
	Nine Months Ended September 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	19,861		21,959
Estimated decrease in claims and claim adjustment expenses for claims arising in prior years	(1,148)		(648)
Total increases	18,713		21,311
Claims and claim adjustment expense payments for claims arising in:
Current year	6,254		7,597
Prior years	10,299		10,623
Total payments	16,553		18,220
Net reserves disposed of related to the divestiture of the Canadian business	(1,627)		—
Unrealized foreign exchange (gain) loss	(39)		204
Net reserves at end of period	60,340		59,714
Plus reinsurance recoverables on unpaid losses	7,787		7,987
Claims and claim adjustment expense reserves at end of period	$	68,127	$	67,701

Gross claims and claim adjustment expense reserves as of September 30, 2026 increased by $2.39 billion over December 31, 2025, primarily reflecting the impacts of (i) catastrophe losses in the first nine months of 2026 and (ii) loss cost trends for the current accident year, partially offset by (iii) claim payments made during the first nine months of 2026 and (iv) net favorable prior year reserve development.

For the nine months ended September 30, 2026 and 2025, estimated claims and claim adjustment expenses incurred included $1.15 billion and $648 million, respectively, of net favorable development for claims arising in prior years, including $1.23 billion and $715 million, respectively, of net favorable prior year reserve development, and $32 million of accretion of discount in each period.

Business Insurance. Net favorable prior year reserve development in the third quarter of 2026 totaled $41 million, primarily driven by better than expected loss experience in all major product lines, primarily for recent accident years, partially offset by an addition to asbestos reserves of $295 million. Net unfavorable prior year reserve development in the third quarter of 2025 totaled $125 million, primarily driven by an addition to asbestos reserves of $277 million, partially offset by better than expected loss experience in the workers’ compensation product line for multiple accident years.

Net favorable prior year reserve development in the first nine months of 2026 totaled $522 million, primarily driven by better than expected loss experience in all major product lines, primarily for recent accident years, partially offset by an addition to reserves related to run-off operations, including an addition to asbestos reserves of $295 million. Net favorable prior year reserve development in the first nine months of 2025 totaled $28 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, including an addition to asbestos reserves of $277 million.

Bond & Specialty Insurance. Net favorable prior year reserve development in the third quarter and first nine months of 2026 totaled $95 million and $235 million, respectively, 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 third quarter and first nine months of 2025 totaled $43 million and $191 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 third quarter of 2026 totaled $98 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 third quarter of 2025 totaled $104 million, primarily driven by better than expected loss experience in the automobile product line for recent accident years. Net favorable prior year reserve development in the first nine months of 2026 and 2025 totaled $468 million and $496 million, respectively, primarily driven by better than expected loss experience in both the automobile and homeowners and other product lines for recent accident years.