| RESERVE FOR CLAIMS AND CLAIM EXPENSES | RESERVE FOR CLAIMS AND CLAIM EXPENSES The Company believes the most significant accounting judgment made by management is its estimate of claims and claim expense reserves. Claims and claim expense reserves represent estimates, including actuarial and statistical projections at a given point in time, of the ultimate settlement and administration costs for unpaid claims and claim expenses arising from the insurance and reinsurance contracts the Company sells. The Company’s reserve for claims and claim expenses are a combination of case reserves, additional case reserves (“ACR”) and incurred but not reported losses and incurred but not enough reported losses (collectively referred to as “IBNR”). Case reserves are losses reported to the Company by insureds and ceding companies, but which have not yet been paid. If deemed necessary and in certain situations, either the Company establishes, or the Company’s clients report, ACR. Client reported ACR represents the client’s estimate of additional contract specific claims in excess of the case reserves they have reported to the Company. ACR established by the Company represents the Company’s estimates for claims related to specific contracts which the Company believes may not be adequately estimated by the client as of that date or is not within the IBNR. The Company establishes IBNR using actuarial techniques and expert judgment to represent the anticipated cost of claims which have not been reported to the Company yet, or where the Company anticipates increased reporting. The Company’s reserving committee, which includes members of the Company’s senior management, reviews, discusses, and assesses the reasonableness and adequacy of the reserving estimates included in the audited consolidated financial statements. The following table summarizes the Company’s reserve for claims and claim expenses by segment, allocated between case reserves, ACR and IBNR: At December 31, 2024 Case Additional IBNR Total Property $ 1,845,228 $ 1,905,553 $ 2,821,958 $ 6,572,739 Casualty and Specialty 3,081,081 295,074 11,354,597 14,730,752 Total $ 4,926,309 $ 2,200,627 $ 14,176,555 $ 21,303,491 At December 31, 2023 Property (1) $ 2,461,580 $ 2,401,911 $ 2,970,129 $ 7,833,620 Casualty and Specialty (1) 2,801,016 331,345 9,520,888 12,653,249 Total $ 5,262,596 $ 2,733,256 $ 12,491,017 $ 20,486,869 (1) The previously reported amount has been adjusted to reclassify certain reserves from IBNR to ACR. Activity in the reserve for claims and claim expenses is summarized as follows: Year ended December 31, 2024 2023 2022 Reserve for claims and claim expenses, net of reinsurance recoverable, beginning of period $ 15,142,583 $ 11,181,648 $ 9,025,961 Net incurred related to: Current year 6,184,315 4,024,116 4,586,422 Prior years (851,334) (450,607) (247,582) Total net incurred 5,332,981 3,573,509 4,338,840 Net paid related to: Current year 488,450 364,793 105,885 Prior years 3,109,360 2,630,885 1,924,271 Total net paid 3,597,810 2,995,678 2,030,156 Foreign exchange and other (1) (55,653) 62,902 (152,997) Amounts acquired (2) — 3,320,202 — Reserve for claims and claim expenses, net of reinsurance recoverable, end of period 16,822,101 15,142,583 11,181,648 Reinsurance recoverable, end of period 4,481,390 5,344,286 4,710,925 Reserve for claims and claim expenses, end of period $ 21,303,491 $ 20,486,869 $ 15,892,573 (1) Reflects the impact of the foreign exchange revaluation of the reserve for claims and claim expenses, net of reinsurance recoverable, denominated in non-U.S. dollars as at the balance sheet date, as well as reinsurance transactions accounted for under retroactive reinsurance accounting. (2) Represents the fair value of Validus’ reserve for claims and claim expenses, net of reinsurance recoverable, acquired on November 1, 2023. During 2024, the Company incurred losses related to Hurricane Milton, Hurricane Helene, the Baltimore Bridge Collapse, a series of severe convective storms that impacted the Southern and Midwest United States, the Hualien earthquake which impacted Taiwan in April 2024, a severe hailstorm which impacted Calgary in August 2024, Hurricane Debby, Hurricane Beryl, and certain aggregate loss contracts triggered during 2024 (collectively, the “2024 Large Loss Events”). The Company’s reserving methodology for each line of business uses a loss reserving process that calculates a point estimate for its ultimate settlement and administration costs for claims and claim expenses. The Company does not calculate a range of estimates and does not discount any of its reserves for claims and claim expenses. The Company uses this point estimate, along with paid claims and case reserves, to record its best estimate of ACR and IBNR in its consolidated financial statements. Under GAAP, the Company is not permitted to establish estimates for catastrophe claims and claim expense reserves until an event occurs that gives rise to a loss. Reserving involves other uncertainties, such as the dependence on information from ceding companies, the time lag inherent in reporting information from the primary insurer to the Company or to the Company’s ceding companies, and differing reserving practices among ceding companies. The information received from ceding companies is typically in the form of bordereaux, broker notifications of loss and/or discussions with ceding companies or their brokers. This information may be received on a monthly, quarterly or transactional basis and normally includes paid claims and estimates of case reserves. The Company sometimes also receives an estimate or provision for IBNR. This information is updated and adjusted periodically during the loss settlement period as new data or facts in respect of initial claims, client accounts, industry or event trends may be reported or emerge in addition to changes in applicable statutory and case laws. The Company’s estimates of large losses are based on factors including currently available information derived from claims information from certain customers and brokers, industry assessments of losses, proprietary models, and the terms and conditions of the Company’s contracts. The uncertainty of the Company’s estimates for large losses is also impacted by the preliminary nature of the information available, the magnitude and relative infrequency of the events, the expected duration of the respective claims development period, inadequacies in the data provided to the relevant date by industry participants and the potential for further reporting lags or insufficiencies; and in certain large losses, significant uncertainty as to the form of the claims and legal issues, under the relevant terms of insurance and reinsurance contracts. In addition, a significant portion of the net claims and claim expenses associated with certain large losses can be concentrated with a few large clients and therefore the loss estimates for these large losses may vary significantly based on the claims experience of those clients. The contingent nature of business interruption and other exposures will also impact losses in a meaningful way, which may give rise to significant complexity in respect of claims handling, claims adjustment and other coverage issues, over time. Given the magnitude of certain events, there can be meaningful uncertainty regarding total covered losses for the insurance industry and, accordingly, several of the key assumptions underlying the Company’s loss estimates. Loss reserve estimation in respect of the Company’s retrocessional contracts poses further challenges compared to directly assumed reinsurance. In addition, the Company’s actual net losses from these events may increase if the Company’s reinsurers or other obligors fail to meet their obligations. The Company reevaluates its actuarial reserving assumptions on a periodic basis. Typically, the quarterly review procedures include reviewing paid and reported claims in the most recent reporting period, reviewing the development of paid and reported claims from prior periods, and reviewing the Company’s overall experience by underwriting year and in the aggregate. The Company monitors its expected ultimate claims and claim expense ratios and expected claims reporting assumptions on a quarterly basis and compares them to its actual experience. These actuarial assumptions are generally reviewed annually, based on input from the Company’s actuaries, underwriters, claims personnel and finance professionals, although adjustments may be made more frequently if needed. Assumption changes are made to adjust for changes in the terms of coverage the Company provides, changes in industry results for similar business, as well as its actual experience to the extent the Company has enough data to rely on its own experience. If the Company determines that adjustments to an earlier estimate are appropriate, such adjustments are recorded in the period in which they are identified. Because of the inherent uncertainties discussed above, the Company has developed a reserving philosophy that attempts to incorporate prudent assumptions and estimates, and the Company has generally experienced favorable development on prior accident years net claims and claim expenses in the last several years. However, there is no assurance that this favorable development on prior accident years net claims and claim expenses will occur in future periods. The Company establishes a provision for unallocated loss adjustment expenses (“ULAE”) when the related reserve for claims and claim expenses is established. ULAE are expenses that cannot be associated with a specific claim but are related to claims paid or in the process of settlement, such as internal costs of the claims function, and are included in the reserve for claims and claim expenses. The determination of the ULAE provision is subject to judgment. Incurred and Paid Claims Development and Reserving Methodology The information provided herein about incurred and paid accident year claims development for the years ended prior to December 31, 2024 on a consolidated basis and by segment is presented as supplementary information. The Company has applied a retrospective approach with respect to its acquisitions, presenting all relevant historical information for all periods presented. In addition, included in the incurred claims and claim expenses and cumulated paid claims and claim expenses tables below are reconciling items that represent the unamortized balance of fair value adjustments recorded in connection with the acquisition of TMR and Validus to reflect an increase in net claims and claim expenses due to the addition of a market based risk margin that represented the cost of capital required by a market participant to assume the net claims and claim expenses of TMR and Validus, partially offset by a decrease from discounting in connection with the acquisition of TMR and Validus, to reflect the time value of money. For incurred and paid accident year claims denominated in currencies other than USD, the Company used the current year-end balance sheet foreign exchange rate for all periods provided, thereby eliminating the effects of changes in foreign currency translation rates from the incurred and paid accident year claims development information included in the tables below. The following table details the Company’s consolidated incurred claims and claim expenses and cumulative paid claims and claim expenses as of December 31, 2024, net of reinsurance, as well as IBNR and ACR included within the net incurred claims amounts: Incurred Claims and Claim Expenses, Net of Reinsurance For the year ended December 31, At December 31, 2024 Accident 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 IBNR (unaudited) (unaudited) (unaudited) (unaudited) (unaudited) (unaudited) (unaudited) (unaudited) (unaudited) 2015 $ 1,670,190 $ 1,603,613 $ 1,572,065 $ 1,527,011 $ 1,505,261 $ 1,494,406 $ 1,497,311 $ 1,489,897 $ 1,487,053 $ 1,485,686 $ 51,310 2016 — 1,872,508 1,882,586 1,843,984 1,811,320 1,734,299 1,752,579 1,784,035 1,762,581 1,768,120 31,713 2017 — — 3,606,410 3,423,131 3,340,805 3,262,344 3,230,732 3,168,653 3,160,015 3,171,839 106,741 2018 — — — 2,912,949 3,132,829 3,065,222 2,934,773 2,926,168 2,965,944 2,980,818 178,549 2019 — — — — 2,706,854 2,680,637 2,591,017 2,554,243 2,564,553 2,620,761 249,622 2020 — — — — — 4,393,340 4,392,922 4,397,548 4,370,007 4,301,296 761,291 2021 — — — — — — 5,534,493 5,388,056 5,176,258 4,906,690 1,018,009 2022 — — — — — — — 5,902,647 5,627,982 5,128,208 2,231,524 2023 — — — — — — — — 5,277,384 5,200,462 3,144,564 2024 — — — — — — — — — 6,077,913 5,042,190 Total $ 37,641,793 $ 12,815,513 Cumulative Paid Claims and Claim Expenses, Net of Reinsurance For the year ended December 31, Accident 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 (unaudited) (unaudited) (unaudited) (unaudited) (unaudited) (unaudited) (unaudited) (unaudited) (unaudited) 2015 $ 456,673 $ 787,860 $ 1,009,810 $ 1,137,612 $ 1,239,336 $ 1,303,717 $ 1,353,866 $ 1,391,122 $ 1,417,548 $ 1,430,775 2016 — 469,972 895,958 1,103,921 1,280,778 1,416,750 1,522,045 1,586,304 1,615,296 1,653,636 2017 — — 922,620 1,503,737 1,864,861 2,229,595 2,416,297 2,579,980 2,726,059 2,850,754 2018 — — — 672,825 1,190,862 1,593,543 1,900,077 2,118,511 2,238,238 2,382,009 2019 — — — — 382,173 991,137 1,350,356 1,678,643 1,996,128 2,225,414 2020 — — — — — 756,409 1,810,464 2,323,405 2,795,075 3,239,789 2021 — — — — — — 886,330 2,092,957 2,922,881 3,356,124 2022 — — — — — — — 280,032 1,446,448 2,260,464 2023 — — — — — — — — 516,063 1,289,115 2024 — — — — — — — — — 475,609 Total $ 21,163,689 Outstanding liabilities from accident year 2014 and prior, net of reinsurance 386,060 Adjustment for unallocated loss adjustment expenses 114,425 Unamortized fair value and other adjustments recorded in connection with acquisitions (156,488) Liability for claims and claim expenses, net of reinsurance $ 16,822,101 Property Segment Within the Property segment, the Company writes property catastrophe excess of loss reinsurance contracts to insure insurance and reinsurance companies against natural and man-made catastrophes. Under these contracts, the Company indemnifies an insurer or reinsurer when its aggregate paid claims and claim expenses from a single occurrence of a covered peril exceeds the attachment point specified in the contract, up to an amount per loss specified in the contract. Generally, the Company’s most significant exposure is to losses from hurricanes, earthquakes and other windstorms, although the Company is also exposed to claims arising from other man-made and natural catastrophes, such as tsunamis, winter storms, freezes, floods, fires, tornadoes, explosions and acts of terrorism. The Company’s predominant exposure under such coverage is to property damage. However, other risks, including business interruption and other non-property losses, may also be covered under the Company’s catastrophe contracts when arising from a covered peril. The Company’s coverages are offered on either a worldwide basis or are limited to selected geographic areas. Coverage can also vary from “all property” perils to limited coverage on selected perils, such as “earthquake only” coverage. The Company also enters into retrocessional contracts that provide property catastrophe coverage to other reinsurers or retrocedants. This coverage is generally in the form of excess of loss retrocessional contracts and may cover all perils and exposures on a worldwide basis or be limited in scope to selected geographic areas, perils and/or exposures. The exposures the Company assumes from retrocessional business can change within a contract term as the underwriters of a retrocedant may alter their book of business after the retrocessional coverage has been bound. The Company also offers dual trigger reinsurance contracts which require the Company to pay claims based on claims incurred by insurers and reinsurers in addition to the estimate of insured industry losses as reported by referenced statistical reporting agencies. Also included in the Property segment is property per risk, property (re)insurance, delegated authority arrangements and regional U.S. multi-line reinsurance. The Company’s predominant exposure under such coverage is to property damage. However, other risks, including business interruption and other non-property losses, may also be covered when arising from a covered peril. The Company’s coverages are offered on either a worldwide basis or are limited to selected geographic areas. Principally all of the business is reinsurance, although the Company also writes insurance business primarily through delegated authority arrangements. The Company offers these products principally through proportional reinsurance coverage or in the form of delegated authority arrangements. In a proportional reinsurance arrangement (also referred to as quota share reinsurance or pro rata reinsurance), the reinsurer shares a proportional part of the original premiums and losses of the reinsured. Claims and claim expenses in the Company’s Property segment are generally characterized by losses of low frequency and high severity. Initial reporting of paid and incurred claims in general, tends to be relatively prompt, particularly for less complex losses. The Company considers this business “short-tail” as compared to the reporting of claims for “long-tail” products, which tends to be slower. However, the timing of claims payment and reporting also varies depending on various factors, including: whether the claims arise under reinsurance of primary insurance companies or reinsurance of other reinsurance companies; the nature of the events ( e.g. , hurricanes, earthquakes or terrorism); the geographic area involved; post-event inflation which may cause the cost to repair damaged property to increase significantly from current estimates, or for property claims to remain open for a longer period of time, due to limitations on the supply of building materials, labor and other resources; complex policy coverage and other legal issues; and the quality of each client’s claims management and reserving practices. Management’s judgments regarding these factors are reflected in the Company’s reserve for claims and claim expenses. Reserving for most of the Company’s Property segment, in particular catastrophe exposure, generally does not involve the use of traditional actuarial techniques, although for certain classes, such as proportional Property classes, traditional actuarial techniques are applied. Rather, claims and claim expense reserves are estimated by management by completing an in-depth analysis of the individual contracts which may potentially be impacted by the loss. The in-depth analysis generally involves: 1) estimating the size of insured industry losses; 2) reviewing reinsurance contract portfolios to identify contracts which are exposed; 3) reviewing information reported or otherwise provided by customers and brokers; 4) discussing the loss with customers and brokers; and 5) estimating the ultimate expected cost to settle all claims and administrative costs arising from the loss on a contract-by-contract basis and in aggregate for the event. Once a loss has occurred, during the then current reporting period, the Company records its best estimate of the ultimate expected cost to settle all claims arising from the loss. The Company’s estimate of claims and claim expense reserves is then determined by deducting cumulative paid losses from its estimate of the ultimate expected loss. The Company’s estimate of IBNR is determined by deducting cumulative paid losses, case reserves and ACR from its estimate of the ultimate expected loss. Once the Company receives a valid notice of loss or payment request under a catastrophe reinsurance contract, it is generally able to process and pay such claims promptly. Because losses from which claims arise under policies written within the Property segment are typically prominent, public events such as hurricanes and earthquakes, the Company is often able to use independent reports as part of its loss reserve estimation process. The Company also reviews catastrophe bulletins published by various statistical reporting agencies to assist in determining the size of the industry loss, although these reports may not be available for some time after an event. For smaller events including localized severe weather events such as windstorms, hail, ice, snow, flooding, freezing and tornadoes, which are not necessarily prominent, public occurrences, the Company uses standard actuarial techniques to set reserves as it does in other property. The assumptions used are monitored and reviewed through the year to ensure they reflect the level of small cat activity experienced through the year and the exposure to the geographic regions involved. For these small events, the IBNR is run-off over time using Bornhuetter- Ferguson actuarial method, a standard actuarial technique. The loss development factors for the reported Bornhuetter-Ferguson actuarial method are selected based on a review of the Company’s historical experience. The reported loss development factors are typically reviewed annually. In general, reserves for the Company’s more recent large losses are subject to greater uncertainty and, therefore, greater potential variability, and are likely to experience material changes from one period to the next. This is due to the uncertainty as to the size of the industry losses, uncertainty as to which contracts have been exposed, uncertainty due to complex legal and coverage issues that can arise out of large or complex losses, and uncertainty as to the magnitude of claims incurred by the Company’s customers. As the Company’s claims age, more information becomes available and the Company believes its estimates become more certain. The following table details the Company’s Property segment incurred claims and claim expenses and cumulative paid claims and claim expenses as of December 31, 2024, net of reinsurance, as well as IBNR and ACR included within the net incurred claims amounts: Incurred Claims and Claim Expenses, Net of Reinsurance For the year ended December 31, At December 31, 2024 Accident 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 IBNR (unaudited) (unaudited) (unaudited) (unaudited) (unaudited) (unaudited) (unaudited) (unaudited) (unaudited) 2015 $ 506,243 $ 456,920 $ 414,379 $ 397,750 $ 388,076 $ 383,214 $ 374,258 $ 376,457 $ 375,420 $ 373,895 $ 511 2016 — 572,814 592,915 564,880 544,624 517,878 514,263 532,556 522,917 522,370 3,361 2017 — — 1,951,429 1,813,187 1,687,873 1,670,648 1,613,614 1,550,274 1,521,356 1,496,890 76,065 2018 — — — 1,271,912 1,348,628 1,286,032 1,158,452 1,147,450 1,098,897 1,072,994 64,246 2019 — — — — 1,162,088 1,135,337 1,042,748 976,162 914,252 912,496 35,810 2020 — — — — — 1,966,826 2,075,320 2,076,315 2,010,634 1,972,883 265,855 2021 — — — — — — 2,759,175 2,758,871 2,655,570 2,440,274 143,701 2022 — — — — — — — 2,544,022 2,431,989 2,045,341 597,038 2023 — — — — — — — — 1,469,539 1,376,749 577,889 2024 — — — — — — — — — 1,928,913 1,407,007 Total $ 14,142,805 $ 3,171,483 Cumulative Paid Claims and Claim Expenses, Net of Reinsurance For the year ended December 31, Accident 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 (unaudited) (unaudited) (unaudited) (unaudited) (unaudited) (unaudited) (unaudited) (unaudited) (unaudited) 2015 $ 141,410 $ 277,662 $ 322,118 $ 344,855 $ 356,090 $ 360,172 $ 362,864 $ 365,875 $ 369,874 $ 370,585 2016 — 144,973 324,607 405,317 438,693 465,432 476,483 481,117 477,703 480,030 2017 — — 619,039 935,017 1,115,451 1,223,434 1,243,652 1,291,080 1,313,624 1,323,316 2018 — — — 453,864 675,404 838,513 872,831 917,391 852,022 853,609 2019 — — — — 164,785 457,281 632,491 718,321 777,272 818,617 2020 — — — — — 284,033 878,467 1,139,605 1,332,331 1,517,898 2021 — — — — — — 585,175 1,371,613 1,852,117 1,984,325 2022 — — — — — — — 76,656 764,636 1,157,016 2023 — — — — — — — — 232,849 536,495 2024 — — — — — — — — — 224,606 Total $ 9,266,497 Outstanding liabilities from accident year 2014 and prior, net of reinsurance 49,601 Adjustment for unallocated loss adjustment expenses 15,115 Unamortized fair value and other adjustments recorded in connection with acquisitions (34,183) Liability for claims and claim expenses, net of reinsurance $ 4,906,841 Casualty and Specialty Segment The Company offers its casualty and specialty reinsurance products principally on a proportional basis, and it also provides excess of loss coverage. The Company offers casualty and specialty reinsurance products to insurance and reinsurance companies and provides coverage for specific geographic regions or on a worldwide basis. Principally all of the business is reinsurance, although the Company also writes insurance business. As with the Company’s Property segment, its Casualty and Specialty segment reinsurance contracts can include coverage for relatively large limits or exposures. As a result, the Company’s casualty and specialty reinsurance business can be subject to significant claims volatility. In periods of low claims frequency or severity, the Company’s results will generally be favorably impacted while in periods of high claims frequency or severity the Company’s results will generally be negatively impacted. The Company’s processes and methodologies in respect of loss estimation for the coverages offered through its Casualty and Specialty segment differ from those used for its Property segment. For example, the Company’s casualty and specialty coverages are more likely to be impacted by factors such as long-term inflation and changes in the social and legal environment, which the Company believes gives rise to greater uncertainty in its reserves for claims and claim expenses. The Company believes this makes its Casualty and Specialty segment reserving subject to greater uncertainty than its Property segment. The Company calculates multiple point estimates for claims and claim expense reserves using a variety of actuarial reserving techniques for many, but not all, of its classes of business for each underwriting year within the Casualty and Specialty segment. The Company does not believe that these multiple point estimates are, or should be considered, a range. Rather, the Company considers each class of business and determines the most appropriate point estimate for each underwriting year based on the characteristics of the particular class including: (1) loss development patterns derived from historical data; (2) the credibility of the selected loss development pattern; (3) the stability of the loss development patterns; (4) how developed the underwriting year is; and (5) the observed loss development of other underwriting years for the same class. The Company also considers other relevant factors, including: (1) historical ultimate loss ratios; (2) the presence of individual large losses; and (3) known occurrences that have not yet resulted in reported losses. The Company makes determinations of the most appropriate point estimate of loss for each class based on an evaluation of relevant information and does not ascribe any particular portion of the estimate to a particular factor or consideration. In addition, the Company believes that a review of individual contract information improves the loss estimates for some classes of business. When developing claims and claims expense reserves for its Casualty and Specialty segment, the Company considers several actuarial techniques such as the expected loss ratio method, the Bornhuetter-Ferguson actuarial method and the paid and reported chain ladder actuarial method. For classes of business and underwriting years where the Company has limited historical claims experience, estimates of ultimate losses are generally initially determined based on the loss ratio method applied to each underwriting year and to each class of business. Unless the Company has credible claims experience or unfavorable development, it generally selects an ultimate loss based on its initial expected loss ratio. The selected ultimate losses are determined by multiplying the initial expected loss ratio by the earned premium. The initial expected loss ratios are key inputs that involve management judgment and are based on a variety of factors, including: (1) contract by contract expected loss ratios developed during the Company’s pricing process; (2) historical loss ratios and combined ratios adjusted for rate change and trend; and (3) industry benchmarks for similar business. These judgments take into account management’s view of past, current and future factors that may influence ultimate losses, including: (1) market conditions; (2) changes in the business underwritten; (3) changes in timing of the emergence of claims; and (4) other factors that may influence ultimate loss ratios and losses. The determination of when reported losses are sufficient and credible to warrant selection of an ultimate loss ratio different from the initial expected loss ratio also requires judgment. The Company generally makes adjustments for reported loss experience indicating unfavorable variances from initial expected loss ratios sooner than reported loss experience indicating favorable variances. This is because the reporting of losses in excess of expectations tends to have greater credibility than an absence or lower than expected level of reported losses. Over time, as a greater number of claims are reported and the credibility of reported losses improves, actuarial estimates of IBNR are typically based on the Bornhuetter-Ferguson actuarial method or the reported chain ladder actuarial method. The Bornhuetter-Ferguson actuarial method allows for greater weight to be applied to expected results in periods where little or no actual experience is available, and, hence, is less susceptible to the potential pitfall of being excessively swayed by experience of actual paid and/or reported loss data, compared to the chain ladder actuarial method. The Bornhuetter-Ferguson actuarial method uses the initial expected loss ratio to estimate IBNR, and it assumes that past experience is not fully representative of the future. As the Company’s reserves for claims and claim expenses age, and actual claims experience becomes available, this method places less weight on expected experience and places more weight on actual experience. This experience, which represents the difference between expected reported claims and actual reported claims, is reflected in the respective reporting period as a change in estimate. The utilization of the Bornhuetter-Ferguson actuarial method requires the Company to estimate an expected ultimate claims and claim expense ratio and select an expected loss reporting pattern. The Company selects its estimates of the expected ultimate claims and claim expense ratios as described above and selects its expected loss reporting patterns by utilizing actuarial analysis, including management’s judgment, and historical patterns of paid losses and reporting of case reserves to the Company, as well as industry loss development patterns. The estimated expected claims and claim expense ratio may be modified to the extent that reported losses at a given point in time differ from what would be expected based on the selected loss reporting pattern. The reported chain ladder actuarial method utilizes actual reported losses and a loss development pattern to determine an estimate of ultimate losses that is independent of the initial expected ultimate loss ratio and earned premium. The Company believes this technique is most appropriate when there are a large number of reported losses with significant statistical credibility and a relatively stable loss development pattern. Information that may cause future loss development patterns to differ from historical loss development patterns is considered and reflected in the Company’s selected loss development patterns as appropriate. For certain reinsurance contracts, historical loss development patterns may be developed from ceding company data or other sources. In addition, certain specialty coverages may be impacted by natural and man-made catastrophes. The Company estimates reserves for claim and claim expenses for these losses, following a process that is similar to its Property segment described above. The following table details the Company’s Casualty and Specialty segment incurred claims and claim expenses and cumulative paid claims and claim expenses as of December 31, 2024, net of reinsurance, as well as IBNR and ACR included within the net |
