Property Casualty Loss and Loss Expenses

9 Months Ended

Sep. 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 September 30,				Nine months ended September 30,
	2022		2021		2022		2021
Gross loss and loss expense reserves, beginning of period	$	7,603	$	6,955	$	7,229	$	6,677
Less reinsurance recoverable	287		274		327		277
Net loss and loss expense reserves, beginning of period	7,316		6,681		6,902		6,400





Net incurred loss and loss expenses related to:
Current accident year	1,391		1,090		3,687		3,072
Prior accident years	(43)		(102)		(143)		(331)
Total incurred	1,348		988		3,544		2,741
Net paid loss and loss expenses related to:
Current accident year	484		416		1,021		893
Prior accident years	464		349		1,709		1,344
Total paid	948		765		2,730		2,237
Net loss and loss expense reserves, end of period	7,716		6,904		7,716		6,904
Plus reinsurance recoverable	329		322		329		322
Gross loss and loss expense reserves, end of period	$	8,045	$	7,226	$	8,045	$	7,226

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 $68 million at September 30, 2022, and $66 million at September 30, 2021, for certain life and health loss and loss expense reserves.

For the three months ended September 30, 2022, we experienced $43 million of favorable development on prior accident years, including $4 million of favorable development in commercial lines, $8 million of favorable development in personal lines and $7 million of favorable development in excess and surplus lines. Within commercial lines, we recognized favorable reserve development of $24 million for the commercial property line and $16 million for the workers' compensation 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 $23 million for the commercial casualty line and $16 million for the commercial auto line.

For the nine months ended September 30, 2022, we experienced $143 million of favorable development on prior accident years, including $51 million of favorable development in commercial lines, $56 million of favorable development in personal lines and $13 million of favorable development in excess and surplus lines. Within commercial lines, we recognized favorable reserve development of $43 million for the workers' compensation line and $36 million for the commercial property 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 $25 million for the commercial casualty line and $15 million for the commercial auto line. Within personal lines, we recognized favorable reserve development of $51 million for the homeowner line.

For the three months ended September 30, 2021, we experienced $102 million of favorable development on prior accident years, including $107 million of favorable development in commercial lines, $3 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 commercial casualty line and $34 million for the commercial property line due to reduced uncertainty of prior accident year loss and loss adjustment expense for these lines. For the nine months ended September 30, 2021, we experienced $331 million of favorable development on prior accident years, including $276 million of favorable development in commercial lines, $35 million of favorable development in personal lines and $6 million of unfavorable development in excess and surplus lines. Within commercial lines, we recognized favorable reserve development of $85 million for the commercial casualty line, $68 million for the commercial property line, $59 million for the workers' compensation line and $44 million for the commercial auto 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.