9. Liability for Unpaid Claims

In connection with our acquisition of the Liberty Group Business, we expanded our financial statement disclosures related to changes in the liability for unpaid claims (in millions), which were as follows:



	For the Six
	Months Ended
	June 30,
	2018			2017
Balance as of beginning-of-year	$	2,222		$	2,242
Reinsurance recoverable		57			69
Net balance as of beginning-of-year		2,165			2,173

Business acquired (1)		2,836			-

Incurred related to:
Current year		986			686
Prior years
Interest		50			37
All other incurred		(87	)		(45	)
Total incurred		949			678

Paid related to:
Current year		(393	)		(343	)
Prior years		(517	)		(356	)
Total paid		(910	)		(699	)

Net balance as of end-of-period		5,040			2,152
Reinsurance recoverable		136			70
Balance as of end-of-period	$	5,176		$	2,222

⁽¹⁾

Represents Liberty group life and disability reserves, net, as of May 1, 2018, subject to finalization of acquisition date fair values. See Note 3 for additional information.

The majority of the reserves included in the roll forward are for long-term disability claims. The interest rate assumption is an important part of the reserving process due to the long benefit period for these claims. Interest accrued on prior year reserves has been calculated on the opening reserve balance less one-half of the prior year incurred period’s claim payments at our average reserve discount rate for the respective periods.

“Incurred related to prior years - All other incurred” reflected in the preceding table is primarily impacted by the level of claim resolutions in the period compared to that which is expected by the reserve assumption. A negative number implies a favorable result where claim resolutions were more favorable than assumed. Our claim resolution rate assumption used in determining reserves is our expectation of the resolution rate we will experience over the long-term life of the block of claims. It will vary from actual experience in any one period, both favorably and unfavorably.

A reconciliation of future contract benefits as reported in our Consolidated Balance Sheets to the liability for unpaid claims (in millions), was as follows:



	As of June 30,
	2018		2017
Future contract benefits	$	33,718	$	22,293

Less:
Life and annuity reserves and claims due		26,975		18,411
Accident and health active life reserves		1,567		1,660
Liability for unpaid claims	$	5,176	$	2,222