Reserve for Unpaid Losses and Loss Adjustment Expenses

3 Months Ended

Mar. 31, 2019

Liability for Unpaid Claims and Claims Adjustment Expense, Activity in Liability [Abstract]

Reserve for Unpaid Losses and Loss Adjustment Expenses

Property and Casualty Insurance Products

Rollforward of Liabilities for Unpaid Losses and Loss Adjustment Expenses

	For the three months ended March 31,
	2019			2018
Beginning liabilities for unpaid losses and loss adjustment expenses, gross	$	24,584		$	23,775
Reinsurance and other recoverables	4,232			3,957
Beginning liabilities for unpaid losses and loss adjustment expenses, net	20,352			19,818
Provision for unpaid losses and loss adjustment expenses
Current accident year	1,641			1,640
Prior accident year development	(11		)	(32		)
Total provision for unpaid losses and loss adjustment expenses	1,630			1,608
Less payments
Current accident year	271			327
Prior accident years	1,309			1,322
Total payments	1,580			1,649
Ending liabilities for unpaid losses and loss adjustment expenses, net	20,402			19,777
Reinsurance and other recoverables	4,209			3,938
Ending liabilities for unpaid losses and loss adjustment expenses, gross	$	24,611		$	23,715

Unfavorable (Favorable) Prior Accident Year Development

	For the three months ended March 31,
	2019			2018
Workers’ compensation	$	(20	)	$	(25	)
Workers’ compensation discount accretion	8			10
General liability	6			8
Package business	5			8
Commercial property	(2		)	(13		)
Professional liability	—			2
Bond	—			—
Automobile liability - Commercial Lines	—			(5		)
Automobile liability - Personal Lines	(5		)	—
Homeowners	1			(12		)
Net asbestos reserves	—			—
Net environmental reserves	—			—
Catastrophes	(8		)	(3		)
Uncollectible reinsurance	—			—
Other reserve re-estimates, net	4			(2		)
Total prior accident year development	$	(11	)	$	(32	)

Re-estimates of prior accident year reserves for the three months ended March 31, 2019

Workers’ compensation reserves were reduced, principally in small commercial driven by lower than previously estimated claim severity for the 2014 and 2015 accident years.

General liability reserves were increased, primarily due to reserve increases in small commercial for accident years 2017 and 2018 due to higher frequency of high-severity bodily injury claims.

Package business reserves were increased, primarily due to increased severity on 2018 accident year property claims.

Automobile liability reserves were reduced, primarily driven by the emergence of lower estimated severity in personal automobile liability for accident year 2017.

Catastrophes reserves were reduced, primarily as a result of lower estimated net losses from 2017 hurricanes Harvey and Irma.

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.Group Life, Disability and Accident Products

Rollforward of Liabilities for Unpaid Losses and Loss Adjustment Expenses

	For the three months ended March 31,
	2019			2018
Beginning liabilities for unpaid losses and loss adjustment expenses, gross	$	8,445		$	8,512
Reinsurance recoverables	239			209
Beginning liabilities for unpaid losses and loss adjustment expenses, net	8,206			8,303
Provision for unpaid losses and loss adjustment expenses
Current incurral year	1,150			1,185
Prior year's discount accretion	58			62
Prior incurral year development [1]	(120		)	(127		)
Total provision for unpaid losses and loss adjustment expenses [2]	1,088			1,120
Less: payments
Current incurral year	314			318
Prior incurral years	855			840
Total payments	1,169			1,158
Ending liabilities for unpaid losses and loss adjustment expenses, net	8,125			8,265
Reinsurance recoverables	237			233
Ending liabilities for unpaid losses and loss adjustment expenses, gross	$	8,362		$	8,498

[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 $46, and $41 for the three months ended March 31, 2019 and 2018, 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, 2019

Group disability- Prior period reserve estimates decreased by approximately $105 largely driven by group long-term disability claim recoveries higher than prior reserve assumptions and claim incidence lower than prior assumptions.  New York Paid Family Leave also experienced favorable claim emergence compared to prior estimates

Group life and accident (including group life premium waiver)- Prior period reserve estimates decreased by approximately $10 largely driven by lower than previously expected claim incidence in group life premium waiver.

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.8. RESERVE FOR FUTURE POLICY BENEFITS

Changes in Reserves for Future Policy Benefits[1]
Liability balance, as of January 1, 2019	$	642
Incurred	27
Paid	(28		)
Change in unrealized investment gains and losses	7
Liability balance, as of March 31, 2019	$	648
Reinsurance recoverable asset, as of January 1, 2019	$	27
Incurred	5
Paid	(2		)
Reinsurance recoverable asset, as of March 31, 2018	$	30

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

[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 run-off structured settlement and terminal funding agreement liabilities which are in the Corporate category.