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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, 2021

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

XAnnual Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
For the fiscal year ended December 31, 2023
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

22-3263609
(State or other jurisdiction

of incorporation or organization)

22-3263609

(I.R.S Employer

Identification No.)

100 Everest Way

Warren, New Jersey 07059

100 Everest Way
Warren, New Jersey
07059
(Address of principal executive offices)(Zip Code)
(908) 604-3000

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

code)

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

Title of Each Class

Name of Each Exchange on Whichwhere 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 TermLong-Term Notes Due 2067

NYSE

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

_____________________
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

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

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 requirements for the past 90 days.

Yes

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 (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).

Yes

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

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 filer,” “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

Indicate

If an 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.

Act.

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

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.

o
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).

o
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
YesNoX
The aggregate market value onas of June 30, 2021,2023, 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 0.

zero.

At March 15, 2022,13, 2024, the number of shares outstanding of the registrantregistrant’s 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.


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EVEREST REINSURANCE HOLDINGS, INC.

Table of Contents

FORM 10-K

Page

PART I

1

PART IItem 1A.

13

Item 1.

Business

1

Item 1A.

Risk Factors

7

Item 1B.

1419

Item 2.1C.

1419

1420

21

1421

PART II

PART II

Item 5.

1421

1521

1521

2633

2834

2934

2934

2935

2935

PART III

3036

3036

3036

3036

3036

PART IV

PART IV

Item 15.

3138


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SAFE HARBOR DISCLOSURE
This report contains forward-looking statements within the meaning of the United States Private Securities Litigation Reform Act of 1995 and other U.S. federal securities laws. We intend these forward-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”, “will”, “should”, “could”, “anticipate”, “estimate”, “expect”, “plan”, “believe”, “predict”, “potential” and “intend”. Forward-looking statements contained in this report include:

•the effects of catastrophic events on our financial statements;
•our losses from catastrophe exposure could exceed our projections;
•information regarding our reserves for losses and loss adjustment expenses or LAE;
•our failure to accurately assess underwriting risk and establish adequate premium rates;
•decreases in pricing for property and casualty reinsurance and insurance;
•our inability or failure to purchase reinsurance;
•our ability to maintain our financial strength ratings;
•the failure of our insured, intermediaries and reinsurers to satisfy their obligations to us;
•decline in our investment values and investment income due to exposure to financial markets conditions;
•the failure to maintain enough cash to meet near-term financial obligations;
•our ability to pay dividends, interest and principal, which is dependent on our ability to receive dividends, loan payments and other funds from our subsidiaries due to our holding company structure;
•reduced net income and capital levels due to foreign currency exchange losses;
•our sensitivity to unanticipated levels of inflation;
•the effects of measures taken by domestic or foreign governments on our business;
•our ability to retain our key executive officers and to attract or retain the executives and employees necessary to manage our business;
•the effect of cybersecurity risks, including technology breaches or failure, and regulatory and legislative developments related to cybersecurity on our business;
•our dependence on brokers and agents for business developments;
•material variation of analytical models used in decision making from actual results;
•the effects of business continuation risk on our operations;
•the effect on our business of the highly competitive nature of our industry, including the effects of new entrants to, competing products for and consolidation in the (re)insurance industry;
•an anti-takeover effect caused by insurance laws; and
•our failure to comply with insurance laws and regulations and other regulatory challenges.
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.

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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” means Everest Re Group, Ltd. (Holdings Ireland’s parent); “Bermuda Re” means Everest Reinsurance (Bermuda), Ltd., a subsidiary of Group; “Everest Re” means Everest Reinsurance Company, and its subsidiaries, a subsidiary of Holdings, and its subsidiaries (unless the context otherwise requires); and the “Company”, “Everest”, “we”, “us”, and “our” means Holdings and its consolidated subsidiaries (unless the context otherwise requires).

Unless noted otherwise, all tabular dollar amounts are in millions of United States (“U.S.”) dollars (“U.S. dollars” or “$”). Some amounts may not reconcile due to rounding.

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”“EG”. 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.

At December 31, 2023, we had stockholder’s equity of $7.2 billion and total assets of $31.6 billion.
Our Operations.
The Company’s principal business, conducted through its Reinsurance and Insurance operating segments, is the underwriting of reinsurance and insurance in the U.S. and international markets. TheIn 2023, the Company had gross written premiums in 2021, of $9.3$11.1 billion, with approximately 65% representing reinsurance and 35% representing insurance. Stockholder’s equity at December 31, 2021 was $7.0 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 principally through brokers, including for 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,Reinsurance Company, a Delaware insurancereinsurance company and a direct subsidiary of Holdings, is a licensed property and casualty insurer and/or reinsurer in all 50 states, the District of Columbia, Puerto Rico and Guam and is authorized to conduct reinsurance business in Canada, Singapore and Brazil. Everest ReReinsurance Company underwrites property and casualty reinsurance for insurance and reinsurance companies in the U.S. and international markets.markets, through its U.S. offices as well as through its branches in Canada and Singapore. Everest ReReinsurance Company 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. AtAs of December 31, 2021,2023, Everest Re had statutory surplus of $5.7$7.0 billion.

•

Everest National Insurance Company (“Everest National”), a Delaware insurance company and a direct subsidiary of Everest Re,Reinsurance Company, is licensed in all 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.Reinsurance Company.

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•

Everest Indemnity Insurance Company (“Everest Indemnity”), a Delaware insurance company and a direct subsidiary of Everest Re,Reinsurance Company, 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 ina Delaware domestic surplus lines

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insurer and is eligible to write business on a non-admitted basis in all other U.S. states, the District of Columbia and Puerto Rico. The majority of Everest Indemnity’s business is reinsured by its parent, Everest Re.Reinsurance Company.
•

Everest Security Insurance Company (“Everest Security”), a GeorgiaDelaware insurance company and a direct subsidiary of Everest Re, writesReinsurance Company, is licensed to write property and casualty insurance on an admitted basis in Delaware, Georgia and Alabama and is approved as an eligible surplus lines insurer in Delaware.Alabama. The majority of Everest Security’s business is reinsured by its parent, Everest Re.Reinsurance Company.

•

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

•

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

•

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 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 Foreign Corporation.” By making this election, Everest Assurance is authorized to write life reinsurance and casualty reinsurance in both Bermuda and the U.S. In addition, Everest Assurance is considered an approved/eligible alien surplus lines insurer in all 50 states and the District of Columbia.

Human Capital Management.
Our colleagues worldwide are essential to our success, and we strive to attract and retain the highest caliber of talent to meet our business needs, as well as the needs of our clients and customers. It is our goal to build skilled, talented, collaborative, inclusive teams and foster a sense of purpose and company culture rooted in diversity of thought and experiences. As of February 1, 2024, the Company employed 2,158 persons. Management believes that colleague engagement is strong. None of the Company’s employees are subject to collective bargaining agreements, and the Company is not aware of any current efforts to enter into such agreements.
Talent Attraction, Development, and Retention.
Everest is proud to be home to top industry talent, and we make ongoing, strategic investments in our people. Our ability to attract, develop and retain a high caliber of professionals is critical to our continued growth and ability to execute on our strategic priorities.
The continued development of all colleagues is core to who we are and how we maintain our competitive advantage as a global leader in risk management. We are proud to offer corporate mentoring programs, leadership development opportunities, and avenues for engagement with our external partner organizations. We provide opportunities for continued learning and talent development at all levels. Our colleagues are encouraged to take ownership of their development by using the tools that the Company has made available to them including industry training, technical upskilling, mentorships and personal development classes. Everest also actively manages succession planning across our organization and strives to provide growth and advancement opportunities to internal talent, where possible. Our leaders and colleagues engage in ongoing learning that supports both professional and personal development.
Proactive recruitment of skilled, experienced, diverse teams is an important aspect of succession planning at both the Board of Directors (the “Board”) level and throughout the organization. Our Human Resources and Senior Leadership Teams, Executive Committee, Global Diversity, Equity and Inclusion Council (“DEI Council”) and Colleague Resource Groups (“CRGs”) collaborate to attract, retain and develop exceptional, diverse talent, fostering an inclusive workplace that embraces diversity in gender, ethnicity, age, geography, skill sets, experiences and perspectives.
People power our success. We are committed to providing all colleagues with an engaging and supportive environment so they can develop personally and help drive our future growth. That is why Everest is pleased to offer various global initiatives such as leadership coffee hours and fireside chats; charitable community outreach events and volunteer
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opportunities; networking events; employee recognition awards; and, thought leadership topics with senior leaders. By offering a meaningful and engaging colleague experience, we are focused on inspiring our global teams to underwrite opportunity in everything that they do.
Culture.
Everest’s Colleague Value Proposition Opportunity through Unity includes the building blocks of the Company’s culture: our mission, purpose, and values, as well as a newly defined set of Colleague Behaviors that speak to how we operate as One Everest, regardless of location, level, or function.

•Our Values are the guiding principles that inform our decisions, actions and behaviors. They are an expression of our culture and an integral part of how we work: Talent. Thoughtful Assumption of Risk. Execution. Efficiency. Humility. Leadership. Collaboration. Diversity, Equity and Inclusion.
•Our Colleague Behaviors define how we operate and interact with each other no matter our location, level or function: Respect Everyone. Pursue Better. Lead by Example. Own our Outcomes. Win Together.
•In 2023, the Company began embedding these new behaviors within colleague programs and practices globally. We are taking a systematic approach to integrating them into everything we do, from our talent acquisition and onboarding programs to our performance and compensation plans, recognition initiatives and general employment policies.
Diversity and Inclusion.
People are Everest’s greatest asset, and the quality of our teams has been enhanced through the wide range of backgrounds, perspectives and interests our colleagues bring to our community. At Everest, Diversity, Equity, and Inclusion (“DEI”) expresses our commitment to non-discriminatory access to opportunity, equity in our dealings and cultural inclusivity, and represents a cultural and business imperative that we promote not only within our workplace but also throughout the global communities in which we operate. The Board is committed to advancing diversity within its structure as well as emphasizing its importance in our senior executive leadership. We believe that diversity in gender, ethnicity, age, geography, skill sets, experiences and perspectives enhances our governance, strategy, corporate responsibility, human rights and risk management.
Everest has a global DEI strategic framework and focus areas that aligns with our corporate global DEI efforts and initiatives. We have four pillars that provide the foundation for our strategic framework as described below.
1.Alignment & Accountability: Our integrated global DEI efforts align with our corporate strategy, cultural values and colleague behaviors.
2.Colleague-Centered: Our colleagues are the center of the global programs, processes and partnerships we create, and we value and respect their diverse experiences and perspectives.
3.Culture & Engagement: Our workplace culture of deep colleague engagement thrives because of our efforts to advance inclusion, allyship and belonging.
4.Opportunity & Growth: Our global efforts and ways to underwrite opportunity for all stakeholders are oriented toward growth, and we have the agility to pivot as necessary to support our strategic priorities.
As part of our global DEI efforts, Everest has the DEI Council, which functions globally across our North America and international operations. The DEI Council’s mission is to help foster an environment that attracts, retains and develops the best talent; values the diversity of people, their life experiences and perspectives; and serves as a conduit to senior management to promote measurable company-wide engagement on inclusivity. The DEI Council is an important voice and key counselor and supports our leaders in their role to further cultivate DEI at Everest through open dialogue and discussion, training, and best practices. The DEI Council has also been instrumental in supporting our CRGs as they raise awareness and ensure that a diverse and representative group of voices is heard throughout the Company.
We look to seize opportunities to celebrate our diversity and lift one another up. Our global CRGs, as part of our DEI Council, connect regularly through networking events, professional development opportunities and sharing cultural traditions, driving greater awareness and collaboration across offices worldwide. Participation in our CRGs is open to everyone, regardless of background, to enhance career and personal development, exchange ideas and share cultural
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experiences and backgrounds to contribute to Everest’s vision and values. As of December 31, 2023, the Company sponsors nine CRGs.
Business and Underwriting Strategy.
The Company writes business on a worldwide basis for many different customers and lines of business, thereby obtaining a broad spread of risk. The Company is not substantially dependent on any single customer, small group of customers, line of business or geographic area. The Company believes that a reduction of business from any one customer would not have a material adverse effect on its future financial condition or results of operations.

The broker reinsurance market consists of several substantial national and international brokers and a number of smaller specialized brokers. Brokers do not have the authority to bind the Company with respect to reinsurance agreements, nor does the Company commit in advance to accept any portion of a broker’s submitted business. Reinsurance business from any ceding company, whether new or renewal is subject to acceptance by the Company. Brokerage fees are generally paid by reinsurers. The Company believes that a reduction of business assumed from any one broker would not have a material adverse effect on the Company.
The Company’s insurance business mainly writes commercial property and casualty on an admitted and non-admitted basis. The business is written through wholesale and retail brokers, surplus lines brokers and through program administrators.
The direct reinsurance market is an important distribution channel for reinsurance business written by the Company. Direct placement of reinsurance enables the Company to access clients who prefer to place their reinsurance directly with reinsurers based upon the reinsurer’s in-depth understanding of the ceding company’s needs.
It is our long-standing client and broker relationships that help us continue to grow and maintain our global leadership position. The Company continually evaluates each business relationship, including within its distribution channel bearing underwriting expertise and experience, performs analyses to evaluate financial security, monitors performance and adjusts underwriting decisions accordingly.
The Company’s business strategy is to sustain its leadership position within targeted reinsurance and insurance markets, and provide effective management throughout the property and casualty underwriting cycle, thereby achieving an attractive return for its shareholders. The Company’s underwriting strategies seek to capitalize on what we believe are our financial strength and capacity, global franchise, stable and experienced management team, diversified product and distribution offerings, underwriting expertise and disciplined approach, efficient and low-cost operating structure and effective enterprise risk management practices.
The Company’s underwriting strategies emphasize disciplined underwriting, prioritizing underwriting profitability over premium volume, and flexibility to adjust and respond to changing market conditions. Key elements of these strategies, as applicable to the Reinsurance segment, include careful risk selection, appropriate pricing through strict underwriting discipline, and adjustments to the Company’s business mix as market conditions change. We focus on (re)insuring companies that effectively manage their own underwriting cycle through proper analysis and appropriate pricing of underlying risks and whose underwriting guidelines and performance are compatible with their and the Company’s objectives. Key elements of the Company’s underwriting strategies, as applicable to the Insurance segment, include careful expansion on what we believe to be the Company’s existing strengths in the primary insurance market, including its broad underwriting expertise, global presence, strong financial ratings and substantial capital, and facilitating adjustments to its mix of business by geographic region, line of business and type of coverage. These strategies allow Everest to fully participate in market opportunities that provide the greatest potential for underwriting profitability. The Company’s insurance and reinsurance operations allow the Company to execute its strategies by providing access to the global business markets. The Company carefully monitors its mix of business across all operations to seek to avoid unacceptable geographic or other risk concentrations.
Segments Overview.
The Company operates through two operating segments, Reinsurance and Insurance, which are managed as autonomous units, and key strategic decisions are based on the aggregate operating results and projections for the two business segments. During the fourth quarter of 2023, the Company revised the classification and presentation of certain products related to its accident and health business within the segment groupings. These products have been realigned from within the Reinsurance segment to the Insurance segment to appropriately reflect how the business segments are now
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managed due to changes in management beginning in the fourth quarter of 2023. These changes have been reflected retrospectively.
The Reinsurance segment writes worldwide 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 segment writes property and casualty insurance directly and through brokers, including for surplus lines, and general agents within the United States.
The two 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 the two operating segments based upon their underwriting results.
Underwriting results include earned premium less losses and loss adjustment expenses (“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. For selected financial information regarding these segments, see ITEM 8, “Financial Statements and Supplementary Data” - Note 6 of Notes to Consolidated Financial Statements and ITEM 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operation - Segment Results”.
Reinsurance Industry Overview.Segment

.

Overview
Reinsurance is an arrangement in which an (re)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 and/or reinsurance 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,treaties; instead, the reinsurer relies upon the pricing and underwriting decisions madeevaluates portfolio level exposure based on information provided by the ceding company. InIn 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

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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.

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,(such as commissions, premium taxes, assessments, and miscellaneous administrative expenseexpenses 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 treaty 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
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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.

All the Company’s reinsurance and retrocessional agreements transfer significant reinsurance risk and therefore, are accounted for as reinsurance in accordance with U.S. generally accepted accounting principles (“GAAP”) guidance.

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

For the year ended December 31, 2023, the Company’s business strategyReinsurance segment wrote $7.2 billion of gross written premiums. Our Reinsurance segment 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 rangecomprised 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 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 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, 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

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achieving its insurance program strategic goals of increased premium volume and improved underwriting results. Recent growth is coming from newly launched lines of business on both a treaty, facultative and large corporate risk basis, including:

•Property Pro Rata business, which consists predominantly of contracts providing coverage to cedents for property damage and related losses, which may include business interruption and other non-property losses, resulting from natural or man-made perils arising from their underlying portfolio of policies at an agreed upon percentage for both premium and loss.
•Property Non-Catastrophe Excess of Loss (“XOL”) business, which consists predominantly of contracts providing coverage to cedents for a portion of property damage and related losses, which may include business interruption and other non-property losses, resulting from natural or man-made perils in excess of an agreed upon deductible up to a stated limit.
•Property Catastrophe XOL business, which consists predominantly of contracts providing coverage to cedents for a portion of property damage and related losses, which may include business interruption and other non-property losses, resulting from catastrophic losses, in excess of an agreed upon deductible up to a stated limit. The main perils covered include hurricane, earthquake, flood, convective storm and fire.
•Casualty Pro Rata business, which consists predominantly of contracts providing coverage to cedents for losses primarily arising from general liability, professional indemnity, product liability, workers' compensation, employer’s liability, aviation and auto liability from their underlying portfolio of policies at an agreed upon percentage for both premium and loss.
•Casualty XOL business, which consists predominantly of contracts providing coverage to cedents for losses primarily arising from general liability, professional indemnity, product liability, workers' compensation, aviation and auto liability from their underlying portfolio of policies in excess of an agreed upon deductible up to a stated limit.
•Financial Lines business, which consists predominantly of contracts providing coverage to cedents for losses arising from political risk, credit, surety, mortgage and alternative risk lines of business on both a pro rata and excess of loss basis.
Products
Our reinsurance divisions provide treaty and facultative reinsurance on either a pro rata basis or an excess of loss basis to insurance companies across the globe. Our company provides products for the following lines of business:
•Property provides protection for property damage and other related losses covered in the underlying insurance policies. Losses might arise from property loss or property damage, as well as productother related risks, such as business interruption and geographic expansionother non-property losses that arise from the covered peril. Perils covered by such policies may be natural or man-made and include hurricane, tornado, hail, windstorm, earthquake, freezes, floods, explosions and fires.
•Catastrophe is a specific line of property reinsurance that provides protection against catastrophic losses from natural perils such as hurricane, windstorm, earthquake, floods, tornadoes, fires.
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•Casualty provides protection for losses covered in existingliability or casualty insurance policies. Typical lines covered by the underlying insurers can be general liability, workers compensation, automobile liability, umbrella and excess casualty.
•Marine provides protection for property damages, physical loss or liability affecting the marine business, which includes losses relating to cargo ships, hull, recreational craft, inland marine and offshore energy. Perils can be natural or man-made and include storms, sinking/stranding, pollution, fire, explosion and accidents.
•Aviation provides protection cover for aircrafts, airline, aerospace, and other general aviation risks.
•Engineering provides protection for construction and machinery risks including testing, setting up of machinery, operational failures, incidents affecting plant and equipment, business interruption and other mechanical failures. This class also covers property and liability exposures related to construction sites.
•Professional Lines provides protection for losses arising from employment, practices, and coverage of risks, such as director’s and officer’s liability, employment litigation liability, medical malpractice, professional indemnity, environmental liability, omission of insurance, and cyber liability.
•Credit and Surety provides protection for losses arising from insurance products, offering payments in the event of default from a borrower. Losses may arise from surety bonds issued by insurers as required by regulators or guarantors. For example, mortgage insurance provides coverage for losses related to credit risk.
•Motor provides protection to insurance companies offering motor liability and property damage. Losses may affect the underlying insured party or other claimants.
•Agriculture/Crop provides protection for risks associated with agriculture and production of food. Underlying insurance contracts might offer contracts covering against natural or man-perils, such as hail, storms and floods, and might cover crop yields or price deviation from set amounts.
•Political Violence provides protection against damages resulting from various perils, such as terrorism, sabotage, strikes, riots, insurrection, revolution, coup, and war. Losses might occur due to property damage resulting from such perils, business interruption, cyber/malicious attack, event cancellation or construction delays.
Competition
The global reinsurance market is highly competitive and very mature. Reinsurance companies differentiate themselves based on financial strength, range of products, brand recognition, duration of the relationship with the cedents, distribution channels, claims management, and customer service. Competition for clients might be based on pricing, capacity, coverage terms, conditions, or other factors.
We compete in global and local markets with U.S. and international reinsurers. In addition, competitors may include investment companies, mutual companies, insurance companies, alternative risk and capacity providers (such as captives, catastrophe bonds and pools) and others, as alternative products are introduced into the capital markets to compete with traditional reinsurance companies.
Insurance Segment.
Overview
Everest’s Insurance segment markets and distributes a wide range of insurance products and services through various forms of brokers and agents. We serve multinational corporations and mid-size commercial clients across various industries.
Our Insurance segment operates through the North America markets. These operations are managed to conform with corporate guidelines with respect to pricing, risk management, control of aggregate catastrophe exposures, capital, and investments.
In 2023, the Company’s Insurance segment wrote $3.9 billion of gross written premiums. The Insurance segment lines of business. business write a broad suite of tailored products and services, including:
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•Accident and Health business, which consists predominantly of policies covering Participant Accident, Short-Term Medical, and Medical Stop-Loss protection for employers with self-funded medical plans.
•Specialty Casualty business, which consists predominantly of policies covering General Liability (Premises/Operations and Products), Auto Liability, and Umbrella/Excess Liability.
•Other Specialty business, which consists predominantly of policies covering specialty areas including but not limited to Surety, Trade Credit & Political Risk, Transactional Liability, Energy & Construction, and Aviation.
•Professional Liability business, which consists predominantly of policies covering Directors & Officers Liability, Errors & Omissions, Cyber Liability, and other ancillary financial lines products.
•Property/Short-Tail business, which consists predominantly of policies covering Property, Inland Marine, and other short-tail lines.
•Workers’ Compensation business, which consists predominantly of policies covering Workers Compensation, including both guaranteed cost and loss sensitive product offerings.
Products
The Company is building a world-classInsurance division writes property, casualty, and specialty insurance platform capableproducts, which are aligned with the lines of offeringbusiness described within the Insurance Segment Overview. These products acrossare written directly, as well as through brokers, including for surplus lines, and geographies, complementing its leading global reinsurance franchise.

Capital Transactions.

general agents within the U.S.

Competition
The Company’s business operations are in part dependentinsurance market is highly competitive. Insurance companies differentiate themselves based on its financial strength, range of products, brand recognition, agent and financial strength ratings,broker relationships, distribution channels, claims management, and customer service. Competition for clients might be based on pricing, capacity, coverage terms, conditions, or other factors.
We compete on a regional basis with major U.S. insurers. In addition, we also compete with new companies and existing companies that move into the market’s perceptioninsurance industry. Competitors sell through various distribution channels and business models, across a broad array of its financial strength. The Company stockholder’s equity was $7.0 billionproduct lines, and $6.4 billion at December 31, 2021with a high level of variation regarding geographic, marketing, and 2020, 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.

customer segmentation.

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 theour subsidiaries’ financial 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 rating agencies. The ratings presented in the following table were in effect as of JanuaryDecember 31, 2022.

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.
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Strong financial ratings are particularly important for reinsurance and insurance companies given that customers 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

(1)

S&P

(2)

Moody's

(3)

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

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

(1) A.M. Best Financial Strength Ratings Scale: D (Poor) to A+ (Superior). Each financial strength rating category from A to C includes a rating notch to reflect a graduation of financial strength within the category. A rating notch is expressed with either a second plus (+) or a minus (-).
(2) S&P Financial Strength Ratings Scale: D (Payment Default) to AAA (Extremely Strong). Ratings from “AA” to “CCC” may be modified by the addition of a plus (+) or minus (-) sign to show relative standing within the major rating categories.
(3) Moody’s Financial Strength Ratings Scale: C (Low Grade) to Aaa (High Grade). Note that Moody’s appends numerical modifiers 1, 2 and 3 to each generic rating classification from Aa through Caa. The modifier 1 indicates that the obligation ranks in the higher end of its generic rating category; modifier 2 indicates a mid-range ranking; and modifier 3 indicates a ranking in the lower end of that generic rating category.

A.M. Best states that the “A+” (“Superior”) rating is assigned to those companies which, in its opinion, have a superior ability to meet their ongoing insurance policypolicies 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 May 7, 2021.June 29, 2023. S&P states that the “A+”/”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 itstheir insurance policies and contracts in accordance with their terms. Following the publishing of the revised Insurer Risk Based Capital Adequacy methodology on November 15, 2023, S&P affirmed all ratings on June 4, 2021.January 29, 2024. 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 July 20, 2021.

June 29, 2023.

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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.

Debt Ratings.

The following table shows the debt ratings by A.M. Best, S&P and Moody’s of the Holdings’following series of notes issued by Holdings, all of which are considered investment grade: (1) senior notes due June 1, 2044, (2) senior notes due October 15, 2050, (3) senior notes due October 15, 2052 and (4) long-term notes due May 1, 2067 all of which are considered investment grade.2067. Debt ratings are the rating agencies’ current assessment of the credit worthiness of an obligor with respect to a specific obligation.

Instrument

A.M. Best

S&P

(1)

Moody's

Senior Notes due June 1, 2044

a-

(Strong)

BBB+

A-

(Strong)

Baa1

(Medium Grade)

Senior Notes due October 15, 2050

a-

(Strong)

BBB+

A-

(Strong)

Baa1

(Medium Grade)

Senior Notes due October 15, 2052

Not Rated

BBB+

A-

(Strong)

Baa1

(Medium Grade)

Long TermLong-Term Notes due May 1, 2067

bbb

(Adequate)

BBB-

BBB

(Adequate)

Baa2

(Medium Grade)

(1) On January 29, 2024, S&P lowered the ratings of Holdings and its debt (from two notches to three notches lower than Group’s operating companies) to align Everest with the potential high regulatory restrictions on payment distributions from the Company's operating subsidiaries to Holdings.

Enterprise Risk Management.
Competition.Everest is in the business of underwriting and managing risk for its customers. As a global insurance and reinsurance business, we have an established Enterprise Risk Management (“ERM”) framework that is integrated into the day-to-day management of our businesses and operations.

The worldwideERM framework provides a group-wide systemic approach to managing the organization’s key risks and is supported by a Risk Appetites Statement approved by the Board.


Risk governance is a key component of Everest’s ERM framework in order to establish and coordinate risk guidelines that reflect the enterprise’s appetite for risk, facilitate monitoring of risk exposure relative to established guidelines, and ensure effective and timely escalation and communication to management and the Board. Risk management is overseen by Board and senior management risk committees. The risk committees are established at the Group level, as well as
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within certain Everest entities, to oversee capital and risk positions, approve risk management strategies and limits, and establish appropriate risk standards and policies.

Our Executive Risk Management Committee (“ERC”) reports to and assists the Chief Executive Officer in the oversight and review of Everest’s ERM framework and key risks, including Underwriting, Financial, Operational, and Strategic risks. The ERC is responsible for establishing the Group’s risk management principles, policies, and risk appetite levels. The ERC meets at least quarterly and is comprised of the following senior executives: Chief Executive Officer, Chief Financial Officer, Chief Operations Officer and Head of Reinsurance Division, Chief Executive Officer of the Insurance Division, General Counsel, Chief Transformation Officer, Chief Reserving Actuary, and the Chief Risk Officer.

The ERC is assisted in its activities by Everest’s ERM function and senior management risk committees. The ERC provides strategic risk management direction to the Group, which is then executed by the business units and by Everest’s ERM function. ERM is centrally responsible for implementing the risk management framework and identifying, assessing, monitoring, controlling, and communicating the Company’s risk exposures. Everest’s ERM function is independent of operating units and reports to the Chief Risk Officer. Everest’s senior management risk committees, including the Underwriting Risk Committee, Financial Risk Committee, and Operational Risk Committee supports ERM and the ERC with the compilation and analysis of risk insights with regards to exposure management and execution management.

Our Chief Risk Officer also reports to the Board’s Risk Management Committee (“RMC”), which helps execute the Board’s supervisory responsibility pertaining to ERM. The role of the RMC includes evaluation of the integrity and effectiveness of our ERM procedures, systems, and information; governance on major policy decisions pertaining to risk aggregation and minimization; and, assessment of our major decisions and preparedness levels pertaining to perceived material risks.
Regulatory Matters.
The Company and its insurance subsidiaries are subject to regulation under the insurance statutes of the various jurisdictions in which they conduct business, including all U.S. states, Canada and Singapore. These regulations vary from jurisdiction to jurisdiction and are generally designed to protect ceding insurance companies and policyholders by regulating the Company’s conduct of business, financial integrity and ability to meet its obligations. Many of these regulations require reporting of information designed to allow insurance regulators to closely monitor the Company’s performance.
Climate Risk Management.
As a global reinsurance and insurance businessesorganization, we recognize the potential impact of extreme natural perils on our world. We are highly competitive,also acutely aware of the fact that our industry plays a critical role in economic and social recovery after such extreme weather events. It is our policy to remain committed to providing solutions that can help our clients manage their own environmental risks in real and practical ways. We are also dedicated to managing and reducing our own ecological footprint wherever possible and considering environmental factors when making investment decisions.
Much of our business involves protecting clients through insurance and reinsurance from the impact of devastating natural catastrophes. As such, it is our policy to take a proactive approach to incorporating climate and weather-related risk into our underwriting procedure. To meet this challenge, our underwriting, actuarial and catastrophe modelling teams work together in researching and analyzing external raw climate/meteorological data in conjunction with our internal proprietary claims and loss information data to assess the geographical impacts of climate risk and develop predictive analytics models to refine our pricing tolerances and product development.This team approach to assessing the impact of climate risk on sustainability for Everest as well as cyclicalour customers ensures that we are most accurately and responsibly providing specialized coverage to our clients for climate and other environment-related risks.
Insurance Holding Company Regulation.
Under applicable U.S. laws and regulations, no person, corporation or other entity may acquire a controlling interest in the Company, unless such person, corporation or entity has obtained prior approval for such acquisition from the insurance commissioners of Delaware and any other state in which the Company’s insurance subsidiaries are domiciled or deemed domiciled (as of this date, California). Under these laws, “control” is presumed when any person acquires, directly or indirectly, 10% or more of the voting securities of an insurance company. To obtain the approval of any change in control, the proposed acquirer must file an application with the relevant insurance commissioner disclosing, among other things, the background of the acquirer and that of its directors and officers, the acquirer’s financial condition and its proposed changes in the management and operations of the insurance company. U.S. state regulators
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also require prior notice or regulatory approval of material intercompany and inter-affiliate transactions within the holding company structure.
The Insurance Companies Act of Canada requires prior approval by productthe Minister of Finance of anyone acquiring a significant interest in an insurance company authorized to do business in Canada. In addition, the Company is subject to regulation by the insurance regulators of other U.S. states and market.foreign jurisdictions in which it is authorized to do business. Certain of these U.S. states and foreign jurisdictions impose regulations regulating the ability of any person to acquire control of an insurance company authorized to do business in that jurisdiction without appropriate regulatory approval similar to those described above.
Dividends.
Under Bermuda law, Everest Assurance is unable to declare or make payment of a dividend if it fails to meet its minimum solvency margin or minimum liquidity ratio. As such,a long-term insurer, Everest Assurance is also unable to declare or pay a dividend to anyone who is not a policyholder unless, after payment of the dividend, the value of the assets in its long-term business fund, as certified by its approved actuary, exceeds its liabilities for long-term business by at least the $250,000 minimum solvency margin. Prior approval of the Bermuda Monetary Authority is required if Everest Assurance’s dividend payments would exceed 25% of its respective prior year end statutory capital and surplus. At December 31, 2023, Bermuda Re, Everest International and Everest Assurance exceeded their solvency and liquidity requirements.
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 $7.0 billion at December 31, 2023, 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 results tenddistress. 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 the insurer’s statutory surplus as of the end of the prior calendar year and (2) the insurer’s statutory net income (loss), not including realized capital gains (losses), for the prior calendar year. Accordingly, as of December 31, 2023, the maximum amount that will be available for the payment of dividends by Everest Re without triggering the requirement for prior approval of regulatory authorities in connection with a dividend is $877 million.
Insurance Regulation.
Everest Assurance, by virtue of its one-time election under section 953(d) of the U.S. Internal Revenue Code to fluctuate with periodsbe a U.S. income tax paying “Controlled Foreign Corporation”, is admitted to do business in the United States and Bermuda. In Bermuda, Everest Assurance is regulated by the Insurance Act 1978 (as amended) and related regulations (the “Act”). The Act establishes solvency and liquidity standards and auditing and reporting requirements and subjects Everest Assurance to the supervision, investigation and intervention powers of constrained availability, higherthe Bermuda Monetary Authority. Under the Act, Everest Assurance is licensed as a Class 3A insurer for general business and as a Class C insurer for long-term business.
U.S. domestic property and casualty insurers, including reinsurers, are subject to regulation by their states of domicile and by those states in which they are licensed. The regulation of reinsurers is typically focused on financial condition, investments, management and operation. The rates and stronger profits followedpolicy terms of reinsurance agreements are generally not subject to direct regulation by periodsany governmental authority.
The operations of abundant capacity, lower ratesEverest Re’s foreign branch offices in Canada and constrained profitability. CompetitionSingapore are subject to regulation by the insurance regulatory officials of those jurisdictions. Management believes that the Company is in compliance with applicable laws and regulations pertaining to its business and operations.
Everest National, Everest Security, Everest Denali and Everest Premier are subject to regulations similar to the U.S. regulations applicable to Everest Re. In addition, these companies must comply with substantial regulatory requirements in each state where they conduct business. These additional requirements include, but are not limited to, rate and policy form requirements, as well as requirements on licensing, agent appointments, participation in residual markets and claim handling procedures. These regulations are primarily designed for the protection of policyholders. Everest Indemnity is a Delaware domestic surplus lines insurer and is eligible to write insurance on a surplus lines basis in the typesU.S.
Licenses.
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Everest Re is a licensed property and casualty insurer and/or reinsurer in all states, the District of Columbia, Puerto Rico and Guam. Such licensing enables U.S. domestic ceding company clients to take credit for uncollateralized reinsurance receivables from Everest Re in their statutory financial statements.
Everest Re is licensed as a property and casualty reinsurer in Canada. It is also authorized to conduct reinsurance business in Singapore and Brazil. Everest Re can also write reinsurance in other foreign countries. Because some jurisdictions require a reinsurer to register in order to be an acceptable market for local insurers, Everest Re is registered as a foreign insurer and/or reinsurer in the following countries: Bolivia, Brazil, Chile, China, Colombia, Dominican Republic, Ecuador, El Salvador, Guatemala, Honduras, India, Mexico, Nicaragua, Panama, Paraguay, the Philippines, Singapore and Venezuela.
Everest National is licensed in 50 states, the District of Columbia and Puerto Rico.
Everest Indemnity is a Delaware domestic surplus lines insurer and is eligible to write insurance on a surplus lines basis in all 50 states, the District of Columbia and Puerto Rico.
Everest Security recently converted from a Georgia corporation to a Delaware corporation effective August 1, 2023, and is now licensed to write property and casualty insurance as an admitted insurance carrier in Delaware and Georgia, effective October 24, 2023 and in Alabama, effective December 19, 2023.
Everest Denali is licensed in all 50 states and the District of Columbia. Everest Premier is licensed in all 50 states and the District of Columbia.
Everest Assurance is registered as a Class 3A general business insurer in Bermuda and a Class C long-term insurer in Bermuda. By virtue of its one-time election under section 953(d) of the U.S. Internal Revenue Code to be a U.S. income tax paying “Controlled Foreign Corporation,” Everest Assurance may operate in both the U.S. and Bermuda. Everest Assurance is also considered an approved/eligible alien surplus lines insurer in all 50 states and the District of Columbia. In addition, Everest Assurance can also write reinsurance in other foreign countries. Because some jurisdictions require a reinsurer to register in order to be an acceptable market for local insurers, Everest Assurance is registered as a foreign insurer and/or reinsurer in the following countries: Bolivia, Colombia, Chile, Ecuador, Guatemala, Mexico and Paraguay.
Periodic Examinations.
Led by their states of domicile, U.S. insurance companies are subject to periodic financial examination of their affairs, usually every three to five years. U.S. insurance companies are also subject to examinations by the various state insurance departments where they are licensed concerning compliance with applicable conduct of business regulations. In addition, non-U.S. insurance companies and branches are subject to examination and review by regulators in their respective jurisdictions. In 2023, there were no reports of these examinations or reviews issued that we underwritecontained any material findings or recommendations.
NAIC Risk-Based Capital Requirements.
The U.S. National Association of Insurance Commissioners (“NAIC”) has developed a formula to measure the statutory minimum amount of capital required for a property and casualty insurance company to support its overall business operations in light of its size and risk profile. The major categories of a company’s risk profile are its asset risk, credit risk, and underwriting risk. The standard is an effort to anticipate insolvencies. This allows regulators to take actions that could limit the impact of these insolvencies on policyholders.
Under the approved formula, a company’s adjusted statutory surplus (end of period surplus adjusted for items not currently applicable to the Everest companies) is compared to the Risk-Based Capital Model (“RBC”) developed by the NAIC.  If this ratio is above a minimum threshold, no action is necessary.  Below this threshold are four distinct action levels at which an insurer’s domiciliary state regulator can intervene with increasing degrees of authority over an insurer as the ratio of adjusted surplus to RBC decreases.  The mildest intervention requires an insurer to submit a plan of appropriate corrective actions.  The most severe action requires an insurer to be rehabilitated or liquidated.
Based on their financial positions, as of December 31, 2023, Everest Re, Everest National, Everest Indemnity, Everest Security, Everest Denali and Everest Premier exceed the minimum RBC thresholds.
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Tax Matters.
The following summary of the taxation of the Company is based on many factors, includingcurrent law. There can be no assurance that legislative, judicial, or administrative changes will not be enacted that might materially affect this summary.

The Company conducts business and is subject to taxation in the perceived overall financial strengthUnited States. Non-U.S. branches of the reinsurer or insurer, ratingsCompany are subject to both local taxation in the jurisdictions in which they operate and U.S. corporate income tax but are generally relieved from double taxation through the application of foreign tax credits against their U.S. income tax liability.

On August 16, 2022, the Inflation Reduction Act of 2022 (“IRA”) was enacted. We have evaluated the tax provisions of the reinsurer or insurer by A.M. Best and/or Standard & Poor’s, underwriting expertise,IRA, the jurisdictions wheremost significant of which are 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.

We compete in the U.S. and international reinsurance and insurance markets with numerous global competitors. 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, and certain government sponsored risk transfer vehicles. Some of these competitors have greater financial resources than we do 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 historically have been 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, provided capital markets with access to insurance and reinsurance risk exposure. The capital markets demand for these products was being primarily driven by a low interest environmentcorporate alternative minimum tax and the desire to achieve greater risk diversificationshare repurchase excise tax, and potentially higher returns on their investments. This increased competition was generally having a negative impact on rates, terms and conditions; however,do not expect the impact varies widely by market and coverage.

The industry continues to deal with the impacts of a global pandemic, COVID-19 and its subsequent variants. We activated our operational resiliency plan across our global footprint and all of our critical operations are functioning effectively. We continue to service and meet the needs of our clients while ensuring the safety and health of our employees and customers.

5

Prior to the pandemic, there was a growing industry consensus that there was some firming of (re)insurance rates for the areas impacted by the recent catastrophes. The increased frequency of catastrophe losses in 2020 and 2021 appears to be further pressuring the increase of rates. As business activity continues to regain strength, 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.

While we are unable to predict the full impact the pandemic will have on the insurance industry as it continueslegislation to have a negativematerial impact on the global economy, we are well positioned to continue to service our clients. Our capital position remains a sourceresults 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.

Human Capital Management.

Our employees are essential to the success of our business, and so we strive to attract and retain a high standard of insurance professionals to meet our business needs as well as the needs of our clients and customers. As of February 1, 2022, the Company employed 1,615 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. 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 the executive level involving identifying and developing female and other minority leaders within the organization to assume more visible senior leadership roles. 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 encourage promotions. 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.

operations.

6

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 throughon the Company’s internetSecurities and Exchange Commission (“SEC”) website at http:https://www.everestregroup.comwww.sec.gov as soon as reasonably practicable after such reports are electronically filed with the SEC.
ITEM 1A.    RISK FACTORS
Our business, results of operations and financial conditions are subject to numerous risks and uncertainties.

ITEM 1A.While we seek to identify, manage and mitigate risks to our business, risk and uncertainty cannot be eliminated or necessarily predicted.RISK FACTORS

In additionconnection with any investment decision with respect to the other information provided in this report,our securities, you should carefully consider the following risk factors, should be considered when evaluating an investmentas well as the other information contained in this report and our securities. Ifother filings with the circumstances contemplated bySEC.Additional risks and uncertainties not presently known to us or that we currently deem immaterial may also impair our business operations.Should any of these risks materialize, actual results could differ materially from the individual risk factors materialize,disclosed information, 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, or temporary disruption, as occurred in early 2020 related to the Covid-19 pandemic, 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.

UNDERWRITING
Our results could be adversely affected by catastrophic events.

We are exposed to unpredictable catastrophic events, including 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. Climate change and resulting changes in global temperatures, weather patterns, and sea levels may both increase the frequency and severity of natural catastrophes and the resulting losses in the future and impact our risk modeling assumptions. We cannot predict the impact that changing climate conditions, if any, may have on our results of operations or our financial condition. Additionally, we cannot predict how legal, regulatory and/or social responses to concerns around global climate change and the resulting impact on various sectors of the economy may impact our business. 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-tax catastrophe losses, net of reinsurance, were as follows:

Calendar year:

Pre-tax catastrophe losses

(Dollars in millions)

 

 

2021

$

940.0

2020

 

397.4

2019

 

573.7

2018

 

1,712.6

2017

 

941.4

Calendar year:Pre-tax net catastrophe losses
(Dollars in millions)
2023$323 
2022984 
2021940 
2020397 
2019574 
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 these loss projections to estimate our potential catastrophe losses in certain geographic areas
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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.

amount.

7

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”)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 claimclaims 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 reserves in the period in which such deficiencies are identified which would cause a charge to our earnings and a reduction of capital. During the past five calendar years, the reserve re-estimation process resulted in an increase to our pre-tax net income in 2023 and resulted in a decrease to our pre-tax net income in 2022, 2021, 2020 and 2019, 2018 and an increase for the year 2017:

Calendar year:

Effect on pre-tax net income

(Dollars in millions)

 

 

 

2021

$

5.3

decrease

2020

 

200.3

decrease

2019

 

44.4

decrease

2018

 

558.8

decrease

2017

 

117.7

increase

2019:

Calendar year:Effect on pre-tax net income
(Dollars in millions)
2023$21 increase
20228 decrease
20215 decrease
2020200 decrease
201944 decrease
The difficulty in estimating our reserves is significantly more challenging as it relates to reserving for potential asbestos and environmental (“A&E”) liabilities. AtAs of December 31, 2021, 1.3%2023, 1.6% 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.

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 such unanticipated events, we also face the unanticipated expansion of our exposures, particularly in 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,cases, 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

8

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.

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If rating agencies downgradewe are unable or choose not to purchase reinsurance and transfer risk to the ratingsreinsurance 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 subsidiaries, future prospectslinked financial instruments, we increased our use of capital market products for growthcatastrophe reinsurance. In addition, we have increased some of our quota share contracts with larger retrocessionaires. The percentage of business that we reinsure may vary considerably from year to year, depending on our view of the relationship between cost and profitabilityexpected benefit for the contract period.
Percentage of ceded written premiums to gross written premiums20232022202120202019
Unaffiliated13.3 %13.2 %14.3 %14.9 %16.7 %
Affiliated3.9 %3.8 %4.9 %1.7 %1.4 %
FINANCIAL
A decline in our financial strength ratings could be significantlyadversely affect our standing among cedents and adversely affected.

broker partners and our ability to grow premiums and earnings.

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. 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 could have a material and adverse effect on our ability to write new business, thatwhich 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 on our financial strength ratings 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. 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.

See also ITEM 1, “Financial Strength Ratings”.
A decline in our debt ratings could increase our borrowing costs and adversely affect our ability to access capital markets at attractive rates.
If our debt ratings are downgraded, we could incur higher borrowing costs, higher cost of capital, and our ability to access the capital markets at attractive rates could be impacted. We are unable to provide any guarantees on whether or not or ratings may be downgraded by any of our rating agencies in the future.
See also ITEM 1, “Debt Ratings”.
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, 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.

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. In addition, we have increased some of our quota share contracts with larger 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.

Percentage of ceded written premiums to gross written premiums

2021

 

2020

 

2019

 

2018

 

2017

Unaffiliated

14.3

%

 

14.9

%

 

16.7

%

 

14.7

%

 

14.6

%

Affiliated

4.9

%

 

1.7

%

 

1.4

%

 

8.7

%

 

38.4

%

9

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 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 addition to competitors, the entry of alternative capital market products and vehicles provide additional sources of reinsurance and insurance 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 72) and existing key executive officers 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 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: President and Chief Executive Officer, Juan C. Andrade (age 56); Executive Vice President and Chief Financial Officer, Mark Kociancic (age 52), Executive Vice President, Group, Chief Operating Officer and Head of Reinsurance Division, Jim Williamson (age 48), Executive Vice President, General Counsel, Chief Compliance Officer and Secretary, Sanjoy Mukherjee (age 55) and Executive Vice President, President and Chief Executive Officer of the Everest Insurance® Division, Mike Karmilowicz (age 53). 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 exposeddue to interest rate, credit and market risks.changed conditions in the financial markets.

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A significant portion of our investment portfolio consists of fixed income securities and smaller portions consist of equity securities and other investments. Both theThe fair market value of our invested assets and associated investment income may fluctuate depending on generalvarious factors including the effects of economic events and conditions, governmental policies, changes in interest rates and credit spreads, 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 valuevolatility.
Interest Rate Risk.
Most of our fixed income securities could also decreaseare classified as a result of a downturnavailable for sale, and temporary changes in the business cycle that causes the credit qualityfair value of such securitiesthese investments due 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 causeare reflected as changes to our shareholder’s equity. Additionally, net investment income from fixed income investments that carry prepayment risk, such as mortgage-backed and other asset-backed securities, tocan differ from the income anticipated from those securities at the time of purchase. In

Credit Risk.
Our investment portfolio is subject to the risk of loss due to default or deterioration in credit quality. 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 ifto information about past events and current conditions. If issuers of individual investments are unable to meet their obligations, investment income will be reduced and realized capital losses may arise.
Equity Risk.

The majority of our fixed income securities are classified as available for sale and temporary changes in the market 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 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

10

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 failure to maintain access to enough cash, readily salable or unencumbered financial assets to meet near-term financial obligations.
Liquidity risk is a manifestation of events that are driven by other risk types (insurance, investment, operational). A liquidity shortfall may arise in the event of insufficient access to internal and external funding sources to meet an immediate and significant need for cash or collateral. Additionally, a rapid increase in interest rates can create a short-term pressure on regulatory capital models.
The Company's liquidity could be affected by a broad market illiquidity event, default by significant market participant, inability to sell assets, inability to access bank accounts, inability to access capital and credit markets, concentration of CAT events, or unforeseen capital needs. A failure to have sufficient cashflow to meet obligations may adversely affect business relations and the creditworthiness of the Company.
Because of our holding company structure, our ability to pay dividends, interest and principal is dependent on receiving dividends, loan payments and other funds from our subsidiaries.
Holdings is a holding company, whose most significant asset is the stock of its operating subsidiaries. As a result, its ability to pay dividends, interest or other payments on its securities in the future will depend on the earnings and cash flows of its operating subsidiaries and the ability of the subsidiaries to pay dividends or to advance or repay funds to it. This ability is subject to general economic, financial, competitive, regulatory and other factors beyond our control. Payment of dividends and advances and repayments from some of the operating subsidiaries are regulated by U.S. states 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 Holdings in the future, which could prevent us from paying dividends or interest or making other payments on our securities.
We may experience foreign currency exchange losses that reduce our net income and capital levels.

Through our international operations, we

We conduct business in a variety of foreign (non-U.S.)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.
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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 2021,2023, we wrote approximately 15.8%18.7% of our coverages in non-U.S. currencies; as of December 31, 2021,2023, we maintained approximately 8.3%9.2% of our investment portfolio in investments denominated in non-U.S. currencies. During 2021, 2020
Our business is sensitive to unanticipated levels of inflation.
While consideration is given to the levels of inflation and 2019,how that may impact premiums and claims, the impacts of inflation may be different than anticipated. Premiums are established before actual losses are known, which may result in some underpricing if inflation rises more rapidly than expected, ultimately creating a deficiency that may impact our financial position.
Measures taken by domestic or foreign governments could have effects on our quarterly pre-tax net income from exchange rate fluctuations rangedbusiness.
The potential political, economic, military, and social risks that can emerge from a lossnation's involvement in international affairs can manifest into elevated geopolitical risk. For financial institutions, there are direct and indirect effects that can result from these events, including effects to the growth of $7.7 million to a gain of $9.3 million.

Changesbusiness, return in the method for determining LIBORforeign investments, claims patterns and the potential replacement of LIBOR may affectlocal operations.

OPERATIONAL
We are dependent on our cost of capitalkey personnel.
Our success has been, 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. In 2020 it was announced that most LIBOR rates wouldwill continue to be, published until June 2023. Potential changesdependent on our ability to LIBOR, as well as uncertainty relatedretain the services of our existing key executives and other key employees, and to such potential changesattract and retain additional qualified personnel in the establishmentfuture. The loss of the services of any alternative reference rates, maykey 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 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 reformsability 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.

conduct business.

We are subject to cybersecuritycybersecurity 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 and other cyber threats could expose us to the loss or misuse of our technology systems or 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 other penalties, which could be significant. Management isWe are not aware of a cybersecurity incident that has had a material impact on our operations.

The NAIC has adopted an Insurance Data Security Model Law, which, when adopted bymaterially affected 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 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 (potentiallyCompany, 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, 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 orstrategy, results of operations but our insuranceor financial condition.

We are dependent on brokers and reinsurance companiesagents for business developments.
We rely on brokers and agents. Our relationship with this distribution network is based on quality of underwriting, claim services, financial strength and other factors, which could incur additional costs resultingweaken.
Analytical models used in decision making could vary materially from compliance withactual results.
As a financial services company, we are exposed to model risk. We utilize financial models to derive metrics and drive analysis to assist in decision making across key areas, such lawsas pricing, underwriting, reserving, investment management, ceding business, capital allocation and regulations.

11

The continuing COVID-19 pandemic has adversely affected,risk management. These models may not operate properly, may contain incorrect information and errors and may materially and adversely affect, our results of operations, financial position and liquidity in the future.

The ongoing COVID-19 pandemic, including the related impactrely on the U.S. and global economies, has adversely affected our results of operations. We expect the pandemic and its impact on our business to continue and potentially even worsen, but we cannot predict the magnitude or duration of its continued impact, particularly given the great uncertainties associated with COVID-19, including regarding the reopening of the U.S. and global economies and the recovery from its economic and other effects. The full impact of COVID-19 on our results of operations, financial position and liquidity is not yet known, and likely will not be known for some time, but includes the following:

Claim Losses Related to COVID-19 May Exceed Reserves: We have established reserves for COVID-19-related losses. Our reserves represent management’s best estimate of what the settlement and claims administration will cost for claims that have occurred, whether reported or unreported. Given the great uncertainties associated with COVID-19 and its impact and the limited information upon which our current assumptions and assessments have been made,projections that are inherently uncertain.

Our operations are subject to business continuation risk.
Across our preliminary reserves and the underlying estimated levelglobal business centers, there is risk that our operations, systems or data, or those of claim losses and costs arising from COVID-19 may materially change.

Adverse Legislative and Regulatory Action:Legislative and regulatory initiatives taken or whichthird parties on whom we rely, may be takendisrupted. We may experience a disruption in response to COVID-19 may adversely affect us. For example, our business may be subject to, certain initiatives, including, but not limited to: legislative and regulatory action that seeks to retroactively mandate coverage for losses which our insurance policies would not otherwise cover and which were not priced to cover; actions prohibiting us from cancelling insurance policies in accordance with our policy terms or non-renewing policies at their natural expiration; and/or orders to provide premium refunds, grant extended grace periods for premium payments, and provide extended time to pay past due premiums. Any such action would likely increase both our underwriting losses and our expenses and any legal challenges to any such action could take years to resolve.

Reduction in Premiums: The demand for insurance is significantly influenced by general economic conditions. Consequently, reduced economic activity relating to the COVID-19 pandemic is likely to decrease demand for our insurance products and services and negatively impact our premium volumes (and, in certain cases, may result in return of premiums due to a decrease in exposures). This may continue for an indefinite period, with the magnitude of the impact impossible to predict.

Investments: Further disruptions in global financial markets due to the continuing impact of COVID-19 could cause us to incur additional unrealized and/or realized investment losses, including credit impairments in our fixed maturity portfolio. In addition, the economic uncertainty resulting from COVID-19 may result in a decline in interest rates, which may negatively impact our future net investment income.

Credit Risk: As credit risk is generally a function of the economy, we face greater credit risk from our policyholders, independent agents and brokers in connection with the payment and remittance of premiumscontinuity as a result of pandemic and public health crises, geopolitical risks including armed conflict and civil unrest, terrorist events, natural disasters, cyber-attacks affecting internet and cloud services. All ultimately result in workforce unavailability among others.

STRATEGIC
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Our industry is highly competitive, and we may not be able to compete successfully in the economic conditions causedfuture.
Our industry is highly competitive and subject to pricing cycles that can be pronounced. We compete globally in the 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.
According to S&P, Group ranks among the top ten global property and casualty reinsurance groups, where more than two-thirds of the market share is concentrated. The worldwide net premium written by COVID-19. Similarly, our credit risk relatedthe Top 40 global reinsurance groups for both life and non-life business was estimated to the reimbursement of deductibles from policyholders andbe $306 billion in connection with reinsurance recoverables has increased.

Operational Disruptions and Costs: Our operations could be disrupted if key members of our senior management or a significant percentage of our workforce or the workforce of our agents, brokers, suppliers or other third party service providers are unable2022 according to continue to work because of illness, government directives or otherwise.data compiled by S&P. In addition to existing competitors, the entry of alternative capital market products and new company formations provide additional sources of reinsurance and insurance capacity, which could reduce our agents, brokers, suppliersmarket share.

SHAREHOLDERS, LEGAL & REGULATION
Applicable insurance laws may have an anti-takeover effect.
Before a person can acquire control of a U.S. insurance company, prior written approval must be obtained from the insurance commissioner of the state where that insurance company is domiciled or deemed commercially domiciled. Prior to granting approval of an application to acquire control of a domestic insurance company, a state insurance commissioner will consider such factors as the financial strength of the applicant, the integrity and other third party service providers, which we rely oncompetence of the applicant’s board of directors and executive officers, the acquiror’s plans for key aspectsthe future operations of our operations, are subjectthe insurance company and any anti-competitive results that may arise from the consummation of the acquisition of control. Because any person who acquired control of Group would thereby acquire indirect control of its insurance company subsidiaries in the United States, the insurance change of control laws of Delaware and California would apply to risks and uncertainties related tosuch a transaction. This could have the COVID-19 pandemic, which may interfere with their ability to fulfill their respective commitments and responsibilities to us ineffect of delaying or even preventing such a timely manner and in accordance with the agreed-upon terms. In response to the COVID-19 pandemic, we have implemented remote working policies which have resulted in disruptions to our business routines, heightened risk to cybersecurity attacks and data security incidents and a greater dependency on internet and telecommunication access and capabilities.

change of control.

12

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.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” transactions. Such “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 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 penalizefine 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 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 regulations or developing new capital adequacy directives for insurers and reinsurers. The future impact of such initiatives or new initiatives from the current Government Administration,governmental authorities, if any, on our operation, net income (loss) or financial condition cannot be determined at this time.

Risk Relating

Regulatory and legislative developments related to our seCURITIES

Because of our holding company structure, our ability to pay dividends, interest and principal is dependentcybersecurity could have an adverse impact on our receiptbusiness.

18
Table of dividends, loan paymentsContents
In October 2017, the NAIC adopted the Insurance Data Security Model Law, which was intended to establish the standards for data security and for the investigation and notification of data breaches applicable to insurance licensees in states adopting such law, requiring insurers, and other funds from our subsidiaries.

entities required to be licensed under state insurance laws to comply with certain requirements, such as developing and maintaining a written information security program, conducting risk assessments and overseeing the data security practices of third-party vendors. The Insurance Data Security Model Law has now adopted in 23 states. In addition, certain state insurance regulators are developing or have developed their own regulations that may impose additional regulatory requirements relating to cybersecurity on insurance and reinsurance companies. For example, the New York State Department of Financial Services has an applicable regulation pertaining to cybersecurity for all banking and insurance entities under its jurisdiction, effective as of March 1, 2017 and amended on November 1, 2023. The SEC has also adopted new rules effective September 5, 2023 to enhance and standardize disclosures regarding cybersecurity risk management, strategy, governance and incidents. We are a holding company, whose most significant asset consists ofcannot predict the stock of our operating subsidiaries. As a result, our ability to pay dividends, interest or other paymentsimpact these laws and regulations will have on our securities in the future will depend on the earningsbusiness, financial condition or results of operations, but our insurance 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 and other factors beyond our control. Payment of dividends and advances and repaymentsreinsurance companies could incur additional costs resulting from some of the operating subsidiaries are regulated by U.S., state and foreign insurancecompliance with such 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.

regulations.

13

Risk Relating to taxation

If U.S. tax law changes, our net income may be impacted.

The 2017 TCJA addressed what some members of Congress 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 (“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.

ITEM 1B.UNRESOLVED STAFF COMMENTS

None.
ITEM 1C.    CYBERSECURITY
Cybersecurity Risk Management and Strategy
Everest has aligned and operationalized its cybersecurity program and controls to the National Institute of Standards and Technology (“NIST”) Cybersecurity Incident Response Framework to provide preventative, detective and responsive measures that are timely, comprehensive, systematic, and in alignment with industry standards, regulatory requirements, and the Company’s risk management framework.

None.As part of the Company’s cybersecurity program, Everest has established cross-functional teams with roles and responsibilities for cybersecurity incident response. The Company has a formal incident response escalation process, which involves a dedicated Security Operation Center (“SOC”) as well as a cybersecurity incident response team (“CSIRT”), to further escalate to senior management and the Board, as appropriate. While the actual methods of incident response employed may differ based on the type and nature of the incident, our approach uses a combination of internal teams, external advisors and vendors with specialized skills to support the response and recovery efforts, including a process for escalating issues as needed to senior management and providing timely notification of cybersecurity incidents to law enforcement and regulatory bodies, as appropriate.

Everest uses a multi-layered process for assessing, identifying and managing material risks from cybersecurity threats and manages its systems and processes both internally and with the assistance of specialized third-party service providers.

The Company obtains timely cyber-threat intelligence from various sources and maintains intrusion detection, network firewall protections, advanced threat protection, endpoint detection and response, email filtering, DDoS and other protections to secure the company’s critical infrastructure.The SOC provides enhanced early detection of threat intelligence services, actively manages security tools, and monitors and responds to security alerts. The SOC also initiates incident response protocols, including escalating threats as needed to the CSIRT, including the Chief Information Security
19
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Officer (“CISO“), who can further escalate to other members of senior management and the Board, as may be appropriate. Various processes, including compiling security metrics, vulnerability scans, regular patching of software and hardware vulnerabilities, external penetration testing, internal phishing tests, red team exercises, and cyber incident response exercises are used to test the effectiveness of the overall cybersecurity control environment. In addition to periodic self-assessment of various cybersecurity controls, the Company conducts annual independent NIST assessments to review its cybersecurity posture and to identify opportunities to enhance its cybersecurity controls and mitigate cybersecurity risk.
Everest outsources certain business, technological and administrative functions and relies on third-party vendors to perform certain functions or provide certain services on its behalf.The Company negotiates contractual provisions to address identified cybersecurity risk(s) with third-party vendors. Third party security assessments of these vendors are also performed as part of the Company’s third-party vendor management processes. The Company also maintains processes to oversee and manage material risks from cybersecurity threats associated with its use of third-party service providers.
Everest provides resources and learning opportunities to educate all of our colleagues on how to identify, report, and be vigilant against cybersecurity threats in the workplace.In addition, we conduct cybersecurity incident simulation exercises with business, information technology, management, and other key stakeholders to practice and test response processes.Furthermore, the Company collaborates with industry associations, government and regulatory authorities, peer companies and external advisors to monitor the threat environment and to inform its cybersecurity practices.
For the year ended December 31, 2023, Everest has not experienced any cybersecurity incident that materially affected the Company, including its business strategy, results of operations or financial conditions.
Governance
Cybersecurity threats present a persistent and dynamic threat to our entire industry.The Company views cybersecurity risk as an enterprise-wide concern that involves people, processes and technology.Accordingly, the Board of Directors of Group, through the RMC, referenced above in ITEM 1 “Business” - Enterprise Risk Management, has ultimate responsibility for risk oversight, as described more fully in our Proxy Statement, while management is tasked with the day-to-day management of the Company’s cybersecurity risks. The Company’s Board has a practical understanding of information systems and technology use in our business operations and processes, as well as a recognition of the risk management aspects of cyber risks and cybersecurity.The RMC, which oversees controls for the Company's major risk exposures, has principal responsibility for oversight of cybersecurity risk.
The Company also appointed a certified Chief Information Security Officer (“CISO”) with significant public and private cybersecurity experience. The CISO is dedicated to assessing the Company’s data security risk, monitoring cyber threat intelligence and taking the steps necessary to implement pertinent safeguards and protocols to manage the risk.In addition, the Executive Risk Committee (“ERC”), referenced above in ITEM 1 “Business” - Enterprise Risk Management, annually reviews the Company’s cyber exposure across all lines of business and security safeguards for privacy-protected data held by the Company. The ERC, through its sub-committees, including the Operational Risk Committee and the Global IT and Cyber Risk Management Committee, works in conjunction with the Company’s CISO to assess the Company’s vulnerabilities to cybersecurity threats, including the operational risk of such threats to our business, as continuous dialogue throughout the year is essential in assessing the operational risk to our business of cybersecurity threats. The Operational Risk Committee and the Global IT and Cyber Risk Management Committee sub-committees meet quarterly in advance of the quarterly ERC meetings to, among other things, report on material cybersecurity risks.
From a governance perspective, in addition to the CISO, senior members of Information Technology provide briefs on cybersecurity matters, the overall cyber resiliency posture of the Company, and the effectiveness of the Company’s cybersecurity program to the RMC. The topics covered by these updates include the Company's activities, policies and procedures to prevent, detect and respond to cybersecurity incidents, as well as lessons learned from cybersecurity incidents and internal and external testing of our cyber defenses.

ITEM 2.PROPERTIES

Everest Re’s corporate offices are located in approximately 321,500 square feet of leased office space in Warren, New Jersey. The Company’s 18 other 17 locations occupy a total of approximately 212,800233,360 square feet, all of which are leased.

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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.

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, 2021,2023, all of the Company’s common stock was owned by Holdings Ireland and was not publicly traded.

14

Dividend History and Restrictions.

The Company

Holdings did not pay any dividends in 2021, 20202023, 2022 and 2019.2021. The declaration and payment of future dividends, if any, by the CompanyHoldings will be at the discretion of the Board of Directors and will depend upon many factors, including the Company’sHoldings’ 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 CompanyHoldings 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 $5.7$7.0 billion at December 31, 2021,2023, 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 the prior calendar year. TheAccordingly, as of December 31, 2023, the maximum amount that iswill be available for the payment of dividends by Everest Re without triggering the requirement for prior approval of regulatory authorities in 2022 without prior regulatory approvalconnection with a dividend is $571.7$877 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.

    [RESERVED]

ITEM 7.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. Itcondition for the years ended December 31, 2023 and 2022. This discussion should be read in conjunction with the Consolidated Financial Statements and accompanying notes thereto presentedrelated Notes, under ITEM 8 “Financial Statementsof this Form 10-K. Pursuant to the FAST Act Modernization and Supplementary Data”.Simplification of Regulation S-K, comparisons between 2022 and 2021 have been omitted from this Form 10-K but can be found in
21
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"Management's Discussion and Analysis of Financial Condition and Results of Operations" in Part II, Item 7 of our Form 10-K for the year ended December 31, 2022.
All comparisons in this discussion are to the corresponding prior year unless otherwise indicated.
Industry Conditions.

The worldwide reinsurance and insurance businesses are highly competitive, as well as cyclical by product and market. As such,a result, 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.

We compete in the U.S. and international reinsurance and insurance markets with numerous global competitors. 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, and certain government sponsored risk transfer vehicles. Some of these competitors have greater financial resources than we do 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.

15

Worldwide insurance and reinsurance market conditions historically have been 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 financialFinancial instruments such as side cars, catastrophe bonds and collateralized reinsurance funds, providedprovide capital markets with access to insurancereinsurance and reinsuranceinsurance risk exposure. The capital markets demand for these products was beingis primarily driven by a low interest environment and the desire to achieve greater risk diversification and potentially higher returns on their investments. This increased competition was generally havinghas a negative impact on rates, terms and conditions; however, the impact varies widely by market and coverage.

The industry continues to deal with the impacts of a global pandemic, COVID-19 and its subsequent variants. We activated our operational resiliency plan across our global footprint and all of our critical operations are functioning effectively from remote locations. We continue to service and meet the needs of our clients while ensuring the safety and health of our employees and customers.

Prior to the pandemic, there was a growing industry consensus that there was some firming of (re)insurance rates for the areas impacted by the Based on recent catastrophes. The increased frequency of catastrophe losses in 2020 and 2021 appears to be further pressuring the increase of rates. As business activity continues to regain strength, rates also appear to be firming in most lines of business, particularlycompetitive behaviors in the casualtyreinsurance and insurance industry, natural catastrophe events and the macroeconomic backdrop, there has been dislocation in the market which has had a positive impact on rates and terms and conditions, generally, though specifics in local markets can vary.

Specifically, recent market conditions in property, particularly catastrophe excess of loss, have resulted in rate increases. As a result of the rate increases, most of the lines that had seen significant losses such as excess casualty and directors’ and officers’ liability.within property have been affected. Other casualty lines arehave been experiencing modest rate increase,increases, while some lines such as workers’ compensation wereand directors and officers liability have been experiencing softer market conditions. It is too early to tell what theThe impact on pricing conditions will be but it is likely to change depending on the line of business and geography.

While we are unable to predict the full impact the pandemic will have on the insurance industry as it continues to have a negative impact on the global economy, we are well positioned to continue to service our clients. Our capital position remains a source of strength, with high qualityhigh-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 recent emergence of the Middle East war and the ongoing war in the Ukraine are evolving events. Economic and legal sanctions have been levied against Russia, specific named individuals and entities connected to the Russian government, as well as businesses located in the Russian Federation and/or owned by Russian nationals in numerous countries, including the United States. The significant political and economic uncertainty surrounding these wars and associated sanctions have impacted economic and investment markets both within Russia, Ukraine, the Middle East region, and around the world.

16

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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)

2021

 

2020

 

2019

 

2021/2020

 

2020/2019

Gross written premiums

$

9,331.0

 

$

7,957.0

 

$

7,053.1

 

 

17.3%

 

12.8%

Net written premiums

 

7,719.4

 

 

6,638.7

 

 

5,774.9

 

 

16.3%

 

15.0%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

REVENUES:

 

 

 

 

 

 

 

 

 

 

 

 

 

Premiums earned

$

7,178.6

 

$

6,406.6

 

$

5,489.0

 

 

12.1%

 

16.7%

Net investment income

 

745.0

 

 

375.9

 

 

356.2

 

 

98.2%

 

5.5%

Net realized capital gains (losses)

 

501.3

 

 

49.8

 

 

419.4

 

 

NM

 

-88.1%

Other income (expense)

 

23.4

 

 

(14.6)

 

 

(1.6)

 

 

NM

 

NM

Total revenues

 

8,448.2

 

 

6,817.7

 

 

6,263.0

 

 

23.9%

 

8.9%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

CLAIMS AND EXPENSES:

 

 

 

 

 

 

 

 

 

 

 

 

 

Incurred losses and loss adjustment expenses

 

5,386.9

 

 

4,608.1

 

 

3,829.1

 

 

16.9%

 

20.3%

Commission, brokerage, taxes and fees

 

1,512.5

 

 

1,373.4

 

 

1,270.1

 

 

10.1%

 

8.1%

Other underwriting expenses

 

454.1

 

 

401.0

 

 

350.9

 

 

13.2%

 

14.3%

Corporate expense

 

33.3

 

 

16.0

 

 

13.1

 

 

108.5%

 

22.4%

Interest, fee and bond issue cost amortization expense

 

70.0

 

 

35.7

 

 

34.9

 

 

96.2%

 

2.1%

Total claims and expenses

 

7,456.8

 

 

6,434.2

 

 

5,498.1

 

 

15.9%

 

17.0%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

INCOME (LOSS) BEFORE TAXES

 

991.5

 

 

383.5

 

 

765.0

 

 

158.5%

 

-49.9%

Income tax expense (benefit)

 

191.6

 

 

31.7

 

 

135.2

 

 

NM

 

-76.6%

NET INCOME (LOSS)

$

799.8

 

$

351.9

 

$

629.7

 

 

127.3%

 

-44.1%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

RATIOS:

 

 

 

 

 

 

 

 

 

 

Point Change

Loss ratio

 

75.0%

 

 

71.9%

 

 

69.8%

 

 

3.1

 

2.1

Commission and brokerage ratio

 

21.1%

 

 

21.4%

 

 

23.1%

 

 

(0.3)

 

(1.7)

Other underwriting expense ratio

 

6.3%

 

 

6.3%

 

 

6.4%

 

 

-

 

(0.1)

Combined ratio

 

102.4%

 

 

99.6%

 

 

99.3%

 

 

2.8

 

0.3

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

At December 31,

 

Percentage Increase/ (Decrease)

(Dollars in millions)

2021

 

2020

 

2019

 

2021/2020

 

2020/2019

Balance sheet data:

 

 

 

 

 

 

 

 

 

 

 

 

 

Total investments and cash

$

19,718.8

 

$

15,910.2

 

$

11,956.3

 

 

23.9%

 

33.1%

Total assets

 

27,695.0

 

 

23,640.2

 

 

19,626.1

 

 

17.2%

 

20.5%

Loss and loss adjustment expense reserves

 

13,121.2

 

 

11,578.1

 

 

10,129.1

 

 

13.3%

 

14.3%

Total debt

 

3,088.6

 

 

1,910.4

 

 

633.8

 

 

61.7%

 

201.4%

Total liabilities

 

20,656.9

 

 

17,225.9

 

 

13,768.7

 

 

19.9%

 

25.1%

Stockholder's equity

 

7,038.0

 

 

6,414.3

 

 

5,857.4

 

 

9.7%

 

9.5%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(Some amounts may not reconcile due to rounding)

(NM, not meaningful)

Years Ended December 31,Percentage Increase/(Decrease)
(Dollars in millions)2023202220212023/20222022/2021
Gross written premiums$11,117 $9,677 $9,331 14.9 %3.7 %
Net written premiums9,212 8,032 7,719 14.7 %4.0 %
REVENUES:
Premiums earned$8,536 $7,876 $7,179 8.4 %9.7 %
Net investment income993 638 745 55.5 %(14.3)%
Net gains (losses) on investments(180)(982)501 (81.6)%NM
Other income (expense)(11)(6)23 NMNM
Total revenues9,337 7,526 8,448 24.1 %(10.9)%
CLAIMS AND EXPENSES:
Incurred losses and loss adjustment expenses5,578 5,823 5,387 (4.2)%8.1 %
Commission, brokerage, taxes and fees1,851 1,632 1,513 13.4 %7.9 %
Other underwriting expenses574 501 454 14.5 %10.5 %
Corporate expense18 26 33 (31.1)%(22.9)%
Interest, fee and bond issue cost amortization expense134 101 70 33.2 %44.3 %
Total claims and expenses8,156 8,083 7,457 0.9 %8.4 %
INCOME (LOSS) BEFORE TAXES1,181 (557)991 NMNM
Income tax expense (benefit)210 (112)192 NMNM
NET INCOME (LOSS)$972 $(445)$800 NMNM
RATIOS:Point Change
Loss ratio65.3 %73.9 %75.0 %(8.6)(1.1)
Commission and brokerage ratio21.7 %20.7 %21.1 %1.0 (0.4)
Other underwriting expense ratio6.7 %6.4 %6.3 %0.3 0.1 
Combined ratio93.8 %101.0 %102.4 %(7.2)(1.4)
At December 31,Percentage Increase/ (Decrease)
(Dollars in millions)2023202220212023/20222022/2021
Balance sheet data:
Total investments and cash$23,439 $19,195 $19,719 22.1 %(2.7)%
Total assets31,638 27,957 27,695 13.2 %0.9 %
Loss and loss adjustment expense reserves15,796 14,977 13,121 5.5 %14.1 %
Total debt3,385 3,084 3,089 9.8 %(0.2)%
Total liabilities24,451 22,303 20,657 9.6 %8.0 %
Stockholder's equity7,187 5,654 7,038 27.1 %(19.7)%
(Some amounts may not reconcile due to rounding)
(NM - not meaningful)
Revenues.

Premiums. Gross written premiums increased by 17.3%14.9% to $9.3$11.1 billion in 2021,2023, compared to $8.0$9.7 billion in 2020,2022, reflecting a $762.5 million,$1.3 billion, or 14.5%,22.1% increase in our reinsurance business and a $611.5$138 million, or 22.7%,3.6% increase

17

in our insurance business. The riseincrease in reinsurance premiums was due to increases in mostreflects growth across all lines of business, notably casualtyparticularly property pro rata, business, casualtyand property excess of loss business, property pro rata business and property catastrophe excess of loss business as well as positive impact from the movement of foreign exchange rates.business. The riseincrease in insurance premiums was mainly due to increases inreflects growth across

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multiple lines of business, particularly specialty casualty business, professional liability business and property/short tail business including property.and other specialty business, driven by positive rate and exposure increases, new business and strong renewal retention. Net written premiums increased by 16.3%14.7% to $7.7$9.2 billion in 2021,2023, compared to $6.6$8.0 billion in 20202022. Premiums earned increased by 8.4% to $8.5 billion in 2023, compared to $7.9 billion in 2022, which is consistent with the changepercentage changes in gross written premiums. Premiums earned increased by 12.1% to $7.2 billion in 2021, compared to $6.4 billion in 2020. The change in premiums earned relative to net written premiums is primarily the result of timing; premiums are earned ratably over the coverage period whereas written premiums are generally recorded at the initiation of the coverage period.

Other Income (Expense). We recorded other incomeexpense of $23.4$11 million and other expense of $14.6$6 million in 20212023 and 2020,2022, respectively. The changes werechange was primarily the result of fluctuations in foreign currency exchange rates.

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.indicated:

Years Ended December 31,
(Dollars in millions)Current
Year		Ratio %/
Pt Change		Prior
Years		Ratio %/
Pt Change		Total
Incurred		Ratio %/
Pt Change
2023
Attritional (a)
$5,254 61.5 %$1 — %$5,255 61.6 %
Catastrophes346 4.0 %(22)(0.3)%323 3.8 %
Total$5,599 65.6 %$(21)(0.3)%$5,578 65.3 %
2022
Attritional (a)
$4,828 61.3 %$11 0.1 %$4,839 61.4 %
Catastrophes987 12.5 %(4)0.0 %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 %
Catastrophes943 13.1 %(3)— %940 13.1 %
Total$5,382 74.9 %$5 0.1 %$5,387 75.0 %
Variance 2023/2022
Attritional (a)
$426 0.3  pts$(11)(0.1) pts$416 0.1  pts
Catastrophes(642)(8.5) pts(18)(0.2) pts(660)(8.7) pts
Total$(215)(8.2) pts$(29)(0.3) pts$(244)(8.6) pts
Variance 2022/2021
Attritional (a)
$389 (0.5) pts$3 —  pts$392 (0.5) pts
Catastrophes44 (0.6) pts(1)—  pts43 (0.6) pts
Total$433 (1.1) pts$2 —  pts$436 (1.1) pts
(a)

 

Total

 

Current

 

Ratio %/

 

Prior

 

Ratio %/

 

Total

 

Ratio %/

(Dollars in millions)

Year

 

Pt Change

 

Years

 

Pt Change

 

Incurred

 

Pt Change

2021

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Attritional (a)

$

4,438.8

 

61.8%

 

 

$

8.0

 

0.1%

 

 

$

4,446.9

 

61.9%

 

Catastrophes

 

942.7

 

13.1%

 

 

 

(2.7)

 

—%

 

 

 

940.0

 

13.1%

 

Total

$

5,381.5

 

74.9%

 

 

$

5.3

 

0.1%

 

 

$

5,386.9

 

75.0%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2020

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Attritional (a)

$

3,997.2

 

62.4%

 

 

$

213.5

 

3.3%

 

 

$

4,210.8

 

65.7%

 

Catastrophes

 

410.6

 

6.4%

 

 

 

(13.2)

 

-0.2%

 

 

 

397.4

 

6.2%

 

Total

$

4,407.8

 

68.8%

 

 

$

200.3

 

3.1%

 

 

$

4,608.1

 

71.9%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Variance 2021/2020

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Attritional (a)

$

441.6

 

(0.6)

pts

 

$

(205.5)

 

(3.2)

pts

 

$

236.1

 

(3.8)

pts

Catastrophes

 

532.2

 

6.7

pts

 

 

10.4

 

0.2

pts

 

 

542.6

 

6.9

pts

Total

$

973.8

 

6.1

pts

 

$

(195.0)

 

(3.0)

pts

 

$

778.7

 

3.1

pts

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Variance 2020/2019

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Attritional (a)

$

725.8

 

2.8

pts

 

$

229.5

 

3.6

pts

 

$

955.3

 

6.4

pts

Catastrophes

 

(102.7)

 

(3.0)

pts

 

 

(73.5)

 

(1.3)

pts

 

 

(176.3)

 

(4.3)

pts

Total

$

623.0

 

(0.2)

pts

 

$

155.9

 

2.3

pts

 

$

779.0

 

2.1

pts

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(a) Attritional losses exclude catastrophe losses.

(Some amounts may not reconcile due to rounding.)

Attritional losses exclude catastrophe losses.

(Some amounts may not reconcile due to rounding.)
Incurred losses and LAE increaseddecreased by 16.9%4.2% to $5.4$5.6 billion in 20212023 compared to $4.6$5.8 billion in 2020,2022, primarily due to an increasea decrease of $532.2$642 million in current year catastrophe losses, andpartially offset by an increase of $441.6$426 million in current year attritional losses including the impact of a change in the Company’s reinsurance program with an affiliate,

18

partially offset by more favorable development on prior year attritional losses in 2021 compared to 2020.losses. The increase isin current year attritional losses was mainly relateddue to the impact of the increase in premiums earned, partially mitigated by $154.8earned. Net favorable development on prior year attritional losses was $11 million, where Reinsurance had favorable development of COVID-19 losses incurred in 2020 which did not recur in 2021,$333 million and an increaseInsurance had unfavorable development of $532.2 million in current year catastrophe losses.$322 million. The current year catastrophe losses of $942.7$346 million in 20212023 related primarily related to the 2023 Turkey earthquakes ($92 million), Hurricane IdaOtis ($423.284 million), the Texas winter2023 New Zealand storms ($288.241 million), the European floods2023 Morocco earthquake ($107.840 million), the Canada drought loss2023 Hawaii wildfire ($80.026 million), and the Quad State TornadoesHurricane Idalia ($42.020 million), with the rest of theremaining losses emanatingresulting from the 2021 Australia floods.various storm events. The current year catastrophe losses of $410.6$987 million in 20202022 related primarily to Hurricane LauraIan ($115.0768 million), the Northern California wildfires2022 Australia floods

24
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($75 million), the 2022 South Africa flood ($44.143 million), Hurricane ZetaFiona ($36.527 million), Hurricane Sallyand the 2022 Canada derecho ($31.420 million), with the California Glass wildfire ($29.5 million),remaining losses resulting from various storm events.
The Company had up to $350 million of catastrophe bond protection (“CAT Bond”) that attaches at a $48.1 billion Property Claims Services (“PCS”) Industry loss threshold. This recovery would be recognized on a pro-rata basis up to a $63.8 billion PCS Industry loss level. As a result of Hurricane Ian, PCS’s current industry estimate of $48.2 billion issued in February 2024 exceeds the Nashville tornadoes ($22.8 million),attachment point. The potential recovery under the Derecho storms ($20.5 million), Hurricane Isaias ($20.0 million), Hurricane Delta ($18.5 million),CAT Bond is not expected to be material. As a result, no portion of the Calgary stormspotential CAT bond recovery has been included in Canada ($17.4 million), Oregon wildfires ($17.0 million), the U.S. Civil Unrest ($14.5 million)Company’s current financial results.
The stop loss agreements between Everest Re and Bermuda Re that were effective for 2018 and 2019 were both commuted during the Queensland hailstorm ($10.0 million),third quarter of 2023. The commutations of the Australia East Coast storm ($6.8 million) andagreements resulted in the 2020 Australia fires ($6.5 million).

recognition of an aggregate loss of $37 million for Everest Re. The impact of the commutations are embedded within the Reinsurance Segment’s net favorable development on prior year attritional losses.

Commission, Brokerage, Taxes and Fees. Commission, brokerage, taxes and fees increased to $1.5$1.9 billion in 20212023 compared to $1.4$1.6 billion in 2020.2022. The increase was mainlyprimarily due to increasesthe impact of the increase in premiums earned and changes in the mix of business.

Other Underwriting Expenses. Other underwriting expenses were $454.1$574 million and $401.0$501 million in 20212023 and 2020,2022, respectively. The increase in other underwriting expenses in 2021 was mainly due to the continued build out of our insurance operations, and growth overall; broadly in line withincluding an expansion of the year over year increase in premiums earned.insurance platform.

Corporate Expenses. Corporate expenses, which are general operating expenses that are not allocated to segments, were $33.3$18 million and $16.0$26 million for the years ended December 31, 20212023 and 2020,2022, respectively. The variances weredecrease from 2023 to 2022 was mainly due to higher compensation costs from increased staff count.a greater percentage of general expenses being allocated to operating segments.

Interest, Fees and Bond Issue Cost Amortization Expense. Interest, fees and other bond amortization expense were $70.0$134 million and $35.7$101 million in 20212023 and 2020,2022, respectively. The increase in interest expense was primarily due to the issuance of $1.0 billion of senior notes in October 2020 and 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 termlong-term subordinated notes, which is reset quarterly per the note agreement. The floating rate was 2.54%8.03% as of December 31, 2021.2023 compared to 6.99% as of December 31, 2022.

Income Tax Expense (Benefit). The Company had an income tax expense of $191.6$210 million and $31.7income tax benefit of $112 million in 20212023 and 2020,2022, 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) on investments as well as changes in tax exempt investment income and creditable foreign taxes. The change infrom income tax benefit to income tax expense resulted primarily from higher investmentimprovement in pre-tax income, decreased capital gainslosses and earned premiums offset by an increase in catastrophe losses.increased fair value of investments.

The Coronavirus Aid, Relief,

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 Economic Security (“CARES”) Act, enactedthe share repurchase excise tax, and do not expect the legislation to have a material impact 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 ratesour results 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 $32.5 million and obtain federal income tax cash refunds of $182.5 million including interest in 2020.

operations.

Net Income (Loss).

Our net income was $799.8$972 million and $351.9net loss was $445 million in 20212023 and 2020,2022, respectively. The change was primarily driven by the financial component fluctuations explained above.

underwriting income of $533 million and net investment income of $993 million, partially offset by realized losses on investments of $180 million.

19

Ratios.

Our combined ratio increaseddecreased by 2.87.2 points to 102.4%93.8% in 20212023 compared to 99.6%101.0% in 2020.2022. The loss ratio component increaseddecreased by 3.18.6 points in 20212023 over the same period last year. The increase wasyear mainly due to higher current yeara decline of $642 million in catastrophe losses, partially offset by COVID 19 losses in 2020 which did not recur in 2021.losses. The commission and brokerage ratio component decreasedcomponents increased to 21.1%21.7% in 20212023 compared to 21.4%20.7% in 2020,2022, reflecting changes in affiliated reinsurance agreements and changes in the mix of business. The other underwriting expense ratio remained the same at 6.3%slightly increased to 6.7% in 2021 and 2020.

2023 from 6.4% in 2022. The increase was mainly due to higher insurance operations costs.

Stockholder's Equity.

Stockholder’s equity increased by $623.7 million$1.5 billion to $7.0$7.2 billion at December 31, 20212023 from $6.4$5.7 billion at December 31, 2020,2022, principally as a result of $799.8$972 million of net income, $527 million of net unrealized appreciation on investments, net
25
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of tax, $17 million of net foreign currency translation adjustments and $23.5$17 million of net benefit plan obligation adjustments, partially offset by $191.3 million of net unrealized depreciation on investments, net of tax and $8.7 million of net foreign currency translation adjustments.

Consolidated Investment Results

Net Investment Income.

Net investment income increased by 98.2%55.5% to $745.0$993 million in 20212023 compared to $375.9$638 million in 2020.2022. The increase in 2021 was primarily the result of an increase of $312 million in income from fixed maturity investments and an increase of $59 million in short-term investments and cash, partially offset by a significant increasedecrease of $35 million in limited partnership income and higher income from other alternative investments.income. The limited partnership income primarily reflects increaseschanges 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)

2021

 

2020

 

2019

Fixed maturities

$

343.7

 

$

305.4

 

$

273.1

Equity securities

 

15.3

 

 

11.5

 

 

10.8

Short-term investments and cash

 

0.5

 

 

3.0

 

 

10.2

Other invested assets

 

 

 

 

 

 

 

 

Limited partnerships

 

321.1

 

 

48.9

 

 

43.3

Dividends from preferred shares of affiliate

 

31.0

 

 

31.0

 

 

31.0

Other

 

62.9

 

 

1.7

 

 

14.1

Gross investment income before adjustments

 

774.5

 

 

401.5

 

 

382.6

Funds held interest income (expense)

 

7.7

 

 

5.7

 

 

6.5

Interest income from Parent

 

6.0

 

 

5.2

 

 

0.2

Gross investment income

 

788.1

 

 

412.3

 

 

389.3

Investment expenses

 

(43.1)

 

 

(36.4)

 

 

(33.1)

Net investment income

$

745.0

 

$

375.9

 

$

356.2

 

 

 

 

 

 

 

 

 

(Some amounts may not reconcile due to rounding.)

 

 

 

 

 

 

 

 

Years Ended December 31,
(Dollars in millions)202320222021
Fixed maturities$822 $510 $344 
Equity securities3 16 15 
Short-term investments and cash74 16 1 
Other invested assets
Limited partnerships37 72 321 
Dividends from preferred shares of affiliate31 31 31 
Other59 30 63 
Gross investment income before adjustments1,027 675 774 
Funds held interest income (expense)3 6 8 
Interest income from Parent7 11 6 
Gross investment income1,038 691 788 
Investment expenses46 52 43 
Net investment income$993 $638 $745 
(Some amounts may not reconcile due to rounding.)
The following table shows a comparison of various investment yields for the periods indicated:

 

2021

 

2020

 

2019

Annualized pre-tax yield on average cash and invested assets

4.4

%

 

2.8

%

 

3.2

%

Annualized after-tax yield on average cash and invested assets

3.5

%

 

2.3

%

 

2.6

%

20

202320222021
Annualized pre-tax yield on average cash and invested assets4.5 %3.3 %4.4 %
Annualized after-tax yield on average cash and invested assets3.6 %2.6 %3.5 %
26

Table of Contents

Net Realized Capital Gains (Losses).

on Investments.

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

 

Years Ended December 31,

 

2021/2020

 

2020/2019

(Dollars in millions)

2021

 

2020

 

2019

 

Variance

 

Variance

Gains (losses) from sales:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Fixed maturity securities, market value

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Gains

$

32.7

 

$

24.2

 

$

24.7

 

$

8.5

 

$

(0.5)

Losses

 

(24.5)

 

 

(56.8)

 

 

(17.1)

 

 

32.3

 

 

(39.7)

Total

 

8.2

 

 

(32.6)

 

 

7.6

 

 

40.8

 

 

(40.2)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Fixed maturity securities, fair value

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Gains

 

—

 

 

—

 

 

0.4

 

 

—

 

 

(0.4)

Losses

 

—

 

 

(2.9)

 

 

—

 

 

2.9

 

 

(2.9)

Total

 

—

 

 

(2.9)

 

 

0.4

 

 

2.9

 

 

(3.3)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Equity securities, fair value

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Gains

 

39.1

 

 

37.4

 

 

14.2

 

 

1.7

 

 

23.2

Losses

 

(14.6)

 

 

(45.3)

 

 

(10.1)

 

 

30.7

 

 

(35.2)

Total

 

24.4

 

 

(7.9)

 

 

4.1

 

 

32.3

 

 

(12.0)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other invested assets

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Gains

 

10.0

 

 

7.7

 

 

6.7

 

 

2.3

 

 

1.0

Losses

 

(3.8)

 

 

(6.0)

 

 

(0.7)

 

 

2.2

 

 

(5.3)

Total

 

6.2

 

 

1.7

 

 

6.0

 

 

4.5

 

 

(4.3)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Short Term Investments:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Gains

 

-

 

 

1.1

 

 

0.2

 

 

(1.1)

 

 

0.9

Losses

 

-

 

 

—

 

 

—

 

 

-

 

 

—

Total

 

—

 

 

1.1

 

 

0.2

 

 

(1.1)

 

 

0.9

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total net realized gains (losses) from sales

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Gains

 

81.8

 

 

70.4

 

 

46.3

 

 

11.4

 

 

24.1

Losses

 

(43.0)

 

 

(111.0)

 

 

(27.9)

 

 

68.0

 

 

(83.1)

Total

 

38.8

 

 

(40.6)

 

 

18.4

 

 

79.4

 

 

(59.0)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Allowances for credit losses:

 

(25.9)

 

 

(1.6)

 

 

—

 

 

(24.3)

 

 

(1.6)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other than temporary impairments:

 

—

 

 

—

 

 

(19.6)

 

 

—

 

 

19.6

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Gains (losses) from fair value adjustments:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Fixed maturities, fair value

 

—

 

 

1.9

 

 

1.8

 

 

(1.9)

 

 

0.1

Equity securities, fair value

 

254.1

 

 

276.1

 

 

153.7

 

 

(22.0)

 

 

122.4

Other invested assets, fair value

 

234.3

 

 

(186.1)

 

 

265.2

 

 

420.4

 

 

(451.3)

Total

 

488.4

 

 

91.9

 

 

420.7

 

 

396.5

 

 

(328.8)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total net realized gains (losses)

$

501.3

 

$

49.8

 

$

419.4

 

$

451.5

 

$

(369.6)

21

Years Ended December 31,2023/20222022/2021
(Dollars in millions)202320222021VarianceVariance
Realized gains (losses) from dispositions:
Fixed maturity securities - available for sale
Gains$12 $9 $33 $3 $(24)
Losses(204)(88)(24)(116)(63)
Total(192)(79)8 (114)(87)
Equity securities
Gains8 165 39 (156)126 
Losses— (48)(15)48 (33)
Total8 117 24 (108)93 
Other invested assets
Gains— 18 10 (18)8 
Losses— (5)(4)5 (1)
Total— 13 6 (13)7 
Short-term Investments:
Gains1 — — 1 — 
Losses— — — — — 
Total— — — 1 — 
Total net realized gains (losses) from dispositions
Gains20 192 82 (172)110 
Losses(204)(141)(43)(64)(98)
Total(184)51 39 (235)12 
Allowances for credit losses:(1)(27)(26)26 (1)
Gains (losses) from fair value adjustments:
Fixed maturities— — — — — 
Equity securities(4)(447)254 443 (701)
Other invested assets9 (558)234 567 (793)
Total5 (1,006)488 1,010 (1,494)
Total net gains (losses) on investments$(180)$(982)$501 $801 $(1,483)

(Some amounts may not reconcile due to rounding.)

(Some amounts may not reconcile due to rounding.)

Net gains (losses) on investments during 2023 primarily relate to $184 million of net realized losses from disposition of investments and net losses from fair value adjustments on equity securities of $4 million as a result of equity market declines in 2023, partially offset by net gains of $9 million from fair value adjustments on other invested assets.
Segment Results.

The Company’s operations are comprisedCompany operates through two operating segments. The Reinsurance operation writes worldwide property and casualty reinsurance and specialty lines of its Reinsurance segmentbusiness, on both a treaty and itsfacultative 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 segment. Theseoperation writes property and casualty insurance directly and through brokers, including for surplus lines, and general agents within the United States. The two segments are managed independently, but
27
Table of Contents
conform with corporate guidelines with respect to pricing, risk management, control of aggregate catastrophe exposures, capital, investments and support operations.
Our two operating segments each have executive leadership who are responsible for the overall performance of their respective segments and who are directly accountable to our chief operating decision maker (“CODM”), the Chief Executive Officer of Everest Group, Ltd., who is ultimately responsible for reviewing the business to assess performance, make operating decisions and allocate resources. We report the results of our operations consistent with the manner in which our CODM reviews the business.
During the fourth quarter of 2023, the Company revised the classification and presentation of certain products related to its accident and health business within the segment groupings. These products have been realigned from within the Reinsurance segment to the Insurance segment to appropriately reflect how the business segments are managed. These changes have been reflected retrospectively.
The Company does not review and evaluate the financial results of its operating segments based upon balance sheet data. Management generally monitors and evaluates the financial performance of thesethe two 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. The Company measures its 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. Management has determined that these measures are appropriate and align with how the business is managed. We continue to evaluate our segments as our business evolves and may further refine our segments and financial performance measures.

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:

indicated.

Reinsurance.

The following table presents the underwriting results and ratios for the Reinsurance segment for the periods indicated.indicated:
Years Ended December 31,2023/20222022/2021
(Dollars in millions)202320222021Variance% ChangeVariance% Change
Gross written premiums$7,181 $5,879 $5,979 $1,302 22.1 %$(99)(1.7)%
Net written premiums6,205 5,204 5,217 1,001 19.2 %(13)(0.2)%
Premiums earned$5,637 $5,147 $4,899 $490 9.5 %$247 5.1 %
Incurred losses and LAE3,329 3,926 3,750 (597)(15.2)%176 4.7 %
Commission and brokerage1,545 1,308 1,229 237 18.2 %79 6.4 %
Other underwriting expenses167 138 142 29 20.9 %(4)(2.8)%
Underwriting gain (loss)$596 $(224)$(220)$821 NM$(4)1.7 %
Point ChgPoint Chg
Loss ratio59.0 %76.3 %76.5 %(17.3)(0.3)
Commission and brokerage ratio27.4 %25.4 %25.1 %2.0 0.3 
Other underwriting expense ratio3.0 %2.7 %2.9 %0.3 (0.2)
Combined ratio89.4 %104.4 %104.5 %(15.0)(0.1)
(Some amounts may not reconcile due to rounding.)
(NM - not meaningful)
28
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Years Ended December 31,

 

2021/2020

 

2020/2019

(Dollars in millions)

2021

 

2020

 

2019

 

Variance

 

 

% Change

 

Variance

 

 

% Change

Gross written premiums

$

6,028.2

 

$

5,265.7

 

$

4,600.4

 

$

762.5

 

 

14.5%

 

$

665.3

 

 

14.5%

Net written premiums

 

5,264.7

 

 

4,632.3

 

 

3,923.8

 

 

632.4

 

 

13.7%

 

 

708.5

 

 

18.1%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Premiums earned

$

4,948.7

 

$

4,484.7

 

$

3,796.2

 

$

464.0

 

 

10.3%

 

$

688.5

 

 

18.1%

Incurred losses and LAE

 

3,761.1

 

 

3,209.2

 

 

2,692.7

 

 

551.9

 

 

17.2%

 

 

516.5

 

 

19.2%

Commission and brokerage

 

1,250.1

 

 

1,120.0

 

 

1,027.3

 

 

130.2

 

 

11.6%

 

 

92.7

 

 

9.0%

Other underwriting expenses

 

143.1

 

 

119.3

 

 

110.0

 

 

23.8

 

 

19.9%

 

 

9.3

 

 

8.5%

Underwriting gain (loss)

$

(205.6)

 

$

36.2

 

$

(33.9)

 

$

(241.9)

 

 

NM

 

$

70.1

 

 

(207.6)%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Point Chg

 

 

 

 

 

Point Chg

Loss ratio

 

76.0%

 

 

71.6%

 

 

70.9%

 

 

 

 

 

4.4

 

 

 

 

 

0.7

Commission and brokerage ratio

 

25.3%

 

 

25.0%

 

 

27.1%

 

 

 

 

 

0.3

 

 

 

 

 

(2.1)

Other underwriting expense ratio

 

2.9%

 

 

2.6%

 

 

2.9%

 

 

 

 

 

0.3

 

 

 

 

 

(0.3)

Combined ratio

 

104.2%

 

 

99.2%

 

 

100.9%

 

 

 

 

 

5.0

 

 

 

 

 

(1.7)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(Some amounts may not reconcile due to rounding)

Premiums. Gross written premiums increased by 14.5%22.1% to $6.0$7.2 billion in 20212023 from $5.3$5.9 billion in 2020, primarily due to increases2022. The increase in mostgross written premiums reflects growth across all lines of business, notably casualty pro rata business, casualty excess of loss business,particularly property pro rata, business and property catastrophe excess of loss business. Net written premiums increased by 13.7% to $5.3$6.2 billion in 2021 compared to $4.62023 from $5.2 billion in 2020, which is consistent with the change in gross written premiums.2022. Premiums earned increased 10.3%9.5% to $4.9$5.6 billion in 20212023 compared to $4.5$5.1 billion in 2020.2022. The change in premiums earned relative to net written premiums is primarily the result of timing; premiums are earned ratably over the coverage period whereas written premiums are generally recorded at the initiation of the coverage period.

22
During 2023, the Company refined its premium estimation methodology for its risk attaching reinsurance contracts within its Reinsurance Segment to continue to recognize gross written premium over the term of the treaty, albeit over a different pattern than what was previously used. The refined estimate resulted in an increase of gross written premium for th

e twelve months ended December 31, 2023

period and has further aligned the estimation methodology across the reinsurance division globally. This change had no impact on the total written premium to be recognized over the term of the treaty. There was no impact on net earned premium and therefore, no impact on income from continuing operations, net income, or any related per-share amounts.

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

 

Years Ended December 31,

 

Current

 

Ratio %/

 

Prior

 

Ratio %/

 

Total

 

Ratio %/

(Dollars in millions)

Year

 

Pt Change

 

Years

 

Pt Change

 

Incurred

 

Pt Change

2021

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Attritional

$

3,003.7

 

60.7%

 

 

$

(31.8)

 

(0.6)%

 

 

$

2,971.9

 

60.1%

 

Catastrophes

 

791.9

 

16.0%

 

 

 

(2.7)

 

(0.1)%

 

 

 

789.2

 

15.9%

 

Total segment

$

3,795.6

 

76.7%

 

 

$

(34.5)

 

(0.7)%

 

 

$

3,761.1

 

76.0%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2020

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Attritional

$

2,692.2

 

60.0%

 

 

$

187.3

 

4.2%

 

 

$

2,879.5

 

64.2%

 

Catastrophes

 

342.5

 

7.6%

 

 

 

(12.8)

 

(0.3)%

 

 

 

329.7

 

7.4%

 

Total segment

$

3,034.7

 

67.7%

 

 

$

174.5

 

3.9%

 

 

$

3,209.2

 

71.6%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2019

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Attritional

$

2,140.1

 

56.4%

 

 

$

(15.4)

 

(0.4)%

 

 

$

2,124.7

 

56.0%

 

Catastrophes

 

509.3

 

13.4%

 

 

 

58.7

 

1.5%

 

 

 

568.0

 

14.9%

 

Total segment

$

2,649.4

 

69.8%

 

 

$

43.3

 

1.1%

 

 

$

2,692.7

 

70.9%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Variance 2021/2020

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Attritional

$

311.5

 

0.7

pts

 

$

(219.1)

 

(4.8)

pts

 

$

92.4

 

(4.1)

pts

Catastrophes

 

449.3

 

8.4

pts

 

 

10.1

 

0.2

pts

 

 

459.4

 

8.5

pts

Total segment

$

760.9

 

9.0

pts

 

$

(209.0)

 

(4.6)

pts

 

$

551.8

 

4.4

pts

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Variance 2020/2019

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Attritional

$

552.1

 

3.6

pts

 

$

202.7

 

4.6

pts

 

$

754.8

 

8.2

pts

Catastrophes

 

(166.8)

 

(5.8)

pts

 

 

(71.5)

 

(1.8)

pts

 

 

(238.3)

 

(7.5)

pts

Total segment

$

385.3

 

(2.1)

pts

 

$

131.2

 

2.8

pts

 

$

516.5

 

0.7

pts

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(Some amounts may not reconcile due to rounding.)

Years Ended December 31,
(Dollars in millions)Current
Year		Ratio %/
Pt Change		Prior
Years		Ratio %/
Pt Change		Total
Incurred		Ratio %/
Pt Change
2023
Attritional$3,371 59.8 %$(351)(6.2)%$3,020 53.6 %
Catastrophes330 5.8 %(21)(0.4)%309 5.5 %
Total segment$3,701 65.7 %$(372)(6.6)%$3,329 59.1 %
2022
Attritional$3,077 59.8 %$(18)(0.4)%$3,058 59.4 %
Catastrophes870 16.9 %(3)(0.1)%868 16.9 %
Total segment$3,947 76.7 %$(21)(0.4)%$3,926 76.3 %
2021
Attritional$2,976 60.7 %$(15)(0.3)%$2,961 60.4 %
Catastrophes792 16.2 %(3)(0.1)%789 16.1 %
Total segment$3,767 76.9 %$(18)(0.4)%$3,750 76.5 %
Variance 2023/2022
Attritional$295 —  pts$(333)(5.9) pts$(38)(5.8) pts
Catastrophes(541)(11.1) pts(18)(0.3) pts(559)(11.4) pts
Total segment$(246)(11.0) pts$(351)(6.2) pts$(597)(17.2) pts
Variance 2022/2021
Attritional$101 (1.0) pts$(3)—  pts$98 (1.0) pts
Catastrophes78 0.7  pts— —  pts78 0.7  pts
Total segment$179 (0.2) pts $(3)—  pts $176 (0.3) pts 
(Some amounts may not reconcile due to rounding.)
Incurred losses increaseddecreased by 17.2%15.2% to $3.8$3.3 billion in 20212023 compared to $3.2$3.9 billion in 2020.2022. The increasedecrease was primarily due to $351 million of favorable development on prior year attritional losses in 2023 and a decrease of $541 million in current year catastrophe losses, partially offset by an increase of $449.3 million in current years catastrophe losses and an increase of $311.5$295 million in current year attritional losses including the impact of a change in the Company’s reinsurance program with an affiliate, partially offset by morelosses. The net favorable development on prior yearsyear attritional losses in 2021 comparedmainly related to 2020.a combination of well seasoned mortgage and short-tail business, offset by $37 million of commutations from stop loss agreements between Everest Re and Bermuda Re that are embedded within the Reinsurance Segment’s net favorable development on prior year attritional losses. The increase in current year attritional losses was primarily related to the impact of the increase in premiums earned, partially mitigated by $116.4 million of COVID-19 losses incurred in 2020 which did not recur in 2021.earned. The current year catastrophe losses of $791.9$330 million in 20212023 related primarily related to the 2023 Turkey earthquakes ($92 million), Hurricane IdaOtis ($344.984 million), the Texas winter2023 New Zealand storms ($230.740 million), the European floods2023 Morocco earthquake ($107.840 million), the Canada drought loss
29
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2023 Hawaii wildfire ($80.021 million), and the Quad State TornadoesHurricane Idalia ($27.020 million), with the rest of theremaining losses emanatingresulting from the 2021 Australia floods.various storm events. The current year catastrophe losses of $342.5$870 million in 20202022 related primarily related to Hurricane LauraIan ($96.5669 million), the Northern California wildfires2022 Australia floods ($44.175 million), the California Glass wildfire2022 South Africa flood ($29.543 million), Hurricane ZetaFiona ($28.5 million), Hurricane Isaias ($17.8 million), the Derecho storms ($17.5 million), the Nashville tornadoes ($17.3 million), Oregon wildfires ($17.0 million), Hurricane Delta ($16.5 million), Hurricane Sally ($15.5 million), the Calgary storms in Canada ($14.9 million), the Queensland hailstorm ($10.0 million), the Australia East Coast storm ($6.8 million), the 2020 Australia fires ($6.524 million), and the U.S. Civil Unrest2022 Canada derecho ($4.120 million).

, with the remaining losses resulting from various storm events.

Segment Expenses. Commission and brokerage increased to $1.5 billion in 2023 compared to $1.3 billion in 2021 compared to $1.1 billion in 2020.2022. The increase was mainly due to the impact of the increase in premiums earned and changes in the mix of

23

business. Segment other underwriting expenses increased to $143.1$167 million in 20212023 from $119.3$138 million in 2020, mainly due to the impact of the increase in premiums earned.2022.

Insurance.

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

 

Years Ended December 31,

 

2021/2020

 

2020/2019

(Dollars in millions)

2021

 

2020

 

2019

 

Variance

 

% Change

 

Variance

 

% Change

Gross written premiums

$

3,302.8

 

$

2,691.3

 

$

2,452.7

 

$

611.5

 

 

22.7%

 

$

238.6

 

 

9.7%

Net written premiums

 

2,454.8

 

 

2,006.4

 

 

1,851.2

 

 

448.4

 

 

22.3%

 

 

155.2

 

 

8.4%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Premiums earned

$

2,229.9

 

$

1,921.9

 

$

1,692.9

 

$

308.0

 

 

16.0%

 

$

229.0

 

 

13.5%

Incurred losses and LAE

 

1,625.8

 

 

1,399.0

 

 

1,136.4

 

 

226.9

 

 

16.2%

 

 

262.7

 

 

23.1%

Commission and brokerage

 

262.4

 

 

253.4

 

 

242.8

 

 

9.0

 

 

3.6%

 

 

10.6

 

 

4.4%

Other underwriting expenses

 

311.0

 

 

281.7

 

 

240.9

 

 

29.2

 

 

10.4%

 

 

40.7

 

 

16.9%

Underwriting gain (loss)

$

30.8

 

$

(12.2)

 

$

72.8

 

$

42.9

 

 

NM

 

$

(84.9)

 

 

(116.4)%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Point Chg

 

 

 

 

 

Point Chg

Loss ratio

 

72.9%

 

 

72.8%

 

 

67.1%

 

 

 

 

 

0.1

 

 

 

 

 

5.7

Commission and brokerage ratio

 

11.8%

 

 

13.2%

 

 

14.3%

 

 

 

 

 

(1.4)

 

 

 

 

 

(1.1)

Other underwriting expense ratio

 

13.9%

 

 

14.6%

 

 

14.3%

 

 

 

 

 

(0.7)

 

 

 

 

 

0.3

Combined ratio

 

98.6%

 

 

100.6%

 

 

95.7%

 

 

 

 

 

(2.0)

 

 

 

 

 

4.9

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(Some amounts may not reconcile due to rounding)

(NM, not meaningful)

indicated:

Years Ended December 31,2023/20222022/2021
(Dollars in millions)202320222021Variance% ChangeVariance% Change
Gross written premiums$3,936 $3,798 $3,352 $138 3.6 %$445 13.3 %
Net written premiums3,007 2,828 2,503 180 6.3 %325 13.0 %
Premiums earned$2,900 $2,729 $2,279 $171 6.3 %$450 19.7 %
Incurred losses and LAE2,249 1,897 1,637 353 18.6 %260 15.9 %
Commission and brokerage306 325 284 (18)(5.6)%41 14.3 %
Other underwriting expenses407 364 312 44 12.0 %51 16.5 %
Underwriting gain (loss)$(64)$144 $46 $(207)NM$98 NM
Point ChgPoint Chg
Loss ratio77.6 %69.5 %71.8 %8.1 (2.3)
Commission and brokerage ratio10.6 %11.9 %12.5 %(1.3)(0.6)
Other underwriting expense ratio14.1 %13.3 %13.7 %0.7 (0.4)
Combined ratio102.2 %94.7 %98.0 %7.5 (3.3)
(Some amounts may not reconcile due to rounding)
(NM, not meaningful)
Premiums. Gross written premiums increased by 22.7%3.6% to $3.3$3.9 billion in 20212023 compared to $3.8 billion in 2022. The increase in insurance premiums reflects growth across multiple lines of business, particularly specialty casualty business, property/short tail business and other specialty business, driven by positive rate and exposure increases, new business and strong renewal retention. Net written premiums increased by 6.3% to $3.0 billion in 2023 compared to $2.8 billion in 2022. The higher percentage increase in net written premiums compared to gross written premiums was mainly due to higher net retention resulting from changes in the mix of business. Premiums earned increased by 6.3% to $2.9 billion in 2023 compared to $2.7 billion in 2020. This increase was primarily due to increases in specialty casualty business, professional liability business and short tail business, including property. Net written premiums increased by 22.3% to $2.5 billion in 2021 compared $2.0 billion in 2020 which is consistent with the change in gross written premiums. Premiums earned increased 16.0% to $2.2 billion in 2021 compared to $1.9 billion in 2020.2022. The change in premiums earned relative to net written premiums is primarily the result of timing; premiums are earned ratably over the coverage period whereas written premiums are generally recorded at the initiation of the coverage period.

24

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

 

Years Ended December 31,

 

Current

 

Ratio %/

 

Prior

 

Ratio %/

 

Total

 

Ratio %/

(Dollars in millions)

Year

 

Pt Change

 

Years

 

Pt Change

 

Incurred

 

Pt Change

2021

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Attritional

$

1,435.1

 

64.4%

 

 

$

39.8

 

1.8%

 

 

$

1,475.0

 

66.1%

 

Catastrophes

 

150.8

 

6.8%

 

 

 

-

 

(0.0)%

 

 

 

150.8

 

6.8%

 

Total segment

$

1,586.0

 

71.1%

 

 

$

39.8

 

1.8%

 

 

$

1,625.8

 

72.9%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2020

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Attritional

$

1,305.1

 

67.9%

 

 

$

26.3

 

1.4%

 

 

$

1,331.3

 

69.3%

 

Catastrophes

 

68.0

 

3.5%

 

 

 

(0.4)

 

(0.0)%

 

 

 

67.7

 

3.5%

 

Total segment

$

1,373.1

 

71.4%

 

 

$

25.9

 

1.3%

 

 

$

1,399.0

 

72.8%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Variance 2021/2020

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Attritional

$

130.1

 

(3.5)

pts

 

$

13.6

 

0.4

pts

 

$

143.7

 

(3.2)

pts

Catastrophes

 

82.8

 

3.3

pts

 

 

0.3

 

—

pts

 

 

83.2

 

3.3

pts

Total segment

$

212.9

 

(0.3)

pts

 

$

13.9

 

0.5

pts

 

$

226.8

 

0.1

pts

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Variance 2020/2019

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Attritional

$

173.8

 

1.1

pts

 

$

26.8

 

1.4

pts

 

$

200.6

 

2.5

pts

Catastrophes

 

64.0

 

3.3

pts

 

 

(2.1)

 

(0.1)

pts

 

 

62.0

 

3.2

pts

Total segment

$

237.8

 

4.4

pts

 

$

24.7

 

1.2

pts

 

$

262.7

 

5.7

pts

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(Some amounts may not reconcile due to rounding.)

Years Ended December 31,
(Dollars in millions)Current
Year		Ratio %/
Pt Change		Prior
Years		Ratio %/
Pt Change		Total
Incurred		Ratio %/
Pt Change
2023
Attritional$1,883 64.9 %$352 12.1 %$2,234 77.1 %
Catastrophes16 0.6 %(1)— %15 0.5 %
Total segment$1,899 65.5 %$351 12.1 %$2,249 77.6 %
2022
Attritional$1,751 64.2 %$30 1.1 %$1,781 65.3 %
Catastrophes117 4.3 %(1)— %116 4.3 %
Total segment$1,868 68.5 %$29 1.1 %$1,897 69.5 %
2021
Attritional$1,463 64.2 %$23 1.0 %$1,486 65.2 %
Catastrophes151 6.6 %— — %151 6.6 %
Total segment$1,614 70.8 %$23 1.0 %$1,637 71.8 %
Variance 2023/2022
Attritional$132 0.8  pts$322 11.0  pts$454 11.8  pts
Catastrophes(101)(3.7) pts— —  pts(101)(3.7) pts
Total segment$31 (3.0) pts$322 11.0  pts$353 8.1  pts
Variance 2022/2021
Attritional$288 —  pts$7 0.1  pts$294 —  pts
Catastrophes(34)(2.3) pts(1)—  pts(35)(2.4) pts
Total segment$254 (2.4) pts$6 —  pts$260 (2.3) pts
(Some amounts may not reconcile due to rounding.)
Incurred losses and LAE increased by 16.2%18.6% to $1.6$2.2 billion in 20212023 compared to $1.4$1.9 billion in 2020,2022. The increase was mainly due to $352 million of net unfavorable development on prior year attritional losses in 2023, mainly related to casualty lines in accident years 2016 through 2019 that were impacted by social inflation and an increase of $130.1$132 million of current year attritional losses, and an increasepartially offset by a decrease of $82.8$101 million in current year catastrophe losses. The riseincrease in current year attritional losses was primarily due to the impact of the increase in premiums earned, partially mitigated by $38.4earned. The current year catastrophe losses of $16 million of COVID-19in 2023 related primarily to the 2023 third quarter U.S. storms ($5 million), the 2023 Hawaii wildfire ($5 million) and the 2023 December U.S. East Coast flooding ($5 million), with the remaining losses incurred in 2020 which did not recur in 2021.resulting from various storm events. The $150.8$117 million of current year catastrophe losses in 2021,2022 related primarily related to Hurricane IdaIan ($78.399 million), with the Texas winter storms ($57.5 million) and the Quad State Tornadoes ($15.0 million). The $68.0 million of current year catastropheremaining losses in 2020, primarily related to Hurricane Laura ($18.5 million), Hurricane Sally ($15.9 million), the U.S. Civil Unrest ($10.4 million), Hurricane Zeta ($8.0 million), the Nashville tornadoes ($5.5 million), the Derecho storms ($3.0 million), the Calgary storms in Canada ($2.5 million), Hurricane Isaias ($2.2 million), and Hurricane Delta ($2.0 million).

resulting from various storm events.

Segment Expenses. Commission and brokerage increaseddecreased to $262.4$306 million in 20212023 compared to $253.4$325 million in 2020.2022 primarily due to changes in the mix of business. Segment other underwriting expenses increased to $311.0$407 million in 20212023 compared to $281.7$364 million in 2020.2022. The increases wereincrease was mainly due to the impact of the increasesincrease in premiums earned and expenses related to the continued build out of the insurance business.

LIQUIDITY AND CAPITAL RESOURCES
Capital. Stockholder’s equity at December 31, 2023 and December 31, 2022 was $7.2 billion and $5.7 billion, respectively. Management’s objective in managing capital is to ensure its overall capital level, as well as the capital levels of its operating subsidiaries, exceed the amounts required by regulators, the amount needed to support our current financial strength ratings from rating agencies and our own economic capital models. The Company’s capital has historically exceeded these benchmark levels.

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Our main operating company, Everest Re, is regulated by the State of Delaware’s Department of Insurance. The regulatory body has its own capital adequacy models based on statutory capital as opposed to GAAP basis equity. Failure to meet the required statutory capital levels could result in various regulatory restrictions.
The regulatory targeted capital and the actual statutory capital for Everest Re was as follows:
Everest Re (1)
At December 31,
(Dollars in millions)20232022
Regulatory targeted capital$4,242 $3,353 
Actual capital$6,963 $5,553 
(1)

SAFE HARBOR DISCLOSURE

This report contains forward-looking statements within the meaning Regulatory targeted capital represents 200% of the U.S. federal securities laws.RBC authorized control level calculation for the applicable year.

Our financial strength ratings as determined by A.M. Best, Standard & Poor’s and Moody’s are important as they provide our customers and investors with an independent assessment of our financial strength using a rating scale that provides for relative comparisons. We intend these forward-looking statementscontinue to be coveredpossess significant financial flexibility and access to debt and equity markets as a result of our financial strength, as evidenced by the safe harbor provisions for forward-looking statementsfinancial strength ratings as assigned by independent rating agencies. See also ITEM 1, Business - “Financial Strength Ratings”.
We maintain our own economic capital models to monitor and project our overall capital as well as the capital at our operating subsidiaries. A key input to the economic models is projected income, and this input is continually compared to actual results, which may require a change in the federalcapital strategy.
We repurchased $6 million of our long-term subordinated notes during the third quarter of 2022 and recognized a gain of $1 million on the repurchase. We may continue, from time to time, to seek to retire portions of our outstanding debt securities laws. In some cases, these statements canthrough cash repurchases, in open-market purchases, privately negotiated transactions or otherwise. Such repurchases, if any, will be identified bysubject to and depend on prevailing market conditions, our liquidity requirements, contractual restrictions and other factors. The amounts involved in any such transactions, individually or in the aggregate, may be material.
Liquidity. Our liquidity requirements are generally met from positive cash flow from operations. Positive cash flow results from reinsurance and insurance premiums being collected prior to disbursements for claims, with disbursements generally taking place over an extended period after the collection of premiums, sometimes a period of many years. Collected premiums are generally invested, prior to their use of forward-looking wordsin such as “may”, “will”, “should”, “could”, “anticipate”, “estimate”, “expect”, “plan”, “believe”, “predict”, “potential”disbursements, and “intend”. Forward-looking statements contained in this report include information regarding our reservesinvestment income provides additional funding for loss payments. Our net cash flows from operating activities were $2.4 billion and $2.1 billion for the years ended December 31, 2023 and 2022, respectively.
If disbursements for losses and LAE, policy acquisition costs and other operating expenses were to exceed premium inflows, cash flow from reinsurance and insurance operations would be negative. The effect on cash flow from insurance operations would be partially offset by cash flow from investment income. Additionally, cash inflows from investment maturities of both short-term investments and longer-term maturities are available to supplement other operating cash flows. We do not expect to supplement negative insurance operations cash flows with investment dispositions.
As the impacttiming of payments for losses and LAE cannot be predicted with certainty, we maintain portfolios of long-term invested assets with varying maturities, along with short-term investments that provide additional liquidity for payment of claims. At December 31, 2023 and December 31, 2022, we held cash and short-term investments of $1.8 billion and $1.3 billion, respectively. Our short-term investments are generally readily marketable and can be converted to cash. In addition to these cash and short-term investments, at December 31, 2023, we had $537 million of fixed maturity securities - available for sale maturing within one year or less, $2.3 billion maturing within one to five years and $4.4 billion maturing after five years. We believe that these fixed maturity securities, in conjunction with the TCJA,short-term investments and positive cash flow from operations, provide ample sources of liquidity for the adequacyexpected payment of our provision for uncollectible balances, estimateslosses and LAE in the near future. We do not anticipate selling a significant amount of our catastrophe exposure, the effects of catastrophic and pandemic events on our financial statements and the ability of our subsidiariessecurities to pay dividends. Forward-looking statements only reflect our expectationslosses and LAE. At December 31, 2023, we had $324 million of net pre-tax unrealized depreciation related to fixed maturity - available for sale securities, comprised of $536 million of pre-tax unrealized depreciation and $212 million of pre-tax unrealized appreciation.
Management generally expects annual positive cash flow from operations, which reflects the strength of overall pricing as well as the growth in business written. However, given the catastrophic events observed in recent periods, cash flow from operations may decline and could become negative in the near term as significant claim payments are not guaranteesmade related
32
Table of performance. These statements involve risks, uncertainties and assumptions. Actual events Contents
to the catastrophes. However, as indicated above, the Company has ample liquidity to settle its catastrophe claims and/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.

payments due for its catastrophe bond program.

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 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, 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 securities. Additionally, we have invested in equity securities, private equity and private placement loans.

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 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 $19.7$23.4 billion investment portfolio, atDecember 31, 2021, 2023, 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 $1.9$3.4 billion of mortgage-backed securities in the $12.9$16.8 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.

26

The table below displays the potential impact of marketfair value fluctuations and after-tax unrealized appreciation on our fixed maturity portfolio (including $695.9 million$1.3 billion of short-term investments) for the period indicated based on upward and downward parallel and immediateshifts of 100 and 200 basis point shiftspoints 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 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 theThe market value change under the various interest rate change scenarios.changes scenarios was estimated taking duration into account with modeling done at the individual security level.

Impact of Interest Rate Shift in Basis Points
At December 31, 2023
(Dollars in millions)-200-1000100200
Total Fair Value$19,196 $18,638 $18,081 $17,523 $16,965 
Fair Value Change from Base (%)6.2 %3.1 %— %(3.1)%(6.2)%
Change in Unrealized Appreciation
After-tax from Base ($)$881 $441 $— $(441)$(881)
Impact of Interest Rate Shift in Basis Points
At December 31, 2022
(Dollars in millions)-200-1000100200
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)
33
Table of Contents

 

Impact of Interest Rate Shift in Basis Points

 

 

At December 31, 2021

(Dollars in millions)

-200

 

 

-100

 

 

O

 

 

100

 

 

200

 

Total Market/Fair Value

$

14,300.0

 

 

$

13,927.9

 

 

$

13,556.3

 

 

$

13,184.7

 

 

$

12,813.1

 

Market/Fair Value Change from Base (%)

 

5.5

%

 

 

2.7

%

 

 

-

%

 

 

-2.7

%

 

 

-5.5

%

Change in Unrealized Appreciation

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

After-tax from Base ($)

$

587.2

 

 

$

293.6

 

 

$

—

 

 

$

(293.6)

 

 

$

(587.2)

 

 

Impact of Interest Rate Shift in Basis Points

 

 

At December 31, 2020

 

(Dollars in millions)

-200

 

 

-100

 

 

O

 

 

100

 

 

200

 

Total Market/Fair Value

$

12,041.1

 

 

$

11,696.3

 

 

$

11,351.5

 

 

$

11,006.7

 

 

$

10,661.9

 

Market/Fair Value Change from Base (%)

 

6.1

%

 

 

3.0

%

 

 

-

%

 

 

-3.0

%

 

 

-6.1

%

Change in Unrealized Appreciation

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

After-tax from Base ($)

$

544.8

 

 

$

272.4

 

 

$

—

 

 

$

(272.4)

 

 

$

(544.8)

 

We had $13.1$15.8 billion and $11.6$15.0 billion of gross reserves for losses and LAE as of December 31, 20212023 and December 31, 2020,2022, 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 ofsimilar to the interest rate impacts on the fair value of investments.investments held. 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.

27

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

 

Impact of Percentage Change in Equity Fair/Market Values

 

At December 31, 2021

(Dollars in millions)

-20%

 

-10%

 

0%

 

10%

 

20%

Fair/Market Value of the Equity Portfolio

$

1,406.2

 

$

1,582.0

 

$

1,757.8

 

$

1,933.6

 

$

2,109.4

After-tax Change in Fair/Market Value

 

(277.7)

 

 

(138.9)

 

 

—

 

 

138.9

 

 

277.7

 

Impact of Percentage Change in Equity Fair/Market Values

 

At December 31, 2020

(Dollars in millions)

-20%

 

-10%

 

0%

 

10%

 

20%

Fair/Market Value of the Equity Portfolio

$

1,031.0

 

$

1,159.9

 

$

1,288.8

 

$

1,417.6

 

$

1,546.5

After-tax Change in Fair/Market Value

 

(203.6)

 

 

(101.8)

 

 

—

 

 

101.8

 

 

203.6

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 foreignnon-U.S. 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 foreignnon-U.S. 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 FASBU.S. GAAP guidance, the impact on the marketfair 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.

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 in Percent

 

At December 31, 2021

(Dollars in millions)

-20%

 

-10%

 

0%

 

10%

 

20%

Total After-tax Foreign Exchange Exposure

$

(190.4)

 

$

(95.2)

 

$

—

 

$

95.2

 

$

190.4

 

Change in Foreign Exchange Rates in Percent

 

At December 31, 2020

(Dollars in millions)

-20%

 

-10%

 

0%

 

10%

 

20%

Total After-tax Foreign Exchange Exposure

$

(162.3)

 

$

(81.1)

 

$

—

 

$

81.1

 

$

162.3

Change in Foreign Exchange Rates in Percent
At December 31, 2023
(Dollars in millions)-20%-10%0%10%20%
Total After-tax Foreign Exchange Exposure$(164)$(82)$— $82 $164 
Change in Foreign Exchange Rates in Percent
At December 31, 2022
(Dollars in millions)-20%-10%0%10%20%
Total After-tax Foreign Exchange Exposure$(157)$(79)$— $79 $157 

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.

28

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

None.

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)Act”), our management, including our Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of our disclosure controls and procedures (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.
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Management’s Annual Report on Internal Control Over Financial Reporting

Our management is responsible for establishing and maintaining adequate internal controlscontrol 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, 2021.2023. 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, 2021,2023, our internal control over financial reporting is effective based on those criteria.

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 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 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, we have determined that there has been no such change during the fourth quarter.

ITEM 9B.OTHER INFORMATION

None.

ITEM 9B.    OTHER INFORMATION

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

None.

29

None.
35

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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)

 

2021

 

2020

(1)

Audit Fees

 

$

3,555.1

 

$

3,529.0

(2)

Audit-Related Fees

 

 

281.0

 

 

134.2

(3)

Tax Fees

 

 

614.2

 

 

691.0

(4)

All Other Fees

 

 

16.6

 

 

16.5

(Dollars in millions)20232022
(1)Audit Fees$2.5 $3.4 
(2)Audit-Related Fees0.3 0.3 
(3)Tax Fees1.0 0.7 
(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 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 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.

30

Under its Charter and the “Audit and Non-Audit Services Pre-Approval Policy” (the “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 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

36
Table of Contents
audit, 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 20212023 and 2020.

2022.
37

Table of Contents
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.
38
Table of Contents

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 28, 2022.

14, 2024.

EVEREST REINSURANCE HOLDINGS, INC.

By:

/S/ JUAN C. ANDRADE

Juan C. Andrade

(Chairman, President and

Chief Executive Officer)

31

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

President and Chief Executive Officer

(Principal Executive Officer)

March 28, 202214, 2024

Juan C. Andrade

/S/ MARK KOCIANCIC

Executive Vice President and Chief

Financial Officer

March 28, 202214, 2024

Mark Kociancic

/S/ ROBERT J. FREILING

Senior Vice President and Chief

Accounting Officer

March 28, 202214, 2024

Robert J. Freiling

32

39

Table of Contents

INDEX TO EXHIBITS

Exhibit No.

2.1

Agreement and Plan of Merger among Everest Reinsurance Holdings, Inc., Everest Re Group, Ltd.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$400 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.

4.3

Fifth Supplemental Indenture relating to Holdings $1.0 billion 3.50% Senior Notes due October 15, 2050, dated October 7, 2020, 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 October 7, 2020.

4.4
Sixth Supplemental Indenture relating to Holdings $1.0 billion 3.125% Senior Notes due October 15, 2052, dated October 4, 2021, 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 October 4, 2021.

10.1

Completion of Tender Offer relating to Everest Reinsurance Holdings, Inc. 6.60% Fixed to Floating Rate Long TermLong-Term Subordinated Notes (LoTSSM)(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.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.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.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.Ltd. Form 8-K filed August 8, 2019.

*10.6

Employment agreement between Everest Global Services, Inc. and Mark Kociancic, incorporated herein by reference to Exhibit 10.1 to Everest Re Group, Ltd.Ltd. Form 8-K filed on October 1, 2020

E-1
Table of Contents
*10.7

Employment agreement between Everest Global Services, Inc. and James Williamson, incorporated herein by reference to Exhibit 10.2 to Everest Re Group, Ltd. Form 8-K filed on October 1, 2020

E-1

*10.8

Employment agreement between Everest Global Services, Inc. and Joseph V. Taranto, incorporated herein by reference to Exhibit 10.1 to Everest Group, Ltd. Form 10-Q filed on May 4, 2023
*10.9
Departure of Sanjoy Mukherjee, Executive Vice President, General Counsel and Secretary of Everest Group, Ltd. effective July 3, 2023, herein by reference to Exhibit 10.2 to Everest Group, Ltd. Form 10-Q filed on May 4, 2023
*10.10
Employment agreement made effective as of June 12, 2023, between Everest Global Services, Inc. and Ricardo A. Anzaldua, filed herewith
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 Mark Kociancic, filed herewith

32.1

Section 906 Certification of Juan C. Andrade and Mark Kociancic, filed herewith

97.1

Everest Group, Ltd. Clawback Policy
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)

_________________

E-*2
Management contract or compensatory plan or arrangement.

E-2

Table of Contents

EVEREST REINSURANCE HOLDINGS, INC.

INDEX TO FINANCIAL STATEMENTS AND SCHEDULES

Pages

F-2

F-2

Consolidated Balance Sheets at December 31, 2023 and 2022

F-4

Consolidated Balance Sheets at December 31, 2021 and 2020

F-4

Consolidated Statements of Operations and Comprehensive Income (Loss) for the Years EndedDecember 31, 2023, 2022 and 2021

F-5

December 31, 2021, 2020 and 2019

F-5

Consolidated Statements of Changes in Stockholder’s Equity for the Years EndedDecember 31, 2023, 2022 and 2021

F-6

December 31, 2021, 2020 and 2019

F-6

Consolidated Statements of Cash Flows for the Years Ended

December 31, 2021, 20202023, 2022 and 20192021

F-7F-7

F-8

F-8

I

Summary of Investments Other Than Investments in Related Parties at December 31, 20212023

S-1S-1

II

Condensed Financial Information of Registrant:

Balance Sheets as of December 31, 20212023 and 20202022

S-2S-2

Statements of Operations for the Years Ended December 31, 2021, 20202023, 2022 and 20192021

S-3S-3

Statements of Cash Flows for the Years Ended December 31, 2021, 20202023, 2022 and 20192021

S-4S-4

Notes to Condensed Financial Information

S-5S-5

III

Supplementary Insurance Information as of and for the Years EndedDecember 31, 2023, 2022 and

2021
S-6

December 31, 2021, 2020 and 2019

S-6

IV

Reinsurance for the Years Ended December 31, 2021, 20202023, 2022 and 2019

S-7

2021

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

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

Table of Contents

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, 20212023 and 2020,2022, 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, 2021,2023, 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, 20212023 and 2020,2022, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 20212023 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 auditsaudit 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.

F-2

Valuation of the Reserve for Losses and Loss Adjustment Expenses

As described in Notes 1 and 34 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 its insurance and reinsurance businesses. The Company’s reserve for losses and loss adjustment expenses as of December 31, 20212023 was $13.1$15.8 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

F-2
Table of Contents
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 (i) the significant judgment by management when developing their estimate; this in turn led toestimate, (ii) a high degree of auditor judgment, 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 (iii) 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;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//s/ PricewaterhouseCoopers LLP

New York, New York

March 28, 2022

14, 2024

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

F-3

F-3

Table of Contents

EVEREST REINSURANCE HOLDINGS, INC.

CONSOLIDATED BALANCE SHEETS

 

December 31,

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

2021

 

2020

 

 

 

 

 

ASSETS:

 

 

 

 

 

Fixed maturities - available for sale, (amortized cost: 2021, $12,733,499; 2020, $10,248,650 allowances for credit losses: 2021, $(27,491); 2020, $(1,566))

$

12,860,395

 

$

10,643,565

Equity securities, at fair value

 

1,757,792

 

 

1,288,767

Short-term investments (cost: 2021, $695,935; 2020, $708,043)

 

695,886

 

 

707,905

Other invested assets

 

1,674,639

 

 

1,094,933

Other invested assets, at fair value

 

2,030,816

 

 

1,796,479

Cash

 

699,266

 

 

378,518

Total investments and cash

 

19,718,794

 

 

15,910,167

Note receivable - affiliated

 

500,000

 

 

300,000

Accrued investment income

 

89,966

 

 

80,196

Premiums receivable

 

1,719,961

 

 

1,591,980

Reinsurance recoverables - unaffiliated

 

1,569,328

 

 

1,505,650

Reinsurance recoverables - affiliated

 

2,298,769

 

 

2,701,655

Funds held by reinsureds

 

299,204

 

 

267,599

Deferred acquisition costs

 

471,931

 

 

379,707

Prepaid reinsurance premiums

 

431,055

 

 

363,489

Other assets

 

595,970

 

 

539,786

TOTAL ASSETS

$

27,694,978

 

$

23,640,229

 

 

 

 

 

 

LIABILITIES:

 

 

 

 

 

Reserve for losses and loss adjustment expenses

$

13,121,177

 

$

11,578,096

Unearned premium reserve

 

2,992,878

 

 

2,385,174

Funds held under reinsurance treaties

 

48,410

 

 

46,894

Other net payable to reinsurers

 

391,577

 

 

277,390

Losses in course of payment

 

272,592

 

 

161,154

Income taxes

 

246,348

 

 

192,877

Senior notes

 

2,345,800

 

 

1,376,718

Long term notes

 

223,774

 

 

223,674

Borrowings from FHLB

 

519,000

 

 

310,000

Accrued interest on debt and borrowings

 

17,348

 

 

10,460

Unsettled securities payable

 

15,196

 

 

206,693

Other liabilities

 

462,831

 

 

456,786

Total liabilities

 

20,656,931

 

 

17,225,916

 

 

 

 

 

 

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 (2021 and 2020)

 

-

 

 

-

Additional paid-in capital

 

1,101,527

 

 

1,101,092

Accumulated other comprehensive income (loss), net of deferred income tax expense (benefit) of $24,279 at 2021 and $71,080 at 2020

 

91,469

 

 

268,018

Retained earnings

 

5,845,051

 

 

5,045,203

Total stockholder's equity

 

7,038,047

 

 

6,414,313

TOTAL LIABILITIES AND STOCKHOLDER'S EQUITY

$

27,694,978

 

$

23,640,229

 

 

 

 

 

 

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

 

 

 

 

 

 

F-4

December 31,
(In millions of U.S. dollars, par value per share)20232022
ASSETS:
Fixed maturities - available for sale, at fair value$15,932 $12,671 
 (amortized cost: 2023, $16,304; 2022,$13,699, credit allowances: 2023, $(48); 2022, $(46))
Fixed maturities - held to maturity, at amortized cost
 (fair value: 2023, $850; 2022, $793 net of credit allowances: 2023, $(8); 2022, $(9))851 811 
Equity securities, at fair value91 194 
Other invested assets3,259 2,754 
Other invested assets, at fair value1,481 1,472 
Short-term investments1,298 812 
Cash527 481 
Total investments and cash23,439 19,195 
Notes receivable - affiliated— 840 
Accrued investment income222 150 
Premiums receivable (net of credit allowances: 2023, $(28); 2022, $(21))2,245 1,721 
Reinsurance recoverables - unaffiliated (net of credit allowances: 2023, $(22); 2022, $(21))1,816 1,841 
Reinsurance recoverables - affiliated1,547 1,935 
Income tax asset, net141 288 
Funds held by reinsureds306 303 
Deferred acquisition costs659 499 
Prepaid reinsurance premiums490 463 
Other assets (net of credit allowances: 2023, $(9); 2022, $(5))774 722 
TOTAL ASSETS$31,638 $27,957 
LIABILITIES:
Reserve for losses and loss adjustment expenses$15,796 $14,977 
Unearned premium reserve3,886 3,177 
Funds held under reinsurance treaties54 43 
Amounts due to reinsurers488 436 
Losses in course of payment139 77 
Income tax liability, net29 — 
Senior notes2,349 2,347 
Long-term notes218 218 
Borrowings from FHLB819 519 
Accrued interest on debt and borrowings22 19 
Unsettled securities payable126 1 
Other liabilities526 489 
TOTAL LIABILITIES24,451 22,303 
Commitments and Contingencies (Note 11)
STOCKHOLDER'S EQUITY:
Common stock, par value: $0.01; 3,000 shares authorized;
1,000 shares issued and outstanding (2023 and 2022)— — 
Additional paid-in capital1,102 1,102 
Accumulated other comprehensive income (loss), net of deferred income tax
expense (benefit) of $(76) at 2023 and $(225) at 2022(287)(848)
Retained earnings6,372 5,400 
Total stockholder's equity7,187 5,654 
TOTAL LIABILITIES AND STOCKHOLDER'S EQUITY$31,638 $27,957 
The accompanying notes are an integral part of the consolidated financial statements.
F-4

Table of Contents

EVEREST REINSURANCE HOLDINGS, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

AND COMPREHENSIVE INCOME (LOSS)

 

 

 

Years Ended December 31,

(Dollars in thousands)

2021

 

2020

 

2019

 

 

 

 

 

 

 

 

 

REVENUES:

 

 

 

 

 

 

 

 

Premiums earned

$

7,178,592

 

$

6,406,576

 

$

5,489,035

Net investment income

 

744,954

 

 

375,906

 

 

356,211

Net realized capital gains (losses):

 

 

 

 

 

 

 

 

Credit allowances on fixed maturity securities

 

(25,924)

 

 

(1,566)

 

 

-

Other-than-temporary impairments on fixed

maturity securities

 

-

 

 

-

 

 

(19,643)

Other net realized capital gains (losses)

 

527,210

 

 

51,370

 

 

439,010

Total net realized capital gains (losses)

 

501,286

 

 

49,804

 

 

419,367

Other income (expense)

 

23,383

 

 

(14,579)

 

 

(1,589)

Total revenues

 

8,448,215

 

 

6,817,707

 

 

6,263,024

 

 

 

 

 

 

 

 

 

CLAIMS AND EXPENSES:

 

 

 

 

 

 

 

 

Incurred losses and loss adjustment expenses

 

5,386,856

 

 

4,608,144

 

 

3,829,122

Commission, brokerage, taxes and fees

 

1,512,502

 

 

1,373,355

 

 

1,270,053

Other underwriting expenses

 

454,064

 

 

401,033

 

 

350,901

Corporate expenses

 

33,334

 

 

15,985

 

 

13,063

Interest, fee and bond issue cost amortization expense

 

69,974

 

 

35,659

 

 

34,931

Total claims and expenses

 

7,456,730

 

 

6,434,176

 

 

5,498,070

 

 

 

 

 

 

 

 

 

INCOME (LOSS) BEFORE TAXES

 

991,485

 

 

383,531

 

 

764,955

Income tax expense (benefit)

 

191,636

 

 

31,658

 

 

135,228

 

 

 

 

 

 

 

 

 

NET INCOME (LOSS)

$

799,849

 

$

351,873

 

$

629,727

 

 

 

 

 

 

 

 

 

Other comprehensive income (loss), net of tax:

 

 

 

 

 

 

 

 

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

on securities arising during the period

 

(200,307)

 

 

163,080

 

 

175,482

Less: reclassification adjustment for realized

losses (gains) included in net income (loss)

 

9,014

 

 

25,468

 

 

5,080

Total URA(D) on securities arising during

the period

 

(191,293)

 

 

188,548

 

 

180,562

 

 

 

 

 

 

 

 

 

Foreign currency translation adjustments

 

(8,734)

 

 

14,461

 

 

17,153

 

 

 

 

 

 

 

 

 

Benefit plan actuarial net gain (loss) for the period

 

6,251

 

 

(5,615)

 

 

(12,591)

Reclassification adjustment for amortization of net

(gain) loss included in net income (loss)

 

17,227

 

 

6,300

 

 

5,453

Total benefit plan net gain (loss) for the period

 

23,478

 

 

685

 

 

(7,138)

Total other comprehensive income (loss), net of tax

 

(176,549)

 

 

203,694

 

 

190,577

 

 

 

 

 

 

 

 

 

COMPREHENSIVE INCOME (LOSS)

$

623,300

 

$

555,567

 

$

820,304

 

 

 

 

 

 

 

 

 

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

 

 

 

F-5

Years Ended December 31,
(In millions of U.S. dollars)202320222021
REVENUES:
Premiums earned$8,536 $7,876 $7,179 
Net investment income993 638 745 
Total net gains (losses) on investments(180)(982)501 
Other income (expense)(11)(6)23 
Total revenues9,337 7,526 8,448 
CLAIMS AND EXPENSES:
Incurred losses and loss adjustment expenses5,578 5,823 5,387 
Commission, brokerage, taxes and fees1,851 1,632 1,513 
Other underwriting expenses574 501 454 
Corporate expenses18 26 33 
Interest, fee and bond issue cost amortization expense134 101 70 
Total claims and expenses8,156 8,083 7,457 
INCOME (LOSS) BEFORE TAXES1,181 (557)991 
Income tax expense (benefit)210 (112)192 
NET INCOME (LOSS)$972 $(445)$800 
Other comprehensive income (loss), net of tax:
Unrealized appreciation (depreciation) ("URA(D)") on securities arising during the period374 (1,011)(200)
Reclassification adjustment for realized losses (gains) included in net income (loss)153 73 9 
Total URA(D) on securities arising during the period527 (938)(191)
Foreign currency translation adjustments17 (18)(9)
Benefit plan actuarial net gain (loss) for the period15 15 17 
Reclassification adjustment for amortization of net (gain) loss included in net income (loss)2 2 6 
Total benefit plan net gain (loss) for the period17 17 23 
Total other comprehensive income (loss), net of tax561 (939)(177)
COMPREHENSIVE INCOME (LOSS)$1,533 $(1,384)$623 
The accompanying notes are an integral part of the consolidated financial statements.
F-5

Table of Contents

EVEREST REINSURANCE HOLDINGS, INC.

CONSOLIDATED STATEMENTS OF

CHANGES IN STOCKHOLDER’S EQUITY

 

Years Ended December 31,

(Dollars in thousands, except share amounts)

2021

 

2020

 

2019

 

 

 

 

 

 

 

 

 

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

$

1,101,092

 

$

1,100,678

 

$

1,100,315

Share-based compensation plans

 

435

 

 

414

 

 

363

Balance, December 31

 

1,101,527

 

 

1,101,092

 

 

1,100,678

 

 

 

 

 

 

 

 

 

ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS),

NET OF DEFERRED INCOME TAXES:

 

 

 

 

 

 

 

 

Balance, January 1

 

268,018

 

 

64,324

 

 

(126,254)

Net increase (decrease) during the period

 

(176,549)

 

 

203,694

 

 

190,577

Balance, December 31

 

91,469

 

 

268,018

 

 

64,324

 

 

 

 

 

 

 

 

 

RETAINED EARNINGS:

 

 

 

 

 

 

 

 

Balance, January 1

 

5,045,203

 

 

4,692,423

 

 

4,062,696

Change to beginning balance due to adoption of ASU 2016-13

 

-

 

 

907

 

 

-

Net income (loss)

 

799,849

 

 

351,873

 

 

629,727

Balance, December 31

 

5,845,051

 

 

5,045,203

 

 

4,692,423

 

 

 

 

 

 

 

 

 

TOTAL STOCKHOLDER'S EQUITY, December 31

$

7,038,047

 

$

6,414,313

 

$

5,857,425

 

 

 

 

 

 

 

 

 

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

 

 

 

F-6

Years Ended December 31,
(In millions of U.S. dollars, except share amounts)202320222021
COMMON STOCK (shares outstanding):
Balance, beginning of period1,0001,0001,000
Balance, end of period1,0001,0001,000
ADDITIONAL PAID-IN CAPITAL:
Balance, beginning of period$1,102 $1,102 $1,101 
Share-based compensation plans— — — 
Balance, end of period1,102 1,102 1,102 
ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS), NET OF DEFERRED INCOME TAXES:
Balance, beginning of period(848)91 268 
Net increase (decrease) during the period561 (939)(177)
Balance, end of period(287)(848)91 
RETAINED EARNINGS:
Balance, beginning of period5,400 5,845 5,045 
Net income (loss)972 (445)800 
Balance, end of period6,372 5,400 5,845 
TOTAL STOCKHOLDER'S EQUITY, END OF PERIOD$7,187 $5,654 $7,038 
The accompanying notes are an integral part of the consolidated financial statements.
F-6

Table of Contents

EVEREST REINSURANCE HOLDINGS, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

 

 

 

 

 

 

 

 

 

 

Years Ended December 31,

(Dollars in thousands)

2021

 

2020

 

2019

 

 

 

 

 

 

 

 

 

CASH FLOWS FROM OPERATING ACTIVITIES:

 

 

 

 

 

 

 

 

Net income (loss)

$

799,849

 

$

351,873

 

$

629,727

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

 

 

 

 

 

 

 

 

Decrease (increase) in premiums receivable

 

(128,091)

 

 

(252,850)

 

 

(24,618)

Decrease (increase) in funds held by reinsureds, net

 

(30,281)

 

 

(33,519)

 

 

(57)

Decrease (increase) in reinsurance recoverables

 

336,586

 

 

247,165

 

 

405,574

Decrease (increase) in income taxes

 

100,088

 

 

204,419

 

 

295,667

Decrease (increase) in prepaid reinsurance premiums

 

(67,713)

 

 

51,352

 

 

(84,181)

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

 

1,478,040

 

 

1,430,417

 

 

(37,727)

Increase (decrease) in unearned premiums

 

609,059

 

 

183,417

 

 

370,246

Increase (decrease) in other net payable to reinsurers

 

114,061

 

 

8,078

 

 

(50,560)

Increase (decrease) in losses in course of payment

 

110,693

 

 

90,044

 

 

113,306

Change in equity adjustments in limited partnerships

 

(368,354)

 

 

(39,880)

 

 

(45,843)

Distribution of limited partnership income

 

113,849

 

 

91,403

 

 

51,982

Change in other assets and liabilities, net

 

(9,549)

 

 

(88,105)

 

 

(1,124)

Non-cash compensation expense

 

36,233

 

 

32,217

 

 

27,421

Amortization of bond premium (accrual of bond discount)

 

31,404

 

 

13,926

 

 

4,308

Net realized capital (gains) losses

 

(501,286)

 

 

(49,804)

 

 

(419,367)

Net cash provided by (used in) operating activities

 

2,624,588

 

 

2,240,153

 

 

1,234,754

 

 

 

 

 

 

 

 

 

CASH FLOWS FROM INVESTING ACTIVITIES:

 

 

 

 

 

 

 

 

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

 

2,329,839

 

 

1,126,309

 

 

937,871

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

 

961,050

 

 

626,378

 

 

2,400,869

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

 

-

 

 

4,907

 

 

2,917

Proceeds from equity securities sold - at fair value

 

861,801

 

 

375,112

 

 

283,707

Distributions from other invested assets

 

126,690

 

 

243,002

 

 

185,116

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

 

(5,831,618)

 

 

(4,695,090)

 

 

(3,626,139)

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

 

-

 

 

-

 

 

(4,243)

Cost of equity securities acquired - at fair value

 

(1,052,277)

 

 

(625,694)

 

 

(325,546)

Cost of other invested assets acquired

 

(430,205)

 

 

(363,101)

 

 

(323,453)

Net change in short-term investments

 

12,930

 

 

(425,878)

 

 

(102,302)

Net change in unsettled securities transactions

 

(205,690)

 

 

200,070

 

 

(30,904)

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

 

(200,000)

 

 

-

 

 

(300,000)

Net cash provided by (used in) investing activities

 

(3,427,480)

 

 

(3,533,985)

 

 

(902,107)

 

 

 

 

 

 

 

 

 

CASH FLOWS FROM FINANCING ACTIVITIES:

 

 

 

 

 

 

 

 

Tax benefit from share-based compensation, net of expense

 

(35,798)

 

 

(31,803)

 

 

(27,059)

FHLB advances (repayments)

 

209,000

 

 

310,000

 

 

-

Cost of debt repurchase

 

-

 

 

(10,647)

 

 

-

Proceeds from issuance of senior notes

 

968,357

 

 

979,417

 

 

-

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

 

-

 

 

-

 

 

(300,000)

Net cash provided by (used in) financing activities

 

1,141,559

 

 

1,246,967

 

 

(327,059)

 

 

 

 

 

 

 

 

 

EFFECT OF EXCHANGE RATE CHANGES ON CASH

 

(17,920)

 

 

14,261

 

 

1,012

 

 

 

 

 

 

 

 

 

Net increase (decrease) in cash

 

320,748

 

 

(32,604)

 

 

6,600

Cash, beginning of period

 

378,518

 

 

411,122

 

 

404,522

Cash, end of period

$

699,266

 

$

378,518

 

$

411,122

 

 

 

 

 

 

 

 

 

SUPPLEMENTAL CASH FLOW INFORMATION:

 

 

 

 

 

 

 

 

Income taxes paid (recovered)

$

91,228

 

$

(173,056)

 

$

(160,748)

Interest paid

 

62,194

 

 

27,670

 

 

34,928

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

F-7

Years Ended December 31,
(In millions of U.S. dollars)202320222021
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss)$972 $(445)$800 
Adjustments to reconcile net income to net cash provided by operating activities:
Decrease (increase) in premiums receivable(519)(3)(128)
Decrease (increase) in funds held by reinsureds, net9 (9)(30)
Decrease (increase) in reinsurance recoverables424 70 337 
Decrease (increase) in income taxes27 (286)100 
Decrease (increase) in prepaid reinsurance premiums(25)(36)(68)
Increase (decrease) in reserve for losses and loss adjustment expenses797 1,885 1,478 
Increase (decrease) in unearned premiums703 189 609 
Increase (decrease) in amounts due to reinsurers48 50 114 
Increase (decrease) in losses in course of payment61 (197)111 
Change in equity adjustments in limited partnerships(83)(90)(368)
Distribution of limited partnership income57 107 114 
Change in other assets and liabilities, net(274)(130)(10)
Non-cash compensation expense39 37 36 
Amortization of bond premium (accrual of bond discount)(43)22 31 
Net (gains) losses on investments180 982 (501)
Net cash provided by (used in) operating activities2,374 2,146 2,625 
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from fixed maturities matured/called/repaid - available for sale1,206 1,399 2,330 
Proceeds from fixed maturities sold - available for sale2,546 2,645 961 
Proceeds from fixed maturities matured/called/repaid - held to maturity82 39 — 
Proceeds from equity securities sold126 2,203 862 
Distributions from other invested assets127 135 127 
Cost of fixed maturities acquired - available for sale(6,518)(5,928)(5,832)
Cost of fixed maturities acquired - held to maturity(112)(125)— 
Cost of equity securities acquired(14)(951)(1,052)
Cost of other invested assets acquired(611)(1,241)(430)
Net change in short-term investments(444)(113)13 
Net change in unsettled securities transactions172 (52)(206)
Proceeds from repayment (cost of issuance) of notes receivable - affiliated840 (340)(200)
Net cash provided by (used in) investing activities(2,599)(2,329)(3,427)
CASH FLOWS FROM FINANCING ACTIVITIES:
Tax benefit from share-based compensation, net of expense(38)(37)(36)
Net FHLB borrowings (repayments)300 — 209 
Cost of debt repurchase— (6)— 
Proceeds from issuance of senior notes— — 968 
Net cash provided by (used in) financing activities262 (43)1,142 
EFFECT OF EXCHANGE RATE CHANGES ON CASH10 8 (18)
Net increase (decrease) in cash46 (218)321 
Cash, beginning of period481 699 379 
Cash, end of period$527 $481 $699 
SUPPLEMENTAL CASH FLOW INFORMATION:
Income taxes paid (recovered)$182 $174 $91 
Interest paid130 98 62 
NON-CASH TRANSACTIONS
Reclassification of specific investments from fixed maturity securities, available for sale at fair value
to fixed maturity securities, held to maturity at amortized cost net of credit allowances$— $722 $— 
The accompanying notes are an integral part of the consolidated financial statements.
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Table of Contents

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Years Ended December 31, 2021, 20202023, 2022 and 2019

2021

1.1. 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”), SpecialtyEverSports & 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.

The Company consolidates the results of 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 be the primary beneficiary. The 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 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.

Certain reclassifications and format changes have been made to prior years’ amounts to conform to the 20212023 presentation.
B.

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. Had these adjustments, which were determined not to be material, been recorded in the originating periods, net income for the years ended December 31, 2020Investments and 2019 would have decreased by $31 million and $20 million, respectively.Cash.

The out of period adjustments also impacted previously issued interim consolidated financial statements, which were determined not to be material. Had these adjustments been recorded in the originating periods, net income for the three-months ended March 31, 2021 would have increased by $29 million; net income for the three-months ended June 30, 2021 would have decreased by $17 million and net income for the six-months ended June 30, 2021 would have increased by $12 million; and net income for the three- and nine-months ended September 30, 2021 would have decreased by $17 million and $5 million, respectively. In addition, had results for the first three quarters of 2021 been adjusted, net income for the three-months ended December 31, 2021 would have been $46 million more than that reported. Furthermore, net income for the three-months ended March 31, 2020 would have increased by $6 million; net income for the three and six-months ended June 30, 2020 would have decreased by $12 million and $6 million, respectively; and net income for the three and nine-months ended September 30, 2020 would have decreased by $12 million and $19 million, respectively.

F-8

The Company assessed the materiality of these adjustments described above on prior period financial statements and have determined that these adjustments were not material to the financial statements of any prior annual or interim period.

B. Investments.

Fixed maturity investmentssecurities designated as available for sale reflect unrealized appreciation and depreciation, as a result of 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, since cash flows from these investments will be primarily used to settle its reserve for losses 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.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 decline in marketfair value. Non-credit related declines in marketfair 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 realized capital 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 realized capital 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

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Table of Contents
carrying value. The fair value adjustment that is non-credit related is recorded as a component of other comprehensive income (loss), net of tax, and is included in accumulated other comprehensive income (loss) in the Company’s consolidated balance sheets. The Company will adjust the credit allowance account for future changes in credit loss estimates for a security and record this adjustment through net realized capital gains (losses) on investments 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 evaluates fixed maturity securities classified as held to maturity for current expected credit losses 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 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 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 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.

For equity securities, the Company reflects changes in fair value as net realized capital gains and losses.(losses) on investments. 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).
Short-term investments

F-9

comprise securities due to mature within one year from the date of purchase and are stated at cost, which approximates marketfair value.

Realized gains or losses on sales of investments are determined on the basis of identified cost. For some non-publicly traded securities, market prices are determined through the use of pricing models that evaluate securities 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, marketfair 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 are employed to recalculate 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 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 as an input to the calculation of projected and prepayments for pass-through security types.
Other invested assets include limited partnerships, corporate-owned life insurance (“COLI”), rabbi trusts. Cash contributions totrusts and cash distributions from the sweep facility were reported gross in cash flows from investing activities in the consolidated statements of cash flows.other investments. Limited partnerships are accounted for under the equity method of accounting, which can be recorded on a monthly or quarterly lag.

lag and are included within net investment income. Corporate-owned life insurance policies are carried at policy cash surrender value and changes in the policy cash surrender value are included within net investment income.

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, 20212023 and December 31, 20202022 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.
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Table of Contents

C.Allowance for Premium Receivable and Reinsurance Recoverables.

Effective January 1, 2020, the

The Company adoptedapplies 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. Prior to the adoption of CECL, an allowance for doubtful accounts was estimated on the basis of periodic evaluations of balances due from third parties, considering historical collection experience, solvency and current economic conditions.

Premiums receivable, excluding receivables for losses within a deductible and retrospectively-rated policy premiums, are primarily comprised of premiums due from policyholders/ cedants.cedents. 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 Linescommercial 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 manages these credit risks through credit analysis, collateral requirements, and oversight. The allowance for receivables for loss within a deductible and retrospectively-rated policy premiums is recorded within Otherother assets in the Consolidated Balance Sheets.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 other offsets, considering the nature of the collateral, potential future changes in collateral values, and historical loss information for the type of collateral

F-10

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.

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 collateral, potential future changes in collateral values, and historical loss information for the type of collateral obtained. The probability of default factors are 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 expects the impact of the COVID-19 pandemic to reinsurers to be somewhat mitigated by their regulated capital and liquidity positions. The ultimate impact to the Company's financial statements could vary significantly from our estimates depending on the duration and severity of the pandemic, the duration and severity of the economic downturn and the degree to which federal, state and local government actions to mitigate the economic impact of COVID-19 are effective.

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
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Table of Contents
reinsurance recoverable and any related allowance are recorded in the period in which the balance is deemed uncollectible.

Allowances are presented in the table below for the periods indicated.

 

 

 

 

Years Ended December 31,

(Dollars in thousands)

 

 

 

2021

 

2020

Reinsurance recoverable, premium receivables and deductibles

 

 

 

$

36,985

 

$

33,370

D.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

F-11

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.

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.  Provisions are also included for certain potential liabilities, including those relating to asbestos and environmental (“A&E”) exposures, catastrophe exposures, COVID-19 and COVID-19other 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 recorded as commission expense. Commission accruals for contracts with adjustable features are estimated based on expected loss and LAE.

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 recognized and earned 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.
During 2023, the Company refined its premium estimation methodology for its risk attaching reinsurance contracts within its Reinsurance Segment to continue to recognize gross written premium over the term of the treaty, albeit over a different pattern than what was previously used. The refined estimate resulted in an increase of gross written premium for th

e twelve months ended December 31, 2023

period and has further aligned the estimation methodology across the reinsurance division globally. This change had no impact on the total written premium to be recognized over the term of the treaty. There was no impact on net earned premium and therefore, no impact on income from continuing operations, net income, or any related per-share amounts.

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, 20212023 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 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 income taxes have been recorded to recognize the tax effect of temporary differences between the GAAP and income tax basesbasis of assets and liabilities, which arise because of differences between the financial reporting and income tax rules.
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Table of Contents

As an accounting policy, the Company has adopted the aggregate portfolio approach for releasing disproportionate income tax effects from AOCI.

Accumulated Other Comprehensive Income.

I.Foreign Currency.

The Company transacts business in numerous currencies through business units located around the world. The base transactionalfunctional 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 foreigntransactions in currencies other than a business unit’s functional currency denominatedfor monetary assets and liabilities at the business units between the original currency and the base currency are recordedmeasured through the consolidated statements of operations and comprehensive income (loss) in other income (expense), except for

F-12

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’ basefunctional currency financial statements are translated to the Company’s reporting currency, 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.statements of operations. Gains and losses resulting from translating the foreign currency financial statements, net of deferred income taxes, are excluded from net income loss(loss) and accumulated as a separate component of other comprehensive income (loss) in stockholder’s equity.

J.Segmentation.

The Company, through its subsidiaries, operates in 2two segments: Reinsurance and Insurance. During the fourth quarter of 2023, the Company revised the classification and presentation of certain products related to its accident and health business within the segment groupings. These products have been realigned from within the Reinsurance segment to the Insurance segment to appropriately reflect how the business segments are managed. These changes have been reflected retrospectively. See also Note 17.

6.

K. Retroactive Reinsurance.

Premiums on ceded retroactive contracts are earned when written withRecent Accounting Pronouncements.

Adoption of New Accounting Standards
The Company did not adopt any new accounting standards that had 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.

L. Applicationmaterial impact in 2023.

Future Adoption of Recently Issued Accounting Guidance.

Reference Rate Reform - LIBOR. In March 2020,Standards

The Company assessed the adoption impacts of recently issued accounting standards that are affective after 2023 by the Financial Accounting Standards Board (“FASB”)on the Company’s consolidated financial statements. Additionally, the Company assessed whether there have been material updates to previously issued ASU 2020-04,accounting standards that are effective after 2023 . There were no accounting standards identified, other than those directly reference below, that are expected to have a material impact to Holdings.
Improvements to Income Tax Disclosures. InDecember 2023, the Financial Accounting Standards Board issued Accounting Standard Update No. 2023-09, which outlinesrequires expanded income tax disclosures, including the issues surroundingdisaggregation of existing disclosures related to the cessation of LIBOR as a referencetax rate for contractual debt agreements. The guidance also details the potential alternative expedientsreconciliation and sources available for use in determination of rates and terms for such debt agreements in order to apply appropriate accounting policy.income taxes paid. The guidance is effective for annual reporting periods beginning after December 15, 2021.2024. Prospective application is required, with retrospective application permitted. The Company has reviewed its inventory of investments, debt issuances and business contracts to evaluateis currently evaluating the impact of elimination of LIBOR upon its financial statements and business operations. Due toeffect the existence of modification or default provisions for use of other reference rates after the elimination of LIBOR, the Company has determined that the adoption of ASU 2020-04 did notupdated guidance will have a material impact upon its financial statements or business operations.

Accounting for Income Taxes. In December 2019, FASB issued ASU 2019-12, which provides simplification of existing guidance for income taxes, including the removal of certain exceptions related to recognition of deferred tax liabilities on foreign subsidiaries. The guidance is effective for annual reporting periods beginning after December 15, 2020 and interim periods within that annual reporting period. The Company adopted the guidance effective January 1, 2021. The adoption of ASU 2019-12 did not have a material impact on the Company’sCompany's financial statements.statement disclosures.

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ValuationTable of Financial Instruments.Contents

2.INVESTMENTSIn June 2016, FASB issued ASU 2016-13 (and has subsequently issued related guidance and amendments in ASU 2019-11 and ASU 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.
The new guidance requires the carrying value of assets measured at amortized cost, including reinsurance and premiums receivables to be presented as the net amount expected to be collected on the financial asset (amortized cost less an allowance for credit losses valuation account). The allowance reflects expected credit losses of the financial asset which considers available information using a combination both historical information, current market conditions and reasonable and supportable forecasts. For available-for-sale debt securities, the guidance modified the previous other than temporary impairment model, now requiring an allowance for estimated credit related losses rather than a permanent impairment, 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 adopted the guidance effective January 1, 2020, on a modified retrospective basis. The adoption resulted in a cumulative adjustment of $0.9 million in retained earnings, net of tax, which is disclosed separately within the Consolidated Statements of Stockholder’s Equity.

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.

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2. INVESTMENTS

Thefollowing tables below present theshow amortized cost, allowance for credit losses, gross unrealized appreciation/(depreciation)appreciation, gross unrealized depreciation (“URA(D)”) and marketfair value of fixed maturity securities as of December 31, 2021 and 2020:

 

At December 31, 2021

 

Amortized

 

Allowances for

 

Unrealized

 

Unrealized

 

Market

(Dollars in thousands)

Cost

 

Credit Loss

 

Appreciation

 

Depreciation

 

Value

Fixed maturity securities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

U.S. Treasury securities and obligations of

U.S. government agencies and corporations

$

656,742

 

$

-

 

$

9,303

 

$

(3,296)

 

$

662,749

Obligations of U.S. states and political

subdivisions

 

558,842

 

 

(151)

 

 

29,080

 

 

(1,150)

 

 

586,621

Corporate securities

 

4,036,000

 

 

(19,267)

 

 

89,172

 

 

(31,000)

 

 

4,074,905

Asset-backed securities

 

3,464,248

 

 

(7,680)

 

 

20,732

 

 

(11,014)

 

 

3,466,286

Mortgage-backed securities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Commercial

 

586,441

 

 

-

 

 

20,538

 

 

(4,085)

 

 

602,894

Agency residential

 

1,255,186

 

 

-

 

 

15,568

 

 

(10,076)

 

 

1,260,678

Non-agency residential

 

4,398

 

 

-

 

 

16

 

 

(6)

 

 

4,408

Foreign government securities

 

677,327

 

 

-

 

 

21,658

 

 

(7,005)

 

 

691,980

Foreign corporate securities

 

1,494,315

 

 

(393)

 

 

34,449

 

 

(18,497)

 

 

1,509,874

Total fixed maturity securities

$

12,733,499

 

$

(27,491)

 

$

240,516

 

$

(86,129)

 

$

12,860,395

 

At December 31, 2020

 

Amortized

 

Allowances for

 

Unrealized

 

Unrealized

 

Market

(Dollars in thousands)

Cost

 

Credit Loss

 

Appreciation

 

Depreciation

 

Value

Fixed maturity securities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

U.S. Treasury securities and obligations of

U.S. government agencies and corporations

$

659,957

 

$

-

 

$

22,032

 

$

-

 

$

681,989

Obligations of U.S. states and political

subdivisions

 

543,646

 

 

-

 

 

34,655

 

 

(1,255)

 

 

577,046

Corporate securities

 

3,316,525

 

 

(1,205)

 

 

166,072

 

 

(31,480)

 

 

3,449,912

Asset-backed securities

 

2,450,807

 

 

-

 

 

28,585

 

 

(5,222)

 

 

2,474,170

Mortgage-backed securities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Commercial

 

512,388

 

 

-

 

 

37,875

 

 

(183)

 

 

550,080

Agency residential

 

937,166

 

 

-

 

 

28,630

 

 

(696)

 

 

965,100

Non-agency residential

 

3,164

 

 

-

 

 

2

 

 

(2)

 

 

3,164

Foreign government securities

 

694,132

 

 

-

 

 

51,317

 

 

(3,211)

 

 

742,238

Foreign corporate securities

 

1,130,865

 

 

(361)

 

 

73,265

 

 

(3,903)

 

 

1,199,866

Total fixed maturity securities

$

10,248,650

 

$

(1,566)

 

$

442,433

 

$

(45,952)

 

$

10,643,565

- available for sale for the periods indicated:

F-14

At December 31, 2023
(Dollars in millions)Amortized
Cost		Allowances for
Credit Loss		Unrealized
Appreciation		Unrealized
Depreciation		Fair
Value
Fixed maturity securities – available for sale
U.S. Treasury securities and obligations of U.S. government agencies and corporations$265 $— $— $(17)$247 
Obligations of U.S. states and political subdivisions138 — 1 (11)128 
Corporate securities4,400 (47)96 (160)4,289 
Asset-backed securities5,307 — 23 (48)5,282 
Mortgage-backed securities
Commercial575 — — (53)522 
Agency residential2,532 — 27 (124)2,435 
Non-agency residential429 — 14 (1)441 
Foreign government securities859 — 15 (39)835 
Foreign corporate securities1,800 — 35 (82)1,753 
Total fixed maturity securities - available for sale$16,304 $(48)$212 $(536)$15,932 
(Some amounts may not reconcile due to rounding.)
At December 31, 2022
(Dollars in millions)Amortized
Cost		Allowances for
Credit Loss		Unrealized
Appreciation		Unrealized
Depreciation		Fair
Value
Fixed maturity securities – available for sale
U.S. Treasury securities and obligations of U.S. government agencies and corporations$575 $— $— $(40)$535 
Obligations of U.S. states and political subdivisions444 — 2 (32)413 
Corporate securities3,913 (45)14 (322)3,561 
Asset-backed securities4,111 — 5 (165)3,951 
Mortgage-backed securities
Commercial569 — — (59)509 
Agency residential1,792 — 3 (167)1,628 
Non-agency residential3 — — — 3 
Foreign government securities696 — 2 (61)637 
Foreign corporate securities1,597 (1)4 (167)1,433 
Total fixed maturity securities - available for sale$13,699 $(46)$30 $(1,013)$12,671 

(Some amounts may not reconcile due to rounding.)
The following table shows amortized cost, allowance for credit losses, gross URA(D) and marketfair value of fixed maturity securities - held to maturity for the periods indicated:
At December 31, 2023
(Dollars in millions)Amortized
Cost		Allowances for
Credit Loss		Unrealized
Appreciation		Unrealized
Depreciation		Fair
Value
Fixed maturity securities - held to maturity
Corporate securities$150 $(2)$1 $(3)$146 
Asset-backed securities604 (5)4 (10)593 
Mortgage-backed securities
Commercial21 — — — 21 
Foreign corporate securities84 (1)7 — 90 
Total fixed maturity securities - held to maturity$859 $(8)$12 $(13)$850 
(Some amounts may not reconcile due to rounding.)
F-13
Table of Contents
At December 31, 2022
(Dollars in millions)Amortized
Cost		Allowances for
Credit Loss		Unrealized
Appreciation		Unrealized
Depreciation		Fair
Value
Fixed maturity securities - held to maturity
Corporate securities$152 $(2)$— $(6)$144 
Asset-backed securities634 (6)2 (15)614 
Mortgage-backed securities
Commercial7 — — — 7 
Foreign corporate securities28 (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 tablestable 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, 2023At December 31, 2022
(Dollars in millions)Amortized
Cost		Fair
Value		Amortized
Cost		Fair
Value
Fixed maturity securities – available for sale
Due in one year or less$546 $537 $581 $563 
Due after one year through five years2,402 2,310 3,684 3,429 
Due after five years through ten years2,842 2,784 2,003 1,760 
Due after ten years1,672 1,621 958 827 
Asset-backed securities5,307 5,282 4,111 3,951 
Mortgage-backed securities
Commercial575 522 569 509 
Agency residential2,532 2,435 1,792 1,628 
Non-agency residential429 441 3 3 
Total fixed maturity securities - available for sale$16,304 $15,932 $13,699 $12,671 
(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. 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, 2023At December 31, 2022
(Dollars in millions)Amortized
Cost		Fair
Value		Amortized
Cost		Fair
Value
Fixed maturity securities – held to maturity
Due in one year or less$5 $5 $5 $5 
Due after one year through five years59 58 63 61 
Due after five years through ten years43 42 43 41 
Due after ten years127 131 68 65 
Asset-backed securities604 593 634 614 
Mortgage-backed securities
Commercial21 21 7 7 
Total fixed maturity securities - held to maturity$859 $850 $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 December 31, 2023, $42 million of unrealized loss from the date of the re-designation 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 fair values of these
F-14
Table of Contents

 

At December 31, 2021

 

At December 31, 2020

 

Amortized

 

Market

 

Amortized

 

Market

(Dollars in thousands)

Cost

 

Value

 

Cost

 

Value

Fixed maturity securities – available for sale

 

 

 

 

 

 

 

 

 

 

 

Due in one year or less

$

586,432

 

$

583,676

 

$

658,561

 

$

659,622

Due after one year through five years

 

3,488,358

 

 

3,526,854

 

 

2,911,285

 

 

3,036,151

Due after five years through ten years

 

2,260,481

 

 

2,309,870

 

 

1,927,265

 

 

2,079,866

Due after ten years

 

1,087,955

 

 

1,105,729

 

 

848,014

 

 

875,412

Asset-backed securities

 

3,464,248

 

 

3,466,286

 

 

2,450,807

 

 

2,474,170

Mortgage-backed securities

 

 

 

 

 

 

 

 

 

 

 

Commercial

 

586,441

 

 

602,894

 

 

512,388

 

 

550,080

Agency residential

 

1,255,186

 

 

1,260,678

 

 

937,166

 

 

965,100

Non-agency residential

 

4,398

 

 

4,408

 

 

3,164

 

 

3,164

Total fixed maturity securities

$

12,733,499

 

$

12,860,395

 

$

10,248,650

 

$

10,643,565

securities incorporate the use of significant unobservable inputs and therefore are classified as Level 3 within the fair value hierarchy.

The Company evaluated fixed maturity securities classified as held to maturity for current expected credit losses as of December 31, 2023 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 incorporation 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, 2023.
The changes in net unrealized appreciation (depreciation)URA(D) for the Company’s investments are derived from the following sources for the periods as indicated:

 

Years Ended December 31,

(Dollars in thousands)

2021

 

2020

Increase (decrease) during the period between the market value and cost

of investments carried at market value, and deferred taxes thereon:

 

 

 

 

 

Fixed maturity securities and short term investments

$

(242,005)

 

$

238,634

Change in unrealized appreciation (depreciation), pre-tax

 

(242,005)

 

 

238,634

Deferred tax benefit (expense)

 

50,712

 

 

(50,086)

Change in unrealized appreciation (depreciation),

net of deferred taxes, included in stockholder's equity

$

(191,293)

 

$

188,548

follows:

F-15

Years Ended December 31,
(Dollars in millions)20232022
Increase (decrease) during the period between the fair value and cost of investments carried at fair value, and deferred taxes thereon:
Fixed maturity securities - available fore sale and short-term investments$667 $(1,187)
Change in unrealized appreciation (depreciation), pre-tax667 (1,187)
Deferred tax benefit (expense)(140)249 
Change in URA(D), net of deferred taxes, included in stockholder's equity$527 $(938)
(Some amounts may not reconcile due to rounding.)

The tables below display the aggregate marketfair 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. Theindicated:

Duration of Unrealized Loss at December 31, 2023 By Security Type
Less than 12 monthsGreater than 12 monthsTotal
(Dollars in millions)Fair
Value		Gross
Unrealized
Depreciation		Fair
Value		Gross
Unrealized
Depreciation		Fair
Value		Gross
Unrealized
Depreciation
Fixed maturity securities - available for sale
U.S. Treasury securities and obligations of U.S. government agencies and corporations$7 $— $238 $(17)$245 $(17)
Obligations of U.S. states and political subdivisions3 — 74 (11)77 (11)
Corporate securities673 (47)1,150 (112)1,822 (160)
Asset-backed securities179 (2)1,958 (46)2,138 (48)
Mortgage-backed securities
Commercial19 — 491 (53)511 (53)
Agency residential203 (2)1,030 (123)1,233 (124)
Non-agency residential125 (1)3 — 128 (1)
Foreign government securities38 (1)423 (38)461 (39)
Foreign corporate securities120 (2)821 (80)940 (82)
Total$1,367 $(54)$6,187 $(481)$7,554 $(536)
Securities where an allowance for credit loss was recorded2 (1)— — 2 (1)
Total fixed maturity securities - available for sale$1,369 $(55)$6,187 $(481)$7,556 $(536)
(Some amounts presented in the tables below include $15.7 millionmay not reconcile due to rounding.)
F-15
Table of market value and $(0.4) million of gross unrealized depreciation as of December 31, 2021 relatedContents
Duration of Unrealized Loss at December 31, 2023 By Maturity
Less than 12 monthsGreater than 12 monthsTotal
(Dollars in millions)Fair
Value		Gross
Unrealized
Depreciation		Fair
Value		Gross
Unrealized
Depreciation		Fair
Value		Gross
Unrealized
Depreciation
Fixed maturity securities - available for sale
Due in one year or less$84 $(1)$263 $(10)$348 $(11)
Due in one year through five years227 (5)1,317 (96)1,544 (101)
Due in five years through ten years150 (5)951 (128)1,101 (133)
Due after ten years379 (39)174 (25)553 (64)
Asset-backed securities179 (2)1,958 (46)2,138 (48)
Mortgage-backed securities347 (3)1,523 (176)1,871 (179)
Total$1,367 $(54)$6,187 $(481)$7,554 $(536)
Securities where an allowance for credit loss was recorded2 (1)— — 2 (1)
Total fixed maturity securities - available for sale$1,369 $(55)$6,187 $(481)$7,556 $(536)
(Some amounts may not reconcile due to fixed maturity securities 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

 

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

$

266,953

 

$

(3,296)

 

$

-

 

$

-

 

$

266,953

 

$

(3,296)

Obligations of U.S. states and

political subdivisions

 

51,094

 

 

(1,038)

 

 

2,558

 

 

(112)

 

 

53,652

 

 

(1,150)

Corporate securities

 

1,465,259

 

 

(24,853)

 

 

200,637

 

 

(6,147)

 

 

1,665,896

 

 

(31,000)

Asset-backed securities

 

1,890,876

 

 

(10,713)

 

 

37,910

 

 

(301)

 

 

1,928,786

 

 

(11,014)

Mortgage-backed securities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Commercial

 

138,934

 

 

(2,467)

 

 

34,967

 

 

(1,618)

 

 

173,901

 

 

(4,085)

Agency residential

 

698,896

 

 

(6,879)

 

 

167,923

 

 

(3,197)

 

 

866,819

 

 

(10,076)

Non-agency residential

 

1,401

 

 

(4)

 

 

156

 

 

(2)

 

 

1,557

 

 

(6)

Foreign government securities

 

200,294

 

 

(4,778)

 

 

14,612

 

 

(2,227)

 

 

214,906

 

 

(7,005)

Foreign corporate securities

 

676,609

 

 

(16,871)

 

 

33,057

 

 

(1,626)

 

 

709,666

 

 

(18,497)

Total fixed maturity securities

$

5,390,316

 

$

(70,899)

 

$

491,820

 

$

(15,230)

 

$

5,882,136

 

$

(86,129)

 

Duration of Unrealized Loss at December 31, 2021 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

$

81,412

 

$

(1,878)

 

$

35,515

 

$

(3,829)

 

$

116,927

 

$

(5,707)

Due in one year through five years

 

1,209,378

 

 

(18,614)

 

 

154,449

 

 

(3,418)

 

 

1,363,827

 

 

(22,032)

Due in five years through ten years

 

852,857

 

 

(20,678)

 

 

34,164

 

 

(1,977)

 

 

887,021

 

 

(22,655)

Due after ten years

 

516,562

 

 

(9,666)

 

 

26,736

 

 

(888)

 

 

543,298

 

 

(10,554)

Asset-backed securities

 

1,890,876

 

 

(10,713)

 

 

37,910

 

 

(301)

 

 

1,928,786

 

 

(11,014)

Mortgage-backed securities

 

839,231

 

 

(9,350)

 

 

203,046

 

 

(4,817)

 

 

1,042,277

 

 

(14,167)

Total fixed maturity securities

$

5,390,316

 

$

(70,899)

 

$

491,820

 

$

(15,230)

 

$

5,882,136

 

$

(86,129)

rounding.)

The aggregate marketfair value and gross unrealized losses related to investmentsfixed maturity securities - available for sale in an unrealized loss position at December 31, 20212023 were $5.9$7.6 billion and $86.1$536 million, respectively. The marketfair value of securities for the single issuer (the United States government) whose securities comprised the largest unrealized loss position at December 31, 2021,2023, did not exceed 2.1%1.4% of the overall marketfair value of the Company’s fixed maturity securities.securities available for sale. The marketfair value of the securities for the issuer with the second largest unrealized loss comprised less than 0.4%0.5% 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 $70.9$55 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 securities, asset backedasset-backed securities as well as commercial and agency residential mortgage backedmortgage-backed securities. Of these unrealized losses, $61.5$39 million were related to securities that were rated investment grade by at least one nationally recognized rating agency. The $15.2$481 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

F-16

domestic and foreign corporate securities as well as agency residential mortgage backed securities. Of these unrealized losses $12.3$455 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.

The Company, given Based upon the sizeCompany’s current evaluation 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 as of December 31, 2023, the unrealized losses are current with respectdue to principalchanges in interest rates and interest payments.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.

F-16
Table of Contents

The tables below display the aggregate marketfair 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
Duration of Unrealized Loss at December 31, 2022 By Security Type
Less than 12 monthsGreater than 12 monthsTotal
(Dollars in millions)Fair
Value		Gross
Unrealized
Depreciation		Fair
Value		Gross
Unrealized
Depreciation		Fair
Value		Gross
Unrealized
Depreciation
Fixed maturity securities - available for sale
U.S. Treasury securities and obligations of U.S. government agencies and corporations$290 $(14)$245 $(26)$535 $(40)
Obligations of U.S. states and political subdivisions235 (23)27 (9)261 (32)
Corporate securities2,138 (175)841 (146)2,979 (321)
Asset-backed securities3,120 (138)436 (27)3,556 (165)
Mortgage-backed securities
Commercial464 (50)36 (9)500 (59)
Agency residential852 (54)605 (113)1,456 (167)
Non-agency residential2 — 1 — 3 — 
Foreign government securities455 (36)144 (25)599 (61)
Foreign corporate securities967 (100)365 (67)1,332 (167)
Total$8,522 $(591)$2,698 $(421)$11,220 $(1,012)
Securities where an allowance for credit loss was recorded2 (1)— — 2 (1)
Total fixed maturity securities - available for sale$8,524 $(591)$2,698 $(421)$11,222 $(1,013)
(Some amounts presented in the tables below include $0.1 million of market value and $(0.1) million of gross unrealized depreciation as of December 31, 2020 relatedmay not reconcile due to fixed maturity securities for which the Company has recorded an allowance for credit losses.

 

Duration of Unrealized Loss at December 31, 2020 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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Obligations of U.S. states and

political subdivisions

 

19,524

 

 

(999)

 

 

4,059

 

 

(256)

 

 

23,583

 

 

(1,255)

Corporate securities

 

240,601

 

 

(7,799)

 

 

188,853

 

 

(23,681)

 

 

429,454

 

 

(31,480)

Asset-backed securities

 

223,919

 

 

(4,573)

 

 

81,952

 

 

(649)

 

 

305,871

 

 

(5,222)

Mortgage-backed securities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Commercial

 

37,414

 

 

(182)

 

 

3,983

 

 

(1)

 

 

41,397

 

 

(183)

Agency residential

 

235,809

 

 

(682)

 

 

1,573

 

 

(14)

 

 

237,382

 

 

(696)

Non-agency residential

 

161

 

 

(2)

 

 

-

 

 

-

 

 

161

 

 

(2)

Foreign government securities

 

10,505

 

 

(373)

 

 

25,793

 

 

(2,838)

 

 

36,298

 

 

(3,211)

Foreign corporate securities

 

57,900

 

 

(2,182)

 

 

18,349

 

 

(1,721)

 

 

76,249

 

 

(3,903)

Total fixed maturity securities

$

825,833

 

$

(16,792)

 

$

324,562

 

$

(29,160)

 

$

1,150,395

 

$

(45,952)

 

Duration of Unrealized Loss at December 31, 2020 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

$

28,802

 

$

(1,218)

 

$

34,555

 

$

(4,142)

 

$

63,357

 

$

(5,360)

Due in one year through five years

 

150,106

 

 

(5,828)

 

 

116,987

 

 

(4,783)

 

 

267,093

 

 

(10,611)

Due in five years through ten years

 

81,492

 

 

(1,634)

 

 

13,118

 

 

(435)

 

 

94,610

 

 

(2,069)

Due after ten years

 

68,130

 

 

(2,673)

 

 

72,394

 

 

(19,136)

 

 

140,524

 

 

(21,809)

Asset-backed securities

 

223,919

 

 

(4,573)

 

 

81,952

 

 

(649)

 

 

305,871

 

 

(5,222)

Mortgage-backed securities

 

273,384

 

 

(866)

 

 

5,556

 

 

(15)

 

 

278,940

 

 

(881)

Total fixed maturity securities

$

825,833

 

$

(16,792)

 

$

324,562

 

$

(29,160)

 

$

1,150,395

 

$

(45,952)

rounding.)
Duration of Unrealized Loss at December 31, 2022 By Maturity
Less than 12 monthsGreater than 12 monthsTotal
(Dollars in millions)Fair
Value		Gross
Unrealized
Depreciation		Fair
Value		Gross
Unrealized
Depreciation		Fair
Value		Gross
Unrealized
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 years2,020 (143)936 (107)2,956 (250)
Due in five years through ten years1,162 (148)395 (98)1,557 (246)
Due after ten years439 (50)262 (64)701 (114)
Asset-backed securities3,120 (138)436 (27)3,556 (165)
Mortgage-backed securities1,318 (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 recorded2 (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 marketfair value and gross unrealized losses related to investmentsfixed maturity securities - available for sale in an unrealized loss position at December 31, 20202022 were $1.2$11.2 billion and $46.0 million,$1.0 billion, respectively. The marketfair value of securities for the single issuer (the United States government) whose securities comprised the largest unrealized loss position at December 31, 2020,2022, did not exceed 0.2%

F-17

4.3% 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 0.6% 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 $16.8$591 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, as well asforeign government securities, asset backed securities and agency residential mortgage backed securities. Of these unrealized losses, $12.5$520 million were related to securities that were rated investment grade by at least one nationally recognized rating agency. The $29.2$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 and foreign governmentas well as agency residential mortgage-backed securities. Of these unrealized

F-17
Table of Contents
losses, $5.9$392 million were related to securities that were rated investment grade by at least one nationally recognized 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 tablestable below for the periods indicated:

 

Years Ended December 31,

(Dollars in thousands)

2021

 

2020

 

2019

Fixed maturities

$

343,659

 

$

305,399

 

$

273,122

Equity securities

 

15,253

 

 

11,466

 

 

10,782

Short-term investments and cash

 

517

 

 

2,978

 

 

10,231

Other invested assets

 

 

 

 

 

 

 

 

Limited partnerships

 

321,050

 

 

48,899

 

 

43,316

Dividends from preferred shares of affiliate

 

31,032

 

 

31,032

 

 

31,031

Other

 

62,945

 

 

1,699

 

 

14,117

Gross investment income before adjustments

 

774,456

 

 

401,473

 

 

382,599

Funds held interest income (expense)

 

7,656

 

 

5,705

 

 

6,459

Interest income from Parent

 

5,952

 

 

5,154

 

 

211

Gross investment income

 

788,064

 

 

412,332

 

 

389,269

Investment expenses

 

(43,110)

 

 

(36,426)

 

 

(33,058)

Net investment income

$

744,954

 

$

375,906

 

$

356,211

 

 

 

 

 

 

 

 

 

(Some amounts may not reconcile due to rounding.)

 

 

 

Years Ended December 31,
(Dollars in millions)202320222021
Fixed maturities$822 $510 $344 
Equity securities3 16 15 
Short-term investments and cash74 16 1 
Other invested assets
Limited partnerships37 72 321 
Dividends from preferred shares of affiliate31 31 31 
Other59 30 63 
Gross investment income before adjustments1,027 675 774 
Funds held interest income (expense)3 6 8 
Interest income from Parent7 11 6 
Gross investment income1,038 691 788 
Investment expenses46 52 43 
Net investment income$993 $638 $745 

(Some amounts may not reconcile due to rounding.)
The Company records results from limited partnership investments on the equity method of accounting with changes in value reported through net investment income. The net investment income from limited partnerships is dependent upon the Company’s share of 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 $971.9 million$1.0 billion in limited partnerships and private placement loans at December 31, 2021.2023. These commitments will be funded when called in accordance with the partnership and loan agreements, which have investment periods that expire, unless extended, through 2026.2027.
During the fourth quarter of 2022, the Company entered into COLI policies, which are invested in debt and

equity securities. The Company participates in a private placement liquidity sweep facility (“COLI policies are carried within other invested assets at the facility”). The primary purposepolicy cash surrender value of the facility is to enhance the Company’s return on its short-term investments$1.3 billion 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$939 million as of December 31, 2021, the market value of investments in the facility consolidated within the Company’s balance sheets was $301.1 million.2023 and December 31, 2022, respectively.

Other invested assets, at fair value, as of December 31, 20212023 and December 31, 2020,2022, were comprised of preferred shares held in Preferred Holdings, an affiliated company.

a wholly-owned subsidiary of Group.

F-18

Variable Interest Entities

The Company is engaged with various special purpose entities and other entities that are deemed to be VIEs primarily as an investor 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, 20212023 and 2020,2022, 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
F-18
Table of Contents
investments. The Company’s maximum exposure to loss as of December 31, 20212023 and 20202022 is limited to the total carrying value of $1.7$3.3 billion and $1.1$2.8 billion, respectively, which are included in general and limited partnerships, COLI policies and other alternative investments in Other Invested Assetsother invested assets in the Company's Consolidated Balance Sheets. consolidated balance sheets.
As of December 31, 2021,2023, the Company has outstanding commitments totaling $0.8 billion$972 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-backasset-backed securities, which includes collateralized loan obligations and are reported inclassified as fixed maturities available-for-sale.- available for sale. 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 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.

F-19

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)

2021

 

2020

 

2019

Fixed maturity securities, market value:

 

 

 

 

 

 

 

 

Allowances for credit losses

$

(25,924)

 

$

(1,566)

 

$

-

Other-than-temporary impairments

 

-

 

 

-

 

 

(19,643)

Gains (losses) from sales

 

8,186

 

 

(32,614)

 

 

7,571

Fixed maturity securities, fair value:

 

 

 

 

 

 

 

 

Gains (losses) from sales

 

-

 

 

(2,863)

 

 

355

Gains (losses) from fair value adjustments

 

-

 

 

1,944

 

 

1,808

Equity securities, fair value:

 

 

 

 

 

 

 

 

Gains (losses) from sales

 

24,426

 

 

(7,931)

 

 

4,144

Gains (losses) from fair value adjustments

 

254,122

 

 

276,093

 

 

153,728

Other invested assets

 

6,142

 

 

1,705

 

 

6,003

Other invested assets, fair value:

 

 

 

 

 

 

 

 

Gains (losses) from fair value adjustments

 

234,337

 

 

(186,102)

 

 

265,245

Short-term investment gains (losses)

 

(3)

 

 

1,138

 

 

156

Total net realized capital gains (losses)

$

501,286

 

$

49,804

 

$

419,367

 

Roll Forward of Allowance for Credit Losses

 

Twelve Months Ended December 31, 2021

 

 

 

 

Asset

 

Obligations of

 

Foreign

 

 

 

 

Corporate

 

Backed

 

U.S. states and

 

Corporate

 

 

 

 

Securities

 

Securities

 

political subdivisions

 

Securities

 

Total

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Beginning Balance

$

(1,205)

 

$

-

 

$

-

 

$

(361)

 

$

(1,566)

Credit losses on securities where credit

 

 

 

 

 

 

 

 

 

 

 

 

 

 

losses were not previously recorded

 

(21,178)

 

 

(4,915)

 

 

(151)

 

 

(188)

 

 

(26,432)

Increases in allowance on previously

 

 

 

 

 

 

 

 

 

 

 

 

 

 

impaired securities

 

(2,530)

 

 

(2,765)

 

 

-

 

 

-

 

 

(5,295)

Decreases in allowance on previously

 

 

 

 

 

 

 

 

 

 

 

 

 

 

impaired securities

 

-

 

 

-

 

 

-

 

 

-

 

 

-

Reduction in allowance due to disposals

 

5,646

 

 

-

 

 

-

 

 

156

 

 

5,802

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance as of December 31, 2021

$

(19,267)

 

$

(7,680)

 

$

(151)

 

$

(393)

 

$

(27,491)

F-20

Years Ended December 31,
(Dollars in millions)202320222021
Fixed maturity securities:
Allowances for credit losses$(1)$(27)$(26)
Net realized gains (losses) from dispositions(192)(79)8 
Gains (losses) from fair value adjustments— — — 
Equity securities:
Net realized gains (losses) from dispositions8 117 24 
Gains (losses) from fair value adjustments(4)(447)254 
Other invested assets— 13 6 
Other invested assets, fair value:
Gains (losses) from fair value adjustments9 (558)234 
Short-term investment gains (losses)— — — 
Total net gains (losses) on investments$(180)$(982)$501 
(Some amounts may not reconcile due to rounding.)
The following tables provide a roll forward of the Company’s beginning and ending balance of allowance for credit losses for the periods indicated:
Roll Forward of Allowance for Credit Losses - Fixed Maturities - Available for Sale
Twelve Months Ended December 31, 2023
Corporate
Securities		Asset-Backed
Securities		Foreign
Corporate
Securities		Total
(Dollars in millions)
Balance, beginning of period$(45)$— $(1)$(46)
Credit losses on securities where credit losses were not previously recorded(23)— — (23)
Increases in allowance on previously impaired securities(1)— — (1)
Decreases in allowance on previously impaired securities— — — — 
Reduction in allowance due to disposals21 — 1 22 
Balance, end of period$(47)$— $— $(48)
(Some amounts may not reconcile due to rounding.)
F-19

Table of Contents

 

Roll Forward of Allowance for Credit Losses

 

Twelve Months Ended December 31, 2020

 

 

 

 

Foreign

 

Foreign

 

 

 

 

Corporate

 

Government

 

Corporate

 

 

 

 

Securities

 

Securities

 

Securities

 

Total

 

 

 

 

 

 

 

 

 

 

 

 

Beginning Balance

$

-

 

$

-

 

$

-

 

$

-

Credit losses on securities where credit

 

 

 

 

 

 

 

 

 

 

 

losses were not previously recorded

 

(21,829)

 

 

(70)

 

 

(561)

 

 

(22,460)

Increases in allowance on previously

 

 

 

 

 

 

 

 

 

 

 

impaired securities

 

(5,909)

 

 

-

 

 

(211)

 

 

(6,120)

Decreases in allowance on previously

 

 

 

 

 

 

 

 

 

 

 

impaired securities

 

1,824

 

 

-

 

 

282

 

 

2,106

Reduction in allowance due to disposals

 

24,709

 

 

70

 

 

129

 

 

24,908

 

 

 

 

 

 

 

 

 

 

 

 

Balance as of December 31, 2020

$

(1,205)

 

$

-

 

$

(361)

 

$

(1,566)

Roll Forward of Allowance for Credit Losses - Fixed Maturities - Held to Maturity
Twelve Months Ended December 31, 2023
Corporate
Securities		Asset-Backed
Securities		Foreign
Corporate
Securities		Total
(Dollars in millions)
Balance, beginning of period$(2)$(6)$(1)$(9)
Credit losses on securities where credit losses were not previously recorded— — — — 
Increases in allowance on previously impaired securities— — — — 
Decreases in allowance on previously impaired securities— — — — 
Reduction in allowance due to disposals— 1 — 1 
Balance, end of period$(2)$(5)$(1)$(8)
(Some amounts may not reconcile due to rounding.)

Roll Forward of Allowance for Credit Losses - Fixed Maturities - Available for Sale
Twelve Months Ended December 31, 2022
Corporate
Securities		Asset-Backed
Securities		Foreign
Corporate
Securities		Total
(Dollars in millions)
Balance, beginning of period$(19)$(8)$— $(27)
Credit losses on securities where credit losses were not previously recorded(11)— (1)(12)
Increases in allowance on previously impaired securities(20)— — (21)
Decreases in allowance on previously impaired securities— — — — 
Reduction in allowance due to disposals6 8 1 14 
Balance, end of period$(45)$— $(1)$(46)
(Some amounts may not reconcile due to rounding.)
Roll Forward of Allowance for Credit Losses - Fixed Maturities - Held to Maturity
Twelve Months Ended December 31, 2022
Corporate
Securities		Asset-Backed
Securities		Foreign
Corporate
Securities		Total
(Dollars in millions)
Balance, beginning of period$— $— $— $— 
Credit losses on securities where credit losses were not previously recorded(2)(6)(1)(9)
Increases in allowance on previously impaired securities— — — — 
Decreases in allowance on previously impaired securities— — — — 
Reduction in allowance due to disposals— — — — 
Balance, end of period$(2)$(6)$(1)$(9)
(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 millions)202320222021
Proceeds from sales of fixed maturity securities - available for sale$2,546 $2,645 $961 
Gross gains from dispositions12 9 33 
Gross losses from dispositions(204)(88)(24)
Proceeds from sales of equity securities$126 $2,203 $862 
Gross gains from dispositions8 165 39 
Gross losses from dispositions— (48)(15)
F-20
Table of Contents

 

 

 

Years Ended December 31,

(Dollars in thousands)

2021

 

2020

 

2019

Proceeds from sales of fixed maturity securities

$

961,050

 

$

631,285

 

$

2,403,786

Gross gains from sales

 

32,664

 

 

24,177

 

 

25,076

Gross losses from sales

 

(24,478)

 

 

(59,654)

 

 

(17,150)

 

 

 

 

 

 

 

 

 

Proceeds from sales of equity securities

$

861,801

 

$

375,112

 

$

283,707

Gross gains from sales

 

39,071

 

 

37,403

 

 

14,270

Gross losses from sales

 

(14,645)

 

 

(45,334)

 

 

(10,126)

Securities with a carrying value amount of $1.5$1.4 billion at December 31, 2021,2023, were on deposit with or regulated by various state or governmental insurance departments in compliance with insurance lawlaws. See Note 10.

3.sFAIR VALUE.

F-21

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 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 unobservable and significant to the fair value measurement.
The Company’s fixed maturity and equity securities are managed both internally and on an external basis by independent, professional investment managers using portfolio guidelines approved by the Company. The Company obtains prices from nationally recognized pricing services. These services seek to utilize market data and observations in their evaluation process. These services 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.
The Company does not make any changes to prices received from the pricing services. In addition, the Company has 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, review of pricing statistics and trends, and comparison of prices for certain securities with a secondary price 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, 2023, $2.0 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, 2022, $1.7 billion of fixed maturities were fair valued using unobservable inputs.
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 2 due to the added input of a foreign exchange conversion rate to determine fair value. The Company uses foreign currency exchange rates published by a nationally recognized 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 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.
F-21

Table of Contents

In addition, some of the fixed maturities with fair values categorized as Level 3 result when prices are not available from the nationally recognized pricing services and are obtained from investment managers 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 investment managers may obtain non-binding price quotes for the securities from brokers. The single broker quotes are provided by market makers or 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.
The fixed maturities with fair values categorized as Level 3 result when prices are not available from the nationally recognized pricing services.
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;
•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, 2023 and December 31, 2022, 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-22
Table of Contents
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:
(Dollars in millions)December 31,
2023		Quoted Prices
in Active
Markets for
Identical
Assets
(Level 1)		Significant
Other
Observable
Inputs
(Level 2)		Significant
Unobservable
Inputs
(Level 3)
Assets:
Fixed maturities - available for sale
U.S. Treasury securities and obligations of U.S. government agencies and corporations$247 $— $247 $— 
Obligations of U.S. states and political subdivisions128 — 128 — 
Corporate securities4,289 — 3,617 672 
Asset-backed securities5,282 — 3,977 1,305 
Mortgage-backed securities
Commercial522 — 522 — 
Agency residential2,435 — 2,435 — 
Non-agency residential441 — 441 — 
Foreign government securities835 — 835 — 
Foreign corporate securities1,753 — 1,737 16 
Total fixed maturities - available for sale15,932 — 13,939 1,993 
Equity securities, fair value91 70 21 — 
Other invested assets, fair value1,481 — — 1,481 
(Some amounts may not reconcile due to rounding.)
Fair Value Measurement Using:
(Dollars in millions)December 31,
2022		Quoted Prices
in Active
Markets for
Identical
Assets
(Level 1)		Significant
Other
Observable
Inputs
(Level 2)		Significant
Unobservable
Inputs
(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 subdivisions413 — 413 — 
Corporate securities3,561 — 2,846 715 
Asset-backed securities3,951 — 2,957 994 
Mortgage-backed securities
Commercial509 — 509 — 
Agency residential1,628 — 1,628 — 
Non-agency residential3 — 3 — 
Foreign government securities637 — 637 — 
Foreign corporate securities1,433 — 1,417 16 
Total fixed maturities - available for sale12,671 — 10,946 1,725 
Equity securities, fair value194 132 63 — 
Other invested assets, fair value1,472 — — 1,472 
(Some amounts may not reconcile due to rounding.)
F-23
Table of Contents
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, 2023December 31, 2022
(Dollars in millions)Corporate
Securities		Asset-Backed
Securities		CMBSForeign
Corporate		TotalCorporate
Securities		Asset-Backed
Securities		CMBSForeign
Corporate		Total
Beginning balance fixed maturities$715 $994 $— $16 $1,725 $730 $1,251 $— $16 $1,997 
Total gains or (losses) (realized/unrealized) Included in earnings (or changes in net assets)4 — — — 4 (24)— — — (24)
Included in other comprehensive income (loss)(2)6 — — 4 3 (35)— (4)(36)
Purchases, issuances and settlements(45)305 — — 260 40 513 6 8 567 
Transfers in (out) of Level 3 and reclassification of securities in/(out) investment categories— — — — — (35)(735)(6)(4)(779)
Ending balance$672 $1,305 $— $16 $1,993 $715 $994 $— $16 $1,725 
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$9 $— $— $— $9 $(23)$8 $— $— $(15)
(Some amounts may not reconcile due to rounding.)
There were no transfers of assets in/(out) Level 3 during 2023.
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 related mainly to previously designated Level 3 securities that the Company had 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 table or in the roll forward of Level 3 securities. The fair 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 use of significant unobservable inputs and therefore are classified as Level 3 within the fair value hierarchy as of December 31, 2022.
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 hierarchy tables above. Fair values of fixed maturity securities - held to maturity, senior notes and long-term subordinated notes can be found within Notes 2, 7 and 8, respectively. Fair values of long-term notes receivable from affiliates can be found within Note 15. Short-term investments are stated at cost, which approximates fair value. See Note 1.
Exempt from Fair Value Disclosure Requirements
Certain financial instruments are exempt from the requirements for fair value disclosure, such as limited partnerships accounted for under the equity method and pension and other postretirement obligations. The Company’s investment in COLI policies are recorded at their cash surrender value and are therefore not required to be included in the tables above. See Note 1 of the Notes to these Consolidated Financial Statements for details of investments in COLI policies.
In addition, $274 million and $292 million of investments within other invested assets on the consolidated balance sheets as of December 31, 2023 and December 31, 2022, 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-24

3. Table of Contents
4.RESERVES FOR LOSSES AND LAE

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

 

At December 31,

(Dollars in thousands)

2021

 

2020

 

2019

Gross reserves beginning of period

$

11,578,096

 

$

10,129,462

 

$

10,146,086

Less reinsurance recoverables

 

(3,951,474)

 

 

(4,215,348)

 

 

(4,697,543)

Net reserves beginning of period

 

7,626,622

 

 

5,914,114

 

 

5,448,543

 

 

 

 

 

 

 

 

 

Incurred related to:

 

 

 

 

 

 

 

 

Current year

 

5,381,550

 

 

4,407,795

 

 

3,784,771

Prior years

 

5,306

 

 

200,349

 

 

44,351

Total incurred losses and LAE

 

5,386,856

 

 

4,608,144

 

 

3,829,122

 

 

 

 

 

 

 

 

 

Paid related to:

 

 

 

 

 

 

 

 

Current year

 

2,373,958

 

 

1,901,971

 

 

1,885,443

Prior years

 

1,126,618

 

 

1,017,557

 

 

1,490,460

Total paid losses and LAE

 

3,500,576

 

 

2,919,528

 

 

3,375,903

 

 

 

 

 

 

 

 

 

Foreign exchange/translation adjustment

 

(42,441)

 

 

23,892

 

 

12,352

 

 

 

 

 

 

 

 

 

Net reserves end of period

 

9,470,461

 

 

7,626,622

 

 

5,914,114

Plus reinsurance recoverables

 

3,650,716

 

 

3,951,474

 

 

4,215,348

Gross reserves end of period

$

13,121,177

 

$

11,578,096

 

$

10,129,462

 

 

 

 

 

 

 

 

 

(Some amounts may not reconcile due to rounding.)

 

 

 

 

 

 

 

 

At December 31,
(Dollars in millions)202320222021
Gross reserves beginning of period$14,977 $13,121 $11,578 
Less reinsurance recoverables on unpaid losses(3,684)(3,651)(3,951)
Net reserves beginning of period11,294 9,470 7,627 
Incurred related to:
Current year5,599 5,815 5,382 
Prior years(21)7 5 
Total incurred losses and LAE5,578 5,823 5,387 
Paid related to:
Current year1,169 1,097 2,374 
Prior years3,128 2,867 1,127 
Total paid losses and LAE4,298 3,964 3,501 
Foreign exchange/translation adjustment40 (35)(42)
Net reserves end of period12,614 11,294 9,470 
Plus reinsurance recoverables on unpaid losses3,182 3,684 3,651 
Gross reserves end of period$15,796 $14,977 $13,121 

(Some amounts may not reconcile due to rounding.)
Current year incurred losses were $5.6 billion, $5.8 billion and $5.4 billion $4.4 billion and $3.8 billion atfor the years ended December 31, 2023, 2022 and 2021, 2020respectively. The decrease in current year incurred losses in 2023 compared to 2022 primarily related to a decrease of $642 million in current year catastrophe losses, partially offset by an increase of $426 million in current year attritional losses resulting from the impact of the increase in premiums earned and 2019, respectively.changes in the mix of business. The increase in current year incurred losses in 20212022 compared to 20202021 primarily related to an increase of $532.2$44 million in current year catastrophe losses and an increase of $441.6$389 million in current year attritional losses including the impact of a change in the Company’s reinsurance program with an affiliate.losses. The increase in current year attritional losses was mainly due to the growth in premiums earned partially mitigated by $154.8and $25 million of losses due to the Russia/Ukraine conflict.
The recent emergence of the Middle East war and the ongoing war in the Ukraine are evolving events. Economic and legal sanctions have been levied against Russia, specific named individuals and entities connected to the Russian government, as well as businesses located in the Russian Federation and/or owned by Russian nationals in numerous countries, including the United States. The significant political and economic uncertainty surrounding these wars and associated sanctions have impacted economic and investment markets both within Russia, Ukraine, the Middle East region, and around the world.
Incurred prior years’ reserves decreased by $21 million in 2023 and increased by $7 million and $5 million in 2022 and 2021, respectively. The net favorable development on prior year reserves of $21 million in 2023 is comprised of $351 million of favorable development on prior years attritional losses for reinsurance lines, mainly related to COVID-19 in 2020mortgage and short-tail lines of business, which did not recur in 2021.is offset by $352 million of unfavorable development on prior years attritional losses for insurance lines, mainly related to casualty lines for accident years from 2016 through 2019. The increase in currentprior year incurred lossesdevelopment also includes $37 million of commutations from 2019 to 2020stop loss agreements between Everest Re and Bermuda Re that are embedded within the Reinsurance Segment’s net favorable development on prior year attritional losses. Additionally, there was $22 million of favorable development on prior year catastrophe losses. The 2022 prior year development was primarily due to an increase of $571.0 million in current year attritional losses primarily due to higher premiums earned and the previously mentioned $154.8$113 million of losses related to COVID-19 in 2020, partially offsetstrengthening of asbestos reserves mitigated primarily by a $102.7 million decline in current year catastrophe losses.

Incurred prior years’ reserves increased by $5.3 million, $200.3 million and $44.4 million in 2021, 2020 and 2019 respectively.reserve releases from the reinsurance segment. The increase for 2021 related mainly to increases in insurance casualty reserves. The increase for 2020 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 auto liability. The reserve charge also includes actions on non-CAT property lines, primarily for the 2017 to 2019 accident years and driven by a few large losses to aggregate programs.

The following is information about incurred and paid claims development as of December 31, 2021,2023, net of reinsurance, as well as cumulative claim frequency and the total of incurred but not reported liabilities (IBNR) plus expected
F-25
Table of Contents
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-22

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, 20122014 to December 31, 20202022 is presented as supplementary information.

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.
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,
2023
(Dollars in millions)
Net outstanding liabilities
Reinsurance Casualty$5,433 
Reinsurance Property3,161 
Insurance Casualty3,310 
Insurance Property493 
Liabilities for unpaid claims and claim adjustment expenses, net of reinsurance12,396 
Reinsurance recoverable on unpaid claims
Reinsurance Casualty492 
Reinsurance Property816 
Insurance Casualty1,695 
Insurance Property179 
Total reinsurance recoverable on unpaid claims3,182 
Unallocated claims adjustment expenses184 
Other33 
218 
Total gross liability for unpaid claims and claim adjustment expense$15,796 
(Some amounts may not reconcile due to rounding.)
F-26
Table of Contents

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.

Reinsurance –- Casualty Business

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

At December 31, 2021

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

 

2020

 

 

2021

 

on Reported

 

Number of

Accident Year

 

(unaudited)

 

(unaudited)

 

(unaudited)

 

 

(unaudited)

 

 

(unaudited)

 

 

(unaudited)

 

 

(unaudited)

 

 

(unaudited)

 

 

(unaudited)

 

 

 

 

Claims

 

Reported Claims

(Dollars in thousands)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2012

 

$

374,264

 

$

267,240

 

$

174,383

 

$

181,654

 

$

188,478

 

$

190,701

 

$

190,701

 

$

190,701

 

$

190,701

 

$

190,701

 

442

 

N/A

2013

 

 

 

 

 

177,680

 

 

223,263

 

 

221,054

 

 

227,822

 

 

217,141

 

 

217,141

 

 

217,141

 

 

217,141

 

 

217,141

 

469

 

N/A

2014

 

 

 

 

 

 

 

 

255,341

 

 

234,568

 

 

256,783

 

 

228,097

 

 

228,097

 

 

228,097

 

 

228,097

 

 

228,097

 

3,077

 

N/A

2015

 

 

 

 

 

 

 

 

 

 

 

208,309

 

 

248,848

 

 

237,190

 

 

237,190

 

 

237,190

 

 

237,190

 

 

237,190

 

9,358

 

N/A

2016

 

 

 

 

 

 

 

 

 

 

 

 

 

 

241,914

 

 

238,215

 

 

238,215

 

 

238,215

 

 

238,215

 

 

238,215

 

19,816

 

N/A

2017

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

197,617

 

 

203,379

 

 

203,379

 

 

203,379

 

 

203,379

 

38,680

 

N/A

2018

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

768,393

 

 

752,960

 

 

799,254

 

 

820,853

 

137,593

 

N/A

2019

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

974,064

 

 

1,022,213

 

 

1,022,606

 

449,537

 

N/A

2020

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1,066,376

 

 

1,038,290

 

772,012

 

N/A

2021

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1,348,723

 

931,304

 

N/A

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

$

5,545,195

 

 

 

 

 

(Some amounts may not reconcile due to rounding.)

F-23

At December 31, 2023
Total of
IBNR Liabilities
Plus Expected
Development
on Reported Claims		Cumulative
Number of
Reported
Claims
Ultimate Incurred Loss and Allocated Loss Adjustment Expenses, Net of reinsurance
Years Ended December 31,
2014201520162017201820192020202120222023
Accident
Year		(unaudited)(unaudited)(unaudited)(unaudited)(unaudited)(unaudited)(unaudited)(unaudited)(unaudited)
(Dollars in millions)
2014$341 $327 $258 $229 $229 $229 $229 $229 $229 $229 —  N/A
2015294 250 238 238 238 238 238 238 238 6  N/A
2016243 239 239 239 239 239 239 239 18  N/A
2017198 204 204 204 204 204 204 50  N/A
2018814 799 845 867 919 1,029 115  N/A
20191,009 1,057 1,058 1,073 1,109 285  N/A
20201,085 1,057 1,026 1,017 373  N/A
20211,358 1,351 1,309 693  N/A
20221,331 1,290 912  N/A
20231,634 1,283  N/A
$8,299 
(Some amounts may not reconcile due to rounding.)
Cumulative Paid Loss and Allocated Loss Adjustment Expenses, Net of Reinsurance
Years Ended December 31,
2014201520162017201820192020202120222023
Accident Year(unaudited)(unaudited)(unaudited)(unaudited)(unaudited)(unaudited)(unaudited)(unaudited)(unaudited)
(Dollars in millions)
2014$15 $36 $77 $107 $145 $175 $184 $188 $211 $216 
201516 39 86 147 168 188 194 209 216 
201618 54 89 143 161 187 214 220 
201727 87 110 123 150 180 187 
2018132 200 318 415 473 510 
2019165 265 381 487 531 
2020146 237 334 447 
2021156 230 377 
2022105 222 
2023175 
$3,101 
All outstanding liabilities prior to 2014, net of reinsurance235 
Liabilities for claims and claim adjustment expenses, net of reinsurance$5,433 
(Some amounts may not reconcile due to rounding.)
Average Annual Percentage Payout of Incurred Loss by Age, Net of Reinsurance (unaudited)
Years12345678910
Casualty11.5 %8.9 %11.6 %11.7 %6.8 %7.3 %5.5 %3.6 %6.3 %2.0 %
F-27

Table of Contents

 

 

 

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

 

 

 

Years Ended December 31,

 

 

 

2012

 

 

2013

 

 

2014

 

 

2015

 

 

2016

 

 

2017

 

 

2018

 

 

2019

 

 

2020

 

 

2021

Accident Year

 

 

(unaudited)

 

 

(unaudited)

 

 

(unaudited)

 

 

(unaudited)

 

 

(unaudited)

 

 

(unaudited)

 

 

(unaudited)

 

 

(unaudited)

 

 

(unaudited)

 

 

 

(Dollars in thousands)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2012

 

$

13,205

 

$

29,560

 

$

59,883

 

$

94,889

 

$

120,798

 

$

125,361

 

$

149,126

 

$

152,963

 

$

158,734

 

$

163,440

2013

 

 

 

 

 

12,437

 

 

28,105

 

 

63,619

 

 

97,298

 

 

125,905

 

 

157,967

 

 

178,119

 

 

183,897

 

 

186,205

2014

 

 

 

 

 

 

 

 

14,576

 

 

34,231

 

 

75,579

 

 

106,207

 

 

142,595

 

 

174,830

 

 

184,167

 

 

188,462

2015

 

 

 

 

 

 

 

 

 

 

 

15,144

 

 

37,998

 

 

84,178

 

 

145,819

 

 

169,256

 

 

186,975

 

 

195,226

2016

 

 

 

 

 

 

 

 

 

 

 

 

 

 

16,907

 

 

52,674

 

 

88,115

 

 

147,710

 

 

159,910

 

 

187,253

2017

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

25,901

 

 

85,219

 

 

98,032

 

 

126,846

 

 

145,370

2018

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

118,244

 

 

195,365

 

 

300,740

 

 

407,182

2019

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

149,304

 

 

243,937

 

 

369,040

2020

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

133,237

 

 

225,810

2021

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

160,388

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

$

2,228,375

All outstanding liabilities prior to 2012, net of reinsurance

 

 

 

 

 

 

 

 

 

 

 

 

 

 

417,209

Liabilities for claims and claim adjustment expenses, net of reinsurance

 

 

 

 

 

 

 

$

3,734,028

 

 

 

 

 

 

 

(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

 

 

9

 

 

10

 

Casualty

 

11.9

%

 

10.3

%

 

13.7

%

 

16.7

%

 

11.0

%

 

10.3

%

 

7.0

%

 

2.2

%

 

2.0

%

 

2.5

%

Reinsurance - Property Business

F-24

At December 31, 2023
Total of
IBNR Liabilities
Plus Expected
Development
on Reported Claims		Cumulative
Number of
Reported
Claims
Ultimate Incurred Loss and Allocated Loss Adjustment Expenses, Net of reinsurance
Years Ended December 31,
2014201520162017201820192020202120222023
Accident
Year		(unaudited)(unaudited)(unaudited)(unaudited)(unaudited)(unaudited)(unaudited)(unaudited)(unaudited)
(Dollars in millions)
2014$715 $527 $369 $339 $340 $340 $340 $340 $340 $340 3  N/A
2015640 341 311 311 311 311 311 311 311 1  N/A
2016612 631 632 628 627 627 627 628 2  N/A
20171,262 1,847 2,015 2,109 2,162 2,200 2,203 2  N/A
20182,214 2,103 2,093 2,041 2,011 1,982 (1) N/A
20191,658 1,664 1,591 1,486 1,479 (7) N/A
20201,843 1,887 1,827 1,805 23  N/A
20212,140 2,126 2,068 87  N/A
20222,535 2,223 549  N/A
20231,958 980  N/A
$14,996 
(Some amounts may not reconcile due to rounding.)
Cumulative Paid Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance
Years Ended December 31,
2014201520162017201820192020202120222023
Accident
Year		(unaudited)(unaudited)(unaudited)(unaudited)(unaudited)(unaudited)(unaudited)(unaudited)(unaudited)
(Dollars in millions)
2014$145 $222 $273 $301 $317 $319 $323 $325 $332 $339 
2015148 213 261 276 282 287 291 300 314 
2016223 475 569 575 580 582 592 603 
2017773 1,529 1,887 2,011 2,105 2,181 2,219 
2018470 1,358 1,652 1,808 1,866 1,909 
2019656 1,016 1,258 1,376 1,472 
2020528 1,100 1,408 1,590 
2021625 1,274 1,634 
2022548 1,209 
2023525 
$11,815 
All outstanding liabilities prior to 2014, net of reinsurance(20)
Liabilities for claims and claim adjustment expenses, net of reinsurance$3,161 
(Some amounts may not reconcile due to rounding.)
Average Annual Percentage Payout of Incurred Loss by Age, Net of Reinsurance (unaudited)
Years12345678910
Property30.9 %32.8 %16.2 %7.2 %3.9 %2.4 %1.6 %1.7 %3.3 %1.9 %
F-28

Table of Contents

Insurance - Casualty Business
At December 31, 2023
Total of
IBNR Liabilities
Plus Expected
Development
on Reported Claims		Cumulative
Number of
Reported
Claims
Ultimate Incurred Loss and Allocated Loss Adjustment Expenses, Net of reinsurance
Years Ended December 31,
2014201520162017201820192020202120222023
Accident
Year		(unaudited)(unaudited)(unaudited)(unaudited)(unaudited)(unaudited)(unaudited)(unaudited)(unaudited)
(Dollars in millions)
2014$238 $239 $241 $255 $255 $255 $256 $256 $256 $256 1 24,779
2015259 259 277 277 277 266 266 269 278 4 26,300
2016351 276 279 281 288 287 281 281 — 30,606
2017304 237 238 237 236 232 235 — 34,567
2018645 644 666 689 698 793 135 35,301
2019768 756 794 814 996 194 39,356
2020817 792 793 841 287 38,099
20211,112 1,112 1,106 457 44,387
20221,039 1,054 450 45,829
20231,236 620 36,309
$7,076 
(Some amounts may not reconcile due to rounding.)
Cumulative Paid Loss and Allocated Loss Adjustment Expenses, Net of Reinsurance
Years Ended December 31,
2014201520162017201820192020202120222023
Accident
Year		(unaudited)(unaudited)(unaudited)(unaudited)(unaudited)(unaudited)(unaudited)(unaudited)(unaudited)
(Dollars in millions)
2014$20 $72 $114 $144 $229 $229 $250 $253 $254 $255 
201520 68 117 199 244 259 263 266 270 
201625 101 276 299 308 313 318 321 
201723 151 157 217 233 239 243 
201863 189 271 383 435 476 
201911 217 350 489 598 
202082 209 340 448 
2021201 339 521 
2022222 470 
2023193 
$3,793 
All outstanding liabilities prior to 2014, net of reinsurance27 
Liabilities for claims and claim adjustment expenses, net of reinsurance$3,310 
(Some amounts may not reconcile due to rounding.)
Average Annual Percentage Payout of Incurred Loss by Age, Net of Reinsurance (unaudited)
Years12345678910
Casualty12.1 %19.7 %16.7 %15.0 %11.1 %3.6 %3.2 %1.1 %0.9 %0.2 %
F-29

Table of ContentsReinsurance –
Insurance - Property Business

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

At December 31, 2021

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

 

2020

 

 

2021

 

on Reported

 

Number of

Accident Year

 

(unaudited)

 

(unaudited)

 

(unaudited)

 

 

(unaudited)

 

 

(unaudited)

 

 

(unaudited)

 

 

(unaudited)

 

 

(unaudited)

 

 

(unaudited)

 

 

 

 

Claims

 

Reported Claims

(Dollars in thousands)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2012

 

$

679,785

 

$

587,520

 

$

523,948

 

$

549,441

 

$

539,374

 

$

541,323

 

$

526,815

 

$

523,856

 

$

522,297

 

$

520,333

 

1,026

 

N/A

2013

 

 

 

 

 

403,975

 

 

300,432

 

 

258,467

 

 

219,064

 

 

218,494

 

 

218,393

 

 

218,393

 

 

218,393

 

 

218,393

 

293

 

N/A

2014

 

 

 

 

 

 

 

 

598,906

 

 

520,558

 

 

398,417

 

 

369,381

 

 

370,501

 

 

370,501

 

 

370,501

 

 

370,501

 

513

 

N/A

2015

 

 

 

 

 

 

 

 

 

 

 

556,750

 

 

362,015

 

 

336,155

 

 

336,155

 

 

336,155

 

 

336,155

 

 

336,155

 

1,175

 

N/A

2016

 

 

 

 

 

 

 

 

 

 

 

 

 

 

638,865

 

 

673,684

 

 

673,998

 

 

670,154

 

 

668,786

 

 

669,430

 

3,993

 

N/A

2017

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1,272,428

 

 

1,856,678

 

 

2,025,190

 

 

2,118,950

 

 

2,171,546

 

5,340

 

N/A

2018

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2,247,228

 

 

2,136,005

 

 

2,126,144

 

 

2,073,974

 

3,926

 

N/A

2019

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1,752,412

 

 

1,758,026

 

 

1,685,107

 

130,235

 

N/A

2020

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1,889,425

 

 

1,933,200

 

376,021

 

N/A

2021

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2,172,649

 

1,048,869

 

N/A

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

$

12,151,287

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(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

 

 

2020

 

 

2021

Accident Year

 

 

(unaudited)

 

 

(unaudited)

 

 

(unaudited)

 

 

(unaudited)

 

 

(unaudited)

 

 

(unaudited)

 

 

(unaudited)

 

 

(unaudited)

 

 

(unaudited)

 

 

 

(Dollars in thousands)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2012

 

$

149,680

 

$

290,697

 

$

366,373

 

$

432,118

 

$

450,309

 

$

479,080

 

$

491,667

 

$

492,822

 

$

494,581

 

$

499,386

2013

 

 

 

 

 

134,914

 

 

166,776

 

 

180,524

 

 

195,395

 

 

203,843

 

 

211,113

 

 

214,264

 

 

215,325

 

 

216,097

2014

 

 

 

 

 

 

 

 

159,404

 

 

254,954

 

 

316,111

 

 

346,325

 

 

358,577

 

 

361,190

 

 

365,719

 

 

368,078

2015

 

 

 

 

 

 

 

 

 

 

 

161,394

 

 

239,320

 

 

296,683

 

 

314,114

 

 

321,199

 

 

326,643

 

 

331,154

2016

 

 

 

 

 

 

 

 

 

 

 

 

 

 

249,085

 

 

556,082

 

 

654,563

 

 

656,722

 

 

658,337

 

 

663,957

2017

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

808,372

 

 

1,628,572

 

 

1,991,813

 

 

2,098,073

 

 

2,157,355

2018

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

486,807

 

 

1,397,399

 

 

1,723,729

 

 

1,865,968

2019

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

704,540

 

 

1,205,478

 

 

1,461,033

2020

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

555,171

 

 

1,176,568

2021

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

638,780

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

$

9,378,377

All outstanding liabilities prior to 2012, net of reinsurance

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

154,467

Liabilities for claims and claim adjustment expenses, net of reinsurance

 

 

 

 

 

 

 

 

 

 

 

 

 

$

2,927,377

 

 

 

 

 

 

 

(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

 

 

9

 

 

10

 

Property

33.3

%

 

35.1

%

 

15.6

%

 

6.0

%

 

2.5

%

 

2.4

%

 

1.7

%

 

0.4

%

 

0.3

%

 

0.9

%

F-25

At December 31, 2023
Total of
IBNR Liabilities
Plus Expected
Development
on Reported Claims		Cumulative
Number of
Reported
Claims
Ultimate Incurred Loss and Allocated Loss Adjustment Expenses, Net of reinsurance
Years Ended December 31,
2014201520162017201820192020202120222023
Accident Year(unaudited)(unaudited)(unaudited)(unaudited)(unaudited)(unaudited)(unaudited)(unaudited)(unaudited)
(Dollars in millions)
2014$76 $89 $84 $82 $82 $82 $82 $82 $82 $82 —  N/A
201596 93 93 92 95 107 107 103 95 —  N/A
2016150 186 180 177 175 174 181 181 —  N/A
2017233 300 303 309 322 332 329 —  N/A
2018382 380 392 390 395 402 5  N/A
2019350 367 359 365 378 7  N/A
2020524 523 513 478 24  N/A
2021557 550 578 31  N/A
2022708 711 115  N/A
2023638 164  N/A
$3,872 

Insurance – Casualty Business

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

At December 31, 2021

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

 

2020

 

 

2021

 

on Reported

 

Number of

Accident Year

 

(unaudited)

 

(unaudited)

 

(unaudited)

 

 

(unaudited)

 

 

(unaudited)

 

 

(unaudited)

 

 

(unaudited)

 

 

(unaudited)

 

 

(unaudited)

 

 

 

 

Claims

 

Reported Claims

(Dollars in thousands)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2012

 

$

212,020

 

$

175,028

 

$

185,368

 

$

184,658

 

$

188,272

 

$

185,808

 

$

185,808

 

$

185,859

 

$

186,976

 

$

186,976

 

1,017

 

15,782

2013

 

 

 

 

 

256,168

 

 

228,206

 

 

230,727

 

 

224,705

 

 

194,720

 

 

194,729

 

 

194,894

 

 

195,442

 

 

195,442

 

1,938

 

21,360

2014

 

 

 

 

 

 

 

 

238,062

 

 

239,066

 

 

240,960

 

 

255,016

 

 

255,140

 

 

255,099

 

 

256,254

 

 

256,254

 

2,301

 

25,265

2015

 

 

 

 

 

 

 

 

 

 

 

259,199

 

 

259,516

 

 

278,169

 

 

278,168

 

 

278,338

 

 

266,805

 

 

266,805

 

2,538

 

27,044

2016

 

 

 

 

 

 

 

 

 

 

 

 

 

 

351,988

 

 

276,918

 

 

279,642

 

 

281,718

 

 

288,365

 

 

288,365

 

3,687

 

31,674

2017

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

304,338

 

 

237,963

 

 

238,151

 

 

237,543

 

 

237,550

 

3,703

 

35,627

2018

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

645,821

 

 

645,105

 

 

666,576

 

 

690,035

 

171,007

 

36,041

2019

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

768,835

 

 

755,941

 

 

794,498

 

204,649

 

39,219

2020

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

817,231

 

 

792,661

 

510,532

 

34,983

2021

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1,112,359

 

708,987

 

31,679

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

$

4,820,945

 

 

 

 

 

(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

 

 

2020

 

 

2021

Accident Year

 

 

(unaudited)

 

 

(unaudited)

 

 

(unaudited)

 

 

(unaudited)

 

 

(unaudited)

 

 

(unaudited)

 

 

(unaudited)

 

 

(unaudited)

 

 

(unaudited)

 

 

 

(Dollars in thousands)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2012

 

$

15,687

 

$

55,230

 

$

84,407

 

$

116,622

 

$

133,278

 

$

147,010

 

$

154,410

 

$

168,865

 

$

171,160

 

$

174,799

2013

 

 

 

 

 

17,120

 

 

68,588

 

 

101,648

 

 

129,755

 

 

149,774

 

 

167,583

 

 

182,788

 

 

189,216

 

 

193,325

2014

 

 

 

 

 

 

 

 

20,377

 

 

71,918

 

 

114,198

 

 

143,892

 

 

228,998

 

 

229,606

 

 

250,487

 

 

253,265

2015

 

 

 

 

 

 

 

 

 

 

 

19,962

 

 

67,995

 

 

116,979

 

 

199,529

 

 

244,473

 

 

259,190

 

 

264,189

2016

 

 

 

 

 

 

 

 

 

 

 

 

 

 

24,808

 

 

101,233

 

 

275,797

 

 

299,126

 

 

308,336

 

 

313,458

2017

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

22,806

 

 

151,275

 

 

156,995

 

 

216,906

 

 

233,798

2018

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

63,227

 

 

189,296

 

 

271,718

 

 

383,255

2019

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

10,609

 

 

216,399

 

 

350,310

2020

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

94,546

 

 

222,904

2021

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

200,730

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

$

2,590,034

All outstanding liabilities prior to 2012, net of reinsurance

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

28,430

Liabilities for claims and claim adjustment expenses, net of reinsurance

 

 

 

 

 

 

 

 

 

 

 

 

 

 

$

2,259,340

 

 

 

 

 

 

 

(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

 

 

9

 

 

10

 

Casualty

 

10.2

%

 

15.1

%

 

18.9

%

 

17.3

%

 

13.5

%

 

4.4

%

 

3.2

%

 

3.7

%

 

1.7

%

 

1.9

%

(Some amounts may not reconcile due to rounding.)

F-26

Cumulative Paid Loss and Allocated Loss Adjustment Expenses, Net of Reinsurance
Years Ended December 31,
2014201520162017201820192020202120222023
Accident
Year		(unaudited)(unaudited)(unaudited)(unaudited)(unaudited)(unaudited)(unaudited)(unaudited)(unaudited)
(Dollars in millions)
2014$45 $77 $81 $81 $82 $82 $82 $82 $82 $82 
201551 82 91 91 91 94 94 94 95 
201678 162 180 175 178 180 180 181 
2017164 298 287 305 321 329 329 
2018238 349 376 388 391 396 
2019224 346 357 364 367 
2020271 374 395 453 
2021361 515 537 
2022390 548 
2023391 
$3,379 
All outstanding liabilities prior to 2014, net of reinsurance— 
Liabilities for claims and claim adjustment expenses, net of reinsurance$493 

Insurance – Property Business

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

At December 31, 2021

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

 

2020

 

 

2021

 

on Reported

 

Number of

Accident Year

 

(unaudited)

 

(unaudited)

 

(unaudited)

 

 

(unaudited)

 

 

(unaudited)

 

 

(unaudited)

 

 

(unaudited)

 

 

(unaudited)

 

 

(unaudited)

 

 

 

 

Claims

 

Reported Claims

(Dollars in thousands)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2012

 

$

58,482

 

$

47,227

 

$

43,423

 

$

44,867

 

$

44,297

 

$

44,105

 

$

44,149

 

$

44,098

$

$

43,981

 

$

43,981

 

-

 

N/A

2013

 

 

 

 

 

64,491

 

 

56,350

 

 

52,175

 

 

52,865

 

 

52,676

 

 

52,667

 

 

52,501

 

 

52,604

 

 

52,604

 

1

 

N/A

2014

 

 

 

 

 

 

 

 

67,658

 

 

70,075

 

 

67,446

 

 

66,644

 

 

66,519

 

 

66,560

 

 

66,661

 

 

66,661

 

1

 

N/A

2015

 

 

 

 

 

 

 

 

 

 

 

81,132

 

 

75,671

 

 

75,828

 

 

75,785

 

 

75,614

 

 

88,916

 

 

88,916

 

6

 

N/A

2016

 

 

 

 

 

 

 

 

 

 

 

 

 

 

143,312

 

 

169,794

 

 

165,081

 

 

164,068

 

 

159,296

 

 

159,299

 

15

 

N/A

2017

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

230,648

 

 

293,606

 

 

297,609

 

 

300,168

 

 

306,076

 

177

 

N/A

2018

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

376,799

 

 

373,382

 

 

377,908

 

 

377,527

 

159

 

N/A

2019

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

337,988

 

 

349,802

 

 

348,349

 

334

 

N/A

2020

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

510,496

 

 

508,786

 

4,771

 

N/A

2021

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

541,106

 

160,032

 

N/A

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

$

2,493,303

 

 

 

 

 

(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

 

 

2020

 

 

2021

Accident Year

 

 

(unaudited)

 

 

(unaudited)

 

 

(unaudited)

 

 

(unaudited)

 

 

(unaudited)

 

 

(unaudited)

 

 

(unaudited)

 

 

(unaudited)

 

 

(unaudited)

 

 

 

(Dollars in thousands)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2012

 

$

26,868

 

$

44,407

 

$

42,865

 

$

44,516

 

$

44,230

 

$

44,040

 

$

44,049

 

$

44,075

 

$

43,880

 

$

43,916

2013

 

 

 

 

 

35,201

 

 

54,219

 

 

52,587

 

 

52,848

 

 

52,473

 

 

52,458

 

 

52,465

 

 

52,436

 

 

52,495

2014

 

 

 

 

 

 

 

 

40,277

 

 

66,435

 

 

66,600

 

 

65,967

 

 

66,448

 

 

66,481

 

 

66,557

 

 

66,566

2015

 

 

 

 

 

 

 

 

 

 

 

45,421

 

 

70,397

 

 

75,166

 

 

75,190

 

 

75,047

 

 

76,312

 

 

76,370

2016

 

 

 

 

 

 

 

 

 

 

 

 

 

 

72,262

 

 

153,113

 

 

169,128

 

 

164,453

 

 

163,284

 

 

163,711

2017

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

161,592

 

 

293,419

 

 

282,606

 

 

296,783

 

 

299,146

2018

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

236,427

 

 

342,824

 

 

368,751

 

 

375,508

2019

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

218,337

 

 

337,086

 

 

347,014

2020

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

263,475

 

 

364,032

2021

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

359,621

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

$

2,148,377

All outstanding liabilities prior to 2012, net of reinsurance

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

144

Liabilities for claims and claim adjustment expenses, net of reinsurance

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

$

345,070

 

 

 

 

(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

 

 

9

 

 

10

 

Property

 

58.5

%

 

33.4

%

 

3.0

%

 

1.6

%

 

1.6

%

 

1.4

%

 

0.1

%

 

0.3

%

 

0.1

%

 

0.1

%

Reconciliation of the Disclosure of Incurred and Paid Claims Development(Some amounts may not reconcile due 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.

rounding.)

F-27

Average Annual Percentage Payout of Incurred Loss by Age, Net of Reinsurance (unaudited)
Years12345678910
Property57.1 %29.8 %4.0 %4.7 %1.8 %1.6 %0.2 %0.7 %0.2 %0.1 %

 

At December 31,

 

2021

(Dollars in thousands)

 

 

Net outstanding liabilities

 

 

Reinsurance Casualty

$

3,734,028

Reinsurance Property

 

2,927,377

Insurance Casualty

 

2,259,340

Insurance Property

 

345,070

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

 

9,265,815

 

 

 

Reinsurance recoverable on unpaid claims

 

 

Reinsurance Casualty

 

908,589

Reinsurance Property

 

1,010,858

Insurance Casualty

 

1,541,726

Insurance Property

 

189,544

Total reinsurance recoverable on unpaid claims

 

3,650,716

 

 

 

Unallocated claims adjustment expenses

 

173,945

Other

 

30,701

 

 

204,646

 

 

 

Total gross liability for unpaid claims and claim adjustment expense

$

13,121,177

 

 

 

(Some amounts may not reconcile due to rounding.)

 

 

Reserving Methodology

The Company maintains reserves equal to our estimated ultimate liability for 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. InsuranceManagement’s best estimate is developed through collaboration with actuarial, underwriting, claims, legal and reinsurance lossfinance departments and LAE reserves representculminates with the Company’sinput of reserve committees. Each segment reserve committee
F-30
Table of Contents
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. Actual loss and LAE ultimately paid may deviate, perhaps substantially, from such reserves. Net income will be impacted in a period in which the change in estimated ultimate loss and LAE is recorded.

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, 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 claimsClaims staff handleshandle individual loss reports and supporting claim information. Based on evaluation of a claim, the Company may

F-28

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 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 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 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 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.

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
F-31
Table of Contents
short tail lines at an earlier stage than for long tail lines. As a result, the Company utilizes, as well, exposure-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 do we supplement the actuarially determined reserves for uncertainty.

F-29

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.

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:

 

At December 31,

(Dollars in thousands)

 

2021

 

 

2020

 

 

2019

Gross basis:

 

 

 

 

 

 

 

 

Beginning of period reserves

$

219,341

 

$

257,921

 

$

347,495

Incurred losses

 

10,861

 

 

1,540

 

 

2,071

Paid losses

 

(55,048)

 

 

(40,120)

 

 

(91,645)

End of period reserves

$

175,154

 

$

219,341

 

$

257,921

 

 

 

 

 

 

 

 

 

Net basis:

 

 

 

 

 

 

 

 

Beginning of period reserves

$

167,439

 

$

196,574

 

$

223,548

Incurred losses

 

(3,148)

 

 

(4,753)

 

 

-

Paid losses

 

(35,857)

 

 

(24,382)

 

 

(26,974)

End of period reserves

$

128,434

 

$

167,439

 

$

196,574

At December 31,
(Dollars in millions)202320222021
Gross basis:
Beginning of period reserves$278 $175 $219 
Incurred losses— 144 11 
Paid losses(31)(42)(55)
End of period reserves$246 $278 $175 
Net basis:
Beginning of period reserves$210 $128 $167 
Incurred losses— 113 (3)
Paid losses(21)(32)(36)
End of period reserves$189 $210 $128 

Reinsurance Recoverables. Reinsurance recoverables for both paid and unpaid losses totaled $3.9$3.4 billion and $4.2$3.8 billion at December 31, 20212023 and 2020,2022, respectively. At December 31, 2021, $2.32023, $1.5 billion, or 59.2%45.8%, was receivable from Everest Reinsurance (Bermuda), Ltd. (“Bermuda Re”), an affiliated entity, and is fully collateralized by a trust agreement and $391.5$285 million, or 10.1%8.5%, 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.

F-30

F-32

Table of Contents

5.

REINSURANCE

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 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 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 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.

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, review of pricing statistics and trends, and comparison of prices for certain securities with a secondary price 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, 2021, $2.0 billion of fixed maturities, market value 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, 2020, $1.3 billion of fixed maturities, market value were fair valued using unobservable inputs.

The Company internally manages a public equity portfolio which had a fair value at December 31, 2021 and December 31, 2020 of $1.3 billion and $784.7 million, respectively. During the fourth quarter of 2021, the Company began to internally manage a portfolio of collateralized loan obligations included in asset-backed securities which had a fair value of $2.0 billion at December 31, 2021. All prices for these securities were obtained from publicly published sources or nationally recognized pricing vendors.

F-31

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 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 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 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.

In addition to the valuations from investment managers, some of the fixed maturities with fair values categorized as Level 3 result when prices are not available from the nationally recognized pricing 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 investment managers may obtain non-binding price quotes for the securities from brokers. The single broker quotes are provided by market makers or 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.

The fixed maturities with fair values categorized as Level 3 result when prices are not available from the nationally recognized pricing services.

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;

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;

F-32

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, 2021 and December 31, 2020, 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-33

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)

2021

 

(Level 1)

 

(Level 2)

 

(Level 3)

Assets:

 

 

 

 

 

 

 

 

 

 

 

Fixed maturities, market value

 

 

 

 

 

 

 

 

 

 

 

U.S. Treasury securities and obligations of

U.S. government agencies and corporations

$

662,749

 

$

-

 

$

662,749

 

$

-

Obligations of U.S. States and political subdivisions

 

586,621

 

 

-

 

 

586,621

 

 

-

Corporate securities

 

4,074,905

 

 

-

 

 

3,344,980

 

 

729,925

Asset-backed securities

 

3,466,286

 

 

-

 

 

2,215,005

 

 

1,251,281

Mortgage-backed securities

 

 

 

 

 

 

 

 

 

 

 

Commercial

 

602,894

 

 

-

 

 

602,894

 

 

-

Agency residential

 

1,260,678

 

 

-

 

 

1,260,678

 

 

-

Non-agency residential

 

4,408

 

 

-

 

 

4,408

 

 

-

Foreign government securities

 

691,980

 

 

-

 

 

691,980

 

 

-

Foreign corporate securities

 

1,509,874

 

 

-

 

 

1,493,859

 

 

16,015

Total fixed maturities, market value

 

12,860,395

 

 

-

 

 

10,863,174

 

 

1,997,221

 

 

 

 

 

 

 

 

 

 

 

 

Equity securities, fair value

 

1,757,792

 

 

1,721,762

 

 

36,030

 

 

-

Other invested assets, fair value

 

2,030,816

 

 

-

 

 

-

 

 

2,030,816

 

 

 

 

Fair Value Measurement Using:

 

 

 

 

Quoted Prices

 

 

 

 

 

 

 

 

 

 

in Active

 

Significant

 

 

 

 

 

 

 

Markets for

 

Other

 

Significant

 

 

 

 

Identical

 

Observable

 

Unobservable

 

December 31,

 

Assets

 

Inputs

 

Inputs

(Dollars in thousands)

2020

 

(Level 1)

 

(Level 2)

 

(Level 3)

Assets:

 

 

 

 

 

 

 

 

 

 

 

Fixed maturities, market value

 

 

 

 

 

 

 

 

 

 

 

U.S. Treasury securities and obligations of

U.S. government agencies and corporations

$

681,989

 

$

-

 

$

681,989

 

$

-

Obligations of U.S. States and political subdivisions

 

577,046

 

 

-

 

 

577,046

 

 

-

Corporate securities

 

3,449,912

 

 

-

 

 

2,819,068

 

 

630,844

Asset-backed securities

 

2,474,170

 

 

-

 

 

1,851,137

 

 

623,033

Mortgage-backed securities

 

 

 

 

 

 

 

 

 

 

 

Commercial

 

550,080

 

 

-

 

 

550,080

 

 

-

Agency residential

 

965,100

 

 

-

 

 

965,100

 

 

-

Non-agency residential

 

3,164

 

 

-

 

 

3,164

 

 

-

Foreign government securities

 

742,238

 

 

-

 

 

742,238

 

 

-

Foreign corporate securities

 

1,199,866

 

 

-

 

 

1,194,167

 

 

5,699

Total fixed maturities, market value

 

10,643,565

 

 

-

 

 

9,383,989

 

 

1,259,576

 

 

 

 

 

 

 

 

 

 

 

 

Equity securities, fair value

 

1,288,767

 

 

1,222,158

 

 

66,609

 

 

-

Other invested assets, fair value

 

1,796,479

 

 

-

 

 

-

 

 

1,796,479

F-34

In addition, $286.6 million and $224.7 million of investments within other invested assets on the consolidated balance sheets as of December 31, 2021 and December 31, 2020, respectively, are not included within the fair value hierarchy tables as the assets are measured at NAV as a practical expedient to determine fair value.

The following tables present the activity under Level 3, fair value measurements using significant unobservable inputs by asset type, for the periods indicated:

 

Total Fixed Maturities, Market Value

 

December 31, 2021

 

December 31, 2020

 

Corporate

 

Asset

 

Foreign

 

 

 

Corporate

 

Asset

 

Foreign

 

 

 

(Dollars in thousands)

Securities

 

Backed Securities

 

Corporate

 

Total

 

Securities

 

Backed Securities

 

Corporate

 

Total

Beginning balance

$

630,843

 

$

623,033

 

$

5,700

 

$

1,259,576

 

$

546,939

 

$

153,641

 

$

1,751

 

$

702,331

Total gains or (losses) (realized/unrealized)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Included in earnings

 

(11,717)

 

 

(6,469)

 

 

399

 

 

(17,787)

 

 

1,216

 

 

681

 

 

(125)

 

 

1,772

Included in other comprehensive

income (loss)

 

4,007

 

 

(6,603)

 

 

184

 

 

(2,412)

 

 

(1,115)

 

 

11,678

 

 

147

 

 

10,710

Purchases, issuances and settlements

 

106,791

 

 

641,320

 

 

9,733

 

 

757,844

 

 

84,840

 

 

457,033

 

 

3,814

 

 

545,687

Transfers in and/or (out) of Level 3

 

-

 

 

-

 

 

-

 

 

-

 

 

(1,037)

 

 

-

 

 

113

 

 

(924)

Ending balance

$

729,925

 

$

1,251,281

 

$

16,015

 

$

1,997,221

 

$

630,843

 

$

623,033

 

$

5,700

 

$

1,259,576

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

$

(16,467)

 

$

(7,679)

 

$

-

 

$

(24,146)

 

$

(539)

 

$

-

 

$

-

 

$

(539)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(Some amounts may not reconcile due to rounding.)

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Fixed Maturities, Fair Value

 

December 31, 2021

 

December 31, 2020

 

Foreign

 

 

 

Foreign

 

 

 

(Dollars in thousands)

Corporate

 

Total

 

Corporate

 

Total

Beginning balance fixed maturities at fair value

 

-

 

 

-

 

 

5,826

 

 

5,826

Total gains or (losses) (realized/unrealized)

 

 

 

 

 

 

 

 

 

 

 

Included in earnings

 

-

 

 

-

 

 

(919)

 

 

(919)

Included in other comprehensive income (loss)

 

-

 

 

-

 

 

-

 

 

-

Purchases, issuances and settlements

 

-

 

 

-

 

 

(4,907)

 

 

(4,907)

Transfers in and/or (out) of Level 3

 

-

 

 

-

 

 

-

 

 

-

Ending balance

$

-

 

$

-

 

$

-

 

$

-

(Some amounts may not reconcile due to rounding.)

 

 

 

 

 

 

 

 

 

 

 

 

The net transfers to/(from) Level 3, fair value measurements using significant unobservable inputs for fixed maturities, market value were $(0.9) million for the year ended December 31, 2020. The transfers during 2020 related to securities that were previously priced by investment managers and were subsequently priced using a recognized pricing service as of December 31, 2020.

The net transfers to/(from) Level 3, fair value measurements using significant unobservable inputs for equity securities, fair value were ($9.9) million for 2020. The transfer of ($9.9) million during 2020, was related to preferred stock in a private entity purchased during the second quarter of 2020 which was priced at cost originally and was subsequently priced based upon the book value of the underlying private entity as of December 31, 2020. There were 0 such transfers during 2021.

F-35

5. SENIOR NOTES

The table below displays Holdings’ outstanding senior notes. Market 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, 2021

 

December 31, 2020

 

 

 

 

 

 

 

Consolidated

 

 

 

 

Consolidated

 

 

 

 

 

 

 

 

Principal

 

Balance Sheet

 

Market

 

Balance Sheet

 

Market

(Dollars in thousands)

Date Issued

 

Date Due

 

Amounts

 

Amount

 

Value

 

Amount

 

Value

4.868% Senior notes

06/05/2014

 

06/01/2044

 

400,000

 

$

397,314

 

$

503,840

 

$

397,194

 

$

528,000

3.5% Senior notes

10/7/2020

 

10/15/2050

 

1,000,000

 

$

980,046

 

$

1,054,520

 

$

979,524

 

$

1,138,100

3.125% Senior notes

10/4/2021

 

10/15/2052

 

1,000,000

 

$

968,440

 

$

983,140

 

$

-

 

$

-

 

 

 

 

 

2,400,000

 

$

2,345,800

 

$

2,541,500

 

$

1,376,718

 

$

1,666,100

On October 4, 2021, Holdings issued $1.0 billion of 31 year senior notes an interest coupon rate of 3.125% which will mature on October 15, 2052. Interest is paid semi-annually on April 15th and October 15th of each year.

Interest expense incurred in connection with these senior notes is as follows for the periods indicated:

 

 

 

 

 

Years Ended December 31,

(Dollars in thousands)

Interest Paid

 

Payable Dates

 

 

2021

 

 

2020

 

 

2019

4.868% Senior notes

semi-annually

 

June 1/December 1

 

$

19,472

 

$

19,472

 

$

19,472

3.5% Senior notes

semi-annually

 

April 15/October 15

 

$

35,221

 

$

8,115

 

$

-

3.125% Senior notes

semi-annually

 

April 15/October 15

 

$

7,635

 

$

-

 

$

-

 

 

 

 

 

$

62,328

 

$

27,587

 

$

19,472

6. LONG TERM SUBORDINATED NOTES

The table below displays Holdings’ outstanding fixed to floating rate long term subordinated notes. Market 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, 2021

 

December 31, 2020

 

 

 

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

 

$

223,774

 

$

216,289

 

$

223,674

 

$

206,447

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 floating rate interest period from May 15, 2017 through maturity, interest will be based on the 3 month LIBOR plus 238.5 basis points, reset quarterly, payable quarterly in arrears on February 15, May 15, August 15 and November 15 of each year, subject to Holdings’ right to defer interest on 1 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, 2021 to February 14, 2022 is 2.54%.

Holdings may redeem the long term subordinated notes 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 Company’s 5.40% senior notes on October 15, 2014, the Company’s 4.868% senior notes, due on June 1, 2044, have become the Company’s long term indebtedness that ranks senior to the long term subordinated notes.

F-36

The Company repurchased and retired $13.2 million of its outstanding long term subordinated notes during the year ended December 31, 2020. The Company realized a gain of $2.5 million from the repurchase of the long term subordinated notes the year ended December 2020. NaN repurchases of debt were made during the year ended December 31, 2021.

On March 19, 2009, Group announced the commencement of a cash tender offer for any and all of the 6.60% fixed to floating rate long term subordinated notes. Upon expiration of the tender offer, the Company had reduced its outstanding debt by $161.4 million. In addition, during 2020, the Company repurchased and retired $13.2 million of these notes.

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)

2021

 

2020

 

2019

Interest expense incurred

$

5,818

 

$

7,645

 

$

11,587

7. FEDERAL HOME LOAN BANK MEMBERSHIP

Everest Re is a member of the Federal Home Loan Bank of New York (“FHLBNY”), which allows Everest Re to borrow up to 10% of its statutory admitted assets. As of December 31, 2021, Everest Re had admitted assets of approximately $20.2 billion which provides borrowing capacity of up to approximately $2.02 billion. As of December 31, 2021, Everest Re has $519.0 million of borrowings outstanding, with maturities in 2022 and interest payable at interest rates between 0.53% and 0.65%. Everest incurred interest expense of $1.2 million and $0.2 million for the years ended December 31, 2021 and 2020, 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, 2021, the total amount on deposit in the trust account was $1.1 billion.

F-37

The Company entered into 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 named storm and earthquake events. The table below summarizes the various agreements:

(Dollars in thousands)

 

 

 

 

 

 

 

 

 

 

 

Class

 

Description

 

Effective Date

 

Expiration Date

 

Limit

 

Coverage Basis

 

 

 

 

 

 

 

 

 

 

 

 

Series 2017-1 Class A-2

 

US, Canada, Puerto Rico – Named Storm and Earthquake Events

 

4/13/2017

 

4/13/2022

 

 

50,000

 

Aggregate

Series 2017-1 Class B-2

 

US, Canada, Puerto Rico – Named Storm and Earthquake Events

 

4/13/2017

 

4/13/2022

 

 

75,000

 

Aggregate

Series 2017-1 Class C-2

 

US, Canada, Puerto Rico – Named Storm and Earthquake Events

 

4/13/2017

 

4/13/2022

 

 

175,000

 

Aggregate

Series 2018-1 Class A-1

 

US, Canada, Puerto Rico – Named Storm and Earthquake Events

 

4/30/2018

 

5/6/2022

 

 

62,500

 

Aggregate

Series 2018-1 Class B-1

 

US, Canada, Puerto Rico – Named Storm and Earthquake Events

 

4/30/2018

 

5/6/2022

 

 

200,000

 

Aggregate

Series 2018-1 Class A-2

 

US, Canada, Puerto Rico – Named Storm and Earthquake Events

 

4/30/2018

 

5/5/2023

 

 

62,500

 

Aggregate

Series 2018-1 Class B-2

 

US, Canada, Puerto Rico – Named Storm and Earthquake Events

 

4/30/2018

 

5/5/2023

 

 

200,000

 

Aggregate

Series 2019-1 Class A-1

 

US, Canada, Puerto Rico – Named Storm and Earthquake Events

 

12/12/2019

 

12/19/2023

 

 

150,000

 

Occurrence

Series 2019-1 Class B-1

 

US, Canada, Puerto Rico – Named Storm and Earthquake Events

 

12/12/2019

 

12/19/2023

 

 

275,000

 

Aggregate

Series 2019-1 Class A-2

 

US, Canada, Puerto Rico – Named Storm and Earthquake Events

 

12/12/2019

 

12/19/2024

 

 

150,000

 

Occurrence

Series 2019-1 Class B-2

 

US, Canada, Puerto Rico – Named Storm and Earthquake Events

 

12/12/2019

 

12/19/2024

 

 

275,000

 

Aggregate

Series 2021-1 Class A-1

 

US, Canada, Puerto Rico – Named Storm and Earthquake Events

 

4/8/2021

 

4/21/2025

 

 

150,000

 

Occurrence

Series 2021-1 Class B-1

 

US, Canada, Puerto Rico – Named Storm and Earthquake Events

 

4/8/2021

 

4/21/2025

 

 

85,000

 

Aggregate

Series 2021-1 Class C-1

 

US, Canada, Puerto Rico – Named Storm and Earthquake Events

 

4/8/2021

 

4/21/2025

 

 

85,000

 

Aggregate

Series 2021-1 Class A-2

 

US, Canada, Puerto Rico – Named Storm and Earthquake Events

 

4/8/2021

 

4/20/2026

 

 

150,000

 

Occurrence

Series 2021-1 Class B-2

 

US, Canada, Puerto Rico – Named Storm and Earthquake Events

 

4/8/2021

 

4/20/2026

 

 

90,000

 

Aggregate

Series 2021-1 Class C-2

 

US, Canada, Puerto Rico – Named Storm and Earthquake Events

 

4/8/2021

 

4/20/2026

 

 

90,000

 

Aggregate

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total available limit as of December 31, 2021

 

 

 

 

 

$

2,325,000

 

 

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. The proceeds from the issuance of the Notes listed below are held in reinsurance trusts 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-38

(Dollars in thousands)

 

 

 

 

 

 

 

 

Note Series

 

Issue Date

 

 

Maturity Date

 

Amount

Series 2017-1 Class A-2

 

4/13/2017

 

 

4/13/2022

 

 

50,000

Series 2017-1 Class B-2

 

4/13/2017

 

 

4/13/2022

 

 

75,000

Series 2017-1 Class C-2

 

4/13/2017

 

 

4/13/2022

 

 

175,000

Series 2018-1 Class A-1

 

4/30/2018

 

 

5/6/2022

 

 

62,500

Series 2018-1 Class B-1

 

4/30/2018

 

 

5/6/2022

 

 

200,000

Series 2018-1 Class A-2

 

4/30/2018

 

 

5/5/2023

 

 

62,500

Series 2018-1 Class B-2

 

4/30/2018

 

 

5/5/2023

 

 

200,000

Series 2019-1 Class A-1

 

12/12/2019

 

 

12/19/2023

 

 

150,000

Series 2019-1 Class B-1

 

12/12/2019

 

 

12/19/2023

 

 

275,000

Series 2019-1 Class A-2

 

12/12/2019

 

 

12/19/2024

 

 

150,000

Series 2019-1 Class B-2

 

12/12/2019

 

 

12/19/2024

 

 

275,000

Series 2021-1 Class A-1

 

4/8/2021

 

 

4/21/2025

 

 

150,000

Series 2021-1 Class B-1

 

4/8/2021

 

 

4/21/2025

 

 

85,000

Series 2021-1 Class C-1

 

4/8/2021

 

 

4/21/2025

 

 

85,000

Series 2021-1 Class A-2

 

4/8/2021

 

 

4/20/2026

 

 

150,000

Series 2021-1 Class B-2

 

4/8/2021

 

 

4/20/2026

 

 

90,000

Series 2021-1 Class C-2

 

4/8/2021

 

 

4/20/2026

 

 

90,000

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

$

2,325,000

9. 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.

Supplemental information related to operating leases is as follows for the periods indicated:

 

Year Ended

 

December 31,

(Dollars in thousands)

2021

 

2020

Lease expense incurred:

 

 

 

 

 

Operating lease cost

$

23,998

 

$

29,822

 

At December 31,

(Dollars in thousands)

2021

 

2020

Operating lease right of use assets

$

131,295

 

$

139,835

Operating lease liabilities

 

149,501

 

 

155,144

F-39

 

Year Ended

 

December 31,

(Dollars in thousands)

2021

 

2020

Operating cash flows from operating leases

$

(15,905)

 

$

(18,411)

 

 

At December 31,

 

 

2021

 

2020

 

Weighted average remaining operating lease term

 

11.8 years

 

 

12.5 years

 

Weighted average discount rate on operating leases

 

4.00

%

 

4.02

%

Maturities of the existing lease liabilities are expected to occur as follows:

(Dollars in thousands)

 

 

 

 

 

2022

$

18,459

2023

 

18,192

2024

 

18,226

2025

 

15,235

2026

 

14,108

Thereafter

 

102,104

Undiscounted lease payments

 

186,324

Less: present value adjustment

 

36,823

Total operating lease liability

$

149,501

On July 2, 2019, the Company entered into a lease agreement to relocate its U.S. corporate offices from Liberty Corner, New Jersey to Warren, New Jersey. The new lease, which covers approximately 315,000 square feet of office space, was effective October 1, 2019 and runs through 2036. The initial base rent payment of the lease will be approximately $650 thousand per month or $7.8 million per year. The Company relocated the existing operations and employees of the Liberty Corner, New Jersey facility to the new corporate complex as of December 2020.

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 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 $32.5 million and obtain federal income tax cash refunds of $182.5 million including interest in 2020.

F-40

The significant components of the provision are as follows for the periods indicated:

 

Years Ended December 31,

(Dollars in thousands)

2021

 

2020

 

2019

Current tax expense (benefit):

 

 

 

 

 

U.S.

$

101,499

 

$

(106,719)

 

$

(1,684)

Foreign

 

7

 

 

(11)

 

 

77

Total current tax expense (benefit)

 

101,506

 

 

(106,730)

 

 

(1,607)

Total deferred U.S. tax expense (benefit)

 

90,130

 

 

138,388

 

 

136,834

Total income tax expense (benefit)

$

191,636

 

$

31,658

 

$

135,228

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)

2021

 

2020

 

2019

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

$

208,103

 

$

80,588

 

$

160,762

Increase (decrease) in taxes resulting from:

 

 

 

 

 

 

 

 

Tax exempt income

 

(3,927)

 

 

(3,598)

 

 

(3,680)

Dividend received deduction

 

(840)

 

 

(1,100)

 

 

(998)

Proration

 

1,048

 

 

1,049

 

 

1,050

Creditable foreign premium tax

 

(13,392)

 

 

(11,513)

 

 

(9,852)

Tax audit settlement

 

-

 

 

-

 

 

(1,576)

Share based compensation tax benefits formerly in APIC

 

(1,951)

 

 

(2,612)

 

 

(2,987)

Impact of CARES Act

 

-

 

 

(32,500)

 

 

-

Change in uncertain tax positions

 

-

 

 

-

 

 

(8,434)

Other

 

2,595

 

 

1,345

 

 

942

Total income tax provision

$

191,636

 

$

31,658

 

$

135,228

 

 

 

 

 

 

 

 

 

(Some amounts may not reconcile due to rounding.)

 

 

 

 

 

 

 

 

A reconciliation of the beginning and ending unrecognized tax benefits, for the periods indicated, is as follows:

(Dollars in thousands)

2021

 

2020

 

2019

Balance at January 1

$

-

 

$

-

 

$

8,434

Additions based on tax positions related to the current year

 

-

 

 

-

 

 

-

Additions for tax positions of prior years

 

-

 

 

-

 

 

-

Reductions for tax positions of prior years

 

-

 

 

-

 

 

(8,434)

Settlements with taxing authorities

 

-

 

 

-

 

 

-

Lapses of applicable statutes of limitations

 

-

 

 

-

 

 

-

Balance at December 31

$

-

 

$

-

 

$

-

At December 31, 2021, the Company’s unrecognized tax benefits, excluding interest 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, 2021, the Company accrued $0 thousand for the payment of interest (net of the federal benefit) and penalties. At December 31, 2021 and 2020, there were 0 accrued liabilities, respectively, for the payment of interest and penalties.

The Company’s 2014 through 2018 U.S. tax years are under audit by the IRS. To date, the Company has received only one notice of proposed adjustment for an immaterial amount of tax for the 2014 tax year. Also, the Company proposed affirmative beneficial income tax return adjustments to the IRS at the start of the 2014 audit.

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Subsequent to the Company’s CARES Act net operating loss carryback, the Company received a tax refund of $16.3 million of recaptured foreign tax credits related to the affirmative adjustments.In addition, tax years 2019 and 2020 are open for examination by the U.S. Federal jurisdiction.

To date, the Company has not received any Information Document Requests (“IDRs”) or notices of proposed adjustment for 2015 to 2018. The Company had filed amended tax returns requesting refunds for 2015 and 2016 for $1.5 million and $4.7 million respectively.

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)

2021

 

2020

Deferred tax assets:

 

 

 

 

 

Loss reserves

$

129,861

 

$

96,840

Unearned premium reserve

 

107,724

 

 

85,028

Lease Liability

 

30,885

 

 

31,989

Foreign tax credits

 

21,787

 

 

46,109

Net unrecognized losses on benefit plans

 

13,395

 

 

19,636

Equity compensation

 

6,869

 

 

6,749

Investment impairments

 

6,160

 

 

1,121

Unrealized foreign currency losses

 

4,480

 

 

597

Uncollectible reinsurance reserve

 

3,142

 

 

3,142

Net operating loss

 

834

 

 

684

Deferred expense

 

679

 

 

622

Other tax credits

 

213

 

 

4,591

Other assets

 

7,355

 

 

6,559

Total deferred tax assets

 

333,384

 

 

303,667

 

 

 

 

 

 

Deferred tax liabilities:

 

 

 

 

 

Net fair value income

 

349,017

 

 

277,525

Deferred acquisition costs

 

99,395

 

 

79,994

Partnership Investments

 

56,699

 

 

26,119

Net unrealized investment gains

 

35,228

 

 

84,869

Right of use asset

 

27,111

 

 

28,822

Bond market discount

 

3,087

 

 

2,257

Benefit plan asset

 

1,667

 

 

1,765

Other liabilities

 

7,253

 

 

5,056

Total deferred tax liabilities

 

579,457

 

 

506,407

 

 

 

 

 

 

Net deferred tax assets/(liabilities)

$

(246,073)

 

$

(202,740)

 

 

 

 

 

 

Due to the passage of the CARES Act in 2020, which allowed for a five-year carryback of NOLs, as of December 31, 2020 the Company 0 longer has a Consolidated U.S. NOL carryforward. Without the Consolidated U.S. NOL carryforward, the Company was able to utilize a significant amount of U.S. Foreign Tax Credits (“FTCs”) in both 2019 and 2020. As a result, its FTC carryforwards were significantly reduced at December 31, 2020 to only $46.1 million. The remaining FTC carryforwards as of December 31, 2021 begin to expire in 2028 related to our branch basket.

F-42

Tax effected U.S. Separate Return Limitation Year NOLs of $0.8 million begin to expire in 2037.

The Company follows ASU 2016-09 in regards to the 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 settlement (vesting/exercising) date be recorded as part of income tax expense (benefit) within the consolidated statements of operations and comprehensive income (loss). Per ASU 2016-09, the Company recorded excess tax benefits of $2.0 million, $2.6 million and $3.0 million 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 2021, 2020 and 2019, respectively.

ASU 2016-09 does 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 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 $0.4 million, $0.4 million and $0.4 million in 2021, 2020 and 2019, 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 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 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 34 and Note 8.

10.

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

F-43

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.

The Company expects the impact of the COVID-19 pandemic to reinsurers to be somewhat mitigated by their regulated capital and liquidity positions. The ultimate impact to the Company's financial statements could vary significantly from our estimates depending on the duration and severity of the pandemic, the duration and severity of the economic downturn and the degree to which federal, state and local government actions to mitigate the economic impact of COVID-19 are effective.

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)202320222021
Written premiums:
Direct$3,785 $3,701 $3,300 
Assumed7,332 5,975 6,031 
Ceded(1,905)(1,645)(1,612)
Net written premiums$9,212 $8,032 $7,719 
Premiums earned:
Direct$3,709 $3,544 $2,982 
Assumed6,705 5,945 5,741 
Ceded(1,878)(1,613)(1,544)
Net premiums earned$8,536 $7,876 $7,179 
Incurred losses and LAE:
Direct$2,594 $2,423 $2,043 
Assumed3,449 4,107 3,872 
Ceded(465)(708)(528)
Net incurred losses and LAE$5,578 $5,823 $5,387 
F-33
Table of Contents

 

Years Ended December 31,

(Dollars in thousands)

2021

 

2020

 

2019

Written premiums:

 

 

 

 

 

 

 

 

Direct

$

3,300,459

 

$

2,698,100

 

$

2,449,198

Assumed

 

6,030,568

 

 

5,258,938

 

 

4,603,866

Ceded

 

(1,611,587)

 

 

(1,318,338)

 

 

(1,278,115)

Net written premiums

$

7,719,441

 

$

6,638,700

 

$

5,774,949

 

 

 

 

 

 

 

 

 

Premiums earned:

 

 

 

 

 

 

 

 

Direct

$

2,981,927

 

$

2,591,613

 

$

2,255,388

Assumed

 

5,740,688

 

 

5,183,399

 

 

4,427,006

Ceded

 

(1,544,024)

 

 

(1,368,436)

 

 

(1,193,359)

Net premiums earned

$

7,178,592

 

$

6,406,576

 

$

5,489,035

 

 

 

 

 

 

 

 

 

Incurred losses and LAE:

 

 

 

 

 

 

 

 

Direct

$

2,042,814

 

$

1,784,616

 

$

1,401,251

Assumed

 

3,871,643

 

 

3,576,252

 

 

2,913,987

Ceded

 

(527,601)

 

 

(752,724)

 

 

(486,116)

Net incurred losses and LAE

$

5,386,856

 

$

4,608,144

 

$

3,829,122

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”), Everest Insurance Company of Canada (“Everest Canada”), Lloyd’s Syndicate 2786 and 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 millions)
Coverage PeriodCeding CompanyPercent
Ceded		Assuming
Company		Type of BusinessSingle
Occurrence
Limit		Aggregate
Limit
01/01/2010-12/31/2010Everest Re44.0 %Bermuda ReProperty / Casualty Business150325
01/01/2011-12/31/2011Everest Re50.0 %Bermuda ReProperty / Casualty Business150300
01/01/2012-12/31/2014Everest Re50.0 %Bermuda ReProperty / Casualty Business100200
01/01/2015-12/31/2016Everest Re50.0 %Bermuda ReProperty / Casualty Business163325
01/01/2017-12/31/2017Everest Re60.0 %Bermuda ReProperty / Casualty Business219438
01/01/2010-12/31/2010Everest Re- Canadian Branch60.0 %Bermuda ReProperty Business350(1)0
01/01/2011-12/31/2011Everest Re- Canadian Branch60.0 %Bermuda ReProperty Business350(1)0
01/01/2012-12/31/2012Everest Re- Canadian Branch75.0 %Bermuda ReProperty / Casualty Business206(1)413(1)
01/01/2013-12/31/2013Everest Re- Canadian Branch75.0 %Bermuda ReProperty / Casualty Business150(1)413(1)
01/01/2014-12/31/2017Everest Re- Canadian Branch75.0 %Bermuda ReProperty / Casualty Business263(1)413(1)
01/01/2012-12/31/2017Everest Canada80.0 %Everest Re- Canadian BranchProperty Business-0
01/01/2020Everest International Assurance100.0 %Bermuda ReLife Business-0
(1)

Amounts shown are Canadian dollars.

(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

 

-

 

-

 

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

F-44

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, 2021.

2024.

The stop loss agreements between Everest Re entered into a property catastrophe excess of loss reinsurance contract withand Bermuda Re that were effective January 1, 2019.for 2018 and 2019 were both commuted during the third quarter of 2023. The contract provides $100.0commutations of the agreements resulted in the recognition of an aggregate loss of $37 million for Everest Re. The impact of reinsurance coverage for property catastrophe losses above certain attachment points. This agreement expiredthe commutations are embedded within the Reinsurance Segment’s net favorable development on December 31, 2019 and was not renewed.

prior year attritional losses.

Everest Re entered into a catastrophe excess of loss reinsurance contract with Bermuda Re (UK Branch), effective January 1, 2021 through December 31, 2021, subject to renewal thereafter.2021. The contract provides Bermuda Re (UK Branch), with up to £100.0£100 million of reinsurance coverage for each catastrophe occurrence above £40.0£24 million. Bermuda Re (UK Branch) paid Everest Re £3.5£5 million for this coverage.

This agreement was most recently renewed effective January 1, 2024.

Everest Re entered into a catastrophe excess of loss reinsurance contract with Ireland Re, effective February 1, 2021 through January 31, 2022, subject to renewal thereafter.2022. The contract provides Ireland Re with up to €145.0€210 million of reinsurance coverage for each catastrophe occurrence above €16.0€18 million. Ireland Re paid Everest Re €9.8€14 million for this coverage. This agreement was most recently renewed effective February 1, 2024.

Everest Re entered into a catastrophe excess of loss reinsurance contract with Ireland Re, effective March 31, 2023 through January 31, 2024. The contract provides Ireland Re with up to €61 million of reinsurance coverage for each catastrophe occurrence above €139 million. Ireland Re paid Everest Re €2 million for this coverage. This agreement was not renewed for 2024.
F-34
Table of Contents

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
Date		Transferring
Company		Assuming
Company		% of Business or
Amount of Transfer		Covered Period
of Transfer
10/01/2001Everest Re (Belgium Branch)Bermuda Re100 %All years
10/01/2008Everest ReBermuda Re$747 01/01/2002-12/31/2007
12/31/2017Everest ReBermuda 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 $2.3 billion for accident years 2017 and prior. As a result of the LPT agreement, the Company transferred $1.0 billion of cash and fixed maturity securities and transferred $970.0$970 million of loss reserves to Bermuda Re. As part of the LPT agreement, Bermuda Re will provide an additional $500.0$500 million of adverse development coverage on the subject loss reserves. As of December 31, 2021,2023, and December 31, 2020,2022, the Company has a reinsurance recoverable of $856.4$807 million and $886.4$804 million, respectively, recorded on its balance sheet due from Bermuda Re.

The following tables summarize the significant 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, Everest Ireland and Lloyd’s syndicate 2786in transactions with affiliated entities for the periods indicated:

 

 

Bermuda Re

Years Ended December 31,

(Dollars in thousands)

2021

 

2020

 

2019

Ceded written premiums

$

303,235

 

$

133,137

 

$

100,347

Ceded earned premiums

 

299,711

 

 

132,016

 

 

101,681

Ceded losses and LAE

 

(58,992)

 

 

109,830

 

 

(51,454)

 

 

 

 

 

 

 

 

 

Assumed written premiums

 

4,820

 

 

-

 

 

-

Assumed earned premiums

 

3,799

 

 

249

 

 

248

Assumed losses and LAE

 

79

 

 

144

 

 

89

F-45

Bermuda ReYears Ended December 31,
(Dollars in millions)202320222021
Ceded written premiums$432 $372 $303 
Ceded earned premiums431 371 300 
Ceded losses and LAE(15)(16)(59)
Assumed written premiums4 3 5 
Assumed earned premiums4 5 4 

 

 

Everest International & Canada

Years Ended December 31,

(Dollars in thousands)

2021

 

2020

 

2019

Ceded written premiums

$

-

 

$

-

 

$

-

Ceded earned premiums

 

-

 

 

-

 

 

-

Ceded losses and LAE

 

(15)

 

 

(503)

 

 

324

 

 

 

 

 

 

 

 

 

Assumed written premiums

 

-

 

 

1

 

 

-

Assumed earned premiums

 

-

 

 

(7)

 

 

-

Assumed losses and LAE

 

10,723

 

 

(2,102)

 

 

3,024

 

 

Ireland Re

Years Ended December 31,

(Dollars in thousands)

2021

 

2020

 

2019

Assumed written premiums

$

15,947

 

$

-

 

$

-

Assumed earned premiums

 

14,973

 

 

-

 

 

-

Assumed losses and LAE

 

64,074

 

 

-

 

 

-

 

 

Ireland Insurance

Years Ended December 31,

(Dollars in thousands)

2021

 

2020

 

2019

Assumed written premiums

$

8,508

 

$

5,499

 

$

2,712

Assumed earned premiums

 

5,831

 

 

3,901

 

 

1,615

Assumed losses and LAE

 

3,052

 

 

2,256

 

 

810

 

 

Lloyd's Syndicate 2786

Years Ended December 31,

(Dollars in thousands)

2021

 

2020

 

2019

Assumed written premiums

$

583

 

$

(3,592)

 

$

(11,470)

Assumed earned premiums

 

585

 

 

(3,375)

 

 

(18,650)

Assumed losses and LAE

 

872

 

 

(2,636)

 

 

8,355

Ireland ReYears Ended December 31,
(Dollars in millions)202320222021
Assumed written premiums$13 $10 $16 
Assumed earned premiums12 10 15 
Assumed losses and LAE2 23 64 
Ireland InsuranceYears Ended December 31,
(Dollars in millions)202320222021
Assumed written premiums$14 $9 $9 
Assumed earned premiums17 8 6 
Assumed losses and LAE7 5 3 

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.

The following table summarizes the premiums and losses that are ceded by the Company to Mt. Logan Re segregated accountsaccounts:
Mt. Logan Re Segregated AccountsYears Ended December 31,
(Dollars in millions)202320222021
Ceded written premiums$210 $170 $286 
Ceded earned premiums205 174 280 
Ceded losses and LAE31 150 194 
6.SEGMENT REPORTING
The Company operates through two operating segments. The Reinsurance operation writes worldwide property and assumed bycasualty 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
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and Singapore. The Insurance operation writes property and casualty insurance directly and through brokers, including for surplus lines, and general agents within the United States. The two 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.
Our two operating segments each have executive leadership who are responsible for the overall performance of their respective segments and who are directly accountable to our chief operating decision maker (“CODM”), the Chief Executive Officer of Everest Group, Ltd., who is ultimately responsible for reviewing the business to assess performance, make operating decisions and allocate resources. We report the results of our operations consistent with the manner in which our CODM reviews the business.
During the fourth quarter of 2023, the Company revised the classification and presentation of certain products related to its accident and health business within the segment groupings. These products have been realigned from Mt. Logan Re segregated accounts.

 

 

Mt. Logan Re Segregated Accounts

Years Ended December 31,

(Dollars in thousands)

2021

 

2020

 

2019

Ceded written premiums

$

286,049

 

$

263,487

 

$

240,721

Ceded earned premiums

 

280,048

 

 

265,381

 

 

235,500

Ceded losses and LAE

 

194,167

 

 

175,087

 

 

171,900

Assumed written premiums

 

-

 

 

-

 

 

-

Assumed earned premiums

 

-

 

 

-

 

 

-

Assumed losses and LAE

 

-

 

 

-

 

 

-

within the Reinsurance segment to the Insurance segment to appropriately reflect how the business segments are managed. These changes have been reflected retrospectively.

F-The Company does not review and evaluate the financial results of its operating segments based upon balance sheet data. 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. 46
Management has determined that these measures are appropriate and align with how the business is managed. We continue to evaluate our segments as our business evolves and may further refine our segments and financial performance measures.

12. COMPREHENSIVE INCOME (LOSS)

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

Year Ended December 31, 2023
(Dollars in millions)ReinsuranceInsuranceTotal
Gross written premiums$7,181 $3,936 $11,117 
Net written premiums6,205 3,007 9,212 
Premiums earned$5,637 $2,900 $8,536 
Incurred losses and LAE3,329 2,249 5,578 
Commission and brokerage1,545 306 1,851 
Other underwriting expenses167 407 574 
Underwriting gain (loss)$596 $(64)$533 
Net investment income993 
Net gains (losses) on investments(180)
Corporate expenses(18)
Interest, fee and bond issue cost amortization expense(134)
Other income (expense)(11)
Income (loss) before taxes$1,181 
(Some amounts may not reconcile due to rounding.)
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Year Ended December 31, 2022
(Dollars in millions)ReinsuranceInsuranceTotal
Gross written premiums$5,879 $3,798 $9,677 
Net written premiums5,204 2,828 8,032 
Premiums earned$5,147 $2,729 $7,876 
Incurred losses and LAE3,926 1,897 5,823 
Commission and brokerage1,308 325 1,632 
Other underwriting expenses138 364 501 
Underwriting gain (loss)$(224)$144 $(81)
Net investment income638 
Net gains (losses) on investments(982)
Corporate expenses(26)
Interest, fee and bond issue cost amortization expense(101)
Other income (expense)(6)
Income (loss) before taxes$(557)
(Some amounts may not reconcile due to rounding.)
Year Ended December 31, 2021
(Dollars in millions)ReinsuranceInsuranceTotal
Gross written premiums$5,979 $3,352 $9,331 
Net written premiums5,217 2,503 7,719 
Premiums earned$4,899 $2,279 $7,179 
Incurred losses and LAE3,750 1,637 5,387 
Commission and brokerage1,229 284 1,513 
Other underwriting expenses142 312 454 
Underwriting gain (loss)$(220)$46 $(175)
Net investment income745 
Net gains (losses) on investments501 
Corporate expenses(33)
Interest, fee and bond issue cost amortization expense(70)
Other income (expense)23 
Income (loss) before taxes$991 
(Some amounts may not reconcile due to rounding.)
Further classifications of revenues by geographic location are impracticable to disclose and, therefore, are not provided. Additionally, such information is not utilized by the Company’s CODM when reviewing the business to assess performance, make operating decisions or allocate resources.

Approximately 17.2%, 17.6% and 19.3% of the Company’s gross written premiums in 2023, 2022 and 2021, respectively, were sourced through the Company’s largest intermediary.
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7.SENIOR NOTES
The table below displays Holdings’ outstanding senior notes. 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, 2023December 31, 2022
(Dollars in millions)Date IssuedDate DuePrincipal
Amounts		Consolidated
Balance Sheet
Amount		Fair
Value		Consolidated
Balance Sheet
Amount		Fair
Value
4.868% Senior notes06/05/201406/01/2044400 $398 $369 $397 $343 
3.5% Senior notes10/07/202010/15/20501,000 981 742 981 677 
3.125% Senior notes10/04/202110/15/20521,000 970 688 969 627 
2,400 $2,349 $1,799 $2,347 $1,647 
Interest expense incurred in connection with these senior notes is as follows for the periods indicated:
Years Ended December 31,
(Dollars in millions)Interest PaidPayable Dates202320222021
4.868% Senior notessemi-annuallyJune 1/December 1$19 $19 $19 
3.5% Senior notessemi-annuallyApril 15/October 1535 35 35 
3.125% Senior notessemi-annuallyApril 15/October 1532 32 8 
$86 $86 $62 
8.LONG-TERM SUBORDINATED NOTES
The table below displays Holdings’ outstanding fixed to floating rate long-term subordinated notes. 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, 2023December 31, 2022
Date IssuedOriginal
Principal
Amount		Maturity DateConsolidated
Balance
Sheet Amount		Fair
Value		Consolidated
Balance
Sheet Amount		Fair
Value
(Dollars in millions)ScheduledFinal
Long-term subordinated notes04/26/2007$400 05/15/203705/01/2067$218 $187 $218 $187 
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 floating rate interest period from May 15, 2017 through maturity, interest will be based on the 3 month LIBOR plus 238.5 basis points, reset quarterly, payable quarterly in arrears on February 15, May 15, August 15 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, 2023 to February 14, 2024 is 8.03%. Following the cessation of LIBOR, for periods from and including August 15, 2023, interest will be based on 3-month CME Term SOFR plus a spread.
Holdings may redeem the long-term subordinated notes 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. The Company’s 4.868% senior notes, due on June 1, 2044, 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 indebtedness that rank senior to the long-term subordinated notes.
In 2009, the 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 repurchased and retired $6 million of the outstanding long-term subordinated notes for the year ended December 31, 2022. The Company realized a gain of $1 million on the repurchases made during 2022.
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Interest expense incurred in connection with these long-term subordinated notes is as follows for the periods indicated:
Years Ended December 31,
(Dollars in millions)202320222021
Interest expense incurred$17 $9 $6 
9.FEDERAL HOME LOAN BANK MEMBERSHIP
Everest Re is a member of the Federal Home Loan Bank of New York (“FHLBNY”), which allows Everest Re to borrow up to 10% of its statutory admitted assets. As of December 31, 2023, Everest Re had admitted assets of approximately $26.3 billion which provides borrowing capacity in excess of $2.6 billion. As of December 31, 2023, Everest Re had $819 million of borrowings outstanding, all of which expire in 2024. Everest Re incurred interest expense of $30 million and $4 million for the years ended December 31, 2023 and 2022, respectively. The FHLBNY membership agreement requires that 4.5% of borrowed funds be used to acquire additional membership stock. Additionally, the FHLBNY membership requires that members must have sufficient qualifying collateral pledged. As of December 31, 2023, Everest Re had $1.1 billion of collateral pledged.
10.COLLATERALIZED REINSURANCE, TRUST AGREEMENTS AND OTHER RESTRICTED ASSETS
The Company maintains certain restricted assets as security for potential future obligations, primarily to support its underwriting operations. The following table summarizes the Company’s restricted assets:
At December 31,
(Dollars in millions)20232022
Collateral in trust for non-affiliated agreements (1)
$825 $705 
Collateral for FHLB borrowings1,077 572 
Securities on deposit with or regulated by government authorities1,447 1,360 
Funds held by reinsureds306 303 
Total restricted assets$3,654 $2,941 
(1) At December 31, 2023 and December 31, 2022, the total amount on deposit in trust accounts includes $116 million and $21 million of restricted cash respectively.
The Company entered into 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 named storm and earthquake events. The table below summarizes the various agreements:
(Dollars in millions)
ClassDescriptionEffective DateExpiration DateLimitCoverage
Basis
Series 2019-1 Class A-2US, Canada, Puerto Rico – Named Storm and Earthquake Events12/12/201912/19/2024150 Occurrence
Series 2019-1 Class B-2US, Canada, Puerto Rico – Named Storm and Earthquake Events12/12/201912/19/2024275 Aggregate
Series 2021-1 Class A-1US, Canada, Puerto Rico – Named Storm and Earthquake Events4/8/20214/21/2025150 Occurrence
Series 2021-1 Class B-1US, Canada, Puerto Rico – Named Storm and Earthquake Events4/8/20214/21/202585 Aggregate
Series 2021-1 Class C-1US, Canada, Puerto Rico – Named Storm and Earthquake Events4/8/20214/21/202585 Aggregate
Series 2021-1 Class A-2US, Canada, Puerto Rico – Named Storm and Earthquake Events4/8/20214/20/2026150 Occurrence
Series 2021-1 Class B-2US, Canada, Puerto Rico – Named Storm and Earthquake Events4/8/20214/20/202690 Aggregate
Series 2021-1 Class C-2US, Canada, Puerto Rico – Named Storm and Earthquake Events4/8/20214/20/202690 Aggregate
Series 2022-1 Class AUS, Canada, Puerto Rico – Named Storm and Earthquake Events6/22/20226/25/2025300 Aggregate
Total available limit as of December 31, 2023$1,375 
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.
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The Company had up to $350 million of catastrophe bond protection (“CAT Bond”) that attaches at a $48.1 billion Property Claims Services (“PCS”) Industry loss threshold. This recovery would be recognized on a pro-rata basis up to a $63.8 billion PCS Industry loss level. As a result of Hurricane Ian, PCS’s current industry estimate of $48.2 billion issued in February 2024 exceeds the attachment point. The potential recovery under the CAT Bond is not expected to be material. As a result, no portion of the potential CAT bond recovery has been included in the Company’s current financial results.
Kilimanjaro has financed the various property catastrophe reinsurance coverages by issuing catastrophe bonds to unrelated, external investors. The proceeds from the issuance of the Notes listed below are held in reinsurance trusts 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. The catastrophe bonds’ issue dates, maturity dates and amounts correspond to the reinsurance agreements listed above.
11.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 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”) an unaffiliated life insurance company, as well as 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 was 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 millions)20232022
The Prudential$136 $137 
Other unaffiliated life insurance company34 34 
12.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.
Supplemental information related to operating leases is as follows for the periods indicated:
Year Ended December 31,
(Dollars in millions)20232022
Lease expense incurred:
Operating lease cost$26 $25 
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Table of Contents
At December 31,
(Dollars in millions)20232022
Operating lease right of use assets (1)
$111 $121 
Operating lease liabilities (1)
130 139 
(1) Operating lease right of use assets and operating lease liabilities are included within other assets and other liabilities on the Company’s consolidated balance sheets, respectively.
Year Ended December 31,
(Dollars in millions)20232022
Operating cash flows from operating leases$(19)$(18)
At December 31,
20232022
Weighted average remaining operating lease term10.3 years11.1 years
Weighted average discount rate on operating leases4.03 %4.00 %
Maturities of the existing lease liabilities are expected to occur as follows:
(Dollars in millions)
2024$20 
202516 
202615 
202714 
202812 
Thereafter78 
Undiscounted lease payments155 
Less: present value adjustment26 
Total operating lease liability$130 
13.COMPREHENSIVE INCOME (LOSS)
The following table presents the components of comprehensive income (loss) in the consolidated statements of operations and comprehensive income (loss) for the periods indicated:
December 31, 2023December 31, 2022December 31, 2021
(Dollars in millions)Before TaxTax EffectNet of TaxBefore TaxTax EffectNet of TaxBefore TaxTax EffectNet of Tax
URA(D) on securities - temporary$473 (99)$374 $(1,280)269 $(1,011)$(254)53 $(200)
Reclassification of net realized losses (gains) included in net income (loss)193 (41)153 93 (20)73 12 (3)9 
Foreign currency translation adjustments22 (5)17 (23)5 (18)(11)2 (9)
Benefit plan actuarial net gain (loss)19 (4)15 18 (4)15 22 (5)17 
Reclassification of amortization of net gain (loss) included in net income (loss)2 — 2 3 (1)2 8 (2)6 
Total other comprehensive income (loss)$710 $(149)$561 $(1,189)$249 $(939)$(223)$47 $(177)
(Some amounts may not reconcile due to rounding)
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Table of Contents

 

Year Ended

 

Year Ended

 

Year Ended

(Dollars in thousands)

December 31, 2021

 

December 31, 2020

 

December 31, 2019

 

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

$

(253,601)

 

 

53,294

 

$

(200,307)

 

$

206,159

 

 

(43,078)

 

$

163,080

 

$

222,884

 

 

(46,971)

 

$

175,913

URA(D) on securities - OTTI

 

-

 

 

-

 

 

-

 

 

-

 

 

-

 

 

-

 

 

(546)

 

 

115

 

 

(431)

Reclassification of net realized losses

(gains) included in net income (loss)

 

11,596

 

 

(2,582)

 

 

9,014

 

 

32,475

 

 

(7,007)

 

 

25,468

 

 

6,068

 

 

(988)

 

 

5,080

Foreign currency translation adjustments

 

(11,064)

 

 

2,330

 

 

(8,734)

 

 

18,277

 

 

(3,815)

 

 

14,461

 

 

21,708

 

 

(4,555)

 

 

17,153

Benefit plan actuarial net gain (loss)

 

7,912

 

 

(1,662)

 

 

6,251

 

 

(7,107)

 

 

1,492

 

 

(5,615)

 

 

(15,938)

 

 

3,347

 

 

(12,591)

Reclassification of amortization of net gain

(loss) included in net income (loss)

 

21,807

 

 

(4,580)

 

 

17,227

 

 

7,974

 

 

(1,674)

 

 

6,300

 

 

6,902

 

 

(1,449)

 

 

5,453

Total other comprehensive income (loss)

$

(223,350)

 

$

46,800

 

$

(176,549)

 

$

257,778

 

$

(54,082)

 

$

203,694

 

$

241,078

 

$

(50,501)

 

$

190,577

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(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

2021

 

2020

 

comprehensive income (loss)

(Dollars in thousands)

 

 

 

 

 

 

 

URA(D) on securities

$

11,596

 

$

32,475

 

Other net realized capital gains (losses)

 

 

(2,582)

 

 

(7,007)

 

Income tax expense (benefit)

 

$

9,014

 

$

25,468

 

Net income (loss)

Benefit plan net gain (loss)

$

21,807

 

$

7,974

 

Other underwriting expenses

 

 

(4,580)

 

 

(1,674)

 

Income tax expense (benefit)

 

$

17,227

 

$

6,300

 

Net income (loss)

 

 

 

 

 

 

 

 

(Some amounts may not reconcile due to rounding)

Years Ended December 31,Affected line item within the
statements of operations and
comprehensive income (loss)
AOCI component20232022
(Dollars in millions)
URA(D) on securities$193 $93 Other net realized capital gains (losses)
(41)(20)Income tax expense (benefit)
$153 $73 Net income (loss)
Benefit plan net gain (loss)$2 $3 Other underwriting expenses
— (1)Income tax expense (benefit)
$2 $2 Net income (loss)

(Some amounts may not reconcile due to rounding)
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 thousands)

2021

 

2020

Beginning balance of URA (D) on securities

$

313,161

 

$

124,612

Current period change in URA (D) of investments - temporary

 

(191,293)

 

 

188,548

Ending balance of URA (D) on securities

 

121,869

 

 

313,161

Beginning balance of foreign currency translation

adjustments

 

28,727

 

 

14,267

Current period change in foreign currency translation

adjustments

 

(8,734)

 

 

14,461

Ending balance of foreign currency translation

adjustments

 

19,992

 

 

28,727

Beginning balance of benefit plan net gain (loss)

 

(73,870)

 

 

(74,556)

Current period change in benefit plan net gain (loss)

 

23,478

 

 

685

Ending balance of benefit plan net gain (loss)

 

(50,392)

 

 

(73,870)

Ending balance of accumulated other comprehensive

income (loss)

$

91,469

 

$

268,018

F-47

Years Ended December 31,
(Dollars in millions)20232022
Beginning balance of URA(D) on securities$(816)$122 
Current period change in URA(D) of investments -  temporary527 (938)
Ending balance of URA(D) on securities(289)(816)
Beginning balance of foreign currency translation adjustments2 20 
Current period change in foreign currency translation adjustments17 (18)
Ending balance of foreign currency translation adjustments19 2 
Beginning balance of benefit plan net gain (loss)(33)(50)
Current period change in benefit plan net gain (loss)17 17 
Ending balance of benefit plan net gain (loss)(16)(33)
Ending balance of accumulated other comprehensive income (loss)$(287)$(848)
(Some amounts may not reconcile due to rounding)

13. 14.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 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 millions)202320222021
Company contributions$1 $6 $4 
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Years Ended December 31,

(Dollars in thousands)

2021

 

2020

 

2019

Company contributions

$

3,821

 

$

6,825

 

$

4,750

The following table summarizes the Company’s pension expense for the periods indicated:

 

Years Ended December 31,

(Dollars in thousands)

2021

 

2020

 

2019

Pension expense

$

3,388

 

$

8,429

 

$

10,042

Years Ended December 31,
(Dollars in millions)202320222021
Pension expense$5 $(2)$3 

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 thousands)

2021

 

2020

Change in projected benefit obligation:

 

 

 

 

 

Benefit obligation at beginning of year

$

404,471

 

$

355,356

Service cost

 

10,637

 

 

9,522

Interest cost

 

8,253

 

 

10,112

Actuarial (gain)/loss

 

(8,587)

 

 

43,595

Curtailment

 

-

 

 

-

Benefits paid

 

(12,147)

 

 

(14,115)

Projected benefit obligation at end of year

 

402,626

 

 

404,471

 

 

 

 

 

 

Change in plan assets:

 

 

 

 

 

Fair value of plan assets at beginning of year

 

354,464

 

 

301,467

Actual return on plan assets

 

31,166

 

 

60,286

Actual contributions during the year

 

3,821

 

 

6,825

Benefits paid

 

(12,147)

 

 

(14,115)

Fair value of plan assets at end of year

 

377,303

 

 

354,464

 

 

 

 

 

 

Funded status at end of year

$

(25,323)

 

$

(50,007)

 

 

 

 

 

 

(Some amounts may not reconcile due to rounding.)

F-48

Years Ended December 31,
(Dollars in millions)20232022
Change in projected benefit obligation:
Benefit obligation at beginning of year$291 $403 
Service cost5 9 
Interest cost14 10 
Actuarial (gain)/loss9 (115)
Curtailment— — 
Benefits paid(25)(15)
Projected benefit obligation at end of year295 291 
Change in plan assets:
Fair value of plan assets at beginning of year285 377 
Actual return on plan assets48 (83)
Actual contributions during the year1 6 
Benefits paid(25)(15)
Fair value of plan assets at end of year308 285 
Funded status at end of year$13 $(6)
(Some amounts may not reconcile due to rounding.)

Amounts recognized in the consolidated balance sheets for the periods indicated:

 

At December 31,

(Dollars in thousands)

2021

 

2020

Other assets (due beyond one year)

$

-

 

$

-

Other liabilities (due within one year)

 

(1,469)

 

 

(2,197)

Other liabilities (due beyond one year)

 

(23,854)

 

 

(47,810)

Net amount recognized in the consolidated balance sheets

$

(25,323)

 

$

(50,007)

At December 31,
(Dollars in millions)20232022
Other assets (due beyond one year)$19 $1 
Other liabilities (due within one year)(3)(1)
Other liabilities (due beyond one year)(3)(6)
Net amount recognized in the consolidated balance sheets$13 $(6)

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 millions)20232022
Accumulated income (loss)$(33)$(56)
Accumulated other comprehensive income (loss)$(33)$(56)
(Some amounts may not reconcile due to rounding.)
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At December 31,

(Dollars in thousands)

2021

 

2020

Accumulated income (loss)

$

(67,729)

 

$

(91,979)

Accumulated other comprehensive income (loss)

$

(67,729)

 

$

(91,979)

 

 

 

 

 

 

(Some amounts may not reconcile due to rounding.)

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

 

Years Ended December 31,

(Dollars in thousands)

2021

 

2020

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

$

(91,979)

 

$

(97,466)

Net gain (loss) arising during period

 

15,298

 

 

(4,090)

Recognition of amortizations in net periodic benefit cost:

 

 

 

 

 

Actuarial loss

 

8,953

 

 

9,576

Curtailment loss recognized

 

-

 

 

-

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

$

(67,729)

 

$

(91,979)

 

 

 

 

 

 

(Some amounts may not reconcile due to rounding.)

F-49

Years Ended December 31,
(Dollars in millions)20232022
Other comprehensive income (loss) at December 31, prior year$(56)$(68)
Net gain (loss) arising during period19 7 
Recognition of amortizations in net periodic benefit cost:
Actuarial loss4 4 
Curtailment loss recognized— — 
Other comprehensive income (loss) at December 31, current year$(33)$(56)
(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 thousands)

2021

 

2020

 

2019

Service cost

$

10,637

 

$

9,522

 

$

8,255

Interest cost

 

8,253

 

 

10,112

 

 

11,712

Expected return on assets

 

(24,454)

 

 

(20,781)

 

 

(17,968)

Amortization of actuarial loss from earlier periods

 

8,489

 

 

8,551

 

 

7,635

Settlement

 

464

 

 

1,025

 

 

408

Net periodic benefit cost

$

3,388

 

$

8,429

 

$

10,042

 

 

 

 

 

 

 

 

 

Other changes recognized in other comprehensive income (loss):

 

 

 

 

 

 

 

 

Other comprehensive income (loss) attributable to change from

prior year

 

(24,251)

 

 

(5,486)

 

 

 

 

 

 

 

 

 

 

 

 

Total recognized in net periodic benefit cost and other

 

 

 

 

 

 

 

 

comprehensive income (loss)

$

(20,863)

 

$

2,943

 

 

 

 

 

 

 

 

 

 

 

 

(Some amounts may not reconcile due to rounding.)

Years Ended December 31,
(Dollars in millions)202320222021
Service cost$5 $9 $11 
Interest cost14 10 8 
Expected return on assets(19)(25)(24)
Amortization of actuarial loss from earlier periods4 4 8 
Settlement— 1 — 
Net periodic benefit cost$5 $(2)$3 
Other changes recognized in other comprehensive income (loss):
Other comprehensive income (loss) attributable to change from prior year(23)(12)
Total recognized in net periodic benefit cost and other comprehensive income (loss)$(18)$(14)

(Some amounts may not reconcile due to rounding.)
The weighted average discount rates used to determine net periodic benefit cost for 2023, 2022 and 2021 2020were 5.25%, 2.86% and 2019 were 2.55%, 3.28% and 4.27%, respectively.  The rate of compensation increase used to determine the net periodic benefit cost for 2021, 20202023, 2022 and 20192021 was 4.00%.  The expected long-term rate of return on plan assets for 2023, 2022 and 2021 was 7.00% for 2021, 2020, 6.75% and 2019 based on expected portfolio returns and allocations.

7.00% respectively.

The weighted average discount rates used to determine the actuarial present value of the projected benefit obligation for years end2023, 2022 and 2021 2020were 5.00%, 5.25% and 2019 were 2.86%, 2.55% and 3.28%, respectively.

The following table summarizes the accumulated benefit obligation for the periods indicated:
At December 31,
(Dollars in millions)20232022
Qualified Plan$263 $258 
Non-qualified Plan6 6 
Total$269 $264 
(Some amounts may not reconcile due to rounding.)
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At December 31,

(Dollars in thousands)

2021

 

2020

Qualified Plan

$

339,360

 

$

336,027

Non-qualified Plan

 

12,190

 

 

16,258

Total

$

351,550

 

$

352,285

 

 

 

 

 

 

(Some amounts may not reconcile due to rounding.)

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)

2021

 

2020

Qualified Plan

 

 

 

 

 

Projected benefit obligation

$

390,437

 

$

388,213

Fair value of plan assets

 

377,303

 

 

354,464

Non-qualified Plan

 

 

 

 

 

Projected benefit obligation

$

12,190

 

$

16,258

Fair value of plan assets

 

-

 

 

-

F-50

At December 31,
(Dollars in millions)20232022
Qualified Plan
Projected benefit obligation$289 $284 
Fair value of plan assets308 285 
Non-qualified Plan
Projected benefit obligation$6 $6 
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)

2021

 

2020

Qualified Plan

 

 

 

 

 

Accumulated benefit obligation

$

-

 

$

-

Fair value of plan assets

 

-

 

 

-

Non-qualified Plan

 

 

 

 

 

Accumulated benefit obligation

$

12,189

 

$

16,258

Fair value of plan assets

 

-

 

 

-

At December 31,
(Dollars in millions)20232022
Qualified Plan
Accumulated benefit obligation$— $— 
Fair value of plan assets— — 
Non-qualified Plan
Accumulated benefit obligation6 6 
Fair value of plan assets$— $— 

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

(Dollars in thousands)

 

2022

$

16,662

2023

 

12,639

2024

 

13,565

2025

 

14,550

2026

 

15,439

Next 5 years

 

95,005

(Dollars in millions)
2024$15 
202514 
202615 
202716 
202817 
Next 5 years99 

Plan assets consist primarily of shares in investment trusts with 76%75%, 22%, 1%24% and 1% of the underlying assets consisting of equity securities, fixed maturities limited partnerships and cash, respectively.  The Company manages the qualified plan investments for U.S. employees.  The assets in the plan consist of debt and equity mutual funds.  Due to the long termlong-term nature of the plan, the target asset allocation has historically been 70% equities and 30% bonds.

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:
(Dollars in millions)December 31,
2023		Quoted Prices
in Active
Markets for
Identical
Assets
(Level 1)		Significant
Other
Observable
Inputs
(Level 2)		Significant
Unobservable
Inputs
(Level 3)
Assets:
Short-term investments, which approximates fair value (a)$2 $2 $— $— 
Mutual funds, fair value
Fixed income (b)73 73 — — 
Equities (c)232 232 — — 
Total$308 $308 $— $— 
(Some amounts may not reconcile due to rounding.)

 

 

 

Fair Value Measurement Using:

 

 

 

Quoted Prices

 

 

 

 

 

 

 

in Active

 

Significant

 

 

 

 

 

Markets for

 

Other

 

Significant

 

 

 

Identical

 

Observable

 

Unobservable

 

December 31,

 

Assets

 

Inputs

 

Inputs

(Dollars in thousands)

2021

 

(Level 1)

 

(Level 2)

 

(Level 3)

Assets:

 

 

 

 

 

 

 

 

 

 

 

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

$

2,540

 

$

2,540

 

$

-

 

$

-

Mutual funds, fair value

 

 

 

 

 

 

 

 

 

 

 

Fixed income (b)

 

84,663

 

 

84,663

 

 

-

 

 

-

Equities (c)

 

287,382

 

 

287,382

 

 

-

 

 

-

Total

$

374,585

 

$

374,585

 

$

-

 

$

-

 

 

 

 

 

 

 

 

 

 

 

 

(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.

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(b)This category includes fixed income funds, which invest in investment grade securities of corporations, governments and government agencies with approximately 90% in U.S. securities and 10% 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 100% in U.S. equities.
Fair Value Measurement Using:
(Dollars in millions)December 31,
2022		Quoted Prices
in Active
Markets for
Identical
Assets
(Level 1)		Significant
Other
Observable
Inputs
(Level 2)		Significant
Unobservable
Inputs
(Level 3)
Assets:
Short-term investments, which approximates fair value (a)$4 $4 $— $— 
Mutual funds, fair value
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.

F-51

 

 

 

Fair Value Measurement Using:

 

 

 

Quoted Prices

 

 

 

 

 

 

 

in Active

 

Significant

 

 

 

 

 

Markets for

 

Other

 

Significant

 

 

 

Identical

 

Observable

 

Unobservable

 

December 31,

 

Assets

 

Inputs

 

Inputs

(Dollars in thousands)

2020

 

(Level 1)

 

(Level 2)

 

(Level 3)

Assets:

 

 

 

 

 

 

 

 

 

 

 

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

$

1,204

 

$

1,204

 

$

-

 

$

-

Mutual funds, fair value

 

 

 

 

 

 

 

 

 

 

 

Fixed income (b)

 

93,609

 

 

93,609

 

 

-

 

 

-

Equities (c)

 

255,054

 

 

255,054

 

 

-

 

 

-

Total

$

349,867

 

$

349,867

 

$

-

 

$

-

 

 

 

 

 

 

 

 

 

 

 

 

(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.

In addition, $2.6 million and $4.6$2 million of investments which were recorded as part of the qualified plan assets at December 31, 2021 and 2020, respectively,2022, are not included within the fair value hierarchy tables as the assets are valued using the NAV practical expedient guidance within ASU 2015-07.

NaN

No contributions were made to the qualified pension benefit plan for the years ended December 31, 20212023 and 2020.

2022.

Defined Contribution Plans.

The Company also maintains both qualified and non-qualified defined contribution plans (“Savings Plan” and “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 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 years. The Company incurred expenses related to these plans of $14.8$22 million, $14.4$18 million and $10.8$15 million for the years ended December 31, 2023, 2022 and 2021, 2020 and 2019, respectively. .

In addition, the Company maintains several defined contribution pension plans covering non-U.S. employees.  Each international office 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.  In the current year, the contributions as a percentage of salary for the international offices ranged from 7.7%7.5% to 9.8%9.3%.  The contributions are generally used to purchase pension benefits from local insurance providers. The Company incurred expenses related to these plans of $0.6$0.7 million, $0.8$0.7 million and $0.5$0.6 million for the years ended December 31, 2023, 2022 and 2021, 2020 and 2019, 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 their eligible dependents), who have elected

F-52

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 accrues the post-retirement benefit expense during the period of the employee’s service. A medical cost trend rate of 6.50%6.75% in 20212023 was assumed to decrease gradually to 4.75% in 2030 and then remain at that level. The Company incurred expenses of $1.2$(1) million, $1.3$1 million and $1.2$1 million for the years ended December 31, 2023, 2022 and 2021, 2020 and 2019, respectively.

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The following table summarizes the status of this plan for the periods indicated:

 

At December 31,

(Dollars in thousands)

2021

 

2020

Change in projected benefit obligation:

 

 

 

 

 

Benefit obligation at beginning of year

$

35,098

 

$

29,376

Service cost

 

1,096

 

 

1,066

Interest cost

 

641

 

 

845

Amendments

 

-

 

 

-

Actuarial (gain)/loss

 

(6,044)

 

 

4,042

Benefits paid

 

(267)

 

 

(232)

Benefit obligation at end of year

 

30,523

 

 

35,098

 

 

 

 

 

 

Change in plan assets:

 

 

 

 

 

Fair value of plan assets at beginning of year

 

-

 

 

-

Employer contributions

 

267

 

 

232

Benefits paid

 

(267)

 

 

(232)

Fair value of plan assets at end of year

 

-

 

 

-

 

 

 

 

 

 

Funded status at end of year

$

(30,523)

 

$

(35,098)

At December 31,
(Dollars in millions)20232022
Change in projected benefit obligation:
Benefit obligation at beginning of year$21 $31 
Service cost1 1 
Interest cost1 1 
Amendments— — 
Actuarial (gain)/loss(1)(10)
Benefits paid— — 
Benefit obligation at end of year22 21 
Change in plan assets:
Fair value of plan assets at beginning of year— — 
Employer contributions— — 
Benefits paid— — 
Fair value of plan assets at end of year— — 
Funded status at end of year$(22)$(21)

Amounts recognized in the consolidated balance sheets for the periods indicated:

 

At December 31,

(Dollars in thousands)

2021

 

2020

Other liabilities (due within one year)

$

(682)

 

$

(613)

Other liabilities (due beyond one year)

 

(29,840)

 

 

(34,484)

Net amount recognized in the consolidated balance sheets

$

(30,523)

 

$

(35,098)

 

 

 

 

 

 

(Some amounts may not reconcile due to rounding.)

At December 31,
(Dollars in millions)20232022
Other liabilities (due within one year)$(1)$(1)
Other liabilities (due beyond one year)(21)(21)
Net amount recognized in the consolidated balance sheets$(22)$(21)

(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)

2021

 

2020

Accumulated income (loss)

$

2,191

 

$

(3,854)

Accumulated prior service credit (cost)

 

1,750

 

 

2,327

Accumulated other comprehensive income (loss)

$

3,941

 

$

(1,527)

F-53

At December 31,
(Dollars in millions)20232022
Accumulated income (loss)$11 $13 
Accumulated prior service credit (cost)1 1 
Accumulated other comprehensive income (loss)$12 $14 

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

Years Ended December 31,
(Dollars in millions)20232022
Other comprehensive income (loss) at December 31, prior year$14 $4 
Net gain (loss) arising during period1 10 
Prior Service credit (cost) arising during period— — 
Recognition of amortizations in net periodic benefit cost:
Actuarial loss (gain)(2)— 
Prior service cost— — 
Other comprehensive income (loss) at December 31, current year$12 $14 
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Years Ended December 31,

(Dollars in thousands)

2021

 

2020

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

$

(1,527)

 

$

3,092

Net gain (loss) arising during period

 

6,044

 

 

(4,042)

Prior Service credit (cost) arising during period

 

-

 

 

-

Recognition of amortizations in net periodic benefit cost:

 

 

 

 

 

Actuarial loss (gain)

 

-

 

 

-

Prior service cost

 

(577)

 

 

(577)

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

$

3,941

 

$

(1,527)

Net periodic benefit cost included the following components for the periods indicated:

 

Years Ended December 31,

(Dollars in thousands)

2021

 

2020

 

2019

Service cost

$

1,096

 

$

1,066

 

$

983

Interest cost

 

641

 

 

845

 

 

980

Prior service credit recognition

 

(577)

 

 

(577)

 

 

(577)

Net gain recognition

 

-

 

 

-

 

 

(155)

Net periodic cost

$

1,161

 

$

1,334

 

$

1,231

 

 

 

 

 

 

 

 

 

Other changes recognized in other comprehensive income (loss):

 

 

 

 

 

 

 

 

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

 

(5,468)

 

 

4,619

 

 

 

 

 

 

 

 

 

 

 

 

Total recognized in net periodic benefit cost and

 

 

 

 

 

 

 

 

other comprehensive income (loss)

$

(4,307)

 

$

5,953

 

 

 

 

 

 

 

 

 

 

 

 

(Some amounts may not reconcile due to rounding.)

Years Ended December 31,
(Dollars in millions)202320222021
Service cost$1 $1 $1 
Interest cost1 1 1 
Prior service credit recognition— — (1)
Net gain recognition(2)— — 
Net periodic cost$(1)$1 $1 
Other changes recognized in other comprehensive income (loss):
Other comprehensive gain (loss) attributable to change from prior year2 (10)
Total recognized in net periodic benefit cost and other comprehensive income (loss)$1 $(9)

(Some amounts may not reconcile due to rounding.)
The weighted average discount rates used to determine net periodic benefit cost for 2023, 2022 and 2021 2020were 5.25%, 2.86% and 2019 were 2.55%, 3.28% and 4.27%, respectively.

The weighted average discount rates used to determine the actuarial present value of the projected benefit obligation at year end 2023, 2022 and 2021 2020were 5.00%, 5.25% and 2019 were 2.86%, 2.55% and 3.28%, respectively.

The following table displays the expected benefit payments in the years indicated:
(Dollars in millions)
2024$1 
20251 
20261 
20271 
20281 
Next 5 years7 
15.

RELATED-PARTY TRANSACTIONS

The table below displays long-term note agreements that Group entered into with Everest Re for the periods indicated. These transactions are presented as Notes Receivable – Affiliated in the Consolidated Balance Sheet of Holdings. All note agreements listed were repaid in full during the second quarter of 2023 and are no longer outstanding as of December 31, 2023. The fair value of these long-term notes is considered Level 2 in the fair value hierarchy.
December 31, 2023December 31, 2022
(Dollars in millions)Date IssuedDate DuePrincipal
Amounts		Consolidated
Balance Sheet
Amount		Fair
Value		Consolidated
Balance Sheet
Amount		Fair
Value
1.69% Long-term Note12/17/201912/17/2028$300 $— $— $300 $242 
1.00% Long-term Note8/5/20218/5/2030200 — — 200 151 
3.11% Long-term Note6/14/20226/14/2052215 — — 215 171 
4.34% Long-term Note12/12/202212/12/2052125 — — 125 125 
$840 $— $— $840 $689 
(Some amounts may not reconcile due to rounding.)
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Table of Contents
Interest income recognized in connection with these long-term notes is as follows for the periods indicated:
Years Ended December 31,
(Dollars in millions)Interest ReceivedReceivable Dates202320222021
1.69% Long-term NoteannuallyDecember 17$2 $5 $5 
1.00% Long-term NoteannuallyAugust 51 2 1 
3.11% Long-term NoteannuallyJune 145 4 — 
4.34% Long-term NoteannuallyDecember 12— — — 
$7 $11 $6 
(Some amounts may not reconcile due to rounding.)
Holdings holds 1,773.214 preferred shares of Preferred Holdings with a $1 million par value and 1.75% annual dividend rate. Holdings received these shares in December 2015 in exchange for previously held 9,719,971 Common Shares of Group. 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 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 periods indicated:
Years Ended December 31,
(Dollars in millions)202320222021
Dividends received on preferred stock of affiliate$31 $31 $31 
Affiliated Companies
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.
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 millions)202320222021
Expenses incurred$204 $204 $133 
16.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.
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.
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Table of Contents
The significant components of the provision are as follows for the periods indicated:
Years Ended December 31,
(Dollars in millions)202320222021
Current tax expense (benefit):
U.S.$284 $95 $102 
Foreign— — — 
Total current tax expense (benefit)284 95 102 
Total deferred U.S. tax expense (benefit)(74)(207)90 
Total income tax expense (benefit)$210 $(112)$192 
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:
Years Ended December 31,
(Dollars in millions)202320222021
Expected income tax provision at the U.S. statutory tax rate$248 $(117)$208 
Increase (reduction) in taxes resulting from:
Tax exempt income(3)(4)(4)
Dividend received deduction(2)(3)(1)
Proration1 1 1 
Creditable foreign premium tax(14)(11)(13)
Reserve adjustment— (19)— 
U.S. BEAT tax— 22 — 
Share based compensation(3)(3)(2)
Prior year true up(21)16 — 
Insurance company-owned life insurance(13)(1)— 
Other17 7 3 
Total income tax provision$210 $(112)$192 
(Some amounts may not reconcile due to rounding.)
At December 31, 2023, 2022 and 2021, the Company had no uncertain tax positions.
The Company’s 2014 through 2018 U.S. tax years are under audit by the Internal Revenue Service (“IRS”). Over several years, the Company had received and responded to a significant number of Information Document Requests (“IDRs”). In 2023, the IRS issued several insignificant Notice(s) of Proposed Adjustment. The Company had filed amended tax returns requesting refunds for 2015 and 2016 for $2 million and $5 million, respectively.

In the fall of 2023, the IRS issued a final Revenue Agent Report (“RAR”) which is under review by the Company.

(Dollars in thousands)

 

 

2022

$

683

2023

 

779

2024

 

831

2025

 

974

2026

 

1,084

Next 5 years

 

7,252

We have asked for and received an extension from the IRS to complete our review. Note that the IRS requested, and we have signed, an extension of the audit to June 30, 2025.


For tax year 2019, the Statute of Limitations has expired and, thus, the Federal income tax return for the year is no longer subject to IRS examination except to the extent the Company files an amended return.

Tax years 2020, 2021, and 2022 are open for examination by the IRS.
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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 millions)20232022
Deferred tax assets:
Loss reserves$154 $154 
Unearned premium reserve143 114 
Net unrealized investment losses66 200 
Depreciation44 — 
Lease Liability27 29 
Unrealized foreign currency losses15 24 
Investment impairments12 12 
Equity compensation8 7 
Amortization7 — 
Net unrecognized losses on benefit plans4 9 
Foreign tax credits— 3 
Other assets17 12 
Total deferred tax assets497 564 
Deferred tax liabilities:
Deferred acquisition costs139 105 
Net fair value income136 141 
Partnership Investments49 56 
Right of use asset23 25 
Bond market discount9 5 
Depreciation— 16 
Other liabilities5 6 
Total deferred tax liabilities361 354 
Net deferred tax assets/(liabilities)$136 $210 
(Some amounts may not reconcile due to rounding.)
At December 31, 2023, and 2022, the Company had $0 million and $3 million respectively of foreign tax credit (“FTC”) carryforwards, all related to the branch basket. The branch basket FTCs begin to expire in 2030.

Tax effected U.S. Separate Return Limitation Year Net Operating Losses (“NOLs”) of $1 million begin to expire in 2037. At December 31, 2023 there is a $1 million valuation allowance offsetting the U.S. Separate Return Limitation NOLs.
At December 31, 2023, $66 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 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, 2023, 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 realized.
The Company follows ASU 2016-09 in regard to the 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 settlement (vesting/exercising) date be recorded as part of income tax expense (benefit) within the consolidated statements of operations and comprehensive income (loss). Per ASU 2016-09, the Company recorded excess tax benefits of $3 million, $3 million and $2 million 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 2023, 2022 and 2021, respectively.
ASU 2016-09 does 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
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Table of Contents
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 $0.4 million, $0.4 million and $0.4 million in 2023, 2022 and 2021, respectively.

14. 17.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-54

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.  AtAccordingly, as of December 31, 2021, Everest Re has $571.7 million2023, the maximum amount that will be available for the payment of dividends in 2022by Everest Re without triggering the needrequirement for prior approval of regulatory approval.

authorities in connection with a dividend is $877 million.

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 $5.7$7.0 billion and $5.3$5.6 billion at December 31, 20212023 and 2020,2022, respectively.  The statutory net income of Everest Re was $263.7$877 million, $595.1$294 million and $363.0$264 million for the years ended December 31, 2023, 2022 and 2021, 2020 and 2019, respectively.

There are certain 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.

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

Everest Re (1)
At December 31,
(Dollars in millions)20232022
Regulatory targeted capital$4,242 $3,353 
Actual capital$6,963 $5,553 

 

Everest Re (1)

 

At December 31,

(Dollars in thousands)

2021

 

2020

Regulatory targeted capital

$

2,960,047

 

$

2,489,772

Actual capital

$

5,717,114

 

$

5,276,003

(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-18.55

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)

2021

 

2020

The Prudential

$

138,285

 

$

140,773

Unaffiliated life insurance company

 

34,847

 

 

35,128

16. RELATED-PARTY TRANSACTIONS

Group

Group entered into a $300.0 million long term note agreement with Everest Re as of December 17, 2019. The note will pay interest annually at a rate of 1.69% and is scheduled to mature in December, 2028. This transaction is presented as a Note Receivable – Affiliated in the Consolidated Balance Sheet of Holdings. The Company recognized interest income related to this long term note of $5.1 million and $5.2 million for years ended December 31, 2021 and 2020, respectively.

Group entered into a $200.0 million long term note agreement with Everest Re as of August 5, 2021. The note will pay interest annually at a rate of 1.00% and is scheduled to mature in August, 2030. The Company recognized interest income related to this long term note of $0.8 million for the year ended December 31, 2021.

Group’s Board of Directors approved an amended share repurchase program authorizing Group and/or its subsidiary Holdings to purchase Group’s common shares through open market transactions, privately negotiated transactions or both. The most recent amendment from the Board, approved on May 22, 2020, increased the cumulative number of shares that may be repurchased under the program to 32.0 million shares.

Holdings had purchased and held 9,719,971 Common Shares of Group, which were purchased in the open market between February 2007 and March 2011.

In December, 2015, Holdings transferred the 9,719,971 Common Shares of Group, which it held as other invested assets, at fair value, valued at $1.8 billion, to Preferred Holdings in exchange for 1,773.214 preferred shares of Preferred Holdings with a $1.0 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.

F-56

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 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 period indicated.

 

Years Ended December 31,

(Dollars in thousands)

2021

 

2020

 

2019

Dividends received on preferred stock of affiliate

$

31,032

 

$

31,032

 

$

31,032

Affiliated Companies

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.

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)

2021

 

2020

 

2019

Expenses incurred

$

133,353

 

$

124,486

 

$

107,851

17. SEGMENT REPORTING

The Reinsurance operation writes worldwide 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.

F-57

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

 

Year Ended December 31, 2021

(Dollars in thousands)

Reinsurance

 

Insurance

 

Total

Gross written premiums

$

6,028,206

 

$

3,302,821

 

$

9,331,027

Net written premiums

 

5,264,652

 

 

2,454,789

 

 

7,719,441

 

 

 

 

 

 

 

 

 

Premiums earned

$

4,948,706

 

$

2,229,885

 

$

7,178,592

Incurred losses and LAE

 

3,761,051

 

 

1,625,805

 

 

5,386,856

Commission and brokerage

 

1,250,145

 

 

262,357

 

 

1,512,502

Other underwriting expenses

 

143,106

 

 

310,958

 

 

454,064

Underwriting gain (loss)

$

(205,596)

 

$

30,765

 

$

(174,830)

 

 

 

 

 

 

 

 

 

Net investment income

 

 

 

 

 

 

 

744,954

Net realized capital gains (losses)

 

 

 

 

 

 

 

501,286

Corporate expenses

 

 

 

 

 

 

 

(33,334)

Interest, fee and bond issue cost amortization expense

 

 

 

 

 

 

 

(69,974)

Other income (expense)

 

 

 

 

 

 

 

23,383

Income (loss) before taxes

 

 

 

 

 

 

$

991,485

 

Year Ended December 31, 2020

(Dollars in thousands)

Reinsurance

 

Insurance

 

Total

Gross written premiums

$

5,265,698

 

$

2,691,340

 

$

7,957,038

Net written premiums

 

4,632,265

 

 

2,006,435

 

 

6,638,700

 

 

 

 

 

 

 

 

 

Premiums earned

$

4,484,693

 

$

1,921,883

 

$

6,406,576

Incurred losses and LAE

 

3,209,160

 

 

1,398,984

 

 

4,608,144

Commission and brokerage

 

1,119,966

 

 

253,389

 

 

1,373,355

Other underwriting expenses

 

119,320

 

 

281,713

 

 

401,033

Underwriting gain (loss)

$

36,247

 

$

(12,203)

 

$

24,044

 

 

 

 

 

 

 

 

 

Net investment income

 

 

 

 

 

 

 

375,906

Net realized capital gains (losses)

 

 

 

 

 

 

 

49,804

Corporate expenses

 

 

 

 

 

 

 

(15,985)

Interest, fee and bond issue cost amortization expense

 

 

 

 

 

 

 

(35,659)

Other income (expense)

 

 

 

 

 

 

 

(14,579)

Income (loss) before taxes

 

 

 

 

 

 

$

383,531

F-58

 

Year Ended December 31, 2019

(Dollars in thousands)

Reinsurance

 

Insurance

 

Total

Gross written premiums

$

4,600,373

 

$

2,452,691

 

$

7,053,064

Net written premiums

 

3,923,799

 

 

1,851,150

 

 

5,774,949

 

 

 

 

 

 

 

 

 

Premiums earned

$

3,796,136

 

$

1,692,899

 

$

5,489,035

Incurred losses and LAE

 

2,692,680

 

 

1,136,442

 

 

3,829,122

Commission and brokerage

 

1,027,286

 

 

242,767

 

 

1,270,053

Other underwriting expenses

 

110,032

 

 

240,869

 

 

350,901

Underwriting gain (loss)

$

(33,862)

 

$

72,821

 

$

38,959

 

 

 

 

 

 

 

 

 

Net investment income

 

 

 

 

 

 

 

356,211

Net realized capital gains (losses)

 

 

 

 

 

 

 

419,367

Corporate expenses

 

 

 

 

 

 

 

(13,063)

Interest, fee and bond issue cost amortization expense

 

 

 

 

 

 

 

(34,931)

Other income (expense)

 

 

 

 

 

 

 

(1,589)

Income (loss) before taxes

 

 

 

 

 

 

$

764,955

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)

2021

 

2020

 

2019

Canada gross written premiums

$

251,560

 

$

320,665

 

$

214,594

No other country represented more than 5% of the Company’s revenues.

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

18. SUBSEQUENT EVENTS

The Company has evaluated known recognized and non-recognized subsequent events. The Company does not have any subsequent events to report.

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Table of Contents


SCHEDULE I - SUMMARY OF INVESTMENTS -

 

 

 

 

 

 

 

 

OTHER THAN INVESTMENTS IN RELATED PARTIES

 

 

 

 

 

 

 

 

DECEMBER 31, 2021

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

$

656,742

 

$

662,749

 

$

662,749

State, municipalities and political subdivisions

 

558,842

 

 

586,621

 

 

586,621

Foreign government securities

 

677,327

 

 

691,980

 

 

691,980

Foreign corporate securities

 

1,494,315

 

 

1,509,874

 

 

1,509,874

Public utilities

 

109,283

 

 

112,506

 

 

112,506

All other corporate bonds

 

6,976,219

 

 

7,018,541

 

 

7,018,541

Mortgage - backed securities

 

 

 

 

 

 

 

 

Commercial

 

586,441

 

 

602,894

 

 

602,894

Agency residential

 

1,255,186

 

 

1,260,678

 

 

1,260,678

Non-agency residential

 

4,398

 

 

4,408

 

 

4,408

Redeemable preferred stock

 

414,746

 

 

410,144

 

 

410,144

Total fixed maturities-available for sale

 

12,733,499

 

 

12,860,395

 

 

12,860,395

Equity securities at fair value(1)

 

1,290,861

 

 

1,757,792

 

 

1,757,792

Short-term investments

 

695,935

 

 

695,886

 

 

695,886

Other invested assets

 

1,674,639

 

 

1,674,639

 

 

1,674,639

Other invested assets, at fair value (1)

 

1,773,214

 

 

2,030,816

 

 

2,030,816

Cash

 

699,266

 

 

699,266

 

 

699,266

Total investments and cash

$

18,867,414

 

$

19,718,794

 

$

19,718,794

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(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 comprehensive income.

SCHEDULE I - SUMMARY OF INVESTMENTS -

OTHER THAN INVESTMENTS IN RELATED PARTIES

DECEMBER 31, 2023
Column AColumn BColumn CColumn D
(Dollars in millions)CostMarket
Value		Amount
Shown in
Balance
Sheet
Fixed maturities - available for sale
Bonds:
U.S. government and government agencies$265 $247 $247 
State, municipalities and political subdivisions138 128 128 
Foreign government securities859 835 835 
Foreign corporate securities1,807 1,759 1,759 
Public utilities238 231 231 
All other corporate bonds8,990 8,907 8,907 
Mortgage - backed securities
Commercial575 522 522 
Agency residential2,531 2,435 2,435 
Non-agency residential429 441 441 
Redeemable preferred stock474 427 427 
Total fixed maturities - available for sale16,305 15,932 15,932 
Fixed maturities - held to maturity
Bonds:
Foreign corporate securities84 90 83 
Public utilities4 5 4 
All other corporate bonds750 733 743 
Mortgage - backed securities
Commercial21 21 21 
Total Fixed maturities - held to maturity859 850 851 
Equity securities at fair value (1)
91 91 91 
Short-term investments1,298 1,298 1,298 
Other invested assets3,259 3,259 3,259 
Other invested assets, at fair value (1)
1,773 1,481 1,481 
Cash527 527 527 
Total investments and cash$24,111 $23,437 $23,439 
(Some amounts may not reconcile due to rounding.)
S-(1)1
Original cost does not reflect fair value adjustments, which have been realized through the statements of operations and comprehensive income (loss).

S-1

Table of Contents


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)

2021

 

2020

ASSETS:

 

 

 

 

 

Fixed maturities - available for sale

$

147,310

 

$

-

(amortized cost: 2021, $147,970; 2020, $0)

 

 

 

 

 

Equity securities - at fair value

 

678,539

 

 

311,009

Other invested assets

 

241,520

 

 

146,968

Other invested assets, at fair value

 

2,030,816

 

 

1,796,479

Short-term investments

 

5,401

 

 

9,985

Cash

 

284

 

 

10,482

Total investments and cash

 

3,103,870

 

 

2,274,923

Investment in subsidiaries, at equity in the underlying net assets

 

6,370,660

 

 

6,115,130

Note receivable - affiliated

 

470,000

 

 

-

Accrued investment income

 

4,759

 

 

87

Advances to affiliates

 

203

 

 

165

Other assets

 

(1,867)

 

 

(104)

TOTAL ASSETS

$

9,947,625

 

$

8,390,201

 

 

 

 

 

 

LIABILITIES:

 

 

 

 

 

Senior notes

$

2,345,800

 

$

1,376,718

Long term notes

 

223,774

 

 

223,674

Accrued interest on debt and borrowings

 

17,144

 

 

10,388

Income taxes

 

316,899

 

 

362,393

Due to affiliates

 

5,494

 

 

1,835

Other liabilities

 

467

 

 

880

Total liabilities

$

2,909,578

 

$

1,975,888

 

 

 

 

 

 

STOCKHOLDER'S EQUITY:

 

 

 

 

 

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

 

 

 

 

 

1,000 shares issued and outstanding (2021 and 2020)

 

-

 

 

-

Additional paid-in capital

 

1,101,527

 

 

1,101,092

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

 

 

 

 

 

tax expense (benefit) of $24,279 at 2021 and $71,080 at 2020

 

91,469

 

 

268,018

Retained earnings

 

5,845,051

 

 

5,045,203

Total stockholder's equity

 

7,038,047

 

 

6,414,313

TOTAL LIABILITIES AND STOCKHOLDER'S EQUITY

$

9,947,625

 

$

8,390,201

 

 

 

 

 

 

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)

2021

 

2020

 

2019

REVENUES:

 

 

 

 

 

 

 

 

Net investment income

$

70,339

 

$

26,021

 

$

34,970

Net investment income - Affiliated

 

2,970

 

 

320

 

 

412

Net realized capital gains (losses)

 

328,584

 

 

(73,338)

 

 

274,110

Other income (expense)

 

498

 

 

3,105

 

 

524

Net income (loss) of subsidiaries

 

551,370

 

 

393,552

 

 

370,084

Total revenues

 

953,762

 

 

349,659

 

 

680,100

 

 

 

 

 

 

 

 

 

EXPENSES:

 

 

 

 

 

 

 

 

Interest expense

 

68,728

 

 

35,508

 

 

34,931

Corporate expense

 

17,602

 

 

9,392

 

 

6,810

Total expenses

 

86,330

 

 

44,900

 

 

41,741

 

 

 

 

 

 

 

 

 

INCOME (LOSS) BEFORE TAXES

 

867,432

 

 

304,760

 

 

638,359

Income tax expense (benefit)

 

67,583

 

 

(47,113)

 

 

8,632

 

 

 

 

 

 

 

 

 

NET INCOME (LOSS)

$

799,849

 

$

351,873

 

$

629,727

 

 

 

 

 

 

 

 

 

Other comprehensive income (loss), net of tax :

 

 

 

 

 

 

 

 

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

 

(200,307)

 

 

163,080

 

 

175,482

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

 

9,014

 

 

25,468

 

 

5,080

Total URA(D) on securities arising during the period

 

(191,293)

 

 

188,548

 

 

180,562

 

 

 

 

 

 

 

 

 

Foreign currency translation adjustments

 

(8,734)

 

 

14,461

 

 

17,153

 

 

 

 

 

 

 

 

 

Benefit plan actuarial net gain (loss) for the period

 

6,251

 

 

(5,615)

 

 

(12,591)

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

 

17,227

 

 

6,300

 

 

5,453

Total benefit plan net gain (loss) for the period

 

23,478

 

 

685

 

 

(7,138)

Total other comprehensive income (loss), net of tax

 

(176,549)

 

 

203,694

 

 

190,577

 

 

 

 

 

 

 

 

 

COMPREHENSIVE INCOME (LOSS)

$

623,300

 

$

555,567

 

$

820,304

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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)

2021

 

2020

 

2019

 

 

 

 

 

 

 

 

 

 

 

 

 

CASH FLOWS FROM OPERATING ACTIVITIES:

 

 

 

 

 

 

 

 

 

 

Net income (loss)

$

799,849

 

$

351,873

 

$

629,727

 

 

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

 

 

 

 

 

 

 

 

 

 

Equity in (earnings) deficit of subsidiaries

 

(551,370)

 

 

(393,552)

 

 

(370,084)

 

 

Dividends received from subsidiary

 

-

 

 

-

 

 

300,000

 

 

Increase (decrease) in income taxes

 

(45,355)

 

 

119,331

 

 

40,695

 

 

Change in equity adjustments in limited partnerships

 

(32,802)

 

 

8,491

 

 

2,468

 

 

Change in other assets and liabilities, net

 

39,852

 

 

20,179

 

 

(16,615)

 

 

Amortization of bond premium (accrual of bond discount)

 

301

 

 

63

 

 

13

 

 

Net realized capital losses (gains)

 

(328,584)

 

 

73,338

 

 

(274,110)

 

 

Net cash provided by (used in) operating activities

 

(118,109)

 

 

179,722

 

 

312,094

 

 

 

 

 

 

 

 

 

 

 

 

 

CASH FLOWS FROM INVESTING ACTIVITIES:

 

 

 

 

 

 

 

 

 

 

Additional investment in subsidiaries

 

87,973

 

 

(949,464)

 

 

15,174

 

 

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

 

-

 

 

1,750

 

 

-

 

 

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

 

-

 

 

-

 

 

12,000

 

 

Proceeds from equity maturities sold - at fair value

 

242,996

 

 

61,883

 

 

18,905

 

 

Distributions from other invested assets

 

2,014,483

 

 

1,113,176

 

 

389,200

 

 

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

 

(147,970)

 

 

-

 

 

-

 

 

Cost of equity securities acquired - at fair value

 

(516,279)

 

 

(184,542)

 

 

(32,597)

 

 

Cost of other invested assets acquired

 

(2,076,233)

 

 

(1,211,726)

 

 

(388,598)

 

 

Net change in short-term investments

 

4,584

 

 

10,529

 

 

(16,403)

 

 

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

 

(470,000)

 

 

10,000

 

 

(10,000)

 

 

Net cash provided by (used in) investing activities

 

(860,446)

 

 

(1,148,394)

 

 

(12,319)

 

 

 

 

 

 

 

 

 

 

 

 

 

CASH FLOWS FROM FINANCING ACTIVITIES:

 

 

 

 

 

 

 

 

 

 

Proceeds from issuance of senior notes

 

968,357

 

 

979,417

 

 

-

 

 

Cost of debt repurchase

 

-

 

 

(10,647)

 

 

-

 

 

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

 

-

 

 

-

 

 

(300,000)

 

 

Net cash provided by (used in) financing activities

 

968,357

 

 

968,770

 

 

(300,000)

 

 

 

 

 

 

 

 

 

 

 

 

 

Net increase (decrease) in cash

 

(10,198)

 

 

98

 

 

(225)

 

 

Cash, beginning of period

 

10,482

 

 

10,384

 

 

10,609

 

 

Cash, end of period

$

284

 

$

10,482

 

$

10,384

 

 

 

 

 

 

 

 

 

 

 

 

 

See notes to consolidated financial statements.

 

S-4

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)20232022
ASSETS:
Fixed maturities - available for sale (amortized cost: 2023, $0; 2022, $0)$— $— 
Equity securities - at fair value18 12 
Other invested assets190 194 
Other invested assets, at fair value1,481 1,472 
Short-term investments139 30 
Cash1 2 
Total investments and cash1,829 1,710 
Investment in subsidiaries, at equity in the underlying net assets7,545 5,496 
Notes receivable - affiliated535 1,170 
Accrued investment income6 12 
Other assets1 — 
TOTAL ASSETS$9,916 $8,388 
LIABILITIES:
Senior notes$2,349 $2,347 
Long-term notes218 218 
Accrued interest on debt and borrowings18 17 
Income taxes142 144 
Due to affiliates3 7 
Total liabilities$2,729 $2,734 
STOCKHOLDER'S EQUITY:
Common stock, par value: $0.01; 3,000 shares authorized; 1,000 shares issued and outstanding (2023 and 2022)— — 
Additional paid-in capital1,102 1,102 
Accumulated other comprehensive income (loss), net of deferred income tax expense (benefit) of $(76) at 2023 and $(225) at 2022(287)(848)
Retained earnings6,372 5,400 
Total stockholder's equity7,187 5,654 
TOTAL LIABILITIES AND STOCKHOLDER'S EQUITY$9,916 $8,388 
See notes to consolidated financial statements.
S-2
Table of Contents

SCHEDULE II – CONDENSED FINANCIAL INFORMATION OF THE REGISTRANT
CONDENSED STATEMENTS OF OPERATIONS
Years Ended December 31,
(Dollars in millions)202320222021
REVENUES:
Net investment income$19 $47 $39 
Net investment income - Affiliated67 57 34 
Net gains (losses) on investments10 (704)329 
Other income (expense)1 (3)— 
Net income (loss) of subsidiaries987 114 551 
Total revenues1,086 (488)954 
EXPENSES:
Interest expense104 97 69 
Corporate expense15 10 18 
Total expenses119 107 86 
INCOME (LOSS) BEFORE TAXES967 (595)867 
Income tax expense (benefit)(5)(150)68 
NET INCOME (LOSS)$972 $(445)$800 
Other comprehensive income (loss) of subsidiaries, net of tax561 (939)(177)
COMPREHENSIVE INCOME (LOSS)$1,533 $(1,384)$623 
See notes to consolidated financial statements.
S-3
Table of Contents
SCHEDULE II – CONDENSED FINANCIAL INFORMATION OF THE REGISTRANT
CONDENSED STATEMENTS OF CASH FLOWS
Years Ended December 31,
(Dollars in millions)202320222021
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss)$972 $(445)$800 
Adjustments to reconcile net income to net cash provided by operating activities:
Equity in (earnings) deficit of subsidiaries(987)(114)(551)
Dividends received from subsidiary— 250 — 
Increase (decrease) in income taxes(2)(173)(45)
Change in equity adjustments in limited partnerships(15)(37)(33)
Change in other assets and liabilities, net2 (5)40 
Net (gains) losses on investments(10)704 (329)
Net cash provided by (used in) operating activities(40)180 (118)
CASH FLOWS FROM INVESTING ACTIVITIES:
Additional investment in subsidiaries(502)(200)88 
Proceeds from fixed maturities matured/called/repaid - available for sale— — — 
Proceeds from fixed maturities sold - available for sale— 244 — 
Proceeds from equity maturities sold— 652 243 
Distributions from other invested assets171 1,362 2,014 
Cost of fixed maturities acquired - available for sale— (134)(148)
Cost of equity securities acquired— (93)(516)
Cost of other invested assets acquired(156)(1,278)(2,076)
Net change in short-term investments(109)(24)5 
Proceeds from repayment of long term notes receivable - affiliated865 400 — 
(Issuance) of long term notes receivable - affiliated(230)(1,100)(470)
Net cash provided by (used in) investing activities39 (171)(860)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of senior notes— — 968 
Cost of debt repurchase— (6)— 
Net cash provided by (used in) financing activities— (6)968 
Net increase (decrease) in cash(1)2 (10)
Cash, beginning of period2 — 10 
Cash, end of period$1 $2 $— 
See notes to consolidated financial statements.
S-4
Table of Contents
SCHEDULE II – CONDENSED FINANCIAL INFORMATION OF THE REGISTRANT
NOTES TO CONDENSED FINANCIAL INFORMATION

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

2)2.)The Senior Notes and Long-Term Subordinated Notes presented in Notes 57 and 68 are direct obligations of the Registrant.

3)3.)Effective October 21, 2021,May 2023, Everest Reinsurance Holdings, Inc. entered into a $470.0$230 million long termlong-term promissory note with Everest Reinsurance Company, a subsidiary entity. The promissory note has an interest rate of 3.72% payable annually and is scheduled to mature on October 21, 2051. However, the note was paid off in full in May 2023 and is no longer outstanding as of December 31, 2023.

4.)Effective December 2022, Everest Reinsurance Holdings, Inc. entered into a $125 million long-term promissory note with Everest Group, Ltd., its parent. The promissory note has an interest rate of 4.34% payable annually and is scheduled to mature in June 2052. However, the note was paid off in full in May 2023 and is no longer outstanding as of December 31, 2023. At December 31, 2022, this transaction was included within notes receivable - affiliated in the condensed balance sheets of Everest Reinsurance Holdings, Inc.
5.)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. Everest Reinsurance Company has repaid $270 million of the promissory note to Everest Reinsurance Holdings, Inc. in December 2023 which leaves $290 million outstanding as of December 31, 2023. At December 31, 2023, this transaction was included within notes receivable - affiliated in the condensed balance sheets of Everest Reinsurance Holdings, Inc.
6.)Effective June 2022, Everest Reinsurance Holdings, Inc. entered into a $215 million long-term promissory note with Everest 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. However, the note was paid off in full in May 2023 and is no longer outstanding as of December 31, 2023. At December 31, 2022, this transaction was included within notes receivable - affiliated in the condensed balance sheets of Everest Reinsurance Holdings, Inc.
7.)Effective May 2022, Everest Reinsurance Holdings, Inc. entered into a $200 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. At December 31, 2023 and 2022, this transaction was included within notes receivable - affiliated in the condensed balance sheets of Everest Reinsurance Holdings, Inc.

4)8.)Effective February 19, 2019,October 21, 2021, Everest Reinsurance Holdings, Inc. entered into a $10.0$470 million long termlong-term promissory note with Everest Indemnity InsuranceReinsurance Company, an affiliateda subsidiary entity. The promissory note washas an interest rate of 3.25% payable annually and is scheduled to mature on February 19, 2049 but wasOctober 21, 2051. Everest Reinsurance Company has repaid in September 2020.$425 million of the promissory note to Everest Reinsurance Holdings, Inc., leaving $45 million of the promissory note still outstanding as of December 31, 2023.

5)9.)In December, 2015, Holdings transferred the 9,719,971 Common Shares of Group, which it held as other invested assets, at fair value, valued at $1.8 billion, to Preferred Holdings, an affiliated entity and subsidiary of Group, in exchange for 1,773.214 preferred shares of Preferred Holdings with a $1.0$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-5

S-5

Table of Contents

EVEREST REINSURANCE HOLDINGS, INC.
SCHEDULE III - SUPPLEMENTARY INSURANCE INFORMATION
Column AColumn BColumn CColumn DColumn EColumn FColumn GColumn HColumn IColumn J
SegmentsDeferred
Acquisition
Costs		Reserve
for Losses
and Loss
Adjustment
Expenses		Unearned
Premium
Reserves		Premiums
Earned		Net
Investment
Income		Incurred
Loss and
Loss
Adjustment
Expenses		Amortization
of Deferred
Acquisition
Costs		Other
Operating
Expenses		Net
Written
Premium
(Dollars in millions)
As of and for the year ended December 31, 2023
Reinsurance$487 $10,178 $2,050 $5,637 $640 $3,329 $1,545 $167 $6,205 
Insurance172 5,617 1,836 2,900 353 2,249 306 407 3,007 
Total$659 $15,796 $3,886 $8,536 $993 $5,578 $1,851 $574 $9,212 
As of and for the year ended December 31, 2022
Reinsurance$329 $9,994 $1,453 $5,147 $426 $3,926 $1,308 $138 $5,204 
Insurance170 4,983 1,725 2,729 212 1,897 325 364 2,828 
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, 2021
Reinsurance$315 $8,807 $1,427 $4,899 $500 $3,750 $1,229 $142 $5,217 
Insurance157 4,314 1,566 2,279 245 1,637 284 312 2,503 
Total$472 $13,121 $2,993 $7,179 $745 $5,387 $1,513 $454 $7,719 
(Some amounts may not reconcile due to rounding.)
S-6
Table of Contents

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 thousands)

 

Costs

 

 

Expenses

 

 

Reserves

 

 

Earned

 

 

Income

 

 

Expenses

 

 

Costs

 

 

Expenses

 

 

Premium

As of and for the year ended December 31, 2021

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Reinsurance

$

314,784

 

$

8,829,380

 

$

1,426,730

 

$

4,948,706

 

$

501,287

 

$

3,761,051

 

$

1,250,145

 

$

143,106

 

$

5,264,652

Insurance

 

157,147

 

 

4,291,797

 

 

1,566,148

 

 

2,229,885

 

 

243,667

 

 

1,625,805

 

 

262,357

 

 

310,958

 

 

2,454,789

Total

$

471,931

 

$

13,121,177

 

$

2,992,878

 

$

7,178,592

 

$

744,954

 

$

5,386,856

 

$

1,512,502

 

$

454,064

 

$

7,719,441

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

As of and for the year ended December 31, 2020

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Reinsurance

$

169,346

 

$

7,896,076

 

$

1,127,815

 

$

4,484,693

 

$

254,671

 

$

3,209,160

 

$

1,119,966

 

$

119,320

 

$

4,632,265

Insurance

 

210,361

 

 

3,682,020

 

 

1,257,359

 

 

1,921,883

 

 

121,235

 

 

1,398,984

 

 

253,389

 

 

281,713

 

 

2,006,435

Total

$

379,707

 

$

11,578,096

 

$

2,385,174

 

$

6,406,576

 

$

375,906

 

$

4,608,144

 

$

1,373,355

 

$

401,033

 

$

6,638,700

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

As of and for the year ended December 31, 2019

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Reinsurance

$

182,531

 

$

7,138,800

 

$

1,069,829

 

$

3,796,136

 

$

249,073

 

$

2,692,680

 

$

1,027,286

 

$

110,032

 

$

3,923,799

Insurance

 

205,707

 

 

2,990,662

 

 

1,129,103

 

 

1,692,899

 

 

107,138

 

 

1,136,442

 

 

242,767

 

 

240,869

 

 

1,851,150

Total

$

388,238

 

$

10,129,462

 

$

2,198,932

 

$

5,489,035

 

$

356,211

 

$

3,829,122

 

$

1,270,053

 

$

350,901

 

$

5,774,949

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(Some amounts may not reconcile due to rounding.)

S-6

SCHEDULE IV - REINSURANCE

Column AColumn BColumn CColumn DColumn EColumn F
(Dollars in millions)Gross
Amount		Ceded to
Other
Companies		Assumed
from Other
Companies		Net
Amount		Assumed
to Net
December 31, 2023
Total property and liability insurance premiums earned$3,709 $1,878 $6,705 $8,536 78.6 %
December 31, 2022
Total property and liability insurance premiums earned$3,544 $1,613 $5,945 $7,876 75.5 %
December 31, 2021
Total property and liability insurance premiums earned$2,982 $1,544 $5,741 $7,179 80.0 %

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, 2021

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total property and liability

 

 

 

 

 

 

 

 

 

 

 

 

 

 

insurance premiums earned

$

2,981,927

 

$

1,544,024

 

$

5,740,688

 

$

7,178,592

 

$

80.0%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

December 31, 2020

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total property and liability

 

 

 

 

 

 

 

 

 

 

 

 

 

 

insurance premiums earned

$

2,591,613

 

$

1,368,436

 

$

5,183,399

 

$

6,406,576

 

$

80.9%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

December 31, 2019

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total property and liability

 

 

 

 

 

 

 

 

 

 

 

 

 

 

insurance premiums earned

$

2,255,387

 

$

1,193,359

 

$

4,427,006

 

$

5,489,034

 

$

80.7%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

S-7

S-7