Unpaid losses and loss adjustment expenses

12 Months Ended

Dec. 31, 2023

Insurance [Abstract]

Unpaid losses and loss adjustment expenses

(16)Unpaid losses and loss adjustment expenses

Reconciliations of the changes in unpaid losses and loss adjustment expenses (“claim liabilities”), excluding liabilities under retroactive reinsurance contracts (see Note 17), for each of the three years ended December 31, 2023 follows (in millions). Net liabilities of acquired businesses in 2022 were from the Alleghany acquisition. See Note 2.

	2023			2022			2021
Balance at the beginning of the year:
Gross liabilities	$	107,472		$	86,664		$	79,854
Reinsurance recoverable on unpaid losses		(5,025	)		(2,960	)		(2,912	)
Net liabilities		102,447			83,704			76,942
Incurred losses and loss adjustment expenses:
Current accident year		59,244			59,463			52,099
Prior accident years		(3,541	)		(2,672	)		(3,116	)
Total		55,703			56,791			48,983
Paid losses and loss adjustment expenses:
Current accident year		(25,184	)		(27,236	)		(22,897	)
Prior accident years		(27,065	)		(23,083	)		(18,904	)
Total		(52,249	)		(50,319	)		(41,801	)
Foreign currency effect		288			(508	)		(420	)
Net liabilities of acquired businesses		—			12,779			—
Balance at December 31:
Net liabilities		106,189			102,447			83,704
Reinsurance recoverable on unpaid losses		4,893			5,025			2,960
Gross liabilities	$	111,082		$	107,472		$	86,664

Our claim liabilities under property and casualty insurance and reinsurance contracts are based upon estimates of the ultimate claim costs associated with claim occurrences as of the balance sheet date and include estimates for incurred-but-not-reported (“IBNR”) claims. Incurred losses and loss adjustment expenses shown in the preceding table related to insured events occurring in the current year (“current accident year”) and events occurring in all prior years (“prior accident years”). Incurred and paid losses and loss adjustment expenses are net of reinsurance recoveries. Current accident year incurred losses from significant catastrophe events (losses in excess of $150 million per event) were approximately $925 million in 2023, $3.1 billion in 2022 ($2.5 billion from Hurricane Ian) and $2.9 billion in 2021 ($1.5 billion from Hurricane Ida). Current accident year incurred losses for private passenger auto insurance declined in 2023 compared to 2022, reflecting lower claims frequencies and higher average claims severities and increased significantly in 2022 versus 2021, attributable to increases in claims frequencies and severities.

Notes to Consolidated Financial Statements

(16)Unpaid losses and loss adjustment expenses

We recorded net reductions of estimated ultimate liabilities for prior accident years of $3.5 billion in 2023, $2.7 billion in 2022 and $3.1 billion in 2021, which produced corresponding reductions in incurred losses and loss adjustment expenses in those periods. These reductions, as percentages of the net liabilities at the beginning of each year, were 3.5% in 2023, 3.2% in 2022 and 4.0% in 2021.

We reduced estimated ultimate liabilities for prior accident years of primary insurance businesses by $2.1 billion in 2023, $1.1 billion in 2022 and $2.4 billion in 2021. The reductions in each year derived from private passenger auto, medical professional liability, and property claims. Estimated ultimate liabilities for prior accident years of property and casualty reinsurance businesses were reduced $1.4 billion in 2023, $1.6 billion in 2022 and $718 million in 2021. The reductions in each year reflected reduced estimates from both property and casualty claims.

Estimated net claim liabilities for environmental and asbestos exposures, excluding liabilities under retroactive reinsurance contracts, were approximately $2.0 billion at December 31, 2023 and $2.1 billion at December 31, 2022. These liabilities are subject to change due to changes in the legal and regulatory environment, among other factors. We are unable to reliably estimate additional losses or a range of losses that are reasonably possible to arise from these factors.

Disaggregated information concerning our claim liabilities is provided below and in the pages that follow. In this discussion, “claim-tail” refers to the period between the claim occurrence date and claim settlement or payment date. A reconciliation of the disaggregated net unpaid losses and allocated loss adjustment expenses (the latter referred to as “ALAE”) to our consolidated claim liabilities as of December 31, 2023 follows (in millions).

	GEICO				BH Primary				BHRG
	Physical Damage		Auto Liability		Medical Professional Liability		Workers’ Compensation/ Other Casualty		Property		Casualty		Total
Unpaid losses and ALAE, net	$	737	$	20,477	$	9,166	$	21,230	$	16,499	$	32,393	$	100,502
Reinsurance recoverable		4		900		26		1,547		689		1,481		4,647
Unallocated loss adjustment    expenses														2,467
Other losses and loss adjustment    expenses														3,466
Unpaid losses and loss adjustment    expenses													$	111,082

GEICO

GEICO’s claim liabilities predominantly relate to various types of private passenger auto liability and physical damage claims. For such claims, we establish and evaluate unpaid claim liabilities using standard actuarial loss development methods and techniques. The actuarial methods utilize historical claims data, adjusted when deemed appropriate to reflect perceived changes in loss patterns. Claim liabilities include average, case, case development and IBNR estimates.

We establish average liabilities based on expected severities for newly reported physical damage and liability claims prior to establishing individual case reserves when insufficient time or information is available for specific claim estimates and for large volumes of minor physical damage claims that are quickly settled. We establish case loss estimates for liability claims, including estimates for loss adjustment expenses based on the facts and merits of the claim.

Claim estimates for liability coverages normally reflect greater uncertainty than for physical damage coverages, primarily due to the longer claim-tails, the greater chance of litigation and the time needed to evaluate facts at the time the case estimate is first established. Consequently, we establish additional case development liabilities, which are usually percentages of the case liabilities. For unreported claims, IBNR claim liabilities are estimated by projecting the ultimate number of claims expected (reported and unreported) for each significant coverage based on historical data, from which reported claims are deducted to produce the estimated number of unreported claims. The product of the average cost per unreported claim and the number of unreported claims produces the IBNR liability estimate. We may record supplemental IBNR liabilities in certain situations when actuarial techniques are difficult to apply.

Notes to Consolidated Financial Statements

(16)Unpaid losses and loss adjustment expenses

GEICO’s net incurred and paid auto physical damage and liability losses and ALAE are summarized by accident year below. IBNR and case development liabilities are as of December 31, 2023 and are net of estimated salvage and subrogation recoveries. Claim counts are established when accidents that could result in a liability are reported and are based on policy coverage. Each claim event may generate claims under multiple coverages and may result in multiple counts. The “Cumulative Number of Reported Claims” includes the combined number of reported claims for all auto policy coverages. Dollars are in millions.

Physical Damage

	Incurred Losses and ALAE through December 31,								Cumulative Number of
Accident Year		2022*		2023		IBNR and Case Development Liabilities			Reported Claims (in thousands)
2022		$	14,138	$	13,699	$	(56	)		9,161
2023					12,273		(691	)		7,295
	Incurred losses and ALAE			$	25,972
	Cumulative Paid Losses and ALAE through December 31,
Accident Year		2022*		2023
2022		$	13,251	$	13,731
2023					11,567
	Paid losses and ALAE				25,298
	Net unpaid losses and ALAE for 2022 – 2023 accident years				674
	Net unpaid losses and ALAE for accident years before 2022				63
	Net unpaid losses and ALAE			$	737

Auto Liability

	Incurred Losses and ALAE through December 31,												Cumulative Number of
Accident Year	2019*		2020*		2021*		2022*		2023		IBNR and Case Development Liabilities		Reported Claims (in thousands)
2019	$	16,901	$	16,678	$	16,191	$	16,151	$	16,168	$	348		2,797
2020				14,637		14,024		13,697		13,593		666		2,123
2021						17,481		17,457		17,229		1,559		2,446
2022								19,645		18,903		3,316		2,360
2023										17,948		5,567		1,804
	Incurred losses and ALAE								$	83,841
	Cumulative Paid Losses and ALAE through December 31,
Accident Year	2019*		2020*		2021*		2022*		2023
2019	$	6,742	$	11,671	$	13,851	$	15,084	$	15,593
2020				5,395		9,839		11,794		12,608
2021						6,450		12,681		14,863
2022								7,614		13,838
2023										7,191
	Paid losses and ALAE									64,093
	Net unpaid losses and ALAE for 2019 – 2023 accident years									19,748
	Net unpaid losses and ALAE for accident years before 2019									729
	Net unpaid losses and ALAE								$	20,477

* Unaudited required supplemental information

Notes to Consolidated Financial Statements

(16)Unpaid losses and loss adjustment expenses

BH Primary

BH Primary’s liabilities for unpaid losses and loss adjustment expenses primarily derive from medical professional liability and workers’ compensation and other casualty insurance, which includes commercial auto and general liability insurance. Net incurred and paid losses and ALAE are summarized by accident year in the following tables, disaggregated by medical professional liability coverages and workers’ compensation and other casualty coverages. IBNR and case development liabilities are as of December 31, 2023. The cumulative number of reported claims reflects the number of individual claimants and includes claims that ultimately resulted in no liability or payment. Dollars are in millions.

Medical Professional Liability

We estimate the ultimate expected incurred losses and loss adjustment expenses for medical professional claim liabilities using a variety of commonly accepted actuarial methodologies, such as the paid and incurred development method and Bornhuetter-Ferguson based methods, as well as other techniques that consider insured loss exposures and historical and expected loss trends, among other factors. These methodologies produce loss estimates from which we determine our best estimate. In addition, we study developments in older accident years and adjust initial loss estimates to reflect recent developments based upon claim age, coverage and litigation experience.

	Incurred Losses and ALAE through December 31,																						Cumulative Number of
Accident Year	2014*		2015*		2016*		2017*		2018*		2019*		2020*		2021*		2022*		2023		IBNR and Case Development Liabilities		Reported Claims (in thousands)
2014	$	1,370	$	1,375	$	1,305	$	1,246	$	1,218	$	1,127	$	1,061	$	1,033	$	1,029	$	1,007	$	45		11
2015				1,374		1,342		1,269		1,290		1,218		1,157		1,093		1,033		1,016		55		12
2016						1,392		1,416		1,414		1,394		1,341		1,288		1,216		1,188		105		15
2017								1,466		1,499		1,495		1,474		1,382		1,349		1,315		117		21
2018										1,602		1,650		1,659		1,580		1,616		1,606		205		24
2019												1,670		1,691		1,663		1,614		1,534		320		21
2020														1,704		1,751		1,698		1,631		615		32
2021																1,852		1,855		1,787		1,053		25
2022																		1,927		1,912		1,403		20
2023																				1,964		1,781		17
	Incurred losses and ALAE																		$	14,960
	Cumulative Paid Losses and ALAE through December 31,
Accident Year	2014*		2015*		2016*		2017*		2018*		2019*		2020*		2021*		2022*		2023
2014	$	21	$	106	$	238	$	396	$	540	$	671	$	752	$	788	$	840	$	869
2015				23		108		218		382		543		663		719		799		843
2016						22		115		274		461		620		712		822		908
2017								27		128		300		457		582		739		877
2018										35		166		367		543		728		949
2019												39		160		314		536		757
2020														34		148		321		531
2021																36		136		333
2022																		38		182
2023																				28
	Paid losses and ALAE																			6,277
	Net unpaid losses and ALAE for 2014 – 2023 accident years																			8,683
	Net unpaid losses and ALAE for accident years before 2014																			483
	Net unpaid losses and ALAE																		$	9,166

* Unaudited required supplemental information

Notes to Consolidated Financial Statements

(16)Unpaid losses and loss adjustment expenses

Workers’ Compensation and Other Casualty

We periodically evaluate ultimate loss and loss adjustment expense estimates for workers’ compensation and other casualty claims using a combination of commonly accepted actuarial methodologies such as the Bornhuetter-Ferguson and chain-ladder approaches using paid and incurred loss data. Paid and incurred loss data is segregated and analyzed by state due to the different state regulatory frameworks that may impact certain factors, including the duration and amount of loss payments. We also separately study the various components of liabilities, such as employee lost wages, medical expenses and the costs of claims investigations and administration. We establish case liabilities for reported claims based upon the facts and circumstances of the claim. The excess of the ultimate projected losses, including the expected development of case estimates, and the case-basis liabilities is included in IBNR liabilities.

	Incurred Losses and ALAE through December 31,																						Cumulative Number of
Accident Year	2014*		2015*		2016*		2017*		2018*		2019*		2020*		2021*		2022*		2023		IBNR and Case Development Liabilities		Reported Claims (in thousands)
2014	$	2,138	$	2,064	$	2,036	$	1,970	$	1,901	$	1,906	$	1,875	$	1,861	$	1,829	$	1,810	$	115		103
2015				2,580		2,539		2,455		2,426		2,428		2,402		2,408		2,393		2,358		201		120
2016						2,931		2,848		2,793		2,772		2,815		2,825		2,864		2,840		361		125
2017								3,473		3,337		3,299		3,310		3,322		3,320		3,321		422		143
2018										3,998		3,886		3,967		4,030		4,091		4,177		643		163
2019												4,584		4,623		4,692		4,763		4,847		867		184
2020														5,030		4,881		4,775		4,774		1,467		156
2021																5,899		5,856		5,882		2,455		316
2022																		6,796		6,757		3,646		308
2023																				7,299		5,187		132
	Incurred losses and ALAE																		$	44,065
	Cumulative Paid Losses and ALAE through December 31,
Accident Year	2014*		2015*		2016*		2017*		2018*		2019*		2020*		2021*		2022*		2023
2014	$	286	$	683	$	1,002	$	1,269	$	1,407	$	1,504	$	1,557	$	1,600	$	1,617	$	1,646
2015				329		804		1,187		1,507		1,766		1,873		1,966		2,041		2,070
2016						373		908		1,359		1,765		1,998		2,140		2,303		2,377
2017								480		1,133		1,645		2,050		2,279		2,492		2,673
2018										583		1,340		1,902		2,324		2,746		3,120
2019												725		1,598		2,214		2,898		3,430
2020														736		1,498		2,066		2,598
2021																869		1,751		2,440
2022																		962		2,012
2023																				1,056
	Paid losses and ALAE																			23,422
	Net unpaid losses and ALAE for 2014 – 2023 accident years																			20,643
	Net unpaid losses and ALAE for accident years before 2014																			587
	Net unpaid losses and ALAE																		$	21,230

* Unaudited required supplemental information

BHRG

We use a variety of methodologies to establish BHRG’s estimates for property and casualty claim liabilities. These methodologies include paid and incurred loss development techniques, incurred and paid loss Bornhuetter-Ferguson techniques and frequency and severity techniques, as well as ground-up techniques when appropriate.

Notes to Consolidated Financial Statements

(16)Unpaid losses and loss adjustment expenses

Our claim liabilities are principally a function of reported losses from ceding companies, case development and IBNR liability estimates. Case loss estimates are reported either individually or in bulk as provided under the terms of the contracts. We may independently evaluate case losses reported by the ceding company, and if deemed appropriate, establish additional case liabilities based on our estimates.

Estimated IBNR liabilities are affected by expected case loss emergence patterns and expected loss ratios, which are evaluated as groups of contracts with similar exposures or on a contract-by-contract basis. Estimated case and IBNR liabilities for major catastrophe events are generally based on a per-contract assessment of the ultimate cost associated with the individual loss event. Claim count data is not provided consistently by ceding companies under our contracts or is otherwise considered unreliable.

Net incurred and paid losses and ALAE of BHRG are disaggregated based on losses that are expected to have shorter claim-tails (property) and losses expected to have longer claim-tails (casualty). Under certain contracts, the coverage can apply to multiple lines of business written by the ceding company, whether property, casualty or combined, and the ceding company may not report loss data by such lines consistently, if at all. In those instances, we allocated losses to property and casualty coverages based on internal estimates. BHRG’s disaggregated incurred and paid losses and ALAE are summarized by accident year. IBNR and case development liabilities are as of December 31, 2023. Dollars are in millions.

Property

	Incurred Losses and ALAE through December 31,
Accident Year	2014*		2015*		2016*		2017*		2018*		2019*		2020*		2021*		2022*		2023		IBNR and Case Development Liabilities
2014	$	3,095	$	2,849	$	2,725	$	2,567	$	2,508	$	2,432	$	2,400	$	2,393	$	2,373	$	2,376	$	27
2015				3,605		3,414		2,847		3,237		3,232		3,253		3,255		3,248		3,272		60
2016						3,926		4,515		4,192		4,155		4,150		4,139		4,117		4,106		26
2017								6,397		6,096		5,918		5,791		5,713		5,631		5,612		64
2018										5,486		5,579		5,437		5,293		5,299		5,249		172
2019												4,986		5,129		4,901		4,574		4,527		162
2020														6,928		7,208		6,876		6,657		610
2021																8,103		7,976		7,640		896
2022																		8,880		8,453		2,228
2023																				7,993		4,140
Incurred losses and ALAE																			$	55,885
	Cumulative Paid Losses and ALAE through December 31,
Accident Year	2014*		2015*		2016*		2017*		2018*		2019*		2020*		2021*		2022*		2023
2014	$	572	$	1,520	$	1,899	$	2,059	$	2,135	$	2,187	$	2,218	$	2,242	$	2,272	$	2,295
2015				671		1,804		2,210		2,429		2,538		2,721		2,807		2,860		2,933
2016						915		2,214		2,677		3,167		3,436		3,632		3,741		3,820
2017								1,348		3,508		4,583		4,936		5,171		5,364		5,454
2018										1,208		3,093		3,735		4,020		4,265		4,473
2019												1,012		2,848		3,566		3,898		4,058
2020														1,255		3,584		4,634		5,298
2021																1,624		4,095		5,414
2022																		1,814		4,333
2023																				1,777
Paid losses and ALAE																				39,855
Net unpaid losses and ALAE for 2014 – 2023 accident years																				16,030
Net unpaid losses and ALAE for accident years before 2014																				469
Net unpaid losses and ALAE																			$	16,499

* Unaudited required supplemental information

Notes to Consolidated Financial Statements

(16)Unpaid losses and loss adjustment expenses

Casualty

	Incurred Losses and ALAE through December 31,
Accident Year	2014*		2015*		2016*		2017*		2018*		2019*		2020*		2021*		2022*		2023		IBNR and Case Development Liabilities
2014	$	3,507	$	3,672	$	3,619	$	3,557	$	3,456	$	3,472	$	3,446	$	3,334	$	3,298	$	3,265	$	424
2015				3,422		3,628		3,668		3,580		3,438		3,401		3,364		3,310		3,312		373
2016						3,788		3,998		3,902		3,870		3,819		3,775		3,746		3,773		416
2017								4,039		4,474		4,351		4,244		4,176		4,165		4,222		547
2018										4,886		5,537		5,489		5,358		5,285		5,370		756
2019												5,572		6,043		5,902		5,736		5,695		1,228
2020														6,214		6,231		6,047		6,093		1,750
2021																6,310		6,285		5,957		2,299
2022																		6,061		6,112		3,505
2023																				6,071		4,656
	Incurred losses and ALAE																		$	49,870
	Cumulative Paid Losses and ALAE through December 31,
Accident Year	2014*		2015*		2016*		2017*		2018*		2019*		2020*		2021*		2022*		2023
2014	$	429	$	1,002	$	1,390	$	1,662	$	1,917	$	2,103	$	2,311	$	2,405	$	2,493	$	2,560
2015				446		995		1,431		1,731		2,003		2,197		2,345		2,481		2,590
2016						654		1,359		1,801		2,149		2,420		2,613		2,789		2,963
2017								607		1,311		1,829		2,478		2,727		2,945		3,171
2018										695		1,742		2,792		3,258		3,637		3,954
2019												841		1,872		2,423		3,190		3,736
2020														868		1,905		2,715		3,379
2021																766		1,785		2,661
2022																		622		1,338
2023																				692
	Paid losses and ALAE																			27,044
	Net unpaid losses and ALAE for 2014 – 2023 accident years																			22,826
	Net unpaid losses and ALAE for accident years before 2014																			9,567
	Net unpaid losses and ALAE																		$	32,393

* Unaudited required supplemental information

Required supplemental unaudited average historical claims duration information based on the net losses and ALAE incurred and paid accident year data in the preceding tables follows. The percentages show the average portions of net losses and ALAE paid by each succeeding year, with year 1 representing the current accident year.

Average Annual Percentage Payout of Incurred Losses by Age, Net of Reinsurance
In Year	1	2	3	4	5	6	7	8	9	10
GEICO Physical Damage	97%	3%
GEICO Auto Liability	41%	31%	13%	7%	4%
BH Primary Medical Professional Liability	2%	8%	12%	14%	13%	12%	8%	6%	5%	3%
BH Primary Workers’ Compensation and Other Casualty	15%	18%	14%	13%	9%	6%	5%	3%	1%	2%
BHRG Property	22%	35%	15%	8%	4%	4%	2%	2%	2%	1%
BHRG Casualty	14%	17%	13%	11%	8%	6%	5%	4%	3%	2%