Property Casualty Loss and Loss Expenses

6 Months Ended

Jun. 30, 2022

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,
	2022		2021		2022		2021
Gross loss and loss expense reserves, beginning of period	$	7,287	$	6,880	$	7,229	$	6,677
Less reinsurance recoverable	319		262		327		277
Net loss and loss expense reserves, beginning of period	6,968		6,618		6,902		6,400





Net incurred loss and loss expenses related to:
Current accident year	1,299		949		2,296		1,982
Prior accident years	(59)		(119)		(100)		(229)
Total incurred	1,240		830		2,196		1,753
Net paid loss and loss expenses related to:
Current accident year	368		334		537		477
Prior accident years	524		433		1,245		995
Total paid	892		767		1,782		1,472
Net loss and loss expense reserves, end of period	7,316		6,681		7,316		6,681
Plus reinsurance recoverable	287		274		287		274
Gross loss and loss expense reserves, end of period	$	7,603	$	6,955	$	7,603	$	6,955

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 $66 million at June 30, 2022, and $64 million at June 30, 2021, for certain life and health loss and loss expense reserves.

For the three months ended June 30, 2022, we experienced $59 million of favorable development on prior accident years, including $29 million of favorable development in commercial lines, $14 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 $18 million for the workers' compensation line and $7 million for the commercial property 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 $16 million for the homeowner line.

For the six months ended June 30, 2022, we experienced $100 million of favorable development on prior accident years, including $47 million of favorable development in commercial lines, $48 million of favorable development in personal lines and $6 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 $12 million for the commercial property 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 $46 million for the homeowner line.

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.