Travelers 2007 Annual Report Download - page 198

THE TRAVELERS COMPANIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
6. INSURANCE CLAIM RESERVES (Continued)
The table below is a reconciliation of beginning and ending property casualty reserve balances for
claims and claim adjustment expenses.
(at and for the year ended December 31, in millions) 2007 2006 2005
Claims and claim adjustment expense reserves at beginning of year ..... $59,202 $61,007 $58,984
Less reinsurance recoverables on unpaid losses ................... 16,358 18,112 17,538
Net reserves at beginning of year .......................... 42,844 42,895 41,446
Estimated claims and claim adjustment expenses for claims arising in the
current year ........................................... 12,848 12,533 14,450
Estimated increase (decrease) in claims and claim adjustment expenses
for claims arising in prior years ............................. (672) (429) 260
Acquisitions(1) ........................................... —538 —
Total increases ........................................ 12,176 12,642 14,710
Claims and claim adjustment expense payments for claims arising in:
Current year ........................................... 4,528 4,279 4,227
Prior years ............................................ 7,417 8,632 8,871
Total payments ....................................... 11,945 12,911 13,098
Unrealized foreign exchange (gain) loss ......................... 23 218 (163)
Net reserves at end of year .............................. 43,098 42,844 42,895
Plus reinsurance recoverables on unpaid losses .................... 14,521 16,358 18,112
Claims and claim adjustment expense reserves at end of year ......... $57,619 $59,202 $61,007
(1) In February 2006, the 2003 and prior years of account of Lloyd’s Syndicates 5000 and 779 closed
through reinsurance to close (RITC) into the 2004 year of account. See ‘‘Reinsurance to Close’’
section of note 1.
Gross claims and claim adjustment expense reserves at December 31, 2007 decreased by
$1.58 billion from the same date in 2006, primarily reflecting payments related to operations in runoff
(including asbestos and environmental payments), prior year hurricane losses, and favorable prior year
reserve development. Gross claims and claim adjustment expense reserves at December 31, 2006
decreased by $1.80 billion from the amount at December 31, 2005, primarily reflecting payments
related to prior year hurricane losses, claims and claim adjustment expense payments from runoff
operations (including asbestos and environmental payments) and favorable prior year reserve
development, primarily in the Personal Insurance segment, partially offset by the impact of reserves
acquired in the RITC transaction described above.
The $1.84 billion decline in reinsurance recoverables in 2007 primarily reflected significant
collections on reinsurance recoverables, including those related to prior year hurricane losses,
operations in runoff (primarily Gulf) and various commutation agreements. The $1.75 billion decline in
reinsurance recoverables in 2006 primarily reflected those factors, partially offset by the impact of
reinsurance recoverables acquired in the RITC transaction described above.
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