Travelers 2014 Annual Report Download - page 214

Table of Contents
THE TRAVELERS COMPANIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
7. INSURANCE CLAIM RESERVES (Continued)
and environmental reserves, respectively, which are discussed in further detail in the "Asbestos and Environmental Reserves" section below,
(ii) net unfavorable prior year reserve development in the commercial automobile line of business, driven by higher than expected severity in the
bodily injury coverage primarily for accident years 2010 and 2011, and (iii) net unfavorable prior year reserve development in the general liability
product line for the 2011 accident year resulting from higher than expected claim frequency.
Bond & Specialty Insurance. Net favorable prior year reserve development in 2012 of $180 million was primarily driven by better than
expected loss experience in the contract surety product line for accident years 2008 and prior, and better than expected results for management
liability business primarily for the errors & omissions and fiduciary products for accident years 2007 and prior.
Personal Insurance. Net favorable prior year reserve development of $175 million in 2012 was primarily driven by better than expected loss
development in the Homeowners and Other product line related to catastrophe losses incurred for 2011 and non
- catastrophe losses incurred for
accident years 2010 and 2011, as well as favorable loss development in the umbrella line of business for accident years 2007 through 2011. These
factors were partially offset by unfavorable prior year reserve development in the personal automobile line of business, driven primarily by higher
than expected bodily injury severity for accident year 2011.
Asbestos and Environmental Reserves
At December 31, 2014 and 2013, the Company's claims and claim adjustment expense reserves included $2.70 billion and $2.69 billion,
respectively, for asbestos and environmental
- related claims, net of reinsurance.
It is difficult to estimate the reserves for asbestos and environmental
- related claims due to the vagaries of court coverage decisions, plaintiffs'
expanded theories of liability, the risks inherent in complex litigation and other uncertainties, including, without limitation, those which are set forth
below.
Asbestos Reserves. Because each policyholder presents different liability and coverage issues, the Company generally reviews the exposure
presented by each policyholder at least annually. Among the factors which the Company may consider in the course of this review are: available
insurance coverage, including the role of any umbrella or excess insurance the Company has issued to the policyholder; limits and deductibles; an
analysis of the policyholder's potential liability; the jurisdictions involved; past and anticipated future claim activity and loss development on
pending claims; past settlement values of similar claims; allocated claim adjustment expense; potential role of other insurance; the role, if any, of
non
- asbestos claims or potential non - asbestos claims in any resolution process; and applicable coverage defenses or determinations, if any,
including the determination as to whether or not an asbestos claim is a products/completed operation claim subject to an aggregate limit and the
available coverage, if any, for that claim.
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