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US P&C industry again cuts asbestos, environmental reserves in '17

The U.S. property and casualty insurance industry lowered its asbestos liability net reserves for a seventh consecutive year in 2017.

As of the close of 2010, the industry's net asbestos reserves stood at $20.61 billion. Those reserves have since consistently declined, falling to $16.80 billion in 2017, according to data compiled from disclosures on Note 33 in annual statutory statements. Net asbestos-related losses and loss adjustment expenses incurred by P&C insurers, however, rose 13.8% in 2017 compared to the prior year.

The six largest asbestos reserve holders accounted for nearly 52% of the industry’s total reserves in 2017. Seven of the 15 companies included in an S&P Global Market Intelligence analysis strengthened asbestos reserves that year. Berkshire Hathaway Inc. carried out the most significant strengthening, boosting its reserves by $91.9 million in 2017 to $1.78 billion. The group's net incurred loss and loss-adjustment expense, or LAE, dropped by 65.2% year over year to $54.2 million.

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Net environmental reserves for the P&C industry decreased by 2.6% to $4.65 billion in 2017. American International Group Inc. released $61.7 million in environmental reserves, having reported $18.1 million in net incurred loss and LAE for the year. A total of 10 insurers in this analysis, including CNA Financial Corp., Allianz Group, Travelers Cos. Inc. and Chubb Ltd., reduced their environmental reserves in 2017.

This analysis does not reflect retroceded reserves where P&C insurers entered into reinsurance agreements to cover certain asbestos and environmental liability expenses. Overall, asbestos loss and LAE exposure represents the majority of the total A&E losses, nearly 2.6x environmental loss figures in 2017.

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Click here for a template to view asbestos and environmental reserve activity, survival ratios, loss exposure and other Notes to Financial Statement data for P&C, Life and Health companies.

Click here for a demonstration on how to download asbestos and environmental liability data using SNLxl.