perty and Casualty Insurance Products Unpaid Losses and Loss Adjustment Expenses

A rollforward of liabilities for unpaid losses and loss adjustment expenses follows:



	For the years ended December 31,
	2014		2013		2012
Beginning liabilities for unpaid losses and loss adjustment expenses, gross	$	21,704	$	21,716	$	21,550
Reinsurance and other recoverables	3,028		3,027		3,033
Beginning liabilities for unpaid losses and loss adjustment expenses, net	18,676		18,689		18,517
Add provision for unpaid losses and loss adjustment expenses
Current year	6,572		6,621		7,274
Prior years	228		192		(4		)
Total provision for unpaid losses and loss adjustment expenses	6,800		6,813		7,270
Less payments
Current year	2,639		2,552		2,882
Prior years	4,072		4,274		4,216
Total payments	6,711		6,826		7,098
Ending liabilities for unpaid losses and loss adjustment expenses, net	18,765		18,676		18,689
Reinsurance and other recoverables	3,041		3,028		3,027
Ending liabilities for unpaid losses and loss adjustment expenses, gross	$	21,806	$	21,704	$	21,716

As of December 31, 2014 and 2013, property and casualty insurance products reserves were discounted by a total of $556 and $553, respectively. The current accident year benefit from discounting property and casualty insurance products reserves was $34 in 2014, $46 in 2013 and $48 in 2012. The reduction in the discount benefit in 2014 as compared to 2013 reflects lower claim volume and a shorter than expected payment pattern in 2014. The slight reduction in the discount benefit in 2013 as compared to 2012 reflects lower claim volume in 2013 partially offset by a higher discount rate in 2013. Accretion of discounts for prior accident years totaled $31 in 2014, $31 in 2013, and $52 in 2012.

In the opinion of management, based upon the known facts and current law, the reserves recorded for the Company’s property and casualty insurance products at December 31, 2014 represent the Company’s best estimate of its ultimate liability for losses and loss adjustment expenses related to losses covered by policies written by the Company. However, because of the significant uncertainties surrounding reserves, and particularly asbestos and environmental exposures, it is possible that management’s estimate of the ultimate liabilities for these claims may change and that the required adjustment to recorded reserves could exceed the currently recorded reserves by an amount that could be material to the Company’s results of operations or cash flows. For additional information, see Note 14 - Commitments and Contingencies, Guaranty Fund and Other Insurance-related Assessments.

Losses and loss adjustment expenses are also impacted by trends, frequency and severity. Examples of current trends affecting frequency and severity include increases in medical cost inflation rates, the changing use of medical care procedures, the introduction of new products and changes in internal claim practices. Other trends include changes in the legislative and regulatory environment over workers’ compensation claims and evolving exposures to claims relating to molestation or abuse and other mass torts. In the case of the reserves for asbestos exposures, factors contributing to the high degree of uncertainty include inadequate loss development patterns, plaintiffs’ expanding theories of liability, the risks inherent in major litigation, and inconsistent emerging legal doctrines. In the case of the reserves for environmental exposures, factors contributing to the high degree of uncertainty include expanding theories of liabilities and damages, the risks inherent in major litigation, inconsistent decisions concerning the existence and scope of coverage for environmental claims, and uncertainty as to the monetary amount being sought by the claimant from the insured.

The following table presents (favorable) unfavorable prior accident years reserve development:



	For the years ended December 31,
	2014			2013			2012
Auto liability	$	25		$	144		$	(25	)
Homeowners	(7		)	(6		)	(32		)
Professional liability	(17		)	(29		)	40
Package business	3			2			(20		)
General liability	(25		)	(75		)	(87		)
Bond	8			(8		)	(9		)
Commercial property	2			(7		)	(8		)
Net asbestos reserves	212			130			48
Net environmental reserves	30			12			10
Uncollectible reinsurance	—			(25		)	—
Workers’ compensation	(7		)	(2		)	78
Workers’ compensation - NY 25a Fund for Reopened Cases	—			80			—
Change in workers’ compensation discount, including accretion	30			30			52
Catastrophes	(45		)	(63		)	(66		)
Other reserve re-estimates, net	$	19		$	9		$	15
Total prior accident years development	$	228		$	192		$	(4	)

Net unfavorable reserve development in 2014 primarily included the following:


•	a strengthening in commercial auto liability reserves, for several accident years;


•	a strengthening of net asbestos reserves driven by the annual ground-up asbestos reserve evaluation;


•	partially offset by a release of general liability reserves due to lower frequency in late emerging claims ; and


•	also offset by a release of professional liability reserves, for accident years 2010, 2012 and 2013; and


•	also offset by a release of catastrophe reserves primarily for accident year 2013.

Net unfavorable reserve development in 2013 primarily included the following:


•	a strengthening in commercial auto liability reserves, for accident years 2010 to 2012;


•	a strengthening related to the closing of the New York Section 25A Fund for Reopened Cases (the "Fund");


•	a strengthening of net asbestos reserves driven by the annual ground-up asbestos reserve evaluation;


•	partially offset by a release of general liability reserves, for accident years 2006 to 2011; and


•	also offset by a release of professional liability reserves, for accident years 2008 to 2012; and


•	also offset by a release of catastrophe reserves primarily related to Storm Sandy.

Net favorable reserve development in 2012 primarily included the following:


•	a release of general liability reserves, for accident years 2006 to 2008;


•	a release of catastrophes, primarily related to the 2001 World Trade Center worker's compensation claims;


•	partially offset by a strengthening of reserves for workers’ compensation reserves, for accident years 2009 to 2011; and


•	also offset by a strengthening of asbestos and environmental reserves.

Life Insurance Products Unpaid Losses and Loss Adjustment Expenses

A rollforward of liabilities for group life, disability and accident, for unpaid losses and loss adjustment expenses follows:



	For the years ended December 31,
	2014			2013			2012
Beginning liabilities for unpaid losses and loss adjustment expenses, gross	$	6,308		$	6,547		$	6,547
Reinsurance recoverables	267			252			233
Beginning liabilities for unpaid losses and loss adjustment expenses, net	6,041			6,295			6,314
Add provision for unpaid losses and loss adjustment expenses
Current year	2,370			2,534			2,989
Prior years	(11		)	(17		)	52
Total provision for unpaid losses and loss adjustment expenses	2,359			2,517			3,041
Less payments
Current year	1,161			1,207			1,460
Prior years	1,426			1,564			1,600
Total payments	2,587			2,771			3,060
Ending liabilities for unpaid losses and loss adjustment expenses, net	5,813			6,041			6,295
Reinsurance recoverables	271			267			252
Ending liabilities for unpaid losses and loss adjustment expenses, gross	$	6,084		$	6,308		$	6,547

The liability for unpaid losses and loss adjustment expenses for group life, disability and accident contracts was discounted to present value using rates based on the Company’s earned investment yield estimated at the time the claims are incurred. The decrease in the provision for unpaid losses and loss adjustment expenses related to prior years was due to favorable claim recoveries in both the group life and group disability lines of business, net of accretion of discount.

The liability for future policy benefits and unpaid losses and loss adjustment expenses is as follows:



	2014		2013
Group life term, disability and accident unpaid losses and loss adjustment expenses	$	6,084	$	6,308
Group life other unpaid losses and loss adjustment expenses	203		206
Individual life unpaid losses and loss adjustment expenses	171		167
Future policy benefits	13,180		12,988
Future policy benefits and unpaid losses and loss adjustment expenses	$	19,638	$	19,669