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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, 2022
___
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)
Delaware22-3263609
(State or other jurisdiction
of incorporation or organization)
(I.R.S Employer
Identification No.)
(State or other jurisdiction
100 Everest Way
Warren, New Jersey
07059
(Address of principal executive offices)(Zip Code)
of incorporation or organization)
22-3263609
(I.R.S Employer
Identification No.)
100 Everest Way
Warren
,
New Jersey
07059
(
908
)
(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
ClassName of Exchange where Registered
4.868% Senior Notes Due 2044NYSE
3.50% Senior Notes Due 2050NYSE
3.125% Senior Notes Due 2052NYSE
6.60% Long-Term Notes Due 2067NYSE
Name of Each Exchange on Which Registered
4.868% Senior Notes Due 2044
NYSE
3.50% Senior Notes Due 2050
NYSE
3.125% Senior Notes Due 2052
NYSE
6.60% Long-Term Notes Due 2067
NYSE_____________________
Securities registered pursuant
to Section 12(g) of the Act: None
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
YesXNo
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
YesNoX
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 requi
rementsrequirements for the past 90 days.
Yes
X
YesXNo
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
YesXNo
Indicate by check mark whether
the registrant is a
large accelerated filer,
an accelerated filer,
a non-accelerated filer,
a smaller reporting company
or an emerging growth
company.
See the
definitions of “large accelerated filer,”
“accelerated “accelerated filer,”
“smaller “smaller reporting company” and “emerging
growth company” in Rule 12b-2 of the Exchange
Act.
Large accelerated filerAccelerated filer
Non-accelerated filerXSmaller reporting company
Emerging growth company
Accelerated filer
Non-accelerated filer
X
Smaller reporting company
EmergingIf an emerging growth company,
Indicate 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
YesNoX
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.
YesNoX
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.)
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.
☐
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)Act).
☐
YesNoX
The aggregate market value
on as of June 30, 2022,2023, 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
zero
. zero.
At March
9, 2023, 13, 2024, the
number of
shares outstanding
of the registrant
registrant’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.

Table of Contents
EVEREST REINSURANCE HOLDINGS, INC.
Table of Contents
FORM 10-K
Page
PART I
1
13
19
Item 1C.
19
20
21
21
PART II
21
21
21
33
34
34
34
35
35
PART III
36
36
36
36
36
PART IV
38
PART I
Item 1.
Business
1
Item 1A.
Risk Factors
7
Item 1B.
Unresolved Staff Comments
13
Item 2.
Properties
13
Item 3.
Legal Proceedings
13
Item 4.
Mine Safety Disclosures
13
PART II
Item 5.
Market for Registran
t’s Common Equity,Related Stockholder Mattersand
Issuer Purchases of Equity Securities
13
Item 6.
[Reserved]
14
Item 7.
Management’s Discussion and Analysisof Financial Condition and Results of
Operations
14
Item 7A.
Quantitative and QualitativeDisclosures About Market Risk
26
Item 8.
Financial Statements and SupplementaryData
28
Item 9.
Changes in and Disagreements With Accountantson Accounting and Financial
Disclosure
28
Item 9A.
Controls and Procedures
29
Item 9B.
Other Information
29
Item 9C.
Disclosure Regarding ForeignJurisdictions that Prevent Inspect
ions
29
PART III
Item 10.
Directors, Executive Officersand Corporate Governance
30
Item 11.
Executive Compensation
30
Item 12.
Security Ownership of Certain Beneficial Ownersand Management and Related
Stockholder Matters
30
Item 13.
Certain Relationships and RelatedTransactions,and Director Independence
30
Item 14.
Principal Accountant Fees and Services
30
PART IV
Item 15.
Exhibits and Financial Statement Schedules
31
1Table of Contents
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.

Table of Contents
PART I
Unless
otherwise
indicated,
all
financial
data
in
this
document
have
been
prepared
using
accounting
principles
generally accepted
in the United States
of America (“GAAP”).
As used in this
document, “Holdings” means
Everest
Reinsurance
Holdings,
Inc.,
a
Delaware
company
and
direct
subsidiary
of
Everest
Underwriting
Group
(Ireland)
Limited
(“ (“Holdings
Ireland”);
“Group”
“Group” means
Everest
Re
Group,
Ltd.
(Holdings
(Holdings Ireland’s
parent);
“Bermuda
“Bermuda Re”
means
Everest
Reinsurance
(Bermuda),
Ltd.,
a
subsidiary
of
Group;
“Everest
Re”
means
Everest
Reinsurance
Company and its subsidiaries, a subsidiary of Holdings
(unless the context otherwise requires);
and the “Company”,
“we”,
“us”,
and “our”Group; “Everest Re” means Everest Reinsurance Company, 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
BUSINESS
The Company.
Holdings, a Delaware corporation,
is a wholly-owned subsidiary
of Holdings Ireland.
On December 30, 2008, Holdings Ireland is a direct subsidiary of Group
contributed
Holdings
to
its
recently
established
Irish
and serves as a holding
company
Holdings
Ireland.
Holdings
Ireland
is
a
direct
subsidiary
of
Group
for the U.S. reinsurance 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.
The In 2023, the Company
had gross
written
premiums
in 2022,
of $9.7
$11.1 billion, with approximately
61% 65% representing reinsurance
and 39%35% representing
insurance.
Stockholder’s equity
at
December 31, 2022 was $5.7 billion. The Company
underwrites reinsurance both through
brokers and directly
with
ceding companies, giving
it the flexibility
to pursue
business based on
the ceding company’s
preferred reinsurance
purchasing method.
The Company underwrites insurance
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
insurance
reinsurance 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
Re Reinsurance 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
Re Reinsurance 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.
At As of December
31,
2022, 2023, Everest Re had statutory
surplus of $5.6$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.
2
●
•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 a Delaware domestic surplus lines
to
1
write
Table of Contents
insurance
in
a
particular
jurisdiction
is
permitted
to
provide
to
insureds
when
the
specific
specialty
coverage
is
unavailable
from
admitted
insurers.
Everest
Indemnity
is
a
Delaware
Domestic
Surplus
Lines
Insurerinsurer 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
Georgia Delaware insurance company
and a direct subsidiary
of
Everest
Re,
writes
property
and
casualty
insurance
on
an
admitted
basis
in
Georgia
and
Alabama
and
is
approved
as
an
eligible
surplus
lines
insurer
in
Delaware.
The
majority
of
Everest
Security’s
business
is
reinsured by its parent, Everest
Re.
●
Everest
Denali Insurance
Company (“Everest
Denali”), a
Delaware
insurance
company
and a
direct subsidiary
of Everest
Re, Reinsurance Company, is licensed
to write property
and casualty insurance
on an admitted basis in all 50 states
Delaware, Georgia and the District of
Columbia.
Alabama. The majority of Everest Denali’s
Security’s business is reinsured by its parent, Everest
Re. Reinsurance Company.
●
•Everest
Premier
Denali Insurance
Company
(“ (“Everest
Premier” 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 Premier’s
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 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 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
“Controlled Foreign
Corporation.”
By
making
this
election,
Everest
Assurance
is
authorized to write life reinsur
ancereinsurance and casualty reinsurance in both
Bermuda and the U.S.
Reinsurance Industry Overview.
Reinsurance
In addition, Everest Assurance is
considered an
arrangement
approved/eligible alien surplus lines insurer in
which
an
insurance
company,
the
reinsurer,
agrees
to
indemnify
another
insurance or reinsurance company,
the ceding company,
against all or a portion of the insurance risks
underwritten
by the
ceding company
under one
or more
insurance
contracts.
Reinsurance
can provide
a ceding
company
with
several
benefits,
including
a
reduction
in
its
net
liability
on
individual
risks
or
classes
of
risks,
catastrophe
protection from
large and/or
multiple losses and/or
a reduction
in operating
leverage as
measured by
the ratio
of
net premiums
and reserves
to capital.
Reinsurance
also provides
a ceding
company
with additional
underwriting
capacity by
permitting it
to accept
larger
risks
and write
more business
than would
be acceptable
relative
to
the
ceding
company’s
financial
resources.
Reinsurance
does
not
discharge
the
ceding
company
from
its
liability
to
policyholders; rather,
it reimburses the ceding company
for covered losses.
There
are
two
basic
types
of reinsurance
arrangements:
treaty
and facultative.
Treaty
reinsurance
obligates
the
ceding company
to cede
and the
reinsurer to
assume a
specified portion
of a
type or
category
of risks
insured
by
the ceding company.
Treaty
reinsurers do not
separately evaluate
each of the individual risks
assumed under their
treaties, instead,
the reinsurer relies
upon the pricing and
underwriting decisions made by
the ceding company.
In
facultative
reinsurance,
the ceding
company cedes
and the
reinsurer assumes
all or
part of
the risk
under a
single
insurance contract.
Facultative
reinsurance
is negotiated
separately for
each insurance
contract
that is
reinsured.
Facultative
reinsurance,
when
purchased
by
ceding
companies,
usually
is
intended
to
cover
individual
risks
not
covered by their reinsurance
treaties because of the dollar limits involved
or because the risk is unusual.
Both treaty
and facultative
reinsurance can
be written
on either a
pro rata
basis or
an excess
of loss
basis.
Under
pro rata reinsurance,
the ceding company50 states and the reinsurerDistrict of Columbia.
share
Human Capital Management.
Our colleagues worldwide are essential to our success, and we strive to attract and retain the premiumshighest caliber of talent to meet our business needs, as well as
the lossesneeds of our clients and expenses
customers. It is our goal to build skilled, talented, collaborative, inclusive teams and foster a sense of purpose and company culture rooted in an
agreed proportion.
Under excess
diversity of loss
reinsurance,
thought and experiences. As of February 1, 2024, the reinsurer
indemnifiesCompany employed 2,158 persons. Management believes that colleague engagement is strong. None of the
ceding company
against
all
or
a
specified
portion
of
losses
and
expenses
in
excess
of
a
specified
dollar
amount,
known
as
the
ceding
company's retention or reinsurer's
attachment point, generally
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 negotiated reinsurancehigh 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.
contract limit.
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
2
Table of Contents
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
3
Table of Contents
In
pro
rata
reinsurance,
experiences and backgrounds to contribute to Everest’s vision and values. As of December 31, 2023, the
reinsurer
generally
pays
the
ceding
company
a
ceding
commission.
The
ceding Company sponsors nine CRGs.
commission
generally
is
based
on
the
ceding
company’s
cost
of
acquiring
the
business
being
reinsured
(commissions,
premium
taxes,
assessments
Business and
miscellaneous
administrative
expense
and
may
contain
profit Underwriting Strategy.
sharing provisions,
whereby the
ceding commission
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 adjusted
basednot substantially dependent on
loss experience).
Premiums
paid by
the 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 reinsurer
for excessreduction of loss reinsurance
arebusiness assumed from any one broker would not directly proportional to
have a material adverse effect on the premiums that theCompany.
ceding company
receives because
the reinsurer
does not
assume a
proportionate
risk.
ThereThe Company’s insurance business mainly writes commercial property and casualty on an admitted and non-admitted basis. The business is
usually no
ceding
commission on excess of loss reinsurance.
Reinsurers
may
purchase
reinsurance
to
cover
their
own
risk
exposure.
Reinsurance
of a
reinsurer's
business
is
called
a
retrocession.
Reinsurance
companies
cede
risks
under
retrocessional
agreements
to
other
reinsurers,
known
as
retrocessionaires,
for
reasons
similar
to
those
that
cause
insurers
to
purchase
reinsurance:
to
reduce
net liability on
individual or classes
of risks, protect
against catastrophic
losses, stabilize
financial ratios
written through wholesale and obtain
additional underwriting capacity.
Reinsurance
can
be
written
through
intermediaries,
generally
professional
reinsurance
retail brokers,
or
directly
with
ceding
companies.
From
a
ceding
company's
perspective,
the
broker
and
the
direct
distribution
channels
have
advantages
surplus lines brokers 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.through program administrators.
The
Company’s
direct reinsurance market is an important distribution channel for reinsurance business
strategy
is
written by the Company. Direct placement of reinsurance enables the Company to
sustain
its
leadership
position
within
targeted
access clients who prefer to place their reinsurance
and
insurance directly with reinsurers based upon the reinsurer’s in-depth understanding of the ceding company’s needs.
markets,
provide
effective
management
throughout
the
property
It is our long-standing client and
casualty
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
cycle
expertise and
thereby experience, performs analyses to evaluate financial security, monitors performance and adjusts underwriting decisions accordingly.
achieveThe 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 stockholder.
shareholders. The Company’s
underwriting strategies
seek to
capitalize
on its
i)
what we believe are our financial
strength
and
capacity,
ii)
global
franchise,
iii)
stable
and
experienced
management
team,
iv)
diversified
product
and
distribution
offerings,
v)
underwriting
expertise
and
disciplined
approach,
vi)
efficient
and
low-cost
operating structure and vii)
effective enterprise risk management
practices.
The Company
offers treaty
and facultative
reinsurance and
admitted and
non-admitted insurance.
The Company’s
products
include
the
full
range
of
property
and
casualty
reinsurance
and
insurance
coverages,
including
marine,
aviation,
surety,
errors
and
omissions
liability
(“E&O”),
directors’
and
officers’
liability
(“D&O”),
medical
malpractice, mortgage reinsurance,
other specialty lines, accident and health (“A&H”)
and workers’ compensation.
The Company’s underwriting strategies
emphasizes emphasize disciplined underwriting, prioritizing underwriting profitability over
premium volume.
volume, and flexibility to adjust and respond to changing market conditions. Key elements
of
this
strategy
include
careful
risk
selection,
appropriate
pricing
through
strict
underwriting
discipline
and
adjustment
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
in response
to changing
as market
conditions.
The Company
focuses
conditions change. We focus on
reinsuring
(re)insuring companies
that
effectively
manage
the
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 objectives.
The
Company’s
broad 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
and facilitating adjustments
to its
mix of
business geographically,
by geographic region, line
of
business
and
by
type
of
coverage,
allowing
it
coverage. These strategies allow Everest to
fully
participate
in
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
provide the greatest potential for underwriting profitability. The Company’s insurance and reinsurance
basis.
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
4
Table of Contents
4
Capital Transactions.managed due to changes in management beginning in the fourth quarter of 2023. These changes have been reflected retrospectively.
The Company’s
Reinsurance segment writes worldwide property and casualty reinsurance and specialty lines of business, operationson 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”.
part dependent
Reinsurance 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 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 its
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 strengthresources. 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 financial
strength
ratings,
facultative. Treaty reinsurance obligates the ceding company to cede and the market’s
perceptionreinsurer to assume a specified portion of
its financial strength
.
The Company
stockholder’s
equity was
$5.7 billion and
$7.0
billion
at
December
31,
2022
and
2021,
respectively.
The
Company
possesses
significant
financial
flexibility
with
access to
the debt
markets
and, through
its ultimate
parent,
equity markets,
as a
result type or category of
its perceived
financial
strength, as evidenced risks insured by the ceding company. Treaty reinsurers do not separately evaluate each of the individual risks assumed under their treaties; instead, the reinsurer evaluates portfolio level exposure based on information provided by the ceding company. In facultative reinsurance, the ceding company cedes, and the reinsurer assumes, all or part of the risk under a single insurance contract. Facultative reinsurance is negotiated separately for each insurance contract that is reinsured. Facultative reinsurance, when purchased by ceding companies, usually is intended to cover individual risks not covered by their reinsurance treaties because of the dollar limits involved or because the risk is unusual.
Both treaty and facultative reinsurance can be written on either a pro rata basis or an excess of loss basis. Under pro rata reinsurance, the ceding company and the reinsurer share the premiums as well as the losses and expenses in an agreed proportion. Under excess of loss reinsurance, the reinsurer indemnifies the ceding company against all or a specified portion of losses and expenses in excess of a specified dollar amount, known as the ceding company's retention or reinsurer's attachment point, generally subject to a negotiated reinsurance contract limit.
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 (such as commissions, premium taxes, assessments, and miscellaneous administrative expenses 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
5
Table of Contents
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.
For the year ended December 31, 2023, the Company’s Reinsurance segment wrote $7.2 billion of gross written premiums. Our Reinsurance segment is comprised of property and casualty reinsurance and specialty 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 other related risks, such as business interruption and other 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.
6
Table of Contents
•Casualty provides protection for losses covered in liability 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.
ratingsWe 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 assigned by independent ratingcaptives, catastrophe bonds and pools) and others, as alternative products are introduced into the capital markets to compete with traditional reinsurance companies.
agencies.
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 Company’sInsurance segment lines of business write a broad suite of tailored products and services, including:
capital
7
position
Table of Contents
remains
strong,
commensurate
with
its
financial
ratings
•Accident and the
Company
has
ample
liquidity
toHealth business, which consists predominantly of policies covering Participant Accident, Short-Term Medical, and Medical Stop-Loss protection for employers with self-funded medical plans.
meet its•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 obligationslines 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 Insurance division writes property, casualty, and specialty insurance products, which are aligned with the lines of business described within the Insurance Segment Overview. These products are written directly, as well as through brokers, including for surplus lines, and general agents within the U.S.
foreseeable future.
Competition
The insurance market is highly competitive. Insurance companies differentiate themselves based on financial strength, range of products, brand recognition, agent and 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 insurance industry. Competitors sell through various distribution channels and business models, across a broad array of product lines, and with a high level of variation regarding geographic, marketing, and 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 the Company’s operating subsidiaries as reported by A.M. Best, S&P and Moody’s. These ratings represent an independent opinion of our 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, 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.
independent
8
assessment
Table of Contents
of
the
Company’s
financial
strength
using
a
rating
scale
that
provides
for
relative
comparisons.
Strong
financial
ratings
are
particularly
important
for
reinsurance
and
insurance
companies
given
that customers
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 CompanyA+ (Superior)A+ (Strong)A1 (upper-medium)
Everest National Insurance CompanyA+ (Superior)A+ (Strong)Not Rated
Everest Indemnity Insurance CompanyA+ (Superior)A+ (Strong)Not Rated
Everest Security Insurance CompanyA+ (Superior)A+ (Strong)Not Rated
Everest International Assurance, Ltd.A+ (Superior)A+ (Strong)Not Rated
Everest Denali Insurance CompanyA+ (Superior)A+ (Strong)Not Rated
Everest Premier Insurance CompanyA+ (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
S&P
Moody's
Everest Reinsurance Company
A+ (Superior)
A+ (Strong)
A1 (upper-medium)
Everest National Insurance Company
A+ (Superior)
A+ (Strong)
Not Rated
Everest Indemnity Insurance Company
A+ (Superior)
A+ (Strong)
Not Rated
Everest Security Insurance Company
A+ (Superior)
A+ (Strong)
Not Rated
Everest International Assurance, Ltd.
A+ (Superior)
A+ (Strong)
Not Rated
Everest Denali Insurance Company
A+ (Superior)
A+ (Strong)
Not Rated
Everest Premier Insurance Company
A+ (Superior)
A+ (Strong)
Not Rated
A.M.
Best
states
that
the
“A+ “A+”
(“Superior”)
rating
is
assigned
to
those
companies
which,
in
its
opinion,
have
a
superior
ability
to
meet
their
ongoing
insurance
policy
and
contract
obligations
based
on
A.M.
Best’s
comprehensive
quantitative
and
qualitative
evaluation
of
a
company’s
balance
sheet
strength,
operating
performance
and
business
profile.
A.M.
Best
affirmed
these
ratings
on
June
15,
2022.
S&P
states
that
the
“A+”/”A”
ratings
are
assigned
to
those
insurance
companies
which,
in
its
opinion,
have
strong
financial
security
characteristics
with
respect
to
their
ability
to
pay
under
its
insurance
policies
and
contracts
in
accordance
with
their
terms.
S&P
affirmed
all
ratings
on
May
27,
2022.
Moody’s
states
that
an
“A1”
rating
is
assigned
to
companies that,
which, in its opinion, have a superior ability to meet their
opinion,
offer
upper-medium
grade security
ongoing insurance policies and are
subject to
low credit
risk.
Moody’s
contract obligations based on A.M. Best’s comprehensive quantitative and qualitative evaluation of a company’s balance sheet strength, operating performance and business profile. A.M. Best affirmed these ratings on June 17, 2022.
29, 2023. S&P states that the “A+” / “A” ratings are assigned to those insurance companies which, in its opinion, have strong financial security characteristics with respect to their ability to pay under their 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 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 June 29, 2023.
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.
5
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.
InstrumentA.M. Best
S&P (1)
Moody's
Senior Notes due June 1, 2044a-(Strong)BBB+(Strong)Baa1(Medium Grade)
Senior Notes due October 15, 2050a-(Strong)BBB+(Strong)Baa1(Medium Grade)
Senior Notes due October 15, 2052Not RatedBBB+(Strong)Baa1(Medium Grade)
Long-Term Notes due May 1, 2067bbb(Adequate)BBB-(Adequate)Baa2(Medium Grade)
A.M. Best(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.
S&P
Moody'sEnterprise Risk Management.
Senior Notes due June 1, 2044Everest 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 ERM 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.
a-
(Strong)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
A-
9
(Strong)
Baa1
(Medium Grade)
Senior Notes due October 15, 2050
a-
(Strong)
A-
(Strong)
Baa1
(Medium Grade)
Senior Notes due October 15, 2052
Table of Contents
Not Ratedwithin certain Everest entities, to oversee capital and risk positions, approve risk management strategies and limits, and establish appropriate risk standards and policies.
A-
(Strong)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.
Baa1
(Medium Grade)
Long-Term Notes due May 1, 2067
bbb
(Adequate)
BBB
(Adequate)
Baa2
(Medium Grade)
Competition.
The
worldwide
reinsurance
ERC is assisted in its activities by Everest’s ERM function and
insurance
businesses
are
highly
competitive,
as
well
as
cyclical
senior management risk committees. The ERC provides strategic risk management direction to the Group, which is then executed by
product
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.
market.
As
such,
financial
results
tend
to
fluctuate
with
periods
of
constrained
availability,
higher
rates
and
strongerOur 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.
profits followed
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 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,regulating the market impact
from these competitive factors
related to reinsurance
and
insurance
is
generally
not
consistent
across
lines
Company’s conduct of business,
domestic
financial integrity and
international
geographical
areas 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 distribution channels.insurance organization, we recognize the potential impact of extreme natural perils on our world. We are 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 our 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
10
Table of Contents
Wealso require prior notice or regulatory approval of material intercompany and inter-affiliate transactions within the holding company structure.
compete
The Insurance Companies Act of Canada requires prior approval by the Minister of Finance of anyone acquiring a significant interest in the
U.S. and
international
reinsurance
andan 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
company authorized to do
and
have
established
long-term
and
continuing
business relationships,
which can be a
significant competitive
advantage.
in Canada. In addition, the lack
Company is subject to regulation by the insurance regulators of strong barriers
other U.S. states and 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.
entry
into
the
reinsurance
business
and
the
securitization
of
reinsurance
and
insurance
risks
through
capital
markets provide additionalDividends.
sourcesUnder Bermuda law, Everest Assurance is unable to declare or make payment of potential reinsurance
a dividend if it fails to meet its minimum solvency margin or minimum liquidity ratio. As 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 insurance capacitysurplus. At December 31, 2023, Bermuda Re, Everest International and competition.
Everest Assurance exceeded their solvency and liquidity requirements.
Worldwide
insurance
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
reinsurance
market
conditions
historically
have
been
competitive.
Generally,
there
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 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.
ample
insurance
and
reinsurance
capacity
relative
to
demand,
as
well
as,
additional
capital
from
the
capital
markets throughInsurance Regulation.
Everest Assurance, 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”, 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 the 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.
insurance linked
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 instruments.
These financial instruments
such as side cars,
catastrophe
bondscondition, investments, management and collateralized
reinsurance funds,
provided capital
markets with
access to insurance
and reinsurance
risk
exposure.
operation. The capital
markets
demand for
these products
is primarily
driven by
the desire
to achieve
greater
risk
diversification
and
potentially
higher
returns
on
their
investments.
This
competition
generally
has
a
negative
impact
on
rates,
terms
and
conditions;
however,
the
impact
varies
widely
by
market
and
coverage.
Based
on
recent
competitive
behaviors
in
the
insurance
and
reinsurance
industry,
natural
catastrophe
events
and
the
macroeconomic
backdrop,
there
has
been
some
dislocation
in
the
market
which
we
expect
to
have
a
positive
impact on rates and policy terms and conditions
of reinsurance agreements are generally
though local market specificities can
vary. not subject to direct regulation by any governmental authority.
The increased frequencyoperations of
catastrophe
losses experienced throughout
2022 appears Everest Re’s foreign branch offices in Canada and Singapore are subject to be pressuring
regulation by the increase
insurance regulatory officials of
rates.
As
business
activity
continues
to
regain
strength
after
the
pandemic
and
current
macroeconomic
uncertainty,
rates
also
appear
to
be
firming
in
most
lines
of
business,
particularly
in
the
casualty
lines
those jurisdictions. Management believes 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 ofCompany is in compliance with applicable laws and regulations pertaining to its business and geography.
operations.
6
The war
in the
Ukraine
is ongoing
Everest National, Everest Security, Everest Denali and an
evolving
event.
Economic
and legal
sanctions
have
been levied
against
Russia, specific named individuals
and entities connected
Everest Premier are subject to regulations similar to the Russian government,
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 businesses
located
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 U.S.
Russian Federation
Licenses.
11
Table of Contents
Everest Re is a licensed property and casualty insurer and/or ownedreinsurer 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 Russiantheir 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 contained any material findings or recommendations.
nationals by
numerous countries,
including the
United States.NAIC Risk-Based Capital Requirements.
The
significant
political
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
economic
uncertainty
surrounding
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
war
and
associated
sanctions
have
impacted impact of these insolvencies on policyholders.
economic
and
investment
markets
both
within
Russia
and
around
Under the
world.
The
Company
has
recorded
$25
million approved formula, a company’s adjusted statutory surplus (end of losses relatedperiod surplus adjusted for items not currently applicable to the Ukraine/Russia
war during 2022.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.
Human Capital Management.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.
12
Our employees
Table of Contents
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
ofTax Matters.
February 1, 2023,
The following summary of the taxation of the Company employed
1,933 persons.
Management believes
is based on current law. There can be no assurance that employee relations
are good.legislative, judicial, or administrative changes will not be enacted that might materially affect this summary.
None
The Company conducts business and is subject to taxation in the United States. Non-U.S. branches of the Company’s
employeesCompany are subject
to collective bargainingboth 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.

agreements,
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
Company is share repurchase excise tax, and do not
aware expect the legislation to have a material impact on our results of operations.
of any current efforts
to implement such agreements.

Everest is
committed to providing
our employees with an engaging
and supportive environment
so that employees
can develop
personally and
help us achieve
success as
an organization.
We consider
the ability
to attract,
develop
and
retain
a
high
caliber
of
insurance
professionals
to
be
critical
to
our
success.
Opportunities
for
continued
learning
and
talent
development
are
provided
to
all
employee
levels.
Employees
are
encouraged
to
take
ownership
of
their
development
by
using
the
tools
that
the
Company
has
made
available
to
them
including
industry
training,
mentorships
and
personal
development
classes.
Everest
actively
manages
succession
planning
throughout
our organization
and strives
to provide
job growth
and advancement
opportunities to
internal talent,
where possible.
Diversity and Inclusion.
Our strength
and success
derive
from our
diversity,
and we
are
at
our best
when we
embrace
diverse
views
and
perspectives.
Equality
in
opportunity,
career
development,
compensation
and
respect
for
all
individuals
are
fundamental human rights that are
at the forefront
of our culture and promoted not
only within our workplace but
also the
global communities
in which
we operate.
Our Board
is committed
to diversity
within its
structure
as well
as
emphasizing
its
importance
in
our
senior
executive
leadership.
We
believe
that
diversity
in
gender,
age,
ethnicity
and
skill
set
allows
for
dynamic
and
evolving
perspectives
in
governance,
strategy,
corporate
responsibility,
human rights and risk management.
Proactive diversity
recruitment is
an integral
aspect of succession
planning at both
the board level
and throughout
all
levels
in
the
organization.
Our
Talent
Development
team
works
with
senior
management
to
identify
women
and
persons
of
color
across
the
Company
as
potential
leaders.
These
individuals
are
provided
management
and
executive leadership
training and
education to
enhance their skillsets
and provide
opportunities for
advancement.
Indeed, our
executive
officers
are
measured
on their
forward-thinking
diversity
initiatives
as part
of their
annual
performance evaluations.
Such diversity
at the
most senior
levels of
our organization
reflects our
commitment to
identify and develop highly qualified women and individuals
of color to help lead our Company into
the future.
The
work
of
the
DEI
Council
has
helped
enhance
the
employee
experience
for
all
our
colleagues
across
the
organization
worldwide.
The
council
encourages
continuous
and
open
dialogue
between
executive
and
senior
management
and
traditionally
underrepresented
groups
at
all
levels,
without
fear
of
reprisal
or
retaliation,
to
identify
areas
of
improvement
and
carry
out
the
message
of
inclusion
both
inside
and
outside
our
organization.
The
DEI
council
was
instrumental
in
forming
and
supporting
additional
Employee
Resource
Groups
(“ERGs”),
developing a
Regional Representation
network and
leveraging specific
Talent
Development
and Talent
Acquisition
initiatives that will positively influence the composition
of our workforce.
7
Available Information.
The Company’s
Annual Reports
on Form
10-K, Quarterly
Reports on
Form 10-Q, Current
Reports on
Form 8-K
and
amendments
to
those
reports
are
available
free
of
charge
through
on the
Company’s
internet
Securities and Exchange Commission (“SEC”) website
at
http: https://www.everestre
group.com
www.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.While we seek to identify, manage and mitigate risks to our business, risk and uncertainty cannot be eliminated or necessarily predicted.In addition
connection with any investment decision with respect to our securities, you should carefully consider the
following risk factors, as well as the other information
provided
contained in this
report and our other filings with the
following risk
factors
should be
considered when
evaluating
an
investment
in
our
securities.
If
the
circumstances
contemplated
by
the
individual
risk
factors
materialize,
SEC.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 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 BUSINESSUNDERWRITING
Our results could be adversely affected by catastrophic
events.
We
are
exposed
to
unpredictable
catastrophic
events,
including weather
-related
weather-related and other
natural
catastrophes,
as well as acts of
terrorism. The frequency and/or
severity of catastrophic
events may be impacted
in the future by
the continued
effects of
climate change.
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
-taxpre-tax catastrophe
losses, net
of
reinsurance, were as follows:
Calendar year:
Pre-tax net catastrophe losses
(Dollars in millions)
2022
$
984
2021
940
2020
397
2019
574
2018
1,713
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
geographic
13
areas
Table of Contents
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 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 adverse effect
on our financial condition and results of operations.
amount.
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 claim
claims data supplied by
our ceding companies and brokers,
and we
employ
actuarial
and statistical
projections.
The information
received
from
our
ceding companies
is not
always
timely
or
accurate,
which
can
contribute
to
inaccuracies
in
our
loss
projections.
Because
of
the
uncertainties that
surround
our estimates
of loss
and LAE
reserves, we
cannot be
certain that
ultimate losses
and
LAE payments
will not
exceed
our estimates.
If our
reserves are
deficient, we
would be
required to
increase loss
8
reserves in
the period
in which
such deficiencies
are identified
which would
cause a
charge to
our earnings
and a
reduction of
capital. During
the past
five calendar
years,
the reserve
re-estimation
process
resulted in
a decrease
an increase to our pre-tax net income in all five
years:
Calendar year:
Effect on2023 and resulted in a decrease to our pre-tax net income in 2022, 2021, 2020 and 2019:
(Dollars in millions)
2022
$
8
decrease
2021
5
decrease
2020
200
decrease
2019
44
decrease
2018
559
decrease
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.
At As of December 31,
2022, 1.9% 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 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
economic
conditions.
If
any
of
these
factors
were
to
result
in
a
decline
in
the
demand
for
(re)insurance
or
an
overall increase in (re)insurance
capacity, our
net income could decrease.
If rating agencies downgrade
14
the ratings
Table of our insurance
subsidiaries, future prospects
for growth and profitability
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
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.
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
expected 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 adversely affect our standing among cedents and 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 our ability to write new business, which in turn could impact our profitability and results.
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.
Our investment values and investment income could decline due to changed conditions in the financial markets.
15
PercentageA significant portion of ceded writtenour investment portfolio consists of fixed income securities and smaller portions consist of equity securities and other investments. The fair value of our invested assets and associated investment income may fluctuate depending on various factors including the effects of economic events and conditions, governmental policies, changes in interest rates and credit spreads, and market volatility.
Interest Rate Risk.
Most of our fixed income securities are classified as available for sale, and temporary changes in the fair value of these investments due to interest rate fluctuations are 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, can differ from the income anticipated from those securities at the time of purchase.
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 to 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.
We have invested a portion of our investment portfolio in equity securities. The value of these assets fluctuates with changes in the markets. In times of economic weakness, the fair value of these assets may decline, and may negatively impact net income.We also invest in non-traditional investments which have different risk characteristics than traditional fixed income and equity securities. These alternative investments are comprised primarily of private equity limited partnerships.The changes in value and investment income/(loss) for these partnerships may be more volatile than over-the-counter securities.
The 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.
We conduct business in a variety of 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.
16
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 2023, we wrote approximately 18.7% of our coverages in non-U.S. currencies; as of December 31, 2023, we maintained approximately 9.2% of our investment portfolio in investments denominated in non-U.S. currencies.
Our business is sensitive to unanticipated levels of inflation.
While consideration is given to the levels of inflation and 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 business.
The potential political, economic, military, and social risks that can emerge from a nation'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 gross written premiumsthe growth of business, return in foreign investments, claims patterns and local operations.
2022
2021OPERATIONAL
2020We are dependent on our key personnel.
2019Our success has been, and will continue to be, dependent on our ability to retain the services of our existing key executives and other key employees, and to attract and retain additional qualified personnel in the future. The loss of the services of any key executive officer or the inability to hire and retain other highly qualified personnel in the future, particularly those experienced in the property and casualty industry, could adversely affect our ability to conduct business.
2018We are subject to cybersecurity risks that could negatively impact our business operations.
UnaffiliatedWe 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. We are not aware of a cybersecurity incident that materially affected the Company, including its business strategy, results of operations or financial condition.
13.2We are dependent on brokers and agents 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 weaken.
14.3Analytical models used in decision making could vary materially from actual 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 as pricing, underwriting, reserving, investment management, ceding business, capital allocation and risk management. These models may not operate properly, may contain incorrect information and errors and may rely on assumptions and projections that are inherently uncertain.
14.9Our operations are subject to business continuation risk.
%Across our global business centers, there is risk that our operations, systems or data, or those of third parties on whom we rely, may be disrupted. We may experience a disruption in business continuity 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.
16.7
%STRATEGIC
14.7
17
%
Affiliated
3.8
%
4.9
%
1.7
%
1.4
%
8.7
%
Our industry is highly competitive, and we may not be able
to compete as successfully in the future.
Our industry
is highly
competitive
and subject
to
pricing cycles
that
can
be pronounced.
We
compete
globally in
the United
States,
international
reinsurance
and insurance
markets
with numerous
competitors.
Our competitors
include
independent
reinsurance
and
insurance
companies,
subsidiaries
or
affiliates
of
established
worldwide
insurance
companies,
reinsurance
departments
of
certain
insurance
companies
and
domestic
and
international
underwriting operations, including underwriting syndicates
at Lloyd’s
of London.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 the Top 40 global reinsurance
groups
where more
than two-thirds
of the
market
share
is
concentrated.
The worldwide
net
premium
written
for both life and non-life business was estimated to be $306 billion in 2022 according to data compiled by
the
Top
40 global
reinsurance
groups,
for
both
life
and
non-life
business,
was
estimated
to
be
$274 billion
in
2020
according
to
data
compiled
by
S&P.
In
10
addition to existing competitors,
the entry of alternative
capital market products
and vehiclesnew company formations provide additional
sources of
reinsurance and insurance
capacity.
capacity, which could reduce our market share.
We are dependent on our key
personnel.
Our successSHAREHOLDERS, LEGAL & REGULATION
Applicable insurance laws may have an anti-takeover effect.
has been,
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 will
continue
to be,
dependent on
our ability
to retain
competence of the services
applicant’s board of our
existing key
executivesdirectors and
other key employees,
executive officers, the acquiror’s plans for the future operations of the insurance company and to attract
and retain additional qualified
personnelany 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 future. The
loss
United States, the insurance change of the servicescontrol laws of
any key
executive officer
or the inability Delaware and California would apply to
hire and retain
other highly qualified personnel
in the
future,
particularly
those
experienced
in
the
property
and casualty
industry,
could
adversely
affect
our
ability
to
conduct business.
Our investment
values and
investment
income could
decline because
they are
exposed
to interest
rate, credit
and
market risks.
A significant
portion of our
investment
portfolio consists
of fixed
income securities
and smaller portions
consist of
equity
securities
and
other
investments.
Both
the
fair
value
of
our
invested
assets
and
associated
investment
income
fluctuate
depending
on
general
economic
and
market
conditions.
For
example,
the
fair
value
of
our
predominant fixed income portfolio
generally increases or decreases
inversely to fluctuations
in interest rates.
The
fair
value
of our
fixed
income
securities
could
also decrease
as such a
result
of a
downturn
in
the
business
cycle
that
causes the
credit quality
of such securities
to deteriorate.
The net investment
income that
we realize
from future
investments in fixed income
securities will generally increase or decrease
with interest rates.
Interest
rate
fluctuations
also
can
cause
net
investment
income
from
fixed
income
investments
that
carry
prepayment
risk,
such
as
mortgage-backed
and
other
asset-backed
securities,
to
differ
from
the
income
anticipated
from
those
securities
at
the
time
of
purchase.
In
addition,
if
issuers
of
individual
investments
are
unable to meet their obligations, investment
income will be reduced and realized capital
losses may arise.
The
majority
of our
fixed
income
securities
are
classified
as
available
for
sale
and
temporary
changes
in
the
fair
value
of
these
investments
are
reflected
as
changes
to
our
stockholder’s
equity.
Our
actively
managed
equity
security portfolios
are fair valued
and any changes
in fair value
are reflected
as net realized
capital gains
or losses.
As a result, a decline in the value of our securities reduces our
capital or could cause us to incur a loss.
As
a
part
of our
ongoing
analysis
of our
investment
portfolio,
we
are
required
to
assess
current
expected
credit
losses for
all held-to-maturity
securities and
evaluate
expected
credit losses
for available
-for-sale securities
when
fair
value
is
below
amortized
cost,
which
considers
reasonable
and
supportable
forecasts
of
future
economic
conditions in addition to information
about past events and current
conditions. transaction. This analysis requires
a high degree
of judgment. Financial assets with similar risk characteristics
and relevant historical loss
information are included in
the development
of an estimate
of expected
lifetime losses.
Declines in relevant
stock and
other financial markets
and other
factors
impacting the
value of
our investments
could result
in an
adverse effect
on our
net income
and
other financial results.
We
have
invested
a
portion of
our
investment
portfolio
in
equity securities.
The value
of these
assets
fluctuates
with changes
in the
markets. In
times of
economic weakness,
the fair
value of
these assets
may decline,
and may
negatively
impact
net
income.
We
also
invest
in
non-traditional
investments
which
have
different
risk
characteristics
than
traditional
fixed
income
and
equity
securities.
These
alternative
investments
are
comprised
primarily
of
private
equity
limited
partnerships.
The
changes
in
value
and
investment
income/(loss)
for
these
partnerships may be more volatile
than over-the-counter securities.
Prolonged
and
severe
disruptions
in
the
overall
public
and private
debt
and
equity
markets,
such
as occurred
in
early
2020
related
to
the
COVID-19
pandemic,
could
result
in
significant
realized
and
unrealized
losses
in
our
investment
portfolio.
There
could
also be
disruption
in individual
market
sectors,
such as
occurred
in the
energy
sector
in
recent
years.
Such
declines
in
the
financial
markets
could
result
in
significant
realized
and
unrealized
11
losses on investments
and could have
the effect of delaying or even preventing such a material adverse
impact on our
resultschange of operations,
equity,
business andcontrol.
insurer financial strength and debt
ratings.
We may experience
foreign currency exchange losses that
reduce our net income and capital levels.
Through our
international operations,
we conduct business
in a variety
of foreign
(non-U.S.) currencies,
principally
the
Canadian
dollar
and
the
Singapore
dollar.
Assets,
liabilities,
revenues
and
expenses
denominated
in
foreign
currencies
are
exposed
to
changes
in
currency
exchange
rates.
Our
reporting
currency
is
the
U.S.
dollar,
and
exchange
rate
fluctuations,
especially
relative
to
the
U.S.
dollar,
may
materially
impact
our
results
and
financial
position.
In
2022,
we
wrote
approximately
15.2%
of
our
coverages
in
non-U.S.
currencies;
as
of
December
31,
2022,
we
maintained
approximately
8.8%
of
our
investment
portfolio
in
investments
denominated
in
non-U.S.
currencies.
During
2022,
2021
and
2020,
the
impact
on
our
quarterly
pre-tax
net
income
from
exchange
rate
fluctuations ranged from a loss
of $11 million to a gain of $11 million.
We are subject to cybersecurity risks
that could negatively impact our business operations.
We
are
dependent
upon
our
information
technology
platform,
including
our
processing
systems,
data
and
electronic transmissions
in our business operations.
Security breaches could expose
us to the loss or misuse
of our
information,
litigation
and
potential
liability.
In
addition,
cyber
incidents
that
impact
the
availability,
reliability,
speed,
accuracy
or
other
proper
functioning
of
these
systems
could
have
a
significant
negative
impact
on
our
operations
and
possibly
our
results.
An
incident
could
also
result
in
a
violation
of
applicable
privacy
and
other
laws, damage
our reputation,
cause a
loss of
customers
or give
rise to
monetary fines
and other
penalties, which
could be
significant.
Management is
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
by
the
states
will
require
insurers, insurance
producers and other
entities required to
be licensed under state
insurance laws to
comply with
certain
requirements
under
state
insurance
laws,
such
as
developing
and
maintaining
a
written
information
security
program,
conducting
risk assessments
and overseeing
the data
security
practices
of third
-party
vendors.
In
addition,
certain
state
insurance
regulators
are
developing
or
have
developed
regulations
that
may
impose
regulatory
requirements
relating
to
cybersecurity
on
insurance
and
reinsurance
companies
(potentially
including
insurance and reinsurance
companies that are
not domiciled, but are
licensed, in the relevant
state).
For example,
the
New
York
State
Department
of Financial
Services
has
a
regulation
pertaining
to
cybersecurity
for
all
banking
and
insurance
entities
under
its
jurisdiction,
which
was
effective
as
of
March
1,
2017,
which
applies
to
us.
We
cannot
predict
the
impact
these
laws
and
regulations
will
have
on
our
business,
financial
condition
or
results
of
operations,
but our
insurance
and reinsurance
companies
could
incur additional
costs
resulting
from
compliance
with such laws and regulations.
RISKS RELATING TO
REGULATION
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”
“extraordinary” transactions.
Such
“extraordinary”
“extraordinary” transactions
include
declaring
dividends
from
operating
subsidiaries
that
exceed
statutory
thresholds.
These
laws
also
generally
require
approval
of
changes
of
control
of
insurance
companies.
The
application
of
these
laws
could
affect
our
liquidity
and
ability
to
pay
dividends,
interest
and
other
payments
on
securities,
as
applicable,
and could
restrict
our
ability
to
expand
our
business
operations
through
acquisitions
of
new insurance
subsidiaries.
We may
not have
or maintain
all required
licenses and approvals
or fully comply
with
12
the
wide
variety
of
applicable
laws
and
regulations
or
the
relevant
authority’s
interpretation
of
the
laws
and
regulations.
If we
do
not
have
the
requisite
licenses
and approvals
or
do
not comply
with
applicable
regulatory
requirements,
the
insurance
regulatory
authorities
could
preclude
or
temporarily
suspend
us
from
carrying
on
some or all
of our activities
or monetarily penalize
fine 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.
Regulatory and legislative developments related to cybersecurity could have an adverse impact on our business.
time.
18
RISK RELATING TO
OUR SECURITIES
BecauseIn 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
our holding
company
structure, our
ability data breaches applicable to
pay dividends,
interest
and principal
is dependent
on our
receipt of dividends, loan payments insurance licensees in states adopting such law, requiring insurers, and other funds from our subsidiaries.
We are
a holding
company,
whose most
significant asset
consists
of the
stock of
our operating
subsidiaries.
As a
result,
our ability
entities required to pay
dividends, interest
or other
payments
on our
securities in
the future
will depend
on the
earnings
and
cash
flows
of
the
operating
subsidiaries
and
the
ability
of
the
subsidiaries
to
pay
dividends
or
to
advance
or
repay
funds
to
us.
This
ability
is
subject
to
general
economic,
financial,
competitive,
regulatory
and
other factors beyond
our control. Payment
of dividends and advances
and repayments from
some of the operating
subsidiaries are
regulated by
U.S.,be licensed under state
and foreign
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
restrictions, including
minimum
solvency
requirements relating to cybersecurity on insurance and
liquidity
thresholds.
Accordingly,
reinsurance companies. For example, the
operating
subsidiaries
may
not
be
able
New York State Department of Financial Services has an applicable regulation pertaining to
pay
dividends
or
advance
or
repay
funds
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
us
in
enhance and standardize disclosures regarding cybersecurity risk management, strategy, governance and incidents. We cannot predict the
future,
which
could
prevent
us
from
paying
dividends,
interest
or
other
payments impact these laws and regulations will have on our securities.
RISK RELATING TO
TAXATIONbusiness, financial condition or results of operations, but our insurance and reinsurance companies could incur additional costs resulting from compliance with such laws and regulations.
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 of 2022 (“IRA”) was enacted. We
have evaluated
the tax provisions
of
the
IRA,
the
most
significant
of
which
are
the
corporate
alternative
minimum
tax
and
the
share
repurchase
excise tax, and do not expect
the legislation to have a material
impact on our results of operations. As the
IRS issues
additional guidance, we will evaluate any
impact to our consolidated financial statements.
13
ITEM 1B.
UNRESOLVED
STAFF COMMENTS
None.
ITEM 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.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
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 18
locations
occupy a
total
of approximately
226,500 233,360 square
feet,
all of
which
are leased.
20
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, 2022,2023, all of the Company’s
common stock was owned by Holdings
Ireland and was not publicly
traded.
Dividend History and Restrictions.
The CompanyHoldings did not pay any dividend
s
dividends in 2023, 2022 2021 and 2020.
2021. The declaration and payment of future
dividends,
if
any,
by
Holdings will be at the
Company
discretion of the Board of Directors and will
be
at
the
discretion
of
the
Board
of
Directors
and
will
depend
upon
many
factors,
including
the
Company’s
Holdings’ earnings,
financial
condition,
business needs
and growth
objectives,
capital
and surplus
requirements
of its
operating
subsidiaries,
regulatory
restrictions,
rating
agency considerations
and other
factors.
As an insurance holding
company,
the Company Holdings 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
$5.6
$7.0 billion
at
December
31,
2022,
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
14
the prior calendar year.
The Accordingly, 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 2023
without prior regulatory approval
connection with a dividend is $555$877 million.
Recent Sales of Unregistered
Securities.
None.
ITEM 6.
SELECTED FINANCIAL DATA    [RESERVED]
Information for Item 6 is not
required pursuant to General
Instruction I(2) of Form 10-K.
ITEM 7.
MANAGEMENT’S
DISCUSSION
AND
ANALYSIS
OF
FINANCIAL
CONDITION
AND
RESULTS
OF
OPERATION
The following
is a
discussion and
analysis of
our results
of operations
and financial
condition.
It condition 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 presented
under ITEM 8,
“Financial Statements and Supplementaryrelated Notes, under ITEM 8 of this Form 10-K. Pursuant to the FAST Act Modernization and Simplification of Regulation S-K, comparisons between 2022 and 2021 have been omitted from this Form 10-K but can be found in
21
Data”.
Table of Contents
"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
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
is
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,
provided provide capital
markets with
access to insurance
reinsurance and reinsurance
insurance risk
exposure.
The capital
markets
demand for
these products
is primarily
driven by
the desire
to achieve
greater
risk
diversification
and
potentially
higher
returns
on
their
investments.
This
competition
generally
has
a
negative
impact
on
rates,
terms
and
conditions;
however,
the
impact
varies
widely
by
market
and
coverage.
Based
on
recent
competitive
behaviors
in
the
reinsurance and insurance
industry, natural catastrophe events and
reinsurance
industry,
natural
catastrophe
events
and
the
macroeconomic
backdrop,
there
has
been
some
dislocation
in
the
market
which
we
expect
to
have
has had a
positive
impact on rates and terms and conditions,
generally,
though specifics in local market specificitiesmarkets 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 within property have been affected. Other casualty lines have been experiencing modest rate increases, while some lines such as workers’ compensation and directors and officers liability have been experiencing softer market conditions. The increased frequency of
catastrophe
losses experienced throughout
2022 appearsimpact on pricing conditions is likely to be pressuring
the increase
of
rates.
As
business
activity
continues
to
regain
strength
after
the
pandemic
and
current
macroeconomic
15
uncertainty,
rates
also
appear
to
be
firming
in
most
lines
of
business,
particularly
in
the
casualty
lines
that
had
seen
significant
losses
such
as
excess
casualty
and
directors’
and
officers’
liability.
Other
casualty
lines
are
experiencing
modest
rate
increase,
while
some
lines
such
as
workers’
compensation
were
experiencing
softer
market
conditions.
It
is
too
early
to
tell
what
the
impact
on
pricing
conditions
will
be
but
it
is
likely
to
change
depending on the line of business and geography.
Our capital
position remains
a source
of strength,
with high
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
is ongoing
and an
are evolving
event.
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 by
in numerous countries,
including the
United States.
The
significant
political
and
economic
uncertainty
surrounding
the
war
these wars and
associated
sanctions
have
impacted
economic
and
investment
markets
both
within
Russia,
and
around
the
world.
The
Company
has
recorded
$25
million of losses related to Ukraine, the Ukraine
/Russia war during 2022.Middle East region, and around the world.
22
Table of Contents
16
Financial Summary.
We
monitor
and
evaluate
our
overall
performance
based
upon
financial
results.
The
following
table
displays
a
summary of the consolidated net income (loss), ratios
and stockholder’s equity for
the periods indicated:
Years Ended December 31,
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)
Percentage Increase/(Decrease)
(Dollars in millions)
2022
2021
2020
2022/2021
2021/2020
Gross written premiums
$
9,677
$
9,331
$
7,957
3.7%
17.3%
Net written premiums
8,032
7,719
6,639
4.0%
16.3%
REVENUES:
Premiums earned
$
7,876
$
7,179
$
6,407
9.7%
12.1%
Net investment income
638
745
376
-14.3%
98.2%
Net gains (losses) on investments
(982)
501
50
NM
NM
Other income (expense)
(6)
23
(15)
-123.7%
NM
Total revenues
7,526
8,448
6,818
-10.9%
23.9%
CLAIMS AND EXPENSES:
Incurred losses and loss adjustment expenses
5,823
5,387
4,608
8.1%
16.9%
Commission, brokerage, taxes and fees
1,632
1,513
1,373
7.9%
10.1%
Other underwriting expenses
501
454
401
10.5%
13.2%
Corporate expense
26
33
16
-22.9%
108.5%
Interest, fee and bond issue cost amortization
expense
101
70
36
44.3%
96.2%
Total claims and expenses
8,083
7,457
6,434
8.4%
15.9%
INCOME (LOSS) BEFORE TAXES
(557)
991
384
-156.1%
158.5%
Income tax expense (benefit)
(112)
192
32
-158.4%
NM
NET INCOME (LOSS)
$
(445)
$
800
$
352
-155.6%
127.3%
RATIOS:
Point Change
Loss ratio
73.9%
75.0%
71.9%
(1.1)
3.1
Commission and brokerage ratio
20.7%
21.1%
21.4%
(0.4)
(0.3)
Other underwriting expense ratio
6.4%
6.3%
6.3%
0.1
-
Combined ratio
101.0%
102.4%
99.6%
(1.4)
2.8
At December 31,
Percentage Increase/ (Decrease)
(Dollars in millions)
2022
2021
2020
2022/2021
2021/2020
Balance sheet data:
Total investments and cash
$
19,195
$
19,719
$
15,910
-2.7%
23.9%
Total assets
27,957
27,695
23,640
0.9%
17.2%
Loss and loss adjustment expense reserves
14,977
13,121
11,578
14.1%
13.3%
Total debt
3,084
3,089
1,910
-0.2%
61.7%
Total liabilities
22,303
20,657
17,226
8.0%
19.9%
Stockholder's equity
5,654
7,038
6,414
-19.7%
9.7%
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.
Premiums. Gross
written
premiums
increased
by
3.7% 14.9% to
$9.7 $11.1 billion
in
2023, compared to $9.7 billion in 2022, compared
to
$9.3 billion
in
2021,
reflecting a $426
million,$1.3 billion, or 12.9%,
22.1% increase in our
insurance reinsurance business
and an $81a $138 million,
or 1.3%, decrease
3.6% increase in our
insurance business. The increase in reinsurance premiums reflects growth across all lines of business, particularly property pro rata, and property excess of loss business. The increase in insurance premiums reflects growth across
23
Table of Contents
17
reinsurance
business.
The
increase
in
insurance
premiums
reflects
growth
across
most
multiple lines
of
business,
particularly
specialty
casualty
business,
and
property/short
tail
business
and other specialty business, driven
by
positive
rate
and
exposure
increases, new business
and strong renewal
retention.
The decrease in reinsurance
premiums was mainly due
to a
decline in property pro
rata business. Net
written premiums increased
by 4.0%14.7% to $9.2 billion in 2023, compared to $8.0 billion in 2022,
compared to
$7.7 billion in
2021 which is
consistent
with the change
in gross
written premiums.
2022. Premiums
earned increased by
9.7%
8.4% to
$7.9
$8.5 billion
in
2023, compared to $7.9 billion in 2022,
compared
which is consistent with the percentage changes in gross written premiums. The change in premiums earned relative to
$7.2
billion
in
2021.
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 expense
of $6
$11 million and
other income
of $23
$6 million in
2023 and 2022, and
2021, respectively.
The changes werechange was primarily the result of fluctuations
in foreign currency exchange rates.
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:
Total
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
Current
Ratio %/
Prior
Ratio %/
Total
Ratio %/
(Dollars in millions)
Year
Pt Change
Years
Pt Change
Incurred
Pt Change
2022
Attritional (a)
$
4,828
61.3%
$
11
0.1%
$
4,839
61.4%
Catastrophes
987
12.5%
(4)
—%
983
12.5%
Total
$
5,815
73.8%
$
7
0.1%
$
5,823
73.9%
2021
Attritional (a)
$
4,439
61.8%
$
8
0.1%
$
4,447
61.9%
Catastrophes
943
13.1%
(3)
0.0%
940
13.1%
Total
$
5,382
74.9%
$
5
0.1%
$
5,387
75.0%
2020
Attritional (a)
$
3,997
62.4%
$
214
3.3%
$
4,211
65.7%
Catastrophes
411
6.4%
(13)
-0.2%
397
6.2%
Total
$
4,408
68.8%
$
200
3.1%
$
4,608
71.9%
Variance 2022/2021
Attritional (a)
$
389
(0.5)
pts
$
3
—
pts
$
392
(0.5)
pts
Catastrophes
44
(0.6)
pts
(1)
—
pts
43
(0.6)
pts
Total
$
433
(1.1)
pts
$
2
—
pts
$
436
(1.1)
pts
Variance 2021/2020
Attritional (a)
$
442
(0.6)
pts
$
(206)
(3.2)
pts
$
236
(3.8)
pts
Catastrophes
532
6.7
pts
10
0.2
pts
543
6.9
pts
Total
$
974
6.1
pts
$
(195)
(3.0)
pts
$
779
3.1
pts
(a)
Attritional losses exclude catastrophe
losses.
(Some amounts may not reconcile due
to rounding.)
Incurred losses and LAE
increased decreased by 8.1%4.2% to $5.6 billion in 2023 compared to $5.8
billion in 2022, compared
to $5.4 billion in 2021,
primarily due to
a decrease of $642 million in current year catastrophe losses, partially offset by an
increase
of
$389
$426 million
in
current
year
attritional
losses
and
an
increase
of
$44
million
in
current
year
catastrophe
losses.
The increase
in current
year attritional
losses was
mainly related
due to the
impact of the
increase
in premiums earned
and $25 million
ofearned. Net favorable development on prior year attritional losses
incurred due to
the Ukraine/Russia
war.
was $11 million, where Reinsurance had favorable development of $333 million and Insurance had unfavorable development of $322 million. The current year
catastrophe losses of $346 million in 2023 related primarily to the 2023 Turkey earthquakes ($92 million), Hurricane Otis ($84 million), the 2023 New Zealand storms ($41 million), the 2023 Morocco earthquake ($40 million), the 2023 Hawaii wildfire ($26 million), and Hurricane Idalia ($20 million), with the remaining losses resulting from various storm events. The current year catastrophe losses of $987 million in 2022 related primarily to Hurricane Ian ($768 million), the 2022 Australia floods
24
Table of Contents
18
catastrophe
losses
of
$987
million
in
2022
related
primarily
to
Hurricane
Ian
($768
million),
the
2022
Australia
floods ($75 million),
the 2022 South
Africa flood ($43
million), Hurricane
Fiona ($27 million),
and the 2022
Canada
derecho ($20 million), with
the remaining losses resulting
from various storm events.
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 year
catastrophe
losses
industry estimate of
$943
million
$48.2 billion issued in
2021
primarily
related
to
Hurricane
Ida
($423
million),
the
Texas
winter
storms
($288
million), the
European floods
($108 million),
February 2024 exceeds the Canada
drought loss
($80 million)
andattachment point. The potential recovery under the
Quad State
Tornadoes
($42 million), with the rest CAT Bond is not expected to be material. As a result, no portion of the losses emanating
frompotential CAT bond recovery has been included in the 2021 Australia floods.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 third quarter of 2023. The commutations of the agreements resulted in the 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
$1.6 $1.9 billion
in 2022
2023 compared to $1.5$1.6 billion
in 2021.2022. The increase was mainly
primarily due to increasesthe impact of the increase in premiums
earned and changes in the
mix of business.
Other Underwriting Expenses.
Other underwriting expenses
were $574 million and $501 million and
$454 million in 2022
2023 and 2021,
2022, respectively.
The
increase
in
other
underwriting
expenses
was
mainly
due
to
the
continued
build
out
of
our
insurance operations, including an
expansion of the international insurance
platform.
Corporate
Expenses.
Corporate
expenses,
which
are
general
operating
expenses
that
are
not
allocated
to
segments,
were
$26 $18 million
and
$33 $26 million
for
the years
ended December
31,
2023 and 2022, and
2021, respectively.
The
decrease from 20212023 to 2022 was mainly due
to a decreasegreater 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 $134 million and $101 million in variable incentive compensation.
Interest,
Fees
and
Bond
Issue
Cost
Amortization
Expense.
Interest,
fees
and
other
bond
amortization
expense
were $101
million and
$70 million
in 2022
2023 and 2021,
2022, respectively.
The increase
in interest
expense was
primarily
due
to
the
issuance
of
$1.0
billion
of
senior
notes
in
October
2021.
Interest
expense
was
also
impacted
by
the
movements
in the
floating interest
rate
related
to the
long-term subordinated
notes, which
is reset
quarterly per
the note agreement.
The floating rate
was 6.99% as
of December 31, 2022
compared to 2.54%
8.03% as of December 31, 2023 compared to 6.99% as of December 31, 2022.
2021.
Income Tax
Expense (Benefit).
The Company had
an income tax
expense of $210 million and income tax benefit of $112
million in 2023 and 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 gains (losses) on investments as well as changes in tax exempt investment income and creditable foreign taxes. The change from income tax benefit to income tax expense
of
$192
million
in
2022
and
2021,
respectively.
Variations
in
income
taxes
generally
result
from
changes
in
the
relative levels
of pre-tax
income, including
the impact
of catastrophe
losses and
net gains
(losses) on
investments
as
well
as
changes
in
tax
exempt
investment
income
and
creditable
foreign
taxes.
The
change
from
income
tax
expense to income
tax benefit
resulted primarily from
improvement in pre-tax income, decreased capital losses and increased fair
value and capital
losses as well as
an increase
in catastrophe losses.
The Coronavirus
Aid, Relief,
and Economic
Security (“CARES”)
Act, enacted
on March
27, 2020,
provided that
U.S.
companies could
carryback for
five years
net operating
losses incurred
in 2018,
2019 and/or
2020. This
beneficial
tax provision
in the CARES
Act enabled the
Company to
carryback its
significant 2018
net operating
losses to
prior
tax years
with higher effective
tax rates
of 35% versus
21% in 2018
and later
years.
As a result,
the Company
was
able to
record a
net income
tax benefit
from the
five-year
carryback of
$33 million
and obtain
federal income
tax
cash refunds of $183 million including interest
in 2020.investments.
On August 16, 2022, the Inflation Reduction
Act of 2022 (“IRA”) was enacted. We
have evaluated
the tax provisions
of
the
IRA,
the
most
significant
of
which
are
the
corporate
alternative
minimum
tax
and
the
share
repurchase
excise tax, and do not expect
the legislation to have a material
impact on our results of operations. As the
IRS issues
additional guidance, we will evaluate any
impact to our consolidated financial statements.
Net Income (Loss).
Our net
loss
income was
$445 $972 million
and
net income
loss was
$800
$445 million in
2022
2023 and 20
21, respectively
.
2022, respectively. The change
was
primarily driven by the consolidatedunderwriting income of $533 million and net investment income of $993 million, partially offset by realized losses on investments of $180 million.
results explained below.
Ratios.
Our
combined
ratio
decreased
by
1.4
7.2 points
to
93.8% in 2023 compared to 101.0%
in
2022
compared
to
102.4%
in
2021.
2022. The
loss
ratio
component decreased by 1.18.6 points
in 20222023 over the same period last year.
year mainly due to a decline of $642 million in catastrophe losses. The declinecommission and brokerage ratio components increased to 21.7% in 2023 compared to 20.7% in 2022, reflecting changes in affiliated reinsurance agreements and changes in the ratio was mainly due
to lower loss experience.
Although both current
year attritional and
current year catastrophe
losses were higher in
19
2022
than
2021,
the
rate
of
increase
in
the
current
year
losses
was
lower
than
the
rate
of
increase
in
earned
premiums
resulting
in
a
reduction
of
the
overall
loss
ratio.
The
commission
and
brokerage
ratio
component
decreased
to
20.7% in
2022
compared
to
21.1% in
2021,
reflecting
changes
in
affiliated
reinsurance
agreements
and changes
in the
mix of
business. The
other underwriting
expense ratio
slightly increased
to 6.4%
6.7% in 2022
2023 from
6.3% 6.4% in 2021.2022. The increase was mainly due to higher insurance
operations costs.
Stockholder's Equity.
Stockholder’s
equity decreased
increased by $1.4
$1.5 billion to
$5.7 $7.2 billion at
December 31, 2023 from $5.7 billion at December 31, 2022,
from $7.0
billion at
December principally as a result of $972 million of net income, $527 million of net unrealized appreciation on investments, net
31,
25
2021,
Table of Contents
principally
as
a
result
of
$445
million
of
net
loss,
$938
million
of
net
unrealized
depreciation
on
investments,
of tax, $17 million of net
of
tax
foreign currency translation adjustments and
$18
million
of
net
foreign
currency
translation
adjustments,
partially
offset
by
$17
$17 million of net benefit plan obligation adjustmentsadjustments.
.
Consolidated Investment
Results
Net Investment Income.
Net
investment
income
decreased
increased by
14.3%
55.5% to
$638
$993 million
in
2022
2023 compared
to
$745
$638 million
in
2021.
2022. The
decrease increase was
primarily the
result of
a decline
an increase of $249
$312 million in
income from fixed maturity investments and an increase of $59 million in short-term investments and cash, partially offset by a decrease of $35 million in limited partnership
income. The limited partnership income partially
offset by
an
additional
$166
million
of
income
from
fixed
maturity
investments.
The
limited
partnership
income
primarily
reflects
decreases
changes in
their
reported
net
asset
values.
As
such,
until
these
asset
values
are
monetized
and
the
resultant income is
distributed, they
are subject to future
increases or decreases
in the asset value,
and the results
may be volatile.
The following table shows the components
of net investment income for
the periods indicated:
Years Ended December 31,
(Dollars in millions)
2022
2021
2020
Fixed maturities
$
510
$
344
$
305
Equity securities
16
15
11
Short-term investments and cash
16
1
3
Other invested assets
Limited partnerships
72
321
49
Dividends from preferred shares of affiliate
31
31
31
Other
30
63
2
Gross investment income before adjustments
675
775
401
Funds held interest income (expense)
6
8
6
Interest income from Parent
11
6
5
Gross investment income
691
788
412
Investment expenses
(52)
(43)
(36)
Net investment income
$
638
$
745
$
376
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:
2022
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 %
2021
2020
Annualized pre-tax yield on average cash and invested assets
3.3
%
4.4
%
2.8
%
Annualized after-tax yield on average cash and invested assets
2.6
%
3.5
%
2.3
%26
Table of Contents
20
Net Gains (Losses) on Investments.
The following table presents the composition
of our net gains (losses) on investments
for the periods indicated:
Years Ended December 31,
2022/2021
2021/2020
(Dollars in millions)
2022
2021
2020
Variance
Variance
Realized gains (losses) from dispositions:
Fixed maturity securities, available
for sale
Gains
$
9
$
33
$
24
$
(24)
$
9
Losses
(88)
(25)
(60)
(63)
35
Total
(79)
8
(36)
(87)
44
Equity securities
Gains
165
39
37
126
2
Losses
(48)
(15)
(45)
(33)
30
Total
117
24
(8)
93
32
Other invested assets
Gains
18
10
8
8
2
Losses
(5)
(4)
(6)
(1)
2
Total
13
6
2
7
4
Short Term Investments:
Gains
—
—
1
—
(1)
Losses
—
—
—
—
—
Total
—
—
1
—
(1)
Total net realized
gains (losses) from dispositions
Gains
192
82
70
110
11
Losses
(141)
(43)
(111)
(98)
68
Total
51
39
(41)
12
79
Allowances for credit losses:
(27)
(26)
(2)
(1)
(24)
Gains (losses) from fair value adjustments:
Fixed maturities
—
—
2
—
(2)
Equity securities
(447)
254
276
(701)
(22)
Other invested assets
(559)
234
(186)
(793)
420
Total
(1,006)
488
92
(1,494)
396
Total net gains
(losses) on investments
$
(982)
$
501
$
50
$
(1,483)
$
451
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.)
21
Net gains
(losses) on
investments
during 2022
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
$447 $4 million
as a
result of
equity market
declines
in 2022,
2023, partially offset by net losses
gains of $559
$9 million from
fair value
adjustments
on other
invested
assets, $51
million of
net
realized
gains
from
disposition
of
investments
and
assets.
$27
million
of
credit
allowances
on
fixed
maturity securities.
Segment Results.
The Company
manages its
reinsurance
operates through two operating segments. The Reinsurance operation writes worldwide property and insurance
operations
as autonomous
unitscasualty reinsurance and
key
strategic
decisions
are based on the aggregate operating
results and projections for these segments
of business.
The
Reinsurance
operation
writes
risks
on
a
worldwide
basis
in
property
and
casualty
reinsurance
and
specialty
lines of business, on both a treaty and facultative
basis, through reinsurance brokers,
as well as directly with ceding
companies.
Business
is
written
in
the
United
States
as
well as
through
branches
in
Canada
and
Singapore.
The
Insurance operation
writes property and
casualty insurance directly
and through brokers,
including for surplus lines, brokers
and
general agents within the United States. The two segments are managed independently, but
27
Table of Contents
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,
control
Our two operating segments each have executive leadership who are responsible for the overall performance of
aggregate
catastrophe
exposures,
capital,
investments
their respective segments and
support
operations.
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.
We measure our 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.
The
Company
does
not
maintain
separate
balance
sheet
data
for
its
operating
segments.
Accordingly,
the
Company
does not
review Management has determined that these measures are appropriate and
evaluate
align with how the financial
results
of its
operating
business is managed. We continue to evaluate our segments based
upon balance
sheet
data.
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
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.
22
Reinsurance.
The
following
table
presents
the
underwriting
results
and
ratios
for
the
Reinsurance
segment
for
the
periods indicated:
indicated.
Years Ended December 31,
2022/2021
2021/2020
(Dollars in millions)
2022
2021
2020
Variance
% Change
Variance
% Change
Gross written premiums
$
5,948
$
6,028
$
5,266
$
(80)
(1.3)%
$
763
14.5%
Net written premiums
5,269
5,265
4,632
4
0.1%
632
13.7%
Premiums earned
$
5,212
$
4,949
$
4,485
$
263
5.3%
$
464
10.3%
Incurred losses and LAE
3,957
3,761
3,209
196
5.2%
552
17.2%
Commission and brokerage
1,326
1,250
1,120
76
6.1%
130
11.6%
Other underwriting expenses
139
143
119
(4)
(3.1)%
24
19.9%
Underwriting gain (loss)
$
(210)
$
(206)
$
36
$
(5)
2.2%
$
(242)
NM
Point Chg
Point Chg
Loss ratio
75.9%
76.0%
71.6%
(0.1)
4.4
Commission and brokerage ratio
25.4%
25.3%
25.0%
0.1
0.3
Other underwriting expense
ratio
2.7%
2.9%
2.6%
(0.2)
0.3
Combined ratio
104.0%
104.2%
99.2%
(0.2)
5.0
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)rounding.)
(NM - not meaningful)
28
Table of Contents
Premiums.
Gross written
premiums decreased
increased by 1.3%
22.1% to $5.9
$7.2 billion in
2022 2023 from
$6.0 $5.9 billion
in 2021,
primarily
due
to
a
decline
in
property
pro
rata
business.
Net
written
premiums
remained
flat
at
$5.3
billion
in
2022
and
2021.2022. The
difference
increase in the
percentage
gross written premiums reflects growth across all lines of business, particularly property pro rata, and property excess of loss business. Net written premiums increased to $6.2 billion in 2023 from $5.2 billion in 2022. Premiums earned increased 9.5% to $5.6 billion in 2023 compared to $5.1 billion in 2022. The change in
gross premiums earned relative to net written
premiums compared
tois primarily the
percentage
change in
net
written
premiums
was
primarily
due
to
the
reduction
in
business
ceded
to
the
segregated
accounts
result of
Mt.
Logan
Re
during
2022
compared
to
2021.
Premiums
earned
increased
5.3%
to
$5.2
billion
in
2022
compared
to
$4.9
billion
in
2021.
The
change
in
premiums
earned
relative
to
net
written
premiums
is
the
result
of
timing;
premiums are earned
ratably over
the coverage period
whereas written premiums
are generally recorded
at the initiation of
the coverage period.
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 the 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.
23
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
2022
Attritional
$
3,115
59.8%
$
(26)
(0.5)%
$
3,089
59.3%
Catastrophes
870
16.7%
(3)
(0.1)%
867
16.6%
Total segment
$
3,985
76.5%
$
(29)
(0.6)%
$
3,957
75.9%
2021
Attritional
$
3,004
60.7%
$
(32)
(0.6)%
$
2,972
60.1%
Catastrophes
792
16.0%
(3)
(0.1)%
789
15.9%
Total segment
$
3,796
76.7%
$
(35)
(0.7)%
$
3,761
76.0%
2020
Attritional
$
2,692
60.0%
$
187
4.2%
$
2,880
64.2%
Catastrophes
343
7.6%
(13)
(0.3)%
330
7.4%
Total segment
$
3,035
67.7%
$
174
3.9%
$
3,209
71.6%
Variance 2022/2021
Attritional
$
111
(0.9)
pts
$
6
0.1
pts
$
117
(0.8)
pts
Catastrophes
78
0.7
pts
—
—
pts
78
0.7
pts
Total segment
$
189
(0.2)
pts
$
6
0.1
pts
$
196
(0.1)
pts
Variance 2021/2020
Attritional
$
312
0.7
pts
$
(219)
(4.8)
pts
$
92
(4.1)
pts
Catastrophes
449
8.4
pts
10
0.2
pts
459
8.5
pts
Total segment
$
761
9.0
pts
$
(209)
(4.6)
pts
$
552
4.4
pts
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
increased
decreased by
5.2%
15.2% to
$4.0
$3.3 billion
in
2022
2023 compared
to
$3.8
$3.9 billion
in
2021.
2022. The
increase
decrease was
primarily
due
to
an
increase
$351 million of
$111
favorable development on prior year attritional losses in 2023 and a decrease of $541 million
in
current
year
attritional
losses
and
an
increase
of
$78
million
in
current year
catastrophe
losses, partially offset by an increase of $295 million in current year attritional losses. The
net favorable development on prior year attritional losses mainly related to 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 and
$25 earned. The current year catastrophe losses of $330 million
of attritional
losses
incurred due
in 2023 related primarily to the 2023 Turkey earthquakes ($92 million), Hurricane Otis ($84 million), the 2023 New Zealand storms ($40 million), the 2023 Morocco earthquake ($40 million), the
29
Ukraine/Russia
war.
Table of Contents
2023 Hawaii wildfire ($21 million), and Hurricane Idalia ($20 million), with the remaining losses resulting from various storm events. The current
year catastrophe
losses of
$870 $870 million
in 2022
related
primarily to
Hurricane
Ian ($669
million), the
2022 Australia floods ($75 million), the 2022
South Africa flood ($43 million), Hurricane Fiona
($ ($24 million), and the
2022
Canada
derecho
($ ($20
million),
with
the
remaining
losses
resulting
from
various
storm
events.
The
current
year catastr
ophe losses
of $792
million in
2021 primarily
related to
Hurricane Ida
($345 million),
the Texas
winter
storms
($231
million),
the
European
floods
($108
million),
the
Canada
drought
loss
($80
million)
and
the
Quad
State Tornadoes
($27 million), with the restremaining losses resulting from various storm events.
Segment Expenses. Commission and brokerage increased to $1.5 billion in 2023 compared to $1.3 billion in 2022. The increase was mainly due to the impact of the losses emanating
from the 2021 Australia floods.
Segment
Expenses.
Commission
and
brokerage
increased
to
$1.33
billion
in
2022
compared
to
$1.25
billion
in
2021. The increase
was due
to the impact
of the increase
in premiums earned
and changes in
the mix of
business.
Segment other underwriting expenses decreased
slightlyincreased to $139$167 million in 20222023 from $143$138 million in 2021.
2022.
24
Insurance.
The
following
table
presents
the
underwriting
results
and
ratios
for
the
Insurance
segment
for
the
periods indicated:
indicated.
Years Ended December 31,
2022/2021
2021/2020
(Dollars in millions)
2022
2021
2020
Variance
% Change
Variance
% Change
Gross written premiums
$
3,729
$
3,303
$
2,691
$
426
12.9%
$
611
22.7%
Net written premiums
2,763
2,455
2,006
308
12.5%
448
22.3%
Premiums earned
$
2,664
$
2,230
$
1,922
$
434
19.5%
$
308
16.0%
Incurred losses and LAE
1,865
1,626
1,399
239
14.7%
227
16.2%
Commission and brokerage
306
262
253
44
16.8%
9
3.6%
Other underwriting expenses
363
311
282
52
16.7%
29
10.4%
Underwriting gain (loss)
$
130
$
31
$
(12)
$
99
NM
$
43
NM
Point Chg
Point Chg
Loss ratio
70.0%
72.9%
72.8%
(2.9)
0.1
Commission and brokerage ratio
11.5%
11.8%
13.2%
(0.3)
(1.4)
Other underwriting expense
ratio
13.6%
13.9%
14.6%
(0.3)
(0.7)
Combined ratio
95.1%
98.6%
100.6%
(3.5)
(2.0)
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 12.9%
to
$3.7 billion
in 2022
compared
3.6% to $3.3
$3.9 billion in
2021.
2023 compared to $3.8 billion in 2022. The
increase
in
insurance
premiums
reflects
growth
across
most
multiple lines
of business,
particularly
specialty
casualty
business, property/short tail business and property/short
tailother specialty business, driven
by positive rate
and exposure increases,
new business and strong
renewal
retention.
Net written
premiums
increased
by
12.5% 6.3% to
$2.8 billion
in 2022
compared
to
$2.5 billion
in
2021
which
is
consistent
with
the
change
in
gross
written
premiums.
Premiums
earned
increased
19.5%
to
$2.7
$3.0 billion in 2022
2023 compared to
$2.2 $2.8 billion in
2021. 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 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.
30
Table of Contents
25
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
2022
Attritional
$
1,712
64.3%
$
37
1.4%
$
1,749
65.7%
Catastrophes
117
4.4%
(1)
—%
116
4.4%
Total segment
$
1,829
68.7%
$
36
1.4%
$
1,865
70.0%
2021
Attritional
$
1,435
64.4%
$
40
1.8%
$
1,475
66.1%
Catastrophes
151
6.8%
—
—%
151
6.8%
Total segment
$
1,586
71.1%
$
40
1.8%
$
1,626
72.9%
2020
Attritional
$
1,305
67.9%
$
26
1.4%
$
1,331
69.3%
Catastrophes
68
3.5%
—
—%
68
3.5%
Total segment
$
1,373
71.4%
$
26
1.3%
$
1,399
72.8%
Variance 2022/2021
Attritional
$
277
(0.1)
pts
$
(3)
(0.4)
pts
$
274
(0.4)
pts
Catastrophes
(34)
(2.4)
pts
(1)
—
pts
(35)
(2.4)
pts
Total segment
$
243
(2.4)
pts
$
(4)
(0.4)
pts
$
239
(2.9)
pts
Variance 2021/2020
Attritional
$
130
(3.5)
pts
$
14
0.4
pts
$
144
(3.2)
pts
Catastrophes
83
3.3
pts
—
—
pts
83
3.3
pts
Total segment
$
213
(0.3)
pts
$
14
0.5
pts
$
227
0.1
pts
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 14.7%18.6% to
$1.9 $2.2 billion in
2022 2023 compared
to $1.6$1.9 billion
in 2021,2022. 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
$277 $132 million of
current year
attritional losses,
partially offset by
a decrease of $34
$101 million in current
year catastrophe losses
.
losses. The riseincrease in current year attritional losses
was primarily due to the impact of the increase in
premiums
earned. The
current
year
catastrophe
losses of
$117 $16 million
in 2022
2023 related
primarily to
Hurricane Ian
($99
million),
with
the
remaining
losses
resulting
from
various
storm
events.
The
$151
million
of
current
year
catastrophe
losses in
2021, primarily
related
to Hurricane
Ida 2023 third quarter U.S. storms ($78
5 million), the
Texas
winter storms
($58 2023 Hawaii wildfire ($5 million)
and the Quad State Tornadoes
($152023 December U.S. East Coast flooding ($5 million)., with the remaining losses resulting from various storm events. The $117 million of current year catastrophe losses in 2022 related primarily to Hurricane Ian ($99 million), with the remaining losses resulting from various storm events.
Segment
Expenses.
Commission
and
brokerage
increased
decreased to
$306
$306 million
in
2023 compared to $325 million in 2022
compared
primarily due to
$262
million
changes in
2021. the mix of business. Segment
other underwriting
expenses increased
to $363
$407 million in
2022 2023 compared
to $311
$364 million in
2021.
2022. The
increases
were
increase was mainly
due
to
the
impact
of
the
increases
increase 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.
31
Table of Contents
SAFE HARBOR DISCLOSUREOur 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.
This report
contains forward
-looking statements
withinThe regulatory targeted capital and the meaningactual 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) Regulatory targeted capital represents 200% of the U.S.
federal securities
laws. We
intendRBC authorized control level calculation for the applicable year.
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 identifiedOur financial strength ratings as determined by the
useA.M. Best, Standard & Poor’s and Moody’s are important as they provide our customers and investors with an independent assessment of forward-looking
words
such
as
“may”,
“will”,
“should”,
“could”,
“anticipate”,
“estimate”,
“expect”,
“plan”,
“believe”,
“predict”,
26
“potential”
our financial strength using a rating scale that provides for relative comparisons. We continue to possess significant financial flexibility and “intend”.
Forward-looking
statements
contained
in
this report
include
information
regarding
our
reserves
for
losses
and
LAE,
the
impact
of
the
TCJA,
the
adequacy
of
our
provision
for
uncollectible
balances,
estimates
of
our
catastrophe
exposure,
the
effects
of
catastrophic
and
pandemic
events
on
our
financial
statements
and
the
ability
of
our
subsidiaries
to
pay
dividends.
Forward-looking
statements
only
reflect
our
expectations
and
are
not
guarantees
of
performance.
These
statements
involve
risks,
uncertainties
and
assumptions.
Actual events
or results
may
differ
materially
from our
expectations.
Important
factors
that could
cause our
actual events
or results
access 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, whetherdebt and equity markets as a result
of new information, future eventsour financial strength, as evidenced by the financial 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 capital 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 through cash repurchases, in open-market purchases, privately negotiated transactions or otherwise. Such repurchases, if any, will be subject 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 in such disbursements, and investment 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 timing 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 short-term investments and positive cash flow from operations, provide ample sources of liquidity for the expected payment of losses and LAE in the near future. We do not anticipate selling a significant amount of securities to pay losses 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 made related
32
Table of Contents
to the catastrophes. However, as indicated above, the Company has ample liquidity to settle its catastrophe claims and/or any 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
(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 non-trading securities. Additionally,
we have invested
in equity securities.
The overall investment
strategy considers
the scope of present
and anticipated Company
operations.
In particular,
estimates of
the financial
impact resulting
from non-investment
asset and
liability transactions,
together with
our
capital
structure
and
other
factors,
are
used
to
develop
a
net
liability
analysis.
This
analysis
includes
estimated
payout characteristics
for which
our 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 $19.2
$23.4 billion investment
portfolio,
at December 31,
2022, 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
$2.1
$3.4 billion
of
mortgage-backed
securities
in
the
$13.5
$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.
27
The
table
below
displays
the
potential
impact
of
fair
value
fluctuations
and
after-tax
unrealized
appreciation
on
our fixed
maturity
portfolio
(including
$812 million
of short
-term investments)
for
the period
indicated
based
on
upward
and
downward
parallel
and
immediate
100
and
200 basis
point
shifts
in
interest
rates.
For
legal
entities
with
a
U.S.
dollar
functional
currency,
this
modeling
was
performed
on
each
security
individually.
To
generate
appropriate
price
estimate
on
mortgage-backed
securities,
changes
in
prepayment
expectations
under
different
interest rate
environments were
taken into
account. For
legal entities with
non-U.S. dollar functional
currency,
the
effective
duration
of the
involved
portfolio
of securities
was
used as
a proxy
for
the fair
value
change
under the
various interest rate
change scenarios.
Impact of Interest Rate Shift in Basis Points
At December 31, 2022
(Dollars in millions)
-200
-100
O
100
200
Total Fair Value
$
15,057
$
14,676
$
14,294
$
13,912
$
13,531
Fair Value Change from Base (%)
5.3
%
2.7
%
-
%
-2.7
%
-5.3
%
Change in Unrealized Appreciation
After-tax from Base ($)
$
603
$
302
$
—
$
(302)
$
(603)
Impact of Interest Rate Shift in Basis Points
At December 31, 2021
(Dollars in millions)
-200
-100
O
100
200
Total Fair Value
$
14,300
$
13,928
$
13,556
$
13,185
$
12,813
Fair Value Change from Base (%)
5.5
%
2.7
%
-
%
-2.7
%
-5.5
%
Change in Unrealized Appreciation
After-tax from Base ($)
$
587
$
294
$
—
$
(294)
$
(587)
We had $15.0
billion and $13.1 billion
of gross reserves
for losses and
LAE as of December 31,
2022 and December
31,
2021,
respectively.
These
amounts
are
recorded
at
their
nominal
value,
as
opposed
to
present
value,
which
would reflect
a discount
adjustment to
reflect the time
value of
money.
Since losses are
paid out over
a period of
time, the
present value
of the
reserves is
less than
the nominal
value.
As interest
rates
rise, the
present value
of
the reserves
decreases and,
conversely,
as interest
rates
decline, the
present
value increases.
These movements
are
the
opposite
of
the
interest
rate
impacts
on
the
fair
value
of
investments.
While
the
difference
between
present
value
and
nominal
value
is
not
reflected
in
our
financial
statements,
our
financial
results
will
include
investment
income
over
time
from
the
investment
portfolio
until
the
claims
are
paid.
Our
loss
and loss
reserve
obligations have an expected
duration that is reasonably consistent
with our fixed income portfolio.
Equity Risk.
Equity risk is
the potential change
in fair value
of the common
stock, preferred
stock and
mutual fund
portfolios
arising
from
changing
prices.
Our
equity
investments
consist
of
a
diversified
portfolio
of
individual
securities. The primary
objective of
the equity portfolio
is to
obtain greater
total return
relative to
our core
bonds
over time through market appreciation
and income.
The table below displays the potential impact onof fair
value fluctuations and after-tax unrealized appreciation on our fixed maturity portfolio (including $1.3 billion of short-term investments) for the period indicated based on upward and downward parallel shifts of 100 and 200 basis points in interest rates. The market value change under the various interest rate 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)
in
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
We had $15.8 billion and $15.0 billion of gross reserves for losses and LAE as of December 31, 2023 and December 31, 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 similar to the interest rate impacts on the fair value of a 10%investments held. While the difference between present value and 20%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.
Foreign Currency Risk. Foreign currency risk is the potential change in
equity prices up value, income and down forcash flow arising from adverse changes in foreign currency exchange rates. Each of our non-U.S. operations maintains capital in the periods indicated
.
Impact of Percentage Change in Equity Fair Values
At December 31, 2022
(Dollars in millions)
-20%
-10%
0%
10%
20%
Fair Valuecurrency of the Equity Portfolio
$
156
$
175
$
194
$
214
$
233
After-tax Changecountry of its geographic location consistent with local regulatory guidelines. Each non-U.S. operation may conduct business in Fair Value
(31)
(15)
—
15
31
28
Impactits local currency, as well as the currency of Percentage Changeother countries in Equity Fair Values
At December 31, 2021
(Dollars in millions)
-20%
-10%
0%
10%
20%
Fair Valuewhich it operates. The primary foreign currency exposures for these non-U.S. operations are the Singapore and Canadian Dollars. We mitigate foreign exchange exposure by generally matching the currency and duration of the Equity Portfolio
$
1,406
$
1,582
$
1,758
$
1,934
$
2,109
After-tax Change in Fair Value
(278)
(139)
—
139
278
Foreign
Currency
Risk.
Foreign
currency
risk is
the potential
change
in value,
income
and
cash
flow arising
from
adverse changes
in foreign
currency exchange
rates.
Each of
our non-U.S.
(“foreign”)
operations
maintains capital
in the
currency
of the
country
of its
geographic
location
consistent
with local
regulatory
guidelines. Each
foreign
operation
may
conduct
business
in
its
local
currency,
as
well
as
the
currency
of
other
countries
in
which
it
operates.
The
primary
foreign
currency
exposures
for
these
foreign
operations
are
the
Singapore
and
Canadian
Dollars. We
mitigate foreign
exchange
exposure by
generally matching
the currency
and duration
of our
assets to
our corresponding
operating liabilities. In
accordance with FASB
U.S. GAAP guidance, the impact
on the fair
value of available
for
sale
fixed
maturities
due
to
changes
in
foreign
currency
exchange
rates,
in
relation
to
functional
currency,
is
reflected as
part of other
comprehensive income.
Conversely,
the impact of
changes in
foreign currency
exchange
rates,
in
relation
to
functional
currency,
on
other
assets
and
liabilities
is
reflected
through
net
income
as
a
component of other income (expense). In
addition, we translate
the assets, liabilities and income of non-U.S.
dollar
functional
currency
legal
entities
to
the U.S.
dollar.
This translation
amount is
reported
as a
component
of other
comprehensive income.
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.
foreign
exchange
rates
on
the
valuation
of
invested
assets
subject
to
foreign
currency
exposure
for
the
periods
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 $164 
indicated.
This
analysis
includes
the
after-tax
impact
of
translation
from
transactional
currency
to
functional
Change in Foreign Exchange Rates in Percent
At December 31, 2022
(Dollars in millions)-20%-10%0%10%20%
Total After-tax Foreign Exchange Exposure$(157)$(79)$— $79 $157 
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, 2022
(Dollars in millions)
-20%
-10%
0%
10%
20%
Total After-tax
Foreign Exchange Exposure
$
(157)
$
(79)
$
—
$
79
$
157
Change in Foreign Exchange Rates in Percent
At December 31, 2021
(Dollars in millions)
-20%
-10%
0%
10%
20%
Total After-tax
Foreign Exchange Exposure
$
(190)
$
(95)
$
—
$
95
$
190
ITEM 8.
FINANCIAL STATEMENTS
AND SUPPLEMENTARY
DATA
The financial statements and schedules
listed in the accompanying Index
to Financial Statements and Schedules on
page F-1 are filed as part of this report.
ITEM 9.
CHANGES IN AND DISAGREEMENTS WITH
ACCOUNTANTS
ON ACCOUNTING AND FINANCIAL
DISCLOSURE
None.
29
ITEM 9A.
CONTROLS AND PROCEDURES
Disclosure Controls and Procedures
As
required
by
Rule
13a-15(b)
of
the
Securities
Exchange
Act
of
1934
( (“the
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
(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 repreport.
34
ort.
Table of Contents
Management’s Annual Report
on Internal Control Over Financial Reporting
Our
management
is
responsible
for
establishing
and
maintaining
adequate
internal
controls
control 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,
2022. 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,
2022, 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.
quarter.
ITEM 9B.
OTHER INFORMATION
None.
ITEM 9C.
DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT
PREVENT INSPECTIONS
None.
35
Table of Contents
30
PART III
ITEM 10.
DIRECTORS, EXECUTIVE OFFICERS
AND CORPORATE GOVERNANCE
Information for Item 10 is not
required pursuant to General
Instruction I(2) of Form 10-K.
ITEM 11.
EXECUTIVE COMPENSATION
Information for Item 11 is not
required pursuant to General
Instruction I(2) of Form 10-K.
ITEM 12.
SECURITY
OWNERSHIP
OF
CERTAIN
BENEFICIAL
OWNERS
AND
MANAGEMENT
AND
RELATED
STOCKHOLDER MATTERS
Information for Item 12 is not
required pursuant to General
Instruction I(2) of Form 10-K.
ITEM 13.
CERTAIN RELATIONSHIPS
AND RELATED TRANSACTIONS,
AND DIRECTOR INDEPENDENCE
Information for Item 13 is not
required pursuant to General
Instruction I(2) of Form 10-K.
ITEM 14.
PRINCIPAL ACCOUNTANT
FEES AND SERVICES
The PricewaterhouseCoopers LLP (and
its worldwide affiliates) fees incurred
are as follows for the periods indicated:
indicated:
(Dollars in millions)
2022
2021
(1)
(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
$
3.4
$
3.6
(2)
Audit-Related Fees
0.3
0.3
(3)
Tax Fees
0.7
0.6
(4)
All Other Fees
—
—
Audit
fees
include the
annual audit
and quarterly
financial statement
reviews,
subsidiary audits,
and procedures
required to
be performed
by the
independent auditor
to be able
to form
an opinion
on our
consolidated
financial
statements. These other
procedures include information
systems and
procedural reviews
and testing performed
in
order to
understand
and place
reliance on
the systems
of internal
control,
and consultations
relating to
the audit
or quarterly review.
Audit fees may
also include statutory
audits or financial audits
for our subsidiaries or
affiliates
and services associated
with SEC registration
statements,
periodic reports
and other
documents filed with
the SEC
or other documents issued in connection with securities offerings.
Audit
-related
Audit-related fees
include
assurance
and related
services that
are reasonably
related to
the performance
of the
audit
or
review
of
our
financial
statements,
including
due
diligence
services
pertaining
to
potential
business
acquisitions/dispositions,
accounting consultations
related to
accounting, financial
reporting or
disclosure matters
not
classified
as
“audit
“audit services”; assistance
with
understanding
and
implementing
new
accounting
and
financial
reporting
guidance
from
rule
making
authorities;
financial
audits
of
employee
benefit
plans;
agreed-upon
or
expanded
audit
procedures
related
to
accounting
and/or
billing
records
required
to
respond
to
or
comply
with
financial, accounting or regulatory reporting
matters and assistance
with internal control reporting
requirements.
Tax fees
include tax compliance, tax planning
and tax advice and is granted general
pre-approval by Group’s
Audit
Committee.
All other fees represent an accounting
research subscription and software.
31
Under its
Charter and
the “Audit
and Non-Audit
Services Pre-Approval
Policy” (the
“Policy” “Policy”), the
Audit Committee
is
required
to
pre-approve
the
audit
and
non-audit
services
to
be
performed
by
the
independent
auditors.
The
Policy
mandates
specific
approval
by
the
Audit
Committee
for
any
service
that
has
not
received
a
general
pre-
approval
pre-approval or
that
exceeds
pre-approved
cost
levels
or
budgeted
amounts.
For
both
specific
and
general
pre-
approval,
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
amount
Table of Contents
of
audit, audit
-related
audit-related and tax
fees
and a
total
amount of fees
for certain
permissible non-audit
services classified below
as “All
Other Fees”.
All such factors
are
considered as
a whole,
and no
one factor
is determinative.
The Audit
Committee
further considered
whether the
performance by
PricewaterhouseCoopers
LLP of the
non-audit related
services disclosed
below is compatible
with
maintaining
their
independence.
The
Audit
Committee
approved
all
of
the
audit-related
fees,
tax
fees
and
all
other fees for 20222023 and 2021.2022.
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 10, 2023.14, 2024.
EVEREST REINSURANCE HOLDINGS, INC.
By:
/S/ JUAN C. ANDRADE
Juan C. Andrade
(Chairman, President and
Chief Executive Officer)
32
EVEREST REINSURANCE HOLDINGS, INC.
By:/S/ JUAN C. ANDRADE
Juan C. Andrade
(Chairman, President and
Chief Executive Officer)
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
SignatureTitleDate
/S/ JUAN C. ANDRADE
President and Chief Executive Officer
(Principal Executive Officer)
March 10, 2023
Juan C. Andrade
/S/ MARK KOCIANCIC
Executive Vice President and Chief
Financial Officer
March 10, 2023
Mark Kociancic
/S/ ROBERT J. FREILING
Senior Vice President and Chief
Accounting Officer
March 10, 2023
(Principal Executive Officer)
March 14, 2024
Juan C. Andrade
/S/ MARK KOCIANCIC
Executive Vice President and Chief
Financial Officer
March 14, 2024
Mark Kociancic
/S/ ROBERT J. FREILING
Senior Vice President and Chief
Accounting Officer
March 14, 2024
Robert J. Freiling
39
E-1Table of Contents
INDEX TO EXHIBITS
Exhibit No.
2.1
Agreement and Plan of Merger among Everest Reinsurance Holdings, Inc., Everest Group, Ltd. and Everest Re Merger Corporation, incorporated herein by reference to Exhibit 2.1 to the Registration Statement on Form S-4 (No. 333-87361)
3.1
Certificate of Incorporation of Everest Reinsurance Holdings, Inc., incorporated herein by reference to Exhibit 4.1 to the Registration Statement on Form S-8 (No. 333-05771)
3.2
By-Laws of Everest Reinsurance Holdings, Inc., incorporated herein by reference to Exhibit 3.2 to the Everest Reinsurance Holdings, Inc. Quarterly Report on Form 10-Q for the quarter ended March 31, 2000.
4.1
Indenture, dated March 14, 2000, between Everest Reinsurance Holdings, Inc. and The Chase Manhattan Bank, as Trustee, incorporated herein by reference to Exhibit 4.1 to Everest Reinsurance Holdings, Inc. Form 8-K filed on March 15, 2000.
4.2
Fourth Supplemental Indenture relating to Holdings $400 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-Term Subordinated Notes (LoTSSM) dated March 19, 2009, incorporated herein by reference to Exhibit 99.1 to Everest 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 Group, Ltd. Form 8-K filed on December 8, 2015.
*10.3
Employment agreement between Everest National Insurance Company and Jonathan M. Zaffino, dated September 8, 2017, incorporated herein by reference to Exhibit 10.1 to Everest Group, Ltd. Form 8-K filed on September 12, 2017.
*10.4
Amendment of employment agreement between Everest Global Services, Inc., Everest Group, Ltd., Everest Reinsurance Holdings Inc. and Dominic J. Addesso, dated November 20, 2017, incorporated herein by reference to Exhibit 10.1 to Everest Group, Ltd. Form 8-K filed November 20, 2017.
*10.5
Employment agreement between Everest 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 Group, 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 Group, Ltd. Form 8-K filed on October 1, 2020
E-1
Table of Contents
3.1
*10.7
Employment agreement between Everest Global Services, Inc. and James Williamson, incorporated herein by reference to Exhibit 10.2 to Everest Group, Ltd. Form 8-K filed on October 1, 2020
*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 INSXBRL Instance Document
101 SCHXBRL Taxonomy Extension Schema
101 CALXBRL Taxonomy Extension Calculation Linkbase
101 DEFXBRL Taxonomy Extension Definition Linkbase
101 LABXBRL Taxonomy Extension Label Linkbase
101 PREXBRL Taxonomy Extension Presentation Linkbase
104Cover Page Interactive Data File (embedded within the Inline XBRL document)
CertificateofIncorporationofEverestReinsuranceHoldings,Inc.,incorporatedhereinby_________________
reference to Exhibit 4.1 to*the Registration StatementManagement contract or compensatory plan or arrangement.on Form S-8 (No. 333-05771)
3.2
4.1
4.2
4.3
4.4
Sixth
10.1
*10.2
*10.3
*10.4
*10.5
E-2
*10.6
*10.7
EmploymentagreementbetweenEverestGlobalServices,Inc.andJamesWilliamson,
23.1
31.1
31.2
32.1
101 INS
XBRL Instance Document
101 SCH
XBRL Taxonomy
Extension Schema
101 CAL
XBRL Taxonomy
Extension Calculation Linkbase
101 DEF
XBRL Taxonomy
Extension Definition Linkbase
101 LAB
XBRL Taxonomy
Extension Label Linkbase
101 PRE
XBRL Taxonomy
Extension Presentation Linkbase
104
Cover Page Interactive
Data File (embedded within the Inline XBRL document)
F-1
EVEREST REINSURANCE HOLDINGS, INC.
INDEX TO FINANCIAL STATEMENTS
AND SCHEDULES
Pages
(PCAOB FIRM ID
238
)
F-2
F-4
F-2
Consolidated Balance Sheets at December 31, 2023 and 2022
F-4
Consolidated Statements of Operations and Comprehensive Income (Loss) for the Years Ended December 31, 2023, 2022 and 2021
F-5
Consolidated Statements of Changes in Stockholder’s Equity for the Years Ended December 31, 2023, 2022 and 2021
F-6
F-7
F-8
ISummary of Investments Other Than Investments in Related Parties at December 31, 2023
S-1
IICondensed Financial Information of Registrant:
Balance Sheets as of December 31, 2023 and 2022
S-2
Statements of Operations for the Years Ended December 31, 2023, 2022 and 2021
S-3
Statements of Cash Flows for the Years Ended December 31, 2023, 2022 and 2021
S-4
Notes to Condensed Financial Information
S-5
IIISupplementary Insurance Information as of and for the Years Ended December 31, 2023, 2022 and2021
S-6
IVReinsurance for the Years Ended December 31, 2023, 2022 and2021
S-7
Schedules other than those listed above are omitted for the YearsEnded
20
F-5reason that they are not applicable or the information is otherwise contained in the Financial Statements.
Consolidated Statements of Changesin Stockholder’s Equity for the YearsEnded
20
F-6
20
F-7
F-8
Schedules
I
S-1
II
Condensed Financial Information of Registrant:
S-2
20
S-3
20
S-4
Notes to Condensed Financial Information
S-5
III
20
S-6
IV
20
S-7
Schedules
other
than
those
listed
above
are
omitted
for
the
reason
that
they
are
not
applicable
or
the
information
is
otherwise
contained
in
the
Financial
Statements.
F-1
F-2Table 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, 20222023 and 2021,2022, 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, 2022,2023, 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, 2023 and 2022, and
2021, and the results of its operations and its
cash
flows for each of the three years
in the period ended December 31, 20222023 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
audits audit to obtain reasonable assurance
about
whether the consolidated financial statements
are free of material misstatement,
whether due to error or fraud.
The Company is not required to have,
nor were we engaged to perform,
an audit of its internal control over
financial reporting. As part of our audits we are required
to obtain an understanding
of internal control over
financial reporting but not for the purpose of expressing
an opinion on the effectiveness of the Company's
internal
control over financial reporting. Accordingly,
,
we express no such opinion.
Our audits included performing procedures
to assess the risks of material misstatement
of the consolidated
financial statements, whether
due to error or fraud, and performing
procedures that respond
to those risks. Such
procedures included examining, on
a test basis, evidence regarding
the amounts and disclosures in the
consolidated financial statements.
Our audits also included evaluating the accounting
principles used and
significant estimates made by management,
as well as evaluating the overall
presentation of the consolidated
financial statements. We
believe that our audits provide a reasonable
basis for our opinion.
Critical Audit Matters
The critical audit matter communicated
below is a matter arising from the current
period audit of the consolidated
financial statements that was
communicated or required to
be communicated to the audit committee
and that (i)
relates to accounts or disclosures
that are material to the consolidated
financial statements and (ii) involved
our
especially challenging, subjective, or complex judgments.
The communication of critical audit matters
does not
alter in any way our opinion on the consolidated
financial statements, taken
as a whole, and we are not, by
communicating the critical audit matter
below, providing
a separate opinion on the critical audit
matter or on the
accounts or disclosures to which it relates.
Valuation of the Reserve for Losses and
Loss Adjustment Expenses
As described in Notes 1 and 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
F-3
its insurance and reinsurance
businesses. The Company’s reserve
for losses and loss adjustment expenses
as of
December 31, 20222023 was $15.0$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
ceding
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/
PricewaterhouseCoopers LLP
New York, New York
March 10, 202314, 2024
We have served as the Company’s
auditor since 1996.
F-3
Table of Contents
F-4
EVEREST REINSURANCE HOLDINGS, INC.
CONSOLIDATED
BALANCE SHEETS
December 31,
(Dollars in millions, except share amounts and par value per share)
2022
2021
ASSETS:
Fixed maturities - available for
sale, at fair value
$
12,671
$
12,860
(amortized cost: 2022, $
13,699
; 2021, $
12,733
, credit allowances: 2022, $
(
46
)
; 2021, $
(
27
)
)
Fixed maturities - held to maturity,
at amortized cost
(fair value: 2022, $
793
, net of credit allowances: 2022, $
(
9
)
)
811
-
Equity securities, at fair value
194
1,758
Other invested assets
2,754
1,675
Other invested assets, at fair value
1,472
2,031
Short-term investments (cost:
2022, $
812
; 2021, $
696
)
812
696
Cash
481
699
Total investments
and cash
19,195
19,719
Notes receivable - affiliated
840
500
Accrued investment income
150
90
Premiums receivable (net of credit allowances:
2022, $
(
21
)
; 2021, $
(
18
)
)
1,721
1,720
Reinsurance recoverables
- unaffiliated (net of credit allowances:
2022, $
(
21
)
; 2021, $
(
16
)
)
1,841
1,569
Reinsurance recoverables
- affiliated
1,935
2,299
Income tax asset, net
288
-
Funds held by reinsureds
303
299
Deferred acquisition costs
499
472
Prepaid reinsurance premiums
463
431
Other assets (net of credit allowances:
2022, $
(
5
)
; 2021, $
(
4
)
)
722
596
TOTAL ASSETS
$
27,957
$
27,695
LIABILITIES:
Reserve for losses and loss adjustment
expenses
$
14,977
$
13,121
Unearned premium reserve
3,177
2,993
Funds held under reinsurance treaties
43
48
Other net payable to reinsurers
436
392
Losses in course of payment
77
273
Income tax liability, net
-
246
Senior notes
2,347
2,346
Long-term notes
218
224
Borrowings from FHLB
519
519
Accrued interest on debt and borrowings
19
17
Unsettled securities payable
1
15
Other liabilities
489
463
Total liabilities
22,303
20,657
Commitments and Contingencies (Note 15)
(nil)
(nil)
STOCKHOLDER'S EQUITY:
Common stock, par value: $
0.01
;
3,000
shares authorized;
1,000
shares issued and outstanding (2022 and
2021)
-
-
Additional paid-in capital
1,102
1,102
Accumulated other comprehensive income
(loss), net of deferred income
tax expense (benefit) of $
(225)
at 2022
and $
24
at 2021
(848)
91
Retained earnings
5,400
5,845
Total stockholder's
equity
5,654
7,038
TOTAL LIABILITIES
AND STOCKHOLDER'S EQUITY
$
27,957
$
27,695
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
F-5
EVEREST REINSURANCE HOLDINGS, INC.
CONSOLIDATED
STATEMENTS
OF OPERATIONS
AND COMPREHENSIVE INCOME (LOSS)
Years Ended December 31,
(Dollars in millions)
2022
2021
2020
REVENUES:
Premiums earned
$
7,876
$
7,179
$
6,407
Net investment income
638
745
376
Net gains (losses) on investments:
Credit allowances on fixed maturity securities
(27)
(26)
(2)
Gains (losses) from fair value adjustments
(1,006)
488
92
Net realized gains (losses) from dispositions
51
39
(41)
Total net gains (losses) on investments
(982)
501
50
Other income (expense)
(6)
23
(15)
Total revenues
7,526
8,448
6,818
CLAIMS AND EXPENSES:
Incurred losses and loss adjustment expenses
5,823
5,387
4,608
Commission, brokerage, taxes and fees
1,632
1,513
1,373
Other underwriting expenses
501
454
401
Corporate expenses
26
33
16
Interest, fee and bond issue cost amortization expense
101
70
36
Total claims and expenses
8,083
7,457
6,434
INCOME (LOSS) BEFORE TAXES
(557)
991
384
Income tax expense (benefit)
(112)
192
32
NET INCOME (LOSS)
$
(445)
$
800
$
352
Other comprehensive income (loss), net of tax:
Unrealized appreciation (depreciation) ("URA(D)") on securities arising during the period
(1,011)
(200)
163
Reclassification adjustment for realized losses (gains) included in net income (loss)
73
9
25
Total URA(D) on securities arising during the period
(938)
(191)
189
Foreign currency translation adjustments
(18)
(9)
14
Benefit plan actuarial net gain (loss) for the period
15
17
(6)
Reclassification adjustment for amortization of net (gain) loss included in net income (loss)
2
6
6
Total benefit plan net gain (loss) for the period
17
23
1
Total other comprehensive income (loss), net of tax
(939)
(177)
204
COMPREHENSIVE INCOME (LOSS)
$
(1,384)
$
623
$
556
The accompanying notes are an integral
part of the consolidated financial statements.
F-6
EVEREST REINSURANCE HOLDINGS, INC.
CONSOLIDATED
STATEMENTS
OF
CHANGES IN STOCKHOLDER’S EQUITY
Years Ended December 31,
(Dollars in millions, except share
amounts)
2022
2021
2020
COMMON STOCK (shares outstanding):
Balance, beginning of period
1,000
1,000
1,000
Balance, end of period
1,000
1,000
1,000
ADDITIONAL PAID-IN CAPITAL:
Balance, beginning of period
$
1,102
$
1,101
$
1,101
Share-based compensation plans
-
-
-
Balance, end of period
1,102
1,102
1,101
ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS), NET OF DEFERRED INCOME
TAXES:
Balance, beginning of period
91
268
64
Net increase (decrease) during the period
(939)
(177)
204
Balance, end of period
(848)
91
268
RETAINED EARNINGS:
Balance, beginning of period
5,845
5,045
4,692
Change to beginning balance due to adoption of ASU 2016-13
-
-
1
Net income (loss)
(445)
800
352
Balance, end of period
5,400
5,845
5,045
TOTAL STOCKHOLDER'S
EQUITY, END OF PERIOD
$
5,654
$
7,038
$
6,414
The accompanying notes are an integral
part of the consolidated financial statements.
F-7
EVEREST REINSURANCE HOLDINGS, INC.
CONSOLIDATED
STATEMENTS
OF CASH FLOWS
Years Ended December 31,
(Dollars in millions)
2022
2021
2020
CASH FLOWS FROM OPERATING
ACTIVITIES:
Net income (loss)
$
(445)
$
800
$
352
Adjustments to reconcile net income
to net cash provided by operating
activities:
Decrease (increase) in premiums receivable
(3)
(128)
(253)
Decrease (increase) in funds held by reinsureds,
net
(9)
(30)
(34)
Decrease (increase) in reinsurance
recoverables
70
337
247
Decrease (increase) in income taxes
(286)
100
204
Decrease (increase) in prepaid reinsurance
premiums
(36)
(68)
51
Increase (decrease) in reserve for losses
and loss adjustment expenses
1,885
1,478
1,430
Increase (decrease) in unearned premiums
189
609
183
Increase (decrease) in other net payable
to reinsurers
50
114
8
Increase (decrease) in losses in course
of payment
(197)
111
90
Change in equity adjustments in limited partnerships
(90)
(368)
(40)
Distribution of limited partnership income
107
114
91
Change in other assets and liabilities, net
(130)
(10)
(88)
Non-cash compensation expense
37
36
32
Amortization of bond premium (accrual of
bond discount)
22
31
14
Net (gains) losses on investments
982
(501)
(50)
Net cash provided by (used in) operating
activities
2,146
2,625
2,240
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from fixed maturities
matured/called/repaid - available
for sale
1,399
2,330
1,126
Proceeds from fixed maturities sold
- available for sale
2,645
961
631
Proceeds from fixed maturities
matured/called/repaid - held to
maturity
39
-
-
Proceeds from equity securities sold
2,203
862
375
Distributions from other invested
assets
135
127
243
Cost of fixed maturities acquired -
available for sale
(5,928)
(5,832)
(4,695)
Cost of fixed maturities acquired -
held to maturity
(125)
-
-
Cost of equity securities acquired
(951)
(1,052)
(626)
Cost of other invested assets acquired
(1,241)
(430)
(363)
Net change in short-term investments
(113)
13
(426)
Net change in unsettled securities transactions
(52)
(206)
200
Proceeds from repayment (cost
of issuance) of notes receivable - affiliated
(340)
(200)
-
Net cash provided by (used in) investing
activities
(2,329)
(3,427)
(3,534)
CASH FLOWS FROM FINANCING ACTIVITIES:
Tax benefit from
share-based compensation, net of
expense
(37)
(36)
(32)
Net FHLB borrowings (repayments)
-
209
310
Cost of debt repurchase
(6)
-
(11)
Proceeds from issuance of senior notes
-
968
979
Net cash provided by (used in) financing
activities
(43)
1,142
1,247
EFFECT OF EXCHANGE RATE
CHANGES ON CASH
8
(18)
14
Net increase (decrease) in cash
(218)
321
(33)
Cash, beginning of period
699
379
411
Cash, end of period
$
481
$
699
$
379
SUPPLEMENTAL CASH FLOW
INFORMATION:
Income taxes paid (recovered)
$
174
$
91
$
(173)
Interest paid
98
62
28
NON-CASH TRANSACTIONS
Reclassification of specific investments
from fixed maturity securities,
available for sale
at fair value to fixed maturity
securities, held to maturity at amortized
cost net of credit allowances
$
722
$
-
$
-
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
EVEREST REINSURANCE HOLDINGS, INC.
CONSOLIDATED STATEMENTS OF
CHANGES IN STOCKHOLDER’S EQUITY
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-8F-6
EVEREST REINSURANCE HOLDINGS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
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.
F-7
NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS
Years Ended
December 31, 2023, 2022 2021 and 20202021
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”),
EverSports
&
Entertainment
Insurance,
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
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
2022
2023 presentation.
Out of Period Adjustments
For the
year ended
December
31, 2021,
the Company
recorded
out of
period adjustments
relating
to prior
years
that decreased
net income by
$46 million. The
out of period
adjustments are
related to
the accounting
for certain
affiliated reinsurance agreements.
B.
Investments and Cash.
Fixed
maturity
securities
designated
as
available
for
sale
reflect
unrealized
appreciation
and
depreciation,
as
a
result of changes in fair value
during the period, in stockholder’s
equity, net of income
taxes in “accumulated
other
comprehensive
income
(loss)”
in
the consolidated
balance
sheets.
The Company
reviews
all
of its
fixed
maturity,
available
for
sale
securities
whose
fair
value
has
fallen
below
their
amortized
cost
at
the
time
of
review.
The
Company
then
assesses
whether
the
decline
in
value
is
due
to
non-credit
related
or
credit
related
factors.
In
making
its
assessment,
the
Company
evaluates
the
current
market
and
interest
rate
environment
as
well
as
specific issuer
information.
Generally,
a
change
in
a
security’s
value
caused
by
a
change
in
the
market,
interest
rate
or
foreign
exchange
environment
does
not
constitute
a
credit
impairment,
but
rather
a
non-credit
related
F-9
decline
in
fair
value.
Non-credit
related
declines
in
fair
value
are
recorded
as
unrealized
losses
in
accumulated
other comprehensive
income (loss).
If the Company
intends to
sell the impaired
security or is
more likely
than not
to
be
required
to
sell
the
security
before
an
anticipated
recovery
in
value,
the
Company
records
the
entire
impairment
in
net
gains
(losses)
on
investments
in
the
Company’s
consolidated
statements
of
operations
and
comprehensive income
(loss). If the
Company determines
that the
decline is credit
related and
the Company
does
not have
the intent
intends to
sell the
security; and
it impaired security or is
more
likely
than
not that
the Company
will not
have
to
be required to sell the
security before an anticipated recovery
of its cost basis,
in value, the Company establishes
a credit allowance equal
torecords the estimated
credit
loss and
is recorded
entire impairment in net
gains (losses)
on investments
in the
Company’s
consolidated statements
of operations
and
comprehensive
income
(loss).
The
determination
of
credit-related
or
non-credit-related
impairment
is
first
based
on
an
assessment
of
qualitative
factors,
which
may
determine
that
a
qualitative
analysis
is
sufficient
to
support
the conclusion
that
the present
value
of expected
cash
flows
equals or
exceeds
the security’s
amortized
cost
basis.
However,
if
the
qualitative
assessment
suggests
a
credit
loss
may
exist,
a
quantitative
assessment
is
performed,
and
the
amount
of
the
allowance
for
a
given
security
will
generally
be
the
difference
between
a
discounted
cash
flow
model
and
the
Company’s
carrying
value.
The
Company
will
adjust
the
credit
allowance
account
for
future
changes
in
credit
loss
estimates
for
a
security
and
record
this
adjustment
through
net
gains
(losses) on investments in the Company’s
consolidated statements
of operations and comprehensive income
(loss). If the Company determines that the decline is credit related and the Company does not have the intent to sell the security; and it is more likely than not that the Company will not have to sell the security before recovery of its cost basis, the Company establishes a credit allowance equal to the estimated credit loss and is recorded in net gains (losses) on investments in the Company’s consolidated statements of operations and comprehensive income (loss). The determination of credit-related or non-credit-related impairment is first based on an assessment of qualitative factors, which may determine that a qualitative analysis is sufficient to support the conclusion that the present value of expected cash flows equals or exceeds the security’s amortized cost basis. However, if the qualitative assessment suggests a credit loss may exist, a quantitative assessment is performed, and the amount of the allowance for a given security will generally be the difference between a discounted cash flow model and the Company’s
F-8
carrying value. The Company will adjust the credit allowance account for future changes in credit loss estimates for a security and record this adjustment through net gains (losses) on investments in the 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
gains
(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
comprise
securities
due
to
mature
within
one
year
from
the
date
of
purchase
and
are
stated at cost, which approximates
fair value.
Realized
gains
or
losses
on
sales
of
investments
are
determined
on
the
basis
of
identified
cost.
For
some
non-
publicly non-publicly traded
securities, market
prices are determined
through the use
of pricing models
that evaluate
securities
F-10
relative
to
the
U.S.
Treasury
yield
curve,
taking
into
account
the
issue
type,
credit
quality,
and
cash
flow
characteristics
of
each
security.
For
other
non-publicly
traded
securities,
investment
managers’
valuation
committees
will
estimate
fair
value,
and
in
many
instances,
these
fair
values
are
supported
with
opinions
from
qualified independent
third
parties. For
publicly
traded
securities, fair
value
is based
on quoted
market
prices or
valuation
models that
use observable
market
inputs. When
a sector
of the
financial markets
is inactive
or illiquid,
the Company
may use
its own
assumptions about
future cash
flows and
risk-adjusted
discount rates
to determine
fair value.
Other
invested
assets
include
limited
partnerships,
company-owned
corporate-owned life
insurance
(“COLI”), rabbi trusts and
rabbi
trusts.
other investments. Limited
partnerships
are
accounted
for
under
the
equity
method of
accounting,
which
can
be recorded
on
a
monthly
or
quarterly lag. Company
-ownedlag 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, 20222023 and December 31, 2021
2022 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.
F-9
C.
Allowance for Premium Receivable
and Reinsurance Recoverables.
The Company
applies the
Current Expected
Credit Losses
(CECL) methodology
for estimating
allowances for
credit
losses.
The
Company
evaluates
the
recoverability
of
its
premiums
and
reinsurance
recoverable
balances
and
establishes an allowance for estimated
uncollectible amounts.
Premiums
receivable,
excluding
receivables
for
losses
within
a
deductible
and
retrospectively-rated
policy
premiums,
are
primarily
comprised
of premiums
due from
policyholders/
cedants.
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
lines business
is written
with large
deductibles
or under
retrospectively-
rated 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 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 other
assets in
the consolidated
balance
sheets. The allowance is estimated
as the amount of the
receivable exposed to
loss multiplied by estimated
factors
for
probability
of
default.
The
probability
of
default
is
assigned
based
on
each
policyholder's
credit
rating,
or
a
rating is
estimated if
no external
rating is
available. Credit
ratings are
reviewed and
updated at
least annually.
The
exposure amount is
estimated net of collateral
and 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
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 probability-weighted macroeconomic scenarios.
F-11
The
Company
records
total
credit
loss
expenses
related
to
premiums
receivable
in
Other
underwriting
expenses
and
records
credit
loss
expenses
related
to
deductibles
in
Incurred
losses
and
loss
adjustment
expenses
in
the
Company’s consolidated
statements of operations
and comprehensive income (loss).
The
allowance
for
uncollectible
reinsurance
recoverable
reflects
management’s
best
estimate
of
reinsurance
cessions that
may be
uncollectible in
the future
due to
reinsurers’
unwillingness or
inability to
pay.
The allowance
for uncollectible
reinsurance
recoverable
comprises an
allowance
and an
allowance
for
disputed
balances. Based
on
this
analysis,
the
Company
may
adjust
the
allowance
for
uncollectible
reinsurance
recoverable
or
charge
off
reinsurer balances that are determined
to be uncollectible.
Due to
the inherent
uncertainties
as to
collection and
the length
of time
before
reinsurance
recoverable
become
due, it
is possible
that future
adjustments
to the
Company’s
reinsurance
recoverable,
net of
the allowance,
could
be required,
which
could
have
a
material
adverse
effect
on
the
Company’s
consolidated
results
of operations
or
cash flows in a particular quarter or annual period.
The
allowance
is
estimated
as
the
amount
of
reinsurance
recoverable
exposed
to
loss
multiplied
by
estimated
factors
for
the
probability
of
default.
The
reinsurance
recoverable
exposed
is
the
amount
of
reinsurance
recoverable net
of collateral
and other offsets,
considering the nature
of the 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
-lookingforward-looking and consider a
variety of economic
outcomes. The
Company's evaluation
of the required
allowance for
reinsurance
recoverable
considers the
current
economic environment as well
as macroeconomic scenarios.
The
Company
records
credit
loss
expenses
related
to
reinsurance
recoverable
in
Incurred
losses
and
loss
adjustment
expenses
in the
Company’s
consolidated
statements
of operations
and comprehensive
income (loss).
Write-offs of
F-10
reinsurance recoverable
and any related
allowance are recorded
in the period in which
the balance is
deemed uncollectible.
D.
Deferred Acquisition Costs.
Acquisition
costs,
consisting
principally
of
commissions
and
brokerage
expenses
and
certain
premium
taxes
and
fees incurred at
the time a contract
or policy is issued and
that vary with and
are directly related
to the Company’s
reinsurance
and
insurance
business,
are
deferred
and
amortized
over
the
period
in
which
the
related
premiums
are earned.
Deferred acquisition
costs are
limited to
their estimated
realizable value
by line
of business
based on
the related unearned premiums, anticipated
claims and claim expenses and anticipated
investment income.
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
other exposures,
for which
liabilities cannot
be estimated
using traditional
reserving techniques.
See also
Note 3.
The reserves
are reviewed
periodically
and
any
changes
in
estimates
are
reflected
in
earnings
in
the
period
the
adjustment
is
made.
The
Company’s
loss
and
LAE
reserves
represent
management’s
best
estimate
of
the
ultimate
liability.
Loss
and
LAE
reserves
are
presented
gross
of
reinsurance
recoverable
and
incurred
losses
and
LAE
are
presented
net
of
reinsurance.
Accruals
for
commissions
are
established
for
reinsurance
contracts
that
provide
for
the
stated
commission
percentage
to
increase
or decrease
based
on the
loss experience
of the
contract.
Changes
in estimates
for
such
arrangements
are
recorded
as
commission
expense.
Commission
accruals
for
contracts
with
adjustable
features
are estimated based on expected
loss and LAE.
F-12
F.
Premium Revenues.
Written
premiums
are
earned
ratably
over
the
periods
of
the
related
insurance
and
reinsurance
contracts.
Unearned premium reserves
are established
relative to
the unexpired
contract period.
For reinsurance
contracts,
such
reserves
are
established
based
upon
reports
received
from
ceding
companies
or estimated
using
pro
rata
methods
based
on
statistical
data.
Reinstatement
premiums
represent
additional
premium
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 the 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
%
10% of
the
outstanding
balance
at
December 31,
2022 2023 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
bases
basis of
assets
and
liabilities,
which
arise because of differences between
the financial reporting and income tax rules.
F-11
As an accounting policy,
the Company has adopted the aggregate
portfolio approach for releasing
disproportionate
income tax effects from
Accumulated Other Comprehensive Income.
I.
Foreign Currency.
The
Company
transacts
business
in
numerous
currencies
through
business
units
located
around
the
world.
The
base
transactional
functional currency
for
each
business
unit
is
determined
by
the
local
currency
used
for
most
economic
activity in that
area.
Movements in
exchange rates
related to
foreign transactions in currencies other than a business unit’s functional currency
denominated for monetary
assets and
liabilities
at
are measured through the
business
units
between
the
original
currency
consolidated statements of operations and
the
base
currency
are
recorded
through
the
consolidated
statements
of
operations
and
comprehensive
income
(loss)
in
other
income
(expense),
except
for
currency
movements
related
to
available
for
sale
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
two
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.Recent Accounting Pronouncements.
K.
Retroactive Reinsurance.Adoption of New Accounting Standards
Premiums on
ceded retroactive
contracts
are earned
when written
withThe Company did not adopt any new accounting standards that had a
corresponding
reinsurance
recoverable material impact in 2023.
established for the
amount of reserves
ceded.
The initial gain,
if applicable, is deferred
and amortized into
income
over
an
actuarially
determined
expected
payout
period.
Any
future
loss
is
recognized
immediately
and
charged
against earnings.
F-13
L. ApplicationFuture Adoption of Recently Issued Accounting
Guidance. Standards
The
Company
did
not
adopt
any
new
accounting
standards
that
had
a
material
impact
during
the
year
ended
December 31,
2022.
The Company
assessed the
adoption impacts
of recently
issued accounting
standards
that are affective after 2023 by the
Financial
Accounting
Standards
Board
on
the
Company’s
consolidated
financial
statements
as
well
as
statements. Additionally, the Company assessed whether there have been material
updates
to
previous
assessments,
if
any,
from
the
Company’s
Annual
Report
on
Form
10-K
for
the
year
ended
December 31, 2021.
previously issued accounting standards that are effective after 2023 . There were no
accounting standards
issued during 2022 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 requires expanded income tax disclosures, including the disaggregation of existing disclosures related to the tax rate reconciliation and income taxes paid. The guidance is effective for annual periods beginning after December 15, 2024. Prospective application is required, with retrospective application permitted. The Company is currently evaluating the effect the updated guidance will have on the Company's financial statement disclosures.
F-12
2.
INVESTMENTS
The
following
tables
show
amortized
cost,
allowance
for
credit
losses,
gross
unrealized
appreciation,
gross
unrealized
depreciation
and
fair
value
of
available
for
sale,
fixed
maturity
securities
available
for
sale
as
of
the
dates indicated:
At December 31, 2022
Amortized
Allowances for
Unrealized
Unrealized
Fair
(Dollars in millions)
Cost
Credit Loss
Appreciation
Depreciation
Value
Fixed maturity securities – available for sale
U.S. Treasury securitiescredit losses, gross unrealized appreciation, gross unrealized depreciation (“URA(D)”) and obligationsfair value of
U.S. government agencies and corporations
$
575
$
-
$
-
$
(40)
$
535
Obligations of U.S. states and political subdivisions
444
-
2
(32)
413
Corporate securities
3,913
(45)
14
(322)
3,561
Asset-backed securities
4,111
-
5
(165)
3,951
Mortgage-backed securities
Commercial
569
-
-
(59)
509
Agency residential
1,792
-
3
(167)
1,628
Non-agency residential
3
-
-
-
3
Foreign government securities
696
-
2
(61)
637
Foreign corporate securities
1,597
(1)
4
(167)
1,433
Total fixed maturity securities - available for sale for the periods indicated:
$
13,699
$
(46)
$
30
$
(1,013)
$
12,671
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, 2021
Amortized
Allowances for
Unrealized
Unrealized
Fair
(Dollars in millions)
Cost
Credit Loss
Appreciation
Depreciation
Value
Fixed maturity securities – available for sale
U.S. Treasury securities and obligations of
U.S. government agencies and corporations
$
657
$
-
$
9
$
(3)
$
663
Obligations of U.S. states and political subdivisions
559
-
29
(1)
587
Corporate securities
4,036
(19)
89
(31)
4,075
Asset-backed securities
3,464
(8)
21
(11)
3,466
Mortgage-backed securities
Commercial
586
-
21
(4)
603
Agency residential
1,255
-
16
(10)
1,261
Non-agency residential
4
-
-
-
4
Foreign government securities
677
-
22
(7)
692
Foreign corporate securities
1,494
-
34
(18)
1,510
Total fixed maturity securities - available for sale
$
12,733
$
(27)
$
241
$
(86)
$
12,860
(Some amounts may not reconcile due
to rounding.)
F-14
The following table
shows amortized
cost, allowance for
credit losses, gross
unrealized appreciation/(depreciation)
and fair value of fixed maturity
securities held to maturity for the periods indicated:
At December 31, 2022
Amortized
Allowances for
Unrealized
Unrealized
Fair
(Dollars in millions)
Cost
Credit Loss
Appreciation
Depreciation
Value
Fixed maturity securities – held to maturity
Corporate securities
$
152
$
(2)
$
-
$
(6)
$
144
Asset-backed securities
634
(6)
2
(15)
614
Mortgage-backed securities
Commercial
7
-
-
-
7
Foreign corporate securities
28
(1)
2
-
28
Total fixed maturity securities - held to maturity
$
820
$
(9)
$
3
$
(22)
$
793
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
fair value of
fixed maturity
securities available
for sale
are shown in
the following table
by
contractual maturity.
Mortgage-backed
securities are generally
more likely to
be prepaid than other
fixed maturity
securities.
As
the
stated
maturity
of
such
securities
may
not
be
indicative
of
actual
maturities,
the
totals
for
mortgage-backed and asset-backed
securities are shown separately.
At December 31, 2022
At December 31, 2021
Amortized
Fair
Amortized
Fair
(Dollars in millions)
Cost
Value
Cost
Value
Fixed maturity securities – available for sale
Due in one year or less
$
581
$
563
$
586
$
584
Due after one year through five years
3,684
3,429
3,488
3,527
Due after five years through ten years
2,003
1,760
2,260
2,310
Due after ten years
958
827
1,088
1,106
Asset-backed securities
4,111
3,951
3,464
3,466
Mortgage-backed securities
Commercial
569
509
586
603
Agency residential
1,792
1,628
1,255
1,261
Non-agency residential
3
3
4
4
Total fixed maturity securities - availableheld to maturity for salethe periods indicated:
$
13,699
$
12,671
$
12,733
$
12,860
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
Contents
F-15
At December 31, 2022
Amortized
Fair
(Dollars in millions)
Cost
Value
Fixed maturity securities – held to maturity:
Due in one year or less
$
5
$
5
Due after one year through five years
63
61
Due after five years through ten years
43
41
Due after ten years
68
65
Asset-backed securities
634
614
Mortgage-backed securities
Commercial
7
7
Total fixed maturity securities - held to maturity
$
820
$
793
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.)
During
2022,
the
Company
re-designated
a
portion
of
its
fixed
maturity
securities
from
its
fixed
maturity
–
available
for
sale
portfolio
to
its
fixed
maturity
–
held
to
maturity
portfolio.
The
fair
value
of
the
securities
reclassified at the date
of transfer
was $
722
million, net of allowance
for current expected
credit losses, which was
subsequently
recognized
as
the
new
amortized
cost
basis.
As
of
the
date
of
transfer,
these
securities
had
an
unrealized loss
of $
53
million, which remained
in accumulated
other comprehensive
income on the balance
sheet,
and
will
be
amortized
into
income
through
an
adjustment
to
the
yields
of
the
underlying
securities
over
the
remaining life of the securities.
The Company evaluated
fixed maturity securities
classified as held to maturity
for current expected
credit losses as
of
December
31,
2022
utilizing
risk
characteristics
of
each
security,
including
credit
rating,
remaining
time
to
maturity,
adjusted
for
prepayment
considerations,
amortized cost 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, 2022.
The
changes
in
net
unrealized
appreciation
(depreciation)
for
the
Company’s
investments
are
derived
from
the
following sources for the periods
indicated:
Years Ended December 31,
(Dollars in millions)
2022
2021
Increase (decrease) during the period between the fair value and cost
of investments carried at fair value, and deferred taxes thereon:
Fixedfixed maturity securities - short term investmentsavailable for sale 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.
$
(1,187)
$
(242)
Change in unrealized appreciation (depreciation), pre-tax
(1,187)
(242)
Deferred tax benefit (expense)
249
51
Change in unrealized appreciation (depreciation),
net of deferred taxes, included in stockholder's equity
$
(938)
$
(191)
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.)
F-16
The
tables
below
display
the
aggregate
fair
value
and
gross
unrealized
depreciation
of
fixed
maturity
securities
available
for
sale, by
security type
amortized cost and contractual
maturity,
in each
case subdivided
according
to
length
fair value of time
that individual securities had been in a continuous unrealized
loss position for the periods indicated.
Duration of Unrealized Loss at December 31, 2022 By Security Type
Less than 12 months
Greater than 12 months
Total
Gross
Gross
Gross
Fair
Unrealized
Fair
Unrealized
Fair
Unrealized
(Dollars in millions)
Value
Depreciation
Value
Depreciation
Value
Depreciation
Fixed maturity securities - available for sale
U.S. Treasury securities and obligations of
U.S. government agencies and corporations
$
290
$
(14)
$
245
$
(26)
$
535
$
(40)
Obligations of U.S. states and political subdivisions
235
(23)
27
(9)
261
(32)
Corporate securities
2,138
(175)
841
(146)
2,979
(321)
Asset-backed securities
3,120
(138)
436
(27)
3,556
(165)
Mortgage-backed securities
Commercial
464
(50)
36
(9)
500
(59)
Agency residential
852
(54)
605
(113)
1,456
(167)
Non-agency residential
2
-
1
-
3
-
Foreign government securities
455
(36)
144
(25)
599
(61)
Foreign corporate securities
967
(100)
365
(67)
1,332
(167)
Total
$
8,522
$
(591)
$
2,698
$
(421)
$
11,220
$
(1,012)
Securities where an allowance for credit loss was recorded
2
(1)
-
-
2
(1)
Total fixed maturity securities - available for sale
$
8,524
$
(591)
$
2,698
$
(421)
$
11,222
$
(1,013)
(Some amountsheld to maturity are shown in the following table by contractual maturity. As the stated maturity of such securities may not reconcile due
to rounding.)
be indicative of actual maturities, the totals for mortgage-backed and asset-backed securities are shown separately.
Duration of Unrealized Loss at December 31, 2022 By Maturity
Less than 12 months
Greater than 12 months
Total
Gross
Gross
Gross
Fair
Unrealized
Fair
Unrealized
Fair
Unrealized
(Dollars in millions)
Value
Depreciation
Value
Depreciation
Value
Depreciation
Fixed maturity securities - available for sale
Due in one year or less
$
463
$
(8)
$
29
$
(4)
$
491
$
(11)
Due in one year through five years
2,020
(143)
936
(107)
2,956
(250)
Due in five years through ten years
1,162
(148)
395
(98)
1,557
(246)
Due after ten years
439
(50)
262
(64)
701
(114)
Asset-backed securities
3,120
(138)
436
(27)
3,556
(165)
Mortgage-backed securities
1,318
(105)
641
(122)
1,959
(226)
Total
$
8,522
$
(591)
$
2,698
$
(421)
$
11,220
$
(1,012)
Securities where an allowance for credit loss was recorded
2
(1)
-
-
2
(1)
Total fixed maturity securities - available for sale
$
8,524
$
(591)
$
2,698
$
(421)
$
11,222
$
(1,013)
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
The
F-14
aggregate
fair
value
and
gross
unrealized
losses
related
to
fixed
maturity
securities
available
for
sale
in
an
unrealized
loss position
at
December 31,
2022 were
$
11.2
billion and
$
1.0
billion, respectively.
The fair
value
of
securities for
incorporate the single
issuer
(use of significant unobservable inputs and therefore are classified as Level 3 within the Unitedfair value hierarchy.
States
government)
whoseThe Company evaluated fixed maturity securities
comprised
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 largest
unrealizedincorporation 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 URA(D) for the Company’s investments are as follows:
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 fair value and gross unrealized depreciation of fixed maturity securities - available for sale, by security type and contractual maturity, in each case subdivided according to length of time that individual securities had been in a continuous unrealized loss position
at December
31, 2022,
did not
exceed for the periods indicated:
4.3
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 may not reconcile due to rounding.)
F-15
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)
the overall
(Some amounts may not reconcile due to rounding.)
The aggregate fair value
of the
Company’s
fixed maturity
securities available
for
sale.
The fair
value
of the
securities
for
the issuer
with the
second
largest
unrealized
loss
comprised less
than
0.6
% of the
Company’s
fixed maturity
securities. In
addition, as
indicated on
the above
table,
there
was
no
significant
concentration
of
unrealized
losses
in
any
one
market
sector.
The
$
591
million
of
and gross unrealized losses related
to fixed maturity
securities - available for sale in an unrealized loss position at December 31, 2023 were $7.6 billion and $536 million, respectively. The fair value of securities for the single issuer (the United States government) whose securities comprised the largest unrealized loss position at December 31, 2023, did not exceed 1.4% of the overall fair value of the Company’s fixed maturity securities available
for sale. The fair value of the securities for the issuer with the second largest unrealized loss comprised less than 0.5% 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 $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
F-17
securities,
asset-backed
securities
as
well
as
commercial
and
agency
residential
mortgage-backed
securities.
Of
these unrealized
losses, $
520
$39 million were
related
to securities
that were
rated
investment
grade by
at least
one
nationally
recognized
rating
agency.
The
$
421
$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
domestic and
foreign
corporate
securities
as
well
as
agency
residential
mortgage
backed
securities.
Of
these
unrealized
losses
$
392
$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.
Based upon
the Company’s
current evaluation
of securities
in
an unrealized
loss position as of
December 31, 2022,2023, the
unrealized losses
are due to
changes in interest
rates and
non-issuer specific
credit spreads
and are
not credit
related. In
addition, the
contractual
terms of
these securities
do not permit these securities to be settled at a price less
than their amortized cost.
F-16
The Company,
giventables below display the size
of its investment
portfolioaggregate fair value and capital
position, does not
have the
intent to
sell these
securities; and
it is
more likely
than not
that the
Company will
not have
to sell
the security
before
recovery
of its
cost
basis.
In
addition,
all
securities
currently
in
an
unrealized
loss
position
are
current
with
respect
to
principal
and interest payments
.
The
tables
below
display
the
aggregate
fair
value
and
gross
unrealized
depreciation
of
fixed
maturity
securities
available
for sale,
by security
type and
contractual
maturity,
in each
case subdivided
according to
length of
time
that individual
securities had been
in a continuous
unrealized loss
position for
the periods indicated.
The amounts
presented
in the
tables below
include $
16
milliondepreciation of
fair value
and $(
0.4
) million
of gross
unrealized
depreciation
as of December 31, 2021 related
to fixed maturity securities
available for sale
for which the Company
has recorded
an allowance for credit losses.
Duration of Unrealized Loss at December 31, 2021 By Security Type
Less than 12 months
Greater than 12 months
Total
Gross
Gross
Gross
Fair
Unrealized
Fair
Unrealized
Fair
Unrealized
(Dollars in millions)
Value
Depreciation
Value
Depreciation
Value
Depreciation
Fixed maturity securities - available for sale
U.S. Treasury securities and obligations of
U.S. government agencies and corporations
$
267
$
(3)
$
-
$
-
$
267
$
(3)
Obligations of U.S. states and political subdivisions
51
(1)
3
-
54
(1)
Corporate securities
1,465
(25)
201
(6)
1,666
(31)
Asset-backed securities
1,891
(11)
38
-
1,929
(11)
Mortgage-backed securities
Commercial
139
(2)
35
(2)
174
(4)
Agency residential
699
(7)
168
(3)
867
(10)
Non-agency residential
1
-
-
-
2
-
Foreign government securities
200
(5)
15
(2)
215
(7)
Foreign corporate securities
677
(17)
33
(2)
710
(18)
Total fixed maturity securities - available for sale, 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.
$
5,390
$
(71)
$
492
$
(15)
$
5,882
$
(86)
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 may not reconcile due to rounding.)
F-18
Duration of Unrealized Loss at December 31, 2021 By Maturity
Less than 12 months
Greater than 12 months
Total
Gross
Gross
Gross
Fair
Unrealized
Fair
Unrealized
Fair
Unrealized
(Dollars in millions)
Value
Depreciation
Value
Depreciation
Value
Depreciation
Fixed maturity securities - available for sale
Due in one year or less
$
81
$
(2)
$
36
$
(4)
$
117
$
(6)
Due in one year through five years
1,209
(19)
154
(3)
1,364
(22)
Due in five years through ten years
853
(21)
34
(2)
887
(23)
Due after ten years
517
(10)
27
(1)
543
(11)
Asset-backed securities
1,891
(11)
38
-
1,929
(11)
Mortgage-backed securities
839
(9)
203
(5)
1,042
(14)
Total fixed maturity securities - available for sale
$
5,390
$
(71)
$
492
$
(15)
$
5,882
$
(86)
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
fair
value
and
gross
unrealized
losses
related
to
investments
fixed maturity securities - available for sale in
an
unrealized
loss
position
at
December 31, 2021
2022 were $
5.9
$11.2 billion and $
86
million,$1.0 billion, respectively.
The fair
value of
securities for
the single issuer
(the (the United
States
government)
whose securities
comprised
the largest
unrealized
loss
position
at
December 31,
2021, 2022, did not exceed
2.1
% 4.3% of the overall fair value
of the Company’s
fixed maturity securities available
for sale. The
fair
value
of the
securities for
the issuer
with the
second
largest
unrealized
loss
comprised
less than
0.4
% 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 $
71
$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,
foreign government securities,
asset backed securities and
agency
residential
mortgage
backed
securities.
Of
these
unrealized
losses,
$
62
$520 million
were
related
to
securities
that were rated investment
grade by at least one nationally
recognized rating agency.
The $
15
$421 million of unrealized
losses related
to fixed
maturity securities
available
for
sale in
an unrealized
loss position
for more
than one
year
related
primarily
to
domestic
and
foreign
corporate
securities
as
well
as
agency
residential
mortgage-backed
securities. Of these unrealized
losses $
12
F-17
losses, $392 million were related
to securities that
were rated
investment grade
by at
least
one
nationally
recognized
rating
agency.
In
all
instances,
there
were
no
projected
cash
flow
shortfalls
to
recover the full book value
of the investments and the
related interest
obligations. The mortgage
-backedmortgage-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 table
below for the periods indicated:
Years Ended December 31,
(Dollars in millions)
2022
2021
2020
Fixed maturities
$
510
$
344
$
305
Equity securities
16
15
11
Short-term investments and cash
16
1
3
Other invested assets
Limited partnerships
72
321
49
Dividends from preferred shares of affiliate
31
31
31
Other
30
63
2
Gross investment income before adjustments
675
774
401
Funds held interest income (expense)
6
8
6
Interest income from Parent
11
6
5
Gross investment income
691
788
412
Investment expenses
(52)
(43)
(36)
Net investment income
$
638
$
745
$
376
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.)
F-19
The
Company
records
results
from
limited
partnership
investments
on
the
equity
method
of
accounting
with
changes in value reported through
net investment income.
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 $
927
million$1.0 billion in
limited partnerships
and
private placement loans at
December 31, 2022.2023. These commitments will be funded
when called in accordance with
the partnership and loan agreements, which
have investment periods
that expire, unless extended, through 2027.
2026
.
During the
fourth
quarter of
2022, the
Company
entered
into
corporate-owned
life
insurance
COLI policies,
which are
invested in debt and equity securities. The COLI policies are carried within other invested assets
at the policy cash surrender value of $
939
$1.3 billion and $939 million as of December 31, 2022.
The Company
participates
in
a private
placement
liquidity
sweep
facility
(“the
facility”).
The primary
purpose
of
the
facility
is
to
enhance
the
Company’s
return
on
its
short-term
investments
2023 and
cash
positions.
The
facility
invests
in
high
quality,
short-duration
securities
and
permits
daily
liquidity.
The
Company
consolidates
its
participation
in
the
facility.
As
of
December
31,
2022,
the
fair
value
of
investments
in
the
facility
consolidated
within the Company’s balance sheets
was $
309
million.
respectively.
Other invested assets, at
fair value, as of December 31, 20222023 and December 31,
2021, 2022, were comprised of preferred
shares
held in
Everest
Preferred
International
Holdings, Ltd.
(“Preferred
Holdings”), a
wholly-owned
subsidiary
of
Group.
Variable Interest
Entities
The
Company
is
engaged
with
various
special
purpose
entities
and
other
entities
that
are
deemed
to
be
VIEs
primarily as an 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, 2022
2023 and 2021,
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
the
investments.
The Company’s
maximum exposure
to loss
as of December 31,
2023 and 2022 and
2021 is
limited to
the total
carrying
value of
$
2.8
$3.3 billion and
$
1.7
$2.8 billion,
respectively,
which are
included in
general
and limited partnerships, COLI policies and other alternative investments in other invested assets in the Company's consolidated balance sheets.
limited
partnerships
and
other
alternative
investments
in
Other
Invested
Assets
in
the
Company's
Consolidated
Balance
Sheets.
As
of
December 31,
2022,
the
Company
has
outstanding
commitments
totaling
$
857
million
whereby
2023, the Company
has outstanding commitments totaling $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-backed
securities,
which includes
collateralized
loan
obligations
and
are
classified
as
fixed
maturities.
maturities - 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
F-20
is not
the primary
beneficiary due
to the
relative size
of the Company’s
investment
in comparison
to the
principal
amount
of
the
structured
securities
issued
by
the
VIEs,
the
level
of
credit
subordination
which
reduces
the
Company’s
obligation
to
absorb
losses
or
right
to
receive
benefits
and
the
Company’s
inability
to
direct
the
activities that most significantly
impact the economic performance
of the VIEs. The Company’s
maximum exposure
to loss on these investments
is limited to the amount of the Company’s
investment.
The components of net gains (losses) on investments
are presented in the table below for
the periods indicated:
Years Ended December 31,
(Dollars in millions)
2022
2021
2020
Fixed maturity securities:
Allowances for credit losses
$
(27)
$
(26)
$
(2)
Net realized gains (losses) from dispositions
(79)
8
(36)
Gains (losses) from fair value adjustments
-
-
2
Equity securities:
Net realized gains (losses) from dispositions
116
24
(8)
Gains (losses) from fair value adjustments
(447)
254
276
Other invested assets
13
6
2
Other invested assets, fair value:
Gains (losses) from fair value adjustments
(558)
234
(186)
Short-term investment gains (losses)
-
-
1
Total net gains (losses) on investments
$
(982)
$
501
$
50
(Some amounts may not reconcile due
to rounding.)
The 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
Years Ended December 31, 2022
Asset
Foreign
Corporate
Backed
Corporate
Securities
Securities
Securities
Total
(Dollars in millions)
Balance, beginning of period
$
(19)
$
(8)
$
-
$
(27)
Credit losses on securities where credit
losses were not previously recorded
(1)
(13)
(6)
(2)
(21)
Increases in allowance on previously
impaired securities
(20)
-
-
(21)
Decreases in allowance on previously
impaired securities
-
-
-
-
Reduction in allowance due to disposals
6
8
-
14
Balance, end of period
$
(46)
$
(6)
$
(2)
$
(55)
(1) Credit losses recorded as of December
31, 2022 for fixed maturities – held
to maturity were $
(
2
)
million, $
(
6
)
million and $
(
1
)
million for corporate, asset-backed
and foreign corporate securities
(Some amounts may not reconcile due
to rounding.)
F-21
Roll Forward of Allowance for Credit Losses
Years Ended December 31, 2021
Asset
Corporate
Backed
Securities
Securities
Total
(Dollars in millions)
Balance, beginning of period
$
(1)
$
-
$
(2)
Credit losses on securities where credit
losses were not previously recorded
(21)
(5)
(26)
Increases in allowance on previously
impaired securities
(3)
(3)
(5)
Decreases in allowance on previously
impaired securities
-
-
-
Reduction in allowance due to disposals
6
-
6
Balance, end of period
$
(19)
$
(8)
$
(27)
(Some amounts may not reconcile due
to rounding.)
The proceeds
and split
between
gross
gains
and losses
from
sales
of fixed
maturity
securities
- available
for
sale
and equity securities, are presented in the table
below for the periods indicated:
Years Ended December 31,
(Dollars in millions)
2022
2021
2020
Proceeds from sales of fixed maturity securities - available for sale
$
2,645
$
961
$
631
Gross gains from dispositions
9
33
24
Gross losses from dispositions
(88)
(24)
(60)
Proceeds from sales of equity securities
$
2,203
$
862
$
375
Gross gains from dispositions
165
39
37
Gross losses from dispositions
(48)
(15)
(45)
Securities with a carrying value
amount of $
1.4
billion at December 31, 2022, were
on deposit with various state
or
governmental insurance departments
in compliance with insurance laws.
F-22
3.
RESERVES FOR LOSSES AND
LAE
The following
table
provides
a roll
forward
of the
Company’s
beginning and
ending reserve
for
losses
and LAE
is
summarized for the periods indicated:
At December 31,
(Dollars in millions)
2022
2021
2020
Gross reserves beginning of period
$
13,121
$
11,578
$
10,129
Less reinsurance recoverables on unpaid losses
(3,651)
(3,951)
(4,215)
Net reserves beginning of period
9,470
7,627
5,914
Incurred related to:
Current year
5,815
5,382
4,408
Prior years
8
5
200
Total incurred losses and LAE
5,823
5,387
4,608
Paid related to:
Current year
1,097
2,374
1,902
Prior years
2,867
1,127
1,018
Total paid losses and LAE
3,964
3,501
2,920
Foreign exchange/translation adjustment
(35)
(42)
24
Net reserves end of period
11,294
9,470
7,627
Plus reinsurance recoverables on unpaid losses
3,684
3,651
3,951
Gross reserves end of period
$
14,977
$
13,121
$
11,578
(Some amounts may not reconcile due
to rounding.)
Current year incurred
losses were $
5.8
billion, $
5.4
billion and $
4.4
billion for the years
ended December 31, 2022,
2021
and
2020,
respectively.
The
increase
in
current
year
incurred
losses
in
2022
compared
to
2021
primarily
related to
an increase
of $
44
million in
current year
catastrophe
losses and
an increase
of $
389
million in
current
year
attritional
losses.
The increase
in
current
year
attritional
losses
was
mainly
due
to
the
growth
in
premiums
earned
and
$
25
million
of losses
due
to
the
Russia/Ukraine
conflict.
The increase
in
current
year
incurred
losses
from
2020
to
2021
was
primarily
due
to
an
increase
of
$
532
million
in
current
year
catastrophe
losses
and
an
increase
of
$
442
million
in
current
year
attritional
losses
including
the
impact
of
a
change
in
the
Company’s
reinsurance program
with an affiliate
.
The increase
in current
year attritional
losses was mainly
due to
the growth
in premiums earned and the previously mentioned
$
155
million of losses related to COVID-19
in 2020.
The war
in the
Ukraine
is ongoing
and an
evolving
event.
Economic
and legal
sanctions
have
been levied
against
Russia, specific named individuals
and entities connected
to the Russian government,
as well as businesses
located
in the
Russian Federation
and/or owned
by Russian
nationals by
numerous countries,
including the
United States.
The
significant
political
and
economic
uncertainty
surrounding
the
war
and
associated
sanctions
have
impacted
economic
and
investment
markets
both
within
Russia
and
around
the
world.
The
Company
has
recorded
$
25
million of incurred
underwriting losses
related to
the Ukraine and
Russia conflict for
the year
ended December 31,
2022.
Incurred
prior
years’
reserves
increased
by
$
8
million,
$
5
million
and
$
200
million
in
2022,
2021
and
2020
respectively.
The
2022
prior
year
development
was
primarily
due
to
$
113
million
of
strengthening
of
asbestos
reserves
mitigated
primarily
by
reserve
releases
from
the
reinsurance
segment.
The
increase
for
2021
related
mainly to
increases in
insurance
casualty reserves.
The increase
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.
F-23
The
following
is
information
about
incurred
and
paid
claims
development
as
of
December
31,
2022,
net
of
reinsurance, as
well as cumulative
claim frequency and
the total
of incurred but
not reported liabilities
(IBNR) plus
expected
development
on
reported
claims
included
within
the
net
incurred
claims
amounts.
Each
of
the
Company’s financial
reporting segments has
been disaggregated
into casualty and
property business.
The casualty
and property segregation
results in groups
that have homogeneous
loss development
characteristics
and are large
enough to represent
credible trends.
Generally,
casualty claims take
longer to be reported
and settled, resulting in
longer
payout
patterns
and
increased
volatility.
Property
claims
on
the
other
hand,
tend
to
be
reported
and
settled quicker
and therefore
tend to exhibit
less volatility.
The property business
is more exposed
to catastrophe
losses, which
can result
in year
over year
fluctuations in
incurred claims
depending on
the frequency
and severity
of catastrophes claims in any
one accident year.
The
information
about
incurred
and
paid
claims
development
for
the
years
ended
December
31,
2013
to
December 31, 2021 is presented as supplementary
information.
The Cumulative Number
of Reported
Claims is shown
only for Insurance
Casualty as it
is impractical to
provide the
information
for
the
remaining
groups.
The reinsurance
groups
each
include
pro
rata
contracts
for
which
ceding
companies
provide
only
summary
information
via
a
bordereau.
This
summary
information
does
not
include
the
number
of reported
claims
underlying
the
paid and
reported
losses.
Therefore,
it
is
not possible
to
provide
this
information.
The Insurance Property group
includes Accident & Health insurance business.
This business is written
via a
master contract
and individual
claim counts
are not
provided.
This business
represents
a significant
enough
portion
of the
business
in
the Insurance
Property
group
so that
including
the number
of reported
claims
for
the
remaining business would distort any
analytics performed on the group.
The Cumulative
Number of
Reported
Claims shown
for the
Insurance
Casualty is
determined by
claim and
line of
business.
For example,
a claim event
with three claimants
in the same line
of business is
a single claim.
However,
a
claim
event
with
a
single
claimant
that
spans
two
lines
of
business
contributes
two
claims.
Cessions
under
affiliated quota share agreements
reduce net losses but do not impact claim counts.
The following tables
present the incurred
loss and ALAE and the
paid loss and ALAE, net of
reinsurance for
casualty
and property,
as well
as the
average
annual
percentage
payout
of incurred
claims by
age, net
of reinsurance
for
each of our disclosed lines of business.
Reinsurance – Casualty Business
At December 31, 2022
Total of
IBNR Liabilities
Ultimate Incurred Loss and Allocated Loss Adjustment Expenses, Net of reinsurance
Plus Expected
Years Ended December 31,
Development
Cumulative
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
on Reported
Number of
Accident
Year
(unaudited)
(unaudited)
(unaudited)
(unaudited)
(unaudited)
(unaudited)
(unaudited)
(unaudited)
(unaudited)
Claims
Reported
Claims
(Dollars in millions)
2013
$
176
$
222
$
220
$
226
$
215
$
215
$
215
$
215
$
215
$
215
-
N/A
2014
254
234
256
227
227
227
227
227
227
1
N/A
2015
208
249
236
236
236
236
236
236
5
N/A
2016
242
238
238
238
238
238
238
12
N/A
2017
198
203
203
203
203
203
23
N/A
2018
769
754
800
822
874
117
N/A
2019
971
1,019
1,020
1,035
363
N/A
2020
1,061
1,033
1,001
590
N/A
2021
1,345
1,338
899
N/A
2022
1,413
1,036
N/A
$
6,780
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:
F-24
Cumulative Paid Loss and Allocated Loss Adjustment Expenses, Net of Reinsurance
Years Ended December 31,
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
Accident Year
(unaudited)
(unaudited)
(unaudited)
(unaudited)
(unaudited)
(unaudited)
(unaudited)
(unaudited)
(unaudited)
(Dollars in millions)
2013
$
12
$
28
$
63
$
97
$
125
$
158
$
175
$
180
$
183
$
192
2014
15
34
76
106
143
173
182
186
208
2015
15
38
84
145
167
186
193
205
2016
17
53
87
143
159
185
206
2017
26
84
104
122
145
164
2018
119
194
300
402
466
2019
150
248
370
479
2020
137
227
329
2021
157
227
2022
116
$
2,592
All outstanding liabilities prior to 2013, net of reinsurance
204
Liabilities for claims and claim adjustment expenses, net of reinsurance
$
4,392
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
Contents
F-25
Reinsurance – Property Business
At December 31, 2022
Total of
IBNR Liabilities
Ultimate Incurred Loss and Allocated Loss Adjustment Expenses, Net of reinsurance
Plus Expected
Years Ended December 31,
Development
Cumulative
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
on Reported
Number of
Accident
Year
(unaudited)
(unaudited)
(unaudited)
(unaudited)
(unaudited)
(unaudited)
(unaudited)
(unaudited)
(unaudited)
Claims
Reported
Claims
(Dollars in millions)
2013
$
390
$
286
$
244
$
204
$
203
$
203
$
203
$
203
$
203
$
203
-
N/A
2014
588
508
385
356
357
357
357
357
357
-
N/A
2015
546
355
328
328
328
328
328
328
-
N/A
2016
625
647
647
643
642
642
642
1
N/A
2017
1,273
1,857
2,025
2,119
2,172
2,210
1
N/A
2018
2,222
2,111
2,101
2,049
2,019
4
N/A
2019
1,685
1,691
1,618
1,513
9
N/A
2020
1,862
1,905
1,845
82
N/A
2021
2,158
2,144
303
N/A
2022
2,563
1,448
N/A
$
13,824
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.)
Cumulative Paid Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance
Years Ended December 31,
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
Accident
Year
(unaudited)
(unaudited)
(unaudited)
(unaudited)
(unaudited)
(unaudited)
(unaudited)
(unaudited)
(unaudited)
(Dollars in millions)
2013
$
128
$
152
$
163
$
177
$
185
$
191
$
195
$
196
$
197
$
199
2014
151
234
289
318
333
336
339
342
349
2015
155
227
279
294
299
304
309
319
2016
231
489
584
591
596
600
611
2017
781
1,542
1,900
2,022
2,118
2,195
2018
477
1,367
1,672
1,819
1,876
2019
670
1,037
1,279
1,398
2020
536
1,118
1,432
2021
638
1,293
2022
564
$
10,237
All outstanding liabilities prior to 2013, net of reinsurance
28
Liabilities for claims and claim adjustment expenses, net of reinsurance
$
3,615
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.)
Average Annual Percentage Payout
of Incurred Loss by Age, Net of Reinsurance (unaudited)
Years
1
2
3
4
5
6
7
8
9
10
Property
31.3
%
32.8
%
15.7
%
6.2
%
3.3
%
2.5
%
1.5
%
1.5
%
1.6
%
0.9
%
F-26
Insurance – Casualty Business
At December 31, 2022
Total of
IBNR Liabilities
Ultimate Incurred Loss and Allocated Loss Adjustment Expenses, Net of reinsurance
Plus Expected
Years Ended December 31,
Development
Cumulative
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
on Reported
Number of
Accident
Year
(unaudited)
(unaudited)
(unaudited)
(unaudited)
(unaudited)
(unaudited)
(unaudited)
(unaudited)
(unaudited)
Claims
Reported
Claims
(Dollars in millions)
2013
$
256
$
228
$
230
$
224
$
194
$
194
$
195
$
195
$
195
$
195
1
21,078
2014
237
238
240
254
254
254
255
255
255
1
24,930
2015
258
258
277
277
277
265
265
269
3
26,455
2016
351
276
279
281
287
287
281
-
30,793
2017
304
237
237
237
236
232
-
34,648
2018
645
644
666
689
697
149
35,173
2019
768
755
794
813
168
39,110
2020
816
792
792
325
37,445
2021
1,112
1,112
595
42,574
2022
1,039
635
36,436
$
5,685
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.)
Cumulative Paid LossThe proceeds and Allocated Loss Adjustment Expenses, Netsplit between gross gains and losses from sales of Reinsurance
Years Ended December 31,
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
Accident
Year
(unaudited)
(unaudited)
(unaudited)
(unaudited)
(unaudited)
(unaudited)
(unaudited)
(unaudited)
(unaudited)
(Dollars in millions)
2013
$
17
$
69
$
102
$
130
$
150
$
167
$
183
$
189
$
193
$
194
2014
20
72
114
144
229
229
250
253
254
2015
20
68
117
199
244
259
263
266
2016
25
101
275
299
308
313
318
2017
23
151
157
216
233
239
2018
63
189
271
383
435
2019
11
216
350
489
2020
81
209
340
2021
201
339
2022
221
$
3,097
All outstanding liabilities prior to 2013, net of reinsurance
19
Liabilitiesfixed maturity securities - available for claimssale and claim adjustment expenses, net of reinsurance
$
2,607
(Some amounts may not reconcile due to rounding.)
Average Annual Percentage Payout
of Incurred Loss by Age, Net of Reinsurance (unaudited)
Years
1
2
3
4
5
6
7
8
9
10
Casualty
12.0
%
20.5
%
18.4
%
17.3
%
11.8
%
3.6
%
4.6
%
1.7
%
1.2
%
0.6
%
F-27
Insurance – Property Business
At December 31, 2022
Total of
IBNR Liabilities
Ultimate Incurred Loss and Allocated Loss Adjustment Expenses, Net of reinsurance
Plus Expected
Years Ended December 31,
Development
Cumulative
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
on Reported
Number of
Accident
Year
(unaudited)
(unaudited)
(unaudited)
(unaudited)
(unaudited)
(unaudited)
(unaudited)
(unaudited)
(unaudited)
Claims
Reported
Claims
(Dollars in millions)
2013
$
64
$
56
$
52
$
53
$
52
$
52
$
52
$
52
$
52
$
52
-
N/A
2014
67
70
67
66
66
66
66
66
66
-
N/A
2015
81
75
75
75
75
88
88
85
-
N/A
2016
142
169
164
163
158
158
165
-
N/A
2017
230
293
297
299
305
315
-
N/A
2018
376
372
377
377
383
-
N/A
2019
337
349
348
354
1
N/A
2020
509
509
503
14
N/A
2021
539
536
8
N/A
2022
699
242
N/A
$
3,158
(Some amounts may not reconcile due to rounding.)
Cumulative Paid Loss and Allocated Loss Adjustment Expenses, Net of Reinsurance
Years Ended December 31,
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
Accident
Year
(unaudited)
(unaudited)
(unaudited)
(unaudited)
(unaudited)
(unaudited)
(unaudited)
(unaudited)
(unaudited)
(Dollars in millions)
2013
$
35
$
54
$
52
$
53
$
52
$
52
$
52
$
52
$
52
$
52
2014
40
66
66
66
66
66
66
66
66
2015
45
70
75
75
75
76
76
76
2016
72
152
168
163
162
164
165
2017
161
293
282
296
312
315
2018
236
342
368
377
383
2019
218
336
350
353
2020
263
366
386
2021
360
506
2022
383
$
2,685
All outstanding liabilities prior to 2013, net of reinsurance
-
Liabilities for claims and claim adjustment expenses, net of reinsurance
$
473
(Some amounts may not reconcile due to rounding.)
Average Annual Percentage Payout
of Incurred Loss by Age, Net of Reinsurance (unaudited)
Years
1
2
3
4
5
6
7
8
9
10
Property
57.4
%
34.0
%
3.5
%
1.5
%
1.9
%
0.9
%
0.2
%
0.4
%
0.1
%
0.1
%
F-28
Reconciliation of
the Disclosure
of Incurred
and Paid
Claims Development
to the
Liability for
Unpaid Claims
and
Claim Adjustment Expenses
The
reconciliation
of
the
net
incurred
and
paid
claims
development
tables
to
the
liability
for
claims
and
claim
adjustment expensesequity securities, are presented in the consolidated
statement of financial position is as follows.
At December 31,
2022
(Dollars in millions)
Net outstanding liabilities
Reinsurance Casualty
$
4,392
Reinsurance Property
3,615
Insurance Casualty
2,607
Insurance Property
473
Liabilities for unpaid claims and claim adjustment expenses, net of reinsurance
11,087
Reinsurance recoverable on unpaid claims
Reinsurance Casualty
980
Reinsurance Property
908
Insurance Casualty
1,626
Insurance Property
169
Total reinsurance recoverable
on unpaid claims
3,684
Unallocated claims adjustment expenses
175
Other
32
207
Total gross liability for unpaid claims and claim adjustment expense
$
14,977
(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.
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.
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.
F-29
The detailed
data required
to evaluate
ultimate losses
for the
Company’s
insurance business
is accumulated
from
its
underwriting
and
claim
systems.
Reserving
for
reinsurance
requires
evaluation
of
loss
information
received
from ceding companies.
Ceding companies report losses
in many forms depending
on the type of contract
and the
agreed
or
contractual
reporting
requirements.
Generally,
pro
rata
contracts
require
the
submission
of
a
monthly/quarterly
account,
which includes
premium and
loss
activity for
the period
with corresponding
reserves
as established
by the
ceding company.
This information
is recorded
into the
Company’s
records.
For certain
pro
rata contracts,
the Company may
require a detailed
loss report
for claims that
exceed a
certain dollar threshold
or
relate to a particular type of loss.
Excess of loss and facultative
contracts generally require
individual loss reporting
with precautionary
notices provided
when a
loss reaches
a significant
percentage
of the
attachment
point of
the
contract
or when
certain
causes
of loss
or types
of injury
occur.
Experienced claims
staff
handles
individual
loss
reports and
supporting claim
information.
Based on
evaluation
of a
claim, the
Company may
establish additional
case reserves
in addition
to the
case reserves
reported by
the ceding
company.
To
ensure ceding
companies are
submitting required
and accurate
data, Everest’s
Underwriting, Claim, Reinsurance
Accounting, and
Internal Audit
Departments perform
various reviews
of ceding companies,
particularly larger
ceding companies,
including on-site
audits 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.
F-30
Although the Company
uses similar actuarial
methods for
both short
tail and long
tail lines, the
faster reporting
of
experience for the short tail lines allows
the Company to have greater
confidence in its estimates of ultimate
losses
for short
tail lines
at an
earlier stage
than for
long tail
lines.
As a
result, the
Company
utilizes, as
well, exposure-
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.
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 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
F-31
At December 31,
(Dollars in millions)
2022
2021
2020
Gross basis:
(32)
(36)
(24)
EndSecurities with a carrying value amount of period reserves
$
210
$
128
$
167
Reinsurance Recoverables.
Reinsurance recoverables
for both
paid and unpaid
losses totaled $
3.8
billion and $
3.9
$1.4 billion at December
31, 2022 and
2021, respectively.
At December 31,
2022, $2023, were on deposit with or regulated by various state or governmental insurance departments in compliance with insurance laws. See Note 10.
1.9
billion, or
51.0
%, was receivable
from Everest
Reinsurance
(Bermuda), Ltd.
(“Bermuda Re”),
an affiliated
entity,
and is
fully collateralized
by a
trust
agreement
and
$
378
million,
or
10.0
%,
was
receivable
from
Mt.
Logan
Re
Ltd.
(Bermuda)
(“Mt.
Logan
Re”)
collateralized
segregated
accounts.
No
other
retrocessionaire
accounted
for
more
than
5
%
of
reinsurance
receivables.
4.
3.FAIR VALUE
GAAP guidance
regarding
fair value
measurements
address how
companies should
measure
fair value
when they
are required to use fair value
measures for recognition or disclosure
purposes under GAAP and provides a common
definition of fair value
to be used throughout
GAAP.
It defines fair value
as the price that would
be received to sell
an asset or
paid to transfer
a liability in
an orderly fashion
between market
participants at
the measurement date.
In
addition,
it
establishes
a
three-level
valuation
hierarchy
for
the
disclosure
of
fair
value
measurements.
The
valuation hierarchy
for the disclosure of fair value measurements. The valuation hierarchy is based on
the transparency
of inputs to
the valuation
of an asset
or liability.
The level in
the
hierarchy
within which
a given
fair value
measurement
falls is
determined based
on the
lowest level
input that
is
significant to the measurement,
with Level 1 being the highest priority and Level 3 being the lowest
priority.
The levels in the hierarchy
are defined as follows:
Level 1:
Inputs
to
the
valuation
methodology
are
observable
inputs
that
reflect
unadjusted
quoted
prices
for
identical assets or liabilities in an active market;
Level 2:
Inputs
to
the
valuation
methodology
include
quoted
prices
for
similar
assets
and
liabilities
in
active
markets,
and
inputs
that
are
observable
for
the
asset
or
liability,
either
directly
or
indirectly,
for
substantially the full term of the financial instrument;
Level 3:
Inputs to the valuation methodology are
unobservable and significant to the fair va
luevalue measurement.
The
Company’s
fixed
maturity
and
equity
securities
are
primarily
managed
both internally and on an external basis by
third
party
independent, professional investment
asset
managers.
managers using portfolio guidelines approved by the Company. The
investment
asset
managers
managing
publicly
traded
securities
obtain
Company obtains prices
from
nationally
recognized
pricing
services.
These
services
seek
to
utilize
market
data
and
observations
in
their
evaluation
process.
They 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.
F-32
The investment
asset managers
doCompany does not make
any changes to
prices received from
either the pricing
services or services. In addition, the
investment
brokers.
In
addition,
Company has procedures in place to review 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.
assumptions
about
future
cash
flows
and
risk-adjusted
discount
rates
to
determine
fair
value.
At
December
31,
2022,
$
1.7
billion
of
fixed
maturities
were
fair
valued
using
unobservable
inputs.
The
majority
of
these
fixed
maturities
were
valued
by
investment
managers’
valuation
committees
and
many
of
these
fair
values
were
substantiated
by
valuations
from
independent
third
parties.
The
Company
has
procedures
in
place
to
evaluate
these independent
third
party valuations.
At
December 31, 2021,
$
2.0
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
internally
manages
a
public
equity
portfolio
which
had
a
fair
value
at
December
31,
2022
and
has procedures in place to evaluate these independent third party valuations. At December 31,
2021
of
$
97
million
and
$
1.3
billion,
respectively.
The
Company
internally
manages
a
portfolio
of
collateralized
loan obligations
included in
asset-backed
securities available
for sale,
which had
a fair
value of
$
2.6
2022, $1.7 billion at
December 31,
2022 and
$
2.0
billion at
December 31,
2021. All
prices for
these securities
of fixed maturities were obtained
from publicly published sources or nationally
recognized pricing vendors.
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
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
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
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
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
.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;
F-33
●
•Obligations
of U.S.
states
and political
subdivisions are
comprised of
state
and municipal
bond issuances
and
the fair values
are based
on observable
market inputs
such as quoted
market prices,
quoted prices
for similar
securities, benchmark yields and credit spreads;
●
•Corporate
securities
are
primarily
comprised
of U.S.
corporate
and
public utility
bond
issuances
and the
fair
values
are
based
on
observable
market
inputs
such
as
quoted
market
prices,
quoted
prices
for
similar
securities, benchmark yields and credit spreads;
●
•Asset-backed
and
mortgage-backed
securities
fair
values
are
based
on
observable
inputs
such
as
quoted
prices,
reported
trades,
quoted
prices
for
similar
issuances
or
benchmark
yields and
cash
flow models
using
observable inputs such as prepayment speeds,
collateral performance and default
spreads;
●
•Foreign government
securities are
comprised of
global non-U.S.
sovereign
bond issuances
and the
fair values
are based
on observable
market inputs
such as
quoted market
prices, quoted
prices for
similar securities
and
models
with
observable
inputs
such
as
benchmark
yields
and
credit
spreads
and
then,
where
applicable,
converted to U.S. dollars
using an exchange rate
from a nationally recognized
source;
●
Foreign corporate
securities are comprised of
global non-U.S. corporate
sovereign bond issuances and the fair
values are
based
on
observable
market
inputs
such
as
quoted
market
prices,
quoted
prices
for
similar
securities
and
models
with
observable
inputs
such
as
benchmark
yields
and
credit
spreads
and
then,
where
applicable,
converted to U.S. dollars
using an exchange rate
from a nationally recognized source;
•Foreign corporate securities are comprised of global non-U.S. corporate bond issuances and the fair values are based on observable market inputs such as quoted market prices, quoted prices for similar securities and models with observable inputs such as benchmark yields and credit spreads and then, where applicable, converted to U.S. dollars using an exchange rate from a nationally recognized source.
Other
invested
assets,
at
fair
value,
were
categorized
as
Level
3
at
December
31,
2022
and
December 31,
2021,
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
%
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
% 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
F-34
The following
table presents
the fair
value measurement
levels for
all assets,
which the
Company has
recorded at
fair value as of the period indicated:
Fair Value Measurement Using:
Quoted Prices
in Active
Significant
Markets for
Other
Significant
Identical
Observable
Unobservable
December 31,
Assets
Inputs
Inputs
(Dollars in millions)
2022
(Level 1)
(Level 2)
(Level 3)
Assets:
Fixed maturities, available for sale
U.S. Treasury securities and obligations of
U.S. government agencies and corporations
$
535
$
-
$
535
$
-
Obligations of U.S. states and political subdivisions
413
-
413
-
Corporate securities
3,561
-
2,846
715
Asset-backed securities
3,951
-
2,957
994
Mortgage-backed securities
Commercial
509
-
509
-
Agency residential
1,628
-
1,628
-
Non-agency residential
3
-
3
-
Foreign government securities
637
-
637
-
Foreign corporate securities
1,433
-
1,417
16
Total
fixed maturities, available for sale
12,671
-
10,946
1,725
Equity securities, fair value
194
132
63
-
Other invested assets, fair value
1,472
-
-
1,472
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.)
F-35
Fair Value Measurement Using:
Quoted Prices
in Active
Significant
Markets for
Other
Significant
Identical
Observable
Unobservable
December 31,
Assets
Inputs
Inputs
(Dollars in millions)
2021
(Level 1)
(Level 2)
(Level 3)
Assets:
Fixed maturities, available for sale
U.S. Treasury securities and obligations of
U.S. government agencies and corporations
$
663
$
-
$
663
$
-
Obligations of U.S. states and political subdivisions
587
-
587
-
Corporate securities
4,075
-
3,345
730
Asset-backed securities
3,466
-
2,215
1,251
Mortgage-backed securities
Commercial
603
-
603
-
Agency residential
1,261
-
1,261
-
Non-agency residential
4
-
4
-
Foreign government securities
692
-
692
-
Foreign corporate securities
1,510
-
1,494
16
Total
fixed maturities, available for sale
12,860
-
10,863
1,997
Equity securities, fair value
1,758
1,722
36
-
Other invested assets, fair value
2,031
-
-
2,031
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
Contents
F-36
The
following
table
presents
the
activity
under
Level
3,
fair
value
measurements
using
significant
unobservable
inputs for fixed maturities - available
for sale, for the periods indicated:
Total Fixed Maturities,
Available for Sale
December 31, 2022
December 31, 2021
Corporate
Asset-Backed
Foreign
Corporate
Asset-Backed
Foreign
(Dollars in millions)
Securities
Securities
CMBS
Corporate
Total
Securities
Securities
Corporate
Total
Beginning balance fixed maturities
$
730
$
1,251
$
-
$
16
$
1,997
$
631
$
623
$
6
$
1,260
Total gains or (losses) (realized/unrealized)
Included in earnings
(24)
-
-
-
(24)
(12)
(6)
-
(18)
Included in other comprehensive income (loss)
3
(35)
-
(4)
(36)
4
(7)
-
(2)
Purchases, issuances and settlements
40
513
6
8
567
107
641
10
758
Transfers in (out) of Level
3 and
reclassification of securities in/(out)
investment categories
(35)
(735)
(6)
(4)
(779)
-
-
-
-
Ending balance
$
715
$
994
$
-
$
16
$
1,725
$
730
$
1,251
$
16
$
1,997
The amount of total gains or losses for the
period included in earnings (or changes in
net assets) attributable to the change in
unrealized gains or losses relating to
assets still held at the reporting date
$
(23)
$
8
$
-
$
-
$
(15)
$
(16)
$
(8)
$
-
$
(24)
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
$779 million
shown
as
transfers
in/(out)
of
Level
3
and
reclassification
of
securities
in/(out)
of
investment
categories
for the
year ended
December 31,
2022 relate
related mainly to
previously designated
Level
3
securities
that
the
Company
has
had reclassified
from
“fixed
“fixed maturities
–
- available
for
sale”
to
“fixed
“fixed maturities
–
- held
to
maturity”
during
2022.
As
“fixed
“fixed maturities
–
- held
to
maturity"
are
carried
at
amortized
cost,
net
of
credit
allowances
rather
than
at
fair
value
as
“fixed
“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.
There were
no
transfers of assets
in/(out) Level 3 during 2021.
Financial Instruments Disclosed, But Not Reported,
at Fair Value
Certain financial
instruments
disclosed, but
not reported,
at fair
value are
excluded
from the
fair value
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, 5
and 6,
respectively.
Fair values
of long-term
notes receivable
from affiliates
can be found
within Note
16. Short-term
investments
are stated
at cost,
which approximates
fair value.
See Note
1.
F-37
5.
SENIOR NOTES
The table below
displays Holdings’
outstanding senior
notes.
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.
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.
December 31, 2021
Consolidated
Consolidated
Principal
Balance Sheet
Fair
Balance Sheet
Fair
(Dollars in millions)
Date Issued
Date Due
Amounts
Amount
Value
Amount
Value
4.868
% Senior notes
06/05/2014
06/01/2044
400
$
397
$
343
$
397
$
504
3.5
% Senior notes
10/07/2020
10/15/2050
1,000
981
677
980
1,055
3.125
% Senior notes
10/04/2021
10/15/2052
1,000
969
627
969
983
2,400
$
2,347
$
1,647
$
2,346
$
2,542
F-24
Interest expense incurred inTable of Contents
4.RESERVES FOR LOSSES AND LAE
connection with these senior notes
The following table provides a roll forward of the Company’s beginning and ending reserves for losses and LAE and is as follows
summarized for the periods indicated:
Years Ended December 31,
(Dollars in millions)
Interest Paid
Payable Dates
2022
2021
2020
4.868
% Senior notes
semi-annually
June 1/December 1
$
19
$
19
$
19
3.5
% Senior notes
semi-annually
April 15/October 15
35
35
8
3.125
% Senior notes
semi-annually
April 15/October 15
32
8
-
$
86
$
62
$
28
6.
LONG-TERM 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, 2022
December 31, 2021
Original
Consolidated
Consolidated
Principal
Maturity Date
Balance
Fair
Balance
Fair
(Dollars in millions)
Date Issued
Amount
Scheduled
Final
Sheet Amount
Value
Sheet Amount
Value
Long-term subordinated notes
04/26/2007
$
400
05/15/2037
05/01/2067
$
218
$
187
$
224
$
216
During the
fixed
rate
interest
period from
May 3, 2007
through
May 14, 2017
, interest
was
at
the annual
rate
of
6.6
%, payable
semi-annually
in arrears
on November 15
and May
15 of
each year,
commencing on
November 15,
2007
.
During the 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, 202
2
to
February 14, 2023 is
6.99
%.
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
F-38
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.
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)
2022
2021
2020
Interest expense incurred
$
9
$
6
$
8
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,
2022, Everest
Re had
admitted
assets
of
approximately $
22.4
billion which provides
borrowing capacity of up
to approximately
$
2.2
billion. As of December
31, 2022,
Everest
Re has
$
519
million of
borrowings
outstanding,
which will
all mature
in 2023.
Everest
incurred
interest
expense of
$
4
million and
$
1
million for
the years
ended December
31, 2022
and 2021,
respectively.
The
FHLBNY membership
agreement requires
that
4.5
% of borrowed
funds be
used to
acquire additional
membership
stock.
8.
COLLATERALIZED REINSURANCE
AND TRUST AGREEMENTS
A
subsidiary
of the
Company,
Everest
Re,
has
established
a
trust
agreement,
which
effectively
uses
Everest
Re’s
investments as
collateral, as security
for assumed losses
payable to
non-affiliated ceding
companies.
At December
31,
2022,
the
total
amount
on
deposit
in
the
trust
account
was
$
705
million
which
includes
$
21
million
of
restricted
cash.
At
December
31, 2021,
the total
amount
on deposit
in the
trust
account
was
$
592
million
which
includes $
87
million of restricted cash.
F-39
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)
Class
Description
Effective Date
Expiration Date
Limit
Coverage
Basis
Series 2018-1 Class A-2
US, Canada, Puerto Rico – Named Storm and Earthquake Events
4/30/2018
5/5/2023
$
63
Aggregate
Series 2018-1 Class B-2
US, Canada, Puerto Rico – Named Storm and Earthquake Events
4/30/2018
5/5/2023
200
Aggregate
Series 2019-1 Class A-1
US, Canada, Puerto Rico – Named Storm and Earthquake Events
12/12/2019
12/19/2023
150
Occurrence
Series 2019-1 Class B-1
US, Canada, Puerto Rico – Named Storm and Earthquake Events
12/12/2019
12/19/2023
275
Aggregate
Series 2019-1 Class A-2
US, Canada, Puerto Rico – Named Storm and Earthquake Events
12/12/2019
12/19/2024
150
Occurrence
Series 2019-1 Class B-2
US, Canada, Puerto Rico – Named Storm and Earthquake Events
12/12/2019
12/19/2024
275
Aggregate
Series 2021-1 Class A-1
US, Canada, Puerto Rico – Named Storm and Earthquake Events
4/8/2021
4/21/2025
150
Occurrence
Series 2021-1 Class B-1
US, Canada, Puerto Rico – Named Storm and Earthquake Events
4/8/2021
4/21/2025
85
Aggregate
Series 2021-1 Class C-1
US, Canada, Puerto Rico – Named Storm and Earthquake Events
4/8/2021
4/21/2025
85
Aggregate
Series 2021-1 Class A-2
US, Canada, Puerto Rico – Named Storm and Earthquake Events
4/8/2021
4/20/2026
150
Occurrence
Series 2021-1 Class B-2
US, Canada, Puerto Rico – Named Storm and Earthquake Events
4/8/2021
4/20/2026
90
Aggregate
Series 2021-1 Class C-2
US, Canada, Puerto Rico – Named Storm and Earthquake Events
4/8/2021
4/20/2026
90
Aggregate
Series 2022-1 Class A
US, Canada, Puerto Rico – Named Storm and Earthquake Events
6/22/2022
6/25/2025
300
Aggregate
Total available
limit as of December 31, 2022
$
2,063
Recoveries
under
these
collateralized
reinsurance
agreements
with
Kilimanjaro
are
primarily
dependent
on
estimated industry
level insured losses
from covered events,
as well as, the geographic
location of the events.
The
estimated
industry
level
of
insured
losses
is
obtained
from
published
estimates
by
an
independent
recognized
authority
on
insured
property
losses.
Currently,
none
of
the
published
insured
loss
estimates
for
catastrophe
events during the applicable
covered periods of
the various agreements
have exceeded
the single event retentions
or aggregate retentions
under the terms of the agreements that
would result in a recovery.
Kilimanjaro has
financed the
various
property catastrophe
reinsurance
coverages
by issuing
catastrophe
bonds to
unrelated,
external
investors.
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-40
(Dollars in millions)
Note Series
Issue Date
Maturity Date
Amount
Series 2018-1 Class A-2
4/30/2018
5/5/2023
$
63
Series 2018-1 Class B-2
4/30/2018
5/5/2023
200
Series 2019-1 Class A-1
12/12/2019
12/19/2023
150
Series 2019-1 Class B-1
12/12/2019
12/19/2023
275
Series 2019-1 Class A-2
12/12/2019
12/19/2024
150
Series 2019-1 Class B-2
12/12/2019
12/19/2024
275
Series 2021-1 Class A-1
4/8/2021
4/21/2025
150
Series 2021-1 Class B-1
4/8/2021
4/21/2025
85
Series 2021-1 Class C-1
4/8/2021
4/21/2025
85
Series 2021-1 Class A-2
4/8/2021
4/20/2026
150
Series 2021-1 Class B-2
4/8/2021
4/20/2026
90
Series 2021-1 Class C-2
4/8/2021
4/20/2026
90
Series 2022-1 Class A
6/22/2022
6/25/2025
300
$
2,063
9.
LEASES
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)
2022
2021
Lease expense incurred:
Operating lease cost
$
25
$
24
At December 31,
(Dollars in millions)
2022
2021
Operating lease right of use assets
$
121
$
131
Operating lease liabilities
139
150
Year Ended
December 31,
(Dollars in millions)
2022
2021
Operating cash flows from operating leases
$
(18)
$
(16)
F-41
At December 31,
2022
2021
Weighted average remaining operating lease term
11.1
years
11.8
years
Weighted average discount rate on operating leases
4.00
%
4.00
%
Maturities of the existing lease liabilities are expected
to occur as follows:
(Dollars in millions)
2023
$
19
2024
19
2025
16
2026
14
2027
14
Thereafter
90
Undiscounted lease payments
172
Less:
present value adjustment
32
Total operating lease liability
$
139
10.
INCOME TAXES
All of
the income
of 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
$
33
million and
obtain federal
income tax
cash refunds of $
183
million including interest in 2020.
On August 16, 2022, the Inflation Reduction
Act of 2022 (“IRA”) was enacted. We
have evaluated
the tax provisions
of
the
IRA,
the
most
significant
of
which
are
the
corporate
alternative
minimum
tax
and
the
share
repurchase
excise tax and do not expect
the legislation to have a material
impact on our results of operations. As the
IRS issues
additional guidance, we will evaluate any
impact to our consolidated financial statements.
The significant components of the provision
are as follows for the periods indicated:
Years Ended December 31,
(Dollars in millions)
2022
2021
2020
Current tax expense (benefit):
U.S.
$
95
$
102
$
(106)
Foreign
-
-
-
Total current tax expense (benefit)
95
102
(106)
Total deferred U.S.
tax expense (benefit)
(207)
90
138
Total income tax expense (benefit)
$
(112)
$
192
$
32
F-42
A reconciliation of the total income tax
provision using the statutory
U.S. Federal Income tax
rate to the Company’s
total income tax provision
is as follows for the periods indicated:
Years Ended December 31,
(Dollars in millions)
2022
2021
2020
Expected income tax provision at the U.S. statutory tax rate
$
(117)
$
208
$
81
Increase (decrease) in taxes resulting from:
Tax exempt income
(4)
(4)
(4)
Dividend received deduction
(3)
(1)
(1)
Proration
1
1
1
Creditable foreign premium tax
(11)
(13)
(12)
Reserve adjustment
(19)
-
-
U.S. BEAT tax
22
-
-
Share based compensation
(3)
(2)
(3)
Impact of CARES Act
-
-
(33)
Prior year true up
16
-
(4)
Other
6
3
7
Total income tax provision
$
(112)
$
192
$
32
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 for the years ended December 31, 2023, 2022 and 2021, respectively. 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 changes in the mix of business. The increase in current year incurred losses in 2022 compared to 2021 primarily related to an increase of $44 million in current year catastrophe losses and an increase of $389 million in current year attritional losses. The increase in current year attritional losses was mainly due to the growth in premiums earned and $25 million of losses due to the Russia/Ukraine conflict.
The 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 mortgage and short-tail lines of business, which 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 prior year development also includes $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. Additionally, there was $22 million of favorable development on prior year catastrophe losses. The 2022 prior year development was primarily due to $113 million of strengthening of asbestos reserves mitigated primarily by reserve releases from the reinsurance segment. The increase for 2021 related mainly to increases in insurance casualty reserves.
The following is information about incurred and paid claims development as of December 31, 2023, net of reinsurance, as well as cumulative claim frequency and the total of incurred but not reported liabilities (IBNR) plus expected
AtF-25
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 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, 2014 to December 31, 2022 2021is presented as supplementary information.
The Cumulative Number of Reported Claims is shown only for Insurance Casualty as it is impractical 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 2020,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 Company
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.
had
no
uncertain tax positions.
The Company’s
2014 through 2018
U.S. tax
years are
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 audit byaffiliated quota share agreements reduce net losses but do not impact claim counts.
Reconciliation of the Internal Revenue
Service (“IRS”). To
date,Disclosure of Incurred and Paid Claims Development to the Liability for Unpaid Claims and Claim Adjustment Expenses
the
Company
has
received
a
significant
number
The reconciliation of
Information
Document
Requests.
However,
the
IRS
has
not
issued
any
Notice
of
Proposed
Adjustments
for
these
tax
years.
The
Company
had
filed
amended
tax
returns
requesting refunds for 2015 and
2016 for $
2
million and $
5
million respectively.
Tax years
2019, 2020, and 2021 are open for examination
by the IRS.
F-43
Deferred
income
taxes
reflect
the
tax
effect
of
the
temporary
differences
between
the
value
of
assets
and
liabilities
for
financial
statement
purposes
and
such
values
as
measured
by
U.S.
tax
laws
and
regulations.
The
principal items making up the net deferred
income tax assets/(liabilities) are as
followsincurred and paid claims development tables to the liability for claims and claim adjustment expenses in the periods indicated:
consolidated statement of financial position is as follows.
At December 31,
(Dollars in millions)
2022
2021
Deferred tax assets:
Net unrealized investment losses
$
200
$
-
Loss reserves
154
130
Unearned premium reserve
114
108
Lease Liability
29
31
Unrealized foreign currency losses
24
4
Investment impairments
12
6
Net unrecognized losses on benefit plans
9
13
Equity compensation
7
7
Foreign tax credits
3
22
Other assets
12
12
Total deferred tax assets
564
333
Deferred tax liabilities:
Net fair value income
141
349
Deferred acquisition costs
105
99
Partnership Investments
56
57
Right of use asset
25
27
Depreciation
16
4
Bond market discount
5
3
Net unrealized investment gains
-
35
Other liabilities
6
5
Total deferred tax liabilities
354
579
Net deferred tax assets/(liabilities)
$
210
$
(246)
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
At
December
31,
2022,
and
2021, the
Company
had
$
3
million
and
$
29
million
respectively
Table of foreign
tax
credit
The tax
benefits related
tofollowing tables present the
payment incurred loss and ALAE and the paid loss and ALAE, net of
dividends on
restricted stock
have been
recorded
reinsurance for casualty and property, as part
well as the average annual percentage payout of additionalincurred claims by age, net of reinsurance for each of our disclosed lines of business.
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
2022,
2021 and 2020, 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 3 and Note 8.
Balances
are
considered
past
due
when
amounts
that
have
been
billed
are
not
collected
within
contractually
stipulated time periods,
generally 30, 60 or
90 days.
To
manage reinsurer credit
risk, a reinsurance
security review
committee
evaluates
the
credit
standing,
financial
performance,
management
and
operational
quality
of
each
potential
reinsurer.
In placing
reinsurance,
the Company
considers
the nature
of the
risk reinsured,
including the
expected liability payout duration,
and establishes limits tiered by reinsurer
credit rating.
Where its contracts
permit, the Company
secures future claim
obligations with
various forms
of collateral
or other
credit
enhancement,
including
irrevocable
letters
of
credit,
secured
trusts,
funds
held
accounts
and
group
wide
offsets.
See Note 1C for discussion of allowance on reinsurance
recoverables.
Insurance companies, including
reinsurers, are
regulated and hold
risk-based capital
to mitigate the risk
of loss due
to
economic
factors
and
other
risks.
Non-U.S.
reinsurers
are
either
subject
to
a
capital
regime
substantively
equivalent
to domestic
insurers
or we
hold collateral
to support
collection of
reinsurance
receivable.
As a
result,
there is limited history of losses from insurer
defaults.
F-45
Premiums
written
and
earned
and
incurred
losses
and
LAE
are
comprised
of
the
following
for
the
periods
indicated:
Years Ended December 31,
(Dollars in millions)
2022
2021
2020
Written premiums:
Direct
$
3,701
$
3,300
$
2,698
Assumed
5,975
6,031
5,259
Ceded
(1,645)
(1,612)
(1,318)
Net written premiums
$
8,032
$
7,719
$
6,639
Premiums earned:
Direct
$
3,544
$
2,982
$
2,592
Assumed
5,945
5,741
5,183
Ceded
(1,613)
(1,544)
(1,368)
Net premiums earned
$
7,876
$
7,179
$
6,407
Incurred losses and LAE:
Direct
$
2,423
$
2,043
$
1,785
Assumed
4,107
3,872
3,576
Ceded
(708)
(528)
(753)
Net incurred losses and LAE
$
5,823
$
5,387
$
4,608
The Company
has engaged
in reinsurance
transactions
with Bermuda
Re,
Everest
Reinsurance
Company
(Ireland)
dac
(“Ireland
Re”),
Everest
Insurance
(Ireland)
dac
(“Ireland
Insurance”),
Everest
International
Reinsurance
Ltd.
(“Everest
International”),
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)
Single
Percent
Assuming
Occurrence
Aggregate
Coverage Period
Ceding Company
Ceded
Company
Type of Business
Limit
Limit
01/01/2010-12/31/2010
Everest Re
44.0
%
Bermuda Re
Property / - Casualty Business
150
325
01/01/2011-12/31/2011
Everest Re
50.0
%
Bermuda Re
Property / Casualty Business
150
300
01/01/2012-12/31/2014
Everest Re
50.0
%
Bermuda Re
Property / Casualty Business
100
200
01/01/2015-12/31/2016
Everest Re
50.0
%
Bermuda Re
Property / Casualty Business
163
325
01/01/2017-12/31/2017
Everest Re
60.0
%
Bermuda Re
Property / Casualty Business
219
438
01/01/2010-12/31/2010
Everest Re- Canadian Branch
60.0
%
Bermuda Re
Property Business
350
(1)
-
01/01/2011-12/31/2011
Everest Re- Canadian Branch
60.0
%
Bermuda Re
Property Business
350
(1)
-
01/01/2012-12/31/2012
Everest Re- Canadian Branch
75.0
%
Bermuda Re
Property / Casualty Business
206
(1)
413
(1)
01/01/2013-12/31/2013
Everest Re- Canadian Branch
75.0
%
Bermuda Re
Property / Casualty Business
150
(1)
413
(1)
01/01/2014-12/31/2017
Everest Re- Canadian Branch
75.0
%
Bermuda Re
Property / Casualty Business
263
(1)
413
(1)
01/01/2012-12/31/2017
Everest Canada
80.0
%
Everest Re- Canadian
Branch
Property Business
-
-
01/01/2020
Everest International Assurance
100.0
%
Bermuda Re
Life Business
-
-
(1) Amounts shown are Canadian dollars.
Effective
January 1, 2018,
Everest
Re entered
into a
twelve
month whole
account aggregate
stop loss
reinsurance
contract
(“stop
loss agreement”)
with Bermuda
Re.
The stop
loss agreement
provides
coverage
for
ultimate
net
losses
on
applicable
net
earned
premiums
above
a
retention
level,
subject
to
certain
other
coverage
limits
and
conditions. The stop loss agreement
was most recently renewed
effective January 1, 2022.
Everest
Re entered
into a
catastrophe
excess of
loss reinsurance
contract
with Bermuda
Re (UK
Branch), effective
January
1,
2021
through
December
31,
2021.
The
contract
provides
Bermuda
Re
(UK
Branch),
with
up
to
£
100
F-46
million
of
reinsurance
coverage
for
each
catastrophe
occurrence
above
£
40
million.
This
agreement
was
most
recently renewed effective
January 1, 2022.
Everest
Re
entered
into
a
catastrophe
excess
of
loss
reinsurance
contract
with
Ireland
Re,
effective
February
1,
2021 through
January 31,
2022. The
contract
provides Ireland
Re with
up to
€
145
million of
reinsurance
coverage
for each
catastrophe
occurrence above
€
16
million. This
agreement was
most recently
renewed effective
January
1, 2022.
The
table
below
represents
loss
portfolio
transfer
(“LPT”)
reinsurance
agreements
whereby
net
insurance
exposures and reserves were
transferred to an
affiliate.
(Dollars in millions)
Effective
Transferring
Assuming
% of Business or
Covered Period
Date
Company
Company
Amount of Transfer
of Transfer
10/01/2001
Everest Re (Belgium Branch)
Bermuda Re
100
%
All years
10/01/2008
Everest Re
Bermuda Re
$
747
01/01/2002-12/31/2007
12/31/2017
Everest Re
Bermuda Re
$
970
All years
On December 31, 2017,
the Company
entered into
a LPT agreement
with Bermuda Re.
The LPT agreement
covers
subject
loss
reserves
of
$
2.3
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
million of loss reserves
to
Bermuda
Re.
As
part
of
the
LPT
agreement,
Bermuda
Re
will
provide
an
additional
$
500
million
of
adverse
development
coverage
on
the
subject
loss
reserves.
As
of
December
31,
2022,
and
December
31,
2021,
the
Company
has
a
reinsurance
recoverable
of
$
804
million
and
$
856
million,
respectively,
recorded
on
its
balance
sheet due from Bermuda Re.
The
following
tables
summarize
the
significant
premiums
and
losses
ceded
and
assumed
by
the
Company
in
transactions with affiliated entities
for the periods indicated:
Bermuda Re
Years Ended December 31,
(Dollars in millions)
2022
2021
2020
Ceded written premiums
$
372
$
303
$
133
Ceded earned premiums
371
300
132
Ceded losses and LAE
(16)
(59)
110
Assumed written premiums
3
5
-
Assumed earned premiums
5
4
-
Ireland Re
Years Ended December 31,
(Dollars in millions)
2022
2021
2020
Assumed written premiums
$
10
$
16
$
-
Assumed earned premiums
10
15
-
Assumed losses and LAE
23
64
-
F-47
Ireland Insurance
Years Ended December 31,
(Dollars in millions)
2022
2021
2020
Assumed written premiums
$
9
$
9
$
5
Assumed earned premiums
8
6
4
Assumed losses and LAE
5
3
2
In
2013,
Group
established
Mt.
Logan
Re,
which
is
a
Class
3
insurer
based
in
Bermuda.
Mt.
Logan
Re
then
established
separate
segregated
accounts
for its
business activity,
which invest
in a
diversified set
of catastrophe
exposures.
The
following
table
summarizes
the
premiums
and
losses
that
are
ceded
by
the
Company
to
Mt.
Logan
Re
segregated accounts and
assumed by the Company from Mt. Logan
Re segregated accounts.
Mt. Logan Re Segregated Accounts
Years Ended December 31,
(Dollars in millions)
2022
2021
2020
Ceded written premiums
$
170
$
286
$
263
Ceded earned premiums
174
280
265
Ceded losses and LAE
150
194
175
12.
COMPREHENSIVE INCOME (LOSS)
The following
tables
present
the
components
of
comprehensive
income
(loss)
in
the
consolidated
statements
of
operations and comprehensive income
(loss) for the periods indicated:
December 31, 2022
December 31, 2021
December 31, 2020
(Dollars in millions)
Before Tax
Tax Effect
Net of Tax
Before Tax
Tax Effect
Net of Tax
Before Tax
Tax Effect
Net of Tax
Unrealized appreciation (depreciation)
("URA(D)") on securities - temporary
$
(1,280)
269
$
(1,011)
$
(254)
53
$
(200)
$
206
(43)
$
163
Reclassification of net realized losses
(gains) included in net income (loss)
93
(20)
73
12
(3)
9
32
(7)
25
Foreign currency translation adjustments
(23)
5
(18)
(11)
2
(9)
18
(4)
14
Benefit plan actuarial net gain (loss)
18
(4)
15
22
(5)
17
(7)
1
(6)
Reclassification of amortization of net gain (loss)
included in net income (loss)
3
(1)
2
8
(2)
6
8
(2)
6
Total other comprehensive income
(loss)
$
(1,189)
$
249
$
(939)
$
(223)
$
47
$
(177)
$
258
$
(54)
$
204
(Some amounts may not reconcile due to rounding)
The following table presents details
of the amounts reclassified from AOCI for
the periods indicated:
Affected line item within the
Years Ended December 31,
statements of operations and
AOCI component
2022
2021
comprehensive income (loss)
(Dollars in millions)
URA(D) on securities
$
93
$
12
Other net realized capital gains (losses)
(20)
(3)
Income tax expense (benefit)
$
73
$
9
Net income (loss)
Benefit plan net gain (loss)
$
3
$
8
Other underwriting expenses
(1)
(2)
Income tax expense (benefit)
$
2
$
6
Net income (loss)
(Some amounts may not reconcile due to rounding)
F-48
The following table presents
the components of accumulated
other comprehensive income
(loss), net of tax,
in the
consolidated balance sheets for
the periods indicated:
Years Ended December 31,
(Dollars in millions)
2022
2021
Beginning balance of URA(D) on securities
$
122
$
313
Current period change in URA(D) of investments -
temporary
(938)
(191)
Ending balance of URA(D) on securities
(816)
122
Beginning balance of foreign currency translation adjustments
20
29
Current period change in foreign currency translation adjustments
(18)
(9)
Ending balance of foreign currency translation adjustments
2
20
Beginning balance of benefit plan net gain (loss)
(50)
(74)
Current period change in benefit plan net gain (loss)
17
23
Ending balance of benefit plan net gain (loss)
(33)
(50)
Ending balance of accumulated other comprehensive income (loss)
$
(848)
$
91
(Some amounts may not reconcile due to rounding)
13.
EMPLOYEE BENEFIT PLANS
Defined Benefit Pension Plans.
The
Company
maintains
both
qualified
and
non-qualified
defined
benefit
pension
plans
for
its
U.S.
employees
employed prior to
April 1, 2010.
Generally,
the Company computes
the benefits based
on average
earnings over a
period
prescribed
by
the
plans
and
credited
length
of
service.
The
Company’s
non-qualified
defined
benefit
pension plan
provided
compensating
pension benefits
for
participants
whose benefits
have
been curtailed
under
the
qualified
plan
due
to
Internal
Revenue
Code
limitations.
Effective
January 1,
2018,
participants
of
the
Company’s non-qualified defined
benefit pension plan 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)
2022
2021
2020
Company contributions
$
6
$
4
$
7
The following table summarizes the
Company’s pension expense
for the periods indicated:
Years Ended December 31,
(Dollars in millions)
2022
2021
2020
Pension expense
$
(2)
$
3
$
8
F-49
The
following
table
summarizes
the
status
of
these
defined
benefit
plans
for
U.S.
employees
for
the
periods
indicated:
Years Ended December 31,
(Dollars in millions)
2022
2021
Change in projected benefit obligation:
Benefit obligation at beginning of year
$
403
$
404
Service cost
9
11
Interest cost
10
8
Actuarial (gain)/loss
(115)
(9)
Curtailment
-
-
Benefits paid
(15)
(12)
Projected benefit obligation at end of year
291
403
Change in plan assets:
Fair value of plan assets at beginning of year
377
354
Actual return on plan assets
(83)
31
Actual contributions during the year
6
4
Benefits paid
(15)
(12)
Fair value of plan assets at end of year
285
377
Funded status at end of year
$
(6)
$
(25)
(Some amounts may not reconcile due
to rounding.)
Amounts recognized in the consolidated
balance sheets for the periods indicated:
At December 31,
(Dollars in millions)
2022
2021
Other assets (due beyond one year)
$
1
$
-
Other liabilities (due within one year)
(1)
(1)
Other liabilities (due beyond one year)
(6)
(24)
Net amount recognized in the consolidated balance sheets
$
(6)
$
(25)
Amounts not
yet reflected
in net
periodic benefit
cost and
included in
accumulated other
comprehensive
income
(loss) for the periods indicated:
At December 31,
(Dollars in millions)
2022
2021
Accumulated income (loss)
$
(56)
$
(68)
Accumulated other comprehensive income (loss)
$
(56)
$
(68)
(Some amounts may not reconcile due
to rounding.)
F-50
Other changes in other comprehensive income (loss)
for the periods indicated are as
follows:
Years Ended December 31,
(Dollars in millions)
2022
2021
Other comprehensive income (loss) at December 31, prior year
$
(68)
$
(92)
Net gain (loss) arising during period
7
15
Recognition of amortizations in net periodic benefit cost:
Actuarial loss
4
9
Curtailment loss recognized
-
-
Other comprehensive income (loss) at December 31, current year
$
(56)
$
(68)
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.)
Net periodic benefit cost for U.S.
employees included the following components
for the periods indicated:
Years Ended December 31,
(Dollars in millions)
2022
2021
2020
Service cost
$
9
$
11
$
10
Interest cost
10
8
10
Expected return on assets
(25)
(24)
(21)
Amortization of actuarial loss from earlier periods
4
8
9
Settlement
1
-
1
Net periodic benefit cost
$
(2)
$
3
$
8
Other changes recognized in other comprehensive income (loss):
Other comprehensive income (loss) attributable to change from
prior year
(12)
(24)
Total recognized in net periodic benefit cost and other
comprehensive income (loss)
$
(14)
$
(21)
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 %
The weightedF-27
average
discount
rates
used to
determine
net
periodic benefit
cost
for
2022, 2021
and 2020
were
2.86
%,
2.55
%
and
3.28
%,
respectively.
The
rate
of
compensation
increase
used
to
determine
the
net
periodic
benefit cost
for 2022,
2021 and
2020 was
4.00
%.
The expected
long-term rate
Table of return
on plan
assets for
2022,
The
weighted
average
discount
rates
used
to
determine
the
actuarial
present
value
of
the
projected
benefitReinsurance - Property Business
obligation for 2022, 2021 and 2020 were
5.25
%,
2.86
% and
2.55
%, respectively.
The following table summarizes the
accumulated benefit obligation for
the periods indicated:
At December 31,
(Dollars in millions)
2022
2021
Qualified Plan
$
258
$
339
Non-qualified Plan
6
12
Total
$
264
$
352
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.)
F-51
The
following
table
displays
the
plans
with
projected
benefit
obligations
in
excess
of plan
assets
for
the
periods
indicated:
At December 31,
(Dollars in millions)
2022
2021
Qualified Plan
Projected benefit obligation
$
284
$
390
Fair value of plan assets
285
377
Non-qualified Plan
Projected benefit obligation
$
6
$
12
Fair value of plan assets
-
-
The following table
displays the
plans with accumulated
benefit obligations
in excess
of plan assets
for the periods
indicated:
At December 31,
(Dollars in millions)
2022
2021
Qualified Plan
Accumulated benefit obligation
$
-
$
-
Fair value of plan assets
-
-
Non-qualified Plan
Accumulated benefit obligation
6
12
Fair value of plan assets
$
-
$
-
The following table displays
the expected benefit payments in
the periods indicated:
(Dollars in millions)
2023
$
13
2024
14
2025
14
2026
15
2027
17
Next 5 years
100
Plan assets
consist of
shares in
investment
trusts with
74
%,
24
%,
1
% 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-term
nature of
the plan,
the target
asset allocation
has historically
been
70
% equities
and
30
% bonds.
F-52
The following
tables
present
the
fair
value
measurement
levels
for
the
qualified
plan
assets
at
fair
value
for
the
periods indicated:
Fair Value Measurement Using:
Quoted Prices
in Active
Significant
Markets for
Other
Significant
Identical
Observable
Unobservable
December 31,
Assets
Inputs
Inputs
(Dollars in millions)
2022
(Level 1)
(Level 2)
(Level 3)
Assets:
Short-term investments, which approximates fair value (a)
$
4
$
4
$
-
$
-
Mutual funds, fair value
Fixed income (b)
68
68
-
-
Equities (c)
211
211
-
-
Total
$
283
$
283
$
-
$
-
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
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
Insurance - Property 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$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 
(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$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 
(Some amounts may not reconcile due to rounding.)
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 %
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. 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
F-30
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 Claims staff handle individual loss reports and supporting claim information. Based on evaluation of a claim, the Company may establish additional case reserves in addition to the case reserves reported by the ceding company. To ensure ceding companies are submitting required and accurate data, Everest’s Underwriting, Claim, Reinsurance Accounting, and Internal Audit Departments perform various reviews of ceding companies, particularly larger ceding companies, including on-site audits 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
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.
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 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 $3.4 billion and $3.8 billion at December 31, 2023 and 2022, respectively. At December 31, 2023, $1.5 billion, or 45.8%, was receivable from Everest Reinsurance (Bermuda), Ltd. (“Bermuda Re”), an affiliated entity, and is fully collateralized by a trust agreement and $285 million, or 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.
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5.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 4 and Note 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 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.
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 
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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.
Effective January 1, 2018, Everest Re entered into a twelve month whole account aggregate stop loss reinsurance contract (“stop loss agreement”) with Bermuda Re. The stop loss agreement provides coverage for ultimate net losses on applicable net earned premiums above a retention level, subject to certain other coverage limits and conditions. The stop loss agreement was most recently renewed effective January 1, 2024.
The stop loss agreements between Everest Re and Bermuda Re that were effective for 2018 and 2019 were both commuted during the third quarter of 2023. The commutations of the agreements resulted in the 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.
Everest Re entered into a catastrophe excess of loss reinsurance contract with Bermuda Re (UK Branch), effective January 1, 2021 through December 31, 2021. The contract provides Bermuda Re (UK Branch), with up to £100 million of reinsurance coverage for each catastrophe occurrence above £24 million. Bermuda Re (UK Branch) paid Everest Re £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. The contract provides Ireland Re with up to €210 million of reinsurance coverage for each catastrophe occurrence above €18 million. Ireland Re paid Everest Re €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.
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The table below represents loss portfolio transfer (“LPT”) reinsurance agreements whereby net insurance exposures and reserves were transferred to an affiliate.
(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 million of loss reserves to Bermuda Re. As part of the LPT agreement, Bermuda Re will provide an additional $500 million of adverse development coverage on the subject loss reserves. As of December 31, 2023, and December 31, 2022, the Company has a reinsurance recoverable of $807 million and $804 million, respectively, recorded on its balance sheet due from Bermuda Re.
The following tables summarize the significant premiums and losses ceded and assumed by the Company in transactions with affiliated entities for the periods indicated:
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 
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 accounts:
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 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
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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 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 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. 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.
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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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 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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The following table presents details of the amounts reclassified from AOCI for the periods indicated:
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 $2 Net income (loss)
(Some amounts may not reconcile due to rounding)
The following table presents the components of accumulated other comprehensive income (loss), net of tax, in the consolidated balance sheets for the periods indicated:
Years Ended December 31,
(Dollars in millions)20232022
Beginning balance of URA(D) on securities$(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)
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 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 
F-42
The following table summarizes the Company’s pension expense for the periods indicated:
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 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 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)$(56)
(Some amounts may not reconcile due to rounding.)
F-43
Other changes in other comprehensive income (loss) for the periods indicated are as follows:
Years Ended December 31,
(Dollars in millions)20232022
Other comprehensive income (loss) at December 31, prior year$(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 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 were 5.25%, 2.86% and 2.55%, respectively.  The rate of compensation increase used to determine the net periodic benefit cost for 2023, 2022 and 2021 was 4.00%.  The expected long-term rate of return on plan assets for 2023, 2022 and 2021 was 7.00%, 6.75% and 7.00% respectively.
The weighted average discount rates used to determine the actuarial present value of the projected benefit obligation for 2023, 2022 and 2021 were 5.00%, 5.25% and 2.86%, 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.)
F-44
The following table displays the plans with projected benefit obligations in excess of plan assets for the periods indicated:
At December 31,
(Dollars in millions)20232022
Qualified Plan
Projected benefit obligation$289 $284 
Fair value of plan assets308 285 
Non-qualified Plan
Projected benefit obligation$6 $6 
Fair value of plan assets— — 
The following table displays the plans with accumulated benefit obligations in excess of plan assets for the periods indicated:
At December 31,
(Dollars in millions)20232022
Qualified Plan
Accumulated benefit obligation$— $— 
Fair value of plan assets— — 
Non-qualified Plan
Accumulated benefit obligation6 6 
Fair value of plan assets$— $— 
The following table displays the expected benefit payments in the periods indicated:
(Dollars in millions)
2024$15 
202514 
202615 
202716 
202817 
Next 5 years99 
Plan assets consist primarily of shares in investment trusts with 75%, 24% and 1% of the underlying assets consisting of equity securities, fixed maturities 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-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.)
(a)
This category includes high quality,
short-term money market instruments,
which are issued and payable
in U.S. dollars.
F-45
(b)
This category includes fixed income
funds, which invest in investment
grade securities of corporations,
governments and government agencies
with
approximately
70
% 90% in U.S. securities and
30
% 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
50
% 100% in U.S. equities andequities.
50
% in international equities.
Fair Value Measurement Using:
Quoted Prices
in Active
Significant
Markets for
Other
Significant
Identical
Observable
Unobservable
December 31,
Assets
Inputs
Inputs
(Dollars in millions)
2021
(Level 1)
(Level 2)
(Level 3)
Assets:
Short-term investments, which approximates fair value (a)
$
3
$
3
$
-
$
-
Mutual funds, fair value
Fixed income (b)
85
85
-
-
Equities (c)
287
287
-
-
Total
$
375
$
375
$
-
$
-
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
% 70% in U.S. securities and
30
% 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
% 50% in U.S. equities and
50
% 50% in international equities.
In
addition,
$
2
$2 million
and
$
3
million
of investments
which
were
recorded
as
part of
the qualified
plan
assets
at
December 31, 2022, and
2021, respectively,
are not included within
the fair value
hierarchy tables
as the assets are
valued using the NAV practical
expedient guidance within ASU 2015-07.
F-53
No
contributions
were
made
to
the
qualified
pension
benefit
plan
for
the
years
ended
December 31,
2022
2023 and
2021. 2022.
Defined Contribution Plans.
The Company also maintains
both qualified and non-qualified defined contribution
plans (“Savings Plan” and “Non-
Qualified“Non-Qualified Savings
Plan”,
respectively) covering
U.S. employees.
Under the plans,
the Company
contributes up
to a
maximum
3
% 3% of the participants’
compensation based on
the contribution percentage
of the employee.
The Non-
Qualified
Non-Qualified Savings
Plan
provides
compensating
savings
plan
benefits
for
participants
whose
benefits
have
been
curtailed under the Savings
Plan due to Internal Revenue
Code limitations.
In addition, effective for
new hires (and
rehires) on
or after
April 1, 2010,
the Company
will contribute
between
3
% 3% and
8
% 8% of
an employee’s
earnings for
each payroll
period based
on the
employee’s
age.
These contributions
will be
100
% 100% vested
after
three year
s.years. The
Company incurred
expenses related
to these
plans of $
18
$22 million, $
15
$18 million and
$
14
$15 million for
the years
ended
December 31, 2023, 2022 and 2021, and 2020, 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
7.8
% 7.5% to
9.6
% 9.3%.
The contributions are generally
used
to
purchase
pension
benefits
from
local
insurance
providers. The
Company
incurred
expenses
related
to
these
plans
of
$
0.7
$0.7 million,
$
0.6
$0.7 million
and
$
0.8
$0.6 million
for
the
years
ended
December
31,
2023, 2022
and 2021,
and
2020,
respectively.
Post-Retirement Plan.
The Company
sponsors
a
Retiree
Health
Plan
��
for
employees
employed
prior
to
April 1,
2010.
This
plan
provides
healthcare benefits for
eligible retired employees
(and (and their eligible dependents),
who have elected
coverage.
The
Company
anticipates
that
most
covered
employees
will
become
eligible
for
these
benefits
if
they
retire
while
working for
the Company.
The cost
of these
benefits
is shared
with the
retiree.
The Company
accrues the
post-
retirement post-retirement benefit expense during
the period of the employee’s
service. A medical cost trend rate
of
7.00
% 6.75% in 2023 was assumed to decrease gradually to 4.75% in 2030 and then remain at that level. The Company incurred expenses of $(1) million, $1 million and $1 million for the years ended December 31, 2023, 2022
was
assumed
to
decrease
gradually
to
4.75
%
in
2030
and
then
remain
at
that
level.
The
Company
incurred
expenses
of
$
1
million,
$
1
million
and
$
1
million
for
the
years
ended
December
31,
2022,
2021,
and
2020,
respectively.
F-46
F-54
The following table summarizes the
status of this plan for the periods indicated:
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)
At December 31,
(Dollars in millions)
2022
2021
Change in projected benefit obligation:
Benefit obligation at beginning of year
$
31
$
35
Service cost
1
1
Interest cost
1
1
Amendments
-
-
Actuarial (gain)/loss
(10)
(6)
Benefits paid
-
-
Benefit obligation at end of year
21
31
Change in plan assets:
Fair value of plan assets at beginning of year
-
-
Employer contributions
-
-
Benefits paid
-
-
Fair value of plan assets at end of year
-
-
Funded status at end of year
$
(21)
$
(31)
Amounts recognized in the consolidated
balance sheets for the periods indicated:
At December 31,
(Dollars in millions)
2022
2021
Other liabilities (due within one year)
$
(1)
$
(1)
Other liabilities (due beyond one year)
(21)
(30)
Net amount recognized in the consolidated balance sheets
$
(21)
$
(31)
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 millions)20232022
Accumulated income (loss)$11 $13 
Accumulated prior service credit (cost)1 1 
Accumulated other comprehensive income (loss)$12 $14 
At December 31,
(Dollars in millions)
2022
2021
Accumulated income (loss)
$
13
$
2
Accumulated prior service credit (cost)
1
2
Accumulated other comprehensive income (loss)
$
14
$
4
F-55
Other changes in other comprehensive income (loss)
for the periods indicated are as
follows:
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 
Years Ended December 31,
(Dollars in millions)
2022
2021
Other comprehensive income (loss) at December 31, prior year
$
4
$
(2)
Net gain (loss) arising during period
10
6
Prior Service credit (cost) arising during period
-
-
Recognition of amortizations in net periodic benefit cost:
Actuarial loss (gain)
-
-
Prior service cost
-
(1)
Other comprehensive income (loss) at December 31, current year
$
14
$
4F-47
Net periodic benefit cost included the following
components for the periods indicated:
Years Ended December 31,
(Dollars in millions)
2022
2021
2020
Service cost
$
1
$
1
$
1
Interest cost
1
1
1
Prior service credit recognition
-
(1)
(1)
Net gain recognition
-
-
-
Net periodic cost
$
1
$
1
$
1
Other changes recognized in other comprehensive income (loss):
Other comprehensive gain (loss) attributable to change from prior year
(10)
(5)
Total recognized in net periodic benefit cost and
other comprehensive income (loss)
$
(9)
$
(4)
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 2021
and 2020
2021 were
2.86
% 5.25%,
2.55
% 2.86% and
3.28
% 2.55%, 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 were 5.00%, 5.25% and 2020 were
5.25
%,
2.86
% and
2.55
%2.86%, 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.)
(Dollars in millions)
2023
$
1
2024
1
2025
1
2026
1
2027
1
Next 5 years
7F-48
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.
14.F-49
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.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.
F-50
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
F-51
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.
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-56
restrictions
are
based
upon
statutory
capital
as
opposed
to
GAAP
basis
equity
or
net
assets.
Holdings’
primary
operating
subsidiary,
Everest
Re,
is
regulated
by
Delaware
law
and
is
subject
to
the
Risk-Based
Capital
Model
(“RBC”) developed
by
the
National
Association
of Insurance
Commissioners
(“NAIC”).
This
model represents
the
aggregate regulatory restrictions
on net assets and statutory capital
and surplus.
Dividend Restrictions.
Delaware
law
provides
that
an
insurance
company
which
is
a
member
of
an
insurance
holding
company
system
and is
domiciled in
the state
shall not
pay dividends
without giving
prior notice
to the
Insurance
Commissioner of
Delaware
and
may
not
pay
dividends
without
the
approval
of
the
Insurance
Commissioner
if
the
value
of
the
proposed
dividend,
together
with
all
other
dividends
and
distributions
made
in
the
preceding
twelve
months,
exceeds
the greater
of (1)
10
% 10% of
statutory
surplus or
(2) net
income, not
including realized
capital gains,
each as
reported
in
the
prior
year’s
statutory
annual
statement.
In
addition,
no
dividend
may
be
paid
in
excess
of
unassigned earned surplus.
At  Accordingly, as of December 31, 2022,
2023, the maximum amount that will be available for the payment of dividends by Everest Re
has $
555
million available
for payment
of dividends
in 2023 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
$
5.6
$7.0 billion and
$
5.7
$5.6 billion at
December 31, 2023 and 2022,
respectively.  The statutory net income of Everest Re was $877 million, $294 million and $264 million for the years ended December 31, 2023, 2022 and 2021,
respectively.
The statutory
net income
of Everest
Re
was
$
294
million,
$
264
million
and
$
595
million
for
the
years
ended
December
31,
2022,
2021
and
2020,
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
%
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 millions)
2022
2021
Regulatory targeted capital
$
3,353
$
2,960
Actual capital
$
5,553
$
5,717
(1)
Regulatory targeted capital represents
200
% 200% of the RBC authorized control level calculation for the applicable year.
15.
COMMITMENTS AND CONTINGENCIES
In the ordinary
course of business,
the Company is
involved in
lawsuits, arbitrations
and other formal
and informal
dispute resolution
procedures,
the outcomes
of which
will determine
the Company’s
rights and
obligations
under
insurance
and
reinsurance
agreements.
In
some
disputes,
the
Company
seeks
to
enforce
its
rights
under
an
agreement or to
collect funds owing
to it.
In other matters,
the Company is
resisting attempts
by others to
collect
funds or
enforce
alleged rights.
These disputes
arise from
time to
time and
are ultimately
resolved through
both
informal
and
formal
means,
including
negotiated
resolution,
arbitration
and
litigation.
In
all
such
matters,
the
F-57
Company believes
that its positions
are legally and
commercially reasonable.
The Company
considers the
statuses
of these proceedings when determining its reserves
for unpaid loss and loss adjustment expenses.
Aside from litigation and arbitrations
related to these insurance and
reinsurance agreements,
the Company is not a
party to any other material litigation
or arbitration.
18.SUBSEQUENT EVENTS
The Company
has entered
into
separate
annuity agreements
withevaluated known recognized and non-recognized subsequent events. The
Prudential
Insurance
Company
of America does not have any subsequent events to report.
(“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:F-52

At December 31,
(Dollars in millions)
2022
2021
The Prudential
$
137
$
138
Unaffiliated life insurance company
34
35
16.
RELATED-PARTY
TRANSACTIONS
The
table
below
displays
long-term
note
agreements
that
Group
entered
into
with
Everest
Re
for
the
periods
indicated.
These transactions
are presented
as Notes
Receivable
– Affiliated
in the
Consolidated
Balance Sheet
of
Holdings. Fair value of these long-term notes
is considered Level 2 in the fair value
hierarchy.
December 31, 2022
December 31, 2021
Consolidated
Consolidated
Principal
Balance Sheet
Fair
Balance Sheet
Fair
(Dollars in millions)
Date Issued
Date Due
Amounts
Amount
Value
Amount
Value
1.69
% Long-term Note
12/17/2019
12/17/2028
300
$
300
$
242
$
300
$
264
1.00
% Long-term Note
08/05/2021
08/05/2030
200
200
151
200
165
3.11
% Long-term Note
06/14/2022
06/14/2052
215
215
171
-
-
4.34
% Long-term Note
12/12/2022
12/12/2052
125
125
125
-
-
840
$
840
$
689
$
500
$
429
Interest income recognized
in connection with these long-term notes is
as follows for the periods indicated:
Years Ended December 31,
(Dollars in millions)
Interest Received
Receivable Dates
2022
2021
2020
1.69
% Long-term Note
annually
December 17
$
5
$
5
$
5
1.00
% Long-term Note
annually
August 5
2
1
-
3.11
% Long-term Note
annually
June 14
4
-
-
$
11
$
6
$
5
(Some amounts may not reconcile due to rounding.)
F-58
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)
2022
2021
2020
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)
2022
2021
2020
Expenses incurred
$
204
$
133
$
124
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-59
The following tables present the underwriting
results for the operating segments
for the periods indicated:
Year Ended December 31, 2022
(Dollars in millions)
Reinsurance
Insurance
Total
Gross written premiums
$
5,948
$
3,729
$
9,677
Net written premiums
5,269
2,763
8,032
Premiums earned
$
5,212
$
2,664
$
7,876
Incurred losses and LAE
3,957
1,865
5,823
Commission and brokerage
1,326
306
1,632
Other underwriting expenses
139
363
501
Underwriting gain (loss)
$
(210)
$
130
$
(81)
Net investment income
638
Net gains (losses) on investments
(982)
Corporate expenses
(26)
Interest, fee and bond issue cost amortization expense
(101)
Other income (expense)
(6)
Income (loss) before taxes
$
(557)
Year Ended December 31, 2021
(Dollars in millions)
Reinsurance
Insurance
Total
Gross written premiums
$
6,028
$
3,303
$
9,331
Net written premiums
5,265
2,455
7,719
Premiums earned
$
4,949
$
2,230
$
7,179
Incurred losses and LAE
3,761
1,626
5,387
Commission and brokerage
1,250
262
1,513
Other underwriting expenses
143
311
454
Underwriting gain (loss)
$
(206)
$
31
$
(175)
Net investment income
745
Net gains (losses) on investments
501
Corporate expenses
(33)
Interest, fee and bond issue cost amortization expense
(70)
Other income (expense)
23
Income (loss) before taxes
$
991
(Some amounts may not reconcile due to rounding.)
F-60
Year Ended December 31, 2020
(Dollars in millions)
Reinsurance
Insurance
Total
Gross written premiums
$
5,266
$
2,691
$
7,957
Net written premiums
4,632
2,006
6,639
Premiums earned
$
4,485
$
1,922
$
6,407
Incurred losses and LAE
3,209
1,399
4,608
Commission and brokerage
1,120
253
1,373
Other underwriting expenses
119
282
401
Underwriting gain (loss)
$
36
$
(12)
$
24
Net investment income
376
Net gains (losses) on investments
50
Corporate expenses
(16)
Interest, fee and bond issue cost amortization expense
(36)
Other income (expense)
(15)
Income (loss) before taxes
$
384
(Some amounts may not reconcile due to rounding.)
The Company
produces
business in
the U.S.
and internationally.
The net
income deriving
from assets
residing
in
the
individual
foreign
countries
in
which
the
Company
writes
business
are
not
identifiable
in
the
Company’s
financial records.
Based on
gross
written
premium, the
table
below presents
the largest
country,
other than
the
U.S., in which the Company writes business,
for the periods indicated:
Years Ended December 31,
(Dollars in millions)
2022
2021
2020
Canada gross written premiums
$
379
$
252
$
321
No other country represented
more than
5
% of the Company’s revenues.
Approximately
17.6
%,
19.3
%
and
20.1
%
of
the
Company’s
gross
written
premiums
in
2022,
2021
and
2020,
respectively,
were sourced through the Company’s
largest intermediary.
18.
SUBSEQUENT EVENTS
The
Company
has
evaluated
known
recognized
and
non-recognized
subsequent
events.
In
February
2023,
an
earthquake
occurred
which
impacted
the
countries
of
Turkey
and
Syria.
The
Company
is
unable
to
estimate
the
magnitude of
losses
at
this time
as this
event
has
recently
occurred.
The Company
will reflect
the impact
of this
event in its first quarter 2023 results..
S-1
SCHEDULE I - SUMMARY OF INVESTMENTS -
OTHER THAN INVESTMENTS IN RELATED PARTIES
DECEMBER 31, 20222023
Column A
Column B
Column C
Column D
Amount
Shown in
Market
Balance
(Dollars in millions)
Cost
Value
Sheet
Fixed maturities-available for sale
Bonds:
U.S. government and government agencies
$
575
$
535
$
535
State, municipalities and political subdivisions
444
413
413
Foreign government securities
696
637
637
Foreign corporate securities
1,597
1,433
1,433
Public utilities
85
79
79
All other corporate bonds
7,571
7,117
7,117
Mortgage - backed securities
Commercial
568
509
509
Agency residential
1,792
1,628
1,628
Non-agency residential
3
3
3
Redeemable preferred stock
368
316
316
Total fixed maturities-available for sale
13,699
12,671
12,671
Fixed maturities-held to maturity
Bonds:
Foreign corporate securities
28
28
27
All other corporate bonds
785
758
778
Mortgage - backed securities
Commercial
7
7
7
Total Fixed maturities-held to maturity
820
793
811
Equity securities at fair value(1)
159
194
194
Short-term investments
812
812
812
Other invested assets
2,754
2,754
2,754
Other invested assets, at fair value(1)
1,773
1,472
1,472
Cash
481
481
481
Total investments and cash
$
20,498
$
19,177
$
19,195
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.)
(1)
Original cost does not reflect fair value adjustments, which have been realized through the statements of operations and comprehensive
income (loss).
S-1
S-2

SCHEDULE II -– CONDENSED FINANCIAL INFORMATION OF THE REGISTRANT
CONDENSED BALANCE SHEETS
At December 31,
(Dollars in millions, except share
amounts and par value per share)
2022
2021
ASSETS:
Fixed maturities - available for sale
$
-
$
147
(amortized cost: 2022, $
0
; 2021, $
148
)
Equity securities - at fair value
12
679
Other invested assets
194
242
Other invested assets, at fair value
1,472
2,031
Short-term investments
30
5
Cash
2
-
Total investments and cash
1,710
3,104
Investment in subsidiaries, at equity in the underlying net assets
5,496
6,371
Notes receivable - affiliated
1,170
470
Accrued investment income
12
5
Other assets
-
(2)
TOTAL ASSETS
$
8,388
$
9,948
LIABILITIES:
Senior notes
$
2,347
$
2,346
Long-term notes
218
224
Accrued interest on debt and borrowings
17
17
Income taxes
144
317
Due to affiliates
7
5
Total liabilities
$
2,734
$
2,910
STOCKHOLDER'S EQUITY:
Common stock, par value: $
0.01
;
3,000
shares authorized;
1,000
shares issued and outstanding (2022 and 2021)
-
-
Additional paid-in capital
1,102
1,102
Accumulated other comprehensive income (loss), net of deferred income
tax expense (benefit) of $
(225)
at 2022 and $
24
at 2021
(848)
91
Retained earnings
5,400
5,845
Total stockholder's equity
5,654
7,038
TOTAL
LIABILITIES AND STOCKHOLDER'S EQUITY
$
8,388
$
9,948
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
S-3
SCHEDULE II -– CONDENSED FINANCIAL INFORMATION OF THE REGISTRANT
CONDENSED STATEMENTS
OF OPERATIONS
Years Ended December 31,
(Dollars in millions)
2022
2021
2020
REVENUES:
Net investment income
$
47
$
39
$
(5)
Net investment income - Affiliated
57
34
31
Net gains (losses) on investments
(704)
329
(73)
Other income (expense)
(3)
-
3
Net income (loss) of subsidiaries
114
551
394
Total revenues
(488)
954
350
EXPENSES:
Interest expense
97
69
36
Corporate expense
10
18
9
Total expenses
107
86
45
INCOME (LOSS) BEFORE TAXES
(595)
867
305
Income tax expense (benefit)
(150)
68
(47)
NET INCOME (LOSS)
$
(445)
$
800
$
352
Other comprehensive income (loss), net of tax :
Unrealized appreciation (depreciation) ("URA(D)") on securities arising during
the period
(1,011)
(200)
163
Less: reclassification adjustment for realized losses (gains) included in net
income (loss)
73
9
25
Total URA(D) on securities arising during the period
(938)
(191)
189
Foreign currency translation adjustments
(18)
(9)
14
Benefit plan actuarial net gain (loss) for the period
15
17
(6)
Reclassification adjustment for amortization of net (gain) loss included in net
income (loss)
2
6
6
Total benefit plan net gain (loss) for the period
17
23
1
Total other comprehensive income (loss), net of tax
(939)
(177)
204
COMPREHENSIVE INCOME (LOSS)
$
(1,384)
$
623
$
556
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
S-4
SCHEDULE II -– CONDENSED FINANCIAL INFORMATION OF THE REGISTRANT
CONDENSED STATEMENTS OF CASH FLOWS
Years Ended December 31,
(Dollars in millions)
2022
2021
2020
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss)
$
(445)
$
800
$
352
Adjustments to reconcile net income to net cash provided by operating activities:
Equity in (earnings) deficit of subsidiaries
(114)
(551)
(394)
Dividends received from subsidiary
250
-
-
Increase (decrease) in income taxes
(173)
(45)
119
Change in equity adjustments in limited partnerships
(37)
(33)
8
Change in other assets and liabilities, net
(5)
40
20
Net realized capital losses (gains)
704
(329)
73
Net cash provided by (used in) operating activities
180
(118)
180
CASH FLOWS FROM INVESTING ACTIVITIES:
Additional investment in subsidiaries
(200)
88
(949)
Proceeds from fixed maturities matured/called/repaid - available for sale
-
-
2
Proceeds from fixed maturities sold - available for sale
244
-
-
Proceeds from equity maturities sold
652
243
62
Distributions from other invested assets
1,362
2,014
1,113
Cost of fixed maturities acquired - available for sale
(134)
(148)
-
Cost of equity securities acquired
(93)
(516)
(185)
Cost of other invested assets acquired
(1,278)
(2,076)
(1,212)
Net change in short-term investments
(24)
5
11
Proceeds from repayment (cost of issuance) of notes receivable - affiliated
(700)
(470)
10
Net cash provided by (used in) investing activities
(171)
(860)
(1,148)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of senior notes
-
968
979
Cost of debt repurchase
(6)
-
(11)
Net cash provided by (used in) financing activities
(6)
968
969
Net increase (decrease) in cash
2
(10)
-
Cash, beginning of period
-
10
10
Cash, end of period
$
2
$
-
$
10
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
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
Notes notes of Everest Reinsurance
Holdings, Inc. and its Subsidiaries.subsidiaries.
2)
2.)The Senior Notes
and Long-Term
Subordinated Notes
presented in
Notes 5
7 and 68 are
direct obligations
of the Registrant.
Registrant.
3)
3.)Effective
December 2022,
May 2023, Everest
Reinsurance
Holdings, Inc.
entered into
a $
125
$230 million long-term
promissory
note
with
Everest
Reinsurance
Company,
a
subsidiary
entity.
The
promissory
note
has
an
interest
rate
of
4.34
% 3.72% payable annually and is scheduled to
mature on October 21, 2051. However, the note was paid off in June 2052.full in May 2023 and is no longer outstanding as of December 31, 2023.
4)
4.)Effective
September December 2022,
Everest Reinsurance
Holdings, Inc. entered
into a $
560
$125 million long-term promissory
note
with
Everest
Reinsurance
Company,
a
subsidiary
entity.
Group, Ltd., its parent. The
promissory
note
has
an
interest
rate
of
3.35
% 4.34% payable annually and is scheduled to
mature in September 2052.
5)
Effective
June 2022,
Everest
Reinsurance Holdings,
Inc. entered
into a
$
215
million long-term
promissory note
with
Everest
Re
Group,
Ltd.,
its
parent
entity.
The
promissory
note
has
an
interest
rate
of
3.11
%
payable
annually and is scheduled to mature in June 2052. 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.
6)
5.)Effective
October
21,
2021,
September 2022, Everest
Reinsurance
Holdings,
Inc.
entered
into
a
$
470
$560 million
long-term
promissory note
with Everest
Reinsurance
Company,
a subsidiary
entity.
The promissory
note has
an interest
rate
of
3.25
%
3.35% payable
annually
and
is
scheduled
to
mature
on
October
21,
2051.
in September 2052. Everest
Reinsurance
Company
has repaid
$
200
$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.
8.)Effective October 21, 2021, Everest Reinsurance
Holdings, Inc. entered into a $470 million long-term promissory note with Everest Reinsurance Company, a subsidiary entity. The promissory note has an interest rate of 3.25% payable annually and is scheduled to mature on October 21, 2051. Everest Reinsurance Company has repaid $425 million of the promissory note to Everest Reinsurance Holdings, Inc.,
leaving $
270
$45 million of the promissory note still outstanding
as of December 31, 2022.2023.
7)
Effective
February
2019, Everest
Reinsurance
9.)In December, 2015, Holdings
Inc. entered
into
a
$
10
million
long-term
promissory
note
with
Everest
Indemnity
Insurance
Company,
an
affiliated
entity.
The
note
was
scheduled
to
mature
in
February 2049 but was repaid in September 2020.
8)
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
$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
$1 million par value and
1.75
%
1.75% annual dividend
rate.
After the
exchange,
Holdings no
longer holds
any shares
or has
any ownership
interest
in Group.
S-5
S-6
EVEREST REINSURANCE HOLDINGS, INC.
SCHEDULE
III - SUPPLEMENTARY INSURANCE INFORMATION
Column A
Column B
Column C
Column D
Column E
Column F
Column G
Column H
Column I
Column J
Reserve
Incurred
Segments
for Losses
Loss and
Amortization
Deferred
and Loss
Unearned
Net
Loss
of Deferred
Other
Net
Acquisition
Adjustment
Premium
Premiums
Investment
Adjustment
Acquisition
Operating
Written
(Dollars in millions)
Costs
Expenses
Reserves
Earned
Income
Expenses
Costs
Expenses
Premium
As of and for the year
ended December 31, 2022
Reinsurance
$
329
$
10,023
$
1,453
$
5,212
$
427
$
3,957
$
1,326
$
139
$
5,269
Insurance
170
4,954
1,725
2,664
211
1,865
306
363
2,763
Total
$
499
$
14,977
$
3,177
$
7,876
$
638
$
5,823
$
1,632
$
501
$
8,032
As of and for the year
ended December 31, 2021
Reinsurance
$
315
$
8,829
$
1,427
$
4,949
$
501
$
3,761
$
1,250
$
143
$
5,265
Insurance
157
4,292
1,566
2,230
244
1,626
262
311
2,455
Total
$
472
$
13,121
$
2,993
$
7,179
$
745
$
5,387
$
1,513
$
454
$
7,719
As of and for the year
ended December 31, 2020
Reinsurance
$
169
$
7,896
$
1,128
$
4,485
$
255
$
3,209
$
1,120
$
119
$
4,632
Insurance
210
3,682
1,257
1,922
121
1,399
253
282
2,006
Total
$
380
$
11,578
$
2,385
$
6,407
$
376
$
4,608
$
1,373
$
401
$
6,639
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
S-7
SCHEDULE IV - REINSURANCE
Column A
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 %
Column B
Column C
Column D
Column E
Column F
Ceded to
Assumed
Gross
Other
from Other
Net
Assumed
(Dollars in millions)
Amount
Companies
Companies
Amount
to Net
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%
December 31, 2020
Total
property and liability
insurance premiums earned
$
2,592
$
1,368
$
5,183
$
6,407
$
80.9%S-7