NOTE 4 – Property Casualty Loss and Loss Expenses

This table summarizes activity for our consolidated property casualty loss and loss expense reserves:

(In millions)	Three months ended September 30,						Nine months ended September 30,
	2011			2010			2011			2010
Gross loss and loss expense reserves, beginning of period	$	4,479		$	4,131		$	4,137		$	4,096
Less reinsurance receivable		508			311			326			435
Net loss and loss expense reserves, beginning of period		3,971			3,820			3,811			3,661
Net incurred loss and loss expenses related to:
Current accident year		675			592			2,115			1,731
Prior accident years		(68	)		(61	)		(221	)		(174	)
Total incurred		607			531			1,894			1,557
Net paid loss and loss expenses related to:
Current accident year		360			308			878			641
Prior accident years		205			196			814			730
Total paid		565			504			1,692			1,371

Net loss and loss expense reserves, end of period		4,013			3,847			4,013			3,847
Plus reinsurance receivable		450			319			450			319
Gross loss and loss expense reserves, end of period	$	4,463		$	4,166		$	4,463		$	4,166

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. The actuarial estimate is subject to review and adjustment by an inter-departmental committee that includes actuarial management, who 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.

We decreased the provision for prior accident years’ incurred loss and loss expenses primarily due to reduced volatility in paid losses and reduced volatility in projections of future calendar year trends and favorable case reserve development. Favorable incurred development in prior accident years occurred mostly in the commercial lines casualty line of business and has had similar trends in the past two years, with approximately 60 percent coming from the most recent prior accident year in each nine-month period above. The reserve for loss and loss expenses in the condensed consolidated balance sheets also includes $58 million at September 30, 2011, and $59 million at September 30, 2010, for certain life and health loss and loss expense reserves.