May 6th, 2014

What is driving the continued release of reserves?

Posted at 1:00 AM ET

leong-jessica-bio-sep-2013Jessica Leong, Lead Casualty Specialty Actuary

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Seventy percent of the improvement for accident year 2012 can be attributed to two lines: homeowners and private passenger auto.

In the charts below, the graphs for both of these lines do not exhibit a clear cycle as do graphs for many liability lines. Because the pattern lacks a clear trend, it is not possible to say that accident year 2013 will also show reserve releases in 2014.

We speculate that property catastrophe issues may be behind the release of reserves for the homeowners line for accident year 2012. Hurricane Sandy made U.S. landfall on October 29 of that year, so there was still a lot of uncertainty on the ultimate cost at year-end.

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