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INSURANCE LIABILITIES (Tables)

3 Months Ended

Mar. 31, 2020

Schedule of reconciliation of activity in the liability for unpaid claims and claims adjustment expense

The following table presents the roll-forward of activity in Loss Reserves:

	Three Months Ended
	March 31,
(in millions)		2020		2019
Liability for unpaid loss and loss adjustment expenses, beginning of period	$	78,328	$	83,639
Reinsurance recoverable		(31,069)		(31,690)
Initial allowance upon CECL adoption		164		-
Net Liability for unpaid loss and loss adjustment expenses, beginning of period		47,423		51,949
Losses and loss adjustment expenses incurred:
Current year		4,111		4,297
Prior years, excluding discount and amortization of deferred gain		(1)		(15)
Prior years, discount charge (benefit)		76		497
Prior years, amortization of deferred gain on retroactive reinsurance^(a)		(75)		(86)
Total losses and loss adjustment expenses incurred		4,111		4,693
Losses and loss adjustment expenses paid:
Current year		(342)		(317)
Prior years		(4,351)		(5,639)
Total losses and loss adjustment expenses paid		(4,693)		(5,956)
Other changes:
Foreign exchange effect		(230)		216
Allowance for credit losses		-		-
Retroactive reinsurance adjustment (net of discount)^(b)		22		(190)
Total other changes		(208)		26
Liability for unpaid loss and loss adjustment expenses, end of period:
Net liability for unpaid losses and loss adjustment expenses		46,633		50,712
Reinsurance recoverable		31,114		31,784
Total	$	77,747	$	82,496

(a)Includes $8 million and $9 million for the retroactive reinsurance agreement with National Indemnity Company (NICO), a subsidiary of Berkshire Hathaway Inc. (Berkshire), covering U.S. asbestos exposures for the three-month periods ended March 31, 2020 and 2019, respectively.(b)Includes benefit (charge) from change in discount on retroactive reinsurance in the amount of $72 million and $307 million for the three-month periods ended March 31, 2020 and 2019, respectively.

Schedule of loss reserve discount and loss reserve discount benefit (charge)

	March 31, 2020						December 31, 2019
	North						North
	America						America
	Commercial			Legacy			Commercial			Legacy
(in millions)	Insurance			Portfolio		Total	Insurance			Portfolio		Total
U.S. workers' compensation	$	2,087	$	657	$	2,744	$	2,134	$	666	$	2,800
Retroactive reinsurance		(1,179)		-		(1,179)		(1,251)		-		(1,251)
Total reserve discount^*	$	908	$	657	$	1,565	$	883	$	666	$	1,549

*Excludes $170 million and $172 million of discount related to certain long tail liabilities in the UK at March 31, 2020 and December 31, 2019, respectively.

Three Months Ended March 31,	2020						2019
	North						North
	America						America
	Commercial		Legacy				Commercial		Legacy
(in millions)	Insurance		Portfolio			Total	Insurance		Portfolio			Total
Current accident year	$	20	$	-	$	20	$	24	$	-	$	24
Accretion and other adjustments to prior year discount		(67)		(9)		(76)		(251)		(13)		(264)
Effect of interest rate changes		-		-		-		(167)		(66)		(233)
Net reserve discount benefit (charge)		(47)		(9)		(56)		(394)		(79)		(473)
Change in discount on loss reserves ceded under
retroactive reinsurance		72		-		72		307		-		307
Net change in total reserve discount^*	$	25	$	(9)	$	16	$	(87)	$	(79)	$	(166)

*Excludes $(2) million and $35 million discount related to certain long tail liabilities in the UK for the three-month periods ended March 31, 2020 and 2019, respectively.