UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(d)

OF THE SECURITIES EXCHANGE ACT OF 1934

FOR THE QUARTERLY PERIOD ENDED:

~~September 30, 2015~~March 31, 2016

Commission file number:

1-14527

EVEREST REINSURANCE HOLDINGS, INC.

(Exact name of registrant as specified in its charter)

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

477 Martinsville Road

Post Office Box 830

Liberty Corner, New Jersey 07938-0830

(908) 604-3000

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

of registrant's principal executive office)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

YES

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

YES

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of "large accelerated filer," "accelerated filer" and "smaller reporting company" in Rule 12b-2 of the Exchange Act.

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

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

YES

Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date.

		Number of Shares Outstanding
Class		At ~~November~~May 1, ~~2015~~2016
Common Shares, $0.01 par value		1,000

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

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, 2015~~March 31, 2016 (unaudited) and
		December 31, ~~2014~~2015	1

	Consolidated Statements of Operations and Comprehensive Income (Loss) for the
		three ~~and nine~~ months ended ~~September 30,~~March 31, 2016 and 2015 ~~and 2014~~ (unaudited)	2

	Consolidated Statements of Changes in Stockholder's Equity for the three ~~and nine~~
		months ended ~~September 30,~~March 31, 2016 and 2015 ~~and 2014~~ (unaudited)	3

	Consolidated Statements of Cash Flows for the ~~nine~~three months ended
		~~September 30,~~March 31, 2016 and 2015 ~~and 2014~~ (unaudited)	4

	Notes to Consolidated Interim Financial Statements (unaudited)		5

Item 2.	Management's Discussion and Analysis of Financial Condition and
		Results of Operation	2827

Item 3.	Quantitative and Qualitative Disclosures About Market Risk		4439

Item 4.	Controls and Procedures		4439

PART II

OTHER INFORMATION


Item 1.	Legal Proceedings	4440

Item 1A.	Risk Factors	4540

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	4540

Item 3.	Defaults Upon Senior Securities	4540

Item 4.	Mine Safety Disclosures	4540

Item 5.	Other Information	4540

Item 6.	Exhibits	4541

EVEREST REINSURANCE HOLDINGS, INC.

CONSOLIDATED BALANCE SHEETS

	September 30,			December 31,		March 31,			December 31,
(Dollars in thousands, except par value per share)	2015			2014		2016			2015
	(unaudited)					(unaudited)
ASSETS:
Fixed maturities - available for sale, at market value	$	5,384,362		$	5,293,411	$	5,579,911		$	5,356,477
(amortized cost: 2015, $5,327,880; 2014, $5,235,523)
(amortized cost: 2016, $5,488,882; 2015, $5,335,472)
Fixed maturities - available for sale, at fair value		-			1,509		1,870			2,102
Equity securities - available for sale, at market value (cost: 2015, $0; 2014, $15)		-			16
Equity securities - available for sale, at fair value		1,199,347			1,299,037		1,194,972			1,215,377
Short-term investments		382,233			564,364		329,190			563,536
Other invested assets (cost: 2015, $427,980; 2014, $435,010)		427,980			435,010
Other invested assets (cost: 2016, $595,114; 2015, $450,154)							595,114			450,154
Other invested assets, at fair value		1,684,860			1,655,311		1,773,214			1,773,214
Cash		276,132			323,975		148,439			155,429
Total investments and cash		9,354,914			9,572,633		9,622,710			9,516,289
Note receivable - affiliated		250,000			250,000		250,000			250,000
Accrued investment income		48,522			45,386		46,810			41,727
Premiums receivable		1,306,646			1,086,203		1,092,277			1,129,656
Reinsurance receivables - unaffiliated		712,958			659,303		848,919			716,982
Reinsurance receivables - affiliated		3,459,615			3,372,715		3,675,168			3,742,105
Funds held by reinsureds		181,146			182,159		172,271			176,712
Deferred acquisition costs		89,267			109,262		80,270			92,651
Prepaid reinsurance premiums		849,228			809,083		757,777			772,686
Other assets		298,322			235,576		247,742			261,805
TOTAL ASSETS	$	16,550,618		$	16,322,320	$	16,793,944		$	16,700,613

LIABILITIES:
Reserve for losses and loss adjustment expenses	$	7,878,119		$	7,843,856	$	7,992,273		$	7,940,720
Unearned premium reserve		1,468,945			1,442,122		1,318,229			1,349,799
Funds held under reinsurance treaties		101,842			101,743		100,755			101,531
Losses in the course of payment		310,398			178,521		143,296			125,592
Commission reserves		52,936			63,110		45,880			51,873
Other net payable to reinsurers		971,929			1,028,549		1,120,917			1,225,260
4.868% Senior notes due 6/1/2044		400,000			400,000		400,000			400,000
6.6% Long term notes due 5/1/2067		238,367			238,364		238,369			238,368
Accrued interest on debt and borrowings		12,341			3,537		12,341			3,537
Income taxes		24,378			46,835		107,488			68,024
Unsettled securities payable		39,309			41,092		29,525			15,040
Other liabilities		264,795			361,874		248,154			249,658
Total liabilities		11,763,359			11,749,603		11,757,227			11,769,402

Commitments and Contingencies (Note 6)
Commitments and Contingencies (Note 5)

STOCKHOLDER'S EQUITY:
Common stock, par value: $0.01; 3,000 shares authorized;
1,000 shares issued and outstanding (2015 and 2014)		-			-
1,000 shares issued and outstanding (2016 and 2015)							-			-
Additional paid-in capital		372,566			362,293		379,582			374,789
Accumulated other comprehensive income (loss), net of deferred income tax expense
(benefit) of ($19,525) at 2015 and $2,434 at 2014		(36,263	)		4,519
(benefit) of $(182) at 2016 and ($33,458) at 2015							(349	)		(62,136	)
Retained earnings		4,450,956			4,205,905		4,657,484			4,618,558
Total stockholder's equity		4,787,259			4,572,717		5,036,717			4,931,211
TOTAL LIABILITIES AND STOCKHOLDER'S EQUITY	$	16,550,618		$	16,322,320	$	16,793,944		$	16,700,613

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						Nine Months Ended						Three Months Ended
	September 30,						September 30,						March 31,
(Dollars in thousands)	2015			2014			2015			2014			2016			2015
	(unaudited)						(unaudited)						(unaudited)
REVENUES:
Premiums earned	$	546,050		$	569,597		$	1,588,536		$	1,560,778		$	481,925		$	521,062
Net investment income		63,363			83,446			206,869			215,869			58,445			72,581
Net realized capital gains (losses):
Other-than-temporary impairments on fixed maturity securities		(10,502	)		-			(43,433	)		(199	)		(23,015	)		(24,121	)
Other-than-temporary impairments on fixed maturity securities
transferred to other comprehensive income (loss)		-			-			-			-			-			-
Realized gain on sale of subsidiary		94,704			-			94,704			-
Other net realized capital gains (losses)		(111,193	)		(160	)		(100,445	)		121,103			(43,362	)		45,417
Total net realized capital gains (losses)		(121,695	)		(160	)		(49,174	)		120,904			(66,377	)		21,296
Other income (expense)		10,828			(3,739	)		38,950			(15,576	)		13,102			15,833
Total revenues		498,546			649,144			1,785,181			1,881,975			487,095			630,772

CLAIMS AND EXPENSES:
Incurred losses and loss adjustment expenses		370,754			380,580			1,002,513			980,143			296,062			308,880
Commission, brokerage, taxes and fees		72,151			79,168			241,635			240,584			68,822			96,531
Other underwriting expenses		56,953			50,623			157,069			137,032			59,227			48,543
Corporate expenses		1,637			4,620			5,031			5,398			2,336			1,609
Interest, fee and bond issue cost amortization expense		8,859			12,292			26,576			28,539			8,859			8,859
Total claims and expenses		510,354			527,283			1,432,824			1,391,696			435,306			464,422

INCOME (LOSS) BEFORE TAXES		(11,808	)		121,861			352,357			490,279			51,789			166,350
Income tax expense (benefit)		(7,149	)		21,720			107,306			145,498			12,863			50,406

NET INCOME (LOSS)	$	(4,659	)	$	100,141		$	245,051		$	344,781		$	38,926		$	115,944

Other comprehensive income (loss), net of tax:
Unrealized appreciation (depreciation) ("URA(D)") on securities arising during the period		(29,878	)		(26,221	)		(49,866	)		13,678			19,600			15,950
Less: reclassification adjustment for realized losses (gains) included in net income (loss)		11,625			(696	)		48,951			1,459			25,915			23,665
Total URA(D) on securities arising during the period		(18,253	)		(26,917	)		(915	)		15,137			45,515			39,615

Foreign currency translation adjustments		(27,473	)		(7,472	)		(44,636	)		(8,587	)		14,932			(33,308	)

Benefit plan actuarial net gain (loss) for the period		-			-			-			-			-			-
Reclassification adjustment for amortization of net (gain) loss included in net income (loss)		1,556			825			4,769			2,366			1,340			1,604
Total benefit plan net gain (loss) for the period		1,556			825			4,769			2,366			1,340			1,604
Total other comprehensive income (loss), net of tax		(44,170	)		(33,564	)		(40,782	)		8,916			61,787			7,911

COMPREHENSIVE INCOME (LOSS)	$	(48,829	)	$	66,577		$	204,269		$	353,697		$	100,713		$	123,855

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						Nine Months Ended					Three Months Ended
	September 30,						September 30,					March 31,
(Dollars in thousands, except share amounts)	2015			2014			2015			2014		2016			2015
	(unaudited)						(unaudited)					(unaudited)
COMMON STOCK (shares outstanding):
Balance, beginning of period		1,000			1,000			1,000			1,000		1,000			1,000
Balance, end of period		1,000			1,000			1,000			1,000		1,000			1,000

ADDITIONAL PAID-IN CAPITAL:
Balance, beginning of period	$	369,284		$	357,537		$	362,293		$	351,051	$	374,789		$	362,293
Share-based compensation plans		3,282			2,453			10,273			8,939		4,793			3,965
Balance, end of period		372,566			359,990			372,566			359,990		379,582			366,258

ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS),
NET OF DEFERRED INCOME TAXES:
Balance, beginning of period		7,907			130,128			4,519			87,648		(62,136	)		4,519
Net increase (decrease) during the period		(44,170	)		(33,564	)		(40,782	)		8,916		61,787			7,911
Balance, end of period		(36,263	)		96,564			(36,263	)		96,564		(349	)		12,430

RETAINED EARNINGS:
Balance, beginning of period		4,455,615			3,996,419			4,205,905			3,751,779		4,618,558			4,205,905
Net income (loss)		(4,659	)		100,141			245,051			344,781		38,926			115,944
Balance, end of period		4,450,956			4,096,560			4,450,956			4,096,560		4,657,484			4,321,849

TOTAL STOCKHOLDER'S EQUITY, END OF PERIOD	$	4,787,259		$	4,553,114		$	4,787,259		$	4,553,114	$	5,036,717		$	4,700,537

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

EVEREST REINSURANCE HOLDINGS, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

	Nine Months Ended						Three Months Ended
	September 30,						March 31,
(Dollars in thousands)	2015			2014			2016			2015
	(unaudited)						(unaudited)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss)	$	245,051		$	344,781		$	38,926		$	115,944
Adjustments to reconcile net income to net cash provided by operating activities:
Decrease (increase) in premiums receivable		(225,922	)		(237,390	)		38,549			(78,969	)
Decrease (increase) in funds held by reinsureds, net		589			762			3,817			(4,707	)
Decrease (increase) in reinsurance receivables		(169,328	)		(778,374	)		(56,106	)		(68,311	)
Decrease (increase) in income taxes		(212	)		12,264			6,546			31,408
Decrease (increase) in prepaid reinsurance premiums		(44,177	)		(198,306	)		15,994			15,016
Increase (decrease) in reserve for losses and loss adjustment expenses		107,006			150,411			29,962			20,927
Increase (decrease) in unearned premiums		34,627			241,650			(33,573	)		(28,224	)
Increase (decrease) in other net payable to reinsurers		(50,813	)		353,468			(106,588	)		(52,400	)
Increase (decrease) in losses in course of payment		133,244			164,072			17,456			60,419
Change in equity adjustments in limited partnerships		(16,409	)		(17,643	)		2,514			(7,173	)
Distribution of limited partnership income		36,883			32,548			9,859			7,369
Change in other assets and liabilities, net		(2,719	)		(2,744	)		24,496			35,494
Non-cash compensation expense		6,303			5,700			3,117			1,946
Amortization of bond premium (accrual of bond discount)		13,978			14,502			4,541			4,955
Amortization of underwriting discount on senior notes		3			43			1			1
Net realized capital (gains) losses		49,174			(120,904	)		66,377			(21,296	)
Net cash provided by (used in) operating activities		117,278			(35,160	)		65,888			32,399

CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from fixed maturities matured/called - available for sale, at market value		696,268			829,363			154,378			188,815
Proceeds from fixed maturities matured/called - available for sale, at fair value		-			875
Proceeds from fixed maturities sold - available for sale, at market value		418,284			547,682			188,046			112,846
Proceeds from fixed maturities sold - available for sale, at fair value		1,824			23,855			-			1,236
Proceeds from equity securities sold - available for sale, at market value		16			-
Proceeds from equity securities sold - available for sale, at fair value		442,276			404,627			86,149			133,960
Proceeds from sale of subsidiary (net of cash disposed)		3,934			-
Distributions from other invested assets		36,130			41,854			255,889			10,797
Cost of fixed maturities acquired - available for sale, at market value		(1,403,187	)		(2,008,937	)		(506,085	)		(293,848	)
Cost of fixed maturities acquired - available for sale, at fair value		(234	)		(23,684	)
Cost of equity securities acquired - available for sale, at fair value		(442,306	)		(237,749	)		(92,019	)		(164,112	)
Cost of other invested assets acquired		(49,575	)		(76,717	)		(413,223	)		(16,600	)
Net change in short-term investments		176,876			97,262			235,895			(860	)
Net change in unsettled securities transactions		(12,069	)		(9,474	)		5,870			(31,296	)
Net cash provided by (used in) investing activities		(131,763	)		(411,043	)		(85,100	)		(59,062	)

CASH FLOWS FROM FINANCING ACTIVITIES:
Tax benefit from share-based compensation		3,970			3,239			1,676			2,020
Net proceeds from issuance of senior notes		-			400,000
Net cash provided by (used in) financing activities		3,970			403,239			1,676			2,020

EFFECT OF EXCHANGE RATE CHANGES ON CASH		(37,328	)		1,575			10,546			(31,845	)

Net increase (decrease) in cash		(47,843	)		(41,389	)		(6,990	)		(56,488	)
Cash, beginning of period		323,975			316,807			155,429			323,975
Cash, end of period	$	276,132		$	275,418		$	148,439		$	267,487

SUPPLEMENTAL CASH FLOW INFORMATION:
Income taxes paid (recovered)	$	104,727		$	129,608		$	4,558		$	18,077
Interest paid		17,608			14,719			-			-

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, 2016 and 2015 ~~and 2014~~

1. GENERAL

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. Logan Re" means Mt. Logan Re Ltd., a subsidiary of Group;~~ and the "Company" means Holdings and its subsidiaries.

Effective July 13, 2015, the Company sold all of the outstanding shares of capital stock of a wholly-owned subsidiary entity, Mt. McKinley Insurance Company ("Mt. McKinley"), to Clearwater Insurance Company. The operating results of Mt. McKinley ~~through July 13,~~for the three months ended March 31, 2015 are included within the Company's financial statements.

2. BASIS OF PRESENTATION

The unaudited consolidated financial statements of the Company for the three ~~and nine~~ months ended ~~September 30,~~March 31, 2016 and 2015 ~~and 2014~~ 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, ~~2014~~2015 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, 2016 and 2015 ~~and 2014~~ 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, 2015, 2014 ~~2013~~ and ~~2012~~2013 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 years' amounts to conform to the 2016 presentation.

Application of Recently Issued Accounting Standard ~~Changes~~Changes.

~~No accounting standards or~~Disclosures about Short-Duration Contracts. In May 2015, the FASB issued ASU 2015-09, authoritative guidance regarding required disclosures associated with short duration insurance contracts. The new disclosure requirements focus on information about initial claim estimates and subsequent claim estimate adjustment, methodologies in estimating claims and the timing, frequency and severity of claims related to short duration insurance contracts. This guidance is effective for annual reporting periods beginning after December 15, 2015 and interim reporting periods beginning after December 15, 2016. Therefore, the initial presentation of this guidance in the Company's financial statements and footnotes will be for its 10-K filing as of December 31, 2016. The Company does not anticipate that it will have ~~been~~a significant impact on its financial statements.

Debt Issuance Costs. In April 2015, The FASB issued ~~recently~~ASU 2015–03, authoritative guidance on the presentation of debt issuance costs. This guidance requires that ~~would~~debt issuance costs be presented within the balance sheet as a reduction of the carrying value of the debt liability, rather than as a separate asset. This guidance is effective for annual reporting periods beginning after December 15, 2015 and related interim reporting periods. The Company does not anticipate that the adoption of this guidance will have a material impact on ~~the Company's~~its financial ~~statements or financial reporting process.~~statements.

Consolidation. In February 2015, the FASB issued ASU 2015-02, authoritative guidance regarding consolidation of reporting entities. The new guidance focuses on the required evaluation of whether certain legal entities should be consolidated. This guidance is effective for annual and interim reporting periods beginning after December 15, 2015. The Company has determined that the guidance will not have a significant impact on its financial statements.

3.INVESTMENTS

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

	At September 30, 2015											At March 31, 2016
	Amortized		Unrealized		Unrealized			Market		OTTI in AOCI		Amortized		Unrealized		Unrealized			Market		OTTI in AOCI
(Dollars in thousands)	Cost		Appreciation		Depreciation			Value		(a)		Cost		Appreciation		Depreciation			Value		(a)
Fixed maturity securities
U.S. Treasury securities and obligations of
U.S. government agencies and corporations	$	222,879	$	4,634	$	(69	)	$	227,444	$	-	$	363,705	$	6,407	$	(66	)	$	370,046	$	-
Obligations of U.S. states and political subdivisions		683,715		32,088		(1,524	)		714,279		-		664,481		38,438		(843	)		702,076		-
Corporate securities		2,012,649		35,136		(48,623	)		1,999,162		6		2,003,827		38,795		(39,602	)		2,003,020		128
Asset-backed securities		132,004		689		(232	)		132,461		-		167,757		765		(287	)		168,235		-
Mortgage-backed securities
Commercial		62,616		1,960		(55	)		64,521		-		62,415		1,201		(188	)		63,428		-
Agency residential		720,508		7,833		(2,306	)		726,035		-		777,460		9,178		(1,925	)		784,713		-
Non-agency residential		141		27		-			168		-		113		19		-			132		-
Foreign government securities		448,501		25,864		(9,658	)		464,707		-		472,081		27,162		(7,782	)		491,461		-
Foreign corporate securities		1,044,867		33,424		(22,706	)		1,055,585		16		977,043		29,693		(9,936	)		996,800		-
Total fixed maturity securities	$	5,327,880	$	141,655	$	(85,173	)	$	5,384,362	$	22	$	5,488,882	$	151,658	$	(60,629	)	$	5,579,911	$	128
Equity securities	$	-	$	-	$	-		$	-	$	-

	At December 31, 2014												At December 31, 2015
	Amortized		Unrealized		Unrealized			Market		OTTI in AOCI			Amortized		Unrealized		Unrealized			Market		OTTI in AOCI
(Dollars in thousands)	Cost		Appreciation		Depreciation			Value		(a)			Cost		Appreciation		Depreciation			Value		(a)
Fixed maturity securities
U.S. Treasury securities and obligations of
U.S. government agencies and corporations	$	135,724	$	1,416	$	(304	)	$	136,836	$	-		$	329,281	$	2,422	$	(718	)	$	330,985	$	-
Obligations of U.S. states and political subdivisions		783,129		41,969		(626	)		824,472		-			669,945		34,020		(890	)		703,075		-
Corporate securities		1,992,200		39,954		(53,219	)		1,978,935		(9,735	)		2,011,997		27,286		(70,725	)		1,968,558		(86	)
Asset-backed securities		94,470		727		(374	)		94,823		-			145,755		290		(1,063	)		144,982		-
Mortgage-backed securities
Commercial		57,027		2,292		(51	)		59,268		-			61,527		1,430		(511	)		62,446		-
Agency residential		596,140		6,697		(4,720	)		598,117		-			714,907		3,994		(6,603	)		712,298		-
Non-agency residential		271		44		-			315		-			126		24		-			150		-
Foreign government securities		515,016		27,415		(5,344	)		537,087		-			447,244		24,255		(8,425	)		463,074		-
Foreign corporate securities		1,061,546		27,832		(25,820	)		1,063,558		-			954,690		27,616		(11,397	)		970,909		17
Total fixed maturity securities	$	5,235,523	$	148,346	$	(90,458	)	$	5,293,411	$	(9,735	)	$	5,335,472	$	121,337	$	(100,332	)	$	5,356,477	$	(69	)
Equity securities	$	15	$	1	$	-		$	16	$	-

^(a) Represents the amount of OTTI recognized in AOCI. Amount includes unrealized gains and losses on impaired securities relating to changes in the value of such securities subsequent to the impairment measurement date.

The amortized cost and market value of fixed maturity securities are shown in the following tables by contractual maturity. Mortgage-backed securities are generally more likely to be prepaid than other fixed maturity securities. As the stated maturity of such securities may not be indicative of actual maturities, the totals for mortgage-backed and asset-backed securities are shown separately.

	At September 30, 2015				At December 31, 2014				At March 31, 2016				At December 31, 2015
	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	$	345,345	$	345,322	$	385,721	$	384,022	$	371,332	$	370,026	$	330,029	$	330,509
Due after one year through five years		2,495,023		2,506,790		2,387,533		2,369,917		2,702,980		2,739,917		2,617,079		2,618,056
Due after five years through ten years		970,585		971,624		1,025,221		1,029,077		779,848		783,570		870,266		856,230
Due after ten years		601,658		637,441		689,140		757,872		626,977		669,890		595,783		631,806
Asset-backed securities		132,004		132,461		94,470		94,823		167,757		168,235		145,755		144,982
Mortgage-backed securities
Commercial		62,616		64,521		57,027		59,268		62,415		63,428		61,527		62,446
Agency residential		720,508		726,035		596,140		598,117		777,460		784,713		714,907		712,298
Non-agency residential		141		168		271		315		113		132		126		150
Total fixed maturity securities	$	5,327,880	$	5,384,362	$	5,235,523	$	5,293,411	$	5,488,882	$	5,579,911	$	5,335,472	$	5,356,477

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

	Three Months Ended						Nine Months Ended						Three Months Eded
	September 30,						September 30,						March 31,
(Dollars in thousands)	2015			2014			2015			2014			2016			2015
Increase (decrease) during the period between the market value and cost
of investments carried at market value, and deferred taxes thereon:
Fixed maturity securities	$	(28,103	)	$	(41,410	)	$	(11,164	)	$	23,285		$	69,826		$	51,211
Fixed maturity securities, other-than-temporary impairment		22			-			9,757			-			197			9,735
Equity securities		-			1			(1	)		3
Change in unrealized appreciation (depreciation), pre-tax		(28,081	)		(41,409	)		(1,408	)		23,288			70,023			60,946
Deferred tax benefit (expense)		9,835			14,492			3,907			(8,151	)		(24,439	)		(17,924	)
Deferred tax benefit (expense), other-than-temporary impairment		(7	)		-			(3,414	)		-			(69	)		(3,407	)
Change in unrealized appreciation (depreciation),
net of deferred taxes, included in stockholder's equity	$	(18,253	)	$	(26,917	)	$	(915	)	$	15,137		$	45,515		$	39,615

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-temporary impairment, but rather a temporary decline in market value. Temporary declines in market value are recorded as unrealized losses in accumulated other comprehensive income (loss). If the Company determines that the decline is other-than-temporary and the Company does not have the intent to sell the security; and it is more likely than not that the Company will not have to sell the security before recovery of its cost basis, the carrying value of the investment is written down to fair value. The fair value adjustment that is credit or foreign exchange related is recorded in net realized capital gains (losses) in the Company's consolidated statements of operations and comprehensive income (loss). The fair value adjustment that is non-credit related is recorded as a component of other comprehensive income (loss), 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 September 30, 2015 By Security Type															Duration of Unrealized Loss at March 31, 2016 By Security Type
	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 - available for sale
U.S. Treasury securities and obligations of
U.S. government agencies and corporations	$	201	$	(1	)	$	1,844	$	(68	)	$	2,045	$	(69	)	$	54,980	$	(66	)	$	698	$	-		$	55,678	$	(66	)
Obligations of U.S. states and political subdivisions		20,162		(316	)		35,460		(1,208	)		55,622		(1,524	)		4,469		(16	)		7,014		(827	)		11,483		(843	)
Corporate securities		647,568		(34,098	)		291,894		(14,525	)		939,462		(48,623	)		471,961		(20,832	)		242,718		(18,770	)		714,679		(39,602	)
Asset-backed securities		49,224		(203	)		8,601		(29	)		57,825		(232	)		20,482		(77	)		31,533		(210	)		52,015		(287	)
Mortgage-backed securities
Commercial		6,003		(55	)		-		-			6,003		(55	)		17,323		(188	)		-		-			17,323		(188	)
Agency residential		97,964		(762	)		157,863		(1,544	)		255,827		(2,306	)		100,416		(901	)		114,503		(1,024	)		214,919		(1,925	)
Non-agency residential		-		-			-		-			-		-			-		-			-		-			-		-
Foreign government securities		115,876		(3,827	)		66,812		(5,831	)		182,688		(9,658	)		22,510		(638	)		57,790		(7,144	)		80,300		(7,782	)
Foreign corporate securities		286,978		(18,810	)		72,392		(3,896	)		359,370		(22,706	)		202,263		(4,129	)		66,205		(5,807	)		268,468		(9,936	)
Total fixed maturity securities	$	1,223,976	$	(58,072	)	$	634,866	$	(27,101	)	$	1,858,842	$	(85,173	)	$	894,404	$	(26,847	)	$	520,461	$	(33,782	)	$	1,414,865	$	(60,629	)
Equity securities		-		-			-		-			-		-
Total	$	1,223,976	$	(58,072	)	$	634,866	$	(27,101	)	$	1,858,842	$	(85,173	)

	Duration of Unrealized Loss at September 30, 2015 By Maturity															Duration of Unrealized Loss at March 31, 2016 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	$	36,780	$	(1,633	)	$	17,019	$	(1,710	)	$	53,799	$	(3,343	)	$	39,889	$	(183	)	$	32,078	$	(3,841	)	$	71,967	$	(4,024	)
Due in one year through five years		594,454		(29,341	)		304,349		(15,213	)		898,803		(44,554	)		422,494		(9,573	)		276,367		(17,598	)		698,861		(27,171	)
Due in five years through ten years		382,520		(23,273	)		109,012		(7,616	)		491,532		(30,889	)		265,716		(14,274	)		60,641		(10,681	)		326,357		(24,955	)
Due after ten years		57,031		(2,805	)		38,022		(989	)		95,053		(3,794	)		28,084		(1,651	)		5,339		(428	)		33,423		(2,079	)
Asset-backed securities		49,224		(203	)		8,601		(29	)		57,825		(232	)		20,482		(77	)		31,533		(210	)		52,015		(287	)
Mortgage-backed securities		103,967		(817	)		157,863		(1,544	)		261,830		(2,361	)		117,739		(1,089	)		114,503		(1,024	)		232,242		(2,113	)
Total fixed maturity securities	$	1,223,976	$	(58,072	)	$	634,866	$	(27,101	)	$	1,858,842	$	(85,173	)	$	894,404	$	(26,847	)	$	520,461	$	(33,782	)	$	1,414,865	$	(60,629	)

The aggregate market value and gross unrealized losses related to investments in an unrealized loss position at ~~September 30, 2015~~March 31, 2016 were ~~$1,858,842~~$1,414,865 thousand and ~~$85,173~~$60,629 thousand, respectively. The market value of securities for the single issuer whose securities comprised the largest unrealized loss position at ~~September 30, 2015,~~March 31, 2016, did not exceed ~~0.3%~~0.2% 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 ~~$58,072~~$26,847 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 and foreign government~~ securities. The majority of these unrealized losses are attributable to unrealized losses in the energy sector, ~~$36,358~~$13,158 thousand, as falling oil prices disrupted the market values for this sector, particularly for oil exploration, production and servicing companies and unrealized foreign exchange losses, ~~$11,313~~$5,798 thousand, as the U.S. dollar has strengthened against other currencies. The ~~$27,101~~$33,782 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 and agency

residential mortgage-backed securities. The majority of these unrealized losses are attributable to unrealized foreign exchange losses, ~~$13,322~~$17,964 thousand, as the U.S. dollar has strengthened against other currencies and unrealized losses in the energy sector, ~~$5,056~~$5,572 thousand, as falling oil prices disrupted the market values for this sector, particularly for oil exploration, production and servicing companies. The Company did not have any sub-prime or alt-A loans with gross unrealized depreciation at ~~September 30, 2015.~~March 31, 2016. 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, 2014 By Security Type															Duration of Unrealized Loss at December 31, 2015 By Security Type
	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 - available for sale
U.S. Treasury securities and obligations of
U.S. government agencies and corporations	$	13,187	$	(20	)	$	26,897	$	(284	)	$	40,084	$	(304	)	$	216,352	$	(712	)	$	692	$	(6	)	$	217,044	$	(718	)
Obligations of U.S. states and political subdivisions		20,428		(242	)		18,199		(384	)		38,627		(626	)		6,434		(84	)		4,917		(806	)		11,351		(890	)
Corporate securities		830,928		(48,891	)		171,207		(4,328	)		1,002,135		(53,219	)		866,715		(49,034	)		307,215		(21,691	)		1,173,930		(70,725	)
Asset-backed securities		62,451		(374	)		-		-			62,451		(374	)		102,506		(791	)		28,048		(272	)		130,554		(1,063	)
Mortgage-backed securities
Commercial		11,742		(51	)		-		-			11,742		(51	)		26,483		(511	)		-		-			26,483		(511	)
Agency residential		24,230		(59	)		267,824		(4,661	)		292,054		(4,720	)		320,285		(3,094	)		150,095		(3,509	)		470,380		(6,603	)
Non-agency residential		-		-			-		-			-		-			-		-			-		-			-		-
Foreign government securities		45,521		(913	)		53,086		(4,431	)		98,607		(5,344	)		61,498		(2,182	)		77,911		(6,243	)		139,409		(8,425	)
Foreign corporate securities		228,733		(21,704	)		117,713		(4,116	)		346,446		(25,820	)		324,904		(6,289	)		76,951		(5,108	)		401,855		(11,397	)
Total fixed maturity securities	$	1,237,220	$	(72,254	)	$	654,926	$	(18,204	)	$	1,892,146	$	(90,458	)	$	1,925,177	$	(62,697	)	$	645,829	$	(37,635	)	$	2,571,006	$	(100,332	)
Equity securities		-		-			-		-			-		-
Total	$	1,237,220	$	(72,254	)	$	654,926	$	(18,204	)	$	1,892,146	$	(90,458	)

	Duration of Unrealized Loss at December 31, 2014 By Maturity															Duration of Unrealized Loss at December 31, 2015 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	$	12,858	$	(550	)	$	53,528	$	(4,224	)	$	66,386	$	(4,774	)	$	21,780	$	(1,577	)	$	12,212	$	(1,171	)	$	33,992	$	(2,748	)
Due in one year through five years		622,137		(51,262	)		243,192		(6,306	)		865,329		(57,568	)		1,023,437		(23,255	)		347,203		(21,582	)		1,370,640		(44,837	)
Due in five years through ten years		467,187		(18,958	)		66,630		(2,018	)		533,817		(20,976	)		394,978		(31,423	)		99,335		(10,131	)		494,313		(41,554	)
Due after ten years		36,615		(1,000	)		23,752		(995	)		60,367		(1,995	)		35,708		(2,046	)		8,936		(970	)		44,644		(3,016	)
Asset-backed securities		62,451		(374	)		-		-			62,451		(374	)		102,506		(791	)		28,048		(272	)		130,554		(1,063	)
Mortgage-backed securities		35,972		(110	)		267,824		(4,661	)		303,796		(4,771	)		346,768		(3,605	)		150,095		(3,509	)		496,863		(7,114	)
Total fixed maturity securities	$	1,237,220	$	(72,254	)	$	654,926	$	(18,204	)	$	1,892,146	$	(90,458	)	$	1,925,177	$	(62,697	)	$	645,829	$	(37,635	)	$	2,571,006	$	(100,332	)

The aggregate market value and gross unrealized losses related to investments in an unrealized loss position at December 31, ~~2014~~2015 were ~~$1,892,146~~$2,571,006 thousand and ~~$90,458~~$100,332 thousand, respectively. The market value of securities for the single issuer whose securities comprised the largest unrealized loss position at December 31, ~~2014,~~2015, did not exceed ~~0.3%~~0.07% 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 ~~$72,254~~$62,697 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, agency residential mortgage-backed securities and foreign government securities. The majority of these unrealized losses are attributable to unrealized losses in the energy sector, ~~$53,772~~$35,978 thousand, as falling oil prices disrupted the market values for this sector, particularly for oil exploration, production and servicing companies ~~during the fourth quarter of 2014~~ and unrealized foreign exchange losses, ~~$7,298~~$6,090 thousand, as the U.S. dollar has strengthened against other currencies. The ~~$18,204~~$37,635 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 and agency residential mortgage-backed ~~securities, foreign and domestic corporate securities and foreign government~~ securities. OfThe majority of these unrealized losses ~~$16,680~~are attributable to unrealized foreign exchange losses, $14,807 thousand, ~~were related to securities that were rated investment grade by at least one nationally recognized statistical rating organization.~~as the U.S. dollar has strengthened against other currencies and unrealized losses in the energy sector, $6,959 thousand, as falling oil prices disrupted the market values for this sector, particularly for oil exploration, production and servicing companies. The Company did not have any sub-prime or alt-A loans with gross unrealized depreciation at December 31, ~~2014.~~2015. 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, ~~are~~as of March 31, 2016, and December 31, 2015, were comprised of ~~common~~preferred shares ~~of the Company's ultimate parent, Group. At September 30, 2015, the Company~~ held ~~9,719,971 shares of Group representing 18% of the total outstanding shares.~~in Everest Preferred International Holdings ("Preferred Holdings"), an affiliated company.

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

	Three Months Ended						Nine Months Ended						Three Months Ended
	September 30,						September 30,						March 31,
(Dollars in thousands)	2015			2014			2015			2014			2016			2015
Fixed maturities	$	46,414		$	52,515		$	140,829		$	157,515		$	45,326		$	47,972
Equity securities		8,004			7,966			26,638			26,083			9,148			8,742
Short-term investments and cash		220			196			705			841			304			164
Other invested assets
Limited partnerships		3,021			19,254			17,676			18,862			(2,514	)		7,379
Dividends from Parent's shares		9,234			7,290			27,702			21,870			-			9,234
Dividends from preferred shares of affiliate														7,758			-
Other		(242	)		869			1,366			3,220			(912	)		625
Gross investment income before adjustments		66,651			88,090			214,916			228,391			59,110			74,116
Funds held interest income (expense)		940			970			4,326			4,262			2,654			2,521
Interest income from Parent		1,075			-			3,225			-			1,075			1,075
Gross investment income		68,666			89,060			222,467			232,653			62,839			77,712
Investment expenses		(5,303	)		(5,614	)		(15,598	)		(16,784	)		(4,394	)		(5,131	)
Net investment income	$	63,363		$	83,446		$	206,869		$	215,869		$	58,445		$	72,581

(Some amounts may not reconcile due to rounding.)

The Company records results from limited partnership investments on the equity method of accounting with changes in value reported through net investment income. 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 ~~$245,663~~$288,022 thousand in limited partnerships at ~~September 30, 2015.~~March 31, 2016. These commitments will be funded when called in accordance with the partnership agreements, which have investment periods that expire, unless extended, through ~~2019.~~2020.

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

	Three Months Ended						Nine Months Ended						Three Months Ended
	September 30,						September 30,						March 31,
(Dollars in thousands)	2015			2014			2015			2014			2016			2015
Fixed maturity securities, market value:
Other-than-temporary impairments	$	(10,502	)	$	-		$	(43,433	)	$	(199	)	$	(23,015	)	$	(24,121	)
Gains (losses) from sales		(6,636	)		1,070			(30,362	)		(1,855	)		(16,855	)		(11,518	)
Fixed maturity securities, fair value:
Gains (losses) from sales		(17	)		82			25			1,022
Gain (losses) from sales														-			28
Gains (losses) from fair value adjustments		-			(938	)		56			(938	)		(232	)		62
Equity securities, market value:
Gains (losses) from sales		-			-			1			-
Equity securities, fair value:
Gains (losses) from sales		(13,656	)		(2,589	)		(14,010	)		(2,204	)		(7,950	)		(65	)
Gains (losses) from fair value adjustments		(101,322	)		(12,559	)		(85,710	)		65,399			(18,325	)		20,946
Other invested assets, fair value:
Gains (losses) from fair value adjustments		(84,272	)		14,775			29,549			59,681			-			35,964
Gain on sale of subsidiary		94,704			-			94,704			-
Short-term investment gains (losses)		6			(1	)		6			(2	)
Total net realized capital gains (losses)	$	(121,695	)	$	(160	)	$	(49,174	)	$	120,904		$	(66,377	)	$	21,296

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.

On July 13, 2015, the Company sold Mt. McKinley, a Delaware domiciled insurance company and wholly-owned subsidiary of the Company to Clearwater Insurance Company, a Delaware domiciled insurance company. The purchase price of $20,156 thousand was based upon the statutory book value of Mt. McKinley as of the closing date. The Company recognized a pre-tax realized gain of $94,704 thousand on the sale of Mt. McKinley.

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

	Three Months Ended						Nine Months Ended						Three Months Ended
	September 30,						September 30,						March 31,
(Dollars in thousands)	2015			2014			2015			2014			2016			2015
Proceeds from sales of fixed maturity securities	$	130,284		$	222,915		$	420,108		$	571,537		$	188,046		$	114,082
Gross gains from sales		1,401			4,408			9,039			10,698			1,464			2,542
Gross losses from sales		(8,054	)		(3,256	)		(39,376	)		(11,531	)		(18,319	)		(14,032	)

Proceeds from sales of equity securities	$	138,799		$	111,684		$	442,292		$	404,627		$	86,149		$	133,960
Gross gains from sales		5,241			1,697			17,655			12,019			1,782			5,142
Gross losses from sales		(18,896	)		(4,286	)		(31,664	)		(14,223	)		(9,732	)		(5,207	)

4.FAIR VALUE

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

The levels in the hierarchy are defined as follows:

Level 1:

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

Level 2:

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

Level 3:

Inputs to the valuation methodology are unobservable and significant to the fair value measurement.

The Company's fixed maturity and equity securities are primarily managed by third party investment asset managers. The investment asset managers 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. Due to the unavailability of prices for ~~one~~six private placement ~~security,~~securities, the Company

valued the ~~security~~six securities at ~~$6,125~~$16,302 thousand at ~~September 30, 2015 and made no such adjustments~~March 31, 2016. Due to the unavailability of prices for two private placement securities, the Company valued the two securities at $3,593 thousand at December 31, ~~2014~~2015.

The Company internally manages a small public equity portfolio which had a fair value at ~~September 30, 2015~~March 31, 2016 and December 31, ~~2014~~2015 of ~~$114,519~~$123,172 thousand and ~~$96,890~~$131,219 thousand, respectively, and all prices were obtained from publically published sources.

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

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

The fixed maturities with fair values categorized as level 3 result when prices are not available from the nationally recognized pricing services. The asset managers will then obtain non-binding price quotes for the securities from brokers. The single broker quotes are provided by market makers or broker-dealers who are recognized as market participants in the markets in which they are providing the quotes. The prices received from brokers are reviewed for reasonableness by the third party asset managers and the Company. If the broker quotes are for foreign denominated securities, the quotes are converted to U.S. dollars using currency exchange rates from nationally recognized sources. ~~Historically, most of~~In limited circumstances when broker prices are not available for private placements, the ~~level 3 fixed maturities have resulted from new issuances and~~Company will value the third party prices services have not yet included the issuance in their data base. Generally, in subsequent measurement periods, the issuances will be included in the data base and the fair value will transfer to level 2.securities using comparable market information.

The composition and valuation inputs for the presented fixed maturities categories are as follows:

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

·	Obligations of U.S. states and political subdivisions are comprised of state and municipal bond issuances and the fair values are based on observable market inputs such as quoted market prices, quoted prices for similar securities, benchmark yields and credit spreads;

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

·	Asset-backed and mortgage-backed securities fair values are based on observable inputs such as quoted prices, reported trades, quoted prices for similar issuances or benchmark yields and cash flow models using observable inputs such as prepayment speeds, collateral performance and default spreads;

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

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

Other invested assets, at fair value, ~~are~~was categorized as Level ~~1, Quoted Prices~~3 at March 31, 2016 and December 31, 2015, since it represented a privately placed convertible preferred stock issued by an affiliate. The stock was received in ~~Active Markets~~exchange 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~~were valued on a ~~quoted price.~~public securities exchange on December 21, 2015. The fair value of the stock at March 31, 2016 and December 31, 2015 represents this exchange value.

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

			Fair Value Measurement Using:								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, 2015		(Level 1)		(Level 2)		(Level 3)		March 31, 2016		(Level 1)		(Level 2)		(Level 3)
Assets:
Fixed maturities, market value
U.S. Treasury securities and obligations of
U.S. government agencies and corporations	$	227,444	$	-	$	227,444	$	-	$	370,046	$	-	$	370,046	$	-
Obligations of U.S. States and political subdivisions		714,279		-		714,279		-		702,076		-		702,076		-
Corporate securities		1,999,162		-		1,993,887		5,275		2,003,020		-		1,987,314		15,706
Asset-backed securities		132,461		-		132,461		-		168,235		-		168,235		-
Mortgage-backed securities
Commercial		64,521		-		64,521		-		63,428		-		63,428		-
Agency residential		726,035		-		726,035		-		784,713		-		784,713		-
Non-agency residential		168		-		168		-		132		-		132		-
Foreign government securities		464,707		-		464,707		-		491,461		-		491,461		-
Foreign corporate securities		1,055,585		-		1,049,460		6,125		996,800		-		996,204		596
Total fixed maturities, market value		5,384,362		-		5,372,962		11,400		5,579,911		-		5,563,609		16,302

Fixed maturities, fair value		-		-		-		-		1,870		-		1,870		-
Equity securities, market value		-		-		-		-		-		-		-		-
Equity securities, fair value		1,199,347		1,109,801		89,546		-		1,194,972		1,134,914		60,058		-
Other invested assets, fair value		1,684,860		1,684,860		-		-		1,773,214		-		-		1,773,214

There were no transfers between Level 1 and Level 2 for the ~~nine~~three months ended ~~September 30, 2015.~~March 31, 2016.

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

			Fair Value Measurement Using:								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)	December 31, 2014		(Level 1)		(Level 2)		(Level 3)		December 31, 2015		(Level 1)		(Level 2)		(Level 3)
Assets:
Fixed maturities, market value
U.S. Treasury securities and obligations of
U.S. government agencies and corporations	$	136,836	$	-	$	136,836	$	-	$	330,985	$	-	$	330,985	$	-
Obligations of U.S. States and political subdivisions		824,472		-		824,472		-		703,075		-		703,075		-
Corporate securities		1,978,935		-		1,978,935		-		1,968,558		-		1,964,625		3,933
Asset-backed securities		94,823		-		94,823		-		144,982		-		144,982		-
Mortgage-backed securities
Commercial		59,268		-		50,671		8,597		62,446		-		62,446		-
Agency residential		598,117		-		598,117		-		712,298		-		712,298		-
Non-agency residential		315		-		315		-		150		-		150		-
Foreign government securities		537,087		-		537,087		-		463,074		-		463,074		-
Foreign corporate securities		1,063,558		-		1,056,392		7,166		970,909		-		969,316		1,593
Total fixed maturities, market value		5,293,411		-		5,277,648		15,763		5,356,477		-		5,350,951		5,526

Fixed maturities, fair value		1,509		-		1,509		-		2,102		-		2,102		-
Equity securities, market value		16		16		-		-		-		-		-		-
Equity securities, fair value		1,299,037		1,188,613		110,424		-		1,215,377		1,153,310		62,067		-
Other invested assets, fair value		1,655,311		1,655,311		-		-		1,773,214		-		-		1,773,214

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

	Three Months Ended September 30, 2015									Nine Months Ended September 30, 2015												Three Months Ended March 31, 2016									Three Months Ended March 31, 2015
	Corporate			Foreign						Corporate						Foreign						Corporate			Foreign						Corporate					Foreign
(Dollars in thousands)	Securities			Corporate			Total			Securities			CMBS			Corporate			Total			Securities			Corporate			Total			Securities		CMBS			Corporate			Total
Beginning balance	$	1,958		$	7,837		$	9,795		$	-		$	8,597		$	7,166		$	15,763		$	3,933		$	1,593		$	5,526		$	-	$	8,597		$	7,166		$	15,763
Total gains or (losses) (realized/unrealized)
Included in earnings		(6	)		62			56			(2	)		-			177			175			8			(997	)		(989	)		2		-			57			59
Included in other comprehensive income (loss)		(93	)		(1,287	)		(1,380	)		(95	)		-			(1,216	)		(1,311	)		(6	)		-			(6	)		1		-			(1,098	)		(1,097	)
Purchases, issuances and settlements		1,723			-			1,723			3,651			-			-			3,651			11,771			-			11,771			1,940		-			-			1,940
Transfers in and/or (out) of Level 3		1,693			(487	)		1,206			1,721			(8,597	)		(2	)		(6,878	)		-			-			-			710		(8,597	)		-			(7,887	)
Ending balance	$	5,275		$	6,125		$	11,400		$	5,275		$	-		$	6,125		$	11,400		$	15,706		$	596		$	16,302		$	2,653	$	-		$	6,125		$	8,778

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	$	-		$	-		$	-		$	-		$	-		$	-		$	-
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																						$	-		$	(997	)	$	(997	)	$	-	$	-		$	-		$	-

(Some amounts may not reconcile due to rounding.)

Three Months Ended September 30, 2014 Nine Months Ended September 30, 2014
Corporate Asset-backed Foreign Non-agency Corporate Asset-backed Foreign Non-agency
(Dollars in thousands) Securities Securities Corporate RMBS Total Securities Securities Corporate RMBS Total
Beginning balance $ - $ 2,528 $ - $ 4 $ 2,532 $ - $ 3,533 $ 481 $ 4 $ 4,018
Total gains or (losses) (realized/unrealized)
Included in earnings - 1,235 - 2 1,237 - 1,291 18 3 1,312
Included in other comprehensive income (loss) 42 (284 ) (50 ) (3 ) (295 ) 42 (191 ) (70 ) (3 ) (222 )
Purchases, issuances and settlements 1,274 17,898 3,614 (3 ) 22,783 1,274 16,744 3,135 (4 ) 21,149
Transfers in and/or (out) of Level 3 - (1,101 ) - - (1,101 ) - (1,101 ) - - (1,101 )
Ending balance $ 1,316 $ 20,276 $ 3,564 $ - $ 25,156 $ 1,316 $ 20,276 $ 3,564 $ - $ 25,156

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.)

The net transfers from level 3, fair value measurements using significant unobservable inputs, of ~~$6,878 thousand and $1,101~~$7,887 thousand of investments for the ~~nine~~three months ended ~~September 30,~~March 31, 2015, ~~and September 30, 2014, respectively,~~ primarily relate to securities that were priced using single non-binding broker quotes ~~and~~as of December 31, 2014. The securities were subsequently priced using a recognized pricing service as of March 31, 2015, and were ~~then~~ classified as level 2.2 as of that date.

1615

5.~~CAPITAL TRANSACTIONS~~The following table presents the activity under Level 3, fair value measurements using significant unobservable inputs by other invested assets, for the periods indicated:

On July 9, 2014, the Company renewed its shelf registration statement on Form S-3ASR with the Securities and Exchange Commission (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.

	Three months ended
	March 31,
(Dollars in thousands)	2016		2015
Other invested assets, fair value:
Beginning balance	$	1,773,214	$	-
Total gains or (losses) (realized/unrealized)
Included in earnings		-		-
Included in other comprehensive income (loss)		-		-
Purchases, issuances and settlements		-		-
Transfers in and/or (out) of Level 3		-		-
Ending balance	$	1,773,214	$	-

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.)

6.5. CONTINGENCIES

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

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

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

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

	At September 30,		At December 31,		At March 31,		At December 31,
(Dollars in thousands)	2015		2014		2016		2015
The Prudential	$	142,661	$	142,653	$	141,945	$	142,427
Unaffiliated life insurance company		32,414		31,964		31,907		33,062

1716

7.6. OTHER COMPREHENSIVE INCOME (LOSS)

The following ~~tables present~~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 September 30, 2015 Nine Months Ended September 30, 2015
(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 $ (45,240 ) $ 15,347 $ (29,893 ) $ (84,958 ) $ 28,749 $ (56,209 )
URA(D) on securities - OTTI 22 (7 ) 15 9,757 (3,414 ) 6,343
Reclassification of net realized losses (gains) included in net income (loss) 17,137 (5,512 ) 11,625 73,793 (24,842 ) 48,951
Foreign currency translation adjustments (42,266 ) 14,793 (27,473 ) (68,670 ) 24,034 (44,636 )
Benefit plan actuarial net gain (loss) - - - - - -
Reclassification of amortization of net gain (loss) included in net income (loss) 2,393 (837 ) 1,556 7,336 (2,567 ) 4,769
Total other comprehensive income (loss) $ (67,954 ) $ 23,784 $ (44,170 ) $ (62,742 ) $ 21,960 $ (40,782 )

(Some amounts may not reconcile due to rounding)

	Three Months Ended September 30, 2014									Nine Months Ended September 30, 2014									Three Months Ended March 31, 2016							Three Months Ended March 31, 2015
(Dollars in thousands)	Before Tax			Tax Effect			Net of Tax			Before Tax			Tax Effect			Net of Tax			Before Tax		Tax Effect			Net of Tax		Before Tax			Tax Effect			Net of Tax
Unrealized appreciation (depreciation) ("URA(D)") on securities - temporary	$	(40,339	)	$	14,118		$	(26,221	)	$	21,234		$	(7,556	)	$	13,678		$	29,956	$	(10,484	)	$	19,472	$	15,572		$	(5,950	)	$	9,622
URA(D) on securities - OTTI		-			-			-			-			-			-			197		(69	)		128		9,735			(3,407	)		6,328
Reclassification of net realized losses (gains) included in net income (loss)		(1,070	)		374			(696	)		2,054			(595	)		1,459			39,870		(13,955	)		25,915		35,639			(11,974	)		23,665
Foreign currency translation adjustments		(11,496	)		4,024			(7,472	)		(13,211	)		4,624			(8,587	)		22,977		(8,045	)		14,932		(51,243	)		17,935			(33,308	)
Benefit plan actuarial net gain (loss)		-			-			-			-			-			-			-		-			-		-			-			-
Reclassification of amortization of net gain (loss) included in net income (loss)		1,269			(444	)		825			3,640			(1,274	)		2,366			2,062		(722	)		1,340		2,467			(863	)		1,604
Total other comprehensive income (loss)	$	(51,636	)	$	18,072		$	(33,564	)	$	13,717		$	(4,801	)	$	8,916		$	95,062	$	(33,275	)	$	61,787	$	12,170		$	(4,259	)	$	7,911

(Some amounts may not reconcile due to rounding)

The following table presents details of the amounts reclassified from AOCI for the periods indicated:

	Three Months Ended						Nine Months Ended							Three Months Ended
	September 30,						September 30,						Affected line item within the statements of	March 31,						Affected line item within the statements of
AOCI component	2015			2014			2015			2014			operations and comprehensive income (loss)	2016			2015			operations and comprehensive income (loss)
(Dollars in thousands)
URA(D) on securities	$	17,137		$	(1,070	)	$	73,793		$	2,054		Other net realized capital gains (losses)	$	39,870		$	35,639		Other net realized capital gains (losses)
		(5,512	)		374			(24,842	)		(595	)	Income tax expense (benefit)		(13,955	)		(11,974	)	Income tax expense (benefit)
	$	11,625		$	(696	)	$	48,951		$	1,459		Net income (loss)	$	25,915		$	23,665		Net income (loss)

Benefit plan net gain (loss)	$	2,393		$	1,269		$	7,336		$	3,640		Other underwriting expenses	$	2,062		$	2,467		Other underwriting expenses
		(837	)		(444	)		(2,567	)		(1,274	)	Income tax expense (benefit)		(722	)		(863	)	Income tax expense (benefit)
	$	1,556		$	825		$	4,769		$	2,366		Net income (loss)	$	1,340		$	1,604		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:

	Nine Months Ended			Twelve Months Ended			Three Months Ended			Twelve Months Ended
	September 30,			December 31,			March 31,			December 31,
(Dollars in thousands)	2015			2014			2016			2015

Beginning balance of URA (D) on securities	$	37,628		$	55,457		$	13,654		$	37,628
Current period change in URA (D) of investments - temporary		(7,258	)		(11,501	)		45,387			(30,257	)
Current period change in URA (D) of investments - non-credit OTTI		6,343			(6,328	)		128			6,283
Ending balance of URA (D) on securities		36,713			37,628			59,169			13,654

Beginning balance of foreign currency translation adjustments		41,877			71,087			(12,701	)		41,877
Current period change in foreign currency translation adjustments		(44,636	)		(29,210	)		14,932			(54,578	)
Ending balance of foreign currency translation adjustments		(2,759	)		41,877			2,231			(12,701	)

Beginning balance of benefit plan net gain (loss)		(74,986	)		(38,896	)		(63,089	)		(74,986	)
Current period change in benefit plan net gain (loss)		4,769			(36,090	)		1,340			11,897
Ending balance of benefit plan net gain (loss)		(70,217	)		(74,986	)		(61,749	)		(63,089	)

Ending balance of accumulated other comprehensive income (loss)	$	(36,263	)	$	4,519		$	(349	)	$	(62,136	)

8.~~CREDIT FACILITY - EXPIRED~~

Effective August 15, 2011, the Company entered into a three year, $150,000 thousand unsecured revolving credit facility, referred to as the "Holdings Credit Facility", which expired on August 15, 2014. The Company decided not to renew the Holdings Credit Facility at expiration.

9.7. REINSURANCE AND TRUST AGREEMENTS

A subsidiary of the Company, Everest Re, has established a trust agreement, which effectively uses Everest Re's investments as collateral, as security for assumed losses payable to a non-affiliated ceding company. At ~~September 30, 2015,~~March 31, 2016, the total amount on deposit in the trust account was ~~$306,214~~$288,380 thousand.

On April 24, 2014, the Company entered into two collateralized reinsurance agreements with Kilimanjaro Re Limited ("Kilimanjaro"), a Bermuda based special purpose reinsurer, to provide the Company with catastrophe reinsurance coverage. These agreements are multi-year reinsurance contracts which cover specified named storm and earthquake events. The first agreement provides up to $250,000 thousand of reinsurance coverage from named storms in specified states of the Southeastern United States. The second agreement provides up to $200,000 thousand of reinsurance coverage from named storms in specified states of the Southeast, Mid-Atlantic and Northeast regions of the United States and Puerto Rico as well as reinsurance coverage from earthquakes in specified states of the Southeast, Mid-Atlantic, Northeast and West regions of the United States, Puerto Rico and British Columbia.

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

On December 1, 2015 the Company entered into two collateralized reinsurance agreements with Kilimanjaro Re to provide the Company with catastrophe reinsurance coverage. These agreements are multi-year reinsurance contracts which cover named storm and earthquake events. The first agreement provides up to $300,000 thousand of reinsurance coverage from named storms and earthquakes in the United States, Puerto Rico and Canada. The second agreement provides up to $325,000 thousand of reinsurance coverage from named storms and earthquakes in the United States, Puerto Rico and Canada.

Kilimanjaro has financed the various property catastrophe reinsurance coverage by issuing catastrophe bonds to unrelated, external investors. On April 24, 2014, Kilimanjaro issued $450,000 thousand of ~~variable rate~~ notes ("Series 2014-1 Notes"). On November 18, 2014, Kilimanjaro issued $500,000 thousand of ~~variable rate~~ notes ("Series 2014-2 Notes"). On December 1, 2015, Kilimanjaro issued $625,000 thousand of notes ("Series 2015-1 Notes). The proceeds from the issuance of the Series 2014-1 Notes, the Series 2014-2 Notes and the Series ~~2014-2~~2015-1 Notes are held in reinsurance trust throughout the duration of the applicable reinsurance agreements and invested solely in US government money market funds with a rating of at least "AAAm" by Standard & Poor's.

~~10.~~8. 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, 2016

December 31, 2015

Consolidated Balance

(Dollars in thousands)

Date Issued

Date Due

Principal Amounts

Sheet Amount

Market Value

Sheet Amount

Market Value

4.868% Senior notes

06/05/2014

06/01/2044

400,000

393,520

400,000

381,204

September 30, 2015 December 31, 2014
Consolidated Balance Consolidated Balance
(Dollars in thousands) Date Issued Date Due Principal Amounts Sheet Amount Market Value Sheet Amount Market Value
4.868% Senior notes 06/05/2014 06/01/2044 $ 400,000 $ 400,000 $ 388,768 $ 400,000 $ 404,892
5.40% Senior notes 10/12/2004 10/15/2014 250,000 - - - -

On June 5, 2014, Holdings issued $400,000 thousand of 30 year senior notes at 4.868%, which will mature on June 1, 2044. Interest will be paid semi-annually on June 1 and December 1 of each year. ~~The proceeds from the issuance have been used in part to pay off the $250,000 thousand of 5.40% senior notes which matured on October 15, 2014.~~

Interest expense incurred in connection with these senior notes 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)	2015		2014		2015		2014		2016		2015
Interest expense incurred	$	4,868	$	8,256	$	14,604	$	16,385	$	4,868	$	4,868

~~11.~~9. 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

September 30, 2015

December 31, 2014

Maturity Date

March 31, 2016

December 31, 2015

Original

Consolidated Balance

Original

Consolidated Balance

(Dollars in thousands)

Date Issued

Principal Amount

Scheduled

Final

Sheet Amount

Market Value

Sheet Amount

Market Value

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

238,367

218,281

238,364

246,312

04/26/2007

400,000

05/15/2037

05/01/2067

238,369

203,789

238,368

208,978

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. Effective upon the maturity of the Company's 5.40% senior notes on October 15, 2014, the Company's 4.868% senior notes, due on June 1, 2044, have become the Company's long term indebtedness that ranks senior to the long term subordinated notes.

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				Nine Months Ended				Three Months Ended
	September 30,				September 30,				March 31,
(Dollars in thousands)	2015		2014		2015		2014		2016		2015
Interest expense incurred	$	3,937	$	3,937	$	11,811	$	11,811	$	3,937	$	3,937

~~12.~~

10. 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 directly and through general agents, brokers and surplus lines brokers mainly within the U.S.

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

Underwriting results include earned premium less losses and LAE incurred, commission and brokerage expenses and other underwriting expenses. 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.

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.

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

	Three Months Ended				Nine Months Ended				Three Months Ended
U.S. Reinsurance	September 30,				September 30,				March 31,
(Dollars in thousands)	2015		2014		2015		2014		2016		2015
Gross written premiums	$	601,570	$	679,904	$	1,615,276	$	1,663,320	$	536,706	$	562,647
Net written premiums		247,352		304,442		672,753		771,054		223,428		240,694

Premiums earned	$	235,275	$	275,521	$	726,113	$	739,977	$	235,243	$	255,412
Incurred losses and LAE		109,137		125,475		337,065		371,135		116,170		111,455
Commission and brokerage		48,881		51,231		141,948		144,747		49,731		58,364
Other underwriting expenses		13,718		12,119		37,054		33,054		13,458		11,529
Underwriting gain (loss)	$	63,539	$	86,696	$	210,046	$	191,041	$	55,884	$	74,064

	Three Months Ended						Nine Months Ended					Three Months Ended
International	September 30,						September 30,					March 31,
(Dollars in thousands)	2015			2014			2015			2014		2016		2015
Gross written premiums	$	374,138		$	419,457		$	1,019,406		$	1,214,343	$	238,478	$	333,615
Net written premiums		147,991			157,932			417,071			446,599		87,716		121,681

Premiums earned	$	135,130		$	145,662		$	433,751		$	438,394	$	113,173	$	140,699
Incurred losses and LAE		128,454			113,703			339,926			286,166		73,415		101,445
Commission and brokerage		27,936			23,767			93,178			80,348		26,110		33,999
Other underwriting expenses		9,128			8,759			25,292			24,689		7,823		8,115
Underwriting gain (loss)	$	(30,388	)	$	(567	)	$	(24,645	)	$	47,191	$	5,825	$	(2,860	)

	Three Months Ended						Nine Months Ended					Three Months Ended
Insurance	September 30,						September 30,					March 31,
(Dollars in thousands)	2015			2014			2015		2014			2016			2015
Gross written premiums	$	473,003		$	354,033		$	1,130,233	$	885,006		$	354,720		$	330,501
Net written premiums		203,730			149,542			490,140		386,694			152,926			146,052

Premiums earned	$	175,645		$	148,414		$	428,672	$	382,407		$	133,509		$	124,951
Incurred losses and LAE		133,163			141,402			325,522		322,842			106,477			95,980
Commission and brokerage		(4,666	)		4,170			6,509		15,489			(7,019	)		4,168
Other underwriting expenses		34,107			29,745			94,723		79,289			37,946			28,899
Underwriting gain (loss)	$	13,041		$	(26,903	)	$	1,918	$	(35,213	)	$	(3,895	)	$	(4,096	)

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)	2015			2014			2015			2014			2016			2015
Underwriting gain (loss)	$	46,192		$	59,226		$	187,319		$	203,019		$	57,814		$	67,108
Net investment income		63,363			83,446			206,869			215,869			58,445			72,581
Net realized capital gains (losses)		(121,695	)		(160	)		(49,174	)		120,904			(66,377	)		21,296
Corporate expense		(1,637	)		(4,620	)		(5,031	)		(5,398	)		(2,336	)		(1,609	)
Interest, fee and bond issue cost amortization expense		(8,859	)		(12,292	)		(26,576	)		(28,539	)		(8,859	)		(8,859	)
Other income (expense)		10,828			(3,739	)		38,950			(15,576	)		13,102			15,833
Income (loss) before taxes	$	(11,808	)	$	121,861		$	352,357		$	490,279		$	51,789		$	166,350

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)	2015		2014		2015		2014		2016		2015
Canada gross written premiums	$	31,903	$	41,644	$	85,575	$	116,133	$	23,586	$	23,512

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

~~13.~~11. RELATED-PARTY TRANSACTIONS

Parent

Group entered into a $250,000 thousand long term promissory note agreement with Holdings as of December 31, 2014. The note will mature on December 31, 2023 and has an interest rate of 1.72% that will be paid annually, on December 15^th of each year. This transaction is presented as a Note Receivable – Affiliated in the Consolidated Balance Sheets of Holdings. Interest income in the amount of $1,075 thousand was recorded by Holdings for the three months ended March 31, 2016, and March 31, 2015, respectively.

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
11/19/2014			5,000,000
			30,000,000

~~As of September 30,~~Through December, 2015, Holdings had purchased and held 9,719,971 ~~common shares~~Common Shares of Group, which ~~it had~~were 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

In December, 2015, Holdings transferred the 9,719,971 Common Shares of Group, which it held as other invested assets, at fair value, valued at $1,773,214 thousand, to Preferred Holdings, an affiliated entity and subsidiary of Group, in exchange for 1,773.214 preferred shares of Preferred Holdings with a $1,000 thousand par value and 1.75% annual dividend rate. After the exchange, Holdings no longer holds any shares or has any ownership interest in Group.

Holdings ~~reports these purchases~~reported both its Parent Shares and preferred shares in Preferred Holdings, as other invested assets, fair value, in the consolidated balance sheets with changes in fair value re-measurement recorded in net realized capital gains (losses) in the consolidated statements of operations and comprehensive income (loss). The following table presents the dividends received on ~~these common~~the preferred shares of preferred Holdings and on the Parent shares that are reported as net investment income in the consolidated statements of operations and comprehensive income (loss) for the period indicated.

	Three Months Ended				Nine Months Ended				Three Months Ended
	September 30,				September 30,				March 31,
(Dollars in thousands)	2015		2014		2015		2014		2016		2015
Dividends received	$	9,234	$	7,290	$	27,702	$	21,870
Dividends received on Parent shares									$	-	$	9,234
Dividends received on preferred stock of affiliate										7,758		-

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				Nine Months Ended				Three Months Ended
	September 30,				September 30,				March 31,
(Dollars in thousands)	2015		2014		2015		2014		2016		2015
Expenses incurred	$	20,359	$	22,149	$	58,555	$	55,668	$	21,170	$	18,363

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

01/01/2012-12/31/2014	Everest Re		50.0	%	Bermuda Re	property / casualty business		100,000			200,000

01/01/2015	Everest Re		50.0	%	Bermuda Re	property / casualty business		162,500			325,000

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


(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.

2423

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 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

Transferring

Assuming

% of Business or

Covered Period

Date

Company

Amount of Transfer

of Transfer

Company

Amount of Transfer

of Transfer

09/19/2000

Mt. McKinley

Bermuda Re

100

All years

Mt. McKinley

Bermuda Re

100

All years

10/01/2001

Everest Re (Belgium Branch)

Bermuda Re

100

All years

Everest Re (Belgium Branch)

Bermuda Re

100

All years

10/01/2008

Everest Re

Bermuda Re

747,022

01/01/2002-12/31/2007

Everest Re

Bermuda Re

747,022

01/01/2002-12/31/2007

On July 13, 2015, the Company sold Mt. McKinley to Clearwater Insurance Company, a Delaware domiciled insurance company. As of that date, Mt. McKinley is no longer deemed an affiliated company or related party.

The following tables summarize the premiums and losses ceded by the Company to Bermuda Re and Everest International, respectively, and premiums and losses assumed by the Company from Everest Canada and Lloyd's syndicate 2786 for the periods indicated:

	Three Months Ended				Nine Months Ended				Three Months Ended
Bermuda Re	September 30,				September 30,				March 31,
(Dollars in thousands)	2015		2014		2015		2014		2016		2015
Ceded written premiums	$	646,001	$	664,316	$	1,713,502	$	1,706,390	$	516,683	$	539,033
Ceded earned premiums		591,656		598,641		1,708,807		1,613,741		538,953		554,051
Ceded losses and LAE (a)		343,660		344,513		984,371		879,336		290,476		295,131

	Three Months Ended						Nine Months Ended				Three Months Ended
Everest International	September 30,						September 30,				March 31,
(Dollars in thousands)	2015			2014			2015		2014		2016			2015
Ceded written premiums	$	168		$	131		$	313	$	219	$	(31	)	$	(2	)
Ceded earned premiums		208			176			441		450		(24	)		41
Ceded losses and LAE		(724	)		(321	)		156		1,823		142			(822	)

	Three Months Ended				Nine Months Ended				Three Months Ended
Everest Canada	September 30,				September 30,				March 31,
(Dollars in thousands)	2015		2014		2015		2014		2016		2015
Assumed written premiums	$	11,046	$	10,425	$	29,533	$	25,650	$	10,199	$	6,664
Assumed earned premiums		9,174		7,106		26,498		17,062		10,454		8,699
Assumed losses and LAE		4,041		4,104		15,062		10,487		6,987		4,729

	Three Months Ended
Lloyd's Syndicate 2786	March 31,
(Dollars in thousands)	2016		2015
Assumed written premiums	$	696	$	-
Assumed earned premiums		88		-
Assumed losses and LAE		-		-

(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, amortization of deferred gain on retroactive reinsurance is reflected in other income on the consolidated statements of operations and comprehensive income (loss). Upon the sale of Mt. McKinley, the value of the remaining deferred gain on retroactive reinsurance was included in the calculation of the realized gain on sale of subsidiary.

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 years is taken into account.

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 segregated accounts and assumed by the Company from Mt. Logan ~~Re.~~Re segregated accounts.

	Three Months Ended				Nine Months Ended				Three Months Ended
Mt. Logan Re	September 30,				September 30,
Mt. Logan Re Segregated Accounts									March 31,
(Dollars in thousands)	2015		2014		2015		2014		2016		2015
Ceded written premiums	$	68,078	$	44,728	$	162,640	$	93,322	$	40,931	$	61,670
Ceded earned premiums		55,234		38,458		141,668		78,975		34,872		38,683
Ceded losses and LAE		17,071		3,113		38,542		17,904		9,098		8,314

Assumed written premiums		4,230		578		11,626		10,497		3,560		3,984
Assumed earned premiums		4,230		5,786		11,626		10,497		3,560		3,984
Assumed losses and LAE		-		-		-		-		-		-

~~14.~~12. RETIREMENT BENEFITS

The Company maintains both qualified and non-qualified defined benefit pension plans and a retiree health plan for its U.S. employees employed prior to April 1, 2010.

Net periodic benefit cost for U.S. employees included the following components for the periods indicated:

Pension Benefits	Three Months Ended						Nine Months Ended						Three Months Ended
	September 30,						September 30,						March 31,
(Dollars in thousands)	2015			2014			2015			2014			2016			2015
Service cost	$	3,203		$	2,460		$	9,398		$	7,381		$	2,897		$	2,940
Interest cost		2,758			2,542			7,926			7,625			2,361			2,457
Expected return on plan assets		(2,904	)		(2,822	)		(8,710	)		(8,468	)		(2,484	)		(2,903	)
Amortization of prior service cost		4			13			15			38			-			5
Amortization of net (income) loss		2,312			1,173			6,824			3,356			2,014			2,251
FAS 88 settlement charge		-			5,269			-			5,269
Net periodic benefit cost	$	5,373		$	8,635		$	15,453		$	15,201		$	4,788		$	4,750

Other Benefits	Three Months Ended				Nine Months Ended				Three Months Ended
	September 30,				September 30,				March 31,
(Dollars in thousands)	2015		2014		2015		2014		2016		2015
Service cost	$	498	$	407	$	1,498	$	1,221	$	438	$	401
Interest cost		329		342		987		1,026		296		263
Amortization of net (income) loss		76		82		497		246		48		211
Net periodic benefit cost	$	903	$	831	$	2,982	$	2,493	$	782	$	875

The Company did not make any contributions to the qualified pension benefit plan for the three ~~and nine~~ months ended ~~September 30, 2015~~March 31, 2016 and ~~2014.~~2015.

2625

~~15.~~13. INCOME TAXES

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.

For interim reporting periods, the company is generally required to use the annualized effective tax rate ("AETR") method, as prescribed by ASC 740-270, Interim Reporting, to calculate its income tax provision. Under this method, the 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 AETR.

~~16.DISPOSITIONS~~

On July 13, 2015, the Company closed its agreement to sell all of the outstanding shares of capital stock of Mt. McKinley, a Delaware domiciled insurance company and wholly-owned subsidiary of the Company to Clearwater Insurance Company, a Delaware domiciled insurance company. The purchase price of $20,156 thousand was based upon the statutory book value of Mt. McKinley as of the closing date. The Company recognized a pre-tax realized gain of $94,704 thousand on the sale of Mt. McKinley.

The transaction met the criteria for Held for Sale accounting. In accordance with the guidance, the table below details the assets and liabilities associated with the business classified as Held for Sale at the time of closing.

(Dollars in thousands)
Investments and cash $ 16,223
Reinsurance recoverables 142,057
Deferred tax asset 35,451
Total assets held for sale $ 193,731

Reserve for losses and loss adjustment expenses $ 137,704
Deferred gain on retroactive reinsurance 94,704
Other liabilities 130
Total liabilities held for sale $ 232,538

Net liabilities held for sale $ (38,807 )

~~17.~~14. SUBSEQUENT EVENTS

The Company has ~~entered into two collateralized reinsurance agreements with Kilimanjaro~~evaluated known recognized and non-recognized subsequent events. The Company does not have any subsequent events to provide the Company with catastrophe reinsurance coverage. Kilimanjaro has funded the catastrophe reinsurance coverage through the issuance of two classes of catastrophe reinsurance bonds in an aggregate amount of $625,000 thousand.report.

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

Worldwide insurance and reinsurance market conditions continued to be very competitive, particularly in the property catastrophe and casualty reinsurance lines of business. Generally, there was ample insurance and reinsurance capacity relative to demand, as well as, additional capital from the capital markets through insurance linked financial instruments. These financial instruments such as side cars, catastrophe bonds and collateralized reinsurance funds, provide capital markets with access to insurance and reinsurance risk exposure. The capital markets demand for these products is being primarily driven by the current low interest environment and the desire to achieve greater risk diversification and potentially higher returns on their investments. This increased competition is generally having a negative impact on rates, terms and conditions; however, the impact varies widely by market and coverage.

Rates tend to fluctuate by specific region and products, 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 resulted in higher catastrophe rates in these areas during 2014.~~ Although there ~~were~~have been flooding and wind storm events and earthquakes in ~~Europe and Asia in~~parts of the ~~latter part of 2013,~~world, the overall 2013, 2014 and 2015 catastrophe losses for the industry were considerably lower than average. This lower level of losses, combined with increased competition has resulted in downward pressure on insurance and reinsurance rates in certain geographical ~~areas during 2014. Catastrophe results during 2014 and~~areas.

During 2015, we initiated a strategic build out of our insurance platform through the ~~third quarter~~investment in key leadership hires which in turn has brought significant underwriting talent and stronger direction in achieving our insurance program strategic goals of ~~2015 were also below historical averages, which could have~~increased volume and improved underwriting results. Recent growth is coming from highly diversified areas including newly launched lines of business, as well as, product and geographic expansion in existing lines of business. We are building a ~~negative impact on worldwide regional catastrophe markets for the balance~~world-class insurance platform capable of ~~2015.~~offering products across lines and geographies, complementing our leading global reinsurance franchise.

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

2827

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)	2015			2014			(Decrease)			2015			2014			(Decrease)			2016			2015			(Decrease)
Gross written premiums	$	1,448.7		$	1,453.4			-0.3	%	$	3,764.9		$	3,762.7			0.1	%	$	1,129.9		$	1,226.8			-7.9	%
Net written premiums		599.1			611.9			-2.1	%		1,580.0			1,604.3			-1.5	%		464.1			508.4			-8.7	%

REVENUES:
Premiums earned	$	546.1		$	569.6			-4.1	%	$	1,588.5		$	1,560.8			1.8	%	$	481.9		$	521.1			-7.5	%
Net investment income		63.4			83.4			-24.1	%		206.9			215.9			-4.2	%		58.4			72.6			-19.5	%
Net realized capital gains (losses)		(121.7	)		(0.2	)	NM				(49.2	)		120.9			-140.7	%		(66.4	)		21.3		NM
Other income (expense)		10.8			(3.7	)	NM				39.0			(15.6	)	NM				13.1			15.8			-17.2	%
Total revenues		498.5			649.1			-23.2	%		1,785.2			1,882.0			-5.1	%		487.1			630.8			-22.8	%

CLAIMS AND EXPENSES:
Incurred losses and loss adjustment expenses		370.8			380.6			-2.6	%		1,002.5			980.1			2.3	%		296.1			308.9			-4.1	%
Commission, brokerage, taxes and fees		72.2			79.2			-8.9	%		241.6			240.6			0.4	%		68.8			96.5			-28.7	%
Other underwriting expenses		57.0			50.6			12.5	%		157.1			137.0			14.6	%		59.2			48.5			22.0	%
Corporate expense		1.6			4.6			-64.6	%		5.0			5.4			-6.8	%		2.3			1.6			45.2	%
Interest, fee and bond issue cost amortization expense		8.9			12.3			-27.9	%		26.6			28.5			-6.9	%		8.9			8.9			0.0	%
Total claims and expenses		510.4			527.3			-3.2	%		1,432.8			1,391.7			3.0	%		435.3			464.4			-6.3	%

INCOME (LOSS) BEFORE TAXES		(11.8	)		121.9			-109.7	%		352.4			490.3			-28.1	%		51.8			166.4			-68.9	%
Income tax expense (benefit)		(7.1	)		21.7			-132.9	%		107.3			145.5			-26.2	%		12.9			50.4			-74.5	%
NET INCOME (LOSS)	$	(4.7	)	$	100.1			-104.7	%	$	245.1		$	344.8			-28.9	%	$	38.9		$	115.9			-66.4	%

RATIOS:							Point Change									Point Change									Point Change
Loss ratio		67.9	%		66.8	%		1.1			63.1	%		62.8	%		0.3			61.4	%		59.3	%		2.1
Commission and brokerage ratio		13.2	%		13.9	%		(0.7	)		15.2	%		15.4	%		(0.2	)		14.3	%		18.5	%		(4.2	)
Other underwriting expense ratio		10.4	%		8.9	%		1.5			9.9	%		8.8	%		1.1			12.3	%		9.3	%		3.0
Combined ratio		91.5	%		89.6	%		1.9			88.2	%		87.0	%		1.2			88.0	%		87.1	%		0.9

																			At			At			Percentage
										At			At			Percentage			March 31,			December 31,			Increase/
										September 30,			December 31,			Increase/
(Dollars in millions)										2015			2014			(Decrease)				2016			2015		(Decrease)
Balance sheet data:
Total investments and cash										$	9,354.9		$	9,572.6			-2.3	%	$	9,622.7		$	9,516.3			1.1	%
Total assets											16,550.6			16,322.3			1.4	%		16,793.9			16,700.6			0.6	%
Loss and loss adjustment expense reserves											7,878.1			7,843.9			0.4	%		7,992.3			7,940.7			0.6	%
Total debt											638.4			638.4			0.0	%		638.4			638.4			0.0	%
Total liabilities											11,763.4			11,749.6			0.1	%		11,757.2			11,769.4			-0.1	%
Stockholder's equity											4,787.3			4,572.7			4.7	%		5,036.7			4,931.2			2.1	%

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

Revenues.

Premiums. Gross written premiums decreased by ~~0.3%~~7.9% to ~~$1,448.7~~$1,129.9 million for the three months ended ~~September 30, 2015,~~March 31, 2016, compared to ~~$1,453.4~~$1,226.8 million for the three months ended ~~September 30, 2014,~~March 31, 2015, reflecting a ~~$123.7~~$121.1 million, or ~~11.2%~~13.5%, decrease in our reinsurance business, partially offset by a ~~$119.0~~$24.2 million, or ~~33.6%~~7.3%, increase in our insurance business. The decline in reinsurance premiums ~~were~~was due mainly to decreases in treaty casualty ~~and treaty property lines of~~ business, reductions in quota share agreements and a negative impact of approximately ~~$31.4~~$15.2 million from the year over year movement in foreign exchange rates. The rise in insurance premiums was primarily due to ~~the strategic initiative to expand our insurance operation resulting in~~ increases in ~~most lines of business. Gross written premiums increased by 0.1% to $3,764.9 million for the~~

~~nine months ended September 30, 2015, compared to $3,762.7 million for the nine months ended September 30, 2014, reflecting a $245.2 million, or 27.7%, increase in our insurance~~accident and health business ~~partially offset by a $243.0 million, or 8.4%, decrease in our reinsurance business. The rise in insurance premiums was primarily due to increases in most~~and other lines of business, as we have focused on expanding the insurance operations. The decline in reinsurance premiums were due mainly to decreases in treaty casualty and treaty property lines of business, reductions in quota share agreements and a negative impact of approximately $70.0 million from the year over year movement in foreign exchange rates.

Net written premiums decreased by ~~2.1%~~8.7% to ~~$599.1~~$464.1 million for the three months ended ~~September 30, 2015,~~March 31, 2016 compared to ~~$611.9~~$508.4 million for the three months ended ~~September 30, 2014, and decreased by 1.5% to $1,580.0 million for the nine months ended September 30,~~March 31, 2015, ~~compared to $1,604.3 million for the nine months ended September 30, 2014. The difference between~~which is consistent with the change in gross written ~~premiums compared to the change in net written premiums is primarily due to varying utilization of reinsurance mainly related to quota share contracts.~~premiums. Premiums earned decreased by ~~4.1%~~7.5% to ~~$546.1~~$481.9 million for the three months ended ~~September 30, 2015,~~March 31, 2016, compared to ~~$569.6~~$521.1 million for the three months ended ~~September 30, 2014, and increased by 1.8% to $1,588.5 million for the nine months ended September 30, 2015, compared to $1,560.8 million for the nine months ended September 30, 2014.~~March 31, 2015. 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.

Net Investment Income. Net investment income decreased by ~~24.1%~~19.5% to ~~$63.4~~$58.4 million for the three months ended ~~September 30, 2015,~~March 31, 2016, compared with net investment income of ~~$83.4~~$72.6 million for the three months ended September 30, 2014, and decreased by 4.2% to $206.9 million for nine months ended September 30, 2015, compared with net investment income of $215.9 million for the nine months ended September 30, 2014.March 31, 2015. Net pre-tax investment income, as a percentage of average invested assets, was ~~3.1%~~2.5% for the three months ended ~~September 30, 2015,~~March 31, 2016 compared to ~~3.8%~~ 3.5% for the three ~~months ended September 30, 2014 and was 3.3% for the nine~~ months ended ~~September 30, 2015 compared to 3.4% for the nine months ended September 30, 2014.~~March 31, 2015. The decline in income and yield was primarily the result of a decrease in our limited partnership income ~~combined with~~and lower ~~income on~~reinvestment rates for the fixed income ~~securities.~~portfolios.

Net Realized Capital Gains (Losses). Net realized capital losses were $~~121.7~~ $66.4 million and ~~$0.2~~net realized capital gains were $21.3 million for the three months ended ~~September 30,~~March 31, 2016 and 2015, ~~and 2014,~~ respectively. The ~~$121.7~~$66.4 million was comprised of $~~185.6~~24.8 million of ~~losses from fair value re-measurements on equity securities and other invested assets, $20.3~~ ~~million of~~net losses from sales on our fixed maturity and equity securities, ~~and $10.5~~$23.0 million of other-than-temporary impairments ~~partially offset by a $94.7 million gain on the sale of a subsidiary. The net realized capital losses of $0.2 million~~ ~~for the three months ended September 30, 2014~~ ~~was comprised of $1.4~~and $18.6 million of losses ~~from sales on our fixed maturity and equity securities, partially offset by $1.2 million of gains~~ from fair value re-measurements on fixed maturity and equity ~~securities and other invested assets.~~

~~Net realized capital losses were $~~securities. ~~49.2~~ ~~million and~~The net realized capital gains ~~were $120.9~~of $21.3 million for the ~~nine~~three months ended ~~September 30,~~March 31, 2015 ~~and 2014, respectively.~~ ~~The $49.2 million was~~were comprised of ~~$56.1~~$57.0 million of ~~losses~~gains from fair value re-measurements on fixed maturity securities, equity securities and other invested assets, $~~44.3~~partially offset by $24.1 million of other-than-temporary impairments and $11.6 million of losses from sales on our fixed ~~maturity~~maturities and equity ~~securities and $43.4 million of other-than-temporary impairments, partially offset by a $94.7 million gain on the sale of a subsidiary. The net realized capital gains of $120.9 million~~ ~~for the nine months ended September 30, 2014~~securities. were the result of $124.1 million of gains from fair value re-measurements on fixed maturity, equity securities and other invested assets, partially offset by $3.0 million of net realized capital losses from sales on our fixed maturity and equity securities and $0.2 million of other-than-temporary impairments.

Other Income (Expense). We recorded other income of $~~10.8~~$13.1 and $15.8 million ~~and $39.0~~ ~~million~~ for the three ~~and nine~~ months ended ~~September 30,~~March 31, 2016 and 2015 ~~respectively. We recorded other expense of $3.7 million and $15.6 million for the three and nine months ended September 30, 2014,~~, respectively. The changes were primarily the result of fluctuations in foreign currency exchange rates for the corresponding periods.

Claims and Expenses.

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

	Three 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
2016
Attritional																						$	293.4			60.8	%		$	(2.0	)		-0.4	%		$	291.4			60.4	%
Catastrophes																							5.2			1.1	%			(0.5	)		-0.1	%			4.7			1.0	%
Total segment																						$	298.6			61.9	%		$	(2.5	)		-0.5	%		$	296.1			61.4	%

2015
Attritional (a)	$	351.1			64.4	%		$	3.3			0.6	%		$	354.5			65.0	%		$	312.8			60.1	%		$	(1.7	)		-0.4	%		$	311.1			59.7	%
Catastrophes		17.2			3.1	%			(0.9	)		-0.2	%			16.3			2.9	%			-			0.0	%			(2.2	)		-0.4	%			(2.2	)		-0.4	%
Total	$	368.3			67.5	%		$	2.4			0.4	%		$	370.8			67.9	%
Total segment																						$	312.8			60.1	%		$	(3.9	)		-0.8	%		$	308.9			59.3	%

2014
Attritional ~~(a)~~	$	372.4			65.3	%		$	(3.1	)		-0.5	%		$	369.3			64.8	%
Variance 2016/2015																																										��
Attritional																						$	(19.4	)		0.7		pts	$	(0.3	)		-		pts	$	(19.7	)		0.7		pts
Catastrophes		14.7			2.6	%			(3.4	)		-0.6	%			11.3			2.0	%			5.2			1.1		pts		1.7			0.3		pts		6.9			1.4		pts
Total	$	387.1			67.9	%		$	(6.5	)		-1.1	%		$	380.6			66.8	%

Variance 2015/2014
Attritional (a)	$	(21.3	)		(0.9	)	pts	$	6.4			1.1		pts	$	(14.8	)		0.2		pts
Catastrophes		2.5			0.5		pts		2.5			0.4		pts		5.0			0.9		pts
Total	$	(18.8	)		(0.4	)	pts	$	8.9			1.5		pts	$	(9.8	)		1.1		pts

(a) Attritional losses exclude catastrophe losses.
Total segment																						$	(14.2	)		1.8		pts	$	1.4			0.3		pts	$	(12.8	)		2.1		pts
(Some amounts may not reconcile due to rounding.)

Nine Months Ended September 30,
Current Ratio %/ Prior Ratio %/ Total Ratio %/
(Dollars in millions) Year Pt Change Years Pt Change Incurred Pt Change
2015

Attritional (a) $ 973.2 61.3 % $ 2.0 0.1 % $ 975.2 61.4 %
Catastrophes 35.3 2.2 % (8.0 ) -0.5 % 27.3 1.7 %
Total $ 1,008.5 63.5 % $ (6.0 ) -0.4 % $ 1,002.5 63.1 %

2014

Attritional (a) $ 956.3 61.3 % $ (5.5 ) -0.4 % $ 950.8 60.9 %
Catastrophes 35.1 2.3 % (5.8 ) -0.4 % 29.3 1.9 %
Total $ 991.4 63.6 % $ (11.3 ) -0.8 % $ 980.1 62.8 %

Variance 2015/2014

Attritional (a) $ 16.9 - pts $ 7.5 0.5 pts $ 24.4 0.5 pts
Catastrophes 0.2 (0.1 ) pts (2.2 ) (0.1 ) pts (2.0 ) (0.2 ) pts
Total $ 17.1 (0.1 ) pts $ 5.3 0.4 pts $ 22.4 0.3 pts

(a) Attritional losses exclude catastrophe losses.
(Some amounts may not reconcile due to rounding.)

Incurred losses and LAE decreased by ~~2.6%~~4.1% to ~~$370.8~~$296.1 million for the three months ended ~~September 30, 2015~~March 31, 2016 compared to ~~$380.6~~$308.9 million for the three months ended ~~September 30, 2014,~~March 31, 2015, primarily due to ~~decreases~~a decrease in current ~~year~~years attritional losses of ~~$21.3~~$19.4 million, resulting primarily from the impact of the decline in premiums earned, partially offset by ~~a $21.6~~$5.2 million ~~loss from the explosion at the Chinese port of Tianjin. Current~~in current year catastrophe losses. The current year catastrophe losses ~~were $17.2~~of $5.2 million for the three months ended ~~September 30, 2015,~~March 31, 2016 primarily related to the ~~2015 Chilean~~2016 Taiwan earthquake ($~~17.4~~5.2 million). ~~The~~There were no current year catastrophe losses ~~of $14.7 million~~ for the three months ended ~~September 30, 2014 were due to the Hurricane Odile ($9.9 million) and the 2014 Chilean earthquake ($4.8 million).~~

Incurred losses and LAE increased by 2.3% to $1,002.5 million for the nine months ended September 30, 2015 compared to $980.1 million for the nine months ended September 30, 2014, primarily due to increases in current year attritional losses of $16.9 million resulting primarily from a $21.6 million loss from the explosion at the Chinese port of Tianjin. Current year catastrophe losses were $35.3 million for the nine months ended September 30, 2015 and related to the 2015 Chilean earthquake ($17.4 million), Northern Chile storms ($9.8 million) and the New South Wales storms ($8.0 million). The current year catastrophe losses of $35.1 million for the nine months ended September 30, 2014 were due to the Japan snowstorm ($13.2 million), the 2014 Chilean earthquake ($12.1 million) and Hurricane Odile (9.9 million).

March 31,

2015.

Commission, Brokerage, Taxes and Fees. Commission, brokerage, taxes and fees decreased by ~~8.9%~~28.7% to ~~$72.2~~$68.8 million for the three months ended ~~September 30, 2015~~March 31, 2016 compared to $~~79.2~~96.5 million for the three months ended ~~September 30, 2014.~~March 31, 2015. The ~~quarter over quarter~~ decline was mainly due to the decline in earned premiums. Commission, brokerage, taxes and fees increased slightly to $241.6 million for the nine months ended September 30, 2015 compared to $240.6 million for the nine months ended September 30, 2014. The year over year change was primarily due to the impact of the ~~increase~~decline in premiums ~~earned.~~earned, changes in the mix of business and the impact of affiliated quota share agreements.

Other Underwriting Expenses. Other underwriting expenses ~~were $57.0 million and $50.6~~increased 22.0% to $59.2 million for the three months ended ~~September 30, 2015 and 2014, respectively, and $157.1 million and $137.0~~March 31, 2016, compared to $48.5 million for the ~~nine~~three months ended ~~September 30, 2015 and 2014, respectively.~~March 31, 2015. The ~~increases in other underwriting expenses were mainly~~increase was due to the costs incurred related to ~~expand~~the expansion of the insurance ~~operations and higher employee benefit costs.~~business.

Corporate Expenses. Corporate expenses, which are general operating expenses that are not allocated to segments, were ~~$1.6~~$2.3 million and ~~$4.6~~$1.6 million for the three months ended ~~September 30,~~March 31, 2016 and 2015, ~~and 2014, respectively, and $5.0 million and $5.4 million for the nine months ended September 30, 2015 and 2014,~~ respectively. The ~~decreases were~~increase in corporate expense was mainly due to ~~non-recurring employee~~increased compensation and benefit ~~charges incurred during the third quarter of 2014.~~expense.

Interest, Fees and Bond Issue Cost Amortization Expense. Interest, fees and other bond amortization expense was $8.9 million ~~and $12.3 million~~ for the three months ended ~~September 30, 2015~~March 31, 2016 and 2014, respectively, and $26.6 million and $28.5 million for the nine months ended September 30, 2015 and 2014, respectively. The decreases were primarily due to the combination of the maturity of $250.0 million of senior notes in October 2014 and the issuance of $400.0 million of senior notes in June, 2014.2015.

Income Tax Expense (Benefit). Income tax ~~benefit was $7.1~~expenses were $12.9 million and ~~income tax expense was $21.7~~$50.4 million for the three months ended ~~September 30,~~March 31, 2016 and 2015, ~~and 2014, respectively, and income tax expense was $107.3 million~~ ~~and $145.5 million~~ ~~for the nine months ended September 30, 2015 and 2014,~~ respectively. Income tax expense is primarily a function of the geographic location of the Company's pre-tax income and the statutory tax rates in those jurisdictions, as affected by tax-exempt investment ~~income.~~income and as calculated under the annualized effective tax rate ("AETR") method. Variations in the income tax expense generally result from changes in the relative levels of pre-tax income, including the impact of catastrophe losses and net capital gains (losses), among jurisdictions with different tax rates. The ~~changes~~decrease in income tax ~~expense/(benefit)~~ expense for the three ~~and nine~~ months ended ~~September 30, 2015~~ March 31, 2016 compared to ~~2014 were~~the three months ended March 31, 2015 was primarily due to ~~higher net~~the realized capital ~~losses.~~losses and lower net investment income.

Net Income (Loss).

Our net ~~loss~~income was ~~$4.7~~$38.9 million and ~~our net income was $100.1~~$115.9 million for the three months ended ~~September 30,~~March 31, 2016 and 2015, ~~and 2014, respectively, and net income was $245.1 million and $344.8 million for the nine months ended September 30, 2015 and 2014,~~ respectively. The changes were primarily driven by the financial component fluctuations explained above.

Ratios.

Our combined ratio increased by ~~1.9~~0.9 points to ~~91.5%~~88.0% for the three months ended ~~September 30, 2015,~~March 31, 2016 compared to ~~89.6%~~87.1% for the three months ended ~~September 30, 2014, and increased by 1.2 points to 88.2% for the nine months ended September 30, 2015, compared to 87.0% for the nine months ended September 30, 2014.~~March 31, 2015. The loss ratio component increased ~~by 1.1 points and 0.3~~2.1 points for the three ~~and nine~~ months ended ~~September 30, 2015, respectively,~~March 31, 2016 over the same period last year, primarily due to ~~$21.6 million of losses from~~ the ~~explosion at the Chinese port of Tianjin.~~increase in current years catastrophe losses. The commission and brokerage ratio components decreased ~~0.7 points and 0.2~~4.2 points for the three ~~and nine~~ months ended ~~September 30, 2015, respectively,~~March 31, 2016 over the same period last year primarily due to changes in the mix of business and ~~changes related to~~the impact of the affiliated quota share agreements. The other underwriting expense ratio components increased ~~1.5 points and 1.1~~3.0 points for the three ~~and nine~~ months ended ~~September 30, 2015, respectively,~~March 31, 2016 over the same period last year ~~mainly~~ due to the ~~growth in~~additional expenses related to the increased focus on the expansion of the insurance ~~operations.~~business.

3230

Stockholder's Equity.

Stockholders' equity increased by ~~$214.5~~$105.5 million to ~~$4,787.3~~$5,036.7 million at ~~September 30, 2015~~ March 31, 2016 from ~~$4,572.7~~$4,931.2 million at December 31, ~~2014,~~2015, principally as a result of ~~$245.1~~$45.5 million of net unrealized appreciation on investments, net of tax, $38.9 million of net income, ~~$10.3 million of share-based compensation transactions and $4.8 million of net benefit plan obligation adjustments, partially offset by $44.6~~$14.9 million of net foreign currency translation adjustments, $4.8 million of share-based compensation transactions and ~~$0.9~~$1.3 million of net ~~unrealized depreciation on investments, net of tax.~~benefit plan obligation adjustments.

Consolidated Investment Results

Net Investment Income.

Net investment income decreased ~~24.1%~~by 19.5% to ~~$63.4~~$58.4 million for the three months ended ~~September 30, 2015~~March 31, 2016 compared to ~~$83.4~~$72.6 million for the three months ended ~~September 30, 2014, and decreased by 4.2% to $206.9 million for the nine months ended September 30, 2015 compared to $215.9 million for the nine months ended September 30, 2014.~~March 31, 2015. These decreases were primarily due to a decrease ~~in income~~ from our limited partnership investments and ~~lower~~a decrease in income on the fixed income portfolio, ~~partially offset by an increase in dividends from Parent's shares and interest income received from the Parent on the affiliated note receivable.~~reflective of lower reinvestment rates.

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

	Three Months Ended						Nine Months Ended						Three Months Ended
	September 30,						September 30,						March 31,
(Dollars in millions)	2015			2014			2015			2014			2016			2015
Fixed maturities	$	46.4		$	52.5		$	140.8		$	157.5		$	45.3		$	48.0
Equity securities		8.0			8.0			26.6			26.1			9.1			8.7
Short-term investments and cash		0.2			0.2			0.7			0.8			0.3			0.2
Other invested assets
Limited partnerships		3.0			19.3			17.7			18.9			(2.5	)		7.4
Dividends from Parent's shares		9.2			7.3			27.7			21.9			-			9.2
Dividends from preferred shares of affiliate														7.8			-
Other		(0.2	)		0.9			1.4			3.2			(0.9	)		0.6
Gross investment income before adjustments		66.6			88.1			214.9			228.4			59.1			74.1
Funds held interest income (expense)		0.9			1.0			4.3			4.3			2.7			2.5
Interest income from Parent		1.0			-			3.2			-			1.1			1.1
Gross investment income		68.7			89.1			222.5			232.7			62.8			77.7
Investment expenses		(5.3	)		(5.6	)		(15.6	)		(16.8	)		(4.4	)		(5.1	)
Net investment income	$	63.4		$	83.4		$	206.9		$	215.9		$	58.4		$	72.6

(Some amounts may not reconcile due to rounding.)

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

	At	At	At	At
	September 30,	December 31,	March 31,	December 31,
	2015	2014	2016	2015
Imbedded pre-tax yield of cash and invested assets at December 31	3.3%	3.1%	2.8%	2.9%
Imbedded after-tax yield of cash and invested assets at December 31	2.3%	2.2%	2.0%	2.1%

	Three Months Ended		Nine Months Ended		Three Months Ended
	September 30,		September 30,		March 31,
	2015	2014	2015	2014	2016	2015
Annualized pre-tax yield on average cash and invested assets	3.1%	3.8%	3.3%	3.4%	2.5%	3.5%
Annualized after-tax yield on average cash and invested assets	2.1%	2.6%	2.3%	2.4%	1.8%	2.5%

3331

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 September 30,									Nine Months Ended September 30,									Three Months Ended March 31,
(Dollars in millions)	2015			2014			Variance			2015			2014			Variance			2016			2015			Variance
Gains (losses) from sales:
Fixed maturity securities, market value
Gains	$	1.4		$	4.3		$	(2.9	)	$	9.0		$	9.4		$	(0.4	)
Losses		(8.1	)		(3.3	)		(4.8	)		(39.4	)		(11.3	)		(28.1	)
Total		(6.7	)		1.0			(7.7	)		(30.4	)		(1.9	)		(28.5	)

Fixed maturity securities, fair value
Gains		-			0.1			(0.1	)		-			1.3			(1.3	)	$	1.5		$	2.5		$	(1.0	)
Losses		-			-			-			-			(0.3	)		0.3			(18.3	)		(14.0	)		(4.3	)
Total		-			0.1			(0.1	)		-			1.0			(1.0	)		(16.9	)		(11.5	)		(5.3	)

Equity securities, fair value
Gains		5.3			1.7			3.6			17.7			12.0			5.7			1.8			5.1			(3.3	)
Losses		(18.9	)		(4.3	)		(14.6	)		(31.7	)		(14.2	)		(17.5	)		(9.7	)		(5.2	)		(4.5	)
Total		(13.6	)		(2.6	)		(11.0	)		(14.0	)		(2.2	)		(11.8	)		(8.0	)		(0.1	)		(7.8	)

Total net realized gains (losses) from sales
Gains		6.6			6.1			0.5			26.7			22.7			4.0			3.3			7.7			(4.4	)
Losses		(26.9	)		(7.6	)		(19.3	)		(71.0	)		(25.8	)		(45.2	)		(28.1	)		(19.2	)		(8.9	)
Total		(20.3	)		(1.4	)		(18.9	)		(44.3	)		(3.0	)		(41.3	)		(24.8	)		(11.6	)		(13.3	)

Gain on sale of subsidiary:		94.7			-			94.7			94.7			-			94.7

Other than temporary impairments:		(10.5	)		-			(10.5	)		(43.4	)		(0.2	)		(43.2	)		(23.0	)		(24.1	)		1.1

Gains (losses) from fair value adjustments:
Fixed maturities, fair value		-			(0.9	)		0.9			0.1			(0.9	)		1.0			(0.2	)		0.1			(0.3	)
Equity securities, fair value		(101.3	)		(12.6	)		(88.7	)		(85.7	)		65.4			(151.1	)		(18.3	)		20.9			(39.2	)
Other invested assets, fair value		(84.3	)		14.8			(99.1	)		29.5			59.7			(30.2	)		-			36.0			(36.0	)
Total		(185.6	)		1.2			(186.8	)		(56.1	)		124.1			(180.2	)		(18.6	)		57.0			(75.6	)

Total net realized gains (losses)	$	(121.7	)	$	(0.2	)	$	(121.5	)	$	(49.2	)	$	120.9		$	(170.0	)	$	(66.4	)	$	21.3		$	(87.7	)

(Some amounts may not reconcile due to rounding)

Net realized capital losses were ~~$121.7~~$66.4 million and ~~$0.2~~net realized capital gains were $21.3 million for the three months ended ~~September 30,~~March 31, 2016, and 2015, ~~and 2014,~~ respectively. ~~For~~For the three months ended ~~September 30, 2015,~~March 31, 2016, we recorded ~~$185.6 million of net realized capital losses due to fair value re-measurements on equity securities and other invested assets, $20.3~~$24.8 million of net realized capital losses from sales of fixed maturity and equity securities, ~~and $10.5~~$23.0 million of other-than-temporary impairments ~~partially offset by a $94.7~~and $18.6 million ~~gain~~of net realized capital losses due to fair value re-measurements on ~~the sale of a subsidiary.~~fixed maturities and equity securities. The fixed maturity and equity sales for the three months ended ~~September 30, 2015~~ March 31, 2016 related primarily to adjusting the portfolios for overall market changes and individual credit shifts. For the three months ended ~~September 30, 2014,~~March 31, 2015, we recorded ~~$1.4~~$57.0 million of net realized capital ~~losses from sales of fixed maturity and equity securities, partially offset by $1.2 million of net realized capital~~ gains ~~due to fair value re-measurements on fixed maturity, equity securities and other invested assets.~~

~~Net realized capital losses were $49.2 million and net realized capital gains were $120.9 million~~ ~~for the nine months ended September 30, 2015~~ ~~and 2014, respectively. For the nine months ended September 30, 2015, we recorded $56.1 million of net realized capital losses~~ due to fair value re-measurements on fixed maturity securities, equity securities and other invested assets, ~~$44.3~~partially offset by $24.1 million of other-than-temporary impairments and $11.6 million of net realized capital losses from sales of fixed maturity and equity ~~securities, $43.4 million of other-than-temporary impairments, partially offset by a $94.7 million gain on the sale of a subsidiary.~~securities. The fixed maturity and equity sales for the ~~nine~~three months ended ~~September 30,~~March 31, 2015 related primarily to adjusting the portfolios for overall market

changes and individual credit shifts. For the nine months ended September 30, 2014, we recorded $124.1 million of net realized capital gains due to fair value re-measurements on fixed maturity, equity securities and other invested assets, partially offset by $3.0 million of net realized capital losses from sales of fixed maturity and equity securities and $0.2 million of other-than-temporary impairments.

Segment Results.

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

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

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

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)	2015			2014			Variance			% Change			2015			2014			Variance			% Change			2016			2015			Variance			% Change
Gross written premiums	$	601.6		$	679.9		$	(78.3	)		-11.5	%	$	1,615.3		$	1,663.3		$	(48.0	)		-2.9	%	$	536.7		$	562.6		$	(25.9	)		-4.6	%
Net written premiums		247.4			304.4			(57.1	)		-18.8	%		672.8			771.1			(98.3	)		-12.7	%		223.4			240.7			(17.3	)		-7.2	%

Premiums earned	$	235.3		$	275.5		$	(40.2	)		-14.6	%	$	726.1		$	740.0		$	(13.9	)		-1.9	%	$	235.2		$	255.4		$	(20.2	)		-7.9	%
Incurred losses and LAE		109.1			125.5			(16.3	)		-13.0	%		337.1			371.1			(34.1	)		-9.2	%		116.2			111.5			4.7			4.2	%
Commission and brokerage		48.9			51.2			(2.4	)		-4.6	%		141.9			144.7			(2.8	)		-1.9	%		49.7			58.4			(8.7	)		-14.8	%
Other underwriting expenses		13.7			12.1			1.6			13.2	%		37.1			33.1			4.0			12.1	%		13.5			11.5			2.0			16.7	%
Underwriting gain (loss)	$	63.5		$	86.7		$	(23.2	)		-26.7	%	$	210.0		$	191.0		$	19.0			9.9	%	$	55.9		$	74.1		$	(18.1	)		-24.5	%

										Point Chg												Point Chg												Point Chg
Loss ratio		46.4	%		45.5	%					0.9			46.4	%		50.2	%					(3.8	)		49.4	%		43.6	%					5.8
Commission and brokerage ratio		20.8	%		18.6	%					2.2			19.5	%		19.6	%					(0.1	)		21.1	%		22.9	%					(1.8	)
Other underwriting expense ratio		5.8	%		4.4	%					1.4			5.2	%		4.4	%					0.8
Other underwriting ratio																										5.7	%		4.5	%					1.2
Combined ratio		73.0	%		68.5	%					4.5			71.2	%		74.2	%					(3.1	)		76.2	%		71.0	%					5.2

(Some amounts may not reconcile due to rounding)

Premiums. Gross written premiums decreased by ~~11.5%~~4.6% to ~~$601.6~~$536.7 million for the three months ended March 31, 2016 from $562.6 million for the three months ended March 31, 2015, primarily due to a decline in treaty casualty business. Net written premiums decreased by 7.2% to $223.4 million for the three months ended ~~September 30, 2015~~March 31, 2016 ~~from $679.9~~compared to $240.7 million for the three months ended ~~September 30, 2014, primarily due to a decrease in treaty casualty and treaty property lines of business resulting from cancellation of some contracts. Net written premiums decreased by 18.8% to $247.4 million~~ ~~for the three months ended September 30,~~March 31, 2015 ~~compared to $304.4 million~~ ~~for the three months ended September 30, 2014~~. The difference between the change in gross written premiums compared to the change in net written premiums ~~was~~is primarily due to a varying utilization of reinsurance primarily related to affiliated quota share contracts. Premiums earned decreased ~~14.6%~~7.9% to ~~$235.3~~$235.2 million for the three months ended ~~September 30, 2015~~March 31, 2016 compared to ~~$275.5~~$255.4 million for the three months ended ~~September 30, 2014~~March 31, 2015. 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 table presents the incurred losses and LAE for the U.S. Reinsurance 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
2016
Attritional	$	118.4		50.4	%		$	(2.3	)		-1.0	%		$	116.1			49.4	%
Catastrophes		-		0.0	%			-			0.0	%			-			0.0	%
Total segment	$	118.4		50.4	%		$	(2.3	)		-1.0	%		$	116.2			49.4	%

2015
Attritional	$	117.5		46.0	%		$	(3.6	)		-1.5	%		$	113.9			44.5	%
Catastrophes		-		0.0	%			(2.4	)		-0.9	%			(2.4	)		-0.9	%
Total segment	$	117.5		46.0	%		$	(6.0	)		-2.5	%		$	111.5			43.6	%

Variance 2016/2015
Attritional	$	0.9		4.4		pts	$	1.3			0.5		pts	$	2.2			4.9		pts
Catastrophes		-		-		pts		2.4			0.9		pts		2.4			0.9		pts
Total segment	$	0.9		4.4		pts	$	3.7			1.5		pts	$	4.7			5.8		pts

(Some amounts may not reconcile due to rounding.)

Incurred losses increased by 4.2% to $116.2 million for the three months ended March 31, 2016 compared to $111.5 million for the three months ended March 31, 2015, primarily due to $6.0 million of favorable development on prior year losses in 2015 which did not recur to the same level in 2016. There were no current year catastrophe losses for the three months ended March 31, 2016 and 2015.

Segment Expenses. Commission and brokerage decreased by 14.8% to $49.7 million for the three months ended March 31, 2016 compared to $58.4 million for the three months ended March 31, 2015. This decline was primarily due to the impact of the decrease in premiums earned and the impact of affiliated quota share contracts. Segment other underwriting expenses increased to $13.5 million for the three months ended March 31, 2016 from $11.5 million for the three months ended March 31, 2015. The increase was primarily due to the impact of changes in the mix of business and higher compensation and benefit plan costs.

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)	2016			2015			Variance			% Change
Gross written premiums	$	238.5		$	333.6		$	(95.1	)		-28.5	%
Net written premiums		87.7			121.7			(34.0	)		-27.9	%

Premiums earned	$	113.2		$	140.7		$	(27.5	)		-19.6	%
Incurred losses and LAE		73.4			101.4			(28.0	)		-27.6	%
Commission and brokerage		26.1			34.0			(7.9	)		-23.2	%
Other underwriting expenses		7.8			8.1			(0.3	)		-3.6	%
Underwriting gain (loss)	$	5.8		$	(2.9	)	$	8.7		NM

										Point Chg
Loss ratio		64.9	%		72.1	%					(7.2	)
Commission and brokerage ratio		23.1	%		24.2	%					(1.1	)
Other underwriting ratio		6.9	%		5.7	%					1.2
Combined ratio		94.9	%		102.0	%					(7.1	)

(NM, not meaningful)

Premiums.Gross written premiums decreased by ~~2.9%~~28.5% to ~~$1,615.3~~$238.5 million for the ~~nine~~three months ended ~~September 30, 2015~~March 31, 2016 ~~from $1,663.3~~compared to $333.6 million for the ~~nine~~three months ended ~~September 30, 2014~~March 31, 2015, primarily due to athe decline in ~~treaty casualty~~Latin American and ~~treaty property lines~~Asian business, reductions in premiums related to quota share agreements and the negative impact of ~~business resulting~~approximately $14.8 million from ~~cancellation~~the movement of ~~some contracts.~~foreign exchange rates. Net written premiums decreased by ~~12.7%~~27.9% to ~~$672.8~~$87.7 million for the ~~nine~~three months ended ~~September 30, 2015~~March 31, 2016 compared to ~~$771.1~~$121.7 million for the ~~nine~~three months ended ~~September 30, 2014~~March 31, 2015~~. The difference between~~, which is consistent with the change in gross written ~~premiums compared to the change in net written premiums is primarily due to a varying utilization of reinsurance primarily related to affiliated quota share contracts.~~premiums. Premiums earned decreased ~~1.9%~~19.6% to ~~$726.1~~$113.2 million for the ~~nine~~three months ended ~~September 30, 2015~~March 31, 2016 compared to ~~$740.0~~$140.7 million for the ~~nine~~three months ended ~~September 30, 2014~~March 31, 2015. 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 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
2015

Attritional $ 108.1 45.9 % $ 1.5 0.6 % $ 109.6 46.5 %
Catastrophes 0.1 0.1 % (0.5 ) -0.2 % (0.4 ) -0.1 %
Total segment $ 108.2 46.0 % $ 0.9 0.4 % $ 109.1 46.4 %

2014

Attritional $ 125.2 45.4 % $ - 0.0 % $ 125.2 45.4 %
Catastrophes - 0.0 % 0.3 0.1 % 0.3 0.1 %
Total segment $ 125.2 45.4 % $ 0.3 0.1 % $ 125.5 45.5 %

Variance 2015/2014

Attritional $ (17.1 ) 0.5 pts $ 1.5 0.6 pts $ (15.6 ) 1.1 pts
Catastrophes 0.1 0.1 pts (0.8 ) (0.3 ) pts (0.7 ) (0.2 ) pts
Total segment $ (17.0 ) 0.6 pts $ 0.6 0.3 pts $ (16.3 ) 0.9 pts

(Some amounts may not reconcile due to rounding.)

Nine Months Ended September 30,
Current Ratio %/ Prior Ratio %/ Total Ratio %/
(Dollars in millions) Year Pt Change Years Pt Change Incurred Pt Change
2015

Attritional $ 360.9 49.7 % $ (17.5 ) -2.4 % $ 343.5 47.3 %
Catastrophes 0.1 0.0 % (6.5 ) -0.9 % (6.4 ) -0.9 %
Total segment $ 361.1 49.7 % $ (24.0 ) -3.3 % $ 337.1 46.4 %

2014

Attritional $ 373.2 50.6 % $ (4.9 ) -0.7 % $ 368.3 49.9 %
Catastrophes 3.2 0.4 % (0.4 ) -0.1 % 2.8 0.3 %
Total segment $ 376.4 51.0 % $ (5.3 ) -0.8 % $ 371.1 50.2 %

Variance 2015/2014

Attritional $ (12.3 ) (0.9 ) pts $ (12.6 ) (1.7 ) pts $ (24.8 ) (2.6 ) pts
Catastrophes (3.1 ) (0.4 ) pts (6.1 ) (0.8 ) pts (9.2 ) (1.2 ) pts
Total segment $ (15.3 ) (1.3 ) pts $ (18.7 ) (2.5 ) pts $ (34.1 ) (3.8 ) pts

(Some amounts may not reconcile due to rounding.)

~~Incurred losses decreased by 13.0% to $109.1 million~~ ~~for the three months ended September 30, 2015~~ ~~compared to $125.5 million~~ ~~for the three months ended September 30, 2014~~, primarily due to a decrease in current year attritional losses of $17.1 million related to the decline in earned premiums, partially offset by $6.7 million of losses related to the explosion at the Chinese port of Tianjin. The $0.1 million of current year catastrophe losses for the three months ended September 30, 2015 were due to the New South Wales storms. There were no current year catastrophe losses ~~for the three months ended September 30, 2014.~~

~~Incurred losses decreased by 9.2% to $337.1 million~~ ~~for the nine months ended September 30, 2015~~ ~~compared to $371.1 million~~ ~~for the nine months ended September 30, 2014~~, primarily resulting from a decrease in current year attritional losses of $12.3 due to the impact of the decline in earned premiums partially offset by $6.7 million of losses related to the explosion at the Chinese port of Tianjin, favorable development of $12.6 million on prior years' attritional losses in 2015 compared to 2014 mainly related to treaty casualty and marine lines of business and favorable development of $6.1 million on prior years' catastrophe losses in 2015 compared to 2014 mainly related to U.S. Storms. The $0.1 million of current year catastrophe losses for the nine months ended September 30, 2015 were due to the New South Wales storms. ~~The $3.2 million of current year catastrophe losses for the nine months ended September 30, 2014 related to the Japan snowstorm.~~

~~Segment Expenses.~~ ~~Commission and brokerage decreased by 4.6% to $48.9 million~~ ~~for the three months ended September 30, 2015~~ ~~compared to $51.2 million~~ ~~for the three months ended September 30, 2014. Commission and brokerage decreased by 1.9% to $141.9 million~~ ~~for the nine months ended September 30, 2015~~ ~~compared to $144.7 million~~ ~~for the nine months ended September 30, 2014. This decrease was primarily due to the impact of the decrease in premiums earned and changes related to the affiliated quota share contracts.~~

~~Segment other underwriting expenses increased to $13.7 million~~ ~~for the three months ended September 30, 2015~~ ~~from $12.1 million~~ ~~for the three months ended September 30, 2014.~~ ~~Segment other underwriting expenses increased to $37.1 million~~ ~~for the nine months ended September 30, 2015~~ ~~from $33.1 million~~ ~~for the nine months ended September 30, 2014. The increases were primarily due to the impact of changes in the mix of business and higher employee benefit costs.~~

~~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) 2015 2014 Variance % Change 2015 2014 Variance % Change
Gross written premiums $ 374.1 $ 419.5 $ (45.3 ) -10.8 % $ 1,019.4 $ 1,214.3 $ (194.9 ) -16.1 %
Net written premiums 148.0 157.9 (9.9 ) -6.3 % 417.1 446.6 (29.5 ) -6.6 %

Premiums earned $ 135.1 $ 145.7 $ (10.5 ) -7.2 % $ 433.8 $ 438.4 $ (4.6 ) -1.1 %
Incurred losses and LAE 128.5 113.7 14.8 13.0 % 339.9 286.2 53.8 18.8 %
Commission and brokerage 27.9 23.8 4.2 17.5 % 93.2 80.3 12.8 16.0 %
Other underwriting expenses 9.1 8.8 0.4 4.2 % 25.3 24.7 0.6 2.4 %
Underwriting gain (loss) $ (30.4 ) $ (0.6 ) $ (29.8 ) NM $ (24.6 ) $ 47.2 $ (71.8 ) -152.2 %

Point Chg Point Chg
Loss ratio 95.1 % 78.1 % 17.0 78.4 % 65.3 % 13.1
Commission and brokerage ratio 20.7 % 16.3 % 4.4 21.5 % 18.3 % 3.2
Other underwriting expense ratio 6.7 % 6.0 % 0.7 5.8 % 5.6 % 0.2
Combined ratio 122.5 % 100.4 % 22.1 105.7 % 89.2 % 16.5

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

~~Premiums.~~ ~~Gross written premiums decreased by 10.8% to $374.1 million~~ ~~for the three months ended September 30, 2015~~ ~~compared to $419.5 million~~ ~~for the three months ended September 30, 2014~~, primarily due to the decline in Latin American and Asian business and the negative impact of approximately $29.9 million from the movement of foreign exchange rates. Net written premiums decreased by 6.3% to $148.0 million ~~for the three months ended September 30, 2015~~ ~~compared to $157.9 million~~ ~~for the three months ended September 30, 2014~~. The difference between the change in gross written premiums compared to the change in net written premiums is primarily due to varying utilization of reinsurance related to the quota share contracts. Premiums earned decreased 7.2% to $135.1 million ~~for the three months ended September 30, 2015~~ ~~compared to $145.7 million~~ ~~for the three months ended September 30, 2014~~. 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 decreased by 16.1% to $1,019.4 million~~ ~~for the nine months ended September 30, 2015~~ ~~compared to $1,214.3 million~~ ~~for the nine months ended September 30, 2014~~, primarily due to the decline in Latin American and Asian business, reductions in premiums related to quota share agreements and the negative impact of approximately $65.1 million from the movement of foreign exchange rates. Net written premiums decreased by 6.6% to $417.1 million ~~for the nine months ended September 30, 2015~~ ~~compared to $446.6 million~~ ~~for the nine months ended September 30, 2014~~. The difference between the change in gross written premiums compared to the change in net written premiums is primarily due to varying utilization of reinsurance related to the quota share contracts. Premiums earned decreased 1.1% to $433.8 million ~~for the nine months ended September 30, 2015~~ ~~compared to $438.4 million~~ ~~for the nine months ended September 30, 2014~~. 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 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
2016
Attritional																				$	71.4			63.1	%		$	(2.8	)		-2.5	%		$	68.6			60.6	%
Catastrophes																					5.2			4.6	%			(0.4	)		-0.3	%			4.8			4.3	%
Total segment																				$	76.6			67.7	%		$	(3.2	)		-2.8	%		$	73.4			64.9	%
																									��
2015
Attritional	$	111.0		82.2	%		$	0.9			0.7	%		$	112.0		82.9	%		$	99.7			70.9	%		$	1.6			1.1	%		$	101.3			72.0	%
Catastrophes		17.0		12.6	%			(0.6	)		-0.4	%			16.5		12.2	%			-			0.0	%			0.2			0.1	%			0.2			0.1	%
Total segment	$	128.1		94.8	%		$	0.4			0.3	%		$	128.5		95.1	%		$	99.7			70.9	%		$	1.7			1.2	%		$	101.4			72.1	%

2014
Attritional	$	106.6		73.2	%		$	(3.8	)		-2.6	%		$	102.8		70.6	%
Catastrophes		14.7		10.1	%			(3.7	)		-2.6	%			10.9		7.5	%
Total segment	$	121.3		83.3	%		$	(7.6	)		-5.2	%		$	113.7		78.1	%

Variance 2015/2014
Variance 2016/2015
Attritional	$	4.4		9.0		pts	$	4.7			3.3		pts	$	9.2		12.3		pts	$	(28.3	)		(7.8	)	pts	$	(4.4	)		(3.6	)	pts	$	(32.7	)		(11.4	)	pts
Catastrophes		2.3		2.5		pts		3.1			2.2		pts		5.6		4.7		pts		5.2			4.6		pts		(0.6	)		(0.4	)	pts		4.6			4.2		pts
Total segment	$	6.8		11.5		pts	$	8.0			5.5		pts	$	14.8		17.0		pts	$	(23.1	)		(3.2	)	pts	$	(4.9	)		(4.0	)	pts	$	(28.0	)		(7.2	)	pts

(Some amounts may not reconcile due to rounding.)

Nine Months Ended September 30,
Current Ratio %/ Prior Ratio %/ Total Ratio %/
(Dollars in millions) Year Pt Change Years Pt Change Incurred Pt Change
2015

Attritional $ 304.9 70.3 % $ 1.6 0.4 % $ 306.5 70.7 %
Catastrophes 35.1 8.1 % (1.7 ) -0.4 % 33.4 7.7 %
Total segment $ 340.0 78.4 % $ (0.1 ) 0.0 % $ 339.9 78.4 %

2014

Attritional $ 263.7 60.1 % $ (4.1 ) -0.9 % $ 259.7 59.2 %
Catastrophes 32.0 7.3 % (5.5 ) -1.2 % 26.5 6.1 %
Total segment $ 295.7 67.4 % $ (9.5 ) -2.1 % $ 286.2 65.3 %

Variance 2015/2014

Attritional $ 41.2 10.2 pts $ 5.7 1.3 pts $ 46.8 11.5 pts
Catastrophes 3.1 0.8 pts 3.8 0.8 pts 6.9 1.6 pts
Total segment $ 44.3 11.0 pts $ 9.4 2.1 pts $ 53.8 13.1 pts

(Some amounts may not reconcile due to rounding.)

Incurred losses and LAE ~~increased~~decreased by ~~13.0%~~27.6% to ~~$128.5~~$73.4 million for the three months ended ~~September 30, 2015~~March 31, 2016 compared to ~~$113.7~~$101.4 million for the three months ended ~~September 30, 2014~~March 31, 2015, primarily due to the ~~increase~~decrease in current year attritional losses of ~~$4.4~~$28.3 million ~~mainly related to $14.9 million of losses from the explosion at the Chinese port of Tianjin,~~reflecting a decline in premiums earned, partially offset by ~~the impact of the decline~~an increase in ~~earned premiums. Losses also increased due to favorable development in 2014 on both prior years' attritional and prior years'~~current year catastrophe losses ~~which did not recur or recur to the same level in 2015.~~of $5.2 million. The ~~$17.0~~$5.2 million of current year catastrophe losses for the three months ended ~~September 30, 2015~~March 31, 2016 were ~~entirely related~~primarily due to the ~~2015 Chilean earthquake. The $14.7 million of~~2016 Taiwan earthquake ($5.2 million). There were no current year catastrophe losses for the three months ended ~~September 30, 2014 were due to Hurricane Odile ($9.9 million) and the 2014 Chilean earthquake ($4.8 million).~~

~~Incurred losses and LAE increased by 18.8% to $339.9 million~~ ~~for the nine months ended September 30, 2015~~March 31, 2015. ~~compared to $286.2 million~~ ~~for the nine months ended September 30, 2014~~, primarily due to the increase in current year attritional losses of $41.2 million, mainly related to $14.9 million of losses from the explosion at the Chinese port of Tianjin. Losses also increased due to favorable development in 2014 on both prior years' attritional and prior years' catastrophe losses which did not recur or recur to the same level in 2015. The $35.1 million of current year catastrophe losses for the nine months ended September 30, 2015 were due to the 2015 Chilean earthquake ($17.4 million), Northern Chile storms ($9.8 million) and the New South Wales storms ($7.9 million). The $32.0 million of current year catastrophe losses for the nine months ended September 30, 2014 were due to the 2014 Chilean earthquake ($12.1 million), the Japan snowstorm ($10.0 million) and Hurricane Odile ($9.9 million).

Segment Expenses. Commission and brokerage ~~increased 17.5%~~decreased 23.2% to ~~$27.9~~$26.1 million for the three months ended ~~September 30, 2015~~March 31, 2016 compared to ~~$23.8~~$34.0 million for the three months ended ~~September 30, 2014~~ ~~and increased 16.0% to $93.2 million~~ ~~for the nine months ended September 30, 2015~~ ~~compared to $80.3 million~~ ~~for the nine months ended September 30, 2014.~~March 31, 2015. The ~~variances were~~decrease was primarily due to the impact of ~~changes~~the decrease in premiums earned and the ~~mix~~impact of ~~business and changes in~~ affiliated quota share agreements.

Segment other underwriting expenses ~~increased~~decreased slightly to ~~$9.1~~$7.8 million for the three months ended ~~September 30, 2015~~March 31, 2016 compared to ~~$8.8~~$8.1 million for the three months ended ~~September 30, 2014~~March 31, 2015.~~, and increased slightly to $25.3 million~~ ~~for the nine months ended September 30, 2015~~ ~~compared to $24.7 million~~ ~~for the nine months ended September 30, 2014.~~

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)	2015			2014			Variance			% Change			2015			2014			Variance			% Change			2016			2015			Variance			% Change
Gross written premiums	$	473.0		$	354.0		$	119.0			33.6	%	$	1,130.2		$	885.0		$	245.2			27.7	%	$	354.7		$	330.5		$	24.2			7.3	%
Net written premiums		203.7			149.5			54.2			36.2	%		490.1			386.7			103.4			26.8	%		152.9			146.1			6.9			4.7	%

Premiums earned	$	175.6		$	148.4		$	27.2			18.3	%	$	428.7		$	382.4		$	46.3			12.1	%	$	133.5		$	125.0		$	8.6			6.9	%
Incurred losses and LAE		133.2			141.4			(8.2	)		-5.8	%		325.5			322.8			2.7			0.8	%		106.5			96.0			10.5			10.9	%
Commission and brokerage		(4.7	)		4.2			(8.8	)		-211.9	%		6.5			15.5			(9.0	)		-58.0	%		(7.0	)		4.2			(11.2	)	NM
Other underwriting expenses		34.1			29.7			4.4			14.7	%		94.7			79.3			15.4			19.5	%		37.9			28.9			9.0			31.1	%
Underwriting gain (loss)	$	13.0		$	(26.9	)	$	39.9			-148.5	%	$	1.9		$	(35.2	)	$	37.1			-105.4	%	$	(3.9	)	$	(4.1	)	$	0.2			-4.9	%

										Point Chg												Point Chg												Point Chg
Loss ratio		75.8	%		95.3	%					(19.5	)		75.9	%		84.4	%					(8.5	)		79.8	%		76.8	%					3.0
Commission and brokerage ratio		-2.7	%		2.8	%					(5.5	)		1.5	%		4.1	%					(2.6	)		-5.3	%		3.3	%					(8.6	)
Other underwriting expense ratio		19.5	%		20.0	%					(0.5	)		22.2	%		20.7	%					1.5
Other underwriting ratio																										28.4	%		23.2	%					5.2
Combined ratio		92.6	%		118.1	%					(25.5	)		99.6	%		109.2	%					(9.6	)		102.9	%		103.3	%					(0.4	)

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

Premiums. Gross written premiums increased by ~~33.6%~~7.3% to ~~$473.0~~$354.7 million for the three months ended ~~September 30, 2015~~March 31, 2016 compared to ~~$354.0~~$330.5 million for the three months ended ~~September 30, 2014~~March 31, 2015. This increase was primarily driven by ~~increases~~an increase in ~~various~~accident and health business, premium from the startup of the Lloyd's syndicate and additional expansion of other insurance lines of ~~business as the company focused on expanding its insurance operations.~~business. Net written premiums increased by ~~36.2%~~4.7% to ~~$203.7~~$152.9 million for the three months ended ~~September 30, 2015~~March 31, 2016 compared to ~~$149.5~~$146.1 million for the three months ended ~~September 30, 2014, which is consistent with~~March 31, 2015. The difference between the change in gross written premiums and the change in new written premiums is primarily due to a varying utilization of reinsurance. . Premiums earned increased ~~18.3%~~6.9% to ~~$175.6~~$133.5 million for the three months ended ~~September 30, 2015~~March 31, 2016 compared to ~~$148.4~~$125.0 million for the three months ended ~~September 30, 2014.~~ March 31, 2015. 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 27.7% to $1,130.2 million~~ ~~for the nine months ended September 30, 2015~~ ~~compared to $885.0 million~~ ~~for the nine months ended September 30, 2014~~. This increase was primarily driven by an increase in various lines of business as the company focused on expanding its insurance operations. Net written premiums increased by 26.8% to $490.1 million ~~for the nine months ended September 30, 2015~~ ~~compared to $386.7 million~~ ~~for the nine months ended September 30, 2014, which is consistent with the change in gross written premiums. Premiums earned increased 12.1% to $428.7 million~~ ~~for the nine months ended September 30, 2015~~ ~~compared to $382.4 million~~ ~~for the nine months ended September 30, 2014~~. 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~~table presents the incurred losses and LAE for the Insurance segment for the periods indicated.

	Three 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
2016
Attritional																					$	103.6		77.6	%		$	3.0			2.3	%		$	106.7			79.9	%
Catastrophes																						-		0.0	%			(0.2	)		-0.1	%			(0.2	)		-0.1	%
Total segment																					$	103.6		77.6	%		$	2.8			2.2	%		$	106.5			79.8	%

2015
Attritional	$	132.0			75.2	%		$	0.9		0.5	%		$	132.9			75.7	%		$	95.6		76.5	%		$	0.4			0.3	%		$	96.0			76.8	%
Catastrophes		-			0.0	%			0.2		0.1	%			0.2			0.1	%			-		0.0	%			-			0.0	%			-			0.0	%
Total segment	$	132.0			75.2	%		$	1.2		0.7	%		$	133.2			75.8	%		$	95.6		76.5	%		$	0.4			0.3	%		$	96.0			76.8	%

2014
Variance 2016/2015
Attritional	$	140.6			94.8	%		$	0.8		0.5	%		$	141.4			95.3	%		$	8.0		1.1		pts	$	2.6			2.0		pts	$	10.7			3.1		pts
Catastrophes		-			0.0	%			-		0.0	%			-			0.0	%			-		-		pts		(0.2	)		(0.1	)	pts		(0.2	)		(0.1	)	pts
Total segment	$	140.6			94.8	%		$	0.8		0.5	%		$	141.4			95.3	%		$	8.0		1.1		pts	$	2.4			1.9		pts	$	10.5			3.0		pts

Variance 2015/2014
Attritional	$	(8.6	)		(19.6	)	pts	$	0.1		-		pts	$	(8.5	)		(19.6	)	pts
Catastrophes		-			-		pts		0.2		0.1		pts		0.2			0.1		pts
Total segment	$	(8.6	)		(19.6	)	pts	$	0.4		0.1		pts	$	(8.2	)		(19.5	)	pts

(Some amounts may not reconcile due to rounding.)

Nine Months Ended September 30,
Current Ratio %/ Prior Ratio %/ Total Ratio %/
(Dollars in millions) Year Pt Change Years Pt Change Incurred Pt Change
2015

Attritional $ 307.4 71.7 % $ 17.9 4.1 % $ 325.3 75.8 %
Catastrophes - 0.0 % 0.3 0.1 % 0.3 0.1 %
Total segment $ 307.4 71.7 % $ 18.2 4.2 % $ 325.5 75.9 %

2014

Attritional $ 319.4 83.5 % $ 3.4 0.9 % $ 322.8 84.4 %
Catastrophes - 0.0 % 0.1 0.0 % 0.1 0.0 %
Total segment $ 319.4 83.5 % $ 3.4 0.9 % $ 322.8 84.4 %

Variance 2015/2014

Attritional $ (12.0 ) (11.8 ) pts $ 14.5 3.2 pts $ 2.5 (8.6 ) pts
Catastrophes - - pts 0.2 0.1 pts 0.2 0.1 pts
Total segment $ (12.0 ) (11.8 ) pts $ 14.7 3.3 pts $ 2.7 (8.5 ) pts

(Some amounts may not reconcile due to rounding.)

Incurred losses and LAE ~~decreased~~increased by ~~5.8%~~10.9% to ~~$133.2~~$106.5 million for the three months ended ~~September 30, 2015~~March 31, 2016 compared to ~~$141.4~~$96.0 million for the three months ended ~~September 30, 2014~~March 31, 2015, ~~mainly~~primarily due to ~~a decrease~~an increase of ~~$8.6~~$8.0 million in current year attritional losses related to ~~impacts from affiliated quota share agreements.~~the impact of the increase in premiums earned and an increase of $2.6 million of favorable development on prior years attritional losses related primarily to crop hail business. There were no current year catastrophe losses for the three months ended ~~September 30,~~March 31, 2016 and 2015 ~~and 2014~~.

~~Incurred losses and LAE increased by 0.8% to $325.5 million~~ ~~for the nine months ended September 30, 2015~~ ~~compared to $322.8 million~~ ~~for the nine months ended September 30, 2014~~, mainly due to an increase of $14.5 million in prior years' attritional losses related primarily to run-off excess casualty business, partially offset by a decline of $12.0 million in current year attritional losses related to impacts from affiliated quota share agreements. There were no current year catastrophe losses ~~for the nine months ended September 30, 2015 and 2014~~.

Segment Expenses. Commission and brokerage decreased to ~~($4.7)~~$(7.0) million for the three months ended ~~September 30, 2015~~March 31, 2016 compared to $4.2 million for the three months ended ~~September 30, 2014~~ ~~and decreased to $6.5 million~~ ~~for the nine months ended September 30, 2015~~ ~~compared to $15.5 million~~ ~~for the nine months ended September 30, 2014. These decreases were~~March 31, 2015. The decrease was primarily driven by changes in the mix of business and impacts from affiliated quota share agreements.

Segment other underwriting expenses increased to ~~$34.1~~$37.9 million for the three months ended ~~September 30, 2015~~March 31, 2016 compared to ~~$29.7~~$28.9 million for the three months ended ~~September 30, 2014.~~ ~~Segment other underwriting expenses increased to $94.7 million~~ ~~for the nine months ended September 30, 2015~~ ~~compared to $79.3 million~~ ~~for the nine months ended September 30, 2014.~~March 31, 2015. The ~~increases were primarily due to~~increase resulted from the impact of the ~~increases~~increase in premiums earned and increased ~~focus on~~expenses due to the build out of the insurance ~~operations.~~platform.

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 ~~$9.4~~$9.6 billion investment portfolio, at ~~September 30, 2015,~~ March 31, 2016, 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 ~~$790.7~~$848.3 million of mortgage-backed securities in the ~~$5,384.4~~$5,581.8 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 displays the potential impact of market value fluctuations and after-tax unrealized appreciation on our fixed maturity portfolio (including ~~$382.2~~$329.2 million of short-term investments) for the period indicated based on upward and downward parallel and immediate 100 and 200 basis point shifts in interest rates. For legal entities with a U.S. dollar functional currency, this modeling was performed on each security individually. To generate appropriate price 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, 2015															At March 31, 2016
(Dollars in millions)	-200			-100			0			100			200			-200			-100			0			100			200
Total Market/Fair Value	$	6,059.0		$	5,916.8		$	5,766.6		$	5,607.1		$	5,442.5		$	6,210.8		$	6,062.0		$	5,911.0		$	5,747.7		$	5,578.5
Market/Fair Value Change from Base (%)		5.1	%		2.6	%		0.0	%		-2.8	%		-5.6	%		5.1	%		2.6	%		0.0	%		-2.8	%		-5.6	%
Change in Unrealized Appreciation
After-tax from Base ($)	$	190.1		$	97.6		$	-		$	(103.7	)	$	(210.7	)	$	194.9		$	98.2		$	-		$	(106.1	)	$	(216.1	)

We had ~~$7,878.1~~$7,992.3 million and ~~$7,843.9~~$7,940.7 million of gross reserves for losses and LAE as of ~~September 30, 2015~~March 31, 2016 and December 31, ~~2014,~~2015, 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~~tables 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, 2015												At March 31, 2016
(Dollars in millions)	-20%			-10%			0%		10%		20%		-20%			-10%			0%		10%		20%
Fair/Market Value of the Equity Portfolio	$	959.5		$	1,079.4		$	1,199.3	$	1,319.3	$	1,439.2	$	956.0		$	1,075.5		$	1,195.0	$	1,314.5	$	1,434.0
After-tax Change in Fair/Market Value		(155.9	)		(78.0	)		-		78.0		155.9		(155.3	)		(77.7	)		-		77.7		155.3

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, 2015,~~March 31, 2016, there has been no material change in exposure to foreign exchange rates as compared to December 31, ~~2014.~~2015.

4338

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 ITEM 1A, "Risk Factors" in the Company's most recent 10-K filing. 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

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

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

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 Dominic J. Addesso

31.2	Section 302 Certification of Craig Howie

32.1	Section 906 Certification of 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

4541

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~~May 16, ~~2015~~

2016

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

(Dollars in thousands)
Investments and cash	$	16,223
Reinsurance recoverables		142,057
Deferred tax asset		35,451
Total assets held for sale	$	193,731

Reserve for losses and loss adjustment expenses	$	137,704
Deferred gain on retroactive reinsurance		94,704
Other liabilities		130
Total liabilities held for sale	$	232,538

Net liabilities held for sale	$	(38,807	)