
	Six Months Ended June 30,
(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	13,192		15,392
Estimated decrease in claims and claim adjustment expenses for claims arising in prior years	(939)		(650)
Total increases	12,253		14,742
Claims and claim adjustment expense payments for claims arising in:
Current year	3,501		4,504
Prior years	7,487		7,763
Total payments	10,988		12,267
Net reserves disposed of related to the divestiture of the Canadian business	(1,627)		—
Unrealized foreign exchange (gain) loss	(37)		272
Net reserves at end of period	59,447		59,166
Plus reinsurance recoverables on unpaid losses	7,775		7,771
Claims and claim adjustment expense reserves at end of period	$	67,222	$	66,937

Gross claims and claim adjustment expense reserves as of June 30, 2026 increased by $1.49 billion over December 31, 2025, primarily reflecting the impacts of (i) catastrophe losses in the first six months of 2026 and (ii) loss cost trends for the current accident year, partially offset by (iii) claim payments made during the first six months of 2026 and (iv) net favorable prior year reserve development.

For the six months ended June 30, 2026 and 2025, estimated claims and claim adjustment expenses incurred included $939 million and $650 million, respectively, of net favorable development for claims arising in prior years, including $991 million and $693 million, respectively, of net favorable prior year reserve development, and $21 million and $22 million, respectively, of accretion of discount.

Business Insurance. Net favorable prior year reserve development in the second quarter of 2026 totaled $319 million, primarily driven by better than expected loss experience in the workers’ compensation product line for multiple accident years and in the commercial property product line for recent accident years. Net favorable prior year reserve development in the second quarter of 2025 totaled $79 million, primarily driven by better than expected loss experience in the workers’ compensation product line for multiple accident years, partially offset by an addition to reserves related to run-off operations.

Net favorable prior year reserve development in the first six months of 2026 totaled $481 million, primarily driven by better than expected loss experience in the workers’ compensation and commercial property product lines for multiple accident years. Net favorable prior year reserve development in the first six months of 2025 totaled $153 million, primarily driven by better than expected loss experience in the workers’ compensation product line for multiple accident years, partially offset by an addition to reserves related to run-off operations.

Bond & Specialty Insurance. Net favorable prior year reserve development in the second quarter of 2026 totaled $75 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. Net favorable prior year reserve development in the first six months of 2026 totaled $140 million, primarily driven by better than expected loss experience in the fidelity and surety product line for recent accident years and in the general liability product line for management liability coverages for multiple accident years. Net favorable prior year reserve development in the second quarter and first six months of 2025 totaled $81 million and $148 million, respectively, primarily driven by better than expected loss experience in the fidelity and surety product line for recent accident years.

Personal Insurance. Net favorable prior year reserve development in the second quarter of 2026 totaled $184 million, primarily driven by better than expected loss experience in both the homeowners and other and automobile product lines for recent accident years. Net favorable prior year reserve development in the first six months of 2026 totaled $370 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 second quarter and first six months of 2025 totaled $155 million and $392 million, respectively, primarily driven by better than expected loss experience in both the automobile and homeowners and other product lines for recent accident years.