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:

~~June~~September 30, 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 ~~August~~November 1, 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 ~~June~~September 30, 2016 (unaudited) and
		December 31, 2015	1

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

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

	Consolidated Statements of Cash Flows for the ~~six~~nine months ended
		~~June~~September 30, 2016 and 2015 (unaudited)	4

	Notes to Consolidated Interim Financial Statements (unaudited)		5

Item 2.	Management's Discussion and Analysis of Financial Condition and
		Results of Operation	28

Item 3.	Quantitative and Qualitative Disclosures About Market Risk		44

Item 4.	Controls and Procedures		44

PART II

OTHER INFORMATION


Item 1.	Legal Proceedings	4445

Item 1A.	Risk Factors	45

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	45

Item 3.	Defaults Upon Senior Securities	45

Item 4.	Mine Safety Disclosures	45

Item 5.	Other Information	45

Item 6.	Exhibits	46

EVEREST REINSURANCE HOLDINGS, INC.

CONSOLIDATED BALANCE SHEETS

	September 30,		December 31,
(Dollars in thousands, except par value per share)	2016		2015
	(unaudited)
ASSETS:
Fixed maturities - available for sale, at market value	$	6,014,941	$	5,356,477
(amortized cost: 2016, $5,862,000; 2015, $5,335,472)
Fixed maturities - available for sale, at fair value		3,982		2,102
Equity securities - available for sale, at fair value		961,115		1,215,377
Short-term investments		188,359		563,536
Other invested assets (cost: 2016, $615,735 2015, $450,154)		615,735		450,154
Other invested assets, at fair value		1,725,367		1,773,214
Cash		285,178		155,429
Total investments and cash		9,794,677		9,516,289
Note receivable - affiliated		250,000		250,000
Accrued investment income		47,699		41,727
Premiums receivable		1,288,137		1,129,656
Reinsurance receivables - unaffiliated		827,281		716,982
Reinsurance receivables - affiliated		3,771,322		3,742,105
Funds held by reinsureds		189,984		176,712
Deferred acquisition costs		77,725		92,651
Prepaid reinsurance premiums		869,282		772,686
Other assets		318,615		256,395
TOTAL ASSETS	$	17,434,722	$	16,695,203

LIABILITIES:
Reserve for losses and loss adjustment expenses	$	8,306,404	$	7,940,720
Unearned premium reserve		1,448,915		1,349,799
Funds held under reinsurance treaties		113,566		101,531
Losses in the course of payment		127,976		125,592
Commission reserves		71,518		51,873
Other net payable to reinsurers		1,020,995		1,225,260
4.868% Senior notes due 6/1/2044		396,684		396,594
6.6% Long term notes due 5/1/2067		236,438		236,364
Accrued interest on debt and borrowings		12,341		3,537
Income taxes		163,956		68,024
Unsettled securities payable		66,976		15,040
Other liabilities		227,998		249,658
Total liabilities		12,193,767		11,763,992

Commitments and Contingencies (Note 5)

STOCKHOLDER'S EQUITY:
Common stock, par value: $0.01; 3,000 shares authorized;
1,000 shares issued and outstanding (2016 and 2015)		-		-
Additional paid-in capital		384,974		374,789
Accumulated other comprehensive income (loss), net of deferred income tax expense
(benefit) of $29,808 at 2016 and ($33,458) at 2015		55,349		(62,136	)
Retained earnings		4,800,632		4,618,558
Total stockholder's equity		5,240,955		4,931,211
TOTAL LIABILITIES AND STOCKHOLDER'S EQUITY	$	17,434,722	$	16,695,203

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

June 30, December 31,
(Dollars in thousands, except par value per share) 2016 2015
(unaudited)
ASSETS:
Fixed maturities - available for sale, at market value $ 5,768,749 $ 5,356,477
     (amortized cost: 2016, $5,617,412; 2015, $5,335,472)
Fixed maturities - available for sale, at fair value - 2,102
Equity securities - available for sale, at fair value 976,879 1,215,377
Short-term investments 387,705 563,536
Other invested assets (cost: 2016, $604,512; 2015, $450,154) 604,512 450,154
Other invested assets, at fair value 1,772,458 1,773,214
Cash 229,927 155,429
         Total investments and cash 9,740,230 9,516,289
Note receivable - affiliated 250,000 250,000
Accrued investment income 42,454 41,727
Premiums receivable 1,119,371 1,129,656
Reinsurance receivables - unaffiliated 814,866 716,982
Reinsurance receivables - affiliated 3,676,433 3,742,105
Funds held by reinsureds 185,170 176,712
Deferred acquisition costs 72,696 92,651
Prepaid reinsurance premiums 750,713 772,686
Other assets 272,767 256,395
TOTAL ASSETS $ 16,924,700 $ 16,695,203

LIABILITIES:
Reserve for losses and loss adjustment expenses $ 8,247,764 $ 7,940,720
Unearned premium reserve 1,264,499 1,349,799
Funds held under reinsurance treaties 106,611 101,531
Losses in the course of payment 128,048 125,592
Commission reserves 61,254 51,873
Other net payable to reinsurers 860,872 1,225,260
4.868% Senior notes due 6/1/2044 396,654 396,594
6.6% Long term notes due 5/1/2067 236,413 236,364
Accrued interest on debt and borrowings 3,537 3,537
Income taxes 138,621 68,024
Unsettled securities payable 59,891 15,040
Other liabilities 256,483 249,658
         Total liabilities 11,760,647 11,763,992

Commitments and Contingencies (Note 5)

STOCKHOLDER'S EQUITY:
Common stock, par value: $0.01; 3,000 shares authorized;
     1,000 shares issued and outstanding (2016 and 2015) - -
Additional paid-in capital 382,537 374,789
Accumulated other comprehensive income (loss), net of deferred income tax expense
     (benefit) of $29,988 at 2016 and ($33,458) at 2015 55,682 (62,136 )
Retained earnings 4,725,834 4,618,558
         Total stockholder's equity 5,164,053 4,931,211
TOTAL LIABILITIES AND STOCKHOLDER'S EQUITY $ 16,924,700 $ 16,695,203

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
	September 30,						September 30,
(Dollars in thousands)	2016			2015			2016			2015
	(unaudited)						(unaudited)
REVENUES:
Premiums earned	$	556,653		$	546,050		$	1,527,433		$	1,588,536
Net investment income		64,570			63,363			196,887			206,869
Net realized capital gains (losses):
Other-than-temporary impairments on fixed maturity securities		(836	)		(10,502	)		(25,242	)		(43,433	)
Other-than-temporary impairments on fixed maturity securities
transferred to other comprehensive income (loss)		-			-			-			-
Realized gain(loss) on sale of subsidiary		(28,032	)		94,704			(28,032	)		94,704
Other net realized capital gains (losses)		(21,195	)		(205,897	)		(34,001	)		(100,445	)
Total net realized capital gains (losses)		(50,063	)		(121,695	)		(87,275	)		(49,174	)
Other income (expense)		(13,208	)		10,828			(10,806	)		38,950
Total revenues		557,952			498,546			1,626,239			1,785,181

CLAIMS AND EXPENSES:
Incurred losses and loss adjustment expenses		301,603			370,754			936,201			1,002,513
Commission, brokerage, taxes and fees		85,563			72,151			226,511			241,635
Other underwriting expenses		64,149			56,953			181,706			157,069
Corporate expenses		1,835			1,637			6,181			5,031
Interest, fee and bond issue cost amortization expense		8,859			8,859			26,576			26,576
Total claims and expenses		462,009			510,354			1,377,175			1,432,824

INCOME (LOSS) BEFORE TAXES		95,943			(11,808	)		249,064			352,357
Income tax expense (benefit)		21,145			(7,149	)		66,990			107,306

NET INCOME (LOSS)	$	74,798		$	(4,659	)	$	182,074		$	245,051

Other comprehensive income (loss), net of tax:
Unrealized appreciation (depreciation) ("URA(D)") on securities arising during the period		3,808			(29,878	)		62,672			(49,866	)
Less: reclassification adjustment for realized losses (gains) included in net income (loss)		(2,767	)		11,625			23,085			48,951
Total URA(D) on securities arising during the period		1,041			(18,253	)		85,757			(915	)

Foreign currency translation adjustments		(2,642	)		(27,473	)		27,779			(44,636	)

Benefit plan actuarial net gain (loss) for the period		-			-			-			-
Reclassification adjustment for amortization of net (gain) loss included in net income (loss)		1,268			1,556			3,949			4,769
Total benefit plan net gain (loss) for the period		1,268			1,556			3,949			4,769
Total other comprehensive income (loss), net of tax		(333	)		(44,170	)		117,485			(40,782	)

COMPREHENSIVE INCOME (LOSS)	$	74,465		$	(48,829	)	$	299,559		$	204,269

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

Three Months Ended Six Months Ended
June 30, June 30,
(Dollars in thousands) 2016 2015 2016 2015
(unaudited) (unaudited)
REVENUES:
Premiums earned $ 488,855 $ 521,424 $ 970,780 $ 1,042,486
Net investment income 73,872 70,925 132,317 143,506
Net realized capital gains (losses):
Other-than-temporary impairments on fixed maturity securities (1,391 ) (8,810 ) (24,406 ) (32,931 )
Other-than-temporary impairments on fixed maturity securities
transferred to other comprehensive income (loss) - - - -
Other net realized capital gains (losses) 30,556 60,035 (12,806 ) 105,452
Total net realized capital gains (losses) 29,165 51,225 (37,212 ) 72,521
Other income (expense) (10,700 ) 12,289 2,402 28,122
Total revenues 581,192 655,863 1,068,287 1,286,635

CLAIMS AND EXPENSES:
Incurred losses and loss adjustment expenses 338,536 322,879 634,598 631,759
Commission, brokerage, taxes and fees 72,126 72,953 140,948 169,484
Other underwriting expenses 58,330 51,573 117,557 100,116
Corporate expenses 2,010 1,785 4,346 3,394
Interest, fee and bond issue cost amortization expense 8,858 8,858 17,717 17,717
Total claims and expenses 479,860 458,048 915,166 922,470

INCOME (LOSS) BEFORE TAXES 101,332 197,815 153,121 364,165
Income tax expense (benefit) 32,982 64,049 45,845 114,455

NET INCOME (LOSS) $ 68,350 $ 133,766 $ 107,276 $ 249,710

Other comprehensive income (loss), net of tax:
Unrealized appreciation (depreciation) ("URA(D)") on securities arising during the period 39,264 (35,938 ) 58,864 (19,988 )
Less: reclassification adjustment for realized losses (gains) included in net income (loss) (63 ) 13,661 25,852 37,326
Total URA(D) on securities arising during the period 39,201 (22,277 ) 84,716 17,338

Foreign currency translation adjustments 15,489 16,145 30,421 (17,163 )

Benefit plan actuarial net gain (loss) for the period - - - -
Reclassification adjustment for amortization of net (gain) loss included in net income (loss) 1,341 1,609 2,681 3,213
Total benefit plan net gain (loss) for the period 1,341 1,609 2,681 3,213
Total other comprehensive income (loss), net of tax 56,031 (4,523 ) 117,818 3,388

COMPREHENSIVE INCOME (LOSS) $ 124,381 $ 129,243 $ 225,094 $ 253,098

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
	September 30,						September 30,
(Dollars in thousands, except share amounts)	2016			2015			2016			2015
	(unaudited)						(unaudited)
COMMON STOCK (shares outstanding):
Balance, beginning of period		1,000			1,000			1,000			1,000
Balance, end of period		1,000			1,000			1,000			1,000

ADDITIONAL PAID-IN CAPITAL:
Balance, beginning of period	$	382,537		$	369,284		$	374,789		$	362,293
Share-based compensation plans		2,437			3,282			10,185			10,273
Balance, end of period		384,974			372,566			384,974			372,566

ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS),
NET OF DEFERRED INCOME TAXES:
Balance, beginning of period		55,682			7,907			(62,136	)		4,519
Net increase (decrease) during the period		(333	)		(44,170	)		117,485			(40,782	)
Balance, end of period		55,349			(36,263	)		55,349			(36,263	)

RETAINED EARNINGS:
Balance, beginning of period		4,725,834			4,455,615			4,618,558			4,205,905
Net income (loss)		74,798			(4,659	)		182,074			245,051
Balance, end of period		4,800,632			4,450,956			4,800,632			4,450,956

TOTAL STOCKHOLDER'S EQUITY, END OF PERIOD	$	5,240,955		$	4,787,259		$	5,240,955		$	4,787,259

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

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

ADDITIONAL PAID-IN CAPITAL:
Balance, beginning of period $ 379,582 $ 366,258 $ 374,789 $ 362,293
Share-based compensation plans 2,955 3,026 7,748 6,991
Balance, end of period 382,537 369,284 382,537 369,284

ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS),
NET OF DEFERRED INCOME TAXES:
Balance, beginning of period (349 ) 12,430 (62,136 ) 4,519
Net increase (decrease) during the period 56,031 (4,523 ) 117,818 3,388
Balance, end of period 55,682 7,907 55,682 7,907

RETAINED EARNINGS:
Balance, beginning of period 4,657,484 4,321,849 4,618,558 4,205,905
Net income (loss) 68,350 133,766 107,276 249,710
Balance, end of period 4,725,834 4,455,615 4,725,834 4,455,615

TOTAL STOCKHOLDER'S EQUITY, END OF PERIOD $ 5,164,053 $ 4,832,806 $ 5,164,053 $ 4,832,806

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

EVEREST REINSURANCE HOLDINGS, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

	Nine Months Ended
	September 30,
(Dollars in thousands)	2016			2015
	(unaudited)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss)	$	182,074		$	245,051
Adjustments to reconcile net income to net cash provided by operating activities:
Decrease (increase) in premiums receivable		(155,717	)		(225,922	)
Decrease (increase) in funds held by reinsureds, net		(948	)		589
Decrease (increase) in reinsurance receivables		(120,745	)		(169,328	)
Decrease (increase) in income taxes		33,279			(212	)
Decrease (increase) in prepaid reinsurance premiums		(94,400	)		(44,177	)
Increase (decrease) in reserve for losses and loss adjustment expenses		322,226			107,006
Increase (decrease) in unearned premiums		94,847			34,627
Increase (decrease) in other net payable to reinsurers		(209,260	)		(50,813	)
Increase (decrease) in losses in course of payment		1,860			133,244
Change in equity adjustments in limited partnerships		(17,067	)		(16,409	)
Distribution of limited partnership income		31,739			36,883
Change in other assets and liabilities, net		(124,955	)		(2,719	)
Non-cash compensation expense		7,453			6,303
Amortization of bond premium (accrual of bond discount)		13,754			13,978
Amortization of underwriting discount on senior notes		3			3
Net realized capital (gains) losses		87,275			49,174
Net cash provided by (used in) operating activities		51,418			117,278

CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from fixed maturities matured/called - available for sale, at market value		572,224			696,268
Proceeds from fixed maturities sold - available for sale, at market value		433,655			418,284
Proceeds from fixed maturities sold - available for sale, at fair value		1,587			1,824
Proceeds from equity securities sold - available for sale, at market value		-			16
Proceeds from equity securities sold - available for sale, at fair value		531,894			442,276
Proceeds from sale of subsidiary (net of cash disposed)		47,721			3,934
Distributions from other invested assets		1,119,428			36,130
Cost of fixed maturities acquired - available for sale, at market value		(1,516,092	)		(1,403,187	)
Cost of fixed maturities acquired - available for sale, at fair value		(3,940	)		(234	)
Cost of equity securities acquired - available for sale, at fair value		(253,041	)		(442,306	)
Cost of other invested assets acquired		(1,299,682	)		(49,575	)
Net change in short-term investments		376,832			176,876
Net change in unsettled securities transactions		40,771			(12,069	)
Net cash provided by (used in) investing activities		51,357			(131,763	)

CASH FLOWS FROM FINANCING ACTIVITIES:
Tax benefit from share-based compensation		2,732			3,970
Net cash provided by (used in) financing activities		2,732			3,970

EFFECT OF EXCHANGE RATE CHANGES ON CASH		24,242			(37,328	)

Net increase (decrease) in cash		129,749			(47,843	)
Cash, beginning of period		155,429			323,975
Cash, end of period	$	285,178		$	276,132

SUPPLEMENTAL CASH FLOW INFORMATION:
Income taxes paid (recovered)	$	30,877		$	104,727
Interest paid		17,608			17,608

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

Six Months Ended
June 30,
(Dollars in thousands) 2016 2015
(unaudited)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $ 107,276 $ 249,710
Adjustments to reconcile net income to net cash provided by operating activities:
Decrease (increase) in premiums receivable 13,635 (19,661 )
Decrease (increase) in funds held by reinsureds, net (3,111 ) (1,191 )
Decrease (increase) in reinsurance receivables (9,694 ) (167,876 )
Decrease (increase) in income taxes 8,190 34,836
Decrease (increase) in prepaid reinsurance premiums 24,418 38,141
Increase (decrease) in reserve for losses and loss adjustment expenses 257,415 75,995
Increase (decrease) in unearned premiums (89,903 ) (99,896 )
Increase (decrease) in other net payable to reinsurers (370,242 ) (144,661 )
Increase (decrease) in losses in course of payment 1,813 76,607
Change in equity adjustments in limited partnerships (11,352 ) (13,872 )
Distribution of limited partnership income 22,822 14,597
Change in other assets and liabilities, net 14,216 2,437
Non-cash compensation expense 5,433 3,955
Amortization of bond premium (accrual of bond discount) 8,972 9,352
Amortization of underwriting discount on senior notes 2 2
Net realized capital (gains) losses 37,212 (72,521 )
Net cash provided by (used in) operating activities 17,102 (14,046 )

CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from fixed maturities matured/called - available for sale, at market value 368,179 493,648
Proceeds from fixed maturities sold - available for sale, at market value 296,888 288,211
Proceeds from fixed maturities sold - available for sale, at fair value 1,587 1,613
Proceeds from equity securities sold - available for sale, at market value - 16
Proceeds from equity securities sold - available for sale, at fair value 421,980 303,477
Distributions from other invested assets 696,889 19,999
Cost of fixed maturities acquired - available for sale, at market value (923,755 ) (850,526 )
Cost of fixed maturities acquired - available for sale, at fair value - (234 )
Cost of equity securities acquired - available for sale, at fair value (180,406 ) (306,602 )
Cost of other invested assets acquired (862,717 ) (33,996 )
Net change in short-term investments 178,128 30,157
Net change in unsettled securities transactions 36,119 3,008
Net cash provided by (used in) investing activities 32,892 (51,229 )

CASH FLOWS FROM FINANCING ACTIVITIES:
Tax benefit from share-based compensation 2,315 3,036
Net cash provided by (used in) financing activities 2,315 3,036

EFFECT OF EXCHANGE RATE CHANGES ON CASH 22,189 (11,317 )

Net increase (decrease) in cash 74,498 (73,556 )
Cash, beginning of period 155,429 323,975
Cash, end of period $ 229,927 $ 250,419

SUPPLEMENTAL CASH FLOW INFORMATION:
Income taxes paid (recovered) $ 35,375 $ 77,577
Interest paid 17,608 17,608

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

NOTES TO CONSOLIDATED INTERIM FINANCIAL STATEMENTS (UNAUDITED)

For the Three and ~~Six~~Nine Months Ended ~~June~~September 30, 2016 and 2015

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) and the "Company" means Holdings and its subsidiaries.

During the third quarter of 2016, the Company established domestic subsidiaries, Everest Premier Insurance Company ("Everest Premier") and Everest Denali Insurance Company ("Everest Denali"), which will be used in the continued expansion of the Insurance operations.

Effective August 24, 2016, the Company sold its wholly-owned subsidiary, Heartland Crop Insurance Company ("Heartland"), a managing agent for crop insurance, to CGB Diversified Services, Inc. ("CGB"). The operating results of Heartland for the period owned are included within the Company's financial statements.

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 for the three and ~~six~~nine months ended ~~June~~September 30, 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 ~~six~~nine months ended ~~June~~September 30, 2016 and 2015 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, 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 ~~six~~nine months ended ~~June~~September 30, 2016 and 2015 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 and 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.

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 a significant impact on its financial statements.

Debt Issuance Costs. In April 2015, The FASB issued ASU 2015–03, authoritative guidance on the presentation of debt issuance costs. This guidance requires that 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. Based upon this guidance, the Company has adjusted prior financial statements and footnotes to conform with this new presentation.

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 June 30, 2016											At September 30, 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	$	383,388	$	8,705	$	(149	)	$	391,944	$	-	$	423,167	$	6,471	$	(470	)	$	429,168	$	-
Obligations of U.S. states and political subdivisions		701,171		49,219		(478	)		749,912		-		725,149		40,657		(802	)		765,004		-
Corporate securities		2,032,340		54,062		(20,239	)		2,066,163		4,451		2,192,089		57,124		(10,576	)		2,238,637		3,802
Asset-backed securities		167,478		1,592		(157	)		168,913		-		167,721		1,316		(12	)		169,025		-
Mortgage-backed securities
Commercial		73,543		1,623		(65	)		75,101		-		75,965		1,567		(35	)		77,497		-
Agency residential		756,403		11,867		(574	)		767,696		-		750,339		7,983		(875	)		757,447		-
Non-agency residential		103		17		-			120		-		89		14		-			103		-
Foreign government securities		512,414		28,986		(7,997	)		533,403		-		530,381		29,667		(6,127	)		553,921		-
Foreign corporate securities		990,572		35,288		(10,363	)		1,015,497		2,123		997,100		34,616		(7,577	)		1,024,139		327
Total fixed maturity securities	$	5,617,412	$	191,359	$	(40,022	)	$	5,768,749	$	6,574	$	5,862,000	$	179,415	$	(26,474	)	$	6,014,941	$	4,129
Equity securities	$	-	$	-	$	-		$	-	$	-	$	-	$	-	$	-		$	-	$	-

	At December 31, 2015
	Amortized		Unrealized		Unrealized			Market		OTTI in AOCI
(Dollars in thousands)	Cost		Appreciation		Depreciation			Value		(a)
Fixed maturity securities
U.S. Treasury securities and obligations of
U.S. government agencies and corporations	$	329,281	$	2,422	$	(718	)	$	330,985	$	-
Obligations of U.S. states and political subdivisions		669,945		34,020		(890	)		703,075		-
Corporate securities		2,011,997		27,286		(70,725	)		1,968,558		(86	)
Asset-backed securities		145,755		290		(1,063	)		144,982		-
Mortgage-backed securities
Commercial		61,527		1,430		(511	)		62,446		-
Agency residential		714,907		3,994		(6,603	)		712,298		-
Non-agency residential		126		24		-			150		-
Foreign government securities		447,244		24,255		(8,425	)		463,074		-
Foreign corporate securities		954,690		27,616		(11,397	)		970,909		17
Total fixed maturity securities	$	5,335,472	$	121,337	$	(100,332	)	$	5,356,477	$	(69	)

At December 31, 2015
Amortized Unrealized Unrealized Market OTTI in AOCI
(Dollars in thousands) Cost Appreciation Depreciation Value (a)
Fixed maturity securities
U.S. Treasury securities and obligations of
U.S. government agencies and corporations $ 329,281 $ 2,422 $ (718 ) $ 330,985 $ -
Obligations of U.S. states and political subdivisions 669,945 34,020 (890 ) 703,075 -
Corporate securities 2,011,997 27,286 (70,725 ) 1,968,558 (86 )
Asset-backed securities 145,755 290 (1,063 ) 144,982 -
Mortgage-backed securities
Commercial 61,527 1,430 (511 ) 62,446 -
Agency residential 714,907 3,994 (6,603 ) 712,298 -
Non-agency residential 126 24 - 150 -
Foreign government securities 447,244 24,255 (8,425 ) 463,074 -
Foreign corporate securities 954,690 27,616 (11,397 ) 970,909 17
Total fixed maturity securities $ 5,335,472 $ 121,337 $ (100,332 ) $ 5,356,477 $ (69 )

^(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 table by contractual maturity. Mortgage-backed securities are generally more likely to be prepaid than other fixed maturity securities. As the stated maturity of such securities may not be indicative of actual maturities, the totals for mortgage-backed and asset-backed securities are shown separately.

	At June 30, 2016				At December 31, 2015				At September 30, 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	$	406,621	$	405,264	$	330,029	$	330,509	$	350,845	$	349,366	$	330,029	$	330,509
Due after one year through five years		2,809,371		2,856,628		2,617,079		2,618,056		2,916,564		2,967,946		2,617,079		2,618,056
Due after five years through ten years		692,168		717,637		870,266		856,230		803,666		833,389		870,266		856,230
Due after ten years		711,725		777,390		595,783		631,806		796,811		860,168		595,783		631,806
Asset-backed securities		167,478		168,913		145,755		144,982		167,721		169,025		145,755		144,982
Mortgage-backed securities
Commercial		73,543		75,101		61,527		62,446		75,965		77,497		61,527		62,446
Agency residential		756,403		767,696		714,907		712,298		750,339		757,447		714,907		712,298
Non-agency residential		103		120		126		150		89		103		126		150
Total fixed maturity securities	$	5,617,412	$	5,768,749	$	5,335,472	$	5,356,477	$	5,862,000	$	6,014,941	$	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 Eded						Six Months Eded						Three Months Eded						Nine Months Eded
	June 30,						June 30,						September 30,						September 30,
(Dollars in thousands)	2016			2015			2016			2015			2016			2015			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	$	53,863		$	(34,272	)	$	123,689		$	16,939		$	4,047		$	(28,103	)	$	127,736		$	(11,164	)
Fixed maturity securities, other-than-temporary impairment		6,446			-			6,643			9,735			(2,444	)		22			4,199			9,757
Equity Securities		-			(1	)		-			(1	)		-			-			-			(1	)
Change in unrealized appreciation (depreciation), pre-tax		60,309			(34,273	)		130,332			26,673			1,603			(28,081	)		131,935			(1,408	)
Deferred tax benefit (expense)		(18,852	)		11,996			(43,291	)		(5,928	)		(1,418	)		9,835			(44,709	)		3,907
Deferred tax benefit (expense), other-than-temporary impairment		(2,256	)		-			(2,325	)		(3,407	)		856			(7	)		(1,469	)		(3,414	)
Change in unrealized appreciation (depreciation),
net of deferred taxes, included in stockholder's equity	$	39,201		$	(22,277	)	$	84,716		$	17,338		$	1,041		$	(18,253	)	$	85,757		$	(915	)

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.

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 June 30, 2016 By Security Type															Duration of Unrealized Loss at September 30, 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	$	4,759	$	(149	)	$	-	$	-		$	4,759	$	(149	)	$	42,928	$	(470	)	$	-	$	-		$	42,928	$	(470	)
Obligations of U.S. states and political subdivisions		-		-			562		(478	)		562		(478	)		72,100		(391	)		633		(411	)		72,733		(802	)
Corporate securities		261,660		(4,945	)		293,977		(15,294	)		555,637		(20,239	)		185,486		(2,571	)		185,850		(8,005	)		371,336		(10,576	)
Asset-backed securities		13,337		(71	)		30,016		(86	)		43,353		(157	)		-		-			17,850		(12	)		17,850		(12	)
Mortgage-backed securities
Commercial		3,470		(20	)		3,352		(45	)		6,822		(65	)		1,511		(3	)		3,282		(32	)		4,793		(35	)
Agency residential		32,558		(106	)		107,907		(468	)		140,465		(574	)		48,246		(106	)		99,400		(769	)		147,646		(875	)
Non-agency residential		29		-			-		-			29		-			-		-			-		-			-		-
Foreign government securities		9,456		(209	)		66,601		(7,788	)		76,057		(7,997	)		14,728		(261	)		61,698		(5,866	)		76,426		(6,127	)
Foreign corporate securities		100,483		(3,051	)		83,260		(7,312	)		183,743		(10,363	)		83,716		(2,070	)		69,922		(5,507	)		153,638		(7,577	)
Total fixed maturity securities	$	425,752	$	(8,551	)	$	585,675	$	(31,471	)	$	1,011,427	$	(40,022	)	$	448,715	$	(5,872	)	$	438,635	$	(20,602	)	$	887,350	$	(26,474	)
Equity securities		-		-			-		-			-		-			-		-			-		-			-		-
Total	$	425,752	$	(8,551	)	$	585,675	$	(31,471	)	$	1,011,427	$	(40,022	)	$	448,715	$	(5,872	)	$	438,635	$	(20,602	)	$	887,350	$	(26,474	)

	Duration of Unrealized Loss at June 30, 2016 By Maturity															Duration of Unrealized Loss at September 30, 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	$	19,629	$	(664	)	$	29,635	$	(3,386	)	$	49,264	$	(4,050	)	$	14,922	$	(259	)	$	23,232	$	(3,449	)	$	38,154	$	(3,708	)
Due in one year through five years		217,063		(4,758	)		325,768		(22,222	)		542,831		(26,980	)		185,270		(3,363	)		246,906		(13,503	)		432,176		(16,866	)
Due in five years through ten years		136,768		(2,909	)		87,271		(5,149	)		224,039		(8,058	)		119,725		(1,682	)		46,244		(2,792	)		165,969		(4,474	)
Due after ten years		2,898		(23	)		1,726		(115	)		4,624		(138	)		79,041		(459	)		1,721		(45	)		80,762		(504	)
Asset-backed securities		13,337		(71	)		30,016		(86	)		43,353		(157	)		-		-			17,850		(12	)		17,850		(12	)
Mortgage-backed securities		36,057		(126	)		111,259		(513	)		147,316		(639	)		49,757		(109	)		102,682		(801	)		152,439		(910	)
Total fixed maturity securities	$	425,752	$	(8,551	)	$	585,675	$	(31,471	)	$	1,011,427	$	(40,022	)	$	448,715	$	(5,872	)	$	438,635	$	(20,602	)	$	887,350	$	(26,474	)

The aggregate market value and gross unrealized losses related to investments in an unrealized loss position at ~~June~~September 30, 2016 were ~~$1,011,427~~$887,350 thousand and ~~$40,022~~$26,474 thousand, respectively. The market value of securities for the single issuer whose securities comprised the largest unrealized loss position at ~~June~~September 30, 2016, did not exceed 0.9% of the overall market value of the Company's fixed maturity securities. In addition, as indicated on the above table, there was no significant concentration of unrealized losses in any one market sector. The ~~$8,551~~$5,872 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. The majority of these unrealized losses are attributable to net unrealized foreign exchange losses, ~~$6,030~~$5,564 thousand, as the U.S. dollar has strengthened against other currencies. The ~~$31,471~~$20,602 thousand of unrealized losses related to fixed maturity securities in an unrealized loss position for more than one year related primarily to domestic and foreign

corporate securities and foreign government securities. The majority of these unrealized losses are attributable to net unrealized foreign

exchange losses, ~~$22,677~~$19,030 thousand, as the U.S. dollar has strengthened against other currencies. The Company did not have any sub-prime or alt-A loans with gross unrealized depreciation at ~~June~~September 30, 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, 2015 By Security Type
	Less than 12 months					Greater than 12 months					Total
			Gross					Gross					Gross
			Unrealized					Unrealized					Unrealized
(Dollars in thousands)	Market Value		Depreciation			Market Value		Depreciation			Market Value		Depreciation
Fixed maturity securities - available for sale
U.S. Treasury securities and obligations of
U.S. government agencies and corporations	$	216,352	$	(712	)	$	692	$	(6	)	$	217,044	$	(718	)
Obligations of U.S. states and political subdivisions		6,434		(84	)		4,917		(806	)		11,351		(890	)
Corporate securities		866,715		(49,034	)		307,215		(21,691	)		1,173,930		(70,725	)
Asset-backed securities		102,506		(791	)		28,048		(272	)		130,554		(1,063	)
Mortgage-backed securities
Commercial		26,483		(511	)		-		-			26,483		(511	)
Agency residential		320,285		(3,094	)		150,095		(3,509	)		470,380		(6,603	)
Non-agency residential		-		-			-		-			-		-
Foreign government securities		61,498		(2,182	)		77,911		(6,243	)		139,409		(8,425	)
Foreign corporate securities		324,904		(6,289	)		76,951		(5,108	)		401,855		(11,397	)
Total fixed maturity securities	$	1,925,177	$	(62,697	)	$	645,829	$	(37,635	)	$	2,571,006	$	(100,332	)

	Duration of Unrealized Loss at December 31, 2015 By Maturity
	Less than 12 months					Greater than 12 months					Total
			Gross					Gross					Gross
			Unrealized					Unrealized					Unrealized
(Dollars in thousands)	Market Value		Depreciation			Market Value		Depreciation			Market Value		Depreciation
Fixed maturity securities
Due in one year or less	$	21,780	$	(1,577	)	$	12,212	$	(1,171	)	$	33,992	$	(2,748	)
Due in one year through five years		1,023,437		(23,255	)		347,203		(21,582	)		1,370,640		(44,837	)
Due in five years through ten years		394,978		(31,423	)		99,335		(10,131	)		494,313		(41,554	)
Due after ten years		35,708		(2,046	)		8,936		(970	)		44,644		(3,016	)
Asset-backed securities		102,506		(791	)		28,048		(272	)		130,554		(1,063	)
Mortgage-backed securities		346,768		(3,605	)		150,095		(3,509	)		496,863		(7,114	)
Total fixed maturity securities	$	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, 2015 were $2,571,006 thousand and $100,332 thousand, respectively. The market value of securities for the single issuer whose securities comprised the largest unrealized loss position at December 31, 2015, did not exceed 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 $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, $35,978 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, $6,090 thousand, as the U.S. dollar has strengthened against other currencies. The $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. The majority of these unrealized losses are attributable to unrealized foreign exchange losses, $14,807 thousand, 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, 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, as of ~~June~~September 30, 2016, and December 31, 2015, were comprised of preferred shares held in Everest Preferred International Holdings ("Preferred Holdings"), an affiliated company.

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

	Three Months Ended						Six Months Ended						Three Months Ended						Nine Months Ended
	June 30,						June 30,						September 30,						September 30,
(Dollars in thousands)	2016			2015			2016			2015			2016			2015			2016			2015
Fixed maturities	$	44,795		$	46,443		$	90,121		$	94,415		$	44,810		$	46,414		$	134,931		$	140,829
Equity securities		8,734			9,892			17,882			18,634			7,870			8,004			25,752			26,638
Short-term investments and cash		251			321			555			485			296			220			851			705
Other invested assets
Limited partnerships		14,192			7,276			11,678			14,655			6,020			3,021			17,698			17,676
Dividends from Parent's shares		-			9,234			-			18,468			-			9,234			-			27,702
Dividends from preferred shares of affiliate		7,758			-			15,516			-			7,758			-			23,274			-
Other		729			983			(183	)		1,608			522			(242	)		339			1,366
Gross investment income before adjustments		76,459			74,149			135,569			148,265			67,276			66,651			202,845			214,916
Funds held interest income (expense)		974			865			3,628			3,386			1,090			940			4,718			4,326
Interest income from Parent		1,075			1,075			2,150			2,150			1,075			1,075			3,225			3,225
Gross investment income		78,508			76,089			141,347			153,801			69,441			68,666			210,788			222,467
Investment expenses		(4,636	)		(5,164	)		(9,030	)		(10,295	)		(4,871	)		(5,303	)		(13,901	)		(15,598	)
Net investment income	$	73,872		$	70,925		$	132,317		$	143,506		$	64,570		$	63,363		$	196,887		$	206,869

(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 ~~$290,398~~$279,126 thousand in limited partnerships at ~~June~~September 30, 2016. These commitments will be funded when called in accordance with the partnership agreements, which have investment periods that expire, unless extended, through 2020.

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

	Three Months Ended						Six Months Ended						Three Months Ended						Nine Months Ended
	June 30,						June 30,						September 30,						September 30,
(Dollars in thousands)	2016			2015			2016			2015			2016			2015			2016			2015
Fixed maturity securities, market value:
Other-than-temporary impairments	$	(1,391	)	$	(8,810	)	$	(24,406	)	$	(32,931	)	$	(836	)	$	(10,502	)	$	(25,242	)	$	(43,433	)
Gains (losses) from sales		2,244			(12,208	)		(14,611	)		(23,726	)		4,338			(6,636	)		(10,273	)		(30,362	)
Fixed maturity securities, fair value:
Gain (losses) from sales		(1,854	)		14			(1,854	)		42
Gains (losses) from sales														(1	)		(17	)		(1,855	)		25
Gains (losses) from fair value adjustments		1,571			(6	)		1,339			56			42			-			1,381			56
Equity securities, market value:
Gains (losses) from sales		-			1			-			1			-			-			-			1
Equity securities, fair value:
Gains (losses) from sales		(7,636	)		(289	)		(15,586	)		(354	)		5,452			(13,656	)		(10,134	)		(14,010	)
Gains (losses) from fair value adjustments		36,987			(5,334	)		18,662			15,612			16,063			(101,322	)		34,725			(85,710	)
Other invested assets, fair value:
Gains (losses) from fair value adjustments		(756	)		77,857			(756	)		113,821			(47,090	)		(84,272	)		(47,846	)		29,549
Gain (loss) on sale of subsidiary														(28,032	)		94,704			(28,032	)		94,704
Short-term investment gains (losses)														1			6			1			6
Total net realized capital gains (losses)	$	29,165		$	51,225		$	(37,212	)	$	72,521		$	(50,063	)	$	(121,695	)	$	(87,275	)	$	(49,174	)

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

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

	Three Months Ended						Six Months Ended						Three Months Ended						Nine Months Ended
	June 30,						June 30,						September 30,						September 30,
(Dollars in thousands)	2016			2015			2016			2015			2016			2015			2016			2015
Proceeds from sales of fixed maturity securities	$	110,429		$	175,742		$	298,475		$	289,824		$	136,767		$	130,284		$	435,242		$	420,108
Gross gains from sales		6,154			5,096			7,618			7,638			6,257			1,401			13,875			9,039
Gross losses from sales		(5,764	)		(17,290	)		(24,083	)		(31,322	)		(1,920	)		(8,054	)		(26,003	)		(39,376	)

Proceeds from sales of equity securities	$	335,831		$	169,533		$	421,980		$	303,493		$	109,914		$	138,799		$	531,894		$	442,292
Gross gains from sales		4,853			7,272			6,635			12,414			6,874			5,241			13,509			17,655
Gross losses from sales		(12,489	)		(7,561	)		(22,221	)		(12,768	)		(1,422	)		(18,896	)		(23,643	)		(31,664	)

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 ~~fifteen~~twenty eight private placement securities, the Company valued the ~~fifteen~~twenty eight securities at ~~$34,431~~$59,289 thousand at ~~June~~September 30, 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, 2015.

The Company internally manages a small public equity portfolio which had a fair value at ~~June~~September 30, 2016 and December 31, 2015 of ~~$124,776~~$135,958 thousand and $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. In limited circumstances when broker prices are not available for private placements, the Company will value the 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, was categorized as Level 3 at ~~June~~September 30, 2016 and December 31, 2015, since it represented a privately placed convertible preferred stock issued by an affiliate. The stock was received in exchange for shares of the Company's parent, which were valued on a public securities exchange on December 21, 2015. The fair value of the preferred stock at ~~June~~September 30, 2016 was determined using a pricing model and at December 31, 2015 represented the original 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)	June 30, 2016		(Level 1)		(Level 2)		(Level 3)		September 30, 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	$	391,944	$	-	$	391,944	$	-	$	429,168	$	-	$	429,168	$	-
Obligations of U.S. States and political subdivisions		749,912		-		749,912		-		765,004		-		765,004		-
Corporate securities		2,066,163		-		2,033,753		32,410		2,238,637		-		2,182,342		56,295
Asset-backed securities		168,913		-		168,913		-		169,025		-		169,025		-
Mortgage-backed securities
Commercial		75,101		-		75,101		-		77,497		-		74,018		3,479
Agency residential		767,696		-		767,696		-		757,447		-		757,447		-
Non-agency residential		120		-		120		-		103		-		103		-
Foreign government securities		533,403		-		533,403		-		553,921		-		553,921		-
Foreign corporate securities		1,015,497		-		1,013,476		2,021		1,024,139		-		1,021,145		2,994
Total fixed maturities, market value		5,768,749		-		5,734,318		34,431		6,014,941		-		5,952,173		62,768

Fixed maturities, fair value										3,982		-		3,982		-
Equity securities, fair value		976,879		915,003		61,876		-		961,115		895,406		65,709		-
Other invested assets, fair value		1,772,458		-		-		1,772,458		1,725,367		-		-		1,725,367

There were no transfers between Level 1 and Level 2 for the ~~six~~nine months ended ~~June~~September 30, 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:
			Quoted Prices
			in Active		Significant
			Markets for		Other		Significant
			Identical		Observable		Unobservable
			Assets		Inputs		Inputs
(Dollars in thousands)	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	$	330,985	$	-	$	330,985	$	-
Obligations of U.S. States and political subdivisions		703,075		-		703,075		-
Corporate securities		1,968,558		-		1,964,625		3,933
Asset-backed securities		144,982		-		144,982		-
Mortgage-backed securities
Commercial		62,446		-		62,446		-
Agency residential		712,298		-		712,298		-
Non-agency residential		150		-		150		-
Foreign government securities		463,074		-		463,074		-
Foreign corporate securities		970,909		-		969,316		1,593
Total fixed maturities, market value		5,356,477		-		5,350,951		5,526

Fixed maturities, fair value		2,102		-		2,102		-
Equity securities, fair value		1,215,377		1,153,310		62,067		-
Other invested assets, fair value		1,773,214		-		-		1,773,214

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

	Three Months Ended June 30, 2016								Six Months Ended June 30, 2016									Three Months Ended September 30, 2016												Nine Months Ended September 30, 2016
	Corporate			Foreign					Corporate			Foreign						Corporate						Foreign						Corporate						Foreign
(Dollars in thousands)	Securities			Corporate		Total			Securities			Corporate			Total			Securities			CMBS			Corporate			Total			Securities			CMBS			Corporate			Total
Beginning balance	$	15,706		$	596	$	16,302		$	3,933		$	1,593		$	5,526		$	32,410		$	-		$	2,021		$	34,431		$	3,933		$	-		$	1,593		$	5,526
Total gains or (losses) (realized/unrealized)
Included in earnings		(18	)		-		(18	)		(10	)		(997	)		(1,007	)		(12	)		-			27			15			(22	)		-			(970	)		(992	)
Included in other comprehensive income (loss)		(27	)		1,425		1,398			(33	)		1,425			1,392			(48	)		(34	)		(1,285	)		(1,367	)		(81	)		(34	)		140			25
Purchases, issuances and settlements		16,749			-		16,749			28,520			-			28,520			25,877			(40	)		2,231			28,068			54,397			(40	)		2,231			56,588
Transfers in and/or (out) of Level 3		-			-		-			-			-			-			(1,932	)		3,553			-			1,621			(1,932	)		3,553			-			1,621
Ending balance	$	32,410		$	2,021	$	34,431		$	32,410		$	2,021		$	34,431		$	56,295		$	3,479		$	2,994		$	62,768		$	56,295		$	3,479		$	2,994		$	62,768

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

(Some amounts may not reconcile due to rounding.)

	Three Months Ended June 30, 2015								Six Months Ended June 30, 2015											Three Months Ended September 30, 2015									Nine Months Ended September 30, 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	$	2,653		$	6,125	$	8,778		$	-		$	8,597		$	7,166	$	15,763		$	1,958		$	7,837		$	9,795		$	-		$	8,597		$	7,166		$	15,763
Total gains or (losses) (realized/unrealized)
Included in earnings		2			58		60			4			-			115		119			(6	)		62			56			(2	)		-			177			175
Included in other comprehensive income (loss)		(3	)		1,169		1,166			(2	)		-			71		69			(93	)		(1,287	)		(1,380	)		(95	)		-			(1,216	)		(1,311	)
Purchases, issuances and settlements		(12	)		-		(12	)		1,928			-			-		1,928			1,723			-			1,723			3,651			-			-			3,651
Transfers in and/or (out) of Level 3		(682	)		485		(197	)		28			(8,597	)		485		(8,084	)		1,693			(487	)		1,206			1,721			(8,597	)		(2	)		(6,878	)
Ending balance	$	1,958		$	7,837	$	9,795		$	1,958		$	-		$	7,837	$	9,795		$	5,275		$	6,125		$	11,400		$	5,275		$	-		$	6,125		$	11,400

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~~to/(from) level 3, fair value measurements using significant unobservable inputs ~~of $0~~were $1,621 thousand and ~~$8,084~~($6,878) thousand of investments for the ~~six~~nine months ended ~~June~~September 30, 2016 and 2015, ~~respectively,~~respectively. The $1,621 thousand relates to the net impact of securities no longer priced by a recognized pricing service. The ($6,878) thousand primarily ~~relate~~related to securities that were priced using single non-binding broker quotes as of December 31, 2014. The securities were subsequently priced using a recognized pricing service as of ~~June~~September 30, 2015, and were classified as level 2 as of that date.

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

	Three months ended					Six months ended					Three months ended					Nine months ended
	June 30,					June 30,					September 30,					September 30,
(Dollars in thousands)	2016			2015		2016			2015		2016			2015		2016			2015
Other invested assets, fair value:
Beginning balance	$	1,773,214		$	-	$	1,773,214		$	-	$	1,772,458		$	-	$	1,773,214		$	-
Total gains or (losses) (realized/unrealized)
Included in earnings		(756	)		-		(756	)		-		(47,090	)		-		(47,846	)		-
Included in other comprehensive income (loss)		-			-		-			-		-			-		-			-
Purchases, issuances and settlements		-			-		-			-		-			-		-			-
Transfers in and/or (out) of Level 3		-			-		-			-		-			-		-			-
Ending balance	$	1,772,458		$	-	$	1,772,458		$	-	$	1,725,367		$	-	$	1,725,367		$	-

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

(Some amounts may not reconcile due to rounding.)

5. 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 June 30,		At December 31,		At September 30,		At December 31,
(Dollars in thousands)	2016		2015		2016		2015
The Prudential	$	141,562	$	142,427	$	140,826	$	142,427
Unaffiliated life insurance company		32,545		33,062		33,195		33,062

6. OTHER COMPREHENSIVE INCOME (LOSS)

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

	Three Months Ended June 30, 2016									Six Months Ended June 30, 2016							Three Months Ended September 30, 2016									Nine Months Ended September 30, 2016
(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	$	53,960		$	(18,886	)	$	35,074		$	83,916	$	(29,370	)	$	54,546	$	8,305		$	(2,909	)	$	5,396		$	92,221	$	(32,279	)	$	59,942
URA(D) on securities - OTTI		6,446			(2,256	)		4,190			6,643		(2,325	)		4,318		(2,444	)		856			(1,588	)		4,199		(1,469	)		2,730
Reclassification of net realized losses (gains) included in net income (loss)		(97	)		34			(63	)		39,773		(13,921	)		25,852		(4,258	)		1,491			(2,767	)		35,515		(12,430	)		23,085
Foreign currency translation adjustments		23,830			(8,341	)		15,489			46,807		(16,386	)		30,421		(4,066	)		1,424			(2,642	)		42,741		(14,962	)		27,779
Benefit plan actuarial net gain (loss)		-			-			-			-		-			-		-			-			-			-		-			-
Reclassification of amortization of net gain (loss) included in net income (loss)		2,063			(722	)		1,341			4,125		(1,444	)		2,681		1,951			(683	)		1,268			6,076		(2,127	)		3,949
Total other comprehensive income (loss)	$	86,202		$	(30,171	)	$	56,031		$	181,264	$	(63,446	)	$	117,818	$	(512	)	$	179		$	(333	)	$	180,752	$	(63,267	)	$	117,485

(Some amounts may not reconcile due to rounding)

	Three Months Ended June 30, 2015									Six Months Ended June 30, 2015									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			Before Tax			Tax Effect			Net of Tax			Before Tax			Tax Effect			Net of Tax
Unrealized appreciation (depreciation) ("URA(D)") on securities - temporary	$	(55,290	)	$	19,352		$	(35,938	)	$	(39,718	)	$	13,402		$	(26,316	)	$	(45,240	)	$	15,347		$	(29,893	)	$	(84,958	)	$	28,749		$	(56,209	)
URA(D) on securities - OTTI		-			-			-			9,735			(3,407	)		6,328			22			(7	)		15		��	9,757			(3,414	)		6,343
Reclassification of net realized losses (gains) included in net income (loss)		21,017			(7,356	)		13,661			56,656			(19,330	)		37,326			17,137			(5,512	)		11,625			73,793			(24,842	)		48,951
Foreign currency translation adjustments		24,839			(8,694	)		16,145			(26,404	)		9,241			(17,163	)		(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)		2,476			(867	)		1,609			4,943			(1,730	)		3,213			2,393			(837	)		1,556			7,336			(2,567	)		4,769
Total other comprehensive income (loss)	$	(6,958	)	$	2,435		$	(4,523	)	$	5,212		$	(1,824	)	$	3,388		$	(67,954	)	$	23,784		$	(44,170	)	$	(62,742	)	$	21,960		$	(40,782	)

(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						Six Months Ended							Three Months Ended						Nine Months Ended
	June 30,						June 30,						Affected line item within the statements of	September 30,						September 30,						Affected line item within the statements of
AOCI component	2016			2015			2016			2015			operations and comprehensive income (loss)	2016			2015			2016			2015			operations and comprehensive income (loss)
(Dollars in thousands)
URA(D) on securities	$	(97	)	$	21,017		$	39,773		$	56,656		Other net realized capital gains (losses)	$	(4,258	)	$	17,137		$	35,515		$	73,793		Other net realized capital gains (losses)
		34			(7,356	)		(13,921	)		(19,330	)	Income tax expense (benefit)		1,491			(5,512	)		(12,430	)		(24,842	)	Income tax expense (benefit)
	$	(63	)	$	13,661		$	25,852		$	37,326		Net income (loss)	$	(2,767	)	$	11,625		$	23,085		$	48,951		Net income (loss)

Benefit plan net gain (loss)	$	2,063		$	2,476		$	4,125		$	4,943		Other underwriting expenses	$	1,951		$	2,393		$	6,076		$	7,336		Other underwriting expenses
		(722	)		(867	)		(1,444	)		(1,730	)	Income tax expense (benefit)		(683	)		(837	)		(2,127	)		(2,567	)	Income tax expense (benefit)
	$	1,341		$	1,609		$	2,681		$	3,213		Net income (loss)	$	1,268		$	1,556		$	3,949		$	4,769		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:

	Six Months Ended			Twelve Months Ended			Nine Months Ended			Twelve Months Ended
	June 30,			December 31,			September 30,			December 31,
(Dollars in thousands)	2016			2015			2016			2015

Beginning balance of URA (D) on securities	$	13,654		$	37,628		$	13,654		$	37,628
Current period change in URA (D) of investments - temporary		80,398			(30,257	)		83,027			(30,257	)
Current period change in URA (D) of investments - non-credit OTTI		4,318			6,283			2,730			6,283
Ending balance of URA (D) on securities		98,370			13,654			99,411			13,654

Beginning balance of foreign currency translation adjustments		(12,701	)		41,877			(12,701	)		41,877
Current period change in foreign currency translation adjustments		30,421			(54,578	)		27,779			(54,578	)
Ending balance of foreign currency translation adjustments		17,720			(12,701	)		15,078			(12,701	)

Beginning balance of benefit plan net gain (loss)		(63,089	)		(74,986	)		(63,089	)		(74,986	)
Current period change in benefit plan net gain (loss)		2,681			11,897			3,949			11,897
Ending balance of benefit plan net gain (loss)		(60,408	)		(63,089	)		(59,140	)		(63,089	)

Ending balance of accumulated other comprehensive income (loss)	$	55,682		$	(62,136	)	$	55,349		$	(62,136	)

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 ~~June~~September 30, 2016, the total amount on deposit in the trust account was ~~$297,465~~$349,867 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 notes ("Series 2014-1 Notes"). On November 18, 2014, Kilimanjaro issued $500,000 thousand of notes ("Series 2014-2 Notes"). On December 1, 2015, Kilimanjaro issued $625,000 thousand of notes ("Series 2015-1 Notes). The proceeds from the issuance of the Series 2014-1 Notes, the Series 2014-2 Notes and the Series 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.

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.

June 30, 2016

December 31, 2015

September 30, 2016

December 31, 2015

Consolidated Balance

(Dollars in thousands)

Date Issued

Date Due

Principal Amounts

Sheet Amount

Market Value

Sheet Amount

Market Value

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

396,654

404,096

396,594

381,204

06/05/2014

06/01/2044

400,000

396,684

423,660

396,594

381,204

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.

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

	Three Months Ended				Six Months Ended				Three Months Ended				Nine Months Ended
	June 30,				June 30,				September 30,				September 30,
(Dollars in thousands)	2016		2015		2016		2015		2016		2015		2016		2015
Interest expense incurred	$	4,868	$	4,868	$	9,736	$	9,736	$	4,868	$	4,868	$	14,604	$	14,604

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, 2016

December 31, 2015

Original

Consolidated Balance

(Dollars in thousands)

Date Issued

Principal Amount

Scheduled

Final

Sheet Amount

Market Value

Sheet Amount

Market Value

6.6% Long term subordinated notes

04/26/2007

400,000

05/15/2037

05/01/2067

236,438

197,706

236,364

208,978

Maturity Date June 30, 2016 December 31, 2015
Original Consolidated Balance Consolidated Balance
(Dollars in thousands) Date Issued Principal Amount Scheduled Final Sheet Amount Market Value Sheet Amount Market Value
6.6% Long term subordinated notes 04/26/2007 $ 400,000 05/15/2037 05/01/2067 $ 236,413 $ 189,893 $ 236,364 $ 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				Six Months Ended				Three Months Ended				Nine Months Ended
	June 30,				June 30,				September 30,				September 30,
(Dollars in thousands)	2016		2015		2016		2015		2016		2015		2016		2015
Interest expense incurred	$	3,937	$	3,937	$	7,874	$	7,874	$	3,937	$	3,937	$	11,811	$	11,811

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 periods indicated:

	Three Months Ended				Six Months Ended				Three Months Ended				Nine Months Ended
U.S. Reinsurance	June 30,				June 30,				September 30,				September 30,
(Dollars in thousands)	2016		2015		2016		2015		2016		2015		2016		2015
Gross written premiums	$	405,530	$	451,059	$	942,236	$	1,013,706	$	654,770	$	601,570	$	1,597,006	$	1,615,276
Net written premiums		161,031		184,707		384,458		425,401		327,242		247,352		711,700		672,753

Premiums earned	$	224,618	$	235,426	$	459,861	$	490,838	$	249,203	$	235,275	$	709,064	$	726,113
Incurred losses and LAE		110,152		116,473		226,322		227,928		137,245		109,137		363,567		337,065
Commission and brokerage		50,130		34,703		99,861		93,067		48,107		48,881		147,968		141,948
Other underwriting expenses		12,133		11,807		25,591		23,336		14,265		13,718		39,856		37,054
Underwriting gain (loss)	$	52,203	$	72,443	$	108,087	$	146,507	$	49,586	$	63,539	$	157,673	$	210,046

	Three Months Ended				Six Months Ended				Three Months Ended					Nine Months Ended
International	June 30,				June 30,				September 30,					September 30,
(Dollars in thousands)	2016		2015		2016		2015		2016		2015			2016		2015
Gross written premiums	$	348,178	$	311,653	$	586,656	$	645,268	$	353,195	$	374,138		$	939,851	$	1,019,406
Net written premiums		124,438		147,399		212,154		269,080		141,295		147,991			353,449		417,071

Premiums earned	$	131,285	$	157,922	$	244,458	$	298,621	$	128,358	$	135,130		$	372,816	$	433,751
Incurred losses and LAE		91,427		110,027		164,842		211,472		41,830		128,454			206,672		339,926
Commission and brokerage		26,140		31,243		52,250		65,242		30,193		27,936			82,443		93,178
Other underwriting expenses		7,969		8,049		15,792		16,164		9,219		9,128			25,011		25,292
Underwriting gain (loss)	$	5,749	$	8,603	$	11,574	$	5,743	$	47,116	$	(30,388	)	$	58,690	$	(24,645	)

	Three Months Ended					Nine Months Ended
Insurance	September 30,					September 30,
(Dollars in thousands)	2016		2015			2016			2015
Gross written premiums	$	497,958	$	473,003		$	1,276,761		$	1,130,233
Net written premiums		154,079		203,730			462,791			490,140

Premiums earned	$	179,092	$	175,645		$	445,553		$	428,672
Incurred losses and LAE		122,528		133,163			365,962			325,522
Commission and brokerage		7,263		(4,666	)		(3,900	)		6,509
Other underwriting expenses		40,665		34,107			116,839			94,723
Underwriting gain (loss)	$	8,636	$	13,041		$	(33,348	)	$	1,918

Three Months Ended Six Months Ended
Insurance
June 30, June 30,
(Dollars in thousands) 2016 2015 2016 2015
Gross written premiums $ 424,083 $ 326,729 $ 778,803 $ 657,230
Net written premiums 155,786 140,358 308,712 286,410

Premiums earned $ 132,952 $ 128,076 $ 266,461 $ 253,027
Incurred losses and LAE 136,957 96,379 243,434 192,359
Commission and brokerage (4,144 ) 7,007 (11,163 ) 11,175
Other underwriting expenses 38,228 31,717 76,174 60,616
Underwriting gain (loss) $ (38,089 ) $ (7,027 ) $ (41,984 ) $ (11,123 )

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						Six Months Ended						Three Months Ended						Nine Months Ended
	June 30,						June 30,						September 30,						September 30,
(Dollars in thousands)	2016			2015			2016			2015			2016			2015			2016			2015
Underwriting gain (loss)	$	19,863		$	74,019		$	77,677		$	141,127		$	105,338		$	46,192		$	183,015		$	187,319
Net investment income		73,872			70,925			132,317			143,506			64,570			63,363			196,887			206,869
Net realized capital gains (losses)		29,165			51,225			(37,212	)		72,521			(50,063	)		(121,695	)		(87,275	)		(49,174	)
Corporate expense		(2,010	)		(1,785	)		(4,346	)		(3,394	)		(1,835	)		(1,637	)		(6,181	)		(5,031	)
Interest, fee and bond issue cost amortization expense		(8,858	)		(8,858	)		(17,717	)		(17,717	)		(8,859	)		(8,859	)		(26,576	)		(26,576	)
Other income (expense)		(10,700	)		12,289			2,402			28,122			(13,208	)		10,828			(10,806	)		38,950
Income (loss) before taxes	$	101,332		$	197,815		$	153,121		$	364,165		$	95,943		$	(11,808	)	$	249,064		$	352,357

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				Six Months Ended				Three Months Ended				Nine Months Ended
	June 30,				June 30,				September 30,				September 30,
(Dollars in thousands)	2016		2015		2016		2015		2016		2015		2016		2015
Canada gross written premiums	$	34,630	$	30,160	$	58,216	$	53,672	$	35,856	$	31,903	$	94,072	$	85,575

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

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 ~~$2,150~~$3,225 thousand and $3,225 thousand was recorded by Holdings for the ~~six~~nine months ended ~~June~~September 30, 2016, and ~~June~~September 30, 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

Through December, 2015, Holdings had purchased and held 9,719,971 Common Shares of Group, which were purchased in the open market between February 2007 and March 2011.

In December, 2015, Holdings transferred the 9,719,971 Common Shares of Group, which it held as other invested assets, at fair value, valued at $1,773,214 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 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 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				Six Months Ended				Three Months Ended				Nine Months Ended
	June 30,				June 30,				September 30,				September 30,
(Dollars in thousands)	2016		2015		2016		2015		2016		2015		2016		2015
Dividends received on Parent shares	$	-	$	9,234	$	-	$	18,468	$	-	$	9,234	$	-	$	27,702
Dividends received on preferred stock of affiliate		7,758		-		15,516		-		7,758		-		23,274		-

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
	September 30,				September 30,
(Dollars in thousands)	2016		2015		2016		2015
Expenses incurred	$	21,242	$	20,359	$	62,701	$	58,555

Three Months Ended Six Months Ended
June 30, June 30,
(Dollars in thousands) 2016 2015 2016 2015
Expenses incurred $ 20,289 $ 19,833 $ 41,459 $ 38,196

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.

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

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

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

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				Six Months Ended				Three Months Ended				Nine Months Ended
Bermuda Re	June 30,				June 30,				September 30,				September 30,
(Dollars in thousands)	2016		2015		2016		2015		2016		2015		2016		2015
Ceded written premiums	$	544,495	$	528,468	$	1,061,178	$	1,067,501	$	685,798	$	646,001	$	1,746,976	$	1,713,502
Ceded earned premiums		593,349		563,100		1,132,302		1,117,151		585,993		591,656		1,718,295		1,708,807
Ceded losses and LAE (a)		404,667		345,580		695,143		640,711		344,789		343,660		1,039,932		984,371

	Three Months Ended				Six Months Ended				Three Months Ended						Nine Months Ended
Everest International	June 30,				June 30,				September 30,						September 30,
(Dollars in thousands)	2016		2015		2016		2015		2016			2015			2016		2015
Ceded written premiums	$	62	$	147	$	31	$	145	$	(5	)	$	168		$	26	$	313
Ceded earned premiums		63		192		39		233		(3	)		208			36		441
Ceded losses and LAE		756		1,702		898		880		479			(724	)		1,377		156

	Three Months Ended				Six Months Ended				Three Months Ended				Nine Months Ended
Everest Canada	June 30,				June 30,				September 30,				September 30,
(Dollars in thousands)	2016		2015		2016		2015		2016		2015		2016		2015
Assumed written premiums	$	16,228	$	11,823	$	26,427	$	18,487	$	12,667	$	11,046	$	39,094	$	29,533
Assumed earned premiums		12,675		8,625		23,129		17,324		11,611		9,174		34,740		26,498
Assumed losses and LAE		14,440		6,292		21,427		11,021		13,287		4,041		34,714		15,062

	Three Months Ended				Nine Months Ended
Lloyd's Syndicate 2786	September 30,				September 30,
(Dollars in thousands)	2016		2015		2016		2015
Assumed written premiums	$	351	$	-	$	890	$	-
Assumed earned premiums		173		-		289		-
Assumed losses and LAE		-		-		-		-

Three Months Ended Six Months Ended
Lloyd's Syndicate 2786
June 30, June 30,
(Dollars in thousands) 2016 2015 2016 2015
Assumed written premiums $ (157 ) $ - $ 539 $ -
Assumed earned premiums 28 - 116 -
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 segregated accounts.

	Three Months Ended				Nine Months Ended
Mt. Logan Re Segregated Accounts	September 30,				September 30,
(Dollars in thousands)	2016		2015		2016		2015
Ceded written premiums	$	57,911	$	68,078	$	128,292	$	162,640
Ceded earned premiums		44,548		55,234		118,776		141,668
Ceded losses and LAE		7,420		17,071		32,750		38,542

Assumed written premiums		5,032		4,230		11,666		11,626
Assumed earned premiums		5,032		4,230		11,666		11,626
Assumed losses and LAE		-		-		-		-

Three Months Ended Six Months Ended
Mt. Logan Re Segregated Accounts
June 30, June 30,
(Dollars in thousands) 2016 2015 2016 2015
Ceded written premiums $ 29,450 $ 32,892 $ 70,381 $ 94,562
Ceded earned premiums 39,356 47,751 74,228 86,434
Ceded losses and LAE 16,232 13,157 25,330 21,471

Assumed written premiums 3,074 3,412 6,634 7,396
Assumed earned premiums 3,074 3,412 6,634 7,396
Assumed losses and LAE - - - -

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
	September 30,						September 30,
(Dollars in thousands)	2016			2015			2016			2015
Service cost	$	2,731		$	3,203		$	8,524		$	9,398
Interest cost		2,371			2,758			7,093			7,926
Expected return on plan assets		(2,789	)		(2,904	)		(7,757	)		(8,710	)
Amortization of prior service cost		-			4			-			15
Amortization of net (income) loss		1,984			2,312			6,012			6,824
Net periodic benefit cost	$	4,297		$	5,373		$	13,872		$	15,453

Pension Benefits	Three Months Ended						Six Months Ended
Other Benefits													Three Months Ended					Nine Months Ended
	June 30,						June 30,						September 30,					September 30,
(Dollars in thousands)	2016			2015			2016			2015			2016			2015		2016			2015
Service cost	$	2,896		$	3,255		$	5,793		$	6,195		$	354		$	498	$	1,230		$	1,498
Interest cost		2,361			2,711			4,722			5,168			252			329		844			987
Expected return on plan assets		(2,484	)		(2,903	)		(4,968	)		(5,806	)
Amortization of prior service cost		-			6			-			11
Amortization of prior service costs														(33	)		-		(33	)		-
Amortization of net (income) loss		2,014			2,261			4,028			4,512			-			76		96			497
Net periodic benefit cost	$	4,787		$	5,330		$	9,575		$	10,080		$	573		$	903	$	2,137		$	2,982

Other Benefits
Three Months Ended Six Months Ended
June 30, June 30,
(Dollars in thousands) 2016 2015 2016 2015
Service cost $ 438 $ 599 $ 876 $ 1,000
Interest cost 296 395 592 658
Amortization of net (income) loss 48 210 96 421
Net periodic benefit cost $ 782 $ 1,204 $ 1,564 $ 2,079

The Company contributed $30,000 thousand to the qualified pension benefit plan for the three and nine months ended September 30, 2016. The Company did not make any contributions to the qualified pension benefit plan for the three and ~~six~~nine months ended ~~June~~September 30, ~~2016 and~~ 2015.

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.

14. ~~PENDING~~ DISPOSITION

The Company ~~has signed a letter of intent to sell~~sold Heartland, ~~Crop Insurance, Inc.,~~ its crop Managing General Agent to CGB ~~Diversified Services, Inc.~~for $49,000 thousand. The ~~pending~~sale agreement includes a provision for a long term strategic reinsurance relationship with ~~CGB Diversified Services, Inc.~~CGB. The Company has recognized an after-tax loss on the sale of Heartland of $12,942 thousand. Under the terms of the ~~letter of intent, there will not be a material gain or loss on the sale and with the proposed~~ reinsurance arrangement, there will not be a material fluctuation in the level of crop business, although it will be reflected as reinsurance rather than insurance.

15. SUBSEQUENT EVENTS

The Company has evaluated known recognized and non-recognized subsequent events. During the early part of October, Hurricane Matthew impacted the Caribbean and the southeastern United States. Based upon current early overall industry loss projections of $3 billion to $9 billion and applying the Company's estimated market share, the Company's best estimated range of loss from this event is $25,000 thousand to $75,000 thousand. The Company does not have any other subsequent events to 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~~higher rates and ~~strong~~stronger profits followed by periods of abundant capacity, ~~low~~lower rates and constrained profitability. Competition in the types of reinsurance and insurance business that we underwrite is based on many factors, including the perceived overall financial strength of the reinsurer or insurer, ratings of the reinsurer or insurer by A.M. Best and/or Standard & Poor's, underwriting expertise, the jurisdictions where the reinsurer or insurer is licensed or otherwise authorized, capacity and coverages offered, premiums charged, other terms and conditions of the reinsurance and insurance business offered, services offered, speed of claims payment and reputation and experience in lines written. Furthermore, the market impact from these competitive factors related to reinsurance and insurance is generally not consistent across lines of business, domestic and international geographical areas and distribution channels.

We compete in the U.S. and international reinsurance and insurance markets with numerous global competitors. Our competitors include independent reinsurance and insurance companies, subsidiaries or affiliates of established worldwide insurance companies, reinsurance departments of certain insurance companies, domestic and international underwriting operations, 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. Although there have been flooding and wind storm events and earthquakes in parts of the world, the overall 2013, 2014 and 2015 catastrophe losses for the industry were considerably lower than average. During the first half of 2016, there has been an increase in catastrophes, such as the Fort McMurray Canadian wildfire, storms and an earthquake in Ecuador; however, the aggregate of these losses are below historical levels of catastrophe losses. This lower level of losses, combined with increased competition has resulted in downward pressure on insurance and reinsurance rates in certain geographical areas. During the first part of October, Hurricane Matthew affected a large area of the Caribbean and southeastern United States. While the future impact on market conditions from this storm cannot be determined at this time, it is unlikely to have a significant impact on the overall markets, but may impact affected areas.

During 2015, we initiated a strategic build out of our insurance platform through the investment in key leadership hires which in turn has brought significant underwriting talent and stronger direction in achieving our insurance program strategic goals of 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 world-class insurance platform capable of 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.

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			Six Months Ended						Percentage			Three Months Ended						Percentage			Nine Months Ended						Percentage
	June 30,						Increase/			June 30,						Increase/			September 30,						Increase/			September 30,						Increase/
(Dollars in millions)	2016			2015			(Decrease)			2016			2015			(Decrease)			2016			2015			(Decrease)			2016			2015			(Decrease)
Gross written premiums	$	1,177.8		$	1,089.4			8.1	%	$	2,307.7		$	2,316.2			-0.4	%	$	1,505.9		$	1,448.7			3.9	%	$	3,813.6		$	3,764.9			1.3	%
Net written premiums		441.3			472.5			-6.6	%		905.3			980.9			-7.7	%		622.6			599.1			3.9	%		1,527.9			1,580.0			-3.3	%

REVENUES:
Premiums earned	$	488.9		$	521.4			-6.2	%	$	970.8		$	1,042.5			-6.9	%	$	556.7		$	546.1			1.9	%	$	1,527.4		$	1,588.5			-3.8	%
Net investment income		73.9			70.9			4.2	%		132.3			143.5			-7.8	%		64.6			63.4			1.9	%		196.9			206.9			-4.8	%
Net realized capital gains (losses)		29.2			51.2			-43.1	%		(37.2	)		72.5			-151.3	%		(50.1	)		(121.7	)		-58.9	%		(87.3	)		(49.2	)		77.5	%
Other income (expense)		(10.7	)		12.3			-187.1	%		2.4			28.1			-91.5	%		(13.2	)		10.8			-222.0	%		(10.8	)		39.0			-127.7	%
Total revenues		581.2			655.9			-11.4	%		1,068.3			1,286.6			-17.0	%		558.0			498.5			11.9	%		1,626.2			1,785.2			-8.9	%

CLAIMS AND EXPENSES:
Incurred losses and loss adjustment expenses		338.5			322.9			4.8	%		634.6			631.8			0.4	%		301.6			370.8			-18.7	%		936.2			1,002.5			-6.6	%
Commission, brokerage, taxes and fees		72.1			73.0			-1.1	%		140.9			169.5			-16.8	%		85.6			72.2			18.6	%		226.5			241.6			-6.3	%
Other underwriting expenses		58.3			51.6			13.1	%		117.6			100.1			17.4	%		64.1			57.0			12.6	%		181.7			157.1			15.7	%
Corporate expense		2.0			1.8			12.6	%		4.3			3.4			28.0	%		1.8			1.6			12.1	%		6.2			5.0			22.9	%
Interest, fee and bond issue cost amortization expense		8.9			8.9			0.0	%		17.7			17.7			0.0	%		8.9			8.9			0.0	%		26.6			26.6			0.0	%
Total claims and expenses		479.9			458.0			4.8	%		915.2			922.5			-0.8	%		462.0			510.4			-9.5	%		1,377.2			1,432.8			-3.9	%

INCOME (LOSS) BEFORE TAXES		101.3			197.8			-48.8	%		153.1			364.2			-58.0	%		96.0			(11.8	)	NM				249.1			352.4			-29.3	%
Income tax expense (benefit)		33.0			64.0			-48.5	%		45.8			114.5			-59.9	%		21.1			(7.1	)	NM				67.0			107.3			-37.6	%
NET INCOME (LOSS)	$	68.4		$	133.8			-48.9	%	$	107.3		$	249.7			-57.0	%	$	74.8		$	(4.7	)	NM			$	182.1		$	245.1			-25.7	%

RATIOS:							Point Change									Point Change									Point Change									Point Change
Loss ratio		69.3	%		61.9	%		7.4			65.4	%		60.6	%		4.8			54.2	%		67.9	%		(13.7	)		61.3	%		63.1	%		(1.8	)
Commission and brokerage ratio		14.8	%		14.0	%		0.8			14.5	%		16.3	%		(1.8	)		15.4	%		13.2	%		2.2			14.8	%		15.2	%		(0.4	)
Other underwriting expense ratio		11.8	%		9.9	%		1.9			12.1	%		9.6	%		2.5			11.5	%		10.4	%		1.1			11.9	%		9.9	%		2.0
Combined ratio		95.9	%		85.8	%		10.1			92.0	%		86.5	%		5.5			81.1	%		91.5	%		(10.4	)		88.0	%		88.2	%		(0.2	)

										At			At			Percentage												At			At			Percentage
										June 30,			December 31,			Increase/												September 30,			December 31,			Increase/
(Dollars in millions)											2016			2015		(Decrease)													2016			2015		(Decrease)
Balance sheet data:
Total investments and cash										$	9,740.2		$	9,516.3			2.4	%										$	9,794.7		$	9,516.3			2.9	%
Total assets											16,924.7			16,695.2			1.4	%											17,434.7			16,695.2			4.4	%
Loss and loss adjustment expense reserves											8,247.8			7,940.7			3.9	%											8,306.4			7,940.7			4.6	%
Total debt											633.1			633.0			0.0	%											633.1			633.0			0.0	%
Total liabilities											11,760.6			11,764.0			0.0	%											12,193.8			11,764.0			3.7	%
Stockholder's equity											5,164.1			4,931.2			4.7	%											5,241.0			4,931.2			6.3	%

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

Revenues.

Premiums. Gross written premiums increased by ~~8.1%~~3.9% to ~~$1,177.8~~$1,505.9 million for the three months ended ~~June~~September 30, 2016, compared to ~~$1,089.4~~$1,448.7 million for the three months ended ~~June~~September 30, 2015, reflecting, a ~~$97.4~~$25.0 million, or ~~29.8%~~5.3%, increase in our insurance business, and a $32.3 million, or 3.3%, increase in our reinsurance business. The rise in insurance premiums was primarily due to increases in most lines of business, as we have focused on expanding the insurance operations. The increase in reinsurance premiums was mainly due to increases in treaty and facultative casualty business. These increases were partially offset by lower premiums in treaty property business and a higher negative impact of $6.7 million from the year over year movement in foreign exchange rates. Gross written premiums

increased to $3,813.6 million for the nine months ended September 30, 2016, compared to $3,764.9 million for the nine months ended September 30, 2015, reflecting a $146.5 million, or 13.0%, increase in our insurance business, partially offset by a ~~$9.0~~$97.8 million, or ~~1.2%~~3.7%, decrease in our reinsurance business. The rise in insurance premiums was primarily due to increases in most lines of business, as we have focused on expanding the insurance operations. The decline in reinsurance premiums was ~~due~~ mainly ~~to a negative impact of approximately $17.2 million from the year over year movement in foreign exchange rates. Gross written premiums decreased slightly to $2,307.7 million for the six months~~

ended June 30, 2016, compared to $2,316.2 million for the six months ended June 30, 2015, reflecting a $130.1 million, or 7.8%, decrease in our reinsurance business, partially offset by a $121.6 million, or 18.5%, increase in our insurance business. The decline in reinsurance premiums were due ~~mainly~~ to a decrease in treaty property business, a ~~decrease~~decline in international premiums related to quota share agreements and a negative impact of ~~approximately $32.4~~$39.1 million from the year over year movement in foreign exchange rates. ~~The rise in insurance premiums was primarily due to increases in most lines of business, as we have focused on expanding the insurance operations.~~

Net written premiums ~~decreased~~increased by ~~6.6%~~3.9% to ~~$441.3~~$622.6 million for the three months ended ~~June~~September 30, 2016, compared to ~~$472.5~~$599.1 million for the three months ended ~~June~~September 30, 2015, and decreased by ~~7.7%~~3.3% to ~~$905.3~~$1,527.9 million for the ~~six~~nine months ended ~~June~~September 30, 2016 compared to ~~$980.9~~$1,580.0 million for the ~~six~~nine months ended ~~June~~September 30, 2015. The ~~difference between~~quarter over quarter change is consistent with the change in gross written premiums, ~~compared to~~with some fluctuation for the ~~change in net written premiums is~~nine months ended September 30, 2016, primarily due to higher utilization of reinsurance ~~mainly related to~~for new insurance business and to quota share agreements. Premiums earned ~~decreased~~increased by ~~6.2%~~1.9% to ~~$488.9~~$556.7 million for the three months ended ~~June~~September 30, 2016, compared to ~~$521.4~~$546.1 million for the three months ended ~~June~~September 30, 2015, and decreased by ~~6.9%~~3.8% to ~~$970.8~~$1,527.4 million for the ~~six~~nine months ended ~~June~~September 30, 2016, compared to ~~$1,042.5~~$1,588.5 million for the ~~six~~nine months ended ~~June~~September 30, 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 increased by ~~4.2%~~1.9% to ~~$73.9~~$64.6 million for the three months ended ~~June~~September 30, 2016, compared with net investment income of ~~$70.9~~$63.4 million for the three months ended ~~June~~September 30, 2015, and decreased by ~~7.8%~~4.8% to ~~$132.3~~$196.9 million for ~~six~~nine months ended ~~June~~September 30, 2016, compared with net investment income of ~~$143.5~~$206.9 million for the ~~six~~nine months ended ~~June 30, 2015. Net pre-tax investment income, as a percentage of average invested assets, was 3.2% for the three months ended June 30, 2016, compared to~~ ~~3.4% for the three months ended June 30, 2015 and was 2.8% for the six months ended June 30, 2016 compared to 3.5% for the six months ended June~~September 30, 2015. The increase in income for the three months ended ~~June~~September 30, 2016 compared to the prior period was primarily due to higher income from our limited partnerships, partially offset by lower reinvestment rates for the fixed income portfolios. The decline in income and yield for the ~~six~~nine months ended ~~June~~September 30, 2016 compared to the prior period was primarily the result of lower reinvestment rates for the fixed income ~~portfolios and lower income from our limited partnerships.~~portfolios.

Net Realized Capital Gains (Losses). Net realized capital ~~gains~~losses were $~~29.2~~50.1 million and ~~$51.2~~$121.7 million for the three months ended ~~June~~September 30, 2016 and 2015, respectively. The net realized capital ~~gains~~losses of ~~$29.2~~$50.1 million were comprised of $~~37.7~~30.9 million of ~~gains~~losses from fair value re-measurements on fixed maturity securities, equity securities and other invested assets, net realized capital losses of $28.0 million from the sale of our Heartland subsidiary and $0.8 million of other-than-temporary impairments, partially offset by $~~7.3~~9.6 million of ~~losses~~gains from sales on our fixed maturity and equity ~~securities and $1.4~~securities. The $121.7 million was comprised of ~~other-than-temporary impairments. The net realized capital gains of $51.2 million~~ ~~for the three months ended June 30, 2015~~ ~~were the result of~~ $~~72.5~~185.6 million of ~~gains~~losses from fair value re-measurements on equity securities and other invested assets, ~~partially offset by~~ $~~12.4~~20.3 million of losses from sales on our fixed maturity and equity securities and ~~$8.8~~$10.5 million of other-than-temporary ~~impairments.~~impairments, partially offset by a $94.7 million gain on the sale of a subsidiary.

Net realized capital losses were $~~37.2~~87.3 million and ~~net realized capital gains were $72.5~~$49.2 million for the ~~six~~nine months ended ~~June~~September 30, 2016 and 2015, respectively. The net realized capital losses of ~~$37.2~~$87.3 million were comprised of net realized capital losses of $28.0 million from the sale of our Heartland subsidiary, $25.2 million of other-than-temporary impairment, $~~32.1~~22.4 million of losses from sales on our fixed maturity and equity securities and ~~$24.4~~$11.7 million of ~~other-than-temporary impairments, partially offset by $19.2 million of gains~~losses from fair value re-measurements on fixed maturity securities, equity securities and other invested assets. The ~~net realized capital gains~~$49.2 million was comprised of ~~$72.5 million~~ ~~for the six months ended June 30, 2015~~ ~~were the result of $129.5~~$56.1 million of ~~gains~~losses from fair value re-measurements on fixed maturity securities, equity securities and other invested assets, ~~partially offset by $32.9 million of other-than-temporary impairments and~~ $~~24.0~~44.3 million of losses from sales on our fixed maturity and equity ~~securities.~~securities and $43.4 million of other-than-temporary impairments, partially offset by a $94.7 million gain on the sale of a subsidiary.

Other Income (Expense). We recorded other expense of $~~10.7~~13.2 million and ~~other income of~~ $~~2.4~~10.8 million for the three and ~~six~~nine months ended ~~June~~September 30, 2016, respectively. We recorded other income of $~~12.3~~10.8 million and $~~28.1~~39.0 million for the three and ~~six~~nine months ended ~~June~~September 30, 2015, 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 our incurred losses and loss adjustment expenses ("LAE") for the periods indicated.

	Three Months Ended June 30,																					Three Months Ended September 30,
	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	$	300.9			61.6	%		$	2.8			0.6	%		$	303.7			62.2	%		$	300.4			54.0	%		$	0.1			0.0	%		$	300.6			54.0	%
Catastrophes		51.5			10.5	%			(16.7	)		-3.4	%			34.8			7.1	%			20.9			3.8	%			(19.8	)		-3.6	%			1.0			0.2	%
Total segment	$	352.4			72.1	%		$	(13.9	)		-2.8	%		$	338.5			69.3	%		$	321.3			57.8	%		$	(19.7	)		-3.6	%		$	301.6			54.2	%

2015
Attritional	$	309.3			59.3	%		$	0.4			0.0	%		$	309.7			59.3	%		$	351.1			64.4	%		$	3.3			0.6	%		$	354.4			65.0	%
Catastrophes		18.1			3.5	%			(4.9	)		-0.9	%			13.2			2.6	%			17.2			3.1	%			(0.9	)		-0.2	%			16.3			2.9	%
Total segment	$	327.4			62.8	%		$	(4.5	)		-0.9	%		$	322.9			61.9	%		$	368.3			67.5	%		$	2.4			0.4	%		$	370.8			67.9	%

Variance 2016/2015
Attritional	$	(8.4	)		2.3		pts	$	2.4			0.6		pts	$	(6.0	)		2.9		pts	$	(50.7	)		(10.4	)	pts	$	(3.2	)		(0.6	)	pts	$	(53.8	)		(11.0	)	pts
Catastrophes		33.4			7.0		pts		(11.8	)		(2.5	)	pts		21.6			4.5		pts		3.7			0.7		pts		(18.9	)		(3.4	)	pts		(15.3	)		(2.7	)	pts
Total segment	$	25.0			9.3		pts	$	(9.4	)		(1.9	)	pts	$	15.6			7.4		pts	$	(47.0	)		(9.7	)	pts	$	(22.1	)		(4.0	)	pts	$	(69.2	)		(13.7	)	pts

	Six Months Ended June 30,																					Nine Months Ended September 30,
	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	$	594.2			61.3	%		$	0.8			0.1	%		$	595.0			61.4	%		$	894.7			58.5	%		$	0.9			0.1	%		$	895.6			58.6	%
Catastrophes		56.7			5.8	%			(17.2	)		-1.8	%			39.6			4.0	%			77.6			5.1	%			(37.0	)		-2.4	%			40.6			2.7	%
Total segment	$	651.0			67.1	%		$	(16.4	)		-1.7	%		$	634.6			65.4	%		$	972.3			63.6	%		$	(36.1	)		-2.3	%		$	936.2			61.3	%

2015
Attritional	$	622.1			59.7	%		$	(1.3	)		-0.1	%		$	620.8			59.6	%		$	973.2			61.3	%		$	2.0			0.1	%		$	975.2			61.4	%
Catastrophes		18.1			1.7	%			(7.1	)		-0.7	%			11.0			1.0	%			35.3			2.2	%			(8.0	)		-0.5	%			27.3			1.7	%
Total segment	$	640.2			61.4	%		$	(8.4	)		-0.8	%		$	631.8			60.6	%		$	1,008.5			63.5	%		$	(6.0	)		-0.4	%		$	1,002.5			63.1	%

Variance 2016/2015
Attritional	$	(27.9	)		1.6		pts	$	2.1			0.2		pts	$	(25.8	)		1.8		pts	$	(78.5	)		(2.8	)	pts	$	(1.1	)		-		pts	$	(79.6	)		(2.8	)	pts
Catastrophes		38.6			4.1		pts		(10.1	)		(1.1	)	pts		28.6			3.0		pts		42.3			2.9		pts		(29.0	)		(1.9	)	pts		13.3			1.0		pts
Total segment	$	10.8			5.7		pts	$	(8.0	)		(0.9	)	pts	$	2.8			4.8		pts	$	(36.2	)		0.1		pts	$	(30.1	)		(1.9	)	pts	$	(66.3	)		(1.8	)	pts

(Some amounts may not reconcile due to rounding.)

Incurred losses and LAE ~~increased~~decreased by ~~4.8%~~18.7% to ~~$338.5~~$301.6 million for the three months ended ~~June~~September 30, 2016 compared to ~~$322.9~~$370.8 million for the three months ended ~~June~~September 30, 2015, primarily due to ~~an increase in current year catastrophe losses of $33.4 million, partially offset by~~ a decrease in current year attritional losses of ~~$8.4~~$50.7 million, ~~and~~as the 2015 attritional loss ratio reflected a ~~decrease in~~$21.6 million loss estimate for the explosions at the Chinese Port of Tianjin, $18.9 million of more favorable development on prior years' catastrophe losses ~~of $11.8~~and a $3.2 million ~~mainly~~decrease in prior years attritional losses, partially offset by a $3.7 million increase in current year catastrophe losses. The $19.8 million favorable loss development for prior years' catastrophes for the three months ended September 30, 2016 related primarily to the ~~2011 Japan earthquake.~~2015 Chilean earthquake ($12.5 million) and the 2013 U.S. storms ($6.0 million). The current year catastrophe losses of ~~$51.5~~$20.9 million for the three months ended ~~June~~September 30, 2016 were related to Hurricane Hermine ($6.8 million), U.S. Storms ($6.6 million), the Fort McMurray Canada Wildfire ($5.0 million), the Taiwan earthquake ($2.3 million) and the Ecuador earthquake ($0.2 million). The current year catastrophe losses of $17.2 million for the three months ended September 30, 2015 primarily related to the 2015 Chilean earthquake ($17.4 million).

Incurred losses and LAE decreased slightly to $936.2 million for the nine months ended September 30, 2016 compared to $1,002.5 million for the nine months ended September 30, 2015, primarily due to a decrease in current year attritional losses of $78.5 million and more favorable development on prior years' catastrophe losses of $29.0 million compared to the prior year, partially offset by an increase of $42.3 million in current year catastrophe losses. The $78.5 million decline in the current year attritional losses was primarily due to the $21.6 million attritional losses in 2015 related to the explosions at the Chinese Port of Tianjin and the 3.8% decline in premiums earned. The $37.0 million of favorable prior years catastrophe losses for the nine months ended September 30, 2016 related primarily to the 2011 Japanese earthquake ($15.5 million), the 2015 Chilean earthquake ($12.4 million), and the 2013 U.S. storms ($4.8 million). The current year catastrophe losses of $77.6 million for the nine months ended September 30, 2016 were related to the Fort McMurray Canada Wildfire ($~~21.9~~26.9 million), the 2016 U.S. Storms ($~~18.2~~24.9 million) ~~and~~, the Ecuador earthquake ($~~11.4~~11.6 million), the 2016 Taiwan earthquake ($7.5 million) and Hurricane Hermine ($6.8 million). ~~Current~~The current year catastrophe losses ~~were $18.1~~of $35.3 million for the ~~three~~nine months ended ~~June~~September 30, 2015 ~~and~~primarily related to the 2015 Chilean earthquake ($17.4 million), Northern Chile storms ($~~10.0~~9.8 million) and the New South Wales storms ($~~8.1 million).~~

Incurred losses and LAE increased slightly to $634.6 million for the six months ended June 30, 2016 compared to $631.8 million for the six months ended June 30, 2015, primarily due to an increase in current year catastrophe losses of $38.6 million, partially offset by a decrease in current year attritional losses of $27.9 million and a decrease in prior years' catastrophe losses of $10.1 million, mainly related to the 2011 Japan earthquake. The current year catastrophe losses of $56.7 million for the six months ended June 30, 2016 were related to the Fort McMurray Canada Wildfire ($21.9 million), U.S. Storms ($18.2 million), the Ecuador earthquake ($11.4 million) and the Taiwan earthquake ($5.2 million). The current year catastrophe losses were $18.1 million for the six months ended June 30, 2015 and related to the Northern Chile storms ($10.0 million) and the New South Wales storms ($8.18.0 million).

Commission, Brokerage, Taxes and Fees. Commission, brokerage, taxes and fees in~~decreased~~creased by ~~1.1%~~18.6% to ~~$72.1~~$85.6 million for the three months ended ~~June~~September 30, 2016 compared to $~~73.0~~72.2 million for the three months ended ~~June~~September 30, 2015. Commission, brokerage, taxes and fees decreased by ~~16.8%~~6.3% to ~~$140.9~~$226.5 million for the ~~six~~nine months ended ~~June~~September 30, 2016 compared to ~~$169.5~~$241.6 million for the ~~six~~nine months ended ~~June~~September 30, 2015. These ~~changes~~variances were primarily due to the impact of the ~~decline~~changes in premiums earned and changes in the mix of business.

Other Underwriting Expenses. Other underwriting expenses were ~~$58.3~~$64.1 million and ~~$51.6~~$57.0 million for the three months ended ~~June~~September 30, 2016 and 2015, respectively. Other underwriting expenses were ~~$117.6~~$181.7 million and ~~$100.1~~$157.1 million for the ~~six~~nine months ended ~~June~~September 30, 2016 and 2015, respectively. The increases in other underwriting expenses were mainly due to costs incurred related to the expansion of the insurance operations.

Corporate Expenses. Corporate expenses, which are general operating expenses that are not allocated to segments, were ~~$2.0~~$1.8 million and ~~$1.8~~$1.6 million for the three months ended ~~June~~September 30, 2016 and 2015, respectively, and ~~$4.3~~$6.2 million and ~~$3.4~~$5.0 million for the ~~six~~nine months ended ~~June~~September 30, 2016 and 2015, respectively. The increases in corporate expenses were mainly due to increased compensation and benefit expenses.

Interest, Fees and Bond Issue Cost Amortization Expense. Interest, fees and other bond amortization expense ~~remained the same at~~was $8.9 million for ~~the~~ three months ended ~~June~~September 30, 2016 and 2015. Interest, fees and other bond amortization ~~remained the same at $17.7~~expense was $26.6 million for ~~the six~~nine months ended ~~June~~September 30, 2016 and ~~2015.~~2015, respectively.

Income Tax Expense (Benefit). Income tax expense was ~~$33.0~~$21.1 million and ~~$64.0~~income tax benefits were $7.1 million for the three months ended ~~June~~September 30, 2016 and 2015, respectively. Income tax expense was ~~$45.8~~$67.0 million and ~~$114.5~~$107.3 million for the ~~six~~nine months ended ~~June~~September 30, 2016 and 2015, 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. 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 ~~decreases~~increase in income tax expenses for the three ~~and six~~ months ended ~~June~~September 30, 2016 compared to the three ~~and six~~ months ended ~~June~~September 30, 2015 were mainly due to the ~~increase~~decrease in ~~current year catastrophe~~losses incurred and lower capital losses.

Net Income (Loss).

Our net income was ~~$68.4~~$74.8 million and ~~$133.8~~our net loss was $4.7 million for the three months ended ~~June~~September 30, 2016 and 2015, respectively. Our net income was ~~$107.3~~$182.1 million and ~~$249.7~~$245.1 million for the ~~six~~nine months ended ~~June~~September 30, 2016 and 2015, respectively. The changes were primarily driven by the financial component fluctuations explained above.

Ratios.

Our combined ratio ~~increased~~decreased by ~~10.1~~10.4 points to ~~95.9%~~81.1% for the three months ended ~~June~~September 30, 2016, compared to ~~85.8%~~91.5% for the three months ended ~~June~~September 30, 2015, and ~~increased~~decreased by ~~5.5~~0.2 points to ~~92.0%~~88.0% for the ~~six~~nine months ended ~~June~~September 30, 2016, compared to ~~86.5%~~88.2% for the ~~six~~nine months ended ~~June~~September 30, 2015. The loss ratio component ~~increased~~decreased by ~~7.4~~13.7 points and ~~4.8~~1.8 points for the three and ~~six~~nine months ended ~~June~~September 30, 2016, respectively, over the same period last ~~year~~year. The change for the three month period was mainly due to ~~the increases of $33.4 million and $38.6 million in~~lower current year attritional losses and favorable prior year development on catastrophe ~~losses.~~losses in 2016 compared to 2015. The commission and brokerage ratio components increased ~~0.8~~2.2 points and decreased 0.4 points for the three and nine months ended ~~June~~September 30, 2016, ~~over the same period last year and decreased 1.8 points~~

~~for the six months ended June 30, 2016~~respectively, compared to the ~~same~~prior period ~~last year. The variances are~~ due mainly to changes in the mix of business and the impact of affiliated quota share ~~agreements and changes in the mix of business.~~agreements. The other underwriting expense ratio components increased ~~1.9~~1.1 points and ~~2.5~~2.0 points for the three and ~~six~~nine months ended ~~June~~September 30, 2016, respectively, over the same period last year mainly due to the increased focus on the expansion of the insurance business.

Stockholder's Equity.

Stockholders' equity increased by ~~$232.8~~$309.7 million to ~~$5,164.1~~$5,241.0 million at ~~June~~September 30, 2016 from $4,931.2 million at December 31, 2015, principally as a result of ~~$107.3~~$182.1 million of net income, ~~$84.7~~$85.8 million of net unrealized appreciation on investments, net of tax, ~~$30.4~~$27.8 million of net foreign currency translation adjustments, ~~$7.7~~$10.2 million of share-based compensation transactions and ~~$2.7~~$3.9 million of net benefit plan obligation adjustments.

Consolidated Investment Results

Net Investment Income.

Net investment income increased ~~4.2%~~1.9% to ~~$73.9~~$64.6 million for the three months ended ~~June~~September 30, 2016 compared to ~~$70.9~~$63.4 million for the three months ended ~~June~~September 30, 2015, primarily due to an increase in limited partnership income, partially offset by lower reinvestment rates for the fixed income portfolios. Net investment income decreased by ~~7.8%~~4.8% to ~~$132.3~~$196.9 million for the ~~six~~nine months ended ~~June~~September 30, 2016 compared to ~~$143.5~~$206.9 million for the ~~six~~nine months ended ~~June~~September 30, 2015, primarily due to a decline in income from fixed maturities, reflective of lower reinvestment ~~rates, and a decline in income from limited partnerships.~~rates.

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

	Three Months Ended						Six Months Ended						Three Months Ended						Nine Months Ended
	June 30,						June 30,						September 30,						September 30,
(Dollars in millions)	2016			2015			2016			2015			2016			2015			2016			2015
Fixed maturities	$	44.8		$	46.4		$	90.1		$	94.4		$	44.8		$	46.4		$	134.9		$	140.8
Equity securities		8.8			9.9			17.9			18.6			7.9			8.0			25.8			26.6
Short-term investments and cash		0.3			0.3			0.6			0.5			0.3			0.2			0.9			0.7
Other invested assets
Limited partnerships		14.2			7.3			11.7			14.7			6.0			3.0			17.7			17.7
Dividends from Parent's shares		-			9.3			-			18.5			-			9.2			-			27.7
Dividends from preferred shares of affiliate		7.7			-			15.5			-			7.8			-			23.3			-
Other		0.7			1.0			(0.2	)		1.6			0.5			(0.2	)		0.3			1.4
Gross investment income before adjustments		76.5			74.2			135.6			148.3			67.3			66.6			202.8			214.9
Funds held interest income (expense)		0.9			0.9			3.6			3.4			1.1			0.9			4.7			4.3
Interest income from Parent		1.1			1.1			2.2			2.2			1.1			1.0			3.2			3.2
Gross investment income		78.5			76.1			141.3			153.8			69.5			68.7			210.8			222.5
Investment expenses		(4.6	)		(5.2	)		(9.0	)		(10.3	)		(4.9	)		(5.3	)		(13.9	)		(15.6	)
Net investment income	$	73.9		$	70.9		$	132.3		$	143.5		$	64.6		$	63.4		$	196.9		$	206.9

(Some amounts may not reconcile due to rounding.)

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

	At	At	At	At
	June 30,	December 31,	September 30,	December 31,
	2016	2015	2016	2015
Imbedded pre-tax yield of cash and invested assets at December 31	2.8%	2.9%	3.0%	2.9%
Imbedded after-tax yield of cash and invested assets at December 31	2.0%	2.1%	2.1%	2.1%

	Three Months Ended		Six Months Ended		Three Months Ended		Nine Months Ended
	June 30,		June 30,		September 30,		September 30,
	2016	2015	2016	2015	2016	2015	2016	2015
Annualized pre-tax yield on average cash and invested assets	3.2%	3.4%	2.8%	3.5%	2.7%	3.1%	2.8%	3.3%
Annualized after-tax yield on average cash and invested assets	2.2%	2.4%	2.0%	2.4%	1.9%	2.1%	1.9%	2.3%

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 June 30,									Six Months Ended June 30,									Three Months Ended September 30,									Nine Months Ended September 30,
(Dollars in millions)	2016			2015			Variance			2016			2015			Variance			2016			2015			Variance			2016			2015			Variance
Gains (losses) from sales:
Fixed maturity securities, market value
Gains	$	6.1		$	5.1		$	1.0		$	7.6		$	7.6		$	-		$	6.3		$	1.4		$	4.9		$	13.9		$	9.0		$	4.9
Losses		(3.9	)		(17.3	)		13.4			(22.2	)		(31.3	)		9.1			(1.9	)		(8.1	)		6.2			(24.1	)		(39.4	)		15.3
Total		2.2			(12.2	)		14.4			(14.6	)		(23.7	)		9.1			4.4			(6.7	)		11.1			(10.3	)		(30.4	)		20.2

Fixed maturity securities, fair value
Gains		-			-			-			-			-			-			-			-			-			-			-			-
Losses		(1.9	)		-			(1.9	)		(1.9	)		-			(1.9	)		-			-			-			(1.9	)		-			(1.9	)
Total		(1.9	)		-			(1.9	)		(1.9	)		-			(1.9	)		-			-			-			(1.9	)		-			(1.9	)

Equity securities, fair value
Gains		4.8			7.3			(2.5	)		6.6			12.4			(5.8	)		6.9			5.3			1.6			13.5			17.7			(4.2	)
Losses		(12.5	)		(7.6	)		(4.9	)		(22.2	)		(12.8	)		(9.4	)		(1.4	)		(18.9	)		17.5			(23.6	)		(31.7	)		8.1
Total		(7.7	)		(0.3	)		(7.4	)		(15.6	)		(0.4	)		(15.2	)		5.5			(13.6	)		19.1			(10.1	)		(14.0	)		3.9

Total net realized gains (losses) from sales
Gains		10.9			12.4			(1.5	)		14.2			20.1			(5.9	)		13.2			6.6			6.6			27.4			26.7			0.7
Losses		(18.2	)		(24.9	)		6.7			(46.3	)		(44.1	)		(2.2	)		(3.4	)		(26.9	)		23.5			(49.7	)		(71.0	)		21.3
Total		(7.3	)		(12.4	)		5.2			(32.1	)		(24.0	)		(8.1	)		9.6			(20.3	)		30.1			(22.4	)		(44.3	)		22.0

Gain (losses) on sale of subsidiary:																				(28.0	)		94.7			(122.7	)		(28.0	)		94.7			(122.7	)


Other than temporary impairments:		(1.4	)		(8.8	)		7.4			(24.4	)		(32.9	)		8.5			(0.8	)		(10.5	)		9.7			(25.2	)		(43.4	)		18.2

Gains (losses) from fair value adjustments:
Fixed maturities, fair value		1.5			-			1.5			1.3			0.1			1.2			0.1			-			0.1			1.4			0.1			1.3
Equity securities, fair value		37.0			(5.3	)		42.3			18.7			15.6			3.1			16.0			(101.3	)		117.3			34.7			(85.7	)		120.4
Other invested assets, fair value		(0.8	)		77.8			(78.6	)		(0.8	)		113.8			(114.6	)		(47.0	)		(84.3	)		37.3			(47.8	)		29.5			(77.3	)
Total		37.7			72.5			(34.8	)		19.2			129.5			(110.3	)		(30.9	)		(185.6	)		154.7			(11.7	)		(56.1	)		44.4

Total net realized gains (losses)	$	29.2		$	51.2		$	(22.0	)	$	(37.2	)	$	72.5		$	(109.7	)	$	(50.1	)	$	(121.7	)	$	71.6		$	(87.3	)	$	(49.2	)	$	(38.1	)

(Some amounts may not reconcile due to rounding)

Net realized capital ~~gains~~losses were ~~$29.2~~$50.1 million and ~~$51.2~~$121.7 million for the three months ended ~~June~~September 30, 2016 and 2015, respectively. For the three months ended ~~June~~September 30, 2016, we recorded ~~$37.7~~$30.9 million of net realized capital ~~gains~~losses due to fair value re-measurements on fixed maturity securities, equity securities and other invested assets, net realized capital losses of $28.0 million from the sale of our Heartland subsidiary and $0.8 million of other-than-temporary impairments, partially offset by ~~$7.3~~$9.6 million of net realized capital gains from sales of fixed maturity. For the three months ended September 30, 2015, 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 million of net realized capital losses from sales of fixed maturity and equity securities and ~~$1.4~~$10.5 million of other-than-temporary ~~impairments.~~impairments, partially offset by a $94.7 million gain on the sale of a subsidiary. The fixed maturity and equity sales for both periods related primarily to adjusting the portfolios for overall market changes and individual credit shifts.

Net realized capital losses were $87.3 million and $49.2 million for the nine months ended September 30, 2016 and 2015, respectively. For the ~~three~~nine months ended ~~June~~September 30, ~~2015,~~2016, we recorded ~~$72.5 million of~~a net realized capital ~~gains due to fair value re-measurements on equity securities and other invested assets, partially offset by $12.4~~losses of $28.0 million from the sale of our Heartland subsidiary, $25.2 million of other-than-temporary impairments, $22.4 million of net realized capital losses from sales of fixed maturity and equity securities and $8.8 million of other-than-temporary impairments. The fixed maturity and equity sales for the three months ended June 30, 2016 and June 30, 2015, respectively, related primarily to adjusting the portfolios for overall market changes and individual credit shifts.

~~Net realized capital losses were $37.2 million and net realized capital gains were $72.5 million~~ ~~for the six months ended June 30, 2016~~ ~~and 2015, respectively. For the six months ended June 30, 2016, we recorded $32.1~~$11.7 million of net realized capital losses ~~from sales of fixed maturity and equity securities and $24.4 million of other-than-temporary impairments, partially offset by $19.2 million of net realized capital gains~~ due to fair value re-measurements on fixed maturity securities, equity securities and other invested assets. For the ~~six~~nine months ended ~~June~~September 30, 2015, we recorded ~~$129.5~~$56.1 million of net realized capital ~~gains~~losses due to fair value re-measurements on fixed maturity securities, equity securities and other invested assets, ~~partially offset by $32.9 million of other-than-temporary impairments and $24.0~~$44.3 million of net realized capital losses from sales of fixed maturity and equity ~~securities.~~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 fixed maturity and equity sales for ~~the six months ended June 30, 2016 and June 30, 2015, respectively,~~both periods related primarily to adjusting the portfolios for overall market changes and individual credit shifts.

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 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 June 30,												Six Months Ended June 30,												Three Months Ended September 30,												Nine Months Ended September 30,
(Dollars in millions)	2016			2015			Variance			% Change			2016			2015			Variance			% Change			2016			2015			Variance			% Change			2016			2015			Variance			% Change
Gross written premiums	$	405.5		$	451.1		$	(45.6	)		-10.1	%	$	942.2		$	1,013.7		$	(71.5	)		-7.1	%	$	654.8		$	601.6		$	53.2			8.8	%	$	1,597.0		$	1,615.3		$	(18.3	)		-1.1	%
Net written premiums		161.0			184.7			(23.7	)		-12.8	%		384.5			425.4			(40.9	)		-9.6	%		327.2			247.4			79.9			32.3	%		711.7			672.8			38.9			5.8	%

Premiums earned	$	224.6		$	235.4		$	(10.8	)		-4.6	%	$	459.9		$	490.8		$	(31.0	)		-6.3	%	$	249.2		$	235.3		$	13.9			5.9	%	$	709.1		$	726.1		$	(17.0	)		-2.3	%
Incurred losses and LAE		110.2			116.5			(6.3	)		-5.4	%		226.3			227.9			(1.6	)		-0.7	%		137.2			109.1			28.1			25.8	%		363.6			337.1			26.5			7.9	%
Commission and brokerage		50.1			34.7			15.4			44.4	%		99.9			93.1			6.8			7.3	%		48.1			48.9			(0.8	)		-1.6	%		148.0			141.9			6.0			4.2	%
Other underwriting expenses		12.1			11.8			0.3			2.8	%		25.6			23.3			2.3			9.7	%		14.3			13.7			0.5			4.0	%		39.9			37.1			2.8			7.6	%
Underwriting gain (loss)	$	52.2		$	72.4		$	(20.2	)		-27.9	%	$	108.1		$	146.5		$	(38.4	)		-26.2	%	$	49.6		$	63.5		$	(14.0	)		-22.0	%	$	157.7		$	210.0		$	(52.4	)		-25.0	%

										Point Chg												Point Chg												Point Chg												Point Chg
Loss ratio		49.0	%		49.5	%					(0.4	)		49.2	%		46.4	%					2.8			55.1	%		46.4	%					8.7			51.3	%		46.4	%					4.9
Commission and brokerage ratio		22.3	%		14.7	%					7.6			21.7	%		19.0	%					2.7			19.3	%		20.8	%					(1.5	)		20.9	%		19.5	%					1.4
Other underwriting ratio		5.5	%		5.0	%					0.5			5.6	%		4.8	%					0.8			5.7	%		5.8	%					(0.1	)		5.6	%		5.2	%					0.4
Combined ratio		76.8	%		69.2	%					7.6			76.5	%		70.2	%					6.2			80.1	%		73.0	%					7.1			77.8	%		71.2	%					6.7

(Some amounts may not reconcile due to rounding.)

Premiums. Gross written premiums ~~decreased~~increased by ~~10.1%~~8.8% to ~~$405.5~~$654.8 million for the three months ended ~~June~~September 30, 2016 from ~~$451.1~~$601.6 million for the three months ended ~~June~~September 30, 2015, primarily due to ~~a decrease in treaty property business, partially offset by~~ an increase in treaty casualty business. Net written premiums ~~decreased~~increased by ~~12.8%~~32.3% to ~~$161.0~~$327.2 million for the three months ended ~~June~~September 30, 2016 compared to ~~$184.7~~$247.4 million for the three months ended ~~June~~September 30, ~~2015~~2015. ~~, which is consistent with~~The difference between the change in gross written ~~premiums.~~premiums compared to the change in net written premiums is primarily due to the assumption of the crop business due to the sale of Heartland and a concurrent new crop reinsurance contract. Premiums earned ~~decreased 4.6%~~increased 5.9% to ~~$224.6~~$249.2 million for the three months ended ~~June~~September 30, 2016 compared to ~~$235.4~~$235.3 million for the three months ended ~~June~~September 30, 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.

Gross written premiums decreased by ~~7.1%~~1.1% to ~~$942.2~~$1,597.0 million for the ~~six~~nine months ended ~~June~~September 30, 2016 from ~~$1,013.7~~$1,615.3 million for the ~~six~~nine months ended ~~June~~September 30, 2015, primarily due to a decrease in treaty property business, partially offset by an increase in treaty casualty business. Net written premiums ~~decreased~~increased by ~~9.6%~~5.8% to ~~$384.5~~$711.7 million for the ~~six~~nine months ended ~~June~~September 30, 2016 compared to ~~$425.4~~$672.8 million for the ~~six~~nine months ended ~~June~~September 30, ~~2015~~2015. ~~, which is consistent with~~The difference between the change in gross written ~~premiums.~~premiums compared to the change in net written premiums is primarily due to the crop transaction described above. Premiums earned decreased ~~6.3%~~2.3% to ~~$459.9~~$709.1 million for the ~~six~~nine months ended ~~June~~September 30, 2016 compared to ~~$490.8~~$726.1 million for the ~~six~~nine months ended ~~June~~September 30, 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 June 30,																					Three Months Ended September 30,
	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	$	117.1			52.2	%		$	1.9			0.8	%		$	119.0			53.1	%		$	129.8		52.1	%		$	(1.0	)		-0.4	%		$	128.8			51.7	%
Catastrophes		1.4			0.6	%			(10.2	)		-4.6	%			(8.8	)		-3.9	%			14.4		5.8	%			(5.9	)		-2.4	%			8.5			3.4	%
Total segment	$	118.5			52.9	%		$	(8.4	)		-3.8	%		$	110.2			49.0	%		$	144.2		57.9	%		$	(6.9	)		-2.8	%		$	137.2			55.1	%

2015
Attritional	$	135.4			57.5	%		$	(15.3	)		-6.5	%		$	120.1			51.0	%		$	108.1		45.9	%		$	1.5			0.6	%		$	109.6			46.5	%
Catastrophes		-			0.0	%			(3.6	)		-1.5	%			(3.6	)		-1.5	%			0.1		0.1	%			(0.5	)		-0.2	%			(0.4	)		-0.1	%
Total segment	$	135.4			57.5	%		$	(18.9	)		-8.0	%		$	116.5			49.5	%		$	108.2		46.0	%		$	0.9			0.4	%		$	109.1			46.4	%

Variance 2016/2015
Attritional	$	(18.3	)		(5.3	)	pts	$	17.2			7.3		pts	$	(1.1	)		2.1		pts	$	21.7		6.2		pts	$	(2.5	)		(1.0	)	pts	$	19.2			5.2		pts
Catastrophes		1.4			0.6		pts		(6.6	)		(3.1	)	pts		(5.2	)		(2.4	)	pts		14.3		5.7		pts		(5.4	)		(2.2	)	pts		8.9			3.5		pts
Total segment	$	(16.9	)		(4.7	)	pts	$	10.6			4.2		pts	$	(6.3	)		(0.4	)	pts	$	36.0		11.9		pts	$	(7.8	)		(3.2	)	pts	$	28.1			8.7		pts

	Six Months Ended June 30,																					Nine Months Ended September 30,
	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	$	235.4			51.2	%		$	(0.4	)		-0.1	%		$	235.1			51.1	%		$	365.2		51.6	%		$	(1.3	)		-0.2	%		$	363.9			51.4	%
Catastrophes		1.4			0.3	%			(10.2	)		-2.2	%			(8.8	)		-1.9	%			15.8		2.2	%			(16.1	)		-2.3	%			(0.3	)		-0.1	%
Total segment	$	236.9			51.5	%		$	(10.6	)		-2.3	%		$	226.3			49.2	%		$	381.0		53.8	%		$	(17.4	)		-2.5	%		$	363.6			51.3	%

2015
Attritional	$	252.9			51.5	%		$	(18.9	)		-3.9	%		$	233.9			47.6	%		$	360.9		49.7	%		$	(17.5	)		-2.4	%		$	343.5			47.3	%
Catastrophes		-			0.0	%			(6.0	)		-1.2	%			(6.0	)		-1.2	%			0.1		0.0	%			(6.5	)		-0.9	%			(6.4	)		-0.9	%
Total segment	$	252.9			51.5	%		$	(24.9	)		-5.1	%		$	227.9			46.4	%		$	361.1		49.7	%		$	(24.0	)		-3.3	%		$	337.1			46.4	%

Variance 2016/2015
Attritional	$	(17.5	)		(0.3	)	pts	$	18.5			3.8		pts	$	1.2			3.5		pts	$	4.3		1.9		pts	$	16.2			2.2		pts	$	20.4			4.1		pts
Catastrophes		1.4			0.3		pts		(4.2	)		(1.0	)	pts		(2.8	)		(0.7	)	pts		15.7		2.2		pts		(9.6	)		(1.4	)	pts		6.1			0.8		pts
Total segment	$	(16.0	)		-		pts	$	14.3			2.8		pts	$	(1.6	)		2.8		pts	$	19.9		4.1		pts	$	6.6			0.8		pts	$	26.5			4.9		pts

(Some amounts may not reconcile due to rounding.)

Incurred losses ~~decreased by 5.4%~~increased 25.8% to ~~$110.2~~$137.2 million for the three months ended ~~June~~September 30, 2016 compared to ~~$116.5~~$109.1 million for the three months ended ~~June~~September 30, 2015, primarily due to ~~an $18.3~~a $21.7 million ~~decrease~~increase in current year attritional losses, ~~resulting primarily from~~related to the impact of the ~~decline~~increase in premiums earned, and ~~favorable~~an increase of $14.3 million on current year ~~over year~~catastrophe losses. This increase was partially offset by higher favorable development of ~~$6.6~~$5.4 million on prior years' catastrophe losses, mainly related to the 2011 Japan earthquake. These declines were partially offset by in a reduction in favorable development on prior years' attritional losses related to treaty casualty and marine business in 2015 and $1.4 million in current year catastrophe losses. 2013 U.S. storms. The ~~$1.4 million of~~ current year catastrophe losses of $14.4 million for the three months ended September 30, 2016 were ~~mainly due~~related to Hurricane Hermine ($6.8 million), U.S. Storms ($6.3 million) and the ~~2016 U.S. storms. There were no~~Fort McMurray Canada Wildfire ($1.3 million). The $0.1 million of current year catastrophe losses for the three months ended ~~June~~September 30, ~~2015.~~2015 were due to the New South Wales storms.

Incurred losses ~~decreased~~increased by ~~0.7%~~7.9% to ~~$226.3~~$363.6 million for the ~~six~~nine months ended ~~June~~September 30, 2016 compared to ~~$227.9~~$337.1 million for the ~~six~~nine months ended ~~June~~September 30, 2015, primarily due to a ~~$17.5~~$16.2 million ~~decrease~~impact from year over year lower favorable development on prior years attritional losses and an increase of $15.7 million in current year ~~attritional losses resulting primarily from the impact of the decline in premiums earned and~~catastrophe losses. These increases were partially offset by more favorable ~~year over year~~ development of ~~$4.2~~$9.6 million on prior years' catastrophe losses. The current year catastrophe losses of $15.8 million for the nine months ended September 30, 2016 were related to Hurricane Hermine ($6.8 million) and U.S. Storms ($9.6 million). 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 $16.1 million of prior years' catastrophes for the nine months ended September 30, 2016 mainly related to the 2011 Japan earthquake. ~~These declines were partially offset by a reduction in favorable development on prior years' attritional losses related to treaty casualty and marine business in 2015 and $1.4 million in current~~

year catastrophe losses. The $1.4 million of current year catastrophe losses were mainly due to the 2016 U.S. storms. There were no current year catastrophe losses for the six months ended June 30, 2015.

Segment Expenses. Commission and brokerage ~~increased~~decreased by ~~44.4%~~1.6% to ~~$50.1~~$48.1 million for the three months ended ~~June~~September 30, 2016 compared to ~~$34.7~~$48.9 million for the three months ended ~~June~~September 30, 2015. Commission and brokerage increased by ~~7.3%~~4.2% to ~~$99.9~~$148.0 million for the ~~six~~nine months ended ~~June~~September 30, 2016 compared to ~~$93.1~~$141.9 million for the ~~six~~nine months ended ~~June~~September 30, 2015. The increases were mainly due to the impact from affiliated quota share agreements and changes in the mix of business.

Segment other underwriting expenses ~~were comparable at $12.1~~increased to $14.3 million for the three months ended ~~June~~September 30, 2016 ~~and $11.8~~from $13.7 million for the three months ended ~~June~~September 30, 2015. Segment other underwriting expenses increased to ~~$25.6~~$39.9 million for the ~~six~~nine months ended ~~June~~September 30, 2016 from ~~$23.3~~$37.1 million for the ~~six~~nine months ended ~~June~~September 30, ~~2015, which was mainly~~2015. The increases were primarily due to ~~increased~~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 June 30,												Six Months Ended June 30,												Three Months Ended September 30,												Nine Months Ended September 30,
(Dollars in millions)	2016			2015			Variance			% Change			2016			2015			Variance			% Change			2016			2015			Variance			% Change			2016			2015			Variance			% Change
Gross written premiums	$	348.2		$	311.7		$	36.5			11.7	%	$	586.7		$	645.3		$	(58.6	)		-9.1	%	$	353.2		$	374.1		$	(20.9	)		-5.6	%	$	939.9		$	1,019.4		$	(79.6	)		-7.8	%
Net written premiums		124.4			147.4			(23.0	)		-15.6	%		212.2			269.1			(56.9	)		-21.2	%		141.3			148.0			(6.7	)		-4.5	%		353.4			417.1			(63.6	)		-15.3	%

Premiums earned	$	131.3		$	157.9		$	(26.6	)		-16.9	%	$	244.5		$	298.6		$	(54.2	)		-18.1	%	$	128.4		$	135.1		$	(6.8	)		-5.0	%	$	372.8		$	433.8		$	(60.9	)		-14.0	%
Incurred losses and LAE		91.4			110.0			(18.6	)		-16.9	%		164.8			211.5			(46.6	)		-22.1	%		41.8			128.5			(86.7	)		-67.4	%		206.7			339.9			(133.2	)		-39.2	%
Commission and brokerage		26.1			31.2			(5.1	)		-16.3	%		52.3			65.2			(13.0	)		-19.9	%		30.2			27.9			2.3			8.1	%		82.4			93.2			(10.7	)		-11.5	%
Other underwriting expenses		8.0			8.0			-			NM			15.8			16.2			(0.4	)		-2.3	%		9.2			9.1			0.1			1.0	%		25.0			25.3			(0.3	)		-1.1	%
Underwriting gain (loss)	$	5.7		$	8.6		$	(2.9	)		-33.2	%	$	11.6		$	5.7		$	5.8			101.8	%	$	47.1		$	(30.4	)	$	77.5		NM			$	58.7		$	(24.6	)	$	83.3		NM

										Point Chg												Point Chg												Point Chg												Point Chg
Loss ratio		69.6	%		69.7	%					(0.1	)		67.4	%		70.8	%					(3.4	)		32.6	%		95.1	%					(62.5	)		55.4	%		78.4	%					(23.0	)
Commission and brokerage ratio		19.9	%		19.8	%					0.1			21.4	%		21.8	%					(0.4	)		23.5	%		20.7	%					2.8			22.1	%		21.5	%					0.6
Other underwriting ratio		6.1	%		5.1	%					1.0			6.5	%		5.5	%					1.0			7.2	%		6.7	%					0.5			6.8	%		5.8	%					1.0
Combined ratio		95.6	%		94.6	%					1.0			95.3	%		98.1	%					(2.8	)		63.3	%		122.5	%					(59.2	)		84.3	%		105.7	%					(21.4	)

(NM, not meaningful)

Premiums. Gross written premiums ~~increased~~decreased by ~~11.7%~~5.6% to ~~$348.2~~$353.2 million for the three months ended ~~June~~September 30, 2016 compared to ~~$311.7~~$374.1 million for the three months ended ~~June~~September 30, 2015, primarily due to a ~~negative impact on premiums during the second quarter of 2015 related to quota share agreements, partially offset by declines~~decline in ~~Latin American and Asian~~Middle East business and the negative impact of approximately ~~$17.1~~$6.2 million from the movement of foreign exchange rates. Net written premiums decreased by ~~15.6%~~4.5% to ~~$124.4~~$141.3 million for the three months ended ~~June~~September 30, 2016 compared to ~~$147.4~~$148.0 million for the three months ended ~~June~~September 30, 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 varying utilization of reinsurance related to the quota share contracts.~~. Premiums earned decreased ~~16.9%~~5.0% to ~~$131.3~~$128.4 million for the three months ended ~~June~~September 30, 2016 compared to ~~$157.9~~$135.1 million for the three months ended ~~June~~September 30, 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.

Gross written premiums decreased by ~~9.1%~~7.8% to ~~$586.7~~$939.9 million for the ~~six~~nine months ended ~~June~~September 30, 2016 compared to ~~$645.3~~$1,019.4 million for the ~~six~~nine months ended ~~June~~September 30, 2015, primarily due to declines in Latin American, Middle East and Asian business and the negative impact of approximately ~~$31.9~~$38.1 million from the movement of foreign exchange ~~rates, partially offset by the negative impact on premiums during the second quarter of 2015 related to quota share agreements.~~rates. Net written premiums decreased by ~~21.1%~~15.3% to ~~$212.2~~$353.4 million for the ~~six~~nine months ended ~~June~~September 30, 2016 compared to ~~$269.1~~$417.1 million for the ~~six~~nine months ended ~~June~~September 30, 2015. 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 ~~18.1%~~14.0% to ~~$244.5~~$372.8 million for the ~~six~~nine months ended ~~June~~

September 30, 2016 compared to ~~$298.6~~$433.8 million for the ~~six~~nine months ended ~~June~~September 30, 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 International segment for the periods indicated.

	Three Months Ended June 30,																					Three Months Ended September 30,
	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	$	65.0			49.5	%		$	(0.6	)		-0.4	%		$	64.4			49.1	%		$	49.3			38.4	%		$	-			0.0	%		$	49.3			38.4	%
Catastrophes		33.4			25.4	%			(6.4	)		-4.9	%			27.0			20.5	%			6.5			5.1	%			(14.0	)		-10.9	%			(7.5	)		-5.8	%
Total segment	$	98.4			74.9	%		$	(7.0	)		-5.3	%		$	91.4			69.6	%		$	55.8			43.5	%		$	(14.0	)		-10.9	%		$	41.8			32.6	%

2015
Attritional	$	94.1			59.7	%		$	(0.9	)		-0.7	%		$	93.2			59.0	%		$	111.0			82.2	%		$	0.9			0.7	%		$	112.0			82.9	%
Catastrophes		18.1			11.5	%			(1.3	)		-0.8	%			16.8			10.7	%			17.0			12.6	%			(0.6	)		-0.4	%			16.5			12.2	%
Total segment	$	112.2			71.2	%		$	(2.2	)		-1.5	%		$	110.0			69.7	%		$	128.1			94.8	%		$	0.4			0.3	%		$	128.5			95.1	%

Variance 2016/2015
Attritional	$	(29.1	)		(10.2	)	pts	$	0.3			0.3		pts	$	(28.8	)		(9.9	)	pts	$	(61.7	)		(43.8	)	pts	$	(0.9	)		(0.7	)	pts	$	(62.7	)		(44.5	)	pts
Catastrophes		15.3			13.9		pts		(5.1	)		(4.1	)	pts		10.2			9.9		pts		(10.5	)		(7.5	)	pts		(13.4	)		(10.5	)	pts		(24.0	)		(18.0	)	pts
Total segment	$	(13.8	)		3.8		pts	$	(4.8	)		(3.8	)	pts	$	(18.6	)		(0.1	)	pts	$	(72.3	)		(51.3	)	pts	$	(14.3	)		(11.2	)	pts	$	(86.7	)		(62.5	)	pts

	Six Months Ended June 30,																					Nine Months Ended September 30,
	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	$	136.4			55.8	%		$	(3.4	)		-1.4	%		$	133.0			54.4	%		$	185.6			49.8	%		$	(3.4	)		-0.9	%		$	182.3			48.9	%
Catastrophes		38.6			15.8	%			(6.8	)		-2.8	%			31.8			13.0	%			45.2			12.1	%			(20.8	)		-5.6	%			24.4			6.5	%
Total segment	$	175.0			71.6	%		$	(10.2	)		-4.2	%		$	164.8			67.4	%		$	230.8			61.9	%		$	(24.1	)		-6.5	%		$	206.7			55.4	%

2015
Attritional	$	193.8			65.0	%		$	0.7			0.1	%		$	194.5			65.1	%		$	304.9			70.3	%		$	1.6			0.4	%		$	306.5			70.7	%
Catastrophes		18.1			6.1	%			(1.2	)		-0.4	%			17.0			5.7	%			35.1			8.1	%			(1.7	)		-0.4	%			33.4			7.7	%
Total segment	$	211.9			71.1	%		$	(0.5	)		-0.3	%		$	211.5			70.8	%		$	340.0			78.4	%		$	(0.1	)		0.0	%		$	339.9			78.4	%

Variance 2016/2015
Attritional	$	(57.4	)		(9.2	)	pts	$	(4.1	)		(1.5	)	pts	$	(61.5	)		(10.7	)	pts	$	(119.3	)		(20.5	)	pts	$	(5.0	)		(1.3	)	pts	$	(124.2	)		(21.8	)	pts
Catastrophes		20.5			9.7		pts		(5.6	)		(2.4	)	pts		14.8			7.3		pts		10.1			4.0		pts		(19.1	)		(5.2	)	pts		(9.0	)		(1.2	)	pts
Total segment	$	(36.9	)		0.5		pts	$	(9.7	)		(3.9	)	pts	$	(46.6	)		(3.4	)	pts	$	(109.2	)		(16.5	)	pts	$	(24.0	)		(6.5	)	pts	$	(133.2	)		(23.0	)	pts

(Some amounts may not reconcile due to rounding.)

Incurred losses and LAE decreased by ~~16.9%~~67.4% to ~~$91.4~~$41.8 million for the three months ended ~~June~~September 30, 2016 compared to ~~$110.0~~$128.5 million for the three months ended ~~June~~September 30, 2015, primarily due to a decrease in current year attritional losses of ~~$29.1~~$61.7 million, mainly ~~due~~related to lower Latin American and Asian losses in 2016 and $14.9 million of losses from the ~~impact~~explosion at the Chinese port of ~~the~~Tianjin in 2015, a decrease ~~in premiums earned, partially offset by an increase~~of $10.5 million in current year catastrophe losses and $13.4 million of ~~$15.3 million.~~ more favorable development in prior years catastrophe losses. The ~~$33.4~~current year catastrophe losses of $6.5 million for the three months ended September 30, 2016 were related to the Fort McMurray Canada Wildfire ($3.7 million), the Taiwan earthquake ($2.3 million) U.S. Storms ($0.3 million) and the Ecuador earthquake ($0.2 million). The $17.0 million of current year catastrophe losses for the three months ended ~~June~~September 30, ~~2016~~2015 were ~~due~~entirely related to the ~~Fort McMurray Canada wildfire ($21.7 million) and the Ecuador earthquake ($11.6 million).~~2015 Chilean earthquake. The ~~$18.1~~$14.0 million of ~~current year~~favorable development of prior years' catastrophe losses for the three months ended ~~June~~September 30, ~~2015 were due~~2016 related primarily to the ~~Northern Chile storms ($10.0 million) and the New South Wales storms ($8.1 million).~~2015 Chilean earthquake.

Incurred losses and LAE decreased by ~~22.1%~~39.2% to ~~$164.8~~$206.7 million for the ~~six~~nine months ended ~~June~~September 30, 2016 compared to ~~$211.5~~$339.9 million for the ~~six~~nine months ended ~~June~~September 30, 2015, primarily due to a decrease in current year attritional losses of ~~$57.4~~$119.3 million, related to lower Latin American and Asian losses in 2016 and $14.9 million of losses from the explosion at the Chinese Port of Tianjin in 2015, more favorable development of prior year catastrophe losses of $19.1 million and the impact of the decrease in premiums earned, partially offset by an increase of $10.1 million in current year catastrophe losses. The $45.2 million of current year catastrophe losses for the nine months ended September 30, 2016 were due to the Fort McMurray Canada wildfire ($25.4 million), the Ecuador earthquake ($11.8 million), the Taiwan earthquake ($7.6 million) and U.S. Storms ($0.3 million). 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 2016 favorable development in prior years' catastrophe losses related primarily to the 2015 Chilean and 2011 Japanese earthquakes.

Segment Expenses. Commission and brokerage increased 8.1% to $30.2 million for the three months ended September 30, 2016 compared to $27.9 million for the three months ended September 30, 2015. The quarter over quarter increase is due to higher contingent commission and the impact of quota share contracts. Commission and brokerage decreased 11.5% to $82.4 million for the nine months ended September 30, 2016 compared to $93.2 million for the nine months ended September 30, 2015. The year over year decrease was mainly due to the impact of the decrease in premiums earned

~~partially offset by an increase~~ and changes in the mix of $20.5 million in current year catastrophe losses. The $38.6 million of current year catastrophe losses for the six months ended June 30, 2016 were due to the Fort McMurray Canada wildfire ($21.7 million), the Ecuador earthquake ($11.6 million) and the Taiwan earthquake ($5.3 million). The $18.1 million of current year catastrophe losses for the six months ended June 30, 2015 were due to the Northern Chile storms ($10.0 million) and the New South Wales storms ($8.1 million).business.

Segment ~~Expenses.~~ ~~Commission and brokerage decreased 16.3%~~other underwriting expenses increased slightly to ~~$26.1~~$9.2 million for the three months ended ~~June~~September 30, 2016 compared to ~~$31.2~~$9.1 million for the three months ended ~~June~~September 30, 2015~~. Commission~~, and ~~brokerage~~ decreased ~~19.9%~~slightly to ~~$52.3~~$25.0 million for the ~~six~~nine months ended ~~June~~September 30, 2016compared to ~~$65.2~~$25.3 million for the ~~six~~nine months ended ~~June 30, 2015.~~ ~~The variances were primarily due to the impact of the decreases in premiums earned.~~

~~Segment other underwriting expenses remained the same at $8.0 million~~ ~~for the three months ended June 30, 2016~~ ~~and~~ ~~2015. Segment other underwriting expenses decreased slightly to $15.8 million~~ ~~for the six months ended June 30, 2016~~ ~~compared to $16.2 million~~ ~~for the six months ended June~~September 30, 2015.

Insurance.

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

	Three Months Ended June 30,													Six Months Ended June 30,												Three Months Ended September 30,												Nine Months Ended September 30,
(Dollars in millions)	2016			2015			Variance				% Change			2016			2015			Variance			% Change			2016			2015			Variance			% Change			2016			2015			Variance			% Change
Gross written premiums	$	424.1		$	326.7		$	97.4				29.8	%	$	778.8		$	657.2		$	121.6			18.5	%	$	498.0		$	473.0		$	25.0			5.3	%	$	1,276.8		$	1,130.2		$	146.5			13.0	%
Net written premiums		155.8			140.4			15.4				11.0	%		308.7			286.4			22.3			7.8	%		154.1			203.7			(49.7	)		-24.4	%		462.8			490.1			(27.3	)		-5.6	%

Premiums earned	$	133.0		$	128.1		$	4.9				3.8	%	$	266.5		$	253.0		$	13.4			5.3	%	$	179.1		$	175.6		$	3.4			2.0	%	$	445.6		$	428.7		$	16.9			3.9	%
Incurred losses and LAE		137.0			96.4			40.6				42.1	%		243.4			192.4			51.1			26.6	%		122.5			133.2			(10.7	)		-8.0	%		366.0			325.5			40.5			12.4	%
Commission and brokerage		(4.1	)		7.0			(11.2	)		NM				(11.2	)		11.2			(22.3	)	NM				7.3			(4.7	)		11.9		NM				(3.9	)		6.5			(10.4	)		-159.9	%
Other underwriting expenses		38.2			31.7			6.5				20.5	%		76.2			60.6			15.6			25.7	%		40.7			34.1			6.6			19.2	%		116.8			94.7			22.1			23.3	%
Underwriting gain (loss)	$	(38.1	)	$	(7.0	)	$	(31.1	)		NM			$	(42.0	)	$	(11.1	)	$	(30.9	)	NM			$	8.6		$	13.0		$	(4.4	)		-33.8	%	$	(33.3	)	$	1.9		$	(35.3	)	NM
										��
											Point Chg												Point Chg												Point Chg												Point Chg
Loss ratio		103.0	%		75.3	%						27.8			91.4	%		76.0	%					15.3			68.4	%		75.8	%					(7.4	)		82.1	%		75.9	%					6.2
Commission and brokerage ratio		-3.1	%		5.5	%						(8.6	)		-4.2	%		4.4	%					(8.6	)		4.1	%		-2.7	%					6.8			-0.9	%		1.5	%					(2.4	)
Other underwriting ratio		28.7	%		24.7	%						4.0			28.6	%		24.0	%					4.6			22.7	%		19.5	%					3.2			26.3	%		22.2	%					4.1
Combined ratio		128.6	%		105.5	%						23.2			115.8	%		104.4	%					11.4			95.2	%		92.6	%					2.6			107.5	%		99.6	%					7.9

(NM, not meaningful)

Premiums. Gross written premiums increased by ~~29.8%~~5.3% to ~~$424.1~~$498.0 million for the three months ended ~~June~~September 30, 2016 compared to ~~$326.7~~$473.0 million for the three months ended ~~June~~September 30, 2015. This increase was primarily driven by increases in ~~the crop, non-standard auto and~~ accident and health ~~lines of~~ business and additional expansion of other insurance lines of business. Net written premiums ~~increased~~decreased by ~~11.0%~~24.4% to ~~$155.8~~$154.1 million for the three months ended ~~June~~September 30, 2016 compared to ~~$140.4~~$203.7 million for the three months ended ~~June~~September 30, 2015. The difference between the change in gross written premiums compared to the change in net written premiums is primarily due to ~~varying utilization~~the transfer of ~~reinsurance.~~ the crop business to the U.S. Reinsurance segment as a result of the Heartland sale and entering into a new crop reinsurance contract. Premiums earned increased ~~3.8%~~2.0% to ~~$133.0~~$179.1 million for the three months ended ~~June~~September 30, 2016 compared to ~~$128.1~~$175.6 million for the

three months ended ~~June~~September 30, 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 ~~18.5%~~13.0% to ~~$778.8~~$1,276.8 million for the ~~six~~nine months ended ~~June~~September 30, 2016 compared to ~~$657.2~~$1,130.2 million for the ~~six~~nine months ended ~~June~~September 30, 2015. This increase was primarily driven by increases in ~~the crop, non-standard auto and~~ accident and health ~~lines of~~ business and additional expansion of other insurance lines of business. Net written premiums ~~increased~~decreased by ~~7.8%~~5.6% to ~~$308.7~~$462.8 million for the ~~six~~nine months ended ~~June~~September 30, 2016 compared to ~~$286.4~~$490.1 million for the ~~six~~nine months ended ~~June~~September 30, 2015. The

difference between the change in gross written premiums compared to the change in the net written premiums is primarily due to ~~varying utilization~~the transfer of ~~reinsurance.~~the crop business as described above. Premiums earned increased ~~5.3%~~3.9% to ~~$266.5~~$445.6 million for the ~~six~~nine months ended ~~June~~September 30, 2016 compared to ~~$253.0~~$428.7 million for the ~~six~~nine months ended ~~June~~September 30, 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.

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

	Three Months Ended June 30,																			Three Months Ended September 30,
	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	$	118.8		89.3	%		$	1.5			1.2	%		$	120.3		90.5	%		$	121.4			67.8	%		$	1.1			0.6	%		$	122.5			68.4	%
Catastrophes		16.7		12.5	%			-			0.0	%			16.7		12.5	%			-			0.0	%			-			0.0	%			0.0			0.0	%
Total segment	$	135.5		101.8	%		$	1.5			1.2	%		$	137.0		103.0	%		$	121.4			67.8	%		$	1.1			0.6	%		$	122.5			68.4	%

2015
Attritional	$	79.7		62.3	%		$	16.6			13.0	%		$	96.3		75.3	%		$	132.0			75.2	%		$	0.9			0.5	%		$	132.9			75.7	%
Catastrophes		-		0.0	%			0.1			0.0	%			0.1		0.0	%			-			0.0	%			0.2			0.1	%			0.2			0.1	%
Total segment	$	79.7		62.3	%		$	16.7			13.0	%		$	96.4		75.3	%		$	132.0			75.2	%		$	1.2			0.7	%		$	133.2			75.8	%

Variance 2016/2015
Attritional	$	39.1		27.0		pts	$	(15.1	)		(11.8	)	pts	$	24.0		15.2		pts	$	(10.6	)		(7.4	)	pts	$	0.2			0.1		pts	$	(10.4	)		(7.3	)	pts
Catastrophes		16.7		12.5		pts		(0.1	)		-		pts		16.6		12.5		pts		-			-		pts		(0.2	)		(0.1	)	pts		(0.2	)		(0.1	)	pts
Total segment	$	55.8		39.5		pts	$	(15.2	)		(11.8	)	pts	$	40.6		27.8		pts	$	(10.6	)		(7.4	)	pts	$	(0.1	)		(0.1	)	pts	$	(10.7	)		(7.4	)	pts

	Six Months Ended June 30,																			Nine Months Ended September 30,
	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	$	222.4		83.5	%		$	4.5			1.7	%		$	226.9		85.2	%		$	343.8		77.1	%		$	5.6			1.3	%		$	349.4		78.4	%
Catastrophes		16.7		6.3	%			(0.2	)		-0.1	%			16.5		6.2	%			16.7		3.7	%			(0.2	)		0.0	%			16.5		3.7	%
Total segment	$	239.1		89.8	%		$	4.3			1.6	%		$	243.4		91.4	%		$	360.5		80.8	%		$	5.4			1.3	%		$	366.0		82.1	%

2015
Attritional	$	175.4		69.3	%		$	17.0			6.7	%		$	192.4		76.0	%		$	307.4		71.7	%		$	17.9			4.1	%		$	325.3		75.8	%
Catastrophes		-		0.0	%			-			0.0	%			-		0.0	%			-		0.0	%			0.3			0.1	%			0.3		0.1	%
Total segment	$	175.4		69.3	%		$	17.0			6.7	%		$	192.4		76.0	%		$	307.4		71.7	%		$	18.2			4.2	%		$	325.5		75.9	%

Variance 2016/2015
Attritional	$	47.0		14.2		pts	$	(12.5	)		(5.0	)	pts	$	34.5		9.2		pts	$	36.4		5.4		pts	$	(12.3	)		(2.8	)	pts	$	24.1		2.6		pts
Catastrophes		16.7		6.3		pts		(0.2	)		(0.1	)	pts		16.5		6.2		pts		16.7		3.7		pts		(0.5	)		(0.1	)	pts		16.2		3.6		pts
Total segment	$	63.7		20.5		pts	$	(12.7	)		(5.1	)	pts	$	51.1		15.3		pts	$	53.1		9.1		pts	$	(12.8	)		(2.9	)	pts	$	40.5		6.2		pts

(Some amounts may not reconcile due to rounding.)

Incurred losses and LAE decreased by 8.0% to $122.5 million for the three months ended September 30, 2016 compared to $133.2 million for the three months ended September 30, 2015, mainly due to a decrease of $10.6 million in current year attritional losses, primarily due to a decline in the workers' compensation loss ratio. There were no current year catastrophe losses for the three months ended September 30, 2016 and 2015.

Incurred losses and LAE increased by ~~42.1%~~12.4% to ~~$137.0~~$366.0 million for the ~~three~~nine months ended ~~June~~September 30, 2016 compared to ~~$96.4~~$325.5 million for the ~~three~~nine months ended ~~June~~September 30, 2015, mainly due to an increase of ~~$39.1~~$36.4 million in current year attritional losses, primarily related to the impact of the increase in premiums earned and ~~the impact of affiliated quota share agreements, and~~ an increase of $16.7 million in current year catastrophe losses, partially offset by the impact from ~~favorable quarter over quarter~~less unfavorable development of ~~$15.1~~$12.3 million onin prior years' attritional losses mainly related to ~~run-off~~runoff umbrella and construction liability business. The $16.7 million of current year catastrophe losses for the ~~three~~nine months ended ~~June~~September 30, 2016 were due to the U.S. storms ($15.0 million) and the Fort McMurray Canada wildfire ($1.7 million). There were no current year catastrophe losses for the ~~three~~nine months ended ~~June 30, 2015~~.

~~Incurred losses and LAE increased by 26.6% to $243.4 million~~ ~~for the six months ended June 30, 2016~~ ~~compared to $192.4 million~~ ~~for the six months ended June 30, 2015~~, mainly due to an increase of $47.0 million in current year attritional losses, primarily related to the impact of the increase in premiums earned and the impact of affiliated quota share agreements, and an increase of $16.7 million in current year catastrophe losses, partially offset by the impact from favorable year over year development of $12.5 million in prior year attritional losses related to run-off umbrella and construction liability business. The $16.7 million of current year catastrophe losses for the six months ended June 30, 2016 were due to the U.S. storms ($15.0 million) and the Fort McMurray Canada wildfire ($1.7 million). There were no current year catastrophe losses ~~for the six months ended June~~September 30, 2015.

Segment Expenses. Commission and brokerage ~~decreased~~increased to ~~($4.1)~~$7.3 million for the three months ended ~~June~~September 30, 2016 compared to ~~$7.0~~$(4.7) million for the three months ended ~~June~~September 30, 2015. Commission and brokerage decreased to ($~~11.2)~~3.9) million for the ~~six~~nine months ended ~~June~~September 30, 2016 compared to ~~$11.2~~$6.5 million for the ~~six~~nine months ended ~~June~~September 30, 2015. The ~~decreases~~fluctuations were mainly due to the impact from affiliated quota share agreements and changes in mix of business.

Segment other underwriting expenses increased to ~~$38.2~~$40.7 million for the three months ended ~~June~~September 30, 2016 compared to ~~$31.7~~$34.1 million for the three months ended ~~June~~September 30, 2015 and increased to ~~$76.2~~$116.8 million for the ~~six~~nine months ended ~~June~~September 30, 2016 compared to ~~$60.6~~$94.7 million for the ~~six~~nine months ended ~~June~~September 30, 2015. The increases were primarily due to the impact of the increases in premiums earned and increased expenses due to the build out of our insurance 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 ~~$9.7~~$9.8 billion investment portfolio, at ~~June~~September 30, 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 ~~$842.9~~$835.0 million of mortgage-backed securities in the ~~$5,768.7~~$6,018.9 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 ~~$387.7~~$188.4 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 June 30, 2016															At September 30, 2016
(Dollars in millions)	-200			-100			0			100			200				-200			-100			0			100			200
Total Market/Fair Value	$	6,471.3		$	6,313.0		$	6,156.5		$	5,989.3		$	5,814.8		$	6,552.1		$	6,379.8		$	6,207.3		$	6,023.8		$	5,835.2
Market/Fair Value Change from Base (%)		5.1	%		2.5	%		0.0	%		-2.7	%		-5.5	%		5.6	%		2.8	%		0.0	%		-3.0	%		-6.0	%
Change in Unrealized Appreciation
After-tax from Base ($)	$	204.6		$	101.7		$	-		$	(108.6	)	$	(222.0	)	$	224.1		$	112.2		$	-		$	(119.3	)	$	(241.9	)

We had ~~$8,247.8~~$8,306.4 million and $7,940.7 million of gross reserves for losses and LAE as of ~~June~~September 30, 2016 and December 31, 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 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 June 30, 2016												At September 30, 2016
(Dollars in millions)	-20%			-10%			0%		10%		20%			-20%			-10%			0%		10%		20%
Fair/Market Value of the Equity Portfolio	$	781.5		$	879.2		$	976.9	$	1,074.6	$	1,172.3	$	768.9		$	865.0		$	961.1	$	1,057.2	$	1,153.3
After-tax Change in Fair/Market Value		(127.0	)		(63.5	)		-		63.5		127.0		(124.9	)		(62.5	)		-		62.5		124.9

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, the impact on the market value of available for sale fixed maturities due to changes in foreign currency exchange rates, in relation to functional currency, is reflected as part of other comprehensive income. Conversely, the impact of changes in foreign currency exchange rates, in relation to functional currency, on other assets and liabilities is reflected through net income as a component of other income (expense). In addition, we translate the assets, liabilities and income of non-U.S. dollar functional currency legal entities to the U.S. dollar. This translation amount is reported as a component of other comprehensive income.

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

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: ~~August 15,~~November 14, 2016