
	Six Months Ended June 30,
(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	(36,908)		183,407
Adjusted net reserves for losses and loss adjustment expenses, beginning of year	16,670,061		15,696,134
Incurred losses and loss adjustment expenses:
Current accident year	2,624,389		2,771,538
Prior accident years	(270,421)		(228,839)
Total incurred losses and loss adjustment expenses	2,353,968		2,542,699
Payments:
Current accident year	221,989		211,521
Prior accident years	2,097,600		1,856,906
Total payments	2,319,589		2,068,427
Effect of foreign currency rate changes on current year activity	(1,579)		824
Provision for expected credit losses within fronting operations (see note 7)	205,346		—
Retroactive reinsurance transaction with Hagerty Re	(62,202)		—
Change in net reserves for losses and loss adjustment expenses of Markel CATCo Re	—		(2,005)



Net reserves for losses and loss adjustment expenses, end of period	16,846,005		16,169,225
Reinsurance recoverables on unpaid losses, end of period	15,326,611		12,346,166
Gross reserves for losses and loss adjustment expenses, end of period	$	32,172,616	$	28,515,391

For the six months ended June 30, 2026, current accident year losses and loss adjustment expenses included $76.0 million of net losses and loss adjustment expenses related to a regional military conflict that emerged in the Middle East following U.S. and Israeli airstrikes on Iran in February 2026. Net losses and loss adjustment expenses from the Middle East conflict were primarily attributed to terrorism, energy, and marine war coverages written by the International division within the Markel Insurance segment.

Estimates for incurred losses related to the Middle East conflict represent the Company's best estimate as of June 30, 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 June 30, 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 six months ended June 30, 2026, losses and loss adjustment expenses included $270.4 million of favorable development on prior years loss reserves, which included $248.7 million of net favorable development on the Company's property, marine and energy, workers' compensation, and credit and surety insurance product lines within its Markel Insurance segment.

For the six months ended June 30, 2025, losses and loss adjustment expenses included $228.8 million of favorable development on prior years loss reserves, which included $179.9 million of net favorable development on the Company's marine and energy, property, general liability, and workers' compensation insurance product lines within its Markel Insurance segment. Favorable development on the Markel Insurance segment's prior years loss reserves was net of $127.9 million of adverse development on run-off risk-managed directors and officers product lines and adverse development on general liability product lines within the Markel Insurance segment's Global Reinsurance division.