Early Reserve Analysis from Conning’s Bill Burns, ACAS

March 13, 2020


Preliminary results show that, in 2019, the property-casualty industry booked $5.7 billion of favorable reserve development, representing 0.9 point of benefit on the calendar-year loss ratio. This marks the 14th consecutive year that the industry has had favorable development from prior accident years. However, the 2019 amount is less than half of the $11.9 billion of favorable development recorded in 2018.

 

Most of the favorable development in 2019 came from workers’ compensation ($7.2 billion) and miscella­neous lines such as auto physical damage, mortgage guaranty, and inland marine ($4.3 billion). However, two major lines of business had significant adverse reserve development: other liability ($3.6 billion) and commercial auto liability ($2.6 billion). Reserve movements for all other lines of business were minimal.

 

Through September 30, 2019, the industry had reported $7.3 billion of favorable development on prior accident years. Therefore, preliminary year-end results suggest that, in the fourth quarter, the industry reversed its position on the losses for prior years by $1.6 billion. It is likely that most of this reversal was in long-tailed lines of business such as other liability, commercial auto, and medical professional liability.

 

Check out our upcoming publications Property-Casualty Forecast & Analysis by Line of Insurance: First Quarter 2020 (April publication) and the forthcoming Strategic Study Property-Casualty Loss Reserves: 2020 edition (June publication) for more reserve insights and analysis. To learn more contact Becky Humphrey at Rebekah.humphrey@conning.com.