Insurance Claim Reserves

6 Months Ended

Jun. 30, 2023

INSURANCE CLAIM RESERVES

Claims and claim adjustment expense reserves were as follows:


(in millions)	June 30, 2023		December 31, 2022
Property-casualty	$	60,564	$	58,643
Accident and health	7		6
Total	$	60,571	$	58,649

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)	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	13,260		11,194
Estimated decrease in claims and claim adjustment expenses for claims arising in prior years	(118)		(387)
Total increases	13,142		10,807
Claims and claim adjustment expense payments for claims arising in:
Current year	3,898		3,357
Prior years	7,466		6,205
Total payments	11,364		9,562
Unrealized foreign exchange (gain) loss	104		(164)
Net reserves at end of period	52,735		49,769
Plus reinsurance recoverables on unpaid losses	7,829		8,207
Claims and claim adjustment expense reserves at end of period	$	60,564	$	57,976

Gross claims and claim adjustment expense reserves at June 30, 2023 increased by $1.92 billion over December 31, 2022, primarily reflecting the impacts of (i) catastrophe losses in the first six months of 2023, (ii) higher volumes of insured exposures and (iii) loss cost trends for the current accident year, partially offset by (iv) claim payments made during the first six months of 2023 and (v) net favorable prior year reserve development.

Reinsurance recoverables on unpaid losses at June 30, 2023 increased by $39 million over December 31, 2022.

Prior Year Reserve Development

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

For the six months ended June 30, 2023 and 2022, estimated claims and claim adjustment expenses incurred included $118 million and $387 million, respectively, of net favorable development for claims arising in prior years, including $165 million and $444 million, respectively, of net favorable prior year reserve development, and $23 million of accretion of discount in each period that impacted the Company’s results of operations.

Business Insurance. Net unfavorable prior year reserve development in the second quarter of 2023 totaled $101 million, primarily driven by higher than expected loss experience in the domestic operations’ (i) general liability product line for primary and excess coverages for multiple accident years, (ii) commercial multi-peril product line for multiple accident years and (iii) commercial automobile product line for recent accident years, partially offset by (iv) better than expected loss experience in the workers’ compensation product line for multiple accident years. 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 unfavorable prior year reserve development in the first six months of 2023 totaled $82 million, primarily driven by higher than expected loss experience in the domestic operations’ (i) general liability product line for primary and excess coverages for multiple accident years, (ii) commercial automobile product line for multiple accident years and (iii) commercial multi-peril product line for recent accident years, partially offset by (iv) better than expected loss experience in the workers’ compensation product line for multiple accident years. 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. The first six months of 2023 and 2022 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 2023 totaled $119 million and $177 million, respectively, primarily driven by better than expected loss experience in the domestic operations’ general liability product line for management liability coverages and in the fidelity and surety product lines for recent accident years. 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.

Personal Insurance. Net favorable prior year reserve development in the second quarter and first six months of 2023 totaled $42 million and $70 million, respectively, 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 second quarter and first six months of 2022 totaled $16 million and $21 million, respectively.