Reserve for Property-Liability Insurance Claims and Claims Expense (Tables)

12 Months Ended

Dec. 31, 2016

Reserve for Property-Liability Insurance Claims and Claims Expense

Activity in the reserve for property-liability insurance claims and claims expense

Activity in the reserve for property-liability insurance claims and claims expense is summarized as follows:

($ in millions)	2016			2015		2014
Balance as of January 1	$	23,869		$	22,923	$	21,857
Less reinsurance recoverables	5,892			5,694		4,664
Net balance as of January 1	17,977			17,229		17,193
Incurred claims and claims expense related to:
Current year	22,238			20,953		19,512
Prior years	(17		)	81		(84		)
Total incurred	22,221			21,034		19,428
Claims and claims expense paid related to:
Current year	14,222			13,660		12,924
Prior years	6,910			6,626		6,468
Total paid	21,132			20,286		19,392
Net balance as of December 31	19,066			17,977		17,229
Plus reinsurance recoverables	6,184			5,892		5,694
Balance as of December 31	$	25,250		$	23,869	$	22,923

Incurred and paid claims and claims expense

The information about incurred and paid claims development for the 2012 to 2015 years, and the average annual percentage payout of incurred claims by age as of December 31, 2016, is presented as required supplementary information.

Auto Insurance

($ in millions, except number of reported claims)	Incurred claims and allocated claim adjustment expenses, net of reinsurance										IBNR reserves plus expected development on reported claims		Cumulative number of reported claims
	For the years ended December 31,										As of December 31, 2016
	(unaudited)		(unaudited)		(unaudited)		(unaudited)
Accident year	2012		2013		2014		2015		2016
2012	$	11,299	$	11,187	$	11,079	$	11,046	$	11,015	$	444	5,801,971
2013	—		11,329		11,269		11,273		11,204		888		5,890,375
2014	—		—		12,166		12,220		12,121		1,603		6,335,312
2015	—		—		—		13,521		13,466		2,963		6,754,829
2016	—		—		—		—		14,265		5,896		6,572,689
									$	62,071
	Cumulative paid claims and allocated claims adjustment expenses, net of reinsurance
	For the years ended December 31,
	(unaudited)		(unaudited)		(unaudited)		(unaudited)
Accident year	2012		2013		2014		2015		2016
2012	$	6,818	$	8,760	$	9,660	$	10,251	$	10,571
2013	—		6,662		8,826		9,770		10,316
2014	—		—		7,312		9,586		10,518
2015	—		—		—		8,027		10,503
2016	—		—		—		—		8,369
							Total		$	50,277
All outstanding liabilities before 2012, net of reinsurance									1,167
Liabilities for claims and claim adjustment expenses, net of reinsurance									$	12,961

Homeowners Insurance

($ in millions, except number of reported claims)	Incurred claims and allocated claim adjustment expenses, net of reinsurance										IBNR reserves plus expected development on reported claims		Cumulative number of reported claims
	For the years ended December 31,										As of December 31, 2016
	(unaudited)		(unaudited)		(unaudited)		(unaudited)
Accident year	2012		2013		2014		2015		2016
2012	$	3,833	$	3,915	$	3,930	$	3,913	$	3,891	$	63	1,003,156
2013	—		3,091		3,163		3,156		3,135		97		682,525
2014	—		—		3,600		3,644		3,646		172		764,101
2015	—		—		—		3,565		3,615		323		717,025
2016	—		—		—		—		3,964		1,020		755,683
									$	18,251
	Cumulative paid claims and allocated claims adjustment expenses, net of reinsurance
	For the years ended December 31,
	(unaudited)		(unaudited)		(unaudited)		(unaudited)
Accident year	2012		2013		2014		2015		2016
2012	$	2,942	$	3,606	$	3,742	$	3,802	$	3,828
2013	—		2,283		2,878		2,991		3,038
2014	—		—		2,730		3,358		3,474
2015	—		—		—		2,584		3,293
2016	—		—		—		—		2,944
							Total		$	16,577
All outstanding liabilities before 2012, net of reinsurance									187
Liabilities for claims and claim adjustment expenses, net of reinsurance									$	1,861

Average annual percentage payout of incurred claims by age, net of reinsurance

Average annual percentage payout of incurred claims by age, net of reinsurance, as of December 31, 2016
	1 year		2 years		3 years		4 years		5 years
Auto insurance	60.2	%	19.1	%	8.0	%	5.2	%	3.1	%

Average annual percentage payout of incurred claims by age, net of reinsurance, as of December 31, 2016
	1 year		2 years		3 years		4 years		5 years
Homeowners insurance	74.2	%	19.1	%	2.8	%	1.4	%	0.7	%

Reconciliation of the net incurred claims and claims expense development

The reconciliation of the net incurred and paid claims development tables above to the reserve for property-liability insurance claims and claims expense in the Consolidated Statement of Financial Position as of December 31, 2016 is as follows:

($ in millions)
Net outstanding liabilities:
Auto insurance	$	12,961
Homeowners insurance	1,861
Other personal lines	1,310
Commercial lines	597
Other business lines	22
Discontinued Lines and Coverages (1)	1,382
Unallocated loss adjustment expenses	933
Net reserve for property-liability insurance claims and claims expense	19,066
Reinsurance recoverable:
Auto insurance	5,422
Homeowners insurance	9
Other personal lines	212
Commercial lines	21
Other business lines	10
Discontinued Lines and Coverages	508
Unallocated loss adjustment expenses	2
Total reinsurance recoverable	6,184
Gross reserve for property-liability insurance claims and claims expense	$	25,250

______________________________

⁽¹⁾  Discontinued Lines and Coverages includes business in run-off. All of the claims relate to accident years more than 10 years ago. IBNR reserves represent $800 million of the total reserves as of December 31, 2016.