| 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 y |
