XML 63 R16.htm IDEA: XBRL DOCUMENT v3.25.2
Reserve for Unpaid Losses and Loss Adjustment Expenses
 6 Months Ended
Jun. 30, 2025
Liability for Unpaid Claims and Claims Adjustment Expense, Activity in Liability [Abstract]  
Reserve for Unpaid Losses and Loss Adjustment Expenses
Property & Casualty Insurance Product Reserves, Net of Reinsurance
Rollforward of Liabilities for Unpaid Losses and Loss Adjustment Expenses
 For the six months ended June 30,
 20252024
Beginning liabilities for unpaid losses and loss adjustment expenses, gross$36,404 $34,044 
Reinsurance and other recoverables6,753 6,696 
Beginning liabilities for unpaid losses and loss adjustment expenses, net29,651 27,348 
Provision for unpaid losses and loss adjustment expenses  
Current accident year5,670 5,088 
Prior accident year development [1](309)(171)
Total provision for unpaid losses and loss adjustment expenses5,361 4,917 
Change in deferred gain on retroactive reinsurance included in other liabilities [1]56 61 
Payments  
Current accident year(1,175)(987)
Prior accident years(3,205)(2,849)
Total payments(4,380)(3,836)
Foreign currency adjustment39 (9)
Ending liabilities for unpaid losses and loss adjustment expenses, net30,727 28,481 
Reinsurance and other recoverables6,631 6,656 
Ending liabilities for unpaid losses and loss adjustment expenses, gross$37,358 $35,137 
[1] Prior accident year development for the six months ended June 30, 2025 and 2024 included a $56 and $61 benefit for amortization of a deferred gain under retroactive reinsurance accounting, respectively, related to the Navigators Adverse Development Cover (the "Navigator's ADC"). For additional information regarding the ADC reinsurance agreement, refer to "Change in Deferred Gain on Retroactive Reinsurance" discussion below.
Unfavorable (Favorable) Prior Accident Year Development
For the six months ended June 30,
20252024
Workers’ compensation$(126)$(119)
Workers’ compensation discount accretion23 23 
General liability— 49 
Marine— (1)
Package business— (1)
Commercial property(23)(5)
Professional liability(11)(7)
Bond(22)(22)
Assumed reinsurance— 24 
Commercial automobile liability— 10 
Personal automobile liability(22)(13)
Homeowners(31)(10)
Net asbestos and environmental ("A&E") reserves— — 
Catastrophes(39)(38)
Uncollectible reinsurance— — 
Other reserve re-estimates, net (2)— 
Prior accident year development before change in deferred gain(253)(110)
Change in deferred gain on retroactive reinsurance included in other liabilities [1](56)(61)
Total prior accident year development$(309)$(171)
[1]The $56 and $61 change in deferred gain on retroactive reinsurance for the six months ended June 30, 2025 and 2024, respectively, 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 six months ended June 30, 2025
Workers’ compensation reserves were decreased within the 2016 to 2021 accident years primarily in small business, driven by lower than previously estimated claim severity.
Commercial property reserves were decreased primarily within accident years 2023 and 2024 as a result of lower than expected severity.
Professional liability reserves were decreased due to favorable development on directors and officers ("D&O") claims driven by the 2020 to 2023 accident years, partially offset by deterioration in employment practices liability and errors and omissions ("E&O") claims across multiple accident years.
Bond reserves decreased due primarily to favorable development on commercial and contract surety bonds driven by accident years 2019 to 2021.
Personal automobile liability reserves were decreased primarily within accident years 2020 to 2023 as a result of lower than expected severity.
Homeowners reserves were decreased primarily due to favorable severity impacting accident year 2024.
Catastrophes reserves were decreased across Business Insurance and Personal Insurance primarily driven by a reduction in reserves in accident years 2021 to 2024, including favorable emergence related to various hail events.
Other reserve re-estimates, net, were decreased due to lower than expected severity on Personal Insurance automobile physical damage for accident year 2024, partially offset by unfavorable development from participation in involuntary market pools.
Re-estimates of prior accident year reserves for the six months ended June 30, 2024
Workers’ compensation reserves were decreased within the 2016 to 2020 accident years primarily in small business, driven by lower than previously estimated claim severity. In addition, the 2020 accident year includes a $20 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 within certain lines in the 2016 to 2019 accident years, with some modest increases in the more 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 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 - Business Insurance increased primarily due to adverse loss development within accident year 2022 driven by higher severity than estimated.
Automobile liability reserves - Personal Insurance were decreased primarily in response to better than anticipated accident year 2023 claim severity for property damage liability.
Catastrophes reserves were decreased primarily within Business Insurance 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
Insurance automobile physical damage for accident year 2023, offset by an increase in reserves related to unfavorable development from participation in involuntary market pools.
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 appealed the district court’s ruling. As to issues material to The Hartford’s settlement, the Third Circuit has dismissed those appeals as moot. The objecting parties' only remaining option is to petition by September 11, 2025, for U.S. Supreme Court review. If a petition is filed and the U.S. Supreme Court agrees to hear the case, the court approvals for the BSA’s plan of reorganization could be open to challenge, and it is possible that adverse outcomes, if any, could have a material adverse effect on the Company’s operating results.
Change in Deferred Gain on Retroactive Reinsurance
The Company has in place an ADC reinsurance agreement that covered 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. The Company has collected recoveries from National Indemnity Company ("NICO"), a subsidiary of Berkshire Hathaway Inc., and as a result amortized $24 and $56 of the deferred gain within benefits, losses and loss adjustment expenses during the three and six months ended June 30, 2025, respectively, and amortized $37 and $61 during the three and six months ended June 30, 2024, respectively. As of June 30, 2025 and December 31, 2024, the deferred gain on the Navigators ADC was $8 and $64, respectively, and is included in other liabilities on the Condensed Consolidated Balance Sheets.
Rollforward of Liabilities for Unpaid Losses and Loss Adjustment Expenses
For the six months ended June 30,
20252024
Beginning liabilities for unpaid losses and loss adjustment expenses, gross$8,206 $8,274 
Reinsurance recoverables282 254 
Beginning liabilities for unpaid losses and loss adjustment expenses, net7,924 8,020 
Provision for unpaid losses and loss adjustment expenses
Current incurral year2,692 2,662 
Prior year's discount accretion105 103 
Prior incurral year development [1](377)(339)
Total provision for unpaid losses and loss adjustment expenses [2]2,420 2,426 
Payments
Current incurral year(1,076)(1,071)
Prior incurral years(1,430)(1,455)
Total payments(2,506)(2,526)
Ending liabilities for unpaid losses and loss adjustment expenses, net7,838 7,920 
Reinsurance recoverables286 266 
Ending liabilities for unpaid losses and loss adjustment expenses, gross$8,124 $8,186 
[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 $88 and $92 for the six months ended June 30, 2025 and 2024, 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 six months ended June 30, 2025
Group disability - Prior period reserve estimates decreased by approximately $307 driven by strong long-term disability claim recoveries, paid family medical leave incidence lower than prior assumptions, as well as a higher New York paid family leave risk adjustment benefit than expected.
Group life and accident (including group life premium waiver) - Prior period reserve estimates decreased by approximately $69 driven by favorable mortality emergence in both group term life and group accidental death and dismemberment, and continued low incidence in group life premium waiver.
Re-estimates of prior incurral years reserves for the six months ended June 30, 2024
Group disability- Prior period reserve estimates decreased by approximately $282 largely driven by group long-term disability claim incidence lower than prior assumptions and favorable recoveries on prior incurral year claims, as well as a higher New York paid family leave risk adjustment benefit than expected.
Group life and accident (including group life premium waiver)- Prior period reserve estimates decreased by approximately $56 largely driven by favorable mortality emergence and continued low incidence in group life premium waiver.
10. Reserve for Future Policy Benefits
Rollforward of Reserve for Future Policy Benefits
For the six months ended June 30,
20252024
Payout AnnuitiesLife ConversionsPaid-up LifePayout AnnuitiesLife ConversionsPaid-up Life
Present Value of Expected Net Premiums
Balance, beginning of the period$45 $49 
Balance, ending of the period $43 $45 
Present Value of Expected Future Policy Benefits
Beginning balance at single-A rate$128 $106 $168 $137 $113 $185 
Beginning adjustment for changes in single-A rate— (15)(33)7 (11)(32)
Beginning balance at original discount rate128 121 201 130 124 217 
Effect of changes in cash flow assumptions— — — — — — 
Effect of actual variances from expected experience(2)3 (1)1 2 — 
Adjusted beginning balance126 124 200 131 126 217 
Interest accrual and other3 11 3 3 9 3 
Benefit Payments(6)(16)(12)(6)(16)(12)
Ending balance at original discount rate123 119 191 128 119 208 
Ending adjustment for changes in single-A rate1 (15)(28)1 (14)(36)
Ending balance at single-A rate$124 $104 $163 $129 $105 $172 
Net reserve for future policy benefits$124 $61 $163 $129 $60 $172 
Weighted-average duration of the reserve for future policy benefits (years)9.311.06.59.011.56.3
 Net Reserve for Future Policy Benefits
As of June 30,
20252024
Payout Annuities$124 $129 
Life Conversions61 60 
Paid-up Life163 172 
Deferred Profit Liability19 20 
Other76 83 
Total$443 $464 
Undiscounted Expected Future Gross Premiums and Benefit Payments
As of June 30,
20252024
Payout Annuities [1]
Expected future benefit payments$242 $252 
Life Conversions
Expected future gross premiums$102 $109 
Expected future benefit payments$192 $199 
Paid-up Life [1]
Expected future benefit payments$249 $268 
[1]Payout Annuities and Paid-up Life have no expected future gross premiums.
Weighted-Average Interest Rates
As of June 30,
20252024
Payout Annuities
Interest accretion rate5.6 %5.6 %
Current discount rate5.4 %5.5 %
Life Conversions
Interest accretion rate4.3 %4.2 %
Current discount rate5.6 %5.5 %
Paid-up Life
Interest accretion rate2.9 %2.9 %
Current discount rate5.0 %5.4 %
Gross premiums and interest accretion recognized on long-duration insurance policies for the six months ended June 30, 2025 and 2024 were immaterial.