
(at and for the year ended December 31, in millions)	2022		2021		2020
Claims and claim adjustment expense reserves at beginning of year	$	56,897	$	54,510	$	51,836
Less reinsurance recoverables on unpaid losses	8,209		8,153		8,035
Cumulative effect of adoption of updated accounting guidance for credit losses at January 1, 2020	—		—		53
Net reserves at beginning of year	48,688		46,357		43,854
Estimated claims and claim adjustment expenses for claims arising in the current year	23,308		20,698		19,285
Estimated decrease in claims and claim adjustment expenses for claims arising in prior years	(537)		(484)		(267)
Total increases	22,771		20,214		19,018
Claims and claim adjustment expense payments for claims arising in:
Current year	9,406		8,401		7,497
Prior years	10,945		9,470		9,092
Total payments	20,351		17,871		16,589

Unrealized foreign exchange loss (gain)	(255)		(12)		74
Net reserves at end of year	50,853		48,688		46,357
Plus reinsurance recoverables on unpaid losses	7,790		8,209		8,153
Claims and claim adjustment expense reserves at end of year	$	58,643	$	56,897	$	54,510

Gross claims and claim adjustment expense reserves at December 31, 2022 increased by $1.75 billion over 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 2022, partially offset by (iv) claim payments made during 2022 and (v) net favorable prior year reserve development. Gross claims and claim adjustment expense reserves at December 31, 2021 increased by $2.39 billion over December 31, 2020, primarily reflecting the impacts of (i) higher volumes of insured exposures, (ii) catastrophe losses in 2021, (iii) loss cost trends for the current accident year and (iv) reduced claim settlement activity largely due to continued disruptions in the judicial system related to COVID-19, partially offset by (v) claim payments made during 2021.

Reinsurance recoverables on unpaid losses at December 31, 2022 decreased by $419 million from December 31, 2021, primarily reflecting cash collections and decreases in mandatory pools and associations and structured settlements. Reinsurance recoverables on unpaid losses at December 31, 2021 increased by $56 million over December 31, 2020, primarily reflecting the impacts of catastrophe losses in 2021, partially offset by a lower level of structured settlements and recoverables from mandatory pools and associations.

PG&E Corporation and Pacific Gas and Electric Company (together, PG&E) emerged from bankruptcy on July 1, 2020, the date the Debtors' and Shareholder Proponents' Joint Chapter 11 Plan of Reorganization Dated June 19, 2020 (the Plan) became effective. In accordance with the terms of the Plan, PG&E funded a trust from which the Company and other subrogation claimants have received, and/or will receive, recoveries related to the 2017 and 2018 California wildfires. In 2020, the Company recognized a subrogation benefit related to these claims of $403 million.

Included in the claims and claim adjustment expense reserves are reserves for long-term disability and annuity claim payments, primarily arising from workers’ compensation insurance and workers’ compensation excess insurance policies, that are discounted to the present value of the estimated future payments. The discount rates used were a range of 3.5% to 5.0% at both December 31, 2022 and 2021. Total reserves net of the discount were $2.72 billion and $2.74 billion, and the related amount of discount was $1.12 billion and $1.15 billion, at December 31, 2022 and 2021, respectively. Accretion of the discount is reported as part of “claims and claim adjustment expenses” in the consolidated statement of income and was $46 million, $48 million and $49 million for the years ended December 31, 2022, 2021 and 2020.

Bond & Specialty Insurance. Net favorable prior year reserve development in 2021 totaled $105 million, primarily driven by better than expected loss experience in the segment's domestic operations in the fidelity and surety product lines for multiple accident years, partially offset by higher than expected loss experience in the general liability product line for management liability coverages for multiple accident years.

Bond & Specialty Insurance. Net unfavorable prior year reserve development in 2020 totaled $1 million, as higher than expected loss experience in the domestic general liability product line for management liability coverages for recent accident years was largely offset by better than expected loss experience in the surety product line for multiple accident years.


(at December 31, 2022, in millions)	Net Undiscounted Claims and Claim Adjustment Expense Reserves		Discount (Net of Reinsurance)		Subtotal: Net Claims and Claim Adjustment Expense Reserves		Reinsurance Recoverables on Unpaid Losses (4)		Claims and Claim Adjustment Expense Reserves
Business Insurance
General liability	$	9,269	$	(135)	$	9,134	$	949	$	10,083
Commercial property	1,109		—		1,109		459		1,568
Commercial multi-peril	4,819		—		4,819		219		5,038
Commercial automobile	3,856		—		3,856		291		4,147
Workers’ compensation (1)	16,473		(934)		15,539		629		16,168
Bond & Specialty Insurance
General liability	2,388		—		2,388		204		2,592
Fidelity and surety	564		—		564		6		570
Personal Insurance
Automobile	3,654		—		3,654		390		4,044
Homeowners (excluding Other)	2,327		—		2,327		108		2,435
International - Canada	708		—		708		20		728
Subtotal — claims and allocated claim adjustment expenses for the products presented in the development tables below	45,167		(1,069)		44,098		3,275		47,373
Other insurance contracts (2)	4,187		(4)		4,183		1,786		5,969
Unallocated loss adjustment expense reserves	2,481		—		2,481		14		2,495
Structured settlements (3)	—		—		—		2,758		2,758
Other	91		—		91		(43)		48
Total property-casualty	51,926		(1,073)		50,853		7,790		58,643
Accident and health	—		—		—		6		6
Total	$	51,926	$	(1,073)	$	50,853	$	7,796	$	58,649

___________________________________________

The claim development tables that follow present, by accident year, incurred and cumulative paid claims and allocated claim adjustment expense on a historical basis. This claim development information is presented on an undiscounted, net of reinsurance basis for ten years, or the number of years for which claims incurred typically remain outstanding if less than ten years. The claim development tables also provide the historical average annual percentage payout of incurred claims by age, net of reinsurance, as supplementary information (identified as unaudited in the tables below). The historical average annual percentage payout for incurred claims is subject to variability due to the impact of both large claim activity and subrogation recoveries, among other items.

General Liability


	(dollars in millions)
	For the Years Ended December 31,
	2013		2014		2015		2016		2017		2018		2019		2020		2021		2022
	Incurred Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance
	Unaudited
Accident Year																					IBNR Reserves Dec 31, 2022		Cumulative Number of Reported Claims
2013	$	965	$	975	$	958	$	940	$	927	$	933	$	975	$	975	$	963	$	963	$	67	22,807
2014			976		989		983		948		956		1,013		988		979		971		86		22,619
2015					998		956		923		967		1,057		1,087		1,072		1,082		78		21,778
2016							1,075		1,058		1,087		1,187		1,204		1,179		1,185		143		20,662
2017									1,133		1,143		1,196		1,234		1,226		1,243		171		19,450
2018											1,253		1,312		1,344		1,395		1,477		294		19,508
2019													1,447		1,486		1,498		1,567		452		18,691
2020															1,467		1,493		1,470		719		13,622
2021																	1,591		1,589		1,058		12,974
2022																			1,696		1,452		11,568
																	Total		$	13,243


	Cumulative Paid Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance
Accident Year	Unaudited
2013	$	35	$	175	$	363	$	498	$	639	$	745	$	816	$	836	$	853	$	868
2014			37		163		321		515		640		750		805		832		849
2015					36		137		336		558		740		828		875		927
2016							35		191		421		649		758		858		951		Liability for Claims
2017									40		180		378		552		724		914		And Allocated Claim
2018											42		202		441		709		939		Adjustment Expenses,
2019													51		233		482		816		Net of Reinsurance
2020															61		244		458
2021																	67		231		2013 -		Before
2022																			81		2022		2013
																	Total		$	7,034	$	6,209	$	3,060
																			Total net liability				$	9,269

Commercial Property


	(dollars in millions)
	For the Years Ended December 31,
	2018		2019		2020		2021		2022
	Incurred Claims and Allocated Claims Adjustment Expenses, Net of Reinsurance
	Unaudited
Accident Year											IBNR Reserves December 31, 2022		Cumulative Number of Reported Claims
2018	$	1,093	$	1,079	$	1,070	$	1,068	$	1,051	$	14	25,094
2019			1,069		1,034		1,031		1,039		3		25,427
2020					1,107		1,025		1,005		38		25,638
2021							1,236		1,190		2		25,436
2022									1,309		227		23,549
							Total		$	5,594


	Cumulative Paid Claims and Allocated Claim
	Adjustment Expenses, Net of Reinsurance
	Unaudited
											Liability for Claims
Accident Year											And Allocated Claim
2018	$	561	$	928	$	981	$	1,005	$	1,009	Adjustment Expenses,
2019			610		957		1,001		1,012		Net of Reinsurance
2020					580		857		907
2021							645		1,068		2018 -		Before
2022									624		2022		2018
							Total		$	4,620	$	974	$	135
									Total net liability				$	1,109

Commercial Multi-Peril


	(dollars in millions)
	For the Years Ended December 31,
	2013		2014		2015		2016		2017		2018		2019		2020		2021		2022
	Incurred Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance
	Unaudited
Accident Year																					IBNR Reserves December 31, 2022		Cumulative Number of Reported Claims
2013	$	1,615	$	1,623	$	1,620	$	1,609	$	1,591	$	1,600	$	1,599	$	1,598	$	1,593	$	1,591	$	19	84,057
2014			1,663		1,627		1,625		1,617		1,626		1,627		1,627		1,622		1,619		23		78,513
2015					1,568		1,625		1,593		1,597		1,606		1,593		1,584		1,571		32		72,237
2016							1,662		1,623		1,598		1,590		1,601		1,587		1,579		42		69,487
2017									1,872		1,928		1,956		1,919		1,935		1,943		80		72,491
2018											1,976		2,114		2,092		2,112		2,121		108		76,526
2019													2,017		2,087		2,089		2,103		182		67,315
2020															2,142		2,141		2,126		424		69,470
2021																	2,164		2,097		521		55,421
2022																			2,502		1,036		42,299
																	Total		$	19,252


	Cumulative Paid Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance
Accident Year	Unaudited
2013	$	644	$	987	$	1,167	$	1,304	$	1,410	$	1,475	$	1,516	$	1,532	$	1,544	$	1,556
2014			628		956		1,154		1,328		1,448		1,512		1,544		1,560		1,577
2015					595		970		1,144		1,310		1,409		1,452		1,489		1,512
2016							585		950		1,133		1,278		1,373		1,437		1,477		Liability for Claims
2017									716		1,199		1,388		1,531		1,674		1,763		And Allocated Claim
2018											792		1,302		1,500		1,669		1,815		Adjustment Expenses,
2019													707		1,187		1,423		1,628		Net of Reinsurance
2020															791		1,180		1,373
2021																	744		1,206		2013 -		Before
2022																			817		2022		2013
																	Total		$	14,724	$	4,528	$	291
																			Total net liability				$	4,819

Commercial Automobile


	(dollars in millions)
	For the Years Ended December 31,
	2018		2019		2020		2021		2022
	Incurred Claims and Allocated Claims Adjustment
	Expenses, Net of Reinsurance
	Unaudited
Accident Year											IBNR Reserves December 31, 2022		Cumulative Number of Reported Claims
2018	$	1,645	$	1,742	$	1,745	$	1,761	$	1,781	$	63	204,942
2019			1,835		1,951		1,976		1,992		149		207,185
2020					1,788		1,677		1,621		364		142,649
2021							1,741		1,757		561		147,563
2022									1,939		989		141,652
							Total		$	9,090


	Cumulative Paid Claims and Allocated Claim
	Adjustment Expenses, Net of Reinsurance
	Unaudited
											Liability for Claims
Accident Year											And Allocated Claim
2018	$	515	$	848	$	1,159	$	1,404	$	1,594	Adjustment Expenses,
2019			539		934		1,269		1,577		Net of Reinsurance
2020					437		696		958
2021							453		800		2018 -		Before
2022									540		2022		2018
							Total		$	5,469	$	3,621	$	235
									Total net liability				$	3,856

Workers’ Compensation


	(dollars in millions)
	For the Years Ended December 31,
	2013		2014		2015		2016		2017		2018		2019		2020		2021		2022
	Incurred Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance
	Unaudited
Accident Year																					IBNR Reserves December 31, 2022		Cumulative Number of Reported Claims
2013	$	2,553	$	2,545	$	2,540	$	2,506	$	2,463	$	2,423	$	2,354	$	2,321	$	2,304	$	2,273	$	309	135,317
2014			2,554		2,553		2,547		2,476		2,430		2,393		2,352		2,336		2,277		352		131,630
2015					2,644		2,585		2,505		2,441		2,372		2,279		2,220		2,155		398		131,175
2016							2,768		2,690		2,569		2,473		2,372		2,300		2,235		379		131,848
2017									2,779		2,681		2,584		2,483		2,439		2,342		501		125,747
2018											2,744		2,687		2,599		2,503		2,416		625		123,572
2019													2,680		2,714		2,699		2,632		724		120,190
2020															2,559		2,530		2,433		908		96,477
2021																	2,356		2,349		1,006		94,430
2022																			2,293		1,415		92,937
																	Total		$	23,405


	Cumulative Paid Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance
Accident Year	Unaudited
2013	$	458	$	954	$	1,237	$	1,413	$	1,525	$	1,604	$	1,659	$	1,700	$	1,729	$	1,756
2014			455		944		1,224		1,399		1,505		1,581		1,634		1,672		1,703
2015					430		893		1,154		1,310		1,411		1,470		1,520		1,547
2016							421		873		1,118		1,272		1,367		1,433		1,486		Liability for Claims
2017									433		890		1,154		1,314		1,418		1,490		And Allocated Claim
2018											440		919		1,169		1,330		1,440		Adjustment Expenses,
2019													466		951		1,229		1,402		Net of Reinsurance
2020															389		794		1,017
2021																	427		848		2013 -		Before
2022																			388		2022		2013
																	Total		$	13,077	$	10,328	$	6,145
																			Total net liability				$	16,473

General Liability


	(dollars in millions)
	For the Years Ended December 31,
	2013		2014		2015		2016		2017		2018		2019		2020		2021		2022
	Incurred Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance
	Unaudited
Accident Year																					IBNR Reserves December 31, 2022		Cumulative Number of Reported Claims
2013	$	510	$	565	$	606	$	630	$	654	$	607	$	586	$	575	$	564	$	561	$	(8)	4,471
2014			549		571		563		518		473		452		450		449		451		14		4,379
2015					528		524		486		437		395		414		413		414		23		4,229
2016							512		511		504		520		514		510		511		19		4,407
2017									534		517		526		493		524		554		49		4,606
2018											530		548		585		595		605		49		4,850
2019													588		653		665		670		146		5,408
2020															772		753		741		265		5,329
2021																	812		756		404		5,272
2022																			803		616		3,462
																	Total		$	6,066


	Cumulative Paid Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance
Accident Year	Unaudited
2013	$	34	$	154	$	252	$	352	$	400	$	434	$	451	$	462	$	482	$	551
2014			38		150		239		312		367		407		418		426		431
2015					38		141		234		310		338		348		381		383
2016							30		141		233		313		378		446		463		Liability for Claims
2017									38		155		262		340		404		450		And Allocated Claim
2018											49		182		290		383		458		Adjustment Expenses,
2019													51		189		323		410		Net of Reinsurance
2020															52		210		333
2021																	78		210		2013 -		Before
2022																			69		2022		2013
																	Total		$	3,758	$	2,308	$	80
																			Total net liability				$	2,388

Fidelity and Surety


	(dollars in millions)
	For the Years Ended December 31,
	2018		2019		2020		2021		2022		IBNR Reserves December 31, 2022		Cumulative Number of Reported Claims
	Incurred Claims and Allocated Claims Adjustment
	Expenses, Net of Reinsurance
Accident Year	Unaudited
2018	$	220	$	235	$	220	$	220	$	216	$	(7)	914
2019			203		193		200		185		18		888
2020					274		203		219		95		787
2021							284		172		117		576
2022									310		244		526
							Total		$	1,102

Automobile


	(dollars in millions)
	For the Years Ended December 31,
	2018		2019		2020		2021		2022		IBNR Reserves December 31, 2022		Cumulative Number of Reported Claims
	Incurred Claims and Allocated Claims Adjustment
	Expenses, Net of Reinsurance
Accident Year	Unaudited
2018	$	3,281	$	3,269	$	3,233	$	3,220	$	3,223	$	22	1,051,593
2019			3,362		3,361		3,333		3,339		64		1,033,458
2020					2,829		2,764		2,729		150		810,317
2021							3,716		3,770		426		997,397
2022									4,755		1,334		1,015,497
							Total		$	17,816


	Cumulative Paid Claims and Allocated Claim
	Adjustment Expenses, Net of Reinsurance
Accident Year	Unaudited										Liability for Claims
											And Allocated Claim
2018	$	1,889	$	2,582	$	2,880	$	3,040	$	3,144	Adjustment Expenses,
2019			1,933		2,650		2,958		3,159		Net of Reinsurance
2020					1,571		2,126		2,411
2021							2,062		2,981		2018 -		Before
2022									2,683		2022		2018
							Total		$	14,378	$	3,438	$	216
									Total net liability				$	3,654

Homeowners (excluding Other)


	(dollars in millions)
	For the Years Ended December 31,
	2018		2019		2020		2021		2022		IBNR Reserves December 31, 2022		Cumulative Number of Reported Claims
	Incurred Claims and Allocated Claims Adjustment
	Expenses, Net of Reinsurance
Accident Year	Unaudited
2018	$	2,610	$	2,574	$	2,381	$	2,325	$	2,321	$	24	187,375
2019			2,297		2,344		2,343		2,341		12		181,434
2020					3,019		2,967		2,909		68		220,946
2021							3,463		3,486		148		231,949
2022									4,277		1,339		191,981
							Total		$	15,334


	Cumulative Paid Claims and Allocated Claim
	Adjustment Expenses, Net of Reinsurance
Accident Year	Unaudited										Liability for Claims
											And Allocated Claim
2018	$	1,657	$	2,298	$	2,255	$	2,239	$	2,253	Adjustment Expenses,
2019			1,613		2,179		2,269		2,300		Net of Reinsurance
2020					2,019		2,673		2,755
2021							2,334		3,235		2018 -		Before
2022									2,537		2022		2018
							Total		$	13,080	$	2,254	$	73
									Total net liability				$	2,327

International - Canada


	(dollars in millions)
	For the Years Ended December 31,																				IBNR Reserves December 31, 2022		Cumulative
	2013		2014		2015		2016		2017		2018		2019		2020		2021		2022				Number of
Accident	Incurred Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance																						Reported
Year	Unaudited																						Claims
2013	$	464	$	458	$	449	$	438	$	425	$	424	$	414	$	410	$	407	$	410	$	(4)	54,237
2014			410		425		426		415		408		405		405		402		410		(3)		52,294
2015					345		345		345		341		343		342		337		337		(4)		45,217
2016							346		392		392		401		401		400		401		(3)		45,765
2017									331		365		386		386		386		389		(4)		46,822
2018											421		442		444		448		451		7		50,601
2019													426		421		441		444		22		48,212
2020															332		320		306		46		30,208
2021																	334		322		66		28,114
2022																			371		104		30,724
																	Total		$	3,841


Accident	Cumulative Paid Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance
Year	Unaudited
2013	$	186	$	260	$	291	$	322	$	353	$	371	$	387	$	395	$	402		$	403
2014			181		254		289		317		347		368		383		398			401
2015					155		216		243		270		294		308		321			328
2016							202		271		296		329		352		369			381		Liability for Claims
2017									174		246		284		307		332			352		And Allocated Claim
2018											210		292		326		363			394		Adjustment Expenses,
2019													207		277		311			348		Net of Reinsurance
2020															138		186			209
2021																	123			180		2013 -		Before
2022																				162		2022		2013
																	Total			$	3,158	$	683	$	25
																			Total net liability					$	708

Claims and claim adjustment expense reserves represent management’s estimate of the ultimate liability for unpaid losses and loss adjustment expenses for claims that have been reported and claims that have been incurred but not yet reported (IBNR) as of the balance sheet date. Claims and claim adjustment expense reserves do not represent an exact calculation of the liability, but instead represent management estimates, primarily utilizing actuarial expertise and projection methods that develop estimates for the ultimate cost of claims and claim adjustment expenses. Because the establishment of claims and claim adjustment expense reserves is an inherently uncertain process involving estimates and judgment, currently estimated claims and claim adjustment expense reserves may change. The Company reflects changes to the reserves in the results of operations in the period the estimates are changed.

Cumulative amounts paid and case reserves held as of the balance sheet date are subtracted from the estimate of the ultimate cost of claims and claim adjustment expenses to derive incurred but not reported (IBNR) reserves. Accordingly, IBNR reserves include the cost of unreported claims, development on known claims and re-opened claims. This approach to estimating IBNR reserves has been in place for many years, with no material changes in methodology in the past year.

Detailed claim data is typically insufficient to produce a reliable indication of the initial estimate for ultimate claims and claim adjustment expenses for an accident year. As a result, the initial estimate for an accident year is generally based on an exposure-based method using either the loss ratio projection or the expected loss method. The loss ratio projection method, which is typically used for guaranteed-cost business, develops an initial estimate of ultimate claims and claim adjustment expenses for an accident year by multiplying earned premium for the accident year by a projected loss ratio. The projected loss ratio is determined by analyzing prior period experience, and adjusting for loss cost trends, rate level differences, mix of business changes and other known or observed factors influencing the accident year relative to prior accident years. The expected loss method, which is typically used for loss sensitive business, develops an initial estimate of ultimate claims and claim adjustment expenses for an accident year by analyzing exposures by account.

•The Bornhuetter-Ferguson method uses an initial estimate of ultimate losses for a given product line reserve component, typically expressed as a ratio to earned premium. The method assumes that the ratio of additional claim activity to earned premium for that component is relatively stable and predictable over time and that actual claim activity to date is not a credible predictor of further activity for that component. The method is used most often for more recent accident years where claim data is sparse and/or volatile, with a transition to other methods as the underlying claim data becomes more voluminous and therefore more credible.

•The average value analysis combined with the reported claim development method assumes that average claim values are stable and predictable over time for a particular cohort of claims. It is typically limited to analysis at more granular levels, such as coverage or hazard/peril, where a more homogeneous subset of claims produce a more stable and fairly predictable average value. The reported claim development method is the same as the paid loss development method but uses changes in cumulative claim counts to produce estimates of ultimate claim counts rather than ultimate dollars. The resulting estimate of ultimate claim counts by cohort is multiplied by an average value per claim from an average value analysis to obtain estimated ultimate claims and claim adjustment expenses.

While these are the principal methods utilized, the Company’s actuaries have available to them the full range of actuarial methods developed by the casualty actuarial profession. The Company’s actuaries are also regularly monitoring developments within the profession for advances in existing techniques or the creation of new techniques that might improve current and future estimates. Most actuarial methods assume that past patterns demonstrated in the data will repeat themselves in the

A claim file is created when the Company is notified of an actual demand for payment, notified of an event that may lead to a demand for payment or when it is determined that a demand for payment could possibly lead to a future demand for payment on another coverage on the same policy or on another policy. Claim files are generally created for a policy at the claimant by coverage level, depending on the particular facts and circumstances of the underlying event.

For Business Insurance and for Personal Insurance, claim file information is summarized such that the Company generally recognizes one count for each policy claim event by internal regulatory line of business, regardless of the number of claimants or coverages involved. The claims counts are then accumulated and reported by product line. While the methodology is generally consistent within each segment for the product lines displayed, there are some minor differences between and within segments. For Bond & Specialty Insurance, the Company generally recognizes one count per coverage per policy claim event and one count per bond per surety claim event.

For purposes of the claims development tables above, claims reported for direct business are counted even if they eventually close with no loss payment, except in the case of (i) deductible business, where the claim is not counted until the case incurred claim estimate is above the deductible and (ii) International-Canada reported claim counts where claims closed with no loss payment are not counted. Note that claims with zero claim dollars may still generate some level of claim adjustment expenses. Claim counts for assumed business are included only to the extent such counts are available. The Company generally does not receive claim count information for which the underlying claim activity is handled by others, including pools and associations. The Company does not generate claim counts for ceded business. The methods used to summarize claim counts have not changed significantly over the time periods reported in the tables above.

The Company cautions against using the summarized claim count information provided in this disclosure in attempting to project ultimate loss payouts by product line. The Company generally finds claim count data to be useful only on a more granular basis than the aggregated basis disclosed in the claim development tables above, as the risks, average values and other dynamics of the claim process can vary materially by the cause of loss and coverage within product line. For example, in Personal Automobile, the introduction of roadside assistance coverage resulted in a significant increase in claim counts with a low average claim cost. For this reason the Company varies its approach to, and in many cases the level of aggregation for, counting claims for internal analysis purposes depending on the particular granular analysis performed.

Asbestos Reserves. Because each policyholder presents different liability and coverage issues, the Company generally reviews the exposure presented by each policyholder with open claims at least annually. Among the factors the Company may consider in the course of this review are: available insurance coverage, including the role of any umbrella or excess insurance the Company has issued to the policyholder; limits and deductibles; an analysis of the policyholder’s potential liability; the jurisdictions involved; past and anticipated future claim activity and loss development on pending claims; past settlement values of similar claims; allocated claim adjustment expense; the potential role of other insurance; the role, if any, of non-asbestos claims or potential non-asbestos claims in any resolution process; and applicable coverage defenses or determinations, if any, including the determination as to whether or not an asbestos claim is a products/completed operation claim subject to an aggregate limit and the available coverage, if any, for that claim.

In the third quarter of 2022, the Company completed its annual in-depth asbestos claim review, including a review of policyholders with open claims and litigation cases for potential product and "non-product" liability. The number of policyholders with open asbestos claims and net asbestos payments were relatively flat compared to 2021. Payments on behalf of these policyholders continue to be influenced by an increase in severity for certain policyholders and a high level of litigation activity in a limited number of jurisdictions where individuals alleging serious asbestos-related injury, primarily mesothelioma, continue to target defendants who were not traditionally primary targets of asbestos litigation.

The Company’s quarterly asbestos reserve reviews include an analysis of exposure and claim payment patterns by policyholder, as well as recent settlements, policyholder bankruptcies, judicial rulings and legislative actions. The Company also analyzes developing payment patterns among policyholders and the assumed reinsurance component of reserves, as well as projected reinsurance billings and recoveries. In addition, the Company reviews its historical gross and net loss and expense paid experience, year-by-year, to assess any emerging trends, fluctuations, or characteristics suggested by the aggregate paid activity. Conventional actuarial methods are not utilized to establish asbestos reserves, and the Company’s evaluations have not resulted in a reliable method to determine a meaningful average asbestos defense or indemnity payment.

The completion of these reviews and analyses in 2022, 2021 and 2020 resulted in $212 million, $225 million and $295 million increases, respectively, to the Company’s net asbestos reserves. In each year, the reserve increases were primarily driven by increases in the Company’s estimate of projected settlement and defense costs related to a broad number of policyholders. The increase in the estimate of projected settlement and defense costs primarily resulted from payment trends that continue to be higher than previously anticipated due to the continued high level of mesothelioma claim filings and the impact of the current litigation environment surrounding those claims discussed above. Over the past decade, the property and casualty insurance industry, including the Company, has experienced net unfavorable prior year reserve development with regard to asbestos reserves, but the Company believes that over that period there has been a reduction in the volatility associated with the Company’s overall asbestos exposure as the overall asbestos environment has evolved from one dominated by exposure to significant litigation risks, particularly coverage disputes relating to policyholders in bankruptcy who were asserting that their claims were not subject to the aggregate limits contained in their policies, to an environment primarily driven by a frequency of litigation related to individuals with mesothelioma. The Company’s overall view of the current underlying asbestos environment is essentially unchanged from recent periods, and there remains a high degree of uncertainty with respect to future exposure to asbestos claims.

Net asbestos paid loss and loss expenses in 2022, 2021 and 2020 were $245 million, $221 million and $237 million, respectively. Approximately 2%, 9% and 1% of total net paid losses in 2022, 2021 and 2020, respectively, related to policyholders with whom the Company entered into settlement agreements that limit those policyholders' ability to present future claims to the Company.

Environmental Reserves. In establishing environmental reserves, the Company evaluates the exposure presented by each policyholder and the anticipated cost of resolution, if any. These claims are mainly brought pursuant to various state or federal statutes that require a liable party to undertake or pay for environmental remediation. Liability under these statutes may be joint and several with other responsible parties. In the course of its analysis, the Company generally considers the probable liability, available coverage and relevant judicial interpretations. In addition, the Company considers the many variables presented, such as: the nature of the alleged activities of the policyholder at each site; the number of sites; the total number of potentially responsible parties at each site; the nature of the alleged environmental harm and the corresponding remedy at each site; the nature of government enforcement activities at each site; the ownership and general use of each site; the overall nature of the insurance relationship between the Company and the policyholder, including the role of any umbrella or excess insurance the Company has issued to the policyholder; the involvement of other insurers; the potential for other available coverage, including the number of years of coverage; the role, if any, of non-environmental claims or potential non-environmental claims in any resolution process; and the applicable law in each jurisdiction. The evaluation of the exposure presented by a policyholder can change as information concerning that policyholder and the many variables presented is developed. Conventional actuarial methods are not used to estimate these reserves.

Over the past several years, the Company has experienced generally favorable trends in the number of new policyholders tendering environmental claims for the first time and in the number of pending declaratory judgment actions relating to environmental matters. These policyholders continue to present smaller exposures, are involved in fewer hazardous waste sites and are lower tier defendants than policyholders presenting such claims in the past. Further, in many instances, clean-up costs

have been reduced because regulatory agencies are willing to accept risk-based site analyses and more efficient clean-up technologies. However, the degree to which those favorable trends have continued has been less than anticipated. In addition, reserve development on existing environmental claims as well as the costs associated with coverage litigation on environmental matters has been greater than anticipated, driven by claims and legal developments in a limited number of jurisdictions. As a result of these factors, in 2022, 2021 and 2020, the Company increased its net environmental reserves by $132 million, $89 million and $54 million, respectively.

Asbestos and Environmental Reserves. As a result of the processes and procedures discussed above, management believes that the reserves carried for asbestos and environmental claims are appropriately established based upon known facts, current law and management’s judgment. However, the uncertainties surrounding the final resolution of these claims continue, and it is difficult to determine the ultimate exposure for asbestos and environmental claims and related litigation. As a result, these reserves are subject to revision as new information becomes available and as claims develop. Changes in the legal, regulatory and legislative environment may impact the future resolution of asbestos and environmental claims and result in adverse loss reserve development. The emergence of a greater number of asbestos or environmental claims beyond that which is anticipated may result in adverse loss reserve development. Changes in applicable legislation and future court and regulatory decisions and interpretations, including the outcome of legal challenges to legislative and/or judicial reforms establishing medical criteria for the pursuit of asbestos claims, could affect the settlement of asbestos and environmental claims. It is also difficult to predict the ultimate outcome of complex coverage disputes until settlement negotiations near completion and significant legal questions are resolved or, failing settlement, until the dispute is adjudicated. This is particularly the case with policyholders in bankruptcy where negotiations often involve a large number of claimants and other parties and require court approval to be effective. As part of its continuing analysis of asbestos and environmental reserves, the Company continues to study the implications of these and other developments.

Because of the uncertainties set forth above, additional liabilities may arise for amounts in excess of the Company’s current reserves. In addition, the Company’s estimate of claims and claim adjustment expenses may change. These additional liabilities or increases in estimates, or a range of either, cannot now be reasonably estimated and could result in income statement charges that could be material to the Company’s operating results in future periods.

The Company has geographic exposure to catastrophe losses, which include hurricanes, tornadoes and other windstorms, earthquakes, hail, wildfires, severe winter weather, floods, tsunamis, volcanic eruptions, solar flares and other naturally-occurring events. Catastrophes can also result from terrorist attacks and other intentionally destructive acts including those involving cyber events, nuclear, biological, chemical and radiological events, civil unrest, explosions and destruction of infrastructure. The incidence and severity of catastrophes are inherently unpredictable. The extent of losses from a catastrophe is a function of both the total amount of insured exposure in the area affected by the event and the severity of the event. Most catastrophes are restricted to small geographic areas; however, hurricanes, earthquakes, wildfires and cyber attacks may produce significant damage in larger areas, especially those that are heavily populated. The Company generally seeks to mitigate its exposure to catastrophes through individual risk selection and the purchase of catastrophe reinsurance.

There are also risks which impact the estimation of ultimate costs for catastrophes. For example, the estimation of reserves related to hurricanes can be affected by the inability of the Company and its insureds to access portions of the impacted areas, the complexity of factors contributing to the losses, the legal and regulatory uncertainties and the nature of the information available to establish the reserves. Complex factors include, but are not limited to: determining whether damage was caused by flooding versus wind; evaluating general liability and pollution exposures; estimating additional living expenses; the impact of demand surge; the potential impact of changing climate conditions, including higher frequency and severity of weather-related events; infrastructure disruption; fraud; the effect of mold damage and business income interruption costs; and reinsurance collectibility. The timing of a catastrophe’s occurrence, such as at or near the end of a reporting period, can also affect the information available to the Company in estimating reserves for that reporting period. The estimates related to catastrophes are adjusted as actual claims emerge.