Travelers 2010 Annual Report Download - page 137

inherent in complex litigation and other uncertainties, in the opinion of the Company’s management, it
is possible that the outcome of the continued uncertainties regarding these claims could result in
liability in future periods that differs from current reserves by an amount that could be material to the
Company’s future operating results. See the preceding discussion of ‘‘Asbestos Claims and Litigation’’
and ‘‘Environmental Claims and Litigation.’’
Gross claims and claim adjustment expense reserves by product line were as follows:
2010 2009
(at December 31, in millions) Case IBNR Total Case IBNR Total
General liability .................... $ 5,809 $10,449 $16,258 $ 6,211 $11,354 $17,565
Property ......................... 945 627 1,572 1,091 780 1,871
Commercial multi-peril .............. 1,897 1,766 3,663 1,878 1,762 3,640
Commercial automobile .............. 2,256 1,060 3,316 2,211 1,238 3,449
Workers’ compensation .............. 9,447 7,082 16,529 9,354 7,121 16,475
Fidelity and surety .................. 542 1,124 1,666 649 1,083 1,732
Personal automobile ................ 1,434 935 2,369 1,457 993 2,450
Homeowners and personal—other ...... 653 769 1,422 633 717 1,350
International and other .............. 2,353 1,914 4,267 2,344 2,178 4,522
Property-casualty ................. 25,336 25,726 51,062 25,828 27,226 53,054
Accident and health ................. 61 8 69 64 9 73
Claims and claim adjustment expense
reserves ...................... $25,397 $25,734 $51,131 $25,892 $27,235 $53,127
The $2.00 billion decline in gross claims and claim adjustment expense reserves since
December 31, 2009 primarily reflected the impact of net favorable prior year reserve development and
payments related to asbestos and environmental claims as well as operations in runoff.
Asbestos and environmental reserves are included in the General liability, Commercial multi-peril
and International and other lines in the foregoing 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
evaluation. The estimation method(s) chosen are those that are believed to produce the most reliable
indication at that particular evaluation date for the claim liabilities being evaluated.
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