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Reserve for Property and Casualty Insurance Claims and Claims Expense | 6 Months Ended
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Jun. 30, 2025
Reserve for Property-Liability Insurance Claims and Claims Expense [Abstract] |
Reserve for Property and Casualty Insurance Claims and Claims Expense |
Note 9 | Reserve for Property and Casualty Insurance Claims and Claims Expense
The Company establishes reserves for claims and claims expense on reported and unreported claims of insured losses. The Company’s reserving process considers known facts and interpretations of circumstances and factors including the Company’s experience with similar cases, actual claims paid, historical trends involving claim payment patterns and pending levels of unpaid claims, loss management programs, product mix and contractual terms, changes in laws and regulations, judicial decisions and economic conditions. When the Company experiences changes in the mix or type of claims or changing claim settlement patterns or data, it applies actuarial judgment in the determination and selection of development factors to develop reserve liabilities. Inflation and a higher mix of more complex repairs, combined with skilled labor shortages, have increased physical damage loss costs. Medical inflation, increased treatment trends, higher attorney representation, rising litigation costs and more severe accidents have contributed to higher third-party bodily injury loss costs. The Company continues to digitize and modernize claim processes to increase effectiveness and efficiency. These factors may lead to historical development trends being less predictive of future loss development, potentially creating additional reserve variability. Generally, the initial reserves for a new accident year are established based on claim frequency and severity assumptions for different business segments, lines and coverages based on historical relationships to relevant inflation indicators. Reserves for prior accident years are statistically determined using several different actuarial estimation methods. Changes in auto claim frequency may result from changes in mix of business, driving behaviors, miles driven or other factors. Changes in auto current year claim severity are generally influenced by inflation in the medical and auto repair sectors, changes in attorney represented and litigated claim behavior, the effectiveness and efficiency of claim settlements and changes in mix of claim types. When changes in claim data occur, actuarial judgment is used to determine appropriate development factors to establish reserves. The Company’s reserving process incorporates changes in loss patterns, operational statistics and changes in claims reporting processes to determine its best estimate of recorded reserves. As part of the reserving process, the Company may also supplement its claims processes by utilizing third-party adjusters, appraisers, engineers, inspectors and other professionals and information sources to assess and settle catastrophe and non-catastrophe related claims. The effects of inflation are implicitly considered in the reserving process. Because reserves are estimates of unpaid portions of losses that have occurred, including incurred but not reported (“IBNR”) losses, the establishment of appropriate reserves, including reserves for catastrophes, Run-off Property-Liability and reinsurance and indemnification recoverables, is an inherently uncertain and complex process. The ultimate cost of losses may vary materially from recorded amounts, which are based on management’s best estimates. The highest degree of uncertainty is associated with reserves for losses incurred in the initial reporting period as it contains the greatest proportion of losses that have not been reported or settled as well as heightened uncertainty for claims that involve litigation or take longer to settle during periods of rapidly increasing loss costs. The Company also has uncertainty in the Run-off Property-Liability reserves that are based on events long since passed and are complicated by lack of historical data, legal interpretations, unresolved legal issues and legislative intent based on establishment of facts. The Company regularly updates its reserve estimates as new information becomes available and as events unfold that may affect the resolution of unsettled claims. Changes in reserve estimates, which may be material, are reported in property and casualty insurance claims and claims expense in the Condensed Consolidated Statements of Operations in the period such changes are determined. Management believes that the reserve for property and casualty insurance claims and claims expense, net of recoverables, is appropriately established in the aggregate and adequate to cover the ultimate net cost of reported and unreported claims arising from losses which had occurred by the date of the Condensed Consolidated Statements of Financial Position based on available facts, laws and regulations.
Rollforward of the reserve for property and casualty insurance claims and claims expense
|  | Six months ended June 30,
($ in millions) |  | 2025 |  | 2024
Balance as of January 1 |  | $ | 41,917 |  |  | $ | 39,858 |
Less: recoverables (1) |  | 8,602 |  |  | 8,396 |
Net balance as of January 1 |  | 33,315 |  |  | 31,462 |
Incurred claims and claims expense related to: |  |  |  |
Current year |  | 21,685 |  |  | 20,656 |
Prior years |  | (621) |  |  | (354) |
Total incurred |  | 21,064 |  |  | 20,302 |
Claims and claims expense paid related to: |  |  |  |
Current year |  | (10,002) |  |  | (9,087) |
Prior years |  | (9,521) |  |  | (9,465) |
Total paid |  | (19,523) |  |  | (18,552) |
Net balance as of June 30 |  | 34,856 |  |  | 33,212 |
Plus: recoverables |  | 9,285 |  |  | 8,341 |
Balance as of June 30 |  | $ | 44,141 |  |  | $ | 41,553 |
(1)Recoverables comprises reinsurance and indemnification recoverables. Incurred claims and claims expense represents the sum of paid losses, claim adjustment expenses and reserve changes in the period. This expense included losses from catastrophes of $4.19 billion and $2.85 billion in the six months ended June 30, 2025 and 2024, respectively, net of recoverables. Catastrophes are an inherent risk of the property and casualty insurance business that have contributed to, and will continue to contribute to, material year-to-year fluctuations in the Company’s results of operations and financial position.
Prior year reserve reestimates included in claims and claims expense (1)
|  | Non-catastrophe losses |  | Catastrophe losses (2) |  | Total
($ in millions) |  | 2025 |  | 2024 |  | 2025 |  | 2024 |  | 2025 |  | 2024
Three months ended June 30, |  |  |  |  |  |  |  |  |  |  |  |
Auto |  | $ | (415) |  |  | $ | (171) |  |  | $ | (16) |  |  | $ | (9) |  |  | $ | (431) |  |  | $ | (180) |
Homeowners |  | 12 |  |  | (63) |  |  | 18 |  |  | (128) |  |  | 30 |  |  | (191) |
Other personal lines |  | 28 |  |  | 60 |  |  | 2 |  |  | 1 |  |  | 30 |  |  | 61 |
Commercial lines |  | 7 |  |  | 109 |  |  | 2 |  |  | (2) |  |  | 9 |  |  | 107 |
Other business lines |  | (10) |  |  | (1) |  |  | — |  |  | — |  |  | (10) |  |  | (1) |
Run-off Property-Liability |  | 2 |  |  | 2 |  |  | — |  |  | — |  |  | 2 |  |  | 2 |
Protection Services |  | — |  |  | (1) |  |  | — |  |  | — |  |  | — |  |  | (1) |
Total prior year reserve reestimates |  | $ | (376) |  |  | $ | (65) |  |  | $ | 6 |  |  | $ | (138) |  |  | $ | (370) |  |  | $ | (203) |
Six months ended June 30, |  |  |  |  |  |  |  |  |  |  |  |
Auto |  | $ | (653) |  |  | $ | (238) |  |  | $ | (27) |  |  | $ | (16) |  |  | $ | (680) |  |  | $ | (254) |
Homeowners |  | 5 |  |  | (103) |  |  | 17 |  |  | (277) |  |  | 22 |  |  | (380) |
Other personal lines |  | 81 |  |  | 115 |  |  | (5) |  |  | (2) |  |  | 76 |  |  | 113 |
Commercial lines |  | (24) |  |  | 163 |  |  | 5 |  |  | (5) |  |  | (19) |  |  | 158 |
Other business lines |  | (25) |  |  | 4 |  |  | — |  |  | — |  |  | (25) |  |  | 4 |
Run-off Property-Liability |  | 5 |  |  | 6 |  |  | — |  |  | — |  |  | 5 |  |  | 6 |
Protection Services |  | — |  |  | (1) |  |  | — |  |  | — |  |  | — |  |  | (1) |
Total prior year reserve reestimates |  | $ | (611) |  |  | $ | (54) |  |  | $ | (10) |  |  | $ | (300) |  |  | $ | (621) |  |  | $ | (354) |
(1)Favorable reserve reestimates are shown in parentheses. (2)The first six months of 2025 includes $60 million of estimated recoveries related to the Nationwide Reinsurance Program aggregate cover for losses occurring between April 1, 2024 and December 31, 2024.

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- Definition Describes the various components of the reserve for property-liability future policy benefits and guaranteed minimum benefits, and for claims and claims adjustment expenses; the significant assumptions for estimating claims losses; causes of significant variances from prior periods (such as catastrophes, asbestos and environmental claims reserve losses); and reconciliations of beginning to ending reserve balances. + References No definition available. + Details
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- Definition Reserve for Property-Liability Insurance Claims and Claims Expense [Abstract] + References No definition available. + Details
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