Travelers 2014 Annual Report Download - page 211

Table of Contents
THE TRAVELERS COMPANIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
7. INSURANCE CLAIM RESERVES (Continued)
The following table presents a reconciliation of beginning and ending property casualty reserve balances for claims and claim
adjustment expenses:
Gross claims and claim adjustment expense reserves at December 31, 2014 decreased by $1.04 billion from December 31, 2013, primarily
reflecting the impact of net favorable prior year reserve development and payments related to operations in runoff. Gross claims and claim
adjustment expense reserves at December 31, 2013 decreased by $23 million from December 31, 2012, primarily reflecting the impact of net favorable
prior year reserve development and payments related to catastrophes and operations in runoff, largely offset by the impact of the acquisition of
Dominion.
Reinsurance recoverables on unpaid losses at December 31, 2014 declined by $492 million from December 31, 2013, reflecting the impacts of
(i) net favorable prior year reserve development, (ii) cash collections, (iii) commutation agreements, as well as (iv) a slightly lower level of
reinsurance purchased in 2014. Reinsurance recoverables on unpaid losses at December 31, 2013 declined by $974 million from December 31, 2012,
reflecting the impacts of (i) a decline in mandatory pools and associations primarily due to catastrophe
- related collections and, to a lesser extent the
sale of renewal rights, related to the Company's National Flood Insurance Program in 2013, (ii) cash collections, (iii) commutation agreements and
(iv) net favorable prior year reserve development, partially offset by (v) the acquisition of Dominion, which added $352 million of reinsurance
recoverables on unpaid losses at November 1, 2013.
210
(at and for the year ended December 31, in millions)
2014
2013
2012
Claims and claim adjustment expense reserves at beginning of year
$
50,865
$
50,888
$
51,353
Less reinsurance recoverables on unpaid losses
9,280
10,254
10,434
Net reserves at beginning of year
41,585
40,634
40,919
Estimated claims and claim adjustment expenses for claims arising
in the current year
14,621
14,060
15,559
Estimated decrease in claims and claim adjustment expenses for
claims arising in prior years
(957
)
(944
)
(1,074
)
Total increases
13,664
13,116
14,485
Claims and claim adjustment expense payments for claims arising in:
Current year
5,828
5,485
6,507
Prior years
8,099
8,477
8,326
Total payments
13,927
13,962
14,833
Acquisition(1)
—
1,792
—
Unrealized foreign exchange (gain) loss
(286
)
5
63
Net reserves at end of year
41,036
41,585
40,634
Plus reinsurance recoverables on unpaid losses
8,788
9,280
10,254
Claims and claim adjustment expense reserves at end of year
$
49,824
$
50,865
$
50,888
(1) Dominion's net claims and claim adjustment expense reserves at November 1, 2013 were $1,792 million. Dominion's gross
reserves on that date were $2,144 million. Dominion's reinsurance recoverables on unpaid losses on that date were
$352 million.