INSURANCE LIABILITIES (Tables)

3 Months Ended

Mar. 31, 2017

LIABILITY FOR UNPAID CLAIMS AND CLAIMS ADJUSTMENT EXPENSE, FUTURE POLICY BENEFITS FOR LIFE AND ACCIDENT AND HEALTH INSURANCE CONTRACTS, AND POLICYHOLDER CONTRACT DEPOSITS

Schedule of reconciliation of activity in the liability for unpaid claims and claims adjustment expense

The following table presents the roll forward of activity in Loss Reserves:

Three Months Ended March 31,
(in millions)		2017		2016
Liability for unpaid loss and loss adjustment expenses, beginning of year	$	77,077	$	74,942
Reinsurance recoverable		(15,532)		(14,339)
Net Liability for unpaid loss and loss adjustment expenses, beginning of year		61,545		60,603
Foreign exchange effect		(105)		(160)
Dispositions(a)		-		-
Retroactive reinsurance adjustment (net of discount)(b)		(11,199)		-
Total		50,241		60,443
Losses and loss adjustment expenses incurred:
Current year		4,300		4,912
Prior years, excluding discount		25		(66)
Prior years, discount charge (benefit)		(25)		(9)
Total losses and loss adjustment expenses incurred		4,300		4,837
Losses and loss adjustment expenses paid:
Current year		(571)		(580)
Prior years		(4,753)		(4,966)
Total losses and loss adjustment expenses paid		(5,324)		(5,546)
Reclassified to liabilities held for sale(c)		(87)		-
Liability for unpaid loss and loss adjustment expenses, end of period:
Net liability for unpaid losses and loss adjustment expenses		49,130		59,734
Reinsurance recoverable		26,920		14,212
Total	$	76,050	$	73,946

(a) Includes amounts related to dispositions through the date of disposition. Includes sale of UGC and Ascot.

(b)Includes discount on retroactive reinsurance in the amount of $1.7 billion.

(c)Represents change in loss reserves included in our pending sale of certain of our insurance operations to Fairfax for the three months ended March 31, 2017. Upon consummation of the sale, we may retain a portion of these reserves through reinsurance arrangements.

Schedule of loss reserve discount and loss reserve discount benefit (charge)

The following table presents the components of the loss reserve discount discussed above:

	March 31, 2017						December 31, 2016
			Legacy Portfolio						Legacy Portfolio
	U.S. Liability		- Property and				U.S. Liability		- Property and
	and		Casualty run-off				and		Casualty run-off
(in millions)	Financial Lines		Insurance Lines			Total	Financial Lines		Insurance Lines			Total
U.S. workers' compensation	$	2,606	$	989	$	3,595	$	2,583	$	987	$	3,570
Retroactive reinsurance		(1,655)		-		(1,655)		-		-		-
Total reserve discount	$	951	$	989	$	1,940	$	2,583	$	987	$	3,570

The following table presents the net loss reserve discount benefit (charge):

Three Months Ended March 31,	2017						2016
			Legacy Portfolio						Legacy Portfolio
	U.S. Liability		- Property and				U.S. Liability		- Property and
	and		Casualty run-off				and		Casualty run-off
(in millions)	Financial Lines		Insurance Lines			Total	Financial Lines		Insurance Lines			Total
Current accident year	$	32	$	-	$	32	$	48	$	-	$	48
Accretion and other adjustments
to prior year discount		(48)		(16)		(64)		(14)		(14)		(28)
Effect of interest rate changes		39		18		57		(8)		(3)		(11)
Net reserve discount
benefit (charge)		23		2		25		26		(17)		9
Change in discount on loss reserves
ceded under retroactive reinsurance		(1,655)		-		(1,655)		-		-		-
Net change in total reserve
discount	$	(1,632)	$	2	$	(1,630)	$	26	$	(17)	$	9
Comprised of:
U.S. Workers' compensation	$	(1,632)	$	2	$	(1,630)	$	26	$	(16)	$	10
Asbestos	$	-	$	-	$	-	$	-	$	(1)	$	(1)