Insurance Claim Reserves

3 Months Ended

Mar. 31, 2023

INSURANCE CLAIM RESERVES

Claims and claim adjustment expense reserves were as follows:


(in millions)	March 31, 2023		December 31, 2022
Property-casualty	$	59,058	$	58,643
Accident and health	6		6
Total	$	59,064	$	58,649

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)	2023		2022
Claims and claim adjustment expense reserves at beginning of year	$	58,643	$	56,897
Less reinsurance recoverables on unpaid losses	7,790		8,209

Net reserves at beginning of year	50,853		48,688

Estimated claims and claim adjustment expenses for claims arising in the current year	6,025		5,133
Estimated decrease in claims and claim adjustment expenses for claims arising in prior years	(90)		(114)
Total increases	5,935		5,019

Claims and claim adjustment expense payments for claims arising in:
Current year	1,177		1,074
Prior years	4,382		3,498
Total payments	5,559		4,572
Unrealized foreign exchange (gain) loss	28		(13)
Net reserves at end of period	51,257		49,122
Plus reinsurance recoverables on unpaid losses	7,801		8,441
Claims and claim adjustment expense reserves at end of period	$	59,058	$	57,563

Gross claims and claim adjustment expense reserves at March 31, 2023 increased by $415 million from December 31, 2022, 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 three months of 2023, partially offset by (iv) claim payments made during the first three months of 2023 and (v) net favorable prior year reserve development.

Reinsurance recoverables on unpaid losses at March 31, 2023 increased by $11 million from December 31, 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, 2023 and 2022, estimated claims and claim adjustment expenses incurred included $90 million and $114 million, respectively, of net favorable development for claims arising in prior years, including $105 million and $153 million, respectively, of net favorable prior year reserve development, and $11 million and $12 million, respectively, of accretion of discount that impacted the Company’s results of operations.

Business Insurance. Net favorable prior year reserve development in the first quarter of 2023 totaled $19 million, primarily driven by better than expected loss experience in the domestic operations’ workers’ compensation product line for multiple accident years, partially offset by higher than expected loss experience in the general liability product line for excess coverages for multiple accident years. Net favorable prior year reserve development in the first quarter of 2022 totaled $113 million, primarily driven by better than expected loss experience in the domestic operations’ workers’ compensation product line for multiple accident years. The first quarters of 2023 and 2022 also included an increase to environmental reserves.

Bond & Specialty Insurance. Net favorable prior year reserve development in the first quarter of 2023 totaled $58 million, primarily driven by better than expected loss experience in the domestic operations’ fidelity and surety product lines and in the general liability product line for management liability coverages for recent accident years. 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.

Personal Insurance. Net favorable prior year reserve development in the first quarter of 2023 totaled $28 million, primarily driven by better than expected loss experience in the domestic operations’ homeowners and other product line for recent accident years. Net favorable prior year reserve development in the first quarter of 2022 totaled $5 million.