
	Nine Months Ended September 30
(in millions of U.S. dollars)	2020		2019
Gross unpaid losses and loss expenses – beginning of period	$	62,690	$	62,960
Reinsurance recoverable on unpaid losses - beginning of period (1)	(14,181)		(14,689)
Net unpaid losses and loss expenses – beginning of period	48,509		48,271


Net losses and loss expenses incurred in respect of losses occurring in:
Current year	17,109		14,484
Prior years (2)	(212)		(619)
Total	16,897		13,865
Net losses and loss expenses paid in respect of losses occurring in:
Current year	4,766		4,920
Prior years	7,597		8,374
Total	12,363		13,294
Foreign currency revaluation and other	95		(162)
Net unpaid losses and loss expenses – end of period	53,138		48,680
Reinsurance recoverable on unpaid losses (1)	14,767		14,332
Gross unpaid losses and loss expenses – end of period	$	67,905	$	63,012

(2) Relates to prior period loss reserve development only and excludes prior period development related to reinstatement premiums, expense adjustments and earned premiums totaling $23 million and $60 million for the nine months ended September 30, 2020 and 2019, respectively.

Gross and net unpaid losses and loss expenses increased $5,215 million and $4,629 million, respectively, for the nine months ended September 30, 2020, driven by catastrophe losses incurred, an increase in underlying exposure due to premium growth, and reduced payment activity due to the economic slowdown related to the COVID-19 pandemic.

Prior period development (PPD) arises from changes to loss estimates recognized in the current year that relate to loss events that occurred in previous calendar years and excludes the effect of losses from the development of earned premium from previous accident years. Long-tail lines include lines such as workers' compensation, general liability, and professional liability; while short-tail lines include lines such as most property lines, energy, personal accident, and agriculture.


	Three Months Ended September 30						Nine Months Ended September 30
(in millions of U.S. dollars)	Long-tail		Short-tail		Total		Long-tail		Short-tail		Total
2020
North America Commercial P&C Insurance	$	(255)	$	55	$	(200)	$	(439)	$	(12)	$	(451)
North America Personal P&C Insurance	—		48		48		—		48		48
North America Agricultural Insurance	—		18		18		—		4		4
Overseas General Insurance	(71)		11		(60)		(72)		(28)		(100)
Global Reinsurance	(6)		—		(6)		(25)		(4)		(29)
Corporate	54		—		54		339		—		339
Total	$	(278)	$	132	$	(146)	$	(197)	$	8	$	(189)
2019
North America Commercial P&C Insurance	$	(197)	$	88	$	(109)	$	(468)	$	43	$	(425)
North America Personal P&C Insurance	—		(62)		(62)		—		(88)		(88)
North America Agricultural Insurance	—		18		18		—		(43)		(43)
Overseas General Insurance	(66)		41		(25)		(66)		17		(49)
Global Reinsurance	(25)		—		(25)		(59)		26		(33)
Corporate	36		—		36		79		—		79
Total	$	(252)	$	85	$	(167)	$	(514)	$	(45)	$	(559)

Significant prior period movements by segment, principally driven by reserve reviews completed during each respective period, are discussed in more detail below. The remaining net development for long-tail lines and short-tail business for each segment and Corporate comprises numerous favorable and adverse movements across a number of lines and accident years, none of which is significant individually or in the aggregate.

For the three months ended September 30, 2020, net favorable PPD was $200 million, which was the net result of several underlying favorable and adverse movements, and was driven by the following principal changes:

•Net favorable development of $155 million in workers' compensation business mainly impacting accident years 2016 and prior, driven by lower than expected paid and reported loss activity, and related updates to loss development factors, partly offset by adverse development in accident year 2019;

•Net favorable development of $47 million in commercial excess and umbrella portfolios, driven by accident years 2014 and prior, and accident year 2019. The 2014 and prior development was a function of lower than expected paid and reported loss activity. The development on the 2019 accident year relates to three large policies covering specific perils, which expired in the quarter, with no covered events occurring;

•Net favorable development of $41 million on large multi-line prospective deals in the 2016 and prior accident years, due to lower than expected reported loss activity. These structured deals typically cover large clients for multiple product lines and with varying loss limitations; this development is net of premium returns of $26 million tied to the loss performance of the particular deals;

•Net favorable development of $40 million in our foreign casualty business, mainly in accident year 2016, due to lower than expected reported loss activity, partly offset by a large loss in accident year 2017; and

•Net adverse development of $35 million in our property portfolios, due to adverse non-catastrophe loss development mainly in accident year 2019, partially offset by favorable catastrophe-driven loss experience; and

For the nine months ended September 30, 2020, net favorable PPD was $451 million, which was the net result of several underlying favorable and adverse movements, and was driven by the following principal changes:

•Net favorable development of $337 million in our workers’ compensation lines. This included favorable development of $62 million related to our annual assessment of multi-claimant events including industrial accidents, in the 2019 accident year. Consistent with prior years, we reviewed these potential exposures after the close of the accident year to allow for late reporting or identification of significant losses. This favorable development in accident year 2019 was partially offset by some higher than expected activity from other claims. The remaining overall favorable development was mainly in accident years 2016 and prior, driven by lower than expected loss experience and related updates to loss development factors;

•Net favorable development of $66 million in professional liability (errors & omissions and cyber risk), driven by accident years 2016 and prior, which experienced lower than expected loss emergence;

•Net favorable development of $43 million in voluntary environmental lines, in accident years 2016 and prior, due to lower than expected emergence and a related updates to loss development factors;

•Net favorable development of $41 million on large multi-line prospective deals due to the same factors experienced for the three months ended September 30, 2020, as described above;

•Net adverse development of $75 million in commercial automobile liability, mainly in high deductible and excess portfolios, driven by adverse paid and reported loss experience and related updates to loss development factors, mainly in accident years 2015 through 2019; and

•Net favorable development of $12 million in short-tail business due to the same factors experienced for the three months ended September 30, 2020, as described above, which was offset by:

For the three months ended September 30, 2019, net favorable PPD was $109 million, which was the net result of several underlying favorable and adverse movements, and was driven by the following principal changes:

•Net favorable development of $94 million in workers' compensation business mainly impacting accident years 2015 and prior, driven by lower than expected paid and reported loss activity, and related improvements in loss development factors;

•Net favorable development of $39 million in our foreign casualty business, impacting accident years 2015 and prior, driven by reported loss activity that was generally lower than expected;

•Net favorable development of $36 million on large multi-line prospective deals in the 2015 and prior accident years, due to lower than expected reported loss activity. These structured deals typically cover large clients for multiple product lines and with varying loss limitations; this development is net of premium returns of $34 million tied to the loss performance of the particular deals; and

•Net favorable development of $32 million in U.S. commercial excess and umbrella portfolios, mainly in accident years 2013 and prior, driven by lower paid and reported loss activity relative to prior expectations as well as an increase in weighting towards experience-based methods, partly offset by modestly adverse development in more recent accident years, mainly in 2018, due to higher than expected large loss activity.

•Net adverse development excluding catastrophes of $116 million, with adverse development of $154 million across our retail, wholesale, and program distribution channels in accident year 2018, primarily due to a higher than expected severity of non-catastrophe claims, partly offset by favorable development of $38 million in 2017 and prior accident years on non-catastrophe claims; and

•Net favorable catastrophe development of $27 million. There was $41 million of favorable development on the 2017 and 2018 natural catastrophes, mostly in 2017, partly offset by some adverse development on older catastrophe events.

For the nine months ended September 30, 2019, net favorable PPD was $425 million, which was the net result of several underlying favorable and adverse movements, and was driven by the following principal changes:

•Net favorable development of $294 million in our workers’ compensation lines. This included favorable development of $61 million related to our annual assessment of multi-claimant events including industrial accidents, in the 2018 accident year. Consistent with prior years, we reviewed these potential exposures after the close of the accident year to allow for late reporting or identification of significant losses. This development in accident year 2018 was partially offset by some higher than expected activity from other claims and from involuntary pools. The remaining overall favorable development was mainly in accident years 2015 and prior, generally driven by lower than expected loss experience and related updates to loss development factors;

•Net favorable development of $63 million in U.S. commercial excess and umbrella portfolios due to the same factors experienced for the three months ended September 30, 2019, as described above with a similar result of favorable development in older accident years, partly offset by some adverse development in several of the more recent prior accident years which led to reserve strengthening in those years;

•Net favorable development of $53 million in professional liability (errors & omissions and cyber), mainly in the 2015 and prior accident years where case activity was less than expected, partially offset by adverse development in the 2016 accident year, which was driven by several large adverse claim developments;

•Net favorable development of $36 million on large multi-line prospective deals due to the same factors experienced for the three months ended September 30, 2019, as described above; and

•Net adverse development of $43 million in short-tail business due to the same factors experienced for the three months ended September 30, 2019, as described above, which was partly offset by favorable development of $49 million in surety business, mainly in the 2017 accident year, driven by lower than expected reported loss activity.

For the three and nine months ended September 30, 2020, net adverse PPD was $48 million, which was the net result of several underlying favorable and adverse movements, and was driven by the following principal changes:

•Net adverse development of $69 million in our homeowners lines, including valuables, mainly in accident years 2017 through 2019 due to higher than expected non-catastrophe loss emergence and adverse development arising from natural catastrophes in accident years 2017 and 2018; and

•Net favorable development of $22 million in our personal excess lines, driven by favorable development mainly in the 2017 accident year, partly offset by adverse development in accident year 2019.

For the three months ended September 30, 2019, net favorable PPD was $62 million, which was the net result of several underlying favorable and adverse movements, and was driven by the following principal changes:

•Net favorable development of $36 million in our homeowners lines, including valuables, mainly in accident year 2018. Non-catastrophe loss emergence was generally lower than expected in recent accident years. Losses arising from accident year 2017 natural catastrophes developed adversely; however, this was mostly offset by favorable development on the 2018 catastrophe events; and

•Net favorable development of $26 million in our personal excess lines primarily impacting the 2016 accident year, due to lower than expected loss emergence and an increase in weighting towards experience-based methods, partly offset by adverse emergence in accident year 2015.

For the nine months ended September 30, 2019, net favorable PPD was $88 million, which was the net result of several underlying favorable and adverse movements, and was driven by the following principal changes:

For the nine months ended September 30, 2019, net favorable PPD was $43 million, which is the net of the adverse activity noted above and favorable claim development in our Multiple Peril Crop Insurance (MPCI) business, which was due to better than expected crop yield results in certain states at the prior year-end period (i.e., 2019 results based on crop yield results at year-end 2018).

For the three months ended September 30, 2020, net favorable PPD was $60 million, which was the net result of several underlying favorable and adverse movements, and was driven by the following principal changes:

•Net favorable development of $94 million in casualty lines, including favorable development of $143 million in accident years 2016 and prior, due to lower than expected loss emergence across primary and excess lines in Continental Europe, U.K., and Asia Pacific, partially offset by adverse development of $49 million in accident years 2017 through 2019, primarily due to adverse large loss experience in the U.K. and Asia Pacific;

•Net adverse development of $57 million in financial lines, with adverse development of $125 million in accident years 2016 through 2019, primarily due to adverse large loss experience in Directors and Officers (D&O) in the U.K. and Asia Pacific. This was partially offset by favorable development of $68 million in accident years 2015 and prior, primarily from favorable case-specific settlements within Continental Europe and Asia Pacific financial institutions.

For the nine months ended September 30, 2020, net favorable PPD was $100 million, which was the net result of several underlying favorable and adverse movements and was driven by the following principal changes:

For the three months ended September 30, 2019, net favorable PPD was $25 million, which was the net result of several underlying favorable and adverse movements, and was driven by the following principal changes:

•Net favorable development of $101 million in casualty lines, including favorable development of $123 million in accident years 2015 and prior, due to lower than expected loss emergence mainly across primary lines in Continental Europe, U.K., and Asia Pacific, partially offset by adverse development of $22 million in accident years 2016 through 2018, primarily due to adverse attritional and large loss experience in Continental Europe; and

•Net adverse development of $50 million in financial lines, with favorable development of $75 million in accident years 2015 and prior, due to lower than expected loss emergence across most regions in D&O and Professional Indemnity, which was more than offset by adverse development of $125 million in accident years 2016 through 2018, primarily due to adverse large loss experience in D&O in the U.K. and Asia Pacific.

•Net adverse development of $41 million in short-tail business, primarily due to net adverse development of $27 million in Surety, driven by adverse large loss experience across Continental Europe and Latin America in accident years 2017 and 2018.

For the nine months ended September 30, 2019, net favorable PPD was $49 million, which was the net result of several underlying favorable and adverse movements, and was driven by net favorable development of $66 million in long-tail lines due to the same factors experienced for the three months ended September 30, 2019 described above.

For the three and nine months ended September 30, 2020, net favorable PPD was $6 million and $29 million, respectively, which was the net result of several underlying favorable and adverse movements, none of which is significant individually or in the aggregate.

For the three months ended September 30, 2019, net favorable PPD was $25 million, in long-tail business, primarily from professional liability, medical malpractice, and workers' compensation lines primarily from treaty years 2013 and prior principally due to lower than expected loss emergence.

For the nine months ended September 30, 2019, net favorable PPD was $33 million, which was the net result of several underlying favorable and adverse movements, and was driven by the following principal changes:

•Net favorable development of $59 million in long-tail business, primarily in our casualty, professional liability, medical malpractice, and workers’ compensation lines primarily from treaty years 2013 and prior principally due to lower than expected loss emergence; and

For the three months ended September 30, 2020, net adverse development was $54 million, driven principally by development in environmental liabilities of $35 million due to certain case specific incurred activity.

For the nine months ended September 30, 2020 net adverse development was $339 million, driven by adverse development of $254 million for U.S. child molestation claims, predominantly reviver statute-related, as well as the adverse development noted above regarding environmental liabilities. The remainder of the adverse development was driven by increased claim costs on a limited number of non-A&E run-off casualty and workers’ compensation exposures, and charges relating to unallocated loss adjustment expenses due to run-off operating expenses.

For the three months ended September 30, 2019, net adverse development was $36 million, driven principally by adverse development in environmental liabilities of $27 million due to case specific settlements and higher than expected remediation expense and defense costs, generally impacting larger modeled accounts.

For the nine months ended September 30, 2019, net adverse development was $79 million, driven principally by adverse development on non A&E run-off casualty exposures, including workers' compensation, and by the adverse development in environmental liabilities as described above. The net adverse development also included charges relating to unallocated loss adjustment expenses due to run-off operating expenses of $28 million.