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		28,607			28,359
Prior accident years		(240	)		(1,167	)
Total		28,367			27,192
Losses and loss adjustment expenses paid:
Current accident year		(9,253	)		(9,491	)
Prior accident years		(16,283	)		(15,626	)
Total		(25,536	)		(25,117	)
Foreign currency effect		712			(110	)
Balance at June 30:
Net liabilities		114,101			108,154
Reinsurance recoverable on unpaid losses		4,687			4,650
Gross liabilities	$	118,788		$	112,804

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 six months of 2025 were $1.1 billion from the Southern California wildfires, which occurred in the first quarter. We experienced no significant catastrophe events in the first six months of 2024.

We recorded net reductions of estimated ultimate claim liabilities for prior accident years’ claims of $240 million in the first six months of 2025 and $1.2 billion in the first six 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 0.2% in 2025 and 1.1% in 2024.

Our primary insurance businesses recorded net increases in prior accident years’ estimated ultimate claim liabilities of $266 million in the first six months of 2025, primarily attributable to increases for casualty exposures, partly offset by decreases for property coverages. Our primary insurance businesses reduced estimated losses for prior accident years in the first six months of 2024 by $433 million, which derived primarily from reduced estimates for property and medical professional liability coverages. Our reinsurance businesses recorded net reductions of estimated ultimate claim liabilities for prior accident years in the first six months of $506 million in 2025 and $734 million in 2024. These reductions were primarily attributable to lower estimates for property coverages.