Travelers 2015 Annual Report Download - page 83

Factors contributing to net favorable prior year reserve development in each segment for the years
ended December 31, 2015, 2014 and 2013 are discussed in more detail in note 7 of notes to the
consolidated financial statements herein.
Significant Catastrophe Losses
The Company defines a ‘‘catastrophe’’ as an event that:
• is designated a catastrophe by internationally recognized organizations that track and report on
insured losses resulting from catastrophic events, such as Property Claim Services (PCS) for
events in the United States and Canada; and
• the Company’s estimates of its ultimate losses before reinsurance and taxes exceed a
pre-established dollar threshold.
The Company’s threshold for disclosing catastrophes is determined at the reportable segment level.
If a threshold for one segment or a combination thereof is pierced and the other segments have losses
from the same event, losses from the event are identified as catastrophe losses in the segment results
and for the consolidated results of the Company. The threshold for 2015 ranged from approximately
$17 million to $30 million of losses before reinsurance and taxes.
The following table presents the amount of losses recorded by the Company for significant
catastrophes that occurred in 2015, 2014 and 2013, the amount of related net unfavorable (favorable)
prior year reserve development recognized in subsequent years, and the estimate of ultimate losses for
those catastrophes at December 31, 2015, 2014 and 2013. For purposes of the table, a significant
catastrophe is an event for which the Company estimates its ultimate losses will be $100 million or
more after reinsurance and before taxes.
Losses Incurred /
Unfavorable (Favorable)
Prior Year Reserve
Development for the Year Estimated Ultimate
Ended December 31, Losses at December 31,
(in millions, pretax and net of reinsurance) 2015 2014 2013 2015 2014 2013
2013
PCS Serial Number:
93—Severe wind and hail storms ............... $ 8 $ 5 $114 $127 $119 $114
15—Severe wind and hail storms ............... 6 16 128 150 144 128
2014
PCS Serial Number:
32—Winter storm .......................... (5) 144 n/a 139 144 n/a
43—Severe wind and hail storms ............... (4) 180 n/a 176 180 n/a
2015
PCS Serial Number:
68—Winter storm .......................... 140 n/a n/a 140 n/a n/a
n/a: not applicable.
Amortization of Deferred Acquisition Costs
Amortization of deferred acquisition costs of $3.89 billion in 2015 was comparable to 2014.
Amortization of deferred acquisition costs in 2014 was $3.88 billion, $61 million or 2% higher than in
2013, primarily reflecting the impact of the acquisition of Dominion, partially offset by declines in the
Personal Insurance segment. Amortization of deferred acquisition costs is discussed in more detail in
the segment discussions that follow.
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