
	Nine Months Ended September 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	(40,017)		160,363
Adjusted net reserves for losses and loss adjustment expenses, beginning of year	16,666,952		15,673,090
Incurred losses and loss adjustment expenses:
Current accident year	4,015,514		4,156,998
Prior accident years	(385,941)		(360,473)
Total incurred losses and loss adjustment expenses	3,629,573		3,796,525
Payments:
Current accident year	465,274		444,603
Prior accident years	3,006,278		2,640,264
Total payments	3,471,552		3,084,867
Effect of foreign currency rate changes on current year activity	(3,206)		900
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)
Commutation of ceded reinsurance contracts	—		312,244


Net reserves for losses and loss adjustment expenses, end of period	16,964,911		16,695,887
Reinsurance recoverables on unpaid losses, end of period	16,895,016		12,442,082
Gross reserves for losses and loss adjustment expenses, end of period	$	33,859,927	$	29,137,969

For the nine months ended September 30, 2026, current accident year losses and loss adjustment expenses included $150.6 million of net losses and loss adjustment expenses related to the regional military conflict that emerged in the Middle East following U.S. and Israeli airstrikes on Iran in February 2026. These losses and loss adjustment expenses were net of ceded losses of $270.2 million. Losses and loss adjustment expenses from the Middle East conflict were primarily attributed to marine war, terrorism, and energy 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 September 30, 2026 based upon information currently available. The Company's gross and ceded estimates for these losses are based on known losses and reported claims, as well as an analysis of the Company's ceded reinsurance contracts. These estimates include various assumptions about the nature and extent of such losses, which, in many instances, have been difficult to verify, as well as assumptions about event definitions, attachment points, and reinsurance coverage. 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 September 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. Any such adjustments or additional 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 nine months ended September 30, 2026, losses and loss adjustment expenses included $385.9 million of favorable development on prior years loss reserves, which included $408.1 million of net favorable development on the Company's property, workers' compensation, marine and energy, professional liability, credit and surety, and general liability insurance product lines within its Markel Insurance segment. Favorable development on the Markel Insurance segment's prior years loss reserves was net of adverse development on professional liability and general liability product lines within its Global Reinsurance division.

For the nine months ended September 30, 2025, losses and loss adjustment expenses included $360.5 million of favorable development on prior years loss reserves, which included $364.5 million of net favorable development on the Company's marine and energy, general liability, property, programs, 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 $142.3 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.

In July 2025, the Company commuted a portfolio of ceded reinsurance contracts with certain Nephila Reinsurers consisting of property catastrophe and brokerage property exposures for policy years 2023 and prior. Gross and ceded reserves for losses and loss adjustment expenses on the commuted contracts totaled $312.2 million and resulted in cash payments of $292.6 million.