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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM
10-K

_X_
Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the fiscal year ended
December 31, 2019

2022

___
Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Commission file number
1-14527

EVEREST REINSURANCE HOLDINGS, INC.

(Exact name of registrant as specified in its charter)

Delaware

(State or other jurisdiction

of incorporation or organization)

22-3263609

(I.R.S Employer

Identification No.)

477 Martinsville Road

Post Office Box 830

Liberty Corner,

(State or other jurisdiction
of incorporation or organization)
22-3263609
(I.R.S Employer
Identification No.)
100 Everest Way
Warren
,
New Jersey 07938-0830

(908)

07059
(
908
)
604-3000

(Address, including zip code, and telephone number, including area code, of registrant’s principal executive office)

Securities registered pursuant to Section 12(b) of the Act:

Title of Each Class

Name of Each Exchange on Which Registered

4.868% Senior Notes Due 2044

NYSE

6.60% Long Term Notes Due 2067

NYSE

Securities registered pursuant to Section 12(g) of the Act:  None

Name of Each Exchange on Which Registered
4.868% Senior Notes Due 2044
NYSE
3.50% Senior Notes Due 2050
NYSE
3.125% Senior Notes Due 2052
NYSE
6.60% Long-Term Notes Due 2067
NYSE
Securities registered pursuant
to Section 12(g) of the Act:
None
Indicate by check mark if the registrant
is a well-known seasoned issuer,
as defined in Rule 405 of the Securities Act.

Yes

X

No

X
No
Indicate by check mark if the registrant
is not required to file reports pursuant
to Section 13 or Section 15(d) of the Act.

Yes

No

X

No
X
Indicate by check
mark whether the
registrant (1)
has filed all
reports required
to be filed
by Section 13
or 15(d) of
the Securities Exchange
Act of 1934
during the preceding
12 months (or
for such shorter period that the registrant
was required to file such reports),
and (2) has been subject to such filing requirementsrequi
rements for the past 90 days.

Yes

X

No

X
No
Indicate by check
mark whether the registrant
has submitted electronically
every Interactive
Data File required
to be submitted
pursuant to Rule
405 of Regulation
S-T during the preceding
12 months (or for such shorter period that
the registrant was required
to submit such files).

Yes

X

No

X
No
Indicate by check mark if disclosure
of delinquent filers pursuant
to Item 405 of Regulation S-K
is not contained herein, and
will not be contained, to the best
of the registrant’s
knowledge, in
definitive proxy or information
statements incorporated
by reference in Part III
of this Form 10-K or any amendment to
this Form 10-K.  [   ]

Yes

X

No

X
No
Indicate by check mark whether
the registrant is a
large accelerated filer,
an accelerated filer,
a non-accelerated filer,
a smaller reporting company
or an emerging growth
company.
See the
definitions of “large accelerated filer,” “accelerated
“accelerated filer,”  “smaller
“smaller reporting company” and “emerging
growth company” in Rule 12b-2 of the Exchange
Act.

Large accelerated filer

Accelerated filer

Non-accelerated filer

X

Smaller reporting company

Emerging  growth company

Accelerated filer
Non-accelerated filer
X
Smaller reporting company
Emerging growth company
Indicate by check mark if the
registrant is an emerging
growth company and
has elected not to use the
extended transition period for
complying with any new or revised
financial accounting
standards provided pursuant
to Section 13(a) of the Exchange act.

Yes

No

X

Yes
No
X
Indicate by check mark whether the registrant
is a shell company (as defined in Rule 12b-2
of the Exchange Act.)

Yes

No

X

No
X
Indicate by check mark
whether the registrant
has filed a report on
and attestation
to its management’s
assessment of the effectiveness
of its internal control
over financial reporting
under
Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C.
7262(b)) by the registered public accounting
firm that prepared or issued its audit report.
Yes
No
X
If securities are
registered
pursuant to
Section 12(b)
of the
Act, indicate
by check
mark whether the
financial statements
of the
registrant included
in the
filing reflect
the correction
of an
error to previously issued financial statements.
☐
Indicate
by
check mark
whether
any
of
those
error
corrections
are
restatements
that
required
a recovery
analysis
of
incentive-based
compensation
received
by
any
of
the registrant’s
executive officers during the relevant
recovery period pursuant
to §240.10D-1(b).
☐
The aggregate market value
on June 30, 2019,2022, the last business day
of the registrant’s most
recently completed second
quarter, of the voting
stock held by non-affiliates
of the registrant was zero.

zero
.
At March 15, 2020,
9, 2023, the
number of
shares outstanding
of the registrant
common shares
was
1,000
, all of
which are
owned by
Everest Underwriting
Group (Ireland)
Limited, a wholly-owned
direct subsidiary of Everest Re
Group, Ltd.

The Registrant

meets the
conditions set
forth in
General Instruction
I(1)(a) and
(b) of
Form 10-K
and is
therefore
filing this
form with
the reduced
disclosure format
permitted by
General
Instruction I of Form 10-K.

EVEREST REINSURANCE HOLDINGS, INC.

Table of Contents

PART I

Unless otherwise indicated, all financial data

Item 1.
1
Item 1A.
7
Item 1B.
13
Item 2.
13
Item 3.
13
Item 4.
13
PART II
Item 5.
13
Item 6.
14
Item 7.
14
Item 7A.
26
Item 8.
28
Item 9.
28
Item 9A.
29
Item 9B.
29
Item 9C.
ions
29
PART III
Item 10.
30
Item 11.
30
Item 12.
30
Item 13.
30
Item 14.
30
PART IV
Item 15.
31
1
PART I
Unless
otherwise
indicated,
all
financial
data
in
this
document
have
been
prepared
using
accounting
principles
generally accepted
in the United States
of America (“GAAP”).
As used in this
document, “Holdings” means
Everest
Reinsurance
Holdings,
Inc.,
a
Delaware
company
and
direct
subsidiary
of
Everest
Underwriting
Group
(Ireland)
Limited (“
(“Holdings
Ireland”); “Group”
“Group”
means
Everest
Re
Group,
Ltd. (Holdings
(Holdings
Ireland’s
parent); “Bermuda
“Bermuda
Re”
means
Everest
Reinsurance
(Bermuda),
Ltd.,
a
subsidiary
of
Group; “Everest
“Everest
Re”
means
Everest
Reinsurance
Company and its subsidiaries, a subsidiary of Holdings (unless
(unless the context otherwise requires);
and the “Company”, “we”
“we”, “us”
“us”,
and “our” means Holdings and its subsidiaries (unless the context
otherwise requires).

ITEM 1.
BUSINESS

The Company.

Holdings, a Delaware corporation,
is a wholly-owned subsidiary
of Holdings Ireland.
On December 30, 2008, Group
contributed
Holdings
to
its
recently
established
Irish
holding
company,
Holdings
Ireland.
Holdings
Ireland
is
a
direct
subsidiary
of
Group
and
serves
as
a
holding
company
for
the
U.S.
reinsurance
and
insurance
subsidiaries.
Group is a Bermuda
holding company whose
common shares are
publicly traded in the
U.S. on the New
York
Stock
Exchange
under
the
symbol “RE”
“RE”.
Group
files
an
annual
report
on
Form
10-K
with
the
Securities
and
Exchange
Commission (the “SEC”) with respect to its consolidated operations,
including Holdings.

The Company’s
principal
business,
conducted
through
its operating
segments,
is the
underwriting of
reinsurance
and insurance
in the
U.S.
and international
markets.
The Company
had gross
written
premiums,
in 2019, 2022,
of $7.1 $9.7
billion, with approximately 65%
61% representing reinsurance
and 35%39% representing
insurance.
Stockholder’s equity
at
December 31, 20192022 was $5.9$5.7 billion. The Company
underwrites reinsurance both through
brokers and directly
with
ceding companies, giving
it the flexibility
to pursue
business based on
the ceding company’s
preferred reinsurance
purchasing method.
The Company underwrites insurance
through brokers
,
surplus lines brokers
and general agent
relationships.
Holdings’ active operating
subsidiaries are
each rated
A+ (“Superior”) by A.M.
Best Company (“
(“A.M.
Best”), a leading provider of
insurer ratings
that assigns financial strength
ratings to insurance
companies based on
their ability to meet their obligations to
policyholders.

Following is a summary of the Company’s
principal operating subsidiaries:

·

●
Everest
Re,
a
Delaware
insurance
company
and
a
direct
subsidiary
of
Holdings,
is
a
licensed
property
and
casualty
insurer
and/or
reinsurer
in
all
states,
the
District
of
Columbia,
Puerto
Rico
and
Guam
and
is
authorized to
conduct reinsurance
business in
Canada,
Singapore and
Brazil. Everest
Re underwrites
property
and
casualty
reinsurance
for
insurance
and
reinsurance
companies
in
the
U.S.
and
international
markets.
Everest
Re has
engaged in
reinsurance
transactions
with Bermuda
Re,
Everest
International
Reinsurance,
Ltd. (“
(“Everest
International”),
Mt.
Logan
Re,
Ltd. (“
(“Mt.
Logan
Re”)
and
Everest
Insurance
Company
of
Canada (“
(“Everest
Canada”),
which
are
affiliated
companies,
primarily
driven
by
enterprise
risk
and
capital
management considerations
under which
business is
transacted at
market
rates
and terms.
At December
31, 2019,
2022, Everest Re had statutory
surplus of $3.7$5.6 billion.

·

●
Everest
National
Insurance
Company (“
(“Everest
National”),
a
Delaware
insurance
company
and
a
direct
subsidiary of Everest
Re, is
licensed in
50 states,
the District
of Columbia and
Puerto Rico
and is authorized
to
write
property
and
casualty
insurance
on
an
admitted
basis
in
the
jurisdictions
in
which
it
is
licensed.
The
majority of Everest National’s
business is reinsured by its parent,
Everest Re.

1

2

·

●
Everest
Indemnity
Insurance
Company (“
(“Everest
Indemnity”),
a
Delaware
insurance
company
and
a
direct
subsidiary
of
Everest
Re,
writes
excess
and
surplus
lines
insurance
business
in
the
U.S.
on
a
non-admitted
basis. Excess and surplus lines insurance
is specialty property and liability coverage
that an insurer not licensed
to
write
insurance
in
a
particular
jurisdiction
is
permitted
to
provide
to
insureds
when
the
specific
specialty
coverage
is
unavailable
from
admitted
insurers.
Everest
Indemnity
is licensed in
a
Delaware
Domestic
Surplus
Lines
Insurer and is eligible to write business
on a non-admitted basis in all other states,
the District of Columbia and
Puerto Rico.
The majority of Everest Indemnity’s
business is reinsured by its parent, Everest
Re.

·

●
Everest Security
Insurance Company (“
(“Everest Security”), a
Georgia insurance company
and a direct subsidiary
of
Everest
Re,
writes
property
and
casualty
insurance
on
an
admitted
basis
in
Georgia
and
Alabama
and
is
approved
as
an
eligible
surplus
lines
insurer
in
Delaware.
The
majority
of
Everest
Security’s
business
is
reinsured by its parent, Everest
Re.
●
Everest
Denali Insurance
Company (“Everest
Denali”), a
Delaware
insurance
company
and a
direct subsidiary
of Everest
Re, writesis licensed
to write property
and casualty insurance on an admitted basis
in Georgia all 50 states
and Alabama and is approved as an eligible surplus lines insurer in Delaware.  the District of
Columbia.
The majority of Everest Security’s Denali’s
business is reinsured by its parent, Everest
Re.

·

●
Everest Denali
Premier
Insurance
Company (“
(“Everest Denali”
Premier”),
a
Delaware
insurance
company
and
a
direct
subsidiary of Everest
Re, is licensed to
write property and
casualty insurance
in all 50 states
and the District
of
Columbia.
The majority of Everest Denali’s Premier’s
business is reinsured by its parent,
Everest Re.

·

●
Everest Premier Insurance Company (“
International
Assurance,
Ltd.
(“Everest Premier”), a Delaware insurance company and a direct subsidiary of Everest Re, is licensed to write property and casualty insurance in 50 states and the District of Columbia.  The majority of Everest Premier’s business is reinsured by its parent, Everest Re.

·Everest International Assurance, Ltd. (“Everest

Assurance”),
a
Bermuda
company
and
a
direct
subsidiary
of
Holdings
is
registered
in
Bermuda
as
a
Class
3A general
business
insurer
and
as a Class 3A general business insurer and as a
Class C
long-term
insurer.
Everest Assurance
has made a one-time election
under section 953(d)
of the U.S. Internal
Revenue Code to
be
a
U.S.
income
tax
paying “Controlled
“Controlled
Foreign
Corporation.”
By
making
this
election,
Everest
Assurance will be
is
authorized to write life reinsurancereinsur
ance and casualty reinsurance in both
Bermuda and the U.S.

Reinsurance Industry Overview.

Reinsurance
is
an
arrangement
in
which
an
insurance
company,
the
reinsurer,
agrees
to
indemnify
another
insurance or reinsurance company,
the ceding company,
against all or a portion of the insurance risks
underwritten
by the
ceding company
under one
or more
insurance
contracts.
Reinsurance
can provide
a ceding
company
with
several
benefits,
including
a
reduction
in
its
net
liability
on
individual
risks
or
classes
of
risks,
catastrophe
protection from
large and/or
multiple losses and/or
a reduction
in operating
leverage as
measured by
the ratio
of
net premiums
and reserves
to capital.
Reinsurance
also provides
a ceding
company
with additional
underwriting
capacity by
permitting it
to accept
larger
risks
and write
more business
than would
be acceptable
relative
to
the
ceding
company’s
financial
resources.
Reinsurance
does
not
discharge
the
ceding
company
from
its
liability
to
policyholders; rather,
it reimburses the ceding company
for covered losses.

There
are
two
basic
types
of reinsurance
arrangements:
treaty
and facultative.
Treaty
reinsurance
obligates
the
ceding company
to cede
and the
reinsurer to
assume a
specified portion
of a
type or
category
of risks
insured
by
the ceding company.
Treaty
reinsurers do not
separately evaluate
each of the individual risks
assumed under their
treaties, instead,
the reinsurer relies
upon the pricing and
underwriting decisions made by
the ceding company.
In
facultative
reinsurance,
the ceding
company cedes
and the
reinsurer assumes
all or
part of
the risk
under a
single
insurance contract.
Facultative
reinsurance
is negotiated
separately for
each insurance
contract
that is
reinsured.
Facultative
reinsurance,
when
purchased
by
ceding
companies,
usually
is
intended
to
cover
individual
risks
not
covered by their reinsurance
treaties because of the dollar limits involved
or because the risk is unusual.

Both treaty
and facultative
reinsurance can
be written
on either a
pro rata
basis or
an excess
of loss
basis.
Under
pro rata reinsurance,
the ceding company and the reinsurer
share the premiums as well as
the losses and expenses
in an
agreed proportion.
Under excess
of loss
reinsurance,
the reinsurer
indemnifies the
ceding company
against
all
or
a
specified
portion
of
losses
and
expenses
in
excess
of
a
specified
dollar
amount,
known
as
the
ceding
company's retention or reinsurer's
attachment point, generally
subject to a negotiated reinsurance
contract limit.

2

3

In
pro
rata
reinsurance,
the
reinsurer
generally
pays
the
ceding
company
a
ceding
commission.
The
ceding
commission
generally
is
based
on
the
ceding
company’s
cost
of
acquiring
the
business
being
reinsured
(commissions,
premium
taxes,
assessments
and
miscellaneous
administrative
expense
and
may
contain
profit
sharing provisions,
whereby the
ceding commission generally
is adjusted
based on the ceding company’s cost of acquiring the business being reinsured (commissions, premium taxes, assessments and miscellaneous administrative expense and may contain profit sharing provisions, whereby the ceding commission is adjusted based on
loss experience).
Premiums
paid by
the
ceding company to a reinsurer
for excess of loss reinsurance
are not directly proportional to
the premiums that the
ceding company
receives because
the reinsurer
does not
assume a
proportionate
risk.
There is
usually no
ceding
commission on excess of loss reinsurance.

Reinsurers
may
purchase
reinsurance
to
cover
their
own
risk
exposure.
Reinsurance
of a
reinsurer's
business
is
called
a
retrocession.
Reinsurance
companies
cede
risks
under
retrocessional
agreements
to
other
reinsurers,
known
as
retrocessionaires,
for
reasons
similar
to
those
that
cause
insurers
to
purchase
reinsurance:
to
reduce
net liability on
individual or classes
of risks, protect
against catastrophic
losses, stabilize
financial ratios
and obtain
additional underwriting capacity.

Reinsurance
can
be
written
through
intermediaries,
generally
professional
reinsurance
brokers,
or
directly
with
ceding
companies.
From
a
ceding
company's
perspective,
the
broker
and
the
direct
distribution
channels
have
advantages
and disadvantages.
A ceding company's
decision to select
one distribution
channel over the
other will
be influenced
by its
perception
of such
advantages
and disadvantages
relative
to the
reinsurance
coverage
being
placed.

Business Strategy.

The
Company’s
business
strategy
is
to
sustain
its
leadership
position
within
targeted
reinsurance
and
insurance
markets,
provide
effective
management
throughout
the
property
and
casualty
underwriting
cycle
and
thereby
achieve an
attractive
return for
its stockholder.
The Company’s business strategy is to sustain its leadership position within targeted reinsurance and insurance markets, provide effective management throughout the property and casualty underwriting cycle and thereby achieve an attractive return for its stockholder.  The Company’s
underwriting strategies
seek to
capitalize
on its
i)
financial
strength
and
capacity,
ii)
global
franchise,
iii)
stable
and
experienced
management
team,
iv)
diversified
product
and
distribution
offerings,
v)
underwriting
expertise
and
disciplined
approach,
vi)
efficient
and
low-cost
operating structure and vii)
effective enterprise risk management
practices.

The Company
offers treaty
and facultative
reinsurance and
admitted and
non-admitted insurance.
The Company’s
products
include
the
full
range
of
property
and
casualty
reinsurance
and
insurance
coverages,
including
marine,
aviation,
surety,
errors
and
omissions
liability
(“E&O”),
directors’
and
officers’
liability
(“D&O”),
medical
malpractice, mortgage reinsurance,
other specialty lines, accident and health (“A&H”)
and workers’ compensation.

The Company’s underwriting strategies
emphasizes underwriting profitability over
premium volume.
Key elements
of
this
strategy
include
careful
risk
selection,
appropriate
pricing
through
strict
underwriting
discipline
and
adjustment
of the
Company’s
business mix
in response
to changing
market
conditions.
The Company
focuses
on
reinsuring
companies
that
effectively
manage
the
underwriting
cycle
through
proper
analysis
and
appropriate
pricing of underlying risks and whose underwriting guidelines and
performance are compatible with its objectives.

The
Company’s
underwriting
strategies
emphasize
flexibility
and
responsiveness
to
changing
market
conditions.
The
Company
believes
that
its
existing
strengths,
including
its
broad
underwriting
expertise,
global
presence,
strong
financial ratings
and responsiveness substantial
capital, facilitate
adjustments
to changing its
mix of
business geographically,
by line
of
business
and
by
type
of
coverage,
allowing
it
to
fully
participate
in
market conditions. 
opportunities
that
provide
the
greatest
potential
for
underwriting
profitability.
The
Company’s
insurance
operations
complement
these
strategies
by
accessing business
that is
not available
on a
reinsurance
basis.
The Company believes that
carefully
monitors
its existing strengths, including its broad underwriting expertise, global presence, strong financial ratings and substantial capital, facilitate adjustments to its mix of business geographically, by line of business and by type of coverage, allowing it to participate in those market opportunities that provide the greatest potential for underwriting profitability.  The Company’s insurance operations complement these strategies by accessing business that is not available on a reinsurance basis.  The Company carefully monitors its
mix of business across all operations
to avoid unacceptable geographic
or other risk concentrations.

Commencing 2015,

4
Capital Transactions.
The Company’s
business operations
are in
part dependent
on its
financial strength
and financial
strength
ratings,
and the Company initiated a strategic build outmarket’s
perception of its insurance platform through the investment in key leadership hires which in turn has brought significant underwriting talent and stronger direction in achieving its insurance program strategic goals of increased premium volume and improved underwriting results. Recent growth is coming from highly diversified areas including newly launched lines of business, as well as, product and geographic expansion in existing lines of business. The Company is building a world-class insurance platform capable of offering products across lines and geographies, complementing its leading global reinsurance franchise.  

3

Capital Transactions.

The Company’s business operations are in part dependent on its financial strength and financial strength ratings, and the market’s perception of its financial strength. 

.
The Company
stockholder’s
equity was $5,857.4 million
$5.7 billion and $5,036.8 million
$7.0
billion
at
December
31, 2019
2022
and 2018,
2021,
respectively.
The
Company
possesses
significant
financial
flexibility
with
access to
the debt
markets
and, through
its ultimate
parent,
equity markets,
as a
result of
its perceived
financial
strength, as evidenced by the financial strength
ratings as assigned by independent rating
agencies. The Company’s
capital
position
remains
strong,
commensurate
with
its
financial
ratings
and the
Company
has
ample
liquidity
to
meet its financial obligations for the
foreseeable future.

Financial Strength Ratings.

The
following
table
shows
the
current
financial
strength
ratings
of
the
Company’s
operating
subsidiaries
as
reported by
A.M. Best,
S&P Global
Ratings (“S&P”)
and Moody’s.
These ratings
represent an
independent opinion
of the currentfinancial
strength, operating
performance, business
profile and
ability to meet
policyholder obligations.
The
ratings
are
not
intended
to
be
an
indication
of
the
degree
or
lack
of
risk
involved
in
a
direct
or
indirect
equity
investment
or a recommendation
to buy,
sell or hold
our securities. Additionally,
rating organizations
may change
their rating methodology,
which could have a material impact on
our financial strength ratings.
All
of
the
below-mentioned
ratings
are
continually
monitored
and
revised,
if
necessary,
by
each
of
the Company’s operating subsidiaries as reported by A.M. Best, Standard & Poor’s, and Moody’s.  These ratings are based upon factors relevant to policyholders and are not intended to be an indication of the degree or lack of risk involved in a direct or indirect equity investment in an insurance or reinsurance company.

All of the below-mentioned ratings are continually monitored and revised, if necessary, by each of the

rating
agencies.
The ratings presented in
the following table were in
effect as of January 31, 2020. 

2023.

The Company
believes that
its ratings
are important
as they provide
the Company’s
customers and
others with
an
independent
assessment
of
the
Company’s
financial
strength
using
a
rating
scale
that
provides
for
relative
comparisons.
Strong
financial
ratings
are
particularly
important
for
reinsurance
and
insurance
companies
given
that customers may
rely on a company
to pay covered
losses well into the future.
As a result, a highly rated
company is
generally preferred.

Operating Subsidiary:

A.M. Best

Standard & Poor's

Moody's

Everest Re

A+ (Superior)

A+ (Strong)

A1 (upper-medium)

Everest National

A+ (Superior)

A+ (Strong)

Not Rated

Everest Indemnity

A+ (Superior)

A+ (Strong)

Not Rated

Everest Security

A+ (Superior)

Not Rated

Not Rated

Everest International Assurance, Ltd.

A+ (Superior)

A (Strong )

Not Rated

Everest Denali

A+ (Superior)

Not Rated

Not Rated

Everest Premier

A+ (Superior)

Not Rated

Not Rated

Operating Subsidiary:
A.M. Best
S&P
Moody's
Everest Reinsurance Company
A+ (Superior)
A+ (Strong)
A1 (upper-medium)
Everest National Insurance Company
A+ (Superior)
A+ (Strong)
Not Rated
Everest Indemnity Insurance Company
A+ (Superior)
A+ (Strong)
Not Rated
Everest Security Insurance Company
A+ (Superior)
A+ (Strong)
Not Rated
Everest International Assurance, Ltd.
A+ (Superior)
A+ (Strong)
Not Rated
Everest Denali Insurance Company
A+ (Superior)
A+ (Strong)
Not Rated
Everest Premier Insurance Company
A+ (Superior)
A+ (Strong)
Not Rated
A.M.
Best
states
that
the “A+
“A+”
(“Superior”)
rating
is
assigned
to
those
companies
which,
in
its
opinion,
have
a
superior
ability
to
meet
their
ongoing
insurance
policy
and
contract
obligations
based
on
A.M.
Best’s
comprehensive
quantitative
and
qualitative
evaluation
of
a
company’s
balance
sheet
strength,
operating
performance
and
business
profile.
A.M.
Best
affirmed
these
ratings
on
June
15,
2022.
S&P
states
that
the
“A+”/”A”
ratings
are
assigned
to
those
insurance
companies
which,
in
its
opinion,
have
strong
financial
security
characteristics
with
respect
to
their
ability
to
pay
under
its
insurance
policies
and
contracts
in
accordance
with
their
terms.
S&P
affirmed
all
ratings
on
May
27,
2022.
Moody’s
states
that
an
“A1”
rating
is
assigned
to
companies which, that,
in its their
opinion, have a superior ability to meet their ongoing insurance policy
offer
upper-medium
grade security
and contract obligations based on A.M. Best’s comprehensive quantitative and qualitative evaluation of a company’s balance sheet strength, operating performance and business profile.  A.M. Best are
subject to
low credit
risk.
Moody’s
affirmed these ratings on May 2, 2019. Standard & Poor’s states that the “A+”/”A” ratings are assigned to those insurance companies which, in its opinion, have strong financial security characteristics with respect to their ability to pay under its insurance policies and contracts in accordance with their terms.  Standard & Poor’s affirmed these ratings on July 25, 2019.  Moody’s states that an “A1” rating is assigned to companies that, in their opinion, offer upper-medium grade security and are subject to low credit risk.  Moody’s affirmed these ratings on September 27, 2019. 

June 17, 2022.

Subsidiaries other
than Everest
Re may
not be
rated
by some
or any
rating
agencies because
such ratings
are not
considered
essential
by the
individual subsidiary’s
customers
or because
of the
limited nature
of the
subsidiary’s
operations or because the subsidiaries
are newly established and have
not yet been rated by the agencies.

4

5
Debt Ratings.

The following table shows the debt ratings
by A.M. Best, Standard & Poor’sS&P and Moody’s of the Holdings’ senior
notes due June
1, 2044, senior notes due October 15, 2050, senior notes due
October 15, 2052, and long termlong-term notes due May
1,
2067 bothall of which are considered investment
grade.
Debt ratings are the rating
agencies’ current assessment of the
credit worthiness
of an obligor with respect to a specific obligation.

A.M. Best

Standard & Poor's

Moody's

Senior Notes

a-

(Strong)

A-

(Strong)

Baa1

(Medium Grade)

Long Term Notes

bbb

(Adequate)

BBB

(Adequate)

Baa2

(Medium Grade)

Instrument

A.M. Best
S&P
Moody's
Senior Notes due June 1, 2044
a-
(Strong)
A-
(Strong)
Baa1
(Medium Grade)
Senior Notes due October 15, 2050
a-
(Strong)
A-
(Strong)
Baa1
(Medium Grade)
Senior Notes due October 15, 2052
Not Rated
A-
(Strong)
Baa1
(Medium Grade)
Long-Term Notes due May 1, 2067
bbb
(Adequate)
BBB
(Adequate)
Baa2
(Medium Grade)
Competition.

The
worldwide
reinsurance
and
insurance
businesses
are
highly
competitive,
as
well
as
cyclical
by
product
and
market.
As
such,
financial
results
tend
to
fluctuate
with
periods
of
constrained
availability,
higher
rates
and
stronger
profits followed
by periods
of abundant
capacity,
lower rates
and constrained
profitability.
Competition
in
the
types
of
reinsurance
and
insurance
business
that
we
underwrite
is
based
on
many
factors,
including
the
perceived
overall
financial
strength
of
the
reinsurer
or
insurer,
ratings
of
the
reinsurer
or
insurer
by
A.M.
Best
and/or
Standard
&
Poor’s,
underwriting
expertise,
the
jurisdictions
where
the
reinsurer
or
insurer
is
licensed
or
otherwise
authorized,
capacity
and
coverages
offered,
premiums
charged,
other
terms
and
conditions
of
the
reinsurance
and
insurance
business
offered,
services
offered,
speed
of
claims
payment
and
reputation
and
experience in lines written.
Furthermore, the market impact
from these competitive factors
related to reinsurance
and
insurance
is
generally
not
consistent
across
lines
of business,
domestic
and
international
geographical
areas
and distribution channels.

The Company competes

We
compete
in the
U.S. and
international
reinsurance
and insurance
markets
with numerous
global competitors. The Company’s
Our
competitors
include
independent
reinsurance
and
insurance
companies,
subsidiaries
or
affiliates
of
established
worldwide
insurance
companies,
reinsurance
departments
of certain
insurance
companies,
domestic
and
international
underwriting
operations, including underwriting syndicates at Lloyd’s
and
certain
government
sponsored
risk
transfer
vehicles.
Some
of London
these
competitors
have
greater
financial
resources
than
we
do
and certain government sponsored risk transfer vehicles.  Some of these competitors
have greater financial resources than we do
established
long-term
and have established long term and
continuing
business relationships,
which can be a
significant competitive
advantage.
In addition, the lack
of strong barriers
to
entry
into
the
reinsurance
business
and recently,
the
securitization
of
reinsurance
and
insurance
risks
through
capital
markets provide additional
sources of potential reinsurance
and insurance capacity and competition.

Worldwide
insurance
and
reinsurance
market
conditions continued
historically
have
been
competitive.
Generally,
there
is
ample
insurance
and
reinsurance
capacity
relative
to be competitive. Generally, there was ample insurance and reinsurance capacity relative to
demand,
as
well
as,
additional
capital
from
the
capital
markets through
insurance linked
financial instruments.
These financial instruments
such as side cars,
catastrophe
bonds and collateralized
reinsurance funds, provide
provided capital
markets with
access to insurance
and reinsurance
risk
exposure.
The capital
markets
demand for
these products
is being primarily
driven by the current low interest environment and
the desire
to achieve
greater
risk
diversification
and
potentially
higher
returns
on
their
investments.
This increased
competition is
generally having
has
a
negative
impact
on
rates,
terms
and
conditions;
however,
the
impact
varies
widely
by
market
and
coverage.
Based
on
recent
competitive
behaviors
in
the
insurance
and
reinsurance
industry,
natural
catastrophe
events
and
the
macroeconomic
backdrop,
there
has
been
some
dislocation
in
the
market
which
we
expect
to
have
a
positive
impact on rates and terms and conditions; however, the impact varies widely byconditions
generally,
though local market and coverage. 

Rates tend to fluctuate by specific region and products, particularly areas recently impacted by large catastrophic events.  Although insured specificities can

vary.
The increased frequency of
catastrophe
losses for 2019 were slightly below recent annual averages, there were numerous natural catastrophes in 2018, with total industry losses estimatedexperienced throughout
2022 appears to be $90 billion.  pressuring
the increase
of
rates.
As
business
activity
continues
to
regain
strength
after
the
pandemic
and
current
macroeconomic
uncertainty,
rates
also
appear
to
be
firming
in
most
lines
of
business,
particularly
in
the
casualty
lines
that
had
seen
significant
losses
such
as
excess
casualty
and
directors’
and
officers’
liability.
Other
casualty
lines
are
experiencing
modest
rate
increase,
while
some
lines
such
as
workers’
compensation
were
experiencing
softer
market
conditions.
It
is
too
early
to
tell
what
the
impact
on
pricing
conditions
will
be
but
it
is
likely
to
change
depending on the line of business and geography.
6
The costliest event was the Camp Wildfire in California, the deadliest and most destructive California fire on record. These 2018 catastrophe losses followed another record year of catastrophes in 2017 where total industry losses for the worldwide events were estimated at $140 billion. These catastrophe losses included an unprecedented series of catastrophes war
in the third quarter of 2017 with Hurricanes Harvey, Irma
Ukraine
is ongoing
and Maria, an
evolving
event.
Economic
and legal
sanctions
have
been levied
against
Russia, specific named individuals
and entities connected
to the Russian government,
as well as a significant earthquake in Mexico City.  Additional catastrophe events occurred businesses
located
in the fourth quarter
Russian Federation
and/or owned
by Russian
nationals by
numerous countries,
including the
United States.
The
significant
political
and
economic
uncertainty
surrounding
the
war
and
associated
sanctions
have
impacted
economic
and
investment
markets
both
within
Russia
and
around
the
world.
The
Company
has
recorded
$25
million of 2017 withlosses related to the wildfires in California Ukraine/Russia
war during 2022.
Human Capital Management.
Our employees
are essential
to the
success of
our business,
and Hurricanes Nate so
we strive
to attract
and Ophelia.  During 2016, catastrophe losses included the Fort McMurray Canadian wildfire, Hurricane Matthew which affected retain
a large area high
standard
of
insurance
professionals
to
meet
our
business
needs
as
well
as
the Caribbean
needs
of
our
clients
and southeastern United States, storms and an earthquake in Ecuador.  While the future impact on market conditions from these catastrophes cannot be determined at this time, there is a growing industry consensus that there is some firming
customers.
As
of (re)insurance rates for the areas impacted by the recent catastrophes.

5

Rates also appear to be firming in some of the casualty lines of business, particularly in the casualty lines that have seen significant losses such as excess casualty and directors and officers’ liability.   Other casualty lines are experiencing modest rate increase, while some lines such as workers’ compensation are experiencing softer market conditions.

Commencing in 2015, the Company initiated a strategic build out of its insurance platform through the investment in key leadership hires which in turn has brought significant underwriting talent and stronger direction in achieving its insurance program strategic goals of increased premium volume and improved underwriting results.  Recent growth is coming from highly diversified areas including newly launched lines of business, as well as, product and geographic expansion in existing lines of business.  The Company is building a world-class insurance platform capable of offering products across lines and geographies, complementing its leading global reinsurance franchise. 

Overall, the Company believes that given its size, strong ratings, distribution system, reputation, expertise and capital market vehicle activity the current marketplace conditions provide profit opportunities.  The Company continues to employ its strategy of targeting business that offers the greatest profit potential, while maintaining balance and diversification in its overall portfolio.

Employees.

As of February 1, 2020, 2023,

the Company employed 1,376
1,933 persons.
Management believes
that employee relations
are good.
None of the Company’s
employees are subject
to collective bargaining
agreements, and the
Company is not
aware
of any current efforts
to implement such agreements.

Everest is
committed to providing
our employees with an engaging
and supportive environment
so that employees
can develop
personally and
help us achieve
success as
an organization.
We consider
the ability
to attract,
develop
and
retain
a
high
caliber
of
insurance
professionals
to
be
critical
to
our
success.
Opportunities
for
continued
learning
and
talent
development
are
provided
to
all
employee
levels.
Employees
are
encouraged
to
take
ownership
of
their
development
by
using
the
tools
that
the
Company
has
made
available
to
them
including
industry
training,
mentorships
and
personal
development
classes.
Everest
actively
manages
succession
planning
throughout
our organization
and strives
to provide
job growth
and advancement
opportunities to
internal talent,
where possible.
Diversity and Inclusion.
Our strength
and success
derive
from our
diversity,
and we
are
at
our best
when we
embrace
diverse
views
and
perspectives.
Equality
in
opportunity,
career
development,
compensation
and
respect
for
all
individuals
are
fundamental human rights that are
at the forefront
of our culture and promoted not
only within our workplace but
also the
global communities
in which
we operate.
Our Board
is committed
to diversity
within its
structure
as well
as
emphasizing
its
importance
in
our
senior
executive
leadership.
We
believe
that
diversity
in
gender,
age,
ethnicity
and
skill
set
allows
for
dynamic
and
evolving
perspectives
in
governance,
strategy,
corporate
responsibility,
human rights and risk management.
Proactive diversity
recruitment is
an integral
aspect of succession
planning at both
the board level
and throughout
all
levels
in
the
organization.
Our
Talent
Development
team
works
with
senior
management
to
identify
women
and
persons
of
color
across
the
Company
as
potential
leaders.
These
individuals
are
provided
management
and
executive leadership
training and
education to
enhance their skillsets
and provide
opportunities for
advancement.
Indeed, our
executive
officers
are
measured
on their
forward-thinking
diversity
initiatives
as part
of their
annual
performance evaluations.
Such diversity
at the
most senior
levels of
our organization
reflects our
commitment to
identify and develop highly qualified women and individuals
of color to help lead our Company into
the future.
The
work
of
the
DEI
Council
has
helped
enhance
the
employee
experience
for
all
our
colleagues
across
the
organization
worldwide.
The
council
encourages
continuous
and
open
dialogue
between
executive
and
senior
management
and
traditionally
underrepresented
groups
at
all
levels,
without
fear
of
reprisal
or
retaliation,
to
identify
areas
of
improvement
and
carry
out
the
message
of
inclusion
both
inside
and
outside
our
organization.
The
DEI
council
was
instrumental
in
forming
and
supporting
additional
Employee
Resource
Groups
(“ERGs”),
developing a
Regional Representation
network and
leveraging specific
Talent
Development
and Talent
Acquisition
initiatives that will positively influence the composition
of our workforce.
7
Available Information.

The Company’s
Annual Reports
on Form
10-K, Quarterly
Reports on
Form 10-Q, Current
Reports on
Form 8-K
and
amendments
to
those
reports
are
available
free
of
charge
through
the
Company’s
internet
website
at
http://www.everestregroup.com www.everestre
group.com
as soon
as reasonably
practicable
after such
reports
are electronically
filed with
the SEC.

ITEM 1A.
RISK FACTORS

In addition
to the
other information
provided
in this
report, the
following risk
factors
should be
considered when
evaluating
an
investment
in
our
securities.
If
the
circumstances
contemplated
by
the
individual
risk
factors
materialize,
our business,
financial condition
and results
of operations
could be
materially
and adversely
affected
and our ability to service our debt, our debt ratings
and our ability to issue new debt could decline significantly.

Risks relating to our Business

Fluctuations in the financial markets could result in investment losses.

Prolonged and severe disruptions in the overall public debt and equity markets, such as occurred during 2008, could result in significant realized and unrealized losses in our investment portfolio.  Although financial markets have significantly improved since 2008, they could deteriorate in the future.  There could also be disruption in individual market sectors, such as occurred in the energy sector in recent years.  Such declines in the financial markets could result in significant realized and unrealized losses on investments and could have a material adverse impact on our results of operations, equity, business and insurer financial strength and debt ratings. 

RISKS RELATING TO
OUR BUSINESS
Our results could be adversely affected by catastrophic
events.

We
are
exposed
to
unpredictable
catastrophic
events,
including weather-related weather
-related
and other
natural
catastrophes,
as well as acts of
terrorism. The frequency and/or
severity of catastrophic
events may be impacted
in the future by
the continued
effects of
climate change.
Any material
reduction in
our operating
results caused
by the occurrence
of
one
or
more
catastrophes
could
inhibit
our
ability
to
pay
dividends
or
to
meet
our
interest
and
principal
payment obligations.
By way
of illustration,
during the past
five calendar
years, pre-taxpre
-tax catastrophe
losses, net
of
reinsurance, were as follows:

6

Calendar year:

Pre-tax net catastrophe losses

Calendar year:

Pre-tax catastrophe losses

(Dollars in millions)

 

 

2019

$

573.7

2018

 

1,712.6

2017

 

941.4

2016

 

109.2

2015

 

31.9

(Dollars in millions)

2022
$
984
2021
940
2020
397
2019
574
2018
1,713
Our losses from future catastrophic events
could exceed our projections.

We
use
projections
of
possible
losses
from
future
catastrophic
events
of
varying
types
and
magnitudes
as
a
strategic
underwriting tool.
We use projections of possible losses from future catastrophic events of varying types and magnitudes as a strategic underwriting tool.  We use
these loss
projections to
estimate our
potential catastrophe
losses in
certain
geographic
areas
and decide
on the
placement
of retrocessional
coverage
or other
actions
to
limit the
extent
of
potential
losses
in
a
given
geographic
area.
These
loss
projections
are
approximations,
reliant
on
a
mix
of
quantitative
and
qualitative
processes,
and
actual
losses
may
exceed
the
projections
by
a
material
amount,
resulting in a material adverse effect
on our financial condition and results of operations.

If our loss
reserves are inadequate
to meet our
actual losses, our
net income
would be reduced
or we could
incur a
loss.

We
are
required
to
maintain
reserves
to
cover
our
estimated
ultimate
liability
of
losses
and
loss
adjustment
expenses (“LAE”) for
both reported and
unreported claims incurred.
These reserves are only
estimates of what we
believe
the
settlement
and
administration
of claims
will
cost
based
on
facts
and circumstances
known
to
us.
In
setting reserves for
our reinsurance liabilities,
we rely on claim
data supplied by
our ceding companies and brokers
and we
employ
actuarial
and statistical
projections.
The information
received
from
our
ceding companies
is not
always
timely
or
accurate,
which
can
contribute
to
inaccuracies
in
our
loss
projections.
Because
of
the
uncertainties that
surround
our estimates
of loss
and LAE
reserves, we
cannot be
certain that
ultimate losses
and
LAE payments
will not
exceed
our estimates.
If our
reserves are
deficient, we
would be
required to
increase loss
8
reserves in
the period
in which
such deficiencies
are identified
which would
cause a
charge to
our earnings
and a
reduction of
capital. By way of illustration, during During
the past
five calendar
years,
the reserve
re-estimation
process
resulted in
a decrease
to our pre-tax net income in 2019 and 2018, and an increase for the years 2017 through 2015: 

all five

Calendar year:

Effect on pre-tax net income

(Dollars in millions)

 

 

 

2019

$

44.4

decrease

2018

 

558.8

decrease

2017

 

117.7

increase

2016

 

91.7

increase

2015

 

6.5

increase

The difficultyyears:

Calendar year:
Effect on pre-tax net income
(Dollars in millions)
2022
$
8
decrease
2021
5
decrease
2020
200
decrease
2019
44
decrease
2018
559
decrease
The
difficulty
in
estimating
our
reserves
is
significantly
more
challenging
as
it
relates
to
reserving
for
potential
asbestos and
environmental (“A&E”)
liabilities.
At December 31, 2019, 2.5%
2022, 1.9% of our
gross reserves were
comprised
of
A&E
reserves.
A&E
liabilities
are
especially
hard
to
estimate
for
many
reasons,
including
the
long
delays
between exposure and manifestation
of any bodily injury or property damage,
difficulty in identifying the source of
the asbestos or
environmental contamination,
long reporting delays
and difficulty in properly
allocating liability for
the asbestos
or environmental
damage.
Legal tactics
and judicial and
legislative developments
affecting the
scope
of
insurers’
liability,
which
can
be
difficult
to
predict,
also
contribute
to
uncertainties
in
estimating
reserves
for
A&E liabilities.

7

The

The failure

to
accurately
assess
underwriting
risk
and
establish
adequate
premium
rates
could
reduce
our
net
income or result in a net loss.

Our success depends on our ability to accurately
assess the risks associated with the businesses
on which the risk is
retained.
If we
fail
to
accurately
assess
the risks
we retain,
we
may
fail
to
establish
adequate
premium
rates
to
cover our losses and LAE.
This could reduce our net income and even result
in a net loss.

In
addition,
losses
may
arise from
events
or
exposures
that
are
not
anticipated
when
the
coverage
is
priced.
In
addition to
unanticipated
events,
we also
face the
unanticipated
expansion
of our
exposures,
particularly in long-tail
long-
tail liability
lines.
An example
of this
is the
expansion
over time
of the
scope of
insurers’
legal liability
within the
mass tort arena, particularly for A&E exposures
discussed above.

Decreases in pricing for property and casualty reinsurance
and insurance could reduce our net income.

The
worldwide
reinsurance
and
insurance
businesses
are
highly
competitive,
as
well
as
cyclical
by
product
and
market.
These
cycles,
as
well
as
other
factors
that
influence
aggregate
supply
and
demand
for
property
and
casualty
insurance
and reinsurance
products,
are outside
of our
control.
The supply
of (re)insurance
is driven
by
prevailing
prices
and
levels
of
capacity
that
may
fluctuate
in
response
to
a
number
of
factors
including
large
catastrophic
losses
and investment
returns
being
realized
in
the
insurance
industry.
Demand
for
(re)insurance
is
influenced
by
underwriting
results
of
insurers
and
insureds,
including
catastrophe
losses,
and
prevailing
general
economic
conditions.
If
any
of
these
factors
were
to
result
in
a
decline
in
the
demand
for
(re)insurance
or
an
overall increase in (re)insurance
capacity, our
net income could decrease.

If rating agencies downgrade
the ratings of our insurance
subsidiaries, future prospects
for growth and profitability
could be significantly and adversely affected.

Our active
insurance
company
subsidiaries
currently
hold financial
strength
ratings
assigned by
third-party
rating
agencies which assess and
rate the claims paying
ability and financial strength
of insurers and
reinsurers. Our active subsidiaries
Financial
strength
ratings
are
used
by
cedents,
agents
and
brokers
to
assess
the
financial
strength
and
credit
quality
of
reinsurers
and
insurers.
A
downgrade
or
withdrawal
of
any
of
these
ratings
could
adversely
affect
our
ability
to
market
our
reinsurance
and
insurance
products,
our
ability
to
compete
with
other
reinsurers
and
insurers,
and
9
could
have
a
material
and
adverse
effect
on
our
ability
to
write
new
business
that
in
turn
could
impact
our
profitability
and
operating
results.
In
December
2021,
S&P
announced
proposed
changes
to
its
rating
methodologies. The proposed
changes have
not been finalized,
so the impact,
if any,
that these changes
may have been rated carry an “A+” (“Superior”) rating from A.M. Best. Everest Re, Everest National and Everest Indemnity hold an “A+” (“Strong”) rating from Standard & Poor’s and Everest Assurance holds an “A” (“Strong”) rating from this same agency.  Everest Re holds an “A1” (“upper-medium grade”) rating from Moody’s.  Financial
on our financial strength ratings are used by client companies and agents and brokers that place the business as an important means of assessing the financial strength and quality of reinsurers. A downgrade or withdrawal of any of these ratings might adversely affect our ability to market our insurance products and could have a material and adverse effect on future prospects for growth and profitability. 

is unknown.
Consistent with
market practice,
much of our
treaty reinsurance
business allows
the ceding company
to terminate
the
contract
or
seek
collateralization
of
our
obligations
in
the
event
of
a
rating
downgrade
below
a
certain
threshold. The
termination provision
would generally
be triggered
if a
rating fell
below A.M.
Best’s
A- rating level, which is three levels below
level.
To
a
lesser
extent,
Everest Re’s current rating of A+. To a lesser extent, Everest
Re
also
has
modest
exposure
to
reinsurance
contracts
that
contain
provisions
for
obligatory funding of outstanding
liabilities in the event of a rating
agency downgrade. Those
provisions
would also
generally be triggered if Everest
Re’s rating
fell below A.M. Best’s A- rating
level.

The failure of our insureds, intermediaries and reinsurers to
satisfy their obligations to us could reduce our income.

In
accordance
with
industry
practice,
we
have
uncollateralized
receivables
from
insureds,
agents
and
brokers
and/or
rely
on
agents
and
brokers
to
process
our
payments.
We
may
not
be
able
to
collect
amounts
due
from
insureds, agents and brokers, and/or rely on agents and brokers to process our payments.  We may not be able to collect amounts due from insureds, agents and brokers,
resulting in a reduction to net income.

We are
subject to
credit risk
of reinsurers
in connection
with retrocessional
arrangements
because the transfer
of
risk to a
reinsurer does
not relieve
us of our
liability to the
insured. In
addition, reinsurers
may be unwilling
to pay
us even though they
are able to do so.
The failure of one or
more of our reinsurers
to honor their obligations
to us
in a timely fashion
would impact our cash
flow and reduce our
net income and could
cause us to
incur a significant
loss.

8

If we are unable or choose not to purchase reinsurance

and transfer risk to the reinsurance
markets, our net income
could be reduced or we could incur a net loss in the event
of unusual loss experience.

We are
generally less
reliant on
the purchase
of reinsurance
than many
of our competitors,
in part because
of our
strategic
emphasis on
underwriting discipline
and management
of the
cycles inherent
in our
business.
We
try to
separate
our risk
taking process
from our
risk mitigation
process in
order to
avoid developing
too great
a reliance
on
reinsurance.
With
the
expansion
of
the
capital
markets
into
insurance
linked
financial
instruments,
we
increased our
use of capital
market products
for catastrophe reinsurance starting in 2014. 
reinsurance.
In addition, we
have increased
some of
our
quota
share
contracts
with
larger retrocessions have increased. 
retrocessions.
The
percentage
of
business
that
we
reinsure
may
vary
considerably
from year
to year,
depending on
our view
of the
relationship between
cost and
expected benefit
for
the contract period.

We entered into affiliated whole account quota share reinsurance agreements for 2002 through 2017 with Bermuda Re but we did not renew the quota share reinsurance agreement with Bermuda Re after 2017.  We believe that the terms, conditions and pricing

Percentage of the quota share agreements reflect arm’s length market conditions.

Percentage of ceded written premiums to gross written premiums

2019

 

2018

 

2017

 

2016

 

2015

Unaffiliated

16.7

%

 

14.7

%

 

14.6

%

 

13.6

%

 

8.2

%

Affiliated

1.4

%

 

8.7

%

 

38.4

%

 

45.9

%

 

49.9

%

If we are unableceded written premiums to purchase affiliated or unaffiliated reinsurance in the future, we may have to reduce our premium volume and we may be more exposed to reductions in net income from large losses.

gross written premiums

2022
2021
2020
2019
2018
Unaffiliated
13.2
%
14.3
%
14.9
%
16.7
%
14.7
%
Affiliated
3.8
%
4.9
%
1.7
%
1.4
%
8.7
%
Our industry is highly competitive and we may not be able
to compete as successfully in the future.

Our industry
is highly
competitive
and subject
to
pricing cycles
that
can
be pronounced.
We
compete
globally in
the United
States,
international
reinsurance
and insurance
markets
with numerous
competitors.
Our competitors
include
independent
reinsurance
and
insurance
companies,
subsidiaries
or
affiliates
of
established
worldwide
insurance
companies,
reinsurance
departments
of
certain
insurance
companies
and
domestic
and
international
underwriting operations, including underwriting syndicates
at Lloyd’s
of London.

According
to Standard & Poor’s, S&P,
Group ranks
among the
top ten
global reinsurance
groups,
where more
than two-thirds
of the
market
share
is
concentrated.
The worldwide
net
premium
written
by
the
Top
40 global
reinsurance
groups,
for
both
life
and
non-life
business,
was
estimated
to
be
$274 billion
in
2020
according
to
data
compiled
by
S&P.
In
10
addition to be $225.1 billion in 2018 according to data compiled by Standard & Poor’s.  The leaders in this market are Swiss Re, Munich Re, Hannover Rueck SE, Berkshire Hathaway Re, and SCOR SE. Some of these competitors, have greater financial resources than we do and have established long term and continuing business relationships throughout the industry, which can be a significant competitive advantage.  In addition, the lack of strong barriers to entry into the reinsurance business and
the entry of alternative
capital market products
and vehicles provide additional
sources of
reinsurance and insurance capacity and increased competition. 

capacity.
We are dependent on our key
personnel.

Our success
has been,
and will
continue
to be,
dependent on
our ability
to retain
the services
of our Chairman, Joseph V. Taranto (age 70) and
existing key executive officers
executives and
other key employees,
and to attract
and retain additional qualified
personnel in the future. The
loss
of the services of
any key
executive officer
or the inability to
hire and retain
other highly qualified personnel
in the
future,
particularly
those
experienced
in
the
property
and casualty
industry,
could
adversely
affect
our
ability
to
conduct business.  Generally, we consider key executive officers to be those individuals who have the greatest influence in setting overall policy and controlling operations: Effective January 1, 2020, Juan C. Andrade (age 54) became President and Chief Executive Officer, replacing Dominic J. Addesso (age 66), who retired effective December 31, 2019 and remains on our Board of Directors.  Other key officers include Executive Vice President and Chief Financial Officer, Craig Howie (age 56), Executive Vice President and Chief Executive Officer Reinsurance Division, John P. Doucette (age 54), Executive Vice President, General Counsel, Chief Compliance Officer, Secretary and Managing Director and Chief Executive Officer of Bermuda Re, Sanjoy Mukherjee (age 53) and Executive Vice

9

President, President and Chief Executive Officer of the Everest Insurance® Division, Jonathan Zaffino (age 47). We have employment contracts with all of our key officers, which contain automatic renewal provisions that provide for the contracts to continue indefinitely unless sooner terminated in accordance with the contract or as otherwise may be agreed.

Our investment

values and
investment
income could
decline because
they are
exposed
to interest
rate, credit
and
market risks.

A significant
portion of our
investment
portfolio consists
of fixed
income securities
and smaller portions
consist of
equity
securities
and
other
investments.
Both
the
fair
value
of
our
invested
assets
and
associated
investment
income
fluctuate
depending
on
general
economic
and
market
conditions.
For
example,
the
fair
value
of
our invested assets and associated investment income fluctuate depending on general economic and market conditions.  For example, the fair market value of our
predominant fixed income portfolio
generally increases or decreases
inversely to fluctuations
in interest rates.
The market
fair
value
of our
fixed
income
securities
could
also decrease
as a
result
of a
downturn
in
the
business
cycle
that
causes the
credit quality
of such securities
to deteriorate.
The net investment
income that
we realize
from future
investments in fixed income
securities will generally increase or decrease
with interest rates.

Interest
rate
fluctuations
also
can
cause
net
investment
income
from
fixed
income
investments
that
carry
prepayment
risk,
such
as
mortgage-backed
and
other
asset-backed
securities,
to
differ
from
the
income
anticipated
from
those
securities
at
the
time
of
purchase.
In
addition,
if
issuers
of
individual
investments
are
unable to meet their obligations, investment
income will be reduced and realized capital
losses may arise.

The
majority
of our
fixed
income
securities
are
classified
as
available
for
sale
and
temporary
changes
in
the market
fair
value
of
these
investments
are
reflected
as
changes
to
our
stockholder’s
equity.
Our
actively
managed
equity
security portfolios
are fair valued
and any changes
in fair value
are reflected
as net realized
capital gains
or losses.
As a result, a decline in the value of our securities reduces our
capital or could cause us to incur a loss.

We have invested

As
a
part
of our
ongoing
analysis
of our
investment
portfolio,
we
are
required
to
assess
current
expected
credit
losses for
all held-to-maturity
securities and
evaluate
expected
credit losses
for available
-for-sale securities
when
fair
value
is
below
amortized
cost,
which
considers
reasonable
and
supportable
forecasts
of
future
economic
conditions in addition to information
about past events and current
conditions. This analysis requires
a high degree
of judgment. Financial assets with similar risk characteristics
and relevant historical loss
information are included in
the development
of an estimate
of expected
lifetime losses.
Declines in relevant
stock and
other financial markets
and other
factors
impacting the
value of
our investments
could result
in an
adverse effect
on our
net income
and
other financial results.
We
have
invested
a
portion of
our
investment
portfolio
in
equity securities.
The value
of these
assets
fluctuates
with changes
in the
markets. In
times of
economic weakness,
the fair
value of
these assets
may decline,
and may
negatively
impact
net
income.
We
also
invest
in
non-traditional
investments
which
have
different
risk
characteristics
than
traditional
fixed
income
and
equity
securities.
These
alternative
investments
are
comprised
primarily
of
private
equity
limited
partnerships.
The
changes
in
value
and
investment
income/(loss)
for
these
partnerships may be more volatile
than over-the-counter securities.

The following table quantifies

Prolonged
and
severe
disruptions
in
the portion
overall
public
and private
debt
and
equity
markets,
such
as occurred
in
early
2020
related
to
the
COVID-19
pandemic,
could
result
in
significant
realized
and
unrealized
losses
in
our
investment
portfolio.
There
could
also be
disruption
in individual
market
sectors,
such as
occurred
in the
energy
sector
in
recent
years.
Such
declines
in
the
financial
markets
could
result
in
significant
realized
and
unrealized
11
losses on investments
and could have
a material adverse
impact on our
results of our investment portfolio that consists of fixed income securities, operations,
equity, securities
business and
insurer financial strength and investments that carry prepayment risk. 

debt

10

ratings.

 

At

 

 

 

 

(Dollars in millions)

December 31, 2019

 

% of Total

Mortgage-backed securities

 

 

 

 

 

 

Commercial

$

329.0

 

 

2.8

%

Agency residential

 

644.7

 

 

5.4

%

Non-agency residential

 

1.6

 

 

-

%

Other asset-backed

 

766.0

 

 

6.4

%

Total asset-backed

 

1,741.3

 

 

14.6

%

Other fixed income

 

5,750.8

 

 

48.1

%

Total fixed income, at market value

 

7,492.1

 

 

62.7

%

Fixed income -available for sale, at fair value

 

5.8

 

 

-

%

Equity securities - available for sale, at fair value

 

764.0

 

 

6.4

%

Other invested assets

 

1,020.8

 

 

8.5

%

Other invested assets, at fair value

 

1,982.6

 

 

16.6

%

Cash and short-term investments

 

691.0

 

 

5.8

%

Total investments and cash

$

11,956.3

 

 

100.0

%

We may experience

foreign currency exchange losses that
reduce our net income and capital levels.

Through our
international operations,
we conduct business
in a variety
of foreign
(non-U.S.) currencies,
principally
the
Canadian
dollar
and
the
Singapore
dollar.
Assets,
liabilities,
revenues
and
expenses
denominated
in
foreign
currencies
are
exposed
to
changes
in
currency
exchange
rates.
Our
reporting
currency
is
the
U.S.
dollar,
and
exchange
rate
fluctuations,
especially
relative
to
the
U.S.
dollar,
may
materially
impact
our
results
and
financial
position.
In 2019,
2022,
we
wrote
approximately 15.5%
15.2%
of
our
coverages
in
non-U.S.
currencies;
as
of
December
31, 2019,
2022,
we
maintained
approximately 9.8%
8.8%
of
our
investment
portfolio
in
investments
denominated
in
non-U.S.
currencies.
During 2019, 2018
2022,
2021
and 2017,
2020,
the
impact
on
our
quarterly
pre-tax
net
income
from
exchange
rate
fluctuations ranged from a loss
of $6.4$11 million to a gain of $16.1$11 million.

Changes in the method for determining LIBOR and the potential replacement of LIBOR may affect our cost of capital and net investment income.

On July 27, 2017, the UK Financial Conduct Authority announced that it intends to stop persuading or compelling banks to submit LIBOR rates after 2021, which is expected to result in these widely used reference rates no longer being available.  Potential changes to LIBOR, as well as uncertainty related to such potential changes and the establishment of any alternative reference rates, may adversely affect the market for LIBOR-based securities and could adversely impact the interest rate on our long term subordinate notes.  In addition, the discontinuance of LIBOR or changes or reforms to the determination or supervision of LIBOR may result in a sudden or prolonged increase or decrease in reported LIBOR, which could have an adverse impact on the market for LIBOR-based securities or the value of our investment portfolio. 

We are subject to cybersecurity risks
that could negatively impact our business operations.

We
are
dependent
upon
our
information
technology
platform,
including
our
processing
systems,
data
and
electronic transmissions
in our business operations.
Security breaches could expose
us to the loss or misuse
of our
information,
litigation
and
potential
liability.
In
addition,
cyber
incidents
that
impact
the
availability,
reliability,
speed,
accuracy
or
other
proper
functioning
of
these
systems
could
have
a
significant
negative
impact
on
our
operations
and
possibly
our
results.
An
incident
could
also
result
in
a
violation
of
applicable
privacy
and
other
laws, damage
our reputation,
cause a
loss of
customers
or give
rise to
monetary fines
and potential liability.  In addition, cyber incidents other
penalties, which
could be
significant.
Management is
not aware
of a
cybersecurity incident
that has
had a
material impact the availability, reliability, speed, accuracy or other proper functioning of these systems could have a significant negative impact
on our operations and possibly our results.  An incident could also result in a violation of applicable privacy and other laws, damage our reputation, cause a loss of customers or give rise to monetary fines and other penalties, which could be significant.  Management is not aware of a cybersecurity incident that has had a material impact on our
operations.

11

The

The NAIC

has
adopted
an
Insurance
Data
Security
Model
Law,
which,
when
adopted
by
the
states
will
require
insurers, insurance
producers and other
entities required to
be licensed under state
insurance laws to
comply with
certain
requirements
under
state
insurance
laws,
such
as
developing
and
maintaining
a
written
information
security
program,
conducting
risk assessments
and overseeing
the data
security
practices
of third-party third
-party
vendors.
In
addition,
certain
state
insurance
regulators
are
developing
or
have
developed
regulations
that
may
impose
regulatory
requirements
relating
to
cybersecurity
on
insurance
and
reinsurance
companies
(potentially
including
insurance and reinsurance companies (potentially including insurance and reinsurance
companies that are
not domiciled, but are
licensed, in the relevant
state).
For example,
the
New
York
State
Department
of Financial
Services
has adopted
a
regulation
pertaining
to
cybersecurity
for
all
banking
and
insurance
entities
under
its
jurisdiction,
which
was
effective
as
of
March
1,
2017,
which
applies
to
us.
We
cannot
predict
the
impact
these
laws
and
regulations
will
have
on
our
business,
financial
condition
or
results
of
operations,
but our
insurance
and reinsurance
companies
could
incur additional
costs
resulting
from
compliance
with such laws and regulations.

Risks Relating to Regulation

RISKS RELATING TO
REGULATION
Insurance laws and regulations restrict our ability to
operate and any failure to comply with
those laws and
regulations could have a material adverse effect on our
business.

We
are
subject
to
extensive
and
increasing
regulation
under
U.S.,
state
and
foreign
insurance
laws.
These
laws
limit
the
amount
of
dividends
that
can
be
paid
to
us
by
our
operating
subsidiaries,
impose
restrictions
on
the
amount and
type of
investments
that we
can hold,
prescribe solvency,
accounting
and internal
control
standards
that
must
be
met
and
maintained
and
require
us
to
maintain
reserves.
These
laws
also
require
disclosure
of
material
inter-affiliate
transactions
and
require
prior
approval
of “extraordinary”
“extraordinary”
transactions.
Such “extraordinary”
“extraordinary”
transactions
include
declaring
dividends
from
operating
subsidiaries
that
exceed
statutory
thresholds.
These
laws
also
generally
require
approval
of
changes
of
control
of
insurance
companies.
The
application
of
these
laws
could
affect
our
liquidity
and
ability
to
pay
dividends,
interest
and
other
payments
on
securities,
as
applicable,
and could
restrict
our
ability
to
expand
our
business
operations
through
acquisitions
of
new insurance
subsidiaries.
We may
not have
or maintain
all required
licenses and approvals
or fully comply
with
12
the
wide
variety
of
applicable
laws
and
regulations
or
the
relevant
authority’s
interpretation
of
the
laws
and
regulations.
If we
do
not
have
the
requisite
licenses
and approvals
or
do
not comply
with
applicable
regulatory
requirements,
the
insurance
regulatory
authorities
could
preclude
or
temporarily
suspend
us
from
carrying
on
some or all
of our activities
or monetarily penalize
us.
These types of
actions could have
a material
adverse effect
on our business.
To date,
no material fine, penalty or restriction
has been imposed on us for failure
to comply with
any insurance law or regulation.

As
a
result
of
the
previous
dislocation
of
the
financial
markets,
Congress
and
the
previous
Presidential
administration
in
the
United
States
implemented
changes
in
the
way
the
financial
services
industry
is regulated.
Some of
these changes
are also
impacting the
insurance industry.
For example,
the U.S.
Treasury
established the
Federal
Insurance
Office
with
the authority
to
monitor
all aspects
of the previous dislocation of the financial markets, Congress and the previous Presidential administration in the United States implemented changes in the way the financial services industry is regulated.  Some of these changes are also impacting the
insurance industry.  For example, the U.S. Treasury established the Federal Insurance Office with the authority to
sector,
monitor all aspects of the insurance sector, monitor
the extent
to
which
traditionally
underserved
communities
and
consumers
have
access
to
affordable
non-health
insurance
products,
to
represent
the
United
States
on
prudential
aspects
of international
insurance
matters,
to
assist
with
administration
of
the
Terrorism
Risk
Insurance
Program
and
to
advise
on
important
national
and
international
insurance
matters.
In
addition,
several
European
regulatory
bodies
are
in
process
of
updating
existing
or
developing
new
capital
adequacy
directives
for
insurers
and
reinsurers.
The
future
impact
of
such
initiatives
or
new
initiatives
from
the
current
Government
Administration,
if
any,
on
our
operation,
net
income
(loss)
or
financial condition cannot be determined at this
time.

Risk Relating to our seCURITIES

RISK RELATING TO
OUR SECURITIES
Because of
our holding
company
structure, our
ability to
pay dividends,
interest
and principal
is dependent
on our
receipt of dividends, loan payments and other funds from our subsidiaries.

We are
a holding
company,
whose most
significant asset
consists
of the
stock of
our operating
subsidiaries.
As a
result,
our ability
to pay
dividends, interest
or other
payments
on our
securities in
the future
will depend
on the
earnings
and
cash
flows
of
the
operating
subsidiaries
and
the
ability
of
the
subsidiaries
to
pay
dividends
or
to
advance
or
repay
funds
to
us.
This
ability
is
subject
to
general
economic,
financial,
competitive,
regulatory

12

and

and other factors beyond

our control. Payment
of dividends and advances
and repayments from
some of the operating
subsidiaries are
regulated by
U.S., state
and foreign
insurance laws
and regulatory
restrictions, including
minimum
solvency
and
liquidity
thresholds.
Accordingly,
the
operating
subsidiaries
may
not
be
able
to
pay
dividends
or
advance
or
repay
funds
to
us
in
the
future,
which
could
prevent
us
from
paying
dividends,
interest
or
other
payments on our securities.

Risk Relating to taxation

RISK RELATING TO
TAXATION
If U.S. tax law changes, our net income
may be impacted.

The 2017 TCJA
addressed concerns bywhat
some members
of Congress regarding
had expressed
concern about
for several
years, which
was
U.S.
corporations
moving
their
place
of
incorporation
to
low-tax
jurisdictions
to
obtain
a
competitive
advantage over
domestic corporations
that are subject to
the U.S. corporate
income tax rate
of 21%. Specifically,
it
addressed
their
concern
over
a
perceived
competitive
advantage
that
foreign-controlled
insurers
and
reinsurers
may
have
had
over
U.S.
controlled
insurers
and
reinsurers
resulting
from
the
purchase
of
reinsurance
by
U.S.
insurers
from
affiliates
operating
in
some
foreign
jurisdictions,
including
Bermuda.
Such
affiliated
reinsurance
transactions
may
subject
the
U.S.
ceding
companies
to
a Base
Erosion
and
Anti-abuse
Tax
(“BEAT”)
of 10%
from
2019 to 2025 and 12.5% thereafter
which may exceed its
regular income tax.
In addition, new legislation as well as
proposed and final regulations may
further limit the ability of the Company
to execute alternative
capital balancing
transactions with unrelated parties.
This would further impact our net income and effective
tax rate.

On August 16, 2022, the Inflation Reduction
Act of 2022 (“IRA”) was enacted. We
have evaluated
the tax provisions
of
the
IRA,
the
most
significant
of
which
are
the
corporate
alternative
minimum
tax
and
the
share
repurchase
excise tax and do not expect
the legislation to have a material
impact on our results of operations. As the
IRS issues
additional guidance, we will evaluate any
impact to our consolidated financial statements.
13
ITEM 1B.
UNRESOLVED
STAFF COMMENTS

None.

ITEM 2.
PROPERTIES

Everest
Re’s
corporate
offices are
located in
approximately 230,500
321,500 square
feet of
leased office
space in Liberty Corner,
Warren,
New Jersey.
The Company’s
other 18
locations
occupy a
total
of approximately 206,400
226,500 square
feet,
all of
which
are leased. In addition, effective October 2019, the Company entered into a lease agreement to move its corporate offices from Liberty Corner, New Jersey to Warren, New Jersey. The lease agreement covers approximately 315,000 square feet of office space.  Management believes that the above-described office space is adequate for its current and anticipated needs.

ITEM 3.
LEGAL PROCEEDINGS

In the ordinary
course of business,
the Company is
involved in
lawsuits, arbitrations
and other formal
and informal
dispute resolution
procedures,
the outcomes
of which
will determine
the Company’s
rights and
obligations
under
insurance
and
reinsurance
agreements.
In
some
disputes,
the
Company
seeks
to
enforce
its
rights
under
an
agreement or to
collect funds owing
to it.
In other matters,
the Company is
resisting attempts
by others to
collect
funds or
enforce
alleged rights.
These disputes
arise from
time to
time and
are ultimately
resolved through
both
informal
and
formal
means,
including
negotiated
resolution,
arbitration
and
litigation.
In
all
such
matters,
the
Company believes
that its positions
are legally and
commercially reasonable.
The Company
considers the
statuses
of these proceedings when determining its reserves
for unpaid loss and loss adjustment expenses.

Aside from litigation and arbitrations
related to these insurance and
reinsurance agreements,
the Company is not a
party to any other material litigation
or arbitration.

ITEM 4.
MINE SAFETY DISCLOSURES

Not applicable.

13

PART II

ITEM 5.
MARKET FOR REGISTRANT’S COMMON EQUITY,
RELATED STOCKHOLDER
MATTERS AND
ISSUER
PURCHASES OF EQUITY SECURITIES

Market Information
and Holder of Common Stock.

As of December 31, 2019,2022, all of the Company’s
common stock was owned by Holdings
Ireland and was not publicly
traded.

Dividend History and Restrictions.

The Company did not pay any dividends dividend
s
in 2019, 20182022, 2021 and 2017.  2020.
The declaration and payment of future
dividends,
if
any,
by
the
Company
will
be
at
the
discretion
of
the
Board
of
Directors
and
will
depend
upon
many
factors,
including
the
Company’s
earnings,
financial
condition,
business needs
and growth
objectives,
capital
and surplus
requirements
of its
operating
subsidiaries,
regulatory
restrictions,
rating
agency considerations
and other
factors.
As an insurance holding
company,
the Company is dependent
on dividends and other permitted
payments from
its
subsidiaries to pay cash dividends
to its stockholder.
The payment of dividends to Holdings by Everest
Re is subject
to limitations
imposed by
Delaware law.
Generally,
Everest
Re may
only pay
dividends out
of its
statutory
earned
surplus,
which
was $3,739.1 million
$5.6
billion
at
December
31, 2019,
2022,
and
only
after
it
has
given
10
days
prior
notice
to
the
Delaware
Insurance
Commissioner.
During this
10-day
period, the
Commissioner may,
by order,
limit or
disallow
the payment
of ordinary
dividends if
the Commissioner
finds the
insurer to
be presently
or potentially
in financial
distress. Further,
the maximum amount
of dividends
that may
be paid without
the prior approval
of the Delaware
Insurance Commissioner in any twelve
month period is the greater of (1)
10% of an insurer’s statutory
surplus as of
the end of the
prior calendar year
or (2) the insurer’s
statutory net
income, not including
realized capital
gains, for
14
the prior calendar year.
The maximum amount
that is available
for the payment
of dividends by Everest
Re in 2020 2023
without prior regulatory approval
is $373.9$555 million.

Recent Sales of Unregistered
Securities.

None.

ITEM 6.
SELECTED FINANCIAL DATA

Information for Item 6 is not
required pursuant to General
Instruction I(2) of Form 10-K.

ITEM 7.    Management’s Discussion and Analysis of Financial Condition and Results of Operation

MANAGEMENT’S
DISCUSSION
AND
ANALYSIS
OF
FINANCIAL
CONDITION
AND
RESULTS
OF
OPERATION
The following
is a
discussion and
analysis of
our results
of operations
and financial
condition.
It should
be read
in
conjunction with the Consolidated
Financial Statements
and accompanying notes
thereto presented
under ITEM 8,
“Financial Statements and accompanying notes thereto presented under ITEM 8, “Financial Statements and Supplementary
Data”.

Industry Conditions.

The
worldwide
reinsurance
and
insurance
businesses
are
highly
competitive,
as
well
as
cyclical
by
product
and
market.
As
such,
financial
results
tend
to
fluctuate
with
periods
of
constrained
availability,
higher
rates
and
stronger
profits followed
by periods
of abundant
capacity,
lower rates
and constrained
profitability.
Competition
in
the
types
of
reinsurance
and
insurance
business
that
we
underwrite
is
based
on
many
factors,
including
the
perceived
overall
financial
strength
of
the
reinsurer
or
insurer,
ratings
of
the
reinsurer
or
insurer
by
A.M.
Best
and/or
Standard
&
Poor’s,
underwriting
expertise,
the
jurisdictions
where
the
reinsurer
or
insurer
is
licensed
or
otherwise
authorized,
capacity
and
coverages
offered,
premiums
charged,
other
terms
and
conditions
of
the
reinsurance
and
insurance
business
offered,
services
offered,
speed
of
claims
payment
and
reputation
and
experience in lines written.
Furthermore, the market impact
from these competitive factors
related to reinsurance
and
insurance
is
generally
not
consistent
across
lines
of business,
domestic
and
international
geographical
areas
and distribution channels.

The Company competes

We
compete
in the
U.S. and
international
reinsurance
and insurance
markets
with numerous
global competitors. The Company’s
Our
competitors
include
independent
reinsurance
and
insurance
companies,

14

subsidiaries
or
affiliates

subsidiaries or affiliates of

established
worldwide
insurance
companies,
reinsurance
departments
of certain
insurance
companies,
domestic
and
international
underwriting
operations, including underwriting syndicates at Lloyd’s
and
certain
government
sponsored
risk
transfer
vehicles.
Some
of London
these
competitors
have
greater
financial
resources
than
we
do
and certain government sponsored risk transfer vehicles.  Some of these competitors
have greater financial resources than we do
established
long-term
and have established long term and
continuing
business relationships,
which can be a
significant competitive
advantage.
In addition, the lack
of strong barriers
to
entry
into
the
reinsurance
business
and recently,
the
securitization
of
reinsurance
and
insurance
risks
through
capital
markets provide additional
sources of potential reinsurance
and insurance capacity and competition.

Worldwide
insurance
and
reinsurance
market
conditions continued
historically
have
been
competitive.
Generally,
there
is
ample
insurance
and
reinsurance
capacity
relative
to be competitive. Generally, there was ample insurance and reinsurance capacity relative to
demand,
as
well
as,
additional
capital
from
the
capital
markets through
insurance linked
financial instruments.
These financial instruments
such as side cars,
catastrophe
bonds and collateralized
reinsurance funds, provide
provided capital
markets with
access to insurance
and reinsurance
risk
exposure.
The capital
markets
demand for
these products
is being primarily
driven by the current low interest environment and
the desire
to achieve
greater
risk
diversification
and
potentially
higher
returns
on
their
investments.
This increased
competition is
generally having
has
a
negative
impact
on
rates,
terms
and
conditions;
however,
the
impact
varies
widely
by
market
and
coverage.
Based
on
recent
competitive
behaviors
in
the
insurance
and
reinsurance
industry,
natural
catastrophe
events
and
the
macroeconomic
backdrop,
there
has
been
some
dislocation
in
the
market
which
we
expect
to
have
a
positive
impact on rates and terms and conditions; however, the impact varies widely byconditions
generally,
though local market and coverage. 

Rates tend to fluctuate by specific region and products, particularly areas recently impacted by large catastrophic events.  Although insured specificities can

vary.
The increased frequency of
catastrophe
losses for 2019 were slightly below recent annual averages, there were numerous natural catastrophes in 2018, with total industry losses estimatedexperienced throughout
2022 appears to be $90 billion.  pressuring
the increase
of
rates.
As
business
activity
continues
to
regain
strength
after
the
pandemic
and
current
macroeconomic
15
uncertainty,
rates
also
appear
to
be
firming
in
most
lines
of
business,
particularly
in
the
casualty
lines
that
had
seen
significant
losses
such
as
excess
casualty
and
directors’
and
officers’
liability.
Other
casualty
lines
are
experiencing
modest
rate
increase,
while
some
lines
such
as
workers’
compensation
were
experiencing
softer
market
conditions.
It
is
too
early
to
tell
what
the
impact
on
pricing
conditions
will
be
but
it
is
likely
to
change
depending on the line of business and geography.
Our capital
position remains
a source
of strength,
with high
quality invested
assets, significant
liquidity and
a low
operating expense
ratio. Our diversified
global platform
with its broad mix
of products, distribution
and geography
is resilient.
The costliest event was the Camp Wildfire in California, the deadliest and most destructive California fire on record. These 2018 catastrophe losses followed another record year of catastrophes in 2017 where total industry losses for the worldwide events were estimated at $140 billion. These catastrophe losses included an unprecedented series of catastrophes war
in the third quarter of 2017 with Hurricanes Harvey, Irma
Ukraine
is ongoing
and Maria, an
evolving
event.
Economic
and legal
sanctions
have
been levied
against
Russia, specific named individuals
and entities connected
to the Russian government,
as well as a significant earthquake in Mexico City.  Additional catastrophe events occurred businesses
located
in the fourth quarter
Russian Federation
and/or owned
by Russian
nationals by
numerous countries,
including the
United States.
The
significant
political
and
economic
uncertainty
surrounding
the
war
and
associated
sanctions
have
impacted
economic
and
investment
markets
both
within
Russia
and
around
the
world.
The
Company
has
recorded
$25
million of 2017 withlosses related to the wildfires in California and Hurricanes Nate and Ophelia.  During 2016, catastrophe losses included the Fort McMurray Canadian wildfire, Hurricane Matthew which affected a large area of the Caribbean and southeastern United States, storms and an earthquake in Ecuador.  While the future impact on market conditions from these catastrophes cannot be determined at this time, there is a growing industry consensus that there is some firming of (re)insurance rates for the areas impacted by the recent catastrophes.

Rates also appear to be firming in some of the casualty lines of business, particularly in the casualty lines that have seen significant losses such as excess casualty and directors and officers’ liability.   Other casualty lines are experiencing modest rate increase, while some lines such as workers’ compensation are experiencing softer market conditions.

Commencing in 2015, the Company initiated a strategic build out of its insurance platform through the investment in key leadership hires which in turn has brought significant underwriting talent and stronger direction in achieving its insurance program strategic goals of increased premium volume and improved underwriting results.  Recent growth is coming from highly diversified areas including newly launched lines of business, as well as, product and geographic expansion in existing lines of business.  The Company is building a world-class insurance platform capable of offering products across lines and geographies, complementing its leading global reinsurance franchise. 

Overall, the Company believes that given its size, strong ratings, distribution system, reputation, expertise and capital market vehicle activity the current marketplace conditions provide profit opportunities.  The Company continues to employ its strategy of targeting business that offers the greatest profit potential, while maintaining balance and diversification in its overall portfolio. 

Ukraine

15

/Russia war during 2022.

16
Financial Summary.

We
monitor
and
evaluate
our
overall
performance
based
upon
financial
results.
The
following
table
displays
a
summary of the consolidated net income (loss), ratios
and stockholder’s equity for
the periods indicated:

 

Years Ended December 31,

 

Percentage Increase/(Decrease)

(Dollars in millions)

2019

 

2018

 

2017

 

2019/2018

 

2018/2017

Gross written premiums

$

7,053.1

 

$

6,573.7

 

$

5,788.5

 

 

7.3%

 

13.6%

Net written premiums

 

5,774.9

 

 

5,031.9

 

 

2,723.8

 

 

14.8%

 

84.7%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

REVENUES:

 

 

 

 

 

 

 

 

 

 

 

 

 

Premiums earned

$

5,489.0

 

$

4,839.1

 

$

1,949.6

 

 

13.4%

 

148.2%

Net investment income

 

356.2

 

 

314.4

 

 

286.3

 

 

13.3%

 

9.8%

Net realized capital gains (losses)

 

419.4

 

 

(185.4)

 

 

161.6

 

 

NM

 

-214.7%

Other income (expense)

 

(1.6)

 

 

(9.6)

 

 

25.9

 

 

-83.4%

 

-137.1%

Total revenues

 

6,263.0

 

 

4,958.5

 

 

2,423.3

 

 

26.3%

 

104.6%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

CLAIMS AND EXPENSES:

 

 

 

 

 

 

 

 

 

 

 

 

 

Incurred losses and loss adjustment expenses

 

3,829.1

 

 

4,811.0

 

 

2,039.8

 

 

-20.4%

 

135.9%

Commission, brokerage, taxes and fees

 

1,270.1

 

 

1,141.7

 

 

210.9

 

 

11.2%

 

NM

Other underwriting expenses

 

350.9

 

 

293.3

 

 

254.9

 

 

19.6%

 

15.1%

Corporate expense

 

13.1

 

 

11.0

 

 

7.4

 

 

18.4%

 

49.2%

Interest, fee and bond issue cost amortization expense

 

34.9

 

 

30.6

 

 

31.2

 

 

14.1%

 

-1.8%

Total claims and expenses

 

5,498.1

 

 

6,287.7

 

 

2,544.1

 

 

-12.6%

 

147.1%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

INCOME (LOSS) BEFORE TAXES

 

765.0

 

 

(1,329.2)

 

 

(120.9)

 

 

-157.5%

 

NM

Income tax expense (benefit)

 

135.2

 

 

(367.0)

 

 

(200.7)

 

 

-136.8%

 

82.9%

NET INCOME (LOSS)

$

629.7

 

$

(962.2)

 

$

79.9

 

 

-165.4%

 

NM

 

 

 

 

 

 

 

 

 

 

 

 

 

 

RATIOS:

 

 

 

 

 

 

 

 

 

 

Point Change

Loss ratio

 

69.8%

 

 

99.4%

 

 

104.6%

 

 

(29.6)

 

(5.2)

Commission and brokerage ratio

 

23.1%

 

 

23.6%

 

 

10.8%

 

 

(0.5)

 

12.8

Other underwriting expense ratio

 

6.4%

 

 

6.1%

 

 

13.1%

 

 

0.3

 

(7.0)

Combined ratio

 

99.3%

 

 

129.1%

 

 

128.5%

 

 

(29.8)

 

0.6

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

At December 31,

 

Percentage Increase/ (Decrease)

(Dollars in millions)

2019

 

2018

 

2017

 

2019/2018

 

2018/2017

Balance sheet data:

 

 

 

 

 

 

 

 

 

 

 

 

 

Total investments and cash

$

11,956.3

 

$

10,707.4

 

$

8,911.5

 

 

11.7%

 

20.2%

Total assets

 

19,706.2

 

 

18,680.3

 

 

17,885.1

 

 

5.5%

 

4.4%

Loss and loss adjustment expense reserves

 

10,209.5

 

 

10,167.0

 

 

9,343.0

 

 

0.4%

 

8.8%

Total debt

 

633.8

 

 

933.6

 

 

633.4

 

 

-32.1%

 

47.4%

Total liabilities

 

13,848.8

 

 

13,643.5

 

 

12,475.8

 

 

1.5%

 

9.4%

Stockholder's equity

 

5,857.4

 

 

5,036.8

 

 

5,409.3

 

 

16.3%

 

-6.9%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(Some amounts may not reconcile due to rounding)

(NM, not meaningful)

16

Years Ended December 31,

Percentage Increase/(Decrease)

Revenues.

Premiums.

(Dollars in millions)
2022
2021
2020
2022/2021
2021/2020
Gross written premiums increased by 7.3%
$
9,677
$
9,331
$
7,957
3.7%
17.3%
Net written premiums
8,032
7,719
6,639
4.0%
16.3%
REVENUES:
Premiums earned
$
7,876
$
7,179
$
6,407
9.7%
12.1%
Net investment income
638
745
376
-14.3%
98.2%
Net gains (losses) on investments
(982)
501
50
NM
NM
Other income (expense)
(6)
23
(15)
-123.7%
NM
Total revenues
7,526
8,448
6,818
-10.9%
23.9%
CLAIMS AND EXPENSES:
Incurred losses and loss adjustment expenses
5,823
5,387
4,608
8.1%
16.9%
Commission, brokerage, taxes and fees
1,632
1,513
1,373
7.9%
10.1%
Other underwriting expenses
501
454
401
10.5%
13.2%
Corporate expense
26
33
16
-22.9%
108.5%
Interest, fee and bond issue cost amortization
expense
101
70
36
44.3%
96.2%
Total claims and expenses
8,083
7,457
6,434
8.4%
15.9%
INCOME (LOSS) BEFORE TAXES
(557)
991
384
-156.1%
158.5%
Income tax expense (benefit)
(112)
192
32
-158.4%
NM
NET INCOME (LOSS)
$
(445)
$
800
$
352
-155.6%
127.3%
RATIOS:
Point Change
Loss ratio
73.9%
75.0%
71.9%
(1.1)
3.1
Commission and brokerage ratio
20.7%
21.1%
21.4%
(0.4)
(0.3)
Other underwriting expense ratio
6.4%
6.3%
6.3%
0.1
-
Combined ratio
101.0%
102.4%
99.6%
(1.4)
2.8
At December 31,
Percentage Increase/ (Decrease)
(Dollars in millions)
2022
2021
2020
2022/2021
2021/2020
Balance sheet data:
Total investments and cash
$
19,195
$
19,719
$
15,910
-2.7%
23.9%
Total assets
27,957
27,695
23,640
0.9%
17.2%
Loss and loss adjustment expense reserves
14,977
13,121
11,578
14.1%
13.3%
Total debt
3,084
3,089
1,910
-0.2%
61.7%
Total liabilities
22,303
20,657
17,226
8.0%
19.9%
Stockholder's equity
5,654
7,038
6,414
-19.7%
9.7%
(Some amounts may not reconcile due
to $7,053.1 million rounding)
(NM, not meaningful)
Revenues.
Premiums.
Gross
written
premiums
increased
by
3.7% to
$9.7 billion
in 2019,
2022, compared
to $6,573.7 million
$9.3 billion
in 2018,
2021,
reflecting a $445.7 $426
million, or 22.2%12.9%,
increase in our
insurance business
and a $33.7an $81 million,
or 0.7%1.3%, increase decrease
in our
17
reinsurance
business.
The
increase
in
insurance
premiums
reflects
growth
across
most
lines
of
business,
particularly
specialty
casualty
business
and
property/short
tail
business,
driven
by
positive
rate
and
exposure
increases, new business
and strong renewal
retention.
The rise in insurance premiums was primarily due to increases in many lines of business, including casualty, energy and accident and health. The increasedecrease in reinsurance
premiums was mainly due
to the increase in treaty casualty writings, partially offset by a
decline in treaty property pro
rata business. Net
written premiums increased
by 14.8%4.0% to $5,774.9 million$8.0 billion in 2019, 2022,
compared to $5,031.9 million
$7.7 billion in 2018.  The difference between
2021 which is
consistent
with the change
in gross
written premiums compared to the change in net written premiums is primarily due to the impact of changes in affiliated reinsurance contracts. premiums.
Premiums ceded to Bermuda Re in 2019 were $100.1 million compared with $572.6 million in 2018. Premiums
earned increased by 13.4%
9.7%
to $5,489.0 million
$7.9
billion
in 2019,
2022,
compared
to $4,839.1 million
$7.2
billion
in 2018.
2021.
The
change
in
premiums
earned
relative
to
net
written premiums
is the
result of
timing; premiums
are earned
ratably
over the
coverage
period whereas
written
premiums are recorded at the
initiation of the coverage period.

Gross written premiums increased by 13.6% to $6,573.7

Other Income
(Expense).
We
recorded
other expense
of $6
million and
other income
of $23
million in 2018, compared to $5,788.5 million in 2017, reflecting a $637.0 million, or 16.2%, increase in our reinsurance business
2022 and a $148.2 million, or 8.0%, increase in our insurance business.    The increase in reinsurance premiums was mainly due to the increases in treaty property and treaty casualty writings, rise in mortgage business and growth in Latin American business.  The rise in insurance premiums was primarily due to increases in many lines of business, including casualty, energy and accident and health.  Net written premiums increased by 84.7% to $5,031.9 million in 2018, compared to $2,723.8 million in 2017.  The difference between the change in gross written premiums compared to the change in net written premiums is primarily due to the impact of changes in affiliated reinsurance contracts, particularly the non-renewal of the quota share agreement between Everest Re and Bermuda Re as of December 31, 2017.  Effective January 1, 2018, Everest Re entered into an aggregate stop loss agreement with Bermuda Re.  Premiums ceded to Bermuda Re in 2018 were $572.6 million compared with $2,219.4 million in 2017.  Premiums earned increased by 148.2% to $4,839.1 million in 2018, compared to $1,949.6 million in 2017.  The change in premiums earned relative to net written premiums is partially due to the impact of the non-renewal of the quota share contract between Everest Re and Bermuda Re and is also the result of timing; premiums are earned ratably over the coverage period whereas written premiums are recorded at the initiation of the coverage period.

Net Investment Income.Net investment income increased 13.3% to $356.2 million in 2019 compared with net investment income of $314.4 million in 2018.  Net pre-tax investment income as a percentage of average invested assets was 3.2% in both 2019 and 2018.  The increase in income was primarily the result of higher income from our growing fixed maturity portfolio, partially offset by lower income from our limited partnerships and lower dividend income from our equity portfolio. 

Net investment income increased 9.8% to $314.4 million in 2018 compared with net investment income of $286.3 million in 2017.  Net pre-tax investment income as a percentage of average invested assets was 3.2% in both 2018 and 2017.  The increase in income was primarily the result of higher income from our limited partnerships and from our growing fixed maturity portfolio, partially offset by lower dividend income from our equity portfolio.    

Net Realized Capital Gains (Losses).  Net realized capital gains were $419.4 million in 2019, net realized capital losses were $185.4 million in 2018 and net realized capital gains were $161.6 million in 2017.  The net realized capital gains of $419.4 million in 2019, were comprised of $420.8 million of gains from fair value re-measurements, $18.2 million of gains from sales of investments, partially offset by $19.6 million of other-than-temporary impairments. The net realized capital losses of $185.4 million in 2018 were comprised of $148.0 million of losses from fair value re-measurements, $31.2 million of losses from sales of investments and $6.2 million of other-than-temporary impairments. The net realized capital gains of $161.6 million in 2017 were comprised of $158.5 million of gains from fair value re-measurements and $9.1 million of gains from sales of investments, partially offset by $6.1 million of other-than-temporary impairments.

Other Income (Expense).  We recorded other expense of $1.6 million and $9.6 million in 2019 and 2018, respectively, and other income of $25.9 million in 2017.

2021, respectively.
The changes were primarily the result of fluctuations
in foreign currency exchange
rates.

17

Claims and Expenses.

Incurred
Losses
and
Loss
Adjustment
Expenses.
The
following
table
presents
our
incurred
losses
and
loss
adjustment expenses (“LAE”) for
the periods indicated.

 

Total

 

Current

 

Ratio %/

 

Prior

 

Ratio %/

 

Total

 

Ratio %/

(Dollars in millions)

Year

 

Pt Change

 

Years

 

Pt Change

 

Incurred

 

Pt Change

2019

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Attritional (a)

$

3,271.4

 

59.6%

 

 

$

(16.0)

 

(0.3)%

 

 

$

3,255.5

 

59.3%

 

Catastrophes

 

513.3

 

9.4%

 

 

 

60.3

 

1.1%

 

 

 

573.7

 

10.5%

 

Total

$

3,784.8

 

69.0%

 

 

$

44.4

 

0.8%

 

 

$

3,829.1

 

69.8%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2018

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Attritional (a)

$

3,092.6

 

63.9%

 

 

$

5.8

 

0.1%

 

 

$

3,098.4

 

64.0%

 

Catastrophes

 

1,159.6

 

24.0%

 

 

 

553.0

 

11.4%

 

 

 

1,712.6

 

35.4%

 

Total

$

4,252.2

 

87.9%

 

 

$

558.8

 

11.5%

 

 

$

4,811.0

 

99.4%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2017

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Attritional (a)

$

1,200.6

 

61.5%

 

 

$

(102.3)

 

-5.2%

 

 

$

1,098.4

 

56.3%

 

Catastrophes

 

956.9

 

49.1%

 

 

 

(15.5)

 

-0.8%

 

 

 

941.4

 

48.3%

 

Total

$

2,157.5

 

110.6%

 

 

$

(117.7)

 

-6.0%

 

 

$

2,039.8

 

104.6%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Variance 2019/2018

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Attritional (a)

$

178.8

 

(4.3)

pts

 

$

(21.8)

 

(0.4)

pts

 

$

157.1

 

(4.7)

pts

Catastrophes

 

(646.3)

 

(14.6)

pts

 

 

(492.7)

 

(10.3)

pts

 

 

(1,138.9)

 

(24.9)

pts

Total

$

(467.4)

 

(18.9)

pts

 

$

(514.4)

 

(10.7)

pts

 

$

(981.9)

 

(29.6)

pts

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Variance 2018/2017

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Attritional (a)

$

1,892.0

 

2.4

pts

 

$

108.1

 

5.3

pts

 

$

2,000.0

 

7.7

pts

Catastrophes

 

202.7

 

(25.1)

pts

 

 

568.5

 

12.2

pts

 

 

771.2

 

(12.9)

pts

Total

$

2,094.7

 

(22.7)

pts

 

$

676.5

 

17.5

pts

 

$

2,771.2

 

(5.2)

pts

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(a)  Attritional losses exclude catastrophe losses.

(Some amounts may not reconcile due to rounding.)

Total
Current
Ratio %/
Prior
Ratio %/
Total
Ratio %/
(Dollars in millions)
Year
Pt Change
Years
Pt Change
Incurred
Pt Change
2022
Attritional (a)
$
4,828
61.3%
$
11
0.1%
$
4,839
61.4%
Catastrophes
987
12.5%
(4)
—%
983
12.5%
Total
$
5,815
73.8%
$
7
0.1%
$
5,823
73.9%
2021
Attritional (a)
$
4,439
61.8%
$
8
0.1%
$
4,447
61.9%
Catastrophes
943
13.1%
(3)
0.0%
940
13.1%
Total
$
5,382
74.9%
$
5
0.1%
$
5,387
75.0%
2020
Attritional (a)
$
3,997
62.4%
$
214
3.3%
$
4,211
65.7%
Catastrophes
411
6.4%
(13)
-0.2%
397
6.2%
Total
$
4,408
68.8%
$
200
3.1%
$
4,608
71.9%
Variance 2022/2021
Attritional (a)
$
389
(0.5)
pts
$
3
—
pts
$
392
(0.5)
pts
Catastrophes
44
(0.6)
pts
(1)
—
pts
43
(0.6)
pts
Total
$
433
(1.1)
pts
$
2
—
pts
$
436
(1.1)
pts
Variance 2021/2020
Attritional (a)
$
442
(0.6)
pts
$
(206)
(3.2)
pts
$
236
(3.8)
pts
Catastrophes
532
6.7
pts
10
0.2
pts
543
6.9
pts
Total
$
974
6.1
pts
$
(195)
(3.0)
pts
$
779
3.1
pts
(a)
Attritional losses exclude catastrophe
losses.
(Some amounts may not reconcile due
to rounding.)
Incurred losses and LAE decreased
increased by 20.4%8.1% to $3,829.1$5.8
billion in 2022 compared
to $5.4 billion in 2021,
primarily due to
an
increase
of
$389
million
in
current
year
attritional
losses
and
an
increase
of
$44
million
in
current
year
catastrophe
losses.
The increase
in current
year attritional
losses was
mainly related
to the
impact of the
increase
in premiums earned
and $25 million
of attritional losses
incurred due to
the Ukraine/Russia
war.
The current year
18
catastrophe
losses
of
$987
million
in
2022
related
primarily
to
Hurricane
Ian
($768
million),
the
2022
Australia
floods ($75 million),
the 2022 South
Africa flood ($43
million), Hurricane
Fiona ($27 million),
and the 2022
Canada
derecho ($20 million), with
the remaining losses resulting
from various storm
events.
The current year
catastrophe
losses
of
$943
million
in
2021
primarily
related
to
Hurricane
Ida
($423
million),
the
Texas
winter
storms
($288
million), the
European floods
($108 million),
the Canada
drought loss
($80 million)
and the
Quad State
Tornadoes
($42 million), with the rest of the losses emanating
from the 2021 Australia floods.
Commission, Brokerage,
Taxes
and Fees.
Commission, brokerage,
taxes
and fees
increased to
$1.6 billion
in 2022
compared to $1.5 billion
in 2021. The increase was mainly
due to increases in premiums
earned and changes in the
mix of business.
Other Underwriting Expenses.
Other underwriting expenses
were $501 million and
$454 million in 2019 compared2022
and 2021,
respectively.
The
increase
in
other
underwriting
expenses
was
mainly
due
to
the
continued
build
out
of
our
insurance operations, including an
expansion of the international insurance
platform.
Corporate
Expenses.
Corporate
expenses,
which
are
general
operating
expenses
that
are
not
allocated
to
segments,
were
$26 million
and
$33 million
for
the years
ended December
31,
2022 and
2021, respectively.
The
decrease from 2021 to $4,811.0 million in 2018, primarily2022 was mainly due
to a decrease in variable incentive compensation.
Interest,
Fees
and
Bond
Issue
Cost
Amortization
Expense.
Interest,
fees
and
other
bond
amortization
expense
were $101
million and
$70 million
in 2022
and 2021,
respectively.
The increase
in interest
expense was
primarily
due
to
the
issuance
of
$1.0
billion
of
senior
notes
in
October
2021.
Interest
expense
was
also
impacted
by
the
movements
in the
floating interest
rate
related
to the
long-term subordinated
notes, which
is reset
quarterly per
the note agreement.
The floating rate
was 6.99% as
of December 31, 2022
compared to 2.54%
as of December 31,
2021.
Income Tax
Expense (Benefit).
The Company had
an income tax
benefit of $112
million and income
tax expense
of
$192
million
in
2022
and
2021,
respectively.
Variations
in
income
taxes
generally
result
from
changes
in
the
relative levels
of pre-tax
income, including
the impact
of catastrophe
losses and
net gains
(losses) on
investments
as
well
as
changes
in
tax
exempt
investment
income
and
creditable
foreign
taxes.
The
change
from
income
tax
expense to income
tax benefit
resulted primarily from
increased fair
value and capital
losses as well as
an increase
in catastrophe losses.
The Coronavirus
Aid, Relief,
and Economic
Security (“CARES”)
Act, enacted
on March
27, 2020,
provided that
U.S.
companies could
carryback for
five years
net operating
losses incurred
in 2018,
2019 and/or
2020. This
beneficial
tax provision
in the CARES
Act enabled the
Company to
carryback its
significant 2018
net operating
losses to
prior
tax years
with higher effective
tax rates
of 35% versus
21% in 2018
and later
years.
As a result,
the Company
was
able to
record a
net income
tax benefit
from the
five-year
carryback of
$33 million
and obtain
federal income
tax
cash refunds of $183 million including interest
in 2020.
On August 16, 2022, the Inflation Reduction
Act of 2022 (“IRA”) was enacted. We
have evaluated
the tax provisions
of
the
IRA,
the
most
significant
of
which
are
the
corporate
alternative
minimum
tax
and
the
share
repurchase
excise tax and do not expect
the legislation to have a material
impact on our results of operations. As the
IRS issues
additional guidance, we will evaluate any
impact to our consolidated financial statements.
Net Income (Loss).
Our net
loss
was
$445 million
and
net income
was
$800
million in
2022
and 20
21, respectively
.
The change
was
primarily driven by the consolidated investment
results explained below.
Ratios.
Our
combined
ratio
decreased
by
1.4
points
to
101.0%
in
2022
compared
to
102.4%
in
2021.
The
loss
ratio
component decreased by 1.1 points
in 2022 over the same period last year.
The decline in the ratio was mainly due
to lower loss experience.
Although both current
year attritional and
current year catastrophe
losses were higher in
19
2022
than
2021,
the
rate
of $646.3 million
increase
in
the
current
year
losses
was
lower
than
the
rate
of
increase
in
earned
premiums
resulting
in
a
reduction
of
the
overall
loss
ratio.
The
commission
and
brokerage
ratio
component
decreased
to
20.7% in
2022
compared
to
21.1% in
2021,
reflecting
changes
in
affiliated
reinsurance
agreements
and a decrease changes
in unfavorable development on prior year catastrophe lossesthe
mix of $492.7 million mainly related
business. The
other underwriting
expense ratio
slightly increased
to the development on Hurricanes Harvey, Irma and Maria and the California wildfires 6.4%
in 2018.2022
from
6.3% in 2021. The decrease in lossesincrease was partially offset by an increase of $178.8 million on current year attritional losses mainly due to higher insurance
operations costs.
Stockholder's Equity.
Stockholder’s
equity decreased
by $1.4
billion to
$5.7 billion at
December 31, 2022
from $7.0
billion at
December
31,
2021,
principally
as
a
result
of
$445
million
of
net
loss,
$938
million
of
net
unrealized
depreciation
on
investments,
net
of
tax
and
$18
million
of
net
foreign
currency
translation
adjustments,
partially
offset
by
$17
million of net benefit plan obligation adjustments
.
Consolidated Investment
Results
Net Investment Income.
Net
investment
income
decreased
by
14.3%
to
$638
million
in
2022
compared
to
$745
million
in
2021.
The
decrease was
primarily the
result of
a decline
of $249
million in
limited partnership
income, partially
offset by
an
additional
$166
million
of
income
from
fixed
maturity
investments.
The
limited
partnership
income
primarily
reflects
decreases
in
their
reported
net
asset
values.
As
such,
until
these
asset
values
are
monetized
and
the
resultant income is
distributed, they
are subject to future
increases or decreases
in the asset value,
and the results
may be volatile.
The following table shows the components
of net investment income for
the periods indicated:
Years Ended December 31,
(Dollars in millions)
2022
2021
2020
Fixed maturities
$
510
$
344
$
305
Equity securities
16
15
11
Short-term investments and cash
16
1
3
Other invested assets
Limited partnerships
72
321
49
Dividends from preferred shares of affiliate
31
31
31
Other
30
63
2
Gross investment income before adjustments
675
775
401
Funds held interest income (expense)
6
8
6
Interest income from Parent
11
6
5
Gross investment income
691
788
412
Investment expenses
(52)
(43)
(36)
Net investment income
$
638
$
745
$
376
(Some amounts may not reconcile due
to rounding.)
The following table shows
a comparison of various investment
yields for the periods indicated:
2022
2021
2020
Annualized pre-tax yield on average cash and invested assets
3.3
%
4.4
%
2.8
%
Annualized after-tax yield on average cash and invested assets
2.6
%
3.5
%
2.3
%
20
Net Gains (Losses) on Investments.
The following table presents the composition
of our net gains (losses) on investments
for the periods indicated:
Years Ended December 31,
2022/2021
2021/2020
(Dollars in millions)
2022
2021
2020
Variance
Variance
Realized gains (losses) from dispositions:
Fixed maturity securities, available
for sale
Gains
$
9
$
33
$
24
$
(24)
$
9
Losses
(88)
(25)
(60)
(63)
35
Total
(79)
8
(36)
(87)
44
Equity securities
Gains
165
39
37
126
2
Losses
(48)
(15)
(45)
(33)
30
Total
117
24
(8)
93
32
Other invested assets
Gains
18
10
8
8
2
Losses
(5)
(4)
(6)
(1)
2
Total
13
6
2
7
4
Short Term Investments:
Gains
—
—
1
—
(1)
Losses
—
—
—
—
—
Total
—
—
1
—
(1)
Total net realized
gains (losses) from dispositions
Gains
192
82
70
110
11
Losses
(141)
(43)
(111)
(98)
68
Total
51
39
(41)
12
79
Allowances for credit losses:
(27)
(26)
(2)
(1)
(24)
Gains (losses) from fair value adjustments:
Fixed maturities
—
—
2
—
(2)
Equity securities
(447)
254
276
(701)
(22)
Other invested assets
(559)
234
(186)
(793)
420
Total
(1,006)
488
92
(1,494)
396
Total net gains
(losses) on investments
$
(982)
$
501
$
50
$
(1,483)
$
451
(Some amounts may not reconcile due to rounding.)
21
Net gains
(losses) on
investments
during 2022
primarily relate
to net
losses from
fair value
adjustments
on equity
securities of
$447 million
as a
result of
equity market
declines
in 2022,
net losses
of $559
million from
fair value
adjustments
on other
invested
assets, $51
million of
net
realized
gains
from
disposition
of
investments
and
$27
million
of
credit
allowances
on
fixed
maturity securities.
Segment Results.
The Company
manages its
reinsurance
and insurance
operations
as autonomous
units and
key
strategic
decisions
are based on the aggregate operating
results and projections for these segments
of business.
The
Reinsurance
operation
writes
risks
on
a
worldwide
basis
in
property
and
casualty
reinsurance
and
specialty
lines of business, on both a treaty and facultative
basis, through reinsurance brokers,
as well as directly with ceding
companies.
Business
is
written
in
the
United
States
as
well as
through
branches
in
Canada
and
Singapore.
The
Insurance operation
writes property and
casualty insurance directly
and through brokers,
surplus lines brokers
and
general agents within the United States.
These segments
are
managed
independently,
but conform
with corporate
guidelines
with respect
to
pricing, risk
management,
control
of
aggregate
catastrophe
exposures,
capital,
investments
and
support
operations.
Management generally monitors
and evaluates the financial performance
of these operating segments
based upon
their underwriting results.
Underwriting
results
include
earned
premium
less
losses
and
LAE
incurred,
commission
and
brokerage
expenses
and other underwriting expenses.
We measure our underwriting results
using ratios, in particular loss, commission
and brokerage
and other underwriting
expense ratios,
which respectively,
divide incurred
losses, commissions
and
brokerage and other
underwriting expenses by premiums earned.
The
Company
does
not
maintain
separate
balance
sheet
data
for
its
operating
segments.
Accordingly,
the
Company
does not
review and
evaluate
the financial
results
of its
operating
segments based
upon balance
sheet
data.
Our
loss
and
LAE
reserves
are
management’s
best
estimate
of
our
ultimate
liability
for
unpaid
claims.
We
re-
evaluate
our
estimates
on
an
ongoing
basis,
including
all
prior
period
reserves,
taking
into
consideration
all
available
information
and,
in
particular,
recently
reported
loss
claim
experience
and
trends
related
to
prior
periods.
Such
re-evaluations
are
recorded
in
incurred
losses
in
the
period
in
which
the
re-evaluation
is
made.
Management’s
best
estimate
is
developed
through
collaboration
with
actuarial,
underwriting,
claims,
legal
and
finance
departments
and
culminates
with
the
input
of
reserve
committees.
Each
segment
reserve
committee
includes the
participation of
the relevant
parties from
actuarial, finance,
claims and
segment senior
management
and
has
the
responsibility
for
recommending
and
approving
management’s
best
estimate.
Reserves
are
further
reviewed
by
Everest’s
Chief
Reserving
Actuary
and
senior
management.
The
objective
of
such
process
is
to
determine a single best estimate
viewed by management to be the best
estimate of its ultimate loss liability.
The following discusses the underwriting results for
each of our segments for the periods indicated:
22
Reinsurance.
The
following
table
presents
the
underwriting
results
and
ratios
for
the
Reinsurance
segment
for
the
periods
indicated.
Years Ended December 31,
2022/2021
2021/2020
(Dollars in millions)
2022
2021
2020
Variance
% Change
Variance
% Change
Gross written premiums
$
5,948
$
6,028
$
5,266
$
(80)
(1.3)%
$
763
14.5%
Net written premiums
5,269
5,265
4,632
4
0.1%
632
13.7%
Premiums earned
$
5,212
$
4,949
$
4,485
$
263
5.3%
$
464
10.3%
Incurred losses and LAE
3,957
3,761
3,209
196
5.2%
552
17.2%
Commission and brokerage
1,326
1,250
1,120
76
6.1%
130
11.6%
Other underwriting expenses
139
143
119
(4)
(3.1)%
24
19.9%
Underwriting gain (loss)
$
(210)
$
(206)
$
36
$
(5)
2.2%
$
(242)
NM
Point Chg
Point Chg
Loss ratio
75.9%
76.0%
71.6%
(0.1)
4.4
Commission and brokerage ratio
25.4%
25.3%
25.0%
0.1
0.3
Other underwriting expense
ratio
2.7%
2.9%
2.6%
(0.2)
0.3
Combined ratio
104.0%
104.2%
99.2%
(0.2)
5.0
(Some amounts may not reconcile due
to rounding)
Premiums.
Gross written
premiums decreased
by 1.3%
to $5.9
billion in
2022 from
$6.0 billion
in 2021,
primarily
due
to
a
decline
in
property
pro
rata
business.
Net
written
premiums
remained
flat
at
$5.3
billion
in
2022
and
2021. The
difference
in the
percentage
change in
gross written
premiums compared
to the
percentage
change in
net
written
premiums
was
primarily
due
to
the
reduction
in
business
ceded
to
the
segregated
accounts
of
Mt.
Logan
Re
during
2022
compared
to
2021.
Premiums
earned
increased
5.3%
to
$5.2
billion
in
2022
compared
to
$4.9
billion
in
2021.
The
change
in
premiums
earned
relative
to
net
written
premiums
is
the
result
of
timing;
premiums are earned
ratably over
the coverage period
whereas written premiums
are recorded
at the initiation of
the coverage period.
23
Incurred Losses and LAE.
The following table presents
the incurred losses and LAE for the
Reinsurance segment for
the periods indicated.
Years Ended December 31,
Current
Ratio %/
Prior
Ratio %/
Total
Ratio %/
(Dollars in millions)
Year
Pt Change
Years
Pt Change
Incurred
Pt Change
2022
Attritional
$
3,115
59.8%
$
(26)
(0.5)%
$
3,089
59.3%
Catastrophes
870
16.7%
(3)
(0.1)%
867
16.6%
Total segment
$
3,985
76.5%
$
(29)
(0.6)%
$
3,957
75.9%
2021
Attritional
$
3,004
60.7%
$
(32)
(0.6)%
$
2,972
60.1%
Catastrophes
792
16.0%
(3)
(0.1)%
789
15.9%
Total segment
$
3,796
76.7%
$
(35)
(0.7)%
$
3,761
76.0%
2020
Attritional
$
2,692
60.0%
$
187
4.2%
$
2,880
64.2%
Catastrophes
343
7.6%
(13)
(0.3)%
330
7.4%
Total segment
$
3,035
67.7%
$
174
3.9%
$
3,209
71.6%
Variance 2022/2021
Attritional
$
111
(0.9)
pts
$
6
0.1
pts
$
117
(0.8)
pts
Catastrophes
78
0.7
pts
—
—
pts
78
0.7
pts
Total segment
$
189
(0.2)
pts
$
6
0.1
pts
$
196
(0.1)
pts
Variance 2021/2020
Attritional
$
312
0.7
pts
$
(219)
(4.8)
pts
$
92
(4.1)
pts
Catastrophes
449
8.4
pts
10
0.2
pts
459
8.5
pts
Total segment
$
761
9.0
pts
$
(209)
(4.6)
pts
$
552
4.4
pts
(Some amounts may not reconcile due
to rounding.)
Incurred
losses
increased
by
5.2%
to
$4.0
billion
in
2022
compared
to
$3.8
billion
in
2021.
The
increase
was
primarily
due
to
an
increase
of
$111
million
in
current
year
attritional
losses
and
an
increase
of
$78
million
in
current year
catastrophe
losses. The
increase in
current year
attritional losses
was primarily
related to
the impact
of the
increase
in premiums earned.
earned and
$25 million
of attritional
losses
incurred due
to the
Ukraine/Russia
war.
The current
year catastrophe
losses of $513.3
$870 million
in 2019 2022
related
primarily to Typhoon Hagibis
Hurricane
Ian ($184.0669
million), the
2022 Australia floods ($75 million), the 2022
South Africa flood ($43 million), Hurricane Dorian ($161.0 million), Typhoon Faxai ($119.3 million), the Dallas tornadoes ($25.0Fiona
($24 million), and the Townsville Monsoon
2022
Canada
derecho
($20
million),
with
the
remaining
losses
resulting
from
various
storm
events.
The
current
year catastr
ophe losses
of $792
million in
2021 primarily
related to
Hurricane Ida
($345 million),
the Texas
winter
storms
($231
million),
the
European
floods
($108
million),
the
Canada
drought
loss
($80
million)
and
the
Quad
State Tornadoes
($27 million), with the rest of the losses emanating
from the 2021 Australia ($24.0 million).floods.
Segment
Expenses.
Commission
and
brokerage
increased
to
$1.33
billion
in
2022
compared
to
$1.25
billion
in
2021. The current year catastrophe losses increase
was due
to the impact
of $1,159.6the increase
in premiums earned
and changes in
the mix of
business.
Segment other underwriting expenses decreased
slightly to $139 million in 2018 related to Hurricane Michael ($443.5 million), Camp wildfire ($297.0 million), Woolsey wildfire (151.0 million), Typhoon Jebi ($66.6 million), Hurricane Florence ($60.8 million), Cyclone Mekunu ($43.7 million), Typhoon Trami ($25.0 million), other 2018 California wildfires ($24.6 million), Australian hailstorm ($24.0 million), Japan Floods ($15.0 million) 2022 from $143 million in 2021.
24
Insurance.
The
following
table
presents
the
underwriting
results
and
ratios
for
the U.S. winter storms ($8.4 million).

Insurance
segment
for
the
periods
indicated.
Years Ended December 31,
2022/2021
2021/2020
(Dollars in millions)
2022
2021
2020
Variance
% Change
Variance
% Change
Gross written premiums
$
3,729
$
3,303
$
2,691
$
426
12.9%
$
611
22.7%
Net written premiums
2,763
2,455
2,006
308
12.5%
448
22.3%
Premiums earned
$
2,664
$
2,230
$
1,922
$
434
19.5%
$
308
16.0%
Incurred losses and LAE
1,865
1,626
1,399
239
14.7%
227
16.2%
Commission and brokerage
306
262
253
44
16.8%
9
3.6%
Other underwriting expenses
363
311
282
52
16.7%
29
10.4%
Underwriting gain (loss)
$
130
$
31
$
(12)
$
99
NM
$
43
NM
Point Chg
Point Chg
Loss ratio
70.0%
72.9%
72.8%
(2.9)
0.1
Commission and brokerage ratio
11.5%
11.8%
13.2%
(0.3)
(1.4)
Other underwriting expense
ratio
13.6%
13.9%
14.6%
(0.3)
(0.7)
Combined ratio
95.1%
98.6%
100.6%
(3.5)
(2.0)
(Some amounts may not reconcile due
to rounding)
(NM, not meaningful)
Premiums.
Gross
written
premiums
increased
by 135.9% 12.9%
to
$3.7 billion
in 2022
compared
to $4,811.0 $3.3
billion in
2021.
The
increase
in
insurance
premiums
reflects
growth
across
most
lines
of business,
particularly
specialty
casualty
business and property/short
tail business, driven
by positive rate
and exposure increases,
new business and strong
renewal
retention.
Net written
premiums
increased
by
12.5% to
$2.8 billion
in 2022
compared
to
$2.5 billion
in
2021
which
is
consistent
with
the
change
in
gross
written
premiums.
Premiums
earned
increased
19.5%
to
$2.7
billion in 2022
compared to
$2.2 billion in
2021. The change
in premiums
earned is the
result of timing;
premiums
are
earned
ratably
over
the
coverage
period
whereas
written
premiums
are
recorded
at
the
initiation
of
the
coverage period.
25
Incurred Losses
and LAE.
The following
table presents
the incurred
losses and
LAE for
the Insurance
segment for
the periods indicated.
Years Ended December 31,
Current
Ratio %/
Prior
Ratio %/
Total
Ratio %/
(Dollars in millions)
Year
Pt Change
Years
Pt Change
Incurred
Pt Change
2022
Attritional
$
1,712
64.3%
$
37
1.4%
$
1,749
65.7%
Catastrophes
117
4.4%
(1)
—%
116
4.4%
Total segment
$
1,829
68.7%
$
36
1.4%
$
1,865
70.0%
2021
Attritional
$
1,435
64.4%
$
40
1.8%
$
1,475
66.1%
Catastrophes
151
6.8%
—
—%
151
6.8%
Total segment
$
1,586
71.1%
$
40
1.8%
$
1,626
72.9%
2020
Attritional
$
1,305
67.9%
$
26
1.4%
$
1,331
69.3%
Catastrophes
68
3.5%
—
—%
68
3.5%
Total segment
$
1,373
71.4%
$
26
1.3%
$
1,399
72.8%
Variance 2022/2021
Attritional
$
277
(0.1)
pts
$
(3)
(0.4)
pts
$
274
(0.4)
pts
Catastrophes
(34)
(2.4)
pts
(1)
—
pts
(35)
(2.4)
pts
Total segment
$
243
(2.4)
pts
$
(4)
(0.4)
pts
$
239
(2.9)
pts
Variance 2021/2020
Attritional
$
130
(3.5)
pts
$
14
0.4
pts
$
144
(3.2)
pts
Catastrophes
83
3.3
pts
—
—
pts
83
3.3
pts
Total segment
$
213
(0.3)
pts
$
14
0.5
pts
$
227
0.1
pts
(Some amounts may not reconcile due
to rounding.)
Incurred losses
and LAE increased
by 14.7% to
$1.9 billion in
2022 compared
to $1.6 billion
in 2021, mainly
due to
an increase of
$277 million of
current year
attritional losses,
partially offset by
a decrease of $34
million in 2018 compared to $2,039.8 million in 2017, primarily due to an increasecurrent
year catastrophe losses
.
The rise in current year attritional losses of $1,892.0 million, mainly
was primarily due to the impact of the increase in
premiums earned resulting
earned. The
current
year
catastrophe
losses of
$117 million
in 2022
related
primarily to
Hurricane Ian
($99
million),
with
the
remaining
losses
resulting
from changes
various
storm
events.
The
$151
million
of
current
year
catastrophe
losses in affiliated reinsurance

18

2021, primarily
related
to Hurricane

agreements, includingIda ($78

million), the non-renewal of the quota share agreement with Bermuda Re as of December 31, 2017
Texas
winter storms
($58 million)
and the implementation of an aggregate stop loss agreement with Bermuda Re as of January 1, 2018.  The increase Quad State Tornadoes
($15 million).
Segment
Expenses.
Commission
and
brokerage
increased
to
$306
million
in incurred losses also resulted from $553.0
2022
compared
to
$262
million of unfavorable development on prior years catastrophe losses
in 2018, mainly related
2021. Segment
other underwriting
expenses increased
to Hurricanes Harvey, Irma and Maria and the California wildfires and an increase in current year catastrophe losses of $202.7 million.  The current year catastrophe losses of $1,159.6 $363
million in 2018 are outlined above. Current year catastrophe losses of $956.9 million in 2017 related
2022 compared
to Hurricane Irma ($333.7 million), Hurricane Maria ($268.1 million), Hurricane Harvey ($235.8 million), the Northern California wildfires ($75.3 million), the South Africa Knysna fires ($9.6 million), the Mexico City earthquake ($9.3 million), Cyclone Debbie in Australia ($8.5 million), the Peru storms ($7.1 million), the 2017 US Midwest storms ($5.0 million) and the Southern California wildfires ($4.4 million).  

Commission, Brokerage, Taxes and Fees.  Commission, brokerage, taxes and fees increased to $1,270.1 million in 2019 compared to $1,141.7 million in 2018.  The increase was mainly due to changes in affiliated reinsurance agreements, increases in premiums earned and changes in the mix of business toward additional pro rata business.

Commission, brokerage, taxes and fees increased to $1,141.7 million in 2018 compared to $210.9 million in 2017.  The increase was mainly due to changes in affiliated reinsurance agreements, including the non-renewal of the quota share agreement with Bermuda Re as of December 31, 2017, increases in premiums earned and changes in the mix of business toward additional pro rata business.

Other Underwriting Expenses.  Other underwriting expenses were $350.9 million, $293.3 million and $254.9 $311

million in 2019, 2018 and 2017, respectively.  The increases were mainly due to changes in affiliated reinsurance agreements, impact of increases in premium earned and costs incurred to support the expansion of the insurance business. 

Corporate Expenses.Corporate expenses, which are general operating expenses that are not allocated to segments, were $13.1 million, $11.0 million and $7.4 million for the years ended December 31, 2019, 2018 and 2017, respectively. The variances were mainly due to changes in variable compensation.

Interest, Fees and Bond Issue Cost Amortization Expense.  Interest, fees and other bond amortization expense were $34.9 million, $30.6 million and $31.2 million in 2019, 2018 and 2017, respectively.  The changes in expense were primarily due to the movements in the floating interest rate related to the long term subordinated notes, which is reset quarterly per the note agreement.  The floating rate was 4.3% as of December 31, 2019. 

Income Tax Expense (Benefit).  The Company had an income tax expense of $135.2 million in 2019, an income tax benefit of $367.0 million in 2018, and an income tax benefit of $200.7 million in 2017.  The TCJA impact was an income tax benefit of $28.4 million and $123.1 million in 2018 and 2017, respectively. Variations in income taxes generally result from changes in the relative levels of pre-tax income, including the impact of catastrophe losses and net capital gains (losses) as well as changes in tax exempt investment income and creditable foreign taxes.  The change in income tax expense (benefit) was primarily due to the decrease in catastrophe losses from 2018 to 2019.  In addition, the enactment of the TCJA on December 22, 2017 reduced the U.S. corporate income tax rate to 21% from 35%. 

The Company completed its accounting and interpreted the additional guidance issued by the IRS and U.S. Department of Treasury,  and recognized an income tax benefit of $1.2 million primarily related to the 2018 tax return to provision true-up.

Net Income (Loss).

Our net income was $629.7 million in 2019, our net loss was $962.2 million in 2018 and our net income was $79.9 million in 2017.  The changes were primarily driven by the financial component fluctuations explained above. 

19

Ratios.

Our combined ratio decreased by 29.8 points to 99.3% in 2019 compared to 129.1% in 2018.  The loss ratio component decreased by 29.6 points in 2019 over the same period last year mainly due to a lower loss ratio on current year catastrophe losses and less unfavorable development on prior years catastrophe losses in 2019 compared to 2018. The commission and brokerage ratio component decreased slightly to 23.1% in 2019 compared to 23.6% in 2018, reflecting changes in affiliated reinsurance agreements and changes in the mix of business.  The other underwriting expense ratio increased slightly to 6.4% in 2019 from 6.1% in 2018.

Our combined ratio increased by 0.6 points to 129.1% in 2018 compared to 128.5% in 2017.  The loss ratio component decreased by 5.2 points in 2018 over the same period last year mainly due to a lower loss ratio on current year catastrophe losses and changes in affiliated reinsurance agreements, partially offset by higher unfavorable development on prior years catastrophe losses in 2018 compared to 2017.  The commission and brokerage ratio component increased to 23.6% in 2018 compared to 10.8% in 2017, reflecting changes in affiliated reinsurance agreements and changes in the mix of business.  The other underwriting expense ratio decreased to 6.1% in 2018 from 13.1% in 2017, mainly due to the impact of changes in affiliated reinsurance contracts. 

Stockholder's Equity.

Stockholder’s equity increased by $820.6 million to $5,857.4 million at December 31, 2019 from $5,036.8 million at December 31, 2018, principally as a result of $629.7 million of net income, $180.6 million of net unrealized appreciation on investments, net of tax, $17.2 million of net foreign currency translation adjustments and $0.4 million of capital contributions, partially offset by $7.1 million of net benefit plan obligation adjustments.

Stockholder’s equity decreased by $372.5 million to $5,036.8 million at December 31, 2018 from $5,409.3 million at December 31, 2017, principally as a result of $962.2 million of net loss, $90.9 million of net unrealized depreciation on investments, net of tax and $36.4 million of net foreign currency translation adjustments, partially offset by $712.3 million of capital contributions and $4.5 million of net benefit plan obligation adjustments

Consolidated Investment Results

Net Investment Income. 

Net investment income increased by 13.3% to $356.2 million in 2019 compared to $314.4 million in 2018. The increase in 2019 was primarily due to higher income from our growing fixed maturity portfolio, partially offset by lower income from our limited partnerships and lower dividend income from our equity portfolio. 

Net investment income increased by 9.8% to $314.4 million in 2018 compared to $286.3 million in 2017. The increase in 2018 was primarily due to higher income from our limited partnerships and from our growing fixed maturity portfolio, partially offset by a lower dividend income from our equity portfolio.

20

The following table shows the components of net investment income for the periods indicated: 

 

Years Ended December 31,

(Dollars in millions)

2019

 

2018

 

2017

Fixed maturities

$

273.1

 

$

201.1

 

$

193.7

Equity securities

 

10.8

 

 

14.9

 

 

25.9

Short-term investments and cash

 

10.2

 

 

7.7

 

 

2.9

Other invested assets

 

 

 

 

 

 

 

 

Limited partnerships

 

43.3

 

 

61.6

 

 

36.6

Dividends from preferred shares of affiliate

 

31.0

 

 

31.0

 

 

31.0

Other

 

14.1

 

 

17.8

 

 

6.7

Gross investment income before adjustments

 

382.6

 

 

334.2

 

 

296.8

Funds held interest income (expense)

 

6.5

 

 

5.2

 

 

5.0

Interest income from Parent

 

0.2

 

 

4.1

 

 

4.3

Gross investment income

 

389.3

 

 

343.5

 

 

306.0

Investment expenses

 

(33.1)

 

 

(29.1)

 

 

(19.8)

Net investment income

$

356.2

 

$

314.4

 

$

286.3

 

 

 

 

 

 

 

 

 

(Some amounts may not reconcile due to rounding.)

 

 

 

 

 

 

 

 

The following table shows a comparison of various investment yields for the periods indicated:

 

2019

 

2018

 

2017

Imbedded pre-tax yield of cash and invested assets at December 31

3.5

%

 

3.5

%

 

3.4

%

Imbedded after-tax yield of cash and invested assets at December 31

2.8

%

 

2.8

%

 

2.7

%

 

 

 

 

 

 

 

 

 

Annualized pre-tax yield on average cash and invested assets

3.2

%

 

3.2

%

 

3.2

%

Annualized after-tax yield on average cash and invested assets

2.6

%

 

2.6

%

 

2.2

%

21

Net Realized Capital Gains (Losses).

The following table presents the composition of our net realized capital gains (losses) for the periods indicated: 

 

Years Ended December 31,

 

2019/2018

 

2018/2017

(Dollars in millions)

2019

 

2018

 

2017

 

Variance

 

Variance

Gains (losses) from sales:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Fixed maturity securities, market value

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Gains

$

24.7

 

$

15.3

 

$

31.3

 

$

9.4

 

$

(16.0)

Losses

 

(17.1)

 

 

(14.4)

 

 

(28.9)

 

 

(2.7)

 

 

14.5

Total

 

7.6

 

 

0.9

 

 

2.5

 

 

6.7

 

 

(1.6)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Fixed maturity securities, fair value

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Gains

 

0.4

 

 

—

 

 

—

 

 

0.4

 

 

—

Losses

 

—

 

 

(1.8)

 

 

—

 

 

1.8

 

 

(1.8)

Total

 

0.4

 

 

(1.8)

 

 

—

 

 

2.2

 

 

(1.8)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Equity securities, fair value

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Gains

 

14.2

 

 

25.2

 

 

23.2

 

 

(11.0)

 

 

2.0

Losses

 

(10.1)

 

 

(57.3)

 

 

(16.7)

 

 

47.2

 

 

(40.6)

Total

 

4.1

 

 

(32.1)

 

 

6.6

 

 

36.2

 

 

(38.7)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other invested assets

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Gains

 

6.7

 

 

1.8

 

 

0.1

 

 

4.9

 

 

1.7

Losses

 

(0.7)

 

 

—

 

 

—

 

 

(0.7)

 

 

—

Total

 

6.0

 

 

1.8

 

 

0.1

 

 

4.2

 

 

1.7

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Short Term Investments:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Gains

 

0.2

 

 

—

 

 

—

 

 

0.2

 

 

—

 Losses 

 

—

 

 

—

 

 

—

 

 

—

 

 

—

Total

 

0.2

 

 

—

 

 

—

 

 

0.2

 

 

—

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total net realized gains (losses) from sales

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Gains

 

46.3

 

 

42.3

 

 

54.6

 

 

4.0

 

 

(12.3)

Losses

 

(27.9)

 

 

(73.5)

 

 

(45.6)

 

 

45.6

 

 

(27.9)

Total

 

18.4

 

 

(31.2)

 

 

9.1

 

 

49.6

 

 

(40.3)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Gain (loss) on sale of subsidiary:

 

—

 

 

—

 

 

—

 

 

—

 

 

—

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other than temporary impairments:

 

(19.6)

 

 

(6.2)

 

 

(6.1)

 

 

(13.4)

 

 

(0.1)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Gains (losses) from fair value adjustments:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Fixed maturities, fair value

 

1.8

 

 

1.5

 

 

—

 

 

0.3

 

 

1.5

Equity securities, fair value

 

153.7

 

 

(59.4)

 

 

117.7

 

 

213.1

 

 

(177.1)

Other invested assets, fair value

 

265.2

 

 

(90.1)

 

 

40.8

 

 

355.3

 

 

(130.9)

Total

 

420.7

 

 

(148.0)

 

 

158.5

 

 

568.7

 

 

(306.5)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total net realized gains (losses)

$

419.4

 

$

(185.4)

 

$

161.6

 

$

604.8

 

$

(347.0)

(Some amounts may not reconcile due to rounding.)

2021.

22

The
increases
were
mainly

Net realized capital gains were $419.4 million due

to
the
impact
of
the
increases
in 2019, net realized capital losses were $185.4 million in 2018
premiums
earned
and net realized capital gains were $161.6 million in 2017.  The net realized capital gains of $419.4 million in 2019, were comprised of $420.8 million of gains from fair value re-measurements, $18.2 million of gains from sales of investments, partially offset by $19.6 million of other-than-temporary impairments. The net realized capital losses of $185.4 million in 2018 were comprised of $148.0 million of losses from fair value re-measurements, $31.2 million of losses from sales of investments and $6.2 million of other-than-temporary impairments. The net realized capital gains of $161.6 million in 2017 were comprised of $158.5 million of gains from fair value re-measurements and $9.1 million of gains from sales of investments, partially offset by $6.1 million of other-than-temporary impairments.

Segment Results.

The U.S. Reinsurance operation writes property and casualty reinsurance and specialty lines of business, including Marine, Aviation, Surety and A&H business, on both a treaty and facultative basis, through reinsurance brokers, as well as directly with ceding companies primarily within

expenses
related
to
the U.S.  The International operation writes non-U.S. property and casualty reinsurance through Everest Re’s branches in Canada, Singapore and through offices in Brazil, Miami and New Jersey.  The Insurance operation writes property and casualty insurance directly, through brokers, surplus lines brokers and general agents mainly within the U.S. 

These segments are managed independently, but conform with corporate guidelines with respect to pricing, risk management, control of aggregate catastrophe exposures, capital, investments and support operations.  Management generally monitors and evaluates the financial performance of these operating segments based upon their underwriting results. 

Underwriting results include earned premium less losses and LAE incurred, commission and brokerage expenses and other underwriting expenses.  We measure our underwriting results using ratios, in particular loss, commission and brokerage and other underwriting expense ratios, which respectively, divide incurred losses, commissions and brokerage and other underwriting expenses by premiums earned. 

Our loss and LAE reserves are management’s best estimate of our ultimate liability for unpaid claims.  We re-evaluate our estimates on an ongoing basis, including all prior period reserves, taking into consideration all available information and, in particular, recently reported loss claim experience and trends related to prior periods.  Such re-evaluations are recorded in incurred losses in the period in which the re-evaluation is made. 

The following discusses the underwriting results for each of our segments for the periods indicated: 

23

U.S. Reinsurance.

The following table presents the underwriting results and ratios for the U.S. Reinsurance segment for the periods indicated.

 

Years Ended December 31,

 

2019/2018

 

2018/2017

(Dollars in millions)

2019

 

2018

 

2017

 

Variance

 

 

% Change

 

Variance

 

 

% Change

Gross written premiums

$

2,962.4

 

$

3,014.3

 

$

2,593.1

 

$

(51.9)

 

 

(1.7)%

 

$

421.3

 

 

16.2%

Net written premiums

 

2,411.2

 

 

2,093.1

 

 

1,135.6

 

 

318.1

 

 

15.2%

 

 

957.5

 

 

84.3%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Premiums earned

$

2,369.1

 

$

1,979.9

 

$

858.2

 

$

389.2

 

 

19.7%

 

$

1,121.7

 

 

130.7%

Incurred losses and LAE

 

1,524.1

 

 

2,790.8

 

 

912.1

 

 

(1,266.7)

 

 

(45.4)%

 

 

1,878.7

 

 

206.0%

Commission and brokerage

 

703.3

 

 

568.4

 

 

160.3

 

 

134.9

 

 

23.7%

 

 

408.1

 

 

NM

Other underwriting expenses

 

68.8

 

 

60.3

 

 

55.9

 

 

8.5

 

 

14.1%

 

 

4.4

 

 

7.8%

Underwriting gain (loss)

$

72.9

 

$

(1,439.5)

 

$

(270.2)

 

$

1,512.5

 

 

-105.1%

 

$

(1,169.4)

 

 

NM

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Point Chg

 

 

 

 

 

Point Chg

Loss ratio

 

64.3%

 

 

141.0%

 

 

106.3%

 

 

 

 

 

(76.7)

 

 

 

 

 

34.7

Commission and brokerage ratio

 

29.7%

 

 

28.7%

 

 

18.7%

 

 

 

 

 

1.0

 

 

 

 

 

10.0

Other underwriting expense ratio

 

2.9%

 

 

3.0%

 

 

6.5%

 

 

 

 

 

(0.1)

 

 

 

 

 

(3.5)

Combined ratio

 

96.9%

 

 

172.7%

 

 

131.5%

 

 

 

 

 

(75.8)

 

 

 

 

 

41.2

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(Some amounts may not reconcile due to rounding)

Premiums.Gross written premiums decreased by 1.7% to $2,962.4 million in2019 from $3,014.3 million in 2018, primarily due to a decline in treaty property business and lower reinstatement premiums, partially offset by an increase in treaty property writings. Net written premiums increased by 15.2% to $2,411.2 million in2019 compared to $2,093.1 million in 2018.  The difference between the change in gross written premiums compared to the change in net written premiums is primarily due to the impact of changes in affiliated reinsurance contracts. Premiums earned increased 19.7% to $2,369.1 million in 2019 compared to $1,979.9 million in 2018.  The change in premiums earned relative to net written premiums is the result of timing; premiums are earned ratably over the coverage period whereas written premiums are recorded at the initiation of the coverage period.

Gross written premiums increased by 16.2% to $3,014.3 million in2018 from $2,593.1 million in 2017, primarily due to an increase in treaty property and treaty casualty writings as well as growth in the mortgage business.  Net written premiums increased by 84.3% to $2,093.1 million in2018 compared to $1,135.6 million in 2017.  The difference between the change in gross written premiums compared to the change in net written premiums is primarily due to the impact of changes in affiliated reinsurance contracts, including the non-renewal of the quota share agreement with Bermuda Re as of December 31, 2017 and the implementation of an aggregate stop loss agreement with Bermuda Re for 2018.  Premiums earned increased 130.7% to $1,979.9 million in 2018 compared to $858.2 million in 2017.  The change in premiums earned relative to net written premiums is partially due to the impact of the non-renewal of the quota share contract between Everest Re and Bermuda Re and is also the result of timing; premiums are earned ratably over the coverage period whereas written premiums are recorded at the initiation of the coverage period.

24

Incurred Losses and LAE.The following table presents the incurred losses and LAE for the U.S. Reinsurance segment for the periods indicated.

 

Years Ended December 31,

 

Current

 

Ratio %/

 

Prior

 

Ratio %/

 

Total

 

Ratio %/

(Dollars in millions)

Year

 

Pt Change

 

Years

 

Pt Change

 

Incurred

 

Pt Change

2019

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Attritional

$

1,421.7

 

60.0%

 

 

$

(11.9)

 

(0.5)%

 

 

$

1,409.8

 

59.5%

 

Catastrophes

 

119.0

 

5.0%

 

 

 

(4.8)

 

(0.2)%

 

 

 

114.2

 

4.8%

 

Total segment

$

1,540.7

 

65.0%

 

 

$

(16.7)

 

(0.7)%

 

 

$

1,524.1

 

64.3%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2018

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Attritional

$

1,378.5

 

69.7%

 

 

$

5.8

 

0.3%

 

 

$

1,384.3

 

70.0%

 

Catastrophes

 

952.2

 

48.1%

 

 

 

454.3

 

22.9%

 

 

 

1,406.5

 

71.0%

 

Total segment

$

2,330.7

 

117.8%

 

 

$

460.1

 

23.2%

 

 

$

2,790.8

 

141.0%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2017

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Attritional

$

522.3

 

61.0%

 

 

$

(80.4)

 

(9.4)%

 

 

$

441.9

 

51.6%

 

Catastrophes

 

485.2

 

56.5%

 

 

 

(15.1)

 

(1.8)%

 

 

 

470.2

 

54.7%

 

Total segment

$

1,007.5

 

117.5%

 

 

$

(95.5)

 

(11.2)%

 

 

$

912.1

 

106.3%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Variance 2019/2018

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Attritional

$

43.2

 

(9.7)

pts

 

$

(17.7)

 

(0.8)

pts

 

$

25.5

 

(10.5)

pts

Catastrophes

 

(833.2)

 

(43.1)

pts

 

 

(459.1)

 

(23.1)

pts

 

 

(1,292.3)

 

(66.2)

pts

Total segment

$

(790.0)

 

(52.8)

pts

 

$

(476.8)

 

(23.9)

pts

 

$

(1,266.7)

 

(76.7)

pts

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Variance 2018/2017

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Attritional

$

856.2

 

8.7

pts

 

$

86.2

 

9.7

pts

 

$

942.4

 

18.4

pts

Catastrophes

 

467.0

 

(8.4)

pts

 

 

469.4

 

24.7

pts

 

 

936.3

 

16.3

pts

Total segment

$

1,323.2

 

0.3

pts

 

$

555.6

 

34.4

pts

 

$

1,878.7

 

34.7

pts

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(Some amounts may not reconcile due to rounding.)

Incurred losses decreased by 45.4% to $1,524.1 million in2019 compared to $2,790.8 millionin 2018.   The decrease was primarily due to a decline of $833.2 million in current year catastrophe losses and $459.1 million less of unfavorable development on prior year catastrophe losses in 2019 compared to 2018, primarily related to development on Hurricane Harvey, Irma and Maria and the 2017 California wildfires in 2018. The increases in loss estimates in 2018 for Hurricane Harvey, Irma and Maria were mostly driven by re-opened claims reported in the second quarter of 2018 and loss inflation from higher than expected loss adjustment expenses and in particular, their impact on aggregate covers.  The current year catastrophe losses of $119.0 million in 2019 primarily related to Typhoon Faxai ($35.5 million), Typhoon Hagibis ($34.6 million), the Dallas tornadoes ($25.0 million) and Hurricane Dorian ($24.0 million). The current year catastrophe losses of $952.2 million in 2018 primarily related to Hurricane Michael ($416.5 million), Camp wildfire ($297.0 million), Woolsey wildfire ($151.0 million),Hurricane Florence ($49.3 million), other 2018 California wildfires ($23.1 million), Typhoon Jebi ($6.5 million), Japan Floods ($5.5 million), Typhoon Trami ($2.0 million) and the U.S. winter storms ($1.3 million).

Incurred losses increased by 206.0% to $2,790.8 million in2018 compared to $912.1 millionin 2017.   The increase was primarily due to a rise of $856.2 million in current year attritional losses mainly due to the impact of the increase in premiums earned resulting primarily from changes in affiliated reinsurance agreements, including the non-renewal of the quota share agreement with Bermuda Re as of December 31, 2017 and the implementation of an aggregate stop loss agreement with Bermuda Re as of January 1, 2018.  The increase in incurred losses also resulted from an increase of $467.0 million in current year catastrophe losses and

25

$454.3 million of unfavorable development on prior years catastrophe losses in 2018 primarily related to Hurricane Harvey, Irma and Maria and the 2017 California wildfires.  The increases in loss estimates for Hurricane Harvey, Irma and Maria were mostly driven by re-opened claims reported in the second quarter of 2018 and loss inflation from higher than expected loss adjustment expenses and in particular, their impact on aggregate covers.  The current year catastrophe losses of $952.2 million in 2018 are outlined above.  The current year catastrophe losses of $485.2 million in 2017 related to Hurricane Irma ($200.5 million), Hurricane Harvey ($185.4 million), the Northern California wildfires ($73.6 million), Hurricane Maria ($20.8 million), the Southern California wildfires ($3.6 million) and the 2017 US Midwest storms ($2.6 million). 

Segment Expenses.  Commission and brokerage increased to $703.3 million in 2019 compared to $568.4 million in 2018.  The increase was mainly due to changes in affiliated reinsurance agreements, the impact of the increase in premiums earned and changes in the mix of business. Segment other underwriting expenses increased to $68.8 million in 2019 from $60.3 million in 2018, mainly due to the impact of changes in affiliated reinsurance contracts and the impact of the increases in premiums earned.

Commission and brokerage increased to $568.4 million in 2018 compared to $160.3 million in 2017.  The increase was mainly due to changes in affiliated reinsurance agreements, including the non-renewal of the quota share agreement with Bermuda Re as of December 31, 2017, the impact of the increases in premiums earned and changes in the mix of business towards additional pro rata business. Segment other underwriting expenses increased to $60.3 million in 2018 from $55.9 million in 2017, mainly due to the impact of changes in affiliated reinsurance contracts and the impact of the increases in premiums earned.

International.

The following table presents the underwriting results and ratios for the International segment for the periods indicated.

 

Years Ended December 31,

 

2019/2018

 

2018/2017

(Dollars in millions)

2019

 

2018

 

2017

 

Variance

 

% Change

 

Variance

 

% Change

Gross written premiums

$

1,638.0

 

$

1,555.2

 

$

1,339.5

 

$

82.7

 

 

5.3%

 

$

215.7

 

 

16.1%

Net written premiums

 

1,512.6

 

 

1,426.6

 

 

615.4

 

 

86.0

 

 

6.0%

 

 

811.2

 

 

131.8%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Premiums earned

$

1,427.1

 

$

1,406.5

 

$

502.3

 

$

20.6

 

 

1.5%

 

$

904.2

 

 

180.0%

Incurred losses and LAE

 

1,168.6

 

 

1,020.9

 

 

622.8

 

 

147.7

 

 

14.5%

 

 

398.2

 

 

63.9%

Commission and brokerage

 

324.0

 

 

355.5

 

 

101.9

 

 

(31.5)

 

 

(8.9)%

 

 

253.6

 

 

248.8%

Other underwriting expenses

 

41.2

 

 

37.7

 

 

36.3

 

 

3.5

 

 

9.3%

 

 

1.4

 

 

3.8%

Underwriting gain (loss)

$

(106.8)

 

$

(7.7)

 

$

(258.7)

 

$

(99.1)

 

 

NM

 

$

251.0

 

 

-97.0%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Point Chg

 

 

 

 

 

Point Chg

Loss ratio

 

81.9%

 

 

72.6%

 

 

124.0%

 

 

 

 

 

9.3

 

 

 

 

 

(51.4)

Commission and brokerage ratio

 

22.7%

 

 

25.3%

 

 

20.3%

 

 

 

 

 

(2.6)

 

 

 

 

 

5.0

Other underwriting expense ratio

 

2.9%

 

 

2.6%

 

 

7.2%

 

 

 

 

 

0.3

 

 

 

 

 

(4.6)

Combined ratio

 

107.5%

 

 

100.5%

 

 

151.5%

 

 

 

 

 

7.0

 

 

 

 

 

(51.0)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(Some amounts may not reconcile due to rounding)

(NM, not meaningful)

Premiums.Gross written premiums increased by 5.3% to $1,638.0 million in 2019 compared to $1,555.2 million in 2018, primarily due to increases in business written through our Canada and Singapore branches, partially offset by the negative impact of $25.0 million from the movement of foreign exchange rates.  Net written premiums increased by 6.0% to $1,512.6 million in 2019 compared to $1,426.6 million in 2018, which is consistent with the change in gross written premiums. Premiums earned increased 1.5% to $1,427.1 million in 2019 compared to $1,406.5 million in 2018.  The change in premiums earned is the result of

26

timing; premiums are earned ratably over the coverage period whereas written premiums are recorded at the initiation of the coverage period.

Gross written premiums increased by 16.1% to $1,555.2 million in 2018 compared to $1,339.5 million in 2017, primarily due to increases in Latin American business and business written through our Canada and Singapore branches, partially offset by the negative impact of $20.6 million from the movement of foreign exchange rates.  Net written premiums increased by 131.8% to $1,426.6 million in 2018 compared to $615.4 million in 2017.  The difference between the change in gross written premiums compared to the change in net written premiums is primarily due to the impact of changes in affiliated reinsurance contracts including the non-renewal of the quota share agreement with Bermuda Re as of December 31, 2017.  Premiums earned increased 180.0% to $1,406.5 million in 2018 compared to $502.3 million in 2017.  The change in premiums earned relative to net written premiums is partially due to the impact of the non-renewal of the quota share contract between Everest Re and Bermuda Re and is also the result of timing; premiums are earned ratably over the coverage period whereas written premiums are recorded at the initiation of the coverage period.

Incurred Losses and LAE. The following table presents the incurred losses and LAE for the International segment for the periods indicated.

 

Years Ended December 31,

 

Current

 

Ratio %/

 

Prior

 

Ratio %/

 

Total

 

Ratio %/

(Dollars in millions)

Year

 

Pt Change

 

Years

 

Pt Change

 

Incurred

 

Pt Change

2019

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Attritional

$

718.4

 

50.3%

 

 

$

(3.6)

 

(0.3)%

 

 

$

714.8

 

50.0%

 

Catastrophes

 

390.3

 

27.3%

 

 

 

63.5

 

4.4%

 

 

 

453.8

 

31.8%

 

Total segment

$

1,108.7

 

77.6%

 

 

$

59.9

 

4.2%

 

 

$

1,168.6

 

81.9%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2018

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Attritional

$

751.5

 

53.4%

 

 

$

—

 

—%

 

 

$

751.5

 

53.4%

 

Catastrophes

 

165.3

 

11.8%

 

 

 

104.1

 

7.4%

 

 

 

269.4

 

19.2%

 

Total segment

$

916.8

 

65.2%

 

 

$

104.1

 

7.4%

 

 

$

1,020.9

 

72.6%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2017

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Attritional

$

255.0

 

50.8%

 

 

$

11.6

 

2.3%

 

 

$

266.6

 

53.1%

 

Catastrophes

 

357.2

 

71.1%

 

 

 

(1.0)

 

(0.2)%

 

 

 

356.2

 

70.9%

 

Total segment

$

612.2

 

121.9%

 

 

$

10.6

 

2.1%

 

 

$

622.8

 

124.0%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Variance 2019/2018

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Attritional

$

(33.1)

 

(3.1)

pts

 

$

(3.6)

 

(0.3)

pts

 

$

(36.7)

 

(3.4)

pts

Catastrophes

 

225.0

 

15.5

pts

 

 

(40.6)

 

(3.0)

pts

 

 

184.4

 

12.6

pts

Total segment

$

191.9

 

12.4

pts

 

$

(44.2)

 

(3.2)

pts

 

$

147.7

 

9.3

pts

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Variance 2018/2017

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Attritional

$

496.5

 

2.6

pts

 

$

(11.6)

 

(2.3)

pts

 

$

484.9

 

0.3

pts

Catastrophes

 

(191.9)

 

(59.3)

pts

 

 

105.1

 

7.6

pts

 

 

(86.8)

 

(51.7)

pts

Total segment

$

304.6

 

(56.7)

pts

 

$

93.5

 

5.3

pts

 

$

398.1

 

(51.4)

pts

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(Some amounts may not reconcile due to rounding.)

Incurred losses and LAE increased by 14.5% to $1,168.6 million in 2019 compared to $1,020.9 millionin 2018, primarily due to an increase of $225.0 million in current year catastrophe losses, partially offset by a decrease of $33.1 million in current year attritional losses and $40.6 million less of unfavorable development in 2019 compared to 2018. The $390.3 million of current year catastrophe losses primarily related to Typhoon Hagibis ($149.4 million), Hurricane Dorian ($133.0 million), Typhoon Faxai ($83.8 million) and the Townsville

27

Monsoon in Australia ($24.1 million). The current year catastrophe losses of $165.3 million in 2018 primarily related to Typhoon Jebi ($60.1 million), Cyclone Mekunu ($43.7 million), Australia hailstorm ($24.0 million), Typhoon Trami ($23.0 million), Japan Floods ($9.5 million), Hurricane Michael ($3.0 million) and Hurricane Florence ($2.0 million).

Incurred losses and LAE increased by 63.9% to $1,020.9 million in 2018 compared to $622.8 millionin 2017, primarily due to an increase of $496.5 million in current year attritional losses related to the increase in premiums earned resulting primarily from changes in affiliated reinsurance agreements, including the non-renewal of the quota share agreement with Bermuda Re as of December 31, 2017, as well as $104.1 million of unfavorable development on prior years catastrophe losses, mainly related to Hurricane Harvey, Irma and Maria and the 2017 Mexico earthquake.  The increase was partially offset by a decrease of $191.9 million in current year catastrophe losses.  The current year catastrophe losses of $165.3 million in 2018 are outlined above. The current year catastrophe losses of $357.2 million in 2017 related to Hurricane Maria ($238.6 million), Hurricane Irma ($79.2 million), the Mexico City earthquake ($10.2 million), the South Africa Knysna fires ($9.9 million), Cyclone Debbie in Australia ($8.4 million), the Peru storms ($7.4 million) and Hurricane Harvey ($3.4 million). 

Segment Expenses.Commission and brokerage decreased to $324.0 million in 2019 compared to $355.5 million in 2018.  The decrease was mainly due to changes in affiliated reinsurance agreements and changes in the mix of business.  Segment other underwriting expenses increased to $41.2 million in 2019 from $37.7 million in 2018 mainly due to changes in affiliated reinsurance agreements and higher variable compensation. 

Commission and brokerage increased to $355.5 million in 2018 compared to $101.9 million in 2017.  The increase was mainly due to changes in affiliated reinsurance agreements, including the non-renewal of the quota share agreement with Bermuda Re as of December 31, 2017, the impact of increases in premiums earned and changes in the mix of business.  Segment other underwriting expenses increased slightly to $37.7 million in 2018 from $36.3 million in 2017. 

Insurance.

The following table presents the underwriting results and ratios for the Insurance segment for the periods indicated.

 

Years Ended December 31,

 

2019/2018

 

2018/2017

(Dollars in millions)

2019

 

2018

 

2017

 

Variance

 

% Change

 

Variance

 

% Change

Gross written premiums

$

2,452.7

 

$

2,004.1

 

$

1,855.9

 

$

448.6

 

 

22.4%

 

$

148.2

 

 

8.0%

Net written premiums

 

1,851.2

 

 

1,512.2

 

 

972.8

 

 

339.0

 

 

22.4%

 

 

539.3

 

 

55.4%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Premiums earned

$

1,692.9

 

$

1,452.7

 

$

589.1

 

$

240.2

 

 

16.5%

 

$

863.6

 

 

146.6%

Incurred losses and LAE

 

1,136.4

 

 

999.3

 

 

504.9

 

 

137.2

 

 

13.7%

 

 

494.4

 

 

97.9%

Commission and brokerage

 

242.8

 

 

217.8

 

 

(51.3)

 

 

25.0

 

 

11.5%

 

 

269.1

 

 

NM

Other underwriting expenses

 

240.9

 

 

195.4

 

 

162.7

 

 

45.4

 

 

23.2%

 

 

32.7

 

 

20.1%

Underwriting gain (loss)

$

72.8

 

$

40.2

 

$

(27.1)

 

$

32.7

 

 

81.3%

 

$

67.3

 

 

(248.0)%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Point Chg

 

 

 

 

 

Point Chg

Loss ratio

 

67.1%

 

 

68.8%

 

 

85.7%

 

 

 

 

 

(1.7)

 

 

 

 

 

(16.9)

Commission and brokerage ratio

 

14.3%

 

 

15.0%

 

 

(8.7)%

 

 

 

 

 

(0.7)

 

 

 

 

 

23.7

Other underwriting expense ratio

 

14.3%

 

 

13.4%

 

 

27.6%

 

 

 

 

 

0.9

 

 

 

 

 

(14.2)

Combined ratio

 

95.7%

 

 

97.2%

 

 

104.6%

 

 

 

 

 

(1.5)

 

 

 

 

 

(7.4)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(Some amounts may not reconcile due to rounding)

(NM, not meaningful)

28

Premiums. Gross written premiums increased by 22.4% to $2,452.7 million in 2019 compared to $2,004.1 million in 2018.  This increase was related to most lines of business including casualty, energy and accident and health.  Net written premiums increased by 22.4% to $1,851.2 million in 2019 compared to $1,512.2 million in 2018 which is consistent with the change in gross written premiums. Premiums earned increased 16.5% to $1,692.9 million in 2019 compared to $1,452.7 million in 2018. The change in premiums earned is the result of timing; premiums are earned ratably over the coverage period whereas written premiums are recorded at the initiation of the coverage period.

Gross written premiums increased by 8.0% to $2,004.1 million in 2018 compared to $1,855.9 million in 2017.  This increase was related to most lines of business including casualty, energy and accident and health.  Net written premiums increased by 55.4% to $1,512.2 million in 2018 compared to $972.8 million in 2017.  The difference between the change in gross written premiums compared to the change in net written premiums is primarily due to the impact of affiliated reinsurance agreements, including the impact of the non-renewal of the quota share agreement between Everest Re and Bermuda Re.  Premiums earned increased 146.6% to $1,452.7 million in 2018 compared to $589.1 million in 2017.  The change in premiums earned relative to net written premiums is partially due to the impact of the non-renewal of the quota share contract between Everest Re and Bermuda Re and is also the result of timing; premiums are earned ratably over the coverage period whereas written premiums are recorded at the initiation of the coverage period.

Incurred Losses and LAE.The following table presents the incurred losses and LAE for the Insurance segment for the periods indicated. 

 

Years Ended December 31,

 

Current

 

Ratio %/

 

Prior

 

Ratio %/

 

Total

 

Ratio %/

(Dollars in millions)

Year

 

Pt Change

 

Years

 

Pt Change

 

Incurred

 

Pt Change

2019

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Attritional

$

1,131.3

 

66.8%

 

 

$

(0.5)

 

—%

 

 

$

1,130.8

 

66.8%

 

Catastrophes

 

4.0

 

0.2%

 

 

 

1.7

 

0.1%

 

 

 

5.7

 

0.3%

 

Total segment

$

1,135.3

 

67.0%

 

 

$

1.2

 

0.1%

 

 

$

1,136.4

 

67.1%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2018

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Attritional

$

962.6

 

66.3%

 

 

$

—

 

—%

 

 

$

962.6

 

66.3%

 

Catastrophes

 

42.1

 

2.9%

 

 

 

(5.4)

 

(0.4)%

 

 

 

36.7

 

2.5%

 

Total segment

$

1,004.7

 

69.2%

 

 

$

(5.4)

 

(0.4)%

 

 

$

999.3

 

68.8%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2017

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Attritional

$

423.4

 

71.9%

 

 

$

(33.5)

 

(5.7)%

 

 

$

389.9

 

66.2%

 

Catastrophes

 

114.5

 

19.4%

 

 

 

0.6

 

0.1%

 

 

 

115.0

 

19.5%

 

Total segment

$

537.9

 

91.3%

 

 

$

(32.9)

 

(5.6)%

 

 

$

504.9

 

85.7%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Variance 2019/2018

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Attritional

$

168.7

 

0.5

pts

 

$

(0.5)

 

—

pts

 

$

168.2

 

0.5

pts

Catastrophes

 

(38.1)

 

(2.7)

pts

 

 

7.1

 

0.5

pts

 

 

(31.0)

 

(2.2)

pts

Total segment

$

130.6

 

(2.2)

pts

 

$

6.6

 

0.5

pts

 

$

137.1

 

(1.7)

pts

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Variance 2018/2017

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Attritional

$

539.2

 

(5.6)

pts

 

$

33.5

 

5.7

pts

 

$

572.7

 

0.1

pts

Catastrophes

 

(72.4)

 

(16.5)

pts

 

 

(6.0)

 

(0.5)

pts

 

 

(78.3)

 

(17.0)

pts

Total segment

$

466.8

 

(22.1)

pts

 

$

27.5

 

5.2

pts

 

$

494.4

 

(16.9)

pts

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(Some amounts may not reconcile due to rounding.)

29

Incurred losses and LAE increased by 13.7% to $1,136.4 million in 2019 compared to $999.3 million in 2018, mainly due to an increase of $168.7 million in current year attritional losses, resulting from the impact of the increase in premiums earned, partially offset by a decrease of $38.1 million in current year catastrophe losses.  The current year catastrophe losses of $4.0 million in 2019 primarily related to Hurricane Dorian ($4.0 million). The current year catastrophe losses of $42.1 million in 2018 primarily related to Hurricane Michael ($24.0 million), Hurricane Florence ($9.5 million), the U.S. winter storms ($7.1 million) and other 2018 California wildfires ($1.5 million).

Incurred losses and LAE increased by 97.9% to $999.3 million in 2018 compared to $504.9 million in 2017, mainly due to an increase of $539.2 million in current year attritional losses, resulting from the impact of the increase in premiums earned resulting primarily from changes in affiliated reinsurance agreements, including the non-renewal of the quota share agreement with Bermuda Re as of December 31, 2017.  The increase was partially offset by a decrease of $72.4 million in current year catastrophe losses.  The current year catastrophe losses of $42.1 million in 2018 are outlined above. The current year catastrophe losses of $114.5 million in 2017 primarily related to Hurricane Irma ($53.9 million), Hurricane Harvey ($47.0 million), Hurricane Maria ($8.7 million), the 2017 US Midwest storms ($2.4 million), the Northern California wildfires ($1.7 million) and the Southern California wildfires ($0.8 million). 

Segment Expenses.Commission and brokerage increased to $242.8 million in 2019 compared to $217.8 million in 2018.  The increase was mainly due to changes in affiliated reinsurance agreements and the impact of increases in premiums earned. Segment other underwriting expenses increased to $240.9 million in 2019 compared to $195.4 million in 2018. The increases were mainly due to the impact of the increases in premiums earned and expenses related to the continued build out of the insurance business.

Commission and brokerage increased to $217.8 million in 2018 compared to ($51.3) million in 2017.  The increase was mainly due to changes in affiliated reinsurance agreements, including the non-renewal of the quota share agreement with Bermuda Re as of December 31, 2017, the impact of increases in premiums earned and changes in the mix of business.  Segment other underwriting expenses increased to $195.4 million in 2018 compared to $162.7 million in 2017. The increases were mainly due to the impact of the increases in premiums earned and expenses related to the continued build out of the insurance business. 

SAFE HARBOR DISCLOSURE

This report
contains forward-lookingforward
-looking statements
within the meaning
of the U.S.
federal securities
laws. We
intend
these forward-lookingforward
-looking statements
to
be covered
by
the safe
harbor
provisions
for
forward-looking
statements
in
the federal securities
laws.
In some cases, these
statements can
be identified by the
use of forward-looking
words
such
as “may”
“may”, “will”
“will”, “should”
“should”, “could”
“could”, “anticipate”
“anticipate”, “estimate”
“estimate”, “expect”
“expect”, “plan”
“plan”, “believe”
“believe”, “predict”
“predict”, “potential”
26
“potential”
and “intend”.
Forward-looking
statements
contained
in
this report
include
information
regarding
our
reserves
for
losses
and
LAE,
the
impact
of
the
TCJA,
the
adequacy
of
our
provision
for
uncollectible
balances,
estimates
of
our
catastrophe
exposure,
the
effects
of
catastrophic
and
pandemic
events
on
our
financial
statements
and
the
ability
of
our
subsidiaries
to
pay
dividends.
Forward-looking
statements
only
reflect
our
expectations
and
are
not
guarantees
of
performance.
These
statements
involve
risks,
uncertainties
and
assumptions.
Actual events
or results
may
differ
materially
from our
expectations.
Important
factors
that could
cause our
actual events
or results
to be
materially different
from our
expectations
include those
discussed under
the caption
ITEM 1A, “Risk
Factors”.
We undertake
no obligation
to update
or revise
publicly any
forward-looking
statements, whether as a result
of new information, future events
or otherwise.

ITEM 7A.
QUANTITATIVE
AND QUALITATIVE
DISCLOSURES ABOUT MARKET RISK

Market Sensitive Instruments.

The
SEC’s
Financial
Reporting
Release
#48
requires
registrants
to
clarify
and
expand
upon
the
existing
financial
statement
disclosure
requirements
for
derivative
financial
instruments,
derivative
commodity
instruments
and
other financial
instruments (collectively, “market
(collectively,
“market
sensitive
instruments”).
We
do not
generally
enter into
market
sensitive instruments for trading
purposes.

Our current investment strategy seeks to maximize after-tax income through a high quality, diversified, taxable and tax-preferenced fixed maturity portfolio, while maintaining an adequate level of liquidity.  Our mix of taxable and tax-preferenced investments is adjusted periodically, consistent with our current and projected

30

Our

current

investment
strategy
seeks
to
maximize
after-tax
income
through
a
high
quality,
diversified,
fixed
maturity
portfolio,
while
maintaining
an
adequate
level
of
liquidity.
Our
mix
of
taxable
and
tax-preferenced
investments
is
adjusted
periodically,
consistent
with
our
current
and
projected
operating
results,
market
conditions
and
our
tax
position.
The
fixed
maturity
securities
in
the
investment
portfolio
are
comprised
of non-trading available for sale
non-
trading securities. Additionally,
we have invested
in equity securities.

The overall investment
strategy considers
the scope of present
and anticipated Company
operations.
In particular,
estimates of
the financial
impact resulting
from non-investment
asset and
liability transactions,
together with
our
capital
structure
and
other
factors,
are
used
to
develop
a
net
liability
analysis.
This
analysis
includes
estimated
payout characteristics
for which
our capital structure and other factors, are used to develop a net liability analysis.  investments
provide liquidity.
This analysis includes estimated payout characteristics for which our investments provide liquidity.  This analysis
is considered
in the
development
of
specific
investment
strategies
for
asset
allocation,
duration
and
credit
quality.
The
change
in
overall
market
sensitive risk exposure principally reflects
the asset changes that took place during the period.

Interest
Rate Risk.
Our $12.0 $19.2
billion investment
portfolio,
atDecember 31,2019,
2022, is
principally comprised
of fixed
maturity securities,
which are
generally subject
to interest
rate risk
and some
foreign currency
exchange
rate risk,
and some equity securities, which are subject to price fluctuations
and some foreign exchange
rate risk. The overall
economic impact
of the foreign
exchange risks
on the investment
portfolio is
partially mitigated
by changes
in the
dollar value of foreign currency
denominated liabilities and their associated
income statement impact.

Interest
rate
risk
is
the
potential
change
in
value
of
the
fixed
maturity
securities
portfolio,
including
short-term
investments,
from
a
change
in
market
interest
rates.
In
a
declining
interest
rate
environment,
it
includes
prepayment
risk
on
the $975.3 million
$2.1
billion
of
mortgage-backed
securities
in
the $7,497.9 million
$13.5
billion
fixed
maturity
portfolio.
Prepayment
risk results
from potential
accelerated
principal
payments
that shorten
the average
life and
thus the
expected yield of the security.

27
The
table
below
displays
the
potential
impact
of market
fair
value
fluctuations
and
after-tax
unrealized
appreciation
on
our fixed
maturity
portfolio (including $279.9
(including
$812 million
of short-termshort
-term investments)
for
the period
indicated
based
on
upward
and
downward
parallel
and
immediate
100
and
200 basis
point
shifts
in
interest
rates.
For
legal
entities
with
a
U.S.
dollar
functional
currency,
this
modeling
was
performed
on
each
security
individually.
To
generate
appropriate
price
estimate
on
mortgage-backed
securities,
changes
in
prepayment
expectations
under
different
interest rates.rate
environments were
taken into
account. For
legal entities with a U.S. dollar functional currency, this modeling was performed on each security individually.  To generate appropriate price estimate on mortgage-backed securities, changes in prepayment expectations under different interest rate environments were taken into account.  For legal entities with
non-U.S. dollar functional
currency,
the
effective
duration
of the
involved
portfolio
of securities
was
used as
a proxy
for
the market fair
value
change
under the
various interest rate
change scenarios.

 

Impact of Interest Rate Shift in Basis Points

 

 

At December 31, 2019

(Dollars in millions)

-200

 

 

-100

 

 

O

 

 

100

 

 

200

 

Total Market/Fair Value

$

8,314.4

 

 

$

8,046.1

 

 

$

7,777.8

 

 

$

7,509.5

 

 

$

7,241.2

 

Market/Fair Value Change from Base (%)

 

6.9

%

 

 

3.4

%

 

 

-

%

 

 

-3.4

%

 

 

-6.9

%

Change in Unrealized Appreciation

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

After-tax from Base ($)

$

423.9

 

 

$

211.9

 

 

$

—

 

 

$

(211.9)

 

 

$

(423.9)

 

 

Impact of Interest Rate Shift in Basis Points

 

 

At December 31, 2018

 

(Dollars in millions)

-200

 

 

-100

 

 

O

 

 

100

 

 

200

 

Total Market/Fair Value

$

7,505.3

 

 

$

7,320.6

 

 

$

7,138.5

 

 

$

6,957.6

 

 

$

6,778.5

 

Market/Fair Value Change from Base (%)

 

5.1

%

 

 

2.6

%

 

 

-

%

 

 

-2.5

%

 

 

-5.0

%

Change in Unrealized Appreciation

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

After-tax from Base ($)

$

289.7

 

 

$

143.9

 

 

$

—

 

 

$

(143.0)

 

 

$

(284.4)

 

31

Impact of Interest Rate Shift in Basis Points

At December 31, 2022

(Dollars in millions)
-200
-100
O
100
200
Total Fair Value
$
15,057
$
14,676
$
14,294
$
13,912
$
13,531
Fair Value Change from Base (%)
5.3
%
2.7
%
-
%
-2.7
%
-5.3
%
Change in Unrealized Appreciation
After-tax from Base ($)
$
603
$
302
$
—
$
(302)
$
(603)
Impact of Interest Rate Shift in Basis Points
At December 31, 2021
(Dollars in millions)
-200
-100
O
100
200
Total Fair Value
$
14,300
$
13,928
$
13,556
$
13,185
$
12,813
Fair Value Change from Base (%)
5.5
%
2.7
%
-
%
-2.7
%
-5.5
%
Change in Unrealized Appreciation
After-tax from Base ($)
$
587
$
294
$
—
$
(294)
$
(587)
We had $10,209.5 million$15.0
billion and $10,167.0 million $13.1 billion
of gross reserves
for losses and
LAE as of December 31, 2019
2022 and December
31, 2018,
2021,
respectively.
These
amounts
are
recorded
at
their
nominal
value,
as
opposed
to
present
value,
which
would reflect
a discount
adjustment to
reflect the time
value of
money.
Since losses are
paid out over
a period of
time, the
present value
of the
reserves is
less than
the nominal
value.
As interest
rates
rise, the
present value
of
the reserves
decreases and,
conversely,
as interest
rates
decline, the
present
value increases.
These movements
are
the
opposite
of
the
interest
rate
impacts
on
the
fair
value
of
investments.
While
the
difference
between
present
value
and
nominal
value
is
not
reflected
in
our
financial
statements,
our
financial
results
will
include
investment
income
over
time
from
the
investment
portfolio
until
the
claims
are
paid.
Our
loss
and loss
reserve
obligations have an expected
duration that is reasonably consistent
with our fixed income portfolio.

Equity Risk.
Equity risk is
the potential change
in fair and/or market value
of the common
stock, preferred
stock and
mutual fund
portfolios
arising
from
changing
prices.
Our
equity
investments
consist
of
a
diversified
portfolio
of
individual
securities. The primary
objective of
the equity portfolio
is to
obtain greater
total return
relative to
our core
bonds
over time through market appreciation
and income.

The table below displays the impact on fair/market fair
value and after-tax change
in fair/marketfair value of a 10% and 20% change in
equity prices up and down for the periods indicated. 

indicated

 

Impact of Percentage Change in Equity Fair/Market Values

 

At December 31, 2019

(Dollars in millions)

-20%

 

-10%

 

0%

 

10%

 

20%

Fair/Market Value of the Equity Portfolio

$

611.2

 

$

687.6

 

$

764.0

 

$

840.5

 

$

916.9

After-tax Change in Fair/Market Value

 

(120.7)

 

 

(60.4)

 

 

—

 

 

60.4

 

 

120.7

.

 

Impact of Percentage Change in Equity Fair/Market Values

 

At December 31, 2018

(Dollars in millions)

-20%

 

-10%

 

0%

 

10%

 

20%

Fair/Market Value of the Equity Portfolio

$

451.5

 

$

507.9

 

$

564.3

 

$

620.8

 

$

677.2

After-tax Change in Fair/Market Value

 

(89.2)

 

 

(44.6)

 

 

—

 

 

44.6

 

 

89.2

Foreign Currency Risk.  Foreign currency risk is the potential change

Impact of Percentage Change in value, income and cash flow arising from adverse changesEquity Fair Values
At December 31, 2022
(Dollars in foreign currency exchange rates.  Each of our non-U.S. (“foreign”) operations maintains capital in the currencymillions)
-20%
-10%
0%
10%
20%
Fair Value of the countryEquity Portfolio
$
156
$
175
$
194
$
214
$
233
After-tax Change in Fair Value
(31)
(15)
—
15
31
28
Impact of Percentage Change in Equity Fair Values
At December 31, 2021
(Dollars in millions)
-20%
-10%
0%
10%
20%
Fair Value of the Equity Portfolio
$
1,406
$
1,582
$
1,758
$
1,934
$
2,109
After-tax Change in Fair Value
(278)
(139)
—
139
278
Foreign
Currency
Risk.
Foreign
currency
risk is
the potential
change
in value,
income
and
cash
flow arising
from
adverse changes
in foreign
currency exchange
rates.
Each of
our non-U.S.
(“foreign”)
operations
maintains capital
in the
currency
of the
country
of its
geographic
location
consistent
with local
regulatory
guidelines. Each
foreign
operation
may
conduct
business
in
its
local
currency,
as
well
as
the
currency
of
other
countries
in
which
it
operates.
The
primary
foreign
currency
exposures
for
these
foreign
operations
are
the
Singapore
and
Canadian
Dollars. We
mitigate foreign
exchange
exposure by
generally matching
the currency of other countries in which it operates.  The primary foreign currency exposures for these foreign operations are the Singapore and Canadian Dollars.  We mitigate foreign exchange exposure by generally matching the currency
and duration
of our
assets to
our corresponding
operating liabilities. In
accordance with FASB
guidance, the impact
on the market fair
value of available
for
sale
fixed
maturities
due
to
changes
in
foreign
currency
exchange
rates,
in
relation
to
functional
currency,
is
reflected as
part of other
comprehensive income.
Conversely,
the impact of
changes in
foreign currency
exchange
rates,
in
relation
to
functional
currency,
on
other
assets
and
liabilities
is
reflected
through
net
income
as
a
component of other income (expense). In
addition, we translate
the assets, liabilities and income of non-U.S.
dollar
functional
currency
legal
entities
to
the U.S.
dollar.
This translation
amount is
reported
as a
component
of other
comprehensive income.

32

The tables

below display
the potential
impact of
a parallel
and immediate
10% and
20% increase
and decrease
in
foreign
exchange
rates
on
the
valuation
of
invested
assets
subject
to
foreign
currency
exposure
for
the
periods
indicated.
This
analysis
includes
the
after-tax
impact
of
translation
from
transactional
currency
to
functional
currency
as
well
as
the
after-tax
impact
of
translation
from
functional
currency
to
the
U.S.
dollar
reporting
currency.
Change in foreign exchange rates on the valuation of invested assets subject to foreign currency exposure for the periods indicated.  This analysis includes the after-tax impact of translation from transactional currency to functional currency as well as the after-tax impact of translation from functional currency to the U.S. dollar reporting currency.

Foreign Exchange Rates in Percent

 

Change in Foreign Exchange Rates in Percent

 

At December 31, 2019

(Dollars in millions)

-20%

 

-10%

 

0%

 

10%

 

20%

Total After-tax Foreign Exchange Exposure

$

(159.4)

 

$

(79.7)

 

$

—

 

$

79.7

 

$

159.4

               
At December 31, 2022

 

Change in Foreign Exchange Rates in Percent

 

At December 31, 2018

(Dollars in millions)

-20%

 

-10%

 

0%

 

10%

 

20%

Total After-tax Foreign Exchange Exposure

$

(166.9)

 

$

(83.4)

 

$

—

 

$

83.4

 

$

166.9

               
(Dollars in millions)

-20%
-10%
0%
10%
20%
Total After-tax
Foreign Exchange Exposure
$
(157)
$
(79)
$
—
$
79
$
157
Change in Foreign Exchange Rates in Percent
At December 31, 2021
(Dollars in millions)
-20%
-10%
0%
10%
20%
Total After-tax
Foreign Exchange Exposure
$
(190)
$
(95)
$
—
$
95
$
190
ITEM 8.
FINANCIAL STATEMENTS
AND SUPPLEMENTARY
DATA

The financial statements and schedules
listed in the accompanying Index
to Financial Statements and Schedules on
page F-1 are filed as part of this report.

ITEM 9.
CHANGES IN AND DISAGREEMENTS WITH
ACCOUNTANTS
ON ACCOUNTING AND FINANCIAL
DISCLOSURE

None.

29
ITEM 9A.
CONTROLS AND PROCEDURES

Disclosure Controls and Procedures

As
required
by
Rule
13a-15(b)
of
the
Securities
Exchange
Act
of
1934 (the
(the
Exchange
Act),
our
management,
including our
Chief Executive
Officer and
Chief Financial
Officer,
has evaluated
the effectiveness
of our
disclosure
controls
and
procedures (as
(as
defined
in
Rule
13a-15(e)
under
the
Exchange
Act).
Based
on
that
evaluation,
the
Chief
Executive
Officer
and
Chief
Financial
Officer
have
concluded
that
our
disclosure
controls
and
procedures
were effective as of the
end of the period covered by this annual report.

rep

ort.
Management’s Annual Report
on Internal Control Over Financial Reporting

Our
management
is
responsible
for
establishing
and
maintaining
adequate
internal
controls
over
financial
reporting.
Our internal
control over
financial reporting
is designed
to provide
reasonable assurance
regarding the
reliability
of
financial
reporting
and
the
preparation
of
our
financial
statements
for
external
purposes
in
accordance with generally accepted
accounting principles.

Because
of
its
inherent
limitations,
internal
control
over
financial
reporting
may
not
prevent
or
detect
misstatements.
Also,
projections
of any
evaluation
of effectiveness
to
future
periods are
subject
to
the risk
that
controls
may
become
inadequate
because
of
changes
in
conditions,
or
that
the
degree
of
compliance
with
the
policies or procedures may deteriorate.

Management
has
assessed
the
effectiveness
of
our
internal
control
over
financial
reporting
as
of
December
31, 2019.
2022. In
making this
assessment, we
used the
criteria set
forth
by the
Committee
of Sponsoring
Organizations
of
the Treadway
Commission (COSO) in
Internal Control –
Integrated Framework
(2013).
Based on our assessment
we
concluded that,
as of
December 31, 2019,
2022, our
internal control
over financial
reporting is
effective
based on
those
criteria.

33

Attestation Report

of the Registered Public Accounting Firm

This
annual
report
does
not
include
an
attestation
report
of
the
Company’s
registered
public
accounting
firm
regarding
internal
control
over financial
reporting.
Management’s
internal
controls
are
not include ansubject
to attestation report
by the
Company’s
registered
public accounting
firm pursuant
to rules
of the Company’s registered public accounting firm regarding internal control over financial reporting. Management’s internal controls are not subject to attestation by the Company’s registered public accounting firm pursuant to rules of the
Securities and
Exchange
Commission
that permit
the Company
to provide
only management’s
report in
this annual report
due to
the Company’s
status
as a non-accelerated filer.

Changes in Internal Control Over
Financial Reporting

As
required
by
Rule
13a-15(d)
of
the
Exchange
Act,
our
management,
including
our
Chief
Executive
Officer
and
Chief
Financial
Officer,
has
evaluated
our
internal
control
over
financial
reporting
to
determine
whether
any
changes
occurred
during
the Exchange Act, our management, including our Chief Executive Officer and Chief Financial Officer, has evaluated fourth
fiscal quarter
covered
by
this annual
report
that have
materially
affected,
or
are
reasonably
likely
to materially
affect,
our internal
control
over financial reporting to determine whether any changes occurred during the fourth fiscal quarter covered by this annual report that have materially affected, or are reasonably likely to materially affect, our internal control over
financial reporting.
Based on
that evaluation,
there has been no such change during the fourth
quarter.

ITEM 9B.
OTHER INFORMATION

None.

34

ITEM 9C.
DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT
PREVENT INSPECTIONS
None.

30
PART III

ITEM 10.
DIRECTORS, EXECUTIVE OFFICERS
AND CORPORATE GOVERNANCE

Information for Item 10 is not
required pursuant to General
Instruction I(2) of Form 10-K.

ITEM 11.
EXECUTIVE COMPENSATION

Information for Item 11 is not
required pursuant to General
Instruction I(2) of Form 10-K.

ITEM 12.
SECURITY
OWNERSHIP
OF
CERTAIN
BENEFICIAL
OWNERS
AND
MANAGEMENT
AND
RELATED
STOCKHOLDER MATTERS

Information for Item 12 is not
required pursuant to General
Instruction I(2) of Form 10-K.

ITEM 13.
CERTAIN RELATIONSHIPS
AND RELATED TRANSACTIONS,
AND DIRECTOR INDEPENDENCE

Information for Item 13 is not
required pursuant to General
Instruction I(2) of Form 10-K.

ITEM 14.
PRINCIPAL ACCOUNTANT
FEES AND SERVICES

The PricewaterhouseCoopers LLP (and
its worldwide affiliates) fees incurred
are as follows for the periods
indicated:

(Dollars in thousands)

 

 

2019

 

2018

 (1) 

Audit Fees

 

$

2,902.1

 

$

2,691.7

 (2) 

Audit-Related Fees

 

 

181.6

 

 

159.8

 (3) 

Tax Fees

 

 

497.0

 

 

172.0

 (4) 

All Other Fees

 

 

17.5

 

 

14.0

(Dollars in millions)
2022
2021
(1)
Audit Fees
$
3.4
$
3.6
(2)
Audit-Related Fees
0.3
0.3
(3)
Tax Fees
0.7
0.6
(4)
All Other Fees
—
—
Audit
fees
include the
annual audit
and quarterly
financial statement
reviews,
subsidiary audits,
and procedures
required to
be performed
by the
independent auditor
to be able
to form
an opinion
on our
consolidated
financial
statements. These other
procedures include information
systems and
procedural reviews
and testing performed
in
order to
understand
and place
reliance on
the systems
of internal
control,
and consultations
relating to
the audit
or quarterly review.
Audit fees may
also include statutory
audits or financial audits
for our subsidiaries or
affiliates
and services associated
with SEC registration
statements,
periodic reports
and other
documents filed with
the SEC
or other documents issued in connection with securities offerings.

Audit-related

Audit
-related
fees
include
assurance
and related
services that
are reasonably
related to
the performance
of the
audit
or
review
of
our
financial
statements,
including
due
diligence
services
pertaining
to
potential
business
acquisitions/dispositions,
accounting consultations
related to
accounting, financial
reporting or
disclosure matters
not
classified
as “audit
“audit
services”; assistance
with
understanding
and
implementing
new
accounting
and
financial
reporting
guidance
from
rule
making
authorities;
financial
audits
of
employee
benefit
plans;
agreed-upon
or
expanded
audit
procedures
related
to
accounting
and/or
billing
records
required
to
respond
to
or
comply
with
financial, accounting or regulatory reporting
matters and assistance
with internal control reporting
requirements.

Tax fees
include tax compliance, tax planning
and tax advice and is granted general
pre-approval by Group’s
Audit
Committee.

All other fees represent an accounting
research subscription and software.

31
Under its
Charter and
the “Audit
and Non-Audit
Services Pre-Approval
Policy” (the “Policy”
“Policy”), the
Audit Committee
is
required
to
pre-approve
the
audit
and
non-audit
services
to
be
performed
by
the
independent
auditors.
The
Policy
mandates
specific
approval
by
the
Audit
Committee
for
any
service
that
has
not
received
a
general
pre-
approval
or
that
exceeds
pre-approved
cost
levels
or
budgeted
amounts.
For
both
specific
and
general
pre-
approval,
the
Audit
Committee
considers
whether
such
services
are
consistent
with
the
SEC’s
rules
on
auditor
independence.
The
Audit
Committee
also
considers
whether
the
independent
auditors
are
best
positioned
to
provide
the most
effective
and efficient
service and
whether the
service might
enhance the
Company’s
ability to
manage or control
risk or improve
audit and non-audit services to be performed by the independent auditors.  The Policy mandates specific approval by the Audit Committee for any service that has not received a

quality.

35

general pre-approval or that exceeds pre-approved cost levels or budgeted amounts. For both specific and general pre-approval, the Audit Committee considers whether such services are consistent with the SEC’s rules on auditor independence.  The Audit Committee also considers whether the independent auditors are best positioned to provide the most effective and efficient service and whether the service might enhance the Company’s ability to manage or control risk or improve audit quality.  The Audit Committee

is also mindful
of the relationship
between
fees for
audit and
non-audit services in
deciding whether
to pre-approve
any such
services.
It may
determine, for
each fiscal
year,
the appropriate
ratio
between
the total
amount
of
audit, audit-related audit
-related
and tax
fees
and a
total
amount of fees
for certain
permissible non-audit
services classified below
as “All
Other Fees”.
All such factors
are
considered as
a whole,
and no
one factor
is determinative.
The Audit
Committee
further considered
whether the
performance by
PricewaterhouseCoopers
LLP of the
non-audit related
services disclosed
below is compatible
with
maintaining
their
independence.
The
Audit
Committee
approved
all
of
the
audit-related
fees,
tax
fees
and
all
other fees for 20192022 and 2018.

2021.

PART IV

ITEM 15.
EXHIBITS AND FINANCIAL STATEMENT
SCHEDULES

Exhibits

The exhibits listed on the accompanying
Index to Exhibits on page E-1 are filed as
part of this report except that
the
certifications
in
Exhibit
32
are
being
furnished
to
the
SEC,
rather
than
filed
with
the
SEC,
as
permitted
under
applicable SEC rules.

Financial Statements and Schedules.

The financial statements and schedules
listed in the accompanying Index
to Financial Statements and Schedules on
page F-1 are filed as part of this report.

SIGNATURES

Pursuant to
the requirements
of Section 13 or
15(d) of the Securities
Exchange Act of
1934, the registrant
has duly
caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized
on March 27, 2020.

10, 2023.

EVEREST REINSURANCE HOLDINGS, INC.

By:

/S/ JUAN C. ANDRADE

Juan C. Andrade

(Chairman, President and

    Chief Executive Officer)

By:
/S/ JUAN C. ANDRADE
Juan C. Andrade
(Chairman, President and
Chief Executive Officer)
32
Pursuant
to
the
requirements
of
the
Securities
Exchange
Act
of
1934,
this
report
has
been
signed
below
by
the
following persons on behalf of the registrant
and in the capacities and on the dates indicated.

Signature

Title

Date

/S/ JUAN C. ANDRADE

Chairman, President and Chief Executive Officer (Principal Executive Officer)

March 27, 2020

Juan C. Andrade

/S/ CRAIG HOWIE

Executive Vice President and Chief Financial Officer (Principal Financial Officer)

March 27, 2020

Craig Howie

/S/ KEITH T. SHOEMAKER

Comptroller (Principal Accounting Officer)

March 27, 2020

Keith T. Shoemaker

36

Title
Date
/S/ JUAN C. ANDRADE
President and Chief Executive
Officer
(Principal Executive Officer)
March 10, 2023
Juan C. Andrade

/S/ MARK KOCIANCIC
Executive Vice President and Chief
Financial Officer
March 10, 2023
Mark Kociancic
/S/ ROBERT J. FREILING
Senior Vice President and Chief
Accounting Officer
March 10, 2023
Robert J. Freiling
E-1
INDEX TO EXHIBITS

Exhibit No.

2.1

Agreement and Plan of Merger among Everest Reinsurance Holdings, Inc., Everest Re Group, Ltd. and Everest Re Merger Corporation, incorporated herein by reference to Exhibit 2.1 to the Registration Statement on Form S-4 (No. 333-87361)

3.1

Certificate of Incorporation of Everest Reinsurance Holdings, Inc., incorporated herein by reference to Exhibit 4.1 to the Registration Statement on Form S-8 (No. 333-05771)

3.2

By-Laws of Everest Reinsurance Holdings, Inc., incorporated herein by reference to Exhibit 3.2 to the Everest Reinsurance Holdings, Inc. Quarterly Report on Form 10-Q for the quarter ended March 31, 2000.

4.1

Indenture, dated March 14, 2000, between Everest Reinsurance Holdings, Inc. and The Chase Manhattan Bank, as Trustee, incorporated herein by reference to Exhibit 4.1 to Everest Reinsurance Holdings, Inc. Form 8-K filed on March 15, 2000.

4.2

Fourth Supplemental Indenture relating to Holdings $400.0 million 4.868% Senior Notes due June 1, 2044, dated June 5 2014, between Holdings and the Bank of New York Mellon, as Trustee, incorporated herein by reference to Exhibit 4.1 to Everest Reinsurance Holdings, Inc. Form 8-K filed on July 5, 2014.

10.1

Completion of Tender Offer relating to Everest Reinsurance Holdings, Inc. 6.60% Fixed to Floating Rate Long Term Subordinated Notes (LoTSSM) dated March 19, 2009, incorporated herein by reference to Exhibit 99.1 to Everest Re Group, Ltd. Form 8-K filed on March 31, 2009.

*10.2

Employment agreement between Everest Global Services, Inc., Everest Reinsurance Holdings Inc. and Dominic J. Addesso, dated December 4, 2015, incorporated herein by reference to Exhibit 10.1 to Everest Re Group, Ltd. Form 8-K filed on December 8, 2015.

*10.3

Employment agreement between Everest National Insurance Company and Jonathan M. Zaffino, dated September 8, 2017, incorporated herein by reference to Exhibit 10.1 to Everest Re Group, Ltd. Form 8-K filed on September 12, 2017.

*10.4

Amendment of employment agreement between Everest Global Services, Inc., Everest Re Group, Ltd., Everest Reinsurance Holdings Inc. and Dominic J. Addesso, dated November 20, 2017, incorporated herein by reference to Exhibit 10.1 to Everest Re Group, Ltd. Form 8-K filed November 20, 2017.

*10.5

Employment agreement between Everest Re Group Ltd., Everest Global Services, Inc., Everest Reinsurance Holdings Inc. and Juan C Andrade, dated August 1, 2019, incorporated herein by reference to Exhibit 10.1 to Everest Re Group, Ltd. Form 8-K filed August 8, 2019.

3.1

23.1

Consent of PricewaterhouseCoopers LLP, filed herewith

31.1

Section 302 Certification of Juan C. Andrade, filed herewith

31.2

Section 302 Certification of Craig Howie, filed herewith

32.1

Section 906 Certification of Juan C. Andrade and Craig Howie, filed herewith

101 INS

XBRL Instance Document

101 SCH

XBRL Taxonomy Extension Schema

101 CAL

XBRL Taxonomy Extension Calculation Linkbase

101 DEF

XBRL Taxonomy Extension Definition Linkbase

101 LAB

XBRL Taxonomy Extension Label Linkbase

101 PRE

XBRL Taxonomy Extension Presentation Linkbase

3.2
4.1

4.2
4.3
4.4
Sixth
10.1
*10.2
*10.3
*10.4
*10.5
E-2
*10.6
*10.7
23.1
31.1
31.2
32.1
101 INS
XBRL Instance Document
101 SCH
XBRL Taxonomy
Extension Schema
101 CAL
XBRL Taxonomy
Extension Calculation Linkbase
101 DEF
XBRL Taxonomy
Extension Definition Linkbase
101 LAB
XBRL Taxonomy
Extension Label Linkbase
101 PRE
XBRL Taxonomy
Extension Presentation Linkbase
104
Cover Page Interactive
Data File (embedded within the Inline XBRL document)
F-1
EVEREST REINSURANCE HOLDINGS, INC.

INDEX TO FINANCIAL STATEMENTS
AND SCHEDULES

Pages

Report of Independent Registered Public Accounting Firm

F-2

Consolidated Balance Sheets at December 31, 2019 and 2018

F-3

Consolidated Statements of Operations and Comprehensive Income (Loss) for the Years Ended

December 31, 2019, 2018 and 2017

F-4

Consolidated Statements of Changes in Stockholder’s Equity for the Years Ended

December 31, 2019, 2018 and 2017

F-5

Consolidated Statements of Cash Flows for the Years Ended

December 31, 2019, 2018 and 2017

F-6

Notes to Consolidated Financial Statements

F-7

Schedules

I

Summary of Investments Other Than Investments in Related Parties at December 31, 2019

S-1

II

Condensed Financial Information of Registrant:

      Balance Sheets as of December 31, 2019 and 2018

S-2

      Statements of Operations for the Years Ended December 31, 2019, 2018 and 2017

S-3

      Statements of Cash Flows for the Years Ended December 31, 2019, 2018 and 2017

S-4

      Notes to Condensed Financial Information

S-5

III

Supplementary Insurance Information as of and for the Years Ended

      December 31, 2019, 2018 and 2017

S-6

IV

Reinsurance for the Years Ended December 31, 2019, 2018 and 2017

S-7

Schedules other than those listed above are omitted for the reason that they are not applicable or the information is otherwise contained in the Financial Statements.

F-1

Report of Independent RegisteredPublic Accounting Firm

(PCAOB FIRM ID
238
)
F-2
Consolidated Balance Sheets at December 31, 2022and 2021
F-4
Consolidated Statements of Operationsand Comprehensive Income (Loss) for the YearsEnded
December 31, 2022, 2021and 20
20
F-5
Consolidated Statements of Changesin Stockholder’s Equity for the YearsEnded
December 31, 2022, 2021and 20
20
F-6
Consolidated Statements of CashFlows for the YearsEnded
December 31, 2022, 2021and 20
20
F-7
Notes to Consolidated Financial Statements
F-8
Schedules
I
Summary of Investments Other Than Investmentsin Related Parties atDecember 31, 2022
S-1
II
Condensed Financial Information of Registrant:
Balance Sheets as of December 31, 2022and 2021
S-2
Statements of Operations forthe Years EndedDecember 31, 2022, 2021 and 20
20
S-3
Statements of Cash Flows for the YearsEnded December 31, 2022, 2021 and 20
20
S-4
Notes to Condensed Financial Information
S-5
III
Supplementary Insurance Informationas of and for the YearsEnded
December 31, 2022, 2021and 20
20
S-6
IV
Reinsurance for the YearsEnded December 31, 2022, 2021and 20
20
S-7
Schedules
other
than
those
listed
above
are
omitted
for
the
reason
that
they
are
not
applicable
or
the
information
is
otherwise
contained
in
the
Financial
Statements.
F-2
Report of Independent Registered
Public Accounting Firm
To the Board
of Directors and Stockholder of Everest
Reinsurance Holdings, Inc.

Opinion on the Financial Statements

We have audited the
accompanying consolidated
balance sheets of Everest Reinsurance
Holdings, Inc. and its
subsidiaries (the “Company”) as of December 31, 20192022 and 2018,2021, and the related
consolidated statements
of
operations and comprehensive income
(loss), of changes in stockholder's equity and
of cash flows for each of the
three years in the period ended December 31, 2019,2022, including
the related notes and financial statement
schedules
listed in the accompanying index
appearing on page F-1 (collectively referred
to as the “consolidated
financial
statements”). In our opinion, the
consolidated financial statements
present fairly,
in all material respects, the
financial position of the Company as of December 31, 20192022 and 2018,
2021, and the results of its operations and its
cash
flows for each of the three years
in the period ended December 31, 20192022 in conformity with accounting
principles
generally accepted in the United
States of America.

Basis for Opinion

These consolidated financial statements
are the responsibility of the Company’s
management. Our responsibility is
to express an opinion on the Company’s
consolidated financial statements
based on our audits. We are a
public
accounting firm registered with
the Public Company Accounting Oversight
Board (United States) (PCAOB) and
are
required to be independent with respect
to the Company in accordance with the U.S.
federal securities laws and
the applicable rules and regulations of the Securities and
Exchange Commission and the PCAOB.

We conducted our audits
of these consolidated financial statements
in accordance with the standards
of the
PCAOB. Those standards
require that we plan and perform the audit
audits to obtain reasonable assurance
about
whether the consolidated financial statements
are free of material misstatement,
whether due to error or fraud.
The Company is not required to have,
nor were we engaged to perform,
an audit of its internal control over
financial reporting. As part of our audits we are required
to obtain an understanding
of internal control over
financial reporting but not for the purpose of expressing
an opinion on the effectiveness of the Company's
internal
control over financial reporting. Accordingly
,
we express no such opinion.

Our audits included performing procedures
to assess the risks of material misstatement
of the consolidated
financial statements, whether
due to error or fraud, and performing
procedures that respond
to those risks. Such
procedures included examining, on
a test basis, evidence regarding
the amounts and disclosures in the
consolidated financial statements.
Our audits also included evaluating the accounting
principles used and
significant estimates made by management,
as well as evaluating the overall
presentation of the consolidated
financial statements. We
believe that our audits provide a reasonable
basis for our opinion.

Critical Audit Matters
The critical audit matter communicated
below is a matter arising from the current
period audit of the consolidated
financial statements that was
communicated or required to
be communicated to the audit committee
and that (i)
relates to accounts or disclosures
that are material to the consolidated
financial statements and (ii) involved
our
especially challenging, subjective, or complex judgments.
The communication of critical audit matters
does not
alter in any way our opinion on the consolidated
financial statements, taken
as a whole, and we are not, by
communicating the critical audit matter
below, providing
a separate opinion on the critical audit
matter or on the
accounts or disclosures to which it relates.
Valuation of the Reserve for Losses and
Loss Adjustment Expenses
As described in Notes 1 and 3 to the consolidated
financial statements, the Company
maintains reserves equal to
the estimated ultimate liability
for losses and loss adjustment expense for
reported and unreported claims for
both
F-3
insurance and reinsurance
businesses. The Company’s reserve
for losses and loss adjustment expenses
as of
December 31, 2022 was $15.0 billion. Reserves are
based on estimates of ultimate losses
and loss adjustment
expenses by underwriting or accident year.
Management uses a variety of statistical
and actuarial techniques to
monitor reserve adequacy over time, evaluate
new information as it becomes known
and adjust reserves as
warranted. Management considers
many factors when setting
reserves including (i) exposure base and
projected
ultimate premium; (ii) expected
loss ratios by product and class
of business, which are developed collaboratively
by underwriters and actuaries; (iii) actuarial methodologies
and assumptions which analyze loss reporting
and
payment experience, reports from
ceding companies and historical trends,
such as reserving patterns, loss
payments and product mix; (iv) current
legal interpretations
of coverage and liability; and (v) economic conditions.
The principal considerations for
our determination that performing procedures
relating to the valuation of the
reserve for losses and loss adjustment
expenses is a critical audit matter are
the significant judgment by
management when developing their estimate;
this in turn led to a high degree of auditor subjectivity,
judgment
and effort in performing procedures
and evaluating the audit evidence relating
to the methodologies and the
significant assumptions related
to expected loss ratios
and historical trends, such as reserving patterns,
loss
payments and product mix, and the audit
effort involved the use of professionals
with specialized skill and
knowledge.
Addressing the matter involved
performing procedures and evaluating
audit evidence in connection with forming
our overall opinion on the consolidated
financial statements. These procedures
included testing the effectiveness
of controls relating to management’s
valuation of the reserve for losses and
loss adjustment expenses, including
controls over the selection of methodologies
and development of significant assumptions.
These procedures also
included, among others, testing the completeness
and accuracy of data provided
by management and the
involvement of professionals
with specialized skill and knowledge to assist
in performing procedures for a sample
of products and lines of business including: (i) evaluating
management’s methodologies and
assumptions related
to expected loss ratios
and historical trends, such as, reserving patterns,
loss payment and product mix used for
determining reserves for losses and
loss adjustment expenses; and (ii) developing an
independent estimate of the
reserve for losses and loss adjustment
expenses and comparing the independent estimate
to management’s
actuarially determined reserves.
/s/
PricewaterhouseCoopers LLP

New York, New York

March 27, 2020

10, 2023

We have served as the Company’s
auditor since 1996.

F-2

F-4
EVEREST REINSURANCE HOLDINGS, INC.

CONSOLIDATED
BALANCE SHEETS

 

December 31,

(Dollars in thousands, except share amounts and par value per share)

2019

 

2018

 

 

 

 

 

ASSETS:

 

 

 

 

 

Fixed maturities - available for sale, at market value

  (amortized cost: 2019, $7,334,425; 2018, $7,032,749

$

7,492,079

 

$

6,962,075

Fixed maturities - available for sale, at fair value

 

5,826

 

 

2,337

Equity securities, at fair value

 

764,049

 

 

564,338

Short-term investments (cost: 2019, $279,824; 2018, $174,155)

 

279,879

 

 

174,131

Other invested assets (cost: 2019, $1,020,766; 2018, $882,647)

 

1,020,766

 

 

882,647

Other invested assets, at fair value

 

1,982,582

 

 

1,717,336

Cash

 

411,122

 

 

404,522

Total investments and cash

 

11,956,303

 

 

10,707,386

Note receivable - affiliated

 

300,000

 

 

-

Accrued investment income

 

54,383

 

 

47,232

Premiums receivable

 

1,337,344

 

 

1,471,805

Reinsurance receivables - unaffiliated

 

1,318,820

 

 

1,295,961

Reinsurance receivables - affiliated

 

3,125,269

 

 

3,544,975

Income taxes

 

65,793

 

 

411,994

Funds held by reinsureds

 

228,297

 

 

228,556

Deferred acquisition costs

 

388,238

 

 

353,630

Prepaid reinsurance premiums

 

413,612

 

 

328,796

Other assets

 

518,127

 

 

289,962

TOTAL ASSETS

$

19,706,186

 

$

18,680,297

LIABILITIES:

 

 

 

 

 

Reserve for losses and loss adjustment expenses

$

10,209,519

 

$

10,167,018

Unearned premium reserve

 

2,198,932

 

 

1,826,868

Funds held under reinsurance treaties

 

41,233

 

 

41,600

Other net payable to reinsurers

 

267,367

 

 

316,826

Losses in course of payment

 

70,541

 

 

117,844

Senior notes due 6/1/2044

 

397,074

 

 

396,954

Long term notes due 5/1/2067

 

236,758

 

 

236,659

Note payable - affiliated

 

-

 

 

300,000

Accrued interest on debt and borrowings

 

2,878

 

 

3,093

Unsettled securities payable

 

25,230

 

 

50,912

Other liabilities

 

399,229

 

 

185,766

Total liabilities

 

13,848,761

 

 

13,643,540

Commitments and Contingencies (Note 15)

 

-

 

 

-

STOCKHOLDER'S EQUITY:

 

 

 

 

 

Common stock, par value: $0.01; 3,000 shares authorized;

  1,000 shares issued and outstanding (2019 and 2018)

 

-

 

 

-

Additional paid-in capital

 

1,100,678

 

 

1,100,315

Accumulated other comprehensive income (loss), net of deferred income

  tax expense (benefit) of $16,997 at 2019 and ($33,506) at 2018

 

64,324

 

 

(126,254)

Retained earnings

 

4,692,423

 

 

4,062,696

Total stockholder's equity

 

5,857,425

 

 

5,036,757

TOTAL LIABILITIES AND STOCKHOLDER'S EQUITY

$

19,706,186

 

$

18,680,297

 

 

 

 

 

 

The accompanying notes are an integral part of the consolidated financial statements.

December 31,

F-3

(Dollars in millions, except share amounts and par value per share)
2022
2021
ASSETS:
Fixed maturities - available for
sale, at fair value
$
12,671
$
12,860
(amortized cost: 2022, $
13,699
; 2021, $
12,733
, credit allowances: 2022, $
(
46
)
; 2021, $
(
27
)
)
Fixed maturities - held to maturity,
at amortized cost
(fair value: 2022, $
793
, net of credit allowances: 2022, $
(
9
)
)
811
-
Equity securities, at fair value
194
1,758
Other invested assets
2,754
1,675
Other invested assets, at fair value
1,472
2,031
Short-term investments (cost:
2022, $
812
; 2021, $
696
)
812
696
Cash
481
699
Total investments
and cash
19,195
19,719
Notes receivable - affiliated
840
500
Accrued investment income
150
90
Premiums receivable (net of credit allowances:
2022, $
(
21
)
; 2021, $
(
18
)
)
1,721
1,720
Reinsurance recoverables
- unaffiliated (net of credit allowances:
2022, $
(
21
)
; 2021, $
(
16
)
)
1,841
1,569
Reinsurance recoverables
- affiliated
1,935
2,299
Income tax asset, net
288
-
Funds held by reinsureds
303
299
Deferred acquisition costs
499
472
Prepaid reinsurance premiums
463
431
Other assets (net of credit allowances:
2022, $
(
5
)
; 2021, $
(
4
)
)
722
596
TOTAL ASSETS
$
27,957
$
27,695
LIABILITIES:
Reserve for losses and loss adjustment
expenses
$
14,977
$
13,121
Unearned premium reserve
3,177
2,993
Funds held under reinsurance treaties
43
48
Other net payable to reinsurers
436
392
Losses in course of payment
77
273
Income tax liability, net
-
246
Senior notes
2,347
2,346
Long-term notes
218
224
Borrowings from FHLB
519
519
Accrued interest on debt and borrowings
19
17
Unsettled securities payable
1
15
Other liabilities
489
463
Total liabilities
22,303
20,657
Commitments and Contingencies (Note 15)
(nil)
(nil)
STOCKHOLDER'S EQUITY:
Common stock, par value: $
0.01
;
3,000

shares authorized;

1,000
shares issued and outstanding (2022 and
2021)
-
-
Additional paid-in capital
1,102
1,102
Accumulated other comprehensive income
(loss), net of deferred income
tax expense (benefit) of $
(225)
at 2022
and $
24
at 2021
(848)
91
Retained earnings
5,400
5,845
Total stockholder's
equity
5,654
7,038
TOTAL LIABILITIES
AND STOCKHOLDER'S EQUITY
$
27,957
$
27,695
The accompanying notes are an integral part of the consolidated
financial statements.
F-5
EVEREST REINSURANCE HOLDINGS, INC.

CONSOLIDATED
STATEMENTS
OF OPERATIONS

AND COMPREHENSIVE INCOME (LOSS)

 

 

 

Years Ended December 31,

(Dollars in thousands)

2019

 

2018

 

2017

 

 

 

 

 

 

 

 

 

REVENUES:

 

 

 

 

 

 

 

 

Premiums earned

$

5,489,035

 

$

4,839,058

 

$

1,949,595

Net investment income

 

356,211

 

 

314,381

 

 

286,259

Net realized capital gains (losses):

 

 

 

 

 

 

 

 

Other-than-temporary impairments on fixed

  maturity securities

 

(19,643)

 

 

(6,164)

 

 

(6,077)

Other-than-temporary impairments on fixed

  maturity securities transferred to other

  comprehensive income (loss)

 

-

 

 

-

 

 

-

Other net realized capital gains (losses)

 

439,010

 

 

(179,192)

 

 

167,630

Total net realized capital gains (losses)

 

419,367

 

 

(185,356)

 

 

161,553

Other income (expense)

 

(1,589)

 

 

(9,568)

 

 

25,866

Total revenues

 

6,263,024

 

 

4,958,515

 

 

2,423,273

CLAIMS AND EXPENSES:

 

 

 

 

 

 

 

 

Incurred losses and loss adjustment expenses

 

3,829,122

 

 

4,811,018

 

 

2,039,751

Commission, brokerage, taxes and fees

 

1,270,053

 

 

1,141,714

 

 

210,925

Other underwriting expenses 

 

350,901

 

 

293,347

 

 

254,886

Corporate expenses

 

13,063

 

 

11,034

 

 

7,394

Interest, fee and bond issue cost amortization expense

 

34,931

 

 

30,611

 

 

31,183

Total claims and expenses

 

5,498,070

 

 

6,287,724

 

 

2,544,139

INCOME (LOSS) BEFORE TAXES

 

764,955

 

 

(1,329,209)

 

 

(120,866)

Income tax expense (benefit) 

 

135,228

 

 

(367,025)

 

 

(200,736)

NET INCOME (LOSS) 

$

629,727

 

$

(962,184)

 

$

79,870

Other comprehensive income (loss), net of tax:

 

 

 

 

 

 

 

 

Unrealized appreciation (depreciation) ("URA(D)")

  on securities arising during the period

 

175,482

 

 

(92,966)

 

 

(10,536)

Less: reclassification adjustment for realized

  losses (gains) included in net income (loss)

 

5,080

 

 

2,021

 

 

2,303

Total URA(D) on securities arising during

  the period

 

180,562

 

 

(90,945)

 

 

(8,233)

Foreign currency translation adjustments

 

17,153

 

 

(36,431)

 

 

37,427

Benefit plan actuarial net gain (loss) for the period

 

(12,591)

 

 

(510)

 

 

1,027

Reclassification adjustment for amortization of net

  (gain) loss included in net income (loss)

 

5,453

 

 

5,021

 

 

5,477

Total benefit plan net gain (loss) for the period

 

(7,138)

 

 

4,511

 

 

6,504

Total other comprehensive income (loss), net of tax

 

190,577

 

 

(122,865)

 

 

35,698

COMPREHENSIVE INCOME (LOSS)  

$

820,304

 

$

(1,085,049)

 

$

115,568

 

 

 

 

 

 

 

 

 

The accompanying notes are an integral part of the consolidated financial statements.

 

 

 

Years Ended December 31,

F-4

(Dollars in millions)
2022
2021
2020
REVENUES:
Premiums earned
$
7,876
$
7,179
$
6,407
Net investment income
638
745
376
Net gains (losses) on investments:
Credit allowances on fixed maturity securities
(27)
(26)
(2)
Gains (losses) from fair value adjustments
(1,006)
488
92
Net realized gains (losses) from dispositions
51
39
(41)
Total net gains (losses) on investments
(982)
501
50
Other income (expense)
(6)
23
(15)
Total revenues
7,526
8,448
6,818
CLAIMS AND EXPENSES:
Incurred losses and loss adjustment expenses
5,823
5,387
4,608
Commission, brokerage, taxes and fees
1,632
1,513
1,373
Other underwriting expenses
501
454
401
Corporate expenses
26
33
16
Interest, fee and bond issue cost amortization expense
101
70
36
Total claims and expenses
8,083
7,457
6,434
INCOME (LOSS) BEFORE TAXES
(557)
991
384
Income tax expense (benefit)
(112)
192
32
NET INCOME (LOSS)
$
(445)
$
800
$
352
Other comprehensive income (loss), net of tax:
Unrealized appreciation (depreciation) ("URA(D)") on securities arising during the period
(1,011)
(200)
163
Reclassification adjustment for realized losses (gains) included in net income (loss)
73
9
25
Total URA(D) on securities arising during the period
(938)
(191)
189
Foreign currency translation adjustments
(18)
(9)
14
Benefit plan actuarial net gain (loss) for the period
15
17
(6)
Reclassification adjustment for amortization of net (gain) loss included in net income (loss)
2
6
6
Total benefit plan net gain (loss) for the period
17
23
1
Total other comprehensive income (loss), net of tax
(939)
(177)
204
COMPREHENSIVE INCOME (LOSS)
$
(1,384)
$
623
$
556
The accompanying notes are an integral
part of the consolidated financial statements.

F-6
EVEREST REINSURANCE HOLDINGS, INC.

CONSOLIDATED
STATEMENTS
OF

CHANGES IN STOCKHOLDER’S EQUITY

 

Years Ended December 31,

(Dollars in thousands, except share amounts)

2019

 

2018

 

2017

 

 

 

 

 

 

 

 

 

COMMON STOCK (shares outstanding):

 

 

 

 

 

 

 

 

Balance, January 1

 

1,000

 

 

1,000

 

 

1,000

Balance, December 31

 

1,000

 

 

1,000

 

 

1,000

 

 

 

 

 

 

 

 

 

ADDITIONAL PAID-IN CAPITAL:

 

 

 

 

 

 

 

 

Balance, January 1

$

1,100,315

 

$

387,841

 

$

387,567

Capital contribution from parent

 

-

 

 

712,253

 

 

-

Share-based compensation plans

 

363

 

 

221

 

 

274

Balance, December 31

 

1,100,678

 

 

1,100,315

 

 

387,841

 

 

 

 

 

 

 

 

 

ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS),

NET OF DEFERRED INCOME TAXES:

 

 

 

 

 

 

 

 

Balance, January 1

 

(126,254)

 

 

(942)

 

 

(36,315)

Change to beginning balance due to adoption of ASU 2016-01

 

-

 

 

(2,447)

 

 

-

Reclass due to early adoption of  ASU 2018-02

 

-

 

 

-

 

 

(325)

Net increase (decrease) during the period

 

190,577

 

 

(122,865)

 

 

35,698

Balance, December 31

 

64,324

 

 

(126,254)

 

 

(942)

 

 

 

 

 

 

 

 

 

RETAINED EARNINGS:

 

 

 

 

 

 

 

 

Balance, January 1

 

4,062,696

 

 

5,022,433

 

 

4,942,239

Change to beginning balance due to adoption of ASU 2016-01

 

-

 

 

2,447

 

 

-

Reclass due to early adoption of  ASU 2018-02

 

-

 

 

-

 

 

325

Net income (loss)

 

629,727

 

 

(962,184)

 

 

79,870

Balance, December 31

 

4,692,423

 

 

4,062,696

 

 

5,022,433

 

 

 

 

 

 

 

 

 

TOTAL STOCKHOLDER'S EQUITY, December 31

$

5,857,425

 

$

5,036,757

 

$

5,409,332

 

 

 

 

 

 

 

 

 

The accompanying notes are an integral part of the consolidated financial statements.

 

 

 

Years Ended December 31,

F-5

(Dollars in millions, except share
amounts)
2022
2021
2020
COMMON STOCK (shares outstanding):
Balance, beginning of period
1,000
1,000
1,000
Balance, end of period
1,000
1,000
1,000
ADDITIONAL PAID-IN CAPITAL:
Balance, beginning of period
$
1,102
$
1,101
$
1,101
Share-based compensation plans
-
-
-
Balance, end of period
1,102
1,102
1,101
ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS), NET OF DEFERRED INCOME
TAXES:
Balance, beginning of period
91
268
64
Net increase (decrease) during the period
(939)
(177)
204
Balance, end of period
(848)
91
268
RETAINED EARNINGS:
Balance, beginning of period
5,845
5,045
4,692
Change to beginning balance due to adoption of ASU 2016-13
-
-
1
Net income (loss)
(445)
800
352
Balance, end of period
5,400
5,845
5,045
TOTAL STOCKHOLDER'S
EQUITY, END OF PERIOD
$
5,654
$
7,038
$
6,414
The accompanying notes are an integral
part of the consolidated financial statements.

F-7
EVEREST REINSURANCE HOLDINGS, INC.

CONSOLIDATED
STATEMENTS
OF CASH FLOWS

 

 

 

 

 

 

 

 

 

 

Years Ended December 31,

(Dollars in thousands)

2019

 

2018

 

2017

 

 

 

 

 

 

 

 

 

CASH FLOWS FROM OPERATING ACTIVITIES:

 

 

 

 

 

 

 

 

Net income (loss) 

$

629,727

 

$

(962,184)

 

$

79,870

Adjustments to reconcile net income to net cash provided by operating activities:

 

 

 

 

 

 

 

 

Decrease (increase) in premiums receivable

 

(24,618)

 

 

(171,642)

 

 

(170,234)

Decrease (increase) in funds held by reinsureds, net

 

(57)

 

 

(20,963)

 

 

(92,526)

Decrease (increase) in reinsurance receivables

 

405,574

 

 

1,260,865

 

 

(731,292)

Decrease (increase) in income taxes

 

295,667

 

 

(292,728)

 

 

(249,674)

Decrease (increase) in prepaid reinsurance premiums

 

(84,181)

 

 

17,302

 

 

436,571

Increase (decrease) in reserve for losses and loss adjustment expenses

 

21,399

 

 

859,691

 

 

964,415

Increase (decrease) in unearned premiums

 

370,246

 

 

221,850

 

 

291,108

Increase (decrease) in other net payable to reinsurers

 

(50,560)

 

 

(173,810)

 

 

(329,946)

Increase (decrease) in losses in course of payment

 

113,306

 

 

66,148

 

 

(31,815)

Change in equity adjustments in limited partnerships

 

(45,843)

 

 

(70,494)

 

 

(35,749)

Distribution of limited partnership income

 

51,982

 

 

55,350

 

 

33,629

Change in other assets and liabilities, net

 

(60,250)

 

 

(143,047)

 

 

(367,338)

Non-cash compensation expense

 

27,421

 

 

13,863

 

 

10,212

Amortization of bond premium (accrual of bond discount)

 

4,308

 

 

3,735

 

 

17,690

Net realized capital (gains) losses

 

(419,367)

 

 

185,356

 

 

(161,553)

Net cash provided by (used in) operating activities

 

1,234,754

 

 

849,292

 

 

(336,632)

 

 

 

 

 

 

 

 

 

CASH FLOWS FROM INVESTING ACTIVITIES:

 

 

 

 

 

 

 

 

Proceeds from fixed maturities matured/called - available for sale, at market value

 

937,871

 

 

741,360

 

 

1,005,532

Proceeds from fixed maturities sold - available for sale, at market value

 

2,400,869

 

 

791,368

 

 

1,676,203

Proceeds from fixed maturities sold - available for sale, at fair value

 

2,917

 

 

1,751

 

 

-

Proceeds from equity securities sold - at fair value

 

283,707

 

 

1,029,920

 

 

586,496

Distributions from other invested assets

 

185,116

 

 

1,043,131

 

 

2,327,206

Cost of fixed maturities acquired - available for sale, at market value

 

(3,626,139)

 

 

(3,714,695)

 

 

(2,431,780)

Cost of fixed maturities acquired - available for sale, at fair value

 

(4,243)

 

 

(4,381)

 

 

-

Cost of equity securities acquired - at fair value

 

(325,546)

 

 

(702,221)

 

 

(396,056)

Cost of other invested assets acquired

 

(323,453)

 

 

(1,138,317)

 

 

(2,546,289)

Net change in short-term investments

 

(102,302)

 

 

193,623

 

 

67,164

Net change in unsettled securities transactions

 

(30,904)

 

 

55,967

 

 

(40,530)

Proceeds from repayment (cost of issuance) of note receivable, affiliated

 

(300,000)

 

 

250,000

 

 

-

Net cash provided by (used in) investing activities

 

(902,107)

 

 

(1,452,494)

 

 

247,946

 

 

 

 

 

 

 

 

 

CASH FLOWS FROM FINANCING ACTIVITIES:

 

 

 

 

 

 

 

 

Tax benefit from share-based compensation, net of expense

 

(27,059)

 

 

(11,195)

 

 

(9,938)

Capital contribution from parent

 

-

 

 

500,324

 

 

-

Proceeds from issuance (cost of repayment) of note payable-affiliated

 

(300,000)

 

 

300,000

 

 

-

Net cash provided by (used in) financing activities

 

(327,059)

 

 

789,129

 

 

(9,938)

 

 

 

 

 

 

 

 

 

EFFECT OF EXCHANGE RATE CHANGES ON CASH

 

1,012

 

 

(10,957)

 

 

30,382

 

 

 

 

 

 

 

 

 

Net increase (decrease) in cash

 

6,600

 

 

174,970

 

 

(68,242)

Cash, beginning of period

 

404,522

 

 

229,552

 

 

297,794

Cash, end of period

$

411,122

 

$

404,522

 

$

229,552

 

 

 

 

 

 

 

 

 

SUPPLEMENTAL CASH FLOW INFORMATION:

 

 

 

 

 

 

 

 

Income taxes paid (recovered)

$

(160,748)

 

$

(73,669)

 

$

53,019

Interest paid

 

34,928

 

 

30,027

 

 

31,775

 

 

 

 

 

 

 

 

 

NON-CASH TRANSACTIONS

 

 

 

 

 

 

 

 

Equity value of non-cash capital contribution of affiliate from parent, net of cash held by affiliate

$

-

 

$

211,928

 

$

-

Transfer of fixed maturities, available for sale, at market value to Bermuda Re as part of

 

 

 

 

 

 

 

 

settlement for loss portfolio transfer agreement as of 12/31/17

 

-

 

 

-

 

 

790,583

 

 

 

 

 

 

 

 

 

The accompanying notes are an integral part of the consolidated financial statements.

F-6

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Years Ended December 31, 2019, 2018

(Dollars in millions)
2022
2021
2020
CASH FLOWS FROM OPERATING
ACTIVITIES:
Net income (loss)
$
(445)
$
800
$
352
Adjustments to reconcile net income
to net cash provided by operating
activities:
Decrease (increase) in premiums receivable
(3)
(128)
(253)
Decrease (increase) in funds held by reinsureds,
net
(9)
(30)
(34)
Decrease (increase) in reinsurance
recoverables
70
337
247
Decrease (increase) in income taxes
(286)
100
204
Decrease (increase) in prepaid reinsurance
premiums
(36)
(68)
51
Increase (decrease) in reserve for losses
and 2017

loss adjustment expenses

1,885
1,478
1,430
Increase (decrease) in unearned premiums
189
609
183
Increase (decrease) in other net payable
to reinsurers
50
114
8
Increase (decrease) in losses in course
of payment
(197)
111
90
Change in equity adjustments in limited partnerships
(90)
(368)
(40)
Distribution of limited partnership income
107
114
91
Change in other assets and liabilities, net
(130)
(10)
(88)
Non-cash compensation expense
37
36
32
Amortization of bond premium (accrual of
bond discount)
22
31
14
Net (gains) losses on investments
982
(501)
(50)
Net cash provided by (used in) operating
activities
2,146
2,625
2,240
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from fixed maturities
matured/called/repaid - available
for sale
1,399
2,330
1,126
Proceeds from fixed maturities sold
- available for sale
2,645
961
631
Proceeds from fixed maturities
matured/called/repaid - held to
maturity
39
-
-
Proceeds from equity securities sold
2,203
862
375
Distributions from other invested
assets
135
127
243
Cost of fixed maturities acquired -
available for sale
(5,928)
(5,832)
(4,695)
Cost of fixed maturities acquired -
held to maturity
(125)
-
-
Cost of equity securities acquired
(951)
(1,052)
(626)
Cost of other invested assets acquired
(1,241)
(430)
(363)
Net change in short-term investments
(113)
13
(426)
Net change in unsettled securities transactions
(52)
(206)
200
Proceeds from repayment (cost
of issuance) of notes receivable - affiliated
(340)
(200)
-
Net cash provided by (used in) investing
activities
(2,329)
(3,427)
(3,534)
CASH FLOWS FROM FINANCING ACTIVITIES:
Tax benefit from
share-based compensation, net of
expense
(37)
(36)
(32)
Net FHLB borrowings (repayments)
-
209
310
Cost of debt repurchase
(6)
-
(11)
Proceeds from issuance of senior notes
-
968
979
Net cash provided by (used in) financing
activities
(43)
1,142
1,247
EFFECT OF EXCHANGE RATE
CHANGES ON CASH
8
(18)
14
Net increase (decrease) in cash
(218)
321
(33)
Cash, beginning of period
699
379
411
Cash, end of period
$
481
$
699
$
379
SUPPLEMENTAL CASH FLOW
INFORMATION:
Income taxes paid (recovered)
$
174
$
91
$
(173)
Interest paid
98
62
28
NON-CASH TRANSACTIONS
Reclassification of specific investments
from fixed maturity securities,
available for sale
at fair value to fixed maturity
securities, held to maturity at amortized
cost net of credit allowances
$
722
$
-
$
-
The accompanying notes are an integral part of the consolidated
financial statements.
F-8
NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS
Years Ended
December 31, 2022, 2021 and 2020
1.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

A.
Business and Basis of Presentation.

Everest Reinsurance
Holdings, Inc. (“Holdings”), a Delaware
company and direct
subsidiary of Everest
Underwriting
Group
(Ireland)
Limited (“
(“Holdings
Ireland”),
which
is
a
direct
subsidiary
of
Everest
Re
Group,
Ltd.
(“Group”),
through its
subsidiaries, principally
provides property
and casualty
reinsurance and
insurance in
the United
States
of America and internationally.
As used in this document, “Company” means Holdings and its subsidiaries.

The accompanying
consolidated financial
statements
have been prepared
in conformity
with accounting principles
generally accepted in
the United States
of America (“GAAP”).
The statements
include all of the
following domestic
and foreign direct
and indirect subsidiaries
of the Company:
Everest
Reinsurance Company (“
(“Everest Re”),
Everest
Global
Services,
Inc. (“
(“Global
Services”),
Everest
National
Insurance
Company (“
(“Everest
National”),
Everest
Indemnity
Insurance
Company (“
(“Everest
Indemnity”),
Everest
Security
Insurance
Company (“
(“Everest
Security”),
Everest
Reinsurance
Company
–
Escritório
de
Representação
No
Brasil
Ltda. (“
(“Everest
Brazil”),
Mt.
Whitney
Securities,
Inc.,
Everest
Denali
Insurance
Company (“
(“Everest
Denali”),
Everest
Premier
Insurance
Company (“
(“Everest
Premier”), Everest
Specialty
Underwriters
Services,
LLC,
Everest
International
Assurance,
Ltd. (“
(“Everest
Assurance”), Specialty
EverSports
&
Entertainment
Insurance, Group,
Inc.
(“Specialty”),
Specialty
Insurance
Group
-
Leisure
and
Entertainment
Risk Purchasing
Group LLC (“
(“Specialty RPG”),
Salus Systems
(“Salus”) and
Mt. McKinley
Managers,
L.L.C. All intercompany
accounts and transactions have
been eliminated. All amounts are reported
in U.S. dollars.

During

The Company
consolidates
the fourth quarter results
of 2018, Global Services was contributed operations
and financial
position of
all voting
interest
entities ("VOE")
in
which
the
Company
has
a
controlling
financial
interest
and
all
variable
interest
entities
("VIE")
in
which
the
Company
is considered
to Holdings from its parent company, Holdings Ireland.  be
the primary
beneficiary.
The operating results consolidation
assessment,
including the
determination
as to whether an entity qualifies as a VIE or VOE, depends
on the facts and circumstances surrounding
each entity.
The
preparation
of
financial
statements
in
conformity
with
GAAP
requires
management
to
make
estimates
and
assumptions
that
affect
the
reported
amounts
of
assets
and
liabilities
(and
disclosure
of
contingent
assets
and
liabilities) at
the date
of Global Services for the fourth quarter of 2018 are included within the Company’s consolidated financial statements. 

The preparation of

financial statements in conformity with GAAP requires management to make estimates
and assumptions that affect the
reported amounts of assets and liabilities (and disclosure of contingent assets and liabilities) at the date of the financial statements and the reported amounts
of revenues
and expenses
during the
reporting period.
Ultimate actual results could differ,
possibly materially,
from those estimates.

All intercompany accounts

Certain
reclassifications
and
format
changes
have
been
made
to
prior
years’
amounts
to
conform
to
the
2022
presentation.
Out of Period Adjustments
For the
year ended
December
31, 2021,
the Company
recorded
out of
period adjustments
relating
to prior
years
that decreased
net income by
$46 million. The
out of period
adjustments are
related to
the accounting
for certain
affiliated reinsurance agreements.
B.
Investments and transactions have been eliminated. 

Certain reclassifications Cash.

Fixed
maturity
securities
designated
as
available
for
sale
reflect
unrealized
appreciation
and format changes have been made to prior years’ amounts to conform to the 2019 presentation.  

B.  Investments.

Fixed maturity investments available for sale, at market value, reflect unrealized appreciation and

depreciation,
as
a
result of temporary changes in marketfair value
during the period, in stockholder’s
equity, net of income
taxes in “accumulated
other
comprehensive
income
(loss)”
in
the consolidated
balance
sheets.
The Company
reviews
all
of its
fixed
maturity,
available
for
sale
securities
whose
fair
value
has
fallen
below
their
amortized
cost
at
the
time
of
review.
The
Company
then
assesses
whether
the
decline
in
value
is
due
to
non-credit
related
or
credit
related
factors.
In
making
its
assessment,
the
Company
evaluates
the
current
market
and
interest
rate
environment
as
well
as
specific issuer
information.
Generally,
a
change
in
a
security’s
value
caused
by
a
change
in
the
market,
interest
rate
or
foreign
exchange
environment
does
not
constitute
a
credit
impairment,
but
rather
a
non-credit
related
F-9
decline
in
fair
value.
Non-credit
related
declines
in
fair
value
are
recorded
as
unrealized
losses
in
accumulated
other comprehensive
income (loss)”.
If the Company
intends to
sell the impaired
security or is
more likely
than not
to
be
required
to
sell
the
security
before
an
anticipated
recovery
in
value,
the
Company
records
the
entire
impairment
in
net
gains
(losses)
on
investments
in
the
Company’s
consolidated
statements
of
operations
and
comprehensive income
(loss). If the
Company determines
that the
decline is credit
related and
the Company
does
not have
the intent
to
sell the
security; and
it is
more
likely
than
not that
the Company
will not
have
to
sell the
security before recovery
of its cost basis,
the Company establishes
a credit allowance equal
to the estimated
credit
loss and
is recorded
in net
gains (losses)
on investments
in the
Company’s
consolidated statements
of operations
and
comprehensive
income
(loss).
The
determination
of
credit-related
or
non-credit-related
impairment
is
first
based
on
an
assessment
of
qualitative
factors,
which
may
determine
that
a
qualitative
analysis
is
sufficient
to
support
the conclusion
that
the present
value
of expected
cash
flows
equals or
exceeds
the security’s
amortized
cost
basis.
However,
if
the
qualitative
assessment
suggests
a
credit
loss
may
exist,
a
quantitative
assessment
is
performed,
and
the
amount
of
the
allowance
for
a
given
security
will
generally
be
the
difference
between
a
discounted
cash
flow
model
and
the
Company’s
carrying
value.
The
Company
will
adjust
the
credit
allowance
account
for
future
changes
in
credit
loss
estimates
for
a
security
and
record
this
adjustment
through
net
gains
(losses) on investments in the consolidated balance sheets.  Fixed maturity, equity securities and other invested assets carried at fair value reflect fair value re-measurements as net realized capital gains and losses in the Company’s
consolidated statements
of operations and comprehensive income
(loss).
Fixed maturity
securities designated
as held to
maturity consist
of debt securities
for which the
Company has both
the
positive
intent
and
ability
to
hold
to
maturity
or
redemption
and
are
reported
at
amortized
cost,
net
of the
current
expected
credit
loss
allowance.
Interest
income
for
fixed
maturity
securities
held
to
maturity
is
determined
in the
same manner
as interest
income for
fixed maturity
securities available
for sale.
The Company records changes in fair value
evaluates
fixed
maturity
securities
classified
as
held
to
maturity
for its fixed maturities-available
current
expected
credit
losses
utilizing
risk
characteristics
of
each
security,
including
credit
rating,
remaining
time
to
maturity,
adjusted
for sale,
prepayment
considerations,
and subordination
level, and
applying default
and recovery
rates,
which include
the incorporation
of
historical
credit
loss
experience
and
macroeconomic
forecasts,
to
develop
an
estimate
of
current
expected
credit losses.
The
Company
does
not
create
an
allowance
for
uncollectible
interest.
If
interest
is
not
received
when
due,
the
interest receivable
is immediately
reversed and
no additional
interest is
accrued. If future
interest
is received
that
has not been accrued, it is recorded as income at market value through stockholder’s equity, net
that time.
The
Company’s
assessments
are
based
on
the
issuers’
current
and
expected
future
financial
position,
timeliness
with respect
to interest
and/or principal
payments, speed
of taxes in accumulated other comprehensive income (loss) since cash flows from these investments will be primarily repayments
and any
applicable credit
enhancements
or
breakeven
constant
default
rates
on
mortgage-backed
and
asset-backed
securities,
as
well
as
relevant
information provided by
rating agencies, investment
advisors and analysts.
Retrospective adjustments
are employed to recalculate
the values of asset-backed
securities.
All of the Company’s
asset-backed
and
mortgage-backed
securities
have
a
pass-through
structure.
Each
acquisition
lot
is
reviewed
to
recalculate
the effective
yield.
The recalculated
effective
yield is
used to settle its reserve
derive
a book
value
as if
the new
yield
were
applied
at
the
time
of
acquisition.
Outstanding
principal
factors
from
the
time
of
acquisition
to
the
adjustment
date
are
used
to
calculate
the
prepayment
history
for
all
applicable
securities.
Conditional
prepayment
rates,
computed
with
life
to
date
factor
histories
and
weighted
average
maturities,
are
used
in
the
calculation of projected prepayments
for lossespass-through security types.
For
equity
securities,
the
Company
reflects
changes
in
fair
value
as
net
gains
(losses)
on
investments.
Interest
income on
all fixed
maturities and loss adjustment expense liabilities.  The Company anticipates holding these investments for an extended period as the cash flow from interest and maturities will fund the projected payout of these liabilities.  As of January 1, 2018, the Company carries
dividend income
on all of its
equity securities at fair value.  For equity securities, at fair value, the Company reflects changes in value as net realized capital gains and losses since these securities may be sold in the near term depending on financial market conditions.  Interest income on all fixed maturities and dividend income on all equity securities
are included
as part
of net
investment
income in the consolidated statements
of operations and comprehensive
income (loss).  Unrealized losses on fixed maturities, which
Short-term
investments
comprise
securities
due
to
mature
within
one
year
from
the
date
of
purchase
and
are deemed other-than-temporary and related to the credit quality of a security, are charged to net income (loss) as net realized capital losses.  Short-term investments are
stated at cost, which approximates market
fair value.  Realized gains or losses on

F-7

Realized

gains

or
losses
on
sales
of
investments
are
determined
on
the
basis
of
identified
cost.
For
some non-publicly
non-
publicly traded
securities, market
prices are determined
through the use
of pricing models
that evaluate
securities
F-10
relative
to
the
U.S.
Treasury
yield
curve,
taking
into
account
the
issue
type,
credit
quality,
and
cash
flow
characteristics
of
each
security.
For
other
non-publicly
traded
securities,
investment
managers’
valuation
committees
will
estimate
fair
value,
and
in
many
instances,
these
fair
values
are
supported
with
opinions
from
qualified independent
third
parties. For
publicly
traded
securities, market fair
value
is based
on quoted
market
prices or
valuation
models that
use observable
market
inputs. When
a sector
of the
financial markets
is inactive
or illiquid,
the Company
may use
its own
assumptions about
future cash
flows and
risk-adjusted
discount rates
to determine
fair value.  Retrospective adjustments
Other
invested
assets
include
limited
partnerships,
company-owned
life
insurance
and
rabbi
trusts.
Limited
partnerships
are
accounted
for
under
the
equity
method of
accounting,
which
can
be recorded
on
a
monthly
or
quarterly lag. Company
-owned life insurance
policies are employed to recalculate carried
at policy cash
surrender value
and changes in
the values of asset-backed securities.  Each acquisition lot is reviewed to recalculate the effective yield.  The recalculated effective yield is used to derive a book
policy cash surrender value as if the new yield were applied at the time of acquisition.  Outstanding principal factors from the time of acquisition to the adjustment date are used to calculate the prepayment history for all applicable securities.  Conditional prepayment rates, computed with life to date factor histories and weighted average maturities, are used to effect the calculation of projected and prepayments for pass-through security types.  included within
net investment income.
Other invested assets, include limited partnerships, rabbi trusts and, prior to July 1, 2018, a private placement liquidity sweep facility. Cash contributions to and cash distributions from the sweep facility were reported gross in cash flows from investing activities in the consolidated statements of cash flows. Limited partnerships are accounted for under the equity method of accounting, which can be recorded on a monthly or quarterly lag.  Other invested assets,
at fair value, are
comprised of convertible
preferred stock
of Everest
Preferred International
Holdings,
Ltd. (“
(“Preferred
Holdings”),
an
affiliated
entity.
The
fair
values
of
the
Preferred
Holdings
convertible
preferred stock
at December 31, 20192022 and December 31, 2018 2021
were determined using a pricing model.

Cash
includes
cash
on
hand.
Restricted
cash
is
included
within
cash
in
the
consolidated
balance
sheets
and
represents
amounts
held
for
the
benefit
of
third
parties
that
is
legally
or
contractually
restricted
as
to
its
withdrawal or usage. Amounts
include trust funds set up for the benefit of ceding companies.
C.  Uncollectible
Allowance for Premium Receivable Balances.

and Reinsurance Recoverables.
The Company
applies the
Current Expected
Credit Losses
(CECL) methodology
for estimating
allowances for
credit
losses.
The
Company
evaluates
the
recoverability
of
its
premiums
and
reinsurance
recoverable
balances
and
establishes an allowance for estimated
uncollectible amounts.
Premiums
receivable,
excluding
receivables
for
losses
within
a
deductible
and
retrospectively-rated
policy
premiums,
are
primarily
comprised
of premiums
due from
policyholders/
cedants.
Balances are
considered
past
due when
amounts that
have been
billed are
not collected
within contractually
stipulated
time periods.
For these
balances, the
allowance is
estimated based
on recent
historical credit
loss and
collection experience,
adjusted
for
current economic conditions and reasonable
and supportable forecasts, when appropriate.
A portion
of the
Company's
commercial
lines business
is written
with large
deductibles
or under
retrospectively-
rated plans.
Under some commercial
insurance contracts
with a large
deductible, the Company
is obligated
to pay
the claimant the full
amount of the claim
and the Company
is subsequently reimbursed
by the policyholder for
the
deductible amount.
As such,
the Company
is subject
to
credit
risk until
reimbursement
is made.
Retrospectively-
rated policies are policies whereby
the ultimate premium is adjusted
based on actual losses incurred.
Although the
premium
adjustment
feature
of
a
retrospectively-rated
policy
substantially
reduces
insurance
risk
for
the
Company,
it presents credit
risk to the Company.
The Company’s
results of operations
could be adversely
affected
if
a
significant
portion
of
such
policyholders
failed
to
reimburse
the
Company
for
the
deductible
amount
or
the
amount of additional premium owed under
retrospectively-rated
policies. The Company provides reserves manages these
credit risks
through
credit
analysis,
collateral
requirements,
and
oversight.
The
allowance
for uncollectible reinsurance recoverable
receivables
for
loss
within
a
deductible and
retrospectively-rated
policy premiums
is recorded
within other
assets in
the consolidated
balance
sheets. The allowance is estimated
as the amount of the
receivable exposed to
loss multiplied by estimated
factors
for
probability
of
default.
The
probability
of
default
is
assigned
based
on
each
policyholder's
credit
rating,
or
a
rating is
estimated if
no external
rating is
available. Credit
ratings are
reviewed and
updated at
least annually.
The
exposure amount is
estimated net of collateral
and premium receivable balances based on management’s assessmentother offsets, considering
the nature of the collectability collateral,
potential
future
changes
in
collateral
values,
and
historical
loss
information
for
the
type
of
collateral
obtained.
The
probability
of
default
factors
are
historical
corporate
defaults
for
receivables
with
similar
durations
estimated
through
multiple
economic
cycles.
Credit
ratings
are
forward-looking
and
consider
a
variety
of
economic
outcomes.
The
Company's
evaluation
of
the
required
allowance
for
receivables
for
loss
within
a
deductible
and
retrospectively-rated
policy
premiums
considers
the
current
economic
environment
as
well
as
the
probability-
weighted macroeconomic scenarios.
F-11
The
Company
records
total
credit
loss
expenses
related
to
premiums
receivable
in
Other
underwriting
expenses
and
records
credit
loss
expenses
related
to
deductibles
in
Incurred
losses
and
loss
adjustment
expenses
in
the
Company’s consolidated
statements of operations
and comprehensive income (loss).
The
allowance
for
uncollectible
reinsurance
recoverable
reflects
management’s
best
estimate
of
reinsurance
cessions that
may be
uncollectible in
the future
due to
reinsurers’
unwillingness or
inability to
pay.
The allowance
for uncollectible
reinsurance
recoverable
comprises an
allowance
and an
allowance
for
disputed
balances. Based
on
this
analysis,
the
Company
may
adjust
the
allowance
for
uncollectible
reinsurance
recoverable
or
charge
off
reinsurer balances that are determined
to be uncollectible.
Due to
the inherent
uncertainties
as to
collection and
the length
of time
before
reinsurance
recoverable
become
due, it
is possible
that future
adjustments
to the
Company’s
reinsurance
recoverable,
net of
the allowance,
could
be required,
which
could
have
a
material
adverse
effect
on
the
Company’s
consolidated
results
of operations
or
cash flows in a particular quarter or annual period.
The
allowance
is
estimated
as
the
amount
of
reinsurance
recoverable
exposed
to
loss
multiplied
by
estimated
factors
for
the
probability
of
default.
The
reinsurance
recoverable
exposed
is
the
amount
of
reinsurance
recoverable net
of collateral
and other offsets,
considering the nature
of the outstanding balances.  Such reservescollateral,
potential future
changes in
collateral
values,
and
historical
loss
information
for
the
type
of
collateral
obtained.
The
probability
of
default
factors are presented historical
insurer and reinsurer
defaults for liabilities
with similar durations
to the reinsured liabilities
as
estimated through
multiple economic cycles. Credit
ratings are forward
-looking and consider a
variety of economic
outcomes. The
Company's evaluation
of the required
allowance for
reinsurance
recoverable
considers the
current
economic environment as well
as macroeconomic scenarios.
The
Company
records
credit
loss
expenses
related
to
reinsurance
recoverable
in
Incurred
losses
and
loss
adjustment
expenses
in the
Company’s
consolidated
statements
of operations
and comprehensive
income (loss).
Write-offs of
reinsurance recoverable
and any related
allowance are recorded
in the table below for period in which
the periods indicated. 

balance is

 

 

 

 

Years Ended December 31,

(Dollars in thousands)

 

 

 

2019

 

2018

Reinsurance recoverable and premium receivables

 

 

 

$

25,163

 

$

25,163

         
deemed uncollectible.

D.
Deferred Acquisition Costs.

Acquisition
costs,
consisting
principally
of
commissions
and
brokerage
expenses
and
certain
premium
taxes
and
fees incurred at
the time a contract
or policy is issued and
that vary with and
are directly related
to the Company’s
reinsurance
and
insurance
business,
are
deferred
and
amortized
over
the
period
in
which
the
related
premiums
are earned.
Deferred acquisition
costs are
limited to
their estimated
realizable value
by line
of business
based on
the related unearned premiums, anticipated
claims and claim expenses and anticipated
investment income.  Deferred acquisition costs amortized to income are presented in the table below for the periods indicated. 

 

Years Ended December 31,

(Dollars in thousands)

2019

 

2018

 

2017

Deferred acquisition costs

$

1,270,053

 

$

1,141,714

 

$

210,925

         
E.

E.  Reserve for Losses and Loss Adjustment Expenses.

The
reserve
for
losses
and
loss
adjustment
expenses
(“LAE”)
is
based
on
individual
case
estimates
and
reports
received
from
ceding
companies.
A
provision
is
included
for
losses
and
LAE
incurred
but
not
reported
(“IBNR”)
based
on past
experience.  A provision is
Provisions
are
also included
for certain
potential
liabilities, including
those relating
to
asbestos and
environmental
(“A&E”)
exposures, catastrophe
exposures,
COVID-19 and
other exposures,
for which
liabilities cannot
be estimated
using traditional
reserving techniques.
See also
Note 3.
The reserves
are reviewed
periodically
and
any
changes
in
estimates
are
reflected
in
earnings
in
the
period
the
adjustment
is
made.
The
Company’s
loss
and
LAE
reserves
represent
management’s
best
estimate
of
the
ultimate
liability.
Loss
and
LAE
reserves
are
presented
gross
of
reinsurance
recoverable
and
incurred
losses
and
LAE
are
presented
net
of
reinsurance.
Accruals
for
commissions
are
established
for
reinsurance
contracts
that
provide
for
the
stated
commission
percentage
to
increase
or decrease
based
on the
loss experience
of the
contract.
Changes
in estimates
for
such
arrangements
are reflected in earnings in the period the adjustment is made.  The Company’s loss and LAE reserves represent management’s best estimate of the ultimate liability.  Loss and LAE reserves are presented gross of reinsurance receivables and incurred losses and LAE are presented net of reinsurance.

F-8

recorded
as
commission

Accruals expense.

Commission
accruals
for commissions are established for reinsurance
contracts that provide for the stated commission percentage to increase or decrease based on the loss experience of the contract.  Changes in estimates for such arrangements are recorded as commission expense.  Commission accruals for contracts
with
adjustable
features
are estimated based on expected
loss and LAE.

F-12
F.
Premium Revenues.

Written
premiums
are
earned
ratably
over
the
periods
of
the
related
insurance
and
reinsurance
contracts.
Unearned premium reserves
are established
relative to
the unexpired
contract period.
For reinsurance
contracts,
such
reserves
are
established
based
upon
reports
received
from
ceding
companies
or estimated
using
pro
rata
methods
based
on
statistical
data.
Reinstatement
premiums
represent
additional
premium received on reinsurance coverages, most prevalently catastrophe related, when limits have been depleted under the original reinsurance contract and additional coverage is granted.  Written
recognized
and earned premiums
at
the time
a loss
event
occurs
and losses
are
recorded,
most
prevalently
catastrophe
related,
when
limits
have
been
depleted
under
the
original
reinsurance
contract
and
additional
coverage
is
granted.
The
recognition
of
reinstatement
premiums
is
based
on
estimates
of
loss
and
LAE,
which
reflects
management’s
judgement.
Written
and
earned
premiums
and
the
related
costs,
which
have
not
yet
been
reported
to
the
Company,
are estimated and accrued.
Premiums are net of ceded reinsurance.

G.
Prepaid Reinsurance Premiums.

Prepaid
reinsurance
premiums
represent
unearned
premium
reserves
ceded
to
other
reinsurers.
Prepaid
reinsurance
premiums
for
any
foreign
reinsurers
comprising
more
than
10
%
of
the
outstanding
balance
at
December 31, 2019
2022 were
collateralized
either through
collateralized
trust arrangements,
rights of
offset or
letters
of credit, thereby limiting the credit risk to
the Company.

H.
Income Taxes.

The
Company
and
its wholly-owned
wholly
owned
subsidiaries
file
a
consolidated
U.S.
Corporation
Income
Tax
Return.
The
Company’s
foreign
subsidiaries
and
foreign
branches
of
its
U.S.
subsidiaries
file
country
and
local
corporation
income tax
returns
as required.
Deferred
U.S.
federal
and foreign branches of its U.S. subsidiaries file country and local corporation income tax returns as required. Deferred U.S. federal and foreign
income taxes
have
been recorded
to recognize
the
tax
effect
of
temporary
differences
between
the
GAAP
and
income
tax
bases
of
assets
and
liabilities,
which
arise because of differences between
the financial reporting and income tax rules.

I.  Foreign Currency.

As a global entity, an accounting policy,
the Company transacts business in numerous currencies through business units located aroundhas adopted the world.  The base transactional currencyaggregate
portfolio approach for releasing
disproportionate
income tax effects from
Accumulated Other Comprehensive Income.
I.
Foreign Currency.
The
Company
transacts
business
in
numerous
currencies
through
business
units
located
around
the
world.
The
base
transactional
currency
for
each
business
unit
is
determined
by
the
local
currency
used
for
most
economic
activity in that
area.
Movements in
exchange rates
related to
foreign currency
denominated monetary
assets and
liabilities
at
the
business
units
between
the
original
currency
and
the
base
currency
are
recorded
through
the
consolidated
statements
of
operations
and
comprehensive
income
(loss)
in
other
income
(expense),
except
for
currency
movements
related
to
available
for
sale investments,
fixed
maturity
securities,
which
are
excluded
from
net
income
(loss) and accumulated in stockholder’s
equity, net of deferred
taxes.

The business units’ base currency financial statements
are translated to
U.S. dollars using the exchange
rates at the
end
of
period
for
the
balance
sheets
and
the
average
exchange
rates
in
effect
for
the
reporting
period
for
the
income statements.
Gains and
losses resulting
from translating
the foreign
currency
financial statements,
net of
deferred income taxes,
are excluded from net income
loss and accumulated in stockholder’s
equity.

J.
Segmentation.

The Company,
through its subsidiaries, operates
in three
two
segments: U.S. Reinsurance International and Insurance.
See also Note 17.

K.
Retroactive Reinsurance.

Premiums on
ceded retroactive
contracts
are earned
when written
with a
corresponding
reinsurance
recoverable
established for the
amount of reserves
ceded.
The initial gain,
if applicable, is deferred
and amortized into
income
over
an
actuarially
determined
expected
payout
period.
Any
future
loss
is
recognized
immediately
and
charged
against earnings.

F-13
L. Application of Recently Issued Accounting Standard Changes.

Simplification

Guidance.
The
Company
did
not
adopt
any
new
accounting
standards
that
had
a
material
impact
during
the
year
ended
December 31,
2022.
The Company
assessed the
adoption impacts
of Disclosure Requirements.  In August 2018, the Securities and Exchange Commission (“SEC”) recently
issued Final Rule Release #33-10532 (“the Rule”) which addresses the simplification of the SEC’s disclosure requirements for quarterly and annual financial reports.  The main change addressed accounting
standards
by the Rule
Financial
Accounting
Standards
Board
on
the
Company’s
consolidated
financial
statements
as
well
as
material
updates
to
previous
assessments,
if
any,
from
the
Company’s
Annual
Report
on
Form
10-K
for
the
year
ended
December 31, 2021.
There were no
accounting standards
issued during 2022 that is

F-9

are expected to

applicable to the Company is a new requirement to disclose changes in equity by line item with subtotals for each interim reporting period on the Statements of Changes in Shareholders’ Equity.  The Rule became effective for all financial reports filed after November 5, 2018 (30 days after its publication in the Federal Register), except for the additional requirement for the Statements of Changes in Shareholders’ Equity which was to be implemented for first quarter 2019 reporting. The Company has adopted the portions of the Rule that became effective November 5, 2018.  The portion of the Rule related to the new requirement for the Statements of Changes in Shareholders’ Equity was adopted by the Company in the first quarter of 2019.

Accounting for Cloud Computing Arrangement.  In August 2018, The Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2018-15, which outlines accounting for implementation costs of a cloud computing arrangement that is a service contract.  This guidance requires that implementation costs of a cloud computing arrangement that is a service contract must be capitalized and expensed in accordance with the existing provisions provided in Subtopic 350-40 regarding development of internal use software.  In addition, any capitalized implementation costs should be amortized over the term of the hosting arrangement.  The guidance is effective for annual reporting periods beginning after December 15, 2019 and interim periods within that annual reporting period.  The Company does not expect the adoption of ASU 2018-15 to have a material

impact on its financial statements.

Accounting for Deferred Taxes in Accumulated Other Comprehensive Income (AOCI).  In February 2018, FASB issued ASU 2018-02, which outlines guidance on the treatment of trapped deferred taxes contained within AOCI on the consolidated balance sheets.  The new guidance allows the amount of trapped deferred taxes in AOCI, resulting from the change in the U.S. tax rate from 35% to 21% upon enactment Holdings.

2.
INVESTMENTS
The
following
tables
show
amortized
cost,
allowance
for
credit
losses,
gross
unrealized
appreciation,
gross
unrealized
depreciation
and
fair
value
of
available
for
sale,
fixed
maturity
securities
available
for
sale
as
of
the Tax Cuts and Jobs Act (“TCJA”), to be reclassed as part of retained earnings in the consolidated balance sheets.  The guidance is effective for annual and interim reporting periods beginning after December 15, 2018, but early adoption is allowed.  The Company decided to early adopt the guidance as of
dates indicated:
At December 31, 2017.  The adoption resulted2022
Amortized
Allowances for
Unrealized
Unrealized
Fair
(Dollars in a reclassmillions)
Cost
Credit Loss
Appreciation
Depreciation
Value
Fixed maturity securities – available for sale
U.S. Treasury securities and obligations of $325 thousand between AOCI
U.S. government agencies and retained earnings during the fourth quartercorporations
$
575
$
-
$
-
$
(40)
$
535
Obligations of 2017.  As an accounting policy, the Company has adopted the aggregate portfolio approachU.S. states and political subdivisions
444
-
2
(32)
413
Corporate securities
3,913
(45)
14
(322)
3,561
Asset-backed securities
4,111
-
5
(165)
3,951
Mortgage-backed securities
Commercial
569
-
-
(59)
509
Agency residential
1,792
-
3
(167)
1,628
Non-agency residential
3
-
-
-
3
Foreign government securities
696
-
2
(61)
637
Foreign corporate securities
1,597
(1)
4
(167)
1,433
Total fixed maturity securities - available for releasing disproportionate income tax effects from AOCI.

Accounting for Impact on Income Taxessale

$
13,699
$
(46)
$
30
$
(1,013)
$
12,671
(Some amounts may not reconcile due to Tax Reform.  Inrounding.)
At December 2017, the SEC issued Staff Accounting Bulletin (“SAB”) 118, which provides guidance on the application of FASB Accounting Standards Codification (“ASC”) Topic 740, Income Taxes, due to the enactment of TCJA.  SAB 118 became effective upon release.  The Company has adopted the provisions of SAB 118 with respect to measuring the tax effects31, 2021
Amortized
Allowances for the modifications to the determination of tax basis loss reserves.  In 2018, the Company recorded adjustments to the amount of tax expense it recorded
Unrealized
Unrealized
Fair
(Dollars in 2017 with respect to the TCJA as estimated amounts were finalized, which did not have a material impact on the Company’s financial statements.

Amortization of Bond Premium.  In March 2017, FASB issued ASU 2017-08, which outlines guidance on the amortization period for premium on callable debt securities.  The new guidance requires that the premium on callable debtmillions)

Cost
Credit Loss
Appreciation
Depreciation
Value
Fixed maturity securities be amortized through the earliest call date rather than through the maturity date of the callable security.  The guidance is effective for annual and interim reporting periods beginning after December 15, 2019.  The adoption of ASU 2017-08 did not have a material impact on the Company’s financial statements.

Presentation and Disclosure of Net Periodic Benefit Costs.  In March 2017, FASB issued ASU 2017-07, which outlines guidance on the presentation of net periodic costs of benefit plans.  The new guidance requires that the service cost component of net periodic benefit costs be reported within the same line item of the statements of operations as other compensation costs are reported.  Other components of net periodic benefit costs should be reported separately.  Footnote disclosure is required to state within which line items of the statements of operations the components are reported.  The guidance is effective for annual and interim reporting periods beginning after December 15, 2017.  The Company adopted the guidance effective January 1, 2018.  The adoption of ASU 2017-07 did not have a material impact on the Company’s financial statements.

Disclosure of Restricted Cash.  In November 2016, FASB issued ASU 2016-18 and in August 2016, FASB issued ASU 2016-15, which outlines guidance on the presentation in the statements of cash flows of changes in restricted cash.  The new guidance requires that the statements of cash flows should reflect all changes in

F-10

cash, cash equivalents and restricted cash in total and not segregated individually.  The guidance is effective for annual and interim reporting periods beginning after December 15, 2017.  The Company adopted the guidance effective January 1, 2018.  The adoption of ASU 2016-18 and ASU 2016-15 did not have a material impact on the Company’s financial statements.

Intra-Entity Asset Transfers.  In October 2016, FASB issued ASU 2016-16, which outlines guidance on the tax accounting for intra-entity asset sales and transfers, other than inventory.  The new guidance requires that reporting entities recognize tax expense from the intra-entity transfer of an asset in the seller’s tax jurisdiction at the time of transfer and recognize any deferred tax asset in the buyer’s tax jurisdiction at the time of transfer.  The guidance is effective for annual and interim reporting periods beginning after December 15, 2017.  The Company adopted the guidance effective January 1, 2018.  The adoption of ASU 2016-16 did not have a material impact on the Company’s financial statements.

Valuation of Financial Instruments.  In June 2016, FASB issued ASU 2016-13, (and has subsequently issued related guidance and amendments in ASU 2019-11 and 2019-10 in November 2019) which outline guidance on the valuation of and accounting for assets measured at amortized cost and– available for sale debt securities. 

U.S. Treasury securities and obligations of
U.S. government agencies and corporations
$
657
$
-
$
9
$
(3)
$
663
Obligations of U.S. states and political subdivisions
559
-
29
(1)
587
Corporate securities
4,036
(19)
89
(31)
4,075
Asset-backed securities
3,464
(8)
21
(11)
3,466
Mortgage-backed securities
Commercial
586
-
21
(4)
603
Agency residential
1,255
-
16
(10)
1,261
Non-agency residential
4
-
-
-
4
Foreign government securities
677
-
22
(7)
692
Foreign corporate securities
1,494
-
34
(18)
1,510
Total fixed maturity securities - available for sale
$
12,733
$
(27)
$
241
$
(86)
$
12,860
(Some amounts may not reconcile due
to rounding.)
F-14
The carryingfollowing table
shows amortized
cost, allowance for
credit losses, gross
unrealized appreciation/(depreciation)
and fair value of assets measured at amortized cost will now be presented as the amount expectedfixed maturity
securities held to be collected on the financial asset (amortized cost less an allowance for credit losses valuation account).  Available for sale debt securities will now record credit losses through an allowance for credit losses, which will be limited to the amount by which fair value is below amortized cost.  The guidance is effective for annual and interim reporting periods beginning after December 15, 2019. The Company does not expect the adoption of ASU 2016-13, ASU 2019-11 and ASU 2019-10 to have material impact on its financial statements.

Leases.  In February 2016, FASB issued ASU 2016-02 (and subsequently issued ASU 2018-11 in July, 2018) which outline new guidance on the accounting for leases.  The new guidance requires the recognition of lease assets and lease liabilities on the balance sheets for most leases that were previously deemed operating leases and required only lease expense presentation in the statements of operations.  The guidance is effective for annual and interim reporting periods beginning after December 15, 2018.  The Company adopted ASU 2016-02 effective January 1, 2019 and elected to utilize a cumulative-effect adjustment to the opening balance of retained earnings for the year of adoption.  Accordingly, the Company’s reporting for the comparative periods prior to adoption continue to be presented in the financial statements in accordance with previous lease accounting guidance.  The Company also elected to apply the package of practical expedients applicable to the Company in the updated guidance for transition for leases in effect at adoption.  The Company did not elect the hindsight practical expedient to determine the lease term of existing leases (e.g. The Company did not re-assess lease renewals, termination options nor purchase options in determining lease terms).  The adoption of the updated guidance resulted in the Company recognizing a right-of-use asset of $60,325 thousand as part of other assets and a lease liability of $66,551 thousand as part of other liabilities in the consolidated balance sheet, as well as de-recognizing the liability for deferred rent that was required under the previous guidance.  The cumulative effect adjustment to the opening balance of retained earnings was zero. The adoption of the updated guidance did not have a material effect on the Company’s results of operations or liquidity.

Recognition and Measurement of Financial Instruments.  In January 2016, the FASB issued ASU 2016-01, which outlines revised guidance on the accounting for equity investments.  The new guidance states that all equity investments in unconsolidated entities will be measured at fair value, with the change in value being recorded through the income statement rather than being recorded within other comprehensive income.  The updated guidance is effective for annual and interim reporting periods beginning after December 15, 2017.  The Company adopted the guidance effective January 1, 2018.  The adoption of ASU 2016-01 resulted in a cumulative change adjustment of $2,447 thousand between AOCI and retained earnings, which is disclosed separately within the consolidated statement of changes in shareholders equity.

Revenue Recognition.  In May 2014, the FASB issued ASU 2014-09 and in August 2015, FASB issued ASU 2015-14, which outline revised guidance on the recognition of revenue arising from contracts with customers.  The new guidance states that reporting entities should apply certain steps to determine when revenue should be recognized, based upon fulfillment of performance obligations to complete contracts.  The updated guidance is effective for annual and interim reporting periods beginning after December 15, 2017.  The

F-11

Company adopted the guidance effective January 1, 2018.  The adoption of ASU 2014-09 and ASU 2015-14 did not have a material impact on the Company’s financial statements.

Any issued guidance and pronouncements, other than those directly referenced above, are deemed by the Company to be either not applicable or immaterial to its financial statements.

2.  INVESTMENTS

The amortized cost, market value and gross unrealized appreciation and depreciation of available for sale, fixed maturity investments, carried at market value and other-than-temporary impairments (“OTTI”) in accumulated other comprehensive income (“AOCI”) are as follows for the periods indicated:

 

At December 31, 2019

 

Amortized

 

Unrealized

 

Unrealized

 

Market

 

OTTI in AOCI

(Dollars in thousands)

Cost

 

Appreciation

 

Depreciation

 

Value

 

(a)

Fixed maturity securities 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

U.S. Treasury securities and obligations of

  U.S. government agencies and corporations

$

768,374

 

$

10,128

 

$

(987)

 

$

777,515

 

$

-

Obligations of U.S. states and political

  subdivisions

 

506,347

 

 

29,651

 

 

(87)

 

 

535,911

 

 

-

Corporate securities

 

2,777,097

 

 

70,898

 

 

(26,438)

 

 

2,821,557

 

 

245

Asset-backed securities

 

761,607

 

 

5,659

 

 

(1,309)

 

 

765,957

 

 

-

Mortgage-backed securities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Commercial

 

311,961

 

 

17,242

 

 

(154)

 

 

329,049

 

 

-

Agency residential

 

625,612

 

 

19,395

 

 

(320)

 

 

644,687

 

 

-

Non-agency residential

 

1,638

 

 

-

 

 

-

 

 

1,638

 

 

-

Foreign government securities

 

646,149

 

 

18,908

 

 

(7,050)

 

 

658,007

 

 

27

Foreign corporate securities

 

935,640

 

 

31,257

 

 

(9,139)

 

 

957,758

 

 

333

Total fixed maturity securities

$

7,334,425

 

$

203,138

 

$

(45,484)

 

$

7,492,079

 

$

605

F-12

At December 31, 2022

 

At December 31, 2018

 

Amortized

 

Unrealized

 

Unrealized

 

Market

 

OTTI in AOCI

(Dollars in thousands)

Cost

 

Appreciation

 

Depreciation

 

Value

 

(a)

Fixed maturity securities 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

U.S. Treasury securities and obligations of

  U.S. government agencies and corporations

$

2,250,312

 

$

3,573

 

$

(11,088)

 

$

2,242,797

 

$

-

Obligations of U.S. states and political

  subdivisions

 

489,013

 

 

12,915

 

 

(2,839)

 

 

499,089

 

 

440

Corporate securities

 

2,273,581

 

 

12,487

 

 

(69,915)

 

 

2,216,153

 

 

430

Asset-backed securities

 

223,192

 

 

102

 

 

(2,039)

 

 

221,255

 

 

-

Mortgage-backed securities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Commercial

 

135,380

 

 

1,947

 

 

(723)

 

 

136,604

 

 

-

Agency residential

 

149,306

 

 

1,177

 

 

(1,709)

 

 

148,774

 

 

-

Non-agency residential

 

3,115

 

 

3

 

 

(4)

 

 

3,114

 

 

-

Foreign government securities

 

576,540

 

 

14,399

 

 

(11,353)

 

 

579,586

 

 

-

Foreign corporate securities

 

932,310

 

 

13,325

 

 

(30,932)

 

 

914,703

 

 

281

Total fixed maturity securities

$

7,032,749

 

$

59,928

 

$

(130,602)

 

$

6,962,075

 

$

1,151

Amortized

(a)  Represents the amount of OTTI recognized

Allowances for
Unrealized
Unrealized
Fair
(Dollars in AOCI.  Amount includes unrealized gains and losses on impairedmillions)
Cost
Credit Loss
Appreciation
Depreciation
Value
Fixed maturity securities relating– held to changes in the value of suchmaturity
Corporate securities subsequent to the impairment measurement date.

The amortized cost and market value of

$
152
$
(2)
$
-
$
(6)
$
144
Asset-backed securities
634
(6)
2
(15)
614
Mortgage-backed securities
Commercial
7
-
-
-
7
Foreign corporate securities
28
(1)
2
-
28
Total fixed maturity securities - held to maturity
$
820
$
(9)
$
3
$
(22)
$
793
(Some amounts may not reconcile due to rounding.)
The amortized
cost and
fair value of
fixed maturity
securities available
for sale
are shown in
the following tables table
by
contractual maturity.
Mortgage-backed
securities are generally
more likely to
be prepaid than other
fixed maturity
securities.
As
the
stated
maturity
of
such
securities
may
not
be
indicative
of
actual
maturities,
the
totals
for
mortgage-backed and asset-backed
securities are shown separately.
At December 31, 2022
At December 31, 2021
Amortized
Fair
Amortized
Fair
(Dollars in millions)
Cost
Value
Cost
Value
Fixed maturity securities – available for sale
Due in one year or less
$
581
$
563
$
586
$
584
Due after one year through five years
3,684
3,429
3,488
3,527
Due after five years through ten years
2,003
1,760
2,260
2,310
Due after ten years
958
827
1,088
1,106
Asset-backed securities
4,111
3,951
3,464
3,466
Mortgage-backed securities
Commercial
569
509
586
603
Agency residential
1,792
1,628
1,255
1,261
Non-agency residential
3
3
4
4
Total fixed maturity securities - available for sale
$
13,699
$
12,671
$
12,733
$
12,860
(Some amounts may not reconcile due to rounding.)
The amortized
cost and
fair value
of fixed
maturity securities
held to
maturity are
shown in
the following
table by
contractual maturity.
Mortgage-backed securities are
generally more likely
to be prepaid than other fixed maturity
securities.
As
the
stated
maturity
of
such
securities
may
not
be
indicative
of
actual
maturities,
the
totals
for
mortgage-backed and asset-backed
securities are shown separately.

 

At December 31, 2019

 

At December 31, 2018

 

Amortized

 

Market

 

Amortized

 

Market

(Dollars in thousands)

Cost

 

Value

 

Cost

 

Value

Fixed maturity securities – available for sale

 

 

 

 

 

 

 

 

 

 

 

Due in one year or less

$

569,506

 

$

563,730

 

$

511,193

 

$

507,572

Due after one year through five years

 

2,919,966

 

 

2,963,903

 

 

4,271,245

 

 

4,230,451

Due after five years through ten years

 

1,541,695

 

 

1,602,642

 

 

1,177,752

 

 

1,163,831

Due after ten years

 

602,440

 

 

620,473

 

 

561,566

 

 

550,474

Asset-backed securities

 

761,607

 

 

765,957

 

 

223,192

 

 

221,255

Mortgage-backed securities

 

 

 

 

 

 

 

 

 

 

 

Commercial

 

311,961

 

 

329,049

 

 

135,380

 

 

136,604

Agency residential

 

625,612

 

 

644,687

 

 

149,306

 

 

148,774

Non-agency residential

 

1,638

 

 

1,638

 

 

3,115

 

 

3,114

Total fixed maturity securities

$

7,334,425

 

$

7,492,079

 

$

7,032,749

 

$

6,962,075

F-13

F-15
At December 31, 2022
Amortized
Fair
(Dollars in millions)
Cost
Value
Fixed maturity securities – held to maturity:
Due in one year or less
$
5
$
5
Due after one year through five years
63
61
Due after five years through ten years
43
41
Due after ten years
68
65
Asset-backed securities
634
614
Mortgage-backed securities
Commercial
7
7
Total fixed maturity securities - held to maturity
$
820
$
793
(Some amounts may not reconcile due to rounding.)
During
2022,
the
Company
re-designated
a
portion
of
its
fixed
maturity
securities
from
its
fixed
maturity
–
available
for
sale
portfolio
to
its
fixed
maturity
–
held
to
maturity
portfolio.
The
fair
value
of
the
securities
reclassified at the date
of transfer
was $
722
million, net of allowance
for current expected
credit losses, which was
subsequently
recognized
as
the
new
amortized
cost
basis.
As
of
the
date
of
transfer,
these
securities
had
an
unrealized loss
of $
53
million, which remained
in accumulated
other comprehensive
income on the balance
sheet,
and
will
be
amortized
into
income
through
an
adjustment
to
the
yields
of
the
underlying
securities
over
the
remaining life of the securities.
The changes in net unrealized appreciation (depreciation) Company evaluated
fixed maturity securities
classified as held to maturity
for current expected
credit losses as
of
December
31,
2022
utilizing
risk
characteristics
of
each
security,
including
credit
rating,
remaining
time
to
maturity,
adjusted
for
prepayment
considerations,
and
subordination
level,
and
applying
default
and
recovery
rates, which include the Company’s investmentsincorporation
of historical credit loss experience and macroeconomic
forecasts, to develop
an
estimate
of
current
expected
credit
losses.
These
fixed
maturities
classified
as
held
to
maturity
are
of
a
high
credit quality and are all rated investment
grade as of December 31, 2022.
The
changes
in
net
unrealized
appreciation
(depreciation)
for
the
Company’s
investments
are
derived
from
the
following sources for the periods as
indicated:

 

Years Ended December 31,

(Dollars in thousands)

2019

 

2018

Increase (decrease) during the period between

  the market value and cost of investments carried

  at market value, and deferred taxes thereon:

 

 

 

 

 

Fixed maturity securities

$

228,953

 

$

(115,642)

Fixed maturity securities, other-than-temporary

  impairment

 

(546)

 

 

645

Change in unrealized appreciation

  (depreciation), pre-tax

 

228,408

 

 

(114,997)

Deferred tax benefit (expense)

 

(47,959)

 

 

24,187

Deferred tax benefit (expense),

  other-than-temporary impairment

 

115

 

 

(135)

Change in unrealized appreciation (depreciation),

  net of deferred taxes, included in

  stockholder's equity

$

180,562

 

$

(90,945)

Years Ended December 31,

The Company frequently reviews all of its fixed maturity, available for sale securities for declines

(Dollars in marketmillions)
2022
2021
Increase (decrease) during the period between the fair value and focuses its attention on securities whosecost
of investments carried at fair value, has fallen below 80% of their amortized cost at the time of review.  The Company then assesses whether the declineand deferred taxes thereon:
Fixed maturity securities - short term investments
$
(1,187)
$
(242)
Change in value is temporary or other-than-temporary.  In making its assessment, the Company evaluates the current market and interest rate environment as well as specific issuer information.  Generally, a changeunrealized appreciation (depreciation), pre-tax
(1,187)
(242)
Deferred tax benefit (expense)
249
51
Change in a security’s value caused by a change in the market, interest rate or foreign exchange environment does not constitute an other-than-temporary impairment, but rather a temporary decline in market value.  Temporary declines in market value are recorded as unrealized losses in accumulated other comprehensive income (loss).  If the Company determines that the decline is other-than-temporary and the Company does not have the intent to sell the security; and it is more likely than not that the Company will not have to sell the security before recovery of its cost basis, the carrying value of the investment is written down to fair value.  The fair value adjustment that is credit or foreign exchange related is recorded in net realized capital gains (losses) in the Company’s consolidated statements of operations and comprehensive income (loss). The fair value adjustment that is non-credit related is recorded as a component of other comprehensive income (loss)appreciation (depreciation),
net of tax, and isdeferred taxes, included in accumulated other comprehensive income (loss) in the Company’s consolidated balance sheets.  The Company’s assessments are based on the issuers’ current and expected future financial position, timeliness with respectstockholder's equity
$
(938)
$
(191)
(Some amounts may not reconcile due to interest and/or principal payments, speed of repayments and any applicable credit enhancements or breakeven constant default rates on mortgage-backed and asset-backed securities, as well as relevant information provided by rating agencies, investment advisors and analysts. 

Retrospective adjustments are employed to recalculate the values of asset-backed securities. All of the Company’s asset-backed and mortgage-backed securities have a pass-through structure. Each acquisition lot is reviewed to recalculate the effective yield. The recalculated effective yield is used to derive a book value as if the new yield were applied at the time of acquisition. Outstanding principal factors from the time of acquisition to the adjustment date are used to calculate the prepayment history for all applicable securities. Conditional prepayment rates, computed with life to date factor histories and weighted average maturities, are used in the calculation of projected prepayments for pass-through security types.

F-14

rounding.)

F-16
The
tables
below
display
the
aggregate market
fair
value
and
gross
unrealized
depreciation
of
fixed
maturity
securities
available
for
sale, by
security type
and contractual
maturity,
in each
case subdivided
according
to
length
of time
that individual securities had been in a continuous unrealized
loss position for the periods indicated: 

indicated.

 

Duration of Unrealized Loss at December 31, 2019 By Security Type

 

Less than 12 months

 

Greater than 12 months

 

Total

 

 

 

 

Gross

 

 

 

 

Gross

 

 

 

 

Gross

 

Market

 

Unrealized

 

Market

 

Unrealized

 

Market

 

Unrealized

(Dollars in thousands)

Value

 

Depreciation

 

Value

 

Depreciation

 

Value

 

Depreciation

Fixed maturity securities -

  available for sale

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

U.S. Treasury securities and

  obligations of U.S. government

  agencies and corporations

$

8,997

 

$

(141)

 

$

203,780

 

$

(846)

 

$

212,777

 

$

(987)

Obligations of U.S. states and

  political subdivisions

 

4,600

 

 

(38)

 

 

4,518

 

 

(49)

 

 

9,118

 

 

(87)

Corporate securities

 

334,973

 

 

(5,186)

 

 

230,679

 

 

(21,252)

 

 

565,652

 

 

(26,438)

Asset-backed securities

 

159,695

 

 

(887)

 

 

76,351

 

 

(422)

 

 

236,046

 

 

(1,309)

Mortgage-backed securities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Commercial

 

13,083

 

 

(87)

 

 

16,374

 

 

(67)

 

 

29,457

 

 

(154)

Agency residential

 

19,019

 

 

(82)

 

 

17,147

 

 

(238)

 

 

36,166

 

 

(320)

Non-agency residential

 

-

 

 

-

 

 

690

 

 

-

 

 

690

 

 

-

Foreign government securities

 

113,256

 

 

(858)

 

 

109,953

 

 

(6,192)

 

 

223,209

 

 

(7,050)

Foreign corporate securities

 

105,551

 

 

(1,260)

 

 

121,710

 

 

(7,879)

 

 

227,261

 

 

(9,139)

Total fixed maturity securities

$

759,174

 

$

(8,539)

 

$

781,202

 

$

(36,945)

 

$

1,540,376

 

$

(45,484)

 

Duration of Unrealized Loss at December 31, 2019 By Maturity

 

Less than 12 months

 

Greater than 12 months

 

Total

 

 

 

 

Gross

 

 

 

 

Gross

 

 

 

 

Gross

 

Market

 

Unrealized

 

Market

 

Unrealized

 

Market

 

Unrealized

(Dollars in thousands)

Value

 

Depreciation

 

Value

 

Depreciation

 

Value

 

Depreciation

Fixed maturity securities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Due in one year or less

$

34,542

 

$

(1,067)

 

$

188,755

 

$

(6,411)

 

$

223,297

 

$

(7,478)

Due in one year through five years

 

226,521

 

 

(2,554)

 

 

357,728

 

 

(11,562)

 

 

584,249

 

 

(14,116)

Due in five years through ten years

 

251,967

 

 

(3,292)

 

 

43,129

 

 

(6,785)

 

 

295,096

 

 

(10,077)

Due after ten years

 

54,347

 

 

(570)

 

 

81,028

 

 

(11,460)

 

 

135,375

 

 

(12,030)

Asset-backed securities

 

159,695

 

 

(887)

 

 

76,351

 

 

(422)

 

 

236,046

 

 

(1,309)

Mortgage-backed securities

 

32,102

 

 

(169)

 

 

34,211

 

 

(305)

 

 

66,313

 

 

(474)

Total fixed maturity securities

$

759,174

 

$

(8,539)

 

$

781,202

 

$

(36,945)

 

$

1,540,376

 

$

(45,484)

The aggregate market value and gross unrealized losses related to investments in an unrealized loss position

Duration of Unrealized Loss at December 31, 2019 were $1,540,376 thousand2022 By Security Type
Less than 12 months
Greater than 12 months
Total
Gross
Gross
Gross
Fair
Unrealized
Fair
Unrealized
Fair
Unrealized
(Dollars in millions)
Value
Depreciation
Value
Depreciation
Value
Depreciation
Fixed maturity securities - available for sale
U.S. Treasury securities and $45,484 thousand, respectively.  The market valueobligations of
U.S. government agencies and corporations
$
290
$
(14)
$
245
$
(26)
$
535
$
(40)
Obligations of U.S. states and political subdivisions
235
(23)
27
(9)
261
(32)
Corporate securities
2,138
(175)
841
(146)
2,979
(321)
Asset-backed securities
3,120
(138)
436
(27)
3,556
(165)
Mortgage-backed securities
Commercial
464
(50)
36
(9)
500
(59)
Agency residential
852
(54)
605
(113)
1,456
(167)
Non-agency residential
2
-
1
-
3
-
Foreign government securities
455
(36)
144
(25)
599
(61)
Foreign corporate securities
967
(100)
365
(67)
1,332
(167)
Total
$
8,522
$
(591)
$
2,698
$
(421)
$
11,220
$
(1,012)
Securities where an allowance for the single issuer whosecredit loss was recorded
2
(1)
-
-
2
(1)
Total fixed maturity securities comprised the largest unrealized loss position- available for sale
$
8,524
$
(591)
$
2,698
$
(421)
$
11,222
$
(1,013)
(Some amounts may not reconcile due
to rounding.)
Duration of Unrealized Loss at December 31, 2019,2022 By Maturity
Less than 12 months
Greater than 12 months
Total
Gross
Gross
Gross
Fair
Unrealized
Fair
Unrealized
Fair
Unrealized
(Dollars in millions)
Value
Depreciation
Value
Depreciation
Value
Depreciation
Fixed maturity securities - available for sale
Due in one year or less
$
463
$
(8)
$
29
$
(4)
$
491
$
(11)
Due in one year through five years
2,020
(143)
936
(107)
2,956
(250)
Due in five years through ten years
1,162
(148)
395
(98)
1,557
(246)
Due after ten years
439
(50)
262
(64)
701
(114)
Asset-backed securities
3,120
(138)
436
(27)
3,556
(165)
Mortgage-backed securities
1,318
(105)
641
(122)
1,959
(226)
Total
$
8,522
$
(591)
$
2,698
$
(421)
$
11,220
$
(1,012)
Securities where an allowance for credit loss was recorded
2
(1)
-
-
2
(1)
Total fixed maturity securities - available for sale
$
8,524
$
(591)
$
2,698
$
(421)
$
11,222
$
(1,013)
(Some amounts may not reconcile due to rounding.)
The
aggregate
fair
value
and
gross
unrealized
losses
related
to
fixed
maturity
securities
available
for
sale
in
an
unrealized
loss position
at
December 31,
2022 were
$
11.2
billion and
$
1.0
billion, respectively.
The fair
value
of
securities for
the single
issuer
(the United
States
government)
whose securities
comprised
the largest
unrealized
loss position
at December
31, 2022,
did not
exceed
4.3
% of
the overall
fair value
of the
Company’s
fixed maturity
securities available
for
sale.
The fair
value
of the
securities
for
the issuer
with the
second
largest
unrealized
loss
comprised less
than
0.6
% of the
Company’s
fixed maturity
securities. In
addition, as
indicated on
the above
table,
there
was
no
significant
concentration
of
unrealized
losses
in
any
one
market
sector.
The
$
591
million
of
unrealized losses related
to fixed maturity
securities available
for sale that have
been in an unrealized
loss position
for less
than one year
were generally
comprised of domestic
and foreign
corporate securities,
foreign government
F-17
securities,
asset-backed
securities
as
well
as
commercial
and
agency
residential
mortgage-backed
securities.
Of
these unrealized
losses, $
520
million were
related
to securities
that were
rated
investment
grade by
at least
one
nationally
recognized
rating
agency.
The
$
421
million
of
unrealized
losses
related
to
fixed
maturity
securities
available
for sale
in an
unrealized
loss position
for more
than one
year related
primarily to
domestic and
foreign
corporate
securities
as
well
as
agency
residential
mortgage
backed
securities.
Of
these
unrealized
losses
$
392
million
were
related
to
securities
that
were
rated
investment
grade
by
at
least
one
nationally
recognized
rating
agency.
In
all
instances,
there
were
no
projected
cash
flow
shortfalls
to
recover
the
full
book
value
of
the
investments
and the
related interest
obligations.
The mortgage-backed
securities still
have excess
credit coverage
and are
current on
interest and
principal payments.
Based upon
the Company’s
current evaluation
of securities
in
an unrealized
loss position as of
December 31, 2022, the
unrealized losses
are due to
changes in interest
rates and
non-issuer specific
credit spreads
and are
not credit
related. In
addition, the
contractual
terms of
these securities
do not permit these securities to be settled at a price less
than their amortized cost.
The Company,
given the size
of its investment
portfolio and capital
position, does not
have the
intent to
sell these
securities; and
it is
more likely
than not
that the
Company will
not have
to sell
the security
before
recovery
of its
cost
basis.
In
addition,
all
securities
currently
in
an
unrealized
loss
position
are
current
with
respect
to
principal
and interest payments
.
The
tables
below
display
the
aggregate
fair
value
and
gross
unrealized
depreciation
of
fixed
maturity
securities
available
for sale,
by security
type and
contractual
maturity,
in each
case subdivided
according to
length of
time
that individual
securities had been
in a continuous
unrealized loss
position for
the periods indicated.
The amounts
presented
in the
tables below
include $
16
million of
fair value
and $(
0.4
) million
of gross
unrealized
depreciation
as of December 31, 2021 related
to fixed maturity securities
available for sale
for which the Company
has recorded
an allowance for credit losses.
Duration of Unrealized Loss at December 31, 2021 By Security Type
Less than 12 months
Greater than 12 months
Total
Gross
Gross
Gross
Fair
Unrealized
Fair
Unrealized
Fair
Unrealized
(Dollars in millions)
Value
Depreciation
Value
Depreciation
Value
Depreciation
Fixed maturity securities - available for sale
U.S. Treasury securities and obligations of
U.S. government agencies and corporations
$
267
$
(3)
$
-
$
-
$
267
$
(3)
Obligations of U.S. states and political subdivisions
51
(1)
3
-
54
(1)
Corporate securities
1,465
(25)
201
(6)
1,666
(31)
Asset-backed securities
1,891
(11)
38
-
1,929
(11)
Mortgage-backed securities
Commercial
139
(2)
35
(2)
174
(4)
Agency residential
699
(7)
168
(3)
867
(10)
Non-agency residential
1
-
-
-
2
-
Foreign government securities
200
(5)
15
(2)
215
(7)
Foreign corporate securities
677
(17)
33
(2)
710
(18)
Total fixed maturity securities - available for sale
$
5,390
$
(71)
$
492
$
(15)
$
5,882
$
(86)
(Some amounts may not reconcile due to rounding.)
F-18
Duration of Unrealized Loss at December 31, 2021 By Maturity
Less than 12 months
Greater than 12 months
Total
Gross
Gross
Gross
Fair
Unrealized
Fair
Unrealized
Fair
Unrealized
(Dollars in millions)
Value
Depreciation
Value
Depreciation
Value
Depreciation
Fixed maturity securities - available for sale
Due in one year or less
$
81
$
(2)
$
36
$
(4)
$
117
$
(6)
Due in one year through five years
1,209
(19)
154
(3)
1,364
(22)
Due in five years through ten years
853
(21)
34
(2)
887
(23)
Due after ten years
517
(10)
27
(1)
543
(11)
Asset-backed securities
1,891
(11)
38
-
1,929
(11)
Mortgage-backed securities
839
(9)
203
(5)
1,042
(14)
Total fixed maturity securities - available for sale
$
5,390
$
(71)
$
492
$
(15)
$
5,882
$
(86)
(Some amounts may not reconcile due to rounding.)
The
aggregate
fair
value
and
gross
unrealized
losses
related
to
investments
in
an
unrealized
loss
position
at
December 31, 2021
were $
5.9
billion and $
86
million, respectively.
The fair
value of
securities for
the single issuer
(the United
States
government)
whose securities
comprised
the largest
unrealized
loss
position
at
December 31,
2021, did not exceed 0.2
2.1
% of the overall marketfair value
of the Company’s
fixed maturity securities.securities available
for sale. The
fair
value
of the
securities for
the issuer
with the
second
largest
unrealized
loss
comprised
less than
0.4
% of
the
Company’s
fixed
maturity
securities
available
for
sale. In
addition, as
indicated
on the
above
table,
there
was
no
significant concentration
of unrealized losses in
any one market sector.
The $8,539 thousand$
71
million of unrealized
losses related
to
fixed
maturity
securities
that
have
been
in
an
unrealized
loss
position
for
less
than
one
year
were
generally
comprised of domestic and foreign
corporate securities. Of these unrealized losses, $5,645 thousand were related tosecurities,
foreign government securities,
asset backed securities and
agency
residential
mortgage
backed
securities.
Of
these
unrealized
losses,
$
62
million
were
related
to
securities
that were rated investment
grade by at least one nationally
recognized statistical rating agency.
The $36,945 thousand$
15
million of unrealized
losses related
to fixed
maturity securities
available
for
sale in
an unrealized
loss position
for more
than one
year
related
primarily
to
domestic
and
foreign
corporate
securities and foreign government
as
well
as
agency
residential
mortgage-backed
securities. Of these unrealized
losses $16,976 thousand$
12
million were related
to securities that
were rated
investment grade
by at
least
one
nationally
recognized statistical
rating
agency. There was
In
all
instances,
there
were
no gross unrealized depreciation for mortgage-backed securities related
projected
cash
flow
shortfalls
to sub-prime and alt-A loans. In all instances, there were no projected cash flow shortfalls to
recover the full book value
of the investments and the
related interest
obligations. The mortgage-backedmortgage
-backed securities
still have excess credit
coverage and are current
on interest and principal payments.

F-15

The Company, given the size of its investment portfolio and capital position, does not have the intent to sell these securities; and it is more likely than not that the Company will not have to sell the security before recovery of its cost basis.  In addition, all securities currently in an unrealized loss position are current with respect to principal and interest payments.

The tables below display the aggregate market value and gross unrealized depreciation of fixed maturity securities, by security type and contractual maturity, in each case subdivided according to length of time that individual securities had been in a continuous unrealized loss position for the periods indicated:

 

Duration of Unrealized Loss at December 31, 2018 By Security Type

 

Less than 12 months

 

Greater than 12 months

 

Total

 

 

 

 

Gross

 

 

 

 

Gross

 

 

 

 

Gross

 

Market

 

Unrealized

 

Market

 

Unrealized

 

Market

 

Unrealized

(Dollars in thousands)

Value

 

Depreciation

 

Value

 

Depreciation

 

Value

 

Depreciation

Fixed maturity securities -

  available for sale

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

U.S. Treasury securities and

  obligations of U.S. government

  agencies and corporations

$

245,357

 

$

(6,099)

 

$

373,377

 

$

(4,989)

 

$

618,734

 

$

(11,088)

Obligations of U.S. states and

  political subdivisions

 

107,183

 

 

(2,829)

 

 

1,475

 

 

(10)

 

 

108,658

 

 

(2,839)

Corporate securities

 

1,390,942

 

 

(57,043)

 

 

194,770

 

 

(12,872)

 

 

1,585,712

 

 

(69,915)

Asset-backed securities

 

127,052

 

 

(1,408)

 

 

47,551

 

 

(631)

 

 

174,603

 

 

(2,039)

Mortgage-backed securities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Commercial

 

51,357

 

 

(695)

 

 

2,259

 

 

(28)

 

 

53,616

 

 

(723)

Agency residential

 

44,071

 

 

(1,221)

 

 

21,889

 

 

(488)

 

 

65,960

 

 

(1,709)

Non-agency residential

 

3,093

 

 

(4)

 

 

-

 

 

-

 

 

3,093

 

 

(4)

Foreign government securities

 

192,510

 

 

(10,690)

 

 

101,137

 

 

(663)

 

 

293,647

 

 

(11,353)

Foreign corporate securities

 

501,532

 

 

(25,821)

 

 

65,279

 

 

(5,111)

 

 

566,811

 

 

(30,932)

Total fixed maturity securities

$

2,663,097

 

$

(105,810)

 

$

807,737

 

$

(24,792)

 

$

3,470,834

 

$

(130,602)

 

Duration of Unrealized Loss at December 31, 2018 By Maturity

 

Less than 12 months

 

Greater than 12 months

 

Total

 

 

 

 

Gross

 

 

 

 

Gross

 

 

 

 

Gross

 

Market

 

Unrealized

 

Market

 

Unrealized

 

Market

 

Unrealized

(Dollars in thousands)

Value

 

Depreciation

 

Value

 

Depreciation

 

Value

 

Depreciation

Fixed maturity securities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Due in one year or less

$

165,545

 

$

(7,618)

 

$

118,322

 

$

(1,164)

 

$

283,867

 

$

(8,782)

Due in one year through five years

 

1,423,431

 

 

(44,924)

 

 

525,554

 

 

(9,530)

 

 

1,948,985

 

 

(54,454)

Due in five years through ten years

 

624,875

 

 

(35,360)

 

 

42,902

 

 

(2,773)

 

 

667,777

 

 

(38,133)

Due after ten years

 

223,673

 

 

(14,580)

 

 

49,260

 

 

(10,178)

 

 

272,933

 

 

(24,758)

Asset-backed securities

 

127,052

 

 

(1,408)

 

 

47,551

 

 

(631)

 

 

174,603

 

 

(2,039)

Mortgage-backed securities

 

98,521

 

 

(1,920)

 

 

24,148

 

 

(516)

 

 

122,669

 

 

(2,436)

Total fixed maturity securities

$

2,663,097

 

$

(105,810)

 

$

807,737

 

$

(24,792)

 

$

3,470,834

 

$

(130,602)

The aggregate market value and gross unrealized losses related to investments in an unrealized loss position at December 31, 2018 were $3,470,834 thousand and $130,602 thousand, respectively.  The market value of securities for the single issuer (the United States government) whose securities comprised the largest unrealized loss position at December 31, 2018, did not exceed 9.0% of the overall market value of the Company’s fixed maturity securities.  The market value of securities for the issuer with the second largest unrealized loss comprised less than 0.8% of the company’s fixed maturity securities.  In addition, as indicated on the above table, there was no significant concentration of unrealized losses in any one market sector.  The $105,810 thousand of unrealized losses related to fixed maturity securities that have been in an unrealized loss position for less than one year were generally comprised of domestic and foreign corporate securities, foreign government securities and U.S. government agencies and corporations.  Of these unrealized losses, $68,010 thousand related to securities that were rated investment grade by at least one nationally recognized

F-16

statistical rating agency.  The $24,792 thousand of unrealized losses related to fixed maturity securities in an unrealized loss position for more than one year related primarily to domestic and foreign corporate securities and U.S. government agencies.  Of these unrealized losses, $14,802 thousand related to securities that were rated investment grade by at least one nationally recognized statistical rating agency.  There was no gross unrealized depreciation for mortgage-backed securities related to sub-prime and alt-A loans.  In all instances, there were no projected cash flow shortfalls to recover the full book value of the investments and the related interest obligations.  The mortgage-backed securities still have excess credit coverage and are current on interest and principal payments. 

The components of net investment

income are presented in the tables table
below for the periods indicated:

 

Years Ended December 31,

(Dollars in thousands)

2019

 

2018

 

2017

Fixed maturities

$

273,122

 

$

201,108

 

$

193,676

Equity securities

 

10,782

 

 

14,909

 

 

25,852

Short-term investments and cash

 

10,231

 

 

7,715

 

 

2,870

Other invested assets

 

 

 

 

 

 

 

 

Limited partnerships

 

43,316

 

 

61,645

 

 

36,603

Dividends from preferred shares of affiliate

 

31,031

 

 

31,032

 

 

31,032

Other

 

14,117

 

 

17,825

 

 

6,675

Gross investment income before adjustments

 

382,599

 

 

334,234

 

 

296,708

Funds held interest income (expense)

 

6,459

 

 

5,188

 

 

5,006

Interest income from Parent

 

211

 

 

4,085

 

 

4,300

Gross investment income

 

389,269

 

 

343,507

 

 

306,014

Investment expenses

 

(33,058)

 

 

(29,126)

 

 

(19,755)

Net investment income

$

356,211

 

$

314,381

 

$

286,259

 

 

 

 

 

 

 

 

 

(Some amounts may not reconcile due to rounding.)

 

 

 

The Company records results

Years Ended December 31,
(Dollars in millions)
2022
2021
2020
Fixed maturities
$
510
$
344
$
305
Equity securities
16
15
11
Short-term investments and cash
16
1
3
Other invested assets
Limited partnerships
72
321
49
Dividends from limited partnership investments on the equity methodpreferred shares of affiliate
31
31
31
Other
30
63
2
Gross investment income before adjustments
675
774
401
Funds held interest income (expense)
6
8
6
Interest income from Parent
11
6
5
Gross investment income
691
788
412
Investment expenses
(52)
(43)
(36)
Net investment income
$
638
$
745
$
376
(Some amounts may not reconcile due to rounding.)
F-19
The
Company
records
results
from
limited
partnership
investments
on
the
equity
method
of
accounting
with
changes in value reported through
net investment income. Due to
The net investment income
from limited partnerships
is
dependent upon the timingCompany’s
share of receiving financial information from these partnerships, the net asset
values of interests
underlying each limited partnership.
Due
to
the
timing
of
receiving
financial
information
from
these
partnerships,
the
results
are
generally
reported
on
a
one
month
or
quarter
lag.
If
the
Company
determines
there
has
been
a
significant
decline
in
value
of a
limited
partnership during this lag period, a loss will be recorded
in the period in which the Company identifies the
decline.

The Company
had contractual
commitments to
invest up
to an
additional $699,481 thousand
927
million in
limited partnerships
and
private placement loans at
December 31, 2019.2022. These commitments will be funded
when called in accordance with
the partnership and loan agreements, which
have investment periods
that expire, unless extended, through 2026.

Beginning in 2016,

2026
.
During the Company participated in a private placement liquidity sweep facility (“the facility”).  The primary purpose of the facility is to enhance the Company’s return on its short-term investments and cash positions.  The facility invests in high quality, short-duration securities and permits daily liquidity.  Through the second
fourth
quarter of 2018,
2022, the Company’s participation in the facility was classified
Company
entered
into
corporate-owned
life
insurance
policies,
which are
carried within other invested assets on the Company’s Balance Sheets.

As

at policy cash surrender value of the third quarter of 2018, the Company has consolidated its participation in the facility.  As a result, the underlying investments are now recorded in the various investment line items within the Company’s balance sheet, rather than$
939
million as part of other invested assets.  As of December 31, 2019, 2022.
The Company
participates
in
a private
placement
liquidity
sweep
facility
(“the market
facility”).
The primary
purpose
of
the
facility
is
to
enhance
the
Company’s
return
on
its
short-term
investments
and
cash
positions.
The
facility
invests
in
high
quality,
short-duration
securities
and
permits
daily
liquidity.
The
Company
consolidates
its
participation
in
the
facility.
As
of
December
31,
2022,
the
fair
value
of
investments
in
the
facility
consolidated
within the Company’s balance sheets
was $156,258 thousand. 

309
million.
Other invested assets, at
fair value, as of December 31, 20192022 and December 31, 2018,
2021, were comprised of preferred
shares
held in
Everest
Preferred
International
Holdings, Ltd.
(“Preferred
Holdings”), a
wholly-owned
subsidiary
of
Group.
Variable Interest
Entities
The
Company
is
engaged
with
various
special
purpose
entities
and
other
entities
that
are
deemed
to
be
VIEs
primarily as an affiliated company. 

investor

F-17

through normal investment
activities but also as
an investment manager.
A VIE is an
entity
that either has
investors
that lack certain
essential characteristics
of a controlling
financial interest,
such as simple
majority kick-out
rights, or lacks
sufficient funds
to finance its
own activities without
financial support provided
by
other
entities.
The
Company
performs
ongoing
qualitative
assessments
of
its
VIEs
to
determine
whether
the
Company
has
a
controlling
financial
interest
in the
VIE and
therefore
is
the
primary
beneficiary.
The Company
is
deemed
to
have
a
controlling
financial
interest
when
it
has
both
the
ability
to
direct
the
activities
that
most
significantly
impact
the
economic
performance
of the
VIE
and
the
obligation
to
absorb
losses
or
right
to
receive
benefits
from
the
VIE
that
could
potentially
be
significant
to
the
VIE.
Based
on
the
Company’s
assessment,
if
it
determines
it
is
the
primary
beneficiary,
the
Company
consolidates
the
VIE
in
the
Company’s
Consolidated
Financial Statements.
As of
December 31, 2022
and 2021,
the Company
did not
hold any
securities for
which it
is
the primary beneficiary.
The
Company,
through
normal
investment
activities,
makes
passive
investments
in
general
and
limited
partnerships
and other
alternative investments.
For these
non-consolidated
VIEs, the
Company has
determined it
is
not
the
primary
beneficiary
as
it
has
no
ability
to
direct
activities
that
could
significantly
affect
the
economic
performance of
the investments.
The Company’s
maximum exposure
to loss
as of December 31,
2022 and
2021 is
limited to
the total
carrying
value of
$
2.8
billion and
$
1.7
billion,
respectively,
which are
included in
general
and
limited
partnerships
and
other
alternative
investments
in
Other
Invested
Assets
in
the
Company's
Consolidated
Balance
Sheets.
As
of
December 31,
2022,
the
Company
has
outstanding
commitments
totaling
$
857
million
whereby
the Company
is committed
to
fund these
investments
and may
be called
by the
partnership
during
the
commitment
period to
fund the
purchase
of new
investments
and partnership
expenses.
These investments
are
generally of a passive nature
in that the Company does not take
an active role in management.
In addition, the Company
makes passive investments
in structured securities issued
by VIEs for which the Company
is not
the manager.
These investments
are
included in
asset-backed
securities,
which includes
collateralized
loan
obligations
and
are
classified
as
fixed
maturities.
The
Company
has
not provided
financial
or
other
support
with
respect to these investments
other than its original investment.
For these investments, the Company
determined it

F-20
is not
the primary
beneficiary due
to the
relative size
of the Company’s
investment
in comparison
to the
principal
amount
of
the
structured
securities
issued
by
the
VIEs,
the
level
of
credit
subordination
which
reduces
the
Company’s
obligation
to
absorb
losses
or
right
to
receive
benefits
and
the
Company’s
inability
to
direct
the
activities that most significantly
impact the economic performance
of the VIEs. The Company’s
maximum exposure
to loss on these investments
is limited to the amount of the Company’s
investment.
The components of net realized capital gains (losses) on investments
are presented in the table below for
the periods indicated:

 

Years Ended December 31,

(Dollars in thousands)

2019

 

2018

 

2017

Fixed maturity securities, market value:

 

 

 

 

 

 

 

 

Other-than-temporary impairments

$

(19,643)

 

$

(6,164)

 

$

(6,077)

Gains (losses) from sales

 

7,571

 

 

933

 

 

2,473

Fixed maturity securities, fair value:

 

 

 

 

 

 

 

 

Gains (losses) from sales

 

355

 

 

(1,799)

 

 

-

Gains (losses) from fair value adjustments

 

1,808

 

 

1,506

 

 

-

Equity securities, fair value:

 

 

 

 

 

 

 

 

Gains (losses) from sales

 

4,144

 

 

(32,092)

 

 

6,556

Gains (losses) from fair value adjustments

 

153,728

 

 

(59,409)

 

 

117,695

Other invested assets

 

6,003

 

 

1,815

 

 

61

Other invested assets, fair value:

 

 

 

 

 

 

 

 

Gains (losses) from fair value adjustments

 

265,245

 

 

(90,136)

 

 

40,846

Short-term investment gains (losses)

 

156

 

 

(10)

 

 

(1)

Total net realized capital gains (losses)

$

419,367

 

$

(185,356)

 

$

161,553

Years Ended December 31,
(Dollars in millions)
2022
2021
2020
Fixed maturity securities:
Allowances for credit losses
$
(27)
$
(26)
$
(2)
Net realized gains (losses) from dispositions
(79)
8
(36)
Gains (losses) from fair value adjustments
-
-
2
Equity securities:
Net realized gains (losses) from dispositions
116
24
(8)
Gains (losses) from fair value adjustments
(447)
254
276
Other invested assets
13
6
2
Other invested assets, fair value:
Gains (losses) from fair value adjustments
(558)
234
(186)
Short-term investment gains (losses)
-
-
1
Total net gains (losses) on investments
$
(982)
$
501
$
50
(Some amounts may not reconcile due
to rounding.)
The Companyfollowing tables
provide a
roll forward
of the Company’s
beginning and ending
balance of allowance
for credit
losses for the periods indicated:
Roll Forward of Allowance for Credit Losses
Years Ended December 31, 2022
Asset
Foreign
Corporate
Backed
Corporate
Securities
Securities
Securities
Total
(Dollars in millions)
Balance, beginning of period
$
(19)
$
(8)
$
-
$
(27)
Credit losses on securities where credit
losses were not previously recorded
(1)
(13)
(6)
(2)
(21)
Increases in allowance on previously
impaired securities
(20)
-
-
(21)
Decreases in allowance on previously
impaired securities
-
-
-
-
Reduction in allowance due to disposals
6
8
-
14
Balance, end of period
$
(46)
$
(6)
$
(2)
$
(55)
(1) Credit losses recorded as net realized capital gains (losses)of December
31, 2022 for fixed maturities – held
to maturity were $
(
2
)
million, $
(
6
)
million and $
(
1
)
million for corporate, asset-backed
and foreign corporate securities
(Some amounts may not reconcile due
to rounding.)
F-21
Roll Forward of Allowance for Credit Losses
Years Ended December 31, 2021
Asset
Corporate
Backed
Securities
Securities
Total
(Dollars in the consolidated statementsmillions)
Balance, beginning of operations and comprehensive income (loss) both fair value re-measurements and write-downs in the value of securities deemed to be impairedperiod
$
(1)
$
-
$
(2)
Credit losses on an other-than-temporary basis as displayed in the table above.  The Company had no other-than-temporary impaired securities where the impairment had both a credit and non-credit component. 

losses were not previously recorded
(21)
(5)
(26)
Increases in allowance on previously
impaired securities
(3)
(3)
(5)
Decreases in allowance on previously
impaired securities
-
-
-
Reduction in allowance due to disposals
6
-
6
Balance, end of period
$
(19)
$
(8)
$
(27)
(Some amounts may not reconcile due
to rounding.)
The proceeds
and split
between
gross
gains
and losses
from
sales
of fixed
maturity
securities
- available
for
sale
and equity securities, are presented in the table
below for the periods indicated:

 

 

 

Years Ended December 31,

(Dollars in thousands)

2019

 

2018

 

2017

Proceeds from sales of fixed maturity securities

$

2,403,786

 

$

793,119

 

$

1,676,203

Gross gains from sales

 

25,076

 

 

15,349

 

 

31,328

Gross losses from sales

 

(17,150)

 

 

(16,215)

 

 

(28,855)

 

 

 

 

 

 

 

 

 

Proceeds from sales of equity securities

$

283,707

 

$

1,029,920

 

$

586,496

Gross gains from sales

 

14,270

 

 

25,160

 

 

23,214

Gross losses from sales

 

(10,126)

 

 

(57,252)

 

 

(16,658)

Years Ended December 31,
(Dollars in millions)
2022
2021
2020
Proceeds from sales of fixed maturity securities - available for sale
$
2,645
$
961
$
631
Gross gains from dispositions
9
33
24
Gross losses from dispositions
(88)
(24)
(60)
Proceeds from sales of equity securities
$
2,203
$
862
$
375
Gross gains from dispositions
165
39
37
Gross losses from dispositions
(48)
(15)
(45)
Securities with a carrying value
amount of $1,549,145 thousand$
1.4
billion at December 31, 2019,2022, were
on deposit with various state
or
governmental insurance departments
in compliance with insurance laws.

F-18

F-22
3.
RESERVES FOR LOSSES AND
LAE

Activity in

The following
table
provides
a roll
forward
of the
Company’s
beginning and
ending reserve
for
losses
and LAE
is
summarized for the periods indicated:

   

At December 31,

(Dollars in thousands)

2019

 

2018

 

2017

Gross reserves beginning of period

$

10,167,018

 

$

9,343,028

 

$

8,331,288

Less reinsurance recoverables

 

(4,697,543)

 

 

(5,727,268)

 

 

(4,199,791)

Net reserves beginning of period

 

5,469,475

 

 

3,615,760

 

 

4,131,497

Incurred related to:

 

 

 

 

 

 

 

 

Current year

 

3,784,771

 

 

4,252,220

 

 

2,157,498

Prior years

 

44,351

 

 

558,798

 

 

(117,747)

Total incurred losses and LAE

 

3,829,122

 

 

4,811,018

 

 

2,039,751

Paid related to:

 

 

 

 

 

 

 

 

Current year 

 

1,885,443

 

 

1,524,635

 

 

1,607,601

Prior years

 

1,431,336

 

 

1,408,256

 

 

957,933

Total paid losses and LAE

 

3,316,778

 

 

2,932,891

 

 

2,565,534

Foreign exchange/translation adjustment

 

12,352

 

 

(24,412)

 

 

10,046

Net reserves end of period

 

5,994,171

 

 

5,469,475

 

 

3,615,760

Plus reinsurance recoverables

 

4,215,348

 

 

4,697,543

 

 

5,727,268

Gross reserves end of period

$

10,209,519

 

$

10,167,018

 

$

9,343,028

 

 

 

 

 

 

 

 

 

(Some amounts may not reconcile due to rounding.)

 

 

 

 

 

 

 

 

At December 31,
(Dollars in millions)
2022
2021
2020
Gross reserves beginning of period
$
13,121
$
11,578
$
10,129
Less reinsurance recoverables on unpaid losses
(3,651)
(3,951)
(4,215)
Net reserves beginning of period
9,470
7,627
5,914
Incurred related to:
Current year
5,815
5,382
4,408
Prior years
8
5
200
Total incurred losses and LAE
5,823
5,387
4,608
Paid related to:
Current year
1,097
2,374
1,902
Prior years
2,867
1,127
1,018
Total paid losses and LAE
3,964
3,501
2,920
Foreign exchange/translation adjustment
(35)
(42)
24
Net reserves end of period
11,294
9,470
7,627
Plus reinsurance recoverables on unpaid losses
3,684
3,651
3,951
Gross reserves end of period
$
14,977
$
13,121
$
11,578
(Some amounts may not reconcile due
to rounding.)
Current year incurred
losses were $3,784,771 thousand, $4,252,220 thousand$
5.8
billion, $
5.4
billion and $2,157,498 thousand at$
4.4
billion for the years
ended December 31, 2019, 20182022,
2021
and
2020,
respectively.
The
increase
in
current
year
incurred
losses
in
2022
compared
to
2021
primarily
related to
an increase
of $
44
million in
current year
catastrophe
losses and
an increase
of $
389
million in
current
year
attritional
losses.
The increase
in
current
year
attritional
losses
was
mainly
due
to
the
growth
in
premiums
earned
and
$
25
million
of losses
due
to
the
Russia/Ukraine
conflict.
The increase
in
current
year
incurred
losses
from
2020
to
2021
was
primarily
due
to
an
increase
of
$
532
million
in
current
year
catastrophe
losses
and
an
increase
of
$
442
million
in
current
year
attritional
losses
including
the
impact
of
a
change
in
the
Company’s
reinsurance program
with an affiliate
.
The increase
in current
year attritional
losses was mainly
due to
the growth
in premiums earned and 2017, respectively.  The decrease in current year incurredthe previously mentioned
$
155
million of losses in 2019 compared to 2018 was primarily due to a decrease of $646,242 thousand in current year catastrophe losses, partially offset by an increase of $178,794 thousand in current year attritional losses. The $482,195 decrease in reinsurance recoverables from December 31, 2019 to December 31, 2018 is primarily related to changes COVID-19
in affiliated reinsurance agreements.

Incurred prior years’ reserves increased by $44,351 thousand 2020.

The war
in the
Ukraine
is ongoing
and $558,798 thousand in 2019 an
evolving
event.
Economic
and 2018 respectively, legal
sanctions
have
been levied
against
Russia, specific named individuals
and decreased by $117,747 thousand in 2017.  The increase for 2019 was mainly due entities connected
to adverse development on prior years catastrophe losses.

The increase for 2018 was mainly due to $553,036 thousand of adverse development on prior years catastrophe losses, primarily related to Hurricanes Harvey, Irma and Maria, the Russian government,

as well as businesses
located
in the
Russian Federation
and/or owned
by Russian
nationals by
numerous countries,
including the
United States.
The
significant
political
and
economic
uncertainty
surrounding
the
war
and
associated
sanctions
have
impacted
economic
and
investment
markets
both
within
Russia
and
around
the
world.
The
Company
has
recorded
$
25
million of incurred
underwriting losses
related to
the 2017 California wildfires.  Ukraine and
Russia conflict for
the year
ended December 31,
2022.
Incurred
prior
years’
reserves
increased
by
$
8
million,
$
5
million
and
$
200
million
in
2022,
2021
and
2020
respectively.
The
2022
prior
year
development
was
primarily
due
to
$
113
million
of
strengthening
of
asbestos
reserves
mitigated
primarily
by
reserve
releases
from
the
reinsurance
segment.
The
increase
for
2021
related
mainly to
increases in
insurance
casualty reserves.
The increase in loss estimates
for Hurricanes Harvey, Irma2020
primarily related
to higher
ultimate loss
estimates
for
long-tail
casualty
business
in
the
reinsurance
segment
for
accident
years
2015
to
2018,
notably
general liability,
professional lines, and Maria was mostly driven by re-opened auto liability.
F-23
The
following
is
information
about
incurred
and
paid
claims loss inflation from higher than expected loss adjustment expenses and in particular, their impact on aggregate covers.

The decrease for 2017 was attributable to favorable

development in the reinsurance segments
as
of $84,809 thousand related primarily to property and short-tail business in the U.S., as well as favorable development on prior year catastrophe losses, partially offset by $25,194 thousand
December
31,
2022,
net
of adverse development on A&E reserves.  The insurance segment also experienced favorable development on prior year reserves of $32,938 thousand mainly on its workers compensation business, which is largely written in California.

The following is information about incurred and paid claims development as of December 31, 2019, net of

reinsurance, as
well as cumulative
claim frequency and
the total
of incurred but
not reported liabilities
(IBNR) plus
expected
development
on
reported
claims
included
within
the
net
incurred
claims
amounts.
Each
of
the
Company’s financial
reporting segments has
been disaggregated
into casualty and
property business.
The casualty
and property segregation
results in groups
that have homogeneous
loss development
characteristics
and are large
enough to represent
credible trends.
Generally,
casualty claims take
longer to be reported
and settled, resulting in
longer
payout
patterns
and
increased
volatility.
Property
claims
on
the
other
hand,
tend
to
be
reported
and
settled quicker
and therefore
tend to exhibit
less volatility.
The property business
is more

exposed

F-19

exposed to catastrophe

losses, which
can result
in year
over year
fluctuations in
incurred claims
depending on
the frequency
and severity
of catastrophes claims in any
one accident year.

The
information
about
incurred
and
paid
claims
development
for
the
years
ended
December
31,
2013
to
December 31, 2012 to December 31, 20182021 is presented as supplementary
information.

These tables present eight years of incurred and paid claims development as it is impracticable to retrospectively create the tables for ten years.  For the reinsurance groups, for the years prior to 2012, the total of IBNR plus expected development on reported claims was not prepared on an accident year basis.  The Company calculated these IBNR amounts in the aggregate for each business unit in total as of prior year end points in time.  While business written in the United States would have been allocated to accident year for regulatory reporting purposes, business written outside of the United States would not have been similarly allocated.  Attempting to allocate the non-U.S. business IBNR reserves to accident year currently for older year end valuations would require making assumptions and estimates which may not be in line with assumptions that would have been made at the time.  A similar situation applies to insurance where the accumulation of the business lines reported in the regulatory filings are not consistent with the breakout of the tables presented below.  As a result of not being able to present the information prior to 2012, prospectively an additional year will be added to the tables each reporting year until a ten year table is presented.

The Cumulative Number
of Reported
Claims is shown
only for Insurance
Casualty as it
is impracticableimpractical to
provide the
information
for
the
remaining
groups.
The reinsurance
groups
each
include
pro
rata
contracts
for
which
ceding
companies
provide
only
summary
information
via
a
bordereau.
This
summary
information
does
not
include
the
number
of reported
claims
underlying
the
paid and
reported
losses.
Therefore,
it
is
not possible
to
provide
this
information.
The Insurance Property group
includes Accident & Health insurance business.
This business is written
via a
master contract
and individual
claim counts
are not
provided.
This business
represents
a significant
enough
portion
of the
business
in
the Insurance
Property
group
so that
including
the number
of reported
claims
for
the
remaining business would distort any
analytics performed on the group.

The Cumulative
Number of
Reported
Claims shown
for the
Insurance
Casualty is
determined by
claim and
line of
business.
For example,
a claim event
with three claimants
in the same line
of business is
a single claim.
However,
a
claim
event
with
a
single
claimant
that
spans
two
lines
of
business
contributes
two
claims.
Cessions
under
affiliated quota share agreements
reduce net losses but do not impact claim counts.

The following tables
present the incurred
loss and ALAE and the
paid loss and ALAE, net of
reinsurance for
casualty
and property,
as well
as the
average
annual
percentage
payout
of incurred
claims by
age, net
of reinsurance
for
each of our disclosed lines of business.

U.S.

Reinsurance – Casualty Business

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

At December 31, 2019

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total of

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

IBNR Liabilities

 

 

 

 

 

Incurred Claims and Allocated Claim Adjustment Expenses, Net of reinsurance

 

Plus Expected

 

 

 

 

 

 Years Ended December 31,

 

Development

 

Cumulative

 

 

 

2012

 

 

2013

 

 

2014

 

 

2015

 

 

2016

 

 

2017

 

 

2018

 

 

2019

 

on Reported

 

Number of

Accident Year

 

 

(unaudited)

 

 

(unaudited)

 

 

(unaudited)

 

 

(unaudited)

 

 

(unaudited)

 

 

(unaudited)

 

 

(unaudited)

 

 

 

 

Claims

 

Reported Claims

(Dollars in thousands)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2012

 

$

249,501

 

$

211,232

 

$

139,755

 

$

139,400

 

$

145,769

 

$

150,362

 

$

150,362

 

$

150,362

 

943

 

N/A

2013

 

 

 

 

 

117,075

 

 

183,657

 

 

181,150

 

 

177,215

 

 

173,300

 

 

173,300

 

 

173,300

 

2,099

 

N/A

2014

 

 

 

 

 

 

 

 

197,491

 

 

189,641

 

 

193,772

 

 

176,745

 

 

176,745

 

 

176,745

 

1,263

 

N/A

2015

 

 

 

 

 

 

 

 

 

 

 

155,879

 

 

178,366

 

 

180,503

 

 

180,503

 

 

180,503

 

5,487

 

N/A

2016

 

 

 

 

 

 

 

 

 

 

 

 

 

 

171,561

 

 

173,189

 

 

173,189

 

 

173,189

 

18,104

 

N/A

2017

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

142,373

 

 

148,135

 

 

148,135

 

64,849

 

N/A

2018

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

484,218

 

 

472,358

 

259,626

 

N/A

2019

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

691,038

 

411,692

 

N/A

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

$

2,165,629

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(Some amounts may not reconcile due to rounding.)

F-20

 

 

 

Cumulative Paid Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance

 

 

 

Years Ended December 31,

 

 

 

2012

 

 

2013

 

 

2014

 

 

2015

 

 

2016

 

 

2017

 

 

2018

 

 

2019

Accident Year

 

 

(unaudited)

 

 

(unaudited)

 

 

(unaudited)

 

 

(unaudited)

 

 

(unaudited)

 

 

(unaudited)

 

 

(unaudited)

 

 

 

(Dollars in thousands)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2012

 

$

6,387

 

$

19,817

 

$

44,688

 

$

76,515

 

$

99,187

 

$

100,650

 

$

125,237

 

$

137,623

2013

 

 

 

 

 

7,131

 

 

15,627

 

 

48,271

 

 

78,880

 

 

105,256

 

 

133,572

 

 

152,303

2014

 

 

 

 

 

 

 

 

7,119

 

 

21,818

 

 

57,897

 

 

84,584

 

 

118,042

 

 

146,455

2015

 

 

 

 

 

 

 

 

 

 

 

7,901

 

 

21,881

 

 

62,180

 

 

122,060

 

 

147,438

2016

 

 

 

 

 

 

 

 

 

 

 

 

 

 

7,440

 

 

34,924

 

 

65,630

 

 

116,329

2017

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

15,354

 

 

65,757

 

 

76,186

2018

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

63,140

 

 

104,690

2019

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

103,453

 

 

 

 

 

 

 

 

 

 

 

$

984,477

All outstanding liabilities prior to 2012, net of reinsurance

 

 

 

 

 

 

 

 

 

 

 

430,513

Liabilities for claims and claim adjustment expenses, net of reinsurance

 

 

 

 

 

 

 

$

1,611,666

 

 

 

 

(Some amounts may not reconcile due to rounding.)

At December 31, 2022

 

 

Average Annual Percentage Payout of Incurred Claims by Age, Net of Reinsurance (unaudited)

Years

 

1

 

 

2

 

 

3

 

 

4

 

 

5

 

 

6

 

 

7

 

 

8

 

Casualty

 

10.1

%

 

11.5

%

 

17.5

%

 

23.4

%

 

15.8

%

 

11.6

%

 

13.4

%

 

8.2

%

Total of

F-21

U.S. Reinsurance – Property Business

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

At December 31, 2019

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total of

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

��

 

 

 

 

 

 

 

 

 

 

 

IBNR Liabilities

 

 

 

 

 

Incurred Claims and Allocated Claim Adjustment Expenses, Net of reinsurance

 

Plus Expected

 

 

 

 

 

 Years Ended December 31,

 

Development

 

Cumulative

 

 

 

2012

 

 

2013

 

 

2014

 

 

2015

 

 

2016

 

 

2017

 

 

2018

 

 

2019

 

on Reported

 

Number of

Accident Year

 

 

(unaudited)

 

 

(unaudited)

 

 

(unaudited)

 

 

(unaudited)

 

 

(unaudited)

 

 

(unaudited)

 

 

(unaudited)

 

 

 

 

Claims

 

Reported Claims

(Dollars in thousands)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2012

 

$

551,599

 

$

469,638

 

$

469,044

 

$

479,090

 

$

475,719

 

$

469,253

 

$

454,746

 

$

452,056

 

635

 

N/A

2013

 

 

 

 

 

251,617

 

 

167,656

 

 

136,887

 

 

108,005

 

 

107,292

 

 

107,292

 

 

107,292

 

545

 

N/A

2014

 

 

 

 

 

 

 

 

288,800

 

 

263,119

 

 

202,094

 

 

194,900

 

 

195,028

 

 

195,028

 

1,420

 

N/A

2015

 

 

 

 

 

 

 

 

 

 

 

319,447

 

 

249,546

 

 

223,357

 

 

223,357

 

 

223,357

 

2,915

 

N/A

2016

 

 

 

 

 

 

 

 

 

 

 

 

 

 

430,295

 

 

398,141

 

 

403,456

 

 

403,151

 

5,224

 

N/A

2017

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

821,226

 

 

1,290,180

 

 

1,442,562

 

8,182

 

N/A

2018

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1,728,705

 

 

1,572,312

 

88,241

 

N/A

2019

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

970,657

 

329,381

 

N/A

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

$

5,366,415

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(Some amounts may not reconcile due to rounding.)

 

 

 

Cumulative Paid Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance

 

 

 

Years Ended December 31,

 

 

 

2012

 

 

2013

 

 

2014

 

 

2015

 

 

2016

 

 

2017

 

 

2018

 

 

2019

Accident Year

 

 

(unaudited)

 

 

(unaudited)

 

 

(unaudited)

 

 

(unaudited)

 

 

(unaudited)

 

 

(unaudited)

 

 

(unaudited)

 

 

 

(Dollars in thousands)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2012

 

$

129,875

 

$

254,010

 

$

323,408

 

$

379,768

 

$

397,473

 

$

425,913

 

$

431,933

 

$

432,048

2013

 

 

 

 

 

94,879

 

 

95,541

 

 

96,805

 

 

97,343

 

 

101,369

 

 

105,604

 

 

105,715

2014

 

 

 

 

 

 

 

 

86,083

 

 

131,940

 

 

163,269

 

 

177,822

 

 

183,469

 

 

184,425

2015

 

 

 

 

 

 

 

 

 

 

 

112,644

 

 

164,892

 

 

194,422

 

 

204,076

 

 

206,251

2016

 

 

 

 

 

 

 

 

 

 

 

 

 

 

162,246

 

 

327,451

 

 

371,004

 

 

383,676

2017

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

543,946

 

 

1,068,749

 

 

1,400,220

2018

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

409,225

 

 

1,064,429

2019

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

568,567

 

 

 

 

 

 

 

 

 

 

 

 

 

 

$

4,345,331

All outstanding liabilities prior to 2012, net of reinsurance

 

 

 

 

 

 

 

 

 

 

 

 

 

 

14,394

Liabilities for claims and claim adjustment expenses, net of reinsurance

 

 

 

 

 

 

 

 

 

 

$

1,035,477

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(Some amounts may not reconcile due to rounding.)

 

Average Annual Percentage Payout of Incurred Claims by Age, Net of Reinsurance (unaudited)

Years

1

 

 

2

 

 

3

 

 

4

 

 

5

 

 

6

 

 

7

 

 

8

 

Property

39.3

%

 

35.7

%

 

17.9

%

 

6.8

%

 

3.0

%

 

4.5

%

 

1.1

%

 

-

%

International – Casualty Business

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

At December 31, 2019

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total of

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

IBNR Liabilities

 

 

 

 

 

Incurred Claims and Allocated Claim Adjustment Expenses, Net of reinsurance

 

Plus Expected

 

 

 

 

 

 Years Ended December 31,

 

Development

 

Cumulative

 

 

 

2012

 

 

2013

 

 

2014

 

 

2015

 

 

2016

 

 

2017

 

 

2018

 

 

2019

 

on Reported

 

Number of

Accident Year

 

 

(unaudited)

 

 

(unaudited)

 

 

(unaudited)

 

 

(unaudited)

 

 

(unaudited)

 

 

(unaudited)

 

 

(unaudited)

 

 

 

 

Claims

 

Reported Claims

(Dollars in thousands)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2012

 

$

124,118

 

$

56,314

 

$

35,046

 

$

42,804

 

$

43,861

 

$

41,857

 

$

41,857

 

$

41,857

 

3,845

 

N/A

2013

 

 

 

 

 

60,539

 

 

40,585

 

 

41,615

 

 

52,893

 

 

46,636

 

 

46,636

 

 

46,636

 

5,567

 

N/A

2014

 

 

 

 

 

 

 

 

58,448

 

 

47,034

 

 

65,755

 

 

54,783

 

 

54,783

 

 

54,783

 

14,100

 

N/A

2015

 

 

 

 

 

 

 

 

 

 

 

53,586

 

 

72,317

 

 

60,112

 

 

60,112

 

 

60,112

 

17,775

 

N/A

2016

 

 

 

 

 

 

 

 

 

 

 

 

 

 

71,461

 

 

67,712

 

 

67,712

 

 

67,712

 

20,948

 

N/A

2017

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

56,666

 

 

56,666

 

 

56,666

 

22,902

 

N/A

2018

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

290,866

 

 

287,295

 

116,125

 

N/A

2019

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

291,237

 

189,506

 

N/A

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

$

906,298

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(Some amounts may not reconcile due to rounding.)

F-22

IBNR Liabilities

 

 

 

Cumulative Paid Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance

 

 

 

Years Ended December 31,

 

 

 

2012

 

 

2013

 

 

2014

 

 

2015

 

 

2016

 

 

2017

 

 

2018

 

 

2019

Accident Year

 

 

(unaudited)

 

 

(unaudited)

 

 

(unaudited)

 

 

(unaudited)

 

 

(unaudited)

 

 

(unaudited)

 

 

(unaudited)

 

 

 

(Dollars in thousands)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2012

 

$

6,896

 

$

10,240

 

$

15,908

 

$

19,052

 

$

22,179

 

$

26,158

 

$

28,340

 

$

29,312

2013

 

 

 

 

 

5,625

 

 

13,380

 

 

16,768

 

 

20,014

 

 

22,426

 

 

26,158

 

 

30,057

2014

 

 

 

 

 

 

 

 

7,984

 

 

13,928

 

 

19,565

 

 

23,552

 

 

26,942

 

 

31,388

2015

 

 

 

 

 

 

 

 

 

 

 

8,025

 

 

17,391

 

 

24,085

 

 

26,574

 

 

31,472

2016

 

 

 

 

 

 

 

 

 

 

 

 

 

 

10,285

 

 

18,798

 

 

24,955

 

 

31,274

2017

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

10,519

 

 

18,527

 

 

22,203

2018

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

57,962

 

 

97,222

2019

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

52,808

 

 

 

 

 

 

 

 

 

 

 

 

 

 

$

325,736

All outstanding liabilities prior to 2012, net of reinsurance

 

 

 

 

 

 

 

 

 

 

 

 

 

 

81,298

Liabilities for claims and claim adjustment expenses, net of reinsurance

 

 

 

 

 

 

 

 

 

 

$

661,860

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(Some amounts may not reconcile due to rounding.)

 

 

Average Annual Percentage Payout of Incurred Claims by Age, Net of Reinsurance (unaudited)

Years

 

1

 

 

2

 

 

3

 

 

4

 

 

5

 

 

6

 

 

7

 

 

8

 

Casualty

 

17.7

%

 

13.4

%

 

9.5

%

 

7.1

%

 

6.8

%

 

8.5

%

 

6.9

%

 

2.3

%

International – Property Business

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

At December 31, 2019

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total of

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

IBNR Liabilities

 

 

 

 

 

Incurred Claims and Allocated Claim Adjustment Expenses, Net of reinsurance

 

Plus Expected

 

 

 

 

 

 Years Ended December 31,

 

Development

 

Cumulative

 

 

 

2012

 

 

2013

 

 

2014

 

 

2015

 

 

2016

 

 

2017

 

 

2018

 

 

2019

 

on Reported

 

Number of

Accident Year

 

 

(unaudited)

 

 

(unaudited)

 

 

(unaudited)

 

 

(unaudited)

 

 

(unaudited)

 

 

(unaudited)

 

 

(unaudited)

 

 

 

 

Claims

 

Reported Claims

(Dollars in thousands)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2012

 

$

139,993

 

$

131,550

 

$

80,030

 

$

85,091

 

$

78,285

 

$

86,847

 

$

86,846

 

$

86,577

 

131

 

N/A

2013

 

 

 

 

 

153,518

 

 

141,114

 

 

131,090

 

 

121,419

 

 

121,461

 

 

121,359

 

 

121,359

 

749

 

N/A

2014

 

 

 

 

 

 

 

 

312,947

 

 

263,727

 

 

205,545

 

 

183,732

 

 

184,724

 

 

184,724

 

1,650

 

N/A

2015

 

 

 

 

 

 

 

 

 

 

 

240,258

 

 

124,993

 

 

126,432

 

 

126,432

 

 

126,432

 

1,477

 

N/A

2016

 

 

 

 

 

 

 

 

 

 

 

 

 

 

204,775

 

 

260,561

 

 

255,561

 

 

252,023

 

4,409

 

N/A

2017

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

469,561

 

 

584,857

 

 

600,988

 

5,369

 

N/A

2018

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

527,258

 

 

572,429

 

82,625

 

N/A

2019

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

853,790

 

363,334

 

N/A

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

$

2,798,321

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(Some amounts may not reconcile due to rounding.)

 

 

 

Cumulative Paid Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance

 

 

 

Years Ended December 31,

 

 

 

2012

 

 

2013

 

 

2014

 

 

2015

 

 

2016

 

 

2017

 

 

2018

 

 

2019

Accident Year

 

 

(unaudited)

 

 

(unaudited)

 

 

(unaudited)

 

 

(unaudited)

 

 

(unaudited)

 

 

(unaudited)

 

 

(unaudited)

 

 

 

(Dollars in thousands)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2012

 

$

26,704

 

$

47,635

 

$

55,926

 

$

65,905

 

$

66,511

 

$

67,638

 

$

70,505

 

$

84,550

2013

 

 

 

 

 

42,793

 

 

73,212

 

 

86,957

 

 

102,145

 

 

107,086

 

 

109,786

 

 

117,699

2014

 

 

 

 

 

 

 

 

72,526

 

 

116,833

 

 

144,471

 

 

161,086

 

 

169,757

 

 

171,960

2015

 

 

 

 

 

 

 

 

 

 

 

47,862

 

 

76,584

 

 

102,906

 

 

111,100

 

 

114,511

2016

 

 

 

 

 

 

 

 

 

 

 

 

 

 

75,192

 

 

171,256

 

 

228,381

 

 

240,359

2017

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

245,772

 

 

508,255

 

 

592,765

2018

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

90,429

 

 

330,681

2019

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

151,893

 

 

 

 

 

 

 

 

 

 

 

 

 

 

$

1,804,419

All outstanding liabilities prior to 2012, net of reinsurance

 

 

 

 

 

 

 

 

 

 

 

 

 

 

4,034

Liabilities for claims and claim adjustment expenses, net of reinsurance

 

 

 

 

 

 

 

 

 

 

$

997,937

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(Some amounts may not reconcile due to rounding.)

 

 

Average Annual Percentage Payout of Incurred Claims by Age, Net of Reinsurance (unaudited)

 

Years

 

1

 

 

2

 

 

3

 

 

4

 

 

5

 

 

6

 

 

7

 

 

8

 

Property

 

26.9

%

 

37.2

%

 

15.9

%

 

8.0

%

 

3.4

%

 

1.5

%

 

5.2

%

 

16.2

%

F-23

Insurance – Casualty Business

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

At December 31, 2019

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total of

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

IBNR Liabilities

 

 

 

 

 

Incurred Claims and Allocated Claim Adjustment Expenses, Net of reinsurance

 

Plus Expected

 

 

 

 

 

 Years Ended December 31,

 

Development

 

Cumulative

 

 

 

2012

 

 

2013

 

 

2014

 

 

2015

 

 

2016

 

 

2017

 

 

2018

 

 

2019

 

on Reported

 

Number of

Accident Year

 

 

(unaudited)

 

 

(unaudited)

 

 

(unaudited)

 

 

(unaudited)

 

 

(unaudited)

 

 

(unaudited)

 

 

(unaudited)

 

 

 

 

Claims

 

Reported Claims

(Dollars in thousands)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2012

 

$

212,636

 

$

174,914

 

$

185,267

 

$

184,598

 

$

188,211

 

$

179,329

 

$

179,329

 

$

179,328

 

1,289

 

15,769

2013

 

 

 

 

 

256,032

 

 

228,065

 

 

230,599

 

 

224,601

 

 

182,759

 

 

182,759

 

 

182,759

 

1,114

 

21,350

2014

 

 

 

 

 

 

 

 

237,875

 

 

238,867

 

 

240,761

 

 

247,403

 

 

247,403

 

 

247,404

 

959

 

25,188

2015

 

 

 

 

 

 

 

 

 

 

 

258,918

 

 

259,149

 

 

262,747

 

 

262,747

 

 

262,747

 

1,205

 

26,896

2016

 

 

 

 

 

 

 

 

 

 

 

 

 

 

351,476

 

 

337,950

 

 

336,400

 

 

336,380

 

1,688

 

31,517

2017

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

261,240

 

 

256,418

 

 

256,597

 

6,006

 

34,701

2018

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

607,682

 

 

607,851

 

296,857

 

33,817

2019

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

772,505

 

614,653

 

30,144

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

$

2,845,571

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(Some amounts may not reconcile due to rounding.)

 

 

 

Cumulative Paid Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance

 

 

 

Years Ended December 31,

 

 

 

2012

 

 

2013

 

 

2014

 

 

2015

 

 

2016

 

 

2017

 

 

2018

 

 

2019

Accident Year

 

 

(unaudited)

 

 

(unaudited)

 

 

(unaudited)

 

 

(unaudited)

 

 

(unaudited)

 

 

(unaudited)

 

 

(unaudited)

 

 

 

(Dollars in thousands)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2012

 

$

15,683

 

$

55,216

 

$

84,382

 

$

116,589

 

$

133,237

 

$

146,961

 

$

159,713

 

$

162,342

2013

 

 

 

 

 

17,116

 

 

68,567

 

 

101,617

 

 

129,715

 

 

149,722

 

 

162,454

 

 

170,698

2014

 

 

 

 

 

 

 

 

20,371

 

 

71,893

 

 

114,156

 

 

143,822

 

 

213,512

 

 

222,038

2015

 

 

 

 

 

 

 

 

 

 

 

19,948

 

 

67,951

 

 

116,847

 

 

213,722

 

 

229,153

2016

 

 

 

 

 

 

 

 

 

 

 

 

 

 

24,463

 

 

98,470

 

 

285,967

 

 

297,182

2017

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

21,116

 

 

167,224

 

 

180,400

2018

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

27,054

 

 

196,285

2019

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

33,097

 

 

 

 

 

 

 

 

 

 

 

 

 

 

$

1,491,195

All outstanding liabilities prior to 2012, net of reinsurance

 

 

 

 

 

 

 

 

 

 

 

 

 

 

27,899

Liabilities for claims and claim adjustment expenses, net of reinsurance

 

 

 

 

 

 

 

 

 

 

 

 

 

$

1,382,275

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(Some amounts may not reconcile due to rounding.)

 

 

Average Annual Percentage Payout of Incurred Claims by Age, Net of Reinsurance (unaudited)

 

 

 

Years

 

1

 

 

2

 

 

3

 

 

4

 

 

5

 

 

6

 

 

7

 

 

8

 

Casualty

 

6.3

%

 

20.0

%

 

20.2

%

 

16.4

%

 

12.0

%

 

9.7

%

 

9.8

%

 

5.9

%

Insurance – Property Business

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

At December 31, 2019

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total of

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

IBNR Liabilities

 

 

 

 

 

Incurred Claims and Allocated Claim Adjustment Expenses, Net of reinsurance

 

Plus Expected

 

 

 

 

 

 Years Ended December 31,

 

Development

 

Cumulative

 

 

 

2012

 

 

2013

 

 

2014

 

 

2015

 

 

2016

 

 

2017

 

 

2018

 

 

2019

 

on Reported

 

Number of

Accident Year

 

 

(unaudited)

 

 

(unaudited)

 

 

(unaudited)

 

 

(unaudited)

 

 

(unaudited)

 

 

(unaudited)

 

 

(unaudited)

 

 

 

 

Claims

 

Reported Claims

(Dollars in thousands)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2012

 

$

58,615

 

$

46,888

 

$

43,520

 

$

44,848

 

$

44,278

 

$

44,076

 

$

44,077

 

$

44,077

 

14

 

 N/A  

2013

 

 

 

 

 

63,853

 

 

56,900

 

 

52,113

 

 

52,815

 

 

52,500

 

 

52,500

 

 

52,450

 

27

 

 N/A  

2014

 

 

 

 

 

 

 

 

68,093

 

 

69,820

 

 

67,409

 

 

66,524

 

 

66,524

 

 

66,509

 

21

 

 N/A  

2015

 

 

 

 

 

 

 

 

 

 

 

80,421

 

 

75,906

 

 

75,484

 

 

75,484

 

 

75,518

 

14

 

 N/A  

2016

 

 

 

 

 

 

 

 

 

 

 

 

 

 

142,885

 

 

163,117

 

 

162,678

 

 

163,791

 

7

 

 N/A  

2017

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

291,935

 

 

293,342

 

��

297,355

 

818

 

 N/A  

2018

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

377,148

 

 

372,847

 

10,730

 

 N/A  

2019

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

336,859

 

73,827

 

 N/A  

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

$

1,409,406

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(Some amounts may not reconcile due to rounding.)

F-24

 

 

 

Cumulative Paid Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance

 

 

 

Years Ended December 31,

 

 

 

2012

 

 

2013

 

 

2014

 

 

2015

 

 

2016

 

 

2017

 

 

2018

 

 

2019

Accident Year

 

 

(unaudited)

 

 

(unaudited)

 

 

(unaudited)

 

 

(unaudited)

 

 

(unaudited)

 

 

(unaudited)

 

 

(unaudited)

 

 

 

(Dollars in thousands)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2012

 

$

26,894

 

$

44,665

 

$

42,861

 

$

44,501

 

$

44,152

 

$

44,077

 

$

44,032

 

$

44,054

2013

 

 

 

 

 

35,190

 

 

54,172

 

 

52,537

 

 

52,798

 

 

52,423

 

 

52,409

 

 

52,415

2014

 

 

 

 

 

 

 

 

40,260

 

 

66,400

 

 

66,564

 

 

65,927

 

 

66,404

 

 

66,432

2015

 

 

 

 

 

 

 

 

 

 

 

45,374

 

 

70,326

 

 

75,078

 

 

75,095

 

 

74,951

2016

 

 

 

 

 

 

 

 

 

 

 

 

 

 

70,439

 

 

138,683

 

 

150,678

 

 

157,336

2017

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

155,374

 

 

296,514

 

 

290,270

2018

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

242,912

 

 

354,900

2019

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

218,586

 

 

 

 

 

 

 

 

 

 

 

 

 

 

$

1,258,943

All outstanding liabilities prior to 2012, net of reinsurance

 

 

 

 

 

 

 

 

 

 

 

 

 

 

422

Liabilities for claims and claim adjustment expenses, net of reinsurance

 

 

 

 

 

 

 

 

 

 

$

150,884

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(Some amounts may not reconcile due to rounding.)

 

 

Average Annual Percentage Payout of Incurred Claims by Age, Net of Reinsurance (unaudited)

Years

 

1

 

 

2

 

 

3

 

 

4

 

 

5

 

 

6

 

 

7

 

 

8

 

Property

 

59.2

%

 

37.0

%

 

1.0

%

 

2.0

%

 

0.8

%

 

-

%

 

-

%

 

0.1

%

Reconciliation of the Disclosure ofUltimate Incurred Loss and Paid Claims Development to the Liability for Unpaid Claims and ClaimAllocated Loss Adjustment Expenses,

The reconciliation Net of thereinsurance

Plus Expected
Years Ended December 31,
Development
Cumulative
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
on Reported
Number of
Accident
Year
(unaudited)
(unaudited)
(unaudited)
(unaudited)
(unaudited)
(unaudited)
(unaudited)
(unaudited)
(unaudited)
Claims
Reported
Claims
(Dollars in millions)
2013
$
176
$
222
$
220
$
226
$
215
$
215
$
215
$
215
$
215
$
215
-
N/A
2014
254
234
256
227
227
227
227
227
227
1
N/A
2015
208
249
236
236
236
236
236
236
5
N/A
2016
242
238
238
238
238
238
238
12
N/A
2017
198
203
203
203
203
203
23
N/A
2018
769
754
800
822
874
117
N/A
2019
971
1,019
1,020
1,035
363
N/A
2020
1,061
1,033
1,001
590
N/A
2021
1,345
1,338
899
N/A
2022
1,413
1,036
N/A
$
6,780
(Some amounts may not reconcile due to rounding.)
F-24
Cumulative Paid Loss and Allocated Loss Adjustment Expenses, Net of Reinsurance
Years Ended December 31,
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
Accident Year
(unaudited)
(unaudited)
(unaudited)
(unaudited)
(unaudited)
(unaudited)
(unaudited)
(unaudited)
(unaudited)
(Dollars in millions)
2013
$
12
$
28
$
63
$
97
$
125
$
158
$
175
$
180
$
183
$
192
2014
15
34
76
106
143
173
182
186
208
2015
15
38
84
145
167
186
193
205
2016
17
53
87
143
159
185
206
2017
26
84
104
122
145
164
2018
119
194
300
402
466
2019
150
248
370
479
2020
137
227
329
2021
157
227
2022
116
$
2,592
All outstanding liabilities prior to 2013, net incurred and paid claims development tables to the liabilityof reinsurance
204
Liabilities for claims and claim adjustment expenses, net of reinsurance
$
4,392
(Some amounts may not reconcile due to rounding.)
Average Annual Percentage Payout
of Incurred Loss by Age, Net of Reinsurance (unaudited)
Years
1
2
3
4
5
6
7
8
9
10
Casualty
11.3
%
9.1
%
12.6
%
13.5
%
9.6
%
11.3
%
5.9
%
3.2
%
5.5
%
4.2
%
F-25
Reinsurance – Property Business
At December 31, 2022
Total of
IBNR Liabilities
Ultimate Incurred Loss and Allocated Loss Adjustment Expenses, Net of reinsurance
Plus Expected
Years Ended December 31,
Development
Cumulative
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
on Reported
Number of
Accident
Year
(unaudited)
(unaudited)
(unaudited)
(unaudited)
(unaudited)
(unaudited)
(unaudited)
(unaudited)
(unaudited)
Claims
Reported
Claims
(Dollars in millions)
2013
$
390
$
286
$
244
$
204
$
203
$
203
$
203
$
203
$
203
$
203
-
N/A
2014
588
508
385
356
357
357
357
357
357
-
N/A
2015
546
355
328
328
328
328
328
328
-
N/A
2016
625
647
647
643
642
642
642
1
N/A
2017
1,273
1,857
2,025
2,119
2,172
2,210
1
N/A
2018
2,222
2,111
2,101
2,049
2,019
4
N/A
2019
1,685
1,691
1,618
1,513
9
N/A
2020
1,862
1,905
1,845
82
N/A
2021
2,158
2,144
303
N/A
2022
2,563
1,448
N/A
$
13,824
(Some amounts may not reconcile due to rounding.)
Cumulative Paid Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance
Years Ended December 31,
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
Accident
Year
(unaudited)
(unaudited)
(unaudited)
(unaudited)
(unaudited)
(unaudited)
(unaudited)
(unaudited)
(unaudited)
(Dollars in millions)
2013
$
128
$
152
$
163
$
177
$
185
$
191
$
195
$
196
$
197
$
199
2014
151
234
289
318
333
336
339
342
349
2015
155
227
279
294
299
304
309
319
2016
231
489
584
591
596
600
611
2017
781
1,542
1,900
2,022
2,118
2,195
2018
477
1,367
1,672
1,819
1,876
2019
670
1,037
1,279
1,398
2020
536
1,118
1,432
2021
638
1,293
2022
564
$
10,237
All outstanding liabilities prior to 2013, net of reinsurance
28
Liabilities for claims and claim adjustment expenses, net of reinsurance
$
3,615
(Some amounts may not reconcile due to rounding.)
Average Annual Percentage Payout
of Incurred Loss by Age, Net of Reinsurance (unaudited)
Years
1
2
3
4
5
6
7
8
9
10
Property
31.3
%
32.8
%
15.7
%
6.2
%
3.3
%
2.5
%
1.5
%
1.5
%
1.6
%
0.9
%
F-26
Insurance – Casualty Business
At December 31, 2022
Total of
IBNR Liabilities
Ultimate Incurred Loss and Allocated Loss Adjustment Expenses, Net of reinsurance
Plus Expected
Years Ended December 31,
Development
Cumulative
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
on Reported
Number of
Accident
Year
(unaudited)
(unaudited)
(unaudited)
(unaudited)
(unaudited)
(unaudited)
(unaudited)
(unaudited)
(unaudited)
Claims
Reported
Claims
(Dollars in millions)
2013
$
256
$
228
$
230
$
224
$
194
$
194
$
195
$
195
$
195
$
195
1
21,078
2014
237
238
240
254
254
254
255
255
255
1
24,930
2015
258
258
277
277
277
265
265
269
3
26,455
2016
351
276
279
281
287
287
281
-
30,793
2017
304
237
237
237
236
232
-
34,648
2018
645
644
666
689
697
149
35,173
2019
768
755
794
813
168
39,110
2020
816
792
792
325
37,445
2021
1,112
1,112
595
42,574
2022
1,039
635
36,436
$
5,685
(Some amounts may not reconcile due to rounding.)
Cumulative Paid Loss and Allocated Loss Adjustment Expenses, Net of Reinsurance
Years Ended December 31,
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
Accident
Year
(unaudited)
(unaudited)
(unaudited)
(unaudited)
(unaudited)
(unaudited)
(unaudited)
(unaudited)
(unaudited)
(Dollars in millions)
2013
$
17
$
69
$
102
$
130
$
150
$
167
$
183
$
189
$
193
$
194
2014
20
72
114
144
229
229
250
253
254
2015
20
68
117
199
244
259
263
266
2016
25
101
275
299
308
313
318
2017
23
151
157
216
233
239
2018
63
189
271
383
435
2019
11
216
350
489
2020
81
209
340
2021
201
339
2022
221
$
3,097
All outstanding liabilities prior to 2013, net of reinsurance
19
Liabilities for claims and claim adjustment expenses, net of reinsurance
$
2,607
(Some amounts may not reconcile due to rounding.)
Average Annual Percentage Payout
of Incurred Loss by Age, Net of Reinsurance (unaudited)
Years
1
2
3
4
5
6
7
8
9
10
Casualty
12.0
%
20.5
%
18.4
%
17.3
%
11.8
%
3.6
%
4.6
%
1.7
%
1.2
%
0.6
%
F-27
Insurance – Property Business
At December 31, 2022
Total of
IBNR Liabilities
Ultimate Incurred Loss and Allocated Loss Adjustment Expenses, Net of reinsurance
Plus Expected
Years Ended December 31,
Development
Cumulative
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
on Reported
Number of
Accident
Year
(unaudited)
(unaudited)
(unaudited)
(unaudited)
(unaudited)
(unaudited)
(unaudited)
(unaudited)
(unaudited)
Claims
Reported
Claims
(Dollars in millions)
2013
$
64
$
56
$
52
$
53
$
52
$
52
$
52
$
52
$
52
$
52
-
N/A
2014
67
70
67
66
66
66
66
66
66
-
N/A
2015
81
75
75
75
75
88
88
85
-
N/A
2016
142
169
164
163
158
158
165
-
N/A
2017
230
293
297
299
305
315
-
N/A
2018
376
372
377
377
383
-
N/A
2019
337
349
348
354
1
N/A
2020
509
509
503
14
N/A
2021
539
536
8
N/A
2022
699
242
N/A
$
3,158
(Some amounts may not reconcile due to rounding.)
Cumulative Paid Loss and Allocated Loss Adjustment Expenses, Net of Reinsurance
Years Ended December 31,
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
Accident
Year
(unaudited)
(unaudited)
(unaudited)
(unaudited)
(unaudited)
(unaudited)
(unaudited)
(unaudited)
(unaudited)
(Dollars in millions)
2013
$
35
$
54
$
52
$
53
$
52
$
52
$
52
$
52
$
52
$
52
2014
40
66
66
66
66
66
66
66
66
2015
45
70
75
75
75
76
76
76
2016
72
152
168
163
162
164
165
2017
161
293
282
296
312
315
2018
236
342
368
377
383
2019
218
336
350
353
2020
263
366
386
2021
360
506
2022
383
$
2,685
All outstanding liabilities prior to 2013, net of reinsurance
-
Liabilities for claims and claim adjustment expenses, net of reinsurance
$
473
(Some amounts may not reconcile due to rounding.)
Average Annual Percentage Payout
of Incurred Loss by Age, Net of Reinsurance (unaudited)
Years
1
2
3
4
5
6
7
8
9
10
Property
57.4
%
34.0
%
3.5
%
1.5
%
1.9
%
0.9
%
0.2
%
0.4
%
0.1
%
0.1
%
F-28
Reconciliation of
the Disclosure
of Incurred
and Paid
Claims Development
to the
Liability for
Unpaid Claims
and
Claim Adjustment Expenses
The
reconciliation
of
the
net
incurred
and
paid
claims
development
tables
to
the
liability
for
claims
and
claim
adjustment expenses in the consolidated
statement of financial position is as follows.

 

At December 31,

 

2019

(Dollars in thousands)

 

 

Net outstanding liabilities

 

 

U.S. Reinsurance Casualty

$

1,611,666

U.S. Reinsurance Property

 

1,035,477

International Casualty

 

661,860

International Property

 

997,937

Insurance Casualty

 

1,382,275

Insurance Property

 

150,884

Liabilities for unpaid claims and claim adjustment expenses, net of reinsurance

 

5,840,099

 

 

 

Reinsurance recoverable on unpaid claims

 

 

U.S. Reinsurance Casualty

 

914,400

U.S. Reinsurance Property

 

745,217

International Casualty

 

364,868

International Property

 

560,273

Insurance Casualty

 

1,440,156

Insurance Property

 

190,435

Total reinsurance recoverable on unpaid claims

 

4,215,348

 

 

 

Unallocated claims adjustment expenses

 

126,530

Other

 

27,542

 

 

154,071

 

 

 

Total gross liability for unpaid claims and claim adjustment expense

$

10,209,519

 

 

 

(Some amounts may not reconcile due to rounding.)

 

 

F-25

Reserving Methodology

The Company maintains reserves equal to our estimated ultimate

At December 31,
2022
(Dollars in millions)
Net outstanding liabilities
Reinsurance Casualty
$
4,392
Reinsurance Property
3,615
Insurance Casualty
2,607
Insurance Property
473
Liabilities for unpaid claims and claim adjustment expenses, net of reinsurance
11,087
Reinsurance recoverable on unpaid claims
Reinsurance Casualty
980
Reinsurance Property
908
Insurance Casualty
1,626
Insurance Property
169
Total reinsurance recoverable
on unpaid claims
3,684
Unallocated claims adjustment expenses
175
Other
32
207
Total gross liability for lossesunpaid claims and lossclaim adjustment expense (LAE)
$
14,977
(Some amounts may not reconcile due to rounding.)
Reserving Methodology
The Company
maintains
reserves equal
to our
estimated
ultimate liability
for reported losses
and loss
adjustment
expense
(LAE)
for
reported
and
unreported
claims
for
our
insurance
and
reinsurance
businesses.
Because
reserves
are
based
on
estimates
of
ultimate
losses
and
LAE
by
underwriting
or
accident
year,
the
Company
uses
a
variety
of
statistical
and
actuarial
techniques
to
monitor
reserve
adequacy
over
time,
evaluate
new
information
as
it
becomes known,
and adjust
reserves whenever
an adjustment
appears warranted.
The Company
considers many
factors
when
setting
reserves
including:
(1)
exposure
base
and
projected
ultimate
premium;
(2)
expected
loss
ratios
by
product
and
class
of
business,
which
are
developed
collaboratively
by
underwriters
and
actuaries;
(3)
actuarial
methodologies
and
assumptions
which
analyze
loss
reporting
and
payment
experience,
reports
from
ceding
companies
and
historical
trends,
such
as
reserving
patterns,
loss
payments,
and
product
mix;
(4)
current
legal
interpretations
of
coverage
and
liability;
and
(5)
economic
conditions.
Management’s
best
estimate
is
developed
through
collaboration
with
actuarial,
underwriting,
claims,
legal
and
finance
departments
and
culminates
with
the
input
of reserve
committees.
Each
segment reserve
committee
includes
the
participation
of
the relevant
parties from
actuarial, finance, claims
and projected ultimate premium; (2) expected loss ratios segment senior
management and
has the responsibility
for
recommending
and
approving
management’s
best
estimate.
Reserves
are
further
reviewed
by product
Everest’s
Chief
Reserving Actuary
and class senior
management.
The objective
of business, which are developed collaboratively by underwriters and actuaries; (3) actuarial methodologies and assumptions which analyze loss reporting and payment experience, reports from ceding companies and historical trends, such as reserving patterns, loss payments, and product mix; (4) current legal interpretations of coverage and liability; and (5) economic conditions.  Insurance and reinsurance loss and LAE reserves represent the Company’s
process
is to
determine
a single
best estimate
viewed
by
management
to
be
the
best
estimate
of
its
ultimate
loss
liability.
Actual
loss
and
LAE
ultimately
paid
may
deviate,
perhaps
substantially,
from
such
reserves.
Net
income (gain or loss)
will
be
impacted
in
a
period
in
which
the
change in estimated ultimate loss
and LAE is recorded.

F-29
The detailed
data required
to evaluate
ultimate losses
for the
Company’s
insurance business
is accumulated
from
its
underwriting
and
claim
systems.
Reserving
for
reinsurance
requires
evaluation
of
loss
information
received
from ceding companies.
Ceding companies report losses
in many forms depending
on the type of contract
and the
agreed
or
contractual
reporting
requirements.
Generally,
pro
rata
contracts
require
the
submission
of
a
monthly/quarterly
account,
which includes
premium and
loss
activity for
the period
with corresponding
reserves
as established
by the
ceding company.
This information
is recorded
into the
Company’s
records.
For certain
pro
rata contracts, require the submission of a monthly/quarterly account, which includes premium and loss activity for the period with corresponding reserves as established by the ceding company.  This information is recorded into the Company’s records.  For certain pro rata contracts,
the Company may
require a detailed
loss report
for claims that
exceed a
certain dollar threshold
or
relate to a particular type of loss.
Excess of loss and facultative
contracts generally require
individual loss reporting
with precautionary
notices provided
when a
loss reaches
a significant
percentage
of the
attachment
point of
the
contract
or when
certain
causes
of loss
or types
of injury
occur.
Experienced claims
staff
handles
individual
loss
reports and
supporting claim
information.
Based on
evaluation
of a
claim, the
Company may
establish additional
case reserves
in addition
to the
case reserves
reported by
the ceding
company.
To
ensure ceding
companies are
submitting required
and accurate
data, Everest’s
Underwriting, Claim, Reinsurance
Accounting, and
Internal Audit
Departments perform
various reviews
of ceding companies,
particularly larger
ceding companies,
including on-site audits.

audits of domestic ceding companies.
The
Company
segments
both
reinsurance
and
insurance
reserves
into
exposure
groupings
for
actuarial
analysis.
The
Company
assigns
business
to
exposure
groupings
so
that
the
underlying
exposures
have
reasonably
homogeneous
loss development
characteristics
and are
large
enough to
facilitate
credible
estimation
of ultimate
losses.
The Company periodically
reviews its exposure
groupings and may
change groupings
over time as
business
changes.
The Company
currently uses
approximately
200
exposure
groupings to
develop reserve
estimates.
One
of the
key
selection
characteristics
for
the exposure
groupings
is the
historical
duration
of the
claims
settlement
process.
Business in which claims are reported
and settled relatively
quickly are commonly referred
to as short tail
lines, principally property
lines.
On the other
hand, casualty
claims tend
to take
longer to be
reported and
settled
and casualty lines
are generally
referred to
as long tail
lines. Estimates
of ultimate losses
for shorter tail
lines, with
the
exception
of
loss
estimates
for
large
catastrophic
events,
generally
exhibit
less
volatility
than
those
for
the
longer tail lines.

The
Company
uses
a
variety
of
actuarial
methodologies,
such
as
the
expected
loss
ratio
method,
chain
ladder
methods,
and
Bornhuetter-Ferguson
methods,
supplemented
by
judgment
where
appropriate,
to
estimate
ultimate loss and LAE for each exposure
group.

Expected Loss Ratio Method:
The expected loss ratio method uses
earned premium times an expected loss ratio
to
calculate
ultimate losses
for a
given underwriting
or accident
year.
This method
relies entirely
on expectation
to
project
ultimate
losses
with
no
consideration
given
to
actual
losses.
As
such,
it
may
be
appropriate
for
an
immature underwriting or
accident year where
few,
if any,
losses have been
reported or paid,
but less appropriate
for a more mature year.

Chain Ladder Method:
Chain ladder
methods use
a standard
loss development
triangle to
project ultimate
losses.  Age-to-age development factors are selected for each development period and combined to calculate

F-26

Age-to-age

age-to-ultimate development

factors
are
selected
for
each
development
period
and
combined
to
calculate
age-to-
ultimate
development
factors
which
are
then
applied
to
paid
or
reported
losses
to
project
ultimate
losses.
This
method
relies
entirely
on
actual
paid
or
reported
losses
to
project
ultimate
losses.
No
other
factors
such
as
changes
in
pricing
or
other
expectations
are
taken
into
account.
It
is
most
appropriate
for
groups
with
homogeneous,
stable
experience
where
past
development
patterns
are
expected
to
continue
in pricing or other expectations are taken into account.  the
future.
It is most appropriate for groups with homogeneous, stable experience where past development patterns are expected to continue in the future.  It is
least appropriate for groups
which have changed significantly
over time or which are more volatile.

Bornhuetter-Ferguson
Method:
The
Bornhuetter-Ferguson
method
is
a
combination
of
the
expected
loss
ratio
method and the chain ladder
method.
Ultimate losses are projected
based partly on actual paid
or reported losses
and partly
on expectation.
Incurred but
not reported
(IBNR) reserves
are calculated
using earned
premium, an
a
priori
loss
ratio,
and
selected
age-to-age
development
factors
and
added
to
actual
reported
(paid)
losses
to
determine
ultimate
losses.
It is
more responsive
to actual
reported (paid) losses to determine ultimate losses.  It is more responsive to actual reported
or paid
development
than the
expected
loss
ratio
method
but
less
responsive
than
the
chain
ladder
method.
The
reliability
of
the
method
depends
on
the
accuracy of the selected a priori loss ratio.

F-30
Although the Company
uses similar actuarial
methods for
both short
tail and long
tail lines, the
faster reporting
of
experience for the short tail lines allows
the Company to have greater
confidence in its estimates of ultimate
losses
for short
tail lines
at an
earlier stage
than for
long tail
lines.
As a
result, the
Company
utilizes, as
well, exposure-basedexposure-
based methods to estimate its ultimate
losses for longer tail lines, especially for
immature underwriting or accident
years.
For
both
short
and
long
tail
lines,
the
Company
supplements
these
general
approaches
with
analytically
based judgments.

Key
actuarial
assumptions
contain
no
explicit
provisions
for
reserve
uncertainty
nor does
do
we
supplement
the Company supplement the
actuarially determined reserves for uncertainty.

Carried reserves at
each reporting date
are the Company’s
best estimate
of ultimate unpaid
losses and LAE
at that
date.
The Company completes
detailed reserve studies
for each exposure group
annually for both reinsurance
and
insurance operations.
The completed annual
reserve studies
are “rolled-forward”
for each accounting
period until
the subsequent reserve study
is completed.
Analyzing the roll-forward
process involves
comparing actual reported
losses
to
expected
losses
based
on
the
most
recent
reserve
study.
The
Company
analyzes
significant
variances
between actual and expected losses and post
adjustments to its reserves as warranted.

The Company continues to receive claims under expired insurance

Certain
reserves,
including
losses
from
widespread
catastrophic
events
and
COVID-19
related
losses,
cannot
be
estimated using
traditional actuarial
methods. These
types of events
are reserved
for separately
using a variety
of
statistical
and
actuarial
techniques.
We
estimate
losses
for
these
types
of
events
based
on
information
derived
from
catastrophe
models,
quantitative
and
qualitative
exposure
analyses,
reports
and
communications
from
ceding companies and development patterns
for historically similar events,
where available.
The
Company
continues
to
receive
claims
under
expired
insurance
and
reinsurance
contracts
asserting
injuries
and/or
damages
relating
to
or
resulting
from
environmental
pollution
and
hazardous
substances,
including
asbestos.
Environmental
claims
typically
assert
liability
for
(a)
the
mitigation
or
remediation
of
environmental
contamination
or
(b)
bodily
injury
or
property
damage
caused
by
the
release
of
hazardous
substances
into
the
land,
air
or
water.
Asbestos
claims
typically
assert
liability
for
bodily
injury
from
exposure
to
asbestos
or
for
property damage resulting from asbestos
or products containing asbestos.

The
Company’s
reserves
include
an
estimate
of
the
Company’s
ultimate
liability
for
A&E
claims.
The
Company’s
A&E liabilities
emanate
from direct
insurance
business
and Everest
Re’s
assumed reinsurance
business.
All of
the
contracts of insurance
and reinsurance,
under which the Company
has received claims during
the past three years,
expired
more
than
20 years
ago.
There
are
significant
uncertainties
surrounding
the
Company’s
reserves
for
its
A&E losses.

A&E
exposures
represent
a
separate
exposure
group
for
monitoring
and
evaluating
reserve
adequacy.
The
following
table
summarizes
incurred
losses
with respect
to
A&E reserves
on both
a gross
and net
of reinsurance
basis for the periods indicated:

F-27

 

At December 31,

(Dollars in thousands)

 

2019

 

 

2018

 

 

2017

Gross basis:

 

 

 

 

 

 

 

 

Beginning of period reserves

$

347,495

 

$

448,993

 

$

441,111

Incurred losses

 

2,071

 

 

(2,473)

 

 

90,009

Paid losses

 

(91,645)

 

 

(99,026)

 

 

(82,126)

End of period reserves

$

257,921

 

$

347,495

 

$

448,993

 

 

 

 

 

 

 

 

 

Net basis:

 

 

 

 

 

 

 

 

Beginning of period reserves

$

223,548

 

$

269,153

 

$

274,409

Incurred losses

 

-

 

 

-

 

 

25,194

Paid losses 

 

(26,974)

 

 

(45,605)

 

 

(30,451)

End of period reserves

$

196,574

 

$

223,548

 

$

269,153

F-31
At December 31,
(Dollars in millions)
2022
2021
2020
Gross basis:
Beginning of period reserves
$
175
$
219
$
258
Incurred losses
144
11
2
Paid losses
(42)
(55)
(40)
End of period reserves
$
278
$
175
$
219
Net basis:
Beginning of period reserves
$
128
$
167
$
197
Incurred losses
113
(3)
(5)
Paid losses
(32)
(36)
(24)
End of period reserves
$
210
$
128
$
167
Reinsurance Receivables.  Recoverables.
Reinsurance receivables recoverables
for both
paid and unpaid
losses totaled $4,444,089 thousand$
3.8
billion and $4,840,936 thousand$
3.9
billion at December
31, 20192022 and 2018,
2021, respectively.
At December 31, 2019, $3,108,676 thousand,
2022, $
1.9
billion, or 70.0
51.0
%, was receivable
from Everest
Reinsurance
(Bermuda), Ltd. (“
(“Bermuda Re”),
an affiliated
entity,
and is
fully collateralized
by a
trust
agreement
and $338,965 thousand,
$
378
million,
or 7.6
10.0
%,
was
receivable
from
Mt.
Logan
Re
Ltd.
(Bermuda) (“
(“Mt.
Logan
Re”)
collateralized
segregated
accounts.
No
other
retrocessionaire
accounted
for
more
than
5
%
of
reinsurance
receivables.

4.
FAIR VALUE

GAAP guidance
regarding
fair value
measurements
address how
companies should
measure
fair value
when they
are required to use fair value
measures for recognition or disclosure
purposes under GAAP and provides a common
definition of fair value
to be used throughout
GAAP.
It defines fair value
as the price that would
be received to sell
an asset or
paid to transfer
a liability in
an orderly fashion
between market
participants at
the measurement date.
In
addition,
it
establishes
a
three-level
valuation
hierarchy
for
the
disclosure
of
fair
value
measurements.
The
valuation hierarchy for the disclosure of fair value measurements.  The valuation hierarchy
is based on
the transparency
of inputs to
the valuation
of an asset
or liability.
The level in
the
hierarchy
within which
a given
fair value
measurement
falls is
determined based
on the
lowest level
input that
is
significant to the measurement,
with Level 1 being the highest priority and Level 3 being the lowest
priority.

The levels in the hierarchy
are defined as follows:

Level 1:

Inputs to the valuation methodology are observable inputs that reflect unadjusted quoted prices for identical assets or liabilities in an active market;

Level 2:

Inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, and inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the financial instrument;

Level 3:

Inputs to the valuation methodology are Level 1:

Inputs
to
the
valuation
methodology
are
observable
inputs
that
reflect
unadjusted
quoted
prices
for
identical assets or liabilities in an active market;
Level 2:
Inputs
to
the
valuation
methodology
include
quoted
prices
for
similar
assets
and
liabilities
in
active
markets,
and
inputs
that
are
observable
for
the
asset
or
liability,
either
directly
or
indirectly,
for
substantially the full term of the financial instrument;
Level 3:
Inputs to the valuation methodology are
unobservable and significant to the fair value measurement.

The Company’s fixed maturity and equity securities are primarily managed by third party investment asset managers.  The investment asset managers obtain prices from nationally recognized pricing services.  These services seeksignificant to the fair va

lue measurement.
The
Company’s
fixed
maturity
and
equity
securities
are
primarily
managed
by
third
party
investment
asset
managers.
The
investment
asset
managers
managing
publicly
traded
securities
obtain
prices
from
nationally
recognized
pricing
services.
These
services
seek
to
utilize
market
data
and
observations
in
their
evaluation
process.
They use
pricing applications
that vary
by asset
class and
incorporate
available
market
information
and
when fixed
maturity
securities
do not
trade
on a
daily basis
the services
will apply
available
information
through
processes
such
as
benchmark
curves,
benchmarking
of
like
securities,
sector
groupings
and
matrix
pricing.
In
addition,
they
use
model
processes,
such
as
the
Option
Adjusted
Spread
model
to
develop
prepayment
and
interest rate scenarios
for securities that have
prepayment features.

F-28

F-32

In limited instances where prices are not provided by pricing services or in rare instances when a manager may not agree with the pricing service, price quotes on a non-binding basis are obtained from investment brokers. 

The investment
asset managers
do not make
any changes to
prices received from
either the pricing
services or the
investment
brokers.
In
addition,
the
investment
asset
managers
have
procedures
in
place
to
review
the
reasonableness
of the
prices from
the service
providers
and may
request verification
of the
prices. The
Company
also
continually
performs
quantitative
and
qualitative
analysis
of
prices,
including
but
not
limited
to
initial
and
ongoing
review
of
pricing
methodologies,
review
of
prices
obtained
from
pricing
services
and
third
party
investment
asset managers, have procedures in place to
review the reasonableness of
pricing statistics
and trends,
and comparison
of the prices from the service providers and may request verification of the prices.  In addition, the Company continually performs analytical reviews of
for certain
securities
with a
secondary price changes and tests the prices on a random basis to an independent pricing source.
source for
reasonableness. No
material variances
were noted
during these
price validation
procedures.
In limited
situations,
where
financial
markets
are
inactive
or
illiquid,
the
Company
may
use its
own
assumptions
about
future
cash
flows
and
risk-adjusted
discount
rates
to
determine
fair
value.
At
December
31,
2022,
$
1.7
billion
of
fixed
maturities
were
fair
valued
using
unobservable
inputs.
The
majority
of
these
fixed
maturities
were
valued
by
investment
managers’
valuation
committees
and
many
of
these
fair
values
were
substantiated
by
valuations
from
independent
third
parties.
The
Company
has
procedures
in
place
to
evaluate
these independent
third
party valuations.
At
December 31, 2019, $702,331 thousand2021,
$
2.0
billion of
fixed
maturities market value and $5,826 thousand of fixed maturities, fair value
were fair
valued
using unobservable inputs.
The majority of the fixed maturities, market
Company
internally
manages
a
public
equity
portfolio
which
had
a
fair
value $610,873 thousand
at
December
31,
2022
and all of the $5,826 thousand of fixed maturities, fair value, were valued by investment managers’ valuation committees and a majority of these fair values were substantiated by valuations from independent third parties.  The Company has procedures in place to review and evaluate these independent third party valuations.  The remaining Level 3 fixed maturities of $91,458 thousand were fair valued by the Company at either par or amortized cost, which the Company believes approximates fair value.  At
December 31, 2018, $383,994 thousand
2021
of fixed maturities, market value
$
97
million
and $2,337 thousand
$
1.3
billion,
respectively.
The
Company
internally
manages
a
portfolio
of fixed maturities, fair value were fair valued using unobservable inputs.  The majority of the fixed maturities, market value, $354,133 thousand and all of the $2,337 thousand of fixed maturities, fair value, were valued by investment managers’ valuation committees and a majority of these fair values were substantiated by valuations from independent third parties.  The remaining Level 3 fixed maturities of $28,708 thousand were fair valued by the Company at either par or amortized cost and $1,153 thousand were priced using a non-binding broker quote. 

The Company internally manages a public equity portfolio

collateralized
loan obligations
included in
asset-backed
securities available
for sale,
which had
a fair
value of
$
2.6
billion at
December 31, 2019
2022 and
$
2.0
billion at
December 31, 2018 of $170,888 thousand and $124,228 thousand, respectively, and all
2021. All
prices for
these securities
were obtained
from publicly published sources. 

sources or nationally

recognized pricing vendors.
Equity
securities
denominated
in
U.S.
currency
with
quoted
prices
in
active
markets
for
identical
assets
are
categorized
as
Level
1
since
the
quoted
prices
are
directly
observable.
Equity
securities
traded
on
foreign
exchanges
are categorized
as level 1 since the quoted prices are directly observable.  Equity securities traded on foreign exchanges are categorized as level Level
2 due
to the
added input
of a
foreign
exchange
conversion
rate
to determine
fair or market value.
The Company uses foreign currency exchange
rates published by a nationally
recognized sources.

All categories of

source.
Fixed
maturity securities
listed
in the
tables have
been categorized
as Level
2, since
a particular
security may
not
have
traded
but
the
pricing
services
are
able
to
use
valuation
models
with
observable
market
inputs
such
as
interest
rate
yield curves
and prices
for similar
fixed maturity securities listed in the tables below are generally categorized as level 2, since a particular security may not have traded but the pricing services are able to use valuation models with observable market inputs such as interest rate yield curves and prices for similar fixed maturity
securities in
terms of
issuer,
maturity and
seniority.
For
foreign
government
securities
and
foreign
corporate
securities,
the
fair
values
provided
by
the
third
party
pricing
services
in
local
currencies,
and
where
applicable,
are
converted
to
U.S.
dollars
using
currency
exchange
rates from nationally recognized
sources.

The

In addition
to the
valuations from
investment
managers,
some of
the fixed
maturities with
fair values
categorized
as levelLevel 3 result when prices are
not available from the nationally
recognized pricing services.  services and are
derived using
unobservable
inputs.
The
Company
will
value
the
securities
with
unobservable
inputs
using
comparable
market
information
or receive
fair
values
from investment
managers.
The asset investment
managers will then
may
obtain
non-binding
price quotes
for the
securities from
brokers.
The single
broker
quotes are
provided
by market
makers
or broker-dealers broker-
dealers
who
are
recognized
as
market
participants
in
the
markets
in
which
they
are
providing
the
quotes.
The
prices received from brokers
are reviewed for
reasonableness by the third
party asset managers and
the Company.
If the broker quotes are for
foreign denominated securities,
the quotes are converted
to U.S. dollars using currency
exchange rates from
nationally recognized sources. In limited circumstances sources
.
The fixed maturities
with fair values
categorized as
Level 3 result
when broker prices are
not available for private placements,
from the Company will value the securities using comparable market information or receive fair values from investment managers. 

nationally

F-29

recognized pricing services.
The

The composition

and
valuation
inputs
for
the
presented
fixed
maturities
categories
Level
1
and
Level
2
are
as
follows:

·

●
U.S. Treasury
securities and obligations
of U.S. government
agencies and corporations
are primarily comprised
of U.S. Treasury
bonds and the fair value is based
on observable market inputs
such as quoted prices, reported
trades, quoted prices for similar issuances
or benchmark yields;

·

F-33
●
Obligations
of U.S.
states
and political
subdivisions are
comprised of
state
and municipal
bond issuances
and
the fair values
are based
on observable
market inputs
such as quoted
market prices,
quoted prices
for similar
securities, benchmark yields and credit spreads;
●
Corporate
securities
are
primarily
comprised
of U.S.
corporate
and
public utility
bond
issuances
and the
fair
values
are
based
on
observable
market
inputs
such
as
quoted
market
prices,
quoted
prices
for
similar
securities, benchmark yields and credit spreads;
●
Asset-backed
and
mortgage-backed
securities
fair
values
are
based
on
observable
inputs
such
as
quoted
prices,
reported
trades,
quoted
prices
for
similar
issuances
or
benchmark
yields and
cash
flow models
using
observable inputs such as prepayment speeds,
collateral performance and default
spreads;
●
Foreign government
securities are
comprised of
global non-U.S.
sovereign
bond issuances
and the
fair values
are based
on observable
market inputs
such as
quoted market
prices, quoted
prices for
similar securities
and
models
with
observable
inputs
such
as
benchmark
yields
and
credit
spreads
and
then,
where
applicable,
converted to U.S. dollars
using an exchange rate
from a nationally recognized
source;
●
Foreign corporate
securities are comprised of
global non-U.S. corporate
bond issuances and the fair
values are
based
on
observable
market
inputs
such
as
quoted
market
prices,
quoted
prices
for
similar
securities
and
models
with
observable
inputs
such
as
benchmark
yields
and
credit
spreads
and
then,
where
applicable,
converted to U.S. dollars
using an exchange rate
from a nationally recognized
source.
Other
invested
assets,
at
fair
value,
were
categorized
as
Level
3
at
December
31,
2022
and
December 31,
2021,
since it represented
a privately
placed convertible
preferred
stock issued
by an
affiliate. The
stock was
received in
exchange
for shares
of the
Company’s
parent.
The
25
year redeemable,
convertible preferred
stock with
a
1.75
%
coupon
is
valued
using
a
pricing
model.
The
pricing
model
includes
observable
inputs
such
as
the
U.S.
Treasury
yield curve rate T
note constant
maturity
10
year and the swap
rate on the Company’s
June 1, 2044
,
4.868
% senior
notes,
with
adjustments
to
reflect
the
Company’s
own
assumptions
about
the
inputs
that
market
participants
would use in pricing the asset.
F-34
The following
table presents
the fair
value measurement
levels for
all assets,
which the
Company has
recorded at
fair value as of the period indicated:
Fair Value Measurement Using:
Quoted Prices
in Active
Significant
Markets for
Other
Significant
Identical
Observable
Unobservable
December 31,
Assets
Inputs
Inputs
(Dollars in millions)
2022
(Level 1)
(Level 2)
(Level 3)
Assets:
Fixed maturities, available for sale
U.S. Treasury securities and obligations of
U.S. government agencies and corporations
$
535
$
-
$
535
$
-
Obligations of U.S. states and political subdivisions are comprised of state and municipal bond issuances and the fair values are based on observable market inputs such as quoted market prices, quoted prices
413
-
413
-
Corporate securities
3,561
-
2,846
715
Asset-backed securities
3,951
-
2,957
994
Mortgage-backed securities
Commercial
509
-
509
-
Agency residential
1,628
-
1,628
-
Non-agency residential
3
-
3
-
Foreign government securities
637
-
637
-
Foreign corporate securities
1,433
-
1,417
16
Total
fixed maturities, available for similar securities, benchmark yields and credit spreads;

·Corporate securities are primarily comprised of U.S. corporate and public utility bond issuances and the fair values are based on observable market inputs such as quoted market prices, quoted prices for similar securities, benchmark yields and credit spreads;

·Asset-backed and mortgage-backedsale

12,671
-
10,946
1,725
Equity securities, fair values are based on observable inputs such as quoted prices, reported trades, quoted prices for similar issuances or benchmark yields and cash flow models using observable inputs such as prepayment speeds, collateral performance and default spreads;

·Foreign government securities are comprised of global non-U.S. sovereign bond issuances and the fair values are based on observable market inputs such as quoted market prices, quoted prices for similar securities and models with observable inputs such as benchmark yields and credit spreads and then, where applicable, converted to U.S. dollars using an exchange rate from a nationally recognized source;

·Foreign corporate securities are comprised of global non-U.S. corporate bond issuances and the fair values are based on observable market inputs such as quoted market prices, quoted prices for similar securities and models with observable inputs such as benchmark yields and credit spreads and then, where applicable, converted to U.S. dollars using an exchange rate from a nationally recognized source.

value

194
132
63
-
Other invested assets, at fair value were categorized as Level 3 at
1,472
-
-
1,472
(Some amounts may not reconcile due to rounding.)
F-35
Fair Value Measurement Using:
Quoted Prices
in Active
Significant
Markets for
Other
Significant
Identical
Observable
Unobservable
December 31, 2019 and December 31, 2018, since it represented a privately placed convertible preferred stock issued by an affiliate.  The stock was received
Assets
Inputs
Inputs
(Dollars in exchangemillions)
2021
(Level 1)
(Level 2)
(Level 3)
Assets:
Fixed maturities, available for shares of the Company’s parent.  The 25 year redeemable, convertible preferred stock with a 1.75% coupon is valued using a pricing model. The pricing model includes observable inputs such as the sale
U.S. Treasury yield curve rate T note constant maturity 20 yearsecurities and the swap rate on the Company’s June 1, 2044, 4.868% senior notes, with adjustmentsobligations of
U.S. government agencies and corporations
$
663
$
-
$
663
$
-
Obligations of U.S. states and political subdivisions
587
-
587
-
Corporate securities
4,075
-
3,345
730
Asset-backed securities
3,466
-
2,215
1,251
Mortgage-backed securities
Commercial
603
-
603
-
Agency residential
1,261
-
1,261
-
Non-agency residential
4
-
4
-
Foreign government securities
692
-
692
-
Foreign corporate securities
1,510
-
1,494
16
Total
fixed maturities, available for sale
12,860
-
10,863
1,997
Equity securities, fair value
1,758
1,722
36
-
Other invested assets, fair value
2,031
-
-
2,031
(Some amounts may not reconcile due to reflect the Company’s own assumptions about the inputs that market participants would use in pricing the asset.

F-30

rounding.)

The following table presents the fair value measurement levels for all assets, which the Company has recorded at fair value (fair and market value) as of the period indicated: 

 

 

 

 

Fair Value Measurement Using:

 

 

 

 

Quoted Prices

 

 

 

 

 

 

 

 

 

 

in Active

 

Significant

 

 

 

 

 

 

 

Markets for

 

Other

 

Significant

 

 

 

 

Identical

 

Observable

 

Unobservable

 

December 31,

 

Assets

 

Inputs

 

Inputs

(Dollars in thousands)

2019

 

(Level 1)

 

(Level 2)

 

(Level 3)

Assets:

 

 

 

 

 

 

 

 

 

 

 

Fixed maturities, market value

 

 

 

 

 

 

 

 

 

 

 

U.S. Treasury securities and obligations of

  U.S. government agencies and corporations

$

777,515

 

$

-

 

$

777,515

 

$

-

Obligations of U.S. States and political subdivisions

 

535,911

 

 

-

 

 

535,911

 

 

-

Corporate securities

 

2,821,557

 

 

-

 

 

2,274,618

 

 

546,939

Asset-backed securities

 

765,957

 

 

-

 

 

612,316

 

 

153,641

Mortgage-backed securities

 

 

 

 

 

 

 

 

 

 

 

Commercial

 

329,049

 

 

-

 

 

329,049

 

 

-

Agency residential

 

644,687

 

 

-

 

 

644,687

 

 

-

Non-agency residential

 

1,638

 

 

-

 

 

1,638

 

 

-

Foreign government securities

 

658,007

 

 

-

 

 

658,007

 

 

-

Foreign corporate securities

 

957,758

 

 

-

 

 

956,007

 

 

1,751

Total fixed maturities, market value

 

7,492,079

 

 

-

 

 

6,789,748

 

 

702,331

 

 

 

 

 

 

 

 

 

 

 

 

Fixed maturities, fair value

 

5,826

 

 

-

 

 

-

 

 

5,826

Equity securities, fair value

 

764,049

 

 

719,548

 

 

44,501

 

 

-

Other invested assets, fair value

 

1,982,582

 

 

-

 

 

-

 

 

1,982,582

There were no transfers between Level 1 and Level 2 for the twelve months ended December 31, 2019.

F-31

The following table presents the fair value measurement levels for all assets, which the Company has recorded at fair value (fair and market value) as of the period indicated.

 

 

 

 

Fair Value Measurement Using:

 

 

 

 

Quoted Prices

 

 

 

 

 

 

 

 

 

 

in Active

 

Significant

 

 

 

 

 

 

 

Markets for

 

Other

 

Significant

 

 

 

 

Identical

 

Observable

 

Unobservable

 

December 31,

 

Assets

 

Inputs

 

Inputs

(Dollars in thousands)

2018

 

(Level 1)

 

(Level 2)

 

(Level 3)

Assets:

 

 

 

 

 

 

 

 

 

 

 

Fixed maturities, market value

 

 

 

 

 

 

 

 

 

 

 

U.S. Treasury securities and obligations of

  U.S. government agencies and corporations

$

2,242,797

 

$

-

 

$

2,242,797

 

$

-

Obligations of U.S. States and political subdivisions

 

499,089

 

 

-

 

 

499,089

 

 

-

Corporate securities

 

2,216,153

 

 

-

 

 

1,839,903

 

 

376,250

Asset-backed securities

 

221,255

 

 

-

 

 

221,255

 

 

-

Mortgage-backed securities

 

 

 

 

 

 

 

 

 

 

 

Commercial

 

136,604

 

 

-

 

 

136,604

 

 

-

Agency residential

 

148,774

 

 

-

 

 

148,774

 

 

-

Non-agency residential

 

3,114

 

 

-

 

 

3,114

 

 

-

Foreign government securities

 

579,586

 

 

-

 

 

579,586

 

 

-

Foreign corporate securities

 

914,703

 

 

-

 

 

906,959

 

 

7,744

Total fixed maturities, market value

 

6,962,075

 

 

-

 

 

6,578,081

 

 

383,994

 

 

 

 

 

 

 

 

 

 

 

 

Fixed maturities, fair value

 

2,337

 

 

-

 

 

-

 

 

2,337

Equity securities, fair value

 

564,338

 

 

540,894

 

 

23,444

 

 

-

Other invested assets, fair value

 

1,717,336

 

 

-

 

 

-

 

 

1,717,336

In addition, $209,578 thousand$

292
million and $117,662 thousand$
287
million of investments
within other invested
assets on the consolidated
balance
sheets
as
of
December
31,
2022
and
December
31,
2021,
respectively,
are
not
included
within
the
fair
value
hierarchy
tables
as
the
assets
are
measured
at
net
asset
value
(NAV)
as
a
practical
expedient
to
determine
fair
value.
F-36
The
following
table
presents
the
activity
under
Level
3,
fair
value
measurements
using
significant
unobservable
inputs for fixed maturities available
for sale, for the periods indicated:
Total Fixed Maturities,
Available for Sale
December 31, 20192022
December 31, 2021
Corporate
Asset-Backed
Foreign
Corporate
Asset-Backed
Foreign
(Dollars in millions)
Securities
Securities
CMBS
Corporate
Total
Securities
Securities
Corporate
Total
Beginning balance fixed maturities
$
730
$
1,251
$
-
$
16
$
1,997
$
631
$
623
$
6
$
1,260
Total gains or (losses) (realized/unrealized)
Included in earnings
(24)
-
-
-
(24)
(12)
(6)
-
(18)
Included in other comprehensive income (loss)
3
(35)
-
(4)
(36)
4
(7)
-
(2)
Purchases, issuances and 2018, respectively, aresettlements
40
513
6
8
567
107
641
10
758
Transfers in (out) of Level
3 and
reclassification of securities in/(out)
investment categories
(35)
(735)
(6)
(4)
(779)
-
-
-
-
Ending balance
$
715
$
994
$
-
$
16
$
1,725
$
730
$
1,251
$
16
$
1,997
The amount of total gains or losses for the
period included in earnings (or changes in
net assets) attributable to the change in
unrealized gains or losses relating to
assets still held at the reporting date
$
(23)
$
8
$
-
$
-
$
(15)
$
(16)
$
(8)
$
-
$
(24)
(Some amounts may not reconcile due to rounding.)
The
$
779
million
shown
as
transfers
in/(out)
of
Level
3
and
reclassification
of
securities
in/(out)
of
investment
categories
for the
year ended
December 31,
2022 relate
mainly to
previously designated
Level
3
securities
that
the
Company
has
reclassified
from
“fixed
maturities
–
available
for
sale”
to
“fixed
maturities
–
held
to
maturity”
during
2022.
As
“fixed
maturities
–
held
to
maturity"
are
carried
at
amortized
cost,
net
of
credit
allowances
rather
than
at
fair
value
as
“fixed
maturities
–
available
for
sale”,
these
securities
are
no
longer
included within the fair
value hierarchy tables astable
or in the assets are measured at NAV as a practical expedient to determine fair value. 

The following tables present the activity underroll forward

of Level 3 securities.
The
fair value measurements using significant unobservable inputs by asset type,
values
of
these
securities
are
determined
in
a
similar
manner
as
the
Company’s
fixed maturity
securities available for
sale as
described above.
The fair
values
of these
securities incorporate
the periods indicated: 

use

 

Total Fixed Maturities, Market Value

 

 December 31, 2019

 

December 31, 2018

 

Corporate

 

Asset

 

Foreign

 

 

 

Corporate

 

Foreign

 

 

 

(Dollars in thousands)

Securities

 

Backed Securities

 

Corporate

 

Total

 

Securities

 

Corporate

 

Total

Beginning balance

$

376,250

 

$

-

 

$

7,744

 

$

383,994

 

$

158,221

 

$

6,952

 

$

165,173

Total gains or (losses) (realized/unrealized)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Included in earnings

 

4,937

 

 

-

 

 

(12)

 

 

4,925

 

 

(93)

 

 

(660)

 

 

(753)

Included in other comprehensive

  income (loss)

 

(21)

 

 

3,632

 

 

(110)

 

 

3,501

 

 

1,090

 

 

-

 

 

1,090

Purchases, issuances and settlements

 

161,078

 

 

150,009

 

 

(5,871)

 

 

305,216

 

 

215,839

 

 

(298)

 

 

215,541

Transfers in and/or (out) of Level 3

 

4,695

 

 

-

 

 

-

 

 

4,695

 

 

1,193

 

 

1,750

 

 

2,943

Ending balance

$

546,939

 

$

153,641

 

$

1,751

 

$

702,331

 

$

376,250

 

$

7,744

 

$

383,994

The amount of total gains or losses for the

  period included in earnings (or changes in

  net assets) attributable to the change in

  unrealized gains or losses relating to

  assets still held at the reporting date

$

-

 

$

-

 

$

-

 

$

-

 

$

-

 

$

-

 

$

-

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(Some amounts may not reconcile due to rounding.)

 

 

 

 

 

 

 

 

 

of significant

F-32

unobservable
inputs
and
therefore

are

 

Total Fixed Maturities, Fair Value

 

December 31, 2019

 

December 31, 2018

 

Foreign

 

 

 

Foreign

 

 

 

(Dollars in thousands)

Corporate

 

Total

 

Corporate

 

Total

Beginning balance fixed maturities at fair value

 

2,337

 

 

2,337

 

 

-

 

 

-

Total gains or (losses) (realized/unrealized)

 

 

 

 

 

 

 

 

 

 

 

Included in earnings

 

2,163

 

 

2,163

 

 

(293)

 

 

(293)

Included in other comprehensive income (loss)

 

-

 

 

-

 

 

-

 

 

-

Purchases, issuances and settlements

 

1,326

 

 

1,326

 

 

2,630

 

 

2,630

Transfers in and/or (out) of Level 3

 

-

 

 

-

 

 

-

 

 

-

Ending balance

$

5,826

 

$

5,826

 

$

2,337

 

$

2,337

The amount of total gains or losses for the period

  included in earnings (or changes in net assets)

  attributable to the change in unrealized gains or

  losses relating to assets still held at the

  reporting date

$

1,796

 

$

1,796

 

$

-

 

$

-

(Some amounts may not reconcile due to rounding.)

 

 

 

 

 

 

 

 

 

 

 

 

The net transfers to/(from) level classified

as
Level
3
within
the
fair
value measurements using significant unobservable inputs were $4,695 thousand and $2,943 thousand for the years ended December 31, 2019 and 2018, respectively, for fixed maturities, market value.  The transfers were related to securities that were priced using a recognized pricing service
hierarchy
as
of December 31, 2018 and December 31, 2017, respectively. These securities2022.
There were subsequently priced by investment managers as
no
transfers of December 31, 2019 and 2018, respectively. 

The following table presents the activity underassets

in/(out) Level 3 during 2021.
Financial Instruments Disclosed, But Not Reported,
at Fair Value
Certain financial
instruments
disclosed, but
not reported,
at fair
value are
excluded
from the
fair value measurements using significant unobservable inputs by other invested assets, for the periods indicated: 

 

Years Ended December 31,

(Dollars in thousands)

2019

 

2018

Other invested assets, fair value:

 

 

 

 

 

Beginning balance

$

1,717,336

 

$

1,807,473

Total gains or (losses) (realized/unrealized)

 

 

 

 

 

Included in earnings

 

265,246

 

 

(90,136)

Included in other comprehensive income (loss)

 

-

 

 

-

Purchases, issuances and settlements

 

-

 

 

-

Transfers in and/or (out) of Level 3

 

-

 

 

-

Ending balance

$

1,982,582

 

$

1,717,336

The amount of total gains or losses for the period

  included in earnings (or changes in net assets)

  attributable to the change in unrealized gains or

  losses relating to assets still held at the

  reporting date

$

-

 

$

-

 

 

 

 

 

 

(Some amounts may not reconcile due to rounding.)

 

 

 

 

 

hierarchy

F-33

tables
above.
Fair
values
of
fixed
maturity
securities
held
to
maturity,
senior
notes
and
long-term
subordinated
notes can
be found
within Notes
2, 5
and 6,
respectively.
Fair values
of long-term
notes receivable
from affiliates
can be found
within Note
16. Short-term
investments
are stated
at cost,
which approximates
fair value.
See Note
1.

F-37
5.
SENIOR NOTES

The table below
displays Holdings’
outstanding senior
notes.  Market
Fair value
is based on
quoted market
prices, but due
to limited trading activity,
these senior notes are considered Level
2 in the fair value hierarchy.

 

 

 

 

 

 

 

December 31, 2019

 

December 31, 2018

 

 

 

 

 

 

 

Consolidated

 

 

 

 

Consolidated

 

 

 

 

 

 

 

 

Principal

 

Balance Sheet

 

Market

 

Balance Sheet

 

Market

(Dollars in thousands)

Date Issued

 

Date Due

 

Amounts

 

Amount

 

Value

 

Amount

 

Value

Senior notes

06/05/2014

 

06/01/2044

 

400,000

 

$

397,074

 

$

452,848

 

$

396,954

 

$

396,968

                  

On June 5, 2014, Holdings issued $400,000 thousand of 30 year senior notes at 4.868%, which will mature on June 1, 2044. Interest will be paid semi-annually on June 1 and

December 1 of each year. 

31, 2022

December 31, 2021
Consolidated
Consolidated
Principal
Balance Sheet
Fair
Balance Sheet
Fair
(Dollars in millions)
Date Issued
Date Due
Amounts
Amount
Value
Amount
Value
4.868
% Senior notes
06/05/2014
06/01/2044
400
$
397
$
343
$
397
$
504
3.5
% Senior notes
10/07/2020
10/15/2050
1,000
981
677
980
1,055
3.125
% Senior notes
10/04/2021
10/15/2052
1,000
969
627
969
983
2,400
$
2,347
$
1,647
$
2,346
$
2,542
Interest expense incurred in
connection with these senior notes is as follows
for the periods indicated:

 

Years Ended December 31,

(Dollars in thousands)

2019

 

2018

 

2017

Interest expense incurred

$

19,472

 

$

19,472

 

$

19,472

         

Years Ended December 31,
(Dollars in millions)
Interest Paid
Payable Dates
2022
2021
2020
4.868
% Senior notes
semi-annually
June 1/December 1
$
19
$
19
$
19
3.5
% Senior notes
semi-annually
April 15/October 15
35
35
8
3.125
% Senior notes
semi-annually
April 15/October 15
32
8
-
$
86
$
62
$
28
6.  LONG TERM
LONG-TERM SUBORDINATED
NOTES

The table
below displays
Holdings’ outstanding
fixed
to
floating
rate long term
long-term subordinated
notes.  Market
Fair
value
is
based on
quoted market
prices, but due
to limited
trading activity,
these subordinated
notes are
considered Level
2 in the fair value hierarchy.

 

 

 

 

 

 

 

 

 

 

December 31, 2019

 

December 31, 2018

 

 

 

Original

 

 

 

 

 

Consolidated

 

 

 

 

Consolidated

 

 

 

 

 

 

Principal

 

Maturity Date

 

 

 

Balance

 

Market

 

Balance

 

Market

(Dollars in thousands)

Date Issued

 

Amount

 

Scheduled

 

Final

 

Sheet Amount

 

Value

 

Sheet Amount

 

Value

Long term subordinated notes

04/26/2007

 

$

400,000

 

05/15/2037

 

05/01/2067

 

$

236,758

 

$

233,191

 

$

236,659

 

$

200,390

                     

December 31, 2022
December 31, 2021
Original
Consolidated
Consolidated
Principal
Maturity Date
Balance
Fair
Balance
Fair
(Dollars in millions)
Date Issued
Amount
Scheduled
Final
Sheet Amount
Value
Sheet Amount
Value
Long-term subordinated notes
04/26/2007
$
400
05/15/2037
05/01/2067
$
218
$
187
$
224
$
216
During the
fixed
rate
interest
period from
May 3, 2007
through
May 14, 2017
, interest
was
at
the annual
rate
of
6.6
%, payable
semi-annually
in arrears
on November 15
and May
15 of
each year,
commencing on
November 15,
2007
.
During the fixed floating
rate interest
period from May
15, 2017 through
maturity,
interest will be
based on the 3 2007 through
month
LIBOR
plus
238.5
basis
points,
reset
quarterly,
payable
quarterly
in
arrears
on
February 15,
May 14, 2017, interest was at the annual rate of 6.6%, payable semi-annually in arrears on November15,
August 15 and May November
15 of each year, commencing
subject to Holdings’
right to defer
interest on
one
or more occasions
for
up
to
ten
consecutive
years.
Deferred
interest
will
accumulate
interest
at
the
applicable
rate
compounded
quarterly for
periods from and
including May 15,
2017. The reset
quarterly interest
rate for
November 15, 2007.  During202
2
to
February 14, 2023 is
6.99
%.
Holdings may
redeem the floating rate interest period from
long-term subordinated
notes on
or after
May 15, 2017 through maturity, interest will be based on
, in
whole or
in part
at
100
% of
the 3 month LIBORprincipal
amount plus 238.5 basis points, reset quarterly, payable quarterly in arrears on February 15, May 15, August 15
accrued and November 15 of each year, subject to Holdings’ right to defer interest on one or more occasions for up to ten consecutive years.  Deferred interest will accumulate interest at the applicable rate compounded quarterly for periods from and including May 15, 2017.  The reset quarterly interest rate for November 15, 2019 to February 17, 2020 is 4.3%. 

Holdings may redeem the long term subordinated notes

unpaid interest;
however,
redemption
on or
after May 15, 2017, in whole or in part at 100% of the principal amount plus accrued and unpaid interest; however, redemption on or after
the scheduled
maturity
date
and
prior
to
May 1, 2047
is
subject
to
a
replacement
capital
covenant.
This
covenant
is
for
the
benefit
of
certain senior note
holders and
it mandates that
Holdings receive
proceeds from
the sale of
another subordinated
debt issue,
of at
least
similar size,
before
it may
redeem
the subordinated
notes.  Effective upon the maturity of the
The Company’s 5.40
4.868
% senior notes on October 15, 2014, the Company’s 4.868% senior
notes, due
on
June 1, 2044
, have become
3.5
% senior
notes due
on
October 15, 2050
and
3.125
% senior
notes due
on
October
15, 2052
are the Company’s long term
long-term indebtedness that ranks rank
senior to the long termlong-term subordinated
notes.

On March 19,

In 2009, Group announced
the commencement
Company
had
reduced
its
outstanding
amount
of
long-term
subordinated
notes through
the
initiation
of
a
cash
tender
offer
for
any
and
all
of
the
long-term
subordinated
notes.
In
addition,
the
Company
F-38
repurchased and
retired $
6
million of the 6.60% fixed to floating rate long termoutstanding
long-term subordinated notes.  Upon expiration
notes for the
year ended December
31, 2022. The Company realized a gain
of $
1
million on the tender offer, repurchases made during 2022.
Interest
expense
incurred
in
connection
with
these
long-term
subordinated
notes
is
as
follows
for
the Company had reduced its outstanding debt by $161,441 thousand. 

F-34

periods
indicated:

Years Ended December 31,
(Dollars in millions)
2022
2021
2020
Interest expense incurred in connection with these long term subordinated notes is as follows for the periods indicated:

 

Years Ended December 31,

(Dollars in thousands)

2019

 

2018

 

2017

Interest expense incurred

$

11,587

 

$

10,926

 

$

11,498

         
$

9
$
6
$
8
7.
FEDERAL HOME LOAN BANK MEMBERSHIP

Effective August 15, 2019,

Everest
Re became
is
a
member
of
the
Federal
Home
Loan
Bank
of
New
York
(“FHLB”FHLBNY”) organization, ,
which
allows
Everest
Re
to
borrow
up to
10
% of
its statutory
admitted
assets.
As of
December 31, 2019,
2022, Everest
Re had
admitted
assets
of $12,518,844 thousand
approximately $
22.4
billion which provides
borrowing capacity of up
to $1,251,884 thousand.  Throughapproximately
$
2.2
billion. As of December
31, 2019, 2022,
Everest
Re had nohas
$
519
million of
borrowings through
outstanding,
which will
all mature
in 2023.
Everest
incurred
interest
expense of
$
4
million and
$
1
million for
the FHLB.

years

ended December
31, 2022
and 2021,
respectively.
The
FHLBNY membership
agreement requires
that
4.5
% of borrowed
funds be
used to
acquire additional
membership
stock.
8.
COLLATERALIZED REINSURANCE
AND TRUST AGREEMENTS

A
subsidiary
of the
Company,
Everest
Re,
has
established
a
trust
agreement,
which
effectively
uses
Everest
Re’s
investments as
collateral, as security
for assumed losses
payable to
non-affiliated ceding
companies.
At December
31,
2022,
the
total
amount
on
deposit
in
the
trust
account
was
$
705
million
which
includes
$
21
million
of
restricted
cash.
At
December
31, 2019, 2021,
the total
amount
on deposit
in the
trust
account
was $718,548 thousand.

On April 24, 2014, the

$
592
million
which
includes $
87
million of restricted cash.
F-39
The
Company
entered
into two
various
collateralized
reinsurance
agreements
with
Kilimanjaro
Re
Limited
(“Kilimanjaro”), a Bermuda
based special purpose
reinsurer,
to provide the
Company with catastrophe
reinsurance
coverage.
These
agreements
are
multi-year
reinsurance
contracts
which
cover specified
named
storm
and
earthquake
events. The first agreement provides up to $250,000 thousand of reinsurance coverage from named stormstable below summarizes
the various agreements:
(Dollars in specified states of the Southeastern United States.  The second agreement provides up to $200,000 thousand of reinsurance coverage from named storms in specified states of the Southeast, Mid-Atlantic and Northeast regions of the United States andmillions)
Class
Description
Effective Date
Expiration Date
Limit
Coverage
Basis
Series 2018-1 Class A-2
US, Canada, Puerto Rico as well as reinsurance coverage from earthquakes in specified states of the Southeast, Mid-Atlantic, Northeast– Named Storm and West regions of the United States,Earthquake Events
4/30/2018
5/5/2023
$
63
Aggregate
Series 2018-1 Class B-2
US, Canada, Puerto Rico – Named Storm and British Columbia.  These reinsurance agreements expired in April Earthquake Events
4/30/2018.

On November 18, 2014, the Company entered into a collateralized reinsurance agreement with Kilimanjaro to provide the Company with catastrophe reinsurance coverage. This agreement is a multi-year reinsurance contract which covers specified earthquake events.  The agreement provides up to $500,000 thousand of reinsurance coverage from earthquakes in the United States,

5/5/2023
200
Aggregate
Series 2019-1 Class A-1
US, Canada, Puerto Rico – Named Storm and Canada. These reinsurance agreements expired in November, 2019.

On December 1, 2015, the Company entered into two collateralized reinsurance agreements with Kilimanjaro to provide the Company with catastrophe reinsurance coverage.  These agreements are multi-year reinsurance contracts which cover named storm and earthquake events. The first agreement provides up to $300,000 thousand of reinsurance coverage from named storms and earthquakes in the United States,Earthquake Events

12/12/2019
12/19/2023
150
Occurrence
Series 2019-1 Class B-1
US, Canada, Puerto Rico – Named Storm and Canada.  The second agreement provides up to $325,000 thousand of reinsurance coverage from named storms and earthquakes in the United States,Earthquake Events
12/12/2019
12/19/2023
275
Aggregate
Series 2019-1 Class A-2
US, Canada, Puerto Rico – Named Storm and Canada.

On April 13, 2017, the Company entered into six collateralized reinsurance agreements with Kilimanjaro to provide the Company with annual aggregate catastrophe reinsurance coverage.  The initial three agreements are four year reinsurance contracts which cover named storm and earthquake events.  These agreements provide up to $225,000 thousand, $400,000 thousand and $325,000 thousand, respectively, of annual aggregate reinsurance coverage from named storms and earthquakes in the United States,Earthquake Events

12/12/2019
12/19/2024
150
Occurrence
Series 2019-1 Class B-2
US, Canada, Puerto Rico – Named Storm and Canada. The subsequent three agreements are five year reinsurance contracts which cover named storm and earthquake events.  These agreements provide up to $50,000 thousand, $75,000 thousand and $175,000 thousand, respectively, of annual aggregate reinsurance coverage from named storms and earthquakes in the United States,Earthquake Events
12/12/2019
12/19/2024
275
Aggregate
Series 2021-1 Class A-1
US, Canada, Puerto Rico – Named Storm and Canada. 

On April 30, 2018, the Company entered into four collateralized reinsurance agreements with Kilimanjaro to provide the Company with catastrophe reinsurance coverage.  These agreements are multi-year reinsurance contracts which cover named storm and earthquake events. The first two agreements are four year

Earthquake Events

F-35

4/8/2021
4/21/2025
150

Occurrence

reinsurance contracts which provide up to $62,500 thousand and $200,000 thousand, respectively, of annual aggregate reinsurance coverage from named storms and earthquakes in the United States,

Series 2021-1 Class B-1
US, Canada, Puerto Rico the U.S. Virgin Islands– Named Storm and Canada.  The remaining two agreements are five year reinsurance contracts which provide up to $62,500 thousand and $200,000 thousand, respectively, of annual aggregate reinsurance coverage from named storms and earthquakes in the United States,Earthquake Events
4/8/2021
4/21/2025
85
Aggregate
Series 2021-1 Class C-1
US, Canada, Puerto Rico the U.S. Virgin Islands– Named Storm and Canada.

On December 12, 2019, the Company entered into four collateralized reinsurance agreements with Kilimanjaro to provide the Company with catastrophe reinsurance coverage.  These agreements are multi-year reinsurance contracts which cover named storm and earthquake events.  The first two agreements are four year reinsurance contracts which provide up to $150,000 thousand and $275,000 thousand, respectively, of annual aggregate reinsurance coverage from named storms and earthquakes in the United States,Earthquake Events

4/8/2021
4/21/2025
85
Aggregate
Series 2021-1 Class A-2
US, Canada, Puerto Rico the U.S. Virgin Islands– Named Storm and Canada.  The remaining two agreements are five year reinsurance contracts which provide up to $150,000 thousand and $275,000 thousand, respectively, of annual aggregate reinsurance coverage from named storms and earthquakes in the United State,Earthquake Events
4/8/2021
4/20/2026
150
Occurrence
Series 2021-1 Class B-2
US, Canada, Puerto Rico the U.S. Virgin Islands– Named Storm and Canada. 

Earthquake Events

4/8/2021
4/20/2026
90
Aggregate
Series 2021-1 Class C-2
US, Canada, Puerto Rico – Named Storm and Earthquake Events
4/8/2021
4/20/2026
90
Aggregate
Series 2022-1 Class A
US, Canada, Puerto Rico – Named Storm and Earthquake Events
6/22/2022
6/25/2025
300
Aggregate
Total available
limit as of December 31, 2022
$
2,063
Recoveries
under
these
collateralized
reinsurance
agreements
with
Kilimanjaro
are
primarily
dependent
on
estimated industry
level insured losses
from covered events,
as well as, the geographic
location of the events.
The
estimated
industry
level
of
insured
losses
is
obtained
from
published
estimates
by
an
independent
recognized
authority
on
insured
property
losses.
Currently,
none
of
the
published
insured
loss
estimates
for
catastrophe
events during the applicable
covered periods of
the various agreements
have exceeded
the single event retentions
or aggregate retentions
under the terms of the agreements that
would result in a recovery.

Kilimanjaro has
financed the
various
property catastrophe
reinsurance
coverages
by issuing
catastrophe
bonds to
unrelated,
external
investors.  On April 24, 2014, Kilimanjaro issued $450,000 thousand
The
proceeds
from
the
issuance
of notes (“Series 2014-1 Notes”). The $450,000 thousand
the
Notes
listed
below
are
held
in
reinsurance
trusts
throughout
the
duration
of Series 2014-1 Notes were fully redeemed on April 30, 2018
the
applicable
reinsurance
agreements
and are no longer outstanding.  On November 18, 2014, Kilimanjaro issued $500,000 thousand of notes (“Series 2014-2 Notes”).  On December 1, 2015, Kilimanjaro issued $625,000 thousand of notes (“Series 2015-1 Notes).  On April 13, 2017, Kilimanjaro issued $950,000 thousand of notes (“Series 2017-1 Notes) and $300,000 thousand of notes (“Series 2017-2 Notes). On April 30, 2018, Kilimanjaro issued $262,500 thousand of notes (“Series 2018-1 Notes”) and $262,500 thousand of notes (“Series 2018-2 Notes”). On December 12, 2019 Kilimanjaro issued $425,000 thousand of notes (“Series 2019-1 Notes”) and $425,000 thousand of notes (“Series 2019-2 Notes’”). The proceeds from the issuance of the Notes listed above are held
invested
solely
in reinsurance trust throughout the duration of the applicable reinsurance agreements and invested solely in
US
government
money market funds with a rating
of at least “AAAm”
by Standard & Poor’s.

F-40
(Dollars in millions)
Note Series
Issue Date
Maturity Date
Amount
Series 2018-1 Class A-2
4/30/2018
5/5/2023
$
63
Series 2018-1 Class B-2
4/30/2018
5/5/2023
200
Series 2019-1 Class A-1
12/12/2019
12/19/2023
150
Series 2019-1 Class B-1
12/12/2019
12/19/2023
275
Series 2019-1 Class A-2
12/12/2019
12/19/2024
150
Series 2019-1 Class B-2
12/12/2019
12/19/2024
275
Series 2021-1 Class A-1
4/8/2021
4/21/2025
150
Series 2021-1 Class B-1
4/8/2021
4/21/2025
85
Series 2021-1 Class C-1
4/8/2021
4/21/2025
85
Series 2021-1 Class A-2
4/8/2021
4/20/2026
150
Series 2021-1 Class B-2
4/8/2021
4/20/2026
90
Series 2021-1 Class C-2
4/8/2021
4/20/2026
90
Series 2022-1 Class A
6/22/2022
6/25/2025
300
$
2,063
9.
LEASES

Effective January 1, 2019, the Company adopted ASU 2016-02 and ASU 2018-11 which outline new guidance on the accounting for leases. 

The Company
enters
into
lease
agreements
for
real
estate
that
is
primarily
used
for
office
space
in
the
ordinary
course of
business.
These leases are
accounted for
as operating
leases, whereby
lease expense
is recognized
on a
straight-line
basis
over the
term of
the lease.
Most
leases include
an option
to extend
or renew
the lease
term.
The exercise
of the
renewal
is at
the Company’s
discretion.
The operating
lease liability
includes lease
payments
related
to
options
to
extend
or
renew
the
lease
term
if
the
Company
is
reasonably
certain
of
exercise
those
options.
The Company,
in determining
the present
value of
lease payments
utilizes either
the rate
implicit in
the
lease
if
that
rate
is
readily
determinable
or
the
Company’s
incremental
secured
borrowing
rate
commensurate
with terms of the underlying lease.

F-36

Supplemental information related

to operating leases is as follows
for the periods indicated:

 

Year Ended

 

December 31,

(Dollars in thousands)

2019

Lease expense incurred:

 

 

Operating lease cost

$

21,471

 

At December 31,

(Dollars in thousands)

2019

Operating lease right of use assets

$

152,978

Operating lease liabilities

 

160,387

Year Ended

Year Ended

December 31,

(Dollars in thousands)

2019

Operating cash flows from operating leases

$

(17,617)

At December 31,

2019

Weighted average remaining operating lease term

12.8 years

Weighted average discount rate on operating leases

3.91

%

(Dollars in millions)

2022
2021
Lease expense incurred:
Operating lease cost
$
25
$
24
At December 31,
(Dollars in millions)
2022
2021
Operating lease right of use assets
$
121
$
131
Operating lease liabilities
139
150
Year Ended
December 31,
(Dollars in millions)
2022
2021
Operating cash flows from operating leases
$
(18)
$
(16)
F-41
At December 31,
2022
2021
Weighted average remaining operating lease term
11.1
years
11.8
years
Weighted average discount rate on operating leases
4.00
%
4.00
%
Maturities of the existing lease liabilities are expected
to occur as follows:

(Dollars in thousands)

 

 

 

 

 

2020

$

17,793

2021

 

15,106

2022

 

16,921

2023

 

16,465

2024

 

16,425

Thereafter

 

122,861

Undiscounted lease payments

 

205,571

Less:  present value adjustment

 

45,184

Total operating lease liability

$

160,387

As

(Dollars in millions)
2023
$
19
2024
19
2025
16
2026
14
2027
14
Thereafter
90
Undiscounted lease payments
172
Less:
present value adjustment
32
Total operating lease liability
$
139
10.
INCOME TAXES
All of
the income
of December 31, 2018, the Company accounted for leases per the guidance codified in Accounting Standards Codification, Topic 840-Leases. Based on prior guidance, the future minimum rental commitments, exclusive of cost escalation clauses, at December 31, 2018, for all of the Company’s operating leases were $73,873 thousand. The breakdown of the minimum rental commitments as of December 31, 2018 were as follows: $17,004 thousand for 2019, $16,594 thousand for 2020, $7,806 thousand for 2021, $7,501 thousand for 2022, $7,385 thousand for 2023 and $17,583 thousand for all years thereafter.

On July 2, 2019, the Company entered into a lease agreement to relocateHoldings

U.S. subsidiaries,
including its corporate offices from Liberty Corner, New Jersey to a corporate complex in Warren, New Jersey.  The new lease, which covers approximately 315,000 square feet of office space, became effective in October, 2019 and runs through 2036.  The initial base rent payment of the lease will be approximately $650 thousand per month or $7,800 thousand per year.  The Company expects to relocate the existing operations and employees of the Liberty Corner, New Jersey facility
foreign
branches,
is subject
to the new corporate complex during 2021.

F-37

10.  INCOME TAXES

All of the income of Holdings U.S. subsidiaries, including its foreign branches, is subject to the applicable federal,

foreign,
state,
and
local
income
taxes
on
corporations.
The
provision
for
income
taxes
in
the
consolidated
statement
of
operations
and
comprehensive
income
(loss)
has
been
determined
by
applying
the
respective
tax
laws to the income of each entity.
The TCJACoronavirus
Aid, Relief,
and Economic
Security (“CARES”)
Act, enacted
on December 22, 2017 causedMarch
27, 2020,
provided that
U.S.
companies could
carryback for
five years
net operating
losses incurred
in 2018,
2019 and/or
2020. This
beneficial
tax provision
in the CARES
Act enabled the
Company to
carryback its
significant 2018
net operating
losses to
prior
tax years
with higher
effective
tax rates
of
35
% versus
21
% in
2018 and
later years.
As a
result, the
Company was
able to
record an a
net income
tax benefit
from the
five-year
carryback of
$
33
million and
obtain federal
income tax benefit
cash refunds of $123,143 thousand$
183
million including interest in 2017.  The income2020.
On August 16, 2022, the Inflation Reduction
Act of 2022 (“IRA”) was enacted. We
have evaluated
the tax provision reflects provisions
of
the
IRA,
the
most
significant
of
which
are
the
corporate
alternative
minimum
tax
and
the
share
repurchase
excise tax and do not expect
the lower 21% tax expense/(benefit)legislation to be realized byhave a material
impact on our results of operations. As the Company under the TCJA upon the reversal of the temporary differences in its deferred tax inventory account versus the 35% tax expense/(benefit) that had been expected
IRS issues
additional guidance, we will evaluate any
impact to be realized before the TCJA.  our consolidated financial statements.
The significant components of the provision
are as follows for the periods indicated:

 

Years Ended December 31,

(Dollars in thousands)

2019

 

2018

 

2017

Current tax expense (benefit):

 

 

 

 

 

U.S.

$

(1,684)

 

$

(50,964)

 

$

(123,083)

Foreign

 

77

 

 

8

 

 

221

Total current tax expense (benefit)

 

(1,607)

 

 

(50,956)

 

 

(122,862)

Total deferred U.S. tax expense (benefit)

 

136,834

 

 

(316,069)

 

 

(77,874)

Total income tax expense (benefit)

$

135,228

 

$

(367,025)

 

$

(200,736)

Years Ended December 31,
(Dollars in millions)
2022
2021
2020
Current tax expense (benefit):
U.S.
$
95
$
102
$
(106)
Foreign
-
-
-
Total current tax expense (benefit)
95
102
(106)
Total deferred U.S.
tax expense (benefit)
(207)
90
138
Total income tax expense (benefit)
$
(112)
$
192
$
32
F-42
A reconciliation of the total income tax
provision using the statutory
U.S. Federal Income tax
rate to the Company’s
total income tax provision
is as follows for the periods indicated:

(Dollars in thousands)

2019

 

2018

 

2017

Expected income tax provision at the U.S. statutory tax rate

$

160,762

 

$

(279,216)

 

$

(42,600)

Increase (reduction) in taxes resulting from:

 

 

 

 

 

 

 

 

Tax exempt income

 

(3,680)

 

 

(3,824)

 

 

(8,488)

Dividend received deduction

 

(998)

 

 

(1,277)

 

 

(4,063)

Proration

 

1,050

 

 

1,150

 

 

1,760

Creditable foreign premium tax

 

(9,852)

 

 

(13,475)

 

 

(7,515)

Tax audit settlement

 

(1,576)

 

 

(2,060)

 

 

(11,565)

U.S. rate differential on carryback of net operation losses to PY

 

-

 

 

(43,734)

 

 

-

U.S. rate differential on deferred tax 2017 return to provision

 

-

 

 

(28,832)

 

 

-

Share based compensation tax benefits formerly in APIC

 

(2,987)

 

 

(1,450)

 

 

(3,308)

Impact of U.S. tax reform

 

-

 

 

-

 

 

(123,143)

Change in uncertain tax positions

 

(8,434)

 

 

8,434

 

 

-

Other

 

942

 

 

(2,741)

 

 

(1,814)

Total income tax provision

$

135,228

 

$

(367,025)

 

$

(200,736)

 

 

 

 

 

 

 

 

 

(Some amounts may not reconcile due to rounding.)

 

 

 

 

 

 

 

 

F-38

A reconciliation

Years Ended December 31,
(Dollars in millions)
2022
2021
2020
Expected income tax provision at the U.S. statutory tax rate
$
(117)
$
208
$
81
Increase (decrease) in taxes resulting from:
Tax exempt income
(4)
(4)
(4)
Dividend received deduction
(3)
(1)
(1)
Proration
1
1
1
Creditable foreign premium tax
(11)
(13)
(12)
Reserve adjustment
(19)
-
-
U.S. BEAT tax
22
-
-
Share based compensation
(3)
(2)
(3)
Impact of the beginning and ending unrecognizedCARES Act
-
-
(33)
Prior year true up
16
-
(4)
Other
6
3
7
Total income tax benefits, for the periods indicated, is as follows:

provision

(Dollars in thousands)

2019

 

2018

 

2017

Balance at January 1

$

8,434

 

$

-

 

$

-

Additions based on tax positions related to the current year

 

-

 

 

-

 

 

-

Additions for tax positions of prior years

 

-

 

 

8,434

 

 

-

Reductions for tax positions of prior years

 

(8,434)

 

 

-

 

 

-

Settlements with taxing authorities

 

-

 

 

-

 

 

-

Lapses of applicable statutes of limitations

 

-

 

 

-

 

 

-

Balance at December 31

$

-

 

$

8,434

 

$

-

$

(112)
$
192
$
32
(Some amounts may not reconcile due to rounding.)
At December 31, 2019, the Company’s unrecognized tax benefits, excluding interest2022, 2021 and penalties, that would impact the effective tax rate were $0 thousand.

Interest and penalties related to unrecognized tax benefits are recognized in income tax expense. At December 31, 2019,2020, the Company accrued $0 thousand

had
no
uncertain tax positions.
The Company’s
2014 through 2018
U.S. tax
years are
under audit by
the Internal Revenue
Service (“IRS”). To
date,
the
Company
has
received
a
significant
number
of
Information
Document
Requests.
However,
the
IRS
has
not
issued
any
Notice
of
Proposed
Adjustments
for
these
tax
years.
The
Company
had
filed
amended
tax
returns
requesting refunds for the payment of interest (net of the federal benefit)2015 and penalties.  At December 31,
2016 for $
2
million and $
5
million respectively.
Tax years
2019, 2020, and 2018, there were no accrued liabilities, respectively, for the payment of interest and penalties. 

The Company’s 2014 and subsequent U.S. tax years2021 are open to audit for examination

by the IRS.   In 2018, the IRS opened an audit of the 2014 tax year.  To date, the Company has received only one notice of proposed adjustment for an immaterial amount of tax.  The Company did propose affirmative beneficial tax return adjustments to the IRS at the start of the audit.  In total, the Company expects a net tax refund of $34,972 thousand plus net interest of $2,421 thousand for the 2014 tax year.  The refund is subject to IRS Joint Committee review and approval.

In 2019, the IRS opened an audit of the 2015 through 2017 tax years.  To date, the Company has not received any Information Document Requests or notices of proposed adjustment.  The Company had filed amended tax returns for 2015 and 2016 for $1,519 thousand and $4,685 thousand respectively.  Those refunds, plus accrued interest of $978 thousand and $247 thousand respectively, will be settled at the conclusion of the audit.

F-39

F-43
Deferred
income
taxes
reflect
the
tax
effect
of
the
temporary
differences
between
the
value
of
assets
and
liabilities
for
financial
statement
purposes
and
such
values
as
measured
by
U.S.
tax
laws
and
regulations.
The
principal items making up the net deferred
income tax assets/(liabilities) are as
follows for the periods indicated:

 

At December 31,

(Dollars in thousands)

2019

 

2018

Deferred tax assets:

 

 

 

 

 

    Foreign tax credits

$

186,706

 

$

167,685

Unearned premium reserve

 

75,130

 

 

63,309

    Loss reserves

 

66,025

 

 

64,135

Net unrecognized losses on benefit plans

 

19,818

 

 

17,921

    Net operating loss

 

19,027

 

 

98,795

Unrealized foreign currency losses

 

7,958

 

 

12,590

Investment impairments

 

3,961

 

 

1,291

Uncollectible reinsurance reserve

 

3,142

 

 

3,142

    Other tax credits

 

2,294

 

 

-

Deferred expenses

 

2,049

 

 

1,992

Net unrealized investment losses

 

-

 

 

9,745

Other assets

 

13,114

 

 

11,624

Total deferred tax assets

 

399,224

 

 

452,229

 

 

 

 

 

 

Deferred tax liabilities:

 

 

 

 

 

Net fair value income

 

266,850

 

 

178,018

Deferred acquisition costs

 

81,931

 

 

74,736

Net unrealized investment gains

 

38,074

 

 

-

Partnership Investments

 

15,039

 

 

14,936

    Benefit plan asset

 

2,333

 

 

3,600

Bond market discount

 

1,466

 

 

1,845

Other liabilities

 

3,796

 

 

2,022

Total deferred tax liabilities

 

409,489

 

 

275,157

 

 

 

 

 

 

Net deferred tax assets/(liabilities)

$

(10,265)

 

$

177,072

 

 

 

 

 

 

(Some amounts may not reconcile due to rounding.)

 

 

 

 

 

At December 31, 2019,
(Dollars in millions)
2022
2021
Deferred tax assets:
Net unrealized investment losses
$
200
$
-
Loss reserves
154
130
Unearned premium reserve
114
108
Lease Liability
29
31
Unrealized foreign currency losses
24
4
Investment impairments
12
6
Net unrecognized losses on benefit plans
9
13
Equity compensation
7
7
Foreign tax credits
3
22
Other assets
12
12
Total deferred tax assets
564
333
Deferred tax liabilities:
Net fair value income
141
349
Deferred acquisition costs
105
99
Partnership Investments
56
57
Right of use asset
25
27
Depreciation
16
4
Bond market discount
5
3
Net unrealized investment gains
-
35
Other liabilities
6
5
Total deferred tax liabilities
354
579
Net deferred tax assets/(liabilities)
$
210
$
(246)
(Some amounts may not reconcile due to rounding.)
At
December
31,
2022,
and
2021, the
Company has $186,706 thousand
had
$
3
million
and
$
29
million
respectively
of Foreign Tax Credits foreign
tax
credit
(“FTC”) and no Alternative Minimum Tax (“AMT”) credit carry forwards.  carryforwards, all related to
the branch basket.
The branch basket FTCs begin to
expire between 2020 and 2029. Beginning in 2018, AMT credits are recorded as a current receivable as
2030
.
Tax
effected
U.S.
Separate
Return
Limitation
Year
Net
Operating
Losses
(“NOLs”)
of $
1
million begin
to
expire
in
2037
.
At December
31, 2022,
$
200
million of
the Company’s
deferred
tax asset
relates
primarily to
unrealized
losses on
available for sale
fixed maturity securities.
The unrealized losses
on available for sale
fixed maturity securities
were
a result of TCJA converting them into refundable credits
market conditions,
including rising interest
rates. Ultimate
realization of
the deferred
tax asset
depends
on
the
Company’s
ability
and
intent
to
hold
the
available
for
sale
securities
until
they
recover
their
value
or
mature.
As
of
December
31,
2022,
based
on
all
the
available
evidence,
the
Company
has
concluded
that
the
deferred tax
asset related to
the unrealized losses
on the available
for sale fixed
maturity portfolio are,
more likely
than not, expect to be received no later than with realized.
The
Company
follows
ASU
2016-09
in
regard
to
the filing
treatment
of
the
tax
effects
of
share-based
compensation
transactions.
ASU
2016-09
required
that
the
income
tax
effects
of
restricted
stock
vestings
and
stock
option
exercises
resulting
from
the
change
in
value
of
share-based
compensation
awards
between
the
grant
date
and
F-44
settlement
(vesting/exercising)
date
be recorded
as part
of income
tax
expense
(benefit)
within the 2021 U.S. corporation income tax return.  The Company also has a tax effected U.S. Net Operating Loss (“NOL”) carryforward
consolidated
statements
of $19,027 thousand.  The NOL carryforward does not expire until 2038.

Management believes that it is more likely than not that the Company will realize all of its deferred tax assets.  Accordingly, no valuation allowance has been recorded for the periods presented.

In performing our assessment of the recoverability of the deferred tax asset pursuant to ASC 740, the Company considered tax laws governing the utilization of the NOL operations

and FTC carryforwards and other deferred tax assets in each applicable jurisdiction. Under U.S. tax law, a company generally must use its NOL carryforwards before it can use its FTC carryforwards. The Company evaluated all the positive and negative evidence impacting the realization of its deferred tax assets as of December 31, 2019 in the U.S. tax jurisdiction. Evidence considered in our analysis included the Company’s ability to carryback NOL generated in

comprehensive

F-40

income
(loss). Per

2017 and 2018, thus limiting the NOL to be carried forward beyond 2019.   In addition, the Company implemented planning actions during 2019 and early 2020 to increase its planned U.S. source and foreign source income to better enable it to utilize its U.S. deferred tax assets and tax attributes.  As of December 31, 2019, based on all the available evidence, the Company has concluded that it is more likely than not that the U.S. NOL and FTC carryforwards will be utilized prior to their respective expirations and, thus, no valuation allowance has been established in the U.S. jurisdiction. 

As a result of the TCJA, the Company recognized a $123,143 thousand tax benefit in the Company’s Consolidated Statements of Operations for the year ended December 31, 2017. In accordance with SEC Staff Accounting Bulletin 118, in 2017 the Company recorded the effects of the TCJA using reasonable estimates due to the need for further analysis to complete the accounting.

The Company completed its accounting, and interpreted the additional guidance issued by the IRS and U.S. Department of the Treasury, and recognized an income tax benefit of $1,154 thousand primarily related to the 2018 tax return to tax provision true-up.

Effective January 1, 2017, the Company adopted ASU 2016-09, which provided new guidance on

the treatment
Company
recorded
excess
tax
benefits
of the tax effects of share based compensation transactions.  ASU 2016-09 required that the income tax effects of$
3
million, $
2
million
and $
3
million related
to restricted
stock
vestings
and stock
option exercises resulting from the change in value of share based compensation awards between the grant date and settlement (vesting/exercising) date be recorded
as
part of income tax
expense (benefit) within
the consolidated statements
of operations and
comprehensive income (loss).  Per the new guidance, the Company recorded excess tax benefits of $2,987 thousand and $1,450 thousand related to restricted stock vestings and stock option exercises as part of income tax expense (benefit) within the consolidated statements of operations and comprehensive income
(loss) in 20192022, 2021 and 2018.

In years prior 2020, respectively.

ASU
2016-09
does
not
impact
the
accounting
treatment
of tax
benefits
related
to 2017, the Company recorded
dividends
on
restricted
stock.
The tax
benefits related
to the
payment of
dividends on
restricted stock vestings and stock option exercises
have been
recorded
as part
of additional
paid-in capital
in the stockholder’s
equity section
of the
consolidated balance sheets. 

sheets in
all years.
The adoption tax
benefits
related
to
the
payment
of ASU 2016-09 did not impact the accounting treatment of tax benefits related to dividends
on restricted stock.  The tax benefits related to the payment of dividends on restricted
stock have been recorded as part of additional paid-in capital
were
$
0.4
million,
$
0.4
million
and
$
0.4
million
in the stockholder’s equity section of the consolidated balance sheets in all years.  The tax benefits related to the payment of dividends on restricted stock were $363 thousand
2022,
2021 and $241 thousand in 2019 2020, respectively.
11.
REINSURANCE
The
Company
utilizes
reinsurance
agreements
to
reduce
its
exposure
to
large
claims
and 2018 respectively.

11.  REINSURANCE

The Company utilizes reinsurance agreements to reduce its exposure to large claims and

catastrophic
loss
occurrences.
These agreements
provide for
recovery from
reinsurers
of a
portion of
losses and
LAE under
certain
circumstances
without
relieving
the
Company
of
its
underlying
obligations
to
the
policyholders.
Losses
and
LAE
incurred and premiums
earned are reported
after deduction for
reinsurance.
In the event
that one or
more of the
reinsurers
were
unable
to
meet
their
obligations
under
these
reinsurance
agreements,
the
Company
would
not
realize
the
full
value
of
the
reinsurance
recoverables
balances.
The
Company's
procedures
include
carefully
selecting
its
reinsurers,
structuring
agreements
to
provide
collateral
funds
where
necessary,
and
regularly
monitoring the Company would not realize the full value financial condition
and ratings of
its reinsurers. Reinsurance
recoverable include
balances due from
reinsurance
companies
and
are
presented
net
of
an
allowance
for
uncollectible
reinsurance.
Reinsurance
recoverables include
an estimate
of the amount
of gross losses
and loss adjustment
expense reserves that
may be
ceded
under
the
terms
of
the
reinsurance
agreements,
including
incurred
but
not
reported
unpaid
losses.
The
Company’s
estimate of
losses and
loss adjustment
expense reserves
ceded to
reinsurers
is based
on assumptions
that
are
consistent
with
those
used
in
establishing
the
gross
reserves
for
amounts
the
Company
owes
to
its
claimants.
The
Company
estimates
its
ceded
reinsurance
recoverable
based
on
the
terms
of
any
applicable
facultative and
treaty reinsurance,
including an estimate
of how incurred but
not reported losses
will ultimately be
ceded under
reinsurance
agreements. Accordingly,
the Company’s
estimate of
reinsurance recoverable balances.  recoverables
is subject
to
similar
risks
and
uncertainties
as
the
estimate
of
the
gross
reserve
for
unpaid
losses
and
loss
adjustment
expenses.
The
Company
may
hold
partial
collateral,
including
letters
of
credit
and
funds
held,
under
these
agreements.
See also Note 1C, Note 3 and Note 8.

F-41

Balances
are
considered
past
due
when
amounts
that
have
been
billed
are
not
collected
within
contractually
stipulated time periods,
generally 30, 60 or
90 days.
To
manage reinsurer credit
risk, a reinsurance
security review
committee
evaluates
the
credit
standing,
financial
performance,
management
and
operational
quality
of
each
potential
reinsurer.
In placing
reinsurance,
the Company
considers
the nature
of the
risk reinsured,
including the
expected liability payout duration,
and establishes limits tiered by reinsurer
credit rating.
Where its contracts
permit, the Company
secures future claim
obligations with
various forms
of collateral
or other
credit
enhancement,
including
irrevocable
letters
of
credit,
secured
trusts,
funds
held
accounts
and
group
wide
offsets.
See Note 1C for discussion of allowance on reinsurance
recoverables.
Insurance companies, including
reinsurers, are
regulated and hold
risk-based capital
to mitigate the risk
of loss due
to
economic
factors
and
other
risks.
Non-U.S.
reinsurers
are
either
subject
to
a
capital
regime
substantively
equivalent
to domestic
insurers
or we
hold collateral
to support
collection of
reinsurance
receivable.
As a
result,
there is limited history of losses from insurer
defaults.

F-45
Premiums
written
and
earned
and
incurred
losses
and
LAE
are
comprised
of
the
following
for
the
periods
indicated:
Years Ended December 31,
(Dollars in millions)
2022
2021
2020
Written premiums:
Direct
$
3,701
$
3,300
$
2,698
Assumed
5,975
6,031
5,259
Ceded
(1,645)
(1,612)
(1,318)
Net written premiums
$
8,032
$
7,719
$
6,639
Premiums writtenearned:
Direct
$
3,544
$
2,982
$
2,592
Assumed
5,945
5,741
5,183
Ceded
(1,613)
(1,544)
(1,368)
Net premiums earned
$
7,876
$
7,179
$
6,407
Incurred losses and earned andLAE:
Direct
$
2,423
$
2,043
$
1,785
Assumed
4,107
3,872
3,576
Ceded
(708)
(528)
(753)
Net incurred losses and LAE are comprised of the following for the periods indicated:

 

Years Ended December 31,

(Dollars in thousands)

2019

 

2018

 

2017

Written premiums:

 

 

 

 

 

 

 

 

Direct

$

2,449,198

 

$

1,996,606

 

$

1,873,115

Assumed

 

4,603,866

 

 

4,577,070

 

 

3,915,374

Ceded

 

(1,278,115)

 

 

(1,541,814)

 

 

(3,064,645)

Net written premiums

$

5,774,949

 

$

5,031,862

 

$

2,723,844

 

 

 

 

 

 

 

 

 

Premiums earned:

 

 

 

 

 

 

 

 

Direct

$

2,255,388

 

$

1,903,576

 

$

1,655,023

Assumed

 

4,427,006

 

 

4,447,862

 

 

3,842,836

Ceded

 

(1,193,359)

 

 

(1,512,380)

 

 

(3,548,264)

Net premiums earned

$

5,489,035

 

$

4,839,058

 

$

1,949,595

 

 

 

 

 

 

 

 

 

Incurred losses and LAE:

 

 

 

 

 

 

 

 

Direct

$

1,401,251

 

$

1,182,399

 

$

1,196,323

Assumed

 

2,913,987

 

 

4,162,776

 

 

3,108,753

Ceded

 

(486,116)

 

 

(534,157)

 

 

(2,265,325)

Net incurred losses and LAE

$

3,829,122

 

$

4,811,018

 

$

2,039,751

$

5,823
$
5,387
$
4,608
The Company
has engaged
in reinsurance
transactions
with Bermuda
Re,
Everest
Reinsurance
Company
(Ireland)
dac
(“Ireland
Re”),
Everest
Insurance
(Ireland)
dac
(“Ireland
Insurance”),
Everest
International
Reinsurance
Ltd. (“
(“Everest
International”), Mt. Logan Re,
Everest
Insurance
Company
of
Canada (“
(“Everest
Canada”),
Lloyd’s
Syndicate
2786
and Lloyd’s Syndicate 2786,
Mt.
Logan
Re,
which
are
affiliated
companies
primarily
driven
by
enterprise
risk
and
capital
management
considerations under which business
is ceded at market rates and
terms.

The
table
below
represents
affiliated
quota
share
reinsurance
agreements ("
("whole
account
quota
share")
for
all
new and renewal business for the indicated
coverage period:

(Dollars in thousands)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Single

 

 

 

 

 

 

 

Percent

 

Assuming

 

 

 

Occurrence

 

Aggregate

 

Coverage Period

 

Ceding Company

 

Ceded

 

Company

 

Type of Business

 

Limit

 

Limit

 

01/01/2010-12/31/2010

 

Everest Re

 

44.0

%

 

Bermuda Re

 

property / casualty business

 

150,000

 

325,000

 

01/01/2011-12/31/2011

 

Everest Re

 

50.0

%

 

Bermuda Re

 

property / casualty business

 

150,000

 

300,000

 

01/01/2012-12/31/2014

 

Everest Re

 

50.0

%

 

Bermuda Re

 

property / casualty business

 

100,000

 

200,000

 

01/01/2015-12/31/2016

 

Everest Re

 

50.0

%

 

Bermuda Re

 

property / casualty business

 

162,500

 

325,000

 

01/01/2017-12/31/2017

 

Everest Re

 

60.0

%

 

Bermuda Re

 

property / casualty business

 

219,000

 

438,000

 

01/01/2010-12/31/2010

 

Everest Re- Canadian Branch

 

60.0

%

 

Bermuda Re

 

property business

 

350,000

(1)

-

 

01/01/2011-12/31/2011

 

Everest Re- Canadian Branch

 

60.0

%

 

Bermuda Re

 

property business

 

350,000

(1)

-

 

01/01/2012-12/31/2012

 

Everest Re- Canadian Branch

 

75.0

%

 

Bermuda Re

 

property / casualty business

 

206,250

(1)

412,500

(1)

01/01/2013-12/31/2013

 

Everest Re- Canadian Branch

 

75.0

%

 

Bermuda Re

 

property / casualty business

 

150,000

(1)

412,500

(1)

01/01/2014-12/31/2017

 

Everest Re- Canadian Branch

 

75.0

%

 

Bermuda Re

 

property / casualty business

 

262,500

(1)

412,500

(1)

01/01/2012-12/31/2017

 

Everest Canada

 

80.0

%

 

Everest Re-

  Canadian Branch

 

property business

 

-

 

-

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1) Amounts shown are Canadian dollars.

(Dollars in millions)
Single
Percent
Assuming
Occurrence
Aggregate
Coverage Period
Ceding Company
Ceded
Company
Type of Business
Limit
Limit
01/01/2010-12/31/2010
Everest Re
44.0
%
Bermuda Re
Property / Casualty Business
150
325
01/01/2011-12/31/2011
Everest Re
50.0
%
Bermuda Re
Property / Casualty Business
150
300
01/01/2012-12/31/2014
Everest Re
50.0
%
Bermuda Re
Property / Casualty Business
100
200
01/01/2015-12/31/2016
Everest Re
50.0
%
Bermuda Re
Property / Casualty Business
163
325
01/01/2017-12/31/2017
Everest Re
60.0
%
Bermuda Re
Property / Casualty Business
219
438
01/01/2010-12/31/2010
Everest Re- Canadian Branch
60.0
%
Bermuda Re
Property Business
350
(1)
-
01/01/2011-12/31/2011
Everest Re- Canadian Branch
60.0
%
Bermuda Re
Property Business
350
(1)
-
01/01/2012-12/31/2012
Everest Re- Canadian Branch
75.0
%
Bermuda Re
Property / Casualty Business
206
(1)
413
(1)
01/01/2013-12/31/2013
Everest Re- Canadian Branch
75.0
%
Bermuda Re
Property / Casualty Business
150
(1)
413
(1)
01/01/2014-12/31/2017
Everest Re- Canadian Branch
75.0
%
Bermuda Re
Property / Casualty Business
263
(1)
413
(1)
01/01/2012-12/31/2017
Everest Canada
80.0
%
Everest Re- Canadian
Branch
Property Business
-
-
01/01/2020
Everest International Assurance
100.0
%
Bermuda Re
Life Business
-
-
(1) Amounts shown are Canadian dollars.
Effective
January 1, 2018,
Everest
Re entered
into a
twelve
month whole
account aggregate
stop loss
reinsurance
contract (“
(“stop
loss agreement”)
with Bermuda
Re.
The stop
loss agreement
provides
coverage
for
ultimate
net
losses
on
applicable
net
earned
premiums
above
a
retention
level,
subject
to
certain
other
coverage
limits
and
conditions. The stop loss agreement
was most recently renewed
effective January 1, 2019. 

In addition, 2022.

Everest
Re entered
into a property
catastrophe
excess of
loss reinsurance
contract
with Bermuda
Re (UK
Branch), effective
January
1,
2021
through
December
31,
2021.
The
contract
provides
Bermuda
Re
(UK
Branch),
with
up
to
£
100
F-46
million
of
reinsurance
coverage
for
each
catastrophe
occurrence
above
£
40
million.
This
agreement
was
most
recently renewed effective
January 1, 2019.2022.
Everest
Re
entered
into
a
catastrophe
excess
of
loss
reinsurance
contract
with
Ireland
Re,
effective
February
1,
2021 through
January 31,
2022. The
contract
provides $100,000 thousandIreland
Re with
up to
€
145
million of
reinsurance
coverage
for property each
catastrophe losses
occurrence above certain attachment points. 

F-42

€
16

million. This

agreement was
most recently
renewed effective
January
1, 2022.
The
table
below
represents
loss
portfolio
transfer
(“LPT”)
reinsurance
agreements
whereby
net
insurance
exposures and reserves were
transferred to an
affiliate.

(Dollars in thousands)

Effective

 

Transferring

 

Assuming

 

 

% of Business or

 

 

Covered Period

Date

 

Company

 

Company

 

 

Amount of Transfer

 

 

of Transfer

10/01/2001

 

Everest Re  (Belgium Branch)

 

Bermuda Re

 

 

100

%

 

 

All years

10/01/2008

 

Everest Re

 

Bermuda Re

 

$

747,022

 

 

 

01/01/2002-12/31/2007

12/31/2017

 

Everest Re

 

Bermuda Re

 

$

970,000

 

 

 

All years

(Dollars in millions)
Effective
Transferring
Assuming
% of Business or
Covered Period
Date
Company
Company
Amount of Transfer
of Transfer
10/01/2001
Everest Re (Belgium Branch)
Bermuda Re
100
%
All years
10/01/2008
Everest Re
Bermuda Re
$
747
01/01/2002-12/31/2007
12/31/2017
Everest Re
Bermuda Re
$
970
All years
On December 31, 2017,
the Company
entered into
a LPT agreement
with Bermuda Re.
The LPT agreement
covers
subject
loss
reserves
of $2,336,242 thousand
$
2.3
billion
for
accident
years
2017
and
prior.
As
a
result
of
the
LPT
agreement,
the
Company transferred $1,000,000 thousand
$
1.0
billion of cash and
fixed maturity securities
and transferred $970,000 thousand
$
970
million of loss reserves
to
Bermuda
Re.
As
part
of
the
LPT
agreement,
Bermuda
Re
will
provide
an
additional
$
500
million
of
adverse
development
coverage
on
the
subject
loss
reserves.
As
of
December
31,
2022,
and
December
31,
2021,
the
Company
has
a
reinsurance
recoverable
of
$
804
million
and
$
856
million,
respectively,
recorded
on
its
balance
sheet due from Bermuda Re.  As part of
The
following
tables
summarize
the LPT agreement, Bermuda Re will provide an additional $500,000 thousand of adverse development coverage on
significant
premiums
and
losses
ceded
and
assumed
by
the subject loss reserves. 

The following tables summarize the premiums and losses ceded by the

Company to Bermuda Re and Everest International, respectively, and premiums and losses assumed by the Company from Everest Canada and Lloyd’s syndicate 2786
in
transactions with affiliated entities
for the periods indicated:

 

 

Bermuda Re

Years Ended December 31,

(Dollars in thousands)

2019

 

2018

 

2017

Ceded written premiums

$

100,084

 

$

572,620

 

$

2,219,352

Ceded earned premiums

 

101,681

 

 

586,120

 

 

2,796,939

Ceded losses and LAE

 

(51,686)

 

 

(49,955)

 

 

1,687,659

 

 

Everest International

Years Ended December 31,

(Dollars in thousands)

2019

 

2018

 

2017

Ceded written premiums

$

-

 

$

-

 

$

10

Ceded earned premiums

 

-

 

 

-

 

 

44

Ceded losses and LAE

 

324

 

 

(753)

 

 

(990)

 

 

Everest Canada

Years Ended December 31,

(Dollars in thousands)

2019

 

2018

 

2017

Assumed written premiums

$

-

 

$

-

 

$

25,871

Assumed earned premiums

 

-

 

 

-

 

 

54,558

Assumed losses and LAE

 

3,024

 

 

6,238

 

 

29,389

Bermuda Re

 

 

Lloyd's Syndicate 2786

Years Ended December 31,

(Dollars in thousands)

2019

 

2018

 

2017

Assumed written premiums

$

(11,470)

 

$

10,800

 

$

35,607

Assumed earned premiums

 

(18,650)

 

 

35,826

 

 

33,590

Assumed losses and LAE

 

8,355

 

 

27,550

 

 

17,688

Years Ended December 31,

In 2013, Group established Mt. Logan Re, which is a Class 3 insurer based

(Dollars in millions)
2022
2021
2020
Ceded written premiums
$
372
$
303
$
133
Ceded earned premiums
371
300
132
Ceded losses and LAE
(16)
(59)
110
Assumed written premiums
3
5
-
Assumed earned premiums
5
4
-
Ireland Re
Years Ended December 31,
(Dollars in millions)
2022
2021
2020
Assumed written premiums
$
10
$
16
$
-
Assumed earned premiums
10
15
-
Assumed losses and LAE
23
64
-
F-47
Ireland Insurance
Years Ended December 31,
(Dollars in millions)
2022
2021
2020
Assumed written premiums
$
9
$
9
$
5
Assumed earned premiums
8
6
4
Assumed losses and LAE
5
3
2
In
2013,
Group
established
Mt.
Logan
Re,
which
is
a
Class
3
insurer
based
in
Bermuda.
Mt.
Logan
Re
then
established
separate
segregated
accounts
for its
business activity,
which invest
in a
diversified set
of catastrophe
exposures.

F-43

The
following
table
summarizes

The following table summarizes the

premiums
and
losses
that
are
ceded
by
the
Company
to
Mt.
Logan
Re
segregated accounts and
assumed by the Company from Mt. Logan
Re segregated accounts.

 

 

Mt. Logan Re Segregated Accounts

Years Ended December 31,

(Dollars in thousands)

2019

 

2018

 

2017

Ceded written premiums

$

240,721

 

$

207,439

 

$

192,928

Ceded earned premiums

 

235,500

 

 

212,046

 

 

192,573

Ceded losses and LAE

 

171,900

 

 

234,471

 

 

283,511

Assumed written premiums

 

-

 

 

10,582

 

 

11,984

Assumed earned premiums

 

-

 

 

10,582

 

 

11,984

Assumed losses and LAE

 

-

 

 

-

 

 

-

Mt. Logan Re Segregated Accounts
Years Ended December 31,
(Dollars in millions)
2022
2021
2020
Ceded written premiums
$
170
$
286
$
263
Ceded earned premiums
174
280
265
Ceded losses and LAE
150
194
175
12.
COMPREHENSIVE INCOME (LOSS)

The following
tables
present
the
components
of
comprehensive
income
(loss)
in
the
consolidated
statements
of
operations and comprehensive income
(loss) for the periods indicated:

 

Year Ended

 

Year Ended

 

Year Ended

(Dollars in thousands)

December 31, 2019

 

December 31, 2018

 

December 31, 2017

 

Before Tax

 

Tax Effect

 

Net of Tax

 

Before Tax

 

Tax Effect

 

Net of Tax

 

Before Tax

 

Tax Effect

 

Net of Tax

Unrealized appreciation (depreciation)

  ("URA(D)") on securities - temporary

$

222,884

 

 

(46,971)

 

$

175,913

 

$

(119,058)

 

$

25,582

 

$

(93,476)

 

$

(11,672)

 

$

4,085

 

$

(7,587)

URA(D) on securities - OTTI

 

(546)

 

 

115

 

 

(431)

 

 

645

 

 

(135)

 

 

510

 

 

(4,537)

 

 

1,588

 

 

(2,949)

Reclassification of net realized losses

  (gains) included in net income (loss)

 

6,068

 

 

(988)

 

 

5,080

 

 

3,416

 

 

(1,395)

 

 

2,021

 

 

3,543

 

 

(1,240)

 

 

2,303

Foreign currency translation adjustments

 

21,708

 

 

(4,555)

 

 

17,153

 

 

(46,136)

 

 

9,705

 

 

(36,431)

 

 

57,564

 

 

(20,137)

 

 

37,427

Benefit plan actuarial net gain (loss)

 

(15,938)

 

 

3,347

 

 

(12,591)

 

 

(646)

 

 

136

 

 

(510)

 

 

1,300

 

 

(273)

 

 

1,027

Reclassification of amortization of net gain

  (loss) included in net income (loss)

 

6,902

 

 

(1,449)

 

 

5,453

 

 

6,356

 

 

(1,335)

 

 

5,021

 

 

8,426

 

 

(2,949)

 

 

5,477

Total other comprehensive income (loss)

$

241,078

 

$

(50,501)

 

$

190,577

 

$

(155,423)

 

$

32,558

 

$

(122,865)

 

$

54,624

 

$

(18,926)

 

$

35,698

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(Some amounts may not reconcile due to rounding)

December 31, 2022
December 31, 2021
December 31, 2020
(Dollars in millions)
Before Tax
Tax Effect
Net of Tax
Before Tax
Tax Effect
Net of Tax
Before Tax
Tax Effect
Net of Tax
Unrealized appreciation (depreciation)
("URA(D)") on securities - temporary
$
(1,280)
269
$
(1,011)
$
(254)
53
$
(200)
$
206
(43)
$
163
Reclassification of net realized losses
(gains) included in net income (loss)
93
(20)
73
12
(3)
9
32
(7)
25
Foreign currency translation adjustments
(23)
5
(18)
(11)
2
(9)
18
(4)
14
Benefit plan actuarial net gain (loss)
18
(4)
15
22
(5)
17
(7)
1
(6)
Reclassification of amortization of net gain (loss)
included in net income (loss)
3
(1)
2
8
(2)
6
8
(2)
6
Total other comprehensive income
(loss)
$
(1,189)
$
249
$
(939)
$
(223)
$
47
$
(177)
$
258
$
(54)
$
204
(Some amounts may not reconcile due to rounding)
The following table presents details
of the amounts reclassified from AOCI for
the periods indicated:

 

 

 

Affected line item within the

 

Years Ended December 31,

 

statements of operations and

AOCI component

2019

 

2018

 

comprehensive income (loss)

(Dollars in thousands)

 

 

 

 

 

 

 

URA(D) on securities

$

6,068

 

$

3,416

 

Other net realized capital gains (losses)

 

 

(988)

 

 

(1,395)

 

Income tax expense (benefit)

 

$

5,080

 

$

2,021

 

Net income (loss)

Benefit plan net gain (loss)

$

6,902

 

$

6,356

 

Other underwriting expenses

 

 

(1,449)

 

 

(1,335)

 

Income tax expense (benefit)

 

$

5,453

 

$

5,021

 

Net income (loss)

 

 

 

 

 

 

 

 

(Some amounts may not reconcile due to rounding)

F-44

Affected line item within the
Years Ended December 31,
statements of operations and
AOCI component
2022
2021
comprehensive income (loss)
(Dollars in millions)
URA(D) on securities
$
93
$
12
Other net realized capital gains (losses)
(20)
(3)
Income tax expense (benefit)
$
73
$
9
Net income (loss)
Benefit plan net gain (loss)
$
3
$
8
Other underwriting expenses
(1)
(2)
Income tax expense (benefit)
$
2
$
6
Net income (loss)
(Some amounts may not reconcile due to rounding)
F-48
The following table presents
the components of accumulated
other comprehensive income
(loss), net of tax,
in the
consolidated balance sheets for
the periods indicated:
Years Ended December 31,
(Dollars in millions)
2022
2021
Beginning balance of URA(D) on securities
$
122
$
313
Current period change in URA(D) of investments -
temporary
(938)
(191)
Ending balance of URA(D) on securities
(816)
122
Beginning balance of foreign currency translation adjustments
20
29
Current period change in foreign currency translation adjustments
(18)
(9)
Ending balance of foreign currency translation adjustments
2
20
Beginning balance of benefit plan net gain (loss)
(50)
(74)
Current period change in benefit plan net gain (loss)
17
23
Ending balance of benefit plan net gain (loss)
(33)
(50)
Ending balance of accumulated other comprehensive income (loss), net of tax, in the consolidated balance sheets for the periods indicated: 

 

Years Ended December 31,

(Dollars in thousands)                   

2019

 

2018

Beginning balance of URA (D) on securities

$

(55,950)

 

$

37,442

Change to beginning balance due to adoption of ASU 2016-01

 

-

 

 

(2,447)

Current period change in URA (D) of investments -

  temporary

 

180,993

 

 

(91,455)

Current period change in URA (D) of investments -

  non-credit OTTI

 

(431)

 

 

510

Ending balance of URA (D) on securities

 

124,612

 

 

(55,950)

Beginning balance of foreign currency translation

  adjustments

 

(2,886)

 

 

33,545

Current period change in foreign currency translation

  adjustments

 

17,153

 

 

(36,431)

Ending balance of foreign currency translation

  adjustments

 

14,267

 

 

(2,886)

Beginning balance of benefit plan net gain (loss)

 

(67,418)

 

 

(71,929)

Current period change in benefit plan net gain (loss)

 

(7,138)

 

 

4,511

Ending balance of benefit plan net gain (loss)

 

(74,556)

 

 

(67,418)

Ending balance of accumulated other comprehensive

  income (loss)

$

64,324

 

$

(126,254)

$

(848)
$
91
(Some amounts may not reconcile due to rounding)
13.
EMPLOYEE BENEFIT PLANS

Defined Benefit Pension Plans.

The
Company
maintains
both
qualified
and
non-qualified
defined
benefit
pension
plans
for
its
U.S.
employees
employed prior to
April 1, 2010.
Generally,
the Company computes
the benefits based
on average
earnings over a
period
prescribed
by
the
plans
and
credited
length
of
service.
The
Company’s
non-qualified
defined
benefit
pension plan
provided
compensating
pension benefits
for
participants
whose benefits
have
been curtailed
under
the
qualified
plan
due
to
Internal
Revenue
Code
limitations.
Effective
January 1,
2018,
participants
of
the
Company’s non-qualified defined benefit pension plan provided compensating pension benefits for participants whose benefits have been curtailed under the qualified plan due to Internal Revenue Code limitations.  Effective January 1, 2018, participants of the Company’s non-qualified defined
benefit pension plan may no longer accrue additional
service benefits.

Although not required
to make contributions
under IRS regulations,
the following table summarizes
the Company’s
contributions to the defined benefit pension
plans for the periods indicated:

 

Years Ended December 31,

(Dollars in thousands)

2019

 

2018

 

2017

Company contributions

$

4,750

 

$

77,743

 

$

10,534

         

Years Ended December 31,
(Dollars in millions)
2022
2021
2020
Company contributions
$
6
$
4
$
7
The following table summarizes the
Company’s pension expense
for the periods indicated:

 

Years Ended December 31,

(Dollars in thousands)

2019

 

2018

 

2017

Pension expense

$

10,042

 

$

9,728

 

$

16,299

         

F-45

Years Ended December 31,
(Dollars in millions)
2022
2021
2020
Pension expense
$
(2)
$
3
$
8
F-49
The
following
table
summarizes
the
status
of
these
defined
benefit
plans
for
U.S.
employees
for
the
periods
indicated:
Years Ended December 31,
(Dollars in millions)
2022
2021
Change in projected benefit obligation:
Benefit obligation at beginning of year
$
403
$
404
Service cost
9
11
Interest cost
10
8
Actuarial (gain)/loss
(115)
(9)
Curtailment
-
-
Benefits paid
(15)
(12)
Projected benefit obligation at end of year
291
403
Change in plan assets:
Fair value of plan assets at beginning of year
377
354
Actual return on plan assets
(83)
31
Actual contributions during the year
6
4
Benefits paid
(15)
(12)
Fair value of plan assets at end of year
285
377
Funded status at end of these defined benefit plans for U.S. employeesyear
$
(6)
$
(25)
(Some amounts may not reconcile due
to rounding.)
Amounts recognized in the consolidated
balance sheets for the periods indicated:

 

Years Ended December 31,

(Dollars in thousands)

2019

 

2018

Change in projected benefit obligation:

 

 

 

 

 

Benefit obligation at beginning of year

$

300,244

 

$

316,202

Service cost

 

8,255

 

 

9,801

Interest cost

 

11,712

 

 

10,290

Actuarial (gain)/loss

 

46,206

 

 

(29,966)

Curtailment

 

-

 

 

-

Benefits paid

 

(11,062)

 

 

(6,084)

Projected benefit obligation at end of year

 

355,355

 

 

300,244

 

 

 

 

 

 

Change in plan assets:

 

 

 

 

 

Fair value of plan assets at beginning of year

 

260,531

 

 

210,267

Actual return on plan assets

 

47,247

 

 

(21,395)

Actual contributions during the year

 

4,750

 

 

77,743

Benefits paid

 

(11,062)

 

 

(6,084)

Fair value of plan assets at end of year

 

301,466

 

 

260,531

 

 

 

 

 

 

Funded status at end of year

$

(53,889)

 

$

(39,713)

 

 

 

 

 

 

(Some amounts may not reconcile due to rounding.)

Amounts

At December 31,
(Dollars in millions)
2022
2021
Other assets (due beyond one year)
$
1
$
-
Other liabilities (due within one year)
(1)
(1)
Other liabilities (due beyond one year)
(6)
(24)
Net amount recognized in the consolidated balance sheets
$
(6)
$
(25)
Amounts not
yet reflected
in net
periodic benefit
cost and
included in
accumulated other
comprehensive
income
(loss) for the periods indicated:

 

At December 31,

(Dollars in thousands)

2019

 

2018

Other assets (due beyond one year)

$

-

 

$

-

Other liabilities (due within one year)

 

(7,362)

 

 

(7,530)

Other liabilities (due beyond one year)

 

(46,527)

 

 

(32,182)

Net amount recognized in the consolidated balance sheets

$

(53,889)

 

$

(39,713)

Amounts

At December 31,
(Dollars in millions)
2022
2021
Accumulated income (loss)
$
(56)
$
(68)
Accumulated other comprehensive income (loss)
$
(56)
$
(68)
(Some amounts may not yet reflectedreconcile due
to rounding.)
F-50
Other changes in other comprehensive income (loss)
for the periods indicated are as
follows:
Years Ended December 31,
(Dollars in millions)
2022
2021
Other comprehensive income (loss) at December 31, prior year
$
(68)
$
(92)
Net gain (loss) arising during period
7
15
Recognition of amortizations in net periodic benefit cost:
Actuarial loss
4
9
Curtailment loss recognized
-
-
Other comprehensive income (loss) at December 31, current year
$
(56)
$
(68)
(Some amounts may not reconcile due to rounding.)
Net periodic benefit cost for U.S.
employees included the following components
for the periods indicated:
Years Ended December 31,
(Dollars in millions)
2022
2021
2020
Service cost
$
9
$
11
$
10
Interest cost
10
8
10
Expected return on assets
(25)
(24)
(21)
Amortization of actuarial loss from earlier periods
4
8
9
Settlement
1
-
1
Net periodic benefit cost
$
(2)
$
3
$
8
Other changes recognized in other comprehensive income (loss):
Other comprehensive income (loss) attributable to change from
prior year
(12)
(24)
Total recognized in net periodic benefit cost and included in accumulated other
comprehensive income (loss) for the periods indicated:

 

At December 31,

(Dollars in thousands)

2019

 

2018

Accumulated income (loss)

$

(97,466)

 

$

(88,580)

Accumulated other comprehensive income (loss)

$

(97,466)

 

$

(88,580)

 

 

 

 

 

 

(Some amounts may not reconcile due to rounding.)

$

F-46

(14)
$
(21)
(Some amounts may not reconcile due
to rounding.)

The weighted

Other changes in other comprehensive income (loss) for the periods indicated are as follows:

average

 

Years Ended December 31,

(Dollars in thousands)

2019

 

2018

Other comprehensive income (loss) at December 31, prior year

$

(88,580)

 

$

(86,788)

Net gain (loss) arising during period

 

(16,927)

 

 

(8,631)

Recognition of amortizations in net periodic benefit cost:

 

 

 

 

 

Actuarial loss

 

8,042

 

 

6,839

Curtailment loss recognized

 

-

 

 

-

Other comprehensive income (loss) at December 31, current year

$

(97,466)

 

$

(88,580)

 

 

 

 

 

 

(Some amounts may not reconcile due to rounding.)

Net discount

rates
used to
determine
net
periodic benefit
cost
for U.S. employees included the following components for the periods indicated:

 

Years Ended December 31,

(Dollars in thousands)

2019

 

2018

 

2017

Service cost

 

8,255

 

$

9,801

 

$

10,949

Interest cost

 

11,712

 

 

10,290

 

 

10,034

Expected return on assets

 

(17,968)

 

 

(17,202)

 

 

(13,050)

Amortization of actuarial loss from earlier periods

 

7,635

 

 

6,839

 

 

8,366

Settlement

 

408

 

 

-

 

 

-

Net periodic benefit cost

$

10,042

 

$

9,728

 

$

16,299

 

 

 

 

 

 

 

 

 

Other changes recognized in other comprehensive income (loss):

 

 

 

 

 

 

 

 

Other comprehensive income (loss) attributable to change from

   prior year

 

8,885

 

 

1,792

 

 

 

 

 

 

 

 

 

 

 

 

Total recognized in net periodic benefit cost and other

 

 

 

 

 

 

 

 

comprehensive income (loss)

$

18,927

 

$

11,520

 

 

 

 

 

 

 

 

 

 

 

 

(Some amounts may not reconcile due to rounding.)

The estimated transition obligation, actuarial loss 2022, 2021

and prior service cost that will be amortized from accumulated other comprehensive income into 2020
were
2.86
%,
2.55
%
and
3.28
%,
respectively.
The
rate
of
compensation
increase
used
to
determine
the
net
periodic
benefit cost over the next year are $0 thousand, $9,461 thousand
for 2022,
2021 and
2020 was
4.00
%.
The expected
long-term rate
of return
on plan
assets for
2022,
2021 and $0 thousand, respectively.

The weighted average discount rates used to determine net periodic benefit cost for 2019, 2018 and 2017 were 4.272020 was

6.75
%, 3.62
7.00
% and 4.16
7.00
% respectively.
The
weighted
average
discount
rates
used
to
determine
the
actuarial
present
value
of
the
projected
benefit
obligation for 2022, 2021 and 2020 were
5.25
%,
2.86
% and
2.55
%, respectively.  The rate of compensation increase used to determine the net periodic benefit cost for 2019, 2018 and 2017 was 4.00%.  The expected long-term rate of return on plan assets was 7.00% for 2019, 7.00% for 2018 and was 7.50% for 2017 based on expected portfolio returns and allocations.

The weighted average discount rates used to determine the actuarial present value of the projected benefit obligation for years end 2019, 2018 and 2017 were 3.28%, 4.27% and 3.62%, respectively.

F-47

The following table summarizes the

accumulated benefit obligation for
the periods indicated:

 

At December 31,

(Dollars in thousands)

2019

 

2018

Qualified Plan

$

288,328

 

$

237,855

Non-qualified Plan

 

21,642

 

 

24,472

Total

$

309,970

 

$

262,327

 

 

 

 

 

 

(Some amounts may not reconcile due to rounding.)

At December 31,
(Dollars in millions)
2022
2021
Qualified Plan
$
258
$
339
Non-qualified Plan
6
12
Total
$
264
$
352
(Some amounts may not reconcile due
to rounding.)
F-51
The
following
table
displays
the
plans
with
projected
benefit
obligations
in
excess
of plan
assets
for
the
periods
indicated:
At December 31,
(Dollars in millions)
2022
2021
Qualified Plan
Projected benefit obligation
$
284
$
390
Fair value of plan assets
285
377
Non-qualified Plan
Projected benefit obligation
$
6
$
12
Fair value of plan assets
-
-
The following table
displays the
plans with accumulated
benefit obligations
in excess
of plan assets
for the periods
indicated:
At December 31,
(Dollars in millions)
2022
2021
Qualified Plan
Accumulated benefit obligation
$
-
$
-
Fair value of plan assets
-
-
Non-qualified Plan
Accumulated benefit obligation
6
12
Fair value of plan assets
$
-
$
-
The following table displays the plans with projected benefit obligations in excess of plan assets for the periods indicated:

 

At December 31,

(Dollars in thousands)

2019

 

2018

Qualified Plan

 

 

 

 

 

Projected benefit obligation

$

333,715

 

$

275,772

Fair value of plan assets

 

301,467

 

 

260,531

Non-qualified Plan

 

 

 

 

 

Projected benefit obligation

$

21,642

 

$

24,472

Fair value of plan assets

 

-

 

 

-

The following table displays the plans with accumulated benefit obligations in excess of plan assets for the periods indicated:

 

At December 31,

(Dollars in thousands)

2019

 

2018

Qualified Plan

 

 

 

 

 

Accumulated benefit obligation

$

-

 

$

-

Fair value of plan assets

 

-

 

 

-

Non-qualified Plan

 

 

 

 

 

Accumulated benefit obligation

$

21,642

 

$

24,472

Fair value of plan assets

 

-

 

 

-

The following table displays the expected benefit payments in

the periods indicated:

(Dollars in thousands)

 

2020

$

15,670

2021

 

11,458

2022

 

12,198

2023

 

12,902

2024

 

13,985

Next 5 years

 

84,334

F-48

(Dollars in millions)
2023
$
13
2024
14
2025
14
2026
15
2027
17
Next 5 years
100
Plan assets
consist of
shares in
investment
trusts with 62
74
%, 30
24
%, 7
1
% and
1
% of the
underlying assets
consisting of
equity
securities,
fixed
maturities,
limited
partnerships
and multi-strategy
cash,
respectively.
The
Company
manages
the
qualified
plan
investments
for
U.S.
employees.
The
assets
in
the
plan
consist
of
debt
and
equity funds and cash, respectively.  The Company manages
mutual
funds.
Due to
the qualified plan investments for U.S. employees.  The assets in long-term
nature of
the plan, consist of debt and equity mutual funds.  Due to the long term nature of the plan,
the target
asset allocation
has historically
been
70
% equities
and
30
% bonds.

F-52
The following
tables
present
the
fair
value
measurement
levels
for
the
qualified
plan
assets
at
fair
value
for
the
periods indicated:
Fair Value Measurement Using:
Quoted Prices
in Active
Significant
Markets for
Other
Significant
Identical
Observable
Unobservable
December 31,
Assets
Inputs
Inputs
(Dollars in millions)
2022
(Level 1)
(Level 2)
(Level 3)
Assets:
Short-term investments, which approximates fair value measurement levels for the qualified plan assets at(a)
$
4
$
4
$
-
$
-
Mutual funds, fair value for the periods indicated:

 

 

 

Fair Value Measurement Using:

 

 

 

Quoted Prices

 

 

 

 

 

 

 

in Active

 

Significant

 

 

 

 

 

Markets for

 

Other

 

Significant

 

 

 

Identical

 

Observable

 

Unobservable

 

December 31,

 

Assets

 

Inputs

 

Inputs

(Dollars in thousands)

2019

 

(Level 1)

 

(Level 2)

 

(Level 3)

Assets:

 

 

 

 

 

 

 

 

 

 

 

Short-term investments, which approximates fair value (a)

$

1,749

 

$

1,749

 

$

-

 

$

-

Mutual funds, fair value

 

 

 

 

 

 

 

 

 

 

 

Fixed income (b)

 

90,483

 

 

90,483

 

 

-

 

 

-

Equities (c)

 

188,884

 

 

188,884

 

 

-

 

 

-

Total

$

281,116

 

$

281,116

 

$

-

 

$

-

 

 

 

 

 

 

 

 

 

 

 

 

(Some amounts may not reconcile due to rounding.)

Fixed income (b)

68
68
-
-
Equities (c)
211
211
-
-
Total
$
283
$
283
$
-
$
-
(Some amounts may not reconcile due
to rounding.)
(a)
This category includes high quality,
short-term money market instruments,
which are issued and payable
in U.S. dollars.

(b)
This category includes fixed income
funds, which invest in investment
grade securities of corporations,
governments and government agencies
with
approximately
70
% in U.S. securities and
30
% in international securities.

(c)
This category includes funds, which
invest in small, mid and multi-cap equity securities
including common stocks, securities convertible
into common stock
and securities with common stock characteristics,
such as rights and warrants, with approximately
50
% in U.S. equities and
50
% in international equities.

There were no transfers between Level 1 and Level 2

Fair Value Measurement Using:
Quoted Prices
in Active
Significant
Markets for the twelve months ended
Other
Significant
Identical
Observable
Unobservable
December 31, 2019.

F-49

Assets
Inputs
Inputs
(Dollars in millions)
2021
(Level 1)
(Level 2)
(Level 3)
Assets:
Short-term investments, which approximates fair value (a)
$
3
$
3
$
-
$
-
Mutual funds, fair value
Fixed income (b)
85
85
-
-
Equities (c)
287
287
-
-
Total
$
375
$
375
$
-
$
-
(Some amounts may not reconcile due
to rounding.)

(a)

 

 

 

Fair Value Measurement Using:

 

 

 

Quoted Prices

 

 

 

 

 

 

 

in Active

 

Significant

 

 

 

 

 

Markets for

 

Other

 

Significant

 

 

 

Identical

 

Observable

 

Unobservable

 

December 31,

 

Assets

 

Inputs

 

Inputs

(Dollars in thousands)

2018

 

(Level 1)

 

(Level 2)

 

(Level 3)

Assets:

 

 

 

 

 

 

 

 

 

 

 

Short-term investments, which approximates fair value (a)

$

2,872

 

$

2,872

 

$

-

 

$

-

Mutual funds, fair value

 

 

 

 

 

 

 

 

 

 

 

Fixed income (b)

 

82,633

 

 

82,633

 

 

-

 

 

-

Equities (c)

 

154,935

 

 

154,935

 

 

-

 

 

-

Total

$

240,440

 

$

240,440

 

$

-

 

$

-

 

 

 

 

 

 

 

 

 

 

 

 

(Some amounts may not reconcile due to rounding.)

 (a)      This category includes high quality,

short-term money market instruments,
which are issued and payable
in U.S. dollars.

(b)
This category includes fixed income
funds, which invest in investment
grade securities of corporations,
governments and government agencies
with
approximately 50
70
% in U.S. securities and 50
30
% in international securities.

(c)
This category includes funds, which
invest in small, mid and multi-cap equity securities
including common stocks, securities convertible
into common stock
and securities with common stock characteristics,
such as rights and warrants, with approximately
50
% in U.S. equities and
50
% in international equities.

In
addition, $20,351 thousand
$
2
million
and $20,091 thousand
$
3
million
of investments
which
were
recorded
as
part of
the qualified
plan
assets
at
December 31, 20192022 and 2018,
2021, respectively,
are not included within
the fair value
hierarchy tables
as the assets are
valued using the NAV practical
expedient guidance within ASU 2015-07.

The Company contributed $0 thousand and $77,000 thousand

F-53
No
contributions
were
made
to
the
qualified
pension
benefit
plan
for
the
years
ended
December 31, 2019
2022
and 2018, respectively.

2021.
Defined Contribution Plans.

The Company also maintains
both qualified and non-qualified defined contribution
plans (“Savings Plan” and “Non-Qualified“Non-
Qualified Savings
Plan”,
respectively) covering
U.S. employees.
Under the plans,
the Company
contributes up
to a
maximum
3
% of the participants’
compensation based on
the contribution percentage
of the employee.
The Non-Qualified Non-
Qualified
Savings
Plan
provides
compensating
savings
plan
benefits
for
participants
whose
benefits
have
been
curtailed under the Savings
Plan due to Internal Revenue
Code limitations.
In addition, effective for
new hires (and
rehires) on
or after
April 1, 2010,
the Company
will contribute
between
3
% and
8
% of
an employee’s
earnings for
each payroll
period based
on the
employee’s
age.
These contributions
will be
100
% vested
after
three year
s.

The following table presents the Company’s

Company incurred
expenses related
to these
plans of $
18
million, $
15
million and
$
14
million for
the periods indicated:

years

 

Years Ended December 31,

(Dollars in thousands)

2019

 

2018

 

2017

Incurred expenses

$

10,794

 

$

9,301

 

$

7,167

         

ended

F-50

December 31, 2022, 2021 and 2020, respectively.

In addition, the Company maintains
several defined contribution
pension plans covering non-U.S.
employees.
Each non-U.S.
international
office (Brazil, Canada and Singapore) maintains
a separate
plan for
the non-U.S.
employees working
in that
location.
The Company
contributes various
amounts based on salary,
age and/or years
of service.  The
In the current
year,
the contributions as
a percentage of salary for
the branchinternational offices range
ranged from 6.0
7.8
% to 8.4
9.6
%.
The contributions are generally
used
to
purchase
pension
benefits
from
local
insurance
providers. The following table presents
Company
incurred
expenses
related
to
these
plans
of
$
0.7
million,
$
0.6
million
and
$
0.8
million
for
the Company’s incurred expenses related to these plans for the periods indicated:

 

Years Ended December 31,

(Dollars in thousands)

2019

 

2018

 

2017

Incurred expenses

$

474

 

$

489

 

$

514

         

years

ended
December
31,
2022,
2021
and
2020,
respectively.
Post-Retirement Plan.

The Company
sponsors
a
Retiree
Health
Plan
��
for
employees
employed
prior
to
April 1,
2010.
This
plan
provides
healthcare benefits for
eligible retired employees (and
(and their eligible dependants)dependents),
who have elected
coverage.
The
Company
anticipates
that
most
covered
employees
will
become
eligible
for
these
benefits
if
they
retire
while
working for
the Company.
The cost
of these
benefits
is shared
with the
retiree.
The Company anticipates that most covered employees will become eligible for these benefits if they retire while working for the Company.  The cost of these benefits is shared with the retiree.  The Company
accrues the post-retirement
post-
retirement benefit expense during
the period of the employee’s
service.

A medical cost trend rate

of 7.00%
7.00
% in 2019 2022
was
assumed
to
decrease
gradually
to 4.50%
4.75
%
in 2029
2030
and
then
remain
at
that
level.

Changes in

The
Company
incurred
expenses
of
$
1
million,
$
1
million
and
$
1
million
for
the assumed healthcare cost trend can have a significant effect on the amounts reported for the healthcare plans.  A one percent change in the rate would have the following effects on:

 

Percentage

 

Percentage

 

Point Increase

 

Point Decrease

(Dollars in thousands)

($ Impact)

 

($ Impact)

a.  Effect on total service and interest cost components

$

434

 

$

(335)

b.  Effect on accumulated post-retirement benefit obligation

 

6,257

 

 

(4,833)

The following table presents the post-retirement benefit expenses for the periods indicated:

years

 

Years Ended December 31,

(Dollars in thousands)

2019

 

2018

 

2017

Post-retirement benefit expenses

$

1,231

 

$

1,829

 

$

2,814

         

ended

December
31,
2022,
2021
and
2020,
respectively.
F-54
The following table summarizes the
status of this plan for the periods indicated:

F-51

 

At December 31,

(Dollars in thousands)

2019

 

2018

Change in projected benefit obligation:

 

 

 

 

 

Benefit obligation at beginning of year

$

28,483

 

$

34,717

Service cost

 

983

 

 

1,312

Interest cost

 

980

 

 

999

Amendments

 

(582)

 

 

-

Actuarial (gain)/loss

 

-

 

 

(7,985)

Benefits paid

 

(488)

 

 

(561)

Benefit obligation at end of year

 

29,376

 

 

28,483

 

 

 

 

 

 

Change in plan assets:

 

 

 

 

 

Fair value of plan assets at beginning of year

 

-

 

 

-

Employer contributions

 

488

 

 

561

Benefits paid

 

(488)

 

 

(561)

Fair value of plan assets at end of year

 

-

 

 

-

 

 

 

 

 

 

Funded status at end of year

$

(29,376)

 

$

(28,483)

At December 31,

(Dollars in millions)
2022
2021
Change in projected benefit obligation:
Benefit obligation at beginning of year
$
31
$
35
Service cost
1
1
Interest cost
1
1
Amendments
-
-
Actuarial (gain)/loss
(10)
(6)
Benefits paid
-
-
Benefit obligation at end of year
21
31
Change in plan assets:
Fair value of plan assets at beginning of year
-
-
Employer contributions
-
-
Benefits paid
-
-
Fair value of plan assets at end of year
-
-
Funded status at end of year
$
(21)
$
(31)
Amounts recognized in the consolidated
balance sheets for the periods indicated:
At December 31,
(Dollars in millions)
2022
2021
Other liabilities (due within one year)
$
(1)
$
(1)
Other liabilities (due beyond one year)
(21)
(30)
Net amount recognized in the consolidated balance sheets for the periods indicated:

 

At December 31,

(Dollars in thousands)

2019

 

2018

Other liabilities (due within one year)

$

(611)

 

$

(608)

Other liabilities (due beyond one year)

 

(28,764)

 

 

(27,875)

Net amount recognized in the consolidated balance sheets

$

(29,376)

 

$

(28,483)

 

 

 

 

 

 

(Some amounts may not reconcile due to rounding.)

$

(21)
$
(31)
(Some amounts may not reconcile due
to rounding.)
Amounts not
yet reflected
in net
periodic benefit
cost and
included in
accumulated other
comprehensive
income
(loss) for the periods indicated:

 

At December 31,

(Dollars in thousands)

2019

 

2018

Accumulated income (loss)

$

188

 

$

(238)

Accumulated prior service credit (cost)

 

2,904

 

 

3,480

Accumulated other comprehensive income (loss)

$

3,092

 

$

3,242

At December 31,
(Dollars in millions)
2022
2021
Accumulated income (loss)
$
13
$
2
Accumulated prior service credit (cost)
1
2
Accumulated other comprehensive income (loss)
$
14
$
4
F-55
Other changes in other comprehensive income (loss)
for the periods indicated are as
follows:

F-52

 

Years Ended December 31,

(Dollars in thousands)

2019

 

2018

Other comprehensive income (loss) at December 31, prior year

$

3,242

 

$

(4,260)

Net gain (loss) arising during period

 

582

 

 

7,985

Prior Service credit (cost) arising during period

 

-

 

 

-

Recognition of amortizations in net periodic benefit cost:

 

 

 

 

 

Actuarial loss (gain)

 

(155)

 

 

94

Prior service cost

 

(577)

 

 

(577)

Other comprehensive income (loss) at December 31, current year

$

3,092

 

$

3,242

Years Ended December 31,

(Dollars in millions)
2022
2021
Other comprehensive income (loss) at December 31, prior year
$
4
$
(2)
Net gain (loss) arising during period
10
6
Prior Service credit (cost) arising during period
-
-
Recognition of amortizations in net periodic benefit cost:
Actuarial loss (gain)
-
-
Prior service cost
-
(1)
Other comprehensive income (loss) at December 31, current year
$
14
$
4
Net periodic benefit cost included the following
components for the periods indicated:

 

Years Ended December 31,

(Dollars in thousands)

2019

 

2018

 

2017

Service cost

$

983

 

$

1,312

 

$

1,570

Interest cost

 

980

 

 

999

 

 

1,184

Prior service credit recognition

 

(577)

 

 

(577)

 

 

(131)

Net gain recognition

 

(155)

 

 

94

 

 

192

Net periodic cost

$

1,231

 

$

1,829

 

$

2,814

 

 

 

 

 

 

 

 

 

Other changes recognized in other comprehensive income (loss):

 

 

 

 

 

 

 

 

Other comprehensive gain (loss) attributable to change from prior year

 

150

 

 

(7,502)

 

 

 

 

 

 

 

 

 

 

 

 

Total recognized in net periodic benefit cost and

 

 

 

 

 

 

 

 

other comprehensive income (loss)

$

1,381

 

$

(5,673)

 

 

 

 

 

 

 

 

 

 

 

 

(Some amounts may not reconcile due to rounding.)

The estimated transition obligation, actuarial loss and prior

Years Ended December 31,
(Dollars in millions)
2022
2021
2020
Service cost
$
1
$
1
$
1
Interest cost
1
1
1
Prior service credit that will be amortized from accumulatedrecognition
-
(1)
(1)
Net gain recognition
-
-
-
Net periodic cost
$
1
$
1
$
1
Other changes recognized in other comprehensive income (loss) into:
Other comprehensive gain (loss) attributable to change from prior year
(10)
(5)
Total recognized in net periodic benefit cost over the next fiscal year are $0 thousand, $0 thousand and ($577
other comprehensive income (loss)
$
(9)
$
(4)
(Some amounts may not reconcile due
to rounding.) thousand, respectively.

The weighted
average
discount
rates
used to
determine
net
periodic benefit
cost
for 2019, 2018
2022, 2021
and 2017 2020
were 4.27
2.86
%, 3.62
2.55
% and 4.16
3.28
%, respectively.

The
weighted
average
discount
rates
used
to
determine
the
actuarial
present
value
of
the
projected
benefit
obligation at year end 2019, 20182022, 2021 and 20172020 were 3.28
5.25
%, 4.27
2.86
% and 3.62
2.55
%, respectively.

The following table displays
the expected benefit payments in
the years indicated:

F-53

(Dollars in thousands)

 

 

2020

$

 611  

2021

 

 673  

2022

 

 768  

2023

 

 851  

2024

 

 896  

Next 5 years

 

 6,377  

(Dollars in millions)

2023
$
1
2024
1
2025
1
2026
1
2027
1
Next 5 years
7
14.
DIVIDEND RESTRICTIONS AND STATUTORY
FINANCIAL INFORMATION

Holdings
and
its
operating
subsidiaries
are
subject
to
various
regulatory
restrictions,
including
the
amount
of
dividends
that
may
be
paid
and
the
level
of
capital
that
the
operating
entities
must
maintain.
These
regulatory
F-56
restrictions
are
based
upon
statutory
capital
as
opposed
to
GAAP
basis
equity
or
net
assets.
Holdings’
primary
operating
subsidiary,
Everest
Re,
is
regulated
by
Delaware
law
and
is
subject
to
the
Risk-Based
Capital
Model
(“RBC”) developed
by
the
National
Association
of Insurance
Commissioners
(“NAIC”).
This
model represents
the
aggregate regulatory restrictions
on net assets and statutory capital
and surplus.

Dividend Restrictions.

Delaware
law
provides
that
an
insurance
company
which
is
a
member
of
an
insurance
holding
company
system
and is
domiciled in
the state
shall not
pay dividends
without giving
prior notice
to the
Insurance
Commissioner of
Delaware
and
may
not
pay
dividends
without
the
approval
of
the
Insurance
Commissioner
if
the
value
of
the
proposed
dividend,
together
with
all
other
dividends
and
distributions
made
in
the
preceding
twelve
months,
exceeds
the greater
of (1)
10
% of
statutory
surplus or
(2) net
income, not
including realized
capital gains,
each as
reported
in
the
prior
year’s
statutory
annual
statement.
In
addition,
no
dividend
may
be
paid
in
excess
of
unassigned earned surplus.
At December 31, 2019, 2022,
Everest Re
has $373,914 thousand$
555
million available
for payment
of dividends
in 20202023 without the need for prior regulatory
approval.

Statutory Financial Information.

Everest
Re
prepares
its
statutory
financial
statements
in
accordance
with
accounting
practices
prescribed
or
permitted by the
NAIC and the Delaware
Insurance Department.
Prescribed statutory
accounting practices
are set
forth in the NAIC Accounting Practices and
Procedures Manual.
The capital and statutory surplus
of Everest Re was $3,739,140 thousand
$
5.6
billion and $3,650,594 thousand
$
5.7
billion at
December 31, 2019 2022
and 2018, 2021,
respectively.
The statutory
net income
of Everest
Re
was $363,034 thousand,
$
294
million,
$
264
million
and
$
595
million
for
the year
years
ended
December
31, 2019
2022,
2021
and
2020,
respectively.
There
are
certain
regulatory
and
contractual
restrictions
on
the statutory net loss
ability
of Everest Re was $1,317,991 thousand and $391,419 thousand for
Holdings’
operating
subsidiaries
to
transfer
funds
to
Holdings
in
the years ended December 31, 2018 and 2017, respectively. 

There

form
of
cash
dividends,
loans
or
advances.
The
insurance
laws
of
the
State
of
Delaware,
where
Holdings’
direct
insurance
subsidiaries
are certain
domiciled,
require
regulatory and contractual restrictions on the ability of Holdings’ operating subsidiaries to transfer funds to Holdings in the form of cash dividends, loans or advances.  The insurance laws of the State of Delaware, where Holdings’ direct insurance subsidiaries are domiciled, require regulatory
approval
before
those
subsidiaries can pay dividends or make
loans or advances to Holdings that exceed
certain statutory thresholds.

Capital Restrictions.

In
the
United
States,
Everest
Re
is
subject
to
the
RBC
developed
by
the
NAIC
which
determines
an
authorized
control
level
risk-based
capital.
As
long
as
the
total
adjusted
capital
is
200
%
or
more
of
the
authorized
control
level capital, no action is required by
the Company.

F-54

The regulatory targeted

capital and the actual statutory
capital for Everest
Re is as follows:

 

Everest Re (1)

 

At December 31,

(Dollars in thousands)

2019

 

2018

Regulatory targeted capital

$

2,001,226

 

$

2,172,958

Actual capital

$

3,739,140

 

$

3,650,594

Everest Re
(1)
At December 31,
(Dollars in millions)
2022
2021
Regulatory targeted capital
$
3,353
$
2,960
Actual capital
$
5,553
$
5,717
(1)
Regulatory targeted capital represents
200
% of the RBC authorized control level calculation for the applicable year.

15.
COMMITMENTS AND CONTINGENCIES

In the ordinary
course of business,
the Company is
involved in
lawsuits, arbitrations
and other formal
and informal
dispute resolution
procedures,
the outcomes
of which
will determine
the Company’s
rights and
obligations
under
insurance
and
reinsurance
agreements.
In
some
disputes,
the
Company
seeks
to
enforce
its
rights
under
an
agreement or to
collect funds owing
to it.
In other matters,
the Company is
resisting attempts
by others to
collect
funds or
enforce
alleged rights.
These disputes
arise from
time to
time and
are ultimately
resolved through
both
informal
and
formal
means,
including
negotiated
resolution,
arbitration
and
litigation.
In
all
such
matters,
the
F-57
Company believes
that its positions
are legally and
commercially reasonable.
The Company
considers the
statuses
of these proceedings when determining its reserves
for unpaid loss and loss adjustment expenses.

Aside from litigation and arbitrations
related to these insurance and
reinsurance agreements,
the Company is not a
party to any other material litigation
or arbitration.

The Company
has entered
into
separate
annuity agreements
with The
Prudential
Insurance
Company
of America (“
(“The
Prudential”)
and
an
additional
unaffiliated
life
insurance
company
in
which
the
Company
has
either
purchased
annuity contracts
or become
the assignee
of annuity
proceeds that
are meant
to settle
claim payment
obligations in the future.
In both instances, the Company
would become contingently
liable if either The Prudential
or
the
unaffiliated
life
insurance
company
were
unable
to
make
payments
related
to
the
respective
annuity
contract.

The table below presents
the estimated cost
to replace all
such annuities for
which the Company
was contingently
liable for the periods indicated:

 

At December 31,

(Dollars in thousands)

2019

 

2018

The Prudential

$

141,703

 

$

142,754

Unaffiliated life insurance company

 

35,082

 

 

34,717

At December 31,
(Dollars in millions)
2022
2021
The Prudential
$
137
$
138
Unaffiliated life insurance company
34
35
16.
RELATED-PARTY
TRANSACTIONS

The
table
below
displays
long-term
note
agreements
that
Group

Group

entered
into a $300,000 thousand long term note agreement
with
Everest
Re
for
the
periods
indicated.
These transactions
are presented
as Notes
Receivable
– Affiliated
in the
Consolidated
Balance Sheet
of
Holdings. Fair value of December 17, 2019. The note will pay interest annually at a rate of 1.69% and these long-term notes
is scheduled to matureconsidered Level 2 in December, 2028. As of the fair value
hierarchy.
December 31, 2019 this transaction is presented as a Note Receivable – Affiliated in the Consolidated balance sheet of Holdings.

Group entered into a $250,000 thousand long term promissory note agreement with Holdings as of 2022

December 31, 2014.  The note was repaid2021
Consolidated
Consolidated
Principal
Balance Sheet
Fair
Balance Sheet
Fair
(Dollars in December 2018. millions)
Date Issued
Date Due
Amounts
Amount
Value
Amount
Value
1.69
% Long-term Note
12/17/2019
12/17/2028
300
$
300
$
242
$
300
$
264
1.00
% Long-term Note
08/05/2021
08/05/2030
200
200
151
200
165
3.11
% Long-term Note
06/14/2022
06/14/2052
215
215
171
-
-
4.34
% Long-term Note
12/12/2022
12/12/2052
125
125
125
-
-
840
$
840
$
689
$
500
$
429
Interest income recognized
in the amount of $0 thousand and $4,085 thousand was recorded by Holdingsconnection with these long-term notes is
as follows for the years endedperiods indicated:
Years Ended December 31, 2019 and 2018, respectively. 

F-55

(Dollars in millions)
Interest Received
Receivable Dates
2022
2021
2020
1.69
% Long-term Note
annually
December 17
$
5
$
5
$
5
1.00
% Long-term Note
annually
August 5
2
1
-
3.11
% Long-term Note
annually
June 14
4
-
-
$
11
$
6
$
5
(Some amounts may not reconcile due to rounding.)

Group’s Board

F-58
Holdings
holds
1,773.214
preferred
shares
of Directors approved an amended share repurchase program authorizing Group and/or its subsidiary
Preferred
Holdings to purchase Group’s common
with
a
$
1
million
par
value
and
1.75
%
annual
dividend
rate.
Holdings
received
these
shares through open market transactions, privately negotiated transactions or both.  The table below represents the amendments to the share repurchase program
in
December
2015
in
exchange
for the common shares approved for repurchase. 

Common

Shares

Authorized for

Amendment Date

Repurchase

(Dollars in thousands)

09/21/2004

5,000,000

07/21/2008

5,000,000

02/24/2010

5,000,000

02/22/2012

5,000,000

05/15/2013

5,000,000

11/19/2014

5,000,000

30,000,000

Holdings had purchased and previously

held
9,719,971
Common Shares
of Group, which were purchased Group.
After the
exchange,
Holdings no
longer holds
any shares
or has
any ownership
interest
in the open market between February 2007 and March 2011.

In December, 2015, Group.

Holdings transferredhas
reported the 9,719,971 Common Shares of Group, which it held
preferred
shares in
Preferred
Holdings, as
other invested
assets, at fair
value, valued at $1,773,214 thousand, to Preferred Holdings, an affiliated entity and subsidiary of Group, in
the consolidated
balance sheets
with changes
in exchange for 1,773.214fair
value re
-measurement
recorded
in net
realized
capital gains
(losses)
in
the
consolidated
statements
of
operations
and
comprehensive
income
(loss).
The
following
table
presents
the dividends
received on
the preferred
shares
of Preferred
Holdings with a $1,000 thousand par value and 1.75% annual dividend rate.  After the exchange, Holdings no longer holds any shares or has any ownership interest in Group. 

Holdings has reported the preferred shares in Preferred Holdings, as other invested assets, fair value, in the consolidated balance sheets with changes in fair value re-measurement recorded in net realized capital gains (losses) in the consolidated statements of operations and comprehensive income (loss).  The following table presents the dividends received

on the preferred
Parent
shares of Preferred Holdings and on the Parent shares
that are
reported as net investment
income in the consolidated
statements of
operations and comprehensive
income (loss)
for the periodperiods indicated.

 

Years Ended December 31,

(Dollars in thousands)

2019

 

2018

 

2017

Dividends received on preferred stock of affiliate

$

31,032

 

$

31,032

 

$

31,032

         

Years Ended December 31,
(Dollars in millions)
2022
2021
2020
Dividends received on preferred stock of affiliate
$
31
$
31
$
31
Affiliated Companies

Effective December 31, 2018, Holdings entered into a $300,000 thousand long-term promissory note agreement with Bermuda Re.  The note was repaid in May, 2019.  This transaction was presented as a Note Payable – Affiliated in the consolidated balance sheets of Holdings as of December 31, 2018. Interest expense in the amount of $3,658 thousand and $0 thousand was recorded by Holdings for the years ended December 2019 and 2018, respectively.

Effective October 1, 2018, Holdings Ireland made a capital contribution of

Everest
Global
Services, an affiliated entity, to Holdings. 
Inc.
(“Global Services had an equity value of $227,253 thousand at the time of contribution and that value is classified as additional paid in capital in the Company’s consolidated balance sheet as of December 31, 2018.

Everest Global Services, Inc. (“Global

Services”),
an
affiliate
of
Holdings,
provides
centralized
management
and
home
office
services,
through
a
management
agreement,
to
Holdings
and
other
affiliated
companies
within
Holdings’ consolidated
structure.
Services provided
by Everest
Global include
executive
managerial services,
legal
services, actuarial services, accounting services, information
technology services and others.

F-56

The following

table
presents
the expenses
incurred
by
Holdings from
services provided
by
Everest
Global for
the
periods indicated.

 

Years Ended December 31,

(Dollars in thousands)

2019

 

2018

 

2017

Expenses incurred

$

107,851

 

$

81,346

 

$

91,927

         

Years Ended December 31,
(Dollars in millions)
2022
2021
2020
Expenses incurred
$
204
$
133
$
124
17.
SEGMENT REPORTING

The U.S. Reinsurance
operation writes
worldwide property
and casualty
reinsurance and
specialty lines of business, including Marine, Aviation, Surety and Accident and Health (“A&H”)
business, on
both
a
treaty
and
facultative
basis,
through
reinsurance
brokers,
as
well
as
directly
with
ceding
companies.
Business
is
written
in
the
United
States
as
well
as
through
branches
in
Canada
and
Singapore.
The
Insurance
operation
writes property
and facultative basis, through reinsurance brokers, as well as casualty
insurance
directly with ceding companies primarilyand
through
brokers,
surplus lines
brokers
and general
agents within the U.S.  The International operation writes non-U.S. property and casualty reinsurance through Everest Re’s branches in Canada, Singapore and through offices in Brazil, Miami and New Jersey.  The Insurance operation writes property and casualty insurance directly and through brokers, surplus lines brokers and general agents mainly within the U.S. 

United States.

These segments
are
managed
independently,
but conform
with corporate
guidelines
with respect
to
pricing, risk
management,
control
of
aggregate
catastrophe
exposures,
capital,
investments
and
support
operations.
Management generally monitors
and evaluates the financial performance
of these operating segments
based upon
their underwriting results.

Underwriting
results
include
earned
premium
less
losses
and
LAE
incurred,
commission
and
brokerage
expenses
and other underwriting expenses.
We measure our underwriting results
using ratios, in particular loss, commission
and brokerage
and other underwriting expense ratios,
which, respectively,
divide incurred losses, commissions
and
brokerage and other
underwriting expenses by premiums earned.

The
Company
does
not
maintain
separate
balance
sheet
data
for
its
operating
segments.
Accordingly,
the
Company
does not maintain separate balance sheet data for its operating segments.  Accordingly, the Company does not
review and
evaluate
the financial
results
of its
operating
segments based
upon balance
sheet
data.

F-59
The following tables present the underwriting
results for the operating segments
for the periods indicated:

U.S. Reinsurance

Years Ended December 31,

(Dollars in thousands)

2019

 

2018

 

2017

Gross written premiums

$

2,962,416

   

$

3,014,337

 

$

2,593,063

Net written premiums

 

2,411,223

   

 

2,093,116

 

 

1,135,604

Premiums earned

$

2,369,093

   

$

1,979,926

 

$

858,155

Incurred losses and LAE

 

1,524,093

   

 

2,790,818

 

 

912,124

Commission and brokerage

 

703,271

   

 

568,374

 

 

160,311

Other underwriting expenses

 

68,796

   

 

60,266

 

 

55,881

Underwriting gain (loss)

$

72,933

   

$

(1,439,532)

 

$

(270,161)

International

Years Ended December 31,

(Dollars in thousands)

2019

 

2018

 

2017

Gross written premiums

$

1,637,957

   

$

1,555,245

 

$

1,339,546

Net written premiums

 

1,512,576

   

 

1,426,588

 

 

615,395

Premiums earned

$

1,427,043

   

$

1,406,460

 

$

502,322

Incurred losses and LAE

 

1,168,587

   

 

1,020,929

 

 

622,753

Commission and brokerage

 

324,015

   

 

355,528

 

 

101,936

Other underwriting expenses

 

41,236

   

 

37,661

 

 

36,291

Underwriting gain (loss)

$

(106,795)

 

$

(7,658)

 

$

(258,658)

F-57

Insurance

Years Ended December 31,

(Dollars in thousands)

2019

 

2018

 

2017

Gross written premiums

$

2,452,691

   

$

2,004,093

 

$

1,855,881

Net written premiums

 

1,851,150

   

 

1,512,158

 

 

972,845

Premiums earned

$

1,692,899

   

$

1,452,672

 

$

589,118

Incurred losses and LAE

 

1,136,442

   

 

999,271

 

 

504,874

Commission and brokerage

 

242,767

   

 

217,812

 

 

(51,322)

Other underwriting expenses

 

240,869

   

 

195,420

 

 

162,714

Underwriting gain (loss)

$

72,821

   

$

40,169

 

$

(27,148)

The following table reconciles the

Year Ended December 31, 2022
(Dollars in millions)
Reinsurance
Insurance
Total
Gross written premiums
$
5,948
$
3,729
$
9,677
Net written premiums
5,269
2,763
8,032
Premiums earned
$
5,212
$
2,664
$
7,876
Incurred losses and LAE
3,957
1,865
5,823
Commission and brokerage
1,326
306
1,632
Other underwriting results for the operating segments toexpenses
139
363
501
Underwriting gain (loss)
$
(210)
$
130
$
(81)
Net investment income
638
Net gains (losses) on investments
(982)
Corporate expenses
(26)
Interest, fee and bond issue cost amortization expense
(101)
Other income (expense)
(6)
Income (loss) before taxes as reported
$
(557)
Year Ended December 31, 2021
(Dollars in the consolidated statements of operationsmillions)
Reinsurance
Insurance
Total
Gross written premiums
$
6,028
$
3,303
$
9,331
Net written premiums
5,265
2,455
7,719
Premiums earned
$
4,949
$
2,230
$
7,179
Incurred losses and comprehensiveLAE
3,761
1,626
5,387
Commission and brokerage
1,250
262
1,513
Other underwriting expenses
143
311
454
Underwriting gain (loss)
$
(206)
$
31
$
(175)
Net investment income
745
Net gains (losses) on investments
501
Corporate expenses
(33)
Interest, fee and bond issue cost amortization expense
(70)
Other income (expense)
23
Income (loss) for the periods indicated:

before taxes

 

Years Ended December 31,

(Dollars in thousands)

2019

 

2018

 

2017

Underwriting gain (loss)

$

38,959

   

$

(1,407,021)

 

$

(555,967)

Net investment income

 

356,211

   

 

314,381

 

 

286,259

Net realized capital gains (losses)

 

419,367

   

 

(185,356)

 

 

161,553

Corporate expense

 

(13,063)

   

 

(11,034)

 

 

(7,394)

Interest, fee and bond issue cost amortization expense

 

(34,931)

   

 

(30,611)

 

 

(31,183)

Other income (expense)

 

(1,589)

   

 

(9,568)

 

 

25,866

Income (loss) before taxes

$

764,955

   

$

(1,329,209)

 

$

(120,866)

$

991
(Some amounts may not reconcile due to rounding.)
F-60
Year Ended December 31, 2020
(Dollars in millions)
Reinsurance
Insurance
Total
Gross written premiums
$
5,266
$
2,691
$
7,957
Net written premiums
4,632
2,006
6,639
Premiums earned
$
4,485
$
1,922
$
6,407
Incurred losses and LAE
3,209
1,399
4,608
Commission and brokerage
1,120
253
1,373
Other underwriting expenses
119
282
401
Underwriting gain (loss)
$
36
$
(12)
$
24
Net investment income
376
Net gains (losses) on investments
50
Corporate expenses
(16)
Interest, fee and bond issue cost amortization expense
(36)
Other income (expense)
(15)
Income (loss) before taxes
$
384
(Some amounts may not reconcile due to rounding.)
The Company
produces
business in
the U.S.
and internationally.
The net
income deriving
from assets
residing
in
the
individual
foreign
countries
in
which
the
Company
writes
business
are
not
identifiable
in
the
Company’s
financial records.
Based on
gross
written
premium, the
table
below presents
the largest
country,
other than
the
U.S., in which the Company writes business,
for the periods indicated:

 

Years Ended December 31,

(Dollars in thousands)

2019

 

2018

 

2017

Canada gross written premiums

$

214,594

 

$

173,530

 

$

130,136

         

Years Ended December 31,
(Dollars in millions)
2022
2021
2020
Canada gross written premiums
$
379
$
252
$
321
No other country represented
more than
5
% of the Company’s revenues.

Approximately 25.8
17.6
%, 21.1
19.3
%
and 21.5
20.1
%
of
the
Company’s
gross
written
premiums
in 2019, 2018
2022,
2021
and 2017,
2020,
respectively,
were sourced through the Company’s
largest intermediary.

18.
SUBSEQUENT EVENTS

The
Company
has
evaluated
known
recognized
and
non-recognized
subsequent
events.
In
February
2023,
an
earthquake
occurred
which
impacted
the
countries
of
Turkey
and
Syria.
The
Company
is
unable
to
estimate
the
magnitude of
losses
at
this time
as this
event
has
recently
occurred.
The Company has evaluated known recognized
will reflect
the impact
of this
event in its first quarter 2023 results..
S-1
SCHEDULE I - SUMMARY OF INVESTMENTS -
OTHER THAN INVESTMENTS IN RELATED PARTIES
DECEMBER 31, 2022
Column A
Column B
Column C
Column D
Amount
Shown in
Market
Balance
(Dollars in millions)
Cost
Value
Sheet
Fixed maturities-available for sale
Bonds:
U.S. government and non-recognized subsequent events. In late 2019government agencies
$
575
$
535
$
535
State, municipalities and early 2020, wildfires, floodingpolitical subdivisions
444
413
413
Foreign government securities
696
637
637
Foreign corporate securities
1,597
1,433
1,433
Public utilities
85
79
79
All other corporate bonds
7,571
7,117
7,117
Mortgage - backed securities
Commercial
568
509
509
Agency residential
1,792
1,628
1,628
Non-agency residential
3
3
3
Redeemable preferred stock
368
316
316
Total fixed maturities-available for sale
13,699
12,671
12,671
Fixed maturities-held to maturity
Bonds:
Foreign corporate securities
28
28
27
All other corporate bonds
785
758
778
Mortgage - backed securities
Commercial
7
7
7
Total Fixed maturities-held to maturity
820
793
811
Equity securities at fair value(1)
159
194
194
Short-term investments
812
812
812
Other invested assets
2,754
2,754
2,754
Other invested assets, at fair value(1)
1,773
1,472
1,472
Cash
481
481
481
Total investments and hailstormscash
$
20,498
$
19,177
$
19,195
(Some amounts may not reconcile due to rounding.)
(1)
Original cost does not reflect fair value adjustments, which have been impacting Australia. In addition,realized through the Coronavirus outbreak is currently affecting many countriesstatements of operations and comprehensive
income (loss).
S-2
SCHEDULE II - CONDENSED FINANCIAL INFORMATION OF THE REGISTRANT
CONDENSED BALANCE SHEETS
At December 31,
(Dollars in millions, except share
amounts and par value per share)
2022
2021
ASSETS:
Fixed maturities - available for sale
$
-
$
147
(amortized cost: 2022, $
0
; 2021, $
148
)
Equity securities - at fair value
12
679
Other invested assets
194
242
Other invested assets, at fair value
1,472
2,031
Short-term investments
30
5
Cash
2
-
Total investments and cash
1,710
3,104
Investment in subsidiaries, at equity in the underlying net assets
5,496
6,371
Notes receivable - affiliated
1,170
470
Accrued investment markets around the world. income
12
5
Other assets
-
(2)
TOTAL ASSETS
$
8,388
$
9,948
LIABILITIES:
Senior notes
$
2,347
$
2,346
Long-term notes
218
224
Accrued interest on debt and borrowings
17
17
Income taxes
144
317
Due to the recentnessaffiliates
7
5
Total liabilities
$
2,734
$
2,910
STOCKHOLDER'S EQUITY:
Common stock, par value: $
0.01
;
3,000
shares authorized;
1,000
shares issued and outstanding (2022 and 2021)
-
-
Additional paid-in capital
1,102
1,102
Accumulated other comprehensive income (loss), net of these events, the Company is unabledeferred income
tax expense (benefit) of $
(225)
at 2022 and $
24
at 2021
(848)
91
Retained earnings
5,400
5,845
Total stockholder's equity
5,654
7,038
TOTAL
LIABILITIES AND STOCKHOLDER'S EQUITY
$
8,388
$
9,948
See notes to estimate the effects of these matters on the fair value of our investments, investment credit losses or insured losses at this time. However, the Company anticipates that the losses from these events will adversely impact first quarter 2020consolidated financial statements.

F-58

19.  UNAUDITED QUARTERLY

S-3
SCHEDULE II - CONDENSED FINANCIAL DATA

Summarized quarterly financial dataINFORMATION OF THE REGISTRANT

CONDENSED STATEMENTS
OF OPERATIONS
Years Ended December 31,
(Dollars in millions)
2022
2021
2020
REVENUES:
Net investment income
$
47
$
39
$
(5)
Net investment income - Affiliated
57
34
31
Net gains (losses) on investments
(704)
329
(73)
Other income (expense)
(3)
-
3
Net income (loss) of subsidiaries
114
551
394
Total revenues
(488)
954
350
EXPENSES:
Interest expense
97
69
36
Corporate expense
10
18
9
Total expenses
107
86
45
INCOME (LOSS) BEFORE TAXES
(595)
867
305
Income tax expense (benefit)
(150)
68
(47)
NET INCOME (LOSS)
$
(445)
$
800
$
352
Other comprehensive income (loss), net of tax :
Unrealized appreciation (depreciation) ("URA(D)") on securities arising during
the period
(1,011)
(200)
163
Less: reclassification adjustment for realized losses (gains) included in net
income (loss)
73
9
25
Total URA(D) on securities arising during the period
(938)
(191)
189
Foreign currency translation adjustments
(18)
(9)
14
Benefit plan actuarial net gain (loss) for the periods indicated:

period

 

2019

(Dollars in thousands)

1st Quarter

 

2nd Quarter

 

3rd Quarter

 

4th Quarter

 

 

 

 

 

 

 

 

 

 

 

 

Operating data:

 

 

 

 

 

 

 

 

 

 

 

Gross written premiums

$

1,684,882

 

$

1,688,038

 

$

1,890,002

 

$

1,790,142

Net written premiums

 

1,392,243

 

 

1,319,865

 

 

1,569,954

 

 

1,492,886

 

 

 

 

 

 

 

 

 

 

 

 

Premiums earned

 

1,270,454

 

 

1,375,623

 

 

1,428,400

 

 

1,414,558

Net investment income

 

84,534

 

 

90,709

 

 

95,592

 

 

85,376

Net realized capital gains (losses)

 

135,056

 

 

142,563

 

 

112,542

 

 

29,206

Total claims and underwriting expenses

 

1,174,175

 

 

1,255,551

 

 

1,562,452

 

 

1,505,892

Net income (loss)

 

251,608

 

 

280,922

 

 

61,137

 

 

36,060

15

 

2018

(Dollars in thousands)

1st Quarter

 

2nd Quarter

 

3rd Quarter

 

4th Quarter

 

 

 

 

 

 

 

 

 

 

 

 

Operating data:

 

 

 

 

 

 

 

 

 

 

 

Gross written premiums

$

1,466,231

 

$

1,632,284

 

$

1,759,190

 

$

1,715,970

Net written premiums

 

1,107,027

 

 

1,190,354

 

 

1,378,481

 

 

1,356,000

 

 

 

 

 

 

 

 

 

 

 

 

Premiums earned

 

1,116,010

 

 

1,179,836

 

 

1,230,771

 

 

1,312,441

Net investment income

 

69,909

 

 

72,070

 

 

90,298

 

 

82,104

Net realized capital gains (losses)

 

(60,201)

 

 

(42,271)

 

 

30,018

 

 

(112,902)

Total claims and underwriting expenses

 

1,057,972

 

 

1,600,124

 

 

1,347,593

 

 

2,282,035

Net income (loss)

 

(11,793)

 

 

(267,295)

 

 

21,966

 

 

(705,062)

17

20.   REVISIONS TO

(6)
Reclassification adjustment for amortization of net (gain) loss included in net
income (loss)
2
6
6
Total benefit plan net gain (loss) for the period
17
23
1
Total other comprehensive income (loss), net of tax
(939)
(177)
204
COMPREHENSIVE INCOME (LOSS)
$
(1,384)
$
623
$
556
See notes to consolidated financial statements.
S-4
SCHEDULE II - CONDENSED FINANCIAL INFORMATION OF THE REGISTRANT
CONDENSED STATEMENTS

In preparing its current OF CASH FLOWS

Years Ended December 31,
(Dollars in millions)
2022
2021
2020
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss)
$
(445)
$
800
$
352
Adjustments to reconcile net income to net cash provided by operating activities:
Equity in (earnings) deficit of subsidiaries
(114)
(551)
(394)
Dividends received from subsidiary
250
-
-
Increase (decrease) in income taxes
(173)
(45)
119
Change in equity adjustments in limited partnerships
(37)
(33)
8
Change in other assets and liabilities, net
(5)
40
20
Net realized capital losses (gains)
704
(329)
73
Net cash provided by (used in) operating activities
180
(118)
180
CASH FLOWS FROM INVESTING ACTIVITIES:
Additional investment in subsidiaries
(200)
88
(949)
Proceeds from fixed maturities matured/called/repaid - available for sale
-
-
2
Proceeds from fixed maturities sold - available for sale
244
-
-
Proceeds from equity maturities sold
652
243
62
Distributions from other invested assets
1,362
2,014
1,113
Cost of fixed maturities acquired - available for sale
(134)
(148)
-
Cost of equity securities acquired
(93)
(516)
(185)
Cost of other invested assets acquired
(1,278)
(2,076)
(1,212)
Net change in short-term investments
(24)
5
11
Proceeds from repayment (cost of issuance) of notes receivable - affiliated
(700)
(470)
10
Net cash provided by (used in) investing activities
(171)
(860)
(1,148)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of senior notes
-
968
979
Cost of debt repurchase
(6)
-
(11)
Net cash provided by (used in) financing activities
(6)
968
969
Net increase (decrease) in cash
2
(10)
-
Cash, beginning of period
-
10
10
Cash, end of period
$
2
$
-
$
10
See notes to consolidated financial statements, the Company identified errors in the handling of foreign exchange related to premium funds held from reinsureds.  Although management determined that the impact of the foreign exchange differences were not material to prior period financial statements, the impact of recording the cumulative difference would have significantly impacted results within the current period.  As a result, prior period balances have been revised in the applicable financial statements and corresponding footnotes to correct the foreign exchange adjustments.

Management assessed the materiality of this change within prior period financial statements based upon SEC Staff Accounting Bulletin Number 99, Materiality, which is since codified in Accounting Standards Codification ("ASC") 250, Accounting Changes and Error Corrections. The prior period comparative financial statements that are presented herein have been revised.

F-59

statements.

S-5

The following tables present line items for prior period financial statements that have been affected by the revision. For these line items, the tables detail the amounts as previously reported, the impact upon those line items due to the revision, and the amounts as currently revised within the financial statements.

CONSOLIDATED BALANCE SHEETS

 

December 31, 2018

 

December 31, 2017

 

 

As Previously

 

Impact of

 

 

 

 

As Previously

 

Impact of

 

 

 

 

 

Reported

 

Revisions

 

As Revised

 

Reported

 

Revisions

 

As Revised

(Dollars in thousands)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

ASSETS:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Funds held by reinsureds

 

 

238,566

 

 

(10,010)

 

 

228,556

 

 

210,939

 

 

(4,292)

 

 

206,647

Income taxes

 

 

409,892

 

 

2,102

 

 

411,994

 

 

87,110

 

 

901

 

 

88,011

TOTAL ASSETS

 

$

18,688,205

 

$

(7,908)

 

$

18,680,297

 

$

17,888,512

 

$

(3,391)

 

$

17,885,121

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

SHAREHOLDERS' EQUITY:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Retained earnings

 

 

4,070,604

 

 

(7,908)

 

 

4,062,696

 

 

5,025,824

 

 

(3,391)

 

 

5,022,433

Total shareholders' equity

 

 

5,044,665

 

 

(7,908)

 

 

5,036,757

 

 

5,412,723

 

 

(3,391)

 

 

5,409,332

TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY

 

$

18,688,205

 

$

(7,908)

 

$

18,680,297

 

$

17,888,512

 

$

(3,391)

 

$

17,885,121

CONSOLIDATED BALANCE SHEETS

 

June 30, 2019

 

March 31, 2019

 

 

As Previously

 

Impact of

 

 

 

 

As Previously

 

Impact of

 

 

 

 

 

Reported

 

Revisions

 

As Revised

 

Reported

 

Revisions

 

As Revised

(Dollars in thousands)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

ASSETS:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Funds held by reinsureds

 

 

250,903

 

 

(10,768)

 

 

240,135

 

 

248,993

 

 

(9,524)

 

 

239,469

Income taxes

 

 

151,109

 

 

2,261

 

 

153,370

 

 

289,210

 

 

2,000

 

 

291,210

TOTAL ASSETS

 

$

19,235,832

 

$

(8,507)

 

$

19,227,325

 

$

19,063,665

 

$

(7,524)

 

$

19,056,141

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

SHAREHOLDERS' EQUITY:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Retained earnings

 

 

4,603,734

 

 

(8,507)

 

 

4,595,227

 

 

4,321,830

 

 

(7,524)

 

 

4,314,306

Total stockholder's equity

 

 

5,743,746

 

 

(8,507)

 

 

5,735,239

 

 

5,394,126

 

 

(7,524)

 

 

5,386,602

TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY

 

$

19,235,832

 

$

(8,507)

 

$

19,227,325

 

$

19,063,665

 

$

(7,524)

 

$

19,056,141

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE

 

Year  Ended December 31, 2018

 

Year Ended December 31, 2017

 INCOME (LOSS):

 

As Previously

 

Impact of

 

 

 

 

As Previously

 

Impact of

 

 

 

 

 

Reported

 

Revisions

 

As Revised

 

Reported

 

Revisions

 

As Revised

(Dollars in thousands)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenues:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other income (expense)

 

 

(3,851)

 

 

(5,717)

 

 

(9,568)

 

 

23,750

 

 

2,116

 

 

25,866

Total revenues

 

$

4,964,232

 

$

(5,717)

 

$

4,958,515

 

$

2,421,157

 

$

2,116

 

$

2,423,273

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

INCOME (LOSS) BEFORE TAXES

 

$

(1,323,492)

 

$

(5,717)

 

$

(1,329,209)

 

$

(122,982)

 

$

2,116

 

$

(120,866)

Income tax expense (benefit) 

 

 

(365,825)

 

 

(1,200)

 

 

(367,025)

 

 

(201,180)

 

 

444

 

 

(200,736)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

NET INCOME (LOSS)

 

$

(957,667)

 

$

(4,517)

 

$

(962,184)

 

$

78,198

 

$

1,672

 

$

79,870

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

COMPREHENSIVE INCOME (LOSS)  

 

$

(1,080,532)

 

$

(4,517)

 

$

(1,085,049)

 

$

113,896

 

$

1,672

 

$

115,568

F-60

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE

 

 

Three Months Ended June 30, 2019

 

 

Six Months Ended June 30, 2019

 INCOME (LOSS):

 

 

As Previously

 

 

Impact of

 

 

 

 

 

As Previously

 

 

Impact of

 

 

 

 

 

 

Reported

 

 

Revisions

 

 

As Revised

 

 

Reported

 

 

Revisions

 

 

As Revised

(Dollars in thousands)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenues:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other income (expense)

 

 

(3,812)

 

 

(1,243)

 

 

(5,055)

 

 

(5,026)

 

 

(759)

 

 

(5,785)

Total revenues

 

$

1,605,083

 

$

(1,243)

 

$

1,603,840

 

$

3,093,913

 

$

(759)

 

$

3,093,154

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

INCOME (LOSS) BEFORE TAXES

 

$

349,532

 

$

(1,243)

 

$

348,289

 

$

664,187

 

$

(759)

 

$

663,428

Income tax expense (benefit) 

 

 

67,628

 

 

(261)

 

 

67,367

 

 

131,057

 

 

(159)

 

 

130,898

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

NET INCOME (LOSS)

 

$

281,904

 

$

(982)

 

$

280,922

 

$

533,130

 

$

(600)

 

$

532,530

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

COMPREHENSIVE INCOME (LOSS)  

 

$

349,533

 

$

(982)

 

$

348,551

 

$

698,907

 

$

(600)

 

$

698,307

CONSOLIDATED STATEMENTS OF OPERATIONS

 

Three Months Ended March 31, 2019

AND COMPREHENSIVE INCOME (LOSS):

 

As Previously

 

Impact of

 

 

 

 

 

Reported

 

Revisions

 

As Revised

(Dollars in thousands)

 

 

 

 

 

 

 

 

 

Revenues:

 

 

 

 

 

 

 

 

 

Other income (expense)

 

 

(1,214)

 

 

484

 

 

(730)

Total revenues

 

$

1,488,830

 

$

484

 

$

1,489,314

 

 

 

 

 

 

 

 

 

 

INCOME (LOSS) BEFORE TAXES

 

$

314,655

 

$

484

 

$

315,139

Income tax expense (benefit) 

 

 

63,429

 

 

102

 

 

63,531

 

 

 

 

 

 

 

 

 

 

NET INCOME (LOSS)

 

$

251,226

 

$

382

 

$

251,608

 

 

 

 

 

 

 

 

 

 

COMPREHENSIVE INCOME (LOSS)  

 

$

349,374

 

$

382

 

$

349,756

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE

 

Three Months Ended September 30, 2018

 

Nine Months Ended September 30, 2018

 INCOME (LOSS):

 

As Previously

 

Impact of

 

 

 

As Previously

 

Impact of

 

 

 

 

 

Reported

 

Revisions

 

As Revised

 

Reported

 

Revisions

 

As Revised

(Dollars in thousands)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenues:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other income (expense)

 

 

(1,385)

 

 

(3,417)

 

 

(4,802)

 

 

1,420

 

 

(5,325)

 

 

(3,905)

Total revenues

 

$

1,349,702

 

$

(3,417)

 

$

1,346,285

 

$

3,687,860

 

$

(5,325)

 

$

3,682,535

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

INCOME (LOSS) BEFORE TAXES

 

$

2,109

 

$

(3,417)

 

$

(1,308)

 

$

(317,829)

 

$

(5,325)

 

$

(323,154)

Income tax expense (benefit) 

 

 

(22,556)

 

 

(718)

 

 

(23,274)

 

 

(64,914)

 

 

(1,118)

 

 

(66,032)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

NET INCOME (LOSS)

 

$

24,665

 

$

(2,699)

 

$

21,966

 

$

(252,915)

 

$

(4,207)

 

$

(257,122)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

COMPREHENSIVE INCOME (LOSS)  

 

$

19,153

 

$

(2,699)

 

$

16,454

 

$

(346,619)

 

$

(4,207)

 

$

(350,826)

F-61

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE

 

Three Months Ended June 30, 2018

 

Six Months Ended June 30, 2018

INCOME (LOSS):

 

As Previously

 

Impact of

 

 

 

 

As Previously

 

Impact of

 

 

 

 

 

Reported

 

Revisions

 

As Revised

 

Reported

 

Revisions

 

As Revised

(Dollars in thousands)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenues:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other income (expense)

 

 

77,682

 

 

(2,388)

 

 

75,294

 

 

2,805

 

 

(1,908)

 

 

897

Total revenues

 

$

1,287,317

 

$

(2,388)

 

$

1,284,929

 

$

2,338,158

 

$

(1,908)

 

$

2,336,250

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

INCOME (LOSS) BEFORE TAXES

 

$

(312,807)

 

$

(2,388)

 

$

(315,195)

 

$

(319,938)

 

$

(1,908)

 

$

(321,846)

Income tax expense (benefit) 

 

 

(47,399)

 

 

(501)

 

 

(47,900)

 

 

(42,538)

 

 

(400)

 

 

(42,938)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

NET INCOME (LOSS)

 

$

(265,408)

 

$

(1,887)

 

$

(267,295)

 

$

(277,580)

 

$

(1,508)

 

$

(279,088)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

COMPREHENSIVE INCOME (LOSS)  

 

$

(302,416)

 

$

(1,887)

 

$

(304,303)

 

$

(365,772)

 

$

(1,508)

 

$

(367,280)

CONSOLIDATED STATEMENTS OF OPERATIONS

 

Three Months Ended March 31, 2018

AND COMPREHENSIVE INCOME (LOSS):

 

As Previously

 

Impact of

 

 

 

 

 

Reported

 

Revisions

 

As Revised

(Dollars in thousands)

 

 

 

 

 

 

 

 

 

Revenues:

 

 

 

 

 

 

 

 

 

Other income (expense)

 

 

(74,877)

 

 

480

 

 

(74,397)

Total revenues

 

$

1,050,841

 

$

480

 

$

1,051,321

 

 

 

 

 

 

 

 

 

 

INCOME (LOSS) BEFORE TAXES

 

$

(7,131)

 

$

480

 

$

(6,651)

Income tax expense (benefit) 

 

 

5,041

 

 

101

 

 

5,142

 

 

 

 

 

 

 

 

 

 

NET INCOME (LOSS)

 

$

(12,172)

 

$

379

 

$

(11,793)

 

 

 

 

 

 

 

 

 

 

COMPREHENSIVE INCOME (LOSS)  

 

$

(63,356)

 

$

379

 

$

(62,977)

CONSOLIDATED STATEMENTS OF

 

Year Ended December 31, 2018

 

Year Ended December 31, 2017

CHANGES IN STOCKHOLDER'S EQUITY

 

As Previously

 

Impact of

 

 

 

 

As Previously

 

Impact of

 

 

 

 

 

Reported

 

Revisions

 

As Revised

 

Reported

 

Revisions

 

As Revised

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(Dollars in thousands)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

RETAINED EARNINGS:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance, beginning of period

 

$

5,025,824

 

$

(3,391)

 

$

5,022,433

 

$

4,947,301

 

$

(5,062)

 

$

4,942,239

Net income (loss)

 

 

(957,667)

 

 

(4,517)

 

 

(962,184)

 

 

78,198

 

 

1,672

 

 

79,870

Balance, end of period

 

 

4,070,604

 

 

(7,908)

 

 

4,062,696

 

 

5,025,824

 

 

(3,391)

 

 

5,022,433

TOTAL STOCKHOLDER'S EQUITY, END OF PERIOD

 

$

5,044,665

 

$

(7,908)

 

$

5,036,757

 

$

5,412,723

 

$

(3,391)

 

$

5,409,332

F-62

CONSOLIDATED STATEMENTS OF

 

Six Months Ended June 30, 2019

 

Three Months Ended March 31, 2019

CHANGES IN STOCKHOLDER'S EQUITY

 

As Previously

 

Impact of

 

 

 

 

As Previously

 

Impact of

 

 

 

 

 

Reported

 

Revisions

 

As Revised

 

Reported

 

Revisions

 

As Revised

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(Dollars in thousands)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

RETAINED EARNINGS:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance, January 1

 

$

4,070,604

 

$

(7,908)

 

$

4,062,696

 

$

4,070,604

 

$

(7,908)

 

$

4,062,696

Net income (loss)

 

 

251,226

 

 

382

 

 

251,608

 

 

251,226

 

 

382

 

 

251,608

Balance, March 31

 

 

4,321,830

 

 

(7,524)

 

 

4,314,306

 

 

4,321,830

 

 

(7,524)

 

 

4,314,306

Net income (loss)

 

 

281,904

 

 

(982)

 

 

280,922

 

 

 

 

 

 

 

 

 

Balance, June 30

 

 

4,603,734

 

 

(8,507)

 

 

4,595,227

 

 

 

 

 

 

 

 

 

TOTAL STOCKHOLDER'S EQUITY, June 30

 

$

5,743,746

 

$

(8,507)

 

$

5,735,239

 

$

5,394,126

 

$

(7,524)

 

$

5,386,602

CONSOLIDATED STATEMENTS OF

 

Three Months Ended September 30, 2018

 

Nine Months Ended September 30, 2018

CHANGES IN STOCKHOLDER'S EQUITY

 

As Previously

 

Impact of

 

 

 

 

As Previously

 

Impact of

 

 

 

 

 

Reported

 

Revisions

 

As Revised

 

Reported

 

Revisions

 

As Revised

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(Dollars in thousands)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

RETAINED EARNINGS:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance, beginning of period

 

$

4,750,691

 

$

(4,897)

 

$

4,745,792

 

$

5,025,824

 

$

(3,391)

 

$

5,022,433

Net income (loss)

 

 

24,665

 

 

(2,699)

 

 

21,966

 

 

(252,915)

 

 

(4,207)

 

 

(257,122)

Balance, end of period

 

 

4,775,356

 

 

(7,597)

 

 

4,767,758

 

 

4,775,356

 

 

(7,597)

 

 

4,767,758

TOTAL STOCKHOLDER'S EQUITY, END OF PERIOD

 

$

5,066,243

 

$

(7,597)

 

$

5,058,645

 

$

5,066,243

 

$

(7,597)

 

$

5,058,645

CONSOLIDATED STATEMENTS OF

 

Three Months Ended June 30, 2018

 

Six Months Ended June 30, 2018

CHANGES IN STOCKHOLDER'S EQUITY

 

As Previously

 

Impact of

 

 

 

 

As Previously

 

Impact of

 

 

 

 

 

Reported

 

Revisions

 

As Revised

 

Reported

 

Revisions

 

As Revised

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(Dollars in thousands)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

RETAINED EARNINGS:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance, beginning of period

 

$

5,016,099

 

$

(3,011)

 

$

5,013,087

 

$

5,025,824

 

$

(3,391)

 

$

5,022,433

Net income (loss)

 

 

(265,408)

 

 

(1,887)

 

 

(267,295)

 

 

(277,580)

 

 

(1,508)

 

 

(279,088)

Balance, end of period

 

 

4,750,691

 

 

(4,897)

 

 

4,745,792

 

 

4,750,691

 

 

(4,897)

 

 

4,745,792

TOTAL STOCKHOLDER'S EQUITY, END OF PERIOD

 

$

5,047,046

 

$

(4,897)

 

$

5,042,149

 

$

5,047,046

 

$

(4,897)

 

$

5,042,149

F-63

CONSOLIDATED STATEMENTS OF

 

Three Months Ended March 31, 2018

CHANGES IN STOCKHOLDER'S EQUITY

 

As Previously

 

Impact of

 

 

 

 

 

Reported

 

Revisions

 

As Revised

 

 

 

 

 

 

 

 

 

 

(Dollars in thousands)

 

 

 

 

 

 

 

 

 

RETAINED EARNINGS:

 

 

 

 

 

 

 

 

 

Balance, beginning of period

 

$

5,025,824

 

$

(3,391)

 

$

5,022,433

Net income (loss)

 

 

(12,172)

 

 

379

 

 

(11,793)

Balance, end of period

 

 

5,016,099

 

 

(3,011)

 

 

5,013,087

TOTAL STOCKHOLDER'S EQUITY, END OF PERIOD

 

$

5,349,415

 

$

(3,011)

 

$

5,346,404

CONSOLIDATED STATEMENTS OF CASH FLOWS 

 

Year Ended December 31, 2018

 

Year Ended December 31, 2017

 

 

As Previously

 

Impact of

 

 

 

 

As Previously

 

Impact of

 

 

 

 

 

Reported

 

Revisions

 

As Revised

 

Reported

 

Revisions

 

As Revised

(Dollars in thousands)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

CASH FLOWS FROM OPERATING ACTIVITIES:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income (loss) 

 

$

(957,667)

 

$

(4,517)

 

$

(962,184)

 

$

78,198

 

$

1,672

 

$

79,870

Decrease (increase) in funds held by reinsureds, net

 

 

(26,680)

 

 

5,717

 

 

(20,963)

 

 

(90,410)

 

 

(2,116)

 

 

(92,526)

Decrease (increase) in income taxes

 

 

(291,528)

 

 

(1,200)

 

 

(292,728)

 

 

(250,118)

 

 

444

 

 

(249,674)

CONSOLIDATED STATEMENTS OF CASH FLOWS 

 

Six Months Ended June 30, 2019

 

Three Months Ended March 31, 2019

 

 

As Previously

 

Impact of

 

 

 

 

As Previously

 

Impact of

 

 

 

 

 

Reported

 

Revisions

 

As Revised

 

Reported

 

Revisions

 

As Revised

(Dollars in thousands)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

CASH FLOWS FROM OPERATING ACTIVITIES:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income (loss) 

 

$

533,130

 

$

(600)

 

$

532,530

 

$

251,226

 

$

382

 

$

251,608

Decrease (increase) in funds held by reinsureds, net

 

 

(14,688)

 

 

759

 

 

(13,929)

 

 

(13,877)

 

 

(484)

 

 

(14,361)

Decrease (increase) in income taxes

 

 

214,830

 

 

(159)

 

 

214,671

 

 

94,631

 

 

102

 

 

94,733

CONSOLIDATED STATEMENTS OF CASH FLOWS 

 

Nine Months Ended September 30, 2018

 

Six Months Ended June 30, 2018

 

 

As Previously

 

Impact of

 

 

 

 

As Previously

 

Impact of

 

 

 

 

 

Reported

 

Revisions

 

As Revised

 

Reported

 

Revisions

 

As Revised

(Dollars in thousands)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

CASH FLOWS FROM OPERATING ACTIVITIES:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income (loss) 

 

$

(252,915)

 

$

(4,207)

 

$

(257,122)

 

$

(277,580)

 

$

(1,508)

 

$

(279,088)

Decrease (increase) in funds held by reinsureds, net

 

 

(22,523)

 

 

5,325

 

 

(17,198)

 

 

(13,233)

 

 

1,908

 

 

(11,326)

Decrease (increase) in income taxes

 

 

11,069

 

 

(1,118)

 

 

9,951

 

 

4,652

 

 

(400)

 

 

4,252

CONSOLIDATED STATEMENTS OF CASH FLOWS 

Three Months Ended March 31, 2018

 

As Previously

 

Impact of

 

 

 

 

Reported

 

Revisions

 

As Revised

(Dollars in thousands)

 

 

 

 

 

 

 

 

CASH FLOWS FROM OPERATING ACTIVITIES:

 

 

 

 

 

 

 

 

Net income (loss) 

$

(12,172)

 

$

379

 

$

(11,793)

Decrease (increase) in funds held by reinsureds, net

 

136,342

 

 

(480)

 

 

135,862

Decrease (increase) in income taxes

 

52,369

 

 

101

 

 

52,470

F-64

SCHEDULE I - SUMMARY OF INVESTMENTS -

 

 

 

 

 

 

 

 

OTHER THAN INVESTMENTS IN RELATED PARTIES

 

 

 

 

 

 

 

 

DECEMBER 31, 2019

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Column A

 

Column B

 

 

Column C

 

 

Column D

 

 

 

 

 

 

 

 

Amount

 

 

 

 

 

 

 

 

Shown in

 

 

 

 

 

Market

 

 

Balance

(Dollars in thousands)

 

Cost

 

 

Value

 

 

Sheet

Fixed maturities-available for sale

 

 

 

 

 

 

 

 

Bonds:

 

 

 

 

 

 

 

 

U.S. government and government agencies

$

768,374

 

$

777,515

 

$

777,515

State, municipalities and political subdivisions

 

506,347

 

 

535,911

 

 

535,911

Foreign government securities

 

646,149

 

 

658,007

 

 

658,007

Foreign corporate securities

 

935,640

 

 

957,758

 

 

957,758

Public utilities

 

100,728

 

 

103,659

 

 

103,659

All other corporate bonds

 

3,429,829

 

 

3,475,879

 

 

3,475,879

Mortgage - backed securities

 

   

 

 

   

 

 

   

Commercial

 

311,961

 

 

329,049

 

 

329,049

Agency residential

 

625,612

 

 

644,687

 

 

644,687

Non-agency residential

 

1,638

 

 

1,638

 

 

1,638

Redeemable preferred stock

 

8,147

 

 

7,976

 

 

7,976

Total fixed maturities-available for sale

 

7,334,425

 

 

7,492,079

 

 

7,492,079

Fixed maturities - available for sale, at fair value

 

3,966

 

 

5,826

 

 

5,826

Equity securities at fair value(1)

 

642,240

 

 

764,049

 

 

764,049

Short-term investments

 

279,824

 

 

279,879

 

 

279,879

Other invested assets

 

1,020,766

 

 

1,020,766

 

 

1,020,766

Other invested assets, at fair value (1)

 

1,773,214

 

 

1,982,582

 

 

1,982,582

Cash

 

411,122

 

 

411,122

 

 

411,122

Total investments and cash

$

11,465,557

 

$

11,956,303

 

$

11,956,303

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(Some amounts may not reconcile due to rounding.)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1) Original cost does not reflect adjustments, which have been realized through the statements of operations and comprehensiveincome.

S-1

SCHEDULE II - CONDENSED FINANCIAL INFORMATION OF THE REGISTRANT

 

 

 

 

 

CONDENSED BALANCE SHEETS

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

At December 31,

(Dollars in thousands, except share amounts and par value per share)

2019

 

2018

ASSETS:

 

 

 

 

 

Fixed maturities - available for sale, at market value

$

1,750

 

$

13,750

(amortized cost: 2019, $1,750; 2018, $13,390)

 

 

 

 

 

Equity securities - available for sale, at fair value

 

75,585

 

 

53,401

Other invested assets

 

56,909

 

 

59,979

Other invested assets, at fair value

 

1,982,582

 

 

1,717,336

Short-term investments

 

20,514

 

 

4,111

Cash

 

10,384

 

 

10,609

Total investments and cash

 

2,147,724

 

 

1,859,186

Investment in subsidiaries, at equity in the underlying net assets

 

4,580,852

 

 

4,318,223

Note receivable - affiliated

 

10,000

 

 

-

Accrued investment income

 

573

 

 

19

Advances to affiliates

 

(39)

 

 

(72)

Other assets

 

162

 

 

32

TOTAL ASSETS

 

6,739,272

 

 

6,177,388

 

 

 

 

 

 

LIABILITIES:

 

 

 

 

 

Senior notes due 6/1/2044

$

397,074

 

$

396,954

Long term notes due 5/1/2067

 

236,758

 

 

236,659

Note payable - affiliated

 

-

 

 

300,000

Accrued interest on debt and borrowings

 

2,878

 

 

3,093

Income taxes

 

243,062

 

 

202,443

Due to affiliates

 

1,016

 

 

544

Other liabilities

 

1,059

 

 

938

Total liabilities

 

881,847

 

 

1,140,631

 

 

 

 

 

 

STOCKHOLDER'S EQUITY:

 

 

 

 

 

Common stock, par value:  $0.01; 3,000 shares authorized;

 

 

 

 

 

1,000 shares issued and outstanding (2019 and 2018)

 

-

 

 

-

Additional paid-in capital

 

1,100,678

 

 

1,100,315

Accumulated other comprehensive income (loss), net of deferred income

 

 

 

 

 

tax expense (benefit) of $16,997 at 2019 and ($33,506) at 2018

 

64,324

 

 

(126,254)

Retained earnings

 

4,692,423

 

 

4,062,696

Total stockholder's equity

 

5,857,425

 

 

5,036,757

TOTAL LIABILITIES AND STOCKHOLDER'S EQUITY

 

6,739,272

 

 

6,177,388

 

 

 

 

 

 

 

 

 

 

 

 

See notes to consolidated financial statements.

 

 

 

 

 

S-2

SCHEDULE II - CONDENSED FINANCIAL INFORMATION OF THE REGISTRANT

 

 

 

 

 

 

 

 

CONDENSED STATEMENTS OF OPERATIONS

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Years Ended December 31,

(Dollars in thousands)

2019

 

2018

 

2017

REVENUES:

 

 

 

 

 

 

 

 

Net investment income

$

34,970

 

$

38,951

 

$

34,813

Net investment income - Affiliated

 

412

 

 

4,085

 

 

4,300

Net realized capital gains (losses)

 

274,110

 

 

(87,267)

 

 

81,027

Other income (expense)

 

524

 

 

(6,085)

 

 

1,819

Net income (loss) of subsidiaries

 

370,084

 

 

(906,211)

 

 

(124,269)

Total revenues

 

680,100

 

 

(956,527)

 

 

(2,310)

 

 

 

 

 

   

 

 

   

EXPENSES:

 

 

 

 

   

 

 

   

Interest expense

 

34,931

 

 

30,611

 

 

31,183

Corporate expense

 

6,810

 

 

6,337

 

 

5,233

Total expenses

 

41,741

 

 

36,948

 

 

36,416

 

 

 

 

 

   

 

 

   

INCOME (LOSS) BEFORE TAXES

 

638,359

 

 

(993,475)

 

 

(38,726)

Income tax expense (benefit)

 

8,632

 

 

(31,291)

 

 

(118,596)

 

 

 

 

 

   

 

 

   

NET INCOME (LOSS)

$

629,727

 

$

(962,184)

 

$

79,870

 

 

 

 

 

   

 

 

   

Other comprehensive income (loss), net of tax :

 

 

 

 

   

 

 

   

Unrealized appreciation (depreciation) ("URA(D)") on securities arising during the period

 

175,482

 

 

(92,966)

 

 

(10,536)

Less: reclassification adjustment for realized losses (gains) included in net income (loss)

 

5,080

 

 

2,021

 

 

2,303

Total URA(D) on securities arising during the period

 

180,562

 

 

(90,945)

 

 

(8,233)

 

 

 

 

 

   

 

 

   

Foreign currency translation adjustments

 

17,153

 

 

(36,431)

 

 

37,427

 

 

 

 

 

   

 

 

   

Benefit plan actuarial net gain (loss) for the period

 

(12,591)

 

 

(510)

 

 

1,027

Reclassification adjustment for amortization of net (gain) loss included in net income (loss)

 

5,453

 

 

5,021

 

 

5,477

Total benefit plan net gain (loss) for the period

 

(7,138)

 

 

4,511

 

 

6,504

Total other comprehensive income (loss), net of tax

 

190,577

 

 

(122,865)

 

 

35,698

 

 

 

 

 

   

 

 

   

COMPREHENSIVE INCOME (LOSS)  

$

820,304

 

$

(1,085,049)

 

$

115,568

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

See notes to consolidated financial statements.

 

 

 

 

 

 

 

 

S-3

SCHEDULE II - CONDENSED FINANCIAL INFORMATION OF THE REGISTRANT

 

 

 

 

 

 

 

 

 

 

CONDENSED STATEMENTS OF CASH FLOWS

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Years Ended December 31,

 

 

(Dollars in thousands)

2019

 

2018

 

2017

 

 

 

 

 

 

 

 

 

 

 

 

 

CASH FLOWS FROM OPERATING ACTIVITIES:

 

 

 

 

 

 

 

 

 

 

Net income (loss)

$

629,727

 

$

(962,184)

 

$

79,870

 

 

Adjustments to reconcile net income to net cash provided by operating activities:

 

 

 

 

 

 

 

 

 

 

Equity in (earnings) deficit of subsidiaries

 

(370,084)

 

 

906,211

 

 

124,269

 

 

Dividends received from subsidiary

 

300,000

 

 

90,000

 

 

-

 

 

Increase (decrease) in income taxes

 

40,695

 

 

4,687

 

 

(113,329)

 

 

Change in equity adjustments in limited partnerships

 

2,468

 

 

(2,617)

 

 

(121)

 

 

Change in other assets and liabilities, net

 

(16,615)

 

 

(20,450)

 

 

28,928

 

 

Amortization of bond premium (accrual of bond discount)

 

13

 

 

370

 

 

450

 

 

Net realized capital losses (gains)

 

(274,110)

 

 

87,267

 

 

(81,027)

 

 

Net cash provided by (used in) operating activities

 

312,094

 

 

103,284

 

 

39,040

 

 

 

 

 

 

 

 

 

 

 

 

 

CASH FLOWS FROM INVESTING ACTIVITIES:

 

 

 

 

 

 

 

 

 

 

Additional investment in subsidiaries

 

15,174

 

 

(1,383,659)

 

 

741

 

 

Proceeds from fixed maturities matured/called - available for sale, at market value

 

-

 

 

9,385

 

 

6,612

 

 

Proceeds from fixed maturities sold - available for sale, at market value

 

12,000

 

 

96,836

 

 

7,189

 

 

Proceeds from equity maturities sold - available for sale, at fair value

 

18,905

 

 

182,552

 

 

37,634

 

 

Distributions from other invested assets

 

389,200

 

 

1,401,606

 

 

132,064

 

 

Cost of fixed maturities acquired - available for sale, at market value

 

-

 

 

(13,510)

 

 

(24,058)

 

 

Cost of equity securities acquired - available for sale, at fair value

 

(32,597)

 

 

(39,449)

 

 

(54,605)

 

 

Cost of other invested assets acquired

 

(388,598)

 

 

(1,407,352)

 

 

(152,446)

 

 

Net change in short-term investments

 

(16,403)

 

 

396

 

 

8,506

 

 

Net change in unsettled securities transaction

 

-

 

 

(99)

 

 

(604)

 

 

Proceeds from repayment (cost of issuance) of note receivable, affiliated

 

(10,000)

 

 

250,000

 

 

-

 

 

Net cash provided by (used in) investing activities

 

(12,319)

 

 

(903,294)

 

 

(38,967)

 

 

 

 

 

 

 

 

 

 

 

 

 

CASH FLOWS FROM FINANCING ACTIVITIES:

 

 

 

 

 

 

 

 

 

 

Capital contribution from parent

 

-

 

 

500,324

 

 

-

 

 

Proceeds from issuance (cost of repayment) for note payable, affiliated

 

(300,000)

 

 

300,000

 

 

-

 

 

Net cash provided by (used in) financing activities

 

(300,000)

 

 

800,324

 

 

-

 

 

 

 

 

 

 

 

 

 

 

 

 

Net increase (decrease) in cash

 

(225)

 

 

314

 

 

73

 

 

Cash, beginning of period

 

10,609

 

 

10,295

 

 

10,222

 

 

Cash, end of period

$

10,384

 

$

10,609

 

$

10,295

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-cash financing transaction:

 

 

 

 

 

 

 

 

 

 

Equity value of non-cash capital contribution of affiliate from

 

 

 

 

 

 

 

 

 

 

parent, net of cash held by affiliate

$

-

 

$

211,928

 

$

-

 

 

Non-cash contribution from parent

 

-

 

 

221

 

 

598

 

 

Non-cash contribution to subsidiaries

 

-

 

 

(221)

 

 

(598)

 

 

 

 

 

 

 

 

 

 

 

 

 

See notes to consolidated financial statements.

 

 

 

 

 

 

 

 

 

 

S-4

SCHEDULE II – CONDENSED FINANCIAL INFORMATION

OF THE REGISTRANT

NOTES TO CONDENSED
FINANCIAL INFORMATION

1)
The
accompanying
condensed
financial
information
should
be
read
in
conjunction
with
the
Consolidated
Financial Statements and related
Notes of Everest Reinsurance
Holdings, Inc. and its Subsidiaries.

2)
The Senior Notes
and Long-Term
Subordinated Notes
presented in
Notes 5
and 6 are
direct obligations
of the
Registrant.
3)
Effective
December 2022,
Everest
Reinsurance
Holdings, Inc.
entered into
a $
125
million long-term
promissory
note
with
Everest
Reinsurance
Company,
a
subsidiary
entity.
The
promissory
note
has
an
interest
rate
of
4.34
% payable annually and is scheduled to
mature in June 2052.
4)
Effective
September 2022,
Everest Reinsurance
Holdings, Inc. entered
into a $
560
million long-term promissory
note
with
Everest
Reinsurance
Company,
a
subsidiary
entity.
The
promissory
note
has
an
interest
rate
of
3.35
% payable annually and is scheduled to
mature in September 2052.
5)
Effective
June 2022,
Everest
Reinsurance Holdings,
Inc. entered
into a
$
215
million long-term
promissory note
with
Everest
Re
Group,
Ltd.,
its
parent
entity.
The
promissory
note
has
an
interest
rate
of
3.11
%
payable
annually and is scheduled to mature in June 2052.
6)
Effective
October
21,
2021,
Everest
Reinsurance
Holdings,
Inc.
entered
into
a
$
470
million
long-term
promissory note
with Everest
Reinsurance
Company,
a subsidiary
entity.
The promissory
note has
an interest
rate
of
3.25
%
payable
annually
and
is
scheduled
to
mature
on
October
21,
2051.
Everest
Reinsurance
Company
has repaid
$
200
million of
the promissory
note to
Everest
Reinsurance
Holdings, Inc.,
leaving $
270
million of the Registrant.

3)    Everest Re Group, Ltd., the parent company, entered into a $250,000 thousand long term promissory note agreement with Everest Reinsurance Holdings, Inc. still outstanding

as of December 31, 2014.  2022.
7)
Effective
February
2019, Everest
Reinsurance
Holdings,
Inc. entered
into
a
$
10
million
long-term
promissory
note
with
Everest
Indemnity
Insurance
Company,
an
affiliated
entity.
The
note
was
scheduled
to
mature on December 31, 2023
in
February 2049 but was repaid in September 2020.
8)
In
December, 2018.

4)    Effective

2015,
Holdings
transferred
the
9,719,971
Common
Shares
of
Group,
which
it
held
as
other
invested assets,
at fair value,
valued at $
1.8
billion, to Preferred
Holdings, an affiliated
entity and subsidiary
of
Group, in exchange
for
1,773.214
preferred shares
of Preferred Holdings
with a $
1
million par value and
1.75
%
annual dividend
rate.
After the
exchange,
Holdings no
longer holds
any shares
or has
any ownership
interest
in Group.
S-6
EVEREST REINSURANCE HOLDINGS, INC.
SCHEDULE
III - SUPPLEMENTARY INSURANCE INFORMATION
Column A
Column B
Column C
Column D
Column E
Column F
Column G
Column H
Column I
Column J
Reserve
Incurred
Segments
for Losses
Loss and
Amortization
Deferred
and Loss
Unearned
Net
Loss
of Deferred
Other
Net
Acquisition
Adjustment
Premium
Premiums
Investment
Adjustment
Acquisition
Operating
Written
(Dollars in millions)
Costs
Expenses
Reserves
Earned
Income
Expenses
Costs
Expenses
Premium
As of and for the year
ended December 31, 2018, Everest 2022
Reinsurance Holdings, Inc. entered into a $300,000 thousand long-term promissory note agreement with Everest Reinsurance (Bermuda) Ltd., an affiliated entity.  The note was scheduled to mature on
$
329
$
10,023
$
1,453
$
5,212
$
427
$
3,957
$
1,326
$
139
$
5,269
Insurance
170
4,954
1,725
2,664
211
1,865
306
363
2,763
Total
$
499
$
14,977
$
3,177
$
7,876
$
638
$
5,823
$
1,632
$
501
$
8,032
As of and for the year
ended December 31, 2023 but was repaid in May, 2019. This transaction is presented as a Note Payable – Affiliated in2021
Reinsurance
$
315
$
8,829
$
1,427
$
4,949
$
501
$
3,761
$
1,250
$
143
$
5,265
Insurance
157
4,292
1,566
2,230
244
1,626
262
311
2,455
Total
$
472
$
13,121
$
2,993
$
7,179
$
745
$
5,387
$
1,513
$
454
$
7,719
As of and for the condensed balance sheet of Everest Reinsurance Holdings, Inc. as ofyear
ended December 31, 2018.

5)    Effective February 19, 2019, Everest 2020

Reinsurance Holdings, Inc. entered into a $10,000 thousand long term promissory note with Everest Indemnity
$
169
$
7,896
$
1,128
$
4,485
$
255
$
3,209
$
1,120
$
119
$
4,632
Insurance Company, an affiliated entity. The note will mature on February 19, 2049 and has an interest rate of 4.8% that will be paid annually. This transaction is presented as a Note Receivable – Affiliated
210
3,682
1,257
1,922
121
1,399
253
282
2,006
Total
$
380
$
11,578
$
2,385
$
6,407
$
376
$
4,608
$
1,373
$
401
$
6,639
(Some amounts may not reconcile due to rounding.)
S-7
SCHEDULE IV - REINSURANCE
Column A
Column B
Column C
Column D
Column E
Column F
Ceded to
Assumed
Gross
Other
from Other
Net
Assumed
(Dollars in the condensed balance sheet of Everest Reinsurance Holdings as of millions)
Amount
Companies
Companies
Amount
to Net
December 31, 2019.

6)    In 2022

Total
property and liability
insurance premiums earned
$
3,544
$
1,613
$
5,945
$
7,876
$
75.5%
December 2015, Holdings transferred the 9,719,971 Common Shares of Group, which it held as other invested assets, at fair value, valued at $1,773,214 thousand, to Preferred Holdings, an affiliated entity31, 2021
Total property and subsidiary of Group, in exchange for 1,773.214 preferred shares of Preferred Holdings with a $1,000 thousand par valueliability
insurance premiums earned
$
2,982
$
1,544
$
5,741
$
7,179
$
80.0%
December 31, 2020
Total
property and 1.75% annual dividend rate.  After the exchange, Holdings no longer holds any shares or has any ownership interest in Group.

liability

S-5

insurance premiums earned

$

EVEREST REINSURANCE HOLDINGS, INC.

SCHEDULE  III - SUPPLEMENTARY INSURANCE INFORMATION

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Column A

 

Column B

 

 

Column C

 

 

Column D

 

 

Column E

 

 

Column F

 

 

Column G

 

 

Column H

 

 

Column I

 

 

Column J

 

 

 

 

 

Reserve

 

 

 

 

 

 

 

 

 

 

 

Incurred

 

 

 

 

 

 

 

 

 

Geographic Area

 

 

 

 

for Losses

 

 

 

 

 

 

 

 

 

 

 

Loss and

 

 

Amortization

 

 

 

 

 

 

 

 

Deferred

 

 

and Loss

 

 

Unearned

 

 

 

 

 

Net

 

 

Loss

 

 

of Deferred

 

 

Other

 

 

Net

 

 

Acquisition

 

 

Adjustment

 

 

Premium

 

 

Premiums

 

 

Investment

 

 

Adjustment

 

 

Acquisition

 

 

Operating

 

 

Written

(Dollars in thousands)

 

Costs

 

 

Expenses

 

 

Reserves

 

 

Earned

 

 

Income

 

 

Expenses

 

 

Costs

 

 

Expenses

 

 

Premium

As of and for the year ended December 31, 2019

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Domestic

$

329,904

 

$

7,461,870

 

$

1,830,396

 

$

4,061,992

 

$

318,914

 

$

2,660,535

 

$

946,038

 

$

309,665

 

$

4,262,373

International

 

58,333

 

 

2,747,649

 

 

368,536

 

 

1,427,043

 

 

37,298

 

 

1,168,587

 

 

324,015

 

 

41,236

 

 

1,512,576

Total

$

388,238

 

$

10,209,519

 

$

2,198,932

 

$

5,489,035

 

$

356,211

 

$

3,829,122

 

$

1,270,053

 

$

350,901

 

$

5,774,949

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

As of and for the year ended December 31, 2018

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Domestic

$

304,513

   

$

7,908,776

   

$

1,575,931

   

$

3,432,598

   

$

279,415

   

$

3,790,089

   

$

786,186

   

$

255,686

   

$

3,605,274

International

 

49,117

   

 

2,258,242

   

 

250,937

   

 

1,406,460

   

 

34,966

   

 

1,020,929

   

 

355,528

   

 

37,661

   

 

1,426,588

Total

$

353,630

   

$

10,167,018

   

$

1,826,868

   

$

4,839,058

   

$

314,381

   

$

4,811,018

   

$

1,141,714

   

$

293,347

   

$

5,031,862

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

As of and for the year ended December 31, 2017

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Domestic

$

260,706

   

$

7,070,895

   

$

1,352,987

   

$

1,447,273

   

$

253,852

   

$

1,416,998

   

$

108,989

   

$

218,595

   

$

2,108,449

International

 

47,035

   

 

2,272,133

   

 

254,635

   

 

502,322

   

 

32,407

   

 

622,753

   

 

101,936

   

 

36,291

   

 

615,395

Total

$

307,741

   

$

9,343,028

   

$

1,607,622

   

$

1,949,595

   

$

286,259

   

$

2,039,751

   

$

210,925

   

$

254,886

   

$

2,723,844

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(Some amounts may not reconcile due to rounding.)

2,592

S-6

$
1,368
$
5,183
$
6,407
$
80.9%

SCHEDULE IV - REINSURANCE

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Column A

 

Column B

 

 

Column C

 

 

Column D

 

 

Column E

 

 

Column F

 

 

 

 

 

Ceded to

 

 

Assumed

 

 

 

 

 

 

 

 

Gross

 

 

Other

 

 

from Other

 

 

Net

 

 

Assumed

(Dollars in thousands)

 

Amount

 

 

Companies

 

 

Companies

 

 

Amount

 

 

to Net

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

December 31, 2019

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total property and liability

 

 

 

 

 

 

 

 

 

 

 

 

 

 

insurance premiums earned

$

2,255,387

 

$

1,193,359

 

$

4,427,006

 

$

5,489,034

 

$

80.7%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

December 31, 2018

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total property and liability

 

 

 

 

 

 

 

 

 

 

 

 

 

 

insurance premiums earned

$

1,903,576

 

$

1,512,380

 

$

4,447,862

 

$

4,839,058

 

$

91.9%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

December 31, 2017

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total property and liability

 

 

 

 

 

 

 

 

 

 

 

 

 

 

insurance premiums earned

$

1,655,023

 

$

3,548,264

 

$

3,842,836

 

$

1,949,595

 

$

197.1%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

S-7