INSURANCE CLAIM RESERVES

Claims and claim adjustment expense reserves were as follows:



(in millions)	March 31, 2018		December 31, 2017
Property-casualty	$	49,794	$	49,633
Accident and health	16		17
Total	$	49,810	$	49,650

The following table presents a reconciliation of beginning and ending property casualty reserve balances for claims and claim adjustment expenses for the three months ended March 31, 2018 and 2017:



(for the three months ended March 31, in millions)	2018			2017
Claims and claim adjustment expense reserves at beginning of year	$	49,633		$	47,929
Less reinsurance recoverables on unpaid losses	8,123			7,981
Net reserves at beginning of year	41,510			39,948

Estimated claims and claim adjustment expenses for claims arising in the current year	4,391			4,126
Estimated decrease in claims and claim adjustment expenses for claims arising in prior years	(116		)	(50		)
Total increases	4,275			4,076

Claims and claim adjustment expense payments for claims arising in:
Current year	1,009			887
Prior years	3,040			2,812
Total payments	4,049			3,699
Unrealized foreign exchange (gain) loss	(10		)	34
Net reserves at end of period	41,726			40,359
Plus reinsurance recoverables on unpaid losses	8,068			7,942
Claims and claim adjustment expense reserves at end of period	$	49,794		$	48,301

Gross claims and claim adjustment expense reserves at March 31, 2018 increased by $161 million from December 31, 2017, primarily reflecting the impacts of (i) higher volumes of insured exposures and loss cost trends for the current accident year and (ii) catastrophe losses in the first quarter of 2018, partially offset by the impacts of (iii) payments related to catastrophe losses incurred in 2017, (iv) net favorable prior year reserve development and (v) payments related to operations in runoff.

Reinsurance recoverables on unpaid losses at March 31, 2018 decreased by $55 million from December 31, 2017, primarily reflecting the impacts of cash collections in the first three months of 2018.

Prior Year Reserve Development

The following disclosures regarding reserve development are on a “net of reinsurance” basis.

For the three months ended March 31, 2018 and 2017, estimated claims and claim adjustment expenses incurred included $116 million and $50 million, respectively, of net favorable development for claims arising in prior years, including $150 million and $81 million, respectively, of net favorable prior year reserve development and $13 million of accretion of discount in each period that impacted the Company's results of operations.

Business Insurance. Net favorable prior year reserve development in the first quarter of 2018 totaled $66 million, primarily driven by better than expected loss experience in the segment’s domestic operations in (i) the workers’ compensation product line for recent accident years and (ii) the commercial property product line for accident year 2016, partially offset by (iii) higher than expected loss experience in the commercial automobile product line for recent accident years. Net favorable prior year reserve development in the first quarter of 2017 totaled $61 million, primarily driven by better than expected loss experience in the segment's domestic operations in (i) the workers’ compensation product line for multiple accident years and (ii) the general liability product line for both primary and excess coverages for accident years 2009 and prior as well as accident year 2014, partially offset by (iii) net unfavorable prior year reserve development in the Company’s international operations in Europe due to the U.K. Ministry of Justice’s “Ogden” discount rate adjustment applied to lump sum bodily injury payouts.

Bond & Specialty Insurance. Net favorable prior year reserve development in the first quarter of 2018 totaled $35 million, primarily driven by better than expected loss experience in the segment’s domestic operations in the general liability product line for multiple accident years. Net favorable prior year reserve development in the first quarter of 2017 totaled $14 million.

Personal Insurance. Net favorable prior year reserve development in the first quarter of 2018 totaled $49 million, primarily driven by better than expected loss experience in the segment's domestic operations in the Homeowners and Other product line for accident years 2016 and 2017 and in the Automobile product line for accident year 2017. Net favorable prior year reserve development in the first quarter of 2017 totaled $6 million.