Insurance

Property and Casualty Insurance Reserves The following table provides an analysis of changes in the liability for losses and loss adjustment expenses during the first three months of 2019 and 2018 (in millions):



	Three months ended March 31,
	2019			2018
Balance at beginning of year	$	9,741		$	9,678
Less reinsurance recoverables, net of allowance	2,942			2,957
Net liability at beginning of year	6,799			6,721
Provision for losses and LAE occurring in the current period	737			697
Net decrease in the provision for claims of prior years	(45		)	(56		)
Total losses and LAE incurred	692			641
Payments for losses and LAE of:
Current year	(89		)	(86		)
Prior years	(615		)	(554		)
Total payments	(704		)	(640		)
Reserves of business disposed (*)	—			(319		)
Foreign currency translation and other	1			2
Net liability at end of period	6,788			6,405
Add back reinsurance recoverables, net of allowance	2,835			2,788
Gross unpaid losses and LAE included in the balance sheet at end of period	$	9,623		$	9,193


(*)	Reflects the reinsurance to close transaction at Neon discussed below.

The net decrease in the provision for claims of prior years during the first three months of 2019 reflects (i) lower than expected

losses in the crop business and lower than expected claim frequency at National Interstate (all within the Property and transportation sub-segment), (ii) lower than anticipated claim severity in the workers’ compensation business (within the Specialty casualty sub-segment), and (iii) lower than expected claim frequency and severity in the surety business and lower than anticipated claim severity in the fidelity business (all within the Specialty financial sub-segment). This favorable development was partially offset by higher than expected claim severity in the targeted markets businesses and higher than expected losses at Neon (all within the Specialty casualty sub-segment).

The net decrease in the provision for claims of prior years during the first three months of 2018 reflects (i) lower than expected losses in the crop business (within the Property and transportation sub-segment), (ii) lower than anticipated claim frequency and severity in workers’ compensation business and lower than expected claim severity in the executive liability business (all within the Specialty casualty sub-segment), and (iii) lower than expected claim frequency and severity in the surety business (within the Specialty financial sub-segment). This favorable development was partially offset by higher than expected claim severity and frequency in the targeted markets businesses (within the Specialty casualty sub-segment).

In December 2017, the Neon Lloyd’s syndicate entered into a reinsurance to close transaction for the 2015 and prior years of account with StarStone Underwriting Limited, a subsidiary of Enstar Group Limited, which was effective as of December 31, 2017 and settled in early 2018. In the Lloyd’s market, a reinsurance to close transaction transfers the responsibility for discharging all of the liabilities that attach to the transferred year of account plus the right to any income due to the closing year of account in return for a premium. This transaction provided Neon with finality on its legacy business.