Travelers 2009 Annual Report Download - page 219

THE TRAVELERS COMPANIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
7. 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) 2009 2008 2007
Claims and claim adjustment expense reserves at beginning of year . . . . . $54,646 $57,619 $59,202
Less reinsurance recoverables on unpaid losses . . . . . . . . . . . . . . . . . . . 13,334 14,521 16,358
Net reserves at beginning of year . . . . . . . . . . . . . . . . . . . . . . . . . . 41,312 43,098 42,844
Estimated claims and claim adjustment expenses for claims arising in the
current year ........................................... 13,681 14,504 12,848
Estimated decrease in claims and claim adjustment expenses for claims
arising in prior years..................................... (1,449) (1,725) (672)
Total increases........................................ 12,232 12,779 12,176
Claims and claim adjustment expense payments for claims arising in:
Current year........................................... 5,399 5,761 4,528
Prior years ............................................ 7,519 7,356 7,417
Total payments ....................................... 12,918 13,117 11,945
Sale of subsidiary(1)....................................... —(790) —
Unrealized foreign exchange (gain) loss . . . . . . . . . . . . . . . . . . . . . . . . . 315 (658) 23
Net reserves at end of year .............................. 40,941 41,312 43,098
Plus reinsurance recoverables on unpaid losses . . . . . . . . . . . . . . . . . . . . 12,113 13,334 14,521
Claims and claim adjustment expense reserves at end of year . . . . . . . . . $53,054 $54,646 $57,619
(1) In December 2008, the Company sold its United Kingdom based subsidiary, Unionamerica
Holdings, Ltd., which was in runoff.
Gross claims and claim adjustment expense reserves at December 31, 2009 decreased by
$1.59 billion from the same date in 2008, primarily reflecting 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.
Gross claims and claim adjustment expense reserves at December 31, 2008 decreased by
$2.97 billion from the same date in 2007, primarily reflecting ongoing claims and claim adjustment
expense activity, including losses incurred and payments, favorable prior year reserve development,
payments related to operations in runoff (including asbestos and environmental payments) and the sale
of Unionamerica, partially offset by catastrophe losses incurred.
The $1.22 billion decline in reinsurance recoverables in 2009 primarily reflected various
commutation agreements and collections on reinsurance recoverables, including those related to prior
years’ hurricane losses. The $1.19 billion decline in reinsurance recoverables in 2008 compared with
2007 primarily reflected the sale of Unionamerica, various commutation agreements and collections on
reinsurance recoverables, including those related to prior years’ hurricane losses.
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