
(at and for the year ended December 31, in millions)	2024		2023		2022
Claims and claim adjustment expense reserves at beginning of year	$	61,621	$	58,643	$	56,897
Less reinsurance recoverables on unpaid losses	7,817		7,790		8,209

Net reserves at beginning of year	53,804		50,853		48,688
Estimated claims and claim adjustment expenses for claims arising in the current year	27,508		26,159		23,308
Estimated decrease in claims and claim adjustment expenses for claims arising in prior years	(548)		(38)		(537)
Total increases	26,960		26,121		22,771
Claims and claim adjustment expense payments for claims arising in:
Current year	10,924		10,852		9,406
Prior years	13,227		12,424		10,945
Total payments	24,151		23,276		20,351

Unrealized foreign exchange (gain) loss	(194)		106		(255)
Net reserves at end of year	56,419		53,804		50,853
Plus reinsurance recoverables on unpaid losses	7,669		7,817		7,790
Claims and claim adjustment expense reserves at end of year	$	64,088	$	61,621	$	58,643

Gross claims and claim adjustment expense reserves at December 31, 2024 increased by $2.47 billion over December 31, 2023, primarily reflecting the impacts of (i) catastrophe losses in 2024, (ii) higher volumes of insured exposures and (iii) loss cost trends for the current accident year, partially offset by (iv) claim payments made during 2024 and (v) net favorable prior year reserve development. 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.

Reinsurance recoverables on unpaid losses at December 31, 2024 decreased by $148 million over December 31, 2023, primarily reflecting a decrease in structured settlements and recoverables from mandatory pools and associations, partially offset by the impact of catastrophe losses. 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.

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, 2024 and 2023. Total reserves net of the discount were $2.65 billion and $2.68 billion, and the related amount of discount was $1.07 billion and $1.10 billion, at December 31, 2024 and 2023, respectively. Accretion of the discount is reported as part of “claims and claim adjustment expenses” in the consolidated statement of income and was $44 million, $45 million and $46 million for the years ended December 31, 2024, 2023 and 2022.

Business Insurance. Net favorable prior year reserve development in 2024 totaled $90 million, primarily driven by (i) better than expected loss experience in the domestic operations’ workers’ compensation product line for multiple accident years, partially offset by (ii) higher than expected loss experience in the general liability product line (excluding asbestos) for recent accident years, (iii) an addition to asbestos reserves of $242 million and (iv) additions to other reserves related to run-off 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.

Beginning in early January 2025, there were a series of severe wildfires that impacted the Pacific Palisades neighborhood and Eaton Canyon area in Southern California. The Company’s preliminary pre-tax estimate of catastrophe losses from these wildfires, including assessments from the California FAIR Plan, and net of estimated recoveries from reinsurance, is $1.7 billion. The catastrophe losses from these wildfires will be reflected in the Company’s first quarter 2025 earnings.


(at December 31, 2024, 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	$	11,100	$	(124)	$	10,976	$	1,140	$	12,116
Commercial property	1,266		—		1,266		358		1,624
Commercial multi-peril	5,758		—		5,758		318		6,076
Commercial automobile	4,791		—		4,791		298		5,089
Workers’ compensation (1)	15,757		(900)		14,857		554		15,411
Bond & Specialty Insurance
General liability	2,681		—		2,681		339		3,020
Fidelity and surety	714		—		714		8		722
Personal Insurance
Automobile	4,302		—		4,302		320		4,622
Homeowners (excluding Other)	2,275		—		2,275		37		2,312
International - Canada	795		—		795		14		809
Subtotal — claims and allocated claim adjustment expenses for the products presented in the development tables below	49,439		(1,024)		48,415		3,386		51,801
Other insurance contracts (2)	5,036		(4)		5,032		1,735		6,767
Unallocated loss adjustment expense reserves	2,880		—		2,880		17		2,897
Structured settlements (3)	—		—		—		2,583		2,583
Other	92		—		92		(52)		40
Total property-casualty	57,447		(1,028)		56,419		7,669		64,088
Accident and health	—		—		—		5		5
Total	$	57,447	$	(1,028)	$	56,419	$	7,674	$	64,093

___________________________________________

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,
	2015		2016		2017		2018		2019		2020		2021		2022		2023		2024
	Incurred Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance
	Unaudited
Accident Year																					IBNR Reserves Dec 31, 2024		Cumulative Number of Reported Claims
2015	$	998	$	956	$	923	$	967	$	1,057	$	1,087	$	1,072	$	1,082	$	1,110	$	1,100	$	70	22,069
2016			1,075		1,058		1,087		1,187		1,204		1,179		1,185		1,183		1,173		99		20,947
2017					1,133		1,143		1,196		1,234		1,226		1,243		1,288		1,306		117		19,913
2018							1,253		1,312		1,344		1,395		1,477		1,530		1,571		134		20,059
2019									1,447		1,486		1,498		1,567		1,706		1,698		216		19,730
2020											1,467		1,493		1,470		1,577		1,568		322		19,208
2021													1,591		1,589		1,628		1,711		575		15,694
2022															1,696		1,736		1,916		851		18,258
2023																	1,998		2,060		1,432		16,973
2024																			2,340		2,120		12,629
																	Total		$	16,443


	Cumulative Paid Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance
Accident Year	Unaudited
2015	$	36	$	137	$	336	$	558	$	740	$	828	$	875	$	927	$	975	$	1,002
2016			35		191		421		649		758		858		951		991		1,031
2017					40		180		378		552		724		914		1,029		1,111
2018							42		202		441		709		939		1,146		1,270		Liability for Claims
2019									51		233		482		816		1,074		1,276		And Allocated Claim
2020											61		244		458		770		1,031		Adjustment Expenses,
2021													67		231		493		826		Net of Reinsurance
2022															81		302		668
2023																	54		280		2015 -		Before
2024																			55		2024		2015
																	Total		$	8,550	$	7,893	$	3,207
																			Total net liability				$	11,100

Commercial Property


	(dollars in millions)
	For the Years Ended December 31,
	2020		2021		2022		2023		2024
	Incurred Claims and Allocated Claims Adjustment Expenses, Net of Reinsurance
	Unaudited
Accident Year											IBNR Reserves December 31, 2024		Cumulative Number of Reported Claims
2020	$	1,107	$	1,025	$	1,005	$	993	$	983	$	33	25,713
2021			1,236		1,190		1,190		1,201		(5)		25,796
2022					1,309		1,369		1,372		3		28,896
2023							1,268		1,244		7		29,166
2024									1,474		201		25,257
							Total		$	6,274


	Cumulative Paid Claims and Allocated Claim
	Adjustment Expenses, Net of Reinsurance
	Unaudited
											Liability for Claims
Accident Year											And Allocated Claim
2020	$	580	$	857	$	907	$	932	$	939	Adjustment Expenses,
2021			645		1,068		1,141		1,169		Net of Reinsurance
2022					624		1,113		1,247
2023							614		1,049		2020 -		Before
2024									702		2024		2020
							Total		$	5,106	$	1,168	$	98
									Total net liability				$	1,266

Commercial Multi-Peril


	(dollars in millions)
	For the Years Ended December 31,
	2015		2016		2017		2018		2019		2020		2021		2022		2023		2024
	Incurred Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance
	Unaudited
Accident Year																					IBNR Reserves December 31, 2024		Cumulative Number of Reported Claims
2015	$	1,568	$	1,625	$	1,593	$	1,597	$	1,606	$	1,593	$	1,584	$	1,571	$	1,563	$	1,564	$	14	73,061
2016			1,662		1,623		1,598		1,590		1,601		1,587		1,579		1,578		1,590		19		69,612
2017					1,872		1,928		1,956		1,919		1,935		1,943		1,930		1,928		43		72,767
2018							1,976		2,114		2,092		2,112		2,121		2,127		2,125		56		80,273
2019									2,017		2,087		2,089		2,103		2,103		2,110		78		75,593
2020											2,142		2,141		2,126		2,111		2,061		216		70,726
2021													2,164		2,097		2,097		2,107		238		58,432
2022															2,502		2,533		2,569		436		54,444
2023																	2,781		2,811		716		52,398
2024																			2,946		1,255		42,267
																	Total		$	21,811


	Cumulative Paid Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance
Accident Year	Unaudited
2015	$	595	$	970	$	1,144	$	1,310	$	1,409	$	1,452	$	1,489	$	1,512	$	1,523	$	1,535
2016			585		950		1,133		1,278		1,373		1,437		1,477		1,510		1,547
2017					716		1,199		1,388		1,531		1,674		1,763		1,815		1,843
2018							792		1,302		1,500		1,669		1,815		1,917		1,986		Liability for Claims
2019									707		1,187		1,423		1,628		1,801		1,916		And Allocated Claim
2020											791		1,180		1,373		1,547		1,687		Adjustment Expenses,
2021													744		1,206		1,437		1,616		Net of Reinsurance
2022															817		1,476		1,752
2023																	935		1,603		2015 -		Before
2024																			906		2024		2015
																	Total		$	16,391	$	5,420	$	338
																			Total net liability				$	5,758

Commercial Automobile


	(dollars in millions)
	For the Years Ended December 31,
	2020		2021		2022		2023		2024
	Incurred Claims and Allocated Claims Adjustment
	Expenses, Net of Reinsurance
	Unaudited
Accident Year											IBNR Reserves December 31, 2024		Cumulative Number of Reported Claims
2020	$	1,788	$	1,677	$	1,621	$	1,558	$	1,551	$	102	143,151
2021			1,741		1,757		1,786		1,800		181		149,164
2022					1,939		2,040		2,050		365		160,389
2023							2,245		2,222		744		166,691
2024									2,544		1,493		150,376
							Total		$	10,167


	Cumulative Paid Claims and Allocated Claim
	Adjustment Expenses, Net of Reinsurance
	Unaudited
											Liability for Claims
Accident Year											And Allocated Claim
2020	$	437	$	696	$	958	$	1,192	$	1,345	Adjustment Expenses,
2021			453		800		1,135		1,405		Net of Reinsurance
2022					540		966		1,324
2023							589		1,006		2020 -		Before
2024									604		2024		2020
							Total		$	5,684	$	4,483	$	308
									Total net liability				$	4,791

Workers’ Compensation


	(dollars in millions)
	For the Years Ended December 31,
	2015		2016		2017		2018		2019		2020		2021		2022		2023		2024
	Incurred Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance
	Unaudited
Accident Year																					IBNR Reserves December 31, 2024		Cumulative Number of Reported Claims
2015	$	2,644	$	2,585	$	2,505	$	2,441	$	2,372	$	2,279	$	2,220	$	2,155	$	2,097	$	2,050	$	292	131,266
2016			2,768		2,690		2,569		2,473		2,372		2,300		2,235		2,151		2,111		262		132,057
2017					2,779		2,681		2,584		2,483		2,439		2,342		2,243		2,190		338		129,935
2018							2,744		2,687		2,599		2,503		2,416		2,318		2,245		381		132,125
2019									2,680		2,714		2,699		2,632		2,521		2,424		463		126,972
2020											2,559		2,530		2,433		2,271		2,152		519		98,066
2021													2,356		2,349		2,294		2,237		555		95,805
2022															2,293		2,294		2,226		676		103,114
2023																	2,373		2,365		836		97,620
2024																			2,352		1,363		86,556
																	Total		$	22,352


	Cumulative Paid Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance
Accident Year	Unaudited
2015	$	430	$	893	$	1,154	$	1,310	$	1,411	$	1,470	$	1,520	$	1,547	$	1,574	$	1,592
2016			421		873		1,118		1,272		1,367		1,433		1,486		1,522		1,553
2017					433		890		1,154		1,314		1,418		1,490		1,544		1,585
2018							440		919		1,169		1,330		1,440		1,516		1,578		Liability for Claims
2019									466		951		1,229		1,402		1,518		1,593		And Allocated Claim
2020											389		794		1,017		1,164		1,273		Adjustment Expenses,
2021													427		848		1,076		1,234		Net of Reinsurance
2022															388		830		1,081
2023																	444		925		2015 -		Before
2024																			443		2024		2015
																	Total		$	12,857	$	9,495	$	6,262
																			Total net liability				$	15,757

General Liability


	(dollars in millions)
	For the Years Ended December 31,
	2015		2016		2017		2018		2019		2020		2021		2022		2023		2024
	Incurred Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance
	Unaudited
Accident Year																					IBNR Reserves December 31, 2024		Cumulative Number of Reported Claims
2015	$	528	$	524	$	486	$	437	$	395	$	414	$	413	$	414	$	407	$	411	$	8	4,235
2016			512		511		504		520		514		510		511		509		512		20		4,419
2017					534		517		526		493		524		554		565		582		43		4,623
2018							530		548		585		595		605		612		636		42		4,890
2019									588		653		665		670		662		654		47		5,503
2020											772		753		741		698		684		108		5,501
2021													812		756		683		659		151		5,712
2022															803		763		727		264		5,098
2023																	862		888		422		5,730
2024																			1,001		716		4,772
																	Total		$	6,754


	Cumulative Paid Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance
Accident Year	Unaudited
2015	$	38	$	141	$	234	$	310	$	338	$	348	$	381	$	383	$	387	$	392
2016			30		141		233		313		378		446		463		472		479
2017					38		155		262		340		404		450		488		513
2018							49		182		290		383		458		504		559		Liability for Claims
2019									51		189		323		410		513		554		And Allocated Claim
2020											52		210		333		447		525		Adjustment Expenses,
2021													78		210		316		401		Net of Reinsurance
2022															69		212		335
2023																	90		274		2015 -		Before
2024																			115		2024		2015
																	Total		$	4,147	$	2,607	$	74
																			Total net liability				$	2,681

Fidelity and Surety


	(dollars in millions)
	For the Years Ended December 31,
	2020		2021		2022		2023		2024		IBNR Reserves December 31, 2024		Cumulative Number of Reported Claims
	Incurred Claims and Allocated Claims Adjustment
	Expenses, Net of Reinsurance
Accident Year	Unaudited
2020	$	274	$	203	$	219	$	222	$	206	$	49	816
2021			284		172		93		87		28		609
2022					310		261		187		71		744
2023							353		374		104		948
2024									363		311		783
							Total		$	1,217

Automobile


	(dollars in millions)
	For the Years Ended December 31,
	2020		2021		2022		2023		2024		IBNR Reserves December 31, 2024		Cumulative Number of Reported Claims
	Incurred Claims and Allocated Claims Adjustment
	Expenses, Net of Reinsurance
Accident Year	Unaudited
2020	$	2,829	$	2,764	$	2,729	$	2,717	$	2,695	$	26	811,007
2021			3,716		3,770		3,751		3,724		82		1,000,923
2022					4,755		4,784		4,729		219		1,131,357
2023							5,206		5,133		593		1,109,494
2024									5,179		1,561		945,540
							Total		$	21,460


	Cumulative Paid Claims and Allocated Claim
	Adjustment Expenses, Net of Reinsurance
Accident Year	Unaudited										Liability for Claims
											And Allocated Claim
2020	$	1,571	$	2,126	$	2,411	$	2,561	$	2,631	Adjustment Expenses,
2021			2,062		2,981		3,350		3,541		Net of Reinsurance
2022					2,683		3,855		4,278
2023							2,888		4,068		2020 -		Before
2024									2,838		2024		2020
							Total		$	17,356	$	4,104	$	198
									Total net liability				$	4,302

Homeowners (excluding Other)


	(dollars in millions)
	For the Years Ended December 31,
	2020		2021		2022		2023		2024		IBNR Reserves December 31, 2024		Cumulative Number of Reported Claims
	Incurred Claims and Allocated Claims Adjustment
	Expenses, Net of Reinsurance
Accident Year	Unaudited
2020	$	3,019	$	2,967	$	2,909	$	2,869	$	2,859	$	16	221,346
2021			3,463		3,486		3,444		3,423		22		233,960
2022					4,277		4,184		4,146		43		235,908
2023							5,171		5,018		214		267,031
2024									5,021		1,129		212,797
							Total		$	20,467


	Cumulative Paid Claims and Allocated Claim
	Adjustment Expenses, Net of Reinsurance
Accident Year	Unaudited										Liability for Claims
											And Allocated Claim
2020	$	2,019	$	2,673	$	2,755	$	2,802	$	2,823	Adjustment Expenses,
2021			2,334		3,235		3,344		3,372		Net of Reinsurance
2022					2,537		3,828		4,018
2023							3,369		4,608		2020 -		Before
2024									3,402		2024		2020
							Total		$	18,223	$	2,244	$	31
									Total net liability				$	2,275

International - Canada


	(dollars in millions)
	For the Years Ended December 31,																				IBNR Reserves December 31, 2024		Cumulative
	2015		2016		2017		2018		2019		2020		2021		2022		2023		2024				Number of
Accident	Incurred Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance																						Reported
Year	Unaudited																						Claims
2015	$	325	$	325	$	324	$	321	$	322	$	322	$	317	$	317	$	318	$	318	$	(1)	44,956
2016			325		369		369		377		377		376		378		379		380		(2)		45,503
2017					312		343		363		363		363		366		369		363		(3)		46,522
2018							396		416		418		422		425		427		424		(3)		50,329
2019									401		396		415		418		419		424		9		47,920
2020											313		301		288		283		281		10		30,038
2021													314		302		295		292		23		28,054
2022															349		356		360		35		33,023
2023																	410		434		74		32,737
2024																			462		128		31,642
																	Total		$	3,738


Accident	Cumulative Paid Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance
Year	Unaudited
2015	$	146	$	203	$	228	$	255	$	276	$	290	$	302	$	309	$	311		$	314
2016			190		255		279		310		331		347		358		364			370
2017					164		231		267		289		313		332		344			352
2018							197		275		306		342		370		386			399		Liability for Claims
2019									194		260		293		328		356			380		And Allocated Claim
2020											130		175		196		214			233		Adjustment Expenses,
2021													115		170		197			216		Net of Reinsurance
2022															152		220			248
2023																	184			262		2015 -		Before
2024																				188		2024		2015
																	Total			$	2,962	$	776	$	19
																			Total net liability					$	795

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 conducts an in-depth asbestos claim review on an annual basis, including a review of domestic policyholders with open claims and litigation cases for potential product and “non-product” liability. Policyholders are identified for this review based upon, among other factors: a combination of past payments and current case reserves in excess of a specified threshold (currently $100,000), perceived level of exposure, number of reported claims, products/completed operations and potential “non-product” exposures, size of policyholder and geographic distribution of products or services sold by the policyholder.

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, including as a result of the bankruptcy of other defendants; the jurisdictions involved, including any trends, judicial rulings or legislative actions in those jurisdictions; 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

The Company also reviews its asbestos reserves quarterly. These reviews include, as appropriate, 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.

During the third quarter of 2024, the Company completed its annual in-depth asbestos claim review. While the latest available government data continue to reflect a declining trend in deaths caused by mesothelioma, the number of policyholders with open asbestos claims was relatively flat compared to 2023. Net asbestos paid claims and claim adjustment expenses in 2024, 2023 and 2022 were $282 million, $212 million and $245 million, respectively. Payments on behalf of these policyholders continue to be influenced by the factors described above, including 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 sued and/or primary targets of asbestos litigation. The completion of the analyses described above and the annual review in the third quarters of 2024, 2023 and 2022 resulted in $242 million, $284 million and $212 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.

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, the number of policyholders with open environmental claims and 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. Moreover, more efficient clean-up technologies have reduced clean-up costs in many instances depending on the remedy chosen at sites. However, the degree to which those favorable trends have continued has been less than anticipated. In addition, inflationary impacts on consulting and contractor costs, increased involvement of regulatory agencies and costs of their involvement, and the application of more stringent cleanup standards, including on emerging contaminants, has contributed to reserve development on existing environmental claims. Additionally, 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 2024, 2023 and 2022, the Company increased its net environmental reserves by $78 million, $93 million and $132 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.