Reconciliations of the changes in unpaid losses and loss adjustment expenses (“claim liabilities”), excluding liabilities under retroactive reinsurance contracts (see Note 14), follow (in millions).


	2025			2024
Balance at the beginning of the year:
Gross liabilities	$	115,151		$	111,082
Reinsurance recoverable on unpaid losses		(4,593	)		(4,893	)
Net liabilities		110,558			106,189
Losses and loss adjustment expenses incurred:
Current accident year		43,124			43,166
Prior accident years		(1,182	)		(992	)
Total		41,942			42,174
Losses and loss adjustment expenses paid:
Current accident year		(16,086	)		(16,011	)
Prior accident years		(22,165	)		(21,370	)
Total		(38,251	)		(37,381	)
Foreign currency effect		949			206
Balance at September 30:
Net liabilities		115,198			111,188
Reinsurance recoverable on unpaid losses		4,639			4,648
Gross liabilities	$	119,837		$	115,836

Our claim liabilities under property and casualty insurance and reinsurance contracts are based upon estimates of the ultimate claim costs associated with claim events that have occurred as of the balance sheet date and include estimates for incurred-but-not-reported (“IBNR”) claims. Losses and loss adjustment expenses incurred in the preceding table related to events occurring in the current year (“current accident year”) and events occurring in all prior years (“prior accident years”). Losses and loss adjustment expenses incurred and paid are net of reinsurance recoveries.

Current accident year incurred losses from significant catastrophe events (losses exceeding $150 million per event) in the first nine months were $1.1 billion in 2025 from the Southern California wildfires, which occurred in the first quarter, and $715 million in 2024 from Hurricane Helene, which occurred in the third quarter.

We recorded net reductions of estimated ultimate claim liabilities for prior accident years’ claims of $1.2 billion in the first nine months of 2025 and $992 million in the first nine months of 2024, which reduced losses and loss adjustment expenses incurred in those periods. These reductions, as percentages of the net liabilities at the beginning of each year, were 1.1% in 2025 and 0.9% in 2024.

Our primary insurance businesses recorded net decreases in prior accident years’ estimated ultimate claim liabilities of $284 million in the first nine months of 2025, attributable to decreases for property and workers’ compensation coverages, partly offset by increases in medical professional liability and other casualty coverages. In the first nine months of 2024, our primary insurance businesses increased estimated losses for prior accident years by $222 million, which reflected higher projected claim losses for certain commercial auto, business owner and other casualty coverages, partly offset by lower than expected property, medical professional liability and workers’ compensation losses. Our reinsurance businesses recorded net reductions of estimated ultimate claim liabilities for prior accident years of $898 million in the first nine months of 2025 compared to $1.2 billion in 2024. These reductions were primarily attributable to lower estimates for property coverages.