EVEREST GROUP, LTD. - Quarter Report: 2015 June (Form 10-Q)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(d)

OF THE SECURITIES EXCHANGE ACT OF 1934

FOR THE QUARTERLY PERIOD ENDED:

June 30, 2015

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.)

Wessex House – 2^nd Floor

45 Reid Street

PO Box HM 845

Hamilton HM DX, 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

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted 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 and post such files).

YES

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

Large accelerated filer	X	Accelerated filer
Non-accelerated filer		Smaller reporting company
(Do not check if smaller reporting company)

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

YES

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

		Number of Shares Outstanding
Class		At August 1, 2015
Common Shares, $0.01 par value		44,188,487

EVEREST RE GROUP, LTD

Table of Contents

Form 10-Q

Page

PART I

FINANCIAL INFORMATION

Item 1.	Financial Statements

	Consolidated Balance Sheets June 30, 2015 (unaudited)
	and December 31, 2014	1

	Consolidated Statements of Operations and Comprehensive Income (Loss) for the
	three and six months ended June 30, 2015 and 2014 (unaudited)	2

	Consolidated Statements of Changes in Shareholders' Equity for the three and
	six months ended June 30, 2015 and 2014 (unaudited)	3

	Consolidated Statements of Cash Flows for the six months ended
	June 30, 2015 and 2014 (unaudited)	4

	Notes to Consolidated Interim Financial Statements (unaudited)	5

Item 2.	Management's Discussion and Analysis of Financial Condition and
	Results of Operation	30

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	56

Item 4.	Controls and Procedures	56

PART II

OTHER INFORMATION

Item 1.	Legal Proceedings	57

Item 1A.	Risk Factors	57

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	57

Item 3.	Defaults Upon Senior Securities	57

Item 4.	Mine Safety Disclosures	58

Item 5.	Other Information	58

Item 6.	Exhibits	58

EVEREST RE GROUP, LTD.

CONSOLIDATED BALANCE SHEETS

	June 30,			December 31,
(Dollars and share amounts in thousands, except par value per share)	2015			2014
	(unaudited)
ASSETS:
Fixed maturities - available for sale, at market value	$	13,474,801		$	13,101,067
(amortized cost: 2015, $13,213,596; 2014, $12,831,159)
Fixed maturities - available for sale, at fair value		228			1,509
Equity securities - available for sale, at market value (cost: 2015, $147,512; 2014, $148,326)		137,516			140,210
Equity securities - available for sale, at fair value		1,483,803			1,447,820
Short-term investments		1,901,807			1,705,932
Other invested assets (cost: 2015, $665,153; 2014, $601,925)		665,153			601,925
Cash		338,901			437,474
Total investments and cash		18,002,209			17,435,937
Accrued investment income		108,829			111,075
Premiums receivable		1,445,180			1,397,983
Reinsurance receivables		682,878			670,854
Funds held by reinsureds		233,447			228,192
Deferred acquisition costs		350,551			398,408
Prepaid reinsurance premiums		179,448			154,177
Income taxes		206,400			184,762
Other assets		273,954			236,436
TOTAL ASSETS	$	21,482,896		$	20,817,824

LIABILITIES:
Reserve for losses and loss adjustment expenses	$	9,783,570		$	9,720,813
Future policy benefit reserve		59,456			59,820
Unearned premium reserve		1,562,078			1,728,745
Funds held under reinsurance treaties		78,553			3,932
Commission reserves		88,008			87,990
Other net payable to reinsurers		160,248			139,841
Losses in course of payment		251,980			157,527
4.868% Senior notes due 6/1/2044		400,000			400,000
6.6% Long term notes due 5/1/2067		238,366			238,364
Accrued interest on debt and borrowings		3,537			3,537
Equity index put option liability		40,819			47,022
Unsettled securities payable		72,834			41,092
Other liabilities		257,056			316,469
Total liabilities		12,996,505			12,945,152

NONCONTROLLING INTERESTS:
Redeemable noncontrolling interests - Mt. Logan Re		759,729			421,552

Commitments and contingencies (Note 9)

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; (2015) 68,555
and (2014) 68,336 outstanding before treasury shares		685			683
Additional paid-in capital		2,084,636			2,068,807
Accumulated other comprehensive income (loss), net of deferred income tax expense
(benefit) of $20,968 at 2015 and $20,715 at 2014		(14,819	)		48,317
Treasury shares, at cost; 24,363 shares (2015) and 23,650 shares (2014)		(2,610,878	)		(2,485,897	)
Retained earnings		8,267,038			7,819,210
Total shareholders' equity attributable to Everest Re Group		7,726,662			7,451,120
TOTAL LIABILITIES, NONCONTROLLING INTERESTS AND SHAREHOLDERS' EQUITY	$	21,482,896		$	20,817,824

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

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)	2015			2014			2015			2014
	(unaudited)						(unaudited)
REVENUES:
Premiums earned	$	1,332,398		$	1,272,317		$	2,639,475		$	2,416,807
Net investment income		125,046			131,224			247,629			254,381
Net realized capital gains (losses):
Other-than-temporary impairments on fixed maturity securities		(16,238	)		(389	)		(42,256	)		(389	)
Other-than-temporary impairments on fixed maturity securities
transferred to other comprehensive income (loss)		-			-			-			-
Other net realized capital gains (losses)		(7,940	)		59,405			7,573			80,531
Total net realized capital gains (losses)		(24,178	)		59,016			(34,683	)		80,142
Net derivative gain (loss)		6,445			3,774			6,203			2,113
Other income (expense)		(3,925	)		(13,871	)		42,148			(17,167	)
Total revenues		1,435,786			1,452,460			2,900,772			2,736,276

CLAIMS AND EXPENSES:
Incurred losses and loss adjustment expenses		790,661			735,697			1,513,126			1,355,106
Commission, brokerage, taxes and fees		294,917			283,687			582,084			529,689
Other underwriting expenses		63,951			58,414			124,615			109,052
Corporate expenses		5,925			3,899			11,388			8,844
Interest, fees and bond issue cost amortization expense		9,026			8,978			18,016			16,546
Total claims and expenses		1,164,480			1,090,675			2,249,229			2,019,237

INCOME (LOSS) BEFORE TAXES		271,306			361,785			651,543			717,039
Income tax expense (benefit)		35,834			63,860			77,001			117,092

NET INCOME (LOSS)	$	235,472		$	297,925		$	574,542		$	599,947
Net (income) loss attributable to noncontrolling interests		(26,415	)		(7,741	)		(42,507	)		(15,830	)
NET INCOME (LOSS) ATTRIBUTABLE TO EVEREST RE GROUP	$	209,057		$	290,184		$	532,035		$	584,117

Other comprehensive income (loss), net of tax:
Unrealized appreciation (depreciation) ("URA(D)") on securities arising during the period		(136,481	)		85,921			(53,276	)		139,392
Reclassification adjustment for realized losses (gains) included in net income (loss)		12,747			2,169			34,930			4,043
Total URA(D) on securities arising during the period		(123,734	)		88,090			(18,346	)		143,435

Foreign currency translation adjustments		54,337			(763	)		(48,003	)		(3,400	)

Benefit plan actuarial net gain (loss) for the period		-			-			-			-
Reclassification adjustment for amortization of net (gain) loss included in net income (loss)		1,609			770			3,213			1,541
Total benefit plan net gain (loss) for the period		1,609			770			3,213			1,541
Total other comprehensive income (loss), net of tax		(67,788	)		88,097			(63,136	)		141,576
Other comprehensive (income) loss attributable to noncontrolling interests		-			-			-			-
Total other comprehensive income (loss), net of tax attributable to Everest Re Group		(67,788	)		88,097			(63,136	)		141,576

COMPREHENSIVE INCOME (LOSS)	$	141,269		$	378,281		$	468,899		$	725,693

EARNINGS PER COMMON SHARE ATTRIBUTABLE TO EVEREST RE GROUP:
Basic	$	4.72		$	6.32		$	11.99		$	12.58
Diluted		4.68			6.26			11.88			12.46
Dividends declared		0.95			0.75			1.90			1.50

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

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)	2015			2014			2015			2014
	(unaudited)						(unaudited)
COMMON SHARES (shares outstanding):
Balance, beginning of period		44,410,420			46,057,039			44,685,637			47,543,132
Issued during the period, net		59,606			109,068			219,267			315,139
Treasury shares acquired		(277,500	)		(475,092	)		(712,378	)		(2,167,256	)
Balance, end of period		44,192,526			45,691,015			44,192,526			45,691,015

COMMON SHARES (par value):
Balance, beginning of period	$	685		$	682		$	683		$	680
Issued during the period, net		-			1			2			3
Balance, end of period		685			683			685			683

ADDITIONAL PAID-IN CAPITAL:
Balance, beginning of period		2,073,977			2,036,320			2,068,807			2,029,774
Share-based compensation plans		10,659			16,362			15,829			22,908
Balance, end of period		2,084,636			2,052,682			2,084,636			2,052,682

ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS),
NET OF DEFERRED INCOME TAXES:
Balance, beginning of period		52,969			211,207			48,317			157,728
Net increase (decrease) during the period		(67,788	)		88,097			(63,136	)		141,576
Balance, end of period		(14,819	)		299,304			(14,819	)		299,304

RETAINED EARNINGS:
Balance, beginning of period		8,099,936			7,025,158			7,819,210			6,765,967
Net income (loss) attributable to Everest Re Group		209,057			290,184			532,035			584,117
Dividends declared ($0.95 per share in second quarter 2015 and $1.90 year-to-date
per share in 2015 and $0.75 per share in second quarter 2014 and $1.50
year-to-date per share in 2014)		(41,955	)		(34,319	)		(84,207	)		(69,061	)
Balance, end of period		8,267,038			7,281,023			8,267,038			7,281,023

TREASURY SHARES AT COST:
Balance, beginning of period		(2,560,937	)		(2,235,856	)		(2,485,897	)		(1,985,873	)
Purchase of treasury shares		(49,941	)		(74,968	)		(124,981	)		(324,951	)
Balance, end of period		(2,610,878	)		(2,310,824	)		(2,610,878	)		(2,310,824	)

TOTAL SHAREHOLDERS' EQUITY, END OF PERIOD	$	7,726,662		$	7,322,868		$	7,726,662		$	7,322,868

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

EVEREST RE GROUP, LTD.

CONSOLIDATED STATEMENTS OF CASH FLOWS

	Six Months Ended
	June 30,
(Dollars in thousands)	2015			2014
	(unaudited)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss)	$	574,542		$	599,947
Adjustments to reconcile net income to net cash provided by operating activities:
Decrease (increase) in premiums receivable		(51,422	)		(97,827	)
Decrease (increase) in funds held by reinsureds, net		68,245			2,148
Decrease (increase) in reinsurance receivables		(32,526	)		(137,077	)
Decrease (increase) in income taxes		(20,898	)		15,257
Decrease (increase) in prepaid reinsurance premiums		(28,916	)		(68,346	)
Increase (decrease) in reserve for losses and loss adjustment expenses		113,567			8,055
Increase (decrease) in future policy benefit reserve		(364	)		(1,144	)
Increase (decrease) in unearned premiums		(160,849	)		96,803
Increase (decrease) in other net payable to reinsurers		23,867			100,546
Increase (decrease) in losses in course of payment		95,003			161,990
Change in equity adjustments in limited partnerships		(12,840	)		(3,200	)
Distribution of limited partnership income		18,332			13,430
Change in other assets and liabilities, net		26,768			(56,872	)
Non-cash compensation expense		10,364			9,768
Amortization of bond premium (accrual of bond discount)		25,514			27,068
Amortization of underwriting discount on senior notes		2			28
Net realized capital (gains) losses		34,683			(80,142	)
Net cash provided by (used in) operating activities		683,072			590,432

CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from fixed maturities matured/called - available for sale, at market value		1,172,211			1,047,509
Proceeds from fixed maturities matured/called - available for sale, at fair value		-			875
Proceeds from fixed maturities sold - available for sale, at market value		731,673			606,476
Proceeds from fixed maturities sold - available for sale, at fair value		1,613			20,763
Proceeds from equity securities sold - available for sale, at market value		4,599			8,672
Proceeds from equity securities sold - available for sale, at fair value		300,620			304,892
Distributions from other invested assets		27,705			22,520
Cost of fixed maturities acquired - available for sale, at market value		(2,448,121	)		(2,458,723	)
Cost of fixed maturities acquired - available for sale, at fair value		(234	)		(1,309	)
Cost of equity securities acquired - available for sale, at market value		(5,541	)		(10,619	)
Cost of equity securities acquired - available for sale, at fair value		(317,650	)		(183,314	)
Cost of other invested assets acquired		(98,890	)		(34,388	)
Net change in short-term investments		(199,226	)		(423,677	)
Net change in unsettled securities transactions		4,475			20,633
Net cash provided by (used in) investing activities		(826,766	)		(1,079,690	)

CASH FLOWS FROM FINANCING ACTIVITIES:
Common shares issued during the period, net		5,468			13,143
Purchase of treasury shares		(124,981	)		(324,951	)
Net proceeds from issuance of senior notes		-			400,000
Third party investment in redeemable noncontrolling interest		296,848			123,700
Subscription advances for third party redeemable noncontrolling interest		-			77,500
Dividends paid to shareholders		(84,207	)		(69,061	)
Dividends paid on third party investment in redeemable noncontrolling interest		(41,178	)		-
Net cash provided by (used in) financing activities		51,950			220,331

EFFECT OF EXCHANGE RATE CHANGES ON CASH		(6,829	)		(885	)

Net increase (decrease) in cash		(98,573	)		(269,812	)
Cash, beginning of period		437,474			611,382
Cash, end of period	$	338,901		$	341,570

SUPPLEMENTAL CASH FLOW INFORMATION:
Income taxes paid (recovered)	$	93,352		$	97,241
Interest paid		17,907			15,018

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

NOTES TO CONSOLIDATED INTERIM FINANCIAL STATEMENTS (UNAUDITED)

For the Three and Six Months Ended June 30, 2015 and 2014

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.

Effective February 27, 2013, the Company established a new subsidiary, Mt. Logan Re Ltd. ("Mt. Logan Re") and effective July 1, 2013, Mt. Logan Re established separate segregated accounts and issued non-voting redeemable preferred shares to capitalize the segregated accounts. Accordingly, the financial position and operating results for Mt. Logan Re are consolidated with the Company and the non-controlling interests in Mt. Logan Re's operating results and equity are presented as separate captions in the Company's financial statements.

2. BASIS OF PRESENTATION

The unaudited consolidated financial statements of the Company for the three and six months ended June 30, 2015 and 2014 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, 2014 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, 2015 and 2014 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, 2014, 2013 and 2012 included in the Company's most recent Form 10-K filing.

All intercompany accounts and transactions have been eliminated.

Application of Recently Issued Accounting Standard Changes.

No accounting standards or guidance have been issued recently that would have a material impact on the Company's financial statements or financial reporting process.

3. INVESTMENTS

The amortized cost, market value and gross unrealized appreciation and depreciation of available for sale, fixed maturity, equity security investments, carried at market value and other-than-temporary impairments ("OTTI") in accumulated other comprehensive income ("AOCI") are as follows for the periods indicated:

	At June 30, 2015
	Amortized		Unrealized		Unrealized			Market		OTTI in AOCI
(Dollars in thousands)	Cost		Appreciation		Depreciation			Value		(a)
Fixed maturity securities
U.S. Treasury securities and obligations of
U.S. government agencies and corporations	$	336,763	$	11,953	$	(464	)	$	348,252	$	-
Obligations of U.S. states and political subdivisions		712,000		29,604		(2,885	)		738,719		-
Corporate securities		4,942,119		127,488		(32,992	)		5,036,615		2,297
Asset-backed securities		451,680		1,981		(1,579	)		452,082		-
Mortgage-backed securities
Commercial		298,660		8,598		(1,798	)		305,460		-
Agency residential		2,181,733		37,251		(10,026	)		2,208,958		-
Non-agency residential		1,347		47		(45	)		1,349		-
Foreign government securities		1,321,212		59,975		(33,148	)		1,348,039		-
Foreign corporate securities		2,968,082		117,506		(50,261	)		3,035,327		-
Total fixed maturity securities	$	13,213,596	$	394,403	$	(133,198	)	$	13,474,801	$	2,297
Equity securities	$	147,512	$	3,322	$	(13,318	)	$	137,516	$	-

	At December 31, 2014
	Amortized		Unrealized		Unrealized			Market		OTTI in AOCI
(Dollars in thousands)	Cost		Appreciation		Depreciation			Value		(a)
Fixed maturity securities
U.S. Treasury securities and obligations of
U.S. government agencies and corporations	$	221,052	$	10,290	$	(304	)	$	231,038	$	-
Obligations of U.S. states and political subdivisions		783,129		41,969		(626	)		824,472		-
Corporate securities		4,626,002		143,889		(62,906	)		4,706,985		(6,910	)
Asset-backed securities		340,761		1,691		(1,230	)		341,222		-
Mortgage-backed securities
Commercial		231,439		10,675		(429	)		241,685		-
Agency residential		2,157,182		37,555		(11,573	)		2,183,164		-
Non-agency residential		2,734		54		(57	)		2,731		-
Foreign government securities		1,488,144		71,177		(26,866	)		1,532,455		-
Foreign corporate securities		2,980,716		109,673		(53,074	)		3,037,315		-
Total fixed maturity securities	$	12,831,159	$	426,973	$	(157,065	)	$	13,101,067	$	(6,910	)
Equity securities	$	148,326	$	3,831	$	(11,947	)	$	140,210	$	-

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

The amortized cost and market value of fixed maturity securities are shown in the following table by contractual maturity. Mortgage-backed securities are generally more likely to be prepaid than other fixed maturity securities. As the stated maturity of such securities may not be indicative of actual maturities, the totals for mortgage-backed and asset-backed securities are shown separately.

	At June 30, 2015				At December 31, 2014
	Amortized		Market		Amortized		Market
(Dollars in thousands)	Cost		Value		Cost		Value
Fixed maturity securities – available for sale:
Due in one year or less	$	1,052,896	$	1,062,418	$	1,183,247	$	1,189,416
Due after one year through five years		5,996,029		6,112,557		5,646,466		5,726,277
Due after five years through ten years		2,376,397		2,419,621		2,270,073		2,313,672
Due after ten years		854,854		912,356		999,257		1,102,900
Asset-backed securities		451,680		452,082		340,761		341,222
Mortgage-backed securities:
Commercial		298,660		305,460		231,439		241,685
Agency residential		2,181,733		2,208,958		2,157,182		2,183,164
Non-agency residential		1,347		1,349		2,734		2,731
Total fixed maturity securities	$	13,213,596	$	13,474,801	$	12,831,159	$	13,101,067

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

	Three Months Ended						Six Months Ended
	June 30,						June 30,
(Dollars in thousands)	2015			2014			2015			2014
Increase (decrease) during the period between the market value and cost
of investments carried at market value, and deferred taxes thereon:
Fixed maturity securities	$	(144,172	)	$	93,403		$	(17,910	)	$	157,869
Fixed maturity securities, other-than-temporary impairment		(477	)		5			9,207			81
Equity securities		(430	)		4,531			(1,880	)		6,614
Change in unrealized appreciation (depreciation), pre-tax		(145,079	)		97,939			(10,583	)		164,564
Deferred tax benefit (expense)		21,344			(9,849	)		(4,356	)		(21,129	)
Deferred tax benefit (expense), other-than-temporary impairment		1			-			(3,407	)		-
Change in unrealized appreciation (depreciation),
net of deferred taxes, included in shareholders' equity	$	(123,734	)	$	88,090		$	(18,346	)	$	143,435

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

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

The majority of the Company's equity securities available for sale at market value are primarily comprised of mutual fund investments whose underlying securities consist of fixed maturity securities. When a fund's value reflects an unrealized loss, the Company assesses whether the decline in value is temporary or other-than-temporary. In making its assessment, the Company considers the composition of its portfolios and their related markets, reports received from the portfolio managers and discussions with portfolio managers. If the Company determines that the declines are temporary and it has the ability and intent to continue to hold the investments, then the declines are recorded as unrealized losses in accumulated other comprehensive income (loss). If declines are deemed to be other-than-temporary, then the carrying value of the investment is written down to fair value and recorded in net realized capital gains (losses) in the Company's consolidated statements of operations and comprehensive income (loss).

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

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

	Duration of Unrealized Loss at June 30, 2015 By Security Type
	Less than 12 months					Greater than 12 months					Total
			Gross					Gross					Gross
			Unrealized					Unrealized					Unrealized
(Dollars in thousands)	Market Value		Depreciation			Market Value		Depreciation			Market Value		Depreciation
Fixed maturity securities - available for sale
U.S. Treasury securities and obligations of
U.S. government agencies and corporations	$	25,004	$	(335	)	$	1,969	$	(129	)	$	26,973	$	(464	)
Obligations of U.S. states and political subdivisions		97,850		(2,141	)		17,686		(744	)		115,536		(2,885	)
Corporate securities		1,407,353		(24,960	)		282,817		(8,032	)		1,690,170		(32,992	)
Asset-backed securities		160,736		(1,565	)		4,299		(14	)		165,035		(1,579	)
Mortgage-backed securities
Commercial		133,162		(1,798	)		-		-			133,162		(1,798	)
Agency residential		419,093		(2,812	)		417,728		(7,214	)		836,821		(10,026	)
Non-agency residential		204		(2	)		51		(43	)		255		(45	)
Foreign government securities		337,577		(20,816	)		98,995		(12,332	)		436,572		(33,148	)
Foreign corporate securities		756,739		(38,986	)		157,352		(11,275	)		914,091		(50,261	)
Total fixed maturity securities	$	3,337,718	$	(93,415	)	$	980,897	$	(39,783	)	$	4,318,615	$	(133,198	)
Equity securities		55,275		(5,071	)		72,090		(8,247	)		127,365		(13,318	)
Total	$	3,392,993	$	(98,486	)	$	1,052,987	$	(48,030	)	$	4,445,980	$	(146,516	)

	Duration of Unrealized Loss at June 30, 2015 By Maturity
	Less than 12 months					Greater than 12 months					Total
			Gross					Gross					Gross
			Unrealized					Unrealized					Unrealized
(Dollars in thousands)	Market Value		Depreciation			Market Value		Depreciation			Market Value		Depreciation
Fixed maturity securities
Due in one year or less	$	87,985	$	(7,088	)	$	49,702	$	(9,253	)	$	137,687	$	(16,341	)
Due in one year through five years		1,476,198		(45,857	)		332,321		(11,722	)		1,808,519		(57,579	)
Due in five years through ten years		887,119		(28,977	)		136,078		(7,596	)		1,023,197		(36,573	)
Due after ten years		173,221		(5,316	)		40,718		(3,941	)		213,939		(9,257	)
Asset-backed securities		160,736		(1,565	)		4,299		(14	)		165,035		(1,579	)
Mortgage-backed securities		552,459		(4,612	)		417,779		(7,257	)		970,238		(11,869	)
Total fixed maturity securities	$	3,337,718	$	(93,415	)	$	980,897	$	(39,783	)	$	4,318,615	$	(133,198	)

The aggregate market value and gross unrealized losses related to investments in an unrealized loss position at June 30, 2015 were $4,445,980 thousand and $146,516 thousand, respectively. The market value of securities for the single issuer whose securities comprised the largest unrealized loss position at June 30, 2015, did not exceed 0.5% of the overall market value of the Company's fixed maturity securities. In addition, as indicated on the above table, there was no significant concentration of unrealized losses in any one market sector. The $93,415 thousand of unrealized losses related to fixed maturity securities that have been in an unrealized loss position for less than one year were generally comprised of domestic and foreign corporate securities, as well as foreign government securities. The majority of these unrealized losses are attributable to net unrealized foreign exchange losses, $64,859 thousand, as the U.S. dollar has strengthened against other currencies and unrealized losses in the energy sector, $20,351 thousand, as falling oil prices have disrupted the market values for this sector, particularly for oil exploration, production and servicing companies. The $39,783 thousand of unrealized losses related to fixed maturity securities in an unrealized loss position for more than one year related primarily to foreign and domestic corporate securities, foreign government securities and agency residential mortgage-backed securities. Of these unrealized losses, $33,964 thousand related to securities that were rated investment grade by at least one nationally recognized statistical rating organization. There was no gross unrealized depreciation for mortgage-backed securities related to sub-prime and alt-A loans. In all instances, there were no projected cash flow shortfalls to recover the full book value of the investments and the related interest obligations. The mortgage-backed securities still have excess credit coverage and are current on interest and principal payments.

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

	Duration of Unrealized Loss at December 31, 2014 By Security Type
	Less than 12 months					Greater than 12 months					Total
			Gross					Gross					Gross
			Unrealized					Unrealized					Unrealized
(Dollars in thousands)	Market Value		Depreciation			Market Value		Depreciation			Market Value		Depreciation
Fixed maturity securities - available for sale
U.S. Treasury securities and obligations of
U.S. government agencies and corporations	$	13,187	$	(20	)	$	26,897	$	(284	)	$	40,084	$	(304	)
Obligations of U.S. states and political subdivisions		20,428		(242	)		18,199		(384	)		38,627		(626	)
Corporate securities		1,245,830		(55,388	)		362,320		(7,518	)		1,608,150		(62,906	)
Asset-backed securities		192,253		(1,230	)		-		-			192,253		(1,230	)
Mortgage-backed securities
Commercial		28,191		(123	)		9,777		(306	)		37,968		(429	)
Agency residential		141,807		(172	)		678,972		(11,401	)		820,779		(11,573	)
Non-agency residential		-		-			266		(57	)		266		(57	)
Foreign government securities		235,725		(15,415	)		139,200		(11,451	)		374,925		(26,866	)
Foreign corporate securities		567,905		(36,926	)		290,234		(16,148	)		858,139		(53,074	)
Total fixed maturity securities	$	2,445,326	$	(109,516	)	$	1,525,865	$	(47,549	)	$	3,971,191