Liability for Unpaid Claims and Claim Adjustment Expenses

6 Months Ended

Jun. 30, 2020

Insurance [Abstract]

Liability for Unpaid Claims and Claims Adjustment Expenses Disclosure

Changes in the liability for unpaid claims and claim adjustment expenses are as follows:

	2020		2019
	(in millions of dollars)
Balance at January 1	$	23,076.7	$	23,149.0
Less Reinsurance Recoverable	2,246.8		2,227.3
Net Balance at January 1	20,829.9		20,921.7
Incurred Related to
Current Year	3,187.2		3,101.9
Prior Years
Interest	528.5		545.5
All Other Incurred	(270.5)		(202.2)
Foreign Currency	(130.2)		(8.5)
Total Incurred	3,315.0		3,436.7
Paid Related to
Current Year	(1,015.9)		(973.4)
Prior Years	(2,546.6)		(2,542.1)
Total Paid	(3,562.5)		(3,515.5)
Net Balance at June 30	20,582.4		20,842.9
Plus Reinsurance Recoverable	2,260.2		2,247.7
Balance at June 30	$	22,842.6	$	23,090.6

The majority of the net balances are related to disability claims with long-tail payouts on which interest earned on assets backing liabilities is an integral part of pricing and reserving. Interest accrued on prior year reserves has been calculated on the opening reserve balance less one-half of the period's claim payments relative to prior years at our average reserve discount rate for the respective periods.

"Incurred Related to Prior Years - All Other Incurred" shown in the preceding chart is primarily impacted by the level of claim resolutions in the period relative to the long-term expectations reflected in the reserves. Our claim resolution rate assumption used in determining reserves is our expectation of the resolution rate we will experience over the life of the block of business and will vary from actual experience in any one period, both favorably and unfavorably.

Reconciliation

A reconciliation of policy and contract benefits and reserves for future policy and contract benefits as reported in our consolidated balance sheets to the liability for unpaid claims and claim adjustment expenses is as follows:

	June 30
	2020		2019
	(in millions of dollars)
Policy and Contract Benefits	$	1,778.8	$	1,751.4
Reserves for Future Policy and Contract Benefits	48,335.1		47,138.3
Total	50,113.9		48,889.7
Less:
Life Reserves for Future Policy and Contract Benefits	8,436.7		8,335.1
Accident and Health Active Life Reserves	12,374.8		12,008.3
Adjustment Related to Unrealized Investment Gains and Losses	6,459.8		5,455.7
Liability for Unpaid Claims and Claim Adjustment Expenses	$	22,842.6	$	23,090.6

The adjustment related to unrealized investment gains and losses reflects the changes that would be necessary to policyholder liabilities if the unrealized investment gains and losses related to the corresponding available-for-sale securities had been realized. Changes in this adjustment are reported as a component of other comprehensive income or loss.