Travelers 2014 Annual Report Download - page 212

Table of Contents
THE TRAVELERS COMPANIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
7. INSURANCE CLAIM RESERVES (Continued)
Prior Year Reserve Development
The following disclosures regarding reserve development are on a "net of reinsurance" basis.
2014.
In 2014, estimated claims and claim adjustment expenses incurred included $957 million of net favorable development for claims arising in prior
years, including $941 million of net favorable prior year reserve development impacting the Company's results of operations and $50 million of
accretion of discount.
Business and International Insurance. Net favorable prior year reserve development in 2014 totaled $322 million. Net favorable prior year
reserve development in 2014 was primarily driven by (i) better than expected loss experience in the general liability product line (excluding increases
to asbestos and environmental reserves discussed below), primarily related to excess coverages for accident years 2008 through 2012, reflecting
more favorable legal and judicial environments than what the Company previously expected, (ii) a $162 million benefit resulting from better than
expected loss experience related to, and the commutation of reinsurance treaties associated with, a workers' compensation reinsurance pool for
accident years 1996 and prior, (iii) better than expected loss experience in the property product line for accident years 2010 through 2013, including
catastrophe losses from Storm Sandy for accident year 2012 and (iv) better than expected loss experience in the commercial auto product line for
accident years 2011 and 2012. These factors contributing to net favorable prior year reserve development in 2014 were partially offset by
(i) $250 million and $87 million increases to asbestos and environmental reserves, respectively, which are discussed in further detail in the
"Asbestos and Environmental Reserves" section below, (ii) an increase in unallocated loss adjustment expense reserves of $77 million for interest
awarded as part of damages pursuant to a court decision in the third quarter of 2014 related to a legal matter, which is discussed in more detail in
the "Asbestos Direct Action Litigation" section of note 16 and (iii) higher than expected loss experience for liability coverages in the commercial
multi - peril product line for accident years 2010 through 2013.
Bond & Specialty Insurance. Net favorable prior year reserve development in 2014 of $450 million was primarily driven by better than
expected loss experience in the contract surety product line for accident years 2012 and prior.
Personal Insurance. Net favorable prior year reserve development in 2014 of $169 million was primarily driven by better than expected loss
experience in the Homeowners and Other line of business for non
- catastrophe weather - related losses for accident year 2013 and catastrophe losses
for accident years 2011 through 2013.
2013.
In 2013, estimated claims and claim adjustment expenses incurred included $944 million of net favorable development for claims arising in prior
years, including $840 million of net favorable prior year reserve development impacting the Company's results of operations and $48 million of
accretion of discount.
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