Changes in the liability for unpaid claims and claim adjustment expenses are as follows:



	2017			2016			2015
	(in millions of dollars)
Balance at January 1	$	23,249.5		$	23,796.1		$	24,194.0
Less Reinsurance Recoverable	2,163.6			2,064.6			2,066.9
Net Balance at January 1	21,085.9			21,731.5			22,127.1

Incurred Related to
Current Year	5,422.9			5,243.0			5,058.1
Prior Years
Interest	1,089.7			1,136.7			1,177.6
All Other Incurred	(158.2		)	(198.3		)	(111.6		)
Foreign Currency	167.5			(340.2		)	(119.5		)
Total Incurred	6,521.9			5,841.2			6,004.6

Paid Related to
Current Year	(2,156.9		)	(2,035.4		)	(1,853.7		)
Prior Years	(4,410.9		)	(4,451.4		)	(4,546.5		)
Total Paid	(6,567.8		)	(6,486.8		)	(6,400.2		)

Net Balance at December 31	21,040.0			21,085.9			21,731.5
Plus Reinsurance Recoverable	2,182.0			2,163.6			2,064.6
Balance at December 31	$	23,222.0		$	23,249.5		$	23,796.1

The majority of the net balances are related to disability claims with long-tail payouts on which interest earned on assets backing liabilities is an integral part of pricing and reserving. Interest accrued on prior year reserves has been calculated on the opening reserve balance less one-half of the year’s claim payments relative to prior years at our average reserve discount rate for the respective periods.

"Incurred Related to Prior Years - All Other Incurred" shown in the preceding chart includes the reserve adjustment as discussed in the following paragraphs, which impacts the comparability of 2017 to the other years presented. Excluding that adjustment, the variability exhibited year over year is primarily caused by the level of claim resolutions in the period relative to the long-term expectations reflected in the reserves. Our claim resolution rate assumption used in determining reserves is our expectation of the resolution rate we will experience over the life of the block of business and will vary from actual experience in any one period, both favorably and unfavorably.

2017 Unclaimed Death Benefits Reserve Increase

Beginning in 2011, a number of state regulators began requiring insurers to cross-check specified insurance policies with the Social Security Administration's Death Master File to identify potential matches. If a potential match was identified, insurers were requested to determine if benefits were due, locate beneficiaries, and make payments where appropriate. We initiated this process where requested, and in 2012 we began implementing this process in all states on a forward-looking basis. In addition to implementing this on a forward-looking basis, in 2013 we began an initiative to search for potential claims from previous years. During 2013, we completed our assessment of benefits which we estimated would be paid under this initiative, and as such, established additional reserves for payment of these benefits.

Similar to other insurers, we are undergoing an examination by a third party acting on behalf of a number of state treasurers concerning our compliance with the unclaimed property laws of the participating states. In the fourth quarter of 2017, we started the process to reach a Global Resolution Agreement with the third party regarding settlement of the examination, which we finalized in January of 2018. During the fourth quarter of 2017, we established reserves which reflect our estimate of the liability expected to be paid as we execute on the terms of the settlement. Claim reserves were increased $18.5 million for Unum US group life, $8.1 million for Unum US voluntary life, and $12.4 million for Colonial Life voluntary life, for a total reserve increase of $39.0 million before tax. The reserves established were attributed to prior years incurred claims, thereby impacting the results shown in the preceding chart.

Reconciliation

A reconciliation of policy and contract benefits and reserves for future policy and contract benefits as reported in our consolidated balance sheets to the liability for unpaid claims and claim adjustment expenses is as follows:



	December 31
	2017		2016		2015
	(in millions of dollars)
Policy and Contract Benefits	$	1,605.2	$	1,507.9	$	1,484.6
Reserves for Future Policy and Contract Benefits	45,601.6		44,245.9		43,540.6
Total	47,206.8		45,753.8		45,025.2
Less:
Life Reserves for Future Policy and Contract Benefits	8,231.3		8,078.2		7,946.3
Accident and Health Active Life Reserves	10,658.8		10,172.9		9,704.4
Adjustment Related to Unrealized Investment Gains and Losses	5,094.7		4,253.2		3,578.4
Liability for Unpaid Claims and Claim Adjustment Expenses	$	23,222.0	$	23,249.5	$	23,796.1

The adjustment related to unrealized investment gains and losses reflects the changes that would be necessary to policyholder liabilities if the unrealized investment gains and losses related to the corresponding available-for-sale securities had been realized. Changes in this adjustment are reported as a component of other comprehensive income or loss.