Commercial Lines net income of $289 million increased from $90 million in third quarter 2017 primarily due to lower current accident year catastrophe losses, higher favorable prior year development
and the effect of a lower U.S.
Although the effect of prior year development
on other liability for 2001 was less severe, it will likely be a larger issue for 2002 and beyond.
The loss ratio improved 3.6 points, due to an improved non-catastrophe current accident year loss ratio and favorable net prior year development
, partially offset by higher catastrophe losses.
Results include $127 million of favorable prior year development
adding 13 points to the combined ratio.
Combined ratio, excluding catastrophes and prior year development
, of 88.8 improved 0.2 points from the first quarter of 2011.
The difference between' the calendar year ratio and the accident year ratio is caused by the total prior year development
during the calendar year for losses and all loss adjustment expenses, including allocated expenses, cost containment expenses and claims adjustment expenses.
Favorable prior year development
shaved 5.1 points off of the combined ratio.
The full-year combined ratiowas 57.8, an improvement of 60.8 points thanks to favorable prior year development
and significantly lower international losses from major catastrophe events.
"The prior year developments
are broadly flat on the prior year, though there has been some reserve strengthening related to 2018 which is something we will need to keep an eye on in the interim results," commented Shore.