Retroactive reinsurance policies provide indemnification of losses and loss adjustment expenses of short-duration insurance contracts with respect to underlying loss events that occurred prior to the contract inception date. Claims payments may commence immediately after the contract inception date or, when applicable, once a contractual retention amount has been reached. Reconciliations of the changes in estimated liabilities for retroactive reinsurance unpaid losses and loss adjustment expenses (“claim liabilities”) and related deferred charge reinsurance assumed assets for each of the three months ending March 31, 2020 and 2019 follows (in millions).

	2020						2019
	Unpaid losses and loss adjustment expenses			Deferred charges reinsurance assumed			Unpaid losses and loss adjustment expenses			Deferred charges reinsurance assumed
Balances – beginning of year:	$	42,441		$	(13,747	)	$	41,834		$	(14,104	)
Incurred losses and loss adjustment expenses
Current year contracts		—			—			—			—
Prior years’ contracts		24			259			2			273
Total		24			259			2			273
Paid losses and loss adjustment expenses		(196	)		—			(203	)		—
Balances – March 31:	$	42,269		$	(13,488	)	$	41,633		$	(13,831	)
Incurred losses and loss adjustment expenses, net of deferred charges	$	283					$	275

In the preceding table, classifications of incurred losses and loss adjustment expenses are based on the inception dates of the contracts. Incurred losses and loss adjustment expenses in the first quarter related to contracts written in prior years were $283 million in 2020 and $275 million in 2019. Such losses reflected the recurring amortization of deferred charges and the effects of changes in the timing and amount of projected future loss payments.

Berkshire’s subsidiary, National Indemnity Company (“NICO”), is party to a contract with various subsidiaries of American International Group, Inc. (collectively, “AIG”), in which NICO’s ultimate liability is contractually limited to $20 billion. Our estimated ultimate claim liabilities with respect to the AIG contract at both March 31, 2020 and December 31, 2019 were $18.2 billion. Deferred charge assets related to the AIG contract were approximately $6.1 billion at March 31, 2020 and $6.3 billion at December 31, 2019.