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Unpaid losses and loss expenses | 9 Months Ended
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Sep. 30, 2021
Liability for Claims and Claims Adjustment Expense [Abstract] |
Liability for Future Policy Benefits and Unpaid Claims Disclosure [Text Block] | Unpaid losses and loss expenses The following table presents a reconciliation of beginning and ending Unpaid losses and loss expenses:
| Nine Months Ended
| September 30
(in millions of U.S. dollars) | 2021 |  | 2020
Gross unpaid losses and loss expenses – beginning of period | $ | 67,811 |  |  | $ | 62,690 |
Reinsurance recoverable on unpaid losses – beginning of period (1) | (14,647) |  |  | (14,181) |
Net unpaid losses and loss expenses – beginning of period | 53,164 |  |  | 48,509 |
Net losses and loss expenses incurred in respect of losses occurring in: |  |  |
Current year | 17,556 |  |  | 17,109 |
Prior years (2) | (868) |  |  | (212) |
Total | 16,688 |  |  | 16,897 |
Net losses and loss expenses paid in respect of losses occurring in: |  |  |
Current year | 4,771 |  |  | 4,766 |
Prior years | 7,922 |  |  | 7,597 |
Total | 12,693 |  |  | 12,363 |
Foreign currency revaluation and other | (78) |  |  | 95 |
Net unpaid losses and loss expenses – end of period | 57,081 |  |  | 53,138 |
Reinsurance recoverable on unpaid losses (1) | 15,550 |  |  | 14,767 |
Gross unpaid losses and loss expenses – end of period | $ | 72,631 |  |  | $ | 67,905 |
(1) Net of valuation allowance for uncollectible reinsurance. (2) Relates to prior period loss reserve development only and excludes prior period development related to reinstatement premiums, expense adjustments and earned premiums totaling $87 million and $23 million for the nine months ended September 30, 2021 and 2020, respectively. Gross and net unpaid losses and loss expenses increased $4,820 million and $3,917 million, respectively, for the nine months ended September 30, 2021, driven by an increase in underlying exposure due to premium growth, crop activity, and net catastrophe losses incurred, partially offset by favorable prior period development. Prior Period Development Prior period development (PPD) arises from changes to loss estimates recognized in the current year that relate to loss events that occurred in previous calendar years and excludes the effect of losses from the development of earned premium from previous accident years. Long-tail lines include lines such as workers' compensation, general liability, and professional liability; while short-tail lines include lines such as most property lines, energy, personal accident, and agriculture. The following table summarizes (favorable) and adverse PPD by segment.
| Three Months Ended September 30 |  | Nine Months Ended September 30
(in millions of U.S. dollars) | Long-tail |  | Short-tail |  | Total |  | Long-tail |  | Short-tail |  | Total
2021 |  |  |  |  |  |  |  |  |  |  |
North America Commercial P&C Insurance | $ | (101) |  |  | $ | (56) |  |  | $ | (157) |  |  | $ | (243) |  |  | $ | (197) |  |  | $ | (440) |
North America Personal P&C Insurance | — |  |  | (182) |  |  | (182) |  |  | — |  |  | (266) |  |  | (266) |
North America Agricultural Insurance | — |  |  | 7 |  |  | 7 |  |  | — |  |  | 5 |  |  | 5 |
Overseas General Insurance | (13) |  |  | (15) |  |  | (28) |  |  | (8) |  |  | (201) |  |  | (209) |
Global Reinsurance | (4) |  |  | — |  |  | (4) |  |  | (26) |  |  | 15 |  |  | (11) |
Corporate | 43 |  |  | — |  |  | 43 |  |  | 140 |  |  | — |  |  | 140 |
Total | $ | (75) |  |  | $ | (246) |  |  | $ | (321) |  |  | $ | (137) |  |  | $ | (644) |  |  | $ | (781) |
2020 |  |  |  |  |  |  |  |  |  |  |
North America Commercial P&C Insurance | $ | (255) |  |  | $ | 55 |  |  | $ | (200) |  |  | $ | (439) |  |  | $ | (12) |  |  | $ | (451) |
North America Personal P&C Insurance | — |  |  | 48 |  |  | 48 |  |  | — |  |  | 48 |  |  | 48 |
North America Agricultural Insurance | — |  |  | 18 |  |  | 18 |  |  | — |  |  | 4 |  |  | 4 |
Overseas General Insurance | (71) |  |  | 11 |  |  | (60) |  |  | (72) |  |  | (28) |  |  | (100) |
Global Reinsurance | (6) |  |  | — |  |  | (6) |  |  | (25) |  |  | (4) |  |  | (29) |
Corporate | 54 |  |  | — |  |  | 54 |  |  | 339 |  |  | — |  |  | 339 |
Total | $ | (278) |  |  | $ | 132 |  |  | $ | (146) |  |  | $ | (197) |  |  | $ | 8 |  |  | $ | (189) |
Significant prior period movements by segment, principally driven by reserve reviews completed during each respective period, are discussed in more detail below. The remaining net development for long-tail lines and short-tail business for each segment and Corporate comprises numerous favorable and adverse movements across a number of lines and accident years, none of which is significant individually or in the aggregate. North America Commercial P&C Insurance 2021 For the three months ended September 30, 2021, net favorable PPD was $157 million, which was the net result of several underlying favorable and adverse movements, and was driven by the following principal changes: •Net favorable development of $101 million in long-tail business, primarily from: •Net favorable development of $97 million in our workers' compensation business mainly impacting accident years 2016 and prior, driven by lower than expected loss experience, and related improvements in loss development factors; •Net favorable development of $36 million on large multi-line prospective deals in the 2017 and prior accident years, due to lower than expected reported loss activity. These structured deals typically cover large clients for multiple product lines and with varying loss limitations; this development is net of premium returns of $46 million tied to the loss performance of the particular deals; and •Net adverse development of $31 million in commercial excess and umbrella portfolios, mainly in accident years 2018 and 2019, driven by higher than expected reported loss activity. •Net favorable development of $56 million in short-tail business, primarily from: •Net favorable development of $54 million in our property and marine portfolios, mainly in accident years 2019 and 2020, which experienced lower than expected loss development on catastrophe and non-catastrophe losses. For the nine months ended September 30, 2021, net favorable PPD was $440 million, which was the net result of several underlying favorable and adverse movements, and was driven by the following principal changes: •Net favorable development of $243 million in long-tail business, primarily from: •Net favorable development of $255 million in our workers’ compensation business. This included favorable development of $36 million related to our annual assessment of multi-claimant events including industrial accidents, in the 2020 accident year. Consistent with prior years, we reviewed these potential exposures after the close of the accident year to allow for late reporting or identification of significant losses. The remaining overall favorable development was mainly in accident years 2016 and prior, driven by lower than expected loss experience and related improvements to loss development factors; •Net favorable development of $51 million in professional liability (errors & omissions and cyber), driven by accident years 2016 and 2017, from lower than expected emergence, partly offset by higher than expected development in accident year 2019; •Net favorable development of $40 million in voluntary environmental lines, driven by accident years 2017 and prior, from lower than expected emergence, partly offset by higher than expected development in accident year 2019; •Net favorable development of $37 million in general liability portfolios, driven by lower than expected paid and reported case incurred activity in accident years 2017 and prior, partly offset by higher than expected reported case incurred activity in accident years 2018 and 2019; •Net favorable development of $36 million on large multi-line prospective deals due to the same factors experienced for the three months ended September 30, 2021, as described above; •Net adverse development of $26 million in high deductible general liability coverages, driven by higher than expected loss severities, mainly impacting accident years 2016 through 2020, partly offset by favorable loss development in older accident years; •Net adverse development of $74 million in commercial automobile liability, driven by adverse reported loss experience, mainly impacting accident years 2017 and 2019; and •Net adverse development of $74 million in commercial excess and umbrella portfolios, with accident years 2016 through 2019 experiencing higher than expected reported loss activity, partly offset by lower than expected emergence in accident years 2015 and prior. •Net favorable development of $197 million in short-tail business, primarily from: •Net favorable development of $89 million in surety, mainly in accident years 2018 through 2020, driven by lower than expected loss emergence; •Net favorable development of $83 million in property and marine coverages mainly in accident years 2019 and 2020, driven by lower than expected loss development; •Net favorable development of $46 million in accident and health, mainly in accident years 2019 and 2020, where loss emergence was lower than expected; and •Net adverse development of $41 million in first-party cyber risk, driven by accident years 2019 and 2020, which experienced higher than expected loss development as well as heightened frequency and severity. 2020 For the three months ended September 30, 2020, net favorable PPD was $200 million, which was the net result of several underlying favorable and adverse movements, and was driven by the following principal changes: •Net favorable development of $255 million in long-tail business, primarily from: •Net favorable development of $155 million in workers' compensation business mainly impacting accident years 2016 and prior, driven by lower than expected paid and reported loss activity, and related updates to loss development factors, partly offset by adverse development in accident year 2019; •Net favorable development of $47 million in commercial excess and umbrella portfolios, driven by accident years 2014 and prior, and accident year 2019. The 2014 and prior development was a function of lower than expected paid and reported loss activity. The development on the 2019 accident year relates to three large policies covering specific perils, which expired in the quarter, with no covered events occurring; •Net favorable development of $41 million on large multi-line prospective deals in the 2016 and prior accident years, due to lower than expected reported loss activity. These structured deals typically cover large clients for multiple product lines and with varying loss limitations; this development is net of premium returns of $26 million tied to the loss performance of the particular deals; •Net favorable development of $40 million in our foreign casualty business, mainly in accident year 2016, due to lower than expected reported loss activity, partly offset by a large loss in accident year 2017; and •Net adverse development of $29 million in assumed general liability and excess lines mainly in accident years 2016 and prior due to higher than expected reported loss activity. •Net adverse development of $55 million in short-tail business, primarily from: •Net adverse development of $35 million in our property portfolios, due to adverse non-catastrophe loss development mainly in accident year 2019, partially offset by favorable catastrophe-driven loss experience; and •Net adverse development of $21 million in our marine portfolios, mainly impacting the 2019 accident year, driven by higher than expected non-catastrophe loss development. For the nine months ended September 30, 2020, net favorable PPD was $451 million, which was the net result of several underlying favorable and adverse movements, and was driven by the following principal changes: •Net favorable development of $439 million in long-tail business, primarily from: •Net favorable development of $337 million in workers’ compensation lines. This included favorable development of $62 million related to our annual assessment of multi-claimant events including industrial accidents, in the 2019 accident year. Consistent with prior years, we reviewed these potential exposures after the close of the accident year to allow for late reporting or identification of significant losses. This favorable development in accident year 2019 was partially offset by some higher than expected activity from other claims. The remaining overall favorable development was mainly in accident years 2016 and prior, driven by lower than expected loss experience and related updates to loss development factors; •Net favorable development of $66 million in professional liability (errors & omissions and cyber risk), driven by accident years 2016 and prior, which experienced lower than expected loss emergence; •Net favorable development of $43 million in voluntary environmental lines, in accident years 2016 and prior, due to lower than expected emergence and a related updates to loss development factors; •Net favorable development of $41 million on large multi-line prospective deals due to the same factors experienced for the three months ended September 30, 2020, as described above; •Net favorable development of $40 million in our foreign casualty businesses due to the same factors experienced for the three months ended September 30, 2020, as described above; •Net adverse development of $75 million in commercial automobile liability, mainly in high deductible and excess portfolios, driven by adverse paid and reported loss experience and related updates to loss development factors, mainly in accident years 2015 through 2019; and •Net adverse development of $5 million for U.S. child molestation claims, predominantly reviver statute-related. •Net favorable development of $12 million in short-tail business due to the same factors experienced for the three months ended September 30, 2020, as described above, which was offset by: •Net favorable development of $37 million, in accident and health, mainly in accident years 2018 and 2019, driven by lower than expected paid loss emergence; and •Net favorable development of $31 million in surety, driven by accident year 2018, where loss emergence was lower than expected. North America Personal P&C Insurance 2021 For the three months ended September 30, 2021, net favorable PPD was $182 million, driven by favorable development of $176 million in homeowners, including valuables, mainly in accident year 2020, which experienced better than expected non-catastrophe loss development. For the nine months ended September 30, 2021, net favorable PPD was $266 million, driven by favorable development of $216 million in homeowners, including valuables, due to the same factors experienced for the three months ended September 30, 2021 as described above and a favorable $43 million in automobile, predominantly from better than expected frequency results in accident year 2020 for physical damage coverages. 2020 For the three and nine months ended September 30, 2020, net adverse PPD was $48 million, which was the net result of several underlying favorable and adverse movements, and was driven by the following principal changes: •Net adverse development of $69 million in our homeowners lines, including valuables, mainly in accident years 2017 through 2019 due to higher than expected non-catastrophe loss emergence and adverse development arising from natural catastrophes in accident years 2017 and 2018; and •Net favorable development of $22 million in our personal excess lines, driven by favorable development mainly in the 2017 accident year, partly offset by adverse development in accident year 2019. Overseas General Insurance 2021 For the three months ended September 30, 2021, net favorable PPD was $28 million, which was the net result of several underlying favorable and adverse movements, and was driven by the following principal changes: •Net favorable development of $15 million in short-tail business, primarily from favorable claim development in surety in accident years 2018 through 2020. •Net favorable development of $13 million in long-tail business, primarily from: •Net favorable development of $72 million in casualty lines, including favorable development of $97 million in accident years 2017 and prior, due to lower than expected loss emergence across primary and excess lines in Continental Europe and U.K., partially offset by adverse development of $25 million in accident years 2018 through 2020, primarily due to higher than expected loss development and corresponding changes in loss development patterns on business in Asia Pacific; •Net favorable development of $24 million in other long tail lines including Environmental and Political Risks, primarily in accident years 2017 and prior; and •Net adverse development of $84 million in financial lines, with adverse development primarily in accident years 2011 through 2020 in Directors and Officers (D&O) on specific claims in Australia, and U.K., and adverse professional indemnity development, including medical malpractice, in various regions. For the nine months ended September 30, 2021, net favorable PPD was $209 million, primarily from: •Net favorable development of $201 million in short-tail business, primarily from: •Net favorable development of $55 million in accident and health lines, mainly due to favorable loss development across all regions in accident years 2019 and 2020; •Net favorable development of $54 million in property lines, in accident years 2019 and 2020, including a $21 million favorable reduction in COVID-19 estimates in accident year 2020. The remaining favorable development was across most regions in accident years 2019 and 2020; and •Net favorable development of $35 million in marine lines in accident years 2018 through 2020, driven by favorable loss development, specific claim reductions, and salvage and subrogation recoveries in Continental Europe and Asia Pacific. 2020 For the three months ended September 30, 2020, net favorable PPD was $60 million, which was the net result of several underlying favorable and adverse movements, and was driven by the following principal changes: •Net favorable development of $71 million in long-tail business, primarily from: •Net favorable development of $94 million in casualty lines, including favorable development of $143 million in accident years 2016 and prior, due to lower than expected loss emergence across primary and excess lines in Continental Europe, U.K., and Asia Pacific, partially offset by adverse development of $49 million in accident years 2017 through 2019, primarily due to adverse large loss experience in the U.K. and Asia Pacific; •Net favorable development of $22 million in political risks, driven by benign loss experience in 2018 and 2019; and •Net adverse development of $57 million in financial lines, with adverse development of $125 million in accident years 2016 through 2019, primarily due to adverse large loss experience in D&O in the U.K. and Asia Pacific. This was partially offset by favorable development of $68 million in accident years 2015 and prior, primarily from favorable case-specific settlements within Continental Europe and Asia Pacific financial institutions. For the nine months ended September 30, 2020, net favorable PPD was $100 million, which was the net result of several underlying favorable and adverse movements and was driven by the following principal changes: •Net favorable development of $72 million in long-tail lines due to the same factors experienced for the three months ended September 30, 2020 described above; and •Net favorable development of $28 million in short-tail business, including $22 million in marine lines across all regions mainly in accident years 2017 and 2018. Global Reinsurance 2020 For the three and nine months ended September 30, 2020, net favorable PPD was $6 million and $29 million, respectively, which was the net result of several underlying favorable and adverse movements, none of which is significant individually or in the aggregate. Corporate 2021 For the three months ended September 30, 2021, net adverse development was $43 million, driven principally by development in environmental liabilities of $33 million due to certain case specific incurred activity. For the nine months ended September 30, 2021, net adverse development was $140 million, driven by adverse development of $68 million for molestation claims, as well as the adverse development noted above regarding environmental liabilities. The remainder of the adverse development was driven by increased claim costs on non-A&E run-off workers’ compensation exposures, and charges relating to unallocated loss adjustment expenses incurred. 2020 For the three months ended September 30, 2020, net adverse development was $54 million, driven principally by development in environmental liabilities of $35 million due to certain case specific incurred activity. For the nine months ended September 30, 2020 net adverse development was $339 million, driven by adverse development of $254 million for U.S. child molestation claims, predominantly reviver statute-related, as well as the adverse development noted above regarding environmental liabilities. The remainder of the adverse development was driven by increased claim costs on a limited number of non-A&E run-off casualty and workers’ compensation exposures, and charges relating to unallocated loss adjustment expenses due to run-off operating expenses.

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- Definition The entire disclosure for liabilities related to future policy benefits and unpaid claims and claim adjustments. + References Reference 1: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 944 -SubTopic 40 -URI http://asc.fasb.org/subtopic&trid=2560295 + Details
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