UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(d)

OF THE SECURITIES EXCHANGE ACT OF 1934

FOR THE QUARTERLY PERIOD ENDED:

~~September 30, 2017~~March 31, 2018

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, a smaller reporting company or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company" and "emerging growth company" in Rule 12b-2 of the Exchange Act.

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

Indicate by check mark if the registrant is an emerging growth company and has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange act.

YES

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

YES

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

		Number of Shares Outstanding
Class		At ~~November~~May 1, ~~2017~~2018
Common Shares, $0.01 par value		1,000

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

EVEREST REINSURANCE HOLDINGS, INC.

Table of Contents

Form 10-Q

Page

PART I

FINANCIAL INFORMATION


Item 1.	Financial Statements

	Consolidated Balance Sheets at ~~September 30, 2017~~March 31, 2018 (unaudited) and
		December 31, ~~2016 (unaudited)~~2017	1

	Consolidated Statements of Operations and Comprehensive Income (Loss) for the
		three ~~and nine~~ months ended ~~September 30,~~March 31, 2018 and 2017 ~~and 2016~~ (unaudited)	2

	Consolidated Statements of Changes in Stockholder's Equity for the three ~~and~~
		~~nine~~ months ended ~~September 30,~~March 31, 2018 and 2017 ~~and 2016~~ (unaudited)	3

	Consolidated Statements of Cash Flows for the ~~nine~~three months ended
		~~September 30,~~March 31, 2018 and 2017 ~~and 2016~~ (unaudited)	4

	Notes to Consolidated Interim Financial Statements (unaudited)		5

Item 2.	Management's Discussion and Analysis of Financial Condition and
		Results of Operation	3431

Item 3.	Quantitative and Qualitative Disclosures About Market Risk		5143

Item 4.	Controls and Procedures		5143

PART II

OTHER INFORMATION


Item 1.	Legal Proceedings	5143

Item 1A.	Risk Factors	5244

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	5244

Item 3.	Defaults Upon Senior Securities	5244

Item 4.	Mine Safety Disclosures	5244

Item 5.	Other Information	5244

Item 6.	Exhibits	5244

EVEREST REINSURANCE HOLDINGS, INC.

CONSOLIDATED BALANCE SHEETS

	September 30,			December 31,			March 31,			December 31,
(Dollars in thousands, except par value per share)	2017			2016			2018			2017
	(unaudited)						(unaudited)
ASSETS:
Fixed maturities - available for sale, at market value	$	6,039,361		$	5,970,496		$	4,907,818		$	4,971,921
(amortized cost: 2017, $5,974,256; 2016, $5,910,494)
(amortized cost: 2018, $4,928,909; 2017, $4,927,622)
Fixed maturities - available for sale, at fair value								1,821			-
Equity securities - available for sale, at fair value		998,071			887,800			887,435			822,375
Short-term investments		229,999			306,286			186,605			241,506
Other invested assets (cost: 2017, $736,566; 2016, $613,680)		739,486			613,740
Other invested assets (cost: 2018, $865,412; 2017, $835,597)								865,412			838,694
Other invested assets, at fair value		1,922,402			1,766,626			1,770,684			1,807,473
Cash		302,331			297,794			384,410			229,552
Total investments and cash		10,231,650			9,842,742			9,004,185			8,911,521
Note receivable - affiliated		250,000			250,000			250,000			250,000
Accrued investment income		45,575			45,323			38,458			35,376
Premiums receivable		1,564,491			1,128,639			1,283,896			1,301,827
Reinsurance receivables - unaffiliated		1,116,370			887,657			1,141,448			1,180,648
Reinsurance receivables - affiliated		4,137,998			3,686,130			4,796,997			4,940,039
Income taxes								48,917			87,110
Funds held by reinsureds		204,989			190,421			76,255			210,939
Deferred acquisition costs		65,519			68,621			307,161			307,741
Prepaid reinsurance premiums		1,115,344			781,384			312,780			346,708
Other assets		411,425			202,519			293,533			316,603
TOTAL ASSETS	$	19,143,361		$	17,083,436		$	17,553,630		$	17,888,512

LIABILITIES:
Reserve for losses and loss adjustment expenses	$	9,969,148		$	8,331,288		$	9,145,821		$	9,343,028
Unearned premium reserve		1,628,717			1,312,386			1,611,403			1,607,622
Funds held under reinsurance treaties		125,463			110,836			42,105			40,536
Losses in the course of payment		193,948			82,915
Commission reserves		24,932			52,037			13,757			21,464
Other net payable to reinsurers		1,158,259			815,298			352,198			491,299
4.868% Senior notes due 6/1/2044		396,804			396,714			396,864			396,834
6.6% Long term notes due 5/1/2067		236,536			236,462			236,585			236,561
Accrued interest on debt and borrowings		7,564			3,537			7,668			2,727
Income taxes		(29,533	)		148,940
Unsettled securities payable		39,660			27,121			32,263			25,338
Other liabilities		224,219			267,349			365,551			310,380
Total liabilities		13,975,717			11,784,883			12,204,215			12,475,789

Commitments and Contingencies (Note 7)

STOCKHOLDER'S EQUITY:
Common stock, par value: $0.01; 3,000 shares authorized;
1,000 shares issued and outstanding (2017 and 2016)		-			-
1,000 shares issued and outstanding (2018 and 2017)								-			-
Additional paid-in capital		387,772			387,567			387,889			387,841
Accumulated other comprehensive income (loss), net of deferred income tax expense
(benefit) of $9,405 at 2017 and ($19,549) at 2016		17,459			(36,315	)
(benefit) of ($14,553) at 2018 and ($299) at 2017								(54,573	)		(942	)
Retained earnings		4,762,413			4,947,301			5,016,099			5,025,824
Total stockholder's equity		5,167,644			5,298,553			5,349,415			5,412,723
TOTAL LIABILITIES AND STOCKHOLDER'S EQUITY	$	19,143,361		$	17,083,436		$	17,553,630		$	17,888,512

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

EVEREST REINSURANCE HOLDINGS, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

AND COMPREHENSIVE INCOME (LOSS)

	Three Months Ended						Nine Months Ended						Three Months Ended
	September 30,						September 30,						March 31,
(Dollars in thousands)	2017			2016			2017			2016			2018			2017
	(unaudited)						(unaudited)						(unaudited)
REVENUES:
Premiums earned	$	518,507		$	556,653		$	1,457,759		$	1,527,433		$	1,116,010		$	471,055
Net investment income		73,417			64,570			206,166			196,887			69,909			60,849
Net realized capital gains (losses):
Other-than-temporary impairments on fixed maturity securities		(1,473	)		(836	)		(4,179	)		(25,242	)		(35	)		(1,132	)
Other-than-temporary impairments on fixed maturity securities
transferred to other comprehensive income (loss)		-			-			-			-			-			-
Realized gain(loss) on sale of subsidiary		-			(28,032	)		-			(28,032	)		-			-
Other net realized capital gains (losses)		229,962			(21,195	)		258,145			(34,001	)		(60,166	)		118,900
Total net realized capital gains (losses)		228,489			(50,063	)		253,966			(87,275	)		(60,201	)		117,768
Other income (expense)		1,486			(13,208	)		21,996			(10,806	)		(74,877	)		9,855
Total revenues		821,899			557,952			1,939,887			1,626,239			1,050,841			659,527

CLAIMS AND EXPENSES:
Incurred losses and loss adjustment expenses		1,331,558			301,603			1,918,508			936,201			713,255			289,722
Commission, brokerage, taxes and fees		34,545			82,778			147,565			219,552			256,457			52,507
Other underwriting expenses		57,713			64,149			181,805			181,706			77,351			59,895
Corporate expenses		1,132			1,835			6,241			6,181			3,596			3,597
Interest, fee and bond issue cost amortization expense		7,161			8,859			23,974			26,576			7,313			8,859
Total claims and expenses		1,432,109			459,224			2,278,093			1,370,216			1,057,972			414,580

INCOME (LOSS) BEFORE TAXES		(610,210	)		98,728			(338,206	)		256,023			(7,131	)		244,947
Income tax expense (benefit)		(220,486	)		22,425			(153,318	)		69,358			5,041			75,769

NET INCOME (LOSS)	$	(389,724	)	$	76,303		$	(184,888	)	$	186,665		$	(12,172	)	$	169,178

Other comprehensive income (loss), net of tax:
Unrealized appreciation (depreciation) ("URA(D)") on securities arising during the period		530			3,808			13,794			62,672			(46,822	)		9,439
Less: reclassification adjustment for realized losses (gains) included in net income (loss)		(1,674	)		(2,767	)		(8,618	)		23,085			(4,835	)		(3,467	)
Total URA(D) on securities arising during the period		(1,144	)		1,041			5,176			85,757			(51,657	)		5,972

Foreign currency translation adjustments		34,281			(2,642	)		43,220			27,779			(1,342	)		3,567

Benefit plan actuarial net gain (loss) for the period		-			-			-			-
Reclassification adjustment for amortization of net (gain) loss included in net income (loss)		1,369			1,268			5,377			3,949			1,815			2,004
Total benefit plan net gain (loss) for the period		1,369			1,268			5,377			3,949			1,815			2,004
Total other comprehensive income (loss), net of tax		34,507			(333	)		53,774			117,485			(51,184	)		11,543

COMPREHENSIVE INCOME (LOSS)	$	(355,217	)	$	75,970		$	(131,114	)	$	304,150		$	(63,356	)	$	180,721

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

EVEREST REINSURANCE HOLDINGS, INC.

CONSOLIDATED STATEMENTS OF

CHANGES IN STOCKHOLDER'S EQUITY

	Three Months Ended						Nine Months Ended						Three Months Ended
	September 30,						September 30,						March 31,
(Dollars in thousands, except share amounts)	2017			2016			2017			2016			2018			2017
	(unaudited)						(unaudited)						(unaudited)
COMMON STOCK (shares outstanding):
Balance, beginning of period		1,000			1,000			1,000			1,000			1,000			1,000
Balance, end of period		1,000			1,000			1,000			1,000			1,000			1,000

ADDITIONAL PAID-IN CAPITAL:
Balance, beginning of period	$	387,705		$	382,537		$	387,567		$	374,789		$	387,841		$	387,567
Share-based compensation plans		67			2,437			205			10,185			48			70
Balance, end of period		387,772			384,974			387,772			384,974			387,889			387,637

ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS),
NET OF DEFERRED INCOME TAXES:
Balance, beginning of period		(17,048	)		55,682			(36,315	)		(62,136	)		(942	)		(36,315	)
Net increase (decrease) during the period		34,507			(333	)		53,774			117,485			(51,184	)		11,543
Cumulative change due to adoption of Accounting Standards Update 2016-01														(2,447	)		-
Balance, end of period		17,459			55,349			17,459			55,349			(54,573	)		(24,772	)

RETAINED EARNINGS:
Balance, beginning of period		5,152,137			4,756,019			4,947,301			4,645,657			5,025,824			4,947,301
Net income (loss)		(389,724	)		76,303			(184,888	)		186,665			(12,172	)		169,178
Cumulative change due to adoption of Accounting Standards Update 2016-01														2,447			-
Balance, end of period		4,762,413			4,832,322			4,762,413			4,832,322			5,016,099			5,116,479

TOTAL STOCKHOLDER'S EQUITY, END OF PERIOD	$	5,167,644		$	5,272,645		$	5,167,644		$	5,272,645		$	5,349,415		$	5,479,344

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

EVEREST REINSURANCE HOLDINGS, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

	Nine Months Ended						Three Months Ended
	September 30,						March 31,
(Dollars in thousands)	2017			2016			2018			2017
	(unaudited)						(unaudited)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss)	$	(184,888	)	$	186,665		$	(12,172	)	$	169,178
Adjustments to reconcile net income to net cash provided by operating activities:
Decrease (increase) in premiums receivable		(432,477	)		(155,717	)		18,258			(127,985	)
Decrease (increase) in funds held by reinsureds, net		415			(948	)		136,342			5,307
Decrease (increase) in reinsurance receivables		(649,539	)		(120,745	)		177,774			(33,666	)
Decrease (increase) in income taxes		(206,857	)		35,647			52,369			74,132
Decrease (increase) in prepaid reinsurance premiums		(330,345	)		(94,400	)		33,663			(61,392	)
Increase (decrease) in reserve for losses and loss adjustment expenses		1,579,394			322,226			(193,513	)		34,016
Increase (decrease) in unearned premiums		310,237			94,847			3,844			39,180
Increase (decrease) in other net payable to reinsurers		336,582			(216,024	)		(138,603	)		(27,178	)
Increase (decrease) in losses in course of payment		110,669			1,860			(20,616	)		99,506
Change in equity adjustments in limited partnerships		(20,415	)		(17,067	)		(15,687	)		225
Distribution of limited partnership income		23,174			31,739			10,214			3,727
Change in other assets and liabilities, net		(88,583	)		(125,150	)		51,822			17,896
Non-cash compensation expense		7,675			7,453			2,913			2,629
Amortization of bond premium (accrual of bond discount)		13,675			13,754			2,105			4,494
Amortization of underwriting discount on senior notes		3			3
Net realized capital (gains) losses		(253,966	)		87,275			60,201			(117,768	)
Net cash provided by (used in) operating activities		214,754			51,418			168,914			82,301

CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from fixed maturities matured/called - available for sale, at market value		771,950			572,224			217,085			274,356
Proceeds from fixed maturities sold - available for sale, at market value		1,063,126			433,655			154,981			292,994
Proceeds from fixed maturities sold - available for sale, at fair value		-			1,587
Proceeds from equity securities sold - available for sale, at fair value		302,407			531,894			128,479			134,051
Proceeds from sale of subsidiary (net of cash disposed)		-			47,721
Distributions from other invested assets		1,459,677			1,119,428			371,583			448,121
Cost of fixed maturities acquired - available for sale, at market value		(1,809,485	)		(1,516,092	)		(369,980	)		(785,984	)
Cost of fixed maturities acquired - available for sale, at fair value		-			(3,940	)		(1,836	)		-
Cost of equity securities acquired - available for sale, at fair value		(326,444	)		(253,041	)		(223,034	)		(56,724	)
Cost of other invested assets acquired		(1,584,617	)		(1,299,682	)		(395,769	)		(497,077	)
Net change in short-term investments		79,509			376,832			54,594			(29,794	)
Net change in unsettled securities transactions		(189,980	)		40,771			41,432			72,275
Net cash provided by (used in) investing activities		(233,857	)		51,357			(22,465	)		(147,782	)

CASH FLOWS FROM FINANCING ACTIVITIES:
Tax benefit from share-based compensation		(7,471	)		2,732
Tax benefit from share-based compensation, net of expense								(419	)		(2,560	)
Net cash provided by (used in) financing activities		(7,471	)		2,732			(419	)		(2,560	)

EFFECT OF EXCHANGE RATE CHANGES ON CASH		31,111			24,242			8,828			5,833

Net increase (decrease) in cash		4,537			129,749			154,858			(62,208	)
Cash, beginning of period		297,794			155,429			229,552			297,794
Cash, end of period	$	302,331		$	285,178		$	384,410		$	235,586

SUPPLEMENTAL CASH FLOW INFORMATION:
Income taxes paid (recovered)	$	53,273		$	30,877		$	(50,447	)	$	1,581
Interest paid		19,783			17,608			2,317			-

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

NOTES TO CONSOLIDATED INTERIM FINANCIAL STATEMENTS (UNAUDITED)

For the Three ~~and Nine~~ Months Ended ~~September 30,~~March 31, 2018 and 2017 ~~and 2016~~

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.

2. BASIS OF PRESENTATION

The unaudited consolidated financial statements of the Company for the three ~~and nine~~ months ended ~~September 30,~~March 31. 2018 and 2017 ~~and 2016~~ 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, ~~2016~~2017 consolidated balance sheet data was derived from audited financial statements, but does not include all disclosures required by GAAP. The results for the three ~~and nine~~ months ended ~~September 30,~~March 31. 2018 and 2017 ~~and 2016~~ 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, 2017, 2016 ~~2015~~ and ~~2014~~2015 included in the Company's most recent Form 10-K filing.

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities (and disclosure of contingent assets and liabilities) at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Ultimate actual results could differ, possibly materially, from those estimates.

All intercompany accounts and transactions have been eliminated.

Certain reclassifications and format changes have been made to prior years' amounts to conform to the ~~2017~~2018 presentation.

Application of Recently Issued Accounting Standard Changes.

Accounting for Deferred Taxes in Accumulated Other Comprehensive Income (AOCI).In February 2018, FASB issued ASU 2018-02 which outlines guidance on the treatment of trapped deferred taxes contained within AOCI on the consolidated balance sheets. The new guidance allows the amount of trapped deferred taxes in AOCI, resulting from the change in the U.S. tax rate from 35% to 21% upon enactment of the Tax Cuts and Jobs Act ("TCJA"), to be reclassed as part of retained earnings in the consolidated balance sheets. The guidance is effective for annual and interim reporting periods beginning after December 15, 2018, but early adoption is allowed. The Company has decided to early adopt the guidance as of December 31, 2017. The adoption has resulted in a reclass of $325 thousand between AOCI and retained earnings.

Accounting for Impact on Income Taxes due to Tax Reform. In December 2017, the SEC issued Staff Accounting Bulletin ("SAB") 118 which provides guidance on the application of FASB Accounting Standards Codification ("ASC") Topic 740, Income Taxes, due to the enactment of TCJA. SAB 118 became effective upon release. The Company has adopted the provisions of SAB 118 with respect to measuring the tax effects for the modifications to the determination of tax basis loss reserves. Because of uncertainty in how the Internal Revenue Service ("IRS") intends to implement the modifications and the necessary transition calculation, the Company has determined that a reasonable estimate cannot be determined and has followed the provisions of the tax laws that were in effect prior to the modifications. In 2018, the Company expects to record adjustments to the amount of tax expense it recorded in 2017 with respect to the TCJA as estimated amounts are finalized. Further adjustments are not expected to have a material impact on the Company's financial statements.

Amortization of Bond Premium. In March 2017, FASB issued ASU 2017-08 which outlines guidance on the amortization period for premium on callable debt securities. The new guidance requires that the premium on callable debt securities be amortized through the earliest call date rather than through the maturity date of the callable security. The guidance is effective for annual and interim reporting periods beginning after December 15, 2019. The Company does not expect the adoption of ASU 2017-08 to have a material impact on its financial statements.

Presentation and Disclosure of Net Periodic Benefit Costs. In March 2017, FASB issued ASU 2017-07 which outlines guidance on the presentation of net periodic costs of benefit plans. The new guidance requires that the service cost component of net periodic benefit costs be reported within the same line item of the statements of operations as other compensation costs are reported. Other components of net periodic benefit costs should be reported separately. Footnote disclosure is required to state within which line items of the statements of operations the components are reported. The guidance is effective for annual and interim reporting periods beginning after December 15, 2017. The Company ~~does not expect~~adopted the guidance effective January 1, 2018. The adoption of ASU 2017-07 todid not have a material impact on ~~its~~the Company's financial statements.

Disclosure of Restricted Cash. In November 2016, FASB issued ASU 2016-18 and in August 2016, FASB issued ASU 2016-15 which outlines guidance on the presentation in the statements of cash flows of changes in restricted cash. The new guidance requires that the statements of cash flows should reflect all changes in cash, cash equivalents and restricted cash in total and not segregated individually. The guidance is effective for annual and interim reporting periods beginning after December 15, 2017. The Company ~~does not expect~~adopted the guidance effective January 1, 2018. The adoption of ASU 2016-18 toand ASU 2016-15 did not have a material impact on ~~its~~the Company's financial statements.

Intra-Entity Asset Transfers. In October 2016, FASB issued ASU 2016-16 which outlines guidance on the tax accounting for intra-entity asset sales and transfers, other than inventory. The new guidance requires that reporting entities recognize tax expense from the intra-entity transfer of an asset in the seller's tax jurisdiction at the time of transfer and recognize any deferred tax asset in the buyer's tax jurisdiction at the time of transfer. The guidance is effective for annual and interim reporting periods beginning after December 15, 2017. The Company ~~does not expect~~adopted the guidance effective January 1, 2018. The adoption of ASU 2016-16 todid not have a material impact on ~~its~~the Company's financial statements.

Valuation of Financial Instruments. In June 2016, FASB issued ASU 2016-13 which ~~outlines~~outline guidance on the valuation of and accounting for assets measured at amortized cost and available for sale debt securities. The carrying value of assets measured at amortized cost will now be presented as the amount expected to be collected on the financial asset (amortized cost less an allowance for credit losses valuation account). Available for sale debt securities will now record credit losses through an allowance for credit losses, which will be limited to the amount by which fair value is below amortized cost. The guidance is effective for annual and interim reporting periods beginning after December 15, 2019. The Company is currently evaluating the impact of the adoption of ASU 2016-13 on its financial statements.

Leases. In February 2016, FASB issued ASU 2016-02 which outlines new guidance on the accounting for leases. The new guidance requires the recognition of lease assets and lease liabilities on the balance sheets for most leases that were previously deemed operating leases and required only lease expense presentation in the statements of operations. The guidance is effective for annual and interim reporting periods beginning after December 15, 2018. The Company is currently evaluating the impact of the adoption of ASU 2016-02 on its financial statements.

Recognition and Measurement of Financial Instruments. In January 2016, the FASB issued ASU 2016-01 which outlines revised guidance on the accounting for equity investments. The new guidance states that all equity investments in unconsolidated entities will be ~~measures~~measured at fair value, with the change in value being recorded through the income statement rather than being recorded within other comprehensive income. The updated guidance is effective for annual and interim reporting periods beginning after December 15, 2017. The Company ~~is currently evaluating~~adopted the ~~impact of the~~guidance effective January 1, 2018. The adoption of ASU 2016-01 ~~on its financial statements.~~resulted in a cumulative change adjustment of $2,447 thousand between AOCI and retained earnings, which is disclosed separately within the consolidated statement of changes in shareholders equity.

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. The Company implemented this guidance effective in the fourth quarter of 2016.

~~Disclosures for Investments in Certain Entities that Calculate Net Asset Value Per Share.~~ In May 2015, the FASB issued ASU 2015-07, which removes the requirement to categorize, within the fair value hierarchy, investments for which fair values are estimated using the net asset value practical expedient provided by Accounting Standards Codification 820, Fair Value Measurement. The updated guidance is effective for annual reporting periods beginning after December 15, 2015. The adoption did not have a material impact on the Company's 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. The Company implemented this guidance effective in the second quarter of 2016. The adoption did not have a material impact on the Company's financial statements.~~

~~Consolidation.~~ In February 2015, the FASB issued ASU 2015-02, authoritative guidance regarding consolidation of reporting entities. The new guidance focuses on the required evaluation of whether certain legal entities should be consolidated. This guidance is effective for annual and interim reporting periods beginning after December 15, 2015. Based upon this guidance, the Company has determined that the separate segregated accounts associated with Mt. Logan Re should not be consolidated. The Company implemented the guidance effective January 1, 2016.

Revenue Recognition. In May 2014, the FASB issued ASU 2014-09 and in August 2015, FASB issued ASU 2015-14 which ~~outlines~~outline revised guidance on the recognition of revenue arising from contracts with customers. The new guidance states that reporting entities should apply certain steps to determine when revenue should be recognized, based upon fulfillment of performance obligations to complete contracts. The updated guidance is effective for annual and interim reporting periods beginning after December 15, 2017. The Company ~~does not expect~~adopted the guidance effective January 1, 2018. The adoption of ASU 2014-09 toand ASU 2015-14 did not have a material impact on ~~its~~the Company's financial statements.

Any issued guidance and pronouncements, other than those directly ~~references~~referenced above, are deemed by the Company to be either not applicable or immaterial to its financial statements.

3. REVISIONS TO FINANCIAL STATEMENTS

In preparing its second quarter of 2017 financial statements, the Company altered its processing of ceding certain commissions and deferred acquisition costs under an affiliated quota share agreement. In previous reporting periods, these expenses were ceded based upon a quarter lag. In the second quarter of 2017, the quarter lag was eliminated and these expenses are now recorded on a current quarter basis. Although management determined that the impact of the ceding lag was not material to prior period financial statements, the impact of eliminating the ceding lag would have significantly impacted results within the second quarter of 2017. As a result, prior period balances have been revised in the applicable financial statements and corresponding footnotes to eliminate the impact of the previous recording lag.

Management assessed the materiality of this change within prior period financial statements based upon SEC Staff Accounting Bulletin Number 99, Materiality, which is since codified in Accounting Standards Codification ("ASC") 250, Accounting Changes and Error Corrections. In accordance with ASC 250, the prior period comparative financial statements that are presented herein have been revised.

The following tables present line items for prior period financial statements that have been affected by the revision. For these line items, the tables detail the amounts as previously reported, the impact upon those line items due to the revision, and the amounts as currently revised within the financial statements.

CONSOLIDATED BALANCE SHEETS March 31, 2017
As Previously Impact of
Reported Revisions As Revised
(Dollars in thousands, except par value per share)
ASSETS:
Deferred acquisition costs $ 62,308 $ (4,994 ) $ 57,314
TOTAL ASSETS $ 17,587,840 $ (4,994 ) $ 17,582,846

LIABILITIES:
Other net payable to reinsurers $ 832,307 $ (41,746 ) $ 790,561
Income taxes 223,629 5,625 229,254
Total liabilities 12,139,623 (36,121 ) 12,103,502

STOCKHOLDERS EQUITY:
Retained earnings 5,085,352 31,127 5,116,479
Total stockholder's equity 5,448,217 31,127 5,479,344
TOTAL LIABILITIES AND STOCKHOLDER'S EQUITY $ 17,587,840 $ (4,994 ) $ 17,582,846

CONSOLIDATED BALANCE SHEETS December 31, 2016 December 31, 2015
As Previously Impact of As Previously Impact of
Reported Revisions As Revised Reported Revisions As Revised
(Dollars in thousands, except par value per share)
ASSETS:
Deferred acquisition costs $ 73,924 $ (5,303 ) $ 68,621 $ 92,651 $ (6,249 ) $ 86,402
TOTAL ASSETS $ 17,088,739 $ (5,303 ) $ 17,083,436 $ 16,695,203 $ (6,249 ) $ 16,688,954

LIABILITIES:
Other net payable to reinsurers $ 860,391 $ (45,093 ) $ 815,298 $ 1,225,260 $ (37,480 ) $ 1,187,780
Income taxes 142,143 6,797 148,940 68,024 4,132 72,156
Total liabilities 11,823,179 (38,296 ) 11,784,883 11,763,992 (33,348 ) 11,730,644

STOCKHOLDERS EQUITY:
Retained earnings 4,914,308 32,993 4,947,301 4,618,558 27,099 4,645,657
Total stockholder's equity 5,265,560 32,993 5,298,553 4,931,211 27,099 4,958,310
TOTAL LIABILITIES AND STOCKHOLDER'S EQUITY $ 17,088,739 $ (5,303 ) $ 17,083,436 $ 16,695,203 $ (6,249 ) $ 16,688,954

CONSOLIDATED STATEMENTS OF OPERATIONS Year Ended December 31, 2016 Year Ended December 31, 2015
AND COMPREHENSIVE INCOME (LOSS): As Previously Impact of As Previously Impact of
Reported Revisions As Revised Reported Revisions As Revised
(Dollars in thousands)
CLAIMS AND EXPENSES:
Commission, brokerage, taxes and fees $ 289,982 $ (8,558 ) $ 281,424 $ 315,069 $ (2,744 ) $ 312,325
Total claims and expenses 1,928,940 (8,558 ) 1,920,382 1,892,062 (2,744 ) 1,889,318

INCOME (LOSS) BEFORE TAXES 390,433 8,558 398,991 604,542 2,744 607,286
Income tax expense (benefit) 94,683 2,664 97,347 191,889 3,007 194,896

NET INCOME (LOSS) $ 295,750 $ 5,894 $ 301,644 $ 412,653 $ (263 ) $ 412,390

COMPREHENSIVE INCOME (LOSS) $ 321,571 $ 5,894 $ 327,465 $ 345,998 $ (263 ) $ 345,735

CONSOLIDATED STATEMENTS OF OPERATIONS Year Ended December 31, 2014 Three Months Ended March 31, 2017
AND COMPREHENSIVE INCOME (LOSS): As Previously Impact of As Previously Impact of
Reported Revisions As Revised Reported Revisions As Revised
(Dollars in thousands)
CLAIMS AND EXPENSES:
Commission, brokerage, taxes and fees $ 339,402 $ (427 ) $ 338,975 $ 49,470 $ 3,037 $ 52,507
Total claims and expenses 1,930,749 (427 ) 1,930,322 411,543 3,037 414,580

INCOME (LOSS) BEFORE TAXES 657,688 427 658,115 247,984 (3,037 ) 244,947
Income tax expense (benefit) 203,562 1,125 204,687 76,940 (1,171 ) 75,769

NET INCOME (LOSS) $ 454,126 $ (698 ) $ 453,428 $ 171,044 $ (1,866 ) $ 169,178

COMPREHENSIVE INCOME (LOSS) $ 370,997 $ (698 ) $ 370,299 $ 182,587 $ (1,866 ) $ 180,721

CONSOLIDATED BALANCE SHEETS	March 31, 2017
	As Previously		Impact of
	Reported		Revisions			As Revised
(Dollars in thousands, except par value per share)
ASSETS:
Deferred acquisition costs	$	62,308	$	(4,994	)	$	57,314
TOTAL ASSETS	$	17,587,840	$	(4,994	)	$	17,582,846

LIABILITIES:
Other net payable to reinsurers	$	832,307	$	(41,746	)	$	790,561
Income taxes		223,629		5,625			229,254
Total liabilities		12,139,623		(36,121	)		12,103,502

STOCKHOLDERS EQUITY:
Retained earnings		5,085,352		31,127			5,116,479
Total stockholder's equity		5,448,217		31,127			5,479,344
TOTAL LIABILITIES AND STOCKHOLDER'S EQUITY	$	17,587,840	$	(4,994	)	$	17,582,846

CONSOLIDATED STATEMENTS OF OPERATIONS	Three Months Ended March 31, 2017
AND COMPREHENSIVE INCOME (LOSS):	As Previously		Impact of
	Reported		Revisions			As Revised
(Dollars in thousands)
CLAIMS AND EXPENSES:
Commission, brokerage, taxes and fees	$	49,470	$	3,037		$	52,507
Total claims and expenses		411,543		3,037			414,580

INCOME (LOSS) BEFORE TAXES		247,984		(3,037	)		244,947
Income tax expense (benefit)		76,940		(1,171	)		75,769

NET INCOME (LOSS)	$	171,044	$	(1,866	)	$	169,178

COMPREHENSIVE INCOME (LOSS)	$	182,587	$	(1,866	)	$	180,721

CONSOLIDATED STATEMENTS OF	Three Months Ended March 31, 2017
CHANGES IN STOCKHOLDER'S EQUITY	As Previously		Impact of
	Reported		Revisions			As Revised
(Dollars in thousands, except share amounts)
RETAINED EARNINGS:
Balance, beginning of period	$	4,914,308	$	32,993		$	4,947,301
Net income (loss)		171,044		(1,866	)		169,178
Balance, end of period		5,085,352		31,127			5,116,479
TOTAL STOCKHOLDER'S EQUITY, END OF PERIOD	$	5,448,217	$	31,127		$	5,479,344

CONSOLIDATED STATEMENTS OF CASH FLOWS	Three Months Ended March 31, 2017
	As Previously			Impact of
	Reported			Revisions			As Revised
(Dollars in thousands)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss)	$	171,044		$	(1,866	)	$	169,178
Decrease (increase) in income taxes		75,304			(1,172	)		74,132
Increase (decrease) in other net payable to reinsurers		(30,525	)		3,347			(27,178	)
Change in other assets and liabilities, net		18,204			(309	)		17,895

CONSOLIDATED STATEMENTS OF OPERATIONS Three Months Ended September 30, 2016 Nine Months Ended September 30, 2016
AND COMPREHENSIVE INCOME (LOSS): As Previously Impact of As Previously Impact of
Reported Revisions As Revised Reported Revisions As Revised
(Dollars in thousands)
CLAIMS AND EXPENSES:
Commission, brokerage, taxes and fees $ 85,563 $ (2,785 ) $ 82,778 $ 226,511 $ (6,959 ) $ 219,552
Total claims and expenses 462,009 (2,785 ) 459,224 1,377,175 (6,959 ) 1,370,216

INCOME (LOSS) BEFORE TAXES 95,943 2,785 98,728 249,064 6,959 256,023
Income tax expense (benefit) 21,145 1,280 22,425 66,990 2,368 69,358

NET INCOME (LOSS) $ 74,798 $ 1,505 $ 76,303 $ 182,074 $ 4,591 $ 186,665

COMPREHENSIVE INCOME (LOSS) $ 74,465 $ 1,505 $ 75,970 $ 299,559 $ 4,591 $ 304,150

CONSOLIDATED STATEMENTS OF OPERATIONS Three Months Ended June 30, 2016 Six Months Ended June 30, 2016
AND COMPREHENSIVE INCOME (LOSS): As Previously Impact of As Previously Impact of
Reported Revisions As Revised Reported Revisions As Revised
(Dollars in thousands)
CLAIMS AND EXPENSES:
Commission, brokerage, taxes and fees $ 72,126 $ (1,717 ) $ 70,409 $ 140,948 $ (4,174 ) $ 136,774
Total claims and expenses 479,860 (1,717 ) 478,143 915,166 (4,174 ) 910,992

INCOME (LOSS) BEFORE TAXES 101,332 1,717 103,049 153,121 4,174 157,295
Income tax expense (benefit) 32,982 695 33,677 45,845 1,088 46,933

NET INCOME (LOSS) $ 68,350 $ 1,022 $ 69,372 $ 107,276 $ 3,086 $ 110,362

COMPREHENSIVE INCOME (LOSS) $ 124,381 $ 1,022 $ 125,403 $ 225,094 $ 3,086 $ 228,180

CONSOLIDATED STATEMENTS OF OPERATIONS Three Months Ended March 31, 2016
AND COMPREHENSIVE INCOME (LOSS): As Previously Impact of
Reported Revisions As Revised
(Dollars in thousands)
CLAIMS AND EXPENSES:
Commission, brokerage, taxes and fees $ 68,822 $ (2,457 ) $ 66,365
Total claims and expenses 435,306 (2,457 ) 432,849

INCOME (LOSS) BEFORE TAXES 51,789 2,457 54,246
Income tax expense (benefit) 12,863 393 13,256

NET INCOME (LOSS) $ 38,926 $ 2,064 $ 40,990

COMPREHENSIVE INCOME (LOSS) $ 100,713 $ 2,064 $ 102,777

CONSOLIDATED STATEMENTS OF Year Ended December 31, 2016 Year Ended December 31, 2015
CHANGES IN STOCKHOLDER'S EQUITY As Previously Impact of As Previously Impact of
Reported Revisions As Revised Reported Revisions As Revised

(Dollars in thousands, except share amounts)
RETAINED EARNINGS:
Balance, beginning of period $ 4,618,558 $ 27,099 $ 4,645,657 $ 4,205,905 $ 27,362 $ 4,233,267
Net income (loss) 295,750 5,894 301,644 412,653 (263 ) 412,390
Balance, end of period 4,914,308 32,993 4,947,301 4,618,558 27,099 4,645,657
TOTAL STOCKHOLDER'S EQUITY, END OF PERIOD $ 5,265,560 $ 32,993 $ 5,298,553 $ 4,931,211 $ 27,099 $ 4,958,310

CONSOLIDATED STATEMENTS OF Year Ended December 31, 2014 Three Months Ended March 31, 2017
CHANGES IN STOCKHOLDER'S EQUITY As Previously Impact of As Previously Impact of
Reported Revisions As Revised Reported Revisions As Revised

(Dollars in thousands, except share amounts)
RETAINED EARNINGS:
Balance, beginning of period $ 3,751,779 $ 28,060 $ 3,779,839 $ 4,914,308 $ 32,993 $ 4,947,301
Net income (loss) 454,126 (698 ) 453,428 171,044 (1,866 ) 169,178
Balance, end of period 4,205,905 27,362 4,233,267 5,085,352 31,127 5,116,479
TOTAL STOCKHOLDER'S EQUITY, END OF PERIOD $ 4,572,717 $ 27,362 $ 4,600,079 $ 5,448,217 $ 31,127 $ 5,479,344

CONSOLIDATED STATEMENTS OF Three Months Ended September 30, 2016 Nine Months Ended September 30, 2016
CHANGES IN STOCKHOLDER'S EQUITY As Previously Impact of As Previously Impact of
Reported Revisions As Revised Reported Revisions As Revised

(Dollars in thousands, except share amounts)
RETAINED EARNINGS:
Balance, beginning of period $ 4,725,834 $ 30,185 $ 4,756,019 $ 4,618,558 $ 27,099 $ 4,645,657
Net income (loss) 74,798 1,505 76,303 182,074 4,591 186,665
Balance, end of period 4,800,632 31,690 4,832,322 4,800,632 31,690 4,832,322
TOTAL STOCKHOLDER'S EQUITY, END OF PERIOD $ 5,240,955 $ 31,690 $ 5,272,645 $ 5,240,955 $ 31,690 $ 5,272,645

CONSOLIDATED STATEMENTS OF Three Months Ended June 30, 2016 Six Months Ended June 30, 2016
CHANGES IN STOCKHOLDER'S EQUITY As Previously Impact of As Previously Impact of
Reported Revisions As Revised Reported Revisions As Revised

(Dollars in thousands, except share amounts)
RETAINED EARNINGS:
Balance, beginning of period $ 4,657,484 $ 29,163 $ 4,686,647 $ 4,618,558 $ 27,099 $ 4,645,657
Net income (loss) 68,350 1,022 69,372 107,276 3,086 110,362
Balance, end of period 4,725,834 30,185 4,756,019 4,725,834 30,185 4,756,019
TOTAL STOCKHOLDER'S EQUITY, END OF PERIOD $ 5,164,053 $ 30,185 $ 5,194,238 $ 5,164,053 $ 30,185 $ 5,194,238

CONSOLIDATED STATEMENTS OF Three Months Ended March 31, 2016
CHANGES IN STOCKHOLDER'S EQUITY As Previously Impact of
Reported Revisions As Revised

(Dollars in thousands, except share amounts)
RETAINED EARNINGS:
Balance, beginning of period $ 4,618,558 $ 27,099 $ 4,645,657
Net income (loss) 38,926 2,064 40,990
Balance, end of period 4,657,484 29,163 4,686,647
TOTAL STOCKHOLDER'S EQUITY, END OF PERIOD $ 5,036,717 $ 29,163 $ 5,065,880

CONSOLIDATED STATEMENTS OF CASH FLOWS Year Ended December 31, 2016 Year Ended December 31, 2015
As Previously Impact of As Previously Impact of
Reported Revisions As Revised Reported Revisions As Revised
(Dollars in thousands)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $ 295,750 $ 5,894 $ 301,644 $ 412,653 $ (263 ) $ 412,390
Decrease (increase) in income taxes 60,325 2,666 62,991 57,487 3,007 60,494
Increase (decrease) in other net payable to reinsurers (364,242 ) (7,614 ) (371,856 ) 204,526 (8,590 ) 195,936
Change in other assets and liabilities, net 16,090 (946 ) 15,144 7,499 5,846 13,345

CONSOLIDATED STATEMENTS OF CASH FLOWS Year Ended December 31, 2014 Three Months Ended March 31, 2017
As Previously Impact of As Previously Impact of
Reported Revisions As Revised Reported Revisions As Revised
(Dollars in thousands)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $ 454,126 $ (698 ) $ 453,428 $ 171,044 $ (1,866 ) $ 169,178
Decrease (increase) in income taxes 68,206 1,125 69,331 75,304 (1,172 ) 74,132
Increase (decrease) in other net payable to reinsurers 5,130 (3,216 ) 1,914 (30,525 ) 3,347 (27,178 )
Change in other assets and liabilities, net 81,388 2,789 84,177 18,204 (309 ) 17,895

CONSOLIDATED STATEMENTS OF CASH FLOWS Nine Months Ended September 30, 2016 Six Months Ended June 30, 2016
As Previously Impact of As Previously Impact of
Reported Revisions As Revised Reported Revisions As Revised
(Dollars in thousands)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $ 182,074 $ 4,591 $ 186,665 $ 107,276 $ 3,086 $ 110,362
Decrease (increase) in income taxes 33,279 2,368 35,647 8,190 1,089 9,279
Increase (decrease) in other net payable to reinsurers (209,260 ) (6,764 ) (216,024 ) (370,242 ) (3,111 ) (373,353 )
Change in other assets and liabilities, net (124,955 ) (195 ) (125,150 ) 14,216 (1,064 ) 13,152

CONSOLIDATED STATEMENTS OF CASH FLOWS Three Months Ended March 31, 2016
As Previously Impact of
Reported Revisions As Revised
(Dollars in thousands)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $ 38,926 $ 2,064 $ 40,990
Decrease (increase) in income taxes 6,546 393 6,939
Increase (decrease) in other net payable to reinsurers (106,588 ) (1,122 ) (107,710 )
Change in other assets and liabilities, net 24,496 (1,335 ) 23,161

4. INVESTMENTS

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

	At September 30, 2017											At March 31, 2018
	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	$	657,018	$	2,088	$	(3,220	)	$	655,886	$	-	$	705,124	$	324	$	(14,037	)	$	691,411	$	-
Obligations of U.S. states and political subdivisions		652,525		24,061		(4,744	)		671,842		-		523,611		14,630		(1,694	)		536,547		165
Corporate securities		2,213,498		38,058		(11,965	)		2,239,591		695		1,991,600		17,038		(32,936	)		1,975,702		133
Asset-backed securities		153,400		451		(62	)		153,789		-		132,109		75		(1,295	)		130,889		-
Mortgage-backed securities
Commercial		59,311		334		(622	)		59,023		-		51,247		-		(738	)		50,509		-
Agency residential		683,178		1,904		(7,252	)		677,830		-		139,703		548		(2,961	)		137,290		-
Non-agency residential		55		7		-			62		-		45		5		-			50		-
Foreign government securities		520,431		19,038		(7,996	)		531,473		-		513,864		14,888		(8,891	)		519,861		-
Foreign corporate securities		1,034,840		25,601		(10,576	)		1,049,865		374		871,606		14,225		(20,272	)		865,559		307
Total fixed maturity securities	$	5,974,256	$	111,542	$	(46,437	)	$	6,039,361	$	1,069	$	4,928,909	$	61,733	$	(82,824	)	$	4,907,818	$	605

	At December 31, 2016											At December 31, 2017
	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	$	693,005	$	2,509	$	(4,434	)	$	691,080	$	-	$	671,449	$	658	$	(7,594	)	$	664,513	$	-
Obligations of U.S. states and political subdivisions		723,938		18,016		(11,970	)		729,984		-		563,789		22,124		(444	)		585,469		-
Corporate securities		2,119,324		50,665		(15,786	)		2,154,203		4,868		2,009,665		28,003		(13,459	)		2,024,209		129
Asset-backed securities		136,826		330		(129	)		137,027		-		138,203		207		(386	)		138,024		-
Mortgage-backed securities
Commercial		75,435		510		(452	)		75,493		-		52,121		115		(485	)		51,751		-
Agency residential		721,772		2,365		(8,993	)		715,144		-		114,435		511		(1,658	)		113,288		-
Non-agency residential		76		12		-			88		-		51		7		-			58		-
Foreign government securities		495,572		22,088		(10,383	)		507,277		-		514,048		17,065		(7,493	)		523,620		-
Foreign corporate securities		944,546		30,015		(14,361	)		960,200		175		863,861		20,121		(12,993	)		870,989		377
Total fixed maturity securities	$	5,910,494	$	126,510	$	(66,508	)	$	5,970,496	$	5,043	$	4,927,622	$	88,811	$	(44,512	)	$	4,971,921	$	506

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

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

	At September 30, 2017				At December 31, 2016				At March 31, 2018				At December 31, 2017
	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	$	403,948	$	405,602	$	394,401	$	392,824	$	341,749	$	341,018	$	319,858	$	320,746
Due after one year through five years		2,918,422		2,931,495		2,925,786		2,955,325		2,591,948		2,555,916		2,601,898		2,595,237
Due after five years through ten years		1,024,154		1,045,455		879,762		894,166		1,041,331		1,044,539		1,051,431		1,069,617
Due after ten years		731,788		766,105		776,436		800,429		630,777		647,607		649,625		683,200
Asset-backed securities		153,400		153,789		136,826		137,027		132,109		130,889		138,203		138,024
Mortgage-backed securities
Commercial		59,311		59,023		75,435		75,493		51,247		50,509		52,121		51,751
Agency residential		683,178		677,830		721,772		715,144		139,703		137,290		114,435		113,288
Non-agency residential		55		62		76		88		45		50		51		58
Total fixed maturity securities	$	5,974,256	$	6,039,361	$	5,910,494	$	5,970,496	$	4,928,909	$	4,907,818	$	4,927,622	$	4,971,921

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

	Three Months Ended						Nine Months Ended						Three Months Ended
	September 30,						September 30,						March 31,
(Dollars in thousands)	2017			2016			2017			2016			2018			2017
Increase (decrease) during the period between the market value and cost
of investments carried at market value, and deferred taxes thereon:
Fixed maturity securities	$	(3,197	)	$	4,047		$	9,077		$	127,736		$	(65,488	)	$	12,242
Fixed maturity securities, other-than-temporary impairment		(158	)		(2,444	)		(3,974	)		4,199			99			(3,499	)
Other invested assets		1,595			-			2,860			-			-			444
Change in unrealized appreciation (depreciation), pre-tax		(1,760	)		1,603			7,963			131,935			(65,389	)		9,187
Deferred tax benefit (expense)		561			(1,418	)		(4,178	)		(44,709	)		13,753			(4,440	)
Deferred tax benefit (expense), other-than-temporary impairment		55			856			1,391			(1,469	)		(21	)		1,225
Change in unrealized appreciation (depreciation),
net of deferred taxes, included in stockholder's equity	$	(1,144	)	$	1,041		$	5,176		$	85,757		$	(51,657	)	$	5,972

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~~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:

The aggregate market value and gross unrealized losses related to investments in an unrealized loss position at ~~September 30, 2017~~March 31, 2018 were ~~$2,205,326~~$2,901,916 thousand and ~~$46,437~~$82,824 thousand, respectively. The market value of securities for the single issuer (the United States government) whose securities comprised the largest unrealized loss position at ~~September 30, 2017, (the U.S. Government)~~March 31, 2018, did not exceed ~~4.6%~~13.5% of the overall market value of the Company's fixed maturity securities. The market value of securities for the issuer with the second largest unrealized loss comprised less than 0.8% 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 ~~$23,890~~$45,463 thousand of unrealized losses related to fixed maturity securities that have been in an unrealized loss position for less than one year were generally comprised of domestic and foreign corporate securities, ~~agency residential mortgage-backed securities~~U.S. government agencies and corporations and foreign government securities. Of these unrealized losses, ~~$20,072~~$38,298 thousand were related to securities that were rated investment grade by at least one nationally recognized statistical rating agency. The ~~$22,547~~$37,361 thousand of unrealized losses related to fixed maturity securities in an unrealized loss position for more than one year related primarily due to ~~domestic~~foreign and ~~foreign~~domestic corporate securities, ~~as well as~~ foreign government securities, U.S. government agencies and

corporations and agency residential mortgage-backed securities. Of these unrealized losses ~~$20,240~~$35,930 thousand were related to securities that were rated investment grade by at least one nationally recognized statistical rating agency. There was no gross unrealized depreciation for mortgage-backed securities related to sub-prime and alt-A loans. In all instances, there were no projected cash flow shortfalls to recover the full book value of the investments and the related interest obligations. The mortgage-backed securities still have excess credit coverage and are current on interest and principal payments.

The 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.

The aggregate market value and gross unrealized losses related to investments in an unrealized loss position at December 31, ~~2016~~2017 were ~~$2,510,133~~$2,234,401 thousand and ~~$66,508~~$44,512 thousand, respectively. The market value of securities for the single issuer (the United States government) whose securities comprised the largest unrealized loss position at December 31, ~~2016,~~2017, did not exceed ~~1.0%~~13.0% of the overall market value of the Company's fixed maturity securities. The market value of securities for the issuer with the second largest unrealized loss comprised less than 0.9% 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 ~~$40,537~~$16,693 thousand of unrealized losses related to fixed maturity securities that have been in an unrealized loss position for less than one year were generally comprised of ~~obligations of U.S. states and political subdivisions,~~ domestic and foreign corporate securities, ~~agency residential mortgage-backed securities~~U.S. government agencies and corporations and foreign government securities. Of

these unrealized losses, ~~$36,646~~$13,043 thousand were related to securities that were rated investment grade by at least one nationally recognized statistical rating agency. The ~~$25,971~~$27,819 thousand of unrealized losses related to fixed maturity securities in an unrealized loss position for more than one year related primarily due to ~~domestic~~foreign and ~~foreign~~domestic corporate securities, foreign government securities, U.S. government agencies and corporations and agency residential mortgage-backed securities. Of these unrealized losses ~~$22,882~~$26,463 thousand ~~is attributable~~were related to ~~net unrealized foreign exchange losses, as the U.S. dollar has strengthened against other currencies.~~securities that were rated investment grade by at least one nationally recognized statistical rating agency. There was no gross unrealized depreciation for mortgage-backed securities related to sub-prime and alt-A loans. In all instances, there were no projected cash flow shortfalls to recover the full book value of the investments and the related interest obligations. The mortgage-backed securities still have excess credit coverage and are current on interest and principal payments.

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

The Company records results from limited partnership investments on the equity method of accounting with changes in value reported through net investment income. Due to the timing of receiving financial information from these partnerships, the results are generally reported on a one month or quarter lag. If the Company determines there has been a significant decline in value of a limited partnership during this lag period, a loss will be recorded in the period in which the Company identifies the decline.

The Company had contractual commitments to invest up to an additional ~~$348,144~~$386,414 thousand in limited partnerships at ~~September 30, 2017.~~March 31, 2018. These commitments will be funded when called in accordance with the partnership agreements, which have investment periods that expire, unless extended, through 2023.

The Company's other invested assets at ~~September 30, 2017~~March 31, 2018 and December 31, ~~2016~~2017 included ~~$54,718~~$115,446 thousand and ~~$57,126~~$131,998 thousand, respectively, related to a private placement liquidity sweep facility. The primary purpose of the facility is to enhance the Company's return on its short-term investments and cash positions. The facility invests in high quality, short-duration securities and permits daily liquidity.

Other invested assets, at fair value, as of ~~September 30, 2017~~March 31, 2018 and December 31, ~~2016,~~2017, were comprised of preferred shares held in Preferred Holdings, an affiliated company.

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

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

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

5. RESERVES FOR LOSSES AND LAE

Activity in the reserve for losses and LAE is summarized for the periods indicated:

Current year incurred losses were $1,918,055 thousand for the nine months ended September 30, 2017 compared to $1,441,962 thousand for the full year 2016. The increase in current year incurred losses was primarily due to $1,039,295 thousand of catastrophe losses incurred in the nine months ended September 30, 2017, mainly related to Hurricane Irma, Hurricane Maria, Hurricane Harvey and the Mexico City earthquake. The $688,924 thousand increase in reinsurance recoverables from December 31, 2016 is primarily due to recoverables from these catastrophe losses.

Incurred prior years' reserves increased by ~~$453~~$318 thousand for the three months ended March 31, 2018 and decreased by ~~$91,682~~$117,747 thousand ~~for the nine months ended September 30, 2017 and the year ended December 31, 2016, respectively. The decrease~~ for the year ended December 31, ~~2016~~2017. The increase for the three months ended March 31, 2018, related primarily to unfavorable development on insurance business. The decrease for 2017 was attributable to favorable development in the reinsurance segments of ~~$187,909~~$84,809 thousand related primarily to property and short-tail business in the U.S., ~~property business in Canada, Latin America, Middle East and Africa,~~ as well as favorable development on prior year catastrophe

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 ~~forty-eight~~seventy-four private placement securities ~~the~~at March 31, 2018, an investment manager's valuation committee valued ~~the forty-eight~~seventy-three of these private placement securities at ~~$105,199~~$164,818 thousand. A majority of the fair values determined by the valuation committee are substantiated by valuations from independent third parties. In addition, the Company valued one private placement security at $16,962 thousand, ~~at September 30, 2017.~~representing par value. Due to the unavailability of prices for ~~forty-two~~sixty-five private placement securities ~~the~~at December 31, 2017, an investment manager's valuation committee valued the ~~forty-two~~sixty-five securities at ~~$86,536 thousand at December 31, 2016.~~$165,173 thousand.

The Company internally manages a public equity portfolio which had a fair value at ~~September 30, 2017~~March 31, 2018 and December 31, ~~2016~~2017 of ~~$218,533~~$349,344 thousand and ~~$133,755~~$245,043 thousand, respectively, and all prices were obtained from ~~publically~~publicly 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.~~information or receive fair values from investment managers.

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 ~~September 30, 2017~~March 31, 2018 and December 31, ~~2016,~~2017, since it represented a privately placed convertible preferred stock issued by an affiliate. The stock was received in exchange for shares of the Company's parent. The ~~fair value of the~~25 year redeemable, convertible preferred stock ~~at September 30, 2017 and December 31, 2016 was determined~~with a 1.75% coupon is valued using a pricing model. The pricing model includes observable inputs such as the U.S. Treasury yield curve rate T note constant maturity 20 year and the swap rate on the Company's June 1, 2044, 4.868% senior notes, with adjustments to reflect the Company's own assumptions about the inputs that market participants would use in pricing the asset.

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

The following 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:

There were no transfers between Level 1 and Level 2 for the three months ended March 31, 2018.

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:

In addition ~~$70,657~~$82,902 thousand and ~~$18,801~~$79,505 thousand of investments within other invested assets on the consolidated balance sheets as of ~~September 30, 2017~~March 31, 2018 and December 31, ~~2016,~~2017, respectively, are not included within the fair value hierarchy tables as the assets are valued using the NAV practical expedient guidance within ASU 2015-07.

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

There were no net transfers to/(from) level 3, ~~fair value measurements using significant unobservable inputs were $0 thousand and $1,621 thousand of investments for~~during the ~~nine~~three months ended ~~September 30,~~March 31, 2018 and 2017, ~~and 2016,~~ respectively. ~~The $1,621 thousand of investments for the nine months ended September 30, 2016 related to the net impact of securities no longer priced by a recognized pricing service.~~

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

7. COMMITMENTS AND CONTINGENCIES

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

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

The Company has entered into separate annuity agreements with The Prudential Insurance Company of America ("The Prudential") 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 table below presents the estimated cost to replace all such annuities for which the Company was contingently liable for the periods indicated:

8. 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:

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

The following table presents the components of accumulated other comprehensive income (loss), net of tax, in the consolidated balance sheets for the periods indicated:

	Nine Months Ended			Twelve Months Ended			Three Months Ended			Twelve Months Ended
	September 30,			December 31,			March 31,			December 31,
(Dollars in thousands)	2017			2016			2018			2017

Beginning balance of URA (D) on securities	$	39,041		$	13,654		$	37,442		$	39,041
Current period change in URA (D) of investments - temporary		7,759			22,063			(51,735	)		(5,284	)
Current period change in URA (D) of investments - non-credit OTTI		(2,583	)		3,324			78			(2,949	)
Reclass due to early adoption of ASU 2018-02								-			6,634
Cumulative change due to ASU 2016-01								(2,447	)		-
Ending balance of URA (D) on securities		44,218			39,041			(16,662	)		37,442

Beginning balance of foreign currency translation adjustments		(9,852	)		(12,701	)		33,545			(9,852	)
Current period change in foreign currency translation adjustments		43,220			2,849			(1,342	)		37,427
Reclass due to early adoption of ASU 2018-02								-			5,970
Ending balance of foreign currency translation adjustments		33,368			(9,852	)		32,203			33,545

Beginning balance of benefit plan net gain (loss)		(65,504	)		(63,089	)		(71,929	)		(65,504	)
Current period change in benefit plan net gain (loss)		5,377			(2,415	)		1,815			6,504
Reclass due to early adoption of ASU 2018-02								-			(12,929	)
Ending balance of benefit plan net gain (loss)		(60,127	)		(65,504	)		(70,114	)		(71,929	)

Ending balance of accumulated other comprehensive income (loss)	$	17,459		$	(36,315	)	$	(54,573	)	$	(942	)

9. COLLATERALIZED REINSURANCE AND TRUST AGREEMENTS

A subsidiary of the Company, Everest Re, has established a trust agreement, which effectively uses Everest Re's investments as collateral, as security for assumed losses payable to a non-affiliated ceding ~~company.~~companies. At ~~September 30, 2017,~~March 31, 2018, the total amount on deposit in the trust account was ~~$659,548~~$698,649 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. These reinsurance agreements expired in April, 2018.

On November 18, 2014, the Company entered into a collateralized reinsurance agreement with Kilimanjaro 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 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.

On April 13, 2017 the Company entered into six collateralized reinsurance agreements with Kilimanjaro to provide the Company with annual aggregate catastrophe reinsurance coverage. The initial three agreements are four year reinsurance contracts which cover named storm and earthquake events. These agreements provide up to $225,000 thousand, $400,000 thousand and $325,000 thousand, respectively, of annual aggregate reinsurance coverage from named storms and earthquakes in the United States, Puerto Rico and Canada. The subsequent three agreements are five year reinsurance contracts which cover named storm and earthquake events. These agreements provide up to $50,000 thousand, $75,000 thousand and $175,000 thousand, respectively, of annual aggregate reinsurance coverage from named storms and earthquakes in the United States, Puerto Rico and Canada.

On April 30, 2018 the Company entered into four 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 two agreements are four year reinsurance contracts which provide up to $62,500 thousand and $200,000 thousand, respectively, of annual aggregate reinsurance coverage from named storms and earthquakes in the United States, Puerto Rico, the U.S. Virgin Islands and Canada. The remaining two agreements are five year reinsurance contracts which provide up to $62,500 thousand and $200,000 thousand, respectively, of annual aggregate reinsurance coverage from named storms and earthquakes in the United States, Puerto Rico, the U.S. Virgin Islands and Canada.

Recoveries under these collateralized reinsurance agreements with Kilimanjaro are primarily dependent on estimated industry level insured losses from covered events, as well as, the geographic location of the events. The estimated industry level of insured losses is obtained from published estimates by an independent recognized authority on insured property losses. As of ~~September 30,~~December 31, 2017, none of the published insured loss estimates for the 2017 catastrophe events have exceeded the single event retentions under the terms of the agreements that would result in a recovery. In addition, the aggregation of the to date published insured loss estimates for the 2017 covered events have not exceeded the aggregated retentions for recovery. However, if the published estimates for insured losses for the covered 2017 events increase, ~~or if there are additional covered events during the remainder of 2017,~~

the aggregate losses may exceed the aggregate event retentions under the agreements, resulting in a recovery.

Kilimanjaro has financed the various property catastrophe reinsurance coverages by issuing catastrophe bonds to unrelated, external investors. On April 24, 2014, Kilimanjaro issued $450,000 thousand of notes ("Series 2014-1 Notes"). The $450,000 thousand of Series 2014-1 Notes were fully redeemed on April 30, 2018 and are no longer outstanding. 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). On April 13, 2017, Kilimanjaro issued $950,000 thousand of notes ("Series 2017-1 Notes) and $300,000 thousand of notes ("Series 2017-2 Notes). On April 30, 2018, Kilimanjaro issued $262,500 thousand of notes ("Series 2018-1 Notes") and $262,500 thousand of notes ("Series 2018-2 Notes"). The proceeds from the issuance of the Notes listed above 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.

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.

September 30, 2017

December 31, 2016

March 31, 2018

December 31, 2017

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

396,804

420,008

396,714

383,612

06/05/2014

06/01/2044

400,000

396,864

399,080

396,834

420,340

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				Nine Months Ended				Three Months Ended
	September 30,				September 30,				March 31,
(Dollars in thousands)	2017		2016		2017		2016		2018		2017
Interest expense incurred	$	4,868	$	4,868	$	14,604	$	14,604	$	4,868	$	4,868

11. LONG TERM SUBORDINATED NOTES

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

Maturity Date

September 30, 2017

December 31, 2016

Maturity Date

March 31, 2018

December 31, 2017

Original

Consolidated Balance

Original

Consolidated Balance

(Dollars in thousands)

Date Issued

Principal Amount

Scheduled

Final

Sheet Amount

Market Value

Sheet Amount

Market Value

Date Issued

Principal Amount

Scheduled

Final

Sheet Amount

Market Value

Sheet Amount

Market Value

6.6% Long term subordinated notes

04/26/2007

400,000

05/15/2037

05/01/2067

236,536

221,380

236,462

204,636

04/26/2007

400,000

05/15/2037

05/01/2067

236,585

238,421

236,561

233,072

During the fixed rate interest period from May 3, 2007 through May 14, 2017, interest was at the annual rate of 6.6%, payable semi-annually in arrears on November 15 and May 15 of each year, commencing on November 15, 2007. During the floating rate interest period from May 15, 2017 through maturity, interest will be based on the 3 month LIBOR plus 238.5 basis points, reset quarterly, payable quarterly in arrears on February 15, May 15, August 15 and November 15 of each year, subject to Holdings' right to defer interest on one or more occasions for up to ten consecutive years. Deferred interest will accumulate interest at the applicable rate compounded quarterly for periods from and including August 15, 2017. The reset quarterly interest rate for ~~November~~February 15, ~~2017~~2018 to ~~November 15, 2017~~May 14, 2018 is ~~3.70%~~4.2%.

Holdings may redeem the long term subordinated notes on or after May 15, 2017, in whole or in part at 100% of the principal amount plus accrued and unpaid interest; however, redemption on or after the scheduled maturity date and prior to May 1, 2047 is subject to a replacement capital covenant. This covenant is for the benefit of certain senior note holders and it mandates that Holdings receive proceeds from the sale of another subordinated debt issue, of at least similar size, before it may redeem the subordinated notes. Effective upon the maturity of the Company's 5.40% senior notes on October 15, 2014, the Company's 4.868% senior notes, due on June 1, 2044, have become the Company's long term indebtedness that ranks senior to the long term subordinated notes.

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

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

	Three Months Ended				Nine Months Ended				Three Months Ended
	September 30,				September 30,				March 31,
(Dollars in thousands)	2017		2016		2017		2016		2018		2017
Interest expense incurred	$	2,240	$	3,937	$	9,210	$	11,811	$	2,391	$	3,937

12. 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 brokers, surplus lines brokers and general agents 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 ~~loss adjustment expenses ("LAE")~~LAE incurred, commission and brokerage expenses and other underwriting expenses. We measure our underwriting results using ratios, in particular loss, commission and brokerage and other underwriting expense ratios, which, respectively, divide incurred losses, commissions and brokerage and other underwriting expenses by premiums earned.

The Company does not maintain separate balance sheet data for its operating segments. Accordingly, the Company does not review and evaluate the financial results of its operating segments based upon balance sheet data.

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

	Three Months Ended
International	March 31,
(Dollars in thousands)	2018		2017
Gross written premiums	$	367,024	$	278,575
Net written premiums		334,875		103,246

Premiums earned	$	328,939	$	118,151
Incurred losses and LAE		176,359		68,414
Commission and brokerage		78,394		23,535
Other underwriting expenses		10,086		8,889
Underwriting gain (loss)	$	64,100	$	17,313

	Three Months Ended
Insurance	March 31,
(Dollars in thousands)	2018		2017
Gross written premiums	$	454,985	$	394,851
Net written premiums		348,321		126,528

Premiums earned	$	345,686	$	144,590
Incurred losses and LAE		235,692		100,874
Commission and brokerage		50,743		(11,400	)
Other underwriting expenses		50,379		36,755
Underwriting gain (loss)	$	8,872	$	18,361

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

	Three Months Ended						Nine Months Ended						Three Months Ended
	September 30,						September 30,						March 31,
(Dollars in thousands)	2017			2016			2017			2016			2018			2017
Underwriting gain (loss)	$	(905,309	)	$	108,123		$	(790,119	)	$	189,974		$	68,947		$	68,930
Net investment income		73,417			64,570			206,166			196,887			69,909			60,849
Net realized capital gains (losses)		228,489			(50,063	)		253,966			(87,275	)		(60,201	)		117,768
Corporate expense		(1,132	)		(1,835	)		(6,241	)		(6,181	)		(3,596	)		(3,597	)
Interest, fee and bond issue cost amortization expense		(7,161	)		(8,859	)		(23,974	)		(26,576	)		(7,313	)		(8,859	)
Other income (expense)		1,486			(13,208	)		21,996			(10,806	)		(74,877	)		9,855
Income (loss) before taxes	$	(610,210	)	$	98,728		$	(338,206	)	$	256,023		$	(7,131	)	$	244,947

(Some amounts may not reconcile due to rounding.)

The Company produces business in the U.S. and internationally. The net income deriving from assets residing in the individual foreign countries in which the Company writes business are not identifiable in the Company's financial records. Based on gross written premium, the table below presents the largest country, other than the U.S., in which the Company writes business, for the periods indicated:

	Three Months Ended				Nine Months Ended				Three Months Ended
	September 30,				September 30,				March 31,
(Dollars in thousands)	2017		2016		2017		2016		2018		2017
Canada gross written premiums	$	30,625	$	35,856	$	94,777	$	94,072	$	40,392	$	27,957

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

13. 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 is payable annually. This transaction is presented as a Note Receivable – Affiliated in the Consolidated Balance Sheets of Holdings. Interest income in the amount of ~~$3,225 thousand and $3,225~~$4,300 thousand was recorded by Holdings for the ~~nine months~~year ended ~~September 30,~~December 31, 2017 and ~~September 30,~~December 31, 2016, 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

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				Nine Months Ended				Three Months Ended
	September 30,				September 30,				March 31,
(Dollars in thousands)	2017		2016		2017		2016		2018		2017
Dividends received on preferred stock of affiliate	$	7,758	$	7,758	$	23,274	$	23,274	$	7,758	$	7,758

Affiliated Companies

Everest Global Services, Inc. ("Global Services"), an affiliate of Holdings, provides centralized management and home office services, through a management agreement, to Holdings and other affiliated companies within Holdings' consolidated structure. Services provided by Everest Global include executive managerial services, legal services, actuarial services, accounting services, information technology services and others.

The following table presents the expenses incurred by Holdings from services provided by Everest Global for the periods indicated.

	Three Months Ended				Nine Months Ended				Three Months Ended
	September 30,				September 30,				March 31,
(Dollars in thousands)	2017		2016		2017		2016		2018		2017
Expenses incurred	$	25,465	$	21,242	$	71,694	$	62,701	$	28,448	$	23,183

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

Percent

Assuming

Single

Aggregate

Coverage Period

Ceding Company

Ceded

Company

Type of Business

Occurrence Limit

Limit

Ceding Company

Ceded

Company

Type of Business

Occurrence Limit

Limit

01/01/2010-12/31/2010

Everest Re

44.0%

Bermuda Re

property / casualty business

150,000

325,000

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

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

Everest Re

50.0%

Bermuda Re

property / casualty business

100,000

200,000

01/01/2015-12/31/2016

Everest Re

50.0%

Bermuda Re

property / casualty business

162,500

325,000

Everest Re

50.0%

Bermuda Re

property / casualty business

162,500

325,000

01/01/2017

Everest Re

60.0%

Bermuda Re

property / casualty business

219,000

438,000

01/01/2017-12/31/2017

Everest Re

60.0%

Bermuda Re

property / casualty business

219,000

438,000

01/01/2010-12/31/2010

Everest Re- Canadian Branch

60.0%

Bermuda Re

property business

350,000

⁽¹⁾

Everest Re- Canadian Branch

60.0%

Bermuda Re

property business

350,000

⁽¹⁾

01/01/2011-12/31/2011

Everest Re- Canadian Branch

60.0%

Bermuda Re

property business

350,000

⁽¹⁾

Everest Re- Canadian Branch

60.0%

Bermuda Re

property business

350,000

⁽¹⁾

01/01/2012-12/31/2012

Everest Re- Canadian Branch

75.0%

Bermuda Re

property / casualty business

206,250

⁽¹⁾

412,500

⁽¹⁾

Everest Re- Canadian Branch

75.0%

Bermuda Re

property / casualty business

206,250

⁽¹⁾

412,500

01/01/2013-12/31/2013

Everest Re- Canadian Branch

75.0%

Bermuda Re

property / casualty business

150,000

⁽¹⁾

412,500

⁽¹⁾

Everest Re- Canadian Branch

75.0%

Bermuda Re

property / casualty business

150,000

⁽¹⁾

412,500

01/01/2014

Everest Re- Canadian Branch

75.0%

Bermuda Re

property / casualty business

262,500

⁽¹⁾

412,500

⁽¹⁾

01/01/2014-12/31/2017

Everest Re- Canadian Branch

75.0%

Bermuda Re

property / casualty business

262,500

⁽¹⁾

412,500

01/01/2012

Everest Canada

80.0%

Everest Re- Canadian Branch

property business

01/01/2012-12/31/2017

Everest Canada

80.0%

Everest Re- Canadian Branch

property business

⁽¹⁾Amounts shown are Canadian dollars.

As of December 31, 2017, the Company decided not to renew its quota share reinsurance agreements between Everest Re and Bermuda Re, between Everest Re-Canadian branch and Bermuda Re and between Everest Canada and the Everest Re-Canadian branch due to economic implications of the enactment of TCJA on December 22, 2017.

Effective January 1, 2018, Everest Re entered into a twelve month whole account aggregate stop loss reinsurance contract ("stop loss agreement") with Bermuda Re. The stop loss agreement provides coverage for ultimate net losses on applicable net earned premiums above a retention level, subject to certain other coverage limits and conditions.

On ~~July 13, 2015,~~December 31, 2017, the Company ~~sold Mt. McKinley~~entered into a LPT agreement with Bermuda Re. The LPT agreement covers subject loss reserves of $3,138,716 thousand for accident years 2017 and prior. As a result of the LPT agreement, the Company transferred $1,000,000 thousand of cash and fixed maturity securities and transferred $970,000 thousand of loss reserves to ~~Clearwater Insurance Company, a Delaware domiciled insurance company.~~Bermuda Re. As part of ~~that date, Mt. McKinley is no longer deemed~~the LPT agreement, Bermuda Re will provide an ~~affiliated company or related party.~~additional $500,000 thousand of adverse development coverage on the subject loss reserves.

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

Three Months Ended Nine Months Ended
Bermuda Re
September 30, September 30,
(Dollars in thousands) 2017 2016 2017 2016
Ceded written premiums $ 911,866 $ 685,798 $ 2,228,538 $ 1,746,976
Ceded earned premiums 796,194 585,993 2,005,965 1,718,295
Ceded losses and LAE (a) 650,460 344,789 1,379,164 1,039,932

	Three Months Ended						Nine Months Ended					Three Months Ended
Everest International	September 30,						September 30,
Bermuda Re												March 31,
(Dollars in thousands)	2017			2016			2017			2016		2018		2017
Ceded written premiums	$	21		$	(5	)	$	(4	)	$	26	$	132,320	$	634,896
Ceded earned premiums		38			(3	)		13			36		136,158		588,874
Ceded losses and LAE		(13	)		479			(631	)		1,377		193,551		340,131

Three Months Ended Nine Months Ended
Everest Canada
September 30, September 30,
(Dollars in thousands) 2017 2016 2017 2016
Assumed written premiums $ 13,028 $ 12,667 $ 39,008 $ 39,094
Assumed earned premiums 13,464 11,611 38,201 34,740
Assumed losses and LAE 7,448 13,287 21,418 34,714

Three Months Ended Nine Months Ended
Lloyd's Syndicate 2786
September 30, September 30,
(Dollars in thousands) 2017 2016 2017 2016
Assumed written premiums $ 15,984 $ 351 $ 34,069 $ 890
Assumed earned premiums 15,042 173 31,766 289
Assumed losses and LAE 7,893 - 16,157 -

	Three Months Ended
Everest International	March 31,
(Dollars in thousands)	2018		2017
Ceded written premiums	$	-	$	(70	)
Ceded earned premiums		-		(71	)
Ceded losses and LAE		-		(443	)

	Three Months Ended
Everest Canada	March 31,
(Dollars in thousands)	2018		2017
Assumed written premiums	$	-	$	12,848
Assumed earned premiums		-		12,853
Assumed losses and LAE		2,973		6,651

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.

14. 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:

The service cost component of net periodic benefit costs is included within other underwriting expenses on the consolidated statement of operations and comprehensive income (loss). In accordance with ASU 2017-07, other staff compensation costs are also primarily recorded within this line item.

The Company ~~contributed $10,000 thousand~~did not make any contributions to the qualified pension benefit plan for the three ~~and nine~~ months ended ~~September 30,~~March 31, 2018 and 2017. ~~The Company contributed $30,000 thousand to the qualified pension benefit plan for the three and nine months ended September 30, 2016.~~

The Company is domiciled in the United States and has subsidiaries domiciled within the United States with significant branches in Canada and Singapore. The Company's non-U.S. branches are subject to income taxation at varying rates in their respective domiciles. The Tax Cuts and Jobs Act ("TCJA") was passed on December 22, 2017. The primary changes from TCJA affecting the Company is a reduction of the corporate income tax rate from 35% to 21% beginning January 1, 2018 as well as the imposition of a new Base Erosion and Anti-abuse Tax ("BEAT") of 5% in 2018 and 10% from 2019 – 2025 and 12.5% thereafter on certain transactions with non-US affiliates of the Company.

The Company generally applies the estimated annual effective tax rate approach for calculating its tax provision for interim periods as prescribed by ASC 740-270, Interim Reporting. Under the estimated annual effective tax rate approach, the estimated annual effective tax rate is applied to the interim year-to-date pre-tax income/loss to determine the income tax expense or benefit for the year-to-date period. If the annual effective tax rate approach produces a year-to-date tax benefit which exceeds the amount which is estimated to be recoverable for the full year, then the tax benefit for the interim reporting period will be limited as

prescribed under ASC 740-270 to the estimated recoverable based on the year-to-date result. The tax expense or benefit for the quarter represents the difference between the year-to-date 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/loss and effective tax rate.

16. ~~DISPOSITION~~

On August 24, 2016 the Company sold Heartland, its crop Managing General Agent to CGB for $49,000 thousand. The sale agreement includes a provision for a long term strategic reinsurance relationship with CGB. The Company has recognized an after-tax loss on the sale of Heartland of $12,942 thousand. Under the terms of the reinsurance arrangement, there has not been a material fluctuation in the level of crop business, although it has been reflected as reinsurance rather than insurance.

~~17.~~ SUBSEQUENT EVENTS

The Company has evaluated known recognized and non-recognized subsequent events. In October 2017, Hurricane Nate impacted the Southern United States and Central America and Hurricane Ophelia impacted Ireland, the United Kingdom and Northern Europe. Also, in October 2017, a number of wildfires affected California. Due to the recentness of these events,On April 30, 2018, the Company ~~is unable~~entered into four collateralized reinsurance agreements with Kilimanjaro to ~~estimate the amount of losses related to Hurricane Nate, Hurricane Ophelia or the California wildfires at this time. However,~~provide the Company ~~anticipates that~~with annual aggregate catastrophe reinsurance coverage. Kilimanjaro has financed these ~~events will adversely impact the fourth quarter 2017 financial results.~~coverages by issuing a total of $525,000 thousand of catastrophe bonds to unrelated, external investors. See also Footnote 9, Collateralized Reinsurance and Trust Agreements.

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, higher rates and stronger profits followed by periods of abundant capacity, lower rates and constrained profitability. Competition in the types of reinsurance and insurance business that we underwrite is based on many factors, including the perceived overall financial strength of the reinsurer or insurer, ratings of the reinsurer or insurer by A.M. Best and/or Standard & Poor's, underwriting expertise, the jurisdictions where the reinsurer or insurer is licensed or otherwise authorized, capacity and coverages offered, premiums charged, other terms and conditions of the reinsurance and insurance business offered, services offered, speed of claims payment and reputation and experience in lines written. Furthermore, the market impact from these competitive factors related to reinsurance and insurance is generally not consistent across lines of business, domestic and international geographical areas and distribution channels.

We compete in the U.S. and international reinsurance and insurance markets with numerous global competitors. Our competitors include independent reinsurance and insurance companies, subsidiaries or affiliates of established worldwide insurance companies, reinsurance departments of certain insurance companies, domestic and international underwriting operations, 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 rate 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. There was an unprecedented series of catastrophes in the third quarter of 2017 with Hurricanes Harvey, Irma and Maria, as well as a significant earthquake in Mexico City. Additional catastrophe events occurred in ~~October~~the fourth quarter of 2017 with ~~Hurricanes Nate and Ophelia and~~ the wild fires in ~~California.~~California and Hurricanes Nate and Ophelia. The total industry losses for all of these worldwide events ~~could~~have been estimated to exceed ~~$100~~$140 billion. This is the second consecutive year with higher than average catastrophe losses. During 2016, catastrophe losses included the Fort McMurray Canadian wildfire, Hurricane Matthew which affected a large area of the Caribbean and southeastern United States, storms and an earthquake in Ecuador. There are industry reports that the catastrophe losses for 2016 reached their highest level in four years and the United States experienced the most loss events since 1980 and the highest total losses since 2012. While the future impact on market conditions from these catastrophes cannot be determined at this time, there was some firming in the markets impacted by the 2016 catastrophes and as catastrophe losses ~~continue to increase~~increased in 2017, there is a growing industry consensus that there will be a general firming of the (re)insurance markets resulting in rate increases, not only for catastrophe exposures, but also potentially for most other lines of business.

Commencing in 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 premium 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

3431

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			Nine Months Ended						Percentage			Three Months Ended						Percentage
	September 30,						Increase/			September 30,						Increase/			March 31,						Increase/
(Dollars in millions)	2017			2016			(Decrease)			2017			2016			(Decrease)			2018			2017			(Decrease)
Gross written premiums	$	1,701.1		$	1,505.9			13.0	%	$	4,289.1		$	3,813.6			12.5	%	$	1,466.2		$	1,252.4			17.1	%
Net written premiums		570.8			622.6			-8.3	%		1,437.5			1,527.9			-5.9	%		1,107.0			448.8			146.6	%

REVENUES:
Premiums earned	$	518.5		$	556.7			-6.9	%	$	1,457.8		$	1,527.4			-4.6	%	$	1,116.0		$	471.1			136.9	%
Net investment income		73.4			64.6			13.7	%		206.2			196.9			4.7	%		69.9			60.8			14.9	%
Net realized capital gains (losses)		228.5			(50.1	)	NM				254.0			(87.3	)	NM				(60.2	)		117.8			-151.1	%
Other income (expense)		1.5			(13.2	)		-111.3	%		22.0			(10.8	)	NM				(74.9	)		9.9		NM
Total revenues		821.9			558.0			47.3	%		1,939.9			1,626.2			19.3	%		1,050.8			659.5			59.3	%

CLAIMS AND EXPENSES:
Incurred losses and loss adjustment expenses		1,331.6			301.6		NM				1,918.5			936.2			104.9	%		713.3			289.7			146.2	%
Commission, brokerage, taxes and fees		34.5			82.8			-58.3	%		147.6			219.6			-32.8	%		256.5			52.5		NM
Other underwriting expenses		57.7			64.1			-10.0	%		181.8			181.7			0.1	%		77.4			59.9			29.1	%
Corporate expense		1.1			1.8			-38.3	%		6.2			6.2			1.0	%		3.6			3.6			0.0	%
Interest, fee and bond issue cost amortization expense		7.2			8.9			-19.2	%		24.0			26.6			-9.8	%		7.3			8.9			-17.5	%
Total claims and expenses		1,432.1			459.2			211.9	%		2,278.1			1,370.2			66.3	%		1,058.0			414.6			155.2	%

INCOME (LOSS) BEFORE TAXES		(610.2	)		98.7		NM				(338.2	)		256.0			-232.1	%		(7.1	)		244.9			-102.9	%
Income tax expense (benefit)		(220.5	)		22.4		NM				(153.3	)		69.4		NM				5.0			75.8			-93.3	%
NET INCOME (LOSS)	$	(389.7	)	$	76.3		NM			$	(184.9	)	$	186.7			-199.0	%	$	(12.2	)	$	169.2			-107.2	%

RATIOS:							Point Change									Point Change									Point Change
Loss ratio		256.8	%		54.2	%		202.6			131.6	%		61.3	%		70.3			63.9	%		61.5	%		2.4
Commission and brokerage ratio		6.7	%		14.9	%		(8.2	)		10.1	%		14.4	%		(4.3	)		23.0	%		11.2	%		11.8
Other underwriting expense ratio		11.1	%		11.5	%		(0.4	)		12.5	%		11.9	%		0.6			6.9	%		12.7	%		(5.8	)
Combined ratio		274.6	%		80.6	%		194.0			154.2	%		87.6	%		66.6			93.8	%		85.4	%		8.4

										At			At			Percentage			At			At			Percentage
										September 30,			December 31,			Increase/			March 31,			December 31,			Increase/
(Dollars in millions)											2017			2016		(Decrease)			2018			2017			(Decrease)
Balance sheet data:
Total investments and cash										$	10,231.7		$	9,842.7			4.0	%	$	9,004.2		$	8,911.5			1.0	%
Total assets											19,143.4			17,083.4			12.1	%		17,553.6			17,888.5			-1.9	%
Loss and loss adjustment expense reserves											9,969.1			8,331.3			19.7	%		9,145.8			9,343.0			-2.1	%
Total debt											633.3			633.2			0.0	%		633.4			633.4			0.0	%
Total liabilities											13,975.7			11,784.9			18.6	%		12,204.2			12,475.8			-2.2	%
Stockholder's equity											5,167.6			5,298.6			-2.5	%		5,349.4			5,412.7			-1.2	%

(Some amounts may not reconcile due to rounding)

(NM, not meaningful)

3532

Revenues.

Premiums. Gross written premiums increased by ~~13.0%~~17.1% to ~~$1,701.1~~$1,466.2 million for the three months ended ~~September~~ ~~30, 2017,~~March 31, 2018, compared to ~~$1,505.9~~$1,252.4 million ~~for~~or the three months ended ~~September~~ ~~30, 2016,~~March 31, 2017, reflecting a ~~$263.6~~$153.7 million, or ~~26.1%~~17.9%, increase in our reinsurance business and a ~~$68.4~~$60.1 million, or 13.7%, decrease in our insurance business. The increase in reinsurance premiums was mainly due to the new crop reinsurance transactions, increases in financial lines of business and the influx of reinstatement premiums related to multiple catastrophe events in the third quarter. The decline in insurance premiums was due to the sale of Heartland Crop Insurance, Inc. ("Heartland") which accounted for $162.4 million of gross written premium in the third quarter of 2016. Excluding the impact of Heartland, insurance premiums rose by $94.0 million due to increased production in many lines of business, including retail casualty, surety and accident and health. Gross written premiums increased by 12.5% to $4,289.1 million for the nine months ended ~~September~~ ~~30, 2017, compared to $3,813.6 million for the nine months ended~~ ~~September~~ ~~30, 2016, reflecting a $400.7 million, or 15.8%, increase in our reinsurance business and a $74.7 million, or 5.9%~~15.2%, increase in our insurance business. The increase in reinsurance premiums was mainly due to the ~~new crop reinsurance transactions,~~ increases in treaty property ~~and financial lines of~~ business and ~~the influx of reinstatement premiums related to multiple catastrophe events in the third quarter.~~Latin American business. The rise in insurance premiums was primarily due to increases in many lines of business, including ~~retail casualty,~~property and accident and ~~health and surety, partially offset by the impact of the sale of Heartland.~~

health. Net written premiums ~~decreased~~increased by ~~8.3%~~146.6% to ~~$570.8~~$1,107.0 million for the three months ended ~~September~~ ~~30, 2017,~~March 31, 2018, compared to ~~$622.6~~$448.8 million for the three months ended ~~September~~ ~~30, 2016, and decreased by 5.9% to $1,437.5 million for the nine months ended~~ ~~September~~ ~~30, 2017, compared to $1,527.9 million for the nine months ended~~ ~~September~~ ~~30, 2016.~~March 31, 2017. The difference between the change in gross written premiums compared to the change in net written premiums is primarily due to ~~varying utilization~~the impact of changes in affiliated reinsurance ~~mainly related to affiliated~~contracts, particularly the non-renewal of the quota share ~~contracts.~~agreement between Everest Re and Bermuda Re as of December 31, 2017. Effective January 1, 2018, Everest Re entered into an aggregate stop loss agreement with Bermuda Re. Premiums ceded to Bermuda Re during the three months ended March 31, 2018 were $132.3 million compared with $634.9 million during the three months ended March 31, 2017. Premiums earned ~~decreased~~increased by ~~6.9%~~136.9% to ~~$518.5~~$1,116.0 million for the three months ended ~~September~~ ~~30, 2017,~~March 31, 2018, compared to ~~$556.7~~$471.1 million for the three months ended ~~September~~ ~~30, 2016 and decreased by 4.6% to $1,457.8 million for the nine months ended~~ ~~September~~ ~~30, 2017, compared to $1,527.4 million for the nine months ended~~ ~~September~~ ~~30, 2016.~~March 31, 2017. The change in premiums earned relative to net written premiums is ~~the result of~~due to timing; premiums are earned ratably over the coverage period whereas written premiums are recorded at the initiation of the coverage period.

Net Investment Income. Net investment income increased ~~13.7%~~14.9% to ~~$73.4~~$69.9 million for the three months ended ~~September~~ ~~30, 2017~~March 31, 2018, compared with net investment income of ~~$64.6~~$60.8 million for the three months ended ~~September~~ ~~30, 2016 and increased 4.7% to $206.2 million for the nine months ended~~ ~~September~~ ~~30, 2017 compared with net investment income of $196.9 million for the nine months ended~~ ~~September~~ ~~30, 2016.~~March 31, 2017. Net pre-tax investment income as a percentage of average invested assets was ~~3.0%~~3.2% for the three months ended ~~September~~ ~~30, 2017,~~March 31, 2018, compared to ~~2.7%~~2.5% for the three months ended ~~September~~ ~~30, 2016 and remained flat at 2.8% for the nine months ended~~ ~~September~~ ~~30, 2017 and 2016.~~March 31, 2017. The ~~increases~~increase in income ~~for the three~~ and ~~nine months ended September 30, 2017 were~~yield was primarily the result of higher income from our limited ~~partnerships and higher income from the growing fixed income portfolio, partially offset by lower dividend income from our equity portfolio.~~partnerships.

Net Realized Capital Gains (Losses). Net realized capital ~~gains~~losses were ~~$228.5~~$60.2 million and net realized capital ~~losses~~gains were ~~$50.1~~$117.8 million for the three months ended March 31, 2018~~September~~ and ~~30,~~ 2017, respectively. The net realized capital losses of $60.2 million for the three months ended March 31, 2018, were comprised of $63.8 million of losses from fair value re-measurements on equity securities and ~~2016, respectively.~~other invested assets, partially offset by $3.6 million of gains from sales on our fixed maturity and equity portfolio. The net realized capital gains of ~~$228.5~~$117.8 million for the three months ended March 31, 2017, were comprised of $~~227.5~~108.1 million of gains from fair value re-measurements on equity securities and other invested assets and $~~2.4~~10.8 million of gains from sales on our fixed maturity and equity securities, partially offset by ~~$1.5~~$1.1 million of other-than-temporary impairments. ~~The net realized capital losses of $50.1 million~~ ~~for the three months ended~~ ~~September~~ ~~30, 2016~~ ~~were~~ ~~comprised of~~ $~~30.9~~ million of 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 $~~9.6~~ ~~million of gains from sales on our fixed maturity and equity securities.~~

~~Net realized capital gains were $254.0 million and net realized capital losses were $87.3 million~~ ~~for the nine months ended September 30,~~ ~~2017 and 2016, respectively.~~ ~~The net realized capital gains of $254.0 million were comprised of $237.8 million of gains from fair value re-measurements on equity securities and other invested assets and $20.3~~ ~~million of gains from sales on our fixed maturity and equity securities, partially offset by $4.2 million of other-than-temporary impairments. The net realized capital losses of $87.3 million~~ ~~for the nine months ended September 30, 2016~~ ~~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 impairments, $22.4~~ million of losses from sales on our fixed maturity and equity securities and $11.7 million of losses from fair value re-measurements on fixed maturity securities, equity securities and other invested assets.

Other Income (Expense). We recorded other expense of $74.9 million and other income of ~~$1.5 million and $22.0 million~~ ~~for the three and nine months ended September 30,~~ ~~2017, respectively. We recorded other expense of $13.2~~ ~~million and $10.8~~$9.9 million for the three ~~and nine~~ months ended ~~September 30, 2016,~~March 31, 2018 and 2017, respectively. The ~~changes were primarily~~change was mainly due to the ~~result~~impact of ~~fluctuations in foreign currency exchange rates.~~development related to the Loss Portfolio Transfer agreement between Everest Re and Bermuda Re which was effective on December 31, 2017.

Claims and Expenses.

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

Three Months Ended September 30,
Current Ratio %/ Prior Ratio %/ Total Ratio %/
(Dollars in millions) Year Pt Change Years Pt Change Incurred Pt Change
2017

Attritional $ 325.6 62.8 % $ (0.9 ) -0.2 % $ 324.7 62.6 %
Catastrophes 1,007.8 194.4 % (0.9 ) -0.2 % 1,006.9 194.2 %
Total $ 1,333.4 257.2 % $ (1.8 ) -0.4 % $ 1,331.6 256.8 %

2016

Attritional $ 300.4 54.0 % $ 0.1 0.0 % $ 300.6 54.0 %
Catastrophes 20.9 3.8 % (19.8 ) -3.6 % 1.0 0.2 %
Total $ 321.3 57.8 % $ (19.7 ) -3.6 % $ 301.6 54.2 %

Variance 2017/2016

Attritional $ 25.2 8.8 pts $ (1.0 ) (0.2 ) pts $ 24.1 8.6 pts
Catastrophes 986.9 190.6 pts 18.9 3.4 pts 1,005.9 194.0 pts
Total $ 1,012.1 199.4 pts $ 17.9 3.2 pts $ 1,030.0 202.6 pts

	Nine Months Ended September 30,																					Three Months Ended March 31,
	Current			Ratio %/				Prior			Ratio %/				Total			Ratio %/				Current			Ratio %/				Prior			Ratio %/				Total			Ratio %/
(Dollars in millions)	Year			Pt Change				Years			Pt Change				Incurred			Pt Change				Year			Pt Change				Years			Pt Change				Incurred			Pt Change
2018
Attritional																						$	712.9			63.9	%		$	0.3			0.0	%		$	713.3			63.9	%
Catastrophes																							-			0.0	%			-			0.0	%			-			0.0	%
Total																						$	712.9			63.9	%		$	0.3			0.0	%		$	713.3			63.9	%

2017
Attritional	$	878.8			60.3	%		$	4.4			0.3	%		$	883.2			60.6	%		$	279.0			59.2	%		$	4.1			0.9	%		$	283.1			60.1	%
Catastrophes		1,039.3			71.3	%			(3.9	)		-0.3	%			1,035.3			71.0	%			7.2			1.5	%			(0.6	)		-0.1	%			6.6			1.4	%
Total	$	1,918.1			131.6	%		$	0.5			0.0	%		$	1,918.5			131.6	%		$	286.2			60.7	%		$	3.5			0.8	%		$	289.7			61.5	%

2016
Attritional	$	894.7			58.5	%		$	0.9			0.1	%		$	895.6			58.6	%
Catastrophes		77.6			5.1	%			(37.0	)		-2.4	%			40.6			2.7	%
Total	$	972.3			63.6	%		$	(36.1	)		-2.3	%		$	936.2			61.3	%

Variance 2017/2016
Variance 2018/2017
Attritional	$	(15.9	)		1.8		pts	$	3.5			0.2		pts	$	(12.4	)		2.0		pts	$	433.9			4.7		pts	$	(3.8	)		(0.9	)	pts	$	430.2			3.8		pts
Catastrophes		961.7			66.2		pts		33.1			2.1		pts		994.7			68.3		pts		(7.2	)		(1.5	)	pts		0.6			0.1		pts		(6.6	)		(1.4	)	pts
Total	$	945.8			68.0		pts	$	36.6			2.3		pts	$	982.3			70.3		pts	$	426.7			3.2		pts	$	(3.2	)		(0.8	)	pts	$	423.6			2.4		pts

(Some amounts may not reconcile due to rounding.)

Incurred losses and LAE increased to $1,331.6 million for the three months ended September 30, 2017 compared to $301.6 million for the three months ended September 30, 2016, primarily due to an increase of $986.9 million in current year catastrophe losses, an increase in current year attritional losses of $25.2 million and $19.8 million of favorable development on prior years catastrophe losses in 2016, primarily related to the 2011 Japan earthquake, which did not recur in 2017. The increase in attritional losses was primarily due to the impact of changes in affiliated quota share contracts and changes in the mix of business. The current year catastrophe losses of $1,007.8 million ~~for the three months ended~~ ~~September~~ ~~30,~~ 2017 related to Hurricane Irma ($476.2 million), Hurricane Maria ($318.9 million), Hurricane Harvey ($180.7 million) and the Mexico City earthquake ($32.1 million). The current year catastrophe losses of $20.9 million for the three months ended September 30, 2016 were related to Hurricane Hermine ($6.8 million), 2016 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).

Incurred losses and LAE increased by ~~104.9%~~146.2% to ~~$1,918.5~~$713.3 million for the ~~nine~~three months ended ~~September 30, 2017~~March 31, 2018 compared to ~~$936.2~~$289.7 million for the ~~nine~~three months ended ~~September 30, 2016,~~March 31, 2017, primarily due to an increase of ~~$961.7~~$433.9 million in current year ~~catastrophe losses~~attritional losses. The increase was mainly due to changes in affiliated reinsurance agreements, including the non-renewal of the quota share agreement with Bermuda Re as of December 31, 2017 and ~~favorable development~~the implementation of ~~$37.0 million on prior~~an aggregate stop loss agreement with Bermuda Re as of January 1, 2018. There were no current year catastrophe losses ~~in 2016, primarily related to~~for the ~~2011 Japan earthquake, which did not recur in 2017.~~three months ended March 31, 2018. The current year catastrophe losses of ~~$1,039.3~~$7.2 million for the ~~nine~~three months ended ~~September 30~~,March 31, 2017 related to ~~Hurricane Irma ($476.2 million), Hurricane Maria ($318.9 million), Hurricane Harvey ($180.7 million), the Mexico City earthquake ($32.1 million), the South Africa Knysna fires ($10.0 million),~~ Cyclone Debbie in Australia ($8.3 million), the Peru storms ($6.9 million) and the 2017 US Midwest storms ($6.2 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 ($26.9 million), the 2016 U.S. Storms ($24.9 million), the Ecuador earthquake ($11.6 million), the 2016 Taiwan earthquake ($7.5 million) and Hurricane Hermine ($6.87.2 million).

Commission, Brokerage, Taxes and Fees. Commission, brokerage, taxes and fees deincreased ~~by 58.3%~~ to ~~$34.5 million~~ ~~for the three months ended~~ ~~September~~ ~~30,~~ ~~2017 compared to~~ ~~$82.8~~$256.5 million for the three months ended ~~September~~ ~~30,~~ ~~2016.~~ ~~Commission, brokerage, taxes and fees decreased by 32.8% to $147.6 million~~ ~~for the nine months ended September 30,~~ ~~2017~~March 31, 2018 compared to $~~219.6~~52.5 million for the ~~nine~~three months ended ~~September 30,~~ ~~2016.~~March 31, 2017. The ~~decreases were primarily~~increase was mainly due to changes in affiliated reinsurance agreements, including the ~~impact~~non-renewal of the ~~decrease in premiums earned and the impact of affiliated~~ quota share ~~contracts.~~agreement with Bermuda Re as of December 31, 2017, and changes in the mix of business toward additional pro rata business.

Other Underwriting Expenses. Other underwriting expenses ~~were $57.7~~increased by 29.1% to $77.4 million ~~and~~for the three months ended March 31, 2018 compared to ~~$64.1~~$59.9 million for the three months ended ~~September 30,~~March 31, 2017. The increase was mainly due to changes in affiliated reinsurance agreements, including the non-renewal of the quota share agreement with Bermuda Re as of December 31, 2017, and ~~September 30, 2016, respectively. The decrease for~~costs incurred to support the ~~three month period was primarily due to lower variable compensation costs. Other underwriting expenses were flat at $181.8 million~~ ~~and~~ ~~$181.7 million for~~expansion of the ~~nine months ended September 30, 2017 and September 30, 2016, respectively.~~insurance business.

Corporate Expenses. Corporate expenses, which are general operating expenses that are not allocated to segments, ~~decreased slightly to $1.1~~remained flat at $3.6 million ~~from $1.8~~ ~~million~~ for the three months ended March 31, ~~September~~ ~~30,~~ ~~2017~~2018 and ~~2016, respectively, and were flat at $6.2 million~~ ~~for the nine months ended September 30,~~ ~~2017 and 2016, respectively.~~2017.

Interest, Fees and Bond Issue Cost Amortization Expense. Interest, fees and other bond amortization ~~were $7.2~~expense was $7.3 million and $8.9 million for the three months ended ~~September~~ ~~30,~~March 31, ~~2017~~2018 and ~~2016, respectively. Interest, fees and other bond amortization were $24.0 million and $26.6 million~~ ~~for the nine months ended September 30,~~2017, ~~and 2016,~~ respectively. The ~~decreases~~decrease in expense ~~for both the three and nine month periods were~~was primarily due to the conversion of the long term subordinated notes from a fixed rate of 6.6% to a floating rate, which is reset quarterly per the note agreement. The floating rate was ~~3.70%~~4.2% as of ~~September 30, 2017.~~March 31, 2018.

3834

Income Tax Expense (Benefit). We had an income ~~tax benefit of $220.5 million~~ ~~and income~~ tax expense of ~~$22.4~~$5.0 and $75.8 million for the three months ended March 31,~~September~~ ~~30,~~ 2018 and 2017, ~~and 2016, respectively. We had an income tax benefit of $153.3 million~~ respectively~~and income tax expense of~~ ~~$69.4 million for the nine months ended September 30,~~ ~~2017 and 2016, respectively. I~~ncome tax expense is primarily a function of the Company's pre-tax income and the statutory tax rate, as affected by tax-exempt investment income and foreign tax credits and as calculated under the annualized effective tax rate ("AETR") method.. Variations in ~~income tax expense~~taxes generally result from changes in the relative levels of pre-tax income, including the impact of catastrophe losses and net capital gains (losses)~~. However, if~~ among jurisdictions with different tax rates. In addition, the ~~AETR approach produces a year-to-date~~enactment of the TCJA on December 22, 2017 reduced the U.S. corporate tax ~~benefit which exceeds the amount which is estimated~~rate to be recoverable for the full year, then the tax benefit for the interim reporting period will be limited, as prescribed under ASC 740-270, to the estimated tax recoverable based on the year-to-date result. The decrease in income tax expense ~~for the three and nine months ended September 30, 2017~~ ~~compared to~~ ~~the three and nine months ended September 30, 2016~~ ~~was primarily due to the significant catastrophe losses incurred during the third quarter of 2017.~~21% from 35%.

Net Income (Loss).

Our net loss was ~~$389.7~~$12.2 million and our net income was ~~$76.3~~$169.2 million for the three months ended March 31,~~September~~ ~~30,~~ ~~2017~~ 2018 and ~~2016, respectively. Our net loss was $184.9 million and our net income was $186.7 million~~ ~~for the nine months ended September 30,~~ 2017, ~~and 2016,~~ respectively. The changes were primarily driven by the financial component fluctuations explained above.

Ratios.

Our combined ratio increased by ~~194.0~~8.4 points to ~~274.6%~~ 93.8% for the three months ended ~~September 30, 2017,~~March 31, 2018, compared to ~~80.6%~~ 85.4% for the three months ended ~~September 30, 2016, and increased by 66.6 points to 154.2% for the nine months ended September 30, 2017, compared to 87.6% for the nine months ended September 30, 2016.~~March 31, 2017. The loss ratio components increased ~~202.6~~2.4 points ~~and 70.3 points~~ for the three ~~and nine~~ months ended ~~September 30, 2017, respectively,~~March 31, 2018 over the same period last year. The ~~changes were mainly due to the increases in current year catastrophe losses. The~~ commission and brokerage ratio components ~~decreased~~increased to ~~6.7% from 14.9%~~ 23.0% for the three months ended ~~September 30, 2017 and 2016, respectively, and decreased~~March 31, 2018 compared to ~~10.1% from 14.4%~~ 11.2% for the ~~nine~~three months ended ~~September 30, 2017 and 2016, respectively. The decreases reflect changes in the mix of business, the impact of affiliated quota share contracts and the impact from reinstatement premiums.~~March 31, 2017. The other underwriting expense ratios decreased to ~~11.1% from 11.5%~~ 6.9% for the three months ended ~~September 30, 2017 and 2016, respectively, and increased to 12.5%~~March 31, 2018 from ~~11.9%~~ 12.7% for the ~~nine~~three months ended ~~September 30, 2017 and 2016, respectively.~~March 31, 2017. The ~~decrease~~changes in the ~~three month period was~~combined ratio and its components were mainly due to ~~lower variable compensation costs. The increase~~the impact of changes in affiliated reinsurance contracts and changes in the ~~nine month period was due to costs associated with the continued expansion~~mix of ~~the insurance business, partially offset by lower variable compensation costs.~~business.

Stockholder's Equity.

~~Stockholders'~~Stockholder's equity decreased by ~~$130.9~~$63.3 million to ~~$5,167.6~~$5,349.4 million at ~~September 30, 2017~~March 31, 2018 from ~~$5,298.6~~$5,412.7 million at December 31, ~~2016,~~2017, principally as a result of ~~$184.9 million of net loss, partially offset by $43.2 million of net foreign currency translation adjustments, $5.4 million of net benefit plan obligation adjustments, $5.2~~$51.7 million of net unrealized depreciation on investments, net of tax, ~~and $0.2~~$12.2 million of ~~share-based compensation transactions.~~net loss and $1.3 million of net foreign currency translation adjustments, partially offset by $1.8 million of net benefit plan obligation adjustments.

Consolidated Investment Results

Net Investment Income.

Net investment income increased by ~~13.7%~~14.9% to ~~$73.4~~$69.9 million for the three months ended ~~September 30, 201~~March 31,7 2018 compared to ~~$64.6~~$60.8 million for the three months ended ~~September 30, 201~~March 31,~~6. Net investment income increased by 4.7% to $206.2 million~~ ~~for the nine months ended September 30, 2017 compared to $196.9 million~~ ~~for the nine months ended September 30, 201~~6. 2017. The ~~increases for the three and nine month periods were~~increase was primarily due to an increase in limited partnership ~~income and higher income from the growing fixed income portfolio, partially offset by lower dividend income from our equity portfolio.~~income.

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

	Three Months Ended						Nine Months Ended						Three Months Ended
	September 30,						September 30,						March 31,
(Dollars in millions)	2017			2016			2017			2016			2018			2017
Fixed maturities	$	48.3		$	44.8		$	144.9		$	134.9		$	42.4		$	47.0
Equity securities		6.3			7.9			19.4			25.8			4.4			6.7
Short-term investments and cash		0.6			0.3			1.6			0.9			0.9			0.4
Other invested assets
Limited partnerships		11.8			6.0			20.6			17.7			14.5			(0.2	)
Dividends from preferred shares of affiliate		7.8			7.8			23.3			23.3			7.8			7.8
Other		1.5			0.5			4.2			0.3			3.2			1.3
Gross investment income before adjustments		76.4			67.3			214.1			202.8			73.2			62.9
Funds held interest income (expense)		1.1			1.1			4.0			4.7			2.9			1.9
Interest income from Parent		1.1			1.1			3.2			3.2			1.1			1.1
Gross investment income		78.5			69.5			221.3			210.8			77.1			65.9
Investment expenses		(5.1	)		(4.9	)		(15.1	)		(13.9	)		(7.2	)		(5.1	)
Net investment income	$	73.4		$	64.6		$	206.2		$	196.9		$	69.9		$	60.8

(Some amounts may not reconcile due to rounding.)

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

At At
September 30, December 31,
2017 2016
Imbedded pre-tax yield of cash and invested assets at December 31 3.1% 2.9%
Imbedded after-tax yield of cash and invested assets at December 31 2.1% 2.0%

Three Months Ended Nine Months Ended
September 30, September 30,
2017 2016 2017 2016
Annualized pre-tax yield on average cash and invested assets 3.0% 2.7% 2.8% 2.8%
Annualized after-tax yield on average cash and invested assets 2.1% 1.9% 2.0% 1.9%

	At	At
	March 31,	December 31,
	2018	2017
Imbedded pre-tax yield of cash and invested assets at December 31	3.2%	3.4%
Imbedded after-tax yield of cash and invested assets at December 31	2.5%	2.7%

	Three Months Ended
	March 31,
	2018	2017
Annualized pre-tax yield on average cash and invested assets	3.2%	2.5%
Annualized after-tax yield on average cash and invested assets	2.6%	1.8%

Net Realized Capital Gains (Losses).

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

	Three Months Ended September 30,									Nine Months Ended September 30,									Three Months Ended March 31,
(Dollars in millions)	2017			2016			Variance			2017			2016			Variance			2018			2017			Variance
Gains (losses) from sales:
Fixed maturity securities, market value
Gains	$	8.0		$	6.3		$	1.7		$	23.7		$	13.9		$	9.8
Losses		(4.1	)		(1.9	)		(2.2	)		(6.9	)		(24.1	)		17.2
Total		3.9			4.4			(0.5	)		16.8			(10.3	)		27.0

Fixed maturity securities, fair value
Gains		-			-			-			-			-			-		$	6.9		$	8.0		$	(1.1	)
Losses		-			-			-			-			(1.9	)		1.9			(0.8	)		(1.5	)		0.7
Total		-			-			-			-			(1.9	)		1.9			6.1			6.5			(0.4	)

Equity securities, fair value
Gains		2.2			6.9			(4.7	)		13.8			13.5			0.3			3.2			8.0			(4.8	)
Losses		(3.7	)		(1.4	)		(2.3	)		(10.3	)		(23.6	)		13.3			(5.7	)		(3.7	)		(2.0	)
Total		(1.5	)		5.5			(7.0	)		3.5			(10.1	)		13.6			(2.5	)		4.3			(6.8	)

Total net realized gains (losses) from sales
Gains		10.2			13.2			(3.0	)		37.5			27.4			10.1			10.1			16.0			(5.9	)
Losses		(7.8	)		(3.4	)		(4.5	)		(17.2	)		(49.7	)		32.5			(6.5	)		(5.2	)		(1.3	)
Total		2.4			9.6			(7.5	)		20.3			(22.4	)		42.6			3.6			10.8			(7.2	)

Gain (losses) on sale of subsidiary:		-			(28.0	)		28.0			-			(28.0	)		28.0

Other than temporary impairments:		(1.5	)		(0.8	)		(0.7	)		(4.2	)		(25.2	)		21.0			-			(1.1	)		1.1

Gains (losses) from fair value adjustments:
Fixed maturities, fair value		-			0.1			(0.1	)		-			1.4			(1.4	)
Equity securities, fair value		29.6			16.0			13.6			82.0			34.7			47.3			(27.0	)		37.4			(64.4	)
Other invested assets, fair value		197.9			(47.0	)		244.9			155.8			(47.8	)		203.6			(36.8	)		70.7			(107.5	)
Total		227.5			(30.9	)		258.4			237.8			(11.7	)		249.5			(63.8	)		108.1			(171.9	)

Total net realized gains (losses)	$	228.5		$	(50.1	)	$	278.6		$	254.0		$	(87.3	)	$	341.3		$	(60.2	)	$	117.8		$	(178.0	)

(Some amounts may not reconcile due to rounding.)

Net realized capital ~~gains~~losses were ~~$228.5~~$60.2 million and net realized capital ~~losses~~gains were ~~$50.1~~$117.8 million for the three months ended ~~September 30,~~March 31, 2018 and 2017, ~~and 2016,~~ respectively. For the three months ended ~~September 30,~~March 31, 2018, we recorded $63.8 million of losses from fair value re-measurements on equity securities and other invested assets, partially offset by $3.6 million of gains from sales on our fixed maturity and equity securities. For the three months ended March 31, 2017, we recorded ~~$227.5~~$108.1 million of net realized capital gains due to fair value re-measurements on equity securities and other invested assets and ~~$2.4~~$10.8 million of net realized capital gains from sales of fixed maturity and equity securities, partially offset by ~~$1.5~~$1.1 million of other-than-temporary impairments. For the three months ended September 30, 2016, we recorded $30.9 million of net realized capital 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 $9.6 million of net realized capital gains from sales of fixed maturity and equity securities. The fixed maturity and equity sales ~~for the three months ended September 30, 2017 and 2016~~ related primarily to adjusting the portfolios for overall market changes and individual credit shifts.

Net realized capital gains were $254.0 million and net realized capital losses were $87.3 million for the nine months ended September 30, 2017 and 2016, respectively. For the nine months ended September 30, 2017 we recorded $237.8 million of net realized capital gains due to fair value re-measurements on equity securities and other invested assets and $20.3 million of net realized capital gains from sales of fixed maturity and equity securities, partially offset by $4.2 million of other-than-temporary impairments. For the nine months ended September 30, 2016, we recorded net realized capital losses of $28.0 million from the

4136

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 $11.7 million of net realized capital losses due to fair value re-measurements on fixed maturity securities, equity securities and other invested assets. The fixed maturity and equity sales for the nine months ended September 30, 2017 and 2016 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, through brokers, surplus lines brokers and general agents 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 September 30,												Nine Months Ended September 30,												Three Months Ended March 31,
(Dollars in millions)	2017			2016			Variance			% Change			2017			2016			Variance			% Change			2018			2017			Variance			% Change
Gross written premiums	$	908.3		$	654.8		$	253.6			38.7	%	$	1,962.3		$	1,597.0		$	365.3			22.9	%	$	644.2		$	579.0		$	65.2			11.3	%
Net written premiums		295.6			327.2			(31.6	)		-9.7	%		649.9			711.7			(61.8	)		-8.7	%		423.8			219.1			204.8			93.5	%

Premiums earned	$	242.4		$	249.2		$	(6.9	)		-2.8	%	$	653.0		$	709.1		$	(56.1	)		-7.9	%	$	441.4		$	208.3		$	233.1			111.9	%
Incurred losses and LAE		678.9			137.2			541.7		NM				919.1			363.6			555.5			152.8	%		301.2			120.4			180.8			150.1	%
Commission and brokerage		31.7			48.1			(16.4	)		-34.1	%		115.2			148.0			(32.7	)		-22.1	%		127.3			40.4			86.9			215.4	%
Other underwriting expenses		12.1			14.3			(2.2	)		-15.2	%		40.6			39.9			0.8			1.9	%		16.9			14.3			2.6			18.5	%
Underwriting gain (loss)	$	(480.4	)	$	49.6		$	(530.0	)	NM			$	(422.0	)	$	157.7		$	(579.7	)		NM		$	(4.0	)	$	33.3		$	(37.3	)		-112.1	%

										Point Chg												Point Chg												Point Chg
Loss ratio		280.1	%		55.1	%					225.0			140.8	%		51.3	%					89.5			68.2	%		57.8	%					10.4
Commission and brokerage ratio		13.1	%		19.3	%					(6.2	)		17.6	%		20.9	%					(3.2	)		28.8	%		19.4	%					9.4
Other underwriting ratio		5.0	%		5.7	%					(0.7	)		6.2	%		5.6	%					0.6			3.9	%		6.8	%					(2.9	)
Combined ratio		298.2	%		80.1	%					218.1			164.6	%		77.8	%					86.9			100.9	%		84.0	%					16.9

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

Premiums. Gross written premiums increased by ~~38.7%~~11.3% to ~~$908.3~~$644.2 million for the three months ended ~~September 30, 201~~March 31,7 2018 from ~~$654.8~~$579.0 million for the three months ended ~~September 30, 201~~March 31,6 2017, primarily due to ~~the new crop reinsurance~~an increase in treaty property business, ~~related to the sale of Heartland~~an increase in structured products as well as marine and ~~the influx of reinstatement premiums due to the catastrophe losses.~~aviation business. Net written premiums ~~decreased~~increased by ~~9.7%~~93.5% to ~~$295.6~~$423.8 million for the three months ended ~~September 30, 201~~March 31,7 2018 compared to ~~$327.2~~$219.1 million for the three months ended ~~September 30, 201~~March 31,6. 2017. The difference between the change in gross written premiums compared to the change in net written premiums is primarily due to ~~a varying utilization~~the impact of changes in affiliated reinsurance ~~primarily related to~~contracts, including the ~~affiliated~~non-renewal of the quota share ~~contracts.~~ agreement with Bermuda Re as of December 31, 2017 and the implementation of an aggregate stop loss agreement with Bermuda Re for 2018. Premiums earned ~~decreased 2.8%~~increased 111.9% to ~~$242.4~~$441.4 million for the three

months ended March 31, 2018 compared to $208.3 million for the three months ended ~~September 30, 201~~March 31,7 ~~compared to $249.2 million for the three months ended September 30, 201~~6 2017. The change in premiums earned relative to net written premiums is ~~primarily the result of timing; premiums are earned ratably over the coverage period whereas written premiums are recorded at the initiation of the coverage period.~~

~~Gross written premiums increased by 22.9% to $1,962.3 million for the nine months ended September 30, 201~~7 ~~from $1,597.0 million for the nine months ended September 30, 201~~6~~, primarily~~ due to the new crop reinsurance business, an increase in treaty casualty business and the influx of reinstatement premiums due to the catastrophe losses. Net written premiums decreased by 8.7% to $649.9 million for the nine months ended September 30, 2017 ~~compared to $711.7 million for the nine months ended September 30, 201~~6. The difference between the change in gross written premiums compared to the change in net written premiums is primarily due to a varying utilization of reinsurance primarily related to the affiliated quota share contracts. Premiums earned decreased 7.9% to $653.0 million for the nine months ended September 30, 2017 ~~compared to $709.1 million for the nine months ended September 30, 201~~6~~. The change in premiums earned relative to net written premiums is primarily the result of~~ timing; premiums are earned ratably over the coverage period whereas written premiums are recorded at the initiation of the coverage period.

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

	Three Months Ended September 30,																					Three Months Ended March 31,
	Current			Ratio %/				Prior			Ratio %/				Total			Ratio %/				Current			Ratio %/				Prior			Ratio %/				Total			Ratio %/
(Dollars in millions)	Year			Pt Change				Years			Pt Change				Incurred			Pt Change				Year			Pt Change				Years			Pt Change				Incurred			Pt Change
2018
Attritional																						$	301.2			68.2	%		$	-			0.0	%		$	301.2			68.2	%
Catastrophes																							-			0.0	%			-			0.0	%			-			0.0	%
Total segment																						$	301.2			68.2	%		$	-			0.0	%		$	301.2			68.2	%

2017
Attritional	$	128.0			52.8	%		$	(0.4	)		-0.2	%		$	127.5			52.6	%		$	120.6			57.8	%		$	(0.5	)		-0.2	%		$	120.1			57.6	%
Catastrophes		551.6			227.6	%			(0.2	)		-0.1	%			551.4			227.5	%			0.4			0.2	%			(0.1	)		0.0	%			0.3			0.2	%
Total segment	$	679.6			280.4	%		$	(0.6	)		-0.3	%		$	678.9			280.1	%		$	121.0			58.0	%		$	(0.6	)		-0.2	%		$	120.4			57.8	%

2016
Variance 2018/2017
Attritional	$	129.8			52.1	%		$	(1.0	)		-0.4	%		$	128.8			51.7	%		$	180.6			10.4		pts	$	0.5			0.2		pts	$	181.1			10.6		pts
Catastrophes		14.4			5.8	%			(5.9	)		-2.4	%			8.5			3.4	%			(0.4	)		(0.2	)	pts		0.1			-		pts		(0.3	)		(0.2	)	pts
Total segment	$	144.2			57.9	%		$	(6.9	)		-2.8	%		$	137.2			55.1	%		$	180.2			10.2		pts	$	0.6			0.2		pts	$	180.8			10.4		pts

Variance 2017/2016
Attritional	$	(1.8	)		0.7		pts	$	0.6			0.2		pts	$	(1.3	)		0.9		pts
Catastrophes		537.2			221.8		pts		5.7			2.3		pts		542.9			224.1		pts
Total segment	$	535.4			222.5		pts	$	6.3			2.5		pts	$	541.7			225.0		pts
(Some amounts may not reconcile due to rounding.)

Nine Months Ended September 30,
Current Ratio %/ Prior Ratio %/ Total Ratio %/
(Dollars in millions) Year Pt Change Years Pt Change Incurred Pt Change
2017

Attritional $ 374.8 57.4 % $ (4.7 ) -0.7 % $ 370.0 56.7 %
Catastrophes 553.2 84.7 % (4.1 ) -0.6 % 549.1 84.1 %
Total segment $ 928.0 142.1 % $ (8.8 ) -1.3 % $ 919.1 140.8 %

2016

Attritional $ 365.2 51.6 % $ (1.3 ) -0.2 % $ 363.9 51.4 %
Catastrophes 15.8 2.2 % (16.1 ) -2.3 % (0.3 ) -0.1 %
Total segment $ 381.0 53.8 % $ (17.4 ) -2.5 % $ 363.6 51.3 %

Variance 2017/2016

Attritional $ 9.6 5.8 pts $ (3.4 ) (0.5 ) pts $ 6.1 5.3 pts
Catastrophes 537.4 82.5 pts 12.0 1.7 pts 549.4 84.2 pts
Total segment $ 547.0 88.3 pts $ 8.6 1.2 pts $ 555.5 89.5 pts

(Some amounts may not reconcile due to rounding.)

Incurred losses increased by 150.1% to ~~$678.9~~$301.2 million for the three months ended ~~September 30, 201~~March 31,7 2018 compared to ~~$137.2~~$120.4 million for the three months ended ~~September 30, 201~~March 31,6 2017, primarily due to an increase of ~~$537.2~~$180.6 million in current year ~~catastrophe~~attritional losses. The ~~current year catastrophe losses~~increase was mainly due to changes in affiliated reinsurance agreements, including the non-renewal of ~~$551.6 million~~ ~~for~~ the ~~three months ended September 30, 2017 related to Hurricane Irma ($348.6 million), Hurricane Harvey ($128.5 million), Hurricane Maria ($74.0 million),~~quota share agreement with Bermuda Re as of December 31, 2017 and the ~~Mexico City earthquake ($1.1 million).~~implementation of an aggregate stop loss agreement with Bermuda Re as of January 1, 2018. ~~The $14.4 million of~~There were no current year catastrophe losses for the three months ended ~~September 30, 2016 were related to Hurricane Hermine ($6.8 million), 2016 U.S. Storms ($6.3 million) and the Fort McMurray Canada Wildfire ($1.3 million).~~

~~Incurred losses increased by 152.8% to $919.1 million for the nine months ended September 30, 201~~7 ~~compared to $363.6 million for the nine months ended September 30, 201~~6, due to an increase of $537.4 million in current year catastrophe losses, favorable development of $16.1 million on prior years' catastrophe losses in 2016 which did not recur in 2017 and an increase of $9.6 million in current year attritional losses, resulting mainly from the impact of the new crop reinsurance contract.March 31, 2018. The current year catastrophe losses of ~~$553.2~~$0.4 million for the ~~nine~~three months ended ~~September 30, 201~~March 31, 72017 primarily related to ~~Hurricane Irma~~Cyclone Debbie in Australia ($~~348.6 million), Hurricane Harvey ($128.5 million), Hurricane Maria ($74.0 million), the Mexico City earthquake ($1.1 million) and the 2017 U.S. Storms ($1.4 million).~~ ~~The $15.8 million of current year catastrophe losses for the nine months ended September 30, 2016 were related to Hurricane Hermine ($6.8 million) and 2016 U.S. Storms ($9.6~~0.4 million).

Segment Expenses. Commission and brokerage ~~expenses decreased~~increased by ~~34.1%~~215.4% to ~~$31.7~~$127.3 million for the three months ended ~~September 30, 2017~~March 31, 2018 compared to ~~$48.1~~$40.4 million for the three months ended ~~September 30, 2016~~March 31, 2017. ~~Commission and brokerage~~The increase was mainly due to changes in affiliated reinsurance agreements, including the non-renewal of the quota share agreement with Bermuda Re as of December 31, 2017. Segment other underwriting expenses ~~decreased by 22.1%~~increased to ~~$115.2~~$16.9 million for the ~~nine~~three months ended ~~September 30, 2017~~March 31, 2018 ~~compared to $148.0~~from $14.3 million for the ~~nine~~three months ended ~~September 30, 2016. The decreases are~~March 31, 2017 mainly due to the impact of ~~the new crop~~changes in affiliated reinsurance ~~contract which generally has a lower expense ratio, the impact of affiliated quota share contracts and the impact of the decrease in premiums earned.~~contracts.

~~Segment other underwriting expenses decreased to $12.1 million~~ ~~for the three months ended September 30, 2017~~ ~~from $14.3 million~~ ~~for the three months ended September 30, 2016. The decrease for the three month period was primarily due to lower variable compensation costs.~~ ~~Segment other underwriting expenses increased slightly to $40.6 million~~ ~~for the nine months ended September 30, 2017~~ ~~from $39.9 million~~ ~~for the nine months ended September 30, 2016.~~

4438

International.

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

	Three Months Ended September 30,												Nine Months Ended September 30,												Three Months Ended March 31,
(Dollars in millions)	2017			2016			Variance			% Change			2017			2016			Variance			% Change			2018			2017			Variance		% Change
Gross written premiums	$	363.2		$	353.2		$	10.0			2.8	%	$	975.3		$	939.9		$	35.4			3.8	%	$	367.0		$	278.6		$	88.4		31.8	%
Net written premiums		130.2			141.3			(11.1	)		-7.9	%		345.4			353.4			(8.1	)		-2.3	%		334.9			103.2			231.6		224.3	%

Premiums earned	$	123.9		$	128.4		$	(4.4	)		-3.5	%	$	355.4		$	372.8		$	(17.5	)		-4.7	%	$	328.9		$	118.2		$	210.8		178.4	%
Incurred losses and LAE		410.5			41.8			368.7		NM				557.4			206.7			350.7			169.7	%		176.4			68.4			108.0		157.8	%
Commission and brokerage		25.1			30.2			(5.1	)		-16.9	%		72.4			82.4			(10.0	)		-12.2	%		78.4			23.5			54.9		233.1	%
Other underwriting expenses		8.2			9.2			(1.0	)		-10.6	%		26.3			25.0			1.3			5.1	%		10.1			8.9			1.2		13.5	%
Underwriting gain (loss)	$	(320.0	)	$	47.1		$	(367.1	)	NM			$	(300.8	)	$	58.7		$	(359.5	)	NM			$	64.1		$	17.3		$	46.8	NM

										Point Chg												Point Chg											Point Chg
Loss ratio		331.3	%		32.6	%					298.7			156.9	%		55.4	%					101.5			53.6	%		57.9	%				(4.3	)
Commission and brokerage ratio		20.3	%		23.5	%					(3.3	)		20.4	%		22.1	%					(1.7	)		23.8	%		19.9	%				3.9
Other underwriting ratio		6.6	%		7.2	%					(0.6	)		7.3	%		6.8	%					0.5			3.1	%		7.5	%				(4.4	)
Combined ratio		358.2	%		63.3	%					294.9			184.6	%		84.3	%					100.4			80.5	%		85.3	%				(4.8	)

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

Premiums. Gross written premiums increased by ~~2.8%~~31.8% to ~~$363.2~~$367.0 million for the three months ended ~~September 30, 201~~March 31,7 2018 compared to ~~$353.2~~$278.6 million for the three months ended ~~September 30, 201~~March 31,6 2017, primarily due to ~~the increase in Middle East, African and Asian business, partially offset by a decline~~increases in Latin American ~~business~~ and ~~a negative impact of $5.6 million from the movement of foreign exchange rates.~~Middle East/Africa business. Net written premiums ~~decreased~~increased by ~~7.9%~~224.3% to ~~$130.2~~$334.9 million for the three months ended ~~September 30, 201~~March 31,7 2018 compared to ~~$141.3~~$103.2 million for the three months ended ~~September 30, 201~~March 31,6. 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, including affiliated quota share contracts. Premiums earned decreased 3.5% to $123.9 million for the three months ended September 30, 2017 ~~compared to $128.4 million for the three months ended September 30, 201~~6. The change in premiums earned relative to net written premiums is primarily the result of timing; premiums are earned ratably over the coverage period whereas written premiums are recorded at the initiation of the coverage period.

~~Gross written premiums increased by 3.8% to $975.3 million for the nine months ended September 30, 201~~7 ~~compared to $939.9 million for the nine months ended September 30, 201~~6, primarily due to increases in Middle East, African and Asian business and the positive impact of $17.7 million from the movement of foreign exchange rates. Net written premiums decreased by 2.3% to $345.4 million for the nine months ended September 30, 2017 ~~compared to $353.4 million for the nine months ended September 30, 201~~6. 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, including affiliated quota share contracts. Premiums earned decreased 4.7% to $355.4 million for the nine months ended September 30, 2017 ~~compared to $372.8 million for the nine months ended September 30, 201~~6. The change in premiums earned relative to net written premiums is primarily the result of timing; premiums are earned ratably over the coverage period whereas written premiums are recorded at the initiation of the coverage period.

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

Three Months Ended September 30,
Current Ratio %/ Prior Ratio %/ Total Ratio %/
(Dollars in millions) Year Pt Change Years Pt Change Incurred Pt Change
2017

Attritional $ 64.0 51.7 % $ 0.7 0.6 % $ 64.7 52.3 %
Catastrophes 346.6 279.7 % (0.8 ) -0.7 % 345.8 279.0 %
Total segment $ 410.6 331.4 % $ (0.1 ) -0.1 % $ 410.5 331.3 %

2016

Attritional $ 49.3 38.4 % $ - 0.0 % $ 49.3 38.4 %
Catastrophes 6.5 5.1 % (14.0 ) -10.9 % (7.5 ) -5.8 %
Total segment $ 55.8 43.5 % $ (14.0 ) -10.9 % $ 41.8 32.6 %

Variance 2017/2016

Attritional $ 14.7 13.3 pts $ 0.7 0.6 pts $ 15.4 13.9 pts
Catastrophes 340.1 274.6 pts 13.2 10.2 pts 353.3 284.8 pts
Total segment $ 354.8 287.9 pts $ 13.9 10.8 pts $ 368.7 298.7 pts

Nine Months Ended September 30,
Current Ratio %/ Prior Ratio %/ Total Ratio %/
(Dollars in millions) Year Pt Change Years Pt Change Incurred Pt Change
2017

Attritional $ 182.9 51.5 % $ 2.6 0.7 % $ 185.5 52.2 %
Catastrophes 371.7 104.6 % 0.2 0.1 % 371.9 104.7 %
Total segment $ 554.6 156.1 % $ 2.8 0.8 % $ 557.4 156.9 %

2016

Attritional $ 185.6 49.8 % $ (3.4 ) -0.9 % $ 182.3 48.9 %
Catastrophes 45.2 12.1 % (20.8 ) -5.6 % 24.4 6.5 %
Total segment $ 230.8 61.9 % $ (24.1 ) -6.5 % $ 206.7 55.4 %

Variance 2017/2016

Attritional $ (2.7 ) 1.7 pts $ 6.0 1.6 pts $ 3.2 3.3 pts
Catastrophes 326.5 92.5 pts 21.0 5.7 pts 347.5 98.2 pts
Total segment $ 323.8 94.2 pts $ 26.9 7.3 pts $ 350.7 101.5 pts

(Some amounts may not reconcile due to rounding.)

~~Incurred losses and LAE increased to $410.5 million for the three months ended September 30, 201~~7 ~~compared to $41.8 million for the three months ended September 30, 201~~6, primarily due to an increase of $340.1 million in current year catastrophe losses, an increase of $14.7 million in current year attritional losses and $14.0 million of favorable development on prior year catastrophe losses in 2016, which did not recur in 2017. ~~The current year catastrophe losses of $346.6 million~~ ~~for the three months ended September 30, 2017 related to Hurricane Maria ($236.2 million), Hurricane Irma ($77.5 million), the Mexico City earthquake ($31.1 million) and Hurricane Harvey ($1.4 million).~~ ~~The $6.5 million of current year catastrophe losses 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), 2016 U.S. Storms ($0.3 million) and the Ecuador earthquake ($0.2 million).~~

~~Incurred losses and LAE increased by 169.7% to $557.4 million for the nine months ended September 30, 201~~7 ~~compared to $206.7 million for the nine months ended September 30, 201~~6~~, primarily due to an increase of $326.5 million in current catastrophe losses and $20.8 million of favorable development on prior year catastrophe losses in 2016 which did not recur in 2017.~~ ~~The current year catastrophe losses of $371.7 million~~ ~~for the nine months ended September 30, 201~~7 related to Hurricane Maria ($236.2 million), Hurricane Irma ($77.5 million), the Mexico City earthquake ($31.1 million), the South Africa Knysna fires ($10.1 million), Cyclone Debbie in Australia ($8.3 million), the Peru storms ($7.1 million) and Hurricane Harvey ($1.4 million). ~~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)~~.

~~Segment Expenses.~~ ~~Commission and brokerage decreased 16.9% to $25.1 million for the three months ended September 30, 201~~7 ~~compared to $30.2 million for the three months ended September 30, 201~~6~~. Commission and brokerage decreased 12.2% to $72.4 million for the nine months ended September 30, 201~~7 ~~compared to $82.4 million for the nine months ended September 30, 201~~6~~. The decreases were due to the impact of the decreases in premiums earned, the impact of affiliated quota share agreements and changes in the mix of business.~~

~~Segment other underwriting expenses decreased to $8.2 million for the three months ended September 30, 201~~7 ~~from $9.2 million for the three months ended September 30, 201~~6. ~~The decrease for the three month period is primarily due to lower variable compensation costs. Segment other underwriting expenses~~ ~~increased slightly to~~ ~~$26.3 million for the nine months ended September 30, 201~~7 ~~from $25.0 million for the nine months ended September 30, 201~~6.

~~Insurance.~~

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

Three Months Ended September 30, Nine Months Ended September 30,
(Dollars in millions) 2017 2016 Variance % Change 2017 2016 Variance % Change
Gross written premiums $ 429.6 $ 498.0 $ (68.4 ) -13.7 % $ 1,351.5 $ 1,276.8 $ 74.7 5.9 %
Net written premiums 144.9 154.1 (9.1 ) -5.9 % 442.2 462.8 (20.6 ) -4.4 %

Premiums earned $ 152.2 $ 179.1 $ (26.9 ) -15.0 % $ 449.4 $ 445.6 $ 3.9 0.9 %
Incurred losses and LAE 242.1 122.5 119.6 97.6 % 442.0 366.0 76.0 20.8 %
Commission and brokerage (22.3 ) 4.5 (26.7 ) NM (40.1 ) (10.9 ) (29.2 ) NM
Other underwriting expenses 37.4 40.7 (3.3 ) -8.1 % 114.9 116.8 (2.0 ) -1.7 %
Underwriting gain (loss) $ (105.0 ) $ 11.4 $ (116.4 ) NM $ (67.3 ) $ (26.4 ) $ (40.9 ) NM

Point Chg Point Chg
Loss ratio 159.0 % 68.4 % 90.6 98.3 % 82.1 % 16.2
Commission and brokerage ratio -14.6 % 2.5 % (17.1 ) -8.9 % -2.5 % (6.4 )
Other underwriting ratio 24.5 % 22.7 % 1.8 25.6 % 26.3 % (0.7 )
Combined ratio 168.9 % 93.6 % 75.3 115.0 % 105.9 % 9.1

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

~~Premiums.~~ ~~Gross written premiums decreased by 13.7% to $429.6 million for the three months ended September 30, 201~~7 ~~compared to $498.0 million for the three months ended September 30, 201~~6. This decrease was primarily due to the sale of Heartland, which accounted for $162.4 million of gross written premiums in the third quarter of 2016. Excluding the impact of Heartland, gross written premiums increased by $94.0 million due to higher production from many lines of business, including retail casualty, surety and accident and health. Net written premiums decreased by 5.9% to $144.9 million for the three months ended September 30, 2017 ~~compared to $154.1 million for the three months ended September 30, 201~~6 2017. The difference between the change in gross written premiums compared to the change in net written premiums is primarily due to the ~~more conservative reinsurance position we have taken to support our expanded insurance business and the~~ impact of changes in affiliated reinsurance contracts including the non-renewal of the quota share ~~agreements.~~agreement with Bermuda Re as of December 31, 2017. Premiums earned ~~decreased 15.0%~~increased 178.4% to ~~$152.2~~$328.9 million for the three months ended ~~September 30, 201~~March 31,7 2018 compared to ~~$179.1~~$118.2 million for the three months ended ~~September 30, 201~~March 31,6 2017. 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 5.9% to $1,351.5 million for the nine months ended September 30, 201~~7 ~~compared to $1,276.8 million for the nine months ended September 30, 201~~6~~. Excluding the impact of the sale of Heartland, which accounted for $229.9 million of gross written premiums in the nine months~~

ended September 30, 2016, gross written premiums increased $304.6 million. This increase was primarily driven by expansion of many lines of business, including retail casualty, retail property, surety and accident and health. Net written premiums decreased by 4.4% to $442.2 million for the nine months ended September 30, 2017 ~~compared to $462.8 million for the nine months ended September 30, 201~~6. ~~The difference between the change in gross written premiums compared to the change in net written premiums is primarily~~ due to ~~the more conservative reinsurance position we have taken to support our new business and the impact of affiliated quota share agreements.~~ ~~Premiums earned increased 0.9% to $449.4 million for the nine months ended September 30, 201~~7 ~~compared to $445.6 million for the nine months ended September 30, 201~~6~~. 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 table presents the incurred losses and LAE for the ~~Insurance~~International segment for the periods indicated.

Three Months Ended September 30,
Current Ratio %/ Prior Ratio %/ Total Ratio %/
(Dollars in millions) Year Pt Change Years Pt Change Incurred Pt Change
2017

Attritional $ 133.6 87.7 % $ (1.2 ) -0.8 % $ 132.4 86.9 %
Catastrophes 109.6 72.0 % 0.1 0.1 % 109.7 72.1 %
Total segment $ 243.2 159.7 % $ (1.1 ) -0.7 % $ 242.1 159.0 %

2016

Attritional $ 121.4 67.8 % $ 1.1 0.6 % $ 122.5 68.4 %
Catastrophes - 0.0 % - 0.0 % - 0.0 %
Total segment $ 121.4 67.8 % $ 1.1 0.6 % $ 122.5 68.4 %

Variance 2017/2016

Attritional $ 12.2 19.9 pts $ (2.3 ) (1.4 ) pts $ 9.9 18.5 pts
Catastrophes 109.6 72.0 pts 0.1 0.1 pts 109.7 72.1 pts
Total segment $ 121.8 91.9 pts $ (2.2 ) (1.3 ) pts $ 119.6 90.6 pts

	Nine Months Ended September 30,																					Three Months Ended March 31,
	Current			Ratio %/				Prior			Ratio %/				Total			Ratio %/				Current			Ratio %/				Prior			Ratio %/				Total			Ratio %/
(Dollars in millions)	Year			Pt Change				Years			Pt Change				Incurred			Pt Change				Year			Pt Change				Years			Pt Change				Incurred			Pt Change
2018
Attritional																						$	176.4			53.6	%		$	-			0.0	%		$	176.4			53.6	%
Catastrophes																							-			0.0	%			-			0.0	%			-			0.0	%
Total segment																						$	176.4			53.6	%		$	-			0.0	%		$	176.4			53.6	%

2017
Attritional	$	321.2			71.4	%		$	6.5			1.4	%		$	327.7			72.8	%		$	61.1			51.7	%		$	0.8			0.7	%		$	61.9			52.4	%
Catastrophes		114.4			25.5	%			(0.1	)		0.0	%			114.3			25.5	%			6.8			5.8	%			(0.3	)		-0.3	%			6.5			5.5	%
Total segment	$	435.6			96.9	%		$	6.4			1.4	%		$	442.0			98.3	%		$	67.9			57.5	%		$	0.5			0.4	%		$	68.4			57.9	%

2016
Attritional	$	343.8			77.1	%		$	5.6			1.3	%		$	349.4			78.4	%
Catastrophes		16.7			3.7	%			(0.2	)		0.0	%			16.5			3.7	%
Total segment	$	360.5			80.8	%		$	5.4			1.3	%		$	366.0			82.1	%

Variance 2017/2016
Variance 2018/2017
Attritional	$	(22.6	)		(5.7	)	pts	$	0.9			0.1		pts	$	(21.7	)		(5.6	)	pts	$	115.3			1.9		pts	$	(0.8	)		(0.7	)	pts	$	114.5			1.2		pts
Catastrophes		97.7			21.8		pts		0.1			-		pts		97.8			21.8		pts		(6.8	)		(5.8	)	pts		0.3			0.3		pts		(6.5	)		(5.5	)	pts
Total segment	$	75.1			16.1		pts	$	1.0			0.1		pts	$	76.0			16.2		pts	$	108.5			(3.9	)	pts	$	(0.5	)		(0.4	)	pts	$	108.0			(4.3	)	pts

(Some amounts may not reconcile due to rounding.)

Incurred losses and LAE increased by ~~97.6%~~157.8% to ~~$242.1~~$176.4 million for the three months ended ~~September 30, 201~~March 31,7 2018 compared to ~~$122.5~~$68.4 million for the three months ended ~~September 30, 201~~March 31,6 2017, ~~mainly~~primarily due to an increase of ~~$109.6 million in current year catastrophe losses and an increase of $12.2~~$115.3 million in current year attritional losses. The increase was mainly due to changes in affiliated reinsurance agreements, including the non-renewal of the quota share agreement with Bermuda Re as of December 31, 2017. There were no current year catastrophe losses for the three months ended March 31, 2018. The current year catastrophe losses of ~~$109.6~~$6.8 million for the three months ended ~~September 30, 201~~March 31, ~~7 related to Hurricane Harvey ($50.8 million), Hurricane Irma ($50.1 million) and Hurricane Maria ($8.7 million).~~ ~~There were no current year catastrophe losses~~ ~~for the three months ended September 30, 2016.~~

~~Incurred losses and LAE increased by 20.8% to $442.0 million for the nine months ended September 30, 201~~7 ~~compared to $366.0 million for the nine months ended September 30, 201~~6, mainly due to an increase of $97.7 million in current catastrophe losses, partially offset by a decrease of $22.6 million in current year attritional losses. The decrease in current year attritional losses2017 primarily related to ~~changes~~Cyclone Debbie in ~~the mix of business and the impact of affiliated quota share agreements.~~ ~~The current year catastrophe losses of $114.4 million~~ ~~for the nine months ended September 30, 2017 primarily related to Hurricane Harvey~~Australia ($~~50.8 million), Hurricane Irma ($50.1 million), Hurricane Maria ($8.7 million) and the 2017 US Midwest Storms ($4.8~~6.8 million).~~The $16.7 million of current year catastrophe losses for the nine months ended September 30, 2016 were due to the 2016 U.S. storms ($15.0 million) and the Fort McMurray Canada wildfire ($1.7 million).~~

Segment Expenses. Commission and brokerage ~~decreased~~increased 233.1% to ~~($22.3)~~$78.4 million for the three months ended ~~September 30, 201~~March 31,7 2018 compared to ~~$4.5~~$23.5 million for the three months ended ~~September 30, 201~~March 31,6 2017. ~~Commission and brokerage decreased to ($40.1) million for the nine months ended September 30, 201~~7 ~~compared to ($10.9) million for the nine months ended September 30, 201~~6. The ~~decreases were~~increase was mainly due to changes in affiliated reinsurance agreements, including the ~~impact~~non-renewal of the quota share agreement with Bermuda Re as of December 31, 2017, and the changes in the mix of ~~business and the impacts from affiliated quota share agreements.~~

business. Segment other underwriting expenses ~~decreased~~increased slightly to ~~$37.4~~$10.1 million for the three months ended ~~September 30, 201~~March 31,7 2018 compared to ~~$40.7~~$8.9 million for the three months ended ~~September 30, 201~~March 31,6. 2017.

Insurance.

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

	Three Months Ended March 31,
(Dollars in millions)	2018			2017			Variance			% Change
Gross written premiums	$	455.0		$	394.9		$	60.1			15.2	%
Net written premiums		348.3			126.5			221.8			175.3	%

Premiums earned	$	345.7		$	144.6		$	201.1			139.1	%
Incurred losses and LAE		235.7			100.9			134.8			133.7	%
Commission and brokerage		50.7			(11.4	)		62.1		NM
Other underwriting expenses		50.4			36.8			13.6			37.1	%
Underwriting gain (loss)	$	8.9		$	18.4		$	(9.5	)	NM

										Point Chg
Loss ratio		68.2	%		69.8	%					(1.6	)
Commission and brokerage ratio		14.7	%		-7.9	%					22.6
Other underwriting ratio		14.5	%		25.4	%					(10.9	)
Combined ratio		97.4	%		87.3	%					10.1

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

Premiums. Gross written premiums increased by 15.2% to $455.0 million for the three months ended March 31, 2018 compared to $394.9 million for the three months ended March 31, 2017. This increase was primarily driven by expansion of various insurance lines of business including property and accident and health. Net written premiums increased by 175.3% to $348.3 million for the three months ended March 31, 2018 compared to $126.5 million for the three months ended March 31, 2017. The difference between the change in gross written premiums compared to the change in net written premiums is primarily due to the impact of affiliated reinsurance agreements, including the impact of the non-renewal of the quota share agreement between Everest Re and Bermuda Re. Premiums earned increased by 139.1% to $345.7 million for the three months ended March 31, 2018 compared to $144.6 million for the three months ended March 31, 2017. 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, as well as changes in the mix of business.

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

	Three Months Ended March 31,
	Current		Ratio %/				Prior			Ratio %/				Total			Ratio %/
(Dollars in millions)	Year		Pt Change				Years			Pt Change				Incurred			Pt Change
2018
Attritional	$	235.3		68.1	%		$	0.4			0.1	%		$	235.7			68.2	%
Catastrophes		-		0.0	%			-			0.0	%			-			0.0	%
Total segment	$	235.3		68.1	%		$	0.4			0.1	%		$	235.7			68.2	%

2017
Attritional	$	97.3		67.3	%		$	3.7			2.6	%		$	101.0			69.9	%
Catastrophes		-		0.0	%			(0.1	)		-0.1	%			(0.1	)		-0.1	%
Total segment	$	97.3		67.3	%		$	3.6			2.5	%		$	100.9			69.8	%

Variance 2018/2017
Attritional	$	138.0		0.8		pts	$	(3.3	)		(2.5	)	pts	$	134.7			(1.7	)	pts
Catastrophes		-		-		pts		0.1			0.1		pts		0.1			0.1		pts
Total segment	$	138.0		0.8		pts	$	(3.2	)		(2.4	)	pts	$	134.8			(1.6	)	pts

(Some amounts may not reconcile due to rounding.)

Incurred losses and LAE increased by 133.7% to $235.7 million for the three months ended March 31, 2018 compared to $100.9 million for the three months ended March 31, 2017, mainly due to an increase of $138.0 million in current year attritional losses. The increase was mainly due to changes in affiliated reinsurance agreements, including the non-renewal of the quota share agreement with Bermuda Re as of December 31, 2017. There were no current year catastrophe losses for the three months ended March 31, 2018 and 2017.

Segment Expenses. Commission and brokerage increased to $50.7 million for the three months ended March 31, 2018 compared to ($11.4) million for the three months ended March 31, 2017. The increase was mainly due to changes in affiliated reinsurance agreements, including the non-renewal of the quota share agreement with Bermuda Re as of December 31, 2017, and changes in the mix of business. Segment other underwriting expenses ~~decreased~~increased to ~~$114.9~~$50.4 million for the ~~nine~~three months ended ~~September 30, 201~~March 31,7 2018 compared to ~~$116.8~~$36.8 million for the ~~nine~~three months ended ~~September 30, 201~~March 31,~~6. These decreases were~~ 2017. The increase was mainly due to ~~lower variable compensation costs.~~increased expenses related to the continued build out of the insurance business and the non-renewal of the quota share agreement.

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 ~~$10.2~~$9.0 billion investment portfolio, at ~~September 30, 2017,~~March 31, 2018, 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 ~~$736.9~~$187.8 million of mortgage-backed securities in the ~~$6,039.4~~$4,909.6 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 ~~$230.0~~$186.6 million of short-term investments) for the period indicated based on upward and downward parallel and immediate 100 and 200 basis point shifts in interest rates. For legal entities with a U.S. dollar functional currency, this modeling was performed on each security individually. To generate appropriate price estimate on mortgage-backed securities, changes in prepayment expectations under different interest rate environments were taken into account. For legal entities with non-U.S. dollar functional currency, the effective duration of the involved portfolio of securities was used as a proxy for the market value change under the various interest rate change scenarios.

	Impact of Interest Rate Shift in Basis Points															Impact of Interest Rate Shift in Basis Points
	At September 30, 2017															At March 31, 2018
(Dollars in millions)		-200			-100			0			100			200			-200			-100			0			100			200
Total Market/Fair Value	$	6,634.4		$	6,454.2		$	6,269.4		$	6,077.2		$	5,883.9		$	5,405.7		$	5,250.1		$	5,096.2		$	4,943.4		$	4,791.4
Market/Fair Value Change from Base (%)		5.8	%		2.9	%		0.0	%		-3.1	%		-6.1	%		6.1	%		3.0	%		0.0	%		-3.0	%		-6.0	%
Change in Unrealized Appreciation
After-tax from Base ($)	$	237.3		$	120.1		$	-		$	(124.9	)	$	(250.6	)	$	244.5		$	121.6		$	-		$	(120.7	)	$	(240.8	)

We had ~~$9,969.1~~$9,145.8 million and ~~$8,331.3~~$9,343.0 million of gross reserves for losses and LAE as of ~~September 30, 2017~~March 31, 2018 and December 31, ~~2016,~~2017, 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, preferred stock and mutual fund portfolios arising from changing prices. Our equity investments consist of a diversified portfolio of individual securities. The primary objective of the equity portfolio is to obtain greater total return relative to our core bonds over time through market appreciation and income.

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

	Impact of Percentage Change in Equity Fair/Market Values												Impact of Percentage Change in Equity Fair/Market Values
	At September 30, 2017												At March 31, 2018
(Dollars in millions)		-20%			-10%			0%		10%		20%		-20%			-10%			0%		10%		20%
Fair/Market Value of the Equity Portfolio	$	798.5		$	898.3		$	998.1	$	1,097.9	$	1,197.7	$	709.9		$	798.7		$	887.4	$	976.2	$	1,064.9
After-tax Change in Fair/Market Value		(129.7	)		(64.9	)		-		64.9		129.7		(140.2	)		(70.1	)		-		70.1		140.2

Foreign Currency Risk. Foreign currency risk is the potential change in value, income and cash flow arising from adverse changes in foreign currency exchange rates. Each of our non-U.S. ("foreign") operations

maintains capital in the currency of the country of its geographic location consistent with local regulatory guidelines. Each foreign operation may conduct business in its local currency, as well as the currency of other countries in which it operates. The primary foreign currency exposures for these foreign operations are the Singapore and Canadian Dollars. We mitigate foreign exchange exposure by generally matching the currency and duration of our assets to our corresponding operating liabilities. In accordance with FASB 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 impact of the TCJA, 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

attempts by others to collect funds or enforce alleged rights. These disputes arise from time to time and are ultimately resolved through both informal and formal means, including negotiated resolution, arbitration and litigation. In all such matters, the Company believes that its positions are legally and commercially reasonable. The Company considers the statuses of these proceedings when determining its reserves for unpaid loss and loss adjustment expenses.

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

ITEM 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

5244

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: May 15, 2018

~~Dated: November 14, 2017~~

	Duration of Unrealized Loss at September 30, 2017 By Security Type															Duration of Unrealized Loss at March 31, 2018 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	$	239,038	$	(2,191	)	$	37,447	$	(1,029	)	$	276,485	$	(3,220	)	$	463,799	$	(7,505	)	$	197,045	$	(6,532	)	$	660,844	$	(14,037	)
Obligations of U.S. states and political subdivisions		89,509		(2,104	)		67,956		(2,640	)		157,465		(4,744	)		48,612		(383	)		36,392		(1,311	)		85,004		(1,694	)
Corporate securities		415,341		(6,124	)		155,808		(5,841	)		571,149		(11,965	)		932,829		(22,060	)		197,475		(10,876	)		1,130,304		(32,936	)
Asset-backed securities		30,657		(55	)		1,912		(7	)		32,569		(62	)		88,378		(1,187	)		9,763		(108	)		98,141		(1,295	)
Mortgage-backed securities
Commercial		31,221		(487	)		3,803		(135	)		35,024		(622	)		44,673		(534	)		5,835		(204	)		50,508		(738	)
Agency residential		417,521		(4,374	)		115,934		(2,878	)		533,455		(7,252	)		49,143		(934	)		58,282		(2,027	)		107,425		(2,961	)
Non-agency residential		-		-			-		-			-		-
Foreign government securities		199,311		(4,486	)		56,732		(3,510	)		256,043		(7,996	)		166,552		(2,568	)		112,686		(6,323	)		279,238		(8,891	)
Foreign corporate securities		254,015		(4,069	)		89,121		(6,507	)		343,136		(10,576	)		373,653		(10,292	)		116,799		(9,980	)		490,452		(20,272	)
Total fixed maturity securities	$	1,676,613	$	(23,890	)	$	528,713	$	(22,547	)	$	2,205,326	$	(46,437	)	$	2,167,639	$	(45,463	)	$	734,277	$	(37,361	)	$	2,901,916	$	(82,824	)

	Duration of Unrealized Loss at September 30, 2017 By Maturity															Duration of Unrealized Loss at March 31, 2018 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	$	127,207	$	(514	)	$	16,129	$	(1,148	)	$	143,336	$	(1,662	)	$	127,462	$	(1,146	)	$	34,295	$	(2,361	)	$	161,757	$	(3,507	)
Due in one year through five years		741,570		(10,638	)		246,865		(12,047	)		988,435		(22,685	)		1,343,096		(26,724	)		472,954		(23,235	)		1,816,050		(49,959	)
Due in five years through ten years		220,432		(5,290	)		76,295		(3,682	)		296,727		(8,972	)		357,163		(10,110	)		116,756		(8,115	)		473,919		(18,225	)
Due after ten years		108,005		(2,532	)		67,775		(2,650	)		175,780		(5,182	)		157,724		(4,828	)		36,392		(1,311	)		194,116		(6,139	)
Asset-backed securities		30,657		(55	)		1,912		(7	)		32,569		(62	)		88,378		(1,187	)		9,763		(108	)		98,141		(1,295	)
Mortgage-backed securities		448,742		(4,861	)		119,737		(3,013	)		568,479		(7,874	)		93,816		(1,468	)		64,117		(2,231	)		157,933		(3,699	)
Total fixed maturity securities	$	1,676,613	$	(23,890	)	$	528,713	$	(22,547	)	$	2,205,326	$	(46,437	)	$	2,167,639	$	(45,463	)	$	734,277	$	(37,361	)	$	2,901,916	$	(82,824	)

	Duration of Unrealized Loss at December 31, 2016 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	$	469,571	$	(4,434	)	$	-	$	-		$	469,571	$	(4,434	)
Obligations of U.S. states and political subdivisions		221,088		(11,486	)		564		(484	)		221,652		(11,970	)
Corporate securities		431,757		(10,121	)		118,172		(5,665	)		549,929		(15,786	)
Asset-backed securities		35,065		(122	)		5,745		(7	)		40,810		(129	)
Mortgage-backed securities
Commercial		27,230		(391	)		3,060		(61	)		30,290		(452	)
Agency residential		487,000		(6,320	)		90,740		(2,673	)		577,740		(8,993	)
Non-agency residential		-		-			-		-			-		-
Foreign government securities		218,171		(2,713	)		61,542		(7,670	)		279,713		(10,383	)
Foreign corporate securities		264,939		(4,950	)		75,489		(9,411	)		340,428		(14,361	)
Total fixed maturity securities	$	2,154,821	$	(40,537	)	$	355,312	$	(25,971	)	$	2,510,133	$	(66,508	)

	Duration of Unrealized Loss at December 31, 2016 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	$	111,926	$	(322	)	$	21,691	$	(3,625	)	$	133,617	$	(3,947	)
Due in one year through five years		1,015,066		(10,567	)		190,960		(16,511	)		1,206,026		(27,078	)
Due in five years through ten years		243,082		(10,369	)		41,371		(2,961	)		284,453		(13,330	)
Due after ten years		235,452		(12,446	)		1,745		(133	)		237,197		(12,579	)
Asset-backed securities		35,065		(122	)		5,745		(7	)		40,810		(129	)
Mortgage-backed securities		514,230		(6,711	)		93,800		(2,734	)		608,030		(9,445	)
Total fixed maturity securities	$	2,154,821	$	(40,537	)	$	355,312	$	(25,971	)	$	2,510,133	$	(66,508	)

	Duration of Unrealized Loss at December 31, 2017 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	$	446,963	$	(2,921	)	$	198,684	$	(4,673	)	$	645,647	$	(7,594	)
Obligations of U.S. states and political subdivisions		4,400		(27	)		37,886		(417	)		42,286		(444	)
Corporate securities		455,431		(6,674	)		216,715		(6,785	)		672,146		(13,459	)
Asset-backed securities		75,196		(328	)		7,991		(58	)		83,187		(386	)
Mortgage-backed securities
Commercial		26,650		(264	)		5,972		(221	)		32,622		(485	)
Agency residential		46,234		(322	)		58,135		(1,336	)		104,369		(1,658	)
Foreign government securities		159,852		(1,567	)		121,018		(5,926	)		280,870		(7,493	)
Foreign corporate securities		263,547		(4,590	)		109,727		(8,403	)		373,274		(12,993	)
Total fixed maturity securities	$	1,478,273	$	(16,693	)	$	756,128	$	(27,819	)	$	2,234,401	$	(44,512	)

CONSOLIDATED BALANCE SHEETS	December 31, 2016							December 31, 2015
	As Previously		Impact of					As Previously		Impact of
	Reported		Revisions			As Revised		Reported		Revisions			As Revised
(Dollars in thousands, except par value per share)
ASSETS:
Deferred acquisition costs	$	73,924	$	(5,303	)	$	68,621	$	92,651	$	(6,249	)	$	86,402
TOTAL ASSETS	$	17,088,739	$	(5,303	)	$	17,083,436	$	16,695,203	$	(6,249	)	$	16,688,954

LIABILITIES:
Other net payable to reinsurers	$	860,391	$	(45,093	)	$	815,298	$	1,225,260	$	(37,480	)	$	1,187,780
Income taxes		142,143		6,797			148,940		68,024		4,132			72,156
Total liabilities		11,823,179		(38,296	)		11,784,883		11,763,992		(33,348	)		11,730,644

STOCKHOLDERS EQUITY:
Retained earnings		4,914,308		32,993			4,947,301		4,618,558		27,099			4,645,657
Total stockholder's equity		5,265,560		32,993			5,298,553		4,931,211		27,099			4,958,310
TOTAL LIABILITIES AND STOCKHOLDER'S EQUITY	$	17,088,739	$	(5,303	)	$	17,083,436	$	16,695,203	$	(6,249	)	$	16,688,954

CONSOLIDATED STATEMENTS OF OPERATIONS	Year Ended December 31, 2016							Year Ended December 31, 2015
AND COMPREHENSIVE INCOME (LOSS):	As Previously		Impact of					As Previously		Impact of
	Reported		Revisions			As Revised		Reported		Revisions			As Revised
(Dollars in thousands)
CLAIMS AND EXPENSES:
Commission, brokerage, taxes and fees	$	289,982	$	(8,558	)	$	281,424	$	315,069	$	(2,744	)	$	312,325
Total claims and expenses		1,928,940		(8,558	)		1,920,382		1,892,062		(2,744	)		1,889,318

INCOME (LOSS) BEFORE TAXES		390,433		8,558			398,991		604,542		2,744			607,286
Income tax expense (benefit)		94,683		2,664			97,347		191,889		3,007			194,896

NET INCOME (LOSS)	$	295,750	$	5,894		$	301,644	$	412,653	$	(263	)	$	412,390

COMPREHENSIVE INCOME (LOSS)	$	321,571	$	5,894		$	327,465	$	345,998	$	(263	)	$	345,735

CONSOLIDATED STATEMENTS OF OPERATIONS	Year Ended December 31, 2014							Three Months Ended March 31, 2017
AND COMPREHENSIVE INCOME (LOSS):	As Previously		Impact of					As Previously		Impact of
	Reported		Revisions			As Revised		Reported		Revisions			As Revised
(Dollars in thousands)
CLAIMS AND EXPENSES:
Commission, brokerage, taxes and fees	$	339,402	$	(427	)	$	338,975	$	49,470	$	3,037		$	52,507
Total claims and expenses		1,930,749		(427	)		1,930,322		411,543		3,037			414,580

INCOME (LOSS) BEFORE TAXES		657,688		427			658,115		247,984		(3,037	)		244,947
Income tax expense (benefit)		203,562		1,125			204,687		76,940		(1,171	)		75,769

NET INCOME (LOSS)	$	454,126	$	(698	)	$	453,428	$	171,044	$	(1,866	)	$	169,178

COMPREHENSIVE INCOME (LOSS)	$	370,997	$	(698	)	$	370,299	$	182,587	$	(1,866	)	$	180,721

CONSOLIDATED STATEMENTS OF OPERATIONS	Three Months Ended September 30, 2016							Nine Months Ended September 30, 2016
AND COMPREHENSIVE INCOME (LOSS):	As Previously		Impact of					As Previously		Impact of
	Reported		Revisions			As Revised		Reported		Revisions			As Revised
(Dollars in thousands)
CLAIMS AND EXPENSES:
Commission, brokerage, taxes and fees	$	85,563	$	(2,785	)	$	82,778	$	226,511	$	(6,959	)	$	219,552
Total claims and expenses		462,009		(2,785	)		459,224		1,377,175		(6,959	)		1,370,216

INCOME (LOSS) BEFORE TAXES		95,943		2,785			98,728		249,064		6,959			256,023
Income tax expense (benefit)		21,145		1,280			22,425		66,990		2,368			69,358

NET INCOME (LOSS)	$	74,798	$	1,505		$	76,303	$	182,074	$	4,591		$	186,665

COMPREHENSIVE INCOME (LOSS)	$	74,465	$	1,505		$	75,970	$	299,559	$	4,591		$	304,150

CONSOLIDATED STATEMENTS OF OPERATIONS	Three Months Ended June 30, 2016							Six Months Ended June 30, 2016
AND COMPREHENSIVE INCOME (LOSS):	As Previously		Impact of					As Previously		Impact of
	Reported		Revisions			As Revised		Reported		Revisions			As Revised
(Dollars in thousands)
CLAIMS AND EXPENSES:
Commission, brokerage, taxes and fees	$	72,126	$	(1,717	)	$	70,409	$	140,948	$	(4,174	)	$	136,774
Total claims and expenses		479,860		(1,717	)		478,143		915,166		(4,174	)		910,992

INCOME (LOSS) BEFORE TAXES		101,332		1,717			103,049		153,121		4,174			157,295
Income tax expense (benefit)		32,982		695			33,677		45,845		1,088			46,933

NET INCOME (LOSS)	$	68,350	$	1,022		$	69,372	$	107,276	$	3,086		$	110,362

COMPREHENSIVE INCOME (LOSS)	$	124,381	$	1,022		$	125,403	$	225,094	$	3,086		$	228,180

CONSOLIDATED STATEMENTS OF OPERATIONS	Three Months Ended March 31, 2016
AND COMPREHENSIVE INCOME (LOSS):	As Previously		Impact of
	Reported		Revisions			As Revised
(Dollars in thousands)
CLAIMS AND EXPENSES:
Commission, brokerage, taxes and fees	$	68,822	$	(2,457	)	$	66,365
Total claims and expenses		435,306		(2,457	)		432,849

INCOME (LOSS) BEFORE TAXES		51,789		2,457			54,246
Income tax expense (benefit)		12,863		393			13,256

NET INCOME (LOSS)	$	38,926	$	2,064		$	40,990

COMPREHENSIVE INCOME (LOSS)	$	100,713	$	2,064		$	102,777

			Fair Value Measurement Using:
			Quoted Prices
			in Active		Significant
			Markets for		Other		Significant
			Identical		Observable		Unobservable
			Assets		Inputs		Inputs
(Dollars in thousands)	September 30, 2017		(Level 1)		(Level 2)		(Level 3)
Assets:
Fixed maturities, market value
U.S. Treasury securities and obligations of
U.S. government agencies and corporations	$	655,886	$	-	$	655,886	$	-
Obligations of U.S. States and political subdivisions		671,842		-		671,842		-
Corporate securities		2,239,591		-		2,137,522		102,069
Asset-backed securities		153,789		-		153,789		-
Mortgage-backed securities
Commercial		59,023		-		59,023		-
Agency residential		677,830		-		677,830		-
Non-agency residential		62		-		62		-
Foreign government securities		531,473		-		531,473		-
Foreign corporate securities		1,049,865		-		1,046,734		3,131
Total fixed maturities, market value		6,039,361		-		5,934,161		105,200

Equity securities, fair value		998,071		951,679		46,392		-
Other invested assets, fair value		1,922,402		-		-		1,922,402

	Three Months Ended September 30, 2017								Nine Months Ended September 30, 2017
	Corporate		Foreign						Corporate		Foreign
(Dollars in thousands)	Securities		Corporate			Total			Securities		Corporate			Total
Beginning balance	$	86,140	$	3,151		$	89,291		$	65,197	$	2,538		$	67,735
Total gains or (losses) (realized/unrealized)
Included in earnings		283		210			493			1,208		314			1,522
Included in other comprehensive income (loss)		18		(230	)		(212	)		161		(230	)		(69	)
Purchases, issuances and settlements		15,628		-			15,628			35,503		509			36,012
Transfers in and/or (out) of Level 3		-		-			-			-		-			-
Ending balance	$	102,069	$	3,131		$	105,200		$	102,069	$	3,131		$	105,200

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.)

	Total Fixed Maturities, Fair Value
	Three Months Ended March 31, 2018						Three Months Ended March 31, 2017
	Foreign						Foreign
(Dollars in thousands)	Corporate			Total			Corporate		Total
Beginning balance fixed maturities at fair value	$	-		$	-		$	-	$	-
Total gains or (losses) (realized/unrealized)
Included in earnings		(14	)		(14	)		-		-
Included in other comprehensive income (loss)		-			-			-		-
Purchases, issuances and settlements		1,835			1,835			-		-
Transfers in and/or (out) of Level 3		-			-			-		-
Ending balance	$	1,821		$	1,821		$	-	$	-

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.)

	At September 30,		At December 31,		At March 31,		At December 31,
(Dollars in thousands)	2017		2016		2018		2017
The Prudential	$	144,331	$	146,507	$	144,516	$	144,618
Unaffiliated life insurance company		33,769		33,860		32,718	$	34,444

	Three Months Ended					Nine Months Ended
U.S. Reinsurance	September 30,					September 30,
(Dollars in thousands)	2017			2016		2017			2016
Gross written premiums	$	908,346		$	654,770	$	1,962,297		$	1,597,006
Net written premiums		295,645			327,242		649,883			711,700

Premiums earned	$	242,350		$	249,203	$	652,953		$	709,064
Incurred losses and LAE		678,926			137,245		919,107			363,567
Commission and brokerage		31,698			48,107		115,243			147,968
Other underwriting expenses		12,094			14,265		40,623			39,856
Underwriting gain (loss)	$	(480,368	)	$	49,586	$	(422,020	)	$	157,673

	Three Months Ended				Nine Months Ended
Lloyd's Syndicate 2786	September 30,				September 30,
(Dollars in thousands)	2017		2016		2017		2016
Assumed written premiums	$	15,984	$	351	$	34,069	$	890
Assumed earned premiums		15,042		173		31,766		289
Assumed losses and LAE		7,893		-		16,157		-

Pension Benefits	Three Months Ended						Nine Months Ended
	September 30,						September 30,
(Dollars in thousands)	2017			2016			2017			2016
Service cost	$	2,737		$	2,731		$	9,335		$	8,524
Interest cost		2,509			2,371			7,060			7,093
Expected return on plan assets		(3,263	)		(2,789	)		(9,572	)		(7,757	)
Amortization of net (income) loss		2,091			1,984			8,172			6,012
Net periodic benefit cost	$	4,074		$	4,297		$	14,995		$	13,872

Other Benefits	Three Months Ended						Nine Months Ended
Pension Benefits													Three Months Ended
	September 30,						September 30,						March 31,
(Dollars in thousands)	2017			2016			2017			2016			2018			2017
Service cost	$	392		$	354		$	1,273		$	1,230		$	2,977		$	3,299
Interest cost		295			252			793			844			2,585			2,276
Amortization of prior service cost		(33	)		(33	)		(98	)		(33	)
Expected return on plan assets														(3,670	)		(3,155	)
Amortization of net (income) loss		48			-			199			96			2,237			3,040
Net periodic benefit cost	$	703		$	573		$	2,167		$	2,137		$	4,128		$	5,460

(Some amounts may not reconcile due to rounding.)