Retroactive reinsurance policies provide indemnification of losses and loss adjustment expenses of short-duration insurance contracts with respect to underlying loss events that occurred prior to the contract inception date and may include significant asbestos, environmental and other mass tort claims. Retroactive reinsurance contracts are generally subject to aggregate policy limits and our exposure to such claims under these contracts is likewise limited. Reconciliations of the changes in estimated liabilities for retroactive reinsurance unpaid losses and loss adjustment expenses follow (in millions).


	2025			2024
Balance at the beginning of the year	$	32,443		$	34,647
Losses and loss adjustment expenses incurred	13				(66	)
Losses and loss adjustment expenses paid		(1,259	)		(1,596	)
Foreign currency effect		110			75
Balance at September 30	$	31,307		$	33,060

Losses and loss adjustment expenses incurred	$	13		$	(66	)
Deferred charge adjustments		499			610
Losses and loss adjustment expenses incurred, including deferred charge adjustments	$	512		$	544

We classify incurred and paid losses and loss adjustment expenses based on the inception dates of the contracts, reflecting when our exposure to losses began. Substantially all of the incurred and paid losses and loss adjustment expenses shown in the preceding table related to contracts written in prior years. Losses and loss adjustment expenses incurred shown in the Consolidated Statements of Earnings include changes in estimated ultimate liabilities and related adjustments to deferred charge assets arising from the changes in the estimated timing and amount of loss payments. Deferred charge assets on retroactive reinsurance contracts were $8.3 billion at September 30, 2025 and $8.8 billion at December 31, 2024.