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,
	2018			2017			2018			2017
Gross loss and loss expense reserves, beginning of period	$	5,423		$	5,213		$	5,219		$	5,035
Less reinsurance recoverable	188			283			187			298
Net loss and loss expense reserves, beginning of period	5,235			4,930			5,032			4,737
Net incurred loss and loss expenses related to:
Current accident year	857			835			2,548			2,493
Prior accident years	(44		)	(20		)	(123		)	(96		)
Total incurred	813			815			2,425			2,397
Net paid loss and loss expenses related to:
Current accident year	392			411			928			969
Prior accident years	313			314			1,186			1,145
Total paid	705			725			2,114			2,114
Net loss and loss expense reserves, end of period	5,343			5,020			5,343			5,020
Plus reinsurance recoverable	186			280			186			280
Gross loss and loss expense reserves, end of period	$	5,529		$	5,300		$	5,529		$	5,300

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, claims, underwriting, loss prevention and accounting management. This committee 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 $49 million at September 30, 2018, and

$50 million at September 30, 2017, for certain life and health loss and loss expense reserves.

For the three months ended September 30, 2018, we experienced $44 million of favorable development on prior accident years, including $37 million of favorable development in commercial lines, $8 million of favorable development in excess and surplus lines and $1 million of adverse development in our reinsurance assumed operations. This included $5 million from favorable development of catastrophe losses. Within commercial lines, we recognized favorable reserve development of $20 million for the commercial casualty line, $9 million for the workers' compensation line, $9 million for the commercial property line and $2 million for the other commercial lines due to reduced uncertainty of prior accident year loss and loss adjustment expense for these lines. This was partially offset by unfavorable reserve development of $3 million for the commercial auto line. Within personal lines, we recognized unfavorable reserve development of $7 million for the homeowner line of business due primarily to higher-than-anticipated loss development on known claims.

For the nine months ended September 30, 2018, we experienced $123 million of favorable development on prior accident years, including $114 million of favorable development in commercial lines, $16 million of unfavorable development in personal lines, $22 million of favorable development in excess and surplus lines and $3 million of favorable development in our reinsurance assumed operations. This included $12 million from favorable development of catastrophe losses. Within commercial lines, we recognized favorable reserve development of $39 million for the workers' compensation line, $37 million for the commercial property line, $31 million for the commercial casualty line and $14 million for the other commercial lines due to reduced uncertainty of prior accident year loss and loss adjustment expense for these lines. This was partially offset by unfavorable reserve development of $7 million for the commercial auto line. Within personal lines, we recognized unfavorable reserve development of $24 million for the homeowner line of business due primarily to higher-than-anticipated loss development on known claims.

For the three months ended September 30, 2017, we experienced $20 million of favorable development on prior accident years, including $18 million of favorable development in commercial lines, $3 million of favorable development in excess and surplus lines and $1 million of adverse development in our reinsurance assumed operations. This included $6 million from favorable development of catastrophe losses. Within commercial lines, we recognized favorable reserve development of $14 million for the workers' compensation line, $7 million for the commercial property line and $5 million for the other commercial lines due to reduced uncertainty of prior accident year loss and loss adjustment expense for these lines. This was partially offset by unfavorable reserve development of $8 million for the commercial auto line.

For the nine months ended September 30, 2017, we experienced $96 million of favorable development on prior accident years, including $55 million of favorable development in commercial lines, $13 million of favorable development in personal lines, $25 million of favorable development in excess and surplus lines and $3 million of favorable development in our reinsurance assumed operations. This included $20 million from favorable development of catastrophe losses. Within commercial lines, we recognized favorable reserve development of

$44 million for the workers' compensation line, $21 million for the commercial property line and $25 million for the other commercial lines due to reduced uncertainty of prior accident year loss and loss adjustment expenses for these lines. This was partially offset by unfavorable reserve development of $27 million for the commercial auto line and $8 million for the commercial casualty line. The unfavorable reserve development for commercial casualty reflected higher large loss activity than prior year.