Insurance Claim Reserves

6 Months Ended

Jun. 30, 2022

Claims and claim adjustment expense reserves were as follows:


(in millions)	June 30, 2022		December 31, 2021
Property-casualty	$	57,976	$	56,897
Accident and health	7		10
Total	$	57,983	$	56,907

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


	Six Months Ended June 30,
(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	11,194		10,430
Estimated decrease in claims and claim adjustment expenses for claims arising in prior years	(387)		(459)
Total increases	10,807		9,971

Claims and claim adjustment expense payments for claims arising in:
Current year	3,357		3,113
Prior years	6,205		5,274
Total payments	9,562		8,387
Unrealized foreign exchange (gain) loss	(164)		53
Net reserves at end of period	49,769		47,994
Plus reinsurance recoverables on unpaid losses	8,207		7,901
Claims and claim adjustment expense reserves at end of period	$	57,976	$	55,895

Gross claims and claim adjustment expense reserves at June 30, 2022 increased by $1.08 billion from December 31, 2021, primarily reflecting the impacts of (i) higher volumes of insured exposures, (ii) loss cost trends for the current accident year and (iii) catastrophe losses in the first six months of 2022, partially offset by (iv) net favorable prior year reserve development.

Reinsurance recoverables on unpaid losses at June 30, 2022 decreased by $2 million from December 31, 2021.

Prior Year Reserve Development

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

For the six months ended June 30, 2022 and 2021, estimated claims and claim adjustment expenses incurred included $387 million and $459 million, respectively, of net favorable development for claims arising in prior years, including $444 million and $499 million, respectively, of net favorable prior year reserve development, and $23 million and $24 million, respectively, of accretion of discount that impacted the Company's results of operations.

Business Insurance. Net favorable prior year reserve development in the second quarter of 2022 totaled $202 million, primarily driven by better than expected loss experience in the domestic operations' workers' compensation product line for multiple accident years and in the commercial multi-peril product line for recent accident years, partially offset by an increase in reserves in the domestic operations' general liability product line including for run-off operations. Net favorable prior year reserve development in the second quarter of 2021 totaled $73 million, primarily driven by better than expected loss experience in the domestic operations' workers' compensation product line for multiple accident years, partially offset by an increase in reserves related to run-off operations.

Net favorable prior year reserve development in the first six months of 2022 totaled $315 million, primarily driven by better than expected loss experience in the domestic operations' workers' compensation product line for multiple accident years and in the commercial multi-peril product line for recent accident years, partially offset by an increase in reserves in the domestic operations' general liability product line including for run-off operations. Net favorable prior year reserve development in the first six months of 2021 totaled $207 million, primarily driven by better than expected loss experience in the domestic operations' workers' compensation product line for multiple accident years and in the commercial property and commercial automobile product lines for recent accident years, partially offset by an increase in reserves related to run-off operations. The first six months of 2022 and 2021 also included an increase to environmental reserves.

Bond & Specialty Insurance. Net favorable prior year reserve development in the second quarter and first six months of 2022 totaled $73 million and $108 million, respectively, primarily driven by better than expected loss experience in the domestic operations' fidelity and surety product lines for recent accident years. Net favorable prior year reserve development in the second quarter and first six months of 2021 totaled $44 million and $59 million, respectively, primarily driven by better than expected loss experience in the domestic operations' fidelity and surety product lines for recent accident years.

Personal Insurance. Net favorable prior year reserve development in the second quarter and first six months of 2022 totaled $16 million and $21 million, respectively. Net favorable prior year reserve development in the second quarter and first six months of 2021 totaled $65 million and $233 million, respectively, primarily driven by better than expected loss experience in the domestic operations in both the automobile and homeowners and other product lines for recent accident years.