UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

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

For the quarterly period ended September 30, ~~2020~~2021

☐ 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~~100 Everest Way

~~Post Office Box 830~~

~~Liberty Corner,~~ Warren, New Jersey ~~07938-0830~~07059

~~(908~~)(908) 604-3000

(Address, including zip code, and telephone number, including area code, of registrant’s principal executive office)

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

YES☑ NO ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted 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 such files).

YES☑ NO ☐

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

Large accelerated filer ☐		Accelerated filer ☐
Non-accelerated Filer ☑		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 ☐NO ☑

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

YES ☐NO ☑

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

		Number of Shares Outstanding
Class		At November 1, ~~2020~~2021
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 atas of September 30, ~~2020~~2021 (unaudited) and December 31, ~~2019~~2020	1

	Consolidated Statements of Operations and Comprehensive Income (Loss) for the three and nine months ended September 30, 2021 and 2020 ~~and 2019~~ (unaudited)	2

	Consolidated Statements of Changes in Stockholder’s Equity for the ~~three and~~ nine months ended September 30, 2021 and 2020 ~~and 2019~~ (unaudited)	3

	Consolidated Statements of Cash Flows for the nine months ended September 30, 2021 and 2020 ~~and 2019~~ (unaudited)	4

	Notes to Consolidated Interim Financial Statements (unaudited)	5

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operation	3531

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	5147

Item 4.	Controls and Procedures	5147

PART II

OTHER INFORMATION

Item 1.	Legal Proceedings	5248

Item 1A.	Risk Factors	5248

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	5348

Item 3.	Defaults Upon Senior Securities	5348

Item 4.	Mine Safety Disclosures	5348

Item 5.	Other Information	5348

Item 6.	Exhibits	5449

EVEREST REINSURANCE HOLDINGS, INC.

CONSOLIDATED BALANCE SHEETS


(Dollars in thousands, except share amounts and par value per share)	September 30, 2021		December 31, 2020
	(unaudited)
ASSETS:
Fixed maturities – available for sale, at market value (amortized cost: 2021, $11,658,597; 2020, $10,248,650, allowances for credit losses: 2021, $(31,113); 2020, $(1,566))	$	11,897,480	$	10,643,565
Equity securities, at fair value		1,488,355		1,288,767
Short-term investments (cost: 2021, $538,094; 2020, $708,043)		538,094		707,905
Other invested assets		1,626,435		1,094,933
Other invested assets, at fair value		1,933,277		1,796,479
Cash		453,090		378,518
Total investments and cash		17,936,731		15,910,167
Note Receivable - affiliated		500,000		300,000
Accrued investment income		110,188		80,196
Premiums receivable		1,852,973		1,591,980
Reinsurance recoverables - unaffiliated		1,662,942		1,505,650
Reinsurance recoverables - affiliated		2,371,998		2,701,655
Funds held by reinsureds		295,473		267,599
Deferred acquisition costs		443,973		379,707
Prepaid reinsurance premiums		444,768		363,489
Other assets		717,167		616,640
TOTAL ASSETS	$	26,336,213		23,717,083

LIABILITIES:
Reserve for losses and loss adjustment expenses	$	13,321,811	$	11,654,950
Unearned premium reserve		2,914,338		2,385,174
Funds held under reinsurance treaties		48,922		46,894
Other net payable to reinsurers		428,985		277,390
Losses in course of payment		150,028		161,154
Income taxes net payable		251,609		192,877
Senior notes due 6/1/2044		397,284		397,194
Senior notes due 10/15/2050		979,915		979,524
Long term notes due 5/1/2067		223,749		223,674
Borrowings from FHLB		310,000		310,000
Accrued interest on debt and borrowings		23,267		10,460
Unsettled securities payable		64,984		206,693
Other liabilities		463,543		456,786
Total liabilities		19,578,435		17,302,770
Commitments and Contingencies (Note 6)		(nil)		(nil)

STOCKHOLDER'S EQUITY:
Common shares, par value: $0.01; 3,000 shares authorized; 1,000 shares issued and outstanding (2021 and 2020)		-		-
Additional paid-in capital		1,101,425		1,101,092
Accumulated other comprehensive income (loss), net of deferred income tax expense (benefit) $44,898 at 2021 and $71,080 at 2020		169,214		268,018
Retained earnings		5,487,139		5,045,203
Total stockholder's equity		6,757,778		6,414,313
TOTAL LIABILITIES AND STOCKHOLDER'S EQUITY	$	26,336,213	$	23,717,083

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

(Dollars in thousands, except share amounts and par value per share)
September 30, 2020

December 31, 2019

(unaudited)

ASSETS:

Fixed maturities - available for sale, at market value (amortized cost: 2020, $8,267,172; 2019, $7,334,425 allowances for credit losses: 2020, $17,636; 2019, $0)
$
8,576,687

$
7,492,079
Fixed maturities - available for sale, at fair value

3,748

5,826
Equity securities, at fair value

1,010,264

764,049
Short-term investments (cost: 2020, $908,334; 2019, $279,824)

907,889

279,879
Other invested assets (cost: 2020, $1,069,726; 2019, $1,020,766)

1,069,726

1,020,766
Other invested assets, at fair value

1,801,743

1,982,582
Cash

451,512

411,122
Total investments and cash

13,821,569

11,956,303
Note Receivable - affiliated

300,000

300,000
Accrued investment income

76,463

54,383
Premiums receivable

1,517,550

1,337,344
Reinsurance receivables - unaffiliated

1,451,992

1,318,820
Reinsurance receivables - affiliated

2,704,519

3,125,269
Income taxes net recoverable

-

65,793
Funds held by reinsureds

264,597

228,297
Deferred acquisition costs

380,863

388,238
Prepaid reinsurance premiums

395,776

413,612
Other assets

572,171

518,127
TOTAL ASSETS
$
21,485,500

19,706,186

LIABILITIES:

Reserve for losses and loss adjustment expenses
$
11,042,011

$
10,209,519
Unearned premium reserve

2,399,154

2,198,932
Funds held under reinsurance treaties

46,803

41,233
Other net payable to reinsurers

343,165

267,367
Losses in course of payment

186,466

70,541
Income taxes net payable

131,824

-
Senior notes due 6/1/2044

397,164

397,074
Long term notes due 5/1/2067

223,649

236,758
Borrowings from FHLB

90,000

-
Accrued interest on debt and borrowings

7,215

2,878
Unsettled securities payable

98,898

25,230
Other liabilities

363,485

399,229
         Total liabilities

15,329,834

13,848,761

Commitments and Contingencies (Note 6)

(nil)

(nil)

STOCKHOLDER'S EQUITY:

Common stock, par value: $0.01; 3,000 shares authorized;
  1,000 shares issued and outstanding (2020 and 2019)

-

-
Additional paid-in capital

1,100,983

1,100,678
Accumulated other comprehensive income (loss), net of deferred income
  tax expense (benefit) of $51,941 at 2020 and $16,977 at 2019

195,495

64,324
Retained earnings

4,859,188

4,692,423
Total stockholder's equity

6,155,666

5,857,425
TOTAL LIABILITIES AND STOCKHOLDER'S EQUITY
$
21,485,500

$
19,706,186

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

EVEREST REINSURANCE HOLDINGS, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

AND COMPREHENSIVE INCOME (LOSS)

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
(Dollars in thousands)	2021		2020		2021		2020
	(unaudited)				(unaudited)
REVENUES:
Premiums earned	$	1,851,364	$	1,615,457	$	5,314,819	$	4,648,422
Net investment income		197,161		135,428		593,019		244,782
Net realized capital gains (losses):
Credit allowances on fixed maturity securities		(7,329)		2,289		(29,546)		(17,636)
Other net realized capital gains (losses)		(44,122)		112,904		296,869		(89,664)
Total net realized capital gains (losses)		(51,451)		115,193		267,323		(107,300)
Other income (expense)		9,937		(1,790)		12,049		(11,410)
Total revenues		2,007,011		1,864,288		6,187,210		4,774,494

CLAIMS AND EXPENSES:
Incurred losses and loss adjustment expenses		1,653,019		1,277,851		4,102,721		3,283,196
Commission, brokerage, taxes and fees		388,847		322,404		1,125,549		1,001,207
Other underwriting expenses		109,512		109,366		329,238		304,705
Corporate expenses		10,907		4,206		23,106		11,441
Interest, fee and bond issue cost amortization expense		15,539		6,535		46,610		20,917
Total claims and expenses		2,177,824		1,720,362		5,627,224		4,621,466

INCOME (LOSS) BEFORE TAXES		(170,813)		143,926		559,986		153,028
Income tax expense (benefit)		(27,500)		24,120		118,050		(12,830)

NET INCOME (LOSS)	$	(143,313)	$	119,806	$	441,936	$	165,858

Other comprehensive income (loss), net of tax:
Unrealized appreciation (depreciation) ("URA(D)") on securities arising during the period		(43,482)		38,572		(109,930)		104,598
Less: reclassification adjustment for realized losses (gains) included in net income (loss)		2,160		(2,605)		10,092		28,824
Total URA(D) on securities arising during the period		(41,322)		35,967		(99,838)		133,422

Foreign currency translation adjustments		(20,862)		14,414		(4,615)		(6,783)
Reclassification adjustment for amortization of net (gain) loss included in net income (loss)		1,563		1,806		5,649		4,532
Total benefit plan net gain (loss) for the period		1,563		1,806		5,649		4,532
Total other comprehensive income (loss), net of tax		(60,621)		52,187		(98,804)		131,171

COMPREHENSIVE INCOME (LOSS)	$	(203,934)	$	171,992	$	343,132	$	297,028

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

Three Months Ended

Nine Months Ended

September 30,

September 30,
(Dollars in thousands)
2020

2019

2020

2019

(unaudited)

(unaudited)
REVENUES:

Premiums earned
$
1,615,457

$
1,428,400

$
4,648,422

$
4,074,477
Net investment income

135,428

95,592

244,782

270,835
Net realized capital gains (losses):

Credit allowances on fixed maturity securities

2,289

-

(17,636)

-
Other-than-temporary impairments on fixed maturity securities

-

(6,968)

-

(14,187)
Other net realized capital gains (losses)

112,904

119,510

(89,664)

404,348
Total net realized capital gains (losses)

115,193

112,542

(107,300)

390,161
Other income (expense)

(1,790)

(2,673)

(11,410)

(8,459)
Total revenues

1,864,288

1,633,861

4,774,494

4,727,014

CLAIMS AND EXPENSES:

Incurred losses and loss adjustment expenses

1,277,851

1,098,093

3,283,196

2,737,411
Commission, brokerage, taxes and fees

322,404

357,681

1,001,207

962,674
Other underwriting expenses

109,366

95,693

304,705

257,426
Corporate expenses

4,206

3,183

11,441

7,353
Interest, fee and bond issue cost amortization expense

6,535

7,802

20,917

27,314
Total claims and expenses

1,720,362

1,562,452

4,621,466

3,992,178

INCOME (LOSS) BEFORE TAXES

143,926

71,409

153,028

734,836
Income tax expense (benefit)

24,120

10,272

(12,830)

141,169

NET INCOME (LOSS)
$
119,806

$
61,137

$
165,858

$
593,667

Other comprehensive income (loss), net of tax:

Unrealized appreciation (depreciation) ("URA(D)")
  on securities arising during the period

38,572

24,454

104,598

180,998
Less: reclassification adjustment for realized
  losses (gains) included in net income (loss)

(2,605)

2,085

28,824

6,927
Total URA(D) on securities arising during
  the period

35,967

26,539

133,422

187,925

Foreign currency translation adjustments

14,414

2,881

(6,783)

4,970

Reclassification adjustment for amortization of net
  (gain) loss included in net income (loss)

1,806

1,364

4,532

3,666
Total benefit plan net gain (loss) for the period

1,806

1,364

4,532

3,666
Total other comprehensive income (loss), net of tax

52,187

30,784

131,171

196,561

COMPREHENSIVE INCOME (LOSS)
$
171,992

$
91,921

$
297,028

$
790,228

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

EVEREST REINSURANCE HOLDINGS, INC.

CONSOLIDATED STATEMENTS OF

CHANGES IN STOCKHOLDER’S EQUITY

(Dollars in thousands, except share amounts)	2021		2020
	(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
Balance, September 30		1,000		1,000

ADDITIONAL PAID-IN CAPITAL:
Balance, January 1	$	1,101,092	$	1,100,678
Share-based compensation plans		108		103
Balance, March 31		1,101,200		1,100,781
Share-based compensation plans		116		101
Balance, June 30		1,101,316		1,100,882
Share-based compensation plans		109		101
Balance, September 30		1,101,425		1,100,983

ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS), NET OF DEFERRED INCOME TAXES:
Balance, January 1		268,018		64,324
Net increase (decrease) during the period		(104,063)		(178,351)
Balance, March 31		163,955		(114,027)
Net increase (decrease) during the period		65,880		257,335
Balance, June 30		229,835		143,308
Net increase (decrease) during the period		(60,621)		52,187
Balance, September 30		169,214		195,495

RETAINED EARNINGS:
Balance, January 1		5,045,203		4,692,423
Change to beginning balance due to adoption of ASU 2016-13		-		907
Net income (loss)		119,443		316,645
Balance, March 31		5,164,646		5,009,975
Net income (loss)		465,807		(270,593)
Balance, June 30		5,630,453		4,739,382
Net income (loss)		(143,313)		119,806
Balance, September 30		5,487,139		4,859,188

TOTAL STOCKHOLDER'S EQUITY, September 30	$	6,757,778	$	6,155,666

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

(Dollars in thousands, except share amounts)
2020

2019

(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
Balance, September 30

1,000

1,000

ADDITIONAL PAID-IN CAPITAL:

Balance, January 1
$
1,100,678

$
1,100,315
Share-based compensation plans

103

87
Balance, March 31

1,100,781

1,100,402
Share-based compensation plans

101

87
Balance, June 30

1,100,882

1,100,489
Share-based compensation plans

101

84
Balance, September 30

1,100,983

1,100,573

ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS),
NET OF DEFERRED INCOME TAXES:

Balance, January 1

64,324

(126,254)
Net increase (decrease) during the period

(178,351)

98,148
Balance, March 31

(114,027)

(28,106)
Net increase (decrease) during the period

257,335

67,629
Balance, June 30

143,308

39,523
Net increase (decrease) during the period

52,187

30,784
Balance, September 30

195,495

70,307

RETAINED EARNINGS:

Balance, January 1

4,692,423

4,062,696
Change to beginning balance due to adoption of ASU 2016-13

907

-
Net income (loss)

316,645

251,610
Balance, March 31

5,009,975

4,314,306
Net income (loss)

(270,593)

280,921
Balance, June 30

4,739,382

4,595,227
Net income (loss)

119,806

61,137
Balance, September 30

4,859,188

4,656,364

TOTAL STOCKHOLDER'S EQUITY, September 30
$
6,155,666

$
5,827,244

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

EVEREST REINSURANCE HOLDINGS, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

	Nine Months Ended
	September 30,
(Dollars in thousands)	2021		2020
	(unaudited)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss)	$	441,936	$	165,858
Adjustments to reconcile net income to net cash provided by operating activities:
Decrease (increase) in premiums receivable		(261,405)		(182,948)
Decrease (increase) in funds held by reinsureds, net		(26,033)		(30,632)
Decrease (increase) in reinsurance recoverables		171,961		288,732
Decrease (increase) in income taxes		84,791		162,490
Decrease (increase) in prepaid reinsurance premiums		(81,012)		17,584
Increase (decrease) in reserve for losses and loss adjustment expenses		1,674,386		843,790
Increase (decrease) in unearned premiums		529,640		201,163
Increase (decrease) in other net payable to reinsurers		150,925		76,161
Increase (decrease) in losses in course of payment		(11,090)		116,447
Change in equity adjustments in limited partnerships		(310,870)		7,020
Distribution of limited partnership income		64,513		41,167
Change in other assets and liabilities, net		(104,489)		(94,329)
Non-cash compensation expense		27,532		23,901
Amortization of bond premium (accrual of bond discount)		22,686		7,109
Net realized capital (gains) losses		(267,323)		107,300
Net cash provided by (used in) operating activities		2,106,148		1,750,813

CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from fixed maturities matured/called - available for sale, at market value		1,639,849		681,605
Proceeds from fixed maturities sold - available for sale, at market value		394,004		420,491
Proceeds from fixed maturities sold - available for sale, at fair value		-		2,054
Proceeds from equity securities sold - at fair value		450,319		328,519
Distributions from other invested assets		134,821		157,703
Cost of fixed maturities acquired - available for sale, at market value		(3,484,809)		(2,084,790)
Cost of equity securities acquired - at fair value		(506,643)		(459,572)
Cost of other invested assets acquired		(396,089)		(253,357)
Net change in short-term investments		170,671		(627,143)
Net change in unsettled securities transactions		(194,217)		73,467
Proceeds from repayment (cost of issuance) of note receivable - affiliated		(200,000)		-
Net cash provided by (used in) investing activities		(1,992,094)		(1,761,023)

CASH FLOWS FROM FINANCING ACTIVITIES:
Tax benefit from share-based compensation, net of expense		(27,200)		(23,596)
FHLB borrowings (repayments)		-		90,000
Cost of debt repurchase		-		(10,647)
Net cash provided by (used in) financing activities		(27,200)		55,757

EFFECT OF EXCHANGE RATE CHANGES ON CASH		(12,282)		(5,156)

Net increase (decrease) in cash		74,572		40,390
Cash, beginning of period		378,518		411,122
Cash, end of period	$	453,090	$	451,512

SUPPLEMENTAL CASH FLOW INFORMATION:
Income taxes paid (recovered)	$	33,080	$	(175,535)
Interest paid		33,248		16,416

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

Nine Months Ended

September 30,
(Dollars in thousands)
2020

2019

(unaudited)
CASH FLOWS FROM OPERATING ACTIVITIES:

Net income (loss)
$
165,858

$
593,667
Adjustments to reconcile net income to net cash provided by operating activities:

Decrease (increase) in premiums receivable

(182,948)

(115,834)
Decrease (increase) in funds held by reinsureds, net

(30,632)

(18,129)
Decrease (increase) in reinsurance receivables

288,732

107,427
Decrease (increase) in income taxes

162,490

226,147
Decrease (increase) in prepaid reinsurance premiums

17,584

(114,587)
Increase (decrease) in reserve for losses and loss adjustment expenses

843,790

240,321
Increase (decrease) in unearned premiums

201,163

321,643
Increase (decrease) in other net payable to reinsurers

76,161

24,093
Increase (decrease) in losses in course of payment

116,447

(44,192)
Change in equity adjustments in limited partnerships

7,020

(42,959)
Distribution of limited partnership income

41,167

39,247
Change in other assets and liabilities, net

(94,329)

(33,863)
Non-cash compensation expense

23,901

20,425
Amortization of bond premium (accrual of bond discount)

7,109

3,416
Net realized capital (gains) losses

107,300

(390,161)
Net cash provided by (used in) operating activities

1,750,813

816,661

CASH FLOWS FROM INVESTING ACTIVITIES:

Proceeds from fixed maturities matured/called - available for sale, at market value

681,605

672,207
Proceeds from fixed maturities sold - available for sale, at market value

420,491

2,217,734
Proceeds from fixed maturities sold - available for sale, at fair value

2,054

2,706
Proceeds from equity securities sold - at fair value

328,519

184,898
Distributions from other invested assets

157,703

133,130
Cost of fixed maturities acquired - available for sale, at market value

(2,084,790)

(3,071,436)
Cost of equity securities acquired - at fair value

(459,572)

(269,672)
Cost of other invested assets acquired

(253,357)

(212,910)
Net change in short-term investments

(627,143)

(100,012)
Net change in unsettled securities transactions

73,467

(30,252)
Net cash provided by (used in) investing activities

(1,761,023)

(473,607)

CASH FLOWS FROM FINANCING ACTIVITIES:

Tax benefit from share-based compensation, net of expense

(23,596)

(20,166)
FHLB advances (repayments)

90,000

-
Cost of debt repurchase

(10,647)

-
Proceeds from issuance (cost of repayment) of note payable-affiliated

-

(300,000)
Net cash provided by (used in) financing activities

55,757

(320,166)

EFFECT OF EXCHANGE RATE CHANGES ON CASH

(5,156)

(6,578)

Net increase (decrease) in cash

40,390

16,310
Cash, beginning of period

411,122

404,522
Cash, end of period
$
451,512

$
420,832

SUPPLEMENTAL CASH FLOW INFORMATION:

Income taxes paid (recovered)
$
(175,535)

$
(85,216)
Interest paid

16,416

22,421

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

NOTES TO CONSOLIDATED INTERIM FINANCIAL STATEMENTS (UNAUDITED)

For the Three and Nine Months Ended September 30, ~~2020,~~2021, and ~~2019~~2020

1. GENERAL

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

~~During the fourth quarter of 2018, Everest Global Services (“Global Services”), a previously affiliated company, was contributed to Holdings from its parent company, Holdings Ireland.~~

2. BASIS OF PRESENTATION

The unaudited interim consolidated financial statements of the Company as of September 30, 2021 and December 31, 2020 and for the three and nine months ended September 30, ~~2020~~2021 and ~~2019~~2020 include all adjustments, consisting of normal recurring accruals, which, in the opinion of management, are necessary for a fair statement of the results on an interim basis. Certain financial information, which is normally included in annual financial statements prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”), has been omitted since it is not required for interim reporting purposes. The December 31, ~~2019~~2020 consolidated balance sheet data was derived from audited financial statements, but does not include all disclosures required by GAAP. The results for the three and nine months ended September 30, ~~2020~~2021 and ~~2019~~2020 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, 2020, 2019 ~~2018~~ and ~~2017~~2018 included in the Company’s most recent Form 10-K filing.

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities (and disclosure of contingent assets and liabilities) at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Ultimate actual results could differ, possibly materially, from those estimates. This is particularly true given the fluid and continuing nature of the COVID-19 pandemic. This is an ongoing event and so is the Company’s evaluation and analysis. While the Company’s analysis considers all aspects of its operations, it does not take into account legal, regulatory or legislative intervention that could retroactively mandate or expand coverage provisions. Given the uncertainties in the current public health and economic environment, there could be an adverse impact on results for the Property & Casualty industry and the Company for the remainder of the year. The impact is dependent on the shape and length of the economic recovery.

With recent changes in executive management and organizational structure, the Company manages its reinsurance and insurance operations as autonomous units and key strategic decisions are based on the aggregate operating results and projections for these segments of business. Accordingly, effective January 1, 2020, the Company revised its reporting segments to Reinsurance Operations and Insurance Operations. This replaces the previous reported segments of U.S. Reinsurance, International (reinsurance) and Insurance. The prior year presented segment information has been reformatted to reflect this change.

All intercompany accounts and transactions have been eliminated.

~~Certain reclassifications and format changes have been made to prior years’ amounts to conform to the 2020 presentation.~~

Application of Recently Issued Accounting Standard Changes.

~~Modernization of Regulation S-K Disclosures.~~ Reference Rate Reform - LIBOR.In ~~August~~March 2020, the ~~Securities and Exchange Commission (“SEC”) issued Final Rule Release #33-10825 which addresses the modernization of the disclosure~~

requirements for business, legal proceeding and risk factor disclosures in Regulation S-K filings. Rule #33-10825 will become effective for all financial reports filed after November 9, 2020 (30 days after its publication in the Federal Register) and will be adopted by the Company in the fourth quarter of 2020 for implementation within its 2020 10-K filings.

~~Accounting for Income Taxes~~~~. In December 2019, The~~ Financial Accounting Standards Board (“FASB”) issued ASU 2020-04 (and subsequently issued ASU 2021-01 in January 2021), which outlines the issues surrounding the cessation of LIBOR as a reference rate for contractual debt agreements. The guidance also details the potential alternative expedients and sources available for use in determination of rates and terms for such debt agreements in order to apply appropriate accounting policy. The guidance is effective for annual reporting periods beginning after December 15, 2021. The Company is currently evaluating the impact of the adoption of ASU 2020-04 and 2021-01 on its financial statements.

Accounting for Income Taxes. In December 2019, FASB issued ASU 2019-12, which provides simplification of existing guidance for income taxes, including the removal of certain exceptions related to recognition of deferred tax liabilities on foreign subsidiaries. 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~~adopted the ~~impact of the~~guidance

effective January 1, 2021. The adoption of ASU 2019-12 ~~on its financial statements.~~

Simplification of Disclosure Requirements. In August 2018, the 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. The Rule became effective for all financial reports filed after November 5, 2018 (30 days after its publication in the Federal Register), except for the additional requirement for the Statements of Changes in Shareholders’ Equity which was to be implemented for first quarter 2019 reporting. The Company has adopted the portions of the Rule that became effective November 5, 2018. The portion of the Rule related to the new requirement for the Statements of Changes in Shareholders’ Equity was adopted by the Company in the first quarter of 2019.

~~Accounting for Cloud Computing Arrangement.~~ In August 2018, FASB issued 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 adopted the guidance as of January 1, 2020. The adoption of ASU 2018-15 did not have a material impact on the Company’s financial statements.

~~Accounting for Impact on Income Taxes due to Tax Reform~~. In December 2017, the SEC issued Staff Accounting Bulletin (“SAB”) 118, which provides guidance on the application of FASB Accounting Standards Codification (“ASC”) Topic 740, Income Taxes, due to the enactment of TCJA. SAB 118 became effective upon release. The Company has adopted the provisions of SAB 118 with respect to measuring the tax effects for the modifications to the determination of tax basis loss reserves. In 2018, the Company recorded adjustments to the amount of tax expense it recorded in 2017 with respect to the TCJA as estimated amounts were finalized, which did not have a material impact on the Company’s financial statements.

~~Amortization of Bond Premium.~~ In March 2017, FASB issued ASU 2017-08 which outlines guidance on the amortization period for premium on callable debt securities. The new guidance requires that the premium on callable debt securities be amortized through the earliest call date rather than through the maturity date of the callable security. The guidance is effective for annual and interim reporting periods beginning after December 15, 2018. The Company adopted the guidance effective January 1, 2019. The adoption of ASU 2017-08 did not have a material impact on the Company’s financial statements.

~~Valuation of Financial Instruments.~~ In June 2016, FASB issued ASU 2016-13 (and has subsequently issued related guidance and amendments in ASU 2019-11 and ASU 2019-10 in November 2019) which outline guidance on the valuation of and accounting for assets measured at amortized cost and available for sale debt securities. The new guidance requires the carrying value of assets measured at amortized cost, including reinsurance and premiums receivable, to be presented as the net amount expected to be collected on the financial asset (amortized cost less an allowance for credit losses valuation account). The allowance reflects expected credit losses of the financial asset which considers available information using a combination both historical information, current market conditions and reasonable and supportable forecasts. For available-for-sale debt securities, the guidance modified the previous other than temporary impairment model, now

requiring an allowance for estimated credit related losses rather than a permanent impairment, 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 adopted the guidance effective January 1, 2020, on a modified retrospective basis. The adoption resulted in a cumulative adjustment of $907 ~~thousand in retained earnings, net of tax, which is disclosed separately within the Consolidated Statements of Shareholders’ Equity.~~

~~Leases.~~ In February 2016, FASB issued ASU 2016-02 (and subsequently issued ASU 2018-11 in July, 2018) which 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 adopted ASU 2016-02 effective January 1, 2019 and elected to utilize a cumulative-effect adjustment to the 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 the updated guidance did not have a material effect on the Company’s results of operations or liquidity.~~

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

~~Effective January 1, 2020, the Company adopted ASU 2016-13 which modified the previous other than temporary impairment model for available for sale fixed maturity securities.~~ The guidance requires the Company to record allowances for credit losses for securities that are deemed to have valuation deterioration due to credit related factors. The initial table below presents thefollowing tables show amortized cost, allowance for credit losses, gross unrealized ~~appreciation/(depreciation)~~appreciation, gross unrealized depreciation and market value of available for sale, fixed maturity securities as of ~~September 30, 2020 in accordance with ASU 2016-13 guidance. The second table presents~~ the amortized cost, gross unrealized appreciation/(depreciation), market value and other-than-temporary impairments (“OTTI”) in AOCI as of December 31, 2019, in accordance with previously applicable guidancedates indicated:

	At September 30, 2021
	Amortized		Allowances for		Unrealized		Unrealized		Market
(Dollars in thousands)	Cost		Credit Losses		Appreciation		Depreciation		Value
Fixed maturity securities
U.S. Treasury securities and obligations of U.S. government agencies and corporations	$	612,456	$	-	$	12,505	$	(911)	$	624,050
Obligations of U.S. states and political subdivisions		577,289		(151)		31,294		(1,057)		607,375
Corporate securities		3,675,504		(22,889)		119,670		(21,015)		3,751,270
Asset-backed securities		3,162,626		(7,680)		30,688		(2,987)		3,182,647
Mortgage-backed securities
Commercial		575,056		-		26,423		(3,096)		598,383
Agency residential		997,672		-		20,963		(3,523)		1,015,112
Non-agency residential		4,972		-		8		(4)		4,976
Foreign government securities		689,353		-		28,743		(4,747)		713,349
Foreign corporate securities		1,363,669		(393)		46,475		(9,433)		1,400,318
Total fixed maturity securities	$	11,658,597	$	(31,113)	$	316,769	$	(46,773)	$	11,897,480

	At December 31, 2020
	Amortized		Allowances for		Unrealized		Unrealized		Market
(Dollars in thousands)	Cost		Credit Losses		Appreciation		Depreciation		Value
Fixed maturity securities
U.S. Treasury securities and obligations of U.S. government agencies and corporations	$	659,957	$	-	$	22,032	$	-	$	681,989
Obligations of U.S. states and political subdivisions		543,646		-		34,655		(1,255)		577,046
Corporate securities		3,316,525		(1,205)		166,072		(31,480)		3,449,912
Asset-backed securities		2,450,807		-		28,585		(5,222)		2,474,170
Mortgage-backed securities
Commercial		512,388		-		37,875		(183)		550,080
Agency residential		937,166		-		28,630		(696)		965,100
Non-agency residential		3,164		-		2		(2)		3,164
Foreign government securities		694,132		-		51,317		(3,211)		742,238
Foreign corporate securities		1,130,865		(361)		73,265		(3,903)		1,199,866
Total fixed maturity securities	$	10,248,650	$	(1,566)	$	442,433	$	(45,952)	$	10,643,565

At September 30, 2020

Amortized

Allowances for

Unrealized

Unrealized

Market
(Dollars in thousands)
Cost

Credit Losses

Appreciation

Depreciation

Value
Fixed maturity securities

U.S. Treasury securities and obligations of
U.S. government agencies and corporations
$
744,050

$
-

$
28,063

$
-

$
772,113
Obligations of U.S. states and political
subdivisions

513,785

-

30,938

(2,440)

542,283
Corporate securities

3,060,951

(17,237)

144,769

(52,567)

3,135,916
Asset-backed securities

1,239,605

-

20,867

(11,316)

1,249,156
Mortgage-backed securities

Commercial

387,944

-

36,166

(1,071)

423,039
Agency residential

685,446

-

34,218

(382)

719,282
Non-agency residential

337

-

-

(3)

334
Foreign government securities

648,542

-

45,532

(3,426)

690,648
Foreign corporate securities

986,512

(399)

63,622

(5,819)

1,043,916
Total fixed maturity securities
$
8,267,172

$
(17,636)

$
404,175

$
(77,024)

$
8,576,687

At December 31, 2019

Amortized

Unrealized

Unrealized

Market

OTTI in AOCI
(Dollars in thousands)
Cost

Appreciation

Depreciation

Value

(a)
Fixed maturity securities

U.S. Treasury securities and obligations of
U.S. government agencies and corporations
$
768,374

$
10,128

$
(987)

$
777,515

$
-
Obligations of U.S. states and political
subdivisions

506,347

29,651

(87)

535,911

-
Corporate securities

2,777,097

70,898

(26,438)

2,821,557

245
Asset-backed securities

761,607

5,659

(1,309)

765,957

-
Mortgage-backed securities

Commercial

311,961

17,242

(154)

329,049

-
Agency residential

625,612

19,395

(320)

644,687

-
Non-agency residential

1,638

-

-

1,638

-
Foreign government securities

646,149

18,908

(7,050)

658,007

27
Foreign corporate securities

935,640

31,257

(9,139)

957,758

333
Total fixed maturity securities
$
7,334,425

$
203,138

$
(45,484)

$
7,492,079

$
605

^(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.6

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, 2021				At December 31, 2020
	Amortized		Market		Amortized		Market
(Dollars in thousands)	Cost		Value		Cost		Value
Fixed maturity securities – available for sale
Due in one year or less	$	638,736	$	638,370	$	658,561	$	659,622
Due after one year through five years		3,146,824		3,223,451		2,911,285		3,036,151
Due after five years through ten years		2,119,485		2,193,899		1,927,265		2,079,866
Due after ten years		1,013,226		1,040,642		848,014		875,412
Asset-backed securities		3,162,626		3,182,647		2,450,807		2,474,170
Mortgage-backed securities
Commercial		575,056		598,383		512,388		550,080
Agency residential		997,672		1,015,112		937,166		965,100
Non-agency residential		4,972		4,976		3,164		3,164
Total fixed maturity securities	$	11,658,597	$	11,897,480	$	10,248,650	$	10,643,565

At September 30, 2020

At December 31, 2019

Amortized

Market

Amortized

Market
(Dollars in thousands)
Cost

Value

Cost

Value
Fixed maturity securities – available for sale

Due in one year or less
$
774,274

$
771,432

$
569,506

$
563,730
Due after one year through five years

2,745,236

2,840,648

2,919,966

2,963,903
Due after five years through ten years

1,723,844

1,862,590

1,541,695

1,602,642
Due after ten years

710,486

710,206

602,440

620,473
Asset-backed securities

1,239,605

1,249,156

761,607

765,957
Mortgage-backed securities

Commercial

387,944

423,039

311,961

329,049
Agency residential

685,446

719,282

625,612

644,687
Non-agency residential

337

334

1,638

1,638
Total fixed maturity securities
$
8,267,172

$
8,576,687

$
7,334,425

$
7,492,079

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

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
(Dollars in thousands)	2021		2020		2021		2020
Increase (decrease) during the period between the market value and cost of investments carried at market value, and deferred taxes thereon:
Fixed maturity securities and short-term investments	$	(52,322)	$	45,476	$	(126,348)	$	168,996
Change in unrealized appreciation (depreciation), pre-tax		(52,322)		45,476		(126,348)		168,996
Deferred tax benefit (expense)		11,000		(9,509)		26,510		(35,574)
Change in unrealized appreciation (depreciation), net of deferred taxes, included in stockholder's equity	$	(41,322)	$	35,967	$	(99,838)	$	133,422

Three Months Ended

Nine Months Ended

September 30,

September 30,
(Dollars in thousands)
2020

2019

2020

2019
Increase (decrease) during the period between the market value and cost of investments carried at market value, and deferred taxes thereon:

Fixed maturity securities
$
45,476

$
33,473

$
168,996

$
238,301
Fixed maturity securities, other-than-temporary impairment

-

119

-

(581)
Change in unrealized appreciation (depreciation), pre-tax

45,476

33,592

168,996

237,720
Deferred tax benefit (expense)

(9,509)

(7,028)

(35,574)

(49,917)
Deferred tax benefit (expense), other-than-temporary impairment

-

(25)

-

122
Change in unrealized appreciation (depreciation), net of deferred taxes, included in stockholder's equity
$
35,967

$
26,539

$
133,422

$
187,925

The Company reviews all of its fixed maturity, available for sale securities whose fair value has fallen below their amortized cost at the time of review. The Company then assesses whether the decline in value is due to non-credit related or credit related factors. In making its assessment, the Company evaluates the current market and interest rate environment as well as specific issuer information. Generally, a change in a security’s value caused by a change in the market, interest rate or foreign exchange environment does not constitute a credit impairment, but rather a non-credit related decline in market value. Non-credit related declines in market value are recorded as unrealized losses in accumulated other comprehensive income (loss). If the Company intends to sell the security or is more likely than not to sell the security, the Company records the entire fair value adjustment in net realized capital gains (losses) in the Company’s consolidated statements of operations and comprehensive income (loss). If the Company determines that the decline is credit related 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 Company establishes a credit allowance equal to the estimated credit loss and is recorded in net realized capital gains (losses) in the Company’s consolidated statements of operations and comprehensive income (loss). The amount of the allowance for a given security will generally be the difference between a discounted cash flow model and the Company’s carrying value. The fair value adjustment that is non-credit related is recorded as a component of other comprehensive income (loss), net of tax, and is included in accumulated other comprehensive income (loss) in the Company’s

consolidated balance sheets. The Company will adjust the credit allowance account for future changes in credit loss estimates for a

security and record this adjustment through net realized capital gains (losses) in the Company’s consolidated statements of operations and comprehensive income (loss).

The Company does not create an allowance for uncollectible interest. If interest is not received when due, the interest receivable is immediately reversed and no additional interest is accrued. If future interest is received that has not been accrued, it is recorded as income at that time.

Prior to the adoption of ASU 2016-13 effective January 1, 2020, estimated credit losses were recorded as adjustments to the carrying value of the security and any subsequent improvement in market value were recorded through other comprehensive income.

The Company’s assessments are based on the issuers’ current and expected future financial position, timeliness with respect to interest and/or principal payments, speed of repayments and any applicable credit enhancements or breakeven constant default rates on mortgage-backed and asset-backed securities, as well as relevant information provided by rating agencies, investment advisors and analysts.

Retrospective adjustments are employed to recalculate the values of asset-backed securities. All of the Company’s asset-backed and mortgage-backed securities have a pass-through structure. Each acquisition lot is reviewed to recalculate the effective yield. The recalculated effective yield is used to derive a book value as if the new yield were applied at the time of acquisition. Outstanding principal factors from the time of acquisition to the adjustment date are used to calculate the prepayment history for all applicable securities. Conditional prepayment rates, computed with life to date factor histories and weighted average maturities, are used in the calculation of projected prepayments for pass-through security types.

The tables below display the aggregate market value and gross unrealized depreciation of fixed maturity 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:~~ indicated:

	Duration of Unrealized Loss at September 30, 2020 By Security Type													Duration of Unrealized Loss at September 30, 2021 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
	Market			Unrealized		Market		Unrealized		Market		Unrealized		Market		Unrealized		Market		Unrealized		Market		Unrealized
(Dollars in thousands)	Value			Depreciation		Value		Depreciation		Value		Depreciation		Value		Depreciation		Value		Depreciation		Value		Depreciation
Fixed maturity securities - available for sale
U.S. Treasury securities and obligations of U.S. government agencies and corporations														$	164,510	$	(911)	$	-	$	-	$	164,510	$	(911)
Obligations of U.S. states and political subdivisions		49,369			(2,275)		4,943		(165)		54,312		(2,440)		61,687		(937)		3,569		(120)		65,256		(1,057)
Corporate securities		422,208			(15,327)		145,733		(37,240)		567,941		(52,567)		926,023		(15,559)		171,444		(5,456)		1,097,467		(21,015)
Asset-backed securities		316,075			(8,299)		152,001		(3,017)		468,076		(11,316)		579,799		(2,619)		23,396		(368)		603,195		(2,987)
Mortgage-backed securities
Commercial		61,148			(1,067)		3,980		(4)		65,128		(1,071)		82,124		(1,908)		25,450		(1,188)		107,574		(3,096)
Agency residential		114,935			(378)		697		(4)		115,632		(382)		459,632		(2,872)		55,358		(651)		514,990		(3,523)
Non-agency residential		161			(2)		173		(1)		334		(3)		1,724		(2)		156		(2)		1,880		(4)
Foreign government securities		6,698			(94)		26,876		(3,332)		33,574		(3,426)		178,925		(2,881)		10,819		(1,866)		189,744		(4,747)
Foreign corporate securities		102,945			(2,080)		28,774		(3,739)		131,719		(5,819)		430,909		(8,034)		24,008		(1,399)		454,917		(9,433)
Total fixed maturity securities	$	1,073,539		$	(29,522)	$	363,177	$	(47,502)	$	1,436,716	$	(77,024)	$	2,885,334	$	(35,723)	$	314,199	$	(11,050)	$	3,199,533	$	(46,773)

Duration of Unrealized Loss at September 30, 2020 By Maturity

Less than 12 months

Greater than 12 months

Total

Gross

Gross

Gross

Market

Unrealized

Market

Unrealized

Market

Unrealized
(Dollars in thousands)
Value

Depreciation

Value

Depreciation

Value

Depreciation
Fixed maturity securities

Due in one year or less
$
26,900

$
(651)

$
47,826

$
(8,288)

$
74,726

$
(8,939)
Due in one year through five years

234,922

(9,460)

83,469

(5,596)

318,391

(15,056)
Due in five years through ten years

174,002

(3,638)

18,334

(1,158)

192,336

(4,796)
Due after ten years

145,396

(6,027)

56,697

(29,434)

202,093

(35,461)
Asset-backed securities

316,075

(8,299)

152,001

(3,017)

468,076

(11,316)
Mortgage-backed securities

176,244

(1,447)

4,850

(9)

181,094

(1,456)
Total fixed maturity securities
$
1,073,539

$
(29,522)

$
363,177

$
(47,502)

$
1,436,716

$
(77,024)

	Duration of Unrealized Loss at September 30, 2021 By Maturity
	Less than 12 months				Greater than 12 months				Total
			Gross				Gross				Gross
	Market		Unrealized		Market		Unrealized		Market		Unrealized
(Dollars in thousands)	Value		Depreciation		Value		Depreciation		Value		Depreciation
Fixed maturity securities
Due in one year or less	$	99,157	$	(1,838)	$	23,908	$	(2,582)	$	123,065	$	(4,420)
Due in one year through five years		756,922		(8,846)		124,406		(3,228)		881,328		(12,074)
Due in five years through ten years		614,332		(12,640)		34,678		(1,876)		649,010		(14,516)
Due after ten years		291,643		(4,998)		26,847		(1,155)		318,490		(6,153)
Asset-backed securities		579,799		(2,619)		23,396		(368)		603,195		(2,987)
Mortgage-backed securities		543,480		(4,782)		80,964		(1,841)		624,444		(6,623)
Total fixed maturity securities	$	2,885,334	$	(35,723)	$	314,199	$	(11,050)	$	3,199,533	$	(46,773)

The aggregate market value and gross unrealized losses related to investments in an unrealized loss position at September 30, ~~2020~~2021 were ~~$1,436,716~~ ~~thousand~~$3,199.5 million and ~~$77,024~~ ~~thousand,~~$46.8 million, respectively. The market value of securities for the single issuer whose securities comprised the largest unrealized loss position at September 30, ~~2020,~~2021, did not exceed ~~0.1~~%0.4% of the overall market value of the Company’s fixed maturity securities. In addition, as indicated on the above table, there was no significant concentration of unrealized losses in any one market sector. The ~~$29,522~~ ~~thousand~~$35.7 million 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, asset backed securities and ~~asset~~agency residential mortgage backed securities. Of these unrealized losses, ~~$17,083~~ ~~thousand~~$30.2 million were related to securities that were rated investment grade by at least one nationally recognized ~~statistical~~ rating agency. The ~~$47,502~~ ~~thousand~~$11.1 million of unrealized losses related to fixed maturity securities in an unrealized loss position for more than one year related primarily to domestic and foreign corporate securities as well as foreign government ~~securities and asset backed~~ securities. Of these unrealized losses ~~$11,390~~ ~~thousand~~$8.7 million were related to securities that were rated investment grade by at least one nationally recognized ~~statistical~~ rating agency. There was no0 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, 2020 By Security Type
	Less than 12 months				Greater than 12 months				Total
			Gross				Gross				Gross
	Market		Unrealized		Market		Unrealized		Market		Unrealized
(Dollars in thousands)	Value		Depreciation		Value		Depreciation		Value		Depreciation
Fixed maturity securities - available for sale
Obligations of U.S. states and political subdivisions		19,524		(999)		4,059		(256)		23,583		(1,255)
Corporate securities		240,601		(7,799)		188,853		(23,681)		429,454		(31,480)
Asset-backed securities		223,919		(4,573)		81,952		(649)		305,871		(5,222)
Mortgage-backed securities
Commercial		37,414		(182)		3,983		(1)		41,397		(183)
Agency residential		235,809		(682)		1,573		(14)		237,382		(696)
Non-agency residential		161		(2)		-		-		161		(2)
Foreign government securities		10,505		(373)		25,793		(2,838)		36,298		(3,211)
Foreign corporate securities		57,900		(2,182)		18,349		(1,721)		76,249		(3,903)
Total fixed maturity securities	$	825,833	$	(16,792)	$	324,562	$	(29,160)	$	1,150,395	$	(45,952)

	Duration of Unrealized Loss at December 31, 2020 By Maturity
	Less than 12 months				Greater than 12 months				Total
			Gross				Gross				Gross
	Market		Unrealized		Market		Unrealized		Market		Unrealized
(Dollars in thousands)	Value		Depreciation		Value		Depreciation		Value		Depreciation
Fixed maturity securities
Due in one year or less	$	28,802	$	(1,218)	$	34,555	$	(4,142)	$	63,357	$	(5,360)
Due in one year through five years		150,106		(5,828)		116,987		(4,783)		267,093		(10,611)
Due in five years through ten years		81,492		(1,634)		13,118		(435)		94,610		(2,069)
Due after ten years		68,130		(2,673)		72,394		(19,136)		140,524		(21,809)
Asset-backed securities		223,919		(4,573)		81,952		(649)		305,871		(5,222)
Mortgage-backed securities		273,384		(866)		5,556		(15)		278,940		(881)
Total fixed maturity securities	$	825,833	$	(16,792)	$	324,562	$	(29,160)	$	1,150,395	$	(45,952)

Duration of Unrealized Loss at December 31, 2019 By Security Type

Less than 12 months

Greater than 12 months

Total

Gross

Gross

Gross

Market

Unrealized

Market

Unrealized

Market

Unrealized
(Dollars in thousands)
Value

Depreciation

Value

Depreciation

Value

Depreciation
Fixed maturity securities -
  available for sale

U.S. Treasury securities and
  obligations of U.S. government
  agencies and corporations
$
8,997

$
(141)

$
203,780

$
(846)

$
212,777

$
(987)
Obligations of U.S. states and
  political subdivisions

4,600

(38)

4,518

(49)

9,118

(87)
Corporate securities

334,973

(5,186)

230,679

(21,252)

565,652

(26,438)
Asset-backed securities

159,695

(887)

76,351

(422)

236,046

(1,309)
Mortgage-backed securities

Commercial

13,083

(87)

16,374

(67)

29,457

(154)
Agency residential

19,019

(82)

17,147

(238)

36,166

(320)
Non-agency residential

-

-

690

-

690

-
Foreign government securities

113,256

(858)

109,953

(6,192)

223,209

(7,050)
Foreign corporate securities

105,551

(1,260)

121,710

(7,879)

227,261

(9,139)
Total fixed maturity securities
$
759,174

$
(8,539)

$
781,202

$
(36,945)

$
1,540,376

$
(45,484)

Duration of Unrealized Loss at December 31, 2019 By Maturity

Less than 12 months

Greater than 12 months

Total

Gross

Gross

Gross

Market

Unrealized

Market

Unrealized

Market

Unrealized
(Dollars in thousands)
Value

Depreciation

Value

Depreciation

Value

Depreciation
Fixed maturity securities

Due in one year or less
$
34,542

$
(1,067)

$
188,755

$
(6,411)

$
223,297

$
(7,478)
Due in one year through five years

226,521

(2,554)

357,728

(11,562)

584,249

(14,116)
Due in five years through ten years

251,967

(3,292)

43,129

(6,785)

295,096

(10,077)
Due after ten years

54,347

(570)

81,028

(11,460)

135,375

(12,030)
Asset-backed securities

159,695

(887)

76,351

(422)

236,046

(1,309)
Mortgage-backed securities

32,102

(169)

34,211

(305)

66,313

(474)
Total fixed maturity securities
$
759,174

$
(8,539)

$
781,202

$
(36,945)

$
1,540,376

$
(45,484)

The aggregate market value and gross unrealized losses related to investments in an unrealized loss position at December 31, ~~2019~~2020 were ~~$1,540,376~~ ~~thousand~~$1,150.4 million and ~~$45,484~~ ~~thousand,~~$46.0 million, respectively. The market value of securities for the single issuer whose securities comprised the largest unrealized loss position at December 31, ~~2019,~~2020, did not exceed ~~0.2~~%0.2% of the overall market value of the Company’s fixed maturity securities. In addition, as indicated on the above table, there was no significant concentration of unrealized losses in any one market sector. The ~~$8,539~~ ~~thousand~~$16.8 million 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 as well as asset backed securities. Of these unrealized losses, ~~$5,645~~ ~~thousand~~$12.5 million were related to securities that were rated investment grade by at least one nationally recognized ~~statistical~~ rating agency. The ~~$36,945~~ ~~thousand~~$29.2 million of unrealized losses related to fixed maturity securities in an unrealized loss position for more than one year related primarily to domestic and foreign corporate securities and foreign government securities. Of these unrealized losses ~~$16,976~~ ~~thousand~~$5.9 million were related to securities that were rated investment grade by at least one nationally recognized ~~statistical~~ rating agency. There was no0 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.

1210

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

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
(Dollars in thousands)	2021		2020		2021		2020
Fixed maturities	$	83,412	$	78,272	$	260,428	$	227,257
Equity securities		3,774		2,504		10,082		6,120
Short-term investments and cash		73		410		309		2,558
Other invested assets
Limited partnerships		81,928		35,908		260,486		2,439
Dividends from preferred shares of affiliate		7,758		7,758		23,274		23,274
Other		30,954		14,743		62,829		(1,291)
Gross investment income before adjustments		207,899		139,595		617,408		260,358
Funds held interest income (expense)		814		957		7,035		5,115
Interest income from Parent		1,607		1,295		4,156		3,858
Gross investment income		210,320		141,848		628,599		269,331
Investment expenses		(13,159)		(6,420)		(35,580)		(24,549)
Net investment income	$	197,161	$	135,428	$	593,019	$	244,782

(Some amounts may not reconcile due to rounding.)

Three Months Ended

Nine Months Ended

September 30,

September 30,
(Dollars in thousands)
2020

2019

2020

2019
Fixed maturities
$
78,272

$
68,178

$
227,257

$
200,606
Equity securities

2,504

1,971

6,120

5,721
Short-term investments and cash

410

2,210

2,558

8,115
Other invested assets

Limited partnerships

35,908

15,102

2,439

38,273
Dividends from preferred shares of affiliate

7,758

7,758

23,274

23,274
Other

14,743

7,285

(1,291)

13,564
Gross investment income before adjustments

139,595

102,504

260,358

289,553
Funds held interest income (expense)

957

1,108

5,115

5,434
Interest income from Parent

1,295

-

3,858

-
Gross investment income

141,848

103,612

269,331

294,987
Investment expenses

(6,420)

(8,020)

(24,549)

(24,152)
Net investment income
$
135,428

$
95,592

$
244,782

$
270,835

(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. The net investment income from limited partnerships is dependent upon the Company’s share of the net asset values of interests underlying each limited partnership. 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 ~~$1,008,757~~ ~~thousand~~$,12152. million in limited partnerships and private placement ~~loans~~loan securities at September 30, ~~2020.~~2021. These commitments will be funded when called in accordance with the partnership and loan agreements, which have investment periods that expire, unless extended, through 2026.

The Company participates in a private placement liquidity sweep facility (“the facility”). The primary purpose of the facility is to enhance the Company’s return on its short-term investments and cash positions. The facility invests in high quality, short-duration securities and permits daily liquidity. The Company consolidates its participation in the facility. As of September 30, ~~2020,~~2021, the market value of investments in the facility consolidated within the Company’s balance sheets was ~~$765,573~~ ~~thousand.~~ $241.6 million.

1311

Other invested assets, at fair value, as of September 30, ~~2020~~2021 and December 31, ~~2019,~~2020, were comprised of preferred shares held in Everest Preferred International Holdings, ~~an affiliated company.~~Ltd. (“Preferred Holdings”), a wholly-owned subsidiary of Group.

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

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
(Dollars in thousands)	2021		2020		2021		2020
Fixed maturity securities, market value:
Allowances for credit losses	$	(7,329)	$	2,289	$	(29,546)	$	(17,636)
Gains (losses) from sales		2,725		(31)		10,780		(19,005)
Fixed maturity securities, fair value:
Gains (losses) from sales		-		(1,968)		-		(1,968)
Gains (losses) from fair value adjustments		-		3,339		-		1,944
Equity securities, fair value:
Gains (losses) from sales		(488)		(281)		6,335		(11,609)
Gains (losses) from fair value adjustments		(4,446)		94,260		136,929		120,796
Other invested assets		1,920		1,085		6,014		50
Other invested assets, fair value:
Gains (losses) from fair value adjustments		(43,832)		15,741		136,798		(180,838)
Short-term investment gains (losses)		(1)		759		13		966
Total net realized capital gains (losses)	$	(51,451)	$	115,193	$	267,323	$	(107,300)

	Roll Forward of Allowance for Credit Losses
	Three Months Ended September 30, 2021										Nine Months Ended September 30, 2021
			Asset		Obligations of U.S. states and political subdivisions		Foreign						Asset		Obligations of U.S. states and political subdivisions		Foreign
	Corporate		Backed				Corporate				Corporate		Backed				Corporate
	Securities		Securities				Securities		Total		Securities		Securities				Securities		Total
Beginning Balance	$	(18,475)	$	(4,915)	$	-	$	(393)	$	(23,783)	$	(1,205)	$	-	$	-	$	(361)	$	(1,566)
Credit losses on securities where credit
losses were not previously recorded		(5,257)		-		(151)		-		(5,408)		(21,178)		(4,915)		(151)		(188)		(26,432)
Increases in allowance on previously
impaired securities		(620)		(2,765)		-		-		(3,385)		(2,088)		(2,765)		-		-		(4,853)
Decreases in allowance on previously
impaired securities		-		-		-		-		-		-		-		-		-		-
Reduction in allowance due to disposals		1,463		-		-		-		1,463		1,582		-		-		156		1,738

Balance as of September 30, 2021	$	(22,889)	$	(7,680)	$	(151)	$	(393)	$	(31,113)	$	(22,889)	$	(7,680)	$	(151)	$	(393)	$	(31,113)

	Roll Forward of Allowance for Credit Losses
	Three Months Ended September 30, 2020								Nine Months Ended September 30, 2020
			Foreign		Foreign						Foreign		Foreign
	Corporate		Government		Corporate				Corporate		Government		Corporate
	Securities		Securities		Securities		Total		Securities		Securities		Securities		Total

Beginning Balance	$	(19,398)	$	-	$	(527)	$	(19,925)	$	-	$	-	$	-	$	-
Credit losses on securities where credit
losses were not previously recorded		(6)		-		-		(6)		(21,829)		(70)		(561)		(22,460)
Increases in allowance on previously
impaired securities		(5,354)		-		-		(5,354)		(5,909)		-		(211)		(6,120)
Decreases in allowance on previously
impaired securities		65		-		128		193		1,303		-		244		1,547
Reduction in allowance due to disposals		7,456		-		-		7,456		9,198		70		129		9,397

Balance as of September 30, 2020	$	(17,237)	$	-	$	(399)	$	(17,636)	$	(17,237)	$	-	$	(399)	$	(17,636)

Three Months Ended

Nine Months Ended

September 30,

September 30,
(Dollars in thousands)
2020

2019

2020

2019
Fixed maturity securities, market value:

Allowances for credit losses
$
2,289

$
-

$
(17,636)

$
-
Other-than-temporary impairments

-

(6,968)

-

(14,187)
Gains (losses) from sales

(31)

2,200

(19,005)

3,313
Fixed maturity securities, fair value:

Gains (losses) from sales

(1,968)

-

(1,968)

356
Gains (losses) from fair value adjustments

3,339

-

1,944

13
Equity securities, fair value:

Gains (losses) from sales

(281)

(1,192)

(11,609)

2,538
Gains (losses) from fair value adjustments

94,260

(10,326)

120,796

93,349
Other invested assets

1,085

2,097

50

2,341
Other invested assets, fair value:

Gains (losses) from fair value adjustments

15,741

126,655

(180,838)

302,306
Short-term investment gains (losses)

759

76

966

132
Total net realized capital gains (losses)
$
115,193

$
112,542

$
(107,300)

$
390,161

Roll Forward of Allowance for Credit Losses

Three Months Ended September 30, 2020

Nine Months Ended September 30, 2020

Foreign

Foreign

Foreign

Foreign

Corporate

Government

Corporate

Corporate

Government

Corporate

Securities

Securities

Securities

Total

Securities

Securities

Securities

Total
Beginning Balance
$
(19,398)

$
-

$
(527)

$
(19,925)

$
-

$
-

$
-

$
-
Credit losses on securities where credit

losses were not previously recorded

(6)

-

-

(6)

(21,829)

(70)

(561)

(22,460)
Increases in allowance on previously

impaired securities

(5,354)

-

-

(5,354)

(5,909)

-

(211)

(6,120)
Decreases in allowance on previously

impaired securities

65

-

128

193

1,303

-

244

1,547
Reduction in allowance due to disposals

7,456

-

-

7,456

9,198

70

129

9,397

Balance as of September 30, 2020
$
(17,237)

$
-

$
(399)

$
(17,636)

$
(17,237)

$
-

$
(399)

$
(17,636)

The Company recorded as net realized capital gains (losses) in the consolidated statements of operations and comprehensive income (loss) fair value re-measurements, allowances for credit losses per ASU 2016-13 and

write-downs in the value of securities deemed to be impaired on an other-than-temporary basis in prior years 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
	September 30,				September 30,
(Dollars in thousands)	2021		2020		2021		2020
Proceeds from sales of fixed maturity securities	$	151,932	$	84,822	$	394,004	$	422,545
Gross gains from sales		8,868		4,977		24,067		15,578
Gross losses from sales		(6,143)		(6,976)		(13,287)		(36,551)

Proceeds from sales of equity securities	$	104,231	$	115,516	$	450,319	$	328,519
Gross gains from sales		2,769		9,503		17,706		30,256
Gross losses from sales		(3,257)		(9,784)		(11,371)		(41,865)

Three Months Ended

Nine Months Ended

September 30,

September 30,
(Dollars in thousands)
2020

2019

2020

2019
Proceeds from sales of fixed maturity securities
$
84,822

$
213,132

$
422,545

$
2,220,440
Gross gains from sales

4,977

6,638

15,578

17,875
Gross losses from sales

(6,976)

(4,438)

(36,551)

(14,206)

Proceeds from sales of equity securities
$
115,516

$
35,925

$
328,519

$
184,898
Gross gains from sales

9,503

1,035

30,256

9,283
Gross losses from sales

(9,784)

(2,227)

(41,865)

(6,745)

4. RESERVES FOR LOSSES AND LAE

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

	Nine Months Ended September 30,
(Dollars in thousands)		2021		2020
Gross reserves beginning of period	$	11,654,950	$	10,209,519
Less reinsurance recoverables on unpaid losses		(3,951,474)		(4,215,348)
Net reserves beginning of period		7,703,476		5,994,171
Incurred related to:
Current year		4,106,331		3,288,049
Prior years		(3,610)		(4,853)
Total incurred losses and LAE		4,102,721		3,283,196
Paid related to:
Current year		1,117,795		856,707
Prior years		1,186,019		1,275,408
Total paid losses and LAE		2,303,814		2,132,115

Foreign exchange/translation adjustment and cumulative adjustment due to adoption of ASU 2016-13		(19,783)		(5,954)

Net reserves end of period		9,482,600		7,139,298
Plus reinsurance recoverables on unpaid losses		3,839,211		3,902,713
Gross reserves end of period	$	13,321,811	$	11,042,011

(Some amounts may not reconcile due to rounding.)

Nine Months Ended September 30,
(Dollars in thousands)

2020

2019
Gross reserves beginning of period
$
10,209,519

$
10,167,018
Less reinsurance recoverables

(4,215,348)

(4,697,543)
Net reserves beginning of period

5,994,171

5,469,475
Incurred related to:

Current year

3,288,049

2,709,367
Prior years

(4,853)

28,044
Total incurred losses and LAE

3,283,196

2,737,411
Paid related to:

Current year

856,707

505,856
Prior years

1,275,408

1,600,956
Total paid losses and LAE

2,132,115

2,106,812

Foreign exchange/translation adjustment and cumulative adjustment due to adoption of ASU 2016-13

(5,954)

(2,720)

Net reserves end of period

7,139,298

6,097,354
Plus reinsurance recoverables

3,902,713

4,314,820
Gross reserves end of period
$
11,042,011

$
10,412,174

(Some amounts may not reconcile due to rounding.)

Current year incurred losses were ~~$3,288,049~~ ~~thousand~~$4,106.3 and $3,288.0 million for the nine months ended September 30, 2021 and 2020, respectively. Gross and net reserves increased for the nine months ended September 30, 2021, reflecting an increase in underlying exposure due to premium growth and catastrophe losses of $837.4 million and $341.0 million for the nine months ended September 30, 2021 and 2020, respectively. In addition, current year incurred losses for the nine months ended September 30, 2020 ~~and $2,709,367~~ ~~thousand for~~included $104.8 million of losses associated with the ~~nine months ended September 30, 2019, respectively. The increase~~COVID-19 Pandemic which did not recur in ~~current year incurred losses in 2020 compared to 2019 was primarily due to $104,831~~ ~~thousand of incurred losses due to COVID-19 as well as the impact of the increase in premiums earned.~~2021.

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.~~

Level 1Inputs to the valuation methodology are observable inputs that reflect unadjusted quoted prices for identical assets or liabilities in an active market;

Level 2:Inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, and inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the financial instrument;

Level 3:Inputs to the valuation methodology are unobservable and significant to the fair value measurement.

The Company’s fixed maturity and equity securities are primarily managed by third party investment asset managers. The investment asset managers managing publicly traded securities 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. At September 30, ~~2020, $1,063,886~~ ~~thousand~~2021, $1,732.3 million of fixed maturities, market ~~value and $3,748~~ ~~thousand of fixed maturities, fair~~ value were fair valued using unobservable inputs. The majority of the fixed maturities, market ~~value, $805,061~~ ~~thousand and all of the $3,748~~ ~~thousand of fixed maturities, fair~~ value, were valued by investment managers’ valuation committees and many of these fair values were substantiated by valuations from independent third parties. The Company has procedures in place to evaluate these independent third party valuations. ~~The remaining Level 3 fixed maturities of $258,825~~ ~~thousand were fair valued by the Company at either par or amortized cost, which the Company believes approximates fair value.~~ At December 31, ~~2019, $702,331~~ ~~thousand~~2020, $1,259.6 million of fixed maturities, market ~~value and $5,826~~ ~~thousand of fixed maturities, fair~~ value were fair valued using unobservable inputs. ~~The majority of the fixed maturities, market value, $610,873~~ ~~thousand and all of the $5,826~~ thousand of fixed maturities, fair value, were valued by investment managers’ valuation committees and a majority of these fair values were substantiated by valuations from independent third parties. The remaining Level 3 fixed maturities of $91,458 ~~thousand were fair valued by the Company at either par or amortized cost, which the Company believes approximates fair value.~~

The Company internally manages a public equity portfolio which had a fair value at September 30, ~~2020~~2021 and December 31, ~~2019~~2020 of ~~$591,681~~ ~~thousand~~$1,253.9 million and ~~$170,888~~ ~~thousand,~~$784.7 million, 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~~In addition to the valuations from investment managers, some of 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 may 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 Level 1 and Level 2 are as follows:

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

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

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

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

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

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

Other invested assets, at fair value, were categorized as Level 3 at September 30, ~~2020~~2021 and December 31, ~~2019,~~2020, since it represented a privately placed convertible preferred stock issued by an affiliate. The stock was received in exchange for shares of the Company’s parent. The 25 ~~year~~25-year redeemable, convertible preferred stock with a ~~1.75~~%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 10 year and the swap rate on the Company’s June 1, 2044,~~, 4.868~~% 4.868% senior

notes, with adjustments to reflect the Company’s own assumptions about the inputs that market participants would use in pricing the asset.

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

			Fair Value Measurement Using:
			Quoted Prices
			in Active		Significant
			Markets for		Other		Significant
			Identical		Observable		Unobservable
			Assets		Inputs		Inputs
(Dollars in thousands)	September 30, 2021		(Level 1)		(Level 2)		(Level 3)
Assets:
Fixed maturities, market value
U.S. Treasury securities and obligations of U.S. government agencies and corporations	$	624,050	$	-	$	624,050	$	-
Obligations of U.S. states and political subdivisions		607,375		-		607,375		-
Corporate securities		3,751,270		-		3,027,877		723,393
Asset-backed securities		3,182,647		-		2,178,578		1,004,069
Mortgage-backed securities
Commercial		598,383		-		598,383		-
Agency residential		1,015,112		-		1,015,112		-
Non-agency residential		4,976		-		4,976		-
Foreign government securities		713,349		-		713,349		-
Foreign corporate securities		1,400,318		-		1,395,444		4,874
Total fixed maturities, market value		11,897,480		-		10,165,144		1,732,336

Equity securities, fair value		1,488,355		1,451,271		37,084		-
Other invested assets, fair value		1,933,277		-		-		1,933,277

			Fair Value Measurement Using:
			Quoted Prices
			in Active		Significant
			Markets for		Other		Significant
			Identical		Observable		Unobservable
			Assets		Inputs		Inputs
(Dollars in thousands)	December 31, 2020		(Level 1)		(Level 2)		(Level 3)
Assets:
Fixed maturities, market value
U.S. Treasury securities and obligations of U.S. government agencies and corporations	$	681,989	$	-	$	681,989	$	-
Obligations of U.S. states and political subdivisions		577,046		-		577,046		-
Corporate securities		3,449,912		-		2,819,068		630,844
Asset-backed securities		2,474,170		-		1,851,137		623,033
Mortgage-backed securities
Commercial		550,080		-		550,080		-
Agency residential		965,100		-		965,100		-
Non-agency residential		3,164		-		3,164		-
Foreign government securities		742,238		-		742,238		-
Foreign corporate securities		1,199,866		-		1,194,167		5,699
Total fixed maturities, market value		10,643,565		-		9,383,989		1,259,576

Equity securities, fair value		1,288,767		1,222,158		66,609		-
Other invested assets, fair value		1,796,479		-		-		1,796,479

Fair Value Measurement Using:

Quoted Prices

in Active

Significant

Markets for

Other

Significant

Identical

Observable

Unobservable

Assets

Inputs

Inputs
(Dollars in thousands)

September 30, 2020

(Level 1)

(Level 2)

(Level 3)
Assets:

Fixed maturities, market value

U.S. Treasury securities and obligations of
U.S. government agencies and corporations

$
772,113

$
-

$
772,113

$
-
Obligations of U.S. States and political subdivisions

542,283

-

542,283

-
Corporate securities

3,135,916

-

2,482,521

653,395
Asset-backed securities

1,249,156

-

844,367

404,789
Mortgage-backed securities

Commercial

423,039

-

423,039

-
Agency residential

719,282

-

719,282

-
Non-agency residential

334

-

334

-
Foreign government securities

690,648

-

690,648

-
Foreign corporate securities

1,043,916

-

1,038,214

5,702
Total fixed maturities, market value

8,576,687

-

7,512,801

1,063,886

Fixed maturities, fair value

3,748

-

-

3,748
Equity securities, fair value

1,010,264

946,928

63,336

-
Other invested assets, fair value

1,801,743

-

-

1,801,743

~~There were no~~ ~~transfers between Level 1 and Level 2 for the three and nine months ended September 30, 2020.~~

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

Fair Value Measurement Using:

Quoted Prices

in Active

Significant

Markets for

Other

Significant

Identical

Observable

Unobservable

Assets

Inputs

Inputs
(Dollars in thousands)
December 31, 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
$
777,515

$
-

$
777,515

$
-
Obligations of U.S. States and political subdivisions

535,911

-

535,911

-
Corporate securities

2,821,557

-

2,274,618

546,939
Asset-backed securities

765,957

-

612,316

153,641
Mortgage-backed securities

Commercial

329,049

-

329,049

-
Agency residential

644,687

-

644,687

-
Non-agency residential

1,638

-

1,638

-
Foreign government securities

658,007

-

658,007

-
Foreign corporate securities

957,758

-

956,007

1,751
Total fixed maturities, market value

7,492,079

-

6,789,748

702,331

Fixed maturities, fair value

5,826

-

-

5,826
Equity securities, fair value

764,049

719,548

44,501

-
Other invested assets, fair value

1,982,582

-

-

1,982,582

In addition, ~~$218,821~~ ~~thousand~~$266.3 million and ~~$209,578~~ ~~thousand~~$224.7 million of investments within other invested assets on the consolidated balance sheets as of September 30, ~~2020~~2021 and December 31, ~~2019,~~2020, 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, 2020								Nine Months Ended September 30, 2020								Three Months Ended September 30, 2021								Nine Months Ended September 30, 2021
	Corporate		Asset		Foreign				Corporate		Asset		Foreign						Asset								Asset
(Dollars in thousands)	Securities		Backed Securities		Corporate		Total		Securities		Backed Securities		Corporate		Total		Corporate Securities		Backed Securities		Foreign Corporate		Total		Corporate Securities		Backed Securities		Foreign Corporate		Total
Beginning balance	$	651,186	$	295,730	$	6,274	$	953,190	$	546,939	$	153,641	$	1,751	$	702,331	$	634,923	$	815,276	$	4,886	$	1,455,085	$	630,843	$	623,033	$	5,700	$	1,259,576
Total gains or (losses) (realized/unrealized)
Included in earnings		361		457		26		844		(101)		582		(71)		410		3,184		(3,292)		33		(75)		(12,366)		(7,254)		173		(19,447)
Included in other comprehensive income (loss)		(992)		5,028		126		4,162		(4,898)		7,238		86		2,426		(1,311)		(381)		(34)		(1,726)		6,107		4,094		(70)		10,131
Purchases, issuances and settlements		(1,349)		103,574		139		102,364		112,061		243,328		3,822		359,211		86,597		192,466		(11)		279,052		98,809		384,196		(929)		482,076
Transfers in and/or (out) of Level 3		4,189		-		(863)		3,326		(606)		-		114		(492)		-		-		-		-		-		-		-		-
Ending balance	$	653,395	$	404,789	$	5,702	$	1,063,886	$	653,395	$	404,789	$	5,702	$	1,063,886	$	723,393	$	1,004,069	$	4,874	$	1,732,336	$	723,393	$	1,004,069	$	4,874	$	1,732,336
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	$	-	$	-	$	-	$	-	$	(539)	$	-	$	-	$	(539)	$	761	$	(2,764)	$	-	$	(2,003)	$	(16,518)	$	(7,679)	$	-	$	(24,197)

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

Total Fixed Maturities, Market Value

Three Months Ended September 30, 2019

Nine Months Ended September 30, 2019

Corporate

Asset

Foreign

Corporate

Asset

Foreign

(Dollars in thousands)
Securities

Backed Securities

Corporate

Total

Securities

Backed Securities

Corporate

Total
Beginning balance
$
472,229

$
-

$
2,093

$
474,322

$
376,250

$
-

$
7,744

$
383,994
Total gains or (losses) (realized/unrealized)

Included in earnings

1,018

-

-

1,018

3,348

-

(119)

3,229
Included in other comprehensive income (loss)

(1,314)

644

-

(670)

1,130

644

-

1,774
Purchases, issuances and settlements

42,289

40,000

-

82,289

131,975

40,000

(5,532)

166,443
Transfers in and/or (out) of Level 3

3,176

-

-

3,176

4,695

-

-

4,695
Ending balance
$
517,398

$
40,644

$
2,093

$
560,135

$
517,398

$
40,644

$
2,093

$
560,135
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, 2020

Nine Months Ended September 30, 2020

Foreign

Foreign

(Dollars in thousands)
Corporate

Total

Corporate

Total
Beginning balance fixed maturities at fair value
$
4,431

$
4,431

$
5,826

$
5,826
Total gains or (losses) (realized/unrealized)

Included in earnings

1,371

1,371

(24)

(24)
Included in other comprehensive income (loss)

-

-

-

-
Purchases, issuances and settlements

(2,054)

(2,054)

(2,054)

(2,054)
Transfers in and/or (out) of Level 3

-

-

-

-
Ending balance
$
3,748

$
3,748

$
3,748

$
3,748
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
	Three Months Ended September 30, 2020								Nine Months Ended September 30, 2020
			Asset								Asset
(Dollars in thousands)	Corporate Securities		Backed Securities		Foreign Corporate		Total		Corporate Securities		Backed Securities		Foreign Corporate		Total
Beginning balance	$	651,186	$	295,730	$	6,274	$	953,190	$	546,939	$	153,641	$	1,751	$	702,331
Total gains or (losses) (realized/unrealized)
Included in earnings		361		457		26		844		(101)		582		(71)		410
Included in other comprehensive income (loss)		(992)		5,028		126		4,162		(4,898)		7,238		86		2,426
Purchases, issuances and settlements		(1,349)		103,574		139		102,364		112,061		243,328		3,822		359,211
Transfers in and/or (out) of Level 3		4,189		-		(863)		3,326		(606)		-		114		(492)
Ending balance	$	653,395	$	404,789	$	5,702	$	1,063,886	$	653,395	$	404,789	$	5,702	$	1,063,886
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	$	-	$	-	$	-	$	-	$	(539)	$	-	$	-	$	(539)

(Some amounts may not reconcile due to rounding.)

Total Fixed Maturities, Fair Value

Three Months Ended September 30, 2019

Nine Months Ended September 30, 2019

Foreign

Foreign

(Dollars in thousands)
Corporate

Total

Corporate

Total
Beginning balance fixed maturities at fair value
$
-

$
-

$
2,337

$
2,337
Total gains or (losses) (realized/unrealized)

Included in earnings

-

-

369

369
Included in other comprehensive income (loss)

-

-

-

-
Purchases, issuances and settlements

-

-

(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.)

The net transfers to/(from) Level 3, fair value measurements using significant unobservable inputs for fixed maturities, market value were ~~$3,326~~ ~~thousand~~$3.3 million and ($~~492) thousand~~0.5) million for the three and nine months ended September 30, 2020, ~~respectively, and were $3,176~~ ~~thousand and $4,695~~ ~~thousand for the three and nine months ended September 30, 2019,~~ respectively. The net transfers ~~of $3,326~~ ~~thousand during~~for the three months ended September 30, 2020 were previously priced byusing a recognized pricing service and were subsequently priced ~~using~~by investment managers as of September 30, 2020. The net transfers ~~of ($492) thousand during~~for the nine months ended September 30, 2020 were ~~related to securities that were~~ previously priced ~~using~~by investment managers and were subsequently priced byusing a recognized pricing service as of September ~~30, 2020. The transfers of $3,176~~ ~~thousand and $4,695~~ ~~thousand during 2019 were related to securities that were previously priced by a recognized pricing service and were subsequently priced using investment managers as of September 30, 2019.~~30,2020.

	Total Fixed Maturities, Fair Value
	Three Months Ended September 30, 2020				Nine Months Ended September 30, 2020
	Foreign				Foreign
(Dollars in thousands)	Corporate		Total		Corporate		Total
Beginning balance fixed maturities at fair value	$	4,431	$	4,431	$	5,826	$	5,826
Total gains or (losses) (realized/unrealized)
Included in earnings		1,371		1,371		(24)		(24)
Included in other comprehensive income (loss)		-		-		-		-
Purchases, issuances and settlements		(2,054)		(2,054)		(2,054)		(2,054)
Transfers in and/or (out) of Level 3		-		-		-		-
Ending balance	$	3,748	$	3,748	$	3,748	$	3,748
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 following table presents the activity under Level 3, fair value measurements using significant unobservable inputs by equity securities for the periods indicated:

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
(Dollars in thousands)	2021		2020		2021		2020
Equity securities
Balance, beginning of period	$	-	$	9,877	$	-	$	-
Total (gains) or losses (realized/unrealized)
Included in earnings		-		-		-		-
Included in other comprehensive income (loss)		-		-		-		-
Purchases, issuances and settlements		-		-		-		9,877
Transfers in and/or (out) of Level 3		-		(9,877)		-		(9,877)
Balance, end of period	$	-	$	-	$	-	$	-

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 liabilities still held at the reporting date	$	-	$	-	$	-	$	-

(Some amounts may not reconcile due to rounding.)

Three Months Ended

Nine Months Ended

September 30,

September 30,
(Dollars in thousands)
2020

2019

2020

2019
Equity securities

Balance, beginning of period
$
9,877

$
-

$
-

$
-
Total (gains) or losses (realized/unrealized)

Included in earnings

-

-

-

-
Included in other comprehensive income (loss)

-

-

-

-
Purchases, issuances and settlements

-

-

9,877

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

(9,877)

-

(9,877)

-
Balance, end of period
$
-

$
-

$
-

$
-

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 liabilities still held at the reporting date
$
-

$
-

$
-

$
-

(Some amounts may not reconcile due to rounding.)

The net transfers to/(from) ~~Level~~level 3, fair value measurements using significant unobservable inputs for equity securities, fair value were ($~~9,877) thousand~~9.9) million for both the three and nine months ended September 30, 2020. The transfers of ($~~9,877) thousand~~9.9) million during both the three and nine months ended September 30, 2020, were related to preferred stock in a private entity purchased during the second quarter of 2020 which was priced at cost as of June 30, 2020 and was subsequently priced based upon the book value of the underlying private entity as of September 30, 2020.

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
	September 30,				September 30,
(Dollars in thousands)	2021		2020		2021		2020
Other invested assets, fair value:
Beginning balance	$	1,977,109	$	1,786,003	$	1,796,479	$	1,982,582
Total gains or (losses) (realized/unrealized)
Included in earnings		(43,832)		15,740		136,798		(180,839)
Included in other comprehensive income (loss)		-		-		-		-
Purchases, issuances and settlements		-		-		-		-
Transfers in and/or (out) of Level 3		-		-		-		-
Ending balance	$	1,933,277	$	1,801,743	$	1,933,277	$	1,801,743
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.)

Three Months Ended

Nine Months Ended

September 30,

September 30,
(Dollars in thousands)
2020

2019

2020

2019
Other invested assets, fair value:

Beginning balance
$
1,786,003

$
1,892,988

$
1,982,582

$
1,717,336
Total gains or (losses) (realized/unrealized)

Included in earnings

15,740

126,655

(180,839)

302,306
Included in other comprehensive income (loss)

-

-

-

-
Purchases, issuances and settlements

-

-

-

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

-

-

-

-
Ending balance
$
1,801,743

$
2,019,642

$
1,801,743

$
2,019,642
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

by others to collect

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

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

The Company has entered into separate annuity agreements with The Prudential Insurance Company of America (“The Prudential”) and an additional unaffiliated life insurance company in which the Company has either purchased annuity contracts or become the assignee of annuity proceeds that are meant to settle claim payment obligations in the future. In both instances, the Company would become contingently liable if either The Prudential or the unaffiliated life insurance company were unable to make payments related to the respective annuity 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, 2021		At December 31, 2020
(Dollars in thousands)	At September 30, 2021		At December 31, 2020
The Prudential	$	138,869	$	140,773
Unaffiliated life insurance company		34,163		35,128

At September 30, 2020

At December 31, 2019
(Dollars in thousands)

The Prudential
$
141,488

$
141,703
Unaffiliated life insurance company

34,441

35,082

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, 2020						Nine Months Ended September 30, 2020						Three Months Ended September 30, 2021						Nine Months Ended September 30, 2021
(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 - non-credit related temporary	$	48,819		(10,247)	$	38,572	$	132,405		(27,807)	$	104,598	$	(55,005)		11,524	$	(43,482)	$	(139,099)		29,170	$	(109,930)
URA(D) on securities - non-credit related OTTI		-		-		-		-		-		-
Reclassification of net realized losses (gains) included in net income (loss)		(3,343)		738		(2,605)		36,591		(7,767)		28,824		2,683		(524)		2,160		12,751		(2,660)		10,092
Foreign currency translation adjustments		18,239		(3,825)		14,414		(8,618)		1,835		(6,783)		(26,357)		5,495		(20,862)		(5,789)		1,174		(4,615)
Reclassification of amortization of net gain (loss) included in net income (loss)		2,285		(480)		1,806		5,736		(1,205)		4,532		1,978		(416)		1,563		7,150		(1,502)		5,649
Total other comprehensive income (loss)	$	66,000	$	(13,814)	$	52,187	$	166,114	$	(34,944)	$	131,171	$	(76,701)	$	16,079	$	(60,621)	$	(124,987)	$	26,182	$	(98,804)

(Some amounts may not reconcile due to rounding)

Three Months Ended September 30, 2019

Nine Months Ended September 30, 2019
(Dollars in thousands)
Before Tax

Tax Effect

Net of Tax

Before Tax

Tax Effect

Net of Tax
Unrealized appreciation (depreciation) ("URA(D)") on securities - temporary
$
30,803

$
(6,443)

$
24,360

$
229,768

$
(48,311)

$
181,457
URA(D) on securities - OTTI

119

(25)

94

(581)

122

(459)
Reclassification of net realized losses (gains) included in net income (loss)

2,671

(586)

2,085

8,533

(1,606)

6,927
Foreign currency translation adjustments

3,641

(760)

2,881

6,286

(1,316)

4,970
Reclassification of amortization of net gain (loss) included in net income (loss)

1,726

(362)

1,364

4,640

(974)

3,666
Total other comprehensive income (loss)
$
38,960

$
(8,176)

$
30,784

$
248,646

$
(52,085)

$
196,561

(Some amounts may not reconcile due to rounding)

	Three Months Ended September 30, 2020						Nine Months Ended September 30, 2020
(Dollars in thousands)	Before Tax		Tax Effect		Net of Tax		Before Tax		Tax Effect		Net of Tax
Unrealized appreciation (depreciation) ("URA(D)") on securities - temporary	$	48,819		(10,247)	$	38,572	$	132,405		(27,807)	$	104,598
Reclassification of net realized losses (gains) included in net income (loss)		(3,343)		738		(2,605)		36,591		(7,767)		28,824
Foreign currency translation adjustments		18,239		(3,825)		14,414		(8,618)		1,835		(6,783)
Reclassification of amortization of net gain (loss) included in net income (loss)		2,285		(480)		1,806		5,736		(1,205)		4,532
Total other comprehensive income (loss)	$	66,000	$	(13,814)	$	52,187	$	166,114	$	(34,944)	$	131,171

(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				Affected line item within the
	September 30,				September 30,				statements of operations and
AOCI component	2021		2020		2021		2020		comprehensive income (loss)
(Dollars in thousands)
URA(D) on securities	$	2,683	$	(3,343)	$	12,751	$	36,591	Other net realized capital gains (losses)
		(524)		738		(2,660)		(7,767)	Income tax expense (benefit)
	$	2,160	$	(2,605)	$	10,092	$	28,824	Net income (loss)
Benefit plan net gain (loss)	$	1,978	$	2,285	$	7,150	$	5,736	Other underwriting expenses
		(416)		(480)		(1,502)		(1,205)	Income tax expense (benefit)
	$	1,563	$	1,806	$	5,649	$	4,532	Net income (loss)

(Some amounts may not reconcile due to rounding)

Three Months Ended

Nine Months Ended

Affected line item within the

September 30,

September 30,

statements of operations and
AOCI component
2020

2019

2020

2019

comprehensive income (loss)
(Dollars in thousands)

URA(D) on securities
$
(3,343)

$
2,671

$
36,591

$
8,533

Other net realized capital gains (losses)

738

(586)

(7,767)

(1,606)

Income tax expense (benefit)

$
(2,605)

$
2,085

$
28,824

$
6,927

Net income (loss)
Benefit plan net gain (loss)
$
2,285

$
1,726

$
5,736

$
4,640

Other underwriting expenses

(480)

(362)

(1,205)

(974)

Income tax expense (benefit)

$
1,806

$
1,364

$
4,532

$
3,666

Net income (loss)

(Some amounts may not reconcile due to rounding)

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

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
(Dollars in thousands)	2021		2020		2021		2020
Beginning balance of URA (D) on securities	$	254,645	$	222,068	$	313,161	$	124,612
Current period change in URA (D) of investments - non-credit related		(41,322)		35,967		(99,838)		133,422
Ending balance of URA (D) on securities		213,323		258,034		213,323		258,034

Beginning balance of foreign currency translation adjustments		44,974		(6,931)		28,727		14,267
Current period change in foreign currency translation adjustments		(20,862)		14,414		(4,615)		(6,783)
Ending balance of foreign currency translation adjustments		24,112		7,483		24,112		7,483

Beginning balance of benefit plan net gain (loss)		(69,784)		(71,829)		(73,870)		(74,556)
Current period change in benefit plan net gain (loss)		1,562		1,806		5,649		4,532
Ending balance of benefit plan net gain (loss)		(68,221)		(70,023)		(68,221)		(70,023)

Ending balance of accumulated other comprehensive income (loss)	$	169,214	$	195,495	$	169,214	$	195,495

Three Months Ended

Nine Months Ended

September 30,

September 30,
(Dollars in thousands)
2020

2019

2020

2019
Beginning balance of URA (D) on securities
$
222,068

$
105,436

$
124,612

$
(55,950)
Current period change in URA (D) of investments - non-credit related

35,967

26,446

133,422

188,385
Current period change in URA (D) of investments - non-credit OTTI

-

94

-

(459)
Ending balance of URA (D) on securities

258,034

131,976

258,034

131,976

Beginning balance of foreign currency translation adjustments

(6,931)

(797)

14,267

(2,886)
Current period change in foreign currency translation adjustments

14,414

2,880

(6,783)

4,969
Ending balance of foreign currency translation adjustments

7,483

2,083

7,483

2,083

Beginning balance of benefit plan net gain (loss)

(71,829)

(65,116)

(74,556)

(67,418)
Current period change in benefit plan net gain (loss)

1,806

1,364

4,532

3,666
Ending balance of benefit plan net gain (loss)

(70,023)

(63,752)

(70,023)

(63,752)

Ending balance of accumulated other comprehensive income (loss)
$
195,495

$
70,307

$
195,495

$
70,307

8. COLLATERALIZED REINSURANCE AND TRUST AGREEMENTS

A subsidiary of the Company, Everest Re, has established a trust agreement, which effectively uses Everest Re’s investments as collateral, as security for assumed losses payable to non-affiliated ceding companies. At September 30, ~~2020,~~2021, the total amount on deposit in the trust account was ~~$849,953~~ ~~thousand.~~$1,065.6 million.

~~On April 24, 2014, the~~The Company entered into ~~two~~various collateralized reinsurance agreements with Kilimanjaro Re Limited (“Kilimanjaro”), a Bermuda based special purpose reinsurer, to provide the Company with catastrophe reinsurance coverage. These agreements are multi-year reinsurance contracts which cover ~~specified~~ named storm and earthquake events. The ~~first agreement provides up to $250,000~~ ~~thousand of reinsurance coverage from named storms in specified states of~~table below summarizes 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.various agreements:

(Dollars in thousands)
Class	Description	Effective Date	Expiration Date	Limit		Coverage Basis

Series 2017-1 Class A-2	US, Canada, Puerto Rico – Named Storm and Earthquake Events	4/13/2017	4/13/2022		50,000	Aggregate
Series 2017-1 Class B-2	US, Canada, Puerto Rico – Named Storm and Earthquake Events	4/13/2017	4/13/2022		75,000	Aggregate
Series 2017-1 Class C-2	US, Canada, Puerto Rico – Named Storm and Earthquake Events	4/13/2017	4/13/2022		175,000	Aggregate
Series 2018-1 Class A-1	US, Canada, Puerto Rico – Named Storm and Earthquake Events	4/30/2018	5/6/2022		62,500	Aggregate
Series 2018-1 Class B-1	US, Canada, Puerto Rico – Named Storm and Earthquake Events	4/30/2018	5/6/2022		200,000	Aggregate
Series 2018-1 Class A-2	US, Canada, Puerto Rico – Named Storm and Earthquake Events	4/30/2018	5/5/2023		62,500	Aggregate
Series 2018-1 Class B-2	US, Canada, Puerto Rico – Named Storm and Earthquake Events	4/30/2018	5/5/2023		200,000	Aggregate
Series 2019-1 Class A-1	US, Canada, Puerto Rico – Named Storm and Earthquake Events	12/12/2019	12/19/2023		150,000	Occurrence
Series 2019-1 Class B-1	US, Canada, Puerto Rico – Named Storm and Earthquake Events	12/12/2019	12/19/2023		275,000	Aggregate
Series 2019-1 Class A-2	US, Canada, Puerto Rico – Named Storm and Earthquake Events	12/12/2019	12/19/2024		150,000	Occurrence
Series 2019-1 Class B-2	US, Canada, Puerto Rico – Named Storm and Earthquake Events	12/12/2019	12/19/2024		275,000	Aggregate
Series 2021-1 Class A-1	US, Canada, Puerto Rico – Named Storm and Earthquake Events	4/8/2021	4/21/2025		150,000	Occurrence
Series 2021-1 Class B-1	US, Canada, Puerto Rico – Named Storm and Earthquake Events	4/8/2021	4/21/2025		85,000	Aggregate
Series 2021-1 Class C-1	US, Canada, Puerto Rico – Named Storm and Earthquake Events	4/8/2021	4/21/2025		85,000	Aggregate
Series 2021-1 Class A-2	US, Canada, Puerto Rico – Named Storm and Earthquake Events	4/8/2021	4/20/2026		150,000	Occurrence
Series 2021-1 Class B-2	US, Canada, Puerto Rico – Named Storm and Earthquake Events	4/8/2021	4/20/2026		90,000	Aggregate
Series 2021-1 Class C-2	US, Canada, Puerto Rico – Named Storm and Earthquake Events	4/8/2021	4/20/2026		90,000	Aggregate

	Total available limit as of September 30, 2021			$	2,325,000

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. These reinsurance agreements expired in November, 2019.~~

~~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 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.~~

~~On December 12, 2019, the Company entered into four~~ 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 two ~~agreements are four year~~ ~~reinsurance contracts which provide up to $150,000~~ ~~thousand and $275,000~~ ~~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 $150,000~~ ~~thousand and $275,000~~ ~~thousand, respectively, of annual aggregate~~

~~reinsurance coverage from named storms and earthquakes in the United State, 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. Currently, none of the published insured loss estimates for catastrophe events during the applicable covered periods of the various agreements have exceeded the single event retentions or aggregate retentions under the terms of the agreements that would result in a recovery.

Kilimanjaro has financed the various property catastrophe reinsurance coverages by issuing catastrophe bonds to unrelated, external investors. ~~On April 24, 2014, Kilimanjaro issued $450,000~~ ~~thousand of notes (“Series 2014-1 Notes”). The $450,000~~ ~~thousand of Series 2014-1 Notes were fully redeemed on April 30, 2018 and are no longer outstanding. On November 18, 2014, Kilimanjaro issued $500,000~~ ~~thousand of notes (“Series 2014-2 Notes”). The $500,000~~ ~~thousand of Series 2014-2 Notes were fully redeemed in November 2019 and are no longer outstanding. On December 1, 2015, Kilimanjaro issued $625,000~~ ~~thousand of notes (“Series 2015-1 Notes). On April 13, 2017, Kilimanjaro issued $950,000~~ ~~thousand of notes (“Series 2017-1 Notes) and $300,000~~ ~~thousand of notes (“Series 2017-2 Notes). On April 30, 2018, Kilimanjaro issued $262,500~~ ~~thousand of notes (“Series 2018-1 Notes”) and $262,500~~ ~~thousand of notes (“Series 2018-2 Notes”). On December 12, 2019 Kilimanjaro issued $425,000~~ ~~thousand of notes (“Series 2019-1 Notes”) and $425,000~~ ~~thousand of notes (“Series 2019-2 Notes’”).~~ The proceeds from the issuance of the Notes listed ~~above~~below are held in reinsurance ~~trust~~trusts throughout the duration of the applicable reinsurance agreements and invested solely in US government money market funds with a rating of at least “AAAm” by Standard & Poor’s.

(Dollars in thousands)
Note Series	Issue Date	Maturity Date	Amount
Series 2017-1 Class A-2	4/13/2017	4/13/2022		50,000
Series 2017-1 Class B-2	4/13/2017	4/13/2022		75,000
Series 2017-1 Class C-2	4/13/2017	4/13/2022		175,000
Series 2018-1 Class A-1	4/30/2018	5/6/2022		62,500
Series 2018-1 Class B-1	4/30/2018	5/6/2022		200,000
Series 2018-1 Class A-2	4/30/2018	5/5/2023		62,500
Series 2018-1 Class B-2	4/30/2018	5/5/2023		200,000
Series 2019-1 Class A-1	12/12/2019	12/19/2023		150,000
Series 2019-1 Class B-1	12/12/2019	12/19/2023		275,000
Series 2019-1 Class A-2	12/12/2019	12/19/2024		150,000
Series 2019-1 Class B-2	12/12/2019	12/19/2024		275,000
Series 2021-1 Class A-1	4/8/2021	4/21/2025		150,000
Series 2021-1 Class B-1	4/8/2021	4/21/2025		85,000
Series 2021-1 Class C-1	4/8/2021	4/21/2025		85,000
Series 2021-1 Class A-2	4/8/2021	4/20/2026		150,000
Series 2021-1 Class B-2	4/8/2021	4/20/2026		90,000
Series 2021-1 Class C-2	4/8/2021	4/20/2026		90,000

9. SENIOR NOTES

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

				September 30, 2021				December 31, 2020
				Consolidated				Consolidated
			Principal	Balance Sheet		Market		Balance Sheet		Market
(Dollars in thousands)	Date Issued	Date Due	Amounts	Amount		Value		Amount		Value
4.868% Senior notes	06/05/2014	06/01/2044	400,000	$	397,284	$	506,828	$	397,194	$	528,000
3.5% Senior notes	10/07/2020	10/15/2050	1,000,000	$	979,915	$	1,065,400	$	979,524	$	1,138,100

September 30, 2020

December 31, 2019

Consolidated

Consolidated

Principal

Balance Sheet

Market

Balance Sheet

Market
(Dollars in thousands)
Date Issued

Date Due

Amounts

Amount

Value

Amount

Value
Senior notes
06/05/2014

06/01/2044

400,000

$
397,164

$
460,252

$
397,074

$
452,848

On June 5, 2014,, Holdings issued ~~$400,000~~ ~~thousand~~$400.0 million of 30 year senior notes at ~~4.868~~%4.868%, which will mature on June 1, ~~2044~~.2044. Interest ~~will be~~is paid semi-annually on June 1 and December 1 of each year.

On October 7, 2020, Holdings issued $1,000.0 million of 30 year senior notes an interest coupon rate of 3.5% which will mature on October 15, 2050. Interest is paid semi-annually on April 15th and October 15th of each year.

On October 4, 2021, Holdings issued $1,000.0 million of 31 year senior notes an interest coupon rate of 3.125% which will mature on October 15, 2052. Interest is paid semi-annually on April 15th and October 15th 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
	September 30,				September 30,
(Dollars in thousands)	2021		2020		2021		2020
Interest expense incurred 4.868% Senior notes	$	4,868	$	4,868	$	14,604	$	14,604
Interest expense incurred 3.5% Senior notes	$	8,805	$	-	$	26,415	$	-

Three Months Ended

NIne Months Ended

September 30,

September 30,
(Dollars in thousands)
2020

2019

2020

2019
Interest expense incurred
$
4,868

$
4,868

$
14,604

$
14,604

~~In addition to the above senior notes outstanding, Holdings issued $1,000,000~~ ~~thousand of 30 year~~ ~~senior notes on October 7, 2020~~ ~~at an interest rate of 3.5%. These senior notes will mature on October 15, 2050~~ ~~and will pay interest semi-annually on April 15th and October 15th of each year.~~

10. LONG TERM SUBORDINATED NOTES

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

September 30, 2021

December 31, 2020

Original

Consolidated

Principal

Maturity Date

Balance

Market

Balance

Market

(Dollars in thousands)

Date Issued

Amount

Scheduled

Final

Sheet Amount

Value

Sheet Amount

Value

Long term subordinated notes

04/26/2007

400,000

05/15/2037

05/01/2067

223,749

216,043

223,674

206,447

September 30, 2020

December 31, 2019

Original

Consolidated

Consolidated

Principal

Maturity Date

Balance

Market

Balance

Market
(Dollars in thousands)
Date Issued

Amount

Scheduled

Final

Sheet Amount

Value

Sheet Amount

Value
Long term subordinated notes
04/26/2007

$
400,000

05/15/2037

05/01/2067

$
223,649

$
191,301

$
236,758

$
233,191

During the fixed rate interest period from May 3, 2007 through May 14, 2017,, interest was at the annual rate of ~~6.6~~%6.6%, payable semi-annually in arrears on November 15 and May 15 of each year, commencing on November 15, 2007. During the floating rate interest period from May 15, 2017 through maturity, interest will be based on the 3 month LIBOR plus 238.5 basis points, reset quarterly, payable quarterly in arrears on February 15, May 15, August 15 and November 15 of each year, subject to Holdings’ right to defer interest on ~~one~~1 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 May 15, 2017. The reset quarterly interest rate for August ~~17, 2020~~16, 2021 to November ~~15, 2020~~14, 2021 is ~~2.67~~%2.51%.

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

The Company repurchased and retired $0 ~~thousand~~ million and ~~$13,183~~ ~~thousand~~$13.2 million of its outstanding long term subordinated notes during the three and nine months ended September 30, 2020, respectively. The Company realized a gain of $0 ~~thousand~~ million and ~~$2,536~~ ~~thousand~~$2.5 million from the repurchase of the long term subordinated notes during the three and nine months ended September 30, 2020, respectively. NaN repurchases of debt were made during the three and nine months ended September 30, 2021.

On March 19, 2009, Group announced the commencement of a cash tender offer for any and all of the ~~6.60~~%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.~~ $161.4 million. In addition, during 2020, the Company repurchased and retired $13.2 million of these notes.

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

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
(Dollars in thousands)	2021		2020		2021		2020
Interest expense incurred	$	1,456	$	1,587	$	4,378	$	6,126

Three Months Ended

NIne Months Ended

September 30,

September 30,
(Dollars in thousands)
2020

2019

2020

2019
Interest expense incurred
$
1,587

$
2,881

$
6,126

$
8,892

11. FEDERAL HOME LOAN BANK MEMBERSHIP

~~Effective August 15, 2019,~~ Everest ~~Reinsurance Company (“Everest Re”) became~~Re is a member of the Federal Home Loan Bank of New York (“FHLBNY”), which allows Everest Re to borrow up to 10 %10% of its statutory admitted assets. As of September 30, ~~2020,~~2021, Everest Re had admitted assets of approximately ~~$14,667,099~~ ~~thousand~~$18,874.0 million which provides borrowing capacity of up to approximately ~~$1,466,709~~ ~~thousand.~~ $1,887.4 million.

~~On August 31,~~24

During 2020, Everest Re borrowed ~~$90,000~~ ~~thousand~~$400.0 million under its FHLBNY ~~available~~ capacity. The ~~$90,000~~ ~~thousand collateralized borrowing has~~borrowings have interest payable at aan interest rate of ~~0.35~~%0.35%. As of September 30, 2021, $310.0 million of these borrowings remain outstanding, with maturities in November and ~~will mature on~~

~~November 30, 2020.~~December 2021. The FHLBNY membership agreement requires that 4.5% of borrowed funds be used to acquire additional membership stock.

~~12. LEASES~~

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

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

Three Months Ended

Nine Months Ended
(Dollars in thousands)
September 30,

September 30,

2020

2019

2020

2019
Lease expense incurred:

Operating lease cost
$
7,591

$
4,791

$
22,263

$
14,146

(Dollars in thousands)
At September 30, 2020

At December 31, 2019
Operating lease right of use assets
$
139,972

$
152,978
Operating lease liabilities

153,322

160,387

Three Months Ended

Nine Months Ended
(Dollars in thousands)
September 30,

September 30,

2020

2019

2020

2019
Operating cash flows from operating leases
$
(4,538)

$
(4,297)

$
(13,396)

$
(12,914)

At September 30, 2020

At December 31, 2019
Weighted average remaining operating lease term
12.6 years

12.8 years

Weighted average discount rate on operating leases
4.03
%
3.91
%

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

(Dollars in thousands)

Remainder of 2020
$
4,582
2021

16,181
2022

18,615
2023

18,202
2024

18,208
2025

15,217
Thereafter

116,149
Undiscounted lease payments

207,154
Less: present value adjustment

53,832
Total operating lease liability
$
153,322

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, was 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 during 2021.~~

~~13.~~12. SEGMENT REPORTING

The Reinsurance operation writes worldwide property and casualty reinsurance and specialty lines of business, on both a treaty and facultative basis, through reinsurance brokers, as well as directly with ceding companies. Business is written in the United States as well as through branches in Canada and Singapore. The Insurance operation writes property and casualty insurance directly and through brokers, surplus lines brokers and general agents within the United States.

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~~The Company measures its 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
Reinsurance	September 30,				September 30,
(Dollars in thousands)	2021		2020		2021		2020
Gross written premiums	$	1,693,027	$	1,473,266	$	4,552,364	$	3,906,355
Net written premiums		1,461,238		1,296,107		3,961,280		3,403,090

Premiums earned	$	1,280,181	$	1,153,740	$	3,689,508	$	3,223,608
Incurred losses and LAE		1,207,528		936,904		2,917,285		2,250,270
Commission and brokerage		319,707		265,095		935,252		818,282
Other underwriting expenses		32,049		35,697		101,337		92,143
Underwriting gain (loss)	$	(279,103)	$	(83,956)	$	(264,366)	$	62,913

	Three Months Ended				Nine Months Ended
Insurance	September 30,				September 30,
(Dollars in thousands)	2021		2020		2021		2020
Gross written premiums	$	830,688	$	591,695	$	2,421,716	$	1,971,818
Net written premiums		608,248		429,594		1,801,884		1,462,869

Premiums earned	$	571,183	$	461,717	$	1,625,311	$	1,424,814
Incurred losses and LAE		445,491		340,947		1,185,435		1,032,926
Commission and brokerage		69,139		57,309		190,296		182,925
Other underwriting expenses		77,464		73,669		227,901		212,562
Underwriting gain (loss)	$	(20,911)	$	(10,208)	$	21,678	$	(3,599)

Three Months Ended

Nine Months Ended
Reinsurance
September 30,

September 30,
(Dollars in thousands)
2020

2019

2020

2019
Gross written premiums
$
1,473,266

$
1,297,228

$
3,906,355

$
3,464,773
Net written premiums

1,296,107

1,141,437

3,403,090

2,955,349

Premiums earned
$
1,153,740

$
996,545

$
3,223,608

$
2,852,045
Incurred losses and LAE

936,904

800,711

2,250,270

1,935,706
Commission and brokerage

265,095

297,499

818,282

793,027
Other underwriting expenses

35,697

30,406

92,143

79,822
Underwriting gain (loss)
$
(83,956)

$
(132,071)

$
62,913

$
43,490

Three Months Ended

Nine Months Ended
Insurance
September 30,

September 30,
(Dollars in thousands)
2020

2019

2020

2019
Gross written premiums
$
591,695

$
592,775

$
1,971,818

$
1,798,149
Net written premiums

429,594

428,518

1,462,869

1,326,714

Premiums earned
$
461,717

$
431,855

$
1,424,814

$
1,222,432
Incurred losses and LAE

340,947

297,382

1,032,926

801,705
Commission and brokerage

57,309

60,182

182,925

169,647
Other underwriting expenses

73,669

65,287

212,562

177,604
Underwriting gain (loss)
$
(10,208)

$
9,004

$
(3,599)

$
73,476

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
	September 30,				September 30,
(Dollars in thousands)	2021		2020		2021		2020
Underwriting gain (loss)	$	(300,014)	$	(94,164)	$	(242,688)	$	59,314
Net investment income		197,161		135,428		593,019		244,782
Net realized capital gains (losses)		(51,451)		115,193		267,323		(107,300)
Corporate expense		(10,907)		(4,206)		(23,106)		(11,441)
Interest, fee and bond issue cost amortization expense		(15,539)		(6,535)		(46,610)		(20,917)
Other income (expense)		9,937		(1,790)		12,049		(11,410)
Income (loss) before taxes	$	(170,813)	$	143,926	$	559,986	$	153,028

Three Months Ended

Nine Months Ended

September 30,

September 30,
(Dollars in thousands)
2020

2019

2020

2019
Underwriting gain (loss)
$
(94,164)

$
(123,067)

$
59,314

$
116,966
Net investment income

135,428

95,592

244,782

270,835
Net realized capital gains (losses)

115,193

112,542

(107,300)

390,161
Corporate expense

(4,206)

(3,183)

(11,441)

(7,353)
Interest, fee and bond issue cost amortization expense

(6,535)

(7,802)

(20,917)

(27,314)
Other income (expense)

(1,790)

(2,673)

(11,410)

(8,459)
Income (loss) before taxes
$
143,926

$
71,409

$
153,028

$
734,836

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

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
(Dollars in thousands)	2021		2020		2021		2020
Canada gross written premiums	$	60,455	$	65,785	$	163,740	$	200,443

Three Months Ended

Nine Months Ended

September 30,

September 30,
(Dollars in thousands)
2020

2019

2020

2019
Canada gross written premiums
$
65,785

$
52,136

$
200,443

$
138,392

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

~~14.~~13. RELATED-PARTY TRANSACTIONS

Parent

Group entered into a ~~$300,000~~ ~~thousand~~$300.0 million long term note agreement with Everest Re as of December 17, 2019. The note will pay interest annually at a rate of ~~1.69~~%1.69% and is scheduled to mature in December, 2028. ~~This transaction is presented as a Note Receivable – Affiliated in the Consolidated Balance Sheet of Holdings.~~ The Company recognized interest income related to this long term note of ~~$1,296~~ ~~thousand~~$1.3 million and $0 ~~thousand~~$1.3 million for the three months ended September 30, ~~2020~~2021 and ~~2019,~~2020, respectively and ~~$3,859~~ ~~thousand~~$3.8 million and $0 ~~thousand~~$3.9 million for the nine months ended September 30, 2021 and 2020, ~~and 2019,~~ respectively.

Group entered into a ~~$250,000~~ ~~thousand~~$200.0 million long term ~~promissory~~ note agreement with ~~Holdings~~Everest Re as of ~~December 31, 2014.~~August 5, 2021. The note ~~was repaid~~will pay interest annually at a rate of 1.00% and is scheduled to mature in ~~December 2018.~~August, 2030. The Company recognized interest income related to this long term note of $0.3 million for both the three and nine months ended September 30, 2021.

Group’s Board of Directors approved an amended share repurchase program authorizing Group and/or its subsidiary Holdings to purchase Group’s common shares through open market transactions, privately negotiated transactions or both. The ~~table below represents~~most recent amendment from the ~~amendments~~Board, approved on May 22, 2020, increased the cumulative number of shares that may be repurchased under the program to ~~the share repurchase program for the common shares approved for repurchase.~~ 32.0 million shares.

		~~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~~
~~05/22/2020~~		~~2,000,000~~
		~~32,000,000~~

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,~~$1,773.2 million, 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~~$1.0 million par value and ~~1.75~~%1.75% annual dividend rate. After the exchange, Holdings no longer holds any shares or has any ownership interest in Group.

Holdings has reported the 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
	September 30,				September 30,
(Dollars in thousands)	2021		2020		2021		2020
Dividends received on preferred stock of affiliate	$	7,758	$	7,758	$	23,274	$	23,274

Three Months Ended

Nine Months Ended

September 30,

September 30,
(Dollars in thousands)
2020

2019

2020

2019
Dividends received on preferred stock of affiliate
$
7,758

$
7,758

$
23,274

$
23,274

Affiliates

~~Affiliated Companies~~

~~Effective December 31, 2018, Holdings entered into a $300,000~~ ~~thousand long-term promissory note agreement~~The Company has engaged in reinsurance transactions with Bermuda ~~Re. The note was repaid in May, 2019. Interest expense~~Re, Everest Reinsurance Company (Ireland) dac (“Ireland Re”), Everest Insurance (Ireland) dac (“Ireland Insurance”), Everest International Reinsurance Ltd. (“Everest International”), Everest Insurance Company of $0 ~~thousand~~Canada (“Everest Canada”), Lloyd’s Syndicate 2786 and ~~$3,658~~ ~~thousand was recorded~~Mt. Logan Re, which are affiliated companies primarily driven by ~~Holdings for the three~~enterprise risk and ~~nine months ended September 30, 2019, respectively.~~ capital management considerations under which business is ceded at market rates and terms.

~~Effective October 1, 2018, Holdings Ireland made a capital contribution of Global Services, an affiliated entity, to Holdings. Global Services had an equity value of $227,253~~ ~~thousand at the time of contribution and that value is classified as additional paid in capital in the Company’s consolidated balance sheets.~~

~~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)
							Single
			Percent		Assuming		Occurrence		Aggregate
Coverage Period		Ceding Company	Ceded		Company	Type of Business	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	-		-
01/01/2020		Everest International Assurance	100.0	%	Bermuda Re	life business	-		-

(1)	Amounts shown are Canadian dollars.

(Dollars in thousands)

Single

Percent

Assuming

Occurrence

Aggregate

Coverage Period

Ceding Company

Ceded

Company

Type of Business

Limit

Limit

01/01/2010-12/31/2010

Everest Re

44.0
%

Bermuda Re

property / casualty business

150,000
325,000

01/01/2011-12/31/2011

Everest Re

50.0
%

Bermuda Re

property / casualty business

150,000
300,000

01/01/2012-12/31/2014

Everest Re

50.0
%

Bermuda Re

property / casualty business

100,000

200,000

01/01/2015-12/31/2016

Everest Re

50.0
%

Bermuda Re

property / casualty business

162,500

325,000

01/01/2017-12/31/2017

Everest Re

60.0
%

Bermuda Re

property / casualty business

219,000

438,000

01/01/2010-12/31/2010

Everest Re- Canadian Branch

60.0
%

Bermuda Re

property business

350,000
⁽¹⁾
-

01/01/2011-12/31/2011

Everest Re- Canadian Branch

60.0
%

Bermuda Re

property business

350,000
⁽¹⁾
-

01/01/2012-12/31/2012

Everest Re- Canadian Branch

75.0
%

Bermuda Re

property / casualty business

206,250
⁽¹⁾
412,500
⁽¹⁾
01/01/2013-12/31/2013

Everest Re- Canadian Branch

75.0
%

Bermuda Re

property / casualty business

150,000
⁽¹⁾
412,500
⁽¹⁾
01/01/2014-12/31/2017

Everest Re- Canadian Branch

75.0
%

Bermuda Re

property / casualty business

262,500
⁽¹⁾
412,500
⁽¹⁾
01/01/2012-12/31/2017

Everest Canada

80.0
%

Everest Re-
Canadian Branch

property business

-

-

(1) Amounts shown are Canadian dollars.

Effective January 1, 2018, Everest Re entered into a twelve month whole account aggregate stop loss reinsurance contract (“stop loss agreement”) 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 most recently renewed effective January 1, ~~2020.~~ 2021.

~~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~~$100.0 million of reinsurance coverage for property catastrophe losses above certain attachment points. This agreement expired on December 31, 2019 and was not renewed.

Everest Re entered into a catastrophe excess of loss reinsurance contract with Bermuda Re (UK Branch), effective January 1, 2021 through December 31, 2021, subject to renewal thereafter. The contract provides Bermuda Re (UK Branch), with up to £100.0 million of reinsurance coverage for each catastrophe occurrence above £40.0 million. Bermuda Re (UK Branch) paid Everest Re £3.5 million for this coverage.

Everest Re entered into a catastrophe excess of loss reinsurance contract with Ireland Re, effective February 1, 2021 through January 31, 2022, subject to renewal thereafter. The contract provides Ireland Re with up to €145.0 million of reinsurance coverage for each catastrophe occurrence above €16.0 million. Ireland Re paid Everest Re €9.8 million for this coverage.

The table below represents loss portfolio transfer (“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
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~~$2,336.2 million for accident years 2017 and prior. As a result of the LPT agreement, the Company transferred ~~$1,000,000~~ ~~thousand~~$1,000.0 million of cash and fixed maturity securities and transferred ~~$970,000~~ ~~thousand~~$970.0 million of loss reserves to Bermuda Re. As part of the LPT agreement, Bermuda Re will provide an additional ~~$500,000~~ ~~thousand~~$500.0 million of adverse development coverage on the subject loss reserves. As of September 30, 2021, and December 31, 2020, the Company has a reinsurance recoverable of $882.7 million and $886.4 million, respectively, recorded on its balance sheet due from Bermuda Re.

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, Everest Ireland and Lloyd’s syndicate 2786 for the periods indicated:

	Three Months Ended				Nine Months Ended
Bermuda Re	September 30,				September 30,
(Dollars in thousands)	2021		2020		2021		2020
Ceded written premiums	$	78,330	$	32,255	$	224,131	$	96,353
Ceded earned premiums		77,078		32,278		221,754		95,215
Ceded losses and LAE		12,355		12,605		3,241		4,263

Assumed written premiums		4,820		-		4,820		-
Assumed earned premiums		3,676		62		3,799		186
Assumed losses and LAE		(199)		62		(134)		115

	Three Months Ended				Nine Months Ended
Ireland Re	September 30,				September 30,
(Dollars in thousands)	2021		2020		2021		2020
Assumed written premiums	$	7,092	$	-	$	12,993	$	-
Assumed earned premiums		7,092		-		12,018		-
Assumed losses and LAE		62,472		-		62,472		-

	Three Months Ended				Nine Months Ended
Ireland Insurance	September 30,				September 30,
(Dollars in thousands)	2021		2020		2021		2020
Assumed written premiums	$	3,619	$	1,217	$	6,409	$	3,723
Assumed earned premiums		1,724		788		4,237		2,569
Assumed losses and LAE		1,134		704		2,139		1,625

	Three Months Ended				Nine Months Ended
Lloyd's Syndicate 2786	September 30,				September 30,
(Dollars in thousands)	2021		2020		2021		2020
Assumed written premiums	$	56	$	(1,743)	$	728	$	(4,144)
Assumed earned premiums		81		(1,743)		722		(3,926)
Assumed losses and LAE		(473)		293		(259)		(331)

	Three Months Ended				Nine Months Ended
Everest International & Canada	September 30,				September 30,
(Dollars in thousands)	2021		2020		2021		2020
Ceded written premiums	$	-	$	-	$	-	$	-
Ceded earned premiums		-		-		-		-
Ceded losses and LAE		-		-		-		16

Assumed written premiums		-		-		-		1
Assumed earned premiums		-		-		-		(7)
Assumed losses and LAE		46		(1,709)		112		(1,059)

Three Months Ended

Nine Months Ended
Bermuda Re
September 30,

September 30,
(Dollars in thousands)
2020

2019

2020

2019
Ceded written premiums
$
32,224

$
14,660

$
94,393

$
85,667
Ceded earned premiums

32,273

16,510

94,587

85,632
Ceded losses and LAE

12,573

(16,836)

2,622

(8,521)

Three Months Ended

Nine Months Ended
Everest International
September 30,

September 30,
(Dollars in thousands)
2020

2019

2020

2019
Ceded written premiums
$
-

$
-

$
-

$
-
Ceded earned premiums

-

-

-

-
Ceded losses and LAE

-

10

16

(26)

Three Months Ended

Nine Months Ended
Everest Canada
September 30,

September 30,
(Dollars in thousands)
2020

2019

2020

2019
Assumed written premiums
$
-

$
-

$
1

$
-
Assumed earned premiums

-

-

(7)

-
Assumed losses and LAE

(1,709)

(1,633)

(1,059)

(938)

Three Months Ended

Nine Months Ended
Lloyd's Syndicate 2786
September 30,

September 30,
(Dollars in thousands)
2020

2019

2020

2019
Assumed written premiums
$
(1,743)

$
24

$
(4,144)

$
(8,702)
Assumed earned premiums

(1,743)

850

(3,926)

(16,380)
Assumed losses and LAE

293

1,141

(331)

(2,386)

In 2013, Group established Mt. Logan Re, which is a Class 3 insurer based in Bermuda. Mt. Logan Re then established separate segregated accounts for its business activity, which invest in a diversified set of catastrophe exposures.

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

	Three Months Ended				Nine Months Ended
Mt. Logan Re Segregated Accounts	September 30,				September 30,
(Dollars in thousands)	2021		2020		2021		2020
Ceded written premiums	$	97,649	$	74,215	$	225,592	$	211,429
Ceded earned premiums		86,049		62,543		212,153		202,810
Ceded losses and LAE		97,070		68,879		191,677		143,179

Three Months Ended

Nine Months Ended
Mt. Logan Re Segregated Accounts
September 30,

September 30,
(Dollars in thousands)
2020

2019

2020

2019
Ceded written premiums
$
74,215

$
79,152

$
211,429

$
193,664
Ceded earned premiums

62,543

69,942

202,810

176,576
Ceded losses and LAE

68,879

81,136

143,179

145,918
Assumed written premiums

-

-

-

-
Assumed earned premiums

-

-

-

-
Assumed losses and LAE

-

-

-

-

~~15. RETIREMENT BENEFITS~~

The Company maintains both qualified and non-qualified defined benefit pension plans 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

September 30,

September 30,
(Dollars in thousands)
2020

2019

2020

2019
Service cost
$
2,040

$
2,064

$
8,092

$
6,616
Interest cost

2,562

2,928

7,608

8,788
Expected return on plan assets

(5,197)

(4,492)

(15,591)

(14,523)
Amortization of net (income) loss

2,462

1,909

6,137

5,111
Settlement charge

871

102

871

309
Net periodic benefit cost
$
2,738

$
2,511

$
7,117

$
6,301

Other Benefits
Three Months Ended

Nine Months Ended

September 30,

September 30,
(Dollars in thousands)
2020

2019

2020

2019
Service cost
$
311

$
245

$
763

$
818
Interest cost

215

245

644

835
Amortization of prior service cost

(177)

(144)

(401)

(433)
Amortization of net (income) loss

-

(39)

-

(39)
Net periodic benefit cost
$
349

$
307

$
1,006

$
1,181

(Some amounts may not reconcile due to rounding.)

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

~~The Company~~ ~~did not~~ ~~make any contributions to the qualified pension benefit plan for the three and nine months ended September 30, 2020 and 2019, respectively.~~

~~16.~~14. INCOME TAXES

The Company is domiciled in the United States and has subsidiaries domiciled within the United States with significant branches in Canada and Singapore. The Company’s non-U.S. branches are subject to income taxation at varying rates in their respective domiciles.

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~~ (loss)to determine the income tax expense or benefit for the year-to-date period. The tax expense or benefit for the quarter represents the difference between the year-to-date tax expense or benefit for the current

year-to-date period less such amount for the immediately preceding year-to-date period. Management considers the impact of all known events in its estimation of the Company’s annual pre-tax income/~~loss~~(loss) and effective tax rate.

~~17.~~15. SUBSEQUENT EVENTS

The Company has evaluated known recognized and non-recognized subsequent events. InOther than the debt issuance on October ~~and November 2020, Hurricanes Delta, Zeta and Eta impacted the Caribbean and southeastern United States. Due to the recentness of these events,~~4, 2021, described in Note 9, the Company ~~is unable~~does not have any subsequent events to ~~estimate the amount of losses at this time. However, the Company anticipates that the losses from these events will adversely impact its fourth quarter 2020 financial statements.~~ report.

3430

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATION

Industry Conditions.

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

~~The Company competes~~We compete in the ~~global~~U.S. and international reinsurance and insurance markets with numerous global competitors. ~~The Company’s~~Our competitors include independent reinsurance and insurance companies, subsidiaries or affiliates of established worldwide insurance companies, reinsurance departments of certain insurance companies, domestic and international underwriting operations, ~~including underwriting syndicates at Lloyd’s of London~~ and certain government sponsored risk transfer vehicles. Some of these competitors have greater financial resources than we do and have established long term and continuing business relationships, which can be a significant competitive advantage. In addition, the lack of strong barriers to entry into the reinsurance business and recently, the securitization of reinsurance and insurance risks through capital markets provide additional sources of potential reinsurance and insurance capacity and competition.

Worldwide insurance and reinsurance market conditions historically have been competitive. 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, provided capital markets with access to insurance and reinsurance risk exposure. The capital markets demand for these products was being primarily driven by a low interest environment and the desire to achieve greater risk diversification and potentially higher returns on their investments. This increased competition was generally having a negative impact on rates, terms and conditions; however, the impact varies widely by market and coverage.

The industry continues to deal with the impacts of a global pandemic, ~~COVID-19.~~COVID-19 and its subsequent variants. Globally, many countries mandated that their citizens remain at home and many non-essential businesses have continued to be physically closed. We ~~closed our physical offices; however, we~~ activated our operational resiliency plan across our global footprint and all of our critical operations are functioning effectively from remote locations. We continue to service and meet the needs of our clients while ensuring the safety and health of our employees and customers.

The pandemic has caused significant volatility in the global financial markets. Interest rates plummeted, credit spreads widened and the equity markets lost value. We saw our fixed maturity and equity portfolios decline in value resulting in realized and unrealized investment losses in our March 31, 2020 financial statements. However, the financial markets rebounded during the second and third quarters and we recognized after-tax unrealized gains of $283.1 million in these periods. Nevertheless, the lack of business activity may leadThere continues to ~~an increase in bankruptcies and corresponding credit losses.~~

~~There will also~~ be a negative impact on ~~future~~ industry underwriting results. With the closing of non-essential businesses, there has been a significant decline in business activity. To the extent that premiums are based on business activity, there will be a decline in premium volume. Incurred lossesresults from the ~~pandemic will be impacted by the duration of the event and will~~pandemic. These impacts vary ~~by line of business and geographical location. For the quarter ended September 30, 2020, our underwriting results include $31.1 million of estimated losses related~~significantly from country to ~~the pandemic and $104.8 million for the nine months ended September 30, 2020.~~ We anticipate this Pandemic could have a meaningful impact on our revenue, as well as net and operating income in future quarters as a result of reinsurance and insurance claims due to the pandemic and resulting macro-economic market conditions.

~~Many regulators have issued moratoriums~~country depending on the ~~cancellation~~rate of ~~policies for~~infections and the non-payment of premiums and also on non-renewals. We are complying with the various regulatory requests for accommodations to policyholders during this difficult period. The moratoriums combined with the forced closure of businesses may lead to an increase in uncollectible premium expense.corresponding mandated business restrictions.

Prior to the pandemic, there was a growing industry consensus that there was some firming of (re)insurance rates for the areas impacted by the recent catastrophes. ~~Rates~~The increased frequency of catastrophe losses in 2020 and 2021 appears to be further pressuring the increase of rates. As business activity continues to regain strength, rates also ~~appeared~~appear to be firming in ~~some of the casualty~~most lines of business, particularly in the casualty lines that had seen significant losses such as excess casualty and directors’ and officers’ liability. Other casualty lines ~~were~~are experiencing modest rate increase, while some lines such as workers’ compensation were experiencing softer market conditions. It is too early to tell what will be the impact on pricing conditions but it is likely to change depending on the line of business and geography.

While we are unable to predict the full impact the pandemic will have on the insurance industry as it continues to have a negative impact on the global economy, we are well positioned to continue to service our clients. Our capital position remains a source of strength, with high quality invested assets, significant liquidity ~~low financial leverage,~~ and a low operating expense ratio. Our diversified global platform with its broad mix of products, distribution and geography is resilient.

3632

Financial Summary.

We monitor and evaluate our overall performance based upon financial results. The following table displays a summary of the consolidated net income (loss), ratios and stockholder’s equity for the periods indicated:

	Three Months Ended				Percentage	Nine Months Ended				Percentage	Three Months Ended				Percentage	Nine Months Ended				Percentage
	September 30,				Increase/	September 30,				Increase/	September 30,				Increase/	September 30,				Increase/
(Dollars in millions)	2020		2019		(Decrease)	2020		2019		(Decrease)	2021		2020		(Decrease)	2021		2020		(Decrease)
Gross written premiums	$	2,065.0	$	1,890.0	9.3%	$	5,878.2	$	5,262.9	11.7%	$	2,523.7	$	2,065.0	22.2%	$	6,974.1	$	5,878.2	18.6%
Net written premiums		1,725.7		1,570.0	9.9%		4,866.0		4,282.1	13.6%		2,069.5		1,725.7	19.9%		5,763.2		4,866.0	18.4%

REVENUES:
Premiums earned	$	1,615.5	$	1,428.4	13.1%		4,648.4	$	4,074.5	14.1%	$	1,851.3	$	1,615.5	14.6%	$	5,314.8	$	4,648.4	14.3%
Net investment income		135.4		95.6	41.7%	$	244.8		270.8	-9.6%		197.1		135.4	45.6%		593.0		244.8	142.3%
Net realized capital gains (losses)		115.2		112.6	2.4%		(107.3)		390.2	-127.5%		(51.5)		115.2	-144.7%		267.3		(107.3)	NM
Other income (expense)		(1.8)		(2.7)	-33.1%		(11.4)		(8.5)	34.1%		9.9		(1.8)	NM		12.0		(11.4)	NM
Total revenues		1,864.3		1,633.9	14.1%		4,774.5		4,727.0	1.0%		2,007.0		1,864.3	7.7%		6,187.2		4,774.5	29.6%

CLAIMS AND EXPENSES:
Incurred losses and loss adjustment expenses		1,277.9		1,098.1	16.4%		3,283.2		2,737.4	19.9%		1,653.0		1,277.9	29.4%		4,102.7		3,283.2	25.0%
Commission, brokerage, taxes and fees		322.4		357.7	-9.9%		1,001.2		962.7	4.0%		388.8		322.4	20.6%		1,125.5		1,001.2	12.4%
Other underwriting expenses		109.4		95.7	14.3%		304.7		257.4	18.4%		109.5		109.4	0.1%		329.2		304.7	8.1%
Corporate expense		4.2		3.2	32.2%		11.4		7.4	55.6%		10.9		4.2	159.3%		23.1		11.4	102.0%
Interest, fee and bond issue cost amortization expense		6.5		7.8	-16.2%		20.9		27.3	-23.4%		15.5		6.5	137.8%		46.6		20.9	122.8%
Total claims and expenses		1,720.4		1,562.5	10.1%		4,621.5		3,992.2	15.8%		2,177.8		1,720.4	26.6%		5,627.2		4,621.5	21.8%

INCOME (LOSS) BEFORE TAXES		143.9		71.4	101.6%		153.0		734.8	-79.2%		(170.8)		143.9	NM		560.0		153.0	NM
Income tax expense (benefit)		24.1		10.3	134.8%		(12.8)		141.2	-109.1%		(27.5)		24.1	NM		118.1		(12.8)	NM
NET INCOME (LOSS)	$	119.8	$	61.1	96.0%		165.9	$	593.7	-72.1%	$	(143.3)	$	119.8	NM	$	441.9	$	165.9	166.5%

RATIOS:					Point Change					Point Change					Point Change					Point Change
Loss ratio		79.1%		76.9%	2.2	$	70.6%		67.2%	3.4		89.3%		79.1%	10.2		77.2%		70.6%	6.6
Commission and brokerage ratio		20.0%		25.0%	(5.0)		21.5%		23.6%	(2.1)		21.0%		20.0%	1.0		21.2%		21.5%	(0.3)
Other underwriting expense ratio		6.7%		6.7%	-		6.6%		6.3%	0.3		5.9%		6.7%	(0.8)		6.2%		6.6%	(0.4)
Combined ratio		105.8%		108.6%	(2.8)		98.7%		97.1%	1.6		116.2%		105.8%	10.4		104.6%		98.7%	5.9

	At		At		Percentage						At		At		Percentage
	September 30,		December 31,		Increase/						September 30,		December 31,		Increase/
(Dollars in millions)	2020		2019		(Decrease)						2021		2020		(Decrease)
Balance sheet data:
Total investments and cash	$	13,821.6	$	11,956.3	15.6%						$	17,936.7	$	15,910.2	12.7%
Total assets		21,485.5		19,706.2	9.0%							26,336.2		23,717.1	11.0%
Loss and loss adjustment expense reserves		11,042.0		10,209.5	8.2%							13,321.8		11,655.0	14.3%
Total debt		710.8		633.8	12.1%							1,910.9		1,910.4	0.0%
Total liabilities		15,329.8		13,848.8	10.7%							19,578.4		17,302.8	13.2%
Stockholder's equity		6,155.7		5,857.4	5.1%							6,757.8		6,414.3	5.4%

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

3733

Revenues.

Premiums. Gross written premiums increased by ~~9.3%~~22.2% to $2,523.7 million for the three months ended September 30, 2021, compared to $2,065.0 million for the three months ended September 30, 2020, ~~compared to $1,890.0 million for the three months ended September 30, 2019,~~ reflecting a ~~$176.0~~$219.8 million, or 13.6%, increase in our reinsurance business while our insurance business remained basically flat with a slight decline of $1.1 million. The increase in reinsurance premiums was mainly due to the increase in treaty casualty writings, treaty property business and facultative business. Gross written premiums increased by 11.7% to $5,878.2 million for the nine months ended September 30, 2020, compared to $5,262.9 million for the nine months ended September 30, 2019, reflecting a $441.6 million, or 12.7%14,9%, increase in our reinsurance business and a ~~$173.7~~$239.0 million, or ~~9.7%~~40.4%, increase in our insurance business. The increase in reinsurance premiums was mainly due to increases in ~~treaty~~ casualty ~~writings~~pro rata business, casualty excess of loss business and property ~~business.~~catastrophe excess of loss writings. The rise in insurance premiums was primarily due to increases in ~~many lines~~specialty casualty business, professional liability business and short tail business, including property. Gross written premiums increased by 18.6% to $6,974.1 million for the nine months ended September 30, 2021, compared to $5,878.2 million for the nine months ended September 30, 2020, reflecting a $646.0 million, or 16.5%, increase in our reinsurance business and a $449.9 million, or 22.8%, increase in our insurance business. The increase in reinsurance premiums was mainly due to increases in casualty pro rata business, casualty excess of loss business and property catastrophe excess of loss writings. The rise in insurance premiums was primarily due to increases in specialty casualty business, professional liability business and short tail business, including property, ~~casualty and accident and health.~~ partially offset by a decline in workers’ compensation business.

Net written premiums increased by ~~9.9%~~19.9% to $2,069.5 million for the three months ended September 30, 2021, compared to $1,725.7 million for the three months ended September 30, 2020 ~~compared~~and increased by 18.4% to ~~$1,570.0~~$5,763.2 million for the ~~three~~nine months ended September 30, ~~2019 and increased by 13.6%~~2021, compared to $4,866.0 million for the nine months ended September 30, 2020, ~~compared~~which is consistent with the change in gross written premiums. Premiums earned increased by 14.6% to ~~$4,282.1~~$1,851.3 million for the ~~nine~~three months ended September 30, ~~2019.~~ ~~The differences between the changes in gross written premiums~~2021, compared ~~to the changes in net written premiums are primarily due to varying utilization of reinsurance.~~ ~~Premiums earned increased by 13.1%~~ to $1,615.5 million for the three months ended September 30, 2020 ~~compared~~and increased by 14.3% to ~~$1,428.4~~$5,314.8 million for the ~~three~~nine months ended September 30, ~~2019 and increased by 14.1%~~2021, compared to $4,648.4 million for the nine months ended September 30, ~~2020, compared to $4,074.5 million for the nine months ended September 30, 2019.~~2020. The change in premiums earned relative to net written premiums is the result of timing; premiums are earned ratably over the coverage period whereas written premiums are recorded at the initiation of the coverage period.

Net Investment Income.Net investment income increased ~~41.7%~~ to $197.1 million for the three months ended September 30, 2021 compared with net investment income of $135.4 million for the three months ended September 30, ~~2020~~2020. Net investment income increased to $593.0 million for the nine months ended September 30, 2021 compared with net investment income of ~~$95.6 million for the three months ended September 30, 2019.~~ This increase was primarily the result of an increase in limited partnership income, as the improvement in the equity markets during the second quarter had a positive impact on the limited partnership valuations, and we had higher income from our growing fixed income portfolio. ~~Net investment income decreased 9.6% to~~ $244.8 million for the nine months ended September 30, ~~2020 compared with net investment income of $270.8 million for the nine months ended September 30, 2019.~~ ~~This decrease in income was primarily the result of losses from our limited partnerships in the second quarter, partially offset by higher income from our growing fixed maturity portfolio.~~ 2020. Net pre-tax investment income as a percentage of average invested assets was ~~4.3%~~4.7% and ~~3.4%~~4.3% for the three months ended September 30, ~~2020~~2021 and ~~2019,~~2020, respectively and was ~~2.6%~~4.9% and ~~3.3%~~2.6% for the nine months ended September 30, 2021 and 2020, respectively. The increases in both income and ~~2019, respectively.~~yield were primarily the result of an increase in limited partnership income and higher income from other alternative investments. The limited partnership income primarily reflects increases in their reported net asset values. As such, until these asset values are monetized and the resultant income is distributed, they are subject to future increases or decreases in the asset value, and the results may be volatile.

Net Realized Capital Gains (Losses). Net realized capital losses were $51.5 million and net realized capital gains were $115.2 million for the three months ended September 30, 2021and ~~$112.6~~2020, respectively. The net realized capital losses of $51.5 million for the three months ended September 30, ~~2020~~2021, were comprised of $48.3 million of losses from fair value re-measurements and ~~2019, respectively.~~ $7.3 million in net allowances for credit losses, partially offset by $4.1 million of gains from sales of investments.The net realized capital gains of $115.2 million for the three months ended September 30, 2020, were comprised of $113.4 million of gains from fair value re-measurements, resulting primarily from increases in equity security valuations which further rebounded from declines in the first quarter of 2020, and $2.3 million from a decline in net allowances for credit losses partially offset by ~~0.5~~$0.5 million of losses from sales of investments.

Net realized capital gains were $267.3 million and net realized capital losses were $107.3 million for the nine months ended September 30, 2021 and 2020, respectively. The net realized capital gains of ~~$112.6~~$267.3 million for the ~~three~~nine months ended September 30, ~~2019~~ 2021 were comprised of ~~$116.4~~$273.7 million of gains from fair value re-measurements and ~~3.1~~$23.1 million of gains from sales of investments, partially offset by ~~$7.0~~$29.5 million ~~of other than temporary impairments.~~

30, 2020 were comprised of $58.1 million of losses from fair value re-measurements, $31.6 million of losses from sales of investments and $17.6 million of net allowances for credit losses.~~The net realized capital gains~~

Other Income (Expense). We recorded other income of ~~$390.2~~$9.9 million and other expense of $1.8 million for the three months ended September 30, 2021 and 2020, respectively. We recorded other income of $12.0 million and other expense of $11.4 million for the nine months ended September 30, ~~2019 were comprised of $395.6~~ ~~million of gains from fair value re-measurements~~2021 and ~~$8.7million of net gains from sales of investments, partially offset by $14.2 million of other-than-temporary impairments.~~

~~Other Income (Expense).~~ ~~We recorded other expense of $1.8 million and $2.7 million for the three months ended September 30,~~ 2020, ~~and 2019. We recorded other expense of $11.4 million and $8.5 million~~ ~~for the nine months ended September 30, 2020 and 2019,~~ respectively.The change was primarily the result of fluctuations in foreign currency exchange rates.

Claims and Expenses.

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

	Three Months Ended September 30,												Three Months Ended September 30,
	Current		Ratio %/		Prior		Ratio %/		Total		Ratio %/		Current		Ratio %/		Prior		Ratio %/		Total		Ratio %/
(Dollars in millions)	Year		Pt Change		Years		Pt Change		Incurred		Pt Change		Year		Pt Change		Years		Pt Change		Incurred		Pt Change
2021
Attritional													$	1,111.7	60.0%		$	-	0.0%		$	1,111.7	60.0%
Catastrophes														544.1	29.4%			(2.7)	-0.1%			541.3	29.3%
Total													$	1,655.8	89.4%		$	(2.7)	-0.1%		$	1,653.0	89.3%
2020
Attritional	$	980.8	60.7%		$	-	0.0%		$	980.8	60.7%		$	980.8	60.7%		$	-	0.0%		$	980.8	60.7%
Catastrophes		300.2	18.6%			(3.2)	-0.2%			297.0	18.4%			300.2	18.6%			(3.2)	-0.2%			297.0	18.4%
Total	$	1,281.1	79.3%		$	(3.2)	-0.2%		$	1,277.9	79.1%		$	1,281.1	79.3%		$	(3.2)	-0.2%		$	1,277.9	79.1%
2019
Variance 2021/2020
Attritional	$	814.6	57.0%		$	(13.4)	-0.9%		$	801.2	56.1%		$	130.9	(0.7)	pts	$	-	-	pts	$	130.9	(0.7)	pts
Catastrophes		279.5	19.6%			17.4	1.2%			296.9	20.8%			243.9	10.8	pts		0.5	0.1	pts		244.3	10.9	pts
Total	$	1,094.1	76.6%		$	4.0	0.3%		$	1,098.1	76.9%		$	374.7	10.1	pts	$	0.5	0.1	pts	$	375.2	10.2	pts
Variance 2020/2019
Attritional	$	166.2	3.7	pts	$	13.4	0.9	pts	$	179.6	4.6	pts
Catastrophes		20.7	(1.0)	pts		(20.6)	(1.4)	pts		0.1	(2.4)	pts
Total	$	187.0	2.7	pts	$	(7.2)	(0.5)	pts	$	179.8	2.2	pts

	Nine Months Ended September 30,												Nine Months Ended September 30,
	Current		Ratio %/		Prior		Ratio %/		Total		Ratio %/		Current		Ratio %/		Prior		Ratio %/		Total		Ratio %/
(Dollars in millions)	Year		Pt Change		Years		Pt Change		Incurred		Pt Change		Year		Pt Change		Years		Pt Change		Incurred		Pt Change
2021
Attritional													$	3,266.8	61.5%		$	(1.5)	0.0%		$	3,265.3	61.5%
Catastrophes														839.6	15.8%			(2.1)	0.0%			837.4	15.8%
Total													$	4,106.3	77.3%		$	(3.6)	0.0%		$	4,102.7	77.2%
2020
Attritional	$	2,943.2	63.3%		$	(1.0)	0.0%		$	2,942.2	63.3%		$	2,943.2	63.3%		$	(1.0)	0.0%		$	2,942.2	63.3%
Catastrophes		344.9	7.4%			(3.9)	-0.1%			341.0	7.3%			344.9	7.4%			(3.9)	-0.1%			341.0	7.3%
Total	$	3,288.0	70.7%		$	(4.9)	-0.1%		$	3,283.2	70.6%		$	3,288.0	70.7%		$	(4.9)	-0.1%		$	3,283.2	70.6%
2019
Attritional	$	2,405.0	59.0%		$	(27.2)	-0.7%		$	2,377.8	58.4%
Catastrophes		304.4	7.5%			55.3	1.4%			359.6	8.8%
Total	$	2,709.4	66.5%		$	28.1	0.7%		$	2,737.4	67.2%
Variance 2020/2019
Variance 2021/2020
Attritional	$	538.2	4.3	pts	$	26.2	0.7	pts	$	564.4	4.9	pts	$	323.6	(1.8)	pts	$	(0.5)	-	pts	$	323.1	(1.8)	pts
Catastrophes		40.5	(0.1)	pts		(59.2)	(1.5)	pts		(18.6)	(1.5)	pts		494.7	8.4	pts		1.8	0.1	pts		496.5	8.5	pts
Total	$	578.6	4.2	pts	$	(33.0)	(0.8)	pts	$	545.8	3.4	pts	$	818.3	6.6	pts	$	1.2	0.1	pts	$	819.5	6.6	pts

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

Incurred losses and LAE increased by ~~16.4%~~29.4% to $1,653.0 million for the three months ended September 30, 2021 compared to $1,277.9 million for the three months ended September 30, 2020, ~~compared~~primarily due to ~~$1,098.1~~an increase of $130.9 million in current year attritional losses, mainly related to the impact of the increase in premiums earned partially offset by $31.1 million of COVID-19 losses incurred in 2020 which did not recur in 2021, and an increase of $243.9 million in current year catastrophe losses. The current year catastrophe losses of $544.1 million for the three months ended September 30, ~~2019, primarily due to an increase of $166.2 million in current year attritional losses,~~2021 related to ~~$31.1 million of losses from the COVID-19 pandemic~~Hurricane Ida ($430.8 million) and the impact of the increase in premiums earned, an increase of $20.7 million in current year catastrophe losses and $13.4 million less of favorable development on prior years attritional losses in 2020 compared to 2019. The increase in incurred losses was partially offset by a $20.6 million improvement in development on prior years catastrophe losses.European floods ($112.5

million). The current year catastrophe losses of $300.2 million for the three months ended September 30, 2020 related to Hurricane Laura ($122.4 million), the Northern California wildfires ($52.0 million), the California Glass wildfire ($30.0 million), Hurricane Sally ($24.6 million), Oregon wildfires ($21.0 million), Hurricane Isaias ($19.9 million), the Derecho storms ($15.1 million), Calgary storms in Canada ($15.0 million), the U.S. Civil Unrest ($2.4 million) and the Nashville tornadoes ($2.3 million),

partially offset by a reduction in the loss estimate for the Australia East Coast Storm ($3.2 million) and the 2020 Australia fires ($1.3 million). ~~The current year catastrophe losses of $279.5 million for the three months ended September 30, 2019, mainly related to Hurricane Dorian ($154.5 million) and Typhoon Faxai ($126.0 million).~~

Incurred losses and LAE increased by ~~19.9%~~25.0% to $4,102.7 million for the nine months ended September 30, 2021 compared to $3,283.2 million for the nine months ended September 30, 2020, ~~compared~~primarily due to ~~$2,734.4~~an increase of $494.7 million in current year catastrophe losses and an increase of $323.6 million in current year attritional losses, mainly related to the impact of the increase in premiums earned partially offset by $104.8 million of COVID-19 losses incurred in 2020 which did not recur in 2021. The current year catastrophe losses of $839.6 million for the nine months ended September 30, ~~2019,~~2021 primarily ~~due~~related to ~~an increase~~Hurricane Ida ($430.8 million), the Texas winter storms ($278.8 million) and the European floods ($112.5 million) with the rest of ~~$538.2~~ ~~million in current year attritional~~the losses ~~related primarily to $104.8 million of losses~~emanating from the ~~COVID-19 pandemic~~2021 Australia floods and ~~the impact of the increase in premiums earned~~ , an increase of $40.5 million in current year catastrophe losses and $26.2 million less of favorable development on prior years attritional losses in 2020 compared to 2019. The increase in incurred losses was partially offset by a $59.2 million improvement in development on prior years catastrophe losses in 2020 compared to 2019. Victoria Australia flooding. The current year catastrophe losses of $344.9 million for the nine months ended September 30, 2020 related to Hurricane Laura ($122.4 million), the Northern California wildfires ($52.0 million), the California Glass wildfire ($30.0 million), Hurricane Sally ($24.6 million), Oregon wildfires ($21.0 million), Hurricane Isaias ($19.9 million), the U.S. Civil Unrest ($17.4 million), the Derecho storms ($15.1 million), the Nashville tornadoes ($15.1 million), the Calgary storms in Canada ($15.0 million), the Australia East Coast storm ($6.8 million) and the 2020 Australia fires ($5.6 million). ~~The current~~ ~~year catastrophe losses of $304.4~~

Commission, Brokerage, Taxes and Fees. Commission, brokerage, taxes and fees increased to $388.8 million for the three months ended September 30, 2021 compared to $322.4 million for the three months ended September 30, 2020. Commission, brokerage, taxes and fees increased to $1,125.5 million for the nine months ended September 30, ~~2019 are primarily~~2021 compared to $1,001.2 million for the nine months ended September 30, 2020. The increases were mainly due to ~~Hurricane Dorian ($154.5 million) Typhoon Faxai ($126.0 million)~~the impact of the increase in premiums earned and changes in the ~~Townsville monsoon in Australia ($23.9 million).~~mix of business.

~~Commission, Brokerage, Taxes and Fees.~~ ~~Commission, brokerage, taxes and fees decreased to $322.4~~Other Underwriting Expenses. Other underwriting expenses remained relatively flat at $109.5 million for the three months ended September 30, ~~2020~~2021 compared to $357.7 million for the three months ended September 30, 2019. The decrease was mainly due to the impact of the commutation of a multi-year contract in 2019 which increased the level of prior year commission expense and changes in affiliated reinsurance agreements. Commission, brokerage, taxes and fees in~~creased to $1,001.2 million for the nine months ended September 30, 2020 compared to~~ $~~962.7~~ ~~million~~ ~~for the nine months ended September 30, 2019.~~ ~~The increase was mainly due to the impact of the increases in premiums earned and changes in affiliated reinsurance agreements.~~

~~Other Underwriting Expenses.~~ ~~Other underwriting expenses increased~~ to $109.4 million for the three months ended September 30, ~~2020 compared~~2020. Other underwriting expenses increased to ~~$95.7~~$329.2 million for the ~~three~~nine months ended September 30, ~~2019. Other underwriting expenses increased~~2021 compared to $304.7 million for the nine months ended September 30, ~~2020 compared to $257.4 million for the nine months ended September 30, 2019. These increases were~~2020. The year over year increase was mainly due to ~~changes in affiliated reinsurance agreements,~~the impact of ~~increases~~increase in ~~premium~~premiums earned and costs incurred to support the expansion of the insurance business.

Corporate Expenses.Corporate expenses, which are general operating expenses that are not allocated to segments, have increased to ~~$4.2~~$10.9 million from ~~$3.2~~$4.2 million for the three months ended September 30, ~~2020~~2021 and ~~2019,~~2020, respectively, and increased to ~~$11.4~~$23.1 million from ~~$7.4~~$11.4 million for the nine months ended September 30, ~~2020~~2021 and ~~2019,~~2020, respectively. The increases were mainly due to higher compensation costs ~~associated with the relocation of our U.S. headquarters.~~from increased staff count.

Interest, Fees and Bond Issue Cost Amortization Expense. Interest, fees and other bond amortization expense was ~~$6.5~~$15.5 million and ~~$7.8~~$6.5 million for the three months ended September 30, ~~2020~~2021 and ~~2019,~~2020, respectively. Interest, fees and other bond amortization expense was ~~$20.9~~$46.6 million and ~~$27.3~~$20.9 million for the nine months ended September 30, ~~2020~~2021 and ~~2019,~~2020, respectively. The ~~decreases~~variances in ~~expense~~expenses were primarily due to interest expense on the ~~$300.0~~$1,000.0 million ~~affiliated loan agreement with Bermuda Re~~of senior notes issued in ~~2019~~October 2020 and the movement in the floating interest rate related to the long term subordinated notes, which is reset quarterly per the note agreement. The floating rate was ~~2.67%~~2.51% as of September 30, ~~2020.~~2021.

Income Tax Expense (Benefit). We had an income tax benefit of $27.5 million and an income tax expense of $118.1 million for the three and nine months ended September 30, 2021, respectively. We had an income tax expense of $24.1 million and an income tax benefit of $12.8 million for the three and nine months ended September 30, 2020, ~~respectively. We had an income tax expense of $10.3 million and $141.2 million for the three and nine months ended September 30, 2019,~~ respectively. Income tax benefit or expense is primarily a function of the geographic location of the Company’s pre-tax income and the statutory tax rates in those jurisdictions. The effective tax rate (“ETR”) is

primarily affected by tax-exempt investment income, qualifying dividends, and foreign tax ~~credits and dividends.~~credits. Variations in the ETR generally

result from changes in the relative levels of pre-tax income, including the impact of catastrophe losses and net capital gains (losses), among jurisdictions with different tax rates. The change in income tax expense (benefit) for the three and nine months ended September 30, 2021 compared to the three and nine months ended September 30, 2020 as ~~compared to the three months ended September 30, 2019 results~~ resulted primarily from higher investment income and ~~realized investment gains, partially~~earned premiums offset by ~~the estimated incurred losses from the COVID-19 pandemic. The change~~an increase in income tax for the nine months ended September 30, 2020 as compared to the nine months ended September 30, 2019 was primarily due to the estimated incurred losses from the COVID-19 pandemic and the beneficial tax impact from thecatastrophe losses.

The Coronavirus Aid, Relief and Economic ~~Securities~~Security Act (“~~the~~ CARES Act”).

~~The CARES Act~~ was passed by Congress and signed into law by the President on March 27, 2020 in response to the COVID-19 pandemic. Among the provisions of the CARES Act was a special tax provision which allows companies to elect to carryback five years net operating losses incurred in the 2018, 2019 and/or 2020 tax years. The Tax Cuts and Jobs Act of 2017 had eliminated net operating loss carrybacks for most companies. The Company determined that the special 5five year loss carryback tax provision provided a tax benefit of $31.0 million which it recorded in the quarter ended March 31, 2020.

Net Income (Loss).

Our net loss was $143.3 million and net income was $119.8 ~~million and $61.1~~ million, for the three months ended September 30, ~~2020~~2021 and ~~2019~~2020 respectively. Our net income was ~~$165.9~~$441.9 million and ~~$593.7~~$165.9 million, for the nine months ended September 30, ~~2020~~2021 and ~~2019~~2020 respectively. The changes were primarily driven by the financial component fluctuations explained above.

Ratios.

Our combined ratio ~~decreased~~increased by ~~2.8~~10.4 points to 116.2% for the three months ended September 30, 2021 compared to 105.8% for the three months ended September 30, 2020 ~~compared~~and increased by 5.9 points to ~~108.6%~~104.6% for the ~~three~~nine months ended September 30, ~~2019, and increased by 1.6 points~~2021 compared to 98.7% for the nine months ended September 30, ~~2020 compared to 97.1% for the nine months ended September 30, 2019.~~2020. The loss ratio component increased by ~~2.2~~10.2 points and ~~3.4~~6.6 points in for the three and nine months ended September 30, ~~2020,~~2021, respectively, over the same period last ~~year~~year. The increases were mainly due to higher ~~attritional losses due to COVID-19.~~current year catastrophe losses. The commission and brokerage ratio component ~~decreased~~increased to 21.0% for the three months ended September 30, 2021 compared to 20.0% for the three months ended September 30, 2020 ~~compared~~and decreased to ~~25.0%~~21.2% for the ~~three~~nine months ended September 30, ~~2019, and decreased~~2021 compared to 21.5% for the nine months ended September 30, 2020, ~~compared to 23.6% for the nine months ended September 30, 2019,~~ reflecting ~~the impact of the commutation of a multi-year contract in 2019 which increased the commission ratio, the impact of~~ changes in affiliated reinsurance agreements and ~~the impact of~~ changes in the mix of business. The other underwriting expense ratio ~~remained flat at~~decreased to 5.9% from 6.7% for the three months ended September 30, 2021 and 2020, respectively and ~~2019 and increased slightly~~decreased to 6.2% from 6.6% for the nine months ended September 30, 2021 and 2020, ~~from 6.3% for the nine months ended September 30, 2019.~~respectively. The ~~increase for the nine month period was~~decreases were mainly due to ~~the impact of~~ changes in ~~affiliated reinsurance contracts.~~the mix of business.

Stockholder's Equity.

Stockholder’s equity increased by ~~$298.3~~$343.5 million to ~~$6,155.7~~$6,757.8 million at September 30, ~~2020~~2021 from ~~$5,857.4~~$6,414.3 million at December 31, ~~2019,~~2020, principally as a result of ~~$165.9~~$441.9 million of net income ~~$133.4~~and $5.6 million of net benefit plan obligation adjustments, partially offset by $99.8 million of net unrealized depreciation on investments, net of tax ~~$4.5 million of net benefit plan obligation adjustments~~ and ~~$0.9 million of cumulative adjustment from the adoption of ASU-2016-13, partially offset by $6.8~~$4.6 million of net foreign currency translation adjustments.

Consolidated Investment Results

Net Investment Income.

Net investment income increased ~~by 41.7%~~to $197.1 million for the three months ended September 30, 2021 compared to $135.4 million for the three months ended September 30, ~~2020 compared~~2020. Net investment income increased to ~~$95.6~~$593.0 million for the ~~three~~nine months ended September 30, ~~2019.~~ ~~This increase was~~2021 compared to $244.8 million for the nine months ended September 30, 2020. The increases were primarily the result of an increase in limited partnership income ~~as the improvement in the equity markets during the second quarter had a positive impact on the limited partnership valuations,~~ and ~~we had~~ higher income from ~~our growing fixed~~other alternative investments. The limited partnership income ~~portfolio.~~ ~~Net investment~~primarily reflects increases in their reported net asset values. As such, until these asset values are monetized and the resultant income ~~decreased by 9.6%~~is distributed, they are subject to ~~$244.8 million for the nine months ended September 30, 2020 compared to $270.8 million for the nine months ended September 30, 2019.~~ ~~This decrease in income was primarily the result of losses from our limited partnerships~~future increases or decreases in the ~~second quarter, partially offset by higher income from our growing fixed maturity portfolio.~~asset value, and the results may be volatile.

4137

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

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
(Dollars in millions)	2021		2020		2021		2020
Fixed maturities	$	83.4	$	78.3	$	260.4	$	227.3
Equity securities		3.8		2.5		10.1		6.1
Short-term investments and cash		0.1		0.5		0.3		2.6
Other invested assets
Limited partnerships		81.9		35.9		260.5		2.4
Dividends from preferred shares of affiliate		7.8		7.8		23.3		23.3
Other		30.9		14.7		62.8		(1.3)
Gross investment income before adjustments		207.9		139.7		617.4		260.4
Funds held interest income (expense)		0.8		0.9		7.0		5.1
Interest income from Parent		1.6		1.3		4.2		3.9
Gross investment income		210.3		141.8		628.6		269.3
Investment expenses		13.1		(6.4)		35.6		(24.5)
Net investment income	$	197.2	$	135.4	$	593.0	$	244.8

(Some amounts may not reconcile due to rounding.)

	Three Months Ended		Nine Months Ended
	September 30,		September 30,
	2021	2020	2021	2020
Annualized pre-tax yield on average cash and invested assets	4.7%	4.3%	4.9%	2.6%
Annualized after-tax yield on average cash and invested assets	3.7%	3.4%	3.9%	2.1%

Three Months Ended

Nine Months Ended

September 30,

September 30,
(Dollars in millions)
2020

2019

2020

2019
Fixed maturities
$
78.3

$
68.2

$
227.3

$
200.6
Equity securities

2.5

1.9

6.1

5.7
Short-term investments and cash

0.5

2.2

2.6

8.1
Other invested assets

Limited partnerships

35.9

15.1

2.4

38.3
Dividends from preferred shares of affiliate

7.8

7.8

23.3

23.3
Other

14.7

7.3

(1.3)

13.6
Gross investment income before adjustments

139.7

102.5

260.4

289.6
Funds held interest income (expense)

0.9

1.1

5.1

5.4
Interest income from Parent

1.3

-

3.9

-
Gross investment income

141.8

103.6

269.3

295.0
Investment expenses

(6.4)

(8.0)

(24.5)

(24.2)
Net investment income
$
135.4

$
95.6

$
244.8

$
270.8

(Some amounts may not reconcile due to rounding.)

~~The following tables show a comparison of various investment yields for the periods indicated:~~38

At

At

September 30,

December 31,

2020

2019

Imbedded pre-tax yield of cash and invested assets
3.2%

3.5%

Imbedded after-tax yield of cash and invested assets
2.5%

2.8%

Three Months Ended

Nine Months Ended

September 30,

September 30,

2020

2019

2020

2019
Annualized pre-tax yield on average cash and invested assets
4.3%

3.4%

2.6%

3.3%
Annualized after-tax yield on average cash and invested assets
3.4%

2.7%

2.1%

2.6%

Net Realized Capital Gains (Losses).

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

	Three Months Ended September 30,						Nine Months Ended September 30,						Three Months Ended September 30,						Nine Months Ended September 30,
(Dollars in millions)	2020		2019		Variance		2020		2019		Variance		2021		2020		Variance		2021		2020		Variance
Gains (losses) from sales:
Fixed maturity securities, market value
Gains	$	5.0	$	6.6	$	(1.6)	$	15.6	$	17.5	$	(1.9)	$	8.9	$	5.0	$	3.9	$	24.1	$	15.6	$	8.5
Losses		(5.0)		(4.5)		(0.5)		(34.6)		(14.2)		(20.4)		(6.2)		(5.0)		(1.2)		(13.3)		(34.6)		21.3
Total		-		2.1		(2.1)		(19.0)		3.3		(22.3)		2.7		-		2.7		10.8		(19.0)		29.8
Fixed maturity securities, fair value
Gains		-		-		-		-		0.4		(0.4)		-		-		-		-		-		-
Losses		(2.0)		-		(2.0)		(2.0)		-		(2.0)		-		(2.0)		2.0		-		(2.0)		2.0
Total		(2.0)		-		(2.0)		(2.0)		0.4		(2.4)		-		(2.0)		2.0		-		(2.0)		2.0
Equity securities, fair value
Gains		9.5		1.1		8.4		30.3		9.3		21.0		2.8		9.5		(6.7)		17.7		30.3		(12.6)
Losses		(9.8)		(2.2)		(7.6)		(41.9)		(6.7)		(35.2)		(3.3)		(9.8)		6.5		(11.4)		(41.9)		30.5
Total		(0.3)		(1.1)		0.8		(11.6)		2.6		(14.2)		(0.5)		(0.3)		(0.2)		6.3		(11.6)		17.9
Other invested assets
Gains		1.4		2.6		(1.2)		6.0		2.9		3.1		2.4		1.4		1.0		8.0		6.0		2.0
Losses		(0.3)		(0.5)		0.2		(5.9)		(0.6)		(5.3)		(0.4)		(0.3)		(0.1)		(2.0)		(5.9)		3.9
Total		1.1		2.1		(1.0)		0.1		2.3		(2.2)		1.9		1.1		0.8		6.0		0.1		5.9
Short Term Investments:
Gains		0.8		-		0.8		1.0		0.1		0.9		-		0.8		(0.8)		-		1.0		(1.0)
Losses		-		-		-		-		-		-		-		-		-		-		-		-
Total		0.8		-		0.8		1.0		0.1		0.9		-		0.8		(0.8)		-		1.0		(1.0)
Total net realized gains (losses) from sales
Gains		16.7		10.3		6.4		52.9		30.2		22.7		14.1		16.7		(2.6)		49.8		52.9		(3.1)
Losses		(17.1)		(7.2)		(9.9)		(84.4)		(21.5)		(62.9)		(9.9)		(17.1)		7.2		(26.7)		(84.4)		57.7
Total		(0.5)		3.1		(3.6)		(31.6)		8.7		(40.3)		4.1		(0.5)		4.6		23.1		(31.6)		54.7

Allowances for credit losses:		2.3		-		2.3		(17.6)		-		(17.6)		(7.3)		2.3		(9.6)		(29.5)		(17.6)		(11.9)

Other than temporary impairments:		-		(7.0)		7.0		-		(14.2)		14.2

Gains (losses) from fair value adjustments:
Fixed maturities, fair value		3.3		-		3.3		1.9		-		1.9		-		3.3		(3.3)		-		1.9		(1.9)
Equity securities, fair value		94.3		(10.3)		104.6		120.8		93.3		27.5		(4.5)		94.3		(98.8)		136.9		120.8		16.1
Other invested assets, fair value		15.8		126.7		(110.9)		(180.8)		302.3		(483.1)		(43.8)		15.8		(59.6)		136.8		(180.8)		317.6
Total		113.4		116.4		(3.0)		(58.1)		395.6		(453.7)		(48.3)		113.4		(161.7)		273.7		(58.1)		331.8

Total net realized gains (losses)	$	115.2	$	112.6	$	2.6	$	(107.3)	$	390.2	$	(497.5)	$	(51.5)	$	115.2	$	(166.7)	$	267.3	$	(107.3)	$	374.6

(Some amounts may not reconcile due to rounding.)

~~Net realized capital losses were $107.3 million and~~in net ~~realized capital gains were $390.2 million~~allowances for ~~the nine months ended September 30, 2020 and 2019, respectively.~~ credit losses.The net realized capital losses of $107.3 million for the nine months ended September 30, 2020 were comprised of $58.1 million of losses from fair value re-measurements, $31.6 million of losses from sales of investments and $17.6 million of net allowances for credit losses.~~The net realized capital gains of $390.2 million for the nine months ended September 30, 2019 were comprised of $395.6~~ ~~million of gains from fair value re-measurements and $8.7million of net gains from sales of investments, partially offset by $14.2 million of other-than-temporary impairments.~~

Segment 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.

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

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

Reinsurance.

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

	Three Months Ended September 30,							Nine Months Ended September 30,							Three Months Ended September 30,							Nine Months Ended September 30,
(Dollars in millions)	2020		2019		Variance		% Change	2020		2019		Variance		% Change	2021		2020		Variance		% Change	2021		2020		Variance		% Change
Gross written premiums	$	1,473.3	$	1,297.2	$	176.1	13.6%	$	3,906.4	$	3,464.8	$	441.6	12.7%	$	1,693.0	$	1,473.3	$	219.8	14.9%	$	4,552.4	$	3,906.4	$	646.0	16.5%
Net written premiums		1,296.1		1,141.4		154.7	13.6%		3,403.1		2,955.3		447.8	15.2%		1,461.2		1,296.1		165.1	12.7%		3,961.3		3,403.1		558.2	16.4%

Premiums earned	$	1,153.7	$	996.5	$	157.2	15.8%	$	3,223.6	$	2,852.0	$	371.6	13.0%	$	1,280.2	$	1,153.7	$	126.4	11.0%	$	3,689.5	$	3,223.6	$	465.9	14.5%
Incurred losses and LAE		936.9		800.7		136.2	17.0%		2,250.3		1,935.7		314.6	16.3%		1,207.5		936.9		270.6	28.9%		2,917.3		2,250.3		667.0	29.6%
Commission and brokerage		265.1		297.5		(32.4)	-10.9%		818.3		793.0		25.3	3.2%		319.7		265.1		54.6	20.6%		935.3		818.3		117.0	14.3%
Other underwriting expenses		35.7		30.4		5.3	17.4%		92.1		79.8		12.3	15.4%		32.0		35.7		(3.6)	-10.1%		101.3		92.1		9.2	10.0%
Underwriting gain (loss)	$	(84.0)	$	(132.1)	$	48.1	-36.4%	$	62.9	$	43.5	$	19.4	44.6%	$	(279.1)	$	(84.0)	$	(195.1)	232.4%	$	(264.4)	$	62.9	$	(327.3)	-520.2%

							Point Chg							Point Chg							Point Chg							Point Chg
Loss ratio		81.2%		80.3%			0.9		69.8%		67.9%			1.9		94.3%		81.2%			13.1		79.1%		69.8%			9.3
Commission and brokerage ratio		23.0%		29.9%			(6.9)		25.4%		27.8%			(2.4)		25.0%		23.0%			2.0		25.3%		25.4%			(0.1)
Other underwriting ratio		3.1%		3.1%			-		2.8%		2.8%			-		2.5%		3.1%			(0.6)		2.7%		2.8%			(0.1)
Combined ratio		107.3%		113.3%			(6.0)		98.0%		98.5%			(0.5)		121.8%		107.3%			14.5		107.2%		98.0%			9.1

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

Premiums.Gross written premiums increased by ~~13.6%~~14.9% to $1,693.0 million for the three months ended September 30, 2021 from $1,473.3 million for the three months ended September 30, 2020 ~~from $1,297.2~~primarily due to

increases in casualty pro rata business, casualty excess of loss business and property catastrophe excess of loss writings. Net written premiums increased by 12.7% to $1,461.2 million for the three months ended September 30, ~~2019 primarily due to increases in casualty writings and treaty property business. Net written premiums increased by 13.6%~~2021 compared to $1,296.1 million for the three months ended September 30, 2020, ~~compared to $1,141.4 million for the three months ended September 30, 2019,~~ which is consistent with the change in gross written premiums. Premiums

earned increased ~~15.8%~~11.0% to $1,280.2 million for the three months ended September 30, 2021 compared to $1,153.7 million for the three months ended September 30, ~~2020 compared to $996.5 million for the three months ended September 30, 2019.~~2020. The change in premiums earned relative to net written premiums is the result of timing; premiums are earned ratably over the coverage period whereas written premiums are recorded at the initiation of the coverage period.

Gross written premiums increased by ~~12.7%~~16.5% to $4,552.4 million for the nine months ended September 30, 2021 from $3,906.4 million for the nine months ended September 30, 2020 ~~from $3,464.8~~primarily due to increases in casualty pro rata business, casualty excess of loss business and property catastrophe excess of loss writings. Net written premiums increased by 16.4% to $3,961.3 million for the nine months ended September 30, ~~2019 primarily due to increases in casualty writings and treaty property business. Net written premiums increased by 15.2%~~2021 compared to $3,403.1 million for the nine months ended September 30, 2020, ~~compared~~which is consistent with the change in gross written premiums. Premiums earned increased 14.5% to ~~$2,955.3~~$3,689.5 million for the nine months ended September 30, ~~2019. The difference between the change in gross written premiums~~2021 compared ~~to the change in net written premiums is primarily due to varying utilization of reinsurance. Premiums earned increased 13.0%~~ to $3,223.6 million for the nine months ended September 30, ~~2020 compared to $2,852.0 million for the nine months ended September 30, 2019.~~2020. The change in premiums earned relative to net written premiums is the result of timing; premiums are earned ratably over the coverage period whereas written premiums are recorded at the initiation of the coverage period.

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

	Three Months Ended September 30,
	Current		Ratio %/		Prior		Ratio %/		Total		Ratio %/
(Dollars in millions)	Year		Pt Change		Years		Pt Change		Incurred		Pt Change
2021
Attritional	$	743.8	58.1%		$	-	0.0%		$	743.8	58.1%
Catastrophes		465.6	36.4%			(1.9)	-0.1%			463.7	36.2%
Total segment	$	1,209.4	94.5%		$	(1.9)	-0.1%		$	1,207.5	94.3%
2020
Attritional	$	677.2	58.7%		$	-	0.0%		$	677.2	58.7%
Catastrophes		262.7	22.8%			(3.0)	-0.3%			259.7	22.5%
Total segment	$	939.9	81.5%		$	(3.0)	-0.3%		$	936.9	81.2%
Variance 2021/2020
Attritional	$	66.7	(0.6)	pts	$	-	-	pts	$	66.7	(0.6)	pts
Catastrophes		202.9	13.6	pts		1.1	0.2	pts		204.0	13.7	pts
Total segment	$	269.6	13.0	pts	$	1.1	0.2	pts	$	270.6	13.1	pts

Three Months Ended September 30,

Current

Ratio %/

Prior

Ratio %/

Total

Ratio %/
(Dollars in millions)
Year

Pt Change

Years

Pt Change

Incurred

Pt Change
2020

Attritional
$
677.2

58.7%

$
-

0.0%

$
677.2

58.7%

Catastrophes

262.7

22.8%

(3.0)

-0.3%

259.7

22.5%

Total segment
$
939.9

81.5%

$
(3.0)

-0.3%

$
936.9

81.2%

2019

Attritional
$
524.9

52.7%

$
(14.7)

-1.5%

$
510.2

51.2%

Catastrophes

275.5

27.6%

15.0

1.5%

290.5

29.1%

Total segment
$
800.4

80.3%

$
0.2

0.0%

$
800.7

80.3%

Variance 2020/2019

Attritional
$
152.3

6.0
pts

$
14.7

1.5
pts

$
167.0

7.5
pts
Catastrophes

(12.8)

(4.8)
pts

(18.0)

(1.8)
pts

(30.8)

(6.6)
pts
Total segment
$
139.5

1.2
pts

$
(3.3)

(0.3)
pts

$
136.2

0.7
pts

	Nine Months Ended September 30,
	Current		Ratio %/		Prior		Ratio %/		Total		Ratio %/
(Dollars in millions)	Year		Pt Change		Years		Pt Change		Incurred		Pt Change
2021
Attritional	$	2,216.3	60.1%		$	0.5	0.0%		$	2,216.8	60.1%
Catastrophes		703.6	19.1%			(3.1)	-0.1%			700.5	19.0%
Total segment	$	2,919.9	79.1%		$	(2.6)	-0.1%		$	2,917.3	79.1%
2020
Attritional	$	1,967.2	61.0%		$	(0.6)	0.0%		$	1,966.6	61.0%
Catastrophes		286.9	8.9%			(3.2)	-0.1%			283.7	8.8%
Total segment	$	2,254.1	69.9%		$	(3.8)	-0.1%		$	2,250.3	69.8%
Variance 2021/2020
Attritional	$	249.0	(0.9)	pts	$	1.1	-	pts	$	250.2	(0.9)	pts
Catastrophes		416.8	10.2	pts		0.1	-	pts		416.8	10.2	pts
Total segment	$	665.8	9.3	pts	$	1.2	-	pts	$	667.0	9.3	pts

(Some amounts may not reconcile due to rounding.)

Incurred losses increased by ~~17.0%~~28.9% to $1,207.5 million for the three months ended September 30, 2021 compared to $936.9 million for the three months ended September 30, ~~2020 compared to $800.7 million for the three months ended September 30, 2019.~~2020. The ~~increase~~rise in incurred losses was primarily due

to an increase of ~~$152.3~~$202.9 million on current year catastrophe losses and an increase of $66.7 million in current year attritional losses, ~~primarily~~mainly related to ~~$27.1 million of losses from the COVID-19 pandemic and~~ the impact of the increase in premiums earned ~~as well as $14.7 million less of favorable development on prior years attritional losses in 2020 compared to 2019. The increase in incurred losses was~~ partially offset by ~~a decline~~$27.1 million of ~~$12.8~~COVID-19 losses incurred in 2020 which did not recur in 2021. The $465.6 million inof current year catastrophe losses for the three months ended September 30, 2021 primarily related to Hurricane Ida ($352.4 million) and ~~$18.0 million of improvement in development on prior years catastrophe losses in 2020 compared to 2019.~~ the European floods ($112.5 million). The $262.7 million of current year catastrophe losses for the three months ended September 30, 2020 related to Hurricane Laura ($107.4 million), the Northern California wildfires ($52.0 million), the California Glass wildfire ($30.0 million), Oregon wildfires ($21.0 million), Hurricane Isaias ($17.9 million), the Derecho storms ($13.1 million), Calgary storms in Canada ($12.5 million), Hurricane Sally ($8.6 million), the U.S. Civil Unrest ($2.4 million) and the Nashville tornadoes ($2.3 million), partially offset by a reduction in the loss estimate for the Australia East Coast storm ($3.2 million) and the 2020 Australia fires ($1.3 million). ~~The current year catastrophe losses of $275.5 million for the three months ended September 30, 2019 related to Hurricane Dorian ($150.5 million) and Typhoon Faxai ($126.0 million)..~~

Incurred losses increased by ~~16.3%~~29.6% to $2,917.3 million for the nine months ended September 30, 2021 compared to $2,250.3 million for the nine months ended September 30, ~~2020 compared to $1,935.7 million for the nine months ended September 30, 2019.~~2020. The ~~increase~~rise in incurred losses was primarily due to an increase of ~~$372.8~~$416.8 million on current years catastrophe losses and an increase of $249.0 million in current year attritional losses, primarily related to ~~$72.6 million of losses from the COVID-19 pandemic and~~ the impact of the increase in premiums earned ~~as well as $9.3 million less of favorable development on prior years attritional losses in 2020 compared to 2019. The increase in incurred losses was~~and partially offset by ~~a decline~~$72.6 million of ~~$13.5~~COVID-19 losses incurred in 2020 which did not recur in 2021. The $703.6 million inof current year catastrophe losses for the nine months ended September 30, 2021 primarily related to Hurricane Ida ($352.4 million), the Texas winter storms ($221.3 million) and ~~$54.0 million~~the European floods ($112.5 million) with the rest of ~~improvement in development on prior years catastrophe~~the losses ~~in 2020 compared to 2019.~~emanating from the 2021 Australia floods and Victoria Australia flooding. The current year catastrophe losses of $286.9 million for the nine months ended September 30, 2020 primarily related to Hurricane Laura ($107.4 million), the Northern California wildfires ($52.0 million), the California Glass wildfire ($30.0 million), Oregon wildfires ($21.0 million), Hurricane Isaias ($17.9 million), , the Derecho storms ($13.1 million), the Nashville tornadoes ($9.6 million), the Calgary storms in Canada ($12.5 million), Hurricane Sally ($8.6 million), the Australia East Coast storm ($6.8 million), the 2020 Australia fires ($5.6 million) and the U.S. Civil Unrest ($2.4 million),.

Segment Expenses. ~~The current year catastrophe losses of $300.4~~Commission and brokerage increased to $319.7 million for the ~~nine~~three months ended September30, ~~2019mainly related to Hurricane Dorian ($150.5 million), Typhoon Faxai ($126.0 million), and the Townsville monsoon in Australia ($23.9 million).~~

~~Segment Expenses.~~ ~~Commission and brokerage decreased~~2021 compared to $265.1 million for the three months ended September 30, 2020 compared to $297.5 million for the three months ended September 30, 2019. The decrease was mainly due to the impact of the commutation of a multi-year contract in 2019 which increased prior year commission expense and the impact of changes in affiliated reinsurance agreements.2020. Commission and brokerage increased to ~~$818.3~~$935.3 million for the nine months ended September 30, ~~2020~~ 2021 compared to ~~$793.0~~$818.3 million for the nine months ended September 30, ~~2019~~.2020. The increase was mainly due to the impact of the increase in premiums earned. Segment other underwriting expenses increased to $35.7 million for the three months ended September 30, 2020 from $30.4 million for the three months ended September 30, 2019. Segment other underwriting expenses increased to $92.1 million ~~for the nine months ended September 30, 2020~~ ~~from $79.8 million~~ ~~for the nine months ended September 30, 2019. These~~increases were mainly due to the impact of the increase in premiums earned and changes in ~~affiliated reinsurance agreements.~~the mix of business.

~~Insurance.~~Segment other underwriting expenses decreased to $32.0 million for the three months ended September 30, 2021 from $35.7 million for the three months ended September 30, 2020. The quarter over quarter decrease was primarily due to changes in the mix of business. Segment other underwriting expenses increased to $101.3 million for the nine months ended September 30, 2021 from $92.1 million for the nine months ended September 30, 2020. The year over year increase was mainly due to the impact of the increase in premiums earned.

Insurance.

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

	Three Months Ended September 30,							Nine Months Ended September 30,							Three Months Ended September 30,							Nine Months Ended September 30,
(Dollars in millions)	2020		2019		Variance		% Change	2020		2019		Variance		% Change	2021		2020		Variance		% Change	2021		2020		Variance		% Change
Gross written premiums	$	591.7	$	592.8	$	(1.1)	-0.2%	$	1,971.8	$	1,798.1	$	173.7	9.7%	$	830.7	$	591.7	$	239.0	40.4%	$	2,421.7	$	1,971.8	$	449.9	22.8%
Net written premiums		429.6		428.5		1.1	0.3%		1,462.9		1,326.7		136.2	10.3%		608.2		429.6		178.7	41.6%		1,801.9		1,462.9		339.0	23.2%

Premiums earned	$	461.7	$	431.9	$	29.9	6.9%	$	1,424.8	$	1,222.4	$	202.4	16.6%	$	571.2	$	461.7	$	109.5	23.7%	$	1,625.3	$	1,424.8	$	200.5	14.1%
Incurred losses and LAE		340.9		297.4		43.6	14.7%		1,032.9		801.7		231.2	28.8%		445.5		340.9		104.5	30.6%		1,185.4		1,032.9		152.5	14.8%
Commission and brokerage		57.3		60.2		(2.9)	-4.8%		182.9		169.6		13.3	7.8%		69.1		57.3		11.8	20.6%		190.3		182.9		7.4	4.0%
Other underwriting expenses		73.7		65.3		8.4	12.9%		212.6		177.6		35.0	19.7%		77.5		73.7		3.8	5.2%		227.9		212.6		15.3	7.2%
Underwriting gain (loss)	$	(10.2)	$	9.0	$	(19.2)	-213.2%	$	(3.6)	$	73.5	$	(77.1)	104.9%	$	(20.9)	$	(10.2)	$	(10.7)	NM	$	21.7	$	(3.6)	$	25.3	-702.4%

							Point Chg							Point Chg							Point Chg							Point Chg
Loss ratio		73.8%		68.9%			4.9		72.5%		65.6%			6.9		78.0%		73.8%			4.2		72.9%		72.5%			0.4
Commission and brokerage ratio		12.4%		13.9%			(1.5)		12.8%		13.9%			(1.1)		12.1%		12.4%			(0.3)		11.7%		12.8%			(1.1)
Other underwriting ratio		16.0%		15.1%			0.9		15.0%		14.5%			0.5		13.6%		16.0%			(2.4)		14.0%		15.0%			(1.0)
Combined ratio		102.2%		97.9%			4.3		100.3%		94.0%			6.3		103.7%		102.2%			1.5		98.7%		100.3%			(1.7)

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

Premiums.Gross written premiums ~~remained basically flat at~~increased by 40.4% to $830.7 million for the three months ended September 30, 2021 compared to $591.7 million for the three months ended September 30, ~~2020 compared~~2020. The rise in gross written premiums was primarily due to ~~$592.8~~increases in specialty casualty business, professional liability business and short tail business, including property. Net written premiums increased by 41.6% to $608.2 million for the three months ended September 30, ~~2019. Net written premiums increased by 0.3%~~2021 compared to $429.6 million for the three months ended September 30, 2020, ~~compared~~which is consistent with the change in gross written premiums. Premiums earned increased 23.7% to ~~$428.5~~$571.2 million for the three months ended September 30, ~~2019. The difference between the change in gross written premiums~~2021 compared ~~to the change in net written premiums is primarily due to varying utilization of reinsurance. Premiums earned increased 6.9%~~ to $461.7 million for the three months ended September 30, ~~2020 compared to $431.9 million for the three months ended September 30, 2019.~~2020. The change in premiums earned is the result of timing; premiums are earned ratably over the coverage period whereas written premiums are recorded at the initiation of the coverage period.

Gross written premiums increased by ~~9.7%~~22.8% to $2,421.7 million for the nine months ended September 30, 2021 compared to $1,971.8 million for the nine months ended September 30, ~~2020 compared~~2020. The rise in gross written premiums was primarily due to ~~$1,798.1~~increases in specialty casualty business, professional liability business and short tail business, including property, partially offset by a decline in workers’ compensation business. Net written premiums increased by 23.2% to $1,801.9 million for the nine months ended September 30, ~~2019. This increase was related to most lines of business including casualty, property, specialty lines and accident and health. Net written premiums increased by 10.3%~~2021 compared to $1,462.9 million for the nine months ended September 30, 2020, ~~compared to $1,326.7 million for the nine months ended September 30, 2019,~~ which is consistent with the change in gross written premiums. Premiums earned increased ~~16.6%~~14.1% to $1,625.3 million for the nine months ended September 30, 2021 compared to $1,424.8 million for the nine months ended September 30, ~~2020 compared to $1,222.4 million for the nine months ended September 30, 2019.~~2020. The change in premiums earned is the result of timing; premiums are earned ratably over the coverage period whereas written premiums are recorded at the initiation of the coverage period.

4743

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

	Three Months Ended September 30,												Three Months Ended September 30,
	Current		Ratio %/		Prior		Ratio %/		Total		Ratio %/		Current		Ratio %/		Prior		Ratio %/		Total		Ratio %/
(Dollars in millions)	Year		Pt Change		Years		Pt Change		Incurred		Pt Change		Year		Pt Change		Years		Pt Change		Incurred		Pt Change
2021
Attritional													$	367.9	64.4%		$	-	0.0%		$	367.9	64.4%
Catastrophes														78.4	13.7%			(0.8)	-0.1%			77.6	13.6%
Total segment													$	446.3	78.1%		$	(0.8)	-0.1%		$	445.5	78.0%
2020
Attritional	$	303.7	65.8%		$	-	0.0%		$	303.7	65.8%		$	303.7	65.8%		$	-	0.0%		$	303.7	65.8%
Catastrophes		37.5	8.1%			(0.2)	-0.1%			37.3	8.1%			37.5	8.1%			(0.2)	-0.1%			37.3	8.1%
Total segment	$	341.2	73.9%		$	(0.2)	-0.1%		$	340.9	73.8%		$	341.2	73.9%		$	(0.2)	-0.1%		$	340.9	73.8%
2019
Variance 2021/2020
Attritional	$	289.7	67.1%		$	1.3	0.3%		$	291.0	67.4%		$	64.2	(1.4)	pts	$	-	-	pts	$	64.2	(1.4)	pts
Catastrophes		4.0	0.9%			2.3	0.5%			6.3	1.5%			40.9	5.6	pts		(0.6)	-	pts		40.3	5.5	pts
Total segment	$	293.7	68.0%		$	3.7	0.9%		$	297.4	68.9%		$	105.1	4.2	pts	$	(0.6)	-	pts	$	104.5	4.2	pts
Variance 2020/2019
Attritional	$	14.0	(1.3)	pts	$	(1.3)	(0.3)	pts	$	12.7	(1.6)	pts
Catastrophes		33.5	7.2	pts		(2.5)	(0.6)	pts		31.0	6.6	pts
Total segment	$	47.5	5.9	pts	$	(3.9)	(1.0)	pts	$	43.6	4.9	pts

	Nine Months Ended September 30,												Nine Months Ended September 30,
	Current		Ratio %/		Prior		Ratio %/		Total		Ratio %/		Current		Ratio %/		Prior		Ratio %/		Total		Ratio %/
(Dollars in millions)	Year		Pt Change		Years		Pt Change		Incurred		Pt Change		Year		Pt Change		Years		Pt Change		Incurred		Pt Change
2021
Attritional													$	1,050.5	64.6%		$	(2.0)	-0.1%		$	1,048.5	64.5%
Catastrophes														135.9	8.4%			1.0	0.1%			136.9	8.4%
Total segment													$	1,186.4	73.0%		$	(1.0)	-0.1%		$	1,185.4	72.9%
2020
Attritional	$	976.0	68.5%		$	(0.3)	0.0%		$	975.6	68.5%		$	976.0	68.5%		$	(0.3)	0.0%		$	975.6	68.5%
Catastrophes		58.0	4.1%			(0.7)	0.0%			57.3	4.0%			58.0	4.1%			(0.7)	0.0%			57.3	4.0%
Total segment	$	1,034.0	72.6%		$	(1.0)	-0.1%		$	1,032.9	72.5%		$	1,034.0	72.6%		$	(1.0)	-0.1%		$	1,032.9	72.5%
2019
Attritional	$	810.6	66.3%		$	(17.3)	-1.4%		$	793.2	64.9%
Catastrophes		4.0	0.3%			4.5	0.4%			8.5	0.7%
Total segment	$	814.6	66.6%		$	(12.9)	-1.1%		$	801.7	65.6%
Variance 2020/2019
Variance 2021/2020
Attritional	$	165.4	2.2	pts	$	17.0	1.4	pts	$	182.4	3.6	pts	$	74.5	(3.9)	pts	$	(1.6)	(0.1)	pts	$	72.9	(4.0)	pts
Catastrophes		54.0	3.8	pts		(5.2)	(0.4)	pts		48.8	3.3	pts		77.9	4.3	pts		1.7	0.1	pts		79.6	4.4	pts
Total segment	$	219.4	6.0	pts	$	11.9	1.1	pts	$	231.2	6.9	pts	$	152.5	0.4	pts	$	-	-	pts	$	152.5	0.4	pts

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

Incurred losses and LAE increased by ~~14.7%~~30.6% to $445.5 million for the three months ended September 30, 2021 compared to $340.9 million for the three months ended September 30, 2020, ~~compared to $297.4 million for the three months ended September 30, 2019,~~ mainly due to an increase of ~~$14.0~~$64.2 million in current year attritional losses ~~resulting from $4.0 million of losses from the COVID-19 pandemic and~~primarily related to the impact of the increase in premiums earned and ana $40.9 million increase ~~of $33.5 million~~ in current year catastrophe losses. The increase in attritional losses was partially offset by $4.0 million of COVID-19 losses incurred in 2020 which did not recur in 2021. The $78.4 million of current year catastrophe losses for the three months ended September 30, 2021, related to Hurricane Ida. The $37.5 million of current year catastrophe losses for the three months ended September 30, 2020, related to Hurricane Sally ($16.0 million), Hurricane Laura ($15.0 million), the Calgary storms in Canada ($2.5 million), Hurricane Isaias ($2.0 million) and the Derecho storms ($2.0 million). ~~The current year catastrophe losses of $4.0 million for the three months ended September 30, 2019, related to Hurricane Dorian ($4.0 million).~~

Incurred losses and LAE increased by ~~28.8%~~14.8% to $1,185.4 million for the nine months ended September 30, 2021 compared to $1,032.9 million for the nine months ended September 30, 2020, ~~compared to $801.7 million for the nine months ended September 30, 2019,~~ mainly due to an increase of ~~$165.4~~$77.9 million in current year catastrophe losses and an increase of $74.5 million in current year attritional losses. The rise in current year attritional losses ~~resulting from $32.2 million of losses from the COVID-19 pandemic and~~was primarily due to the impact of the increase in premiums earned ~~an increase~~and partially offset by $32.2 million of ~~$54.0~~COVID-19 losses incurred in 2020 which did not recur in 2021. The $135.9 million inof current year catastrophe losses for the nine months ended September 30, 2021, related to Hurricane Ida ($78.4

million) and ~~$17.0 million less of unfavorable development on prior years attritional losses in 2020 compared to 2019.~~the Texas winter storms ($57.5 million). The $58.0 million of current year catastrophe losses for the nine months ended September 30, 2020, primarily related to Hurricane Sally ($16.0 million), Hurricane Laura ($15.0 million), the U.S. Civil Unrest ($15.0 million), the Nashville tornadoes ($5.5 million), the Calgary storms in Canada ($2.5

million), the Derecho storms ($2.0 million) and Hurricane Isaias ($2.0 million). ~~The current year catastrophe losses of $4.0~~

Segment Expenses. Commission and brokerage increased to $69.1 million for the ~~nine~~three months ended September 30, ~~2019, related to Hurricane Dorian ($4.0 million).~~

~~Segment Expenses.Commission and brokerage decreased~~2021 compared to $57.3 million for the three months ended September 30, ~~2020 compared to $60.2 million for the three months ended September 30, 2019. The three month decrease was primarily due to changes in the mix of business.~~2020. Commission and brokerage increased to ~~$182.9~~$190.3 million for the nine months ended September 30, ~~2020~~ 2021 compared to ~~$169.6~~$182.9 million for the nine months ended September 30, ~~2019~~. The nine month increase was due to the impact of the increase in premiums earned. Segment other underwriting expenses increased to $73.7 million for the three months ended September 30, 2020 compared to $65.3 million for the three months ended September 30, 2019. Segment other underwriting expenses increased to $212.6 million ~~for the nine months ended September 30, 2020~~ ~~compared to $177.6 million~~ ~~for the nine months ended September 30, 2019.~~ 2020. The increases were mainly due to the impact of the increase in premiums earned and expenses related to the continued build out of the insurance business.

Segment other underwriting expenses increased to $77.5 million for the three months ended September 30, 2021 compared to $73.7 million for the three months ended September 30, 2020. Segment other underwriting expenses increased to $227.9 million for the nine months ended September 30, 2021 compared to $212.6 million for the nine months ended September 30, 2020. The increases were mainly due to the impact of the increase in premiums earned and expenses related to the continued build out of the insurance business.

Market Sensitive Instruments.

The SEC’s Financial Reporting Release #48 requires registrants to clarify and expand upon the existing financial statement disclosure requirements for derivative financial instruments, derivative commodity instruments and other financial instruments (collectively, “market sensitive instruments”). We do not generally enter into market sensitive instruments for trading purposes.

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

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

4945

Interest Rate Risk. Our ~~$13.8~~$17.9 billion investment portfolio, at September 30, ~~2020,~~2021, is principally comprised of fixed maturity securities, which are generally subject to interest rate risk and some foreign currency exchange rate risk, and some equity securities, which are subject to price fluctuations and some foreign exchange rate risk. The overall economic impact of the foreign exchange risks on the investment portfolio is partially mitigated by changes in the dollar value of foreign currency denominated liabilities and their associated income statement impact.

Interest rate risk is the potential change in value of the fixed maturity securities portfolio, including short-term investments, from a change in market interest rates. In a declining interest rate environment, it includes prepayment risk on the ~~$1,142.6~~$1,618.5 million of mortgage-backed securities in the ~~$8,580.4~~$11,897.5 million fixed maturity portfolio. Prepayment risk results from potential accelerated principal payments that shorten the average life and thus the expected yield of the security.

The table below displays the potential impact of market value fluctuations and after-tax unrealized appreciation on our fixed maturity portfolio (including ~~$907.9~~$538.1 million of short-term investments) for the period indicated based on upward and downward parallel and immediate 100 and 200 basis point shifts in interest rates. For legal entities with a U.S. dollar functional currency, this modeling was performed on each security individually. To generate appropriate price estimate on mortgage-backed securities, changes in prepayment expectations under different interest rate environments were taken into account. For legal entities with non-U.S. dollar functional currency, the effective duration of the involved portfolio of securities was used as a proxy for the market value change under the various interest rate change scenarios.

	Impact of Interest Rate Shift in Basis Points										Impact of Interest Rate Shift in Basis Points
	At September 30, 2020										At September 30, 2021
(Dollars in millions)	-200		-100		-		100		200		-200		-100		-		100		200
Total Market/Fair Value	$	10,079.3	$	9,783.8	$	9,488.3	$	9,192.8	$	8,897.3	$	13,282.2	$	12,858.9	$	12,435.6	$	12,012.3	$	11,589.0
Market/Fair Value Change from Base (%)		6.2%		3.1%		0.0%		-3.1%		-6.2%		6.8%		3.4%		0.0%		-3.4%		-6.8%
Change in Unrealized Appreciation
After-tax from Base ($)	$	466.9	$	233.4	$	-	$	(233.4)	$	(466.9)	$	668.8	$	334.4	$	-	$	(334.4)	$	(668.8)

We had ~~$11,042.0~~$13,321.8 million and ~~$10,209.5~~$11,654.9 million of gross reserves for losses and LAE as of September 30, ~~2020~~2021 and December 31, ~~2019,~~2020, respectively. These amounts are recorded at their nominal value, as opposed to present value, which would reflect a discount adjustment to reflect the time value of money. Since losses are paid out over a period of time, the present value of the reserves is less than the nominal value. As interest rates rise, the present value of the reserves decreases and, conversely, as interest rates decline, the present value increases. These movements are the opposite of the interest rate impacts on the fair value of investments. While the difference between present value and nominal value is not reflected in our financial statements, our financial results will include investment income over time from the investment portfolio until the claims are paid. Our loss and loss reserve obligations have an expected duration that is reasonably consistent with our fixed income portfolio.

Equity Risk. Equity risk is the potential change in fair and/or market value of the common stock, preferred stock and mutual fund portfolios arising from changing prices. Our equity investments consist of a diversified portfolio of individual securities. The primary objective of the equity portfolio is to obtain greater total return relative to our core bonds over time through market appreciation and income.

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

	Impact of Percentage Change in Equity Fair/Market Values										Impact of Percentage Change in Equity Fair/Market Values
	At September 30, 2020										At September 30, 2021
(Dollars in millions)	-20%		-10%		0%		10%		20%		-20%		-10%		0%		10%		20%
Fair/Market Value of the Equity Portfolio	$	808.2	$	909.2	$	1,010.3	$	1,111.3	$	1,212.3	$	1,190.7	$	1,339.5	$	1,488.4	$	1,637.2	$	1,786.0
After-tax Change in Fair/Market Value		(159.6)		(79.8)		-		79.8		159.6		(235.2)		(117.6)		-		117.6		235.2

Foreign Currency Risk. Foreign currency risk is the potential change in value, income and cash flow arising from adverse changes in foreign currency exchange rates. Each of our non-U.S. (“foreign”) operations maintains capital in the currency of the country of its geographic location consistent with local regulatory guidelines. Each foreign operation may conduct business in its local currency, as well as the currency of other countries in which it operates. The primary foreign currency exposures for these foreign operations are the Singapore and Canadian Dollars. We mitigate foreign exchange exposure by generally matching the currency and duration of our assets to our corresponding operating liabilities. In accordance with FASB guidance, the impact on the market value of available for sale fixed maturities due to changes in foreign currency exchange rates, in relation to functional currency, is reflected as part of other comprehensive income. Conversely, the impact of changes in foreign currency exchange rates, in relation to functional currency, on other assets and liabilities is reflected through net income as a component of other income (expense). In addition, we translate the assets, liabilities and income of non-U.S. dollar functional currency legal entities to the U.S. dollar. This translation amount is reported as a component of other comprehensive income.

SAFE HARBOR DISCLOSURE

This report contains forward-looking statements within the meaning of the U.S. federal securities laws. We intend these forward-looking statements to be covered by the safe harbor provisions for forward-looking statements in the federal securities laws. In some cases, these statements can be identified by the use of forward-looking words such as “may”, “will”, “should”, “could”, “anticipate”, “estimate”, “expect”, “plan”, “believe”, “predict”, “potential” and “intend”. Forward-looking statements contained in this report include information regarding our reserves for losses and LAE, the CARES Act, the impact of the TCJA, the adequacy of our provision for uncollectible balances, estimates of our catastrophe exposure, the effects of catastrophic and pandemic events on our financial statements and the ability of our subsidiaries to pay dividends. Forward-looking statements only reflect our expectations and are not guarantees of performance. These statements involve risks, uncertainties and assumptions. Actual events or results may differ materially from our expectations. Important factors that could cause our actual events or results to be materially different from our expectations include those discussed under the caption ITEM 1A, “Risk Factors” in the Company’s most recent 10-K filing. We undertake no obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

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

ITEM 4. CONTROLS AND PROCEDURES

As of the end of the period covered by this report, our management carried out an evaluation, with the participation of the Chief Executive Officer and Chief Financial Officer, of the effectiveness of our disclosure controls and procedures (as defined in Rule 13a-15(e) under the Securities Exchange Act of 1934 (the “Exchange Act”)). Based on their evaluation, the Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures are effective to ensure that information required to be disclosed by us in the

reports that we file or submit under the Exchange Act are recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms. Our management, with the participation of the Chief Executive Officer and Chief Financial Officer, also conducted an evaluation of our internal control over financial reporting to determine whether any changes occurred during the quarter covered by this report that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting. Based on that evaluation, there has been no such change during the quarter covered by this report.

PART II

ITEM 1. LEGAL PROCEEDINGS

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

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

ITEM 1A. RISK FACTORS

~~Other than as set forth below, there have been no~~No material ~~changes from the risk factors previously disclosed in the Company’s annual report on Form 10-K for the fiscal year ended December 31, 2019.~~changes.

~~The continuing COVID-19 pandemic has adversely affected, and may materially and adversely affect, our results of operations, financial position and liquidity in the future.~~

The ongoing COVID-19 pandemic, including the related impact on the U.S. and global economies, has adversely affected our results of operations. We expect the pandemic and its impact on our business to continue and potentially even worsen, but we cannot predict the magnitude or duration of its continued impact, particularly given the great uncertainties associated with COVID-19, including regarding the reopening of the U.S. and global economies and the recovery from its economic and other effects. The full impact of COVID-19 on our results of operations, financial position and liquidity is not yet known, and likely will not be known for some time, but includes the following:

~~Claim Losses Related to COVID-19 May Exceed Reserves~~: We have established reserves for COVID-19-related losses. Our reserves represent management’s best estimate of what the settlement and claims administration will cost for claims that have occurred, whether reported or unreported. Given the great uncertainties associated with COVID-19 and its impact and the limited information upon which our current assumptions and assessments have been made, our preliminary reserves and the underlying estimated level of claim losses and costs arising from COVID-19 may materially change.

~~Adverse Legislative and Regulatory Action~~: Legislative and regulatory initiatives taken or which may be taken in response to COVID-19 may adversely affect us. For example, our business may be subject to, certain initiatives, including, but not limited to: legislative and regulatory action that seeks to retroactively mandate coverage for losses which our insurance policies would not otherwise cover and which were not priced to cover; actions prohibiting us from cancelling insurance policies in accordance with our policy terms or non-renewing policies at their natural expiration; and/or orders to provide premium refunds, grant extended grace periods for premium payments, and provide extended time to pay past due premiums. Any such action would likely increase both our underwriting losses and our expenses and any legal challenges to any such action could take years to resolve.

~~Reduction in Premiums~~: The demand for insurance is significantly influenced by general economic conditions. Consequently, reduced economic activity relating to the COVID-19 pandemic is likely to decrease demand for our insurance products and services and negatively impact our premium volumes (and, in certain cases, may result in return of premiums due to a decrease in exposures). This may continue for an indefinite period, with the magnitude of the impact impossible to predict.

~~Investments~~: Further disruptions in global financial markets due to the continuing impact of COVID-19 could cause us to incur additional unrealized and/or realized investment losses, including credit impairments in our fixed maturity portfolio. In addition, the economic uncertainty resulting from COVID-19 may result in a decline in interest rates, which may negatively impact our future net investment income.

~~Credit Risk~~: As credit risk is generally a function of the economy, we face greater credit risk from our policyholders, independent agents and brokers in connection with the payment and remittance of premiums as a result of the economic conditions caused by COVID-19. Similarly, our credit risk related to the reimbursement of deductibles from policyholders and in connection with reinsurance recoverables has increased.

~~Operational Disruptions and Costs~~: Our operations could be disrupted if key members of our senior management or a significant percentage of our workforce or the workforce of our agents, brokers, suppliers or other third party service providers are unable to continue to work because of illness, government directives or otherwise. In addition, our agents, brokers, suppliers and other third party service providers, which we rely on for key aspects of our operations, are subject to risks and uncertainties related to the COVID-19 pandemic, which may interfere with their ability to fulfill their respective commitments and responsibilities to us in a timely manner and in accordance with the agreed-upon terms. In response to the COVID-19 pandemic, we have implemented remote working policies which have resulted in disruptions to our business routines, heightened risk to cybersecurity attacks and data security incidents and a greater dependency on internet and telecommunication access and capabilities.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

None.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4. MINE SAFETY DISCLOSURES

Not applicable.

ITEM 5. OTHER INFORMATION

None.

ITEM 6. EXHIBITS

Exhibit Index:

Exhibit No.	Description

31.1	Section 302 Certification of Juan C. Andrade

31.2	Section 302 Certification of Mark Kociancic

32.1	Section 906 Certification of Juan C. Andrade and Mark Kociancic

101.INS	XBRL Instance Document

101.SCH	XBRL Taxonomy Extension Schema

101.CAL	XBRL Taxonomy Extension Calculation Linkbase

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Everest Reinsurance Holdings, Inc.

Signatures

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.


	Everest Reinsurance Holdings, Inc.
	(Registrant)


	/S/ MARK KOCIANCIC
	Mark Kociancic
	Executive Vice President and
		Chief Financial Officer

	(Duly Authorized Officer and Principal Financial Officer)



Dated: November ~~16, 2020~~10, 2021

5550


(Dollars in thousands, except share amounts and par value per share)	September 30, 2020		December 31, 2019
	(unaudited)
ASSETS:
Fixed maturities - available for sale, at market value (amortized cost: 2020, $8,267,172; 2019, $7,334,425 allowances for credit losses: 2020, $17,636; 2019, $0)	$	8,576,687	$	7,492,079
Fixed maturities - available for sale, at fair value		3,748		5,826
Equity securities, at fair value		1,010,264		764,049
Short-term investments (cost: 2020, $908,334; 2019, $279,824)		907,889		279,879
Other invested assets (cost: 2020, $1,069,726; 2019, $1,020,766)		1,069,726		1,020,766
Other invested assets, at fair value		1,801,743		1,982,582
Cash		451,512		411,122
Total investments and cash		13,821,569		11,956,303
Note Receivable - affiliated		300,000		300,000
Accrued investment income		76,463		54,383
Premiums receivable		1,517,550		1,337,344
Reinsurance receivables - unaffiliated		1,451,992		1,318,820
Reinsurance receivables - affiliated		2,704,519		3,125,269
Income taxes net recoverable		-		65,793
Funds held by reinsureds		264,597		228,297
Deferred acquisition costs		380,863		388,238
Prepaid reinsurance premiums		395,776		413,612
Other assets		572,171		518,127
TOTAL ASSETS	$	21,485,500		19,706,186

LIABILITIES:
Reserve for losses and loss adjustment expenses	$	11,042,011	$	10,209,519
Unearned premium reserve		2,399,154		2,198,932
Funds held under reinsurance treaties		46,803		41,233
Other net payable to reinsurers		343,165		267,367
Losses in course of payment		186,466		70,541
Income taxes net payable		131,824		-
Senior notes due 6/1/2044		397,164		397,074
Long term notes due 5/1/2067		223,649		236,758
Borrowings from FHLB		90,000		-
Accrued interest on debt and borrowings		7,215		2,878
Unsettled securities payable		98,898		25,230
Other liabilities		363,485		399,229
Total liabilities		15,329,834		13,848,761

Commitments and Contingencies (Note 6)		(nil)		(nil)

STOCKHOLDER'S EQUITY:
Common stock, par value: $0.01; 3,000 shares authorized; 1,000 shares issued and outstanding (2020 and 2019)		-		-
Additional paid-in capital		1,100,983		1,100,678
Accumulated other comprehensive income (loss), net of deferred income tax expense (benefit) of $51,941 at 2020 and $16,977 at 2019		195,495		64,324
Retained earnings		4,859,188		4,692,423
Total stockholder's equity		6,155,666		5,857,425
TOTAL LIABILITIES AND STOCKHOLDER'S EQUITY	$	21,485,500	$	19,706,186

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

	At December 31, 2019
	Amortized		Unrealized		Unrealized		Market		OTTI in AOCI
(Dollars in thousands)	Cost		Appreciation		Depreciation		Value		(a)
Fixed maturity securities
U.S. Treasury securities and obligations of U.S. government agencies and corporations	$	768,374	$	10,128	$	(987)	$	777,515	$	-
Obligations of U.S. states and political subdivisions		506,347		29,651		(87)		535,911		-
Corporate securities		2,777,097		70,898		(26,438)		2,821,557		245
Asset-backed securities		761,607		5,659		(1,309)		765,957		-
Mortgage-backed securities
Commercial		311,961		17,242		(154)		329,049		-
Agency residential		625,612		19,395		(320)		644,687		-
Non-agency residential		1,638		-		-		1,638		-
Foreign government securities		646,149		18,908		(7,050)		658,007		27
Foreign corporate securities		935,640		31,257		(9,139)		957,758		333
Total fixed maturity securities	$	7,334,425	$	203,138	$	(45,484)	$	7,492,079	$	605

	Total Fixed Maturities, Market Value
	Three Months Ended September 30, 2019								Nine Months Ended September 30, 2019
	Corporate		Asset		Foreign				Corporate		Asset		Foreign
(Dollars in thousands)	Securities		Backed Securities		Corporate		Total		Securities		Backed Securities		Corporate		Total
Beginning balance	$	472,229	$	-	$	2,093	$	474,322	$	376,250	$	-	$	7,744	$	383,994
Total gains or (losses) (realized/unrealized)
Included in earnings		1,018		-		-		1,018		3,348		-		(119)		3,229
Included in other comprehensive income (loss)		(1,314)		644		-		(670)		1,130		644		-		1,774
Purchases, issuances and settlements		42,289		40,000		-		82,289		131,975		40,000		(5,532)		166,443
Transfers in and/or (out) of Level 3		3,176		-		-		3,176		4,695		-		-		4,695
Ending balance	$	517,398	$	40,644	$	2,093	$	560,135	$	517,398	$	40,644	$	2,093	$	560,135
The amount of total gains or losses for the period included in earnings (or changes in net assets) attributable to the change in unrealized gains or losses relating to assets still held at the reporting date	$	-	$	-	$	-	$	-	$	-	$	-	$	-	$	-

(Some amounts may not reconcile due to rounding.)

	At September 30, 2020			At December 31, 2019
Weighted average remaining operating lease term	12.6 years		12.8 years
Weighted average discount rate on operating leases	4.03	%	3.91		%

(Dollars in thousands)
Remainder of 2020	$	4,582
2021		16,181
2022		18,615
2023		18,202
2024		18,208
2025		15,217
Thereafter		116,149
Undiscounted lease payments		207,154
Less: present value adjustment		53,832
Total operating lease liability	$	153,322

	Three Months Ended				Nine Months Ended
Everest International	September 30,				September 30,
(Dollars in thousands)	2020		2019		2020		2019
Ceded written premiums	$	-	$	-	$	-	$	-
Ceded earned premiums		-		-		-		-
Ceded losses and LAE		-		10		16		(26)

Pension Benefits	Three Months Ended				Nine Months Ended
	September 30,				September 30,
(Dollars in thousands)	2020		2019		2020		2019
Service cost	$	2,040	$	2,064	$	8,092	$	6,616
Interest cost		2,562		2,928		7,608		8,788
Expected return on plan assets		(5,197)		(4,492)		(15,591)		(14,523)
Amortization of net (income) loss		2,462		1,909		6,137		5,111
Settlement charge		871		102		871		309
Net periodic benefit cost	$	2,738	$	2,511	$	7,117	$	6,301

Other Benefits	Three Months Ended				Nine Months Ended
	September 30,				September 30,
(Dollars in thousands)	2020		2019		2020		2019
Service cost	$	311	$	245	$	763	$	818
Interest cost		215		245		644		835
Amortization of prior service cost		(177)		(144)		(401)		(433)
Amortization of net (income) loss		-		(39)		-		(39)
Net periodic benefit cost	$	349	$	307	$	1,006	$	1,181

(Some amounts may not reconcile due to rounding.)