Travelers 2014 Annual Report Download - page 107

Table of Contents
The Company continues to receive notices from policyholders tendering claims for the first time, frequently under policies issued prior to the
mid - 1980's. These policyholders continue to present smaller exposures, have fewer sites and are lower tier defendants. Further, in many instances,
clean
- up costs have been reduced because regulatory agencies are willing to accept risk - based site analyses and more efficient clean - up
technologies. Over the past several years, the Company has experienced generally favorable trends in the number of new policyholders tendering
environmental claims for the first time and in the number of pending declaratory judgment actions relating to environmental matters. However, the
degree to which those favorable trends have continued has been less than anticipated. In addition, reserve development on existing environmental
claims has been greater than anticipated. As a result of these factors, in 2014, 2013 and 2012, the Company increased its net environmental reserves
by $87 million, $65 million and $90 million, respectively.
Net environmental paid loss and loss expenses were $84 million in each of the years 2014, 2013 and 2012. At December 31, 2014, approximately
92% of the net environmental reserve (approximately $318 million) was carried in a bulk reserve and included unresolved environmental claims,
incurred but not reported environmental claims and the anticipated cost of coverage litigation disputes relating to these claims. The bulk reserve
the Company carries is established and adjusted based upon the aggregate volume of in
- process environmental claims and the Company's
experience in resolving those claims. The balance, approximately 8% of the net environmental reserve (approximately $28 million), consists of case
reserves.
The following table displays activity for environmental losses and loss expenses and reserves:
106
(at and for the year ended December 31, in millions)
2014
2013
2012
Beginning reserves:
Gross
$
355
$
352
$
346
Ceded
(11
)
(5
)
(5
)
Net
344
347
341
Incurred losses and loss expenses:
Gross
94
72
99
Ceded
(7
)
(7
)
(9
)
Net
87
65
90
Paid loss and loss expenses:
Gross
95
87
93
Ceded
(11
)
(3
)
(9
)
Net
84
84
84
Acquired reserves, foreign exchange and other:(1)
Gross
(1
)
18
—
Ceded
—
( 2
)
—
Net
(1
)
16
—
Ending reserves:
Gross
353
355
352
Ceded
(7
)
(11
)
(5
)
Net
$
346
$
344
$
347
(1) Amounts in 2013 represent acquired reserves of Dominion at November 1, 2013.