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 September 30,						Nine months ended September 30,
	2015			2014			2015			2014
Gross loss and loss expense reserves, beginning of period	$	4,647		$	4,408		$	4,438		$	4,241
Less reinsurance recoverable	292			282			282			299
Net loss and loss expense reserves, beginning of period	4,355			4,126			4,156			3,942
Net incurred loss and loss expenses related to:
Current accident year	661			647			2,096			2,125
Prior accident years	(48		)	(25		)	(140		)	(120		)
Total incurred	613			622			1,956			2,005
Net paid loss and loss expenses related to:
Current accident year	343			353			794			859
Prior accident years	261			286			954			979
Total paid	604			639			1,748			1,838
Net loss and loss expense reserves, end of period	4,364			4,109			4,364			4,109
Plus reinsurance recoverable	289			284			289			284
Gross loss and loss expense reserves, end of period	$	4,653		$	4,393		$	4,653		$	4,393

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 $47 million at September 30, 2015, and $42 million at September 30, 2014, for certain life and health loss and loss expense reserves.

For the three months ended September 30, 2015, we experienced $48 million of favorable development on prior accident years, including $43 million of favorable development in commercial lines, $2 million of adverse development in personal lines and $7 million of favorable development in excess and surplus lines. We recognized favorable reserve development during the three months ended September 30, 2015, of $25 million for the workers' compensation line and $16 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 $4 million for the three months ended September 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 nine months ended September 30, 2015, we experienced $140 million of favorable development on prior accident years, including $120 million of favorable development in commercial lines, $1 million of adverse development in personal lines and $21 million of favorable development in excess and surplus lines. This included $12 million from favorable development of catastrophe losses for the nine months ended September 30, 2015. We recognized favorable reserve development during the nine months ended September 30, 2015, of $80 million for the workers' compensation line, $36 million for the commercial casualty line and $17 million for the other commercial line due to reduced uncertainty of prior accident year loss and loss adjustment expense for these lines. Our commercial auto line developed unfavorably by $27 million for the nine months ended September 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 September 30, 2014, we experienced $25 million of favorable development on prior accident years, including $24 million of favorable development in commercial lines, $5 million of adverse development in personal lines and $6 million of favorable development in excess and surplus lines. This included $5 million from favorable development of catastrophe losses for the three months ended September 30, 2014. We recognized favorable development during the three months ended September 30, 2014, of $15 million for workers' compensation line, $8 million for each the commercial property line and the commercial casualty line and $12 million of adverse development for the commercial auto line, due to reduced uncertainty of prior accident year loss and loss adjustment expense for these lines.

For the nine months ended September 30, 2014, we experienced $120 million of favorable development on prior accident years, including $84 million of favorable development in commercial lines, $13 million of favorable development in personal lines and $23 million of favorable development in excess and surplus lines. This included $19 million from favorable development of catastrophe losses for the nine months ended September 30, 2014. We recognized favorable development during the nine months ended September 30, 2014, of $45 million for the workers' compensation line, $33 million for the commercial property line, $25 million for the commercial casualty line and $24 million of adverse development in the commercial auto line, due to reduced uncertainty of prior accident year loss and loss adjustment expense for these lines.