ANNUAL REPORT 2013

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
31 December 2013 and 2012 (Expressed in United States Dollars)
The table below illustrates the development of the estimates of ultimate cumulative claims for the Company after the end of the underwriting year,
illustrating how amounts estimated have changed from the first estimate made.
Estimate of gross ultimate liability
2009 2010 2011 2012 2013 Total
US$’000 US$’000 US$’000 US$’000 US$’000 US$’000
At end of accident year $ 43,975 191,957 515,356 324,587 306,172
One year later 46,829 206,494 529,491 318,895
Two years later 45,644 213,431 504,483
Three years later 45,104 222,238
Four years later 48,962
Ultimate liability 2009 – 2013 48,962 222,238 504,483 318,895 306,172 1,400,750
Ultimate liability pre-2009 452,606
1,853,356
Payments made 2009 – 2013 (44,396) (131,637) (402,050 ) (207,465) (47,191 ) (832,739)
Payments made pre-2009 (436,926)
(1,269,665)
Gross liability
as at 31 December 2013 $ 583,691
Estimate of net ultimate liability
2009 2010 2011 2012 2013 Total
US$’000 US$’000 US$’000 US$’000 US$’000 US$’000
At end of accident year $ 31,810 170,263 377,402 254,575 305,924
One year later 38,565 169,950 389,664 251,442
Two years later 38,249 167,065 369,326
Three years later 38,064 181,156
Four years later 42,028
Ultimate liability 2009 – 2013 42,028 181,156 369,326 251,442 305,924 1,149,876
Ultimate liability pre-2009 400,178
1,550,054
Payments made 2009 – 2013 (37,700 ) (99,360) (278,013) (149,926 ) (47,191 ) (612,190 )
Payments made pre-2009 (384,842)
(997,032)
Net liability
as at 31 December 2013 $ 553,022
A summary of changes in outstanding losses and loss expenses for 2013 and 2012, including outstanding losses recoverable from reinsurers,
is presented in Note 16.
The reserves established can be more or less than adequate to meet individual claims arising. The level of uncertainty varies significantly from class
to class but can arise from inadequate case reserves for known large losses and catastrophes or from inadequate provision for IBNR. The Company
believes that the loss reserves established are adequate, however a 1% improvement/deterioration in the total estimated losses would have an impact
on profit before tax of $5.8 million gain/loss (2012 – $5.4 million). There was no change to the Company’s reserving methodology during the year.
TOKIO MILLENNIUM RE | ANNUAL REPORT 2013 39