The Company uses several actuarial methods to compute incurred-but-not reported liabilities. These methods use historical claim reporting patterns to develop a triangle of reported claim amounts. The claim triangle is then used to develop the ultimate claims amount and the incurred-but-not reported liabilities. Expected claim methods use exposure data such as premiums to develop the ultimate claim amount. The final method blends the estimates from the development and the expected claim methods. There were no significant changes in methodologies during 2019.

The following tables provide information on incurred and paid claims development, net of retrocession, for short-duration reinsurance contracts for the Company’s U.S. and Latin America and Asia Pacific Traditional segments, which primarily relate to group life and health (including disability) business. The short-duration business for the Company’s other segments is immaterial. Liabilities for claims and claims adjustment expenses, net of reinsurance equals total incurred claims less cumulative paid claims plus outstanding liabilities prior to 2012.

The Company provides reinsurance on large quota share transactions. It is common industry practice for cedants to provide loss information on a bulk basis without comprehensive claim details. Additionally, a claim under aggregate stop loss coverage may be the result of thousands of claims, but the Company only pays the excess amount. Therefore, it is impractical to provide meaningful claim count detail by accident year in the tables shown below.



U.S. and Latin America																	As of
(dollars in millions)																	December 31, 2019
Incurred Claims and Allocated Claim Adjustments, Net of Reinsurance ⁽¹⁾																	Total of Incurred-but-Not-Reported Liabilities Plus Expected Development on Reported Claims
Accident Year	For the Years Ended December 31,
	2012		2013		2014		2015		2016		2017		2018		2019
2012	$	323	$	309	$	297	$	298	$	299	$	298	$	297	$	297	$	—
2013			349		333		339		337		336		336		337		—
2014					408		411		396		397		396		399		—
2015							460		461		465		462		462		—
2016									501		500		501		497		1
2017											485		514		509		6
2018													538		538		28
2019															491		213
													Total		$	3,530



Cumulative Paid Claims and Allocated Claim Adjustment Expense, Net of Reinsurance ⁽¹⁾
Accident Year	For the Years Ended December 31,
Accident Year	2012		2013		2014		2015		2016		2017		2018		2019
2012	$	109	$	222	$	244	$	252	$	258	$	264	$	268	$	272
2013			114		249		277		286		292		297		302
2014					129		305		337		349		356		364
2015							146		361		407		422		431
2016									185		393		437		451
2017											190		403		448
2018													183		415
2019															180
													Total		$	2,863
					All outstanding claims prior to 2012, net of reinsurance										152
			Liabilities for claims and claim adjustment expense, net of reinsurance												$	819



Asia Pacific																	As of
(dollars in millions)																	December 31, 2019
Incurred Claims and Allocated Claim Adjustments, Net of Reinsurance ⁽¹⁾																	Total of Incurred-but-Not-Reported Liabilities Plus Expected Development on Reported Claims
Accident Year	For the Years Ended December 31,
	2012		2013		2014		2015		2016		2017		2018		2019
2012	$	207	$	278	$	282	$	285	$	293	$	303	$	308	$	313	$	7
2013			292		312		303		300		313		327		329		11
2014					276		299		264		270		283		285		13
2015							277		256		249		266		266		21
2016									227		205		212		219		24
2017											211		214		214		34
2018													253		270		76
2019															253		141
													Total		$	2,149



Cumulative Paid Claims and Allocated Claim Adjustment Expense, Net of Reinsurance ⁽¹⁾
Accident Year	For the Years Ended December 31,
Accident Year	2012		2013		2014		2015		2016		2017		2018		2019
2012	$	49	$	135	$	185	$	222	$	243	$	259	$	274	$	283
2013			50		144		209		235		260		282		294
2014					34		135		177		205		228		241
2015							49		118		167		201		221
2016									38		97		133		152
2017											35		87		115
2018													32		106
2019															38
													Total		$	1,450
					All outstanding claims prior to 2012, net of reinsurance										98
			Liabilities for claims and claim adjustment expense, net of reinsurance												$	797



Average Annual Payout of Incurred Claims by Age, Net of Reinsurance
Years	1		2		3		4		5		6		7		8
U.S. and Latin America	35.0	%	42.2	%	8.6	%	2.9	%	1.9	%	1.7	%	1.4	%	1.3	%
Asia Pacific	15.2	%	28.0	%	16.3	%	10.4	%	7.4	%	5.5	%	4.2	%	3.0	%

The reconciliation of the net incurred and paid claims development tables to the liability for claims and claim adjustment expense in the consolidated balance sheet as of December 31, 2019 is as follows (dollars in millions):



	2019
Liabilities for claims and claim adjustment expense, net of reinsurance:
U.S. and Latin America	$	819
Asia Pacific	797
Liabilities for claims and claim adjustment expense, net of reinsurance	1,616
Adjustments to reconcile to total policy claims and future policy benefits:
Reinsurance recoverable	14
Effect of discounting	(134		)
Unallocated claims adjustment expense	6
Total adjustments	(114		)
Other short-duration contracts:
Canada	131
Europe, Middle East and Africa	438
Other	224
Liability for unpaid claims and claim adjustment expense - short-duration	2,295
Liability for unpaid claims and claim adjustment expense - long-duration	4,491
Total liability for unpaid claims and claim adjustment expense (included in future policy benefits and other policy-related balances)	$	6,786

The liability for unpaid claims is reported in future policy benefits and other policy-related balances within the Company’s consolidated balance sheet. Activity associated with unpaid claims is summarized below (dollars in millions):



	2019			2018			2017
Balance at beginning of year	$	6,585		$	5,896		$	5,181
Less: reinsurance recoverable	(433		)	(456		)	(395		)
Net balance at beginning of year	6,152			5,440			4,786
Incurred:
Current year	10,307			10,049			8,912
Prior years	154			131			14
Total incurred	10,461			10,180			8,926
Payments:
Current year	(5,140		)	(4,602		)	(4,514		)
Prior years	(5,305		)	(4,692		)	(4,004		)
Total payments	(10,445		)	(9,294		)	(8,518		)
Other changes:
Interest accretion	33			25			19
Foreign exchange adjustments	21			(199		)	227
Total other changes	54			(174		)	246

Net balance at end of year	6,222			6,152			5,440
Plus: reinsurance recoverable	564			433			456
Balance at end of year	$	6,786		$	6,585		$	5,896

Incurred claims related to prior years reflected in the table above, resulted in part from developed claims for prior years being different than were anticipated when the liabilities for unpaid claims were originally estimated. These trends have been considered in establishing the current year liability for unpaid claims.