Short Duration Contracts

12 Months Ended

Dec. 31, 2024

Short Duration Contracts Disclosure [Abstract]

Short duration contracts

The Company’s reserves for losses and loss adjustment expenses primarily relate to short-duration contracts with various characteristics (e.g., type of coverage, geography, claims duration). The Company considered such information in determining the level of disaggregation for disclosures related to its short-duration contracts, as detailed in the table below:

Reportable segment	Level of disaggregation	Included lines of business
Insurance	Property energy, marine and aviation	Property energy, marine and aviation
	Third party occurrence business	Excess and surplus casualty (excluding contract binding); construction and national accounts; and other (including alternative market risks, excess workers’ compensation and employer’s liability insurance coverages)
	Third party claims-made business	Professional lines
	Multi-line and other specialty	Programs; contract binding (part of excess and surplus casualty); travel, accident and health; warranty and lenders solutions; and other (contract and commercial surety coverages); MCE business1
Reinsurance	Casualty	Casualty
	Property catastrophe	Property catastrophe
	Property excluding property catastrophe	Property excluding property catastrophe
	Marine and aviation	Marine and aviation
	Other specialty	Other specialty
Mortgage	Direct mortgage insurance in the U.S.	Mortgage insurance on U.S. primary exposures

(1) Includes business underwritten under a new business reinsurance agreement related to the MCE Acquisition. See note 2.

The Company determined the following to be insignificant for disclosure purposes: (i) certain mortgage business, including non-U.S. primary business, second lien and student loan exposures, global mortgage reinsurance and participation in various GSE credit risk-sharing products and (ii) certain reinsurance business, including casualty clash and non-traditional lines. Such amounts are included as reconciling items.

The Company is required to establish reserves for losses and loss adjustment expenses (“Loss Reserves”) that arise from the business the Company underwrites. Loss Reserves for the insurance, reinsurance and mortgage segments represent estimates of future amounts required to pay losses and loss adjustment expenses for insured or reinsured events which have occurred at or before the balance sheet date. Loss Reserves do not reflect contingency reserve allowances to account for future loss occurrences. Losses arising from

future events will be estimated and recognized at the time the losses are incurred and could be substantial.

Insurance Segment

Loss Reserves for the insurance segment are comprised of estimated amounts for (1) reported losses (“case reserves”) and (2) incurred but not reported losses (“IBNR reserves”). Generally, claims personnel determine whether to establish a case reserve for the estimated amount of the ultimate settlement of individual claims. The estimate reflects the judgment of claims personnel based on general corporate reserving practices, the experience and knowledge of such personnel regarding the nature and value of the specific type of claim and, where appropriate, advice of counsel. The Company also contracts with a number of outside third party administrators in the claims process who, in certain cases, have limited authority to establish case reserves. The work of such administrators is reviewed and monitored by our claims personnel. Loss Reserves are also established to provide for loss adjustment expenses and represent the estimated expense of settling claims, including legal and other fees and the general expenses of administering the claims adjustment process. Periodically, adjustments to the case reserves may be made as additional information is reported or payments are made. IBNR reserves are established to provide for incurred claims which have not yet been reported at the balance sheet date as well as to adjust for any projected variance in case reserving. Actuaries estimate ultimate losses and loss adjustment expenses using various generally accepted actuarial methods applied to known losses and other relevant information. Like case reserves, IBNR reserves are adjusted as additional information becomes known or payments are made. The process of estimating reserves involves a considerable degree of judgment by management and, as of any given date, is inherently uncertain.

Ultimate losses and loss adjustment expenses are generally determined by projection of claim emergence and settlement patterns observed in the past that can reasonably be expected to persist into the future. In forecasting ultimate losses and loss adjustment expenses with respect to any line of business, past experience with respect to that line of business is the primary resource, developed through both industry and company experience, but cannot be relied upon in isolation. Uncertainties in estimating ultimate losses and loss adjustment expenses are magnified by the length of the time lag between when a claim actually occurs and when it is reported and settled. This time lag is sometimes referred to as the “claim-tail.” During this period additional facts regarding coverages written in prior accident years, as well as about actual claims and trends, may become known and, as a result, may lead to adjustments of the related Loss Reserves. If the Company determines that an adjustment is appropriate, the adjustment is recorded in the accounting period in which such determination is made. Accordingly, should Loss

Reserves need to be increased or decreased in the future from amounts currently established, future results of operations would be negatively or positively impacted respectively. The Company authorizes managing general agents, general agents and other producers to write program business on the Company’s behalf within prescribed underwriting authorities. This delegated authority process introduces additional complexity to the actuarial determination of unpaid future losses and loss adjustment expenses. In order to monitor adherence to the underwriting guidelines given to such parties, the Company periodically performs underwriting and claims due diligence reviews.

In determining ultimate losses and loss adjustment expenses, the cost to indemnify claimants, provide needed legal defense and other services for insureds and administer the investigation and adjustment of claims are considered. These claim costs are influenced by many factors that change over time, such as expanded coverage definitions as a result of new court decisions, inflation in costs to repair or replace damaged property, inflation in the cost of medical services and legislated changes in statutory benefits, as well as by the particular, unique facts that pertain to each claim. As a result, the rate at which claims arose in the past and the costs to settle them may not always be representative of what will occur in the future. The factors influencing changes in claim costs are often difficult to isolate or quantify and developments in paid and incurred losses from historical trends are frequently subject to multiple and conflicting interpretations. Changes in coverage terms or claims handling practices may also cause future experience and/or development patterns to vary from the past. A key objective of actuaries in developing estimates of ultimate losses and loss adjustment expenses, and resulting IBNR reserves, is to identify aberrations and systemic changes occurring within historical experience and adjust for them so that the future can be projected more reliably. Because of the factors previously discussed, this process requires the substantial use of informed judgment and is inherently uncertain.

Although Loss Reserves are initially determined based on underwriting and pricing analyses, the Company’s insurance segment applies several generally accepted actuarial methods, as discussed below, on a quarterly basis to evaluate the Loss Reserves, in addition to the expected loss method, in particular for Loss Reserves from more mature accident years (the year in which a loss occurred). Each quarter, as part of the reserving process, the segments’ actuaries reaffirm that the assumptions used in the reserving process continue to form a sound basis for the projection of liabilities. If actual loss activity differs substantially from expectations based on historical information, an adjustment to Loss Reserves may be supported. The Company places more or less reliance on a particular actuarial method based on the facts and circumstances at the time the estimates of Loss Reserves are made.

These methods generally fall into one of the following categories or are hybrids of one or more of the following categories:

•Expected loss methods - these methods are based on the assumption that ultimate losses vary proportionately with premiums. Expected loss and loss adjustment expense ratios are typically developed based upon the information derived by underwriters and actuaries during the initial pricing of the business, supplemented by industry data available from organizations, such as statistical bureaus and consulting firms, where appropriate. These ratios consider, among other things, rate increases and changes in terms and conditions that have been observed in the market. Expected loss methods are useful for estimating ultimate losses and loss adjustment expenses in the early years of long-tailed lines of business, when little or no paid or incurred loss information is available, and is commonly applied when limited loss experience exists for a company.

•Historical incurred loss development methods - these methods assume that the ratio of losses in one period to losses in an earlier period will remain constant in the future. These methods use incurred losses (i.e., the sum of cumulative historical loss payments plus outstanding case reserves) over discrete periods of time to estimate future losses. Historical incurred loss development methods may be preferable to historical paid loss development methods because they explicitly take into account open cases and the claims adjusters’ evaluations of the cost to settle all known claims. However, historical incurred loss development methods necessarily assume that case reserving practices are consistently applied over time. Therefore, when there have been significant changes in how case reserves are established, using incurred loss data to project ultimate losses may be less reliable than other methods.

•Historical paid loss development methods - these methods, like historical incurred loss development methods, assume that the ratio of losses in one period to losses in an earlier period will remain constant. These methods use historical loss payments over discrete periods of time to estimate future losses and necessarily assume that factors that have affected paid losses in the past, such as inflation or the effects of litigation, will remain constant in the future. Because historical paid loss development methods do not use incurred losses to estimate ultimate losses, they may be more reliable than the other methods that use incurred losses in situations where there are significant changes in how incurred losses are established by a company’s claims adjusters. However, historical paid loss development methods are more leveraged (meaning that small changes in payments have a larger impact on estimates of ultimate losses) than

actuarial methods that use incurred losses because cumulative loss payments take much longer to equal the expected ultimate losses than cumulative incurred amounts. In addition, and for similar reasons, historical paid loss development methods are often slow to react to situations when new or different factors arise than those that have affected paid losses in the past.

•Adjusted historical paid and incurred loss development methods - these methods take traditional historical paid and incurred loss development methods and adjust them for the estimated impact of changes from the past in factors such as inflation, the speed of claim payments or the adequacy of case reserves. Adjusted historical paid and incurred loss development methods are often more reliable methods of predicting ultimate losses in periods of significant change, provided the actuaries can develop methods to reasonably quantify the impact of changes. As such, these methods utilize more judgment than historical paid and incurred loss development methods.

•Bornhuetter-Ferguson (“B-F”) paid and incurred loss methods - these methods utilize actual paid and incurred losses and expected patterns of paid and incurred losses, taking the initial expected ultimate losses into account to determine an estimate of expected ultimate losses. The B-F paid and incurred loss methods are useful when there are few reported claims and a relatively less stable pattern of reported losses.

•Frequency-Severity methods - These methods utilize actual paid and incurred claim experience, but break the data down into its component pieces: claim counts, often expressed as a ratio to exposure or premium (frequency), and average claim size (severity). The component pieces are projected to an ultimate level and multiplied together to result in an estimate of ultimate loss. These methods are especially useful when the severity of claims can be confined to a relatively stable range of estimated ultimate average claim value.

•Additional analyses - other methodologies are often used in the reserving process for specific types of claims or events, such as catastrophic or other specific major events. These include vendor catastrophe models, which are typically used in the estimation of Loss Reserves at the early stage of known catastrophic events before information has been reported to an insurer or reinsurer.

In the initial reserving process for short-tail insurance lines (consisting of property, energy, marine and aviation and other exposures including travel, accident and health, and warranty and lenders solutions), the Company relies on a combination of the reserving methods discussed above. For catastrophe-exposed business, the reserving process also includes the usage of catastrophe models for known events

and a heavy reliance on analysis of individual catastrophic events and management judgment. The development of losses on short-tail business can be unstable, especially for policies characterized by high severity, low frequency losses. As time passes, for a given accident year, additional weight is given to the paid and incurred B-F loss development methods and eventually to the historical paid and incurred loss development methods in the reserving process. The Company makes a number of key assumptions in their reserving process, including that historical paid and reported development patterns are stable, catastrophe models provide useful information about our exposure to catastrophic events that have occurred and underwriters’ judgment as to potential loss exposures can be relied on. The expected loss ratios used in the initial reserving process for short-tail business have varied over time due to changes in pricing, reinsurance structure, estimates of catastrophe losses, policy changes (such as attachment points, class and limits) and geographical distribution. As losses in short-tail lines are reported relatively quickly, expected loss ratios are selected for the current accident year based upon actual attritional loss ratios for earlier accident years, adjusted for rate changes, inflation, changes in reinsurance programs and expected attritional losses based on modeling. Furthermore, ultimate losses for short-tail business are known in a reasonably short period of time.

In the initial reserving process for long-tail insurance lines (consisting of third party occurrence business, third party claims made business, and other exposures including surety, programs and contract binding exposures), the Company primarily relies on the expected loss method. The development of the Company’s long-tail business may be unstable, especially if there are high severity major events, as a portion of the Company’s casualty business is in high excess layers. As time passes, for a given accident year, additional weight is given to the paid and incurred B-F loss development methods and historical paid and incurred loss development methods in the reserving process. The Company makes a number of key assumptions in reserving for long-tail lines, including that the pricing loss ratio is the best estimate of the ultimate loss ratio at the time the policy is entered into, that the loss development patterns, which are based on a combination of company and industry loss development patterns and adjusted to reflect differences in the insurance segment’s mix of business, are reasonable and that claims personnel and underwriters analyses of our exposure to major events are assumed to be the best estimate of exposure to the known claims on those events. The expected loss ratios used in the initial reserving process for long-tail business for recent accident years have varied over time, in some cases significantly, from earlier accident years. As the credibility of historical experience for earlier accident years increases, the experience from these accident years will be given a greater weighting in the actuarial analysis to determine future

accident year expected loss ratios, adjusted for changes in pricing, loss trends, terms and conditions and reinsurance structure.

From time to time, the Company enters into loss portfolio transfer and adverse development cover reinsurance agreements accounted for as retroactive reinsurance. These agreements transfer Loss Reserves and future favorable or adverse development on certain runoff programs and certain third party occurrence business, within multi-line and other specialty business (the “Covered Lines”). As incurred losses and allocated loss adjustment expenses for the Covered Lines

are ceded to the reinsurer, the Company is not exposed to changes in the amount, timing and uncertainty of cash flows arising from the Covered Lines. To avoid distortion, the incurred losses and allocated loss adjustment expenses and cumulative paid losses and loss adjustment expenses for the Covered Lines are excluded entirely from the tables below. Unpaid loss and loss adjustment expenses recoverable at December 31, 2024 included $168 million related to such reinsurance agreements.

The following tables present information on the insurance segment’s short-duration insurance contracts:

Property, energy, marine and aviation (in millions except claim count)
Incurred losses and allocated loss adjustment expenses, net of reinsurance																					December 31, 2024
																					Total of IBNR liabilities plus expected development on reported claims		Cumulative number of reported claims
	Year ended December 31,
Accident year	2015 unaudited		2016 unaudited		2017 unaudited		2018 unaudited		2019 unaudited		2020 unaudited		2021 unaudited		2022 unaudited		2023 unaudited		2024
2015	$	112	$	110	$	104	$	102	$	98	$	92	$	92	$	91	$	89	$	89	$	1	4,535
2016			104		101		105		100		96		92		87		87		86		—		6,177
2017					281		246		236		230		231		225		225		224		—		6,481
2018							181		186		174		170		170		172		170		4		5,085
2019									179		179		165		161		159		156		(2)		7,436
2020											359		329		336		333		337		3		8,682
2021													427		429		423		421		19		10,077
2022															522		495		576		148		15,860
2023																	571		510		110		20,178
2024																			703		348		17,889
																	Total		$	3,272
Cumulative paid losses and allocated loss adjustment expenses, net of reinsurance
2015	$	24	$	65	$	76	$	86	$	88	$	86	$	87	$	88	$	86	$	86
2016			25		83		98		97		94		91		87		87		86
2017					30		140		196		212		216		218		220		221
2018							30		102		135		143		150		154		157
2019									26		105		134		139		148		153
2020											56		194		251		293		306
2021													90		268		343		365
2022															100		276		337
2023																	146		271
2024																			195
									Total										2,177
									All outstanding liabilities before 2015, net of reinsurance										19
							Liabilities for losses and loss adjustment expenses, net of reinsurance												$	1,114

Third party occurrence business (in millions except claim count)
	Incurred losses and allocated loss adjustment expenses, net of reinsurance																				December 31, 2024
																					Total of IBNR liabilities plus expected development on reported claims		Cumulative number of reported claims
	Year ended December 31,
Accident year	2015 unaudited		2016 unaudited		2017 unaudited		2018 unaudited		2019 unaudited		2020 unaudited		2021 unaudited		2022 unaudited		2023 unaudited		2024
2015	$	359	$	391	$	398	$	392	$	391	$	382	$	386	$	379	$	377	$	365	$	51	78,553
2016			389		394		406		399		375		367		363		352		345		67		78,811
2017					417		418		422		412		407		406		404		408		89		84,682
2018							430		453		450		451		459		461		448		106		79,202
2019									456		487		480		471		470		451		122		88,964
2020											606		616		640		632		606		138		98,530
2021													622		662		659		671		147		99,287
2022															688		726		735		408		100,455
2023																	877		936		622		102,558
2024																			1,001		883		83,386
																	Total		$	5,966
Cumulative paid losses and allocated loss adjustment expenses, net of reinsurance
2015	$	11	$	44	$	88	$	139	$	181	$	211	$	227	$	249	$	268	$	276
2016			12		42		88		137		164		195		215		230		246
2017					13		52		100		135		165		221		247		271
2018							17		64		115		154		200		247		271
2019									18		73		122		173		214		255
2020											24		76		155		235		318
2021													26		91		174		323
2022															24		85		186
2023																	32		156
2024																			37
									Total										2,339
									All outstanding liabilities before 2015, net of reinsurance										339
							Liabilities for losses and loss adjustment expenses, net of reinsurance												$	3,966

Third party claims-made business (in millions except claim count)
Incurred losses and allocated loss adjustment expenses, net of reinsurance																					December 31, 2024
																					Total of IBNR liabilities plus expected development on reported claims		Cumulative number of reported claims
	Year ended December 31,
Accident year	2015 unaudited		2016 unaudited		2017 unaudited		2018 unaudited		2019 unaudited		2020 unaudited		2021 unaudited		2022 unaudited		2023 unaudited		2024
2015	$	259	$	277	$	276	$	260	$	255	$	252	$	268	$	267	$	274	$	268	$	6	13,955
2016			275		291		308		314		322		327		329		327		329		16		14,892
2017					270		285		311		308		323		316		337		339		42		15,484
2018							272		314		319		336		347		366		366		33		17,094
2019									289		317		317		322		329		329		49		16,723
2020											383		412		423		445		432		86		16,816
2021													514		517		499		461		176		18,086
2022															668		654		589		257		19,825
2023																	809		895		543		23,671
2024																			737		577		23,155
																	Total		$	4,745
Cumulative paid losses and allocated loss adjustment expenses, net of reinsurance
2015	$	9	$	52	$	100	$	126	$	174	$	193	$	217	$	221	$	242	$	248
2016			11		68		127		158		205		242		257		295		296
2017					9		67		113		143		196		232		257		276
2018							12		68		118		158		208		258		285
2019									12		65		122		154		196		235
2020											17		87		151		214		265
2021													23		90		162		223
2022															25		100		218
2023																	64		200
2024																			56
									Total										2,302
									All outstanding liabilities before 2015, net of reinsurance										90
							Liabilities for losses and loss adjustment expenses, net of reinsurance												$	2,533

Multi-line and other specialty (in millions except claim count)
Incurred losses and allocated loss adjustment expenses, net of reinsurance																					December 31, 2024
																					Total of IBNR liabilities plus expected development on reported claims		Cumulative number of reported claims
	Year ended December 31,
Accident year	2015 unaudited		2016 unaudited		2017 unaudited		2018 unaudited		2019 unaudited		2020 unaudited		2021 unaudited		2022 unaudited		2023 unaudited		2024
2015	$	334	$	358	$	356	$	365	$	356	$	349	$	347	$	345	$	344	$	344	$	3	181,424
2016			408		431		427		416		410		408		408		406		404		4		195,233
2017					482		500		491		500		504		512		516		514		6		236,433
2018							512		564		562		564		564		564		564		9		266,125
2019									566		611		639		650		656		671		11		249,876
2020											616		567		513		515		519		26		168,232
2021													634		618		614		635		42		112,591
2022															677		640		639		90		144,429
2023																	815		809		199		161,842
2024																			1,419		885		145,190
																	Total		$	6,518
Cumulative paid losses and allocated loss adjustment expenses, net of reinsurance
2015	$	138	$	236	$	278	$	306	$	321	$	326	$	330	$	331	$	333	$	337
2016			176		304		341		363		379		385		390		391		396
2017					181		342		380		423		446		472		479		493
2018							211		389		442		479		508		526		543
2019									212		385		486		548		576		611
2020											171		308		358		405		450
2021													157		334		427		511
2022															177		370		439
2023																	253		489
2024																			337
									Total										4,606
									All outstanding liabilities before 2015, net of reinsurance										29
							Liabilities for losses and loss adjustment expenses, net of reinsurance												$	1,941

The following table presents the average annual percentage payout of incurred losses and allocated loss adjustment expenses by age, net of reinsurance, as of December 31, 2024:

	Average annual percentage payout of incurred losses and allocated loss adjustment expenses by age, net of reinsurance
	Year 1		Year 2		Year 3		Year 4		Year 5		Year 6		Year 7		Year 8		Year 9		Year 10
Property, energy, marine and aviation	21.5	%	43.8	%	17.2	%	6.1	%	2.4	%	—	%	—	%	0.3	%	(1.2)	%	—	%
Third party occurrence business	3.6	%	10.0	%	12.3	%	13.2	%	10.0	%	10.0	%	5.5	%	5.5	%	4.8	%	2.2	%
Third party claims-made business	4.4	%	15.6	%	16.3	%	10.9	%	14.3	%	10.9	%	7.0	%	6.2	%	4.0	%	2.4	%
Multi-line and other specialty	32.8	%	29.2	%	11.0	%	8.5	%	5.1	%	3.3	%	1.7	%	1.1	%	0.8	%	1.4	%

Reinsurance Segment

Loss Reserves for the Company’s reinsurance segment are comprised of (1) case reserves, (2) additional case reserves (“ACRs”) and (3) IBNR reserves. The Company receives reports of claims notices from ceding companies and records case reserves based upon the amount of reserves recommended by the ceding company. Case reserves may be supplemented by ACRs, which may be estimated by the Company’s claims personnel ahead of official notification from the ceding company, or when judgment regarding the size or severity of the known event differs from the ceding company. In certain instances, the Company establishes ACRs even when the ceding company does not report any liability on a known event. In addition, specific claim information reported by ceding companies or obtained through claim audits can alert the Company to emerging trends such as changing legal interpretations of coverage and liability, claims from unexpected sources or classes of

business, and significant changes in the frequency or severity of individual claims. Such information is often used in the process of estimating IBNR reserves. IBNR reserves are established to provide for incurred claims which have not yet been reported at the balance sheet date as well as to adjust for any projected variance in case reserving. Actuaries estimate ultimate losses and loss adjustment expenses using various generally accepted actuarial methods applied to known losses and other relevant information. Like case reserves, IBNR reserves are adjusted as additional information becomes known or payments are made. The process of estimating Loss Reserves involves a considerable degree of judgment by management and, as of any given date, is inherently uncertain.

The estimation of Loss Reserves for the reinsurance segment is subject to the same risk factors as the estimation of Loss Reserves for the insurance segment. In addition, the inherent uncertainties of estimating such reserves are even greater for

reinsurers, due primarily to the following factors: (1) the claim-tail for reinsurers is generally longer because claims are first reported to the ceding company and then to the reinsurer through one or more intermediaries, (2) the reliance on premium estimates, where reports have not been received from the ceding company, in the reserving process, (3) the potential for writing a number of reinsurance contracts with different ceding companies with the same exposure to a single loss event, (4) the diversity of loss development patterns among different types of reinsurance contracts, (5) the necessary reliance on the ceding companies for information regarding reported claims and (6) the differing reserving practices among ceding companies.

Ultimate losses and loss adjustment expenses are generally determined by projection of claim emergence and settlement patterns observed in the past that can reasonably be expected to persist into the future. As with the insurance segment, the process of estimating Loss Reserves for the reinsurance segment involves a considerable degree of judgment by management and, as of any given date, is inherently uncertain. As discussed above, such uncertainty is greater for reinsurers compared to insurers. As a result, our reinsurance operations obtain information from numerous sources to assist in the process. Pricing actuaries from the reinsurance segment devote considerable effort to understanding and analyzing a ceding company’s operations and loss history during the underwriting of the business, using a combination of ceding company and industry statistics. Such statistics normally include historical premium and loss data by class of business, individual claim information for larger claims, distributions of insurance limits provided, loss reporting and payment patterns, and rate change history. This analysis is used to project expected loss ratios for each treaty during the upcoming contract period.

As mentioned above, there can be a considerable time lag from the time a claim is reported to a ceding company to the time it is reported to the reinsurer. The lag can be several years in some cases and may be attributed to a number of reasons, including the time it takes to investigate a claim, delays associated with the litigation process, the deterioration in a claimant’s physical condition many years after an accident occurs, the case reserving approach of the ceding company, etc. In the reserving process, the Company assumes that such lags are predictable, on average, over time and therefore the lags are contemplated in the loss reporting patterns used in their actuarial methods. This means that the reinsurance segment must rely on estimates for a longer period of time than does an insurance company. Backlogs in the recording of assumed reinsurance can also complicate the accuracy of loss reserve estimation. As of December 31, 2024 there were no significant backlogs related to the processing of assumed reinsurance information at our reinsurance operations.

The reinsurance segment relies heavily on information reported by ceding companies, as discussed above. In order to determine the accuracy and completeness of such information, underwriters, actuaries, and claims personnel often perform audits of ceding companies and regularly review information received from ceding companies for unusual or unexpected results. Material findings are usually discussed with the ceding companies. The Company sometimes encounters situations where they determine that a claim presentation from a ceding company is not in accordance with contract terms. In these situations, the Company attempts to resolve the dispute with the ceding company. Most situations are resolved amicably and without the need for litigation or arbitration. However, in the infrequent situations where a resolution is not possible, the Company will vigorously defend its position in such disputes.

Although Loss Reserves are initially determined based on underwriting and pricing analysis, the Company applies several generally accepted actuarial methods, as discussed above, on a quarterly basis to evaluate its Loss Reserves in addition to the expected loss method, in particular for reserves from more mature underwriting years (the year in which business is underwritten). Each quarter, as part of the reserving process, the Company’s actuaries reaffirm that the assumptions used in the reserving process continue to form a sound basis for projection of liabilities. If actual loss activity differs substantially from expectations based on historical information, an adjustment to Loss Reserves may be supported. Estimated Loss Reserves for more mature underwriting years are now based more on actual loss activity and historical patterns than on the initial assumptions based on pricing indications. More recent underwriting years rely more heavily on internal pricing assumptions. The Company places more or less reliance on a particular actuarial method based on the facts and circumstances at the time the estimates of Loss Reserves are made.

In the initial reserving process for short-tail reinsurance lines (consisting of property excluding property catastrophe and property catastrophe exposures), the Company relies on a combination of the reserving methods discussed above. For known catastrophic events, the reserving process also includes the usage of catastrophe models and a heavy reliance on analysis which includes ceding company inquiries and management judgment. The development of property losses may be unstable, especially where there is high catastrophic exposure, may be characterized by high severity, low frequency losses for excess and catastrophe-exposed business and may be highly correlated across contracts. As time passes, for a given underwriting year, additional weight is given to the paid and incurred B-F loss development methods and historical paid and incurred loss development methods in the reserving process. The Company makes a number of key assumptions in reserving for short-tail lines, including that historical paid and reported development

patterns are stable, catastrophe models provide useful information about our exposure to catastrophic events that have occurred and our underwriters’ judgment and guidance received from ceding companies as to potential loss exposures may be relied on. The expected loss ratios used in the initial reserving process for property exposures have varied over time due to changes in pricing, reinsurance structure, estimates of catastrophe losses, terms and conditions and geographical distribution. As losses in property lines are reported relatively quickly, expected loss ratios are selected for the current underwriting year incorporating the experience for earlier underwriting years, adjusted for rate changes, inflation, changes in reinsurance programs, expectations about present and future market conditions and expected attritional losses based on modeling. Due to the short-tail nature of property business, reported loss experience emerges quickly and ultimate losses are known in a reasonably short period of time.

In the initial reserving process for long-tail reinsurance lines (consisting of casualty, other specialty, marine and aviation and other exposures), the Company primarily relies on the expected loss method. The development of long-tail business may be unstable, especially if there are high severity major

events, with business written on an excess of loss basis typically having a longer tail than business written on a pro rata basis. As time passes, for a given underwriting year, additional weight is given to the paid and incurred B-F loss development methods and eventually to the historical paid and incurred loss development methods in the reserving process. Our reinsurance operations make a number of key assumptions in reserving for long-tail lines, including that the pricing loss ratio is the best estimate of the ultimate loss ratio at the time the contract is entered into, historical paid and reported development patterns are stable and claims personnel and underwriters’ analyses of our exposure to major events are our best estimate of our exposure to the known claims on those events. The expected loss ratios used in our reinsurance operations’ initial reserving process for long-tail contracts have varied over time due to changes in pricing, terms and conditions and reinsurance structure. As the credibility of historical experience for earlier underwriting years increases, the experience from these underwriting years is used in the actuarial analysis to determine future underwriting year expected loss ratios, adjusted for changes in pricing, loss trends, terms and conditions and reinsurance structure.

The following tables present information on the reinsurance segment’s short-duration insurance contracts:

Casualty (in millions)
Incurred losses and allocated loss adjustment expenses, net of reinsurance																					December 31, 2024
																					Total of IBNR liabilities plus expected development on reported claims		Cumulative number of reported claims
	Year ended December 31,
Accident year	2015 unaudited		2016 unaudited		2017 unaudited		2018 unaudited		2019 unaudited		2020 unaudited		2021 unaudited		2022 unaudited		2023 unaudited		2024
2015	$	218	$	217	$	225	$	232	$	236	$	243	$	246	$	248	$	257	$	248	$	37	N/A
2016			209		222		244		259		266		266		269		278		279		43		N/A
2017					264		252		268		295		306		313		327		335		49		N/A
2018							273		286		278		283		295		304		318		49		N/A
2019									328		340		367		378		399		398		72		N/A
2020											377		365		348		366		385		128		N/A
2021													436		431		422		423		157		N/A
2022															542		523		535		312		N/A
2023																	650		654		438		N/A
2024																			720		680		N/A
																	Total		$	4,295
Cumulative paid losses and allocated loss adjustment expenses, net of reinsurance
2015	$	4	$	20	$	47	$	71	$	96	$	119	$	136	$	151	$	169	$	177
2016			6		26		51		86		113		132		156		172		186
2017					6		30		64		113		137		164		188		221
2018							8		31		106		129		154		182		205
2019									16		58		97		130		219		256
2020											18		50		90		131		177
2021													14		53		102		190
2022															17		60		111
2023																	18		86
2024																			14
																	Total		1,623
									All outstanding liabilities before 2015, net of reinsurance										354
							Liabilities for losses and loss adjustment expenses, net of reinsurance												$	3,026

Property catastrophe (in millions)
Incurred losses and allocated loss adjustment expenses, net of reinsurance																					December 31, 2024
																					Total of IBNR liabilities plus expected development on reported claims		Cumulative number of reported claims
	Year ended December 31,
Accident year	2015 unaudited		2016 unaudited		2017 unaudited		2018 unaudited		2019 unaudited		2020 unaudited		2021 unaudited		2022 unaudited		2023 unaudited		2024
2015	$	32	$	17	$	11	$	5	$	3	$	3	$	2	$	2	$	2	$	2	$	—	N/A
2016			21		15		11		8		5		5		4		3		3		1		N/A
2017					85		53		48		35		23		20		20		20		(1)		N/A
2018							68		43		25		11		2		(1)		(2)		—		N/A
2019									10		2		1		(7)		(14)		(10)		—		N/A
2020											262		325		329		320		308		9		N/A
2021													307		301		286		288		7		N/A
2022															292		284		258		25		N/A
2023																	253		245		34		N/A
2024																			489		100		N/A
																	Total		$	1,601
Cumulative paid losses and allocated loss adjustment expenses, net of reinsurance
2015	$	(3)	$	(3)	$	1	$	2	$	1	$	1	$	1	$	1	$	1	$	2
2016			(7)		1		1		2		1		1		1		1		2
2017					31		31		36		26		13		15		16		16
2018							27		2		12		(18)		(15)		(14)		(12)
2019									4		3		6		(19)		(19)		(27)
2020											55		155		203		243		253
2021													66		168		217		224
2022															68		162		200
2023																	6		75
2024																			58
																	Total		791
									All outstanding liabilities before 2015, net of reinsurance										2
							Liabilities for losses and loss adjustment expenses, net of reinsurance												$	812

Property excluding property catastrophe (in millions)
Incurred losses and allocated loss adjustment expenses, net of reinsurance																					December 31, 2024
																					Total of IBNR liabilities plus expected development on reported claims		Cumulative number of reported claims
	Year ended December 31,
Accident year	2015 unaudited		2016 unaudited		2017 unaudited		2018 unaudited		2019 unaudited		2020 unaudited		2021 unaudited		2022 unaudited		2023 unaudited		2024
2015	$	213	$	187	$	183	$	187	$	186	$	175	$	171	$	166	$	166	$	166	$	4	N/A
2016			172		143		135		133		137		133		127		128		126		6		N/A
2017					263		244		233		225		209		201		198		197		7		N/A
2018							221		236		232		209		199		201		201		6		N/A
2019									212		202		192		187		187		193		4		N/A
2020											363		336		316		317		319		14		N/A
2021													537		489		483		491		28		N/A
2022															728		654		645		74		N/A
2023																	819		720		136		N/A
2024																			1,183		687		N/A
																	Total		$	4,241
Cumulative paid losses and allocated loss adjustment expenses, net of reinsurance
2015	$	75	$	118	$	148	$	159	$	164	$	157	$	158	$	158	$	159	$	159
2016			33		93		97		102		110		112		113		113		115
2017					27		123		153		160		175		178		182		182
2018							29		106		150		165		173		175		175
2019									42		122		148		160		166		167
2020											100		206		241		264		277
2021													135		265		358		418
2022															141		354		459
2023																	149		375
2024																			143
																	Total		2,470
									All outstanding liabilities before 2015, net of reinsurance										6
							Liabilities for losses and loss adjustment expenses, net of reinsurance												$	1,777

Marine and aviation (in millions)
Incurred losses and allocated loss adjustment expenses, net of reinsurance																					December 31, 2024
																					Total of IBNR liabilities plus expected development on reported claims		Cumulative number of reported claims
	Year ended December 31,
Accident year	2015 unaudited		2016 unaudited		2017 unaudited		2018 unaudited		2019 unaudited		2020 unaudited		2021 unaudited		2022 unaudited		2023 unaudited		2024
2015	$	33	$	37	$	31	$	31	$	30	$	28	$	27	$	25	$	24	$	24	$	1	N/A
2016			27		23		23		19		17		15		12		11		10		3		N/A
2017					29		26		24		21		20		17		15		15		2		N/A
2018							27		25		24		24		21		20		20		2		N/A
2019									48		54		60		60		62		62		6		N/A
2020											82		75		79		79		81		7		N/A
2021													109		95		80		78		9		N/A
2022															125		137		133		42		N/A
2023																	161		166		66		N/A
2024																			235		157		N/A
																	Total		$	824
Cumulative paid losses and allocated loss adjustment expenses, net of reinsurance
2015	$	—	$	13	$	19	$	21	$	22	$	22	$	22	$	22	$	22	$	22
2016			(7)		(2)		—		3		6		7		7		7		7
2017					2		6		9		11		11		12		12		12
2018							2		7		11		13		14		15		16
2019									10		21		28		34		43		49
2020											9		26		42		59		66
2021													8		24		45		52
2022															12		37		62
2023																	13		43
2024																			18
																	Total		347
									All outstanding liabilities before 2015, net of reinsurance										18
							Liabilities for losses and loss adjustment expenses, net of reinsurance												$	495

Other specialty (in millions)
Incurred losses and allocated loss adjustment expenses, net of reinsurance																					December 31, 2024
																					Total of IBNR liabilities plus expected development on reported claims		Cumulative number of reported claims
	Year ended December 31,
Accident year	2015 unaudited		2016 unaudited		2017 unaudited		2018 unaudited		2019 unaudited		2020 unaudited		2021 unaudited		2022 unaudited		2023 unaudited		2024
2015	$	270	$	269	$	267	$	264	$	264	$	261	$	251	$	249	$	247	$	245	$	1	N/A
2016			317		314		307		298		304		300		297		298		291		3		N/A
2017					386		378		361		360		358		355		352		348		11		N/A
2018							403		396		391		415		411		411		405		22		N/A
2019									414		393		388		383		393		388		27		N/A
2020											578		511		506		526		518		44		N/A
2021													594		594		594		602		55		N/A
2022															929		911		956		161		N/A
2023																	1,310		1,238		390		N/A
2024																			1,704		1,070		N/A
																	Total		$	6,695
Cumulative paid losses and allocated loss adjustment expenses, net of reinsurance
2015	$	81	$	157	$	191	$	205	$	217	$	228	$	231	$	232	$	234	$	234
2016			105		199		235		253		269		275		281		284		284
2017					132		249		289		303		316		327		336		337
2018							126		267		306		327		344		366		369
2019									118		205		269		295		316		335
2020											130		286		361		396		434
2021													148		302		420		481
2022															176		451		606
2023																	238		534
2024																			362
																	Total		3,976
									All outstanding liabilities before 2015, net of reinsurance										30
							Liabilities for losses and loss adjustment expenses, net of reinsurance												$	2,749

The following table presents the average annual percentage payout of incurred losses and allocated loss adjustment expenses by age, net of reinsurance, as of December 31, 2024:

	Average annual percentage payout of incurred losses and allocated loss adjustment expenses by age, net of reinsurance
	Year 1		Year 2		Year 3		Year 4		Year 5		Year 6		Year 7		Year 8		Year 9		Year 10
Casualty	2.8	%	8.3	%	11.9	%	11.9	%	11.5	%	8.4	%	7.5	%	7.2	%	6.0	%	3.4	%
Property catastrophe	(134.2)	%	168.4	%	(22.5)	%	213.9	%	(38.4)	%	9.1	%	(12.1)	%	1.5	%	(0.8)	%	9.4	%
Property excluding property catastrophe	23.6	%	36.2	%	14.7	%	6.8	%	4.7	%	0.2	%	0.8	%	0.2	%	1.1	%	0.1	%
Marine and aviation	1.4	%	28.9	%	20.3	%	13.8	%	10.0	%	4.9	%	2.3	%	1.4	%	0.6	%	0.4	%
Other specialty	27.7	%	29.2	%	14.2	%	6.4	%	5.2	%	4.0	%	1.6	%	0.7	%	0.3	%	0.3	%

Mortgage Segment

The Company’s mortgage segment includes (1) U.S. primary mortgage insurance (2) U.S. credit risk transfer and other, and (3) international mortgage insurance and reinsurance. The latter two categories along with second lien and student loan exposures are excluded on the basis of insignificance for the purposes of presenting disclosures related to short duration contracts.

For primary mortgage insurance business, the Company establishes case reserves for loans that have been reported as delinquent by loan servicers as well as those that are delinquent but not reported (IBNR reserves). The Company also reserves for the expenses of adjusting claims related to these delinquencies. The trigger that creates a case reserve estimate is that an insured loan is reported to us as being two payments in arrears. The actuarial reviews and documentation created in the reserving process are completed in accordance with generally accepted actuarial standards. The selected assumptions reflect actuarial judgment based on the analysis of historical data and experience combined with information concerning current underwriting, economic, judicial, regulatory and other influences on ultimate claim settlements.

Because the reserving process requires the Company to forecast future conditions, it is inherently uncertain and requires significant judgment and estimation. The use of different estimates would result in the establishment of different reserve levels. Additionally, changes in estimates are likely to occur from period to period as economic conditions change, and the ultimate liability may vary significantly from the estimates used. Major risk factors include (but are not limited to) changes in home prices and borrower equity, which can limit the borrower’s ability to sell the property and satisfy the outstanding loan balance, and changes in unemployment, which can affect the borrower’s income and ability to make mortgage payments. The unique nature of the COVID-19 pandemic, with no historical precedent, adds further uncertainty to current reserve estimates.

The lead actuarial methodology used by the Company is a frequency-severity method based on the inventory of pending delinquencies. Each month the loan servicers report the delinquency status of each insured loan. Using the frequency-

severity method allows the Company to take advantage of its knowledge of the number of delinquent loans and the coverage provided (“risk size”) on those loans by directly relating the reserves to these amounts. The delinquencies are grouped into homogeneous cohorts for analysis, reflecting the age of delinquency. A claim rate is then developed for each cohort which represents the frequency with which the delinquencies become claims. The claim frequency rates are based on an analysis of the patterns of emerging cure counts and claim counts, the foreclosure status of the pending delinquencies, the product and geographical mix of the delinquencies and our view of future economic and claim conditions, which include trends in home prices and unemployment. Claim rates can vary materially by age of delinquency, depending on the mix of delinquencies and economic conditions.

Claim size severity estimates are determined by examining the risk sizes on the delinquent loans and estimating the portion of risk that will be paid, as well as any expenses. This is done based on a review of historical development patterns, an assessment of economic conditions and the level of equity the borrowers may have in their homes, as well as considering economic conditions and loss mitigation opportunities. Mortgage insurance is generally not subject to large claim sizes, as with some other lines of insurance. A claim size over $250,000 is rare, and this helps reduce the volatility of claim size estimates.

The claim rate and claim size assumptions generate case reserves for the population of reported delinquencies. The reserve for unreported delinquencies (included in IBNR reserves) is estimated by looking at historical patterns of reporting. Claim rates and claim sizes can then be assigned to estimated unreported delinquencies using assumptions made in the establishment of case reserves.

Mortgage insurance Loss Reserves are short-tail, in the sense that the vast majority of delinquencies are resolved within two years of being reported. Due to the forbearances and foreclosure moratoriums associated with COVID-19, settlement timelines have been extended. While reserves are initially analyzed by reserve cohort, as described above, they are also rolled up by underwriting year to ensure that reserve assumptions are consistent with the performance of the underwriting year. The accuracy of prior reserve assumptions

is also checked in hindsight to determine if adjustments to the assumptions are needed.

Loss Reserves for the Company’s mortgage reinsurance business and GSE credit risk sharing transactions are comprised of case reserves and IBNR reserves. The Company’s mortgage reinsurance operations receive reports of delinquent loans and claims notices from ceding

companies and record case reserves based upon the amount of reserves recommended by the ceding company. In addition, specific claim and delinquency information reported by ceding companies is used in the process of estimating IBNR reserves.

The following table presents information on the mortgage segment’s short-duration insurance contracts:

U.S. primary mortgage insurance (in millions except claim count)
Incurred losses and allocated loss adjustment expenses, net of reinsurance																					December 31, 2024
																					Total of IBNR liabilities plus expected development on reported claims	Cumulative number of paid claims
Year ended December 31,
Accident year	2015 unaudited		2016 unaudited		2017 unaudited		2018 unaudited		2019 unaudited		2020 unaudited		2021 unaudited		2022 unaudited		2023 unaudited		2024
2015	$	223	$	197	$	198	$	195	$	189	$	191	$	191	$	189	$	188	$	188	—	4,686
2016			184		171		149		141		142		142		137		136		136		—	3,557
2017					179		132		107		108		109		102		99		99		—	2,707
2018							132		96		89		88		72		69		69		—	1,966
2019									108		119		110		63		51		52		—	1,435
2020											420		374		78		33		31		—	835
2021													144		77		20		17		—	381
2022															173		55		30		—	469
2023																	182		71		—	366
2024																			180		1	40
																	Total		$	873
Cumulative paid losses and allocated loss adjustment expenses, net of reinsurance
2015	16		92		151		171		180		183		184		185		186		186
2016			11		72		113		127		131		132		132		133		134
2017					9		48		79		87		90		92		93		95
2018							4		31		50		56		59		60		63
2019									3		20		29		34		39		42
2020											1		4		8		13		19
2021													—		2		5		8
2022															—		3		10
2023																	—		7
2024																			1
																	Total		565
									All outstanding liabilities before 2015, net of reinsurance										13
							Liabilities for losses and loss adjustment expenses, net of reinsurance												$	321

The following table presents the average annual percentage payout of incurred losses and allocated loss adjustment expenses by age, net of reinsurance, as of December 31, 2024:

Average annual percentage payout of incurred losses and allocated loss adjustment expenses by age, net of reinsurance
	Year 1		Year 2		Year 3		Year 4		Year 5		Year 6		Year 7		Year 8		Year 9		Year 10
U.S. Primary	4.5	%	26.1	%	23.7	%	11.4	%	7.2	%	2.5	%	1.5	%	1.0	%	0.5	%	0.5	%

The following table represents a reconciliation of the disclosures of net incurred and paid loss development tables to the reserve for losses and loss adjustment expenses at December 31, 2024:

	December 31, 2024
Net outstanding liabilities
Insurance
Property, energy, marine and aviation	$	1,114
Third party occurrence business	3,966
Third party claims-made business	2,533
Multi-line and other specialty	1,941
Reinsurance
Casualty	3,026
Property catastrophe	812
Property excluding property catastrophe	1,777
Marine and aviation	495
Other specialty	2,749
Mortgage
U.S. primary	321
Other short duration lines not included in disclosures (1)	2,384
Total for short duration lines	21,118
Unpaid losses and loss adjustment expenses recoverable
Insurance
Property, energy, marine and aviation	420
Third party occurrence business	2,411
Third party claims-made business	923
Multi-line and other specialty	356
Reinsurance
Casualty	715
Property catastrophe	783
Property excluding property catastrophe	278
Marine and aviation	462
Other specialty	998
Mortgage
U.S. primary	33
Other short duration lines not included in disclosures (2)	474
Intercompany eliminations	(32)
Total for short duration lines	7,821
Lines other than short duration	146
Discounting	(68)
Unallocated claims adjustment expenses	352
	430
Reserve for losses and loss adjustment expenses	$	29,369

(1)    Includes amounts associated with the loss portfolio reinsurance agreement related to the MCE Acquisition. See note 2.

(2)    Includes unpaid loss and loss adjustment expenses recoverable of $168 million related to the loss portfolio transfer reinsurance agreements.