Reserve for Future Policy Benefits

Property & Casualty Insurance Product Reserves, Net of Reinsurance

Rollforward of Liabilities for Unpaid Losses and Loss Adjustment Expenses


	For the nine months ended September 30,
	2026		2025
Beginning liabilities for unpaid losses and loss adjustment expenses, gross	$	38,155	$	36,404
Reinsurance and other recoverables	6,723		6,753
Beginning liabilities for unpaid losses and loss adjustment expenses, net	31,432		29,651
Provision for unpaid losses and loss adjustment expenses
Current accident year	8,717		8,401
Prior accident year development [1]	(746)		(412)
Total provision for unpaid losses and loss adjustment expenses	7,971		7,989
Effect of the Commutation Agreement [2]	1,298		—
Change in deferred gain on retroactive reinsurance included in other liabilities [1]	533		64
Payments
Current accident year	(1,973)		(2,038)
Prior accident years	(4,993)		(4,586)
Total payments	(6,966)		(6,624)
Foreign currency adjustment	(6)		32
Ending liabilities for unpaid losses and loss adjustment expenses, net	34,262		31,112
Reinsurance and other recoverables	5,187		6,627
Ending liabilities for unpaid losses and loss adjustment expenses, gross	$	39,449	$	37,739

[1]Prior accident year development for the nine months ended September 30, 2026 included a $533 benefit related to a change in deferred gain under retroactive reinsurance accounting for the A&E ADC, including $36 related to amortization of the deferred gain and a $497 benefit reflecting the impact of the Commutation Agreement in the third quarter of 2026. Prior accident year development for the nine months ended September 30, 2025 included a $64 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 Note 8 - Reinsurance and "Change in Deferred Gain on Retroactive Reinsurance" discussion below.

[2]Represents net unpaid losses and loss adjustment expenses reserves reassumed, resulting from the Commutation Agreement associated with the A&E ADC. For additional information regarding the Commutation Agreement, refer to Note 8 - Reinsurance.

Unfavorable (Favorable) Prior Accident Year Development


	For the nine months ended September 30,
		2026		2025
Workers’ compensation		$	(167)	$	(188)
Workers’ compensation discount accretion		34		34
General liability		116		—
Marine		1		—

Commercial property		(25)		(28)
Professional liability		(9)		(11)
Bond		(32)		(22)
Assumed reinsurance		5		—
Commercial automobile liability		26		—
Personal automobile liability		(59)		(55)
Homeowners		(36)		(36)




Catastrophes		(50)		(39)
Uncollectible reinsurance		—		6
Other reserve re-estimates, net		(17)		(9)
Prior accident year development before change in deferred gain		(213)		(348)
Change in deferred gain on retroactive reinsurance included in other liabilities [1]		(533)		(64)
Total prior accident year development		$	(746)	$	(412)

[1]The change in deferred gain on retroactive reinsurance for the nine months ended September 30, 2026 includes $36 related to amortization of the A&E ADC deferred gain and $497 reflecting a net gain from the Commutation Agreement associated with the A&E ADC. The change in deferred gain on retroactive reinsurance for the nine months ended September 30, 2025 is comprised of a $64 benefit for amortization of the Navigators ADC deferred gain. For additional information regarding the ADC reinsurance agreements, refer to Note 8 - Reinsurance and "Change in Deferred Gain on Retroactive Reinsurance" discussion below.

Re-estimates of prior accident year reserves for the nine months ended September 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 during the three months ended June 30, 2026 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 nine months ended September 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 had two ADC reinsurance agreements with 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 previously ceded all available limits under the agreements. On September 23, 2026, the Company entered into the Commutation Agreement with NICO, resulting in the commutation and termination of the A&E ADC agreement.

As of December 31, 2025, the Company had paid A&E ADC claims in excess of the attachment point and had an $850 deferred gain included in other liabilities on the Condensed Consolidated Balance Sheets. During the first quarter of 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 in the Condensed Consolidated Statements of Operations. NICO subsequently suspended further payment under the A&E ADC due to a dispute that was the subject of an arbitration proceeding, which has now been resolved pursuant to the Commutation Agreement. As a result of the Commutation Agreement, during the third quarter of 2026, the Company reduced the related $1.437 billion reinsurance recoverable by $317 to the commutation amount of $1.120 billion, with a corresponding reduction in the deferred gain, and also recognized a $497 net gain within benefits, losses and loss adjustment expenses, reflecting the release of the remaining deferred gain. As such, the deferred gain on the A&E ADC was $0 as of September 30, 2026.

During the three and nine months ended September 30, 2025, the Company collected recoveries from NICO under the Navigators ADC and, as a result, amortized $8 and $64 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 nine months ended September 30,
	2026		2025
Beginning liabilities for unpaid losses and loss adjustment expenses, gross	$	8,113	$	8,206
Reinsurance recoverables	282		282
Beginning liabilities for unpaid losses and loss adjustment expenses, net	7,831		7,924

Provision for unpaid losses and loss adjustment expenses
Current incurral year	4,096		3,949
Prior year's discount accretion	162		153
Prior incurral year development [1]	(339)		(486)
Total provision for unpaid losses and loss adjustment expenses [2]	3,919		3,616
Payments
Current incurral year	(1,996)		(1,899)
Prior incurral years	(1,795)		(1,841)
Total payments	(3,791)		(3,740)
Ending liabilities for unpaid losses and loss adjustment expenses, net	7,959		7,800
Reinsurance recoverables	306		281
Ending liabilities for unpaid losses and loss adjustment expenses, gross	$	8,265	$	8,081

[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 $138 and $129 for the nine months ended September 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 nine months ended September 30, 2026

Group disability - Prior period reserve estimates decreased by approximately $292 driven by favorable long-term disability claim recoveries compared to prior assumptions, 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 $49 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 nine months ended September 30, 2025

Group disability- Prior period reserve estimates decreased by approximately $403 driven by favorable long-term disability claim recoveries, paid family and 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 $81 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 nine months ended September 30,
	2026						2025
	Payout Annuities		Life Conversions		Paid-up Life		Payout Annuities		Life Conversions		Paid-up Life
Present Value of Expected Net Premiums
Balance, beginning of the period			$	43					$	45
Balance, ending of the period			$	39					$	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 rate	3		(15)		(24)		—		(15)		(33)
Beginning balance at original discount rate	120		119		189		128		121		201
Effect of changes in cash flow assumptions	—		—		—		—		—		1
Effect of actual variances from expected experience	2		1		—		(1)		3		1
Adjusted beginning balance	122		120		189		127		124		203
Issuances	—		11		11		—		—		—
Interest accrual and other	4		9		6		4		15		4
Benefit Payments	(9)		(27)		(15)		(9)		(21)		(16)
Ending balance at original discount rate	117		113		191		122		118		191
Ending adjustment for changes in single-A rate	(7)		(19)		(32)		4		(13)		(24)
Ending balance at single-A rate	$	110	$	94	$	159	$	126	$	105	$	167

Net reserve for future policy benefits	$	110	$	55	$	159	$	126	$	62	$	167
Weighted-average duration of the reserve for future policy benefits (years)	8.8		9.5		5.4		9.4		11.0		6.2


Net Reserve for Future Policy Benefits
	As of September 30,
	2026		2025
Payout Annuities	$	110	$	126
Life Conversions	55		62
Paid-up Life	159		167
Deferred Profit Liability	16		16
Other	81		85
Total	$	421	$	456


Undiscounted Expected Future Gross Premiums and Benefit Payments
	As of September 30,
	2026		2025
Payout Annuities [1]
Expected future benefit payments	$	230	$	240
Life Conversions
Expected future gross premiums	$	94	$	100
Expected future benefit payments	$	179	$	189
Paid-up Life [1]
Expected future benefit payments	$	241	$	244

[1]Payout Annuities and Paid-up Life have no expected future gross premiums.


Weighted-Average Interest Rates
	As of September 30,
	2026		2025
Payout Annuities
Interest accretion rate	5.6	%	5.6	%
Current discount rate	6.3	%	5.2	%
Life Conversions
Interest accretion rate	4.3	%	4.3	%
Current discount rate	6.3	%	5.4	%
Paid-up Life
Interest accretion rate	3.0	%	2.9	%
Current discount rate	5.9	%	4.8	%

The Company completed a review of cash flow assumptions in the third quarter 2026 and 2025, resulting in immaterial changes to the reserve for future policy benefits. For paid-up life, the net effect of updating cash flow assumptions was offset by a corresponding impact to the deferred profit liability.

Gross premiums and interest accretion recognized on long-duration insurance policies for the nine months ended September 30, 2026 and 2025 were immaterial.