POLICY LIABILITIES

6 Months Ended

Jun. 30, 2022

Changes in the liability for unpaid policy claims were as follows:


	Three Months Ended June 30,					Six Months Ended June 30,
(In millions)		2022		2021			2022		2021
Unpaid supplemental health claims, beginning of period		$	4,009	$	4,192		$	4,067	$	4,389
Less reinsurance recoverables		40		37			37		39
Net balance, beginning of period		3,969		4,155			4,030		4,350
Add claims incurred during the period related to:
Current year		1,583		1,710			3,322		3,570
Prior years		(155)		(198)			(365)		(518)
Total incurred		1,428		1,512			2,957		3,052
Less claims paid during the period on claims incurred during:
Current year		1,042		1,139			1,532		1,657
Prior years		398		407			1,363		1,461
Total paid		1,440		1,546			2,895		3,118
Effect of foreign exchange rate changes on unpaid claims		(216)		4			(351)		(159)
Net balance, end of period		3,741		4,125			3,741		4,125
Add reinsurance recoverables		38		37			38		37
Unpaid supplemental health claims, end of period		3,779		4,162			3,779		4,162
Unpaid life claims, end of period		674		759			674		759
Total liability for unpaid policy claims		$	4,453	$	4,921		$	4,453	$	4,921

The incurred claims development related to prior years reflects favorable claims experience compared to previous estimates. The favorable claims development of $365 million for the six-month period ended June 30, 2022 comprises approximately $220 million from Japan and $145 million from the U.S., representing approximately 60% and 40% of the total, respectively. Excluding the impact of foreign exchange of a loss of approximately $41 million from December 31, 2021 to June 30, 2022, the favorable claims development in Japan would have been approximately $261 million, representing approximately 72% of the total.

The Company has experienced continued favorable claim trends in 2022 for its core health products in Japan. During the first six months of 2022, there were impacts from lower utilization of healthcare services, due to the COVID-19 pandemic. This impacted both cancer and medical products, as the Japan population was avoiding doctor and hospital visits and staying home more. This resulted in lower sickness, accident, and cancer incurred claims. Although overall experience is favorable, during the first six months of 2022, there has been an increase in medical hospitalization claims related to COVID-19, mainly due to at-home sickness benefits being utilized in Japan.

In addition, dating back to before the pandemic, cancer treatment patterns in Japan are continuing to be influenced by significant advances in early-detection techniques and by the increased use of pathological diagnosis rather than clinical exams. Additionally, follow-up radiation and chemotherapy treatments are occurring more often on an outpatient basis. Such changes in treatment not only increase the quality of life and initial outcomes for the patients, but also decrease the average length of each hospital stay, resulting in favorable claims development.

In the first six months of 2022, as experienced in 2021 and 2020, the incurred claims development related to prior years reflects favorable claims experience compared to previous estimates. The favorable claims trend continued for the majority of the Company's major U.S. accident and health lines of business, including accident, hospital indemnity, cancer, critical illness and short-term disability. Additionally, refinements to COVID-19 incurred estimates also contributed to the favorable development. The U.S. portion of the favorable claims development in the first six months of 2022 includes $54 million related to refinements in the estimates for COVID-19 and non-COVID-19 claims as experience emerges.