Reconciliations of the changes in unpaid losses and loss adjustment expenses (“LAE”) liabilities (“claim liabilities”), excluding liabilities under retroactive reinsurance contracts (see Note 14), follow (in millions).


	2026			2025
Balance at the beginning of the year:
Gross liabilities	$	120,713		$	115,151
Reinsurance recoverable on unpaid losses		(4,456	)		(4,593	)
Net liabilities		116,257			110,558
Losses and LAE incurred:
Current accident year		14,452			14,638
Prior accident years		(499	)		(163	)
Total		13,953			14,475
Losses and LAE paid:
Current accident year		(3,673	)		(3,788	)
Prior accident years		(9,271	)		(9,105	)
Total		(12,944	)		(12,893	)
Foreign currency effect		11			198
Balance at March 31:
Net liabilities		117,277			112,338
Reinsurance recoverable on unpaid losses		4,284			4,785
Gross liabilities	$	121,561		$	117,123

Our claim liabilities under property and casualty insurance and reinsurance contracts are based upon estimates of the ultimate claim costs associated with claim events that have occurred as of the balance sheet date and include estimates for incurred-but-not-reported (“IBNR”) claims. Losses and LAE incurred and paid in the preceding table related to events occurring in the current year (“current accident year”) and events occurring in all prior years (“prior accident years”). Losses and LAE incurred and paid are net of reinsurance recoveries. We experienced no significant catastrophe events (losses exceeding $150 million per event) in the first quarter of 2026, while current accident year incurred losses included $1.1 billion in the first quarter of 2025 from the Southern California wildfires.

Reductions of estimated ultimate claim liabilities for prior accident years’ claims in the first quarter were $499 million in 2026 and $163 million in 2025, which reduced losses and LAE incurred in those periods. These reductions, as percentages of the net liabilities at the beginning of each year, were relatively insignificant in each period.

Our primary insurance businesses reduced prior accident years’ ultimate claims estimates by $239 million in the first quarter of 2026, attributable to lower estimates for property and casualty coverages, and increased prior accident years’ estimates by $167 million in 2025, attributable to increases for casualty coverages partly offset by lower loss estimates for property coverages. Our reinsurance businesses recorded net reductions of estimated ultimate claim liabilities for prior accident years in the first quarter of $260 million in 2026 and $330 million in 2025. These reductions were primarily attributable to lower estimates for property coverages.