Insurance

9 Months Ended

Sep. 30, 2023

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 nine months of 2023 and 2022 (in millions):


	Nine months ended September 30,
	2023		2022
Balance at beginning of year	$	11,974	$	11,074
Less reinsurance recoverables, net of allowance	3,767		3,419
Net liability at beginning of year	8,207		7,655
Provision for losses and LAE occurring in the current period	3,132		2,869


Net decrease in the provision for claims of prior years	(168)		(226)
Total losses and LAE incurred	2,964		2,643
Payments for losses and LAE of:
Current year	(743)		(667)
Prior years	(1,745)		(1,501)
Total payments	(2,488)		(2,168)
Foreign currency translation and other	1		1
Net liability at end of period	8,684		8,131
Add back reinsurance recoverables, net of allowance	4,207		3,936
Gross unpaid losses and LAE included in the balance sheet at end of period	$	12,891	$	12,067

The net decrease in the provision for claims of prior years during the first nine months of 2023 reflects (i) lower than anticipated losses in the crop business, lower than expected claim frequency and severity across the transportation businesses and lower than anticipated claim frequency in the property and inland marine business (within the Property and transportation sub-segment), (ii) lower than anticipated claim severity in the workers’ compensation businesses, lower than expected claim frequency in the executive liability and environmental businesses and favorable reserve development related to COVID-19 losses across several businesses (within the Specialty casualty sub-segment) and (iii) lower than anticipated claim frequency in the trade credit and financial institutions businesses and 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 anticipated claim severity in the public sector and excess liability businesses (within the Specialty casualty sub-segment).

The net decrease in the provision for claims of prior years during the first nine months of 2022 reflects (i) lower than anticipated losses in the crop business, lower than expected claim frequency in the trucking and ocean marine businesses and in the Singapore operations, lower than expected claim frequency and severity in the aviation business and lower than anticipated claim severity in the property and inland marine business (within the Property and transportation sub-segment), (ii) lower than anticipated claim severity in the workers’ compensation businesses, lower than expected claim frequency in the executive liability business and lower than anticipated claim frequency and severity in the excess and surplus business (within the Specialty casualty sub-segment) and (iii) lower than anticipated claim frequency in the surety, trade credit and financial institutions businesses (within the Specialty financial sub-segment). This favorable development was partially offset by (i) higher than anticipated claim severity in the targeted markets and excess liability businesses (within the Specialty casualty sub-segment) and (ii) net adverse development associated with AFG’s internal reinsurance program (within Other specialty).

Recoverables from Reinsurers and Premiums Receivable Progressions of the 2023 and 2022 allowance for expected credit losses on recoverables from reinsurers and premiums receivable are shown below (in millions):


	Recoverables from Reinsurers				Premiums Receivable
	2023		2022		2023		2022
Balance at June 30	$	9	$	7	$	9	$	9
Increase in allowance from acquisition of CRS	—		—		4		—
Provision (credit) for expected credit losses	2		1		—		(1)
Write-offs charged against the allowance	—		—		—		—
Balance at September 30	$	11	$	8	$	13	$	8

Balance at January 1	$	8	$	8	$	8	$	8
Increase in allowance from acquisition of CRS	—		—		4		—
Provision (credit) for expected credit losses	3		—		1		—
Write-offs charged against the allowance	—		—		—		—
Balance at September 30	$	11	$	8	$	13	$	8