Insurance

3 Months Ended

Mar. 31, 2021

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 2021 and 2020 (in millions):


	Three months ended March 31,
	2021		2020
Balance at beginning of year	$	10,392	$	10,232
Less reinsurance recoverables, net of allowance	3,117		3,024
Net liability at beginning of year	7,275		7,208
Provision for losses and LAE occurring in the current period	726		749


Net decrease in the provision for claims of prior years	(59)		(42)
Total losses and LAE incurred	667		707
Payments for losses and LAE of:
Current year	(52)		(75)
Prior years	(622)		(676)
Total payments	(674)		(751)

Foreign currency translation and other	—		(22)
Net liability at end of period	7,268		7,142
Add back reinsurance recoverables, net of allowance	3,116		2,964
Gross unpaid losses and LAE included in the balance sheet at end of period	$	10,384	$	10,106

The net decrease in the provision for claims of prior years during the first three months of 2021 reflects (i) lower than anticipated claim frequency and severity in the transportation businesses, lower than expected losses in the crop business and lower than expected claim frequency in the aviation business (within the Property and transportation sub-segment), (ii) lower than anticipated claim severity in the workers’ compensation businesses (within the Specialty casualty sub-segment) and (iii) lower than anticipated claim frequency and severity in the financial institutions business and lower than anticipated claim frequency in the surety business (within the Specialty financial sub-segment). This favorable development was partially offset by (i) higher than expected claim frequency and severity in the equine business (within the Property and transportation sub-segment) and (ii) higher than anticipated claim severity in the targeted markets, professional liability and excess liability businesses (within the Specialty casualty sub-segment).

The net decrease in the provision for claims of prior years during the first three months of 2020 reflects (i) lower than expected losses in the crop business and lower than anticipated claim frequency and severity at National Interstate (within the Property and transportation sub-segment) and (ii) lower than anticipated claim severity in the workers’ compensation businesses and lower than anticipated claim frequency and severity in the executive liability business (within the Specialty casualty sub-segment). This favorable development was partially offset by (i) higher than expected claim severity in the property and inland marine business (within the Property and transportation sub-segment), (ii) higher than expected claim frequency and severity in the excess and surplus lines businesses and higher than expected claim severity in public sector business (within the Specialty casualty sub-segment), and (iii) higher than expected losses at Neon.

Recoverables from Reinsurers and Premiums Receivable Progressions of the 2021 and 2020 allowance for expected credit losses on recoverables from reinsurers and premiums receivable related to continuing operations are shown below (in millions):


	Recoverables from Reinsurers				Premiums Receivable
	2021		2020		2021		2020






Balance at January 1	$	6	$	18	$	10	$	13
Impact of adoption of new accounting policy	—		(11)		—		(3)
Provision (credit) for expected credit losses	1		—		1		(1)
Write-offs charged against the allowance	—		—		—		—
Balance at March 31	$	7	$	7	$	11	$	9