
	Three Months Ended March 31,
	2026		2025
(Dollars in millions)
Gross reserves beginning of period	$	34,312	$	29,889
Less reinsurance recoverables on unpaid losses	(3,715)		(2,915)
Net reserves beginning of period	30,597		26,975

Incurred related to:
Current year	2,250		2,893
Prior years	(33)		—
Prior years, impact from retroactive reinsurance	—		—
Total incurred losses and LAE	2,217		2,893



Paid related to:
Current year	297		410
Prior years	1,268		1,346
Total paid losses and LAE	1,565		1,755

Foreign exchange/translation adjustment	(145)		224
Retroactive reinsurance adjustment	—		—

Net reserves end of period	31,104		28,337
Plus reinsurance recoverables on unpaid losses (1)	3,545		3,175
Gross reserves end of period	$	34,649	$	31,512

Current year incurred losses were $2.3 billion and $2.9 billion for the three months ended March 31, 2026 and 2025, respectively. Current year incurred losses decreased overall due to a decrease of $239 million of current year attritional losses in 2026 compared to 2025, as well as a decrease of $404 million in 2026 current year catastrophe losses. 2025 current year attritional losses for the three months ended March 31, 2025 included approximately $83 million from the Washington D.C. aviation incident.

The net favorable development on prior year reserves of $33 million was primarily due to favorable prior year development on catastrophe losses of $70 million, driven by the release of reserves for well-seasoned 2023 and 2024 events, as well as 2025 Southern California wildfires reserves, partially offset by $37 million unfavorable development on prior year attritional losses primarily driven by development of Russia/Ukraine losses.

The current year catastrophe losses of $130 million for the three months ended March 31, 2026 related primarily to the 2026 Middle East Conflict ($58 million), the 2026 Winter Storm Fern ($27 million), the 2026 U.S. Winter Weather Events ($20 million), the 2026 Kristin Storms ($15 million) and the 2026 Nils Storms ($10 million). The $534 million of current year catastrophe losses for the three months ended March 31, 2025 related to the 2025 Southern California wildfires ($512 million) and the Myanmar earthquake ($22 million).

We are exposed to losses arising from unpredictable catastrophic events, including, but not limited to, weather-related and other natural catastrophes, as well as acts of terrorism, wars, pandemics, political instability and significant cyber or operational incidents, for which liabilities cannot be estimated using traditional reserving techniques. For example, we have exposure to losses due to the uncertainty regarding the current conflict in the Middle East.

Effective October 1, 2025, the Company through its subsidiaries Everest Re and Bermuda Re (collectively, the “Ceding Companies”) (1) entered into an adverse development reinsurance agreement (the “State National Reinsurance Agreement”) with State National Reinsurer and (2) entered into an adverse development reinsurance agreement (the “MS Transverse Reinsurance Agreement”) with MS Transverse Reinsurer (collectively the “Reinsurers”). The Reinsurance Agreements are supported on a retrocessional basis by Longtail Re, an affiliate of Stone Ridge Capital.

The agreements reinsure potential adverse loss development for accident years 2024 and prior arising out of the Ceding Companies’ North American liabilities within the Global Wholesale & Specialty and Legacy segments (“Subject Business”), subject to exclusions for certain liabilities, including among others those related to the Asbestos and Environmental (“A&E”) reserves included in the Legacy segment. At the time the Company entered into the agreement, the carried reserves held for the Subject Business, pursuant to the Reinsurance Agreements, were $5.4 billion.

Under the State National Reinsurance Agreement, the Company paid a reinsurance premium of $1.30 billion, including interest, to State National Reinsurer to assume $1.30 billion of carried reserves as of September 30, 2025, and potential subsequent adverse development for net paid losses on an approximately 85.7 percent coinsurance basis up to an aggregate limit of $600 million above the Company’s net carried reserves for the Subject Business.

Under the State National Reinsurance Agreement $250 million of the reinsurance premium was placed into a funds withheld collateral trust account as security for State National Reinsurer’s claim payment obligations to the Company.

Under the MS Transverse Reinsurance Agreement, the Company paid a reinsurance premium of $122 million to MS Transverse Reinsurer to assume potential subsequent adverse development for net paid losses on an 80 percent coinsurance basis up to an aggregate limit of $400 million. The $122 million payment to MS Transverse Reinsurer exceeds the retroactive reinsured liabilities and represents excess compensation for the uncertainty of future claims development, as a result the Company recognized an immediate pre-tax loss of $122 million in Incurred losses and loss adjustment expenses in the Company’s 2025 consolidated statement of operations. Mitsui Sumitomo Insurance Company Limited, the parent of MS Transverse Reinsurer, has provided a parental guarantee to secure its obligations under the agreement.

The Company has retained the risk of collection on amounts due from other third-party reinsurers and continues to be responsible for claims handling and other administrative services, subject to certain conditions.

As of March 31, 2026 and December 31, 2025, the Company had a deferred gain of $2 million and $3 million, respectively. The deferred gain would be recognized over the claim settlement period in the proportion of the amount of cumulative ceded losses collected from the reinsurer to the estimated ultimate reinsurance recoveries. The total covered losses ceded to State National Reinsurer as of March 31, 2026 and December 31, 2025 were $1.25 billion and $1.25 billion, respectively. The aggregated unexpired limit for State National Reinsurer as of March 31, 2026 and December 31, 2025 was $598 million and $597 million, respectively. The aggregated unexpired limit for MS Transverse Reinsurer as of March 31, 2026 and December 31, 2025 was $400 million.