Reserve for Loss and Loss Expense | Reserve for Loss and Loss Expense (a) The table below provides a roll forward of reserves for loss and loss expense for beginning and ending reserve balances: ($ in thousands) 2017 2016 2015 Gross reserves for loss and loss expense, at beginning of year $ 3,691,719 3,517,728 3,477,870 Less: reinsurance recoverable on unpaid loss and loss expense, at beginning of year 611,200 551,019 571,978 Net reserves for loss and loss expense, at beginning of year 3,080,519 2,966,709 2,905,892 Incurred loss and loss expense for claims occurring in the: Current year 1,384,266 1,300,565 1,217,550 Prior years (39,192 ) (65,768 ) (69,009 ) Total incurred loss and loss expense 1,345,074 1,234,797 1,148,541 Paid loss and loss expense for claims occurring in the: Current year 497,486 450,811 446,550 Prior years 742,722 670,176 641,174 Total paid loss and loss expense 1,240,208 1,120,987 1,087,724 Net reserves for loss and loss expense, at end of year 3,185,385 3,080,519 2,966,709 Add: Reinsurance recoverable on unpaid loss and loss expense, at end of year 585,855 611,200 551,019 Gross reserves for loss and loss expense at end of year $ 3,771,240 3,691,719 3,517,728 Our net loss and loss expense reserves increased by $104.9 million in 2017 , $113.8 million in 2016 , and $60.8 million in 2015 . The loss and loss expense reserves are net of anticipated recoveries for salvage and subrogation claims, which amounted to $64.8 million for 2017 , $64.9 million for 2016 , and $62.1 million for 2015 . The changes in the net loss and loss expense reserves were the result of growth in exposures, anticipated loss trends, payments of claims, and normal reserve changes inherent in the uncertainty in establishing reserves for loss and loss expense. As additional information is collected in the loss settlement process, reserves are adjusted accordingly. These adjustments are reflected in the Consolidated Statements of Income in the period in which such adjustments are identified. These changes could have a material impact on the results of operations of future periods when the adjustments are made. In 2017 , we experienced overall net favorable prior year loss development of $39.2 million , compared to $ 65.8 million in 2016 and $69.0 million in 2015 . The following table summarizes the prior year development by line of business: (Favorable)/Unfavorable Prior Year Development ($ in millions) 2017 2016 2015 General Liability $ (48.3 ) (45.0 ) (51.0 ) Commercial Automobile 35.6 25.3 2.4 Workers Compensation (52.3 ) (56.0 ) (37.0 ) Businessowners' Policies 1.9 1.8 2.2 Commercial Property 8.7 0.3 (3.0 ) Homeowners 0.4 1.7 1.5 Personal Automobile 6.7 1.0 0.4 E&S Casualty Lines 10.0 6.0 16.0 Other (1.9 ) (0.9 ) (0.5 ) Total $ (39.2 ) (65.8 ) (69.0 ) The Insurance Subsidiaries had $39.2 million of favorable prior accident year development during 2017 , which included $48.6 million of net favorable casualty development and $9.4 million of unfavorable property development. The net favorable casualty reserve development was largely driven by the workers compensation and general liability lines of business, including products liability and excess liability. Partially offsetting this net favorable development was $36.0 million of unfavorable casualty development in the commercial auto line of business. In addition, our E&S casualty lines experienced unfavorable development of $10.0 million in 2017. The majority of the 2017 net favorable development was attributable to accident years 2016 and prior, driven by the general liability and workers compensation lines of business. This net favorable development was partially offset by unfavorable development in accident years 2015 and 2016 attributable to our commercial auto and E&S casualty lines of business. The unfavorable development in our commercial auto line of business was driven primarily by bodily injury liability for accident years 2012 through 2016, driven by higher than expected frequency and severity. The Insurance Subsidiaries had $65.8 million of favorable prior accident year development during 2016 , which included $ 69.0 million of net favorable casualty development and $ 3.2 million of unfavorable property development. The net favorable casualty reserve development was largely driven by the workers compensation and general liability lines of business, including products liability and excess liability. Partially offsetting this net favorable development was $25.0 million of unfavorable casualty development in the commercial automobile line of business. In addition, our E&S casualty lines experienced unfavorable development of $6.0 million in 2016. The majority of the 2016 net favorable development was attributable to accident years 2013 and prior, driven by the workers compensation and general liability lines of business. This net favorable development was partially offset by unfavorable development in accident years 2014 and 2015 attributable to our commercial auto and E&S casualty lines of business. The unfavorable development in our commercial auto line of business was driven primarily by bodily injury liability for accident years 2014 and 2015. The unfavorable development in accident year 2014 was driven by higher than expected severity, whereas accident year 2015 was driven by higher than expected frequency and severity. The Insurance Subsidiaries had $69.0 million of favorable prior accident year development during 2015 , which included $ 67.0 million of net favorable casualty development and $ 2.0 million of favorable property development. The net favorable casualty reserve development was largely driven by the workers compensation and general liability lines of business. Our E&S casualty lines experienced unfavorable development of $16.0 million in 2015. The majority of the 2015 net favorable development was attributable to accident years 2009 through 2013, driven by the workers compensation and general liability lines of business. This net favorable development was partially offset by unfavorable development in accident years 2012 through 2014 attributable to our E&S casualty lines of business. (b) Reserves established for liability insurance include exposure to asbestos and environmental claims. These claims have arisen primarily from insured exposures in municipal government, small non-manufacturing commercial risk, and homeowners policies. The emergence of these claims is slow and highly unpredictable. There are significant uncertainties in estimating our exposure to asbestos and environmental claims (for both case and IBNR reserves) resulting from lack of relevant historical data, the delayed and inconsistent reporting patterns associated with these claims, and uncertainty as to the number and identity of claimants and complex legal and coverage issues. Legal issues that arise in asbestos and environmental cases include federal or state venue, choice of law, causation, admissibility of evidence, allocation of damages and contribution among joint defendants, successor and predecessor liability, and whether direct action against insurers can be maintained. Coverage issues that arise in asbestos and environmental cases include the interpretation and application of policy exclusions, the determination and calculation of policy limits, the determination of the ultimate amount of a loss, the extent to which a loss is covered by a policy, if at all, the obligation of an insurer to defend a claim, and the extent to which a party can prove the existence of coverage. Courts have reached different and sometimes inconsistent conclusions on these legal and coverage issues. We do not discount to present value that portion of our losses and loss expense reserves expected to be paid in future periods. The following table details our loss and loss expense reserves for various asbestos and environmental claims: 2017 ($ in millions) Gross Net Asbestos $ 7.6 6.3 Landfill sites 12.4 7.7 Underground storage tanks 8.4 7.2 Total $ 28.4 21.2 Reserves for asbestos and environmental claims are highly uncertain. There are significant uncertainties associated with estimating critical assumptions, such as average clean-up costs, third-party costs, potentially responsible party shares, allocation of damages, litigation and coverage costs, and potential state and federal legislative changes. Estimating IBNR is challenging because of the delayed and inconsistent reporting patterns associated with these claims. Traditional actuarial approaches cannot be applied because past loss history is not necessarily indicative of future behavior. While certain alternative projection models can be applied, such models can produce significantly different results with small changes in assumptions. As a result, reserves for asbestos and environmental require a high degree of judgment. Because of the significant uncertainty in the estimate, we do not calculate an asbestos and environmental loss range. Historically, our asbestos and environmental claims have been significantly lower in volume than many other standard commercial lines carriers since, prior to the introduction of the absolute pollution exclusion endorsement in the mid-1980’s, we were primarily a Standard Personal Lines carrier and therefore do not have broad exposure to asbestos and environmental claims. Additionally, we are the primary insurance carrier on the majority of these exposures, which provides more certainty in our reserve position compared to other insurance carriers. The following table provides a roll forward of gross and net asbestos and environmental incurred loss and loss expense and related reserves thereon: 2017 2016 2015 ($ in thousands) Gross Net Gross Net Gross Net Asbestos Reserves for loss and loss expense at beginning of year $ 7,847 6,615 8,024 6,793 8,751 7,314 Incurred loss and loss expense — — 77 77 (428 ) (77 ) Less: loss and loss expense paid (270 ) (269 ) (254 ) (255 ) (299 ) (444 ) Reserves for loss and loss expense at the end of year $ 7,577 6,346 7,847 6,615 8,024 6,793 Environmental Reserves for loss and loss expense at beginning of year $ 22,115 16,101 22,387 16,368 21,902 15,680 Incurred loss and loss expense 126 — 1,406 1,303 3,396 3,397 Less: loss and loss expense paid (1,403 ) (1,235 ) (1,678 ) (1,570 ) (2,911 ) (2,709 ) Reserves for loss and loss expense at the end of year $ 20,838 14,866 22,115 16,101 22,387 16,368 Total Asbestos and Environmental Claims Reserves for loss and loss expense at beginning of year $ 29,962 22,716 30,411 23,161 30,653 22,994 Incurred loss and loss expense 126 — 1,483 1,380 2,968 3,320 Less: loss and loss expense paid (1,673 ) (1,504 ) (1,932 ) (1,825 ) (3,210 ) (3,153 ) Reserves for loss and loss expense at the end of year $ 28,415 21,212 29,962 22,716 30,411 23,161 (c) The following is information about incurred and paid claims development as of December 31, 2017 , net of reinsurance, as well as cumulative claim frequency and the total of IBNR liabilities. During the experience period, we implemented a series of claims-related initiatives and claims management changes. These initiatives focused on claims handling and reserving, medical claims costs, and loss adjustment expenses. As a result of these initiatives, several historical patterns have changed and may no longer be appropriate to use as the sole basis for projections. All Lines (in thousands, except for claim counts) Incurred Loss and Allocated Loss Adjustment Expenses, Net of Reinsurance As of December 31, 2017 Accident Year Unaudited IBNR Cumulative Number of Reported Claims 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2008 $ 957,247 988,584 990,931 964,862 947,306 936,975 927,958 931,785 926,017 923,978 41,791 85,338 2009 920,143 941,972 916,691 883,590 870,057 869,927 857,960 853,401 848,413 41,937 85,575 2010 950,114 973,742 977,959 956,600 943,118 922,404 915,131 907,074 50,293 94,258 2011 1,042,576 1,061,667 1,062,233 1,056,107 1,033,518 1,023,726 1,019,351 63,891 104,500 2012 1,065,437 1,071,290 1,020,655 998,028 973,089 973,644 77,542 103,745 2013 1,044,142 1,062,045 1,047,230 1,021,007 1,002,316 116,449 90,755 2014 1,107,513 1,133,798 1,146,990 1,124,014 171,913 94,375 2015 1,114,081 1,130,513 1,144,830 256,758 92,891 2016 1,188,608 1,203,634 416,010 92,191 2017 1,270,110 634,863 88,941 Total 10,417,364 All Lines (in thousands) Cumulative Paid Loss and Allocated Loss Adjustment Expenses, Net of Reinsurance Accident Year Unaudited 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2008 $ 286,314 489,633 609,851 690,016 764,196 798,996 819,280 839,392 853,769 860,745 2009 277,275 442,417 540,982 634,902 695,249 736,100 760,589 775,885 784,713 2010 328,826 509,910 625,229 704,895 773,536 803,773 823,770 835,532 2011 391,944 585,867 692,730 782,655 852,202 901,801 924,111 2012 378,067 555,819 651,544 743,742 810,135 856,195 2013 335,956 518,872 644,475 748,758 833,823 2014 405,898 614,075 736,154 855,959 2015 376,641 581,203 725,385 2016 387,272 617,958 2017 433,440 Total 7,727,861 All outstanding liabilities before 2008, net of reinsurance 352,192 Liabilities for loss and loss adjustment expenses, net of reinsurance 3,041,694 General Liability (in thousands, except for claim counts) Incurred Loss and Allocated Loss Adjustment Expenses, Net of Reinsurance As of Accident Year Unaudited IBNR Cumulative Number of Reported Claims 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2008 $ 250,239 243,755 243,536 234,770 233,712 224,236 219,551 221,640 221,203 219,617 14,326 13,769 2009 237,913 241,625 233,530 223,146 212,947 211,243 206,387 205,741 201,568 17,629 13,841 2010 215,208 228,680 242,499 237,154 222,328 211,619 208,968 202,394 18,403 12,672 2011 227,769 228,720 239,480 230,785 217,256 211,196 212,011 25,729 11,579 2012 238,979 245,561 215,083 194,144 175,305 175,268 27,702 9,922 2013 250,609 251,421 239,776 225,709 210,785 53,014 10,226 2014 244,312 249,946 257,132 239,333 80,168 10,391 2015 254,720 245,710 246,990 124,639 9,987 2016 277,214 272,048 178,904 9,617 2017 293,747 249,085 8,194 Total 2,273,761 General Liability (in thousands) Cumulative Paid Loss and Allocated Loss Adjustment Expenses, Net of Reinsurance Accident Year Unaudited 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2008 $ 16,397 45,595 82,421 113,088 151,055 166,394 176,873 186,896 194,257 198,360 2009 14,346 37,143 64,970 103,213 130,554 151,920 166,767 176,316 180,621 2010 15,726 46,201 80,018 113,050 143,360 161,487 172,394 178,179 2011 13,924 42,692 73,643 102,978 135,377 159,768 170,525 2012 13,030 35,241 56,580 89,008 109,448 130,866 2013 12,789 35,113 72,127 104,587 139,114 2014 14,901 46,825 79,972 121,969 2015 14,665 39,978 78,668 2016 15,684 46,549 2017 17,366 Total 1,262,217 All outstanding liabilities before 2008, net of reinsurance 80,514 Liabilities for loss and loss adjustment expenses, net of reinsurance 1,092,058 Workers Compensation (in thousands, except for claim counts) Incurred Loss and Allocated Loss Adjustment Expenses, Net of Reinsurance As of Accident Year Unaudited IBNR Cumulative Number of Reported Claims 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2008 $ 219,616 243,186 255,810 250,423 241,921 245,993 244,100 243,512 238,836 238,218 25,993 14,401 2009 197,504 215,946 213,036 210,109 210,756 216,992 212,536 208,611 208,142 22,575 12,217 2010 198,371 214,469 212,815 211,030 214,916 212,448 208,155 204,423 28,964 12,184 2011 205,238 218,973 214,743 215,114 210,591 205,708 200,674 32,881 11,845 2012 203,864 208,036 199,360 195,197 188,596 187,359 36,233 11,605 2013 199,794 194,318 187,658 173,160 166,662 34,776 11,366 2014 199,346 187,065 182,579 172,515 42,869 10,482 2015 193,729 194,639 183,604 42,287 10,530 2016 196,774 184,946 70,424 10,509 2017 195,202 112,086 10,182 Total 1,941,745 Workers Compensation (in thousands) Cumulative Paid Loss and Allocated Loss Adjustment Expenses, Net of Reinsurance Accident Year Unaudited 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2008 $ 39,628 100,678 139,144 158,083 171,403 180,556 188,206 191,265 195,962 198,512 2009 37,885 87,299 117,019 133,116 145,417 154,726 160,529 164,336 167,894 2010 46,795 93,281 122,442 137,184 149,086 153,795 158,078 162,796 2011 42,941 90,836 118,847 134,646 139,232 149,269 154,320 2012 40,911 86,909 108,211 122,755 132,052 139,477 2013 36,829 74,568 96,376 109,739 118,669 2014 35,924 78,944 100,876 113,626 2015 33,857 77,320 98,195 2016 34,525 78,531 2017 40,375 Total 1,272,395 All outstanding liabilities before 2008, net of reinsurance 247,121 Liabilities for loss and loss adjustment expenses, net of reinsurance 916,471 Commercial Automobile (in thousands, except for claim counts) Incurred Loss and Allocated Loss Adjustment Expenses, Net of Reinsurance As of Accident Year Unaudited IBNR Cumulative Number of Reported Claims 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2008 $ 196,370 195,823 190,349 187,100 187,417 182,785 180,902 183,736 183,618 183,151 736 24,129 2009 199,541 191,079 182,724 169,858 166,682 162,911 161,251 161,923 161,300 897 24,652 2010 187,562 189,305 187,778 181,923 179,854 172,969 173,157 173,471 1,491 25,301 2011 174,006 183,044 182,325 178,421 172,617 174,882 174,514 2,937 25,272 2012 179,551 191,947 183,527 184,289 184,367 186,128 3,880 23,889 2013 188,289 205,282 209,197 207,994 210,410 8,258 25,392 2014 200,534 212,725 216,824 219,925 19,053 27,338 2015 220,994 240,958 253,074 36,137 28,818 2016 255,187 274,367 71,303 30,480 2017 301,274 132,814 30,187 Total 2,137,614 Commercial Automobile (in thousands) Cumulative Paid Loss and Allocated Loss Adjustment Expenses, Net of Reinsurance Accident Year Unaudited 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2008 $ 69,053 104,711 130,857 151,741 166,487 173,795 175,244 180,779 181,779 181,979 2009 63,126 94,406 113,697 137,564 149,949 155,560 158,303 159,723 160,013 2010 68,098 99,254 128,015 146,913 163,513 167,227 169,100 169,793 2011 69,849 99,196 121,576 142,507 157,291 166,082 170,000 2012 73,316 105,371 127,235 148,669 168,114 176,656 2013 76,469 109,893 140,015 169,850 189,626 2014 80,810 117,169 148,884 180,701 2015 91,347 132,260 175,866 2016 106,022 155,720 2017 117,287 Total 1,677,641 All outstanding liabilities before 2008, net of reinsurance 4,158 Liabilities for loss and loss adjustment expenses, net of reinsurance 464,131 Businessowners' Policies (in thousands, except for claim counts) Incurred Loss and Allocated Loss Adjustment Expenses, Net of Reinsurance As of Accident Year Unaudited IBNR Cumulative Number of Reported Claims 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2008 $ 39,660 38,986 39,334 32,974 30,250 29,793 31,066 31,340 30,967 31,065 192 3,258 2009 48,535 51,762 46,645 43,828 43,553 44,938 44,299 44,273 43,933 272 3,474 2010 53,669 49,285 42,408 39,915 40,899 40,581 41,239 41,197 697 3,917 2011 54,469 57,083 51,047 58,242 59,256 58,966 58,456 1,080 4,959 2012 54,342 48,029 46,303 44,172 44,077 43,747 756 5,540 2013 49,617 42,618 41,005 40,624 41,369 3,192 3,479 2014 55,962 60,949 62,548 59,806 5,952 4,054 2015 52,871 53,768 57,245 10,256 3,913 2016 52,335 53,792 11,938 3,757 2017 46,624 15,252 3,462 Total 477,234 Businessowners' Policies (in thousands) Cumulative Paid Loss and Allocated Loss Adjustment Expenses, Net of Reinsurance Accident Year Unaudited 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2008 $ 15,019 21,765 24,449 25,738 28,026 28,660 28,589 29,778 30,873 30,873 2009 18,915 29,612 32,689 36,073 40,052 42,895 43,358 43,448 43,547 2010 20,821 28,131 31,027 34,705 37,819 38,900 40,279 40,395 2011 27,884 37,362 41,011 46,444 52,114 55,856 57,045 2012 22,199 31,833 35,089 37,215 38,766 40,627 2013 17,412 26,592 30,845 34,760 37,993 2014 28,914 40,584 44,911 49,460 2015 24,189 36,014 42,710 2016 24,655 36,848 2017 21,865 Total 401,363 All outstanding liabilities before 2008, net of reinsurance 7,292 Liabilities for loss and loss adjustment expenses, net of reinsurance 83,163 Commercial Property (in thousands, except for claim counts) Incurred Loss and Allocated Loss Adjustment Expenses, Net of Reinsurance As of Accident Year Unaudited IBNR Cumulative Number of Reported Claims 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2008 $ 97,578 102,860 101,436 101,470 101,265 101,702 101,043 100,881 101,043 101,054 2 7,604 2009 82,619 82,124 82,025 82,014 80,774 80,455 80,558 80,545 80,416 4 7,009 2010 105,647 96,851 97,386 96,127 95,530 95,363 95,178 95,155 5 7,667 2011 136,954 131,667 130,942 131,282 131,353 131,113 131,049 4 9,036 2012 118,464 114,224 115,375 116,658 117,102 117,170 24 8,514 2013 88,101 90,639 90,103 90,005 90,436 42 5,709 2014 141,192 136,249 136,820 138,751 126 6,512 2015 110,270 109,513 111,750 261 6,398 2016 121,927 126,185 804 6,686 2017 138,773 8,794 6,358 Total 1,130,739 Commercial Property (in thousands) Cumulative Paid Loss and Allocated Loss Adjustment Expenses, Net of Reinsurance Accident Year Unaudited 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2008 $ 68,211 98,921 100,465 99,288 100,213 100,752 100,908 100,868 101,034 101,032 2009 59,933 78,695 80,433 80,894 80,251 80,352 80,529 80,509 80,405 2010 69,543 91,918 94,602 95,111 95,270 95,147 95,156 95,150 2011 94,538 127,580 129,579 130,681 131,060 131,115 131,089 2012 81,528 108,834 111,503 114,699 116,291 116,625 2013 60,244 87,874 90,446 90,350 90,840 2014 101,131 132,909 136,634 137,883 2015 79,048 106,182 109,829 2016 83,966 118,789 2017 99,047 Total 1,080,689 All outstanding liabilities before 2008, net of reinsurance 250 Liabilities for loss and loss adjustment expenses, net of reinsurance 50,300 Personal Automobile (in thousands, except for claim counts) Incurred Loss and Allocated Loss Adjustment Expenses, Net of Reinsurance As of Accident Year Unaudited IBNR Cumulative Number of Reported Claims 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2008 $ 100,311 106,999 106,842 103,934 100,213 99,912 99,686 99,255 99,116 99,270 191 16,042 2009 93,808 103,319 105,033 103,908 104,734 103,866 103,393 103,412 103,348 191 17,346 2010 103,340 110,075 112,346 109,515 107,490 107,405 107,224 107,054 222 20,822 2011 113,232 116,164 113,686 112,993 114,241 113,830 113,988 284 22,700 2012 113,771 114,921 109,832 109,324 110,294 110,300 728 22,332 2013 108,417 109,620 106,225 106,703 107,759 851 22,371 2014 102,250 109,325 106,757 107,452 2,554 22,499 2015 96,387 99,698 100,214 6,541 20,840 2016 92,727 98,032 11,651 19,747 2017 101,880 22,284 19,818 Total 1,049,297 Personal Automobile (in thousands) Cumulative Paid Loss and Allocated Loss Adjustment Expenses, Net of Reinsurance Accident Year Unaudited 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2008 $ 50,396 73,194 84,715 91,834 95,932 97,723 98,174 98,604 98,668 98,810 2009 51,039 71,911 86,431 96,229 100,566 102,187 102,322 102,437 103,009 2010 58,786 82,490 95,300 101,540 104,061 105,849 106,453 106,733 2011 61,323 82,102 93,878 105,068 111,085 112,732 113,551 2012 63,704 82,729 94,842 102,977 107,890 109,355 2013 61,384 80,861 92,637 100,528 105,131 2014 62,519 83,739 92,589 99,173 2015 58,725 76,470 87,163 2016 57,961 76,823 2017 62,854 Total 962,602 All outstanding liabilities before 2008, net of reinsurance 5,862 Liabilities for loss and loss adjustment expenses, net of reinsurance 92,557 Homeowners (in thousands, except for claim counts) Incurred Loss and Allocated Loss Adjustment Expenses, Net of Reinsurance As of Accident Year Unaudited IBNR Cumulative Number of Reported Claims 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2008 $ 41,224 41,747 39,342 39,203 38,062 38,410 38,111 38,042 38,045 38,038 56 5,139 2009 47,636 44,511 42,609 40,313 61,927 40,400 40,465 40,457 40,451 73 5,633 2010 68,373 67,525 63,285 97,761 62,462 62,402 62,339 62,392 84 9,131 2011 103,804 98,211 82,744 94,167 94,543 94,183 94,378 159 15,106 2012 87,260 82,745 86,560 86,667 86,271 86,330 180 16,936 2013 73,670 72,528 71,494 72,145 71,714 284 7,747 2014 80,111 82,461 83,637 83,844 1,146 8,762 2015 76,637 76,400 76,559 2,744 7,724 2016 60,105 60,931 2,067 6,820 2017 59,167 5,315 6,651 Total 673,804 Homeowners (in thousands) Cumulative Paid Loss and Allocated Loss Adjustment Expenses, Net of Reinsurance Accident Year Unaudited 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2008 $ 21,277 33,535 36,271 37,086 37,763 37,837 37,933 37,939 37,930 37,928 2009 28,299 36,965 38,078 39,342 39,731 39,819 39,907 40,189 40,269 2010 43,699 58,638 60,295 61,106 62,155 62,227 62,241 62,272 2011 71,668 89,963 91,718 92,185 93,312 93,720 94,007 2012 69,056 79,584 82,720 84,250 85,196 85,562 2013 50,664 65,528 67,838 69,775 71,776 2014 61,561 76,007 79,751 81,664 2015 52,589 70,078 72,202 2016 42,252 57,333 2017 45,466 Total 648,479 All outstanding liabilities before 2008, net of reinsurance 5,403 Liabilities for loss and loss adjustment expenses, net of reinsurance 30,728 E&S Casualty Lines (in thousands, except for claim counts) Incurred Loss and Allocated Loss Adjustment Expenses, Net of Reinsurance As of December 31, 2017 Accident Year Unaudited IBNR Cumulative Number of Reported Claims 2011 2012 2013 2014 2015 2016 2017 2008 $ 92 169 146 119 52 (162 ) 119 — 35 2009 885 1,053 938 728 710 96 737 — 274 2010 3,294 4,106 3,369 4,299 3,831 3,055 4,932 — 804 2011 8,127 7,102 9,853 12,207 10,273 9,652 10,228 361 1,316 2012 42,367 42,621 43,175 46,149 46,165 45,988 7,313 2,006 2013 55,468 60,309 67,099 69,112 67,647 15,326 2,219 2014 55,316 63,505 69,929 71,719 18,224 1,987 2015 75,498 76,432 82,404 32,909 2,606 2016 94,451 96,416 65,489 2,454 2017 91,438 79,354 1,760 Total 471,628 E&S Casualty Lines (in thousands) Cumulative Paid Loss and Allocated Loss Adjustment Expenses, Net of Reinsurance Accident Year Unaudited 2011 2012 2013 2014 2015 2016 2017 2008 $ — 24 70 80 79 92 97 2009 — 198 431 605 626 709 737 2010 — 1,218 2,570 3,574 4,078 4,513 4,610 2011 — 806 3,200 6,445 9,954 9,912 10,256 2012 3,722 7,914 16,430 25,064 32,343 36,278 2013 2,715 9,470 21,980 35,200 46,108 2014 2,353 12,234 25,571 43,877 2015 3,036 13,057 29,389 2016 3,720 16,195 2017 5,057 Total 192,604 All outstanding liabilities before 2008, net of reinsurance — Liabilities for loss and loss adjustment expenses, net of reinsurance 279,023 In 2011, the Parent purchased Mesa Underwriters Specialty Insurance Company ("MUSIC"), a wholly-owned E&S Lines subsidiary of Montpelier Re Holdings, Ltd. Under the terms of the purchase agreement, the Parent acquired net loss and loss adjustment reserves amounting to approximately $15 million . All development on this acquired business was fully reinsured as of the acquisition date. (d) The reconciliation of the net incurred and paid claims development tables to the liability for loss and loss adjustment expenses in the consolidated statement of financial position is as follows: (in thousands) December 31, 2017 Net outstanding liabilities: Standard Commercial Lines General liability 1,092,058 Workers compensation 916,471 Commercial automobile 464,131 Businessowners' policies 83,163 Commercial property 50,300 Other Standard Commercial Lines 10,560 Total Standard Commercial Lines net outstanding liabilities 2,616,683 Standard Personal Lines Personal automobile 92,557 Homeowners 30,728 Other Standard Personal Lines 9,184 Total Standard Personal Lines net outstanding liabilities 132,469 E&S Lines Casualty lines 279,023 Property lines 13,519 Total E&S Lines net outstanding liabilities 292,542 Total liabilities for unpaid loss and loss adjustment expenses, net of reinsurance 3,041,694 Reinsurance recoverable on unpaid claims: Standard Commercial Lines General liability 175,276 Workers compensation 218,024 Commercial automobile 16,745 Businessowners' policies 3,926 Commercial property 24,387 Other Standard Commercial Lines 2,287 Total Standard Commercial Lines reinsurance recoverable on unpaid loss 440,645 Standard Personal Lines Personal automobile 53,129 Homeowners 999 Other Standard Personal Lines 69,333 Total Standard Personal Lines reinsurance recoverable on unpaid loss 123,461 E&S Lines Casualty lines 21,360 Property lines 389 Total E&S Lines reinsurance recoverable on unpaid loss 21,749 Total reinsurance recoverable on unpaid loss 585,855 Unallocated loss adjustment expenses 143,691 Total gross liability for unpaid loss and loss adjustment expenses 3,771,240 (e) The table below reflects the historical average annual percentage payout of incurred claims by age. For example, the general liability line of business averages payout of 6.6% of its ultimate losses in the first year, 12.5% in the second year, and so forth. The following is supplementary information about average historical claims duration as of December 31, 2017 : Average Annual Percentage Payout of Incurred Claims by Age, Net of Reinsurance Years 1 2 3 4 5 6 7 8 9 10 General liability 6.6% 12.5 15.4 16.7 14.9 10.1 6.0 4.6 2.2 1.3 Workers compensation 20.2 23.9 13.6 8.3 5.0 3.9 2.8 2.0 1.8 1.9 Commercial automobile 38.2 17.4 14.0 12.8 9.0 4.1 1.6 1.4 0.7 0.1 Businessowners’ policies 46.6 20.8 8.1 7.5 7.5 4.1 2.0 1.6 0.1 1.1 Commercial property 70.5 25.6 2.7 0.7 0.4 0.1 — — — — Personal automobile 56.1 18.9 10.7 7.4 4.2 1.5 0.4 0.1 0.2 — Homeowners 71.1 21.0 3.3 2.1 1.6 0.1 — 0.2 0.2 0.1 E&S Lines - casualty 4.5 12.5 18.2 20.4 15.5 8.3 4.0 |