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Claim and Claim Adjustment Expense Reserves (Tables)

9 Months Ended

Sep. 30, 2017

Insurance [Abstract]

Reconciliation of Claim and Claim Adjustment Expense Reserves

The following table presents a reconciliation between beginning and ending claim and claim adjustment expense reserves, including claim and claim adjustment expense reserves of non-core operations.

Nine Months Ended September 30		2017				2016
(In millions)
Reserves, beginning of year:
Gross		$	22,343			$	22,663
Ceded			4,094				4,087
Net reserves, beginning of year			18,249				18,576
Net incurred claim and claim adjustment expenses:
Provision for insured events of current year			3,949				3,799
Decrease in provision for insured events of prior years			(284	)			(332	)
Amortization of discount			138				134
Total net incurred (a)			3,803				3,601
Net payments attributable to:
Current year events			(560	)			(591	)
Prior year events			(3,401	)			(3,209	)
Total net payments			(3,961	)			(3,800	)
Foreign currency translation adjustment and other			110				39
Net reserves, end of period			18,201				18,416
Ceded reserves, end of period			4,008				4,256
Gross reserves, end of period		$	22,209			$	22,672

(a) Total net incurred above does not agree to Insurance claims and policyholders’ benefits as reflected in the Consolidated Condensed Statements of Income due to amounts related to retroactive reinsurance deferred gain accounting, uncollectible reinsurance and loss deductible receivables and benefit expenses related to future policy benefits, which are not reflected in the table above.

Net Prior Year Development

The following table and discussion present net prior year development:

		Three Months Ended September 30,								Nine Months Ended September 30,
		2017				2016				2017				2016
(In millions)
Pretax (favorable) unfavorable net prior year claim and allocated claim adjustment expense reserve development		$	(115	)		$	(132	)		$	(227	)		$	(282	)
Pretax (favorable) unfavorable premium development			(19	)			(5	)			(2	)			(27	)
Total pretax (favorable) unfavorable net prior year development		$	(134	)		$	(137	)		$	(229	)		$	(309	)

Details of the Net Prior Year Claim and Allocated Claim Adjustment Expense Reserve Development ("development")

The following table and discussion present details of the net prior year claim and allocated claim adjustment expense reserve development (“development”):

		Three Months Ended September 30,								Nine Months Ended September 30,
		2017				2016				2017				2016
(In millions)
Medical professional liability		$	1			$	13			$	5			$	(17	)
Other professional liability and management liability			(27	)			(48	)			(96	)			(98	)
Surety			(82	)			(63	)			(82	)			(63	)
Commercial auto			(14	)			(12	)			(40	)			(47	)
General liability			7				14				6				(38	)
Workers’ compensation			7				(6	)			(39	)			48
Other			(7	)			(30	)			19				(67	)
Total pretax (favorable) unfavorable development		$	(115	)		$	(132	)		$	(227	)		$	(282	)

Schedule of Impact of Loss Portfolio Transfer on the Consolidated Statement of Operations

The following table presents the impact of the loss portfolio transfer on the Consolidated Condensed Statements of Income.

		Three Months Ended September 30,								Nine Months Ended September 30,
		2017				2016				2017				2016
(In millions)
Net A&EP adverse development before consideration of LPT		$	-			$	-			$	60			$	200
Retroactive reinsurance benefit recognized			(17	)			(12	)			(60	)			(94	)
Pretax impact of A&EP reserve development and the LPT		$	(17	)		$	(12	)		$	-			$	106

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Tabular disclosure of the activity in the reserve for settling insured claims and expenses incurred in the claims settlement process for the period. The estimated liability includes the amount of money that will be required for future payments of (a) claims that have been reported to the insurer, (b) claims related to insured events that have occurred but that have not been reported to the insurer as of the date the liability is estimated, and (c) claim adjustment expenses. Claim adjustment expenses include costs incurred in the claim settlement process such as legal fees; outside adjuster fees; and costs to record, process, and adjust claims.

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Reference 1: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 944
-SubTopic 40
-Section 50
-Paragraph 3
-URI http://asc.fasb.org/extlink&oid=65670824&loc=d3e14764-158437

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