THG 2018 Annual Report

Carried Reserves The table below summarizes the gross, ceded and net reserve for losses and LAE and reconciles to the incurred claims development in WKH IROORZLQJ VHFWLRQ $FFRUGLQJO\ WKH FRPPHUFLDO PXOWLSOH SHULO ZRUNHUV¶ FRPSHQVDWLRQ FRPPHUFLDO DXWRPRELOH OLDELOLW\ OL nes and general liability and umbrella - occurrence presentation includes AIX program business. YEARS ENDED DECEMBER 31, 2018 2017 (in millions) Gross Ceded Net Gross Ceded Net $ 1,206.5 $ (110.8) $ 1,095.7 $ 1,104.9 $ (108.9) $ 996.0 :RUNHUV¶ FRPSHQVDWLRQ 775.9 (183.0) 592.9 757.8 (180.8) 577.0 Commercial automobile liability 433.5 (25.5) 408.0 428.1 (27.6) 400.5 General liability and umbrella - occurrence 534.1 (133.5) 400.6 508.5 (126.2) 382.3 General liability - claims made 245.9 (16.2) 229.7 231.6 (17.9) 213.7 Other lines 400.6 (78.4) 322.2 408.3 (108.8) 299.5 Total Commercial Lines and other 3,596.5 (547.4) 3,049.1 3,439.2 (570.2) 2,869.0 Personal automobile liability 1,514.0 (917.3) 596.7 1,453.8 (878.8) 575.0 Homeowners 158.2 (6.0) 152.2 133.5 (4.4) 129.1 Other personal lines 35.4 (1.9) 33.5 32.0 (1.6) 30.4 Total Personal Lines 1,707.6 (925.2) 782.4 1,619.3 (884.8) 734.5 Total loss and LAE reserves $ 5,304.1 $ (1,472.6) $ 3,831.5 $ 5,058.5 $ (1,455.0) $ 3,603.5 General liability and umbrella - occurrence is primarily comprised of our commercial monoline general liability and umbrella coverages. General liability - claims made is primarily comprised of our commercial professional and management liability lines. Within total Commercial Lines and other, other lines is primarily comprised of marine, surety, miscellaneous commercial property, product liability, voluntary pools, healthcare and fidelity lines. Included in the above table, primarily in other lines, are $57.6 million and $59.4 million of gross asbestos and environmental reserves as of December 31, 2018 and 2017, respectively. Incurred claims development tables )RU WKH IROORZLQJ QHW UHVHUYH FRPSRQHQWV FRPPHUFLDO PXOWLSOH SHULO ZRUNHUV¶ FRPSHQVDWLRQ FRPPHUFLDO DXWRPRELOH OLDELOLW\ general liability and umbrella - occurrence, general liability - claims made, personal automobile liability and homeowners, the Company is presenting incurred claims development tables by accident year. 7KH FRPPHUFLDO PXOWLSOH SHULO ZRUNHUV¶ FRPSHQVDWLRQ FRPPHUFLDO automobile liability and general liability and umbrella - occurrence lines presentation includes AIX program business. In each of these tables, the Company is presenting the number of years for which claims are typically outstanding, which is consistent with the period at which substantially all of the reserve development has emerged based on past history. The tables presented below include cumulative LQFXUUHG ORVV DQG DOORFDWHG ORVV DGMXVWPHQW H[SHQVHV ³$/$(´ FXPXODWLYH SDLG ORVV DQG $/$( DQG ,%15 EDODQF es at December 31, 2018. IBNR includes both incurred but not reported liabilities and expected development on reported claims. In addition, cumulative incurred claim counts are presented as of December 31, 2018 and claim duration is presented in a separate table disclosing the average annual percentage payout of incurred claims by age, net of reinsurance. Claim duration is calculated as an average of paid loss and ALAE divided by incurred loss and ALAE by elapsed year. The incurred claims development tables presented are reconciled to the net carried reserves in the preceding table as of December 31, 2018. 124 THE HANOVER INSURANCE GROUP | 2018 ANNUAL REPORT