
	Three Months Ended March 31,
(in millions)	2026		2025
Claims and claim adjustment expense reserves at beginning of year	$	67,643	$	64,088
Less reinsurance recoverables on unpaid losses	7,797		7,669

Net reserves at beginning of year	59,846		56,419
Estimated claims and claim adjustment expenses for claims arising in the current year	6,739		8,338
Estimated decrease in claims and claim adjustment expenses for claims arising in prior years	(385)		(360)
Total increases	6,354		7,978
Claims and claim adjustment expense payments for claims arising in:
Current year	1,174		1,856
Prior years	4,146		4,415
Total payments	5,320		6,271
Net reserves disposed of related to the divestiture of the Canadian business	(1,627)		—
Unrealized foreign exchange (gain) loss	(32)		59
Net reserves at end of period	59,221		58,185
Plus reinsurance recoverables on unpaid losses	7,687		7,787
Claims and claim adjustment expense reserves at end of period	$	66,908	$	65,972

Gross claims and claim adjustment expense reserves as of March 31, 2026 increased by $1.18 billion over December 31, 2025, primarily reflecting the impacts of (i) catastrophe losses in the first three months of 2026 and (ii) loss cost trends for the current accident year, partially offset by (iii) claim payments made during the first three months of 2026 and (iv) net favorable prior year reserve development.

For the three months ended March 31, 2026 and 2025, estimated claims and claim adjustment expenses incurred included $385 million and $360 million, respectively, of net favorable development for claims arising in prior years, including $413 million and $378 million, respectively, of net favorable prior year reserve development, and $11 million of accretion of discount in each period.

Business Insurance. Net favorable prior year reserve development in the first quarter of 2026 totaled $162 million, primarily driven by better than expected loss experience in the commercial property and workers’ compensation product lines for multiple accident years. Net favorable prior year reserve development in the first quarter of 2025 totaled $74 million, primarily driven by better than expected loss experience in the workers’ compensation product line for multiple accident years.

Bond & Specialty Insurance. Net favorable prior year reserve development in the first quarter of 2026 totaled $65 million, primarily driven by better than expected loss experience in the fidelity and surety product line for multiple accident years. Net favorable prior year reserve development in the first quarter of 2025 totaled $67 million, primarily driven by better than expected loss experience in the general liability product line for management liability coverages for multiple accident years and in the fidelity and surety product line for recent accident years.

Personal Insurance. Net favorable prior year reserve development in the first quarter of 2026 totaled $186 million, primarily driven by better than expected loss experience in both the automobile and homeowners and other product lines for recent accident years. Net favorable prior year reserve development in the first quarter of 2025 totaled $237 million, primarily driven by better than expected loss experience in both the automobile and homeowners and other product lines for recent accident years.