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Insurance Claim Reserves
 12 Months Ended
Dec. 31, 2016
Insurance Claim Reserves disclosure  
Insurance Claim Reserves disclosure [Text Block]

7. INSURANCE CLAIM RESERVES

        Claims and claim adjustment expense reserves were as follows:

(at December 31, in millions)
  2016   2015  

Property-casualty

   $ 47,929   $ 48,272  

Accident and health

     20     23  
​ ​ ​ ​ ​ ​ ​ ​

Total

   $ 47,949   $ 48,295  
​ ​ ​ ​ ​ ​ ​ ​
​ ​ ​ ​ ​ ​ ​ ​
​ ​ ​ ​ ​ ​ ​ ​

        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)
  2016   2015   2014  

Claims and claim adjustment expense reserves at beginning of year

   $ 48,272   $ 49,824   $ 50,865  

Less reinsurance recoverables on unpaid losses

     8,449     8,788     9,280  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Net reserves at beginning of year

     39,823     41,036     41,585  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Estimated claims and claim adjustment expenses for claims arising in the current year

     15,675     14,471     14,688  

Estimated decrease in claims and claim adjustment expenses for claims arising in prior years

     (680 )   (817 )   (885 )
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Total increases

     14,995     13,654     13,803  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Claims and claim adjustment expense payments for claims arising in:

                    

Current year

     6,220     5,725     5,895  

Prior years

     8,576     8,749     8,171  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Total payments

     14,796     14,474     14,066  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Acquisition(1)

     —     2     —  

Unrealized foreign exchange gain

     (74 )   (395 )   (286 )
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Net reserves at end of year

     39,948     39,823     41,036  

Plus reinsurance recoverables on unpaid losses

     7,981     8,449     8,788  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Claims and claim adjustment expense reserves at end of year

   $ 47,929   $ 48,272   $ 49,824  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
(1)
Amount represents acquired net claims and claim adjustment expense reserves of Travelers Participações em Seguros Brasil S.A. at October 1, 2015.

        Gross claims and claim adjustment expense reserves at December 31, 2016 decreased by $343 million from December 31, 2015. This decrease primarily reflected the impacts of (i) payments related to operations in runoff, including the Company's $524 million payment related to the settlement of the PPG Industries, Inc. litigation and (ii) net favorable prior year reserve development, partially offset by the impacts of (iii) higher volumes of insured exposures and (iv) loss cost trends for the current accident year. Gross claims and claim adjustment expense reserves at December 31, 2015 decreased by $1.55 billion from December 31, 2014. This decrease primarily reflected the impacts of (i) payments related to operations in runoff, including a $579 million payment related to the settlement of the Asbestos Direct Action Litigation as described in more detail in note 16, (ii) net favorable prior year reserve development and (iii) changes in foreign currency exchange rates, partially offset by (iv) the impact of loss cost trends for the current accident year.

        Reinsurance recoverables on unpaid losses at December 31, 2016 decreased by $468 million from December 31, 2015, primarily reflecting the impact of cash collections in 2016, including the settlement of a reinsurance dispute which is discussed in more detail in note 16. Reinsurance recoverables on unpaid losses at December 31, 2015 decreased by $339 million from December 31, 2014, primarily reflecting the impact of cash collections in 2015.

        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 rate used was 5% at both December 31, 2016 and 2015. Total reserves net of the discount were $2.17 billion and $2.13 billion, and the related amount of discount was $1.08 billion and $1.07 billion, at December 31, 2016 and 2015, respectively. Accretion of the discount is reported as part of "claims and claim adjustment expenses" in the Consolidated Statement of Income.

Prior Year Reserve Development

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

2016.

        In 2016, estimated claims and claim adjustment expenses incurred included $680 million of net favorable development for claims arising in prior years, including $771 million of net favorable prior year reserve development impacting the Company's results of operations and $50 million of accretion of discount.

        Business and International Insurance.    Net favorable prior year reserve development in 2016 totaled $484 million, primarily driven by better than expected loss experience in the Company's domestic operations in (i) the workers' compensation product line for accident years 2006 and prior as well as accident years 2009, 2013 and 2015 and (ii) the general liability product line (excluding an increase to asbestos and environmental reserves discussed below), related to both primary and excess coverages for accident years 2007 and prior, accident year 2009 and accident years 2011 through 2015, as well as in the Company's international operations in Europe and Canada. These factors contributing to net favorable prior year reserve development in 2016 were partially offset by $225 million and $82 million increases to asbestos and environmental reserves, respectively, which are discussed in further detail in the "Asbestos and Environmental Reserves" section below.

        Bond & Specialty Insurance.    Net favorable prior year reserve development in 2016 totaled $326 million, primarily driven by better than expected loss experience in (i) the fidelity and surety product line for accident years 2009 through 2015 and (ii) the general liability product line for accident years 2006 through 2011.

        Personal Insurance.    Net unfavorable prior year reserve development in 2016 totaled $39 million, primarily driven by worse than expected loss experience in the automobile product line for bodily injury coverages for the 2015 accident year.

2015.

        In 2015, estimated claims and claim adjustment expenses incurred included $817 million of net favorable development for claims arising in prior years, including $941 million of net favorable prior year reserve development impacting the Company's results of operations and $51 million of accretion of discount.

        Business and International Insurance.    Net favorable prior year reserve development in 2015 totaled $405 million, primarily driven by better than expected loss experience in the Company's domestic operations in (i) the general liability product line (excluding increases to asbestos and environmental reserves discussed below), for both primary and excess coverages for accident years 2005 through 2013, (ii) the workers' compensation line of business for accident years 2006 and prior, (iii) the property product line related to catastrophe losses for accident years 2011, 2012 and 2014 and non-catastrophe losses for accident years 2013 and 2014, as well as in the Company's operations in Canada and at Lloyd's. These factors contributing to net favorable prior year reserve development in 2015 were partially offset by $224 million and $72 million increases to asbestos and environmental reserves, respectively, which are discussed in further detail in the "Asbestos and Environmental Reserves" section below.

        Bond & Specialty Insurance.    Net favorable prior year reserve development in 2015 totaled $258 million, primarily driven by better than expected loss experience in the fidelity and surety product line for accident years 2008 through 2014, which was partially driven by a reduction in outstanding exposures related to the financial crisis that commenced in 2007.

        Personal Insurance.    Net favorable prior year reserve development in 2015 totaled $278 million, primarily driven by better than expected loss experience in (i) the Homeowners and Other product line for liability coverages for accident years 2011 through 2014, for non-catastrophe weather-related losses and non-weather-related losses for accident year 2014 and (ii) the Automobile product line for liability coverages for accident years 2012 through 2014.

2014.

        In 2014, estimated claims and claim adjustment expenses incurred included $885 million of net favorable development for claims arising in prior years, including $941 million of net favorable prior year reserve development impacting the Company's results of operations and $50 million of accretion of discount.

        Business and International Insurance.    Net favorable prior year reserve development in 2014 totaled $322 million, primarily driven by (i) better than expected loss experience in the Company's domestic operations in the general liability product line (excluding increases to asbestos and environmental reserves discussed below), primarily related to excess coverages for accident years 2008 through 2012, (ii) a $162 million benefit resulting from better than expected loss experience related to, and the commutation of reinsurance treaties associated with, a workers' compensation reinsurance pool for accident years 1996 and prior, and better than expected loss experience in the Company's domestic operations in (iii) the property product line for accident years 2010 through 2013, including catastrophe losses from Storm Sandy for accident year 2012 and (iv) the commercial auto product line for accident years 2011 and 2012. These factors contributing to net favorable prior year reserve development in 2014 were partially offset by (i) $250 million and $87 million increases to asbestos and environmental reserves, respectively, which are discussed in further detail in the "Asbestos and Environmental Reserves" section below, (ii) an increase in unallocated loss adjustment expense reserves of $77 million for interest awarded as part of damages pursuant to a court decision in the third quarter of 2014 related to a legal matter, which is discussed in more detail in the "Settlement of Asbestos Direct Action Litigation" section of note 16 and (iii) higher than expected loss experience for liability coverages in the commercial multi-peril product line for accident years 2010 through 2013.

        Bond & Specialty Insurance.    Net favorable prior year reserve development in 2014 totaled $450 million, primarily driven by better than expected loss experience in the contract surety product line for accident years 2012 and prior.

        Personal Insurance.    Net favorable prior year reserve development in 2014 totaled $169 million, primarily driven by better than expected loss experience in the Homeowners and Other product line for (i) non-catastrophe weather-related losses for accident year 2013 and (ii) catastrophe losses for accident years 2011 through 2013.

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, 2016.

At December 31, 2016 (in millions)
  Net Undiscounted
Claims and Claim
Adjustment Expense
Reserves		   Discount
(Net of
Reinsurance)		   Subtotal:
Net Claims and
Allocated Claim
Adjustment
Expense Reserves		   Reinsurance
Recoverables on
Unpaid Losses		   Claims and
Claim
Adjustment
Expense
Reserves		  

Business and International Insurance

                                

General liability

   $ 7,034   $ (168 ) $ 6,866   $ 712   $ 7,578  

Commercial property

     866     —     866     194     1,060  

Commercial multi-peril

     3,414     —     3,414     81     3,495  

Commercial automobile

     2,270     —     2,270     256     2,526  

Workers' compensation(1)

     15,439     (832 )   14,607     729     15,336  

International—Canada

     1,482     —     1,482     157     1,639  

Bond & Specialty Insurance

    
 		    
 		    
 		    
 		    
 		  

General liability

     2,042     —     2,042     82     2,124  

Fidelity and surety

     450     —     450     17     467  

Personal Insurance

    
 		    
 		    
 		    
 		    
 		  

Automobile

     2,277     —     2,277     465     2,742  

Homeowners (excluding Other)

     742     —     742     2     744  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Subtotal—claims and allocated claim adjustment expenses for the products presented in the development tables below

     36,016     (1,000 )   35,016     2,695     37,711  

Other insurance contracts(2)

     2,955     (3 )   2,952     2,058     5,010  

Unallocated loss adjustment expense reserves

     1,936     —     1,936     40     1,976  

Structured settlements(3)

     —     —     —     3,168     3,168  

Other

     44     —     44     20     64  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Total property-casualty

     40,951     (1,003 )   39,948     7,981     47,929  

Accident and health

     —     —     —     20     20  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Total

   $ 40,951   $ (1,003 ) $ 39,948   $ 8,001   $ 47,949  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
(1)
Net discount amount includes discount of $80 million on reinsurance recoverables for long-term disability and annuity claim payments.

(2)
Primarily includes residual market, non-Canadian international and runoff assumed reinsurance business.

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

        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 claim development information reflects the acquisition of The Dominion of Canada General Insurance Company (Dominion) in November 2013 on a retrospective basis (includes Dominion data for years prior to the Company's acquisition of Dominion).

Business and International Insurance

General Liability

 
   (dollars in millions)
    
    
    
    
    
    
    
    
    
    
  

 

For the Years Ended December 31,  

          
 		  

  2007     2008     2009     2010     2011     2012     2013     2014     2015         2016                

  Incurred Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance                

    Unaudited                        
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

                                                                    IBNR     Cumulative  

                                                                    Reserves     Number of  

                                                                    Dec. 31,     Reported  

Accident Year

                                                                     2016     Claims
  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

2007

   $ 1,136   $ 1,162   $ 1,087   $ 1,089   $ 968   $ 919   $ 888   $ 883   $ 865       $ 824   $ 78     23,840  

2008

           1,143     1,209     1,222     1,079     1,041     994     946     931         935     88     25,385  

2009

                 1,060     1,071     1,028     960     869     837     809         796     95     25,457  

2010

                       1,028     1,031     1,021     959     927     912         918     108     27,678  

2011

                             1,004     1,074     1,065     998     972         935     146     27,210  

2012

                                   989     985     935     913         892     184     24,384  

2013

                                         965     975     958         940     256     21,836  

2014

                                               976     989         983     438     20,926  

2015

                                                     998         956     592     18,771  

2016

                                                               1,075     908     13,810  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

                                              Total       $ 9,254              
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

 

Cumulative Paid Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance  

          
 		  

    Unaudited                        
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Accident Year 

                                                                              

2007

   $ 32   $ 134   $ 316   $ 467   $ 549   $ 632   $ 682   $ 697   $ 713       $ 726              

2008

           35     154     359     497     615     694     734     759         799              

2009

                 35     167     314     446     543     613     643         667              

2010

                       35     139     324     487     629     702         756     Liability for Claims  

2011

                             47     187     355     539     660         725     And Allocated Claim  

2012

                                   32     150     295     489         589     Adjustment Expenses,  

2013

                                         35     175     363         498     Net of Reinsurance
  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

2014

                                               37     163         321              

2015

                                                     36         137     2007 -     Before  

2016

                                                               35     2016     2007
  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

                                              Total       $ 5,253   $ 4,001   $ 3,033  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

                                                             
Total net liability		  
$
7,034		  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​


 

 
   Average Annual Percentage Payout of Incurred Claims by Age, Net of Reinsurance    
    
  
 
   Unaudited    
    
  
Years
  1   2   3   4   5   6   7   8   9   10    
    
  

    3.9 %   13.3 %   19.1 %   17.6 %   12.4 %   8.4 %   5.0 %   2.5 %   3.1 %   1.6 %            

Commercial Property

 
   (dollars in millions)
    
    
    
    
    
  

 

For the Years Ended December 31,  

          
 		  

  2012     2013     2014     2015         2016                

  Incurred Claims and Allocated Claims
Adjustment Expenses, Net of Reinsurance  		              

    Unaudited                        
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

                                      IBNR     Cumulative  

                                      Reserves     Number of  

                                      Dec. 31,     Reported  

Accident Year

                                       2016     Claims
  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

2012

   $ 1,054   $ 988   $ 924   $ 889       $ 895   $ 13     28,183  

2013

           789     755     737         731     10     22,141  

2014

                 936     860         836     15     21,490  

2015

                       786         750     28     19,859  

2016

                                 896     131     19,327  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Total

       $ 4,108              
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

 

Cumulative Paid Claims and Allocated Claim
Adjustment Expenses, Net of Reinsurance  

          
 		  

    Unaudited                        
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Accident Year 

                                       Liability for Claims
And Allocated Claim		  

2012

   $ 453   $ 770   $ 845   $ 865       $ 872     Adjustment Expenses,  

2013

           389     610     683         703     Net of Reinsurance
  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

2014

                 464     710         775              

2015

                       376         615     2012 -     Before  

2016

                                 441     2016     2012
  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Total

       $ 3,406   $ 702   $ 164  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

   
 		    
 		    
 		    
 		        
Total net liability		  
$
866		  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​


 

 
   Average Annual Percentage Payout of
Incurred Claims by Age, Net of Reinsurance		    
    
  
 
   Unaudited    
    
  
Years
  1   2   3   4   5    
    
  

    51.7 %   31.8 %   8.7 %   2.5 %   0.8 %            

Commercial Multi-Peril

 
   (dollars in millions)
    
    
    
    
    
    
    
    
    
    
  

 

For the Years Ended December 31,  

          
 		  

  2007     2008     2009     2010     2011     2012     2013     2014     2015         2016                

  Incurred Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance                

    Unaudited                        
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

                                                                    IBNR     Cumulative  

                                                                    Reserves     Number of  

                                                                    Dec. 31,     Reported  

Accident Year

                                                                     2016     Claims
  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

2007

   $ 1,490   $ 1,430   $ 1,364   $ 1,402   $ 1,398   $ 1,375   $ 1,373   $ 1,369   $ 1,376       $ 1,369   $ 51     96,767  

2008

           1,725     1,674     1,683     1,688     1,674     1,684     1,674     1,688         1,681     47     108,382  

2009

                 1,484     1,506     1,501     1,498     1,511     1,514     1,514         1,509     42     103,198  

2010

                       1,711     1,826     1,832     1,861     1,895     1,892         1,898     51     111,586  

2011

                             2,235     2,244     2,269     2,286     2,296         2,287     66     125,358  

2012

                                   1,885     1,883     1,903     1,888         1,888     88     104,419  

2013

                                         1,615     1,623     1,620         1,609     122     82,936  

2014

                                               1,663     1,627         1,625     193     76,833  

2015

                                                     1,568         1,625     354     68,278  

2016

                                                               1,662     658     56,471  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

                                              Total       $ 17,153              
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

 

Cumulative Paid Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance  

          
 		  

    Unaudited                        
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Accident Year 

                                                                              

2007

   $ 498   $ 824   $ 982   $ 1,110   $ 1,208   $ 1,256   $ 1,278   $ 1,296   $ 1,307       $ 1,312              

2008

           712     1,103     1,264     1,396     1,490     1,551     1,581     1,602         1,617              

2009

                 603     958     1,121     1,264     1,360     1,408     1,436         1,449              

2010

                       709     1,180     1,395     1,579     1,698     1,763         1,798     Liability for Claims  

2011

                             1,060     1,573     1,803     1,979     2,088         2,156     And Allocated Claim  

2012

                                   795     1,246     1,424     1,590         1,699     Adjustment Expenses,  

2013

                                         644     987     1,167         1,304     Net of Reinsurance
  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

2014

                                               628     956         1,154              

2015

                                                     595         970     2007 -     Before  

2016

                                                               585     2016     2007
  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Total

       $ 14,044   $ 3,109   $ 305  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

                                                             
Total net liability		  
$
3,414		  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​


 

 
   Average Annual Percentage Payout of Incurred Claims by Age, Net of Reinsurance    
    
  
 
   Unaudited    
    
  
Years
  1   2   3   4   5   6   7   8   9   10    
    
  

    39.5 %   22.9 %   10.8 %   8.8 %   6.0 %   3.3 %   1.8 %   1.1 %   0.9 %   0.4 %            

Commercial Automobile

 
   (dollars in millions)
    
    
    
    
    
  

 

For the Years Ended December 31,  

          
 		  

  2012     2013     2014     2015         2016                

  Incurred Claims and Allocated Claims
Adjustment Expenses, Net of Reinsurance  		              

    Unaudited                        
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

                                      IBNR     Cumulative  

                                      Reserves     Number of  

                                      Dec. 31,     Reported  

Accident Year

                                       2016     Claims
  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

2012

   $ 1,294   $ 1,350   $ 1,327   $ 1,325       $ 1,337   $ 35     214,780  

2013

           1,235     1,236     1,240         1,245     67     197,041  

2014

                 1,165     1,166         1,168     131     184,067  

2015

                       1,198         1,215     246     179,963  

2016

                                 1,290     516     173,790  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Total

       $ 6,255              
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

 

Cumulative Paid Claims and Allocated Claim
Adjustment Expenses, Net of Reinsurance  

          
 		  

    Unaudited                        
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Accident Year 

                                       Liability for Claims
And Allocated Claim		  

2012

   $ 467   $ 753   $ 960   $ 1,134       $ 1,235     Adjustment Expenses,  

2013

           435     675     884         1,039     Net of Reinsurance
  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

2014

                 397     618         821              

2015

                       409         658     2012 -     Before  

2016

                                 416     2016     2012
  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Total

       $ 4,169   $ 2,086   $ 184  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

   
 		    
 		    
 		    
 		        
Total net liability		  
$
2,270		  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

 
   Average Annual Percentage Payout of
Incurred Claims by Age, Net of Reinsurance		    
    
  
 
   Unaudited    
    
  
Years
  1   2   3   4   5    
    
  

    34.0 %   20.0 %   16.6 %   12.7 %   7.6 %            

Workers' Compensation

 
   (dollars in millions)
    
    
    
    
    
    
    
    
    
    
  

 

For the Years Ended December 31,  

          
 		  

  2007     2008     2009     2010     2011     2012     2013     2014     2015         2016                

  Incurred Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance                

    Unaudited                        
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

                                                                    IBNR     Cumulative  

                                                                    Reserves     Number of  

                                                                    Dec. 31,     Reported  

Accident Year

                                                                     2016     Claims
  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

2007

   $ 1,554   $ 1,519   $ 1,484   $ 1,448   $ 1,390   $ 1,373   $ 1,358   $ 1,340   $ 1,328       $ 1,341   $ 217     103,064  

2008

           1,714     1,745     1,734     1,683     1,639     1,634     1,621     1,617         1,617     237     107,565  

2009

                 1,799     1,778     1,746     1,753     1,753     1,766     1,775         1,750     272     104,229  

2010

                       1,886     2,042     2,035     2,056     2,049     2,052         2,055     354     116,837  

2011

                             2,284     2,303     2,347     2,350     2,379         2,385     430     135,061  

2012

                                   2,447     2,456     2,457     2,456         2,445     519     133,417  

2013

                                         2,553     2,545     2,540         2,506     651     128,111  

2014

                                               2,554     2,553         2,547     839     123,110  

2015

                                                     2,644         2,585     1,142     120,681  

2016

                                                               2,768     1,651     108,357  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

                                              Total       $ 21,999              
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

 

Cumulative Paid Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance  

          
 		  

    Unaudited                        
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Accident Year 

                                                                              

2007

   $ 216   $ 450   $ 589   $ 683   $ 747   $ 802   $ 845   $ 880   $ 910       $ 936              

2008

           274     571     752     875     961     1,036     1,088     1,130         1,162              

2009

                 288     623     828     961     1,065     1,137     1,193         1,235              

2010

                       341     750     978     1,133     1,246     1,321         1,385     Liability for Claims  

2011

                             420     911     1,185     1,365     1,487         1,583     And Allocated Claim  

2012

                                   443     940     1,217     1,394         1,536     Adjustment Expenses,  

2013

                                         458     954     1,237         1,413     Net of Reinsurance
  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

2014

                                               455     944         1,224              

2015

                                                     430         893     2007 -     Before  

2016

                                                               421     2016     2007
  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Total

       $ 11,788   $ 10,211   $ 5,228  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

                                                             
Total net liability		  
$
15,439		  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​


 

 
   Average Annual Percentage Payout of Incurred Claims by Age, Net of Reinsurance    
    
  
 
   Unaudited    
    
  
Years
  1   2   3   4   5   6   7   8   9   10    
    
  

    17.0 %   19.2 %   11.2 %   7.4 %   5.4 %   4.1 %   3.2 %   2.5 %   2.1 %   1.9 %            

International—Canada

 
   (dollars in millions)
    
    
    
    
    
    
    
    
    
    
  

 

For the Years Ended December 31,  

          
 		  

  2007     2008     2009     2010     2011     2012     2013     2014     2015         2016                

  Incurred Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance                

    Unaudited                        
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

                                                                    IBNR     Cumulative  

                                                                    Reserves     Number of  

                                                                    Dec. 31,     Reported  

Accident Year

                                                                     2016     Claims
  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

2007

   $ 632   $ 626   $ 616   $ 608   $ 607   $ 609   $ 611   $ 608   $ 601       $ 597   $ 4     66,327  

2008

           681     685     670     665     658     655     651     646         642     5     71,803  

2009

                 724     718     707     714     714     702     696         690     13     71,671  

2010

                       715     722     721     735     724     715         706     20     71,437  

2011

                             723     696     686     682     678         669     30     72,063  

2012

                                   664     642     631     611         616     50     67,320  

2013

                                         723     717     701         685     56     71,183  

2014

                                               665     678         682     83     67,935  

2015

                                                     597         610     112     58,238  

2016

                                                               612     102     54,948  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

                                              Total       $ 6,509              
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

 

Cumulative Paid Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance  

          
 		  

    Unaudited                        
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Accident Year 

                                                                              

2007

   $ 228   $ 355   $ 410   $ 450   $ 488   $ 524   $ 547   $ 561   $ 570       $ 578              

2008

           256     406     460     501     543     579     603     616         622              

2009

                 274     419     479     525     573     608     630         648              

2010

                       258     403     465     522     573     615         641     Liability for Claims  

2011

                             253     380     432     481     538         571     And Allocated Claim  

2012

                                   225     336     389     435         482     Adjustment Expenses,  

2013

                                         260     388     439         494     Net of Reinsurance
  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

2014

                                               252     382         445              

2015

                                                     228         346     2007 -     Before  

2016

                                                               295     2016     2007
  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Total

       $ 5,122   $ 1,387   $ 95  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

                                                             
Total net liability		  
$
1,482		  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​


 

 
   Average Annual Percentage Payout of Incurred Claims by Age, Net of Reinsurance    
    
  
 
   Unaudited    
    
  
Years
  1   2   3   4   5   6   7   8   9   10    
    
  

    38.9 %   20.0 %   8.5 %   7.2 %   7.2 %   5.5 %   3.6 %   2.3 %   1.2 %   1.4 %            

        The incurred and paid amounts have been translated from the local currency to U.S. dollars using the December 31, 2016 spot rate for all years presented in the table above in order to isolate changes in foreign exchange rates from loss development.

Bond & Specialty Insurance

General Liability

 
   (dollars in millions)
    
    
    
    
    
    
    
    
    
    
  

 

For the Years Ended December 31,  

          
 		  

  2007     2008     2009     2010     2011     2012     2013     2014     2015         2016                

  Incurred Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance                

    Unaudited                        
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

                                                                    IBNR     Cumulative  

                                                                    Reserves     Number of  

                                                                    Dec. 31,     Reported  

Accident Year

                                                                     2016     Claims
  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

2007

   $ 584   $ 571   $ 638   $ 582   $ 551   $ 511   $ 479   $ 467   $ 462       $ 454   $ 4     11,018  

2008

           579     769     743     697     716     712     672     643         631     24     6,463  

2009

                 592     624     665     686     680     660     655         641     24     6,287  

2010

                       571     612     679     679     661     668         653     18     5,655  

2011

                             565     596     639     632     601         545     34     5,191  

2012

                                   538     591     614     605         601     137     4,824  

2013

                                         510     565     606         630     204     4,371  

2014

                                               549     571         563     232     4,182  

2015

                                                     528         524     272     3,814  

2016

                                                               512     405     2,676  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

                                              Total       $ 5,754              
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

 

Cumulative Paid Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance  

          
 		  

    Unaudited                        
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Accident Year 

                                                                              

2007

   $ 35   $ 134   $ 229   $ 303   $ 357   $ 373   $ 393   $ 400   $ 410       $ 415              

2008

           47     157     281     387     471     529     562     579         590              

2009

                 36     167     310     390     460     497     563         592              

2010

                       33     152     291     396     482     565         597     Liability for Claims  

2011

                             33     143     249     324     414         447     And Allocated Claim  

2012

                                   38     160     255     342         383     Adjustment Expenses,  

2013

                                         34     154     252         352     Net of Reinsurance
  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

2014

                                               38     150         239              

2015

                                                     38         141     2007 -     Before  

2016

                                                               30     2016     2007
  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

                                              Total       $ 3,786   $ 1,968   $ 74  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

                                                             
Total net liability		  
$
2,042		  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​


 

 
   Average Annual Percentage Payout of Incurred Claims by Age, Net of Reinsurance    
    
  
 
   Unaudited    
    
  
Years
  1   2   3   4   5   6   7   8   9   10    
    
  

    6.3 %   19.7 %   18.8 %   15.1 %   12.1 %   7.5 %   6.2 %   3.0 %   1.9 %   1.1 %            

Fidelity and Surety

 
   (dollars in millions)
    
    
    
    
    
  

 

For the Years Ended December 31,  

          
 		  

  2012     2013     2014     2015         2016                

  Incurred Claims and Allocated Claims
Adjustment Expenses, Net of Reinsurance  		              

    Unaudited                        
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

                                      IBNR     Cumulative  

                                      Reserves     Number of  

                                      Dec. 31,     Reported  

Accident Year

                                       2016     Claims
  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

2012

   $ 255   $ 262   $ 249   $ 175       $ 140   $ 9     1,148  

2013

           240     246     199         146     6     1,006  

2014

                 223     212         165     32     992  

2015

                       217         191     79     768  

2016

                                 226     128     595  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Total

       $ 868              
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

 

Cumulative Paid Claims and Allocated Claim
Adjustment Expenses, Net of Reinsurance  

          
 		  

    Unaudited                        
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Accident Year 

                                       Liability for Claims
And Allocated Claim		  

2012

   $ 42   $ 108   $ 124   $ 110       $ 111     Adjustment Expenses,  

2013

           37     113     128         131     Net of Reinsurance
  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

2014

                 58     96         111              

2015

                       32         75     2012 -     Before  

2016

                                 54     2016     2012
  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Total

       $ 482   $ 386   $ 64  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

   
 		    
 		    
 		    
 		        
Total net liability		  
$
450		  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​


 

 
   Average Annual Percentage Payout of
Incurred Claims by Age, Net of Reinsurance		    
    
  
 
   Unaudited    
    
  
Years
  1   2   3   4   5    
    
  

    26.1 %   36.2 %   10.1 %   (3.6)%(1 )   0.8 %            
(1)
Includes recovery activity.

Personal Insurance

Automobile

 
   (dollars in millions)
    
    
    
    
    
  

 

For the Years Ended December 31,  

          
 		  

  2012     2013     2014     2015         2016                

  Incurred Claims and Allocated Claims
Adjustment Expenses, Net of Reinsurance  		              

    Unaudited                        
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

                                      IBNR     Cumulative  

                                      Reserves     Number of  

                                      Dec. 31,     Reported  

Accident Year

                                       2016     Claims
  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

2012

   $ 2,417   $ 2,454   $ 2,448   $ 2,432       $ 2,428   $ 15     793,669  

2013

           2,108     2,095     2,049         2,044     36     694,650  

2014

                 2,014     1,994         1,981     75     669,990  

2015

                       2,186         2,244     224     755,762  

2016

                                 2,779     646     839,962  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Total

       $ 11,476              
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

 

Cumulative Paid Claims and Allocated Claim
Adjustment Expenses, Net of Reinsurance  

          
 		  

    Unaudited                        
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Accident Year 

                                       Liability for Claims
And Allocated Claim		  

2012

   $ 1,503   $ 1,983   $ 2,189   $ 2,311       $ 2,376     Adjustment Expenses,  

2013

           1,251     1,628     1,814         1,935     Net of Reinsurance
  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

2014

                 1,193     1,564         1,763              

2015

                       1,319         1,768     2012 -     Before  

2016

                                 1,610     2016     2012
  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Total

       $ 9,452   $ 2,024   $ 253  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

   
 		    
 		    
 		    
 		        
Total net liability		  
$
2,277		  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​


 

 
   Average Annual Percentage Payout of
Incurred Claims by Age, Net of Reinsurance		    
    
  
 
   Unaudited    
    
  
Years
  1   2   3   4   5    
    
  

    60.0 %   19.2 %   9.2 %   5.5 %   2.7 %            

Homeowners (excluding Other)

 
   (dollars in millions)
    
    
    
    
    
  

 

For the Years Ended December 31,  

          
 		  

  2012     2013     2014     2015         2016                

  Incurred Claims and Allocated Claims
Adjustment Expenses, Net of Reinsurance  		              

    Unaudited                        
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

                                      IBNR     Cumulative  

                                      Reserves     Number of  

                                      Dec. 31,     Reported  

Accident Year

                                       2016     Claims
  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

2012

   $ 2,136   $ 2,056   $ 2,029   $ 2,018       $ 2,019   $ 1     259,006  

2013

           1,488     1,397     1,365         1,375     4     149,373  

2014

                 1,515     1,450         1,453     9     151,517  

2015

                       1,438         1,454     28     144,367  

2016

                                 1,556     307     129,630  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

    Total       $ 7,857              
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

 

Cumulative Paid Claims and Allocated Claim
Adjustment Expenses, Net of Reinsurance  

          
 		  

    Unaudited                        
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Accident Year 

                                       Liability for Claims
And Allocated Claim		  

2012

   $ 1,508   $ 1,901   $ 1,964   $ 1,993       $ 2,008     Adjustment Expenses,  

2013

           994     1,269     1,317         1,344     Net of Reinsurance
  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

2014

                 1,053     1,338         1,402              

2015

                       994         1,333     2012 -     Before  

2016

                                 1,049     2016     2012
  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Total

       $ 7,136   $ 721   $ 21  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

   
 		    
 		    
 		    
 		        
Total net liability		  
$
742		  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​


 

 
   Average Annual Percentage Payout of
Incurred Claims by Age, Net of Reinsurance		    
    
  
 
   Unaudited    
    
  
Years
  1   2   3   4   5    
    
  

    71.1 %   20.6 %   3.7 %   1.7 %   0.7 %            

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 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 claims 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 continually 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 and International 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 recognizes one count per coverage per policy 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 a new roadside assistance coverage feature several years ago 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, 2016 and 2015, the Company's claims and claim adjustment expense reserves included $1.71 billion and $2.17 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 at least annually. Among the factors which 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; 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 2016, the Company completed its annual in-depth asbestos claim review, including a review of active policyholders and litigation cases for potential product and "non-product" liability, and noted the continuation of the following trends:

•
continued high level of litigation activity in certain jurisdictions involving individuals alleging serious asbestos-related illness, primarily involving mesothelioma claims;

•
while overall payment patterns have been generally stable, there has been an increase in severity for certain policyholders due to the continued high level of litigation activity; and

•
continued moderate level of asbestos-related bankruptcy activity.

        In the Home Office and Field Office category, which accounts for the vast majority of policyholders with active asbestos-related claims, the number of policyholders tendering asbestos claims for the first time, the number of policyholders with open asbestos claims and both gross and net asbestos-related payments declined slightly when compared to 2015. Payments on behalf of policyholders in this category continue to be influenced by the 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 category, as well as recent settlements, policyholder bankruptcies, judicial rulings and legislative actions. The Company also analyzes developing payment patterns among policyholders in the Home Office and Field Office, and Assumed Reinsurance and Other categories 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 nor have the Company's evaluations resulted in any way of determining a meaningful average asbestos defense or indemnity payment.

        The completion of these reviews and analyses in 2016, 2015 and 2014 resulted in $225 million, $224 million and $250 million increases, respectively, in 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 in the Home Office category due to a higher than previously anticipated level of litigation activity surrounding mesothelioma claims. This increase in the estimate of projected settlement and defense costs resulted from payment trends that continue to be higher than previously anticipated due to the impact of the current litigation environment discussed above. Over the past decade, the property and casualty insurance industry, including the Company, has experienced net unfavorable prior year reserve development with regard to asbestos reserves, but the Company believes that over that period there has been a reduction in the volatility associated with the Company's overall asbestos exposure as the overall asbestos environment has evolved from one dominated by exposure to significant litigation risks, particularly coverage disputes relating to policyholders in bankruptcy who were asserting that their claims were not subject to the aggregate limits contained in their policies, to an environment primarily driven by a frequency of litigation related to individuals with mesothelioma. The Company's overall view of the current underlying asbestos environment is essentially unchanged from recent periods and there remains a high degree of uncertainty with respect to future exposure to asbestos claims.

        Net asbestos paid loss and loss expenses in 2016, 2015 and 2014 were $708 million, $770 million and $242 million, respectively. Net payments in 2016 included the payment of the $518 million settlement amounts related to PPG Industries, Inc. Net payments in 2015 included the payment of the $502 million settlement amounts related to the Settlement of Asbestos Direct Action Litigation as described in more detail in note 16. Approximately 69%, 69% and 8% of total net paid losses in 2016, 2015 and 2014, respectively, related to policyholders with whom the Company had entered into settlement agreements limiting the Company's liability.

        Environmental Reserves.    In establishing environmental reserves, the Company evaluates the exposure presented by each policyholder and the anticipated cost of resolution, if any. In the course of this 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.

        The Company continues to receive notices from policyholders tendering claims for the first time, frequently under policies issued prior to the mid-1980s. These policyholders continue to present smaller exposures, have fewer sites and are lower tier defendants. 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. 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. However, the degree to which those favorable trends have continued has been less than anticipated. In addition, reserve development on existing environmental claims has been greater than anticipated, driven by claims and legal developments in a limited number of jurisdictions. As a result of these factors, in 2016, 2015 and 2014, the Company increased its net environmental reserves by $82 million, $72 million and $87 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. The continuing uncertainties include, without limitation, the risks and lack of predictability inherent in complex litigation, any impact from the bankruptcy protection sought by various asbestos producers and other asbestos defendants, a further increase or decrease in the cost to resolve, and/or the number of, asbestos and environmental claims beyond that which is anticipated, the emergence of a greater number of asbestos claims than anticipated as a result of extended life expectancies resulting from medical advances and lifestyle improvements, the role of any umbrella or excess policies the Company has issued, the resolution or adjudication of disputes pertaining to the amount of available coverage for asbestos and environmental claims in a manner inconsistent with the Company's previous assessment of these claims, the number and outcome of direct actions against the Company, future developments pertaining to the Company's ability to recover reinsurance for asbestos and environmental claims and the unavailability of other insurance sources potentially available to policyholders, whether through exhaustion of policy limits or through the insolvency of other participating insurers. In addition, uncertainties arise from the insolvency or bankruptcy of policyholders and other defendants. It is also not possible to predict changes in the legal, regulatory and legislative environment and their impact on the future development of asbestos and environmental claims. This environment could be affected by 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. 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 can be caused by a variety of events, including, among others, hurricanes, tornadoes and other windstorms, earthquakes, hail, wildfires, severe winter weather, floods, tsunamis, volcanic eruptions and other naturally-occurring events, such as solar flares. Catastrophes can also result from terrorist attacks and other intentionally destructive acts including those involving nuclear, biological, chemical, radiological, cyber-attacks, explosions and infrastructure failures. 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 and earthquakes 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.