Unpaid losses and loss adjustment expenses

3 Months Ended

Mar. 31, 2024

Unpaid losses and loss adjustment expenses

Note 14. 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 15), for each of the three-month periods ended March 31, 2024 and 2023 follow (in millions).


	2024			2023
Balance at the beginning of the year:
Gross liabilities	$	111,082		$	107,472
Reinsurance recoverable on unpaid losses		(4,893	)		(5,025	)
Net liabilities		106,189			102,447
Incurred losses and loss adjustment expenses:
Current accident year		13,854			14,776
Prior accident years		(634	)		(740	)
Total		13,220			14,036
Paid losses and loss adjustment expenses:
Current accident year		(3,663	)		(3,841	)
Prior accident years		(8,979	)		(9,747	)
Total		(12,642	)		(13,588	)
Foreign currency effect		(76	)		93
Balance at March 31:
Net liabilities		106,691			102,988
Reinsurance recoverable on unpaid losses		4,791			4,969
Gross liabilities	$	111,482		$	107,957

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 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.

We recorded net reductions of estimated ultimate liabilities for prior accident years of $634 million in the first quarter of 2024 and $740 million in 2023, 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 0.6% in 2024 and 0.7% in 2023.

We reduced estimated ultimate liabilities for prior accident years of primary insurance businesses in the first quarter by $248 million in 2024 and $379 million in 2023, which primarily related to private passenger auto and medical professional liability claims. In the first quarter, estimated ultimate liabilities for prior accident years of property and casualty reinsurance businesses were reduced $386 million in 2024 and $361 million in 2023. The reduction in 2024 derived from both property and casualty claims.