Travelers 2009 Annual Report Download - page 142

Gross claims and claim adjustment expense reserves by product line were as follows:
2009 2008
(at December 31, in millions) Case IBNR Total Case IBNR Total
General liability.................... $ 6,368 $11,542 $17,910 $ 6,529 $11,912 $18,441
Property ......................... 1,211 771 1,982 1,414 858 2,272
Commercial multi-peril . . . . . . . . . . . . . . 1,878 1,762 3,640 1,988 1,968 3,956
Commercial automobile . . . . . . . . . . . . . . 2,262 1,294 3,556 2,413 1,408 3,821
Workers’ compensation . . . . . . . . . . . . . . 9,355 7,122 16,477 9,419 6,872 16,291
Fidelity and surety . . . . . . . . . . . . . . . . . . 661 1,091 1,752 677 1,081 1,758
Personal automobile . . . . . . . . . . . . . . . . 1,457 994 2,451 1,448 1,043 2,491
Homeowners and personal—other . . . . . . 633 717 1,350 633 800 1,433
International and other . . . . . . . . . . . . . . 2,003 1,933 3,936 2,140 2,043 4,183
Property-casualty . . . . . . . . . . . . . . . . . 25,828 27,226 53,054 26,661 27,985 54,646
Accident and health . . . . . . . . . . . . . . . . . 64 9 73 68 9 77
Claims and claim adjustment expense
reserves ...................... $25,892 $27,235 $53,127 $26,729 $27,994 $54,723
The amounts previously disclosed above at December 31, 2008 for general liability and commercial
auto IBNR reserves have been increased and decreased by $103 million, respectively, to correct a
classification error at December 31, 2008. In addition, the amounts previously disclosed at
December 31, 2008 for commercial multi-peril case and IBNR reserves, as well as the total case and
IBNR reserves, have been increased and decreased by $172 million, respectively, to correct a
classification error at December 31, 2008. These reclassifications had no impact on total claims and
claim adjustment expense reserves reported at December 31, 2008.
The $1.60 billion decline in gross claims and claim adjustment expense reserves since
December 31, 2008 primarily reflected ongoing claims and claim adjustment expense activity, including
losses incurred and payments, as well as favorable prior year reserve development and payments related
to operations in runoff.
Asbestos and environmental reserves are included in the General liability, Commercial multi-peril
and International and other lines in the summary table. Asbestos and environmental reserves are
discussed separately; see ‘‘Asbestos Claims and Litigation’’, ‘‘Environmental Claims and Litigation’’ and
‘‘Uncertainty Regarding Adequacy of Asbestos and Environmental Reserves.’’
General Discussion
The process for estimating the liabilities for claims and claim adjustment expenses begins with the
collection and analysis of claim data. Data on individual reported claims, both current and historical,
including paid amounts and individual claim adjuster estimates, are grouped by common characteristics
(components) and evaluated by actuaries in their analyses of ultimate claim liabilities by product line.
Such data is occasionally supplemented with external data as available and when appropriate. The
process of analyzing reserves for a component is undertaken on a regular basis, generally quarterly, in
light of continually updated information.
Multiple estimation methods are available for the analysis of ultimate claim liabilities. Each
estimation method has its own set of assumption variables and its own advantages and disadvantages,
with no single estimation method being better than the others in all situations and no one set of
assumption variables being meaningful for all product line components. The relative strengths and
weaknesses of the particular estimation methods when applied to a particular group of claims can also
change over time. Therefore, the actual choice of estimation method(s) can change with each
130