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Reserve for Losses and Loss Adjustment Expenses | 3 Months Ended
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Mar. 31, 2023
Liability for Future Policy Benefits and Unpaid Claims and Claims Adjustment Expense [Abstract] |
Reserve for losses and loss adjustment expenses | The following table represents an analysis of losses and loss adjustment expenses and a reconciliation of the beginning and ending reserve for losses and loss adjustment expenses:
| Three Months Ended |  |
| March 31, |  |
| 2023 |  | 2022 |  |  |  |
Reserve for losses and loss adjustment expenses at beginning of period | $ | 20,032 |  |  | $ | 17,757 |  |  |  |  |
Unpaid losses and loss adjustment expenses recoverable | 6,280 |  |  | 5,599 |  |  |  |  |
Net reserve for losses and loss adjustment expenses at beginning of period | 13,752 |  |  | 12,158 |  |  |  |  |
Net incurred losses and loss adjustment expenses relating to losses occurring in: |  |  |  |  |  |  |
Current year | 1,607 |  |  | 1,142 |  |  |  |  |
Prior years | (136) |  |  | (141) |  |  |  |  |
Total net incurred losses and loss adjustment expenses | 1,471 |  |  | 1,001 |  |  |  |  |
Net foreign exchange (gains) losses and other | 55 |  |  | (33) |  |  |  |  |
Net paid losses and loss adjustment expenses relating to losses occurring in: |  |  |  |  |  |  |
Current year | (140) |  |  | (71) |  |  |  |  |
Prior years | (727) |  |  | (656) |  |  |  |  |
Total net paid losses and loss adjustment expenses | (867) |  |  | (727) |  |  |  |  |
Net reserve for losses and loss adjustment expenses at end of period | 14,411 |  |  | 12,399 |  |  |  |  |
Unpaid losses and loss adjustment expenses recoverable | 6,347 |  |  | 5,710 |  |  |  |  |
Reserve for losses and loss adjustment expenses at end of period | $ | 20,758 |  |  | $ | 18,109 |  |  |  |  |
Development on Prior Year Loss Reserves 2023 First Quarter During the 2023 first quarter, the Company recorded net favorable development on prior year loss reserves of $136 million, which consisted of $12 million from the insurance segment, $53 million from the reinsurance segment and $71 million from the mortgage segment. The insurance segment’s net favorable development of $12 million, or 0.9 loss ratio points, for the 2023 first quarter consisted of $25 million of net favorable development in short-tailed and long-tailed lines and $13 million of net adverse development in medium-tailed lines. Net favorable development in short-tailed lines reflected $9 million of favorable development in property (excluding marine), primarily from 2020 and 2022 accident years (i.e., the year in which a loss occurred), $8 million of favorable development related to travel and accident business, primarily from the 2020 to 2022 accident years, and $7 million of favorable development in warranty and lenders solutions, primarily from the 2022 accident year. Net favorable development in long-tailed lines of $1 million included favorable development in executive assurance business, partially offset by adverse development in casualty and healthcare. Net adverse development in medium-tailed lines included $18 million of adverse development in professional liability business, primarily from the 2017 to 2019 accident years, partially offset by favorable development in marine business of $7 million, primarily from the 2021 and 2022 accident years. The reinsurance segment’s net favorable development of $53 million, or 4.0 loss ratio points, for the 2023 first quarter consisted of $49 million of net favorable development in short-tailed lines and $3 million of net favorable development in medium-tailed and long-tailed lines. Net favorable development in short-tailed lines reflected $23 million of favorable development related to property other than property catastrophe business, across most underwriting years (i.e., all premiums and losses attributable to contracts having an inception or renewal date within the given twelve-month period), $18 million of favorable development related to other specialty and other short-tailed lines, primarily from the 2020 and 2021 underwriting years, and $8 million of favorable development related to property catastrophe business, primarily from the 2018, 2019 and 2022 underwriting years. Net favorable development in medium-tailed lines included $2 million in marine and aviation lines, while net favorable development in long-tailed lines included $3 million in casualty business. The mortgage segment’s net favorable development was $71 million, or 23.9 loss ratio points, for the 2023 first quarter. Such amounts were primarily related to reductions on reserves for loans becoming delinquent after the onset of the COVID-19 pandemic.The Company’s credit risk transfer and international businesses also contributed to the favorable development. 2022 First Quarter During the 2022 first quarter, the Company recorded net favorable development on prior year loss reserves of $141 million, which consisted of $7 million from the insurance segment, $32 million from the reinsurance segment and $102 million from the mortgage segment. The insurance segment’s net favorable development of $7 million, or 0.7 loss ratio points, for the 2022 first quarter consisted of $19 million of net favorable development in short-tailed lines and $12 million of net adverse development in medium-tailed and long-tailed lines. Net favorable development in short-tailed lines reflected $19 million of favorable development in warranty and lenders solutions, primarily from the 2021 accident year. Net adverse development in medium-tailed lines included $7 million of adverse development in professional liability business, primarily from the 2010 to 2013, 2015 and 2019 accident years, and $6 million of adverse development in contract binding business, across most accident years, partially offset by favorable development in program business of $5 million, primarily from the 2020 accident year. Net adverse development in long-tailed lines primarily reflected $6 million of unfavorable development related to casualty lines, primarily from 2019 to 2021 accident years. The reinsurance segment’s net favorable development of $32 million, or 4.0 loss ratio points, for the 2022 first quarter consisted $35 million of net favorable development in short-tailed and medium-tailed lines and $3 million of net adverse development in long-tailed lines. Net favorable development in short-tailed lines reflected $19 million of favorable development related to property catastrophe and property other than property catastrophe business, primarily from the 2018, 2019 and 2021 underwriting years. Net favorable development in medium-tailed lines included $11 million of favorable development in marine and aviation lines, across most underwriting years. Adverse development in long-tailed lines reflected an increase in casualty reserves, primarily from the 2021 underwriting year, which was partially offset by favorable development in earlier underwriting years. The mortgage segment’s net favorable development was $102 million, or 35.3 loss ratio points, for the 2022 first quarter, primarily reflecting the impact of lower new delinquencies and favorable cure activity related to the U.S. first lien portfolio primarily from the 2020 accident year. The Company’s credit risk transfer, international, second lien and student loan business also contributed to the favorable development.

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- 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 -Publisher FASB -URI https://asc.fasb.org//944-40/tableOfContent + Details
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