SEC Info - Everest Re Group Ltd - ‘10-K’ for 12/31/19

Amortized

Unrealized

Market

OTTI in AOCI

(Dollars in thousands)

Cost

Appreciation

Depreciation

Value

(a)

Fixed maturity securities

U.S. Treasury securities and obligations of

U.S. government agencies and corporations

i 1,489,660

i 28,357

( i 2,214)

i 1,515,803

Obligations of U.S. states and political subdivisions

i 507,353

i 29,651

( i 89)

i 536,915

Corporate securities

i 6,227,661

i 185,052

( i 37,767)

i 6,374,946

i 469

Asset-backed securities

i 892,373

i 6,818

( i 1,858)

i 897,333

Mortgage-backed securities

Commercial

i 814,570

i 31,236

( i 1,249)

i 844,557

Agency residential

i 2,173,099

i 36,361

( i 10,879)

i 2,198,581

Non-agency residential

i 5,723

( i 20)

i 5,703

Foreign government securities

i 1,492,315

i 47,148

( i 33,513)

i 1,505,950

i 71

Foreign corporate securities

i 2,870,737

i 107,999

( i 33,580)

i 2,945,156

i 447

Total fixed maturity securities

i i 16,473,491 /

i i 472,622 /

( i i 121,169 / )

i 16,824,944

i i 987 /

Amortized

Unrealized

Market

OTTI in AOCI

(Dollars in thousands)

Cost

Appreciation

Depreciation

Value

(a)

Fixed maturity securities

U.S. Treasury securities and obligations of

U.S. government agencies and corporations

i 2,629,454

i 16,781

( i 15,101)

i 2,631,134

Obligations of U.S. states and political subdivisions

i 490,018

i 12,915

( i 2,839)

i 500,094

i 439

Corporate securities

i 5,538,582

i 48,465

( i 141,515)

i 5,445,532

i 1,688

Asset-backed securities

i 545,427

i 162

( i 5,492)

i 540,097

Mortgage-backed securities

Commercial

i 329,883

i 2,167

( i 5,340)

i 326,710

Agency residential

i 1,832,760

i 7,325

( i 43,821)

i 1,796,264

Non-agency residential

i 10,198

i 37

( i 26)

i 10,209

Foreign government securities

i 1,335,328

i 34,743

( i 55,906)

i 1,314,165

i 98

Foreign corporate securities

i 2,694,922

i 63,994

( i 97,858)

i 2,661,058

i 320

Total fixed maturity securities

i 15,406,572

i 186,589

( i 367,898)

i 15,225,263

i 2,545

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

F-18

The amortized cost and market value of fixed maturity securities are shown in the following table 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 December 31, 2019				At December 31, 2018
	Amortized		Market		Amortized		Market
(Dollars in thousands)	Cost		Value		Cost		Value
Fixed maturity securities – available for sale:
Due in one year or less	$	i 1,456,960	$	i 1,457,919	$	i 1,328,571	$	i 1,330,534
Due after one year through five years		i 6,757,107		i 6,869,359		i 8,114,247		i 8,016,490
Due after five years through ten years		i 3,471,370		i 3,609,816		i 2,455,911		i 2,413,846
Due after ten years		i 902,289		i 941,676		i 789,575		i 791,113
Asset-backed securities		i 892,373		i 897,333		i 545,427		i 540,097
Mortgage-backed securities:
Commercial		i 814,570		i 844,557		i 329,883		i 326,710
Agency residential		i 2,173,099		i 2,198,581		i 1,832,760		i 1,796,264
Non-agency residential		i 5,723		i 5,703		i 10,198		i 10,209
Total fixed maturity securities	$	i 16,473,491	$	i 16,824,944	$	i 15,406,572	$	i 15,225,263

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


	Years Ended December 31,
(Dollars in thousands)	2019		2018
Increase (decrease) during the period between the market value and cost
of investments carried at market value, and deferred taxes thereon:
Fixed maturity securities	$	i 534,410	$	( i 247,497)
Fixed maturity securities, other-than-temporary impairment		( i 1,559)		( i 1,071)
Change in unrealized appreciation (depreciation), pre-tax		i 532,851		( i 248,568)
Deferred tax benefit (expense)		( i 49,149)		i 20,543
Deferred tax benefit (expense), other-than-temporary impairment		i 115		( i 135)
Change in unrealized appreciation (depreciation),
net of deferred taxes, included in shareholders’ equity	$	i 483,817	$	( i 228,160)

The Company frequently reviews all of its fixed maturity, available for sale securities for declines in market value and focuses its attention on securities whose fair value has fallen below i 80% of their amortized cost at the time of review. The Company then assesses whether the decline in value is temporary or other-than-temporary. In making its assessment, the Company evaluates the current market and interest rate environment as well as specific issuer information. Generally, a change in a security’s value caused by a change in the market, interest rate or foreign exchange environment does not constitute an other-than-temporary impairment, but rather a temporary decline in market value. Temporary declines in market value are recorded as unrealized losses in accumulated other comprehensive income (loss). If the Company determines that the decline is other-than-temporary and the Company does not have the intent to sell the security; and it is more likely than not that the Company will not have to sell the security before recovery of its cost basis, the carrying value of the investment is written down to fair value. The fair value adjustment that is credit or foreign exchange related is recorded in net realized capital gains (losses) in the Company’s consolidated statements of operations and comprehensive income (loss). The fair value adjustment that is non-credit related is recorded as a component of other comprehensive income (loss), net of tax, and is included in accumulated other comprehensive income (loss) in the Company’s consolidated balance sheets.

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

F-19

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

The tables below display the aggregate market value and gross unrealized depreciation of fixed maturity and equity securities, by security type and contractual maturity, in each case subdivided according to length of time that individual securities had been in a continuous unrealized loss position for the periods indicated:

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

Less than 12 months

Greater than 12 months

Total

Gross

Unrealized

(Dollars in thousands)

Market Value

Depreciation

Market Value

Depreciation

Market Value

Depreciation

Fixed maturity securities - available for sale

U.S. Treasury securities and obligations of

U.S. government agencies and corporations

i 85,527

( i 1,005)

i 249,371

( i 1,209)

i 334,898

( i 2,214)

Obligations of U.S. states and political subdivisions

i 4,600

( i 38)

i 5,522

( i 51)

i 10,122

( i 89)

Corporate securities

i 547,120

( i 9,877)

i 395,369

( i 27,890)

i 942,489

( i 37,767)

Asset-backed securities

i 176,222

( i 1,027)

i 94,190

( i 831)

i 270,412

( i 1,858)

Mortgage-backed securities

Commercial

i 83,127

( i 689)

i 23,063

( i 560)

i 106,190

( i 1,249)

Agency residential

i 344,267

( i 1,834)

i 488,680

( i 9,045)

i 832,947

( i 10,879)

Non-agency residential

i 332

i 3,976

( i 20)

i 4,308

( i 20)

Foreign government securities

i 210,766

( i 4,770)

i 283,648

( i 28,743)

i 494,414

( i 33,513)

Foreign corporate securities

i 278,403

( i 7,553)

i 365,808

( i 26,027)

i 644,211

( i 33,580)

Total fixed maturity securities

i 1,730,364

( i 26,793)

i 1,909,627

( i 94,376)

i 3,639,991

( i 121,169)

Duration of Unrealized Loss at December 31, 2019 By Maturity

Less than 12 months

Greater than 12 months

Total

Gross

Unrealized

(Dollars in thousands)

Market Value

Depreciation

Market Value

Depreciation

Market Value

Depreciation

Fixed maturity securities

Due in one year or less

i 67,879

( i 1,237)

i 416,583

( i 23,004)

i 484,462

( i 24,241)

Due in one year through five years

i 464,753

( i 7,960)

i 689,195

( i 38,138)

i 1,153,948

( i 46,098)

Due in five years through ten years

i 495,741

( i 12,388)

i 103,612

( i 11,100)

i 599,353

( i 23,488)

Due after ten years

i 98,043

( i 1,658)

i 90,328

( i 11,678)

i 188,371

( i 13,336)

Asset-backed securities

i 176,222

( i 1,027)

i 94,190

( i 831)

i 270,412

( i 1,858)

Mortgage-backed securities

i 427,726

( i 2,523)

i 515,719

( i 9,625)

i 943,445

( i 12,148)

Total fixed maturity securities

i 1,730,364

( i 26,793)

i 1,909,627

( i 94,376)

i 3,639,991

( i 121,169)

F-20

The aggregate market value and gross unrealized losses related to investments in an unrealized loss position at December 31, 2019 were $ i 3,639,991 thousand and $ i 121,169 thousand, respectively. The market value of securities for the single issuer whose securities comprised the largest unrealized loss position at December 31, 2019, did not exceed i 0.8% of the overall market value of the Company’s fixed maturity securities. In addition, as indicated on the above table, there was no significant concentration of unrealized losses in any one market sector. The $ i 26,793 thousand of unrealized losses related to fixed maturity securities that have been in an unrealized loss position for less than one year were generally comprised of domestic and foreign corporate securities and foreign government securities. Of these unrealized losses, $ i 23,104 thousand were related to securities that were rated investment grade by at least one nationally recognized statistical rating agency. The $ i 94,376 thousand of unrealized losses related to fixed maturity securities in an unrealized loss position for more than one year related primarily to foreign and domestic corporate securities, foreign government securities and agency residential mortgage-backed securities. Of these unrealized losses, $ i 73,144 thousand were related to securities that were rated investment grade by at least one nationally recognized statistical rating agency. There was no gross unrealized depreciation for mortgage-backed securities related to sub-prime and alt-A loans. In all instances, there were no projected cash flow shortfalls to recover the full book value of the investments and the related interest obligations. The mortgage-backed securities still have excess credit coverage and are current on interest and principal payments.

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

Duration of Unrealized Loss at December 31, 2018 By Security Type

Less than 12 months

Greater than 12 months

Total

Gross

Unrealized

(Dollars in thousands)

Market Value

Depreciation

Market Value

Depreciation

Market Value

Depreciation

Fixed maturity securities - available for sale

U.S. Treasury securities and obligations of

U.S. government agencies and corporations

i 76,226

( i 158)

i 777,409

( i 14,943)

i 853,635

( i 15,101)

Obligations of U.S. states and political subdivisions

i 71,559

( i 1,444)

i 38,105

( i 1,395)

i 109,664

( i 2,839)

Corporate securities

i 2,513,463

( i 69,619)

i 1,683,729

( i 71,896)

i 4,197,192

( i 141,515)

Asset-backed securities

i 230,285

( i 2,746)

i 245,300

( i 2,746)

i 475,585

( i 5,492)

Mortgage-backed securities

Commercial

i 71,167

( i 1,128)

i 154,201

( i 4,212)

i 225,368

( i 5,340)

Agency residential

i 156,930

( i 975)

i 1,373,629

( i 42,846)

i 1,530,559

( i 43,821)

Non-agency residential

i 10,174

( i 26)

i 10,174

( i 26)

Foreign government securities

i 196,303

( i 9,719)

i 494,156

( i 46,187)

i 690,459

( i 55,906)

Foreign corporate securities

i 939,808

( i 35,023)

i 782,405

( i 62,835)

i 1,722,213

( i 97,858)

Total fixed maturity securities

i 4,265,915

( i 120,838)

i 5,548,934

( i 247,060)

i 9,814,849

( i 367,898)

F-21

Duration of Unrealized Loss at December 31, 2018 By Maturity

Less than 12 months

Greater than 12 months

Total

Gross

Unrealized

(Dollars in thousands)

Market Value

Depreciation

Market Value

Depreciation

Market Value

Depreciation

Fixed maturity securities

Due in one year or less

i 454,239

( i 2,558)

i 427,513

( i 20,675)

i 881,752

( i 23,233)

Due in one year through five years

i 2,014,704

( i 45,148)

i 2,764,981

( i 129,940)

i 4,779,685

( i 175,088)

Due in five years through ten years

i 1,082,568

( i 51,300)

i 492,216

( i 34,210)

i 1,574,784

( i 85,510)

Due after ten years

i 245,848

( i 16,957)

i 91,094

( i 12,431)

i 336,942

( i 29,388)

Asset-backed securities

i 230,285

( i 2,746)

i 245,300

( i 2,746)

i 475,585

( i 5,492)

Mortgage-backed securities

i 238,271

( i 2,129)

i 1,527,830

( i 47,058)

i 1,766,101

( i 49,187)

Total fixed maturity securities

i 4,265,915

( i 120,838)

i 5,548,934

( i 247,060)

i 9,814,849

( i 367,898)

The aggregate market value and gross unrealized losses related to investments in an unrealized loss position at December 31, 2018 were $ i 9,814,849 thousand and $ i 367,898 thousand, respectively. The market value of securities for the single issuer (the United States government) whose securities comprised the largest unrealized loss position at December 31, 2018, did not exceed i 5.7% of the overall market value of the Company’s fixed maturity securities. The market value of the securities for the issuer with the second largest unrealized loss comprised less than i 1.0% of the Company’s fixed maturity securities. In addition, as indicated on the above table, there was no significant concentration of unrealized losses in any one market sector. The $ i 120,838 thousand of unrealized losses related to fixed maturity securities that have been in an unrealized loss position for less than one year were generally comprised of domestic and foreign corporate securities, foreign government securities and asset-backed securities. Of these unrealized losses, $ i 74,729 thousand were related to securities that were rated investment grade by at least one nationally recognized statistical rating agency. The $ i 247,060 thousand of unrealized losses related to fixed maturity securities in an unrealized loss position for more than one year related primarily to domestic and foreign corporate securities, foreign government securities, agency residential mortgage-backed securities and U.S. government agencies and corporations. Of these unrealized losses, $ i 230,560 thousand were related to securities that were rated investment grade by at least one nationally recognized statistical rating agency. There was no gross unrealized depreciation for mortgage-backed securities related to sub-prime and alt-A loans. In all instances, there were no projected cash flow shortfalls to recover the full book value of the investments and the related interest obligations. The mortgage-backed securities still have excess credit coverage and are current on interest and principal payments.

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

	Years Ended December 31,
(Dollars in thousands)	2019		2018			2017
Fixed maturities	$	i 520,291	$	i 465,793	$	i 427,379
Equity securities		i 19,505		i 25,327		i 34,523
Short-term investments and cash		i 17,619		i 14,395		i 4,177
Other invested assets
Limited partnerships		i 105,815		i 93,327		i 83,569
Other		i 14,117		i 16,960		i 10,125
Gross investment income before adjustments		i 677,347		i 615,802		i 559,773
Funds held interest income (expense)		i 13,271		i 6,300		i 11,874
Future policy benefit reserve income (expense)		( i 1,380)		( i 1,419)		( i 1,282)
Gross investment income		i 689,238		i 620,683		i 570,365
Investment expenses		( i 42,099)		( i 39,500)		( i 27,467)
Net investment income	$	i 647,139	$	i 581,183	$	i 542,898

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

F-22

The Company had contractual commitments to invest up to an additional $ i 1,016,811 thousand in limited partnerships and private placement loans at December 31, 2019. These commitments will be funded when called in accordance with the partnership and loan agreements, which have investment periods that expire, unless extended, through 2026.

Beginning in 2016, the Company participated 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. Through the second quarter of 2018, the Company’s participation in the facility was classified within other invested assets on the Company’s Balance Sheets.

Starting in the third quarter of 2018, the Company consolidated its participation in the facility. As a result of the consolidation of the underlying investments of the facility, effective July 1, 2018, the Company reclassified $ i 143,656 thousand from other invested assets to fixed maturity securities, available for sale, at market value and reclassified $ i 243,864 thousand from other invested assets to short-term investments. As of December 31, 2019, the market value of investments in the facility consolidated within the Company’s balance sheets was $ i 308,711 thousand.

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

	Years Ended December 31,
(Dollars in thousands)	2019			2018	2017
Fixed maturity securities, market value:
Other-than-temporary impairments	$	( i 20,899)	$	( i 8,110)	$	( i 7,093)
Gains (losses) from sales		i 28,025		( i 21,719)		i 17,714
Fixed maturity securities, fair value:
Gains (losses) from sales		i 355		( i 1,799)		-
Gains (losses) from fair value adjustments		i 1,808		i 1,506		-
Equity securities, market value:
Gains (losses) from sales		-		-		( i 3,424)
Equity securities, fair value:
Gains (losses) from sales		i 4,148		( i 29,941)		i 6,969
Gains (losses) from fair value adjustments		i 165,200		( i 68,832)		i 138,973
Other invested assets		i 6,003		i 1,815		i 61
Short-term investments gain (loss)		i 364		( i 56)		( i 6)
Total net realized capital gains (losses)	$	i 185,004	$	( i 127,136)	$	i 153,194

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

F-23

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

	Years Ended December 31,
(Dollars in thousands)	2019		2018		2017
Proceeds from sales of fixed maturity securities	$	i 3,283,154	$	i 3,150,179	$	i 2,401,844
Gross gains from sales		i 63,721		i 33,996		i 58,589
Gross losses from sales		( i 35,341)		( i 57,514)		( i 40,875)

Proceeds from sales of equity securities	$	i 283,965	$	i 1,199,409	$	i 651,433
Gross gains from sales		i 14,274		i 31,718		i 24,809
Gross losses from sales		( i 10,126)		( i 61,659)		( i 21,264)

Securities with a carrying value amount of $ i 1,549,145 thousand at December 31, 2019 were on deposit with various state or governmental insurance departments in compliance with insurance laws.

3. RESERVE FOR LOSSES, LAE AND FUTURE POLICY BENEFIT RESERVE

Reserves for losses and LAE.

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

	Years Ended December 31,
(Dollars in thousands)	2019		2018		2017
Gross reserves beginning of period	$	i 13,119,090	$	i 11,884,321		i 10,312,313
Less reinsurance recoverables		( i 1,619,641)		( i 1,212,649)		( i 990,862)
Net reserves beginning of period		i 11,499,449		i 10,671,672		i 9,321,451

Incurred related to:
Current year		i 4,986,456		i 5,264,327		i 4,815,967
Prior years		( i 63,558)		i 387,076		( i 293,386)
Total incurred losses and LAE		i 4,922,898		i 5,651,403		i 4,522,581

Paid related to:
Current year		i 2,042,246		i 1,700,765		i 1,280,605
Prior years		i 2,460,825		i 3,011,175		i 2,062,634
Total paid losses and LAE		i 4,503,071		i 4,711,940		i 3,343,239

Foreign exchange/translation adjustment		i 51,325		( i 111,686)		i 170,879

Net reserves end of period		i 11,970,601		i 11,499,449		i 10,671,672
Plus reinsurance recoverables		i 1,640,712		i 1,619,641		i 1,212,649
Gross reserves end of period	$	i 13,611,313	$	i 13,119,090		i 11,884,321

(Some amounts may not reconcile due to rounding.)

Current year incurred losses were $ i 4,986,456 thousand, $ i 5,264,327 thousand and $ i 4,815,967 thousand at December 31, 2019, 2018 and 2017, respectively. The decrease in current year incurred losses from 2018 to 2019 was primarily due to $ i 693,458 thousand of lower catastrophe losses in 2019 compared to 2018, partially offset by $ i 415,585 thousand of additional attritional losses related to higher premiums earned in 2019 compared to 2018.

Incurred prior years losses decreased by $ i 63,558 thousand in 2019, increased by $ i 387,076 thousand in 2018 and decreased by $293,386 thousand in 2017. The decrease for 2019 primarily related to reserve reductions associated short-tail lines of business and worker’s compensation.

The increase for 2018 was mainly due to $ i 561,197 thousand of adverse development on prior years catastrophe losses, primarily related to Hurricanes Harvey, Irma and Maria, as well as the 2017 California wildfires. The

F-24

increase in loss estimates for Hurricanes Harvey, Irma and Maria was mostly driven by re-opened claims, loss inflation from higher than expected loss adjustment expenses and in particular, their impact on aggregate covers. This reserve increase was partially offset by $ i 174,121 thousand of favorable development on prior years attritional losses which mainly related to U.S. and international property and casualty reinsurance business, as well as favorable development in the Insurance segment which largely related to workers’ compensation business.

The decrease for 2017 was attributable to favorable development in the reinsurance segments of $ i 238,378 thousand, related primarily to property and short-tail business in the U.S. and Bermuda as well as favorable development on prior year catastrophe losses, partially offset by $ i 37,137 thousand of adverse development on A&E reserves. The insurance segment also experienced favorable development on prior year reserves of $ i 55,007 thousand mainly on its workers compensation business, which is largely written in California.

The following is information about incurred and paid claims development as of December 31, 2019, net of reinsurance, as well as cumulative claim frequency and the total of incurred but not reported liabilities (IBNR) plus expected development on reported claims included within the net incurred claims amounts. Each of the Company’s financial reporting segments has been disaggregated into casualty and property business. The casualty and property segregation results in groups that have homogeneous loss development characteristics and are large enough to represent credible trends. Generally, casualty claims take longer to be reported and settled, resulting in longer payout patterns and increased volatility. Property claims on the other hand, tend to be reported and settled quicker and therefore tend to exhibit less volatility. The property business is more exposed to catastrophe losses, which can result in year over year fluctuations in incurred claims depending on the frequency and severity of catastrophes claims in any one accident year.

The information about incurred and paid claims development for the years ended December 31, 2012 to December 31, 2018 is presented as supplementary information.

These tables present eight years of incurred and paid claims development as it is impracticable to retrospectively create the tables for ten years. For the reinsurance groups, for the years prior to 2012, the total of IBNR plus expected development on reported claims was not prepared on an accident year basis. The Company calculated these IBNR amounts in the aggregate for each business unit in total as of prior year end points in time. While business written in the United States would have been allocated to accident year for regulatory reporting purposes, business written outside of the United States would not have been similarly allocated. Attempting to allocate the non-U.S. business IBNR reserves to accident year currently for older year end valuations would require making assumptions and estimates which may not be in line with assumptions that would have been made at the time. A similar situation applies to insurance where the accumulation of the business lines reported in the regulatory filings are not consistent with the breakout of the tables presented below. As a result of not being able to present the information prior to 2012, prospectively an additional year will be added to the tables each reporting year until a ten year table is presented.

The Cumulative Number of Reported Claims is shown only for Insurance Casualty as it is impracticable to provide the information for the remaining groups. The reinsurance groups each include pro rata contracts for which ceding companies provide only summary information via a bordereau. This summary information does not include the number of reported claims underlying the paid and reported losses. Therefore, it is not possible to provide this information. The Insurance Property group includes Accident & Health insurance business. This business is written via a master contract and individual claim counts are not provided. This business represents a significant enough portion of the business in the Insurance Property group so that including the number of reported claims for the remaining business would distort any analytics performed on the group.

The Cumulative Number of Reported Claims shown for the Insurance Casualty is determined by claim and line of business. For example, a claim event with three claimants in the same line of business is a single claim. However, a claim event with a single claimant that spans two lines of business contributes two claims.

F-25

The following tables present the ultimate loss and ALAE and the paid loss and ALAE, net of reinsurance for casualty and property, as well as the average annual percentage payout of incurred claims by age, net of reinsurance for each of our disclosed lines of business.

F-26

U.S. Reinsurance – Casualty Business

Total of

IBNR Liabilites

Incurred Claims and Allocated Claim Adjustment Expenses, Net of reinsurance

Plus Expected

Years Ended December 31,

Development

Cumulative

2012

2013

2014

2015

2016

2017

2018

2019

on Reported

Number of

Accident Year

(unaudited)

Claims

Reported Claims

(Dollars in thousands)

2012

i 401,018

i 395,794

i 329,084

i 325,134

i 321,099

i 320,958

i 324,139

i 312,483

i 1,539

N/A

2013

i 310,935

i 388,323

i 385,643

i 388,287

i 372,409

i 362,781

i 355,118

i 3,851

N/A

2014

i 367,492

i 383,657

i 392,379

i 375,404

i 357,608

i 351,033

i 2,232

N/A

2015

i 326,346

i 354,265

i 352,983

i 350,790

i 337,332

i 10,184

N/A

2016

i 330,362

i 354,822

i 355,804

i 343,004

i 56,353

N/A

2017

i 346,836

i 347,147

i 342,896

i 105,550

N/A

2018

i 484,218

i 472,532

i 259,800

N/A

2019

i 767,529

i 488,182

N/A

i 3,281,926

(Some amounts may not reconcile due to rounding.)

Cumulative Paid Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance

Years Ended December 31,

2012

2013

2014

2015

2016

2017

2018

2019

Accident Year

(unaudited)

(Dollars in thousands)

2012

i 9,986

i 38,496

i 82,995

i 143,510

i 187,286

i 218,653

i 272,046

i 286,409

2013

i 14,842

i 48,929

i 108,801

i 170,868

i 211,273

i 285,756

i 310,168

2014

i 18,809

i 54,255

i 110,249

i 164,552

i 254,077

i 294,533

2015

i 19,902

i 53,621

i 107,458

i 206,397

i 257,511

2016

i 18,927

i 58,310

i 137,219

i 193,804

2017

i 25,800

i 73,023

i 142,335

2018

i 63,140

i 104,690

2019

i 103,453

i 1,692,901

All outstanding liabilities prior to 2012, net of reinsurance

i 607,385

Liabilities for claims and claim adjustment expenses, net of reinsurance

i 2,196,410

(Some amounts may not reconcile due to rounding.)

	Average Annual Percentage Payout of Incurred Claims by Age, Net of Reinsurance (unaudited)
Years	1		2		3		4		5		6		7		8
Casualty	i 8.4	%	i 10.3	%	i 17.7	%	i 19.6	%	i 16.6	%	i 14.4	%	i 11.7	%	i 4.6	%

U.S. Reinsurance – Property Business

Total of

IBNR Liabilites

Incurred Claims and Allocated Claim Adjustment Expenses, Net of reinsurance

Plus Expected

Years Ended December 31,

Development

Cumulative

2012

2013

2014

2015

2016

2017

2018

2019

on Reported

Number of

Accident Year

(unaudited)

Claims

Reported Claims

(Dollars in thousands)

2012

i 937,720

i 723,851

i 723,151

i 715,961

i 713,237

i 706,782

i 692,079

i 694,576

i 1,112

N/A

2013

i 622,108

i 405,338

i 352,687

i 314,637

i 310,942

i 308,557

i 310,199

i 1,099

N/A

2014

i 603,258

i 516,189

i 437,409

i 402,129

i 396,641

i 397,683

i 2,674

N/A

2015

i 673,913

i 534,178

i 476,348

i 451,694

i 456,195

i 5,655

N/A

2016

i 972,881

i 816,765

i 797,339

i 788,551

i 10,293

N/A

2017

i 1,564,165

i 2,117,747

i 2,231,384

i 16,538

N/A

2018

i 1,728,705

i 1,572,138

i 88,063

N/A

2019

i 970,831

i 329,576

N/A

i 7,421,556

(Some amounts may not reconcile due to rounding.)

F-27

Cumulative Paid Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance

Years Ended December 31,

2012

2013

2014

2015

2016

2017

2018

2019

Accident Year

(unaudited)

(Dollars in thousands)

2012

i 242,315

i 402,305

i 520,244

i 598,289

i 621,013

i 646,572

i 651,550

i 666,768

2013

i 234,464

i 250,850

i 269,014

i 289,130

i 296,074

i 300,708

i 302,756

2014

i 189,598

i 289,430

i 338,030

i 362,825

i 373,060

i 375,988

2015

i 225,655

i 320,310

i 378,235

i 405,614

i 419,757

2016

i 291,462

i 582,985

i 681,502

i 735,678

2017

i 545,551

i 1,422,328

i 1,744,822

2018

i 409,225

i 1,064,431

2019

i 568,556

i 5,878,758

All outstanding liabilities prior to 2012, net of reinsurance

i 29,929

Liabilities for claims and claim adjustment expenses, net of reinsurance

i 1,572,727

(Some amounts may not reconcile due to rounding.)

	Average Annual Percentage Payout of Incurred Claims by Age, Net of Reinsurance (unaudited)
Years	1		2		3		4		5		6		7		8
Property	i 36.5	%	i 34.0	%	i 13.6	%	i 7.7	%	i 2.9	%	i 2.4	%	i 0.7	%	i 2.2	%

International – Casualty Business

Total of

IBNR Liabilites

Incurred Claims and Allocated Claim Adjustment Expenses, Net of reinsurance

Plus Expected

Years Ended December 31,

Development

Cumulative

2012

2013

2014

2015

2016

2017

2018

2019

on Reported

Number of

Accident Year

(unaudited)

Claims

Reported Claims

(Dollars in thousands)

2012

i 224,614

i 146,421

i 135,234

i 135,230

i 117,350

i 118,941

i 116,283

i 101,872

i 6,225

N/A

2013

i 184,497

i 168,277

i 164,973

i 144,869

i 141,645

i 138,355

i 130,124

i 13,641

N/A

2014

i 195,753

i 187,451

i 168,865

i 166,576

i 166,605

i 158,117

i 27,302

N/A

2015

i 193,714

i 179,392

i 172,811

i 172,061

i 167,290

i 30,299

N/A

2016

i 184,267

i 180,284

i 177,979

i 178,255

i 46,648

N/A

2017

i 191,492

i 139,214

i 150,276

i 48,308

N/A

2018

i 309,673

i 319,752

i 148,582

N/A

2019

i 291,237

i 189,506

N/A

i 1,496,922

(Some amounts may not reconcile due to rounding.)

Cumulative Paid Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance

Years Ended December 31,

2012

2013

2014

2015

2016

2017

2018

2019

Accident Year

(unaudited)

(Dollars in thousands)

2012

i 18,875

i 30,090

i 46,015

i 56,420

i 66,234

i 76,921

i 83,253

i 88,278

2013

i 17,865

i 41,481

i 54,619

i 67,605

i 75,964

i 86,851

i 95,799

2014

i 25,910

i 44,805

i 62,508

i 73,955

i 86,607

i 99,522

2015

i 24,237

i 48,806

i 69,674

i 82,465

i 96,180

2016

i 26,446

i 50,824

i 70,108

i 87,191

2017

i 26,541

i 52,774

i 77,614

2018

i 57,962

i 97,222

2019

i 52,808

i 694,615

All outstanding liabilities prior to 2012, net of reinsurance

i 116,104

Liabilities for claims and claim adjustment expenses, net of reinsurance

i 918,411

(Some amounts may not reconcile due to rounding.)

	Average Annual Percentage Payout of Incurred Claims by Age, Net of Reinsurance (unaudited)
Years	1		2		3		4		5		6		7		8
Casualty	i 16.7	%	i 13.9	%	i 12.6	%	i 8.8	%	i 8.0	%	i 8.8	%	i 6.6	%	i 4.9	%

F-28

International – Property Business

Total of

IBNR Liabilites

Incurred Claims and Allocated Claim Adjustment Expenses, Net of reinsurance

Plus Expected

Years Ended December 31,

Development

Cumulative

2012

2013

2014

2015

2016

2017

2018

2019

on Reported

Number of

Accident Year

(unaudited)

Claims

Reported Claims

(Dollars in thousands)

2012

i 437,946

i 397,747

i 338,496

i 346,116

i 342,251

i 340,618

i 344,626

i 358,428

i 754

N/A

2013

i 473,767

i 413,959

i 374,216

i 366,182

i 365,106

i 362,370

i 369,876

i 920

N/A

2014

i 589,489

i 541,484

i 497,317

i 443,210

i 445,914

i 446,412

i 3,613

N/A

2015

i 545,360

i 393,027

i 388,795

i 384,816

i 385,980

i 4,466

N/A

2016

i 539,447

i 543,428

i 593,567

i 595,512

i 15,930

N/A

2017

i 857,100

i 954,835

i 970,874

i 15,997

N/A

2018

i 544,258

i 574,521

i 84,717

N/A

2019

i 879,698

i 389,242

N/A

i 4,581,301

(Some amounts may not reconcile due to rounding.)

Cumulative Paid Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance

Years Ended December 31,

2012

2013

2014

2015

2016

2017

2018

2019

Accident Year

(unaudited)

(Dollars in thousands)

2012

i 126,001

i 230,203

i 279,611

i 303,002

i 311,706

i 319,112

i 324,936

i 355,887

2013

i 121,461

i 246,893

i 294,024

i 325,155

i 337,087

i 341,831

i 354,102

2014

i 162,647

i 295,731

i 360,679

i 392,731

i 410,715

i 416,735

2015

i 127,511

i 235,921

i 299,773

i 334,271

i 345,693

2016

i 159,425

i 316,190

i 447,094

i 481,029

2017

i 247,895

i 641,832

i 773,790

2018

i 90,429

i 330,681

2019

i 151,893

i 3,209,811

All outstanding liabilities prior to 2012, net of reinsurance

i 54,040

Liabilities for claims and claim adjustment expenses, net of reinsurance

i 1,425,530

(Some amounts may not reconcile due to rounding.)

	Average Annual Percentage Payout of Incurred Claims by Age, Net of Reinsurance (unaudited)
Years	1		2		3		4		5		6		7		8
Property	i 25.9	%	i 34.1	%	i 15.6	%	i 7.2	%	i 3.2	%	i 1.5	%	i 2.5	%	i 8.6	%

Bermuda – Casualty Business

Total of

IBNR Liabilites

Incurred Claims and Allocated Claim Adjustment Expenses, Net of reinsurance

Plus Expected

Years Ended December 31,

Development

Cumulative

2012

2013

2014

2015

2016

2017

2018

2019

on Reported

Number of

Accident Year

(unaudited)

Claims

Reported Claims

(Dollars in thousands)

2012

i 284,509

i 262,122

i 240,949

i 230,441

i 236,883

i 237,315

i 241,312

i 241,631

i 30,273

N/A

2013

i 228,258

i 258,432

i 252,704

i 261,259

i 250,627

i 234,668

i 230,654

i 33,689

N/A

2014

i 211,439

i 244,163

i 261,523

i 257,904

i 234,196

i 226,434

i 48,168

N/A

2015

i 273,468

i 301,791

i 307,957

i 308,042

i 309,983

i 82,925

N/A

2016

i 292,353

i 351,182

i 349,522

i 357,169

i 114,651

N/A

2017

i 354,391

i 365,767

i 365,823

i 181,139

N/A

2018

i 547,267

i 546,367

i 376,744

N/A

2019

i 667,150

i 551,529

N/A

i 2,945,212

(Some amounts may not reconcile due to rounding.)

F-29

Cumulative Paid Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance

Years Ended December 31,

2012

2013

2014

2015

2016

2017

2018

2019

Accident Year

(unaudited)

(Dollars in thousands)

2012

i 12,864

i 29,660

i 51,278

i 75,680

i 102,019

i 130,159

i 149,629

i 164,775

2013

i 16,996

i 33,951

i 52,270

i 77,270

i 102,866

i 124,708

i 144,010

2014

i 13,580

i 24,915

i 42,872

i 67,716

i 91,981

i 115,098

2015

i 13,643

i 58,956

i 93,220

i 127,930

i 153,080

2016

i 45,671

i 84,152

i 121,553

i 155,397

2017

i 29,904

i 64,197

i 103,915

2018

i 36,678

i 93,727

2019

i 61,239

i 991,242

All outstanding liabilities prior to 2012, net of reinsurance

i 356,351

Liabilities for claims and claim adjustment expenses, net of reinsurance

i 2,310,321

(Some amounts may not reconcile due to rounding.)

	Average Annual Percentage Payout of Incurred Claims by Age, Net of Reinsurance (unaudited)
Years	1		2		3		4		5		6		7		8
Casualty	i 7.8	%	i 9.7	%	i 9.8	%	i 10.5	%	i 10.0	%	i 10.5	%	i 8.2	%	i 6.3	%

Bermuda – Property Business

Total of

IBNR Liabilites

Incurred Claims and Allocated Claim Adjustment Expenses, Net of reinsurance

Plus Expected

Years Ended December 31,

Development

Cumulative

2012

2013

2014

2015

2016

2017

2018

2019

on Reported

Number of

Accident Year

(unaudited)

Claims

Reported Claims

(Dollars in thousands)

2012

i 238,152

i 180,775

i 119,168

i 117,221

i 117,909

i 118,999

i 117,734

i 120,824

i 593

N/A

2013

i 217,531

i 142,666

i 124,191

i 115,029

i 114,252

i 114,800

i 112,900

i 272

N/A

2014

i 186,492

i 164,139

i 138,381

i 134,776

i 137,389

i 136,813

i 1,092

N/A

2015

i 192,520

i 157,711

i 143,625

i 146,196

i 143,266

i 2,204

N/A

2016

i 206,279

i 181,593

i 186,735

i 187,607

i 4,619

N/A

2017

i 393,969

i 365,405

i 346,472

i 10,115

N/A

2018

i 394,542

i 396,488

i 85,786

N/A

2019

i 343,602

i 184,640

N/A

i 1,787,971

(Some amounts may not reconcile due to rounding.)

Cumulative Paid Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance

Years Ended December 31,

2012

2013

2014

2015

2016

2017

2018

2019

Accident Year

(unaudited)

(Dollars in thousands)

2012

i 45,573

i 85,175

i 90,147

i 108,172

i 111,772

i 113,508

i 113,816

i 116,429

2013

i 34,745

i 64,560

i 101,614

i 108,535

i 110,378

i 111,655

i 111,833

2014

i 32,813

i 86,611

i 106,564

i 126,552

i 129,891

i 131,455

2015

i 33,814

i 73,041

i 109,401

i 131,387

i 134,862

2016

i 26,737

i 78,499

i 130,319

i 167,562

2017

i 38,106

i 137,127

i 250,661

2018

i 72,580

i 170,831

2019

i 66,370

i 1,150,003

All outstanding liabilities prior to 2012, net of reinsurance

i 26,236

Liabilities for claims and claim adjustment expenses, net of reinsurance

i 664,204

(Some amounts may not reconcile due to rounding.)

	Average Annual Percentage Payout of Incurred Claims by Age, Net of Reinsurance (unaudited)
Years	1		2		3		4		5		6		7		8
Property	i 19.6	%	i 28.5	%	i 25.2	%	i 14.9	%	i 2.4	%	i 1.2	%	i 0.2	%	i 2.2	%

F-30

Insurance – Casualty Business

Total of

IBNR Liabilites

Incurred Claims and Allocated Claim Adjustment Expenses, Net of reinsurance

Plus Expected

Years Ended December 31,

Development

Cumulative

2012

2013

2014

2015

2016

2017

2018

2019

on Reported

Number of

Accident Year

(unaudited)

Claims

Reported Claims

(Dollars in thousands)

2012

i 349,597

i 351,402

i 346,953

i 348,180

i 353,320

i 343,931

i 346,882

i 351,320

i 20,199

i 15,769

2013

i 393,539

i 393,390

i 392,827

i 393,035

i 351,295

i 344,388

i 350,815

i 23,120

i 21,350

2014

i 431,068

i 457,043

i 454,576

i 460,642

i 397,061

i 397,834

i 38,872

i 25,188

2015

i 519,509

i 528,050

i 535,671

i 542,176

i 468,584

i 54,740

i 26,896

2016

i 553,437

i 551,321

i 580,323

i 615,168

i 166,117

i 31,517

2017

i 612,967

i 602,985

i 625,039

i 226,898

i 34,701

2018

i 705,789

i 711,001

i 353,806

i 33,817

2019

i 850,832

i 653,255

i 30,144

i 4,370,593

(Some amounts may not reconcile due to rounding.)

Cumulative Paid Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance

Years Ended December 31,

2012

2013

2014

2015

2016

2017

2018

2019

Accident Year

(unaudited)

(Dollars in thousands)

2012

i 33,185

i 101,288

i 157,897

i 213,451

i 246,407

i 272,055

i 294,380

i 306,833

2013

i 33,311

i 117,037

i 176,312

i 224,611

i 260,184

i 285,822

i 303,726

2014

i 41,190

i 124,915

i 201,646

i 256,807

i 297,644

i 325,856

2015

i 44,311

i 134,730

i 218,853

i 291,943

i 353,232

2016

i 54,731

i 164,225

i 268,909

i 342,325

2017

i 53,898

i 172,200

i 280,797

2018

i 63,492

i 208,081

2019

i 72,375

i 2,193,224

All outstanding liabilities prior to 2012, net of reinsurance

i 300,347

Liabilities for claims and claim adjustment expenses, net of reinsurance

i 2,477,716

(Some amounts may not reconcile due to rounding.)

	Average Annual Percentage Payout of Incurred Claims by Age, Net of Reinsurance (unaudited)
Years	1		2		3		4		5		6		7		8
Casualty	i 9.1	%	i 19.8	%	i 17.4	%	i 14.0	%	i 10.9	%	i 7.2	%	i 6.7	%	i 3.3	%

Insurance – Property Business

Total of

IBNR Liabilites

Incurred Claims and Allocated Claim Adjustment Expenses, Net of reinsurance

Plus Expected

Years Ended December 31,

Development

Cumulative

2012

2013

2014

2015

2016

2017

2018

2019

on Reported

Number of

Accident Year

(unaudited)

Claims

Reported Claims

(Dollars in thousands)

2012

i 106,325

i 89,000

i 81,747

i 82,448

i 82,019

i 81,802

i 81,979

i 82,526

i 68

N/A

2013

i 112,037

i 98,106

i 91,251

i 92,144

i 92,233

i 92,393

i 92,246

i 471

N/A

2014

i 131,679

i 123,668

i 119,928

i 119,464

i 119,282

i 119,413

i 407

N/A

2015

i 172,904

i 152,895

i 143,944

i 146,780

i 144,769

i 405

N/A

2016

i 290,264

i 275,154

i 280,170

i 291,672

i 736

N/A

2017

i 496,905

i 501,407

i 494,844

i 13,043

N/A

2018

i 407,855

i 401,900

i 14,862

N/A

2019

i 348,590

i 81,655

N/A

i 1,975,961

(Some amounts may not reconcile due to rounding.)

F-31

Cumulative Paid Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance

Years Ended December 31,

2012

2013

2014

2015

2016

2017

2018

2019

Accident Year

(unaudited)

(Dollars in thousands)

2012

i 56,504

i 81,772

i 80,469

i 81,749

i 81,891

i 81,682

i 81,820

i 82,457

2013

i 68,695

i 93,110

i 91,841

i 92,110

i 91,720

i 91,759

i 91,777

2014

i 81,827

i 116,037

i 118,220

i 118,211

i 118,545

i 118,660

2015

i 102,170

i 141,280

i 142,437

i 145,225

i 146,719

2016

i 162,548

i 249,517

i 271,938

i 289,194

2017

i 178,666

i 424,181

i 458,811

2018

i 244,772

i 358,324

2019

i 227,387

i 1,773,329

All outstanding liabilities prior to 2012, net of reinsurance

i 644

Liabilities for claims and claim adjustment expenses, net of reinsurance

i 203,277

(Some amounts may not reconcile due to rounding.)

	Average Annual Percentage Payout of Incurred Claims by Age, Net of Reinsurance (unaudited)
Years	1		2		3		4		5		6		7		8
Property	i 56.8	%	i 35.0	%	i 4.7	%	i 3.0	%	i 0.4	%	i -	%	i 0.1	%	i -	%

F-32

Reconciliation of the Disclosure of Incurred and Paid Claims Development to the Liability for Unpaid Claims and Claim Adjustment Expenses

The reconciliation of the net incurred and paid claims development tables to the liability for claims and claim adjustment expenses in the consolidated statement of financial position is as follows.

	December 31, 2019
(Dollars in thousands)
Net outstanding liabilities
U.S. Reinsurance Casualty	$	i 2,196,410
U.S. Reinsurance Property		i 1,572,727
International Casualty		i 918,411
International Property		i 1,425,530
Bermuda Casualty		i 2,310,321
Bermuda Property		i 664,204
Insurance Casualty		i 2,477,716
Insurance Property		i 203,277
Liabilities for unpaid claims and claim adjustment expenses, net of reinsurance		i 11,768,596

Reinsurance recoverable on unpaid claims
U.S. Reinsurance Casualty		i 363,925
U.S. Reinsurance Property		i 207,967
International Casualty		i 91,193
International Property		i 149,803
Bermuda Casualty		i 9,975
Bermuda Property		i 68,639
Insurance Casualty		i 631,827
Insurance Property		i 117,382
Total reinsurance recoverable on unpaid claims		i 1,640,712

Insurance lines other than short-duration		-
Unallocated claims adjustment expenses		i 163,563
Other		i 38,442
		i 202,005

Total gross liability for unpaid claims and claim adjustment expense	$	i 13,611,313

(Some amounts may not reconcile due to rounding.)

Reserving Methodology

The Company maintains reserves equal to our estimated ultimate liability for losses and loss adjustment expense (LAE) for reported and unreported claims for our insurance and reinsurance businesses. Because reserves are based on estimates of ultimate losses and LAE by underwriting or accident year, the Company uses a variety of statistical and actuarial techniques to monitor reserve adequacy over time, evaluate new information as it becomes known, and adjust reserves whenever an adjustment appears warranted. The Company considers many factors when setting reserves including: (1) exposure base and projected ultimate premium; (2) expected loss ratios by product and class of business, which are developed collaboratively by underwriters and actuaries; (3) actuarial methodologies and assumptions which analyze loss reporting and payment experience, reports from ceding companies and historical trends, such as reserving patterns, loss

F-33

payments, and product mix; (4) current legal interpretations of coverage and liability; and (5) economic conditions. Insurance and reinsurance loss and LAE reserves represent the Company’s best estimate of its ultimate liability. Actual loss and LAE ultimately paid may deviate, perhaps substantially, from such reserves. Net income (gain or loss) will be impacted in a period in which the change in estimated ultimate loss and LAE is recorded.

The detailed data required to evaluate ultimate losses for the Company’s insurance business is accumulated from its underwriting and claim systems. Reserving for reinsurance requires evaluation of loss information received from ceding companies. Ceding companies report losses in many forms depending on the type of contract and the agreed or contractual reporting requirements. Generally, pro rata contracts require the submission of a monthly/quarterly account, which includes premium and loss activity for the period with corresponding reserves as established by the ceding company. This information is recorded into the Company’s records. For certain pro rata contracts, the Company may require a detailed loss report for claims that exceed a certain dollar threshold or relate to a particular type of loss. Excess of loss and facultative contracts generally require individual loss reporting with precautionary notices provided when a loss reaches a significant percentage of the attachment point of the contract or when certain causes of loss or types of injury occur. Experienced claims staff handles individual loss reports and supporting claim information. Based on evaluation of a claim, the Company may establish additional case reserves in addition to the case reserves reported by the ceding company. To ensure ceding companies are submitting required and accurate data, Everest’s Underwriting, Claim, Reinsurance Accounting, and Internal Audit Departments perform various reviews of ceding companies, particularly larger ceding companies, including on-site audits.

The Company segments both reinsurance and insurance reserves into exposure groupings for actuarial analysis. The Company assigns business to exposure groupings so that the underlying exposures have reasonably homogeneous loss development characteristics and are large enough to facilitate credible estimation of ultimate losses. The Company periodically reviews its exposure groupings and may change groupings over time as business changes. The Company currently uses approximately i 200 exposure groupings to develop reserve estimates. One of the key selection characteristics for the exposure groupings is the historical duration of the claims settlement process. Business in which claims are reported and settled relatively quickly are commonly referred to as short tail lines, principally property lines. On the other hand, casualty claims tend to take longer to be reported and settled and casualty lines are generally referred to as long tail lines. Estimates of ultimate losses for shorter tail lines, with the exception of loss estimates for large catastrophic events, generally exhibit less volatility than those for the longer tail lines.

The Company uses a variety of actuarial methodologies, such as the expected loss ratio method, chain ladder methods, and Bornhuetter-Ferguson methods, supplemented by judgment where appropriate, to estimate ultimate loss and LAE for each exposure group.

Expected Loss Ratio Method: The expected loss ratio method uses earned premium times an expected loss ratio to calculate ultimate losses for a given underwriting or accident year. This method relies entirely on expectation to project ultimate losses with no consideration given to actual losses. As such, it may be appropriate for an immature underwriting or accident year where few, if any, losses have been reported or paid, but less appropriate for a more mature year.

Chain Ladder Method: Chain ladder methods use a standard loss development triangle to project ultimate losses. Age-to-age development factors are selected for each development period and combined to calculate age-to-ultimate development factors which are then applied to paid or reported losses to project ultimate losses. This method relies entirely on actual paid or reported losses to project ultimate losses. No other factors such as changes in pricing or other expectations are taken into account. It is most appropriate for groups with homogeneous, stable experience where past development patterns are expected to continue in the future. It is least appropriate for groups which have changed significantly over time or which are more volatile.

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Bornhuetter-Ferguson Method: The Bornhuetter-Ferguson method is a combination of the expected loss ratio method and the chain ladder method. Ultimate losses are projected based partly on actual paid or reported losses and partly on expectation. Incurred but not reported (IBNR) reserves are calculated using earned premium, an a priori loss ratio, and selected age-to-age development factors and added to actual reported (paid) losses to determine ultimate losses. It is more responsive to actual reported or paid development than the expected loss ratio method but less responsive than the chain ladder method. The reliability of the method depends on the accuracy of the selected a priori loss ratio.

Although the Company uses similar actuarial methods for both short tail and long tail lines, the faster reporting of experience for the short tail lines allows the Company to have greater confidence in its estimates of ultimate losses for short tail lines at an earlier stage than for long tail lines. As a result, the Company utilizes, as well, exposure-based methods to estimate its ultimate losses for longer tail lines, especially for immature underwriting or accident years. For both short and long tail lines, the Company supplements these general approaches with analytically based judgments.

Key actuarial assumptions contain no explicit provisions for reserve uncertainty nor does the Company supplement the actuarially determined reserves for uncertainty.

Carried reserves at each reporting date are the Company’s best estimate of ultimate unpaid losses and LAE at that date. The Company completes detailed reserve studies for each exposure group annually for both reinsurance and insurance operations. The completed annual reserve studies are “rolled-forward” for each accounting period until the subsequent reserve study is completed. Analyzing the roll-forward process involves comparing actual reported losses to expected losses based on the most recent reserve study. The Company analyzes significant variances between actual and expected losses and post adjustments to its reserves as warranted.

The Company continues to receive claims under expired insurance and reinsurance contracts asserting injuries and/or damages relating to or resulting from environmental pollution and hazardous substances, including asbestos. Environmental claims typically assert liability for (a) the mitigation or remediation of environmental contamination or (b) bodily injury or property damage caused by the release of hazardous substances into the land, air or water. Asbestos claims typically assert liability for bodily injury from exposure to asbestos or for property damage resulting from asbestos or products containing asbestos.

The Company’s reserves include an estimate of the Company’s ultimate liability for A&E claims. The Company’s A&E liabilities emanate from Mt. McKinley’s direct insurance business and Everest Re’s assumed reinsurance business. All of the contracts of insurance and reinsurance, under which the Company has received claims during the past three years, expired more than i 20 years ago. There are significant uncertainties surrounding the Company’s reserves for its A&E losses.

F-35

A&E exposures represent a separate exposure group for monitoring and evaluating reserve adequacy. The following table summarizes incurred losses with respect to A&E reserves on both a gross and net of reinsurance basis for the periods indicated:

	At December 31,
(Dollars in thousands)	2019		2018		2017
Gross basis:
Beginning of period reserves	$	i 347,495	$	i 448,994	$	i 441,111
Incurred losses		i 2,070		( i 2,473)		i 90,009
Paid losses		( i 91,644)		( i 99,026)		( i 82,126)
End of period reserves	$	i 257,921	$	i 347,495	$	i 448,994

Net basis:
Beginning of period reserves	$	i 261,456	$	i 318,081	$	i 319,072
Incurred losses		-		-		i 37,137
Paid losses		( i 32,756)		( i 56,624)		( i 38,128)
End of period reserves	$	i 228,701	$	i 261,456	$	i 318,081

In 2015, the Company sold Mt. McKinley, a Delaware domiciled insurance company and wholly-owned subsidiary of the Company to Clearwater Insurance Company, a Delaware domiciled insurance company. Concurrently with the closing, the Company entered into a retrocession treaty with an affiliate of Clearwater Insurance Company. Per the retrocession treaty, the Company retroceded i 100% of the liabilities associated with certain Mt. McKinley policies, which related entirely to A&E business and had been reinsured by Bermuda Re. As consideration for entering into the retrocession treaty, Everest Re Bermuda transferred cash of $ i 140,279 thousand, an amount equal to the net loss reserves as of the closing date. The maximum liability retroceded under the retrocession treaty will be $ i 440,279 thousand, equal to the retrocession payment plus $ i 300,000 thousand. The Company will retain liability for any amounts exceeding the maximum liability retroceded under the retrocession treaty.

On December 20, 2019, the retrocession treaty was amended and included a partial commutation. As a result of this amendment and partial commutation, gross A&E reserves and correspondingly reinsurance receivable were reduced by $ i 43,362 thousand. In addition, the maximum liability permitted to be retroceded increased to $, i 450298 thousand.

Reinsurance Receivables.

Reinsurance receivables for both paid and recoverable on unpaid losses totaled $ i 1,763,471 thousand and $ i 1,787,648 thousand at December 31, 2019 and December 31, 2018, respectively. At December 31, 2019, $ i 682,845 thousand, or i 38.7%, was receivable from Mt. Logan Re collateralized segregated accounts; $ i 147,807 thousand, or i 8.4% was receivable from Munich Reinsurance America, Inc. (“Munich Re”); and $ i 95,481 thousand, or i 5.4%, was receivable from Zurich Versicherungs Gesellschaft (“Zurich”). No other retrocessionaire accounted for more than i 5% of our receivables.

F-36

Future Policy Benefit Reserve.

Activity in the reserve for future policy benefits is summarized for the periods indicated:

	At December 31,
(Dollars in thousands)	2019		2018		2017
Balance at beginning of year	$	i 46,778	$	i 51,014	$	i 55,074
Liabilities assumed		i 53		i 110		i 115
Adjustments to reserves		i 350		i 806		( i 437)
Benefits paid in the current year		( i 4,589)		( i 5,151)		( i 3,738)
Balance at end of year	$	i 42,592	$	i 46,778	$	i 51,014

(Some amounts may not reconcile due to rounding.)

4. FAIR VALUE

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

The levels in the hierarchy are defined as follows:

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

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

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

The Company’s fixed maturity and equity securities are primarily managed by third party investment asset managers. The investment asset managers obtain prices from nationally recognized pricing services. These services seek to utilize market data and observations in their evaluation process. They use pricing applications that vary by asset class and incorporate available market information and when fixed maturity securities do not trade on a daily basis the services will apply available information through processes such as benchmark curves, benchmarking of like securities, sector groupings and matrix pricing. In addition, they use model processes, such as the Option Adjusted Spread model to develop prepayment and interest rate scenarios for securities that have prepayment features.

In limited instances where prices are not provided by pricing services or in rare instances when a manager may not agree with the pricing service, price quotes on a non-binding basis are obtained from investment brokers. The investment asset managers do not make any changes to prices received from either the pricing services or the investment brokers. In addition, the investment asset managers have procedures in place to review the reasonableness of the prices from the service providers and may request verification of the prices. In addition, the Company continually performs analytical reviews of price changes and tests the prices on a random basis to an independent pricing source. No material variances were noted during these price validation procedures. In limited situations, where financial markets are inactive or illiquid, the Company may use its own assumptions

F-37

about future cash flows and risk-adjusted discount rates to determine fair value. At December 31, 2019, $ i 772,979 thousand of fixed maturities, market value and $ i 5,826 thousand of fixed maturities, fair value were fair valued using unobservable inputs. The majority of the fixed maturities, market value, $ i 610,873 thousand, were valued by investment managers’ valuation committees and a majority of these fair values and all of the $ i 5,826 thousand of fixed maturities, fair value were substantiated by valuations from independent third parties. The Company has procedures in place to review and evaluate these independent third party valuations. The remaining Level 3 fixed maturities of $ i 162,106 thousand were valued at either par or amortized cost, which the Company believes approximates fair value. At December 31, 2018, $ i 435,959 thousand of fixed maturities, market value and $ i 2,337 thousand of fixed maturities, fair value were fair valued using unobservable inputs. The majority of the fixed maturities, market value, $ i 354,143 thousand and all of the $ i 2,337 thousand of fixed maturities, fair value were valued by investment managers’ valuation committees and a majority of these fair values were substantiated by valuations from independent third parties. The remaining Level 3 fixed maturities of $ i 80,663 thousand were fair valued by the Company at either par or amortized cost and $ i 1,153 thousand were priced using a non-binding broker quote.

The Company internally manages a public equity portfolio which had a fair value at December 31, 2019 and December 31, 2018 of $ i 170,888 thousand and $ i 124,228 thousand, respectively, and all prices were obtained from publicly published sources.

Equity securities denominated in U.S. currency with quoted prices in active markets for identical assets are categorized as level 1 since the quoted prices are directly observable. Equity securities traded on foreign exchanges are categorized as level 2 due to the added input of a foreign exchange conversion rate to determine fair or market value. The Company uses foreign currency exchange rates published by nationally recognized sources.

All categories of fixed maturity securities listed in the tables below are generally categorized as level 2, since a particular security may not have traded but the pricing services are able to use valuation models with observable market inputs such as interest rate yield curves and prices for similar fixed maturity securities in terms of issuer, maturity and seniority. For foreign government securities and foreign corporate securities, the fair values provided by the third party pricing services in local currencies, and where applicable, are converted to U.S. dollars using currency exchange rates from nationally recognized sources.

The fixed maturities with fair values categorized as level 3 result when prices are not available from the nationally recognized pricing services. The asset managers will then obtain non-binding price quotes for the securities from brokers. The single broker quotes are provided by market makers or broker-dealers who are recognized as market participants in the markets in which they are providing the quotes. The prices received from brokers are reviewed for reasonableness by the third party asset managers and the Company. If the broker quotes are for foreign denominated securities, the quotes are converted to U.S. dollars using currency exchange rates from nationally recognized sources. In limited circumstances when broker prices are not available for private placements, the Company will value the securities using comparable market information or receive fair values from investment managers.

The composition and valuation inputs for the presented fixed maturities categories are as follows:

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

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

F-38

•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.

The Company had i two remaining equity index put option contracts at December 31, 2019, based on the Standard & Poor’s 500 (“S&P 500”) index. Based on historical index volatilities and trends and the December 31, 2019 S&P 500 index value, the Company estimates the probability that each equity index put option contract of the S&P 500 index falling below the strike price on the exercise date to be less than i 0.4%. The theoretical maximum payouts under these equity index put option contracts would occur if on each of the exercise dates the S&P 500 index value were i zero. At December 31, 2019, the present value of the theoretical maximum payouts using a i 3% discount factor was $ i 208,359 thousand. Conversely, if the contracts had all expired on December 31, 2019, with the S&P index at i 3,230.78, there would have been i no settlement amount.

The Company has i one equity index put option contract based on the FTSE 100 index. Based on historical index volatilities and trends and the December 31, 2019 FTSE 100 index value, the Company estimates the probability that the equity index put option contract of the FTSE 100 index will fall below the strike price on the exercise date to be less than i 4%. The theoretical maximum payout under the equity index put option contract would occur if on the exercise date the FTSE 100 index value was zero. At December 31, 2019, the present value of the theoretical maximum payout using a i 3% discount factor and current exchange rate was $ i 42,899 thousand. Conversely, if the contract had expired on December 31, 2019, with the FTSE index at i 7,542.44, there would have been no settlement amount.

At December 31, 2019 and December 31, 2018, the fair value for these equity put options was $ i 5,584 thousand and $ i 11,958 thousand, respectively.

The Company’s liability for equity index put options is categorized as level 3 since there is no active market for these equity put options. The fair values for these options are calculated by the Company using an industry accepted pricing model, Black-Scholes. The model inputs and assumptions are: risk free interest rates, equity market indexes values, volatilities and dividend yields and duration. The model results are then adjusted for the Company’s credit default swap rate. All of these inputs and assumptions are updated quarterly. One of the

F-39

option contacts is in British Pound Sterling so the fair value for this contract is converted to U.S. dollars using an exchange rate from a nationally recognized source.

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

Fair Value Measurement Using:

Quoted Prices

in Active

Significant

Markets for

Other

Significant

Identical

Observable

Unobservable

Assets

Inputs

(Dollars in thousands)

(Level 1)

(Level 2)

(Level 3)

Assets:

Fixed maturities, market value

U.S. Treasury securities and obligations of

U.S. government agencies and corporations

i 1,515,803

Obligations of U.S. States and political subdivisions

i 536,915

Corporate securities

i 6,374,946

i 5,757,358

i 617,588

Asset-backed securities

i 897,333

i 743,692

i 153,641

Mortgage-backed securities

Commercial

i 844,557

Agency residential

i 2,198,581

Non-agency residential

i 5,703

Foreign government securities

i 1,505,950

Foreign corporate securities

i 2,945,156

i 2,943,406

i 1,750

Total fixed maturities, market value

i 16,824,944

i 16,051,965

i 772,979

Fixed maturities, fair value

i 5,826

Equity securities, fair value

i 931,457

i 864,584

i 66,873

Liabilities:

Equity index put option contracts

i 5,584

There were i no transfers between Level 1 and Level 2 for the twelve months ended December 31, 2019.

F-40

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

Fair Value Measurement Using:

Quoted Prices

in Active

Significant

Markets for

Other

Significant

Identical

Observable

Unobservable

Assets

Inputs

(Dollars in thousands)

(Level 1)

(Level 2)

(Level 3)

Assets:

Fixed maturities, market value

U.S. Treasury securities and obligations of

U.S. government agencies and corporations

i 2,631,134

Obligations of U.S. States and political subdivisions

i 500,094

Corporate securities

i 5,445,532

i 5,017,317

i 428,215

Asset-backed securities

i 540,097

Mortgage-backed securities

Commercial

i 326,710

Agency residential

i 1,796,264

Non-agency residential

i 10,209

Foreign government securities

i 1,314,165

Foreign corporate securities

i 2,661,058

i 2,653,314

i 7,744

Total fixed maturities, market value

i 15,225,263

i 14,789,304

i 435,959

Fixed maturities, fair value

i 2,337

Equity securities, fair value

i 716,639

i 674,433

i 42,206

Liabilities:

Equity index put option contracts

i 11,958

In addition, $ i 209,578 thousand and $ i 117,662 thousand of investments within other invested assets on the consolidated balance sheets as of December 31, 2019 and 2018, respectively, are not included within the fair value hierarchy tables as the assets are measured at NAV as a practical expedient to determine fair value.

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

Total Fixed Maturities, Market Value

Corporate

Asset-Backed

Foreign

Corporate

Foreign

(Dollars in thousands)

Securities

Corporate

Total

Securities

Corporate

Total

Beginning balance fixed maturities at market value

i 428,215

i 7,744

i 435,959

i 210,186

i 6,952

i 217,138

Total gains or (losses) (realized/unrealized)

Included in earnings

i 4,937

( i 12)

i 4,925

( i 92)

( i 660)

( i 752)

Included in other comprehensive income (loss)

( i 20)

i 3,632

( i 110)

i 3,502

i 1,091

Purchases, issuances and settlements

i 179,761

i 150,009

( i 5,872)

i 323,898

i 215,838

( i 298)

i 215,540

Transfers in and/or (out) of Level 3

i 4,695

i 1,192

i 1,750

i 2,942

Ending balance

i 617,588

i 153,641

i 1,750

i 772,979

i 428,215

i 7,744

i 435,959

The amount of total gains or losses for the period

included in earnings (or changes in net assets)

attributable to the change in unrealized gains

or losses relating to assets still held

at the reporting date

(Some amounts may not reconcile due to rounding.)

F-41

Total Fixed Maturities, Fair Value

Foreign

(Dollars in thousands)

Corporate

Total

Corporate

Total

Beginning balance fixed maturities at market value

i 2,337

Total gains or (losses) (realized/unrealized)

Included in earnings

i 2,163

( i 293)

Included in other comprehensive income (loss)

Purchases, issuances and settlements

i 1,326

i 2,630

Transfers in and/or (out) of Level 3

Ending balance

i 5,826

i 2,337

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

i 1,795

(Some amounts may not reconcile due to rounding.)

The net transfers to/(from) level 3, fair value measurements using significant unobservable inputs for fixed maturities, market value were $ i 4,695 thousand and $ i 2,942 thousand as of December 31, 2019 and 2018, respectively. The transfers during 2019 and 2018 were related to securities that were priced using a recognized pricing service as of December 31, 2018 and 2017, respectively. These securities were subsequently priced by investment managers as of December 31, 2019 and 2018, respectively.

The following table presents the activity under Level 3, fair value measurements using significant unobservable inputs for equity index put option contracts, for the periods indicated:

	Years Ended December 31,
(Dollars in thousands)	2019		2018
Liabilities:
Balance, beginning of period	$	i 11,958	$	i 12,477
Total (gains) or losses (realized/unrealized)
Included in earnings		( i 6,374)		( i 520)
Included in other comprehensive income (loss)		-		-
Purchases, issuances and settlements		-		-
Transfers in and/or (out) of Level 3		-		-
Balance, end of period	$	i 5,584	$	i 11,958

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

(Some amounts may not reconcile due to rounding.)

5. CREDIT FACILITIES

The Company has i two active credit facilities for a total commitment of up to $ i 1,000,000 thousand and an additional credit facility for a total commitment of up to £, i 47000 thousand, providing for the issuance of letters of credit and/or unsecured revolving credit lines. The following table presents the interest and fees incurred in connection with the two credit facilities for the periods indicated:

	Years Ended December 31,
(Dollars in thousands)	2019		2018		2017
Credit facility interest and fees incurred	$	i 420	$	i 420	$	i 420

The terms and outstanding amounts for each facility are discussed below:

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Group Credit Facility

Effective May 26, 2016, Group, Everest Reinsurance (Bermuda), Ltd. (“Bermuda Re”) and Everest International Reinsurance, Ltd. (“Everest International”), both direct subsidiaries of Group, entered into a i five year, $ i 800,000 thousand senior credit facility with a syndicate of lenders, which amended and restated in its entirety the June 22, 2012, i four year, $ i 800,000 thousand senior credit facility. Both the May 26, 2016 and June 22, 2012 senior credit facilities, which have similar terms, are referred to as the “Group Credit Facility”. Wells Fargo Corporation (“Wells Fargo Bank”) is the administrative agent for the Group Credit Facility, which consists of i two tranches. Tranche one provides up to $ i 200,000 thousand of unsecured revolving credit for liquidity and general corporate purposes, and for the issuance of unsecured standby letters of credit. The interest on the revolving loans shall, at the Company’s option, be either (1) the Base Rate (as defined below) or (2) an adjusted London Interbank Offered Rate (“LIBOR”) plus a margin. The Base Rate is the higher of (a) the prime commercial lending rate established by Wells Fargo Bank, (b) the Federal Funds Rate plus i 0.5% per annum or (c) the one month LIBOR Rate plus i 1.0% per annum. The amount of margin and the fees payable for the Group Credit Facility depends on Group’s senior unsecured debt rating. Tranche two exclusively provides up to $ i 600,000 thousand for the issuance of standby letters of credit on a collateralized basis.

The Group Credit Facility requires Group to maintain a debt to capital ratio of not greater than i 0.35 to 1 and to maintain a minimum net worth. Minimum net worth is an amount equal to the sum of $ i 5,370,979 thousand plus i 25% of consolidated net income for each of Group’s fiscal quarters, for which statements are available ending on or after March 31, 2016 and for which consolidated net income is positive, plus i 25% of any increase in consolidated net worth during such period attributable to the issuance of ordinary and preferred shares, which at December 31, 2019, was $ i 6,256,094 thousand. As of December 31, 2019, the Company was in compliance with all Group Credit Facility covenants.

The following table summarizes the outstanding letters of credit for the periods indicated:

(Dollars in thousands)

Bank

Commitment

In Use

Date of Expiry

Commitment

In Use

Date of Expiry

Wells Fargo Bank Group Credit Facility

Tranche One

i 200,000

i 33,737

i 12/31/2020

i 200,000

Tranche Two

i 2,381

i 7/29/2020

Tranche Two

i 1,649

i 9/30/2020

Tranche Two

i 573,353

i 12/31/2020

Tranche Two

i 600,000

i 12,364

i 1/4/2021

i 600,000

i 558,818

i 12/31/2019

Total Wells Fargo Bank Group Credit Facility

i 800,000

i 623,484

i 800,000

i 558,818

Bermuda Re Letter of Credit Facility

Effective December 31, 2019, Bermuda Re renewed its letter of credit issuance facility with Citibank N.A. referred to as the “Bermuda Re Letter of Credit Facility”, which commitment is reconfirmed annually with updated fees. The current renewal of the Bermuda Re Letter of Credit Facility provides for the issuance of up to $ i 200,000 thousand of secured letters of credit to collateralize reinsurance obligations as a non-admitted reinsurer. The interest on drawn letters of credit shall be (A) i 0.35% per annum of the principal amount of issued standard letters of credit (expiry of 15 months or less) and (B) i 0.45% per annum of the principal amount of issued extended tenor letters of credit (expiry maximum of up to i 60 months). The commitment fee on undrawn credit shall be i 0.15% per annum.

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The following table summarizes the outstanding letters of credit for the periods indicated:

(Dollars in thousands)

Bank

Commitment

In Use

Date of Expiry

Commitment

In Use

Date of Expiry

Citibank Bilateral Letter of Credit Agreement

i 200,000

i 4,425

02/29/2020

i 200,000

i 3,482

i 02/28/2019

i 512

09/03/2020

i 3,672

i 11/24/2019

i 3,672

i 11/24/2020

i 72,443

i 12/31/2019

i 177

i 12/16/2020

i 296

i 08/15/2020

i 125

i 12/20/2020

i 177

i 12/16/2020

i 101,404

i 12/31/2020

i 125

i 12/20/2020

i 559

08/15/2021

i 1,851

i 11/04/2022

i 37,096

i 12/30/2023

i 407

i 11/13/2022

i 59,293

i 12/30/2022

Total Citibank Bilateral Agreement

i 200,000

i 147,970

i 200,000

i 141,746

Everest International Credit Facility

Effective November 7, 2019, Everest International renewed its credit facility with Lloyds Bank plc (“Everest International Credit Facility”). The current renewal of the Everest International Credit Facility has a i four year term and provides up to £ i 47,000 thousand for the issuance of standby letters of credit on a collateralized basis. The Company pays a commitment fee of i 0.1% per annum on the average daily amount of the remainder of (1) the aggregate amount available under the facility and (2) the aggregate amount of drawings outstanding under the facility. The Company pays a credit commission fee of i 0.35% per annum on drawings outstanding under the facility.

The Everest International Credit Facility requires Group to maintain a debt to capital ratio of not greater than i 0.35 to 1 and to maintain a minimum net worth. Minimum net worth is an amount equal to the sum of $ i 5,326,009 thousand ( i 70% of consolidated net worth as of December 31, 2015), plus i 25% of consolidated net income for each of Group’s fiscal quarters, for which statements are available ending on or after January 1, 2015 and for which net income is positive, plus i 25% of any increase in consolidated net worth of Group during such period attributable to the issuance of ordinary and preferred shares, which at December 31, 2019, was $ i 6,246,842 thousand. As of December 31, 2019, the Company was in compliance with all Everest International Credit Facility requirements.

The following table summarizes the outstanding letters of credit for the periods indicated:

(Dollars in thousands)

Bank

Commitment

In Use

Date of Expiry

Commitment

In Use

Date of Expiry

Lloyd's Bank plc

i 47,000

i 12/31/2023

i 30,000

i 26,000

i 12/31/2022

Total Lloyd's Bank Credit Facility

i 47,000

i 30,000

i 26,000

Federal Home Loan Bank Membership

Effective August 15, 2019, Everest Reinsurance Company (“Everest Re”) became a member of the Federal Home Loan Bank (“FHLB”) organization, which allows Everest Re to borrow up to i 10% of its statutory admitted assets. As of December 31, 2019, Everest Re had admitted assets of $ i 12,518,844 thousand which provides borrowing capacity of up to $ i 1,251,884 thousand. Through December 31, 2019, Everest had i no borrowings through the FLHB.

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6. SENIOR NOTES

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

Consolidated Balance

(Dollars in thousands)

Date Issued

Date Due

Principal Amounts

Sheet Amount

Market Value

Sheet Amount

Market Value

Senior notes

i 6/5/2014

i 6/1/2044

i 400,000

i 397,074

i 452,848

i 396,954

i 396,968

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

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

	Years Ended December 31,
(Dollars In thousands	2019		2018		2017
Interest expense incurred	$	i 19,472	$	i 19,472	$	i 19,472

7. LONG TERM SUBORDINATED NOTES

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

Maturity Date

Original

Consolidated Balance

(Dollars in thousands)

Date Issued

Principal Amount

Scheduled

Final

Sheet Amount

Market Value

Sheet Amount

Market Value

Long term subordinated notes

i 4/26/2007

i 400,000

i 5/15/2037

i i 5/1/2067 /

i 236,758

i 233,191

i 236,659

i 200,390

During the fixed rate interest period from May 3, 2007 through May 14, 2017, interest was at the annual rate of i 6.6%, payable semi-annually in arrears on November 15 and May 15 of each year, commencing on i 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 i 238.5 basis points, reset quarterly, payable quarterly in arrears on February 15, May 15, August 15 and November 15 of each year, subject to Holdings’ right to defer interest on one or more occasions for up to ten consecutive years. Deferred interest will accumulate interest at the applicable rate compounded quarterly for periods from and including May 15, 2017. The reset quarterly interest rate for November 15, 2019 to February 17, 2020 is i 4.3%.

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

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

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

	Years Ended December 31,
(Dollars in thousands)	2019		2018		2017
Interest expense incurred	$	i 11,587	$	i 10,926	$	i 11,498

8. COLLATERALIZED REINSURANCE AND TRUST AGREEMENTS

Certain subsidiaries of Group have established trust agreements, which effectively use the Company’s investments as collateral, as security for assumed losses payable to certain non-affiliated ceding companies. At December 31, 2019, the total amount on deposit in trust accounts was $ i 989,693 thousand.

The Company reinsures some of its catastrophe exposures with the segregated accounts of Mt. Logan Re. Mt. Logan Re is a Class 3 insurer registered in Bermuda effective February 27, 2013 under The Segregated Accounts Companies Act 2000 and i 100% of the voting common shares are owned by Group. Separate segregated accounts for Mt. Logan Re began being established effective July 1, 2013 and non-voting, redeemable preferred shares have been issued to capitalize the segregated accounts. Each segregated account invests predominantly in a diversified set of catastrophe exposures, diversified by risk/peril and across different geographic regions globally.

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.


	Years Ended December 31,
Mt. Logan Re Segregated Accounts	2019	2018	2017
(Dollars in thousands)
Ceded written premiums	i 291,979	i 260,612	i 245,453
Ceded earned premiums	i 294,762	i 262,518	i 242,793
Ceded losses and LAE	i 187,192	i 319,046	i 320,315

Assumed written premiums	i 17,005	i 11,032	i 25,970
Assumed earned premiums	i 17,005	i 11,032	i 25,970
Assumed losses and LAE	-	-	-

Each segregated account is permitted to assume net risk exposures equal to the amount of its available posted collateral, which in the aggregate was $ i 993,036 thousand and $ i 1,156,853 thousand at December 31, 2019 and 2018, respectively. Of this amount, Group had investments recorded at $ i 46,390 thousand and $ i 45,625 thousand at December 31, 2019 and 2018, respectively, in the segregated accounts.

Effective April 1, 2018, the Company entered into a retroactive reinsurance transaction with one of the Mt. Logan Re segregated accounts to retrocede $ i 269,198 thousand of casualty reserves held by Bermuda Re related to accident years i 2002 through i 2015. As consideration for entering the agreement, the Company transferred cash of $ i 252,000 thousand to the Mt. Logan Re segregated account. The maximum liability to be retroceded under the agreement will be $ i 319,000 thousand. The Company will retain liability for any amounts exceeding the maximum liability.

On April 24, 2014, the Company entered into i two collateralized reinsurance agreements with Kilimanjaro Re Limited (“Kilimanjaro”), a Bermuda based special purpose reinsurer, to provide the Company with catastrophe reinsurance coverage. These agreements are multi-year reinsurance contracts which cover specified named storm and earthquake events. The first agreement provides up to $ i 250,000 thousand of reinsurance coverage from named storms in specified states of the Southeastern United States. The second agreement provides up to $ i 200,000 thousand of reinsurance coverage from named storms in specified states of the Southeast, Mid-Atlantic and Northeast regions of the United States and Puerto Rico as well as reinsurance coverage from

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earthquakes in specified states of the Southeast, Mid-Atlantic, Northeast and West regions of the United States, Puerto Rico and British Columbia. These reinsurance agreements expired in April, 2018.

On November 18, 2014, the Company entered into a collateralized reinsurance agreement with Kilimanjaro to provide the Company with catastrophe reinsurance coverage. This agreement is a multi-year reinsurance contract which covers specified earthquake events. The agreement provides up to $ i 500,000 thousand of reinsurance coverage from earthquakes in the United States, Puerto Rico and Canada. These reinsurance agreements expired in November, 2019.

On December 1, 2015 the Company entered into i two collateralized reinsurance agreements with Kilimanjaro to provide the Company with catastrophe reinsurance coverage. These agreements are multi-year reinsurance contracts which cover named storm and earthquake events. The first agreement provides up to $ i 300,000 thousand of reinsurance coverage from named storms and earthquakes in the United States, Puerto Rico and Canada. The second agreement provides up to $ i 325,000 thousand of reinsurance coverage from named storms and earthquakes in the United States, Puerto Rico and Canada.

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

On April 30, 2018 the Company entered into i four collateralized reinsurance agreements with Kilimanjaro to provide the Company with catastrophe reinsurance coverage. These agreements are multi-year reinsurance contracts which cover named storm and earthquake events. The first i two agreements are i four year reinsurance contracts which provide up to $ i 62,500 thousand and $ i 200,000 thousand, respectively, of annual aggregate reinsurance coverage from named storms and earthquakes in the United States, Puerto Rico, the U.S. Virgin Islands and Canada. The remaining i two agreements are i five year reinsurance contracts which provide up to $ i 62,500 thousand and $ i 200,000 thousand, respectively, of annual aggregate reinsurance coverage from named storms and earthquakes in the United States, Puerto Rico, the U.S. Virgin Islands and Canada.

On December 12, 2019, the Company entered into i four collateralized reinsurance agreements with Kilimanjaro to provide the Company with catastrophe reinsurance coverage. These agreements are multi-year reinsurance contracts which cover named storm and earthquake events. The first i two agreements are i four year reinsurance contracts which provide up to $ i 150,000 thousand and $ i 275,000 thousand, respectively, of annual aggregate reinsurance coverage from named storms and earthquakes in the United States, Puerto Rico, the U.S. Virgin Islands and Canada. The remaining i two agreements are i five year reinsurance contracts which provide up to $ i 150,000 thousand and $ i 275,000 thousand, respectively, of annual aggregate reinsurance coverage from named storms and earthquakes in the United State, Puerto Rico, the U.S. Virgin Islands and Canada.

Recoveries under these collateralized reinsurance agreements with Kilimanjaro are primarily dependent on estimated industry level insured losses from covered events, as well as, the geographic location of the events. The estimated industry level of insured losses is obtained from published estimates by an independent recognized authority on insured property losses. Currently, none of the published insured loss estimates for catastrophe events during the applicable covered periods of the various agreements have exceeded the single event retentions or aggregate retentions under the terms of the agreements that would result in a recovery.

Kilimanjaro has financed the various property catastrophe reinsurance coverages by issuing catastrophe bonds to unrelated, external investors. On April 24, 2014, Kilimanjaro issued $ i 450,000 thousand of notes (“Series

F-47

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

9. LEASES

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

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

	Year Ended December 31,
(Dollars in thousands)		2019
Lease expense incurred:
Operating lease cost	$	i 24,524

		At December 31,
(Dollars in thousands)		2019
Operating lease right of use assets	$	i 161,435
Operating lease liabilities		i 169,909

	Year Ended December 31,
(Dollars in thousands)		2019
Operating cash flows from operating leases	$	( i 20,041)

	At December 31,
	2019
Weighted average remaining operating lease term	12.6 years
Weighted average discount rate on operating leases	i 3.91	%

F-48

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

(Dollars in thousands)
2020	$	i 19,945
2021		i 17,153
2022		i 18,985
2023		i 18,169
2024		i 17,872
Thereafter		i 126,250
Undiscounted lease payments		i 218,374
Less: present value adjustment		i 48,465
Total operating lease liability	$	i 169,909

As of December 31, 2018, the Company accounted for leases per the guidance codified in Accounting Standards Codification, Topic 740-Leases. Based on prior guidance, the future minimum rental commitments, exclusive of cost escalation clauses, at December 31, 2018, for all of the Company’s operating leases were $ i 91,841 thousand. The breakdown of the minimum rental commitments as of December 31, 2018, were as follows: $ i 18,992 thousand for 2019, $ i 18,365 thousand for 2020, $ i 9,469 thousand for 2021, $ i 9,180 thousand for 2022, $ i 8,919 thousand for 2023 and $ i 26,916 thousand for all years thereafter.

On July 2, 2019, the Company entered into a lease agreement to relocate its corporate offices from Liberty Corner, New Jersey to a corporate complex in Warren, New Jersey. The new lease, which covers approximately i 315,000 square feet of office space, became effective in October, 2019 and runs through i 2036. The initial base rent payment of the lease will be approximately $ i 650 thousand per month or $ i 7,800 thousand per year. The Company expects to relocate the existing operations and employees of the Liberty Corner, New Jersey facility to the new corporate complex during 2021.

10. INCOME TAXES

Under Bermuda law, no income or capital gains taxes are imposed on Group and its Bermuda Subsidiaries. The Minister of Finance of Bermuda has assured Group and its Bermuda subsidiaries that, pursuant to The Exempted Undertakings Tax Protection Amendment Act of 2011, they will be exempt until 2035 from imposition of any such taxes.

All of the income of Group's non-Bermuda subsidiaries is subject to the applicable federal, foreign, state and local taxes on corporations. Additionally, the income of the foreign branches of the Company's insurance operating companies, in particular the UK branch of Bermuda Re, is subject to various rates of income tax. Group's U.S. subsidiaries conduct business in and are subject to taxation in the U.S. Should the U.S. subsidiaries distribute current or accumulated earnings and profits in the form of dividends or otherwise, the Company would be subject to an accrual of i 5% U.S. withholding tax. Currently, however, no withholding tax has been accrued with respect to such un-remitted earnings as management has no intention of remitting them. The cumulative amount that would be subject to withholding tax, if distributed, is not practicable to compute. The provision for income taxes in the consolidated statement of operations and comprehensive income (loss) has been determined in accordance with the individual income of each entity and the respective applicable tax laws. The provision reflects the permanent differences between financial and taxable income relevant to each entity. The TCJA, enacted on December 22, 2017, caused the Company to record income tax expense of $ i 8,246 thousand in 2017. The income tax expense reflects the lower i 21% tax benefit to be realized by the Company under the TCJA upon the reversal of the temporary differences in its deferred tax inventory account versus the i 35% tax benefit that had been expected to be realized before TCJA. The significant components of the provision are as follows for the periods indicated:

F-49

	Years Ended December 31,
(Dollars in thousands)	2019		2018		2017
Current tax expense (benefit):
U.S.	$	( i 5,044)	$	( i 38,625)	$	( i 117,173)
Non-U.S.		i 14,420		i 6,497		i 2,849
Total current tax expense (benefit)		i 9,376		( i 32,128)		( i 114,324)
Deferred tax expense (benefit):
U.S.		i 80,247		( i 298,998)		i 50,207
Non-U.S.		( i 97)		( i 97)		i 777
Total deferred tax expense (benefit)		i 80,150		( i 299,095)		i 50,984

Total income tax expense (benefit)	$	i 89,526	$	( i 331,223)	$	( i 63,340)

(Some amounts may not reconcile due to rounding.)

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The weighted average expected tax provision has been calculated using the pre-tax income (loss) in each jurisdiction multiplied by that jurisdiction's applicable statutory tax rate. Reconciliation of the difference between the provision for income taxes and the expected tax provision at the weighted average tax rate for the periods indicated is provided below:

Years Ended December 31,

2019

2018

2017

(Dollars in thousands)

U.S.

Non-U.S.

U.S.

Non-U.S.

U.S.

Non-U.S.

Underwriting gain (loss)

i 38,964

i 297,199

( i 1,407,020)

i 796,745

( i 516,167)

i 308,646

Net investment income

i 325,179

i 321,960

i 283,569

i 297,614

i 255,310

i 287,588

Net realized capital gains (losses)

i 155,609

i 29,394

( i 90,033)

( i 37,103)

i 148,099

i 5,095

Net derivative gain (loss)

i 6,374

i 520

i 9,581

Corporate expenses

( i 13,063)

( i 19,903)

( i 11,035)

( i 19,637)

( i 7,394)

( i 18,529)

Interest, fee and bond issue cost amortization expense

( i 34,931)

i 3,239

( i 30,611)

( i 420)

( i 31,183)

( i 420)

Other income (expense)

( i 1,976)

( i 9,057)

( i 5,894)

( i 18,877)

i 32,441

( i 53,656)

Pre-tax income (loss)

i 469,782

i 629,206

( i 1,261,024)

i 1,018,842

( i 118,894)

i 538,305

Expected tax provision at the applicable statutory rate(s)

i 98,766

i 17,205

( i 264,912)

i 9,647

( i 41,614)

i 6,843

Increase (decrease) in taxes resulting from:

Tax exempt income

( i 3,680)

( i 3,824)

( i 8,488)

Dividend received deduction

( i 998)

( i 1,520)

( i 4,639)

Proration

i 1,050

i 1,150

i 1,760

Affiliated preferred stock dividends

i 6,517

i 10,861

Creditable foreign premium tax

( i 9,852)

( i 13,475)

( i 7,515)

Tax audit settlement

( i 1,576)

( i 2,094)

( i 11,516)

U.S. rate differential on carryback of net operation losses to PY

( i 43,734)

U.S. rate differential on deferred tax 2017 return to provision

( i 28,411)

Share based compensation tax benefits formerly in APIC

( i 2,984)

( i 373)

( i 3,333)

( i 120)

( i 6,716)

( i 235)

Impact of U.S. tax reform

i 8,246

Impact of prior year accounting adjustment

( i 8,986)

Change in uncertain tax positions

( i 8,434)

i 8,434

Other

( i 3,606)

( i 2,509)

i 7,579

( i 3,127)

i 1,641

( i 2,982)

Total income tax provision

i 75,203

i 14,323

( i 337,623)

i 6,400

( i 66,966)

i 3,626

(Some amounts may not reconcile due to rounding.)

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Reconciliation of the beginning and ending unrecognized tax benefits, for the periods indicated, is as follows:

(Dollars in thousands)	2019		2018		2017
Balance at January 1	$	i 8,434	$	-	$	-
Additions based on tax positions related to the current year		-		-		-
Additions for tax positions of prior years		-		i 8,434		-
Reductions for tax positions of prior years		( i 8,434)		-		-
Settlements with taxing authorities		-		-		-
Lapses of applicable statutes of limitations		-		-		-
Balance at December 31	$	-	$	i 8,434	$	-

At December 31, 2019, the Company’s unrecognized tax benefits, excluding interest and penalties, that would impact the effective tax rate was $0 thousand.

Interest and penalties related to unrecognized tax benefits are recognized in income tax expense. At December 31, 2019, the Company accrued $ i 0 thousand for the payment of interest (net of the federal benefit) and penalties. At December 31, 2019 and 2018, there were i no accrued liabilities, respectively, for the payment of interest and penalties.

The Company’s 2014 and subsequent U.S. tax years are open to audit by the IRS. In 2018, the IRS opened an audit of the 2014 tax year. To date, the Company has received only one notice of proposed adjustment for an immaterial amount of tax. The Company did propose affirmative beneficial tax return adjustments to the IRS at the start of the audit. In total, the Company expects a net tax refund of $ i 34,972 thousand plus net interest of $ i 2,421 thousand for the 2014 tax year. The refund is subject to IRS Joint Committee review and approval.

In 2019, the IRS opened an audit of the 2015 through 2017 tax years. To date, the Company has not received any Information Document Requests or notices of proposed adjustment. The Company had filed amended tax returns for 2015 and 2016 for $ i 1,519 thousand and $ i 4,685 thousand respectively. Those refunds, plus accrued interest of $ i 978 thousand and $ i 247 thousand respectively, will be settled at the conclusion of the audit.

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Deferred Income taxes reflect the tax effect of the temporary differences between the value of assets and liabilities for financial statement purposes and such values as measured by the U.S. tax laws and regulations. The principal items making up the net deferred income tax assets/(liabilities) are as follows for the periods indicated:

	Years Ended December 31,
(Dollars in thousands)	2019		2018
Deferred tax assets:
Foreign Tax Credits	$	i 186,706	$	i 167,685
Unearned premium reserves		i 75,130		i 63,309
Loss reserves		i 66,025		i 64,135
Net operating loss carryforward		i 31,698		i 106,543
Net unrealized losses on benefit plans		i 19,818		i 17,921
Unrealized foreign currency losses		i 7,964		i 12,596
Investment impairments		i 3,961		i 1,291
Uncollectible reinsurance reserves		i 3,142		i 3,142
Other Tax Credits		i 2,294		-
Net unrealized investment losses		-		i 10,815
Net fair value losses		-		i 7,196
Other assets		i 13,869		i 11,521
Total deferred tax assets		i 410,607		i 466,154

Deferred tax liabilities:
Deferred acquisition costs		i 81,931		i 74,736
Net unrealized investment gains		i 39,413		-
Net fair value income		i 25,936		-
Partnership investments		i 15,039		i 14,936
Benefit plan asset		i 2,333		i 3,600
Other liabilities		i 4,937		i 3,868
Total deferred tax liabilities		i 169,589		i 97,140

Net deferred tax assets		i 241,018		i 369,014
Less: Valuation allowance		( i 12,997)		( i 9,309)
Total net deferred tax assets	$	i 228,021	$	i 359,705

(Some amounts may not reconcile due to rounding.)

At December 31, 2019, the Company has $ i 186,706 thousand of Foreign Tax Credits (“FTCs”). The FTCs expire in various amounts between 2020 and 2029. The Company also has a tax-effected U.S. Net Operating Loss (“NOL”) carryforward of $ i 19,027 thousand. This NOL carryforward expires in 2038.

In performing our assessment of the recoverability of the Company’s deferred tax assets pursuant to ASC 740, we considered the tax laws governing the utilization of the NOL and FTC carryforwards as well as our other deferred tax assets in each applicable tax jurisdiction. We then evaluated all the positive and negative evidence impacting the realizability of the Company’s deferred tax assets as of December 31, 2019 in the U.S. tax jurisdiction. Evidence considered in the analysis included the Company’s ability to carryback the net operating losses generated in 2017 and 2018 as well as that a company generally must use any remaining net operating loss carryforward before it can utilize its foreign tax credit carryforwards. Consequently, the Company implemented planning actions during 2018, 2019 and early 2020 to increase its planned U.S. source and foreign source income to better enable it to utilize its U.S. deferred tax assets and tax attributes. As of December 31, 2019, based on all available evidence, the Company concluded that it is “more likely than not” that it will use its

F-53

U.S. NOL and FTC carryforwards prior to their respective expirations and, thus, no valuation allowance has been established in the U.S. jurisdiction.

With respect to operations in foreign tax jurisdictions, a valuation allowance of $ i 12,671 thousand and $ i 9,309 thousand has been recorded in 2019 and 2018, respectively, against the NOL deferred tax assets in its Canadian and UK subsidiaries. The tax-effected Canadian NOLs of $ i 2,511 begin to expire in 2035 and the UK NOLs of $ i 10,160 do not expire.

As a result of the TCJA, the Company recognized an $ i 8,246 thousand tax expense in the Company’s Consolidated Statements of Operations for the year ended December 31, 2017. In accordance with SEC Staff Accounting Bulletin 118, in 2017 the Company recorded the effects of the TCJA at that time using reasonable estimates due to the need for further analysis to complete the accounting.

During 2018, the Company completed its accounting, including interpretation of additional guidance issued by the IRS and U.S. Department of the Treasury, and recognized an income tax benefit of $ i 28,411 thousand primarily related to the 2017 tax return to tax provision true-up recorded in 2018.

Effective January 1, 2017, the Company adopted ASU 2016-09 which provided new guidance on the treatment of the tax effects of share based compensation transactions. ASU 2016-09 required that the income tax effects of restricted stock vestings and stock option exercises resulting from the change in value of share based compensation awards between the grant date and settlement (vesting/exercise) date be recorded as part of income tax expense (benefit) within the consolidated statements of operations and comprehensive income (loss). Per the new guidance, the Company recorded excess tax benefits of $ i 3,357 thousand, $ i 3,453 thousand and $ i 6,951 thousand related to restricted stock vestings and stock option exercises as part of income tax expense (benefit) within the consolidated statements of operations and comprehensive income (loss) in 2019, 2018 and 2017, respectively.

In years prior to 2017, the Company recorded tax benefits related to restricted stock vestings and stock option exercises as part of additional paid-in capital in the shareholders' equity section of the consolidated balance sheets.

The adoption of ASU 2016-09 did not impact the accounting treatment of tax benefits related to dividends on restricted stock. The tax benefits related to the payment of dividends on restricted stock have been recorded as part of additional paid-in capital in the shareholders' equity section of the consolidated balance sheets in all years. The tax benefits related to the payment of dividends on restricted stock were $ i 484 thousand, $ i 403 thousand and $ i 626 thousand in 2019, 2018 and 2017, respectively.

11. REINSURANCE

The Company utilizes reinsurance agreements to reduce its exposure to large claims and catastrophic loss occurrences. These agreements provide for recovery from reinsurers of a portion of losses and LAE under certain circumstances without relieving the Company of its underlying obligations to the policyholders. Losses and LAE incurred and premiums earned are reported after deduction for reinsurance. In the event that one or more of the reinsurers were unable to meet their obligations under these reinsurance agreements, the Company would not realize the full value of the reinsurance recoverable balances. The Company may hold partial collateral, including letters of credit and funds held, under these agreements. See also Note 1C, Note 3 and Note 8.

F-54

Premiums written and earned and incurred losses and LAE are comprised of the following for the periods indicated:

	Years Ended December 31,
(Dollars in thousands)	2019		2018		2017
Written premiums:
Direct	$	i 2,783,036	$	i 2,240,951	$	i 2,083,555
Assumed		i 6,350,328		i 6,234,203		i 5,090,367
Ceded		( i 1,308,940)		( i 1,060,726)		( i 929,261)
Net written premiums	$	i 7,824,424	$	i 7,414,428	$	i 6,244,661

Premiums earned:
Direct	$	i 2,551,662	$	i 2,129,320	$	i 1,825,705
Assumed		i 6,059,222		i 5,807,332		i 4,945,522
Ceded		( i 1,207,198)		( i 1,004,953)		( i 833,387)
Net premiums earned	$	i 7,403,686	$	i 6,931,699	$	i 5,937,840

Incurred losses and LAE:
Direct	$	i 1,618,686	$	i 1,372,589	$	i 1,311,682
Assumed		i 3,923,298		i 5,046,947		i 3,909,816
Ceded		( i 619,086)		( i 768,133)		( i 698,917)
Net incurred losses and LAE	$	i 4,922,898	$	i 5,651,403	$	i 4,522,581

12. OTHER COMPREHENSIVE INCOME (LOSS)

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

Years Ended December 31, 2019

2019

2018

2017

(Dollars in thousands)

Before Tax

Tax Effect

Net of Tax

Before Tax

Tax Effect

Net of Tax

Before Tax

Tax Effect

Net of Tax

Unrealized appreciation (depreciation) ("URA(D)") on securities - temporary

i 547,539

( i 49,665)

i 497,874

( i 275,511)

i 21,061

( i 254,450)

( i 81,915)

i 21,597

( i 60,318)

URA(D) on securities - OTTI

( i 1,559)

i 115

( i 1,444)

( i 1,071)

( i 135)

( i 1,206)

( i 5,618)

i 1,588

( i 4,030)

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

( i 13,129)

i 516

( i 12,613)

i 28,014

( i 518)

i 27,496

( i 7,258)

i 308

( i 6,950)

Foreign currency translation adjustments

i 18,585

( i 4,555)

i 14,030

( i 86,520)

i 9,704

( i 76,816)

i 142,054

( i 20,137)

i 121,917

Benefit plan actuarial net gain (loss)

( i 15,938)

i 3,347

( i 12,591)

( i 646)

i 136

( i 510)

i 1,300

( i 273)

i 1,027

Reclassification of benefit plan liability amortization included in net income (loss)

i 6,902

( i 1,449)

i 5,453

i 6,356

( i 1,335)

i 5,021

i 8,426

( i 2,949)

i 5,477

Total other comprehensive income (loss)

i 542,400

( i 51,691)

i 490,709

( i 329,378)

i 28,913

( i 300,465)

i 56,989

i 134

i 57,123

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

	Years Ended
	December 31,				Affected line item within the statements of
AOCI component	2019		2018		operations and comprehensive income (loss)
(Dollars in thousands)
URA(D) on securities	$	( i 13,129)	$	i 28,014	Other net realized capital gains (losses)
		i 516		( i 518)	Income tax expense (benefit)
	$	( i 12,613)	$	i 27,496	Net income (loss)

Benefit plan net gain (loss)	$	i 6,902	$	i 6,356	Other underwriting expenses
		( i 1,449)		( i 1,335)	Income tax expense (benefit)
	$	i 5,453	$	i 5,021	Net income (loss)

F-55

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

	Years Ended
	December 31,
(Dollars in thousands)	2019		2018
Beginning balance of URA (D) on securities	$	( i 179,392)	$	i 49,969
Change to beginning balance due to adoption of ASU 2016-01		-		( i 1,201)
Current period change in URA (D) of investments - temporary		i 485,261		( i 226,954)
Current period change in URA (D) of investments - non-credit OTTI		( i 1,444)		( i 1,206)
Ending balance of URA (D) on securities		i 304,425		( i 179,392)

Beginning balance of foreign currency translation adjustments		( i 215,747)		( i 138,931)
Current period change in foreign currency translation adjustments		i 14,030		( i 76,816)
Ending balance of foreign currency translation adjustments		( i 201,717)		( i 215,747)

Beginning balance of benefit plan net gain (loss)		( i 67,418)		( i 71,929)
Current period change in benefit plan net gain (loss)		( i 7,138)		i 4,511
Ending balance of benefit plan net gain (loss)		( i 74,556)		( i 67,418)

Ending balance of accumulated other comprehensive income (loss)	$	i 28,152	$	( i 462,557)

(Some amounts may not reconcile due to rounding.)

13. EMPLOYEE BENEFIT PLANS

Defined Benefit Pension Plans.

The Company maintains both qualified and non-qualified defined benefit pension plans for its U.S. employees employed prior to April 1, 2010. Generally, the Company computes the benefits based on average earnings over a period prescribed by the plans and credited length of service. The Company’s non-qualified defined benefit pension plan provided compensating pension benefits for participants whose benefits have been curtailed under the qualified plan due to Internal Revenue Code limitations. Effective January 1, 2018, participants of the Company’s non-qualified defined benefit pension plan may no longer accrue additional service benefits.

Although not required to make contributions under IRS regulations, the following table summarizes the Company’s contributions to the defined benefit pension plans for the periods indicated:

	Years Ended December 31,
(Dollars in thousands)	2019		2018		2017
Company contributions	$	i 4,750	$	i 77,743	$	i 10,534

The following table summarizes the Company’s pension expense for the periods indicated:

	Years Ended December 31,
(Dollars in thousands)	2019		2018		2017
Pension expense	$	i 10,042	$	i 9,728	$	i 16,299

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The following table summarizes the status of these defined benefit plans for U.S. employees for the periods indicated:

	Years Ended December 31,
(Dollars in thousands)	2019		2018
Change in projected benefit obligation:
Benefit obligation at beginning of year	$	i 300,244	$	i 316,202
Service cost		i 8,255		i 9,801
Interest cost		i 11,712		i 10,290
Actuarial (gain)/loss		i 46,206		( i 29,966)
Curtailment		-		-
Benefits paid		( i 11,062)		( i 6,084)
Projected benefit obligation at end of year		i 355,356		i 300,244

Change in plan assets:
Fair value of plan assets at beginning of year		i 260,531		i 210,267
Actual return on plan assets		i 47,247		( i 21,395)
Actual contributions during the year		i 4,750		i 77,743
Administrative expenses paid		-		-
Benefits paid		( i 11,062)		( i 6,084)
Fair value of plan assets at end of year		i 301,467		i 260,531

Funded status at end of year	$	( i 53,889)	$	( i 39,713)

(Some amounts may not reconcile due to rounding.)

Amounts recognized in the consolidated balance sheets for the periods indicated:

	At December 31,
(Dollars in thousands)	2019		2018
Other assets (due beyond one year)	$	-	$	-
Other liabilities (due within one year)		( i 7,362)		( i 7,530)
Other liabilities (due beyond one year)		( i 46,527)		( i 32,182)
Net amount recognized in the consolidated balance sheets	$	( i 53,889)	$	( i 39,713)

(Some amounts may not reconcile due to rounding.)

Amounts not yet reflected in net periodic benefit cost and included in accumulated other comprehensive income (loss) for the periods indicated:

	At December 31,
(Dollars in thousands)	2019		2018
Accumulated income (loss)	$	( i 97,466)	$	( i 88,580)
Accumulated other comprehensive income (loss)	$	( i 97,466)	$	( i 88,580)

(Some amounts may not reconcile due to rounding.)

F-57

Other changes in other comprehensive income (loss) for the periods indicated are as follows:

	Years Ended December 31,
(Dollars in thousands)	2019		2018
Other comprehensive income (loss) at December 31, prior year	$	( i 88,580)	$	( i 86,788)
Net gain (loss) arising during period		( i 16,927)		( i 8,631)
Recognition of amortizations in net periodic benefit cost:
Actuarial loss		i 8,042		i 6,839
Curtailment loss recognized		-		-
Other comprehensive income (loss) at December 31, current year	$	( i 97,466)	$	( i 88,580)

(Some amounts may not reconcile due to rounding.)

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

	Years Ended December 31,
(Dollars in thousands)	2019		2018		2017
Service cost	$	i 8,255	$	i 9,801	$	i 10,949
Interest cost		i 11,712		i 10,290		i 10,034
Expected return on assets		( i 17,968)		( i 17,202)		( i 13,050)
Amortization of actuarial loss from earlier periods		i 7,635		i 6,839		i 8,366
Settlement		i 408		-		-
Net periodic benefit cost	$	i 10,042	$	i 9,728	$	i 16,299

Other changes recognized in other comprehensive income (loss):
Other comprehensive income (loss) attributable to change from prior year		i 8,885		i 1,792

Total recognized in net periodic benefit cost and other
comprehensive income (loss)	$	i 18,927	$	i 11,520

(Some amounts may not reconcile due to rounding.)

The estimated transition obligation, actuarial loss and prior service cost that will be amortized from accumulated other comprehensive income into net periodic benefit cost over the next year are $ i 0 thousand, $ i 9,461 thousand and $ i 0 thousand, respectively.

The weighted average discount rates used to determine net periodic benefit cost for 2019, 2018 and 2017 were i 4.27%, i 3.62% and i 4.16%, respectively. The rate of compensation increase used to determine the net periodic benefit cost for 2019, 2018 and 2017 was i i i 4.00 / / %. The expected long-term rate of return on plan assets was i 7.00% for 2019, i 7.00% for 2018 and was i 7.50% for 2017 based on expected portfolio returns and allocations.

The weighted average discount rates used to determine the actuarial present value of the projected benefit obligation for years end 2019, 2018 and 2017 were i 3.28%, i 4.27% and i 3.62%, respectively.

F-58

The following table summarizes the accumulated benefit obligation for the periods indicated:

	At December 31,
(Dollars in thousands)	2019		2018
Qualified Plan	$	i 288,328	$	i 237,855
Non-qualified Plan		i 21,642		i 24,472
Total	$	i 309,970	$	i 262,327

(Some amounts may not reconcile due to rounding.)

The following table displays the plans with projected benefit obligations in excess of plan assets for the periods indicated:

	At December 31,
(Dollars in thousands)	2019		2018
Qualified Plan
Projected benefit obligation	$	i 333,715	$	i 275,772
Fair value of plan assets		i 301,467		i 260,531
Non-qualified Plan
Projected benefit obligation	$	i 21,642	$	i 24,472
Fair value of plan assets		-		-

The following table displays the plans with accumulated benefit obligations in excess of plan assets for the periods indicated:

	At December 31,
(Dollars in thousands)	2019		2018
Qualified Plan
Accumulated benefit obligation	$	-	$	-
Fair value of plan assets		-		-
Non-qualified Plan
Accumulated benefit obligation	$	i 21,642	$	i 24,472
Fair value of plan assets		-		-

The following table displays the expected benefit payments in the periods indicated:

(Dollars in thousands)
2019		i 15,670
2020		i 11,458
2021		i 12,198
2022		i 12,902
2023		i 13,985
Next 5 years		i 84,334

Plan assets consist of shares in investment trusts with i 62%, i 30%, i 7% and i 1% of the underlying assets consisting of equity securities, fixed maturities, limited partnerships and multi-strategy equity funds and cash, respectively. The Company manages the qualified plan investments for U.S. employees. The assets in the plan consist of debt and equity mutual funds. Due to the long term nature of the plan, the target asset allocation has historically been i 70% equities and i 30% bonds.

F-59

The following tables present the fair value measurement levels for the qualified plan assets at fair value for the periods indicated:

			Fair Value Measurement Using:
			Quoted Prices
			in Active		Significant
			Markets for		Other		Significant
			Identical		Observable		Unobservable
			Assets		Inputs		Inputs
(Dollars in thousands)	December 31, 2019		(Level 1)		(Level 2)		(Level 3)
Assets:
Short-term investments, which approximates fair value (a)	$	i 1,749	$	i 1,749	$	-	$	-
Mutual funds, fair value
Fixed income (b)		i 90,483		i 90,483		-		-
Equities (c)		i 188,884		i 188,884		-		-
Total	$	i 281,116	$	i 281,116	$	-	$	-

(Some amounts may not reconcile due to rounding.)

(a) This category includes high quality, short-term money market instruments, which are issued and payable in U.S. dollars.

(b) This category includes fixed income funds, which invest in investment grade securities of corporations, governments and government agencies with approximately 70% in U.S. securities and 30% in international securities.

(c) This category includes funds, which invest in small, mid and multi-cap equity securities including common stocks, securities convertible into common stock and securities with common stock characteristics, such as rights and warrants, with approximately 50% in U.S. equities and 50% in international equities.

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

			Fair Value Measurement Using:
			Quoted Prices
			in Active		Significant
			Markets for		Other		Significant
			Identical		Observable		Unobservable
			Assets		Inputs		Inputs
(Dollars in thousands)	December 31, 2018		(Level 1)		(Level 2)		(Level 3)
Assets:
Short-term investments, which approximates fair value (a)	$	i 2,872	$	i 2,872	$	-	$	-
Mutual funds, fair value
Fixed income (b)		i 82,633		i 82,633		-		-
Equities (c)		i 154,935		i 154,935		-		-
Total	$	i 240,440	$	i 240,440	$	-	$	-

(Some amounts may not reconcile due to rounding.)

(a) This category includes high quality, short-term money market instruments, which are issued and payable in U.S. dollars.

F-60

In addition, $ i 20,351 thousand and $ i 20,091 thousand of investments which were recorded as part of the qualified plan assets at December 31, 2019 and 2018, respectively, are not included within the fair value hierarchy tables as the assets are valued using the NAV practical expedient guidance within ASU 2015-07.

The Company contributed $0 thousand and $ i 77,000 thousand to the qualified pension benefit plan for the years ended December 31, 2019 and 2018, respectively.

Defined Contribution Plans.

The Company also maintains both qualified and non-qualified defined contribution plans (“Savings Plan” and “Non-Qualified Savings Plan”, respectively) covering U.S. employees. Under the plans, the Company contributes up to a maximum i 3% of the participants’ compensation based on the contribution percentage of the employee. The Non-Qualified Savings Plan provides compensating savings plan benefits for participants whose benefits have been curtailed under the Savings Plan due to Internal Revenue Code limitations. In addition, effective for new hires (and rehires) on or after April 1, 2010, the Company will contribute between i 3% and i 8% of an employee’s earnings for each payroll period based on the employee’s age. These contributions will be i 100% vested after three years.

The following table presents the Company’s incurred expenses related to these plans for the periods indicated:

	Years Ended December 31,
(Dollars in thousands)	2019		2018		2017
Incurred expenses	$	i 10,794	$	i 9,301	$	i 7,167

In addition, the Company maintains several defined contribution pension plans covering non-U.S. employees. Each non-U.S. office (Brazil, Canada, London, Belgium, Singapore, Ireland, Zurich and Bermuda) maintains a separate plan for the non-U.S. employees working in that location. The Company contributes various amounts based on salary, age and/or years of service. In the current year, the contributions as a percentage of salary for the branch offices ranged from i 4.9% to i 45.7%. The contributions are generally used to purchase pension benefits from local insurance providers. The following table presents the Company’s incurred expenses related to these plans for the periods indicated:

	Years Ended December 31,
(Dollars in thousands)	2019		2018		2017
Incurred expenses	$	i 2,216	$	i 2,057	$	i 1,849

Post-Retirement Plan.

The Company sponsors a Retiree Health Plan for employees employed prior to April 1, 2010. This plan provides healthcare benefits for eligible retired employees (and their eligible dependants), who have elected coverage. The Company anticipates that most covered employees will become eligible for these benefits if they retire while working for the Company. The cost of these benefits is shared with the retiree. The Company accrues the post-retirement benefit expense during the period of the employee’s service.

A medical cost trend rate of i 7.00% in 2019 was assumed to decrease gradually to i 4.50% in 2029 and then remain at that level.

F-61

Changes in the assumed healthcare cost trend can have a significant effect on the amounts reported for the healthcare plans. A one percent change in the rate would have the following effects on:

	Percentage		Percentage
	Point Increase		Point Decrease
(Dollars in thousands)	($ Impact)		($ Impact)
a. Effect on total service and interest cost components	$	i 434	$	( i 335)
b. Effect on accumulated post-retirement benefit obligation		i 6,257		( i 4,833)

The following table presents the post-retirement benefit expenses for the periods indicated:

	Years Ended December 31,
(Dollars in thousands)	2019		2018		2017
Post-retirement benefit expenses	$	i 1,231	$	i 1,829	$	i 2,814

The following table summarizes the status of this plan for the periods indicated:

	At December 31,
(Dollars in thousands)	2019		2018
Change in projected benefit obligation:
Benefit obligation at beginning of year	$	i 28,483	$	i 34,717
Service cost		i 983		i 1,312
Interest cost		i 980		i 999
Amendments		( i 582)		-
Actuarial (gain)/loss		-		( i 7,985)
Benefits paid		( i 488)		( i 561)
Benefit obligation at end of year		i 29,376		i 28,483

Change in plan assets:
Fair value of plan assets at beginning of year		-		-
Employer contributions		i 488		i 561
Benefits paid		( i 488)		( i 561)
Fair value of plan assets at end of year		-		-

Funded status at end of year	$	( i 29,376)	$	( i 28,483)

Amounts recognized in the consolidated balance sheets for the periods indicated:

	At December 31,
(Dollars in thousands)	2019		2018
Other liabilities (due within one year)	$	( i 611)	$	( i 608)
Other liabilities (due beyond one year)		( i 28,764)		( i 27,875)
Net amount recognized in the consolidated balance sheets	$	( i 29,376)	$	( i 28,483)

(Some amounts may not reconcile due to rounding.)

F-62

Amounts not yet reflected in net periodic benefit cost and included in accumulated other comprehensive income (loss) for the periods indicated:

	At December 31,
(Dollars in thousands)	2019		2018
Accumulated income (loss)	$	i 188	$	( i 238)
Accumulated prior service credit (cost)		i 2,904		i 3,480
Accumulated other comprehensive income (loss)	$	i 3,092	$	i 3,242

Other changes in other comprehensive income (loss) for the periods indicated are as follows:

	Years Ended December 31,
(Dollars in thousands)	2019		2018
Other comprehensive income (loss) at December 31, prior year	$	i 3,242	$	( i 4,260)
Net gain (loss) arising during period		i 582		i 7,985
Prior Service credit (cost) arising during period		-		-
Recognition of amortizations in net periodic benefit cost:
Actuarial loss (gain)		( i 155)		i 94
Prior service cost		( i 577)		( i 577)
Other comprehensive income (loss) at December 31, current year	$	i 3,092	$	i 3,242

Net periodic benefit cost included the following components for the periods indicated:

	Years Ended December 31,
(Dollars in thousands)	2019		2018		2017
Service cost	$	i 983	$	i 1,312	$	i 1,570
Interest cost		i 980		i 999		i 1,184
Prior service credit recognition		( i 577)		( i 577)		( i 131)
Net gain recognition		( i 155)		i 94		i 192
Net periodic cost	$	i 1,231	$	i 1,829	$	i 2,814

Other changes recognized in other comprehensive income (loss):
Other comprehensive gain (loss) attributable to change from prior year		i 150		( i 7,502)

Total recognized in net periodic benefit cost and
other comprehensive income (loss)	$	i 1,381	$	( i 5,673)

(Some amounts may not reconcile due to rounding.)

The estimated transition obligation, actuarial loss and prior service credit that will be amortized from accumulated other comprehensive income (loss) into net periodic benefit cost over the next fiscal year are $ i 0 thousand, $ i 0 thousand and ($ i 577) thousand, respectively.

The weighted average discount rates used to determine net periodic benefit cost for 2019, 2018 and 2017 were i 4.27 %, i 3.62% and i 4.16%, respectively.

The weighted average discount rates used to determine the actuarial present value of the projected benefit obligation at year end 2019, 2018 and 2017 were i 3.28%, i 4.27% and i 3.62%, respectively.

F-63

The following table displays the expected benefit payments in the years indicated:

(Dollars in thousands)
2019	$	i 611
2020		i 673
2021		i 768
2022		i 851
2023		i 896
Next 5 years		i 6,377

14. DIVIDEND RESTRICTIONS AND STATUTORY FINANCIAL INFORMATION

Group and its operating subsidiaries are subject to various regulatory restrictions, including the amount of dividends that may be paid and the level of capital that the operating entities must maintain. These regulatory restrictions are based upon statutory capital as opposed to GAAP basis equity or net assets. Group and one of its primary operating subsidiaries, Bermuda Re, are regulated by Bermuda law and its other primary operating subsidiary, Everest Re, is regulated by Delaware law. Bermuda Re is subject to the Bermuda Solvency Capital Requirement (“BSCR”) administered by the Bermuda Monetary Authority (“BMA”) and Everest Re is subject to the Risk-Based Capital Model (“RBC”) developed by the National Association of Insurance Commissioners (“NAIC”). These models represent the aggregate regulatory restrictions on net assets and statutory capital and surplus.

Dividend Restrictions.

Under Bermuda law, Group is prohibited from declaring or paying a dividend if such payment would reduce the realizable value of its assets to an amount less than the aggregate value of its liabilities and its issued share capital and share premium (additional paid-in capital) accounts. Group’s ability to pay dividends and its operating expenses is dependent upon dividends from its subsidiaries.

Under Bermuda law, Bermuda Re is prohibited from declaring or making payment of a dividend if it fails to meet its minimum solvency margin or minimum liquidity ratio. As a long term insurer, Bermuda Re is also unable to declare or pay a dividend to anyone who is not a policyholder unless, after payment of the dividend, the value of the assets in their long term business fund, as certified by their approved actuary, exceeds their liabilities for long term business by at least the $ i 250 thousand minimum solvency margin.

Prior approval of the BMA is required if Bermuda Re’s dividend payments would exceed i 25% of their prior year-end total statutory capital and surplus.

Bermuda Re prepares its statutory financial statements in conformity with the accounting principles set forth in Bermuda in The Insurance Act 1978, amendments thereto and related regulations. The statutory capital and surplus of Bermuda Re was $ i 3,197,418 thousand and $ i 3,068,534 thousand at December 31, 2019 and 2018, respectively. The statutory net income of Bermuda Re was $ i 503,610 thousand, $ i 873,111 thousand and $ i 582,128 thousand for the years ended December 31, 2019, 2018 and 2017, respectively.

Delaware law provides that an insurance company which is a member of an insurance holding company system and is domiciled in the state shall not pay dividends without giving prior notice to the Insurance Commissioner of Delaware and may not pay dividends without the approval of the Insurance Commissioner if the value of the proposed dividend, together with all other dividends and distributions made in the preceding i twelve months, exceeds the greater of (1) i 10% of statutory surplus or (2) net income, not including realized capital gains, each

F-64

as reported in the prior year’s statutory annual statement. In addition, no dividend may be paid in excess of unassigned earned surplus. At December 31, 2019, Everest Re has $ i 373,914 thousand available for payment of dividends in 2020 without the need for prior regulatory approval.

Everest Re prepares its statutory financial statements in accordance with accounting practices prescribed or permitted by the NAIC and the Delaware Insurance Department. Prescribed statutory accounting practices are set forth in the NAIC Accounting Practices and Procedures Manual. The capital and statutory surplus of Everest Re was $ i 3,739,140 thousand and $ i 3,650,594 thousand at December 31, 2019 and 2018, respectively. The statutory net income of Everest Re was $ i 363,034 thousand for the year ended December 31, 2019, and statutory net loss of Everest Re was $ i 1,317,991 thousand and $ i 391,419 thousand for the years ended December 31, 2018 and 2017, respectively.

There are certain regulatory and contractual restrictions on the ability of Holdings’ operating subsidiaries to transfer funds to Holdings in the form of cash dividends, loans or advances. The insurance laws of the State of Delaware, where Holdings’ direct insurance subsidiaries are domiciled, require regulatory approval before those subsidiaries can pay dividends or make loans or advances to Holdings that exceed certain statutory thresholds.

Capital Restrictions.

In Bermuda, Bermuda Re is subject to the BSCR administered by the BMA. No regulatory action is taken if an insurer’s capital and surplus is equal to or in excess of their enhanced capital requirement determined by the BSCR model. In addition, the BMA has established a target capital level for each insurer, which is i 120% of the enhanced capital requirement.

In the United States, Everest Re is subject to the RBC developed by the NAIC which determines an authorized control level risk-based capital. As long as the total adjusted capital is i 200% or more of the authorized control level capital, no action is required by the Company.

The regulatory targeted capital and the actual statutory capital for Bermuda Re and Everest Re were as follows:

	Bermuda Re ⁽¹⁾				Everest Re ⁽¹⁾
	At December 31,				At December 31,
(Dollars in thousands)	2019⁽¹⁾		2018		2019		2018
Regulatory targeted capital	$	-	$	i 1,753,156	$	i 2,001,226	$	i 2,172,958
Actual capital	$	i 3,197,418	$	i 3,068,534	$	i 3,739,140	$	i 3,650,594

(a) Regulatory targeted capital represents the target capital level from the applicable year's BSCR calculation.

(b) Regulatory targeted capital represents i 200% of the RBC authorized control level calculation for the applicable year.

(c) The 2019 BSCR calculation is not yet due to be completed; however, the Company anticipates that Bermuda Re's December 31, 2019 actual capital will exceed the targeted capital level.

15. COMMITMENTS AND CONTINGENCIES

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

The Company has entered into separate annuity agreements with The Prudential Insurance of America (“The Prudential”) and an additional unaffiliated life insurance company in which the Company has either purchased annuity contracts or become the assignee of annuity proceeds that are meant to settle claim payment obligations in the future. In both instances, the Company would become contingently liable if either The Prudential or the unaffiliated life insurance company were unable to make payments related to the respective annuity contract.

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

	At December 31,
(Dollars in thousands)	2019		2018
The Prudential	$	i 141,703	$	i 142,754
Unaffiliated life insurance company		i 35,082		i 34,717

16. SHARE-BASED COMPENSATION PLANS

The Company has a 2010 Stock Incentive Plan (“2010 Employee Plan”), a 2009 Non-Employee Director Stock Option and Restricted Stock Plan (“2009 Director Plan”) and a 2003 Non-Employee Director Equity Compensation Plan (“2003 Director Plan”).

Under the 2010 Employee Plan, i 4,000,000 common shares have been authorized to be granted as non-qualified share options, incentive share options, share appreciation rights, restricted share awards or performance share unit awards to officers and key employees of the Company. At December 31, 2019, there were i 2,303,555 remaining shares available to be granted under the 2010 Employee Plan. The 2010 Employee Plan replaced a 2002 Employee Plan, which replaced a 1995 Employee Plan; therefore, no further awards will be granted under the 2002 Employee Plan or the 1995 Employee Plan. Through December 31, 2019, only non-qualified share options, restricted share awards and performance share unit awards had been granted under the employee plans. Under the 2009 Director Plan, i 37,439 common shares have been authorized to be granted as share options or restricted share awards to non-employee directors of the Company. At December 31, 2019, there were i 34,957 remaining shares available to be granted under the 2009 Director Plan. The 2009 Director Plan replaced a 1995 Director Plan, which expired. Under the 2003 Director Plan, i 500,000 common shares have been authorized to be granted as share options or share awards to non-employee directors of the Company. At December 31, 2019 there were i 324,913 remaining shares available to be granted under the 2003 Director Plan.

Options and restricted shares granted under the 2010 Employee Plan and the 2002 Employee Plan vest at the earliest of i 20% per year over i five years or in accordance with any applicable employment agreement. Options and restricted shares granted under the 2003 Director Plan generally vest at i 33% per year over i three years, unless an alternate vesting period is authorized by the Board. Options and restricted shares granted under the 2009 Director Plan will vest as provided in the award agreement. All options are exercisable at fair market value of the stock at the date of grant and expire i ten years after the date of grant.

Performance Share Unit awards granted under the 2010 Employee Plan will vest i 100% after i three years. The Performance Share Unit awards represent the right to receive between and 0 and i 1.75 shares of stock for each unit awarded depending upon performance in relation to certain metrics. The performance share unit valuation will be based i 50% on growth in book value per share over the i three year vesting period, compared to designated peer companies. The remaining i 50% of the performance share valuation will be based upon operating return on equity for each of the separate operating years within the vesting period.

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For share options, restricted shares and performance share units granted under the 2010 Employee Plan, the 2002 Employee Plan, the 2009 Director Plan and the 2003 Director Plan, share-based compensation expense recognized in the consolidated statements of operations and comprehensive income (loss) was $ i 34,018 thousand, $ i 32,369 thousand and $ i 30,297 thousand for the years ended December 31, 2019, 2018 and 2017, respectively. The corresponding income tax benefit recorded in the consolidated statements of operations and comprehensive income (loss) for share-based compensation was $ i 8,384 thousand, $ i 7,401 thousand and $ i 14,824 thousand for the years ended December 31, 2019, 2018 and 2017, respectively. In accordance with ASU 2016-09, the income tax effect resulting from the change in the value of share based compensation awards between grant date and settlement date has been recorded as part of the income tax benefit in the consolidation statements of operations and comprehensive income (loss) effective January 1, 2017. Prior to that date, the income tax impact of the change in value of share based compensation awards between grant date and settlement date was recorded within additional paid in capital in the Consolidated Balance Sheets.

For the year ended December 31, 2019, a total of i 232,601 restricted shares were granted on February 27, 2019, May 15, 2019, May 23, 2019, September 18, 2019, and November 19, 2019, with a fair value of $223.45, $247.93, $249.83, $260.555 and $266.2325 per share, respectively. Additionally, i 16,855 performance share units were awarded on February 27, 2019, with a fair value of $223.45 per unit. No share options were granted during the year ended December 31, 2019. For share options granted during previous years, the fair value per option was calculated on the date of the grant using the Black-Scholes option valuation model.

The Company recognizes, as an increase to additional paid-in capital, a realized income tax benefit from dividends, charged to retained earnings and paid to employees on equity classified non-vested equity shares. In addition, the amount recognized in additional paid-in capital for the realized income tax benefit from dividends on those awards is included in the pool of excess tax benefits available to absorb tax deficiencies on share-based payment awards. For the years ended December 31, 2019, 2018 and 2017, the Company recognized $ i 484 thousand, $ i 403 thousand and $ i 626 thousand, respectively, of additional paid-in capital due to tax benefits from dividends on restricted shares.

A summary of the option activity under the Company’s shareholder approved plans as of December 31, 2019, 2018 and 2017, and changes during the year then ended is presented in the following tables:

				Weighted-
		Weighted-		Average
		Average		Remaining	Aggregate
(Aggregate Intrinsic Value in thousands)		Exercise		Contractual	Intrinsic
Options	Shares	Price/Share		Term	Value
Outstanding at January 1, 2019	i 279,164	$	i 83.84
Granted	–		i -
Exercised	i 108,460		i 78.58
Forfeited/Cancelled/Expired	–		-
Outstanding at December 31, 2019	i 170,704		i 87.18	i 1.4	$	i 32,376
			.
Exercisable at December 31, 2019	i 170,704		i 87.18	i 1.4	$	i 32,376

F-67

				Weighted-
		Weighted-		Average
		Average		Remaining	Aggregate
(Aggregate Intrinsic Value in thousands)		Exercise		Contractual	Intrinsic
Options	Shares	Price/Share		Term	Value
Outstanding at January 1, 2018	i 360,364	$	i 84.10
Granted	-		-
Exercised	i 81,200		i 84.99
Forfeited/Cancelled/Expired	-		-
Outstanding at December 31, 2018	i 279,164		i 83.84	i 1.9	$	i 37,386

Exercisable at December 31, 2018	i 279,164		i 83.84	i 1.9	$	i 37,386

				Weighted-
		Weighted-		Average
		Average		Remaining	Aggregate
(Aggregate Intrinsic Value in thousands)		Exercise		Contractual	Intrinsic
Options	Shares	Price/Share		Term	Value
Outstanding at January 1, 2017	i 454,994	$	i 84.88
Granted	-		-
Exercised	i 94,630		i 87.84
Forfeited/Cancelled/Expired	-		-
Outstanding at December 31, 2017	i 360,364		i 84.10	i 2.7	$	i 49,428

Exercisable at December 31, 2017	i 360,364		i 84.10	i 2.7	$	i 49,428

There were no share options granted in 2019, 2018 and 2017. The aggregate intrinsic value (market price less exercise price) of options exercised during the years ended December 31, 2019, 2018 and 2017 was $ i 16,297 thousand, $ i 11,737 thousand and $ i 14,130 thousand, respectively. The cash received from the exercised share options for the year ended December 31, 2019 was $ i 8,523 thousand. The tax benefit realized from the options exercised for the year ended December 31, 2019 was $ i 3,198 thousand.

The following table summarizes information about share options outstanding for the period indicated:

	At December 31, 2019
	Options Outstanding				Opotions Exercisable
		Weighted-
		Average	Weighted-			Weighted-
	Number	Remaining	Average		Number	Average
Range of	Outstanding	Contractual	Exercise		Exercisable	Exercise
Exercise Prices	at 12/31/19	Life	Price		at 12/31/19	Price
$ i 84.6300 - $ i 85.6300	i 31,100	i 0.2	$	i 84.63	i 31,100	$	i 84.63
$ i 85.6400 - $ i 87.4700	i 59,900	i 1.2		i 86.62	i 59,900		i 86.62
$ i 87.4800 - $ i 89.4100	i 73,750	i 2.1		i 88.32	i 73,750		i 88.32
$ i 89.4200 - $ i 110.1300	i 5,954	i 1.5		i 91.99	i 5,954		i 91.99
	i 170,704	i 1.4		i 87.18	i 170,704		i 87.18

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The following table summarizes the status of the Company’s non-vested shares and changes for the periods indicated:

Years Ended December 31,

2019

2018

2017

Weighted-

Average

Grant Date

Restricted (non-vested) Shares

Fair Value

Outstanding at January 1,

i 414,407

i 217.15

i 421,261

i 194.01

i 435,338

i 164.21

Granted

i 232,601

i 173,065

i 240.59

i 160,185

i 234.01

Vested

i 138,322

i 141,982

i 178.31

i 152,397

i 151.80

Forfeited

i 13,549

i 37,937

i 212.48

i 21,865

i 187.82

Outstanding at December 31,

i 495,137

i 414,407

i 217.15

i 421,261

i 194.01

As of December 31, 2019, there was $ i 79,780 thousand of total unrecognized compensation cost related to non-vested share-based compensation expense. That cost is expected to be recognized over a weighted-average period of i 3.4 years. The total fair value of shares vested during the years ended December 31, 2019, 2018 and 2017, was $ i 28,135 thousand, $ i 25,317 thousand and $ i 23,134 thousand, respectively. The tax benefit realized from the shares vested for the year ended December 31, 2019 was $ i 5,774 thousand.

In addition to the 2010 Employee Plan, the 2009 Director Plan and the 2003 Director Plan, Group issued i 459 common shares in 2019, i 480 common shares in 2018 and i 404 common shares in 2017 to the Company’s non-employee directors as compensation for their service as directors. These issuances had aggregate values of approximately $ i 107 thousand, $ i 113 thousand and $ i 94 thousand, respectively.

Since its 1995 initial public offering, the Company has issued to certain key employees of the Company i 2,525,422 restricted common shares, of which i 331,938 restricted shares have been cancelled. The Company has issued to non-employee directors of the Company i 167,618 restricted common shares, of which i no restricted shares have been cancelled. The Company acquired i 71,437, i 65,974 and i 60,453 common shares at a cost of $ i 14,181 thousand, $ i 14,202 thousand and $ i 14,240 thousand in 2019, 2018 and 2017, respectively, from employees who chose to pay required withholding taxes and/or the exercise cost on option exercises or restricted share vestings by withholding shares.

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The following table summarized the status of the Company’s non-vested performance share unit awards and changes for the period indicated:

Years Ended December 31,

2019

2018

2017

Weighted-

Average

Grant Date

Performance Share Unit Awards

Fair Value

Outstanding at January 1,

i 32,382

i 33,454

i 21,223

Granted

i 16,855

i 223.45

i 13,325

i 242.39

i 11,245

i 234.03

Increase/(Decrease) on vesting units due to performance

( i 3,455)

( i 267)

i 986

Vested

i 10,922

i 223.45

i 12,435

i 242.39

Forfeited

i 1,695

Outstanding at December 31,

i 34,850

i 32,382

i 33,454

The Company acquired i 5,008 and i 5,214 common shares at a cost of $ i 1,119 thousand and $ i 1,264 thousand in 2019 and 2018, respectively, from employees who chose to pay required withholding taxes on performance shares units settlements by withholding shares.

17. SEGMENT REPORTING

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

U.S. Reinsurance	Years Ended December 31,
(Dollars in thousands)	2019		2018		2017
Gross written premiums	$	i 2,962,416	$	i 3,014,338	$	i 2,592,972
Net written premiums		i 2,513,579		i 2,642,182		i 2,245,422

Premiums earned	$	i 2,471,447	$	i 2,528,991	$	i 2,181,160
Incurred losses and LAE		i 1,514,151		i 2,784,181		i 1,632,795
Commission and brokerage		i 703,803		i 568,374		i 462,487
Other underwriting expenses		i 68,796		i 60,266		i 55,881
Underwriting gain (loss)	$	i 184,697	$	( i 883,830)	$	i 29,997

International	Years Ended December 31,
(Dollars in thousands)	2019		2018		2017
Gross written premiums	$	i 1,648,598	$	i 1,543,946	$	i 1,316,701
Net written premiums		i 1,551,753		i 1,458,745		i 1,229,597

Premiums earned	$	i 1,475,669	$	i 1,439,882	$	i 1,202,043
Incurred losses and LAE		i 1,193,816		i 992,704		i 1,059,640
Commission and brokerage		i 342,400		i 364,010		i 287,688
Other underwriting expenses		i 41,690		i 39,042		i 38,844
Underwriting gain (loss)	$	( i 102,237)	$	i 44,126	$	( i 184,129)

Bermuda	Years Ended December 31,
(Dollars in thousands)	2019		2018		2017
Gross written premiums	$	i 1,744,875	$	i 1,666,317	$	i 1,205,001
Net written premiums		i 1,666,940		i 1,605,526		i 1,139,082

Premiums earned	$	i 1,544,180	$	i 1,324,198	$	i 1,093,250
Incurred losses and LAE		i 967,211		i 808,717		i 735,292
Commission and brokerage		i 354,044		i 319,197		i 303,707
Other underwriting expenses		i 50,348		i 43,566		i 38,011
Underwriting gain (loss)	$	i 172,577	$	i 152,718	$	i 16,240

Insurance	Years Ended December 31,
(Dollars in thousands)	2019		2018		2017
Gross written premiums	$	i 2,777,475	$	i 2,250,552	$	i 2,059,248
Net written premiums		i 2,092,152		i 1,707,975		i 1,630,560

Premiums earned	$	i 1,912,390	$	i 1,638,628	$	i 1,461,387
Incurred losses and LAE		i 1,247,720		i 1,065,801		i 1,094,854
Commission and brokerage		i 303,479		i 267,449		i 250,081
Other underwriting expenses		i 280,065		i 228,667		i 186,081
Underwriting gain (loss)	$	i 81,126	$	i 76,711	$	( i 69,629)

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

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	Years Ended December 31,
(Dollars in thousands)	2019		2018		2017
Underwriting gain (loss)	$	i 336,163	$	( i 610,275)	$	( i 207,521)
Net investment income		i 647,139		i 581,183		i 542,898
Net realized capital gains (losses)		i 185,004		( i 127,136)		i 153,194
Net derivative gain (loss)		i 6,374		i 520		i 9,581
Corporate expenses		( i 32,966)		( i 30,672)		( i 25,923)
Interest, fee and bond issue cost amortization expense		( i 31,693)		( i 31,031)		( i 31,603)
Other income (expense)		( i 11,034)		( i 24,771)		( i 21,215)
Income (loss) before taxes	$	i 1,098,987	$	( i 242,182)	$	i 419,411

The Company produces business in the U.S., Bermuda and internationally. The net income deriving from and 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:

	Year Ended December 31,
(Dollars in thousands)	2019		2018		2017
United Kingdom gross written premium	$	i 964,358	$	i 914,612	$	i 730,826

Approximately i 23.1%, i 19.7% and i 20.4% of the Company’s gross written premiums in 2019, 2018 and 2017, respectively, were sourced through the Company’s largest intermediary.

18. SUBSEQUENT EVENTS

The Company has evaluated known recognized and non-recognized subsequent events. In late 2019 and early 2020, wildfires, flooding and hailstorms have been impacting Australia. In addition, the Coronavirus outbreak is currently affecting many countries around the world. Due to the recentness of these events, the Company is unable to estimate the amount of losses at this time. However, the Company anticipates that the losses from these events will adversely impact first quarter 2020 financial statements.

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19. UNAUDITED QUARTERLY FINANCIAL DATA

Summarized quarterly financial data for the periods indicated:

	2019
(Dollars in thousands, except per share amounts)	1st Quarter		2nd Quarter		3rd Quarter		4th Quarter

Operating data:
Gross written premiums	$	i 2,127,108	$	i 2,166,655	$	i 2,403,274	$	i 2,436,327
Net written premiums		i 1,851,698		i 1,783,983		i 2,068,557		i 2,120,186

Premiums earned		i 1,732,697		i 1,817,299		i 1,905,619		i 1,948,071
Net investment income		i 140,976		i 179,028		i 181,058		i 146,077
Net realized capital gains (losses)		i 92,232		i 30,272		( i 12,943)		i 75,443
Total claims and underwriting expenses		i 1,537,009		i 1,620,413		i 1,933,158		i 1,976,943
Net income (loss)		i 354,551		i 332,868		i 104,398		i 217,644

Earnings per common share attributable to Everest Re Group:
Basic	$	i 8.70	$	i 8.17	$	i 2.56	$	i 5.34
Diluted	$	i 8.67	$	i 8.15	$	i 2.56	$	i 5.32

	2018
(Dollars in thousands, except per share amounts)	1st Quarter		2nd Quarter		3rd Quarter		4th Quarter

Operating data:
Gross written premiums	$	i 1,931,607	$	i 2,066,521	$	i 2,198,664	$	i 2,278,361
Net written premiums		i 1,672,206		i 1,746,378		i 1,938,773		i 2,057,071

Premiums earned		i 1,619,427		i 1,729,818		i 1,731,479		i 1,850,975
Net investment income		i 138,294		i 141,322		i 161,363		i 140,204
Net realized capital gains (losses)		( i 24,901)		i 15,776		i 54,804		( i 172,815)
Total claims and underwriting expenses		i 1,511,100		i 1,817,815		i 1,731,201		i 2,481,858
Net income (loss)		i 215,186		i 60,787		i 198,381		( i 385,313)

Earnings per common share attributable to Everest Re Group:
Basic	$	i 5.26	$	i 1.49	$	i 4.87	$	( i 9.58)
Diluted	$	i 5.23	$	i 1.48	$	i 4.84	$	( i 9.58)

20. REVISIONS TO FINANCIAL STATEMENTS

In preparing its current period financial statements, the Company identified errors in the handling of foreign exchange related to premium funds held from reinsureds. Although management determined that the impact of the foreign exchange differences were not material to prior period financial statements, the impact of recording the cumulative difference would have significantly impacted results within the current period. As a result, prior period balances have been revised in the applicable financial statements and corresponding footnotes to correct the foreign exchange adjustments.

F-73

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

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

CONSOLIDATED BALANCE SHEETS

December 31, 2017

As Previously

Impact of

As Previously

Impact of

Reported

Revisions

As Revised

Reported

Revisions

As Revised

(Dollars in thousands)

ASSETS:

Premiums Receivable

i 2,218,283

( i 35,100)

i 2,183,183

i 1,844,881

( i 25,106)

i 1,819,775

Funds held by reinsureds

i 445,040

( i 10,009)

i 435,031

i 292,927

( i 4,292)

i 288,635

Income taxes

i 592,385

i 2,102

i 594,487

i 299,438

i 902

i 300,340

TOTAL ASSETS

i 24,793,999

( i 43,007)

i 24,750,992

i 23,591,792

( i 28,496)

i 23,563,296

SHAREHOLDERS' EQUITY:

Retained earnings

i 9,574,440

( i 43,007)

i 9,531,433

i 9,685,908

( i 28,496)

i 9,657,412

Total shareholders' equity

i 7,903,804

( i 43,007)

i 7,860,797

i 8,369,232

( i 28,496)

i 8,340,736

TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY

i 24,793,999

( i 43,007)

i 24,750,992

i 23,591,792

( i 28,496)

i 23,563,296

CONSOLIDATED BALANCE SHEETS

June 30, 2019

March 31, 2019

As Previously

Impact of

As Previously

Impact of

Reported

Revisions

As Revised

Reported

Revisions

As Revised

(Dollars in thousands)

ASSETS:

Premiums Receivable

i 2,389,943

( i 38,836)

i 2,351,107

i 2,392,094

( i 29,831)

i 2,362,263

Funds held by reinsureds

i 498,043

( i 10,768)

i 487,275

i 432,736

( i 9,525)

i 423,211

Income taxes

i 358,457

i 2,261

i 360,718

i 475,851

i 2,000

i 477,851

TOTAL ASSETS

i 26,387,791

( i 47,343)

i 26,340,448

i 25,630,507

( i 37,356)

i 25,593,151

SHAREHOLDERS' EQUITY:

Retained earnings

i 10,152,059

( i 47,343)

i 10,104,716

i 9,866,203

( i 37,356)

i 9,828,847

Total stockholder's equity

i 8,884,160

( i 47,343)

i 8,836,817

i 8,426,629

( i 37,356)

i 8,389,273

TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY

i 26,387,791

( i 47,343)

i 26,340,448

i 25,630,507

( i 37,356)

i 25,593,151

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CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE

Year Ended December 31, 2018

Year Ended December 31, 2017

INCOME (LOSS):

As Previously

Impact of

As Previously

Impact of

Reported

Revisions

As Revised

Reported

Revisions

As Revised

(Dollars in thousands)

Revenues:

Other income (expense)

( i 9,060)

( i 15,711)

( i 24,771)

( i 35,442)

i 14,227

( i 21,215)

Total revenues

i 7,377,206

( i 15,711)

i 7,361,495

i 6,608,071

i 14,227

i 6,622,298

INCOME (LOSS) BEFORE TAXES

( i 226,471)

( i 15,711)

( i 242,182)

i 405,184

i 14,227

i 419,411

Income tax expense (benefit)

( i 330,023)

( i 1,200)

( i 331,223)

( i 63,784)

i 444

( i 63,340)

NET INCOME (LOSS)

i 103,552

( i 14,511)

i 89,041

i 468,968

i 13,783

i 482,751

COMPREHENSIVE INCOME (LOSS)

( i 196,913)

( i 14,511)

( i 211,424)

i 526,091

i 13,783

i 539,874

EARNINGS PER COMMON SHARE:

Basic

i 2.54

( i 0.36)

i 2.18

i 11.43

i 0.34

i 11.77

Diluted

i 2.53

( i 0.36)

i 2.17

i 11.36

i 0.34

i 11.70

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE

Three Months Ended June 30, 2019

Six Months Ended June 30, 2019

INCOME (LOSS):

As Previously

Impact of

As Previously

Impact of

Reported

Revisions

As Revised

Reported

Revisions

As Revised

(Dollars in thousands)

Revenues:

Other income (expense)

( i 7,977)

( i 10,248)

( i 18,225)

( i 17,030)

( i 4,495)

( i 21,525)

Total revenues

i 2,018,975

( i 10,248)

i 2,008,727

i 3,979,058

( i 4,495)

i 3,974,563

INCOME (LOSS) BEFORE TAXES

i 382,593

( i 10,248)

i 372,345

i 791,384

( i 4,495)

i 786,889

Income tax expense (benefit)

i 39,738

( i 261)

i 39,477

i 99,629

( i 159)

i 99,470

NET INCOME (LOSS)

i 342,855

( i 9,987)

i 332,868

i 691,755

( i 4,336)

i 687,419

COMPREHENSIVE INCOME (LOSS)

i 514,064

( i 9,987)

i 504,077

i 1,109,410

( i 4,336)

i 1,105,074

EARNINGS PER COMMON SHARE:

Basic

i 8.42

( i 0.25)

i 8.17

i 16.98

( i 0.10)

i 16.88

Diluted

i 8.39

( i 0.24)

i 8.15

i 16.93

( i 0.11)

i 16.82

F-75

CONSOLIDATED STATEMENTS OF OPERATIONS	Three Months Ended March 31, 2,019
AND COMPREHENSIVE INCOME (LOSS):	As Previously		Impact of
	Reported		Revisions		As Revised
(Dollars in thousands)
Revenues:
Other income (expense)	$	( i 9,053)	$	i 5,753	$	( i 3,300)
Total revenues	$	i 1,960,083	$	i 5,753	$	i 1,965,836

INCOME (LOSS) BEFORE TAXES	$	i 408,791	$	i 5,753	$	i 414,544
Income tax expense (benefit)		i 59,891		i 102		i 59,993

NET INCOME (LOSS)	$	i 348,900	$	i 5,651	$	i 354,551

COMPREHENSIVE INCOME (LOSS)	$	i 595,346	$	i 5,651	$	i 600,997

EARNINGS PER COMMON SHARE:
Basic	$	i 8.57	$	i 0.13	$	i 8.70
Diluted	$	i 8.54	$	i 0.13	$	i 8.67

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE

Three Months Ended September 30, 2018

Nine Months Ended September 30, 2018

INCOME (LOSS):

As Previously

Impact of

As Previously

Impact of

Reported

Revisions

As Revised

Reported

Revisions

As Revised

(Dollars in thousands)

Revenues:

Other income (expense)

( i 5,458)

( i 7,950)

( i 13,408)

i 9,642

( i 12,590)

( i 2,948)

Total revenues

i 1,944,413

( i 7,950)

i 1,936,463

i 5,582,509

( i 12,590)

i 5,569,919

INCOME (LOSS) BEFORE TAXES

i 197,421

( i 7,950)

i 189,471

i 475,827

( i 12,590)

i 463,237

Income tax expense (benefit)

( i 8,192)

( i 718)

( i 8,910)

( i 9,999)

( i 1,118)

( i 11,117)

NET INCOME (LOSS)

i 205,613

( i 7,232)

i 198,381

i 485,826

( i 11,472)

i 474,354

COMPREHENSIVE INCOME (LOSS)

i 180,634

( i 7,232)

i 173,402

i 177,601

( i 11,472)

i 166,129

EARNINGS PER COMMON SHARE:

Basic

i 5.04

( i 0.17)

i 4.87

i 11.89

( i 0.28)

i 11.61

Diluted

i 5.02

( i 0.18)

i 4.84

i 11.83

( i 0.28)

i 11.55

F-76

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE

Three Months Ended June 30, 2018

Six Months Ended June 30, 2018

INCOME (LOSS):

As Previously

Impact of

As Previously

Impact of

Reported

Revisions

As Revised

Reported

Revisions

As Revised

(Dollars in thousands)

Revenues:

Other income (expense)

i 3,036

( i 9,609)

( i 6,573)

i 15,100

( i 4,640)

i 10,460

Total revenues

i 1,892,939

( i 9,609)

i 1,883,330

i 3,638,096

( i 4,640)

i 3,633,456

INCOME (LOSS) BEFORE TAXES

i 60,763

( i 9,609)

i 51,154

i 278,406

( i 4,640)

i 273,766

Income tax expense (benefit)

( i 9,132)

( i 501)

( i 9,633)

( i 1,807)

( i 400)

( i 2,207)

NET INCOME (LOSS)

i 69,895

( i 9,108)

i 60,787

i 280,213

( i 4,240)

i 275,973

COMPREHENSIVE INCOME (LOSS)

( i 33,469)

( i 9,108)

( i 42,577)

( i 3,033)

( i 4,240)

( i 7,273)

EARNINGS PER COMMON SHARE:

Basic

i 1.71

( i 0.22)

i 1.49

i 6.85

( i 0.10)

i 6.75

Diluted

i 1.70

( i 0.22)

i 1.48

i 6.81

( i 0.10)

i 6.71

CONSOLIDATED STATEMENTS OF OPERATIONS	Three Months Ended March 31, 2018
AND COMPREHENSIVE INCOME (LOSS):	As Previously		Impact of
	Reported		Revisions		As Revised
(Dollars in thousands)
Revenues:
Other income (expense)	$	i 12,064	$	i 4,969	$	i 17,033
Total revenues	$	i 1,745,157	$	i 4,969	$	i 1,750,126

INCOME (LOSS) BEFORE TAXES	$	i 217,643	$	i 4,969	$	i 222,612
Income tax expense (benefit)		i 7,325		i 101		i 7,426

NET INCOME (LOSS)	$	i 210,318	$	i 4,868	$	i 215,186

COMPREHENSIVE INCOME (LOSS)	$	i 30,436	$	i 4,868	$	i 35,304

EARNINGS PER COMMON SHARE:
Basic	$	i 5.14	$	i 0.12	$	i 5.26
Diluted	$	i 5.11	$	i 0.12	$	i 5.23

CONSOLIDATED STATEMENTS OF

Year Ended December 31, 2018

Year Ended December 31, 2017

CHANGES IN STOCKHOLDER'S EQUITY

As Previously

Impact of

As Previously

Impact of

Reported

Revisions

As Revised

Reported

Revisions

As Revised

(Dollars in thousands)

RETAINED EARNINGS:

Balance, beginning of period

i 9,685,908

( i 28,496)

i 9,657,412

i 9,422,932

( i 42,279)

i 9,380,653

Net income (loss)

i 103,552

( i 14,511)

i 89,041

i 468,968

i 13,783

i 482,751

Balance, end of period

i 9,574,440

( i 43,007)

i 9,531,433

i 9,685,908

( i 28,496)

i 9,657,412

TOTAL STOCKHOLDER'S EQUITY, END OF PERIOD

i 7,903,804

( i 43,007)

i 7,860,797

i 8,369,232

( i 28,496)

i 8,340,736

F-77

CONSOLIDATED STATEMENTS OF

Six Months Ended June 30, 2019

Three Months Ended March 31, 2019

CHANGES IN STOCKHOLDER'S EQUITY

As Previously

Impact of

As Previously

Impact of

Reported

Revisions

As Revised

Reported

Revisions

As Revised

(Dollars in thousands)

RETAINED EARNINGS:

Balance, January 1

i 9,574,440

( i 43,007)

i 9,531,433

i 9,574,440

( i 43,007)

i 9,531,433

Net income (loss)

i 348,900

i 5,651

i 354,551

i 348,900

i 5,651

i 354,551

Balance, March 31

i 9,866,203

( i 37,356)

i 9,828,847

i 9,866,203

( i 37,356)

i 9,828,847

Net income (loss)

i 342,855

( i 9,987)

i 332,868

Balance, June 30,

i 10,152,059

( i 47,343)

i 10,104,716

TOTAL STOCKHOLDER'S EQUITY, June 30

i 8,884,160

( i 47,343)

i 8,836,817

i 8,426,629

( i 37,356)

i 8,389,273

CONSOLIDATED STATEMENTS OF

Three Months Ended September 30, 2018

Nine Months Ended September 30, 2018

CHANGES IN STOCKHOLDER'S EQUITY

As Previously

Impact of

As Previously

Impact of

Reported

Revisions

As Revised

Reported

Revisions

As Revised

(Dollars in thousands)

RETAINED EARNINGS:

Balance, beginning of period

i 9,860,842

( i 32,736)

i 9,828,106

i 9,685,908

( i 28,496)

i 9,657,412

Net income (loss)

i 205,613

( i 7,232)

i 198,381

i 485,826

( i 11,472)

i 474,354

Balance, end of period

i 10,013,592

( i 39,968)

i 9,973,624

i 10,013,592

( i 39,968)

i 9,973,624

TOTAL STOCKHOLDER'S EQUITY, END OF PERIOD

i 8,329,013

( i 39,968)

i 8,289,045

i 8,329,013

( i 39,968)

i 8,289,045

CONSOLIDATED STATEMENTS OF

Three Months Ended June 30, 2018

Six Months Ended June 30, 2018

CHANGES IN STOCKHOLDER'S EQUITY

As Previously

Impact of

As Previously

Impact of

Reported

Revisions

As Revised

Reported

Revisions

As Revised

(Dollars in thousands)

RETAINED EARNINGS:

Balance, beginning of period

i 9,844,187

( i 23,628)

i 9,820,559

i 9,685,908

( i 28,496)

i 9,657,412

Net income (loss)

i 69,895

( i 9,108)

i 60,787

i 280,213

( i 4,240)

i 275,973

Balance, end of period

i 9,860,842

( i 32,736)

i 9,828,106

i 9,860,842

( i 32,736)

i 9,828,106

TOTAL STOCKHOLDER'S EQUITY, END OF PERIOD

i 8,241,349

( i 32,736)

i 8,208,613

i 8,241,349

( i 32,736)

i 8,208,613

CONSOLIDATED STATEMENTS OF	Three Months Ended March 31, 2018
CHANGES IN STOCKHOLDER'S EQUITY	As Previously		Impact of
	Reported		Revisions		As Revised

(Dollars in thousands)
RETAINED EARNINGS:
Balance, beginning of period	$	i 9,685,908	$	( i 28,496)	$	i 9,657,412
Net income (loss)		i 210,318		i 4,868		i 215,186
Balance, end of period		i 9,844,187		( i 23,628)		i 9,820,559
TOTAL STOCKHOLDER'S EQUITY, END OF PERIOD	$	i 8,344,180	$	( i 23,628)	$	i 8,320,552

F-78

CONSOLIDATED STATEMENTS OF CASH FLOWS

Year Ended December 31, 2018

Year Ended December 31, 2017

As Previously

Impact of

As Previously

Impact of

Reported

Revisions

As Revised

Reported

Revisions

As Revised

(Dollars in thousands)

CASH FLOWS FROM OPERATING ACTIVITIES:

Net income (loss)

i 103,552

( i 14,511)

i 89,041

i 468,968

i 13,783

i 482,751

Decrease (increase) in premiums receivable

( i 392,981)

i 9,994

( i 382,987)

( i 338,335)

( i 12,111)

( i 350,446)

Decrease (increase) in funds held by reinsureds, net

( i 159,344)

i 5,717

( i 153,627)

( i 31,104)

( i 2,116)

( i 33,220)

Decrease (increase) in income taxes

( i 263,865)

( i 1,200)

( i 265,065)

( i 114,521)

i 444

( i 114,077)

CONSOLIDATED STATEMENTS OF CASH FLOWS

Six Months Ended June 30, 2019

Three Months Ended March 31, 2019

As Previously

Impact of

As Previously

Impact of

Reported

Revisions

As Revised

Reported

Revisions

As Revised

(Dollars in thousands)

CASH FLOWS FROM OPERATING ACTIVITIES:

Net income (loss)

i 691,755

( i 4,336)

i 687,419

i 348,900

i 5,651

i 354,551

Decrease (increase) in premiums receivable

( i 178,319)

i 3,736

( i 174,583)

( i 163,108)

( i 5,269)

( i 168,377)

Decrease (increase) in funds held by reinsureds, net

( i 56,180)

i 759

( i 55,421)

i 9,837

( i 484)

i 9,353

Decrease (increase) in income taxes

i 180,285

( i 159)

i 180,126

i 91,754

i 102

i 91,856

CONSOLIDATED STATEMENTS OF CASH FLOWS

Nine Months Ended September 30, 2018

Six Months Ended June 30, 2018

As Previously

Impact of

As Previously

Impact of

Reported

Revisions

As Revised

Reported

Revisions

As Revised

(Dollars in thousands)

CASH FLOWS FROM OPERATING ACTIVITIES:

Net income (loss)

i 485,826

( i 11,472)

i 474,354

i 280,213

( i 4,240)

i 275,973

Decrease (increase) in premiums receivable

( i 264,556)

i 7,265

( i 257,291)

( i 126,355)

i 2,733

( i 123,622)

Decrease (increase) in funds held by reinsureds, net

( i 78,514)

i 5,325

( i 73,189)

( i 77,794)

i 1,907

( i 75,887)

Decrease (increase) in income taxes

i 59,034

( i 1,118)

i 57,916

i 43,516

( i 400)

i 43,116

CONSOLIDATED STATEMENTS OF CASH FLOWS	Three Months Ended March 31, 2018
	As Previously		Impact of
	Reported		Revisions		As Revised
(Dollars in thousands)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss)	$	i 210,318	$	i 4,868	$	i 215,186
Decrease (increase) in premiums receivable		( i 56,826)		( i 4,489)		( i 61,315)
Decrease (increase) in funds held by reinsureds, net		i 95,416		( i 480)		i 94,936
Decrease (increase) in income taxes		i 55,905		i 101		i 56,006

F-79

SCHEDULE I — SUMMARY OF INVESTMENTS —

OTHER THAN INVESTMENTS IN RELATED PARTIES

Column A		Column B		Column C		Column D
						Amount
						Shown in
				Market		Balance
(Dollars in thousands)		Cost		Value		Sheet
Fixed maturities-available for sale
Bonds:
U.S. government and government agencies	$	i 1,489,660	$	i 1,515,803	$	i 1,515,803
State, municipalities and political subdivisions		i 507,353		i 536,915		i 536,915
Foreign government securities		i 1,492,315		i 1,505,950		i 1,505,950
Foreign corporate securities		i 2,870,737		i 2,945,156		i 2,945,156
Public utilities		i 322,525		i 332,818		i 332,818
All other corporate bonds		i 6,789,362		i 6,931,485		i 6,931,485
Mortgage - backed securities:
Commercial		i 814,570		i 844,557		i 844,557
Agency residential		i 2,173,099		i 2,198,581		i 2,198,581
Non-agency residential		i 5,723		i 5,703		i 5,703
Redeemable preferred stock		i 8,147		i 7,976		i 7,976
Total fixed maturities-available for sale		i 16,473,491		i 16,824,944		i 16,824,944
Fixed maturities - available for sale at fair value (1)		i 3,966		i 5,826		i 5,826
Equity securities - at fair value (1)		i 814,548		i 931,457		i 931,457
Short-term investments		i 414,639		i 414,706		i 414,706
Other invested assets		i 1,763,531		i 1,763,531		i 1,763,531
Cash		i 808,036		i 808,036		i 808,036

Total investments and cash	$	i 20,278,211	$	i 20,748,500	$	i 20,748,500

(1) Original cost does not reflect fair value adjustments, which have been realized through the statements of operations and comprehensive income (loss).

S-1

SCHEDULE II — CONDENSED FINANCIAL INFORMATION OF THE REGISTRANT

CONDENSED BALANCE SHEETS

	December 31,
(Dollars and share amounts in thousands, except par value per share)	2019		2018

ASSETS:
Fixed maturities - available for sale, at market value	$	i 201,666	$	i 76,170
(amortized cost: 2019, $ i 201,581; 2018, $ i 76,274)
Other invested assets (cost: 2019, $ i 41,700; 2018, $ i 91)		i 41,700		i 91
Cash		i 3,471		i 198
Investment in subsidiaries, at equity in the underlying net assets		i 9,134,038		i 7,733,933
Accrued investment income		i 652		i 277
Receivable from subsidiaries		i 9,361		i 6,726
Other assets		i 44,646		i 44,737
TOTAL ASSETS	$	i 9,435,534	$	i 7,862,132

LIABILITIES:
Long term note payable, affiliated due i 12/1/2028	$	i 300,000	$	-
Due to subsidiaries		i 1,491		i 1,065
Other liabilities		i 1,118		i 270
Total liabilities		i 302,609		i 1,335

SHAREHOLDERS' EQUITY:
Preferred shares, par value: $ i 0.01 ; i 50,000 shares authorized;
i no shares issued and outstanding		-		-
Common shares, par value: $ i 0.01 ; i 200,000 shares authorized
(2019) i 69,464and (2018) i 69,202 issued outstanding before treasury shares		i 694		i 692
Additional paid-in capital		i 2,219,660		i 2,188,777
Accumulated other comprehensive income (loss), net of deferred income
tax expense (benefit) of $ i 30,996 at 2019 and $( i 20,697) at 2018		i 28,152		( i 462,557)
Treasury shares, at cost; i 28,665 shares (2019) and i 28,551 shares (2018)		( i 3,422,152)		( i 3,397,548)
Retained earnings		i 10,306,571		i 9,531,433
Total shareholders' equity		i 9,132,925		i 7,860,797
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY	$	i 9,435,534	$	i 7,862,132

See notes to consolidated financial statements.

S-2

SCHEDULE II — CONDENSED FINANCIAL INFORMATION OF THE REGISTRANT

CONDENSED STATEMENTS OF OPERATIONS

	Years Ended December 31,
		2019		2018		2017
(Dollars in thousands)
REVENUES:
Net investment income	$	i 3,484	$	i 3,790	$	i 1,344
Net realized capital gains (losses)		( i 66)		( i 57)		i 80
Other income (expense)		i 458		( i 5,299)		( i 6,872)
Net income (loss) of subsidiaries		i 1,026,233		i 112,859		i 509,279
Total revenues		i 1,030,109		i 111,293		i 503,831

EXPENSES:
Interest expense - affiliated		i 2,087		i 4,085		i 4,300
Other expenses		i 18,561		i 18,167		i 16,780
Total expenses		i 20,648		i 22,252		i 21,080

INCOME (LOSS) BEFORE TAXES		i 1,009,461		i 89,041		i 482,751

NET INCOME (LOSS)	$	i 1,009,461	$	i 89,041	$	i 482,751

Other comprehensive income (loss), net of tax:
Unrealized appreciation (depreciation) ("URA(D)") on securities arising during the period		i 496,430		( i 255,656)		( i 64,348)
Reclassification adjustment for realized losses (gains) included in net income (loss)		( i 12,613)		i 27,496		( i 6,950)
Total URA(D) on securities arising during the period		i 483,817		( i 228,160)		( i 71,298)

Foreign currency translation adjustments		i 14,030		( i 76,816)		i 121,917

Benefit plan actuarial net gain (loss) for the period		( i 12,591)		( i 510)		i 1,027
Reclassification adjustment for amortization of net (gain) loss included in net income (loss)		i 5,453		i 5,021		i 5,477
Total benefit plan net gain (loss) for the period		( i 7,138)		i 4,511		i 6,504
Total other comprehensive income (loss), net of tax		i 490,709		( i 300,465)		i 57,123

COMPREHENSIVE INCOME (LOSS)	$	i 1,500,170	$	( i 211,424)	$	i 539,874



See notes to consolidated financial statements.

S-3

SCHEDULE II — CONDENSED FINANCIAL INFORMATION OF THE REGISTRANT

CONDENSED STATEMENTS OF CASH FLOWS

	Years Ended December 31,
(Dollars in thousands)		2019		2018		2017
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss)	$	i 1,009,461	$	i 89,041	$	i 482,751
Adjustments to reconcile net income to net cash provided by operating activities:
Equity in retained (earnings) deficit of subsidiaries		( i 1,026,233)		( i 112,859)		( i 509,279)
Dividends received from Bermuda Re		i 600,000		i 750,000		i 400,000
Dividends received from Everest International		-		i 200,000		-
Dividends received from Mt. Logan Re		-		-		i 25,000
Change in other assets and liabilities, net		i 564		i 4,824		i 6,107
Increase (decrease) in due to/from affiliates		( i 2,209)		i 683		( i 6,470)
Amortization of bond premium (accrual of bond discount)		( i 9)		( i 577)		i 12
Realized capital losses (gains)		i 66		i 57		( i 80)
Non-cash compensation expense		i 2,796		i 2,740		i 3,448
Net cash provided by (used in) operating activities		i 584,436		i 933,909		i 401,489

CASH FLOWS FROM INVESTING ACTIVITIES:
Additional investment in subsidiaries		( i 478,125)		( i 542,965)		( i 109,815)
Proceeds from fixed maturities matured/called - available for sale, at market value		i 63		i 93		i 696
Proceeds from fixed maturities sold - available for sale, at market value		i 74,841		i 24,856		i 90,154
Distribution from other invested assets		i 644,918		i 1,026,297		i 546,414
Cost of fixed maturities acquired - available for sale, at market value		( i 200,267)		-		( i 189,308)
Cost of other invested assets acquired		( i 686,528)		( i 923,828)		( i 503,937)
Net change in short-term investments		-		-		-
Net cash provided by (used in) investing activities		( i 645,098)		( i 415,547)		( i 165,796)

CASH FLOWS FROM FINANCING ACTIVITIES:
Common shares issued during the period, net		i 22,861		i 20,086		i 22,790
Purchase of treasury shares		( i 24,604)		( i 75,304)		( i 50,000)
Dividends paid to shareholders		( i 234,322)		( i 216,221)		( i 207,242)
Proceeds from issuance (cost of repayment) of long term note - affiliated		300,000		(250,000)		-
Net cash provided by (used in) financing activities		i 63,935		( i 521,439)		( i 234,452)

EFFECT OF EXCHANGE RATE CHANGES ON CASH		-		-		-

Net increase (decrease) in cash		i 3,273		( i 3,077)		i 1,241
Cash, beginning of period		i 198		i 3,275		i 2,034
Cash, end of period	$	i 3,471	$	i 198	$	i 3,275

See notes to consolidated financial statements.

S-4

SCHEDULE II – CONDENSED FINANCIAL INFORMATION OF THE REGISTRANT

NOTES to conDENSED financial information

1.) The accompanying condensed financial information should be read in conjunction with the consolidated financial statements and related Notes of Everest Re Group, Ltd. and its Subsidiaries.

2.) Everest Re Group, Ltd. entered into a $ i 300,000 thousand long term note agreement with Everest Reinsurance Company, an affiliated company, as of December 17, 2019. The note will pay interest annually at a rate of i 1.69 % and is scheduled to mature in December, 2028. As of December 31, 2019, this transaction was presented as a Long Term Note Payable – Affiliated in the Consolidated Balance sheets of Everest Re Group, Ltd.

3.) Everest Re Group, Ltd. has invested funds in the segregated accounts of Mt. Logan Re, Ltd. (“Mt. Logan Re”), an affiliated entity. On the Condensed Balance Sheets, investments in Mt. Logan Re valued at $ i 46,390 thousand and $ i 45,625 thousand as of December 31, 2019 and 2018, respectively, have been recorded within Other Assets. On the Condensed Statements of Operations, income of $ i 765 thousand, expense of $, i 4695 thousand and expense of $ i 6,352 thousand for the years ended December 31, 2019, 2018 and 2017, respectively, have been recorded in other income (expense).

S-5

i SCHEDULE III — SUPPLEMENTARY INSURANCE INFORMATION

Column A

Column B

Column C

Column D

Column E

Column F

Column G

Column H

Column I

Column J

Reserve

Incurred

Geographic Area

for Losses

Loss and

Amortization

Deferred

and Loss

Unearned

Net

Loss

of Deferred

Other

Net

Acquisition

Adjustment

Premium

Premiums

Investment

Adjustment

Acquisition

Operating

Written

(Dollars in thousands)

Costs

Expenses

Reserves

Earned

Income

Expenses

Costs

Expenses

Premium

As of and the Year Ended December 31, 2019

Domestic

i 358,108

i 7,823,095

i 2,014,712

i 4,383,837

i 320,923

i 2,761,871

i 1,007,282

i 348,861

i 4,605,731

International

i 66,183

i 2,655,458

i 344,222

i 1,475,669

i 37,297

i 1,193,816

i 342,400

i 41,690

i 1,551,753

Bermuda

i 157,572

i 3,132,760

i 697,801

i 1,544,180

i 288,919

i 967,211

i 354,044

i 50,348

i 1,666,940

Total

i 581,863

i 13,611,313

i 3,056,735

i 7,403,686

i 647,139

i 4,922,898

i 1,703,726

i 440,899

i 7,824,424

As of and the Year Ended December 31, 2018

Domestic

i 334,818

i 8,154,003

i 1,695,208

i 4,167,619

287,002

i 3,849,982

i 835,823

i 288,933

i 4,350,157

International

i 54,253

i 2,209,202

i 261,611

i 1,439,882

34,965

i 992,704

i 364,010

i 39,042

i 1,458,745

Bermuda

i 122,502

i 2,755,885

i 560,793

i 1,324,198

259,216

i 808,717

i 319,197

i 43,566

i 1,605,526

Total

i 511,573

i 13,119,090

i 2,517,612

i 6,931,699

581,183

i 5,651,403

i 1,519,030

i 371,541

i 7,414,428

As of and the Year Ended December 31, 2017

Domestic

i 289,636

i 7,254,043

i 1,460,291

i 3,642,547

259,621

i 2,727,649

i 712,568

i 241,962

i 3,875,982

International

i 53,186

i 2,175,500

i 253,626

i 1,202,043

32,407

i 1,059,640

i 287,688

i 38,844

i 1,229,597

Bermuda

i 68,765

i 2,454,778

i 286,639

i 1,093,250

250,870

i 735,292

i 303,707

i 38,011

i 1,139,082

Total

i 411,587

i 11,884,321

i 2,000,556

i 5,937,840

542,898

i 4,522,581

i 1,303,963

i 318,817

i 6,244,661

(Some amounts may not reconcile due to rounding.)

S-6

i SCHEDULE IV — REINSURANCE

Column A

Column B

Column C

Column D

Column E

Column F

Ceded to

Assumed

Gross

Other

from Other

Net

Assumed

(Dollars in thousands)

Amount

Companies

Amount

to Net

Total property and liability insurance premiums

earned

i 2,556,386

i 1,207,198

i 6,054,498

i 7,403,686

i 81.8%