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:

USD millions

2018

2019

Balance as of 1 January

66 795

67 446

Reinsurance recoverable

−4 458

−3 606

Deferred expense on retroactive reinsurance

−240

−169

Net balance as of 1 January

62 097

63 671

 

 

 

Incurred related to:

 

 

Current year

27 457

29 338

Prior year

42

2 231

Amortisation of deferred expense on retroactive reinsurance and impact of commutations

−41

−23

Total incurred

27 458

31 546

 

 

 

Paid related to:

 

 

Current year

−9 344

−9 702

Prior year

−15 501

−18 008

Total paid

−24 845

−27 710

 

 

 

Foreign exchange

−1 748

161

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

709

1 302

Net balance as of period end

63 671

68 970

 

 

 

Reinsurance recoverable

3 606

3 732

Deferred expense on retroactive reinsurance

169

168

Reclassified to liabilities held for sale

 

−497

Balance as of period end

67 446

72 373

Prior-year development

Non-life claims development during 2019 on prior accident years is mainly due to adverse development for Casualty impacted by large man-made losses predominantly in North America. Property was impacted by adverse natural catastrophe development in Asia as well as large man-made losses, partly offset by reserves releases from North America natural catastrophe events. Specialty was impacted by large man-made losses and adverse development, partly offset by reserves releases from North America natural catastrophe events.

For life and health lines of business, claims development on prior year business was mainly driven by adverse development for the disability portfolio in Australia, Continental Europe and the US. This was partly offset by positive experience in other regions and lines of business including Canada, Asia, and the UK. Claims development related to prior years for the disability portfolio also includes an element of interest accretion for unpaid claims reported at an estimated present value. Unfavourable claims development for the Australia group disability portfolio is offset by a reduction in profit share reserve.

A summary of prior year net claims and claim adjustment expenses development by lines of business for the years ended 31 December is shown below1:

USD millions

2018

2019

1

Adverse development is shown as positive numbers, and represents a charge to the income statement. Favourable development is shown as negative, and represents a credit to the income statement.

Line of business:

 

 

Property

–340

367

Casualty

428

1 425

Specialty

–295

105

Life and health

249

334

Total

42

2 231

US asbestos and environmental claims exposure

The Groupʼs 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 2019, the Group carried net reserves for US asbestos and environmental liabilities equal to USD 1 584 million. During 2019, the Group incurred net losses of USD 32 million and net paid of USD 308 million in relation to these liabilities.

The net paid losses include a settlement of USD 190 million for late asbestos and environmental reported claims presented by one cedent in Q2 2019.

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 Groupʼs 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. 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

USD millions

 

Reporting year

Accident year

 

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

thereof IBNR

2010

 

2 494

2 447

2 317

2 337

2 422

2 464

2 572

2 544

2 504

2 482

9

2011

 

 

4 311

4 372

4 187

4 242

4 195

4 190

4 208

4 245

4 247

12

2012

 

 

 

2 683

2 512

2 311

2 269

2 240

2 225

2 225

2 219

4

2013

 

 

 

 

3 111

3 128

2 954

2 870

2 846

2 831

2 826

0

2014

 

 

 

 

 

2 719

2 562

2 383

2 351

2 348

2 335

4

2015

 

 

 

 

 

 

2 817

2 753

2 579

2 548

2 508

31

2016

 

 

 

 

 

 

 

3 901

3 632

3 333

3 327

47

2017

 

 

 

 

 

 

 

 

6 024

5 929

5 692

66

2018

 

RSI

 

 

 

 

 

 

 

4 648

5 110

392

2019

 

 

 

 

 

 

 

 

 

 

5 166

2 553

Total

 

 

 

 

 

 

 

 

 

 

35 912

3 118

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

USD millions

 

Reporting year

Accident year

 

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

2010

 

381

1 494

1 785

1 895

2 090

2 242

2 385

2 428

2 442

2 450

2011

 

 

673

2 407

3 215

3 654

3 938

4 039

4 159

4 182

4 196

2012

 

 

 

236

1 584

1 971

2 090

2 133

2 152

2 164

2 172

2013

 

 

 

 

537

1 988

2 489

2 682

2 741

2 762

2 778

2014

 

 

 

 

 

462

1 702

2 081

2 208

2 253

2 269

2015

 

 

 

 

 

 

465

1 646

2 160

2 325

2 401

2016

 

 

 

 

 

 

 

637

2 211

2 840

3 051

2017

 

 

 

 

 

 

 

 

978

3 666

4 754

2018

 

RSI

 

 

 

 

 

 

 

631

3 443

2019

 

 

 

 

 

 

 

 

 

 

915

Total

 

 

 

 

 

 

 

 

 

 

28 429

 

 

 

 

 

 

 

 

 

 

 

 

All liabilities before 2010

 

 

 

 

 

 

 

 

 

 

170

Liabilities for claims and claim adjustment expenses, net of reinsurance

7 653

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

Years

1

2

3

4

5

6

7

8

9

10

Property (RSI)

16.6%

49.7%

17.6%

6.5%

3.9%

2.2%

2.4%

0.9%

0.4%

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 to 2019 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

USD millions

 

Reporting year

Accident year

 

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

thereof IBNR

2010

 

836

982

922

902

898

901

890

856

832

837

69

2011

 

 

640

697

721

668

626

622

596

590

589

62

2012

 

 

 

518

602

558

530

502

511

502

516

61

2013

 

 

 

 

727

749

757

752

756

746

745

108

2014

 

 

 

 

 

993

984

997

986

975

1 010

223

2015

 

 

 

 

 

 

1 260

1 309

1 400

1 473

1 546

390

2016

 

 

 

 

 

 

 

1 705

1 714

1 712

1 815

750

2017

 

 

 

 

 

 

 

 

1 960

2 069

2 210

1 177

2018

 

RSI

 

 

 

 

 

 

 

1 894

2 071

1 459

2019

 

 

 

 

 

 

 

 

 

 

2 703

2 331

Total

 

 

 

 

 

 

 

 

 

 

14 042

6 630

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

USD millions

 

Reporting year

Accident year

 

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

2010

 

29

159

318

409

517

612

662

693

713

732

2011

 

 

3

108

181

250

336

382

416

439

461

2012

 

 

 

13

115

181

240

294

352

387

423

2013

 

 

 

 

14

126

232

347

429

504

558

2014

 

 

 

 

 

23

157

291

429

565

660

2015

 

 

 

 

 

 

34

209

423

652

902

2016

 

 

 

 

 

 

 

46

101

396

662

2017

 

 

 

 

 

 

 

 

50

251

542

2018

 

RSI

 

 

 

 

 

 

 

52

309

2019

 

 

 

 

 

 

 

 

 

 

83

Total

 

 

 

 

 

 

 

 

 

 

5 332

 

 

 

 

 

 

 

 

 

 

 

 

All liabilities before 2010

 

 

 

 

 

 

 

 

 

 

1 117

Liabilities for claims and claim adjustment expenses, net of reinsurance

9 827

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

Years

1

2

3

4

5

6

7

8

9

10

Liability, proportional (RSI)

2.3%

13.0%

14.4%

13.2%

13.1%

10.0%

6.5%

4.9%

3.1%

2.2%

The increase in the incurred losses for accident years 2013 to 2019 is driven by volume increases of business being written. The increases in the incurred losses in reporting year 2019 for accident years 2015 to 2018 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

USD millions

 

Reporting year

Accident year

 

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

thereof IBNR

2010

 

526

440

405

380

359

338

329

314

318

312

31

2011

 

 

403

432

469

428

384

351

344

329

331

42

2012

 

 

 

329

347

307

279

258

248

225

220

49

2013

 

 

 

 

409

390

354

299

274

252

253

67

2014

 

 

 

 

 

434

439

407

364

336

355

118

2015

 

 

 

 

 

 

1 806

1 846

1 815

1 832

1 857

154

2016

 

 

 

 

 

 

 

585

568

594

641

175

2017

 

 

 

 

 

 

 

 

491

508

591

219

2018

 

RSI

 

 

 

 

 

 

 

449

452

298

2019

 

 

 

 

 

 

 

 

 

 

2 412

580

Total

 

 

 

 

 

 

 

 

 

 

7 424

1 733

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

USD millions

 

Reporting year

Accident year

 

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

2010

 

1

12

36

53

88

106

125

149

157

166

2011

 

 

1

10

65

111

138

145

158

172

189

2012

 

 

 

–4

11

35

53

84

99

113

128

2013

 

 

 

 

–2

11

37

59

83

108

132

2014

 

 

 

 

 

–2

8

40

71

99

141

2015

 

 

 

 

 

 

0

92

199

329

480

2016

 

 

 

 

 

 

 

13

208

233

285

2017

 

 

 

 

 

 

 

 

–2

18

47

2018

 

RSI

 

 

 

 

 

 

 

–1

21

2019

 

 

 

 

 

 

 

 

 

 

209

Total

 

 

 

 

 

 

 

 

 

 

1 798

 

 

 

 

 

 

 

 

 

 

 

 

All liabilities before 2010

 

 

 

 

 

 

 

 

 

 

4 063

Liabilities for claims and claim adjustment expenses, net of reinsurance

9 689

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

Years

1

2

3

4

5

6

7

8

9

10

Liability, non-proportional (RSI)

0.8%

7.1%

8.7%

8.6%

9.8%

7.3%

6.5%

6.2%

3.9%

3.0%

The increase in incurred losses for accident year 2015 compared to other years is due to an increase in volume of business written in that year. Accident year 2019 includes an Adverse Development Cover and a Loss Portfolio Transfer written with Corporate Solutions. Liabilities before 2010 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

USD millions

 

Reporting year

Accident year

 

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

thereof IBNR

2010

 

273

225

231

219

216

218

211

206

201

200

22

2011

 

 

228

248

244

236

239

233

233

229

228

26

2012

 

 

 

321

331

316

306

303

297

295

290

29

2013

 

 

 

 

342

349

336

326

318

316

311

44

2014

 

 

 

 

 

300

334

326

314

304

302

56

2015

 

 

 

 

 

 

432

430

408

398

389

64

2016

 

 

 

 

 

 

 

590

625

620

584

141

2017

 

 

 

 

 

 

 

 

731

765

726

238

2018

 

RSI

 

 

 

 

 

 

 

722

810

249

2019

 

 

 

 

 

 

 

 

 

 

799

476

Total

 

 

 

 

 

 

 

 

 

 

4 639

1 345

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

USD millions

 

Reporting year

Accident year

 

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

2010

 

25

84

115

130

138

145

148

156

158

160

2011

 

 

48

120

141

152

161

165

174

177

180

2012

 

 

 

76

174

200

216

226

235

239

243

2013

 

 

 

 

53

137

177

200

214

221

228

2014

 

 

 

 

 

30

102

144

171

189

205

2015

 

 

 

 

 

 

61

136

189

221

240

2016

 

 

 

 

 

 

 

73

177

269

325

2017

 

 

 

 

 

 

 

 

95

232

331

2018

 

RSI

 

 

 

 

 

 

 

97

311

2019

 

 

 

 

 

 

 

 

 

 

111

Total

 

 

 

 

 

 

 

 

 

 

2 334

 

 

 

 

 

 

 

 

 

 

 

 

All liabilities before 2010

 

 

 

 

 

 

 

 

 

 

3 164

Liabilities for claims and claim adjustment expenses, net of reinsurance

5 469

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

Years

1

2

3

4

5

6

7

8

9

10

Accident & Health (RSI)

15.4%

25.3%

13.0%

7.4%

4.4%

3.2%

2.3%

2.0%

1.2%

1.4%

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 2010 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

USD millions

 

Reporting year

Accident year

 

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

thereof IBNR

2010

 

585

646

686

692

690

692

691

690

690

690

0

2011

 

 

989

983

954

911

913

912

911

902

905

–18

2012

 

 

 

1 467

1 457

1 440

1 429

1 420

1 418

1 415

1 415

22

2013

 

 

 

 

1 536

1 511

1 517

1 491

1 485

1 480

1 480

10

2014

 

 

 

 

 

1 975

1 939

1 938

1 922

1 912

1 910

–4

2015

 

 

 

 

 

 

1 902

1 902

1 906

1 910

1 910

10

2016

 

 

 

 

 

 

 

2 475

2 592

2 642

2 644

63

2017

 

 

 

 

 

 

 

 

2 366

2 385

2 371

216

2018

 

RSI

 

 

 

 

 

 

 

2 026

2 061

393

2019

 

 

 

 

 

 

 

 

 

 

2 024

1 088

Total

 

 

 

 

 

 

 

 

 

 

17 410

1 780

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

USD millions

 

Reporting year

Accident year

 

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

2010

 

197

449

533

569

646

655

664

669

671

673

2011

 

 

263

662

842

875

893

903

910

913

916

2012

 

 

 

468

1 089

1 247

1 296

1 327

1 347

1 360

1 369

2013

 

 

 

 

566

1 156

1 336

1 382

1 412

1 427

1 436

2014

 

 

 

 

 

731

1 453

1 696

1 773

1 808

1 828

2015

 

 

 

 

 

 

788

1 428

1 669

1 770

1 814

2016

 

 

 

 

 

 

 

818

1 811

2 158

2 338

2017

 

 

 

 

 

 

 

 

753

1 515

1 847

2018

 

RSI

 

 

 

 

 

 

 

619

1 326

2019

 

 

 

 

 

 

 

 

 

 

651

Total

 

 

 

 

 

 

 

 

 

 

14 198

 

 

 

 

 

 

 

 

 

 

 

 

All liabilities before 2010

 

 

 

 

 

 

 

 

 

 

311

Liabilities for claims and claim adjustment expenses, net of reinsurance

3 523

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

Years

1

2

3

4

5

6

7

8

9

10

Motor, proportional (RSI)

33.3%

37.7%

13.5%

4.5%

3.6%

1.2%

0.9%

0.5%

0.3%

0.2%

The increase in the incurred losses from accident years 2010 to 2016 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 on inwards non-proportional business.

Property & Casualty Reinsurance – Motor, non-proportional

Incurred claims and allocated claim adjustment expenses, net of reinsurance

USD millions

 

Reporting year

Accident year

 

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

thereof IBNR

2010

 

324

288

283

269

262

254

246

242

244

244

31

2011

 

 

406

444

429

427

412

405

393

420

412

105

2012

 

 

 

335

352

331

316

317

300

309

304

58

2013

 

 

 

 

433

455

458

441

427

432

432

62

2014

 

 

 

 

 

408

441

437

435

429

408

72

2015

 

 

 

 

 

 

388

411

446

442

455

96

2016

 

 

 

 

 

 

 

471

588

551

545

154

2017

 

 

 

 

 

 

 

 

580

611

599

210

2018

 

RSI

 

 

 

 

 

 

 

492

532

260

2019

 

 

 

 

 

 

 

 

 

 

1 190

434

Total

 

 

 

 

 

 

 

 

 

 

5 121

1 482

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

USD millions

 

Reporting year

Accident year

 

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

2010

 

5

22

48

67

83

100

113

120

130

138

2011

 

 

-10

20

56

80

104

118

134

144

151

2012

 

 

 

2

25

50

85

111

137

158

170

2013

 

 

 

 

7

84

148

193

219

246

261

2014

 

 

 

 

 

4

60

104

143

187

217

2015

 

 

 

 

 

 

–1

33

92

157

203

2016

 

 

 

 

 

 

 

8

65

126

181

2017

 

 

 

 

 

 

 

 

9

59

126

2018

 

RSI

 

 

 

 

 

 

 

4

36

2019

 

 

 

 

 

 

 

 

 

 

91

Total

 

 

 

 

 

 

 

 

 

 

1 574

 

 

 

 

 

 

 

 

 

 

 

 

All liabilities before 2010

 

 

 

 

 

 

 

 

 

 

2 802

Liabilities for claims and claim adjustment expenses, net of reinsurance

6 349

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

Years

1

2

3

4

5

6

7

8

9

10

Motor, non-proportional (RSI)

1.4%

9.5%

11.1%

9.9%

8.0%

6.5%

4.9%

3.1%

2.9%

3.4%

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 and the increase in incurred losses for accident year 2019 compared to other years is due to an increase in volume of business written.

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

USD millions

 

Reporting year

Accident year

 

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

thereof IBNR

2010

 

1 219

1 231

1 176

1 151

1 131

1 100

1 079

1 080

1 071

1 081

27

2011

 

 

1 285

1 276

1 190

1 107

1 152

1 148

1 164

1 146

1 144

4

2012

 

 

 

940

1 000

1 021

1 002

1 002

990

987

982

11

2013

 

 

 

 

1 086

1 013

973

938

928

906

894

21

2014

 

 

 

 

 

1 098

1 090

990

964

950

954

36

2015

 

 

 

 

 

 

1 232

1 212

1 197

1 189

1 187

61

2016

 

 

 

 

 

 

 

1 280

1 268

1 222

1 226

148

2017

 

 

 

 

 

 

 

 

1 608

1 531

1 400

229

2018

 

RSI

 

 

 

 

 

 

 

1 641

1 730

707

2019

 

 

 

 

 

 

 

 

 

 

1 745

1 084

Total

 

 

 

 

 

 

 

 

 

 

12 343

2 328

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

USD millions

 

Reporting year

Accident year

 

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

2010

 

195

462

653

752

829

944

965

983

995

1 006

2011

 

 

165

559

775

877

927

963

1 027

1 049

1 065

2012

 

 

 

125

441

675

765

821

863

897

916

2013

 

 

 

 

147

415

597

706

760

796

819

2014

 

 

 

 

 

172

406

586

683

739

778

2015

 

 

 

 

 

 

134

385

688

848

951

2016

 

 

 

 

 

 

 

142

475

718

886

2017

 

 

 

 

 

 

 

 

181

579

859

2018

 

RSI

 

 

 

 

 

 

 

184

646

2019

 

 

 

 

 

 

 

 

 

 

276

Total

 

 

 

 

 

 

 

 

 

 

8 202

 

 

 

 

 

 

 

 

 

 

 

 

All liabilities before 2010

 

 

 

 

 

 

 

 

 

 

635

Liabilities for claims and claim adjustment expenses, net of reinsurance

4 776

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

Years

1

2

3

4

5

6

7

8

9

10

Specialty (RSI)

14.2%

27.7%

20.6%

11.0%

6.3%

5.2%

3.4%

1.8%

1.3%

1.0%

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 2019.

Corporate Solutions

Incurred claims and allocated claim adjustment expenses, net of reinsurance

USD millions

 

Reporting year

Accident year

 

2012

2013

2014

2015

2016

2017

2018

2019

thereof IBNR

Cumulative number of reported claims (in nominals)

2012

 

1 299

1 227

1 152

1 120

1 117

1 174

1 155

1 201

49

12 955

2013

 

 

1 597

1 576

1 506

1 422

1 420

1 409

1 383

105

26 173

2014

 

 

 

1 833

1 774

1 704

1 708

1 679

1 608

202

21 507

2015

 

 

 

 

1 888

2 054

2 123

2 093

1 910

243

17 785

2016

 

 

 

 

 

2 013

2 099

2 137

2 124

380

16 806

2017

 

 

 

 

 

 

3 009

3 237

2 987

488

19 928

2018

 

RSI

 

 

 

 

 

2 695

2 621

545

23 430

2019

 

 

 

 

 

 

 

 

2 792

1 500

12 707

Total

 

 

 

 

 

 

 

 

16 626

3 512

151 291

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

USD millions

 

Reporting year

Accident year

 

2012

2013

2014

2015

2016

2017

2018

2019

2012

 

182

556

717

811

900

972

1 005

1 034

2013

 

 

272

667

936

1 092

1 161

1 237

1 285

2014

 

 

 

272

829

1 121

1 264

1 354

1 452

2015

 

 

 

 

350

907

1 303

1 500

1 634

2016

 

 

 

 

 

372

1 140

1 392

1 657

2017

 

 

 

 

 

 

383

1 506

2 112

2018

 

RSI

 

 

 

 

 

415

1 422

2019

 

 

 

 

 

 

 

 

527

Total

 

 

 

 

 

 

 

 

11 123

 

 

 

 

 

 

 

 

 

 

All liabilities before 2012

 

 

 

 

 

 

 

 

457

Liabilities for claims and claim adjustment expenses, net of reinsurance

5 960

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

Years

1

2

3

4

5

6

7

8

Corporate Solutions (RSI)

16.9%

33.7%

17.3%

10.2%

6.2%

5.9%

3.1%

2.5%

For the 2019 reporting year, a Loss Portfolio Transfer to P&C Reinsurance of US liability lines of business reduced reserves by USD 1.2 billion in total across all accident years. Excluding this impact, there was unfavourable prior-year development across all lines of business, in particular US liability, mainly driven by large and medium-sized man-made losses. The impact of this unfavourable development was reduced by recoveries under an Adverse Development Cover with P&C Reinsurance in place for the second half of the year. A recovery in 2019 of USD 0.6 billion under this cover is included in the 2018 accident year above. P&C Reinsurance reports both the Adverse Development Cover and the Loss Portfolio Transfer under accident year 2019 (see ˝Property & Casualty Reinsurance – Liability, non-proportional”).

Life & Health Reinsurance, long tail

Incurred claims and allocated claim adjustment expenses, net of reinsurance

USD millions

 

Reporting year

Accident year

 

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

thereof IBNR

Cumulative number of reported claims (in nominals)

2010

 

184

186

181

204

205

216

191

188

190

195

24

4 827

2011

 

 

210

219

277

289

302

281

275

276

282

31

6 801

2012

 

 

 

260

347

350

374

339

341

338

352

30

9 300

2013

 

 

 

 

468

461

458

424

422

424

447

36

11 881

2014

 

 

 

 

 

458

418

398

400

422

445

44

13 736

2015

 

 

 

 

 

 

392

425

411

412

441

51

16 395

2016

 

 

 

 

 

 

 

412

428

414

443

101

13 571

2017

 

 

 

 

 

 

 

 

420

426

447

149

15 348

2018

 

RSI

 

 

 

 

 

 

 

391

422

182

13 060

2019

 

 

 

 

 

 

 

 

 

 

363

248

4 914

Total

 

 

 

 

 

 

 

 

 

 

3 837

896

109 833

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

USD millions

 

Reporting year

Accident year

 

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

2010

 

8

39

61

78

91

102

111

120

125

131

2011

 

 

18

59

96

120

140

160

175

188

198

2012

 

 

 

26

84

134

171

203

224

242

258

2013

 

 

 

 

36

117

178

236

276

301

323

2014

 

 

 

 

 

31

104

190

250

285

312

2015

 

 

 

 

 

 

34

102

181

229

266

2016

 

 

 

 

 

 

 

13

83

152

204

2017

 

 

 

 

 

 

 

 

11

72

156

2018

 

RSI

 

 

 

 

 

 

 

11

71

2019

 

 

 

 

 

 

 

 

 

 

12

Total

 

 

 

 

 

 

 

 

 

 

1 931

 

 

 

 

 

 

 

 

 

 

 

 

All liabilities before 2010

 

 

 

 

 

 

 

 

 

 

263

Liabilities for claims and claim adjustment expenses, net of reinsurance

2 169

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

Years

1

2

3

4

5

6

7

8

9

10

Life & Health Reinsurance, long tail (RSI)

5.2%

15.6%

15.5%

11.0%

7.9%

6.1%

5.0%

4.5%

3.3%

3.0%

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. The decrease in incurred losses for accident year 2019 is due to the lower volume of business being written 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

USD millions

2019

Net outstanding liabilities

 

Property & Casualty Reinsurance

 

Property

7 653

Liability, proportional

9 827

Liability, non-proportional

9 689

Accident & Health

5 469

Motor, proportional

3 523

Motor, non-proportional

6 349

Specialty

4 776

Corporate Solutions

5 960

Life & Health Reinsurance, long tail

2 169

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

55 415

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

–305

Impact of acquisition accounting

–489

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

54 621

Other short duration contract lines

3 028

Total net discounted outstanding short duration liabilities

57 649

 

 

Allocated reinsurance recoverables on unpaid claims:

 

Property & Casualty Reinsurance

 

Property

674

Liability, proportional

289

Liability, non-proportional

235

Accident & Health

216

Motor, proportional

65

Motor, non-proportional

224

Specialty

551

Corporate Solutions

5 506

Consolidation

–5 360

Impact of acquisition accounting

–92

Other short duration contract lines

618

Total short duration reinsurance recoverable on outstanding liabilities

2 926

 

 

Exclusions:

 

Unallocated claim adjustment expenses

1 111

Long duration contracts

11 184

Total other reconciling items

12 295

 

 

Liabilities reclassified to held for sale

–497

Total unpaid claims and claim adjustment expenses

72 373

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:

USD millions

2018

2019

1

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

Carrying amount of discounted claims

1 223

1 318

Aggregate amount of the discount

–291

–305

Interest accretion1

35

28

Range of interest rates

3.0–3.6%

3.0–3.4%

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