Insurance Claim Reserves

12 Months Ended

Dec. 31, 2023

Insurance Loss Reserves [Abstract]

Insurance Claim Reserves

INSURANCE CLAIM RESERVES

Claims and claim adjustment expense reserves were as follows:

(at December 31, in millions)	2023		2022
Property-casualty	$	61,621	$	58,643
Accident and health	6		6
Total	$	61,627	$	58,649

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

(at and for the year ended December 31, in millions)	2023		2022		2021
Claims and claim adjustment expense reserves at beginning of year	$	58,643	$	56,897	$	54,510
Less reinsurance recoverables on unpaid losses	7,790		8,209		8,153
Net reserves at beginning of year	50,853		48,688		46,357
Estimated claims and claim adjustment expenses for claims arising in the current year	26,159		23,308		20,698
Estimated decrease in claims and claim adjustment expenses for claims arising in prior years	(38)		(537)		(484)
Total increases	26,121		22,771		20,214
Claims and claim adjustment expense payments for claims arising in:
Current year	10,852		9,406		8,401
Prior years	12,424		10,945		9,470
Total payments	23,276		20,351		17,871
Unrealized foreign exchange loss (gain)	106		(255)		(12)
Net reserves at end of year	53,804		50,853		48,688
Plus reinsurance recoverables on unpaid losses	7,817		7,790		8,209
Claims and claim adjustment expense reserves at end of year	$	61,621	$	58,643	$	56,897

Gross claims and claim adjustment expense reserves at December 31, 2023 increased by $2.98 billion over December 31, 2022, primarily reflecting the impacts of (i) catastrophe losses in 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 2023 and (v) net favorable prior year reserve development. 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.

Reinsurance recoverables on unpaid losses at December 31, 2023 increased by $27 million over December 31, 2022, primarily reflecting the impact of catastrophe losses in 2023 and a higher level of recoverables from mandatory pools and associations, partially offset by cash collections and a decrease in structured settlements. 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.

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, 2023 and 2022.  Total reserves net of the discount were $2.68 billion and $2.72 billion, and the related amount of discount was $1.10 billion and $1.12 billion, at December 31, 2023 and 2022, respectively.  Accretion of the discount is reported as part of “claims and claim adjustment expenses” in the consolidated statement of income and was $45 million, $46 million and $48 million for the years ended December 31, 2023, 2022 and 2021.

Prior Year Reserve Development

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

2023

In 2023, estimated claims and claim adjustment expenses incurred included $38 million of net favorable development for claims arising in prior years, including $143 million of net favorable prior year reserve development and $45 million of accretion of discount that impacted the Company’s results of operations.

Business Insurance. Net unfavorable prior year reserve development in 2023 totaled $289 million, primarily driven by (i) higher than expected loss experience in the domestic operations’ general liability product line (excluding asbestos) for multiple accident years, including additions to reserves attributable to childhood sexual molestation and environmental claims in the Company’s run-off operations, (ii) an addition to asbestos reserves of $284 million and (iii) higher than expected loss experience in the domestic operations’ commercial automobile product line for recent accident years, partially offset by (iv) better than expected loss experience in the domestic operations’ workers’ compensation product line for multiple accident years.

Bond & Specialty Insurance. Net favorable prior year reserve development in 2023 totaled $285 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.

Personal Insurance. Net favorable prior year reserve development in 2023 totaled $147 million, primarily driven by better than expected loss experience in the domestic operations’ homeowners and other product line for recent accident years.

2022

In 2022, estimated claims and claim adjustment expenses incurred included $537 million of net favorable development for claims arising in prior years, including $649 million of net favorable prior year reserve development and $46 million of accretion of discount that impacted the Company’s results of operations.

Business Insurance.  Net favorable prior year reserve development in 2022 totaled $381 million, primarily driven by the following:

•Workers’ compensation - better than expected loss experience in domestic operations for multiple accident years;

•Commercial property - better than expected loss experience in domestic operations for recent accident years; and

•Commercial multi-peril (excluding asbestos and environmental) - better than expected loss experience in domestic operations for recent accident years;

Partially offset by:

•Asbestos reserves - an addition of $212 million, primarily in the domestic operations’ general liability product line;

•General liability (excluding asbestos and environmental) - higher than expected loss experience in domestic operations for excess coverages for multiple accident years, as well as an increase to general liability reserves in the Company’s run-off operations; and

•Environmental reserves - an addition primarily in the domestic operations’ general liability product line.

Bond & Specialty Insurance.  Net favorable prior year reserve development in 2022 totaled $222 million, 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 2022 totaled $46 million.

2021

In 2021, estimated claims and claim adjustment expenses incurred included $484 million of net favorable development for claims arising in prior years, including $538 million of net favorable prior year reserve development and $48 million of accretion of discount that impacted the Company’s results of operations.

Business Insurance. Net favorable prior year reserve development in 2021 totaled $173 million, primarily driven by the following:

•Workers’ compensation - better than expected loss experience in domestic operations for multiple accident years;

•Commercial property - better than expected loss experience in domestic operations for recent accident years;

•International - better than expected loss experience for recent accident years; and

•Commercial automobile - better than expected loss experience in domestic operations for recent accident years;

Partially offset by:

•Asbestos reserves - an addition of $225 million, primarily in the domestic operations’ general liability product line;

•Other reserves - an addition related to run-off operations; and

•Environmental reserves - an addition primarily in the domestic operations’ general liability product line.

Bond & Specialty Insurance.  Net favorable prior year reserve development in 2021 totaled $105 million, primarily driven by better than expected loss experience in the domestic operations’ 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.

Personal Insurance.  Net favorable prior year reserve development in 2021 totaled $260 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.

Claims Development

The following is a summary of claims and claim adjustment expense reserves, including certain components, for the Company’s major product lines by reporting segment at December 31, 2023.

(at December 31, 2023, 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	$	10,251	$	(132)	$	10,119	$	1,052	$	11,171
Commercial property	1,160		—		1,160		464		1,624
Commercial multi-peril	5,205		—		5,205		207		5,412
Commercial automobile	4,263		—		4,263		299		4,562
Workers’ compensation (1)	16,104		(912)		15,192		614		15,806
Bond & Specialty Insurance
General liability	2,432		—		2,432		276		2,708
Fidelity and surety	611		—		611		24		635
Personal Insurance
Automobile	4,095		—		4,095		345		4,440
Homeowners (excluding Other)	2,439		—		2,439		64		2,503
International - Canada	765		—		765		18		783
Subtotal — claims and allocated claim adjustment expenses for the products presented in the development tables below	47,325		(1,044)		46,281		3,363		49,644
Other insurance contracts (2)	4,753		(4)		4,749		1,814		6,563
Unallocated loss adjustment expense reserves	2,689		—		2,689		14		2,703
Structured settlements (3)	—		—		—		2,663		2,663
Other	85		—		85		(37)		48
Total property-casualty	54,852		(1,048)		53,804		7,817		61,621
Accident and health	—		—		—		6		6
Total	$	54,852	$	(1,048)	$	53,804	$	7,823	$	61,627

___________________________________________

(1)Net discount amount includes discount of $48 million on reinsurance recoverables for long-term disability and annuity claim payments.

(2)Primarily includes residual market, international (other than operations in Canada within the Personal Insurance segment) and runoff assumed reinsurance business.

(3)Includes structured settlements in cases where the Company did not receive a release from the claimant.

(4)Total reinsurance recoverables (on paid and unpaid losses) at December 31, 2023 were $8.14 billion.

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.

Business Insurance

General Liability

	(dollars in millions)
	For the Years Ended December 31,
	2014		2015		2016		2017		2018		2019		2020		2021		2022		2023
	Incurred Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance
	Unaudited
Accident Year																					IBNR Reserves Dec 31, 2023		Cumulative Number of Reported Claims
2014	$	976	$	989	$	983	$	948	$	956	$	1,013	$	988	$	979	$	971	$	968	$	70	22,665
2015			998		956		923		967		1,057		1,087		1,072		1,082		1,110		94		21,845
2016					1,075		1,058		1,087		1,187		1,204		1,179		1,185		1,183		116		20,755
2017							1,133		1,143		1,196		1,234		1,226		1,243		1,288		151		19,578
2018									1,253		1,312		1,344		1,395		1,477		1,530		195		19,870
2019											1,447		1,486		1,498		1,567		1,706		362		19,232
2020													1,467		1,493		1,470		1,577		496		16,317
2021															1,591		1,589		1,628		780		14,682
2022																	1,696		1,736		1,079		16,311
2023																			1,998		1,789		11,949
																	Total		$	14,724

	Cumulative Paid Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance
Accident Year	Unaudited
2014	$	37	$	163	$	321	$	515	$	640	$	750	$	805	$	832	$	849	$	868
2015			36		137		336		558		740		828		875		927		975
2016					35		191		421		649		758		858		951		991
2017							40		180		378		552		724		914		1,029		Liability for Claims
2018									42		202		441		709		939		1,146		And Allocated Claim
2019											51		233		482		816		1,074		Adjustment Expenses,
2020													61		244		458		770		Net of Reinsurance
2021															67		231		493
2022																	81		302		2014 -		Before
2023																			54		2023		2014
																	Total		$	7,702	$	7,022	$	3,229
																			Total net liability				$	10,251

	Average Annual Percentage Payout of Incurred Claims by Age, Net of Reinsurance
	Unaudited
Years	1		2		3		4		5		6		7		8		9		10
	3.4	%	11.3	%	16.1	%	18.5	%	13.7	%	11.2	%	6.7	%	3.6	%	3.1	%	2.0	%

Commercial Property

	(dollars in millions)
	For the Years Ended December 31,
	2019		2020		2021		2022		2023
	Incurred Claims and Allocated Claims Adjustment Expenses, Net of Reinsurance
	Unaudited
Accident Year											IBNR Reserves December 31, 2023		Cumulative Number of Reported Claims
2019	$	1,069	$	1,034	$	1,031	$	1,039	$	1,031	$	2	25,453
2020			1,107		1,025		1,005		993		32		25,692
2021					1,236		1,190		1,190		(11)		25,743
2022							1,309		1,369		(15)		28,594
2023									1,268		160		25,396
							Total		$	5,851

	Cumulative Paid Claims and Allocated Claim
	Adjustment Expenses, Net of Reinsurance
	Unaudited
											Liability for Claims
Accident Year											And Allocated Claim
2019	$	610	$	957	$	1,001	$	1,012	$	1,013	Adjustment Expenses,
2020			580		857		907		932		Net of Reinsurance
2021					645		1,068		1,141
2022							624		1,113		2019 -		Before
2023									614		2023		2019
							Total		$	4,813	$	1,038	$	122
									Total net liability				$	1,160

	Average Annual Percentage Payout of Incurred Claims by Age, Net of Reinsurance
	Unaudited
Years	1		2		3		4		5
	53.2	%	33.2	%	5.2	%	1.8	%	—	%

Commercial Multi-Peril

	(dollars in millions)
	For the Years Ended December 31,
	2014		2015		2016		2017		2018		2019		2020		2021		2022		2023
	Incurred Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance
	Unaudited
Accident Year																					IBNR Reserves December 31, 2023		Cumulative Number of Reported Claims
2014	$	1,663	$	1,627	$	1,625	$	1,617	$	1,626	$	1,627	$	1,627	$	1,622	$	1,619	$	1,619	$	18	78,565
2015			1,568		1,625		1,593		1,597		1,606		1,593		1,584		1,571		1,563		18		72,444
2016					1,662		1,623		1,598		1,590		1,601		1,587		1,579		1,578		29		69,551
2017							1,872		1,928		1,956		1,919		1,935		1,943		1,930		61		72,592
2018									1,976		2,114		2,092		2,112		2,121		2,127		76		79,965
2019											2,017		2,087		2,089		2,103		2,103		114		68,272
2020													2,142		2,141		2,126		2,111		310		70,349
2021															2,164		2,097		2,097		357		57,321
2022																	2,502		2,533		550		52,447
2023																			2,781		1,080		44,311
																	Total		$	20,442

	Cumulative Paid Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance
Accident Year	Unaudited
2014	$	628	$	956	$	1,154	$	1,328	$	1,448	$	1,512	$	1,544	$	1,560	$	1,577	$	1,589
2015			595		970		1,144		1,310		1,409		1,452		1,489		1,512		1,523
2016					585		950		1,133		1,278		1,373		1,437		1,477		1,510
2017							716		1,199		1,388		1,531		1,674		1,763		1,815		Liability for Claims
2018									792		1,302		1,500		1,669		1,815		1,917		And Allocated Claim
2019											707		1,187		1,423		1,628		1,801		Adjustment Expenses,
2020													791		1,180		1,373		1,547		Net of Reinsurance
2021															744		1,206		1,437
2022																	817		1,476		2014 -		Before
2023																			935		2023		2014
																	Total		$	15,550	$	4,892	$	313
																			Total net liability				$	5,205

	Average Annual Percentage Payout of Incurred Claims by Age, Net of Reinsurance
	Unaudited
Years	1		2		3		4		5		6		7		8		9		10
	36.1	%	22.9	%	10.7	%	9.1	%	7.0	%	4.0	%	2.4	%	1.6	%	0.8	%	0.8	%

Commercial Automobile

	(dollars in millions)
	For the Years Ended December 31,
	2019		2020		2021		2022		2023
	Incurred Claims and Allocated Claims Adjustment
	Expenses, Net of Reinsurance
	Unaudited
Accident Year											IBNR Reserves December 31, 2023		Cumulative Number of Reported Claims
2019	$	1,835	$	1,951	$	1,976	$	1,992	$	2,041	$	90	207,380
2020			1,788		1,677		1,621		1,558		180		143,035
2021					1,741		1,757		1,786		323		148,739
2022							1,939		2,040		636		158,945
2023									2,245		1,238		149,934
							Total		$	9,670

	Cumulative Paid Claims and Allocated Claim
	Adjustment Expenses, Net of Reinsurance
	Unaudited
											Liability for Claims
Accident Year											And Allocated Claim
2019	$	539	$	934	$	1,269	$	1,577	$	1,794	Adjustment Expenses,
2020			437		696		958		1,192		Net of Reinsurance
2021					453		800		1,135
2022							540		966		2019 -		Before
2023									589		2023		2019
							Total		$	5,676	$	3,994	$	269
									Total net liability				$	4,263

	Average Annual Percentage Payout of Incurred Claims by Age, Net of Reinsurance
	Unaudited
Years	1		2		3		4		5
	26.5	%	19.1	%	17.3	%	15.1	%	10.6	%

Workers’ Compensation

	(dollars in millions)
	For the Years Ended December 31,
	2014		2015		2016		2017		2018		2019		2020		2021		2022		2023
	Incurred Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance
	Unaudited
Accident Year																					IBNR Reserves December 31, 2023		Cumulative Number of Reported Claims
2014	$	2,554	$	2,553	$	2,547	$	2,476	$	2,430	$	2,393	$	2,352	$	2,336	$	2,277	$	2,234	$	300	131,666
2015			2,644		2,585		2,505		2,441		2,372		2,279		2,220		2,155		2,097		349		131,239
2016					2,768		2,690		2,569		2,473		2,372		2,300		2,235		2,151		315		132,006
2017							2,779		2,681		2,584		2,483		2,439		2,342		2,243		403		129,555
2018									2,744		2,687		2,599		2,503		2,416		2,318		478		126,699
2019											2,680		2,714		2,699		2,632		2,521		566		120,548
2020													2,559		2,530		2,433		2,271		670		96,891
2021															2,356		2,349		2,294		721		95,329
2022																	2,293		2,294		966		102,371
2023																			2,373		1,386		88,578
																	Total		$	22,796

	Cumulative Paid Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance
Accident Year	Unaudited
2014	$	455	$	944	$	1,224	$	1,399	$	1,505	$	1,581	$	1,634	$	1,672	$	1,703	$	1,728
2015			430		893		1,154		1,310		1,411		1,470		1,520		1,547		1,574
2016					421		873		1,118		1,272		1,367		1,433		1,486		1,522
2017							433		890		1,154		1,314		1,418		1,490		1,544		Liability for Claims
2018									440		919		1,169		1,330		1,440		1,516		And Allocated Claim
2019											466		951		1,229		1,402		1,518		Adjustment Expenses,
2020													389		794		1,017		1,164		Net of Reinsurance
2021															427		848		1,076
2022																	388		830		2014 -		Before
2023																			444		2023		2014
																	Total		$	12,916	$	9,880	$	6,224
																			Total net liability				$	16,104

	Average Annual Percentage Payout of Incurred Claims by Age, Net of Reinsurance
	Unaudited
Years	1		2		3		4		5		6		7		8		9		10
	18.9	%	20.1	%	11.2	%	7.1	%	4.7	%	3.1	%	2.4	%	1.6	%	1.3	%	1.1	%

Bond & Specialty Insurance

General Liability

	(dollars in millions)
	For the Years Ended December 31,
	2014		2015		2016		2017		2018		2019		2020		2021		2022		2023
	Incurred Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance
	Unaudited
Accident Year																					IBNR Reserves December 31, 2023		Cumulative Number of Reported Claims
2014	$	549	$	571	$	563	$	518	$	473	$	452	$	450	$	449	$	451	$	453	$	15	4,383
2015			528		524		486		437		395		414		413		414		407		15		4,233
2016					512		511		504		520		514		510		511		509		18		4,412
2017							534		517		526		493		524		554		565		46		4,616
2018									530		548		585		595		605		612		62		4,883
2019											588		653		665		670		662		79		5,466
2020													772		753		741		698		145		5,446
2021															812		756		683		256		5,568
2022																	803		763		402		4,819
2023																			862		605		4,199
																	Total		$	6,214

	Cumulative Paid Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance
Accident Year	Unaudited
2014	$	38	$	150	$	239	$	312	$	367	$	407	$	418	$	426	$	431	$	434
2015			38		141		234		310		338		348		381		383		387
2016					30		141		233		313		378		446		463		472
2017							38		155		262		340		404		450		488		Liability for Claims
2018									49		182		290		383		458		504		And Allocated Claim
2019											51		189		323		410		513		Adjustment Expenses,
2020													52		210		333		447		Net of Reinsurance
2021															78		210		316
2022																	69		212		2014 -		Before
2023																			90		2023		2014
																	Total		$	3,863	$	2,351	$	81
																			Total net liability				$	2,432

	Average Annual Percentage Payout of Incurred Claims by Age, Net of Reinsurance
	Unaudited
Years	1		2		3		4		5		6		7		8		9		10
	8.4	%	21.7	%	18.8	%	15.6	%	11.8	%	8.1	%	5.1	%	1.4	%	1.0	%	0.6	%

Fidelity and Surety

	(dollars in millions)
	For the Years Ended December 31,
	2019		2020		2021		2022		2023		IBNR Reserves December 31, 2023		Cumulative Number of Reported Claims
	Incurred Claims and Allocated Claims Adjustment
	Expenses, Net of Reinsurance
Accident Year	Unaudited
2019	$	203	$	193	$	200	$	185	$	175	$	8	896
2020			274		203		219		222		71		805
2021					284		172		93		33		602
2022							310		261		147		715
2023									353		175		682
							Total		$	1,104

	Cumulative Paid Claims and Allocated Claim
	Adjustment Expenses, Net of Reinsurance
Accident Year	Unaudited										Liability for Claims
											And Allocated Claim
2019	$	49	$	121	$	147	$	154	$	162	Adjustment Expenses,
2020			50		79		110		125		Net of Reinsurance
2021					25		50		57
2022							36		82		2019 -		Before
2023									96		2023		2019
							Total		$	522	$	582	$	29
									Total net liability				$	611

	Average Annual Percentage Payout of Incurred Claims by Age, Net of Reinsurance
	Unaudited
Years	1		2		3		4		5
	23.7	%	24.7	%	12.0	%	5.5	%	4.3	%

Personal Insurance

Automobile

	(dollars in millions)
	For the Years Ended December 31,
	2019		2020		2021		2022		2023		IBNR Reserves December 31, 2023		Cumulative Number of Reported Claims
	Incurred Claims and Allocated Claims Adjustment
	Expenses, Net of Reinsurance
Accident Year	Unaudited
2019	$	3,362	$	3,361	$	3,333	$	3,339	$	3,343	$	29	1,033,672
2020			2,829		2,764		2,729		2,717		73		810,855
2021					3,716		3,770		3,751		192		1,000,225
2022							4,755		4,784		511		1,128,273
2023									5,206		1,535		1,009,660
							Total		$	19,801

	Cumulative Paid Claims and Allocated Claim
	Adjustment Expenses, Net of Reinsurance
Accident Year	Unaudited										Liability for Claims
											And Allocated Claim
2019	$	1,933	$	2,650	$	2,958	$	3,159	$	3,259	Adjustment Expenses,
2020			1,571		2,126		2,411		2,561		Net of Reinsurance
2021					2,062		2,981		3,350
2022							2,683		3,855		2019 -		Before
2023									2,888		2023		2019
							Total		$	15,913	$	3,888	$	207
									Total net liability				$	4,095

	Average Annual Percentage Payout of Incurred Claims by Age, Net of Reinsurance
	Unaudited
Years	1		2		3		4		5
	56.4	%	22.7	%	9.9	%	5.8	%	3.0	%

Homeowners (excluding Other)

	(dollars in millions)
	For the Years Ended December 31,
	2019		2020		2021		2022		2023		IBNR Reserves December 31, 2023		Cumulative Number of Reported Claims
	Incurred Claims and Allocated Claims Adjustment
	Expenses, Net of Reinsurance
Accident Year	Unaudited
2019	$	2,297	$	2,344	$	2,343	$	2,341	$	2,334	$	—	181,521
2020			3,019		2,967		2,909		2,869		26		221,208
2021					3,463		3,486		3,444		52		233,584
2022							4,277		4,184		167		233,740
2023									5,171		1,367		233,201
							Total		$	18,002

	Cumulative Paid Claims and Allocated Claim
	Adjustment Expenses, Net of Reinsurance
Accident Year	Unaudited										Liability for Claims
											And Allocated Claim
2019	$	1,613	$	2,179	$	2,269	$	2,300	$	2,316	Adjustment Expenses,
2020			2,019		2,673		2,755		2,802		Net of Reinsurance
2021					2,334		3,235		3,344
2022							2,537		3,828		2019 -		Before
2023									3,369		2023		2019
							Total		$	15,659	$	2,343	$	96
									Total net liability				$	2,439

	Average Annual Percentage Payout of Incurred Claims by Age, Net of Reinsurance
	Unaudited
Years	1		2		3		4		5
	66.6	%	26.0	%	3.3	%	1.5	%	0.7	%

International - Canada

	(dollars in millions)
	For the Years Ended December 31,																				IBNR Reserves December 31, 2023		Cumulative
	2014		2015		2016		2017		2018		2019		2020		2021		2022		2023				Number of
Accident	Incurred Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance																						Reported
Year	Unaudited																						Claims
2014	$	420	$	436	$	436	$	425	$	418	$	415	$	414	$	411	$	420	$	421	$	(3)	52,032
2015			353		353		353		349		351		350		345		345		346		1		44,955
2016					354		401		401		411		411		409		411		412		(3)		45,502
2017							339		374		395		395		395		398		401		2		46,521
2018									431		453		454		459		462		465		3		50,328
2019											436		431		452		454		456		6		47,916
2020													340		327		314		308		24		30,036
2021															342		329		321		41		28,042
2022																	379		388		59		32,872
2023																			446		106		30,774
																	Total		$	3,964

Accident	Cumulative Paid Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance
Year	Unaudited
2014	$	186	$	260	$	296	$	324	$	355	$	376	$	393	$	407	$	411		$	416
2015			158		221		249		277		301		315		329		336			339
2016					207		278		303		337		360		377		390			396
2017							178		252		291		314		340		361			375		Liability for Claims
2018									215		299		333		372		403			420		And Allocated Claim
2019											212		283		319		357			387		Adjustment Expenses,
2020													141		190		214			233		Net of Reinsurance
2021															126		185			214
2022																	165			239		2014 -		Before
2023																				200		2023		2014
																	Total			$	3,219	$	745	$	20
																			Total net liability					$	765

	Average Annual Percentage Payout of Incurred Claims by Age, Net of Reinsurance
	Unaudited
Years	1		2		3		4		5		6		7		8		9		10
	45.0	%	17.6	%	8.0	%	7.4	%	6.7	%	4.5	%	3.6	%	2.3	%	0.8	%	1.2	%

The incurred and paid amounts have been translated from the local currency to U.S. dollars using the December 31, 2023 spot rate for all years presented in the table above in order to isolate changes in foreign exchange rates from loss development.

Methodology for Estimating Incurred But Not Reported (IBNR) Reserves

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.

For prior accident years, the following estimation and analysis methods are principally used by the Company’s actuaries to estimate the ultimate cost of claims and claim adjustment expenses.  These estimation and analysis methods are typically referred to as conventional actuarial methods.

•The paid loss development method assumes that the future change (positive or negative) in cumulative paid losses for a given cohort of claims will occur in a stable, predictable pattern from year-to-year, consistent with the pattern observed in past cohorts.

•The case incurred development method is the same as the paid loss development method but is based on cumulative case-incurred losses rather than paid losses.

•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

future.  For certain reserve components where this assumption may not hold, such as asbestos and environmental reserves, conventional actuarial methods are not utilized by the Company.

Methodology for Determining Cumulative Number of Reported Claims

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 and Environmental Reserves

At December 31, 2023 and 2022, the Company’s claims and claim adjustment expense reserves included $1.76 billion and $1.68 billion, respectively, for asbestos and environmental-related claims, net of reinsurance.

It is difficult to estimate the reserves for asbestos and environmental-related claims due to the vagaries of court coverage decisions, plaintiffs’ expanded theories of liability, the risks inherent in complex litigation and other uncertainties, including, without limitation, those which are set forth below.

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 2023, 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 was relatively flat compared to 2022, while net asbestos payments were slightly lower

than 2022. 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 2023, 2022 and 2021 resulted in $284 million, $212 million and $225 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. The 2023 charge also included an additional increase to strengthen the Company’s carried reserve position relative to the range of reasonable estimates. 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 2023, 2022 and 2021 were $212 million, $245 million and $221 million, respectively. Approximately 1%, 2% and 9% of total net paid losses in 2023, 2022 and 2021, 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 2023, 2022 and 2021, the Company increased its net environmental reserves by $93 million, $132 million and $89 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.

Catastrophe Exposure

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.