Unpaid losses and loss expenses

3 Months Ended

Mar. 31, 2023

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:


	Three Months Ended
	March 31
(in millions of U.S. dollars)	2023		2022
Gross unpaid losses and loss expenses – beginning of period	$	75,747	$	72,330
Reinsurance recoverable on unpaid losses – beginning of period (1)	(17,086)		(16,132)
Net unpaid losses and loss expenses – beginning of period	58,661		56,198


Net losses and loss expenses incurred in respect of losses occurring in:
Current year	5,336		4,963
Prior years (2)	(188)		(399)
Total	5,148		4,564
Net losses and loss expenses paid in respect of losses occurring in:
Current year	805		593
Prior years	3,911		3,569
Total	4,716		4,162
Foreign currency revaluation and other	(196)		3
Net unpaid losses and loss expenses – end of period	58,897		56,603
Reinsurance recoverable on unpaid losses (1)	16,520		16,593
Gross unpaid losses and loss expenses – end of period	$	75,417	$	73,196

(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, earned premiums, and development on international A&H lines totaling $(8) million and $159 million for the three months ended March 31, 2023 and 2022, respectively.

Gross unpaid losses and loss expenses decreased $330 million for the three months ended March 31, 2023, principally reflecting underlying exposure growth that was more than offset by the favorable impact of foreign currency movement, a large payment related to the Boy Scouts of America agreement, and a non-recurring transaction in the quarter. In addition, there was an increase in net unpaid losses and loss expenses of $236 million reflecting the factors noted above as well as higher collections in the quarter.

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 financial lines; 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 March 31
(in millions of U.S. dollars)		Long-tail		Short-tail		Total
2023
North America Commercial P&C Insurance		$	9	$	(81)	$	(72)
North America Personal P&C Insurance		—		17		17
North America Agricultural Insurance		—		—		—
Overseas General Insurance		—		(143)		(143)
Global Reinsurance		—		(8)		(8)
Corporate		10		—		10
Total		$	19	$	(215)	$	(196)
2022
North America Commercial P&C Insurance		$	(20)	$	(88)	$	(108)
North America Personal P&C Insurance		—		(51)		(51)
North America Agricultural Insurance		—		(26)		(26)
Overseas General Insurance		—		(60)		(60)
Global Reinsurance		—		(3)		(3)
Corporate		8		—		8
Total		$	(12)	$	(228)	$	(240)

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. Net favorable development for the three months ended March 31, 2023, was $72 million favorable with $81 million favorable in short-tail lines and $9 million adverse in long-tail lines. The short tail development was primarily in surety and A&H, partially offset by adverse development in property and marine due to the net impact of positive development from Hurricane Ian and negative development from Winter Storm Elliott. The long tail development was the net of favorable developments in specialty casualty and workers comp due to lower than expected paid and reported loss activity offset by adverse development in general liability and certain financial lines due to higher than expected development.

Net favorable development for the three months ended March 31, 2022, included favorable development in A&H lines of $76 million, which experienced lower than expected loss emergence. The favorable development was partially offset by adverse development in commercial umbrella and excess portfolios of $60 million driven by higher than expected loss emergence.

North America Personal P&C Insurance. Net adverse development for the three months ended March 31, 2023, was $17 million with no individually significant movements. Net favorable development for the three months ended March 31, 2022, included favorable development in the homeowners line of business from a reserve release due to lower than expected paid and reported loss activity attributable to the indirect effects of COVID related economic slowdown.

Overseas General Insurance. Net favorable development for the three months ended March 31, 2023, included $85 million in property lines, driven by favorable catastrophe development of $43 million, and non-catastrophe loss emergence in Continental Europe and the U.K.

Net favorable development for the three months ended March 31, 2022, included favorable development in property and A&H lines of business.

Molestation claimsIn the first quarter of 2023, the District Court issued an order approving the Boy Scouts of America (BSA) bankruptcy plan in full. There are no changes to the terms of the agreement which are consistent with the 2022 10-K disclosure. We paid $800 million per the agreement, with $300 million paid in 2022, $200 million paid during the first quarter of 2023, and the remaining $300 million paid in April 2023. Refer to the 2022 10-K for additional information on molestation claims.