XML 64 R17.htm IDEA: XBRL DOCUMENT
v3.24.3

Reserve for Future Policy Benefits | 9 Months Ended
--- | ---
Sep. 30, 2024
Insurance Loss Reserves [Abstract] |
Reserve for Future Policy Benefits | |PROPERTY & CASUALTY INSURANCE PRODUCT RESERVES, NET OF REINSURANCE Rollforward of Liabilities for Unpaid Losses and Loss Adjustment Expenses
| For the nine months ended September 30,
| 2024 | 2023 |
Beginning liabilities for unpaid losses and loss adjustment expenses, gross | $ | 34,044 |  | $ | 33,083 |  |
Reinsurance and other recoverables | 6,696 |  | 6,465 |  |
Beginning liabilities for unpaid losses and loss adjustment expenses, net | 27,348 |  | 26,618 |  |
Provision for unpaid losses and loss adjustment expenses |  |  |
Current accident year | 7,799 |  | 7,151 |  |
Prior accident year development [1] | (221) |  | (82) |  |
Total provision for unpaid losses and loss adjustment expenses | 7,578 |  | 7,069 |  |
Change in deferred gain on retroactive reinsurance included in other liabilities [1] | 87 |  | — |  |
Payments |  |  |
Current accident year | (1,852) |  | (1,829) |  |
Prior accident years | (4,078) |  | (4,873) |  |
Total payments | (5,930) |  | (6,702) |  |
Foreign currency adjustment | 9 |  | 3 |  |
Ending liabilities for unpaid losses and loss adjustment expenses, net | 29,092 |  | 26,988 |  |
Reinsurance and other recoverables | 6,603 |  | 6,465 |  |
Ending liabilities for unpaid losses and loss adjustment expenses, gross | $ | 35,695 |  | $ | 33,453 |  |
1.Prior accident year development for the nine months ended September 30, 2024 includes a $87 benefit for amortization of a deferred gain under retroactive reinsurance accounting related to the Navigators Adverse Development Cover (the "Navigator's ADC") as the Company began collection recoveries of the ceded losses from National Indemnity Company ("NICO"), a subsidiary of Berkshire Hathaway Inc, during the period. For additional information regarding the ADC reinsurance agreement, refer to "Change in Deferred Gain on Retroactive Reinsurance" discussion below. Unfavorable (Favorable) Prior Accident Year Development
|  | For the nine months ended September 30,
|  |  | 2024 | 2023
Workers’ compensation |  |  | $ | (188) |  | $ | (174) |
Workers’ compensation discount accretion |  |  | 34 |  | 32 |
General liability |  |  | 81 |  | 39 |
Marine |  |  | (1) |  | (1) |
Package business |  |  | (6) |  | (18) |
Commercial property |  |  | (7) |  | 2 |
Professional liability |  |  | (7) |  | (3) |
Bond |  |  | (22) |  | 12 |
Assumed reinsurance |  |  | 24 |  | 19 |
Automobile liability - Commercial Lines |  |  | 26 |  | 6 |
Automobile liability - Personal Lines |  |  | (13) |  | — |
Homeowners |  |  | (15) |  | 1 |
Net asbestos and environmental ("A&E") reserves |  |  | — |  | — |
Catastrophes |  |  | (38) |  | (44) |
Uncollectible reinsurance |  |  | — |  | 13 |
Other reserve re-estimates, net |  |  | (2) |  | 34 |
Prior accident year development before change in deferred gain |  |  | (134) |  | (82) |
Change in deferred gain on retroactive reinsurance included in other liabilities [1] |  |  | (87) |  | — |
Total prior accident year development |  |  | $ | (221) |  | $ | (82) |
[1]The $87 change in deferred gain on retroactive reinsurance for the nine months ended September 30, 2024, is related to amortization of the Navigators ADC deferred gain. For additional information regarding the ADC reinsurance agreement, refer to "Change in Deferred Gain on Retroactive Reinsurance" discussion below. Re-estimates of prior accident year reserves for the nine months ended September 30, 2024 Workers’ compensation reserves were decreased within the 2016 to 2020 accident years primarily in small commercial, driven by lower than previously estimated claim severity. In addition, the 2020 accident year includes a $48 reduction of COVID-19 related reserves driven by favorable claim count emergence. General liability reserves were increased primarily in response to higher frequency of large losses in the 2016 to 2019 accident years as well as increases in more recent accident years, with the increase in reserves for the three months ended September 30, 2024, focused more toward the recent accident years. In addition, reserves for sexual molestation and sexual abuse claims were increased for older accident years. Lastly, reserves for extra contractual liability claims and other miscellaneous run-off lines were reduced in response to recent favorable loss activity. Professional liability reserves decreased modestly due to favorable development on directors' and officers' ("D&O") claims driven by the 2020 to 2022 accident years, partially offset by deterioration in older accident years. Bond reserves decreased due to favorable development on commercial and contract surety driven by accident years 2019 and prior. Assumed reinsurance reserves were increased due to higher reserve estimates in the Latin America surety and Latin America P&C businesses related to the 2020 to 2023 accident years. Automobile liability reserves - Commercial Lines increased primarily due to adverse loss development within accident years 2022 and 2023 driven by higher severity than estimated. Automobile liability reserves - Personal Lines were decreased primarily in response to better than anticipated accident year 2023 claim severity for property damage liability. Homeowners reserves were decreased primarily due to favorable severity impacting accident year 2023. Catastrophes reserves were decreased primarily within Commercial Lines driven by a reduction in reserves in accident years 2021 to 2022 related to favorable emergence related to various hail events, as well as favorable development in accident year 2022 related to Hurricane Ian. Other reserve re-estimates, net, included a decrease in reserves due to lower severity than expected on Personal Lines automobile physical damage for accident year 2023, offset by an increase in reserves related to unfavorable development from participation in involuntary market pools. Re-estimates of prior accident year reserves for the nine months ended September 30, 2023 Workers’ compensation reserves were decreased within the 2014 to 2019 accident years primarily in small commercial, driven by lower than previously estimated claim severity. In addition, the 2020 accident year reflects a $38 reduction of COVID-19 related reserves. General liability reserves were increased driven by higher frequency and estimated cost to settle large individual claims for the 2016 to 2019 accident years, partially offset by a decrease in reserves for the 2020 accident year due to favorable experience. In addition, reserves for sexual molestation and sexual abuse claims were increased for older accident years. Also included was a decrease in reserves for extra contractual liability claims and other miscellaneous run-off lines. Package business reserves decreased primarily due to lower than previously estimated property severity for accident year 2019 and 2021. Package liability is flat overall with reserve increases related to higher severity across multiple accident years offset by improvement in accident year 2020 due to favorable claim count emergence. Commercial property reserves were flat primarily due to unfavorable development for accident year 2022 in middle & large commercial, offset by favorable development in global specialty. Professional liability reserves decreased modestly due to favorable development on directors' and officers' claims for the 2019 to 2021 accident years partially offset by deterioration on errors and omissions claims primarily for the 2018 accident year. Bond reserves were increased primarily due to unfavorable development for 2013 and prior accident years related to customs bonds. Assumed reinsurance reserves were increased due to higher reserve estimates in the specialty casualty, Latin America casualty and surety business. Automobile liability reserves - Commercial Lines increased primarily due to adverse loss development within accident years 2017 to 2019. Automobile liability reserves - Personal Lines were flat as increases for accident year 2022 from higher estimated severity and increasing attorney representation rates were fully offset by decreases, primarily within accident years 2019 to 2021, due to lower estimated severity. Catastrophes reserves were decreased primarily within Commercial Lines driven by a reduction in reserves in accident year 2022 for Hurricane Ian and accident year 2021 for Hurricane Ida. Uncollectible reinsurance was increased primarily in Commercial Lines related to a captive reinsurer and, to a lesser extent, an increase in reserves for potential collection disputes and credit concerns. Other reserve re-estimates, net, were increased primarily due to an increase in accident year 2022 Personal Lines automobile physical damage severity. Change in Deferred Gain on Retroactive Reinsurance The Company has in place an ADC reinsurance agreement that covers substantially all reserve development of Navigators Insurance Company and certain of its affiliates for 2018 and prior accident years (the “Navigators ADC”) up to an aggregate limit of $300, for which the Company had previously ceded the available limit. As of December 31, 2023, the Company had paid claims related to the Navigators ADC in excess of the $1.816 billion acquisition date reserves plus the $100 retention. During the three and nine months ended September 30, 2024, the Company collected recoveries from NICO and as a result amortized $26 and $87 of the deferred gain within benefits, losses and loss adjustment expenses in the three and nine month periods, respectively. As of September 30, 2024 and December 31, 2023, the deferred gain on the Navigators ADC was $122 and $209, respectively, and is included in other liabilities on the Condensed Consolidated Balance Sheets. Settlement Agreement with Boy Scouts of America On February 14, 2022, the Company executed a final settlement agreement (the “Settlement”) with the Boy Scouts of America (“BSA”), the Local Councils, and the attorneys representing a majority of the alleged victims, pursuant to which The Hartford agreed to pay $787 for sexual molestation and sexual abuse claims associated with liability policies issued by various Hartford Writing Companies in the 1970s and early 1980s. In exchange for its payment, the Company receives a complete release of its policies issued to BSA and the Local Councils, as well as an injunction against further abuse claims involving BSA. All conditions precedent to the Settlement have been satisfied, including approval by the bankruptcy court and the district court, and on April 20, 2023, The Hartford paid the Settlement amount of $787. Certain objecting parties have appealed the district court’s ruling and that appeal is pending before the Third Circuit. If the court approvals for the BSA’s plan of reorganization are not affirmed on appeal, it is possible that adverse outcomes, if any, could have a material adverse effect on the Company’s operating results. Rollforward of Liabilities for Unpaid Losses and Loss Adjustment Expenses
| For the nine months ended September 30,
| 2024 | 2023
Beginning liabilities for unpaid losses and loss adjustment expenses, gross | $ | 8,274 |  | $ | 8,160 |
Reinsurance recoverables | 254 |  | 245 |
Beginning liabilities for unpaid losses and loss adjustment expenses, net | 8,020 |  | 7,915 |
Provision for unpaid losses and loss adjustment expenses |  |
Current incurral year | 3,929 |  | 3,899 |
Prior year's discount accretion | 149 |  | 149 |
Prior incurral year development [1] | (460) |  | (403) |
Total provision for unpaid losses and loss adjustment expenses [2] | 3,618 |  | 3,645 |
Payments |  |
Current incurral year | (1,885) |  | (1,772) |
Prior incurral years | (1,846) |  | (1,798) |
Total payments | (3,731) |  | (3,570) |
Ending liabilities for unpaid losses and loss adjustment expenses, net | 7,907 |  | 7,990 |
Reinsurance recoverables | 279 |  | 243 |
Ending liabilities for unpaid losses and loss adjustment expenses, gross | $ | 8,186 |  | $ | 8,233 |
[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 ("ULAE") of $130 and $136 for the nine months ended September 30, 2024 and 2023, 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 nine months ended September 30, 2024 Group disability - Prior period reserve estimates decreased by approximately $394 largely driven by long-term disability claim incidence lower than prior assumptions and favorable recoveries on prior incurral year claims, as well as a favorable change in the recovery rate assumption. Group life and accident (including group life premium waiver) - Prior period reserve estimates decreased by approximately $68 largely driven by favorable mortality emergence and continued low incidence in group life premium waiver. Re-estimates of prior incurral years reserves for the nine months ended September 30, 2023 Group disability- Prior period reserve estimates decreased by approximately $369 largely driven by group long-term disability claim incidence lower than prior assumptions and strong recoveries on prior incurral year claims. Group life and accident (including group life premium waiver)- Prior period reserve estimates decreased by approximately $25 largely driven by continued low incidence in group life premium waiver. Supplemental Accident & Health- Prior period reserve estimates decreased by approximately $9 driven by lower than previously expected claim incidence. . RESERVE FOR FUTURE POLICY BENEFITS
Rollforward of Reserve for Future Policy Benefits
| For the nine months ended September 30,
| 2024 |  | 2023
| Payout Annuities | Life Conversions | Paid-up Life |  | Payout Annuities | Life Conversions | Paid-up Life
Present Value of Expected Net Premiums |  |  |  |  |  |  |
Balance, beginning of the period |  | $ | 48 |  |  |  |  | $ | 47 |  |
Balance, ending of the period |  | $ | 46 |  |  |  |  | $ | 46 |  |
Present Value of Expected Future Policy Benefits |  |  |  |  |  |  |
Beginning balance at single-A rate | $ | 137 |  | $ | 113 |  | $ | 185 |  |  | $ | 140 |  | $ | 112 |  | $ | 192 |
Beginning adjustment for changes in single-A rate | 7 |  | (11) |  | (32) |  |  | 4 |  | (14) |  | (39) |
Beginning balance at original discount rate | 130 |  | 124 |  | 217 |  |  | 136 |  | 126 |  | 231 |
Effect of changes in cash flow assumptions | — |  | 2 |  | — |  |  | (2) |  | 1 |  | — |
Effect of actual variances from expected experience | 1 |  | 3 |  | (1) |  |  | 1 |  | 4 |  | (1) |
Adjusted beginning balance | 131 |  | 129 |  | 216 |  |  | 135 |  | 131 |  | 230 |
Interest accrual and other | 5 |  | 16 |  | 5 |  |  | 5 |  | 14 |  | 7 |
Benefit Payments | (9) |  | (23) |  | (19) |  |  | (9) |  | (20) |  | (17) |
Ending balance at original discount rate | 127 |  | 122 |  | 202 |  |  | 131 |  | 125 |  | 220 |
Ending adjustment for changes in single-A rate | 8 |  | (10) |  | (26) |  |  | (3) |  | (20) |  | (44) |
Ending balance at single-A rate | $ | 135 |  | $ | 112 |  | $ | 176 |  |  | $ | 128 |  | $ | 105 |  | $ | 176 |
Net reserve for future policy benefits | $ | 135 |  | $ | 66 |  | $ | 176 |  |  | $ | 128 |  | $ | 59 |  | $ | 176 |
Weighted-average duration of the reserve for future policy benefits (years) | 9.0 | 11.6 | 6.6 |  | 9.0 | 11.4 | 6.1
Net Reserve for Future Policy Benefits
| As of September 30,
| 2024 | 2023
Payout Annuities | $ | 135 |  | $ | 128 |
Life Conversions | 66 |  | 59 |
Paid-up Life | 176 |  | 176 |
Deferred Profit Liability | 19 |  | 20 |
Other | 74 |  | 80 |
Total | $ | 470 |  | $ | 463 |
Undiscounted Expected Future Gross Premiums and Benefit Payments
| As of September 30,
| 2024 | 2023 |
Payout Annuities [1] |  |  |
Expected future benefit payments | $ | 249 |  | $ | 259 |  |
Life Conversions |  |  |
Expected future gross premiums | $ | 107 |  | $ | 116 |  |
Expected future benefit payments | $ | 199 |  | $ | 206 |  |
Paid-up Life [1] |  |  |
Expected future benefit payments | $ | 262 |  | $ | 285 |  |
[1]Payout Annuities and Paid-up Life have no expected future gross premiums.
Weighted-Average Interest Rates |
| As of September 30, |
| 2024 | 2023 |
Payout Annuities |  |  |
Interest accretion rate | 5.6 | % | 5.6 | % |
Current discount rate | 4.9 | % | 5.9 | % |
Life Conversions |  |  |
Interest accretion rate | 4.3 | % | 4.2 | % |
Current discount rate | 5.0 | % | 5.9 | % |
Paid-up Life |  |  |
Interest accretion rate | 2.9 | % | 2.9 | % |
Current discount rate | 4.7 | % | 5.9 | % |
The Company completed a review of cash flow assumptions in the third quarter 2024 and 2023, resulting in immaterial changes to the reserve for future policy benefits. For payout annuities, the net effect of updating cash flow assumptions was offset by a corresponding impact to the deferred profit liability. Gross premiums and interest accretion recognized on long-duration insurance policies for the nine months ended September 30, 2024 and 2023 were immaterial.

X
- References No definition available. + Details
Name: | us-gaap_InsuranceLossReservesAbstract
Namespace Prefix: | us-gaap_
Data Type: | xbrli:stringItemType
Balance Type: | na
Period Type: | duration

X
- 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 -Topic 944 -SubTopic 40 -Name Accounting Standards Codification -Section 50 -Paragraph 3 -Publisher FASB -URI https://asc.fasb.org/1943274/2147480081/944-40-50-3 Reference 2: http://www.xbrl.org/2003/role/disclosureRef -Topic 944 -SubTopic 40 -Name Accounting Standards Codification -Publisher FASB -URI https://asc.fasb.org/944-40/tableOfContent + Details
Name: | us-gaap_LiabilityForFuturePolicyBenefitsAndUnpaidClaimsDisclosureTextBlock
Namespace Prefix: | us-gaap_
Data Type: | dtr-types:textBlockItemType
Balance Type: | na
Period Type: | duration