Property Casualty Loss and Loss Expenses

This table summarizes activity for our consolidated property casualty loss and loss expense reserves:



(Dollars in millions)	Three months ended June 30,						Six months ended June 30,
	2015			2014			2015			2014
Gross loss and loss expense reserves, beginning of period	$	4,577		$	4,323		$	4,438		$	4,241
Less reinsurance recoverable	278			289			282			299
Net loss and loss expense reserves, beginning of period	4,299			4,034			4,156			3,942
Net incurred loss and loss expenses related to:
Current accident year	724			773			1,435			1,478
Prior accident years	(70		)	(66		)	(92		)	(95		)
Total incurred	654			707			1,343			1,383
Net paid loss and loss expenses related to:
Current accident year	304			309			451			506
Prior accident years	294			306			693			693
Total paid	598			615			1,144			1,199
Net loss and loss expense reserves, end of period	4,355			4,126			4,355			4,126
Plus reinsurance recoverable	292			282			292			282
Gross loss and loss expense reserves, end of period	$	4,647		$	4,408		$	4,647		$	4,408

We use actuarial methods, models and judgment to estimate, as of a financial statement date, the property casualty loss and loss expense reserves required to pay for and settle all outstanding insured claims, including incurred but not reported (IBNR) claims, as of that date. The actuarial estimate is subject to review and adjustment by an inter-departmental committee that includes actuarial management that is familiar with relevant company and industry business, claims and underwriting trends, as well as general economic and legal trends that could affect future loss and loss expense payments. The amount we will actually have to pay for claims can be highly uncertain. This uncertainty, together with the size of our reserves, makes the loss and loss expense reserves our most significant estimate. The reserve for loss and loss expenses in the condensed consolidated balance sheets also included $44 million at June 30, 2015, and $36 million at June 30, 2014, for certain life and health loss and loss expense reserves.

For the three months ended June 30, 2015, we experienced $70 million of favorable development on prior accident years, including $63 million of favorable development in commercial lines, $2 million of adverse development in personal lines and $9 million of favorable development in excess and surplus lines. We recognized favorable reserve development during the three months ended June 30, 2015, of $41 million for the workers' compensation line and $23 million for the commercial casualty line due to reduced uncertainty of prior accident year loss and loss adjustment expense for these lines. Our commercial auto line developed unfavorably by $11 million for the three months ended June 30, 2015, due to higher loss cost effects in recent accident years, resulting in an increase of our reserve estimate for claims that have not yet been settled.

For the six months ended June 30, 2015, we experienced $92 million of favorable development on prior accident years, including $77 million of favorable development in commercial lines, $1 million of favorable development in personal lines and $14 million of favorable development in excess and surplus lines. This included $11 million from favorable development of catastrophe losses for the six months ended June 30, 2015. We recognized favorable reserve development during the six months ended June 30, 2015, of $56 million for the workers' compensation line, $20 million for the commercial casualty line and $15 million for the commercial property line due to reduced uncertainty of prior accident year loss and loss adjustment expense for these lines. Our commercial auto line developed unfavorably by $23 million for the six months ended June 30, 2015, due to higher loss cost effects in recent accident years, resulting in an increase of our reserve estimate for claims that have not yet been settled.

For the three months ended June 30, 2014, we experienced $66 million of favorable development on prior accident years, including $57 million of favorable development in commercial lines, $1 million of favorable development in personal lines and $8 million of favorable development in excess and surplus lines. This included $5 million from favorable development of catastrophe losses for the three months ended June 30, 2014. We recognized favorable development during the three months ended June 30, 2014, of $24 million for the commercial casualty line and $22 million for the commercial property line due to reduced uncertainty of prior accident year loss and loss adjustment expense for these lines.

For the six months ended June 30, 2014, we experienced $95 million of favorable development on prior accident years, including $60 million of favorable development in commercial lines, $18 million of favorable development in personal lines and $17 million of favorable development in excess and surplus lines. This included $14 million from favorable development of catastrophe losses for the six months ended June 30, 2014. We recognized favorable development during the six months ended June 30, 2014, of $24 million for the commercial property line and $30 million for the workers' compensation line due to reduced uncertainty of prior accident year loss and loss adjustment expense for these lines.