|
☒
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ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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☐
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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Minnesota
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41-0518860
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(State or other jurisdiction of
incorporation or organization)
|
(I.R.S. Employer
Identification No.)
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Title of each class
|
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Trading Symbol(s)
|
|
Name of each exchange on which registered
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Common stock, without par value
|
|
TRV
|
|
New York Stock Exchange
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Large accelerated filer
|
x
|
Accelerated filer
|
¨
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Non-accelerated filer
|
¨
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Smaller reporting company
|
☐
|
|
Emerging growth company
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☐
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Item Number
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Page
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•
|
ability to profitably price business, retain existing customers and obtain new business;
|
•
|
premiums charged, contract terms and conditions, products and services offered (including the ability to design customized programs);
|
•
|
agent, broker and policyholder relationships;
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•
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ability to keep pace relative to competitors with changes in technology and information systems;
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•
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ability to use data and analytics to make decisions;
|
•
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speed of claims payment;
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•
|
ability to provide a positive customer experience;
|
•
|
ability to provide products and services in a cost effective manner;
|
•
|
ability to provide new products and services to meet changing customer needs;
|
•
|
ability to adapt to changes in business models, technology, customer preferences or regulation impacting the markets in which the Company operates;
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•
|
perceived overall financial strength and corresponding ratings assigned by independent rating agencies;
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•
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reputation, experience and qualifications of employees;
|
•
|
geographic scope of business; and
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•
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local presence.
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Location
|
|
% of
Total
|
|
Domestic:
|
|
|
|
California
|
|
10.0
|
%
|
New York
|
|
9.6
|
|
Texas
|
|
8.0
|
|
Pennsylvania
|
|
4.4
|
|
Florida
|
|
4.1
|
|
New Jersey
|
|
3.9
|
|
Illinois
|
|
3.8
|
|
Georgia
|
|
3.5
|
|
All other domestic (1)
|
|
46.3
|
|
Total Domestic
|
|
93.6
|
|
|
|
|
|
International:
|
|
|
|
Canada
|
|
4.3
|
|
All other international (1)
|
|
2.1
|
|
Total International
|
|
6.4
|
|
Consolidated total
|
|
100.0
|
%
|
(1)
|
No other single state or country accounted for 3.0% or more of the Company’s consolidated direct written premiums written in 2019.
|
•
|
Select Accounts provides small businesses with property and casualty insurance products and services, including commercial multi-peril, workers’ compensation, commercial automobile, general liability and commercial property.
|
•
|
Middle Market provides mid-sized businesses with property and casualty insurance products and services, including workers’ compensation, general liability, commercial multi-peril, commercial automobile and commercial property, as well as risk management, claims handling and other services. Middle Market generally provides these products to mid-sized businesses through Commercial Accounts, as well as to targeted industries through Construction, Technology, Public Sector Services and Oil & Gas, and additionally, provides mono-line umbrella and excess coverage insurance through Excess Casualty. Middle Market also provides insurance for goods in transit and movable objects, as well as builders’ risk insurance, through Inland Marine; insurance for the marine transportation industry and related services, as well as other businesses involved in international trade, through Ocean Marine; and comprehensive breakdown for equipment, including property and business interruption, through Boiler & Machinery.
|
•
|
National Accounts provides large companies with casualty insurance products and services, including workers’ compensation, commercial automobile and general liability, generally utilizing loss-sensitive products, on both a bundled and unbundled basis, as well as risk management, claims handling and other services. National Accounts also includes the Company’s commercial residual market business, which primarily offers workers’ compensation claims, policy management and other administrative services related to the involuntary market.
|
•
|
National Property and Other provides traditional and customized commercial property insurance programs to large and mid-sized customers through National Property. National Property and Other also provides insurance coverage for the commercial transportation industry through Northland Transportation and serves small- to medium-sized agricultural businesses, including farms, ranches and other agricultural-related operations through Agribusiness. National Property and Other also includes commercial property and general liability policies for small, difficult-to-place specialty classes of commercial business primarily on an excess and surplus lines basis through Northfield and also offers tailored property and casualty insurance programs on an admitted basis for customers with common risk characteristics or coverage requirements through National Programs.
|
•
|
International, through operations in Canada, the United Kingdom and the Republic of Ireland, provides property and casualty insurance and risk management services to several customer groups, including, among others, those in the technology, manufacturing and public services industry sectors. International also provides insurance for both the foreign exposures of United States organizations and the United States exposures of foreign organizations through Global Services. At its Lloyd’s syndicate (Syndicate 5000), for which the Company provides 100% of the capital, International underwrites six principal businesses—international marine, retail marine, global property, construction & special risks, energy and aviation.
|
(for the year ended December 31, in millions)
|
|
2019
|
|
2018
|
|
2017
|
|
% of Total 2019
|
|||||||
By market:
|
|
|
|
|
|
|
|
|
|
|
|
|
|||
Domestic:
|
|
|
|
|
|
|
|
|
|
|
|
|
|||
Select Accounts
|
|
$
|
2,911
|
|
|
$
|
2,828
|
|
|
$
|
2,800
|
|
|
18.6
|
%
|
Middle Market
|
|
8,630
|
|
|
8,214
|
|
|
7,756
|
|
|
55.2
|
|
|||
National Accounts
|
|
1,051
|
|
|
1,025
|
|
|
1,010
|
|
|
6.7
|
|
|||
National Property and Other
|
|
1,965
|
|
|
1,805
|
|
|
1,691
|
|
|
12.6
|
|
|||
Total Domestic
|
|
14,557
|
|
|
13,872
|
|
|
13,257
|
|
|
93.1
|
|
|||
International
|
|
1,072
|
|
|
1,084
|
|
|
1,013
|
|
|
6.9
|
|
|||
Total Business Insurance by market
|
|
$
|
15,629
|
|
|
$
|
14,956
|
|
|
$
|
14,270
|
|
|
100.0
|
%
|
By product line:
|
|
|
|
|
|
|
|
|
|
|
|
|
|||
Domestic:
|
|
|
|
|
|
|
|
|
|
|
|
|
|||
Workers’ compensation
|
|
$
|
3,806
|
|
|
$
|
3,840
|
|
|
$
|
3,926
|
|
|
24.3
|
%
|
Commercial automobile
|
|
2,736
|
|
|
2,518
|
|
|
2,219
|
|
|
17.5
|
|
|||
Commercial property
|
|
2,014
|
|
|
1,867
|
|
|
1,772
|
|
|
12.9
|
|
|||
General liability
|
|
2,416
|
|
|
2,227
|
|
|
2,086
|
|
|
15.4
|
|
|||
Commercial multi-peril
|
|
3,542
|
|
|
3,390
|
|
|
3,228
|
|
|
22.7
|
|
|||
Other
|
|
43
|
|
|
30
|
|
|
26
|
|
|
0.3
|
|
|||
Total Domestic
|
|
14,557
|
|
|
13,872
|
|
|
13,257
|
|
|
93.1
|
|
|||
International
|
|
1,072
|
|
|
1,084
|
|
|
1,013
|
|
|
6.9
|
|
|||
Total Business Insurance by product line
|
|
$
|
15,629
|
|
|
$
|
14,956
|
|
|
$
|
14,270
|
|
|
100.0
|
%
|
•
|
Select Accounts markets and distributes products and services to small businesses, generally with fewer than 50 employees, through a large network of independent agents and brokers. Products offered by Select Accounts are guaranteed-cost policies, including packaged products covering property and liability exposures. Each small business risk is independently evaluated via an automated underwriting platform which in turn enables agents to quote, bind and issue a substantial amount of new small business risks in an efficient manner. Risks with more complex characteristics are underwritten with the assistance of Company personnel.
|
•
|
Middle Market markets and distributes products and services primarily to mid-sized businesses with 50 to 1,000 employees through a large network of independent agents and brokers. The Company offers a full line of products to its Middle Market customers with an emphasis on guaranteed-cost programs. Each account is underwritten based on the unique risk characteristics, loss history and coverage needs of the account. The ability to underwrite at this detailed level allows Middle Market to have a broad risk appetite and a diversified customer base. Within Middle Market, products and services are tailored to certain targeted industry segments of significant size and complexity that require unique underwriting, claims handling services, risk management or other insurance-related products and services.
|
•
|
National Accounts markets and distributes products and services to large companies through a network of national and regional brokers. Products offered by National Accounts are primarily casualty programs that utilize loss-sensitive products, such as large deductible, and to a lesser extent, retrospectively rated insurance and self-insured retention plans. National Accounts also offers insurance-related services, such as claims administration, risk management, loss control and risk management information services through Constitution State Services LLC, a wholly-owned subsidiary of the Company. The commercial residual market business of National Accounts services approximately 38% of the total workers’ compensation assigned risk market, making the Company one of the largest servicing carriers in the industry.
|
•
|
National Property and Other markets and distributes products and services to a wide customer base, providing traditional and customized insurance programs to a broad range of customer sizes through a large network of agents and brokers. National Property and Other also markets and distributes its products through brokers, wholesale agents, program managers and specialized retail agents who operate in certain markets that are not typically served by the Company’s appointed retail agents, or who maintain certain affinity arrangements in specialized market segments. The wholesale excess and surplus lines market, which is characterized by the absence of rate and form regulation, allows for more pricing and coverage flexibility to write certain classes of business. In working with agents or program managers on a brokerage basis, National Property and Other underwrites the business internally and sets the premium level. In working with agents or program managers with delegated underwriting authority, the agents produce and underwrite business subject to pricing and underwriting guidelines that have been specifically designed for each facility or program.
|
•
|
Workers’ Compensation. Provides coverage for employers for specified benefits payable under state or federal law for workplace injuries to employees. There are typically four types of benefits payable under workers’ compensation policies: medical benefits, disability benefits, death benefits and vocational rehabilitation benefits. The Company emphasizes managed care cost containment strategies, which involve employers, employees and care providers in a collaborative effort that focuses on the injured employee’s early return to work and cost-effective quality care. The Company offers the following types of workers’ compensation products:
|
•
|
guaranteed-cost insurance products, where the premiums charged are not adjusted for actual loss experience during the covered period;
|
•
|
loss-sensitive insurance products, including large deductible and retrospectively rated policies, where fees or premiums are adjusted based on actual loss experience of the insured during the policy period; and
|
•
|
service programs, which are generally sold to the Company’s National Accounts customers, where the Company receives fees rather than premiums for providing loss prevention, risk management, and claim and benefit administration services.
|
•
|
Commercial Automobile. Provides coverage for businesses against losses incurred from personal bodily injury, bodily injury to third parties, property damage to an insured’s vehicle and property damage to other vehicles and other property resulting from the ownership, maintenance or use of automobiles and trucks in a business.
|
•
|
Commercial Property. Provides coverage for loss of or damage to buildings, inventory and equipment resulting from a variety of events, including, among others, hurricanes and other windstorms, tornadoes, earthquakes, hail, wildfires, severe winter weather, floods, volcanic eruptions, tsunamis, theft, vandalism, fires, explosions, terrorism and financial loss due to business interruption resulting from covered property damage. Commercial property also includes specialized equipment insurance, which provides coverage for loss or damage resulting from the mechanical breakdown of boilers and machinery, and ocean and inland marine insurance, which provides coverage for goods in transit and unique, one-of-a-kind exposures.
|
•
|
General Liability. Provides coverages for businesses against third-party claims arising from accidents occurring on their premises or arising out of their operations, including as a result of injuries sustained from products sold. Coverages may also include directors’ and officers’ liability arising in their official capacities, employment practices liability insurance, fiduciary liability for trustees and sponsors of pension, health and welfare, and other employee benefit plans, errors and omissions insurance for employees, agents, professionals and others arising from acts or failures to act under specified circumstances, cyber liability, as well as umbrella and excess insurance.
|
•
|
Commercial Multi-Peril. Provides a combination of the property and liability coverages described in the foregoing product line descriptions.
|
•
|
Provides coverage for employers’ liability (similar to workers’ compensation coverage in the United States), public and product liability (the equivalent of general liability), professional indemnity (similar to professional liability coverage), commercial property, commercial automobile, marine, aviation, onshore and offshore energy, construction, terrorism, personal accident and kidnap & ransom. Marine provides coverage for ship hulls, cargoes carried, private yachts, marine-related liability, ports and terminals, and fine art. Aviation provides coverage for worldwide aviation risks including physical damage and liabilities for airline, aerospace, general aviation, aviation war and space risks. Personal accident provides financial protection in the event of death or disablement due to accidental bodily injury, while kidnap & ransom provides financial protection against kidnap, hijack, illegal detention and extortion. While the covered hazards may be similar to those in the U.S. market, the different legal environments can make the product risks and coverage terms very different from those the Company faces in the United States.
|
Location
|
|
% of Total
|
|
Domestic:
|
|
|
|
California
|
|
12.1
|
%
|
New York
|
|
9.8
|
|
Texas
|
|
7.1
|
|
Illinois
|
|
4.5
|
|
Florida
|
|
4.0
|
|
Pennsylvania
|
|
3.9
|
|
New Jersey
|
|
3.8
|
|
Massachusetts
|
|
3.1
|
|
All other domestic (1)
|
|
45.9
|
|
Total Domestic
|
|
94.2
|
|
|
|
|
|
International:
|
|
|
|
Canada
|
|
3.0
|
|
All other international (1)
|
|
2.8
|
|
Total International
|
|
5.8
|
|
Total Business Insurance
|
|
100.0
|
%
|
(1)
|
No other single state or country accounted for 3.0% or more of Business Insurance’s direct written premiums in 2019.
|
(for the year ended December 31, in millions)
|
|
2019
|
|
2018
|
|
2017
|
|
% of Total 2019
|
|||||||
Domestic:
|
|
|
|
|
|
|
|
|
|
|
|
|
|||
Fidelity and surety
|
|
$
|
1,089
|
|
|
$
|
1,049
|
|
|
$
|
993
|
|
|
39.8
|
%
|
General liability
|
|
1,148
|
|
|
1,037
|
|
|
977
|
|
|
41.9
|
|
|||
Other
|
|
234
|
|
|
204
|
|
|
190
|
|
|
8.5
|
|
|||
Total Domestic
|
|
2,471
|
|
|
2,290
|
|
|
2,160
|
|
|
90.2
|
|
|||
International
|
|
268
|
|
|
238
|
|
|
199
|
|
|
9.8
|
|
|||
Total Bond & Specialty Insurance
|
|
$
|
2,739
|
|
|
$
|
2,528
|
|
|
$
|
2,359
|
|
|
100.0
|
%
|
•
|
Fidelity and Surety. Provides fidelity insurance coverage, which protects an insured for loss due to embezzlement or misappropriation of funds by an employee, and surety, which is a three-party agreement whereby the surety company agrees to pay a third party or complete an obligation in response to the default, acts or omissions of a bonded party. Surety bonds are generally provided for construction performance, legal matters such as appeals, trustees in bankruptcy and probate and other performance obligations.
|
•
|
General Liability. Provides coverage for specialized liability exposures as described above in more detail in the “Business Insurance” section of this report.
|
•
|
Other. Coverages include Commercial Property, Workers’ Compensation, Commercial Automobile and Commercial Multi-Peril, which are described above in more detail in the “Business Insurance” section of this report.
|
•
|
Fidelity and Surety and certain General Liability products, as well as cyber risk coverages, are provided internationally to various customer groups.
|
Location
|
|
% of
Total
|
|
Domestic:
|
|
|
|
California
|
|
10.2
|
%
|
Texas
|
|
6.7
|
|
New York
|
|
6.7
|
|
Florida
|
|
5.1
|
|
Illinois
|
|
4.2
|
|
Pennsylvania
|
|
3.5
|
|
All other domestic (1)
|
|
53.6
|
|
Total Domestic
|
|
90.0
|
|
|
|
|
|
International:
|
|
|
|
United Kingdom
|
|
5.1
|
|
Canada
|
|
4.0
|
|
All other international (1)
|
|
0.9
|
|
Total International
|
|
10.0
|
|
Total Bond & Specialty Insurance
|
|
100.0
|
%
|
(1)
|
No other single state or country accounted for 3.0% or more of Bond & Specialty Insurance’s direct written premiums in 2019.
|
(for the year ended December 31, in millions)
|
|
2019
|
|
2018
|
|
2017
|
|
% of Total 2019
|
|||||||
Domestic:
|
|
|
|
|
|
|
|
|
|
|
|
|
|||
Agency:
|
|
|
|
|
|
|
|
|
|
|
|
|
|||
Automobile
|
|
$
|
5,124
|
|
|
$
|
4,972
|
|
|
$
|
4,646
|
|
|
47.5
|
%
|
Homeowners and Other
|
|
4,540
|
|
|
4,148
|
|
|
3,933
|
|
|
42.1
|
|
|||
Total Agency
|
|
9,664
|
|
|
9,120
|
|
|
8,579
|
|
|
89.6
|
|
|||
Direct-to-Consumer
|
|
412
|
|
|
396
|
|
|
361
|
|
|
3.8
|
|
|||
Total Domestic
|
|
10,076
|
|
|
9,516
|
|
|
8,940
|
|
|
93.4
|
|
|||
International
|
|
707
|
|
|
708
|
|
|
650
|
|
|
6.6
|
|
|||
Total Personal Insurance
|
|
$
|
10,783
|
|
|
$
|
10,224
|
|
|
$
|
9,590
|
|
|
100.0
|
%
|
•
|
Personal Automobile provides coverage for liability to others for both bodily injury and property damage, uninsured motorist protection, and for physical damage to an insured’s own vehicle from collision, fire, flood, hail and theft. In addition, many states require policies to provide first-party personal injury protection, frequently referred to as no-fault coverage.
|
•
|
Homeowners and Other provides protection against losses to dwellings and contents from a variety of perils (excluding flooding) as well as coverage for personal liability. The Company writes homeowners insurance for dwellings, condominiums and tenants, and rental properties. The Company also writes coverage for boats and yachts and valuable personal items such as jewelry, and also writes coverages for umbrella liability, identity fraud, and weddings and special events.
|
•
|
International provides automobile and homeowners and other coverages in Canada (similar to coverages in the United States). Personal Insurance had approximately 536,000 active policies in Canada at December 31, 2019.
|
Location
|
|
% of
Total
|
|
Domestic:
|
|
|
|
New York
|
|
10.0
|
%
|
Texas (1)
|
|
9.9
|
|
California
|
|
6.6
|
|
Pennsylvania
|
|
5.3
|
|
Georgia
|
|
5.0
|
|
New Jersey
|
|
4.4
|
|
Florida
|
|
4.2
|
|
Virginia
|
|
3.6
|
|
Colorado
|
|
3.3
|
|
South Carolina
|
|
3.1
|
|
Maryland
|
|
3.0
|
|
All other domestic (2)
|
|
35.2
|
|
Total Domestic
|
|
93.6
|
|
|
|
|
|
International:
|
|
|
|
Canada
|
|
6.4
|
|
Total International
|
|
6.4
|
|
Total Personal Insurance
|
|
100.0
|
%
|
(1)
|
The percentage for Texas includes business written by the Company through a fronting agreement with another insurer.
|
(2)
|
No other single state accounted for 3.0% or more of Personal Insurance’s direct written premiums in 2019.
|
|
|
A.M. Best
|
|
Moody’s
|
|
S&P
|
|
Fitch
|
|||
Travelers Reinsurance Pool (a)(b)
|
|
A++
|
(1st of 16)
|
|
Aa2
|
(3rd of 21)
|
|
AA
|
(3rd of 21)
|
|
AA (3rd of 21)
|
Travelers C&S Co. of America
|
|
A++
|
(1st of 16)
|
|
Aa2
|
(3rd of 21)
|
|
AA
|
(3rd of 21)
|
|
AA (3rd of 21)
|
First Floridian Auto and Home Ins. Co.
|
|
A-
|
(4th of 16)
|
|
—
|
|
—
|
|
AA (3rd of 21)
|
||
Travelers Insurance Company of Canada
|
|
A++
|
(1st of 16)
|
|
—
|
|
AA-
|
(4th of 21)
|
|
—
|
|
The Dominion of Canada General Insurance Company
|
|
A
|
(3rd of 16)
|
|
—
|
|
—
|
|
—
|
||
Travelers Insurance Company Limited
|
|
A++
|
(1st of 16)
|
|
—
|
|
AA
|
(3rd of 21)
|
|
—
|
|
Travelers Insurance Designated Activity Company
|
|
A++
|
(1st of 16)
|
|
|
—
|
|
AA-
|
(4th of 21)
|
|
—
|
(a)
|
The Travelers Reinsurance Pool consists of: The Travelers Indemnity Company, The Charter Oak Fire Insurance Company, The Phoenix Insurance Company, The Travelers Indemnity Company of Connecticut, The Travelers Indemnity Company of America, Travelers Property Casualty Company of America, Travelers Commercial Casualty Company, TravCo Insurance Company, The Travelers Home and Marine Insurance Company, Travelers Casualty and Surety Company, Northland Insurance Company, Northfield Insurance Company, Northland Casualty Company, American Equity Specialty Insurance Company, The Standard Fire Insurance Company, The Automobile Insurance Company of Hartford, Connecticut, Travelers Casualty Insurance Company of America, Farmington Casualty Company, Travelers Commercial Insurance Company, Travelers Casualty Company of Connecticut, Travelers Property Casualty Insurance Company, Travelers Personal Security Insurance Company, Travelers Personal Insurance Company, Travelers Excess
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(b)
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The following affiliated companies are 100% reinsured by one of the pool participants noted in (a) above: Fidelity and Guaranty Insurance Company, Gulf Underwriters Insurance Company, American Equity Insurance Company, Select Insurance Company, The Travelers Lloyds Insurance Company and Travelers Lloyds of Texas Insurance Company.
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A.M. Best
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Moody’s
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S&P
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Fitch
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Senior debt
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a+ (5th of 22)
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A2
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(6th of 21)
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A
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(6th of 22)
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A
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(6th of 22)
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Subordinated debt
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a (6th of 22)
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A3
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(7th of 21)
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A-
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(7th of 22)
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BBB+
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(8th of 22)
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Junior subordinated debt
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a- (7th of 22)
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A3
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(7th of 21)
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BBB+
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(8th of 22)
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BBB+
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(8th of 22)
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Trust preferred securities
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a- (7th of 22)
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A3
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(7th of 21)
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BBB+
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(8th of 22)
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BBB+
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(8th of 22)
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Commercial paper
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AMB-1+ (1st of 6)
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P-1
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(1st of 4)
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A-1
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(2nd of 10)
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F1
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(2nd of 8)
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•
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On February 28, 2019, A.M. Best assigned a financial strength rating of "A++" to the Company's newly established insurance subsidiary in the Republic of Ireland, Travelers Insurance Designated Activity Company. The outlook for this rating is stable.
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•
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On May 20, 2019, Fitch affirmed all ratings of the Company. The outlook for all ratings is stable.
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•
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On June 26, 2019, S&P assigned a financial strength rating of "A+" to the Company's newly established insurance subsidiary in the Republic of Ireland, Travelers Insurance Designated Activity Company. The outlook for this rating is stable.
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•
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On July 29, 2019, S&P affirmed all ratings of the Company. The outlook for all ratings is stable.
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•
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On November 1, 2019, Moody's affirmed all ratings of the Company. The outlook for all ratings is stable.
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•
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On November 5, 2019, A.M. Best affirmed all ratings of the Company. The outlook for all ratings is stable.
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•
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On November 19, 2019, S&P upgraded the financial strength rating of Travelers Insurance Designated Activity Company to "AA-" from "A+." The outlook for this rating is stable.
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Accident year
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The annual calendar accounting period in which loss events occurred, regardless of when the losses are actually reported, booked or paid.
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Adjusted unassigned surplus
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Unassigned surplus as of the most recent statutory annual report reduced by twenty-five percent of that year’s unrealized appreciation in value or revaluation of assets or unrealized profits on investments, as defined in that report.
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Admitted insurer
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A company licensed to transact insurance business within a state.
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Agent
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A licensed individual who sells and services insurance policies, receiving a commission from the insurer for selling the business and a fee for servicing it. An independent agent represents multiple insurance companies and searches the market for the best product for its client.
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Annuity
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A contract that pays a periodic benefit over the remaining life of a person (the annuitant), the lives of two or more persons or for a specified period of time.
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Assigned risk pools
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Reinsurance pools which cover risks for those unable to purchase insurance in the voluntary market. Possible reasons for this inability include the risk being too great or the profit being too small under the required insurance rate structure. The costs of the risks associated with these pools are charged back to insurance carriers in proportion to their direct writings.
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Assumed reinsurance
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Insurance risks acquired from a ceding company.
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Book value per share
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Total common shareholders’ equity divided by the number of common shares outstanding.
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Broker
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One who negotiates contracts of insurance or reinsurance on behalf of an insured party, receiving a commission from the insurer or reinsurer for placement and other services rendered.
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Capacity
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The percentage of statutory capital and surplus, or the dollar amount of exposure, that an insurer or reinsurer is willing or able to place at risk. Capacity may apply to a single risk, a program, a line of business or an entire book of business. Capacity may be constrained by legal restrictions, corporate restrictions or indirect restrictions.
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Captive
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A closely-held insurance company whose primary purpose is to provide insurance coverage to the company’s owners or their affiliates.
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Case reserves
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Claim department estimates of anticipated future payments to be made on each specific individual reported claim.
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Casualty insurance
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Insurance which is primarily concerned with the losses caused by injuries to third persons, i.e., not the insured, and the legal liability imposed on the insured resulting therefrom. It includes, but is not limited to, employers’ liability, workers’ compensation, public liability, automobile liability, personal liability and aviation liability insurance. It excludes certain types of losses that by law or custom are considered as being exclusively within the scope of other types of insurance, such as fire or marine.
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Catastrophe
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A severe loss 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. Catastrophes include hurricanes, tornadoes and other windstorms, earthquakes, hail, wildfires, severe winter weather, floods, tsunamis, volcanic eruptions, solar flares and other naturally-occurring events. Catastrophes can also be man-made, such as terrorist attacks and other intentionally destructive acts including those involving nuclear, biological, chemical and radiological events, cyber events, explosions and destruction of infrastructure. Each catastrophe has unique characteristics and catastrophes are not predictable as to timing or amount. Their effects are included in net and core income and claims and claim adjustment expense reserves upon occurrence. A catastrophe may result in the payment of reinsurance reinstatement premiums and assessments from various pools.
The Company’s threshold for disclosing catastrophes is primarily determined at the reportable segment level. If a threshold for one segment or a combination thereof is exceeded 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. Additionally, an aggregate threshold is applied for International business across all reportable segments. The threshold for 2019 ranged from approximately $19 million to $30 million of losses before reinsurance and taxes.
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Catastrophe loss
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Loss and directly identified loss adjustment expenses from catastrophes, as well as related reinsurance reinstatement premiums and assessments from various pools.
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Catastrophe reinsurance
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A form of excess-of-loss reinsurance which, subject to a specified limit, indemnifies the ceding company for the amount of loss in excess of a specified retention with respect to an accumulation of losses and related reinsurance reinstatement premiums resulting from a catastrophic event. The actual reinsurance document is called a “catastrophe cover.” These reinsurance contracts are typically designed to cover property insurance losses but can be written to cover casualty insurance losses such as from workers’ compensation policies.
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Cede; ceding company
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When an insurer reinsures its liability with another insurer or a “cession,” it “cedes” business and is referred to as the “ceding company.”
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Ceded reinsurance
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Insurance risks transferred to another company as reinsurance. See “Reinsurance.”
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Claim
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Request by an insured for indemnification by an insurance company for loss incurred from an insured peril.
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Claim adjustment expenses
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See “Loss adjustment expenses (LAE).”
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Claims and claim adjustment expenses
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See “Loss” and “Loss adjustment expenses (LAE).”
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Claims and claim adjustment expense reserves
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See “Loss reserves.”
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Cohort
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A group of items or individuals that share a particular statistical or demographic characteristic. For example, all claims for a given product in a given market for a given accident year would represent a cohort of claims.
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Combined ratio
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For Statutory Accounting Practices (SAP), the combined ratio is the sum of the SAP loss and LAE ratio and the SAP underwriting expense ratio as defined in the statutory financial statements required by insurance regulators. The combined ratio as used in this report is the equivalent of, and is calculated in the same manner as, the SAP combined ratio except that the SAP underwriting expense ratio is based on net written premium and the underwriting expense ratio as used in this report is based on net earned premiums.
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The combined ratio is an indicator of the Company’s underwriting discipline, efficiency in acquiring and servicing its business and overall underwriting profitability. A combined ratio under 100% generally indicates an underwriting profit. A combined ratio over 100% generally indicates an underwriting loss.
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Other companies’ method of computing a similarly titled measure may not be comparable to the Company’s method of computing this ratio.
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Commercial multi-peril policies
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Refers to policies which cover both property and third-party liability exposures.
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Commutation agreement
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An agreement between a reinsurer and a ceding company whereby the reinsurer pays an agreed-upon amount in exchange for a complete discharge of all obligations, including future obligations, between the parties for reinsurance losses incurred.
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Core income (loss)
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Consolidated net income (loss) excluding the after-tax impact of net realized investment gains (losses), discontinued operations, the effect of a change in tax laws and tax rates at enactment date, and cumulative effect of changes in accounting principles when applicable. Financial statement users consider core income when analyzing the results and trends of insurance companies.
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Debt-to-total capital ratio
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The ratio of debt to total capitalization.
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Debt-to-total capital ratio excluding net unrealized gain (loss) on investments
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The ratio of debt to total capitalization excluding the after-tax impact of net unrealized investment gains and losses included in shareholders' equity.
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Deductible
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The amount of loss that an insured retains.
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Deferred acquisition costs (DAC)
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Incremental direct costs of acquired and renewal insurance contracts, consisting of commissions (other than contingent commissions) and premium-related taxes that are deferred and amortized to achieve a matching of revenues and expenses when reported in financial statements prepared in accordance with U.S. Generally Accepted Accounting Principles (GAAP).
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Deficiency
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With regard to reserves for a given liability, a deficiency exists when it is estimated or determined that the reserves are insufficient to pay the ultimate settlement value of the related liabilities. Where the deficiency is the result of an estimate, the estimated amount of deficiency (or even the finding of whether or not a deficiency exists) may change as new information becomes available.
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Demand surge
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Significant short-term increases in building material and labor costs due to a sharp increase in demand for those materials and services, commonly as a result of a large catastrophe resulting in significant widespread property damage.
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Direct written premiums
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The amounts charged by an insurer to insureds in exchange for coverages provided in accordance with the terms of an insurance contract. The amounts exclude the impact of all reinsurance premiums, either assumed or ceded.
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Earned premiums or premiums earned
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That portion of property casualty premiums written that applies to the expired portion of the policy term. Earned premiums are recognized as revenues under both SAP and GAAP.
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Excess and surplus lines insurance
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Insurance for risks not covered by standard insurance due to the unique nature of the risk. Risks could be placed in excess and surplus lines markets due to any number of characteristics, such as loss experience, unique or unusual exposures, or insufficient experience in business. Excess and surplus lines are less regulated by the states, allowing greater flexibility to design specific insurance coverage and negotiate pricing based on the risks to be secured.
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Excess liability
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Additional casualty coverage above a layer of insurance exposures.
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Excess-of-loss reinsurance
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Reinsurance that indemnifies the reinsured against all or a specified portion of losses over a specified dollar amount or “retention.”
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Exposure
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The measure of risk used in the pricing of an insurance product. The change in exposure is the amount of change in premium on policies that renew attributable to the change in portfolio risk.
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Facultative reinsurance
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The reinsurance of all or a portion of the insurance provided by a single policy. Each policy reinsured is separately negotiated.
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Fair Access to Insurance Requirements (FAIR) Plan
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A residual market mechanism which provides property insurance to those unable to obtain such insurance through the regular (voluntary) market. FAIR plans are set up on a state-by-state basis to cover only those risks in that state. For more information, see “residual market (involuntary business).”
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Fidelity and surety programs
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Fidelity insurance coverage protects an insured for loss due to embezzlement or misappropriation of funds by an employee. Surety is a three-party agreement in which the insurer agrees to pay a third party or make complete an obligation in response to the default, acts or omissions of an insured.
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Gross written premiums
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The direct and assumed contractually determined amounts charged to the policyholders for the effective period of the contract based on the terms and conditions of the insurance contract.
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Ground-up analysis
|
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A method to estimate ultimate claim costs for a given cohort of claims such as an accident year/product line component. It involves analyzing the exposure and claim activity at an individual insured level and then through the use of deterministic or stochastic scenarios and/or simulations, estimating the ultimate losses for those insureds. The total losses for the cohort are then the sum of the losses for each individual insured.
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In practice, the method is sometimes simplified by performing the individual insured analysis only for the larger insureds, with the costs for the smaller insureds estimated via sampling approaches (extrapolated to the rest of the smaller insured population) or aggregate approaches (using assumptions consistent with the ground-up larger insured analysis).
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Guaranteed-cost products
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An insurance policy where the premiums charged will not be adjusted for actual loss experience during the covered period.
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Guaranty fund
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A state-regulated mechanism that is financed by assessing insurers doing business in those states. Should insolvencies occur, these funds are available to meet some or all of the insolvent insurer’s obligations to policyholders.
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Holding company liquidity
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Total cash, short-term invested assets and other readily marketable securities held by the holding company.
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Incurred but not reported (IBNR) reserves
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Reserves for estimated losses and LAE that have been incurred but not yet reported to the insurer. This includes amounts for unreported claims, development on known cases and re-opened claims.
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Inland marine
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A broad type of insurance generally covering articles that may be transported from one place to another, as well as bridges, tunnels and other instrumentalities of transportation. It includes goods in transit, generally other than transoceanic, and may include policies for movable objects such as personal effects, personal property, jewelry, furs, fine art and others.
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Insurance Regulatory Information System (IRIS) ratios
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Financial ratios calculated by the NAIC to assist state insurance departments in monitoring the financial condition of insurance companies.
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Large deductible policy
|
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An insurance policy where the customer assumes at least $25,000 or more of each loss. Typically, the insurer is responsible for paying the entire loss under those policies and then seeks reimbursement from the insured for the deductible amount.
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Lloyd’s
|
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An insurance marketplace based in London, England, where brokers, representing clients with insurable risks, deal with Lloyd’s underwriters, who represent investors. The investors are grouped together into syndicates that provide capital to insure the risks.
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Loss
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An occurrence that is the basis for submission and/or payment of a claim. Losses may be covered, limited or excluded from coverage, depending on the terms of the policy.
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Loss adjustment expenses (LAE)
|
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The expenses of settling claims, including legal and other fees and the portion of general expenses allocated to claim settlement costs.
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Loss and LAE ratio
|
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For SAP, the loss and LAE ratio is the ratio of incurred losses and loss adjustment expenses less certain administrative services fee income to net earned premiums as defined in the statutory financial statements required by insurance regulators. The loss and LAE ratio as used in this report is calculated in the same manner as the SAP ratio.
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The loss and LAE ratio is an indicator of the Company’s underwriting discipline and underwriting profitability.
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Other companies’ method of computing a similarly titled measure may not be comparable to the Company’s method of computing this ratio.
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Loss reserves
|
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Liabilities established by insurers and reinsurers to reflect the estimated cost of claims incurred that the insurer or reinsurer will ultimately be required to pay in respect of insurance or reinsurance it has written. Reserves are established for losses and for LAE, and consist of case reserves and IBNR reserves. As the term is used in this document, “loss reserves” is meant to include reserves for both losses and LAE.
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Loss reserve development
|
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The increase or decrease in incurred claims and claim adjustment expenses as a result of the re-estimation of claims and claim adjustment expense reserves at successive valuation dates for a given group of claims. Loss reserve development may be related to prior year or current year development.
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Losses incurred
|
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The total losses sustained by an insurance company under a policy or policies, whether paid or unpaid. Incurred losses include a provision for IBNR.
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National Association of Insurance Commissioners (NAIC)
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An organization of the insurance commissioners or directors of all 50 states, the District of Columbia and the five U.S. territories organized to promote consistency of regulatory practice and statutory accounting standards throughout the United States.
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Net written premiums
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Direct written premiums plus assumed reinsurance premiums less premiums ceded to reinsurers.
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New business volume
|
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The amount of written premiums related to new policyholders and additional products sold to existing policyholders.
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Pool
|
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An organization of insurers or reinsurers through which particular types of risks are underwritten with premiums, losses and expenses being shared in agreed-upon percentages.
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Premiums
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The amount charged during the year on policies and contracts issued, renewed or reinsured by an insurance company.
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Probable maximum loss (PML)
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The maximum amount of loss that the Company would be expected to incur on a policy if a loss were to occur, giving effect to collateral, reinsurance and other factors.
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Property insurance
|
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Insurance that provides coverage to a person or business with an insurable interest in tangible property for that person’s or business’s property loss, damage or loss of use.
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Quota share reinsurance
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Reinsurance wherein the insurer cedes an agreed-upon fixed percentage of liabilities, premiums and losses for each policy covered on a pro rata basis.
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Rates
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Amounts charged per unit of insurance.
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Redundancy
|
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With regard to reserves for a given liability, a redundancy exists when it is estimated or determined that the reserves are greater than what will be needed to pay the ultimate settlement value of the related liabilities. Where the redundancy is the result of an estimate, the estimated amount of redundancy (or even the finding of whether or not a redundancy exists) may change as new information becomes available.
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Reinstatement premiums
|
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Additional premiums payable to reinsurers to restore coverage limits that have been exhausted as a result of reinsured losses under certain excess-of-loss reinsurance treaties.
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Reinsurance
|
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The practice whereby one insurer, called the reinsurer, in consideration of a premium paid to that insurer, agrees to indemnify another insurer, called the ceding company, for part or all of the liability of the ceding company under one or more policies or contracts of insurance which it has issued.
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Reinsurance agreement
|
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A contract specifying the terms of a reinsurance transaction.
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Renewal premium change
|
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The estimated change in average premium on policies that renew, including rate and exposure changes. Such statistics are subject to change based on a number of factors, including changes in estimates.
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Renewal rate change
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The estimated change in average premium on policies that renew, excluding exposure changes. Such statistics are subject to change based on a number of factors, including changes in estimates.
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Residual market (involuntary business)
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Insurance market which provides coverage for risks for those unable to purchase insurance in the voluntary market. Possible reasons for this inability include the risks being too great or the profit potential too small under the required insurance rate structure. Residual markets are frequently created by state legislation either because of lack of available coverage such as: property coverage in a windstorm prone area or protection of the accident victim as in the case of workers’ compensation. The costs of the residual market are usually charged back to the direct insurance carriers in proportion to the carriers’ voluntary market shares for the type of coverage involved.
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Retention
|
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The amount of exposure a policyholder company retains on any one risk or group of risks. The term may apply to an insurance policy, where the policyholder is an individual, family or business, or a reinsurance policy, where the policyholder is an insurance company.
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Retention rate
|
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The percentage of prior period premiums (excluding renewal premium changes), accounts or policies available for renewal in the current period that were renewed. Such statistics are subject to change based on a number of factors, including changes in estimates.
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Retrospective premiums
|
|
Premiums related to retrospectively rated policies.
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Retrospective rating
|
|
A plan or method which permits adjustment of the final premium or commission on the basis of actual loss experience, subject to certain minimum and maximum limits.
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Return on equity
|
|
The ratio of net income (loss) less preferred dividends to average shareholders’ equity.
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Risk-based capital (RBC)
|
|
A measure adopted by the NAIC and enacted by states for determining the minimum statutory policyholders’ surplus requirements of insurers. Insurers having total adjusted capital less than that required by the RBC calculation will be subject to varying degrees of regulatory action depending on the level of capital inadequacy.
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Risk retention group
|
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An alternative form of insurance in which members of a similar profession or business band together to self insure their risks.
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Runoff business
|
|
An operation which has been determined to be nonstrategic; includes non-renewals of in-force policies and a cessation of writing new business, where allowed by law.
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Salvage
|
|
The amount of money an insurer recovers through the sale of property transferred to the insurer as a result of a loss payment.
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|
|
Second-injury fund
|
|
The employer of an injured, impaired worker is responsible only for the workers’ compensation benefit for the most recent injury; the second-injury fund would cover the cost of any additional benefits for aggravation of a prior condition. The cost is shared by the insurance industry and self-insureds, funded through assessments to insurance companies and self-insureds based on either premiums or losses.
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Segment income (loss)
|
|
Determined in the same manner as core income (loss) on a segment basis. Management uses segment income (loss) to analyze each segment’s performance and as a tool in making business decisions. Financial statement users also consider segment income when analyzing the results and trends of insurance companies.
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Self-insured retentions
|
|
That portion of the risk retained by an insured for its own account.
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Servicing carrier
|
|
An insurance company that provides, for a fee, various services including policy issuance, claims adjusting and customer service for insureds in a reinsurance pool.
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Statutory accounting practices (SAP)
|
|
The practices and procedures prescribed or permitted by domiciliary state insurance regulatory authorities in the United States for recording transactions and preparing financial statements. SAP generally reflect a modified going concern basis of accounting.
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Statutory capital and surplus
|
|
The excess of an insurance company’s admitted assets over its liabilities, including loss reserves, as determined in accordance with SAP. Admitted assets are assets of an insurer prescribed or permitted by a state to be recognized on the statutory balance sheet. Statutory capital and surplus is also referred to as “statutory surplus” or “policyholders’ surplus.”
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Statutory net income
|
|
As determined under SAP, total revenues less total expenses and income taxes.
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Structured settlement
|
|
Periodic payments to an injured person or survivor for a determined number of years or for life, typically in settlement of a claim under a liability policy, usually funded through the purchase of an annuity.
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Subrogation
|
|
A principle of law incorporated in insurance policies, which enables an insurance company, after paying a claim under a policy, to recover the amount of the loss from another person or entity who is legally liable for it.
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Tenure impact
|
|
As new business volume increases and accounts for a greater percentage of earned premiums, the loss and LAE ratio generally worsens initially, as the loss and LAE ratio for new business is generally higher than the ratio for business that has been retained for longer periods. As poorer performing business leaves and pricing segmentation improves on renewal of the business that is retained, the loss and LAE ratio is expected to improve in future years.
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Third-party liability
|
|
A liability owed to a claimant (third party) who is not one of the two parties to the insurance contract. Insured liability claims are referred to as third-party claims.
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|
Total capitalization
|
|
The sum of total shareholders’ equity and debt.
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Treaty reinsurance
|
|
The reinsurance of a specified type or category of risks defined in a reinsurance agreement (a “treaty”) between a primary insurer or other reinsured and a reinsurer. Typically, in treaty reinsurance, the primary insurer or reinsured is obligated to offer and the reinsurer is obligated to accept a specified portion of all that type or category of risks originally written by the primary insurer or reinsured.
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Umbrella coverage
|
|
A form of insurance protection against losses in excess of amounts covered by other liability insurance policies or amounts not covered by the usual liability policies.
|
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Unassigned surplus
|
|
The undistributed and unappropriated amount of statutory capital and surplus.
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|
Underlying combined ratio
|
|
The underlying combined ratio is the sum of the underlying loss and LAE ratio and the underlying underwriting expense ratio. The underlying combined ratio is an indicator of the Company’s underwriting discipline and underwriting profitability for the current accident year.
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Underlying loss and LAE ratio
|
|
The underlying loss and LAE ratio is the loss and LAE ratio, adjusted to exclude the impact of catastrophes and prior year reserve development. The underlying loss and LAE ratio is an indicator of the Company’s underwriting discipline and underwriting profitability for the current accident year.
|
|
|
|
Underlying underwriting expense ratio
|
|
The underlying underwriting expense ratio is the underwriting expense ratio adjusted to exclude the impact of catastrophes.
|
|
|
|
Underlying underwriting margin
|
|
Net earned premiums and fee income less claims and claim adjustment expenses (excluding catastrophe losses and prior year reserve development) and insurance-related expenses.
|
|
|
|
Underwriter
|
|
An employee of an insurance company who examines, accepts or rejects risks and classifies accepted risks in order to charge an appropriate premium for each accepted risk. The underwriter is expected to select business that will produce an average risk of loss no greater than that anticipated for the class of business.
|
|
|
|
Underwriting
|
|
The insurer’s or reinsurer’s process of reviewing applications for insurance coverage, and the decision as to whether to accept all or part of the coverage and determination of the applicable premiums; also refers to the acceptance of that coverage.
|
|
|
|
Underwriting expense ratio
|
|
For SAP, the underwriting expense ratio is the ratio of underwriting expenses incurred (including commissions paid), less certain administrative services fee income and billing and policy fees, to net written premiums as defined in the statutory financial statements required by insurance regulators. The underwriting expense ratio as used in this report is the ratio of underwriting expenses (including the amortization of deferred acquisition costs), less certain administrative services fee income, billing and policy fees and other, to net earned premiums.
|
|
|
The underwriting expense ratio is an indicator of the Company’s efficiency in acquiring and servicing its business.
|
|
|
Other companies’ method of computing a similarly titled measure may not be comparable to the Company’s method of computing this ratio.
|
|
|
|
Underwriting gain or loss
|
|
Net earned premiums and fee income less claims and claim adjustment expenses and insurance-related expenses.
|
|
|
|
Unearned premium
|
|
The portion of premiums written that is allocable to the unexpired portion of the policy term.
|
|
|
|
Voluntary market
|
|
The market in which a person seeking insurance obtains coverage without the assistance of residual market mechanisms.
|
|
|
|
Wholesale broker
|
|
An independent or exclusive agent that represents both admitted and non-admitted insurers in market areas, which include standard, non-standard, specialty and excess and surplus lines of insurance. The wholesaler does not deal directly with the insurance consumer. The wholesaler deals with the retail agent or broker.
|
|
|
|
Workers’ compensation
|
|
A system (established under state and federal laws) under which employers provide insurance for benefit payments to their employees for work-related injuries, deaths and diseases, regardless of fault.
|
•
|
In recent years, many state and local governments have been operating under deficits or projected deficits. The severity and duration of these deficits could have an adverse impact on the collectability and valuation of our municipal bond portfolio. These deficits may be exacerbated by the impact of unfunded pension plan obligations and other
|
•
|
Some municipal bond issuers may be unwilling to increase tax rates, or to reduce spending, to fund interest or principal payments on their municipal bonds, or may be unable to access the municipal bond market to fund such payments. The risk of widespread defaults may increase if some issuers voluntarily choose to default, instead of implementing difficult fiscal measures, and the actual or perceived consequences (such as reduced access to capital markets) are less severe than expected.
|
•
|
The risk of widespread defaults may also increase if there are changes in legislation that permit states, municipalities and political subdivisions to file for bankruptcy protection where they were not permitted before. In addition, the collectability and valuation of municipal bonds may be adversely affected if there are judicial interpretations in a bankruptcy or other proceeding that lessen the value of structural protections. For example, debtors may challenge the effectiveness of structural protections thought to be provided by municipal securities backed by a dedicated source of revenue. The collectability and valuation may also be adversely affected if there are judicial interpretations in a bankruptcy or other proceeding that question the payment priority of municipal bonds.
|
•
|
ability to profitably price our business, retain existing customers and obtain new business;
|
•
|
premiums charged, contract terms and conditions, products and services offered (including the ability to design customized programs);
|
•
|
agent, broker and policyholder relationships;
|
•
|
ability to keep pace relative to our competitors with changes in technology, information systems, data and analytics;
|
•
|
effectiveness of our claims process, including the speed of payment;
|
•
|
ability to avoid and mitigate fraudulent claims;
|
•
|
ability to provide our products and services in a cost effective manner;
|
•
|
ability to provide new products and services to meet changing customer needs;
|
•
|
ability to adapt to changes in business models, technology, customer preferences or regulation impacting the markets in which we operate;
|
•
|
ability to provide access to the distribution channels preferred by customers and prospective customers;
|
•
|
perceived overall financial strength and corresponding ratings assigned by independent rating agencies;
|
•
|
reputation, experience and qualifications of employees;
|
•
|
geographic scope of business; and
|
•
|
local presence.
|
•
|
the risks and lack of predictability inherent in complex litigation;
|
•
|
a further increase in the cost to resolve, and/or the number of, asbestos and environmental claims beyond that which is anticipated;
|
•
|
the emergence of a greater number of asbestos claims than anticipated as a result of extended life expectancies resulting from medical advances and lifestyle improvements;
|
•
|
the role of any umbrella or excess policies we have issued;
|
•
|
the resolution or adjudication of disputes concerning coverage for asbestos and environmental claims in a manner inconsistent with our previous assessment of these disputes;
|
•
|
the number and outcome of direct actions against us;
|
•
|
future developments pertaining to our ability to recover reinsurance for asbestos and environmental claims;
|
•
|
any impact on asbestos defendants we insure due to the bankruptcy of other asbestos defendants;
|
•
|
the unavailability of other insurance sources potentially available to policyholders, whether through exhaustion of policy limits or through the insolvency of other participating insurers; and
|
•
|
uncertainties arising from the insolvency or bankruptcy of policyholders.
|
•
|
plaintiffs targeting property and casualty insurers, including us, in purported class action litigation relating to claims handling and other practices;
|
•
|
claims relating to construction defects, which often present complex coverage and damage valuation questions;
|
•
|
claims under directors’ & officers’ and/or errors and omissions insurance policies relating to losses from involvement in financial market activities; failed financial institutions; fraud; improper sales practices; anti-trust allegations; possible accounting irregularities; and corporate governance issues;
|
•
|
claims related to data and network security breaches, information system failures or cyber events, including cases where coverage was not intended to be provided;
|
•
|
the assertion of “public nuisance” or similar theories of liability, pursuant to which plaintiffs, including governmental entities, seek to recover monies spent to administer public health care programs, abate hazards to public health and safety and/or recover damages purportedly attributable to a “public nuisance,” such as litigation against lead paint manufacturers or manufacturers or distributors of opioids;
|
•
|
claims related to liability or workers’ compensation arising out of the spread of infectious disease or pandemic;
|
•
|
claims relating to abuse by an employee or a volunteer of an insured;
|
•
|
claims that link health issues to particular causes (for example, cumulative traumatic head injury from sports or other causes), resulting in liability or workers’ compensation claims;
|
•
|
claims alleging that one or more of our underwriting criteria have a disparate impact on persons belonging to a protected class in violation of the law, including the Fair Housing Act;
|
•
|
claims arising out of modern techniques and practices used in connection with the extraction of natural resources, such as hydraulic fracturing or wastewater injection;
|
•
|
claims arising out of the use of personal cars, homes or other property in commercial transactions, such as ride or home sharing;
|
•
|
claims relating to unanticipated consequences of current or new technologies or business models or processes, including as a result of related behavioral changes; and
|
•
|
claims relating to changing climate conditions, including claims alleging that our policyholders cause or contribute to changing climate conditions.
|
•
|
Improve business processes and workflow to increase efficiencies and productivity and to enhance the experience of our customers and distributors;
|
•
|
Change our underwriting processes;
|
•
|
Develop products that insure risks we have not previously insured, contain new coverages or change coverage terms;
|
•
|
Expand distribution channels;
|
•
|
Change commission terms; and
|
•
|
Enter geographic markets within or outside of the United States where we have had relatively little or no market share.
|
•
|
Changes to our business processes or workflow, including the use of new technologies, may give rise to execution risk;
|
•
|
Models underlying automated underwriting and pricing decisions may not be effective;
|
•
|
Demand for new products or expansion into new markets may not meet our expectations;
|
•
|
New products and expansion into new markets may change our risk exposures, and the data and models we use to manage such exposures may not be as effective as those we use in existing markets or with existing products;
|
•
|
Efforts to develop new products or markets and to change commission terms may create or increase distribution channel conflict, such as described above under “—Disruptions to our relationships with our independent agents and brokers could adversely affect us;” and
|
•
|
In connection with the conversion of existing policyholders to a new product, some policyholders’ pricing may increase while the pricing for other policyholders may decrease, the net impact of which could negatively impact retention and profit margins.
|
•
|
the potential disruption of our ongoing business;
|
•
|
the ineffective integration of, or other difficulties with, underwriting, risk management, claims handling, information technology and actuarial practices;
|
•
|
uncertainties related to an acquiree’s reserve estimates and its design and operation of internal controls over financial reporting;
|
•
|
the diversion of management time and resources to acquisition integration challenges;
|
•
|
the loss of key employees;
|
•
|
unforeseen liabilities;
|
•
|
difficulties in achieving the strategic objectives of an acquisition, including the business, financial, technological or distribution objectives;
|
•
|
the cultural challenges associated with integrating employees; and
|
•
|
the impact on our financial position and/or credit ratings.
|
|
|
As of December 31,
|
||||||||||||||||||||||
|
|
2014
|
|
2015
|
|
2016
|
|
2017
|
|
2018
|
|
2019
|
||||||||||||
The Travelers Companies, Inc.
|
|
$
|
100.00
|
|
|
$
|
109.09
|
|
|
$
|
121.04
|
|
|
$
|
137.23
|
|
|
$
|
123.99
|
|
|
$
|
145.08
|
|
S&P 500 Index
|
|
100.00
|
|
|
101.38
|
|
|
113.51
|
|
|
138.29
|
|
|
132.23
|
|
|
173.86
|
|
||||||
S&P 500 Property & Casualty Insurance Index
|
|
100.00
|
|
|
109.53
|
|
|
126.73
|
|
|
155.10
|
|
|
147.83
|
|
|
186.07
|
|
(1)
|
The cumulative total return to shareholders is a concept used to compare the performance of a company's stock over time. Cumulative total return to shareholders is calculated as the net stock price change for the specified time period plus the cumulative amount of dividends (assuming dividend reinvestment on the respective dividend payment dates) divided by the stock price at the beginning of the time period.
|
(2)
|
Assumes $100 invested in common shares of The Travelers Companies, Inc. on December 31, 2014.
|
(3)
|
Companies in the S&P 500 Property & Casualty Insurance Index as of December 31, 2019 were the following: The Travelers Companies, Inc., Chubb Limited, Cincinnati Financial Corporation, The Progressive Corporation, The Allstate Corporation, Loews Corporation (CNA) and WR Berkley Corporation. Returns of each of the companies included in this index have been weighted according to their respective market capitalizations.
|
Period Beginning
|
|
Period Ending
|
|
Total number
of shares
purchased
|
|
Average
price paid
per share
|
|
Total number of
shares purchased
as part of
publicly announced
plans or programs
|
|
Approximate
dollar value of
shares that may
yet be purchased
under the
plans or programs
(in millions)
|
||||||
Oct. 1, 2019
|
|
Oct. 31, 2019
|
|
228,316
|
|
|
$
|
130.64
|
|
|
226,015
|
|
|
$
|
2,132
|
|
Nov. 1, 2019
|
|
Nov. 30, 2019
|
|
1,351,821
|
|
|
$
|
133.77
|
|
|
1,350,490
|
|
|
$
|
1,951
|
|
Dec. 1, 2019
|
|
Dec. 31, 2019
|
|
1,219,658
|
|
|
$
|
135.67
|
|
|
1,215,288
|
|
|
$
|
1,786
|
|
Total
|
2,799,795
|
|
|
$
|
134.34
|
|
|
2,791,793
|
|
|
$
|
1,786
|
|
|
|
At and for the year ended December 31,
|
||||||||||||||||||
(in millions, except per share amounts)
|
|
2019
|
|
2018
|
|
2017
|
|
2016
|
|
2015
|
||||||||||
|
|
|
||||||||||||||||||
Total revenues
|
|
$
|
31,581
|
|
|
$
|
30,282
|
|
|
$
|
28,902
|
|
|
$
|
27,625
|
|
|
$
|
26,815
|
|
Net income
|
|
$
|
2,622
|
|
|
$
|
2,523
|
|
|
$
|
2,056
|
|
|
$
|
3,014
|
|
|
$
|
3,439
|
|
Total investments
|
|
$
|
77,884
|
|
|
$
|
72,278
|
|
|
$
|
72,502
|
|
|
$
|
70,488
|
|
|
$
|
70,470
|
|
Total assets
|
|
110,122
|
|
|
104,233
|
|
|
103,483
|
|
|
100,245
|
|
|
100,184
|
|
|||||
Claims and claim adjustment expense reserves
|
|
51,849
|
|
|
50,668
|
|
|
49,650
|
|
|
47,949
|
|
|
48,295
|
|
|||||
Total long-term debt
|
|
5,958
|
|
|
5,964
|
|
|
5,971
|
|
|
5,887
|
|
|
5,844
|
|
|||||
Total liabilities
|
|
84,179
|
|
|
81,339
|
|
|
79,752
|
|
|
77,024
|
|
|
76,586
|
|
|||||
Total shareholders' equity
|
|
25,943
|
|
|
22,894
|
|
|
23,731
|
|
|
23,221
|
|
|
23,598
|
|
|||||
Net income per share
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Basic
|
|
$
|
10.01
|
|
|
$
|
9.37
|
|
|
$
|
7.39
|
|
|
$
|
10.39
|
|
|
$
|
10.99
|
|
Diluted
|
|
$
|
9.92
|
|
|
$
|
9.28
|
|
|
$
|
7.33
|
|
|
$
|
10.28
|
|
|
$
|
10.88
|
|
Year-end common shares outstanding
|
|
255.5
|
|
|
263.6
|
|
|
271.4
|
|
|
279.6
|
|
|
295.9
|
|
|||||
Per common share amounts
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Cash dividends
|
|
$
|
3.23
|
|
|
$
|
3.03
|
|
|
$
|
2.83
|
|
|
$
|
2.62
|
|
|
$
|
2.38
|
|
Book value
|
|
$
|
101.55
|
|
|
$
|
86.84
|
|
|
$
|
87.46
|
|
|
$
|
83.05
|
|
|
$
|
79.75
|
|
•
|
Net income of $2.62 billion, or $10.01 per share basic and $9.92 per share diluted
|
•
|
Net earned premiums of $28.27 billion
|
•
|
Catastrophe losses of $886 million ($699 million after-tax)
|
•
|
Net unfavorable prior year reserve development of $60 million ($47 million after-tax)
|
•
|
Combined ratio of 96.5%
|
•
|
Net investment income of $2.47 billion ($2.10 billion after-tax)
|
•
|
Total investments of $77.88 billion; fixed maturities and short-term securities comprise 94% of total investments
|
•
|
Total assets of $110.12 billion
|
•
|
Total debt of $6.56 billion, resulting in a debt-to-total capital ratio of 20.2% (21.7% excluding net unrealized investment gains, net of tax, included in shareholders' equity)
|
•
|
Repurchased 11.2 million common shares for total cost of $1.55 billion and paid $844 million of dividends to shareholders
|
•
|
Shareholders’ equity of $25.94 billion
|
•
|
Net unrealized investment gains of $2.85 billion ($2.25 billion after-tax)
|
•
|
Book value per common share of $101.55
|
•
|
Holding company liquidity of $1.43 billion
|
(for the year ended December 31, in millions except per share amounts)
|
|
2019
|
|
2018
|
|
2017
|
||||||
Revenues
|
|
|
|
|
|
|
|
|
|
|||
Premiums
|
|
$
|
28,272
|
|
|
$
|
27,059
|
|
|
$
|
25,683
|
|
Net investment income
|
|
2,468
|
|
|
2,474
|
|
|
2,397
|
|
|||
Fee income
|
|
459
|
|
|
432
|
|
|
447
|
|
|||
Net realized investment gains
|
|
113
|
|
|
114
|
|
|
216
|
|
|||
Other revenues
|
|
269
|
|
|
203
|
|
|
159
|
|
|||
Total revenues
|
|
31,581
|
|
|
30,282
|
|
|
28,902
|
|
|||
Claims and expenses
|
|
|
|
|
|
|
|
|
|
|||
Claims and claim adjustment expenses
|
|
19,133
|
|
|
18,291
|
|
|
17,467
|
|
|||
Amortization of deferred acquisition costs
|
|
4,601
|
|
|
4,381
|
|
|
4,166
|
|
|||
General and administrative expenses
|
|
4,365
|
|
|
4,297
|
|
|
4,170
|
|
|||
Interest expense
|
|
344
|
|
|
352
|
|
|
369
|
|
|||
Total claims and expenses
|
|
28,443
|
|
|
27,321
|
|
|
26,172
|
|
|||
Income before income taxes
|
|
3,138
|
|
|
2,961
|
|
|
2,730
|
|
|||
Income tax expense(1)
|
|
516
|
|
|
438
|
|
|
674
|
|
|||
Net income
|
|
$
|
2,622
|
|
|
$
|
2,523
|
|
|
$
|
2,056
|
|
Net income per share
|
|
|
|
|
|
|
|
|
|
|||
Basic
|
|
$
|
10.01
|
|
|
$
|
9.37
|
|
|
$
|
7.39
|
|
Diluted
|
|
$
|
9.92
|
|
|
$
|
9.28
|
|
|
$
|
7.33
|
|
Combined ratio
|
|
|
|
|
|
|
|
|
|
|||
Loss and loss adjustment expense ratio
|
|
66.9
|
%
|
|
66.8
|
%
|
|
67.2
|
%
|
|||
Underwriting expense ratio
|
|
29.6
|
|
|
30.1
|
|
|
30.7
|
|
|||
Combined ratio
|
|
96.5
|
%
|
|
96.9
|
%
|
|
97.9
|
%
|
(1)
|
On December 22, 2017, the U.S. enacted the Tax Cuts and Jobs Act of 2017 (TCJA) which, among other changes, reduced the U.S. Federal tax rate from 35% to 21% beginning on January 1, 2018 and imposed a tax on undistributed and previously untaxed post-1986 foreign earnings and profits (accumulated foreign earnings). Total income tax expense for 2017 included a net charge of $129 million to reflect the estimated impact of the changes in tax law and tax rates included in TCJA at the date of enactment, primarily reflecting the revaluation of the Company’s deferred tax assets and liabilities at the new statutory federal tax rate of 21%, and the recognition of tax imposed on the accumulated foreign earnings.
|
(for the year ended December 31, in millions)
|
|
2019
|
|
2018
|
|
2017
|
||||||
Average investments(1)
|
|
$
|
74,866
|
|
|
$
|
73,031
|
|
|
$
|
71,867
|
|
Pre-tax net investment income
|
|
2,468
|
|
|
2,474
|
|
|
2,397
|
|
|||
After-tax net investment income
|
|
2,097
|
|
|
$
|
2,102
|
|
|
1,872
|
|
||
Average pre-tax yield(2)
|
|
3.3
|
%
|
|
3.4
|
%
|
|
3.3
|
%
|
|||
Average after-tax yield(2)
|
|
2.8
|
%
|
|
2.9
|
%
|
|
2.6
|
%
|
(1)
|
Excludes net unrealized investment gains and losses and reflects cash, receivables for investment sales, payables on investment purchases and accrued investment income.
|
(2)
|
Excludes net realized and net unrealized investment gains and losses.
|
(for the year ended December 31, in millions)
|
|
2019
|
|
2018
|
|
2017
|
||||||
|
|
|
|
|
|
|
|
|
|
|||
Other-than-temporary impairment losses
|
|
$
|
(4
|
)
|
|
$
|
(1
|
)
|
|
$
|
(14
|
)
|
Net realized investment gains (losses) on equity securities still held
|
|
61
|
|
|
(29
|
)
|
|
—
|
|
|||
Other net realized investment gains, including from sales
|
|
56
|
|
|
144
|
|
|
230
|
|
|||
Total
|
|
$
|
113
|
|
|
$
|
114
|
|
|
$
|
216
|
|
•
|
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
|
•
|
for which the Company’s estimates of its ultimate losses before reinsurance and taxes exceed a pre-established dollar threshold.
|
|
|
Losses Incurred / Unfavorable (Favorable)
Prior Year Reserve Development for the Year Ended December 31,
|
|
Estimated Ultimate Losses at
December 31,
|
||||||||||||||||||||
(in millions, pre-tax and net of reinsurance)(1)
|
|
2019
|
|
2018
|
|
2017
|
|
2019
|
|
2018
|
|
2017
|
||||||||||||
2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
PCS Serial Number:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
22 — Severe wind and hail storms
|
|
$
|
(2
|
)
|
|
$
|
(2
|
)
|
|
$
|
111
|
|
|
$
|
107
|
|
|
$
|
109
|
|
|
$
|
111
|
|
32 — Severe wind and hail storms
|
|
6
|
|
|
19
|
|
|
210
|
|
|
235
|
|
|
229
|
|
|
210
|
|
||||||
43 — Hurricane Harvey
|
|
(14
|
)
|
|
(24
|
)
|
|
254
|
|
|
216
|
|
|
230
|
|
|
254
|
|
||||||
44 — Hurricane Irma
|
|
(12
|
)
|
|
(28
|
)
|
|
187
|
|
|
147
|
|
|
159
|
|
|
187
|
|
||||||
48 — California wildfire—Tubbs fire
|
|
(5
|
)
|
|
1
|
|
|
507
|
|
|
503
|
|
|
508
|
|
|
507
|
|
||||||
2018
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
PCS Serial Number:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
15 — Winter storm
|
|
(4
|
)
|
|
144
|
|
|
n/a
|
|
|
140
|
|
|
144
|
|
|
n/a
|
|
||||||
17 — Severe wind and hail storms
|
|
(6
|
)
|
|
111
|
|
|
n/a
|
|
|
105
|
|
|
111
|
|
|
n/a
|
|
||||||
33 — Severe wind and hail storms
|
|
2
|
|
|
117
|
|
|
n/a
|
|
|
119
|
|
|
117
|
|
|
n/a
|
|
||||||
52 — Hurricane Florence
|
|
(18
|
)
|
|
106
|
|
|
n/a
|
|
|
88
|
|
|
106
|
|
|
n/a
|
|
||||||
57 — Hurricane Michael
|
|
2
|
|
|
158
|
|
|
n/a
|
|
|
160
|
|
|
158
|
|
|
n/a
|
|
||||||
59 — California wildfire—Camp fire
|
|
2
|
|
|
334
|
|
|
n/a
|
|
|
336
|
|
|
334
|
|
|
n/a
|
|
||||||
60 — California wildfire—Woolsey fire
|
|
10
|
|
|
119
|
|
|
n/a
|
|
|
129
|
|
|
119
|
|
|
n/a
|
|
||||||
2019
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
PCS Serial Number:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
33 — Severe wind storms
|
|
250
|
|
|
n/a
|
|
|
n/a
|
|
|
250
|
|
|
n/a
|
|
|
n/a
|
|
||||||
61 — Severe wind storms and tornadoes
|
|
109
|
|
|
n/a
|
|
|
n/a
|
|
|
109
|
|
|
n/a
|
|
|
n/a
|
|
|
Gross Written Premiums
|
||||||||||
(for the year ended December 31, in millions)
|
2019
|
|
2018
|
|
2017
|
||||||
Business Insurance
|
$
|
17,151
|
|
|
$
|
16,255
|
|
|
$
|
15,473
|
|
Bond & Specialty Insurance
|
2,931
|
|
|
2,665
|
|
|
2,480
|
|
|||
Personal Insurance
|
10,981
|
|
|
10,332
|
|
|
9,695
|
|
|||
Total
|
$
|
31,063
|
|
|
$
|
29,252
|
|
|
$
|
27,648
|
|
|
Net Written Premiums
|
||||||||||
(for the year ended December 31, in millions)
|
2019
|
|
2018
|
|
2017
|
||||||
Business Insurance
|
$
|
15,629
|
|
|
$
|
14,956
|
|
|
$
|
14,270
|
|
Bond & Specialty Insurance
|
2,739
|
|
|
2,528
|
|
|
2,359
|
|
|||
Personal Insurance
|
10,783
|
|
|
10,224
|
|
|
9,590
|
|
|||
Total
|
$
|
29,151
|
|
|
$
|
27,708
|
|
|
$
|
26,219
|
|
(for the year ended December 31, in millions)
|
|
2019
|
|
2018
|
|
2017
|
||||||
Revenues
|
|
|
|
|
|
|
|
|
|
|||
Earned premiums
|
|
$
|
15,300
|
|
|
$
|
14,722
|
|
|
$
|
14,146
|
|
Net investment income
|
|
1,816
|
|
|
1,833
|
|
|
1,786
|
|
|||
Fee income
|
|
437
|
|
|
412
|
|
|
430
|
|
|||
Other revenues
|
|
155
|
|
|
112
|
|
|
69
|
|
|||
Total revenues
|
|
17,708
|
|
|
17,079
|
|
|
16,431
|
|
|||
|
|
|
|
|
|
|
||||||
Total claims and expenses
|
|
16,093
|
|
|
15,182
|
|
|
14,370
|
|
|||
|
|
|
|
|
|
|
||||||
Segment income before income taxes
|
|
1,615
|
|
|
1,897
|
|
|
2,061
|
|
|||
Income tax expense (1)
|
|
223
|
|
|
259
|
|
|
448
|
|
|||
Segment income
|
|
$
|
1,392
|
|
|
$
|
1,638
|
|
|
$
|
1,613
|
|
|
|
|
|
|
|
|
||||||
Loss and loss adjustment expense ratio
|
|
70.3
|
%
|
|
67.8
|
%
|
|
65.9
|
%
|
|||
Underwriting expense ratio
|
|
30.6
|
|
|
31.3
|
|
|
31.9
|
|
|||
Combined ratio
|
|
100.9
|
%
|
|
99.1
|
%
|
|
97.8
|
%
|
(1)
|
On December 22, 2017, the U.S. enacted the Tax Cuts and Jobs Act of 2017 (TCJA) which, among other changes, reduced the U.S. Federal tax rate from 35% to 21% beginning on January 1, 2018 and imposed a tax on undistributed and previously untaxed post-1986 foreign earnings and profits (accumulated foreign earnings).
|
|
|
Gross Written Premiums
|
||||||||||
(for the year ended December 31, in millions)
|
|
2019
|
|
2018
|
|
2017
|
||||||
Domestic:
|
|
|
|
|
|
|
|
|
|
|||
Select Accounts
|
|
$
|
2,945
|
|
|
$
|
2,841
|
|
|
$
|
2,817
|
|
Middle Market
|
|
9,073
|
|
|
8,537
|
|
|
8,051
|
|
|||
National Accounts
|
|
1,603
|
|
|
1,601
|
|
|
1,556
|
|
|||
National Property and Other
|
|
2,279
|
|
|
2,036
|
|
|
1,902
|
|
|||
Total Domestic
|
|
15,900
|
|
|
15,015
|
|
|
14,326
|
|
|||
International
|
|
1,251
|
|
|
1,240
|
|
|
1,147
|
|
|||
Total Business Insurance
|
|
$
|
17,151
|
|
|
$
|
16,255
|
|
|
$
|
15,473
|
|
|
|
Net Written Premiums
|
||||||||||
(for the year ended December 31, in millions)
|
|
2019
|
|
2018
|
|
2017
|
||||||
Domestic:
|
|
|
|
|
|
|
|
|
|
|||
Select Accounts
|
|
$
|
2,911
|
|
|
$
|
2,828
|
|
|
$
|
2,800
|
|
Middle Market
|
|
8,630
|
|
|
8,214
|
|
|
7,756
|
|
|||
National Accounts
|
|
1,051
|
|
|
1,025
|
|
|
1,010
|
|
|||
National Property and Other
|
|
1,965
|
|
|
1,805
|
|
|
1,691
|
|
|||
Total Domestic
|
|
14,557
|
|
|
13,872
|
|
|
13,257
|
|
|||
International
|
|
1,072
|
|
|
1,084
|
|
|
1,013
|
|
|||
Total Business Insurance
|
|
$
|
15,629
|
|
|
$
|
14,956
|
|
|
$
|
14,270
|
|
(for the year ended December 31, in millions)
|
|
2019
|
|
2018
|
|
2017
|
||||||
Revenues
|
|
|
|
|
|
|
|
|
|
|||
Earned premiums
|
|
$
|
2,565
|
|
|
$
|
2,420
|
|
|
$
|
2,307
|
|
Net investment income
|
|
233
|
|
|
233
|
|
|
228
|
|
|||
Other revenues
|
|
26
|
|
|
23
|
|
|
24
|
|
|||
Total revenues
|
|
2,824
|
|
|
2,676
|
|
|
2,559
|
|
|||
|
|
|
|
|
|
|
||||||
Total claims and expenses
|
|
2,055
|
|
|
1,685
|
|
|
1,795
|
|
|||
|
|
|
|
|
|
|
||||||
Segment income before income taxes
|
|
769
|
|
|
991
|
|
|
764
|
|
|||
Income tax expense (1)
|
|
151
|
|
|
198
|
|
|
208
|
|
|||
Segment income
|
|
$
|
618
|
|
|
$
|
793
|
|
|
$
|
556
|
|
|
|
|
|
|
|
|
||||||
Loss and loss adjustment expense ratio
|
|
42.2
|
%
|
|
31.5
|
%
|
|
38.6
|
%
|
|||
Underwriting expense ratio
|
|
37.3
|
|
|
37.5
|
|
|
38.8
|
|
|||
Combined ratio
|
|
79.5
|
%
|
|
69.0
|
%
|
|
77.4
|
%
|
(1)
|
On December 22, 2017, the U.S. enacted the Tax Cuts and Jobs Act of 2017 (TCJA) which, among other changes, reduced the U.S. Federal tax rate from 35% to 21% beginning on January 1, 2018 and imposed a tax on undistributed and previously untaxed post-1986 foreign earnings and profits (accumulated foreign earnings).
|
|
|
Gross Written Premiums
|
||||||||||
(for the year ended December 31, in millions)
|
|
2019
|
|
2018
|
|
2017
|
||||||
Domestic:
|
|
|
|
|
|
|
|
|
|
|||
Management Liability
|
|
$
|
1,720
|
|
|
$
|
1,523
|
|
|
$
|
1,422
|
|
Surety
|
|
926
|
|
|
887
|
|
|
844
|
|
|||
Total Domestic
|
|
2,646
|
|
|
2,410
|
|
|
2,266
|
|
|||
International
|
|
285
|
|
|
255
|
|
|
214
|
|
|||
Total Bond & Specialty Insurance
|
|
$
|
2,931
|
|
|
$
|
2,665
|
|
|
$
|
2,480
|
|
|
|
Net Written Premiums
|
||||||||||
(for the year ended December 31, in millions)
|
|
2019
|
|
2018
|
|
2017
|
||||||
Domestic:
|
|
|
|
|
|
|
|
|
|
|||
Management Liability
|
|
$
|
1,605
|
|
|
$
|
1,455
|
|
|
$
|
1,367
|
|
Surety
|
|
866
|
|
|
835
|
|
|
793
|
|
|||
Total Domestic
|
|
2,471
|
|
|
2,290
|
|
|
2,160
|
|
|||
International
|
|
268
|
|
|
238
|
|
|
199
|
|
|||
Total Bond & Specialty Insurance
|
|
$
|
2,739
|
|
|
$
|
2,528
|
|
|
$
|
2,359
|
|
(for the year ended December 31, in millions)
|
|
2019
|
|
2018
|
|
2017
|
||||||
Revenues
|
|
|
|
|
|
|
|
|
|
|||
Earned premiums
|
|
$
|
10,407
|
|
|
$
|
9,917
|
|
|
$
|
9,230
|
|
Net investment income
|
|
419
|
|
|
408
|
|
|
383
|
|
|||
Fee income
|
|
22
|
|
|
20
|
|
|
17
|
|
|||
Other revenues
|
|
87
|
|
|
66
|
|
|
60
|
|
|||
Total revenues
|
|
10,935
|
|
|
10,411
|
|
|
9,690
|
|
|||
|
|
|
|
|
|
|
||||||
Total claims and expenses
|
|
9,916
|
|
|
10,072
|
|
|
9,606
|
|
|||
|
|
|
|
|
|
|
||||||
Segment income before income taxes
|
|
1,019
|
|
|
339
|
|
|
84
|
|
|||
Income tax expense (benefit) (1)
|
|
195
|
|
|
42
|
|
|
(44
|
)
|
|||
Segment income
|
|
$
|
824
|
|
|
$
|
297
|
|
|
$
|
128
|
|
|
|
|
|
|
|
|
||||||
Loss and loss adjustment expense ratio
|
|
68.0
|
%
|
|
74.1
|
%
|
|
76.3
|
%
|
|||
Underwriting expense ratio
|
|
26.2
|
|
|
26.5
|
|
|
26.8
|
|
|||
Combined ratio
|
|
94.2
|
%
|
|
100.6
|
%
|
|
103.1
|
%
|
(1)
|
On December 22, 2017, the U.S. enacted the Tax Cuts and Jobs Act of 2017 (TCJA) which, among other changes, reduced the U.S. Federal tax rate from 35% to 21% beginning on January 1, 2018 and imposed a tax on undistributed and previously untaxed post-1986 foreign earnings and profits (accumulated foreign earnings).
|
|
|
Gross Written Premiums
|
||||||||||
(for the year ended December 31, in millions)
|
|
2019
|
|
2018
|
|
2017
|
||||||
Domestic:
|
|
|
|
|
|
|
|
|
|
|||
Agency:
|
|
|
|
|
|
|
|
|
|
|||
Automobile
|
|
$
|
5,154
|
|
|
$
|
4,998
|
|
|
$
|
4,671
|
|
Homeowners and Other
|
|
4,685
|
|
|
4,213
|
|
|
4,000
|
|
|||
Total Agency
|
|
9,839
|
|
|
9,211
|
|
|
8,671
|
|
|||
Direct-to-Consumer
|
|
418
|
|
|
398
|
|
|
362
|
|
|||
Total Domestic
|
|
10,257
|
|
|
9,609
|
|
|
9,033
|
|
|||
International
|
|
724
|
|
|
723
|
|
|
662
|
|
|||
Total Personal Insurance
|
|
$
|
10,981
|
|
|
$
|
10,332
|
|
|
$
|
9,695
|
|
|
|
Net Written Premiums
|
||||||||||
(for the year ended December 31, in millions)
|
|
2019
|
|
2018
|
|
2017
|
||||||
Domestic:
|
|
|
|
|
|
|
|
|
|
|||
Agency:
|
|
|
|
|
|
|
|
|
|
|||
Automobile
|
|
$
|
5,124
|
|
|
$
|
4,972
|
|
|
$
|
4,646
|
|
Homeowners and Other
|
|
4,540
|
|
|
4,148
|
|
|
3,933
|
|
|||
Total Agency
|
|
9,664
|
|
|
9,120
|
|
|
8,579
|
|
|||
Direct-to-Consumer
|
|
412
|
|
|
396
|
|
|
361
|
|
|||
Total Domestic
|
|
10,076
|
|
|
9,516
|
|
|
8,940
|
|
|||
International
|
|
707
|
|
|
708
|
|
|
650
|
|
|||
Total Personal Insurance
|
|
$
|
10,783
|
|
|
$
|
10,224
|
|
|
$
|
9,590
|
|
(for the year ended December 31, in millions)
|
|
2019
|
|
2018
|
|
2017
|
||||||
Income (loss)
|
|
$
|
(297
|
)
|
|
$
|
(298
|
)
|
|
$
|
(254
|
)
|
|
|
Number of
Policyholders
|
|
Total Net Paid
|
|
Net Asbestos
Reserves
|
||||||||||||||||
(at and for the year ended December 31, $ in millions)
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||||
Policyholders with settlement agreements
|
|
12
|
|
|
11
|
|
|
$
|
10
|
|
|
$
|
20
|
|
|
$
|
45
|
|
|
$
|
53
|
|
Home office and field office policyholders
|
|
1,439
|
|
|
1,466
|
|
|
200
|
|
|
188
|
|
|
1,093
|
|
|
1,089
|
|
||||
Assumed reinsurance and other
|
|
—
|
|
|
—
|
|
|
14
|
|
|
17
|
|
|
141
|
|
|
139
|
|
||||
Total
|
|
1,451
|
|
|
1,477
|
|
|
$
|
224
|
|
|
$
|
225
|
|
|
$
|
1,279
|
|
|
$
|
1,281
|
|
•
|
a high level of litigation activity in certain jurisdictions involving individuals alleging serious asbestos-related illness, primarily involving mesothelioma claims;
|
•
|
while overall payment patterns have been generally stable, there has been an increase in severity for certain policyholders due to the high level of litigation activity; and
|
•
|
a moderate level of asbestos-related bankruptcy activity.
|
(at and for the year ended December 31, in millions)
|
|
2019
|
|
2018
|
|
2017
|
||||||
Beginning reserves:
|
|
|
|
|
|
|
|
|
|
|||
Gross
|
|
$
|
1,608
|
|
|
$
|
1,538
|
|
|
$
|
1,512
|
|
Ceded
|
|
(327
|
)
|
|
(257
|
)
|
|
(186
|
)
|
|||
Net
|
|
1,281
|
|
|
1,281
|
|
|
1,326
|
|
|||
Incurred losses and loss expenses:
|
|
|
|
|
|
|
|
|
|
|||
Gross
|
|
268
|
|
|
343
|
|
|
340
|
|
|||
Ceded
|
|
(48
|
)
|
|
(118
|
)
|
|
(115
|
)
|
|||
Net
|
|
220
|
|
|
225
|
|
|
225
|
|
|||
Paid loss and loss expenses:
|
|
|
|
|
|
|
|
|
|
|||
Gross
|
|
277
|
|
|
273
|
|
|
315
|
|
|||
Ceded
|
|
(53
|
)
|
|
(48
|
)
|
|
(44
|
)
|
|||
Net
|
|
224
|
|
|
225
|
|
|
271
|
|
|||
Foreign exchange and other:
|
|
|
|
|
|
|
|
|
|
|||
Gross
|
|
2
|
|
|
—
|
|
|
1
|
|
|||
Ceded
|
|
—
|
|
|
—
|
|
|
—
|
|
|||
Net
|
|
2
|
|
|
—
|
|
|
1
|
|
|||
Ending reserves:
|
|
|
|
|
|
|
|
|
|
|||
Gross
|
|
1,601
|
|
|
1,608
|
|
|
1,538
|
|
|||
Ceded
|
|
(322
|
)
|
|
(327
|
)
|
|
(257
|
)
|
|||
Net
|
|
$
|
1,279
|
|
|
$
|
1,281
|
|
|
$
|
1,281
|
|
(at and for the year ended December 31, in millions)
|
|
2019
|
|
2018
|
|
2017
|
||||||
Beginning reserves:
|
|
|
|
|
|
|
|
|
|
|||
Gross
|
|
$
|
358
|
|
|
$
|
373
|
|
|
$
|
395
|
|
Ceded
|
|
(24
|
)
|
|
(13
|
)
|
|
(13
|
)
|
|||
Net
|
|
334
|
|
|
360
|
|
|
382
|
|
|||
Incurred losses and loss expenses:
|
|
|
|
|
|
|
|
|
|
|||
Gross
|
|
84
|
|
|
71
|
|
|
74
|
|
|||
Ceded
|
|
(8
|
)
|
|
(16
|
)
|
|
(9
|
)
|
|||
Net
|
|
76
|
|
|
55
|
|
|
65
|
|
|||
Paid loss and loss expenses:
|
|
|
|
|
|
|
|
|
|
|||
Gross
|
|
92
|
|
|
86
|
|
|
97
|
|
|||
Ceded
|
|
(2
|
)
|
|
(6
|
)
|
|
(9
|
)
|
|||
Net
|
|
90
|
|
|
80
|
|
|
88
|
|
|||
Foreign exchange and other:
|
|
|
|
|
|
|
|
|
|
|||
Gross
|
|
—
|
|
|
—
|
|
|
1
|
|
|||
Ceded
|
|
1
|
|
|
(1
|
)
|
|
—
|
|
|||
Net
|
|
1
|
|
|
(1
|
)
|
|
1
|
|
|||
Ending reserves:
|
|
|
|
|
|
|
|
|
|
|||
Gross
|
|
350
|
|
|
358
|
|
|
373
|
|
|||
Ceded
|
|
(29
|
)
|
|
(24
|
)
|
|
(13
|
)
|
|||
Net
|
|
$
|
321
|
|
|
$
|
334
|
|
|
$
|
360
|
|
|
|
2019
|
|
2018
|
||||||||
(at December 31, in millions)
|
|
Carrying Value
|
|
Weighted Average Credit
Quality (1)
|
|
Carrying Value
|
|
Weighted Average Credit
Quality (1)
|
||||
U.S. Treasury securities and obligations of U.S. government and government agencies and authorities
|
|
$
|
2,095
|
|
|
Aaa/Aa1
|
|
$
|
2,064
|
|
|
Aaa/Aa1
|
Obligations of states, municipalities and political subdivisions:
|
|
0
|
|
|
|
|
|
|
|
|
||
Local general obligation
|
|
16,315
|
|
|
Aaa/Aa1
|
|
14,572
|
|
|
Aaa/Aa1
|
||
Revenue
|
|
10,315
|
|
|
Aaa/Aa1
|
|
9,853
|
|
|
Aaa/Aa1
|
||
State general obligation
|
|
1,231
|
|
|
Aaa/Aa1
|
|
1,334
|
|
|
Aaa/Aa1
|
||
Pre-refunded
|
|
2,056
|
|
|
Aaa/Aa1
|
|
2,852
|
|
|
Aaa/Aa1
|
||
Total obligations of states, municipalities and political subdivisions
|
|
29,917
|
|
|
|
|
28,611
|
|
|
|
||
Debt securities issued by foreign governments
|
|
1,173
|
|
|
Aaa/Aa1
|
|
1,257
|
|
|
Aaa/Aa1
|
||
Mortgage-backed securities, collateralized mortgage obligations and pass-through securities
|
|
3,280
|
|
|
Aaa/Aa1
|
|
2,573
|
|
|
Aaa/Aa1
|
||
All other corporate bonds and redeemable preferred stock:
|
|
|
|
|
|
|
|
|
|
|
||
Financial:
|
|
|
|
|
|
|
|
|
|
|
||
Bank
|
|
3,841
|
|
|
A1
|
|
3,641
|
|
|
A1
|
||
Insurance
|
|
1,183
|
|
|
Aa3
|
|
1,006
|
|
|
A1
|
||
Finance/leasing
|
|
42
|
|
|
Ba3
|
|
39
|
|
|
Ba2
|
||
Brokerage and asset management
|
|
103
|
|
|
A1
|
|
80
|
|
|
A1
|
||
Total financial
|
|
5,169
|
|
|
|
|
4,766
|
|
|
|
||
Industrial
|
|
18,128
|
|
|
A3
|
|
16,957
|
|
|
A3
|
||
Public utility
|
|
3,953
|
|
|
A3
|
|
3,222
|
|
|
A2
|
||
Canadian municipal securities
|
|
1,416
|
|
|
Aa2
|
|
1,165
|
|
|
Aa2
|
||
Sovereign corporate securities (2)
|
|
582
|
|
|
Aaa
|
|
629
|
|
|
Aaa
|
||
Commercial mortgage-backed securities and project loans (3)
|
|
1,509
|
|
|
Aaa
|
|
1,217
|
|
|
Aaa
|
||
Asset-backed and other
|
|
912
|
|
|
Aa1
|
|
1,003
|
|
|
Aa1
|
||
Total all other corporate bonds and redeemable preferred stock
|
|
31,669
|
|
|
|
|
28,959
|
|
|
|
||
Total fixed maturities
|
|
$
|
68,134
|
|
|
Aa2
|
|
$
|
63,464
|
|
|
Aa2
|
(1)
|
Rated using external rating agencies or by the Company when a public rating does not exist.
|
(2)
|
Sovereign corporate securities include corporate securities that are backed by a government and include sovereign banks and securities issued under the Federal Ship Financing Programs.
|
(3)
|
Included in commercial mortgage-backed securities and project loans at December 31, 2019 and 2018 were $557 million and $456 million of securities guaranteed by the U.S. government, respectively, and $2 million of securities guaranteed by government-sponsored enterprises at both December 31, 2019 and 2018.
|
(at December 31, 2019, in millions)
|
|
Carrying
Value
|
|
Percent of Total
Carrying Value
|
|||
Quality Rating:
|
|
|
|
|
|
|
|
Aaa
|
|
$
|
29,164
|
|
|
42.9
|
%
|
Aa
|
|
15,819
|
|
|
23.2
|
|
|
A
|
|
12,148
|
|
|
17.8
|
|
|
Baa
|
|
9,541
|
|
|
14.0
|
|
|
Total investment grade
|
|
66,672
|
|
|
97.9
|
|
|
Below investment grade
|
|
1,462
|
|
|
2.1
|
|
|
Total fixed maturities
|
|
$
|
68,134
|
|
|
100.0
|
%
|
(at December 31, 2019, in millions)
|
|
State General
Obligation
|
|
Local General
Obligation
|
|
Revenue
|
|
Total Carrying
Value
|
|
Weighted Average
Credit
Quality(1)
|
||||||||
State:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Texas
|
|
$
|
14
|
|
|
$
|
2,803
|
|
|
$
|
1,143
|
|
|
$
|
3,960
|
|
|
Aaa
|
Washington
|
|
110
|
|
|
1,389
|
|
|
483
|
|
|
1,982
|
|
|
Aaa/Aa1
|
||||
Virginia
|
|
8
|
|
|
913
|
|
|
826
|
|
|
1,747
|
|
|
Aaa/Aa1
|
||||
California
|
|
—
|
|
|
1,086
|
|
|
454
|
|
|
1,540
|
|
|
Aaa/Aa1
|
||||
Minnesota
|
|
73
|
|
|
1,089
|
|
|
246
|
|
|
1,408
|
|
|
Aaa/Aa1
|
||||
North Carolina
|
|
97
|
|
|
794
|
|
|
438
|
|
|
1,329
|
|
|
Aaa/Aa1
|
||||
Massachusetts
|
|
—
|
|
|
123
|
|
|
1,089
|
|
|
1,212
|
|
|
Aaa/Aa1
|
||||
Colorado
|
|
—
|
|
|
711
|
|
|
282
|
|
|
993
|
|
|
Aa1
|
||||
Maryland
|
|
33
|
|
|
726
|
|
|
166
|
|
|
925
|
|
|
Aaa/Aa1
|
||||
Georgia
|
|
158
|
|
|
596
|
|
|
160
|
|
|
914
|
|
|
Aaa/Aa1
|
||||
Wisconsin
|
|
143
|
|
|
496
|
|
|
182
|
|
|
821
|
|
|
Aa1
|
||||
Tennessee
|
|
63
|
|
|
623
|
|
|
88
|
|
|
774
|
|
|
Aa1
|
||||
Florida
|
|
46
|
|
|
77
|
|
|
624
|
|
|
747
|
|
|
Aa1
|
||||
South Carolina
|
|
53
|
|
|
557
|
|
|
118
|
|
|
728
|
|
|
Aa1
|
||||
All others (2)
|
|
433
|
|
|
4,332
|
|
|
4,016
|
|
|
8,781
|
|
|
Aaa/Aa1
|
||||
Total
|
|
$
|
1,231
|
|
|
$
|
16,315
|
|
|
$
|
10,315
|
|
|
$
|
27,861
|
|
|
Aaa/Aa1
|
(1)
|
Rated using external rating agencies or by the Company when a public rating does not exist. Ratings shown are the higher of the rating of the underlying issuer or the insurer in the case of securities enhanced by third-party insurance for the payment of principal and interest in the event of issuer default.
|
(2)
|
No other single state accounted for 2.5% or more of the total non-pre-refunded municipal bonds.
|
(at December 31, 2019, in millions)
|
|
Carrying
Value
|
|
Weighted Average
Credit
Quality(1)
|
||
Source:
|
|
|
|
|
|
|
Water and sewer
|
|
$
|
4,016
|
|
|
Aaa/Aa1
|
Higher education
|
|
2,626
|
|
|
Aaa/Aa1
|
|
Power utilities
|
|
785
|
|
|
Aa1
|
|
Transportation
|
|
727
|
|
|
Aa1
|
|
Special tax
|
|
578
|
|
|
Aa1
|
|
Health care
|
|
94
|
|
|
Aa2
|
|
Housing
|
|
35
|
|
|
Aaa/Aa1
|
|
Lease
|
|
34
|
|
|
Aaa/Aa1
|
|
Industrial
|
|
14
|
|
|
A2
|
|
Property tax
|
|
12
|
|
|
Aa2
|
|
Other revenue sources
|
|
1,394
|
|
|
Aaa/Aa1
|
|
Total
|
|
$
|
10,315
|
|
|
Aaa/Aa1
|
(1)
|
Rated using external rating agencies or by the Company when a public rating does not exist. Ratings shown are the higher of the rating of the underlying issuer or the insurer in the case of securities enhanced by third-party insurance for the payment of principal and interest in the event of issuer default.
|
(at December 31, 2019, in millions)
|
|
Carrying
Value
|
|
Weighted Average Credit
Quality (1)
|
||
Foreign Government:
|
|
|
|
|
|
|
Canada
|
|
$
|
790
|
|
|
Aaa
|
United Kingdom
|
|
355
|
|
|
Aa2
|
|
All Others (2)
|
|
28
|
|
|
Baa2
|
|
Total
|
|
$
|
1,173
|
|
|
Aaa/Aa1
|
(1)
|
Rated using external rating agencies or by the Company when a public rating does not exist.
|
|
|
|
|
|
|
Corporate Securities
|
||||||||||||||||||||||
|
|
Debt Securities Issued
by Foreign Governments
|
|
Financial
|
|
Sovereign Corporates
|
|
All Other
|
||||||||||||||||||||
(at December 31, 2019, in millions)
|
|
Carrying
Value
|
|
Weighted Average
Credit
Quality (1)
|
|
Carrying
Value
|
|
Weighted Average
Credit
Quality (1)
|
|
Carrying
Value
|
|
Weighted Average
Credit
Quality (1)
|
|
Carrying
Value
|
|
Weighted Average
Credit
Quality (1)
|
||||||||||||
Eurozone Periphery
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Spain
|
|
$
|
—
|
|
|
—
|
|
|
$
|
78
|
|
|
A2
|
|
|
$
|
—
|
|
|
—
|
|
|
$
|
19
|
|
|
Baa2
|
|
Ireland
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
138
|
|
|
Baa2
|
|
||||
Greece
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Italy
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Portugal
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Subtotal
|
|
—
|
|
|
|
|
|
78
|
|
|
|
|
|
—
|
|
|
|
|
|
157
|
|
|
|
|
||||
Eurozone Non-Periphery
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Germany
|
|
—
|
|
|
—
|
|
|
5
|
|
|
Baa3
|
|
|
353
|
|
|
Aaa/Aa1
|
|
|
535
|
|
|
A3
|
|
||||
France
|
|
—
|
|
|
—
|
|
|
4
|
|
|
A1
|
|
|
—
|
|
|
—
|
|
|
632
|
|
|
A2
|
|
||||
Netherlands
|
|
—
|
|
|
—
|
|
|
150
|
|
|
A1
|
|
|
218
|
|
|
Aaa/Aa1
|
|
|
337
|
|
|
A2
|
|
||||
Austria
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
124
|
|
|
Aa2
|
|
|
—
|
|
|
—
|
|
||||
Finland
|
|
—
|
|
|
—
|
|
|
26
|
|
|
Aa3
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Belgium
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
74
|
|
|
Baa1
|
|
||||
Luxembourg
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
14
|
|
|
Aa3
|
|
||||
Subtotal
|
|
—
|
|
|
|
|
|
185
|
|
|
|
|
|
695
|
|
|
|
|
|
1,592
|
|
|
|
|||||
Total
|
|
$
|
—
|
|
|
|
|
|
$
|
263
|
|
|
|
|
|
$
|
695
|
|
|
|
|
|
$
|
1,749
|
|
|
|
|
(1)
|
Rated using external rating agencies or by the Company when a public rating does not exist. The table includes $619 million of short-term securities which have high ratings issued by external rating agencies for short-term issuances. For purposes of this table, the short-term securities, which are rated “A-1+” and/or “P-1,” are included as “Aaa” rated securities.
|
(at December 31, in millions)
|
|
2019
|
|
2018
|
|
2017
|
||||||
Fixed maturities
|
|
$
|
2,853
|
|
|
$
|
(137
|
)
|
|
$
|
1,378
|
|
Equity securities
|
|
—
|
|
|
—
|
|
|
13
|
|
|||
Other investments
|
|
—
|
|
|
—
|
|
|
23
|
|
|||
Unrealized investment gains (losses) before tax
|
|
2,853
|
|
|
(137
|
)
|
|
1,414
|
|
|||
Tax expense (benefit)
|
|
607
|
|
|
(24
|
)
|
|
460
|
|
|||
Net unrealized investment gains (losses) included in accumulated other comprehensive income at year end
|
|
2,246
|
|
|
(113
|
)
|
|
954
|
|
|||
Tax effect of TCJA
|
|
—
|
|
|
—
|
|
|
158
|
|
|||
Net unrealized investment gains (losses) included in shareholders' equity at end of year
|
|
$
|
2,246
|
|
|
$
|
(113
|
)
|
|
$
|
1,112
|
|
|
|
Dollars (in billions)
|
||||||
Likelihood of Exceedance (1)
|
|
Single U.S. and
Canadian
Hurricane
|
|
Single U.S. and
Canadian
Earthquake
|
||||
2.0% (1-in-50)
|
|
$
|
1.3
|
|
|
$
|
0.5
|
|
1.0% (1-in-100)
|
|
$
|
1.6
|
|
|
$
|
0.7
|
|
0.4% (1-in-250)
|
|
$
|
2.2
|
|
|
$
|
1.2
|
|
0.1% (1-in-1,000)
|
|
$
|
4.9
|
|
|
$
|
1.9
|
|
|
|
Percentage of Common Equity (2)
|
||||
Likelihood of Exceedance
|
|
Single U.S. and
Canadian
Hurricane
|
|
Single U.S. and
Canadian
Earthquake
|
||
2.0% (1-in-50)
|
|
5
|
%
|
|
2
|
%
|
1.0% (1-in-100)
|
|
7
|
%
|
|
3
|
%
|
0.4% (1-in-250)
|
|
9
|
%
|
|
5
|
%
|
0.1% (1-in-1,000)
|
|
21
|
%
|
|
8
|
%
|
(1)
|
An event that has, for example, a 2% likelihood of exceedance is sometimes described as a “1-in-50 year event.” As noted above, however, the probabilities in the table represent the likelihood of losses from a single event equaling or exceeding the indicated threshold loss amount in a one-year timeframe, not over a multi-year timeframe. Also, because the probabilities relate to a single event, the probabilities do not address the likelihood of more than one event occurring in a particular period, and, therefore, the amounts do not address potential aggregate catastrophe losses occurring in a one-year timeframe.
|
(2)
|
The percentage of common equity is calculated by dividing (a) indicated loss amounts in dollars by (b) total common equity excluding net unrealized investment gains and losses, net of taxes, included in shareholders’ equity. Net unrealized investment gains and losses can be significantly impacted by both discretionary and other economic factors and are not necessarily indicative of operating trends. Accordingly, the Company’s management uses the percentage of common equity calculated on this basis as a metric to evaluate the potential impact of a single hurricane or single earthquake on the Company’s financial position for purposes of making underwriting and reinsurance decisions.
|
•
|
Increasingly unpredictable and severe weather conditions could result in increased frequency and severity of claims under policies issued by the Company. See “Item 1A—Risk Factors—High levels of catastrophe losses, including as a result of factors such as increased concentrations of insured exposures in catastrophe-prone areas, could materially and adversely affect our results of operations, our financial position and/or liquidity, and could adversely impact our ratings, our ability to raise capital and the availability and cost of reinsurance” and “-Outlook-Underwriting Gain/Loss.”
|
•
|
Changing climate conditions could also impact the creditworthiness of issuers of securities in which the Company invests. For example, water supply adequacy could impact the creditworthiness of bond issuers with significant assets or business activities in the Southwestern United States, and more frequent and/or severe hurricanes could impact the creditworthiness of issuers with significant assets or business activities in the Southeastern United States, among other areas. See “Item 1A—Risk Factors—Our investment portfolio is subject to credit and interest rate risk, and may suffer reduced or low returns or material realized or unrealized losses.”
|
•
|
Increased regulation adopted in response to potential changes in climate conditions may impact the Company and its customers, including state insurance regulations that could impact the Company’s ability to manage property exposures in areas vulnerable to significant climate driven losses. For example, a state recently passed legislation that restricts a carrier's ability to cancel or non-renew policies within or adjacent to declared state emergency zip codes. If the Company is unable to implement risk-based pricing, modify policy terms or reduce exposures to the extent necessary to address rising losses related to catastrophes and smaller scale weather events (should those increased losses occur), its business may be adversely affected. See “Item 1A—Risk Factors—High levels of catastrophe losses, including as a result of factors such as increased concentrations of insured exposures in catastrophe-prone areas, could materially and adversely affect our results of operations, our financial position and/or liquidity, and could adversely impact our ratings, our ability to raise capital and the availability and cost of reinsurance.” In addition, climate change regulation could increase the Company’s customers’ costs of doing business. For example, insureds faced with carbon management regulatory requirements may have less available capital for investment in loss prevention and safety features which may, over time, increase loss exposures. Increased regulation may also result in reduced economic activity, which would decrease the amount of insurable assets and businesses.
|
•
|
The full range of potential liability exposures related to changing climate conditions continues to evolve. For example, from time to time third parties sue our policyholders alleging that they caused or contributed to changing climate conditions. Through the Company’s Emerging Issues Committee and its Committee on Climate, Energy and the Environment, the Company works with its business units and corporate groups, as appropriate, to identify and try to assess climate change-related liability issues, which are continually evolving and often hard to fully evaluate. The Company regularly reviews
|
(at December 31, in millions)
|
|
2019
|
|
2018
|
||||
Gross reinsurance recoverables on paid and unpaid claims and claim adjustment expenses
|
|
$
|
3,476
|
|
|
$
|
3,485
|
|
Allowance for uncollectible reinsurance
|
|
(92
|
)
|
|
(110
|
)
|
||
Net reinsurance recoverables
|
|
3,384
|
|
|
3,375
|
|
||
Mandatory pools and associations
|
|
1,886
|
|
|
2,005
|
|
||
Structured settlements
|
|
2,965
|
|
|
2,990
|
|
||
Total reinsurance recoverables
|
|
$
|
8,235
|
|
|
$
|
8,370
|
|
Reinsurer Group
|
|
Reinsurance
Recoverable
|
|
A.M. Best Rating of Group’s Predominant
Reinsurer
|
||||
Swiss Re Group
|
|
$
|
457
|
|
|
A+
|
|
second highest of 16 ratings
|
Berkshire Hathaway
|
|
347
|
|
|
A++
|
|
highest of 16 ratings
|
|
Munich Re Group
|
|
289
|
|
|
A+
|
|
second highest of 16 ratings
|
|
AXA Group
|
|
170
|
|
|
A+
|
|
second highest of 16 ratings
|
|
Alleghany Group
|
|
141
|
|
|
A+
|
|
second highest of 16 ratings
|
Group
|
|
Structured
Settlements
|
|
A.M. Best Rating of Group’s Predominant
Insurer
|
||||
Fidelity & Guaranty Life Group(1)
|
|
$
|
777
|
|
|
A-
|
|
fourth highest of 16 ratings
|
Genworth Financial Group (2)
|
|
338
|
|
|
B
|
|
seventh highest of 16 ratings
|
|
John Hancock Group
|
|
272
|
|
|
A+
|
|
second highest of 16 ratings
|
|
Brighthouse Financial, Inc.
|
|
248
|
|
|
A
|
|
third highest of 16 ratings
|
|
Symetra Financial Corporation
|
|
241
|
|
|
A
|
|
third highest of 16 ratings
|
(2)
|
On October 23, 2016, Genworth Financial (Genworth) announced that they entered into a definitive agreement under which China Oceanwide Holdings Group Co., Ltd. (China Oceanwide) agreed to acquire all of the outstanding shares of Genworth. China Oceanwide is a privately held, family-owned international financial holding group headquartered in Beijing, China. On March 7, 2017, Genworth stockholders adopted the merger agreement, and the acquisition is pending the receipt of required regulatory approvals. On December 23, 2019, the parties agreed to extend the closing deadline for the transaction until March 31, 2020.
|
(in millions, except per
share amounts)
Quarterly Period Ending
|
|
Number of
shares
repurchased
|
|
Cost of shares
repurchased
|
|
Average price paid
per share
|
|
Remaining capacity
under share repurchase
authorization
|
|||||||
March 31, 2019
|
|
2.9
|
|
|
$
|
375
|
|
|
$
|
129.42
|
|
|
$
|
2,911
|
|
June 30, 2019
|
|
2.6
|
|
|
375
|
|
|
$
|
145.87
|
|
|
$
|
2,536
|
|
|
September 30, 2019
|
|
2.5
|
|
|
375
|
|
|
$
|
147.23
|
|
|
$
|
2,161
|
|
|
December 31, 2019
|
|
2.8
|
|
|
375
|
|
|
$
|
134.33
|
|
|
$
|
1,786
|
|
|
Total
|
|
10.8
|
|
|
$
|
1,500
|
|
|
$
|
138.80
|
|
|
$
|
1,786
|
|
(at December 31, in millions)
|
|
2019
|
|
2018
|
||||
Debt:
|
|
|
|
|
|
|
||
Short-term
|
|
$
|
600
|
|
|
$
|
600
|
|
Long-term
|
|
6,004
|
|
|
6,004
|
|
||
Net unamortized fair value adjustments and debt issuance costs
|
|
(46
|
)
|
|
(40
|
)
|
||
Total debt
|
|
6,558
|
|
|
6,564
|
|
||
Shareholders’ equity:
|
|
|
|
|
|
|
||
Common stock and retained earnings, less treasury stock
|
|
25,303
|
|
|
24,753
|
|
||
Accumulated other comprehensive income (loss)
|
|
640
|
|
|
(1,859
|
)
|
||
Total shareholders’ equity
|
|
25,943
|
|
|
22,894
|
|
||
Total capitalization
|
|
$
|
32,501
|
|
|
$
|
29,458
|
|
(at December 31, dollars in millions)
|
|
2019
|
|
2018
|
||||
Total capitalization
|
|
$
|
32,501
|
|
|
$
|
29,458
|
|
Less: net unrealized gains (losses) on investments, net of taxes, included in shareholders' equity
|
|
2,246
|
|
|
(113
|
)
|
||
Total capitalization excluding net unrealized gains (losses) on investments, net of taxes, included in shareholders' equity
|
|
$
|
30,255
|
|
|
$
|
29,571
|
|
Debt-to-total capital ratio
|
|
20.2
|
%
|
|
22.3
|
%
|
||
Debt-to-total capital ratio excluding net unrealized gains (losses) on investments, net of taxes, included in shareholders' equity
|
|
21.7
|
%
|
|
22.2
|
%
|
Payments Due by Period (in millions)
|
|
Total
|
|
Less than
1 Year
|
|
1-3
Years
|
|
3-5
Years
|
|
After 5
Years
|
||||||||||
Debt
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Senior notes
|
|
$
|
6,250
|
|
|
$
|
500
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
5,750
|
|
Junior subordinated debentures
|
|
254
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
254
|
|
|||||
Total debt principal
|
|
6,504
|
|
|
500
|
|
|
—
|
|
|
—
|
|
|
6,004
|
|
|||||
Interest
|
|
6,526
|
|
|
332
|
|
|
625
|
|
|
625
|
|
|
4,944
|
|
|||||
Total long-term debt obligations (1)
|
|
13,030
|
|
|
832
|
|
|
625
|
|
|
625
|
|
|
10,948
|
|
|||||
Real estate and other operating leases (2)
|
|
441
|
|
|
120
|
|
|
175
|
|
|
89
|
|
|
57
|
|
|||||
Purchase obligations
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Information systems administration and maintenance commitments (3)
|
|
165
|
|
|
92
|
|
|
68
|
|
|
5
|
|
|
—
|
|
|||||
Other purchase commitments (4)
|
|
231
|
|
|
77
|
|
|
95
|
|
|
46
|
|
|
13
|
|
|||||
Total purchase obligations
|
|
396
|
|
|
169
|
|
|
163
|
|
|
51
|
|
|
13
|
|
|||||
Long-term unfunded investment commitments (5)
|
|
1,666
|
|
|
359
|
|
|
522
|
|
|
553
|
|
|
232
|
|
|||||
Estimated claims and claim-related payments
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Claims and claim adjustment expenses (6)
|
|
50,039
|
|
|
11,256
|
|
|
12,551
|
|
|
5,854
|
|
|
20,378
|
|
|||||
Claims from large deductible policies (7)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Loss-based assessments (8)
|
|
124
|
|
|
23
|
|
|
35
|
|
|
14
|
|
|
52
|
|
|||||
Reinsurance contracts accounted for as deposits (9)
|
|
1
|
|
|
—
|
|
|
1
|
|
|
—
|
|
|
—
|
|
|||||
Payout from ceded funds withheld (10)
|
|
67
|
|
|
8
|
|
|
12
|
|
|
14
|
|
|
33
|
|
|||||
Total estimated claims and claim-related payments
|
|
50,231
|
|
|
11,287
|
|
|
12,599
|
|
|
5,882
|
|
|
20,463
|
|
|||||
Liabilities related to unrecognized tax benefits (11)
|
|
50
|
|
|
—
|
|
|
46
|
|
|
4
|
|
|
—
|
|
|||||
Total
|
|
$
|
65,814
|
|
|
$
|
12,767
|
|
|
$
|
14,130
|
|
|
$
|
7,204
|
|
|
$
|
31,713
|
|
(1)
|
See note 8 of notes to the consolidated financial statements for a further discussion of outstanding indebtedness. Because the amounts reported in the foregoing table include principal and interest, the total long-term debt obligations will not agree with the amounts reported in note 8.
|
(2)
|
Represents agreements entered into in the ordinary course of business to lease office space, equipment and furniture.
|
(3)
|
Includes agreements with vendors to purchase system software administration and maintenance services.
|
(4)
|
Includes commitments to vendors entered into in the ordinary course of business for goods and services including property, plant and equipment, office supplies, archival services, etc.
|
(5)
|
Represents estimated timing for fulfilling unfunded commitments for private equity limited partnerships and real estate partnerships, as well as a put/call option entered into by the Company in connection with a business acquisition.
|
(6)
|
The amounts in “Claims and claim adjustment expenses” in the table above represent the estimated timing of future payments for both reported and unreported claims incurred and related claim adjustment expenses, gross of reinsurance recoverables, excluding structured settlements expected to be paid by annuity companies.
|
(in millions)
|
|
Total
|
|
Less than 1
Year
|
|
1-3
Years
|
|
3-5
Years
|
|
After 5
Years
|
||||||||||
Reinsurance recoverables
|
|
$
|
5,150
|
|
|
$
|
890
|
|
|
$
|
948
|
|
|
$
|
528
|
|
|
$
|
2,784
|
|
(in millions)
|
|
Total
|
|
Less than 1
Year
|
|
1-3
Years
|
|
3-5
Years
|
|
After 5
Years
|
||||||||||
Claims and claim adjustment expenses, net
|
|
$
|
44,889
|
|
|
$
|
10,366
|
|
|
$
|
11,603
|
|
|
$
|
5,326
|
|
|
$
|
17,594
|
|
(7)
|
Workers’ compensation large deductible policies provide third-party coverage in which the Company typically is responsible for paying the entire loss under such policies and then seeks reimbursement from the insured for the deductible amount. “Claims from large deductible policies” represent the estimated future payment for claims and claim related expenses below the deductible amount, net of the estimated recovery of the deductible. The liability and the related deductible receivable for unpaid claims are presented in the consolidated balance sheet as “contractholder payables” and “contractholder receivables,” respectively. Most deductibles for such policies are paid directly from the policyholder’s escrow, which is periodically replenished by the policyholder. The payment of the loss amounts above the deductible are reported within “Claims and claim adjustment expenses” in the above table. Because the timing of the collection of the deductible (contractholder receivables) occurs shortly after the payment of the deductible to a claimant (contractholder payables), these cash flows offset each other in the table.
|
(in millions)
|
|
Total
|
|
Less than 1
Year
|
|
1-3
Years
|
|
3-5
Years
|
|
After 5
Years
|
||||||||||
Contractholder payables/receivables
|
|
$
|
4,619
|
|
|
$
|
1,261
|
|
|
$
|
1,316
|
|
|
$
|
676
|
|
|
$
|
1,366
|
|
(8)
|
The amounts in “Loss-based assessments” relate to estimated future payments of second-injury fund assessments which would result from payment of current claim liabilities. Second injury funds cover the cost of any additional benefits for aggravation of a pre-existing condition. For loss-based assessments, the cost is shared by the insurance industry and self-insureds, funded through assessments to insurance companies and self-insureds based on losses. Amounts relating to second-injury fund assessments are included in “other liabilities” in the consolidated balance sheet.
|
(9)
|
The amounts in “Reinsurance contracts accounted for as deposits” represent estimated future nominal payments for reinsurance agreements that are accounted for as deposits. Amounts payable under deposit agreements are included in “other liabilities” in the consolidated balance sheet.
|
(10)
|
The amounts in “Payout from ceded funds withheld” represent estimated payments for losses and return of funds held related to certain reinsurance arrangements whereby the Company holds a portion of the premium due to the reinsurer and is allowed to pay claims from the amounts held.
|
(11)
|
The Company's current liabilities related to unrecognized tax benefits from uncertain tax positions are $50 million. Offsetting these liabilities are deferred tax assets of $5 million associated with the temporary differences that would exist if these positions become realized.
|
|
|
December 31, 2019
|
|
December 31, 2018
|
||||||||||||||||||||
(in millions)
|
|
Case
|
|
IBNR
|
|
Total
|
|
Case
|
|
IBNR
|
|
Total
|
||||||||||||
General liability
|
|
$
|
4,898
|
|
|
$
|
7,451
|
|
|
$
|
12,349
|
|
|
$
|
4,780
|
|
|
$
|
7,092
|
|
|
$
|
11,872
|
|
Commercial property
|
|
1,035
|
|
|
312
|
|
|
1,347
|
|
|
1,157
|
|
|
297
|
|
|
1,454
|
|
||||||
Commercial multi-peril
|
|
2,148
|
|
|
2,065
|
|
|
4,213
|
|
|
2,089
|
|
|
1,886
|
|
|
3,975
|
|
||||||
Commercial automobile
|
|
2,533
|
|
|
1,872
|
|
|
4,405
|
|
|
2,339
|
|
|
1,661
|
|
|
4,000
|
|
||||||
Workers’ compensation
|
|
10,233
|
|
|
9,279
|
|
|
19,512
|
|
|
10,299
|
|
|
9,216
|
|
|
19,515
|
|
||||||
Fidelity and surety
|
|
261
|
|
|
259
|
|
|
520
|
|
|
280
|
|
|
288
|
|
|
568
|
|
||||||
Personal automobile
|
|
2,019
|
|
|
1,509
|
|
|
3,528
|
|
|
2,038
|
|
|
1,400
|
|
|
3,438
|
|
||||||
Homeowners and personal—other
|
|
838
|
|
|
871
|
|
|
1,709
|
|
|
942
|
|
|
884
|
|
|
1,826
|
|
||||||
International and other
|
|
2,620
|
|
|
1,633
|
|
|
4,253
|
|
|
2,574
|
|
|
1,431
|
|
|
4,005
|
|
||||||
Property-casualty
|
|
26,585
|
|
|
25,251
|
|
|
51,836
|
|
|
26,498
|
|
|
24,155
|
|
|
50,653
|
|
||||||
Accident and health
|
|
13
|
|
|
—
|
|
|
13
|
|
|
15
|
|
|
—
|
|
|
15
|
|
||||||
Claims and claim adjustment expense reserves
|
|
$
|
26,598
|
|
|
$
|
25,251
|
|
|
$
|
51,849
|
|
|
$
|
26,513
|
|
|
$
|
24,155
|
|
|
$
|
50,668
|
|
•
|
Estimating the number of large claims and their average values based on historical trends from prior accident periods, adjusted for the current environment and supplemented with actual data for the accident year analyzed to the extent available.
|
•
|
Utilizing individual claim adjuster estimates of the large claims, combined with continual monitoring of the aggregate accuracy of such claim adjuster estimates. (This monitoring may lead to supplemental adjustments to the aggregate of such claim estimates).
|
•
|
Utilizing historic longer-term average ratios of large claims to small claims, and applying such ratios to the estimated ultimate small claims from conventional analysis.
|
•
|
Ground-up analysis of the underlying exposure (typically used for asbestos and environmental).
|
•
|
Changes in claim handling philosophies
|
•
|
Changes in policy provisions or court interpretation of such provisions
|
•
|
New or expanded theories of liability
|
•
|
Trends in jury awards
|
•
|
Changes in the propensity to sue, in general with specificity to particular issues
|
•
|
Changes in the propensity to litigate rather than settle a claim
|
•
|
Increases in attorney involvement in, or impact on, claims
|
•
|
Changes in statutes of limitations
|
•
|
Changes in the underlying court system
|
•
|
Distortions from losses resulting from large single accounts or single issues
|
•
|
Changes in tort law
|
•
|
Shifts in lawsuit mix between federal and state courts
|
•
|
Changes in claim adjuster processes or reporting which may cause distortions in the data being analyzed
|
•
|
The potential impact of inflation on loss costs
|
•
|
Changes in settlement patterns
|
•
|
Changes in policy provisions (e.g., deductibles, policy limits, endorsements)
|
•
|
Changes in underwriting standards
|
•
|
Product mix (e.g., size of account, industries insured, jurisdiction mix)
|
•
|
Physical concentration of policyholders
|
•
|
Availability and cost of local contractors
|
•
|
For the more severe catastrophic events, “demand surge” inflation, which refers to significant short-term increases in building material and labor costs due to a sharp increase in demand for those materials and services
|
•
|
Local building codes
|
•
|
Amount of time to return property to full usage (for business interruption claims)
|
•
|
Frequency of claim re-openings on claims previously closed
|
•
|
Court interpretation of policy provisions (such as occurrence definition, or wind versus flooding)
|
•
|
Lags in reporting claims (e.g., winter damage to summer homes, hidden damage after an earthquake, hail damage to roofs and/or equipment on roofs)
|
•
|
Court or legislative changes to the statute of limitations
|
•
|
Policy provisions mix (e.g., deductibles, policy limits, endorsements)
|
•
|
Changes in underwriting standards
|
•
|
Trends in jury awards
|
•
|
Changes in the underlying court system
|
•
|
Changes in case law
|
•
|
Litigation trends
|
•
|
Increases in attorney involvement in, or impact on, claims
|
•
|
Frequency of claims with payment capped by policy limits
|
•
|
Change in average severity of accidents, or proportion of severe accidents
|
•
|
Changes in auto safety technology
|
•
|
Subrogation opportunities
|
•
|
Changes in claim handling philosophies
|
•
|
Frequency of visits to health providers
|
•
|
Number of medical procedures given during visits to health providers
|
•
|
Types of health providers used
|
•
|
Types of medical treatments received
|
•
|
Changes in cost of medical treatments
|
•
|
Degree of patient responsiveness to treatment
|
•
|
Changes in policy provisions (e.g., deductibles, policy limits, endorsements, etc.)
|
•
|
Changes in mix of insured vehicles (e.g., long haul trucks versus local and smaller vehicles, fleet risks versus non-fleets)
|
•
|
Changes in underwriting standards
|
•
|
Time required to recover from the injury
|
•
|
Degree of available transitional jobs
|
•
|
Degree of legal involvement
|
•
|
Changes in the interpretations and processes of the administrative bodies that oversee workers’ compensation claims
|
•
|
Future wage inflation for states that index benefits
|
•
|
Changes in the administrative policies of second injury funds
|
•
|
Changes in the cost of medical treatments (including prescription drugs) and underlying fee schedules (“inflation”)
|
•
|
Frequency of visits to health providers
|
•
|
Number of medical procedures given during visits to health providers
|
•
|
Types of health providers used
|
•
|
Type of medical treatments received
|
•
|
Use of preferred provider networks and other medical cost containment practices
|
•
|
Availability of new medical processes and equipment
|
•
|
Changes in the use of pharmaceutical drugs, including drugs for pain management
|
•
|
Degree of patient responsiveness to treatment
|
•
|
Frequency of reopening claims previously closed
|
•
|
Mortality trends of injured workers with lifetime benefits and medical treatment
|
•
|
Changes in statutory benefits
|
•
|
The impact, if any, of potential future changes to government health insurance legislation
|
•
|
Product mix
|
•
|
Injury type mix
|
•
|
Changes in underwriting standards
|
•
|
Type of business of insured
|
•
|
Policy limit and attachment points
|
•
|
Third-party claims
|
•
|
Coverage litigation
|
•
|
Complexity of claims
|
•
|
Growth in insureds’ operations
|
•
|
Economic trends, including the general level of construction activity
|
•
|
Concentration of reserves in a relatively few large claims
|
•
|
Type of business bonded
|
•
|
Type of obligation bonded
|
•
|
Cumulative limits of liability for the bonded party
|
•
|
Assets available to mitigate loss
|
•
|
Defective workmanship/latent defects
|
•
|
Financial strategy of the bonded party
|
•
|
Changes in statutory obligations
|
•
|
Geographic spread of business
|
•
|
Changes in policy provisions (e.g., deductibles, limits, endorsements)
|
•
|
Changes in underwriting standards
|
•
|
Trends in jury awards
|
•
|
Changes in the underlying court system and its philosophy
|
•
|
Changes in case law
|
•
|
Litigation trends
|
•
|
Increases in attorney involvement in, or impact on, claims
|
•
|
Frequency of claims with payment capped by policy limits
|
•
|
Change in average severity of accidents, or proportion of severe accidents
|
•
|
Changes in auto safety technology
|
•
|
Frequency and severity of claims involving distracted drivers and pedestrians
|
•
|
Subrogation opportunities
|
•
|
Frequency of visits to health providers
|
•
|
Number of medical procedures given during visits to health providers
|
•
|
Types of health providers used
|
•
|
Types of medical treatments received
|
•
|
Changes in cost of medical treatments
|
•
|
Effectiveness of no-fault laws
|
•
|
Degree of patient responsiveness to treatment
|
•
|
Changes in claim handling philosophies
|
•
|
Changes in policy provisions (e.g., deductibles, policy limits, endorsements, etc.)
|
•
|
Changes in underwriting standards
|
•
|
Changes in the use of permissible data for rating and underwriting
|
•
|
Salvage opportunities
|
•
|
Amount of time to return property to residential use
|
•
|
Changes in weather patterns
|
•
|
Local building codes
|
•
|
Construction and building material costs
|
•
|
Litigation trends
|
•
|
Trends in jury awards
|
•
|
Court interpretation of policy provisions (such as occurrence definition, or wind versus flooding)
|
•
|
Lags in reporting claims (e.g., winter damage to summer homes, hidden damage after an earthquake, hail damage to roofs and/or equipment on roofs)
|
•
|
Court or legislative changes to the statute of limitations
|
•
|
Physical concentration of policyholders
|
•
|
Availability and cost of local contractors
|
•
|
Local building codes
|
•
|
Quality of construction of damaged homes
|
•
|
Amount of time to return property to residential use
|
•
|
For the more severe catastrophic events, “demand surge” inflation, which refers to significant short-term increases in building material and labor costs due to a sharp increase in demand for those materials and services
|
•
|
Policy provisions mix (e.g., deductibles, policy limits, endorsements, etc.)
|
•
|
Degree of concentration of policyholders
|
•
|
Changes in underwriting standards
|
•
|
Changes in the use of permissible data for rating and underwriting
|
•
|
Changes in claim handling procedures, including those of the primary carriers
|
•
|
Changes in policy provisions or court interpretation of such provision
|
•
|
Economic trends
|
•
|
New theories of liability
|
•
|
Trends in jury awards
|
•
|
Changes in the propensity to sue
|
•
|
Changes in statutes of limitations
|
•
|
Changes in the underlying court system
|
•
|
Distortions from losses resulting from large single accounts or single issues
|
•
|
Changes in tort law
|
•
|
Changes in claim adjuster office structure (causing distortions in the data)
|
•
|
Changes in foreign currency exchange rates
|
•
|
Changes in policy provisions (e.g., deductibles, policy limits, endorsements, “claims-made” language)
|
•
|
Changes in underwriting standards
|
•
|
Product mix (e.g., size of account, industries insured, jurisdiction mix)
|
•
|
the Company’s outlook and its future results of operations and financial condition (including, among other things, anticipated premium volume, premium rates, renewal premium changes, underwriting margins and underlying underwriting margins, net and core income, investment income and performance, loss costs, return on equity, core return on equity and expected current returns, and combined ratios and underlying combined ratios);
|
•
|
share repurchase plans;
|
•
|
future pension plan contributions;
|
•
|
the sufficiency of the Company’s asbestos and other reserves;
|
•
|
the impact of emerging claims issues as well as other insurance and non-insurance litigation;
|
•
|
the potential benefit associated with the Company's ability to recover on its subrogation claims;
|
•
|
the cost and availability of reinsurance coverage;
|
•
|
catastrophe losses;
|
•
|
the impact of investment (including changes in interest rates), economic (including inflation, changes in tax law, changes in commodity prices and fluctuations in foreign currency exchange rates) and underwriting market conditions;
|
•
|
strategic and operational initiatives to improve profitability and competitiveness;
|
•
|
the Company's competitive advantages;
|
•
|
new product offerings;
|
•
|
the impact of new or potential regulations imposed or to be imposed by the United States or other nations, including tariffs or other barriers to international trade; and
|
•
|
the impact of developments in the tort environment, such as increased attorney involvement in insurance claims and legislation allowing victims of sexual abuse to file or proceed with claims that otherwise would have been time-barred.
|
|
Page
|
Consolidated Financial Statements:
|
|
Schedules:
|
|
•
|
Changes in claims handling procedures;
|
•
|
Economic inflation and changes in the tort environment; and
|
•
|
Legislative changes, among others.
|
•
|
Assessing the assumptions and methodologies underlying the Company’s reserve estimate by participating in quarterly discussions with the Company’s actuaries;
|
•
|
Evaluating the Company’s estimates by performing independent analyses of net and gross claims and claim adjustment expense reserves for certain lines of business;
|
•
|
Assessing the Company's internally prepared actuarial analyses in comparison to the Company's internal experience and related industry trends for selected other lines of business; and
|
•
|
Developing an overall range of reserve estimates and assessing the position of the Company’s recorded reserve relative to the range.
|
/s/ KPMG LLP
|
KPMG LLP
|
For the year ended December 31,
|
|
2019
|
|
2018
|
|
2017
|
||||||
Revenues
|
|
|
|
|
|
|
||||||
Premiums
|
|
$
|
28,272
|
|
|
$
|
27,059
|
|
|
$
|
25,683
|
|
Net investment income
|
|
2,468
|
|
|
2,474
|
|
|
2,397
|
|
|||
Fee income
|
|
459
|
|
|
432
|
|
|
447
|
|
|||
Net realized investment gains (1)
|
|
113
|
|
|
114
|
|
|
216
|
|
|||
Other revenues
|
|
269
|
|
|
203
|
|
|
159
|
|
|||
Total revenues
|
|
31,581
|
|
|
30,282
|
|
|
28,902
|
|
|||
Claims and expenses
|
|
|
|
|
|
|
||||||
Claims and claim adjustment expenses
|
|
19,133
|
|
|
18,291
|
|
|
17,467
|
|
|||
Amortization of deferred acquisition costs
|
|
4,601
|
|
|
4,381
|
|
|
4,166
|
|
|||
General and administrative expenses
|
|
4,365
|
|
|
4,297
|
|
|
4,170
|
|
|||
Interest expense
|
|
344
|
|
|
352
|
|
|
369
|
|
|||
Total claims and expenses
|
|
28,443
|
|
|
27,321
|
|
|
26,172
|
|
|||
Income before income taxes
|
|
3,138
|
|
|
2,961
|
|
|
2,730
|
|
|||
Income tax expense
|
|
516
|
|
|
438
|
|
|
674
|
|
|||
Net income
|
|
$
|
2,622
|
|
|
$
|
2,523
|
|
|
$
|
2,056
|
|
Net income per share
|
|
|
|
|
|
|
||||||
Basic
|
|
$
|
10.01
|
|
|
$
|
9.37
|
|
|
$
|
7.39
|
|
Diluted
|
|
$
|
9.92
|
|
|
$
|
9.28
|
|
|
$
|
7.33
|
|
Weighted average number of common shares outstanding
|
|
|
|
|
|
|
||||||
Basic
|
|
260.0
|
|
|
267.4
|
|
|
276.0
|
|
|||
Diluted
|
|
262.3
|
|
|
269.8
|
|
|
278.6
|
|
For the year ended December 31,
|
|
2019
|
|
2018
|
|
2017
|
||||||
Net income
|
|
$
|
2,622
|
|
|
$
|
2,523
|
|
|
$
|
2,056
|
|
Other comprehensive income (loss):
|
|
|
|
|
|
|
||||||
Changes in net unrealized gains (losses) on investment securities:
|
|
|
|
|
|
|
||||||
Having no credit losses recognized in the consolidated statement of income
|
|
2,994
|
|
|
(1,489
|
)
|
|
294
|
|
|||
Having credit losses recognized in the consolidated statement of income
|
|
(4
|
)
|
|
(27
|
)
|
|
8
|
|
|||
Net changes in benefit plan assets and obligations
|
|
33
|
|
|
(56
|
)
|
|
29
|
|
|||
Net changes in unrealized foreign currency translation
|
|
117
|
|
|
(247
|
)
|
|
191
|
|
|||
Other comprehensive income (loss) before income taxes
|
|
3,140
|
|
|
(1,819
|
)
|
|
522
|
|
|||
Income tax expense (benefit)
|
|
641
|
|
|
(349
|
)
|
|
110
|
|
|||
Other comprehensive income (loss), net of taxes
|
|
2,499
|
|
|
(1,470
|
)
|
|
412
|
|
|||
Comprehensive income
|
|
$
|
5,121
|
|
|
$
|
1,053
|
|
|
$
|
2,468
|
|
At December 31,
|
|
2019
|
|
2018
|
||||
Assets
|
|
|
|
|
||||
Fixed maturities, available for sale, at fair value (amortized cost $65,281 and $63,601)
|
|
$
|
68,134
|
|
|
$
|
63,464
|
|
Equity securities, at fair value (cost $376 and $382)
|
|
425
|
|
|
368
|
|
||
Real estate investments
|
|
963
|
|
|
904
|
|
||
Short-term securities
|
|
4,943
|
|
|
3,985
|
|
||
Other investments
|
|
3,419
|
|
|
3,557
|
|
||
Total investments
|
|
77,884
|
|
|
72,278
|
|
||
Cash
|
|
494
|
|
|
373
|
|
||
Investment income accrued
|
|
618
|
|
|
624
|
|
||
Premiums receivable
|
|
7,909
|
|
|
7,506
|
|
||
Reinsurance recoverables
|
|
8,235
|
|
|
8,370
|
|
||
Ceded unearned premiums
|
|
689
|
|
|
578
|
|
||
Deferred acquisition costs
|
|
2,273
|
|
|
2,120
|
|
||
Deferred taxes
|
|
—
|
|
|
445
|
|
||
Contractholder receivables
|
|
4,619
|
|
|
4,785
|
|
||
Goodwill
|
|
3,961
|
|
|
3,937
|
|
||
Other intangible assets
|
|
330
|
|
|
345
|
|
||
Other assets
|
|
3,110
|
|
|
2,872
|
|
||
Total assets
|
|
$
|
110,122
|
|
|
$
|
104,233
|
|
Liabilities
|
|
|
|
|
||||
Claims and claim adjustment expense reserves
|
|
$
|
51,849
|
|
|
$
|
50,668
|
|
Unearned premium reserves
|
|
14,604
|
|
|
13,555
|
|
||
Contractholder payables
|
|
4,619
|
|
|
4,785
|
|
||
Payables for reinsurance premiums
|
|
363
|
|
|
289
|
|
||
Deferred taxes
|
|
137
|
|
|
—
|
|
||
Debt
|
|
6,558
|
|
|
6,564
|
|
||
Other liabilities
|
|
6,049
|
|
|
5,478
|
|
||
Total liabilities
|
|
84,179
|
|
|
81,339
|
|
||
Shareholders’ equity
|
|
|
|
|
||||
Common stock (1,750.0 shares authorized; 255.5 and 263.7 shares issued, 255.5 and 263.6 shares outstanding)
|
|
23,469
|
|
|
23,144
|
|
||
Retained earnings
|
|
36,977
|
|
|
35,204
|
|
||
Accumulated other comprehensive income (loss)
|
|
640
|
|
|
(1,859
|
)
|
||
Treasury stock, at cost (522.1 and 510.9 shares)
|
|
(35,143
|
)
|
|
(33,595
|
)
|
||
Total shareholders’ equity
|
|
25,943
|
|
|
22,894
|
|
||
Total liabilities and shareholders’ equity
|
|
$
|
110,122
|
|
|
$
|
104,233
|
|
For the year ended December 31,
|
|
2019
|
|
2018
|
|
2017
|
||||||
Common stock
|
|
|
|
|
|
|
||||||
Balance, beginning of year
|
|
$
|
23,144
|
|
|
$
|
22,886
|
|
|
$
|
22,614
|
|
Employee share-based compensation
|
|
180
|
|
|
108
|
|
|
136
|
|
|||
Compensation amortization under share-based plans and other changes
|
|
145
|
|
|
150
|
|
|
136
|
|
|||
Balance, end of year
|
|
23,469
|
|
|
23,144
|
|
|
22,886
|
|
|||
Retained earnings
|
|
|
|
.
|
|
|
|
|||||
Balance, beginning of year
|
|
35,204
|
|
|
33,462
|
|
|
32,196
|
|
|||
Cumulative effect of adoption of updated accounting guidance for equity financial instruments at January 1, 2018
|
|
—
|
|
|
22
|
|
|
—
|
|
|||
Reclassification of certain tax effects from accumulated other comprehensive income at January 1, 2018
|
|
—
|
|
|
24
|
|
|
—
|
|
|||
Net income
|
|
2,622
|
|
|
2,523
|
|
|
2,056
|
|
|||
Dividends
|
|
(848
|
)
|
|
(818
|
)
|
|
(789
|
)
|
|||
Other
|
|
(1
|
)
|
|
(9
|
)
|
|
(1
|
)
|
|||
Balance, end of year
|
|
36,977
|
|
|
35,204
|
|
|
33,462
|
|
|||
Accumulated other comprehensive income (loss), net of tax
|
|
|
|
|
|
|
||||||
Balance, beginning of year
|
|
(1,859
|
)
|
|
(343
|
)
|
|
(755
|
)
|
|||
Cumulative effect of adoption of updated accounting guidance for equity financial instruments at January 1, 2018
|
|
—
|
|
|
(22
|
)
|
|
—
|
|
|||
Reclassification of certain tax effects from accumulated other comprehensive income at January 1, 2018
|
|
—
|
|
|
(24
|
)
|
|
—
|
|
|||
Other comprehensive income (loss)
|
|
2,499
|
|
|
(1,470
|
)
|
|
412
|
|
|||
Balance, end of year
|
|
640
|
|
|
(1,859
|
)
|
|
(343
|
)
|
|||
Treasury stock, at cost
|
|
|
|
|
|
|
||||||
Balance, beginning of year
|
|
(33,595
|
)
|
|
(32,274
|
)
|
|
(30,834
|
)
|
|||
Treasury stock acquired — share repurchase authorization
|
|
(1,500
|
)
|
|
(1,270
|
)
|
|
(1,378
|
)
|
|||
Net shares acquired related to employee share-based compensation plans
|
|
(48
|
)
|
|
(51
|
)
|
|
(62
|
)
|
|||
Balance, end of year
|
|
(35,143
|
)
|
|
(33,595
|
)
|
|
(32,274
|
)
|
|||
Total shareholders’ equity
|
|
$
|
25,943
|
|
|
$
|
22,894
|
|
|
$
|
23,731
|
|
Common shares outstanding
|
|
|
|
|
|
|
||||||
Balance, beginning of year
|
|
263.6
|
|
|
271.4
|
|
|
279.6
|
|
|||
Treasury stock acquired — share repurchase authorization
|
|
(10.8
|
)
|
|
(9.6
|
)
|
|
(10.9
|
)
|
|||
Net shares issued under employee share-based compensation plans
|
|
2.7
|
|
|
1.8
|
|
|
2.7
|
|
|||
Balance, end of year
|
|
255.5
|
|
|
263.6
|
|
|
271.4
|
|
For the year ended December 31,
|
|
2019
|
|
2018
|
|
2017
|
||||||
Cash flows from operating activities
|
|
|
|
|
|
|
||||||
Net income
|
|
$
|
2,622
|
|
|
$
|
2,523
|
|
|
$
|
2,056
|
|
Adjustments to reconcile net income to net cash provided by operating activities:
|
|
|
|
|
|
|
||||||
Net realized investment gains
|
|
(113
|
)
|
|
(114
|
)
|
|
(216
|
)
|
|||
Depreciation and amortization
|
|
763
|
|
|
803
|
|
|
813
|
|
|||
Deferred federal income tax expense (benefit)
|
|
(33
|
)
|
|
(13
|
)
|
|
337
|
|
|||
Amortization of deferred acquisition costs
|
|
4,601
|
|
|
4,381
|
|
|
4,166
|
|
|||
Equity in income from other investments
|
|
(251
|
)
|
|
(365
|
)
|
|
(397
|
)
|
|||
Premiums receivable
|
|
(384
|
)
|
|
(393
|
)
|
|
(394
|
)
|
|||
Reinsurance recoverables
|
|
157
|
|
|
(100
|
)
|
|
16
|
|
|||
Deferred acquisition costs
|
|
(4,747
|
)
|
|
(4,488
|
)
|
|
(4,257
|
)
|
|||
Claims and claim adjustment expense reserves
|
|
1,047
|
|
|
1,246
|
|
|
1,460
|
|
|||
Unearned premium reserves
|
|
1,008
|
|
|
710
|
|
|
521
|
|
|||
Other
|
|
535
|
|
|
190
|
|
|
43
|
|
|||
Net cash provided by operating activities
|
|
5,205
|
|
|
4,380
|
|
|
4,148
|
|
|||
Cash flows from investing activities
|
|
|
|
|
|
|
||||||
Proceeds from maturities of fixed maturities
|
|
6,845
|
|
|
7,086
|
|
|
8,750
|
|
|||
Proceeds from sales of investments:
|
|
|
|
|
|
|
||||||
Fixed maturities
|
|
2,187
|
|
|
3,546
|
|
|
1,854
|
|
|||
Equity securities
|
|
140
|
|
|
178
|
|
|
765
|
|
|||
Real estate investments
|
|
—
|
|
|
74
|
|
|
23
|
|
|||
Other investments
|
|
459
|
|
|
511
|
|
|
468
|
|
|||
Purchases of investments:
|
|
|
|
|
|
|
||||||
Fixed maturities
|
|
(10,711
|
)
|
|
(13,526
|
)
|
|
(12,250
|
)
|
|||
Equity securities
|
|
(94
|
)
|
|
(117
|
)
|
|
(459
|
)
|
|||
Real estate investments
|
|
(107
|
)
|
|
(74
|
)
|
|
(59
|
)
|
|||
Other investments
|
|
(497
|
)
|
|
(537
|
)
|
|
(541
|
)
|
|||
Net sales (purchases) of short-term securities
|
|
(957
|
)
|
|
908
|
|
|
(26
|
)
|
|||
Securities transactions in the course of settlement
|
|
158
|
|
|
(56
|
)
|
|
(47
|
)
|
|||
Acquisitions, net of cash acquired
|
|
—
|
|
|
(4
|
)
|
|
(439
|
)
|
|||
Other
|
|
(325
|
)
|
|
(318
|
)
|
|
(241
|
)
|
|||
Net cash used in investing activities
|
|
(2,902
|
)
|
|
(2,329
|
)
|
|
(2,202
|
)
|
|||
Cash flows from financing activities
|
|
|
|
|
|
|
||||||
Treasury stock acquired — share repurchase authorization
|
|
(1,500
|
)
|
|
(1,270
|
)
|
|
(1,378
|
)
|
|||
Treasury stock acquired — net employee share-based compensation
|
|
(48
|
)
|
|
(51
|
)
|
|
(62
|
)
|
|||
Dividends paid to shareholders
|
|
(844
|
)
|
|
(814
|
)
|
|
(785
|
)
|
|||
Payment of debt
|
|
(500
|
)
|
|
(600
|
)
|
|
(657
|
)
|
|||
Issuance of debt
|
|
492
|
|
|
591
|
|
|
789
|
|
|||
Issuance of common stock-employee share options
|
|
213
|
|
|
132
|
|
|
173
|
|
|||
Net cash used in financing activities
|
|
(2,187
|
)
|
|
(2,012
|
)
|
|
(1,920
|
)
|
|||
Effect of exchange rate changes on cash
|
|
5
|
|
|
(10
|
)
|
|
11
|
|
|||
Net increase in cash
|
|
121
|
|
|
29
|
|
|
37
|
|
|||
Cash at beginning of year
|
|
373
|
|
|
344
|
|
|
307
|
|
|||
Cash at end of year
|
|
$
|
494
|
|
|
$
|
373
|
|
|
$
|
344
|
|
Supplemental disclosure of cash flow information
|
|
|
|
|
|
|
||||||
Income taxes paid
|
|
$
|
428
|
|
|
$
|
408
|
|
|
$
|
514
|
|
Interest paid
|
|
$
|
338
|
|
|
$
|
347
|
|
|
$
|
367
|
|
•
|
Select Accounts provides small businesses with property and casualty insurance products and services, including commercial multi-peril, workers’ compensation, commercial automobile, general liability and commercial property.
|
•
|
Middle Market provides mid-sized businesses with property and casualty insurance products and services, including workers’ compensation, general liability, commercial multi-peril, commercial automobile and commercial property, as well as risk management, claims handling and other services. Middle Market generally provides these products to mid-sized businesses through Commercial Accounts, as well as to targeted industries through Construction, Technology, Public Sector Services and Oil & Gas, and additionally, provides mono-line umbrella and excess coverage insurance through Excess Casualty. Middle Market also provides insurance for goods in transit and movable objects, as well as builders’ risk insurance, through Inland Marine; insurance for the marine transportation industry and related services, as well as other businesses involved in international trade, through Ocean Marine; and comprehensive breakdown for equipment, including property and business interruption, through Boiler & Machinery.
|
•
|
National Accounts provides large companies with casualty insurance products and services, including workers’ compensation, commercial automobile and general liability, generally utilizing loss-sensitive products, on both a bundled and unbundled basis, as well as risk management, claims handling and other services. National Accounts also includes the Company’s commercial residual market business, which primarily offers workers’ compensation claims, policy management and other administrative services related to the involuntary market.
|
•
|
National Property and Other provides traditional and customized commercial property insurance programs to large and mid-sized customers through National Property. National Property and Other also provides insurance coverage for the commercial transportation industry through Northland Transportation, and serves small- to medium-sized agricultural businesses, including farms, ranches and other agricultural-related operations through Agribusiness. National Property and Other also includes commercial property and general liability policies for small, difficult to place specialty classes of commercial business primarily on an excess and surplus lines basis through Northfield, and also offers tailored property and casualty insurance programs on an admitted basis for customers with common risk characteristics or coverage requirements through National Programs.
|
•
|
International, through its operations in Canada, the United Kingdom and the Republic of Ireland, provides property and casualty insurance and risk management services to several customer groups, including, among others, those in the technology, manufacturing and public services industry sectors. International also provides insurance for both the foreign exposures of United States organizations and the United States exposures of foreign organizations through Global Services. At its Lloyd’s syndicate (Syndicate 5000), for which the Company provides 100% of the capital, International underwrites six principal businesses — international marine, retail marine, global property, construction & special risks, energy and aviation.
|
(for the year ended December 31, in millions)
|
|
Business
Insurance
|
|
Bond &
Specialty
Insurance
|
|
Personal
Insurance
|
|
Total
Reportable
Segments
|
||||||||
2019
|
|
|
|
|
|
|
|
|
||||||||
Premiums
|
|
$
|
15,300
|
|
|
$
|
2,565
|
|
|
$
|
10,407
|
|
|
$
|
28,272
|
|
Net investment income
|
|
1,816
|
|
|
233
|
|
|
419
|
|
|
2,468
|
|
||||
Fee income
|
|
437
|
|
|
—
|
|
|
22
|
|
|
459
|
|
||||
Other revenues
|
|
155
|
|
|
26
|
|
|
87
|
|
|
268
|
|
||||
Total segment revenues (1)
|
|
$
|
17,708
|
|
|
$
|
2,824
|
|
|
$
|
10,935
|
|
|
$
|
31,467
|
|
Amortization and depreciation
|
|
$
|
3,037
|
|
|
$
|
533
|
|
|
$
|
1,787
|
|
|
$
|
5,357
|
|
Income tax expense
|
|
223
|
|
|
151
|
|
|
195
|
|
|
569
|
|
||||
Segment income (1)
|
|
1,392
|
|
|
618
|
|
|
824
|
|
|
2,834
|
|
||||
2018
|
|
|
|
|
|
|
|
|
||||||||
Premiums
|
|
$
|
14,722
|
|
|
$
|
2,420
|
|
|
$
|
9,917
|
|
|
$
|
27,059
|
|
Net investment income
|
|
1,833
|
|
|
233
|
|
|
408
|
|
|
2,474
|
|
||||
Fee income
|
|
412
|
|
|
—
|
|
|
20
|
|
|
432
|
|
||||
Other revenues
|
|
112
|
|
|
23
|
|
|
66
|
|
|
201
|
|
||||
Total segment revenues (1)
|
|
$
|
17,079
|
|
|
$
|
2,676
|
|
|
$
|
10,411
|
|
|
$
|
30,166
|
|
Amortization and depreciation
|
|
$
|
2,943
|
|
|
$
|
515
|
|
|
$
|
1,719
|
|
|
$
|
5,177
|
|
Income tax expense
|
|
259
|
|
|
198
|
|
|
42
|
|
|
499
|
|
||||
Segment income (1)
|
|
1,638
|
|
|
793
|
|
|
297
|
|
|
2,728
|
|
||||
2017
|
|
|
|
|
|
|
|
|
||||||||
Premiums
|
|
$
|
14,146
|
|
|
$
|
2,307
|
|
|
$
|
9,230
|
|
|
$
|
25,683
|
|
Net investment income
|
|
1,786
|
|
|
228
|
|
|
383
|
|
|
2,397
|
|
||||
Fee income
|
|
430
|
|
|
—
|
|
|
17
|
|
|
447
|
|
||||
Other revenues
|
|
69
|
|
|
24
|
|
|
60
|
|
|
153
|
|
||||
Total segment revenues (1)
|
|
$
|
16,431
|
|
|
$
|
2,559
|
|
|
$
|
9,690
|
|
|
$
|
28,680
|
|
Amortization and depreciation
|
|
$
|
2,852
|
|
|
$
|
493
|
|
|
$
|
1,627
|
|
|
$
|
4,972
|
|
Income tax expense (benefit)
|
|
448
|
|
|
208
|
|
|
(44
|
)
|
|
612
|
|
||||
Segment income (1)
|
|
1,613
|
|
|
556
|
|
|
128
|
|
|
2,297
|
|
(1)
|
Segment revenues for reportable business segments exclude net realized investment gains. Segment income for reportable business segments equals net income excluding the after-tax impact of net realized investment gains and, in 2017, the impact of the Tax Cuts and Jobs Act of 2017 at enactment.
|
(for the year ended December 31, in millions)
|
|
2019
|
|
2018
|
|
2017
|
||||||
Business Insurance:
|
|
|
|
|
|
|
||||||
Domestic:
|
|
|
|
|
|
|
||||||
Select Accounts
|
|
$
|
2,911
|
|
|
$
|
2,828
|
|
|
$
|
2,800
|
|
Middle Market
|
|
8,630
|
|
|
8,214
|
|
|
7,756
|
|
|||
National Accounts
|
|
1,051
|
|
|
1,025
|
|
|
1,010
|
|
|||
National Property and Other
|
|
1,965
|
|
|
1,805
|
|
|
1,691
|
|
|||
Total Domestic
|
|
14,557
|
|
|
13,872
|
|
|
13,257
|
|
|||
International
|
|
1,072
|
|
|
1,084
|
|
|
1,013
|
|
|||
Total Business Insurance
|
|
15,629
|
|
|
14,956
|
|
|
14,270
|
|
|||
Bond & Specialty Insurance:
|
|
|
|
|
|
|
||||||
Domestic:
|
|
|
|
|
|
|
||||||
Management Liability
|
|
1,605
|
|
|
1,455
|
|
|
1,367
|
|
|||
Surety
|
|
866
|
|
|
835
|
|
|
793
|
|
|||
Total Domestic
|
|
2,471
|
|
|
2,290
|
|
|
2,160
|
|
|||
International
|
|
268
|
|
|
238
|
|
|
199
|
|
|||
Total Bond & Specialty Insurance
|
|
2,739
|
|
|
2,528
|
|
|
2,359
|
|
|||
Personal Insurance:
|
|
|
|
|
|
|
||||||
Domestic:
|
|
|
|
|
|
|
||||||
Agency:
|
|
|
|
|
|
|
||||||
Automobile
|
|
5,124
|
|
|
4,972
|
|
|
4,646
|
|
|||
Homeowners and Other
|
|
4,540
|
|
|
4,148
|
|
|
3,933
|
|
|||
Total Agency
|
|
9,664
|
|
|
9,120
|
|
|
8,579
|
|
|||
Direct-to-Consumer
|
|
412
|
|
|
396
|
|
|
361
|
|
|||
Total Domestic
|
|
10,076
|
|
|
9,516
|
|
|
8,940
|
|
|||
International
|
|
707
|
|
|
708
|
|
|
650
|
|
|||
Total Personal Insurance
|
|
10,783
|
|
|
10,224
|
|
|
9,590
|
|
|||
Total consolidated net written premiums
|
|
$
|
29,151
|
|
|
$
|
27,708
|
|
|
$
|
26,219
|
|
(for the year ended December 31, in millions)
|
|
2019
|
|
2018
|
|
2017
|
||||||
Revenue reconciliation
|
|
|
|
|
|
|
||||||
Earned premiums
|
|
|
|
|
|
|
||||||
Business Insurance:
|
|
|
|
|
|
|
||||||
Domestic:
|
|
|
|
|
|
|
||||||
Workers’ compensation
|
|
$
|
3,829
|
|
|
$
|
3,899
|
|
|
$
|
3,962
|
|
Commercial automobile
|
|
2,632
|
|
|
2,388
|
|
|
2,132
|
|
|||
Commercial property
|
|
1,937
|
|
|
1,828
|
|
|
1,775
|
|
|||
General liability
|
|
2,342
|
|
|
2,181
|
|
|
2,047
|
|
|||
Commercial multi-peril
|
|
3,453
|
|
|
3,333
|
|
|
3,198
|
|
|||
Other
|
|
40
|
|
|
28
|
|
|
29
|
|
|||
Total Domestic
|
|
14,233
|
|
|
13,657
|
|
|
13,143
|
|
|||
International
|
|
1,067
|
|
|
1,065
|
|
|
1,003
|
|
|||
Total Business Insurance
|
|
15,300
|
|
|
14,722
|
|
|
14,146
|
|
|||
Bond & Specialty Insurance:
|
|
|
|
|
|
|
||||||
Domestic:
|
|
|
|
|
|
|
||||||
Fidelity and surety
|
|
1,036
|
|
|
1,017
|
|
|
977
|
|
|||
General liability
|
|
1,082
|
|
|
1,004
|
|
|
962
|
|
|||
Other
|
|
216
|
|
|
195
|
|
|
187
|
|
|||
Total Domestic
|
|
2,334
|
|
|
2,216
|
|
|
2,126
|
|
|||
International
|
|
231
|
|
|
204
|
|
|
181
|
|
|||
Total Bond & Specialty Insurance
|
|
2,565
|
|
|
2,420
|
|
|
2,307
|
|
|||
Personal Insurance:
|
|
|
|
|
|
|
||||||
Domestic
|
|
|
|
|
|
|
||||||
Automobile
|
|
5,311
|
|
|
5,097
|
|
|
4,655
|
|
|||
Homeowners and Other
|
|
4,393
|
|
|
4,135
|
|
|
3,943
|
|
|||
Total Domestic
|
|
9,704
|
|
|
9,232
|
|
|
8,598
|
|
|||
International
|
|
703
|
|
|
685
|
|
|
632
|
|
|||
Total Personal Insurance
|
|
10,407
|
|
|
9,917
|
|
|
9,230
|
|
|||
Total earned premiums
|
|
28,272
|
|
|
27,059
|
|
|
25,683
|
|
|||
Net investment income
|
|
2,468
|
|
|
2,474
|
|
|
2,397
|
|
|||
Fee income
|
|
459
|
|
|
432
|
|
|
447
|
|
|||
Other revenues
|
|
268
|
|
|
201
|
|
|
153
|
|
|||
Total segment revenues
|
|
31,467
|
|
|
30,166
|
|
|
28,680
|
|
|||
Other revenues
|
|
1
|
|
|
2
|
|
|
6
|
|
|||
Net realized investment gains
|
|
113
|
|
|
114
|
|
|
216
|
|
|||
Total revenues
|
|
$
|
31,581
|
|
|
$
|
30,282
|
|
|
$
|
28,902
|
|
Income reconciliation, net of tax
|
|
|
|
|
|
|
||||||
Total segment income
|
|
$
|
2,834
|
|
|
$
|
2,728
|
|
|
$
|
2,297
|
|
Interest Expense and Other (1)
|
|
(297
|
)
|
|
(298
|
)
|
|
(254
|
)
|
|||
Core income
|
|
2,537
|
|
|
2,430
|
|
|
2,043
|
|
|||
Net realized investment gains
|
|
85
|
|
|
93
|
|
|
142
|
|
|||
Impact of Tax Cuts and Jobs Act of 2017 at enactment
|
|
—
|
|
|
—
|
|
|
(129
|
)
|
|||
Net income
|
|
$
|
2,622
|
|
|
$
|
2,523
|
|
|
$
|
2,056
|
|
(1)
|
The primary component of Interest Expense and Other was after-tax interest expense of $272 million, $278 million and $240 million in 2019, 2018 and 2017, respectively.
|
(at December 31, in millions)
|
|
2019
|
|
2018
|
||||
Asset reconciliation:
|
|
|
|
|
||||
Business Insurance
|
|
$
|
83,896
|
|
|
$
|
78,965
|
|
Bond & Specialty Insurance
|
|
8,599
|
|
|
8,693
|
|
||
Personal Insurance
|
|
17,015
|
|
|
15,943
|
|
||
Total assets for reportable segments
|
|
109,510
|
|
|
103,601
|
|
||
Other assets (1)
|
|
612
|
|
|
632
|
|
||
Total consolidated assets
|
|
$
|
110,122
|
|
|
$
|
104,233
|
|
(1)
|
The primary components of other assets at both December 31, 2019 and 2018, were accrued over-funded benefit plan assets related to the Company's qualified domestic pension plan and other intangible assets.
|
(for the year ended December 31, in millions)
|
|
2019
|
|
2018
|
|
2017
|
||||||
U.S.
|
|
$
|
29,638
|
|
|
$
|
28,418
|
|
|
$
|
27,253
|
|
Non-U.S.:
|
|
|
|
|
|
|
||||||
Canada
|
|
1,371
|
|
|
1,293
|
|
|
1,232
|
|
|||
Other Non-U.S.
|
|
572
|
|
|
571
|
|
|
417
|
|
|||
Total Non-U.S.
|
|
1,943
|
|
|
1,864
|
|
|
1,649
|
|
|||
Total revenues
|
|
$
|
31,581
|
|
|
$
|
30,282
|
|
|
$
|
28,902
|
|
|
|
Amortized
|
|
Gross Unrealized
|
|
Fair
|
||||||||||
(at December 31, 2019, in millions)
|
|
Cost
|
|
Gains
|
|
Losses
|
|
Value
|
||||||||
U.S. Treasury securities and obligations of U.S. government and government agencies and authorities
|
|
$
|
2,076
|
|
|
$
|
19
|
|
|
$
|
—
|
|
|
$
|
2,095
|
|
Obligations of states, municipalities and political subdivisions:
|
|
|
|
|
|
|
|
|
||||||||
Local general obligation
|
|
15,490
|
|
|
829
|
|
|
4
|
|
|
16,315
|
|
||||
Revenue
|
|
9,731
|
|
|
586
|
|
|
2
|
|
|
10,315
|
|
||||
State general obligation
|
|
1,167
|
|
|
64
|
|
|
—
|
|
|
1,231
|
|
||||
Pre-refunded
|
|
1,968
|
|
|
88
|
|
|
—
|
|
|
2,056
|
|
||||
Total obligations of states, municipalities and political subdivisions
|
|
28,356
|
|
|
1,567
|
|
|
6
|
|
|
29,917
|
|
||||
Debt securities issued by foreign governments
|
|
1,167
|
|
|
8
|
|
|
2
|
|
|
1,173
|
|
||||
Mortgage-backed securities, collateralized mortgage obligations and pass-through securities
|
|
3,192
|
|
|
91
|
|
|
3
|
|
|
3,280
|
|
||||
All other corporate bonds
|
|
30,442
|
|
|
1,195
|
|
|
18
|
|
|
31,619
|
|
||||
Redeemable preferred stock
|
|
48
|
|
|
2
|
|
|
—
|
|
|
50
|
|
||||
Total
|
|
$
|
65,281
|
|
|
$
|
2,882
|
|
|
$
|
29
|
|
|
$
|
68,134
|
|
|
|
Amortized
|
|
Gross Unrealized
|
|
Fair
|
||||||||||
(at December 31, 2018, in millions)
|
|
Cost
|
|
Gains
|
|
Losses
|
|
Value
|
||||||||
U.S. Treasury securities and obligations of U.S. government and government agencies and authorities
|
|
$
|
2,076
|
|
|
$
|
4
|
|
|
$
|
16
|
|
|
$
|
2,064
|
|
Obligations of states, municipalities and political subdivisions:
|
|
|
|
|
|
|
|
|
||||||||
Local general obligation
|
|
14,473
|
|
|
219
|
|
|
120
|
|
|
14,572
|
|
||||
Revenue
|
|
9,755
|
|
|
172
|
|
|
74
|
|
|
9,853
|
|
||||
State general obligation
|
|
1,329
|
|
|
18
|
|
|
13
|
|
|
1,334
|
|
||||
Pre-refunded
|
|
2,772
|
|
|
80
|
|
|
—
|
|
|
2,852
|
|
||||
Total obligations of states, municipalities and political subdivisions
|
|
28,329
|
|
|
489
|
|
|
207
|
|
|
28,611
|
|
||||
Debt securities issued by foreign governments
|
|
1,255
|
|
|
7
|
|
|
5
|
|
|
1,257
|
|
||||
Mortgage-backed securities, collateralized mortgage obligations and pass-through securities
|
|
2,557
|
|
|
54
|
|
|
38
|
|
|
2,573
|
|
||||
All other corporate bonds
|
|
29,307
|
|
|
156
|
|
|
583
|
|
|
28,880
|
|
||||
Redeemable preferred stock
|
|
77
|
|
|
2
|
|
|
—
|
|
|
79
|
|
||||
Total
|
|
$
|
63,601
|
|
|
$
|
712
|
|
|
$
|
849
|
|
|
$
|
63,464
|
|
(at December 31, 2019, in millions)
|
|
Amortized
Cost
|
|
Fair
Value
|
||||
Due in one year or less
|
|
$
|
3,738
|
|
|
$
|
3,760
|
|
Due after 1 year through 5 years
|
|
17,729
|
|
|
18,241
|
|
||
Due after 5 years through 10 years
|
|
17,262
|
|
|
18,215
|
|
||
Due after 10 years
|
|
23,360
|
|
|
24,638
|
|
||
|
|
62,089
|
|
|
64,854
|
|
||
Mortgage-backed securities, collateralized mortgage obligations and pass-through securities
|
|
3,192
|
|
|
3,280
|
|
||
Total
|
|
$
|
65,281
|
|
|
$
|
68,134
|
|
(at December 31, 2019, in millions)
|
|
Cost
|
|
Gross Gains
|
|
Gross Losses
|
|
Fair Value
|
||||||||
Public common stock
|
|
$
|
341
|
|
|
$
|
45
|
|
|
$
|
3
|
|
|
$
|
383
|
|
Non-redeemable preferred stock
|
|
35
|
|
|
7
|
|
|
—
|
|
|
42
|
|
||||
Total
|
|
$
|
376
|
|
|
$
|
52
|
|
|
$
|
3
|
|
|
$
|
425
|
|
(at December 31, 2018, in millions)
|
|
Cost
|
|
Gross Gains
|
|
Gross Losses
|
|
Fair Value
|
||||||||
Public common stock
|
|
$
|
338
|
|
|
$
|
2
|
|
|
$
|
24
|
|
|
$
|
316
|
|
Non-redeemable preferred stock
|
|
44
|
|
|
8
|
|
|
—
|
|
|
52
|
|
||||
Total
|
|
$
|
382
|
|
|
$
|
10
|
|
|
$
|
24
|
|
|
$
|
368
|
|
|
|
Less than 12 months
|
|
12 months or longer
|
|
Total
|
||||||||||||||||||
(at December 31, 2019, in millions)
|
|
Fair
Value
|
|
Gross
Unrealized
Losses
|
|
Fair
Value
|
|
Gross
Unrealized
Losses
|
|
Fair
Value
|
|
Gross
Unrealized
Losses
|
||||||||||||
Fixed maturities
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
U.S. Treasury securities and obligations of U.S. government and government agencies and authorities
|
|
$
|
5
|
|
|
$
|
—
|
|
|
$
|
193
|
|
|
$
|
—
|
|
|
$
|
198
|
|
|
$
|
—
|
|
Obligations of states, municipalities and political subdivisions
|
|
668
|
|
|
6
|
|
|
12
|
|
|
—
|
|
|
680
|
|
|
6
|
|
||||||
Debt securities issued by foreign governments
|
|
257
|
|
|
1
|
|
|
147
|
|
|
1
|
|
|
404
|
|
|
2
|
|
||||||
Mortgage-backed securities, collateralized mortgage obligations and pass-through securities
|
|
399
|
|
|
2
|
|
|
131
|
|
|
1
|
|
|
530
|
|
|
3
|
|
||||||
All other corporate bonds
|
|
1,571
|
|
|
10
|
|
|
662
|
|
|
8
|
|
|
2,233
|
|
|
18
|
|
||||||
Total fixed maturities
|
|
$
|
2,900
|
|
|
$
|
19
|
|
|
$
|
1,145
|
|
|
$
|
10
|
|
|
$
|
4,045
|
|
|
$
|
29
|
|
|
|
Less than 12 months
|
|
12 months or longer
|
|
Total
|
||||||||||||||||||
(at December 31, 2018, in millions)
|
|
Fair
Value
|
|
Gross
Unrealized
Losses
|
|
Fair
Value
|
|
Gross
Unrealized
Losses
|
|
Fair
Value
|
|
Gross
Unrealized
Losses
|
||||||||||||
Fixed maturities
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
U.S. Treasury securities and obligations of U.S. government and government agencies and authorities
|
|
$
|
484
|
|
|
$
|
5
|
|
|
$
|
1,011
|
|
|
$
|
11
|
|
|
$
|
1,495
|
|
|
$
|
16
|
|
Obligations of states, municipalities and political subdivisions
|
|
5,241
|
|
|
82
|
|
|
3,298
|
|
|
125
|
|
|
8,539
|
|
|
207
|
|
||||||
Debt securities issued by foreign governments
|
|
96
|
|
|
—
|
|
|
328
|
|
|
5
|
|
|
424
|
|
|
5
|
|
||||||
Mortgage-backed securities, collateralized mortgage obligations and pass-through securities
|
|
593
|
|
|
9
|
|
|
1,070
|
|
|
29
|
|
|
1,663
|
|
|
38
|
|
||||||
All other corporate bonds
|
|
12,622
|
|
|
303
|
|
|
6,872
|
|
|
280
|
|
|
19,494
|
|
|
583
|
|
||||||
Total fixed maturities
|
|
$
|
19,036
|
|
|
$
|
399
|
|
|
$
|
12,579
|
|
|
$
|
450
|
|
|
$
|
31,615
|
|
|
$
|
849
|
|
(for the year ended December 31, in millions)
|
|
2019
|
|
2018
|
|
2017
|
||||||
Fixed maturities
|
|
|
|
|
|
|
||||||
U.S. Treasury securities and obligations of U.S. government and government agencies and authorities
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Obligations of states, municipalities and political subdivisions
|
|
—
|
|
|
—
|
|
|
—
|
|
|||
Debt securities issued by foreign governments
|
|
—
|
|
|
—
|
|
|
—
|
|
|||
Mortgage-backed securities, collateralized mortgage obligations and pass-through securities
|
|
—
|
|
|
—
|
|
|
—
|
|
|||
All other corporate bonds
|
|
4
|
|
|
1
|
|
|
4
|
|
|||
Redeemable preferred stock
|
|
—
|
|
|
—
|
|
|
—
|
|
|||
Total fixed maturities
|
|
4
|
|
|
1
|
|
|
4
|
|
|||
Equity securities
|
|
|
|
|
|
|
||||||
Public common stock
|
|
—
|
|
|
—
|
|
|
9
|
|
|||
Non-redeemable preferred stock
|
|
—
|
|
|
—
|
|
|
—
|
|
|||
Total equity securities
|
|
—
|
|
|
—
|
|
|
9
|
|
|||
Other investments
|
|
—
|
|
|
—
|
|
|
1
|
|
|||
Total
|
|
$
|
4
|
|
|
$
|
1
|
|
|
$
|
14
|
|
Year ended December 31, 2019 (in millions)
|
|
Cumulative
OTTI Credit
Losses
Recognized for
Securities
Held,
Beginning of
Period
|
|
Additions for
OTTI Securities
Where No
Credit Losses
Were
Previously
Recognized
|
|
Additions for
OTTI
Securities
Where Credit
Losses Have
Been
Previously
Recognized
|
|
Reductions
Due to
Sales/Defaults
of Credit-
Impaired
Securities
|
|
Adjustments
to Book Value
of Credit-
Impaired
Securities due
to Changes in
Cash Flows
|
|
Cumulative
OTTI Credit
Losses
Recognized for
Securities Still
Held, End of
Period
|
||||||||||||
Fixed maturities
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Mortgage-backed securities, collateralized mortgage obligations and pass-through securities
|
|
$
|
15
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
(9
|
)
|
|
$
|
3
|
|
|
$
|
9
|
|
All other corporate bonds
|
|
42
|
|
|
—
|
|
|
—
|
|
|
(49
|
)
|
|
10
|
|
|
3
|
|
||||||
Total fixed maturities
|
|
$
|
57
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
(58
|
)
|
|
$
|
13
|
|
|
$
|
12
|
|
Year ended December 31, 2018 (in millions)
|
|
Cumulative
OTTI Credit
Losses
Recognized for
Securities
Held,
Beginning of
Period
|
|
Additions for
OTTI Securities
Where No
Credit Losses
Were
Previously
Recognized
|
|
Additions for
OTTI
Securities
Where Credit
Losses Have
Been
Previously
Recognized
|
|
Reductions
Due to
Sales/Defaults
of Credit-
Impaired
Securities
|
|
Adjustments
to Book Value
of Credit-
Impaired
Securities due
to Changes in
Cash Flows
|
|
Cumulative
OTTI Credit
Losses
Recognized for
Securities Still
Held, End of
Period
|
||||||||||||
Fixed maturities
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Mortgage-backed securities, collateralized mortgage obligations and pass-through securities
|
|
$
|
29
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
(18
|
)
|
|
$
|
4
|
|
|
$
|
15
|
|
All other corporate bonds
|
|
46
|
|
|
—
|
|
|
—
|
|
|
(12
|
)
|
|
8
|
|
|
42
|
|
||||||
Total fixed maturities
|
|
$
|
75
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
(30
|
)
|
|
$
|
12
|
|
|
$
|
57
|
|
(for the year ended December 31, in millions)
|
|
2019
|
|
2018
|
|
2017
|
||||||
Gross investment income
|
|
|
|
|
|
|
||||||
Fixed maturities
|
|
$
|
2,070
|
|
|
$
|
1,980
|
|
|
$
|
1,895
|
|
Equity securities
|
|
15
|
|
|
16
|
|
|
28
|
|
|||
Short-term securities
|
|
105
|
|
|
92
|
|
|
62
|
|
|||
Real estate investments
|
|
55
|
|
|
48
|
|
|
44
|
|
|||
Other investments
|
|
263
|
|
|
377
|
|
|
406
|
|
|||
Gross investment income
|
|
2,508
|
|
|
2,513
|
|
|
2,435
|
|
|||
Investment expenses
|
|
40
|
|
|
39
|
|
|
38
|
|
|||
Net investment income
|
|
$
|
2,468
|
|
|
$
|
2,474
|
|
|
$
|
2,397
|
|
(at and for the year ended December 31, in millions)
|
|
2019
|
|
2018
|
|
2017
|
||||||
Changes in net unrealized investment gains (losses)
|
|
|
|
|
|
|
||||||
Fixed maturities
|
|
$
|
2,990
|
|
|
$
|
(1,515
|
)
|
|
$
|
513
|
|
Equity securities
|
|
—
|
|
|
—
|
|
|
(215
|
)
|
|||
Other investments
|
|
—
|
|
|
(1
|
)
|
|
4
|
|
|||
Change in net pre-tax unrealized gains (losses) on investment securities
|
|
2,990
|
|
|
(1,516
|
)
|
|
302
|
|
|||
Related tax expense (benefit)
|
|
631
|
|
|
(319
|
)
|
|
78
|
|
|||
Change in net unrealized gains (losses) on investment securities
|
|
2,359
|
|
|
(1,197
|
)
|
|
224
|
|
|||
Cumulative effect of adoption of updated accounting guidance for equity financial instruments at January 1, 2018
|
|
—
|
|
|
(22
|
)
|
|
—
|
|
|||
Reclassification of certain tax effects from accumulated other comprehensive income at January 1, 2018
|
|
—
|
|
|
152
|
|
|
—
|
|
|||
Balance, beginning of year
|
|
(113
|
)
|
|
954
|
|
|
730
|
|
|||
Balance, end of year
|
|
$
|
2,246
|
|
|
$
|
(113
|
)
|
|
$
|
954
|
|
•
|
Level 1 - Unadjusted quoted market prices for identical assets or liabilities in active markets that the Company has the ability to access.
|
•
|
Level 2 - Quoted prices for similar assets or liabilities in active markets; quoted prices for identical or similar assets or liabilities in inactive markets; or valuations based on models where the significant inputs are observable (e.g., interest rates, yield curves, prepayment speeds, default rates, loss severities, etc.) or can be corroborated by observable market data.
|
•
|
Level 3 - Valuations based on models where significant inputs are not observable. The unobservable inputs reflect the Company’s own assumptions about the inputs that market participants would use.
|
(at December 31, 2019, in millions)
|
|
Total
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
||||||||
Invested assets:
|
|
|
|
|
|
|
|
|
||||||||
Fixed maturities
|
|
|
|
|
|
|
|
|
||||||||
U.S. Treasury securities and obligations of U.S. government and government agencies and authorities
|
|
$
|
2,095
|
|
|
$
|
2,095
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Obligations of states, municipalities and political subdivisions
|
|
29,917
|
|
|
—
|
|
|
29,905
|
|
|
12
|
|
||||
Debt securities issued by foreign governments
|
|
1,173
|
|
|
—
|
|
|
1,173
|
|
|
—
|
|
||||
Mortgage-backed securities, collateralized mortgage obligations and pass-through securities
|
|
3,280
|
|
|
—
|
|
|
3,280
|
|
|
—
|
|
||||
All other corporate bonds
|
|
31,619
|
|
|
—
|
|
|
31,530
|
|
|
89
|
|
||||
Redeemable preferred stock
|
|
50
|
|
|
—
|
|
|
50
|
|
|
—
|
|
||||
Total fixed maturities
|
|
68,134
|
|
|
2,095
|
|
|
65,938
|
|
|
101
|
|
||||
Equity securities
|
|
|
|
|
|
|
|
|
||||||||
Public common stock
|
|
383
|
|
|
383
|
|
|
—
|
|
|
—
|
|
||||
Non-redeemable preferred stock
|
|
42
|
|
|
13
|
|
|
29
|
|
|
—
|
|
||||
Total equity securities
|
|
425
|
|
|
396
|
|
|
29
|
|
|
—
|
|
||||
Other investments
|
|
36
|
|
|
16
|
|
|
—
|
|
|
20
|
|
||||
Total
|
|
$
|
68,595
|
|
|
$
|
2,507
|
|
|
$
|
65,967
|
|
|
$
|
121
|
|
|
|
|
|
|
|
|
|
|
||||||||
Other liabilities
|
|
$
|
8
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
8
|
|
(at December 31, 2018, in millions)
|
|
Total
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
||||||||
Invested assets:
|
|
|
|
|
|
|
|
|
||||||||
Fixed maturities
|
|
|
|
|
|
|
|
|
||||||||
U.S. Treasury securities and obligations of U.S. government and government agencies and authorities
|
|
$
|
2,064
|
|
|
$
|
2,064
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Obligations of states, municipalities and political subdivisions
|
|
28,611
|
|
|
—
|
|
|
28,599
|
|
|
12
|
|
||||
Debt securities issued by foreign governments
|
|
1,257
|
|
|
—
|
|
|
1,257
|
|
|
—
|
|
||||
Mortgage-backed securities, collateralized mortgage obligations and pass-through securities
|
|
2,573
|
|
|
—
|
|
|
2,554
|
|
|
19
|
|
||||
All other corporate bonds
|
|
28,880
|
|
|
—
|
|
|
28,725
|
|
|
155
|
|
||||
Redeemable preferred stock
|
|
79
|
|
|
3
|
|
|
76
|
|
|
—
|
|
||||
Total fixed maturities
|
|
63,464
|
|
|
2,067
|
|
|
61,211
|
|
|
186
|
|
||||
Equity securities
|
|
|
|
|
|
|
|
|
||||||||
Public common stock
|
|
316
|
|
|
316
|
|
|
—
|
|
|
—
|
|
||||
Non-redeemable preferred stock
|
|
52
|
|
|
30
|
|
|
22
|
|
|
—
|
|
||||
Total equity securities
|
|
368
|
|
|
346
|
|
|
22
|
|
|
—
|
|
||||
Other investments
|
|
52
|
|
|
16
|
|
|
—
|
|
|
36
|
|
||||
Total
|
|
$
|
63,884
|
|
|
$
|
2,429
|
|
|
$
|
61,233
|
|
|
$
|
222
|
|
|
|
|
|
|
|
|
|
|
||||||||
Other liabilities
|
|
$
|
10
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
10
|
|
(in millions)
|
|
Fixed
Maturities
|
|
Other
Investments
|
|
Total
|
||||||
Balance at December 31, 2018
|
|
$
|
186
|
|
|
$
|
36
|
|
|
$
|
222
|
|
Total realized and unrealized investment gains (losses):
|
|
|
|
|
|
|
||||||
Reported in net realized investment gains (1)
|
|
—
|
|
|
3
|
|
|
3
|
|
|||
Reported in increases in other comprehensive income (loss)
|
|
4
|
|
|
—
|
|
|
4
|
|
|||
Purchases, sales and settlements/maturities:
|
|
|
|
|
|
|
||||||
Purchases
|
|
38
|
|
|
6
|
|
|
44
|
|
|||
Sales
|
|
(1
|
)
|
|
(25
|
)
|
|
(26
|
)
|
|||
Settlements/maturities
|
|
(19
|
)
|
|
—
|
|
|
(19
|
)
|
|||
Gross transfers into Level 3
|
|
—
|
|
|
—
|
|
|
—
|
|
|||
Gross transfers out of Level 3
|
|
(107
|
)
|
|
—
|
|
|
(107
|
)
|
|||
Balance at December 31, 2019
|
|
$
|
101
|
|
|
$
|
20
|
|
|
$
|
121
|
|
Amount of total realized investment gains (losses) for the period included in the consolidated statement of income attributable to changes in the fair value of assets still held at the reporting date
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
(1)
|
Includes impairments on investments held at the end of the period as well as amortization on fixed maturities.
|
(in millions)
|
|
Fixed
Maturities
|
|
Other
Investments
|
|
Total
|
||||||
Balance at December 31, 2017
|
|
$
|
204
|
|
|
$
|
38
|
|
|
$
|
242
|
|
Total realized and unrealized investment gains (losses):
|
|
|
|
|
|
|
||||||
Reported in net realized investment gains (1)
|
|
2
|
|
|
7
|
|
|
9
|
|
|||
Reported in increases in other comprehensive income (loss)
|
|
(4
|
)
|
|
—
|
|
|
(4
|
)
|
|||
Purchases, sales and settlements/maturities:
|
|
|
|
|
|
|
||||||
Purchases
|
|
146
|
|
|
3
|
|
|
149
|
|
|||
Sales
|
|
(11
|
)
|
|
(12
|
)
|
|
(23
|
)
|
|||
Settlements/maturities
|
|
(71
|
)
|
|
—
|
|
|
(71
|
)
|
|||
Gross transfers into Level 3
|
|
11
|
|
|
—
|
|
|
11
|
|
|||
Gross transfers out of Level 3
|
|
(91
|
)
|
|
—
|
|
|
(91
|
)
|
|||
Balance at December 31, 2018
|
|
$
|
186
|
|
|
$
|
36
|
|
|
$
|
222
|
|
Amount of total realized investment gains (losses) for the period included in the consolidated statement of income attributable to changes in the fair value of assets still held at the reporting date
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
(1)
|
Includes impairments on investments held at the end of the period as well as amortization on fixed maturities.
|
(at December 31, 2019, in millions)
|
|
Carrying
Value
|
|
Fair
Value
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
||||||||||
Financial assets:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Short-term securities
|
|
$
|
4,943
|
|
|
$
|
4,943
|
|
|
$
|
685
|
|
|
$
|
4,204
|
|
|
$
|
54
|
|
Financial liabilities:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Debt
|
|
$
|
6,458
|
|
|
$
|
8,049
|
|
|
$
|
—
|
|
|
$
|
8,049
|
|
|
$
|
—
|
|
Commercial paper
|
|
100
|
|
|
100
|
|
|
—
|
|
|
100
|
|
|
—
|
|
(at December 31, 2018, in millions)
|
|
Carrying
Value
|
|
Fair
Value
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
||||||||||
Financial assets:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Short-term securities
|
|
$
|
3,985
|
|
|
$
|
3,985
|
|
|
$
|
632
|
|
|
$
|
3,316
|
|
|
$
|
37
|
|
Financial liabilities:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Debt
|
|
$
|
6,464
|
|
|
$
|
7,128
|
|
|
$
|
—
|
|
|
$
|
7,128
|
|
|
$
|
—
|
|
Commercial paper
|
|
100
|
|
|
100
|
|
|
—
|
|
|
100
|
|
|
—
|
|
(for the year ended December 31, in millions)
|
|
2019
|
|
2018
|
|
2017
|
||||||
Written premiums
|
|
|
|
|
|
|
||||||
Direct
|
|
$
|
30,022
|
|
|
$
|
28,210
|
|
|
$
|
26,648
|
|
Assumed
|
|
1,041
|
|
|
1,042
|
|
|
1,000
|
|
|||
Ceded
|
|
(1,912
|
)
|
|
(1,544
|
)
|
|
(1,429
|
)
|
|||
Total net written premiums
|
|
$
|
29,151
|
|
|
$
|
27,708
|
|
|
$
|
26,219
|
|
Earned premiums
|
|
|
|
|
|
|
||||||
Direct
|
|
$
|
28,994
|
|
|
$
|
27,536
|
|
|
$
|
26,189
|
|
Assumed
|
|
1,076
|
|
|
1,024
|
|
|
965
|
|
|||
Ceded
|
|
(1,798
|
)
|
|
(1,501
|
)
|
|
(1,471
|
)
|
|||
Total net earned premiums
|
|
$
|
28,272
|
|
|
$
|
27,059
|
|
|
$
|
25,683
|
|
Percentage of assumed earned premiums to net earned premiums
|
|
3.8
|
%
|
|
3.8
|
%
|
|
3.8
|
%
|
|||
Ceded claims and claim adjustment expenses incurred
|
|
$
|
1,089
|
|
|
$
|
1,293
|
|
|
$
|
1,225
|
|
(at December 31, in millions)
|
|
2019
|
|
2018
|
||||
Business Insurance
|
|
$
|
2,601
|
|
|
$
|
2,585
|
|
Bond & Specialty Insurance
|
|
550
|
|
|
550
|
|
||
Personal Insurance
|
|
784
|
|
|
776
|
|
||
Other
|
|
26
|
|
|
26
|
|
||
Total
|
|
$
|
3,961
|
|
|
$
|
3,937
|
|
(at December 31, 2019, in millions)
|
|
Gross
Carrying
Amount
|
|
Accumulated
Amortization
|
|
Net
|
||||||
Subject to amortization
|
|
|
|
|
|
|
||||||
Customer-related
|
|
$
|
99
|
|
|
$
|
21
|
|
|
$
|
78
|
|
Contract-based (1)
|
|
205
|
|
|
179
|
|
|
26
|
|
|||
Total subject to amortization
|
|
304
|
|
|
200
|
|
|
104
|
|
|||
Not subject to amortization
|
|
226
|
|
|
—
|
|
|
226
|
|
|||
Total
|
|
$
|
530
|
|
|
$
|
200
|
|
|
$
|
330
|
|
(at December 31, 2018, in millions)
|
|
Gross
Carrying
Amount
|
|
Accumulated
Amortization
|
|
Net
|
||||||
Subject to amortization
|
|
|
|
|
|
|
||||||
Customer-related
|
|
$
|
98
|
|
|
$
|
12
|
|
|
$
|
86
|
|
Contract-based (1)
|
|
208
|
|
|
175
|
|
|
33
|
|
|||
Total subject to amortization
|
|
306
|
|
|
187
|
|
|
119
|
|
|||
Not subject to amortization
|
|
226
|
|
|
—
|
|
|
226
|
|
|||
Total
|
|
$
|
532
|
|
|
$
|
187
|
|
|
$
|
345
|
|
(1)
|
Contract-based intangible assets subject to amortization are comprised of fair value adjustments on claims and claim adjustment expense reserves, reinsurance recoverables and other contract-related intangible assets. Fair value adjustments recorded in connection with insurance acquisitions were based on management’s estimate of nominal claims and claim adjustment expense reserves and reinsurance recoverables. The method used calculated a risk adjustment to a risk-free discounted reserve that would, if reserves ran off as expected, produce results that yielded the assumed cost-of-capital on the capital supporting the loss reserves. The fair value adjustments are reported as other intangible assets on the consolidated balance sheet, and the amounts measured in accordance with the acquirer’s accounting policies for insurance contracts have been reported as part of the claims and claim adjustment expense reserves and reinsurance recoverables. The intangible assets are being recognized into income over the expected payment pattern. Because the time value of money and the risk adjustment (cost of capital) components of the intangible assets run off at different rates, the amount recognized in income may be a net benefit in some periods and a net expense in other periods.
|
(at December 31, in millions)
|
|
2019
|
|
2018
|
||||
Property-casualty
|
|
$
|
51,836
|
|
|
$
|
50,653
|
|
Accident and health
|
|
13
|
|
|
15
|
|
||
Total
|
|
$
|
51,849
|
|
|
$
|
50,668
|
|
(at and for the year ended December 31, in millions)
|
|
2019
|
|
2018
|
|
2017
|
||||||
Claims and claim adjustment expense reserves at beginning of year
|
|
$
|
50,653
|
|
|
$
|
49,633
|
|
|
$
|
47,929
|
|
Less reinsurance recoverables on unpaid losses
|
|
8,182
|
|
|
8,123
|
|
|
7,981
|
|
|||
Net reserves at beginning of year
|
|
42,471
|
|
|
41,510
|
|
|
39,948
|
|
|||
Estimated claims and claim adjustment expenses for claims arising in the current year
|
|
18,854
|
|
|
18,614
|
|
|
17,846
|
|
|||
Estimated increase (decrease) in claims and claim adjustment expenses for claims arising in prior years
|
|
164
|
|
|
(406
|
)
|
|
(458
|
)
|
|||
Total increases
|
|
19,018
|
|
|
18,208
|
|
|
17,388
|
|
|||
Claims and claim adjustment expense payments for claims arising in:
|
|
|
|
|
|
|
||||||
Current year
|
|
7,734
|
|
|
7,697
|
|
|
7,335
|
|
|||
Prior years
|
|
10,060
|
|
|
9,363
|
|
|
8,708
|
|
|||
Total payments
|
|
17,794
|
|
|
17,060
|
|
|
16,043
|
|
|||
Unrealized foreign exchange loss (gain)
|
|
106
|
|
|
(187
|
)
|
|
217
|
|
|||
Net reserves at end of year
|
|
43,801
|
|
|
42,471
|
|
|
41,510
|
|
|||
Plus reinsurance recoverables on unpaid losses
|
|
8,035
|
|
|
8,182
|
|
|
8,123
|
|
|||
Claims and claim adjustment expense reserves at end of year
|
|
$
|
51,836
|
|
|
$
|
50,653
|
|
|
$
|
49,633
|
|
•
|
General liability (excluding asbestos and environmental) - higher than expected loss experience in the segment's domestic operations for primary and excess coverages for multiple accident years, including the impact for accident years 2009 and prior related to the enactment of legislation by a number of states that extended the statute of limitations for childhood sexual molestation claims;
|
•
|
Commercial automobile - higher than expected loss experience in the segment's domestic operations for recent accident years;
|
•
|
Asbestos reserves - an increase of $220 million, primarily in the segment's domestic general liability product line;
|
•
|
Commercial multi-peril - higher than expected loss experience in the segment's domestic operations for recent accident years; and
|
•
|
Environmental reserves - an increase of $76 million, primarily in the segment's domestic general liability product line,
|
•
|
Workers' compensation - better than expected loss experience in the segment's domestic operations for multiple accident years; and
|
•
|
Commercial property - better than expected loss experience in the segment's domestic operations for recent accident years.
|
•
|
Workers' compensation - better than expected loss experience in the segment’s domestic operations for multiple accident years; and
|
•
|
Commercial property - better than expected loss experience in the segment’s domestic operations for recent accident years,
|
•
|
Commercial automobile - higher than expected loss experience for recent accident years;
|
•
|
Asbestos reserves - an increase of $225 million, primarily in the segment's domestic general liability product line;
|
•
|
General liability (excluding asbestos and environmental) - higher than expected loss experience in the segment's domestic operations for both primary and excess coverages for multiple accident years; and
|
•
|
Environmental reserves - an increase of $55 million, primarily in the segment's domestic general liability product line.
|
•
|
Workers' compensation - better than expected loss experience in the segment's domestic operations for multiple accident years;
|
•
|
General liability (excluding an increase to asbestos and environmental reserves) - better than expected loss experience in the segment's domestic operations for both primary and excess coverages for multiple accident years; and
|
•
|
Commercial multi-peril - better than expected loss experience for liability coverages for multiple accident years,
|
•
|
Asbestos reserves - an increase of $225 million, primarily in the segment's domestic general liability product line;
|
•
|
Commercial automobile - higher than expected loss experience for recent accident years;
|
•
|
Environmental reserves - an increase of $65 million, primarily in the segment's domestic general liability product line; and
|
•
|
International and other - higher than expected loss experience in Europe primarily due to the U.K. Ministry of Justice’s “Ogden” discount rate adjustment applied to lump sum bodily injury payouts.
|
(at December 31, 2019, in millions)
|
|
Net Undiscounted
Claims and Claim
Adjustment Expense
Reserves
|
|
Discount
(Net of
Reinsurance)
|
|
Subtotal:
Net Claims and Claim Adjustment
Expense Reserves
|
|
Reinsurance
Recoverables on
Unpaid Losses (4)
|
|
Claims and Claim
Adjustment
Expense
Reserves
|
||||||||||
Business Insurance
|
|
|
|
|
|
|
|
|
|
|
||||||||||
General liability
|
|
$
|
7,749
|
|
|
$
|
(172
|
)
|
|
$
|
7,577
|
|
|
$
|
842
|
|
|
$
|
8,419
|
|
Commercial property
|
|
887
|
|
|
—
|
|
|
887
|
|
|
389
|
|
|
1,276
|
|
|||||
Commercial multi-peril
|
|
3,784
|
|
|
—
|
|
|
3,784
|
|
|
175
|
|
|
3,959
|
|
|||||
Commercial automobile
|
|
3,237
|
|
|
—
|
|
|
3,237
|
|
|
259
|
|
|
3,496
|
|
|||||
Workers’ compensation (1)
|
|
16,184
|
|
|
(911
|
)
|
|
15,273
|
|
|
745
|
|
|
16,018
|
|
|||||
Bond & Specialty Insurance
|
|
|
|
|
|
|
|
|
|
|
||||||||||
General liability
|
|
1,824
|
|
|
—
|
|
|
1,824
|
|
|
108
|
|
|
1,932
|
|
|||||
Fidelity and surety
|
|
399
|
|
|
—
|
|
|
399
|
|
|
4
|
|
|
403
|
|
|||||
Personal Insurance
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Automobile
|
|
2,862
|
|
|
—
|
|
|
2,862
|
|
|
486
|
|
|
3,348
|
|
|||||
Homeowners (excluding Other)
|
|
1,168
|
|
|
—
|
|
|
1,168
|
|
|
57
|
|
|
1,225
|
|
|||||
International - Canada
|
|
739
|
|
|
—
|
|
|
739
|
|
|
19
|
|
|
758
|
|
|||||
Subtotal — claims and allocated claim adjustment expenses for the products presented in the development tables below
|
|
38,833
|
|
|
(1,083
|
)
|
|
37,750
|
|
|
3,084
|
|
|
40,834
|
|
|||||
Other insurance contracts (2)
|
|
3,895
|
|
|
(5
|
)
|
|
3,890
|
|
|
1,968
|
|
|
5,858
|
|
|||||
Unallocated loss adjustment expense reserves
|
|
2,104
|
|
|
—
|
|
|
2,104
|
|
|
39
|
|
|
2,143
|
|
|||||
Structured settlements (3)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2,965
|
|
|
2,965
|
|
|||||
Other
|
|
57
|
|
|
—
|
|
|
57
|
|
|
(21
|
)
|
|
36
|
|
|||||
Total property-casualty
|
|
44,889
|
|
|
(1,088
|
)
|
|
43,801
|
|
|
8,035
|
|
|
51,836
|
|
|||||
Accident and health
|
|
—
|
|
|
—
|
|
|
—
|
|
|
13
|
|
|
13
|
|
|||||
Total
|
|
$
|
44,889
|
|
|
$
|
(1,088
|
)
|
|
$
|
43,801
|
|
|
$
|
8,048
|
|
|
$
|
51,849
|
|
(1)
|
Net discount amount includes discount of $67 million on reinsurance recoverables for long-term disability and annuity claim payments.
|
(2)
|
Primarily includes residual market, international (other than operations in Canada within the Personal Insurance segment) and runoff assumed reinsurance business.
|
(3)
|
Includes structured settlements in cases where the Company did not receive a release from the claimant.
|
(4)
|
Total reinsurance recoverables (on paid and unpaid losses) at December 31, 2019 were $8.24 billion.
|
|
|
(dollars in millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||||||||
|
|
For the Years Ended December 31,
|
|
|
|
|
|||||||||||||||||||||||||||||||||||||||||
|
|
2010
|
|
2011
|
|
2012
|
|
2013
|
|
2014
|
|
2015
|
|
2016
|
|
2017
|
|
2018
|
|
2019
|
|
|
|
|
|||||||||||||||||||||||
|
|
Incurred Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance
|
|
|
|
|
|||||||||||||||||||||||||||||||||||||||||
|
|
Unaudited
|
|
|
|
|
|
|
|||||||||||||||||||||||||||||||||||||||
Accident Year
|
|
|
|
|
|
IBNR Reserves Dec 31, 2019
|
|
Cumulative Number of Reported Claims
|
|||||||||||||||||||||||||||||||||||||||
2010
|
|
$
|
1,028
|
|
|
$
|
1,031
|
|
|
$
|
1,021
|
|
|
$
|
959
|
|
|
$
|
927
|
|
|
$
|
912
|
|
|
$
|
918
|
|
|
$
|
908
|
|
|
$
|
911
|
|
|
$
|
900
|
|
|
$
|
62
|
|
|
27,993
|
|
2011
|
|
|
|
1,004
|
|
|
1,074
|
|
|
1,065
|
|
|
998
|
|
|
972
|
|
|
935
|
|
|
913
|
|
|
908
|
|
|
922
|
|
|
69
|
|
|
27,557
|
|
||||||||||||
2012
|
|
|
|
|
|
989
|
|
|
985
|
|
|
935
|
|
|
913
|
|
|
892
|
|
|
905
|
|
|
917
|
|
|
920
|
|
|
78
|
|
|
24,920
|
|
|||||||||||||
2013
|
|
|
|
|
|
|
|
965
|
|
|
975
|
|
|
958
|
|
|
940
|
|
|
927
|
|
|
933
|
|
|
975
|
|
|
104
|
|
|
22,625
|
|
||||||||||||||
2014
|
|
|
|
|
|
|
|
|
|
976
|
|
|
989
|
|
|
983
|
|
|
948
|
|
|
956
|
|
|
1,013
|
|
|
159
|
|
|
22,319
|
|
|||||||||||||||
2015
|
|
|
|
|
|
|
|
|
|
|
|
998
|
|
|
956
|
|
|
923
|
|
|
967
|
|
|
1,057
|
|
|
165
|
|
|
21,360
|
|
||||||||||||||||
2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,075
|
|
|
1,058
|
|
|
1,087
|
|
|
1,187
|
|
|
359
|
|
|
19,997
|
|
|||||||||||||||||
2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,133
|
|
|
1,143
|
|
|
1,196
|
|
|
530
|
|
|
18,014
|
|
||||||||||||||||||
2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,253
|
|
|
1,312
|
|
|
841
|
|
|
16,694
|
|
|||||||||||||||||||
2019
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,447
|
|
|
1,231
|
|
|
12,167
|
|
||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
$
|
10,929
|
|
|
|
|
|
|
|
Cumulative Paid Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance
|
|
|
|
|
||||||||||||||||||||||||||||||||||||||||||
Accident Year
|
|
Unaudited
|
|
|
|
|
|
|
||||||||||||||||||||||||||||||||||||||||
2010
|
|
$
|
35
|
|
|
$
|
139
|
|
|
$
|
324
|
|
|
$
|
487
|
|
|
$
|
629
|
|
|
$
|
702
|
|
|
$
|
756
|
|
|
$
|
781
|
|
|
$
|
800
|
|
|
$
|
814
|
|
|
|
|
|
||||
2011
|
|
|
|
47
|
|
|
187
|
|
|
355
|
|
|
539
|
|
|
660
|
|
|
725
|
|
|
762
|
|
|
799
|
|
|
819
|
|
|
|
|
|
|||||||||||||||
2012
|
|
|
|
|
|
32
|
|
|
150
|
|
|
295
|
|
|
489
|
|
|
589
|
|
|
699
|
|
|
754
|
|
|
811
|
|
|
|
|
|
||||||||||||||||
2013
|
|
|
|
|
|
|
|
35
|
|
|
175
|
|
|
363
|
|
|
498
|
|
|
639
|
|
|
745
|
|
|
816
|
|
|
Liability for Claims
|
|||||||||||||||||||
2014
|
|
|
|
|
|
|
|
|
|
37
|
|
|
163
|
|
|
321
|
|
|
515
|
|
|
640
|
|
|
750
|
|
|
And Allocated Claim
|
||||||||||||||||||||
2015
|
|
|
|
|
|
|
|
|
|
|
|
36
|
|
|
137
|
|
|
336
|
|
|
558
|
|
|
740
|
|
|
Adjustment Expenses,
|
|||||||||||||||||||||
2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
35
|
|
|
191
|
|
|
421
|
|
|
649
|
|
|
Net of Reinsurance
|
||||||||||||||||||||||
2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
40
|
|
|
180
|
|
|
378
|
|
|
|
|
|
|||||||||||||||||||||
2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
42
|
|
|
202
|
|
|
2010 -
|
|
Before
|
||||||||||||||||||||||
2019
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
51
|
|
|
2019
|
|
2010
|
|||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
$
|
6,030
|
|
|
$
|
4,899
|
|
|
$
|
2,850
|
|
|||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total net liability
|
|
$
|
7,749
|
|
|
|
(dollars in millions)
|
|
|
|
|
|||||||||||||||||||||
|
|
For the Years Ended December 31,
|
|
|
|
|
|||||||||||||||||||||
|
|
2015
|
|
2016
|
|
2017
|
|
2018
|
|
2019
|
|
|
|
|
|||||||||||||
|
|
Incurred Claims and Allocated Claims Adjustment Expenses, Net of Reinsurance
|
|
|
|
|
|||||||||||||||||||||
|
|
Unaudited
|
|
|
|
|
|
|
|||||||||||||||||||
Accident Year
|
|
|
|
|
|
IBNR Reserves December 31, 2019
|
|
Cumulative Number of Reported Claims
|
|||||||||||||||||||
2015
|
|
$
|
786
|
|
|
$
|
750
|
|
|
$
|
741
|
|
|
$
|
731
|
|
|
$
|
737
|
|
|
$
|
8
|
|
|
20,162
|
|
2016
|
|
|
|
896
|
|
|
863
|
|
|
820
|
|
|
809
|
|
|
11
|
|
|
22,313
|
|
|||||||
2017
|
|
|
|
|
|
1,209
|
|
|
1,177
|
|
|
1,151
|
|
|
11
|
|
|
25,066
|
|
||||||||
2018
|
|
|
|
|
|
|
|
1,093
|
|
|
1,079
|
|
|
10
|
|
|
24,785
|
|
|||||||||
2019
|
|
|
|
|
|
|
|
|
|
1,069
|
|
|
84
|
|
|
22,186
|
|
||||||||||
|
|
|
|
|
|
|
|
Total
|
|
|
$
|
4,845
|
|
|
|
|
|
|
|
Cumulative Paid Claims and Allocated Claim
|
|
|
|
|
||||||||||||||||||||||
|
|
Adjustment Expenses, Net of Reinsurance
|
|
|
|
|
||||||||||||||||||||||
|
|
Unaudited
|
|
|
|
|
||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
Liability for Claims
|
||||||||||||||||
Accident Year
|
|
|
|
|
|
|
|
|
|
|
|
And Allocated Claim
|
||||||||||||||||
2015
|
|
$
|
376
|
|
|
$
|
615
|
|
|
$
|
681
|
|
|
$
|
699
|
|
|
$
|
717
|
|
|
Adjustment Expenses,
|
||||||
2016
|
|
|
|
441
|
|
|
685
|
|
|
745
|
|
|
767
|
|
|
Net of Reinsurance
|
||||||||||||
2017
|
|
|
|
|
|
618
|
|
|
1,003
|
|
|
1,073
|
|
|
|
|
|
|||||||||||
2018
|
|
|
|
|
|
|
|
561
|
|
|
928
|
|
|
2015 -
|
|
Before
|
||||||||||||
2019
|
|
|
|
|
|
|
|
|
|
610
|
|
|
2019
|
|
2015
|
|||||||||||||
|
|
|
|
|
|
|
|
Total
|
|
|
$
|
4,095
|
|
|
$
|
750
|
|
|
$
|
137
|
|
|||||||
|
|
|
|
|
|
|
|
|
|
Total net liability
|
|
|
$
|
887
|
|
|
|
Average Annual Percentage Payout of Incurred
Claims by Age, Net of Reinsurance
|
|||||||||||||
|
|
Unaudited
|
|||||||||||||
Years
|
|
1
|
|
2
|
|
3
|
|
4
|
|
5
|
|||||
|
|
53.6
|
%
|
|
32.6
|
%
|
|
7.5
|
%
|
|
2.5
|
%
|
|
2.5
|
%
|
|
|
(dollars in millions)
|
|
|
|
|
|||||||||||||||||||||||||||||||||||||||||
|
|
For the Years Ended December 31,
|
|
|
|
|
|||||||||||||||||||||||||||||||||||||||||
|
|
2010
|
|
2011
|
|
2012
|
|
2013
|
|
2014
|
|
2015
|
|
2016
|
|
2017
|
|
2018
|
|
2019
|
|
|
|
|
|||||||||||||||||||||||
|
|
Incurred Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance
|
|
|
|
|
|||||||||||||||||||||||||||||||||||||||||
|
|
Unaudited
|
|
|
|
|
|
|
|||||||||||||||||||||||||||||||||||||||
Accident Year
|
|
|
|
|
|
IBNR Reserves December 31, 2019
|
|
Cumulative Number of Reported Claims
|
|||||||||||||||||||||||||||||||||||||||
2010
|
|
$
|
1,711
|
|
|
$
|
1,826
|
|
|
$
|
1,832
|
|
|
$
|
1,861
|
|
|
$
|
1,895
|
|
|
$
|
1,892
|
|
|
$
|
1,898
|
|
|
$
|
1,885
|
|
|
$
|
1,881
|
|
|
$
|
1,868
|
|
|
$
|
19
|
|
|
112,074
|
|
2011
|
|
|
|
2,235
|
|
|
2,244
|
|
|
2,269
|
|
|
2,286
|
|
|
2,296
|
|
|
2,287
|
|
|
2,283
|
|
|
2,279
|
|
|
2,272
|
|
|
25
|
|
|
125,867
|
|
||||||||||||
2012
|
|
|
|
|
|
1,885
|
|
|
1,883
|
|
|
1,903
|
|
|
1,888
|
|
|
1,888
|
|
|
1,867
|
|
|
1,859
|
|
|
1,854
|
|
|
34
|
|
|
104,921
|
|
|||||||||||||
2013
|
|
|
|
|
|
|
|
1,615
|
|
|
1,623
|
|
|
1,620
|
|
|
1,609
|
|
|
1,591
|
|
|
1,600
|
|
|
1,599
|
|
|
38
|
|
|
83,818
|
|
||||||||||||||
2014
|
|
|
|
|
|
|
|
|
|
1,663
|
|
|
1,627
|
|
|
1,625
|
|
|
1,617
|
|
|
1,626
|
|
|
1,627
|
|
|
50
|
|
|
78,292
|
|
|||||||||||||||
2015
|
|
|
|
|
|
|
|
|
|
|
|
1,568
|
|
|
1,625
|
|
|
1,593
|
|
|
1,597
|
|
|
1,606
|
|
|
92
|
|
|
71,635
|
|
||||||||||||||||
2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,662
|
|
|
1,623
|
|
|
1,598
|
|
|
1,590
|
|
|
122
|
|
|
68,888
|
|
|||||||||||||||||
2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,872
|
|
|
1,928
|
|
|
1,956
|
|
|
266
|
|
|
71,220
|
|
||||||||||||||||||
2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,976
|
|
|
2,114
|
|
|
416
|
|
|
68,403
|
|
|||||||||||||||||||
2019
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,017
|
|
|
715
|
|
|
70,798
|
|
||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
18,503
|
|
|
|
|
|
|
|
Cumulative Paid Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance
|
|
|
|
|
||||||||||||||||||||||||||||||||||||||||||
Accident Year
|
|
Unaudited
|
|
|
|
|
|
|
||||||||||||||||||||||||||||||||||||||||
2010
|
|
$
|
709
|
|
|
$
|
1,180
|
|
|
$
|
1,395
|
|
|
$
|
1,579
|
|
|
$
|
1,698
|
|
|
$
|
1,763
|
|
|
$
|
1,798
|
|
|
$
|
1,819
|
|
|
$
|
1,834
|
|
|
$
|
1,840
|
|
|
|
|
|
||||
2011
|
|
|
|
1,060
|
|
|
1,573
|
|
|
1,803
|
|
|
1,979
|
|
|
2,088
|
|
|
2,156
|
|
|
2,193
|
|
|
2,222
|
|
|
2,234
|
|
|
|
|
|
|||||||||||||||
2012
|
|
|
|
|
|
795
|
|
|
1,246
|
|
|
1,424
|
|
|
1,590
|
|
|
1,699
|
|
|
1,752
|
|
|
|