TD Bank 2014 Annual Report Download - page 190

TD BANK GROUP ANNUAL REPORT 2014 FINANCIAL RESULTS188
RECONCILIATION OF CHANGES IN LIABILITIES FOR PROPERTY
AND CASUALTY INSURANCE
For property and casualty insurance, the recognized liabilities are
comprised of a provision for unpaid claims (see the following section
(a)) and unearned premiums (see the following section (b)). The provi-
sion for unpaid claims is established to reflect the estimate of the full
amount of all liabilities associated with the insurance premiums earned
at the balance sheet date, including insurance claims incurred but not
recorded. The ultimate amount of these liabilities will vary from the
best estimate made for a variety of reasons, including additional infor-
mation with respect to the facts and circumstances of the insurance
claims incurred. The unearned premiums represent the portion of net
written premiums that pertain to the unexpired term of the policies
in force.
(a) Movement in Provision for Unpaid Claims
The following table presents movements in the property and casualty
insurance net provision for unpaid claims during the year.
Movement in Provision for Unpaid Claims
(millions of Canadian dollars) October 31, 2014 October 31, 2013
Gross Reinsurance Net Gross Reinsurance Net
Balance as at beginning of year $ 3,939 $ 157 $ 3,782 $ 3,276 $ 275 $ 3,001
Claims costs for current accident year 2,504 39 2,465 2,332 87 2,245
Prior accident years claims development
(favourable) unfavourable (132) (39) (93) 346 (65) 411
Increase (decrease) due to changes in assumptions:
Discount rate (17) 1 (18) (80) 1 (81)
Provision for adverse deviation 44 (1) 45 70 – 70
Claims and related expenses 2,399 – 2,399 2,668 23 2,645
Claims paid during the year for:
Current accident year (1,064) (3) (1,061) (1,011) (47) (964)
Prior accident years (934) (37) (897) (985) (85) (900)
(1,998) (40) (1,958) (1,996) (132) (1,864)
Increase (decrease) in other recoverables 8 8 – (9) (9) –
Balance as at end of year $ 4,348 $ 125 $ 4,223 $ 3,939 $ 157 $ 3,782
(b) Movement in Provision for Unearned Premiums
The following table presents movements in the property and casualty
insurance net unearned premiums during the year.
Movement in Provision for Unearned Premiums
(millions of Canadian dollars) October 31, 2014 October 31, 2013
Gross Reinsurance Net Gross Reinsurance Net
Balance as at beginning of year $ 1,506 $ – $ 1,506 $ 1,397 $ – $ 1,397
Written premiums 3,006 91 2,915 2,909 70 2,839
Earned premiums (2,953) (91) (2,862) (2,800) (70) (2,730)
Balance as at end of year $ 1,559 $ – $ 1,559 $ 1,506 $ – $ 1,506
(c) Other Movements in Insurance Liabilities
Other movements in insurance liabilities consists of changes in life and
health insurance policy benefit liabilities and other insurance payables
that were caused primarily by the aging of in force business and
changes in actuarial assumptions.
PROPERTY AND CASUALTY CLAIMS DEVELOPMENT
The following table shows the estimates of cumulative incurred claims
for the seven most recent accident years, with subsequent develop-
ments during the periods and together with cumulative payments to
date. The original reserve estimates are evaluated monthly for redun-
dancy or deficiency. The evaluation is based on actual payments in full
or partial settlement of claims and current estimates of claims liabilities
for claims still open or claims still unreported.