UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM

10-Q

_

X

_

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

For the quarterly period ended

June 30, 2022

___

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

Commission file number

1-15731

EVEREST RE GROUP, LTD.

(Exact name of registrant as specified in its charter)

Bermuda

98-0365432

(State or other jurisdiction of

incorporation or organization)

(I.R.S. Employer

Identification No.)

Seon Place – 4th Floor

141 Front Street

PO Box HM 845

Hamilton

HM 19

,

Bermuda

441

-

295-0006

(Address, including zip code, and telephone number, including area code,

of registrant’s principal executive office)

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities

Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports),

and (2) has been subject to such filing requirements for the past 90 days.

Yes

X

No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant

to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such

files).

Yes

X

No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting

company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting

company” and “emerging growth company” in Rule 12b-2 of the Exchange Act. 

Large Accelerated Filer

X

Accelerated filer

Non-accelerated filer

Smaller reporting company

Emerging growth company

Indicate by check mark if the registrant is an emerging growth company and has elected not to use the extended transition period for

complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange act. 

YES

NO

X

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

YES

NO

X

Securities registered pursuant to Section 12(b) of the Act: 

Class

Trading Symbol

Name of Exchange where

 Registered

Number of Shares Outstanding

At August 1, 2022

Common Shares, $0.01 par value

RE

New York Stock Exchange

39,410,456

EVEREST RE GROUP, LTD

Table of Contents

Form 10-Q

Page

PART I

FINANCIAL INFORMATION

Item 1.

Financial Statements

1

2

3

4

5

Item 2.

28

Item 3.

48

Item 4.

48

PART II

OTHER INFORMATION

Item 1.

48

Item 1A.

48

Item 2.

49

Item 3.

49

Item 4.

49

Item 5.

49

Item 6.

50

1

EVEREST RE GROUP, LTD.

CONSOLIDATED BALANCE SHEETS

June 30,

 December 31, 

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

2022

2021

(unaudited)

ASSETS:

Fixed maturities - available for sale, at fair value

$

21,880,443

$

22,308,272

(amortized cost: 2022, $

23,408,417

; 2021, $

22,063,592

, credit allowances: 2022, $

(

42,714

)

; 2021, $

(

29,738

)

)

Fixed maturities - held to maturity, at amortized cost, net of credit allowances 

(fair value: 2022, $

71,245

, credit allowances: 2022, $

(

366

)

)

71,390

-

Equity securities, at fair value

1,299,221

1,825,908

Short-term investments (cost: 2022, $

300,854

; 2021, $

1,178,386

)

300,840

1,178,337

Other invested assets

3,055,356

2,919,965

Cash

2,116,049

1,440,861

Total investments and cash

28,723,299

29,673,343

Accrued investment income

178,123

149,105

Premiums receivable

3,406,564

3,293,598

Reinsurance recoverables

2,096,968

2,053,354

Funds held by reinsureds

909,454

868,601

Deferred acquisition costs

836,496

872,289

Prepaid reinsurance premiums

562,550

515,445

Income taxes

336,646

2,381

Other assets

857,550

757,167

TOTAL ASSETS

$

37,907,650

$

38,185,283

LIABILITIES:

Reserve for losses and loss adjustment expenses

$

19,993,054

$

19,009,486

Future policy benefit reserve

33,580

35,669

Unearned premium reserve

4,681,010

4,609,634

Funds held under reinsurance treaties

12,658

18,391

Other net payable to reinsurers

492,556

449,723

Losses in course of payment

79,549

260,684

Senior notes

2,346,495

2,345,800

Long term notes

223,824

223,774

Borrowings from FHLB

519,000

519,000

Accrued interest on debt and borrowings

16,664

17,348

Unsettled securities payable

66,150

16,698

Other liabilities

590,244

539,896

Total liabilities

29,054,784

28,046,103

Commitments and contingencies (Note 7)

(nil)

(nil)

SHAREHOLDERS' EQUITY:

Preferred shares, par value: $

0.01

;

50,000

 shares authorized; 

no

 shares issued and outstanding

-

-

Common shares, par value: $

0.01

;

200,000

 shares authorized; (2022)

69,947

and (2021)

69,790

 outstanding before treasury shares

700

698

Additional paid-in capital

2,283,513

2,274,431

Accumulated other comprehensive income (loss), net of deferred income 

tax expense (benefit) of $

(208,066)

 at 2022 and $

26,781

 at 2021

(1,576,854)

11,523

Treasury shares, at cost;

30,529

 shares (2022) and

30,524

 shares (2021)

(3,848,630)

(3,847,308)

Retained earnings

11,994,137

11,699,836

Total shareholders' equity 

8,852,866

10,139,180

TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY

$

37,907,650

$

38,185,283

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

2

EVEREST RE GROUP, LTD.

CONSOLIDATED STATEMENTS OF OPERATIONS 

AND COMPREHENSIVE INCOME (LOSS)

Three Months Ended 

Six Months Ended

June 30,

June 30,

(Dollars in thousands, except per share amounts)

2022

2021

2022

2021

(unaudited)

(unaudited)

REVENUES:

Premiums earned 

$

2,916,237

$

2,558,372

$

5,708,003

$

4,946,237

Net investment income

225,978

407,095

468,808

667,508

Net gains (losses) on investments:

Credit allowances on fixed maturity securities

(1,490)

(15,927)

(13,343)

(22,904)

Gains (losses) from fair value adjustments

(188,924)

103,525

(325,784)

132,581

Net realized gains (losses) from dispositions

(45,851)

16,511

(50,765)

33,334

Total net gains (losses) on investments

(236,265)

104,109

(389,892)

143,011

Other income (expense)

(71,337)

7,114

(55,977)

63,707

Total revenues

2,834,613

3,076,690

5,730,942

5,820,463

CLAIMS AND EXPENSES:

Incurred losses and loss adjustment expenses 

1,876,247

1,586,141

3,666,110

3,297,560

Commission, brokerage, taxes and fees

630,294

557,749

1,235,523

1,046,760

Other underwriting expenses 

169,533

140,844

330,826

283,075

Corporate expenses

15,018

16,168

29,038

28,546

Interest, fees and bond issue cost amortization expense

24,398

15,607

48,476

31,246

Total claims and expenses

2,715,490

2,316,509

5,309,973

4,687,187

INCOME (LOSS) BEFORE TAXES

119,123

760,181

420,969

1,133,276

Income tax expense (benefit)

(3,507)

80,199

588

111,432

NET INCOME (LOSS)

$

122,630

$

679,982

$

420,381

$

1,021,844

Other comprehensive income (loss), net of tax:

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

(732,364)

84,171

(1,547,540)

(204,444)

Reclassification adjustment for realized losses (gains) included in net income (loss)

15,841

1,590

20,019

(2,076)

Total URA(D) on securities arising during the period

(716,523)

85,761

(1,527,521)

(206,520)

Foreign currency translation adjustments

(28,269)

34,295

(62,371)

24,713

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

758

2,043

1,515

4,086

Total benefit plan net gain (loss) for the period

758

2,043

1,515

4,086

Total other comprehensive income (loss), net of tax

(744,034)

122,099

(1,588,377)

(177,721)

COMPREHENSIVE INCOME (LOSS)

$

(621,404)

$

802,081

$

(1,167,996)

$

844,123

EARNINGS PER COMMON SHARE:

Basic

$

3.11

$

16.97

$

10.67

$

25.50

Diluted

3.11

16.95

10.67

25.47

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

3

EVEREST RE GROUP, LTD.

CONSOLIDATED STATEMENTS OF 

CHANGES IN SHAREHOLDERS’ EQUITY

Three Months Ended

Six Months Ended

June 30,

June 30,

(Dollars in thousands, except share and dividends per share amounts)

2022

2021

2022

2021

(unaudited)

(unaudited)

COMMON SHARES (shares outstanding):

Balance beginning of period

39,448,677

40,082,500

39,266,633

39,983,481

Issued (redeemed) during the period, net

(30,923)

940

156,121

197,421

Treasury shares acquired

-

(68,100)

(5,000)

(165,562)

Balance end of period 

39,417,754

40,015,340

39,417,754

40,015,340

COMMON SHARES (par value):

Balance beginning of period

$

700

$

698

$

698

$

696

Issued during the period, net

-

-

2

2

Balance end of period 

700

698

700

698

ADDITIONAL PAID-IN CAPITAL:

Balance beginning of period

2,271,890

2,245,737

2,274,431

2,245,301

Share-based compensation plans

11,623

10,653

9,082

11,089

Balance end of period 

2,283,513

2,256,390

2,283,513

2,256,390

ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS),

NET OF DEFERRED INCOME TAXES:

Balance beginning of period

(832,820)

235,079

11,523

534,899

Net increase (decrease) during the period

(744,034)

122,099

(1,588,377)

(177,721)

Balance end of period 

(1,576,854)

357,178

(1,576,854)

357,178

RETAINED EARNINGS:

Balance beginning of period

11,936,489

10,847,086

11,699,836

10,567,452

Net income (loss) 

122,630

679,982

420,381

1,021,844

Dividends declared ($

1.65

 per share in 2Q 2022 and $

3.20

 per share YTD

in 2022; $

1.55

 per share in 2Q 2021 and $

3.10

 per share YTD in 2021)

(64,982)

(62,046)

(126,079)

(124,274)

Balance, end of period

11,994,137

11,465,022

11,994,137

11,465,022

TREASURY SHARES AT COST:

Balance beginning of period

(3,848,630)

(3,645,717)

(3,847,308)

(3,622,172)

Purchase of treasury shares

-

(16,782)

(1,322)

(40,327)

Balance end of period 

(3,848,630)

(3,662,499)

(3,848,630)

(3,662,499)

TOTAL SHAREHOLDERS' EQUITY, END OF PERIOD

$

8,852,866

$

10,416,789

$

8,852,866

$

10,416,789

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

4

EVEREST RE GROUP, LTD.

CONSOLIDATED STATEMENTS OF CASH FLOWS

Six Months Ended

June 30,

(Dollars in thousands)

2022

2021

(unaudited)

CASH FLOWS FROM OPERATING ACTIVITIES:

Net income (loss)

$

420,381

$

1,021,844

Adjustments to reconcile net income to net cash provided by operating activities:

Decrease (increase) in premiums receivable

(223,030)

(499,647)

Decrease (increase) in funds held by reinsureds, net

(51,451)

(79,485)

Decrease (increase) in reinsurance recoverables

(236,849)

15,836

Decrease (increase) in income taxes

(100,230)

76,452

Decrease (increase) in prepaid reinsurance premiums

(109,716)

(71,566)

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

1,360,076

1,139,879

Increase (decrease) in future policy benefit reserve

(2,089)

(1,226)

Increase (decrease) in unearned premiums

176,631

500,077

Increase (decrease) in other net payable to reinsurers

119,858

72,850

Increase (decrease) in losses in course of payment

(178,091)

70,653

Change in equity adjustments in limited partnerships

(156,868)

(377,120)

Distribution of limited partnership income

105,452

49,053

Change in other assets and liabilities, net

(11,031)

(206,994)

Non-cash compensation expense 

23,919

22,439

Amortization of bond premium (accrual of bond discount)

35,052

37,928

Net (gains) losses on investments

389,892

(143,011)

Net cash provided by (used in) operating activities

1,561,906

1,627,962

CASH FLOWS FROM INVESTING ACTIVITIES:

Proceeds from fixed maturities matured/called/repaid - available for sale

1,661,128

1,897,536

Proceeds from fixed maturities matured/called/repaid - held to maturity

333

-

Proceeds from fixed maturities sold - available for sale

772,148

599,737

Proceeds from equity securities sold, at fair value

437,815

474,663

Distributions from other invested assets

204,790

112,398

Cost of fixed maturities acquired - available for sale

(4,070,949)

(3,949,973)

Cost of fixed maturities acquired - held to maturity

(72,061)

-

Cost of equity securities acquired, at fair value

(283,352)

(360,016)

Cost of other invested assets acquired

(307,525)

(309,691)

Net change in short-term investments

878,360

506,285

Net change in unsettled securities transactions

22,512

(103,527)

Net cash provided by (used in) investing activities

(756,801)

(1,132,588)

CASH FLOWS FROM FINANCING ACTIVITIES:

Common shares issued (redeemed) during the period for share-based compensation, net of expense

(14,835)

(11,349)

Purchase of treasury shares

(1,322)

(40,328)

Dividends paid to shareholders

(126,079)

(124,274)

Cost of shares withheld on settlements of share-based compensation awards

(17,352)

(13,713)

Net cash provided by (used in) financing activities

(159,588)

(189,664)

EFFECT OF EXCHANGE RATE CHANGES ON CASH

29,671

(1,016)

Net increase (decrease) in cash

675,188

304,694

Cash, beginning of period

1,440,861

801,651

Cash, end of period

$

2,116,049

$

1,106,345

SUPPLEMENTAL CASH FLOW INFORMATION:

Income taxes paid (recovered)

$

100,506

$

34,780

Interest paid 

48,414

31,695

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

5

NOTES TO CONSOLIDATED INTERIM FINANCIAL STATEMENTS (UNAUDITED)

For the Three and Six Months Ended June 30, 2022 and 2021

1. GENERAL

Everest Re Group, Ltd. (“Group”), a Bermuda company, through its subsidiaries, principally provides reinsurance

and insurance in the U.S., Bermuda and international markets. As used in this document, “Company” means

Group and its subsidiaries.

2. BASIS OF PRESENTATION

The unaudited consolidated financial statements of the Company as of June 30, 2022 and December 31, 2021

and for the three and six months ended June 30, 2022 and 2021 include all adjustments, consisting of normal

recurring accruals, which, in the opinion of management, are necessary for a fair statement of the results on an

interim basis. Certain financial information, which is normally included in annual financial statements prepared

in accordance with accounting principles generally accepted in the United States of America (“GAAP”), has been

omitted since it is not required for interim reporting purposes. The December 31, 2021 consolidated balance

sheet data was derived from audited financial statements but does not include all disclosures required by GAAP. 

The results for the three and six months ended June 30, 2022 and 2021 are not necessarily indicative of the

results for a full year. These financial statements should be read in conjunction with the audited consolidated

financial statements and notes thereto for the years ended December 31, 2021, 2020 and 2019, included in the

Company’s most recent Form 10-K filing.

The Company consolidates the results of operations and financial position of all voting interest entities ("VOE")

in which the Company has a controlling financial interest and all variable interest entities ("VIE") in which the

Company is considered to be the primary beneficiary. The consolidation assessment, including the determination

as to whether an entity qualifies as a VIE or VOE, depends on the facts and circumstances surrounding each

entity. 

The preparation of financial statements in conformity with GAAP requires management to make estimates and

assumptions that affect the reported amounts of assets and liabilities (and disclosure of contingent assets and

liabilities) at the date of the financial statements and the reported amounts of revenues and expenses during the

reporting period. Ultimate actual results could differ, possibly materially, from those estimates. 

All intercompany accounts and transactions have been eliminated. 

Certain reclassifications and format changes have been made to prior years’ amounts to conform to the 2022

presentation.

Application of Recently Issued Accounting Standard Changes. 

The Company did not adopt any new accounting standards that had a material impact during the three and six

months ended June 30, 2022. The Company assessed the adoption impacts of recently issued accounting

standards by the Financial Accounting Standards Board on the Company’s consolidated financial statements as

well as material updates to previous assessments, if any, from the Company’s Annual Report on Form 10-K for

the year ended December 31, 2021. There were no new material accounting standards issued in the six months

ended June 30, 2022, that impacted Group.

Any issued guidance and pronouncements, other than those directly referenced above, are deemed by the

Company to be either not applicable or immaterial to its financial statements.

6

3. INVESTMENTS 

The following tables show amortized cost, allowance for credit losses, gross unrealized

appreciation/(depreciation) and fair value of fixed maturity securities available for sale as of the dates indicated:

At June 30, 2022

Amortized

Allowance for

Unrealized

Unrealized

Fair

(Dollars in thousands)

Cost

Credit Losses

Appreciation

Depreciation

Value

Fixed maturity securities - available for sale

U.S. Treasury securities and obligations of 

U.S. government agencies and corporations

$

1,385,608

$

-

$

7,193

$

(54,571)

$

1,338,230

Obligations of U.S. states and political subdivisions

528,830

(151)

3,950

(24,348)

508,281

Corporate securities

7,505,558

(25,583)

31,650

(524,848)

6,986,777

Asset-backed securities

4,081,011

-

909

(183,241)

3,898,679

Mortgage-backed securities

Commercial

1,024,591

-

124

(72,820)

951,895

Agency residential

2,874,574

-

2,937

(186,656)

2,690,855

Non-agency residential

5,349

-

-

(208)

5,141

Foreign government securities

1,463,494

-

11,670

(115,421)

1,359,743

Foreign corporate securities

4,539,402

(16,980)

21,900

(403,480)

4,140,842

Total fixed maturity securities - available for sale

$

23,408,417

$

(42,714)

$

80,333

$

(1,565,593)

$

21,880,443

At December 31, 2021

Amortized

Allowance for

Unrealized

Unrealized

Fair

(Dollars in thousands)

Cost

Credit Losses

Appreciation

Depreciation

Value

Fixed maturity securities - available for sale

U.S. Treasury securities and obligations of 

U.S. government agencies and corporations

$

1,407,256

$

-

$

23,720

$

(10,358)

$

1,420,618

Obligations of U.S. states and political subdivisions

558,842

(151)

29,080

(1,150)

586,621

Corporate securities

7,443,535

(19,267)

195,210

(62,580)

7,556,898

Asset-backed securities

3,579,439

(7,679)

21,817

(11,848)

3,581,729

Mortgage-backed securities

Commercial

1,032,506

-

37,550

(5,690)

1,064,366

Agency residential

2,361,208

-

32,997

(18,873)

2,375,332

Non-agency residential

6,530

-

22

(16)

6,536

Foreign government securities

1,423,634

-

41,957

(28,079)

1,437,512

Foreign corporate securities

4,250,642

(2,641)

95,195

(64,536)

4,278,660

Total fixed maturity securities - available for sale

$

22,063,592

$

(29,738)

$

477,548

$

(203,130)

$

22,308,272

The amortized cost and fair value of fixed maturity securities available for sale 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 June 30, 2022

At December 31, 2021

Amortized

Fair

Amortized

Fair

(Dollars in thousands)

Cost

Value

Cost

Value

Fixed maturity securities – available for sale:

 Due in one year or less

$

1,261,875

$

1,263,628

$

1,398,742

$

1,398,006

 Due after one year through five years

7,565,293

7,187,705

7,075,077

7,154,468

 Due after five years through ten years

4,746,315

4,285,866

5,003,792

5,100,672

 Due after ten years

1,849,409

1,596,674

1,606,298

1,627,163

Asset-backed securities

4,081,011

3,898,679

3,579,439

3,581,729

Mortgage-backed securities:

Commercial

1,024,591

951,895

1,032,506

1,064,366

Agency residential

2,874,574

2,690,855

2,361,208

2,375,332

Non-agency residential

5,349

5,141

6,530

6,536

Total fixed maturity securities

$

23,408,417

$

21,880,443

$

22,063,592

$

22,308,272

7

During the second quarter of 2022, the Company purchased fixed maturity securities classified as held to

maturity with an amortized cost of $

71.8

 million and a fair value of $

71.2

 million as of June 30, 2022. Fixed

maturity securities held to maturity consist of debt securities for which the Company has both the positive intent

and ability to hold to maturity or redemption and are reported at amortized cost, net of the current expected

credit loss allowance. Interest income for fixed maturity securities held to maturity is determined in the same

manner as interest income for fixed maturity securities available for sale. 

These fixed maturity securities held to maturity are comprised of asset-backed securities, with an amortized cost

of $

62.8

 million, gross unrealized appreciation of $

0.1

 million, gross unrealized depreciation of $

0.2

 million, and

fair value of $

62.4

 million, and corporate securities, with an amortized cost of $

9.0

 million, unrealized

appreciation of $

0.0

 million, unrealized depreciation of $

0.1

 million, and fair value of $

8.8

 million, as of June 30,

2022. The contractual maturity of the corporate securities held to maturity is

5 years

 as of June 30, 2022. The

stated maturity of asset-backed securities held to maturity may not be indicative of actual maturities.

The Company evaluated fixed maturity securities classified as held to maturity for current expected credit losses

as of June 30, 2022 utilizing risk characteristics of each security, including credit rating, remaining time to

maturity, adjusted for prepayment considerations, and subordination level, and applying default and recovery

rates, which include the incorporation of historical credit loss experience and macroeconomic forecasts, to

develop an estimate of current expected credit losses. These fixed maturities classified as held to maturity are of

a high credit quality and are all rated investment grade as of June 30, 2022. The allowance for credit losses

expected to be recognized over the remaining life of the fixed maturity securities classified as held to maturity is

$

0.4

 million as of June 30, 2022.

The changes in net unrealized appreciation (depreciation) for the Company’s available for sale and short-term

investments are derived from the following sources for the periods indicated:

Three Months Ended 

Six Months Ended

June 30,

June 30,

(Dollars in thousands)

2022

2021

2022

2021

Increase (decrease) during the period between the fair value and cost

of investments carried at fair value, and deferred taxes thereon:

Fixed maturity securities - available for sale and short-term investments

$

(832,237)

$

97,127

$

(1,759,644)

$

(235,581)

Change in unrealized appreciation (depreciation), pre-tax

(832,237)

97,127

(1,759,644)

(235,581)

Deferred tax benefit (expense)

115,714

(11,366)

232,123

29,061

Change in unrealized appreciation (depreciation), 

net of deferred taxes, included in shareholders’ equity 

$

(716,523)

$

85,761

$

(1,527,521)

$

(206,520)

8

The tables below display the aggregate fair value and gross unrealized depreciation of fixed maturity securities

available for sale, by security type and contractual maturity, in each case subdivided according to length of time

that individual securities had been in a continuous unrealized loss position for the periods indicated.

Duration of Unrealized Loss at June 30, 2022 By Security Type

Less than 12 months

Greater than 12 months

Total

Gross

Gross

Gross

Unrealized

Unrealized

Unrealized

(Dollars in thousands)

Fair Value

Depreciation

Fair Value

Depreciation

Fair Value

Depreciation

Fixed maturity securities - available for sale

U.S. Treasury securities and obligations of

U.S. government agencies and corporations

$

949,790

$

(39,469)

$

199,364

$

(15,102)

$

1,149,154

$

(54,571)

Obligations of U.S. states and political subdivisions

210,645

(21,935)

12,067

(2,366)

222,712

(24,301)

Corporate securities

4,911,170

(420,055)

779,916

(104,127)

5,691,086

(524,182)

Asset-backed securities

3,623,327

(180,189)

42,484

(3,052)

3,665,811

(183,241)

Mortgage-backed securities

Commercial

926,417

(69,573)

21,217

(3,247)

947,634

(72,820)

Agency residential

1,939,847

(116,105)

579,272

(70,551)

2,519,119

(186,656)

Non-agency residential

4,402

(188)

739

(20)

5,141

(208)

Foreign government securities

972,856

(73,986)

177,226

(41,435)

1,150,082

(115,421)

Foreign corporate securities

3,100,785

(329,255)

479,179

(73,849)

3,579,964

(403,104)

Total

$

16,639,239

$

(1,250,755)

$

2,291,464

$

(313,749)

$

18,930,703

$

(1,564,504)

Securities where an allowance for credit loss was recorded

7,213

(1,089)

-

-

7,213

(1,089)

Total fixed maturity securities

$

16,646,452

$

(1,251,844)

$

2,291,464

$

(313,749)

$

18,937,916

$

(1,565,593)

Duration of Unrealized Loss at June 30, 2022 By Maturity

Less than 12 months

Greater than 12 months

Total

Gross

Gross

Gross

Unrealized

Unrealized

Unrealized

(Dollars in thousands)

Fair Value

Depreciation

Fair Value

Depreciation

Fair Value

Depreciation

Fixed maturity securities - available for sale

Due in one year or less

$

660,642

$

(4,878)

$

90,052

$

(7,477)

$

750,694

$

(12,355)

Due in one year through five years

5,163,545

(300,876)

818,035

(79,426)

5,981,580

(380,302)

Due in five years through ten years

3,087,307

(359,536)

598,581

(114,767)

3,685,888

(474,303)

Due after ten years

1,233,752

(219,410)

141,084

(35,209)

1,374,836

(254,619)

Asset-backed securities

3,623,327

(180,189)

42,484

(3,052)

3,665,811

(183,241)

Mortgage-backed securities

2,870,666

(185,866)

601,228

(73,818)

3,471,894

(259,684)

Total 

$

16,639,239

$

(1,250,755)

$

2,291,464

$

(313,749)

$

18,930,703

$

(1,564,504)

Securities where an allowance for credit loss was recorded

7,213

(1,089)

-

-

7,213

(1,089)

Total fixed maturity securities

$

16,646,452

$

(1,251,844)

$

2,291,464

$

(313,749)

$

18,937,916

$

(1,565,593)

9

The aggregate fair value and gross unrealized losses related to fixed maturity securities available for sale in an

unrealized loss position at June 30, 2022 were $

18.9

 billion and $

1.6

 billion, respectively. The fair value of

securities for the single issuer (the United States government) whose securities comprised the largest unrealized

loss position at June 30, 2022, did not exceed

5.3

% of the overall fair value of the Company’s fixed maturity

securities available for sale. The fair value of the securities for the issuer with the second largest unrealized loss

position at June 30, 2022, comprised less than

1.3

% of the Company’s fixed maturity securities available for sale.

In addition, as indicated on the above table, there was no significant concentration of unrealized losses in any

one market sector. The $

1.3

 billion of unrealized losses related to fixed maturity securities available for sale that

have been in an unrealized loss position for less than one year were generally comprised of foreign and domestic

corporate securities, agency residential and commercial mortgage-backed securities, asset-backed securities, U.S

government securities and foreign government securities. Of these unrealized losses, $

1.1

 billion were related

to securities that were rated investment grade by at least one nationally recognized rating agency. The $

313.7

million of unrealized losses related to fixed maturity securities available for sale in an unrealized loss position for

more than one year related primarily to domestic and foreign corporate securities, foreign government

securities, agency residential mortgage-backed securities and U.S. government securities. Of these unrealized

losses, $

300.6

 million were related to securities that were rated investment grade by at least one nationally

recognized rating agency. In all instances, there were no projected cash flow shortfalls to recover the full book

value of the investments and the related interest obligations. The mortgage -backed securities still have excess

credit coverage and are current on interest and principal payments. Based upon the Company’s current

evaluation of securities in an unrealized loss position as of June 30, 2022, the unrealized losses are due to

changes in interest rates and non-issuer specific credit spreads and are not credit-related. In addition, the

contractual terms of these securities do not permit these securities to be settled at a price less than their

amortized cost. 

The Company, given the size of its investment portfolio and capital position, does not have the intent to sell

these securities; and it is more likely than not that the Company will not have to sell the security before recovery

of its cost basis. In addition, all securities currently in an unrealized loss position are current with respect to

principal and interest payments. 

The tables below display the aggregate fair value and gross unrealized depreciation of fixed maturity securities

available for sale, by security type and contractual maturity, in each case subdivided according to length of time

that individual securities had been in a continuous unrealized loss position for the periods indicated. The

amounts presented in the tables below include $

15.7

 million of fair value and $(

0.4

) million of gross unrealized

depreciation as of December 31, 2021 related to fixed maturity securities available for sale for which the

Company has recorded an allowance for credit losses.

Duration of Unrealized Loss at December 31, 2021 By Security Type 

Less than 12 months

Greater than 12 months

Total

Gross

Gross

Gross

Unrealized

Unrealized

Unrealized

(Dollars in thousands)

Fair Value

Depreciation

Fair Value

Depreciation

Fair Value

Depreciation

Fixed maturity securities - available for sale

U.S. Treasury securities and obligations of

U.S. government agencies and corporations

$

504,168

$

(6,264)

$

91,735

$

(4,094)

$

595,903

$

(10,358)

Obligations of U.S. states and political subdivisions

51,094

(1,038)

2,558

(112)

53,652

(1,150)

Corporate securities

2,132,576

(38,316)

472,831

(24,264)

2,605,407

(62,580)

Asset-backed securities

1,954,079

(11,180)

41,823

(668)

1,995,902

(11,848)

Mortgage-backed securities

Commercial

221,852

(2,854)

40,496

(2,836)

262,348

(5,690)

Agency residential

1,101,215

(12,178)

279,697

(6,695)

1,380,912

(18,873)

Non-agency residential

2,320

(14)

156

(2)

2,476

(16)

Foreign government securities

392,447

(9,709)

100,673

(18,370)

493,120

(28,079)

Foreign corporate securities

1,734,510

(46,247)

210,722

(18,289)

1,945,232

(64,536)

Total fixed maturity securities

$

8,094,261

$

(127,800)

$

1,240,691

$

(75,330)

$

9,334,952

$

(203,130)

10

Duration of Unrealized Loss at December 31, 2021 By Maturity

Less than 12 months

Greater than 12 months

Total

Gross

Gross

Gross

Unrealized

Unrealized

Unrealized

(Dollars in thousands)

Fair Value

Depreciation

Fair Value

Depreciation

Fair Value

Depreciation

Fixed maturity securities - available for sale

Due in one year or less

$

129,860

$

(2,415)

$

136,827

$

(11,832)

$

266,687

$

(14,247)

Due in one year through five years

2,165,467

(35,264)

446,247

(28,685)

2,611,714

(63,949)

Due in five years through ten years

1,727,823

(47,413)

244,454

(22,038)

1,972,277

(69,451)

Due after ten years

791,645

(16,482)

50,991

(2,574)

842,636

(19,056)

Asset-backed securities

1,954,079

(11,180)

41,823

(668)

1,995,902

(11,848)

Mortgage-backed securities

1,325,387

(15,046)

320,349

(9,533)

1,645,736

(24,579)

Total fixed maturity securities

$

8,094,261

$

(127,800)

$

1,240,691

$

(75,330)

$

9,334,952

$

(203,130)

The aggregate fair value and gross unrealized losses related to investments in an unrealized loss position at

December 31, 2021 were $

9.3

 billion and $

203.1

 million, respectively. The fair value of securities for the single

issuer (the United States government) whose securities comprised the largest unrealized loss position at

December 31, 2021, did not exceed

2.7

% of the overall fair value of the Company’s fixed maturity securities

available for sale. The fair value of the securities for the issuer with the second largest unrealized loss comprised

less than

0.5

% of the Company’s fixed maturity securities available for sale. In addition, as indicated on the

above table, there was no significant concentration of unrealized losses in any one market sector. The $

127.8

million of unrealized losses related to fixed maturity securities available for sale that have been in an unrealized

loss position for less than one year were generally comprised of domestic and foreign corporate securities,

agency residential mortgage-backed securities, asset-backed securities and foreign government securities. Of

these unrealized losses, $

116.2

 million were related to securities that were rated investment grade by at least

one nationally recognized rating agency. The $

75.3

 million of unrealized losses related to fixed maturity

securities available for sale in an unrealized loss position for more than one year related primarily to domestic

and foreign corporate securities, foreign government securities and agency residential mortgage-backed

securities. Of these unrealized losses, $

72.3

 million were related to securities that were rated investment grade

by at least one nationally recognized rating agency. In all instances, there were no projected cash flow shortfalls

to recover the full book value of the investments and the related interest obligations. The mortgage-backed

securities still have excess credit coverage and are current on interest and principal payments. 

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

Three Months Ended

Six Months Ended

June 30,

June 30,

(Dollars in thousands)

2022

2021

2022

2021

Fixed maturities

$

168,769

$

148,262

$

316,995

$

289,178

Equity securities

4,600

3,493

8,746

8,331

Short-term investments and cash

6,587

773

6,746

953

Other invested assets:

Limited partnerships

47,584

239,966

136,021

354,299

Other 

13,991

25,855

25,822

31,874

Gross investment income before adjustments

241,531

418,349

494,330

684,635

Funds held interest income (expense)

772

3,287

4,457

11,253

Future policy benefit reserve income (expense)

(128)

(170)

(350)

(461)

Gross investment income

242,175

421,466

498,437

695,427

Investment expenses

(16,197)

(14,371)

(29,629)

(27,919)

Net investment income

$

225,978

$

407,095

$

468,808

$

667,508

The Company records results from limited partnership investments on the equity method of accounting with

changes in value reported through net investment income. The net investment income from limited

partnerships is dependent upon the Company’s share of the net asset values of interests underlying each limited

partnership. Due to the timing of receiving financial information from these partnerships, the results are

generally reported on a one month or quarter lag. If the Company determines there has been a significant

11

decline in value of a limited partnership during this lag period, a loss will be recorded in the period in which the

Company identifies the decline. 

The Company had contractual commitments to invest up to an additional $

2.4

 billion in limited partnerships and

private placement loan securities at June 30, 2022. These commitments will be funded when called in

accordance with the partnership and loan agreements, which have investment periods that expire, unless

extended, through

2026

. 

The Company participates in a private placement liquidity sweep facility (“the facility”). The primary purpose of

the facility is to enhance the Company’s return on its short-term investments and cash positions. The facility

invests in high quality, short-duration securities and permits daily liquidity. The Company consolidates its

participation in the facility. As of June 30, 2022, the fair value of investments in the facility consolidated within

the Company’s balance sheets was $

377.7

 million. 

Variable Interest Entities

The Company is engaged with various special purpose entities and other entities that are deemed to be VIEs

primarily as an investor through normal investment activities but also as an investment manager. A VIE is an

entity that either has investors that lack certain essential characteristics of a controlling financial interest, such

as simple majority kick-out rights, or lacks sufficient funds to finance its own activities without financial support

provided by other entities. The Company performs ongoing qualitative assessments of its VIEs to determine

whether the Company has a controlling financial interest in the VIE and therefore is the primary beneficiary. The

Company is deemed to have a controlling financial interest when it has both the ability to direct the activities

that most significantly impact the economic performance of the VIE and the obligation to absorb losses or right

to receive benefits from the VIE that could potentially be significant to the VIE. Based on the Company’s

assessment, if it determines it is the primary beneficiary, the Company consolidates the VIE in the Company’s

Consolidated Financial Statements. As of June 30, 2022 and December 31, 2021, the Company did

no

t hold any

securities for which it is the primary beneficiary.

The Company, through normal investment activities, makes passive investments in general and limited

partnerships and other alternative investments. For these non-consolidated VIEs, the Company has determined

it is not the primary beneficiary as it has no ability to direct activities that could significantly affect the economic

performance of the investments. The Company’s maximum exposure to loss as of June 30, 2022 and

December 31, 2021 is limited to the total carrying value of $

3.1

 billion and $

2.9

 billion, respectively, which are

included in general and limited partnerships and other alternative investments in Other Invested Assets in the

Company's Consolidated Balance Sheets. As of June 30, 2022, the Company has outstanding commitments

totaling $

2.2

 billion whereby the Company is committed to fund these investments and may be called by the

partnership during the commitment period to fund the purchase of new investments and partnership expenses. 

These investments are generally of a passive nature in that the Company does not take an active role in

management.

In addition, the Company makes passive investments in structured securities issued by VIEs for which the

Company is not the manager. These investments are included in asset-backed securities, which includes

collateralized loan obligations and are reported in fixed maturities, available -for-sale and fixed maturities held to

maturity. The Company has not provided financial or other support with respect to these investments other

than its original investment. For these investments, the Company determined it is not the primary beneficiary

due to the relative size of the Company’s investment in comparison to the principal amount of the structured

securities issued by the VIEs, the level of credit subordination which reduces the Company’s obligation to absorb

losses or right to receive benefits and the Company’s inability to direct the activities that most significantly

impact the economic performance of the VIEs. The Company’s maximum exposure to loss on these investments

is limited to the amount of the Company’s investment.

12

The components of net gains (losses) on investments are presented in the tables below for the periods indicated:

Three Months Ended 

Six Months Ended

June 30,

June 30,

(Dollars in thousands)

2022

2021

2022

2021

Fixed maturity securities:

Allowance for credit losses

$

(1,490)

$

(15,927)

$

(13,343)

$

(22,904)

Net realized gains (losses) from dispositions

(15,560)

10,060

(12,761)

19,234

Equity securities, fair value:

Net realized gains (losses) from dispositions

(30,926)

3,755

(42,713)

9,993

Gains (losses) from fair value adjustments

(188,924)

103,525

(325,784)

132,581

Other invested assets

583

2,748

4,735

4,094

Short-term investments gain (loss)

52

(52)

(26)

13

Total net gains (losses) on investments

$

(236,265)

$

104,109

$

(389,892)

$

143,011

(Some amounts may not reconcile due to rounding.)

Roll Forward of Allowance for Credit Losses – Fixed maturities, available for sale

Three Months Ended June 30, 2022

Six Months Ended June 30, 2022

Obligations of

Obligations of

U.S. States

Foreign

U.S. States

Foreign

Corporate

Asset-Backed

and Political

Corporate

Corporate

Asset-Backed

and Political

Corporate

Securities

Securities

Subdivisions

Securities

Total

Securities

Securities

Subdivisions

Securities

Total

(Dollars in thousands)

Beginning Balance

$

(20,049)

$

(7,679)

$

(151)

$

(13,712)

$

(41,591)

$

(19,267)

$

(7,679)

$

(151)

$

(2,641)

$

(29,738)

Credit losses on securities where credit

losses were not previously recorded

(4,887)

-

-

(4,706)

(9,593)

(6,816)

-

-

(15,890)

(22,706)

Increases in allowance on previously

impaired securities

(654)

-

-

(732)

(1,386)

(654)

-

-

(732)

(1,386)

Decreases in allowance on previously 

impaired securities

-

-

-

-

-

-

-

-

-

-

Reduction in allowance due to disposals

7

7,679

-

2,170

9,856

1,154

7,679

-

2,283

11,116

Balance as of June 30, 2022

$

(25,583)

$

-

$

(151)

$

(16,980)

$

(42,714)

$

(25,583)

$

-

$

(151)

$

(16,980)

$

(42,714)

Roll Forward of Allowance for Credit Losses – Fixed maturities, available for sale

Three Months Ended June 30, 2021

Six Months Ended June 30, 2021

Foreign

Foreign

Foreign

Corporate

Asset-Backed

Corporate

Corporate

Asset-Backed

Government

Corporate

Securities

Securities

Securities

Total

Securities

Securities

Securities

Securities

Total

(Dollars in thousands)

Beginning Balance

$

(3,603)

$

(4,915)

$

(205)

$

(8,723)

$

(1,220)

$

-

$

(22)

$

(503)

$

(1,745)

Credit losses on securities where credit

losses were not previously recorded

(13,537)

-

(1,055)

(14,592)

(15,920)

(4,915)

-

(1,055)

(21,890)

Increases in allowance on previously

impaired securities

(1,468)

-

-

(1,468)

(1,468)

-

-

-

(1,468)

Decreases in allowance on previously 

impaired securities

-

-

-

-

-

-

-

-

-

Reduction in allowance due to disposals

133

-

-

133

133

-

22

298

453

Balance as of June 30, 2021

$

(18,475)

$

(4,915)

$

(1,260)

$

(24,650)

$

(18,475)

$

(4,915)

$

-

$

(1,260)

$

(24,650)

13

The proceeds and split between gross gains and losses from dispositions of fixed maturity and equity securities,

are presented in the table below for the periods indicated:

Three Months Ended

Six Months Ended

June 30,

June 30,

(Dollars in thousands)

2022

2021

2022

2021

Proceeds from sales of fixed maturity securities, available for sale

$

353,160

$

371,459

$

772,148

$

599,737

Gross gains from dispositions

7,456

19,870

27,578

34,734

Gross losses from dispositions

(23,016)

(9,810)

(40,339)

(15,500)

Proceeds from sales of equity securities

$

347,714

$

193,350

$

437,815

$

474,663

Gross gains from dispositions

4,135

5,803

7,643

18,107

Gross losses from dispositions

(35,061)

(2,048)

(50,356)

(8,114)

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

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

Six Months Ended

June 30,

(Dollars in thousands)

2022

2021

Gross reserves beginning of period

$

19,009,486

$

16,322,143

 Less reinsurance recoverables on unpaid losses

(1,946,365)

(1,843,691)

 Net reserves beginning of period

17,063,121

14,478,452

Incurred related to:

 Current year

3,667,769

3,302,013

 Prior years

(1,659)

(4,453)

 Total incurred losses and LAE

3,666,110

3,297,560

Paid related to:

 Current year 

978,599

710,677

 Prior years

1,483,844

1,399,579

 Total paid losses and LAE

2,462,443

2,110,256

Foreign exchange/translation adjustment

(259,484)

35,651

Net reserves end of period

18,007,304

15,701,407

 Plus reinsurance recoverables on unpaid losses

1,985,750

1,862,760

 Gross reserves end of period

$

19,993,054

$

17,564,167

(Some amounts may not reconcile due to rounding.)

Current year incurred losses were $

3.7

 billion and $

3.3

 billion for the six months ended June 30, 2022 and 2021,

respectively. Gross and net reserves increased for the six months ended June 30, 2022, reflecting an increase in

underlying exposure due to premium growth and the impact of $

45.0

 million of incurred losses related to the

Ukraine/Russia war, partially offset by a reduction of $

115.0

 million in current year catastrophe losses. 

The war in the Ukraine is ongoing and an evolving event. Economic and legal sanctions have been levied against

Russia, specific named individuals and entities connected to the Russian government, as well as businesses

located in the Russian Federation and/or owned by Russian nationals by numerous countries, including the

United States. The significant political and economic uncertainty surrounding the war and associated sanctions

have impacted economic and investment markets both within Russia and around the world. The Company has

recorded $

45.0

 million of incurred underwriting losses related to the Ukraine/Russia war for the three and six

months ended June 30, 2022.

14

5. FAIR VALUE 

GAAP guidance regarding fair value measurements addresses 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 managing publicly traded securities obtain prices from nationally

recognized pricing services. These services seek to utilize market data and observations in their evaluation

process. They use pricing applications that vary by asset class and incorporate available market information and

when fixed maturity securities do not trade on a daily basis the services will apply available information through

processes such as benchmark curves, benchmarking of like securities, sector groupings and matrix pricing. In

addition, they use model processes, such as the Option Adjusted Spread model to develop prepayment and

interest rate scenarios for securities that have prepayment features. 

The investment asset managers do not make any changes to prices received from either the pricing services or

the investment brokers. In addition, the investment asset managers have procedures in place to review the

reasonableness of the prices from the service providers and may request verification of the prices. The

Company also continually performs quantitative and qualitative analysis of prices, including but not limited to

initial and ongoing review of pricing methodologies, review of prices obtained from pricing services and third

party investment asset managers, review of pricing statistics and trends, and comparison of prices for certain

securities with a secondary price source for reasonableness. No material variances were noted during these

price validation procedures. In limited situations, where financial markets are inactive or illiquid, the Company

may use its own assumptions about future cash flows and risk-adjusted discount rates to determine fair value. 

At June 30, 2022, $

2.2

 billion of fixed maturities were fair valued using unobservable inputs. The majority of

these fixed maturities were valued by investment managers’ valuation committees and many of these fair values

were substantiated by valuations from independent third parties. The Company has procedures in place to

evaluate these independent third party valuations. At December 31, 2021, $

2.1

 billion of fixed maturities were

fair valued using unobservable inputs. 

The Company internally manages a public equity portfolio which had a fair value at June 30, 2022 and December

31, 2021 of $

896.9

 million and $

1.3

 billion, respectively. During the fourth quarter of 2021, the Company began

to internally manage a portfolio of collateralized loan obligations included in asset-backed securities, available

for sale, which had a fair value of $

2.1

 billion and $

2.0

 billion at June 30, 2022 and December 31, 2021,

respectively. All prices for these securities were obtained from publicly published sources or nationally

recognized pricing vendors. 

15

Equity securities denominated in U.S. currency with quoted prices in active markets for identical assets are

categorized as Level 1 since the quoted prices are directly observable. Equity securities traded on foreign

exchanges are categorized as Level 2 due to the added input of a foreign exchange conversion rate to determine

fair value. The Company uses foreign currency exchange rates published by national ly recognized sources. 

Fixed maturity securities listed in the tables have been 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. 

In addition to the valuations from investment managers, some of the fixed maturities with fair values

categorized as Level 3 result when prices are not available from the nationally recognized pricing services and

are derived using unobservable inputs. The Company will value the securities with unobservable inputs using

comparable market information or receive fair values from investment managers. The investment managers

may obtain non-binding price quotes for the securities from brokers. The single broker quotes are provided by

market makers or broker-dealers who are recognized as market participants in the markets in which they are

providing the quotes. The prices received from brokers are reviewed for reasonableness by the third party asset

managers and the Company. If the broker quotes are for foreign denominated securities, the quotes are

converted to U.S. dollars using currency exchange rates from nationally recognized sources. 

The composition and valuation inputs for the presented fixed maturities categories Level 1 and Level 2 are as

follows:

•

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

comprised of U.S. Treasury bonds and the fair value is based on observable market inputs such as quoted

prices, reported trades, quoted prices for similar issuances or benchmark yields;

• Obligations of U.S. states and political subdivisions are comprised of state and municipal bond issuances and

the fair values are based on observable market inputs such as quoted market prices, quoted prices for

similar securities, benchmark yields and credit spreads;

•

Corporate securities are primarily comprised of U.S. corporate and public utility bond issuances and the fair

values are based on observable market inputs such as quoted market prices, quoted prices for similar

securities, benchmark yields and credit spreads; 

•

Asset-backed and mortgage-backed securities fair values are based on observable inputs such as quoted

prices, reported trades, quoted prices for similar issuances or benchmark yields and cash flow models using

observable inputs such as prepayment speeds, collateral performance and default spreads;

•

Foreign government securities are comprised of global non-U.S. sovereign bond issuances and the fair

values are based on observable market inputs such as quoted market prices, quoted prices for similar

securities and models with observable inputs such as benchmark yields and credit spreads and then, where

applicable, converted to U.S. dollars using an exchange rate from a nationally recognized source;

•

Foreign corporate securities are comprised of global non-U.S. corporate bond issuances and the fair values

are based on observable market inputs such as quoted market prices, quoted prices for similar securities

and models with observable inputs such as benchmark yields and credit spreads and then, where applicable,

converted to U.S. dollars using an exchange rate from a nationally recognized source.

16

The following tables present the fair value measurement levels for all assets and liabilities, which the Company

has recorded at fair value as of 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)

June 30, 2022

(Level 1)

(Level 2)

(Level 3)

Assets:

Fixed maturities, available for sale

U.S. Treasury securities and obligations of

U.S. government agencies and corporations

$

1,338,230

$

-

$

1,338,230

$

-

Obligations of U.S. States and political subdivisions

508,281

-

508,281

-

Corporate securities

6,986,777

-

6,124,350

862,427

Asset-backed securities

3,898,679

-

2,643,282

1,255,397

Mortgage-backed securities

Commercial

951,895

-

946,204

5,691

Agency residential

2,690,855

-

2,690,855

-

Non-agency residential

5,141

-

5,141

-

Foreign government securities

1,359,743

-

1,359,743

-

Foreign corporate securities

4,140,842

-

4,100,881

39,961

Total fixed maturities, available for sale

21,880,443

-

19,716,967

2,163,476

Equity securities, fair value

1,299,221

1,226,921

72,300

-

Fair Value Measurement Using:

Quoted Prices

in Active

Significant

Markets for

Other

Significant

Identical

Observable

Unobservable

Assets

Inputs

Inputs

(Dollars in thousands)

December 31, 2021

(Level 1)

(Level 2)

(Level 3)

Assets:

Fixed maturities, available for sale

U.S. Treasury securities and obligations of

U.S. government agencies and corporations

$

1,420,618

$

-

$

1,420,618

$

-

Obligations of U.S. States and political subdivisions

586,621

-

586,621

-

Corporate securities

7,556,898

-

6,756,324

800,574

Asset-backed securities

3,581,729

-

2,330,448

1,251,281

Mortgage-backed securities

Commercial

1,064,366

-

1,064,366

-

Agency residential

2,375,332

-

2,375,332

-

Non-agency residential

6,536

-

6,536

-

Foreign government securities

1,437,512

-

1,437,512

-

Foreign corporate securities

4,278,660

-

4,262,645

16,015

Total fixed maturities, available for sale

22,308,272

-

20,240,402

2,067,870

Equity securities, fair value

1,825,908

1,742,367

83,541

-

In addition, $

297.2

 million and $

286.6

 million of investments within other invested assets on the consolidated

balance sheets as of June 30, 2022 and December 31, 2021, respectively, are not included within the fair value

hierarchy tables as the assets are measured at NAV as a practical expedient to determine fair value. 

17

The following table presents the activity under Level 3, fair value measurements using significant unobservable

inputs for fixed maturities available for sale, for the periods indicated:

Total Fixed Maturities, Available for Sale

Three Months Ended June 30, 2022

Six Months Ended June 30, 2022

Corporate

Asset-Backed

Foreign

Corporate

Asset-Backed

Foreign

(Dollars in thousands)

Securities

Securities

CMBS

Corporate

Total

Securities

Securities

CMBS

Corporate

Total

Beginning balance fixed maturities

$

714,656

$

1,388,691

$

5,890

$

15,926

$

2,125,163

$

800,574

$

1,251,281

$

-

$

16,015

$

2,067,870

Total gains or (losses) (realized/unrealized)

Included in earnings

(4,534)

35

-

16

(4,483)

11,409

137

-

29

11,575

Included in other comprehensive income (loss)

(3,003)

(47,202)

(199)

(3,747)

(54,151)

(7,170)

(75,990)

(222)

(3,808)

(87,190)

Purchases, issuances and settlements

27,750

61,565

-

7,632

96,947

(69,944)

227,661

5,913

7,591

171,221

Transfers in/(out) of Level 3 and reclassification of

securities in/(out) of investment categories

127,558

(147,692)

-

20,134

-

127,558

(147,692)

-

20,134

-

Ending balance

$

862,427

$

1,255,397

$

5,691

$

39,961

$

2,163,476

$

862,427

$

1,255,397

$

5,691

$

39,961

$

2,163,476

The amount of total gains or losses for the period

included in earnings (or changes in net assets)

attributable to the change in unrealized gains 

or losses relating to assets still held

 at the reporting date

$

(5,261)

$

7,679

$

-

$

-

$

2,418

$

(4,943)

$

7,679

$

-

$

-

$

2,736

(Some amounts may not reconcile due to rounding.)

Total Fixed Maturities, Available for Sale

Three Months Ended June 30, 2021

Six Months Ended June 30, 2021

Corporate

Asset-Backed

Foreign

Corporate

Asset-Backed

Foreign

(Dollars in thousands)

Securities

Securities

Corporate

Total

Securities

Securities

Corporate

Total

Beginning balance fixed maturities

$

704,542

$

785,360

$

5,598

$

1,495,500

$

701,492

$

623,033

$

5,699

$

1,330,224

Total gains or (losses) (realized/unrealized)

Included in earnings

(13,761)

206

137

(13,418)

(15,550)

(3,962)

140

(19,372)

Included in other comprehensive income (loss)

4,582

7,610

(85)

12,107

7,418

4,475

(36)

11,857

Purchases, issuances and settlements

10,208

22,100

(763)

31,545

12,211

191,730

(916)

203,025

Transfers in/(out) of Level 3 and reclassification of

securities in/(out) of investment categories

-

-

-

-

-

-

-

-

Ending balance

$

705,571

$

815,276

$

4,887

$

1,525,734

$

705,571

$

815,276

$

4,887

$

1,525,734

The amount of total gains or losses for the period

included in earnings (or changes in net assets)

attributable to the change in unrealized gains 

or losses relating to assets still held

 at the reporting date

$

(17,279)

$

(4,915)

$

-

$

(22,194)

$

(17,279)

$

(4,915)

$

-

$

(22,194)

(Some amounts may not reconcile due to rounding.)

The Company’s fixed maturity securities held to maturity are recorded at amortized cost, net of credit

allowances, with a carrying value of $

71.4

 million and a fair value of $

71.2

 million as of June 30, 2022. The fair

values of these securities are determined in a similar manner as the Company’s fixed maturity securities

available for sale as described above. The fair values of these securities incorporate the use of significant

unobservable inputs and therefore are classified as Level 3 within the fair value hierarchy as of June 30, 2022.

6. EARNINGS PER COMMON SHARE

Basic earnings per share are calculated by dividing net income by the weighted average number of common

shares outstanding. Diluted earnings per share reflect the potential dilution that would occur if options granted

under various share-based compensation plans were exercised resulting in the issuance of common shares that

would participate in the earnings of the entity. 

18

Net income (loss) per common share has been computed as per below, based upon weighted average common

basic and dilutive shares outstanding.

Three Months Ended

Six Months Ended

June 30,

June 30,

(Dollars in thousands, except per share amounts)

2022

2021

2022

2021

Net income (loss) per share:

Numerator

Net income (loss) 

$

122,630

$

679,982

$

420,381

$

1,021,844

Less: dividends declared-common shares and unvested common shares

(64,982)

(62,045)

(126,079)

(124,274)

Undistributed earnings

57,648

617,937

294,302

897,570

Percentage allocated to common shareholders (1)

98.6

%

98.6

%

98.7

%

98.7

%

56,870

609,411

290,356

885,595

Add: dividends declared-common shareholders

64,184

61,245

124,466

122,659

Numerator for basic and diluted earnings per common share

$

121,054

$

670,656

$

414,822

$

1,008,254

Denominator

Denominator for basic earnings per weighted -average common shares

38,898

39,527

38,861

39,535

Effect of dilutive securities:

Options

-

41

7

48

Denominator for diluted earnings per adjusted weighted-average common shares

38,898

39,567

38,867

39,582

Per common share net income (loss)

Basic

$

3.11

$

16.97

$

10.67

$

25.50

Diluted

$

3.11

$

16.95

$

10.67

$

25.47

(1)

Basic weighted-average common shares outstanding

38,898

39,527

38,861

39,535

Basic weighted-average common shares outstanding and unvested common shares expected to vest

39,430

40,080

39,389

40,069

Percentage allocated to common shareholders

98.6

%

98.6

%

98.7

%

98.7

%

(Some amounts may not reconcile due to rounding.)

There were

no

 anti-diluted options outstanding for the three and six months ended June 30, 2022 and 2021. 

All outstanding options granted under share-based compensation plans expire on

September 19, 2022

.

7. COMMITMENTS AND CONTINGENCIES

In the ordinary course of business, the Company is involved in lawsuits, arbitrations and other formal and

informal dispute resolution procedures, the outcomes of which will determine the Company’s rights and

obligations under insurance and reinsurance agreements. In some disputes, the Company seeks to enforce its

rights under an agreement or to collect funds owing to it. In other matters, the Company is resisting attempts by

others to collect funds or enforce alleged rights. These disputes arise from time to time and are ultimately

resolved through both informal and formal means, including negotiated resolution, arbitration and litigation. In

all such matters, the Company believes that its positions are legally and commercially reasonable. The Company

considers the statuses of these proceedings when determining its reserves for unpaid loss and loss adjustment

expenses. 

Aside from litigation and arbitrations related to these insurance and reinsurance agreements, the Company is

not a party to any other material litigation or arbitration.

19

8. OTHER COMPREHENSIVE INCOME (LOSS)

The following table presents the components of comprehensive income (loss) in the consolidated statements of

operations for the periods indicated:

Three Months Ended June 30, 2022

Six Months Ended June 30, 2022

(Dollars in thousands)

Before Tax

Tax Effect

Net of Tax

Before Tax

Tax Effect

Net of Tax

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

credit related

$

(848,704)

$

116,340

$

(732,364)

$

(1,781,013)

$

233,473

$

(1,547,540)

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

(loss)

16,467

(626)

15,841

21,369

(1,350)

20,019

Foreign currency translation adjustments

(30,896)

2,627

(28,269)

(65,499)

3,128

(62,371)

Reclassification of benefit plan liability amortization included in net

income (loss)

959

(201)

758

1,919

(404)

1,515

Total other comprehensive income (loss)

$

(862,174)

$

118,140

$

(744,034)

$

(1,823,224)

$

234,847

$

(1,588,377)

Three Months Ended June 30, 2021

Six Months Ended June 30, 2021

(Dollars in thousands)

Before Tax

Tax Effect

Net of Tax

Before Tax

Tax Effect

Net of Tax

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

credit related

$

94,009

$

(9,838)

$

84,171

$

(235,157)

$

30,713

$

(204,444)

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

(loss)

3,118

(1,528)

1,590

(424)

(1,652)

(2,076)

Foreign currency translation adjustments

38,022

(3,727)

34,295

29,034

(4,321)

24,713

Reclassification of benefit plan liability amortization included in net

income (loss)

2,586

(543)

2,043

5,172

(1,086)

4,086

Total other comprehensive income (loss)

$

137,735

$

(15,636)

$

122,099

$

(201,375)

$

23,654

$

(177,721)

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

Three Months Ended

Six Months Ended

June 30,

June 30,

Affected line item within the statements of

AOCI component

2022

2021

2022

2021

operations and comprehensive income (loss)

(Dollars in thousands)

URA(D) on securities

$

16,467

$

3,118

$

21,369

$

(424)

Other net realized capital gains (losses)

(626)

(1,528)

(1,350)

(1,652)

Income tax expense (benefit)

$

15,841

$

1,590

$

20,019

$

(2,076)

Net income (loss)

Benefit plan net gain (loss)

$

959

$

2,586

$

1,919

$

5,172

Other underwriting expenses

(201)

(543)

(404)

(1,086)

Income tax expense (benefit)

$

758

$

2,043

$

1,515

$

4,086

Net income (loss)

20

The following table presents the components of accumulated other comprehensive income (loss), net of tax, in

the consolidated balance sheets for the periods indicated:

Three Months Ended

Six Months Ended

June 30,

June 30,

(Dollars in thousands)

2022

2021

2022

2021

Beginning balance of URA (D) on securities

$

(571,602)

$

431,878

$

239,397

$

724,159

Current period change in URA (D) of investments - non-credit related

(716,523)

85,761

(1,527,521)

(206,520)

Ending balance of URA (D) on securities

(1,288,124)

517,639

(1,288,124)

517,639

Beginning balance of foreign currency translation adjustments

(211,583)

(124,972)

(177,481)

(115,390)

Current period change in foreign currency translation adjustments

(28,269)

34,295

(62,371)

24,713

Ending balance of foreign currency translation adjustments 

(239,852)

(90,677)

(239,852)

(90,677)

Beginning balance of benefit plan net gain (loss)

(49,634)

(71,827)

(50,392)

(73,870)

Current period change in benefit plan net gain (loss)

758

2,043

1,515

4,086

Ending balance of benefit plan net gain (loss)

(48,877)

(69,784)

(48,877)

(69,784)

Ending balance of accumulated other comprehensive income (loss)

$

(1,576,854)

$

357,178

$

(1,576,854)

$

357,178

(Some amounts may not reconcile due to rounding.)

9. CREDIT FACILITIES

The Company has multiple active letter of credit facilities for a total commitment of up to $

1.2

 billion as of June

30, 2022. The Company also has additional uncommitted letter of credit facilities of up to $

340.0

 million which

may be accessible via written request and corresponding authorization from the applicable lender. There is no

guarantee the uncommitted capacity will be available to us on a future date.

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

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

five year

, $

800.0

million senior credit facility with a syndicate of lenders, which amended and restated in its entirety the June 22,

2012,

four year

, $

800.0

 million senior credit facility. Both the May 26, 2016 and June 22, 2012 senior credit

facilities, which have similar terms, are referred to as the “2016 Group Credit Facility”. Wells Fargo Corporation

(“Wells Fargo Bank”) is the administrative agent for the 2016 Group Credit Facility.

Effective May 26, 2021, the term of the 2016 Group Credit Facility expired. The Company elected not to renew

this facility to allow for the replacement by other collateralized bi-lateral letter of credit facilities such as those

described below. As a result of the non-renewal in May 2021, letter of credit commitment/availability in the

2016 Group Credit Facility was limited only to the letters of credit already issued. Those letters of credit were

subsequently cancelled from this facility and the facility is now fully matured. Prior to its maturity, the Company

was in compliance with all Group Credit Facility covenants.

The following table summarizes the outstanding letters of credit and/or borrowings for the periods indicated:

(Dollars in thousands)

At June 30, 2022

At December 31, 2021

Bank

Capacity

In Use

Date of Expiry

Capacity

In Use

Date of Expiry

Wells Fargo Bank Group Credit Facility

$

-

$

-

$

39,198

$

39,198

12/30/2022

Total Wells Fargo Bank Group Credit Facility

$

-

$

-

$

39,198

$

39,198

21

Bermuda Re Wells Fargo Letter of Credit Facility

Effective February 23, 2021, Bermuda Re entered into a letter of credit issuance facility with Wells Fargo referred

to as the “2021 Bermuda Re Wells Fargo Letter of Credit Facility.” The Bermuda Re Wells Fargo Letter of Credit

Facility originally provided for the issuance of up to $

50.0

 million of secured letters of credit. Effective May 5,

2021, the agreement was amended to provide for the issuance of up to $

500.0

 million of secured letters of

credit. 

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

(Dollars in thousands)

At June 30, 2022

At December 31, 2021

Bank

Capacity

In Use

Date of Expiry 

Capacity

In Use

Date of Expiry 

Wells Fargo Bank Bilateral LOC Agreement

$

500,000

$

435,413

12/30/2022

$

500,000

$

351,497

12/30/2022

Total Wells Fargo Bank Bilateral LOC Agreement

$

500,000

$

435,413

$

500,000

$

351,497

Bermuda Re Citibank Letter of Credit Facility

Effective August 9, 2021, Bermuda Re entered into a new letter of credit issuance facility with Citibank N.A.

which superseded the previous letter of credit issuance facility with Citibank N.A. that was effective December

31, 2020. Both of these agreements are referred to as the “Bermuda Re Citibank Letter of Credit Facility”. The

current Bermuda Re Citibank Letter of Credit Facility provides for the committed issuance of up to $

230.0

 million

of secured letters of credit. In addition, the facility provided for the uncommitted issuance of up the $

140.0

million, which may be accessible via written request by the Company and corresponding authorization from

Citibank N.A. 

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

(Dollars in thousands)

At June 30, 2022

At December 31, 2021

Bank

Capacity

In Use

Date of Expiry

Capacity

In Use

Date of Expiry

Bermuda Re Citibank LOC Facility- Committed

$

230,000

$

419

12/16/22

$

230,000

$

4,425

02/28/22

208,340

12/31/22

925

03/01/22

473

01/21/23

1,264

11/24/22

4,425

02/28/23

423

12/16/22

1,097

03/01/23

146

12/20/22

975

08/15/23

216,622

12/31/22

1,222

09/23/23

473

01/21/23

145

12/20/23

985

08/15/23

–

1,234

09/23/23

Bermuda Re Citibank LOC Facility - Uncommitted

140,000

84,203

12/31/22

140,000

84,203

12/31/22

21,671

03/30/26

22,731

12/30/25

Total Citibank Bilateral Agreement

$

370,000

$

322,970

$

370,000

$

333,429

Bermuda Re Bayerische Landesbank Credit Facility

Effective August 27, 2021 Bermuda Re entered into a letter of credit issuance facility with Bayerische

Landesbank, an agreement referred to as the “Bermuda Re Bayerische Landesbank Bilateral LOC Facility”. The

Bermuda Re Bayerische Landesbank Bilateral LOC Facility provides for the committed issuance of up to $

200.0

million of secured letters of credit. 

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

(Dollars in thousands)

At June 30, 2022

At December 31, 2021

Bank

Capacity

In Use

Date of Expiry

Capacity

In Use

Date of Expiry

Bayerische Landesbank Bilateral LOC Agreement

$

200,000

$

153,427

12/31/2022

$

200,000

$

154,691

12/31/2022

Total Bayerische Landesbank Bilateral LOC Agreement

$

200,000

$

153,427

$

200,000

$

154,691

22

Bermuda Re Lloyd’s Bank Credit Facility.

Effective October 8, 2021 Bermuda Re entered into a letter of credit issuance facility with Lloyd’s Bank Corporate

Markets PLC, an agreement referred to as the “Bermuda Re Lloyd’s Bank Credit Facility”. The Bermuda Re

Lloyd’s Bank Credit Facility provides for the committed issuance of up to $

50.0

 million of secured letters of

credit, and subject to credit approval a maximum total facility amount of $

250.0

 million.

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

(Dollars in thousands)

At June 30, 2022

At December 31, 2021

Bank

Capacity

In Use

Date of Expiry 

Capacity

In Use

Date of Expiry 

Bermuda Re Lloyd's Bank Credit Facility -Committed

$

50,000

$

46,008

12/31/2022

$

50,000

$

46,008

12/31/2022

Bermuda Re Lloyd's Bank Credit Facility -Uncommitted

200,000

84,806

12/31/2022

-

-

Total Bermuda Re Lloyd's Bank Credit Facility

$

250,000

$

130,814

$

50,000

$

46,008

Bermuda Re Barclays Bank Credit Facility. 

Effective November 3, 2021 Bermuda Re entered into a letter of credit issuance facility with Barclays Bank PLC,

an agreement referred to as the “Bermuda Re Barclays Credit Facility”. The Bermuda Re Barclays Credit Facility

provides for the committed issuance of up to $

200.0

 million of secured letters of credit. 

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

(Dollars in thousands)

At June 30, 2022

At December 31, 2021

Bank

Capacity

In Use

Date of Expiry 

Capacity

In Use

Date of Expiry 

Bermuda Re Barclays Bilateral Letter of Credit Facility

$

200,000

$

171,628

12/31/2022

$

200,000

$

186,299

12/31/2022

Total Bermuda Re Barclays Bilateral Letter of Credit Facility

$

200,000

$

171,628

$

200,000

$

186,299

Federal Home Loan Bank Membership

Everest Reinsurance Company (“Everest Re”) is a member of the Federal Home Loan Bank of New York

(“FHLBNY”), which allows Everest Re to borrow up to

10

% of its statutory admitted assets. As of June 30, 2022,

Everest Re had admitted assets of approximately $

20.8

 billion which provides borrowing capacity of up to

approximately $

2.1

 billion. As of June 30, 2022, Everest Re has $

519.0

 million of borrowings outstanding, with

maturities in November and December, 2022, and interest payable at interest rates between

0.53

% and

0.65

%. 

Everest Re incurred interest expense of $

0.8

 million and $

0.3

 million for the three months ended June 30, 2022

and 2021, respectively. Everest Re incurred interest expense of $

1.5

 million and $

0.6

 million for the six months

ended June 30, 2022 and 2021, respectively. The FHLBNY membership agreement requires that

4.5

% of

borrowed funds be used to acquire additional membership stock.

10. 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

June 30, 2022, the total amount on deposit in trust accounts was $

2.0

 billion. 

The Company reinsures some of its catastrophe exposures with the segregated accounts of Mt. Logan Re. Mt.

Logan Re is a Collateralized insurer registered in Bermuda and

100

% of the voting common shares are owned by

Group. Each segregated account invests predominantly in a diversified set of catastrophe exposures, diversified

by risk/peril and across different geographic regions globally. 

23

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

segregated accounts and assumed by the Company from Mt. Logan Re segregated accounts.

Three Months Ended 

Six Months Ended

June 30,

June 30,

Mt. Logan Re Segregated Accounts

2022

2021

2022

2021

(Dollars in thousands)

Ceded written premiums

$

31,805

$

56,183

$

82,044

$

155,293

Ceded earned premiums

41,068

71,422

91,511

149,529

Ceded losses and LAE

21,097

31,052

61,717

111,895

Assumed written premiums

580

2,741

1,373

5,217

Assumed earned premiums

580

2,741

1,373

5,217

Assumed losses and LAE

-

-

-

-

Effective April 1, 2018, the Company entered into a retroactive reinsurance transaction with one of the Mt.

Logan Re segregated accounts to retrocede $

269.2

 million of casualty reserves held by Bermuda Re related to

accident years

2002

 through

2015

. As consideration for entering the agreement, the Company transferred cash

of $

252.0

 million to the Mt. Logan Re segregated account. The maximum liability to be retroceded under the

agreement will be $

319.0

 million. The Company will retain liability for any amounts exceeding the maximum

liability. As of June 30, 2022 and December 31, 2021, the Company has a reinsurance recoverable of $

181.2

million and $

206.1

 million, respectively. In addition, the Company has a deferred gain liability of $

14.2

 million

and $

15.5

 million as of June 30, 2022 and December 31, 2021, respectively, reported in other liabilities.

The Company entered into various collateralized reinsurance agreements with Kilimanjaro Re Limited

(“Kilimanjaro”), a Bermuda based special purpose reinsurer, to provide the Company with catastrophe

reinsurance coverage. These agreements are multi-year reinsurance contracts which cover named storm and

earthquake events. The table below summarizes the various agreements.

(Dollars in thousands)

Class

Description

Effective Date

Expiration Date

Limit

Coverage Basis

Series 2018-1 Class A-2

US, Canada, Puerto Rico – Named Storm and Earthquake Events

4/30/2018

5/5/2023

$

62,500

Aggregate

Series 2018-1 Class B-2

US, Canada, Puerto Rico – Named Storm and Earthquake Events

4/30/2018

5/5/2023

200,000

Aggregate

Series 2019-1 Class A-1

US, Canada, Puerto Rico – Named Storm and Earthquake Events

12/12/2019

12/19/2023

150,000

Occurrence

Series 2019-1 Class B-1

US, Canada, Puerto Rico – Named Storm and Earthquake Events

12/12/2019

12/19/2023

275,000

Aggregate

Series 2019-1 Class A-2

US, Canada, Puerto Rico – Named Storm and Earthquake Events

12/12/2019

12/19/2024

150,000

Occurrence

Series 2019-1 Class B-2

US, Canada, Puerto Rico – Named Storm and Earthquake Events

12/12/2019

12/19/2024

275,000

Aggregate

Series 2021-1 Class A-1

US, Canada, Puerto Rico – Named Storm and Earthquake Events

4/8/2021

4/21/2025

150,000

Occurrence

Series 2021-1 Class B-1

US, Canada, Puerto Rico – Named Storm and Earthquake Events

4/8/2021

4/21/2025

85,000

Aggregate

Series 2021-1 Class C-1

US, Canada, Puerto Rico – Named Storm and Earthquake Events

4/8/2021

4/21/2025

85,000

Aggregate

Series 2021-1 Class A-2

US, Canada, Puerto Rico – Named Storm and Earthquake Events

4/8/2021

4/20/2026

150,000

Occurrence

Series 2021-1 Class B-2

US, Canada, Puerto Rico – Named Storm and Earthquake Events

4/8/2021

4/20/2026

90,000

Aggregate

Series 2021-1 Class C-2

US, Canada, Puerto Rico – Named Storm and Earthquake Events

4/8/2021

4/20/2026

90,000

Aggregate

Series 2022-1 Class A

US, Canada, Puerto Rico – Named Storm and Earthquake Events

6/22/2022

6/22/2025

300,000

Aggregate

Total available limit as of June 30, 2022

$

2,062,500

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.

24

Kilimanjaro has financed the various property catastrophe reinsurance coverages by issuing catastrophe bonds

to unrelated, external investors. The proceeds from the issuance of the Notes listed below are held in

reinsurance trusts throughout the duration of the applicable reinsurance agreements and invested solely in U.S.

government money market funds with a rating of at least “AAAm” by Standard & Poor’s.

(Dollars in thousands)

Note Series

Issue Date

Maturity Date

Amount

Series 2018-1 Class A-2

4/30/2018

5/5/2023

$

62,500

Series 2018-1 Class B-2

4/30/2018

5/5/2023

200,000

Series 2019-1 Class A-1

12/12/2019

12/19/2023

150,000

Series 2019-1 Class B-1

12/12/2019

12/19/2023

275,000

Series 2019-1 Class A-2

12/12/2019

12/19/2024

150,000

Series 2019-1 Class B-2

12/12/2019

12/19/2024

275,000

Series 2021-1 Class A-1

4/8/2021

4/21/2025

150,000

Series 2021-1 Class B-1

4/8/2021

4/21/2025

85,000

Series 2021-1 Class C-1

4/8/2021

4/21/2025

85,000

Series 2021-1 Class A-2

4/8/2021

4/20/2026

150,000

Series 2021-1 Class B-2

4/8/2021

4/20/2026

90,000

Series 2021-1 Class C-2

4/8/2021

4/20/2026

90,000

Series 2022-1 Class A

6/22/2022

6/22/2025

300,000

$

2,062,500

11. SENIOR NOTES

The table below displays Everest Reinsurance Holdings’ (“Holdings”) outstanding senior notes. Fair value is

based on quoted market prices, but due to limited trading activity, these senior notes are considered Level 2 in

the fair value hierarchy.

June 30, 2022

December 31, 2021

Consolidated Balance

Consolidated Balance

(Dollars in thousands)

Date Issued

Date Due

Principal Amounts

Sheet Amount

Fair Value

Sheet Amount

Fair Value

4.868

% Senior notes

6/5/2014

6/1/2044

$

400,000

$

397,373

$

374,212

$

397,314

$

503,840

3.5

% Senior notes

10/7/2020

10/15/2050

1,000,000

980,310

769,220

980,046

1,054,520

3.125

% Senior notes

10/4/2021

10/15/2052

1,000,000

968,811

701,820

968,440

983,140

$

2,400,000

$

2,346,495

$

1,845,252

$

2,345,800

$

2,541,500

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

Three Months Ended

Six Months Ended

June 30,

June 30,

(Dollars In thousands

2022

2021

2022

2021

Interest expense incurred

4.868

% Senior notes

$

4,868

$

4,868

$

9,736

$

9,736

Interest expense incurred

3.5

% Senior notes

8,807

8,805

17,614

17,610

Interest expense incurred

3.125

% Senior notes

7,827

-

15,741

-

$

21,502

$

13,673

$

43,090

$

27,346

25

12. LONG TERM SUBORDINATED NOTES 

The table below displays Holdings’ outstanding fixed to floating rate long term subordinated notes. Fair value is

based on quoted market prices, but due to limited trading activity, these subordinated notes are considered

Level 2 in the fair value hierarchy.

Maturity Date

June 30, 2022

December 31, 2021

Original

Consolidated Balance

Fair

Consolidated Balance

Fair

(Dollars in thousands)

Date Issued

Principal Amount

Scheduled

Final

Sheet Amount

Value

Sheet Amount

Value

Long term subordinated notes

4/26/2007

$

400,000

5/15/2037

5/1/2067

$

223,824

$

189,012

$

223,774

$

216,289

During the fixed rate interest period from

May 3, 2007

 through

May 14, 2017

, interest was at the annual rate of

6.6

%, payable semi-annually in arrears on November 15 and May 15 of each year, commencing on

November 15,

2007

. During the floating rate interest period from May 15, 2017 through maturity, interest will be based on the

3 month LIBOR plus

238.5

 basis points, reset quarterly, payable quarterly in arrears on February 15, May 15,

August 15 and November 15 of each year, subject to Holdings’ right to defer interest on

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 May 16, 2022 to

August 14, 2022 is

3.80

%. 

Holdings may redeem the long term subordinated notes on or after May 15, 2017, in whole or in part at

100

% of

the principal amount plus accrued and unpaid interest; however, redemption on or after the scheduled maturity

date and prior to

May 1, 2047

 is subject to a replacement capital covenant. This covenant is for the benefit of

certain senior note holders and it mandates that Holdings receive proceeds from the sale of another

subordinated debt issue, of at least similar size, before it may redeem the subordinated notes. The Company’s

4.868

% senior notes, due on

June 1, 2044

,

3.5

% senior noted due on

October 15, 2050

 and

3.125

% senior notes

due on

October 15, 2052

 are the Company’s long term indebtedness that rank senior to the long term

subordinated notes. 

On March 19, 2009, Group announced the commencement of a cash tender offer for any and all of the

6.60

%

fixed to floating rate long term subordinated notes. Upon expiration of the tender offer, the Company had

reduced its outstanding debt by $

161.4

 million. In addition, during 2020, the Company repurchased and retired

$

13.2

 million of the notes. 

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

indicated:

Three Months Ended

Six Months Ended

June 30,

June 30,

(Dollars in thousands)

2022

2021

2022

2021

Interest expense incurred

$

1,927

$

1,460

$

3,458

$

2,922

13. SEGMENT REPORTING

The Reinsurance operation writes worldwide property and casualty reinsurance and specialty lines of business,

on both a treaty and facultative basis, through reinsurance brokers, as well as directly with ceding companies. 

Business is written in the U.S., Bermuda, and Ireland offices, as well as, through branches in Canada, Singapore,

the United Kingdom and Switzerland. The Insurance operation writes property and casualty insurance directly

and through brokers, surplus lines brokers and general agents within the U.S., Bermuda, Canada, Europe,

Singapore and South America through its offices in the U.S., Canada, Chile, Singapore, United Kingdom, Ireland

and a branch in the Netherlands. 

These segments are managed independently, but conform with corporate guidelines with respect to pricing, risk

management, control of aggregate catastrophe exposures, capital, investments and support operations. 

26

Management generally monitors and evaluates the financial performance of these operating segments based

upon their underwriting results. 

Underwriting results include earned premium less losses and loss adjustment expenses (“LAE”) incurred,

commission and brokerage expenses and other underwriting expenses. The Company measures its underwriting

results using ratios, in particular loss, commission and brokerage and other underwriting expense ratios, which,

respectively, divide incurred losses, commissions and brokerage and other underwriting expenses by premiums

earned. 

The Company does not maintain separate balance sheet data for its operating segments. Accordingly, the

Company does not review and evaluate the financial results of its operating segments based upon balance sheet

data.

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

Three Months Ended June 30, 2022

Six Months Ended June 30, 2022

(Dollars in thousands)

Reinsurance

Insurance

Total

Reinsurance

Insurance

Total

Gross written premiums

$

2,201,210

$

1,245,829

$

3,447,038

$

4,386,822

$

2,246,567

$

6,633,389

Net written premiums

2,122,221

899,242

3,021,464

4,203,670

1,629,806

5,833,477

Premiums earned

$

2,139,559

$

776,678

$

2,916,237

$

4,205,813

$

1,502,189

$

5,708,003

Incurred losses and LAE

1,382,104

494,143

1,876,247

2,706,820

959,290

3,666,110

Commission and brokerage

530,859

99,435

630,294

1,045,101

190,422

1,235,523

Other underwriting expenses

52,063

117,470

169,533

102,516

228,310

330,826

Underwriting gain (loss)

$

174,534

$

65,630

$

240,165

$

351,376

$

124,168

$

475,544

Net investment income

225,978

468,808

Net gains (losses) on investments

(236,265)

(389,892)

Corporate expenses

(15,018)

(29,038)

Interest, fee and bond issue cost amortization expense

(24,398)

(48,476)

Other income (expense)

(71,337)

(55,977)

Income (loss) before taxes

$

119,123

$

420,969

(Some amounts may not reconcile due to rounding.)

Three Months Ended June 30, 2021

Six Months Ended June 30, 2021

(Dollars in thousands)

Reinsurance

Insurance

Total

Reinsurance

Insurance

Total

Gross written premiums

$

2,148,235

$

1,041,905

$

3,190,140

$

4,207,250

$

1,914,323

$

6,121,573

Net written premiums

2,059,919

749,492

2,809,411

3,972,868

1,390,479

5,363,347

Premiums earned

$

1,920,801

$

637,571

$

2,558,372

$

3,698,253

$

1,247,984

$

4,946,237

Incurred losses and LAE

1,168,139

418,002

1,586,141

2,440,045

857,515

3,297,560

Commission and brokerage

473,258

84,490

557,749

881,982

164,777

1,046,760

Other underwriting expenses

47,065

93,779

140,844

99,061

184,014

283,075

Underwriting gain (loss)

$

232,339

$

41,300

$

273,639

$

277,165

$

41,678

$

318,843

Net investment income

407,095

667,508

Net gains (losses) on investments

104,109

143,011

Corporate expenses

(16,168)

(28,546)

Interest, fee and bond issue cost amortization expense

(15,607)

(31,246)

Other income (expense)

7,114

63,707

Income (loss) before taxes

$

760,181

$

1,133,276

(Some amounts may not reconcile due to rounding.)

27

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:

Three Months Ended

Six Months Ended

June 30,

June 30,

(Dollars in thousands)

2022

2021

2022

2021

United Kingdom gross written premium

$

312,343

$

249,314

$

623,924

$

615,462

14. SHARE-BASED COMPENSATION PLANS 

For the three months ended June 30, 2022, a total of

2,330

 restricted stock awards were granted on May 10,

2022 with a fair value of $

280.98

 per share. 

For the six months ended June 30, 2022, a total of

199,138

 restricted stock awards were granted: 

187,760

,

9,048

 and

2,330

 restricted share awards were granted on February 23, 2022, February 24, 2022 and May 10,

2022, with a fair value of $

301.535

 per share, $

287.9425

 per share and $

280.98

 per share, respectively. 

Additionally,

18,340

 performance share unit awards were granted on February 23, 2022, with a fair value of

$

301.535

 per unit.

15. INCOME TAXES

The Company is domiciled in Bermuda and has subsidiaries and/or branches in Canada, Chile, Ireland, the

Netherlands, Singapore, Switzerland, the United Kingdom, and the United States. The Company’s Bermuda

domiciled subsidiaries are exempt from income taxation under Bermuda law until 2035. The Company’s non-

Bermudian subsidiaries and branches are subject to income taxation at varying rates in their respective

domiciles.

The Company generally applies the estimated Annualized Effective Tax Rate (“AETR”) approach for calculating its

tax provision for interim periods as prescribed by ASC 740-270, Interim Reporting. Under the AETR approach,

the estimated annualized effective tax rate is applied to the interim year-to-date pre-tax income/(loss) to

determine the income tax expense or benefit for the year-to-date period. The tax expense or benefit for the

quarter represents the difference between the year-to-date tax expense or benefit for the current year -to-date

period less such amount for the immediately preceding year-to-date period. Management considers the impact

of all known events in its estimation of the Company’s annual pre-tax income/(loss) and annualized effective tax

rate.

16. SUBSEQUENT EVENTS 

The Company has evaluated known recognized and non-recognized subsequent events. The Company does not

have any subsequent events to report.

28

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

OPERATION 

Industry Conditions.

The worldwide reinsurance and insurance businesses are highly competitive, as well as cyclical by product and

market. As such, financial results tend to fluctuate with periods of constrained availability, higher rates and

stronger profits followed by periods of abundant capacity, lower rates and constrained profitability. 

Competition in the types of reinsurance and insurance business that we underwrite is based on many factors,

including the perceived overall financial strength of the reinsurer or insurer, ratings of the reinsurer or insurer by

A.M. Best and/or Standard & Poor’s, underwriting expertise, the jurisdictions where the reinsurer or insurer is

licensed or otherwise authorized, capacity and coverages offered, premiums charged, other terms and

conditions of the reinsurance and insurance business offered, services offered, speed of claims payment and

reputation and experience in lines written. Furthermore, the market impact from these competitive factors

related to reinsurance and insurance is generally not consistent across lines of business, domestic and

international geographical areas and distribution channels. 

We compete in the U.S., Bermuda and international reinsurance and insurance markets with numerous global

competitors. Our competitors include independent reinsurance and insurance companies, subsidiaries or

affiliates of established worldwide insurance companies, reinsurance departments of certain insurance

companies, domestic and international underwriting operations, including underwriting syndicates at Lloyd’s of

London and certain government sponsored risk transfer vehicles. Some of these competitors have greater

financial resources than we do and have established long term and continuing business relationships, which can

be a significant competitive advantage. In addition, the lack of strong barriers to entry into the reinsurance

business and recently, the securitization of reinsurance and insurance risks through capital markets provide

additional sources of potential reinsurance and insurance capacity and competition. 

Worldwide insurance and reinsurance market conditions historically have been competitive. Generally, there

was ample insurance and reinsurance capacity relative to demand, as well as additional capital from the capital

markets through insurance linked financial instruments. These financial instruments such as side cars,

catastrophe bonds and collateralized reinsurance funds, provided capital markets with access to insurance and

reinsurance risk exposure. The capital markets demand for these products was being primarily driven by a low

interest environment and the desire to achieve greater risk diversification and potentially higher returns on their

investments. This increased competition was generally having a negative impact on rates, terms and conditions;

however, the impact varies widely by market and coverage.

The industry continues to deal with the impacts of a global pandemic, COVID-19 and its subsequent variants. We

continue to service and meet the needs of our clients while ensuring the safety and health of our employees and

customers.

Prior to the pandemic, there was a growing industry consensus that there was some firming of (re)insurance

rates for the areas impacted by the recent catastrophes. The increased frequency of catastrophe losses that

continued to be experienced in 2022 and throughout 2021 appears to be further pressuring the increase of

rates. As business activity continues to regain strength, rates also appear to be firming in most lines of business,

particularly in the casualty lines that had seen significant losses such as excess casualty and directors’ and

officers’ liability. Other casualty lines are experiencing modest rate increase, while some lines such as workers’

compensation were experiencing softer market conditions. It is too early to tell what the impact on pricing

conditions will be, but it is likely to change depending on the line of business and geography.

While we are unable to predict the full impact the pandemic will have on the insurance industry as it continues

to have a negative impact on the global economy, we are well positioned to continue to service our clients. Our

capital position remains a source of strength, with high quality invested assets, significant liquidity and a low

operating expense ratio. Our diversified global platform with its broad mix of products, distribution and

geography is resilient.

29

The war in the Ukraine is ongoing and an evolving event. Economic and legal sanctions have been levied against

Russia, specific named individuals and entities connected to the Russian government, as well as businesses

located in the Russian Federation and/or owned by Russian nationals by numerous countries, including the

United States. The significant political and economic uncertainty surrounding the war and associated sanctions

have impacted economic and investment markets both within Russia and around the world. The Company has

recorded $45.0 million of incurred underwriting losses related to the Ukraine/Russia war as of the three and six

months ended June 30, 2022. 

Financial Summary.

We monitor and evaluate our overall performance based upon financial results. The following table displays a

summary of the consolidated net income (loss), ratios and shareholders’ equity for the periods indicated.

Three Months Ended

Percentage

Six Months Ended

Percentage

June 30,

Increase/

June 30,

Increase/

(Dollars in millions)

2022

2021

(Decrease)

2022

2021

(Decrease)

Gross written premiums 

$

3,447.0

$

3,190.1

8.1

%

$

6,633.4

$

6,121.6

8.4

%

Net written premiums 

3,021.5

2,809.4

7.5

%

5,833.5

5,363.3

8.8

%

REVENUES:

Premiums earned

$

2,916.2

$

2,558.4

14.0

%

$

5,708.0

$

4,946.2

15.4

%

Net investment income

226.0

407.1

-44.5

%

468.8

667.5

-29.8

%

Net gains (losses) on investments

(236.3)

104.1

NM

(389.9)

143.0

NM

Other income (expense)

(71.3)

7.1

NM

(56.0)

63.7

-187.9

%

Total revenues

2,834.6

3,076.7

-7.9

%

5,730.9

5,820.5

-1.5

%

CLAIMS AND EXPENSES:

Incurred losses and loss adjustment expenses

1,876.2

1,586.1

18.3

%

3,666.1

3,297.6

11.2

%

Commission, brokerage, taxes and fees

630.3

557.7

13.0

%

1,235.5

1,046.8

18.0

%

Other underwriting expenses

169.5

140.8

20.4

%

330.8

283.1

16.9

%

Corporate expenses

15.0

16.2

-7.1

%

29.0

28.5

1.7

%

Interest, fees and bond issue cost amortization expense

24.4

15.6

56.3

%

48.5

31.2

55.1

%

Total claims and expenses

2,715.4

2,316.5

17.2

%

5,309.9

4,687.2

13.3

%

INCOME (LOSS) BEFORE TAXES

119.1

760.2

-84.3

%

421.0

1,133.3

-62.9

%

Income tax expense (benefit) 

(3.5)

80.2

-104.4

%

0.6

111.4

-99.5

%

NET INCOME (LOSS)

$

122.6

$

680.0

-82.0

$

420.4

$

1,021.8

-58.9

%

RATIOS:

Point

Change

Point

Change

Loss ratio

64.3

%

62.0

%

2.3

64.2

%

66.7

%

(2.5)

Commission and brokerage ratio

21.6

%

21.8

%

(0.2)

21.6

%

21.2

%

0.4

Other underwriting expense ratio

5.8

%

5.5

%

0.3

5.8

%

5.7

%

0.1

Combined ratio

91.8

%

89.3

%

2.5

91.7

%

93.6

%

(1.9)

At

At

Percentage

June 30,

December 31,

Increase/

(Dollars in millions, except per share amounts)

2022

2021

(Decrease)

Balance sheet data:

Total investments and cash

$

28,723.3

$

29,673.3

-3.2

%

Total assets

37,907.7

38,185.3

-0.7

%

Loss and loss adjustment expense reserves

19,993.1

19,009.5

5.2

%

Total debt

3,089.3

3,088.6

-

%

Total liabilities

29,054.8

28,046.1

3.6

%

Shareholders' equity

8,852.9

10,139.2

-12.7

%

Book value per share

224.59

258.21

-13.0

%

(NM, not meaningful)

(Some amounts may not reconcile due to rounding.)

30

Revenues. 

Premiums. Gross written premiums increased by 8.1% to $3.4 billion for the three months ended June 30, 2022,

compared to $3.2 billion for the three months ended June 30, 2021, reflecting a $203.9 million, or 19.6%,

increase in our insurance business and a $53.0 million, or 2.5%, increase in our reinsurance business. The rise in

insurance premiums was primarily due to increases across all lines of business, notably specialty casualty

business, professional liability business and other specialty business. The increase in reinsurance premiums was

primarily due to increases in property catastrophe excess of loss business and casualty pro rata business,

partially offset by a decline in property pro rata business. Gross written premiums increased by 8.4% to $6.6

billion for the six months ended June 30, 2022, compared to $6.1 billion for the six months ended June 30, 2021,

reflecting a $332.2 million, or 17.4%, increase in our insurance business and a $179.6 million, or 4.3%, increase in

our reinsurance business. The rise in insurance premiums was primarily due to increases across all lines of

business, notably specialty casualty business, professional liability business and other specialty business. The

increase in reinsurance premiums was primarily due to increases in casualty pro rata business and financial lines

of business. 

Net written premiums increased by 7.5% to $3.0 billion for the three months ended June 30, 2022, compared to

$2.8 billion for the three months ended June 30, 2021. Net written premiums increased by 8.8% to $5.8 billion

for the six months ended June 30, 2022, compared to $5.4 billion for the six months ended June 30, 2021. The

percentage increases in net written premiums are consistent with the percentage changes in gross written

premiums. Premiums earned increased by 14.0% to $2.9 billion for the three months ended June 30, 2022,

compared to $2.6 billion for the three months ended June 30, 2021. Premiums earned increased by 15.4% to

$5.7 billion for the six months ended June 30, 2022, compared to $4.9 billion for the six months ended June 30,

2021. The changes in premiums earned relative to net written premiums are primarily the result of timing;

premiums are earned ratably over the coverage period whereas written premiums are recorded at the initiation

of the coverage period. Accordingly, the significant increases in gross written premiums from pro rata business

during the latter half of 2021 contributed to the current quarter and year-to-date percentage increases in net

earned premiums. 

Other Income (Expense). We recorded other expense of $71.3 million and $56.0 million for the three and six

months ended June 30, 2022, respectively. We recorded other income of $7.1 million and $63.7 million for the

three and six months ended June 30, 2021, respectively. The changes were primarily the result of fluctuations in

foreign currency exchange rates. We recognized foreign currency exchange expense of $73.9 million and foreign

currency exchange income of $8.8 million for the three months ended June 30, 2022 and 2021, respectively. We

recognized foreign currency exchange expense of $60.8 million and foreign currency exchange income of $60.6

million for the six months ended June 30, 2022 and 2021, respectively. 

Net Investment Income. Refer to Consolidated Investments Results Section below.

Net Gains (Losses) on Investments. Refer to Consolidated Investments Results Section below. 

31

Claims and Expenses.

Incurred Losses and Loss Adjustment Expenses. The following table presents our incurred losses and loss

adjustment expenses (“LAE”) for the periods indicated. 

Three Months Ended June 30,

Current

Ratio %/

Prior

Ratio %/

Total

Ratio %/

(Dollars in millions)

Year

Pt Change

Years

Pt Change

Incurred

Pt Change

2022

Attritional

$

1,792.0

61.4

%

$

(0.7)

-

%

$

1,791.2

61.4

%

Catastrophes

85.0

2.9

%

-

-

%

85.0

2.9

%

Total 

$

1,877.0

64.3

%

$

(0.7)

-

%

$

1,876.2

64.3

%

2021

Attritional

$

1,543.8

60.3

%

$

(2.6)

-0.1

%

$

1,541.1

60.2

%

Catastrophes

45.0

1.8

%

-

-

%

45.0

1.8

%

Total 

$

1,588.8

62.1

%

$

(2.6)

-0.1

%

$

1,586.1

62.0

%

Variance 2022/2021

Attritional

$

248.2

1.1

pts

$

1.9

0.1

pts

$

250.1

1.2

pts

Catastrophes

40.0

1.1

pts

-

-

pts

40.0

1.1

pts

Total 

$

288.2

2.2

pts

$

1.9

0.1

pts

$

290.1

2.3

pts

Six Months Ended June 30,

Current

Ratio %/

Prior

Ratio %/

Total

Ratio %/

(Dollars in millions)

Year

Pt Change

Years

Pt Change

Incurred

Pt Change

2022

Attritional

$

3,467.8

60.8

%

$

(1.7)

-

%

3,466.1

60.8

%

Catastrophes

200.0

3.5

%

-

-

%

200.0

3.5

%

Total 

$

3,667.8

64.3

%

$

(1.7)

-

%

$

3,666.1

64.2

%

2021

Attritional

$

2,987.0

60.4

%

$

(4.5)

-0.1

%

2,982.6

60.3

%

Catastrophes

315.0

6.4

%

-

-

%

315.0

6.4

%

Total 

$

3,302.0

66.8

%

$

(4.5)

-0.1

%

$

3,297.6

66.7

%

Variance 2022/2021

Attritional

$

480.8

0.4

pts

$

2.8

0.1

pts

$

483.5

0.5

pts

Catastrophes

(115.0)

(2.9)

pts

-

-

pts

(115.0)

(2.9)

pts

Total 

$

365.8

(2.5)

pts

$

2.8

0.1

pts

$

368.5

(2.5)

pts

(Some amounts may not reconcile due to rounding.)

Incurred losses and LAE increased by 18.3% to $1.9 billion for the three months ended June 30, 2022, compared

to $1.6 billion for the three months ended June 30, 2021, primarily due to an increase of $248.2 million in

current year attritional losses and an increase of $40.0 million in current year catastrophe losses. The increase in

current year attritional losses was mainly due to the impact of the increase in premiums earned and $45.0

million of attritional losses incurred due to the Ukraine/Russia war. The current year catastrophe losses of $85.0

million for the three months ended June 30, 2022 related primarily to the 2022 South Africa flood ($45.0

million), the 2022 Canada derecho ($18.0 million), the 2022 2

nd

 quarter U.S. storms ($12.0 million) and the 2022

Western Europe Convective storm ($10.0 million). The $45.0 million of current year catastrophe losses for the

three months ended June 30, 2021 related to Tropical Storm Claudette, the Texas winter storms, the 2021

Australia floods and the Europe Convective storms. 

Incurred losses and LAE increased by 11.2% to $3.7 billion for the six months ended June 30, 2022, compared to

$3.3 billion for the six months ended June 30, 2021, primarily due to an increase of $480.8 million in current year

attritional losses, partially offset by a decline of $115.0 million in current year catastrophe losses. The increase

in current year attritional losses was mainly due to the impact of the increase in premiums earned and $45.0

million of attritional losses incurred due to the Ukraine/Russia war. The current year catastrophe losses of

$200.0 million for the six months ended June 30, 2022 related primarily to the 2022 Australia floods ($76.4

million), the 2022 South Africa flood ($45.0 million), the 2022 European storms ($30.0 million), the 2022 Canada

derecho ($18.0 million), the 2022 2

nd

 quarter U.S. storms ($12.0 million), the 2022 Western Europe Convective

32

Storm ($10.0 million) and the 2022 March U.S. storms ($8.6 million). The $315.0 million of current year

catastrophe losses for the six months ended June 30, 2021 related primarily to the Texas winter storms ($270.0

million) with the rest of the losses emanating from Tropical Storm Claudette, the 2021 Australia floods, Victoria

Australia flooding and the Europe Convective storms. 

Commission, Brokerage, Taxes and Fees. Commission, brokerage, taxes and fees increased by 13.0% to $630.3

million for the three months ended June 30, 2022, compared to $557.7 million for the three months ended June

30, 2021. Commission, brokerage, taxes and fees increased by 18.0% to $1.2 billion for the six months ended

June 30, 2022, compared to $1.0 billion for the six months ended June 30, 2021. The increases were primarily

due to the impact of the increases in premiums earned and changes in the mix of business. 

Other Underwriting Expenses. Other underwriting expenses were $169.5 million and $140.8 million for the

three months ended June 30, 2022 and 2021, respectively. Other underwriting expenses were $330.8 million

and $283.1 million for the six months ended June 30, 2022 and 2021, respectively. The increases in other

underwriting expenses were mainly due to the impact of the increase in premiums earned as well as the

continued build out of our insurance operations , including an expansion of the international insurance platform. 

Corporate Expenses. Corporate expenses, which are general operating expenses that are not allocated to

segments, were $15.0 million and $16.2 million for the three months ended June 30, 2022 and 2021,

respectively, and $29.0 million and $28.5 million for the six months ended June 30, 2022 and 2021, respectively. 

The variances are mainly due to the changes in variable incentive compensative expenses. 

Interest, Fees and Bond Issue Cost Amortization Expense. Interest, fees and other bond amortization expense

was $24.4 million and $15.6 million for the three months ended June 30, 2022 and 2021, respectively. Interest,

fees and other bond amortization expense was $48.5 million and $31.2 million for the six months ended June 30,

2022 and 2021, respectively. The increases were primarily due to the issuance of $1.0 billion of senior notes in

October 2021. Interest expense was also impacted by the movements in the floating interest rate related to the

long term subordinated notes, which is reset quarterly per the note agreement. The floating rate was 3.80% as

of June 30, 2022. 

Income Tax Expense (Benefit). We had income tax benefit of $3.5 million and income tax expense of $80.2

million for the three months ended June 30, 2022 and 2021, respectively. We had income tax expense of $0.6

million and $111.4 million for the six months ended June 30, 2022 and 2021, respectively. Income tax expense is

primarily a function of the geographic location of the Company’s pre-tax income and the statutory tax rates in

those jurisdictions. The effective tax rate (“ETR”) is primarily affected by tax -exempt investment income, foreign

tax credits and dividends. Variations in the ETR generally result from changes in the relative levels of pre-tax

income, including the impact of catastrophe losses and net capital gains (losses), among jurisdictions with

different tax rates. 

Net Income (Loss). 

Our net income was $122.6 million and $680.0 million for the three months ended June 30, 2022 and 2021,

respectively. Our net income was $420.4 million and $1.0 billion for the six months ended June 30, 2022 and

2021, respectively. These changes were primarily driven by the financial component fluctuations explained

above. 

33

Ratios.

Our combined ratio increased by 2.5 points to 91.8% for the three months ended June 30, 2022, compared to

89.3% for the three months ended June 30, 2021 and decreased by 1.9 points to 91.7% for the six months ended

June 30, 2022, compared to 93.6% for the six months ended June 30, 2021. The loss ratio component increased

2.3 points for the three months ended June 30, 2022 over the same period last year mainly due to an increase of

$40.0 million in current year catastrophe losses and an increase of $45.0 million in current year attritional losses

due to the Ukraine/Russia war. The loss ratio component decreased 2.5 points for the six months ended June

30, 2022 over the same period last year mainly due to a decline of $115.0 million in current year catastrophe

losses, partially offset by an increase of $45.0 million in current year attritional losses due to the Ukraine/Russia

war. The commission and brokera ge ratio components decreased slightly to 21.6% for the three months ended

June 30, 2022 compared to 21.8% for the three months ended June 30, 2021 and increased to 21.6% for the six

months ended June 30, 2022 compared to 21.2% for the six months ended June 30, 2021. These changes were

mainly due to changes in the mix of business. The other underwriting expense ratios increased to 5.8% for the

three months ended June 30, 2022 compared to 5.5% for the three months ended June 30, 2021 and increased

slightly to 5.8% for the six months ended June 30, 2022 compared to 5.7% for the six months ended June 30,

2021. These increases were mainly due to higher insurance operations costs. 

Shareholders’ Equity.

Shareholders’ equity decreased by $1.3 billion to $8.9 billion at June 30, 2022 from $10.1 billion at December 31,

2021, principally as a result of $1.5 billion of unrealized depreciation on fixed maturity portfolio net of tax,

$126.1 million of shareholde r dividends, $62.4 million of net foreign currency translation adjustments, and the

repurchase of 5,000 common shares for $1.3 million, partially offset by $420.4 million of net income, $9.1 million

of share-based compensation transactions and $1.5 million of net benefit plan obligation adjustments, net of

tax. 

Consolidated Investment Results

Net Investment Income.

Net investment income decreased by 44.5% to $226.0 million for the three months ended June 30, 2022

compared with net investment income of $407.1 million for the three months ended June 30, 2021. The

decrease for the three months ended June 30, 2022 was primarily the result of a decline of $192.4 million in

limited partnership income, partially offset by an additional $20.5 million of income from fixed maturity

investments. Net investment income decreased by 29.8% to $468.8 million for the six months ended June 30,

2022 compared with investment income of $667.5 million for the six months ended June 30, 2021. The decrease

for the six months ended June 30, 2022 was primarily the result of a decline of $218.3 million in limited

partnership income, partially offset by an additional $27.8 million of income from fixed maturity investments. 

The limited partnership income primarily reflects increases in their reported net asset values. As such, until

these asset values are monetized and the resultant income is distributed, they are subject to future increases or

decreases in the asset value, and the results may be volatile. 

34

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

Three Months Ended

Six Months Ended

June 30,

June 30,

(Dollars in millions)

2022

2021

2022

2021

Fixed maturities

$

168.8

$

148.3

$

317.0

$

289.2

Equity securities 

4.6

3.5

8.7

8.3

Short-term investments and cash

6.6

0.7

6.7

1.0

Other invested assets

Limited partnerships

47.6

240.0

136.0

354.3

Other

14.0

25.9

25.8

31.9

Gross investment income before adjustments

241.5

418.3

494.3

684.6

Funds held interest income (expense)

0.8

3.3

4.5

11.3

Future policy benefit reserve income (expense)

(0.1)

(0.2)

(0.4)

(0.5)

Gross investment income

242.2

421.5

498.4

695.4

Investment expenses

(16.2)

(14.4)

(29.6)

(27.9)

Net investment income

$

226.0

$

407.1

$

468.8

$

667.5

(Some amounts may not reconcile due to rounding.)

The following table shows a comparison of various investment yields for the periods indicated.

Three Months Ended

Six Months Ended

June 30,

June 30,

2022

2021

2022

2021

Annualized pre-tax yield on average cash and invested assets

3.0

%

6.3

%

3.2

%

5.3

%

Annualized after-tax yield on average cash and invested assets

2.6

%

5.5

%

2.7

%

4.6

%

Annualized return on invested assets

-0.1

%

7.9

%

-0.5

%

6.3

%

35

Net Gains (Losses) on Investments.

The following table presents the composition of our net gains (losses) on investments for the periods indicated. 

Three Months Ended June 30,

Six Months Ended June 30,

(Dollars in millions)

2022

2021

Variance

2022

2021

Variance

Realized gains (losses) from dispositions:

 Fixed maturity securities, available for sale:

 Gains

$

7.4

$

19.8

$

(12.4)

$

27.6

$

34.7

$

(7.1)

 Losses

(23.0)

(9.8)

(13.2)

(40.3)

(15.5)

(24.8)

 Total

(15.6)

10.0

(25.6)

(12.8)

19.2

(32.0)

 Equity securities, fair value:

 Gains

4.1

5.8

(1.7)

7.6

18.1

(10.5)

 Losses

(35.1)

(2.0)

(33.1)

(50.4)

(8.1)

(42.3)

 Total

(30.9)

3.8

(34.7)

(42.7)

10.0

(52.7)

 Other Invested Assets:

 Gains

3.4

4.1

(0.8)

7.9

5.6

2.3

 Losses

(2.8)

(1.4)

(1.4)

(3.1)

(1.5)

(1.6)

 Total

0.6

2.7

(2.1)

4.7

4.1

0.6

Total net realized gains (losses) from dispositions:

 Gains

14.9

29.7

(14.8)

43.1

58.4

(15.4)

 Losses

(60.8)

(13.2)

(47.6)

(93.8)

(25.1)

(68.7)

 Total

(45.9)

16.5

(62.3)

(50.8)

33.3

(84.1)

Allowance for credit losses:

(1.5)

(15.9)

14.4

(13.3)

(22.9)

9.6

Gains (losses) from fair value adjustments:

 Equity securities, fair value

(188.9)

103.5

(292.4)

(325.8)

132.6

(458.4)

Total

(188.9)

103.5

(292.4)

(325.8)

132.6

(458.4)

Total net gains (losses) on investments

$

(236.3)

$

104.1

$

(340.3)

$

(389.9)

$

143.0

$

(532.9)

(Some amounts may not reconcile due to rounding.)

Net gains (losses) on investments during the three months ended June 30, 2022 primarily relate to net losses

from fair value adjustments on equity securities in the amount of $188.9 million as a result of equity market

declines during the second quarter of 2022. In addition, we realized $45.9 million of losses due to the

disposition of investments and recorded an increase to the allowance for credit losses of $1.5 million.

Net gains (losses) on investments during the six months ended June 30, 2022 primarily relate to net losses from

fair value adjustments on equity securities in the amount of $325.8 million as a result of equity market declines

during the first six months of 2022. In addition, we realized $50.8 million of losses due to the disposition of

investments and recorded an increase to the allowance for credit losses of $13.3 million primarily related to our

direct holdings of Russian corporate fixed maturity securities.

Segment Results.

The Company manages its reinsurance and insurance operations as autonomous units and key strategic

decisions are based on the aggregate operating results and projections for these segments of business. 

The Reinsurance operation writes worldwide property and casualty reinsurance and specialty lines of business,

on both a treaty and facultative basis, through reinsurance brokers, as well as directly with ceding companies. 

Business is written in the U.S., Bermuda, and Ireland offices, as well as, through branches in Canada, Singapore,

the United Kingdom and Switzerland. The Insurance operation writes property and casualty insurance directly

and through brokers, surplus lines brokers and general agents within the U.S., Bermuda, Canada, Europe,

Singapore and South America through its offices in the U.S., Canada, Chile, Singapore, the United Kingdom,

Ireland and a branch located in the Netherlands. 

36

These segments are managed independently, but conform with corporate guidelines with respect to pricing, risk

management, control of aggregate catastrophe exposures, capital, investments and support operations. 

Management generally monitors and evaluates the financial performance of these operating segments based

upon their underwriting results. 

Underwriting results include earned premium less losses and loss adjustment expenses (“LAE”) incurred,

commission and brokerage expenses and other underwriting expenses. We measure our underwriting results

using ratios, in particular loss, commission and brokerage and other underwriting expense ratios, which,

respectively, divide incurred losses, commissions and brokerage and other underwriting expenses by premiums

earned. 

The Company does not maintain separate balance sheet data for its operating segments. Accordingly, the

Company does not review and evaluate the financial results of its operating segments based upon balance sheet

data. 

Our loss and LAE reserves are management’s best estimate of our ultimate liability for unpaid claims. We re-

evaluate our estimates on an ongoing basis, including all prior period reserves, taking into consideration all

available information, and in particular, recently reported loss claim experience and trends related to prior

periods. Such re-evaluations are recorded in incurred losses in the period in which re-evaluation is made.

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

Reinsurance.

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

indicated.

Three Months Ended June 30,

Six Months Ended June 30,

(Dollars in millions)

2022

2021

Variance

% Change

2022

2021

Variance

% Change

Gross written premiums

$

2,201.2

$

2,148.2

$

53.0

2.5

%

$

4,386.8

$

4,207.3

$

179.6

4.3

%

Net written premiums

2,122.2

2,059.9

62.3

3.0

%

4,203.7

3,972.9

230.8

5.8

%

Premiums earned

$

2,139.6

$

1,920.8

$

218.8

11.4

%

$

4,205.8

$

3,698.3

$

507.6

13.7

%

Incurred losses and LAE

1,382.1

1,168.1

214.0

18.3

%

2,706.8

2,440.0

266.8

10.9

%

Commission and brokerage

530.9

473.3

57.6

12.2

%

1,045.1

882.0

163.1

18.5

%

Other underwriting expenses

52.1

47.1

5.0

10.6

%

102.5

99.1

3.4

3.5

%

Underwriting gain (loss)

$

174.5

$

232.3

$

(57.8)

-24.9

%

$

351.4

$

277.2

$

74.2

26.8

%

Point Chg

Point Chg

Loss ratio

64.6

%

60.8

%

3.8

64.4

%

66.0

%

(1.6)

Commission and brokerage ratio

24.8

%

24.6

%

0.2

24.8

%

23.8

%

1.0

Other underwriting expense ratio

2.4

%

2.5

%

(0.1)

2.4

%

2.7

%

(0.3)

Combined ratio

91.8

%

87.9

%

3.9

91.6

%

92.5

%

(0.9)

(NM, Not Meaningful)

(Some amounts may not reconcile due to rounding.)

37

Premiums. Gross written premiums increased by 2.5% to $2.2 billion for the three months ended June 30, 2022

from $2.1 billion for the three months ended June 30, 2021, primarily due to increases in property catastrophe

excess of loss business and casualty pro rata business , partially offset by a decline in property pro rata business. 

Net written premiums increased by 3.0% to $2.12 billion for the three months ended June 30, 2022 compared to

$2.06 billion for the three months ended June 30, 2021. The higher percentage increase in net written

premiums compared to gross written premiums mainly related to a reduction in business ceded to the

segregated accounts of Mt. Logan Re in the three months ended June 30, 2022 compared to the three months

ended June 30, 2021. Premiums earned increased by 11.4% to $2.1 billion for the three months ended June 30,

2022, compared to $1.9 billion for the three months ended June 30, 2021. The change in premiums earned

relative to net written premiums is primarily the result of timing; premiums are earned ratably over the coverage

period whereas written premiums are recorded at the initiation of the coverage period. Accordingly, the

significant increases in gross written premiums from pro rata business during the latter half of 2021 contributed

to the current quarter percentage increase in net earned premiums. 

Gross written premiums increased by 4.3% to $4.4 billion for the six months ended June 30, 2022 from $4.2

billion for the six months ended June 30, 2021, primarily due to increases in casualty pro rata business and

financial lines of business. Net written premiums increased by 5.8% to $4.2 billion for the six months ended June

30, 2022 compared to $4.0 billion for the six months ended June 30, 2021. The higher percentage increase in

net written premiums compared to gross written premiums mainly related to a reduction in business ceded to

the segregated accounts of Mt. Logan Re in the six months ended June 30, 2022 compared to the six months

ended June 30, 2021. Premiums earned increased by 13.7% to $4.2 billion for the six months ended June 30,

2022, compared to $3.7 billion for the six months ended June 30, 2021. The change in premiums earned relative

to net written premiums is primarily the result of timing; premiums are earned ratably over the coverage period

whereas written premiums are recorded at the initiation of the coverage period. Accordingly, the significant

increases in gross written premiums from pro rata business during the latter half of 2021 contributed to the

current year-to-date percentage increase in net earned premiums. 

38

Incurred Losses and LAE

. The following table presents the incurred losses and LAE for the Reinsurance segment

for the periods indicated. 

Three Months Ended June 30,

Current

Ratio %/

Prior

Ratio %/

Total

Ratio %/

(Dollars in millions)

Year

Pt Change

Years

Pt Change

Incurred

Pt Change

2022

Attritional

$

1,302.8

60.9

%

$

(0.7)

-

%

1,302.1

60.9

%

Catastrophes

80.0

3.7

%

-

-

%

80.0

3.7

%

Total Segment

$

1,382.8

64.6

%

$

(0.7)

-

%

$

1,382.1

64.6

%

2021

Attritional

$

1,134.6

59.1

%

$

(1.4)

-0.1

%

1,133.1

59.0

%

Catastrophes

35.0

1.8

%

-

-

%

35.0

1.8

%

Total Segment

$

1,169.6

60.9

%

$

(1.4)

-0.1

%

$

1,168.1

60.8

%

Variance 2022/2021

Attritional

$

168.2

1.8

pts

$

0.7

0.1

pts

$

169.0

1.9

pts

Catastrophes

45.0

1.9

pts

-

-

pts

45.0

1.9

pts

Total Segment

$

213.2

3.7

pts

$

0.7

0.1

pts

$

214.0

3.8

pts

Six Months Ended June 30,

Current

Ratio %/

Prior

Ratio %/

Total

Ratio %/

(Dollars in millions)

Year

Pt Change

Years

Pt Change

Incurred

Pt Change

2022

Attritional

$

2,519.1

59.9

%

$

(2.3)

-0.1

%

2,516.8

59.9

%

Catastrophes

190.0

4.5

%

-

-

%

190.0

4.5

%

Total Segment

$

2,709.1

64.4

%

$

(2.3)

-0.1

%

$

2,706.8

64.4

%

2021

Attritional

$

2,185.8

59.1

%

$

(3.3)

-0.1

%

2,182.5

59.0

%

Catastrophes

257.5

7.0

%

-

-

%

257.5

7.0

%

Total Segment

$

2,443.3

66.1

%

$

(3.3)

-0.1

%

$

2,440.0

66.0

%

Variance 2022/2021

Attritional

$

333.3

0.8

pts

$

0.9

-

pts

$

334.2

0.8

pts

Catastrophes

(67.5)

(2.5)

pts

-

-

pts

(67.5)

(2.5)

pts

Total Segment

$

265.8

(1.7)

pts

$

0.9

-

pts

$

266.7

(1.6)

pts

Incurred losses increased by 18.3% to $1.4 billion for the three months ended June 30, 2022, compared to $1.2

billion for the three months ended June 30, 2021. The increase was primarily due to an increase of $168.2

million in current year attritional losses and an increase of $45.0 million in current year catastrophe losses. The

increase in current year attritional losses was mainly related to the impact of the increase in premiums earned

and $45.0 million of attritional losses incurred due to the Ukraine/Russia war. The current year catastrophe

losses of $80.0 million for the three months ended June 30, 2022 related primarily to the 2022 South Africa flood

($45.0 million), the 2022 Canada derecho ($18.0 million), the 2022 Western Europe Convective storm ($10.0

million) and the 2022 2

nd

 quarter U.S. storms ($7.0 million). The $35.0 million of current year catastrophe losses

for the three months ended June 30, 2021 related primarily to Tropical Storm Claudette, the Victoria Australia

flooding and the Europe Convective storms. 

Incurred losses increased by 10.9% to $2.7 billion for the six months ended June 30, 2022, compared to $2.4

billion for the six months ended June 30, 2021. The increase was primarily due to an increase of $333.3 million

in current year attritional losses, partially offset by a decrease of $67.5 million in current year catastrophe losses. 

The increase in current year attritional losses was mainly related to the impact of the increase in premiums

earned and $45.0 million of attritional losses due to the Ukraine/Russia war. The current year catastrophe losses

of $190.0 million for the six months ended June 30, 2022 related primarily to the 2022 Australia floods ($76.4

million), the 2022 South Africa flood ($45.0 million), the 2022 European storms ($30.0 million), the 2022 Canada

derecho ($18.0 million), the 2022 Western Europe Convective storm ($10.0 million), the 2022 2

nd

 quarter U.S.

storms ($7.0 million) and the 2022 March U.S. storms ($3.6 million). The $257.5 million of current year

catastrophe losses for the six months ended June 30, 2021 primarily related to the Texas winter storms ($212.5

39

million) with the rest of the losses emanating from Tropical Storm Claudette, the 2021 Australia floods, the

Victoria Australia flooding and the Europe Convective storms. 

Segment Expenses. Commission and brokerage expense increased by 12.2% to $530.9 million for the three

months ended June 30, 2022 compared to $473.3 million for the three months ended June 30, 2021. 

Commission and brokerage expense increased by 18.5% to $1.0 billion for the six months ended June 30, 2022

compared to $882.0 million for the six months ended June 30, 2021. The increases were mainly due to the

impact of the increases in premiums earned and changes in the mix of business. 

Segment other underwriting expenses increased to $52.1 million for the three months ended June 30, 2022 from

$47.1 million for the three months ended June 30, 2021. Segment other underwriting expenses increased to

$102.5 million for the six months ended June 30, 2022 from $99.1 million for the six months ended June 30,

2021. The increases were mainly due to the impact of increases in premiums earned. 

Insurance.

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

indicated.

Three Months Ended June 30,

Six Months Ended June 30,

(Dollars in millions)

2022

2021

Variance

% Change

2022

2021

Variance

% Change

Gross written premiums

$

1,245.8

$

1,041.9

$

203.9

19.6

%

$

2,246.7

$

1,914.3

$

332.2

17.4

%

Net written premiums

899.2

749.5

149.7

20.0

%

1,629.8

1,390.5

239.3

17.2

%

Premiums earned

$

776.7

$

637.6

$

139.1

21.8

%

$

1,502.2

$

1,248.0

$

254.2

20.4

%

Incurred losses and LAE

494.1

418.0

76.1

18.2

%

959.3

857.5

101.8

11.9

%

Commission and brokerage

99.4

84.5

14.9

17.7

%

190.4

164.8

25.6

15.6

%

Other underwriting expenses

117.5

93.8

23.7

25.3

%

228.3

184.0

44.3

24.1

%

Underwriting gain (loss)

$

65.6

$

41.3

$

24.3

58.9

%

$

124.2

$

41.7

$

82.5

197.9

%

Point Chg

Point Chg

Loss ratio

63.6

%

65.6

%

-2.0

63.9

%

68.7

%

(4.8)

Commission and brokerage ratio

12.8

%

13.3

%

-0.5

12.7

%

13.2

%

(0.5)

Other underwriting expense ratio

15.1

%

14.6

%

0.5

15.2

%

14.8

%

0.4

Combined ratio

91.5

%

93.5

%

-2.0

91.7

%

96.7

%

(4.9)

(NM not meaningful)

(Some amounts may not reconcile due to rounding.)

Premiums. Gross written premiums increased by 19.6% to $1.2 billion for the three months ended June 30, 2022

compared to $1.0 billion for the three months ended June 30, 2021. This rise was primarily related to increases

across all lines of business, notably specialty casualty business, professional liability business and other specialty

business. Net written premiums increased by 20.0% to $899.2 million for the three months ended June 30, 2022

compared to $749.5 million for the three months ended June 30, 2021, which is consistent with the change in

gross written premiums. Premiums earned increased 21.8% to $776.7 million for the three months ended June

30, 2022 compared to $637.6 million for the three months ended June 30, 2021. The change in premiums

earned relative to net written premiums is the result of timing; premiums are earned ratably over the coverage

period whereas written premiums are recorded at the initiation of the coverage period. Accordingly, the

significant increases in gross written premiums during the latter half of 2021 contributed to the current quarter

percentage increase in net earned premiums. 

Gross written premiums increased by 17.4% to $2.2 billion for the six months ended June 30, 2022 compared to

$1.9 billion for the six months ended June 30, 2021. This rise was primarily related to increases across all lines of

business, notably specialty casualty business, professional liability business and other specialty business. Net

written premiums increased by 17.2% to $1.6 billion for the six months ended June 30, 2022 compared to $1.4

billion for the six months ended June 30, 2021, which is consistent with the change in gross written premiums. 

40

Premiums earned increased 20.4% to $1.5 million for the six months ended June 30, 2022 compared to $1.2

billion for the six months ended June 30, 2021. The change in premiums earned relative to net written

premiums is the result of timing; premiums are earned ratably over the coverage period whereas written

premiums are recorded at the initiation of the coverage period. Accordingly, the significant increases in gross

written premiums during the latter half of 2021 contributed to the current year -to-date percentage increase in

net earned premiums. 

Incurred Losses and LAE. The following table presents the incurred losses and LAE for the Insurance segment for

the periods indicated. 

Three Months Ended June 30,

Current

Ratio %/

Prior

Ratio %/

Total

Ratio %/

(Dollars in millions)

Year

Pt Change

Years

Pt Change

Incurred

Pt Change

2022

Attritional

$

489.1

63.0

%

$

-

-

%

489.1

63.0

%

Catastrophes

5.0

0.6

%

-

-

%

5.0

0.6

%

Total Segment

$

494.1

63.6

%

$

-

-

%

$

494.1

63.6

%

2021

Attritional

$

409.2

64.2

%

$

(1.2)

-0.2

%

408.0

64.0

%

Catastrophes

10.0

1.6

%

-

-

%

10.0

1.6

%

Total Segment

$

419.2

65.8

%

$

(1.2)

-0.2

%

$

418.0

65.6

%

Variance 2022/2021

Attritional

$

79.9

(1.2)

pts

$

1.2

0.2

pts

$

81.1

(1.0)

pts

Catastrophes

(5.0)

(1.0)

pts

-

-

pts

(5.0)

(1.0)

pts

Total Segment

$

74.9

(2.2)

pts

$

1.2

0.2

pts

$

76.1

(2.0)

pts

Six Months Ended June 30,

Current

Ratio %/

Prior

Ratio %/

Total

Ratio %/

(Dollars in millions)

Year

Pt Change

Years

Pt Change

Incurred

Pt Change

2022

Attritional

$

948.6

63.1

%

$

0.7

-

%

949.3

63.1

%

Catastrophes

10.0

0.7

%

-

-

%

10.0

0.7

%

Total Segment

$

958.6

63.8

%

$

0.7

-

%

$

959.3

63.9

%

2021

Attritional

$

801.2

64.2

%

$

(1.2)

-0.1

%

800.0

64.1

%

Catastrophes

57.5

4.6

%

-

-

%

57.5

4.6

%

Total Segment

$

858.7

68.8

%

$

(1.2)

-0.1

%

$

857.5

68.7

%

Variance 2022/2021

Attritional

$

147.4

(1.1)

pts

$

1.9

0.1

pts

$

149.3

(1.0)

pts

Catastrophes

(47.5)

(3.9)

pts

-

-

pts

(47.5)

(3.9)

pts

Total Segment

$

99.9

(5.0)

pts

$

1.9

0.1

pts

$

101.8

(4.8)

pts

(Some amounts may not reconcile due to rounding.)

Incurred losses and LAE increased by 18.2% to $494.1 million for the three months ended June 30, 2022

compared to $418.0 million for the three months ended June 30, 2021. The increase was mainly due to an

increase of $79.9 million in current year attritional losses, partially offset by a decrease in current year

catastrophe losses of $5.0 million. The increase in current year attritional losses was primarily due to the impact

of the increase in premiums earned. The current year catastrophe losses of $5.0 million related to the 2022 2

nd

quarter U.S. storms. The $10.0 million of current year catastrophe losses for the three months ended June 30,

2021 related to the Texas winter storms. 

Incurred losses and LAE increased by 11.9% to $959.3 million for the six months ended June 30, 2022 compared

to $857.5 million for the six months ended June 30, 2021. The increase was mainly due to an increase of $147.4

million in current year attritional losses, partially offset by a decrease in current year catastrophe losses of $47.5

million. The increase in current year attritional losses was primarily due to the impact of the increase in

premiums earned. The current year catastrophe losses of $10.0 million related to the 2022 March U.S. storms

41

($5.0 million) and the 2022 2

nd

 quarter U.S. storms ($5.0 million). The $57.5 million of current year catastrophe

losses for the six months ended June 30, 2021 related to the Texas winter storms. 

Segment Expenses. Commission and brokerage increased by 17.7% to $99.4 million for the three months ended

June 30, 2022 compared to $84.5 million for the three months ended June 30, 2021. Commission and brokerage

increased by 15.6% to $190.4 million for the six months ended June 30, 2022 compared to $164.8 million for the

six months ended June 30, 2021. These increase s were mainly due to the impact of the increase in premiums

earned. 

Segment other underwriting expenses increased to $117.5 million for the three months ended June 30, 2022

compared to $93.8 million for the three months ended June 30, 2021. Segment other underwriting expenses

increased to $228.3 million for the six months ended June 30, 2022 compared to $184.0 million for the six

months ended June 30, 2021. These increases were mainly due to the impact of the increases in premiums

earned and increased expenses related to the continued build out of the insurance business, including an

expansion of the international insurance platform. 

FINANCIAL CONDITION 

Investments. Total investments were $26.6 billion at June 30, 2022, a decrease of $1.6 million compared to

$28.2 billion at December 31, 2021. This decrease was primarily related to declines in fixed maturity securities,

equity securities and short -term investments. Fixed maturity securities decreased due to declines in fair values

resulting primarily from higher interest rates, partially offset by net purchases of fixed maturity securities during

the period. Equity securities decreased due to declines in fair values due to diminished market performance as

well as net sales of equity securities during the period. Short-term investments decreased as a result of the

reinvestment of funds into other vehicles. 

The Company’s limited partnership investments are comprised of limited partnerships that invest in private

equities. Generally, the limited partnerships are reported on a quarter lag. We receive annual audited financial

statements for all of the limited partnerships which are prepared using fair value accounting in accordance with

FASB guidance. For the quarterly reports, the Company reviews the financial reports for any unusual changes in

carrying value. If the Company becomes aware of a significant decline in value during the lag reporting period,

the loss will be recorded in the period in which the Company identifies the decline. 

The table below summarize the composition and characteristics of our investment portfolio as of the dates

indicated. 

At

At

June 30, 2022

December 31, 2021

Fixed income portfolio duration (years)

3.1

3.2

Fixed income composite credit quality

A+

A+

Reinsurance Recoverables . 

Reinsurance recoverables for both paid and unpaid losses totaled $2.1 billion and $2.1 billion at June 30, 2022

and December 31, 2021, respectively. At June 30, 2022, $618.1 million, or 29.5%, was receivable from Mt. Logan

Re collateralized segregated accounts; $224.2 million, or 10.7%, was receivable from Munich Reinsurance

America, Inc. (“Munich Re”) and $131.5 million, or 6.3% was receivable from Endurance Specialty Holdings, Ltd.

(“Endurance”). No other retrocessionaire accounted for more than 5% of our recoverables . 

Loss and LAE Reserves. Gross loss and LAE reserves totaled $20.0 billion and $19.0 billion at June 30, 2022 and

December 31, 2021, respectively. 

42

The following tables summarize gross outstanding loss and LAE reserves by segment, classified by case reserves

and IBNR reserves, for the periods indicated. 

At June 30, 2022

Case

IBNR

Total

% of 

(Dollars in millions)

Reserves

Reserves

Reserves

Total

Reinsurance

$

5,853.5

$

8,623.4

$

14,476.9

72.4

%

Insurance

1,639.8

3,731.1

5,370.9

26.9

%

Total excluding A&E

7,493.3

12,354.6

19,847.8

99.3

%

A&E

145.2

-

145.2

0.7

%

Total including A&E

$

7,638.5

$

12,354.6

$

19,993.1

100.0

%

(Some amounts may not reconcile due to rounding.)

At December 31, 2021

Case

IBNR

Total

% of 

(Dollars in millions)

Reserves

Reserves

Reserves

Total

Reinsurance

$

5,415.0

$

8,312.3

$

13,727.3

72.2

%

Insurance

1,546.2

3,562.4

5,108.6

26.9

%

Total excluding A&E

6,961.2

11,874.7

18,835.9

99.1

%

A&E

163.7

9.9

173.6

0.9

%

Total including A&E

$

7,124.8

$

11,884.7

$

19,009.5

100.0

%

(Some amounts may not reconcile due to rounding.)

Changes in premiums earned and business mix, reserve re-estimations, catastrophe losses and changes in

catastrophe loss reserves and claim settlement activity all impact loss and LAE reserves by segment and in total.

Our loss and LAE reserves represent management’s best estimate of our ultimate liability for unpaid claims. We

continuously re-evaluate our reserves, including re-estimates of prior period reserves, taking into consideration

all available information and, in particular, newly reported loss and claim experience. Changes in reserves

resulting from such re-evaluations are reflected in incurred losses in the period when the re-evaluation is made. 

Our analytical methods and processes operate at multiple levels including individual contracts, groupings of like

contracts, classes and lines of business, internal business units, segments, legal entities, and in the aggregate. In

order to set appropriate reserves, we make qualitative and quantitative analyses and judgments at these various

levels. Additionally, the attribution of reserves, changes in reserves and incurred losses among accident years

requires qualitative and quantitative adjustments and allocations at these various levels. We utilize actuarial

science, business expertise and management judgment in a manner intended to ensure the accuracy and

consistency of our reserving practices. Nevertheless, our reserves are estimates, which are subject to variation,

which may be significant. 

There can be no assurance that reserves for, and losses from, claim obligations will not increase in the future,

possibly by a material amount. However, we believe that our existing reserves and reserving methodologies

lessen the probability that any such increase would have a material adverse effect on our financial condition,

results of operations or cash flows. 

43

Asbestos and Environmental Exposures. A&E exposures represent a separate exposure group for monitoring and

evaluating reserve adequacy. The following table summarizes the outstanding loss reserves with respect to A&E

reserves on both a gross and net of retrocessions basis for the periods indicated. 

At

At

June 30,

December 31,

(Dollars in millions)

2022

2021

Gross reserves 

$

145.2

$

175.2

Ceded reserves

(15.8)

(19.0)

Net reserves 

$

129.4

$

156.1

(Some amounts may not reconcile due to rounding.)

With respect to asbestos only, at June 30, 2022, we had net asbestos loss reserves of $129.7 million, or 100.2%,

of total net A&E reserves, all of which was for assumed business.

Ultimate loss projections for A&E liabilities cannot be accomplished using standard actuarial techniques. We

believe that our A&E reserves represent management’s best estimate of the ultimate liability; however, there

can be no assurance that ultimate loss payments will not exceed such reserves, perhaps by a significant amount. 

Industry analysts use the “survival ratio” to compare the A&E reserves among companies with such liabilities. 

The survival ratio is typically calculated by dividing a company’s current net reserves by the three year average of

annual paid losses. Hence, the survival ratio equals the number of years that it would take to exhaust the

current reserves if future loss payments were to continue at historical levels. Using this measurement, our net

three year asbestos survival ratio was 3.6 years at June 30, 2022. These metrics can be skewed by individual

large settlements occurring in the prior three years and therefore, may not be indicative of the timing of future

payments. 

LIQUIDITY AND CAPITAL RESOURCES 

Capital. Shareholders’ equity at June 30, 2022 and December 31, 2021 was $8.9 billion and $10.1 billion,

respectively. Management’s objective in managing capital is to ensure its overall capital level, as well as the

capital levels of its operating subsidiaries, exceed the amounts required by regulators, the amount needed to

support our current financial strength ratings from rating agencies and our own economic capital models. The

Company’s capital has historically exceeded these benchmark levels. 

Our two main operating companies Bermuda Re and Everest Re are regulated by the Bermuda Monetary

Authority (“BMA”) and the State of Delaware, Department of Insurance, respectively. Both regulatory bodies

have their own capital adequacy models based on statutory capital as opposed to GAAP basis equity. Failure to

meet the required statutory capital levels could result in various regulatory restrictions, including business

activity and the payment of dividends to their parent companies. 

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

Bermuda Re

(1)

Everest Re

(2)

At December 31,

At December 31,

(Dollars in millions)

2021

2020

2021

2020

Regulatory targeted capital

$

2,169.3

$

1,923.2

$

2,960.0

$

2,489.8

Actual capital

$

3,184.1

$

2,930.3

$

5,717.1

$

5,276.0

(1)

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

(2)

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

Our financial strength ratings as determined by A.M. Best, Standard & Poor’s and Moody’s are important as they

provide our customers and investors with an independent assessment of our financial strength using a rating

scale that provides for relative comparisons. We continue to possess significant financial flexibility and access to

44

debt and equity markets as a result of our financial strength, as evidenced by the financial strength ratings as

assigned by independent rating agencies. 

We maintain our own economic capital models to monitor and project our overall capital, as well as the capital

at our operating subsidiaries. A key input to the economic models is projected income and this input is

continually compared to actual results, which may require a change in the capital strategy. 

As part of our capital strategy, we model our potential exposure to catastrophe losses arising from a single

event. Projected catastrophe losses are generally summarized in term of probable maximum loss (“PML”). A full

discussion on PMLs is included in our December 31, 2021 Form 10-K filing in PART 1, Item 1. Business, Risk

Management of Underwriting and Reinsurance Arrangements. We focus on the projected net economic loss

from a catastrophe in a given zone as compared to our shareholders’ equity. Economic loss is the PML exposure,

net of third party reinsurance, reduced by estimated reinstatement premiums to renew coverage and estimated

income taxes. In our December 31, 2021 Form 10-K, we reported that our projected net economic loss from our

largest projected 100-year event represented approximately 4.8% of our December 31, 2021 shareholders’

equity. During the first half of 2022, our net exposure to catastrophes has changed due to the market conditions

and business decisions. As a result, our projected net economic loss from our largest 100 -year event in a given

zone represents approximately 7.4% of our June 30, 2022 shareholders’ equity. 

The table below reflects the Company’s PML exposure, net of third party reinsurance at various return periods

for its top zones/perils (as ranked by largest 1 in 100 year economic loss) based on projection data as of July 1,

2022.

Return Periods (in years)

1 in 20

1 in 50

1 in 100

1 in 250

1 in 500

1 in 1,000

Exceeding Probability

5.0%

2.0%

1.0%

0.4%

0.2%

0.1%

(Dollars in millions)

Zone/ Peril

California, Earthquake

$

161

$

649

$

913

$

1,299

$

1,636

$

2,469

Southeast U.S., Wind

484

652

837

1,055

1,263

1,696

Texas Wind

140

385

587

889

1,111

1,350

Europe Wind

147

335

506

781

928

1,036

Chile Earthquake

89

218

407

686

932

1,084

The projected economic losses, defined as PML exposures, net of third party reinsurance, reinstatement

premiums and estimated income taxes, for the top zones/perils scheduled are as follows: 

Return Periods (in years)

1 in 20

1 in 50

1 in 100

1 in 250

1 in 500

1 in 1,000

Exceeding Probability

5.0%

2.0%

1.0%

0.4%

0.2%

0.1%

(Dollars in millions)

Zone/ Peril

California, Earthquake

$

127

$

478

$

659

$

943

$

1,226

$

1,834

Southeast U.S., Wind

304

418

527

685

838

1,165

Texas Wind

104

273

406

586

752

909

Europe Wind

120

263

383

608

704

802

Chile Earthquake

67

164

307

531

721

845

On October 4, 2021, we issued $1.0 billion of 31 year senior notes with an interest coupon rate of 3.125%. These

senior notes will mature on October 15, 2052 and will pay interest semi-annually. 

During the first half of 2022, we repurchased 5,000 shares for $1.3 million in the open market and paid $126.1

million in dividends to adjust our capital position and enhance long term expected returns to our shareholders. 

In 2021, we repurchased 887,622 shares for $225.1 million in the open market and paid $246.7 million in

dividends to adjust our capital position and enhance long term expected returns to our shareholders. We may at

times enter into a Rule 10b5-1 repurchase plan agreement to facilitate the repurchase of shares. On May 22,

45

2020, our existing Board authorization to purchase up to 30 million of our shares was amended to authorize the

purchase of up to 32 million shares. As of June 30, 2022, we had repurchased 30.5 million shares under this

authorization. 

We may continue, from time to time, to seek to retire portions of our outstanding debt securities through cash

repurchases, in open-market purchases, privately negotiated transactions or otherwise. Such repurchases, if any,

will be subject to and depend on prevailing market conditions, our liquidity requirements, contractual

restrictions and other factors. The amounts involved in any such transactions, individually or in the aggregate,

may be material.

Liquidity. Our liquidity requirements are generally met from positive cash flow from operations. Positive cash

flow results from reinsurance and insurance premiums being collected prior to disbursements for claims, which

disbursements generally take place over an extended period after the collection of premiums, sometimes a

period of many years. Collected premiums are generally invested, prior to their use in such disbursements, and

investment income provides additional funding for loss payments. Our net cash flows from operating activities

were $1.6 billion and $1.6 billion for the six months ended June 30, 2022 and 2021, respectively. Additionally,

these cash flows reflected net catastrophe loss payments of $377.1 million and $334.7 million for the six months

ended June 30, 2022 and 2021, respectively and net tax payments of $100.5 million and $34.8 million for the six

months ended June 30, 2022 and 2021, respectively. 

If disbursements for claims and benefits, policy acquisition costs and other operating expenses were to exceed

premium inflows, cash flow from reinsurance and insurance operations would be negative. The effect on cash

flow from insurance operations would be partially offset by cash flow from investment income. Additionally,

cash inflows from investment maturities and dispositions, both short-term investments and longer term

maturities are available to supplement other operating cash flows. 

As the timing of payments for claims and benefits cannot be predicted with certainty, we maintain portfolios of

long term invested assets with varying maturities, along with short-term investments that provide additional

liquidity for payment of claims. At June 30, 2022 and December 31, 2021, we held cash and short-term

investments of $2.4 billion and $2.6 billion, respectively. Our short-term investments are generally readily

marketable and can be converted to cash. In addition to these cash and short-term investments, at June 30,

2022, we had $1.3 billion of available for sale fixed maturity securities maturing within one year or less, $7.2

billion maturing within one to five years and $5.9 billion maturing after five years. Our $1.3 billion of equity

securities are comprised primarily of publicly traded securities that can be easily liquidated. We believe that

these fixed maturity and equity securities, in conjunction with the short-term investments and positive cash flow

from operations, provide ample sources of liquidity for the expected payment of losses in the near future. We

do not anticipate selling a significant amount of securities to pay losses and LAE but have the ability to do so. 

Sales of securities might result in net gains (losses) on investments. At June 30, 2022 we had $1.5 billion of net

pre-tax unrealized depreciation related to fixed maturity securities, comprised of $1.6 billion of pre-tax

unrealized depreciation and $80.3 million of pre-tax unrealized appreciation. 

Management generally expects annual positive cash flow from operations, which reflects the strength of overall

pricing. However, given the recent set of catastrophic events, cash flow from operations may decline and could

become negative in the near term as significant claim payments are made related to the catastrophes. However,

as indicated above, the Company has ample liquidity to settle its catastrophe claims.

In addition to our cash flows from operations and liquid investments, we also have multiple active credit facilities

that provide commitments of up to $1.2 billion of collateralized standby letters of credit to support business

written by our Bermuda operating subsidiaries. In addition, the Company has the ability to request access to an

additional $340.0 million of uncommitted credit facilities, which would require approval from the applicable

lender. There is no guarantee the uncommitted capacity will be available to us on a future date. See Note 9 –

Credit Facilities for further details. 

46

Market Sensitive Instruments. 

The SEC’s Financial Reporting Release #48 requires registrants to clarify and expand upon the existing financial

statement disclosure requirements for derivative financial instruments, derivative commodity instruments and

other financial instruments (collectively, “market sensitive instruments”). We do not generally enter into market

sensitive instruments for trading purposes. 

Our current investment strategy seeks to maximize after-tax income through a high quality, diversified, fixed

maturity portfolio, while maintaining an adequate level of liquidity. Our mix of investments is adjusted

periodically, consistent with our current and projected operating results and market conditions. The fixed

maturity securities in the investment portfolio are comprised of non-trading available for sale securities. 

Additionally, we have invested in equity securities. 

The overall investment strategy considers the scope of present and anticipated Company operations. In

particular, estimates of the financial impact resulting from non-investment asset and liability transactions,

together with our capital structure and other factors, are used to develop a net liability analysis. This analysis

includes estimated payout characteristics for which our investments provide liquidity. This analysis is considered

in the development of specific investment strategies for asset allocation, duration and credit quality. The change

in overall market sensi tive risk exposure principally reflects the asset changes that took place during the period. 

Interest Rate Risk. Our $28.7 billion investment portfolio, at June 30, 2022, is principally comprised of fixed

maturity securities, which are generally subject to interest rate risk and some foreign currency exchange rate

risk, and some equity securities, which are subject to price fluctuations and some foreign exchange rate risk. The

overall economic impact of the foreign exchange risks on the investment portfolio is partially mitigated by

changes in the dollar value of foreign currency denominated liabilities and their associated income statement

impact. 

Interest rate risk is the potential change in value of the fixed maturity securities portfolio, including short-term

investments, from a change in market interest rates. In a declining interest rate environment, it includes

prepayment risk on the $3.6 billion of mortgage -backed securities in the $22.0 billion fixed maturity portfolio. 

Prepayment risk results from potential accelerated principal payments that shorten the average life and thus the

expected yield of the security. 

The table below displays the potential impact of fair value fluctuations and after-tax unrealized appreciation on

our fixed maturity portfolio (including $300.8 million of short-term investments) for the period indicated based

on upward and downward parallel and immediate 100 and 200 basis point shifts in interest rates. For legal

entities with a U.S. dollar functional currency, this modeling was performed on each security individually. To

generate appropriate price estimates on mortgage -backed securities, changes in prepayment expectations under

different interest rate environments were taken into account. For legal entities with a non-U.S. dollar functional

currency, the effective duration of the involved portfolio of securities was used as a proxy for the fair value

change under the various interest rate change scenarios. 

Impact of Interest Rate Shift in Basis Points

At June 30, 2022

-200

-100

0 

100

200

(Dollars in millions)

Total Fair Value

$

23,745.3

$

22,999.0

$

22,252.7

$

21,506.4

$

20,760.1

Fair Value Change from Base (%)

6.7

%

3.4

%

0.0

%

(3.4)

%

(6.7)

%

Change in Unrealized Appreciation

After-tax from Base ($)

$

1,296.2

$

648.1

$

-

$

(648.1)

$

(1,296.2)

We had $20.0 billion and $19.0 billion of gross reserves for losses and LAE as of June 30, 20 22 and December 31,

2021, respectively. These amounts are recorded at their nominal value, as opposed to present value, which

would reflect a discount adjustment to reflect the time value of money. Since losses are paid out over a period

of time, the present value of the reserves is less than the nominal value. As interest rates rise, the present value

47

of the reserves decreases and, conversely, as interest rates decline, the present value increases. These

movements are the opposite of the interest rate impacts on the fair value of investments. While the difference

between present value and nominal value is not reflected in our financial statements, our financial results will

include investment income over time from the investment portfolio until the claims are paid. Our loss and loss

reserve obligations have an expected duration of approximately 3.7 years, which is reasonably consistent with

our fixed income portfolio. If we were to discount our loss and LAE reserves, net of ceded reserves, the discount

would be approximately $2.5 billion resulting in a discounted reserve balance of approximately $15.5 billion,

representing approximately 69.8% of the value of the fixed maturity investment portfolio funds. 

Equity Risk. Equity risk is the potential change in fair value of the common stock, preferred stock and mutual

fund portfolios arising from changing prices. Our equity investments consist of a diversified portfolio of

individual securities and mutual funds, which invest principally in high quality common and preferred stocks that

are traded on the major exchanges, and mutual fund investments in emerging market debt. The primary

objective of the equity portfolio is to obtain greater total return relative to our core bonds over time through

market appreciation and income. 

The table below displays the impact on fair value and after-tax change in fair value of a 10% and 20% change in

equity prices up and down for the period indicated. 

Impact of Percentage Change in Equity Fair/Market Values

At June 30, 2022

(Dollars in millions)

-20%

-10%

0%

10%

20%

Fair Value of the Equity Portfolio

$

1,039.4

$

1,169.3

$

1,299.2

$

1,429.1

$

1,559.1

After-tax Change in Fair Value

$

(206.0)

$

(103.0)

$

-

$

103.0

$

206.0

Foreign Currency Risk. Foreign currency risk is the potential change in value, income and cash flow arising from

adverse changes in foreign currency exchange rates. Each of our non-U.S./Bermuda (“foreign”) operations

maintains capital in the currency of the country of its geographic location consistent with local regulatory

guidelines. Each foreign operation may conduct business in its local currency, as well as the currency of other

countries in which it operates. The primary foreign currency exposures for these foreign operations are the

Canadian Dollar, the Singapore Dollar, the British Pound Sterling and the Euro. We mitigate foreign exchange

exposure by generally matching the currency and duration of our assets to our corresponding operating

liabilities. In accordance with FASB guidance, the impact on the fair value of available for sale fixed maturities

due to changes in foreign currency exchange rates, in relation to functional currency, is reflected as part of other

comprehensive income. Conversely, the impact of changes in foreign currency exchange rates, in relation to

functional currency, on other assets and liabilities is reflected through net income as a component of other

income (expense). In addition, we translate the assets, liabilities and income of non-U.S. dollar functional

currency legal entities to the U.S. dollar. This translation amount is reported as a component of other

comprehensive income. 

Safe Harbor Disclosure.

This report contains forward-looking statements within the meaning of the U.S. federal securities laws. We

intend these forward-looking statements to be covered by the safe harbor provisions for forward-looking

statements in the federal securities laws. In some cases, these statements can be identified by the use of

forward-looking words such as “may”, “will”, “should”, “could”, “anticipate”, “estimate”, “expect”, “plan”,

“believe”, “predict”, “potential” and “intend”. Forward-looking statements contained in this report include

information regarding our reserves for losses and LAE, the CARES Act, the impact of the Tax Cut and Jobs Act, the

adequacy of capital in relation to regulatory required capital, the adequacy of our provision for uncollectible

balances, estimates of our catastrophe exposure, the effects of catastrophic and pandemic events on our

financial statements, the ability of Everest Re, Holdings, Holdings Ireland, Dublin Holdings, Bermuda Re and

Everest International to pay dividends and the settlement costs of our specialized equity index put option

contracts. Forward-looking statements only reflect our expectations and are not guarantees of performance. 

These statements involve risks, uncertainties and assumptions. Actual events or results may differ materially

from our expectations. Important factors that could cause our actual events or results to be materially different

48

from our expectations include those discussed under the caption ITEM 1A, “Risk Factors” in the Company’s most

recent 10-K filing. We undertake no obligation to update or revise publicly any forward-looking statements,

whether as a result of new information, future events or otherwise.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Market Risk Instruments.

 See “Liquidity and Capital Resources - Market Sensitive Instruments” in PART I – ITEM

2.

ITEM 4. CONTROLS AND PROCEDURES

As of the end of the period covered by this report, our management carried out an evaluation, with the

participation of the Chief Executive Officer and Chief Financial Officer, of the effectiveness of our disclosure

controls and procedures (as defined in Rule 13a-15(e) under the Securities Exchange Act of 1934 (the “Exchange

Act”)). Based on their evaluation, the Chief Executive Officer and Chief Financial Officer concluded that our

disclosure controls and procedures are effective to ensure that information required to be disclosed by us in the

reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported within

the time periods specified in Securities and Exchange Commission’s rules and forms. Our management, with the

participation of the Chief Executive Officer and Chief Financial Officer, also conducted an evaluation of our

internal control over financial reporting to determine whether any changes occurred during the quarter covered

by this report that have materially affected, or are reasonably likely to materially affect, our internal control over

financial reporting. Based on that evaluation, there has been no such change during the quarter covered by this

report. 

PART II

ITEM 1. LEGAL PROCEEDINGS

In the ordinary course of business, the Company is involved in lawsuits, arbitrations and other formal and

informal dispute resolution procedures, the outcomes of which will determine the Company’s rights and

obligations under insurance and reinsurance agreements. In some disputes, the Company seeks to enforce its

rights under an agreement or to collect funds owing to it. In other matters, the Company is resisting attempts by

others to collect funds or enforce alleged rights. These disputes arise from time to time and are ultimately

resolved through both informal and formal means, including negotiated resolution, arbitration and litigation. In

all such matters, the Company believes that its positions are legally and commercially reasonable. The Company

considers the statuses of these proceedings when determining its reserves for unpaid loss and loss adjustment

expenses. 

Aside from litigation and arbitrations related to these insurance and reinsurance agreements, the Company is

not a party to any other material litigation or arbitration. 

ITEM 1A. RISK FACTORS

No material changes.

49

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

Issuer Purchases of Equity Securities.

Issuer Purchases of Equity Securities

(a)

(b)

(c)

(d)

Maximum Number (or

Total Number of

Approximate Dollar

Shares (or Units)

Value) of Shares (or

Purchased as Part

Units) that May Yet

Total Number of

of Publicly

Be Purchased Under

Shares (or Units)

Average Price Paid

Announced Plans or

the Plans or

Period

Purchased

per Share (or Unit)

Programs

Programs (1)

April 1 - 30, 2022

-

$

-

-

1,465,181

May 1 - 31, 2022

1,601

$

276.8129

-

1,465,181

June 1 - 30, 2022

801

$

270.2875

-

1,465,181

Total

2,402

$

-

-

-

(1) On May 22, 2020, the Company’s executive committee of the Board of Directors approved an amendment to the share repurchase program

authorizing the Company and/or its subsidiary Holdings, to purchase up to a current aggregate of 32.0 million of the Company’s shares (recognizing that the

number of shares authorized for repurchase has been reduced by those shares that have already been purchased) in open market transactions, privately

negotiated transactions or both. Currently, the Company and/or its subsidiary Holdings have repurchased 30.5 million of the Company’s shares.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4. MINE SAFETY DISCLOSURES

Not applicable.

ITEM 5. OTHER INFORMATION

None.

50

ITEM 6. EXHIBITS 

Exhibit Index 

Exhibit No.

Description

 31.1

Section 302 Certification of Juan C. Andrade

 31.2

Section 302 Certification of Mark Kociancic

 32.1

Section 906 Certification of Juan C. Andrade and Mark Kociancic

101.INS

XBRL Instance Document

101.SCH

XBRL Taxonomy Extension Schema

101.CAL

XBRL Taxonomy Extension Calculation Linkbase

101.DEF

XBRL Taxonomy Extension Definition Linkbase

101.LAB

XBRL Taxonomy Extension Labels Linkbase

101.PRE

XBRL Taxonomy Extension Presentation Linkbase

104

Cover Page Interactive Data File (embedded within the Inline XBRL document)

51

Everest Re Group, Ltd.

Signatures

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report

to be signed on its behalf by the undersigned thereunto duly authorized.

Everest Re Group, Ltd.

(Registrant)

/S/ MARK KOCIANCIC

Mark Kociancic

Executive Vice President and

 Chief Financial Officer

(Duly Authorized Officer and Principal Financial Officer)

Dated: August 4, 2022