INSURANCE LIABILITIES (Tables)

6 Months Ended

Jun. 30, 2018

Claims Development [Line Items]

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				Six Months Ended
	June 30,				June 30,
(in millions)		2018		2017		2018		2017
Liability for unpaid loss and loss adjustment expenses, beginning of period	$	78,098	$	76,050	$	78,393	$	77,077
Reinsurance recoverable		(27,211)		(26,920)		(26,708)		(15,532)
Net Liability for unpaid loss and loss adjustment expenses, beginning of period		50,887		49,130		51,685		61,545
Losses and loss adjustment expenses incurred:
Current year		4,452		4,209		9,130		8,510
Prior years, excluding discount and amortization of deferred gain		(26)		391		(65)		453
Prior years, discount charge (benefit)		9		260		(177)		235
Prior years, amortization of deferred gain on retroactive reinsurance(a)		(69)		(82)		(108)		(120)
Total losses and loss adjustment expenses incurred		4,366		4,778		8,780		9,078
Losses and loss adjustment expenses paid:
Current year		(910)		(1,137)		(1,520)		(1,708)
Prior years		(4,635)		(4,252)		(9,414)		(9,043)
Total losses and loss adjustment expenses paid		(5,545)		(5,389)		(10,934)		(10,751)
Other changes:
Foreign exchange effect		(431)		463		(157)		358
Retroactive reinsurance adjustment (net of discount)(b)		30		(299)		(67)		(11,460)
Reclassified to liabilities held for sale(c)		-		79		-		(8)
Total other changes		(401)		243		(224)		(11,110)
Liability for unpaid loss and loss adjustment expenses, end of period:
Net liability for unpaid losses and loss adjustment expenses		49,307		48,762		49,307		48,762
Reinsurance recoverable		27,406		27,660		27,406		27,660
Total	$	76,713	$	76,422	$	76,713	$	76,422

(a) Includes $8 million and $10 million for the retroactive reinsurance agreement with NICO covering U.S. asbestos exposures for the three-month periods ended June 30, 2018 and 2017, respectively, and $13 million for bothsix-month periods ended June 30, 2018 and 2017.

(b) Includes discount on retroactive reinsurance of $(20) million and $(108) million for the three-month periods ended June 30, 2018 and 2017, respectively, and $108 million and $1.5 billion for the six-month periods ended June 30, 2018 and 2017, respectively.

(c)Represents change in loss reserves included in our sale of certain of our insurance operations to Fairfax Financial Holdings Limited (Fairfax) for the three- and six-month periods ended June 30, 2017. Upon consummation of the sale, we retained 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:

	June 30, 2018						December 31, 2017
	North						North
	America						America
	Commercial			Legacy			Commercial			Legacy
(in millions)	Insurance			Portfolio		Total	Insurance			Portfolio		Total
U.S. workers' compensation	$	2,638	$	964	$	3,602	$	2,465	$	918	$	3,383
Retroactive reinsurance		(1,647)		-		(1,647)		(1,539)		-		(1,539)
Total reserve discount*	$	991	$	964	$	1,955	$	926	$	918	$	1,844

* Excludes $170 million and $173 million of discount related to certain long tail liabilities in the United Kingdom at June 30, 2018 and December 31, 2017, respectively.

The following tables present the net loss reserve discount benefit (charge):

Three Months Ended June 30,	2018						2017
	North						North
	America						America
	Commercial			Legacy			Commercial			Legacy
(in millions)	Insurance			Portfolio		Total	Insurance			Portfolio		Total
Current accident year	$	23	$	-	$	23	$	29	$	-	$	29
Accretion and other adjustments
to prior year discount		(133)		(12)		(145)		(57)		(43)		(100)
Effect of interest rate changes		96		40		136		(128)		(61)		(189)
Net reserve discount
benefit (charge)		(14)		28		14		(156)		(104)		(260)
Change in discount on loss reserves
ceded under retroactive reinsurance		20		-		20		108		-		108
Net change in total reserve
discount(a)	$	6	$	28	$	34	$	(48)	$	(104)	$	(152)
Six Months Ended June 30,	2018						2017
	North						North
	America						America
	Commercial			Legacy			Commercial			Legacy
(in millions)	Insurance			Portfolio		Total	Insurance			Portfolio		Total
Current accident year	$	42	$	-	$	42	$	61	$	-	$	61
Accretion and other adjustments
to prior year discount		(88)		(30)		(118)		(105)		(59)		(164)
Effect of interest rate changes		219		76		295		(89)		(43)		(132)
Net reserve discount
benefit (charge)		173		46		219		(133)		(102)		(235)
Change in discount on loss reserves
ceded under retroactive reinsurance		(108)		-		(108)		(1,547)		-		(1,547)
Net change in total reserve
discount(b)	$	65	$	46	$	111	$	(1,680)	$	(102)	$	(1,782)

• Excludes $7 million and $4 million of discount related to certain long tail liabilities in the United Kingdom for the three-month periods ended June 30, 2018 and 2017, respectively.
• Excludes $3 million and $(4) million of discount related to certain long tail liabilities in the United Kingdom for the six-month periods ended June 30, 2018 and 2017, respectively.