Reserves for Future Policy Benefits Reserve for Future Policy Benefits

3 Months Ended

Mar. 31, 2018

Property and Casualty Insurance Products

Rollforward of Liabilities for Unpaid Losses and Loss Adjustment Expenses



	For the three months ended March 31,
	2018			2017
Beginning liabilities for unpaid losses and loss adjustment expenses, gross	$	23,775		$	22,545
Reinsurance and other recoverables	3,957			3,488
Beginning liabilities for unpaid losses and loss adjustment expenses, net	19,818			19,057
Provision for unpaid losses and loss adjustment expenses
Current accident year	1,640			1,762
Prior accident year development	(32		)	12
Total provision for unpaid losses and loss adjustment expenses	1,608			1,774
Less: payments
Current accident year	327			352
Prior accident years	1,322			1,300
Total payments	1,649			1,652
Ending liabilities for unpaid losses and loss adjustment expenses, net	19,777			19,179
Reinsurance and other recoverables	3,938			3,478
Ending liabilities for unpaid losses and loss adjustment expenses, gross	$	23,715		$	22,657

Unfavorable (Favorable) Prior Accident Year Development



	For the three months ended March 31,
	2018			2017
Workers’ compensation	$	(25	)	$	(20	)
Workers’ compensation discount accretion	10			8
General liability	8			10
Package business	8			—
Commercial property	(13		)	1
Professional liability	2			—
Bond	—			(10		)
Automobile liability - Commercial Lines	(5		)	20
Automobile liability - Personal Lines	—			—
Homeowners	(12		)	—
Net asbestos reserves	—			—
Net environmental reserves	—			—
Catastrophes	(3		)	(3		)
Uncollectible reinsurance	—			—
Other reserve re-estimates, net	(2		)	6
Total prior accident year development	$	(32	)	$	12

Re-estimates of prior accident year reserves for the three months ended March 31, 2018

Workers’ compensation reserves were reduced in small commercial, primarily for accident years 2011 to 2015, as both claim frequency and medical claim severity have emerged favorably compared to previous reserve estimates.

General liability reserves were increased modestly, primarily due to an increase in reserves for specialty business within middle market for accident years 2009 to 2017, largely offset by a decrease in reserves for other lines within middle market, including premises and operations and products liability, principally for accident years 2015 and prior. Contributing to the increase in reserves for specialty general liability reserves was an increase in large losses. Contributing to the reduction in reserves for other middle market lines was more favorable outcomes on litigated claims.

Package business reserves were increased primarily due to increased severity of 2017 accident year property claims.

Commercial property reserves were reduced, driven by an increase in estimated reinsurance recoverable on marine losses from the 2017 accident year.

Homeowners reserves were reduced, primarily in accident years 2013 to 2017, driven by lower than expected severity across multiple perils.

Re-estimates of prior accident year reserves for the three months ended March 31, 2017

Workers’ compensation reserves in small commercial were reduced given the continued emergence of favorable frequency for accident years 2013 to 2015. Management has placed additional weight on this favorable experience as it becomes more credible.

General liability reserves were increased for the 2013 to 2016 accident years on a class of business that insures service and maintenance contractors. This increase was partially offset by a decrease in recent accident year reserves for other middle market general liability reserves.

Bond business reserves related to recent accident years were reduced as reported losses for commercial and contract surety have emerged favorably.

Automobile liability reserves within Commercial Lines were increased in small commercial and large national accounts for the 2013 to 2016 accident years, driven by higher frequency of more severe accidents, including litigated claims.

Group Life, Disability and Accident Products

Rollforward of Liabilities for Unpaid Losses and Loss Adjustment Expenses



	For the three months ended March 31,
	2018			2017
Beginning liabilities for unpaid losses and loss adjustment expenses, gross	$	8,512		$	5,772
Reinsurance recoverables	209			208
Beginning liabilities for unpaid losses and loss adjustment expenses, net	8,303			5,564
Provision for unpaid losses and loss adjustment expenses
Current incurral year	1,185			678
Prior year's discount accretion	62			52
Prior incurral year development [1]	(127		)	(69		)
Total provision for unpaid losses and loss adjustment expenses [2]	1,120			661
Less: payments
Current incurral year	318			178
Prior incurral years	840			519
Total payments	1,158			697
Ending liabilities for unpaid losses and loss adjustment expenses, net	8,265			5,528
Reinsurance recoverables	233			208
Ending liabilities for unpaid losses and loss adjustment expenses, gross	$	8,498		$	5,736


[1]	Prior incurral year development represents the change in estimated ultimate incurred losses and loss adjustment expenses for prior incurral years on a discounted basis.


[2]	Includes unallocated loss adjustment expenses of $41, and $24 for the three months ended March 31, 2018 and 2017, respectively, that are recorded in insurance operating costs and other expenses in the Condensed Consolidated Statements of Operations.

Re-estimates of prior incurral years reserves for the three months ended March 31, 2018

Group disability- Prior period reserve estimates decreased by approximately $85 largely driven by group long-term disability claim terminations (recoveries and claimant deaths) higher than prior reserve assumptions and claim incidence lower than prior assumptions.

Group life and accident (including group life premium waiver)- Prior period reserve estimates decreased by approximately $40 largely driven by lower-than-previously expected claim incidence on group life, group life premium waiver, and group accidental death & dismemberment claims.

Re-estimates of prior incurral years reserves for the three months ended March 31, 2017

Group disability- Prior period reserve estimates decreased by approximately $35 largely driven by group long-term disability claim recoveries higher than prior reserve assumptions. This favorability was partially offset by lower Social Security Disability Income approvals driven by lower approval rates and ongoing backlogs in the Social Security Administration.

Group life and accident (including group life premium waiver)- Prior period reserve estimates decreased by approximately $35 largely driven by lower-than-previously expected claim incidence. This was partially offset by higher-than-expected claim severity.



Changes in Reserves for Future Policy Benefits^[1]
Liability balance as of January 1, 2018	$	713
Incurred	10
Paid	(8		)
Change in unrealized investment gains and losses	(37		)
Liability balance as of March 31, 2018	$	678
Reinsurance recoverable asset, as of January 1, 2018	$	26
Incurred	8
Paid	—
Reinsurance recoverable asset, as of March 31, 2018	$	34



Liability balance as of January 1, 2017	$	322
Incurred	20
Paid	(10		)
Change in unrealized investment gains and losses	(10		)
Liability balance as of March 31, 2017	$	322
Reinsurance recoverable asset, as of January 1, 2017	$	28
Incurred	2
Paid	—
Reinsurance recoverable asset, as of March 31, 2017	$	30

[1]Reserves for future policy benefits includes paid-up life insurance and whole-life policies resulting from conversion from group life policies included within the Group Benefits segment and reserves for structured settlement and terminal funding agreement liabilities retained which are in the Corporate category.