Travelers 2010 Annual Report Download - page 211

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) 2010 2009 2008
Claims and claim adjustment expense reserves at beginning of year ..... $53,054 $54,646 $57,619
Less reinsurance recoverables on unpaid losses ................... 12,113 13,334 14,521
Net reserves at beginning of year .......................... 40,941 41,312 43,098
Estimated claims and claim adjustment expenses for claims arising in the
current year ........................................... 14,452 13,681 14,504
Estimated decrease in claims and claim adjustment expenses for claims
arising in prior years ..................................... (1,417) (1,449) (1,725)
Total increases ........................................ 13,035 12,232 12,779
Claims and claim adjustment expense payments for claims arising in:
Current year ........................................... 5,949 5,399 5,761
Prior years ............................................ 7,748 7,519 7,356
Total payments ....................................... 13,697 12,918 13,117
Sale of subsidiary(1) ....................................... —— (790)
Unrealized foreign exchange (gain) loss ......................... (24) 315 (658)
Net reserves at end of year .............................. 40,255 40,941 41,312
Plus reinsurance recoverables on unpaid losses .................... 10,807 12,113 13,334
Claims and claim adjustment expense reserves at end of year ......... $51,062 $53,054 $54,646
(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, 2010 and 2009 decreased by
$1.99 billion and $1.59 billion from the respective prior year-end, primarily reflecting ongoing claims
and claim adjustment expense activity, including losses incurred and payments made, as well as
favorable prior year reserve development and payments related to operations in runoff. The decline at
December 31, 2010 compared with the prior year-end was partially offset by the impact of the high
level of catastrophe losses incurred in 2010.
The $1.31 billion decline in reinsurance recoverables since December 31, 2009 reflected cash
collections and the impact of net favorable prior year reserve development, partially offset by a
reduction in the allowance for uncollectible reinsurance. The $1.22 billion decline in reinsurance
recoverables at December 31, 2009 compared with the prior year end primarily reflected various
commutation agreements and collections on reinsurance recoverables, including those related to prior
years’ hurricane losses.
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