Reserves for Losses and Adjustment Expenses

12 Months Ended

Dec. 31, 2017

Reserves for Losses and Adjustment Expenses

Reserves for Losses and Loss Adjustment Expenses

The following table represents a reconciliation of beginning and ending consolidated loss and LAE reserves for the twelve months ended December 31, 2017, 2016 and 2015:



	As at December 31,
	2017			2016			2015
	($ in millions)
Provision for losses and LAE at the start of the year	$	5,319.9		$	4,938.2		$	4,750.8
Less reinsurance recoverable	(560.7		)	(354.8		)	(350.0		)
Net loss and LAE at the start of the year	4,759.2			4,583.4			4,400.8

Net loss and LAE expenses (disposed)	(125.5		)	(80.1		)	—
Movement in provision for losses and LAE for claims incurred:
Current year	2,100.1			1,705.4			1,522.7
Prior years	(105.4		)	(129.3		)	(156.5		)
Total incurred	1,994.7			1,576.1			1,366.2
Losses and LAE payments for claims incurred:
Current year	(397.5		)	(241.0		)	(178.8		)
Prior years	(1,157.6		)	(981.8		)	(929.7		)
Total paid	(1,555.1		)	(1,222.8		)	(1,108.5		)

Foreign exchange losses/(gains)	161.0			(97.4		)	(75.1		)

Net losses and LAE reserves at the end of the year	5,234.3			4,759.2			4,583.4
Plus reinsurance recoverable on unpaid losses at the end of the year	1,515.2			560.7			354.8
Provision for losses and LAE at the end of the year	$	6,749.5		$	5,319.9		$	4,938.2

For the twelve months ended December 31, 2017, there was a reduction of $105.4 million in the Company’s estimate of the ultimate claims to be paid in respect of prior accident years compared to $129.3 million for the twelve months ended December 31, 2016. The Company assumed $5.7 million of additional loss reserves in 2016 as a result of its acquisition of AgriLogic in January 2016. The Company ceded $125.5 million of reserves as part of a loss portfolio transfer agreement which includes an upper coverage limit in excess of the amount transferred, during the twelve months ended December 31, 2017 (December 31, 2016 — $85.8 million related to an adverse development cover purchased, December 31, 2015 — $Nil). For additional information on reserve releases, please refer to Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Reserves for Losses and Loss Adjustment Expenses” above.

The following tables show an analysis of incurred claims and allocated loss adjustment expenses, net of reinsurance and cumulative paid claims and allocated claim adjustment expenses, net of reinsurance as at December 31, 2017, 2016, 2015, 2014 2013 and 2012. The loss development triangles are derived from all business written by the Company as although a limited number of contracts are written which have durations of greater than one year the contracts do not meet the definition of a long duration contract.



	Property Insurance Lines
	Incurred Claims, IBNR and Loss Adjustment Expenses, Net of Reinsurance							As at December 31, 2017
								Total of IBNR Plus Expected Development on Reported Claims	Cumulative Number of Reported Claims
	For the Years Ended December 31,
	Unaudited Prior Years
Accident Year	2012	2013	2014	2015	2016	2017
	$ (in millions)
2012	170.7	168.6	167.3	166.2	160.6	154.7		0.3	6,872
2013		130.8	117.9	117.5	113.3	114.3		4.9	5,100
2014			166.2	157.9	134.7	135.4		3.0	8,779
2015				241.9	207.3	201.8		4.7	10,431
2016					239.9	250.7		14.7	9,514
2017						297.7		51.3	6,249
					Total	$	1,154.6



	Property Insurance Lines
	Cumulative Paid Claims and Allocated Loss Adjustment Expenses, Net of Reinsurance

	For the Years Ended December 31,
	Unaudited Prior Years
Accident Year	2012	2013	2014	2015	2016	2017
	($ in millions)
2012	41.5	129.6	139.2	153.4	157.5	154.9
2013		39.2	76.4	89.7	101.8	106.4
2014			40.5	87.0	114.5	124.2
2015				57.5	144.0	172.1
2016					67.3	169.7
2017						97.2
						$	824.5

		All outstanding liabilities for 2012 and subsequent years, net of reinsurance				$	330.1
			All outstanding liabilities before 2012, net of reinsurance			2.9
		Liabilities for claims and claim adjustment expenses, net of reinsurance				$	333.0



	Casualty Insurance Lines
	Incurred Claims, IBNR and Loss Adjustment Expenses, Net of Reinsurance							As at December 31, 2017
								Total of IBNR Plus Expected Development on Reported Claims	Cumulative Number of Reported Claims
	For the Years Ended December 31,
	Unaudited Prior Years
Accident Year	2012	2013	2014	2015	2016	2017
	$ (in millions)
2012	78.6	63.4	70.5	61.7	69.6	67.2		5.2	3,536
2013		134.1	117.5	115.9	121.4	104.4		13.6	3,852
2014			146.4	128.6	140.5	130.9		20.4	4,312
2015				205.5	225.5	188.0		64.7	4,954
2016					219.4	190.6		117.9	5,084
2017						183.4		153.0	4,447
					Total	$	864.5



	Casualty Insurance Lines
	Cumulative Paid Claims and Allocated Loss Adjustment Expenses, Net of Reinsurance

	For the Years Ended December 31,
	Unaudited Prior Years
Accident Year	2012	2013	2014	2015	2016	2017
	($ in millions)
2012	1.3	6.7	14.3	30.0	41.3	49.7
2013		2.3	26.0	39.8	53.5	69.0
2014			2.7	13.6	33.1	60.4
2015				3.2	17.2	57.0
2016					4.2	23.1
2017						3.6
					Total	$	262.8

		All outstanding liabilities for 2012 and subsequent years, net of reinsurance				$	601.7
			All outstanding liabilities before 2012, net of reinsurance			43.0
		Liabilities for claims and claim adjustment expenses, net of reinsurance				$	644.7



	Marine, Aviation and Energy Insurance Lines
	Incurred Claims, IBNR and Loss Adjustment Expenses, Net of Reinsurance								As at December 31, 2017
									Total of IBNR Plus Expected Development on Reported Claims	Cumulative Number of Reported Claims
	For the Years Ended December 31,
	Unaudited Prior Years
Accident Year	2012	2013		2014	2015	2016	2017
	$ (in millions)
2012	269.8	307.2		326.7	347.3	333.0	329.0		33.8	4,593
2013		321.4		334.2	342.9	326.3	333.3		17.4	4,979
2014				310.1	314.5	299.3	310.9		45.3	4,768
2015					297.9	301.0	283.3		37.9	4,356
2016			—			219.4	231.9		49.5	4,572
2017			—				211.5		70.0	3,993
						Total	$	1,699.9



	Marine, Aviation and Energy Insurance Lines
	Cumulative Paid Claims and Allocated Loss Adjustment Expenses, Net of Reinsurance

	For the Years Ended December 31,
	Unaudited Prior Years
Accident Year	2012	2013	2014	2015	2016	2017
	($ in millions)
2012	52.2	133.2	175.7	212.0	240.8	251.7
2013		41.6	131.8	205.3	235.7	265.0
2014			53.6	117.0	189.5	210.2
2015				45.1	123.7	174.9
2016					30.9	83.2
2017						40.4
					Total	$	1,025.4

		All outstanding liabilities for 2012 and subsequent years, net of reinsurance				$	674.5
			All outstanding liabilities before 2012, net of reinsurance			61.4
		Liabilities for claims and claim adjustment expenses, net of reinsurance				$	735.9



	Financial and Professional Insurance Lines
	Incurred Claims, IBNR and Loss Adjustment Expenses, Net of Reinsurance							As at December 31, 2017
								Total of IBNR Plus Expected Development on Reported Claims	Cumulative Number of Reported Claims
	For the Years Ended December 31,
	Unaudited Prior Years
Accident Year	2012	2013	2014	2015	2016	2017
	$ (in millions)
2012	88.8	90.1	94.0	97.6	94.5	90.0		9.7	593
2013		106.6	101.2	105.6	102.3	101.6		15.2	603
2014			136.4	132.6	131.3	121.4		35.2	852
2015				175.9	177.2	187.2		76.7	1,138
2016					193.0	213.6		121.1	1,365
2017						208.6		159.4	1,743
					Total	$	922.4



	Financial and Professional Insurance Lines
	Cumulative Paid Claims and Allocated Loss Adjustment Expenses, Net of Reinsurance

	For the Years Ended December 31,
	Unaudited Prior Years
Accident Year	2012	2013	2014	2015	2016	2017
	($ in millions)
2012	22.8	39.6	50.8	59.5	65.4	70.7
2013		8.1	21.5	31.6	66.0	64.5
2014			3.0	30.9	54.1	72.8
2015				13.9	43.7	70.4
2016					15.4	71.7
2017						27.3
					Total	$	377.4

		All outstanding liabilities for 2012 and subsequent years, net of reinsurance				$	545.0
			All outstanding liabilities before 2012, net of reinsurance			27.4
		Liabilities for claims and claim adjustment expenses, net of reinsurance				$	572.4



	Property Catastrophe and Other Property Reinsurance
	Incurred Claims, IBNR and Loss Adjustment Expenses, Net of Reinsurance							As at December 31, 2017
								Total of IBNR Plus Expected Development on Reported Claims	Cumulative Number of Reported Claims
	For the Years Ended December 31,
	Unaudited Prior Years
Accident Year	2012	2013	2014	2015	2016	2017
	$ (in millions)
2012	281.3	304.2	287.2	280.0	283.4	280.4		19.3	797
2013		220.5	203.0	193.9	182.3	180.8		4.4	945
2014			191.7	180.4	164.0	152.4		4.1	1,016
2015				219.4	191.4	181.6		18.7	1,135
2016					277.9	277.8		35.1	1,297
2017						564.8		216.1	1,366
					Total	$	1,637.8



	Property Catastrophe and Other Property Reinsurance
	Cumulative Paid Claims and Allocated Loss Adjustment Expenses, Net of Reinsurance

	For the Years Ended December 31,
	Unaudited Prior Years
Accident Year	2012	2013	2014	2015	2016	2017
	($ in millions)
2012	35.7	136.2	189.5	209.9	217.5	228.6
2013		34.9	100.3	149.7	162.0	166.8
2014			37.8	102.3	129.2	139.4
2015				36.2	96.9	130.0
2016					58.0	167.2
2017						124.2
					Total	$	956.2

		All outstanding liabilities for 2012 and subsequent years, net of reinsurance				681.6
			All outstanding liabilities before 2012, net of reinsurance			47.9
		Liabilities for claims and claim adjustment expenses, net of reinsurance				$	729.5



	Casualty Reinsurance
	Incurred Claims, IBNR and Loss Adjustment Expenses, Net of Reinsurance							As at December 31, 2017
								Total of IBNR Plus Expected Development on Reported Claims	Cumulative Number of Reported Claims
	For the Years Ended December 31,
	Unaudited Prior Years
Accident Year	2012	2013	2014	2015	2016	2017
	$ (in millions)
2012	236.9	235.2	246.6	238.0	234.8	235.6		66.1	2,173
2013		217.5	232.9	228.4	225.8	208.4		62.2	2,034
2014			208.7	212.0	220.8	214.0		84.5	1,842
2015				197.9	205.3	214.6		103.0	1,648
2016					237.7	250.5		156.2	1,151
2017						249.5		215.9	476
					Total	$	1,372.6



	Casualty Reinsurance
	Cumulative Paid Claims and Allocated Loss Adjustment Expenses, Net of Reinsurance

	For the Years Ended December 31,
	Unaudited Prior Years
Accident Year	2012	2013	2014	2015	2016	2017
	($ in millions)
2012	2.2	17.9	42.2	65.8	97.1	118.5
2013		3.5	16.0	43.2	65.5	93.7
2014			2.6	14.1	38.2	60.9
2015				3.6	18.5	39.2
2016					9.6	34.3
2017						9.1
					Total	$	355.7

		All outstanding liabilities for 2012 and subsequent years, net of reinsurance				1,016.9
			All outstanding liabilities before 2012, net of reinsurance			575.6
		Liabilities for claims and claim adjustment expenses, net of reinsurance				$	1,592.5



	Specialty Reinsurance
	Incurred Claims, IBNR and Loss Adjustment Expenses, Net of Reinsurance							As at December 31, 2017
								Total of IBNR Plus Expected Development on Reported Claims	Cumulative Number of Reported Claims
	For the Years Ended December 31,
	Unaudited Prior Years
Accident Year	2012	2013	2014	2015	2016	2017
	$ (in millions)
2012	178.5	201.7	191.1	177.4	176.0	176.3		10.5	739
2013		146.9	141.9	134.5	122.5	121.7		7.7	620
2014			154.4	143.4	135.2	126.0		15.6	667
2015				169.7	174.3	168.8		29.4	826
2016					243.2	244.6		49.5	844
2017						385.2		211.6	763
					Total	$	1,222.6



	Specialty Reinsurance
	Cumulative Paid Claims and Allocated Loss Adjustment Expenses, Net of Reinsurance

	For the Years Ended December 31,
	Unaudited Prior Years
Accident Year	2012	2013	2014	2015	2016	2017
	($ in millions)
2012	25.7	95.8	131.2	141.4	146.9	152.2
2013		25.4	72.7	89.1	96.4	103.5
2014			17.0	57.9	83.1	91.3
2015				18.1	58.1	106.5
2016					59.6	153.1
2017						95.7
					Total	$	702.3

		All outstanding liabilities for 2012 and subsequent years, net of reinsurance				520.3
			All outstanding liabilities before 2012, net of reinsurance			55.4
		Liabilities for claims and claim adjustment expenses, net of reinsurance				$	575.7

Reconciliation of Incurred and Paid Claims Development to total Provision for Losses and LAE



	Twelve Months Ended December 31, 2017
	($ in millions)
Net outstanding liabilities:
Insurance lines
- Property insurance lines	333.0
- Casualty insurance lines	644.7
- Marine, aviation and energy insurance lines	735.9
- Financial and professional insurance lines	572.4
Total insurance lines	2,286.0

Reinsurance lines
- Property catastrophe and other property reinsurance	729.5
- Casualty reinsurance	1,592.5
- Specialty reinsurance	575.7
Total reinsurance lines	2,897.7

Net loss and LAE	5,183.7

Reinsurance recoverable on unpaid losses:
Insurance lines	1,245.9
Reinsurance lines	269.3
Total reinsurance recoverable on unpaid losses	1,515.2

Insurance lines other than short-duration	—
Unallocated claims incurred	49.2
Other	1.4
	50.6

Provision for losses and LAE at the end of the year	6,749.5

Average Annual Percentage Payout of Incurred Claims by Age, Net of Reinsurance



Years	1		2		3		4		5		6

Insurance	15.4	%	25.3	%	16.3	%	12.2	%	7.6	%	3.4	%

Reinsurance	13.2	%	25.0	%	17.0	%	8.1	%	7.1	%	5.5	%