Property and Casualty Insurance Reserves

3 Months Ended

Mar. 31, 2021

Liability for Future Policy Benefits and Unpaid Claims and Claims Adjustment Expense [Abstract]

Property and Casualty Insurance Reserves

Property and casualty insurance reserve activity for the three months ended March 31, 2021 and 2020 was:


	Three Months Ended
(Dollars in Millions)	Mar 31, 2021		Mar 31, 2020
Property and Casualty Insurance Reserves:
Gross of Reinsurance at Beginning of Year	$	1,982.5	$	1,969.8
Less Reinsurance Recoverables at Beginning of Year	50.1		65.6
Property and Casualty Insurance Reserves - Net of Reinsurance at Beginning of Year	1,932.4		1,904.2
Property and Casualty Insurance Reserves Acquired, Net of Reinsurance	—		—
Incurred Losses and LAE Related to:

Current Year	777.0		738.1



Prior Years	0.1		0.9
Total Incurred Losses and LAE	777.1		739.0
Paid Losses and LAE Related to:

Current Year	258.0		257.0



Prior Years	500.3		505.8
Total Paid Losses and LAE	758.3		762.8
Property and Casualty Insurance Reserves - Net of Reinsurance at End of Period	1,951.2		1,880.4
Plus Reinsurance Recoverables at End of Period	48.3		61.2
Property and Casualty Insurance Reserves - Gross of Reinsurance at End of Period	$	1,999.5	$	1,941.6

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 three months ended March 31, 2021, the Company increased its property and casualty insurance reserves by $0.1 million to recognize adverse development of loss and LAE reserves from prior accident years. Specialty personal automobile insurance loss and LAE reserves developed favorably by $4.0 million due primarily to the emergence of more favorable loss patterns than expected for liability insurance. Commercial automobile insurance loss and LAE reserves developed adversely by $3.0 million due primarily to the emergence of more adverse loss patterns than expected for liability insurance. Preferred personal automobile insurance loss and LAE reserves developed adversely by $1.3 million due primarily to the emergence of more adverse patterns than expected for liability insurance. Homeowners loss and LAE reserves developed favorably by $2.6 million due primarily to the emergence of more favorable loss patterns than expected. Other lines loss and LAE reserves developed adversely by $2.3 million due primarily to the emergence of more adverse loss patterns than expected for prior accident years.

For the three months ended March 31, 2020, the Company decreased its property and casualty insurance reserves by $0.9 million to recognize favorable development of loss and LAE reserves from prior accident years. Specialty personal automobile insurance loss and LAE reserves developed favorably by $18.0 million due primarily to the emergence of more favorable loss patterns than expected for liability insurance related to the 2018 accident year. Commercial automobile loss and LAE reserves developed favorably by $12.5 million due primarily to the emergence of more favorable loss patterns than expected for liability insurance related to the 2018 accident year. Preferred personal automobile insurance loss and LAE reserves developed favorably by $2.1 million due primarily to the emergence of more favorable loss patterns than expected for liability insurance related to 2018 and 2017 accident years. Homeowners insurance loss and LAE reserves developed favorably by $5.0 million primarily due to the net of reinsurance impact from the sale of subrogation rights related to the 2017 and 2018 California Wildfires. Other lines loss and LAE reserves developed favorably by $1.8 million due primarily to the emergence of more favorable loss patterns than expected for the 2018 and 2017 accident years.

Note 4 - Property and Casualty Insurance Reserves (continued)

The Company cannot predict whether loss and LAE reserves will develop favorably or adversely 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 Condensed Consolidated Shareholders’ Equity, but could have a material effect on the Company’s consolidated financial results for a given period.

Receivables from Policyholders - Allowance for Expected Credit Losses

The following table presents receivables from policyholders, net of the allowance for expected credit losses including a rollforward of changes in the allowance for expected credit losses for the three months ended March 31, 2021.


(Dollars in Millions)	Receivables from Policyholders, Net of Allowance for Expected Credit Losses		Allowance for Expected Credit Losses
Balance at Beginning of Year	$	1,194.5	$	20.9
Provision for Expected Credit Losses			12.8
Write-offs of Uncollectible Receivables from Policyholders			(22.4)
Balance at End of Period	$	1,260.9	$	11.3


(Dollars in Millions)	Receivables from Policyholders, Net of Allowance for Expected Credit Losses		Allowance for Expected Credit Losses
Balance at Beginning of Year	$	1,117.1	$	22.3
Provision for Expected Credit Losses			11.9
Write-offs of Uncollectible Receivables from Policyholders			(11.1)
Balance at End of Period	$	1,219.1	$	23.1