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Annual Report 2018

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 years ended 31 December is presented as follows:

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USD millions

2017

2018

1

The Group revised its methodology for determining the prior-year net claims and claim adjustment expenses development on a certain health business. Comparative information for 2017 has been amended accordingly.

Balance as of 1 January

57 355

66 795

Reinsurance recoverable

−4 044

−4 458

Deferred expense on retroactive reinsurance

−211

−240

Net balance as of 1 January

53 100

62 097

 

 

 

Incurred related to:

 

 

Current year1

28 827

27 457

Prior year1

−534

42

Amortisation of deferred expense on retroactive reinsurance and impact of commutations

−5

−41

Total incurred

28 288

27 458

 

 

 

Paid related to:

 

 

Current year

−8 859

−9 344

Prior year

−14 263

−15 501

Total paid

−23 122

−24 845

 

 

 

Foreign exchange

2 653

−1 748

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

1 178

709

Net balance as of period end

62 097

63 671

 

 

 

Reinsurance recoverable

4 458

3 606

Deferred expense on retroactive reinsurance

240

169

Balance as of period end

66 795

67 446

Prior-year development

Non-life claims development during 2018 on prior years includes favourable development on property and specialty, partially offset by adverse development on casualty. The favourable development on property and specialty is mainly related to the natural catastrophe events in North America and wildfires in California that occurred in 2017. Casualty includes adverse development for motor and liability lines of business.

For the life and health business, the adverse claims development on prior-year business was across a number of lines of business, in particular the individual life and disability portfolios in the US and the group disability portfolio in Australia. This was partially offset by positive experience in other regions, including Continental Europe and Asia. 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 for the years ended 31 December is shown below:

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USD millions

2017

2018

1

The Group revised its methodology for determining the prior-year net claims and claim adjustment expenses development on a certain health business. Comparative information for 2017 has been amended accordingly.

Line of business:

 

 

Property

–555

–340

Casualty

–67

428

Specialty

–178

–295

Life and health1

266

249

Total

–534

42

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 2018, the Group carried net reserves for US asbestos and environmental liabilities equal to USD 1 860 million. During 2018, the Group incurred net losses of USD 141 million and paid net against these liabilities of USD 111 million. Incurred claims include a settlement with one cedent on reported asbestos and environmental claims.

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.

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 and for Life & Health Reinsurance long‑tail, the Group discloses data for ten accident years and reporting periods.

The Corporate Solutions business segment was created in 2012. Therefore, seven accident years and reporting periods are 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

For reinsurance business, 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. For reinsurance business, case reserves and estimated IBNR reported by cedents to the Group have been accounted for as case reserves in previous years. For the year-end 2018, IBNR reported by cedents are presented together with the Group's own estimate of IBNR as IBNR in the claims development tables. Reserving for insurance business is performed similarly, except that the Group estimates case reserves as well. 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”).

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 on disability contracts 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

 

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

thereof IBNR

2009

 

2 341

2 356

2 237

2 194

2 172

2 170

2 168

2 170

2 141

2 148

12

2010

 

 

2 521

2 469

2 338

2 357

2 441

2 483

2 590

2 563

2 523

29

2011

 

 

 

4 303

4 354

4 168

4 222

4 174

4 169

4 187

4 224

13

2012

 

 

 

 

2 696

2 524

2 324

2 281

2 252

2 236

2 237

8

2013

 

 

 

 

 

3 130

3 146

2 972

2 887

2 865

2 849

1

2014

 

 

 

 

 

 

2 732

2 572

2 393

2 361

2 358

4

2015

 

 

 

 

 

 

 

2 830

2 764

2 594

2 562

67

2016

 

 

 

 

 

 

 

 

3 902

3 627

3 333

40

2017

 

RSI

 

 

 

 

 

 

 

6 032

5 937

598

2018

 

 

 

 

 

 

 

 

 

 

4 656

2 604

Total

 

 

 

 

 

 

 

 

 

 

32 827

3 376

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

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USD millions

 

Reporting year

Accident year

 

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

2009

 

559

1 608

1 924

2 026

2 076

2 097

2 107

2 118

2 103

2 110

2010

 

 

389

1 511

1 805

1 914

2 110

2 263

2 405

2 448

2 461

2011

 

 

 

671

2 394

3 197

3 635

3 917

4 018

4 138

4 159

2012

 

 

 

 

239

1 591

1 981

2 101

2 144

2 164

2 175

2013

 

 

 

 

 

541

1 999

2 504

2 698

2 758

2 780

2014

 

 

 

 

 

 

464

1 708

2 089

2 218

2 262

2015

 

 

 

 

 

 

 

467

1 654

2 172

2 338

2016

 

 

 

 

 

 

 

 

636

2 210

2 842

2017

 

RSI

 

 

 

 

 

 

 

980

3 672

2018

 

 

 

 

 

 

 

 

 

 

634

Total

 

 

 

 

 

 

 

 

 

 

25 433

 

 

 

 

 

 

 

 

 

 

 

 

All liabilities before 2009

 

 

 

 

 

 

 

 

 

 

139

Liabilities for claims and claim adjustment expenses, net of reinsurance

7 533

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)

17.4%

48.6%

17.0%

6.2%

3.8%

2.2%

2.4%

0.9%

–0.1%

0.3%

The liability for unpaid claims and claim adjustment expenses for property in Property & Casualty Reinsurance shows positive development on most recent accident 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 2017 accident year claims incurred are higher due to natural catastrophes, mainly stemming from cyclone Debbie, hurricanes Harvey, Irma and Maria in the Americas, the two earthquakes in Mexico and the wildfires in California. The 2018 accident year claims incurred are lower than 2017 but include a higher level of natural catastrophes than 2012 to 2016.

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

 

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

thereof IBNR

2009

 

726

861

980

937

932

910

921

930

926

880

38

2010

 

 

835

982

921

901

897

901

889

854

829

82

2011

 

 

 

639

696

720

668

625

621

598

584

77

2012

 

 

 

 

519

603

559

530

503

505

487

71

2013

 

 

 

 

 

727

750

757

752

757

747

135

2014

 

 

 

 

 

 

994

984

996

980

969

277

2015

 

 

 

 

 

 

 

1 264

1 312

1 397

1 467

606

2016

 

 

 

 

 

 

 

 

1 709

1 737

1 759

899

2017

 

RSI

 

 

 

 

 

 

 

1 964

2 072

1 483

2018

 

 

 

 

 

 

 

 

 

 

1 898

1 714

Total

 

 

 

 

 

 

 

 

 

 

11 692

5 382

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

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USD millions

 

Reporting year

Accident year

 

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

2009

 

-60

88

241

365

478

586

635

682

717

720

2010

 

 

28

159

317

408

516

612

661

681

707

2011

 

 

 

2

107

180

249

335

381

399

428

2012

 

 

 

 

13

115

182

240

294

328

364

2013

 

 

 

 

 

14

126

232

347

418

493

2014

 

 

 

 

 

 

23

157

291

400

546

2015

 

 

 

 

 

 

 

34

209

400

627

2016

 

 

 

 

 

 

 

 

46

223

497

2017

 

RSI

 

 

 

 

 

 

 

50

252

2018

 

 

 

 

 

 

 

 

 

 

52

Total

 

 

 

 

 

 

 

 

 

 

4 686

 

 

 

 

 

 

 

 

 

 

 

 

All liabilities before 2009

 

 

 

 

 

 

 

 

 

 

908

Liabilities for claims and claim adjustment expenses, net of reinsurance

7 914

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)

1.4%

14.7%

14.9%

13.0%

12.7%

9.8%

5.5%

4.2%

3.6%

0.3%

The increase in the incurred losses for accident years 2013 to 2018 is driven by volume increases of business being written. The increases in the incurred losses in reporting year 2018 for accident years 2015 to 2017 are driven by US business.

In line with the Group‘s policy, cash flows under loss portfolio transfers are reported through claims paid. For longer‑tailed 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

 

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

thereof IBNR

2009

 

509

520

426

425

385

351

327

313

311

304

27

2010

 

 

521

436

400

375

354

333

324

311

315

39

2011

 

 

 

401

430

467

426

382

349

336

332

56

2012

 

 

 

 

329

347

308

280

259

251

241

59

2013

 

 

 

 

 

406

388

353

298

270

252

89

2014

 

 

 

 

 

 

432

437

405

362

342

146

2015

 

 

 

 

 

 

 

1 754

1 793

1 762

1 787

199

2016

 

 

 

 

 

 

 

 

585

540

524

250

2017

 

RSI

 

 

 

 

 

 

 

494

508

326

2018

 

 

 

 

 

 

 

 

 

 

450

428

Total

 

 

 

 

 

 

 

 

 

 

5 055

1 619

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

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USD millions

 

Reporting year

Accident year

 

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

2009

 

–14

12

32

55

93

155

178

186

195

202

2010

 

 

1

11

35

52

87

104

123

158

160

2011

 

 

 

1

9

65

111

138

145

168

181

2012

 

 

 

 

–4

11

35

53

84

106

136

2013

 

 

 

 

 

–2

11

36

59

82

118

2014

 

 

 

 

 

 

–2

8

40

73

118

2015

 

 

 

 

 

 

 

0

89

193

345

2016

 

 

 

 

 

 

 

 

13

145

106

2017

 

RSI

 

 

 

 

 

 

 

–2

18

2018

 

 

 

 

 

 

 

 

 

 

–1

Total

 

 

 

 

 

 

 

 

 

 

1 383

 

 

 

 

 

 

 

 

 

 

 

 

All liabilities before 2009

 

 

 

 

 

 

 

 

 

 

5 179

Liabilities for claims and claim adjustment expenses, net of reinsurance

8 851

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%

7.0%

7.3%

8.8%

11.1%

10.3%

8.2%

5.9%

1.8%

2.3%

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 2009 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‑tailed 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

 

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

thereof IBNR

2009

 

347

370

347

342

338

329

324

317

311

310

24

2010

 

 

274

226

231

220

217

219

211

206

202

24

2011

 

 

 

228

248

245

236

239

234

234

230

28

2012

 

 

 

 

324

334

319

310

306

300

298

33

2013

 

 

 

 

 

344

351

338

328

321

318

48

2014

 

 

 

 

 

 

302

335

327

316

305

61

2015

 

 

 

 

 

 

 

434

432

410

400

75

2016

 

 

 

 

 

 

 

 

592

626

621

202

2017

 

RSI

 

 

 

 

 

 

 

733

767

354

2018

 

 

 

 

 

 

 

 

 

 

723

376

Total

 

 

 

 

 

 

 

 

 

 

4 174

1 225

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

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USD millions

 

Reporting year

Accident year

 

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

2009

 

31

136

192

216

234

247

253

258

262

265

2010

 

 

25

84

115

130

138

145

149

156

158

2011

 

 

 

48

120

142

152

161

165

175

177

2012

 

 

 

 

77

177

203

219

229

238

242

2013

 

 

 

 

 

54

139

180

203

216

224

2014

 

 

 

 

 

 

30

103

145

173

190

2015

 

 

 

 

 

 

 

62

138

190

223

2016

 

 

 

 

 

 

 

 

74

178

271

2017

 

RSI

 

 

 

 

 

 

 

96

232

2018

 

 

 

 

 

 

 

 

 

 

98

Total

 

 

 

 

 

 

 

 

 

 

2 080

 

 

 

 

 

 

 

 

 

 

 

 

All liabilities before 2009

 

 

 

 

 

 

 

 

 

 

2 865

Liabilities for claims and claim adjustment expenses, net of reinsurance

4 959

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)

14.9%

25.8%

13.3%

7.1%

4.4%

3.0%

2.4%

2.0%

1.1%

1.0%

The increase in incurred losses from accident year 2015 onwards is due to an increase in the volume of workers‘ compensation written on a proportional basis. The 2009 and prior accident years include the run-off of business written by entities acquired as part of the acquisition of General Electric Insurance Solutions during 2006. This business which generally had a longer payment pattern was not renewed.

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

 

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

thereof IBNR

2009

 

650

646

711

736

723

719

721

719

718

716

–5

2010

 

 

591

652

691

697

695

697

697

695

695

–1

2011

 

 

 

998

994

965

922

925

924

922

914

–23

2012

 

 

 

 

1 487

1 477

1 461

1 449

1 440

1 438

1 435

28

2013

 

 

 

 

 

1 554

1 528

1 535

1 509

1 502

1 497

14

2014

 

 

 

 

 

 

1 996

1 959

1 958

1 941

1 931

–2

2015

 

 

 

 

 

 

 

1 916

1 916

1 920

1 924

25

2016

 

 

 

 

 

 

 

 

2 478

2 594

2 644

147

2017

 

RSI

 

 

 

 

 

 

 

2 373

2 391

476

2018

 

 

 

 

 

 

 

 

 

 

2 032

1 149

Total

 

 

 

 

 

 

 

 

 

 

16 179

1 808

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

Download

USD millions

 

Reporting year

Accident year

 

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

2009

 

141

385

585

619

631

682

691

693

696

699

2010

 

 

198

453

537

573

651

660

669

673

676

2011

 

 

 

266

670

852

885

904

913

921

924

2012

 

 

 

 

474

1 104

1 265

1 314

1 345

1 366

1 378

2013

 

 

 

 

 

573

1 170

1 352

1 397

1 428

1 444

2014

 

 

 

 

 

 

738

1 468

1 714

1 790

1 826

2015

 

 

 

 

 

 

 

795

1 440

1 682

1 783

2016

 

 

 

 

 

 

 

 

821

1 816

2 163

2017

 

RSI

 

 

 

 

 

 

 

759

1 526

2018

 

 

 

 

 

 

 

 

 

 

624

Total

 

 

 

 

 

 

 

 

 

 

13 043

 

 

 

 

 

 

 

 

 

 

 

 

All liabilities before 2009

 

 

 

 

 

 

 

 

 

 

322

Liabilities for claims and claim adjustment expenses, net of reinsurance

3 458

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)

32.2%

37.8%

15.2%

4.2%

3.5%

2.4%

1.1%

0.4%

0.4%

0.4%

The increase in the incurred losses from accident year 2010 onwards 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 overstated case reserves, mainly on the German business, and accident year 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

 

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

thereof IBNR

2009

 

375

390

283

284

270

275

269

267

259

261

66

2010

 

 

325

288

283

269

262

255

246

243

245

33

2011

 

 

 

407

445

424

422

407

401

390

416

107

2012

 

 

 

 

332

349

329

313

315

298

307

65

2013

 

 

 

 

 

432

454

457

440

427

432

70

2014

 

 

 

 

 

 

408

441

436

435

428

88

2015

 

 

 

 

 

 

 

388

409

445

441

118

2016

 

 

 

 

 

 

 

 

470

585

549

199

2017

 

RSI

 

 

 

 

 

 

 

579

611

276

2018

 

 

 

 

 

 

 

 

 

 

489

392

Total

 

 

 

 

 

 

 

 

 

 

4 179

1 414

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

Download

USD millions

 

Reporting year

Accident year

 

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

2009

 

1

39

58

70

83

96

107

117

121

125

2010

 

 

5

22

48

67

83

100

113

120

130

2011

 

 

 

-10

20

56

79

103

117

133

144

2012

 

 

 

 

2

25

50

85

111

136

157

2013

 

 

 

 

 

7

85

149

194

220

248

2014

 

 

 

 

 

 

4

60

104

144

187

2015

 

 

 

 

 

 

 

–1

34

92

157

2016

 

 

 

 

 

 

 

 

8

65

127

2017

 

RSI

 

 

 

 

 

 

 

9

59

2018

 

 

 

 

 

 

 

 

 

 

4

Total

 

 

 

 

 

 

 

 

 

 

1 338

 

 

 

 

 

 

 

 

 

 

 

 

All liabilities before 2009

 

 

 

 

 

 

 

 

 

 

2 877

Liabilities for claims and claim adjustment expenses, net of reinsurance

5 718

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)

0.7%

10.4%

10.5%

9.1%

7.0%

6.0%

5.1%

3.1%

2.8%

1.5%

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 an 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-tailed 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

 

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

thereof IBNR

2009

 

1 542

1 673

1 485

1 416

1 384

1 361

1 346

1 330

1 303

1 293

2

2010

 

 

1 229

1 241

1 186

1 160

1 141

1 110

1 088

1 090

1 081

21

2011

 

 

 

1 292

1 270

1 185

1 102

1 148

1 144

1 159

1 152

8

2012

 

 

 

 

959

1 019

1 040

1 021

1 021

1 008

994

15

2013

 

 

 

 

 

1 095

1 021

981

945

935

912

34

2014

 

 

 

 

 

 

1 108

1 100

999

972

956

60

2015

 

 

 

 

 

 

 

1 237

1 219

1 205

1 196

116

2016

 

 

 

 

 

 

 

 

1 286

1 274

1 228

221

2017

 

RSI

 

 

 

 

 

 

 

1 613

1 535

501

2018

 

 

 

 

 

 

 

 

 

 

1 646

1 194

Total

 

 

 

 

 

 

 

 

 

 

11 993

2 172

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

Download

USD millions

 

Reporting year

Accident year

 

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

2009

 

209

659

910

1 011

1 085

1 143

1 181

1 205

1 218

1 230

2010

 

 

197

467

659

759

837

952

973

992

1 004

2011

 

 

 

165

561

778

881

931

967

1 031

1 054

2012

 

 

 

 

127

444

679

770

827

869

903

2013

 

 

 

 

 

148

417

600

710

765

801

2014

 

 

 

 

 

 

173

409

590

688

744

2015

 

 

 

 

 

 

 

135

387

692

853

2016

 

 

 

 

 

 

 

 

143

477

722

2017

 

RSI

 

 

 

 

 

 

 

181

580

2018

 

 

 

 

 

 

 

 

 

 

185

Total

 

 

 

 

 

 

 

 

 

 

8 076

 

 

 

 

 

 

 

 

 

 

 

 

All liabilities before 2009

 

 

 

 

 

 

 

 

 

 

658

Liabilities for claims and claim adjustment expenses, net of reinsurance

4 575

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)

14.2%

28.3%

20.5%

10.1%

5.8%

5.3%

3.5%

1.9%

1.1%

0.9%

This category contains several individual large losses on marine, aviation and space lines, including the Costa Concordia event in accident year 2012. The 2017 accident year claims incurred is higher due to natural catastrophes mainly stemming from hurricanes Harvey, Irma and Maria in the Americas which have reduced in reporting year 2018. The 2018 accident year claims incurred include natural catastrophes and man-made losses.

Corporate Solutions

Incurred claims and allocated claim adjustment expenses, net of reinsurance

Download

USD millions

 

Reporting year

Accident year

 

2012

2013

2014

2015

2016

2017

2018

thereof IBNR

Cumulative number of reported claims (in nominals)

2012

 

1 294

1 223

1 148

1 116

1 112

1 157

1 151

55

12 805

2013

 

 

1 593

1 574

1 504

1 421

1 407

1 408

106

25 901

2014

 

 

 

1 826

1 769

1 700

1 675

1 675

215

21 085

2015

 

 

 

 

1 885

2 052

2 091

2 091

297

17 060

2016

 

 

 

 

 

2 011

2 217

2 165

460

15 959

2017

 

RSI

 

 

 

 

3 005

3 232

864

18 121

2018

 

 

 

 

 

 

 

2 697

1 276

11 667

Total

 

 

 

 

 

 

 

14 419

3 273

122 598

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

Download

USD millions

 

Reporting year

Accident year

 

2012

2013

2014

2015

2016

2017

2018

2012

 

182

554

714

808

896

967

1 000

2013

 

 

272

666

935

1 091

1 158

1 236

2014

 

 

 

271

826

1 117

1 251

1 349

2015

 

 

 

 

350

907

1 293

1 501

2016

 

 

 

 

 

372

1 194

1 421

2017

 

RSI

 

 

 

 

382

1 504

2018

 

 

 

 

 

 

 

416

Total

 

 

 

 

 

 

 

8 427

 

 

 

 

 

 

 

 

 

All liabilities before 2012

 

 

 

 

 

 

 

482

Liabilities for claims and claim adjustment expenses, net of reinsurance

6 474

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

Download

Years

1

2

3

4

5

6

7

Corporate Solutions (RSI)

16.1%

32.1%

15.9%

9.3%

6.1%

5.9%

2.9%

The claims incurred increased due to general volume growth for all accident years. Incurred claims on accident years 2016 and 2017 increased due to large man-made losses as well as adverse prior year development, in particularly in casualty North America. Accident years 2017 and 2018 were significantly impacted by multiple severe large man-made losses, hurricanes in North America and the California wildfires.

Change in claim counts in 2013 and 2014 relate mostly to agriculture business written in 2013, leading to high claim counts in those years. For accident year 2017, a portion of the Accident & Health business from the IHC acquisition moved from assumed reinsurance to direct business which is driving the increase in direct claim counts in that year relative to accident year 2016.

Life & Health Reinsurance, long tail

Incurred claims and allocated claim adjustment expenses, net of reinsurance

Download

USD millions

 

Reporting year

Accident year

 

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

thereof IBNR

Cumulative number of reported claims (in nominals)

2009

 

148

154

146

147

147

169

168

169

163

164

16

4 305

2010

 

 

184

185

181

204

204

216

191

187

190

20

4 722

2011

 

 

 

210

219

277

289

302

281

275

276

29

6 621

2012

 

 

 

 

260

347

350

374

339

341

338

29

9 069

2013

 

 

 

 

 

468

460

458

423

422

424

33

11 528

2014

 

 

 

 

 

 

458

418

398

399

422

51

13 134

2015

 

 

 

 

 

 

 

391

424

409

410

64

15 528

2016

 

 

 

 

 

 

 

 

411

426

413

126

12 106

2017

 

RSI

 

 

 

 

 

 

 

419

424

208

11 126

2018

 

 

 

 

 

 

 

 

 

 

389

297

3 677

Total

 

 

 

 

 

 

 

 

 

 

3 450

873

91 816

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

Download

USD millions

 

Reporting year

Accident year

 

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

2009

 

7

36

54

67

75

83

88

96

102

108

2010

 

 

8

39

61

78

91

102

111

119

125

2011

 

 

 

18

59

96

120

140

160

175

188

2012

 

 

 

 

26

84

134

171

203

225

243

2013

 

 

 

 

 

36

117

178

237

276

302

2014

 

 

 

 

 

 

31

104

190

250

285

2015

 

 

 

 

 

 

 

34

102

181

229

2016

 

 

 

 

 

 

 

 

13

83

152

2017

 

RSI

 

 

 

 

 

 

 

11

72

2018

 

 

 

 

 

 

 

 

 

 

11

Total

 

 

 

 

 

 

 

 

 

 

1 715

 

 

 

 

 

 

 

 

 

 

 

 

All liabilities before 2009

 

 

 

 

 

 

 

 

 

 

230

Liabilities for claims and claim adjustment expenses, net of reinsurance

1 965

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

Download

Years

1

2

3

4

5

6

7

8

9

10

Life & Health Reinsurance, long tail (RSI)

5.5%

16.7%

15.2%

10.9%

7.7%

6.1%

4.6%

4.6%

3.4%

3.7%

In the reporting year 2013, the Group significantly strengthened IBNR claims liabilities in Australia for some lines of business. In addition, for 2013 and 2014 the effect of business volume increases is discernible as well. In 2018 the first year incurred claims are below 2017 due to lower volume in Australia.

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.

For details on consolidation please refer to Note 2.

For the year ended 31 December

Download

USD millions

2018

Net outstanding liabilities

 

Property & Casualty Reinsurance

 

Property

7 533

Liability, proportional

7 914

Liability, non-proportional

8 851

Accident & Health

4 959

Motor, proportional

3 458

Motor, non-proportional

5 718

Specialty

4 575

Corporate Solutions

6 474

Life & Health Reinsurance, long tail

1 965

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

51 447

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

–291

Impact of acquisition accounting

–554

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

50 602

Other short duration contract lines

2 802

Total net discounted outstanding short duration liabilities

53 404

 

 

Allocated reinsurance recoverables on unpaid claims:

 

Property & Casualty Reinsurance

 

Property

571

Liability, proportional

324

Liability, non-proportional

266

Accident & Health

215

Motor, proportional

76

Motor, non-proportional

237

Specialty

594

Corporate Solutions

4 160

Consolidation

–4 113

Impact of acquisition accounting

–111

Other short duration contract lines

649

Total short duration reinsurance recoverable on outstanding liabilities

2 868

 

 

Exclusions:

 

Unallocated claim adjustment expenses

994

Long duration contracts

10 180

Total other reconciling items

11 174

 

 

Total unpaid claims and claim adjustment expenses

67 446

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 was as follows:

Download

USD millions

2017

2018

1

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

Carrying amount of discounted claims

1 262

1 223

Aggregate amount of the discount

–291

–291

Interest accretion1

28

35

Range of interest rates

2.9% –3.6%

3.0% –3.6%

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