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,
	2016			2015			2016			2015
Gross loss and loss expense reserves, beginning of period	$	4,918		$	4,647		$	4,660		$	4,438
Less reinsurance recoverable	310			292			281			282
Net loss and loss expense reserves, beginning of period	4,608			4,355			4,379			4,156
Net incurred loss and loss expenses related to:
Current accident year	730			661			2,261			2,096
Prior accident years	(40		)	(48		)	(151		)	(140		)
Total incurred	690			613			2,110			1,956
Net paid loss and loss expenses related to:
Current accident year	374			343			848			794
Prior accident years	288			261			1,005			954
Total paid	662			604			1,853			1,748
Net loss and loss expense reserves, end of period	4,636			4,364			4,636			4,364
Plus reinsurance recoverable	301			289			301			289
Gross loss and loss expense reserves, end of period	$	4,937		$	4,653		$	4,937		$	4,653

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 who are 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 $54 million at September 30, 2016, and $47 million at September 30, 2015, for certain life and health loss and loss expense reserves.

For the three months ended September 30, 2016, we experienced $40 million of favorable development on prior accident years, including $31 million of favorable development in commercial lines, $4 million of adverse development in personal lines, $12 million of favorable development in excess and surplus lines and $1 million of favorable development in our reinsurance assumed operations. We recognized favorable reserve development during the three months ended September 30, 2016, of $16 million for the workers' compensation line, $7 million for the commercial casualty line and $11 million for the other commercial lines line due to reduced uncertainty of prior accident year loss and loss adjustment expense for these lines. We recognized unfavorable reserve development during the three months ended September 30, 2016, of $9 million for the personal auto line and

$4 million for the commercial auto line. Both lines developed unfavorably 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, 2016, we experienced $151 million of favorable development on prior accident years, including $118 million of favorable development in commercial lines, $4 million of favorable development in personal lines, $27 million of favorable development in excess and surplus lines and $2 million of favorable development in our reinsurance assumed operations. This included $5 million from favorable development of catastrophe losses for the nine months ended September 30, 2016. We recognized favorable reserve development during the nine months ended September 30, 2016, of $52 million for the workers' compensation line, $30 million for the commercial casualty line, $25 million for the commercial property line and $37 million for the other commercial lines due to reduced uncertainty of prior accident year loss and loss adjustment expense for these lines. We recognized unfavorable reserve development during the nine months ended September 30, 2016, of $26 million for the commercial auto line and $15 million for the personal auto line. Both lines developed unfavorably 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, 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 expenses 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.