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 15), for each of the six months ending June 30, 2020 and 2019 follows (in millions).

	2020			2019
Balances – beginning of year:
Gross liabilities	$	73,019		$	68,458
Reinsurance recoverable on unpaid losses		(2,855	)		(3,060	)
Net liabilities		70,164			65,398
Incurred losses and loss adjustment expenses:
Current accident year events		20,278			20,127
Prior accident years’ events		189			71
Total incurred losses and loss adjustment expenses		20,467			20,198
Paid losses and loss adjustment expenses:
Current accident year events		(6,638	)		(7,724	)
Prior accident years’ events		(11,155	)		(10,243	)
Total payments		(17,793	)		(17,967	)
Foreign currency translation adjustment		(78	)		3
Balances – June 30:
Net liabilities		72,760			67,632
Reinsurance recoverable on unpaid losses		2,909			3,149
Gross liabilities	$	75,669		$	70,781

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”). In the first six months, we recorded net increases in estimated ultimate liabilities for prior accident years of $189 million in 2020 compared to $71 million in 2019, which produced corresponding increases in incurred losses and loss adjustment expenses. These increases, as percentages of the net liabilities at the beginning of each year, were 0.3% in 2020 and 0.1% in 2019.

In the first six months of 2020 and 2019, we reduced estimated ultimate liabilities for prior years’ loss events for primary insurance by $250 million and $198 million, respectively. The decreases were primarily attributable to lower than anticipated private passenger automobile, medical professional liability and workers’ compensation claims. The decrease in 2019 was partially offset by increased liabilities for legacy casualty exposures and other commercial insurance business. We increased estimated ultimate liabilities for prior years’ loss events related to reinsurance assumed by $439 million and $269 million in the first six months of 2020 and 2019, respectively. The increase in 2020 included increased liabilities for legacy casualty exposures.