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Insurance Claim Reserves
 12 Months Ended
Dec. 31, 2017
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)
  2017   2016  

Property-casualty

   $ 49,633   $ 47,929  

Accident and health

     17     20  
​ ​ ​ ​ ​ ​ ​ ​

Total

   $ 49,650   $ 47,949  
​ ​ ​ ​ ​ ​ ​ ​
​ ​ ​ ​ ​ ​ ​ ​
​ ​ ​ ​ ​ ​ ​ ​

        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)
  2017   2016   2015  

Claims and claim adjustment expense reserves at beginning of year

   $ 47,929   $ 48,272   $ 49,824  

Less reinsurance recoverables on unpaid losses

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

Net reserves at beginning of year

     39,948     39,823     41,036  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

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

     17,846     15,675     14,471  

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

     (458 )   (680 )   (817 )
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Total increases

     17,388     14,995     13,654  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Claims and claim adjustment expense payments for claims arising in:

                    

Current year

     7,335     6,220     5,725  

Prior years

     8,708     8,576     8,749  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Total payments

     16,043     14,796     14,474  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Acquisition(1)

     —     —     2  

Unrealized foreign exchange loss (gain)

     217     (74 )   (395 )
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Net reserves at end of year

     41,510     39,948     39,823  

Plus reinsurance recoverables on unpaid losses

     8,123     7,981     8,449  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Claims and claim adjustment expense reserves at end of year

   $ 49,633   $ 47,929   $ 48,272  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
(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, 2017 increased by $1.70 billion over December 31, 2016, primarily reflecting the impacts of (i) catastrophe losses in the second half of 2017 and (ii) higher volumes of insured exposures and loss cost trends for the current accident year, partially offset by the impacts of (iii) payments related to operations in runoff and (iv) net favorable prior year reserve development. Gross claims and claim adjustment expense reserves at December 31, 2016 decreased by $343 million from December 31, 2015, primarily reflecting 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 impact of (iii) higher volumes of insured exposures and loss cost trends for the current accident year.

        Reinsurance recoverables on unpaid losses at December 31, 2017 increased by $142 million over December 31, 2016, primarily reflecting the impacts of catastrophe losses and the asbestos reserve increase in the second half of 2017, partially offset by cash collections in 2017, including the settlement of certain disputes as discussed in more detail in note 16. 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.

        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, 2017 and 2016. Total reserves net of the discount were $2.32 billion and $2.17 billion, and the related amount of discount was $1.10 billion and $1.08 billion, at December 31, 2017 and 2016, respectively. Accretion of the discount is reported as part of "claims and claim adjustment expenses" in the consolidated statements of income and was $50 million, $50 million and $51 million in 2017, 2016 and 2015, respectively.

Prior Year Reserve Development

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

2017

        In 2017, estimated claims and claim adjustment expenses incurred included $458 million of net favorable development for claims arising in prior years, including $592 million of net favorable prior year reserve development and $50 million of accretion of discount that impacted the Company's results of operations.

        Business Insurance.    Net favorable prior year reserve development in 2017 totaled $439 million, primarily driven by net favorable prior year reserve development in the segment's domestic operations due to better than expected loss experience in (i) the workers' compensation product line for multiple accident years, (ii) the general liability product line (excluding an increase to asbestos and environmental reserves) for both primary and excess coverages for multiple accident years and (iii) the commercial multi-peril product line for liability coverages for multiple accident years, partially offset by (iv) a $225 million increase to asbestos reserves, (v) the impact of higher than expected loss experience in the commercial automobile product line for recent accident years and (vi) a $65 million increase to environmental reserves. The net favorable prior year reserve development in the segment's domestic operations was partially offset by net unfavorable prior year reserve development in the segment's international operations in Europe primarily due to the U.K. Ministry of Justice's "Ogden" discount rate adjustment applied to lump sum bodily injury payouts.

        Bond & Specialty Insurance.    Net favorable prior year reserve development in 2017 totaled $140 million, primarily driven by better than expected loss experience in the segment's domestic operations in the general liability product line for multiple accident years.

        Personal Insurance.    Net favorable prior year reserve development in 2017 was not significant and totaled $13 million.

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 and $50 million of accretion of discount that impacted the Company's results of operations.

        Business Insurance.    Net favorable prior year reserve development in 2016 totaled $424 million, primarily driven by better than expected loss experience in the Company's domestic operations in (i) the workers' compensation product line for multiple accident years and (ii) the general liability product line (excluding an increase to asbestos and environmental reserves), related to both primary and excess coverages for multiple accident years, partially offset by (iii) a $225 million increase to asbestos reserves and (iv) an $82 million increase to environmental reserves, as well as net favorable prior year reserve development in the segment's international operations in Europe.

        Bond & Specialty Insurance.    Net favorable prior year reserve development in 2016 totaled $350 million, primarily driven by better than expected loss experience in the Company's domestic operations in (i) the fidelity and surety product line for multiple accident years and (ii) the general liability product line for multiple accident years.

        Personal Insurance.    Net unfavorable prior year reserve development in 2016 was not significant and totaled $3 million.

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 and $51 million of accretion of discount that impacted the Company's results of operations.

        Business Insurance.    Net favorable prior year reserve development in 2015 totaled $332 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), for both primary and excess coverages for multiple accident years, (ii) the workers' compensation line of business for accident years 2006 and prior, (iii) the property product line related to catastrophe losses for recent accident years and non-catastrophe losses for recent accident years, partially offset by (iv) a $224 million increase to asbestos reserves and (v) a $72 million increase to environmental reserves, as well as net favorable prior year reserve development in the Company's operations at Lloyd's.

        Bond & Specialty Insurance.    Net favorable prior year reserve development in 2015 totaled $281 million, primarily driven by better than expected loss experience in the Company's domestic operations in the fidelity and surety product line for multiple accident years, 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 $328 million, primarily driven by better than expected loss experience in the Company's domestic operations in (i) the Homeowners and Other product line for liability coverages for recent accident years, 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 recent accident years, as well as in the Company's international operations in Canada.

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, 2017.

(at December 31, 2017, 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

   $ 6,852   $ (163 ) $ 6,689   $ 748   $ 7,437  

Commercial property

     1,040     —     1,040     358     1,398  

Commercial multi-peril

     3,487     —     3,487     131     3,618  

Commercial automobile

     2,406     —     2,406     269     2,675  

Workers' compensation(1)

     15,812     (862 )   14,950     703     15,653  

Bond & Specialty Insurance

    
 		    
 		    
 		    
 		    
 		  

General liability

     1,995     —     1,995     130     2,125  

Fidelity and surety

     460     —     460     19     479  

Personal Insurance

    
 		    
 		    
 		    
 		    
 		  

Automobile

     2,647     —     2,647     450     3,097  

Homeowners (excluding Other)

     1,125     —     1,125     2     1,127  

International—Canada

     760     —     760     27     787  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

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

     36,584     (1,025 )   35,559     2,837     38,396  

Other insurance contracts(2)

     3,858     (5 )   3,853     2,130     5,983  

Unallocated loss adjustment expense reserves

     2,042     —     2,042     36     2,078  

Structured settlements(3)

     —     —     —     3,106     3,106  

Other

     56     —     56     14     70  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Total property-casualty

     42,540     (1,030 )   41,510     8,123     49,633  

Accident and health

     —     —     —     17     17  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Total

   $ 42,540   $ (1,030 ) $ 41,510   $ 8,140   $ 49,650  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
(1)
Net discount amount includes discount of $72 million on reinsurance recoverables for long-term disability and annuity claim payments.

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

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

(4)
Total reinsurance recoverables (on paid and unpaid losses) at December 31, 2017 were $8.31 billion.

        The claim development tables that follow present, by accident year, incurred and cumulative paid claims and allocated claim adjustment expense on a historical basis. This claim development information is presented on an undiscounted, net of reinsurance basis for ten years, or the number of years for which claims incurred typically remain outstanding if less than ten years. The claim development tables also provide the historical average annual percentage payout of incurred claims by age, net of reinsurance, as supplementary information (identified as unaudited in the tables below). For Personal Insurance—International—Canada, 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 Insurance

General Liability

 
   (dollars in millions)
    
    
    
    
    
    
    
    
    
    
  

 

For the Years Ended December 31,  

          
 		  

  2008     2009     2010     2011     2012     2013     2014     2015     2016         2017                

  Incurred Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance                

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

                                                                    IBNR     Cumulative  

                                                                    Reserves     Number of  

                                                                    Dec. 31,     Reported  

Accident Year

                                                                     2017     Claims
  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

2008

   $ 1,143   $ 1,209   $ 1,222   $ 1,079   $ 1,041   $ 994   $ 946   $ 931   $ 935       $ 936   $ 81     25,462  

2009

           1,060     1,071     1,028     960     869     837     809     796         783     71     25,551  

2010

                 1,028     1,031     1,021     959     927     912     918         908     90     27,810  

2011

                       1,004     1,074     1,065     998     972     935         913     93     27,327  

2012

                             989     985     935     913     892         905     111     24,632  

2013

                                   965     975     958     940         927     166     22,200  

2014

                                         976     989     983         948     255     21,703  

2015

                                               998     956         923     361     20,236  

2016

                                                     1,075         1,058     655     17,680  

2017

                                                               1,133     968     12,538  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

                                              Total       $ 9,434              
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

 

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

          
 		  

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

Accident Year 

                                                                              

2008

   $ 35   $ 154   $ 359   $ 497   $ 615   $ 694   $ 734   $ 759   $ 799       $ 817              

2009

           35     167     314     446     543     613     643     667         689              

2010

                 35     139     324     487     629     702     756         781              

2011

                       47     187     355     539     660     725         762     Liability for Claims  

2012

                             32     150     295     489     589         699     And Allocated Claim  

2013

                                   35     175     363     498         639     Adjustment Expenses,  

2014

                                         37     163     321         515     Net of Reinsurance
  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

2015

                                               36     137         336              

2016

                                                     35         191     2008 -     Before  

2017

                                                               40     2017     2008
  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

                                              Total       $ 5,469   $ 3,965   $ 2,887  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

                                                             
Total net liability		  
$
6,852		  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​


 

 
   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 %   13.7 %   19.3 %   18.0 %   13.4 %   8.9 %   4.6 %   2.8 %   3.6 %   1.9 %            

Commercial Property

 
   (dollars in millions)
    
    
    
    
    
  

 

For the Years Ended December 31,  

          
 		  

  2013     2014     2015     2016         2017                

  Incurred Claims and Allocated Claims
Adjustment Expenses, Net of Reinsurance  		              

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

                                      IBNR     Cumulative  

                                      Reserves     Number of  

                                      Dec. 31,     Reported  

Accident Year

                                       2017     Claims
  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

2013

   $ 789   $ 755   $ 737   $ 731       $ 729   $ 6     22,165  

2014

           936     860     836         835     10     21,548  

2015

                 786     750         741     15     20,069  

2016

                       896         863     53     22,055  

2017

                                 1,209     166     21,686  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Total

       $ 4,377              
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

 

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

          
 		  

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

Accident Year 

                                       Liability for Claims
And Allocated Claim		  

2013

   $ 389   $ 610   $ 683   $ 703       $ 713     Adjustment Expenses,  

2014

           464     710     775         803     Net of Reinsurance
  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

2015

                 376     615         681              

2016

                       441         685     2013 -     Before  

2017

                                 618     2017     2013
  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Total

       $ 3,500   $ 877   $ 163  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

   
 		    
 		    
 		    
 		        
Total net liability		  
$
1,040		  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​


 

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

    52.3 %   30.1 %   8.8 %   3.0 %   1.5 %            

Commercial Multi-Peril

 
   (dollars in millions)
    
    
    
    
    
    
    
    
    
    
  

 

For the Years Ended December 31,  

          
 		  

  2008     2009     2010     2011     2012     2013     2014     2015     2016         2017                

  Incurred Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance                

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

                                                                    IBNR     Cumulative  

                                                                    Reserves     Number of  

                                                                    Dec. 31,     Reported  

Accident Year

                                                                     2017     Claims
  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

2008

   $ 1,725   $ 1,674   $ 1,683   $ 1,688   $ 1,674   $ 1,684   $ 1,674   $ 1,688   $ 1,681       $ 1,680   $ 45     108,522  

2009

           1,484     1,506     1,501     1,498     1,511     1,514     1,514     1,509         1,500     30     103,307  

2010

                 1,711     1,826     1,832     1,861     1,895     1,892     1,898         1,885     40     111,756  

2011

                       2,235     2,244     2,269     2,286     2,296     2,287         2,283     52     125,522  

2012

                             1,885     1,883     1,903     1,888     1,888         1,867     58     104,646  

2013

                                   1,615     1,623     1,620     1,609         1,591     68     83,371  

2014

                                         1,663     1,627     1,625         1,617     99     77,731  

2015

                                               1,568     1,625         1,593     191     70,291  

2016

                                                     1,662         1,623     358     65,985  

2017

                                                               1,872     617     59,838  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

                                              Total       $ 17,511              
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

 

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

          
 		  

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

Accident Year 

                                                                              

2008

   $ 712   $ 1,103   $ 1,264   $ 1,396   $ 1,490   $ 1,551   $ 1,581   $ 1,602   $ 1,617       $ 1,625              

2009

           603     958     1,121     1,264     1,360     1,408     1,436     1,449         1,457              

2010

                 709     1,180     1,395     1,579     1,698     1,763     1,798         1,819              

2011

                       1,060     1,573     1,803     1,979     2,088     2,156         2,193     Liability for Claims  

2012

                             795     1,246     1,424     1,590     1,699         1,752     And Allocated Claim  

2013

                                   644     987     1,167     1,304         1,410     Adjustment Expenses,  

2014

                                         628     956     1,154         1,328     Net of Reinsurance
  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

2015

                                               595     970         1,144              

2016

                                                     585         950     2008 -     Before  

2017

                                                               716     2017     2008
  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Total

       $ 14,394   $ 3,117   $ 370  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

                                                             
Total net liability		  
$
3,487		  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​


 

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

    40.0 %   22.9 %   10.7 %   9.0 %   5.9 %   3.2 %   1.8 %   1.1 %   0.7 %   0.5 %            

Commercial Automobile

 
   (dollars in millions)
    
    
    
    
    
  

 

For the Years Ended December 31,  

          
 		  

  2013     2014     2015     2016         2017                

  Incurred Claims and Allocated Claims
Adjustment Expenses, Net of Reinsurance  		              

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

                                      IBNR     Cumulative  

                                      Reserves     Number of  

                                      Dec. 31,     Reported  

Accident Year

                                       2017     Claims
  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

2013

   $ 1,235   $ 1,236   $ 1,240   $ 1,245       $ 1,254   $ 27     197,224  

2014

           1,165     1,166     1,168         1,184     62     184,476  

2015

                 1,198     1,215         1,248     126     181,269  

2016

                       1,290         1,319     293     190,036  

2017

                                 1,399     588     178,825  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Total

       $ 6,404              
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

 

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

          
 		  

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

Accident Year 

                                       Liability for Claims
And Allocated Claim		  

2013

   $ 435   $ 675   $ 884   $ 1,039       $ 1,154     Adjustment Expenses,  

2014

           397     618     821         987     Net of Reinsurance
  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

2015

                 409     658         896              

2016

                       416         698     2013 -     Before  

2017

                                 460     2017     2013
  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Total

       $ 4,195   $ 2,209   $ 197  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

   
 		    
 		    
 		    
 		        
Total net liability		  
$
2,406		  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

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

    33.1 %   19.8 %   17.6 %   13.2 %   9.2 %            

Workers' Compensation

 
   (dollars in millions)
    
    
    
    
    
    
    
    
    
    
  

 

For the Years Ended December 31,  

          
 		  

  2008     2009     2010     2011     2012     2013     2014     2015     2016         2017                

  Incurred Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance                

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

                                                                    IBNR     Cumulative  

                                                                    Reserves     Number of  

                                                                    Dec. 31,     Reported  

Accident Year

                                                                     2017     Claims
  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

2008

   $ 1,714   $ 1,745   $ 1,734   $ 1,683   $ 1,639   $ 1,634   $ 1,621   $ 1,617     1,617       $ 1,607   $ 219     107,851  

2009

           1,799     1,778     1,746     1,753     1,753     1,766     1,775     1,750         1,736     241     104,348  

2010

                 1,886     2,042     2,035     2,056     2,049     2,052     2,055         2,021     298     116,911  

2011

                       2,284     2,303     2,347     2,350     2,379     2,385         2,363     380     136,325  

2012

                             2,447     2,456     2,457     2,456     2,445         2,453     474     136,451  

2013

                                   2,553     2,545     2,540     2,506         2,463     558     128,957  

2014

                                         2,554     2,553     2,547         2,476     681     123,713  

2015

                                               2,644     2,585         2,505     906     121,855  

2016

                                                     2,768         2,690     1,128     121,455  

2017

                                                               2,779     1,747     107,131  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

                                              Total       $ 23,093              
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

 

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

          
 		  

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

Accident Year 

                                                                              

2008

   $ 274   $ 571   $ 752   $ 875   $ 961   $ 1,036   $ 1,088   $ 1,130   $ 1,162       $ 1,189              

2009

           288     623     828     961     1,065     1,137     1,193     1,235         1,274              

2010

                 341     750     978     1,133     1,246     1,321     1,385         1,430              

2011

                       420     911     1,185     1,365     1,487     1,583         1,652     Liability for Claims  

2012

                             443     940     1,217     1,394     1,536         1,629     And Allocated Claim  

2013

                                   458     954     1,237     1,413         1,525     Adjustment Expenses,  

2014

                                         455     944     1,224         1,399     Net of Reinsurance
  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

2015

                                               430     893         1,154              

2016

                                                     421         873     2008 -     Before  

2017

                                                               433     2017     2018
  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Total

       $ 12,558   $ 10,535   $ 5,277  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

                                                             
Total net liability		  
$
15,812		  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​


 

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

    17.2 %   19.3 %   11.3 %   7.4 %   5.4 %   4.1 %   3.1 %   2.4 %   2.1 %   1.7 %            

Bond & Specialty Insurance

General Liability

 
   (dollars in millions)
    
    
    
    
    
    
    
    
    
    
  

 

For the Years Ended December 31,  

          
 		  

  2008     2009     2010     2011     2012     2013     2014     2015     2016         2017                

  Incurred Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance                

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

                                                                    IBNR     Cumulative  

                                                                    Reserves     Number of  

                                                                    Dec. 31,     Reported  

Accident Year

                                                                     2017     Claims
  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

2008

   $ 579   $ 769   $ 743   $ 697   $ 716   $ 712   $ 672   $ 643   $ 631       $ 637   $ 18     6,468  

2009

           592     624     665     686     680     660     655     641         631     16     6,290  

2010

                 571     612     679     679     661     668     653         653     16     5,667  

2011

                       565     596     639     632     601     545         520     3     5,207  

2012

                             538     591     614     605     601         599     126     4,838  

2013

                                   510     565     606     630         654     200     4,418  

2014

                                         549     571     563         518     123     4,290  

2015

                                               528     524         486     170     4,060  

2016

                                                     512         511     250     3,976  

2017

                                                               534     415     2,811  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

                                              Total       $ 5,743              
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

 

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

          
 		  

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

Accident Year 

                                                                              

2008

   $ 47   $ 157   $ 281   $ 387   $ 471   $ 529   $ 562   $ 579   $ 590       $ 593              

2009

           36     167     310     390     460     497     563     592         595              

2010

                 33     152     291     396     482     565     597         623              

2011

                       33     143     249     324     414     447         476     Liability for Claims  

2012

                             38     160     255     342     383         419     And Allocated Claim  

2013

                                   34     154     252     352         400     Adjustment Expenses,  

2014

                                         38     150     239         312     Net of Reinsurance
  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

2015

                                               38     141         234              

2016

                                                     30         141     2008 -     Before  

2017

                                                               38     2017     2008
  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

                                              Total       $ 3,831   $ 1,912   $ 83  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

                                                             
Total net liability		  
$
1,995		  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​


 

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

    6.4 %   20.1 %   18.9 %   14.8 %   11.5 %   8.0 %   6.6 %   3.8 %   1.1 %   0.4 %            

Fidelity and Surety

 
   (dollars in millions)
    
    
    
    
    
  

 

For the Years Ended December 31,  

          
 		  

  2013     2014     2015     2016         2017                

  Incurred Claims and Allocated Claims
Adjustment Expenses, Net of Reinsurance  		              

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

                                      IBNR     Cumulative  

                                      Reserves     Number of  

                                      Dec. 31,     Reported  

Accident Year

                                       2017     Claims
  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

2013

   $ 240   $ 246   $ 199   $ 146       $ 141   $ —     1,014  

2014

           223     212     165         136     3     1,042  

2015

                 217     191         179     60     810  

2016

                       226         239     45     823  

2017

                                 244     132     611  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Total

       $ 939              
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

 

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

          
 		  

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

Accident Year 

                                       Liability for Claims
And Allocated Claim		  

2013

   $ 37   $ 113   $ 128   $ 131       $ 135     Adjustment Expenses,  

2014

           58     96     111         127     Net of Reinsurance
  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

2015

                 32     75         87              

2016

                       54         121     2013 -     Before  

2017

                                 70     2017     2013
  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Total

       $ 540   $ 399   $ 61  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

   
 		    
 		    
 		    
 		        
Total net liability		  
$
460		  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​


 

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

    27.5 %   33.6 %   9.2 %   7.5 %   2.6 %            

Personal Insurance

Automobile

 
   (dollars in millions)
    
    
    
    
    
  

 

For the Years Ended December 31,  

          
 		  

  2013     2014     2015     2016         2017                

  Incurred Claims and Allocated Claims
Adjustment Expenses, Net of Reinsurance  		              

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

                                      IBNR     Cumulative  

                                      Reserves     Number of  

                                      Dec. 31,     Reported  

Accident Year

                                       2017     Claims
  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

2013

   $ 2,108   $ 2,095   $ 2,049   $ 2,044       $ 2,039   $ 16     694,733  

2014

           2,014     1,994     1,981         1,985     33     670,329  

2015

                 2,186     2,244         2,236     101     757,333  

2016

                       2,779         2,791     279     919,301  

2017

                                 3,323     844     970,143  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Total

       $ 12,374              
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

 

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

          
 		  

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

Accident Year 

                                       Liability for Claims
And Allocated Claim		  

2013

   $ 1,251   $ 1,628   $ 1,814   $ 1,935       $ 1,992     Adjustment Expenses,  

2014

           1,193     1,564     1,763         1,879     Net of Reinsurance
  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

2015

                 1,319     1,768         1,985              

2016

                       1,610         2,203     2013 -     Before  

2017

                                 1,912     2017     2013
  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Total

       $ 9,971   $ 2,403   $ 244  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

   
 		    
 		    
 		    
 		        
Total net liability		  
$
2,647		  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​


 

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

    59.1 %   19.6 %   9.6 %   5.9 %   2.8 %            

Homeowners (excluding Other)

 
   (dollars in millions)
    
    
    
    
    
  

 

For the Years Ended December 31,  

          
 		  

  2013     2014     2015     2016         2017                

  Incurred Claims and Allocated Claims
Adjustment Expenses, Net of Reinsurance  		              

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

                                      IBNR     Cumulative  

                                      Reserves     Number of  

                                      Dec. 31,     Reported  

Accident Year

                                       2017     Claims
  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

2013

   $ 1,488   $ 1,397   $ 1,365   $ 1,375       $ 1,376   $ 3     149,430  

2014

           1,515     1,450     1,453         1,457     6     151,664  

2015

                 1,438     1,454         1,461     17     144,930  

2016

                       1,556         1,547     69     143,163  

2017

                                 2,312     457     152,146  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

    Total       $ 8,153              
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

 

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

          
 		  

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

Accident Year 

                                       Liability for Claims
And Allocated Claim		  

2013

   $ 994   $ 1,269   $ 1,317   $ 1,344       $ 1,360     Adjustment Expenses,  

2014

           1,053     1,338     1,402         1,425     Net of Reinsurance
  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

2015

                 994     1,333         1,395              

2016

                       1,049         1,392     2013 -     Before  

2017

                                 1,471     2017     2013
  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Total

       $ 7,043   $ 1,110   $ 15  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

   
 		    
 		    
 		    
 		        
Total net liability		  
$
1,125		  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​


 

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

    68.8 %   21.2 %   4.0 %   1.8 %   1.2 %            

International—Canada

 
   (dollars in millions)
    
    
    
    
    
    
    
    
    
    
  

 

For the Years Ended December 31,  

          
 		  

  2008     2009     2010     2011     2012     2013     2014     2015     2016         2017                

  Incurred Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance                

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

                                                                    IBNR     Cumulative  

                                                                    Reserves     Number of  

                                                                    Dec. 31,     Reported  

Accident Year

                                                                     2017     Claims
  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

2008

   $ 429   $ 433   $ 421   $ 422   $ 428   $ 434   $ 428   $ 423   $ 424       $ 424   $ —     54,281  

2009

           494     481     490     496     505     496     488     489         481     4     55,162  

2010

                 503     505     516     531     519     510     506         499     7     54,924  

2011

                       475     453     461     457     449     442         436     13     55,788  

2012

                             450     427     429     412     410         393     23     51,215  

2013

                                   501     494     485     473         459     24     54,248  

2014

                                         443     459     460         448     30     52,263  

2015

                                               373     373         372     43     45,182  

2016

                                                     373         423     55     45,500  

2017

                                                               358     44     43,885  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

                                              Total       $ 4,293              
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

 

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

          
 		  

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

Accident Year 

                                                                              

2008

   $ 184   $ 281   $ 315   $ 340   $ 363   $ 386   $ 401   $ 409   $ 413       $ 416              

2009

           205     308     351     380     412     438     456     468         471              

2010

                 198     302     341     382     413     445     463         475              

2011

                       182     258     290     325     361     384         403     Liability for Claims  

2012

                             171     239     271     298     327         345     And Allocated Claim  

2013

                                   200     281     314     348         382     Adjustment Expenses,  

2014

                                         196     274     312         342     Net of Reinsurance
  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

2015

                                               167     234         262              

2016

                                                     218         293     2008 -     Before  

2017

                                                               188     2017     2008
  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Total

       $ 3,577   $ 716   $ 44  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

                                                             
Total net liability		  
$
760		  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​


 

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

    44.7 %   18.9 %   7.9 %   7.0 %   6.9 %   5.4 %   3.7 %   2.2 %   0.8 %   0.7 %            

        The incurred and paid amounts have been translated from the local currency to U.S. dollars using the December 31, 2017 spot rate for all years presented in the table above in order to isolate changes in foreign exchange rates from loss development.

Methodology for Estimating Incurred But Not Reported (IBNR) Reserves

        Claims and claim adjustment expense reserves represent management's estimate of the ultimate liability for unpaid losses and loss adjustment expenses for claims that have been reported and claims that have been incurred but not yet reported 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 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, 2017 and 2016, the Company's claims and claim adjustment expense reserves included $1.64 billion and $1.71 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 2017, 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:

•
a 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 a high level of litigation activity; and

•
a 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 and the number of policyholders with open asbestos claims declined slightly when compared to 2016 while gross asbestos-related payments were higher. Payments on behalf of policyholders in this category continue to be influenced by a high level of litigation activity in a limited number of jurisdictions where individuals alleging serious asbestos-related injury, primarily mesothelioma, continue to target defendants who were not traditionally primary targets of asbestos litigation.

        The Company's quarterly asbestos reserve reviews include an analysis of exposure and claim payment patterns by policyholder 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 and the Company's evaluations have not resulted in a reliable method to determine a meaningful average asbestos defense or indemnity payment.

        The completion of these reviews and analyses in 2017, 2016 and 2015 resulted in $225 million, $225 million and $224 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 2017, 2016 and 2015 were $271 million, $708 million and $770 million, respectively. Net payments in 2016 included the $458 million net payment related to PPG Industries, Inc. Net payments in 2015 included the $502 million payment related to the settlement of asbestos direct action litigation. Approximately 4%, 69% and 69% of total net paid losses in 2017, 2016 and 2015, 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 2017, 2016 and 2015, the Company increased its net environmental reserves by $65 million, $82 million and $72 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 and radiological events, cyber events, 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 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.