Travelers 2015 Annual Report Download - page 209

THE TRAVELERS COMPANIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
7. INSURANCE CLAIM RESERVES (Continued)
reflecting the impact of (i) net favorable prior year reserve development and (ii) payments related to
operations in runoff.
Reinsurance recoverables on unpaid losses at December 31, 2015 decreased by $339 million from
December 31, 2014, primarily reflecting the impact of cash collections in 2015. 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.
Prior Year Reserve Development
The following disclosures regarding reserve development are on a ‘‘net of reinsurance’’ basis.
2015.
In 2015, estimated claims and claim adjustment expenses incurred included $897 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 $51 million of accretion
of discount.
Business and International Insurance. Net favorable prior year reserve development in 2015
totaled $405 million, primarily driven by better than expected loss experience in (i) the general liability
product line (excluding increases to asbestos and environmental reserves discussed below), for both
primary and excess coverages for accident years 2005 through 2013, reflecting a more favorable legal
environment than the Company previously expected, (ii) the workers’ compensation line of business for
accident years 2006 and prior, (iii) the property product line related to catastrophe losses for accident
years 2011, 2012 and 2014 and non-catastrophe losses for accident years 2013 and 2014 and (iv) the
Company’s operations in Canada and at Lloyd’s. These factors contributing to net favorable prior year
reserve development in 2015 were partially offset by $224 million and $72 million increases to asbestos
and environmental reserves, respectively, which are discussed in further detail in the ‘‘Asbestos and
Environmental Reserves’’ section below.
Bond & Specialty Insurance. Net favorable prior year reserve development in 2015 totaled
$258 million, primarily driven by better than expected loss experience in the fidelity and surety product
line for accident years 2008 through 2014, which was partially driven by a reduction in outstanding
exposures related to the financial crisis that commenced in 2007.
Personal Insurance. Net favorable prior year reserve development in 2015 totaled $278 million,
primarily driven by better than expected loss experience in (i) the Homeowners and Other product line
for liability coverages for accident years 2011 through 2014, for non-catastrophe weather-related losses
and non-weather-related losses for accident year 2014 and (ii) the Automobile product line for liability
coverages for accident years 2012 through 2014.
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
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