2014 Loss Development Triangles
Loss Development Triangle Cautionary Language The information in this financial supplement is for informational purposes only and is current only as of its stated date, which is December 31, 2014. We are under no obligation to and do not expect to update or revise this data, whether as a result of new information, future events or otherwise, even when such new data has been reflected in our filings with the Securities and Exchange Commission. Although the loss payment and loss reporting patterns disclosed here are critical for estimating loss reserve requirements, they are not the only significant considerations PartnerRe uses to establish reserves. The information disclosed here represents a high-level summary of the data we use for our own reserve evaluations. Important details, such as specific loss development expectations for particular contracts, years or events, cannot be developed by analyzing information at the level provided here. Furthermore, in addition to analyzing loss development information, we incorporate additional information, such as pricing and market conditions, in our reserving process. Readers must keep these and the other qualifications more fully described in this report in mind when reviewing this information. This supplement should be read in conjunction with other documents filed by the Company with the Securities and Exchange Commission, including the Company s most recent Annual Report on Form 10K as filed on February 26, 2015. Cautionary Statements Regarding Forward-Looking Statements: Any forward-looking statements contained in this supplement are based upon the Company s current assumptions and expectations concerning future events and financial performance and are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Such statements are subject to significant business, economic and competitive risks and uncertainties that could cause actual results to differ materially from those reflected in such forward-looking statements. PartnerRe s forward-looking statements could be affected by numerous foreseeable and unforeseeable events and developments such as: the occurrence of catastrophic events with a frequency or severity exceeding our assumptions; actual losses and loss expenses exceeding our loss reserves, which are necessarily based on actuarial and statistical projections of ultimate losses; changes in the judicial, legislative or regulatory environments in which we operate; and other factors identified in the Company s filings with the Securities and Exchange Commission, including the Company s Annual report on Form 10K for the year ended December 31, 2014, which are available on the Company s website. The foregoing review of important factors should not be construed as exhaustive. The words believe, anticipate, estimate, project, plan, expect, intend, hope, will likely result or will continue or words of similar impact generally involve forward-looking statements. We caution readers not to place undue reliance on these forward-looking statements, which speak only as of the dates on which they are made. We undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.
2014 Loss Development Triangles Table of Contents 1. Purpose and Scope 2 2. PartnerRe Reserving Process Outline 4 3. Data Definitions 5 4. Reserving Class Descriptions 8 5. Construction of Data Triangles 12 6. Reconciliation to Financial Statements 13 7. Reconciliation to Prior Triangles 15 8. Selected Disclosures from our Annual Report on Form 10K for the Year Ended December 31, 2014 25 9. Acquisition of Paris Re 32 10. Appendices 33 PartnerRe 1
2014 Loss Development Triangles 1. Purpose and Scope We believe our stakeholders can benefit from enhanced data disclosures and an expanded discussion about the level of risk we assume and how we manage that risk. As part of this ongoing effort, we are publishing PartnerRe s Loss Development Triangles. We believe that the information presented in this document will improve the user s understanding of the loss development characteristics of our business and the critical assumptions underlying our reserves. In particular, we believe that the user will gain further insight into the general pattern of loss payment and loss reporting for each of the loss reserving classes in this presentation. The data presented corresponds to around 78% of our Non-Life loss segment reserves at December 31, 2014. The principal data exclusions are data for years that are more than ten years old, data for discontinued lines of business, and data that falls under the AXA reserve agreement (See Section 9 for further information). The AXA reserve agreement represents guarantees of approximately 6% of our outstanding reserves and is one of the biggest contributor to reserves excluded from the triangles. A full reconciliation of the reserves to those presented in our financial statements for the year ended December 31, 2014 is shown in Section 6. The data presented represents losses reported or paid as at December 31, 2014. All data has been converted to U.S. dollars using exchange rates as at December 31, 2014. To provide context for each of the loss reserving classes we also present premiums and total reserves as at December 31, 2014, corresponding to each class. Although we believe that the data presented in this disclosure will aid the understanding of critical assumptions underlying our reserves, the reader should be aware that loss payment and loss reporting patterns are not the only considerations in establishing reserves. We caution that an attempt to evaluate PartnerRe reserves using solely the data presented here could be misleading. The underwriting year data presented in this supplement represents a high level summary of the data we use at PartnerRe for our own reserve evaluations. Important details, such as specific loss development expectations for particular contracts, years or events cannot be developed by analyzing information at this level. Furthermore, in addition to analyzing the loss development information we incorporate additional information, such as pricing and market conditions, in our reserve analysis. Section 2 provides a high level description of our reserving processes. We strongly recommend that the reader refer to the data discussions in Sections 3 and 5 before attempting to use the data for further analysis. As will be explained in Section 2, PartnerRe relies primarily on underwriting year triangulations for our internal reserve analysis. We believe this approach is commonly used by reinsurers when analyzing their data. As will be explained in Section 3, we believe that the use of underwriting year data provides the user with a better basis for estimating future claims for PartnerRe than accident year data. For these reasons, we continue to only include underwriting year data in this year s Loss Development Triangles. PartnerRe 2
2014 Loss Development Triangles We caution strongly against the mechanical application of standard actuarial methodologies to project ultimate losses and reserves using the triangles presented in this report. Mechanical application of reserving methods will fail to take into account several important facts including: (i) (ii) (iii) For several classes pricing and loss trend conditions have changed dramatically over time (e.g. the deterioration in U.S. casualty pricing subsequent to the hard market underwriting years of 2002-2006 and the impact of the financial crisis on claims trends in underwriting years to ). To the extent that users employ methodologies that rely on a priori loss ratio estimates (e.g. Bornhuetter-Ferguson Methods described in Section 8) extrapolation of past loss ratios to current conditions will be misleading; Several reserving classes are affected by the presence of large losses. Loss development for years with a sizeable component of large losses may be different from those years unaffected by large losses; The composition of the portfolio has changed over time for several reserving classes. Trends derived from a high level summary of loss development data cannot capture all of these changes. Section 4 gives a high level summary of key changes in the composition of the reserves. PartnerRe 3
2014 Loss Development Triangles 2. PartnerRe Reserving Process Outline At PartnerRe we establish our loss reserves after reviewing the actuarial estimates of ultimate liabilities corresponding to the earned exposure of each underwriting year. Actuarial estimates include both a midpoint estimate as well as a range around indicated midpoint estimates. In addition to the actuarial estimates, we also consider other specific uncertainties that may not be reflected in the actuarial estimates. As discussed in our SEC disclosures, PartnerRe s reserve estimates are typically in excess of the midpoint of the range of actuarial estimates. Our actuaries analyze loss development trends based on underwriting year loss development triangles for each of our internal loss reserving classes. We have several hundred reserving classes for which we estimate loss reserves. These several hundred classes have been consolidated into the 16 reserving classes we publish. Our actuaries use a number of loss reserving methods to project claims for each of our reserving classes (see Section 8). While information on loss development patterns derived from analysis of the underwriting year triangles is an input into the loss development methods, our actuaries incorporate additional information such as pricing loss ratio information and benchmark loss development patterns. For Catastrophe business, ultimate losses for large events are estimated on a cedant specific basis using exposure modeling techniques in the initial period after a loss event with refinements being made as cedant specific information is received from brokers and clients. In general, for a given large event, we will establish RCRs and ACRs on a cedant specific basis. In addition, we will establish a bulk IBNR to cover additional aggregate development on large events plus claims arising from smaller, attritional losses. Using these methods, we develop ultimate loss ratios for each underwriting year in each reserving class. These underwriting year loss ratios are adjusted, where necessary, for the presence or absence of unusually large claims to establish loss ratios appropriate for the earned portion of each underwriting year s exposure. Our ultimate loss estimates for earned exposure are the product of the selected ultimate loss ratios multiplied by the earned premium of each underwriting year. Reserves in our financial statements are the difference between estimated ultimate liabilities earned and total cumulative paid claims. For further information on our reserving methods, please refer to Section 8. We have several actuaries in each of our operating business units who collate reserving data and estimate loss reserves. They have local knowledge of business practices and market conditions for the business they analyze. Each quarter the business unit actuaries produce reserve recommendations for their unit. The reserve recommendations are independently reviewed by actuarial peers at the corporate head office and the conclusions are presented for review and approval to the management IBNR committee. The IBNR committee has overall responsibility for establishing reserves for the Group. PartnerRe 4
2014 Loss Development Triangles 3. Data Definitions The triangles present loss data for PartnerRe Non-Life business. 3.1. Gross vs. Net Data All data presented in this supplement is gross, or before recoveries from any reinsurance retrocessions. PartnerRe uses retrocession to a very limited degree and therefore, reinsurance recoverables are a small percentage of our gross claim reserves. In total, our ceded loss reserve for non-life business represents approximately 2% of our gross reserves. In general we believe that the loss development patterns derived from an analysis of the gross data will, for most classes, be representative of the loss development patterns for net data. 3.2. Selection of Reserving Classes We have grouped the data into loss reserving classes based on the similarity of loss development characteristics. In general loss reserving classes correspond to lines of business although some lines are further subdivided. Furthermore, within each reserving class presented here, we generally have not distinguished the types of reinsurance (e.g. treaty proportional, treaty excess, facultative) and the only geographical distinction is between North American and Non-North American business. An exception to this general rule is the Non-North American motor portfolio where we believe the underlying development patterns between Proportional and Non-proportional business are so materially different that aggregating the data would not provide meaningful representation of the underlying development patterns. 3.3 Year and Accident Year We have provided loss development triangles by underwriting year only. As explained in Section 2, at PartnerRe we rely primarily on underwriting year triangulations for our internal reserve analysis. We believe that this approach is commonly used by reinsurers when analyzing their data. Further, we believe that ultimate loss and reserve indications based on underwriting year triangles may be more reliable, as explained below. As a reinsurer our key difficulty in constructing accident year triangles is that for substantial portions of our business, the loss information we receive from cedants does not include details on the date of individual losses. In many markets the convention is that loss amounts for a treaty are advised on what is known as a bordereau or aggregate basis. In such loss presentations details on individual losses other than perhaps large event losses are not available. As a result we are not able to establish the date of most individual losses. Bordereau reporting is used predominantly with proportional treaties. An added complication is that market conventions on the individual detail on claims reported by cedants vary by market and have changed over time. Thus, the use of accident year triangles to project reserves for PartnerRe presents several challenges. Whereas the underwriting year triangles represent data reported to us by our cedants, the construction of accident year triangles requires several assumptions and allocation procedures. To the extent that the assumptions underlying these estimation procedures do not reflect actual historical loss incidence patterns, then patterns displayed by accident year triangles may be misleading. It should be noted that although we believe that ultimate loss and reserve indications based on underwriting year triangles may be more reliable, accident year triangles would provide a more consistent basis for comparison with any benchmark loss development patterns based on PartnerRe 5
2014 Loss Development Triangles accident year data. In particular, in an underwriting year triangulation a significant component of the loss development during the second and third development period of an underwriting year represents losses occurring in future accident periods. This is due to the fact that exposure for an underwriting year is not typically fully earned until three years after the beginning of an underwriting year, and in some cases even longer. For users familiar with accident year data patterns, particularly for shorter tail lines, this loss development may appear somewhat strange as losses are expected to report relatively quickly. The following method can be used to develop reserve indications using the underwriting year triangles: (i) (ii) projecting total ultimate claims for each underwriting year using standard actuarial approaches (e.g. see methods in Section 8) and adjusting the total ultimate liabilities for each underwriting year to liabilities corresponding to the earned portion of each underwriting year by multiplying with the ratio of earned to ultimate premiums. Internally, we use similar approaches that are further refined by generally estimating large losses separately, as the incidence of large losses and their effect on loss ratios is more variable over the premium earning period. Definitions of accident year and underwriting year can be found in the Appendix. 3.4. Development Period For each loss-reserving class we have provided data for the 10 most recent underwriting years at annual evaluation points. The maximum period over which loss development patterns can be estimated through analysis of the data provided is 10 years. We believe that for most classes this provides a reasonable period to evaluate the loss reporting patterns. However, we caution that for some classes, loss reporting could continue beyond the 10-year development period presented here. In these cases the user who wishes to use the data to develop reporting patterns may need to make appropriate assumptions regarding loss reporting beyond 10 years. Furthermore, for several classes paid loss development patterns continue beyond ten years. 3.5. Paid and Reported Definitions Paid losses include losses recorded as paid to our cedants as well as allocated loss adjustment expenses. Reported losses refer to paid losses plus cedant reported case reserves. Cedant reported case reserves refer to reserves recorded based on notices from our cedants. To the extent that we establish additional case reserves (ACRs) over and above those advised by our cedants, these are not included in the reported loss triangles. They are, however, included in the total reserves for the class. PartnerRe 6
2014 Loss Development Triangles 3.6. Premiums For the underwriting year loss triangles we have provided the estimated ultimate written premium for each underwriting year. We have also provided the portion of that premium that was earned by December 31, 2014. Our loss reserves relate to future loss payments in respect of exposure corresponding to the earned portion of the premium for each underwriting year (in other words, losses that have occurred, whether reported or not). Our unearned premium reserves form a provision for future payments in respect of the unearned exposure of each underwriting year (in other words losses from policies incepting during the underwriting year but occurring after December 31, 2014). 3.7. Reserves For each loss reserve class we have provided a statement of the reserves held for the ten most recent underwriting years as at December 31, 2014. Reserves include cedant s reported case reserves (RCRs), additional case reserves (ACRs) and Incurred But Not Reported losses (IBNR). We show the reserves recorded on our balance sheet at December 31, 2014. As with last year s disclosure, we have also provided these reserves for each loss reserve class by underwriting year. PartnerRe 7
2014 Loss Development Triangles 4. Reserving Class Descriptions Loss triangles are provided for various reserving classes. The following brief descriptions provide background commentary on the underlying business composition in each reserving class and describe how this has changed over the time period displayed in the triangles. 4.1. Agriculture Around 85% to 95% of the premium volume in this class is derived from proportional treaties covering crop business. The remaining business consists of non-proportional crop business, proportional and non-proportional livestock, hail, bloodstock, and aquaculture business. Business is written both in the U.S. and outside the U.S. The proportion of U.S. business over the period covered in the triangles is around 60% to 70%. 4.2. Aviation/Space Around 70% to 80% of the premium in this class represent proportional treaties, about 5% to 10% represent non-proportional treaties with the remaining being facultative business. The underlying risks cover general aviation (written primarily on a treaty basis), airline and products liability (both of which comprises the majority of the facultative business), and to a smaller degree space and war risks. Most of this class contains business covered on a risk-attaching basis. 4.3. Credit & Surety Around 70% of premiums in this class represents Credit business with the remaining being Surety. About 90% of the Credit & Surety premiums are written through proportional treaties. U.S. business consists of Surety exposures only. Premiums from U.S. business represent around 10% to 15% of the total for the class. The Non-U.S. business is predominantly European credit business written on a proportional basis. Cedants are mostly specialist monoline credit insurers. Loss reporting for the proportional credit business tends to be short-tailed. We have shown paid, reported and ultimate loss amounts as of December 31, 2014 for a Spanish Housing Surety loss in the Large loss section. Paid and reported amounts on this loss are included in the Credit & Surety triangles and could distort the loss development pattern of this reserving class. There were no paid or reported amounts for this loss as of December 31,. 4.4. Marine This class of business includes Marine and Energy offshore business. Approximately 85% of the Marine only treaties cover mostly cargo and hull risks with a 15% exposure to marine liability business. Energy Offshore exposure contributed a very small proportion of the premium for this class prior to 2005; from 2005 to 2014 Energy offshore increased to around 60% of the premium for this class of business. Almost all of the Energy off-shore business is written on a risk attaching basis. On average over the last ten underwriting years, about half of the Marine and Energy offshore exposures were written on a proportional treaty basis but closer to 60% in the more recent underwriting years. Facultative exposure represented less than 10% of premium in 2005 but this has increased to around 25% since 2006. PartnerRe 8
2014 Loss Development Triangles 4.5. Engineering Approximately 95% of the premium in this class is proportional. Underlying risks covered include standard engineering construction/erection risks and machinery breakdown risks. About 30% to 40% of the business is written on risks in Europe with the remainder being written evenly throughout the world. Almost all of the business in this class is written on a risk-attaching basis. 4.6. Energy Onshore From underwriting years 2005-2014, the premium for this class has averaged about 45% for the facultative business, 50% for proportional treaty exposures and about 5% for nonproportional treaties. For all treaty exposures, when comparing the mix of business in and 2014 compared to previous years, European risks has increased to about 70% from around 50% and U.S. risks have decreased to about 25% from around 50% with remaining risks from the rest of the world. Most of this class contains business covered on a risk-attaching basis. 4.7. Global (Non-U.S.) Property Approximately 60% to 65% of the premium in this class is derived from proportional property treaties. The proportional property treaties cover mostly standard property risks in Europe, Asia, and Latin America. Between 5% and 10% of the proportional treaty premium relates to proportional specialty risks. Around 20% of the premium in this class is derived from non-proportional per risk property business mostly on standard risks. Underlying risks for the non-proportional per risk component are predominantly in Europe and most of it is written on a loss-occurring basis. Around 15% to 20% of the premium in this class relates to facultative risks. Underlying risks are written on a worldwide basis including the U.S. 4.8. Global (Non-U.S.) Casualty The premium in this class is predominantly derived from European proportional and nonproportional treaties although it also includes a small volume of facultative business. The non- North American casualty risks cover a variety of risks including personal injury/accident, general third party liability, industrial liability, pharmaceutical/chemical, directors & officers (D&O), professional indemnity and medical malpractice risks. The personal injury/accident business in this class is generally shorter-tailed than the remainder of the portfolio. Specialty casualty risks (e.g. D&O and professional liability) have been steadily growing since 2005 from around 50% to about 60% of the premium for this class of business in the recent underwriting years. As the percentage of the book has shifted towards specialty casualty risks, the percentage of business written on a loss-occurring basis has diminished. Specialty casualty risks are written predominantly on a risk-attaching or claims-made basis. 4.9. Global (Non-U.S.) Motor Proportional Historically, European business was concentrated in Germany, Austria and the Netherlands but starting in underwriting year, UK has the biggest exposure with around 35% to 45%, Germany, Austria and the Netherlands combine for another 20% to 25% with the remaining premium being written in Asia Pacific and the rest of the world. A little more than half of this class contains business covered on a loss-occurring basis, with the remainder being business on a risk-attaching basis. PartnerRe 9
2014 Loss Development Triangles 4.10. Global (Non-U.S.) Motor Non-proportional This class contains non-proportional motor treaties mainly in Europe. This business is typically much longer-tailed than the proportional European motor business and it is the slowest reporting of all Non-U.S. classes. France and the UK have the longest reporting and payment patterns. The proportion of business written in France is about 10%. The UK business was around 10-20% in 2005 -. It subsequently increased to about 25-30% in underwriting years & and to 50% in underwriting year 2014. Most of this class contains business covered on a loss-occurring basis. 4.11. North America Standard Casualty This class is comprised of excess of loss and proportional treaty reinsurance. Proportional business has steadily increased from around 15-20% in underwriting years 2005 and 2006 to over 50% in more recent underwriting years. The underlying coverage for this class is dominated by general liability. Of this class, approximately 80% in underwriting years to and 60% in underwriting year 2014 is written on a loss-occurring basis, while the remainder is written on a risk-attaching basis. With the addition of the Paris Re run-off business, for underwriting years 2006-, 18% to 20% of the business was written in Canada. However this has dropped off significantly to under 15% since underwriting year. 4.12. North America Specialty Casualty Premium in this class consists of around 40% non-proportional treaty reinsurance for older underwriting years and around 25% for the three most recent underwriting years. The remainder of the business is on a proportional basis. D&O liability coverage represents approximately 25% of all business in this class and medical malpractice and other professional liability covers represent around 20%. Umbrella liability represents approximately 25% of the business with the remainder from various other liability classes. The majority of business in this class is written on a risk-attaching basis. Approximately 50% of the underlying primary coverage is written on a claims-made basis. 4.13. North America Multiline Historically, proportional treaty reinsurance represents approximately 50% of the premium in the class but the proportion has increased to around 80% in underwriting year 2014. The remainder of the business is non-proportional in nature. The treaties cover composite portfolios, typically from regional clients comprising casualty, property and automobile business. While the composition of each treaty varies, the aggregate composition of this class has been approximately 5% to 10% automobile, around 50% casualty and the remainder property with some small variations in these percentages by underwriting year. 4.14. North America Motor This class contains mostly proportional treaties with around 80% of the premium. The vast majority of these treaties are written on a risk-attaching basis. Personal auto (with a significant component of non-standard) makes up around 60% of the business. The remainder of the business is commercial auto. The majority of the business is ceded program business originally written by various Managing General Agents. Canada historically makes up over 20% for most underwriting years but is around 5% to 10% of the premium written in this class in underwriting years to 2014. PartnerRe 10
2014 Loss Development Triangles 4.15. North America Property Around 65% of the premium volume in the class is derived from proportional and the remaining from non-proportional treaties. Treaties cover mainly standard commercial property risks. About half of these treaties are written on a risk-attaching basis and half on a loss-occurring basis. Historically, Canada makes up between 35%-40% of the premium written in this class but this has reduced to around 15%-20% in the more recent underwriting years. 4.16. Catastrophe The premium in this class is for catastrophe business written on a worldwide basis. Around 40-50% of the catastrophe premium relates to U.S. exposures. Almost all catastrophe business is written on a non-proportional basis. PartnerRe 11
2014 Loss Development Triangles 5. Construction of Data Triangles 5.1. Commuted Treaties and Contracts If there are payments and reserves for certain contracts that have been commuted by PartnerRe these would not be included in the triangles. 5.2. Currency Exchange Rates We write business in various currencies so the underlying data relates to several currencies. All data has been converted to U.S. dollars using December 31, 2014 exchange rates. As data has been converted using constant exchange rates for every evaluation period, fluctuations in exchange rates over the time period presented in the statistics have no impact on the loss development patterns. 5.3 Large Event / Catastrophe Losses Paid and reported loss amounts included in the triangles and related to significant loss events / catastrophes are provided. The loss amounts are gross of any retrocession recoveries and are consistent with the loss data in the triangles. Premium data provided with the triangles is gross of any retrocession and includes any reinstatement premiums associated with the loss events. Event losses are shown by underwriting year and decomposed into the main reserving classes they affect. We also provide ultimate loss amounts as of December 31, 2014 in the same format. PartnerRe 12
2014 Loss Development Triangles PartnerRe Ltd. Group Loss Development Triangles as of 31 December 2014 Year Loss Development Amounts in USD Millions 6. Reconciliation to Financial Statements The following table provides a reconciliation of the data presented in the triangles to our financial statements. Reconciliation of Loss Triangles to SEC Form 10K (1) Gross Paid Loss and ALAE from Loss Development Triangles 17,409.9 (2) Gross Reported Loss and ALAE from Loss Development Triangles 20,517.9 (3) (2) - (1) = Gross Case Reserves for UYs 2005-2014 excluding ULAE 3,108.0 (4) Gross Case Reserves for UYs 2004 and prior excluding ULAE as at 31 December 2014 712.7 (5) Gross Case Reserves for other items and discontinued lines, as at 31 December 2014 66.3 (6) Gross Case Reserves for Paris Re UWYs 2005 and Prior, as at 31 December 2014 204.2 (7) ULAE as at 31 December 2014 144.8 (8) Non-Life Case Reserves as at December 31, : (3) + (4) + (5) + (6) + (7) 4,236.0 (9) Case Reserve at 31 December 2014, per SEC Form 10K 4,236.0 (10) Additional Case Reserves as at 31 December 2014 per SEC Form 10K (a) Corresponding to triangles shown 202.3 (b) For UYs 2004 and prior 48.0 (c) For other items and discontinued lines (0.0) (d) For Paris Re UWYs 2005 and Prior, as at 31 December 2014 3.7 (e) = (10a) + (10b) + (10c) + (10d) 254.0 (11) IBNR as at 31 December 2014 per SEC Form 10K (a) Corresponding to triangles shown 4,331.1 (b) For UYs 2004 and prior 335.5 (c) For other items and discontinued lines 187.7 (d) Gross IBNR reserves for Paris Re UWYs 2005 and Prior, as at 31 December 2014 401.7 (e) = (11a) + (11b) + (11c) + (11d) 5,256.0 (12) Loss Reserves: (9) + (10e) + (11e) 9,746.0 (13) gross loss reserve as at 31 December 2014 per SEC Form 10K 9,746.0 Notes: Paris Re Outstanding Reserves for UWYs 2005 and Prior = (6) + (10d) + (11d) 609.6 Reserves Guaranteed under the AXA Reserve Agreement, as at 31 December 2014, per SEC form 10K 581.2 The difference relates to reserves from UWYs 2005 and prior that are not covered by the AXA Reserve Guarantee (reserves for losses with accident dates 2006 and subsequent) 28.4 PartnerRe 13
2014 Loss Development Triangles In the above reconciliation, due to the December acquisition of Paris Re and the reserve agreement, as described in Section 9, we have included additional steps in the reconciliation to account for the portion of loss reserves represented by underwriting years 2005 and prior. Around 95% of the reserves for those years are guaranteed by AXA. PartnerRe 14
2014 Loss Development Triangles 7. Reconciliation to Prior Triangles In the tables below we provide a reconciliation of the cumulative paid and reported loss amounts as of December 31, shown in this year s underwriting year triangles (the second to last diagonal) to the last diagonal of the triangles published last year. The difference between these two diagonals is decomposed into foreign exchange rate differences and commutations and other. Included within commutations and other are non-commutation differences between the current triangles and those published last year. These include: Inclusion of all cash calls in the current triangles. Previously a small amount of cash calls from Global were excluded. A cash call is a reinsurance contract provision, common in proportional contracts, which allows a cedant to make claim and receive immediate payment for a large loss without waiting for the usual periodic payment procedures to occur. Reserving class re-segmentation exercise carried out in 2014 for Canada resulted in a small paid and reported loss re-class between reserving classes. Exclusion of all ACR from the current triangles. Previously a small amount of ACR from Canada were included. As described in Section 5.1, commuted contracts, if any, would have been removed from the triangles. If these commutations did occur between December 31, and December 31, 2014 they would generate differences between the current triangles and those published last year. As stated in Section 5.2, all loss amounts have been converted from original currency to U.S. dollars using December 31, 2014 exchange rates. The difference in exchange rates between December 31, and December 31, 2014 also generates differences in the loss amounts. PartnerRe 15
Paid 2005 Reported 2005 Paid 2005 Reported 2005 PartnerRe Ltd. Group Loss Development Triangles as of December 31, 2014 Year Loss Development Amounts in USD Thousands Reconciliation of Prior Year Diagonal Agriculture as Published This Year Foreign Commutations 71,189 68,355 68,355 (2,834) 0 135,977 133,127 133,127 (2,850) 0 151,949 147,795 147,795 (4,154) 0 294,414 288,122 288,122 (6,291) 0 226,007 220,639 220,639 (5,368) 0 93,668 90,678 90,678 (2,990) 0 201,583 198,719 198,719 (2,864) 0 242,694 238,866 238,866 (3,828) 0 13,515 12,705 12,831 (810) 126 1,430,995 1,399,005 1,399,131 (31,990) 126 as Published This Year Foreign Commutations 71,231 68,394 68,394 (2,837) 0 136,000 133,148 133,148 (2,852) 0 152,242 148,062 148,062 (4,180) 0 294,837 288,517 288,517 (6,320) 0 226,768 221,361 221,361 (5,407) 0 95,083 91,926 91,926 (3,158) 0 202,759 199,844 199,844 (2,916) 0 252,058 247,938 247,938 (4,120) 0 16,790 15,761 15,887 (1,029) 126 1,447,770 1,414,951 1,415,077 (32,819) 126 Aviation as Published This Year Foreign Commutations 97,425 95,129 95,129 (2,296) (0) 129,818 127,235 127,235 (2,583) 0 141,120 138,474 138,474 (2,645) 0 104,684 102,621 102,621 (2,063) 0 119,364 116,270 116,270 (3,094) 0 82,509 80,036 80,036 (2,472) 0 69,915 68,643 68,643 (1,272) 0 41,583 41,047 43,547 (536) 2,500 17,828 17,799 17,799 (29) 0 804,245 787,254 789,754 (16,991) 2,500 as Published This Year Foreign Commutations 106,746 103,894 103,894 (2,853) (0) 138,522 135,657 135,657 (2,865) 0 159,342 156,115 156,115 (3,227) 0 128,281 125,837 125,837 (2,444) 0 136,047 132,345 132,345 (3,703) 0 107,273 103,759 103,759 (3,514) 0 91,860 89,524 89,524 (2,336) 0 65,492 64,353 66,853 (1,139) 2,500 21,329 21,133 21,133 (196) 0 954,895 932,617 935,117 (22,278) 2,500 16
Paid 2005 Reported 2005 Paid 2005 Reported 2005 PartnerRe Ltd. Group Loss Development Triangles as of December 31, 2014 Year Loss Development Amounts in USD Thousands Reconciliation of Prior Year Diagonal Credit and Surety as Published This Year Foreign Commutations 97,910 88,507 89,392 (9,403) 885 158,871 143,614 145,458 (15,256) 1,844 207,613 188,156 189,610 (19,457) 1,454 318,218 288,934 289,716 (29,284) 782 95,500 87,296 87,477 (8,203) 181 86,554 79,797 80,026 (6,757) 229 111,468 101,120 101,348 (10,347) 228 95,504 86,124 86,251 (9,379) 127 5,032 4,515 4,515 (518) 0 1,176,669 1,068,065 1,073,793 (108,605) 5,729 as Published This Year Foreign Commutations 102,160 92,344 93,229 (9,816) 885 168,402 152,151 153,995 (16,251) 1,844 225,682 204,605 206,059 (21,077) 1,454 349,682 317,999 318,798 (31,683) 799 112,490 103,320 103,144 (9,170) (177) 103,916 96,125 96,413 (7,791) 288 135,919 123,447 123,674 (12,472) 228 177,312 160,846 160,984 (16,465) 138 57,680 51,828 51,828 (5,851) 0 1,433,243 1,302,666 1,308,125 (130,576) 5,459 Marine as Published This Year Foreign Commutations 86,097 83,454 83,454 (2,642) 0 134,362 130,415 130,415 (3,947) 0 143,896 139,698 139,698 (4,197) 0 225,555 222,029 222,033 (3,527) 4 158,255 156,141 157,050 (2,114) 909 137,618 134,715 135,767 (2,903) 1,051 76,391 74,516 74,516 (1,875) 0 49,020 47,526 47,526 (1,494) (0) 6,643 6,124 6,200 (519) 76 1,017,837 994,618 996,659 (23,219) 2,041 as Published This Year Foreign Commutations 88,353 85,637 85,637 (2,717) 0 142,721 138,476 138,476 (4,246) 0 158,689 154,240 154,240 (4,449) 0 249,081 245,072 245,076 (4,009) 4 189,334 186,962 187,871 (2,371) 909 204,063 200,461 201,512 (3,602) 1,051 145,075 142,344 142,344 (2,732) 0 92,166 89,614 89,614 (2,552) 0 19,383 18,139 18,214 (1,244) 76 1,288,865 1,260,943 1,262,983 (27,922) 2,041 17
Paid 2005 Reported 2005 Paid 2005 Reported 2005 PartnerRe Ltd. Group Loss Development Triangles as of December 31, 2014 Year Loss Development Amounts in USD Thousands Reconciliation of Prior Year Diagonal Engineering as Published This Year Foreign Commutations 82,677 78,273 78,273 (4,403) 0 108,568 100,936 100,936 (7,632) (0) 125,911 119,381 119,381 (6,530) (0) 61,972 57,967 57,967 (4,005) 0 57,167 54,150 54,206 (3,017) 56 61,093 61,323 61,325 230 1 27,049 25,363 26,048 (1,686) 685 13,776 12,504 13,715 (1,272) 1,211 656 581 581 (75) 0 538,869 510,479 512,434 (28,390) 1,954 as Published This Year Foreign Commutations 94,082 89,331 89,331 (4,751) 0 129,823 120,599 120,602 (9,224) 2 169,934 161,280 161,280 (8,655) (0) 79,413 74,058 74,058 (5,355) 0 88,585 84,164 84,220 (4,421) 56 127,595 125,392 125,393 (2,203) 1 59,281 55,301 55,986 (3,981) 685 45,714 41,980 43,192 (3,734) 1,211 12,727 11,682 11,682 (1,045) 0 807,156 763,786 765,743 (43,369) 1,957 Energy Onshore as Published This Year Foreign Commutations 84,267 83,781 83,781 (486) 0 58,593 58,056 58,056 (537) 0 76,808 74,934 74,934 (1,875) 0 60,490 60,247 60,247 (242) 0 74,673 73,037 73,037 (1,636) 0 53,304 53,051 53,051 (253) 0 16,514 16,662 16,737 147 75 10,995 10,941 12,018 (55) 1,078 197 196 196 (0) 0 435,842 430,905 432,058 (4,937) 1,153 as Published This Year Foreign Commutations 85,296 84,810 84,810 (486) 0 60,087 59,541 59,541 (547) 0 79,529 77,641 77,641 (1,888) 0 64,483 64,208 64,208 (274) 0 84,087 82,388 82,388 (1,698) 0 81,203 80,878 80,878 (324) 0 48,253 49,241 49,316 988 75 34,067 33,790 34,868 (277) 1,078 2,140 2,091 2,091 (49) 0 539,144 534,589 535,742 (4,555) 1,153 18
Paid 2005 Reported 2005 Paid 2005 Reported 2005 PartnerRe Ltd. Group Loss Development Triangles as of December 31, 2014 Year Loss Development Amounts in USD Thousands Reconciliation of Prior Year Diagonal Global (Non-U.S.) Property as Published This Year Foreign Commutations 325,976 301,047 301,047 (24,929) 0 387,345 354,649 354,649 (32,696) 0 459,811 422,455 422,455 (37,356) (0) 388,056 358,043 358,332 (30,013) 290 461,177 418,573 418,659 (42,604) 86 402,792 368,315 368,602 (34,477) 287 333,866 310,076 312,055 (23,790) 1,979 165,649 151,978 154,149 (13,671) 2,171 (792) (720) 1,966 72 2,686 2,923,880 2,684,415 2,691,915 (239,465) 7,499 as Published This Year Foreign Commutations 330,266 304,876 304,897 (25,390) 21 398,982 365,726 365,787 (33,256) 61 474,106 435,990 435,990 (38,116) (0) 407,027 375,466 375,755 (31,561) 290 501,162 454,379 454,465 (46,783) 86 461,643 422,289 422,576 (39,354) 287 422,288 393,067 395,046 (29,221) 1,979 279,027 257,017 259,188 (22,010) 2,171 101,595 95,567 98,252 (6,028) 2,686 3,376,096 3,104,375 3,111,956 (271,720) 7,581 Global (Non-U.S.) Casualty as Published This Year Foreign Commutations 57,373 51,495 51,495 (5,878) (0) 137,029 128,536 128,536 (8,493) 0 163,126 152,002 152,002 (11,124) 0 181,780 175,091 175,091 (6,689) 0 153,555 148,235 148,235 (5,319) 0 49,543 46,636 46,636 (2,907) (0) 21,226 19,061 19,142 (2,165) 81 15,126 13,768 13,768 (1,359) 0 1,391 1,261 1,261 (130) 0 780,148 736,086 736,166 (44,063) 81 as Published This Year Foreign Commutations 88,192 80,069 80,069 (8,123) 0 203,029 190,044 189,804 (12,985) (240) 235,266 218,995 219,006 (16,271) 11 292,403 279,322 279,013 (13,081) (309) 255,709 243,173 242,881 (12,536) (292) 108,230 100,772 100,505 (7,458) (267) 68,506 61,270 61,357 (7,236) 87 66,193 59,075 59,075 (7,119) 0 25,733 22,869 22,869 (2,864) 0 1,343,261 1,255,588 1,254,578 (87,672) (1,010) 19
Paid 2005 Reported 2005 Paid 2005 Reported 2005 PartnerRe Ltd. Group Loss Development Triangles as of December 31, 2014 Year Loss Development Amounts in USD Thousands Reconciliation of Prior Year Diagonal Global (Non-U.S.) Motor PP as Published This Year Foreign Commutations 76,517 68,692 68,692 (7,824) 0 122,722 113,908 113,908 (8,814) 0 135,886 125,282 125,282 (10,605) 0 132,666 125,190 125,190 (7,475) 0 145,883 136,723 136,723 (9,161) 0 104,030 95,473 95,473 (8,557) 0 49,937 44,210 44,210 (5,727) 0 74,002 65,999 65,999 (8,003) 0 21,189 18,895 18,895 (2,293) 0 862,832 794,373 794,373 (68,459) 0 as Published This Year Foreign Commutations 80,892 72,567 72,572 (8,325) 5 128,455 119,339 119,339 (9,116) 1 143,843 132,533 132,534 (11,309) 0 141,576 133,291 133,291 (8,286) 0 160,055 149,701 149,701 (10,354) 0 117,644 107,757 107,759 (9,887) 2 62,189 55,101 55,101 (7,088) 0 103,879 92,671 92,671 (11,207) 0 40,737 36,640 36,640 (4,097) 0 979,270 899,601 899,609 (79,670) 8 Global (Non-U.S.) Motor NP as Published This Year Foreign Commutations 14,402 13,720 13,720 (682) 0 17,123 16,317 16,317 (806) 0 14,757 14,333 14,333 (423) 0 18,910 17,708 17,708 (1,202) 0 7,574 7,228 7,228 (346) 0 3,571 3,309 3,309 (262) 0 2,049 1,910 1,910 (139) 0 1,032 984 984 (48) 0 286 254 254 (32) 0 79,704 75,763 75,763 (3,941) 0 as Published This Year Foreign Commutations 33,889 31,514 31,514 (2,375) 0 40,557 37,895 37,895 (2,663) 0 29,345 27,872 27,872 (1,474) 0 33,612 31,271 31,271 (2,341) 0 17,461 16,302 16,302 (1,159) 0 9,372 8,468 8,468 (903) 0 6,879 6,276 6,276 (602) 0 7,966 7,270 7,270 (696) 0 3,070 2,753 2,753 (316) 0 182,150 169,621 169,621 (12,529) 0 20
Paid 2005 Reported 2005 Paid 2005 Reported 2005 PartnerRe Ltd. Group Loss Development Triangles as of December 31, 2014 Year Loss Development Amounts in USD Thousands Reconciliation of Prior Year Diagonal NA Casualty Standard as Published This Year Foreign Commutations 44,762 44,725 46,845 (37) 2,120 44,910 44,664 45,151 (246) 487 33,595 33,039 34,560 (556) 1,522 26,194 26,081 26,081 (113) 0 12,299 12,248 15,413 (50) 3,165 9,688 9,670 12,715 (18) 3,045 5,870 5,870 5,922 0 52 1,496 1,496 1,515 0 18 1 1 1 0 0 178,814 177,794 188,203 (1,020) 10,409 as Published This Year Foreign Commutations 52,982 52,936 56,013 (46) 3,077 51,817 51,519 52,310 (298) 790 39,957 39,251 41,251 (706) 2,000 38,139 37,856 37,813 (283) (43) 20,197 19,919 28,145 (278) 8,226 28,087 27,440 29,256 (648) 1,816 13,304 13,300 14,398 (4) 1,098 7,306 7,306 8,189 (0) 884 445 445 445 0 0 252,236 249,973 267,821 (2,264) 17,848 NA Casualty Specialty as Published This Year Foreign Commutations 142,190 141,997 139,877 (192) (2,120) 149,030 148,975 148,488 (55) (487) 194,664 194,313 192,792 (351) (1,522) 133,189 133,128 133,128 (61) 0 80,403 79,896 77,057 (506) (2,839) 58,318 57,989 55,271 (329) (2,717) 17,507 17,492 17,441 (14) (52) 3,218 3,215 3,196 (4) (18) 9 9 9 (0) 0 778,527 777,015 767,259 (1,513) (9,756) as Published This Year Foreign Commutations 158,761 158,185 151,646 (577) (6,539) 170,103 169,966 168,677 (137) (1,289) 233,177 232,767 230,594 (410) (2,173) 185,162 185,082 185,039 (80) (43) 126,176 125,100 117,550 (1,076) (7,549) 115,108 114,625 111,017 (484) (3,608) 68,439 68,302 66,966 (137) (1,336) 16,924 16,838 15,954 (86) (884) 1,697 1,696 1,696 (0) 0 1,075,547 1,072,561 1,049,140 (2,986) (23,421) 21
Paid 2005 Reported 2005 Paid 2005 Reported 2005 PartnerRe Ltd. Group Loss Development Triangles as of December 31, 2014 Year Loss Development Amounts in USD Thousands Reconciliation of Prior Year Diagonal NA Multiline as Published This Year Foreign Commutations 71,709 71,246 71,246 (463) 0 51,417 50,933 50,933 (484) 0 64,452 64,099 64,099 (352) 0 44,103 43,621 43,621 (481) 0 36,522 36,030 36,030 (492) 0 31,187 30,616 30,616 (571) 0 44,266 43,330 43,330 (936) 0 36,976 36,604 36,604 (372) 0 12,626 12,531 12,531 (95) 0 393,258 389,011 389,011 (4,247) 0 as Published This Year Foreign Commutations 75,377 74,910 74,910 (467) 0 56,219 55,733 55,733 (486) 0 70,123 69,758 69,758 (365) 0 47,040 46,558 46,558 (482) 0 41,958 41,460 41,460 (497) 0 40,131 39,550 39,550 (581) 0 54,358 53,339 53,283 (1,019) (56) 48,346 47,786 47,786 (561) 0 25,825 25,508 25,508 (318) 0 459,378 454,602 454,547 (4,775) (56) NA Motor as Published This Year Foreign Commutations 73,986 72,613 72,613 (1,373) 0 70,861 68,934 68,934 (1,927) 0 50,770 49,742 49,742 (1,029) 0 65,761 64,767 64,767 (994) 0 90,506 89,927 89,927 (580) 0 60,823 60,386 60,386 (437) 0 52,454 52,220 52,220 (234) 0 11,157 11,157 11,157 0 0 1,652 1,652 1,652 0 0 477,970 471,397 471,397 (6,572) 0 as Published This Year Foreign Commutations 75,491 74,026 74,017 (1,465) (9) 78,214 75,736 75,616 (2,478) (120) 58,827 57,251 57,084 (1,576) (167) 74,494 72,921 72,900 (1,573) (22) 101,580 100,636 100,458 (944) (177) 71,194 70,407 70,299 (787) (108) 61,929 61,534 61,534 (396) 0 19,258 19,208 19,208 (50) 0 2,677 2,673 2,673 (4) 0 543,664 534,392 533,788 (9,272) (604) 22
Paid 2005 Reported 2005 Paid 2005 Reported 2005 PartnerRe Ltd. Group Loss Development Triangles as of December 31, 2014 Year Loss Development Amounts in USD Thousands Reconciliation of Prior Year Diagonal NA Property as Published This Year Foreign Commutations 178,595 175,562 175,562 (3,033) 0 103,725 99,608 98,106 (4,117) (1,502) 107,964 102,846 102,040 (5,117) (806) 201,868 197,451 192,018 (4,417) (5,432) 116,682 112,045 111,487 (4,637) (559) 119,573 112,505 111,235 (7,068) (1,270) 101,486 98,091 98,091 (3,394) 0 74,598 71,944 71,944 (2,653) 0 15,319 13,375 13,375 (1,944) 0 1,019,810 983,429 973,859 (36,381) (9,569) as Published This Year Foreign Commutations 179,373 176,330 176,330 (3,043) 0 106,591 102,274 100,229 (4,317) (2,045) 110,097 104,635 103,000 (5,462) (1,635) 206,678 202,125 196,656 (4,553) (5,469) 121,623 116,773 115,862 (4,850) (911) 131,780 124,328 122,557 (7,452) (1,770) 132,483 127,139 127,139 (5,344) 0 131,614 125,663 125,663 (5,951) 0 46,701 41,198 41,198 (5,504) 0 1,166,941 1,120,465 1,108,634 (46,476) (11,831) Catastrophe as Published This Year Foreign Commutations 663,748 647,344 647,344 (16,404) 0 80,164 74,569 76,072 (5,595) 1,502 138,945 127,396 128,202 (11,549) 806 328,285 324,221 329,653 (4,064) 5,432 185,357 170,604 171,163 (14,753) 559 1,131,749 1,024,869 1,026,139 (106,880) 1,270 188,503 179,420 179,420 (9,082) 0 52,155 51,051 51,051 (1,104) 0 31,496 27,995 27,995 (3,501) 0 2,800,402 2,627,470 2,637,039 (172,932) 9,569 as Published This Year Foreign Commutations 666,053 649,646 649,646 (16,407) (0) 81,738 76,053 78,098 (5,685) 2,045 142,969 131,258 132,893 (11,711) 1,635 335,051 330,647 336,116 (4,404) 5,469 193,762 178,396 179,263 (15,367) 868 1,268,207 1,152,674 1,150,842 (115,534) (1,831) 302,018 286,637 286,637 (15,381) 0 90,886 83,685 83,685 (7,201) 0 123,870 111,083 111,083 (12,786) 0 3,204,555 3,000,078 3,008,264 (204,477) 8,186 23
Group Loss Development Triangles as of December 31, 2014 Year Loss Development Amounts in USD Thousands Reconciliation of Prior Year Diagonal - All Lines as Published This Year Foreign Commutations Paid 2005 2,168,822 2,085,941 2,086,827 (82,881) 885 1,890,512 1,794,476 1,796,320 (96,036) 1,844 2,211,267 2,093,945 2,095,399 (117,321) 1,454 2,586,144 2,485,222 2,486,298 (100,922) 1,076 2,020,923 1,919,041 1,920,598 (101,882) 1,557 2,486,022 2,309,370 2,311,266 (176,652) 1,896 1,320,082 1,256,704 1,259,753 (63,378) 3,048 888,983 845,205 852,292 (43,778) 7,087 127,049 117,175 120,063 (9,874) 2,888 15,699,804 14,907,080 14,928,816 (792,724) 21,736 as Published This Year Foreign Commutations Reported 2005 2,289,145 2,199,467 2,196,907 (89,677) (2,560) 2,091,263 1,983,858 1,984,907 (107,405) 1,048 2,483,129 2,352,254 2,353,379 (130,875) 1,125 2,926,960 2,810,231 2,810,907 (116,729) 676 2,376,995 2,256,379 2,257,418 (120,615) 1,039 3,070,530 2,866,849 2,862,710 (203,682) (4,139) 1,875,541 1,785,665 1,788,426 (89,877) 2,761 1,438,208 1,355,040 1,362,138 (83,168) 7,098 502,400 461,067 463,954 (41,333) 2,888 19,054,169 18,070,809 18,080,745 (983,361) 9,937 24