Prudential 2002 Annual Report Download - page 115
Download and view the complete annual report
Please find page 115 of the 2002 Prudential annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.PRUDENTIAL FINANCIAL, INC.
Notes to Consolidated Financial Statements
9. POLICYHOLDERS’ LIABILITIES (continued)
Unpaid Claims and Claim Adjustment Expenses
The following table provides a reconciliation of the activity in the liability for unpaid claims and claim
adjustment expenses for property and casualty insurance, which includes the Company’s Property and Casualty
Insurance segment, and accident and health insurance at December 31:
2002 2001 2000
Accident
and
Health
Property
and
Casualty
Accident
and
Health
Property
and
Casualty
Accident
and
Health
Property
and
Casualty
(in millions)
Balance at January 1 ........................... $1,655 $1,753 $1,701 $1,848 $1,735 $2,409
Less reinsurance recoverables, net ................ 129 671 246 608 378 451
Net balance at January 1 ........................ 1,526 1,082 1,455 1,240 1,357 1,958
Incurred related to:
Current year .............................. 627 1,615 632 1,440 537 1,271
Prior years ............................... (32) (15) (45) (113) (22) (150)
Total incurred ................................ 595 1,600 587 1,327 515 1,121
Paid related to:
Current year .............................. 237 967 219 932 152 842
Prior years ............................... 341 452 312 553 265 634
Totalpaid ................................... 578 1,419 531 1,485 417 1,476
Acquisitions (dispositions) (a) ................... — — 15 — — (363)
Net balance at December 31 ..................... 1,543 1,263 1,526 1,082 1,455 1,240
Plus reinsurance recoverables, net ................ 24 598 129 671 246 608
Balance at December 31 ........................ $1,567 $1,861 $1,655 $1,753 $1,701 $1,848
(a) The 2001 accident and health increase relates to the acquisition of Gibraltar Life. The reduction in the 2000 property and casualty balance
is primarily attributable to the sale of Gibraltar Casualty Company.
The accident and health reinsurance recoverable balance at December 31, 2002, 2001 and 2000 includes $9
million, $117 million and $239 million, respectively, attributable to the Company’s discontinued healthcare
business.
The unpaid claims and claim adjustment expenses presented above include estimates for liabilities associated
with reported claims and for incurred but not reported claims based, in part, on the Company’s experience.
Changes in the estimated cost to settle unpaid claims are charged or credited to the Consolidated Statements of
Operations periodically as the estimates are revised. Accident and health unpaid claims liabilities are discounted
using interest rates ranging from 3.5% to 7.5%.
The amounts incurred for claims and claim adjustment expenses for property and casualty related to prior
years were primarily driven by lower than anticipated losses for the auto line of business and a release of prior
year reserves for group personal catastrophe coverage. The amounts incurred for claims and claim adjustment
expenses for accident and health related to prior years were primarily due to long-term disability claim
termination experience.
Growing and Protecting Your Wealth114