
	Six Months Ended June 30,
(Dollars in millions)	2026		2025
Gross reserves beginning of period	$	21,336	$	19,271
Less reinsurance recoverables on unpaid losses	(3,369)		(3,391)
Net reserves beginning of period	17,966		15,880

Incurred related to:
Current year	2,625		3,375
Prior years	(104)		25
Prior years, impact from retroactive reinsurance	—		—
Total incurred losses and LAE	2,520		3,400

Paid related to:
Current year	693		640
Prior years	1,814		1,769
Total paid losses and LAE	2,507		2,409

Foreign exchange/translation adjustment	1		134
Retroactive reinsurance adjustment	—		—

Net reserves end of period	17,981		17,005
Plus reinsurance recoverables on unpaid losses (1)	3,205		3,327
Gross reserves end of period	$	21,187	$	20,333

Current year incurred losses were $2.6 billion and $3.4 billion for the six months ended June 30, 2026 and 2025, respectively. Current year incurred losses decreased primarily due to a decrease of $369 million of current year attritional losses in 2026 compared to 2025, as well as a decrease of $382 million in 2026 current year catastrophe losses.

The current year catastrophe losses of $113 million for the six months ended June 30, 2026 related primarily to hurricanes, typhoons and cyclones and other weather related events ($106 million) and foreign conflict ($7 million). The current year catastrophe losses of $495 million for the six months ended June 30, 2025 primarily related to wildfires ($462 million), driven by the 2025 L.A. wildfires, as well as earthquakes ($20 million) and other weather related events ($12 million).

The net favorable development on prior year reserves of $104 million was primarily due to favorable prior year development on catastrophe losses of $42 million and favorable prior year development on attritional losses of $62 million. The net favorable development of catastrophe losses was driven by the release of $76 million of well-seasoned reserves primarily related to accident years 2023-2025, offset by $33 million of unfavorable development related to the 2024 Baltimore Bridge collapse. The net favorable development of prior year attritional losses is primarily driven by property line releases partially offset by casualty reserve strengthening in our Reinsurance Treaty segment.

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, Everest Re and a Bermuda affiliate, Everest Reinsurance (Bermuda), Ltd. (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 reserves included in the Legacy segment. At the time the Ceding Companies 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, Group provided in total consideration a reinsurance premium of $1.3 billion, including interest, to State National Reinsurer, of which $1.0 billion was attributable to the Company, to assume $1.3 billion of carried reserves as of September 30, 2025, of which $1.0 billion was attributable to the Company, 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 Group’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 Group. Of the total funds withheld, $201 million was recognized by the Company at inception of the agreement.

Under the MS Transverse Reinsurance Agreement, Group paid a reinsurance premium of $122 million to MS Transverse Reinsurer, of which $44 million was attributable to the Company, 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, and as a result Group recognized an immediate pre-tax loss of $122 million in Incurred losses and loss adjustment expenses in the Company’s consolidated statement of operations, of which $44 million was recognized by the Company. 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 June 30, 2026 and December 31, 2025, Group had a deferred gain of $8 million and $3 million, respectively, of which $6 million and $3 million was recorded by the Company, 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 June 30, 2026 and December 31, 2025 were $1.26 billion and $1.25 billion, respectively, of which $1.01 billion and $1.00 billion were attributable to the Company, respectively. The aggregated unexpired limit for State National Reinsurer as of June 30, 2026 and December 31, 2025 was $592 million and $597 million, respectively. The aggregated unexpired limit for MS Transverse Reinsurer as of June 30, 2026 and December 31, 2025 was $400 million.