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 14), for each of the six-month periods ending June 30, 2021 and 2020 follows (in millions).

	2021			2020
Balances at beginning of year:
Gross liabilities	$	79,854		$	73,019
Reinsurance recoverable on unpaid losses		(2,912	)		(2,855	)
Net liabilities		76,942			70,164
Incurred losses and loss adjustment expenses:
Current accident year events		23,651			20,278
Prior accident years’ events		(1,064	)		189
Total		22,587			20,467
Paid losses and loss adjustment expenses:
Current accident year events		(8,406	)		(6,638	)
Prior accident years’ events		(11,169	)		(11,155	)
Total		(19,575	)		(17,793	)
Foreign currency translation adjustment		31			(78	)
Balances at June 30:
Net liabilities		79,985			72,760
Reinsurance recoverable on unpaid losses		2,973			2,909
Gross liabilities	$	82,958		$	75,669

Incurred losses and loss adjustment expenses shown in the preceding table were recorded in earnings and related to insured events occurring in the current year (“current accident year”) and events occurring in all prior years (“prior accident years”). We recorded a net reduction of estimated ultimate liabilities for prior accident years of $1.1 billion in the first six months of 2021 compared to a net increase of $189 million in 2020, which produced a corresponding decrease in 2021 and an increase in 2020 in incurred losses and loss adjustment expenses. These amounts represented 1.4% in 2021 and 0.3% in 2020 of the net liabilities at the beginning of each year.

Estimated ultimate liabilities for prior years’ loss events in the first six months were reduced $1.1 billion in 2021 and $250 million in 2020 with respect to primary insurance. In each period, the reductions were primarily attributable to private passenger automobile, medical professional liability and workers’ compensation claims. Estimated ultimate liabilities for prior years’ loss events related to reinsurance assumed in the first six months increased $35 million in 2021 and $439 million in 2020, which included increased provisions for legacy casualty exposures.