SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(d)

OF THE SECURITIES EXCHANGE ACT OF 1934

FOR THE QUARTERLY PERIOD ENDED:

~~September 30, 2013~~March 31, 2014

Commission file number:

1-14527

Delaware		22-3263609
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

477 Martinsville Road

Liberty Corner, New Jersey 07938-0830

(Address, including zip code, and telephone number, including area code,

of registrant’s principal executive office)

EVEREST REINSURANCE HOLDINGS, INC.

Table of Contents

Form 10-Q

Page

PART I

FINANCIAL INFORMATION


Item 1.	Financial Statements

	Consolidated Balance Sheets at ~~September 30, 2013~~March 31, 2014 (unaudited) and
		December 31, ~~2012~~2013	1

	Consolidated Statements of Operations and Comprehensive Income (Loss) for the
		three ~~and nine~~ months ended ~~September 30,~~March 31, 2014 and 2013 ~~and 2012~~ (unaudited)	2

	Consolidated Statements of Changes in Stockholder’s Equity for the three ~~and~~months
		~~nine months~~ ended ~~September 30,~~March 31, 2014 and 2013 ~~and 2012~~ (unaudited)	3

	Consolidated Statements of Cash Flows for the three ~~and nine~~ months ended
		~~September 30,~~March 31, 2014 and 2013 ~~and 2012~~ (unaudited)	4

	Notes to Consolidated Interim Financial Statements (unaudited)		5

Item 2.	Management’s Discussion and Analysis of Financial Condition and
		Results of Operation	2926

Item 3.	Quantitative and Qualitative Disclosures About Market Risk		4538

Item 4.	Controls and Procedures		4538

PART II

OTHER INFORMATION


Item 1.	Legal Proceedings	4538

Item 1A.	Risk Factors	4639

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	4639

Item 3.	Defaults Upon Senior Securities	4639

Item 4.	Mine Safety Disclosures	4639

Item 5.	Other Information	4639

Item 6.	Exhibits	4640

Part I

ITEM 1. FINANCIAL STATEMENTS

EVEREST REINSURANCE HOLDINGS, INC.

CONSOLIDATED BALANCE SHEETS

	March 31,		December 31,
(Dollars in thousands, except par value per share)	2014		2013
	(unaudited)
ASSETS:
Fixed maturities - available for sale, at market value	$	5,537,841	$	5,201,921
(amortized cost: 2014, $5,418,527; 2013, $5,116,600)
Fixed maturities - available for sale, at fair value		-		19,388
Equity securities - available for sale, at market value (cost: 2014, $15; 2013, $15)		13		13
Equity securities - available for sale, at fair value		1,224,669		1,298,940
Short-term investments		642,650		757,162
Other invested assets (cost: 2014, $371,942; 2013, $385,776)		371,942		385,776
Other invested assets, at fair value		1,487,642		1,515,052
Cash		273,265		316,807
Total investments and cash		9,538,022		9,495,059
Accrued investment income		53,735		50,306
Premiums receivable		1,160,395		1,173,780
Reinsurance receivables - unaffiliated		642,035		530,158
Reinsurance receivables - affiliated		3,223,779		3,062,884
Funds held by reinsureds		172,965		175,526
Deferred acquisition costs		110,600		112,024
Prepaid reinsurance premiums		719,788		673,753
Other assets		275,726		247,505
TOTAL ASSETS	$	15,897,045	$	15,520,995

LIABILITIES:
Reserve for losses and loss adjustment expenses	$	7,577,143	$	7,653,229
Unearned premium reserve		1,391,902		1,317,147
Funds held under reinsurance treaties		92,797		92,514
Losses in the course of payment		452,761		350,820
Commission reserves		39,588		47,226
Other net payable to reinsurers		1,155,848		1,026,292
5.4% Senior notes due 10/15/2014		249,971		249,958
6.6% Long term notes due 5/1/2067		238,361		238,361
Accrued interest on debt and borrowings		12,092		4,781
Income taxes		56,460		23,949
Unsettled securities payable		71,299		53,772
Other liabilities		263,455		272,468
Total liabilities		11,601,677		11,330,517

Commitments and Contingencies (Note 6)

STOCKHOLDER'S EQUITY:
Common stock, par value: $0.01; 3,000 shares authorized;
1,000 shares issued and outstanding (2014 and 2013)		-		-
Additional paid-in capital		354,445		351,051
Accumulated other comprehensive income (loss), net of deferred income tax expense
(benefit) of $55,289 at 2014 and $47,195 at 2013		102,678		87,648
Retained earnings		3,838,245		3,751,779
Total stockholder's equity		4,295,368		4,190,478
TOTAL LIABILITIES AND STOCKHOLDER'S EQUITY	$	15,897,045	$	15,520,995

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

September 30, December 31,
(Dollars in thousands, except par value per share) 2013 2012
(unaudited)
ASSETS:
Fixed maturities - available for sale, at market value
$ 5,289,978 $ 5,531,410
     (amortized cost: 2013, $5,192,697; 2012, $5,289,619)
Fixed maturities - available for sale, at fair value 19,780 41,470
Equity securities - available for sale, at market value (cost: 2013, $15; 2012, $15) 16 13
Equity securities - available for sale, at fair value 1,268,150 1,199,848
Short-term investments 454,905 465,550
Other invested assets (cost: 2013, $397,287; 2012, $420,744) 397,287 420,744
Other invested assets, at fair value 1,413,381 1,068,711
Cash 406,873 347,720
         Total investments and cash 9,250,370 9,075,466
Accrued investment income 53,783 54,914
Premiums receivable 1,381,221 1,001,267
Reinsurance receivables - unaffiliated 714,985 650,261
Reinsurance receivables - affiliated 3,084,968 2,976,992
Funds held by reinsureds 173,882 161,694
Deferred acquisition costs 107,386 97,522
Prepaid reinsurance premiums 688,716 557,460
Deferred tax asset 47,922 214,175
Income taxes recoverable 29,890 61,244
Other assets 355,541 236,955
TOTAL ASSETS $ 15,888,664 $ 15,087,950

LIABILITIES:
Reserve for losses and loss adjustment expenses $ 7,716,376 $ 8,143,055
Unearned premium reserve 1,353,444 1,093,822
Funds held under reinsurance treaties 90,804 90,079
Losses in the course of payment 597,080 179,774
Commission reserves 46,137 39,324
Other net payable to reinsurers 1,163,574 900,794
5.4% Senior notes due 10/15/2014 249,945 249,907
6.6% Long term notes due 5/1/2067 238,360 238,357
Junior subordinated debt securities payable - 329,897
Accrued interest on debt and borrowings 12,092 4,781
Unsettled securities payable 40,398 48,830
Other liabilities 381,338 290,724
         Total liabilities 11,889,548 11,609,344

Commitments and Contingencies (Note 6)

STOCKHOLDER'S EQUITY:
Common stock, par value: $0.01; 3,000 shares authorized;
     1,000 shares issued and outstanding (2013 and 2012) - -
Additional paid-in capital 348,899 340,223
Accumulated other comprehensive income (loss), net of deferred income tax expense
     (benefit) of $44,173 at 2013 and $99,544 at 2012 82,035 184,867
Retained earnings 3,568,182 2,953,516
         Total stockholder's equity 3,999,116 3,478,606
TOTAL LIABILITIES AND STOCKHOLDER'S EQUITY $ 15,888,664 $ 15,087,950

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

EVEREST REINSURANCE HOLDINGS, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

AND COMPREHENSIVE INCOME (LOSS)

	Three Months Ended
	March 31,
(Dollars in thousands)	2014			2013
	(unaudited)
REVENUES:
Premiums earned	$	470,445		$	448,006
Net investment income		63,787			76,869
Net realized capital gains (losses):
Other-than-temporary impairments on fixed maturity securities		-			-
Other-than-temporary impairments on fixed maturity securities
transferred to other comprehensive income (loss)		-			-
Other net realized capital gains (losses)		(4,050	)		309,806
Total net realized capital gains (losses)		(4,050	)		309,806
Other income (expense)		(3,055	)		(9,661	)
Total revenues		527,127			825,020

CLAIMS AND EXPENSES:
Incurred losses and loss adjustment expenses		278,046			268,641
Commission, brokerage, taxes and fees		76,094			68,122
Other underwriting expenses		39,251			43,522
Corporate expenses		1,302			1,772
Interest, fee and bond issue cost amortization expense		7,436			12,616
Total claims and expenses		402,129			394,673

INCOME (LOSS) BEFORE TAXES		124,998			430,347
Income tax expense (benefit)		38,532			144,696

NET INCOME (LOSS)	$	86,466		$	285,651

Other comprehensive income (loss), net of tax :
Unrealized appreciation (depreciation) ("URA(D)") on securities arising during the period		20,797			(5,606	)
Less: reclassification adjustment for realized losses (gains) included in net income (loss)		1,298			(1,358	)
Total URA(D) on securities arising during the period		22,095			(6,964	)

Foreign currency translation adjustments		(7,836	)		(7,596	)

Benefit plan actuarial net gain (loss) for the period		-			-
Reclassification adjustment for amortization of net (gain) loss included in net income (loss)		771			1,346
Total benefit plan net gain (loss) for the period		771			1,346
Total other comprehensive income (loss), net of tax		15,030			(13,214	)

COMPREHENSIVE INCOME (LOSS)	$	101,496		$	272,437

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

Three Months Ended Nine Months Ended
September 30, September 30,
(Dollars in thousands) 2013 2012 2013 2012
(unaudited) (unaudited)
REVENUES:
Premiums earned $ 523,521 $ 427,112 $ 1,461,549 $ 1,299,293
Net investment income 68,828 76,342 227,433 231,790
Net realized capital gains (losses):
Other-than-temporary impairments on fixed maturity securities - (486 ) - (6,627 )
Other-than-temporary impairments on fixed maturity securities
transferred to other comprehensive income (loss) - - - -
Other net realized capital gains (losses) 208,426 96,429 533,758 361,300
Total net realized capital gains (losses) 208,426 95,943 533,758 354,673
Other income (expense) 5,012 425 5,095 19,599
Total revenues 805,787 599,822 2,227,835 1,905,355

CLAIMS AND EXPENSES:
Incurred losses and loss adjustment expenses 307,121 242,877 909,661 786,851
Commission, brokerage, taxes and fees 71,560 70,464 215,047 251,320
Other underwriting expenses 48,945 45,938 136,751 126,551
Corporate expenses 1,516 2,019 5,353 5,317
Interest, fee and bond issue cost amortization expense 7,466 12,682 38,010 38,061
Total claims and expenses 436,608 373,980 1,304,822 1,208,100

INCOME (LOSS) BEFORE TAXES 369,179 225,842 923,013 697,255
Income tax expense (benefit) 125,426 69,857 308,347 200,893

NET INCOME (LOSS) $ 243,753 $ 155,985 $ 614,666 $ 496,362

Other comprehensive income (loss), net of tax:
Unrealized appreciation (depreciation) ("URA(D)") on securities arising during the period (7,102 ) 18,036 (91,289 ) 23,511
Less: reclassification adjustment for realized losses (gains) included in net income (loss) (1,124 ) 261 (2,640 ) 1,696
Total URA(D) on securities arising during the period (8,226 ) 18,297 (93,929 ) 25,207
Foreign currency translation adjustments (5,839 ) 15,301 (13,064 ) 12,737
Pension adjustments 1,470 1,199 4,161 3,166
Total other comprehensive income (loss), net of tax (12,595 ) 34,797 (102,832 ) 41,110

COMPREHENSIVE INCOME (LOSS) $ 231,158 $ 190,782 $ 511,834 $ 537,472

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

EVEREST REINSURANCE HOLDINGS, INC.

CONSOLIDATED STATEMENTS OF

CHANGES IN STOCKHOLDER’S EQUITY

	Three Months Ended
	March 31,
(Dollars in thousands, except share amounts)	2014		2013
	(unaudited)
COMMON STOCK (shares outstanding):
Balance, beginning of period		1,000		1,000
Balance, end of period		1,000		1,000

ADDITIONAL PAID-IN CAPITAL:
Balance, beginning of period	$	351,051	$	340,223
Share-based compensation plans		3,394		3,158
Balance, end of period		354,445		343,381

ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS),
NET OF DEFERRED INCOME TAXES:
Balance, beginning of period		87,648		184,867
Net increase (decrease) during the period		15,030		(13,214	)
Balance, end of period		102,678		171,653

RETAINED EARNINGS:
Balance, beginning of period		3,751,779		2,953,516
Net income (loss)		86,466		285,651
Balance, end of period		3,838,245		3,239,167

TOTAL STOCKHOLDER'S EQUITY, END OF PERIOD	$	4,295,368	$	3,754,201

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

Three Months Ended Nine Months Ended
September 30, September 30,
(Dollars in thousands, except share amounts) 2013 2012 2013 2012
(unaudited) (unaudited)
COMMON STOCK (shares outstanding):
Balance, beginning of period 1,000 1,000 1,000 1,000
Balance, end of period 1,000 1,000 1,000 1,000

ADDITIONAL PAID-IN CAPITAL:
Balance, beginning of period $ 346,279 $ 336,813 $ 340,223 $ 333,416
Share-based compensation plans 2,620 1,665 8,676 5,062
Balance, end of period 348,899 338,478 348,899 338,478

ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS),
NET OF DEFERRED INCOME TAXES:
Balance, beginning of period 94,630 181,103 184,867 174,790
Net increase (decrease) during the period (12,595 ) 34,797 (102,832 ) 41,110
Balance, end of period 82,035 215,900 82,035 215,900

RETAINED EARNINGS:
Balance, beginning of period 3,324,429 2,773,564 2,953,516 2,433,187
Net income (loss) 243,753 155,985 614,666 496,362
Balance, end of period 3,568,182 2,929,549 3,568,182 2,929,549

TOTAL STOCKHOLDER'S EQUITY, END OF PERIOD $ 3,999,116 $ 3,483,927 $ 3,999,116 $ 3,483,927

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

EVEREST REINSURANCE HOLDINGS, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

	Three Months Ended
	March 31,
(Dollars in thousands)	2014			2013
	(unaudited)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss)	$	86,466		$	285,651
Adjustments to reconcile net income to net cash provided by operating activities:
Decrease (increase) in premiums receivable		12,611			(51,555	)
Decrease (increase) in funds held by reinsureds, net		2,877			(6,122	)
Decrease (increase) in reinsurance receivables		(279,364	)		(22,142	)
Decrease (increase) in income taxes		24,447			132,099
Decrease (increase) in prepaid reinsurance premiums		(47,040	)		(16,378	)
Increase (decrease) in reserve for losses and loss adjustment expenses		(58,410	)		(176,428	)
Increase (decrease) in unearned premiums		76,126			43,947
Increase (decrease) in other net payable to reinsurers		130,527			(4,619	)
Increase (decrease) in losses in course of payment		101,869			162,432
Change in equity adjustments in limited partnerships		3,143			(11,220	)
Distribution of limited partnership income		5,824			10,252
Change in other assets and liabilities, net		(16,618	)		12,988
Non-cash compensation expense		1,729			2,173
Amortization of bond premium (accrual of bond discount)		6,004			6,563
Amortization of underwriting discount on senior notes		14			13
Net realized capital (gains) losses		4,050			(309,806	)
Net cash provided by (used in) operating activities		54,255			57,848

CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from fixed maturities matured/called - available for sale, at market value		207,534			298,241
Proceeds from fixed maturities matured/called - available for sale, at fair value		875			3,000
Proceeds from fixed maturities sold - available for sale, at market value		149,578			166,934
Proceeds from fixed maturities sold - available for sale, at fair value		20,763			3,664
Proceeds from equity securities sold - available for sale, at fair value		176,116			103,828
Distributions from other invested assets		9,828			22,225
Cost of fixed maturities acquired - available for sale, at market value		(689,205	)		(586,523	)
Cost of fixed maturities acquired - available for sale, at fair value		(1,309	)		(1,295	)
Cost of equity securities acquired - available for sale, at fair value		(77,427	)		(120,527	)
Cost of other invested assets acquired		(4,961	)		(4,661	)
Net change in short-term investments		113,571			83,622
Net change in unsettled securities transactions		(8,812	)		(17,558	)
Net cash provided by (used in) investing activities		(103,449	)		(49,050	)

CASH FLOWS FROM FINANCING ACTIVITIES:
Tax benefit from share-based compensation		1,665			985
Net cash provided by (used in) financing activities		1,665			985

EFFECT OF EXCHANGE RATE CHANGES ON CASH		3,987			(13,548	)

Net increase (decrease) in cash		(43,542	)		(3,765	)
Cash, beginning of period		316,807			347,720
Cash, end of period	$	273,265		$	343,955

SUPPLEMENTAL CASH FLOW INFORMATION:
Income taxes paid (recovered)	$	12,474		$	862
Interest paid		42			5,136

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

Three Months Ended Nine Months Ended
September 30, September 30,
(Dollars in thousands) 2013 2012 2013 2012
(unaudited) (unaudited)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $ 243,753 $ 155,985 $ 614,666 $ 496,362
Adjustments to reconcile net income to net cash provided by operating activities:
Decrease (increase) in premiums receivable (185,115 ) (233,296 ) (382,658 ) (129,749 )
Decrease (increase) in funds held by reinsureds, net 285 2,646 (12,201 ) (14,878 )
Decrease (increase) in reinsurance receivables (91,047 ) (39,772 ) (177,199 ) (9,281 )
Decrease (increase) in current income taxes 18,342 18,495 31,121 23,123
Decrease (increase) in deferred tax asset 111,002 22,640 221,625 136,264
Decrease (increase) in prepaid reinsurance premiums (78,068 ) (66,455 ) (132,217 ) 28,866
Increase (decrease) in reserve for losses and loss adjustment expenses (136,110 ) (109,811 ) (390,402 ) (406,946 )
Increase (decrease) in unearned premiums 140,204 98,935 263,018 (102,067 )
Increase (decrease) in other net payable to reinsurers 147,164 220,948 264,061 263,498
Increase (decrease) in losses in course of payment 182,448 72,965 417,982 83,554
Change in equity adjustments in limited partnerships (6,337 ) (8,800 ) (31,159 ) (28,850 )
Change in other assets and liabilities, net 19,626 (13,445 ) 7,875 75,310
Non-cash compensation expense 2,257 1,737 6,230 4,981
Amortization of bond premium (accrual of bond discount) 5,999 3,330 19,696 12,939
Amortization of underwriting discount on senior notes 14 13 41 38
Net realized capital (gains) losses (208,426 ) (95,943 ) (533,758 ) (354,673 )
Net cash provided by (used in) operating activities 165,991 30,172 186,721 78,491

CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from fixed maturities matured/called - available for sale, at market value 258,451 273,497 885,835 648,218
Proceeds from fixed maturities matured/called - available for sale, at fair value - 1,300 7,213 1,300
Proceeds from fixed maturities sold - available for sale, at market value 124,460 114,610 465,084 290,911
Proceeds from fixed maturities sold - available for sale, at fair value 1,056 11,783 18,398 72,926
Proceeds from equity securities sold - available for sale, at fair value 95,174 85,277 450,020 377,157
Distributions from other invested assets 6,656 16,130 66,444 31,513
Cost of fixed maturities acquired - available for sale, at market value (313,538 ) (404,009 ) (1,314,440 ) (1,066,080 )
Cost of fixed maturities acquired - available for sale, at fair value (2,092 ) (1,658 ) (4,798 ) (7,164 )
Cost of equity securities acquired - available for sale, at fair value (98,760 ) (107,330 ) (332,434 ) (288,218 )
Cost of other invested assets acquired (3,320 ) (20,065 ) (11,828 ) (43,831 )
Net change in short-term investments (86,361 ) (58,681 ) 10,316 (216,270 )
Net change in unsettled securities transactions 16,401 33,600 (15,982 ) 38,712
Net cash provided by (used in) investing activities (1,873 ) (55,546 ) 223,828 (160,826 )

CASH FLOWS FROM FINANCING ACTIVITIES:
Tax benefit from share-based compensation 363 (72 ) 2,446 81
Revolving credit borrowings (40,000 ) - - -
Net cost of junior subordinated debt securities maturing - - (329,897 ) -
Net cash provided by (used in) financing activities (39,637 ) (72 ) (327,451 ) 81

EFFECT OF EXCHANGE RATE CHANGES ON CASH (9,240 ) 28,772 (23,945 ) 43,046

Net increase (decrease) in cash 115,241 3,326 59,153 (39,208 )
Cash, beginning of period 291,632 305,733 347,720 348,267
Cash, end of period $ 406,873 $ 309,059 $ 406,873 $ 309,059

SUPPLEMENTAL CASH FLOW INFORMATION:
Income taxes paid (recovered) $ (4,345 ) $ 27,119 $ 49,050 $ 36,498
Interest paid 72 5,202 23,054 30,244

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

NOTES TO CONSOLIDATED INTERIM FINANCIAL STATEMENTS (UNAUDITED)

For the Three ~~and Nine~~ Months Ended ~~September 30,~~March 31, 2014 and 2013 ~~and 2012~~

As used in this document, “Holdings” means Everest Reinsurance Holdings, Inc., a Delaware company and direct subsidiary of Everest Underwriting Group (Ireland) Limited (“Holdings Ireland”); “Group” means Everest Re Group, Ltd. (Holdings Ireland’s parent); “Bermuda Re” means Everest Reinsurance (Bermuda), Ltd., a subsidiary of Group; “Everest Re” means Everest Reinsurance Company and its subsidiaries, a subsidiary of Holdings (unless the context otherwise requires); ~~"Mt.~~“Mt. Logan ~~Re"~~Re” means Mt. Logan Re Ltd., a subsidiary of Group; and the “Company” means Holdings and its subsidiaries.

2. BASIS OF PRESENTATION

The unaudited consolidated financial statements of the Company for the three ~~and nine~~ months ended ~~September 30,~~March 31, 2014 and 2013 ~~and 2012~~ include all adjustments, consisting of normal recurring accruals, which, in the opinion of management, are necessary for a fair statement of the results on an interim basis. Certain financial information, which is normally included in annual financial statements prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”), has been omitted since it is not required for interim reporting purposes. The December 31, ~~2012~~2013 consolidated balance sheet data was derived from audited financial statements, but does not include all disclosures required by GAAP. The results for the three ~~and nine~~ months ended ~~September 30,~~March 31, 2014 and 2013 ~~and 2012~~ are not necessarily indicative of the results for a full year. These financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto for the years ended December 31, 2013, 2012 ~~2011~~ and ~~2010~~2011 included in the Company’s most recent Form 10-K filing.

All intercompany accounts and transactions have been eliminated.

Certain reclassifications and format changes have been made to prior ~~period~~years’ amounts to conform to the ~~current period~~2014 presentation. One reclassification relates to a correction in the manner in which the Company reports distributions received from limited partnership investments in the consolidated Statements of Cash Flows. Prior to the fourth quarter of 2013, the Company incorrectly reflected all distributions as cash flows from investing activities in its Consolidated Statements of Cash Flows. Starting with the fourth quarter of 2013, cash distributions from the limited partnerships that represent net investment income are reflected as cash flows from operating activities and distributions that represent the return of capital contributions are reflected as cash flows from investing activities. For the three months ended March 31, 2013, $10,252 thousand has been reclassified from “Distributions from other invested assets” included in cash flows from investing activities to “Distribution of limited partnership income” included in cash flows from operations. The Company has determined that this error is not material to the financial statements of any prior period.

Application of Recently Issued Accounting Standard Changes

~~Intangibles-Goodwill or Other.~~ In September 2011, the Financial Accounting Standards Board (“FASB”) amended the authoritative guidance for disclosures on Goodwill Impairment. The amendment allows an entity first to assess qualitative factors to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount as a basis in determining whether it is necessary to perform the two-step goodwill impairment test. This guidance is effective for periods beginning after December 15, 2011. The Company implemented this guidance as of January 1, 2012.

~~Common Fair Value Measurement.~~ In May 2011, FASB issued amendments to existing guidance to achieve common fair value measurement and disclosure requirements between GAAP and International Financial Reporting Standards. The amendments change wording used to describe many GAAP fair value measurement requirements and disclosures. FASB does not intend for the amendments to cause a change in application of fair value accounting guidance. The guidance is effective for reporting periods beginning after December 15, 2011. The Company implemented this guidance prospectively as of January 1, 2012.

The amortized cost, market value and gross unrealized appreciation and depreciation of available for sale, fixed maturity and equity security investments, carried at market value, are as follows for the periods indicated:

The ~~$730,887~~$645,591 thousand of foreign government securities at ~~September 30, 2013~~March 31, 2014 included ~~$88,003~~$90,272 thousand of European sovereign securities. Approximately ~~55.4%~~54.3%, 14.1%, ~~11.6%~~13.5% and ~~7.3%~~7.4% of European Sovereign Securities represented securities held in the governments of France, the United Kingdom, Sweden

securities. The Company held no sovereign securities of Portugal, Italy, Ireland, Greece or Spain at ~~September 30, 2013.~~March 31, 2014.

In accordance with FASB guidance, the Company reclassified the non-credit portion of other-than-temporary impairments from retained earnings into accumulated other comprehensive income (loss), on April 1, 2009. As of ~~September 30, 2013,~~March 31, 2014, all of the previously reclassified securities have either matured or have been sold. ~~The table below presents the pre-tax cumulative unrealized appreciation (depreciation) on those corporate securities, for the period indicated:~~

(Dollars in thousands) At December 31, 2012
Pre-tax cumulative unrealized appreciation (depreciation) $ 399

The amortized cost and market value of fixed maturity securities 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.

The changes in net unrealized appreciation (depreciation) for the Company’s investments are derived from the following sources for the periods as indicated:

The Company frequently reviews all of its fixed maturity, available for sale securities for declines in market value and focuses its attention on securities whose fair value has fallen below 80% of their amortized cost at the time of review. The Company then assesses whether the decline in value is temporary or other-than-temporary. In making its assessment, the Company evaluates the current market and interest rate environment as well as specific issuer information. Generally, a change in a security’s value caused by a change in the market, interest rate or foreign exchange environment does not constitute an ~~other-than-~~

consolidated statements of operations and comprehensive income (loss). The fair value adjustment that is non-credit related is recorded as a component of other comprehensive income (loss), net of tax, and is included in accumulated other comprehensive income (loss) in the Company’s consolidated balance sheets. The Company’s assessments are based on the issuers current and expected future financial position, timeliness with 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.

The majority of the Company’s equity securities available for sale at market value are primarily comprised of mutual fund investments whose underlying securities consist of fixed maturity securities. When a fund’s value reflects an unrealized loss, the Company assesses whether the decline in value is temporary or other-than-temporary. In making its assessment, the Company considers the composition of its portfolios and their related markets, reports received from the portfolio managers and discussions with portfolio managers. If the Company determines that the declines are temporary and it has the ability and intent to continue to hold the investments, then the declines are recorded as unrealized losses in accumulated other comprehensive income (loss). If declines are deemed to be other-than-temporary, then the carrying value of the investment is written down to fair value and recorded in net realized capital gains (losses) in the Company’s consolidated statements of operations and comprehensive income (loss).

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.

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

	Duration of Unrealized Loss at March 31, 2014 By Security Type
	Less than 12 months					Greater than 12 months					Total
			Gross					Gross					Gross
			Unrealized					Unrealized					Unrealized
(Dollars in thousands)	Market Value		Depreciation			Market Value		Depreciation			Market Value		Depreciation
Fixed maturity securities - available for sale
U.S. Treasury securities and obligations of
U.S. government agencies and corporations	$	28,420	$	(303	)	$	8,689	$	(723	)	$	37,109	$	(1,026	)
Obligations of U.S. states and political subdivisions		35,182		(1,091	)		68,552		(3,471	)		103,734		(4,562	)
Corporate securities		516,730		(5,033	)		78,099		(3,324	)		594,829		(8,357	)
Asset-backed securities		1,848		(2	)		-		-			1,848		(2	)
Mortgage-backed securities
Commercial		-		-			-		-			-		-
Agency residential		136,963		(1,951	)		285,909		(9,840	)		422,872		(11,791	)
Non-agency residential		91		-			169		(25	)		260		(25	)
Foreign government securities		104,740		(3,926	)		29,043		(2,866	)		133,783		(6,792	)
Foreign corporate securities		293,848		(5,481	)		93,307		(4,665	)		387,155		(10,146	)
Total fixed maturity securities	$	1,117,822	$	(17,787	)	$	563,768	$	(24,914	)	$	1,681,590	$	(42,701	)
Equity securities		13		(2	)		-		-			13		(2	)
Total	$	1,117,835	$	(17,789	)	$	563,768	$	(24,914	)	$	1,681,603	$	(42,703	)

Duration of Unrealized Loss at September 30, 2013 By Security Type
Less than 12 months Greater than 12 months Total
Gross Gross Gross
Unrealized Unrealized Unrealized
(Dollars in thousands) Market Value Depreciation Market Value Depreciation Market Value Depreciation
Fixed maturity securities - available for sale
U.S. Treasury securities and obligations of
U.S. government agencies and corporations $ 17,873 $ (194 ) $ 8,828 $ (562 ) $ 26,701 $ (756 )
Obligations of U.S. states and political subdivisions 96,868 (8,117 ) 4,448 (217 ) 101,316 (8,334 )
Corporate securities 613,499 (14,473 ) 43,444 (3,233 ) 656,943 (17,706 )
Asset-backed securities - - - - - -
Mortgage-backed securities
Commercial - - - - - -
Agency residential 432,853 (12,252 ) 45,524 (645 ) 478,377 (12,897 )
Non-agency residential - - 281 (32 ) 281 (32 )
Foreign government securities 119,094 (2,446 ) 29,174 (2,668 ) 148,268 (5,114 )
Foreign corporate securities 374,560 (12,669 ) 48,816 (3,831 ) 423,376 (16,500 )
Total fixed maturity securities $ 1,654,747 $ (50,151 ) $ 180,515 $ (11,188 ) $ 1,835,262 $ (61,339 )
Equity securities - - - - - -
Total $ 1,654,747 $ (50,151 ) $ 180,515 $ (11,188 ) $ 1,835,262 $ (61,339 )

The aggregate market value and gross unrealized losses related to investments in an unrealized loss position at ~~September 30, 2013~~March 31, 2014 were ~~$1,835,262~~$1,681,603 thousand and ~~$61,339~~$42,703 thousand, respectively. The market value of securities for the single issuer whose securities comprised the largest unrealized loss position at ~~September 30, 2013,~~March 31, 2014, did not exceed ~~0.7%~~0.8% of the overall market value 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 ~~$50,151~~$17,787 thousand of unrealized losses related to fixed maturity securities that have been in an unrealized loss position for less than one year were primarily comprised of domestic and foreign corporate securities, foreign government securities, agency residential mortgage-backed securities as well as state and municipal securities. Of these unrealized losses, ~~$37,846~~$14,559 thousand were related to securities that were rated investment grade by at least one nationally recognized statistical rating organization. The ~~$11,188~~$24,914 thousand of unrealized losses related to fixed maturity securities in an unrealized loss position for more than one year related primarily to agency residential mortgage-backed securities, foreign and domestic ~~and~~corporate securities, foreign ~~corporate~~government securities as well as ~~foreign government~~state and municipal securities. Of these unrealized losses, ~~$10,532~~$24,078 thousand were related to securities that were rated investment grade by at least one nationally recognized statistical rating organization. The gross unrealized depreciation for mortgage-backed securities included ~~$32~~$25 thousand related to sub-prime and alt-A loans. In all instances, there were no projected cash flow shortfalls to recover the full book value of the investments and the related interest obligations. The mortgage-backed securities still have excess credit coverage and are current on interest and principal payments.

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

Duration of Unrealized Loss at December 31, 2012 By Security Type
Less than 12 months Greater than 12 months Total
Gross Gross Gross
Unrealized Unrealized Unrealized
(Dollars in thousands) Market Value Depreciation Market Value Depreciation Market Value Depreciation
Fixed maturity securities - available for sale
U.S. Treasury securities and obligations of
U.S. government agencies and corporations $ 8,058 $ (292 ) $ 3,386 $ (577 ) $ 11,444 $ (869 )
Obligations of U.S. states and political subdivisions 38,754 (1,072 ) 5,781 (51 ) 44,535 (1,123 )
Corporate securities 122,138 (1,566 ) 62,492 (4,905 ) 184,630 (6,471 )
Asset-backed securities - - - - - -
Mortgage-backed securities
Commercial - - 10,729 (67 ) 10,729 (67 )
Agency residential 177,336 (1,042 ) 54,595 (682 ) 231,931 (1,724 )
Non-agency residential - - 446 (33 ) 446 (33 )
Foreign government securities 13,958 (105 ) 34,355 (3,630 ) 48,313 (3,735 )
Foreign corporate securities 44,945 (565 ) 53,672 (5,716 ) 98,617 (6,281 )
Total fixed maturity securities $ 405,189 $ (4,642 ) $ 225,456 $ (15,661 ) $ 630,645 $ (20,303 )
Equity securities - - 13 (2 ) 13 (2 )
Total $ 405,189 $ (4,642 ) $ 225,469 $ (15,663 ) $ 630,658 $ (20,305 )

Duration of Unrealized Loss at December 31, 2012 By Maturity
Less than 12 months Greater than 12 months Total
Gross Gross Gross
Unrealized Unrealized Unrealized
(Dollars in thousands) Market Value Depreciation Market Value Depreciation Market Value Depreciation
Fixed maturity securities
Due in one year or less $ 5,875 $ (24 ) $ 19,291 $ (2,833 ) $ 25,166 $ (2,857 )
Due in one year through five years 103,313 (1,671 ) 110,161 (10,564 ) 213,474 (12,235 )
Due in five years through ten years 57,225 (678 ) 16,385 (1,008 ) 73,610 (1,686 )
Due after ten years 61,440 (1,227 ) 13,849 (474 ) 75,289 (1,701 )
Asset-backed securities - - - - - -
Mortgage-backed securities 177,336 (1,042 ) 65,770 (782 ) 243,106 (1,824 )
Total fixed maturity securities $ 405,189 $ (4,642 ) $ 225,456 $ (15,661 ) $ 630,645 $ (20,303 )

	Duration of Unrealized Loss at December 31, 2013 By Security Type
	Less than 12 months					Greater than 12 months					Total
			Gross					Gross					Gross
			Unrealized					Unrealized					Unrealized
(Dollars in thousands)	Market Value		Depreciation			Market Value		Depreciation			Market Value		Depreciation
Fixed maturity securities - available for sale
U.S. Treasury securities and obligations of
U.S. government agencies and corporations	$	39,274	$	(302	)	$	8,751	$	(644	)	$	48,025	$	(946	)
Obligations of U.S. states and political subdivisions		92,760		(4,852	)		39,689		(4,170	)		132,449		(9,022	)
Corporate securities		388,721		(8,981	)		56,156		(3,512	)		444,877		(12,493	)
Asset-backed securities		-		-			-		-			-		-
Mortgage-backed securities
Commercial		-		-			-		-			-		-
Agency residential		381,149		(14,084	)		131,504		(4,437	)		512,653		(18,521	)
Non-agency residential		-		-			202		(33	)		202		(33	)
Foreign government securities		100,984		(5,255	)		29,174		(2,686	)		130,158		(7,941	)
Foreign corporate securities		321,933		(11,394	)		66,715		(4,205	)		388,648		(15,599	)
Total fixed maturity securities	$	1,324,821	$	(44,868	)	$	332,191	$	(19,687	)	$	1,657,012	$	(64,555	)
Equity securities		13		(2	)		-		-			13		(2	)
Total	$	1,324,834	$	(44,870	)	$	332,191	$	(19,687	)	$	1,657,025	$	(64,557	)

	Duration of Unrealized Loss at December 31, 2013 By Maturity
	Less than 12 months					Greater than 12 months					Total
			Gross					Gross					Gross
			Unrealized					Unrealized					Unrealized
(Dollars in thousands)	Market Value		Depreciation			Market Value		Depreciation			Market Value		Depreciation
Fixed maturity securities
Due in one year or less	$	17,315	$	(1,273	)	$	31,679	$	(4,132	)	$	48,994	$	(5,405	)
Due in one year through five years		425,627		(8,982	)		111,150		(5,647	)		536,777		(14,629	)
Due in five years through ten years		312,341		(10,408	)		14,865		(663	)		327,206		(11,071	)
Due after ten years		188,389		(10,121	)		42,791		(4,775	)		231,180		(14,896	)
Asset-backed securities		-		-			-		-			-		-
Mortgage-backed securities		381,149		(14,084	)		131,706		(4,470	)		512,855		(18,554	)
Total fixed maturity securities	$	1,324,821	$	(44,868	)	$	332,191	$	(19,687	)	$	1,657,012	$	(64,555	)

The aggregate market value and gross unrealized losses related to investments in an unrealized loss position at December 31, ~~2012~~2013 were ~~$630,658~~$1,657,025 thousand and ~~$20,305~~$64,557 thousand, respectively. The market value of securities for the single issuer whose securities comprised the largest unrealized loss position at December 31, ~~2012,~~2013, did not exceed ~~0.2%~~0.9% of the overall market value 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 ~~$4,642~~$44,868 thousand of unrealized losses related to fixed maturity securities that have been in an unrealized loss position for less than one year were primarily comprised of domestic and foreign corporate securities, ~~state and municipal~~foreign government securities, agency residential mortgage-backed securities as well as ~~agency residential mortgage-backed~~state and municipal securities. Of these unrealized losses, ~~$3,281~~$38,527 thousand were related to securities that were rated investment grade by at least one nationally recognized statistical rating organization. The ~~$15,661~~$19,687 thousand of unrealized losses related to fixed maturity securities in an unrealized loss position for more than one year related primarily to domestic and foreign corporate securities, foreign government securities, agency residential mortgage-backed securities as well as ~~foreign government~~state and municipal securities. Of these unrealized losses, ~~$14,401~~$18,867 thousand were related to securities that were rated investment grade by at least one nationally recognized statistical rating organization. ~~The non-investment grade securities with unrealized losses were mainly comprised of corporate securities, with the majority representing floating interest rate bank loan securities.~~ The gross unrealized depreciation for mortgage-backed securities included $33 thousand related to sub-prime and alt-A loans. In all instances, there were no projected cash flow shortfalls to recover the full book value of the investments and the related interest

obligations. The mortgage-backed securities still have excess credit coverage and are current on interest and principal payments.

Other invested assets, at fair value, is comprised of common shares of the Company’s ultimate parent, Group. At ~~September 30, 2013,~~March 31, 2014, the Company held 9,719,971 shares of Group representing ~~16.9%~~17.4% of the total outstanding shares.

The components of net investment income are presented in the table below for the periods indicated:

The Company records results from limited partnership investments on the equity method of accounting with changes in value reported through net investment income. Due to the 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 ~~$64,342~~$97,761 thousand in limited partnerships at ~~September 30, 2013.~~March 31, 2014. These commitments will be funded when called in accordance with the partnership agreements, which have investment periods that expire, unless extended, through ~~2016.~~2018.

The components of net realized capital gains (losses) are presented in the table below for the periods indicated:

The Company recorded as net realized capital gains (losses) in the consolidated statements of operations and comprehensive income (loss) both fair value re-measurements and write-downs in the value of securities deemed to be impaired on an other-than-temporary basis as displayed in the table above. The Company had no other-than-temporary impaired securities where the impairment had both a credit and non-credit component.

The proceeds and split between gross gains and losses, from sales of fixed maturity and equity securities, are presented in the table below for the periods indicated:

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

In limited instances where prices are not provided by pricing services or in rare instances when a manager may not agree with the pricing service, price quotes on a non-binding basis are obtained from investment brokers. The investment asset managers do not make any changes to prices received from either the pricing services or the investment brokers. In addition, the investment asset managers have procedures in place to review the reasonableness of the prices from the service providers and may request verification of the prices. In addition, the Company continually performs analytical reviews of price changes and tests the prices on a random basis to an independent pricing source. 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. The Company made no such adjustments at ~~September 30, 2013~~March 31, 2014 and December 31, ~~2012.~~2013.

The Company internally manages a small public equity portfolio which had a fair value at ~~September 30,~~March 31, 2014 and December 31, 2013, of ~~$76,901~~$87,317 thousand and $88,338 thousand, respectively, and all prices were obtained from publically published sources.

Equity securities in U.S. denominated currency are categorized as Level 1, Quoted Prices in Active Markets for Identical Assets, since the securities are actively traded on an exchange and prices are based on quoted prices from the exchange. Equity securities traded on foreign exchanges are categorized as Level 2 due to potential foreign exchange adjustments to fair or market value.

Fixed maturity securities are generally categorized as Level 2, Significant Other Observable Inputs, 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. Valuations that are derived from techniques in which one or more of the significant inputs are unobservable (including assumptions about risk) are categorized as Level 3, Significant Unobservable Inputs. These securities include broker priced securities.

As of ~~September 30, 2013~~March 31, 2014 and December 31, ~~2012,~~2013, all Level 3 fixed maturity securities, were priced using single non-binding broker quotes since prices for these securities were not provided by normal pricing service companies. The single broker quotes are provided by market makers or broker-dealers who are recognized as market participants in the markets in which they are providing the quotes. The prices received from brokers are reviewed for reasonableness by the third party asset managers and the Company.

Other invested assets, at fair value, are categorized as Level 1, Quoted Prices in Active Markets for Identical Assets, since the securities are shares of the Company’s parent, which are actively traded on an exchange and the price is based on a quoted price.

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

Foreign government securities

There were no transfers between Level 1 and Level 2 for the ~~nine~~three months ended ~~September 30, 2013.~~March 31, 2014.

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

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

	Three Months Ended March 31, 2014												Three Months Ended March 31, 2013
	Asset-backed			Foreign			Non-agency						Asset-backed			Foreign			Non-agency		Agency
(Dollars in thousands)	Securities			Corporate			RMBS			Total			Securities			Corporate			RMBS		RMBS			Total
Beginning balance	$	3,533		$	481		$	4		$	4,018		$	4,849		$	11,421		$	5	$	29,398		$	45,673
Total gains or (losses) (realized/unrealized)											-
Included in earnings		18			1			1			20			(99	)		(2	)		-		-			(101	)
Included in other comprehensive income (loss)		65			-			-			65			(190	)		(124	)		-		-			(314	)
Purchases, issuances and settlements		(572	)		(9	)		(1	)		(582	)		126			750			-		-			876
Transfers in and/or (out) of Level 3		-			-			-			-			-			(10,253	)		-		(29,398	)		(39,651	)
Ending balance	$	3,044		$	473		$	4		$	3,521		$	4,686		$	1,792		$	5	$	-		$	6,483

The amount of total gains or losses for the period included
in earnings (or changes in net assets) attributable to the
change in unrealized gains or losses relating to assets
still held at the reporting date	$	-		$	-		$	-		$	-		$	-		$	-		$	-	$	-		$	-

(Some amounts may not reconcile due to rounding.)

Three Months Ended September 30, 2013 Nine Months Ended September 30, 2013
Asset-backed Foreign Non-agency Agency Asset-backed Foreign Non-agency Agency
(Dollars in thousands) Securities Corporate RMBS RMBS Total Securities Corporate RMBS RMBS Total
Beginning balance $ 4,832 $ 7,225 $ 323 $ - $ 12,380 $ 4,849 $ 11,421 $ 5 $ 29,398 $ 45,673
Total gains or (losses) (realized/unrealized)
Included in earnings 58 (4 ) 1 - 55 74 (655 ) 3 - (578 )
Included in other comprehensive income (loss) (186 ) 51 - - (135 ) (515 ) (371 ) (25 ) - (911 )
Purchases, issuances and settlements (377 ) (1,751 ) (1 ) - (2,129 ) (397 ) 1,086 (72 ) - 617
Transfers in and/or (out) of Level 3 - (5,039 ) (319 ) - (5,358 ) 316 (10,999 ) 93 (29,398 ) (39,988 )
Ending balance $ 4,327 $ 482 $ 4 $ - $ 4,813 $ 4,327 $ 482 $ 4 $ - $ 4,813

The amount of total gains or losses for the period included
in earnings (or changes in net assets) attributable to the
change in unrealized gains or losses relating to assets
still held at the reporting date $ - $ - $ - $ - $ - $ - $ - $ - $ - $ -

(Some amounts may not reconcile due to rounding.)
There were no transfers from level 3, fair value measurements using significant unobservable inputs, for the three months ended March 31, 2014. The transfer from level 3, fair value measurements using significant unobservable inputs, of $39,651 thousand of investments for the three months ended March 31, 2013, primarily relates to securities that were priced using single non-binding broker quotes as of December 31, 2012. The securities were subsequently priced using a recognized pricing service as of March 31, 2013 and were classified as level 2 as of that date.

Three Months Ended September 30, 2012 Nine Months Ended September 30, 2012
Asset-backed Foreign Non-agency Asset-backed Foreign Non-agency
(Dollars in thousands) Securities Corporate RMBS Total Securities Corporate RMBS Total
Beginning balance $ 8,996 $ 7,383 $ 5 $ 16,384 $ 16,046 $ 2,536 $ 7 $ 18,589
Total gains or (losses) (realized/unrealized)
Included in earnings 56 (14 ) 1 43 111 (33 ) 3 81
Included in other comprehensive income (loss) 390 275 - 665 728 387 (2 ) 1,113
Purchases, issuances and settlements (61 ) (576 ) (1 ) (638 ) 4,407 6,640 (3 ) 11,044
Transfers in and/or (out) of Level 3 (1,789 ) (2,122 ) - (3,911 ) (13,700 ) (4,584 ) - (18,284 )
Ending balance $ 7,592 $ 4,946 $ 5 $ 12,543 $ 7,592 $ 4,946 $ 5 $ 12,543

The amount of total gains or losses for the period included
in earnings (or changes in net assets) attributable to the
change in unrealized gains or losses relating to assets
still held at the reporting date $ - $ - $ - $ - $ - $ - $ - $ -

(Some amounts may not reconcile due to rounding.)

5. CAPITAL TRANSACTIONS

On October 14, 2011, the Company renewed its shelf registration statement on Form S-3ASR with the SEC, as a Well Known Seasoned Issuer. This shelf registration statement can be used by Group to register common shares, preferred shares, debt securities, warrants, share purchase contracts and share purchase units; by Holdings to register debt securities and by Everest Re Capital Trust III (“Capital Trust III”) to register trust preferred securities.

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.

In 1993 and prior, the Company had a business arrangement with The Prudential Insurance Company of America (“The Prudential”) wherein, for a fee, the Company accepted settled claim payment obligations of certain property and casualty insurers, and, concurrently, became the owner of the annuity or assignee of the annuity proceeds funded by the property and casualty insurers specifically to fulfill these fully settled obligations. In these circumstances, the Company would be liable if The Prudential, which has an A+ (Superior) financial strength rating from A.M. Best Company (“A.M. Best”), was unable to make the annuity payments. The table below presents the estimated cost to replace all such annuities for which the Company was contingently liable for the periods indicated:

(Dollars in thousands) At September 30, 2013 At December 31, 2012
$ 145,113 $ 144,628

(Dollars in thousands)		At March 31, 2014				At December 31, 2013
		$	144,411			$	144,734

Prior to its 1995 initial public offering, the Company purchased annuities from an unaffiliated life insurance company with an A+ (Superior) financial strength rating from A.M. Best to settle certain claim liabilities of the company. Should the life insurance company become unable to make the annuity payments, the Company would be liable for those claim liabilities. The table below presents the estimated cost to replace all such annuities for which the Company was contingently liable for the periods indicated:

(Dollars in thousands) At September 30, 2013 At December 31, 2012
$ 30,063 $ 29,132

(Dollars in thousands)		At March 31, 2014				At December 31, 2013
		$	30,123			$	30,664

7. OTHER COMPREHENSIVE INCOME (LOSS)

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

	Three Months Ended March 31, 2014									Three Months Ended March 31, 2013
(Dollars in thousands)	Before Tax			Tax Effect			Net of Tax			Before Tax			Tax Effect			Net of Tax
Unrealized appreciation (depreciation) ("URA(D)") on securities - temporary	$	31,996		$	(11,199	)	$	20,797		$	(8,528	)	$	2,985		$	(5,543	)
URA(D) on securities - OTTI		-			-			-			(97	)		34			(63	)
Reclassification of net realized losses (gains) included in net income (loss)		1,997			(699	)		1,298			(2,089	)		731			(1,358	)
Foreign currency translation adjustments		(12,055	)		4,219			(7,836	)		(11,686	)		4,090			(7,596	)
Benefit plan actuarial net gain (loss)		-			-			-			-			-			-
Reclassification of amortization of net gain (loss) included in net income (loss)		1,186			(415	)		771			2,070			(724	)		1,346
Total other comprehensive income (loss)	$	23,124		$	(8,094	)	$	15,030		$	(20,330	)	$	7,116		$	(13,214	)

Three Months Ended September 30, 2013 Nine Months Ended September 30, 2013
(Dollars in thousands) Before Tax Tax Effect Net of Tax Before Tax Tax Effect Net of Tax
Unrealized appreciation (depreciation) ("URA(D)") on securities - temporary $ (10,927 ) $ 3,824 $ (7,102 ) $ (140,046 ) $ 49,016 $ (91,030 )
URA(D) on securities - OTTI - - - (399 ) 140 (259 )
Reclassification of net realized losses (gains) included in net income (loss) (1,729 ) 606 (1,124 ) (4,062 ) 1,422 (2,640 )
Foreign currency translation adjustments (8,982 ) 3,143 (5,839 ) (20,098 ) 7,034 (13,064 )
Benefit plan liability adjustments - - - - - -
Reclassification of benefit plan liability amortization included in net income (loss) 2,262 (792 ) 1,470 6,402 (2,241 ) 4,161
Total other comprehensive income (loss) $ (19,376 ) $ 6,781 $ (12,595 ) $ (158,203 ) $ 55,371 $ (102,832 )

Three Months Ended September 30, 2012 Nine Months Ended September 30, 2012
(Dollars in thousands) Before Tax Tax Effect Net of Tax Before Tax Tax Effect Net of Tax
URA(D) on securities - temporary $ 27,825 $ (9,739 ) $ 18,086 $ 36,317 $ (12,711 ) $ 23,606
URA(D) on securities - OTTI (77 ) 27 (50 ) (146 ) 51 (95 )
Reclassification of net realized losses (gains) included in net income (loss) 401 (140 ) 261 2,609 (913 ) 1,696
Foreign currency translation adjustments 23,540 (8,239 ) 15,301 19,596 (6,859 ) 12,737
Benefit plan liability adjustments - - - - - -
Reclassification of benefit plan liability amortization included in net income (loss) 1,844 (645 ) 1,199 4,871 (1,705 ) 3,166
Total other comprehensive income (loss) $ 53,533 $ (18,736 ) $ 34,797 $ 63,247 $ (22,137 ) $ 41,110

(Some amounts may not reconcile due to rounding)

The following table presents details of the amounts reclassified from accumulated other comprehensive income (“AOCI”) for the periods indicated:

	Three months ended			Nine months ended			Affected line item within the statements of	Three months ended			Three months ended			Affected line item within the statements of
AOCI component	September 30, 2013			September 30, 2013			operations and comprehensive income (loss)	March 31, 2014			March 31, 2013			operations and comprehensive income (loss)
(Dollars in thousands)
URA(D) on securities	$	(1,729	)	$	(4,062	)	Other net realized capital gains (losses)	$	1,997		$	(2,089	)	Other net realized capital gains (losses)
		606			1,422		Income tax expense (benefit)		(699	)		731		Income tax expense (benefit)
	$	(1,124	)	$	(2,640	)	Net income (loss)	$	1,298		$	(1,358	)	Net income (loss)

Benefit plan liability	$	2,262		$	6,402		Other underwriting expenses
Benefit plan net gain (loss)								$	1,186		$	2,070		Other underwriting expenses
		(792	)		(2,241	)	Income tax expense (benefit)		(415	)		(724	)	Income tax expense (benefit)
	$	1,470		$	4,161		Net income (loss)	$	771		$	1,346		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:

	At September 30,			At December 31,			At March 31,			At December 31,
(Dollars in thousands)	2013			2012			2014			2013

Beginning balance of URA (D) on securities	$	157,163		$	147,140		$	55,457		$	157,163
Current period change in URA (D) of investments - temporary		(93,670	)		10,177			22,095			(101,447	)
Current period change in URA (D) of investments - non-credit OTTI		(259	)		(154	)		-			(259	)
Ending balance of URA (D) on securities		63,234			157,163			77,552			55,457

Beginning balance of foreign currency translation adjustments		90,215			83,185			71,087			90,215
Current period change in foreign currency translation adjustments		(13,064	)		7,030			(7,836	)		(19,128	)
Ending balance of foreign currency translation adjustments		77,151			90,215			63,251			71,087

Beginning balance of benefit plans		(62,511	)		(55,535	)
Current period change in benefit plans		4,161			(6,976	)
Ending balance of benefit plans		(58,350	)		(62,511	)
Beginning balance of benefit plan net gain (loss)								(38,896	)		(62,511	)
Current period change in benefit plan net gain (loss)								771			23,615
Ending balance of benefit plan net gain (loss)								(38,125	)		(38,896	)

Ending balance of accumulated other comprehensive income (loss)	$	82,035		$	184,867		$	102,678		$	87,648

8. CREDIT FACILITY

Effective August 15, 2011, the Company entered into a ~~new~~ three year, $150,000 thousand unsecured revolving credit facility with a syndicate of lenders, ~~replacing the August 23, 2006 five year senior revolving credit facility. Both the August 15, 2011 and August 23, 2006 revolving credit agreements, which have similar terms, are~~ referred to as the “Holdings Credit Facility”. Citibank N.A. is the administrative agent for the Holdings Credit Facility. The Holdings Credit Facility may be used for liquidity and general corporate purposes. The Holdings Credit Facility provides for the borrowing of up to $150,000

thousand with interest at a rate selected by Holdings equal to either, (1) the Base Rate (as defined below) or (2) a periodic fixed rate equal to the Eurodollar Rate plus an applicable margin. The Base Rate means a fluctuating interest rate per annum in effect from time to time to be equal to the higher of (a) the rate of interest publicly announced by Citibank as its base rate, (b) 0.5% per annum above the Federal Funds Rate or (c) 1% above the one month London Interbank Offered Rate (“LIBOR”), in each case plus the applicable margin. The amount of margin and the fees payable for the Holdings Credit Facility depends upon Holdings’ senior unsecured debt rating.

The Holdings Credit Facility requires Holdings to maintain a debt to capital ratio of not greater than 0.35 to 1 and Everest Re to maintain its statutory surplus at $1,875,000 thousand plus 25% of future aggregate net income and 25% of future aggregate capital contributions after December 31, 2010, which at ~~September 30, 2013,~~March 31, 2014, was ~~$2,104,074~~$2,155,750 thousand. As of ~~September 30, 2013,~~March 31, 2014, the Company was in compliance with all Holdings Credit Facility covenants.

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. At December 31, ~~2012, $2,272,346~~2013, $2,294,461 thousand of the ~~$3,068,916~~$3,136,782 thousand in net assets of Holdings’ consolidated subsidiaries were subject to the foregoing regulatory restrictions.

The following table summarizes outstanding letters of credit and/or borrowings for the periods indicated:

(Dollars in thousands)	At March 31, 2014						At December 31, 2013
Bank	Commitment		In Use		Date of Loan	Maturity/Expiry Date	Commitment		In Use		Date of Loan	Maturity/Expiry Date
Citibank Holdings Credit Facility	$	150,000	$	-			$	150,000	$	-
Total revolving credit borrowings				-						-
Total letters of credit				851		12/31/2014				851		12/31/2014

Total Citibank Holdings Credit Facility	$	150,000	$	851			$	150,000	$	851

(Dollars in thousands) At September 30, 2013 At December 31, 2012
Bank Commitment In Use Date of Loan Maturity/Expiry Date Commitment In Use Date of Loan Maturity/Expiry Date
Citibank Holdings Credit Facility $ 150,000 $ - $ 150,000 $ -
Total revolving credit borrowings - -
Total letters of credit 1,551 12/31/2013 1,551 12/31/2013

Total Citibank Holdings Credit Facility $ 150,000 $ 1,551 $ 150,000 $ 1,551

The following table presents the costs incurred in connection with the Holdings Credit Facility for the periods indicated:

	Three Months Ended				Nine Months Ended				Three Months Ended
	September 30,				September 30,				March 31,
(Dollars in thousands)	2013		2012		2013		2012		2014		2013
Credit facility fees incurred	$	72	$	137	$	250	$	442	$	42	$	65

9. 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 a non-affiliated ceding company. At ~~September 30, 2013,~~March 31, 2014, the total amount on deposit in the trust account was ~~$189,799~~$193,504 thousand.

10. SENIOR NOTES

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

					March 31, 2014				December 31, 2013
					Consolidated Balance				Consolidated Balance
(Dollars in thousands)	Date Issued	Date Due	Principal Amounts		Sheet Amount		Market Value		Sheet Amount		Market Value
5.40% Senior notes	10/12/2004	10/15/2014	$	250,000	$	249,971	$	256,500	$	249,958	$	259,130

September 30, 2013 December 31, 2012
Consolidated Balance Consolidated Balance
(Dollars in thousands) Date Issued Date Due Principal Amounts Sheet Amount Market Value Sheet Amount Market Value
5.40% Senior notes 10/12/2004 10/15/2014 $ 250,000 $ 249,945 $ 259,498 $ 249,907 $ 266,390

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

	Three Months Ended
	March 31,
(Dollars in thousands)	2014		2013
Interest expense incurred	$	3,388	$	3,387

Three Months Ended Nine Months Ended
September 30, September 30,
(Dollars in thousands) 2013 2012 2013 2012
Interest expense incurred $ 3,388 $ 3,387 $ 10,163 $ 10,161

11. LONG TERM SUBORDINATED NOTES

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

Maturity Date

March 31, 2014

December 31, 2013

Original

Consolidated Balance

(Dollars in thousands)

Date Issued

Principal Amount

Scheduled

Final

Sheet Amount

Market Value

Sheet Amount

Market Value

6.6% Long term subordinated notes

04/26/2007

400,000

05/15/2037

05/01/2067

238,361

249,411

238,361

233,292

Maturity Date September 30, 2013 December 31, 2012
Original Consolidated Balance Consolidated Balance
(Dollars in thousands) Date Issued Principal Amount Scheduled Final Sheet Amount Market Value Sheet Amount Market Value
6.6% Long term subordinated notes 04/26/2007 $ 400,000 05/15/2037 05/01/2067 $ 238,360 $ 236,173 $ 238,357 $ 242,138

During the fixed rate interest period from May 3, 2007 through May 14, 2017, interest will be 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, subject to Holdings’ right to defer interest on one or more occasions for up to ten consecutive years. 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 semi-annually for periods prior to May 15, 2017, and compounded quarterly for periods from and including May 15, 2017.

Holdings can redeem the long term subordinated notes prior to May 15, 2017, in whole but not in part at the applicable redemption price, which will equal the greater of (a) 100% of the principal amount being redeemed and (b) the present value of the principal payment on May 15, 2017 and scheduled payments of interest that would have accrued from the redemption date to May 15, 2017 on the long term subordinated notes being redeemed, discounted to the redemption date on a semi-annual basis at a discount rate equal to the treasury rate plus an applicable spread of either 0.25% or 0.50%, in each case plus accrued and unpaid interest. 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.

On March 19, 2009, Group announced the commencement of a cash tender offer for any and all of the 6.60% fixed to floating rate long term subordinated notes. Upon expiration of the tender offer, the Company had reduced its outstanding debt by $161,441 thousand.

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

	Three Months Ended
	March 31,
(Dollars in thousands)	2014		2013
Interest expense incurred	$	3,937	$	3,937

Three Months Ended Nine Months Ended
September 30, September 30,
(Dollars in thousands) 2013 2012 2013 2012
Interest expense incurred $ 3,937 $ 3,937 $ 11,811 $ 11,811

12. JUNIOR SUBORDINATED DEBT SECURITIES PAYABLE

The following table displays Holdings’ outstanding junior subordinated debt securities due to Everest Re Capital Trust II (“Capital Trust II”), a wholly owned finance subsidiary of Holdings. Fair value is primarily based on the quoted market price of the related trust preferred securities, and as such, these securities are considered Level 2 under the fair value hierarchy.

September 30, 2013 December 31, 2012
Consolidated Balance Consolidated Balance
(Dollars in thousands) Date Issued Date Due Amount Issued Sheet Amount Fair Value Sheet Amount Fair Value
6.20% Junior subordinated debt securities 03/29/2004 03/29/2034 $ 329,897 $ - $ - $ 329,897 $ 333,225

In accordance with the provisions of the junior subordinated debt securities which were issued on March 29, 2004, Holdings elected to redeem the $329,897 thousand of 6.2% junior subordinated debt securities outstanding on May 24, 2013. As a result of the early redemption, the Company incurred pre-tax expense of $7,282 thousand related to the immediate amortization of the remaining capitalized issuance costs on the trust preferred securities.

Interest expense incurred in connection with these junior subordinated debt securities is as follows for the periods indicated:

	Three Months Ended				Nine Months Ended				Three Months Ended
	September 30,				September 30,				March 31,
(Dollars in thousands)	2013		2012		2013		2012		2014		2013
Interest expense incurred	$	-	$	5,113	$	8,181	$	15,340	$	-	$	5,113

Holdings considered the mechanisms and obligations relating to the trust preferred securities, taken together, constituted a full and unconditional guarantee by Holdings of Capital Trust II’s payment obligations with respect to their trust preferred securities.

13. SEGMENT REPORTING

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

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 loss adjustment expenses (“LAE”) incurred, commission and brokerage expenses and other underwriting expenses. Underwriting results are measured 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.

2120

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.

	Three Months Ended
U.S. Reinsurance	March 31,
(Dollars in thousands)	2014		2013
Gross written premiums	$	530,301	$	434,791
Net written premiums		251,521		217,623

Premiums earned	$	218,191	$	196,945
Incurred losses and LAE		115,984		101,194
Commission and brokerage		40,136		38,130
Other underwriting expenses		9,482		10,534
Underwriting gain (loss)	$	52,589	$	47,087

Three Months Ended Nine Months Ended
U.S. Reinsurance September 30, September 30,
(Dollars in thousands) 2013 2012 2013 2012
Gross written premiums $ 532,324 $ 433,494 $ 1,385,482 $ 938,444
Net written premiums 257,085 219,884 690,547 475,271

Premiums earned $ 225,231 $ 181,396 $ 621,430 $ 529,409
Incurred losses and LAE 102,506 108,153 340,799 321,397
Commission and brokerage 38,275 40,092 114,945 139,920
Other underwriting expenses 12,013 12,766 32,541 33,541
Underwriting gain (loss) $ 72,437 $ 20,385 $ 133,145 $ 34,551

Three Months Ended Nine Months Ended
International September 30, September 30,
(Dollars in thousands) 2013 2012 2013 2012
Gross written premiums $ 339,739 $ 248,459 $ 994,526 $ 878,637
Net written premiums 149,812 105,550 446,158 402,078

Premiums earned $ 140,854 $ 121,611 $ 433,872 $ 426,419
Incurred losses and LAE 90,743 29,309 262,709 191,837
Commission and brokerage 27,932 19,692 87,195 88,432
Other underwriting expenses 8,722 8,246 24,319 21,532
Underwriting gain (loss) $ 13,457 $ 64,364 $ 59,649 $ 124,618

	Three Months Ended					Nine Months Ended					Three Months Ended
Insurance	September 30,					September 30,
International											March 31,
(Dollars in thousands)	2013		2012			2013		2012			2014		2013
Gross written premiums	$	367,465	$	328,930		$	923,571	$	783,872		$	328,878	$	300,399
Net written premiums		178,365		133,432			456,334		348,328			141,457		133,789

Premiums earned	$	157,436	$	124,105		$	406,247	$	343,465		$	145,004	$	141,893
Incurred losses and LAE		113,872		105,415			306,153		273,617			83,575		82,083
Commission and brokerage		5,353		10,680			12,907		22,968			29,169		28,107
Other underwriting expenses		28,210		24,926			79,891		71,478			7,837		7,930
Underwriting gain (loss)	$	10,001	$	(16,916	)	$	7,296	$	(24,598	)	$	24,423	$	23,773

	Three Months Ended
Insurance	March 31,
(Dollars in thousands)	2014		2013
Gross written premiums	$	225,276	$	248,556
Net written premiums		106,726		124,755

Premiums earned	$	107,250	$	109,168
Incurred losses and LAE		78,487		85,364
Commission and brokerage		6,789		1,885
Other underwriting expenses		21,932		25,058
Underwriting gain (loss)	$	42	$	(3,139	)

The following table reconciles the underwriting results for the operating segments to income (loss) before taxes as reported in the consolidated statements of operations and comprehensive income (loss) for the periods indicated:

	Three Months Ended						Nine Months Ended						Three Months Ended
	September 30,						September 30,						March 31,
(Dollars in thousands)	2013			2012			2013			2012			2014			2013
Underwriting gain (loss)	$	95,895		$	67,833		$	200,090		$	134,571		$	77,054		$	67,721
Net investment income		68,828			76,342			227,433			231,790			63,787			76,869
Net realized capital gains (losses)		208,426			95,943			533,758			354,673			(4,050	)		309,806
Corporate expense		(1,516	)		(2,019	)		(5,353	)		(5,317	)		(1,302	)		(1,772	)
Interest, fee and bond issue cost amortization expense		(7,466	)		(12,682	)		(38,010	)		(38,061	)		(7,436	)		(12,616	)
Other income (expense)		5,012			425			5,095			19,599			(3,055	)		(9,661	)
Income (loss) before taxes	$	369,179		$	225,842		$	923,013		$	697,255		$	124,998		$	430,347

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:

	Three Months Ended				Nine Months Ended				Three Months Ended
	September 30,				September 30,				March 31,
(Dollars in thousands)	2013		2012		2013		2012		2014		2013
Canada	$	48,048	$	33,891	$	123,630	$	109,166	$	37,659	$	40,146

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

14. RELATED-PARTY TRANSACTIONS

Parent

Group’s Board of Directors approved an amended share repurchase program authorizing Group and/or its subsidiary Holdings to purchase Group’s common shares through open market transactions, privately negotiated transactions or both. The table below represents the amendments to the share repurchase program for the common shares approved for repurchase.

		Common Shares
		Authorized for
Amendment Date		Repurchase
(Dollars in thousands)

09/21/2004		5,000,000
07/21/2008		5,000,000
02/24/2010		5,000,000
02/22/2012		5,000,000
05/15/2013		5,000,000
		25,000,000

As of ~~September 30, 2013,~~March 31, 2014, Holdings held 9,719,971 common shares of Group, which it had purchased in the open market between February 1, 2007 and March 8, 2011. The table below represents the total purchase price for these common shares purchased.

(Dollars in thousands)
Total purchase price		$	835,371

Holdings reports these purchases 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 these common shares that are reported as net investment income in the consolidated statements of operations and comprehensive income (loss) for the period indicated.

	Three Months Ended				Nine Months Ended				Three Months Ended
	September 30,				September 30,				March 31,
(Dollars in thousands)	2013		2012		2013		2012		2014		2013
Dividends received	$	4,666	$	4,666	$	13,997	$	13,997	$	7,290	$	4,666

Outside Directors

During the normal course of business, the Company, through its affiliates, engages in insurance and brokerage and commission business transactions, with companies controlled by or affiliated with one or more of Group’s outside directors. Such transactions, individually and in the aggregate, are not material to the Company’s financial condition, results of operation and cash flows.

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.

	Three Months Ended
	March 31,
(Dollars in thousands)	2014		2013
Expenses incurred	$	15,843	$	18,555

Three Months Ended Nine Months Ended
September 30, September 30,
(Dollars in thousands) 2013 2012 2013 2012
Expenses incurred $ 19,066 $ 20,700 $ 55,835 $ 57,073

Affiliates

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

(Dollars in thousands)
		Percent			Assuming		Single			Aggregate
Coverage Period	Ceding Company	Ceded			Company	Type of Business	Occurrence Limit			Limit

01/01/2002-12/31/2002	Everest Re		20.0	%	Bermuda Re	property / casualty business	$	-		$	-

01/01/2003-12/31/2003	Everest Re		25.0	%	Bermuda Re	property / casualty business		-			-

01/01/2004-12/31/2005	Everest Re		22.5	%	Bermuda Re	property / casualty business		-			-
	Everest Re		2.5	%	Everest International	property / casualty business		-			-

01/01/2006-12/31/2006	Everest Re		18.0	%	Bermuda Re	property business		125,000	(1)		-
	Everest Re		2.0	%	Everest International	property business		-			-

01/01/2006-12/31/2007	Everest Re		31.5	%	Bermuda Re	casualty business		-			-
	Everest Re		3.5	%	Everest International	casualty business		-			-

01/01/2007-12/31/2007	Everest Re		22.5	%	Bermuda Re	property business		130,000	(1)		-
	Everest Re		2.5	%	Everest International	property business		-			-

01/01/2008-12/31/2008	Everest Re		36.0	%	Bermuda Re	property / casualty business		130,000	(1)		275,000	(2)
	Everest Re		4.0	%	Everest International	property / casualty business		-			-

01/01/2009-12/31/2009	Everest Re		36.0	%	Bermuda Re	property / casualty business		150,000	(1)		325,000	(2)
	Everest Re		8.0	%	Everest International	property / casualty business		-			-

01/01/2010-12/31/2010	Everest Re		44.0	%	Bermuda Re	property / casualty business		150,000			325,000

01/01/2011-12/31/2011	Everest Re		50.0	%	Bermuda Re	property / casualty business		150,000			300,000

01/01/2012	Everest Re		50.0	%	Bermuda Re	property / casualty business		100,000			200,000

01/01/2003-12/31/2006	Everest Re- Canadian Branch		50.0	%	Bermuda Re	property business		-			-
01/01/2007-12/31/2009	Everest Re- Canadian Branch		60.0	%	Bermuda Re	property business		-			-
01/01/2010-12/31/2010	Everest Re- Canadian Branch		60.0	%	Bermuda Re	property business		350,000	(3)		-
01/01/2011-12/31/2011	Everest Re- Canadian Branch		60.0	%	Bermuda Re	property business		350,000	(3)		-
01/01/2012-12/31/2012	Everest Re- Canadian Branch		75.0	%	Bermuda Re	property / casualty business		206,250	(3)		412,500	(3)
01/01/2013-12/31/2013	Everest Re- Canadian Branch		75.0	%	Bermuda Re	property / casualty business		150,000	(3)		412,500	(3)
01/01/2014	Everest Re- Canadian Branch		75.0	%	Bermuda Re	property / casualty business		262,500	(3)		412,500	(3)

��

01/01/2012

Everest Canada

80.0

Everest Re- Canadian Branch

property business

(Dollars in thousands)

Percent Assuming Single Aggregate
Coverage Period Ceding Company Ceded Company Type of Business Occurrence Limit Limit

01/01/2002-12/31/2002 Everest Re 20.0 % Bermuda Re property / casualty business $ - $ -

01/01/2003-12/31/2003 Everest Re 25.0 % Bermuda Re property / casualty business - -

01/01/2004-12/31/2005 Everest Re 22.5 % Bermuda Re property / casualty business - -
Everest Re 2.5 % Everest International property / casualty business - -

01/01/2006-12/31/2006 Everest Re 18.0 % Bermuda Re property business 125,000 (1) -
Everest Re 2.0 % Everest International property business - -

01/01/2006-12/31/2007 Everest Re 31.5 % Bermuda Re casualty business - -
Everest Re 3.5 % Everest International casualty business - -

01/01/2007-12/31/2007 Everest Re 22.5 % Bermuda Re property business 130,000 (1) -
Everest Re 2.5 % Everest International property business - -

01/01/2008-12/31/2008 Everest Re 36.0 % Bermuda Re property / casualty business 130,000 (1) 275,000 (2)
Everest Re 4.0 % Everest International property / casualty business - -

01/01/2009-12/31/2009 Everest Re 36.0 % Bermuda Re property / casualty business 150,000 (1) 325,000 (2)
Everest Re 8.0 % Everest International property / casualty business - -

01/01/2010-12/31/2010 Everest Re 44.0 % Bermuda Re property / casualty business 150,000 325,000

01/01/2011-12/31/2011 Everest Re 50.0 % Bermuda Re property / casualty business 150,000 300,000

01/01/2012 Everest Re 50.0 % Bermuda Re property / casualty business 100,000 200,000

01/01/2003-12/31/2006 Everest Re- Canadian Branch 50.0 % Bermuda Re property business - -
01/01/2007-12/31/2009 Everest Re- Canadian Branch 60.0 % Bermuda Re property business - -
01/01/2010-12/31/2010 Everest Re- Canadian Branch 60.0 % Bermuda Re property business 350,000 (3) -
01/01/2011-12/31/2011 Everest Re- Canadian Branch 60.0 % Bermuda Re property business 350,000 (3) -
01/01/2012-12/31/2012 Everest Re- Canadian Branch 75.0 % Bermuda Re property / casualty business 206,250 (3) 412,500 (3)
01/01/2013 Everest Re- Canadian Branch 75.0 % Bermuda Re property / casualty business 150,000 (3) 412,500 (3)

01/01/2012 Everest Canada 80.0 % Everest Re- Canadian Branch property business - -

(1) The single occurance limit is applied before the loss cessions to either Bermuda Re or Everest International.

(2) The aggregate limit is applied before the loss cessions to either Bermuda Re or Everest International.

(3) Amounts shown are Canadian dollars.


(1)	The single occurance limit is applied before the loss cessions to either Bermuda Re or Everest International.
(2)	The aggregate limit is applied before the loss cessions to either Bermuda Re or Everest International.
(3)	Amounts shown are Canadian dollars.

2523

For premiums earned and losses incurred for the period January 1, 2002 through December 31, 2002, Everest Re, Everest National Insurance Company and Everest Security Insurance Company entered into an Excess of Loss Reinsurance Agreement with Bermuda Re, covering workers’ compensation losses occurring on and after January 1, 2002, as respect to new, renewal and in force policies effective on that date through December 31, 2002. This agreement was commuted as of ~~June~~September 30, 2013. The table below represents Bermuda Re's liability limits for any losses per one occurrence.

	Liability Limits
(Dollars in thousands)	Exceeding		Not to Exceed
Losses per one occurrence	$	100,000	$	150,000

The table below represents loss portfolio transfer reinsurance agreements whereby net insurance exposures and reserves were transferred to an affiliate.

(Dollars in thousands)

Effective	Transferring	Assuming	% of Business or			Covered Period
Date	Company	Company	Amount of Transfer			of Transfer

09/19/2000	Mt. McKinley	Bermuda Re		100	%	All years
10/01/2001	Everest Re (Belgium Branch)	Bermuda Re		100	%	All years
10/01/2008	Everest Re	Bermuda Re	$	747,022		01/01/2002-12/31/2007

The following tables summarize the premiums and losses ceded by the Company to Bermuda Re and Everest International, respectively, and premiums and losses assumed by the Company from Everest Canada for the periods indicated:

	Three Months Ended
Bermuda Re	March 31,
(Dollars in thousands)	2014		2013
Ceded written premiums	$	518,017	$	477,131
Ceded earned premiums		479,813		454,382
Ceded losses and LAE (a)		238,501		231,531

	Three Months Ended				Nine Months Ended				Three Months Ended
Bermuda Re	September 30,				September 30,
Everest International									March 31,
(Dollars in thousands)	2013		2012		2013		2012		2014			2013
Ceded written premiums	$	567,033	$	448,656	$	1,553,615	$	1,188,944	$	(115	)	$	(135	)
Ceded earned premiums		507,308		412,390		1,437,109		1,237,883		(74	)		61
Ceded losses and LAE ~~(a)~~		337,036		263,990		835,022		732,170		1,884			40

Three Months Ended Nine Months Ended
Everest International September 30, September 30,
(Dollars in thousands) 2013 2012 2013 2012
Ceded written premiums $ 295 $ 361 $ 429 $ 1,055
Ceded earned premiums 336 583 750 2,550
Ceded losses and LAE (630 ) 832 (1,233 ) (744 )

	Three Months Ended				Nine Months Ended				Three Months Ended
Everest Canada	September 30,				September 30,				March 31,
(Dollars in thousands)	2013		2012		2013		2012		2014		2013
Assumed written premiums	$	5,650	$	4,170	$	14,775	$	12,813	$	4,010	$	2,838
Assumed earned premiums		4,807		3,963		12,196		11,329		4,688		3,770
Assumed losses and LAE		4,536		2,378		8,810		6,798		3,292		2,226

(a) Ceded losses and LAE include the Mt. McKinley loss portfolio transfer that constitutes losses ceded under retroactive reinsurance and therefore, in accordance with FASB guidance, a deferred gain on retroactive reinsurance is reflected in other expenses on the consolidated statements of operations and comprehensive income (loss).

Everest Re sold net assets of its UK branch to Bermuda Re and provided Bermuda Re with a reserve indemnity agreement allowing for indemnity payments of up to 90% of ₤25.0 million of the excess of 2002 and prior reserves, provided that any recognition of profit from the reserves for 2002 and prior underwriting

Effective February 27, 2013, Group established a new subsidiary, Mt. Logan Re, which is a Class 3 insurer based in Bermuda. Effective July 1, 2013, Mt. Logan Re established separate segregated accounts for its business activity, which will 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 and assumed by the Company from Mt. Logan Re.

The Company is domiciled in the United States and has subsidiaries domiciled within the United States with significant branches in Canada and Singapore. The Company’s non-U.S. branches are subject to income taxation at varying rates in their respective domiciles.

~~The Company~~For interim reporting periods, the company is generally ~~will~~required to use the ~~estimated annual~~annualized effective tax rate ~~approach for calculating its tax provision for interim periods~~(“AETR”) method, as prescribed by ASC 740-270, Interim ~~Reporting.~~Reporting, to calculate its income tax provision. Under this method, the ~~estimated annual effective tax rate approach, the estimated annual effective tax rate~~AETR is applied to the interim year-to-date pre-tax income to determine the income tax expense or benefit for the year-to-date period. The income tax expense or benefit for a quarter represents the difference between the year-to-date income tax expense or benefit for the current year-to-date period less such amount for the immediately preceding year-to-date period. Management considers the impact of all known events in its estimation of the Company’s annual pre-tax income and ~~effective tax rate.~~AETR.

~~During the third quarter of 2012, the Internal Revenue Service completed its audit of~~16. SUBSEQUENT EVENTS

On April 24, 2014, the Company ~~for the 2007 and 2008 tax years. At the conclusion of the audit,~~entered into two reinsurance agreements with Kilimanjaro Re Limited (“Kilimanjaro”), a Bermuda-based special purpose reinsurer, to provide the Company ~~paid additional federal income taxes~~with catastrophe reinsurance coverage. Kilimanjaro has funded the catastrophe reinsurance coverage through the issuance of ~~$12,747 thousand plus interest~~two classes of $1,702 thousand. The additional tax liability resulted primarily from adjustments to the timing of the Company’s utilization of foreign tax credits and therefore, including interest but net of other permanent benefit adjustments, resulted in only $752 thousand of additional income tax expense. Conversely, also as a result of closing the IRS audit, the Company was able to take down its reserve for uncertain tax positions by $9,657 thousand and related interest by $1,567 thousand, resultingcatastrophe reinsurance bonds in an ~~income tax benefit~~aggregate amount of ~~$11,223~~$450,000 thousand.

~~16. SUBSEQUENT EVENTS~~

~~ITEM 2.~~

~~MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATION~~

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATION

Industry Conditions.

The worldwide reinsurance and insurance businesses are highly competitive, as well as cyclical by product and market. As such, financial results tend to fluctuate with periods of constrained availability, high rates and strong profits followed by periods of abundant capacity, low 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 and domestic and international underwriting operations, including underwriting syndicates at Lloyd’s. 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 potential for securitization of reinsurance and insurance risks through capital markets provide additional sources of potential reinsurance and insurance capacity and competition.

Worldwide insurance and reinsurance market conditions continued to be very competitive, particularly in the casualty lines of business. Generally, there was ample insurance and reinsurance capacity relative to demand. Competition and its effect on rates, terms and conditions vary widely by market and coverage yet continued to be most prevalent in the U.S. casualty insurance and reinsurance markets and additional capacity from the capital markets is impacting worldwide catastrophe rates.

Catastrophe rates tend to fluctuate by global region, particularly areas recently impacted by large catastrophic events. During the second and third quarters of 2013, Canada experienced historic flooding in Alberta and Toronto, which ~~will likely result~~has resulted in higher ~~future~~ catastrophe ~~rates. Other recent~~rates in these areas. Although there were flooding and wind storm events in Europe and Asia in the latter part of 2013, the overall 2013 catastrophe ~~events that have led to higher regional~~losses for the industry were lower than average. This lower level of losses, combined with increased competition is putting downward pressure on rates ~~were Superstorm Sandy~~ in ~~2012 and~~certain geographical areas resulting in lower rates for most catastrophe coverages in the ~~Australian and Thailand floods, the New Zealand earthquake and the earthquake and Tsunami in Japan during 2011.~~beginning of 2014.

Overall, we believe that current marketplace conditions, particularly for catastrophe coverages, provide profit opportunities for us given our strong ratings, distribution system, reputation and expertise. We continue to employ our strategy of targeting business that offers the greatest profit potential, while maintaining balance and diversification in our overall portfolio.

2926

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:

	Three Months Ended						Percentage			Nine Months Ended						Percentage			Three Months Ended						Percentage
	September 30,						Increase/			September 30,						Increase/			March 31,						Increase/
(Dollars in millions)	2013			2012			(Decrease)			2013			2012			(Decrease)			2014			2013			(Decrease)
Gross written premiums	$	1,239.5		$	1,010.9			22.6	%	$	3,303.6		$	2,601.0			27.0	%	$	1,084.5		$	983.7			10.2	%
Net written premiums		585.3			458.9			27.5	%		1,593.0			1,225.7			30.0	%		499.7			476.2			4.9	%

REVENUES:
Premiums earned	$	523.5		$	427.1			22.6	%	$	1,461.5		$	1,299.3			12.5	%	$	470.4		$	448.0			5.0	%
Net investment income		68.8			76.3			-9.8	%		227.4			231.8			-1.9	%		63.8			76.9			-17.0	%
Net realized capital gains (losses)		208.4			95.9			117.2	%		533.8			354.7			50.5	%		(4.1	)		309.8			-101.3	%
Other income (expense)		5.0			0.4		NM				5.1			19.6			-74.0	%		(3.1	)		(9.7	)		-68.4	%
Total revenues		805.8			599.8			34.3	%		2,227.8			1,905.4			16.9	%		527.1			825.0			-36.1	%

CLAIMS AND EXPENSES:
Incurred losses and loss adjustment expenses		307.1			242.9			26.5	%		909.7			786.9			15.6	%		278.0			268.6			3.5	%
Commission, brokerage, taxes and fees		71.6			70.5			1.6	%		215.0			251.3			-14.4	%		76.1			68.1			11.7	%
Other underwriting expenses		48.9			45.9			6.5	%		136.8			126.6			8.1	%		39.3			43.5			-9.8	%
Corporate expense		1.5			2.0			-25.0	%		5.4			5.3			0.7	%		1.3			1.8			-26.6	%
Interest, fee and bond issue cost amortization expense		7.5			12.7			-41.1	%		38.0			38.1			-0.1	%		7.4			12.6			-41.1	%
Total claims and expenses		436.6			374.0			16.7	%		1,304.8			1,208.1			8.0	%		402.1			394.7			1.9	%

INCOME (LOSS) BEFORE TAXES		369.2			225.8			63.5	%		923.0			697.3			32.4	%		125.0			430.3			-71.0	%
Income tax expense (benefit)		125.4			69.9			79.5	%		308.3			200.9			53.5	%		38.5			144.7			-73.4	%
NET INCOME (LOSS)	$	243.8		$	156.0			56.3	%	$	614.7		$	496.4			23.8	%	$	86.5		$	285.7			-69.7	%

RATIOS:							Point Change									Point Change									Point Change
Loss ratio		58.7	%		56.9	%		1.8			62.2	%		60.6	%		1.6			59.1	%		60.0	%		(0.9	)
Commission and brokerage ratio		13.7	%		16.5	%		(2.8	)		14.7	%		19.3	%		(4.6	)		16.2	%		15.2	%		1.0
Other underwriting expense ratio		9.3	%		10.7	%		(1.4	)		9.4	%		9.7	%		(0.3	)		8.3	%		9.7	%		(1.4	)
Combined ratio		81.7	%		84.1	%		(2.4	)		86.3	%		89.6	%		(3.3	)		83.6	%		84.9	%		(1.3	)


										At			At			Percentage			At			At			Percentage
										September 30,			December 31,			Increase/			March 31,			December 31,			Increase/
(Dollars in millions)											2013			2012		(Decrease)			2014			2013			(Decrease)
Balance sheet data:
Total investments and cash										$	9,250.4		$	9,075.5			1.9	%	$	9,538.0		$	9,495.1			0.5	%
Total assets											15,888.7			15,088.0			5.3	%		15,897.0			15,521.0			2.4	%
Loss and loss adjustment expense reserves											7,716.4			8,143.1			-5.2	%		7,577.1			7,653.2			-1.0	%
Total debt											488.3			818.2			-40.3	%		488.3			488.3			0.0	%
Total liabilities											11,889.5			11,609.3			2.4	%		11,601.7			11,330.5			2.4	%
Stockholder's equity											3,999.1			3,478.6			15.0	%		4,295.4			4,190.5			2.5	%

(NM, not meaningful)
(Some amounts may not reconcile due to rounding.)
(Some amounts may not reconcile due to rounding)

Revenues.

Premiums. Gross written premiums increased by ~~22.6%~~10.2% to ~~$1,239.5~~$1,084.5 million for the three months ended ~~September 30, 2013~~March 31, 2014, compared to ~~$1,010.9~~$983.7 million for the three months ended ~~September 30, 2012,~~March 31, 2013, reflecting a ~~$190.1~~$124.0 million, or ~~27.9%~~16.9%, increase in our reinsurance business, ~~and~~partially offset by a ~~$38.5~~$23.3 million, or ~~11.7% increase~~9.4%, decrease in our insurance business. The increase in reinsurance premiums was mainly due to new business, ~~increased participations on existing business~~particularly for contracts with catastrophe exposed risks and ~~higher original rates on subject~~mortgage guaranty business. The ~~increase~~decrease in insurance premiums was primarily due to ~~the growth~~lower crop premiums, partially offset by an increase in ~~California workers compensation, crop and non-~~

~~standard~~non-standard auto business. ~~Gross~~Net written premiums increased by ~~27.0%~~4.9% to $3,303.6 million for the nine months ended September 30, 2013 compared to $2,601.0 million for the nine months ended September 30, 2012, reflecting a $562.9 million, or 31.0%, increase in our reinsurance business and a $139.7 million, or 17.8% increase in our insurance business. The increase in reinsurance premiums was mainly due to the impact of a Florida quota share reinsurance contract as well as new business, increased participations on existing business and higher original rates on subject business. Excluding the large Florida quota share reinsurance contract, gross written premiums increased 16.9% and reinsurance premiums increased 16.5%, compared to the prior year nine-month period. The increase in insurance premiums was primarily due to the growth in California workers compensation, crop and non-standard auto business.

~~Net written premiums increased 27.5% to $585.3~~$499.7 million for the three months ended ~~September 30, 2013~~March 31, 2014, compared to ~~$458.9~~$476.2 million for the three months ended ~~September 30, 2012 and increased 30.0% to $1,593.0 million for~~March 31, 2013. The variance in the ~~nine months ended September 30, 2013~~growth of net written premiums compared to ~~$1,225.7 million for~~ the ~~nine months ended September 30, 2012, which is consistent with the increase~~growth in gross written ~~premiums.~~premiums is primarily due to the impact of changes in affiliated reinsurance agreements, particularly the formation of Mt.

Logan Re. Premiums earned increased by ~~22.6%~~5.0% to ~~$523.5~~$470.4 million for the three months ended ~~September 30, 2013~~March 31, 2014, compared to ~~$427.1~~$448.0 million for the three months ended September 30, 2012, and increased by 12.5% to $1,461.5 million for the nine months ended September 30, 2013 compared to $1,299.3 million for the nine months ended September 30, 2012. Unlike written premiums, premiums earned were not impacted by the Florida quota share reinsurance contract. March 31, 2013. The change in premiums earned ~~as compared~~relative to ~~the change in~~ net written premiums ~~was~~is primarily ~~due to~~ the ~~impact~~result of ~~the Florida quota share reinsurance contract, which affected net written premiums but not premiums earned and due to~~ timing; premiums are earned ratably over the coverage period whereas written premiums are recorded at the initiation of the coverage period.

Net Investment Income. Net investment income decreased by ~~9.8%~~17.0% to ~~$68.8~~$63.8 million for the three months ended ~~September 30, 2013~~March 31, 2014, compared with net investment income of ~~$76.3~~$76.9 million for the three months ended September 30, 2012 and decreased by 1.9% to $227.4 million for the nine months ended September 30, 2013 compared with net investment income of $231.8 million for the nine months ended September 30, 2012.March 31, 2013. Net pre-tax investment income, as a percentage of average invested assets, was ~~3.4%~~3.0% for the three months ended ~~September 30, 2013~~March 31, 2014 compared to 3.7% for the three months ended ~~September 30, 2012 and was 3.7% for the nine months ended September 30,~~March 31, 2013, ~~compared to 3.8% for the nine months ended September 30, 2012. The declines were~~ primarily ~~due to lower reinvestment rates and fluctuations~~reflecting a decline in income from our limited partnership ~~income.~~investments.

Net Realized Capital Gains (Losses). Net realized capital losses were $4.1 million and net realized capital gains were ~~$208.4 million and $95.9~~$309.8 million for the three months ended ~~September 30,~~March 31, 2014 and 2013, ~~and 2012,~~ respectively. The ~~$208.4~~$4.1 million was comprised of ~~$205.1~~$2.4 million of losses from sales on our fixed maturity and equity securities and $1.7 million of losses from fair value re-measurements. The net realized capital gains of $309.8 million for the three months ended March 31, 2013, were the result of $299.7 million of gains from fair value re-measurements and ~~$3.4~~$10.1 million of net realized capital gains from sales on our fixed maturity and equity securities. The net realized capital gains of $95.9 million for the three months ended September 30, 2012 were the result of $92.7 million of gains from fair value re-measurements and $3.8 million of net realized capital gains from sales on our fixed maturity and equity securities, partially offset by $0.5 million of other-than-temporary impairments on our available for sale fixed maturity securities.

Net realized capital gains were $533.8 million and $354.7 million for the nine months ended September 30, 2013 and 2012, respectively. Of the $533.8 million, there were $504.0 million of gains from fair value re-measurements and $29.8 million of net realized capital gains from sales on our fixed maturity and equity securities. The net realized capital gains of $354.7 million for the nine months ended September 30, 2012 were the result of $328.7 million of gains from fair value re-measurements and $32.7 million of net realized capital gains from sales on our fixed maturity and equity securities, partially offset by $6.6 million of other-than-temporary impairments on our available for sale fixed maturity securities.

Other Income (Expense). We recorded other ~~income~~expense of ~~$5.0~~$3.1 million and ~~$5.1~~$9.7 million for the three ~~and nine~~ months ended ~~September 30,~~March 31, 2014 and 2013, respectively. ~~We recorded other income of $0.4 million and $19.6 million for the three and nine months ended September 30, 2012, respectively.~~ The ~~changes were~~change was primarily due to fluctuations in currency exchange rates for the corresponding periods and fluctuations in the amortization of deferred gains on retroactive reinsurance agreements with affiliates.

Claims and Expenses.

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

	Three Months Ended March 31,
	Current		Ratio %/				Prior			Ratio %/				Total			Ratio %/
(Dollars in millions)	Year		Pt Change				Years			Pt Change				Incurred			Pt Change
2014
Attritional	$	281.3		59.8	%		$	(0.6	)		-0.1	%		$	280.7			59.7	%
Catastrophes		-		0.0	%			(2.7	)		-0.6	%			(2.7	)		-0.6	%
Total segment	$	281.3		59.8	%		$	(3.3	)		-0.7	%		$	278.0			59.1	%

2013
Attritional	$	255.9		57.2	%		$	(1.6	)		-0.4	%		$	254.3			56.8	%
Catastrophes		-		0.0	%			14.3			3.2	%			14.3			3.2	%
Total segment	$	255.9		57.2	%		$	12.7			2.8	%		$	268.6			60.0	%

Variance 2014/2013
Attritional	$	25.4		2.6		pts	$	1.0			0.3		pts	$	26.4			2.9		pts
Catastrophes		-		-		pts		(17.0	)		(3.8	)	pts		(17.0	)		(3.8	)	pts
Total segment	$	25.4		2.6		pts	$	(16.0	)		(3.5	)	pts	$	9.4			(0.9	)	pts

(Some amounts may not reconcile due to rounding.)

Three Months Ended September 30,
Current Ratio %/ Prior Ratio %/ Total Ratio %/
(Dollars in millions) Year Pt Change Years Pt Change Incurred Pt Change
2013
Attritional (a) $ 311.5 59.6 % $ (12.5 ) -2.4 % $ 299.0 57.2 %
Catastrophes 6.9 1.3 % 1.2 0.2 % 8.1 1.5 %
A&E - 0.0 % - 0.0 % - 0.0 %
Total segment $ 318.4 60.9 % $ (11.3 ) -2.2 % $ 307.1 58.7 %

2012
Attritional (a) $ 236.8 55.5 % $ (4.0 ) -0.9 % $ 232.8 54.6 %
Catastrophes 12.5 2.9 % (2.4 ) -0.6 % 10.1 2.3 %
A&E - 0.0 % - 0.0 % - 0.0 %
Total segment $ 249.3 58.4 % $ (6.4 ) -1.5 % $ 242.9 56.9 %

Variance 2013/2012
Attritional (a) $ 74.7 4.1 pts $ (8.5 ) (1.5 ) pts $ 66.2 2.6 pts
Catastrophes (5.6 ) (1.6 ) pts 3.6 0.8 pts (2.0 ) (0.8 ) pts
A&E - - pts - - pts - - pts
Total segment $ 69.1 2.5 pts $ (4.9 ) (0.7 ) pts $ 64.2 1.8 pts

Nine Months Ended September 30,
Current Ratio %/ Prior Ratio %/ Total Ratio %/
(Dollars in millions) Year Pt Change Years Pt Change Incurred Pt Change
2013
Attritional (a) $ 857.9 58.7 % $ (2.5 ) -0.2 % $ 855.4 58.5 %
Catastrophes 36.9 2.5 % 17.3 1.2 % 54.2 3.7 %
A&E - 0.0 % - 0.0 % - 0.0 %
Total segment $ 894.8 61.2 % $ 14.8 1.0 % $ 909.7 62.2 %

2012
Attritional (a) $ 738.3 56.9 % $ 11.9 0.9 % $ 750.2 57.8 %
Catastrophes 42.5 3.3 % (5.9 ) -0.5 % 36.6 2.8 %
A&E - 0.0 % 0.1 0.0 % 0.1 0.0 %
Total segment $ 780.8 60.2 % $ 6.1 0.4 % $ 786.9 60.6 %

Variance 2013/2012
Attritional (a) $ 119.6 1.8 pts $ (14.4 ) (1.1 ) pts $ 105.2 0.7 pts
Catastrophes (5.6 ) (0.8 ) pts 23.2 1.7 pts 17.6 0.9 pts
A&E - - pts (0.1 ) - pts (0.1 ) - pts
Total segment $ 114.0 1.0 pts $ 8.7 0.6 pts $ 122.8 1.6 pts

(a) Attritional losses exclude catastrophe and Asbestos and Environmental ("A&E") losses.
(Some amounts may not reconcile due to rounding.)

Incurred losses and LAE increased by ~~26.5%~~3.5% to ~~$307.1~~$278.0 million for the three months ended ~~September 30, 2013~~March 31, 2014 compared to ~~$242.9~~$268.6 million for the three months ended ~~September 30, 2012,~~March 31, 2013, primarily due to ~~an increase~~increases in current year attritional losses. The increase in current year attritional losses ~~increased by $74.7~~of $25.4 million is primarily due to the ~~increases~~impact of the increase in premiums earned. ~~Current year catastrophe losses for the three months ended September 30, 2013~~There were ~~$6.9 million, or 1.3 points, related to Canadian floods ($6.9 million). The $12.5 million of~~no current year catastrophe losses for the three months ended ~~September 30, 2012 represented 2.9 points~~March 31, 2014 and ~~related to Hurricane Isaac.~~

Incurred losses and LAE increased by 15.6% to $909.7 million for the nine months ended September 30, 2013 compared to $786.9 million for the nine months ended September 30, 2012, representing an increase of 1.6 loss ratio points, primarily due to higher current year attritional losses and unfavorable development on prior year catastrophe losses in 2013 compared to 2012. The current year attritional losses increased by $119.6 million primarily due to the increases in premiums earned. Prior year catastrophe losses for the nine months ended September 30, 2013, were $17.3 million, or 1.2 points, and related primarily to Superstorm Sandy. Current year catastrophe losses for the nine month ended September 30, 2013 were $36.9 million, or 2.5 points, due to U.S. Storms ($25.0 million), Canadian floods ($9.4 million) and European floods ($2.5 million). The $42.5 million of current year catastrophe losses for the nine months ended September 30, 2012 represented 3.3 points and related to U.S. storm losses ($30.0 million) and Hurricane Isaac ($12.5 million).2013.

Commission, Brokerage, Taxes and Fees. Commission, brokerage, taxes and fees increased by ~~1.6%~~11.7% to ~~$71.6~~$76.1 million for the three months ended ~~September 30, 2013~~March 31, 2014 compared to ~~$70.5~~$68.1 million for the three months ended ~~September 30, 2012.~~March 31, 2013. The ~~quarter~~year over ~~quarter~~year change was primarily due to the impact of the increase in premiums earned ~~partially offset by an increase~~and the decline in ~~excess of loss~~crop business, ~~in 2013~~ which ~~carries~~has a lower commission rate than pro rata business. Commission, brokerage, taxes and fees decreased by 14.4% to $215.0 million for the nine months ended September 30, 2013 compared to $251.3 million for the nine months ended September 30, 2012. The nine month decline was primarily due to the termination of the Florida quota share reinsurance contract in the second quarter of 2012 and an increase in excess of loss business in 2013 which carries a lower commission rate than pro rata business, partially offset by the increase in premiums earned.ratio.

Other Underwriting Expenses. Other underwriting expenses were ~~$48.9~~$39.3 million and ~~$45.9~~$43.5 million for the three months ended ~~September 30,~~March 31, 2014 and 2013, ~~and 2012, respectively, and $136.8 million and $126.6 million for the nine months ended September 30, 2013 and 2012,~~ respectively. The ~~increases~~decrease in other underwriting ~~expense were~~expenses was mainly due to ~~higher compensation~~lower employee related expenses.

Corporate Expenses. Corporate expenses, which are general operating expenses that are not allocated to segments, were ~~$1.5~~$1.3 million and ~~$2.0~~$1.8 million for the three months ended ~~September 30,~~March 31, 2014 and 2013, ~~and 2012, respectively, and $5.4 million and $5.3 million for the nine months ended September 30, 2013 and 2012,~~ respectively. The decrease in corporate expenses was mainly due to lower compensation expenses.

Interest, Fees and Bond Issue Cost Amortization Expense. Interest, fees and other bond amortization expense was ~~$7.5~~$7.4 million and ~~$12.7~~$12.6 million for the three months ended ~~September 30,~~March 31, 2014 and 2013, ~~and 2012, respectively, and $38.0 million and $38.1 million for the nine months ended September 30, 2013 and 2012,~~ respectively. The ~~decreases were~~decrease was primarily due to the redemption of ~~the~~ $329.9 million of trust preferred securities in May 2013. ~~The year over year decrease was partially offset by $7.3 million of amortization expense on remaining capitalized issuance costs for the trust preferred securities.~~

Income Tax Expense (Benefit). ~~Income~~We had income tax ~~expense was $125.4~~expenses of $38.5 million and ~~$69.9~~$144.7 million for the three months ended ~~September 30,~~March 31, 2014 and 2013, ~~and 2012, respectively, and $308.3 million and $200.9 million for the nine months ended September 30, 2013 and 2012,~~ respectively. ~~Our income~~Income tax expense is primarily a function of the geographic location of the Company’s pre-tax income and the statutory tax rates ~~coupled with~~in those jurisdictions, as affected by tax-exempt investment income and as calculated under the ~~impact from tax-preferenced investment income.~~AETR method. Variations in ~~our effective tax rate~~the AETR generally result from changes in the relative levels of pre-tax ~~income. In addition,~~income, including the ~~nine month~~impact of catastrophe losses and net capital gains (losses), among jurisdictions with different tax rates. The decrease in income tax expense for ~~September 30, 2012 reflect tax benefits of $21.7 million realized~~the three months ended March 31, 2014 versus 2013 is primarily due to ~~corrections of understatement~~significantly lower net capital gains in the ~~deferred tax asset account and $11.2 million realized due to the closing of the IRS audit for 2007 and 2008 tax years.~~US.

Net Income (Loss).

Our net income was ~~$243.8~~$86.5 million and ~~$156.0~~$285.7 million for the three months ended ~~September 30,~~March 31, 2014 and 2013, ~~and 2012, respectively, and $614.7 million and $496.4 million for the nine months ended September 30, 2013 and 2012,~~ respectively. The ~~variance was~~changes were primarily driven by the financial component fluctuations explained above.

Ratios.

Our combined ratio decreased by ~~2.4~~1.3 points to ~~81.7%~~83.6% for the three months ended ~~September 30, 2013~~March 31, 2014 compared to ~~84.1%~~84.9% for the three months ended ~~September 30, 2012 and decreased by 3.3 points to 86.3% for the nine months ended September 30, 2013 compared to 89.6% for the nine months ended September 30, 2012.~~March 31, 2013. The loss ratio component ~~increased 1.8~~decreased 0.9 points for the three months ended ~~September 30, 2013,~~March 31, 2014, over the same period last year, primarily due to changes in the ~~$74.7 million increase in current year attritional losses, which added 4.1 points to~~mix of business. The commission and brokerage ratio components increased 1.0 point for the ~~loss ratio.~~three months ended March 31, 2014 over the same period last year. The ~~loss~~other underwriting expense ratio ~~increased 1.6~~components decreased 1.4 points for the ~~nine~~three months ended ~~September 30, 2013~~March 31, 2014 over the same period last year ~~primarily~~ due to higher current year attritional losses, which added 1.8 points to the loss ratio. The commission and brokerage ratio components decreased 2.8 points and 4.6 points for the three and nine months ended September 30, 2013, respectively, due to an increase in excess of loss business which carries a lower commission than pro rata business and the termination of the Florida quota share reinsurance contract, which impacted the year over year variance. The other underwriting expense ratio component decreased by 1.4 points and 0.3 points for the three and nine months ended September 30, 2013, respectively, primarily due to the increase in premiums earned.compensation expenses.

Stockholder's Equity.

~~Stockholder's~~Shareholders’ equity increased by ~~$520.5~~$104.9 million to ~~$3,999.1~~$4,295.4 million at ~~September 30, 2013~~March 31, 2014 from ~~$3,478.6~~$4,190.5 million at December 31, ~~2012,~~2013, principally as a result of ~~$614.7~~$86.5 million of net income, ~~$8.7~~$22.1 million of net unrealized depreciation on investments, net of tax, $3.4 million of share-based compensation transactions and ~~$4.2~~$0.8 million of net benefit plan obligation adjustments, partially offset by ~~$93.9 million of net unrealized depreciation on investments and $13.1~~$7.8 million of net foreign currency translation adjustments.

Consolidated Investment Results

Net Investment Income.

Net investment income decreased ~~9.8%~~17.0% to ~~$68.8~~$63.8 million for the three months ended ~~September 30, 2013~~March 31, 2014 compared to ~~$76.3~~$76.9 million for the three months ended ~~September 30, 2012 and decreased 1.9% to $227.4 million for the nine months ended September 30, 2013 compared to $231.8 million for the nine months ended September 30, 2012.~~March 31, 2013. The decreases were primarily due to ~~declines~~a decline in income from our limited partnership investments and a decline in income from our fixed maturities, reflective of declining reinvestment rates, ~~and equities, due to the partial liquidation of some mutual funds and fluctuations~~partially offset by an increase in ~~income~~dividends from ~~our limited partnerships.~~parent’s shares.

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

	Three Months Ended
	March 31,
(Dollars in millions)	2014			2013
Fixed maturities	$	51.1		$	54.0
Equity securities		8.9			7.7
Short-term investments and cash		0.2			0.3
Other invested assets
Limited partnerships		(3.1	)		11.3
Dividends from Parent's shares		7.3			4.7
Other		2.0			2.3
Gross investment income before adjustments		66.4			80.2
Funds held interest income (expense)		2.1			2.4
Gross investment income		68.5			82.6
Investment expenses		(4.7	)		(5.8	)
Net investment income	$	63.8		$	76.9

(Some amounts may not reconcile due to rounding)

Three Months Ended Nine Months Ended
September 30, September 30,
(Dollars in millions) 2013 2012 2013 2012
Fixed maturities $ 52.1 $ 55.5 $ 159.4 $ 164.2
Equity securities 8.4 8.8 27.2 29.3
Short-term investments and cash 0.3 0.3 0.7 0.8
Other invested assets
Limited partnerships 6.6 9.1 32.1 29.9
Dividends from Parent's shares 4.7 4.7 14.0 14.0
Other 1.1 1.4 5.3 2.5
Gross investment income before adjustments
73.1 79.9 238.7 240.7
Funds held interest income (expense) 0.7 1.0 4.2 3.9
Gross investment income 73.8 80.8 242.9 244.6
Investment expenses (5.0 ) (4.5 ) (15.5 ) (12.8 )
Net investment income $ 68.8 $ 76.3 $ 227.4 $ 231.8

(Some amounts may not reconcile due to rounding)

The following tables show a comparison of various investment yields for the periods indicated:

	At	At
	March 31,	December 31,
	2014	2013
Imbedded pre-tax yield of cash and invested assets	3.3%	3.3%
Imbedded after-tax yield of cash and invested assets	2.3%	2.4%

	Three Months Ended
	March 31,
	2014	2013
Annualized pre-tax yield on average cash and invested assets	3.0%	3.7%
Annualized after-tax yield on average cash and invested assets	2.2%	2.6%

At At
September 30, December 31,
2013 2012
Imbedded pre-tax yield of cash and invested assets 3.3% 3.4%
Imbedded after-tax yield of cash and invested assets 2.4% 2.4%

Three Months Ended Nine Months Ended
September 30, September 30,
2013 2012 2013 2012
Annualized pre-tax yield on average cash and invested assets 3.4% 3.7% 3.7% 3.8%
Annualized after-tax yield on average cash and invested assets 2.4% 2.7% 2.6% 2.8%

Net Realized Capital Gains (Losses).

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

	Three Months Ended March 31,
(Dollars in millions)	2014			2013			Variance
Gains (losses) from sales:
Fixed maturity securities, market value
Gains	$	1.3		$	3.7		$	(2.4	)
Losses		(3.3	)		(1.6	)		(1.7	)
Total		(2.0	)		2.1			(4.1	)

Fixed maturity securities, fair value
Gains		1.2			0.1			1.1
Losses		(0.3	)		(0.2	)		(0.1	)
Total		0.9			(0.1	)		1.0

Equity securities, fair value
Gains		6.6			8.9			(2.3	)
Losses		(7.9	)		(0.8	)		(7.1	)
Total		(1.3	)		8.1			(9.4	)

Total net realized gains (losses) from sales
Gains		9.1			12.7			(3.6	)
Losses		(11.5	)		(2.6	)		(8.9	)
Total		(2.4	)		10.1			(12.5	)

Other than temporary impairments:		-			-			-

Gains (losses) from fair value adjustments:
Fixed maturities, fair value		-			0.1			(0.1	)
Equity securities, fair value		25.8			106.1			(80.3	)
Other invested assets, fair value		(27.4	)		193.5			(220.9	)
Total		(1.7	)		299.7			(301.4	)

Total net realized gains (losses)	$	(4.1	)	$	309.8		$	(313.9	)

(Some amounts may not reconcile due to rounding)

Three Months Ended September 30, Nine Months Ended September 30,
(Dollars in millions) 2013 2012 Variance 2013 2012 Variance
Gains (losses) from sales:
Fixed maturity securities, market value
Gains $ 3.4 $ 2.0 $ 1.4 $ 11.7 $ 9.2 $ 2.5
Losses (1.7 ) (1.9 ) 0.2 (7.7 ) (5.2 ) (2.5 )
Total 1.8 0.1 1.7 4.1 4.0 0.1

Fixed maturity securities, fair value
Gains - 0.6 (0.6 ) 0.4 6.1 (5.7 )
Losses - (0.2 ) 0.2 (0.3 ) (0.6 ) 0.3
Total - 0.5 (0.5 ) 0.1 5.5 (5.4 )

Equity securities, fair value
Gains 3.8 5.2 (1.4 ) 33.2 33.0 0.2
Losses (2.2 ) (2.0 ) (0.2 ) (7.6 ) (9.9 ) 2.3
Total 1.6 3.2 (1.6 ) 25.6 23.1 2.5

Total net realized gains (losses) from sales
Gains 7.2 7.9 (0.7 ) 45.3 48.4 (3.1 )
Losses (3.8 ) (4.1 ) 0.3 (15.5 ) (15.7 ) 0.2
Total 3.4 3.8 (0.4 ) 29.8 32.7 (2.9 )

Other than temporary impairments: - (0.5 ) 0.5 - (6.6 ) 6.6

Gains (losses) from fair value adjustments:
Fixed maturities, fair value 0.6 0.3 0.3 (1.0 ) 1.6 (2.6 )
Equity securities, fair value 37.8 58.6 (20.8 ) 160.3 104.7 55.6
Other invested assets, fair value 166.7 33.7 133.0 344.7 222.3 122.4
Total 205.1 92.7 112.4 504.0 328.7 175.3

Total net realized gains (losses) $ 208.4 $ 95.9 $ 112.5 $ 533.8 $ 354.7 $ 179.1

(Some amounts may not reconcile due to rounding)

Net realized capital losses were $4.1 million and net realized capital gains were ~~$208.4 million and $95.9~~$309.8 million for the three months ended ~~September 30,~~March 31, 2014 and 2013, ~~and 2012,~~ respectively. For the three months ended ~~September 30,~~March 31, 2014, we recorded $2.4 million of net realized capital losses from sales of fixed maturity and equity securities and $1.7 million of net realized capital losses due to fair value re-measurements on equity securities and other invested assets. For the three months ended March 31, 2013, we recorded ~~$205.1~~$299.7 million of net realized capital gains due to fair value re-measurements on fixed maturity, equity securities and other invested assets and ~~$3.4~~$10.1 million of net realized capital gains from sales of fixed maturity and equity securities. The fixed maturity and equity sales for the three months ended ~~September 30, 2013 related primarily to~~

~~adjusting the portfolios for overall market changes~~March 31, 2014 and individual credit shifts. For the three months ended September 30, 2012, we recorded $92.7 million of gains due to fair value re-measurements on fixed maturity, equity securities and other invested assets and $3.8 million of net realized capital gains from sales of fixed maturity and equity securities, partially offset by $0.5 million of other-than-temporary impairments on fixed maturity securities.

Net realized capital gains were $533.8 million and $354.7 million for the nine months ended September 30, 2013 and 2012, respectively. For the nine months ended September 30, 2013, we recorded $504.0 million of gains due to fair value re-measurements on fixed maturity, equity securities and other invested assets and $29.8 million of net realized capital gains from sales of fixed maturity and equity securities. The fixed maturity and equity sales for the nine months ended September 30, 2013 related primarily to adjusting the portfolios for overall market changes and individual credit shifts. For the nine months ended September 30, 2012, we recorded $328.7 million of gains due to fair value re-measurements on fixed maturity, equity securities and other invested assets and $32.7 million of net realized capital gains from sales of fixed maturity and equity securities, partially offset by $6.6 million of other-than-temporary impairments on fixed maturity securities.

Segment Results.

The U.S. Reinsurance operation writes property and casualty reinsurance and specialty lines of business, including Marine, Aviation, Surety and A&H business, on both a treaty and facultative basis, through reinsurance brokers, as well as directly with ceding companies primarily within the U.S. The International operation writes non-U.S. property and casualty reinsurance through Everest Re’s branches in Canada, Singapore and through offices in Brazil, Miami and New Jersey. The Insurance operation writes property and casualty insurance, including medical stop loss insurance, directly and through general agents, brokers and surplus lines brokers within the U.S and Canada.

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

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

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

U.S. Reinsurance.

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

	Three Months Ended September 30,													Nine Months Ended September 30,												Three Months Ended March 31,
(Dollars in millions)	2013			2012			Variance				% Change			2013			2012			Variance			% Change			2014			2013			Variance			% Change
Gross written premiums	$	532.3		$	433.5		$	98.8				22.8	%	$	1,385.5		$	938.4		$	447.0			47.6	%	$	530.3		$	434.8		$	95.5			22.0	%
Net written premiums		257.1			219.9			37.2				16.9	%		690.5			475.3			215.3			45.3	%		251.5			217.6			33.9			15.6	%
										��
Premiums earned	$	225.2		$	181.4		$	43.8				24.2	%	$	621.4		$	529.4		$	92.0			17.4	%	$	218.2		$	196.9		$	21.2			10.8	%
Incurred losses and LAE		102.5			108.2			(5.6	)			-5.2	%		340.8			321.4			19.4			6.0	%		116.0			101.2			14.8			14.6	%
Commission and brokerage		38.3			40.1			(1.8	)			-4.5	%		114.9			139.9			(25.0	)		-17.8	%		40.1			38.1			2.0			5.3	%
Other underwriting expenses		12.0			12.8			(0.8	)			-5.9	%		32.5			33.5			(1.0	)		-3.0	%		9.5			10.5			(1.1	)		-10.0	%
Underwriting gain (loss)	$	72.4		$	20.4		$	52.1			NM			$	133.1		$	34.6		$	98.6		NM			$	52.6		$	47.1		$	5.5			11.7	%

											Point Chg												Point Chg												Point Chg
Loss ratio		45.5	%		59.6	%						(14.1	)		54.8	%		60.7	%					(5.9	)		53.2	%		51.4	%					1.8
Commission and brokerage ratio		17.0	%		22.1	%						(5.1	)		18.5	%		26.4	%					(7.9	)		18.4	%		19.4	%					(1.0	)
Other underwriting expense ratio		5.3	%		7.1	%						(1.8	)		5.3	%		6.4	%					(1.1	)		4.3	%		5.3	%					(1.0	)
Combined ratio		67.8	%		88.8	%						(21.0	)		78.6	%		93.5	%					(14.9	)		75.9	%		76.1	%					(0.2	)

(NM, not meaningful.)
(Some amounts may not reconcile due to rounding.)

Premiums. Gross written premiums increased by ~~22.8%~~22.0% to ~~$532.3~~$530.3 million for the three months ended ~~September 30, 2013~~March 31, 2014 from ~~$433.5~~$434.8 million for the three months ended ~~September 30, 2012,~~March 31, 2013, primarily due to new business opportunities, particularly for contracts with catastrophe exposed risks and ~~higher subject premium on casualty quota share business as rates began to rise in these markets.~~mortgage guaranty business. Net written premiums increased ~~16.9%~~by 15.6% to ~~$257.1~~$251.5 million for the three months ended ~~September 30, 2013~~March 31, 2014 compared to ~~$219.9~~$217.6 million for the three months ended ~~September 30, 2012, which is~~March 31, 2013. The variance in ~~line with~~ the ~~increase~~growth of net written premiums compared to the growth in gross written ~~premiums.~~premiums is due to the impact of changes in affiliated reinsurance agreements. Premiums earned increased ~~24.2%~~10.8% to ~~$225.2~~$218.2 million for the three months ended ~~September 30, 2013~~March 31, 2014 compared to ~~$181.4~~$196.9 million for the three months ended ~~September 30, 2012, which is in line with the increase in net written premiums.~~

Gross written premiums increased by 47.6% to $1,385.5 million for the nine months ended September 30, 2013 from $938.4 million for the nine months ended September 30, 2012, primarily due to the impact of a large Florida quota share reinsurance contract, new business opportunities, particularly for contracts with catastrophe exposed risks and higher subject premium on casualty quota share business as rates began to rise in these markets. Excluding the impact of the Florida quota share reinsurance contract, gross written premiums increased 19.1%. Net written premiums increased 45.3% to $690.5 million for the nine months ended September 30, 2013 compared to $475.3 million for the nine months ended September 30, 2012, which is in line with the increase in gross written premiums. Premiums earned increased 17.4% to $621.4 million for the nine months ended September 30, 2013 compared to $529.4 million for the nine months ended September 30, 2012. Premiums earned were not impacted by the Florida quota share reinsurance contract that affected the written premiums. The change in premiums earned was relatively comparable to the increase in net written premiums, excluding the Florida quota share reinsurance contract.

~~Incurred Losses and LAE.~~ ~~The following tables present the incurred losses and LAE for the U.S. Reinsurance segment for the periods indicated.~~

Three Months Ended September 30,
Current Ratio %/ Prior Ratio %/ Total Ratio %/
(Dollars in millions) Year Pt Change Years Pt Change Incurred Pt Change
2013
Attritional $ 113.6 50.5 % $ (12.0 ) -5.3 % $ 101.6 45.2 %
Catastrophes 0.1 0.0 % 0.8 0.3 % 0.9 0.3 %
A&E - 0.0 % - 0.0 % - 0.0 %
Total segment $ 113.7 50.5 % $ (11.2 ) -5.0 % $ 102.5 45.5 %

2012
Attritional $ 95.9 52.8 % $ (4.3 ) -2.4 % $ 91.6 50.4 %
Catastrophes 12.5 6.9 % 4.1 2.3 % 16.6 9.2 %
A&E - 0.0 % - 0.0 % - 0.0 %
Total segment $ 108.4 59.7 % $ (0.2 ) -0.1 % $ 108.2 59.6 %

Variance 2013/2012
Attritional $ 17.7 (2.3 ) pts $ (7.7 ) (2.9 ) pts $ 10.0 (5.2 ) pts
Catastrophes (12.4 ) (6.9 ) pts (3.3 ) (2.0 ) pts (15.7 ) (8.9 ) pts
A&E - - pts - - pts - - pts
Total segment $ 5.3 (9.2 ) pts $ (11.0 ) (4.9 ) pts $ (5.6 ) (14.1 ) pts

Nine Months Ended September 30,
Current Ratio %/ Prior Ratio %/ Total Ratio %/
(Dollars in millions) Year Pt Change Years Pt Change Incurred Pt Change
2013
Attritional $ 305.9 49.2 % $ (8.6 ) -1.4 % $ 297.3 47.8 %
Catastrophes 27.6 4.4 % 15.9 2.6 % 43.5 7.0 %
A&E - 0.0 % - 0.0 % - 0.0 %
Total segment $ 333.5 53.6 % $ 7.3 1.2 % $ 340.8 54.8 %

2012
Attritional $ 273.6 51.7 % $ 8.2 1.6 % $ 281.8 53.3 %
Catastrophes 42.5 8.0 % (3.0 ) -0.6 % 39.5 7.4 %
A&E - 0.0 % 0.1 0.0 % 0.1 0.0 %
Total segment $ 316.1 59.7 % $ 5.3 1.0 % $ 321.4 60.7 %

Variance 2013/2012
Attritional $ 32.3 (2.5 ) pts $ (16.8 ) (3.0 ) pts $ 15.5 (5.5 ) pts
Catastrophes (14.9 ) (3.6 ) pts 18.9 3.2 pts 4.0 (0.4 ) pts
A&E - - pts (0.1 ) - pts (0.1 ) - pts
Total segment $ 17.4 (6.1 ) pts $ 2.0 0.2 pts $ 19.4 (5.9 ) pts

(Some amounts may not reconcile due to rounding.)

Incurred losses decreased 5.2% to $102.5 million for the three months ended September 30, 2013 compared to $108.2 million for the three months ended September 30, 2012, primarily due to the decline in catastrophe losses and favorable development on prior year attritional losses, partially offset by an increase in current year attritional losses. Current year catastrophe losses for the three months ended September 30, 2013 were $0.1 million due to Canadian floods ($0.1 million), compared to $12.5 million of current year catastrophe losses for the three months ended September 30, 2012, which related to Hurricane Isaac. Favorable development on prior year attritional losses related primarily to the treaty casualty line of business. Current year attritional losses increased by $17.7 million primarily due to the increase in premiums earned. Despite the increase in current year attritional losses, the current year attritional loss ratio decreased 2.3 points due to the continued shift in business to excess of loss contracts which generally have lower attritional losses than pro rata contracts.

Incurred losses increased 6.0% to $340.8 million for the nine months ended September 30, 2013 compared to $321.4 million for the nine months ended September 30, 2012, primarily due to an increase in current

year attritional losses and unfavorable development on prior year catastrophe losses, partially offset by a decline in current year catastrophe losses and favorable development on prior year attritional losses when comparing 2013 to 2012. Current year attritional losses increased by $32.3 million primarily due to the increase in premiums earned. Despite the increase in current year attritional losses, the current year attritional loss ratio decreased 2.5 points due to the continued shift in business to excess of loss contracts which generally have lower attritional losses than pro rata contracts. Unfavorable development on prior year catastrophe losses was $15.9 million, primarily related to Superstorm Sandy ($11.0 million). Current year catastrophe losses for the nine months ended September 30, 2013, were $27.6 million due to U.S. Storms ($25.0 million), European floods ($2.5 million) and Canadian floods ($0.1 million), compared to $42.5 million of current year catastrophe losses for the nine months ended September 30, 2012, which related to U.S. Storms ($30.0 million) and Hurricane Isaac ($12.5 million). The favorable development on prior year attritional losses when comparing 2013 to 2012 was primarily due to the treaty casualty line of business.

~~Segment Expenses.~~ Commission and brokerage decreased 4.5% to $38.3 million for the three months ended September 30, 2013 compared to $40.1 million for the three months ended September 30, 2012. The quarter over quarter variance was due to the shift in the mix of business to contracts with lower commission rates, partially offset by the impact from the increase in premiums earned. Commission and brokerage decreased 17.8% to $114.9 million for the nine months ended September 30, 2013 compared to $139.9 million for the nine months ended September 30, 2012. The year over year change was primarily due to the impact of the termination of the large Florida quota share reinsurance contract in the second quarter 2012 as well as the adoption of new accounting standards concerning the accounting for acquisition costs, which increased expenses in 2012, partially offset by the impact from the increase in premiums earned.

Segment other underwriting expenses decreased slightly to $12.0 million for the three months ended September 30, 2013 compared to $12.8 million for the three months ended September 30, 2012. Segment other underwriting expenses decreased slightly to $32.5 million for the nine months ended September 30, 2013 from $33.5 million for the nine months ended September 30, 2012.

~~International.~~

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

Three Months Ended September 30, Nine Months Ended September 30,
(Dollars in millions) 2013 2012 Variance % Change 2013 2012 Variance % Change
Gross written premiums $ 339.7 $ 248.5 $ 91.3 36.7 % $ 994.5 $ 878.6 $ 115.9 13.2 %
Net written premiums 149.8 105.6 44.3 41.9 % 446.2 402.1 44.1 11.0 %

Premiums earned $ 140.9 $ 121.6 $ 19.2 15.8 % $ 433.9 $ 426.4 $ 7.5 1.7 %
Incurred losses and LAE 90.7 29.3 61.4 209.6 % 262.7 191.8 70.9 36.9 %
Commission and brokerage 27.9 19.7 8.2 41.8 % 87.2 88.4 (1.2 ) -1.4 %
Other underwriting expenses 8.7 8.2 0.5 5.8 % 24.3 21.5 2.8 12.9 %
Underwriting gain (loss) $ 13.5 $ 64.4 $ (50.9 ) -79.1 % $ 59.6 $ 124.6 $ (65.0 ) -52.1 %

Point Chg Point Chg
Loss ratio 64.4 % 24.1 % 40.3 60.6 % 45.0 % 15.6
Commission and brokerage ratio 19.8 % 16.2 % 3.6 20.1 % 20.7 % (0.6 )
Other underwriting expense ratio 6.2 % 6.8 % (0.6 ) 5.6 % 5.1 % 0.5
Combined ratio 90.4 % 47.1 % 43.3 86.3 % 70.8 % 15.5

(Some amounts may not reconcile due to rounding.)

~~Premiums.~~ Gross written premiums increased by 36.7% to $339.7 million for the three months ended September 30, 2013 compared to $248.5 million for the three months ended September 30, 2012, primarily due to growth in Latin America business. Net written premiums increased by 41.9% to $149.8 million for the three months ended September 30, 2013 compared to $105.6 million for the three months ended September 30, 2012, which is consistent with the change in gross written premiums. Premiums earned increased by 15.8% to $140.9 million for the three months ended September 30, 2013 compared to

~~$121.6 million for the three months ended September 30, 2012.~~March 31, 2013. 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 recorded at the initiation of the coverage period.~~

Gross written premiums increased by 13.2% to $994.5 million for the nine months ended September 30, 2013 compared to $878.6 million for the nine months ended September 30, 2012, primarily due to growth in Latin America business. Net written premiums increased by 11.0% to $446.2 million for the nine months ended September 30, 2013 compared to $402.1 million for the nine months ended September 30, 2012, which is consistent with the change in gross written premiums. Premiums earned increased by 1.7% to $433.9 million for the nine months ended September 30, 2013 compared to $426.4 million for the nine months ended September 30, 2012. The change in premiums earned relative to net written premiums is the result of timing;

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

Incurred Losses and LAE. The following tables present the incurred losses and LAE for the ~~International~~U.S. Reinsurance segment for the periods indicated.

Three Months Ended September 30,
Current Ratio %/ Prior Ratio %/ Total Ratio %/
(Dollars in millions) Year Pt Change Years Pt Change Incurred Pt Change
2013
Attritional $ 85.1 60.4 % $ (1.6 ) -1.1 % $ 83.5 59.3 %
Catastrophes 6.6 4.7 % 0.6 0.4 % 7.2 5.1 %
Total segment $ 91.7 65.1 % $ (1.0 ) -0.7 % $ 90.7 64.4 %

2012
Attritional $ 39.8 32.8 % $ (4.0 ) -3.3 % $ 35.8 29.5 %
Catastrophes - 0.0 % (6.5 ) -5.4 % (6.5 ) -5.4 %
Total segment $ 39.8 32.8 % $ (10.5 ) -8.7 % $ 29.3 24.1 %

Variance 2013/2012
Attritional $ 45.3 27.6 pts $ 2.4 2.2 pts $ 47.7 29.8 pts
Catastrophes 6.6 4.7 pts 7.1 5.8 pts 13.7 10.5 pts
Total segment $ 51.9 32.3 pts $ 9.5 8.0 pts $ 61.4 40.3 pts

		Nine Months Ended September 30,																					Three Months Ended March 31,
		Current		Ratio %/				Prior			Ratio %/				Total			Ratio %/					Current		Ratio %/				Prior			Ratio %/				Total			Ratio %/
(Dollars in millions)		Year		Pt Change				Years			Pt Change				Incurred			Pt Change					Year		Pt Change				Years			Pt Change				Incurred			Pt Change
2014
Attritional																							$	120.6		55.3	%		$	(3.2	)		-1.5	%		$	117.4			53.8	%
Catastrophes																								-		0.0	%			(1.4	)		-0.6	%			(1.4	)		-0.6	%
Total segment																							$	120.6		55.3	%		$	(4.6	)		-2.1	%		$	116.0			53.2	%

2013
Attritional		$	255.5		59.0	%		$	(3.4	)		-0.8	%		$	252.1			58.2	%			$	88.3		44.9	%		$	(2.3	)		-1.2	%		$	86.1			43.7	%
Catastrophes			9.1		2.1	%			1.5			0.3	%			10.6			2.4	%				-		0.0	%			15.1			7.7	%			15.1			7.7	%
Total segment		$	264.6		61.1	%		$	(1.9	)		-0.5	%		$	262.7			60.6	%			$	88.3		44.9	%		$	12.9			6.5	%		$	101.2			51.4	%

2012
Attritional		$	198.7		46.6	%		$	(4.0	)		-0.9	%		$	194.7			45.7	%
Catastrophes			-		0.0	%			(2.9	)		-0.7	%			(2.9	)		-0.7	%
Total segment		$	198.7		46.6	%		$	(6.9	)		-1.6	%		$	191.8			45.0	%

Variance 2013/2012
Variance 2014/2013
Attritional		$	56.8		12.4		pts	$	0.6			0.1		pts	$	57.4			12.5		pts		$	32.3		10.4		pts	$	(0.9	)		(0.3	)	pts	$	31.3			10.1		pts
Catastrophes			9.1		2.1		pts		4.4			1.0		pts		13.5			3.1		pts			-		-		pts		(16.5	)		(8.3	)	pts		(16.5	)		(8.3	)	pts
Total segment		$	65.9		14.5		pts	$	5.0			1.1		pts	$	70.9			15.6		pts		$	32.3		10.4		pts	$	(17.5	)		(8.6	)	pts	$	14.8			1.8		pts

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

Incurred losses ~~and LAE~~ increased ~~209.6%~~by 14.6% to ~~$90.7~~$116.0 million for the three months ended ~~September 30, 2013~~March 31, 2014 compared to ~~$29.3~~$101.2 million for the three months ended ~~September 30, 2012, representing 40.3 loss ratio points. Current year attritional losses increased by $45.3 million, or 27.6 points,~~March 31, 2013, primarily due ~~primarily~~ to the increase in ~~premiums earned,~~current year attritional losses of $32.3 million resulting mainly from the impact of ~~changes~~the increase in ~~our affiliated quota share agreements and the effect of fluctuations in foreign currency. Current year~~premiums earned. This decrease was partially offset by a $16.5 million improvement on development on prior years catastrophe losses, ~~were $6.6 million for the three months~~

~~ended September 30, 2013,~~mainly due to $11.4 million of unfavorable development related to Superstorm Sandy in the ~~Canadian floods ($6.6 million).~~first quarter of 2013. There were no current year catastrophe losses for the three months ended ~~September 30, 2012.~~

~~Incurred losses~~March 31, 2014 and LAE increased 36.9% to $262.7 million for the nine months ended September 30, 2013 compared to $191.8 million for the nine months ended September 30, 2012, representing 15.6 loss ratio points. Current year attritional losses increased by $56.8 million, or 12.4 points, due primarily to the increase in premiums earned, the impact of changes in our affiliated quota share agreements and the effect of fluctuations in foreign currency. Current year catastrophe losses were $9.1 million for the nine months ended September 30, 2013, due to the Canadian floods ($9.1 million). There were no current catastrophe losses for the nine months ended September 30, 2012.2013.

Segment Expenses. Commission and brokerage expenses increased ~~41.8%~~by 5.3% to ~~$27.9~~$40.1 million for the three months ended ~~September 30, 2013~~March 31, 2014 compared to ~~$19.7~~$38.1 million for the three months ended ~~September 30, 2012. This increase~~March 31, 2013. The quarter over quarter change was ~~mainly~~primarily due to the impact of the increase in premiums earned and the impact of changes in our affiliated quota share agreements. Commission and brokerage decreased 1.4% to $87.2 million for the nine months ended September 30, 2013 compared to $88.4 million for the nine months ended September 30, 2012. This decrease was mainly due to the shift in the mix of business towards property catastrophe and excess of loss business which have lower commission rates, partially offset by the increase in premiums earned.

Segment other underwriting expenses ~~increased slightly~~decreased to ~~$8.7~~$9.5 million for the three months ended ~~September 30, 2013 compared to $8.2~~March 31, 2014 from $10.5 million for the three months ended ~~September 30, 2012.~~March 31, 2013 due primarily to lower employee related expenses.

International.

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

	Three Months Ended March 31,
(Dollars in millions)	2014			2013			Variance			% Change
Gross written premiums	$	328.9		$	300.4		$	28.5			9.5	%
Net written premiums		141.5			133.8			7.7			5.7	%

Premiums earned	$	145.0		$	141.9		$	3.1			2.2	%
Incurred losses and LAE		83.6			82.1			1.5			1.8	%
Commission and brokerage		29.2			28.1			1.1			3.8	%
Other underwriting expenses		7.8			7.9			(0.1	)		-1.2	%
Underwriting gain (loss)	$	24.4		$	23.8		$	0.7			2.7	%

										Point Chg
Loss ratio		57.6	%		57.8	%					(0.2	)
Commission and brokerage ratio		20.1	%		19.8	%					0.3
Other underwriting expense ratio		5.5	%		5.6	%					(0.1	)
Combined ratio		83.2	%		83.2	%					-

(Some amounts may not reconcile due to rounding.)

Premiums. Gross written premiums increased by 9.5% to $328.9 million for the three months ended March 31, 2014 compared to $300.4 million for the three months ended March 31, 2013, primarily due to growth in Latin America business, partially offset by a negative $14.0 million impact of foreign exchange movements quarter over quarter. Net written premiums increased by 5.7% to $141.5 million for the three months ended March 31, 2014 compared to $133.8 million for the three months ended March 31, 2013. The variance in the growth of net written premiums compared to the growth in gross written premiums is due to the impact of changes in affiliated reinsurance agreements. Premiums earned increased 2.2% to $145.0 million for the three months ended March 31, 2014 compared to $141.9 million for the three months ended March 31, 2013. 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 recorded at the initiation of the coverage period.

Incurred Losses and LAE. The following tables present the incurred losses and LAE for the International segment for the periods indicated.

	Three Months Ended March 31,
	Current			Ratio %/				Prior			Ratio %/				Total			Ratio %/
(Dollars in millions)	Year			Pt Change				Years			Pt Change				Incurred			Pt Change
2014
Attritional	$	84.7			58.4	%		$	0.2			0.2	%		$	85.0			58.6	%
Catastrophes		-			0.0	%			(1.4	)		-1.0	%			(1.4	)		-1.0	%
Total segment	$	84.7			58.4	%		$	(1.1	)		-0.8	%		$	83.6			57.6	%

2013
Attritional	$	87.1			61.4	%		$	(4.2	)		-3.0	%		$	82.9			58.4	%
Catastrophes		-			0.0	%			(0.8	)		-0.6	%			(0.8	)		-0.6	%
Total segment	$	87.1			61.4	%		$	(5.0	)		-3.6	%		$	82.1			57.8	%

Variance 2014/2013
Attritional	$	(2.4	)		(3.0	)	pts	$	4.4			3.2		pts	$	2.1			0.2		pts
Catastrophes		-			-		pts		(0.6	)		(0.4	)	pts		(0.6	)		(0.4	)	pts
Total segment	$	(2.4	)		(3.0	)	pts	$	3.9			2.8		pts	$	1.5			(0.2	)	pts

(Some amounts may not reconcile due to rounding.)

Incurred losses and LAE increased by 1.8% to $83.6 million for the three months ended March 31, 2014 compared to $82.1 million for the three months ended March 31, 2013, primarily due to less favorable

development on prior years attritional losses in 2014 compared to 2013. There were no current year catastrophe losses for the three months ended March 31, 2014 and 2013.

Segment Expenses. Commission and brokerage increased 3.8% to $29.2 million for the three months ended March 31, 2014 compared to $28.1 million for the three months ended March 31, 2013. This increase was primarily due to the impact of the increase in premiums earned. Segment other underwriting expenses ~~increased~~slightly decreased to ~~$24.3~~$7.8 million for the ~~nine~~three months ended ~~September 30, 2013~~March 31, 2014 compared to ~~$21.5~~$7.9 million for the ~~nine~~three months ended ~~September 30, 2012. These increases related primarily to higher compensation costs.~~March 31, 2013.

Insurance.

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

	Three Months Ended September 30,												Nine Months Ended September 30,												Three Months Ended March 31,
(Dollars in millions)	2013			2012			Variance			% Change			2013			2012			Variance			% Change			2014			2013			Variance			% Change
Gross written premiums	$	367.5		$	328.9		$	38.5			11.7	%	$	923.6		$	783.9		$	139.7			17.8	%	$	225.3		$	248.6		$	(23.3	)		-9.4	%
Net written premiums		178.4			133.4			44.9			33.7	%		456.3			348.3			108.0			31.0	%		106.7			124.8			(18.0	)		-14.5	%

Premiums earned	$	157.4		$	124.1		$	33.3			26.9	%	$	406.2		$	343.5		$	62.8			18.3	%	$	107.3		$	109.2		$	(1.9	)		-1.8	%
Incurred losses and LAE		113.9			105.4			8.5			8.0	%		306.2			273.6			32.5			11.9	%		78.5			85.4			(6.9	)		-8.1	%
Commission and brokerage		5.4			10.7			(5.3	)		-49.9	%		12.9			23.0			(10.1	)		-43.8	%		6.8			1.9			4.9		NM
Other underwriting expenses		28.2			24.9			3.3			13.2	%		79.9			71.5			8.4			11.8	%		21.9			25.1			(3.1	)		-12.5	%
Underwriting gain (loss)	$	10.0		$	(16.9	)	$	26.9			-159.1	%	$	7.3		$	(24.6	)	$	31.9			-129.7	%	$	-		$	(3.1	)	$	3.2			-101.3	%

										Point Chg												Point Chg												Point Chg
Loss ratio		72.3	%		84.9	%					(12.6	)		75.4	%		79.7	%					(4.3	)		73.2	%		78.2	%					(5.0	)
Commission and brokerage ratio		3.4	%		8.6	%					(5.2	)		3.2	%		6.7	%					(3.5	)		6.3	%		1.7	%					4.6
Other underwriting expense ratio		17.9	%		20.1	%					(2.2	)		19.6	%		20.8	%					(1.2	)		20.5	%		23.0	%					(2.5	)
Combined ratio		93.6	%		113.6	%					(20.0	)		98.2	%		107.2	%					(9.0	)		100.0	%		102.9	%					(2.9	)

(NM, not meaningful)
(Some amounts may not reconcile due to rounding.)

Premiums. Gross written premiums ~~increased~~decreased by ~~11.7%~~9.4% to ~~$367.5~~$225.3 million for the three months ended ~~September 30, 2013~~March 31, 2014 compared to ~~$328.9~~$248.6 million for the three months ended ~~September 30, 2012.~~March 31, 2013. This ~~increase~~decrease was primarily driven by ~~California workers compensation,~~a decline in crop ~~and non-standard auto~~ business. Net written premiums ~~increased 33.7%~~decreased by 14.5% to ~~$178.4~~$106.7 million for the three months ended ~~September 30, 2013~~March 31, 2014 compared to ~~$133.4~~$124.8 million for the three months ended ~~September 30, 2012. The larger increase~~March 31, 2013, which is comparable with the change in ~~net written premiums compared to~~ gross written ~~premiums is mainly due to less use of reinsurance in 2013, particularly on the crop business.~~premiums. Premiums earned ~~increased 26.9%~~decreased 1.8% to ~~$157.4~~$107.3 million for the three months ended ~~September 30, 2013~~March 31, 2014 compared to ~~$124.1~~$109.2 million for the three months ended ~~September 30, 2012.~~March 31, 2013. The change in premiums earned relative to net written premiums is the result of timing; premiums are

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

Gross written premiums increased by 17.8% to $923.6 million for the nine months ended September 30, 2013 compared to $783.9 million for the nine months ended September 30, 2012. This increase was primarily driven by California workers compensation, crop and non-standard auto business. Net written premiums increased 31.0% to $456.3 million for the nine months ended September 30, 2013 compared to $348.3 million for the nine months ended September 30, 2012. The larger increase in net written premiums compared to gross written premiums is mainly due to less use of reinsurance in 2013, particularly on the crop business. Premiums earned increased 18.3% to $406.2 million for the nine months ended September 30, 2013 compared to $343.5 million for the nine months ended September 30, 2012. As with the quarter, the change in premiums earned in relation to net premiums written is due to timing.

Incurred Losses and LAE. The following tables present the incurred losses and LAE for the Insurance segment for the periods indicated.

Three Months Ended September 30,
Current Ratio %/ Prior Ratio %/ Total Ratio %/
(Dollars in millions) Year Pt Change Years Pt Change Incurred Pt Change
2013
Attritional $ 112.8 71.6 % $ 1.0 0.7 % $ 113.8 72.3 %
Catastrophes 0.2 0.1 % (0.1 ) -0.1 % 0.1 0.0 %
Total segment $ 113.0 71.7 % $ 0.9 0.6 % $ 113.9 72.3 %

2012
Attritional $ 101.1 81.4 % $ 4.3 3.5 % $ 105.4 84.9 %
Catastrophes - 0.0 % - 0.0 % - 0.0 %
Total segment $ 101.1 81.4 % $ 4.3 3.5 % $ 105.4 84.9 %

Variance 2013/2012
Attritional $ 11.7 (9.8 ) pts $ (3.3 ) (2.8 ) pts $ 8.4 (12.6 ) pts
Catastrophes 0.2 0.1 pts (0.1 ) (0.1 ) pts 0.1 - pts
Total segment $ 11.9 (9.7 ) pts $ (3.4 ) (2.9 ) pts $ 8.5 (12.6 ) pts

		Nine Months Ended September 30,																				Three Months Ended March 31,
		Current		Ratio %/				Prior			Ratio %/				Total		Ratio %/					Current			Ratio %/				Prior			Ratio %/				Total			Ratio %/
(Dollars in millions)		Year		Pt Change				Years			Pt Change				Incurred		Pt Change					Year			Pt Change				Years			Pt Change				Incurred			Pt Change
2014
Attritional																						$	76.0			70.8	%		$	2.4			2.3	%		$	78.4			73.1	%
Catastrophes																							-			0.0	%			0.1			0.1	%			0.1			0.1	%
Total segment																						$	76.0			70.8	%		$	2.5			2.4	%		$	78.5			73.2	%

2013
Attritional		$	296.6		73.0	%		$	9.5			2.3	%		$	306.1		75.3	%			$	80.5			73.7	%		$	4.9			4.5	%		$	85.4			78.2	%
Catastrophes			0.2		0.1	%			(0.1	)		0.0	%			0.1		0.1	%				-			0.0	%			-			0.0	%			-			0.0	%
Total segment		$	296.8		73.1	%		$	9.4			2.3	%		$	306.2		75.4	%			$	80.5			73.7	%		$	4.9			4.5	%		$	85.4			78.2	%

2012
Attritional		$	266.0		77.5	%		$	7.6			2.2	%		$	273.6		79.7	%
Catastrophes			-		0.0	%			-			0.0	%			-		0.0	%
Total segment		$	266.0		77.5	%		$	7.6			2.2	%		$	273.6		79.7	%

Variance 2013/2012
Variance 2014/2013
Attritional		$	30.6		(4.5	)	pts	$	1.9			0.1		pts	$	32.5		(4.4	)	pts		$	(4.5	)		(2.9	)	pts	$	(2.5	)		(2.2	)	pts	$	(7.0	)		(5.1	)	pts
Catastrophes			0.2		0.1		pts		(0.1	)		-		pts		0.1		0.1		pts			-			-		pts		0.1			0.1		pts		0.1			0.1		pts
Total segment		$	30.8		(4.4	)	pts	$	1.8			0.1		pts	$	32.5		(4.3	)	pts		$	(4.5	)		(2.9	)	pts	$	(2.4	)		(2.1	)	pts	$	(6.9	)		(5.0	)	pts

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

Incurred losses and LAE ~~increased~~decreased by ~~8.0%~~8.1% to ~~$113.9~~$78.5 million for the three months ended ~~September 30, 2013~~March 31, 2014 compared to ~~$105.4~~$85.4 million for the three months ended ~~September 30, 2012. The variance resulted from~~March 31, 2013, mainly due to a ~~$11.7~~decrease of $4.5 million ~~increase~~ in current year attritional losses due ~~primarily~~ to ~~higher~~the impact of lower premiums earned ~~while~~and changes in the ~~current year attritional loss ratio declined 9.8 points, primarily reflecting lower losses on crop~~mix of business. ~~Current year catastrophe losses were $0.2 million for the three months ended September 30, 2013, due to the Canadian floods ($0.2 million).~~ There were no current year catastrophe losses for the three months ended ~~September 30, 2012.~~

~~Incurred losses~~March 31, 2014 and LAE increased by 11.9% to $306.2 million for the nine months ended September 30, 2013 compared to $273.6 million for the nine months ended September 30, 2012. The variance resulted from an $30.6 million increase in current year attritional losses due to higher premiums earned, while the current year attritional loss ratio declined 4.5 points. Current year catastrophe losses were $0.2 million for the nine months ended September 30, 2013, due to the Canadian floods ($0.2 million). There were no current year catastrophe losses for the nine months ended September 30, 2012.2013.

Segment ~~Expenses.~~Expenses Commission and brokerage ~~decreased~~increased to ~~$5.4~~$6.8 million for the three months ended ~~September 30, 2013~~March 31, 2014 compared to ~~$10.7~~$1.9 million for the three months ended ~~September 30, 2012. Commission and brokerage decreased 43.8% to $12.9 million for~~March 31, 2013. The increase was primarily driven by the ~~nine months ended September 30, 2013 compared to $23.0 million for~~shift in the ~~nine months ended September 30, 2012. These decreases were primarily due to the impact~~mix of ~~the adoption of new accounting standards concerning the accounting for acquisition costs,~~premium this quarter away from crop business, which ~~increased in 2012 and changes in our affiliated quota share agreements.~~

carries a lower commission rate than other insurance lines. Segment other underwriting expenses ~~increased~~decreased to ~~$28.2~~$21.9 million for the three months ended ~~September 30, 2013~~March 31, 2014 compared to ~~$24.9~~$25.1 million for the ~~same period in 2012. Segment other underwriting expenses increased to $79.9 million for the nine~~three months ended ~~September 30,~~March 31, 2013 ~~compared to $71.5 million for the same period in 2012. These increases were~~ primarily due to ~~increased premiums earned and higher compensation~~lower employee related costs.

Market Sensitive Instruments.

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

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

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 ~~$9.3~~$9.5 billion investment portfolio, at ~~September 30, 2013,~~March 31, 2014, 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 ~~$752.3~~$722.8 million of mortgage-backed securities in the ~~$5,309.8~~$5,537.8 million fixed maturity portfolio. Prepayment risk results from potential accelerated principal payments that shorten the average life and thus the expected yield of the security.

The table below display the potential impact of market value fluctuations and after-tax unrealized appreciation on our fixed maturity portfolio (including ~~$454.9~~$642.7 million of short-term investments) for the periods 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 estimates for mortgage-backed securities, changes in prepayment expectations under different interest rate environments were taken into account. For legal entities with non-U.S. dollar functional currency, the effective duration of the involved portfolio of securities was used as a proxy for the market value change under the various interest rate change scenarios.

	Impact of Interest Rate Shift in Basis Points															Impact of Interest Rate Shift in Basis Points
	At September 30, 2013															At March 31, 2014
(Dollars in millions)		-200			-100			0			100			200		-200			-100			0			100			200
Total Market/Fair Value	$	6,061.6		$	5,918.4		$	5,764.7		$	5,600.5		$	5,433.8		$	6,487.0		$	6,337.9		$	6,180.5		$	6,015.1		$	5,845.7
Market/Fair Value Change from Base (%)		5.2	%		2.7	%		0.0	%		-2.8	%		-5.7	%		5.0	%		2.5	%		0.0	%		-2.7	%		-5.4	%
Change in Unrealized Appreciation
After-tax from Base ($)	$	193.0		$	99.9		$	-		$	(106.7	)	$	(215.1	)	$	199.2		$	102.3		$	-		$	(107.5	)	$	(217.6	)

We had ~~$7,716.4~~$7,577.1 million and ~~$8,143.1~~$7,653.2 million of gross reserves for losses and LAE as of ~~September 30, 2013~~March 31, 2014 and December 31, ~~2012,~~2013, respectively. These amounts are recorded at their nominal value, as opposed to present value, which would reflect a discount adjustment to reflect the time value of money. Since losses are paid out over a period of time, the present value of the reserves is less than the nominal value. As interest rates rise, the present value of the reserves decreases and, conversely, as interest rates decline, the present value increases. These movements are the opposite of the interest rate impacts on the fair value of investments. While the difference between present value and nominal value is not reflected in our financial statements, our financial results will include investment income over time from the investment portfolio until the claims are paid. Our loss and loss reserve obligations have an expected duration that is reasonably consistent with our fixed income portfolio.

Equity Risk. Equity risk is the potential change in fair and/or market value of the common stock and preferred stock 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 bonds over time through market appreciation and income.

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

	Impact of Percentage Change in Equity Fair/Market Values												Impact of Percentage Change in Equity Fair/Market Values
	At September 30, 2013												At March 31, 2014
(Dollars in millions)		-20%			-10%			0%		10%		20%	-20%			-10%			0%		10%		20%
Fair/Market Value of the Equity Portfolio	$	1,014.5		$	1,141.3		$	1,268.2	$	1,395.0	$	1,521.8	$	979.7		$	1,102.2		$	1,224.7	$	1,347.2	$	1,469.6
After-tax Change in Fair/Market Value		(164.9	)		(82.4	)		-		82.4		164.9		(159.2	)		(79.6	)		-		79.6		159.2

Foreign Exchange 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

guidance, 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. As of ~~September 30, 2013,~~March 31, 2014, there has been no material change in exposure to foreign exchange rates as compared to December 31, ~~2012.~~2013.

SAFE HARBOR DISCLOSURE

This report contains forward-looking statements within the meaning of the 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 information regarding our reserves for losses and LAE, the adequacy of our provision for uncollectible balances, estimates of our catastrophe exposure, the effects of catastrophic events on our financial statements and the ability of our subsidiaries to pay dividends. Forward-looking statements only reflect our expectations and are not guarantees of performance. These statements involve risks, uncertainties and assumptions. Actual events or results may differ materially from our expectations. Important factors that could cause our actual events or results to be materially different from our expectations include those discussed under the caption “Risk Factors” in our most recently filed Annual Report on Form 10-K, Part 1, Item 1A. We undertake no obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise.

~~ITEM 3.~~

~~QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK~~

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Market Risk Instruments. See “Market Sensitive Instruments” in PART I – ITEM 2.

~~ITEM 4.~~

~~CONTROLS AND PROCEDURES~~

ITEM 4. CONTROLS AND PROCEDURES

As of the end of the period covered by this report, our management carried out an evaluation, with the participation of the Chief Executive Officer and Chief Financial Officer, of the effectiveness of our disclosure controls and procedures (as defined in Rule 13a-15(e) under the Securities Exchange Act of 1934 (the “Exchange Act”)). Based on their evaluation, the Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures are effective to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act are recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms. Our management, with the participation of the Chief Executive Officer and Chief Financial Officer, also conducted an evaluation of our internal control over financial reporting to determine whether any changes occurred during the quarter covered by this report that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting. Based on that evaluation, there has been no such change during the quarter covered by this report.

PART II

~~ITEM 1.~~

~~LEGAL PROCEEDINGS~~

ITEM 1. LEGAL PROCEEDINGS

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 1A. RISK FACTORS

No material changes.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

None.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4. MINE SAFETY DISCLOSURES

Not applicable.

ITEM 5. OTHER INFORMATION

None.

ITEM 6. EXHIBITS

Exhibit Index:

Exhibit No.	Description

31.1	Section 302 Certification of ~~Joseph V. Taranto~~Dominic J. Addesso

31.2	Section 302 Certification of Craig Howie

32.1	Section 906 Certification of ~~Joseph V. Taranto~~Dominic J. Addesso and Craig Howie

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 Labels Linkbase

101.PRE	XBRL Taxonomy Extension Presentation Linkbase

4640

~~Everest Reinsurance Holdings, Inc.~~

~~Signatures~~

~~Pursuant to the requirements 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.~~

Everest Reinsurance Holdings, Inc.

Signatures


Pursuant to the requirements 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.


	Everest Reinsurance Holdings, Inc.
	(Registrant)


	/S/ CRAIG HOWIE
	Craig Howie
	Executive Vice President and
		Chief Financial Officer

	(Duly Authorized Officer and Principal Financial Officer)



Dated: ~~November 14, 2013~~May 15, 2014

Large accelerated filer		Accelerated filer
Non-accelerated filer	X	Smaller reporting company
(Do not check if smaller reporting company)

	At September 30, 2013				At December 31, 2012				At March 31, 2014				At December 31, 2013
	Amortized		Market		Amortized		Market		Amortized		Market		Amortized		Market
(Dollars in thousands)	Cost		Value		Cost		Value		Cost		Value		Cost		Value
Fixed maturity securities – available for sale
Due in one year or less	$	419,286	$	420,887	$	329,474	$	330,149	$	527,979	$	529,116	$	462,133	$	463,674
Due after one year through five years		2,322,907		2,377,714		2,380,093		2,462,430		2,365,020		2,414,315		2,251,169		2,300,475
Due after five years through ten years		997,420		1,005,613		1,008,653		1,064,579		1,096,128		1,114,591		988,896		1,000,053
Due after ten years		657,857		689,741		807,515		889,090		654,110		704,605		630,555		661,106
Asset-backed securities		42,470		43,702		44,070		46,487		51,089		52,435		38,544		39,609
Mortgage-backed securities
Commercial		41,205		45,878		45,157		52,624		32,876		36,454		34,855		38,666
Agency residential		710,550		705,359		672,724		683,722		690,576		685,424		709,589		697,399
Non-agency residential		1,002		1,084		1,933		2,329		749		901		859		939
Total fixed maturity securities	$	5,192,697	$	5,289,978	$	5,289,619	$	5,531,410	$	5,418,527	$	5,537,841	$	5,116,600	$	5,201,921

	Duration of Unrealized Loss at September 30, 2013 By Maturity															Duration of Unrealized Loss at March 31, 2014 By Maturity
	Less than 12 months					Greater than 12 months					Total					Less than 12 months					Greater than 12 months					Total
			Gross					Gross					Gross					Gross					Gross					Gross
			Unrealized					Unrealized					Unrealized					Unrealized					Unrealized					Unrealized
(Dollars in thousands)	Market Value		Depreciation			Market Value		Depreciation			Market Value		Depreciation			Market Value		Depreciation			Market Value		Depreciation			Market Value		Depreciation
Fixed maturity securities
Due in one year or less	$	18,925	$	(873	)	$	28,339	$	(3,871	)	$	47,264	$	(4,744	)	$	42,790	$	(1,575	)	$	35,039	$	(4,148	)	$	77,829	$	(5,723	)
Due in one year through five years		566,673		(7,859	)		85,588		(5,112	)		652,261		(12,971	)		508,264		(6,820	)		140,468		(5,493	)		648,732		(12,313	)
Due in five years through ten years		448,603		(12,477	)		13,106		(831	)		461,709		(13,308	)		375,534		(5,871	)		27,224		(948	)		402,758		(6,819	)
Due after ten years		187,693		(16,690	)		7,677		(697	)		195,370		(17,387	)		52,332		(1,568	)		74,959		(4,460	)		127,291		(6,028	)
Asset-backed securities		-		-			-		-			-		-			1,848		(2	)		-		-			1,848		(2	)
Mortgage-backed securities		432,853		(12,252	)		45,805		(677	)		478,658		(12,929	)		137,054		(1,951	)		286,078		(9,865	)		423,132		(11,816	)
Total fixed maturity securities	$	1,654,747	$	(50,151	)	$	180,515	$	(11,188	)	$	1,835,262	$	(61,339	)	$	1,117,822	$	(17,787	)	$	563,768	$	(24,914	)	$	1,681,590	$	(42,701	)

	Three Months Ended						Nine Months Ended						Three Months Ended
	September 30,						September 30,						March 31,
(Dollars in thousands)	2013			2012			2013			2012			2014			2013
Fixed maturities	$	52,098		$	55,495		$	159,363		$	164,248		$	51,079		$	53,899
Equity securities		8,390			8,849			27,235			29,281			8,937			7,731
Short-term investments and cash		302			330			705			758			186			266
Other invested assets
Limited partnerships		6,569			9,096			32,109			29,940			(3,087	)		11,348
Dividends from Parent's shares		4,666			4,666			13,997			13,997			7,290			4,666
Other		1,056			1,427			5,311			2,453			2,021			2,320
Gross investment income before adjustments		73,081			79,863			238,720			240,677			66,426			80,230
Funds held interest income (expense)		746			979			4,182			3,873			2,109			2,418
Gross investment income		73,827			80,842			242,902			244,550			68,535			82,648
Investment expenses		(4,999	)		(4,500	)		(15,469	)		(12,760	)		(4,748	)		(5,779	)
Net investment income	$	68,828		$	76,342		$	227,433		$	231,790		$	63,787		$	76,869

	Three Months Ended						Nine Months Ended						Three Months Ended
	September 30,						September 30,						March 31,
(Dollars in thousands)	2013			2012			2013			2012			2014			2013
Proceeds from sales of fixed maturity securities	$	125,516		$	126,393		$	483,482		$	363,837		$	170,341		$	170,598
Gross gains from sales		3,446			2,704			12,123			15,371			2,475			3,811
Gross losses from sales		(1,679	)		(2,107	)		(7,934	)		(5,814	)		(3,532	)		(1,780	)

Proceeds from sales of equity securities	$	95,174		$	85,277		$	450,020		$	377,157		$	176,116		$	103,828
Gross gains from sales		3,746			5,204			33,151			33,005			6,588			8,869
Gross losses from sales		(2,152	)		(2,050	)		(7,586	)		(9,904	)		(7,924	)		(786	)

	Number of Shares Outstanding
Class	At ~~November~~May 1, ~~2013~~	2014
Common Shares, $0.01 par value	1,000

(Dollars in thousands)		At December 31, 2012
Pre-tax cumulative unrealized appreciation (depreciation)		$	399

			Fair Value Measurement Using:									Fair Value Measurement Using:
			Quoted Prices									Quoted Prices
			in Active		Significant							in Active		Significant
			Markets for		Other		Significant					Markets for		Other		Significant
			Identical		Observable		Unobservable					Identical		Observable		Unobservable
			Assets		Inputs		Inputs					Assets		Inputs		Inputs
(Dollars in thousands)	September 30, 2013		(Level 1)		(Level 2)		(Level 3)		(Dollars in thousands)	March 31, 2014		(Level 1)		(Level 2)		(Level 3)
Assets:
Fixed maturities, market value
U.S. Treasury securities and obligations of
U.S. government agencies and corporations	$	72,268	$	-	$	72,268	$	-		$	74,980	$	-	$	74,980	$	-
Obligations of U.S. States and political subdivisions		1,030,945		-		1,030,945		-			966,324		-		966,324		-
Corporate securities		1,660,795		-		1,660,795		-			2,003,743		-		2,003,743		-
Asset-backed securities		43,702		-		39,375		4,327			52,435		-		49,391		3,044
Mortgage-backed securities
Commercial		45,878		-		45,878		-			36,454		-		36,454		-
Agency residential		705,359		-		705,359		-			685,424		-		685,424		-
Non-agency residential		1,084		-		1,080		4			901		-		897		4
Foreign government securities		730,887		-		730,887		-			645,591		-		645,591		-
Foreign corporate securities		999,060		-		998,578		482			1,071,989		-		1,071,516		473
Total fixed maturities, market value		5,289,978		-		5,285,165		4,813			5,537,841		-		5,534,320		3,521

Fixed maturities, fair value		19,780		-		19,780		-			-		-		-		-
Equity securities, market value		16		16		-		-			13		13		-		-
Equity securities, fair value		1,268,150		1,146,586		121,564		-			1,224,669		1,108,586		116,083		-
Other invested assets, fair value		1,413,381		1,413,381		-		-			1,487,642		1,487,642		-		-

	Three Months Ended September 30, 2013														Nine Months Ended September 30, 2013
	Asset-backed			Foreign			Non-agency			Agency					Asset-backed			Foreign			Non-agency			Agency
(Dollars in thousands)	Securities			Corporate			RMBS			RMBS		Total			Securities			Corporate			RMBS			RMBS			Total
Beginning balance	$	4,832		$	7,225		$	323		$	-	$	12,380		$	4,849		$	11,421		$	5		$	29,398		$	45,673
Total gains or (losses) (realized/unrealized)
Included in earnings		58			(4	)		1			-		55			74			(655	)		3			-			(578	)
Included in other comprehensive income (loss)		(186	)		51			-			-		(135	)		(515	)		(371	)		(25	)		-			(911	)
Purchases, issuances and settlements		(377	)		(1,751	)		(1	)		-		(2,129	)		(397	)		1,086			(72	)		-			617
Transfers in and/or (out) of Level 3		-			(5,039	)		(319	)		-		(5,358	)		316			(10,999	)		93			(29,398	)		(39,988	)
Ending balance	$	4,327		$	482		$	4		$	-	$	4,813		$	4,327		$	482		$	4		$	-		$	4,813

The amount of total gains or losses for the period included
in earnings (or changes in net assets) attributable to the
change in unrealized gains or losses relating to assets
still held at the reporting date	$	-		$	-		$	-		$	-	$	-		$	-		$	-		$	-		$	-		$	-

(Some amounts may not reconcile due to rounding.)

	Three Months Ended September 30, 2012												Nine Months Ended September 30, 2012
	Asset-backed			Foreign			Non-agency						Asset-backed			Foreign			Non-agency
(Dollars in thousands)	Securities			Corporate			RMBS			Total			Securities			Corporate			RMBS			Total
Beginning balance	$	8,996		$	7,383		$	5		$	16,384		$	16,046		$	2,536		$	7		$	18,589
Total gains or (losses) (realized/unrealized)
Included in earnings		56			(14	)		1			43			111			(33	)		3			81
Included in other comprehensive income (loss)		390			275			-			665			728			387			(2	)		1,113
Purchases, issuances and settlements		(61	)		(576	)		(1	)		(638	)		4,407			6,640			(3	)		11,044
Transfers in and/or (out) of Level 3		(1,789	)		(2,122	)		-			(3,911	)		(13,700	)		(4,584	)		-			(18,284	)
Ending balance	$	7,592		$	4,946		$	5		$	12,543		$	7,592		$	4,946		$	5		$	12,543

The amount of total gains or losses for the period included
in earnings (or changes in net assets) attributable to the
change in unrealized gains or losses relating to assets
still held at the reporting date	$	-		$	-		$	-		$	-		$	-		$	-		$	-		$	-

(Some amounts may not reconcile due to rounding.)

					September 30, 2013				December 31, 2012
					Consolidated Balance				Consolidated Balance
(Dollars in thousands)	Date Issued	Date Due	Principal Amounts		Sheet Amount		Market Value		Sheet Amount		Market Value
5.40% Senior notes	10/12/2004	10/15/2014	$	250,000	$	249,945	$	259,498	$	249,907	$	266,390