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 June 30, 2019

~~FOR THE QUARTERLY PERIOD ENDED:~~

~~September 30, 2018~~

~~Commission file number:~~

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

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 ~~November~~August 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 ~~September~~June 30, ~~2018~~2019 (unaudited) and
		December 31, ~~2017~~2018	1

	Consolidated Statements of Operations and Comprehensive Income (Loss) for the
		three and ~~nine~~six months ended ~~September~~June 30, ~~2018~~2019 and ~~2017~~2018 (unaudited)	2

	Consolidated Statements of Changes in ~~Stockholder's~~Stockholder’s Equity for the three and six
		~~nine~~ months ended ~~September~~June 30, ~~2018~~2019 and ~~2017~~2018 (unaudited)	3

	Consolidated Statements of Cash Flows for the ~~nine~~six months ended
		~~September~~June 30, ~~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	32

Item 3.	Quantitative and Qualitative Disclosures About Market Risk		4948

Item 4.	Controls and Procedures		4948

PART II

OTHER INFORMATION


Item 1.	Legal Proceedings	5048

Item 1A.	Risk Factors	5049

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	5049

Item 3.	Defaults Upon Senior Securities	5049

Item 4.	Mine Safety Disclosures	5049

Item 5.	Other Information	5049

Item 6.	Exhibits	5149

EVEREST REINSURANCE HOLDINGS, INC.

CONSOLIDATED BALANCE SHEETS

	September 30,			December 31,			June 30,		December 31,
(Dollars in thousands, except par value per share)	2018			2017
(Dollars in thousands, except share amounts and par value per share)							2019		2018
	(unaudited)						(unaudited)
ASSETS:
Fixed maturities - available for sale, at market value	$	5,233,454		$	4,971,921		$	6,971,971	$	6,962,075
(amortized cost: 2018, $5,282,911; 2017, $4,927,622)
(amortized cost: 2019, $6,838,605; 2018, $7,032,749)
Fixed maturities - available for sale, at fair value		2,373			-			-		2,337
Equity securities, at fair value		850,539			822,375			751,642		564,338
Short-term investments (cost: 2018, $607,238; 2017, $241,506)		607,233			241,506
Other invested assets (cost: 2018, $817,833; 2017, $835,597)		817,833			838,694
Short-term investments (cost: 2019, $368,833; 2018, $174,155)								368,898		174,131
Other invested assets (cost: 2019, $943,022; 2018, $882,647)								943,022		882,647
Other invested assets, at fair value		1,692,221			1,807,473			1,892,988		1,717,336
Cash		375,758			229,552			377,189		404,522
Total investments and cash		9,579,411			8,911,521			11,305,710		10,707,386
Note receivable - affiliated		250,000			250,000
Accrued investment income		42,248			35,376			50,276		47,232
Premiums receivable		1,442,660			1,301,827			1,564,911		1,471,805
Reinsurance receivables - unaffiliated		1,245,783			1,180,648			1,293,452		1,295,961
Reinsurance receivables - affiliated		3,975,756			4,940,039			3,467,105		3,544,975
Income taxes		101,468			87,110			151,109		409,892
Funds held by reinsureds		237,571			210,939			250,903		238,566
Deferred acquisition costs		344,434			307,741			361,621		353,630
Prepaid reinsurance premiums		353,410			346,708			439,433		328,796
Other assets		264,313			316,603			351,312		289,962
TOTAL ASSETS	$	17,837,054		$	17,888,512		$	19,235,832	$	18,688,205

LIABILITIES:
Reserve for losses and loss adjustment expenses	$	9,519,478		$	9,343,028		$	10,148,412	$	10,167,018
Unearned premium reserve		1,808,870			1,607,622			2,003,530		1,826,868
Funds held under reinsurance treaties		44,790			40,536			39,275		41,600
Other net payable to reinsurers		384,630			491,299			320,100		316,826
4.868% Senior notes due 6/1/2044		396,924			396,834
6.6% Long term notes due 5/1/2067		236,634			236,561
Senior notes due 6/1/2044								397,014		396,954
Long term notes due 5/1/2067								236,709		236,659
Note payable - affiliated								-		300,000
Accrued interest on debt and borrowings		7,869			2,727			3,063		3,093
Unsettled securities payable		99,045			25,338			63,050		50,912
Other liabilities		272,571			331,844			280,933		303,610
Total liabilities		12,770,811			12,475,789			13,492,086		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 (2018 and 2017)		-			-
1,000 shares issued and outstanding (2019 and 2018)								-		-
Additional paid-in capital		387,980			387,841			1,100,489		1,100,315
Accumulated other comprehensive income (loss), net of deferred income tax expense
(benefit) of ($25,892) at 2018 and ($299) at 2017		(97,093	)		(942	)
(benefit) of $10,403 at 2019 and ($33,506) at 2018								39,523		(126,254	)
Retained earnings		4,775,356			5,025,824			4,603,734		4,070,604
Total stockholder's equity		5,066,243			5,412,723			5,743,746		5,044,665
TOTAL LIABILITIES AND STOCKHOLDER'S EQUITY	$	17,837,054		$	17,888,512		$	19,235,832	$	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						Nine Months Ended						Three Months Ended						Six Months Ended
		September 30,						September 30,						June 30,						June 30,
(Dollars in thousands)		2018			2017			2018			2017			2019			2018			2019			2018
		(unaudited)						(unaudited)						(unaudited)						(unaudited)
REVENUES:
Premiums earned		$	1,230,771		$	518,507		$	3,526,617		$	1,457,759		$	1,375,623		$	1,179,836		$	2,646,077		$	2,295,846
Net investment income			90,298			73,417			232,277			206,166			90,709			72,070			175,243			141,979
Net realized capital gains (losses):
Other-than-temporary impairments on fixed maturity securities			(2,834	)		(1,473	)		(3,741	)		(4,179	)		(4,929	)		(872	)		(7,219	)		(907	)
Other-than-temporary impairments on fixed maturity securities
transferred to other comprehensive income (loss)			-			-			-			-			-			-			-			-
Other net realized capital gains (losses)			32,852			229,962			(68,713	)		258,145			147,492			(41,399	)		284,838			(101,565	)
Total net realized capital gains (losses)			30,018			228,489			(72,454	)		253,966			142,563			(42,271	)		277,619			(102,472	)
Other income (expense)			(1,385	)		1,486			1,420			21,996			(3,812	)		77,682			(5,026	)		2,805
Total revenues			1,349,702			821,899			3,687,860			1,939,887			1,605,083			1,287,317			3,093,913			2,338,158

CLAIMS AND EXPENSES:
Incurred losses and loss adjustment expenses			970,297			1,331,558			2,912,312			1,918,508			843,222			1,228,760			1,639,318			1,942,015
Commission, brokerage, taxes and fees			288,212			34,545			832,671			147,565			316,775			288,002			604,993			544,459
Other underwriting expenses			78,800			57,713			230,377			181,805			83,351			74,226			161,733			151,577
Corporate expenses			2,488			1,132			7,597			6,241			2,519			1,513			4,170			5,109
Interest, fee and bond issue cost amortization expense			7,796			7,161			22,732			23,974			9,684			7,623			19,512			14,936
Total claims and expenses			1,347,593			1,432,109			4,005,689			2,278,093			1,255,551			1,600,124			2,429,726			2,658,096

INCOME (LOSS) BEFORE TAXES			2,109			(610,210	)		(317,829	)		(338,206	)		349,532			(312,807	)		664,187			(319,938	)
Income tax expense (benefit)			(22,556	)		(220,486	)		(64,914	)		(153,318	)		67,628			(47,399	)		131,057			(42,358	)

NET INCOME (LOSS)		$	24,665		$	(389,724	)	$	(252,915	)	$	(184,888	)	$	281,904		$	(265,408	)	$	533,130		$	(277,580	)

Other comprehensive income (loss), net of tax:
Unrealized appreciation (depreciation) ("URA(D)") on securities arising during the period			(6,932	)		530			(71,919	)		13,794			68,095			(18,165	)		156,544			(64,987	)
Less: reclassification adjustment for realized losses (gains) included in net income (loss)			2,534			(1,674	)		(2,147	)		(8,618	)		5,858			154			4,842			(4,681	)
Total URA(D) on securities arising during the period			(4,398	)		(1,144	)		(74,066	)		5,176			73,953			(18,011	)		161,386			(69,668	)

Foreign currency translation adjustments			(2,930	)		34,281			(25,084	)		43,220			(7,475	)		(20,812	)		2,089			(22,154	)

Reclassification adjustment for amortization of net (gain) loss included in net income (loss)			1,816			1,369			5,446			5,377			1,151			1,815			2,302			3,630
Total benefit plan net gain (loss) for the period			1,816			1,369			5,446			5,377			1,151			1,815			2,302			3,630
Total other comprehensive income (loss), net of tax			(5,512	)		34,507			(93,704	)		53,774			67,629			(37,008	)		165,777			(88,192	)

COMPREHENSIVE INCOME (LOSS)		$	19,153		$	(355,217	)	$	(346,619	)	$	(131,114	)	$	349,533		$	(302,416	)	$	698,907		$	(365,772	)

The accompanying notes are an integral part of the consolidated financial statements.	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 Nine Months Ended
September 30, September 30,
(Dollars in thousands, except share amounts) 2018 2017 2018 2017
(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 $ 387,936 $ 387,705 $ 387,841 $ 387,567
Share-based compensation plans 44 67 139 205
Balance, end of period 387,980 387,772 387,980 387,772

ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS),
NET OF DEFERRED INCOME TAXES:
Balance, beginning of period (91,581 ) (17,048 ) (942 ) (36,315 )
Change to beginning balance due to adoption of Accounting Standards Update 2016-01 - - (2,447 ) -
Net increase (decrease) during the period (5,512 ) 34,507 (93,704 ) 53,774
Balance, end of period (97,093 ) 17,459 (97,093 ) 17,459

RETAINED EARNINGS:
Balance, beginning of period 4,750,691 5,152,137 5,025,824 4,947,301
Change to beginning balance due to adoption of Accounting Standards Update 2016-01 - - 2,447 -
Net income (loss) 24,665 (389,724 ) (252,915 ) (184,888 )
Balance, end of period 4,775,356 4,762,413 4,775,356 4,762,413

TOTAL STOCKHOLDER'S EQUITY, END OF PERIOD $ 5,066,243 $ 5,167,644 $ 5,066,243 $ 5,167,644

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

(Dollars in thousands, except share amounts)	2019			2018
	(unaudited)
COMMON STOCK (shares outstanding):
Balance, January 1		1,000			1,000
Balance, March 31		1,000			1,000
Balance, June 30		1,000			1,000

ADDITIONAL PAID-IN CAPITAL:
Balance, January 1	$	1,100,315		$	387,841
Share-based compensation plans		87			48
Balance, March 31		1,100,402			387,889
Share-based compensation plans		87			47
Balance, June 30		1,100,489			387,936

ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS),
NET OF DEFERRED INCOME TAXES:
Balance, January 1		(126,254	)		(942	)
Change to beginning balance due to adoption of ASU 2016-01		-			(2,447	)
Net increase (decrease) during the period		98,148			(51,184	)
Balance, March 31		(28,106	)		(54,573	)
Net increase (decrease) during the period		67,629			(37,008	)
Balance, June 30		39,523			(91,581	)

RETAINED EARNINGS:
Balance, January 1		4,070,604			5,025,824
Change to beginning balance due to adoption of ASU 2016-01		-			2,447
Net income (loss)		251,226			(12,172	)
Balance, March 31		4,321,830			5,016,099
Net income (loss)		281,904			(265,408	)
Balance, June 30		4,603,734			4,750,691

TOTAL STOCKHOLDER'S EQUITY, June 30	$	5,743,746		$	5,047,046

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

EVEREST REINSURANCE HOLDINGS, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

	Nine Months Ended						Six Months Ended
	September 30,						June 30,
(Dollars in thousands)	2018			2017			2019			2018
	(unaudited)						(unaudited)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss)	$	(252,915	)	$	(184,888	)	$	533,130		$	(277,580	)
Adjustments to reconcile net income to net cash provided by operating activities:
Decrease (increase) in premiums receivable		(142,519	)		(432,477	)		(93,371	)		(31,486	)
Decrease (increase) in funds held by reinsureds, net		(22,523	)		415			(14,688	)		(13,233	)
Decrease (increase) in reinsurance receivables		888,922			(649,539	)		82,701			627,965
Decrease (increase) in income taxes		11,069			(206,857	)		214,830			4,652
Decrease (increase) in prepaid reinsurance premiums		(7,165	)		(330,345	)		(110,643	)		(6,626	)
Increase (decrease) in reserve for losses and loss adjustment expenses		199,220			1,579,394			(21,387	)		(34,332	)
Increase (decrease) in unearned premiums		202,760			310,237			176,412			54,516
Increase (decrease) in other net payable to reinsurers		(106,203	)		336,582			3,307			(76,825	)
Increase (decrease) in losses in course of payment		36,979			110,669			(22,634	)		78,740
Change in equity adjustments in limited partnerships		(58,996	)		(20,415	)		(23,662	)		(29,160	)
Distribution of limited partnership income		48,773			23,174			24,969			28,278
Change in other assets and liabilities, net		(98,702	)		(88,580	)		(65,421	)		14,713
Non-cash compensation expense		8,779			7,675			13,913			5,903
Amortization of bond premium (accrual of bond discount)		4,842			13,675			826			3,478
Net realized capital (gains) losses		72,454			(253,966	)		(277,619	)		102,472
Net cash provided by (used in) operating activities		784,775			214,754			420,663			451,475

CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from fixed maturities matured/called - available for sale, at market value		556,195			771,950			437,371			416,065
Proceeds from fixed maturities sold - available for sale, at market value		552,982			1,063,126			2,004,602			368,858
Proceeds from fixed maturities sold - available for sale, at fair value		1,751			-			2,706			1,065
Proceeds from equity securities sold - at fair value		616,330			302,407			148,973			429,927
Distributions from other invested assets		1,010,121			1,459,677			76,149			941,415
Cost of fixed maturities acquired - available for sale, at market value		(1,515,045	)		(1,809,485	)		(2,251,818	)		(971,395	)
Cost of fixed maturities acquired - available for sale, at fair value		(4,381	)		-			-			(4,381	)
Cost of equity securities acquired - at fair value		(603,856	)		(326,444	)		(228,872	)		(555,998	)
Cost of other invested assets acquired		(1,059,712	)		(1,584,617	)		(138,096	)		(964,209	)
Net change in short-term investments		(280,114	)		79,509			(192,889	)		47,613
Net change in unsettled securities transactions		110,139			(189,980	)		13,100			(16,558	)
Net cash provided by (used in) investing activities		(615,590	)		(233,857	)		(128,774	)		(307,598	)

CASH FLOWS FROM FINANCING ACTIVITIES:
Tax benefit from share-based compensation, net of expense		(6,193	)		(7,471	)		(13,739	)		(3,362	)
Cost of repayment of note payable-affiliated								(300,000	)		-
Net cash provided by (used in) financing activities		(6,193	)		(7,471	)		(313,739	)		(3,362	)

EFFECT OF EXCHANGE RATE CHANGES ON CASH		(16,786	)		31,111			(5,483	)		(5,217	)

Net increase (decrease) in cash		146,206			4,537			(27,333	)		135,298
Cash, beginning of period		229,552			297,794			404,522			229,552
Cash, end of period	$	375,758		$	302,331		$	377,189		$	364,850

SUPPLEMENTAL CASH FLOW INFORMATION:
Income taxes paid (recovered)	$	(75,361	)	$	53,273		$	(87,045	)	$	(46,386	)
Interest paid		17,426			19,783			19,433			14,544

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

NOTES TO CONSOLIDATED INTERIM FINANCIAL STATEMENTS (UNAUDITED)

For the Three and ~~Nine~~Six Months Ended ~~September~~June 30, ~~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 and ~~nine~~six months ended ~~September~~June 30, ~~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 and ~~nine~~six months ended ~~September~~June 30, ~~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 August 2018, the Securities and Exchange Commission ("SEC") issued Final Rule Release #33-10532 ("the Rule") which addresses the simplification of the SEC's disclosure requirements for quarterly and annual financial reports. The main change addressed by the Rule that is applicable to the Company is a 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. This portion of the Rule will be effective for first quarter 2019 reporting and will be adopted by the Company at that time.

Accounting for Cloud Computing Arrangement. In August 2018, The Financial Accounting Standards Board ~~("FASB"~~(“FASB”) issued ~~ASU~~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 resulted in a reclass of $325 thousand between AOCI and retained 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. 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 September 30, 2018											At June 30, 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	$	784,825	$	1,029	$	(19,369	)	$	766,485	$	-	$	892,226	$	11,066	$	(2,043	)	$	901,249	$	-
Obligations of U.S. states and political subdivisions		506,023		11,063		(3,060	)		514,026		471		501,019		27,035		(348	)		527,706		-
Corporate securities		2,247,866		16,038		(38,042	)		2,225,862		407		2,518,720		59,026		(23,056	)		2,554,690		135
Asset-backed securities		150,814		61		(1,320	)		149,555		-		516,941		1,201		(935	)		517,207		-
Mortgage-backed securities
Commercial		49,344		-		(933	)		48,411		-		271,298		15,385		(72	)		286,611		-
Agency residential		94,813		324		(2,941	)		92,196		-		602,695		14,283		(387	)		616,591		-
Non-agency residential		2,119		8		-			2,127		-		2,701		3		-			2,704		-
Foreign government securities		519,222		13,036		(13,165	)		519,093		-		520,922		21,323		(6,517	)		535,728		-
Foreign corporate securities		927,885		13,917		(26,103	)		915,699		319		1,012,083		32,315		(14,913	)		1,029,485		316
Total fixed maturity securities	$	5,282,911	$	55,476	$	(104,933	)	$	5,233,454	$	1,197	$	6,838,605	$	181,637	$	(48,271	)	$	6,971,971	$	451

	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 September 30, 2018				At December 31, 2017				At June 30, 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	$	464,584	$	462,929	$	319,858	$	320,746	$	637,109	$	631,917	$	511,193	$	507,572
Due after one year through five years		2,750,584		2,704,551		2,601,898		2,595,237		2,922,404		2,955,499		4,271,245		4,230,451
Due after five years through ten years		1,172,127		1,170,791		1,051,431		1,069,617		1,294,439		1,348,170		1,177,752		1,163,831
Due after ten years		598,526		602,894		649,625		683,200		591,018		613,272		561,566		550,474
Asset-backed securities		150,814		149,555		138,203		138,024		516,941		517,207		223,192		221,255
Mortgage-backed securities
Commercial		49,344		48,411		52,121		51,751		271,298		286,611		135,380		136,604
Agency residential		94,813		92,196		114,435		113,288		602,695		616,591		149,306		148,774
Non-agency residential		2,119		2,127		51		58		2,701		2,704		3,115		3,114
Total fixed maturity securities	$	5,282,911	$	5,233,454	$	4,927,622	$	4,971,921	$	6,838,605	$	6,971,971	$	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						Nine Months Ended						Three Months Ended						Six Months Ended
	September 30,						September 30,						June 30,						June 30,
(Dollars in thousands)	2018			2017			2018			2017			2019			2018			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	$	(5,899	)	$	(3,197	)	$	(94,451	)	$	9,077		$	93,919		$	(23,064	)	$	204,828		$	(88,552	)
Fixed maturity securities, other-than-temporary impairment		326			(158	)		691			(3,974	)		(368	)		266			(700	)		365
Other invested assets		-			1,595			-			2,860
Change in unrealized appreciation (depreciation), pre-tax		(5,573	)		(1,760	)		(93,760	)		7,963			93,551			(22,798	)		204,128			(88,187	)
Deferred tax benefit (expense)		1,243			561			19,839			(4,178	)		(19,675	)		4,843			(42,889	)		18,596
Deferred tax benefit (expense), other-than-temporary impairment		(68	)		55			(145	)		1,391			77			(56	)		147			(77	)
Change in unrealized appreciation (depreciation),
net of deferred taxes, included in stockholder's equity	$	(4,398	)	$	(1,144	)	$	(74,066	)	$	5,176		$	73,953		$	(18,011	)	$	161,386		$	(69,668	)

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 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 September 30, 2018 By Security Type															Duration of Unrealized Loss at June 30, 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	$	496,059	$	(10,363	)	$	232,583	$	(9,006	)	$	728,642	$	(19,369	)	$	37,960	$	(12	)	$	304,142	$	(2,031	)	$	342,102	$	(2,043	)
Obligations of U.S. states and political subdivisions		105,936		(1,377	)		36,436		(1,683	)		142,372		(3,060	)		1,991		(48	)		9,840		(300	)		11,831		(348	)
Corporate securities		989,478		(23,269	)		265,588		(14,773	)		1,255,066		(38,042	)		191,106		(8,266	)		307,906		(14,790	)		499,012		(23,056	)
Asset-backed securities		91,624		(1,165	)		12,889		(155	)		104,513		(1,320	)		295,890		(833	)		52,686		(102	)		348,576		(935	)
Mortgage-backed securities
Commercial		22,409		(396	)		26,002		(537	)		48,411		(933	)		1,578		(2	)		17,342		(70	)		18,920		(72	)
Agency residential		48,576		(1,119	)		36,445		(1,822	)		85,021		(2,941	)		13,049		(32	)		38,667		(355	)		51,716		(387	)
Non-agency residential		698		-			-		-			698		-			1,435		-			-		-			1,435		-
Foreign government securities		230,922		(3,184	)		153,714		(9,981	)		384,636		(13,165	)		16,603		(124	)		138,472		(6,393	)		155,075		(6,517	)
Foreign corporate securities		351,496		(10,103	)		240,213		(16,000	)		591,709		(26,103	)		27,650		(350	)		225,895		(14,563	)		253,545		(14,913	)
Total fixed maturity securities	$	2,337,198	$	(50,976	)	$	1,003,870	$	(53,957	)	$	3,341,068	$	(104,933	)	$	587,262	$	(9,667	)	$	1,094,950	$	(38,604	)	$	1,682,212	$	(48,271	)

	Duration of Unrealized Loss at September 30, 2018 By Maturity															Duration of Unrealized Loss at June 30, 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	$	232,647	$	(1,363	)	$	51,818	$	(5,280	)	$	284,465	$	(6,643	)	$	37,823	$	(624	)	$	188,033	$	(9,133	)	$	225,856	$	(9,757	)
Due in one year through five years		1,305,379		(26,391	)		692,804		(33,773	)		1,998,183		(60,164	)		115,774		(960	)		593,416		(15,494	)		709,190		(16,454	)
Due in five years through ten years		414,043		(11,906	)		147,476		(10,707	)		561,519		(22,613	)		101,238		(6,438	)		95,780		(3,859	)		197,018		(10,297	)
Due after ten years		221,822		(8,636	)		36,436		(1,683	)		258,258		(10,319	)		20,475		(778	)		109,026		(9,591	)		129,501		(10,369	)
Asset-backed securities		91,624		(1,165	)		12,889		(155	)		104,513		(1,320	)		295,890		(833	)		52,686		(102	)		348,576		(935	)
Mortgage-backed securities		71,683		(1,515	)		62,447		(2,359	)		134,130		(3,874	)		16,062		(34	)		56,009		(425	)		72,071		(459	)
Total fixed maturity securities	$	2,337,198	$	(50,976	)	$	1,003,870	$	(53,957	)	$	3,341,068	$	(104,933	)	$	587,262	$	(9,667	)	$	1,094,950	$	(38,604	)	$	1,682,212	$	(48,271	)

The aggregate market value and gross unrealized losses related to investments in an unrealized loss position at ~~September~~June 30, ~~2018~~2019 were ~~$3,341,068~~$1,682,212 thousand and ~~$104,933~~$48,271 thousand, respectively. The market value of securities for the single issuer ~~(the United States government)~~ whose securities comprised the largest unrealized loss position at ~~September~~June 30, ~~2018,~~2019, did not exceed ~~14.0%~~0.5% of the overall market value of the ~~Company's fixed maturity securities. The market value of securities for the issuer with the second largest unrealized loss comprised less than 1.0% 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 ~~$50,976~~$9,667 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 foreign government~~ securities. Of these unrealized losses, ~~$38,253~~$1,291 thousand were related to securities that were rated investment grade by at least one nationally recognized statistical rating agency. The ~~$53,957~~$38,604 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. Of these

unrealized losses ~~$52,199~~$26,147 thousand were related to securities that were rated investment grade by at least one nationally recognized statistical rating agency. There was no gross unrealized depreciation for mortgage-backed securities related to sub-prime and alt-A loans. In all instances, there were no projected cash flow shortfalls to recover the full book value of the investments and the related interest obligations. The mortgage-backed securities still have excess credit coverage and are current on interest and principal payments.

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

	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	)		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						Nine Months Ended						Three Months Ended						Six Months Ended
	September 30,						September 30,						June 30,						June 30,
(Dollars in thousands)	2018			2017			2018			2017			2019			2018			2019			2018
Fixed maturities	$	51,834		$	48,335		$	142,776		$	144,916		$	65,374		$	48,523		$	132,428		$	90,942
Equity securities		2,651			6,267			10,681			19,385			2,319			3,627			3,750			8,030
Short-term investments and cash		2,110			648			4,340			1,628			3,169			1,302			5,905			2,230
Other invested assets
Limited partnerships		25,573			11,878			54,213			20,632			15,116			14,168			23,171			28,640
Dividends from preferred shares of affiliate		7,758			7,758			23,274			23,274			7,758			7,758			15,516			15,516
Other		6,061			1,484			10,716			4,232			3,299			1,460			6,279			4,655
Gross investment income before adjustments		95,987			76,370			246,000			214,067			97,035			76,838			187,049			150,013
Funds held interest income (expense)		906			1,098			4,505			4,015			1,445			731			4,326			3,599
Interest income from Parent		1,075			1,075			3,225			3,225			-			1,075			-			2,150
Gross investment income		97,968			78,543			253,730			221,307			98,480			78,644			191,375			155,762
Investment expenses		(7,670	)		(5,126	)		(21,453	)		(15,141	)		(7,771	)		(6,574	)		(16,132	)		(13,783	)
Net investment income	$	90,298		$	73,417		$	232,277		$	206,166		$	90,709		$	72,070		$	175,243		$	141,979

(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 ~~$331,814~~$565,479 thousand in limited partnerships and private placement loans at ~~September~~June 30, ~~2018.~~2019. These commitments will be funded when called in accordance with the partnership and loan agreements, which have investment periods that expire, unless extended, through 2023.

Beginning in the first quarter of 2016, the Company participated in a private placement liquidity sweep facility ("(“the ~~facility"~~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~~Company’s participation in the facility was classified within other invested assets on the ~~Company's~~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~~Company’s balance sheet, rather than as part of other invested assets. As of ~~September~~June 30, ~~2018,~~2019, the market value of investments in the facility consolidated within the ~~Company's~~Company’s balance sheets ~~is $471,641~~was $305,548 thousand.

Other invested assets, at fair value, as of ~~September~~June 30, ~~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						Nine Months Ended						Three Months Ended						Six Months Ended
	September 30,						September 30,						June 30,						June 30,
(Dollars in thousands)	2018			2017			2018			2017			2019			2018			2019			2018
Fixed maturity securities, market value:
Other-than-temporary impairments	$	(2,834	)	$	(1,473	)	$	(3,741	)	$	(4,179	)	$	(4,929	)	$	(872	)	$	(7,219	)	$	(907	)
Gains (losses) from sales		(1,288	)		3,842			4,670			16,814			(2,313	)		(172	)		1,113			5,958
Fixed maturity securities, fair value:
Gains (losses) from sales		(717	)		-			(1,799	)		-			356			(1,068	)		356			(1,082	)
Gains (losses) from fair value adjustments		584			-			1,542			-			-			958			13			958
Equity securities, fair value:
Gains (losses) from sales		9,915			(1,479	)		5,833			3,465			(1,314	)		(1,601	)		3,730			(4,082	)
Gains (losses) from fair value adjustments		36,269			29,645			34,805			82,006			25,829			25,550			103,675			(1,464	)
Other invested assets		913			85			1,497			84			(152	)		581			244			584
Other invested assets, fair value:
Gains (losses) from fair value adjustments		(12,816	)		197,869			(115,252	)		155,775			125,024			(65,647	)		175,651			(102,436	)
Short-term investment gains (losses)		(8	)		-			(9	)		1			62			-			56			(1	)
Total net realized capital gains (losses)	$	30,018		$	228,489		$	(72,454	)	$	253,966		$	142,563		$	(42,271	)	$	277,619		$	(102,472	)

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						Nine Months Ended						Three Months Ended						Six Months Ended
	September 30,						September 30,						June 30,						June 30,
(Dollars in thousands)	2018			2017			2018			2017			2019			2018			2019			2018
Proceeds from sales of fixed maturity securities	$	184,810		$	410,636		$	554,733		$	1,063,126		$	403,419		$	214,942		$	2,007,308		$	369,923
Gross gains from sales		2,519			7,931			11,512			23,674			3,133			2,066			11,237			8,993
Gross losses from sales		(4,524	)		(4,089	)		(8,641	)		(6,860	)		(5,090	)		(3,306	)		(9,768	)		(4,117	)

Proceeds from sales of equity securities	$	186,403		$	52,754		$	616,330		$	302,407		$	79,735		$	301,448		$	148,973		$	429,927
Gross gains from sales		13,764			2,199			21,670			13,774			2,577			4,678			8,248			7,906
Gross losses from sales		(3,849	)		(3,678	)		(15,837	)		(10,309	)		(3,891	)		(6,279	)		(4,518	)		(11,988	)

4. RESERVES FOR LOSSES AND LAE

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

	Nine Months Ended			Twelve Months Ended			Six Months Ended			Six Months Ended
	September 30,			December 31,			June 30,			June 30,
(Dollars in thousands)	2018			2017			2019			2018
Gross reserves at January 1	$	9,343,028		$	8,331,288
Gross reserves beginning of period							$	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
Net reserves beginning of period								5,469,475			3,615,760

Incurred related to:
Current year		2,431,606			2,157,498			1,615,277			1,451,011
Prior years		480,706			(117,747	)		24,041			491,004
Total incurred losses and LAE		2,912,312			2,039,751			1,639,318			1,942,015

Paid related to:
Current year		639,528			1,607,601			391,381			378,985
Prior years		1,129,263			957,933			1,144,204			912,199
Total paid losses and LAE		1,768,791			2,565,534			1,535,585			1,291,184

Foreign exchange/translation adjustment		(23,093	)		10,046			228			(16,509	)

Net reserves at December 31		4,736,188			3,615,760
Net reserves end of period								5,573,437			4,250,082
Plus reinsurance recoverables		4,783,290			5,727,268			4,574,975			5,037,479
Gross reserves at December 31	$	9,519,478		$	9,343,028
Gross reserves end of period							$	10,148,412		$	9,287,561

(Some amounts may not reconcile due to rounding.)

Incurred prior ~~years' reserves~~years losses increased by ~~$480,706~~$24,041 thousand for the ~~nine~~six months ended ~~September~~June 30, ~~2018~~2019 and ~~decreased~~ by ~~$117,747~~$491,004 thousand for the ~~year~~six months ended ~~December 31, 2017.~~June 30, 2018, respectively. The increase for ~~the nine months ended September 30,~~ 2018 ~~resulted from unfavorable~~was mainly due to $494,221 thousand of adverse development on prior years catastrophe losses, primarily related to Hurricanes Harvey, Irma and Maria, as well as the 2017 California wildfires. The increase in loss estimates for Hurricanes Harvey, Irma and Maria was mostly driven by re-opened claims, ~~reported in the second quarter of 2018 and~~ loss inflation from higher than expected loss adjustment expenses and in particular, their impact on aggregate covers. 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 thousand of adverse development on A&E reserves. The insurance segment also experienced favorable development on prior year reserves of $32,938 thousand mainly on its workers compensation business, which is largely written in California.

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.

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~~At June 30, 2019, $474,322 thousand of fixed maturities, market value were fair valued using unobservable inputs. The majority of the ~~unavailability of prices for one-hundred~~fixed maturities, market value, $412,095 thousand were valued by investment managers’ valuation committees and ~~three private placement securities at September 30, 2018, an investment manager's valuation committee valued one hundred one~~a majority of these ~~private placement securities at $377,938 thousand. In addition,~~fair values were substantiated by valuations from independent third parties. The Company has procedures in place to review and evaluate these independent third party valuations. The remaining Level 3 fixed maturities of $62,228 thousand were fair valued by the Company ~~valued two private placement securities~~ at ~~$13,750 thousand, representing~~either par or amortized cost, which the Company believes approximates fair value. ~~Due to the unavailability of prices for sixty-five private placement securities at~~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 ~~September~~June 30, ~~2018~~2019 and December 31, ~~2017~~2018 of ~~$241,537~~$155,784 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;

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;

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;

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;

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

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

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

Other invested assets, at fair value, was categorized as Level 3 at ~~September~~June 30, ~~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.

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

			Fair Value Measurement Using:								Fair Value Measurement Using:
			Quoted Prices								Quoted Prices
			in Active		Significant						in Active		Significant
			Markets for		Other		Significant				Markets for		Other		Significant
			Identical		Observable		Unobservable				Identical		Observable		Unobservable
			Assets		Inputs		Inputs				Assets		Inputs		Inputs
(Dollars in thousands)	September 30, 2018		(Level 1)		(Level 2)		(Level 3)		June 30, 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	$	766,485	$	-	$	766,485	$	-	$	901,249	$	-	$	901,249	$	-
Obligations of U.S. States and political subdivisions		514,026		-		514,026		-		527,706		-		527,706		-
Corporate securities		2,225,862		-		1,848,708		377,154		2,554,690		-		2,082,461		472,229
Asset-backed securities		149,555		-		149,555		-		517,207		-		517,207		-
Mortgage-backed securities
Commercial		48,411		-		48,411		-		286,611		-		286,611		-
Agency residential		92,196		-		92,196		-		616,591		-		616,591		-
Non-agency residential		2,127		-		2,127		-		2,704		-		2,704		-
Foreign government securities		519,093		-		519,093		-		535,728		-		535,728		-
Foreign corporate securities		915,699		-		903,538		12,161		1,029,485		-		1,027,392		2,093
Total fixed maturities, market value		5,233,454		-		4,844,139		389,315		6,971,971		-		6,497,649		474,322

Fixed maturities, fair value		2,373		-		-		2,373		-		-		-		-
Equity securities, fair value		850,539		824,356		26,183		-		751,642		690,230		61,412		-
Other invested assets, fair value		1,692,221		-		-		1,692,221		1,892,988		-		-		1,892,988

There were no transfers between Level 1 and Level 2 for the ~~nine~~six months ended ~~September~~June 30, ~~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

In addition, ~~$110,029~~$154,908 thousand and ~~$79,505~~$117,662 thousand of investments within other invested assets on the consolidated balance sheets as of ~~September~~June 30, ~~2018~~2019 and December 31, ~~2017,~~2018, respectively, are not included within the fair value hierarchy tables as the assets are measured at NAV as a practical expedient to determine fair value.

The following 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 September 30, 2018									Nine Months Ended September 30, 2018									Three Months Ended June 30, 2019									Six Months Ended June 30, 2019
	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	$	329,249		$	12,615		$	341,864		$	158,221		$	6,952		$	165,173		$	367,178		$	7,298		$	374,476		$	376,250	$	7,744		$	383,994
Total gains or (losses) (realized/unrealized)
Included in earnings		(1,935	)		(472	)		(2,407	)		(590	)		(882	)		(1,472	)		(2,528	)		(238	)		(2,766	)		2,330		(119	)		2,211
Included in other comprehensive income (loss)		(450	)		-			(450	)		(25	)		-			(25	)		1,870			-			1,870			2,444		-			2,444
Purchases, issuances and settlements		50,290			18			50,308			219,548			4,341			223,889			101,732			(4,967	)		96,765			89,686		(5,532	)		84,154
Transfers in and/or (out) of Level 3		-			-			-			-			1,750			1,750			3,977			-			3,977			1,519		-			1,519
Ending balance	$	377,154		$	12,161		$	389,315		$	377,154		$	12,161		$	389,315		$	472,229		$	2,093		$	474,322		$	472,229	$	2,093		$	474,322

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, Market Value																Total Fixed Maturities, Market Value
	Three Months Ended September 30, 2017								Nine Months Ended September 30, 2017								Three Months Ended June 30, 2018							Six Months Ended June 30, 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	$	86,140	$	3,151		$	89,291		$	65,197	$	2,538		$	67,735		$	168,590	$	11,368		$	179,958	$	158,221	$	6,952		$	165,173
Total gains or (losses) (realized/unrealized)
Included in earnings		283		210			493			1,208		314			1,522			623		(504	)		119		1,345		(410	)		935
Included in other comprehensive income (loss)		18		(230	)		(212	)		161		(230	)		(69	)		190		-			190		425		-			425
Purchases, issuances and settlements		15,628		-			15,628			35,503		509			36,012			159,846		1			159,847		169,258		4,323			173,581
Transfers in and/or (out) of Level 3		-		-			-			-		-			-			-		1,750			1,750		-		1,750			1,750
Ending balance	$	102,069	$	3,131		$	105,200		$	102,069	$	3,131		$	105,200		$	329,249	$	12,615		$	341,864	$	329,249	$	12,615		$	341,864

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

(Some amounts may not reconcile due to rounding.)

	Total Fixed Maturities, Fair Value
	Three Months Ended June 30, 2019						Six Months Ended June 30, 2019
	Foreign						Foreign
(Dollars in thousands)	Corporate			Total			Corporate			Total
Beginning balance fixed maturities at fair value	$	2,350		$	2,350		$	2,337		$	2,337
Total gains or (losses) (realized/unrealized)
Included in earnings		356			356			369			369
Included in other comprehensive income (loss)		-			-			-			-
Purchases, issuances and settlements		(2,706	)		(2,706	)		(2,706	)		(2,706	)
Transfers in and/or (out) of Level 3		-			-			-			-
Ending balance	$	-		$	-		$	-		$	-

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

(Some amounts may not reconcile due to rounding.)

Total Fixed Maturities, Fair Value
Three Months Ended September 30, 2018 Nine Months Ended September 30, 2018
Foreign Foreign
(Dollars in thousands) Corporate Total Corporate Total
Beginning balance fixed maturities at fair value $ 3,192 $ 3,192 $ - $ -
Total gains or (losses) (realized/unrealized)
Included in earnings (101 ) (101 ) (257 ) (257 )
Included in other comprehensive income (loss) (32 ) (32 ) - -
Purchases, issuances and settlements (686 ) (686 ) 2,630 2,630
Transfers in and/or (out) of Level 3 - - - -
Ending balance $ 2,373 $ 2,373 $ 2,373 $ 2,373

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

(Some amounts may not reconcile due to rounding.)

~~Total Fixed Maturities, Fair Value~~

~~Three Months Ended September 30, 2017~~

~~Nine Months Ended September 30, 2017~~

~~Foreign~~

~~(Dollars in thousands)~~

~~Corporate~~

~~Total~~

~~Corporate~~

~~Total~~

~~Beginning balance fixed maturities at fair value~~

~~Total gains or (losses) (realized/unrealized)~~

~~Included in earnings~~

~~Included in other comprehensive income (loss)~~

~~Purchases, issuances and settlements~~

~~Transfers in and/or (out) of Level 3~~

~~Ending balance~~

~~The amount of total gains or losses for the period included~~

~~in earnings (or changes in net assets) attributable to the~~

~~change in unrealized gains or losses relating to assets~~

~~still held at the reporting date~~

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

	Total Fixed Maturities, Fair Value
	Three Months Ended June 30, 2018						Six Months Ended June 30, 2018
	Foreign						Foreign
(Dollars in thousands)	Corporate			Total			Corporate			Total
Beginning balance fixed maturities at fair value	$	1,821		$	1,821		$	-		$	-
Total gains or (losses) (realized/unrealized)
Included in earnings		(142	)		(142	)		(156	)		(156	)
Included in other comprehensive income (loss)		32			32			32			32
Purchases, issuances and settlements		1,481			1,481			3,316			3,316
Transfers in and/or (out) of Level 3		-			-			-			-
Ending balance	$	3,192		$	3,192		$	3,192		$	3,192

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

(Some amounts may not reconcile due to rounding.)

The net transfers to/(from) level 3, fair value measurements using significant unobservable inputs ~~were $0 thousand and $1,750 thousand for both the three and nine months ended September 30, 2018~~ for fixed maturities, market ~~value.~~value were $3,977 thousand and $1,519 thousand for the three and six months ended June 30, 2019. The transfers during 2019 were related to securities that were priced using a recognized pricing service as of December 31, ~~2017. The~~2018. These securities were subsequently priced using single non-binding broker quotes as of ~~September~~June 30, ~~2018.~~2019.

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					Nine Months Ended					Three Months Ended					Six Months Ended
	September 30,					September 30,					June 30,					June 30,
(Dollars in thousands)	2018			2017		2018			2017		2019		2018			2019		2018
Other invested assets, fair value:
Beginning balance	$	1,705,037		$	1,724,532	$	1,807,473		$	1,766,626	$	1,767,963	$	1,770,684		$	1,717,336	$	1,807,473
Total gains or (losses) (realized/unrealized)												-
Included in earnings		(12,816	)		197,870		(115,252	)		155,776		125,025		(65,647	)		175,652		(102,436	)
Included in other comprehensive income (loss)		-			-		-			-		-		-			-		-
Purchases, issuances and settlements		-			-		-			-		-		-			-		-
Transfers in and/or (out) of Level 3		-			-		-			-		-		-			-		-
Ending balance	$	1,692,221		$	1,922,402	$	1,692,221		$	1,922,402	$	1,892,988	$	1,705,037		$	1,892,988	$	1,705,037

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

(Some amounts may not reconcile due to rounding.)

6. 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.~~contract.

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

	At September 30,		At December 31,		At June 30,		At December 31,
(Dollars in thousands)	2018		2017		2019		2018
The Prudential	$	143,592	$	144,618	$	141,386	$	142,754
Unaffiliated life insurance company		34,038	$	34,444		33,720		34,717

7. COMPREHENSIVE INCOME (LOSS)

The following 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 September 30, 2018									Nine Months Ended September 30, 2018									Three Months Ended June 30, 2019									Six Months Ended June 30, 2019
(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	$	(9,109	)	$	1,919		$	(7,190	)	$	(92,026	)	$	19,561		$	(72,465	)	$	86,524		$	(18,138	)	$	68,386		$	198,965		$	(41,868	)	$	157,097
URA(D) on securities - OTTI		326			(68	)		258			691			(145	)		546			(368	)		77			(291	)	$	(700	)		147		$	(553	)
Reclassification of net realized losses (gains) included in net income (loss)		3,210			(676	)		2,534			(2,425	)		278			(2,147	)		7,394			(1,536	)		5,858			5,862			(1,020	)		4,842
Foreign currency translation adjustments		(3,723	)		793			(2,930	)		(31,781	)		6,697			(25,084	)		(9,465	)		1,990			(7,475	)		2,645			(556	)		2,089
Reclassification of amortization of net gain (loss) included in net income (loss)		2,298			(482	)		1,816			6,893			(1,447	)		5,446			1,457			(306	)		1,151			2,914			(612	)		2,302
Total other comprehensive income (loss)	$	(6,998	)	$	1,486		$	(5,512	)	$	(118,648	)	$	24,944		$	(93,704	)	$	85,542		$	(17,913	)	$	67,629		$	209,686		$	(43,909	)	$	165,777

(Some amounts may not reconcile due to rounding)

	Three Months Ended September 30, 2017									Nine Months Ended September 30, 2017									Three Months Ended June 30, 2018									Six Months Ended June 30, 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	$	852		$	(219	)	$	633		$	24,656		$	(8,279	)	$	16,377		$	(23,527	)	$	5,152		$	(18,375	)	$	(82,917	)	$	17,642		$	(65,275	)
URA(D) on securities - OTTI		(158	)		55			(103	)		(3,974	)		1,391			(2,583	)		266			(56	)		210			365			(77	)		288
Reclassification of net realized losses (gains) included in net income (loss)		(2,454	)		780			(1,674	)		(12,719	)		4,101			(8,618	)		463			(309	)		154			(5,635	)		954			(4,681	)
Foreign currency translation adjustments		52,740			(18,459	)		34,281			66,492			(23,272	)		43,220			(26,362	)		5,550			(20,812	)		(28,058	)		5,904			(22,154	)
Reclassification of amortization of net gain (loss) included in net income (loss)		2,107			(738	)		1,369			8,273			(2,896	)		5,377			2,297			(482	)		1,815			4,595			(965	)		3,630
Total other comprehensive income (loss)	$	53,088		$	(18,581	)	$	34,507		$	82,729		$	(28,955	)	$	53,774		$	(46,863	)	$	9,855		$	(37,008	)	$	(111,650	)	$	23,458		$	(88,192	)

(Some amounts may not reconcile due to rounding)

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

	Three Months Ended						Nine Months Ended							Three Months Ended						Six Months Ended
	September 30,						September 30,						Affected line item within the statements of	June 30,						June 30,						Affected line item within the statements of
AOCI component	2018			2017			2018			2017			operations and comprehensive income (loss)	2019			2018			2019			2018			operations and comprehensive income (loss)
(Dollars in thousands)
URA(D) on securities	$	3,210		$	(2,454	)	$	(2,425	)	$	(12,719	)	Other net realized capital gains (losses)	$	7,394		$	463		$	5,862		$	(5,635	)	Other net realized capital gains (losses)
		(676	)		780			278			4,101		Income tax expense (benefit)		(1,536	)		(309	)		(1,020	)		954		Income tax expense (benefit)
	$	2,534		$	(1,674	)	$	(2,147	)	$	(8,618	)	Net income (loss)	$	5,858		$	154		$	4,842		$	(4,681	)	Net income (loss)

Benefit plan net gain (loss)	$	2,298		$	2,107		$	6,893		$	8,273		Other underwriting expenses	$	1,457		$	2,297		$	2,914		$	4,595		Other underwriting expenses
		(482	)		(738	)		(1,447	)		(2,896	)	Income tax expense (benefit)		(306	)		(482	)		(612	)		(965	)	Income tax expense (benefit)
	$	1,816		$	1,369		$	5,446		$	5,377		Net income (loss)	$	1,151		$	1,815		$	2,302		$	3,630		Net income (loss)

(Some amounts may not reconcile due to rounding)

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

	Nine Months Ended			Twelve Months Ended			Three Months Ended						Six Months Ended
	September 30,			December 31,			June 30,						June 30,
(Dollars in thousands)	2018			2017			2019			2018			2019			2018

Beginning balance of URA (D) on securities	$	37,442		$	39,041		$	31,483		$	(16,662	)	$	(55,950	)	$	37,442
Change to beginning balance due to adoption of Accounting Standards Update 2016-01		(2,447	)		-
Change to beginning balance due to adoption of ASU 2016-01								-			-			-			(2,447	)
Current period change in URA (D) of investments - temporary		(74,612	)		(5,284	)		74,244			(18,221	)		161,939			(69,956	)
Current period change in URA (D) of investments - non-credit OTTI		546			(2,949	)		(291	)		210			(553	)		288
Reclass due to early adoption of ASU 2018-02		-			6,634
Ending balance of URA (D) on securities		(39,071	)		37,442			105,436			(34,673	)		105,436			(34,673	)

Beginning balance of foreign currency translation adjustments		33,545			(9,852	)		6,678			32,203			(2,886	)		33,545
Current period change in foreign currency translation adjustments		(25,084	)		37,427			(7,475	)		(20,812	)		2,089			(22,154	)
Reclass due to early adoption of ASU 2018-02		-			5,970
Ending balance of foreign currency translation adjustments		8,461			33,545			(797	)		11,391			(797	)		11,391

Beginning balance of benefit plan net gain (loss)		(71,929	)		(65,504	)		(66,267	)		(70,114	)		(67,418	)		(71,929	)
Current period change in benefit plan net gain (loss)		5,446			6,504			1,151			1,815			2,302			3,630
Reclass due to early adoption of ASU 2018-02		-			(12,929	)
Ending balance of benefit plan net gain (loss)		(66,483	)		(71,929	)		(65,116	)		(68,299	)		(65,116	)		(68,299	)

Ending balance of accumulated other comprehensive income (loss)	$	(97,093	)	$	(942	)	$	39,523		$	(91,581	)	$	39,523		$	(91,581	)

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 ~~September~~June 30, ~~2018,~~2019, the total amount on deposit in the trust account was ~~$547,603~~$644,803 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.

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.

September 30, 2018

December 31, 2017

June 30, 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

396,924

395,924

396,834

420,340

Senior notes

06/05/2014

06/01/2044

400,000

397,014

429,048

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				Nine Months Ended				Three Months Ended				Six Months Ended
	September 30,				September 30,				June 30,				June 30,
(Dollars in thousands)	2018		2017		2018		2017		2019		2018		2019		2018
Interest expense incurred	$	4,868	$	4,868	$	14,604	$	14,604	$	4,868	$	4,868	$	9,736	$	9,736

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 September 30, 2018 December 31, 2017
Original Consolidated Balance Consolidated Balance
(Dollars in thousands) Date Issued Principal Amount Scheduled Final Sheet Amount Market Value Sheet Amount Market Value
6.6% Long term subordinated notes 04/26/2007 $ 400,000 05/15/2037 05/01/2067 $ 236,634 $ 234,981 $ 236,561 $ 233,072

Maturity Date

June 30, 2019

December 31, 2018

Original

Consolidated Balance

(Dollars in thousands)

Date Issued

Principal Amount

Scheduled

Final

Sheet Amount

Market Value

Sheet Amount

Market Value

Long term subordinated notes

04/26/2007

400,000

05/15/2037

05/01/2067

236,709

211,125

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 May 15, 2019 to August ~~15, 2018 to November~~ 14, ~~2018~~2019 is ~~4.70%~~4.9%.

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				Nine Months Ended				Three Months Ended June 30,				Six Months Ended June 30,
	September 30,				September 30,				Three Months Ended June 30,				Six Months Ended June 30,
(Dollars in thousands)	2018		2017		2018		2017		2019		2018		2019		2018
Interest expense incurred	$	2,875	$	2,240	$	7,968	$	9,210	$	3,406	$	2,702	$	6,011	$	5,093

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:

	Six Months Ended
(Dollars in thousands)	June 30,
Lease expense incurred:	2019
Operating lease cost	$	9,355

	At June 30,
(Dollars in thousands)	2019
Operating lease right of use assets	$	53,690
Operating lease liabilities		59,335

	Six Months Ended
	June 30,
(Dollars in thousands)	2019
Operating cash flows from operating leases	$	8,617

		At June 30,
		2019
Weighted average remaining operating lease term		5.9 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	$	8,464
2020		16,883
2021		8,160
2022		7,864
2023		7,757
2024		7,611
Thereafter		12,480
Undiscounted lease payments		69,219
Less: present value adjustment		9,884
Total operating lease liability	$	59,335

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.

On July 2, 2019, the Company entered into a lease agreement to relocate its corporate offices from Liberty Corner, New Jersey to a corporate complex in Warren, New Jersey. The new lease, which covers approximately 315,000 square feet of office space, will be effective October 1, 2019 and runs through 2036. The initial base rent payment of the lease will be approximately $650 thousand per month or $7,800 thousand per year. The Company expects to relocate the existing operations and employees of the Liberty Corner, New Jersey facility to the new corporate complex by the end of 2020.

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						Nine Months Ended						Three Months Ended					Six Months Ended
U.S. Reinsurance	September 30,						September 30,						June 30,					June 30,
(Dollars in thousands)	2018			2017			2018			2017			2019		2018			2019		2018
Gross written premiums	$	940,839		$	908,346		$	2,237,170		$	1,962,297		$	641,763	$	652,110		$	1,405,903	$	1,296,332
Net written premiums		703,944			295,645			1,557,706			649,883			487,694		429,931			1,105,835		853,762

Premiums earned	$	528,867		$	242,350		$	1,437,761		$	652,953		$	605,136	$	467,509		$	1,180,040	$	908,894
Incurred losses and LAE		394,621			678,926			1,404,349			919,107			367,473		708,524			684,111		1,009,728
Commission and brokerage		156,500			31,698			432,531			115,243			172,589		148,711			339,692		276,031
Other underwriting expenses		16,250			12,094			48,608			40,623			15,728		15,472			31,319		32,358
Underwriting gain (loss)	$	(38,504	)	$	(480,368	)	$	(447,727	)	$	(422,020	)	$	49,346	$	(405,198	)	$	124,918	$	(409,223	)

	Three Months Ended						Nine Months Ended						Three Months Ended					Six Months Ended
International	September 30,						September 30,						June 30,					June 30,
(Dollars in thousands)	2018			2017			2018			2017			2019		2018			2019		2018
Gross written premiums	$	363,359		$	363,186		$	1,129,097		$	975,296		$	372,671	$	398,714		$	761,642	$	765,738
Net written premiums		340,701			130,180			1,012,933			345,387			350,219		337,357			708,077		672,232

Premiums earned	$	331,921		$	123,915		$	1,003,993		$	355,366		$	353,086	$	343,133		$	675,460	$	672,072
Incurred losses and LAE		315,850			410,543			751,696			557,416			213,808		259,487			450,884		435,846
Commission and brokerage		78,180			25,101			240,953			72,426			85,974		84,379			155,836		162,773
Other underwriting expenses		9,991			8,241			29,946			26,293			9,632		9,869			18,097		19,955
Underwriting gain (loss)	$	(72,100	)	$	(319,970	)	$	(18,602	)	$	(300,769	)	$	43,672	$	(10,602	)	$	50,643	$	53,498

	Three Months Ended					Nine Months Ended					Three Months Ended				Six Months Ended
Insurance	September 30,					September 30,					June 30,				June 30,
(Dollars in thousands)	2018		2017			2018		2017			2019		2018		2019		2018
Gross written premiums	$	454,993	$	429,593		$	1,491,438	$	1,351,491		$	673,603	$	581,460	$	1,205,374	$	1,036,445
Net written premiums		333,836		144,935			1,105,223		442,237			481,952		423,066		898,196		771,387

Premiums earned	$	369,983	$	152,242		$	1,084,863	$	449,440		$	417,401	$	369,194	$	790,577	$	714,880
Incurred losses and LAE		259,826		242,089			756,267		441,985			261,941		260,749		504,323		496,441
Commission and brokerage		53,532		(22,254	)		159,187		(40,104	)		58,212		54,912		109,465		105,655
Other underwriting expenses		52,559		37,378			151,823		114,889			57,991		48,885		112,317		99,264
Underwriting gain (loss)	$	4,066	$	(104,971	)	$	17,586	$	(67,330	)	$	39,257	$	4,648	$	64,472	$	13,520

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

	Three Months Ended						Nine Months Ended						Three Months Ended						Six Months Ended
	September 30,						September 30,						June 30,						June 30,
(Dollars in thousands)	2018			2017			2018			2017			2019			2018			2019			2018
Underwriting gain (loss)	$	(106,538	)	$	(905,309	)	$	(448,743	)	$	(790,119	)	$	132,275		$	(411,152	)	$	240,033		$	(342,205	)
Net investment income		90,298			73,417			232,277			206,166			90,709			72,070			175,243			141,979
Net realized capital gains (losses)		30,018			228,489			(72,454	)		253,966			142,563			(42,271	)		277,619			(102,472	)
Corporate expense		(2,488	)		(1,132	)		(7,597	)		(6,241	)		(2,519	)		(1,513	)		(4,170	)		(5,109	)
Interest, fee and bond issue cost amortization expense		(7,796	)		(7,161	)		(22,732	)		(23,974	)		(9,684	)		(7,623	)		(19,512	)		(14,936	)
Other income (expense)		(1,385	)		1,486			1,420			21,996			(3,812	)		77,682			(5,026	)		2,805
Income (loss) before taxes	$	2,109		$	(610,210	)	$	(317,829	)	$	(338,206	)	$	349,532		$	(312,807	)	$	664,187		$	(319,938	)

(Some amounts may not reconcile due to rounding.)

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

	Three Months Ended				Nine Months Ended				Three Months Ended				Six Months Ended
	September 30,				September 30,				June 30,				June 30,
(Dollars in thousands)	2018		2017		2018		2017		2019		2018		2019		2018
Canada gross written premiums	$	41,005	$	30,625	$	125,586	$	94,777	$	47,206	$	44,189	$	86,256	$	84,581

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

~~12.~~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 ~~31, 2023 and has an interest rate of 1.72% that is payable annually. This transaction is presented as a Note Receivable – Affiliated in the Consolidated Balance Sheets of Holdings.~~2018. Interest income in the amount of $0 thousand and $1,075 thousand was recorded by Holdings for the three months ended ~~September~~June 30, ~~2018~~2019 and ~~2017,~~2018, respectively. Interest income in the amount of ~~$3,225~~$0 thousand and $2,150 thousand was recorded by Holdings for the ~~nine~~six months ended ~~September~~June 30, ~~2018~~2019 and ~~2017,~~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				Nine Months Ended				Three Months Ended				Six Months Ended
	September 30,				September 30,				June 30,				June 30,
(Dollars in thousands)	2018		2017		2018		2017		2019		2018		2019		2018
Dividends received on preferred stock of affiliate	$	7,758	$	7,758	$	23,274	$	23,274	$	7,758	$	7,758	$	15,516	$	15,516

Affiliated Companies

~~Everest~~Effective December 31, 2018, Holdings entered into a $300,000 thousand long-term promissory note agreement with Bermuda Re. The note was repaid in May, 2019. This transaction was presented as a Note Payable – Affiliated in the consolidated balance sheets of Holdings as of December 31, 2018. Interest expense of $1,356 thousand and $3,658 thousand was recorded by Holdings for the three and six months ended June 30, 2019, 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.~~Affiliates

Three Months Ended Nine Months Ended
September 30, September 30,
(Dollars in thousands) 2018 2017 2018 2017
Expenses incurred $ 27,238 $ 25,465 $ 82,684 $ 71,694

~~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

⁽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.

(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.

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

Effective January 1, 2018, Everest Re entered into a twelve month whole account aggregate stop loss reinsurance contract ("(“stop loss ~~agreement"~~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
Date Company Company Amount of Transfer of Transfer

09/19/2000 Mt. McKinley Bermuda Re 100 % All years
10/01/2001 Everest Re (Belgium Branch) Bermuda Re 100 % All years
10/01/2008 Everest Re Bermuda Re $ 747,022 01/01/2002-12/31/2007
12/31/2017 Everest Re Bermuda Re $ 970,000 All years

(Dollars in thousands)

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

10/01/2001	Everest Re (Belgium Branch)	Bermuda Re		100	%	All years
10/01/2008	Everest Re	Bermuda Re	$	747,022		01/01/2002-12/31/2007
12/31/2017	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 $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				Nine Months Ended				Three Months Ended						Six Months Ended
Bermuda Re	September 30,				September 30,				June 30,						June 30,
(Dollars in thousands)	2018		2017		2018		2017		2019			2018			2019		2018
Ceded written premiums	$	146,513	$	911,866	$	421,804	$	2,228,538	$	19,534		$	142,971		$	71,007	$	275,291
Ceded earned premiums		148,228		796,194		432,459		2,005,965		16,598			148,073			69,122		284,231
Ceded losses and LAE		34,683		650,460		70,791		1,379,164		(3,417	)		(157,443	)		8,316		36,108

	Three Months Ended						Nine Months Ended						Three Months Ended						Six Months Ended
Everest International	September 30,						September 30,						June 30,						June 30,
(Dollars in thousands)	2018			2017			2018			2017			2019			2018			2019			2018
Ceded written premiums	$	-		$	21		$	-		$	(4	)	$	-		$	-		$	-		$	-
Ceded earned premiums		-			38			-			13			-			-			-			-
Ceded losses and LAE		(5	)		(13	)		(362	)		(631	)		(46	)		(357	)		(36	)		(357	)

	Three Months Ended					Nine Months Ended				Three Months Ended				Six Months Ended
Everest Canada	September 30,					September 30,				June 30,				June 30,
(Dollars in thousands)	2018			2017		2018		2017		2019		2018		2019		2018
Assumed written premiums	$	-		$	13,028	$	-	$	39,008	$	-	$	-	$	-	$	-
Assumed earned premiums		-			13,464		-		38,201		-		-		-		-
Assumed losses and LAE		(1,388	)		7,448		1,958		21,418		2,296		373		695		3,346

	Three Months Ended				Nine Months Ended				Three Months Ended				Six Months Ended
Lloyd's Syndicate 2786	September 30,				September 30,				June 30,				June 30,
(Dollars in thousands)	2018		2017		2018		2017		2019		2018		2019			2018
Assumed written premiums	$	1,056	$	15,984	$	795	$	34,069	$	483	$	2,421	$	(8,726	)	$	(261	)
Assumed earned premiums		2,876		15,042		13,826		31,766		1,596		6,064		(17,231	)		10,950
Assumed losses and LAE		2,883		7,893		10,909		16,157		4,391		1,441		(3,527	)		8,026

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

~~Effective February 27,~~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				Nine Months Ended				Three Months Ended				Six Months Ended
Mt. Logan Re Segregated Accounts	September 30,				September 30,				June 30,				June 30,
(Dollars in thousands)	2018		2017		2018		2017		2019		2018		2019		2018
Ceded written premiums	$	53,340	$	54,057	$	154,779	$	131,939	$	51,289	$	40,622	$	114,512	$	101,439
Ceded earned premiums		44,699		46,696		149,674		131,361		61,812		54,885		106,634		104,975
Ceded losses and LAE		23,087		180,540		130,994		223,973		30,159		92,100		64,781		107,907

Assumed written premiums	$	3,219	$	2,587	$	7,866	$	9,082		-		1,604		-		4,647
Assumed earned premiums		3,219		2,587		7,866		9,082		-		1,604		-		4,647
Assumed losses and LAE		-		-		-		-		-		-		-		-

~~13.~~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						Nine Months Ended						Three Months Ended						Six Months Ended
	September 30,						September 30,						June 30,						June 30,
(Dollars in thousands)	2018			2017			2018			2017			2019			2018			2019			2018
Service cost	$	2,977		$	2,737		$	8,931		$	9,335		$	2,276		$	2,977		$	4,553		$	5,954
Interest cost		2,585			2,509			7,754			7,060			2,930			2,585			5,860			5,170
Expected return on plan assets		(3,670	)		(3,263	)		(11,011	)		(9,572	)		(5,016	)		(3,670	)		(10,031	)		(7,341	)
Amortization of net (income) loss		2,237			2,091			6,710			8,172			1,601			2,237			3,203			4,473
FAS 88 settlement charge														104			-			208			-
Net periodic benefit cost	$	4,129		$	4,074		$	12,384		$	14,995		$	1,895		$	4,129		$	3,793		$	8,256

Other Benefits	Three Months Ended						Nine Months Ended						Three Months Ended						Six Months Ended
	September 30,						September 30,						June 30,						June 30,
(Dollars in thousands)	2018			2017			2018			2017			2019			2018			2019			2018
Service cost	$	446		$	392		$	1,339		$	1,273		$	286		$	446		$	573		$	893
Interest cost		307			296			920			793			295			307			590			614
Amortization of prior service cost		(33	)		(33	)		(98	)		(98	)		(144	)		(33	)		(289	)		(66	)
Amortization of net (income) loss		94			48			282			199			-			94			-			188
Net periodic benefit cost	$	814		$	703		$	2,443		$	2,167		$	437		$	814		$	874		$	1,629

(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 ~~contributed $77,000 thousand~~did not make any contributions to the qualified pension benefit plan ~~during~~for the three and ~~nine~~six months ended ~~September~~June 30, ~~2018. The Company contributed $10,000 thousand to the qualified pension benefit plan during the three~~2019 and ~~nine months ended September 30, 2017.~~2018.

~~14.~~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.

~~15.~~16. SUBSEQUENT EVENTS

The Company has evaluated known recognized and non-recognized subsequent events. ~~In October 2018, Hurricane Michael impacted the Southeastern United States and there are currently active wildfires in Northern and Southern California. Due~~The Company does not have any subsequent events to the recentness of these events, the Company is unable to estimate the amount of losses at this time. However, the Company anticipates that the losses will adversely impact fourth quarter financial statements.report.

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 was 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. ~~Catastrophe events are also impacting 2018 results with Hurricanes Florence and Michael, Typhoons Jebi and Trami, Cyclone Mekunu, Japan floods and California wildfires.~~ 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, as well, improvements in rate in some other reinsurance lines, including casualty lines, and ~~as catastrophe losses increased~~also improvements in ~~2017, there is a growing industry consensus that there will be some firming of (re)~~the insurance ~~rates for the areas impacted by the catastrophes.~~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			Nine Months Ended						Percentage			Three Months Ended						Percentage			Six Months Ended						Percentage
	September 30,						Increase/			September 30,						Increase/			June 30,						Increase/			June 30,						Increase/
(Dollars in millions)	2018			2017			(Decrease)			2018			2017			(Decrease)			2019			2018			(Decrease)			2019			2018			(Decrease)
Gross written premiums	$	1,759.2		$	1,701.1			3.4	%	$	4,857.7		$	4,289.1			13.3	%	$	1,688.0		$	1,632.3			3.4	%	$	3,372.9		$	3,098.5			8.9	%
Net written premiums		1,378.5			570.8			141.5	%		3,675.9			1,437.5			155.7	%		1,319.9			1,190.4			10.9	%		2,712.1			2,297.4			18.1	%

REVENUES:
Premiums earned	$	1,230.8		$	518.5			137.4	%	$	3,526.6		$	1,457.8			141.9	%	$	1,375.6		$	1,179.8			16.6	%	$	2,646.1		$	2,295.8			15.3	%
Net investment income		90.3			73.4			23.0	%		232.3			206.2			12.7	%		90.7			72.1			25.9	%		175.2			142.0			23.4	%
Net realized capital gains (losses)		30.0			228.5			-86.9	%		(72.5	)		254.0			-128.5	%		142.6			(42.3	)	NM				277.6			(102.5	)	NM
Other income (expense)		(1.4	)		1.5			-193.2	%		1.4			22.0			-93.5	%		(3.8	)		77.7			-104.9	%		(5.0	)		2.8		NM
Total revenues		1,349.7			821.9			64.2	%		3,687.9			1,939.9			90.1	%		1,605.0			1,287.3			24.7	%		3,093.9			2,338.2			32.3	%

CLAIMS AND EXPENSES:
Incurred losses and loss adjustment expenses		970.3			1,331.6			-27.1	%		2,912.3			1,918.5			51.8	%		843.2			1,228.8			-31.4	%		1,639.3			1,942.0			-15.6	%
Commission, brokerage, taxes and fees		288.2			34.5		NM				832.7			147.6		NM				316.8			288.0			10.0	%		605.0			544.5			11.1	%
Other underwriting expenses		78.8			57.7			36.5	%		230.4			181.8			26.7	%		83.3			74.2			12.3	%		161.7			151.6			6.7	%
Corporate expense		2.5			1.1			119.8	%		7.6			6.2			21.7	%		2.5			1.5			66.5	%		4.2			5.1			-18.4	%
Interest, fee and bond issue cost amortization expense		7.8			7.2			8.9	%		22.7			24.0			-5.2	%		9.7			7.6			27.0	%		19.5			14.9			30.6	%
Total claims and expenses		1,347.6			1,432.1			-5.9	%		4,005.7			2,278.1			75.8	%		1,255.5			1,600.1			-21.5	%		2,429.7			2,658.1			-8.6	%

INCOME (LOSS) BEFORE TAXES		2.1			(610.2	)		-100.3	%		(317.8	)		(338.2	)		-6.0	%		349.5			(312.8	)		-211.7	%		664.2			(319.9	)	NM
Income tax expense (benefit)		(22.6	)		(220.5	)		-89.8	%		(64.9	)		(153.3	)		-57.7	%		67.6			(47.4	)		-242.7	%		131.1			(42.4	)	NM
NET INCOME (LOSS)	$	24.7		$	(389.7	)		-106.3	%	$	(252.9	)	$	(184.9	)		36.8	%	$	281.9		$	(265.4	)		-206.2	%	$	533.1		$	(277.6	)	NM

RATIOS:							Point Change									Point Change									Point Change									Point Change
Loss ratio		78.8	%		256.8	%		(178.0	)		82.6	%		131.6	%		(49.0	)		61.3	%		104.1	%		(42.8	)		62.0	%		84.6	%		(22.6	)
Commission and brokerage ratio		23.4	%		6.7	%		16.7			23.6	%		10.1	%		13.5			23.0	%		24.4	%		(1.4	)		22.9	%		23.7	%		(0.8	)
Other underwriting expense ratio		6.5	%		11.1	%		(4.6	)		6.5	%		12.5	%		(6.0	)		6.1	%		6.3	%		(0.2	)		6.1	%		6.6	%		(0.6	)
Combined ratio		108.7	%		274.6	%		(165.9	)		112.7	%		154.2	%		(41.5	)		90.4	%		134.8	%		(44.4	)		90.9	%		114.9	%		(24.0	)

										At			At			Percentage												At			At			Percentage
										September 30,			December 31,			Increase/												June 30,			December 31,			Increase/
(Dollars in millions)											2018			2017		(Decrease)													2019			2018		(Decrease)
Balance sheet data:
Total investments and cash										$	9,579.4		$	8,911.5			7.5	%										$	11,305.7		$	10,707.4			5.6	%
Total assets											17,837.1			17,888.5			-0.3	%											19,235.8			18,688.2			2.9	%
Loss and loss adjustment expense reserves											9,519.5			9,343.0			1.9	%											10,148.4			10,167.0			-0.2	%
Total debt											633.6			633.4			0.0	%											633.7			933.6			-32.1	%
Total liabilities											12,770.8			12,475.8			2.4	%											13,492.1			13,643.5			-1.1	%
Stockholder's equity											5,066.2			5,412.7			-6.4	%											5,743.7			5,044.7			13.9	%

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

Revenues.

Premiums. Gross written premiums increased by 3.4% to ~~$1,759.2~~$1,688.0 million for the three months ended ~~September~~ June 30, ~~2018,~~2019, compared to ~~$1,701.1~~$1,632.3 million for the three months ended ~~September~~June 30, ~~2017,~~2018, reflecting a ~~$32.7~~$92.1 million, or ~~2.6%, increase in our reinsurance business and a $25.4 million, or 5.9%~~15.8%, increase in our insurance ~~business. The increase~~business and a $36.4 million, or 3.5% decrease in our reinsurance premiums was mainly due to the increase in treaty casualty business, partially offset by a decline in treaty property business primarily as a result of $138.7 million of lower reinstatement premiums in the third quarter of 2018 compared with the third quarter of 2017 as a result of lower catastrophe losses in 2018.business. The rise in insurance premiums was primarily due to increases in many lines of business, including property, casualty, ~~property~~energy and energy. Gross written premiums increased by 13.3% to $4,857.7 million for the nine months ended September 30, 2018, compared to $4,289.1 million for the nine months ended September 30, 2017, reflecting a $428.7 million, or 14.6%, increase in our reinsurance business and a $139.9 million, or 10.4%, increase in our insurance business.specialty lines. The ~~increase~~decrease in reinsurance premiums was mainly due to ~~the increases~~decreases in treaty property ~~business, treaty casualty business and Latin American business,~~writings, partially offset by an increase in treaty casualty writings. Gross written premiums increased by 8.9% to $3,372.9 million for the six months ended June 30, 2019, compared to $3,098.5 million for the six months ended June 30, 2018, reflecting a ~~$110.8~~$168.9 million, ~~decline~~or

	Three Months Ended September 30,																					Three Months Ended June 30,
	Current			Ratio %/				Prior			Ratio %/				Total			Ratio %/				Current			Ratio %/				Prior			Ratio %/				Total			Ratio %/
(Dollars in millions)	Year			Pt Change				Years			Pt Change				Incurred			Pt Change				Year			Pt Change				Years			Pt Change				Incurred			Pt Change
2019
Attritional																						$	826.5			60.1	%		$	(13.8	)		-1.0	%		$	812.7			59.1	%
Catastrophes																							(0.1	)		0.0	%			30.6			2.2	%			30.5			2.2	%
Total																						$	826.4			60.1	%		$	16.8			1.2	%		$	843.2			61.3	%

2018
Attritional	$	772.3			62.7	%		$	3.2			0.3	%		$	775.5			63.0	%		$	673.5			57.0	%		$	(3.5	)		-0.3	%		$	670.0			56.7	%
Catastrophes		208.3			16.9	%			(13.5	)		-1.1	%			194.8			15.8	%			64.6			5.5	%			494.2			41.9	%			558.8			47.4	%
Total	$	980.6			79.6	%		$	(10.3	)		-0.8	%		$	970.3			78.8	%		$	738.1			62.5	%		$	490.7			41.6	%		$	1,228.8			104.1	%

2017
Variance 2019/2018
Attritional	$	325.6			62.8	%		$	(0.9	)		-0.2	%		$	324.7			62.6	%		$	153.0			3.1		pts	$	(10.3	)		(0.7	)	pts	$	142.7			2.4		pts
Catastrophes		1,007.8			194.4	%			(0.9	)		-0.2	%			1,006.9			194.2	%			(64.7	)		(5.5	)	pts		(463.6	)		(39.7	)	pts		(528.3	)		(45.2	)	pts
Total	$	1,333.4			257.2	%		$	(1.8	)		-0.4	%		$	1,331.6			256.8	%		$	88.3			(2.4	)	pts	$	(473.9	)		(40.4	)	pts	$	(385.6	)		(42.8	)	pts

Variance 2018/2017
Attritional	$	446.7			(0.1	)	pts	$	4.1			0.5		pts	$	450.8			0.4		pts
Catastrophes		(799.5	)		(177.5	)	pts		(12.6	)		(0.9	)	pts		(812.1	)		(178.4	)	pts
Total	$	(352.8	)		(177.6	)	pts	$	(8.5	)		(0.4	)	pts	$	(361.3	)		(178.0	)	pts

	Nine Months Ended September 30,																					Six Months Ended June 30,
	Current			Ratio %/				Prior			Ratio %/				Total			Ratio %/				Current			Ratio %/				Prior			Ratio %/				Total			Ratio %/
(Dollars in millions)	Year			Pt Change				Years			Pt Change				Incurred			Pt Change				Year			Pt Change				Years			Pt Change				Incurred			Pt Change
2019
Attritional																						$	1,590.4			60.1	%		$	(13.8	)		-0.5	%		$	1,576.5			59.6	%
Catastrophes																							24.9			0.9	%			37.9			1.4	%			62.8			2.4	%
Total																						$	1,615.3			61.0	%		$	24.0			0.9	%		$	1,639.3			62.0	%

2018
Attritional	$	2,158.7			61.3	%		$	-			0.0	%		$	2,158.7			61.3	%		$	1,386.4			60.4	%		$	(3.2	)		-0.1	%		$	1,383.2			60.3	%
Catastrophes		272.9			7.7	%			480.7			13.6	%			753.6			21.3	%			64.6			2.8	%			494.2			21.5	%			558.8			24.3	%
Total	$	2,431.6			69.0	%		$	480.7			13.6	%		$	2,912.3			82.6	%		$	1,451.0			63.2	%		$	491.0			21.4	%		$	1,942.0			84.6	%

2017
Attritional	$	878.8			60.3	%		$	4.4			0.3	%		$	883.2			60.6	%
Catastrophes		1,039.3			71.3	%			(3.9	)		-0.3	%			1,035.3			71.0	%
Total	$	1,918.1			131.6	%		$	0.5			0.0	%		$	1,918.5			131.6	%

Variance 2018/2017
Variance 2019/2018
Attritional	$	1,279.9			1.0		pts	$	(4.4	)		(0.3	)	pts	$	1,275.5			0.7		pts	$	204.0			(0.3	)	pts	$	(10.6	)		(0.4	)	pts	$	193.3			(0.7	)	pts
Catastrophes		(766.4	)		(63.6	)	pts		484.6			13.9		pts		(281.7	)		(49.7	)	pts		(39.7	)		(1.9	)	pts		(456.3	)		(20.1	)	pts		(496.0	)		(21.9	)	pts
Total	$	513.5			(62.6	)	pts	$	480.2			13.6		pts	$	993.8			(49.0	)	pts	$	164.3			(2.2	)	pts	$	(467.0	)		(20.5	)	pts	$	(302.7	)		(22.6	)	pts

(Some amounts may not reconcile due to rounding.)

	Impact of Interest Rate Shift in Basis Points															Impact of Interest Rate Shift in Basis Points
	At September 30, 2018															At June 30, 2019
(Dollars in millions)		-200			-100			0			100			200			-200			-100			0			100			200
Total Market/Fair Value	$	6,175.1		$	6,008.0		$	5,843.1		$	5,679.4		$	5,516.9		$	7,813.7		$	7,576.0		$	7,340.9		$	7,101.2		$	6,862.5
Market/Fair Value Change from Base (%)		5.7	%		2.8	%		0.0	%		-2.8	%		-5.6	%		6.4	%		3.2	%		0.0	%		-3.3	%		-6.5	%
Change in Unrealized Appreciation
After-tax from Base ($)	$	262.3		$	130.3		$	-		$	(129.3	)	$	(257.7	)	$	373.5		$	185.9		$	-		$	(189.4	)	$	(377.9	)

	Impact of Percentage Change in Equity Fair/Market Values												Impact of Percentage Change in Equity Fair/Market Values
	At September 30, 2018												At June 30, 2019
(Dollars in millions)		-20%			-10%			0%		10%		20%	-20%			10%			0%		10%		20%
Fair/Market Value of the Equity Portfolio	$	680.4		$	765.5		$	850.5	$	935.6	$	1,020.6	$	601.3		$	676.5		$	751.6	$	826.8	$	902.0
After-tax Change in Fair/Market Value		(134.4	)		(67.2	)		-		67.2		134.4		(118.8	)		(59.4	)		-		59.4		118.8

Exhibit Index:

Exhibit No.	Description

31.1	Section 302 Certification of Dominic J. Addesso

31.2	Section 302 Certification of Craig Howie

32.1	Section 906 Certification of Dominic J. Addesso and Craig Howie

101.INS	XBRL Instance Document

101.SCH	XBRL Taxonomy Extension Schema

101.CAL	XBRL Taxonomy Extension Calculation Linkbase

101.DEF	XBRL Taxonomy Extension Definition Linkbase

101.LAB	XBRL Taxonomy Extension Labels Linkbase

101.PRE	XBRL Taxonomy Extension Presentation Linkbase


	Everest Reinsurance Holdings, Inc.
	(Registrant)


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

	(Duly Authorized Officer and Principal Financial Officer)



Dated: ~~November~~August 14, ~~2018~~2019