Reserve Roll Forward

The following table provides a roll forward of the Company’s beginning and ending claims and benefits payable balances. Claims and benefits payable is the liability for unpaid loss and loss adjustment expenses and is comprised of case and incurred but not reported (“IBNR”) reserves.

Since unpaid loss and loss adjustment expenses are estimates, the Company’s actual losses incurred may be more or less than the Company’s previously developed estimates, which is referred to as either unfavorable or favorable development, respectively.

The best estimate of ultimate loss and loss adjustment expense is generally selected from a blend of methods that are applied consistently each period. There have been no significant changes in the methodologies and assumptions utilized in estimating the liability for unpaid loss and loss adjustment expenses for any of the periods presented.


	For the Six Months Ended June 30,
	2026		2025
Claims and benefits payable, at beginning of period	$	2,101.2	$	2,914.2
Less: Reinsurance ceded and other	(899.0)		(1,669.8)
Net claims and benefits payable, at beginning of period	1,202.2		1,244.4
Incurred losses and loss adjustment expenses related to:
Current year	1,591.5		1,600.5
Prior years	(74.1)		(99.3)
Total incurred losses and loss adjustment expenses	1,517.4		1,501.2
Paid losses and loss adjustment expenses related to:
Current year	928.2		943.9
Prior years	532.7		553.4
Total paid losses and loss adjustment expenses	1,460.9		1,497.3
Net claims and benefits payable, at end of period	1,258.7		1,248.3
Plus: Reinsurance ceded and other (1)	850.9		1,102.6
Claims and benefits payable, at end of period (1)	$	2,109.6	$	2,350.9

(1)Includes reinsurance recoverables and claims and benefits payable of $160.5 million and $339.6 million as of June 30, 2026 and 2025, respectively, which was ceded to the U.S. government. The Company acts as an administrator for the U.S. government under the voluntary National Flood Insurance Program.

The Company experienced net favorable loss development of $74.1 million and $99.3 million for the six months ended June 30, 2026 and 2025, respectively, as presented in the roll forward table above.

Global Lifestyle contributed $37.9 million and $36.8 million in net favorable loss development for the six months ended June 30, 2026 and 2025, respectively. The net favorable loss development in both periods was attributable to nearly all lines of business in Global Lifestyle across most of the Company’s regions with a concentration on more recent accident years and based on emerging evaluations regarding loss experience. Global Automotive contributed $20.6 million of net favorable development, primarily reflecting favorability in severity assumptions within an asset protection product. Connected Living contributed $17.3 million of net favorable development, of which $8.7 million was from mobile, $7.1 million was from extended service contracts, and $1.5 million was from financial services and other insurance products. Mobile development reflected reserve releases as a new client’s actual loss experience replaced initial pricing assumptions. Extended service contract development reflected the emergence of more favorable frequency and severity assumptions globally. Development on financial services and other insurance products was driven by reserve releases on short-tail products and declining portfolios. For the six months ended June 30, 2025, the favorable development was primarily from Connected Living due to similar drivers as noted above. Many of these contracts and products contain retrospective commission (profit sharing) provisions that would result in offsetting increases or decreases in expense dependent on if the development was favorable or unfavorable.

Global Housing contributed $31.0 million and $62.8 million of net favorable loss development for the six months ended June 30, 2026 and 2025, respectively. The net favorable loss development for the six months ended June 30, 2026 consisted of

$41.9 million of net favorable non-catastrophe development and $10.9 million of net unfavorable development from prior catastrophe events. The net favorable non-catastrophe development was driven by $29.8 million from lender-placed hazard due to easing inflation and lower frequency as observed by favorable actual loss emergence data compared to prior estimates. The net favorable loss development for the six months ended June 30, 2025 was primarily attributable to favorable frequency, easing inflation and legislative reform changes in Florida.

- Definition

The entire disclosure for the types of coverages and products sold, and the assets, obligations, recorded liabilities, revenues and expenses arising therefrom, and the amounts of and methodologies and assumptions used in determining the amounts of such items.

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