
Premiums Receivable and Agents' Balances
	As of December 31,
	2022		2021
Premiums receivable, excluding receivables for losses within a deductible and retrospectively-rated policy premiums ("loss sensitive business")	$	4,698	$	4,130
Receivables for loss sensitive business, by credit quality:

AA	106		130
A	38		52
BBB	119		133
BB	56		64
Below BB	41		41
Total receivables for loss sensitive business	360		420

Total Premiums Receivable and Agents' Balances, Gross	5,058		4,550
ACL	(109)		(105)
Total Premiums Receivable and Agents' Balances, Net of ACL	$	4,949	$	4,445

ACL on Premiums Receivable and Agents' Balances

Premiums receivable and agents' balances, excluding receivables for loss sensitive business, are primarily comprised of premiums due from policyholders, which are typically collectible within one year or less. For these balances, the ACL is estimated based on an aging of receivables and recent historical credit loss and collection experience, adjusted for current economic conditions and reasonable and supportable forecasts, when appropriate. Balances are considered past due when amounts that have been billed are not collected within contractually stipulated time periods.

A portion of the Company's Commercial Lines business is written with large deductibles or under retrospectively-rated plans (referred to as "loss sensitive business"). Under some commercial insurance contracts with a large deductible, the Company is obligated to pay the claimant the full amount of the claim and the Company is subsequently reimbursed by the

policyholder for the deductible amount. As such, the Company is subject to credit risk until reimbursement is made. Retrospectively-rated policies are utilized primarily for workers' compensation coverage, whereby the ultimate premium is adjusted based on actual losses incurred. Although the premium adjustment feature of a retrospectively-rated policy substantially reduces insurance risk for the Company, it presents credit risk to the Company. The Company’s results of operations could be adversely affected if a significant portion of such policyholders failed to reimburse the Company for the deductible amount or the amount of additional premium owed under retrospectively-rated policies. The Company manages these credit risks through credit analysis, collateral requirements, and oversight.

The ACL for receivables for loss sensitive business is estimated as the amount of the receivable exposed to loss multiplied by estimated factors for probability of default and the amount of loss given a default. The probability of default is assigned based on each policyholder's credit rating, or a rating is estimated if no external rating is available. Credit ratings are reviewed and updated at least annually. The exposure amount is estimated net of collateral and other credit enhancement, considering the nature of the collateral, potential future changes in collateral values, and historical loss information for the type of collateral obtained. The probability of default factors are historical corporate defaults for receivables with similar durations estimated through multiple economic cycles. Credit ratings are forward-looking and consider a variety of economic outcomes. The loss given default factors are based on a study of historical recovery rates for general creditors through multiple economic cycles. The Company's evaluation of the required ACL for receivables for loss sensitive business considers the current economic environment as well as the probability-weighted macroeconomic scenarios similar to the approach used for estimating the ACL for mortgage loans. See Note 5 - Investments.

The increase in ACL in 2022 reflected the provision required on premiums written in the year and recoveries, offset by write-offs. During 2021, the ACL on premiums receivable decreased as the provision required on premiums written during the year was more than offset by write-offs and a reduction in the provision, primarily reflecting lessening expected impacts of COVID-19 relative to prior assumptions in certain lines of business. In 2020, an increase in the ACL was due to the increasing impacts of COVID-19.


Rollforward of ACL on Premiums Receivable and Agents' Balances for the Year Ended
	December 31, 2022						December 31, 2021						December 31, 2020
	Premiums Receivable and Agents' Balances, Excluding Receivables for Loss Sensitive Business		Receivables for Loss Sensitive Business		Total		Premiums Receivable and Agents' Balances, Excluding Receivables for Loss Sensitive Business		Receivables for Loss Sensitive Business		Total		Premiums Receivable and Agents' Balances, Excluding Receivables for Loss Sensitive Business		Receivables for Loss Sensitive Business		Total
Beginning ACL	$	83	$	22	$	105	$	117	$	35	$	152	$	85	$	60	$	145
Cumulative effect of accounting change [1]													(2)		(21)		(23)
Adjusted beginning ACL	83		22		105		117		35		152		83		39		122
Current period provision (release)	48		3		51		17		(13)		4		78		(4)		74
Current period gross write-offs	(56)		(1)		(57)		(59)		—		(59)		(49)		—		(49)
Current period gross recoveries	10		—		10		8		—		8		5		—		5
Ending ACL	$	85	$	24	$	109	$	83	$	22	$	105	$	117	$	35	$	152

[1]Represents the adjustment to the ACL recorded on adoption of accounting guidance for credit losses on January 1, 2020. The adjusted beginning ACL was based on the Company's historical loss information adjusted for current conditions and the forecasted economic environment at the time the guidance was adopted. For further information refer to Note 1 - Basis of Presentation and Significant Accounting Policies.