EVEREST GROUP, LTD. - Quarter Report: 2018 March (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:

March 31, 2018

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 – 4^th 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

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, 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
(Do not check if 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

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 May 1, 2018
Common Shares, $0.01 par value		40,980,477

EVEREST RE GROUP, LTD

Table of Contents

Form 10-Q

Page

PART I

FINANCIAL INFORMATION

Item 1.	Financial Statements

	Consolidated Balance Sheets March 31, 2018 (unaudited)
	and December 31, 2017	1

	Consolidated Statements of Operations and Comprehensive Income (Loss) for the
	three months ended March 31, 2018 and 2017 (unaudited)	2

	Consolidated Statements of Changes in Shareholders' Equity for the three
	months ended March 31, 2018 and 2017 (unaudited)	3

	Consolidated Statements of Cash Flows for the three months ended
	March 31, 2018 and 2017 (unaudited)	4

	Notes to Consolidated Interim Financial Statements (unaudited)	5

Item 2.	Management's Discussion and Analysis of Financial Condition and
	Results of Operation	32

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	52

Item 4.	Controls and Procedures	52

PART II

OTHER INFORMATION

Item 1.	Legal Proceedings	53

Item 1A.	Risk Factors	53

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	53

Item 3.	Defaults Upon Senior Securities	53

Item 4.	Mine Safety Disclosures	53

Item 5.	Other Information	54

Item 6.	Exhibits	54

EVEREST RE GROUP, LTD.

CONSOLIDATED BALANCE SHEETS

	March 31,			December 31,
(Dollars and share amounts in thousands, except par value per share)	2018			2017
	(unaudited)
ASSETS:
Fixed maturities - available for sale, at market value	$	14,844,581		$	14,756,834
(amortized cost: 2018, $14,997,018; 2017, $14,689,598)
Fixed maturities - available for sale, at fair value		1,821			-
Equity securities - available for sale, at market value (cost: 2018, $0; 2017, $130,287)		-			129,530
Equity securities - available for sale, at fair value		1,169,531			963,572
Short-term investments		338,694			509,682
Other invested assets (cost: 2018, $1,527,701; 2017, $1,628,753)		1,527,701			1,631,850
Cash		700,586			635,067
Total investments and cash		18,582,914			18,626,535
Accrued investment income		100,129			97,704
Premiums receivable		1,906,427			1,844,881
Reinsurance receivables		1,356,888			1,348,226
Funds held by reinsureds		197,419			292,927
Deferred acquisition costs		420,724			411,587
Prepaid reinsurance premiums		321,203			288,211
Income taxes		265,228			299,438
Other assets		362,264			382,283
TOTAL ASSETS	$	23,513,196		$	23,591,792

LIABILITIES:
Reserve for losses and loss adjustment expenses	$	11,793,346		$	11,884,321
Future policy benefit reserve		49,106			51,014
Unearned premium reserve		2,089,628			2,000,556
Funds held under reinsurance treaties		16,965			18,030
Commission reserves		23,251			30,660
Other net payable to reinsurers		244,280			218,017
4.868% Senior notes due 6/1/2044		396,864			396,834
6.6% Long term notes due 5/1/2067		236,585			236,561
Accrued interest on debt and borrowings		7,668			2,727
Equity index put option liability		12,205			12,477
Unsettled securities payable		49,569			38,743
Other liabilities		249,549			332,620
Total liabilities		15,169,016			15,222,560

Commitments and contingencies (Note 8)

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; (2018) 69,187
and (2017) 69,044 outstanding before treasury shares		692			691
Additional paid-in capital		2,163,519			2,165,768
Accumulated other comprehensive income (loss), net of deferred income tax expense
(benefit) of ($11,933) at 2018 and $9,356 at 2017		(341,974	)		(160,891	)
Treasury shares, at cost; 28,208 shares at 2018 and 2017		(3,322,244	)		(3,322,244	)
Retained earnings		9,844,187			9,685,908
Total shareholders' equity		8,344,180			8,369,232
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY	$	23,513,196		$	23,591,792

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
	March 31,
(Dollars in thousands, except per share amounts)	2018			2017
	(unaudited)
REVENUES:
Premiums earned	$	1,619,427		$	1,312,097
Net investment income		138,294			122,289
Net realized capital gains (losses):
Other-than-temporary impairments on fixed maturity securities		(70	)		(1,229	)
Other-than-temporary impairments on fixed maturity securities
transferred to other comprehensive income (loss)		-			-
Other net realized capital gains (losses)		(24,831	)		53,957
Total net realized capital gains (losses)		(24,901	)		52,728
Net derivative gain (loss)		273			2,630
Other income (expense)		12,064			(4,966	)
Total revenues		1,745,157			1,484,778

CLAIMS AND EXPENSES:
Incurred losses and loss adjustment expenses		1,057,177			770,788
Commission, brokerage, taxes and fees		357,639			282,269
Other underwriting expenses		96,284			75,887
Corporate expenses		8,996			8,457
Interest, fees and bond issue cost amortization expense		7,418			8,964
Total claims and expenses		1,527,514			1,146,365

INCOME (LOSS) BEFORE TAXES		217,643			338,413
Income tax expense (benefit)		7,325			46,770

NET INCOME (LOSS)	$	210,318		$	291,643

Other comprehensive income (loss), net of tax:
Unrealized appreciation (depreciation) ("URA(D)") on securities arising during the period		(190,624	)		19,548
Reclassification adjustment for realized losses (gains) included in net income (loss)		(8,772	)		(2,199	)
Total URA(D) on securities arising during the period		(199,396	)		17,349

Foreign currency translation adjustments		17,699			11,893

Reclassification adjustment for amortization of net (gain) loss included in net income (loss)		1,815			2,004
Total benefit plan net gain (loss) for the period		1,815			2,004
Total other comprehensive income (loss), net of tax		(179,882	)		31,246

COMPREHENSIVE INCOME (LOSS)	$	30,436		$	322,889

EARNINGS PER COMMON SHARE:
Basic	$	5.14		$	7.12
Diluted		5.11			7.07
Dividends declared		1.30			1.25

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
	March 31,
(Dollars in thousands, except share and dividends per share amounts)	2018			2017
	(unaudited)
COMMON SHARES (shares outstanding):
Balance, beginning of period		40,835,272			40,898,864
Issued during the period, net		143,362			159,127
Treasury shares acquired		-			-
Balance, end of period		40,978,634			41,057,991

COMMON SHARES (par value):
Balance, beginning of period	$	691		$	689
Issued during the period, net		1			2
Balance, end of period		692			691

ADDITIONAL PAID-IN CAPITAL:
Balance, beginning of period		2,165,768			2,140,783
Share-based compensation plans		(2,249	)		870
Balance, end of period		2,163,519			2,141,653

ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS),
NET OF DEFERRED INCOME TAXES:
Balance, beginning of period		(160,891	)		(216,764	)
Net increase (decrease) during the period		(179,882	)		31,246
Cumulative change due to adoption of Accounting Standards Update 2016-01		(1,201	)		-
Balance, end of period		(341,974	)		(185,518	)

RETAINED EARNINGS:
Balance, beginning of period		9,685,908			9,422,932
Net income (loss)		210,318			291,643
Dividends declared ($1.30 per share in 2018 and $1.25 per share in 2017)		(53,240	)		(51,281	)
Cumulative change due to adoption of Accounting Standards Update 2016-01		1,201			-
Balance, end of period		9,844,187			9,663,294

TREASURY SHARES AT COST:
Balance, beginning of period		(3,322,244	)		(3,272,244	)
Purchase of treasury shares		-			-
Balance, end of period		(3,322,244	)		(3,272,244	)

TOTAL SHAREHOLDERS' EQUITY, END OF PERIOD	$	8,344,180		$	8,347,876

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

EVEREST RE GROUP, LTD.

CONSOLIDATED STATEMENTS OF CASH FLOWS

	Three Months Ended
	March 31,
(Dollars in thousands)	2018			2017
	(unaudited)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss)	$	210,318		$	291,643
Adjustments to reconcile net income to net cash provided by operating activities:
Decrease (increase) in premiums receivable		(56,826	)		(220,367	)
Decrease (increase) in funds held by reinsureds, net		95,416			1,211
Decrease (increase) in reinsurance receivables		236			(30,158	)
Decrease (increase) in income taxes		55,905			37,010
Decrease (increase) in prepaid reinsurance premiums		(32,194	)		(23,704	)
Increase (decrease) in reserve for losses and loss adjustment expenses		(121,415	)		99,095
Increase (decrease) in future policy benefit reserve		(1,907	)		83
Increase (decrease) in unearned premiums		85,598			125,614
Increase (decrease) in other net payable to reinsurers		24,410			13,666
Increase (decrease) in losses in course of payment		45,919			113,815
Change in equity adjustments in limited partnerships		(24,596	)		(10,998	)
Distribution of limited partnership income		15,524			5,384
Change in other assets and liabilities, net		(142,935	)		12,999
Non-cash compensation expense		8,336			7,501
Amortization of bond premium (accrual of bond discount)		8,950			11,746
Net realized capital (gains) losses		24,901			(52,728	)
Net cash provided by (used in) operating activities		195,640			381,812

CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from fixed maturities matured/called - available for sale, at market value		512,384			525,873
Proceeds from fixed maturities sold - available for sale, at market value		364,288			428,491
Proceeds from equity securities sold - available for sale, at market value		-			18,802
Proceeds from equity securities sold - available for sale, at fair value		199,875			140,315
Distributions from other invested assets		1,061,894			1,165,905
Cost of fixed maturities acquired - available for sale, at market value		(1,150,718	)		(1,552,743	)
Cost of fixed maturities acquired - available for sale, at fair value		(1,836	)		-
Cost of equity securities acquired - available for sale, at market value		-			(1,282	)
Cost of equity securities acquired - available for sale, at fair value		(310,426	)		(66,902	)
Cost of other invested assets acquired		(947,290	)		(1,184,270	)
Net change in short-term investments		169,705			(45,178	)
Net change in unsettled securities transactions		46,708			236,702
Net cash provided by (used in) investing activities		(55,416	)		(334,287	)

CASH FLOWS FROM FINANCING ACTIVITIES:
Common shares issued during the period for share-based compensation, net of expense		(9,383	)		(6,629	)
Dividends paid to shareholders		(53,240	)		(51,281	)
Cost of shares withheld for taxes on settlements of share-based compensation awards		(14,245	)		(11,517	)
Net cash provided by (used in) financing activities		(76,868	)		(69,427	)

EFFECT OF EXCHANGE RATE CHANGES ON CASH		2,163			8,220

Net increase (decrease) in cash		65,519			(13,682	)
Cash, beginning of period		635,067			481,922
Cash, end of period	$	700,586		$	468,240

SUPPLEMENTAL CASH FLOW INFORMATION:
Income taxes paid (recovered)	$	(51,253	)	$	9,593
Interest paid		2,422			105

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

NOTES TO CONSOLIDATED INTERIM FINANCIAL STATEMENTS (UNAUDITED)

For the Three Months Ended March 31, 2018 and 2017

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.

During the fourth quarter of 2017, the Company established a new Irish insurance subsidiary, Everest Insurance Ireland, designated activity company ("Ireland Insurance"), which will write insurance business mainly in the European markets.

During the third quarter of 2016, the Company established domestic subsidiaries, Everest Premier Insurance Company ("Everest Premier") and Everest Denali Insurance Company ("Everest Denali"), which will be used in the continued expansion of the Insurance operations.

Effective July 1, 2016, the Company established a new Irish holding company, Everest Dublin Insurance Holdings Limited (Ireland) ("Everest Dublin Holdings").

2. BASIS OF PRESENTATION

The unaudited consolidated financial statements of the Company for the three months ended March 31, 2018 and 2017 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, 2017 consolidated balance sheet data was derived from audited financial statements, but does not include all disclosures required by GAAP. The results for the three months ended March 31, 2018 and 2017 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, 2017, 2016 and 2015 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 significant intercompany accounts and transactions have been eliminated.

Certain reclassifications and format changes have been made to prior years' amounts to conform to the 2018 presentation.

Application of Recently Issued Accounting Standard Changes.

Accounting for Deferred Taxes in Accumulated Other Comprehensive Income (AOCI). In February 2018, FASB issued ASU 2018-02 which outlines guidance on the treatment of trapped deferred taxes contained within AOCI on the consolidated balance sheets. The new guidance allows the amount of trapped deferred taxes in AOCI, resulting from the change in the U.S. tax rate from 35% to 21% upon enactment of the Tax Cuts and Jobs Act ("TCJA"), to be reclassed as part of retained earnings in the consolidated balance sheets. The guidance is effective for annual and interim reporting periods beginning after December 15, 2018, but early adoption is allowed. The Company decided to early adopt the guidance as of December 31, 2017. The adoption has resulted in a reclass of $1,250 thousand between AOCI and retained earnings.

Accounting for Impact on Income Taxes due to Tax Reform. In December 2017, the SEC issued Staff Accounting Bulletin ("SAB") 118 which provides guidance on the application of FASB Accounting Standards Codification ("ASC") Topic 740, Income Taxes, due to the enactment of TCJA. SAB 118 became effective upon release. The Company has adopted the provisions of SAB 118 with respect to measuring the tax effects for the modifications to the determination of tax basis loss reserves. Because of uncertainty in how the Internal Revenue Service ("IRS") intends to implement the modifications and the necessary transition calculation, the Company has determined that a reasonable estimate cannot be determined and has followed the provisions of the tax laws that were in effect prior to the modifications. In 2018, the Company expects to record adjustments to the amount of tax expense it recorded in 2017 with respect to the TCJA as estimated amounts are finalized. Further adjustments are not expected to have a material impact on the Company's financial statements.

Amortization of Bond Premium. In March 2017, FASB issued ASU 2017-08 which outlines guidance on the amortization period for premium on callable debt securities. The new guidance requires that the premium on callable debt securities be amortized through the earliest call date rather than through the maturity date of the callable security. The guidance is effective for annual and interim reporting periods beginning after December 15, 2019. The Company does not expect the adoption of ASU 2017-08 to have a material impact on its financial statements.

Presentation and Disclosure of Net Periodic Benefit Costs. In March 2017, FASB issued ASU 2017-07 which outlines guidance on the presentation of net periodic costs of benefit plans. The new guidance requires that the service cost component of net periodic benefit costs be reported within the same line item of the statements of operations as other compensation costs are reported. Other components of net periodic benefit costs should be reported separately. Footnote disclosure is required to state within which line items of the statements of operations the components are reported. The guidance is effective for annual and interim reporting periods beginning after December 15, 2017. The Company adopted the guidance effective January 1, 2018. The adoption of ASU 2017-07 did not have a material impact on the Company's financial statements.

Disclosure of Restricted Cash. In November 2016, FASB issued ASU 2016-18 and in August 2016, FASB issued ASU 2016-15 which outline guidance on the presentation in the statements of cash flows of changes in restricted cash. The new guidance requires that the statements of cash flows should reflect all changes in cash, cash equivalents and restricted cash in total and not segregated individually. The guidance is effective for annual and interim reporting periods beginning after December 15, 2017. The Company adopted the guidance effective January 1, 2018. The adoption of ASU 2016-18 and ASU 2016-15 did not have a material impact on the Company's financial statements.

Intra-Entity Asset Transfers. In October 2016, FASB issued ASU 2016-16 which outlines guidance on the tax accounting for intra-entity asset sales and transfers, other than inventory. The new guidance requires that reporting entities recognize tax expense from the intra-entity transfer of an asset in the seller's tax jurisdiction at the time of transfer and recognize any deferred tax asset in the buyer's tax jurisdiction at the time of transfer. The guidance is effective for annual and interim reporting periods beginning after December 15, 2017. The Company adopted the guidance effective January 1, 2018. The adoption of ASU 2016-16 did not have a material impact on the Company's financial statements.

Valuation of Financial Instruments. In June 2016, FASB issued ASU 2016-13 which outlines guidance on the valuation of and accounting for assets measured at amortized cost and available for sale debt securities. The carrying value of assets measured at amortized cost will now be presented as the amount expected to be collected on the financial asset (amortized cost less an allowance for credit losses valuation account). Available for sale debt securities will now record credit losses through an allowance for credit losses, which will be limited to the amount by which fair value is below amortized cost. The guidance is effective for annual and interim reporting periods beginning after December 15, 2019. The Company is currently evaluating the impact of the adoption of ASU 2016-13 on its financial statements.

Accounting for Share-Based Compensation. In March 2016, the FASB issued ASU 2016-09, authoritative guidance regarding the accounting for share-based compensation. This guidance requires that the income tax effects resulting from the change in the value of share-based compensation awards between grant and settlement will be recorded as part of the consolidated statements of operations and comprehensive income/(loss). Previously, excess tax benefits have been recorded as part of the additional paid in capital within the consolidated balance sheets. The guidance is effective for annual reporting periods beginning after December 15, 2016 and interim periods within that annual reporting period. The Company has implemented this guidance prospectively as of January 1, 2017. The guidance also requires that the cost of employee taxes paid via shares withheld upon settlement of share-based compensation awards must be shown as a financing activity within the Statements of Cash Flows. The Company has implemented this guidance retrospectively as of January 1, 2017.

Leases. In February 2016, FASB issued ASU 2016-02 which outlines new guidance on the accounting for leases. The new guidance requires the recognition of lease assets and lease liabilities on the balance sheets for most leases that were previously deemed operating leases and required only lease expense presentation in the statements of operations. The guidance is effective for annual and interim reporting periods beginning after December 15, 2018. The Company is currently evaluating the impact of the adoption of ASU 2016-02 on its financial statements.

Recognition and Measurement of Financial Instruments. In January 2016, the FASB issued ASU 2016-01 which outlines revised guidance on the accounting for equity investments. The new guidance states that all equity investments in unconsolidated entities will be measured at fair value, with the change in value being recorded through the income statement rather than being recorded within other comprehensive income. The updated guidance is effective for annual and interim reporting periods beginning after December 15, 2017. The Company adopted the guidance effective January 1, 2018. The adoption of ASU 2016-01 resulted in a cumulative change adjustment of $1,201 thousand between AOCI and retained earnings, which is disclosed separately within the consolidated statement of changes in shareholders' equity.

Disclosures about Short-Duration Contracts. In May 2015, the FASB issued ASU 2015-09, authoritative guidance regarding required disclosures associated with short duration insurance contracts. The new disclosure requirements focus on information about initial claim estimates and subsequent claim estimate adjustment, methodologies in estimating claims and the timing, frequency and severity of claims related to short duration insurance contracts. This guidance is effective for annual reporting periods beginning after December 15, 2015 and interim reporting periods beginning after December 15, 2016. The Company implemented this guidance effective in the fourth quarter of 2016.

Revenue Recognition. In May 2014, the FASB issued ASU 2014-09 and in August 2015, FASB issued ASU 2015-14 which outline revised guidance on the recognition of revenue arising from contracts with customers. The new guidance states that reporting entities should apply certain steps to determine when revenue should be recognized, based upon fulfillment of performance obligations to complete contracts. The updated guidance is effective for annual and interim reporting periods beginning after December 15, 2017. The Company adopted the guidance effective January 1, 2018. The adoption of ASU 2014-09 and ASU 2015-14 did not have a material impact on the Company's financial statements.

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.

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 March 31, 2018
	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	$	1,516,251	$	7,019	$	(25,857	)	$	1,497,413	$	-
Obligations of U.S. states and political subdivisions		523,611		14,630		(1,694	)		536,547		165
Corporate securities		5,834,818		50,974		(108,045	)		5,777,747		2,481
Asset-backed securities		511,328		409		(5,307	)		506,430		-
Mortgage-backed securities
Commercial		232,693		2		(5,396	)		227,299		-
Agency residential		2,272,215		8,860		(58,080	)		2,222,995		-
Non-agency residential		478		42		(44	)		476		-
Foreign government securities		1,283,177		35,703		(44,558	)		1,274,322		163
Foreign corporate securities		2,822,447		54,062		(75,157	)		2,801,352		618
Total fixed maturity securities	$	14,997,018	$	171,701	$	(324,138	)	$	14,844,581	$	3,427
Equity securities	$	-	$	-	$	-		$	-	$	-

	At December 31, 2017
	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	$	1,540,952	$	9,816	$	(14,076	)	$	1,536,692	$	-
Obligations of U.S. states and political subdivisions		563,790		22,123		(444	)		585,469		-
Corporate securities		5,658,456		81,724		(41,175	)		5,699,005		2,488
Asset-backed securities		532,473		869		(1,982	)		531,360		-
Mortgage-backed securities
Commercial		235,794		616		(2,369	)		234,041		-
Agency residential		2,236,361		10,379		(35,838	)		2,210,902		-
Non-agency residential		497		41		(44	)		494		-
Foreign government securities		1,305,070		43,804		(34,847	)		1,314,027		178
Foreign corporate securities		2,616,205		77,045		(48,406	)		2,644,844		950
Total fixed maturity securities	$	14,689,598	$	246,417	$	(179,181	)	$	14,756,834	$	3,616
Equity securities	$	130,287	$	2,615	$	(3,372	)	$	129,530	$	-

^(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.

Effective January 1, 2018, the Company adopted ASU 2016-01, which requires equity investments in unconsolidated entities to be measured at fair value, with any change in value being recorded within net realized capital gains/(losses) as part of the consolidated statements of operations and comprehensive income (loss). Previously, changes in the market value had been recorded within AOCI as part of the consolidated balance sheets. Therefore, effective January 1, 2018, equity security investments no longer have an impact upon the AOCI balance.

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 March 31, 2018				At December 31, 2017
	Amortized		Market		Amortized		Market
(Dollars in thousands)	Cost		Value		Cost		Value
Fixed maturity securities – available for sale:
Due in one year or less	$	1,593,546	$	1,592,697	$	1,041,885	$	1,050,094
Due after one year through five years		7,197,033		7,097,641		7,545,731		7,554,248
Due after five years through ten years		2,314,395		2,283,642		2,214,473		2,231,456
Due after ten years		875,330		913,401		882,384		944,239
Asset-backed securities		511,328		506,430		532,473		531,360
Mortgage-backed securities:
Commercial		232,693		227,299		235,794		234,041
Agency residential		2,272,215		2,222,995		2,236,361		2,210,902
Non-agency residential		478		476		497		494
Total fixed maturity securities	$	14,997,018	$	14,844,581	$	14,689,598	$	14,756,834

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
	March 31,
(Dollars in thousands)	2018			2017
Increase (decrease) during the period between the market value and cost
of investments carried at market value, and deferred taxes thereon:
Fixed maturity securities	$	(219,485	)	$	18,055
Fixed maturity securities, other-than-temporary impairment		(189	)		(4,501	)
Equity securities		-			5,999
Other invested assets		-			444
Change in unrealized appreciation (depreciation), pre-tax		(219,674	)		19,997
Deferred tax benefit (expense)		20,299			(3,873	)
Deferred tax benefit (expense), other-than-temporary impairment		(21	)		1,225
Change in unrealized appreciation (depreciation),
net of deferred taxes, included in shareholders' equity	$	(199,396	)	$	17,349

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.

Upon the adoption of ASU 2016-01 as of January 1, 2018, all equity investments in unconsolidated entities are recorded at fair value. Prior to the adoption of ASU 2016-01, the Company classified certain equity securities as available for sale at market value. The majority of the Company's equity securities classified as available for sale at market value prior to January 1, 2018 were primarily comprised of mutual fund investments whose underlying securities consisted of fixed maturity securities. When a fund's value reflected an unrealized loss, the Company assessed whether the decline in value was temporary or other-than-temporary. In making its assessment, the Company considered the composition of its portfolios and their related markets, reports received from the portfolio managers and discussions with portfolio managers. If the Company determined that the declines were temporary and it had the ability and intent to continue to hold the investments, then the declines were recorded as unrealized losses in accumulated other comprehensive income (loss). If declines were deemed to be other-than-temporary, then the carrying value of the investment was 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 March 31, 2018 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	$	1,193,463	$	(17,432	)	$	225,194	$	(8,425	)	$	1,418,657	$	(25,857	)
Obligations of U.S. states and political subdivisions		48,613		(383	)		36,392		(1,311	)		85,005		(1,694	)
Corporate securities		3,466,924		(77,213	)		674,674		(30,832	)		4,141,598		(108,045	)
Asset-backed securities		337,232		(4,400	)		74,603		(907	)		411,835		(5,307	)
Mortgage-backed securities
Commercial		164,758		(2,555	)		62,303		(2,841	)		227,061		(5,396	)
Agency residential		683,971		(12,440	)		1,285,758		(45,640	)		1,969,729		(58,080	)
Non-agency residential		-		-			13		(44	)		13		(44	)
Foreign government securities		300,778		(12,541	)		351,734		(32,017	)		652,512		(44,558	)
Foreign corporate securities		1,308,105		(38,136	)		468,241		(37,021	)		1,776,346		(75,157	)
Total fixed maturity securities	$	7,503,844	$	(165,100	)	$	3,178,912	$	(159,038	)	$	10,682,756	$	(324,138	)
Equity securities		-		-			-		-			-		-
Total	$	7,503,844	$	(165,100	)	$	3,178,912	$	(159,038	)	$	10,682,756	$	(324,138	)

	Duration of Unrealized Loss at March 31, 2018 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	$	952,178	$	(3,382	)	$	197,004	$	(9,958	)	$	1,149,182	$	(13,340	)
Due in one year through five years		4,143,873		(95,121	)		1,208,285		(74,158	)		5,352,158		(169,279	)
Due in five years through ten years		1,021,638		(40,701	)		309,198		(23,485	)		1,330,836		(64,186	)
Due after ten years		200,194		(6,501	)		41,748		(2,005	)		241,942		(8,506	)
Asset-backed securities		337,232		(4,400	)		74,603		(907	)		411,835		(5,307	)
Mortgage-backed securities		848,729		(14,995	)		1,348,074		(48,525	)		2,196,803		(63,520	)
Total fixed maturity securities	$	7,503,844	$	(165,100	)	$	3,178,912	$	(159,038	)	$	10,682,756	$	(324,138	)

The aggregate market value and gross unrealized losses related to investments in an unrealized loss position at March 31, 2018 were $10,682,756 thousand and $324,138 thousand, respectively. The market value of securities for the single issuer (the United States government) whose securities comprised the largest unrealized loss position at March 31, 2018, did not exceed 9.6% of the overall market value of the Company's fixed maturity securities. The market value of the securities for the issuer with the second largest unrealized loss comprised less than 1.1% 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 $165,100 thousand of unrealized losses related to fixed maturity securities that have been in an unrealized loss position for less than one year were generally comprised of domestic and foreign corporate securities, foreign government securities, U.S. government agencies and corporations, and agency residential mortgage-backed securities. Of these unrealized losses, $155,350 thousand were related to securities that were rated investment grade by at least one nationally recognized statistical rating agency. The $159,038 thousand of unrealized losses related to fixed maturity securities in an unrealized loss position for more than one year related primarily to agency residential mortgage-backed securities, foreign corporate securities, foreign government securities, domestic corporate securities and U.S. government agencies and corporations. Of these unrealized losses, $153,293 thousand were related to securities that were rated investment grade by at least one nationally recognized statistical rating agency. There was no gross unrealized depreciation for mortgage-backed securities related to sub-prime and alt-A loans. In all instances, there were no projected cash flow shortfalls to recover the full book value of the investments and the related interest obligations. The mortgage-backed securities still have excess credit coverage and are current on interest and principal payments.

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

	Duration of Unrealized Loss at December 31, 2017 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	$	1,077,051	$	(8,380	)	$	224,189	$	(5,696	)	$	1,301,240	$	(14,076	)
Obligations of U.S. states and political subdivisions		4,400		(27	)		37,886		(417	)		42,286		(444	)
Corporate securities		1,779,292		(24,942	)		700,098		(16,233	)		2,479,390		(41,175	)
Asset-backed securities		301,316		(1,467	)		72,780		(515	)		374,096		(1,982	)
Mortgage-backed securities
Commercial		101,821		(572	)		64,272		(1,797	)		166,093		(2,369	)
Agency residential		610,941		(4,836	)		1,343,547		(31,002	)		1,954,488		(35,838	)
Non-agency residential		-		-			69		(44	)		69		(44	)
Foreign government securities		327,790		(12,811	)		331,432		(22,036	)		659,222		(34,847	)
Foreign corporate securities		691,865		(19,381	)		450,860		(29,025	)		1,142,725		(48,406	)
Total fixed maturity securities	$	4,894,476	$	(72,416	)	$	3,225,133	$	(106,765	)	$	8,119,609	$	(179,181	)
Equity securities		-		-			113,506		(3,372	)		113,506		(3,372	)
Total	$	4,894,476	$	(72,416	)	$	3,338,639	$	(110,137	)	$	8,233,115	$	(182,553	)

	Duration of Unrealized Loss at December 31, 2017 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	$	247,927	$	(962	)	$	206,113	$	(7,643	)	$	454,040	$	(8,605	)
Due in one year through five years		2,930,977		(42,480	)		1,200,414		(52,143	)		4,131,391		(94,623	)
Due in five years through ten years		612,702		(20,154	)		292,245		(12,680	)		904,947		(32,834	)
Due after ten years		88,792		(1,945	)		45,693		(941	)		134,485		(2,886	)
Asset-backed securities		301,316		(1,467	)		72,780		(515	)		374,096		(1,982	)
Mortgage-backed securities		712,762		(5,408	)		1,407,888		(32,843	)		2,120,650		(38,251	)
Total fixed maturity securities	$	4,894,476	$	(72,416	)	$	3,225,133	$	(106,765	)	$	8,119,609	$	(179,181	)

The aggregate market value and gross unrealized losses related to investments in an unrealized loss position at December 31, 2017 were $8,233,115 thousand and $182,553 thousand, respectively. The market value of securities for the single issuer (the United States government) whose securities comprised the largest unrealized loss position at December 31, 2017, did not exceed 8.9% of the overall market value of the Company's fixed maturity securities. The market value of the securities for the issuer with the second largest unrealized loss comprised less than 1.1% 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 $72,416 thousand of unrealized losses related to fixed maturity securities that have been in an unrealized loss position for less than one year were generally comprised of domestic and foreign corporate securities, foreign government securities, U.S. government agencies and corporations and agency residential mortgage-backed securities. Of these unrealized losses, $68,107 thousand were related to securities that were rated investment grade by at least one nationally recognized statistical rating agency. The $106,765 thousand of unrealized losses related to fixed maturity securities in an unrealized loss position for more than one year related primarily to agency residential mortgage-backed securities, foreign corporate securities, foreign government securities, domestic corporate securities and U.S. government agencies and corporations. Of these unrealized losses, $103,739 thousand were related to securities that were rated investment grade by at least one nationally recognized statistical rating agency. There was no gross unrealized depreciation for mortgage-backed securities related to sub-prime and alt-A loans. In all instances, there were no projected cash flow shortfalls to recover the full book value of the investments and the related

interest obligations. The mortgage-backed securities still have excess credit coverage and are current on interest and principal payments.

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

	Three Months Ended
	March 31,
(Dollars in thousands)	2018			2017
Fixed maturities	$	108,682		$	103,245
Equity securities		6,827			8,745
Short-term investments and cash		1,732			630
Other invested assets
Limited partnerships		23,381			10,998
Other		4,325			2,272
Gross investment income before adjustments		144,947			125,890
Funds held interest income (expense)		3,630			3,148
Future policy benefit reserve income (expense)		(209	)		(319	)
Gross investment income		148,368			128,719
Investment expenses		(10,074	)		(6,430	)
Net investment income	$	138,294		$	122,289

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

The Company had contractual commitments to invest up to an additional $777,058 thousand in limited partnerships at March 31, 2018. These commitments will be funded when called in accordance with the partnership agreements, which have investment periods that expire, unless extended, through 2023.

The Company's other invested assets at March 31, 2018 and December 31, 2017 included $220,241 thousand and $447,915 thousand, respectively, related to a private placement liquidity sweep 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 components of net realized capital gains (losses) are presented in the table below for the periods indicated:

	Three Months Ended
	March 31,
(Dollars in thousands)	2018			2017
Fixed maturity securities, market value:
Other-than-temporary impairments	$	(70	)	$	(1,229	)
Gains (losses) from sales		10,392			11,373
Fixed maturity securities, fair value:
Gains (losses) from sales		(14	)		-
Equity securities, market value:
Gains (losses) from sales		-			(3,436	)
Equity securities, fair value:
Gains (losses) from sales		40			4,516
Gains (losses) from fair value adjustments		(35,253	)		41,507
Other invested assets		3			1
Short-term investments gain (loss)		1			(4	)
Total net realized capital gains (losses)	$	(24,901	)	$	52,728

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

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

	Three Months Ended
	March 31,
(Dollars in thousands)	2018			2017
Proceeds from sales of fixed maturity securities	$	364,288		$	428,491
Gross gains from sales		13,002			15,473
Gross losses from sales		(2,624	)		(4,100	)

Proceeds from sales of equity securities	$	199,875		$	159,117
Gross gains from sales		6,687			8,208
Gross losses from sales		(6,647	)		(7,128	)

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

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

	Three Months Ended			Twelve Months Ended
	March 31,			December 31,
(Dollars in thousands)	2018			2017
Gross reserves at beginning of period	$	11,884,321		$	10,312,313
Less reinsurance recoverables		(1,212,649	)		(990,862	)
Net reserves at beginning of period		10,671,672			9,321,451

Incurred related to:
Current year		957,177			4,815,967
Prior years		100,000			(293,386	)
Total incurred losses and LAE		1,057,177			4,522,581

Paid related to:
Current year		140,761			1,280,605
Prior years		1,055,225			2,062,634
Total paid losses and LAE		1,195,986			3,343,239

Foreign exchange/translation adjustment		25,512			170,879

Net reserves at end of period		10,558,375			10,671,672
Plus reinsurance recoverables		1,234,971			1,212,649
Gross reserves at end of period	$	11,793,346		$	11,884,321

Incurred prior years' reserves increased by $100,000 thousand for the three months ended March 31, 2018 and decreased by $293,386 thousand for the twelve months ended December 31, 2017. The increase for the three months ended March 31, 2018, related primarily to unfavorable development on prior year catastrophes, notably the 2017 California wildfires. The decrease for 2017 was attributable to favorable development in the reinsurance segments of $238,378 thousand, related primarily to property and short-tail business in the U.S. and Bermuda as well as favorable development on prior year catastrophe losses, partially offset by $37,137 thousand of adverse development on A&E reserves. The insurance segment also experienced favorable development on prior year reserves of $55,007 thousand mainly on its workers compensation business, which is largely written in California.

5. DERIVATIVES

The Company sold seven equity index put option contracts, based on two indices, in 2001 and 2005. The Company sold these equity index put options as insurance products with the intent of achieving a profit. These equity index put option contracts meet the definition of a derivative under FASB guidance and the Company's position in these equity index put option contracts is unhedged. Accordingly, these equity index put option contracts are carried at fair value in the consolidated balance sheets with changes in fair value recorded in the consolidated statements of operations and comprehensive income (loss). One of these contracts expired on June 9, 2017, with no liability due under the terms of the contract.

The Company has five remaining equity index put option contracts, based on the Standard & Poor's 500 ("S&P 500") index. Based on historical index volatilities and trends and the March 31, 2018 S&P 500 index value, the Company estimates the probability that each equity index put option contract of the S&P 500 index falling below the strike price on the exercise date to be less than 2%. The theoretical maximum payouts under these five equity index put option contracts would occur if on each of the exercise dates the S&P 500 index value were zero. At March 31, 2018, the present value of these theoretical maximum payouts using a 3% discount factor was $403,464 thousand. Conversely, if the contracts had all expired on March 31, 2018, with the S&P index at $2,640.87, there would have been no settlement amount.

The Company has one equity index put option contract based on the FTSE 100 index. Based on historical index volatilities and trends and the March 31, 2018 FTSE 100 index value, the Company estimates the probability that the equity index put option contract of the FTSE 100 index will fall below the strike price on the exercise date to be less than 17%. The theoretical maximum payout under the equity index put option contract would occur if on the exercise date the FTSE 100 index value was zero. At March 31, 2018, the present value of the theoretical maximum payout using a 3% discount factor and current exchange rate was $42,531 thousand. Conversely, if the contract had expired on March 31, 2018, with the FTSE index at ₤7,056.61, there would have been no settlement amount.

At March 31, 2018 and December 31, 2017, the fair value for these equity put options was $12,205 thousand and $12,477 thousand, respectively.

The fair value of the equity index put options can be found in the Company's consolidated balance sheets as follows:

(Dollars in thousands)
Derivatives not designated as	Location of fair value	At		At
hedging instruments	in balance sheets	March 31, 2018		December 31, 2017

Equity index put option contracts	Equity index put option liability	$	12,205	$	12,477
Total		$	12,205	$	12,477

The change in fair value of the equity index put option contracts can be found in the Company's statement of operations and comprehensive income (loss) as follows:

(Dollars in thousands)		For the Three Months Ended
Derivatives not designated as	Location of gain (loss) in statements of	March 31,
hedging instruments	operations and comprehensive income (loss)	2018		2017

Equity index put option contracts	Net derivative gain (loss)	$	273	$	2,630
Total		$	273	$	2,630

6. FAIR VALUE

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

The levels in the hierarchy are defined as follows:

Level 1:

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

Level 2:

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

Level 3:

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

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

In limited instances where prices are not provided by pricing services or in rare instances when a manager may not agree with the pricing service, price quotes on a non-binding basis are obtained from investment brokers. The investment asset managers do not make any changes to prices received from either the pricing services or the investment brokers. In addition, the investment asset managers have procedures in place to review the reasonableness of the prices from the service providers and may request verification of the prices. In addition, the Company continually performs analytical reviews of price changes and tests the prices on a random basis to an independent pricing source. No material variances were noted during these price validation procedures. In limited situations, where financial markets are inactive or illiquid, the Company may use its own assumptions about future cash flows and risk-adjusted discount rates to determine fair value. Due to the unavailability of prices for seventy-five private placement securities at March 31, 2018, an investment manager's valuation committee valued seventy-three of these private placement securities at $164,818 thousand. A majority of the fair values determined by the valuation committee are substantiated by valuations from independent third parties. In addition, the Company valued two private placement securities at $68,927 thousand, representing par value. Due to the unavailability of prices for sixty-six private placement securities at December 31, 2017, an investment manager's valuation committee valued sixty-five of these private placement securities at $165,173 thousand. In addition, the Company valued one private placement security at $51,965 thousand, representing par value.

The Company internally manages a public equity portfolio which had a fair value at March 31, 2018 and December 31, 2017 of $500,330 thousand and $386,241 thousand, respectively, and all prices were obtained from publicly published sources.

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

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

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

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

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

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

·	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.

recorded in the consolidated statements of operations and comprehensive income (loss). One of these contracts expired on June 9, 2017, with no liability due under the terms of the contract.

The Company's liability for equity index put options is categorized as level 3 since there is no active market for these equity put options. The fair values for these options are calculated by the Company using an industry accepted pricing model, Black-Scholes. The model inputs and assumptions are: risk free interest rates, equity market indexes values, volatilities and dividend yields and duration. The model results are then adjusted for the Company's credit default swap rate. All of these inputs and assumptions are updated quarterly. One of the option contacts is in British Pound Sterling so the fair value for this contract is converted to U.S. dollars using an exchange rate from a nationally recognized source.

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

			Fair Value Measurement Using:
			Quoted Prices
			in Active		Significant
			Markets for		Other		Significant
			Identical		Observable		Unobservable
			Assets		Inputs		Inputs
(Dollars in thousands)	March 31, 2018		(Level 1)		(Level 2)		(Level 3)
Assets:
Fixed maturities, market value
U.S. Treasury securities and obligations of
U.S. government agencies and corporations	$	1,497,413	$	-	$	1,497,413	$	-
Obligations of U.S. States and political subdivisions		536,547		-		536,547		-
Corporate securities		5,777,747		-		5,557,192		220,555
Asset-backed securities		506,430		-		506,430		-
Mortgage-backed securities
Commercial		227,299		-		227,299		-
Agency residential		2,222,995		-		2,222,995		-
Non-agency residential		476		-		476		-
Foreign government securities		1,274,322		-		1,274,322		-
Foreign corporate securities		2,801,352		-		2,789,984		11,368
Total fixed maturities, market value		14,844,581		-		14,612,658		231,923

Fixed maturities, fair value		1,821		-		-		1,821
Equity securities, fair value		1,169,531		1,123,632		45,899		-

Liabilities:
Equity index put option contracts	$	12,205	$	-	$	-	$	12,205

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

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

			Fair Value Measurement Using:
			Quoted Prices
			in Active		Significant
			Markets for		Other		Significant
			Identical		Observable		Unobservable
			Assets		Inputs		Inputs
(Dollars in thousands)	December 31, 2017		(Level 1)		(Level 2)		(Level 3)
Assets:
Fixed maturities, market value
U.S. Treasury securities and obligations of
U.S. government agencies and corporations	$	1,536,692	$	-	$	1,536,692	$	-
Obligations of U.S. States and political subdivisions		585,469		-		585,469		-
Corporate securities		5,699,005		-		5,488,819		210,186
Asset-backed securities		531,360		-		531,360		-
Mortgage-backed securities
Commercial		234,041		-		234,041		-
Agency residential		2,210,902		-		2,210,902		-
Non-agency residential		494		-		494		-
Foreign government securities		1,314,027		-		1,314,027		-
Foreign corporate securities		2,644,844		-		2,637,892		6,952
Total fixed maturities, market value		14,756,834		-		14,539,696		217,138

Equity securities, market value		129,530		113,506		16,024		-
Equity securities, fair value		963,572		941,739		21,833		-

Liabilities:
Equity index put option contracts	$	12,477	$	-	$	-	$	12,477

In addition, $82,902 thousand and $79,505 thousand of investments within other invested assets on the consolidated balance sheets as of March 31, 2018 and December 31, 2017, respectively, are not included within the fair value hierarchy tables as the assets are valued using the NAV practical expedient guidance within ASU 2015-07.

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

	Total Fixed Maturities, Market Value
	Three Months Ended March 31, 2018						Three Months Ended March 31, 2017
	Corporate		Foreign				Corporate			Foreign
(Dollars in thousands)	Securities		Corporate		Total		Securities			Corporate			Total
Beginning balance fixed maturities at market value	$	210,186	$	6,952	$	217,138	$	65,197		$	2,538		$	67,735
Total gains or (losses) (realized/unrealized)
Included in earnings		722		94		816		214			(24	)		190
Included in other comprehensive income (loss)		235		-		235		(29	)		-			(29	)
Purchases, issuances and settlements		9,412		4,322		13,734		18,940			288			19,228
Transfers in and/or (out) of Level 3		-		-		-		-			-			-
Ending balance	$	220,555	$	11,368	$	231,923	$	84,322		$	2,802		$	87,124

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

(Some amounts may not reconcile due to rounding.)

	Total Fixed Maturities, Fair Value
	Three Months Ended March 31, 2018						Three Months Ended March 31, 2017
	Foreign						Foreign
(Dollars in thousands)	Corporate			Total			Corporate		Total
Beginning balance fixed maturities at fair value	$	-		$	-		$	-	$	-
Total gains or (losses) (realized/unrealized)
Included in earnings		(14	)		(14	)		-		-
Included in other comprehensive income (loss)		-			-			-		-
Purchases, issuances and settlements		1,835			1,835			-		-
Transfers in and/or (out) of Level 3		-			-			-		-
Ending balance	$	1,821		$	1,821		$	-	$	-

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

(Some amounts may not reconcile due to rounding.)

There were no net transfers to/(from) level 3, during the three months ended March 31, 2018 and 2017, respectively.

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

	Three Months Ended
	March 31,
(Dollars in thousands)	2018			2017
Liabilities:
Balance, beginning of period	$	12,477		$	22,059
Total (gains) or losses (realized/unrealized)
Included in earnings		(273	)		(2,630	)
Included in other comprehensive income (loss)		-			-
Purchases, issuances and settlements		-			-
Transfers in and/or (out) of Level 3		-			-
Balance, end of period	$	12,205		$	19,429

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

(Some amounts may not reconcile due to rounding.)

7. 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.

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
		March 31,
(Dollars in thousands, except per share amounts)		2018			2017
Net income (loss) per share:
Numerator
Net income (loss)		$	210,318		$	291,643
Less: dividends declared-common shares and nonvested common shares			(53,240	)		(51,281	)
Undistributed earnings			157,078			240,362
Percentage allocated to common shareholders⁽¹⁾			98.9	%		98.9	%
			155,410			237,754
Add: dividends declared-common shareholders			52,697			50,753
Numerator for basic and diluted earnings per common share		$	208,107		$	288,507

Denominator
Denominator for basic earnings per weighted-average common shares			40,469			40,529
Effect of dilutive securities:
Options			220			267
Denominator for diluted earnings per adjusted weighted-average common shares			40,689			40,796

Per common share net income (loss)
Basic		$	5.14		$	7.12
Diluted		$	5.11		$	7.07

⁽¹⁾	Basic weighted-average common shares outstanding		40,469			40,529
	Basic weighted-average common shares outstanding and nonvested common shares expected to vest		40,903			40,973
	Percentage allocated to common shareholders		98.9	%		98.9	%

(Some amounts may not reconcile due to rounding.)

There were no anti-diluted options outstanding for the three months ended March 30, 2018 and 2017.

All outstanding options expire on or between February 18, 2019 and September 19, 2022.

8. 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.

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

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

	At March 31,		At December 31,
(Dollars in thousands)	2018		2017
The Prudential	$	144,516	$	144,618
Unaffiliated life insurance company		32,718		34,444

9. OTHER COMPREHENSIVE INCOME (LOSS)

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

	Three Months Ended March 31, 2018									Three Months Ended March 31, 2017
(Dollars in thousands)	Before Tax			Tax Effect			Net of Tax			Before Tax			Tax Effect			Net of Tax
Unrealized appreciation (depreciation) ("URA(D)") on securities - temporary	$	(209,160	)	$	18,746		$	(190,414	)	$	31,206		$	(8,382	)	$	22,824
URA(D) on securities - OTTI		(189	)		(21	)		(210	)		(4,501	)		1,225			(3,276	)
Reclassification of net realized losses (gains) included in net income (loss)		(10,325	)		1,553			(8,772	)		(6,708	)		4,509			(2,199	)
Foreign currency translation adjustments		17,345			354			17,699			13,813			(1,920	)		11,893
Reclassification of benefit plan liability amortization included in net income (loss)		2,298			(483	)		1,815			3,083			(1,079	)		2,004
Total other comprehensive income (loss)	$	(200,031	)	$	20,149		$	(179,882	)	$	36,893		$	(5,647	)	$	31,246

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

	Three Months Ended
	March 31,						Affected line item within the statements of
AOCI component	2018			2017			operations and comprehensive income (loss)
(Dollars in thousands)
URA(D) on securities	$	(10,325	)	$	(6,708	)	Other net realized capital gains (losses)
		1,553			4,509		Income tax expense (benefit)
	$	(8,772	)	$	(2,199	)	Net income (loss)

Benefit plan net gain (loss)	$	2,298		$	3,083		Other underwriting expenses
		(483	)		(1,079	)	Income tax expense (benefit)
	$	1,815		$	2,004		Net income (loss)

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			Twelve Months Ended
	March 31,			December 31,
(Dollars in thousands)	2018			2017
Beginning balance of URA (D) on securities	$	49,969		$	115,558
Current period change in URA (D) of investments - temporary		(199,186	)		(67,268	)
Current period change in URA (D) of investments - non-credit OTTI		(210	)		(4,030	)
Reclass due to early adoption of ASU 2018-02		-			5,709
Cumulative change due to ASU 2016-01		(1,201	)		-
Ending balance of URA (D) on securities		(150,628	)		49,969

Beginning balance of foreign currency translation adjustments		(138,931	)		(266,818	)
Current period change in foreign currency translation adjustments		17,699			121,917
Reclass due to early adoption of ASU 2018-02		-			5,970
Ending balance of foreign currency translation adjustments		(121,232	)		(138,931	)

Beginning balance of benefit plan net gain (loss)		(71,929	)		(65,504	)
Current period change in benefit plan net gain (loss)		1,815			6,504
Reclass due to early adoption of ASU 2018-02		-			(12,929	)
Ending balance of benefit plan net gain (loss)		(70,114	)		(71,929	)

Ending balance of accumulated other comprehensive income (loss)	$	(341,974	)	$	(160,891	)

(Some amounts may not reconcile due to rounding.)

10. CREDIT FACILITIES

The Company has two active credit facilities for a total commitment of up to $1,050,000 thousand and an additional credit facility for a total commitment of up to £145,000 thousand, providing for the issuance of letters of credit and/or unsecured revolving credit lines. The following table presents the interest and fees incurred in connection with the two credit facilities for the periods indicated:

	Three Months Ended
	March 31,
(Dollars in thousands)	2018		2017
Credit facility interest and fees incurred	$	105	$	104

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

The Group Credit Facility requires Group to maintain a debt to capital ratio of not greater than 0.35 to 1 and to maintain a minimum net worth. Minimum net worth is an amount equal to the sum of $5,370,979 thousand plus 25% of consolidated net income for each of Group's fiscal quarters, for which statements are available ending on or after March 31, 2016 and for which consolidated net income is positive, plus 25% of any increase in consolidated net worth during such period attributable to the issuance of ordinary and preferred shares, which at March 31, 2018, was $5,919,732 thousand. As of March 31, 2018, the Company was in compliance with all Group Credit Facility covenants.

(Dollars in thousands)		At March 31, 2018					At December 31, 2017
Bank		Commitment		In Use		Date of Expiry	Commitment		In Use		Date of Expiry
Wells Fargo Bank Group Credit Facility	Tranche One	$	200,000	$	-		$	200,000	$	-
	Tranche Two		600,000		564,638	12/31/2018		600,000		538,214	12/31/2018
Total Wells Fargo Bank Group Credit Facility		$	800,000	$	564,638		$	800,000	$	538,214

Bermuda Re Letter of Credit Facility

Effective December 29, 2017, Bermuda Re renewed its letter of credit issuance facility with Citibank N.A. referred to as the "Bermuda Re Letter of Credit Facility", which commitment is reconfirmed annually with updated fees. The current renewal of the Bermuda Re Letter of Credit Facility provides for the issuance of up to $250,000 thousand of secured letters of credit to collateralize reinsurance obligations as a non-admitted reinsurer. The interest on drawn letters of credit shall be (A) 0.35% per annum of the principal amount of issued standard letters of credit (expiry of 15 months or less) and (B) 0.45% per annum of the principal amount of issued extended tenor letters of credit (expiry maximum of up to 60 months). The commitment fee on undrawn credit shall be 0.15% per annum.

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

(Dollars in thousands)	At March 31, 2018					At December 31, 2017
Bank	Commitment		In Use		Date of Expiry	Commitment		In Use		Date of Expiry
Citibank Bilateral Letter of Credit Agreement	$	250,000	$	3,672	11/24/2018	$	250,000	$	3,297	2/28/2018
				108,875	12/31/2018				3,672	11/24/2018
				3,297	2/28/2019				73,626	12/31/2018
				346	8/30/2019				344	8/30/2019
				3,599	12/31/2019				93,855	12/30/2021
				95,667	3/30/2022				-
Total Citibank Bilateral Agreement	$	250,000	$	215,456		$	250,000	$	174,794

Everest International Credit Facility

Effective November 9, 2016, Everest International renewed its credit facility with Lloyds Bank plc ("Everest International Credit Facility"). The current renewal of the Everest International Credit Facility, along with a May 17, 2017 amendment, has a four year term and provides up to £145,000 thousand for the issuance of standby letters of credit on a collateralized basis. The Company pays a commitment fee of 0.1% per annum on the average daily amount of the remainder of (1) the aggregate amount available under the facility and (2) the aggregate amount of drawings outstanding under the facility. The Company pays a credit commission fee of 0.35% per annum on drawings outstanding under the facility.

The Everest International Credit Facility requires Group to maintain a debt to capital ratio of not greater than 0.35 to 1 and to maintain a minimum net worth. Minimum net worth is an amount equal to the sum of $5,326,009 thousand (70% of consolidated net worth as of December 31, 2015), plus 25% of consolidated net income for each of Group's fiscal quarters, for which statements are available ending on or after January 1, 2015 and for which net income is positive, plus 25% of any increase in consolidated net worth of Group during such period attributable to the issuance of ordinary and preferred shares, which at March 31, 2018, was $5,919,732 thousand. As of March 31, 2018, the Company was in compliance with all Everest International Credit Facility requirements.

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

(Dollars in thousands)	At March 31, 2018					At December 31, 2017
Bank	Commitment		In Use		Date of Expiry	Commitment		In Use		Date of Expiry
Lloyd's Bank plc	£	145,000	£	-		£	145,000	£	-
		-		-			-		-
Total Lloyd's Bank Credit Facility	£	145,000	£	-		£	145,000	£	-

11. 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 March 31, 2018, the total amount on deposit in trust accounts was $862,629 thousand.

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

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

	Three Months Ended
	March 31,
Mt. Logan Re Segregated Accounts	2018	2017
(Dollars in thousands)
Ceded written premiums	81,036	54,218
Ceded earned premiums	61,409	40,597
Ceded losses and LAE	21,069	19,585

Assumed written premiums	3,043	2,732
Assumed earned premiums	3,043	2,732
Assumed losses and LAE	-	-

Each segregated account is permitted to assume net risk exposures equal to the amount of its available posted collateral, which in the aggregate was $1,077,895 thousand and $837,202 thousand at March 31, 2018 and December 31, 2017, respectively. Of this amount, Group had investments valued at $51,564 thousand and $50,373 thousand at March 31, 2018 and December 31, 2017, respectively, in the segregated accounts.

On April 24, 2014, the Company entered into two collateralized reinsurance agreements with Kilimanjaro Re Limited ("Kilimanjaro"), a Bermuda based special purpose reinsurer, to provide the Company with catastrophe reinsurance coverage. These agreements are multi-year reinsurance contracts which cover specified named storm and earthquake events. The first agreement provides up to $250,000 thousand of reinsurance coverage from named storms in specified states of the Southeastern United States. The second agreement provides up to $200,000 thousand of reinsurance coverage from named storms in specified states of the Southeast, Mid-Atlantic and Northeast regions of the United States and Puerto Rico as well as reinsurance coverage from earthquakes in specified states of the Southeast, Mid-Atlantic, Northeast and West regions of the United States, Puerto Rico and British Columbia. These reinsurance agreements expired in April, 2018.

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

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

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

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

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. As of December 31, 2017, none of the published insured loss estimates for the 2017 catastrophe events have exceeded the single event retentions under the terms of the agreements that would result in a recovery. In addition, the aggregation of the to-date published insured loss estimates for the 2017 covered events have not exceeded the aggregated retentions for recovery. However, if the published estimates for insured losses for the covered 2017 events increase,

the aggregate losses may exceed the aggregate event retentions under the agreements resulting in a recovery.

Kilimanjaro has financed the various property catastrophe reinsurance coverages by issuing catastrophe bonds to unrelated, external investors. On April 24, 2014, Kilimanjaro issued $450,000 thousand of notes ("Series 2014-1 Notes"). The $450,000 thousand of Series 2014-1 Notes were fully redeemed on April 30, 2018 and are no longer outstanding. On November 18, 2014, Kilimanjaro issued $500,000 thousand of notes ("Series 2014-2 Notes"). On December 1, 2015, Kilimanjaro issued $625,000 thousand of notes ("Series 2015-1 Notes). On April 13, 2017, Kilimanjaro issued $950,000 thousand of notes ("Series 2017-1 Notes) and $300,000 thousand of notes ("Series 2017-2 Notes). On April 30, 2018, Kilimanjaro issued $262,500 thousand of notes ("Series 2018-1 Notes") and $262,500 thousand of notes ("Series 2018-2 Notes"). The proceeds from the issuance of the Notes listed above are held in reinsurance trust throughout the duration of the applicable reinsurance agreements and invested solely in US government money market funds with a rating of at least "AAAm" by Standard & Poor's.

12. SENIOR NOTES

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

March 31, 2018

December 31, 2017

Consolidated Balance

(Dollars in thousands)

Date Issued

Date Due

Principal Amounts

Sheet Amount

Market Value

Sheet Amount

Market Value

4.868% Senior notes

06/05/2014

06/01/2044

400,000

396,864

399,080

396,834

420,340

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

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

	Three Months Ended
	March 31,
(Dollars in thousands)	2018		2017
Interest expense incurred	$	4,868	$	4,868

13. LONG TERM SUBORDINATED NOTES

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

Maturity Date

March 31, 2018

December 31, 2017

Original

Consolidated Balance

(Dollars in thousands)

Date Issued

Principal Amount

Scheduled

Final

Sheet Amount

Market Value

Sheet Amount

Market Value

6.6% Long term subordinated notes

04/26/2007

400,000

05/15/2037

05/01/2067

236,585

238,421

236,561

233,072

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 February 15, 2018 to May 14, 2018 is 4.22%.

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. Effective upon the maturity of the Company's 5.40% senior notes on October 15, 2014, the Company's 4.868% senior notes, due on June 1, 2044, have become the Company's long term indebtedness that ranks senior to the long term subordinated notes.

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

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

	Three Months Ended
	March 31,
(Dollars in thousands)	2018		2017
Interest expense incurred	$	2,391	$	3,937

14. SEGMENT REPORTING

The U.S. Reinsurance operation writes property and casualty reinsurance and specialty lines of business, including Marine, Aviation, Surety and Accident and Health ("A&H") business, on both a treaty and facultative basis, through reinsurance brokers, as well as directly with ceding companies primarily within the U.S. The International operation writes non-U.S. property and casualty reinsurance through Everest Re's branches in Canada and Singapore and through offices in Brazil, Miami and New Jersey. The Bermuda operation provides reinsurance and insurance to worldwide property and casualty markets through brokers and directly with ceding companies from its Bermuda office and reinsurance to the United Kingdom and European markets through its UK branch and Ireland Re. The Insurance operation writes property and casualty insurance directly and through brokers, surplus lines brokers and general agents within the U.S., Canada and Europe.

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.

For inter-affiliate reinsurance and business written through the Lloyd's Syndicate, business is generally reported within the segment in which the business was first produced, consistent with how the business is managed.

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
U.S. Reinsurance	March 31,
(Dollars in thousands)	2018			2017
Gross written premiums	$	644,222		$	578,958
Net written premiums		545,831			517,369

Premiums earned	$	563,385		$	481,524
Incurred losses and LAE		545,193			262,066
Commission and brokerage		127,320			102,358
Other underwriting expenses		16,886			14,251
Underwriting gain (loss)	$	(126,014	)	$	102,849

	Three Months Ended
International	March 31,
(Dollars in thousands)	2018		2017
Gross written premiums	$	366,724	$	266,417
Net written premiums		345,155		245,662

Premiums earned	$	343,604	$	271,581
Incurred losses and LAE		127,024		159,501
Commission and brokerage		82,177		66,150
Other underwriting expenses		10,576		9,480
Underwriting gain (loss)	$	123,827	$	36,450

	Three Months Ended
Bermuda	March 31,
(Dollars in thousands)	2018		2017
Gross written premiums	$	415,686	$	321,122
Net written premiums		394,968		305,032

Premiums earned	$	319,134	$	235,106
Incurred losses and LAE		129,513		128,432
Commission and brokerage		81,487		58,423
Other underwriting expenses		10,133		9,480
Underwriting gain (loss)	$	98,001	$	38,771

	Three Months Ended
Insurance	March 31,
(Dollars in thousands)	2018		2017
Gross written premiums	$	504,975	$	434,447
Net written premiums		386,252		345,751

Premiums earned	$	393,304	$	323,886
Incurred losses and LAE		255,447		220,789
Commission and brokerage		66,655		55,338
Other underwriting expenses		58,689		42,676
Underwriting gain (loss)	$	12,513	$	5,083

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

	Three Months Ended
	March 31,
(Dollars in thousands)	2018			2017
Underwriting gain (loss)	$	108,327		$	183,153
Net investment income		138,294			122,289
Net realized capital gains (losses)		(24,901	)		52,728
Net derivative gain (loss)		273			2,630
Corporate expenses		(8,996	)		(8,457	)
Interest, fee and bond issue cost amortization expense		(7,418	)		(8,964	)
Other income (expense)		12,064			(4,966	)
Income (loss) before taxes	$	217,643		$	338,413

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
	March 31,
(Dollars in thousands)	2018		2017
United Kingdom gross written premium	$	258,259	$	170,820

No other country represented more than 5% of the Company's revenues.

15. SHARE-BASED COMPENSATION PLANS

For the three months ended March 31, 2018, share-based compensation awards granted were 160,645 restricted shares, granted on February 21, 2018, with a fair value of $242.39 per share and 13,325 performance share units, granted on February 21, 2018 with a fair value of $242.39 per unit.

16. RETIREMENT BENEFITS

The Company maintains both qualified and non-qualified defined benefit pension plans and a retiree health plan for its U.S. employees employed prior to April 1, 2010.

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

Pension Benefits	Three Months Ended
	March 31,
(Dollars in thousands)	2018			2017
Service cost	$	2,977		$	3,299
Interest cost		2,585			2,276
Expected return on plan assets		(3,670	)		(3,155	)
Amortization of net (income) loss		2,237			3,040
Net periodic benefit cost	$	4,128		$	5,460

Other Benefits	Three Months Ended
	March 31,
(Dollars in thousands)	2018			2017
Service cost	$	446		$	440
Interest cost		307			249
Amortization of prior service cost		(33	)		(33	)
Amortization of net (income) loss		94			76
Net periodic benefit cost	$	814		$	732

(Some amounts may not reconcile due to rounding.)

The service cost component of net periodic benefit costs is included within other underwriting expenses on the consolidated statement of operations and comprehensive income (loss). In accordance with ASU 2017-07, other staff compensation costs are also primarily recorded within this line item.

The Company did not make any contributions to the qualified pension benefit plan for the three months ended March 31, 2018 and 2017.

17. INCOME TAXES

The Company is domiciled in Bermuda and has significant subsidiaries and/or branches in Canada, Ireland, Singapore, 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 annual effective tax rate approach for calculating its tax provision for interim periods as prescribed by ASC 740-270, Interim Reporting. Under the estimated annual effective tax rate approach, the estimated annual effective tax rate is applied to the interim year-to-date pre-tax income/loss to determine the income tax expense or benefit for the year-to-date period. If the annual effective tax rate approach produces a year-to-date tax benefit which exceeds the amount which is estimated to be recoverable for the full year, then the tax benefit for the interim reporting period will be limited as prescribed under ASC 740-270 to the estimated recoverable based on the year-to-date result. The tax expense or benefit for the quarter represents the difference between the year-to-date tax expense or benefit for the current year-to-date period less such amount for the immediately preceding year-to-date period. Management considers the impact of all known events in its estimation of the Company's annual pre-tax income/loss and effective tax rate.

18. SUBSEQUENT EVENTS

On April 30, 2018, the Company entered into four collateralized reinsurance agreements with Kilimanjaro to provide the Company with annual aggregate catastrophe reinsurance coverage. Kilimanjaro has financed these coverages by issuing a total of $525,000 thousand of catastrophe bonds to unrelated, external investors. See also Footnote 11, Collateralized Reinsurance and Trust Agreements.

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 continued to be very competitive, particularly in the property catastrophe and casualty reinsurance lines of business. 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, provide capital markets with access to insurance and reinsurance risk exposure. The capital markets demand for these products is being primarily driven by the current low interest environment and the desire to achieve greater risk diversification and potentially higher returns on their investments. This increased competition is generally having a negative impact on rates, terms and conditions; however, the impact varies widely by market and coverage.

Rates tend to fluctuate by specific region and products, particularly areas recently impacted by large catastrophic events. There was an unprecedented series of catastrophes in the third quarter of 2017 with Hurricanes Harvey, Irma and Maria, as well as a significant earthquake in Mexico City. Additional catastrophe events occurred in the fourth quarter of 2017 with the wild fires in California and Hurricanes Nate and Ophelia. The total industry losses for all of these worldwide events have been estimated to exceed $140 billion. This is the second consecutive year with higher than average catastrophe losses. During 2016, catastrophe losses included the Fort McMurray Canadian wildfire, Hurricane Matthew which affected a large area of the Caribbean and southeastern United States, storms and an earthquake in Ecuador. There are industry reports that the catastrophe losses for 2016 reached their highest level in four years and the United States experienced the most loss events since 1980 and the highest total losses since 2012. While the future impact on market conditions from these catastrophes cannot be determined at this time, there was some firming in the markets impacted by the 2016 catastrophes and as catastrophe losses increased in 2017, there is a growing industry consensus that there will be a general firming of the (re)insurance markets resulting in rate increases, not only for catastrophe exposures, but also potentially for most other lines of business.

Commencing in 2015, we initiated a strategic build out of our insurance platform through the investment in key leadership hires which in turn has brought significant underwriting talent and stronger direction in achieving our insurance program strategic goals of increased premium volume and improved underwriting results. Recent growth is coming from highly diversified areas including newly launched lines of business, as

well as, product and geographic expansion in existing lines of business. We are building a world-class insurance platform capable of offering products across lines and geographies, complementing our leading global reinsurance franchise. As part of this initiative, we launched a new syndicate through Lloyd's of London and formed Ireland Insurance, providing us access to additional international business and new product opportunities to further diversify and broaden our insurance portfolio.

Overall, we believe that given our size, strong ratings, distribution system, reputation, expertise and capital market vehicle activity the current marketplace conditions provide profit opportunities. We continue to employ our strategy of targeting business that offers the greatest profit potential, while maintaining balance and diversification in our overall portfolio.

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
	March 31,						Increase/
(Dollars in millions)	2018			2017			(Decrease)
Gross written premiums	$	1,931.6		$	1,600.9			20.7	%
Net written premiums		1,672.2			1,413.8			18.3	%

REVENUES:
Premiums earned	$	1,619.4		$	1,312.1			23.4	%
Net investment income		138.3			122.3			13.1	%
Net realized capital gains (losses)		(24.9	)		52.7			-147.2	%
Net derivative gain (loss)		0.3			2.6			-89.6	%
Other income (expense)		12.1			(5.0	)	NM
Total revenues		1,745.2			1,484.8			17.5	%

CLAIMS AND EXPENSES:
Incurred losses and loss adjustment expenses		1,057.2			770.8			37.2	%
Commission, brokerage, taxes and fees		357.6			282.3			26.7	%
Other underwriting expenses		96.3			75.9			26.9	%
Corporate expenses		9.0			8.5			6.4	%
Interest, fees and bond issue cost amortization expense		7.4			9.0			-17.2	%
Total claims and expenses		1,527.5			1,146.4			33.2	%

INCOME (LOSS) BEFORE TAXES		217.6			338.4			-35.7	%
Income tax expense (benefit)		7.3			46.8			-84.3	%
NET INCOME (LOSS)	$	210.3		$	291.6			-27.9	%

RATIOS:							Point Change
Loss ratio		65.3	%		58.7	%		6.6
Commission and brokerage ratio		22.1	%		21.5	%		0.6
Other underwriting expense ratio		5.9	%		5.8	%		0.1
Combined ratio		93.3	%		86.0	%		7.3

	At			At			Percentage
	March 31,			December 31,			Increase/
(Dollars in millions, except per share amounts)		2018			2017		(Decrease)
Balance sheet data:
Total investments and cash	$	18,582.9		$	18,626.5			-0.2	%
Total assets		23,513.2			23,591.8			-0.3	%
Loss and loss adjustment expense reserves		11,793.3			11,884.3			-0.8	%
Total debt		633.4			633.4			0.0	%
Total liabilities		15,169.0			15,222.6			-0.4	%
Shareholders' equity		8,344.2			8,369.2			-0.3	%
Book value per share		203.62			204.95			-0.6	%

(NM, not meaningful)
(Some amounts may not reconcile due to rounding.)

Revenues.

Premiums. Gross written premiums increased by 20.7% to $1,931.6 million for the three months ended March 31, 2018, compared to $1,600.9 million for the three months ended March 31, 2017, reflecting a $260.1 million, or 22.3%, increase in our reinsurance business and a $70.5 million, or 16.2%, increase in our insurance business. The increase in reinsurance premiums was mainly due to increases in treaty property business, business written through our U.K. branch and Latin American business. The rise in insurance premiums was primarily due to increases in many lines of business, including property, accident and health and business written through the Lloyd's Syndicate. Net written premiums increased by 18.3% to $1,672.2 million for the three months ended March 31, 2018, compared to $1,413.8 million for the three months ended March 31, 2017. These changes are consistent with the changes in gross written premiums. Premiums earned increased by 23.4% to $1,619.4 million for the three months ended March 31, 2018, compared to $1,312.1 million for the three months ended March 31, 2017. 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.

Net Investment Income. Net investment income increased by 13.1% to $138.3 million for the three months ended March 31, 2018, compared with investment income of $122.3 million for the three months ended March 31, 2017. Net pre-tax investment income, as a percentage of average invested assets, was 3.0% for the three months ended March 31, 2018 compared to 2.8% for the three months ended March 31, 2017. The increase in income and yield was primarily the result of higher income from our limited partnerships and higher income from the growing fixed income portfolio, partially offset by lower dividend income from our equity portfolio.

Net Realized Capital Gains (Losses). Net realized capital losses were $24.9 million and net realized capital gains were $52.7 million for the three months ended March 31, 2018 and 2017, respectively. The net realized capital losses of $24.9 million for the three months ended March 31, 2018 were comprised of $35.3 million of net loss from fair value re-measurements and $0.1 million of other-than-temporary impairments, partially offset by $10.5 million of net realized capital gains from sales on our fixed maturity and equity securities. The net realized capital gains of $52.7 million for the three months ended March 31, 2017 were comprised of $41.5 million of net gains from fair value re-measurements and $12.5 million of net realized capital gains from sales on our fixed maturity and equity securities, partially offset by $1.2 million of other-than-temporary impairments.

Net Derivative Gain (Loss). In 2005 and prior, we sold seven equity index put option contracts, six of which remain outstanding. These contracts meet the definition of a derivative in accordance with FASB guidance and as such, are fair valued each quarter with the change recorded as net derivative gain or loss in the consolidated statements of operations and comprehensive income (loss). As a result of these adjustments in value, we recognized net derivative gains of $0.3 million and $2.6 million for the three months ended March 31, 2018 and 2017, respectively. The change in the fair value of these equity index put option contracts is generally indicative of the change in the equity markets and interest rates over the same periods.

Other Income (Expense). We recorded other income of $12.1 million and other expense of $5.0 million for the three months ended March 31, 2018 and 2017, respectively. The changes were primarily the result of fluctuations in foreign currency exchange rates and other income related to Mt. Logan Re for the corresponding periods. We incurred foreign currency exchange income of $9.9 million and foreign currency exchange expense of $3.9 million for the three months ended March 31, 2018 and 2017, respectively.

Claims and Expenses.

Incurred Losses and Loss Adjustment Expenses. The following tables present our incurred losses and loss adjustment expenses ("LAE") for the periods indicated.

	Three Months Ended March 31,
	Current			Ratio %/				Prior			Ratio %/				Total		Ratio %/
(Dollars in millions)	Year			Pt Change				Years			Pt Change				Incurred		Pt Change
2018
Attritional	$	957.2			59.1	%		$	-			0.0	%		$	957.2		59.1	%
Catastrophes		-			0.0	%			100.0			6.2	%			100.0		6.2	%
Total	$	957.2			59.1	%		$	100.0			6.2	%		$	1,057.2		65.3	%

2017
Attritional	$	750.7			57.2	%		$	0.1			0.0	%		$	750.8		57.2	%
Catastrophes		20.0			1.5	%			-			0.0	%			20.0		1.5	%
Total	$	770.7			58.7	%		$	0.1			0.0	%		$	770.8		58.7	%

Variance 2018/2017
Attritional	$	206.5			1.9		pts	$	(0.1	)		-		pts	$	206.4		1.9		pts
Catastrophes		(20.0	)		(1.5	)	pts		100.0			6.2		pts		80.0		4.7		pts
Total	$	186.5			0.4		pts	$	99.9			6.2		pts	$	286.4		6.6		pts

(Some amounts may not reconcile due to rounding.)

Incurred losses and LAE increased by 37.2% to $1,057.2 million for the three months ended March 31, 2018, compared to $770.8 million for the three months ended March 31, 2017, primarily due to an increase in current year attritional losses of $206.5 million, mainly due to the impact of the increase in premiums earned and changes in the mix of business, and $100.0 million of unfavorable development on prior years catastrophe losses mainly related to the 2017 California wildfires. There were no current year catastrophe losses for the three months ended March 31, 2018. The current year catastrophe losses of $20.0 million for the three months ended March 31, 2017 related to Cyclone Debbie in Australia ($20.0 million).

Commission, Brokerage, Taxes and Fees. Commission, brokerage, taxes and fees increased by 26.7% to $357.6 million for the three months ended March 31, 2018 compared to $282.3 million for the three months ended March 31, 2017. The increase was primarily due to the impact of the increases in premiums earned and changes in the mix of business towards additional pro rata business.

Other Underwriting Expenses. Other underwriting expenses were $96.3 million and $75.9 million for the three months ended March 31, 2018 and 2017, respectively. The increase in other underwriting expenses was mainly due to the impact of the increase in premiums earned and costs incurred to support the continued expansion of the insurance business.

Corporate Expenses. Corporate expenses, which are general operating expenses that are not allocated to segments, were relatively flat at $9.0 million and $8.5 million for the three months ended March 31, 2018 and 2017, respectively.

Interest, Fees and Bond Issue Cost Amortization Expense. Interest, fees and other bond amortization expense was $7.4 million and $9.0 million for the three months ended March 31, 2018 and 2017, respectively. The decrease in expense was primarily due to the conversion of the long term subordinated notes from a fixed rate of 6.6% to a floating rate, which is reset quarterly per the note agreement. The floating rate was 4.2% as of March 31, 2018.

Income Tax Expense (Benefit). We had an income tax expense of $7.3 million and $46.8 million for the three months ended March 31, 2018 and 2017, 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, as affected by tax-exempt investment income and foreign tax credits. Variations in taxes 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. The change in income tax expense (benefit) for

the three months ended March 31, 2018 compared to the three months ended March 31, 2017 was primarily due to the incremental catastrophe loss development as well as incurred capital losses in 2018 versus no catastrophe losses and capital gains in 2017. In addition, the tax rate was lowered from 35% in 2017 to 21% in 2018 under the Tax Cuts and Jobs Act ("TCJA") which was enacted on December 22, 2017.

Net Income (Loss).

Our net income was $210.3 million and $291.6 million for the three months ended March 31, 2018 and 2017, respectively. The changes were primarily driven by the financial component fluctuations explained above.

Ratios.

Our combined ratio increased by 7.3 points to 93.3% for the three months ended March 31, 2018, compared to 86.0% for the three months ended March 31, 2017. The loss ratio component increased 6.6 points for the three months ended March 31, 2018 over the same period last year mainly due to $100.0 million of prior year catastrophe losses primarily related to the 2017 California wildfires. The commission and brokerage ratio components increased to 22.1% for the three months ended March 31, 2018 compared to 21.5% for the three months ended March 31, 2017, reflecting changes in the mix of business. The other underwriting expense ratios remained flat at 5.9% for the three months ended March 31, 2018 from 5.8% for the three months ended March 31, 2017.

Shareholders' Equity.

Shareholders' equity decreased by $25.0 million to $8,344.2 million at March 31, 2018 from $8,369.2 million at December 31, 2017, principally as a result of $199.4 million of unrealized depreciation on investments net of tax, $53.2 million of shareholder dividends and $2.2 million of share-based compensation transactions, partially offset by $210.3 million of net income, $17.7 million of net foreign currency translation adjustments and $1.8 million of net benefit plan obligation adjustments, net of tax.

Consolidated Investment Results

Net Investment Income.

Net investment income increased by 13.1% to $138.3 million for the three months ended March 31, 2018, compared with investment income of $122.3 million for the three months ended March 31, 2017. The increase was primarily due to an increase in limited partnership income and higher income from the growing fixed income portfolio, partially offset by lower dividend income from our equity portfolio.

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

	Three Months Ended
	March 31,
(Dollars in millions)	2018			2017
Fixed maturities	$	108.7		$	103.2
Equity securities		6.8			8.7
Short-term investments and cash		1.7			0.6
Other invested assets
Limited partnerships		23.4			11.0
Other		4.3			2.3
Gross investment income before adjustments		144.9			125.9
Funds held interest income (expense)		3.6			3.1
Future policy benefit reserve income (expense)		(0.2	)		(0.3	)
Gross investment income		148.4			128.7
Investment expenses		(10.1	)		(6.4	)
Net investment income	$	138.3		$	122.3

(Some amounts may not reconcile due to rounding.)

The following tables show a comparison of various investment yields for the periods indicated.

	At	At
	March 31,	December 31,
	2018	2017
Imbedded pre-tax yield of cash and invested assets	3.1%	3.0%
Imbedded after-tax yield of cash and invested assets	2.8%	2.8%

	Three Months Ended
	March 31,
	2018	2017
Annualized pre-tax yield on average cash and invested assets	3.0%	2.8%
Annualized after-tax yield on average cash and invested assets	2.7%	2.4%

Net Realized Capital Gains (Losses).

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

	Three Months Ended March 31,
(Dollars in millions)	2018			2017			Variance
Gains (losses) from sales:
Fixed maturity securities, market value:
Gains	$	13.0		$	15.5		$	(2.5	)
Losses		(2.6	)		(4.1	)		1.5
Total		10.4			11.4			(1.0	)

Equity securities, market value:
Gains		-			-			-
Losses		-			(3.4	)		3.4
Total		-			(3.4	)		3.4

Equity securities, fair value:
Gains		6.7			8.2			(1.5	)
Losses		(6.6	)		(3.7	)		(2.9	)
Total		0.1			4.5			(4.4	)

Total net realized capital gains (losses) from sales:
Gains		19.7			23.7			(4.0	)
Losses		(9.2	)		(11.2	)		2.0
Total		10.5			12.5			(2.0	)

Other-than-temporary impairments:		(0.1	)		(1.2	)		1.1

Gains (losses) from fair value adjustments:
Equity securities, fair value		(35.3	)		41.5			(76.8	)
Total		(35.3	)		41.5			(76.8	)

Total net realized capital gains (losses)	$	(24.9	)	$	52.7		$	(77.6	)

(Some amounts may not reconcile due to rounding.)

Net realized capital losses were $24.9 million and net realized capital gains were $52.7 million for the three months ended March 31, 2018 and 2017, respectively. For the three months ended March 31, 2018, we recorded $35.3 million of net losses from fair value re-measurements and $0.1 million of other-than-temporary impairments, partially offset by $10.5 million of net realized capital gains from sales on our fixed maturity and equity securities. For the three months ended March 31, 2017, we recorded $41.5 million of net gains from fair value re-measurements and $12.5 million of net realized capital gains from sales on our fixed maturity and equity securities, partially offset by $1.2 million of other-than-temporary impairments. The fixed maturity and equity sales for the three months ended March 31, 2018 and 2017 related primarily to adjusting the portfolios for overall market changes and individual credit shifts.

Segment Results.

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.

U.S. Reinsurance.

The following table presents the underwriting results and ratios for the U.S. Reinsurance segment for the periods indicated.

	Three Months Ended March 31,
(Dollars in millions)	2018			2017			Variance			% Change
Gross written premiums	$	644.2		$	579.0		$	65.3			11.3	%
Net written premiums		545.8			517.4			28.5			5.5	%

Premiums earned	$	563.4		$	481.5		$	81.9			17.0	%
Incurred losses and LAE		545.2			262.1			283.1			108.0	%
Commission and brokerage		127.3			102.4			25.0			24.4	%
Other underwriting expenses		16.9			14.3			2.6			18.5	%
Underwriting gain (loss)	$	(126.0	)	$	102.8		$	(228.9	)		-222.5	%

										Point Chg
Loss ratio		96.8	%		54.4	%					42.4
Commission and brokerage ratio		22.6	%		21.3	%					1.3
Other underwriting expense ratio		3.0	%		2.9	%					0.1
Combined ratio		122.4	%		78.6	%					43.8

(Some amounts may not reconcile due to rounding.)

Premiums. Gross written premiums increased by 11.3% to $644.2 million for the three months ended March 31, 2018 from $579.0 million for the three months ended March 31, 2017, primarily due to an increase in treaty property business, an increase in structured products as well as marine and aviation business. Net written premiums increased by 5.5% to $545.8 million for the three months ended March 31, 2018 compared to $517.4 million for the three months ended March 31, 2017. The difference between the change in gross written premiums compared to the change in net written premiums is primarily due to varying utilization of reinsurance. Premiums earned increased by 17.0% to $563.4 million for the three months ended March 31, 2018, compared to $481.5 million for the three months ended March 31, 2017. The change in premiums earned relative to net written premiums is primarily the result of changes in the mix of business towards additional pro rata business and timing; premiums are earned ratably over the coverage period whereas written premiums are recorded at the initiation of the coverage period.

Incurred Losses and LAE. The following tables present the incurred losses and LAE for the U.S. Reinsurance segment for the periods indicated.

	Three Months Ended March 31,
	Current			Ratio %/				Prior			Ratio %/				Total		Ratio %/
(Dollars in millions)	Year			Pt Change				Years			Pt Change				Incurred		Pt Change
2018
Attritional	$	326.4			57.9	%		$	-			0.0	%		$	326.4		57.9	%
Catastrophes		-			0.0	%			218.8			38.9	%			218.8		38.9	%
Total Segment	$	326.4			57.9	%		$	218.8			38.9	%		$	545.2		96.8	%

2017
Attritional	$	262.4			54.5	%		$	(1.2	)		-0.3	%		$	261.2		54.2	%
Catastrophes		1.0			0.2	%			(0.2	)		0.0	%			0.8		0.2	%
Total Segment	$	263.4			54.7	%		$	(1.4	)		-0.3	%		$	262.1		54.4	%

Variance 2018/2017
Attritional	$	64.0			3.4		pts	$	1.2			0.3		pts	$	65.2		3.7		pts
Catastrophes		(1.0	)		(0.2	)	pts		219.0			38.9		pts		218.0		38.7		pts
Total Segment	$	63.0			3.2		pts	$	220.2			39.2		pts	$	283.1		42.4		pts

(Some amounts may not reconcile due to rounding.)

Incurred losses increased by 108.0% to $545.2 million for the three months ended March 31, 2018, compared to $262.1 million for the three months ended March 31, 2017. The increase in incurred losses was primarily due to $218.8 million of prior year catastrophe losses primarily related to Hurricane Irma and the California wildfires and an increase of $64.0 million in current years attritional losses mainly due to the impact of the increase in premiums earned. There were no current year catastrophe losses for the three months ended March 31, 2018. The $1.0 million of current year catastrophe losses for the three months ended March 31, 2017 related to Cyclone Debbie in Australia ($1.0 million).

Segment Expenses. Commission and brokerage expenses increased by 24.4% to $127.3 million for the three months ended March 31, 2018 compared to $102.4 million for the three months ended March 31, 2017. The increase is mainly due to the impact of the increase in premiums earned and changes in the mix of business towards additional pro rata business. Segment other underwriting expenses increased to $16.9 million for the three months ended March 31, 2018 from $14.3 million for the three months ended March 31, 2017.

International.

The following table presents the underwriting results and ratios for the International segment for the periods indicated.

	Three Months Ended March 31,
(Dollars in millions)	2018			2017			Variance			% Change
Gross written premiums	$	366.7		$	266.4		$	100.3			37.7	%
Net written premiums		345.2			245.7			99.5			40.5	%

Premiums earned	$	343.6		$	271.6		$	72.0			26.5	%
Incurred losses and LAE		127.0			159.5			(32.5	)		-20.4	%
Commission and brokerage		82.2			66.2			16.0			24.2	%
Other underwriting expenses		10.6			9.5			1.1			11.6	%
Underwriting gain (loss)	$	123.8		$	36.5		$	87.4			239.7	%

										Point Chg
Loss ratio		37.0	%		58.7	%					(21.7	)
Commission and brokerage ratio		23.9	%		24.4	%					(0.5	)
Other underwriting expense ratio		3.1	%		3.5	%					(0.4	)
Combined ratio		64.0	%		86.6	%					(22.6	)

(Some amounts may not reconcile due to rounding.)

Premiums. Gross written premiums increased by 37.7% to $366.7 million for the three months ended March 31, 2018 compared to $266.4 million for the three months ended March 31, 2017, primarily due to the increases in Latin American and Middle East/Africa business. Net written premiums increased by 40.5% to $345.2 million for the three months ended March 31, 2018 compared to $245.7 million for the three months ended March 31, 2017, which is consistent with the change in gross written premiums. Premiums earned increased 26.5% to $343.6 million for the three months ended March 31, 2018 compared to $271.6 million for the three months ended March 31, 2017. 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.

Incurred Losses and LAE. The following tables present the incurred losses and LAE for the International segment for the periods indicated.

	Three Months Ended March 31,
	Current			Ratio %/				Prior			Ratio %/				Total			Ratio %/
(Dollars in millions)	Year			Pt Change				Years			Pt Change				Incurred			Pt Change
2018
Attritional	$	182.0			53.0	%		$	-			0.0	%		$	182.0			53.0	%
Catastrophes		-			0.0	%			(55.0	)		-16.0	%			(55.0	)		-16.0	%
Total Segment	$	182.0			53.0	%		$	(55.0	)		-16.0	%		$	127.0			37.0	%

2017
Attritional	$	141.6			52.1	%		$	-			0.0	%		$	141.6			52.1	%
Catastrophes		18.1			6.7	%			(0.2	)		-0.1	%			17.9			6.6	%
Total Segment	$	159.7			58.8	%		$	(0.2	)		-0.1	%		$	159.5			58.7	%

Variance 2018/2017
Attritional	$	40.4			0.9		pts	$	-			-		pts	$	40.4			0.9		pts
Catastrophes		(18.1	)		(6.7	)	pts		(54.8	)		(15.9	)	pts		(72.9	)		(22.6	)	pts
Total Segment	$	22.3			(5.8	)	pts	$	(54.8	)		(15.9	)	pts	$	(32.5	)		(21.7	)	pts

(Some amounts may not reconcile due to rounding.)

Incurred losses and LAE decreased by 20.4% to $127.0 million for the three months ended March 31, 2018 compared to $159.5 million for the three months ended March 31, 2017, primarily due to favorable development of $55.0 million on prior year catastrophe losses primarily related to Hurricane Maria, Hurricane Irma and the Mexico City earthquake and a decrease of $18.1 million in current year catastrophe losses. These decreases were partially offset by an increase of $40.4 million of current year attritional losses primarily due to the impact of the increase in premiums earned. There were no current year catastrophe losses for the three months ended March 31, 2018. The $18.1 million of current year catastrophe losses for the three months ended March 31, 2017 were due to Cyclone Debbie in Australia ($18.1 million).

Segment Expenses. Commission and brokerage increased by 24.2% to $82.2 million for the three months ended March 31, 2018 compared to $66.2 million for the three months ended March 31, 2017 mainly due to the impact of the increase in premiums earned and changes in the mix of business. Segment other underwriting expenses increased slightly to $10.6 million for the three months ended March 31, 2018 compared to $9.5 million for the three months ended March 31, 2017.

Bermuda.

The following table presents the underwriting results and ratios for the Bermuda segment for the periods indicated.

	Three Months Ended March 31,
(Dollars in millions)	2018			2017			Variance		% Change
Gross written premiums	$	415.7		$	321.1		$	94.6		29.4	%
Net written premiums		395.0			305.0			89.9		29.5	%

Premiums earned	$	319.1		$	235.1		$	84.0		35.7	%
Incurred losses and LAE		129.5			128.4			1.1		0.8	%
Commission and brokerage		81.5			58.4			23.1		39.5	%
Other underwriting expenses		10.1			9.5			0.7		6.9	%
Underwriting gain (loss)	$	98.0		$	38.8		$	59.2		152.8	%

									Point Chg
Loss ratio		40.6	%		54.6	%				(14.0	)
Commission and brokerage ratio		25.5	%		24.8	%				0.7
Other underwriting expense ratio		3.2	%		4.1	%				(0.9	)
Combined ratio		69.3	%		83.5	%				(14.2	)

(Some amounts may not reconcile due to rounding.)

Premiums. Gross written premiums increased by 29.4% to $415.7 million for the three months ended March 31, 2018 compared to $321.1 million for the three months ended March 31, 2017, primarily due to increased production from the U.K. and Ireland offices and a positive impact of $13.2 million from the movement of foreign exchange rates. Net written premiums increased by 29.5% to $395.0 million for the three months ended March 31, 2018 compared to $305.0 million for the three months ended March 31, 2017, which is consistent with the change in gross written premiums. Premiums earned increased 35.7% to $319.1 million for the three months ended March 31, 2018 compared to $235.1 million for the three months ended March 31, 2017. 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.

Incurred Losses and LAE. The following tables present the incurred losses and LAE for the Bermuda segment for the periods indicated.

	Three Months Ended March 31,
	Current			Ratio %/				Prior			Ratio %/				Total			Ratio %/
(Dollars in millions)	Year			Pt Change				Years			Pt Change				Incurred			Pt Change
2018
Attritional	$	188.7			59.1	%		$	-			0.0	%		$	188.7			59.1	%
Catastrophes		-			0.0	%			(59.2	)		-18.5	%			(59.2	)		-18.5	%
Total Segment	$	188.7			59.1	%		$	(59.2	)		-18.5	%		$	129.5			40.6	%

2017
Attritional	$	127.0			54.0	%		$	-			0.0	%		$	127.0			54.0	%
Catastrophes		0.9			0.4	%			0.5			0.2	%			1.4			0.6	%
Total Segment	$	127.9			54.4	%		$	0.5			0.2	%		$	128.4			54.6	%

Variance 2018/2017
Attritional	$	61.7			5.1		pts	$	-			-		pts	$	61.7			5.1		pts
Catastrophes		(0.9	)		(0.4	)	pts		(59.7	)		(18.7	)	pts		(60.6	)		(19.1	)	pts
Total Segment	$	60.8			4.7		pts	$	(59.7	)		(18.7	)	pts	$	1.1			(14.0	)	pts

(Some amounts may not reconcile due to rounding.)

Incurred losses and LAE increased slightly to $129.5 million for the three months ended March 31, 2018 compared to $128.4 million for the three months ended March 31, 2017, primarily due to an increase of $61.7 million in current year attritional losses related primarily to the impact of the increase in premiums earned, partially offset by $59.2 million of prior years catastrophe losses mainly related to Hurricane Irma, Hurricane Maria and Hurricane Harvey. There were no current year catastrophe losses for the three months ended March 31, 2018. The $0.9 million of current year catastrophe losses for the three months ended March 31, 2017 were due to Cyclone Debbie in Australia ($0.9 million).

Segment Expenses. Commission and brokerage increased by 39.5% to $81.5 million for the three months ended March 31, 2018 compared to $58.4 million for the three months ended March 31, 2017. The increase was mainly due to the impact of the increase in premiums earned. Segment other underwriting expenses increased slightly to $10.1 million for the three months ended March 31, 2018 compared to $9.5 million for the three months ended March 31, 2017.

Insurance.

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

	Three Months Ended March 31,
(Dollars in millions)	2018			2017			Variance		% Change
Gross written premiums	$	505.0		$	434.4		$	70.5		16.2	%
Net written premiums		386.3			345.8			40.5		11.7	%

Premiums earned	$	393.3		$	323.9		$	69.4		21.4	%
Incurred losses and LAE		255.4			220.8			34.6		15.7	%
Commission and brokerage		66.7			55.3			11.3		20.5	%
Other underwriting expenses		58.7			42.7			16.0		37.5	%
Underwriting gain (loss)	$	12.5		$	5.1		$	7.4		146.2	%

									Point Chg
Loss ratio		64.9	%		68.2	%				(3.3	)
Commission and brokerage ratio		16.9	%		17.1	%				(0.2	)
Other underwriting expense ratio		15.0	%		13.1	%				1.9
Combined ratio		96.8	%		98.4	%				(1.6	)

(Some amounts may not reconcile due to rounding.)

Premiums. Gross written premiums increased by 16.2% to $505.0 million for the three months ended March 31, 2018 compared to $434.4 million for the three months ended March 31, 2017. This increase was driven by expansion of various insurance lines of business including property, accident and health and premiums written through the Lloyd's Syndicate. Net written premiums increased by 11.7% to $386.3 million for the three months ended March 31, 2018 compared to $345.8 million for the three months ended March 31, 2017 which is consistent with the change in gross written premiums. Premiums earned increased 21.4% to $393.3 million for the three months ended March 31, 2018 compared to $323.9 million for the three months ended March 31, 2017. 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, as well as changes in the mix of business.

Incurred Losses and LAE. The following tables present the incurred losses and LAE for the Insurance segment for the periods indicated.

	Three Months Ended March 31,
	Current		Ratio %/				Prior			Ratio %/				Total			Ratio %/
(Dollars in millions)	Year		Pt Change				Years			Pt Change				Incurred			Pt Change
2018
Attritional	$	260.0		66.1	%		$	-			0.0	%		$	260.0			66.1	%
Catastrophes		-		0.0	%			(4.6	)		-1.2	%			(4.6	)		-1.2	%
Total Segment	$	260.0		66.1	%		$	(4.6	)		-1.2	%		$	255.4			64.9	%

2017
Attritional	$	219.6		67.8	%		$	1.3			0.4	%		$	220.9			68.2	%
Catastrophes		-		0.0	%			(0.1	)		0.0	%			(0.1	)		0.0	%
Total Segment	$	219.6		67.8	%		$	1.2			0.4	%		$	220.8			68.2	%

Variance 2018/2017
Attritional	$	40.4		(1.7	)	pts	$	(1.3	)		(0.4	)	pts	$	39.1			(2.1	)	pts
Catastrophes		-		-		pts		(4.5	)		(1.2	)	pts		(4.5	)		(1.2	)	pts
Total Segment	$	40.4		(1.7	)	pts	$	(5.8	)		(1.6	)	pts	$	34.6			(3.3	)	pts

(Some amounts may not reconcile due to rounding.)

Incurred losses and LAE increased by 15.7% to $255.4 million for the three months ended March 31, 2018 compared to $220.8 million for the three months ended March 31, 2017, mainly due to an increase of $40.4 million in current year attritional losses, primarily related to the increase in premiums earned. There were no current year catastrophe losses for the three months ended March 31, 2018 and 2017.

Segment Expenses. Commission and brokerage increased by 20.5% to $66.7 million for the three months ended March 31, 2018 compared to $55.3 million for the three months ended March 31, 2017. The increase was mainly due to the impact of the increase in premiums earned. Segment other underwriting expenses increased to $58.7 million for the three months ended March 31, 2018 compared to $42.7 million for the three months ended March 31, 2017. The increase was mainly due to the impact of the increase in premiums earned and increased expenses related to the continued build out of the insurance business.

FINANCIAL CONDITION

Cash and Invested Assets. Aggregate invested assets, including cash and short-term investments, were $18,582.9 million at March 31, 2018, a decrease of $43.6 million compared to $18,626.5 million at December 31, 2017. This decrease was primarily the result of $222.0 million of pre-tax unrealized depreciation, $87.3 million in fair value re-measurements, $53.2 million paid out in dividends to shareholders, $9.0 million of amortization bond premium and $0.7 million of other-than-temporary impairments, partially offset by $195.6 million of cash flows from operations, $46.7 million of unsettled securities, $37.7 million due to fluctuations in foreign currencies and $24.6 million in equity adjustments of our limited partnership investments.

Our principal investment objectives are to ensure funds are available to meet our insurance and reinsurance obligations and to maximize after-tax investment income while maintaining a high quality diversified investment portfolio. Considering these objectives, we view our investment portfolio as having two components: 1) the investments needed to satisfy outstanding liabilities (our core fixed maturities portfolio) and 2) investments funded by our shareholders' equity.

For the portion needed to satisfy global outstanding liabilities, we generally invest in taxable and tax-preferenced fixed income securities with an average credit quality of A1. For the U.S. portion of this portfolio, our mix of taxable and tax-preferenced investments is adjusted periodically, consistent with our current and projected U.S. operating results, market conditions and our tax position. This global fixed maturity securities portfolio is externally managed by an independent, professional investment manager using portfolio guidelines approved by internal management.

Over the past several years, we have expanded the allocation of our investments funded by shareholders' equity to include: 1) a greater percentage of publicly traded equity securities, 2) emerging market fixed maturities through mutual fund structures, as well as individual holdings, 3) high yield fixed maturities, 4) bank and private loan securities and 5) private equity limited partnership investments. The objective of this portfolio diversification is to enhance the risk-adjusted total return of the investment portfolio by allocating a prudent portion of the portfolio to higher return asset classes, which are also less subject to changes in value with movements in interest rates. We limit our allocation to these asset classes because of 1) the potential for volatility in their values and 2) the impact of these investments on regulatory and rating agency capital adequacy models. We use investment managers experienced in these markets and adjust our allocation to these investments based upon market conditions. At March 31, 2018, the market value of investments in these investment market sectors, carried at both market and fair value, approximated 51.1% of shareholders' equity.

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's staff performs reviews of 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 tables below summarize the composition and characteristics of our investment portfolio as of the dates indicated.

(Dollars in millions)	At March 31, 2018				At December 31, 2017
Fixed maturities, market value	$	14,844.6	79.9	%	$	14,756.8	79.2	%
Fixed maturities, fair value		1.8	0.0	%		-	0.0	%
Equity securities, market value		-	0.0	%		129.5	0.7	%
Equity securities, fair value		1,169.5	6.3	%		963.6	5.2	%
Short-term investments		338.7	1.8	%		509.7	2.7	%
Other invested assets		1,527.7	8.2	%		1,631.9	8.8	%
Cash		700.6	3.8	%		635.1	3.4	%
Total investments and cash	$	18,582.9	100.0	%	$	18,626.5	100.0	%

(Some amounts may not reconcile due to rounding.)

	At	At
	March 31, 2018	December 31, 2017
Fixed income portfolio duration (years)	3.2	3.1
Fixed income composite credit quality	A1	Aa3
Imbedded end of period yield, pre-tax	3.1%	3.0%
Imbedded end of period yield, after-tax	2.8%	2.8%

The following table provides a comparison of our total return by asset class relative to broadly accepted industry benchmarks for the periods indicated:

	Three Months Ended	Twelve Months Ended
	March 31, 2018	December 31, 2017
Fixed income portfolio total return	-0.5%	2.5%
Barclay's Capital - U.S. aggregate index	-1.5%	3.5%

Common equity portfolio total return	-1.1%	14.6%
S&P 500 index	-0.8%	21.8%

Other invested asset portfolio total return	2.2%	8.4%

The pre-tax equivalent total return for the bond portfolio was approximately 0.1% and 4.3%, respectively, for the three months ended March 31, 2018 and the twelve months ended December 31, 2017. The pre-tax equivalent return adjusts the yield on tax-exempt bonds to the fully taxable equivalent.

Our fixed income and equity portfolios have different compositions than the benchmark indexes. Our fixed income portfolios have a shorter duration because we align our investment portfolio with our liabilities. We also hold foreign securities to match our foreign liabilities while the index is comprised of only U.S. securities. Our equity portfolios reflect an emphasis on dividend yield and growth equities, while the index is comprised of the largest 500 equities by market capitalization.

Reinsurance Receivables.

Reinsurance receivables for both paid and recoverable on unpaid losses totaled $1,356.9 million and $1,348.2 million at March 31, 2018 and December 31, 2017, respectively. At March 31, 2018, $284.8 million, or 21.0%, was receivable from Mt. Logan Re collateralized segregated accounts; $147.4 million, or 10.9%, was receivable from Resolution Group Reinsurance (Barbados) Limited ("Resolution Group"); $116.0 million, or 8.5%, was receivable from Zurich Vericherungs Gesellschaft ("Zurich"); $92.4 million, or 6.8%, was receivable from C.V. Starr (Bermuda) ("C.V. Starr"); and $78.6 million, or 5.8%, was receivable from Munich Reinsurance America, Inc. ("Munich Re"). The receivables from Resolution Group and C.V. Starr are fully collateralized by individual trust agreements. No other retrocessionaire accounted for more than 5% of our receivables.

Loss and LAE Reserves. Gross loss and LAE reserves totaled $11,793.3 million and $11,884.3 million at March 31, 2018 and December 31, 2017, respectively.

The following tables summarize gross outstanding loss and LAE reserves by segment, classified by case reserves and IBNR reserves, for the periods indicated.

	At March 31, 2018
	Case		IBNR		Total		% of
(Dollars in millions)	Reserves		Reserves		Reserves		Total
U.S. Reinsurance	$	1,788.3	$	1,857.6	$	3,645.9		30.9	%
International		1,200.9		907.5		2,108.5		17.9	%
Bermuda		1,101.0		1,413.6		2,514.6		21.3	%
Insurance		1,045.8		2,048.3		3,094.1		26.2	%
Total excluding A&E		5,136.0		6,227.1		11,363.0		96.4	%
A&E		309.1		121.2		430.3		3.6	%
Total including A&E	$	5,445.0	$	6,348.3	$	11,793.3		100.0	%

(Some amounts may not reconcile due to rounding.)

	At December 31, 2017
	Case		IBNR		Total		% of
(Dollars in millions)	Reserves		Reserves		Reserves		Total
U.S. Reinsurance	$	1,719.6	$	2,041.0	$	3,760.6		31.6	%
International		1,147.6		1,022.9		2,170.5		18.3	%
Bermuda		1,037.8		1,417.0		2,454.8		20.7	%
Insurance		1,049.4		2,000.0		3,049.4		25.7	%
Total excluding A&E		4,954.3		6,481.0		11,435.3		96.2	%
A&E		306.0		143.0		449.0		3.8	%
Total including A&E	$	5,260.4	$	6,623.9	$	11,884.3		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.

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
	March 31,			December 31,
(Dollars in millions)	2018			2017
Gross reserves	$	430.3		$	449.0
Reinsurance receivable		(128.6	)		(130.9	)
Net reserves	$	301.7		$	318.1

(Some amounts may not reconcile due to rounding.)

With respect to asbestos only, at March 31, 2018, we had net asbestos loss reserves of $289.8 million, or 96.1%, of total net A&E reserves, all of which was for assumed business.

On July 13, 2015, we sold Mt. McKinley to Clearwater Insurance Company. Concurrently with the closing, we entered into a retrocession treaty with an affiliate of Clearwater. Per the retrocession treaty, we retroceded 100% of the liabilities associated with certain Mt. McKinley policies, which had been reinsured by Bermuda Re. As consideration for entering into the retrocession treaty, Bermuda Re transferred cash of $140.3 million, an amount equal to the net loss reserves as of the closing date. Of the $140.3 million of net loss reserves retroceded, $100.5 million were related to A&E business. The maximum liability retroceded under the retrocession treaty will be $440.3 million, equal to the retrocession payment plus $300.0 million. We will retain liability for any amounts exceeding the maximum liability retroceded under the retrocession treaty.

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 6.4 years at March 31, 2018. 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.

Shareholders' Equity. Our shareholders' equity decreased to $8,344.2 million as of March 31, 2018 from $8,369.2 million as of December 31, 2017. This decrease was the result of $199.4 million of unrealized depreciation on investments net of tax, $53.2 million of shareholder dividends and $2.2 million of share-based compensation transactions, partially offset by $210.3 million of net income, $17.7 million of net foreign currency translation adjustments and $1.8 million of net benefit plan obligation adjustments, net of tax.

LIQUIDITY AND CAPITAL RESOURCES

Capital. Shareholders' equity at March 31, 2018 and December 31, 2017 was $8,344.2 million and $8,369.2 million, 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.

Commencing in 2017, the regulatory targeted capital required by the State of Delaware, Department of Insurance was expanded to include a provision for catastrophe exposure. This additional requirement added $759.8 million of regulatory targeted capital for Everest Re as of December 31, 2017.

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)	2017		2016		2017		2016
Regulatory targeted capital	$	2,368.6	$	2,025.7	$	2,076.9	$	1,411.4
Actual capital	$	3,085.9	$	2,950.5	$	3,391.9	$	3,635.1

⁽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 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.

Since the beginning of 2017, we repurchased 0.2 million shares for $50.0 million in the open market and paid $260.5 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 November 19, 2014, our existing Board authorization to purchase up to 25 million of our shares was amended to authorize the purchase of up to 30 million shares. As of March 31, 2018, we had repurchased 28.2 million shares under this authorization.

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 $195.6 million and $381.8 million for the three months ended March 31, 2018 and 2017, respectively. Additionally, these cash flows reflected net tax recoverables of $51.3 million and net tax payments of $9.6 million for the three months ended March 31, 2018 and 2017, respectively, and net catastrophe loss payments of $265.8 million and $53.1 million for the three months ended March 31, 2018 and 2017, 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 March 31, 2018 and December 31, 2017, we held cash and short-term investments of $1,039.3 million and $1,144.7 million, respectively. Our short-term investments are generally readily marketable and can be converted to cash. Starting in the first quarter of 2016, we implemented a new liquidity sweep facility with investments in short maturity, investment grade, U.S. dollar denominated fixed income securities. The facility is structured as a limited liability corporation so it is classified on our balance sheet as part of other invested assets. This facility had $220.2 million of available liquidity at March 31, 2018. In addition to these cash and short-term investments, at March 31, 2018, we

had $1,592.7 million of available for sale fixed maturity securities maturing within one year or less, $7,097.6 million maturing within one to five years and $3,197.0 million maturing after five years. Our $1,169.5 million 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 or using available credit facilities to pay losses and LAE but have the ability to do so. Sales of securities might result in realized capital gains or losses. At March 31, 2018 we had $152.4 million of net pre-tax unrealized depreciation related to fixed maturity securities, comprised of $324.1 million of pre-tax unrealized depreciation and $171.7 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 will probably 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 credit facilities that provide up to $200.0 million of unsecured revolving credit for liquidity but more importantly provide for up to $600.0 million and £145.0 million of collateralized standby letters of credit to support business written by our Bermuda operating subsidiaries.

Effective May 26, 2016, Group, Bermuda Re and Everest International 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 "Group Credit Facility". Wells Fargo Corporation ("Wells Fargo Bank") is the administrative agent for the Group Credit Facility, which consists of two tranches. Tranche one provides up to $200.0 million of unsecured revolving credit for liquidity and general corporate purposes, and for the issuance of unsecured standby letters of credit. The interest on the revolving loans shall, at the Company's option, be either (1) the Base Rate (as defined below) or (2) an adjusted London Interbank Offered Rate ("LIBOR") plus a margin. The Base Rate is the higher of (a) the prime commercial lending rate established by Wells Fargo Bank, (b) the Federal Funds Rate plus 0.5% per annum or (c) the one month LIBOR Rate plus 1.0% per annum. The amount of margin and the fees payable for the Group Credit Facility depends on Group's senior unsecured debt rating. Tranche two exclusively provides up to $600.0 million for the issuance of standby letters of credit on a collateralized basis.

The Group Credit Facility requires Group to maintain a debt to capital ratio of not greater than 0.35 to 1 and to maintain a minimum net worth. Minimum net worth is an amount equal to the sum of $5,371.0 million plus 25% of consolidated net income for each of Group's fiscal quarters, for which statements are available ending on or after March 31, 2016 and for which consolidated net income is positive, plus 25% of any increase in consolidated net worth during such period attributable to the issuance of ordinary and preferred shares, which at March 31, 2018, was $5,919.7 million. As of March 31, 2018, the Company was in compliance with all Group Credit Facility covenants.

At March 31, 2018 and December 31, 2017, the Company had no outstanding short-term borrowings from the Group Credit Facility revolving credit line. At March 31, 2018, the Group Credit Facility had no outstanding letters of credit under tranche one and $564.6 million outstanding letters of credit under tranche two. At December 31, 2017, the Group Credit Facility had no outstanding letters of credit under tranche one and $538.2 million outstanding letters of credit under tranche two.

Effective November 9, 2016, Everest International renewed its credit facility with Lloyds Bank plc ("Everest International Credit Facility"). The current renewal of the Everest International Credit Facility, along with a May 17, 2017 amendment, has a four year term and provides up to £145.0 million for the issuance of standby letters of credit on a collateralized basis. The Company pays a commitment fee of 0.1% per annum on the average daily amount of the remainder of (1) the aggregate amount available under the facility and (2) the aggregate amount of drawings outstanding under the facility. The Company pays a credit commission fee of 0.35% per annum on drawings outstanding under the facility.

The Everest International Credit Facility requires Group to maintain a debt to capital ratio of not greater than 0.35 to 1 and to maintain a minimum net worth. Minimum net worth is an amount equal to the sum of $5,326.0 million (70% of consolidated net worth as of December 31, 2015), plus 25% of consolidated net income for each of Group's fiscal quarters, for which statements are available ending on or after January 1, 2015 and for which net income is positive, plus 25% of any increase in consolidated net worth of Group during such period attributable to the issuance of ordinary and preferred shares, which at March 31, 2018, was $5,919.7 million. As of March 31, 2018, the Company was in compliance with all Everest International Credit Facility requirements.

At March 31, 2018 and December 31, 2017, Everest International Credit Facility had £0.0 million outstanding letters of credit.

Costs incurred in connection with the Group Credit Facility and Everest International Credit Facility were $0.1 million for March 31, 2018 and 2017.

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, taxable and tax-preferenced fixed maturity portfolio, while maintaining an adequate level of liquidity. Our mix of taxable and tax-preferenced investments is adjusted periodically, consistent with our current and projected operating results, market conditions and our tax position. The fixed maturity securities in the investment portfolio are comprised of non-trading available for sale securities. Additionally, we have invested in equity securities.

The overall investment strategy considers the scope of present and anticipated Company operations. In particular, estimates of the financial impact resulting from non-investment asset and liability transactions, together with our capital structure and other factors, are used to develop a net liability analysis. This analysis includes estimated payout characteristics for which our investments provide liquidity. This analysis is considered in the development of specific investment strategies for asset allocation, duration and credit quality. The change in overall market sensitive risk exposure principally reflects the asset changes that took place during the period.

Interest Rate Risk. Our $18.6 billion investment portfolio, at March 31, 2018, 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 $2,450.8 million of mortgage-backed securities in the $14,846.4 million 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 market value fluctuations and after-tax unrealized appreciation on our fixed maturity portfolio (including $338.7 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 market value change under the various interest rate change scenarios.

	Impact of Interest Rate Shift in Basis Points
	At March 31, 2018
	-200		-100		0		100		200
(Dollars in millions)
Total Market/Fair Value	$	16,088.4	$	15,647.8	$	15,185.1	$	14,710.0	$	14,236.6
Market/Fair Value Change from Base (%)		5.9%		3.0%		0.0%		-3.1%		-6.2%
Change in Unrealized Appreciation
After-tax from Base ($)	$	821.1	$	421.8	$	-	$	(434.4)	$	(867.3)

We had $11,793.3 million and $11,884.3 million of gross reserves for losses and LAE as of March 31, 2018 and December 31, 2017, 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 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 3.6 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 $1.2 billion resulting in a discounted reserve balance of approximately $9.3 billion, representing approximately 61.4% of the value of the fixed maturity investment portfolio funds.

Equity Risk. Equity risk is the potential change in fair and/or market 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/market value and after-tax change in fair/market 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 March 31, 2018
(Dollars in millions)	-20%			-10%			0%		10%		20%
Fair/Market Value of the Equity Portfolio	$	935.6		$	1,052.6		$	1,169.5	$	1,286.5	$	1,403.4
After-tax Change in Fair/Market Value	$	(189.8	)	$	(94.9	)	$	-	$	94.9	$	189.8

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 market 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.

In June 2016, the United Kingdom approved a referendum to exit the European Union (commonly referred to as "Brexit") which resulted in volatility in global stock markets and currency exchange rates, and has increased political, economic and global market uncertainty. The formal negotiation process for the United Kingdom to exit the European Union will determine the timing and terms of such an exit. The Company has a Lloyd's of London Syndicate and Bermuda Re has a branch operation in the United Kingdom. The nature and extent of the impact of Brexit on regulation, interest rates, currency exchange rates and financial markets is still uncertain and may adversely affect our operations.

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 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 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 from our expectations include those discussed under the caption ITEM 1A, "Risk Factors". 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

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

ITEM 1A. RISK FACTORS

No material changes.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES 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)
January 1 - 31, 2018		0	$	-		0		1,785,507
February 1 - 28, 2018		48,471	$	242.0134		0		1,785,507
March 1 - 31, 2018		0	$	-		0		1,785,507
Total		48,471	$	-		0		1,785,507

(1) On September 21, 2004, the Company's board of directors approved an amended share repurchase program authorizing the Company and/or its subsidiary Holdings to purchase up to an aggregate of 5,000,000 of the Company's common shares through open market transactions, privately negotiated transactions or both. On July 21, 2008; February 24, 2010; February 22, 2012; May 15, 2013; and November 19, 2014, the Company's executive committee of the Board of Directors has approved subsequent amendments to the share repurchase program authorizing the Company and/or its subsidiary Holdings, to purchase up to a current aggregate of 30,000,000 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.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4. MINE SAFETY DISCLOSURES

Not applicable.

ITEM 5. OTHER INFORMATION

None.

ITEM 6. EXHIBITS

Exhibit Index


Exhibit No.	Description

31.1	Section 302 Certification of Dominic J. Addesso

31.2	Section 302 Certification of Craig Howie

32.1	Section 906 Certification of Dominic J. Addesso and Craig Howie

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

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/ CRAIG HOWIE
Craig Howie
Executive Vice President and
Chief Financial Officer

(Duly Authorized Officer and Principal Financial Officer)

Dated: May 10, 2018