UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

~~QUARTERLY REPORT PURSUANT TO SECTION~~_X_ Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

~~OF THE SECURITIES EXCHANGE ACT OF 1934~~For the quarterly period ended March 31, 2019

~~FOR THE QUARTERLY PERIOD ENDED:~~

___ Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

~~March 31, 2018~~

~~Commission file number:~~

~~1-14527~~

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~~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~~“large accelerated filer,~~" "accelerated~~” “accelerated filer,~~" "smaller~~” “smaller reporting ~~company"~~company” and ~~"emerging~~“emerging growth ~~company"~~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~~issuer’s classes of common stock, as of the latest practicable date.

		Number of Shares Outstanding
Class		At May 1, ~~2018~~2019
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 March 31, ~~2018~~2019 (unaudited) and
		December 31, ~~2017~~2018	1

	Consolidated Statements of Operations and Comprehensive Income (Loss) for the
		three months ended March 31, ~~2018~~2019 and ~~2017~~2018 (unaudited)	2

	Consolidated Statements of Changes in ~~Stockholder's~~Stockholder’s Equity for the three
		months ended March 31, ~~2018~~2019 and ~~2017~~2018 (unaudited)	3

	Consolidated Statements of Cash Flows for the three months ended
		March 31, ~~2018~~2019 and ~~2017~~2018 (unaudited)	4

	Notes to Consolidated Interim Financial Statements (unaudited)		5

Item 2.	~~Management's~~Management’s Discussion and Analysis of Financial Condition and
		Results of Operation	3130

Item 3.	Quantitative and Qualitative Disclosures About Market Risk		4342

Item 4.	Controls and Procedures		4342

PART II

OTHER INFORMATION


Item 1.	Legal Proceedings	4342

Item 1A.	Risk Factors	4443

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	4443

Item 3.	Defaults Upon Senior Securities	4443

Item 4.	Mine Safety Disclosures	4443

Item 5.	Other Information	4443

Item 6.	Exhibits	4443

EVEREST REINSURANCE HOLDINGS, INC.

CONSOLIDATED BALANCE SHEETS

March 31, December 31,
(Dollars in thousands, except par value per share) 2018 2017
(unaudited)
ASSETS:
Fixed maturities - available for sale, at market value $ 4,907,818 $ 4,971,921
     (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 887,435 822,375
Short-term investments 186,605 241,506
Other invested assets (cost: 2018, $865,412; 2017, $835,597) 865,412 838,694
Other invested assets, at fair value 1,770,684 1,807,473
Cash 384,410 229,552
         Total investments and cash 9,004,185 8,911,521
Note receivable - affiliated 250,000 250,000
Accrued investment income 38,458 35,376
Premiums receivable 1,283,896 1,301,827
Reinsurance receivables - unaffiliated 1,141,448 1,180,648
Reinsurance receivables - affiliated 4,796,997 4,940,039
Income taxes 48,917 87,110
Funds held by reinsureds 76,255 210,939
Deferred acquisition costs 307,161 307,741
Prepaid reinsurance premiums 312,780 346,708
Other assets 293,533 316,603
TOTAL ASSETS $ 17,553,630 $ 17,888,512

LIABILITIES:
Reserve for losses and loss adjustment expenses $ 9,145,821 $ 9,343,028
Unearned premium reserve 1,611,403 1,607,622
Funds held under reinsurance treaties 42,105 40,536
Commission reserves 13,757 21,464
Other net payable to reinsurers 352,198 491,299
4.868% Senior notes due 6/1/2044 396,864 396,834
6.6% Long term notes due 5/1/2067 236,585 236,561
Accrued interest on debt and borrowings 7,668 2,727
Unsettled securities payable 32,263 25,338
Other liabilities 365,551 310,380
         Total liabilities 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 (2018 and 2017) - -
Additional paid-in capital 387,889 387,841
Accumulated other comprehensive income (loss), net of deferred income tax expense
     (benefit) of ($14,553) at 2018 and ($299) at 2017 (54,573 ) (942 )
Retained earnings 5,016,099 5,025,824
         Total stockholder's equity 5,349,415 5,412,723
TOTAL LIABILITIES AND STOCKHOLDER'S EQUITY $ 17,553,630 $ 17,888,512

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

	March 31,			December 31,
(Dollars in thousands, except share amounts and par value per share)	2019			2018
	(unaudited)
ASSETS:
Fixed maturities - available for sale, at market value	$	6,824,459		$	6,962,075
(amortized cost: 2019, $6,784,594; 2018, $7,032,749)
Fixed maturities - available for sale, at fair value		2,350			2,337
Equity securities, at fair value		724,325			564,338
Short-term investments (cost: 2019, $458,165; 2018, $174,155)		458,180			174,131
Other invested assets (cost: 2019, $929,729; 2018, $882,647)		929,729			882,647
Other invested assets, at fair value		1,767,963			1,717,336
Cash		337,225			404,522
Total investments and cash		11,044,231			10,707,386
Accrued investment income		47,306			47,232
Premiums receivable		1,577,536			1,471,805
Reinsurance receivables - unaffiliated		1,289,292			1,295,961
Reinsurance receivables - affiliated		3,618,489			3,544,975
Income taxes		289,210			409,892
Funds held by reinsureds		248,993			238,566
Deferred acquisition costs		372,457			353,630
Prepaid reinsurance premiums		330,998			328,796
Other assets		245,153			289,962
TOTAL ASSETS	$	19,063,665		$	18,688,205

LIABILITIES:
Reserve for losses and loss adjustment expenses	$	10,173,469		$	10,167,018
Unearned premium reserve		1,951,573			1,826,868
Funds held under reinsurance treaties		38,112			41,600
Other net payable to reinsurers		255,106			316,826
Senior notes due 6/1/2044		396,984			396,954
Long term notes due 5/1/2067		236,684			236,659
Note payable - affiliated		300,000			300,000
Accrued interest on debt and borrowings		9,818			3,093
Unsettled securities payable		73,278			50,912
Other liabilities		234,515			303,610
Total liabilities		13,669,539			13,643,540

Commitments and Contingencies (Note 6)

STOCKHOLDER'S EQUITY:
Common stock, par value: $0.01; 3,000 shares authorized;
1,000 shares issued and outstanding (2019 and 2018)		-			-
Additional paid-in capital		1,100,402			1,100,315
Accumulated other comprehensive income (loss), net of deferred income tax expense
(benefit) of ($7,510) at 2019 and ($33,506) at 2018		(28,106	)		(126,254	)
Retained earnings		4,321,830			4,070,604
Total stockholder's equity		5,394,126			5,044,665
TOTAL LIABILITIES AND STOCKHOLDER'S EQUITY	$	19,063,665		$	18,688,205

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						Three Months Ended
	March 31,						March 31,
(Dollars in thousands)	2018			2017			2019			2018
	(unaudited)						(unaudited)
REVENUES:
Premiums earned	$	1,116,010		$	471,055		$	1,270,454		$	1,116,010
Net investment income		69,909			60,849			84,534			69,909
Net realized capital gains (losses):
Other-than-temporary impairments on fixed maturity securities		(35	)		(1,132	)		(2,290	)		(35	)
Other-than-temporary impairments on fixed maturity securities
transferred to other comprehensive income (loss)		-			-			-			-
Realized gain(loss) on sale of subsidiary		-			-
Other net realized capital gains (losses)		(60,166	)		118,900			137,346			(60,166	)
Total net realized capital gains (losses)		(60,201	)		117,768			135,056			(60,201	)
Other income (expense)		(74,877	)		9,855			(1,214	)		(74,877	)
Total revenues		1,050,841			659,527			1,488,830			1,050,841

CLAIMS AND EXPENSES:
Incurred losses and loss adjustment expenses		713,255			289,722			796,096			713,255
Commission, brokerage, taxes and fees		256,457			52,507			288,218			256,457
Other underwriting expenses		77,351			59,895			78,382			77,351
Corporate expenses		3,596			3,597			1,651			3,596
Interest, fee and bond issue cost amortization expense		7,313			8,859			9,828			7,313
Total claims and expenses		1,057,972			414,580			1,174,175			1,057,972

INCOME (LOSS) BEFORE TAXES		(7,131	)		244,947			314,655			(7,131	)
Income tax expense (benefit)		5,041			75,769			63,429			5,041

NET INCOME (LOSS)	$	(12,172	)	$	169,178		$	251,226		$	(12,172	)

Other comprehensive income (loss), net of tax:
Unrealized appreciation (depreciation) ("URA(D)") on securities arising during the period		(46,822	)		9,439			88,449			(46,822	)
Less: reclassification adjustment for realized losses (gains) included in net income (loss)		(4,835	)		(3,467	)		(1,016	)		(4,835	)
Total URA(D) on securities arising during the period		(51,657	)		5,972			87,433			(51,657	)

Foreign currency translation adjustments		(1,342	)		3,567			9,564			(1,342	)

Reclassification adjustment for amortization of net (gain) loss included in net income (loss)		1,815			2,004			1,151			1,815
Total benefit plan net gain (loss) for the period		1,815			2,004			1,151			1,815
Total other comprehensive income (loss), net of tax		(51,184	)		11,543			98,148			(51,184	)

COMPREHENSIVE INCOME (LOSS)	$	(63,356	)	$	180,721		$	349,374		$	(63,356	)

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

EVEREST REINSURANCE HOLDINGS, INC.

CONSOLIDATED STATEMENTS OF

CHANGES IN ~~STOCKHOLDER'S~~STOCKHOLDER’S EQUITY

	Three Months Ended						Three Months Ended
	March 31,						March 31,
(Dollars in thousands, except share amounts)	2018			2017			2019			2018
	(unaudited)						(unaudited)
COMMON STOCK (shares outstanding):
Balance, beginning of period		1,000			1,000			1,000			1,000
Balance, end of period		1,000			1,000			1,000			1,000

ADDITIONAL PAID-IN CAPITAL:
Balance, beginning of period	$	387,841		$	387,567		$	1,100,315		$	387,841
Share-based compensation plans		48			70			87			48
Balance, end of period		387,889			387,637			1,100,402			387,889

ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS),
NET OF DEFERRED INCOME TAXES:
Balance, beginning of period		(942	)		(36,315	)		(126,254	)		(942	)
Change to beginning balance due to adoption of ASU 2016-01								-			(2,447	)
Net increase (decrease) during the period		(51,184	)		11,543			98,148			(51,184	)
Cumulative change due to adoption of Accounting Standards Update 2016-01		(2,447	)		-
Balance, end of period		(54,573	)		(24,772	)		(28,106	)		(54,573	)

RETAINED EARNINGS:
Balance, beginning of period		5,025,824			4,947,301			4,070,604			5,025,824
Change to beginning balance due to adoption of ASU2016-01								-			2,447
Net income (loss)		(12,172	)		169,178			251,226			(12,172	)
Cumulative change due to adoption of Accounting Standards Update 2016-01		2,447			-
Balance, end of period		5,016,099			5,116,479			4,321,830			5,016,099

TOTAL STOCKHOLDER'S EQUITY, END OF PERIOD	$	5,349,415		$	5,479,344		$	5,394,126		$	5,349,415

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

EVEREST REINSURANCE HOLDINGS, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

	Three Months Ended						Three Months Ended
	March 31,						March 31,
(Dollars in thousands)	2018			2017			2019			2018
	(unaudited)						(unaudited)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss)	$	(12,172	)	$	169,178		$	251,226		$	(12,172	)
Adjustments to reconcile net income to net cash provided by operating activities:
Decrease (increase) in premiums receivable		18,258			(127,985	)		(104,944	)		18,258
Decrease (increase) in funds held by reinsureds, net		136,342			5,307			(13,877	)		136,342
Decrease (increase) in reinsurance receivables		177,774			(33,666	)		(63,291	)		177,774
Decrease (increase) in income taxes		52,369			74,132			94,631			52,369
Decrease (increase) in prepaid reinsurance premiums		33,663			(61,392	)		(2,163	)		33,663
Increase (decrease) in reserve for losses and loss adjustment expenses		(193,513	)		34,016			(3,035	)		(193,513	)
Increase (decrease) in unearned premiums		3,844			39,180			123,901			3,844
Increase (decrease) in other net payable to reinsurers		(138,603	)		(27,178	)		(61,808	)		(138,603	)
Increase (decrease) in losses in course of payment		(20,616	)		99,506			(78,061	)		(20,616	)
Change in equity adjustments in limited partnerships		(15,687	)		225			(7,836	)		(15,687	)
Distribution of limited partnership income		10,214			3,727			7,162			10,214
Change in other assets and liabilities, net		51,822			17,896			44,139			51,822
Non-cash compensation expense		2,913			2,629			7,551			2,913
Amortization of bond premium (accrual of bond discount)		2,105			4,494			(366	)		2,105
Net realized capital (gains) losses		60,201			(117,768	)		(135,056	)		60,201
Net cash provided by (used in) operating activities		168,914			82,301			58,173			168,914

CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from fixed maturities matured/called - available for sale, at market value		217,085			274,356			184,894			217,085
Proceeds from fixed maturities sold - available for sale, at market value		154,981			292,994			1,603,889			154,981
Proceeds from equity securities sold - available for sale, at fair value		128,479			134,051
Proceeds from equity securities sold - at fair value								69,238			128,479
Distributions from other invested assets		371,583			448,121			43,469			371,583
Cost of fixed maturities acquired - available for sale, at market value		(369,980	)		(785,984	)		(1,522,903	)		(369,980	)
Cost of fixed maturities acquired - available for sale, at fair value		(1,836	)		-			-			(1,836	)
Cost of equity securities acquired - available for sale, at fair value		(223,034	)		(56,724	)
Cost of equity securities acquired - at fair value								(146,335	)		(223,034	)
Cost of other invested assets acquired		(395,769	)		(497,077	)		(89,216	)		(395,769	)
Net change in short-term investments		54,594			(29,794	)		(283,094	)		54,594
Net change in unsettled securities transactions		41,432			72,275			19,330			41,432
Net cash provided by (used in) investing activities		(22,465	)		(147,782	)		(120,728	)		(22,465	)

CASH FLOWS FROM FINANCING ACTIVITIES:
Tax benefit from share-based compensation, net of expense		(419	)		(2,560	)		(7,464	)		(419	)
Net cash provided by (used in) financing activities		(419	)		(2,560	)		(7,464	)		(419	)

EFFECT OF EXCHANGE RATE CHANGES ON CASH		8,828			5,833			2,722			8,828

Net increase (decrease) in cash		154,858			(62,208	)		(67,297	)		154,858
Cash, beginning of period		229,552			297,794			404,522			229,552
Cash, end of period	$	384,410		$	235,586		$	337,225		$	384,410

SUPPLEMENTAL CASH FLOW INFORMATION:
Income taxes paid (recovered)	$	(50,447	)	$	1,581		$	(90,148	)	$	(50,477	)
Interest paid		2,317			-			3,049			2,317

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

NOTES TO CONSOLIDATED INTERIM FINANCIAL STATEMENTS (UNAUDITED)

For the Three Months Ended March 31, ~~2018~~2019, and ~~2017~~2018

1. GENERAL

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

During the ~~third~~fourth quarter of ~~2016, the Company established domestic subsidiaries,~~2018, Everest ~~Premier Insurance Company ("Everest Premier") and Everest Denali Insurance Company ("Everest Denali"~~Global Services (“Global Services”), ~~which will be used in the continued expansion of the Insurance operations.~~a previously affiliated company, was contributed to Holdings from its parent company, Holdings Ireland.

2. BASIS OF PRESENTATION

The unaudited consolidated financial statements of the Company for the three months ended March 31. ~~2018~~2019 and ~~2017~~2018 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"~~(“GAAP”), has been omitted since it is not required for interim reporting purposes. The December 31, ~~2017~~2018 consolidated balance sheet data was derived from audited financial statements, but does not include all disclosures required by GAAP. The results for the three months ended March 31. ~~2018~~2019 and ~~2017~~2018 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, 2018, 2017 ~~2016~~ and ~~2015~~2016 included in the ~~Company's~~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'~~years’ amounts to conform to the ~~2018~~2019 presentation.

Application of Recently Issued Accounting Standard Changes.

Simplification of Disclosure Requirements. In March 2019, the Securities and Exchange Commission (SEC) issued Final Rule Release #33-10618 (“Rule #33-10618”) which addresses the modernization and simplification of certain disclosure requirements in Regulation S-K related to quarterly and annual financial reports. The main changes addressed by Rule #33-10618 relate to certain prior year comparative disclosures within the management’s discussion and analysis which may now be excluded at the Company’s discretion and certain disclosures on the cover page of Company filings. Rule #33-10618 became effective for all financial reports filed after May 2, 2019 (30 days after its publication in the Federal Register). The Company has adopted Rule #33-10618 effective with its first quarter 2019 financial filings. The adoption of Rule #33-10618 did not have a material impact on the Company’s financial statements.

Simplification of Disclosure Requirements. In August 2018, the SEC issued Final Rule Release #33-10532 (“Rule #33-10532”) which addresses the simplification of the SEC’s disclosure requirements for quarterly and annual financial reports. The main changes addressed by Rule #33-10532 that are applicable to the Company is the new requirement to disclose changes in equity by line item with subtotals for each interim reporting period on the Statements of Changes in Shareholders’ Equity. Rule #33-10532 became effective

for all financial reports filed after November 5, 2018 (30 days after its publication in the Federal Register), except for the additional requirement for the Statements of Changes in Shareholders’ Equity which became effective for first quarter 2019 reporting. The Company has now adopted all portions of Rule #33-10532. The adoption of Rule #33-10532 did not have a material impact on the Company’s financial statements.

Accounting for Cloud Computing Arrangement. In August 2018, The Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2018-15, which outlines accounting for implementation costs of a cloud computing arrangement that is a service contract. This guidance requires that implementation costs of a cloud computing arrangement that is a service contract must be capitalized and expensed in accordance with the existing provisions provided in Subtopic 350-40 regarding development of internal use software. In addition, any capitalized implementation costs should be amortized over the term of the hosting arrangement. The guidance is effective for annual reporting periods beginning after December 15, 2019 and interim periods within that annual reporting period. The Company is currently evaluating the impact of the adoption of ASU 2018-15 on its financial statements.

Accounting for Long Duration Contracts. In August 2018, FASB issued ASU 2018-12, which discusses changes to the recognition, measurement and presentation of long duration contracts. The main provisions of this guidance address the following: 1) In determining liability for future policy benefits, companies must review cash flow assumptions at least annually and the discount rate assumption at each reporting period date 2) Amortization of deferred acquisition costs has been simplified to be in constant level proportion to either premiums, gross profits or gross margins 3) Disaggregated roll forwards of beginning and ending liabilities for future policy benefits are required. The guidance is effective for annual reporting periods beginning after December 15, 2020 and interim periods within that annual reporting period. The Company is currently evaluating the impact of the adoption of ASU 2018-12 on its financial statements.

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"~~(“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.~~earnings during the fourth quarter of 2017. As an accounting policy, the Company has adopted the aggregate portfolio approach for releasing disproportionate income tax effects from AOCI.

Accounting for Impact on Income Taxes due to Tax Reform. In December 2017, the SEC issued Staff Accounting Bulletin ~~("SAB"~~(“SAB”) 118, which provides guidance on the application of FASB Accounting Standards Codification ~~("ASC"~~(“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~~recorded adjustments to the amount of tax expense it recorded in 2017 with respect to the TCJA as estimated amounts ~~are finalized. Further adjustments are~~were finalized, which did not ~~expected to~~ have a material impact on the ~~Company's~~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.~~2018. The ~~Company does not expect the~~ adoption of ASU 2017-08 todid not have a material impact on ~~its~~the Company’s 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 adopted the guidance effective January 1, 2018. The adoption of ASU 2017-07 did not have a material impact on the ~~Company's~~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 adopted the guidance effective January 1, 2018. The adoption of ASU 2016-18 and ASU 2016-15 did not have a material impact on the ~~Company's~~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~~seller’s tax jurisdiction at the time of transfer and recognize any deferred tax asset in the ~~buyer's~~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 adopted the guidance effective January 1, 2018. The adoption of ASU 2016-16 did not have a material impact on the ~~Company's~~Company’s financial statements.

Valuation of Financial Instruments. In June 2016, FASB issued ASU 2016-13, which 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 (and subsequently issued ASU 2018-11 in July, 2018) which ~~outlines~~outline 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~~adopted ASU 2016-02 effective January 1, 2019 and elected to utilize a cumulative-effect adjustment to the ~~impact~~opening balance of retained earnings for the year of adoption. Accordingly, the Company’s reporting for the comparative periods prior to adoption continue to be presented in the financial statements in accordance with previous lease accounting guidance. The Company also elected to apply the package of practical expedients applicable to the Company in the updated guidance for transition for leases in effect at adoption. The Company did not elect the hindsight practical expedient to determine the lease term of existing leases (e.g. The Company did not re-assess lease renewals, termination options nor purchase options in determining lease terms). The adoption of the updated guidance resulted in the Company recognizing a right-of-use asset of $60,325 thousand as part of other assets and a lease liability of $66,551 thousand as part of other liabilities in the consolidated balance sheet, as well as de-recognizing the liability for deferred rent that was required under the previous guidance. The cumulative effect adjustment to the opening balance of retained earnings was zero. The adoption of ~~ASU 2016-02~~the updated guidance did not have a material effect on ~~its financial statements.~~the Company’s results of operations or liquidity.

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 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 adopted the guidance effective January 1, 2018. The adoption of ASU 2016-01 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.

Revenue Recognition. In May 2014, the FASB issued ASU 2014-09 and in August 2015, FASB issued ASU 2015-14, which 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 adopted the guidance effective January 1, 2018. The adoption of ASU 2014-09 and ASU 2015-14 did not have a material impact on the ~~Company's~~Company’s financial statements.

Any issued guidance and pronouncements, other than those directly 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 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

4. INVESTMENTS

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

	At March 31, 2018											At March 31, 2019
	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	$	705,124	$	324	$	(14,037	)	$	691,411	$	-	$	932,024	$	4,743	$	(7,142	)	$	929,625	$	-
Obligations of U.S. states and political subdivisions		523,611		14,630		(1,694	)		536,547		165		484,637		20,068		(851	)		503,854		-
Corporate securities		1,991,600		17,038		(32,936	)		1,975,702		133		2,600,736		29,201		(31,450	)		2,598,487		479
Asset-backed securities		132,109		75		(1,295	)		130,889		-		411,796		584		(1,319	)		411,061		-
Mortgage-backed securities
Commercial		51,247		-		(738	)		50,509		-		222,745		6,807		(184	)		229,368		-
Agency residential		139,703		548		(2,961	)		137,290		-		594,537		7,363		(1,022	)		600,878		-
Non-agency residential		45		5		-			50		-		3,113		3		(6	)		3,110		-
Foreign government securities		513,864		14,888		(8,891	)		519,861		-		528,555		18,414		(7,177	)		539,792		-
Foreign corporate securities		871,606		14,225		(20,272	)		865,559		307		1,006,451		19,643		(17,810	)		1,008,284		340
Total fixed maturity securities	$	4,928,909	$	61,733	$	(82,824	)	$	4,907,818	$	605	$	6,784,594	$	106,826	$	(66,961	)	$	6,824,459	$	819

	At December 31, 2017											At December 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	$	671,449	$	658	$	(7,594	)	$	664,513	$	-	$	2,250,312	$	3,573	$	(11,088	)	$	2,242,797	$	-
Obligations of U.S. states and political subdivisions		563,789		22,124		(444	)		585,469		-		489,013		12,915		(2,839	)		499,089		440
Corporate securities		2,009,665		28,003		(13,459	)		2,024,209		129		2,273,581		12,487		(69,915	)		2,216,153		430
Asset-backed securities		138,203		207		(386	)		138,024		-		223,192		102		(2,039	)		221,255		-
Mortgage-backed securities
Commercial		52,121		115		(485	)		51,751		-		135,380		1,947		(723	)		136,604		-
Agency residential		114,435		511		(1,658	)		113,288		-		149,306		1,177		(1,709	)		148,774		-
Non-agency residential		51		7		-			58		-		3,115		3		(4	)		3,114		-
Foreign government securities		514,048		17,065		(7,493	)		523,620		-		576,540		14,399		(11,353	)		579,586		-
Foreign corporate securities		863,861		20,121		(12,993	)		870,989		377		932,310		13,325		(30,932	)		914,703		281
Total fixed maturity securities	$	4,927,622	$	88,811	$	(44,512	)	$	4,971,921	$	506	$	7,032,749	$	59,928	$	(130,602	)	$	6,962,075	$	1,151

^(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.

Effective January 1, 2018, the Company adopted ASU 2016-01, which requires equity investments in unconsolidated entities to be measured at fair value, with any change in value being recorded within net realized capital gains/(losses) as part of the consolidated statements of operations and comprehensive income (loss). Previously, changes in the market value had been recorded within AOCI as part of the consolidated balance sheets. Therefore, effective January 1, 2018, equity security investments no longer have an impact upon the AOCI balance.

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 March 31, 2018				At December 31, 2017				At March 31, 2019				At December 31, 2018
	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	$	341,749	$	341,018	$	319,858	$	320,746	$	503,732	$	500,155	$	511,193	$	507,572
Due after one year through five years		2,591,948		2,555,916		2,601,898		2,595,237		3,138,456		3,133,306		4,271,245		4,230,451
Due after five years through ten years		1,041,331		1,044,539		1,051,431		1,069,617		1,295,735		1,318,963		1,177,752		1,163,831
Due after ten years		630,777		647,607		649,625		683,200		614,480		627,618		561,566		550,474
Asset-backed securities		132,109		130,889		138,203		138,024		411,796		411,061		223,192		221,255
Mortgage-backed securities
Commercial		51,247		50,509		52,121		51,751		222,745		229,368		135,380		136,604
Agency residential		139,703		137,290		114,435		113,288		594,537		600,878		149,306		148,774
Non-agency residential		45		50		51		58		3,113		3,110		3,115		3,114
Total fixed maturity securities	$	4,928,909	$	4,907,818	$	4,927,622	$	4,971,921	$	6,784,594	$	6,824,459	$	7,032,749	$	6,962,075

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

	Three Months Ended						Three Months Ended
	March 31,						March 31,
(Dollars in thousands)	2018			2017			2019			2018
Increase (decrease) during the period between the market value and cost
of investments carried at market value, and deferred taxes thereon:
Fixed maturity securities	$	(65,488	)	$	12,242		$	110,909		$	(65,488	)
Fixed maturity securities, other-than-temporary impairment		99			(3,499	)		(332	)		99
Other invested assets		-			444
Change in unrealized appreciation (depreciation), pre-tax		(65,389	)		9,187			110,577			(65,389	)
Deferred tax benefit (expense)		13,753			(4,440	)		(23,214	)		13,753
Deferred tax benefit (expense), other-than-temporary impairment		(21	)		1,225			70			(21	)
Change in unrealized appreciation (depreciation),
net of deferred taxes, included in stockholder's equity	$	(51,657	)	$	5,972		$	87,433		$	(51,657	)

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~~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~~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~~Company’s consolidated balance sheets. The ~~Company's~~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.

Upon the adoption of ASU 2016-01 as of January 1, 2018, all equity investments in unconsolidated entities are recorded at fair value. Prior to the adoption of ASU 2016-01, the Company presented certain equity securities at market value. The majority of the Company’s equity securities presented at market value prior to January 1, 2018 were primarily comprised of mutual fund investments whose underlying securities

109

consisted of fixed maturity securities. When a fund’s value reflected an unrealized loss, the Company assessed whether the decline in value was temporary or other-than-temporary. In making its assessment, the Company considered the composition of its portfolios and their related markets, reports received from the portfolio managers and discussions with portfolio managers. If the Company determined that the declines were temporary and it had the ability and intent to continue to hold the investments, then the declines were recorded as unrealized losses in accumulated other comprehensive income (loss). If declines were deemed to be other-than-temporary, then the carrying value of the investment was written down to fair value and recorded in net realized capital gains (losses) in the Company’s consolidated statements of operations and comprehensive income (loss).

Retrospective adjustments are employed to recalculate the values of asset-backed securities. All of the ~~Company's~~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 securities, by security type and contractual maturity, in each case subdivided according to length of time that individual securities had been in a continuous unrealized loss position for the periods indicated:

	Duration of Unrealized Loss at March 31, 2018 By Security Type															Duration of Unrealized Loss at March 31, 2019 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	$	463,799	$	(7,505	)	$	197,045	$	(6,532	)	$	660,844	$	(14,037	)	$	37,959	$	(7	)	$	597,452	$	(7,135	)	$	635,411	$	(7,142	)
Obligations of U.S. states and political subdivisions		48,612		(383	)		36,392		(1,311	)		85,004		(1,694	)		10,111		(294	)		34,646		(557	)		44,757		(851	)
Corporate securities		932,829		(22,060	)		197,475		(10,876	)		1,130,304		(32,936	)		515,995		(13,833	)		737,270		(17,617	)		1,253,265		(31,450	)
Asset-backed securities		88,378		(1,187	)		9,763		(108	)		98,141		(1,295	)		202,443		(859	)		77,376		(460	)		279,819		(1,319	)
Mortgage-backed securities
Commercial		44,673		(534	)		5,835		(204	)		50,508		(738	)		6,756		(25	)		18,920		(159	)		25,676		(184	)
Agency residential		49,143		(934	)		58,282		(2,027	)		107,425		(2,961	)		2,404		(3	)		52,192		(1,019	)		54,596		(1,022	)
Non-agency residential																	3,091		(6	)		-		-			3,091		(6	)
Foreign government securities		166,552		(2,568	)		112,686		(6,323	)		279,238		(8,891	)		14,307		(597	)		182,454		(6,580	)		196,761		(7,177	)
Foreign corporate securities		373,653		(10,292	)		116,799		(9,980	)		490,452		(20,272	)		80,400		(1,895	)		359,210		(15,915	)		439,610		(17,810	)
Total fixed maturity securities	$	2,167,639	$	(45,463	)	$	734,277	$	(37,361	)	$	2,901,916	$	(82,824	)	$	873,466	$	(17,519	)	$	2,059,520	$	(49,442	)	$	2,932,986	$	(66,961	)

	Duration of Unrealized Loss at March 31, 2018 By Maturity															Duration of Unrealized Loss at March 31, 2019 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	$	127,462	$	(1,146	)	$	34,295	$	(2,361	)	$	161,757	$	(3,507	)	$	41,343	$	(899	)	$	197,723	$	(7,618	)	$	239,066	$	(8,517	)
Due in one year through five years		1,343,096		(26,724	)		472,954		(23,235	)		1,816,050		(49,959	)		345,653		(5,188	)		1,354,907		(25,465	)		1,700,560		(30,653	)
Due in five years through ten years		357,163		(10,110	)		116,756		(8,115	)		473,919		(18,225	)		226,488		(8,954	)		217,134		(6,555	)		443,622		(15,509	)
Due after ten years		157,724		(4,828	)		36,392		(1,311	)		194,116		(6,139	)		45,288		(1,585	)		141,268		(8,166	)		186,556		(9,751	)
Asset-backed securities		88,378		(1,187	)		9,763		(108	)		98,141		(1,295	)		202,443		(859	)		77,376		(460	)		279,819		(1,319	)
Mortgage-backed securities		93,816		(1,468	)		64,117		(2,231	)		157,933		(3,699	)		12,251		(34	)		71,112		(1,178	)		83,363		(1,212	)
Total fixed maturity securities	$	2,167,639	$	(45,463	)	$	734,277	$	(37,361	)	$	2,901,916	$	(82,824	)	$	873,466	$	(17,519	)	$	2,059,520	$	(49,442	)	$	2,932,986	$	(66,961	)

The aggregate market value and gross unrealized losses related to investments in an unrealized loss position at March 31, ~~2018~~2019 were ~~$2,901,916~~$2,932,986 thousand and ~~$82,824~~$66,961 thousand, respectively. The market value of securities for the single issuer (the United States government) whose securities comprised the largest unrealized loss position at March 31, ~~2018,~~2019, did not exceed ~~13.5%~~8.8% of the overall market value of the ~~Company's~~Company’s fixed maturity securities. The market value of securities for the issuer with the second largest unrealized loss comprised less than ~~0.8%~~0.5% of the ~~company's~~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 ~~$45,463~~$17,519 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, U.S. government agencies and corporations and foreign government~~ securities. Of these unrealized losses, ~~$38,298~~$3,678 thousand were related to securities that were rated investment grade by at least one nationally recognized statistical rating agency. The ~~$37,361~~$49,442 thousand of unrealized losses related to fixed maturity securities in an unrealized loss position for more than one year related primarily ~~due~~ to domestic and foreign ~~and domestic~~ corporate ~~securities, foreign government~~ securities, U.S. government agencies and

~~corporations and agency residential mortgage-backed~~ foreign government securities. Of these unrealized losses ~~$35,930~~$39,584 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~~relatedinterest obligations. The mortgage-backed securities still have excess credit coverage and are current on interest and principal payments.

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

	Duration of Unrealized Loss at December 31, 2017 By Security Type															Duration of Unrealized Loss at December 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	$	446,963	$	(2,921	)	$	198,684	$	(4,673	)	$	645,647	$	(7,594	)	$	245,357	$	(6,099	)	$	373,377	$	(4,989	)	$	618,734	$	(11,088	)
Obligations of U.S. states and political subdivisions		4,400		(27	)		37,886		(417	)		42,286		(444	)		107,183		(2,829	)		1,475		(10	)		108,658		(2,839	)
Corporate securities		455,431		(6,674	)		216,715		(6,785	)		672,146		(13,459	)		1,390,942		(57,043	)		194,770		(12,872	)		1,585,712		(69,915	)
Asset-backed securities		75,196		(328	)		7,991		(58	)		83,187		(386	)		127,052		(1,408	)		47,551		(631	)		174,603		(2,039	)
Mortgage-backed securities
Commercial		26,650		(264	)		5,972		(221	)		32,622		(485	)		51,357		(695	)		2,259		(28	)		53,616		(723	)
Agency residential		46,234		(322	)		58,135		(1,336	)		104,369		(1,658	)		44,071		(1,221	)		21,889		(488	)		65,960		(1,709	)
Non-agency residential																	3,093		(4	)		-		-			3,093		(4	)
Foreign government securities		159,852		(1,567	)		121,018		(5,926	)		280,870		(7,493	)		192,510		(10,690	)		101,137		(663	)		293,647		(11,353	)
Foreign corporate securities		263,547		(4,590	)		109,727		(8,403	)		373,274		(12,993	)		501,532		(25,821	)		65,279		(5,111	)		566,811		(30,932	)
Total fixed maturity securities	$	1,478,273	$	(16,693	)	$	756,128	$	(27,819	)	$	2,234,401	$	(44,512	)	$	2,663,097	$	(105,810	)	$	807,737	$	(24,792	)	$	3,470,834	$	(130,602	)

	Duration of Unrealized Loss at December 31, 2017 By Maturity															Duration of Unrealized Loss at December 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	$	102,939	$	(498	)	$	40,006	$	(1,627	)	$	142,945	$	(2,125	)	$	165,545	$	(7,618	)	$	118,322	$	(1,164	)	$	283,867	$	(8,782	)
Due in one year through five years		973,217		(10,291	)		488,945		(18,917	)		1,462,162		(29,208	)		1,423,431		(44,924	)		525,554		(9,530	)		1,948,985		(54,454	)
Due in five years through ten years		189,103		(3,713	)		116,136		(5,216	)		305,239		(8,929	)		624,875		(35,360	)		42,902		(2,773	)		667,777		(38,133	)
Due after ten years		64,934		(1,277	)		38,943		(444	)		103,877		(1,721	)
Due after ten years																	223,673		(14,580	)		49,260		(10,178	)		272,933		(24,758	)
Asset-backed securities		75,196		(328	)		7,991		(58	)		83,187		(386	)		127,052		(1,408	)		47,551		(631	)		174,603		(2,039	)
Mortgage-backed securities		72,884		(586	)		64,107		(1,557	)		136,991		(2,143	)		98,521		(1,920	)		24,148		(516	)		122,669		(2,436	)
Total fixed maturity securities	$	1,478,273	$	(16,693	)	$	756,128	$	(27,819	)	$	2,234,401	$	(44,512	)	$	2,663,097	$	(105,810	)	$	807,737	$	(24,792	)	$	3,470,834	$	(130,602	)

The aggregate market value and gross unrealized losses related to investments in an unrealized loss position at December 31, ~~2017~~2018 were ~~$2,234,401~~$3,470,834 thousand and ~~$44,512~~$130,602 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, ~~2017,~~2018, did not exceed ~~13.0%~~9.0% of the overall market value

of the ~~Company's~~Company’s fixed maturity securities. The market value of securities for the issuer with the second largest unrealized loss comprised less than ~~0.9%~~0.8% of the ~~company's~~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 ~~$16,693~~$105,810 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, foreign government securities and U.S. government agencies and ~~corporations and foreign government securities.~~corporations. Of

these unrealized losses, ~~$13,043~~$68,010 thousand ~~were~~ related to securities that were rated investment grade by at least one nationally recognized statistical rating agency. The ~~$27,819~~$24,792 thousand of unrealized losses related to fixed maturity securities in an unrealized loss position for more than one year related primarily ~~due~~ to ~~foreign~~domestic and ~~domestic~~foreign corporate securities ~~foreign government securities,~~and U.S. government ~~agencies and corporations and agency residential mortgage-backed securities.~~agencies. Of these unrealized losses, ~~$26,463~~$14,802 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 components of net investment income are presented in the tables below for the periods indicated:

	Three Months Ended						Three Months Ended
	March 31,						March 31,
(Dollars in thousands)	2018			2017			2019			2018
Fixed maturities	$	42,419		$	46,980		$	67,054		$	42,419
Equity securities		4,403			6,748			1,431			4,403
Short-term investments and cash		928			390			2,736			928
Other invested assets
Limited partnerships		14,472			(224	)		8,055			14,472
Dividends from preferred shares of affiliate		7,758			7,758			7,758			7,758
Other		3,195			1,252			2,980			3,195
Gross investment income before adjustments		73,175			62,904			90,014			73,175
Funds held interest income (expense)		2,868			1,939			2,881			2,868
Interest income from Parent		1,075			1,075			-			1,075
Gross investment income		77,118			65,918			92,895			77,118
Investment expenses		(7,209	)		(5,069	)		(8,361	)		(7,209	)
Net investment income	$	69,909		$	60,849		$	84,534		$	69,909

(Some amounts may not reconcile due to rounding.)

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

The Company had contractual commitments to invest up to an additional ~~$386,414~~$299,221 thousand in limited partnerships at March 31, ~~2018.~~2019. 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 March 31, 2018 and December 31, 2017 included $115,446 thousand and $131,998 thousand, respectively, related to~~Beginning in the first quarter of 2016, the Company participated in a private placement liquidity sweep ~~facility.~~facility (“the facility”). The primary purpose of the facility is to enhance the ~~Company's~~Company’s return on its short-term investments and cash positions. The facility invests in high quality, short-duration securities and permits daily liquidity. Through the second quarter of 2018, the Company’s participation in the facility was classified within other invested assets on the Company’s Balance Sheets.

As of the third quarter of 2018, the Company has consolidated its participation in the facility. As a result, the underlying investments are now recorded in the various investment line items within the Company’s balance sheet, rather than as part of other invested assets. As of March 31, 2019, the market value of investments in the facility consolidated within the Company’s balance sheets was $298,926 thousand.

Other invested assets, at fair value, as of March 31, ~~2018~~2019 and December 31, ~~2017,~~2018, 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:

	Three Months Ended						Three Months Ended
	March 31,						March 31,
(Dollars in thousands)	2018			2017			2019			2018
Fixed maturity securities, market value:
Other-than-temporary impairments	$	(35	)	$	(1,132	)	$	(2,290	)	$	(35	)
Gains (losses) from sales		6,130			6,465			3,426			6,130
Fixed maturity securities, fair value:
Gains (losses) from sales		(14	)		-			-			(14	)
Gains (losses) from fair value adjustments								13			-
Equity securities, fair value:
Gains (losses) from sales		(2,481	)		4,340			5,044			(2,481	)
Gains (losses) from fair value adjustments		(27,014	)		37,418			77,846			(27,014	)
Other invested assets		3			1			396			3
Other invested assets, fair value:
Gains (losses) from fair value adjustments		(36,789	)		70,675			50,627			(36,789	)
Short-term investment gains (losses)		(1	)		1			(6	)		(1	)
Total net realized capital gains (losses)	$	(60,201	)	$	117,768		$	135,056		$	(60,201	)

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

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

	Three Months Ended						Three Months Ended
	March 31,						March 31,
(Dollars in thousands)	2018			2017			2019			2018
Proceeds from sales of fixed maturity securities	$	154,981		$	292,994		$	1,603,889		$	154,981
Gross gains from sales		6,927			7,995			8,104			6,927
Gross losses from sales		(811	)		(1,530	)		(4,678	)		(811	)

Proceeds from sales of equity securities	$	128,479		$	134,051		$	69,238		$	128,479
Gross gains from sales		3,228			8,013			5,671			3,228
Gross losses from sales		(5,709	)		(3,673	)		(627	)		(5,709	)

1413

5.4. RESERVES FOR LOSSES AND LAE

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

	Three Months Ended			Twelve Months Ended			Three Months Ended			Twelve Months Ended
	March 31,			December 31,			March 31,			December 31,
(Dollars in thousands)	2018			2017			2019			2018
Gross reserves at January 1	$	9,343,028		$	8,331,288		$	10,167,018		$	9,343,028
Less reinsurance recoverables		(5,727,268	)		(4,199,791	)		(4,697,543	)		(5,727,268	)
Net reserves at January 1		3,615,760			4,131,497			5,469,475			3,615,760

Incurred related to:
Current year		712,937			2,157,498			788,837			4,252,220
Prior years		318			(117,747	)		7,259			558,798
Total incurred losses and LAE		713,255			2,039,751			796,096			4,811,018

Paid related to:
Current year		119,982			1,607,601			100,676			1,524,635
Prior years		496,649			957,933			607,365			1,408,256
Total paid losses and LAE		616,631			2,565,534			708,041			2,932,891

Foreign exchange/translation adjustment		4,384			10,046			7,368			(24,412	)

Net reserves at December 31		3,716,768			3,615,760			5,564,898			5,469,475
Plus reinsurance recoverables		5,429,053			5,727,268			4,608,571			4,697,543
Gross reserves at December 31	$	9,145,821		$	9,343,028		$	10,173,469		$	10,167,018

(Some amounts may not reconcile due to rounding.)

Incurred prior ~~years' reserves~~years losses increased by ~~$318~~$7,259 thousand for the three months ended March 31, ~~2018~~2019 and ~~decreased~~ by ~~$117,747~~$558,798 thousand for the ~~year~~twelve months ended December 31, ~~2017.~~2018, respectively. The increase for ~~the three months ended March 31,~~ 2018 ~~related primarily~~was mainly due to unfavorable development on insurance business. The decrease for 2017 was attributable to favorable development in the reinsurance segments of $84,809 thousand related primarily to property and short-tail business in the U.S., as well as favorable development on prior year catastrophe losses, partially offset by $25,194$553,036 thousand of adverse development on ~~A&E reserves.~~prior years catastrophe losses, primarily related to Hurricanes Harvey, Irma and Maria, as well as the 2017 California wildfires. The ~~insurance segment also experienced favorable development~~increase in loss estimates for Hurricanes Harvey, Irma and Maria was mostly driven by re-opened claims, loss inflation from higher than expected loss adjustment expenses and in particular, their impact on ~~prior year reserves of $32,938 thousand mainly on its workers compensation business, which is largely written in California.~~aggregate covers.

6.5. FAIR VALUE

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

The levels in the hierarchy are defined as follows:

Level 1:

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

Level 2:

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

Level 3:

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

1514

The ~~Company's~~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 seventy-four private placement securities at~~At March 31, ~~2018, an investment manager's valuation committee~~2019, $374,476 thousand of fixed maturities, market value and $2,350 thousand of fixed maturities, fair value were fair valued ~~seventy-three of these private placement securities at $164,818 thousand. A~~using unobservable inputs. The majority of the fixed maturities, market value, $360,518 thousand and all of the $2,350 thousand of fixed maturities, fair value were valued by investment managers’ valuation committees and a majority of these fair values ~~determined by the valuation committee are~~were substantiated by valuations from independent third parties. ~~In addition,~~The Company has procedures in place to review and evaluate these independent third party valuations. The remaining Level 3 fixed maturities of $13,958 thousand were fair valued by the Company ~~valued one private placement security~~ at ~~$16,962 thousand, representing~~either par ~~value. Due to the unavailability of prices for sixty-five private placement securities at~~or amortized cost. At December 31, ~~2017, an~~2018, $383,994 thousand of fixed maturities, market value and $2,337 thousand of fixed maturities, fair value were fair valued using unobservable inputs. The majority of the fixed maturities, market value, $354,133 thousand and all of the $2,337 thousand of fixed maturities, fair value, were valued by investment ~~manager's~~managers’ valuation ~~committee~~committees and a majority of these fair values were substantiated by valuations from independent third parties. The remaining Level 3 fixed maturities of $28,708 thousand were fair valued by the ~~sixty-five securities~~Company at ~~$165,173 thousand.~~either par or amortized cost and $1,153 thousand were priced using a non-binding broker quote.

The Company internally manages a public equity portfolio which had a fair value at March 31, ~~2018~~2019 and December 31, ~~2017~~2018 of ~~$349,344~~$151,699 thousand and ~~$245,043~~$124,228 thousand, respectively, and all prices were obtained from 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 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 March 31, ~~2018~~2019 and December 31, ~~2017,~~2018, 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~~Company’s parent. The 25 year redeemable, convertible preferred stock 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~~Company’s June 1, 2044, 4.868% senior notes, with adjustments to reflect the ~~Company's~~Company’s own assumptions about the inputs that market participants would use in pricing the asset.

1716

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

			Fair Value Measurement Using:								Fair Value Measurement Using:
			Quoted Prices								Quoted Prices
			in Active		Significant						in Active		Significant
			Markets for		Other		Significant				Markets for		Other		Significant
			Identical		Observable		Unobservable				Identical		Observable		Unobservable
			Assets		Inputs		Inputs				Assets		Inputs		Inputs
(Dollars in thousands)	March 31, 2018		(Level 1)		(Level 2)		(Level 3)		March 31, 2019		(Level 1)		(Level 2)		(Level 3)
Assets:
Fixed maturities, market value
U.S. Treasury securities and obligations of
U.S. government agencies and corporations	$	691,411	$	-	$	691,411	$	-	$	929,625	$	-	$	929,625	$	-
Obligations of U.S. States and political subdivisions		536,547		-		536,547		-		503,854		-		503,854		-
Corporate securities		1,975,702		-		1,807,112		168,590		2,598,487		-		2,231,309		367,178
Asset-backed securities		130,889		-		130,889		-		411,061		-		411,061		-
Mortgage-backed securities
Commercial		50,509		-		50,509		-		229,368		-		229,368		-
Agency residential		137,290		-		137,290		-		600,878		-		600,878		-
Non-agency residential		50		-		50		-		3,110		-		3,110		-
Foreign government securities		519,861		-		519,861		-		539,792		-		539,792		-
Foreign corporate securities		865,559		-		854,191		11,368		1,008,284		-		1,000,986		7,298
Total fixed maturities, market value		4,907,818		-		4,727,860		179,958		6,824,459		-		6,449,983		374,476

Fixed maturities, fair value		1,821		-		-		1,821		2,350		-		-		2,350
Equity securities, fair value		887,435		858,992		28,443		-		724,325		693,303		31,022		-
Other invested assets, fair value		1,770,684		-		-		1,770,684		1,767,963		-		-		1,767,963

There were no transfers between Level 1 and Level 2 for the three months ended March 31, ~~2018.~~2019.

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

			Fair Value Measurement Using:								Fair Value Measurement Using:
			Quoted Prices								Quoted Prices
			in Active		Significant						in Active		Significant
			Markets for		Other		Significant				Markets for		Other		Significant
			Identical		Observable		Unobservable				Identical		Observable		Unobservable
			Assets		Inputs		Inputs				Assets		Inputs		Inputs
(Dollars in thousands)	December 31, 2017		(Level 1)		(Level 2)		(Level 3)		December 31, 2018		(Level 1)		(Level 2)		(Level 3)
Assets:
Fixed maturities, market value
U.S. Treasury securities and obligations of
U.S. government agencies and corporations	$	664,513	$	-	$	664,513	$	-	$	2,242,797	$	-	$	2,242,797	$	-
Obligations of U.S. States and political subdivisions		585,469		-		585,469		-		499,089		-		499,089		-
Corporate securities		2,024,209		-		1,865,988		158,221		2,216,153		-		1,839,903		376,250
Asset-backed securities		138,024		-		138,024		-		221,255		-		221,255		-
Mortgage-backed securities
Commercial		51,751		-		51,751		-		136,604		-		136,604		-
Agency residential		113,288		-		113,288		-		148,774		-		148,774		-
Non-agency residential		58		-		58		-		3,114		-		3,114		-
Foreign government securities		523,620		-		523,620		-		579,586		-		579,586		-
Foreign corporate securities		870,989		-		864,037		6,952		914,703		-		906,959		7,744
Total fixed maturities, market value		4,971,921		-		4,806,748		165,173		6,962,075		-		6,578,081		383,994

Fixed maturities, fair value										2,337		-		-		2,337
Equity securities, fair value		822,375		800,542		21,833		-		564,338		540,894		23,444		-
Other invested assets, fair value		1,807,473		-		-		1,807,473		1,717,336		-		-		1,717,336

1817

In addition, ~~$82,902~~$146,522 thousand and ~~$79,505~~$117,662 thousand of investments within other invested assets on the consolidated balance sheets as of March 31, ~~2018~~2019 and December 31, ~~2017,~~2018, respectively, are not included within the fair value hierarchy tables as the assets are ~~valued using the~~measured at NAV as a practical expedient ~~guidance within ASU 2015-07.~~to determine fair value.

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

	Total Fixed Maturities, Market Value															Total Fixed Maturities, Market Value
	Three Months Ended March 31, 2018						Three Months Ended March 31, 2017									Three Months Ended March 31, 2019									Three Months Ended March 31, 2018
	Corporate		Foreign				Corporate			Foreign						Corporate			Foreign						Corporate		Foreign
(Dollars in thousands)	Securities		Corporate		Total		Securities			Corporate			Total			Securities			Corporate			Total			Securities		Corporate		Total
Beginning balance	$	158,221	$	6,952	$	165,173	$	65,197		$	2,538		$	67,735		$	376,250		$	7,744		$	383,994		$	158,221	$	6,952	$	165,173
Total gains or (losses) (realized/unrealized)
Included in earnings		722		94		816		214			(24	)		190			4,858			119			4,977			722		94		816
Included in other comprehensive income (loss)		235		-		235		(29	)		-			(29	)		574			-			574			235		-		235
Purchases, issuances and settlements		9,412		4,322		13,734		18,940			288			19,228			(12,046	)		(565	)		(12,611	)		9,412		4,322		13,734
Transfers in and/or (out) of Level 3		-		-		-		-			-			-			(2,458	)		-			(2,458	)		-		-		-
Ending balance	$	168,590	$	11,368	$	179,958	$	84,322		$	2,802		$	87,124		$	367,178		$	7,298		$	374,476		$	168,590	$	11,368	$	179,958

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										Total Fixed Maturities, Fair Value
	Three Months Ended March 31, 2018						Three Months Ended March 31, 2017				Three Months Ended March 31, 2019				Three Months Ended March 31, 2018
	Foreign						Foreign				Foreign				Foreign
(Dollars in thousands)	Corporate			Total			Corporate		Total		Corporate		Total		Corporate			Total
Beginning balance fixed maturities at fair value	$	-		$	-		$	-	$	-	$	2,337	$	2,337	$	-		$	-
Total gains or (losses) (realized/unrealized)
Included in earnings		(14	)		(14	)		-		-		13		13		(14	)		(14	)
Included in other comprehensive income (loss)		-			-			-		-		-		-		-			-
Purchases, issuances and settlements		1,835			1,835			-		-		-		-		1,835			1,835
Transfers in and/or (out) of Level 3		-			-			-		-		-		-		-			-
Ending balance	$	1,821		$	1,821		$	-	$	-	$	2,350	$	2,350	$	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	$	-		$	-		$	-	$	-
The amount of total gains or losses for the period included
in earnings (or changes in net assets) attributable to the
change in unrealized gains or losses relating to assets
still held at the reporting date											$	-	$	-	$	-		$	-

(Some amounts may not reconcile due to rounding.)

~~There were no~~The net transfers to/(from) level 3, ~~during~~fair value measurements using significant unobservable inputs for fixed maturities, market value were ($2,458) thousand for the three months ended March 31, ~~2018 and 2017, respectively.~~2019. The transfers during 2019 were related to securities that were priced using single non-binding broker quotes as of December 31, 2018. These securities were subsequently priced using a recognized pricing service as of March 31, 2019.

1918

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

	Three Months Ended					Three Months Ended
	March 31,					March 31,
(Dollars in thousands)	2018			2017		2019		2018
Other invested assets, fair value:
Beginning balance	$	1,807,473		$	1,766,626	$	1,717,336	$	1,807,473
Total gains or (losses) (realized/unrealized)
Included in earnings		(36,789	)		70,675		50,627		(36,789	)
Included in other comprehensive income (loss)		-			-		-		-
Purchases, issuances and settlements		-			-		-		-
Transfers in and/or (out) of Level 3		-			-		-		-
Ending balance	$	1,770,684		$	1,837,302	$	1,767,963	$	1,770,684

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.)

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

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

	At March 31,		At December 31,		At March 31,		At December 31,
(Dollars in thousands)	2018		2017		2019		2018
The Prudential	$	144,516	$	144,618	$	142,458	$	142,754
Unaffiliated life insurance company		32,718	$	34,444		33,059		34,717

2019

8.7. COMPREHENSIVE INCOME (LOSS)

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

	Three Months Ended March 31, 2018									Three Months Ended March 31, 2017									Three Months Ended March 31, 2019									Three Months Ended March 31, 2018
(Dollars in thousands)	Before Tax			Tax Effect			Net of Tax			Before Tax			Tax Effect			Net of Tax			Before Tax			Tax Effect			Net of Tax			Before Tax			Tax Effect			Net of Tax
Unrealized appreciation (depreciation) ("URA(D)") on securities - temporary	$	(59,390	)	$	12,490		$	(46,900	)	$	18,020		$	(6,307	)	$	11,713		$	112,441		$	(23,730	)	$	88,711		$	(59,390	)	$	12,490		$	(46,900	)
URA(D) on securities - OTTI		99			(21	)		78			(3,499	)		1,225			(2,274	)		(332	)		70			(262	)		99			(21	)		78
Reclassification of net realized losses (gains) included in net income (loss)		(6,098	)		1,263			(4,835	)		(5,334	)		1,867			(3,467	)		(1,532	)		516			(1,016	)		(6,098	)		1,263			(4,835	)
Foreign currency translation adjustments		(1,696	)		354			(1,342	)		5,487			(1,920	)		3,567			12,110			(2,546	)		9,564			(1,696	)		354			(1,342	)
Reclassification of amortization of net gain (loss) included in net income (loss)		2,298			(483	)		1,815			3,083			(1,079	)		2,004			1,457			(306	)		1,151			2,298			(483	)		1,815
Total other comprehensive income (loss)	$	(64,787	)	$	13,603		$	(51,184	)	$	17,757		$	(6,214	)	$	11,543		$	124,144		$	(25,996	)	$	98,148		$	(64,787	)	$	13,603		$	(51,184	)

(Some amounts may not reconcile due to rounding)

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

	Three Months Ended							Three Months Ended
	March 31,						Affected line item within the statements of	March 31,						Affected line item within the statements of
AOCI component	2018			2017			operations and comprehensive income (loss)	2019			2018			operations and comprehensive income (loss)
(Dollars in thousands)
URA(D) on securities	$	(6,098	)	$	(5,334	)	Other net realized capital gains (losses)	$	(1,532	)	$	(6,098	)	Other net realized capital gains (losses)
		1,263			1,867		Income tax expense (benefit)		516			1,263		Income tax expense (benefit)
	$	(4,835	)	$	(3,467	)	Net income (loss)	$	(1,016	)	$	(4,835	)	Net income (loss)

Benefit plan net gain (loss)	$	2,298		$	3,083		Other underwriting expenses	$	1,457		$	2,298		Other underwriting expenses
		(483	)		(1,079	)	Income tax expense (benefit)		(306	)		(483	)	Income tax expense (benefit)
	$	1,815		$	2,004		Net income (loss)	$	1,151		$	1,815		Net income (loss)

(Some amounts may not reconcile due to rounding)

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

	Three Months Ended			Twelve Months Ended			Three Months Ended			Twelve Months Ended
	March 31,			December 31,			March 31,			December 31,
(Dollars in thousands)	2018			2017			2019			2018

Beginning balance of URA (D) on securities	$	37,442		$	39,041		$	(55,950	)	$	37,442
Change to beginning balance due to adoption of ASU 2016-01								-			(2,447	)
Current period change in URA (D) of investments - temporary		(51,735	)		(5,284	)		87,695			(91,455	)
Current period change in URA (D) of investments - non-credit OTTI		78			(2,949	)		(262	)		510
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		(16,662	)		37,442			31,483			(55,950	)

Beginning balance of foreign currency translation adjustments		33,545			(9,852	)		(2,886	)		33,545
Current period change in foreign currency translation adjustments		(1,342	)		37,427			9,564			(36,431	)
Reclass due to early adoption of ASU 2018-02		-			5,970
Ending balance of foreign currency translation adjustments		32,203			33,545			6,678			(2,886	)

Beginning balance of benefit plan net gain (loss)		(71,929	)		(65,504	)		(67,418	)		(71,929	)
Current period change in benefit plan net gain (loss)		1,815			6,504			1,151			4,511
Reclass due to early adoption of ASU 2018-02		-			(12,929	)
Ending balance of benefit plan net gain (loss)		(70,114	)		(71,929	)		(66,267	)		(67,418	)

Ending balance of accumulated other comprehensive income (loss)	$	(54,573	)	$	(942	)	$	(28,106	)	$	(126,254	)

2120

9.8. COLLATERALIZED REINSURANCE AND TRUST AGREEMENTS

A subsidiary of the Company, Everest Re, has established a trust agreement, which effectively uses Everest ~~Re's~~Re’s investments as collateral, as security for assumed losses payable to non-affiliated ceding companies. At March 31, ~~2018,~~2019, the total amount on deposit in the trust account was ~~$698,649~~$613,938 thousand.

On April 24, 2014, the Company entered into two collateralized reinsurance agreements with Kilimanjaro Re Limited ~~("Kilimanjaro"~~(“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 December 31, 2017,~~Currently, 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,

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"~~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"~~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"~~Notes”) and $262,500 thousand of notes ("(“Series 2018-2 ~~Notes"~~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"~~“AAAm” by Standard & ~~Poor's.~~Poor’s.

~~10.~~9. SENIOR NOTES

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

March 31, 2018

December 31, 2017

March 31, 2019

December 31, 2018

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

396,864

399,080

396,834

420,340

Senior notes

06/05/2014

06/01/2044

400,000

396,984

408,224

396,954

396,968

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				Three Months Ended
	March 31,				March 31,
(Dollars in thousands)	2018		2017		2019		2018
Interest expense incurred	$	4,868	$	4,868	$	4,868	$	4,868

~~11.~~10. LONG TERM SUBORDINATED NOTES

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

Maturity Date

March 31, 2018

December 31, 2017

Maturity Date

March 31, 2019

December 31, 2018

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

236,585

238,421

236,561

233,072

Long term subordinated notes

04/26/2007

400,000

05/15/2037

05/01/2067

236,684

211,318

236,659

200,390

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'~~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~~May 15, 2017. The reset quarterly interest rate for February 15, ~~2018~~2019 to May 14, ~~2018~~2019 is ~~4.2%~~5.1%.

2322

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~~Company’s 5.40% senior notes on October 15, 2014, the ~~Company's~~Company’s 4.868% senior notes, due on June 1, 2044, have become the ~~Company's~~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				Three Months Ended
	March 31,				March 31,
(Dollars in thousands)	2018		2017		2019		2018
Interest expense incurred	$	2,391	$	3,937	$	2,605	$	2,391

11. LEASES

Effective January 1, 2019, the Company adopted ASU 2016-02 and ASU 2018-11 which outline new guidance on the accounting for leases. The Company enters into lease agreements for real estate that is primarily used for office space in the ordinary course of business. These leases are accounted for as operating leases, whereby lease expense is recognized on a straight-line basis over the term of the lease. Most leases include an option to extend or renew the lease term. The exercise of the renewal is at the Company’s discretion. The operating lease liability includes lease payments related to options to extend or renew the lease term if the Company is reasonably certain of exercise those options. The Company, in determining the present value of lease payments utilizes either the rate implicit in the lease if that rate is readily determinable or the Company’s incremental secured borrowing rate commensurate with terms of the underlying lease.

Supplemental information related to operating leases is as follows for the periods indicated:

	Three Months Ended
(Dollars in thousands)	March 31,
Lease expense incurred:	2019
Operating lease cost	$	4,562

	At March 31,
(Dollars in thousands)	2019
Operating lease right of use assets	$	57,013
Operating lease liabilities		62,938

	Three Months Ended
	March 31,
(Dollars in thousands)	2019
Operating cash flows from operating leases	$	4,304

	At March 31,
	2019
Weighted average remaining operating lease term	5.5 years
Weighted average discount rate on operating leases	4.48%

Maturities of the existing lease liabilities are expected to occur as follows:

(Dollars in thousands)
Remainder of 2019	$	12,835
2020		16,594
2021		7,806
2022		7,501
2023		7,385
2024		7,230
Thereafter		10,353
Undiscounted lease payments		69,704
Less: present value adjustment		6,766
Total operating lease liability	$	62,938

The amount of operating lease liabilities is not separately presented in the consolidated financial statements but is included in other liabilities. Disclosures regarding minimum lease payments under previous lease accounting guidance can be found in the Company’s 2018 Form 10-K.

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"~~&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~~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 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					Three Months Ended
U.S. Reinsurance	March 31,					March 31,
(Dollars in thousands)	2018			2017		2019		2018
Gross written premiums	$	644,222		$	578,958	$	764,140	$	644,222
Net written premiums		423,831			219,062		618,141		423,831

Premiums earned	$	441,385		$	208,314	$	574,904	$	441,385
Incurred losses and LAE		301,204			120,434		316,638		301,204
Commission and brokerage		127,320			40,373		167,103		127,320
Other underwriting expenses		16,886			14,251		15,591		16,886
Underwriting gain (loss)	$	(4,025	)	$	33,256	$	75,572	$	(4,025	)

	Three Months Ended
International	March 31,
(Dollars in thousands)	2019		2018
Gross written premiums	$	388,971	$	367,024
Net written premiums		357,858		334,875

Premiums earned	$	322,374	$	328,939
Incurred losses and LAE		237,076		176,359
Commission and brokerage		69,862		78,394
Other underwriting expenses		8,465		10,086
Underwriting gain (loss)	$	6,971	$	64,100

	Three Months Ended				Three Months Ended
International	March 31,
Insurance					March 31,
(Dollars in thousands)	2018		2017		2019		2018
Gross written premiums	$	367,024	$	278,575	$	531,771	$	454,985
Net written premiums		334,875		103,246		416,244		348,321

Premiums earned	$	328,939	$	118,151	$	373,176	$	345,686
Incurred losses and LAE		176,359		68,414		242,382		235,692
Commission and brokerage		78,394		23,535		51,253		50,743
Other underwriting expenses		10,086		8,889		54,326		50,379
Underwriting gain (loss)	$	64,100	$	17,313	$	25,215	$	8,872

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
March 31,
(Dollars in thousands) 2018 2017
Underwriting gain (loss) $ 68,947 $ 68,930
Net investment income 69,909 60,849
Net realized capital gains (losses) (60,201 ) 117,768
Corporate expense (3,596 ) (3,597 )
Interest, fee and bond issue cost amortization expense (7,313 ) (8,859 )
Other income (expense) (74,877 ) 9,855
Income (loss) before taxes $ (7,131 ) $ 244,947

(Some amounts may not reconcile due to rounding.)

	Three Months Ended
	March 31,
(Dollars in thousands)	2019			2018
Underwriting gain (loss)	$	107,758		$	68,947
Net investment income		84,534			69,909
Net realized capital gains (losses)		135,056			(60,201	)
Corporate expense		(1,651	)		(3,596	)
Interest, fee and bond issue cost amortization expense		(9,828	)		(7,313	)
Other income (expense)		(1,214	)		(74,877	)
Income (loss) before taxes	$	314,655		$	(7,131	)

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~~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				Three Months Ended
	March 31,				March 31,
(Dollars in thousands)	2018		2017		2019		2018
Canada gross written premiums	$	40,392	$	27,957	$	39,050	$	40,392

No other country represented more than 5% of the ~~Company's~~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~~was repaid in December 2018. At December 31, ~~2023 and has an interest rate of 1.72% that is payable annually. This~~2017, this transaction is presented as a Note Receivable – Affiliated in the Consolidated Balance Sheets of Holdings. Interest income in the amount of ~~$4,300~~$0 thousand and $1,075 thousand was recorded by Holdings for the ~~year~~three months ended ~~December~~March 31, ~~2017~~2019 and ~~December 31, 2016,~~2018, respectively.

~~Group's~~Group’s Board of Directors approved an amended share repurchase program authorizing Group and/or its subsidiary Holdings to purchase ~~Group's~~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				Three Months Ended
	March 31,				March 31,
(Dollars in thousands)	2018		2017		2019		2018
Dividends received on preferred stock of affiliate	$	7,758	$	7,758	$	7,758	$	7,758

Affiliated Companies

~~Everest~~Effective December 31, 2018, Holdings entered into a $300,000 thousand long-term promissory note agreement with Bermuda Re. The note will mature on December 31, 2023 and has an interest rate of 3.07% that is payable annually. This transaction is presented as a Note Payable – Affiliated in the consolidated balance sheets of Holdings. Interest expense of $2,303 thousand and $0 thousand was recorded by Holdings for the three months ended March 31, 2019 and 2018, respectively.

Effective October 1, 2018, Holdings Ireland made a capital contribution of Global Services, ~~Inc. ("~~an affiliated entity, to Holdings. Global ~~Services"),~~Services had an ~~affiliate~~equity value of ~~Holdings, provides centralized management~~$227,253 thousand at the time of contribution and ~~home office services, through a management agreement, to Holdings and other affiliated companies within Holdings'~~that value is classified as additional paid in capital in the Company’s consolidated ~~structure. Services provided by Everest Global include executive managerial services, legal services, actuarial services, accounting services, information technology services and others.~~balance sheet as of December 31, 2018.

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

Three Months Ended
March 31,
(Dollars in thousands) 2018 2017
Expenses incurred $ 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
Coverage Period 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

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

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

01/01/2015-12/31/2016 Everest Re 50.0% Bermuda Re property / casualty business 162,500 325,000

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⁾
-
01/01/2011-12/31/2011 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
01/01/2013-12/31/2013 Everest Re- Canadian Branch 75.0% Bermuda Re property / casualty business 150,000
⁽¹⁾
412,500
01/01/2014-12/31/2017 Everest Re- Canadian Branch 75.0% Bermuda Re property / casualty business 262,500
⁽¹⁾
412,500

01/01/2012-12/31/2017 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.

(Dollars in thousands)

Percent

Assuming

Single

Aggregate

Coverage Period

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

01/01/2011-12/31/2011

Everest Re

50.0%

Bermuda Re

property / casualty business

150,000

300,000

01/01/2012-12/31/2014

Everest Re

50.0%

Bermuda Re

property / casualty business

100,000

200,000

01/01/2015-12/31/2016

Everest Re

50.0%

Bermuda Re

property / casualty business

162,500

325,000

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⁾

01/01/2011-12/31/2011

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⁾

01/01/2013-12/31/2013

Everest Re- Canadian Branch

75.0%

Bermuda Re

property / casualty business

150,000

⁽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

⁽¹⁾

01/01/2012-12/31/2017

Everest Canada

80.0%

Everest Re- Canadian Branch

property business

⁽¹⁾Amounts shown are Canadian dollars.

Effective January 1, 2018, Everest Re entered into a twelve month whole account aggregate stop loss reinsurance contract ("(“stop loss ~~agreement"~~agreement”) with Bermuda Re. The stop loss agreement provides coverage for ultimate net losses on applicable net earned premiums above a retention level, subject to certain other coverage limits and conditions. The stop loss agreement was renewed effective January 1, 2019.

In addition, Everest Re entered into a property catastrophe excess of loss reinsurance contract with Bermuda Re, effective January 1, 2019. The contract provides $100,000 thousand of reinsurance coverage for property catastrophe losses above certain attachment points.

The table below represents loss portfolio transfer ~~("LPT"~~(“LPT”) reinsurance agreements whereby net insurance exposures and reserves were transferred to an affiliate.

(Dollars in thousands)

Effective

Transferring

Assuming

% of Business or

Covered Period

Transferring

Assuming

% of Business or

Covered Period

Date

Company

Amount of Transfer

of Transfer

Company

Amount of Transfer

of Transfer

09/19/2000

Mt. McKinley

Bermuda Re

100

All years

10/01/2001

Everest Re (Belgium Branch)

Bermuda Re

100

All years

Everest Re (Belgium Branch)

Bermuda Re

100%

All years

10/01/2008

Everest Re

Bermuda Re

747,022

01/01/2002-12/31/2007

Everest Re

Bermuda Re

747,022

01/01/2002-12/31/2007

12/31/2017

Everest Re

Bermuda Re

970,000

All years

Everest Re

Bermuda Re

970,000

All years

On December 31, 2017, the Company entered into a LPT agreement with Bermuda Re. The LPT agreement covers subject loss reserves of ~~$3,138,716~~$2,336,242 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 Bermuda Re. As part of the LPT agreement, Bermuda Re will provide an 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~~Lloyd’s syndicate 2786 for the periods indicated:

	Three Months Ended				Three Months Ended
Bermuda Re	March 31,				March 31,
(Dollars in thousands)	2018		2017		2019		2018
Ceded written premiums	$	132,320	$	634,896	$	51,473	$	132,320
Ceded earned premiums		136,158		588,874		52,524		136,158
Ceded losses and LAE		193,551		340,131		11,733		193,551

	Three Months Ended					Three Months Ended
Everest International	March 31,					March 31,
(Dollars in thousands)	2018		2017			2019		2018
Ceded written premiums	$	-	$	(70	)	$	-	$	-
Ceded earned premiums		-		(71	)		-		-
Ceded losses and LAE		-		(443	)		10		-

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

	Three Months Ended					Three Months Ended
Lloyd's Syndicate 2786	March 31,
Everest Canada						March 31,
(Dollars in thousands)	2018			2017		2019			2018
Assumed written premiums	$	(2,682	)	$	7,849	$	-		$	-
Assumed earned premiums		4,886			6,927		-			-
Assumed losses and LAE		6,585			3,433		(1,601	)		2,973

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.

	Three Months Ended
Lloyd's Syndicate 2786	March 31,
(Dollars in thousands)	2019			2018
Assumed written premiums	$	(9,209	)	$	(2,682	)
Assumed earned premiums		(18,827	)		4,886
Assumed losses and LAE		(7,918	)		6,585

~~Effective February 27,~~In 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 then established separate segregated accounts for its business activity, which ~~will~~ invest in a diversified set of catastrophe exposures.

The following table summarizes the premiums and losses that are ceded by the Company to Mt. Logan Re segregated accounts and assumed by the Company from Mt. Logan Re segregated accounts.

	Three Months Ended				Three Months Ended
Mt. Logan Re Segregated Accounts	March 31,				March 31,
(Dollars in thousands)	2018		2017		2019		2018
Ceded written premiums	$	60,817	$	39,179	$	63,223	$	60,817
Ceded earned premiums		50,090		33,957		44,822		50,090
Ceded losses and LAE		15,807		19,759		34,623		15,807

Assumed written premiums	$	3,043	$	2,732		-		3,043
Assumed earned premiums		3,043		2,732		-		3,043
Assumed losses and LAE		-		-		-		-

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. Generally, the Company computes the benefits based on average earnings over a period prescribed by the plans and credited length of service. The Company’s non-qualified defined benefit pension plan provided compensating pension benefits for participants whose benefits have been curtailed under the qualified plan due to Internal Revenue Code limitations. Effective January 1, 2018, participants of the Company’s non-qualified defined benefit pension plan may no longer accrue additional service benefits.

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

Pension Benefits	Three Months Ended						Three Months Ended
	March 31,						March 31,
(Dollars in thousands)	2018			2017			2019			2018
Service cost	$	2,977		$	3,299		$	2,276		$	2,977
Interest cost		2,585			2,276			2,930			2,585
Expected return on plan assets		(3,670	)		(3,155	)		(5,016	)		(3,670	)
Amortization of net (income) loss		2,237			3,040			1,601			2,237
FAS 88 settlement charge								104			-
Net periodic benefit cost	$	4,128		$	5,460		$	1,895		$	4,128

Other Benefits	Three Months Ended						Three Months Ended
	March 31,						March 31,
(Dollars in thousands)	2018			2017			2019			2018
Service cost	$	446		$	440		$	286		$	446
Interest cost		307			249			295			307
Amortization of prior service cost		(33	)		(33	)		(144	)		(33	)
Amortization of net (income) loss		94			76			-			94
Net periodic benefit cost	$	814		$	732		$	437		$	814

(Some amounts may not reconcile due to rounding.)

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 did not make any contributions to the qualified pension benefit plan for the three months ended March 31, ~~2018~~2019 and ~~2017.~~2018.

15. INCOME TAXES

The Company is domiciled in the United States and has subsidiaries domiciled within the United States with significant branches in Canada and Singapore. The ~~Company's~~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~~Company’s annual pre-tax income/loss and effective tax rate.

16. SUBSEQUENT EVENTS

~~On April 30, 2018, the~~The Company ~~entered into four collateralized reinsurance agreements with Kilimanjaro~~has evaluated known recognized and non-recognized subsequent events. The Company does not have any subsequent events to provide the Company with annual aggregate catastrophe reinsurance coverage. Kilimanjaro has financed these 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.report

3029

ITEM 2. ~~MANAGEMENT'S~~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,~~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~~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 were numerous natural catastrophes in 2018 with total industry losses estimated to be $90 billion. The costliest event was the Camp Wildfire in California, the deadliest and most destructive California fire on record. These 2018 catastrophe losses followed another record year of catastrophes in 2017 where total industry losses for the worldwide events were estimated at $140 billion. These catastrophe losses included 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 the fourth quarter of 2017 with the wild fires in California and Hurricanes Nate and Ophelia. ~~The total industry losses for all of these worldwide events have been estimated to exceed $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~~has been some firming in the markets impacted by the ~~2016~~ catastrophes, ~~and~~ as ~~catastrophe losses increased in 2017, there is a growing industry consensus that there will be a general firming of the (re)insurance markets resulting~~well, improvements in rate ~~increases, not only for catastrophe exposures, but~~in some other reinsurance lines, including casualty lines, and also ~~potentially for most other lines of business.~~improvements in the insurance property and casualty lines.

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

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~~stockholder’s equity for the periods indicated:

	Three Months Ended						Percentage			Three Months Ended						Percentage
	March 31,						Increase/			March 31,						Increase/
(Dollars in millions)	2018			2017			(Decrease)			2019			2018			(Decrease)
Gross written premiums	$	1,466.2		$	1,252.4			17.1	%	$	1,684.9		$	1,466.2			14.9	%
Net written premiums		1,107.0			448.8			146.6	%		1,392.2			1,107.0			25.8	%

REVENUES:
Premiums earned	$	1,116.0		$	471.1			136.9	%	$	1,270.5		$	1,116.0			13.8	%
Net investment income		69.9			60.8			14.9	%		84.5			69.9			20.9	%
Net realized capital gains (losses)		(60.2	)		117.8			-151.1	%		135.1			(60.2	)	NM
Other income (expense)		(74.9	)		9.9		NM				(1.2	)		(74.9	)		-98.4	%
Total revenues		1,050.8			659.5			59.3	%		1,488.8			1,050.8			41.7	%

CLAIMS AND EXPENSES:
Incurred losses and loss adjustment expenses		713.3			289.7			146.2	%		796.1			713.3			11.6	%
Commission, brokerage, taxes and fees		256.5			52.5		NM				288.2			256.5			12.4	%
Other underwriting expenses		77.4			59.9			29.1	%		78.4			77.4			1.3	%
Corporate expense		3.6			3.6			0.0	%		1.7			3.6			-54.1	%
Interest, fee and bond issue cost amortization expense		7.3			8.9			-17.5	%		9.8			7.3			34.4	%
Total claims and expenses		1,058.0			414.6			155.2	%		1,174.2			1,058.0			11.0	%

INCOME (LOSS) BEFORE TAXES		(7.1	)		244.9			-102.9	%		314.7			(7.1	)	NM
Income tax expense (benefit)		5.0			75.8			-93.3	%		63.4			5.0		NM
NET INCOME (LOSS)	$	(12.2	)	$	169.2			-107.2	%	$	251.2		$	(12.2	)	NM

RATIOS:							Point Change									Point Change
Loss ratio		63.9	%		61.5	%		2.4			62.7	%		63.9	%		(1.2	)
Commission and brokerage ratio		23.0	%		11.2	%		11.8			22.7	%		23.0	%		(0.3	)
Other underwriting expense ratio		6.9	%		12.7	%		(5.8	)		6.1	%		6.9	%		(0.8	)
Combined ratio		93.8	%		85.4	%		8.4			91.5	%		93.8	%		(2.3	)

	At			At			Percentage
	March 31,			December 31,			Increase/			At			At			Percentage
										March 31,			December 31,			Increase/
(Dollars in millions)	2018			2017			(Decrease)				2019			2018		(Decrease)
Balance sheet data:
Total investments and cash	$	9,004.2		$	8,911.5			1.0	%	$	11,044.2		$	10,707.4			3.1	%
Total assets		17,553.6			17,888.5			-1.9	%		19,063.7			18,688.2			2.0	%
Loss and loss adjustment expense reserves		9,145.8			9,343.0			-2.1	%		10,173.5			10,167.0			0.1	%
Total debt		633.4			633.4			0.0	%		933.7			933.6			0.0	%
Total liabilities		12,204.2			12,475.8			-2.2	%		13,669.5			13,643.5			0.2	%
Stockholder's equity		5,349.4			5,412.7			-1.2	%		5,394.1			5,044.7			6.9	%

(Some amounts may not reconcile due to rounding)

(NM, not meaningful)

Revenues.

Premiums. Gross written premiums increased by ~~17.1%~~14.9% to $1,684.9 million for the three months ended March 31, 2019, compared to $1,466.2 million for the three months ended March 31, 2018, ~~compared to $1,252.4~~reflecting a $141.9 million, or ~~the three months ended March 31, 2017, reflecting a $153.7 million, or 17.9%~~14.0%, increase in our reinsurance business and a ~~$60.1~~$76.8 million, or ~~15.2%~~16.9%, increase in our insurance business. The increase in reinsurance premiums was mainly due to ~~the increases~~an increase in treaty ~~property business~~casualty writings, as well as an increase in Middle Eastern and ~~Latin American~~Africa business. The rise in insurance premiums was primarily due to increases in many lines of business, including property, casualty, energy and accident and health. Net written premiums increased by ~~146.6%~~25.8% to $1,392.2 million for the three months

ended March 31, 2019, compared to $1,107.0 million for the three months ended March 31, ~~2018, compared to $448.8 million for the three months ended March 31, 2017.~~2018. The difference between the change in gross written premiums compared to the change in net written premiums is primarily due to the impact of changes in affiliated reinsurance contracts, particularly the non-renewal of the quota share 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.contracts. Premiums ceded to Bermuda Re during the three months ended March 31, ~~2018~~2019 were ~~$132.3~~$51.5 million compared with ~~$634.9~~$132.3 million during the three months ended March 31, ~~2017.~~2018. Premiums earned increased by ~~136.9%~~13.8% to $1,270.5 million for the three months ended March 31, 2019, compared to $1,116.0 million for the three months ended March 31, ~~2018, compared to $471.1 million for the three months ended March 31, 2017.~~2018. The change in premiums earned relative to net written premiums is ~~due to~~the result of timing; premiums are earned ratably over the coverage period whereas written premiums are recorded at the initiation of the coverage period.

Net Investment Income. Net investment income increased ~~14.9%~~20.9% to $84.5 million for the three months ended March 31, 2019 compared with net investment income of $69.9 million for the three months ended March 31, ~~2018, compared with net investment income of $60.8 million for the three months ended March 31, 2017.~~2018. Net pre-tax investment income as a percentage of average invested assets was 3.1% for the three months ended March 31, 2019 compared to 3.2% for the three months ended March 31, ~~2018, compared to 2.5% for the three months ended March 31, 2017.~~2018. The increase in income ~~and yield~~ was primarily the result of higher income from our growing fixed maturity portfolio partially offset by lower income from our limited partnerships.

Net Realized Capital Gains (Losses). Net realized capital ~~losses~~gains were ~~$60.2~~$135.1 million and net realized capital ~~gains~~losses were ~~$117.8~~$60.2 million for the three months ended March 31, ~~2018~~2019 and ~~2017,~~ 2018, respectively. The net realized capital ~~losses~~gains of ~~$60.2~~$135.1 million for the three months ended March 31, ~~2018,~~2019 were comprised of $128.5 million of gains from fair value re-measurements and $8.9 million of net gains from sales of investments, partially offset by $2.3 million of other-than-temporary impairments. The net realized capital losses of $60.2 million were comprised of $63.8 million of losses from fair value re-measurements ~~on equity securities and other invested assets,~~ partially offset by $3.6million of net gains from sales ~~on our fixed maturity and equity portfolio.~~ ~~The net realized capital gains~~ of ~~$117.8 million for the three months ended March 31, 2017, were comprised of~~ investments.~~$108.1 million of gains from fair value re-measurements on equity securities and other invested assets and $10.8~~ ~~million of gains from sales on our fixed maturity and equity securities, partially offset by $1.1 million of other-than-temporary impairments.~~

Other Income (Expense). We recorded other expense of $1.2 million and $74.9 million ~~and other income of $9.9 million~~ for the three months ended March 31, 2019 and 2018, respectively. The changes were primarily the result of fluctuations in foreign currency exchange rates and ~~2017, respectively.~~changes in deferred gains under retroactive reinsurance agreements. ~~The change was mainly due to the impact of 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"~~(“LAE”) for the periods indicated.

	Three Months Ended March 31,
	Current		Ratio %/				Prior			Ratio %/				Total		Ratio %/
(Dollars in millions)	Year		Pt Change				Years			Pt Change				Incurred		Pt Change
2019
Attritional	$	763.8		60.1	%		$	-			0.0	%		$	763.8		60.1	%
Catastrophes		25.0		2.0	%			7.3			0.6	%			32.3		2.6	%
Total	$	788.8		62.1	%		$	7.3			0.6	%		$	796.1		62.7	%

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	%

Variance 2019/2018
Attritional	$	50.9		(3.8	)	pts	$	(0.3	)		-		pts	$	50.5		(3.8	)	pts
Catastrophes		25.0		2.0		pts		7.3			0.6		pts		32.3		2.6		pts
Total	$	75.9		(1.8	)	pts	$	7.0			0.6		pts	$	82.8		(1.2	)	pts

(Some amounts may not reconcile due to rounding.)

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 $ 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 $ 279.0 59.2 % $ 4.1 0.9 % $ 283.1 60.1 %
Catastrophes 7.2 1.5 % (0.6 ) -0.1 % 6.6 1.4 %
Total $ 286.2 60.7 % $ 3.5 0.8 % $ 289.7 61.5 %

Variance 2018/2017

Attritional $ 433.9 4.7 pts $ (3.8 ) (0.9 ) pts $ 430.2 3.8 pts
Catastrophes (7.2 ) (1.5 ) pts 0.6 0.1 pts (6.6 ) (1.4 ) pts
Total $ 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 by ~~146.2%~~11.6% to $796.1 million for the three months ended March 31, 2019 compared to $713.3 million for the three months ended March 31, 2018, ~~compared~~primarily due to ~~$289.7~~an increase in current year attritional losses of $50.9 million, mainly due to the impact of the increase in premiums earned and an increase of $25.0 million in current year catastrophe losses. The current year catastrophe losses of $25.0 million for the three months ended March 31, ~~2017, primarily due~~2019 related to ~~an increase of $433.9 million~~the Townsville monsoon 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 and the implementation of an aggregate stop loss agreement with Bermuda Re as of January 1, 2018.Australia ($25.0 million). There were no current year catastrophe losses for the three months ended March 31, 2018. ~~The current year catastrophe losses of $7.2 million~~ ~~for the three months ended March 31,~~ ~~2017 related to Cyclone Debbie in Australia ($7.2 million).~~

Commission, Brokerage, Taxes and Fees. Commission, brokerage, taxes and fees increased to ~~$256.5~~$288.2 million for the three months ended March 31, 2019 compared to $256.5 million for the three months ended March 31, 2018. The increase was mainly due to the impact of the increase in premiums earned and changes in affiliated reinsurance agreements.

Other Underwriting Expenses. Other underwriting expenses increased slightly to $78.4 million compared to $77.4 million for the three months ended March 31, 2018, ~~compared to~~ respectively.~~$52.5 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 toward additional pro rata business.

~~Other Underwriting Expenses.~~ ~~Other underwriting expenses increased by 29.1% to $77.4 million~~ ~~for the three months ended March 31, 2018 compared to~~ $59.9 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 costs incurred to support the expansion of the insurance business.

Corporate Expenses. Corporate expenses, which are general operating expenses that are not allocated to segments, ~~remained flat at~~have decreased to $1.7 million from $3.6 million for the three months ended March 31, 2019 and 2018, ~~and 2017.~~respectively. The decline was mainly due to lower employee benefit costs.

Interest, Fees and Bond Issue Cost Amortization Expense. Interest, fees and other bond amortization expense was $9.8 million and $7.3 million ~~and $8.9 million~~ for the three months ended March 31, 2019 and 2018, ~~and 2017,~~ respectively. The ~~decrease~~change in expense was primarily due to interest expense on the ~~conversion of~~$300.0 million affiliated loan agreement with Bermuda Re effective on December 31, 2018 and the movement in the floating interest rate related to 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 5.1% as of March 31, 2019 compared to 4.2% as of March 31, 2018.

Income Tax Expense (Benefit). We had an income tax expense of $63.4 million and $5.0 ~~and $75.8~~ million for the three months ended March 31, 2019 and 2018, ~~and 2017, respectively~~respectively. . Variations in taxes generally result from changes in the relative levels of pre-tax income, including the impact of catastrophe losses and net capital gains (losses) ~~among jurisdictions with different~~as well as changes in tax ~~rates. In addition,~~exempt investment income and creditable foreign taxes. The change in income tax expense (benefit) was primarily due to the ~~enactment of~~increase in net capital gains and underwriting income for the ~~TCJA on December 22, 2017 reduced~~three months ended March 31, 2019 compared to the ~~U.S. corporate tax rate to 21% from 35%.~~three months ended March 31, 2018.

Net Income (Loss).

Our ~~net loss was $12.2 million and our~~ net income was ~~$169.2~~$251.2 million for the three months ended March 31, 2019, and our net loss was $12.2 million, for the three months ended March 31, 2018 ~~and 2017,~~ respectively. The changes were primarily driven by the financial component fluctuations explained above.

Ratios.

Our combined ratio ~~increased~~decreased by ~~8.4~~2.3 points to ~~93.8%~~ 91.5% for the three months ended March 31, ~~2018,~~ 2019 compared to ~~85.4%~~ 93.8% for the three months ended March 31, ~~2017.~~ 2018. The loss ratio ~~components increased 2.4~~component decreased by 1.2 points in 2019 over the same period last year mainly due to a lower loss ratio on current year attritional losses and changes in affiliated reinsurance agreements, partially offset by higher current year catastrophe losses in 2019 compared to 2018. The commission and brokerage ratio component decreased to 22.7% for the three months ended March 31, ~~2018 over the same period last year. The commission and brokerage ratio components increased~~ 2019 compared to 23.0% for the three months ended March 31, 2018, ~~compared~~reflecting changes in affiliated reinsurance agreements and changes in the mix of business. The other underwriting expense ratio decreased slightly to ~~11.2%~~ 6.1% for the three months ended March 31, ~~2017. The other underwriting expense ratios decreased to~~ 2019 from 6.9% for the three months ended March 31, 2018, ~~from 12.7%~~ ~~for the three months ended March 31,~~ ~~2017. The changes in the combined ratio and its components were~~ mainly due to the impact of changes in affiliated reinsurance ~~contracts and changes in the mix of business.~~contracts.

Stockholder's Equity.

~~Stockholder's~~Stockholder’s equity ~~decreased~~increased by ~~$63.3~~$349.4 million to ~~$5,349.4~~$5,394.1 million at March 31, ~~2018~~2019 from ~~$5,412.7~~$5,044.7 million at December 31, ~~2017,~~2018, principally as a result of ~~$51.7~~$251.2 million of net income, $87.4 million of net unrealized ~~depreciation~~appreciation on investments, net of tax, ~~$12.2 million of net loss and $1.3~~$9.6 million of net foreign currency translation adjustments ~~partially offset by $1.8~~and $1.2 million of net benefit plan obligation adjustments.

Consolidated Investment Results

Net Investment Income.

Net investment income increased by ~~14.9%~~20.9% to ~~$69.9~~$84.5 million for the three months ended March 31, ~~2018~~ 2019 compared to ~~$60.8~~$69.9 million for the three months ended March 31, ~~2017.~~ 2018. The increase in 2019 was primarily due to ~~an increase in~~higher income from our growing fixed maturity portfolio, partially offset by lower income from our limited ~~partnership income.~~partnerships.

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

	Three Months Ended						Three Months Ended
	March 31,						March 31,
(Dollars in millions)	2018			2017			2019			2018
Fixed maturities	$	42.4		$	47.0		$	67.1		$	42.4
Equity securities		4.4			6.7			1.4			4.4
Short-term investments and cash		0.9			0.4			2.7			0.9
Other invested assets
Limited partnerships		14.5			(0.2	)		8.1			14.5
Dividends from preferred shares of affiliate		7.8			7.8			7.8			7.8
Other		3.2			1.3			3.0			3.2
Gross investment income before adjustments		73.2			62.9			90.0			73.2
Funds held interest income (expense)		2.9			1.9			2.9			2.9
Interest income from Parent		1.1			1.1			-			1.1
Gross investment income		77.1			65.9			92.9			77.1
Investment expenses		(7.2	)		(5.1	)		(8.4	)		(7.2	)
Net investment income	$	69.9		$	60.8		$	84.5		$	69.9

(Some amounts may not reconcile due to rounding.)

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

At At
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%

	At	At
	March 31,	December 31,
	2019	2018
Imbedded pre-tax yield of cash and invested assets	3.6%	3.5%
Imbedded after-tax yield of cash and invested assets	2.8%	2.8%

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%

	Three Months Ended
	March 31,
	2019	2018
Annualized pre-tax yield on average cash and invested assets	3.1%	3.2%
Annualized after-tax yield on average cash and invested assets	2.5%	2.6%

Net Realized Capital Gains (Losses).

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

	Three Months Ended March 31,									Three Months Ended March 31,
(Dollars in millions)	2018			2017			Variance			2019			2018			Variance
Gains (losses) from sales:
Fixed maturity securities, market value
Gains	$	6.9		$	8.0		$	(1.1	)	$	8.1		$	6.9		$	1.2
Losses		(0.8	)		(1.5	)		0.7			(4.7	)		(0.8	)		(3.9	)
Total		6.1			6.5			(0.4	)		3.4			6.1			(2.7	)

Equity securities, fair value
Gains											5.7			3.2			2.5
Losses											(0.6	)		(5.7	)		5.1
Total											5.1			(2.5	)		7.6

Other invested assets
Gains		3.2			8.0			(4.8	)		0.4			-			0.4
Losses		(5.7	)		(3.7	)		(2.0	)		-			-			-
Total		(2.5	)		4.3			(6.8	)		0.4			-			0.4

Total net realized gains (losses) from sales
Gains		10.1			16.0			(5.9	)		14.2			10.1			4.1
Losses		(6.5	)		(5.2	)		(1.3	)		(5.3	)		(6.5	)		1.2
Total		3.6			10.8			(7.2	)		8.9			3.6			5.3

Other than temporary impairments:		-			(1.1	)		1.1			(2.3	)		-			(2.3	)

Gains (losses) from fair value adjustments:
Equity securities, fair value		(27.0	)		37.4			(64.4	)		77.8			(27.0	)		104.8
Other invested assets, fair value		(36.8	)		70.7			(107.5	)		50.6			(36.8	)		87.4
Total		(63.8	)		108.1			(171.9	)		128.5			(63.8	)		192.2

Total net realized gains (losses)	$	(60.2	)	$	117.8		$	(178.0	)	$	135.1		$	(60.2	)	$	195.2

(Some amounts may not reconcile due to rounding.)

Net realized capital gains were $135.1 million and net realized capital losses were $60.2 million ~~and net realized capital gains were $117.8 million~~ for the three months ended March 31, 2019 and 2018, respectively ~~and 2017, respectively.~~. For the three months ended March 31, 2019, we recorded $128.5 million of gains from fair value re-measurements and $8.9 million of net gains from sales of investments, partially offset by $2.3 million of other-than-temporary impairments. For the three months ended 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~~$3.6 million of ~~gains from sales on our fixed maturity and equity securities. For the three months ended March 31, 2017, we recorded $108.1 million of~~ net ~~realized capital gains due to fair value re-measurements on equity securities and other invested assets and $10.8 million of net realized capital~~ gains from sales of ~~fixed maturity and equity securities, partially offset by $1.1 million of other-than-temporary impairments.~~investments. The fixed maturity and equity sales 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~~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~~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 March 31,												Three Months Ended March 31,
(Dollars in millions)	2018			2017			Variance			% Change			2019			2018			Variance			% Change
Gross written premiums	$	644.2		$	579.0		$	65.2			11.3	%	$	764.1		$	644.2		$	119.9			18.6	%
Net written premiums		423.8			219.1			204.8			93.5	%		618.1			423.8			194.3			45.8	%

Premiums earned	$	441.4		$	208.3		$	233.1			111.9	%	$	574.9		$	441.4		$	133.5			30.3	%
Incurred losses and LAE		301.2			120.4			180.8			150.1	%		316.6			301.2			15.4			5.1	%
Commission and brokerage		127.3			40.4			86.9			215.4	%		167.1			127.3			39.8			31.2	%
Other underwriting expenses		16.9			14.3			2.6			18.5	%		15.6			16.9			(1.3	)		-7.7	%
Underwriting gain (loss)	$	(4.0	)	$	33.3		$	(37.3	)		-112.1	%	$	75.6		$	(4.0	)	$	79.6		NM

										Point Chg												Point Chg
Loss ratio		68.2	%		57.8	%					10.4			55.1	%		68.2	%					(13.1	)
Commission and brokerage ratio		28.8	%		19.4	%					9.4			29.1	%		28.8	%					0.3
Other underwriting ratio		3.9	%		6.8	%					(2.9	)		2.7	%		3.9	%					(1.2	)
Combined ratio		100.9	%		84.0	%					16.9			86.9	%		100.9	%					(14.0	)

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

Premiums. Gross written premiums increased by ~~11.3%~~18.6% to ~~$644.2~~$764.1 million for the three months ended March 31, ~~2018~~ 2019 from ~~$579.0~~$644.2 million for the three months ended March 31, ~~2017~~ 2018, primarily due to an increase in treaty ~~property business, an increase in structured products as well as marine and aviation business.~~casualty writings. Net written premiums increased by ~~93.5%~~45.8% to ~~$423.8~~$618.1 million for the three months ended March 31, ~~2018~~ 2019 compared to ~~$219.1~~$423.8 million for the three months ended March 31, ~~2017.~~ 2018. The difference between the change in gross written premiums compared to the change in net written premiums is primarily due to the impact of changes in affiliated reinsurance ~~contracts, including the non-renewal of the quota share agreement with Bermuda Re as of December 31, 2017 and the implementation of an aggregate stop loss agreement with Bermuda Re for 2018.~~contracts. Premiums earned increased ~~111.9%~~30.3% to ~~$441.4~~$574.9 million ~~for the three~~

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

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

Three Months Ended March 31,
Current Ratio %/ Prior Ratio %/ Total Ratio %/
(Dollars in millions) Year Pt Change Years Pt Change Incurred Pt Change
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 $ 120.6 57.8 % $ (0.5 ) -0.2 % $ 120.1 57.6 %
Catastrophes 0.4 0.2 % (0.1 ) 0.0 % 0.3 0.2 %
Total segment $ 121.0 58.0 % $ (0.6 ) -0.2 % $ 120.4 57.8 %

Variance 2018/2017

Attritional $ 180.6 10.4 pts $ 0.5 0.2 pts $ 181.1 10.6 pts
Catastrophes (0.4 ) (0.2 ) pts 0.1 - pts (0.3 ) (0.2 ) pts
Total segment $ 180.2 10.2 pts $ 0.6 0.2 pts $ 180.8 10.4 pts

(Some amounts may not reconcile due to rounding.)

~~Incurred losses increased by 150.1% to $301.2 million for the three months ended March 31,~~ ~~2018~~ ~~compared to $120.4 million for the three months ended March 31,~~ ~~2017, primarily due to an increase of $180.6 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 and the implementation of an aggregate stop loss agreement with Bermuda Re as of January 1, 2018. ~~There were no current year catastrophe losses~~ for the three months ended March 31, ~~2018.~~2019 compared to $441.4 million ~~The current year catastrophe losses of $0.4 million~~ for the three months ended March 31, ~~2017 primarily related to Cyclone Debbie in Australia ($0.4 million).~~

~~Segment Expenses.~~ ~~Commission and brokerage increased by 215.4% to $127.3 million for the three months ended March 31,~~2018~~compared to $40.4 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.~~ ~~Segment other underwriting expenses increased to $16.9 million for the three months ended March 31,~~ ~~2018~~ ~~from $14.3 million for the three months ended March 31,~~ ~~2017 mainly due to the impact of changes in affiliated reinsurance contracts.~~

~~International.~~

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

Three Months Ended March 31,
(Dollars in millions) 2018 2017 Variance % Change
Gross written premiums $ 367.0 $ 278.6 $ 88.4 31.8 %
Net written premiums 334.9 103.2 231.6 224.3 %

Premiums earned $ 328.9 $ 118.2 $ 210.8 178.4 %
Incurred losses and LAE 176.4 68.4 108.0 157.8 %
Commission and brokerage 78.4 23.5 54.9 233.1 %
Other underwriting expenses 10.1 8.9 1.2 13.5 %
Underwriting gain (loss) $ 64.1 $ 17.3 $ 46.8 NM

Point Chg
Loss ratio 53.6 % 57.9 % (4.3 )
Commission and brokerage ratio 23.8 % 19.9 % 3.9
Other underwriting ratio 3.1 % 7.5 % (4.4 )
Combined ratio 80.5 % 85.3 % (4.8 )

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

~~Premiums.~~ ~~Gross written premiums increased by 31.8% to $367.0 million for the three months ended March 31,~~ ~~2018~~ ~~compared to $278.6 million for the three months ended March 31,~~ ~~2017, primarily due to increases in Latin American and Middle East/Africa business. Net written premiums increased by 224.3% to $334.9 million for the three months ended March 31,~~ ~~2018~~ ~~compared to $103.2 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 changes in affiliated reinsurance contracts including the non-renewal of the quota share agreement with Bermuda Re as of December 31, 2017. Premiums earned increased 178.4% to $328.9 million for the three months ended March 31, ~~2018~~ ~~compared to $118.2 million for the three months ended March 31,~~ ~~2017~~. The change in premiums earned relative to net written premiums is due to 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 March 31,
Current Ratio %/ Prior Ratio %/ Total Ratio %/
(Dollars in millions) 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 $ 61.1 51.7 % $ 0.8 0.7 % $ 61.9 52.4 %
Catastrophes 6.8 5.8 % (0.3 ) -0.3 % 6.5 5.5 %
Total segment $ 67.9 57.5 % $ 0.5 0.4 % $ 68.4 57.9 %

Variance 2018/2017

Attritional $ 115.3 1.9 pts $ (0.8 ) (0.7 ) pts $ 114.5 1.2 pts
Catastrophes (6.8 ) (5.8 ) pts 0.3 0.3 pts (6.5 ) (5.5 ) pts
Total segment $ 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 157.8% to $176.4 million for the three months ended March 31,~~ ~~2018~~ ~~compared to $68.4 million for the three months ended March 31,~~ ~~2017, primarily due to an increase of $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 $6.8 million ~~for the three months ended March 31,~~ ~~2017 primarily related to Cyclone Debbie in Australia ($6.8 million).~~

~~Segment Expenses.~~ ~~Commission and brokerage increased 233.1% to $78.4 million for the three months ended March 31,~~ ~~2018~~ ~~compared to $23.5 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 the changes in the mix of business. Segment other underwriting expenses increased slightly to $10.1 million for the three months ended March 31,~~ ~~2018~~ ~~compared to $8.9 million for the three months ended March 31,~~ ~~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.~~period.

4036

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

	Three Months Ended March 31,
	Current		Ratio %/				Prior			Ratio %/				Total			Ratio %/
(Dollars in millions)	Year		Pt Change				Years			Pt Change				Incurred			Pt Change
2019
Attritional	$	352.0		61.2	%		$	-			0.0	%		$	352.0			61.2	%
Catastrophes		-		0.0	%			(35.3	)		-6.1	%			(35.3	)		-6.1	%
Total segment	$	352.0		61.2	%		$	(35.3	)		-6.1	%		$	316.6			55.1	%

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	%

Variance 2019/2018
Attritional	$	50.8		(7.0	)	pts	$	-			-		pts	$	50.8			(7.0	)	pts
Catastrophes		-		-		pts		(35.3	)		(6.1	)	pts		(35.3	)		(6.1	)	pts
Total segment	$	50.8		(7.0	)	pts	$	(35.3	)		(6.1	)	pts	$	15.4			(13.1	)	pts

(Some amounts may not reconcile due to rounding.)

Incurred losses increased by 5.1% to $316.6 million for the three months ended March 31, 2019 compared to $301.2 million for the three months ended March 31, 2018. The increase was primarily due to a rise of $50.8 million in current year attritional losses mainly due to the impact of the increase in premiums earned and $35.3 million of favorable development on prior years catastrophe losses in 2019 primarily related to Hurricane Michael and the Woolsey wildfire. There were no current year catastrophe losses for the three months ended March 31, 2019 and 2018.

Segment Expenses. Commission and brokerage increased to $167.1 million for the three months ended March 31, 2019 compared to $127.3 million for the three months ended March 31, 2018. The increase was mainly due to changes in affiliated reinsurance agreements and the impact of the increases in premiums earned. Segment other underwriting expenses decreased slightly to $15.6 million for the three months ended March 31, 2019 from $16.9 million for the three months ended March 31, 2018.

International.

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

	Three Months Ended March 31,
(Dollars in millions)	2019			2018			Variance			% Change
Gross written premiums	$	389.0		$	367.0		$	21.9			6.0	%
Net written premiums		357.9			334.9			23.0			6.9	%

Premiums earned	$	322.4		$	328.9		$	(6.6	)		-2.0	%
Incurred losses and LAE		237.1			176.4			60.7			34.4	%
Commission and brokerage		69.9			78.4			(8.5	)		-10.9	%
Other underwriting expenses		8.5			10.1			(1.6	)		-16.1	%
Underwriting gain (loss)	$	7.0		$	64.1		$	(57.1	)		-89.1	%

										Point Chg
Loss ratio		73.5	%		53.6	%					19.9
Commission and brokerage ratio		21.7	%		23.8	%					(2.1	)
Other underwriting ratio		2.6	%		3.1	%					(0.5	)
Combined ratio		97.8	%		80.5	%					17.3

(Some amounts may not reconcile due to rounding.)

Premiums. Gross written premiums increased by 6.0% to $389.0 million for the three months ended March 31, 2019 compared to $367.0 million for the three months ended March 31, 2018, primarily due to increases in Middle East and Africa business and business written through our Canada and Singapore branches, partially offset by a decline in Latin American business and the negative impact of $14.2 million from the movement of foreign exchange rates. Net written premiums increased by 6.9% to $357.9 million for the three months ended March 31, 2019 compared to $334.9 million for the three months ended March 31, 2018, which is consistent with the change in gross written premiums. Premiums earned decreased 2.0% to $322.4 million for the three months ended March 31, 2019 compared to $328.9 million for the three months ended March 31, 2018. The change in premiums earned relative to net written premiums is due to changes in affiliated reinsurance agreements and is also the result of timing; premiums are earned ratably over the coverage period whereas written premiums are recorded at the initiation of the coverage period.

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

	Three Months Ended March 31,
	Current			Ratio %/				Prior		Ratio %/				Total			Ratio %/
(Dollars in millions)	Year			Pt Change				Years		Pt Change				Incurred			Pt Change
2019
Attritional	$	170.1			52.8	%		$	-		0.0	%		$	170.1			52.8	%
Catastrophes		25.0			7.8	%			42.0		12.9	%			67.0			20.7	%
Total segment	$	195.1			60.5	%		$	42.0		12.9	%		$	237.1			73.5	%

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	%

Variance 2019/2018
Attritional	$	(6.3	)		(0.8	)	pts	$	-		-		pts	$	(6.3	)		(0.8	)	pts
Catastrophes		25.0			7.8		pts		42.0		12.9		pts		67.0			20.7		pts
Total segment	$	18.7			6.9		pts	$	42.0		12.9		pts	$	60.7			19.9		pts

(Some amounts may not reconcile due to rounding.)

Incurred losses and LAE increased by 34.4% to $237.1 million for the three months ended March 31, 2019 compared to $176.4 million for the three months ended March 31, 2018, primarily due to an increase of $25.0 million in current year catastrophe losses and $42.0 million of unfavorable development on prior years catastrophe losses in 2019 primarily related to the Japan loss events from the third quarter of 2018. The current year catastrophe losses of $25.0 million for the three months ended March 31, 2019 related to the Townsville monsoon in Australia ($25.0 million). There were no current year catastrophe losses for the three months ended March 31, 2018.

Segment Expenses. Commission and brokerage decreased to $69.9 million for the three months ended March 31, 2019 compared to $78.4 million for the three months ended March 31, 2018. The decrease was mainly due to the impact of changes in affiliated reinsurance agreements and changes in the mix of business. Segment other underwriting expenses decreased to $8.5 million for the three months ended March 31, 2019 from $10.1 million for the three months ended March 31, 2018.

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)	2019			2018			Variance		% Change
Gross written premiums	$	531.8		$	455.0		$	76.8		16.9	%
Net written premiums		416.2			348.3			67.9		19.5	%

Premiums earned	$	373.2		$	345.7		$	27.5		8.0	%
Incurred losses and LAE		242.4			235.7			6.7		2.8	%
Commission and brokerage		51.3			50.7			0.5		1.0	%
Other underwriting expenses		54.3			50.4			3.9		7.8	%
Underwriting gain (loss)	$	25.2		$	8.9		$	16.3		184.2	%

									Point Chg
Loss ratio		65.0	%		68.2	%				(3.2	)
Commission and brokerage ratio		13.7	%		14.7	%				(1.0	)
Other underwriting ratio		14.5	%		14.5	%				-
Combined ratio		93.2	%		97.4	%				(4.2	)

(Some amounts may not reconcile due to rounding.)

Premiums. Gross written premiums increased by 16.9% to $531.8 million for the three months ended March 31, 2019 compared to $455.0 million for the three months ended March 31, 2018. This increase was related to most lines of business including property, casualty, energy and accident and health. Net written premiums increased by 19.5% to $416.2 million for the three months ended March 31, 2019 compared to $348.3 million for the three months ended March 31, 2018, which is consistent with the change in written premiums. Premiums earned increased 8.0% to $373.2 million for the three months ended March 31, 2019 compared to $345.7 million for the three months ended March 31, 2018. The change in premiums earned relative to net written premiums is the result of timing; premiums are earned ratably over the coverage period whereas written premiums are recorded at the initiation of the coverage period.

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

	Three Months Ended March 31,																				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
2019
Attritional																					$	241.8		64.8	%		$	-			0.0	%		$	241.8		64.8	%
Catastrophes																						-		0.0	%			0.6			0.2	%			0.6		0.2	%
Total segment																					$	241.8		64.8	%		$	0.6			0.2	%		$	242.4		65.0	%

2018
Attritional	$	235.3		68.1	%		$	0.4			0.1	%		$	235.7			68.2	%		$	235.3		68.1	%		$	0.4			0.1	%		$	235.7		68.2	%
Catastrophes		-		0.0	%			-			0.0	%			-			0.0	%			-		0.0	%			-			0.0	%			-		0.0	%
Total segment	$	235.3		68.1	%		$	0.4			0.1	%		$	235.7			68.2	%		$	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
Variance 2019/2018
Attritional	$	138.0		0.8		pts	$	(3.3	)		(2.5	)	pts	$	134.7			(1.7	)	pts	$	6.5		(3.3	)	pts	$	(0.4	)		(0.1	)	pts	$	6.1		(3.4	)	pts
Catastrophes		-		-		pts		0.1			0.1		pts		0.1			0.1		pts		-		-		pts		0.6			0.2		pts		0.6		0.2		pts
Total segment	$	138.0		0.8		pts	$	(3.2	)		(2.4	)	pts	$	134.8			(1.6	)	pts	$	6.5		(3.3	)	pts	$	0.2			0.1		pts	$	6.7		(3.2	)	pts

(Some amounts may not reconcile due to rounding.)

Incurred losses and LAE increased by ~~133.7%~~2.8% to ~~$235.7~~$242.4 million for the three months ended March 31, ~~2018~~ 2019compared to ~~$100.9~~$235.7 million for the three months ended March 31, ~~2017~~ 2018, , mainly due to an increase of ~~$138.0~~$6.5 million in current year attritional ~~losses.~~ ~~The increase was mainly due~~losses, related to ~~changes in affiliated reinsurance agreements, including~~ the ~~non-renewal~~impact of the ~~quota share agreement with Bermuda Re as of December 31, 2017.~~increase in premiums earned. There were no current year catastrophe losses for the three months ended March 31, 2019 and 2018.

~~2018 and~~39 ~~2017.~~

Segment Expenses. Commission and brokerage increased slightly to ~~$50.7~~$51.3 million for the three months ended March 31, ~~2018~~ 2019 compared to ~~($11.4)~~$50.7 million for the three months ended March 31, ~~2017~~ 2018. The increase was mainly due to the impact of the increase in premiums earned and 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 increased to ~~$50.4~~$54.3 million for the three months ended March 31, ~~2018~~ 2019 compared to ~~$36.8~~$50.4 million for the three months ended March 31, ~~2017.~~ 2018. The increase was mainly due to the impact of the increase in premiums earned and ~~increased~~ expenses related to the continued build out of the insurance ~~business and the non-renewal of the quota share agreement.~~business.

Market Sensitive Instruments.

The ~~SEC's~~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~~“market sensitive ~~instruments"~~instruments”). We do not generally enter into market sensitive instruments for trading purposes.

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

The overall investment strategy considers the scope of present and anticipated Company operations. In particular, estimates of the financial impact resulting from non-investment asset and liability transactions, together with our capital structure and other factors, are used to develop a net liability analysis. This analysis includes estimated payout characteristics for which our investments provide liquidity. This analysis is considered in the development of specific investment strategies for asset allocation, duration and credit quality. The change in overall market sensitive risk exposure principally reflects the asset changes that took place during the period.

Interest Rate Risk. Our ~~$9.0~~$11.0 billion investment portfolio, at March 31, ~~2018~~2019, 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 ~~$187.8~~$833.4 million of mortgage-backed securities in the ~~$4,909.6~~$6,826.9 million fixed maturity portfolio. Prepayment risk results from potential accelerated principal payments that shorten the average life and thus the expected yield of the security.

The table below displays the potential impact of market value fluctuations and after-tax unrealized appreciation on our fixed maturity portfolio (including ~~$186.6~~$458.2 million of short-term investments) for the period indicated based on upward and downward parallel and immediate 100 and 200 basis point shifts in interest rates. For legal entities with a U.S. dollar functional currency, this modeling was performed on each security individually. To generate appropriate price 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 March 31, 2018															At March 31, 2019
(Dollars in millions)		-200			-100			0			100			200			-200			-100			0			100			200
Total Market/Fair Value	$	5,405.7		$	5,250.1		$	5,096.2		$	4,943.4		$	4,791.4		$	7,709.8		$	7,498.4		$	7,285.0		$	7,066.5		$	6,848.9
Market/Fair Value Change from Base (%)		6.1	%		3.0	%		0.0	%		-3.0	%		-6.0	%		5.8	%		2.9	%		0.0	%		-3.0	%		-6.0	%
Change in Unrealized Appreciation
After-tax from Base ($)	$	244.5		$	121.6		$	-		$	(120.7	)	$	(240.8	)	$	335.6		$	168.6		$	-		$	(172.6	)	$	(344.5	)

We had ~~$9,145.8~~$10,173.5 million and ~~$9,343.0~~$10,167.0 million of gross reserves for losses and LAE as of March 31, ~~2018~~2019 and December 31, ~~2017,~~2018, 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 March 31, 2018												At March 31, 2019
(Dollars in millions)		-20%			-10%			0%		10%		20%		-20%			-10%			0%		10%		20%
Fair/Market Value of the Equity Portfolio	$	709.9		$	798.7		$	887.4	$	976.2	$	1,064.9	$	579.5		$	651.9		$	724.3	$	796.8	$	869.2
After-tax Change in Fair/Market Value		(140.2	)		(70.1	)		-		70.1		140.2		(114.4	)		(57.2	)		-		57.2		114.4

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"~~(“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"~~“may”, ~~"will"~~“will”, ~~"should"~~“should”, ~~"could"~~“could”, ~~"anticipate"~~“anticipate”, ~~"estimate"~~“estimate”, ~~"expect"~~“expect”, ~~"plan"~~“plan”, ~~"believe"~~“believe”, ~~"predict"~~“predict”, ~~"potential"~~“potential” and ~~"intend"~~“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"~~“Risk Factors” in the ~~Company's~~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~~“Market Sensitive ~~Instruments"~~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"~~“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~~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

4443

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)
			~~(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: May 15, 2019

	March 31,			December 31,
(Dollars in thousands, except par value per share)	2018			2017
	(unaudited)
ASSETS:
Fixed maturities - available for sale, at market value	$	4,907,818		$	4,971,921
(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		887,435			822,375
Short-term investments		186,605			241,506
Other invested assets (cost: 2018, $865,412; 2017, $835,597)		865,412			838,694
Other invested assets, at fair value		1,770,684			1,807,473
Cash		384,410			229,552
Total investments and cash		9,004,185			8,911,521
Note receivable - affiliated		250,000			250,000
Accrued investment income		38,458			35,376
Premiums receivable		1,283,896			1,301,827
Reinsurance receivables - unaffiliated		1,141,448			1,180,648
Reinsurance receivables - affiliated		4,796,997			4,940,039
Income taxes		48,917			87,110
Funds held by reinsureds		76,255			210,939
Deferred acquisition costs		307,161			307,741
Prepaid reinsurance premiums		312,780			346,708
Other assets		293,533			316,603
TOTAL ASSETS	$	17,553,630		$	17,888,512

LIABILITIES:
Reserve for losses and loss adjustment expenses	$	9,145,821		$	9,343,028
Unearned premium reserve		1,611,403			1,607,622
Funds held under reinsurance treaties		42,105			40,536
Commission reserves		13,757			21,464
Other net payable to reinsurers		352,198			491,299
4.868% Senior notes due 6/1/2044		396,864			396,834
6.6% Long term notes due 5/1/2067		236,585			236,561
Accrued interest on debt and borrowings		7,668			2,727
Unsettled securities payable		32,263			25,338
Other liabilities		365,551			310,380
Total liabilities		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 (2018 and 2017)		-			-
Additional paid-in capital		387,889			387,841
Accumulated other comprehensive income (loss), net of deferred income tax expense
(benefit) of ($14,553) at 2018 and ($299) at 2017		(54,573	)		(942	)
Retained earnings		5,016,099			5,025,824
Total stockholder's equity		5,349,415			5,412,723
TOTAL LIABILITIES AND STOCKHOLDER'S EQUITY	$	17,553,630		$	17,888,512

The accompanying notes are an integral part of the consolidated 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 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