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Insurance Liabilities
 6 Months Ended
Jun. 30, 2025
Insurance [Abstract]  
Insurance Liabilities
12. Insurance Liabilities
LIABILITY FOR UNPAID LOSSES AND LOSS ADJUSTMENT EXPENSES (LOSS RESERVES)
Loss reserves represent the accumulation of estimates of unpaid claims, including estimates for claims incurred but not reported and loss adjustment expenses, less applicable discount. We regularly review and update the methods used to determine loss reserve estimates. Any adjustments resulting from this review are reflected currently in pre-tax income, except to the extent such adjustment impacts a deferred gain under a retroactive reinsurance agreement, in which case the ceded portion would be amortized into pre-tax income in subsequent periods. Because these estimates are subject to the outcome of future events, changes in estimates are common given that loss trends vary and time is often required for changes in trends to be recognized and confirmed. Reserve changes that increase previous estimates of ultimate cost are referred to as unfavorable or adverse development or reserve strengthening. Reserve changes that decrease previous estimates of ultimate cost are referred to as favorable development or reserve releases.
Our gross loss reserves before reinsurance and discount are net of contractual deductible recoverable amounts due from policyholders of approximately $12.3 billion and $12.1 billion at June 30, 2025 and December 31, 2024, respectively. These recoverable amounts are related to certain policies with high deductibles (in excess of high dollar amounts retained by the insured through self-insured retentions, deductibles, retrospective programs, or captive arrangements, each referred to generically as “deductibles”), primarily for U.S. Commercial casualty business. With respect to the deductible portion of the claim, we manage and pay the entire claim on behalf of the insured and are reimbursed by the insured for the deductible portion of the claim. Thus, these recoverable amounts represent a credit exposure to us. At June 30, 2025 and December 31, 2024 we held collateral of approximately $8.8 billion and $8.6 billion, respectively, for these deductible recoverable amounts, consisting primarily of letters of credit and funded
trust agreements. Allowance for credit losses for the unsecured portion of these recoverable amounts was $14 million at both June 30, 2025 and December 31, 2024.
The following table presents the rollforward of activity in loss reserves:
Three Months Ended
June 30,		Six Months Ended
June 30,
(in millions)2025202420252024
Liability for unpaid loss and loss adjustment expenses, beginning of period$68,896 $70,060 $69,168 $70,393 
Reinsurance recoverable(27,799)(30,169)(29,026)(30,289)
Net Liability for unpaid loss and loss adjustment expenses, beginning of period41,097 39,891 40,142 40,104 
Losses and loss adjustment expenses incurred:
Current year3,523 3,546 7,332 6,911 
Prior years, excluding discount and amortization of deferred gain25 (108)(8)(108)
Prior years, discount charge (benefit)45 62 85 168 
Prior years, amortization of deferred gain on retroactive reinsurance(a)
(100)(33)(122)(65)
Total losses and loss adjustment expenses incurred3,493 3,467 7,287 6,906 
Losses and loss adjustment expenses paid:
Current year(1,023)(855)(1,452)(1,141)
Prior years(2,569)(2,597)(5,530)(5,454)
Total losses and loss adjustment expenses paid(3,592)(3,452)(6,982)(6,595)
Other changes:
Foreign exchange effect895 (158)1,379 (654)
Losses and loss adjustment expenses recognized within gain on divestitures15 — 47 — 
Retroactive reinsurance adjustment (net of discount)(b)
(20)186 15 178 
Reclassified to held for sale, net of reinsurance recoverables— — — (5)
Total other changes890 28 1,441 (481)
Liability for unpaid loss and loss adjustment expenses, end of period:
Net liability for unpaid losses and loss adjustment expenses41,888 39,934 41,888 39,934 
Reinsurance recoverable
27,866 29,849 27,866 29,849 
Total$69,754 $69,783 $69,754 $69,783 
(a)Includes $7 million and $39 million for the retroactive reinsurance agreement with National Indemnity Company (NICO), a subsidiary of Berkshire Hathaway Inc. (Berkshire), covering U.S. asbestos exposures for the three months ended June 30, 2025 and 2024, respectively, and $12 million and $44 million for the six months ended June 30, 2025 and 2024, respectively.
(b)Includes benefit (charge) from change in discount on retroactive reinsurance of $19 million and $23 million for the three months ended June 30, 2025 and 2024 respectively, and $20 million and $78 million for the six months ended June 30, 2025 and 2024, respectively.
On January 20, 2017, we entered into an adverse development reinsurance agreement with NICO, under which we transferred to NICO 80 percent of the reserve risk on substantially all of our U.S. commercial long-tail exposures for accident years 2015 and prior. Under this agreement, we ceded to NICO 80 percent of the paid losses on subject business paid on or after January 1, 2016 in excess of $25 billion of net paid losses, up to an aggregate limit of $25 billion. At NICO’s 80 percent share, NICO’s limit of liability under the contract is $20 billion. We account for this transaction as retroactive reinsurance. We paid total consideration, including interest, of $10.2 billion. The consideration was placed into a collateral trust account as security for NICO’s claim payment obligations, and Berkshire has provided a parental guarantee to secure the obligations of NICO under the agreement.
Prior Year Development
During the three months ended June 30, 2025, we recognized unfavorable prior year loss reserve development of $25 million excluding discount and amortization of deferred gain. The development in this period was primarily driven by adverse development on U.S. Excess Casualty partially offset by favorable experience in U.S. Workers’ Compensation, U.S. Other Casualty and U.S. Property and Special Risks. During the six months ended June 30, 2025, we recognized favorable prior year loss reserve development of $8 million excluding discount and amortization of deferred gain. The development in this period was largely driven by favorable development in U.S. Workers’ Compensation, U.S. Other Casualty, U.S. Property and Special Risks and Global Specialty, partially offset by adverse development on U.S. Excess Casualty.
During the three and six months ended June 30, 2024, we recognized favorable prior year loss reserve development of $108 million excluding discount and amortization of deferred gain. The development in these periods was primarily driven by favorable development on our loss sensitive U.S. Workers’ Compensation business along with favorable development in U.S. Other Casualty, offset by adverse development in U.S. Excess Casualty.
Discounting of Loss Reserves
At June 30, 2025 and December 31, 2024, the loss reserves reflect a net loss reserve discount of $1.2 billion and $1.2 billion, respectively, including tabular and non-tabular calculations based upon the following assumptions:
•The non-tabular workers’ compensation discount is calculated separately for companies domiciled in New York, Pennsylvania and Delaware, and follows the statutory regulations (prescribed or historically permitted) for each state.
–For New York companies, the discount is based on a 5 percent interest rate and the companies’ own payout patterns.
–The Pennsylvania and Delaware regulators have historically approved use of a consistent benchmark discount rate and spread (U.S. Treasury rate plus a liquidity premium) to all of our workers’ compensation reserves in our Pennsylvania domiciled and Delaware domiciled companies, as well as our use of updated payout patterns specific to our primary and excess workers compensation portfolios. In 2020, the regulators also approved that the discount rate will be updated on an annual basis.
•The tabular workers’ compensation discount is calculated based on the mortality rate used in the 2007 U.S. Life table and interest rates prescribed or permitted by each state (i.e. New York is based on 5 percent interest rate and Pennsylvania and Delaware are based on U.S. Treasury rate plus a liquidity premium). In the case that applying this tabular discount factor to our nominal reserves produces a tabular discount that is greater than the indemnity portion of our case reserves, the tabular discount is capped at our estimate of the indemnity portion of our case reserves (45 percent).
The discount for asbestos reserves has been fully accreted.
At June 30, 2025 and December 31, 2024, the discount consists of $147 million and $107 million of tabular discount, respectively, and $1.0 billion and $1.1 billion of non-tabular discount for workers’ compensation, respectively. During the six months ended June 30, 2025 and 2024, the benefit / (charge) from changes in discount of $(29) million and $(102) million, respectively, were recorded as part of Losses and loss adjustment expenses incurred in the Condensed Consolidated Statements of Income (Loss).
The following table presents the components of the loss reserve discount discussed above:
(in millions)June 30, 2025December 31, 2024
U.S. workers' compensation$2,082 $2,111 
Retroactive reinsurance(916)(936)
Total reserve discount(a)(b)
$1,166 $1,175 
(a)Excludes $201 million and $184 million of discount related to certain long-tail liabilities in the UK at June 30, 2025 and December 31, 2024, respectively.
(b)Includes gross discount of $730 million and $627 million, which was 100 percent ceded to Fortitude Re at June 30, 2025 and December 31, 2024, respectively.
The following table presents the net loss reserve discount benefit (charge):
Three Months Ended
June 30,		Six Months Ended
June 30,
(in millions)2025202420252024
Current accident year$33 $36 $56 $66 
Accretion and other adjustments to prior year discount(45)(62)(85)(168)
Net reserve discount benefit (charge)(12)(26)(29)(102)
Change in discount on loss reserves ceded under retroactive reinsurance19 23 20 78 
Net change in total reserve discount*$7 $(3)$(9)$(24)
*Excludes $11 million and $2 million discount related to certain long-tail liabilities in the UK for the three months ended June 30, 2025 and 2024, respectively, and excludes $17 million and $0 million discount related to certain long-tail liabilities in the UK for the six months ended June 30, 2025 and 2024, respectively.
Amortization of Deferred Gain on Retroactive Reinsurance
Amortization of the deferred gain on retroactive reinsurance includes $93 million and $(6) million related to the adverse development reinsurance cover with NICO for the three months ended June 30, 2025 and 2024, respectively, and $110 million and $21 million for the six months ended June 30, 2025 and 2024, respectively.
Amounts recognized reflect the amortization of the initial deferred gain at inception, as amended for subsequent changes in the deferred gain due to changes in subject reserves.
FUTURE POLICY BENEFITS
Future policy benefits primarily include reserves for Global Accident & Health (short-duration) contracts.