Dividend Restrictions And Statutory Financial Information

12 Months Ended

Dec. 31, 2022

Dividend Restrictions And Statutory Financial Information [Abstract]

Dividend Restrictions And Statutory Financial Information

14. DIVIDEND RESTRICTIONS AND STATUTORY FINANCIAL INFORMATION

Group and its operating subsidiaries are subject to various regulatory restrictions, including the amount of

dividends that may be paid and the level of capital that the operating entities must maintain. These regulatory

restrictions are based upon statut ory capital as opposed to GAAP basis equity or net assets. Group and one of its

primary operating subsidiaries, Bermuda Re, are regulated by Bermuda law and its other primary operating

subsidiary, Everest Re, is regulated by Delaware law. Bermuda Re is subject to the Bermuda Solvency Capital

Requirement (“BSCR”) administered by the Bermuda Monetary Authority (“BMA”) and Everest Re is subject to

the Risk-Based Capital Model (“RBC”) developed by the National Association of Insurance Commissioners

(“NAIC”). These models represent the aggregate regulatory restrictions on net assets and statutory capital and

surplus.

Dividend Restrictions.

Under Bermuda law, Group is prohibited from declaring or paying a dividend if such payment would reduce the

realizable value of its assets to an amount less than the aggregate value of its liabilities and its issued share

capital and share premium (additional paid-in capital) accounts. Group’s ability to pay dividends and its

operating expenses is dependent upon dividends from its subsidiaries.

Under Bermuda law, Bermuda Re is prohibited from declaring or making payment of a dividend if it fails to meet

its minimum solvency margin or minimum liquidity ratio. As a long-term insurer, Bermuda Re is also unable to

declare or pay a dividend to anyone who is not a policyholder unless, after payment of the dividend, the value of

the assets in their long-term business fund, as certified by their approved actuary, exceeds their liabilities for

long term business by at least the $

0.3

 million minimum solvency margin. 

Prior approval of the BMA is required if Bermuda Re’s dividend payments would exceed

25

% of their prior year-

end total statutory capital and surplus.

Bermuda Re prepares its statutory financial statements in conformity with the accounting principles set forth in

Bermuda in The Insurance Act 1978, amendments thereto and related regulations. The statutory capital and

surplus of Bermuda Re was $

2.8

 billion and $

3.1

 billion at December 31, 2022 and 2021, respectively. The

statutory net income of Bermuda Re was $

603

 million, $

681

 million and $

223

 million for the years ended

December 31, 2022, 2021 and 2020, respectively.

Delaware law provides that an insurance company which is a member of an insurance holding company system

and is domiciled in the state shall not pay dividends without giving prior notice to the Insurance Commissioner of

Delaware and may not pay dividends without the approval of the Insurance Commissioner if the value of the

proposed dividend, together with all other dividends and distributions made in the preceding

twelve months

,

exceeds the greater of (1)

10

% of statutory surplus or (2) net income, not including realized capital gains, each as

reported in the prior year’s statutory annual statement. In addition, no dividend may be paid in excess of

unassigned earned surplus. At December 31, 2022, Everest Re has $

555

 million available for payment of

dividends in 2023 without the need for prior regulatory approval.

Everest Re prepares its statutory financial statements in accordance with accounting practices prescribed or

permitted by the NAIC and the Delaware Insurance Department. Prescribed statutory accounting practices are

set forth in the NAIC Accounting Practices and Procedures Manual. The capital and statutory surplus of Everest

Re was $

5.6

 billion and $

5.8

 billion at December 31, 2022 and 2021, respectively. The statutory net income of

Everest Re was $

294

 million, $

336

 million and $

595

 million for the years ended December 31, 2022, 2021 and

2020. 

There are certain regulatory and contractual restrictions on the ability of Holdings’ operating subsidiaries to

transfer funds to Holdings in the form of cash dividends, loans or advances. The insurance laws of the State of

Delaware, where Holdings’ direct insurance subsidiaries are domiciled, require regulatory approval before those

subsidiaries can pay dividends or make loans or advances to Holdings that exceed certain statutory thresholds.

Capital Restrictions.

In Bermuda, Bermuda Re is subject to the BSCR administered by the BMA. No regulatory action is taken if an

insurer’s capital and surplus is equal to or in excess of their enhanced capital requirement determined by the

BSCR model. In addition, the BMA has established a target capital level for each insurer, which is

120

% of the

enhanced capital requirement.

In the United States, Everest Re is subject to the RBC developed by the NAIC which determines an authorized

control level risk-based capital. As long as the total adjusted capital is

200

% or more of the authorized control

level capital, no action is required by the Company.

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

Bermuda Re

(1)

Everest Re

(2)

At December 31,

At December 31,

(Dollars in millions)

2022

(3)

2021

2022

2021

Regulatory targeted capital

$

-

$

2,169

$

3,353

$

2,960

Actual capital

$

2,759

$

3,184

$

5,553

$

5,717

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.

(3)

The 2022 BSCR calculation is not yet due to be completed; however, the Company anticipates that Bermuda Re's December 31, 2022 actual capital will exceed the targeted capital

level.