
	Three Months Ended March 31,
(dollars in thousands)	2026		2025
Gross reserves for losses and loss adjustment expenses, beginning of year	$	30,857,453	$	26,633,094
Reinsurance recoverables on unpaid losses, beginning of year	14,150,484		11,120,367
Net reserves for losses and loss adjustment expenses, beginning of year	16,706,969		15,512,727
Effect of foreign currency rate changes on beginning of year balance	(36,345)		56,701
Adjusted net reserves for losses and loss adjustment expenses, beginning of year	16,670,624		15,569,428
Incurred losses and loss adjustment expenses:
Current accident year	1,270,880		1,404,772
Prior accident years	(104,063)		(150,107)
Total incurred losses and loss adjustment expenses	1,166,817		1,254,665
Payments:
Current accident year	35,061		50,284
Prior accident years	1,099,676		901,098
Total payments	1,134,737		951,382
Effect of foreign currency rate changes on current year activity	(582)		54
Change in net reserves for losses and loss adjustment expenses of Markel CATCo Re	—		(121)


Retroactive reinsurance transaction with Hagerty Re	(62,202)		—

Net reserves for losses and loss adjustment expenses, end of period	16,639,920		15,872,644
Reinsurance recoverables on unpaid losses, end of period	14,730,616		12,015,613
Gross reserves for losses and loss adjustment expenses, end of period	$	31,370,536	$	27,888,257

For the three months ended March 31, 2026, current accident year losses and loss adjustment expenses included $35.0 million of net losses and loss adjustment expenses attributed to the regional military conflict that emerged in the Middle East following U.S. and Israeli airstrikes on Iran on February 28, 2026. Net losses and loss adjustment expenses from the Middle East conflict were attributed to terrorism and marine war coverages written by the International division within the Markel Insurance segment. Loss estimates for incurred losses attributed to the Middle East conflict represent the Company's best estimate as of March 31, 2026 based upon information currently available. The Company's estimates for these losses are based on known losses and reported claims, as well as an analysis of the Company's ceded reinsurance contracts. Due to the inherent uncertainty associated with the assumptions surrounding the Middle East conflict, these estimates are subject to a wide range of variability.

While the Company believes the reserves for losses and loss adjustment expenses for the Middle East conflict as of March 31, 2026 are adequate based on information currently available, the Company continues to closely monitor reported claims, ceded reinsurance contract attachment, government actions, and areas impacted by the conflict and may adjust its loss estimates as new information becomes available. Additionally, as the Middle East conflict is ongoing, additional losses may be incurred in subsequent periods, and such losses may be material to the Company's results of operations, financial condition, and cash flows.

Effective January 1, 2026, the Company entered into a retroactive reinsurance agreement with Hagerty Reinsurance Limited (Hagerty Re) to reinsure its retained exposures on business written on behalf of Hagerty, Inc. (Hagerty) prior to January 1, 2026. Net losses and loss adjustment expenses on these ceded policies totaled $62.2 million as of December 31, 2025, for which the Company paid $54.1 million to Hagerty Re. See note 8 for additional details on the Company's transactions with Hagerty to transition the relationship to a fronting arrangement.

For the three months ended March 31, 2026, losses and loss adjustment expenses included $104.1 million of favorable development on prior years loss reserves, which included $64.4 million of net favorable development on the Company's professional liability, credit and surety, and workers' compensation insurance product lines within its Markel Insurance segment.

For the three months ended March 31, 2025, losses and loss adjustment expenses included $150.1 million of favorable development on prior years loss reserves, which included $125.2 million of net favorable development on the Company's professional liability, general liability, marine and energy, and workers' compensation insurance product lines within its Markel Insurance segment.