Travelers 2008 Annual Report Download - page 38

(at December 31, in millions) 1998 1999 2000 2001(a) 2002(a) 2003(a) 2004(a)(b)(c) 2005(a)(b)(c) 2006(a)(b)(c) 2007(a)(b)(c) 2008(a)(b)(c)
Reserves for claims and
claim adjustment expense
originally estimated ....$20,763 $19,983 $19,435 $20,197 $23,268 $24,055 $41,446 $42,895 $42,844 $43,098 $41,312
Cumulative amounts paid as
of
One year later ....... 4,159 4,082 4,374 5,018 5,170 4,651 8,871 8,632 7,417 8,146
Two years later ...... 6,879 6,957 7,517 8,745 8,319 8,686 14,666 13,837 13,181
Three years later ..... 9,006 9,324 10,218 11,149 11,312 11,541 18,733 18,466
Four years later ...... 10,809 11,493 12,000 13,402 13,548 13,708 22,514
Five years later ...... 12,565 12,911 13,603 15,115 15,229 15,574
Six years later ....... 13,647 14,172 14,958 16,473 16,836
Seven years later ..... 14,697 15,301 16,063 17,877
Eight years later ...... 15,681 16,206 17,283
Nine years later ...... 16,480 17,194
Ten years later ....... 17,398
Reserves reestimated as of
One year later ....... 20,521 19,736 19,394 23,228 23,658 24,222 41,706 42,466 42,172 41,373
Two years later ...... 20,172 19,600 22,233 24,083 24,592 25,272 42,565 42,311 40,837
Three years later ..... 19,975 22,302 22,778 25,062 25,553 26,042 42,940 41,692
Four years later ...... 22,489 22,612 23,871 25,953 26,288 26,501 43,148
Five years later ...... 22,593 23,591 24,872 26,670 26,731 26,803
Six years later ....... 23,492 24,559 25,521 27,179 27,055
Seven years later ..... 24,446 25,114 26,039 27,556
Eight years later ...... 24,908 25,664 26,364
Nine years later ...... 25,435 25,917
Ten years later ....... 25,693
Cumulative deficiency
(redundancy)(a)(b) .... 4,930 5,934 6,929 7,359 3,787 2,748 1,702 (1,203) (2,007) (1,725)
Gross liability—end of year . $29,411 $28,854 $28,312 $30,617 $33,628 $34,474 $58,984 $61,007 $59,202 $57,619 $54,646
Reinsurance recoverables . . 8,648 8,871 8,877 10,420 10,360 10,419 17,538 18,112 16,358 14,521 13,334
Net liability—end of year . . $20,763 $19,983 $19,435 $20,197 $23,268 $24,055 $41,446 $42,895 $42,844 $43,098 $41,312
Gross reestimated liability—
latest ............$34,961 $35,977 $37,245 $40,006 $38,865 $37,829 $61,036 $59,999 $56,911 $55,967
Reestimated reinsurance
recoverables—latest .... 9,268 10,060 10,881 12,450 11,810 11,026 17,888 18,307 16,074 14,594
Net reestimated liability—
latest ............$25,693 $25,917 $26,364 $27,556 $27,055 $26,803 $43,148 $41,692 $40,837 $41,373
Gross cumulative deficiency
(redundancy) .......$5,550 $ 7,123 $ 8,933 $ 9,389 $ 5,237 $ 3,355 $ 2,052 $ (1,008) $(2,291) $(1,652)
Included in the cumulative deficiency (redundancy) by year is the following impact of unfavorable
prior year reserve development related to asbestos and environmental claims and claim adjustment
expenses, in millions:
Asbestos 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007
Gross .............$5,974 $ 5,846 $ 5,659 $ 5,377 $ 1,717 $ 1,692 $ 1,100 $ 266 $ 69 $ 70
Net ..............$4,385 $ 4,328 $ 4,278 $ 4,091 $ 1,146 $ 1,122 $ 1,057 $ 226 $ 70 $ 70
Environmental 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007
Gross .............$1,069 $ 930 $ 855 $ 798 $ 644 $ 585 $ 392 $ 375 $ 267 $ 85
Net ..............$ 945$ 888$ 824$ 780$ 630$ 571 $ 420 $ 390 $ 270 $ 85
(a) Includes reserves of The Northland Company and its subsidiaries and Commercial Guaranty Lloyds Insurance Company, which were acquired
from Citigroup on October 1, 2001. Also includes reserves of Commercial Guaranty Casualty Insurance Company, which was contributed to
TPC by Citigroup on October 3, 2001. At December 31, 2001, these gross reserves were $867 million, and net reserves were $633 million.
(b) For years prior to 2004, excludes SPC reserves, which were acquired on April 1, 2004. Accordingly, the reserve development (net reserves for
claims and claim adjustment expense reestimated as of subsequent years less net reserves recorded at the end of the year, as originally
estimated) for years prior to 2004 relates only to losses recorded by TPC and does not include reserve development recorded by SPC. For
2004 and subsequent years, includes SPC reserves and subsequent development recorded by SPC. At December 31, 2004, SPC gross reserves
were $23,274 million, and net reserves were $15,959 million.
(c) In December 2008, the Company completed the sale of Unionamerica Holdings Limited (Unionamerica), which comprised its United
Kingdom (U.K.)-based runoff insurance and reinsurance businesses. (Unionamerica was acquired in 2004 as part of the merger of SPC and
TPC.) Immediately before the sale, the claims and claim adjustment expense reserves of Unionamerica totaled $790 million. As a result of
the sale, those obligations ceased being the responsibility of the Company and its affiliates. The sale is reflected in the table as a reduction in
December 31, 2008 net reserves of $790 million and as a $790 million increase in paid losses for each of the years 2004 through 2007 to
reflect the transfer (payment) of the reserves to the buyer, resulting in no impact to incurred losses.
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