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 nine-month periods ending September 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		38,447			31,777
Prior accident years’ events		(2,151	)		69
Total		36,296			31,846
Paid losses and loss adjustment expenses:
Current accident year events		(15,277	)		(11,691	)
Prior accident years’ events		(15,076	)		(15,259	)
Total		(30,353	)		(26,950	)
Foreign currency translation adjustment		(119	)		124
Balances at September 30:
Net liabilities		82,766			75,184
Reinsurance recoverable on unpaid losses		2,988			2,857
Gross liabilities	$	85,754		$	78,041

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”). Current accident year incurred losses in 2021 included approximately $2.7 billion from significant catastrophe events (losses in excess of $100 million per event) in the U.S. and Europe, including approximately $2.2 billion in the third quarter, primarily from Hurricane Ida and floods in Europe.

We recorded a net reduction of estimated ultimate liabilities for prior accident years of $2.2 billion in the first nine months of 2021 compared to a net increase of $69 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 2.8% in 2021 and 0.1% in 2020 of the net liabilities at the beginning of each year.

Estimated ultimate liabilities for prior years’ loss events with respect to primary insurance were reduced $1.6 billion in the first nine months of 2021 compared to $273 million in 2020. The reduction in 2021 derived primarily from private passenger automobile claims, and to a lesser extent medical professional liability and workers’ compensation claims. Estimated ultimate liabilities for prior years’ loss events related to reinsurance assumed in the first nine months decreased $564 million in 2021 and increased $342 million in 2020, which included increased provisions for legacy casualty exposures.