Allstate 2008 Annual Report Download - page 157

Management’s Discussion and Analysis
of Financial Condition and Results of Operations–(Continued)
The following tables reflect the accident years to which the reestimates shown above are applicable for
Allstate brand, Encompass brand and Discontinued Lines and Coverages lines of business. Favorable reserve
reestimates are shown in these tables in parentheses.
2008 Prior year reserve reestimates
1998 &
Prior 1999 2000 2001 2002 2003 2004 2005 2006 2007 Total
($ in millions)
Allstate brand $56 $(7) $ 9 $34 $ 1 $(5) $13 $152 $(71) $(27) $155
Encompass brand 2 — 2 (1) 2 1 (1) 10 (20) 2 (3)
Total Allstate Protection 58 (7) 11 33 3 (4) 12 162 (91) (25) 152
Discontinued Lines and Coverages 18 — — — — — — — — — 18
Total Property-Liability $76 $(7) $11 $33 $ 3 $(4) $12 $162 $(91) $(25) $170
2007 Prior year reserve reestimates
1997 &
Prior 1998 1999 2000 2001 2002 2003 2004 2005 2006 Total
($ in millions)
Allstate brand $103 $— $10 $16 $(5) $15 $ 5 $(10) $(225) $(76) $(167)
Encompass brand — — (1) (4) — 3 6 (4) (39) (13) (52)
Total Allstate Protection 103 — 9 12 (5) 18 11 (14) (264) (89) (219)
Discontinued Lines and Coverages 47 — — — — — — — — — 47
Total Property-Liability $150 $— $ 9 $12 $(5) $18 $11 $(14) $(264) $(89) $(172)
2006 Prior year reserve reestimates
1996 &
Prior 1997 1998 1999 2000 2001 2002 2003 2004 2005 Total
($ in millions)
Allstate brand $ 18 $(8) $(3) $(5) $(2) $(22) $(2) $(48) $(282) $(731) $(1,085)
Encompass brand — ————(6)—(10)(22)20 (18)
Total Allstate Protection 18 (8) (3) (5) (2) (28) (2) (58) (304) (711) (1,103)
Discontinued Lines and Coverages 132 ———— —— — — — 132
Total Property-Liability $150 $(8) $(3) $(5) $(2) $(28) $(2) $(58) $(304) $(711) $ (971)
Allstate brand prior year reserve reestimates were $155 million unfavorable in 2008 and $167 million and
$1.09 billion favorable in 2007 and 2006, respectively. In 2008, this was primarily due to litigation filed in
conjunction with a Louisiana deadline for filing suits related to Hurricane Katrina. In 2007, this was primarily due
to auto severity development that was better than expected, partially offset by unfavorable reserve reestimates of
catastrophe losses. In 2006, this was primarily due to auto injury severity development and late reported loss
development that was better than expected and changes in reserve reestimates of catastrophe losses which were
favorable in 2006.
These trends are primarily responsible for revisions to loss development factors, as previously described, used
to predict how losses are likely to develop from the end of a reporting period until all claims have been paid.
Because these trends cause actual losses to differ from those predicted by the estimated development factors
used in prior reserve estimates, reserves are revised as actuarial studies validate new trends based on the
indications of updated development factor calculations.
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MD&A