Allstate 2014 Annual Report Download - page 153

The survival ratio is calculated by taking our ending reserves divided by payments made during the year. This is a
commonly used but extremely simplistic and imprecise approach to measuring the adequacy of asbestos and
environmental reserve levels. Many factors, such as mix of business, level of coverage provided and settlement
procedures have significant impacts on the amount of environmental and asbestos claims and claims expense reserves,
claim payments and the resultant ratio. As payments result in corresponding reserve reductions, survival ratios can be
expected to vary over time.
In 2014 and 2013, the asbestos net 3-year survival ratio decreased due to increased claim payments. The
environmental net 3-year survival ratio decreased in 2014 due to increased claim payments and increased in 2013 due
to reserve additions.
Our net asbestos reserves by type of exposure and total reserve additions are shown in the following table.
December 31, 2014 December 31, 2013 December 31, 2012
($ in millions)
Active Active Active
policy- Net % of policy- Net % of policy- Net % of
holders reserves reserves holders reserves reserves holders reserves reserves
Direct policyholders:
Primary 44 $ 8 1% 53 $ 7 1% 54 $ 12 1%
Excess 296 265 26 301 267 26 299 276 27
Total 340 273 27 354 274 27 353 288 28
Assumed reinsurance 166 16 171 17 150 15
IBNR 575 57 572 56 588 57
Total net reserves $ 1,014 100% $ 1,017 100% $ 1,026 100%
Total reserve additions $ 87 $ 74 $ 26
During the last three years, 40 direct primary and excess policyholders reported new claims, and claims of 66
policyholders were closed, decreasing the number of active policyholders by 26 during the period. There was a net
decrease of 14 in 2014, including 13 new policyholders reporting new claims and the closing of 27 policyholders’ claims.
There was a net increase of 1 in 2013, including 12 new policyholders reporting new claims and the closing of 11
policyholders’ claims. There was a net decrease of 13 in 2012 including 15 new policyholders reporting new claims and
the closing of 28 policyholders’ claims.
IBNR net reserves increased $3 million as of December 31, 2014 compared to December 31, 2013. As of
December 31, 2014 IBNR represented 57% of total net asbestos reserves, compared to 56% as of December 31, 2013.
IBNR provides for reserve development of known claims and future reporting of additional unknown claims from current
policyholders and ceding companies.
Pending, new, total closed and closed without payment claims for asbestos and environmental exposures for the
years ended December 31 are summarized in the following table.
2014 2013 2012
Number of claims
Asbestos
Pending, beginning of year 7,444 7,447 8,072
New 727 736 492
Total closed (865) (739) (1,117)
Pending, end of year 7,306 7,444 7,447
Closed without payment 433 451 728
Environmental
Pending, beginning of year 3,717 3,676 4,176
New 381 464 402
Total closed (546) (423) (902)
Pending, end of year 3,552 3,717 3,676
Closed without payment 369 299 511
53