v2.4.0.6
Property and Casualty Insurance Reserves
 9 Months Ended
Sep. 30, 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 nine months ended September 30, 2012 and 2011 was:
 
 
Nine Months Ended
(Dollars in Millions)
 
Sep 30,
2012
 
Sep 30,
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
 
925.0

 
1,038.4

Prior Years:
 
 
 
 
Continuing Operations
 
(23.2
)
 
(30.1
)
Discontinued Operations
 
(0.5
)
 
1.9

Total Incurred Losses and LAE Related to Prior Years
 
(23.7
)
 
(28.2
)
Total Incurred Losses and LAE
 
901.3

 
1,010.2

Paid Losses and LAE Related to:
 
 
 
 
Current Year:
 
 
 
 
Continuing Operations
 
545.0

 
636.7

Prior Years:
 
 
 
 
Continuing Operations
 
382.0

 
399.9

Discontinued Operations
 
14.1

 
22.1

Total Paid Losses and LAE Related to Prior Years
 
396.1

 
422.0

Total Paid Losses and LAE
 
941.1

 
1,058.7

Property and Casualty Insurance Reserves - Net of Reinsurance at End of Period
 
914.8

 
992.1

Plus Reinsurance Recoverables at End of Period
 
67.0

 
71.5

Property and Casualty Insurance Reserves - Gross of Reinsurance at End of Period
 
$
981.8

 
$
1,063.6


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 nine months ended September 30, 2012, the Company reduced its property and casualty insurance reserves by $23.7 million to recognize favorable development of losses and LAE from prior accident years. Personal lines insurance losses and LAE reserves developed favorably by $10.4 million and commercial lines insurance losses and LAE reserves developed favorably by $13.3 million. The commercial lines insurance losses and LAE reserves included favorable development of $12.8 million from continuing operations and $0.5 million from discontinued operations. Personal automobile insurance losses and LAE reserves developed adversely by $3.5 million, homeowners insurance losses and LAE reserves developed favorably by $11.2 million and other personal lines losses and LAE reserves developed favorably by $2.7 million. The commercial lines insurance losses and LAE reserves developed favorably from continuing operations due primarily to the emergence of more favorable loss patterns than expected for the four most recent accident years.
For the nine months ended September 30, 2011, the Company reduced its property and casualty insurance reserves by $28.2 million to recognize favorable development of losses and LAE from prior accident years. Personal lines insurance losses and LAE reserves developed favorably by $27.6 million and commercial lines insurance losses and LAE reserves developed
Note 4 - Property and Casualty Insurance Reserves (continued)
favorably by $0.6 million. The personal lines insurance losses and LAE reserves developed favorably due primarily to the emergence of more favorable loss patterns than expected for the 2010, 2009 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.