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Annual Report 2016

5 Unpaid claims and claim adjustment expenses

A reconciliation of the opening and closing reserve balances for unpaid claims and claim adjustment expenses for the period is presented as follows:

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USD millions

20151

2016

1

The Group has adjusted its presentation of the reconciliation to include both non-life and life and health business lines for the current and the comparative reporting period.

Balance as of 1 January

57 954

55 518

Reinsurance recoverable

–5 103

–4 265

Deferred expense on retroactive reinsurance

–14

–340

Net balance as of 1 January

52 837

50 913

 

 

 

Incurred related to:

 

 

Current year

20 729

25 825

Prior year

–1 126

–810

Amortisation of deferred expense on retroactive reinsurance and impact of commutations

27

–26

Total incurred

19 630

24 989

 

 

 

Paid related to:

 

 

Current year

–8 533

–9 720

Prior year

–12 083

–12 808

Total paid

–20 616

–22 528

 

 

 

Foreign exchange

–2 619

–1 317

Effect of acquisitions, disposals, new retroactive reinsurance and other items

1 681

1 043

Net balance as of 31 December

50 913

53 100

 

 

 

Reinsurance recoverable

4 265

4 044

Deferred expense on retroactive reinsurance

340

211

Balance as of 31 December

55 518

57 355

Prior-year development

Non-life claims development during 2016 on prior years continued to be driven by favourable experience on most lines of business. Property includes adverse development from the New Zealand earthquakes that occurred in 2010 and 2011. Casualty includes adverse development on US asbestos and environmental claims, while the more recent years were in some cases strengthened in view of the unfavourable prevailing market conditions. Within specialty, the main reserve releases came from marine and engineering business lines.

For life and health lines of business, claims development on prior year business was driven by adverse claim experience across a number of lines of business and geographies. In particular, the UK critical illness portfolio strengthened reserves following adverse trends. This was partially offset by Canadian mortality and disability portfolios which had reserve releases following positive claims experience. Claims development related to prior years also includes an element of interest accretion for unpaid claims reported at the estimated present value.

A summary of prior-year net claims and claim adjustment expenses development by lines of business is shown below:

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USD millions

2015

2016

Line of business:

 

 

Property

–539

–335

Casualty

–571

–249

Specialty

–284

–357

Life and health

268

131

Total

–1 126

–810

US asbestos and environmental claims exposure

The Group’s obligation for claims payments and claims settlement charges also includes obligations for long-latent injury claims arising out of policies written prior to 1986, in particular in the area of US asbestos and environmental liability.

At the end of 2016 the Group carried net reserves for US asbestos and environmental liabilities equal to USD 1 977 million. During 2016, the Group incurred net losses of USD 48 million and paid net against these liabilities of USD 164 million.

Estimating ultimate asbestos and environmental liabilities is particularly complex for a number of reasons relating in part to the long period between exposure and manifestation of claims, and in part to other factors, which include risks and lack of predictability inherent in complex litigation, changes in projected costs to resolve, and in the projected number of asbestos and environmental claims, the effect of bankruptcy protection, insolvencies, and changes in the legal, legislative and regulatory environment. As a result, the Group believes that projection of exposures for asbestos and environmental claims is subject to far less predictability relative to non-environmental and non-asbestos exposures. Management believes that its reserves for asbestos and environmental claims are appropriately established based upon known facts and the current state of the law. However, reserves are subject to revision as new information becomes available and as claims develop. Additional liabilities may arise for amounts in excess of reserves, and the Group’s estimate of claims and claim adjustment expenses may change. Any such additional liabilities or increases in estimates cannot be reasonably estimated in advance but could result in charges that could be material to operating results.

The Group maintains an active commutation strategy to reduce exposure. When commutation payments are made, the traditional “survival ratio” is artificially reduced by premature payments which should not imply a reduction in reserve adequacy.

Short duration contract unpaid claims and claim adjustment expenses

Basis of presentation for claims development information

This section of the note provides claims development information on an accident year basis.

Claims development information and information on reserves for claims relating to insured events that have occurred but have not yet been reported or not enough reported (”IBNR”) are generally presented by line of business for individually significant categories. Starting from a line of business split, additional aggregation or disaggregation is provided where appropriate, necessary and practicable (”disaggregation categories”). For instance, Reinsurance liability and motor lines of business are further disaggregated into proportional and non-proportional treaty types to provide more specific information on claims development whereas specialty is shown as one distinct category.

In the Property & Casualty Reinsurance and Corporate Solutions segments, all contracts that transfer significant insurance risk are included in scope to the extent they can be allocated to a disaggregation category. For many reinsurance contracts, proportional contracts in particular, ceding companies do not report losses by accident year. In these cases, the Group has allocated reported losses by underwriting year to accident year to produce the accident year tables. Similarly, IBNR is calculated on an underwriting year basis and then the liabilities are allocated to accident year.

In the Life & Health Reinsurance segment, contracts classified as short duration include group life business, certain types of disability and long-term care contracts, group accident, health coverage including critical illness and medical expenses. The Group provides claims development information for Life & Health Reinsurance where reported accident year information is available and there is potential for claims development. This primarily applies to the Group´s disability lines classified as short duration. This business is generally considered to have relatively higher claims estimation uncertainty than other life and health lines such as group life, due to longer claims development periods.

In the Life Capital segment, short duration contracts include mainly disability medical expenses business. The Group provides no claims development information for Life Capital as its short duration reserves are not material.

Amounts shown in the claims development tables are net of external retrocession and retrocession between business segments to the extent a retrocession program can be allocated to a disaggregation category. Ceded retroactive reinsurance is not included in the claims development table if it cannot be allocated on a reasonable basis to the disaggregation categories used to present claims development information.

Claims development information and information on IBNR reserves are shown on a nominal basis, also for cases where the Group discounts claims liabilities for measurement under US GAAP. Information is shown per accident year and by reporting period. The number of years shown in the claims development tables differs by business segment:

For Property & Casualty Reinsurance, the Group discloses data for ten accident years and reporting periods.

For the Life & Health Reinsurance long tail category, the Group discloses data for nine accident years and reporting periods. Disclosure of ten years of information is impracticable for all lines of business contained in this category as the Group historically has not used accident-year based information for reserving purposes in all income protection business lines.

The Corporate Solutions business segment was created in 2012. Therefore, five accident years and reporting periods will be shown for this business unit. All but an immaterial portion of claims arising from accident years prior to 2012 relate to accident years which are over ten years ago and therefore out of the required range of disclosure. Business ceded to Property & Casualty Reinsurance prior to 2012 is included in the net claims development information reported by this segment.

The current reporting period estimate of net claims liabilities for accident years older than the number of years shown in the claims development tables is presented as a total after disclosure of cumulative paid claims.

The information presented in claims development tables is presented at current balance sheet foreign exchange rates as of the date of these financial statements to permit an analysis of claims development excluding the impact of foreign exchange movements.

Some of the information provided in the following tables, is Required Supplementary Information (RSI) under US GAAP. Therefore it does not form part of these consolidated audited financial statements. Claims development information for all periods except the current reporting period and any information derived from it – including average annual percentage payout of claims incurred – is considered RSI and is identified as RSI in the tables presented.

Methodology for determining the presented amounts of liabilities for IBNR claims

The liability for unpaid claims and claim adjustment expenses is based on an estimate of the ultimate cost of settling the claims based on both information reported to us by ceding companies and internal estimates.

Non-life re/insurance contracts

Cedents report their case reserves and their estimated IBNR to the Group. The Group develops and recognises its own estimate of IBNR claims, which includes circumstances in which the cedent has not reported any claims to the Group or where the Group´s estimate of reserves needed to cover reported claims differs from the amounts reported by cedents. Reserving is done on portfolio or contract level depending on the features of the contract:

For business reviewed on a portfolio level, the expected ultimate losses are set for most lines and types of business based on analysis performed using standard actuarial techniques. In general, contracts are aggregated into portfolios by combining contracts with similar features.

In most cases, these standard actuarial techniques encompass a number of loss development factor techniques applied to claim tables of paid and reported losses. Other actuarial techniques may be applicable to specific categories. For instance, the analysis of frequency and severity could be applied in all disaggregation categories. Life contingency techniques for projecting regular payments related to bodily injury claims are applied to motor proportional, motor non-proportional, liability proportional, liability non-proportional, accident and health and similar Corporate Solutions lines, where the information is available. In some cases, techniques specific to the projection of future payments for specific risks such as asbestos or pollution claims are applied to both proportional and non-proportional liability claims, also in Corporate Solutions (see also separate section ”US asbestos and environmental claims exposure” above).

Contract-level reserving is based on standard actuarial techniques but requires more detailed contract, pricing, claim and exposure information than required for the business reviewed on a portfolio level.

In addition, the following applies to all non-life re/insurance business:

  • For the most recent underwriting years, reliance may be made on the Group´s costing and underwriting functions for the initial estimates of claims, although the initial reserving estimates may differ from these pricing estimates if there is good reason to believe losses are likely to emerge higher or lower, and in light of the limited claims experience to date. Reviews of those initial estimates are performed regularly, forming a basis for adjustments on both the current and prior underwriting years.
  • The reserving process considers any information available in respect of either a specific case or a large loss event and the impact of any unusual features in the technical accounting of information provided by cedents.

Life and health re/insurance contracts

For the Life & Health Reinsurance long tail business, the liability for IBNR claims includes provision for ”not yet reported claims” expected to have been incurred in respect of both already processed and not yet processed reinsurance accounts and generally includes provisions for the cost of claims that currently are within their deferred period. The IBNR reserving calculations have been made using appropriate techniques, such as chain ladder and/or Bornhuetter-Ferguson approaches, depending upon the level of detail available and the assumed level of development of the claim. For certain lines of business, IBNR claims reserves include reported but not admitted claims, allowing for expected rates of decline for these claims.

Claims frequency information

Claims frequency information is not available for the disaggregation categories of Property & Casualty Reinsurance, as cedents do not report claims frequency information to the Group for most of the assumed reinsurance contract types. These contracts are to be found in all disaggregation categories presented.

Life & Health Reinsurance reports claims frequency information based on individual incidence. The number of reported claims is the actual number of claims booked. For Group income protection business, claims with multiple payments in a year are counted as one claim with the corresponding amount annualised. Claims that are reported but not admitted are included in the claim count.

For Corporate Solutions, claims frequency is displayed for direct business only, as individual claims information is generally not available for assumed and ceded business. Claims are counted individually per contract to produce the claims frequency table. For some direct business, summary reports are received and multiple claims are booked under a single claim code; this is usually done at a program, policy year, state, country and/or line of business level of detail. This approach may be applied to business which has a high volume of claim counts, but with only minor claims dollars associated with each claim.

Property & Casualty Reinsurance – Property

Incurred claims and allocated claim adjustment expenses, net of reinsurance

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USD millions

 

Reporting year

Accident year

 

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

Thereof IBNR

2007

 

2 233

2 167

2 219

2 181

2 087

2 121

2 129

2 127

2 122

2 110

–7

2008

 

 

2 617

2 228

2 090

2 008

2 006

2 026

2 017

2 017

2 014

–14

2009

 

 

 

2 221

2 241

2 122

2 079

2 059

2 056

2 053

2 056

1

2010

 

 

 

 

2 489

2 439

2 314

2 334

2 423

2 466

2 577

–5

2011

 

 

 

 

 

4 240

4 308

4 126

4 187

4 143

4 139

123

2012

 

 

 

 

 

 

2 637

2 466

2 273

2 231

2 202

14

2013

 

 

 

 

 

 

 

3 038

3 050

2 880

2 799

–3

2014

 

 

 

 

 

 

 

 

2 681

2 525

2 351

57

2015

 

RSI

 

 

 

 

 

 

 

2 781

2 720

405

2016

 

 

 

 

 

 

 

 

 

 

3 842

2 044

Total

 

 

 

 

 

 

 

 

 

 

26 810

2 615

Cumulative paid claims and allocated claim adjustment expenses, net of reinsurance

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USD millions

 

Reporting year

Accident year

 

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2007

 

447

1 364

1 897

2 002

2 049

2 071

2 088

2 093

2 094

2 095

2008

 

 

541

1 389

1 689

1 811

1 936

1 969

1 984

1 989

1 990

2009

 

 

 

494

1 512

1 817

1 917

1 965

1 987

1 996

2 006

2010

 

 

 

 

394

1 491

1 783

1 891

2 089

2 243

2 390

2011

 

 

 

 

 

662

2 347

3 141

3 582

3 870

3 972

2012

 

 

 

 

 

 

243

1 551

1 938

2 055

2 097

2013

 

 

 

 

 

 

 

536

1 936

2 425

2 614

2014

 

 

 

 

 

 

 

 

465

1 677

2 052

2015

 

RSI

 

 

 

 

 

 

 

467

1 632

2016

 

 

 

 

 

 

 

 

 

 

633

Total

 

 

 

 

 

 

 

 

 

 

21 481

 

 

 

 

 

 

 

 

 

 

 

 

All liabilities before 2007

125

Liabilities for claims and claim adjustment expenses, net of reinsurance

5 454

Average annual percentage payout of incurred claims by age, net of reinsurance

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Years

1

2

3

4

5

6

7

8

9

10

Property (RSI)

18.7%

46.9%

17.1%

6.1%

4.6%

2.4%

1.9%

0.3%

0.0%

0.0%

The liability for unpaid claims for property in Property & Casualty Reinsurance shows positive development on most recent years. Claims in accident year 2011 were at a high level due to several large natural catastrophes including the earthquake and tsunami in Japan, the earthquakes in Christchurch, New Zealand, and floods in Thailand. The negative development on accident year 2010 in calendar year 2016 was driven by a deterioration in loss estimates for the 2010 New Zealand earthquake. Negative IBNRs can be a feature for claims arising from Property exposure due to overestimated case reserves.

Property & Casualty Reinsurance – Liability, proportional

Incurred claims and allocated claim adjustment expenses, net of reinsurance

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USD millions

 

Reporting year

Accident year

 

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

Thereof IBNR

2007

 

1 464

1 551

1 482

1 621

1 519

1 418

1 382

1 347

1 350

1 346

45

2008

 

 

1 131

1 112

1 175

1 240

1 136

1 033

1 092

1 090

1 108

88

2009

 

 

 

762

894

1 008

964

958

928

939

948

90

2010

 

 

 

 

831

975

914

894

886

889

878

148

2011

 

 

 

 

 

633

689

714

658

616

613

139

2012

 

 

 

 

 

 

511

594

550

522

495

115

2013

 

 

 

 

 

 

 

719

742

749

745

238

2014

 

 

 

 

 

 

 

 

984

974

986

518

2015

 

RSI

 

 

 

 

 

 

 

1 251

1 299

872

2016

 

 

 

 

 

 

 

 

 

 

1 705

1 398

Total

 

 

 

 

 

 

 

 

 

 

10 123

3 651

Cumulative paid claims and allocated claim adjustment expenses, net of reinsurance

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USD millions

 

Reporting year

Accident year

 

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2007

 

–6

107

334

498

806

921

1 000

1 053

1 084

1 117

2008

 

 

67

140

286

451

535

651

758

876

928

2009

 

 

 

–18

125

278

400

513

619

668

714

2010

 

 

 

 

30

157

315

405

512

607

656

2011

 

 

 

 

 

4

106

178

247

332

378

2012

 

 

 

 

 

 

13

112

178

236

289

2013

 

 

 

 

 

 

 

15

124

229

343

2014

 

 

 

 

 

 

 

 

24

155

288

2015

 

RSI

 

 

 

 

 

 

 

35

207

2016

 

 

 

 

 

 

 

 

 

 

47

Total

 

 

 

 

 

 

 

 

 

 

4 967

 

 

 

 

 

 

 

 

 

 

 

 

All liabilities before 2007

596

Liabilities for claims and claim adjustment expenses, net of reinsurance

5 752

Average annual percentage payout of incurred claims by age, net of reinsurance

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Years

1

2

3

4

5

6

7

8

9

10

Liability, proportional (RSI)

2.0%

13.6%

14.6%

12.6%

13.2%

9.7%

6.6%

6.5%

3.5%

2.5%

The increase in incurred losses from accident year 2013 to 2016 is driven by volume increases of business written. In view of current market conditions the loss ratios for accident year 2015 were increased. In line with the Group´s policy, cash flows under loss portfolio transfers are reported through claims paid. For longer tail lines and depending on the business volume written, timing of cash flows can lead to net inward payments across the whole portfolio in the first development year of the contract for some accident years.

Property & Casualty Reinsurance – Liability, non-proportional

Incurred claims and allocated claim adjustment expenses, net of reinsurance

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USD millions

 

Reporting year

Accident year

 

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

Thereof IBNR

2007

 

798

787

762

718

631

582

537

529

523

537

71

2008

 

 

676

718

668

544

502

469

437

412

391

67

2009

 

 

 

509

520

430

428

387

354

329

315

43

2010

 

 

 

 

511

427

393

368

346

325

317

70

2011

 

 

 

 

 

393

422

457

419

376

343

95

2012

 

 

 

 

 

 

322

340

301

273

252

104

2013

 

 

 

 

 

 

 

399

380

346

291

161

2014

 

 

 

 

 

 

 

 

425

429

398

265

2015

 

RSI

 

 

 

 

 

 

 

1 709

1 747

351

2016

 

 

 

 

 

 

 

 

 

 

571

368

Total

 

 

 

 

 

 

 

 

 

 

5 162

1 595

Cumulative paid claims and allocated claim adjustment expenses, net of reinsurance

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USD millions

 

Reporting year

Accident year

 

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2007

 

–4

27

71

127

213

254

287

309

333

345

2008

 

 

6

29

101

131

164

191

233

252

280

2009

 

 

 

–2

21

41

64

102

164

186

194

2010

 

 

 

 

4

11

34

51

86

103

122

2011

 

 

 

 

 

3

9

64

109

135

143

2012

 

 

 

 

 

 

–1

11

35

52

83

2013

 

 

 

 

 

 

 

1

11

36

59

2014

 

 

 

 

 

 

 

 

1

8

40

2015

 

RSI

 

 

 

 

 

 

 

0

87

2016

 

 

 

 

 

 

 

 

 

 

13

Total

 

 

 

 

 

 

 

 

 

 

1 366

 

 

 

 

 

 

 

 

 

 

 

 

All liabilities before 2007

5 891

Liabilities for claims and claim adjustment expenses, net of reinsurance

9 687

Average annual percentage payout of incurred claims by age, net of reinsurance

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Years

1

2

3

4

5

6

7

8

9

10

Liability, non-proportional (RSI)

0.5%

4.2%

10.3%

8.4%

11.2%

8.4%

7.5%

3.8%

5.8%

2.2%

The increase in incurred losses for accident year 2015 compared to other years is due to an increase in volume of business written. Liabilities before 2007 include reserves for historic US Asbestos and Environmental losses. In line with the Group´s policy, cash flows under loss portfolio transfers are reported through claims paid. For longer tail lines and depending on the business volume written, timing of cash flows can lead to net inward payments across the whole portfolio in the first development year of the contract for some accident years.

Property & Casualty Reinsurance – Accident & Health

Incurred claims and allocated claim adjustment expenses, net of reinsurance

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USD millions

 

Reporting year

Accident year

 

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

Thereof IBNR

2007

 

457

486

490

453

439

431

409

396

390

379

0

2008

 

 

385

412

400

411

419

408

406

405

410

84

2009

 

 

 

343

367

344

339

336

327

322

314

31

2010

 

 

 

 

271

223

229

217

215

217

209

34

2011

 

 

 

 

 

225

245

242

234

237

231

33

2012

 

 

 

 

 

 

311

321

306

297

294

40

2013

 

 

 

 

 

 

 

334

342

329

320

62

2014

 

 

 

 

 

 

 

 

297

329

322

100

2015

 

RSI

 

 

 

 

 

 

 

428

426

151

2016

 

 

 

 

 

 

 

 

 

 

587

286

Total

 

 

 

 

 

 

 

 

 

 

3 492

821

Cumulative paid claims and allocated claim adjustment expenses, net of reinsurance

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USD millions

 

Reporting year

Accident year

 

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2007

 

46

142

231

265

294

309

321

329

337

343

2008

 

 

51

157

208

247

263

274

282

289

294

2009

 

 

 

32

135

190

215

232

245

250

256

2010

 

 

 

 

25

83

114

128

137

143

147

2011

 

 

 

 

 

48

119

140

150

159

163

2012

 

 

 

 

 

 

72

167

192

208

218

2013

 

 

 

 

 

 

 

51

132

172

195

2014

 

 

 

 

 

 

 

 

30

100

142

2015

 

RSI

 

 

 

 

 

 

 

60

134

2016

 

 

 

 

 

 

 

 

 

 

73

Total

 

 

 

 

 

 

 

 

 

 

1 965

 

 

 

 

 

 

 

 

 

 

 

 

All liabilities before 2007

3 125

Liabilities for claims and claim adjustment expenses, net of reinsurance

4 652

Average annual percentage payout of incurred claims by age, net of reinsurance

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Years

1

2

3

4

5

6

7

8

9

10

Accident & Health (RSI)

14.4%

26.6%

13.9%

7.2%

4.8%

3.1%

2.2%

1.9%

1.7%

1.6%

The 2007 accident year includes the run-off of business written by entities acquired as part of the acquisition of General Electric Insurance Solutions during 2006. This business was not renewed. The increase in incurred losses for accident years 2015 and 2016 compared to previous accident years is due to an increase in the volume of workers’ compensation written.

Property & Casualty Reinsurance – Motor, proportional

Incurred claims and allocated claim adjustment expenses, net of reinsurance

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USD millions

 

Reporting year

Accident year

 

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

Thereof IBNR

2007

 

802

716

831

825

832

836

825

824

826

825

–8

2008

 

 

707

573

569

640

670

646

644

632

632

5

2009

 

 

 

640

637

700

724

711

717

715

713

–17

2010

 

 

 

 

570

631

667

673

669

684

684

–4

2011

 

 

 

 

 

972

966

938

915

927

926

–17

2012

 

 

 

 

 

 

1 427

1 419

1 416

1 393

1 384

44

2013

 

 

 

 

 

 

 

1 502

1 477

1 483

1 459

30

2014

 

 

 

 

 

 

 

 

1 902

1 869

1 869

26

2015

 

RSI

 

 

 

 

 

 

 

1 877

1 881

219

2016

 

 

 

 

 

 

 

 

 

 

2 445

1 190

Total

 

 

 

 

 

 

 

 

 

 

12 818

1 468

Cumulative paid claims and allocated claim adjustment expenses, net of reinsurance

Download

USD millions

 

Reporting year

Accident year

 

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2007

 

182

562

737

767

775

784

790

796

800

803

2008

 

 

322

526

599

577

588

587

599

603

606

2009

 

 

 

158

391

580

613

624

653

669

676

2010

 

 

 

 

195

439

522

556

581

612

627

2011

 

 

 

 

 

260

651

830

850

879

898

2012

 

 

 

 

 

 

460

1 065

1 218

1 265

1 295

2013

 

 

 

 

 

 

 

559

1 132

1 308

1 354

2014

 

 

 

 

 

 

 

 

816

1 482

1 699

2015

 

RSI

 

 

 

 

 

 

 

781

1 413

2016

 

 

 

 

 

 

 

 

 

 

812

Total

 

 

 

 

 

 

 

 

 

 

10 183

 

 

 

 

 

 

 

 

 

 

 

 

All liabilities before 2007

316

Liabilities for claims and claim adjustment expenses, net of reinsurance

2 951

Average annual percentage payout of incurred claims by age, net of reinsurance

Download

Years

1

2

3

4

5

6

7

8

9

10

Motor, proportional (RSI)

34.2%

37.9%

15.7%

2.6%

2.2%

2.3%

1.8%

0.8%

0.5%

0.4%

Increase in the incurred losses from accident year 2010 onward is driven by new business volume across all regions. Proportional motor business includes both longer tailed liability business and shorter tailed hull business. The negative IBNRs are due to overestimated case reserves, mainly on the German business and 2011 includes the effects of an outwards proportional contract in inwards non-proportional business.

Property & Casualty Reinsurance – Motor, non-proportional

Incurred claims and allocated claim adjustment expenses, net of reinsurance

Download

USD millions

 

Reporting year

Accident year

 

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

Thereof IBNR

2007

 

401

414

402

369

366

380

379

372

379

376

85

2008

 

 

399

469

412

317

331

329

322

318

313

52

2009

 

 

 

360

373

270

272

257

262

256

254

78

2010

 

 

 

 

313

277

272

259

251

244

236

43

2011

 

 

 

 

 

387

423

408

405

391

385

114

2012

 

 

 

 

 

 

321

337

317

303

305

101

2013

 

 

 

 

 

 

 

414

435

438

423

123

2014

 

 

 

 

 

 

 

 

392

424

420

161

2015

 

RSI

 

 

 

 

 

 

 

375

396

217

2016

 

 

 

 

 

 

 

 

 

 

455

345

Total

 

 

 

 

 

 

 

 

 

 

3 563

1 319

Cumulative paid claims and allocated claim adjustment expenses, net of reinsurance

Download

USD millions

 

Reporting year

Accident year

 

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2007

 

9

49

83

114

136

152

175

186

192

199

2008

 

 

16

83

121

126

148

165

176

186

195

2009

 

 

 

0

37

55

66

79

93

103

113

2010

 

 

 

 

6

22

48

66

82

98

111

2011

 

 

 

 

 

–8

20

55

77

101

115

2012

 

 

 

 

 

 

3

24

49

84

109

2013

 

 

 

 

 

 

 

7

80

142

187

2014

 

 

 

 

 

 

 

 

5

58

101

2015

 

RSI

 

 

 

 

 

 

 

–1

33

2016

 

 

 

 

 

 

 

 

 

 

8

Total

 

 

 

 

 

 

 

 

 

 

1 171

 

 

 

 

 

 

 

 

 

 

 

 

All liabilities before 2007

2 557

Liabilities for claims and claim adjustment expenses, net of reinsurance

4 949

Average annual percentage payout of incurred claims by age, net of reinsurance

Download

Years

1

2

3

4

5

6

7

8

9

10

Motor, non-proportional (RSI)

1.3%

11.8%

10.2%

7.1%

6.5%

5.1%

4.8%

3.4%

2.2%

1.9%

Claims development in non-proportional motor business is considered long-tailed as it is dominated by liability exposures leading to bodily injury claims which pay out for the lifetime of the claimant. For accident year 2011, negative claims paid in the first year are due to the commutation of external retrocession on acquired retroactive business. In line with the Group’s policy, cash flows under loss portfolio transfers are reported through claims paid. For longer tail lines and depending on the business volume written, timing of cash flows can lead to net inward payments across the whole portfolio in the first development year of the contract for some accident years.

Property & Casualty Reinsurance – Specialty

Incurred claims and allocated claim adjustment expenses, net of reinsurance

Download

USD millions

 

Reporting year

Accident year

 

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

Thereof IBNR

2007

 

1 686

1 690

1 897

1 773

1 771

1 718

1 700

1 682

1 678

1 672

20

2008

 

 

2 021

2 025

1 952

1 906

1 860

1 829

1 811

1 818

1 804

31

2009

 

 

 

1 489

1 621

1 442

1 375

1 347

1 325

1 308

1 292

21

2010

 

 

 

 

1 198

1 210

1 158

1 136

1 117

1 084

1 064

27

2011

 

 

 

 

 

1 259

1 239

1 157

1 078

1 125

1 123

42

2012

 

 

 

 

 

 

933

991

1 012

996

997

52

2013

 

 

 

 

 

 

 

1 065

994

956

923

79

2014

 

 

 

 

 

 

 

 

1 085

1 081

983

165

2015

 

RSI

 

 

 

 

 

 

 

1 208

1 195

369

2016

 

 

 

 

 

 

 

 

 

 

1 266

840

Total

 

 

 

 

 

 

 

 

 

 

12 319

1 646

Cumulative paid claims and allocated claim adjustment expenses, net of reinsurance

Download

USD millions

 

Reporting year

Accident year

 

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2007

 

151

587

1 101

1 273

1 369

1 437

1 489

1 518

1 539

1 553

2008

 

 

246

800

1 280

1 423

1 534

1 597

1 640

1 667

1 692

2009

 

 

 

204

639

884

983

1 055

1 111

1 148

1 171

2010

 

 

 

 

193

455

642

741

817

931

952

2011

 

 

 

 

 

162

549

760

860

909

946

2012

 

 

 

 

 

 

122

430

661

750

806

2013

 

 

 

 

 

 

 

145

407

585

693

2014

 

 

 

 

 

 

 

 

172

402

581

2015

 

RSI

 

 

 

 

 

 

 

133

379

2016

 

 

 

 

 

 

 

 

 

 

141

Total

 

 

 

 

 

 

 

 

 

 

8 914

 

 

 

 

 

 

 

 

 

 

 

 

All liabilities before 2007

661

Liabilities for claims and claim adjustment expenses, net of reinsurance

4 066

Average annual percentage payout of incurred claims by age, net of reinsurance

Download

Years

1

2

3

4

5

6

7

8

9

10

Specialty (RSI)

13.9%

28.1%

21.7%

9.2%

5.8%

5.2%

2.6%

1.7%

1.3%

0.8%

This category includes credit and surety business, which was adversely affected by the financial crisis in 2007–2008. The category also includes several individual large losses on marine, aviation and space lines, including the Costa Concordia claims event.

Corporate Solutions

Incurred claims and allocated claim adjustment expenses, net of reinsurance

Download

USD millions

 

Reporting year

Accident year

 

2012

2013

2014

2015

2016

Thereof IBNR

Cumulative number of reported claims (in nominals)

2012

 

1 288

1 219

1 140

1 107

1 104

132

12 449

2013

 

 

1 586

1 570

1 502

1 419

218

25 257

2014

 

 

 

1 817

1 759

1 691

377

19 959

2015

 

RSI

 

 

1 875

2 038

660

14 164

2016

 

 

 

 

 

1 999

1 246

8 060

Total

 

 

 

 

 

8 251

2 633

79 889

Cumulative paid claims and allocated claim adjustment expenses, net of reinsurance

Download

USD millions

 

Reporting year

Accident year

 

2012

2013

2014

2015

2016

2012

 

182

553

708

801

889

2013

 

 

271

670

936

1 092

2014

 

 

 

270

821

1 110

2015

 

RSI

 

 

349

905

2016

 

 

 

 

 

373

Total

 

 

 

 

 

4 369

 

 

 

 

 

 

 

All liabilities before 2012

716

Liabilities for claims and claim adjustment expenses, net of reinsurance

4 598

Average annual percentage payout of incurred claims by age, net of reinsurance

Download

Years

1

2

3

4

5

Corporate Solutions (RSI)

17.5%

30.4%

16.6%

9.7%

8.0%

Claims incurred increased due to general volume growth from accident year 2012 to 2016. Change in claim counts in 2013 and 2014 relate mostly to agriculture business written in 2013, leading to high claim counts in those years. Adverse experience for accident year 2015 is mainly due to a few large loss developments in casualty.

Life & Health Reinsurance, long tail


Incurred claims and allocated claim adjustment expenses, net of reinsurance

Download

USD millions

 

Reporting year

Accident year

 

2008

2009

2010

2011

2012

2013

2014

2015

2016

Thereof IBNR

Cumulative number of reported claims (in nominals)

2008

 

91

88

88

87

90

103

106

102

109

14

3 068

2009

 

 

152

157

149

150

150

173

171

173

21

4 105

2010

 

 

 

188

190

185

209

209

221

195

27

4 451

2011

 

 

 

 

215

224

284

296

310

288

48

6 105

2012

 

 

 

 

 

266

356

359

383

348

47

8 298

2013

 

 

 

 

 

 

480

471

469

434

78

10 269

2014

 

 

 

 

 

 

 

470

428

407

108

11 021

2015

 

RSI

 

 

 

 

 

 

401

433

183

11 825

2016

 

 

 

 

 

 

 

 

 

419

317

2 327

Total

 

 

 

 

 

 

 

 

 

2 806

843

61 469

Cumulative paid claims and allocated claim adjustment expenses, net of reinsurance

Download

USD millions

 

Reporting year

Accident year

 

2008

2009

2010

2011

2012

2013

2014

2015

2016

2008

 

5

21

38

49

57

64

68

72

76

2009

 

 

7

36

55

68

77

84

90

98

2010

 

 

 

8

40

62

80

93

104

114

2011

 

 

 

 

19

61

99

123

144

164

2012

 

 

 

 

 

27

86

138

176

208

2013

 

 

 

 

 

 

37

120

183

244

2014

 

 

 

 

 

 

 

32

107

195

2015

 

RSI

 

 

 

 

 

 

35

105

2016

 

 

 

 

 

 

 

 

 

13

Total

 

 

 

 

 

 

 

 

 

1 217

 

 

 

 

 

 

 

 

 

 

 

All liabilities before 2008

272

Liabilities for Life and Health claims and claim adjustment expenses, net of reinsurance

1 861

Average annual percentage payout of incurred claims by age, net of reinsurance

Download

Years

1

2

3

4

5

6

7

8

9

Life & Health Reinsurance, long tail (RSI)

6.1%

16.6%

14.6%

10.0%

7.1%

5.8%

4.1%

4.1%

3.7%

In the reporting year 2013, the Group significantly strengthened IBNR claims liabilities in Australia for some lines of business. In addition, for 2009, 2013 and 2014 the effect of business volume increase is discernible as well.

Reconciliation of gross liability for unpaid claims and claim adjustment expenses

The following table reconciles the Group´s net outstanding liabilities to the gross liabilities for unpaid claims and claim adjustment expenses.

The net outstanding liabilities correspond to the total liabilities for unpaid claims and claim adjustment expenses, net of reinsurance for each disaggregation category.

Other short duration contract lines includes reserves for business that is not material to the Group and where accident year information is not available. For Life & Health Reinsurance, in certain markets, cedents do not provide sufficient information to reinsurers to split claims incurred and claims paid by accident year. This is based on existing market practice. For these markets, an assessment of available information from other sources was made along with investigating approximations that could be used to provide claims development information by accident year. However, these alternate sources and estimates, based on currently available data and methods, could not be used to generate meaningful and representative accident year information and therefore have been excluded from disclosure. Other short duration contract lines also contain other treaties from Property & Casualty Reinsurance and Corporate Solutions which could not be allocated on a consistent basis to disaggregation categories or specific accident years.

Unallocated reinsurance recoverable on unpaid claims includes reinsurance recoverable which cannot be allocated on a reasonable basis to disaggregation categories used to present claims development information

For details on consolidation please refer to Note 2.

For the year ended 31 December 2016

Download

USD millions

2016

Net outstanding liabilities

 

Property & Casualty Reinsurance:

 

Property

5 454

Liability, proportional

5 752

Liability, non-proportional

9 687

Accident & Health

4 652

Motor, proportional

2 951

Motor, non-proportional

4 949

Specialty

4 066

Corporate Solutions

4 598

Life & Health Reinsurance, long tail

1 861

Total net undiscounted outstanding liabilities excluding other short duration contract lines and before unallocated reinsurance recoverable

43 970

Discounting impact on (Life & Health Reinsurance) short duration contracts

–241

Impact of acquisition accounting

–704

Total net discounted outstanding liabilities excluding other short duration contract lines and before unallocated reinsurance recoverable

43 025

Other short duration contract lines

2 327

Unallocated reinsurance recoverable on unpaid claims

–394

Total net discounted outstanding short duration liabilities

44 958

 

 

Allocated reinsurance recoverables on unpaid claims

 

Property & Casualty Reinsurance:

 

Property

378

Liability, proportional

426

Liability, non-proportional

364

Accident & Health

247

Motor, proportional

87

Motor, non-proportional

237

Specialty

286

Corporate Solutions

5 156

Life & Health Reinsurance, long tail

 

Consolidation

–4 087

Impact of acquisition accounting

–157

Other short duration contract lines

417

Unallocated reinsurance recoverable on unpaid claims

394

Total short duration reinsurance recoverable on outstanding liabilities

3 748

 

 

Exclusions

 

Unallocated claim adjustment expenses

824

Long duration contracts

7 825

Total other reconciling items

8 649

 

 

Total unpaid claims and claim adjustment expenses

57 355

Discounting information

The following disclosure covers the discounting impact for the disaggregation categories included in the claims development information. Discounting information for Life & Health Reinsurance long tail as of 31 December:

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USD millions

2015

2016

1

Interest accretion is shown as part of “Life and health benefits” in the income statement.

Carrying amount of discounted claims

1 158

1 117

Aggregate amount of the discount

–281

–241

Interest accretion1

24

27

Range of interest rates

2.5%–3.7%

3.1%–3.6%

Please refer to Note 1 for more details about the Group´s discounting approach for unpaid claims and claim adjustment expenses.