v2.4.0.6
Property and Casualty Insurance Reserves
 3 Months Ended
Mar. 31, 2012
Liability for Future Policy Benefits and Unpaid Claims and Claims Adjustment Expense [Abstract]  
Property and Casualty Insurance Reserves
Note 4 - Property and Casualty Insurance Reserves
Property and Casualty Insurance Reserve activity for the three months ended March 31, 2012 and 2011 was:
 
 
Three Months Ended
(Dollars in Millions)
 
Mar 31,
2012
 
Mar 31,
2011
Property and Casualty Insurance Reserves:
 
 
 
 
Gross of Reinsurance and Indemnification at Beginning of Year
 
$
1,029.1

 
$
1,118.7

Less Reinsurance and Indemnification Recoverables at Beginning of Year
 
74.5

 
78.1

Property and Casualty Insurance Reserves - Net of Reinsurance and Indemnification at Beginning of Year
 
954.6

 
1,040.6

Incurred Losses and LAE Related to:
 
 
 
 
Current Year:
 
 
 
 
Continuing Operations
 
291.1

 
309.0

Prior Years:
 
 
 
 
Continuing Operations
 
(5.7
)
 
(3.9
)
Discontinued Operations
 
(1.2
)
 
2.2

Total Incurred Losses and LAE Related to Prior Years
 
(6.9
)
 
(1.7
)
Total Incurred Losses and LAE
 
284.2

 
307.3

Paid Losses and LAE Related to:
 
 
 
 
Current Year:
 
 
 
 
Continuing Operations
 
122.2

 
134.0

Prior Years:
 
 
 
 
Continuing Operations
 
179.0

 
189.4

Discontinued Operations
 
6.2

 
12.3

Total Paid Losses and LAE Related to Prior Years
 
185.2

 
201.7

Total Paid Losses and LAE
 
307.4

 
335.7

Property and Casualty Insurance Reserves - Net of Reinsurance and Indemnification at End of Period
 
931.4

 
1,012.2

Plus Reinsurance and Indemnification Recoverable at End of Period
 
70.0

 
83.6

Property and Casualty Insurance Reserves - Gross of Reinsurance and Indemnification at End of Period
 
$
1,001.4

 
$
1,095.8


Property and Casualty Insurance Reserves are estimated based on historical experience patterns and current economic trends. Actual loss experience and loss trends are likely to differ from these historical experience patterns and economic conditions. Loss experience and loss trends emerge over several years from the dates of loss inception. The Company monitors such emerging loss trends on a quarterly basis. Changes in such estimates are included in the Condensed Consolidated Statements of Income in the period of change.
For the three months ended March 31, 2012, the Company reduced its property and casualty insurance reserves by $6.9 million to recognize favorable development of losses and loss adjustment expenses (“LAE”) from prior accident years. Personal lines insurance losses and LAE reserves developed unfavorably by $0.4 million and commercial lines insurance losses and LAE reserves developed favorably by $7.3 million. The commercial lines insurance losses and LAE reserves included favorable development of $6.1 million from continuing operations and $1.2 million from discontinued operations. The commercial lines insurance losses and LAE reserves developed favorably from continuing operations due primarily to the emergence of more favorable loss trends than expected for the four most recent accident years.
For the three months ended March 31, 2011, the Company reduced its property and casualty insurance reserves by $1.7 million to recognize favorable development of losses and LAE from prior accident years. Personal lines insurance losses and LAE reserves developed favorably by $2.9 million and commercial lines insurance losses and LAE reserves developed unfavorably by $1.2 million. The personal lines insurance losses and LAE reserves developed favorably due primarily to the emergence of Note 4 - Property and Casualty Insurance Reserves (continued)
more favorable loss trends than expected for the 2010 and 2008 accident years.
The Company cannot predict whether losses and LAE will develop favorably or unfavorably from the amounts reported in the Company’s Condensed Consolidated Financial Statements. The Company believes that any such development will not have a material effect on the Company’s consolidated shareholders’ equity, but could have a material effect on the Company’s consolidated financial results for a given period.