Allstate 2008 Annual Report Download - page 160

comprised (9) from 2008, 6 from 2007 and 8 from 2006. The decrease of 9 from 2008 included 15 new
policyholders reporting new claims and the closing of 24 policyholders’ claims.
IBNR net reserves decreased by $55 million. At December 31, 2008 IBNR represented 64% of total net
asbestos reserves, 1 point lower than at December 31, 2007. IBNR provides for reserve development of known
claims and future reporting of additional unknown claims from current and new policyholders and ceding
companies.
Pending, new, total closed and closed without payment claims for asbestos and environmental exposures for
the years ended December 31, are summarized in the following table.
2008 2007 2006
Number of claims
Asbestos
Pending, beginning of year 9,256 9,175 8,806
New 601 876 1,220
Total closed (1,077) (795) (851)
Pending, end of year 8,780 9,256 9,175
Closed without payment 800 364 596
Environmental
Pending, beginning of year 4,747 4,771 4,896
New 291 603 612
Total closed (435) (627) (737)
Pending, end of year 4,603 4,747 4,771
Closed without payment 307 370 513
Property-Liability Reinsurance Ceded For Allstate Protection, we utilize reinsurance to reduce exposure
to catastrophe risk and manage capital, and to support the required statutory surplus and the insurance financial
strength ratings of certain subsidiaries such as Allstate Floridian Insurance Company and Allstate New Jersey
Insurance Company. We purchase significant reinsurance where we believe the greatest benefit may be achieved
relative to our aggregate countrywide exposure. The price and terms of reinsurance and the credit quality of the
reinsurer are considered in the purchase process, along with whether the price can be appropriately reflected in
the costs that are considered in setting future rates charged to policyholders. We also participate in various
reinsurance mechanisms, including industry pools and facilities, which are backed by the financial resources of
the property-liability insurance company market participants, and have historically purchased reinsurance to
mitigate long-tail liability lines, including environmental, asbestos and other discontinued lines exposures. We
retain primary liability as a direct insurer for all risks ceded to reinsurers.
The impacts of reinsurance on our reserve for claims and claims expense at December 31 are summarized in
the following table, net of allowances we have established for uncollectible amounts.
Reserve for
Property-Liability
insurance claims Reinsurance
and claims expense recoverables, net
2008 2007 2008 2007
($ in millions)
Industry pools and facilities $ 2,012 $ 1,862 $1,442 $1,275
Asbestos and environmental 2,183 2,393 795 912
Other including allowance for future uncollectible reinsurance recoverables 15,261 14,610 116 117
Total Property-Liability $19,456 $18,865 $2,353 $2,304
Reinsurance recoverables include an estimate of the amount of property-liability insurance claims and claims
expense reserves that may be ceded under the terms of the reinsurance agreements, including incurred but not
reported unpaid losses. We calculate our ceded reinsurance estimate based on the terms of each applicable
reinsurance agreement, including an estimate of how IBNR losses will ultimately be ceded under the agreement.
We also consider other limitations and coverage exclusions under our reinsurance agreements. Accordingly, our
estimate of reinsurance recoverables is subject to similar risks and uncertainties as our estimate of reserve for
property-liability claims and claims expense. We believe the recoverables are appropriately established; however,
50
MD&A