Claim and Claim Adjustment Expense Reserves

12 Months Ended

Dec. 31, 2016

Liability for Claims and Claims Adjustment Expense [Abstract]

Claim and Claim Adjustment Expense Reserves

Note E. Claim and Claim Adjustment Expense Reserves

The Company's property and casualty insurance claim and claim adjustment expense reserves represent the estimated amounts necessary to resolve all outstanding claims, including IBNR claims as of the reporting date. The Company's reserve projections are based primarily on detailed analysis of the facts in each case, the Company's experience with similar cases and various historical development patterns. Consideration is given to such historical patterns as claim reserving trends and settlement practices, loss payments, pending levels of unpaid claims and product mix, as well as court decisions, economic conditions, including inflation, and public attitudes. All of these factors can affect the estimation of claim and claim adjustment expense reserves.

Establishing claim and claim adjustment expense reserves, including claim and claim adjustment expense reserves for catastrophic events that have occurred, is an estimation process. Many factors can ultimately affect the final settlement of a claim and, therefore, the necessary reserve. Changes in the law, results of litigation, medical costs, the cost of repair materials and labor rates can all affect ultimate claim costs. In addition, time can be a critical part of reserving determinations since the longer the span between the incidence of a loss and the payment or settlement of the claim, the more variable the ultimate settlement amount can be. Accordingly, short-tail claims, such as property damage claims, tend to be more reasonably estimable than long-tail claims, such as workers' compensation, general liability and professional liability claims. Adjustments to prior year reserve estimates, if necessary, are reflected in the results of operations in the period that the need for such adjustments is determined. There can be no assurance that the Company's ultimate cost for insurance losses will not exceed current estimates.

Catastrophes are an inherent risk of the property and casualty insurance business and have contributed to material period-to-period fluctuations in the Company's results of operations and/or equity. The Company reported catastrophe losses, net of reinsurance, of $165 million, $141 million and $156 million for the years ended December 31, 2016, 2015 and 2014. Catastrophe losses in 2016 related primarily to U.S. weather-related events and the Fort McMurray wildfires.

In developing claim and claim adjustment expense (“loss” or “losses”) reserve estimates, our actuaries perform detailed reserve analyses that are staggered throughout the year. Every reserve group is reviewed at least once during the year. The analyses generally review losses gross of ceded reinsurance and apply the ceded reinsurance terms to the gross estimates to establish estimates net of reinsurance. In addition to the detailed analyses, we review actual loss emergence for all products each quarter. In developing the loss reserve estimates for property and casualty contracts, we generally project ultimate losses using several common actuarial methods as listed below. We review the various indications from the various methods and apply judgment to select an actuarial point estimate. The indicated required reserve is the difference between the selected ultimate loss and the inception-to-date paid losses. The difference between the selected ultimate loss and the case incurred or reported loss is IBNR. IBNR includes a provision for development on known cases as well as a provision for late reported incurred claims. Further, the Company does not establish case reserves for allocated loss adjustment expenses (ALAE), therefore all ALAE reserves are included in our estimate of IBNR. The most frequently utilized methods to project ultimate losses include the following:

•paid development;

•incurred development;

•loss ratio;

•Bornhuetter-Ferguson using premiums and paid loss;

•Bornhuetter-Ferguson using premiums and incurred loss;

•frequency times severity; and

•stochastic modeling.

The paid development method estimates ultimate losses by reviewing paid loss patterns and applying them to accident years with further expected changes in paid loss. The incurred development method is similar to the paid development method, but it uses case incurred losses instead of paid losses. The loss ratio method multiplies premiums by an expected loss ratio to produce ultimate loss estimates for each accident year. The Bornhuetter-Ferguson using premiums and paid loss method is a combination of the paid development approach and the loss ratio approach. This method normally determines expected loss ratios similar to the approach used to estimate the expected loss ratio for the loss ratio method. The Bornhuetter-Ferguson using premiums and incurred loss method is similar to the Bornhuetter-Ferguson using premiums and paid loss method except that it uses case incurred losses. The frequency times severity method multiplies a projected number of ultimate claims by an estimated ultimate average loss for each accident year to produce ultimate loss estimates. Stochastic modeling produces a range of possible outcomes based on varying assumptions related to the particular product being modeled.

For many exposures, especially those that can be considered long-tail, a particular accident or policy year may not have a sufficient volume of paid losses to produce a statistically reliable estimate of ultimate losses. In such a case, our actuaries typically assign more weight to the incurred development method than to the paid development method. As claims continue to settle and the volume of paid loss increases, the actuaries may assign additional weight to the paid development method. For most of our products, even the incurred losses for accident or policy years that are early in the claim settlement process will not be of sufficient volume to produce a reliable estimate of ultimate losses. In these cases, we may not assign any weight to the paid and incurred development methods. We will use the loss ratio, Bornhuetter-Ferguson and frequency times severity methods. For short-tail exposures, the paid and incurred development methods can often be relied on sooner, primarily because our history includes a sufficient number of years to cover the entire period over which paid and incurred losses are expected to change. However, we may also use the loss ratio, Bornhuetter-Ferguson and frequency times severity methods for short-tail exposures. For other more complex reserve groups where the above methods may not produce reliable indications, we use additional methods tailored to the characteristics of the specific situation.

Reserves for policyholder benefits for our Life & Group Non-Core segment, which primarily includes long term care, are based on actuarial assumptions which include estimates of morbidity, persistency, discount rates and expenses over the life of the contracts. Under GAAP, the best estimates of the actuarial assumptions at the date the contract was issued are locked-in throughout the life of the contract, unless a premium deficiency develops, which occurred in 2015. As a result, the Company updated the assumptions to represent management’s best estimates at the time of the premium deficiency and these revised assumptions are locked-in unless another premium deficiency is identified.

Certain claim liabilities are more difficult to estimate and have differing methodologies and considerations which are described below.

Our mass tort and A&EP reserving methodologies are similar as both are based on detailed account reviews of all large accounts with estimates based on ultimate payments considering the applicable law and coverage litigation. These reserves are subject to greater inherent variability than is typical of the remainder of the Company’s reserves due to, among other things, a general lack of sufficiently detailed data, expansion of the population being held responsible for these exposures and significant unresolved legal issues such as the existence of coverage and the definition of an occurrence.

Our actuarial reserve analyses result in point estimates. Each quarter, the results of detailed reserve reviews are summarized and discussed with our senior management to determine management's best estimate of reserves. Senior management considers many factors in making this decision. The factors include, but are not limited to, the historical pattern and volatility of the actuarial indications, the sensitivity of the actuarial indications to changes in paid and incurred loss patterns, the consistency of claims handling processes, the consistency of case reserving practices, changes in our pricing and underwriting, pricing and underwriting trends in the insurance market and legal, judicial, social and economic trends. Our recorded reserves reflect our best estimate as of a particular point in time based upon known facts, consideration of the factors cited above and our judgment. The carried reserve may differ from the actuarial point estimate as the result of our consideration of the factors noted above as well as the potential volatility of the projections associated with the specific product being analyzed and other factors affecting claims costs that may not be quantifiable through traditional actuarial analysis.

The loss reserve development tables presented herein illustrate the change over time of reserves established for claim and allocated claim adjustment expenses arising from short duration insurance contracts for certain lines of business within our property & casualty segments. Not all lines of business or segments are presented based on their context to the Company's overall loss reserves, calendar year reserve development, or calendar year net earned premiums. Insurance contracts are considered to be short duration contracts when the contracts are not expected to remain in force for an extended period of time. The Cumulative Net Incurred Claim and Allocated Claim Adjustment Expenses tables, reading across, show the cumulative net incurred claim and allocated claim adjustment expenses relating to each accident year at the end of the stated calendar year. Changes in the cumulative amount across time are the result of the Company's expanded awareness of additional facts and circumstances that pertain to the unsettled claims. The Cumulative Net Paid Claims and Allocated Claim Adjustment Expenses tables, reading across, show the cumulative amount paid for claims in each accident year as of the end of the stated calendar year. The Net Strengthening or (Releases) of Prior Accident Year Reserves tables, reading across, show the net increase or decrease in the cumulative net incurred accident year claim and allocated claim adjustment expenses during each stated calendar year and indicates whether the reserves for that accident year were strengthened or released.

The information in the tables is reported on a net basis after reinsurance and does not include unallocated claim and claim adjustment expenses or the effects of discounting. The information contained in the years preceding the current calendar year is unaudited. Information contained in the tables pertaining to our International segment has been presented at the year-end 2016 foreign currency exchange rates for all periods presented to remove the effects of foreign currency exchange rate changes between calendar years. The Company has presented development information for the Hardy business prospectively from the date of acquisition and is presented as a separate table within our International segment. To the extent the Company enters into a commutation, the transaction is reported on a prospective basis. To the extent that the Company enters into a disposition, the effects of the disposition are reported on a retrospective basis by removing the balances associated with the disposed of business.

The amounts reported for the cumulative number of reported claims include direct and assumed open and closed claims by accident year at the claimant level. The number excludes claim counts for claims within a policy deductible where the insured is responsible for payment of losses in the deductible layer. Claim count data for certain assumed reinsurance contracts is unavailable.

In the loss reserve development tables, IBNR includes reserves for incurred but not reported losses and expected development on case reserves. The Company does not case reserve ALAE, therefore all ALAE reserves are also included in the estimate of IBNR.

Liability for Unpaid Claim and Claim Adjustment Expenses Rollforward

The following table presents a reconciliation between beginning and ending claim and claim adjustment expense reserves, including claim and claim adjustment expense reserves of the Life & Group Non-Core segment.

As of or for the years ended December 31
(In millions)	2016			2015			2014
Reserves, beginning of year:
Gross	$	22,663		$	23,271		$	24,089
Ceded	4,087			4,344			4,972
Net reserves, beginning of year	18,576			18,927			19,117
Change in net reserves due to acquisition (disposition) of subsidiaries	—			—			(13		)
Net incurred claim and claim adjustment expenses:
Provision for insured events of current year	5,025			4,934			5,043
Decrease in provision for insured events of prior years	(342		)	(255		)	(36		)
Amortization of discount	175			166			161
Total net incurred (1)	4,858			4,845			5,168
Net payments attributable to:
Current year events	(967		)	(856		)	(945		)
Prior year events	(4,167		)	(4,089		)	(4,355		)
Total net payments	(5,134		)	(4,945		)	(5,300		)
Foreign currency translation adjustment and other	(51		)	(251		)	(45		)
Net reserves, end of year	18,249			18,576			18,927
Ceded reserves, end of year	4,094			4,087			4,344
Gross reserves, end of year	$	22,343		$	22,663		$	23,271

(1) Total net incurred above does not agree to Insurance claims and policyholders' benefits as reflected on the Consolidated Statements of Operations due to amounts related to retroactive reinsurance deferred gain accounting, uncollectible reinsurance and loss deductible receivables, and benefit expenses related to future policy benefits, which are not reflected in the table above.

The following tables present the gross and net carried reserves.

December 31, 2016	Specialty		Commercial		International		Life & Group Non-Core		Corporate & Other Non-Core		Total
(In millions)
Gross Case Reserves	$	1,871	$	4,661	$	632	$	3,172	$	1,524	$	11,860
Gross IBNR Reserves	4,278		4,233		696		186		1,090		10,483
Total Gross Carried Claim and Claim Adjustment Expense Reserves	$	6,149	$	8,894	$	1,328	$	3,358	$	2,614	$	22,343
Net Case Reserves	$	1,681	$	4,353	$	548	$	2,951	$	94	$	9,627
Net IBNR Reserves	3,723		3,952		653		158		136		8,622
Total Net Carried Claim and Claim Adjustment Expense Reserves	$	5,404	$	8,305	$	1,201	$	3,109	$	230	$	18,249

December 31, 2015	Specialty		Commercial		International		Life & Group Non-Core		Corporate & Other Non-Core		Total
(In millions)
Gross Case Reserves	$	2,011	$	4,975	$	622	$	2,973	$	1,521	$	12,102
Gross IBNR Reserves	4,258		4,208		725		247		1,123		10,561
Total Gross Carried Claim and Claim Adjustment Expense Reserves	$	6,269	$	9,183	$	1,347	$	3,220	$	2,644	$	22,663
Net Case Reserves	$	1,810	$	4,651	$	531	$	2,714	$	130	$	9,836
Net IBNR Reserves	3,758		3,925		688		216		153		8,740
Total Net Carried Claim and Claim Adjustment Expense Reserves	$	5,568	$	8,576	$	1,219	$	2,930	$	283	$	18,576

Net Prior Year Development

Changes in estimates of claim and allocated claim adjustment expense reserves and premium accruals, net of reinsurance, for prior years are defined as net prior year development. These changes can be favorable or unfavorable. The following tables and discussion present the net prior year development recorded for Specialty, Commercial, International and Corporate & Other Non-Core segments.

Year ended December 31, 2016
(In millions)	Specialty			Commercial			International			Corporate & Other Non-Core		Total
Pretax (favorable) unfavorable net prior year claim and allocated claim adjustment expense reserve development	$	(287	)	$	55		$	(58	)	$	2	$	(288	)
Pretax (favorable) unfavorable premium development	(18		)	(2		)	(6		)	—		(26		)
Total pretax (favorable) unfavorable net prior year development	$	(305	)	$	53		$	(64	)	$	2	$	(314	)

Year ended December 31, 2015
(In millions)	Specialty			Commercial			International			Corporate & Other Non-Core		Total
Pretax (favorable) unfavorable net prior year claim and allocated claim adjustment expense reserve development	$	(141	)	$	(15	)	$	(54	)	$	—	$	(210	)
Pretax (favorable) unfavorable premium development	(11		)	(15		)	18			—		(8		)
Total pretax (favorable) unfavorable net prior year development	$	(152	)	$	(30	)	$	(36	)	$	—	$	(218	)

Year ended December 31, 2014
(In millions)	Specialty			Commercial			International			Corporate & Other Non-Core			Total
Pretax (favorable) unfavorable net prior year claim and allocated claim adjustment expense reserve development	$	(136	)	$	176		$	(59	)	$	(2	)	$	(21	)
Pretax (favorable) unfavorable premium development	(13		)	(20		)	2			(1		)	(32		)
Total pretax (favorable) unfavorable net prior year development	$	(149	)	$	156		$	(57	)	$	(3	)	$	(53	)

Favorable net prior year development of $45 million, $50 million and $14 million was recorded in the Life & Group Non-Core segment for the years ended December 31, 2016, 2015 and 2014. The favorable net prior year development for the year ended December 31, 2016 was driven by a reserve release resulting from the annual experience study of long term care claim reserves which indicated lower than expected claim severity.

Premium development can occur in the property and casualty business when there is a change in exposure on auditable policies or when premium accruals differ from processed premium.  Audits on policies usually occur in a period after the expiration date of the policy.

Specialty

The following table presents further detail of the net prior year claim and allocated claim adjustment expense reserve development (development) recorded for the Specialty segment.

Years ended December 31
(In millions)	2016			2015			2014
Pretax (favorable) unfavorable development:
Medical Professional Liability	$	(37	)	$	(43	)	$	39
Other Professional Liability and Management Liability	(130		)	—			(87		)
Surety	(63		)	(69		)	(82		)
Warranty	4			(2		)	(2		)
Other	(61		)	(27		)	(4		)
Total pretax (favorable) unfavorable development	$	(287	)	$	(141	)	$	(136	)

2016

Favorable development for medical professional liability was primarily due to lower than expected severities for individual healthcare professionals, allied facilities and hospitals in accident years 2011 and prior and better than expected severity in medical products liability in accident years 2010 through 2015. This was partially offset by unfavorable development in accident years 2012 and 2013 related to higher than expected large loss emergence in hospitals and higher than expected frequency and severity in accident years 2014 and 2015 in our aging services business.

Favorable development in other professional liability and management liability was primarily due to favorable settlements on closed claims and lower than expected frequency of claims in accident years 2010 through 2014 related to professional services and financial institutions. This was partially offset by unfavorable development related to a specific financial institutions claim in accident year 2014, higher management liability severities in accident year 2015, and deterioration on credit crises-related claims in accident year 2009.

Favorable development in surety coverages was primarily due to lower than expected frequency of large losses in accident years 2014 and prior.

Favorable development for other coverages provided to Specialty customers was due to better than expected claim frequency and claim severity in commercial lines coverages in accident years 2010 through 2015.

2015

Overall, favorable development for medical professional liability was related to lower than expected severity in accident years 2012 and prior. Unfavorable development was recorded related to increased claim frequency and severity in the aging services business in accident years 2013 and 2014.

Favorable development in other professional liability and management liability related to better than expected large loss emergence in financial institutions primarily in accident years 2011 through 2014. Additional favorable development related to lower than expected severity for professional services in accident years 2011 and prior. Unfavorable development was recorded related to increased frequency of large claims on public company management liability in accident years 2012 through 2014.

Favorable development for surety coverages was primarily due to lower than expected frequency of large losses in accident years 2013 and prior.

Favorable development for other coverages was due to better than expected claim frequency in property coverages provided to Specialty customers in accident year 2014.

2014

Unfavorable development for medical professional liability was primarily related to increased frequency of large medical products liability class action lawsuits in accident years 2012 and prior and increased frequency of other large medical professional liability losses in accident years 2011 through 2013.

Overall, favorable development for other professional liability and management liability was related to better than expected severity in accident years 2008 through 2011, including favorable outcomes on individual large claims. Additional favorable development related to lower than expected frequency in accident years 2011 through 2013. Unfavorable development was recorded due to higher than expected severity in financial institution and professional service coverages in accident years 2009 through 2011.

Favorable development for surety coverages was primarily due to better than expected large loss emergence in accident years 2012 and prior.

Specialty - Line of Business Composition

The table below provides the line of business composition of the net liability for unpaid claim and claim adjustment expenses for the Specialty segment.

As of December 31
(In millions)	2016
Net liability for unpaid claim and claim adjustment expenses:
Medical Professional Liability	$	1,779
Other Professional Liability and Management Liability	3,063
Surety	394
Warranty	37
Other	131
Total net liability for unpaid claim and claim adjustment expenses	$	5,404

Specialty - Medical Professional Liability

Cumulative Net Incurred Claim and Allocated Claim Adjustment Expenses are presented in the following table.

As of December 31	Calendar Year																				As of December 31, 2016
(In millions, except reported claims data)	2007(1)		2008(1)		2009(1)		2010(1)		2011(1)		2012(1)		2013(1)		2014(1)		2015(1)		2016		IBNR		Cumulative Number of Claims
Accident Year
2007	$	448	$	452	$	444	$	427	$	395	$	391	$	390	$	401	$	399	$	385	$	9	12,122
2008			426		451		496		480		468		468		467		455		442		9		14,094
2009					462		469		494		506		480		471		463		432		12		15,573
2010							483		478		478		486		470		446		403		16		15,206
2011									486		492		507		533		501		491		23		17,428
2012											526		529		575		567		559		47		18,375
2013													534		540		560		567		95		19,565
2014															511		548		585		165		19,286
2015																	480		539		278		16,798
2016																			469		400		11,600
																	Total		$	4,872	$	1,054

Cumulative Net Paid Claims and Allocated Claim Adjustment Expenses are presented in the following table.

As of December 31	Calendar Year
(In millions)	2007(1)		2008(1)		2009(1)		2010(1)		2011(1)		2012(1)		2013(1)		2014(1)		2015(1)		2016
Accident Year
2007	$	11	$	68	$	134	$	201	$	247	$	296	$	326	$	352	$	364	$	365
2008			9		90		207		282		332		377		395		409		428
2009					9		75		180		278		328		353		377		396
2010							11		93		186		273		338		361		371
2011									18		121		225		315		379		407
2012											15		121		236		359		428
2013													18		121		259		364
2014															25		149		274
2015																	22		105
2016																			18
																	Total		$	3,156
Net liability for unpaid claim and allocated claim adjustment expenses for the accident years presented																			$	1,716
Net liability for unpaid claim and claim adjustment expenses for accident years prior to 2007																			30
Liability for unallocated claim adjustment expenses for accident years presented																			33
Total net liability for unpaid claim and claim adjustment expenses																			$	1,779

Net strengthening or (releases) of prior accident year reserves is presented in the following table.

For the years ended December 31	Calendar Year
(In millions)	2008(1)		2009(1)			2010(1)			2011(1)			2012(1)			2013(1)			2014(1)			2015(1)			2016			Total
Accident Year
2007	$	4	$	(8	)	$	(17	)	$	(32	)	$	(4	)	$	(1	)	$	11		$	(2	)	$	(14	)	$	(63	)
2008			25			45			(16		)	(12		)	—			(1		)	(12		)	(13		)	16
2009						7			25			12			(26		)	(9		)	(8		)	(31		)	(30		)
2010									(5		)	—			8			(16		)	(24		)	(43		)	(80		)
2011												6			15			26			(32		)	(10		)	5
2012															3			46			(8		)	(8		)	33
2013																		6			20			7			33
2014																					37			37			74
2015																								59			59
Total net development for the accident years presented above																		$	63		$	(29	)	$	(16	)
Total net development for accident years prior to 2007																		(24		)	(14		)	(21		)
Total																		$	39		$	(43	)	$	(37	)

(1) Data presented for these calendar years is required supplemental information, which is unaudited.

Specialty - Other Professional Liability and Management Liability

Cumulative Net Incurred Claim and Allocated Claim Adjustment Expenses are presented in the following table.

As of December 31	Calendar Year																				As of December 31, 2016
(In millions, except reported claims data)	2007(1)		2008(1)		2009(1)		2010(1)		2011(1)		2012(1)		2013(1)		2014(1)		2015(1)		2016		IBNR		Cumulative Number of Claims
Accident Year
2007	$	804	$	817	$	806	$	754	$	734	$	724	$	704	$	681	$	662	$	662	$	13	16,011
2008			916		933		954		924		915		880		850		845		827		35		16,326
2009					829		873		903		898		891		900		895		903		50		17,263
2010							825		827		850		848		846		836		823		39		17,796
2011									876		904		933		948		944		910		107		18,620
2012											907		894		876		870		833		107		18,228
2013													844		841		879		840		137		17,324
2014															841		859		854		306		16,886
2015																	847		851		478		16,391
2016																			859		742		15,045
																	Total		$	8,362	$	2,014

Cumulative Net Paid Claims and Allocated Claim Adjustment Expenses are presented in the following table.

As of December 31	Calendar Year
(In millions)	2007(1)		2008(1)		2009(1)		2010(1)		2011(1)		2012(1)		2013(1)		2014(1)		2015(1)		2016
Accident Year
2007	$	32	$	162	$	307	$	397	$	472	$	524	$	564	$	585	$	593	$	614
2008			39		181		376		515		600		641		678		719		741
2009					37		195		358		550		638		719		769		798
2010							31		203		404		541		630		670		721
2011									71		313		502		604		682		726
2012											57		248		398		570		648
2013													51		240		426		583
2014															51		212		375
2015																	48		209
2016																			60
																	Total		$	5,475
Net liability for unpaid claim and allocated claim adjustment expenses for the accident years presented																			$	2,887
Net liability for unpaid claim and claim adjustment expenses for accident years prior to 2007																			104
Liability for unallocated claim adjustment expenses for accident years presented																			72
Total net liability for unpaid claim and claim adjustment expenses																			$	3,063

Net strengthening or (releases) of prior accident year reserves is presented in the following table.

For the years ended December 31	Calendar Year
(In millions)	2008(1)		2009(1)			2010(1)			2011(1)			2012(1)			2013(1)			2014(1)			2015(1)			2016			Total
Accident Year
2007	$	13	$	(11	)	$	(52	)	$	(20	)	$	(10	)	$	(20	)	$	(23	)	$	(19	)	$	—		$	(142	)
2008			17			21			(30		)	(9		)	(35		)	(30		)	(5		)	(18		)	(89		)
2009						44			30			(5		)	(7		)	9			(5		)	8			74
2010									2			23			(2		)	(2		)	(10		)	(13		)	(2		)
2011												28			29			15			(4		)	(34		)	34
2012															(13		)	(18		)	(6		)	(37		)	(74		)
2013																		(3		)	38			(39		)	(4		)
2014																					18			(5		)	13
2015																								4			4
Total net development for the accident years presented above																		$	(52	)	$	7		$	(134	)
Total net development for accident years prior to 2007																		(35		)	(7		)	4
Total																		$	(87	)	$	—		$	(130	)

(1) Data presented for these calendar years is required supplemental information, which is unaudited.

Specialty - Surety

Cumulative Net Incurred Claim and Allocated Claim Adjustment Expenses are presented in the following table.

As of December 31	Calendar Year																				As of December 31, 2016
(In millions, except reported claims data)	2007(1)		2008(1)		2009(1)		2010(1)		2011(1)		2012(1)		2013(1)		2014(1)		2015(1)		2016		IBNR		Cumulative Number of Claims
Accident Year
2007	$	98	$	107	$	81	$	57	$	59	$	56	$	51	$	49	$	49	$	50	$	—	6,270
2008			114		114		73		68		61		52		48		45		44		—		7,153
2009					114		114		103		85		68		59		52		53		1		6,654
2010							112		112		111		84		76		66		63		8		5,943
2011									120		121		116		87		75		70		9		5,760
2012											120		122		98		70		52		16		5,473
2013													120		121		115		106		24		4,890
2014															123		124		94		51		4,737
2015																	131		131		100		4,279
2016																			124		110		2,902
																	Total		$	787	$	319

Cumulative Net Paid Claims and Allocated Claim Adjustment Expenses are presented in the following table.

As of December 31	Calendar Year
(In millions)	2007(1)		2008(1)		2009(1)		2010(1)		2011(1)		2012(1)		2013(1)		2014(1)		2015(1)		2016
Accident Year
2007	$	12	$	30	$	40	$	45	$	46	$	46	$	46	$	48	$	49	$	50
2008			9		27		35		39		42		43		43		43		43
2009					13		24		34		41		43		45		46		47
2010							13		34		50		55		57		58		55
2011									19		42		55		58		60		60
2012											5		32		34		35		35
2013													16		40		69		78
2014															7		30		38
2015																	7		26
2016																			5
																	Total		$	437
Net liability for unpaid claim and allocated claim adjustment expenses for the accident years presented																			$	350
Net liability for unpaid claim and claim adjustment expenses for accident years prior to 2007																			16
Liability for unallocated claim adjustment expenses for accident years presented																			28
Total net liability for unpaid claim and claim adjustment expenses																			$	394

Net strengthening or (releases) of prior accident year reserves is presented in the following table.

For the years ended December 31	Calendar Year
(In millions)	2008(1)		2009(1)			2010(1)			2011(1)			2012(1)			2013(1)			2014(1)			2015(1)			2016			Total
Accident Year
2007	$	9	$	(26	)	$	(24	)	$	2		$	(3	)	$	(5	)	$	(2	)	$	—		$	1		$	(48	)
2008			—			(41		)	(5		)	(7		)	(9		)	(4		)	(3		)	(1		)	(70		)
2009						—			(11		)	(18		)	(17		)	(9		)	(7		)	1			(61		)
2010									—			(1		)	(27		)	(8		)	(10		)	(3		)	(49		)
2011												1			(5		)	(29		)	(12		)	(5		)	(50		)
2012															2			(24		)	(28		)	(18		)	(68		)
2013																		1			(6		)	(9		)	(14		)
2014																					1			(30		)	(29		)
2015																								—			—
Total net development for the accident years presented above																		$	(75	)	$	(65	)	$	(64	)
Total net development for accident years prior to 2007																		(7		)	(4		)	1
Total																		$	(82	)	$	(69	)	$	(63	)

(1) Data presented for these calendar years is required supplemental information, which is unaudited.

Commercial

The following table presents further detail of the development recorded for the Commercial segment.

Years ended December 31
(In millions)	2016			2015			2014
Pretax (favorable) unfavorable development:
Commercial Auto	$	(46	)	$	(22	)	$	31
General Liability	(28		)	(33		)	45
Workers' Compensation	150			80			139
Property and Other	(21		)	(40		)	(39		)
Total pretax (favorable) unfavorable development	$	55		$	(15	)	$	176

2016

Favorable development for commercial auto was primarily due to favorable settlements on claims in accident years 2010 through 2014 and lower than expected severities in accident years 2012 through 2015.

Favorable development for general liability was primarily due to better than expected claim settlements in accident years 2012 through 2014 and better than expected severity on umbrella claims in accident years 2010 through 2013. This was partially offset by unfavorable development related to an increase in reported claims prior to the closing of the three year window set forth by the Minnesota Child Victims Act in accident years 2006 and prior.

Unfavorable development for workers' compensation was primarily due to higher than expected severity for Defense Base Act contractors that largely resulted from a reduction of expected future recoveries from the US Department of Labor under the War Hazard Act. Further unfavorable development was due to the impact of recent Florida court rulings for accident years 2008 through 2015. These were partially offset by favorable development related to lower than expected frequencies related to our ongoing Middle Market and Small Business results for accident years 2009 through 2014.

Favorable development for property and other was primarily due to better than expected loss frequency in accident years 2013 through 2015. This was partially offset by unfavorable development related to higher than expected severity from a fourth quarter 2015 catastrophe event.

2015

Favorable development for commercial auto was primarily due to lower than expected severity in accident years 2009 through 2014.

Favorable development for general liability was primarily due to favorable settlements on claims in accident years 2010 through 2013.

Unfavorable development for workers’ compensation was primarily due to higher than expected severity related to Defense Base Act contractors in accident years 2008 through 2014.

Favorable development for property and other was primarily due to better than expected claim emergence from 2012 and 2014 catastrophe events and better than expected frequency of large claims in accident year 2014.

The year ended December 31, 2015 also included unfavorable loss development related to extra contractual obligation losses and losses associated with premium development.

2014

Unfavorable development for commercial auto was primarily related to higher than expected frequency in accident years 2012 and 2013 and higher than expected severity for liability coverages in accident years 2010 through 2013. Favorable development was recorded related to fewer large claims than expected in accident years 2008 and 2009.

Overall, unfavorable development for general liability was primarily related to higher than expected severity in accident years 2010 through 2013. Favorable development was recorded primarily related to lower than expected frequency of large losses in accident years 2005 through 2009.

Overall, unfavorable development for workers’ compensation was primarily due to increased medical severity in accident years 2010 and prior, higher than expected severity related to Defense Base Act contractors in accident years 2010 through 2013 and the recognition of losses related to favorable premium development in accident year 2013. Favorable development of $26 million was recorded in accident years 1996 and prior related to the commutation of a workers’ compensation reinsurance pool.

Favorable development for property and other first-party coverages was recorded in accident years 2013 and prior, primarily related to fewer claims than expected and favorable individual claim settlements.

Commercial - Line of Business Composition

The table below provides the line of business composition of the net liability for unpaid claim and claim adjustment expenses for the Commercial segment.

As of December 31
(In millions)	2016
Net Claim and claim adjustment expenses:
Commercial Auto	$	424
General Liability	3,248
Workers' Compensation	4,306
Property and Other	327
Total net liability for claim and claim adjustment expenses	$	8,305

Commercial - Commercial Auto

Cumulative Net Incurred Claim and Allocated Claim Adjustment Expenses are presented in the following table.

As of December 31	Calendar Year																				As of December 31, 2016
(In millions, except reported claims data)	2007(1)		2008(1)		2009(1)		2010(1)		2011(1)		2012(1)		2013(1)		2014(1)		2015(1)		2016		IBNR		Cumulative Number of Claims
Accident Year
2007	$	348	$	367	$	368	$	360	$	355	$	358	$	356	$	355	$	354	$	352	$	—	67,473
2008			322		323		316		306		309		305		298		298		296		—		56,407
2009					287		272		274		278		281		277		275		272		—		47,325
2010							262		274		279		283		291		286		281		1		46,324
2011									262		273		279		293		290		285		5		46,676
2012											270		282		292		296		300		11		45,279
2013													242		259		257		241		20		38,513
2014															231		221		210		40		32,958
2015																	199		197		65		29,714
2016																			196		105		25,196
																	Total		$	2,630	$	247

Cumulative Net Paid Claims and Allocated Claim Adjustment Expenses are presented in the following table.

As of December 31	Calendar Year
(In millions)	2007(1)		2008(1)		2009(1)		2010(1)		2011(1)		2012(1)		2013(1)		2014(1)		2015(1)		2016
Accident Year
2007	$	93	$	185	$	250	$	295	$	329	$	340	$	348	$	349	$	350	$	351
2008			83		158		210		244		274		289		291		292		293
2009					72		128		188		229		257		269		270		270
2010							72		137		197		240		265		274		279
2011									78		141		193		241		264		275
2012											77		157		214		253		276
2013													73		132		164		195
2014															63		100		135
2015																	52		95
2016																			51
																	Total		$	2,220
Net liability for unpaid claim and allocated claim adjustment expenses for the accident years presented																			$	410
Net liability for unpaid claim and claim adjustment expenses for accident years prior to 2007																			4
Liability for unallocated claim adjustment expenses for accident years presented																			10
Total net liability for unpaid claim and claim adjustment expenses																			$	424

Net strengthening or (releases) of prior accident year reserves is presented in the following table.

For the years ended December 31	Calendar Year
(In millions)	2008(1)		2009(1)		2010(1)			2011(1)			2012(1)		2013(1)			2014(1)			2015(1)			2016			Total
Accident Year
2007	$	19	$	1	$	(8	)	$	(5	)	$	3	$	(2	)	$	(1	)	$	(1	)	$	(2	)	$	4
2008			1		(7		)	(10		)	3		(4		)	(7		)	—			(2		)	(26		)
2009					(15		)	2			4		3			(4		)	(2		)	(3		)	(15		)
2010								12			5		4			8			(5		)	(5		)	19
2011											11		6			14			(3		)	(5		)	23
2012													12			10			4			4			30
2013																17			(2		)	(16		)	(1		)
2014																			(10		)	(11		)	(21		)
2015																						(2		)	(2		)
Total net development for the accident years presented above																$	37		$	(19	)	$	(42	)
Total net development for accident years prior to 2007																(6		)	(3		)	(4		)
Total																$	31		$	(22	)	$	(46	)

(1) Data presented for these calendar years is required supplemental information, which is unaudited.

Commercial - General Liability

Cumulative Net Incurred Claim and Allocated Claim Adjustment Expenses are presented in the following table.

As of December 31	Calendar Year																				As of December 31, 2016
(In millions, except reported claims data)	2007(1)		2008(1)		2009(1)		2010(1)		2011(1)		2012(1)		2013(1)		2014(1)		2015(1)		2016		IBNR		Cumulative Number of Claims
Accident Year
2007	$	774	$	673	$	678	$	639	$	610	$	600	$	559	$	545	$	548	$	540	$	28	53,553
2008			611		604		630		647		633		632		613		600		591		18		44,586
2009					591		637		634		633		629		623		619		622		16		43,955
2010							566		597		599		649		695		675		659		25		43,378
2011									537		534		564		610		611		621		41		38,101
2012											539		563		579		570		558		63		34,037
2013													615		645		634		643		142		32,897
2014															627		634		635		224		26,744
2015																	573		574		330		21,687
2016																			622		495		16,720
																	Total		$	6,065	$	1,382

Cumulative Net Paid Claims and Allocated Claim Adjustment Expenses are presented in the following table.

As of December 31	Calendar Year
(In millions)	2007(1)		2008(1)		2009(1)		2010(1)		2011(1)		2012(1)		2013(1)		2014(1)		2015(1)		2016
Accident Year
2007	$	30	$	130	$	236	$	328	$	413	$	458	$	481	$	492	$	497	$	504
2008			31		129		261		390		473		528		550		560		567
2009					33		112		270		392		486		532		557		584
2010							27		139		267		414		530		577		608
2011									27		135		253		389		484		534
2012											27		127		233		340		417
2013													33		135		257		377
2014															29		115		245
2015																	31		132
2016																			34
																	Total		$	4,002
Net liability for unpaid claim and allocated claim adjustment expenses for the accident years presented																			$	2,063
Net liability for unpaid claim and claim adjustment expenses for accident years prior to 2007																			1,130
Liability for unallocated claim adjustment expenses for accident years presented																			55
Total net liability for unpaid claim and claim adjustment expenses																			$	3,248

Net strengthening or (releases) of prior accident year reserves is presented in the following table.

For the years ended December 31	Calendar Year
(In millions)	2008(1)			2009(1)			2010(1)			2011(1)			2012(1)			2013(1)			2014(1)			2015(1)			2016			Total
Accident Year
2007	$	(101	)	$	5		$	(39	)	$	(29	)	$	(10	)	$	(41	)	$	(14	)	$	3		$	(8	)	$	(234	)
2008				(7		)	26			17			(14		)	(1		)	(19		)	(13		)	(9		)	(20		)
2009							46			(3		)	(1		)	(4		)	(6		)	(4		)	3			31
2010										31			2			50			46			(20		)	(16		)	93
2011													(3		)	30			46			1			10			84
2012																24			16			(9		)	(12		)	19
2013																			30			(11		)	9			28
2014																						7			1			8
2015																									1			1
Total net development for the accident years presented above																			$	99		$	(46	)	$	(21	)
Total net development for accident years prior to 2007																			(54		)	13			(7		)
Total																			$	45		$	(33	)	$	(28	)

(1) Data presented for these calendar years is required supplemental information, which is unaudited.

Commercial - Workers' Compensation

Cumulative Net Incurred Claim and Allocated Claim Adjustment Expenses are presented in the following table.

As of December 31	Calendar Year																				As of December 31, 2016
(In millions, except reported claims data)	2007(1)		2008(1)		2009(1)		2010(1)		2011(1)		2012(1)		2013(1)		2014(1)		2015(1)		2016		IBNR		Cumulative Number of Claims
Accident Year
2007	$	568	$	580	$	596	$	604	$	603	$	603	$	604	$	610	$	608	$	627	$	32	71,049
2008			558		575		593		606		608		612		622		630		638		36		59,883
2009					583		587		594		596		600		611		617		625		46		51,111
2010							576		619		641		663		683		697		717		45		48,056
2011									593		628		637		648		642		666		52		44,571
2012											589		616		648		661		671		86		41,683
2013													528		563		584		610		121		38,102
2014															459		474		474		157		32,996
2015																	416		426		206		31,296
2016																			421		287		27,042
																	Total		$	5,875	$	1,068

Cumulative Net Paid Claims and Allocated Claim Adjustment Expenses are presented in the following table.

As of December 31	Calendar Year
(In millions)	2007(1)		2008(1)		2009(1)		2010(1)		2011(1)		2012(1)		2013(1)		2014(1)		2015(1)		2016
Accident Year
2007	$	100	$	246	$	337	$	390	$	429	$	471	$	502	$	522	$	533	$	535
2008			92		233		323		381		425		461		489		505		520
2009					88		223		315		381		435		468		495		516
2010							94		245		352		433		500		531		565
2011									97		245		353		432		471		515
2012											86		229		338		411		465
2013													79		211		297		366
2014															60		157		213
2015																	50		130
2016																			52
																	Total		$	3,877
Net liability for unpaid claim and allocated claim adjustment expenses for the accident years presented																			$	1,998
Net liability for unpaid claim and claim adjustment expenses for accident years prior to 2007																			2,334
Other (2)																			(30		)
Liability for unallocated claim adjustment expenses for accident years presented																			4
Total net liability for unpaid claim and claim adjustment expenses																			$	4,306

(2) Other includes the effect of discounting lifetime claim reserves.

Net strengthening or (releases) of prior accident year reserves is presented in the following table.

For the years ended December 31	Calendar Year
(In millions)	2008(1)		2009(1)		2010(1)		2011(1)			2012(1)		2013(1)		2014(1)		2015(1)			2016		Total
Accident Year
2007	$	12	$	16	$	8	$	(1	)	$	—	$	1	$	6	$	(2	)	$	19	$	59
2008			17		18		13			2		4		10		8			8		80
2009					4		7			2		4		11		6			8		42
2010							43			22		22		20		14			20		141
2011										35		9		11		(6		)	24		73
2012												27		32		13			10		82
2013														35		21			26		82
2014																15			—		15
2015																			10		10
Total net development for the accident years presented above														$	125	$	69		$	125
Adjustment for development on a discounted basis														1		(4		)	1
Total net development for accident years prior to 2007														13		15			24
Total														$	139	$	80		$	150

(1) Data presented for these calendar years is required supplemental information, which is unaudited.

International

The following table presents further detail of the development recorded for the International segment.

Years ended December 31
(In millions)	2016			2015			2014
Pretax (favorable) unfavorable development:
Medical Professional Liability	$	(5	)	$	(9	)	$	(7	)
Other Professional Liability	12			(16		)	(26		)
Liability	(30		)	(17		)	(13		)
Property & Marine	(34		)	(29		)	(4		)
Other	(1		)	17			(9		)
Total pretax (favorable) unfavorable development	$	(58	)	$	(54	)	$	(59	)

2016

Unfavorable development for other professional liability was primarily due to higher than expected large loss emergence in accident years 2011 through 2015 associated with our Commercial Institutions business, partially offset by favorable settlements on claims in accident years 2013 and prior.

Favorable development for liability was primarily due to favorable settlements on claims in accident years 2013 and prior related to our Canadian package business. Additional favorable development in accident years 2013 and 2015 was primarily due to lower than expected frequency of large losses related to our Europe business.

Favorable development for property and marine was due to better than expected severity on the December 2015 UK Floods and better than expected attritional losses and large loss experience on accident years 2013 through 2015 for Hardy business. Additional favorable development was due to a commutation of exposures in marine run-off classes on our Europe business.

2015

Favorable development in medical professional liability was due to better than expected frequency of losses in accident years 2011 to 2013.

Favorable development in other professional liability was due to better than expected large loss emergence in accident years 2011 and prior.

Favorable development in liability was due to better than expected large loss emergence in accident years 2012 and prior.

Favorable development in property and marine was due to better than expected individual large loss emergence and favorable settlements on large claims in accident years 2013 and 2014.

Unfavorable development in other is due to higher than expected large losses in financial institutions and political risk, primarily in accident year 2014.

2014

Overall, favorable development for other professional liability was primarily related to better than expected severity in accident years 2012 and prior. Unfavorable development was recorded in accident year 2008 due to financial crisis claims.

Favorable development for liability was primarily related to better than expected frequency and severity in accident years 2009 and subsequent.

Favorable development for property and marine coverages primarily related to better than expected frequency of large claims in accident years 2012 and prior. Reinsurance commutations in the first quarter of 2014 reduced ceded losses from prior years. Overall the commutations increased net operating income because of the release of the related allowance for uncollectible reinsurance.

Favorable development for other coverages was a result of better than expected frequency in Hardy, primarily in financial institution coverages.

International - Line of Business Composition

The table below provides the composition of the net liability for unpaid claim and claim adjustment expenses for the International segment.

As of December 31
(In millions)	2016
Net Claim and claim adjustment expenses:
International excluding Hardy	$	881
Hardy	320
Total net liability for claim and claim adjustment expenses	$	1,201

International - Excluding Hardy

Cumulative Net Incurred Claim and Allocated Claim Adjustment Expenses are presented in the following table.

As of December 31	Calendar Year																				As of December 31, 2016
(In millions, except reported claims data)	2007(1)		2008(1)		2009(1)		2010(1)		2011(1)		2012(1)		2013(1)		2014(1)		2015(1)		2016		IBNR		Cumulative Number of Claims
Accident Year
2007	$	204	$	219	$	213	$	194	$	181	$	172	$	164	$	162	$	160	$	159	$	4	27,149
2008			223		226		214		207		207		200		209		210		207		7		25,119
2009					249		245		247		247		234		231		222		213		13		21,362
2010							226		223		217		211		203		196		190		18		22,877
2011									259		260		253		233		223		216		14		25,361
2012											259		266		252		245		244		34		25,306
2013													281		282		275		256		56		23,999
2014															269		284		284		82		24,859
2015																	282		297		107		22,873
2016																			276		149		15,564
																	Total		$	2,342	$	484

Cumulative Net Paid Claims and Allocated Claim Adjustment Expenses are presented in the following table.

As of December 31	Calendar Year
(In millions)	2007(1)		2008(1)		2009(1)		2010(1)		2011(1)		2012(1)		2013(1)		2014(1)		2015(1)		2016
Accident Year
2007	$	31	$	99	$	112	$	124	$	133	$	140	$	144	$	148	$	150	$	152
2008			34		84		126		135		143		151		165		172		190
2009					38		90		119		134		149		159		170		181
2010							47		93		115		130		143		151		160
2011									44		111		133		146		159		171
2012											42		109		142		161		176
2013													49		109		135		152
2014															51		119		145
2015																	55		130
2016																			64
Total																			$	1,521
Net liability for unpaid claim and allocated claim adjustment expenses for the accident years presented																			$	821
Net liability for unpaid claim and claim adjustment expenses for accident years prior to 2007																			38
Liability for unallocated claim adjustment expenses for accident years presented																			22
Total net liability for unpaid claim and claim adjustment expenses																			$	881

Net strengthening or (releases) of prior accident year reserves is presented in the following table.

For the years ended December 31	Calendar Year
(In millions)	2008(1)		2009(1)			2010(1)			2011(1)			2012(1)			2013(1)			2014(1)			2015(1)			2016			Total (2)
Accident Year
2007	$	15	$	(6	)	$	(19	)	$	(13	)	$	(9	)	$	(8	)	$	(2	)	$	(2	)	$	(1	)	$	(45	)
2008			3			(12		)	(7		)	—			(7		)	9			1			(3		)	(16		)
2009						(4		)	2			—			(13		)	(3		)	(9		)	(9		)	(36		)
2010									(3		)	(6		)	(6		)	(8		)	(7		)	(6		)	(36		)
2011												1			(7		)	(20		)	(10		)	(7		)	(43		)
2012															7			(14		)	(7		)	(1		)	(15		)
2013																		1			(7		)	(19		)	(25		)
2014																					15			—			15
2015																								15			15

(1) Data presented for these calendar years is required supplemental information, which is unaudited.

(2) The amounts included in the loss reserve development tables above are presented at the year-end 2016 foreign currency exchange rates for all periods presented to remove the effects of foreign currency exchange rate fluctuations between calendar years. The amounts included within the table on page 102 presenting the detail of the development recorded within the International segment include the impact of fluctuations in foreign currency exchange rates.

International - Hardy

Cumulative Net Incurred Claim and Allocated Claim Adjustment Expenses are presented in the following table.

As of December 31								Calendar Year										As of December 31, 2016
(In millions, except reported claims data)	Net Claim and Allocated Claim Adjustment Expense Reserves at Acquisition		Net Incurred Claim and Allocated Claim Adjustment Expenses in 2012(1)(2)			Total Acquired Net Claim and Allocated Claim Adjustment Expense Reserves and 2012 Incurreds		2013(1)		2014(1)			2015(1)		2016			IBNR			Cumulative Number of Claims
Accident Year
2007	$	5	$	7		$	12	$	11	$	16		$	10	$	15		$	—		4,249
2008	18		(4		)	14		11		12			13		13			—			4,234
2009	11		1			12		6		(4		)	1		(2		)	—			3,840
2010	46		(10		)	36		46		50			44		50			—			4,495
2011	121		—			121		130		130			134		132			(2		)	6,193
2012	33		69			102		102		110			117		110			(1		)	6,758
2013								127		144			136		137			—			7,392
2014										182			180		174			7			7,656
2015													187		176			18			7,669
2016															225			101			5,274
													Total		$	1,030		$	123

Cumulative Net Paid Claims and Allocated Claim Adjustment Expenses are presented in the following table.

As of December 31	Calendar Year
(In millions)	2012(1)(2)		2013(1)			2014(1)			2015(1)			2016
Accident Year
2007	$	3	$	14		$	14		$	14		$	14
2008	3		14			10			10			11
2009	1		(2		)	(4		)	(4		)	(4		)
2010	19		34			41			43			45
2011	29		80			119			123			127
2012	14		78			98			107			104
2013			37			100			119			125
2014						55			121			139
2015									29			97
2016												62
Total												$	720
Net liability for unpaid claim and allocated claim adjustment expenses for the accident years presented												$	310
Net liability for unpaid claim and claim adjustment expenses for accident years prior to 2007												3
Liability for unallocated claim adjustment expenses for accident years presented												7
Total net liability for unpaid claim and claim adjustment expenses												$	320

Net strengthening or (releases) of prior accident year reserves is presented in the following table.

For the years ended December 31	Calendar Year
(In millions)	2012(1)(2)			2013(1)			2014(1)			2015(1)			2016			Total (3)
Accident Year
2007	$	7		$	(1	)	$	5		$	(6	)	$	5		$	10
2008	(4		)	(3		)	1			1			—			(5		)
2009	1			(6		)	(10		)	5			(3		)	(13		)
2010	(10		)	10			4			(6		)	6			4
2011	—			9			—			4			(2		)	11
2012				—			8			7			(7		)	8
2013							17			(8		)	1			10
2014										(2		)	(6		)	(8		)
2015													(11		)	(11		)

(1) Data presented for these calendar years is required supplemental information, which is unaudited.

(2) Data presented for this calendar year is post-acquisition of Hardy.

(3) The amounts included in the loss reserve development tables above are presented at the year-end 2016 foreign currency exchange rates for all periods presented to remove the effects of foreign currency exchange rate fluctuations between calendar years. The amounts included within the table on page 102 presenting the detail of the development recorded within the International segment include the impact of fluctuations in foreign currency exchange rates.

The table below reconciles the net liability for unpaid claim and claim adjustment expenses for the property and casualty segments to the amount presented in the Consolidated Balance Sheets.

As of December 31
(In millions)	2016
Net liability for unpaid claim and claim adjustment expenses
Specialty	$	5,404
Commercial	8,305
International	1,201
Corporate & Other Non-Core	230
Life & Group Non-Core (1)	3,109
Total net claim and claim adjustment expenses	18,249
Reinsurance receivables (2)
Specialty	745
Commercial	589
International	127
Corporate & Other Non-Core	2,384
Life & Group Non-Core	249
Total reinsurance receivables	4,094
Total gross liability for unpaid claim and claim adjustment expenses	$	22,343

(1) The Life & Group Non-Core segment amount is primarily related to long term care claim reserves, but does include amounts related to unfunded structured settlements arising from short duration contracts. Long term care policies are long duration contracts.

(2) Reinsurance receivables presented do not include reinsurance receivables related to paid losses.

The table below presents information about average historical claims duration as of December 31, 2016 and is presented as required supplementary information, which is unaudited.

Average Annual Percentage Payout of Ultimate Net Incurred Claim and Allocated Claim Adjustment Expenses in Year:
	1		2		3		4		5		6		7		8		9		10		Total
Specialty
Medical Professional Liability	3.1	%	18.2	%	22.3	%	19.6	%	12.7	%	8.0	%	5.0	%	4.8	%	3.7	%	0.3	%	97.7	%
Other Professional Liability and Management Liability	5.7	%	20.6	%	21.0	%	17.0	%	10.0	%	6.3	%	5.6	%	3.8	%	1.9	%	3.2	%	95.1	%
Surety(1)	23.4	%	32.8	%	20.2	%	8.9	%	3.7	%	1.5	%	(0.7	)%	2.0	%	1.0	%	2.0	%	94.8	%
Commercial
Commercial Auto	27.2	%	23.1	%	18.3	%	13.9	%	9.1	%	3.9	%	1.3	%	0.2	%	0.3	%	0.3	%	97.6	%
General Liability	5.0	%	16.3	%	20.5	%	20.1	%	15.3	%	8.0	%	4.2	%	2.7	%	1.1	%	1.3	%	94.5	%
Workers' Compensation	13.5	%	21.4	%	14.6	%	10.5	%	7.5	%	5.7	%	4.6	%	3.0	%	2.1	%	0.3	%	83.2	%
International
International - Excluding Hardy	19.5	%	27.4	%	12.1	%	6.8	%	5.9	%	4.5	%	4.8	%	3.7	%	5.0	%	1.3	%	91.0	%
International - Hardy (2)	25.7	%	40.9	%	12.1	%	4.4	%													83.1	%

(1) Due to the nature of the Surety business, average annual percentage payout of ultimate net incurred claim and allocated claim adjustment expenses has been calculated using only the payouts of mature accident years presented in the loss reserve development tables.

(2) Average historical claims duration for Hardy is presented prospectively beginning with the first full year subsequent to acquisition, 2013.

A&EP Reserves

In 2010, Continental Casualty Company (CCC) together with several of the Company’s insurance subsidiaries completed a transaction with National Indemnity Company (NICO), a subsidiary of Berkshire Hathaway Inc., under which substantially all of the Company’s legacy A&EP liabilities were ceded to NICO through a Loss Portfolio Transfer (LPT). At the effective date of the transaction, the Company ceded approximately $1.6 billion of net A&EP claim and allocated claim adjustment expense reserves to NICO under a retroactive reinsurance agreement with an aggregate limit of $4 billion. The $1.6 billion of claim and allocated claim adjustment expense reserves ceded to NICO was net of $1.2 billion of ceded claim and allocated claim adjustment expense reserves under existing third-party reinsurance contracts. The NICO LPT aggregate reinsurance limit also covers credit risk on the existing third-party reinsurance related to these liabilities. The Company paid NICO a reinsurance premium of $2 billion and transferred to NICO billed third-party reinsurance receivables related to A&EP claims with a net book value of $215 million, resulting in total consideration of $2.2 billion.

Subsequent to the effective date of the LPT, the Company recognized adverse prior year development on its A&EP reserves which resulted in additional amounts ceded under the LPT. As a result, the cumulative amounts ceded under the LPT exceeded the $2.2 billion consideration paid, resulting in the NICO LPT moving into a gain position, requiring retroactive reinsurance accounting. Under retroactive reinsurance accounting, this gain is deferred and only recognized in earnings in proportion to actual paid recoveries under the LPT. Over the life of the contract, there is no economic impact as long as any additional losses incurred are within the limit of the LPT. In a period in which the Company recognizes a change in the estimate of A&EP reserves that increases the amounts ceded under the LPT, the proportion of actual paid recoveries to total ceded losses is impacted and the change in the deferred gain is recognized in earnings as if the revised estimate of ceded losses was available at the effective date of the LPT. The effect of the deferred retroactive reinsurance benefit is recorded in Insurance claims and policyholders' benefits in the Consolidated Statement of Operations.

The following table presents the impact of the Loss Portfolio Transfer on the Consolidated Statements of Operations.

Years ended December 31
(In millions)	2016			2015			2014
Net A&EP adverse development before consideration of LPT	$	200		$	150		$	—
Retroactive reinsurance benefit recognized	(107		)	(85		)	(13		)
Pretax impact of A&EP reserve development and the LPT	$	93		$	65		$	(13	)

Based upon the Company's 2016 A&EP reserve review, net unfavorable prior year development of $200 million was recognized before consideration of cessions to the LPT. The unfavorable development was driven by an increase in anticipated future expenses associated with determination of coverage, higher anticipated payouts associated with a limited number of historical accounts having significant asbestos exposures and higher than expected severity on pollution claims. An A&EP reserve review was not completed in 2014 because additional information and analysis on inuring third-party reinsurance recoveries were needed to finalize the review. The review was finalized in the second quarter of 2015 and management has adopted the first quarter of the year as the timing for all future annual A&EP claims actuarial reviews, subject to the timing of the corresponding review performed by NICO. Unfavorable development of $150 million was recorded in 2015 to reflect a decrease in anticipated future reinsurance recoveries related to asbestos claims and higher than expected severity on pollution claims. While this unfavorable development was ceded to NICO in 2016 and 2015 under the LPT, the Company’s Net income in both periods was negatively affected due to the application of retroactive reinsurance accounting.

As of December 31, 2016 and 2015, the cumulative amounts ceded under the LPT were $2.8 billion and $2.6 billion. The unrecognized deferred retroactive reinsurance benefit was $334 million and $241 million as of December 31, 2016 and 2015.

NICO established a collateral trust account as security for its obligations to the Company. The fair value of the collateral trust account was $2.8 billion as of December 31, 2016 and 2015. In addition, Berkshire Hathaway Inc. guaranteed the payment obligations of NICO up to the aggregate reinsurance limit as well as certain of NICO’s performance obligations under the trust agreement. NICO is responsible for claims handling and billing and collection from third-party reinsurers related to the Company’s A&EP claims.