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

12 Months Ended

Dec. 31, 2012

Reserve for Property-Liability Insurance Claims and Claims Expense

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

($ in millions)	2012			2011			2010

Balance as of January 1	$	20,375		$	19,468		$	19,167
Less reinsurance recoverables		2,588			2,072			2,139

Net balance as of January 1		17,787			17,396			17,028

Esurance acquisition as of October 7, 2011		(13	) ⁽¹⁾		425			—
Incurred claims and claims expense related to:
Current year		19,149			20,496			19,110
Prior years		(665	)		(335	)		(159	)

Total incurred		18,484			20,161			18,951

Claims and claims expense paid related to:
Current year		12,545			13,893			12,012
Prior years		6,435			6,302			6,571

Total paid		18,980			20,195			18,583

Net balance as of December 31		17,278			17,787			17,396
Plus reinsurance recoverables		4,010			2,588			2,072

Balance as of December 31	$	21,288		$	20,375		$	19,468

(1): The Esurance opening balance sheet reserves were reestimated in 2012 resulting in a reduction in reserves due to lower severity. The adjustment was recorded as a reduction in goodwill and an increase in payables to the seller under the terms of the purchase agreement and therefore had no impact on claims expense.

- Definition

Tabular disclosure of the activity in the reserve for settling insured claims and expenses incurred in the claims settlement process for the period. The estimated liability includes the amount of money that will be required for future payments of (a) claims that have been reported to the insurer, (b) claims related to insured events that have occurred but that have not been reported to the insurer as of the date the liability is estimated, and (c) claim adjustment expenses. Claim adjustment expenses include costs incurred in the claim settlement process such as legal fees; outside adjuster fees; and costs to record, process, and adjust claims.

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