Insurance Claim Reserves

3 Months Ended

Mar. 31, 2022

Claims and claim adjustment expense reserves were as follows:


(in millions)	March 31, 2022		December 31, 2021
Property-casualty	$	57,563	$	56,897
Accident and health	9		10
Total	$	57,572	$	56,907

The following table presents a reconciliation of beginning and ending property casualty reserve balances for claims and claim adjustment expenses:


	Three Months Ended March 31,
(in millions)	2022		2021
Claims and claim adjustment expense reserves at beginning of year	$	56,897	$	54,510
Less reinsurance recoverables on unpaid losses	8,209		8,153

Net reserves at beginning of year	48,688		46,357

Estimated claims and claim adjustment expenses for claims arising in the current year	5,133		5,242
Estimated decrease in claims and claim adjustment expenses for claims arising in prior years	(114)		(294)
Total increases	5,019		4,948

Claims and claim adjustment expense payments for claims arising in:
Current year	1,074		1,059
Prior years	3,498		3,012
Total payments	4,572		4,071
Unrealized foreign exchange (gain) loss	(13)		28
Net reserves at end of period	49,122		47,262
Plus reinsurance recoverables on unpaid losses	8,441		8,068
Claims and claim adjustment expense reserves at end of period	$	57,563	$	55,330

Gross claims and claim adjustment expense reserves at March 31, 2022 increased by $666 million from December 31, 2021, primarily reflecting the impacts of (i) higher volumes of insured exposures, (ii) loss cost trends for the current accident year, (iii) fully reinsured property losses associated with fronting arrangements and (iv) reduced claim settlement activity largely due to continued disruptions in the judicial system related to COVID-19.

Reinsurance recoverables on unpaid losses at March 31, 2022 increased by $232 million from December 31, 2021, primarily reflecting the impact of fully reinsured property losses associated with fronting arrangements, partially offset by cash collections in the first three months of 2022.

Prior Year Reserve Development

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

For the three months ended March 31, 2022 and 2021, estimated claims and claim adjustment expenses incurred included $114 million and $294 million, respectively, of net favorable development for claims arising in prior years, including $153 million and $317 million, respectively, of net favorable prior year reserve development, and $12 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 quarters of 2022 and 2021 totaled $113 million and $134 million, respectively, primarily driven by better than expected loss experience in the domestic operations' workers' compensation product line for multiple accident years. The first quarters of 2022 and 2021 also included an increase to environmental reserves. Included in net favorable prior year reserve development in the first quarter of 2021 was a subrogation benefit of $10 million from Southern California Edison Company related to the 2018 Woolsey wildfire in California.

Bond & Specialty Insurance. Net favorable prior year reserve development in the first quarter of 2022 totaled $35 million, primarily driven by better than expected loss experience in the domestic operations' fidelity and surety product lines for recent accident years, partially offset by higher than expected loss experience in the domestic operations' general liability product line for management liability coverages for multiple accident years. Net favorable prior year reserve development in the first quarter of 2021 totaled $15 million, primarily driven by better than expected loss experience in the domestic fidelity and surety product lines for multiple accident years, partially offset by higher than expected loss experience in the domestic general liability product line for management liability coverages for multiple accident years.

Personal Insurance. Net favorable prior year reserve development in the first quarter of 2022 totaled $5 million. Net favorable prior year reserve development in the first quarter of 2021 totaled $168 million, primarily driven by better than expected loss experience in domestic operations in both the homeowners and other and automobile product lines for recent accident years. Included in net favorable prior year reserve development in the first quarter of 2021 was a subrogation benefit of $62 million from Southern California Edison Company related to the 2018 Woolsey wildfire in California.