v3.26.1
Reserve for Unpaid Losses and Loss Adjustment Expenses
 6 Months Ended
Jun. 30, 2026
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,
 20262025
Beginning liabilities for unpaid losses and loss adjustment expenses, gross$38,155 $36,404 
Reinsurance and other recoverables6,723 6,753 
Beginning liabilities for unpaid losses and loss adjustment expenses, net31,432 29,651 
Provision for unpaid losses and loss adjustment expenses  
Current accident year5,699 5,670 
Prior accident year development [1](152)(309)
Total provision for unpaid losses and loss adjustment expenses5,547 5,361 
Change in deferred gain on retroactive reinsurance included in other liabilities [1]36 56 
Payments  
Current accident year(1,065)(1,175)
Prior accident years(3,486)(3,205)
Total payments(4,551)(4,380)
Foreign currency adjustment(6)39 
Ending liabilities for unpaid losses and loss adjustment expenses, net32,458 30,727 
Reinsurance and other recoverables6,523 6,631 
Ending liabilities for unpaid losses and loss adjustment expenses, gross$38,981 $37,358 
[1] Prior accident year development for the six months ended June 30, 2026 included a $36 benefit for amortization of a deferred gain under retroactive reinsurance accounting related to the asbestos and environmental adverse development cover ("A&E ADC"). Prior accident year development for the six months ended June 30, 2025 included a $56 benefit for amortization of a deferred gain under retroactive reinsurance accounting related to the Navigators Adverse Development Cover (the "Navigators' ADC"). The Navigators' ADC deferred gain has been fully amortized as of September 30, 2025. For additional information regarding the adverse development cover ("ADC") reinsurance agreements, refer to "Change in Deferred Gain on Retroactive Reinsurance" discussion below.
Unfavorable (Favorable) Prior Accident Year Development
For the six months ended June 30,
20262025
Workers’ compensation$(110)$(126)
Workers’ compensation discount accretion23 23 
General liability116 — 
Marine4 — 
Commercial property(15)(23)
Professional liability(4)(11)
Bond(32)(22)
Assumed reinsurance5 — 
Commercial automobile liability26 — 
Personal automobile liability(39)(22)
Homeowners(29)(31)
Catastrophes(50)(39)
Other reserve re-estimates, net (11)(2)
Prior accident year development before change in deferred gain(116)(253)
Change in deferred gain on retroactive reinsurance included in other liabilities [1](36)(56)
Total prior accident year development$(152)$(309)
[1]The change in deferred gain on retroactive reinsurance for the six months ended June 30, 2026 is comprised of a $36 benefit for amortization of the A&E ADC deferred gain. The change in deferred gain on retroactive reinsurance for the six months ended June 30, 2025 is comprised of a $56 benefit for amortization of the Navigators ADC deferred gain. For additional information regarding the ADC reinsurance agreements, 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, 2026
Workers’ compensation reserves were decreased within accident years 2017 to 2021, driven by lower than previously estimated claim severity in small business.
General liability reserves were increased for the three months ended March 31, 2026 to reflect legacy sexual molestation and sexual abuse exposures related to polices written in the 1970s and 1980s, which includes a provision for a settlement in principle in one bankruptcy proceeding involving a religious institution. In addition, reserves were increased for the three months ended June 30, 2026, primarily to reflect a higher frequency of large losses in excess casualty and umbrella lines across multiple accident years.
Commercial property reserves were decreased within accident years 2021 to 2025 as a result of lower than expected severity.
Bond reserves were decreased primarily due to favorable development on commercial and contract surety and fidelity bonds driven by accident years 2022 and prior.
Commercial automobile liability reserves were increased primarily due to adverse loss development within accident years 2023 and 2024, driven by higher severity than previously estimated.
Personal automobile liability reserves were decreased primarily within accident years 2021 to 2024 as a result of lower than expected severity and lower estimated allocated loss adjustment expenses.
Homeowners reserves were decreased primarily due to favorable severity impacting accident years 2023 to 2025.
Catastrophe reserves were decreased across Business Insurance and Personal Insurance, primarily within accident years 2021 to 2024, driven by lower than expected development on hail and hurricane claims.
Other reserve re-estimates, net, were decreased due to lower than expected severity on Personal Insurance automobile physical damage for accident year 2025, 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, 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.
Change in Deferred Gain on Retroactive Reinsurance
The Company has two ADC reinsurance agreements with National Indemnity Company ("NICO"), a subsidiary of Berkshire Hathaway Inc., both accounted for as retroactive reinsurance. One agreement covered substantially all asbestos and environmental ("A&E") reserve development for accident years prior to 2016 up to an aggregate limit of $1.5 billion and the other covered substantially all reserve development of Navigators Insurance Company and certain of its affiliates for 2018 and prior accident years up to an aggregate limit of $300. The Company had previously ceded all available limits under the agreements. As such, no remaining limit was available under the A&E ADC as of December 31, 2025, and no remaining limit was available under the Navigators' ADC as of December 31, 2023.
During the three months ended March 31, 2026, the Company collected recoveries from NICO under the A&E ADC and, as a result, amortized $36 of the deferred gain within benefits, losses and loss adjustment expenses. Subsequently during the first quarter of 2026, NICO suspended any further payment under the A&E ADC due to a dispute that is the subject of an arbitration proceeding. The timing of any resolution or outcome of the arbitration is not yet known and there may be impacts to the Company's cash flows or operating results as a result of the dispute. The deferred gain on the A&E ADC was $814 and $850, as of June 30, 2026 and December 31, 2025, respectively, and is included in other liabilities on the Condensed Consolidated Balance Sheets.
During the three and six months ended June 30, 2025, the Company collected recoveries from NICO under the Navigators ADC and, as a result, amortized $24 and $56 of the deferred gain within benefits, losses and loss adjustment expenses. As of September 30, 2025, the deferred gain on the Navigators ADC had been fully amortized and the limit fully collected.
Rollforward of Liabilities for Unpaid Losses and Loss Adjustment Expenses
For the six months ended June 30,
20262025
Beginning liabilities for unpaid losses and loss adjustment expenses, gross$8,113 $8,206 
Reinsurance recoverables282 282 
Beginning liabilities for unpaid losses and loss adjustment expenses, net7,831 7,924 
Provision for unpaid losses and loss adjustment expenses
Current incurral year2,762 2,692 
Prior year's discount accretion112 105 
Prior incurral year development [1](278)(377)
Total provision for unpaid losses and loss adjustment expenses [2]2,596 2,420 
Payments
Current incurral year(1,138)(1,076)
Prior incurral years(1,419)(1,430)
Total payments(2,557)(2,506)
Ending liabilities for unpaid losses and loss adjustment expenses, net7,870 7,838 
Reinsurance recoverables295 286 
Ending liabilities for unpaid losses and loss adjustment expenses, gross$8,165 $8,124 
[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 $93 and $88 for the six months ended June 30, 2026 and 2025, 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, 2026
Group disability - Prior period reserve estimates decreased by approximately $227 driven by favorable long-term disability claim recoveries and 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 $55 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, 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.
10. Reserve for Future Policy Benefits
Rollforward of Reserve for Future Policy Benefits
For the six months ended June 30,
20262025
Payout AnnuitiesLife ConversionsPaid-up LifePayout AnnuitiesLife ConversionsPaid-up Life
Present Value of Expected Net Premiums
Balance, beginning of the period$43 $45 
Balance, ending of the period $41 $43 
Present Value of Expected Future Policy Benefits
Beginning balance at single-A rate$123 $104 $165 $128 $106 $168 
Beginning adjustment for changes in single-A rate3 (15)(24)— (15)(33)
Beginning balance at original discount rate120 119 189 128 121 201 
Effect of changes in cash flow assumptions— — — — — — 
Effect of actual variances from expected experience2 1 (1)(2)3 (1)
Adjusted beginning balance122 120 188 126 124 200 
Issuances— 4 12 — — — 
Interest accrual and other2 8 3 3 11 3 
Benefit Payments(6)(19)(10)(6)(16)(12)
Ending balance at original discount rate118 113 193 123 119 191 
Ending adjustment for changes in single-A rate1 (13)(25)1 (15)(28)
Ending balance at single-A rate$119 $100 $168 $124 $104 $163 
Net reserve for future policy benefits$119 $59 $168 $124 $61 $163 
Weighted-average duration of the reserve for future policy benefits (years)9.310.45.89.311.06.5
 Net Reserve for Future Policy Benefits
As of June 30,
20262025
Payout Annuities$119 $124 
Life Conversions59 61 
Paid-up Life168 163 
Deferred Profit Liability16 19 
Other85 76 
Total$447 $443 
Undiscounted Expected Future Gross Premiums and Benefit Payments
As of June 30,
20262025
Payout Annuities [1]
Expected future benefit payments$232 $242 
Life Conversions
Expected future gross premiums$96 $102 
Expected future benefit payments$180 $192 
Paid-up Life [1]
Expected future benefit payments$246 $249 
[1]Payout Annuities and Paid-up Life have no expected future gross premiums.
Weighted-Average Interest Rates
As of June 30,
20262025
Payout Annuities
Interest accretion rate5.6 %5.6 %
Current discount rate5.5 %5.4 %
Life Conversions
Interest accretion rate4.3 %4.3 %
Current discount rate5.6 %5.6 %
Paid-up Life
Interest accretion rate3.0 %2.9 %
Current discount rate5.1 %5.0 %
Gross premiums and interest accretion recognized on long-duration insurance policies for the six months ended June 30, 2026 and 2025 were immaterial.