Travelers 2010 Annual Report Download - page 213

THE TRAVELERS COMPANIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
7. INSURANCE CLAIM RESERVES (Continued)
Business Insurance. Net favorable prior year reserve development totaled $1.03 billion in 2009,
driven by better than expected loss development primarily concentrated in the general liability,
commercial multi-peril, commercial automobile and commercial property product lines for recent
accident years. The general liability and commercial multi-peril product lines experienced better than
anticipated loss development that was attributable to several factors, including what the Company
believes is improved legal and judicial environments, as well as enhanced risk control, underwriting and
claim process initiatives. The commercial automobile line of business experienced better than expected
loss development that was attributable to what the Company believes is more favorable legal and
judicial environments, claim handling initiatives and improvements in auto safety technology. The
commercial property product line improvement primarily occurred in the 2007 and 2008 accident years
as a result of better than expected loss development for certain large national property and inland
marine exposures. In addition, the commercial property product line’s 2005 accident year experience
improved due to the litigation environment relating to, and ongoing claim settlements for, Hurricane
Katrina. The net favorable prior year reserve development in these product lines in 2009 was partially
offset by a $185 million increase to asbestos reserves and a $70 million increase to environmental
reserves.
Financial, Professional & International Insurance. Net favorable prior year reserve development
totaled $168 million in 2009, driven by better than expected loss development in International,
particularly in the United Kingdom and Canada. In addition, the Aviation and Property lines of
business at Lloyd’s experienced net favorable prior year loss development in 2009. In Bond & Financial
Products, better than expected loss development for the contract surety business within the fidelity and
surety product line for recent accident years also resulted in net favorable prior year reserve
development in 2009.
Personal Insurance. Net favorable prior year reserve development totaled $135 million in 2009,
driven by favorable loss development related to Hurricanes Ike and Katrina, as well as the 2007
California wildfires.
2008.
In 2008, estimated claims and claim adjustment expenses incurred included $1.73 billion of net
favorable development for claims arising in prior years, including $1.54 billion of net favorable prior
year reserve development impacting the Company’s results of operations, which excludes $60 million of
accretion of discount.
Business Insurance. Net favorable prior year reserve development totaled $1.12 billion in 2008,
driven by better than expected loss development primarily concentrated in the general liability and
commercial multi-peril product lines, an increase in anticipated ceded recoveries for older accident
years in the general liability product line and better than anticipated loss development in the
commercial property and commercial automobile product lines. The net favorable prior year reserve
development in the general liability and commercial multi-peril lines was attributable to several factors,
including what the Company believes is improved legal and judicial environments, as well as enhanced
risk control, underwriting and claim process initiatives. The commercial property product line
improvement occurred primarily in the 2007 accident year as a result of better than expected loss
development for certain large national property, national programs, and ocean marine claim exposures
and lower than expected weather-related losses during the last half of 2007, as well as favorable loss
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