Property Casualty Loss and Loss Expenses

6 Months Ended

Jun. 30, 2021

Property Casualty Loss And Loss Expenses

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,
	2021		2020		2021		2020
Gross loss and loss expense reserves, beginning of period	$	6,880	$	6,153	$	6,677	$	6,088
Less reinsurance recoverable	262		294		277		342
Net loss and loss expense reserves, beginning of period	6,618		5,859		6,400		5,746





Net incurred loss and loss expenses related to:
Current accident year	949		1,054		1,982		2,017
Prior accident years	(119)		(47)		(229)		(80)
Total incurred	830		1,007		1,753		1,937
Net paid loss and loss expenses related to:
Current accident year	334		369		477		555
Prior accident years	433		382		995		1,013
Total paid	767		751		1,472		1,568
Net loss and loss expense reserves, end of period	6,681		6,115		6,681		6,115
Plus reinsurance recoverable	274		294		274		294
Gross loss and loss expense reserves, end of period	$	6,955	$	6,409	$	6,955	$	6,409

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 $64 million at June 30, 2021 and
$54 million at June 30, 2020, for certain life and health loss and loss expense reserves.

For the three months ended June 30, 2021, we experienced $119 million of favorable development on prior accident years, including $86 million of favorable development in commercial lines, $12 million of favorable development in personal lines and $1 million of favorable development in excess and surplus lines. Within commercial lines, we recognized favorable reserve development of $27 million for the workers' compensation line and $26 million for the commercial casualty line due to reduced uncertainty of prior accident year loss and loss adjustment expense for these lines. Within personal lines, we recognized favorable reserve development of $9 million in personal auto.

For the six months ended June 30, 2021, we experienced $229 million of favorable development on prior accident years, including $169 million of favorable development in commercial lines, $32 million of favorable development in personal lines and $3 million of unfavorable development in excess and surplus lines. Within commercial lines, we recognized favorable reserve development of $52 million for the workers' compensation line, $37 million for the commercial auto line, $34 million for the commercial property line and $32 million for the commercial casualty line due to reduced uncertainty of prior accident year loss and loss adjustment expense for these lines. Within personal lines, we recognized favorable reserve development of $24 million in personal auto.

For the three months ended June 30, 2020, we experienced $47 million of favorable development on prior accident years, including $45 million of favorable development in commercial lines and $8 million of unfavorable development in excess and surplus lines. We had no net development in personal lines for the three months ended June 30, 2020. Within commercial lines, we recognized favorable reserve development of $21 million for the commercial casualty line and $19 million for the workers' compensation line due to reduced uncertainty of prior accident year loss and loss adjustment expense for these lines. Within personal lines, we recognized favorable reserve development of $7 million in personal auto and unfavorable reserve development of $7 million for the homeowner line of business. For the six months ended June 30, 2020, we experienced $80 million of favorable development on prior accident years, including $51 million of favorable development in commercial lines, $28 million of favorable development in personal lines and $9 million of unfavorable development in excess and surplus lines. Within commercial lines, we recognized favorable reserve development of $26 million for both the workers' compensation line and the commercial casualty line 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 favorable reserve development of $20 million in personal auto and $11 million for the homeowner line of business.