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
JuneSeptember 30, 2022
☐
 
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.)
100 Everest Way
Warren
,
New Jersey
07059
 
(
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 AugustNovember 1, 2022
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 as of JuneSeptember 30,
2022 (unaudited) and
December 31, 2021
 
and December 31,
2021
1
Consolidated Statements of Operations
 
and Comprehensive Income (Loss) for
the three and sixnine months ended JuneSeptember 30, 2022
and 2021 (unaudited)
2
Consolidated Statements of Changes
 
in Stockholder’s Equity for the three
 
and
sixnine months ended JuneSeptember 30, 2022 and 2021 (unaudited)
3
Consolidated Statements of Cash
 
Flows for the sixnine months ended June September
30, 2022
and 2021 (unaudited)
4
Notes to Consolidated Interim
 
Financial Statements (unaudited)
5
Item 2.
Management’s Discussion and Analysis of
 
Financial Condition and Results of
Operation
3031
Item 3.
Quantitative and Qualitative
 
Disclosures About Market Risk
4546
Item 4.
Controls and Procedures
4647
PART II
OTHER INFORMATION
Item 1.
Legal Proceedings
4647
Item 1A.
Risk Factors
4647
Item 2.
Unregistered Sales of Equity
 
Securities and Use of Proceeds
4647
Item 3.
Defaults Upon Senior Securities
4647
Item 4.
Mine Safety Disclosures
4647
Item 5.
Other Information
4748
Item 6.
Exhibits
4748
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
1
EVEREST REINSURANCE HOLDINGS, INC.
CONSOLIDATED
 
BALANCE SHEETS
September 30,
December 31,
(Dollars in thousands,millions, except share amounts and par value per share)
June 30, 2022
December 31, 2021
(unaudited)
ASSETS:
Fixed maturities - available for
sale, at fair value
$
12,873,42112,070
$
12,860,39512,860
(amortized cost: 2022, $
13,754,57213,207
; 2021, $
12,733,49912,733
, allowances for credit losses:
2022, ($
27,27430
); 2021, ($
27,49127
))
Fixed maturities - held to maturity,
at amortized cost, net of credit
allowances
 
71,390
-
(fair value: 2022, $
71,245789
, credit allowances: 2022, ($
3669
))
809
-
Equity securities, at fair value
1,249,3101,258
1,757,7921,758
Short-term investments (cost:
2022, $230,929;$
454
; 2021, $695,935)$
230,929696
695,886)
454
696
Other invested assets
1,791,5211,797
1,674,6391,675
Other invested assets, at fair value
1,791,5391,680
2,030,8162,031
Cash
843,746878
699,266699
Total investments
and cash
18,851,85618,946
19,718,79419,719
Notes receivable - affiliated
715,000715
500,000500
Accrued investment income
119,010139
89,96690
Premiums receivable
1,707,7401,763
1,719,9611,720
Reinsurance recoverables
- unaffiliated
1,660,7911,786
1,569,3281,569
Reinsurance recoverables
- affiliated
2,096,4162,017
2,298,7692,299
Funds held by reinsureds
299,030291
299,204299
Deferred acquisition costs
438,412473
471,931472
Prepaid reinsurance premiums
474,936458
431,055431
Income tax asset, net
106,686379
-
Other assets
638,134689
595,970596
TOTAL
ASSETS
$
27,108,01127,656
$
27,694,97827,695
LIABILITIES:
Reserve for losses and loss adjustment
expenses
$
13,738,35714,849
$
13,121,17713,121
Unearned premium reserve
3,042,0593,145
2,992,8782,993
Funds held under reinsurance treaties
42,23047
48,41048
Other net payable to reinsurers
425,910432
391,577392
Losses in course of payment
97,508141
272,592273
Income tax liability, net
 
-
246,348246
Senior notes
2,346,4952,347
2,345,8002,346
Long term notes
223,824218
223,774224
Borrowings from FHLB
519,000519
519,000519
Accrued interest on debt and borrowings
16,66439
17,34817
Unsettled securities payable
56,336109
15,19615
Other liabilities
453,217476
462,831463
 
Total liabilities
20,961,60022,322
20,656,93120,657
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
(2022 (2022 and 2021)
-
-
Additional paid-in capital
1,101,7501,102
1,101,5271,102
Accumulated other comprehensive income
(loss), net of deferred income
 
tax expense (benefit) of ($
189,705262
) at 2022 and $
24,27924
 
at 2021
(715,759)(987)
91,46991
Retained earnings
5,760,4205,219
5,845,0515,845
Total stockholder's
equity
6,146,4115,334
7,038,0477,038
TOTAL LIABILITIES
AND STOCKHOLDER'S EQUITY
$
27,108,01127,656
$
27,694,97827,695
The accompanying notes are an integral
part of the consolidated
financial statements.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
2
EVEREST REINSURANCE HOLDINGS, INC.
CONSOLIDATED
 
STATEMENTS
 
OF OPERATIONS
AND COMPREHENSIVE INCOME (LOSS)
Three Months Ended
SixNine Months Ended
JuneSeptember 30,
JuneSeptember 30,
(Dollars in thousands)millions)
2022
2021
2022
2021
(unaudited)
(unaudited)
REVENUES:
Premiums earned
 
$
1,954,2292,104
$
1,766,5551,851
$
3,782,8215,887
$
3,463,4555,315
Net investment income
176,499124
248,135197
332,633457
395,858593
Net gains (losses) on investments:
Credit allowances on fixed maturity securities
1,500(12)
(15,075)(7)
(149)(12)
(22,217)(30)
Gains (losses) from fair value adjustments
(340,523)(245)
191,376(48)
(555,944)(801)
322,005274
Net realized gains (losses) from dispositions
(39,250)20
7,4624
(48,767)(29)
18,98623
Total net gains (losses) on investments
(378,273)(237)
183,763(51)
(604,860)(842)
318,774267
Other income (expense)
4937
(1,867)10
(8,904)(2)
2,11212
Total revenues
1,752,9481,998
2,196,5862,007
3,501,6905,500
4,180,1996,187
CLAIMS AND EXPENSES:
Incurred losses and loss adjustment expenses
 
1,303,9372,094
1,095,6181,653
2,529,6274,624
2,449,7024,103
Commission, brokerage, taxes and fees
408,663423
386,848389
793,2931,216
736,7021,126
Other underwriting expenses
 
120,263127
109,930110
238,018365
219,725329
Corporate expenses
5,8865
7,61811
11,65217
12,19923
Interest, fees and bond issue cost amortization expense
24,39826
15,53716
48,47674
31,07147
Total claims and expenses
1,863,1472,675
1,615,5512,178
3,621,0666,296
3,449,3995,627
INCOME (LOSS) BEFORE TAXES
 
(110,199)(677)
581,035(171)
(119,376)(796)
730,800560
Income tax expense (benefit)
 
(24,516)(135)
115,228(28)
(34,745)(170)
145,550118
NET INCOME (LOSS)
 
$
(85,683)(542)
$
465,807(143)
$
(84,631)(626)
$
585,250442
Other comprehensive income (loss), net of tax:
Unrealized appreciation (depreciation) ("URA(D)") on securities arising
during the period
(411,103)(282)
43,410(43)
(805,382)(1,087)
(66,448)(110)
Less: reclassification adjustment for realized losses (gains) included
in net income (loss)
6,17140
6,4422
8,42648
7,93210
Total URA(D) on securities arising during the period
(404,932)(242)
49,852(41)
(796,956)(1,039)
(58,516)(100)
Foreign currency translation adjustments
(9,849)(29)
13,985(21)
(11,788)(41)
16,247(5)
Reclassification adjustment for amortization of net (gain) loss included
in net income (loss)
758-
2,0432
1,5152
4,0866
Total benefit plan net gain (loss) for the period
758-
2,0432
1,5152
4,0866
Total other comprehensive income (loss), net of tax
(414,023)(271)
65,880(61)
(807,228)(1,078)
(38,183)(99)
COMPREHENSIVE INCOME (LOSS)
 
$
(499,706)(813)
$
531,687(204)
$
(891,859)(1,704)
$
547,067343
The accompanying notes are an integral
part of the consolidated
financial statements.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
3
EVEREST REINSURANCE HOLDINGS, INC.
CONSOLIDATED
 
STATEMENTS
 
OF
 
CHANGES IN STOCKHOLDER’S EQUITY
Three Months Ended
SixNine Months Ended
JuneSeptember 30,
JuneSeptember 30,
(Dollars in thousands,millions, except share amounts)
2022
2021
2022
2021
(unaudited)
(unaudited)
COMMON STOCK (shares outstanding):
Balance, beginning of period
1,000
1,000
1,000
1,000
Balance, end of period
1,000
1,000
1,000
1,000
ADDITIONAL PAID-IN CAPITAL:
Balance, beginning of period
$
1,101,6401,102
$
1,101,2001,101
$
1,101,5271,102
$
1,101,0921,101
Share-based compensation plans
110-
116-
223-
224-
Balance, end of period
1,101,7501,102
1,101,3161,101
1,101,7501,102
1,101,3161,101
ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS),
NET OF DEFERRED INCOME TAXES:
Balance, beginning of period
(301,735)(716)
163,955230
91,46991
268,018268
Net increase (decrease) during the period
(414,023)(271)
65,880(61)
(807,228)(1,078)
(38,183)(99)
Balance, end of period
(715,759)(987)
229,835169
(715,759)(987)
229,835169
RETAINED EARNINGS:
Balance, beginning of period
5,846,1035,760
5,164,6465,630
5,845,0515,845
5,045,2035,045
Net income (loss)
 
(85,683)(542)
465,807(143)
(84,631)(626)
585,250442
Balance, end of period
5,760,4205,219
5,630,4535,487
5,760,4205,219
5,630,4535,487
TOTAL STOCKHOLDER'S
 
EQUITY, END OF PERIOD
$
6,146,4115,334
$
6,961,6046,758
$
6,146,4115,334
$
6,961,6046,758
The accompanying notes are an integral part of the consolidated
financial statements.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
4
EVEREST REINSURANCE HOLDINGS, INC.
CONSOLIDATED
 
STATEMENTS
 
OF CASH FLOWS
SixNine Months Ended
JuneSeptember 30,
(Dollars in thousands)millions)
2022
2021
(unaudited)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss)
 
$
(84,631)(626)
$
585,250442
Adjustments to reconcile net income to net cash provided by operating activities:
Decrease (increase) in premiums receivable
9,684(50)
(233,770)(261)
Decrease (increase) in funds held by reinsureds, net
(6,320)7
(21,256)(26)
Decrease (increase) in reinsurance recoverables
105,32740
226,291172
Decrease (increase) in income taxes
 
(139,313)(341)
116,48385
Decrease (increase) in prepaid reinsurance premiums
(44,429)(30)
(40,542)(81)
Increase (decrease) in reserve for losses and loss adjustment expenses
636,6961,791
807,9841,657
Increase (decrease) in unearned premiums
51,183159
272,722530
Increase (decrease) in other net payable to reinsurers
35,06845
66,461151
Increase (decrease) in losses in course of payment
(174,622)(131)
39,117(11)
Change in equity adjustments in limited partnerships
(109,613)(94)
(201,379)(311)
Distribution of limited partnership income
48,80272
27,90565
Change in other assets and liabilities, net
(19,372)(62)
(88,949)(87)
Non-cash compensation expense
19,76628
18,40628
Amortization of bond premium (accrual of bond discount)
14,78421
15,53523
Net (gains) losses on investments
604,860842
(318,774)(267)
Net cash provided by (used in) operating activities
947,8701,671
1,271,4842,106
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from fixed maturities matured/called/repaid - available for sale
875,6421,124
1,153,2581,640
Proceeds from fixed maturities sold - available for sale
511,218812
242,072394
Proceeds from fixed maturities matured/called/repaid - held to maturity
33318
-
Proceeds from equity securities sold - at fair value
425,3801,016
346,088450
Proceeds from distributions and sales of other invested assets
98,653126
70,811135
Cost of fixed maturities acquired - available for sale
(2,464,587)(3,358)
(2,401,534)(3,485)
Cost of fixed maturities acquired - held to maturity
(72,061)(105)
-
Cost of equity securities acquired - at fair value
(271,842)(949)
(358,790)(507)
Cost of other invested assets acquired
(153,486)(224)
(210,373)(396)
Net change in short-term investments
465,116243
205,323171
Net change in unsettled securities transactions
28,64779
(129,026)(194)
Proceeds from repayment (cost of issuance) of note receivable - affiliated
(215,000)(215)
-(200)
Net cash provided by (used in) investing activities
(771,987)(1,433)
(1,082,171)(1,992)
CASH FLOWS FROM FINANCING ACTIVITIES:
Tax benefit from share-based compensation, net of expense
(19,543)(28)
(18,182)(27)
Cost of debt repurchase
(6)
-
Net cash provided by (used in) financing activities
(19,543)(34)
(18,182)(27)
EFFECT OF EXCHANGE RATE CHANGES ON CASH
(11,860)(25)
(3,903)(12)
Net increase (decrease) in cash
144,480179
167,22875
Cash, beginning of period
699,266699
378,518379
Cash, end of period
$
843,746878
$
545,746453
SUPPLEMENTAL CASH FLOW INFORMATION:
Income taxes paid (recovered)
$
104,325170
$
28,85933
Interest paid
48,41451
31,52033
NON-CASH TRANSACTIONS
Reclassification of specific investments from fixed maturity securities, available for sale
at fair value to fixed maturity securities, held to maturity at amortized cost net of credit allowances
$
722
$
-
The accompanying notes are an integral part of the consolidated
 
financial statements.
 
5
NOTES TO CONSOLIDATED
 
INTERIM FINANCIAL STATEMENTS
 
(UNAUDITED)
For the Three and SixNine Months Ended June September
30, 2022, and
 
and 2021
1.
 
GENERAL
Everest Reinsurance
 
Holdings, Inc. (“Holdings”), a Delaware
 
company and direct
 
subsidiary of Everest
 
Underwriting
Group
 
(Ireland)
 
Limited
 
(“Holdings
 
Ireland”),
 
which
 
is
 
a
 
direct
 
subsidiary
 
of
 
Everest
 
Re
 
Group,
 
Ltd.
 
(“Group”),
through its
 
subsidiaries, principally
 
provides property
 
and casualty
 
reinsurance and
 
insurance in
 
the United
 
States
of
 
America
 
and
 
internationally.
 
As
 
used
 
in
 
this
 
document,
 
“Company”
 
means
 
Holdings
 
and
 
its
 
subsidiaries.
“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).
 
2.
 
BASIS OF PRESENTATION
The
unaudited
 
consolidated
financial
 
statements
of the Company
as of June
30, 2022 and
December 31, 2021
and
for the three and
six months ended June
30, 2022 and 2021
include all adjustments,
consisting of normal recurring
accruals,
which,
in
the
opinion
of
management,
are
necessary
for
a
fair
statement
 
of
 
the
 
resultsCompany
 
as
of
September
30,
2022
and
December
31,
2021 and for the three and nine months
ended September 30, 2022 and 2021 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
omitted
since
it
is
 
not
required
for
 
interim
reporting
purposes.
 
The December 31, 2021 consolidated
 
December
31,
2021
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,
2022
and
2021
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
 
but
does
not
include
all
disclosures
required
by
GAAP.
The
results for
the three and
 
six months endednotes
 
June 30, 2022
and 2021 are
not necessarily indicative
of the resultsthereto
 
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,
 
2021,
2020
and
 
2019,
included
in the Company’s most
most recent Form 10-K filing.
The Company
 
consolidates
 
the results
 
of operations
 
and financial
 
position of
 
all voting
 
interest
 
entities ("VOE")
 
in
which
 
the
 
Company
 
has
 
a
 
controlling
 
financial
 
interest
 
and
 
all
 
variable
 
interest
 
entities
 
("VIE")
 
in
 
which
 
the
Company
 
is considered
 
to be
 
the primary
 
beneficiary.
 
The consolidation
 
assessment,
 
including the
 
determination
as to whether an entity qualifies as a VIE or VOE, depends
 
depends on the facts and circumstances surrounding
 
surrounding each entity.
 
The
 
preparation
 
of
 
financial
 
statements
 
in
 
conformity
 
with
 
GAAP
 
requires
 
management
 
to
 
make
 
estimates
 
and
assumptions
 
that
 
affect
 
the
 
reported
 
amounts
 
of
 
assets
 
and
 
liabilities
 
(and
 
disclosure
 
of
 
contingent
 
assets
 
and
liabilities) at
 
the date
 
of the
 
financial statements
 
and the
 
reported amounts
 
of revenues
 
and expenses
 
during the
reporting period. Ultimate actual results
 
could differ,
 
possibly materially,
 
from those estimates.
 
All intercompany accounts
 
and transactions have been eliminated.
 
Certain
 
reclassifications
 
and
 
format
 
changes
 
have
 
been
 
made
 
to
 
prior
 
years’
 
amounts
 
to
 
conform
 
to
 
the
 
2022
presentation.
 
Application of Recently Issued Accounting
 
Standard Changes.
 
The
Company
 
did
not
 
adopt
any
 
new
accounting
 
standards
 
that
had
 
a
material
 
impact during
 
duringthe three
and nine
months
ended
September
30,
2022.
The
Company
assessed
 
the
 
threeadoption
 
andimpacts
 
six
months ended June 30, 2022. The Companyof
 
assessed the adoption impacts of recently
issued
 
accounting standards
standards by
the
Financial
Accounting
 
Standards
Board
on
the
Company’s
 
consolidated
financial
statements
 
as
well
as
as material
updates
 
to
previous
assessments,
 
if any,
 
from
the Company’s
 
Annual
Report
on
 
Form
10-K for
 
the
year
ended December
31, 2021.
 
There were no
 
new materialno accounting
 
standards issued
 
issued in the six months
 
the nine
months ended June
September 30,
30, 2022, that impactedare expected to have
a material impact to Holdings.
Any
 
issued
 
guidance
 
and
 
pronouncements,
 
other
 
than
 
those
 
directly
 
referenced
 
above,
 
are
 
deemed
 
by
 
the
Company to be either not applicable or immaterial to
 
to its financial statements.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
6
3.
 
INVESTMENTS
The
 
following
 
tables
 
show
 
amortized
 
cost,
 
allowance
 
for
 
credit
 
losses,
 
gross
 
unrealized
 
appreciation,
 
gross
unrealized
 
depreciation
 
and
 
fair
 
value
 
of
 
available
 
for
 
sale,
 
fixed
 
maturity
 
securities
 
available
 
for
 
sale
 
as
 
of
 
the
dates indicated:
 
At JuneSeptember 30, 2022
Amortized
Allowances for
 
Unrealized
Unrealized
Fair
(Dollars in thousands)millions)
Cost
Credit Losses
Appreciation
Depreciation
Value
Fixed maturity securities – available for sale
U.S. Treasury securities and obligations of
 
U.S. government agencies and corporations
 
$
615,312602
$
-
$
618-
$
(26,187)(40)
$
589,743562
Obligations of U.S. states and political
 
subdivisions
528,830519
(151)-
3,9511
(24,349)(38)
508,281481
Corporate securities
4,355,5173,962
(25,584)(29)
15,12713
(337,377)(382)
4,007,6833,564
Asset-backed securities
3,928,5823,801
-
6791
(177,890)(157)
3,751,3713,645
Mortgage-backed securities
Commercial
566,417556
-
-
(41,999)(61)
524,418495
Agency residential
1,522,073
-
185
(112,358)
1,409,900
Non-agency residential
3,5361,562
-
-
(143)(195)
3,3931,367
Non-agency residential
3
-
-
-
3
Foreign government securities
697,135688
-
6,3394
(38,860)(65)
664,614626
Foreign corporate securities
1,537,1701,515
(1,539)(1)
4,4394
(126,052)(192)
1,414,0181,326
Total fixed maturity securities –- available for sale
$
13,754,57213,207
$
(27,274)(30)
$
31,33823
$
(885,215)(1,130)
$
12,873,42112,070
(Some amounts may not reconcile due to rounding.)
At December 31, 2021
Amortized
Allowances for
Unrealized
Unrealized
Fair
(Dollars in thousands)millions)
Cost
Credit Losses
Appreciation
Depreciation
Value
Fixed maturity securities – available for sale
U.S. Treasury securities and obligations of
 
U.S. government agencies and corporations
 
$
656,742657
$
-
$
9,3039
$
(3,296)(3)
$
662,749663
Obligations of U.S. states and political
 
subdivisions
558,842559
(151)-
29,08029
(1,150)(1)
586,621587
Corporate securities
4,036,0004,036
(19,267)(19)
89,17289
(31,000)(31)
4,074,9054,075
Asset-backed securities
3,464,2483,464
(7,680)(8)
20,73221
(11,014)(11)
3,466,2863,466
Mortgage-backed securities
Commercial
586,441586
-
20,53821
(4,085)(4)
602,894603
Agency residential
1,255,186
-
15,568
(10,076)
1,260,678
Non-agency residential
4,3981,255
-
16
(6)(10)
4,4081,261
Non-agency residential
4
-
-
-
4
Foreign government securities
677,327677
-
21,65822
(7,005)(7)
691,980692
Foreign corporate securities
1,494,3151,494
(393)-
34,44934
(18,497)(18)
1,509,8741,510
Total fixed maturity securities –- available for sale
$
12,733,49912,733
$
(27,491)(27)
$
240,516241
$
(86,129)(86)
$
12,860,39512,860
(Some amounts may not reconcile due to rounding.)
The following tables
 
7
Theshow amortized cost,
 
and fair value of
fixed maturity securities
available for sale
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 June 30, 2022
At December 31, 2021
Amortized
Fair
Amortized
Fair
(Dollars in thousands)
Cost
Value
Cost
Value
Fixed maturity securities – available for sale
Due in one year or less
$
550,584
$
545,751
$
586,432
$
583,676
Due after one year through five years
3,688,680
3,513,385
3,488,358
3,526,854
Due after five years through ten years
2,134,269
1,933,772
2,260,481
2,309,870
Due after ten years
1,360,431
1,191,431
1,087,955
1,105,729
Asset-backed securities
3,928,582
3,751,371
3,464,248
3,466,286
Mortgage-backed securities
Commercial
566,417
524,418
586,441
602,894
Agency residential
1,522,073
1,409,900
1,255,186
1,260,678
Non-agency residential
3,536
3,393
4,398
4,408
Total fixed maturity securities
$
13,754,572
$
12,873,421
$
12,733,499
$
12,860,395
During the second
quarter of 2022,
the Company
purchased fixed
maturity securities
classified as
held to maturity
with
an
amortized
cost
of
$
71.8
million
and
a
fair
value
of
$
71.2
million
as
of
June
30,
2022.
Fixed
maturity
securities held to maturity
consist of debt securities
for which the Company
has both the positive intent
and ability
to
hold
to
maturity
or
redemption
and
are
reported
at
amortized
cost,
net
of
the
current
expected
credit
loss
allowance.
Interest
income
for
fixed
maturity
securities
held
to
maturity
is
determined
in
the
same
manner
as
interest income for fixed
maturity securities available for
sale.
These fixed
maturity securities
held to
maturity are
comprised of
asset-backed
securities, with
an amortized
cost
of $
62.8
million,
gross
unrealized
appreciation
of $
0.1
million,
gross
unrealized
depreciation
of $
0.2
million,
and
fair value of $
62.4
million, and corporate
securities, with an amortized
cost of $
9.0
million, unrealized appreciation
of
$
0.0
million,
unrealized
depreciation
of
$
0.1
million,
and
fair
value
of
$
8.8
million,
as
of
June
30,
2022.
The
contractual maturity
of the corporate securities
held to maturity is
5 years
as of June 30, 2022. The stated
maturity
of asset-backed securities held to maturity
may not be indicative of actual maturities.
The Company evaluated
fixed maturity securities
classified as held to maturity
for current expected
credit losses as
of June
30, 2022
utilizing risk
characteristics
of each
security,
including credit
rating,
remaining time
to
maturity,
adjusted
for prepayment
considerations,
and subordination
level, and
applying default
and recovery
rates,
which
include the incorporation
of historical credit loss
experience and macroeconomic
forecasts, to
develop an estimate
of current
expected
credit
losses. These
fixed
maturities classified
as held
to maturity
are of
a high
credit quality
and are
all rated
investment
grade as
of June
30, 2022.
The allowance
for credit
 
losses, expectedgross unrealized
 
to be
recognizedappreciation/(depreciation)
over the
remaining life
and fair value of the
fixed maturity
 
securities classified
as held
to maturity
as of the dates indicated:
is $
0.4
 
million as
of June
30,
2022.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
8
The
changes
in
net
unrealized
appreciation
(depreciation)
for
the
Company’s
available
for
sale
and
short
term
investments are derived
from the following sources for
the periods as indicated:
7
Three Months EndedAt September 30, 2022
Six Months EndedAmortized
June 30,Allowances for
June 30,Unrealized
Unrealized
Fair
(Dollars in thousands)millions)
2022Cost
2021Credit Loss
2022Appreciation
2021Depreciation
Increase (decrease) during the period between the fair value and cost of
investments carried at fair value, and deferred taxes thereon:Value
Fixed maturity securities available for sale and short-term investments– held to maturity
Corporate securities
$
(512,342)159
$
63,124(2)
$
(1,008,216)-
$
(74,026)
Change in unrealized appreciation (depreciation), pre-tax
(512,342)
63,124
(1,008,216)
(74,026)
Deferred tax benefit (expense)
107,410
(13,272)
211,260
15,510
Change in unrealized appreciation (depreciation), net of deferred taxes, included
in stockholder's equity
(11)
$
(404,932)147
Asset-backed securities
625
(6)
1
(10)
611
Mortgage-backed securities
Commercial
6
-
-
-
6
Foreign corporate securities
28
(1)
-
(1)
26
Total fixed maturity securities - held to maturity
$
49,852818
$
(796,956)(9)
$
(58,516)1
$
(21)
$
789
(Some amounts may not reconcile due to rounding.)
The amortized cost
and fair value of
fixed maturity securities
available for sale
are shown in the following
 
tables by
contractual maturity.
 
belowMortgage-backed securities
 
displayare generally
more likely to
be prepaid than other
fixed maturity
securities.
As
 
the
 
aggregatestated
 
fair
value
and
gross
unrealized
depreciationmaturity
 
of
 
fixed
maturitysuch
 
securities
may
available
not
be
indicative
of
actual
maturities,
the
totals
 
for
mortgage-backed and asset-backed
 
sale, 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:are shown separately.
 
Duration of Unrealized Loss at JuneAt September 30, 2022 By Security Type
Less than 12 monthsAt December 31, 2021
Greater than 12 months
Total
Gross
Gross
GrossAmortized
Fair
UnrealizedAmortized
Fair
Unrealized
Fair
Unrealized
(Dollars in thousands)millions)
Cost
Value
DepreciationCost
Value
Depreciation
Value
Depreciation
Fixed maturity securities -– available for sale:
 
available for saleDue in one year or less
U.S. Treasury securities and$
554
$
537
$
586
$
584
 
obligations of U.S. governmentDue after one year through five years
3,730
3,455
3,488
3,527
 
agencies and corporationsDue after five years through ten years
$2,034
520,6871,752
$2,260
(23,947)
$
26,566
$
(2,240)
$
547,253
$
(26,187)
Obligations of U.S. states and2,310
 
political subdivisionsDue after ten years
207,489967
(21,199)815
15,2231,088
(3,102)
222,712
(24,301)
Corporate securities
2,907,008
(282,978)
411,811
(53,735)
3,318,819
(336,713)1,106
Asset-backed securities
3,518,2243,801
(177,153)3,645
9,3073,464
(737)
3,527,531
(177,890)3,466
Mortgage-backed securities
Commercial
515,599556
(40,620)495
8,818586
(1,379)
524,417
(41,999)603
Agency residential
1,130,3961,562
(77,988)1,367
266,3321,255
(34,370)
1,396,728
(112,358)1,261
Non-agency residential
3,3933
(143)3
-4
-
3,393
(143)
Foreign government securities
475,696
(29,114)
66,955
(9,746)
542,651
(38,860)
Foreign corporate securities
1,102,644
(109,378)
132,205
(16,531)
1,234,849
(125,909)
Total
10,381,136
(762,520)
937,217
(121,840)
11,318,353
(884,360)
Securities where an allowance for
credit losses was recorded
7,054
(855)
-
-
7,054
(855)4
Total fixed maturity securities - available for sale
$
10,388,19013,207
$
(763,375)12,070
$
937,21712,733
$
(121,840)12,860
(Some amounts may not reconcile due to rounding.)
The amortized
cost and
fair value
of fixed
maturity securities
held to
maturity are
shown in
the following
table by
contractual maturity.
At September 30, 2022
Amortized
Fair
(Dollars in millions)
Cost
Value
Fixed maturity securities – held to maturity:
Due after one year through five years
$
11,325,40761
$
(885,215)58
Due after five years through ten years
46
41
Due after ten years
80
74
Asset-backed securities
625
611
Mortgage-backed securities
Commercial
6
6
Total fixed maturity securities - held to maturity
$
818
$
789
(Some amounts may not reconcile due to rounding.)
During
the
third
quarter
of
2022,
the
Company
re-designated
a
portion
of
its
fixed
maturity
securities
from
its
fixed maturity
– available
for sale
portfolio to
its fixed
maturity –
held to
maturity portfolio.
The fair
value of
the
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
98
securities reclassified
at the date
Duration
of Unrealized Loss at June 30, 2022 By Maturitytransfer
Less than 12 months
Greater than 12 months
Total
Gross
Gross
Gross
Fair
Unrealized
Fair
Unrealized
Fair
Unrealized
(Dollars in thousands)
Value
Depreciation
Value
Depreciation
Value
Depreciation
Fixed maturity securities - available for sale
Due in one year or less
was $
342,251722
million, net
of allowance for
current expected
credit losses,
which
was
subsequently
recognized
as
the
new
amortized
cost
basis.
As
of the
date
of transfer,
these
securities
had an unrealized loss
of $
(2,566)53
$
39,994
$
(3,187)
$
382,245
$
(5,753)
Due in one year through five years
2,518,832
(149,344)
315,227
(23,856)
2,834,059
(173,200)
Due in five years through ten years
1,401,318
(158,998)
248,982
(46,474)
1,650,300
(205,472)
Due after ten years
951,123
(155,708)
48,557
(11,837)
999,680
(167,545)
Asset-backed securities
3,518,224
(177,153)
9,307
(737)
3,527,531
(177,890)
Mortgage-backed securities
1,649,388
(118,751)
275,150
(35,749)
1,924,538
(154,500)
Total
 
million, which remained in accumulated
other comprehensive income
on the balance
10,381,136sheet, and will
be amortized into
income through an
adjustment to the
yields of the
underlying securities over
the
(762,520)remaining life of the securities.
937,217The Company evaluated
(121,840)
11,318,353
(884,360)
Securities where an allowance for credit
losses was recorded
7,054
(855)
-
-
7,054
(855)
Total fixed maturity securities
$
10,388,190
$
(763,375)
$
937,217
$
(121,840)
$
11,325,407
$
(885,215)
The
 
aggregate
fair
value
and
gross
unrealized
losses
related
classified as held to
fixed
maturity
 
securitiesfor current expected
 
availablecredit losses as
of
 
for
sale
in
an
unrealized
loss
position
at
JuneSeptember
 
30,
 
2022
 
wereutilizing
 
$
11.3
risk
 
billioncharacteristics
of
each
security,
including
credit
rating,
remaining
time
to
maturity,
adjusted
for
prepayment
considerations,
 
and
 
$
885.2
subordination
 
million,level,
 
respectively.and
 
Theapplying
 
fairdefault
 
valueand
recovery
rates, which include the incorporation
 
of
securities for historical credit loss experience and macroeconomic
 
the singleforecasts, to develop
an
 
issuer
(the United
States
government)
whose securities
comprised
the largest
unrealized
loss
position
at
June
30,
2022,
did
not
exceed
4.3
%estimate
 
of
 
thecurrent
 
overallexpected
 
faircredit
 
valuelosses.
These
fixed
maturities
classified
as
held
to
maturity
are
 
of
a
high
credit quality and are all rated investment
grade as of September 30, 2022.
The
changes
in
net
unrealized
appreciation
(depreciation)
for
 
the
 
Company’s
 
fixed
maturity
securities available
for
sale.
The fair
value
of the
securities
for
the issuer
with the
second
largest
unrealized
loss
position at June 30, 2022,
comprised less than
2.2
% of the Company’s
fixed maturity securities available
for sale. In
addition,
as indicated
on the
above
table,
there
was
no significant
concentration
of unrealized
losses
in any
one
market
sector.
The
$
763.4
million
of
unrealized
losses
related
to
fixed
maturity
securities
available
for
sale
that
have been
in an
unrealized
loss position
for less
than one
year were
generally
comprised of
domestic and
foreign
corporate
securities,
asset
backed
securities
and
agency
residential
mortgage
backed
securities.
Of
these
unrealized
losses,
$
662.6
million
were
related
to
securities
that
were
rated
investment
grade
by
at
least
one
nationally
recognized
rating
agency.
The
$
121.8
million
of
unrealized
losses
related
to
fixed
maturity
securities
available
for sale
in an
unrealized
loss position
for more
than one
year related
primarily to
domestic and
foreign
corporate
securities
as
well
as
agency
residential
mortgage-backed
securities.
Of
these
unrealized
losses
$
114.2
million
were
related
to
securities
that
were
rated
investment
grade
by
at
least
one
nationally
recognized
rating
agency.
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.
Based upon
the Company’s
current evaluation
of securities
in
an unrealized
loss position as
of June 30,
2022, the unrealized
losses are due
to changes in
interest rates
and non-
issuer
specific credit
spreads
and are
not credit
related.
In
addition,
the contractual
terms of
these securities
do
not permit these securities to be settled at a price less than
their amortized cost.
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
 
currentderived
 
with
respect
to
principal
and interest payments.
10
The
tables
below
display
the
aggregate
fair
value
and
gross
unrealized
depreciation
of
fixed
maturity
securities
available
for
sale, by
security type
and contractual
maturity,
in each
case subdivided
according
to
length
of time
that individual securities
had been in a
continuous unrealized
loss position for
the periods indicated.
The amounts
presented in
the tables below include
$
15.7
million of fair value
and $(
0.4
) million of gross
unrealized depreciation
as of December 31, 2021 related
to fixed maturity securities
available for sale
for which the Company
has recorded
an allowance for credit losses.
Duration of Unrealized Loss at December 31, 2021 By Security Type
Less than 12 months
Greater than 12 months
Total
Gross
Gross
Gross
Fair
Unrealized
Fair
Unrealized
Fair
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
$
266,953
$
(3,296)
$
-
$
-
$
266,953
$
(3,296)
Obligations of U.S. states and
political subdivisions
51,094
(1,038)
2,558
(112)
53,652
(1,150)
Corporate securities
1,465,259
(24,853)
200,637
(6,147)
1,665,896
(31,000)
Asset-backed securities
1,890,876
(10,713)
37,910
(301)
1,928,786
(11,014)
Mortgage-backed securities
Commercial
138,934
(2,467)
34,967
(1,618)
173,901
(4,085)
Agency residential
698,896
(6,879)
167,923
(3,197)
866,819
(10,076)
Non-agency residential
1,401
(4)
156
(2)
1,557
(6)
Foreign government securities
200,294
(4,778)
14,612
(2,227)
214,906
(7,005)
Foreign corporate securities
676,609
(16,871)
33,057
(1,626)
709,666
(18,497)
Total fixed maturity securities
$
5,390,316
$
(70,899)
$
491,820
$
(15,230)
$
5,882,136
$
(86,129)
Duration of Unrealized Loss at December 31, 2021 By Maturity
Less than 12 months
Greater than 12 months
Total
Gross
Gross
Gross
Fair
Unrealized
Fair
Unrealized
Fair
Unrealized
(Dollars in thousands)
Value
Depreciation
Value
Depreciation
Value
Depreciation
Fixed maturity securities - available for
sale
Due in one year or less
$
81,412
$
(1,878)
$
35,515
$
(3,829)
$
116,927
$
(5,707)
Due in one year through five years
1,209,378
(18,614)
154,449
(3,418)
1,363,827
(22,032)
Due in five years through ten years
852,857
(20,678)
34,164
(1,977)
887,021
(22,655)
Due after ten years
516,562
(9,666)
26,736
(888)
543,298
(10,554)
Asset-backed securities
1,890,876
(10,713)
37,910
(301)
1,928,786
(11,014)
Mortgage-backed securities
839,231
(9,350)
203,046
(4,817)
1,042,277
(14,167)
Total fixed maturity securities
$
5,390,316
$
(70,899)
$
491,820
$
(15,230)
$
5,882,136
$
(86,129)
The
aggregate
fair
value
and
gross
unrealized
losses
related
to
investments
in
an
unrealized
loss
position
at
December 31, 2021
were $
5.9
billion and $
86.1
million, respectively.
The fair value
of securities for
the issuer (the
United States
government)
whose securities
comprised the
largest unrealized
loss position
at December
31, 2021,
did not
exceed
2.1
% of the
overall
fair value
of the
Company’s
fixed maturity
securities available
for sale.
The fair
value
of
the
securities
for
the
issuer
with
the
second
largest
unrealized
loss
comprised
less
than
0.4
%
offrom
 
the
Company’s
fixed
maturity
securities available
for
sale. In
addition, as
indicated
on the
above
table,
there
was
no
significant
concentration
of
unrealized
losses
in
any
one
market
sector.
The
$
70.9
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
agency
residential
mortgage
backed
securities.
Of
these
unrealized
losses,
$
61.5
million
were
related
to
securities
that
were
rated
investment
grade
by
at
least
one
nationally
recognized
rating
agency.
The
$
15.2
million of unrealized losses related
to fixed maturity securities available
for sale in an unrealized loss
position
11
for more than
one year related
primarily to domestic
and foreign corporate
securities as well
as agency residential
mortgage
backed
securities.
Of
these
unrealized
losses
$
12.3
million
were
related
to
securities
that
were
rated
investment grade by
at least one nationally recognized
rating agency.
In all instances, there were no projected
cash
flow shortfalls to recover the
full book value of the investments
and the related interest
obligations. The mortgage-
backed securities still have
excess credit coverage
and are current on interest
and principal payments.
The components of net investment
income are presented in the tables
belowfollowing sources for the periods
indicated:
Three Months Ended
SixNine Months Ended
JuneSeptember 30,
JuneSeptember 30,
(Dollars in thousands)millions)
2022
2021
2022
2021
Increase (decrease) during the period between the fair value and cost of
investments carried at fair value, and deferred taxes thereon:
Fixed maturitiesmaturity securities - short-term investments
$
115,510(307)
$
91,895(52)
$
209,941(1,315)
$
177,016(126)
Equity securitiesChange in unrealized appreciation (depreciation), pre-tax
4,600(307)
3,385(52)
8,746(1,315)
6,308(126)
Short-term investments and cash
635
83
850
236
Other invested assets
Limited partnerships
45,244
126,407
88,766
178,558
Dividends from preferred shares of affiliate
7,758
7,758
15,516
15,516
OtherDeferred tax benefit (expense)
 
13,99165
25,85611
25,822276
31,87527
Gross investment income before adjustments
187,738
255,384
349,641
409,509
Funds held interest income (expense)
525
2,732
3,348
6,221
Interest income from Parent
1,800
1,281
3,568
2,549
Gross investment incomeChange in unrealized appreciation (depreciation), net of deferred taxes,
 
190,063
included in stockholder's equity
259,397
356,557
418,279
Investment expenses
(13,564)
(11,262)
(23,924)
(22,421)
Net investment income
$
176,499(242)
$
248,135(41)
$
332,633(1,039)
$
395,858(100)
(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
$
983.5
million
in
limited
partnerships
and
private
placement
loan
securities
at
June
30,
2022.
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 June 30, 2022,
the fair value
of investments
in the facility consolidated
within the Company’s
balance
sheets was $
262.3
million.
Other
invested
assets,
at
fair
value,
as
of
June
30,
2022
and
December 31,
2021,
were
comprised
of
preferred
shares
held in
Everest
Preferred
International
Holdings, Ltd.
(“Preferred
Holdings”), a
wholly-owned
subsidiary
of
Group.
Variable Interest
Entities
The
Company
is
engaged
with
various
special
purpose
entities
and
other
entities
that
are
deemed
to
be
VIEs
primarily as an investor
through normal investment
activities but also as
an investment manager.
A VIE is an
entity
that either has
investors
that lack certain
essential characteristics
of a controlling
financial interest,
such as simple
12
majority kick-out
rights, or lacks
sufficient funds
to finance its
own activities without
financial support provided
by
other
entities.
The
Company
performs
ongoing
qualitative
assessments
of
its
VIEs
to
determine
whether
the
Company
has
a
controlling
financial
interest
in the
VIE and
therefore
is
the
primary
beneficiary.
The Company
is
deemed
to
have
a
controlling
financial
interest
when
it
has
both
the
ability
to
direct
the
activities
that
most
significantly
impact
the
economic
performance
of the
VIE
and
the
obligation
to
absorb
losses
or
right
to
receive
benefits
from
the
VIE
that
could
potentially
be
significant
to
the
VIE.
Based
on
the
Company’s
assessment,
if
it
determines
it
is
the
primary
beneficiary,
the
Company
consolidates
the
VIE
in
the
Company’s
Consolidated
Financial
Statements.
As
of
June
30,
2022
and
December 31,
2021,
the
Company
did
not
hold
any
securities
for
which it is the primary beneficiary.
The
Company,
through
normal
investment
activities,
makes
passive
investments
in
general
and
limited
partnerships
and other
alternative investments.
For these
non-consolidated
VIEs, the
Company has
determined it
is
not
the
primary
beneficiary
as
it
has
no
ability
to
direct
activities
that
could
significantly
affect
the
economic
performance of the investments.
The Company’s maximum
exposure to loss
as of June 30, 2022 and December
31,
2021 is limited to the
total carrying value of $
1.8
billion and $
1.7
billion, respectively,
which are included in general
and
limited
partnerships
and
other
alternative
investments
in
Other
Invested
Assets
in
the
Company's
Consolidated Balance Sheets.
As of June 30, 2022, the
Company has outstanding
commitments totaling
$
0.8
billion
whereby
the Company
is committed
to
fund these
investments
and may
be called
by the
partnership
during
the
commitment
period
to
fund
the
purchase
of new
investments
and
partnership
expenses.
These investments
are
generally of a passive nature
in that the Company does not take
an active role in management.
In addition, the Company
makes passive investments
in structured securities issued
by VIEs for which the Company
is not
the manager.
These investments
are
included in
asset-backed
securities,
which includes
collateralized
loan
obligations
and
are
reported
in
fixed
maturities
available-for-sale
and
fixed
maturities
held
to
maturity.
The
Company
has
not
provided
financial
or
other
support
with
respect
to
these
investments
other
than
its
original
investment.
For these
investments,
the Company
determined it
is not
the primary
beneficiary due
to the
relative
size of
the Company’s
investment in
comparison to
the principal amount
of the structured
securities issued by
the
VIEs, the level
of credit subordination
which reduces
the Company’s
obligation to
absorb losses or
right to
receive
benefits
and
the
Company’s
inability
to
direct
the
activities
that
most
significantly
impact
the
economic
performance of the VIEs.
The Company’s maximum
exposure to loss
on these investments
is limited to the amount
of the Company’s investment.
The components of net gains (losses) on investments
are presented in the table below for
the periods indicated:
Three Months Ended
Six Months Ended
June 30,
June 30,
(Dollars in thousands)
2022
2021
2022
2021
Fixed maturity securities:
Allowances for credit losses
$
1,500
$
(15,075)
$
(149)
$
(22,217)
Net realized gains (losses) from dispositions
(9,875)
4,128
(14,964)
8,055
Equity securities, fair value:
Net realized gains (losses) from dispositions
(30,009)
585
(38,277)
6,823
Gains (losses) from fair value adjustments
(185,865)
103,824
(316,667)
141,375
Other invested assets
583
2,748
4,502
4,094
Other invested assets, fair value:
Gains (losses) from fair value adjustments
(154,658)
87,552
(239,277)
180,630
Short-term investment gains (losses)
51
1
(28)
14
Total net gains (losses) on investments
$
(378,273)
$
183,763
$
(604,860)
$
318,774
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
13
Roll Forward of Allowance for Credit Losses – Fixed maturities,
available for sale
Three Months Ended June 30, 2022
Six Months Ended June 30, 2022
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
$
(20,049)
$
(7,680)
$
(151)
$
(1,260)
$
(29,140)
$
(19,267)
$
(7,680)
$
(151)
$
(393)
$
(27,491)
Credit losses on securities where credit
losses were not previously recorded
(4,888)
-
-
(172)
(5,060)
(6,817)
-
-
(1,141)
(7,958)
Increases in allowance on previously
impaired securities
(653)
-
-
(107)
(760)
(653)
-
-
(107)
(760)
Decreases in allowance on previously
impaired securities
-
-
-
-
-
-
-
-
-
-
Reduction in allowance due to disposals
6
7,680
-
-
7,686
1,153
7,680
-
102
8,935
Balance as of June 30, 2022
$
(25,584)
$
-
$
(151)
$
(1,539)
$
(27,274)
$
(25,584)
$
-
$
(151)
$
(1,539)
$
(27,274)
Roll Forward of Allowance
for Credit Losses – Fixed maturities,
available for sale
Three Months Ended June 30, 2021
Six Months Ended June 30, 2021
Asset
Foreign
Asset
Foreign
Corporate
Backed
Corporate
Corporate
Backed
Corporate
Securities
Securities
Securities
Total
Securities
Securities
Securities
Total
Beginning Balance
$
(3,588)
$
(4,915)
$
(205)
$
(8,708)
$
(1,205)
$
-
$
(361)
$
(1,566)
Credit losses on securities where credit
losses were not previously recorded
(13,538)
-
(188)
(13,726)
(15,921)
(4,915)
(188)
(21,024)
Increases in allowance on previously
impaired securities
(1,468)
-
-
(1,468)
(1,468)
-
-
(1,468)
Decreases in allowance on previously
impaired securities
-
-
-
-
-
-
-
-
Reduction in allowance due to disposals
119
-
-
119
119
-
156
275
Balance as of June 30, 2021
$
(18,475)
$
(4,915)
$
(393)
$
(23,783)
$
(18,475)
$
(4,915)
$
(393)
$
(23,783)
9
The proceeds
tables
below
display
the
aggregate
fair
value
and split between
gross
 
gains and losses from dispositions unrealized
depreciation
of
fixed
 
maturity and equity
securities are
presented in the table below available
for
 
sale, 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:
 
Three Months EndedDuration of Unrealized Loss at September 30, 2022 By Security Type
Six Months EndedLess than 12 months
June 30,Greater than 12 months
June 30,Total
Gross
Gross
Gross
Fair
Unrealized
Fair
Unrealized
Fair
Unrealized
(Dollars in thousands)millions)
2022Value
2021Depreciation
2022Value
2021Depreciation
Proceeds from salesValue
Depreciation
Fixed maturity securities -available for sale
U.S. Treasury securities and obligations of
U.S. government agencies and corporations
$
395
$
(22)
$
143
$
(18)
$
538
$
(40)
Obligations of U.S. states and political subdivisions
327
(30)
25
(8)
351
(38)
Corporate securities
2,447
(260)
550
(104)
2,997
(365)
Asset-backed securities
2,718
(153)
39
(4)
2,757
(157)
Mortgage-backed securities
Commercial
489
(61)
6
(1)
495
(61)
Agency residential
1,060
(133)
306
(62)
1,365
(195)
Non-agency residential
2
-
1
-
3
-
Foreign government securities
457
(43)
116
(22)
573
(65)
Foreign corporate securities
907
(112)
314
(80)
1,222
(192)
Total
8,802
(812)
1,499
(301)
10,302
(1,113)
Securities where an allowance for credit losses
was recorded
20
(17)
-
-
20
(17)
Total fixed maturity securities
$
8,822
$
(830)
$
1,499
$
(301)
$
10,322
$
(1,130)
(Some amounts may not reconcile due to rounding.)
Duration of Unrealized Loss at September 30, 2022 By Maturity
Less than 12 months
Greater than 12 months
Total
Gross
Gross
Gross
Fair
Unrealized
Fair
Unrealized
Fair
Unrealized
(Dollars in millions)
Value
Depreciation
Value
Depreciation
Value
Depreciation
Fixed maturity securities - available for sale
$
244,553Due in one year or less
$
165,443399
$
511,218(7)
$
242,07240
Gross gains from dispositions$
3,119(3)
8,850$
6,274440
15,199$
Gross(10)
Due in one year through five years
2,377
(184)
602
(88)
2,978
(272)
Due in five years through ten years
1,211
(182)
360
(101)
1,570
(283)
Due after ten years
546
(93)
146
(41)
692
(134)
Asset-backed securities
2,718
(153)
39
(4)
2,757
(157)
Mortgage-backed securities
1,551
(194)
313
(63)
1,864
(256)
Total
8,802
(812)
1,499
(301)
10,302
(1,113)
Securities where an allowance for credit losses from dispositions
(12,994)
was recorded
(4,722)20
(21,238)(17)
(7,144)-
Proceeds from sales of equity-
20
(17)
Total fixed maturity securities
$
343,4058,822
$
64,775(830)
$
425,3801,499
$
346,088(301)
Gross gains from dispositions$
4,12610,322
2,633$
7,634(1,130)
14,937
Gross losses from dispositions
(34,135)
(2,048)
(45,911)
(8,114)(Some amounts may not reconcile due to rounding.)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
10
The
aggregate
fair
value
and
gross
unrealized
losses
related
to
fixed
maturity
securities
available
for
sale
in
an
unrealized
loss
position
at
September
30,
2022
were
$
10
billion
and
$
1
billion,
respectively.
The
fair
value
of
securities for
the single
issuer
(the United
States
government)
whose securities
comprised
the largest
unrealized
loss position
at September 30,
2022, did not
exceed
4.5
% of the
overall fair
value of
the Company’s
fixed maturity
securities available
for sale.
In addition,
as indicated
on the above
table, there
was no
significant concentration
of
unrealized
losses
in
any
one
market
sector.
The
$
830
million
of
unrealized
losses
related
to
fixed
maturity
securities
available
for
sale
that
have
been
in
an
unrealized
loss
position
for
less
than
one
year
were
generally
comprised of
domestic
and foreign
corporate
securities, asset
backed
securities and
agency
residential
mortgage
backed
securities. Of
these unrealized
losses,
$
723
million
were related
to
securities that
were rated
investment
grade
by
at
least
one
nationally
recognized
rating
agency.
The
$
301
million
of
unrealized
losses
related
to
fixed
maturity
securities
available
for
sale
in
an
unrealized
loss
position
for
more
than
one
year
related
primarily
to
domestic
and
foreign
corporate
securities
as
well
as
agency
residential
mortgage-backed
securities.
Of
these
unrealized
losses
$
273
million
were
related
to
securities
that
were
rated
investment
grade
by
at
least
one
nationally recognized rating
agency.
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.
Based
upon
the
Company’s
current
evaluation
of securities
in an
unrealized
loss position
as of
September
30, 2022,
the unrealized
losses
are due
to
changes
in
interest
rates
and
non-issuer
specific
credit
spreads
and
are
not
credit
related.
In
addition,
the
contractual
terms
of
these
securities
do
not
permit
these
securities
to
be
settled
at
a
price
less
than
their
amortized cost.
The Company,
given the size
of its investment
portfolio and capital
position, does not
have the
intent to
sell these
securities; and
it is
more likely
than not
that the
Company will
not have
to sell
the security
before
recovery
of its
cost
basis.
In
addition,
all
securities
currently
in
an
unrealized
loss
position
are
current
with
respect
to
principal
and interest payments.
The
tables
below
display
the
aggregate
fair
value
and
gross
unrealized
depreciation
of
fixed
maturity
securities
available
for
sale, by
security type
and contractual
maturity,
in each
case subdivided
according
to
length
of time
that individual securities
had been in a
continuous unrealized
loss position for
the periods indicated.
The amounts
presented
in the
tables below
include $
16
million of
fair value
and $(
0.4
) million
of gross
unrealized
depreciation
as of December 31, 2021 related
to fixed maturity securities
available for sale
for which the Company
has recorded
an allowance for credit losses.
Duration of Unrealized Loss at December 31, 2021 By Security Type
Less than 12 months
Greater than 12 months
Total
Gross
Gross
Gross
Fair
Unrealized
Fair
Unrealized
Fair
Unrealized
(Dollars in millions)
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
$
267
$
(3)
$
-
$
-
$
267
$
(3)
Obligations of U.S. states and political subdivisions
51
(1)
3
-
54
(1)
Corporate securities
1,465
(25)
201
(6)
1,666
(31)
Asset-backed securities
1,891
(11)
38
-
1,929
(11)
Mortgage-backed securities
Commercial
139
(2)
35
(2)
174
(4)
Agency residential
699
(7)
168
(3)
867
(10)
Non-agency residential
1
-
-
-
2
-
Foreign government securities
200
(5)
15
(2)
215
(7)
Foreign corporate securities
677
(17)
33
(2)
710
(18)
Total fixed maturity securities
$
5,390
$
(71)
$
492
$
(15)
$
5,882
$
(86)
(Some amounts may not reconcile due to rounding.)
11
Duration of Unrealized Loss at December 31, 2021 By Maturity
Less than 12 months
Greater than 12 months
Total
Gross
Gross
Gross
Fair
Unrealized
Fair
Unrealized
Fair
Unrealized
(Dollars in millions)
Value
Depreciatio
n
Value
Depreciatio
n
Value
Depreciatio
n
Fixed maturity securities - available for sale
Due in one year or less
$
81
$
(2)
$
36
$
(4)
$
117
$
(6)
Due in one year through five years
1,209
(19)
154
(3)
1,364
(22)
Due in five years through ten years
853
(21)
34
(2)
887
(23)
Due after ten years
517
(10)
27
(1)
543
(11)
Asset-backed securities
1,891
(11)
38
-
1,929
(11)
Mortgage-backed securities
839
(9)
203
(5)
1,042
(14)
Total fixed maturity securities
$
5,390
$
(71)
$
492
$
(15)
$
5,882
$
(86)
(Some amounts may not reconcile due to rounding.)
The
aggregate
fair
value
and
gross
unrealized
losses
related
to
investments
in
an
unrealized
loss
position
at
December 31,
2021 were
$
5.9
billion and
$
86
million, respectively.
The fair
value
of securities
for the
issuer (the
United States
government)
whose securities
comprised the
largest unrealized
loss position
at December
31, 2021,
did not
exceed
2.1
% of the
overall
fair value
of the
Company’s
fixed maturity
securities available
for sale.
The fair
value
of
the
securities
for
the
issuer
with
the
second
largest
unrealized
loss
comprised
less
than
0.4
%
of
the
Company’s
fixed
maturity
securities available
for
sale. In
addition, as
indicated
on the
above
table,
there
was
no
significant concentration
of unrealized losses in
any one market sector.
The $
71
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
agency
residential
mortgage
backed
securities.
Of
these
unrealized
losses,
$
62
million
were
related
to
securities
that were rated investment
grade by at least one nationally
recognized rating agency.
The $
15
million of unrealized
losses related
to fixed
maturity securities
available
for
sale in
an unrealized
loss position
for more
than one
year
related
primarily
to
domestic
and
foreign
corporate
securities
as
well
as
agency
residential
mortgage
backed
securities. Of these unrealized
losses $
12
million were related
to securities that
were rated
investment grade
by at
least
one
nationally
recognized
rating
agency.
In
all
instances,
there
were
no
projected
cash
flow
shortfalls
to
recover the full book value
of the investments and the
related interest
obligations. The mortgage
-backed securities
still have excess credit
coverage and are current
on interest and principal payments.
The components of net investment
income are presented in the
tables below for the periods indicated:
Three Months Ended
Nine Months Ended
September 30,
September 30,
(Dollars in millions)
2022
2021
2022
2021
Fixed maturities
$
129
$
83
$
339
$
260
Equity securities
7
4
15
10
Short-term investments and cash
4
-
4
-
Other invested assets
Limited partnerships
(25)
82
63
260
Dividends from preferred shares of affiliate
8
8
23
23
Other
11
31
37
63
Gross investment income before adjustments
132
208
482
617
Funds held interest income (expense)
1
1
5
7
Interest income from Parent
3
2
7
4
Gross investment income
137
210
494
629
Investment expenses
(13)
(13)
(37)
(36)
Net investment income
$
124
$
197
$
457
$
593
(Some amounts may not reconcile due to rounding.)
12
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
$
1.1
billion in
limited partnerships
and
private
placement
loan
securities
at
September
30,
2022.
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,
2022, the
fair value
of investments
in the
facility consolidated
within the
Company’s
balance sheets was $
241
million.
Other
invested
assets,
at
fair
value,
as
of
September
30,
2022
and
December 31,
2021,
were
comprised
of
preferred
shares
held
in
Everest
Preferred
International
Holdings,
Ltd.
(“Preferred
Holdings”),
a
wholly-owned
subsidiary of Group.
Variable Interest
Entities
The
Company
is
engaged
with
various
special
purpose
entities
and
other
entities
that
are
deemed
to
be
VIEs
primarily as an investor
through normal investment
activities but also as
an investment manager.
A VIE is an
entity
that either has
investors
that lack certain
essential characteristics
of a controlling
financial interest,
such as simple
majority kick-out
rights, or lacks
sufficient funds
to finance its
own activities without
financial support provided
by
other
entities.
The
Company
performs
ongoing
qualitative
assessments
of
its
VIEs
to
determine
whether
the
Company
has
a
controlling
financial
interest
in the
VIE and
therefore
is
the
primary
beneficiary.
The Company
is
deemed
to
have
a
controlling
financial
interest
when
it
has
both
the
ability
to
direct
the
activities
that
most
significantly
impact
the
economic
performance
of the
VIE
and
the
obligation
to
absorb
losses
or
right
to
receive
benefits
from
the
VIE
that
could
potentially
be
significant
to
the
VIE.
Based
on
the
Company’s
assessment,
if
it
determines
it
is
the
primary
beneficiary,
the
Company
consolidates
the
VIE
in
the
Company’s
Consolidated
Financial Statements.
As of September
30, 2022 and
December 31, 2021,
the Company
did not hold
any securities
for which it is the primary beneficiary.
The
Company,
through
normal
investment
activities,
makes
passive
investments
in
general
and
limited
partnerships
and other
alternative investments.
For these
non-consolidated
VIEs, the
Company has
determined it
is
not
the
primary
beneficiary
as
it
has
no
ability
to
direct
activities
that
could
significantly
affect
the
economic
performance
of
the
investments.
The
Company’s
maximum
exposure
to
loss
as
of
September
30,
2022
and
December 31,
2021
is
limited
to
the
total
carrying
value
of
$
1.8
billion
and
$
1.7
billion,
respectively,
which
are
included
in
general
and
limited
partnerships
and
other
alternative
investments
in
Other
Invested
Assets
in
the
Company's
Consolidated
Balance Sheets.
As of
September
30, 2022,
the Company
has outstanding
commitments
totaling
$
766
million
whereby
the
Company
is
committed
to
fund
these
investments
and
may
be
called
by
the
partnership
during
the
commitment
period
to
fund
the
purchase
of new
investments
and
partnership
expenses.
These
investments
are
generally
of
a
passive
nature
in
that
the
Company
does
not
take
an
active
role
in
management.
In addition, the Company
makes passive investments
in structured securities issued
by VIEs for which the Company
is not
the manager.
These investments
are
included in
asset-backed
securities,
which includes
collateralized
loan
obligations
and
are
reported
in
fixed
maturities
available-for-sale
and
fixed
maturities
held
to
maturity.
The
Company
has
not
provided
financial
or
other
support
with
respect
to
these
investments
other
than
its
original
investment.
For these
investments,
the Company
determined it
is not
the primary
beneficiary due
to the
relative
13
size of
the Company’s
investment in
comparison to
the principal amount
of the structured
securities issued by
the
VIEs, the level
of credit subordination
which reduces
the Company’s
obligation to
absorb losses or
right to
receive
benefits
and
the
Company’s
inability
to
direct
the
activities
that
most
significantly
impact
the
economic
performance of the VIEs.
The Company’s maximum
exposure to loss
on these investments
is limited to the amount
of the Company’s investment.
The components of net gains (losses) on investments
are presented in the table below for
the periods indicated:
Three Months Ended
Nine Months Ended
September 30,
September 30,
(Dollars in millions)
2022
2021
2022
2021
Fixed maturity securities:
Allowances for credit losses
$
(12)
$
(7)
$
(12)
$
(30)
Net realized gains (losses) from dispositions
(45)
3
(60)
11
Equity securities, fair value:
Net realized gains (losses) from dispositions
57
-
19
6
Gains (losses) from fair value adjustments
(134)
(4)
(451)
137
Other invested assets
6
2
10
6
Other invested assets, fair value:
Gains (losses) from fair value adjustments
(111)
(44)
(350)
137
Short-term investment gains (losses)
1
-
1
-
Total net gains (losses) on investments
$
(237)
$
(51)
$
(842)
$
267
(Some amounts may not reconcile due to rounding.)
Roll Forward of Allowance for Credit Losses – Fixed maturities
Three Months Ended September 30, 2022
Nine Months Ended September 30, 2022
Asset Backed
Securities
Foreign
Corporate
Securities
Asset Backed
Securities
Foreign
Corporate
Securities
Corporate
Securities
Corporate
Securities
Total
Total
(Dollars in millions)
Beginning Balance
$
(26)
$
-
$
(2)
$
(28)
$
(19)
$
(8)
$
-
$
(27)
Credit losses on securities where credit
losses were not previously recorded
(2)
(6)
(1)
(9)
(9)
(6)
(2)
(17)
Increases in allowance on previously
impaired securities
(3)
-
-
(3)
(4)
-
-
(4)
Decreases in allowance on previously
impaired securities
-
-
-
-
-
-
-
-
Reduction in allowance due to disposals
-
-
-
-
1
8
1
9
Balance as of September 30, 2022
$
(31)
$
(6)
$
(2)
$
(39)
$
(31)
$
(6)
$
(2)
$
(39)
(Some amounts may not reconcile due to rounding.)
14
Roll Forward of Allowance for Credit Losses – Fixed maturities
Three Months Ended September 30, 2021
Nine Months Ended September 30, 2021
Asset
Asset
Corporate
Backed
Corporate
Backed
Securities
Securities
Total
Securities
Securities
Total
(Dollars in millions)
Beginning Balance
$
(18)
$
(5)
$
(24)
$
(1)
$
-
$
(2)
Credit losses on securities where credit
losses were not previously recorded
(5)
-
(5)
(21)
(5)
(26)
Increases in allowance on previously
impaired securities
(1)
(3)
(4)
(2)
(3)
(5)
Decreases in allowance on previously
impaired securities
-
-
-
-
-
-
Reduction in allowance due to disposals
1
-
1
2
-
2
Balance as of September 30, 2021
$
(23)
$
(8)
$
(31)
$
(23)
$
(8)
$
(31)
(Some amounts may not reconcile due to rounding.)
The proceeds and split between gross
gains and losses from dispositions 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 millions)
2022
2021
2022
2021
Proceeds from sales of fixed maturity securities, available for sale
$
301
$
152
$
812
$
394
Gross gains from dispositions
1
9
7
24
Gross losses from dispositions
(46)
(6)
(67)
(13)
Proceeds from sales of equity securities
$
591
$
104
$
1,016
$
450
Gross gains from dispositions
59
3
67
18
Gross losses from dispositions
(2)
(3)
(48)
(11)
(Some amounts may not reconcile due to rounding.)
15
4.
 
RESERVES FOR LOSSES, LAE
 
AND FUTURE POLICY BENEFIT RESERVE
 
Activity in the reserve for losses and LAE is summarized
 
for the periods indicated:
 
SixNine Months Ended JuneSeptember 30,
(Dollars in thousands)millions)
2022
2021
Gross reserves beginning of period
$
13,121,17713,121
$
11,578,09611,578
Less reinsurance recoverables on unpaid losses
(3,650,716)(3,651)
(3,951,474)(3,951)
Net reserves beginning of period
9,470,4619,470
7,626,6227,627
Incurred related to:
Current year
2,520,5964,606
2,450,5674,106
Prior years
9,03118
(865)(4)
Total incurred losses and LAE
2,529,6274,624
2,449,7024,103
Paid related to:
Current year
 
775,0231,502
550,9071,118
Prior years
1,063,1441,303
903,0251,203
Total paid losses and LAE
1,838,1672,805
1,453,9322,321
Foreign exchange/translation adjustment
 
(16,668)(70)
9,986(20)
Net reserves end of period
10,145,25211,221
8,632,3769,389
Plus reinsurance recoverables on unpaid losses
3,593,1053,628
3,772,2283,839
Gross reserves end of period
$
13,738,35714,849
$
12,404,60413,228
(Some amounts may not reconcile due to rounding.)
Current year
 
year incurred
losses were
 
$
2.54.6
 
billion and
$
2.54.1
 
billion for the
 
the sixnine months ended
 
months
ended June
September 30, 2022
 
and 2021,
2021, respectively.
 
Gross
and
net
 
reserves
increased
 
for
the
six nine
 
months
ended
June September
 
30,
2022, reflecting
 
an
increase in
 
increase
in
underlying
exposure
 
due
to
 
earned premium
 
growth year
 
andover year,
 
the impact
of an increase
of $
132
million in catastrophe
losses in 2022
compared to
2021 and the
 
impact of $
25
million of incurred
losses related
to
the
Ukraine/Russia
war.
Prior
year
incurred
development
 
of
 
$
24.618
 
million
 
ofis
 
incurredprimarily
 
losses
related
to
the
Ukraine/Russia
war,
partially offsetdriven
 
by a
 
reduction of
$unfavorable
150.0
million in
current
year catastrophe
losses. Prior
year
incurred development of $
9.0
million is primarily driven by unfavorable
movement on prior year catastrophes.catastrophes
.
The war
 
in the
 
Ukraine
 
is ongoing
 
and an
 
evolving
 
event.
 
Economic
 
and legal
 
sanctions
 
have
 
been levied
 
against
Russia, specific named individuals
 
and entities connected
 
to the Russian government,
 
as well as businesses
 
located
in the
 
Russian Federation
 
and/or owned
 
by Russian
 
nationals by
 
numerous countries,
 
including the
 
United States.
The
 
significant
 
political
 
and
 
economic
 
uncertainty
 
surrounding
 
the
 
war
 
and
 
associated
 
sanctions
 
have
 
impacted
economic
 
and
 
investment
 
markets
 
both
 
within
 
Russia
 
and
 
around
 
the
 
world.
 
The
 
Company
 
has
 
recorded
 
$
24.625
million
 
of
 
incurred
 
underwriting
 
losses
 
related
 
to
 
the
 
Ukraine
 
and
 
Russia
 
conflict
 
for
 
the
 
three
and
sixnine
 
months
ended
ended JuneSeptember 30, 2022.
 
5.
 
FAIR VALUE
GAAP guidance regarding fair
 
value measurements addresses how
 
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.
 
1516
The levels in the hierarchy
 
are defined as follows:
Level 1
 
Inputs to
 
the valuation
 
methodology are
 
observable inputs
 
that reflect
 
unadjusted
 
quoted prices
 
for
identical assets or liabilities in an active market;
Level 2:
 
Inputs
 
to
 
the valuation
 
methodology
 
include
 
quoted
 
prices
 
for
 
similar
 
assets
 
and liabilities
 
in
 
active
markets,
 
and
 
inputs
 
that
 
are
 
observable
 
for
 
the
 
asset
 
or
 
liability,
 
either
 
directly
 
or
 
indirectly,
 
for
substantially the full term of the financial instrument;
Level 3:
 
Inputs to the valuation methodology are
 
unobservable and significant to the fair value
 
measurement.
The
 
Company’s
 
fixed
 
maturity
 
and
 
equity
 
securities
 
are
 
primarily
 
managed
 
by
 
third
 
party
 
investment
 
asset
managers.
 
The
 
investment
 
asset
 
managers
 
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.
 
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. The
 
Company
also
 
continually
 
performs
 
quantitative
 
and
 
qualitative
 
analysis
 
of
 
prices,
 
including
 
but
 
not
 
limited
 
to
 
initial
 
and
ongoing
 
review
 
of
 
pricing
 
methodologies,
 
review
 
of
 
prices
 
obtained
 
from
 
pricing
 
services
 
and
 
third
 
party
investment
 
asset managers,
 
review of
 
pricing statistics
 
and trends,
 
and comparison
 
of prices
 
for certain
 
securities
with a
 
secondary price
 
source for
 
reasonableness. 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
 
JuneSeptember
 
30,
2022,
 
2022,
$
2.21.6
billion
of
fixed
maturities
were
fair
valued
using
unobservable
inputs.
The
majority
of
these
fixed
maturities
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.
At
December 31,
2021, $
2.0
 
billion of
 
fixed
 
maturities
 
were fair
 
valued
using unobservable
inputs. The
majority of
these
fixed
maturities
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.
At December
31, 2021,
$
2.0
billion of
fixed maturities
were fair
valued using
unobservable
inputs.
 
The
 
Company
 
internally
 
manages
 
a
 
public
 
equity
 
portfolio
 
which
 
had
 
a
 
fair
 
value
 
at
 
JuneSeptember
 
30,
 
2022
 
and
December 31,
2021
 
of
$
896.91.2
 
million
billion and
 
$
1.3
 
billion,
respectively.
 
During
the
 
fourth
 
quarter
of
 
2021, the
 
theCompany
Company
began
 
to
 
internally
 
manage
 
a
 
portfolio
 
of
 
collateralized
 
loan
 
obligations
 
included
 
in
 
asset-backed
securities
securities available
 
for sale,
 
which had
 
a fair
 
value of
 
$
2.12.4
 
billion and
 
$
2.0
 
billion at
 
JuneSeptember 30,
 
2022 and
 
December 31,
31, 2021,
 
respectively.
 
All
prices
 
for
 
these
securities
 
were
obtained
 
from
publicly
 
published
sources
 
or
nationally
recognized pricing vendors.
 
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 value. The Company uses foreign
 
currency exchange rates
 
published by nationally recognized sources.
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.
1617
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.
 
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.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
1718
The following
 
table presents
 
the fair
 
value measurement
 
levels for
 
all assets,
 
which the
 
Company has
 
recorded at
fair 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)millions)
JuneSeptember 30, 2022
(Level 1)
(Level 2)
(Level 3)
Assets:
Fixed maturities, available for sale
U.S. Treasury securities and obligations of
 
U.S. government agencies and corporations
$
589,743562
$
-
$
589,743562
$
-
Obligations of U.S. states and political subdivisions
508,281481
-
508,281481
-
Corporate securities
4,007,6833,564
-
3,145,2562,845
862,427719
Asset-backed securities
3,751,3713,645
-
2,495,9742,752
1,255,397893
Mortgage-backed securities
Commercial
524,418495
-
518,727495
5,691-
Agency residential
1,409,9001,367
-
1,409,9001,367
-
Non-agency residential
3,3933
-
3,3933
-
Foreign government securities
664,614626
-
664,614626
-
Foreign corporate securities
1,414,0181,326
-
1,374,0571,310
39,96116
Total fixed maturities, available for sale
12,873,42112,070
-
10,709,94510,442
2,163,4761,628
Equity securities, fair value
1,249,3101,258
1,226,9211,212
22,38946
-
Other invested assets, fair value
1,791,5391,680
-
-
1,791,539
Fair Value Measurement Using:
Quoted Prices
in Active
Significant
Markets for
Other
Significant
Identical
Observable
Unobservable
Assets
Inputs
Inputs1,680
(Dollars in thousands)
December 31, 2021
(Level 1)
(Level 2)
(Level 3)
Assets:
Fixed maturities, available for sale
U.S. Treasury securities and obligations of
U.S. government agencies and corporations
$
662,749
$
-
$
662,749
$
-
Obligations of U.S. states and political subdivisions
586,621
-
586,621
-
Corporate securities
4,074,905
-
3,344,980
729,925
Asset-backed securities
3,466,286
-
2,215,005
1,251,281
Mortgage-backed securities
Commercial
602,894
-
602,894
-
Agency residential
1,260,678
-
1,260,678
-
Non-agency residential
4,408
-
4,408
-
Foreign government securities
691,980
-
691,980
-
Foreign corporate securities
1,509,874
-
1,493,859
16,015
Total fixed maturities, available for sale
12,860,395
-
10,863,174
1,997,221
Equity securities, fair value
1,757,792
1,721,762
36,030
-
Other invested assets, fair value
2,030,816
-
-
2,030,816Some amounts may not reconcile due to rounding.)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
19
Fair Value Measurement Using:
Quoted Prices
in Active
Significant
Markets for
Other
Significant
Identical
Observable
Unobservable
Assets
Inputs
Inputs
(Dollars in millions)
December 31, 2021
(Level 1)
(Level 2)
(Level 3)
Assets:
Fixed maturities, available for sale
U.S. Treasury securities and obligations of
 
U.S. government agencies and corporations
$
663
$
-
$
663
$
-
Obligations of U.S. states and political subdivisions
587
-
587
-
Corporate securities
4,075
-
3,345
730
Asset-backed securities
3,466
-
2,215
1,251
Mortgage-backed securities
Commercial
603
-
603
-
Agency residential
1,261
-
1,261
-
Non-agency residential
4
-
4
-
Foreign government securities
692
-
692
-
Foreign corporate securities
1,510
-
1,494
16
Total
 
fixed maturities, available for sale
12,860
-
10,863
1,997
Equity securities, fair value
1,758
1,722
36
-
Other invested assets, fair value
2,031
-
-
2,031
(Some amounts may not reconcile due to rounding.)
18
In
addition,
$
297.2309
 
million
and
$
286.6287
 
million
of
investments
 
within
other
invested
 
assets on the consolidated
 
on
the
consolidatedbalance
balance
sheets
 
as
 
of
 
JuneSeptember
 
30,
 
2022
 
and
 
December
 
31,
 
2021,
 
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 for fixed maturities available
 
for sale, for the periods indicated:
 
Total Fixed Maturities, Available for Sale
Three Months Ended JuneSeptember 30, 2022
SixNine Months Ended JuneSeptember 30, 2022
Corporate
Asset Backed
Foreign
Corporate
Asset Backed
Foreign
(Dollars in thousands)millions)
Securities
Securities
CMBS
Corporate
Total
Securities
Securities
CMBS
Corporate
Total
Beginning balance fixed maturities
$
714,656862
$
1,388,6911,255
$
5,8906
$
15,92640
$
2,125,1632,163
$
729,925730
$
1,251,2811,251
$
-
$
16,01516
$
1,997,2211,997
Total gains or (losses) (realized/unrealized)
Included in earnings
(4,534)
35(3)
-
16
(4,483)
(3,105)
137-
-
29(3)
(2,939)(6)
-
-
-
(6)
Included in other comprehensive
 
income (loss)
(3,003)(6)
(47,202)65
(199)-
(3,747)-
(54,151)59
(7,170)(13)
(75,990)(11)
(222)-
(3,808)(4)
(87,190)(28)
Purchases, issuances and settlements
27,75027
61,565159
-
7,632-
96,947186
15,21942
227,661387
5,9136
7,5918
256,384443
Transfers in (out) of Level 3 and reclassification of
securities in/(out) investment categories
 
127,558(163)
(147,692)(587)
-(6)
20,134(24)
-(779)
127,558(35)
(147,692)(735)
-(6)
20,134(4)
-(779)
Ending balance
$
862,427719
$
1,255,397893
$
5,691-
$
39,96116
$
2,163,4761,628
$
862,427719
$
1,255,397893
$
5,691-
$
39,96116
$
2,163,4761,628
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
$
(5,261)
$
7,679(3)
$
-
$
-
$
2,418-
$
(4,943)(3)
$
7,679(8)
$
8
$
-
$
-
$
2,736
(Some amounts may not reconcile due to rounding.)
Total Fixed Maturities,
Available for Sale
Three Months Ended June 30, 2021
Six Months Ended June 30, 2021
Corporate
Asset Backed
Foreign
Corporate
Asset Backed
Foreign
(Dollars in thousands)
Securities
Securities
Corporate
Total
Securities
Securities
Corporate
Total
Beginning balance fixed maturities
$
633,893
$
785,360
$
5,598
$
1,424,851
$
630,843
$
623,033
$
5,700
$
1,259,576
Total gains or (losses) (realized/unrealized)
Included in earnings
(13,762)
206
138
(13,418)
(15,550)
(3,962)
140
(19,372)
Included in other comprehensive income (loss)
4,583
7,610
(85)
12,108
7,418
4,475
(36)
11,857
Purchases, issuances and settlements
10,209
22,100
(765)
31,544
12,212
191,730
(918)
203,024
Transfers in (out) of Level
3 and reclassification of
securities in/(out) investment categories
-
-
-
-
-
-
-
-
Ending balance
$
634,923
$
815,276
$
4,886
$
1,455,085
$
634,923
$
815,276
$
4,886
$
1,455,085
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
$
(17,279)
$
(4,915)
$
-
$
(22,194)
$
(17,279)
$
(4,915)
$
-
$
(22,194)
(Some amounts may not reconcile due to rounding.)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
19
20
Total Fixed Maturities,
Available for Sale
Three Months Ended September 30, 2021
Nine Months Ended September 30, 2021
Corporate
Asset Backed
Foreign
Corporate
Asset Backed
Foreign
(Dollars in millions)
Securities
Securities
Corporate
Total
Securities
Securities
Corporate
Total
Beginning balance fixed maturities
$
635
$
815
$
5
$
1,455
$
631
$
623
$
6
$
1,260
Total gains or (losses) (realized/unrealized)
Included in earnings
3
(3)
-
-
(12)
(7)
-
(19)
Included in other comprehensive income (loss)
(1)
-
-
(2)
6
4
-
10
Purchases, issuances and settlements
87
192
-
279
99
384
(1)
482
Transfers in (out) of Level
3 and reclassification of
securities in/(out) investment categories
-
-
-
-
-
-
-
-
Ending balance
$
723
$
1,004
$
5
$
1,732
$
723
$
1,004
$
5
$
1,732
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
$
1
$
(3)
$
-
$
(2)
$
(17)
$
(8)
$
-
$
(24)
(Some amounts may not reconcile due to rounding.)
The
$
779
million
shown
as
transfers
in/(out)
of
Level
3
and
reclassification
of
securities
in/(out)
of
investment
categories for the three and
nine months ended September 30, 2022 relate
mainly to previously designated
Level 3
securities that
the Company
has reclassified
from “fixed
maturities –
available for
sale” to
“fixed maturities
– held
to
maturity”
during
the
third
quarter
of
2022.
As
“fixed
maturities
–
held
to
maturity"
are
carried
at
amortized
cost, net of
credit allowances rather
than at fair value
as “fixed maturities
– available for
sale”,
these securities are
no longer included within the fair value
hierarchy table or
in the roll-forward of Level
3 securities. The fair values of
these securities are determined
in a similar manner
as the Company’s
 
fixed maturity
securities held
to maturity
are recorded
at amortized
cost net
of credit
allowances,
with a carrying
value of
$
71.4
million and a
fair value
of $
71.2
million as
of June 30,
2022. The fair
values of
these
securities
are
determined
in
a
similar
manner
as
the
Company’s
fixed
maturity
securities
 
available
for
sale
 
as
described
 
above.
 
The
 
fair
 
values
 
of
 
these
 
securities
 
incorporate
 
the
 
use
 
of
 
significant
 
unobservable
 
inputs
 
and
therefore are classified as Level
 
3 within the fair value hierarchy
 
as of JuneSeptember 30, 2022.
6.
 
COMMITMENTS AND CONTINGENCIES
In the ordinary
 
course of business,
 
the Company is
 
involved in
 
lawsuits, arbitrations
 
and other formal
 
and informal
dispute resolution
 
procedures,
 
the outcomes
 
of which
 
will determine
 
the Company’s
 
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.
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
June 30, 2022
Six Months Ended
June 30, 2022
(Dollars in thousands)
Before Tax
Tax Effect
Net of Tax
Before Tax
Tax Effect
Net of Tax
Unrealized appreciation (depreciation) ("URA(D)")
on securities - non-credit related
$
(520,134)
109,031
$
(411,103)
$
(1,018,827)
213,445
$
(805,382)
Reclassification of net realized losses (gains)
included in net income (loss)
7,793
(1,622)
6,171
10,611
(2,185)
8,426
Foreign currency translation adjustments
(12,475)
2,626
(9,849)
(14,915)
3,127
(11,788)
Reclassification of amortization of net gain (loss)
included in net income (loss)
959
(202)
758
1,919
(404)
1,515
Total other comprehensive income (loss)
$
(523,857)
$
109,833
$
(414,023)
$
(1,021,212)
$
213,983
$
(807,228)
(Some amounts may not reconcile due to rounding)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
21
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:
 
20
Three Months Ended
JuneSeptember 30, 20212022
SixNine Months Ended
JuneSeptember 30, 20212022
(Dollars in thousands)millions)
Before Tax
Tax Effect
Net of Tax
Before Tax
Tax Effect
Net of Tax
Unrealized appreciation (depreciation) ("URA(D)")
on securities - non-credit related
$
54,925(357)
(11,515)75
$
43,410(282)
$
(84,094)(1,376)
17,646288
$
(66,448)(1,087)
Reclassification of net realized losses (gains)
included in net income (loss)
8,19850
(1,757)(11)
6,44240
10,06861
(2,136)(13)
7,93248
Foreign currency translation adjustments
17,712(37)
(3,727)8
13,985(29)
20,568(52)
(4,321)11
16,247(41)
Reclassification of amortization of net gain (loss)
included in net income (loss)
2,586-
(543)-
2,043-
5,1723
(1,086)(1)
4,0862
Total other comprehensive income (loss)
$
83,421(343)
$
(17,542)72
$
65,880(271)
$
(48,286)(1,364)
$
10,103285
$
(38,183)(1,078)
(Some amounts may not reconcile due to rounding)
Three Months Ended
September 30, 2021
Nine Months Ended
September 30, 2021
(Dollars in millions)
Before Tax
Tax Effect
Net of Tax
Before Tax
Tax Effect
Net of Tax
Unrealized appreciation (depreciation) ("URA(D)")
on securities - non-credit related
$
(55)
12
$
(43)
$
(139)
29
$
(110)
Reclassification of net realized losses (gains)
included in net income (loss)
3
(1)
2
13
(3)
10
Foreign currency translation adjustments
(26)
5
(21)
(6)
1
(5)
Reclassification of amortization of net gain (loss)
included in net income (loss)
2
-
2
7
(2)
6
Total other comprehensive income (loss)
$
(77)
$
16
$
(61)
$
(125)
$
26
$
(99)
(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
SixNine Months Ended
Affected line item within the
JuneSeptember 30,
JuneSeptember 30,
statements of operations and
 
AOCI component
2022
2021
2022
2021
comprehensive income (loss)
(Dollars in thousands)millions)
URA(D) on securities
$
7,79350
$
8,1983
$
10,61161
$
10,06813
Other net gains (losses) on investments
(1,622)(11)
(1,757)(1)
(2,185)(13)
(2,136)(3)
Income tax expense (benefit)
$
6,17140
$
6,4422
$
8,42648
$
7,93210
Net income (loss)
Benefit plan net gain (loss)
$
959-
$
2,5862
$
1,9193
$
5,1727
Other underwriting expenses
(202)-
(543)-
(404)(1)
(1,086)(2)
Income tax expense (benefit)
$
758-
$
2,0432
$
1,5152
$
4,0866
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
Six Months Ended
June 30,
June 30,
(Dollars in thousands)
2022
2021
2022
2021
Beginning balance of URA (D) on securities
$
(270,155)
$
204,793
$
121,869
$
313,161
Current period change in URA (D) of investments - non-credit related
(404,932)
49,852
(796,956)
(58,516)
Ending balance of URA (D) on securities
(675,087)
254,645
(675,087)
254,645
Beginning balance of foreign currency translation adjustments
18,053
30,989
19,992
28,727
Current period change in foreign currency translation adjustments
(9,849)
13,985
(11,788)
16,247
Ending balance of foreign currency translation adjustments
8,204
44,974
8,204
44,974
Beginning balance of benefit plan net gain (loss)
(49,634)
(71,827)
(50,392)
(73,870)
Current period change in benefit plan net gain (loss)
758
2,043
1,515
4,086
Ending balance of benefit plan net gain (loss)
(48,876)
(69,784)
(48,876)
(69,784)
Ending balance of accumulated other comprehensive income (loss)
$
(715,759)
$
229,835
$
(715,759)
$
229,835
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
21
22
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 millions)
2022
2021
2022
2021
Beginning balance of URA (D) on securities
$
(675)
$
255
$
122
$
313
Current period change in URA (D) of investments - non-credit related
(242)
(41)
(1,039)
(100)
Ending balance of URA (D) on securities
(917)
213
(917)
213
Beginning balance of foreign currency translation adjustments
8
45
20
29
Current period change in foreign currency translation adjustments
(29)
(21)
(41)
(5)
Ending balance of foreign currency translation adjustments
(21)
24
(21)
24
Beginning balance of benefit plan net gain (loss)
(50)
(70)
(50)
(74)
Current period change in benefit plan net gain (loss)
-
2
2
6
Ending balance of benefit plan net gain (loss)
(49)
(68)
(49)
(68)
Ending balance of accumulated other comprehensive income (loss)
$
(987)
$
169
$
(987)
$
169
(Some amounts may not reconcile due to rounding.)
8.
 
COLLATERALIZED REINSURANCE
 
AND TRUST AGREEMENTS
 
A
 
subsidiary
 
of
 
the
 
Company,
 
Everest
 
Reinsurance
 
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
 
June September
30,
2022,
the
total
amount
on
deposit
in
the
trust
 
account
was
$
554.1632
 
million.million which includes $
78
million of restricted cash.
23
The
 
Company
 
entered
 
into
 
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
 
named
 
storm
 
and
 
earthquake
events. The table below summarizes
 
the various agreements:
 
 
(Dollars in thousands)millions)
Class
Description
Effective Date
Expiration Date
Limit
Coverage
Basis
Series 2018-1 Class A-2
US, Canada, Puerto Rico – Named Storm and Earthquake Events
4/30/2018
5/5/2023
62,500$
63
Aggregate
Series 2018-1 Class B-2
US, Canada, Puerto Rico – Named Storm and Earthquake Events
4/30/2018
5/5/2023
200,000200
Aggregate
Series 2019-1 Class A-1
US, Canada, Puerto Rico – Named Storm and Earthquake Events
12/12/2019
12/19/2023
150,000150
Occurrence
Series 2019-1 Class B-1
US, Canada, Puerto Rico – Named Storm and Earthquake Events
12/12/2019
12/19/2023
275,000275
Aggregate
Series 2019-1 Class A-2
US, Canada, Puerto Rico – Named Storm and Earthquake Events
12/12/2019
12/19/2024
150,000150
Occurrence
Series 2019-1 Class B-2
US, Canada, Puerto Rico – Named Storm and Earthquake Events
12/12/2019
12/19/2024
275,000275
Aggregate
Series 2021-1 Class A-1
US, Canada, Puerto Rico – Named Storm and Earthquake Events
4/8/2021
4/21/2025
150,000150
Occurrence
Series 2021-1 Class B-1
US, Canada, Puerto Rico – Named Storm and Earthquake Events
4/8/2021
4/21/2025
85,00085
Aggregate
Series 2021-1 Class C-1
US, Canada, Puerto Rico – Named Storm and Earthquake Events
4/8/2021
4/21/2025
85,00085
Aggregate
Series 2021-1 Class A-2
US, Canada, Puerto Rico – Named Storm and Earthquake Events
4/8/2021
4/20/2026
150,000150
Occurrence
Series 2021-1 Class B-2
US, Canada, Puerto Rico – Named Storm and Earthquake Events
4/8/2021
4/20/2026
90,00090
Aggregate
Series 2021-1 Class C-2
US, Canada, Puerto Rico – Named Storm and Earthquake Events
4/8/2021
4/20/2026
90,00090
Aggregate
Series 2022-1 Class A
US, Canada, Puerto Rico – Named Storm and Earthquake Events
6/22/2022
6/22/2025
300,000300
Aggregate
Total available limit
as of JuneSeptember 30, 2022
$
2,062,5002,063
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.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
2224
Kilimanjaro has
 
financed the
 
various
 
property catastrophe
 
reinsurance
 
coverages
 
by issuing
 
catastrophe
 
bonds to
unrelated,
 
external
 
investors.
 
The proceeds
 
from the
 
issuance
 
of the
 
Notes
 
listed
 
below
 
are
 
held in
 
reinsurance
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)millions)
Note Series
Issue Date
Maturity Date
Amount
Series 2018-1 Class A-2
4/30/2018
5/5/2023
62,500$
63
Series 2018-1 Class B-2
4/30/2018
5/5/2023
200,000200
Series 2019-1 Class A-1
12/12/2019
12/19/2023
150,000150
Series 2019-1 Class B-1
12/12/2019
12/19/2023
275,000275
Series 2019-1 Class A-2
12/12/2019
12/19/2024
150,000150
Series 2019-1 Class B-2
12/12/2019
12/19/2024
275,000275
Series 2021-1 Class A-1
4/8/2021
4/21/2025
150,000150
Series 2021-1 Class B-1
4/8/2021
4/21/2025
85,00085
Series 2021-1 Class C-1
4/8/2021
4/21/2025
85,00085
Series 2021-1 Class A-2
4/8/2021
4/20/2026
150,000150
Series 2021-1 Class B-2
4/8/2021
4/20/2026
90,00090
Series 2021-1 Class C-2
4/8/2021
4/20/2026
90,00090
Series 2022-1 Class A
6/22/2022
6/22/2025
300,000300
$
2,062,5002,063
9.
 
SENIOR NOTES
The table
 
below displays
 
Holdings’ outstanding
 
senior notes.
 
Fair 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.
 
JuneSeptember 30, 2022
December 31, 2021
Consolidated
Consolidated
Principal
 
Balance Sheet
Fair
Balance Sheet
Fair
(Dollars in thousands)millions)
Date Issued
Date Due
Amounts
Amount
Value
Amount
Value
4.868
% Senior notes
06/05/2014
06/01/2044
400,000400
$
397,373397
$
374,212339
$
397,314397
$
503,840504
3.5
% Senior notes
10/07/2020
10/15/2050
1,000,0001,000
$980
980,310669
$980
769,220
$
980,046
$
1,054,5201,055
3.125
% Senior notes
10/04/2021
10/15/2052
1,000,0001,000
969
627
968
983
2,400
$
968,8112,347
$
701,8201,635
$
968,4402,346
$
983,140
2,400,000
$
2,346,495
$
1,845,252
$
2,345,800
$
2,541,5002,542
Interest expense incurred in
 
connection with these senior notes is as follows
 
for the periods indicated:
 
Three Months Ended
SixNine Months Ended
JuneSeptember 30,
JuneSeptember 30,
(Dollars in thousands)millions)
2022
2021
2022
2021
Interest expense incurred
4.868
% Senior notes
$
4,8685
$
4,8685
$
9,73615
$
9,73615
Interest expense incurred
3.5
% Senior notes
$9
8,8079
$26
8,805
$
17,614
$
17,61026
Interest expense incurred
3.125
% Senior notes
$8
7,827-
$24
-
$
15,74122
$
-14
$
21,50265
$
13,673
$
43,090
$
27,34641
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
23
25
10.
 
LONG TERM SUBORDINATED
 
NOTES
The table
 
below
 
displays
 
Holdings’
 
outstanding
 
fixed
 
to
 
floating
 
rate
 
long
 
term
 
subordinated
 
notes.
 
Fair
 
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.
 
JuneSeptember 30, 2022
December 31, 2021
Original
Consolidated
Consolidated
Principal
Maturity Date
Balance
Fair
Balance
Fair
(Dollars in thousands)millions)
Date Issued
Amount
Scheduled
Final
Sheet Amount
Value
Sheet Amount
Value
Long term subordinated notes
04/26/2007
$
400,000400
05/15/2037
05/01/2067
$
223,824218
$
189,012179
$
223,774224
$
216,289216
During the
 
fixed
 
rate
 
interest
 
period from
May 3, 2007
 
through
May 14, 2017
, interest
 
was
 
at
 
the annual
 
rate
 
of
6.6
%, payable
 
semi-annually
 
in arrears
 
on November 15
 
and May
 
15 of
 
each year,
 
commencing on
November 15,
2007
.
 
During the floating
 
rate interest
 
period from May
 
15, 2017 through
 
maturity,
 
interest will be
 
based on the 3
month
 
LIBOR
 
plus
238.5
 
basis
 
points,
 
reset
 
quarterly,
 
payable
 
quarterly
 
in
 
arrears
 
on
 
February 15,
 
May 15,
August 15 and November
 
15 of each year,
 
subject to Holdings’
 
right to defer
 
interest on
1one
 
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
 
MayAugust
 
16,15,
 
2022
 
to
AugustNovember 14, 2022 is
3.805.29
%.
 
Holdings may
 
redeem the
 
long term
 
subordinated
 
notes on
 
or after
May 15, 2017
, in
 
whole or
 
in part
 
at
100
% of
the principal
 
amount plus
 
accrued and
 
unpaid interest;
 
however,
 
redemption
 
on or
 
after
 
the scheduled
 
maturity
date
 
and
 
prior
 
to
May 1, 2047
 
is
 
subject
 
to
 
a
 
replacement
 
capital
 
covenant.
 
This
 
covenant
 
is
 
for
 
the
 
benefit
 
of
certain senior note
 
holders and
 
it mandates that
 
Holdings receive
 
proceeds from
 
the sale of
 
another subordinated
debt
 
issue,
 
of
 
at
 
least
 
similar
 
size,
 
before
 
it
 
may
 
redeem
 
the
 
subordinated
 
notes.
 
The
 
Company’s
4.868
%
 
senior
notes, due
 
on
June 1, 2044
,
3.5
% senior
 
notes due
 
on
October 15, 2050
 
and
3.125
% senior
 
notes due
 
on
October
15, 2052
 
are the Company’s
 
long term indebtedness that rank senior
 
to the long term subordinated notes.
In
2009,
the
Company
had
reduced
its
outstanding
amount
of
long
term
subordinated
notes
by
$
161
million
through the
initiation of
a cash
tender offer
for any
and all
of the
long term
subordinated
notes.
In addition,
the
Company
repurchased
and
retired
$
13
million
of
the
long
term
subordinated
notes
in
2020.
During
the
third
quarter
of
2022,
the
Company
repurchased
and
retired
$
6
million
of
the
outstanding
long
term
subordinated
notes. The Company realized
a gain of $
1
million on the transaction.
Interest
 
expense
 
incurred
 
in
 
connection
 
with
 
these
 
long
 
term
 
subordinated
 
notes
 
is
 
as
 
follows
 
for
 
the
 
periods
indicated:
Three Months Ended
SixNine Months Ended
JuneSeptember 30,
JuneSeptember 30,
(Dollars in thousands)millions)
2022
2021
2022
2021
Interest expense incurred
$
1,9273
$
1,4601
$
3,4586
$
2,9224
11.
 
FEDERAL HOME LOAN BANK MEMBERSHIP
Everest
 
Re
 
is
 
a
 
member
 
of
 
the
 
Federal
 
Home
 
Loan
 
Bank
 
of
 
New
 
York
 
(“FHLBNY”),
 
which
 
allows
 
Everest
 
Re
 
to
borrow
 
up
to
10
%
of
 
its
statutory
 
admitted
 
assets.
 
As
of
 
JuneSeptember
 
30,
2022,
 
Everest
 
Re
had
 
admitted
 
assets
 
of
approximately
 
$
20.822.0
 
billion
which
 
provides
 
borrowing
capacity
 
of
up
 
to
approximately
 
$
2.12.2
 
billion.
As
 
of June
September
 
30,
2022,
2022,
Everest
 
Re
has
 
$
519.0519
 
million
of
 
borrowings
outstanding,
 
with
maturities
 
in
November
 
and
December
 
2022
and
 
interest
 
payable
 
at
 
interest
 
rates
 
between
0.53
%
 
and
0.65
%.
 
Everest
 
Re
 
incurred
 
interest
expense
of
 
$
0.8
million
 
million and
 
$
0.3
 
million
for
 
the
three
 
months
 
ended
June
30,
2022
and
2021,
respectively.
Everest
Re
incurred
interest
expense
of $
1.5
million and
$
0.6
million for
the six
months
ended June September
 
30, 2022
 
and 2021,
 
respectively.
TheEverest
 
Re
incurred
interest
expense
of
$
2.3
million
and
$
0.8
million
for
the
nine
months
ended
September
30,
2022 and
2021, respectively.
The FHLBNY
 
membership
 
agreement
 
requires
 
that
4.5
%
of
 
borrowed
 
funds
be
 
used
to
acquire
additional
to acquire additional membership stock.
 
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.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
2426
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.
 
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 JuneSeptember 30, 2022
SixNine Months Ended JuneSeptember 30, 2022
(Dollars in thousands)millions)
Reinsurance
Insurance
Total
 
Reinsurance
Insurance
Total
 
Gross written premiums
$
1,394,0041,681
$
1,042,883905
$
2,436,8872,585
$
2,773,6754,454
$
1,868,2202,773
$
4,641,8957,227
Net written premiums
1,245,0741,506
749,551722
1,994,6252,228
2,430,4153,936
1,360,4192,083
3,790,8346,019
Premiums earned
$
1,294,9031,398
$
659,326706
$
1,954,2292,104
$
2,504,2173,902
$
1,278,6051,985
$
3,782,8215,887
Incurred losses and LAE
875,4021,531
428,536564
1,303,9372,094
1,695,8723,227
833,7551,398
2,529,6274,624
Commission and brokerage
331,917337
76,74785
408,663423
647,246985
146,047231
793,2931,216
Other underwriting expenses
32,45133
87,81294
120,263127
63,42597
174,594269
238,018365
Underwriting gain (loss)
$
55,134(504)
$
66,232(37)
$
121,366(541)
$
97,674(406)
$
124,20987
$
221,883(319)
Net investment income
176,499124
332,633457
Net gains (losses) on investments
(378,273)(237)
(604,860)(842)
Corporate expense
(5,886)(5)
(11,652)(17)
Interest, fee and bond
 
issue cost amortization expense
(24,398)(26)
(48,476)(74)
Other income (expense)
 
4937
(8,904)(2)
Income (loss) before taxes
$
(110,199)(677)
$
(119,376)(796)
(Some amounts may not reconcile due to rounding)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
2527
Three Months Ended JuneSeptember 30, 2021
SixNine Months Ended JuneSeptember 30, 2021
(Dollars in thousands)millions)
Reinsurance
Insurance
Total
 
Reinsurance
Insurance
Total
 
Gross written premiums
$
1,439,2541,693
$
877,776831
$
2,317,0302,524
$
2,859,3374,552
$
1,591,0282,422
$
4,450,3656,974
Net written premiums
1,291,2291,461
637,106608
1,928,3352,069
2,500,0423,961
1,193,6361,802
3,693,6785,763
Premiums earned
$
1,232,1571,280
$
534,398571
$
1,766,5551,851
$
2,409,3273,690
$
1,054,1281,625
$
3,463,4555,315
Incurred losses and LAE
739,4401,208
356,177445
1,095,6181,653
1,709,7572,917
739,9441,185
2,449,7024,103
Commission and brokerage
324,989320
61,85969
386,848389
615,545935
121,157190
736,7021,126
Other underwriting expenses
32,99932
76,93277
109,930110
69,288101
150,437228
219,725329
Underwriting gain (loss)
$
134,729(279)
$
39,430(21)
$
174,159(300)
$
14,737(264)
$
42,59022
$
57,327(243)
Net investment income
248,135197
395,858593
Net gains (losses) on investments
183,763(51)
318,774267
Corporate expense
(7,618)(11)
(12,199)(23)
Interest, fee and bond
 
issue cost amortization expense
(15,537)(16)
(31,071)(47)
Other income (expense)
 
(1,867)10
2,11212
Income (loss) before taxes
$
581,035(171)
$
730,800560
(Some amounts may not reconcile due to rounding)
The Company
 
produces
 
business
 
in
 
the
 
U.S.
 
and
 
internationally.
 
The net
 
income
 
deriving
 
from
 
assets
 
residing
 
in
the
 
individual
 
foreign
 
countries
 
in
 
which
 
the
 
Company
 
writes
 
business
 
are
 
not
 
identifiable
 
in
 
the
 
Company’s
financial records.
 
Based on
 
gross
 
written
 
premium, the
 
table
 
below presents
 
the largest
 
country,
 
other than
 
the
U.S., in which the Company writes business,
 
for the periods indicated:
 
Three Months Ended
SixNine Months Ended
JuneSeptember 30,
JuneSeptember 30,
(Dollars in thousands)millions)
2022
2021
2022
2021
Canada gross written premiums
$
80,714103
$
68,95560
$
148,479252
$
103,285164
No other country represented
 
more than
5
% of the Company’s revenues.
 
13.
 
RELATED-PARTY
 
TRANSACTIONS
Parent
Group entered
 
into a
$
300.0300
 
million long
term note
 
agreement with
Everest
 
Re as
of December
 
17, 2019.
The note
pays interest
 
annually at
 
a rate of
1.69
% and is
 
scheduled to mature
 
in December,
 
2028. The Company
 
recognized
interest income related
 
related to
this long term note
 
note of $
1.3
million and $
1.3
 
million for the
three months ended
 
ended JuneSeptember 30,
2022 and
2021, respectively
and $
2.5
million and
$
2.53.8
 
million for
the six
nine months
ended JuneSeptember
 
30, 2022
and 2021,
respectively.
 
Group entered
into a
 
$
200.0200
 
million long
term note agreement
 
agreement with Everest Re
 
Everest
Re as
of August
5, 2021. The
note pays
interest annually
 
at a rate
 
of
1.00
% and is
 
scheduled to
 
mature in
 
August, 2030.
 
The Company
 
recognized interest
income related to
 
to this
long term note
 
note of
$
0.5
 
million and
$
00.3
 
million for the
 
the three
months ended
 
JuneSeptember 30,
2022 and 2021,
2021, respectively and
$
1.01.5
 
million and $
00.3
 
million for
the sixnine months
ended JuneSeptember 30,
2022 and
2021, respectively.
 
Group
entered
 
into
 
a
$
215.0215
 
million
long
 
term
note
 
agreement
 
with
Holdings
 
as
of
 
June
29,
 
2022.
The
 
note
pays
interest
annually
at
a rate
 
of
3.11
% and
is scheduled
to
mature
in June,
2052.
The Company
recognized
interest
income
related
to
this
long
term
note
of
$
1.7
million
for
both
the
three
and
nine
months
ended
September
30,
2022.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
2628
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
 
most
 
recent
 
amendment
 
from
 
the
 
Board,
 
approved
 
on
 
May
 
22,
 
2020,
 
increased
 
the
cumulative number of shares that may
 
be repurchased under the program to
32.032
 
million shares.
 
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
 
$
1.8
 
billion,
 
to
 
Preferred
 
Holdings
 
in
 
exchange
 
for
1,773.214
 
preferred
 
shares
 
of
Preferred
 
Holdings
with
 
a
$
1.01
 
million
par
 
value
and
1.75
%
annual
 
dividend
rate.
 
After
the
 
exchange,
 
Holdings
no
longer holds any shares or has any
 
ownership interest in Group.
 
Holdings
 
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
 
gains
 
(losses)
 
on
investments
 
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
SixNine Months Ended
JuneSeptember 30,
JuneSeptember 30,
(Dollars in thousands)millions)
2022
2021
2022
2021
Dividends received on preferred stock of affiliate
$
7,7588
$
7,7588
$
15,51623
$
15,51623
Affiliates
The Company
 
has engaged
 
in reinsurance
 
transactions
 
with Everest
 
Reinsurance
 
(Bermuda), Ltd.
 
(“Bermuda Re”),
Everest
 
Reinsurance
 
Company
 
(Ireland)
 
dac
 
(“Ireland
 
Re”),
 
Everest
 
Insurance
 
(Ireland)
 
dac
 
(“Ireland
 
Insurance”),
Everest
 
International
 
Reinsurance
 
Ltd.
 
(“Everest
 
International”),
 
Everest
 
Insurance
 
Company
 
of Canada
 
(“Everest
Canada”), Lloyd’s
 
Syndicate
 
2786 and
 
Mt. Logan
 
Re, which
 
are affiliated
 
companies primarily
 
driven by
 
enterprise
risk and capital management considerations
 
under which business is ceded at market rates
 
and terms.
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)millions)
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
150,000150
325,000325
01/01/2011-12/31/2011
Everest Re
50.0
%
Bermuda Re
property / casualty business
150,000150
300,000300
01/01/2012-12/31/2014
Everest Re
50.0
%
Bermuda Re
property / casualty business
100,000100
200,000200
01/01/2015-12/31/2016
Everest Re
50.0
%
Bermuda Re
property / casualty business
162,500163
325,000325
01/01/2017-12/31/2017
Everest Re
60.0
%
Bermuda Re
property / casualty business
219,000219
438,000438
01/01/2010-12/31/2010
Everest Re- Canadian Branch
60.0
%
Bermuda Re
property business
350,000350
(1)
-
01/01/2011-12/31/2011
Everest Re- Canadian Branch
60.0
%
Bermuda Re
property business
350,000350
(1)
-
01/01/2012-12/31/2012
Everest Re- Canadian Branch
75.0
%
Bermuda Re
property / casualty business
206,250206
(1)
412,500413
(1)
01/01/2013-12/31/2013
Everest Re- Canadian Branch
75.0
%
Bermuda Re
property / casualty business
150,000150
(1)
412,500413
(1)
01/01/2014-12/31/2017
Everest Re- Canadian Branch
75.0
%
Bermuda Re
property / casualty business
262,500263
(1)
412,500413
(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.
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
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
27
29
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, 2022.
 
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
£
100.0100
 
million
of
 
reinsurance
 
coverage
 
for
each
 
catastrophe
 
occurrence
 
above
 
£
40.040
 
million.
 
Bermuda
Re
 
(UK
Branch)
 
paid
Everest
 
Re
£
3.54
 
million
for
 
this
coverage.
 
This
contract
 
was
most
 
recently
renewed
effective January 1, 2022.
Everest
 
Re
 
entered
 
into
 
a
 
catastrophe
 
excess
 
of
 
loss
 
reinsurance
 
contract
 
with
 
Ireland
 
Re,
 
effective
 
February
 
1,
2021 through
 
January 31,
 
31, 2022,
subject
 
to
renewal
 
thereafter.
 
The contract
 
provides
Ireland
 
Re with up
 
up to
€
145.0145
million of
reinsurance
 
coverage
for
 
each catastrophe
 
occurrence
above
€
16.016
 
million. Ireland Re
paid Everest
 
Re paid
Everest
Re
€
9.810
million for this coverage.
 
This contract was most recently
 
renewed effective February
 
February 1, 2022.
The
 
table
 
below
 
represents
 
loss
 
portfolio
 
transfer
 
(“LPT”)
 
reinsurance
 
agreements
 
whereby
 
net
 
insurance
exposures and reserves were
 
transferred to an
 
affiliate.
 
(Dollars in thousands)millions)
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
$
747,022747
01/01/2002-12/31/2007
12/31/2017
Everest Re
Bermuda Re
$
970,000970
All years
On December 31,
 
2017, the
 
Company entered
 
into a
 
LPT agreement
 
with Bermuda
 
Re. The
 
LPT agreement
 
covers
subject
 
loss
 
reserves
 
of
 
$
2.3
 
billion
 
for
 
accident
 
years
 
2017
 
and
 
prior.
 
As
 
a
 
result
 
of
 
the
 
LPT
 
agreement,
 
the
Company
transferred
 
$
1.0
 
billion
of
cash
and
 
fixed
maturity
securities
 
and
transferred
 
$
970.0970
 
million
of
loss reserves
reserves
to
 
Bermuda
 
Re.
 
As
 
part
 
of
the
 
LPT
 
agreement,
 
Bermuda
 
Re
 
will
 
provide
 
an
 
additional
 
$
500.0500
 
million
 
of
adverse
 
adverse
development
 
coverage
 
on
 
the
 
subject
 
loss
 
reserves.
 
As
 
of
 
JuneSeptember
 
30,
 
2022,
 
and
 
December
 
31,
 
2021,
 
the
Company
has
a
 
reinsurance
recoverable
 
of
$
854.0854
 
million
and
$
856.4856
 
million,
respectively,
 
recorded
on
 
its
balance
sheet due from Bermuda Re.
The
 
following
 
tables
 
summarize
 
the
 
significant
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,
Everestto
Ireland and Lloyd’s
syndicate 2786 for the periods
indicated:affiliated entities:
 
Three Months Ended
SixNine Months Ended
Bermuda Re
JuneSeptember 30,
JuneSeptember 30,
(Dollars in thousands)millions)
2022
2021
2022
2021
Ceded written premiums
$
91,38595
$
74,94878
$
183,823279
$
145,801224
Ceded earned premiums
91,37095
73,79977
183,807279
144,676222
Ceded losses and LAE
2,955(2)
20,99012
1,111(1)
(9,114)3
Assumed written premiums
1,065
-
3,3235
-3
5
Assumed earned premiums
1,065-
624
4,5045
1234
Assumed losses and LAE
3-
40-
(191)-
66-
Three Months Ended
Nine Months Ended
Ireland Re
September 30,
September 30,
(Dollars in millions)
2022
2021
2022
2021
Assumed written premiums
$
2
$
7
$
6
$
13
Assumed earned premiums
2
7
6
12
Assumed losses and LAE
(4)
62
(2)
62
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
2830
Three Months Ended
SixNine Months Ended
Everest International & CanadaIreland Insurance
JuneSeptember 30,
JuneSeptember 30,
(Dollars in thousands)
2022
2021
2022
2021
Assumed written premiums
-
-
-
-
Assumed earned premiums
-
-
-
-
Assumed losses and LAE
45
7
(1,824)
66
Three Months Ended
Six Months Ended
Ireland Re
June 30,
June 30,
(Dollars in thousands)millions)
2022
2021
2022
2021
Assumed written premiums
$
2,0373
$
2,9784
$
4,3387
$
5,9016
Assumed earned premiums
2,0372
2,9782
4,5496
4,9274
Assumed losses and LAE
-1
-1
2,4413
-
Three Months Ended
Six Months Ended
Ireland Insurance
June 30,
June 30,
(Dollars in thousands)
2022
2021
2022
2021
Assumed written premiums
$
1,905
$
1,489
$
3,864
$
2,790
Assumed earned premiums
2,338
1,252
3,978
2,514
Assumed losses and LAE
(4,784)
308
1,608
1,005
Three Months Ended
Six Months Ended
Lloyd's Syndicate 2786
June 30,
June 30,
(Dollars in thousands)
2022
2021
2022
2021
Assumed written premiums
$
(250)
$
73
$
(257)
$
672
Assumed earned premiums
(250)
112
(257)
641
Assumed losses and LAE
132
1,796
387
2142
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
SixNine Months Ended
Mt. Logan Re Segregated Accounts
JuneSeptember 30,
JuneSeptember 30,
(Dollars in thousands)millions)
2022
2021
2022
2021
Ceded written premiums
$
21,76060
$
46,57198
$
62,426122
$
127,943226
Ceded earned premiums
29,17151
60,11786
71,655122
126,105212
Ceded losses and LAE
 
22,88482
21,61397
59,648142
94,607192
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)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) and effective
 
tax rate.
29
15.
 
SUBSEQUENT EVENTS
The
 
Company
 
has
 
evaluated
 
known
 
recognized
 
and
 
non-recognized
 
subsequent
 
events.
 
The
 
Company
 
does
 
not
have any subsequent
 
events to report.
3031
ITEM 2.
 
MANAGEMENT’S DISCUSSION AND ANALYSIS
 
OF FINANCIAL CONDITION
AND RESULTS OF
 
OF OPERATION
Industry Conditions.
The
 
worldwide
 
reinsurance
 
and
 
insurance
 
businesses
 
are
 
highly
 
competitive,
 
as
 
well
 
as
 
cyclical
 
by
 
product
 
and
market.
 
As
 
such,
 
financial
 
results
 
tend
 
to
 
fluctuate
 
with
 
periods
 
of
 
constrained
 
availability,
 
higher
 
rates
 
and
stronger
 
profits followed
 
by periods
 
of abundant
 
capacity,
 
lower rates
 
and constrained
 
profitability.
 
Competition
in
 
the
 
types
 
of
 
reinsurance
 
and
 
insurance
 
business
 
that
 
we
 
underwrite
 
is
 
based
 
on
 
many
 
factors,
 
including
 
the
perceived
 
overall
 
financial
 
strength
 
of
 
the
 
reinsurer
 
or
 
insurer,
 
ratings
 
of
 
the
 
reinsurer
 
or
 
insurer
 
by
 
A.M.
 
Best
and/or
 
Standard
 
&
 
Poor’s,
 
underwriting
 
expertise,
 
the
 
jurisdictions
 
where
 
the
 
reinsurer
 
or
 
insurer
 
is
 
licensed
 
or
otherwise
 
authorized,
 
capacity
 
and
 
coverages
 
offered,
 
premiums
 
charged,
 
other
 
terms
 
and
 
conditions
 
of
 
the
reinsurance
 
and
 
insurance
 
business
 
offered,
 
services
 
offered,
 
speed
 
of
 
claims
 
payment
 
and
 
reputation
 
and
experience in lines written.
 
Furthermore, the market impact
 
from these competitive factors
 
related to reinsurance
and
 
insurance
 
is
 
generally
 
not
 
consistent
 
across
 
lines
 
of business,
 
domestic
 
and
 
international
 
geographical
 
areas
and distribution channels.
 
We
 
compete
 
in the
 
U.S. and
 
international
 
reinsurance
 
and insurance
 
markets
 
with numerous
 
global competitors.
Our
 
competitors
 
include
 
independent
 
reinsurance
 
and
 
insurance
 
companies,
 
subsidiaries
 
or
 
affiliates
 
of
established
 
worldwide
 
insurance
 
companies,
 
reinsurance
 
departments
 
of certain
 
insurance
 
companies,
 
domestic
and international underwriting operations,
 
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 tocoverage.
 
deal withBased
on
recent
competitive
behaviors
in
the
insurance
and reinsurance
activity,
natural
catastrophe
events and
the macroeconomic
backdrop,
there has
been
some dislocation
in the
 
impacts ofmarket which
should have
 
a globalpositive
 
pandemic, COVID-19impact on
rates
 
and its
subsequent variants.
We
continue to
service and
meet the
needs of
our clients
while ensuring
the safetyterms
 
and healthconditions
 
of ourgenerally,
though local market specificities can
 
employees andvary widely.
customers.
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.
The increased
 
frequency of
 
of catastrophe
 
losses that
 
continuedexperienced
throughout
to be experienced
2021 and
thus far
in
 
2022 and throughout
2021 appears to be further
pressuring the increase
of rates. As business
activity
continues
 
to
 
be
pressuring the
increase of
rates.
As business
activity continues
to regain
 
strength
 
after the
pandemic and
current
macroeconomic
uncertainty,
rates
 
also appear to
 
to be firming
 
firming in
most
 
lines of
 
business, particularly
 
in the
casualty
 
casualty lines
that
had
seen
significant
losses
such
 
as
excess
casualty
and
directors’
 
and
officers’
liability.
 
Other casualty lines are
casualty
lines
are
experiencing
 
modest
 
rate
 
increase,
 
while
 
some
 
lines
 
such
 
as
 
workers’
 
compensation
 
were
experiencing softer
 
experiencing
softer
market
conditions.
 
It
is
 
too
early
 
to
tell
 
what
the
 
impact
on
 
pricing
conditions
 
will
be,
 
but
it
 
is
likely
to
change
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
 
and
 
a
 
low
operating expense
 
ratio. Our diversified
 
global platform with
 
its broad mix of
 
products, distribution
 
and geography
is resilient.
31
The war
 
in the
 
Ukraine
 
is ongoing
 
and an
 
evolving
 
event.
 
Economic
 
and legal
 
sanctions
 
have
 
been levied
 
against
Russia, specific named individuals
 
and entities connected
 
to the Russian government,
 
as well as businesses
 
located
in the
 
Russian Federation
 
and/or owned
 
by Russian
 
nationals by
 
numerous countries,
 
including the
 
United States.
32
The
 
significant
 
political
 
and
 
economic
 
uncertainty
 
surrounding
 
the
 
war
 
and
 
associated
 
sanctions
 
have
 
impacted
economic
 
and
 
investment
 
markets
 
both
 
within
 
Russia
 
and
 
around
 
the
 
world.
 
The
 
Company
 
has
 
recorded
 
$24.625
million
 
of
incurred
 
underwriting
 
losses
 
related
 
to
 
the
 
Ukraine
 
and
 
Russia
 
conflict
 
as
of
 
the
 
three
and sixnine
 
months
ended
ended JuneSeptember 30, 2022.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
3233
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
 
SixNine Months Ended
 
Percentage
 
JuneSeptember 30,
Increase/
JuneSeptember 30,
Increase/
(Dollars in millions)
2022
2021
(Decrease)
2022
2021
(Decrease)
Gross written premiums
$
2,436.92,585
$
2,317.12,524
5.2%2.4%
$
4,641.97,227
$
4,450.46,974
4.3%3.6%
Net written premiums
1,994.62,228
1,928.42,069
3.4%7.7%
3,790.86,019
3,693.75,763
2.6%4.4%
REVENUES:
Premiums earned
$
1,954.22,104
$
1,766.61,851
10.6%13.6%
$
3,782.85,887
$
3,463.55,315
9.2%10.8%
Net investment income
176.5124
248.1197
-28.9%-36.8%
332.6457
395.9593
-16.0%-22.9%
Net gains (losses) on investments
(378.3)(237)
183.8(51)
NM
(604.9)(842)
318.8267
NM
Other income (expense)
0.57
(1.9)10
NM-30.0%
(8.9)(2)
2.112
NM-116.7%
Total revenues
1,753.01,998
2,196.52,007
-20.2%-0.5%
3,501.75,500
4,180.26,187
-16.2%-11.1%
CLAIMS AND EXPENSES:
Incurred losses and loss adjustment expenses
1,303.92,094
1,095.61,653
19.0%26.7%
2,529.64,624
2,449.74,103
3.3%12.7%
Commission, brokerage, taxes and fees
408.7423
386.8389
5.6%8.7%
793.31,216
736.71,126
7.7%8.0%
Other underwriting expenses
120.3127
109.9110
9.4%16.3%
238.0365
219.7329
8.3%11.0%
Corporate expense
5.95
7.611
-22.7%-54.6%
11.717
12.223
-4.5%-28.1%
Interest, fee and bond issue cost amortization expense
24.426
15.616
56.5%62.1%
48.574
31.147
56.0%58.1%
Total claims and expenses
1,863.12,675
1,615.52,178
15.3%22.8%
3,621.16,296
3,449.45,627
5.0%11.9%
INCOME (LOSS) BEFORE TAXES
(110.2)(677)
581.0(171)
-119.0%NM
(119.4)(796)
730.8560
-116.3%-242.1%
Income tax expense (benefit)
(24.5)(135)
115.3(28)
-121.3%NM
(34.7)(170)
145.6118
-123.9%-244.1%
NET INCOME (LOSS)
 
$
(85.7)(542)
$
465.8(143)
-118.4%NM
$
(84.6)(626)
$
585.3442
-114.5%-241.6%
RATIOS:
Point
Change
Point
Change
Loss ratio
66.7%99.6%
62.0%89.3%
4.710.3
66.9%78.6%
70.7%77.2%
(3.8)1.4
Commission and brokerage ratio
20.9%
21.9%
(1.0)20.1%
21.0%
21.3%(0.9)
(0.3)20.7%
21.2%
(0.5)
Other underwriting expense ratio
6.2%6.1%
5.9%
0.2
6.2%
-
6.3%
6.3%6.2%
-
Combined ratio
93.8%125.7%
90.1%116.2%
3.79.5
94.1%105.4%
98.3%104.6%
(4.2)0.8
At
At
 
Percentage
 
JuneSeptember 30,
December 31,
Increase/
(Dollars in millions)
2022
2021
(Decrease)
Balance sheet data:
Total investments and cash
$
18,851.918,946
$
19,718.819,719
-4.4%-3.9%
Total assets
27,108.027,656
27,695.027,695
-2.1%-0.1%
Loss and loss adjustment expense reserves
13,738.414,849
13,121.213,121
4.7%13.2%
Total debt
3,089.33,084
3,088.63,089
0.0%-0.2%
Total liabilities
20,961.622,322
20,656.920,657
1.5%8.1%
Stockholder's equity
6,146.45,334
7,038.07,038
-12.7%-24.2%
(Some amounts may not reconcile due to rounding)
(NM, not meaningful)
 
 
 
 
3334
Revenues.
Premiums.
 
Gross written
 
premiums increased
 
by 5.2%2.4%
 
to $2.4$2.6
 
billion for
 
the three
 
months
 
ended JuneSeptember
 
30, 2022,
2022, compared
to $2.3$2.5
 
billion for the
 
the three months
 
months ended June
September 30,
 
2021, reflecting a
 
$165.1 a $74
million, or
18.8% 8.9%, increase
increase in our Insuranceinsurance
 
business and a $13 million, or 0.7%,
 
$45.3 million, or
3.1%, decrease
in our reinsurance
 
business. The increase in
insurance
 
rise in insurance
premiums reflects
 
was
primarily
due
to
increases
growth across
 
most
lines
 
of
business
 
notablydriven by
 
specialtypositive rate
 
casualtyand exposure
 
business,increases,
professionalnew business,
 
liability business and strong
 
other specialtyrenewal retention.
 
business. The decrease
 
in reinsurance
 
premiums was
 
mainly due
to
 
a decline in
property
 
declinepro
 
propertyrata
business,
partially
offset
by
an
increase
in
casualty
 
pro
 
rata
 
business.
 
Gross
 
written
 
premiums
increased
by
 
4.3%
3.6% to
$4.6 $7.2
 
billion
for
 
the nine months
 
six
months ended JuneSeptember
 
30, 2022, compared to
 
$4.5to $7.0 billion
for the
nine
 
six months
ended June
September
 
30,
2021,
reflecting
a
 
$277.2351
million,
 
or
 
17.4%14.5%,
 
increase
 
in
 
our
 
Insuranceinsurance
 
business
and
 
a
 
$85.798
 
million,
 
or
 
3.0%2.2%,
 
decrease
 
in
 
our
 
reinsurance
business.
business.
The rise
increase
in
insurance
 
premiums was primarily due
 
to increases in reflects
growth
across
most
 
lines
of business, notably specialty
casualty
 
business
 
professionaldriven
 
liabilityby
positive
rate
and
exposure
increases,
new
 
business,
 
and
 
otherstrong
specialty
business.renewal retention.
 
The decrease in reinsurance
 
decrease
in
reinsurance
premiums was mainly
due to a decline
property pro rata
 
business,
partially offset by an increase in casualty
pro rata business.
Net
written
 
premiums
 
increased
 
by 3.4%
7.7%
 
to $2.0
 
billion for
the three
months
ended June
30, 2022,
compared
to
$1.92.2
 
billion
 
for
 
the
 
three
 
months
 
ended
 
JuneSeptember
30,
2022,
compared to $2.1 billion
for the three
months ended September
 
30,
 
2021
and
increased
 
by 4.4% to $6.0 billion
 
2.6%for
the nine
months ended
September 30,
2022, compared
to $5.8
billion for
the nine
months ended
September 30,
2021.
The
higher
percentage
increases
in
net
written
premiums
compared
 
to
 
$3.8gross
 
billion
for
the
six
months
ended June
30, 2022,
compared to
$3.7 billion
for the
six months
ended June
30, 2021.
The percentage
increases
in net written
 
premiums are
 
consistent
with the percentage
changes
in gross written
premiums. Premiums
earnedwere
increased
by
10.6%primarily due
 
to
 
$2.0a reduction
 
billionin business
 
forceded to
 
the segregated
 
accounts
of Mt.
Logan
Re during
the three
and
nine
 
months
 
ended
 
JuneSeptember
 
30,
 
2022
 
compared
 
to
 
$1.8the
 
three
and
nine
months
ended
September
30,
2021.
Premiums earned increased by 13.6% to
$2.1 billion for the three months ended
September 30, 2022, compared to
$1.9 billion
 
for
 
the three
three months
 
ended JuneSeptember
 
30, 2021
 
2021 and
increased
 
by 9.2%
10.8%
 
to $3.8
 
$5.9 billion
for
 
the sixnine
months ended September
 
months ended30, 2022, compared
 
June 30,
2022,
compared to
$3.5 $5.3 billion
 
for the nine
 
six months
ended JuneSeptember
 
30, 2021. The
The change
 
in
premiums
 
earned
relative
 
to
net
written
written
premiums
 
is
primarily
the
result
 
of timing; premiums are
 
timing;
premiums
are
earned ratably
 
over the
coverage
 
period whereas
written
 
written premiums
 
are
recorded
 
at
the
 
initiation
of
 
the coverage
coverage
period.
 
Accordingly,
 
the
 
significant
 
increases
 
in
gross
 
written
 
premiums
 
from
 
pro
 
rata
 
business
 
during
 
the latter
 
latter
half of 2021 contributed to the current quarter
 
of 2021
contributed
to
the current
quarter
percentage increase in net earned
premiums.
Other
 
Income
 
(Expense).
 
We
 
recorded
 
other
 
income
 
of
 
$0.57
 
million
 
and
 
other
expense
of
$1.910
 
million
 
for
 
the
three
three
months
 
ended June
September
 
30,
2022
 
and
2021,
 
respectively.
 
We
 
recorded
 
other
expense
 
of $8.9
$2
 
million
and
 
other
income
income
of
 
$2.1 12
million
for the
six nine months
 
ended JuneSeptember 30, 2022 and
 
30, 2022
and 2021,
respectively.
 
The change was primarily the
 
was primarilyresult
the result of fluctuations in foreign currency exchange
 
exchange rates.
 
Net Investment Income.
 
Refer to Consolidated
 
Investments Results Section below.
Net Gains (Losses) on Investments.
 
Refer to Consolidated Investments
 
Results Section below.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
3435
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 JuneSeptember 30,
Current
Ratio %/
Prior
Ratio %/
Total
Ratio %/
(Dollars in millions)
Year
Pt Change
Years
Pt Change
Incurred
Pt Change
2022
Attritional
$
1,236.61,260
63.3%59.9%
$
7
0.3%
$
1,267
60.2%
Catastrophes
826
39.2%
1
0.1%
827
39.3%
Total
$
2,086
99.1%
$
8
0.4%
$
2,094
99.6%
2021
Attritional
$
1,112
60.0%
$
-
0.0%
$
1,236.61,112
63.3%60.0%
Catastrophes
65.0544
3.3%29.4%
2.3(3)
0.1%-0.1%
67.3541
3.4%29.3%
Total
$
1,301.71,656
66.6%89.4%
$
2.3(3)
0.1%-0.1%
$
1,303.91,653
66.7%
2021
Attritional
$
1,076.7
60.9%
$
(0.5)
0.0%
$
1,076.2
60.9%
Catastrophes
35.0
2.0%
(15.6)
-0.9%
19.4
1.1%
Total
$
1,111.7
62.9%
$
(16.1)
-0.9%
$
1,095.6
62.0%89.3%
Variance 2022/2021
Attritional
$
160.0148
2.4(0.1)
pts
$
0.57
-0.3
pts
$
160.5155
2.40.2
pts
Catastrophes
30.0282
1.39.8
pts
17.84
1.00.2
pts
47.9286
2.310.0
pts
Total
$
190.0430
3.79.7
pts
$
18.311
1.00.5
pts
$
208.3441
4.710.3
pts
SixNine Months Ended JuneSeptember 30,
Current
Ratio %/
Prior
Ratio %/
Total
Ratio %/
(Dollars in millions)
Year
Pt Change
Years
Pt Change
Incurred
Pt Change
2022
Attritional
$
2,375.13,636
62.8%61.8%
$
-7
0.0%0.1%
$
2,375.13,643
62.7%61.9%
Catastrophes
145.5971
3.8%16.5%
9.010
0.2%
154.5981
4.0%16.7%
Total
$
2,520.64,607
66.6%78.3%
$
9.017
0.2%0.3%
$
2,529.64,624
66.9%78.6%
2021
Attritional
$
2,155.13,267
62.2%61.5%
$
(1.5)(2)
0.0%
$
2,153.63,265
62.2%61.5%
Catastrophes
295.5840
8.5%15.8%
0.6(2)
0.0%
296.1837
8.5%15.8%
Total
$
2,450.64,106
70.7%77.3%
$
(0.9)(4)
0.0%
$
2,449.74,103
70.7%77.2%
Variance 2022/2021
Attritional
$
220.0369
0.60.3
pts
$
1.59
-0.1
pts
$
221.5378
0.60.5
pts
Catastrophes
(150.0)131
(4.7)0.7
pts
8.412
0.2
pts
(141.6)144
(4.5)0.9
pts
Total
$
70.0500
(4.1)1.0
pts
$
9.921
0.20.3
pts
$
79.9522
(3.8)1.4
pts
(Some amounts may not reconcile due to rounding.)
Incurred
losses
and
 
LAE
increased
by
 
19.0% to $1.3 billion
for the three
months ended June
30, 2022 compared26.7%
 
to
$2.1
$1.1
billion
 
for
 
the
 
three
 
months
 
ended
 
June September
30,
2022
compared
to
$1.7 billion
for
the
three
months
ended
September
30,
 
2021, primarily
 
due
 
to
 
an
 
increase
 
of $160.0$148
million
in
current
year
attritional
losses
and
an
increase
of
$282
 
million
 
in
 
current
year
catastrophe
losses.
The
increase in
current
year attritional
 
losses andwas
 
an increasemainly due
to
the impact
 
of $30.0the
 
million inincrease
 
in premiums
earned. The
current year
 
catastrophe
 
losses. Thelosses of $826
 
increase inmillion for the
 
current
yearthree months
 
attritionalended September
 
losses
was
30, 2022 mainly
 
duerelated to
Hurricane
 
toIan
($769
million),
Hurricane
Fiona
($25
million),
Typhoon
Nanmadol
($20
million),
and
 
the
 
impact2022
Western
 
ofEurope hailstorms
 
the
increase
in
premiums
earned
and
($24.6
million
of
attritional
losses incurred
due to
the Ukraine/Russia
war.9 million).
 
The current
 
year catastrophe
 
losses of
 
$65.0544 million
 
for the
the three months
ended September 30, 2021 related to
 
ended June 30,
2022 mainly related
to 2022
South Africa
floodHurricane Ida ($37.5 million),
the 2022 Canada
derecho ($16.0431 million) and the 2022 2
nd
quarter U.S. stormsEuropeans floods
 
($12.0113 million). The current year
 
catastrophe
Incurred
losses
 
of
$35.0 million forand
 
the three
months ended
June 30, 2021
related to
Tropical
Storm Claudette,
Texas
winter storms,
and the Victoria Australia floods.
Incurred losses and LAE
 
increased by 3.3% to $2.5
 
billion for the six monthsby
 
ended June 30, 2022 compared12.7%
 
to $2.4
$4.6
billion
 
for
 
the
 
sixnine
 
months
 
ended
 
JuneSeptember
30,
2022
compared
to
$4.1
billion
for
the
nine
months
ended
September
 
30,
 
2021,
 
primarily
 
due
 
to
 
an
 
increase
 
of
 
$220.0369
million
in
current
year
attritional
losses
and
an
increase
of
$131
 
million
 
in
 
current
 
year
attritional
losses, partially
offset by
a decline
of $150.0
million in
current year
 
catastrophe
 
losses.
 
The
increase
 
in current
current year
 
attritional
losses
 
was mainly
 
mainly due
to
the impact
of the
 
impact of
the increase
 
in premiums
 
earned and $24.6
$25
 
million
 
of
 
35
of attritional
 
losses
incurred
 
due to
the Ukraine/Russia
war.
The current
year catastrophe
losses of
$145.5 million
for
the six
months
ended June
30,
2022 related
 
to
 
2022 Australia
floods ($71.4
million),
2022 South
Africa
flood
($37.5
million),
the
 
2022Ukraine/Russia
 
Canada
derecho
($16.0
million),
2022
2
nd
quarter
U.S.
storms
($12.0
million),
and
the
2022
March
U.S.
storms
($8.6
million).war.
 
The
 
current
 
year
 
catastrophe
 
losses
 
of
 
36
$295.5971
 
million
 
for
 
the
 
sixnine
 
months
ended
 
JuneSeptember
 
30,
 
2021
primarily2022
 
related
 
to
 
Hurricane
Ian
($769
million),
the
2022
Australia
floods
($74
million),
the
2022
South
Africa
flood
($38
million),
Hurricane
Fiona
($25
million),
Typhoon
Nanmadol
($20 million),
the
2022 Canada
derecho
($16 million),
the 2022
2nd quarter
U.S.
storms
($12 million),
the
2022 We
stern
Europe
hailstorms
($9 million)
and
the
2022 March
U.S.
storms
($8
million).
The current
year
catastrophe
losses of
$840 million
for the
nine months
ended September
30, 2021
primarily related
to Hurricane
Ida ($431
million), the
 
Texas
 
winter
storms
 
($263.0279 million)
 
and the
European floods
($113 million),
 
with
the
 
remaining
lossesrest of
the losses emanating from Tropical
Storm Claudette, Victoriathe 2021 Australia
 
floods and the 2021Victoria Australia floods.flooding.
Commission,
Brokerage,
 
Taxes
 
and Fees.
 
Commission,
brokerage,
 
taxes
and
 
fees
increased
 
to
$408.7 $423 million
 
for the
the
three
 
months
 
ended
 
JuneSeptember
 
30,
 
2022
 
compared
 
to
 
$386.8389
 
million
 
for
 
the
 
three
 
months
 
ended
 
JuneSeptember
 
30,
2021.
2021. Commission,
 
brokerage,
 
taxes
 
and
fees
 
increased
 
to $1.2
 
$793.3
million
billion for
 
the
six nine
 
months
 
ended
June September
 
30,
2022 compared
 
2022
compared to $1.1
 
$736.7 millionbillion for
 
the six monthsnine
 
months ended June
September 30,
 
2021. The increase
 
sincreases
 
were mainly
 
due to the
impact
the impact of the increase in premiums earned and changes
 
in the mix of business.
Other
Underwriting
Expenses.
 
Other underwriting expense
 
underwriting
expensess
 
increased to
$127 million for
the three months
ended
September
30,
2022
compared
 
to
 
$120.3110
 
million
 
for
 
the
 
three
 
months
ended
ended June
September
 
30,
2021.
Other
underwriting
expenses
increased
to
$365
million
for
the
nine
months
ended
September
30,
2022
 
compared
 
to $109.9
$329
 
million
for
 
the three
nine
 
months
 
ended June
September
 
30,
2021.
 
Other underwriting
expenses increasedThe
 
to $238.0increases
 
million for
the six
months ended
June 30,
2022 compared
to $219.7
million for
the
six months ended June
30, 2021. The increases were
 
mainly
due
to
the
 
impact
of
increase in premiums earned and costs incurred
 
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
 
decreased
to
 
$5.9 5
million
 
from $7.6
$11
 
million
for
 
the
three
 
months
ended
 
June September
30,
 
2022 and
 
2021,and
2021, respectively and
 
and decreased slightly
 
to $11.7 $17
million from
 
$12.223 million for
 
for the six
nine months
 
ended June 30,September
 
30, 2022 and
and 2021, respectively.
 
The variances are mainly due to changes
in variable
incentive compensation expenses.
Interest, Fees
 
and Bond Issue Cost
 
Amortization Expense.
 
Interest, fees
 
and other bond amortization
 
expense was
$24.4
26 million and
 
$15.6
16 million
for
 
the three months
 
threeended September
30, 2022
and 2021, respectively.
Interest, fees
and other
bond amortization
expense was
$74 million
and $47
million for
the nine
 
months
 
ended
June September
 
30,
2022
and
2021,
 
respectively.
Interest,
fees
and other bond
amortization expense
was $48.5
million and
$31.1 million for
the six months
ended June 30,
2022
and 2021, respectively.
 
The variances
 
in expenses
 
were primarily
due to the
 
the issuance of $1.0 billion
 
billion of senior notes
notes in
October 2021. Interest
 
Interest expense was
 
was also impacted
 
by the movements
 
in the floating
 
interest rate
 
related to
the
long term
to the long-term subordinated
 
notes, which
is reset
 
quarterly per
the note
 
agreement. The floating
 
floating rate was 5.29%
as of September 30,
 
was 3.80%
as of
June 30, 2022.
 
Income Tax
 
Expense (Benefit).
 
We had
 
income tax benefit
 
benefit of
$24.5 $135 million
 
and $34.7$170 million
 
million for
the three
 
and sixnine
months
ended June
September
 
30,
2022,
respectively.
 
We
had
an
 
income
tax
benefit
of
$28
million
and
income
tax
expense
 
of $115.3 million and
 
$145.6 118
million
for
the
 
three
 
and
 
sixnine
 
months
 
ended
 
JuneSeptember
 
30,
 
2021,
 
respectively.
 
Income
 
tax
expense
is
 
primarily
a
 
function
of
 
the
geographic
 
location
of
 
the
Company’s
 
pre-tax
 
income
and
 
the
statutory
 
tax
rates
 
in
those
 
jurisdictions.
 
The effective
effective tax
 
rate
(“ETR”) is
 
primarily affected
 
by tax-exempttax
-exempt
 
investment income,
 
income,
foreign tax
 
credits and
dividends.
Variations
 
in the
ETR generally
 
result from changes
 
changes in
the relative
 
levels of pre
 
-tax pre-
tax
income,
including
 
the
impact
of
catastrophe
 
losses,
foreign
 
exchange
gains
 
(losses)
and
net
 
gains (losses) on
 
(losses)
on
investments, among jurisdictions with different
 
jurisdictions with
different tax rates.
 
On August 16, 2022, the Inflation Reduction
Act of 2022 (“IRA”) was enacted. We
have evaluated
the tax provisions
of
the
IRA,
the
most
significant
of
which
are
the
corporate
alternative
minimum
tax
and
the
share
repurchase
excise tax and do not expect
the legislation to have a material
impact on our results of operations. As the
IRS issues
additional guidance, we will evaluate any
impact to our consolidated financial statements.
Net Income (Loss).
 
Our
net
loss
 
was $85.7
$542
 
million
and
 
net income
was $465.8$143
 
million,
for
 
the
three
 
months
ended
 
June September
30,
 
2022 and
2021
 
and
2021
respectively.
 
Our
 
net
 
loss
 
was
 
$84.6626
 
million
 
and
 
net
 
income
 
was
 
$585.3442
 
million,
 
for
 
the
 
sixnine
 
months
 
ended
June September
30,
 
2022
and
 
2021
respectively.
 
The
changes
 
were
primarily
 
driven
 
by
the
 
financial component
 
fluctuationscomponent
fluctuations explained above.
 
3637
Ratios.
Our
combined
ratio
 
increased
by
3.7 9.5
 
points to 125.7% for
 
the three months
ended September 30,
2022, compared
to
 
93.8%116.2%
 
for
 
the
 
three
 
months
 
ended
 
JuneSeptember
 
30,
 
2022,2021
 
and
increased
by
0.8
points
to
105.4%
for
the
nine
months ended September
30, 2022 compared
 
to 104.6%
for the nine
months ended September
30, 2021. The loss
90.1%ratio
component increased
by 10.3
points for
 
the three
 
months ended
 
JuneSeptember 30,
 
2021 and2022 over
 
decreased bythe same
 
4.2 pointsperiod
last
 
to 94.1%
for the
six months
ended
June 30, 2022
compared to
98.3% for the
six months
ended June 30,
2021. The loss
ratio component
increased by
4.7 points
for the
three months
ended June
30, 2022
over the
same period
last year
 
mainly due
 
to an
increase of
$30.0 million
in current
year
catastrophe
losses and
 
an increase
 
of $24.6
million in
current
year attritional
losses
due to
the Ukraine/Russia
war.
The loss
ratio
component decreased
by 3.8
points for
the six
months ended
June
30,
2022
over
the
same
period
last
year
mainly
due
to
a
decline
of
$150.0$282
 
million
 
in
 
current
 
year
 
catastrophe
losses,
 
partiallylosses. The
 
offsetloss
 
byratio
 
an increasecomponent
increased by 1.4
 
of $24.6points for
 
the nine months
ended September 30,
2022 over the
same period last
year mainly due
to an
increase of
$131 million
 
in current
 
year catastrophe
 
losses, and
$25 million
in current
year attritional
 
losses
due to
the Ukraine
 
Russia
conflict. conflict incurred in
 
2022. The commission
and brokerage
 
ratio
components
decreased
 
to
20.9%20.1%
 
for
 
the
 
three
 
months
 
ended June
30, 2022 compared
 
to 21.9% for
the three months
ended June 30, 2021
and decreased slightly
to 21.0% for
the six
months
ended
JuneSeptember
 
30,
 
2022
 
compared
 
to
 
21.3%21.0%
 
for
the
six
months
ended
June
30,
2021.
These
changes
were
mainly due
to changes
in the
mix of
business. The
other underwriting
expense ratios
remained the
same at
6.2%
for
 
the
 
three
 
months
 
ended
September 30,
 
June2021 and
 
decreased to
20.7% for
the nine
months ended
September 30,
 
2022 compared
 
andto 21.2%
for the nine months
 
2021,ended September 30, 2021. These
 
respectivelychanges were mainly due
 
andto changes in the mix
 
remainedof business.
The
 
theother
 
sameunderwriting
 
atexpense
 
6.3%ratios
increased
slightly
to
6.1%
from
5.9%
 
for
 
the
 
sixthree
months
ended
September 30, 2022 and
2021, respectively and
remained the same at
6.2%
for the nine months
ended June September
30, 2022 and 2021, respectively.
 
Stockholder's Equity.
 
Stockholder’s equity decreased
 
decreased by $891.6 million
$1.7 billion to
 
$6.15.3 billion at June
 
September 30, 2022
from $7.0 billion
 
billion at December 31,
31,
2021,
 
principally
 
as
 
a
 
result
 
of
 
$797.01.0
 
millionbillion
 
of
 
net
 
unrealized
 
depreciation
 
on
 
investments,
 
net
 
of
 
tax,
 
$84.6626
million of
net loss
 
and $11.8$41 million of
 
of net
foreign currency
 
translation adjustments
 
,adjustments,
 
partially offset by
 
$1.5 million
ofby $2
 
million of
net
benefit
 
plan
obligation
 
adjustments,
 
net
of
 
tax.
The
 
movement
in
 
the
unrealized
 
depreciation on
 
oninvestments
investments was driven
by the change in interest rates
 
rates on the Company’s fixed
 
fixed maturity portfolio.
 
Consolidated Investment
 
Results
 
Net Investment Income.
 
Net
investment
 
income
decreased
 
to $124
 
$176.5million for
 
the three
months
ended September
30, 2022
compared
to
$197 million
 
for
the
 
three
 
months
 
ended
June
30,
2022
compared
to
$248.1 million
for the
three months
ended June September
 
30, 2021. Net
 
Net investment
 
income decreased
 
to $332.6$457
 
million for
for the
 
six
nine months
 
ended
June September
 
30,
2022
 
compared
 
to
$395.9 $593
 
million
for
 
the
six nine
 
months
ended
 
JuneSeptember
30,
 
2021.
 
The
decreases
 
were
 
primarily
 
the
 
result
 
of
 
reductions
 
in
 
income
 
from
 
limited
 
partnerships
 
and
 
other
alternative
 
alternative
investments,
 
partially
 
offset
 
by
 
an
 
increase
 
in
 
income
 
from
 
fixed
 
maturity
 
securities.
 
The
 
limited
partnership
 
partnership
income
primarily
 
reflects
changes
 
in
their
 
reported
 
net
asset
 
values.
As
 
such,
until
 
these
asset
 
values
are
 
are
monetized
 
and
the
 
resultant
 
income
is
 
distributed,
 
they
 
are
subject
 
to
future
 
increases
 
or
decreases
 
in the
 
assetthe
asset value, and the results may be volatile.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
3738
The following table shows the components
 
of net investment income for
 
the periods indicated:
 
Three Months Ended
SixNine Months Ended
JuneSeptember 30,
JuneSeptember 30,
(Dollars in millions)
2022
2021
2022
2021
Fixed maturities
$
115.5129
$
91.983
$
209.9339
$
177.0260
Equity securities
 
4.67
3.44
8.715
6.310
Short-term investments and cash
0.74
0.1-
0.94
0.2-
Other invested assets
Limited partnerships
45.3(25)
126.482
88.863
178.6260
Dividends from preferred shares of affiliate
7.78
7.78
15.523
15.523
Other
 
14.011
25.931
25.837
31.963
Gross investment income before adjustments
187.8132
255.4208
349.6482
409.5617
Funds held interest income (expense)
0.51
2.71
3.35
6.27
Interest income from Parent
1.83
1.22
3.67
2.64
Gross investment income
191.1137
259.3210
356.5494
418.3629
Investment expenses
13.613
11.213
23.937
22.436
Net investment income
$
176.5124
$
248.1197
$
332.6457
$
395.9593
(Some amounts may not reconcile due to rounding.)
The following table shows a comparison
 
of various investment yields
 
for the periods indicated.
Three Months Ended
SixNine Months Ended
JuneSeptember 30,
JuneSeptember 30,
2022
2021
2022
2021
Annualized pre-tax yield on average cash and invested assets
3.6%2.5%
6.1%4.7%
3.5%3.1%
5.0%4.9%
Annualized after-tax yield on average cash and invested assets
2.9%2.0%
4.9%3.7%
2.8%2.5%
4.0%3.9%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
3839
Net Gains (Losses) on Investments.
The following table presents the composition
 
of our net gains (losses) on investments
 
for the periods indicated:
 
Three Months Ended JuneSeptember 30,
SixNine Months Ended JuneSeptember 30,
(Dollars in millions)
2022
2021
Variance
2022
2021
Variance
Realized gains (losses) from dispositions:
Fixed maturity securities available for sale
Gains
$
3.11
$
8.99
$
(5.8)(8)
$
6.37
$
15.224
$
(8.9)(17)
Losses
(13.0)(46)
(4.7)(6)
(8.4)(40)
(21.2)(67)
(7.1)(13)
(14.1)(54)
Total
(10.0)(45)
4.23
(14.1)(48)
(15.0)(60)
8.111
(23.1)(71)
Equity securities, fair value
Gains
4.159
2.63
1.556
7.667
14.918
(7.3)49
Losses
(34.1)(2)
(2.0)(3)
(32.1)1
(45.9)(48)
(8.1)(11)
(37.8)(37)
Total
(30.0)57
0.6-
(30.5)57
(38.3)19
6.86
(45.1)13
Other invested assets
Gains
3.37
4.22
(0.9)5
7.615
5.68
2.07
Losses
(2.8)(1)
(1.5)-
(1.4)(1)
(3.1)(4)
(1.6)(2)
(1.6)(2)
Total
0.56
2.82
(2.3)4
4.511
4.16
0.45
Total net realized gains (losses) from dispositions
Gains
10.568
15.714
(5.2)54
21.590
35.750
(14.2)40
Losses
(50.0)(49)
(8.2)(10)
(41.8)(39)
(70.4)(119)
(16.8)(27)
(53.6)(92)
Total
(39.4)20
7.54
(47.0)16
(48.8)(29)
19.023
(67.8)(52)
Allowances for credit losses:
1.5(12)
(15.1)(7)
16.6(5)
(0.1)(12)
(22.2)(30)
22.118
Gains (losses) from fair value adjustments:
Equity securities, fair value
(185.9)(134)
103.8(4)
(289.7)(130)
(316.7)(451)
141.4137
(458.1)(588)
Other invested assets, fair value
(154.7)(111)
87.5(44)
(242.2)(67)
(239.3)(350)
180.6137
(419.9)(487)
Total
(340.5)(245)
191.4(48)
(531.9)(197)
(555.9)(801)
322.0274
(877.9)(1,075)
Total net gains (losses) on investments
$
(378.5)(237)
$
183.8(51)
$
(562.3)(186)
$
(604.9)(842)
$
318.8267
$
(923.7)(1,109)
(Some amounts may not reconcile due to rounding.)
Net gains
(losses) on investments
 
during the three months ended
 
months ended June
September 30, 2022 primarily relate
 
relate to
net losses from
fair value adjustments
on equity securities of $185.9
million as a result
of equity market declines
during the second
quarter of 2022, net losses
of $154.7 million from fair
value adjustments
on other invested assets
and $39.4 million
of net realized losses from disposition
of investments.
Net gains (losses) on investments
during the six months ended June 30, 2022 primarily
relate to net losses
from
 
fair
value
 
adjustments
 
on
 
equity
 
securities
 
of $316.7
$134
 
million
 
as
 
a
 
result
 
of
equity
 
market
 
declines
 
during
 
the
third quarter
 
firstof 2022,
 
sixnet losses
of $111
million from
fair value
adjustments
on other
invested
assets, $20
million
of
net
realized
gains
from
disposition
of
investments
and
$12
million
of
credit
allowances
on
fixed
maturity
securities.
Net gains
(losses) on investments
during the nine
months ended September
30, 2022 primarily
relate to
net losses
from fair value adjustments
on equity securities of $451 million as a result of equity
market declines during the first
nine months of 2022, net losses of $239.3$350 million from
 
from fair value adjustments
 
on other invested assets,
 
and $48.8$29 million of
of net
realized
losses
from
disposition
 
of investments.
investments
investments
and
$12
million
of
credit
allowances
on
fixed
maturity securities.
Segment Results.
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.
 
The
 
Reinsurance
 
operation
 
writes
 
risks
 
on
 
a
 
worldwide
 
basis
 
in
 
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.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
39
40
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 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.
 
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 JuneSeptember 30,
SixNine Months Ended JuneSeptember 30,
(Dollars in millions)
2022
2021
Variance
% Change
2022
2021
Variance
% Change
Gross written premiums
$
1,394.01,681
$
1,439.31,693
$
(45.3)(12)
-3.1%-0.7%
$
2,773.74,454
$
2,859.34,552
$
(85.7)(98)
-3.0%-2.2%
Net written premiums
1,245.11,506
1,291.21,461
(46.2)45
-3.6%3.0%
2,430.43,936
2,500.03,961
(69.6)(25)
-2.8%-0.6%
Premiums earned
$
1,294.91,398
$
1,232.21,280
$
62.7118
5.1%9.2%
$
2,504.23,902
$
2,409.33,690
$
94.9212
3.9%5.8%
Incurred losses and LAE
875.41,531
739.41,208
136.0323
18.4%26.8%
1,695.93,227
1,709.82,917
(13.9)310
-0.8%10.6%
Commission and brokerage
331.9337
325.0320
6.917
2.1%5.6%
647.2985
615.5935
31.750
5.1%5.3%
Other underwriting expenses
32.533
33.032
(0.5)1
-1.5%3.8%
63.497
69.3101
(5.9)(4)
-8.5%-4.6%
Underwriting gain (loss)
$
55.1(504)
$
134.7(279)
$
(79.6)(225)
-59.1%79.9%
$
97.7(406)
$
14.7(264)
$
82.9(142)
NM53.6%
Point Chg
Point Chg
Loss ratio
67.6%109.5%
60.0%94.3%
7.615.2
67.7%82.7%
71.0%79.1%
(3.3)3.6
Commission and brokerage ratio
25.6%24.1%
26.4%25.0%
(0.8)(0.9)
25.8%25.2%
25.5%25.3%
0.3(0.1)
Other underwriting ratio
2.4%
2.5%
(0.1)
2.5%
2.7%
(0.2)
2.5%
2.9%
(0.4)
Combined ratio
95.7%136.0%
89.1%121.8%
6.614.2
96.1%110.4%
99.4%107.2%
(3.3)3.4
(Some amounts may not reconcile due to rounding.)
(NM, not meaningful)
Premiums.
 
Gross written
 
premiums decreased
 
by 3.1% to0.7%
 
$1.39 to $1.7
billion for
 
the three
 
months ended
 
JuneSeptember 30, 2022
from
$1.44
billion
for
the
three
months
ended
June
30,
2021
2022 primarily
 
due
 
to
 
a
 
decline in
property
pro
rata
business,
partially
offset
by
an increase
 
in
 
propertycasualty
 
pro
 
rata
business.
 
Net written premiums
 
increased by 3.0% to
$1.5 billion for the
three months ended September
30,
2022.
The higher percentage
increases in net
written premiums compared
to gross written
 
premiums were
 
decreasedprimarily due
by
3.6%
to
 
$1.25a
 
billionreduction
 
forin
business
ceded to
 
the
 
threesegregated
 
monthsaccounts
 
endedof Mt.
 
JuneLogan
 
30,Re
 
2022
compared to
$1.29 billion forduring
 
the three
 
and
nine
months
ended September 30,
2022 compared to
the three and nine
months ended September
 
June 30, 2021,
which is consistent
with the change
in gross
written
premiums.
2021. Premiums
 
earned
increased
5.1% by 9.2%
 
to
$1.3
$1.4 billion
 
for
the
three
months
ended
June
30,
2022
compared
to
$1.2 billion
for
the three
 
months ended September
30, 2022 compared
to $1.3 billion
for the
three months
 
ended JuneSeptember 30,
 
30, 2021.
The change
 
in premiums
 
earned relative
 
to
net
written
 
premiums is the
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. Accordingly,period whereas written
 
the increases in
gross written
premiums
from
pro
rata
business
during
the
latter
half
of
2021
contributed
to
the
current
quarter
percentage
increase in net earned premiums.
Gross written premiums
decreased by 3.0% to
$2.8 billion for the six
months ended June 30, 2022 from
$2.9 billion
for
the
six
months
ended
June
30,
2021
primarily
due
to
a
decline
in
property
pro
rata
business.
Net
written are recorded at
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
4041
the initiation
of the
coverage
period. Accordingly,
the increases
in gross
written premiums
from pro
rata
business
during the latter half of 2021 contributed
to the current quarter percentage
increase in net earned premiums.
Gross
written
premiums
decreased
by
2.2% to
$4.5 billion
for
the
nine months
ended September
30,
2022 from
$4.6
billion
for
the
nine
months
ended
September
30,
2021
primarily
due
to
a
decline
in
property
pro
rata
business,
partially offset
by an
increase in
casualty pro
rata business
.
Net written
premiums decreased
 
by 2.8%0.6%
 
to $2.4
$3.9 billion
 
billion for
 
the sixnine
 
months
 
ended JuneSeptember
 
30, 2022
 
compared
 
to $2.5
 
$4.0 billion for
the
 
sixfor
the nine
 
months
 
ended
June
September 30,
 
2021,
which
 
is
consistent
 
with
the
 
change
in
 
gross
written
 
premiums. Premiums
 
Premiums
earned increased
3.9%5.8% to
 
$2.53.9 billion
 
for the
 
sixnine months
 
ended JuneSeptember
 
30, 2022
 
compared to
 
$2.43.7 billion
 
for the
 
sixnine months
months
ended
 
JuneSeptember
 
30,
 
2021.
 
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.
 
Accordingly,
 
the
 
increases
 
in
 
gross
 
written
 
premiums
 
from
 
pro
 
rata
 
business
during the latter half of 2021 contributed
 
to the current quarter percentage
 
increase in net earned premiums.
Incurred Losses and LAE.
 
The following tables present
 
the incurred losses and LAE for
 
the Reinsurance segment
 
for
the periods indicated.
Three Months Ended JuneSeptember 30,
Current
Ratio %/
Prior
Ratio %/
Total
Ratio %/
(Dollars in millions)
Year
Pt Change
Years
Pt Change
Incurred
Pt Change
2022
Attritional
$
812.8800
62.8%57.2%
$
7
0.5%
$
807
57.7%
Catastrophes
722
51.7%
2
0.1%
724
51.8%
Total segment
$
1,522
108.9%
$
9
0.6%
$
1,531
109.5%
2021
Attritional
$
744
58.1%
$
-
0.0%
$
812.8744
62.8%58.1%
Catastrophes
60.0466
4.6%36.4%
2.6(2)
0.2%-0.1%
62.6464
4.8%36.2%
Total segment
$
872.81,209
67.4%94.5%
$
2.6(2)
0.2%-0.1%
$
875.41,208
67.6%
2021
Attritional
$
730.7
59.3%
$
0.5
0.0%
$
731.2
59.3%
Catastrophes
25.0
2.0%
(16.7)
-1.4%
8.3
0.7%
Total segment
$
755.7
61.3%
$
(16.2)
-1.3%
$
739.4
60.0%94.3%
Variance 2022/2021
Attritional
$
82.156
3.5(0.9)
pts
$
(0.5)7
-0.5
pts
$
81.663
3.5(0.4)
pts
Catastrophes
35.0256
2.615.3
pts
19.34
1.60.2
pts
54.3260
4.115.6
pts
Total segment
$
117.1312
6.114.4
pts
$
18.811
1.60.7
pts
$
136.0323
7.615.2
pts
SixNine Months Ended JuneSeptember 30,
Current
Ratio %/
Prior
Ratio %/
Total
Ratio %/
(Dollars in millions)
Year
Pt Change
Years
Pt Change
Incurred
Pt Change
2022
Attritional
$
1,550.42,350
61.9%60.2%
$
0.48
0.0%0.2%
$
1,550.82,358
61.9%60.4%
Catastrophes
135.5857
5.4%22.0%
9.611
0.4%0.3%
145.1868
5.8%22.3%
Total segment
$
1,685.93,207
67.3%82.2%
$
10.019
0.4%0.5%
$
1,695.93,227
67.7%82.7%
2021
Attritional
$
1,472.52,216
61.1%60.1%
$
0.51
0.0%
$
1,472.92,217
61.1%60.1%
Catastrophes
238.0704
9.9%19.1%
(1.2)(3)
0.0%-0.1%
236.8701
9.8%19.0%
Total segment
$
1,710.52,920
71.0%79.1%
$
(0.7)(3)
0.0%-0.1%
$
1,709.82,917
71.0%79.1%
Variance 2022/2021
Attritional
$
77.9134
0.80.1
pts
$
(0.1)7
-0.2
pts
$
77.8141
0.80.3
pts
Catastrophes
(102.5)153
(4.5)2.9
pts
10.814
0.4
pts
(91.7)167
(4.0)3.3
pts
Total segment
$
(24.6)287
(3.7)3.0
pts
$
10.721
0.40.6
pts
$
(13.9)310
(3.3)3.5
pts
(Some amounts may not reconcile due to rounding.)
Incurred
losses
 
increased
by
 
18.4%
26.8% to
 
$875.4
million
for
the
three
months
ended
June
30,
2022,
compared
to
$739.4 million1.5 billion
 
for the
 
three months
 
ended JuneSeptember
 
30, 2022,
compared
to
$1.2 billion for
the three months
ended September 30,
2021.
 
The increase was
 
was primarily
due to
 
an increase of
 
of $82.1
million in
current
year
attritional
losses
and an
increase
of $35.0
million in
current
year
catastrophe
losses.
The
increase in current year
attritional losses
was mainly related
to the impact of the increase
in premiums earned and
$24.6 million
of attritional
losses incurred
due to
the Ukraine
/Russia
war.
The current
year
catastrophe
losses of
$60.0
million
for
the
three
months
ended
June
30,
2022
related
primarily
to
2022
South
Africa
flood
($37.5
million), the
2022
Canada
derecho
($16.0 million)
and the
2022 2
nd
quarter
U.S.
storms
($7.0 million).
The $25.056
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
42
million
 
in
41
current
year
attritional
losses
and
an
increase
of
$256
million
in
current
year
catastrophe
losses.
The
increase in current year attritional
losses was mainly related to the impact
of the increase in premiums earned. The
current year
catastrophe
losses of $722
million for
the three
months ended
September 30,
2022 related
primarily
to
Hurricane
Ian ($670
million),
Typhoon
Nanmadol
($20 million),
Hurricane
Fiona ($20
million) and
the Western
Europe
hailstorms
($9
million).
The
$466
million
 
of
 
current
 
year
 
catastrophe
 
losses
 
for
 
the
 
three
 
months
 
ended
September 30, 2021 related to Hurricane
 
June
30,
2021
related
to
Tropical
Storm
ClaudetteIda ($352 million) and the Victoria AustraliaEuropean floods ($113 million).
 
floods.
Incurred
 
losses
 
decreasedincreased
 
by
 
0.8%
10.6% to
 
$1.70
3.2 billion
 
for
 
the
 
sixnine
 
months
 
ended
 
JuneSeptember
 
30,
 
2022,
 
compared
 
to
$1.71
$2.9 billion for
 
the six
nine months
 
ended JuneSeptember 30,
 
30, 2021.
The decreaseincrease
 
was primarily due
 
primarilyto an increase
 
due toof $153
million
 
ain
 
decline of
$102.5
million in
current
 
year
 
catastrophe
 
losses
 
partially
offset
byand
 
an
 
increase
 
of
 
$77.9134
 
million
 
in
 
current
 
year
 
attritional
 
losses.
The
The increase in current year
 
year attritional losses
 
losses was mainly related
 
to the impact of the increase
 
increase in premiums earned and
$25
 
earned
and $24.6 million
 
of
attritional
 
losses
incurred
 
due
to
the
 
Ukraine/Russia
war.
 
The
current
 
year
catastrophe
 
losses
of $135.5 million
 
of
$857 million for
the sixnine
 
months ended June
 
September 30,
2022 related
 
primarily to
Hurricane Ian
($670 million), the
2022
 
Australia
floods
 
($71.4 74
million),
the
2022
 
South
 
Africa
 
flood
 
($37.538
 
million),
Hurricane
Fiona
($20
million),
Typhoon Nanmadol
($20 million), the 2022 Canada
derecho ($16 million), the
2022 Western
Europe hailstorms
($9
million),
 
the
 
2022
 
Canada
derecho
($16.0
million),
2022
2
nd
2nd
 
quarter
 
U.S.
 
storms
($7.0 7
million),
and
the
2022
 
March
U.S.
storms
 
($3.6 million). The $238.04
 
million).
The
$704
million
of
current
year
 
catastrophe
losses
for
 
the
 
sixnine
 
months
 
ended
 
JuneSeptember
 
30,
 
2021
 
primarily
 
related
 
to
Hurricane Ida ($352 million), the
 
Texas
 
winter storms ($221 million)
 
stormsand
the
European
floods
 
($205.5
113 million),
with
the
remainingthe rest of the losses emanating from Tropical
Storm Claudette, Victoriathe 2021 Australia
 
floods and the 2021Victoria Australia floods.flooding.
Segment
Expenses.
 
Commission
and
 
brokerage
 
expense
increased
 
by 2.1%
 
5.6% to $331.9
$337
 
million
for
 
the
three
 
months
ended
 
JuneSeptember
 
30,
 
2022
 
compared
 
to
 
$325.0320
 
million
 
for
 
the
 
three
 
months
 
ended
 
JuneSeptember
 
30,
 
2021.
Commission and
 
Commission
and
brokerage
 
expense
increased
 
by 5.3%
 
5.1%to $985
 
million for
the nine
months ended
September 30,
2022 compared to
 
$647.2935 million for
the nine months
ended September 30,
2021. The increases
were mainly due
to
changes in the mix of business.
Segment other underwriting
expenses increased
slightly to $33
million for the
three months
ended September 30,
2022
from
$32
 
million
 
for
 
the
 
sixthree
 
months
 
ended
 
JuneSeptember
 
30,
 
20222021.
 
comparedSegment
other
underwriting
expenses
decreased
 
to
$615.597 million
 
for
 
the
six nine
 
months
 
ended June
30, 2021.
The
increases
were
mainly
due
to
changes
in the
mix of
business.
Segment other
underwriting expenses
decreased to
$32.5 million for
the three
months
ended JuneSeptember
 
30, 2022 from
$33.0 million for the three
 
months ended June 30, 2021. Segment
other underwriting expenses decreased
to $63.4
million for
the
six
months
ended June
30,
2022 from
 
$69.3
101 million
 
for
 
the
six nine
 
months
ended September 30, 2021. The decreases were
 
ended
June
30,
2021. The
decreases
were mainly due to the impact of decreases in premiums
earned and changes in the mix of business. earned.
 
Insurance.
The
 
following
 
table
 
presents
 
the
 
underwriting
 
results
 
and
 
ratios
 
for
 
the
 
Insurance
 
segment
 
for
 
the
 
periods
indicated.
 
Three Months Ended JuneSeptember 30,
SixNine Months Ended JuneSeptember 30,
(Dollars in millions)
2022
2021
Variance
% Change
2022
2021
Variance
% Change
Gross written premiums
$
1,042.9905
$
877.8831
$
165.174
18.8%8.9%
$
1,868.22,773
$
1,591.02,422
$
277.2351
17.4%14.5%
Net written premiums
749.6722
637.1608
112.4114
17.6%18.8%
1,360.42,083
1,193.61,802
166.8281
14.0%15.6%
Premiums earned
$
659.3706
$
534.4571
$
124.9135
23.4%23.6%
$
1,278.61,985
$
1,054.11,625
$
224.5360
21.4%22.1%
Incurred losses and LAE
428.5564
356.2445
72.4119
20.3%26.6%
833.81,398
739.91,185
93.8213
12.7%17.9%
Commission and brokerage
76.785
61.969
14.916
24.1%23.4%
146.0231
121.2190
24.941
20.6%21.6%
Other underwriting expenses
87.894
76.977
10.917
14.2%21.5%
174.6269
150.4228
24.241
16.1%17.9%
Underwriting gain (loss)
$
66.2(37)
$
39.4(21)
$
26.8(16)
68.0%79.2%
$
124.287
$
42.622
$
81.665
191.6%NM
Point Chg
Point Chg
Loss ratio
65.0%79.9%
66.7%78.0%
(1.7)1.9
65.2%70.4%
70.2%72.9%
(5.0)(2.5)
Commission and brokerage ratio
11.6%12.1%
11.6%12.1%
-
11.4%11.7%
11.5%11.7%
(0.1)-
Other underwriting ratio
13.3%
14.4%13.6%
(0.9)(0.3)
13.7%13.5%
14.3%14.0%
(0.6)(0.5)
Combined ratio
90.0%105.3%
92.6%103.7%
(2.6)1.6
90.3%95.6%
96.0%98.7%
(5.7)(3.1)
(Some amounts may not reconcile due to rounding.)
(NM, not meaningful)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
4243
Premiums.
Gross written
 
premiums increased
 
by 18.8%8.9%
 
to $1.0$905
 
billionmillion for
 
the three
 
months ended
 
ended JuneSeptember 30,
2022
 
30, 2022
compared
 
to
 
$877.8831
 
million
 
for
 
the
 
three
 
months
 
ended
 
JuneSeptember
 
30,
 
2021.
 
The rise
increase
 
in
 
grossinsurance
written
premiums
 
was
primarilyreflects
 
related
to
increasesgrowth
 
across
 
most
 
lines
 
of
 
business
 
notablydriven
 
specialtyby
 
casualtypositive
 
business,rate
 
professionaland
exposure
increases,
new
liability business,
 
and otherstrong
 
specialty business.renewal
retention.
 
Net
written
 
premiums
increased
 
by 17.6%
18.8%
 
to $749.6
$722
 
million
for
 
the
three months ended June 30, 2022 compared
 
to $637.1 million for the three
months ended June 30, 2021, which is
consistent with
the change in gross
written premiums.
Premiums earned increased
23.4% to $659.3
million for the
three
months
 
ended
 
JuneSeptember
 
30,
 
2022 compared
 
to
 
$534.4
608 million
 
for
 
the
 
three
 
months
 
ended
June September
 
30,
 
2021.
The higher
 
Thepercentage
of net
written premiums
compared to
gross written
premiums was
mainly due
to business
mix. Premiums earned increased
23.6% to $706 million for
the three months ended
September 30, 2022 compared
to $571
million for
the three
months ended
September 30,
2021. 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.
Accordingly,
the
significant
increases
in
gross
written
premiums
during
the
latter
half
of 2021
contributed
to
the
current
quarter
percentage
increase
in
net earned premiums.
Gross
written
premiums
increased
by
17.4% to
$1.9 billion
for
the six
months
ended June
30, 2022
compared
to
$1.6 billion
for
the six
months
ended June
30, 2021.
The rise
in gross
written
premiums
was
primarily related
to
increases
across
most
lines
of
business,
notably
specialty
casualty
business,
professional
liability
business
and
other specialty
business.
Net written
premiums
increased by
14.0% to
$1.4 billion
for the
six months
ended June
30, 2022
compared to
$1.2 billion
for the
six months
ended June
30, 2021,
which is
consistent
with the
change in
gross written
premiums.
Premiums earned increased
21.4% to $1.3
billion for
the six months
ended June 30,
2022
compared to
$1.1 billion
for the
six months
ended June
30, 2021.
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. Accordingly,
 
the significant
 
increases in
 
gross written
 
premiums during
 
the latter
half of 2021 contributed to the current quarter
 
percentage increase in net earned premiums.
Gross
written
premiums
increased
by
14.5%
to
$2.8
billion
for
the
nine
months
ended
September
30,
2022
compared
to
$2.4
billion
for
the
nine
months
ended
September
30,
2021.
The
increase
in
insurance
premiums
reflects
growth
across
most
lines
of
business
driven
by
positive
rate
and
exposure
increases,
new
business,
and
strong
renewal
retention.
Net
written
premiums
increased
by
15.6%
to
$2.1
billion
for
the
nine
months
ended
September 30,
2022 compared
to $1.8 billion
for the
nine months
ended September
30, 2021,
which is consistent
with the change
in gross
written premiums.
Premiums earned
increased 22.1%
to $2.0
billion for
the nine
months
ended September
30, 2022
compared to
$1.6 billion
for the
nine months
ended September
30, 2021.
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.
Accordingly,
the
significant
increases
in
gross
written
premiums
during
the
latter
half
of
2021
contributed
to
the
current
quarter
percentage
increase
in
net
earned premiums.
Incurred Losses
 
and LAE.
 
The following
 
tables present
 
the incurred
 
losses and
 
LAE for
 
the Insurance
 
segment for
the periods indicated.
 
Three Months Ended JuneSeptember 30,
Current
Ratio %/
Prior
Ratio %/
Total
Ratio %/
(Dollars in millions)
Year
Pt Change
Years
Pt Change
Incurred
Pt Change
2022
Attritional
$
423.9461
64.3%65.3%
$
-
0.0%
$
423.9461
64.3%65.3%
Catastrophes
5.0104
0.8%14.7%
(0.3)-
0.0%-0.1%
4.7104
0.7%14.6%
Total segment
$
428.9565
65.0%80.0%
$
(0.3)-
0.0%-0.1%
$
428.5564
65.0%79.9%
2021
Attritional
$
346.0368
64.7%64.4%
$
(1.0)-
-0.2%0.0%
$
345.0368
64.6%64.4%
Catastrophes
10.078
1.9%13.7%
1.1(1)
0.2%-0.1%
11.178
2.1%13.6%
Total segment
$
356.0446
66.6%78.1%
$
0.2(1)
0.0%-0.1%
$
356.2445
66.7%78.0%
Variance 2022/2021
Attritional
$
77.993
(0.4)0.9
pts
$
1.0-
0.2-
pts
$
78.893
(0.3)0.9
pts
Catastrophes
(5.0)26
(1.1)1.0
pts
(1.5)1
(0.2)-
pts
(6.5)26
(1.4)1.0
pts
Total segment
$
72.9119
(1.5)1.9
pts
$
(0.5)1
-
pts
$
72.4119
(1.7)1.9
pts
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
4344
SixNine Months Ended JuneSeptember 30,
Current
Ratio %/
Prior
Ratio %/
Total
Ratio %/
(Dollars in millions)
Year
Pt Change
Years
Pt Change
Incurred
Pt Change
2022
Attritional
$
824.71,285
64.5%64.8%
$
(0.4)-
0.0%
$
824.31,285
64.5%64.8%
Catastrophes
10.0114
0.8%5.7%
(0.6)(1)
0.0%-0.1%
9.4
0.7%
Total segment
$
834.7
65.3%
$
(1.0)
0.0%
$
833.8
65.2%
2021
Attritional
$
682.6
64.8%
$
(2.0)
-0.2%
$
680.6
64.6%
Catastrophes
57.5
5.5%
1.8
0.2%
59.3113
5.6%
Total segment
$
740.11,399
70.2%70.5%
$
(0.2)(1)
0.0%-0.1%
$
739.91,398
70.2%70.4%
2021
Attritional
$
1,051
64.6%
$
(2)
-0.1%
$
1,049
64.5%
Catastrophes
136
8.4%
1
0.1%
137
8.4%
Total segment
$
1,186
73.0%
$
(1)
-0.1%
$
1,185
72.9%
Variance 2022/2021
Attritional
$
142.1
(0.3)
pts
$
1.6234
0.2
pts
$
143.72
(0.1)0.1
pts
$
236
0.3
pts
Catastrophes
(47.5)(22)
(4.7)(2.7)
pts
(2.4)(2)
(0.2)
pts
(49.9)(24)
(4.9)(2.8)
pts
Total segment
$
94.6213
(5.0)(2.5)
pts
$
(0.8)-
-(0.1)
pts
$
93.8213
(5.0)(2.5)
pts
(Some amounts may not reconcile due to rounding.)
Incurred
losses
and
 
LAE
increased
by
 
20.3% to $428.5 million
for the three
months ended June
30, 2022 compared
to $356.2
million for
the three
months ended
June 30,
2021, mainly due
to an
increase of
$77.9 million
in current
year attritional
losses which
is primarily
related to
the impact
of the
increase in
premiums earned,
partially offset
by a decrease of $5.0
million in current year
catastrophe losses.
The $5.0 million of current
year catastrophe
losses
for
the three
months
ended June
30, 2022,
related26.6%
 
to
 
the$564
 
2022 2
nd
quarter
U.S.
storms
($5.0 million)
.
The $10.0
million
of
current
year
catastrophe
losses
 
for
 
the
 
three
 
months
 
ended
 
JuneSeptember
30,
2022
compared
to
$445
million
for
the
three
months
ended
September
 
30,
 
2021,
 
relatedmainly
due
 
to
 
Texasan
 
winter
storms.
Incurred losses and
LAE increased by
12.7% to $833.8 million
for the six
months ended June 30,
2022 compared to
$739.9 million for
the six months
ended June 30,
2021, mainly due
to an increase
 
of $142.1 million
 
$93
million in current year attritional
 
year
attritional losses
which is
primarily related
to the
impact of
the increase
 
in premiums earned
and
 
earned, partiallyan
 
offset byincrease
 
a
decrease of
 
$47.5 26
million
 
in
current
year
catastrophe
losses.
The
$104
million
of
current
year
catastrophe
losses for the
three months ended
September 30, 2022,
related to
Hurricane Ian ($99
million) and Hurricane
Fiona
($5 million).
The $78
million of
current
 
year catastrophe
 
losses. Thelosses for
the three
months
ended September
30, 2021,
related to Hurricane Ida.
Incurred
losses
and
LAE
increased
by
17.9%
to
 
$10.0 1.4
billion
for
the
nine
months
ended
September
30,
2022
compared to $1.2 billion for the
nine months ended September 30, 2021,
mainly due to an increase of $234 million
in
current
year
attritional
losses
which
is
primarily
related
to
the
impact
of
the
increase
in
premiums
earned,
partially
offset
by
a
decrease
of $22
million
in
current
year
catastrophe
losses.
The $114
million
 
of current
 
year
catastrophe
 
losses
for
 
the six
nine
 
months
 
ended June
September
 
30,
2022,
 
related
 
to
 
Hurricane
Ian
($99
million),
Hurricane
Fiona
($5
million),
the
2022
 
2March
U.S.
nd
storms
($5
million) and
the
2022
2nd
 
quarter
 
U.S.
 
storms
 
($5.0 million)
and
the 20225
March
U.S.
storms
($5.0
million).
 
The
 
$57.5136
 
million
 
of
 
current
 
year
 
catastrophe
 
losses
 
for
 
the
 
sixnine
 
months
 
ended
September
30,
2021,
June 30, 2021, related to Hurricane Ida ($78 million) and
the Texas
 
winter storms.storms ($58 million).
Segment
 
Expenses.
 
Commission
and
 
brokerage
 
increased
by
 
24.1% 23.4%
to
 
$76.7 85
million
 
for
 
the
three
 
months
 
ended
JuneSeptember 30,
 
2022 compared
 
to $61.9$69
 
million for
 
the three
 
months
 
ended JuneSeptember
 
30, 2021.
 
Commission and
brokerage
 
brokerage
increased by
 
20.6%21.6% to
 
$146.0231 million
 
for the
 
sixnine months
 
ended JuneSeptember
 
30, 2022
 
compared
 
to $121.2$190
million
 
million for
 
the
sixnine
 
months
 
ended
 
JuneSeptember
 
30,
 
2021.
 
These
 
increases
 
were
 
mainly
 
due
 
to
 
the
 
impact
 
of
 
the
increase
in premiums earned and changes in
 
premiums
earned.the mix of business.
 
Segment
 
other
underwriting
 
expenses
 
increased
 
to
 
$87.8
94 million
 
for
 
the
three
 
months
 
ended
 
JuneSeptember
 
30,
2022
compared
to
 
$76.977 million
 
for the
three months
ended September
30, 2021.
Segment other
underwriting expenses
increased to
$269 million
 
for
 
the
three nine
 
months
 
ended September
 
June
30,
2021.
Segment
other
underwriting
expenses
increased to $174.6
million for the
six months ended
June 30, 2022
 
compared
to $150.4$228
 
million for
the nine
months ended
September 30,
2021. These
increases were
mainly due
to the
 
six months
ended
June
30,
2021.
These
increases
were
mainly
due
to
the
impact
of
 
the
increases
 
in
premiums
earned
and
earned and increased expenses related to
 
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.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
4445
Our
 
current
 
investment
 
strategy
 
seeks
 
to
 
maximize
 
after-tax
 
income
 
through
 
a
 
high
 
quality,
 
diversified,
 
taxable
and tax
 
-preferenced
 
fixed
 
maturity
 
portfolio,
 
while maintaining
 
an adequate
 
level of
 
liquidity.
 
Our mix
 
of taxable
and
 
tax-preferenced
 
investments
 
is
 
adjusted
 
periodically,
 
consistent
 
with
 
our
 
current
 
and
 
projected
 
operating
results,
 
market
 
conditions
 
and
 
our
 
tax
 
position.
 
The
 
fixed
 
maturity
 
securities
 
in
 
the
 
investment
 
portfolio
 
are
comprised of non-trading available
 
for sale securities. Additionally,
 
we have invested
 
in equity securities.
 
The overall
 
investment strategy
 
considers the
 
scope of present
 
and anticipated
 
Company operations.
 
In particular,
estimates of
 
the financial
 
impact resulting
 
from non-investment
 
asset and
 
liability transactions,
 
together with
 
our
capital
 
structure
 
and
 
other
 
factors,
 
are
 
used
 
to
 
develop
 
a
 
net
 
liability
 
analysis.
 
This
 
analysis
 
includes
 
estimated
payout
 
characteristics
 
for which
 
our investments
 
provide liquidity.
 
This analysis
 
is considered
 
in the
 
development
of
 
specific
 
investment
 
strategies
 
for
 
asset
 
allocation,
 
duration
 
and
 
credit
 
quality.
 
The
 
change
 
in
 
overall
 
market
sensitive risk exposure principally reflects
 
the asset changes that took place during the period.
 
Interest
Rate
 
Risk.
 
Our
$18.9
$18.9 billion
 
investment
 
portfolio,
at
 
June
September 30,
 
2022,
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
 
$1.9
 
billion
 
of
 
mortgage-backed
 
securities
 
in
 
the
 
$12.912.1
 
billion
 
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
 
fair
 
value
 
fluctuations
 
and
 
after-tax
 
unrealized
 
appreciation
 
on
our fixed
 
maturity
portfolio
 
(including $230.9 million$454
 
million of
short-term
 
investments)
 
for the
 
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
 
were taken into
 
into account. For
 
For legal entities with
 
with non-U.S. dollar functional
 
functional currency,
 
the
effective
 
duration
 
of the
 
involved
 
portfolio
 
of securities
 
was
 
used as
 
a proxy
 
for
 
the fair
 
value
 
change
 
under the
various interest rate
 
change scenarios.
 
Impact of Interest Rate Shift in Basis Points
At JuneSeptember 30, 2022
(Dollars in millions)
-200
-100
0
100
200
Total Fair Value
$
13,937.114,925
$
13,556.414,568
$
13,175.714,210
$
12,795.013,853
$
12,414.413,495
Fair Value Change from Base (%)
5.8%5.0%
2.9%2.5%
0.0%
-2.9%-2.5%
-5.8%-5.0%
Change in Unrealized Appreciation
After-tax from Base ($)
$
601.5565
$
300.7282
$
-
$
(300.7)(282)
$
(601.5)(565)
We had
$13.7 $14.8 billion and $13.1 billion
 
and $13.1
billion of
gross reserves
for losses
 
and LAE as of September 30, 2022 and December
31,
 
as of2021,
 
June 30,
2022 and
December 31,
2021, respectively.
 
These
amounts
 
are
recorded
 
at
their
nominal
 
value,
as
 
opposed
to
present
 
value, which
 
wouldwhich
would reflect a
 
a discount
 
adjustment to
 
to reflect the
 
the time value
 
value of
money.
 
Since losses
 
are paid
 
out over
 
a period
 
of time,
time, the
 
present
 
value
of
 
the
reserves
 
is
less
 
than
the
 
nominal
value.
 
As
interest
 
rates
 
rise,
the
 
present
 
value
of
the
the reserves
 
decreases
 
and,
 
conversely,
 
as
interest
 
rates
 
decline,
the
 
present
 
value
 
increases.
 
These movements
are
 
arethe
the opposite
 
of
the
 
interest
 
rate
 
impacts
on
 
the
fair
 
value
of
 
investments.
 
While
the
 
difference
 
between present
present
value
 
and
nominal
 
value
 
is
not
 
reflected
 
in
our
 
financial
 
statements,
 
our
financial
 
results
 
will include
 
investmentinclude
investment
income
 
over
 
time
 
from
 
the
 
investment
 
portfolio
 
until
 
the
 
claims
 
are
 
paid.
 
Our
 
loss
 
and
 
loss
 
reserve
obligations
obligations have an expected duration
 
duration that is reasonably consistent
 
with our fixed income portfolio.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
4546
Equity Risk.
 
Equity risk
 
is the potential
 
change in fair
 
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
 
value
 
and after-taxafter
-tax
 
change
 
in fair
 
value
 
of a
 
10% and
 
20% change
 
in
equity prices up and down for the periods indicated.
 
Impact of Percentage Change in Equity Fair Value
At JuneSeptember 30, 2022
(Dollars in millions)
-20%
-10%
0%
10%
20%
Fair Value of the Equity Portfolio
$
999.41,007
$
1,124.41,132
$
1,249.31,258
$
1,374.21,384
$
1,499.21,510
After-tax Change in Fair Value
(197.4)(199)
(98.7)(99)
-
98.799
197.4199
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 fair
 
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 statement
sstatements
 
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
 
events or
otherwise.
 
ITEM 3.
 
QUANTITATIVE
 
AND QUALITATIVE
 
DISCLOSURES ABOUT MARKET RISK
Market Risk Instruments.
 
See “Market Sensitive Instruments”
 
in PART I – ITEM 2.
 
4647
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
 
under the Securities
 
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
 
for unpaid loss and loss adjustment expenses.
 
Aside from litigation and arbitrations
 
related to these insurance and
 
reinsurance agreements,
 
the Company is not a
party to any other material litigation
 
or arbitration.
 
ITEM 1A.
 
RISK FACTORS
No material changes.
ITEM 2.
 
UNREGISTERED SALES OF EQUITY SECURITIES
 
SECURITIES AND USE OF PROCEEDS
 
None.
ITEM 3.
 
DEFAULTS
 
UPON SENIOR SECURITIES
None.
ITEM 4.
 
MINE SAFETY DISCLOSURES
Not applicable.
 
 
4748
ITEM 5.
 
OTHER INFORMATION
None.
 
ITEM 6.
 
EXHIBITS
 
Exhibit Index:
Exhibit No.
Description
31.1
C. Andrade
31.2
Kociancic
32.1
Kociancic
101.INS
XBRL Instance Document
101.SCH
XBRL Taxonomy
 
Extension Schema
101.CAL
XBRL Taxonomy
 
Extension Calculation Linkbase
101.DEF
XBRL Taxonomy
 
Extension Definition Linkbase
101.LAB
XBRL Taxonomy
 
Extension Labels Linkbase
101.PRE
XBRL Taxonomy
 
Extension Presentation Linkbase
104
Cover Page Interactive
 
Data File (embedded within the Inline XBRL document)
 
4849
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:
 
August 11,November 10, 2022