We use actuarial methods, models, assumptions 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 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 finance 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.

Our reserving process takes into account known facts and interpretations of circumstances and factors including the type of claim, policy provisions pertaining to each claim, potential subrogation or salvage recoverable, large loss activity and trends, new business activity, judicial decisions, economic conditions, changes in law and regulation and product and underwriting changes. There have been no significant changes in methodologies and assumptions used in calculating loss and loss expense reserves for all years presented. There were no material additional premiums or return premiums accrued for as a result of prior-year effects.

For events designated as natural catastrophes resulting in losses incurred related to direct premiums, we calculate IBNR reserves directly as a result of an estimated claim counts and estimated average dollar amount per claim for each event. Once individual case reserves are established for a catastrophe event, we reduce the IBNR reserves.

Due to the uncertainties inherent with loss reserves, our ultimate loss experience could prove better or worse than what our carried reserves reflect. To the extent that reserves are inadequate and are required to be increased, the amount of the increase is a charge in that period, raising our loss and loss expense ratio and reducing earnings. To the extent that reserves are redundant and are required to be released, the amount of the release is a credit in that period, reducing our loss and loss expense ratio and increasing earnings.


(Dollars in millions)	Years ended December 31,
	2022		2021		2020
Gross loss and loss expense reserves, January 1	$	7,229	$	6,677	$	6,088
Less reinsurance recoverable	327		277		342
Net loss and loss expense reserves, January 1	6,902		6,400		5,746



Net incurred loss and loss expenses related to:
Current accident year	4,875		4,024		3,968
Prior accident years	(159)		(428)		(131)
Total incurred	4,716		3,596		3,837
Net paid loss and loss expenses related to:
Current accident year	1,592		1,379		1,493
Prior accident years	2,095		1,715		1,690
Total paid	3,687		3,094		3,183

Net loss and loss expense reserves, December 31	7,931		6,902		6,400
Plus reinsurance recoverable	405		327		277
Gross loss and loss expense reserves, December 31	$	8,336	$	7,229	$	6,677

At December 31, 2022, 2021 and 2020, the reserve for loss and loss expense in the consolidated balance sheets also included $64 million, $76 million and $69 million, respectively, for certain life and health loss and loss expense reserves. Additional disclosures for reserves related to these health claims are not material and therefore not provided.

During 2022, we experienced $159 million of favorable development on prior accident years including $76 million of favorable development in commercial lines, $61 million of favorable development in personal lines and $9 million of favorable development in excess and surplus lines. Within commercial lines, we recognized favorable development of $63 million for the workers' compensation line and $44 million for the commercial property line due to reduced uncertainty of prior accident year loss and loss expense for these lines. This was partially offset by unfavorable development of $25 million for the commercial casualty line and $23 million for the commercial auto line. Within personal lines, we recognized favorable reserve development of $54 million for the homeowner line of business.

During 2021, we experienced $428 million of favorable development on prior accident years including $353 million of favorable development in commercial lines, $50 million of favorable development in personal lines and $7 million of unfavorable development in excess and surplus lines. Within commercial lines, we recognized favorable development of $120 million for the commercial casualty line, $97 million for the commercial property line,

$66 million for the workers' compensation line and $43 million for the commercial auto line due to reduced uncertainty of prior accident year loss and loss expense for these lines. Within personal lines, we recognized favorable reserve development of $31 million in personal auto and $14 million for the homeowner line of business.

During 2020, we experienced $131 million of favorable development on prior accident years including $95 million of favorable development in commercial lines, $18 million of favorable development in personal lines and $7 million of unfavorable development in excess and surplus lines. Within commercial lines, we recognized favorable development $54 million for the commercial casualty line, $39 million for the workers' compensation line and

$16 million for the commercial property line due to reduced uncertainty of prior accident year loss and loss expense for these lines. This was partially offset by unfavorable development of $17 million for the commercial auto line. Within personal lines, we recognized favorable reserve development of $15 million in personal auto and $5 million for the homeowner line of business.

Included in our lines of business are asbestos and environmental claims. We carried $92 million and $88 million of net loss and loss expense reserves for asbestos and environmental claims at December 31, 2022 and 2021, respectively. The asbestos and environmental claims amounts for each respective year constituted less than 2.0% of total net loss and loss expense reserves at these year-end dates. We believe our exposure to asbestos and environmental claims is limited, largely because our reinsurance retention was $500,000 or below prior to 1987. We also were predominantly a personal lines company in the 1960s and 1970s. During the 1980s and early 1990s, commercial lines grew as a percentage of our overall business and our exposure to asbestos and environmental claims grew accordingly. Over that period, we included an asbestos and environmental exclusion in almost all policies or endorsed the exclusion to the policies. We have no exposure to asbestos and environmental claims related to our acquisition of Cincinnati Global. We continue to monitor our claims for evidence of material exposure to other mass tort classes but have found no such credible evidence to date.

The following table provides a reconciliation of the property casualty incurred losses and allocated loss adjustment expenses (ALAE) development and paid losses and ALAE development information at December 31, 2022.


(Dollars in millions)	Cumulative incurred losses and ALAE as reported within the triangles, net of reinsurance		Cumulative paid losses and ALAE as reported within the triangles, net of reinsurance		Liabilities for loss and ALAE for accident years not presented in the triangles, net of reinsurance		Total liabilities for loss and ALAE, net of reinsurance		Reinsurance recoverable on unpaid losses		Total liabilities for gross loss and loss expense reserves




Commercial casualty	$	5,932	$	3,396	$	86	$	2,622	$	43	$	2,665
Workers' compensation	1,865		1,215		311		961		57		1,018
Commercial auto	2,332		1,581		40		791		5		796
Commercial property	3,312		2,774		15		553		47		600
Personal auto	1,831		1,557		13		287		28		315
Homeowner	2,275		1,952		6		329		8		337
Excess and surplus	1,272		587		2		687		37		724
Other lines											1,512
Total liabilities for loss and ALAE reserves											7,967
Unallocated loss adjustment expense reserves											369
Gross loss and loss expense reserves											$	8,336

For all lines of business, the claim counts reported are primarily measured by insurance coverages that are triggered when a loss occurs and a reserve is established. For this purpose, coverages are defined as unique combinations of certain attributes such as line of business and cause of loss. Claims that are opened and closed without payment are included in the reported claim counts. Claim counts are presented on a direct basis only and do not reflect any assumed or ceded reinsurance.

In the following tables, commercial casualty, workers' compensation and excess and surplus lines each disclose 10 accident years of loss and ALAE reserves and the cumulative number of reported claims. Commercial auto, commercial property, personal auto and homeowner each disclose five accident years of loss and ALAE reserves and the cumulative number of reported claims consistent with the number of years for which claims incurred typically remain outstanding.

The following table shows the commercial casualty incurred and paid losses and ALAE development by accident year. The table also shows the IBNR reserves plus expected development on reported losses and claim frequency:


(Dollars in millions, reported claims in thousands)																					As of December 31, 2022
Incurred losses and ALAE, net of reinsurance for the years ended December 31,																						Total of incurred but not reported liabilities plus expected development on reported losses		Cumulative number of reported claims

Accident	Unaudited
Year	2013		2014		2015		2016		2017		2018		2019		2020		2021		2022
2013	$	448	$	443	$	431	$	416	$	413	$	407	$	391	$	386	$	385	$	381		$	9	20
2014			503		496		479		476		479		465		469		466		462			10		21
2015					533		526		529		516		508		502		504		496			14		22
2016							563		574		557		555		554		538		531			32		22
2017									610		597		577		571		555		554			51		21
2018											650		641		622		588		612			77		22
2019													672		643		607		669			124		20
2020															674		629		606			188		14
2021																	714		697			338		13
2022																			924			613		10
Total																			$	5,932

Cumulative paid losses and ALAE, net of reinsurance
2013	$	35	$	90	$	159	$	232	$	286	$	312	$	337	$	348	$	355	$	366
2014			34		97		172		287		338		390		409		421		437
2015					38		108		200		287		362		404		424		453
2016							46		126		228		331		395		434		466
2017									48		122		234		320		392		437
2018											44		148		253		345		441
2019													39		134		259		394
2020															33		102		242
2021																	31		123
2022																			37
Total																			3,396
All outstanding liabilities before 2013, net of reinsurance																			86
Liabilities for loss and ALAE, net of reinsurance																			$	2,622

The following table shows the average annual percentage payout of incurred losses for the commercial casualty line of business:


Average annual percentage payout of incurred losses by age, net of reinsurance (unaudited)
Years	1	2	3	4	5	6	7	8	9	10
Average annual percentage payout	6.9%	14.0%	18.9%	18.7%	13.5%	8.4%	5.1%	3.8%	2.7%	2.4%

The following table shows the workers’ compensation incurred and paid losses and ALAE development by accident year. The table also shows the IBNR reserves plus expected development on reported losses and claim frequency:


(Dollars in millions, reported claims in thousands)																					As of December 31, 2022
Incurred losses and ALAE, net of reinsurance for the years ended December 31,																						Total of incurred but not reported liabilities plus expected development on reported losses		Cumulative number of reported claims

Accident	Unaudited
Year	2013		2014		2015		2016		2017		2018		2019		2020		2021		2022
2013	$	264	$	246	$	221	$	212	$	208	$	205	$	202	$	201	$	204	$	204		$	16	20
2014			261		233		214		203		201		198		197		202		202			16		19
2015					246		220		208		195		179		173		173		171			23		17
2016							230		218		206		188		183		183		183			24		16
2017									218		208		190		183		172		167			27		15
2018											222		207		199		186		179			28		15
2019													224		215		202		188			41		14
2020															204		190		172			55		11
2021																	202		190			49		11
2022																			209			84		10
Total																			$	1,865

Cumulative paid losses and ALAE, net of reinsurance
2013	$	61	$	119	$	144	$	157	$	164	$	168	$	170	$	174	$	177	$	179
2014			56		110		134		148		157		162		165		168		171
2015					47		93		115		129		134		137		139		139
2016							46		97		119		131		141		146		148
2017									45		88		106		114		119		122
2018											48		95		115		127		133
2019													49		94		115		122
2020															37		68		82
2021																	37		82
2022																			37
Total																			1,215
All outstanding liabilities before 2013, net of reinsurance																			311
Liabilities for loss and ALAE, net of reinsurance																			$	961

The following table shows the average annual percentage payout of incurred losses for the workers’ compensation line of business:


Average annual percentage payout of incurred losses by age, net of reinsurance (unaudited)
Years	1	2	3	4	5	6	7	8	9	10
Average annual percentage payout	24.8%	25.4%	11.2%	6.1%	3.8%	2.2%	1.3%	1.0%	1.3%	0.9%

The following table shows the commercial auto incurred and paid losses and ALAE development by accident year. The table also shows the IBNR reserves plus expected development on reported losses and claim frequency:


(Dollars in millions, reported claims in thousands)											As of December 31, 2022
Incurred losses and ALAE, net of reinsurance for the years ended December 31,												Total of incurred but not reported liabilities plus expected development on reported losses		Cumulative number of reported claims

Accident	Unaudited
Year	2018		2019		2020		2021		2022
2018	$	453	$	442	$	442	$	440	$	444		$	9	49
2019			452		451		453		469			18		46
2020					424		391		384			37		36
2021							470		477			91		39
2022									558			181		37
Total									$	2,332

Cumulative paid losses and ALAE, net of reinsurance
2018	$	184	$	266	$	337	$	378	$	411
2019			183		268		333		395
2020					154		214		280
2021							179		278
2022									217
Total									1,581
All outstanding liabilities before 2018, net of reinsurance									40
Liabilities for loss and ALAE, net of reinsurance									$	791

The following table shows the average annual percentage payout of incurred losses for the commercial auto line of business. Commercial auto includes both physical damage and liability losses. A majority of the incurred losses paid after year 2 are the result of liability losses.


Average annual percentage payout of incurred losses by age, net of reinsurance (unaudited)
Years	1	2	3	4	5
Average annual percentage payout	39.4%	18.3%	15.6%	11.1%	7.8%

The following table shows the commercial property incurred and paid losses and ALAE development by accident year. The table also shows the IBNR reserves plus expected development on reported losses and claim frequency:


(Dollars in millions, reported claims in thousands)											As of December 31, 2022
Incurred losses and ALAE, net of reinsurance for the years ended December 31,												Total of incurred but not reported liabilities plus expected development on reported losses		Cumulative number of reported claims

Accident	Unaudited
Year	2018		2019		2020		2021		2022
2018	$	630	$	603	$	590	$	597	$	596		$	4	18
2019			621		606		600		598			6		17
2020					855		742		719			29		24
2021							607		586			15		14
2022									813			195		13
Total									$	3,312

Cumulative paid losses and ALAE, net of reinsurance
2018	$	386	$	559	$	576	$	589	$	592
2019			413		561		579		590
2020					489		637		672
2021							326		527
2022									393
Total									2,774
All outstanding liabilities before 2018, net of reinsurance									15
Liabilities for loss and ALAE, net of reinsurance									$	553

The following table shows the average annual percentage payout of incurred losses for the commercial property line of business:


Average annual percentage payout of incurred losses by age, net of reinsurance (unaudited)
Years	1	2	3	4	5
Average annual percentage payout	61.1%	27.2%	3.6%	2.0%	0.4%

The following table shows the personal auto incurred and paid losses and ALAE development by accident year. The table also shows the IBNR reserves plus expected development on reported losses and claim frequency:


(Dollars in millions, reported claims in thousands)											As of December 31, 2022
Incurred losses and ALAE, net of reinsurance for the years ended December 31,												Total of incurred but not reported liabilities plus expected development on reported losses		Cumulative number of reported claims

Accident	Unaudited
Year	2018		2019		2020		2021		2022
2018	$	424	$	398	$	395	$	398	$	401		$	3	111
2019			399		383		380		383			4		102
2020					305		281		277			7		71
2021							350		343			14		80
2022									427			58		80
Total									$	1,831

Cumulative paid losses and ALAE, net of reinsurance
2018	$	262	$	327	$	358	$	379	$	391
2019			250		314		346		363
2020					186		225		248
2021							219		278
2022									277
Total									1,557
All outstanding liabilities before 2018, net of reinsurance									13
Liabilities for loss and ALAE, net of reinsurance									$	287

The following table shows the average annual percentage payout of incurred losses for the personal auto line of business. Personal auto includes both physical damage and liability losses. A majority of the incurred losses paid after year 2 are the result of liability losses.


Average annual percentage payout of incurred losses by age, net of reinsurance (unaudited)
Years	1	2	3	4	5
Average annual percentage payout	65.2%	16.1%	8.2%	4.9%	2.8%

The following table shows the homeowner incurred and paid losses and ALAE development by accident year. The table also shows the IBNR reserves plus expected development on reported losses and claim frequency:


(Dollars in millions, reported claims in thousands)											As of December 31, 2022
Incurred losses and ALAE, net of reinsurance for the years ended December 31,												Total of incurred but not reported liabilities plus expected development on reported losses		Cumulative number of reported claims

Accident	Unaudited
Year	2018		2019		2020		2021		2022
2018	$	370	$	386	$	387	$	388	$	386		$	1	24
2019			432		421		422		418			2		22
2020					497		475		470			7		23
2021							495		449			15		19
2022									552			120		17
Total									$	2,275

Cumulative paid losses and ALAE, net of reinsurance
2018	$	268	$	368	$	378	$	381	$	384
2019			303		391		407		411
2020					326		434		453
2021							285		405
2022									299
Total									1,952
All outstanding liabilities before 2018, net of reinsurance									6
Liabilities for loss and ALAE, net of reinsurance									$	329

The following table shows the average annual percentage payout of incurred losses for the homeowner line of business:


Average annual percentage payout of incurred losses by age, net of reinsurance (unaudited)
Years	1	2	3	4	5
Average annual percentage payout	65.8%	24.2%	3.5%	0.9%	0.7%

The following table shows the excess and surplus lines incurred and paid losses and ALAE development by accident year. The table also shows the IBNR reserves plus expected development on reported losses and claim frequency:


(Dollars in millions, reported claims in thousands)																			As of December 31, 2022
Incurred losses and ALAE, net of reinsurance for the years ended December 31,																						Total of incurred but not reported liabilities plus expected development on reported losses		Cumulative number of reported claims

Accident	Unaudited
Year	2013		2014		2015		2016		2017		2018		2019		2020		2021			2022
2013	$	74	$	64	$	54	$	45	$	42	$	41	$	41	$	41	$	40		$	41	$	—	2
2014			95		82		75		64		60		59		59		58			56		1		2
2015					96		81		73		67		65		66		65			61		1		2
2016							93		87		84		82		90		91			88		2		3
2017									104		95		95		94		94			91		5		3
2018											116		109		110		108			107		14		3
2019													137		135		141			139		28		3
2020															172		172			160		51		3
2021																	217			235		98		3
2022																				294		198		2
Total																				$	1,272

Cumulative paid losses and ALAE, net of reinsurance
2013	$	7	$	12	$	20	$	27	$	32	$	34	$	37	$	39	$	39		$	40
2014			9		17		27		37		43		48		51		53			55
2015					8		19		29		41		51		54		56			58
2016							10		21		39		51		62		75			81
2017									11		23		41		57		68			77
2018											11		26		50		62			75
2019													13		34		55			79
2020															16		37			56
2021																	17			45
2022																				21
Total																				587
All outstanding liabilities before 2013, net of reinsurance																				2
Liabilities for loss and ALAE, net of reinsurance																				$	687

The following table shows the average annual percentage payout of incurred losses for the excess and surplus lines insurance segment. Excess and surplus lines consist mostly of commercial casualty and commercial property coverages. A majority of the incurred losses paid after year 2 are the result of commercial casualty losses.


Average annual percentage payout of incurred losses by age, net of reinsurance (unaudited)
Years	1	2	3	4	5	6	7	8	9	10
Average annual percentage payout	11.3%	13.7%	18.1%	16.1%	12.7%	9.1%	5.2%	3.3%	1.7%	2.8%