National General acquisition as of January 4, 2021

Notes to Condensed Consolidated Financial Statements  
in auto current year claim severity are generally influenced by inflation in the medical and auto repair sectors, the effectiveness and efficiency of claim practices and changes in mix of claim types. The Company mitigates these effects through various loss management programs. When such changes in claim data occur, actuarial judgment is used to determine appropriate development factors to establish reserves.As part of the reserving process, the Company may also supplement its claims processes by utilizing third-party adjusters, appraisers, engineers, inspectors, and other professionals and information sources to assess and settle catastrophe and non-catastrophe related claims. The effects of inflation are implicitly considered in the reserving process. Because reserves are estimates of unpaid portions of losses that have occurred, including incurred but not reported (“IBNR”) losses, the establishment of appropriate reserves, including reserves for catastrophes, Run-off Property-Liability and reinsurance and indemnification recoverables, is an inherently uncertain and complex process. The ultimate cost of losses may vary materially from recorded amounts, which are based on management’s best estimates. The highest degree of uncertainty is associated with reserves for losses incurred in the initial reporting period as it contains the greatest proportion of losses that have not been reported or settled as well as heightened uncertainty for claims that involve litigation or take longer to settle during periods of rapidly increasing loss costs. The Company also has uncertainty in the Run-off Property-Liability reserves that are based on events long since passed and are complicated by lack of historical data, legal interpretations, unresolved legal issues and legislative intent based on establishment of facts.The Company regularly updates its reserve estimates as new information becomes available and as events unfold that may affect the resolution of unsettled claims. Changes in reserve estimates, which may be material, are reported in property and casualty insurance claims and claims expense in the Condensed Consolidated Statements of Operations in the period such changes are determined.Management believes that the reserve for property and casualty insurance claims and claims expense, net of recoverables, is appropriately established in the aggregate and adequate to cover the ultimate net cost of reported and unreported claims arising from losses which had occurred by the date of the Condensed Consolidated Statements of Financial Position based on available facts, laws and regulations. 

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| Rollforward of the reserve for property and casualty insurance claims and claims expense |
|  |  | Nine months ended September 30, |
| ($ in millions) |  | 2022 |  | 2021 |
| Balance as of January 1 |  | $ | 33,060  |  |  | $ | 27,610  |  |
| Less recoverables (1) |  | (9,479) |  |  | (7,033) |  |
| Net balance as of January 1 |  | 23,581  |  |  | 20,577  |  |
| National General acquisition as of January 4, 2021 |  | —  |  |  | 1,797  |  |
| Incurred claims and claims expense related to: |  |  |  |  |
| Current year |  | 25,792  |  |  | 21,579  |  |
| Prior years |  | 1,470  |  |  | (65) |  |
| Total incurred |  | 27,262  |  |  | 21,514  |  |
| Claims and claims expense paid related to: |  |  |  |  |
| Current year |  | (14,020) |  |  | (12,539) |  |
| Prior years |  | (9,850) |  |  | (8,098) |  |
| Total paid |  | (23,870) |  |  | (20,637) |  |
| Net balance as of September 30 |  | 26,973  |  |  | 23,251  |  |
| Plus recoverables |  | 9,556  |  |  | 10,035  |  |
| Balance as of September 30 |  | $ | 36,529  |  |  | $ | 33,286  |  |

(1)Recoverables comprises reinsurance and indemnification recoverables.Incurred claims and claims expense represents the sum of paid losses, claim adjustment expenses and reserve changes in the period. This expense included losses from catastrophes of $2.33 billion and $2.81 billion in the nine months ended September 30, 2022 and 2021, respectively, net of recoverables. Catastrophes are an inherent risk of the property and casualty insurance business that have contributed to, and will continue to contribute to, material year-to-year fluctuations in the Company’s results of operations and financial position.Third Quarter 2022 Form 10-Q  35
