Our liabilities for unpaid losses and loss adjustment expenses (also referred to as “claim liabilities”) under property and casualty insurance and reinsurance contracts are based upon estimates of the ultimate claim costs associated with claim occurrences as of the balance sheet date and include estimates for incurred-but-not-reported (“IBNR”) claims. A reconciliation of the changes in claim liabilities, excluding liabilities under retroactive reinsurance contracts (see Note 16), for each of the three years ending December 31, 2019 is as follows (in millions).

	2019			2018			2017
Balances – beginning of year:
Gross liabilities	$	68,458		$	61,122		$	53,379
Reinsurance recoverable on unpaid losses		(3,060	)		(3,201	)		(3,338	)
Net liabilities		65,398			57,921			50,041
Incurred losses and loss adjustment expenses:
Current accident year events		43,335			39,876			37,702
Prior accident years’ events		(752	)		(1,406	)		(544	)
Total incurred losses and loss adjustment expenses		42,583			38,470			37,158
Paid losses and loss adjustment expenses:
Current accident year events		(19,482	)		(18,391	)		(17,425	)
Prior accident years’ events		(17,642	)		(15,452	)		(12,507	)
Total payments		(37,124	)		(33,843	)		(29,932	)
Foreign currency translation adjustment		(23	)		(331	)		654
Business acquisition (disposition)		(670	)		3,181			—
Balances – end of year:
Net liabilities		70,164			65,398			57,921
Reinsurance recoverable on unpaid losses		2,855			3,060			3,201
Gross liabilities	$	73,019		$	68,458		$	61,122

Incurred losses and loss adjustment expenses in the preceding table were recorded in earnings in each period and related to insured events occurring in the current year (“current accident year”) and events occurring in all prior years (“prior accident years”). Current accident year losses included approximately $1.0 billion in 2019, $1.6 billion in 2018 and $3.0 billion in 2017 from significant catastrophe events occurring in each year. The effects of businesses acquired (or disposed) are included (or excluded) on a retrospective basis for all years presented in the disaggregated accident year incurred and paid loss and allocated loss adjustment expenses data shown in this Note.

We recorded net reductions of estimated ultimate liabilities for prior accident years of $752 million in 2019, $1,406 million in 2018 and $544 million in 2017, which produced corresponding reductions in incurred losses and loss adjustment expenses. These reductions, as percentages of the net liabilities at the beginning of each year, were 1.1% in 2019, 2.4% in 2018 and 1.1% in 2017.

Estimated ultimate liabilities for prior years’ loss events related to primary insurance were reduced by $457 million in 2019, $937 million in 2018 and $249 million in 2017. The decrease in 2019 was primarily attributable to lower than anticipated medical professional liability and workers’ compensation losses, partially offset by higher commercial auto and other liability losses. The decreases in 2018 and 2017 were primarily related to workers’ compensation and medical professional liability claims. Liabilities for prior years’ private passenger auto claims were reduced in 2018 and increased in 2017. Estimated ultimate liabilities for prior years’ loss events related to property and casualty reinsurance were reduced $295 million in 2019, $469 million in 2018 and $295 million in 2017.

Estimated claim liabilities include amounts for environmental, asbestos and other latent injury exposures, net of reinsurance recoverable, of approximately $1.7 billion at December 31, 2019 and 2018. These liabilities are subject to change due to changes in the legal and regulatory environment. We are unable to reliably estimate additional losses or a range of losses that are reasonably possible for these claims.

A reconciliation of the disaggregated net unpaid losses and allocated loss adjustment expenses (the latter referred to as “ALAE”) of GEICO, Berkshire Hathaway Primary Group (“BH Primary”) and Berkshire Hathaway Reinsurance Group (“BHRG”) to our consolidated unpaid losses and loss adjustment expenses as of December 31, 2019 follows (in millions).

GEICO’s claim liabilities predominantly relate to various types of private passenger auto liability and physical damage claims. For such claims, we establish and evaluate unpaid claim liabilities using standard actuarial loss development methods and techniques. The actuarial methods utilize historical claims data, adjusted when deemed appropriate to reflect perceived changes in loss patterns. Claim liabilities include average, case, case development and IBNR estimates.

We establish average liabilities based on expected severities for newly reported physical damage and liability claims prior to establishing an individual case reserve when we have insufficient time or information to make specific claim estimates and for a large number of minor physical damage claims that once reported are quickly settled. We establish liability case loss estimates, which include loss adjustment expenses, once the facts and merits of the claim are evaluated.

Estimates for liability coverages are more uncertain than for physical damage coverages primarily due to the longer claim-tails, the greater chance of protracted litigation and the incompleteness of facts at the time the case estimate is first established. The “claim-tail” is the time period between the claim occurrence date and settlement date. Consequently, we establish additional case development liabilities, which are usually percentages of the case liabilities. For unreported claims, IBNR liabilities are estimated by projecting the ultimate number of claims expected (reported and unreported) for each significant coverage and deducting reported claims to produce estimated unreported claims. The product of the average cost per unreported claim and the number of unreported claims produces the IBNR liability estimate. We may record supplemental IBNR liabilities in certain situations when actuarial techniques are difficult to apply.

GEICO’s incurred and paid losses and ALAE, net of reinsurance, are summarized by accident year below for physical damage and auto liability claims. IBNR and case development liabilities are as of December 31, 2019. Claim counts are established when accidents that may result in a liability are reported and are based on policy coverage. Each claim event may generate claims under multiple coverages, and thus may result in multiple counts. The “Cumulative Number of Reported Claims” includes the combined number of reported claims for all policy coverages and excludes projected IBNR claims. Dollars are in millions.

	Incurred Losses and ALAE through December 31,												Cumulative Number of
Accident Year	2015*		2016*		2017*		2018*		2019		IBNR and Case Development Liabilities		Reported Claims (in thousands)
2015	$	10,590	$	10,666	$	10,785	$	10,824	$	10,853	$	156		2,338
2016				11,800		12,184		12,149		12,178		356		2,445
2017						14,095		13,864		13,888		983		2,628
2018								15,383		15,226		2,425		2,674
2019										16,901		4,694		2,577
	Incurred losses and ALAE								$	69,046

	Cumulative Paid Losses and ALAE through December 31,
Accident Year	2015*		2016*		2017*		2018*		2019
2015	$	4,579	$	7,694	$	9,133	$	10,007	$	10,472
2016				5,069		8,716		10,330		11,294
2017						5,806		9,944		11,799
2018								6,218		10,772
2019										6,742
	Paid losses and ALAE									51,079
	Net unpaid losses and ALAE for 2015 – 2019 accident years									17,967
	Net unpaid losses and ALAE for accident years before 2015									508
	Net unpaid losses and ALAE								$	18,475

BH Primary’s liabilities for unpaid losses and loss adjustment expenses primarily derive from medical professional liability and workers’ compensation and other casualty insurance, including commercial auto and general liability insurance. Incurred and paid losses and ALAE are summarized by accident year in the following tables, disaggregated by medical professional liability coverages and workers’ compensation and other casualty coverages. IBNR and case development liabilities are as of December 31, 2019. The cumulative number of reported claims reflects the number of individual claimants and includes claims that ultimately resulted in no liability or payment. Dollars are in millions.

We estimate the ultimate expected incurred losses and loss adjustment expenses for medical professional claim liabilities using commonly accepted actuarial methodologies such as the paid and incurred development method, Bornhuetter-Ferguson based methods, hindsight outstanding severity method, trended severity method and trended pure premium method. These methodologies produce loss estimates from which we determine our best estimate. Periodically, we study developments in older accident years and adjust initial loss estimates to reflect recent development based upon claim age, coverage and litigation experience.

	Incurred Losses and ALAE through December 31,																						Cumulative Number of
Accident Year	2010*		2011*		2012*		2013*		2014*		2015*		2016*		2017*		2018*		2019		IBNR and Case Development Liabilities		Reported Claims (in thousands)
2010	$	1,399	$	1,346	$	1,348	$	1,329	$	1,234	$	1,140	$	1,085	$	1,031	$	1,006	$	991	$	29		12
2011				1,346		1,334		1,321		1,262		1,173		1,115		1,050		1,004		968		38		11
2012						1,336		1,306		1,277		1,223		1,168		1,078		1,035		998		64		11
2013								1,328		1,296		1,261		1,195		1,127		1,086		1,019		93		11
2014										1,370		1,375		1,305		1,246		1,218		1,127		184		11
2015												1,374		1,342		1,269		1,290		1,218		301		12
2016														1,392		1,416		1,414		1,394		412		14
2017																1,466		1,499		1,495		685		18
2018																		1,602		1,650		1,088		18
2019																				1,670		1,369		12
	Incurred losses and ALAE																		$	12,530

	Cumulative Paid Losses and ALAE through December 31,
Accident Year	2010*		2011*		2012*		2013*		2014*		2015*		2016*		2017*		2018*		2019
2010	$	15	$	95	$	224	$	377	$	526	$	654	$	745	$	810	$	853	$	888
2011				16		82		200		356		517		632		711		767		822
2012						15		93		218		377		522		642		725		789
2013								15		90		219		368		518		635		743
2014										21		106		238		396		540		671
2015												23		108		218		382		543
2016														22		115		274		461
2017																27		128		300
2018																		35		166
2019																				39
	Paid losses and ALAE																		$	5,422
	Net unpaid losses and ALAE for 2010 – 2019 accident years																			7,108
	Net unpaid losses and ALAE for accident years before 2010																			371
	Net unpaid losses and ALAE																		$	7,479

We periodically evaluate ultimate loss and loss adjustment expense estimates for the workers’ compensation and other casualty claims using a combination of commonly accepted actuarial methodologies such as the Bornhuetter-Ferguson and chain-ladder approaches using paid and incurred loss data. Paid and incurred loss data is segregated and analyzed by state due to the different state regulatory frameworks that may impact certain factors including the duration and amount of loss payments. We also separately study the various components of liabilities, such as employee lost wages, medical expenses and the costs of claims investigations and administration. We establish case liabilities for reported claims based upon the facts and circumstances of the claim. The excess of the ultimate projected losses, including the expected development of case estimates, and the case-basis liabilities is included in IBNR liabilities.

	Incurred Losses and ALAE through December 31,																						Cumulative Number of
Accident Year	2010*		2011*		2012*		2013*		2014*		2015*		2016*		2017*		2018*		2019		IBNR and Case Development Liabilities		Reported Claims (in thousands)
2010	$	662	$	638	$	612	$	577	$	560	$	556	$	548	$	539	$	531	$	528	$	36		41
2011				738		675		675		624		621		618		607		596		591		56		46
2012						873		850		837		791		780		762		750		736		76		53
2013								1,258		1,228		1,178		1,127		1,096		1,072		1,050		149		67
2014										1,743		1,638		1,614		1,548		1,482		1,497		220		90
2015												2,169		2,127		2,042		2,014		2,025		336		110
2016														2,511		2,422		2,359		2,325		533		114
2017																3,044		2,907		2,842		855		135
2018																		3,544		3,412		1,445		151
2019																				4,074		2,577	147
	Incurred losses and ALAE																		$	19,080

	Cumulative Paid Losses and ALAE through December 31,
Accident Year	2010*		2011*		2012*		2013*		2014*		2015*		2016*		2017*		2018*		2019
2010	$	102	$	236	$	314	$	374	$	417	$	445	$	459	$	466	$	472	$	480
2011				109		220		333		403		453		481		496		505		512
2012						116		299		414		501		560		592		611		626
2013								177		422		609		725		793		835		858
2014										239		557		800		1,007		1,111		1,176
2015												289		700		1,017		1,289		1,488
2016														329		775		1,148		1,461
2017																441		1,003		1,434
2018																		538		1,198
2019																				682
	Paid losses and ALAE																			9,915
	Net unpaid losses and ALAE for 2010 – 2019 accident years																			9,165
	Net unpaid losses and ALAE for accident years before 2010																			403
	Net unpaid losses and ALAE																		$	9,568

We use a variety of methodologies to establish BHRG’s estimates for property and casualty claims liabilities. We use certain methodologies, such as paid and incurred loss development techniques, incurred and paid loss Bornhuetter-Ferguson techniques and frequency and severity techniques, as well as ground-up techniques when appropriate.

Our claims liabilities are principally a function of reported losses from ceding companies, case development and IBNR liability estimates. Case loss estimates are reported under our contracts either individually or in bulk as provided under the terms of the contracts. We may independently evaluate case losses reported by the ceding company, and if deemed appropriate, we may establish case liabilities based on our estimates.

Estimated IBNR liabilities are affected by expected case loss emergence patterns and expected loss ratios, which are evaluated as groups of contracts with similar exposures or on a contract-by-contract basis. Case and IBNR liability estimates for major catastrophe events are generally based on a per-contract assessment of the ultimate cost associated with the individual loss event. Claim count data is not provided consistently by ceding companies under our contracts or is otherwise considered unreliable.

Incurred and paid losses and ALAE of BHRG are disaggregated based on losses that are expected to have shorter claim-tails (property) and losses expected to have longer claim-tails (casualty). Under certain contracts, the coverage can apply to multiple lines of business written by the ceding company, whether property, casualty or combined, and the ceding company may not report loss data by such lines consistently, if at all. In those instances, we allocated losses to property and casualty coverages based on internal estimates. BHRG’s disaggregated incurred and paid losses and ALAE are summarized by accident year, net of reinsurance. IBNR and case development liabilities are as of December 31, 2019. Dollars are in millions.

	Incurred Losses and ALAE through December 31,
Accident Year	2010*		2011*		2012*		2013*		2014*		2015*		2016*		2017*		2018*		2019		IBNR and Case Development Liabilities
2010	$	2,516	$	2,475	$	2,354	$	2,226	$	2,138	$	2,103	$	2,085	$	2,064	$	2,074	$	2,062	$	23
2011				4,197		4,138		3,851		3,754		3,753		3,723		3,700		3,686		3,674		41
2012						3,132		2,828		2,624		2,384		2,331		2,328		2,311		2,295		47
2013								3,181		3,022		2,679		2,589		2,569		2,510		2,459		61
2014										2,615		2,417		2,306		2,162		2,107		2,035		77
2015												3,243		3,084		2,528		2,935		2,932		208
2016														3,266		3,892		3,617		3,594		281
2017																5,258		4,959		4,807		478
2018																		4,366		4,468		1,025
2019																				4,100		1,977
Incurred losses and ALAE																			$	32,426

	Cumulative Paid Losses and ALAE through December 31,
Accident Year	2010*		2011*		2012*		2013*		2014*		2015*		2016*		2017*		2018*		2019
2010	$	335	$	1,059	$	1,485	$	1,742	$	1,905	$	1,954	$	2,000	$	2,024	$	2,031	$	2,043
2011				664		2,305		2,957		3,219		3,336		3,426		3,467		3,512		3,530
2012						260		1,219		1,797		1,935		2,023		2,099		2,118		2,163
2013								513		1,416		1,854		2,050		2,170		2,251		2,290
2014										464		1,235		1,561		1,699		1,764		1,814
2015												574		1,591		1,940		2,134		2,239
2016														705		1,790		2,181		2,641
2017																1,027		2,716		3,638
2018																		907		2,309
2019																				747
Paid losses and ALAE																				23,414
Net unpaid losses and ALAE for 2010 – 2019 accident years																				9,012
Net unpaid losses and ALAE for accident years before 2010																			370
Net unpaid losses and ALAE																			$	9,382

	Incurred Losses and ALAE through December 31,
Accident Year	2010*		2011*		2012*		2013*		2014*		2015*		2016*		2017*		2018*		2019		IBNR and Case Development Liabilities
2010	$	2,296	$	2,383	$	2,316	$	2,253	$	2,135	$	2,085	$	2,040	$	1,878	$	1,958	$	1,913	$	203
2011				2,602		2,690		2,560		2,500		2,411		2,320		2,313		2,274		2,240		299
2012						2,784		2,962		2,797		2,861		2,790		2,678		2,611		2,554		318
2013								2,124		2,257		2,287		2,131		2,077		2,023		1,928		411
2014										1,863		2,058		2,027		1,990		1,904		1,942		574
2015												1,870		2,071		2,098		1,999		1,872		534
2016														1,900		2,106		2,014		1,971		680
2017																2,186		2,674		2,552		941
2018																		2,914		3,544		1,511
2019																				3,405		2,348
	Incurred losses and ALAE																		$	23,921

	Cumulative Paid Losses and ALAE through December 31,
Accident Year	2010*		2011*		2012*		2013*		2014*		2015*		2016*		2017*		2018*		2019
2010	$	117	$	542	$	834	$	1,022	$	1,274	$	1,369	$	1,433	$	1,478	$	1,526	$	1,552
2011				289		812		1,155		1,395		1,483		1,575		1,653		1,693		1,727
2012						307		745		1,136		1,365		1,522		1,646		1,746		1,805
2013								290		517		802		930		1,034		1,135		1,195
2014										149		474		639		748		871		955
2015												195		487		710		830		921
2016														252		553		730		860
2017																230		562		816
2018																		264		865
2019																				351
	Paid losses and ALAE																			11,047
	Net unpaid losses and ALAE for 2010 – 2019 accident years																			12,874
	Net unpaid losses and ALAE for accident years before 2010																			8,430
	Net unpaid losses and ALAE																		$	21,304

Required supplemental unaudited average historical claims duration information based on the net losses and ALAE incurred and paid accident year data in the preceding tables follows. The percentages show the average portions of net losses and ALAE paid by each succeeding year, with year 1 representing the current accident year.

Average Annual Percentage Payout of Incurred Losses by Age, Net of Reinsurance
In Year	1			2			3			4			5			6			7			8			9			10
GEICO Physical Damage		98	%		2	%
GEICO Auto Liability		42	%		29	%		13	%		8	%		4	%
BH Primary Medical Professional Liability		2	%		7	%		12	%		15	%		15	%		12	%		9	%		6	%		5	%		4	%
BH Primary Workers’ Compensation and Other Casualty		16	%		21	%		16	%		12	%		8	%		5	%		3	%		2	%		1	%		2	%
BHRG Property		19	%		36	%		17	%		9	%		4	%		3	%		1	%		1	%		0	%		1	%
BHRG Casualty		10	%		17	%		13	%		8	%		7	%		5	%		4	%		2	%		2	%		1	%