of claims. However, in certain lines of business, where it is common for multiple parties to claim damages arising from a single event, a business may quantify claims on the basis of the number of separate parties involved in an event. This may be the case with businesses writing substantial auto or transportation exposure. Claim counts for assumed reinsurance will vary based on whether the business is written on a facultative or treaty basis. Further variability as respects treaty claim counts may be reflective of the nature of the treaty, line of business coverage, and type of participation such as quota share or excess of loss contracts. Accordingly, the claim counts have been excluded from the below Reinsurance & Monoline Excess segment tables due to this variability. The claim count information set forth in the tables presented below may not provide an accurate reflection of ultimate loss payouts by product line. The following tables present undiscounted incurred and paid claims development as of December 31, 2023, net of reinsurance, as well as cumulative claim frequency and the total of incurred but not reported liabilities (IBNR). The information about incurred and paid claims development for the years ended December 31, 2014 to 2022 is presented as supplementary information. To enhance the comparability of the loss development data, the Company has removed the impact of foreign exchange rate movements by using the December 31, 2023 exchange rate for all periods. Insurance Other Liability (In thousands)
Loss and Loss Expenses Incurred, Net of Reinsurance |  | As of December 31, 2023
For the Year Ended December 31, |  |  |
| Unaudited |  |  | IBNR | Cumulative Number of Reported Claims
Accident Year | 2014 | 2015 | 2016 | 2017 | 2018 | 2019 | 2020 | 2021 | 2022 | 2023 |
2014 | $ | 846,005 |  | $ | 847,308 |  | $ | 845,254 |  | $ | 849,657 |  | $ | 862,568 |  | $ | 868,639 |  | $ | 863,890 |  | $ | 862,440 |  | $ | 863,636 |  | $ | 863,342 |  |  | $ | 28,447 |  | 28
2015 |  | 949,853 |  | 985,529 |  | 960,136 |  | 963,237 |  | 965,497 |  | 975,534 |  | 982,145 |  | 1,011,753 |  | 1,018,418 |  |  | 42,923 |  | 28
2016 |  |  | 1,017,074 |  | 1,010,016 |  | 1,019,067 |  | 1,030,490 |  | 1,044,563 |  | 1,060,478 |  | 1,092,036 |  | 1,134,162 |  |  | 80,989 |  | 28
2017 |  |  |  | 1,065,837 |  | 1,099,566 |  | 1,121,979 |  | 1,138,821 |  | 1,178,596 |  | 1,249,086 |  | 1,267,359 |  |  | 95,118 |  | 28
2018 |  |  |  |  | 1,104,011 |  | 1,131,672 |  | 1,121,429 |  | 1,156,233 |  | 1,232,803 |  | 1,299,691 |  |  | 141,108 |  | 28
2019 |  |  |  |  |  | 1,240,667 |  | 1,237,516 |  | 1,237,950 |  | 1,294,768 |  | 1,371,217 |  |  | 205,380 |  | 29
2020 |  |  |  |  |  |  | 1,339,702 |  | 1,212,875 |  | 1,158,966 |  | 1,167,753 |  |  | 317,212 |  | 23
2021 |  |  |  |  |  |  |  | 1,534,634 |  | 1,390,800 |  | 1,347,336 |  |  | 537,640 |  | 25
2022 |  |  |  |  |  |  |  |  | 1,823,703 |  | 1,830,125 |  |  | 1,116,619 |  | 25
2023 |  |  |  |  |  |  |  |  |  | 2,120,365 |  |  | 1,815,051 |  | 19
Total |  |  |  |  |  |  |  |  |  | $ | 13,419,768 |  |  |  |
Cumulative Paid Claims and Claim Adjustment Expenses, Net of Reinsurance
For the Year Ended December 31,
| Unaudited |
Accident Year | 2014 | 2015 | 2016 | 2017 | 2018 | 2019 | 2020 | 2021 | 2022 | 2023
2014 | $ | 78,811 |  | $ | 190,637 |  | $ | 337,870 |  | $ | 479,657 |  | $ | 593,577 |  | $ | 679,351 |  | $ | 729,573 |  | $ | 759,003 |  | $ | 782,462 |  | $ | 810,687 |
2015 |  | 82,664 |  | 210,421 |  | 381,682 |  | 537,415 |  | 675,274 |  | 756,353 |  | 814,964 |  | 873,489 |  | 928,793 |
2016 |  |  | 69,404 |  | 208,851 |  | 389,988 |  | 558,176 |  | 676,957 |  | 766,774 |  | 871,252 |  | 955,951 |
2017 |  |  |  | 79,937 |  | 255,591 |  | 453,073 |  | 638,879 |  | 774,674 |  | 930,529 |  | 1,048,203 |
2018 |  |  |  |  | 86,788 |  | 264,261 |  | 435,711 |  | 615,688 |  | 806,757 |  | 986,108 |
2019 |  |  |  |  |  | 88,173 |  | 275,315 |  | 471,186 |  | 704,851 |  | 909,617 |
2020 |  |  |  |  |  |  | 72,203 |  | 224,991 |  | 423,186 |  | 621,085 |
2021 |  |  |  |  |  |  |  | 76,568 |  | 267,564 |  | 492,271 |
2022 |  |  |  |  |  |  |  |  | 93,477 |  | 356,621 |
2023 |  |  |  |  |  |  |  |  |  | 92,758 |
Total |  |  |  |  |  |  |  |  |  | $ | 7,202,094 |
| Reserves for loss and loss adjustment expenses before 2014, net of reinsurance | 154,001 |
| Reserves for loss and loss adjustment expenses, net of reinsurance | $ | 6,371,675 |
Workers' Compensation (In thousands)
Loss and Loss Expenses Incurred, Net of Reinsurance |  | As of December 31, 2023
For the Year Ended December 31, |  |  |
| Unaudited |  |  | IBNR | Cumulative Number of Reported Claims
Accident Year | 2014 | 2015 | 2016 | 2017 | 2018 | 2019 | 2020 | 2021 | 2022 | 2023 |
2014 | $ | 639,436 |  | $ | 637,307 |  | $ | 627,767 |  | $ | 617,242 |  | $ | 615,435 |  | $ | 604,030 |  | $ | 600,194 |  | $ | 602,000 |  | $ | 598,977 |  | $ | 589,283 |  |  | $ | 12,555 |  | 57
2015 |  | 712,800 |  | 690,525 |  | 650,997 |  | 641,169 |  | 626,432 |  | 620,741 |  | 617,478 |  | 612,687 |  | 603,732 |  |  | 18,013 |  | 58
2016 |  |  | 702,716 |  | 696,339 |  | 684,700 |  | 660,520 |  | 651,278 |  | 657,972 |  | 654,385 |  | 641,549 |  |  | 19,823 |  | 58
2017 |  |  |  | 762,093 |  | 733,505 |  | 689,622 |  | 673,216 |  | 683,880 |  | 682,153 |  | 675,871 |  |  | 22,933 |  | 58
2018 |  |  |  |  | 778,964 |  | 724,697 |  | 715,055 |  | 724,056 |  | 721,170 |  | 715,018 |  |  | 27,179 |  | 56
2019 |  |  |  |  |  | 784,281 |  | 721,018 |  | 732,762 |  | 734,034 |  | 722,456 |  |  | 39,081 |  | 54
2020 |  |  |  |  |  |  | 725,245 |  | 716,430 |  | 704,008 |  | 668,222 |  |  | 36,045 |  | 42
2021 |  |  |  |  |  |  |  | 742,687 |  | 701,703 |  | 667,517 |  |  | 67,127 |  | 46
2022 |  |  |  |  |  |  |  |  | 772,620 |  | 745,218 |  |  | 153,476 |  | 46
2023 |  |  |  |  |  |  |  |  |  | 784,906 |  |  | 352,511 |  | 43
Total |  |  |  |  |  |  |  |  |  | $ | 6,813,772 |  |  |  |
Cumulative Paid Claims and Claim Adjustment Expenses, Net of Reinsurance
For the Year Ended December 31,
| Unaudited |
Accident Year | 2014 | 2015 | 2016 | 2017 | 2018 | 2019 | 2020 | 2021 | 2022 | 2023
2014 | $ | 148,405 |  | $ | 319,743 |  | $ | 412,611 |  | $ | 471,235 |  | $ | 503,915 |  | $ | 521,141 |  | $ | 531,475 |  | $ | 538,914 |  | $ | 547,894 |  | $ | 553,739 |
2015 |  | 139,320 |  | 323,744 |  | 421,734 |  | 477,541 |  | 512,933 |  | 531,512 |  | 544,849 |  | 557,215 |  | 564,658 |
2016 |  |  | 142,998 |  | 338,835 |  | 446,072 |  | 504,850 |  | 537,861 |  | 558,934 |  | 572,669 |  | 584,330 |
2017 |  |  |  | 153,456 |  | 362,299 |  | 468,817 |  | 525,753 |  | 559,198 |  | 583,258 |  | 603,006 |
2018 |  |  |  |  | 171,006 |  | 397,464 |  | 508,546 |  | 574,889 |  | 613,675 |  | 642,292 |
2019 |  |  |  |  |  | 184,715 |  | 397,376 |  | 515,914 |  | 581,003 |  | 618,324 |
2020 |  |  |  |  |  |  | 172,478 |  | 380,454 |  | 485,203 |  | 548,585 |
2021 |  |  |  |  |  |  |  | 172,729 |  | 384,867 |  | 490,648 |
2022 |  |  |  |  |  |  |  |  | 180,982 |  | 408,929 |
2023 |  |  |  |  |  |  |  |  |  | 195,204 |
Total |  |  |  |  |  |  |  |  |  | $ | 5,209,715 |
|  | Reserves for loss and loss adjustment expenses before 2014, net of reinsurance | 208,451 |
|  | Reserves for loss and loss adjustment expenses, net of reinsurance | $ | 1,812,508 |
Professional Liability (In thousands)
Loss and Loss Expenses Incurred, Net of Reinsurance |  | As of December 31, 2023
For the Year Ended December 31, |  |  |
| Unaudited |  |  | IBNR | Cumulative Number of Reported Claims
Accident Year | 2014 | 2015 | 2016 | 2017 | 2018 | 2019 | 2020 | 2021 | 2022 | 2023 |
2014 | $ | 252,473 |  | $ | 245,854 |  | $ | 258,874 |  | $ | 242,903 |  | $ | 238,388 |  | $ | 257,205 |  | $ | 256,157 |  | $ | 255,527 |  | $ | 254,514 |  | $ | 256,527 |  |  | $ | 10,067 |  | 7
2015 |  | 259,122 |  | 257,634 |  | 274,233 |  | 275,604 |  | 291,157 |  | 282,452 |  | 282,806 |  | 286,950 |  | 286,320 |  |  | 13,275 |  | 8
2016 |  |  | 310,140 |  | 324,043 |  | 360,778 |  | 401,569 |  | 438,761 |  | 468,154 |  | 463,625 |  | 449,678 |  |  | 15,850 |  | 9
2017 |  |  |  | 333,255 |  | 332,317 |  | 338,526 |  | 377,209 |  | 384,107 |  | 393,054 |  | 401,661 |  |  | 45,095 |  | 10
2018 |  |  |  |  | 335,128 |  | 322,297 |  | 333,413 |  | 359,493 |  | 382,239 |  | 397,593 |  |  | 81,991 |  | 10
2019 |  |  |  |  |  | 336,397 |  | 332,426 |  | 345,548 |  | 354,121 |  | 362,983 |  |  | 89,944 |  | 11
2020 |  |  |  |  |  |  | 394,304 |  | 375,559 |  | 337,796 |  | 313,386 |  |  | 100,150 |  | 11
2021 |  |  |  |  |  |  |  | 525,389 |  | 471,456 |  | 446,596 |  |  | 215,820 |  | 11
2022 |  |  |  |  |  |  |  |  | 649,725 |  | 586,327 |  |  | 405,848 |  | 11
2023 |  |  |  |  |  |  |  |  |  | 648,231 |  |  | 509,380 |  | 12
Total |  |  |  |  |  |  |  |  |  | $ | 4,149,302 |  |  |  |
Cumulative Paid Claims and Claim Adjustment Expenses, Net of Reinsurance
For the Year Ended December 31,
| Unaudited |
Accident Year | 2014 | 2015 | 2016 | 2017 | 2018 | 2019 | 2020 | 2021 | 2022 | 2023
2014 | $ | 19,318 |  | $ | 83,246 |  | $ | 137,931 |  | $ | 175,230 |  | $ | 198,176 |  | $ | 214,915 |  | $ | 226,323 |  | $ | 235,581 |  | $ | 238,277 |  | $ | 243,397 |
2015 |  | 20,319 |  | 85,169 |  | 139,396 |  | 187,007 |  | 215,821 |  | 232,506 |  | 239,514 |  | 246,501 |  | 258,988 |
2016 |  |  | 28,503 |  | 102,232 |  | 201,167 |  | 254,994 |  | 297,088 |  | 357,094 |  | 405,052 |  | 412,645 |
2017 |  |  |  | 36,450 |  | 96,179 |  | 162,660 |  | 242,929 |  | 261,033 |  | 306,535 |  | 329,303 |
2018 |  |  |  |  | 28,108 |  | 99,540 |  | 155,102 |  | 198,546 |  | 244,068 |  | 283,639 |
2019 |  |  |  |  |  | 31,635 |  | 97,302 |  | 147,767 |  | 200,259 |  | 235,124 |
2020 |  |  |  |  |  |  | 27,996 |  | 80,180 |  | 128,869 |  | 169,000 |
2021 |  |  |  |  |  |  |  | 28,542 |  | 85,886 |  | 153,063 |
2022 |  |  |  |  |  |  |  |  | 33,417 |  | 90,594 |
2023 |  |  |  |  |  |  |  |  |  | 41,064 |
Total |  |  |  |  |  |  |  |  |  | $ | 2,216,817 |
| Reserves for loss and loss adjustment expenses before 2014, net of reinsurance | 38,814 |
| Reserves for loss and loss adjustment expenses, net of reinsurance | $ | 1,971,299 |
Auto (In thousands)
Loss and Loss Expenses Incurred, Net of Reinsurance |  | As of December 31, 2023
For the Year Ended December 31, |  |  |
| Unaudited |  |  | IBNR | Cumulative Number of Reported Claims
Accident Year | 2014 | 2015 | 2016 | 2017 | 2018 | 2019 | 2020 | 2021 | 2022 | 2023 |
2014 | $ | 363,882 |  | $ | 385,214 |  | $ | 417,539 |  | $ | 415,490 |  | $ | 412,929 |  | $ | 412,757 |  | $ | 408,304 |  | $ | 407,435 |  | $ | 408,816 |  | $ | 408,743 |  |  | $ | 291 |  | 47
2015 |  | 389,529 |  | 416,251 |  | 422,344 |  | 430,503 |  | 431,514 |  | 429,950 |  | 427,079 |  | 428,898 |  | 428,339 |  |  | 1,013 |  | 53
2016 |  |  | 430,132 |  | 429,762 |  | 441,051 |  | 442,122 |  | 438,917 |  | 438,616 |  | 440,412 |  | 442,164 |  |  | 2,410 |  | 52
2017 |  |  |  | 430,445 |  | 428,420 |  | 430,205 |  | 434,186 |  | 440,004 |  | 444,483 |  | 445,263 |  |  | 3,148 |  | 47
2018 |  |  |  |  | 442,701 |  | 462,657 |  | 479,085 |  | 494,442 |  | 521,794 |  | 530,374 |  |  | 6,234 |  | 45
2019 |  |  |  |  |  | 483,120 |  | 488,379 |  | 504,901 |  | 530,967 |  | 548,688 |  |  | 11,878 |  | 45
2020 |  |  |  |  |  |  | 523,739 |  | 428,761 |  | 442,165 |  | 469,184 |  |  | 16,227 |  | 30
2021 |  |  |  |  |  |  |  | 614,422 |  | 596,810 |  | 632,918 |  |  | 54,629 |  | 38
2022 |  |  |  |  |  |  |  |  | 792,553 |  | 825,359 |  |  | 192,025 |  | 44
2023 |  |  |  |  |  |  |  |  |  | 916,722 |  |  | 444,715 |  | 40
Total |  |  |  |  |  |  |  |  |  | $ | 5,647,754 |  |  |  |
Cumulative Paid Claims and Claim Adjustment Expenses, Net of Reinsurance
For the Year Ended December 31,
| Unaudited |
Accident Year | 2014 | 2015 | 2016 | 2017 | 2018 | 2019 | 2020 | 2021 | 2022 | 2023
2014 | $ | 155,553 |  | $ | 237,622 |  | $ | 327,548 |  | $ | 364,768 |  | $ | 393,428 |  | $ | 401,368 |  | $ | 404,067 |  | $ | 405,061 |  | $ | 405,817 |  | $ | 407,212 |
2015 |  | 159,932 |  | 264,377 |  | 324,175 |  | 369,223 |  | 396,832 |  | 410,275 |  | 416,060 |  | 419,891 |  | 421,749 |
2016 |  |  | 183,777 |  | 278,289 |  | 340,319 |  | 389,233 |  | 408,676 |  | 419,203 |  | 427,662 |  | 433,882 |
2017 |  |  |  | 180,494 |  | 267,309 |  | 326,851 |  | 371,755 |  | 401,846 |  | 419,548 |  | 431,165 |
2018 |  |  |  |  | 180,110 |  | 281,564 |  | 350,212 |  | 412,985 |  | 463,232 |  | 498,094 |
2019 |  |  |  |  |  | 185,289 |  | 290,194 |  | 374,545 |  | 440,449 |  | 495,111 |
2020 |  |  |  |  |  |  | 142,816 |  | 228,358 |  | 308,452 |  | 374,990 |
2021 |  |  |  |  |  |  |  | 180,860 |  | 319,941 |  | 429,419 |
2022 |  |  |  |  |  |  |  |  | 253,206 |  | 428,621 |
2023 |  |  |  |  |  |  |  |  |  | 277,634 |
Total |  |  |  |  |  |  |  |  |  | $ | 4,197,877 |
|  | Reserves for loss and loss adjustment expenses before 2014, net of reinsurance | 2,953 |
|  | Reserves for loss and loss adjustment expenses, net of reinsurance | $ | 1,452,830 |
Short-tail lines (In thousands)
Loss and Loss Expenses Incurred, Net of Reinsurance |  | As of December 31, 2023
For the Year Ended December 31, |  |  |
| Unaudited |  |  | IBNR | Cumulative Number of Reported Claims
Accident Year | 2014 | 2015 | 2016 | 2017 | 2018 | 2019 | 2020 | 2021 | 2022 | 2023 |
2014 | $ | 697,102 |  | $ | 701,133 |  | $ | 658,437 |  | $ | 656,704 |  | $ | 657,637 |  | $ | 657,968 |  | $ | 660,388 |  | $ | 658,600 |  | $ | 656,931 |  | $ | 656,326 |  |  | $ | 1,483 |  | 30
2015 |  | 737,494 |  | 725,927 |  | 722,556 |  | 721,082 |  | 713,225 |  | 711,665 |  | 709,937 |  | 710,266 |  | 714,974 |  |  | 2,044 |  | 32
2016 |  |  | 771,829 |  | 775,358 |  | 762,449 |  | 757,010 |  | 751,510 |  | 753,926 |  | 752,541 |  | 752,960 |  |  | 3,288 |  | 34
2017 |  |  |  | 752,865 |  | 753,274 |  | 747,521 |  | 746,878 |  | 746,475 |  | 747,710 |  | 746,406 |  |  | 4,267 |  | 42
2018 |  |  |  |  | 759,748 |  | 748,859 |  | 746,183 |  | 744,467 |  | 742,212 |  | 741,264 |  |  | 7,835 |  | 48
2019 |  |  |  |  |  | 721,072 |  | 701,168 |  | 690,928 |  | 684,606 |  | 684,707 |  |  | 14,592 |  | 43
2020 |  |  |  |  |  |  | 900,816 |  | 904,545 |  | 922,258 |  | 926,379 |  |  | 7,624 |  | 38
2021 |  |  |  |  |  |  |  | 828,347 |  | 832,240 |  | 815,228 |  |  | 24,478 |  | 36
2022 |  |  |  |  |  |  |  |  | 945,041 |  | 928,562 |  |  | 54,776 |  | 36
2023 |  |  |  |  |  |  |  |  |  | 1,075,325 |  |  | 286,870 |  | 27
Total |  |  |  |  |  |  |  |  |  | $ | 8,042,131 |  |  |  |
Cumulative Paid Claims and Claim Adjustment Expenses, Net of Reinsurance
For the Year Ended December 31,
| Unaudited |
Accident Year | 2014 | 2015 | 2016 | 2017 | 2018 | 2019 | 2020 | 2021 | 2022 | 2023
2014 | $ | 369,514 |  | $ | 590,511 |  | $ | 608,396 |  | $ | 626,751 |  | $ | 641,861 |  | $ | 649,068 |  | $ | 651,560 |  | $ | 652,054 |  | $ | 652,379 |  | $ | 652,449 |
2015 |  | 392,762 |  | 608,056 |  | 663,402 |  | 685,314 |  | 694,780 |  | 700,569 |  | 707,271 |  | 707,447 |  | 716,682 |
2016 |  |  | 416,513 |  | 669,738 |  | 711,238 |  | 726,462 |  | 731,552 |  | 738,302 |  | 739,143 |  | 744,157 |
2017 |  |  |  | 445,208 |  | 689,587 |  | 718,436 |  | 730,584 |  | 734,415 |  | 741,582 |  | 746,917 |
2018 |  |  |  |  | 414,833 |  | 661,607 |  | 708,101 |  | 725,027 |  | 725,128 |  | 730,199 |
2019 |  |  |  |  |  | 404,870 |  | 615,748 |  | 645,251 |  | 657,699 |  | 665,789 |
2020 |  |  |  |  |  |  | 460,351 |  | 784,553 |  | 845,590 |  | 900,682 |
2021 |  |  |  |  |  |  |  | 405,461 |  | 698,030 |  | 754,448 |
2022 |  |  |  |  |  |  |  |  | 472,020 |  | 799,125 |
2023 |  |  |  |  |  |  |  |  |  | 565,586 |
Total |  |  |  |  |  |  |  |  |  | $ | 7,276,034 |
| Reserves for loss and loss adjustment expenses before 2014, net of reinsurance | 5,171 |
| Reserves for loss and loss adjustment expenses, net of reinsurance | $ | 771,268 |
Reinsurance & Monoline Excess Casualty (In thousands)
Loss and Loss Expenses Incurred, Net of Reinsurance |  | As of December 31, 2023
For the Year Ended December 31, |  |
| Unaudited |  |  |
Accident Year | 2014 | 2015 | 2016 | 2017 | 2018 | 2019 | 2020 | 2021 | 2022 | 2023 |  | IBNR
2014 | $ | 319,818 |  | $ | 319,210 |  | $ | 318,559 |  | $ | 330,354 |  | $ | 324,470 |  | $ | 323,855 |  | $ | 335,560 |  | $ | 336,622 |  | $ | 341,244 |  | $ | 343,235 |  |  | $ | 13,680 |
2015 |  | 259,244 |  | 231,574 |  | 230,136 |  | 252,249 |  | 293,032 |  | 303,053 |  | 304,503 |  | 308,986 |  | 313,327 |  |  | 16,235 |
2016 |  |  | 240,868 |  | 252,786 |  | 245,317 |  | 267,808 |  | 301,629 |  | 301,242 |  | 310,273 |  | 309,126 |  |  | 19,483 |
2017 |  |  |  | 231,313 |  | 220,878 |  | 238,916 |  | 261,438 |  | 281,132 |  | 298,284 |  | 314,895 |  |  | 28,441 |
2018 |  |  |  |  | 221,393 |  | 210,492 |  | 230,817 |  | 246,861 |  | 261,004 |  | 292,927 |  |  | 37,287 |
2019 |  |  |  |  |  | 236,517 |  | 230,620 |  | 239,206 |  | 240,879 |  | 272,393 |  |  | 52,998 |
2020 |  |  |  |  |  |  | 299,888 |  | 293,574 |  | 290,037 |  | 313,904 |  |  | 103,742 |
2021 |  |  |  |  |  |  |  | 360,399 |  | 347,054 |  | 344,272 |  |  | 190,749 |
2022 |  |  |  |  |  |  |  |  | 447,231 |  | 437,358 |  |  | 325,597 |
2023 |  |  |  |  |  |  |  |  |  | 449,816 |  |  | 396,340 |
Total |  |  |  |  |  |  |  |  |  | $ | 3,391,253 |  |  |
Cumulative Paid Claims and Claim Adjustment Expenses, Net of Reinsurance
For the Year Ended December 31,
| Unaudited |
Accident Year | 2014 | 2015 | 2016 | 2017 | 2018 | 2019 | 2020 | 2021 | 2022 | 2023
2014 | $ | 21,302 |  | $ | 68,906 |  | $ | 115,585 |  | $ | 154,811 |  | $ | 197,644 |  | $ | 227,038 |  | $ | 251,736 |  | $ | 271,062 |  | $ | 283,876 |  | $ | 296,469 |
2015 |  | 17,876 |  | 48,371 |  | 91,016 |  | 141,073 |  | 178,280 |  | 204,981 |  | 233,281 |  | 250,504 |  | 266,497 |
2016 |  |  | 19,884 |  | 61,710 |  | 100,074 |  | 140,104 |  | 171,465 |  | 205,052 |  | 224,739 |  | 241,884 |
2017 |  |  |  | 16,457 |  | 40,013 |  | 69,190 |  | 123,404 |  | 147,049 |  | 174,745 |  | 207,378 |
2018 |  |  |  |  | 11,056 |  | 40,884 |  | 77,371 |  | 109,290 |  | 141,309 |  | 182,326 |
2019 |  |  |  |  |  | 14,544 |  | 39,035 |  | 63,945 |  | 94,735 |  | 142,501 |
2020 |  |  |  |  |  |  | 20,746 |  | 49,637 |  | 81,710 |  | 137,043 |
2021 |  |  |  |  |  |  |  | 10,910 |  | 43,791 |  | 89,076 |
2022 |  |  |  |  |  |  |  |  | 11,574 |  | 45,625 |
2023 |  |  |  |  |  |  |  |  |  | 10,603 |
Total |  |  |  |  |  |  |  |  |  | $ | 1,619,402 |
| Reserves for loss and loss adjustment expenses before 2014, net of reinsurance | 402,281 |
|  | Reserves for loss and loss adjustment expenses, net of reinsurance | $ | 2,174,132 |
Monoline Excess (In thousands)
Loss and Loss Expenses Incurred, Net of Reinsurance |  | As of December 31, 2023
For the Year Ended December 31, |  |
| Unaudited |  |  |
Accident Year | 2014 | 2015 | 2016 | 2017 | 2018 | 2019 | 2020 | 2021 | 2022 | 2023 |  | IBNR
2014 | $ | 63,465 |  | $ | 57,558 |  | $ | 49,478 |  | $ | 45,758 |  | $ | 41,671 |  | $ | 42,541 |  | $ | 42,618 |  | $ | 40,652 |  | $ | 35,707 |  | $ | 32,185 |  |  | $ | 3,400 |
2015 |  | 69,977 |  | 57,897 |  | 50,099 |  | 45,115 |  | 39,682 |  | 39,781 |  | 36,774 |  | 30,104 |  | 27,590 |  |  | 4,664 |
2016 |  |  | 72,657 |  | 70,281 |  | 71,404 |  | 64,957 |  | 65,485 |  | 65,222 |  | 61,432 |  | 53,304 |  |  | 6,192 |
2017 |  |  |  | 76,701 |  | 80,508 |  | 70,749 |  | 71,025 |  | 66,795 |  | 62,647 |  | 55,713 |  |  | 9,442 |
2018 |  |  |  |  | 77,820 |  | 72,505 |  | 71,448 |  | 66,180 |  | 57,847 |  | 50,744 |  |  | 12,964 |
2019 |  |  |  |  |  | 78,929 |  | 77,482 |  | 76,242 |  | 73,978 |  | 66,071 |  |  | 12,977 |
2020 |  |  |  |  |  |  | 84,354 |  | 83,468 |  | 80,452 |  | 72,376 |  |  | 26,582 |
2021 |  |  |  |  |  |  |  | 98,110 |  | 87,980 |  | 77,220 |  |  | 31,581 |
2022 |  |  |  |  |  |  |  |  | 98,923 |  | 76,725 |  |  | 35,307 |
2023 |  |  |  |  |  |  |  |  |  | 110,446 |  |  | 73,881 |
Total |  |  |  |  |  |  |  |  |  | $ | 622,374 |  |  |
Cumulative Paid Claims and Claim Adjustment Expenses, Net of Reinsurance
For the Year Ended December 31,
| Unaudited |
Accident Year | 2014 | 2015 | 2016 | 2017 | 2018 | 2019 | 2020 | 2021 | 2022 | 2023
2014 | $ | 358 |  | $ | 1,729 |  | $ | 3,354 |  | $ | 4,175 |  | $ | 5,808 |  | $ | 7,595 |  | $ | 11,154 |  | $ | 11,938 |  | $ | 13,491 |  | $ | 14,632 |
2015 |  | 2,069 |  | 2,481 |  | 3,272 |  | 4,099 |  | 4,416 |  | 5,083 |  | 5,421 |  | 6,457 |  | 6,844 |
2016 |  |  | 2,498 |  | 4,783 |  | 5,573 |  | 5,928 |  | 7,685 |  | 9,883 |  | 11,819 |  | 13,569 |
2017 |  |  |  | 6,282 |  | 12,810 |  | 15,356 |  | 17,327 |  | 18,375 |  | 19,275 |  | 21,275 |
2018 |  |  |  |  | 6,141 |  | 8,230 |  | 9,368 |  | 10,359 |  | 12,414 |  | 13,583 |
2019 |  |  |  |  |  | 6,241 |  | 10,884 |  | 12,728 |  | 15,436 |  | 18,836 |
2020 |  |  |  |  |  |  | 4,869 |  | 8,699 |  | 10,471 |  | 12,869 |
2021 |  |  |  |  |  |  |  | 4,586 |  | 6,026 |  | 8,872 |
2022 |  |  |  |  |  |  |  |  | 5,898 |  | 10,564 |
2023 |  |  |  |  |  |  |  |  |  | 6,390 |
Total |  |  |  |  |  |  |  |  |  | $ | 127,434 |
| Reserves for loss and loss adjustment expenses before 2014, net of reinsurance | 576,491 |
| Reserves for loss and loss adjustment expenses, net of reinsurance | $ | 1,071,431 |
Property (In thousands)
Loss and Loss Expenses Incurred, Net of Reinsurance |  | As of December 31, 2023
For the Year Ended December 31, |  |
| Unaudited |  |  |
Accident Year | 2014 | 2015 | 2016 | 2017 | 2018 | 2019 | 2020 | 2021 | 2022 | 2023 |  | IBNR
2014 | $ | 113,055 |  | $ | 96,586 |  | $ | 97,261 |  | $ | 99,973 |  | $ | 99,200 |  | $ | 98,846 |  | $ | 99,244 |  | $ | 97,308 |  | $ | 96,648 |  | $ | 96,135 |  |  | $ | 344 |
2015 |  | 127,315 |  | 117,503 |  | 131,722 |  | 130,389 |  | 129,472 |  | 131,133 |  | 130,697 |  | 131,393 |  | 131,947 |  |  | 1,007 |
2016 |  |  | 167,998 |  | 174,440 |  | 181,595 |  | 180,816 |  | 186,086 |  | 184,053 |  | 185,133 |  | 186,176 |  |  | 1,303 |
2017 |  |  |  | 206,666 |  | 200,487 |  | 199,481 |  | 198,039 |  | 191,941 |  | 192,458 |  | 193,551 |  |  | 1,452 |
2018 |  |  |  |  | 108,348 |  | 112,133 |  | 103,192 |  | 105,165 |  | 103,015 |  | 101,498 |  |  | 1,898 |
2019 |  |  |  |  |  | 103,316 |  | 77,255 |  | 82,036 |  | 81,192 |  | 81,157 |  |  | 2,479 |
2020 |  |  |  |  |  |  | 114,645 |  | 117,885 |  | 116,786 |  | 121,417 |  |  | 4,291 |
2021 |  |  |  |  |  |  |  | 133,989 |  | 146,726 |  | 144,429 |  |  | 13,709 |
2022 |  |  |  |  |  |  |  |  | 167,223 |  | 167,351 |  |  | 30,362 |
2023 |  |  |  |  |  |  |  |  |  | 137,685 |  |  | 60,458 |
Total |  |  |  |  |  |  |  |  |  | $ | 1,361,346 |  |  |
Cumulative Paid Claims and Claim Adjustment Expenses, Net of Reinsurance
For the Year Ended December 31,
| Unaudited |
Accident Year | 2014 | 2015 | 2016 | 2017 | 2018 | 2019 | 2020 | 2021 | 2022 | 2023
2014 | $ | 38,734 |  | $ | 66,816 |  | $ | 82,113 |  | $ | 88,240 |  | $ | 91,376 |  | $ | 93,087 |  | $ | 94,552 |  | $ | 95,186 |  | $ | 95,620 |  | $ | 94,996 |
2015 |  | 53,435 |  | 89,120 |  | 109,053 |  | 118,615 |  | 122,630 |  | 125,494 |  | 126,895 |  | 128,037 |  | 128,947 |
2016 |  |  | 78,887 |  | 133,478 |  | 157,341 |  | 168,433 |  | 175,867 |  | 177,961 |  | 182,300 |  | 184,208 |
2017 |  |  |  | 72,114 |  | 141,390 |  | 171,736 |  | 179,799 |  | 182,680 |  | 185,895 |  | 188,497 |
2018 |  |  |  |  | 33,972 |  | 65,071 |  | 82,327 |  | 87,789 |  | 94,931 |  | 96,262 |
2019 |  |  |  |  |  | 23,129 |  | 54,709 |  | 68,693 |  | 71,264 |  | 73,234 |
2020 |  |  |  |  |  |  | 26,606 |  | 65,563 |  | 86,885 |  | 95,643 |
2021 |  |  |  |  |  |  |  | 15,245 |  | 71,800 |  | 109,179 |
2022 |  |  |  |  |  |  |  |  | 25,515 |  | 91,718 |
2023 |  |  |  |  |  |  |  |  |  | 24,737 |
Total |  |  |  |  |  |  |  |  |  | $ | 1,087,421 |
| Reserves for loss and loss adjustment expenses before 2014, net of reinsurance | 1,472 |
| Reserves for loss and loss adjustment expenses, net of reinsurance | $ | 275,397 |
The reconciliation of the net incurred and paid claims development tables to the reserves for losses and loss expenses in the consolidated balance sheet is as follows:
(In thousands) | December 31, 2023
Undiscounted reserves for loss and loss expenses, net of reinsurance: |
|  | Other liability | $ | 6,371,675 |
|  | Workers' compensation | 1,812,508 |
|  | Professional liability | 1,971,299 |
|  | Auto | 1,452,830 |
|  | Short-tail lines | 771,268 |
|  | Other | 151,204 |
|  | Insurance | 12,530,784 |
|  | Casualty | 2,174,132 |
|  | Monoline excess | 1,071,431 |
|  | Property | 275,397 |
|  | Reinsurance & Monoline Excess | 3,520,960 |
Total undiscounted reserves for loss and loss expenses, net of reinsurance | $ | 16,051,744 |
(In thousands) | December 31, 2023
Due from reinsurers on unpaid claims: |
|  | Other liability | $ | 951,773 |
|  | Workers' compensation | 189,182 |
|  | Professional liability | 1,138,129 |
|  | Auto | 81,334 |
|  | Short-tail lines | 379,621 |
|  | Other | 127,581 |
|  | Insurance | 2,867,620 |
|  | Casualty | 116,198 |
|  | Monoline excess | 40,467 |
|  | Property | 53,547 |
|  | Reinsurance & Monoline Excess | 210,212 |
Total due from reinsurers on unpaid claims | $ | 3,077,832 |
(In thousands) | December 31, 2023
Loss reserve discount: |
|  | Other liability | $ | — |
|  | Workers' compensation | (12,193) |
|  | Professional liability | — |
|  | Auto | — |
|  | Short-tail lines | — |
|  | Other | — |
|  | Insurance | (12,193) |
|  | Casualty | (72,503) |
|  | Monoline excess | (305,228) |
|  | Property | — |
|  | Reinsurance & Monoline Excess | (377,731) |
Total loss reserve discount | $ | (389,924) |
Total gross reserves for loss and loss expenses | $ | 18,739,652 |
The following is supplementary information regarding average historical claims duration as of December 31, 2023:
Insurance |  |  |  |  |  |  |  |
Average Annual Percentage Payout of Incurred Claims by Age, Net of Reinsurance |
Years | 1 | 2 | 3 | 4 | 5 | 6 | 7 | 8 | 9 | 10
Other liability | 6.4 | % | 13.4 | % | 15.8 | % | 15.6 | % | 12.9 | % | 10.4 | % | 7.5 | % | 5.5 | % | 4.1 | % | 3.3 | %
Workers' compensation | 24.4 | % | 30.6 | % | 16.0 | % | 9.2 | % | 5.3 | % | 3.4 | % | 2.3 | % | 1.7 | % | 1.4 | % | 1.0 | %
Professional liability | 7.3 | % | 17.1 | % | 17.2 | % | 14.5 | % | 9.0 | % | 9.4 | % | 5.8 | % | 2.6 | % | 4.0 | % | 2.0 | %
Auto | 34.5 | % | 20.6 | % | 15.8 | % | 11.3 | % | 7.3 | % | 3.6 | % | 1.6 | % | 0.8 | % | 0.3 | % | 0.3 | %
Short-tail lines | 54.4 | % | 33.4 | % | 5.5 | % | 2.8 | % | 1.0 | % | 0.9 | % | 0.5 | % | 0.3 | % | 0.4 | % | 0.3 | %
Reinsurance & Monoline Excess |  |  |  |  |  |  |  |
Average Annual Percentage Payout of Incurred Claims by Age, Net of Reinsurance |
Years | 1 | 2 | 3 | 4 | 5 | 6 | 7 | 8 | 9 | 10
Casualty | 4.7 | % | 10.0 | % | 11.7 | % | 13.9 | % | 11.7 | % | 10.1 | % | 8.2 | % | 5.6 | % | 4.4 | % | 3.7 | %
Monoline excess | 7.2 | % | 5.1 | % | 3.1 | % | 2.7 | % | 3.4 | % | 3.2 | % | 4.9 | % | 3.2 | % | 3.1 | % | 3.5 | %
Property | 28.8 | % | 33.5 | % | 17.1 | % | 5.6 | % | 3.5 | % | 1.6 | % | 1.6 | % | 0.6 | % | 0.2 | % | — | %
The table below provides a reconciliation of the beginning and ending reserve balances:
(In thousands) | 2023 |  | 2022 |  | 2021
Net reserves at beginning of year | $ | 14,248,879 |  |  | $ | 12,848,362 |  |  | $ | 11,620,393 |
Net provision for losses and loss expenses: |  |  |  |  |
Claims occurring during the current year (1) | 6,311,780 |  |  | 5,774,713 |  |  | 4,921,191 |
Increase in estimates for claims occurring in prior years (2) | 29,681 |  |  | 54,511 |  |  | 863 |
Loss reserve discount accretion | 30,681 |  |  | 32,526 |  |  | 31,906 |
Total | 6,372,142 |  |  | 5,861,750 |  |  | 4,953,960 |
Net payments for claims: |  |  |  |  |
Current year | 1,217,078 |  |  | 1,068,577 |  |  | 887,896 |
Prior year | 3,764,532 |  |  | 3,279,333 |  |  | 2,777,798 |
Total | 4,981,610 |  |  | 4,347,910 |  |  | 3,665,694 |
Foreign currency translation | 22,409 |  |  | (113,323) |  |  | (60,297) |
Net reserves at end of year | 15,661,820 |  |  | 14,248,879 |  |  | 12,848,362 |
Ceded reserve at end of year | 3,077,832 |  |  | 2,762,344 |  |  | 2,542,526 |
Gross reserves at end of year | $ | 18,739,652 |  |  | $ | 17,011,223 |  |  | $ | 15,390,888 |
Net change in premiums and losses occurring in prior years: |  |  |  |  |
Increase in estimates for claims occurring in prior years (2) | $ | (29,681) |  |  | $ | (54,511) |  |  | $ | (863) |
Retrospective premium adjustments for claims occurring in prior years (3) | 10,782 |  |  | 18,106 |  |  | 7,510 |
Net premium and reserve development on prior years | $ | (18,899) |  |  | $ | (36,405) |  |  | $ | 6,647 |
_______________________________________ (1)Claims occurring during the current year are net of loss reserve discounts of $47 million, $35 million and $21 million in 2023, 2022, and 2021, respectively. (2)The change in estimates for claims occurring in prior years is net of loss reserve discount. On an undiscounted basis, the estimates for claims occurring in prior years decreased by $13 million in 2023, increased by $16 million in 2022, and decreased by $19 million in 2021. (3)For certain retrospectively rated insurance polices and reinsurance agreements, changes in loss and loss expenses for prior years are offset by additional or return premiums. The COVID-19 global pandemic impacted, and may further impact, the Company’s loss costs. Accordingly, the ultimate net impact of COVID-19 on the Company’s reserves remains uncertain. As of December 31, 2023, the Company had recognized losses for COVID-19-related claims activity, net of reinsurance, of approximately $384 million, of which $326 million relates to the Insurance segment and $58 million relates to the Reinsurance & Monoline Excess segment. Such $384 million of COVID-19-related losses included $381 million of reported losses and $3 million of IBNR. For the year ended December 31, 2023, the Company recognized current accident year losses for COVID-19-related claims activity, net of reinsurance, of approximately $1 million, all of which relates to the Insurance segment. Unfavorable prior year development (net of additional and return premiums) was $19 million in 2023. Insurance – Reserves for the Insurance segment developed unfavorably by $24 million in 2023 (net of additional and return premiums). The unfavorable development for the segment was concentrated in the early part of the year, with reserve development being flat overall during the second half of 2023. A key driver of the unfavorable development early in 2023 was property catastrophe losses related to 2022 events which were still being adjusted and settled during the early part of 2023. In particular, losses related to U.S. winter storms which occurred during the month of December 2022 were a significant contributor to the development, as information gathering and evaluation of many of these claims were still ongoing into the new year. In addition to the property prior year development discussed above, during 2023 the Insurance segment also experienced adverse prior year development on casualty lines of business for the 2016 through 2019 accident years, which was offset by favorable prior year development on casualty lines of business for the 2020 through 2022 accident years. The unfavorable development on the 2016 through 2019 accident years was concentrated in the general liability and commercial auto liability lines of business. The development, which particularly impacted business attaching excess of primary policy limits, was driven by a larger than expected number of large losses reported. The Company believes social inflation is contributing to an increase in the frequency of large losses for these accident years. Social inflation can include higher settlement demands from plaintiffs, use of tactics such as litigation funding by the plaintiffs’ bar, negative public sentiment towards large businesses and corporations, and erosion of tort reforms, among others. The favorable prior year development on casualty lines for the 2020 through 2022 accident years in the Insurance segment was concentrated in the professional liability, workers’ compensation, and general liability lines of business. Due to elevated uncertainty regarding incurred loss frequency and severity as a result of ongoing social inflation and the impacts of the COVID-19 pandemic, the Company set its initial loss ratios for the 2020 through 2022 accident years prudently, and largely maintained these estimates through the end of each respective accident year. The reported loss experience to date for these lines of business for the 2020 through 2022 accident years has been significantly better than was expected, and the Company has begun to react to this favorable emergence as the accident years mature beyond the age of twelve months. It should also be noted that commercial auto liability experienced adverse prior year development for the 2020 through 2022 accident years, which partially offset the favorable development discussed above; the adverse development was driven by a larger than expected number of large losses reported. Reinsurance & Monoline Excess – Reserves for the Reinsurance & Monoline Excess segment developed favorably by $5 million in 2023 (net of additional and return premiums). The overall favorable prior year development for the segment was driven mainly by favorable development in excess workers’ compensation, substantially offset by unfavorable development in the non-proportional reinsurance assumed liability and excess general liability (including umbrella) lines of business. The favorable excess workers’ compensation development was driven by continued lower claim frequency and reported losses relative to our expectations, and to favorable claim settlements. The favorable development was spread across many prior accident years. The unfavorable development for non-proportional reinsurance assumed liability and excess general liability was associated primarily with our U.S. assumed reinsurance business, and related to accounts reinsuring excess and umbrella business and construction projects. The adverse development was concentrated mainly in accident years 2017 through 2020. Unfavorable prior year development (net of additional and return premiums) was $36 million in 2022. Insurance – Reserves for the Insurance segment developed unfavorably by $40 million in 2022 (net of additional and return premiums). The unfavorable development in the segment primarily related to COVID-19 losses at two businesses. These businesses wrote policies providing coverage for event cancellation and film production delay which were heavily impacted by losses directly caused by the COVID-19 pandemic. Most of this COVID-19 related unfavorable development emerged during the third quarter as a result of settlements of claims at values higher than our expectations. However, the Company believes that as a result of these settlements the remaining level of uncertainty around the ultimate value of its known COVID-19 claims has been significantly reduced. The unfavorable development mentioned above also includes favorable prior year development for the Insurance segment primarily attributable to the 2020 and 2021 accident years and unfavorable development on the 2015 through 2019 accident years. The favorable development on the 2020 and 2021 accident years was concentrated in certain casualty lines of business including general liability, professional liability, and workers’ compensation. The Company experienced lower reported claim frequency in these lines of business during 2020 and 2021 relative to historical averages, and continued to experience lower reported incurred losses relative to its expectations for these accident years as they developed during 2022. These trends began in 2020 and we believe were caused by the impacts of the COVID-19 pandemic, including for example, lockdowns, reduced driving/traffic and increased work from home. Due to the uncertainty regarding the ultimate impacts of the pandemic on accident years 2020 and 2021 incurred losses, the Company was cautious in reacting to these lower trends in setting and updating its loss ratio estimates for these years. As these accident years have continued to mature, the Company has continued to recognize some of the favorable reported experience in its ultimate loss estimates made during 2022. The unfavorable development on the 2015 through 2019 accident years was concentrated in the general liability and professional liability, including medical professional, lines of business, as well as auto liability. The development was driven by a larger than expected number of large losses reported. The Company believes social inflation is contributing to an increase in the frequency of large losses for these accident years. Social inflation can include higher settlement demands from plaintiffs, use of tactics such as litigation funding by the plaintiffs’ bar, negative public sentiment towards large businesses and corporations, and erosion of tort reforms, among others. Reinsurance & Monoline Excess – Reserves for the Reinsurance & Monoline Excess segment developed favorably by $4 million in 2022 (net of additional and return premiums). The overall favorable development for the segment was driven mainly by favorable development in excess workers compensation, substantially offset by unfavorable development in the professional liability and non-proportional reinsurance assumed liability lines of business. The favorable excess workers’ compensation development was spread across most prior accident years, including 2012 and prior years, and was driven by a review of the Company’s claim reporting patterns as well as a number of favorable claim settlements relative to expectations. The unfavorable professional liability and non-proportional reinsurance assumed liability development was concentrated mainly in accident years 2016 through 2018 and was associated primarily with our U.S. assumed reinsurance business and related to accounts insuring construction projects and professional liability exposures. Favorable prior year development (net of additional and return premiums) was $7 million in 2021. Insurance – Reserves for the Insurance segment developed favorably by $20 million in 2021 (net of additional and return premiums). The overall favorable development in 2021 was attributable to favorable development on the 2020 accident year, partially offset by adverse development on the 2016 through 2019 accident years. The favorable development on the 2020 accident year was largely concentrated in the auto liability and other liability lines of business, including commercial multi-peril liability. During 2020 the Company achieved larger rate increases in these lines of business than were contemplated in its budget and in its initial loss ratio selections. The Company also experienced significantly lower reported claim frequency in these lines in 2020 relative to historical averages, and lower reported incurred losses relative to its expectations. We believe that the lower claim frequency and lower reported incurred losses were caused by the impacts of the COVID-19 pandemic, for example, lockdowns, reduced driving and traffic, work from home, and court closures. However, due to the uncertainty regarding the ultimate impacts of the pandemic on accident year 2020 incurred losses, the Company elected not to react to these lower reported trends during 2020. As more information became available and the 2020 accident year continued to mature, during 2021 the Company started to recognize favorable accident year 2020 development in response to the continuing favorable reported loss experience relative to its expectations. The adverse development on the 2016 through 2019 accident years is concentrated largely in the other liability line of business, including commercial multi-peril liability, but is also seen to a lesser extent in Auto liability. The adverse development for these accident years is driven by a higher than expected number of large losses reported, and particularly impacted the directors and officers liability, lawyers professional liability, and excess and surplus lines casualty classes of business. We also believe that increased social inflation is contributing to the increased number of large losses, for example, higher jury awards on cases which go to trial, and the corresponding higher demands from plaintiffs and higher values required to reach settlement on cases which do not go to trial. Reinsurance & Monoline Excess – Reserves for the Reinsurance & Monoline Excess segment developed unfavorably by $13 million in 2021. The unfavorable development in the segment was driven by the non-proportional reinsurance assumed liability and other liability lines of business, related primarily to accident years 2017 through 2019, and was partially offset by favorable development in excess workers’ compensation business which was spread across many prior accident years. The unfavorable non-proportional reinsurance assumed liability and other liability development was associated with our U.S. and U.K. assumed reinsurance business, and related primarily to accounts insuring construction projects and professional liability exposures. Environmental and Asbestos — To date, known environmental and asbestos claims have not had a material impact on the Company’s operations, because its subsidiaries generally did not insure large industrial companies that are subject to significant environmental or asbestos exposures prior to 1986 when an absolute exclusion was incorporated into standard policy language. The Company’s net reserves for losses and loss expenses relating to asbestos and environmental claims on policies written before adoption of the absolute exclusion was $17 million and $20 million at December 31, 2023 and 2022, respectively. The estimation of these liabilities is subject to significantly greater than normal variation and uncertainty because it is difficult to make an actuarial estimate of these liabilities due to the absence of a generally accepted actuarial methodology for these exposures and the potential effect of significant unresolved legal matters, including coverage issues, as well as the cost of litigating the legal issues. Additionally, the determination of ultimate damages and the final allocation of such damages to financially responsible parties are highly uncertain. Discounting — The Company discounts its liabilities for certain workers’ compensation reserves. The amount of workers’ compensation reserves that were discounted was $1,352 million and $1,464 million at December 31, 2023 and 2022, respectively. The aggregate net discount for those reserves, after reflecting the effects of ceded reinsurance, was $390 million and $416 million at December 31, 2023 and 2022, respectively. At December 31, 2023, discount rates by year ranged from 0.7% to 6.5%, with a weighted average discount rate of 3.5%. Substantially all discounted workers’ compensation reserves (97% of total discounted reserves at December 31, 2023) are excess workers’ compensation reserves. In order to properly match loss expenses with income earned on investment securities supporting the liabilities, reserves for excess workers’ compensation business are discounted using risk-free discount rates determined by reference to the U.S. Treasury yield curve. These rates are determined annually based on the weighted average rate for the period. Once established, no adjustments are made to the discount rate for that period, and any increases or decreases in loss reserves in subsequent years are discounted at the same rate, without regard to when any such adjustments are recognized. The expected loss and loss expense payout patterns subject to discounting are derived from the Company’s loss payout experience. The Company also discounts reserves for certain other long-duration workers’ compensation reserves (representing approximately 3% of total discounted reserves at December 31, 2023), including reserves for quota share reinsurance and reserves related to losses regarding occupational lung disease. These reserves are discounted at statutory rates prescribed or permitted by the Department of Insurance of the State of Delaware.

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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 -Topic 944 -SubTopic 40 -Name Accounting Standards Codification -Publisher FASB -URI https://asc.fasb.org//944-40/tableOfContent + Details
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