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EVEREST GROUP, LTD. - Annual Report: 2022 (Form 10-K)

re-20221231
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C.
 
20549
FORM
10-K
_X_
 
Annual Report Pursuant to Section
 
13 or 15(d) of the Securities Exchange Act of
 
1934
For the fiscal year ended
December 31, 2022
___
 
Transition Report Pursuant
 
to Section 13 or 15(d) of the Securities Exchange
 
Act of 1934
Commission file number
1-15731
EVEREST RE GROUP, LTD.
(Exact name of registrant as specified
 
in its charter)
Bermuda
98-0365432
(State or other jurisdiction of
incorporation or organization)
(I.R.S. Employer
Identification No.)
Seon Place – 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)
Securities registered pursuant
 
to Section 12(g) of the Act:
 
None
Indicate by check mark if the registrant
 
is a well-known seasoned issuer,
 
as defined in Rule 405 of the Securities Act.
YES
X
NO
Indicate by check mark if the registrant
 
is not required to file reports pursuant
 
to Section 13 or Section 15(d) of the Act.
YES
NO
X
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 requi
 
rements for the past 90 days.
YES
X
NO
Indicate by check
 
mark whether the registrant
 
has submitted electronically
 
every Interactive
 
Data File required
 
to be submitted
 
pursuant to Rule
 
405 of Regulation
 
S-T during the preceding
12 months (or for such shorter period that
 
the registrant was required
 
to submit such files).
YES
X
NO
Indicate by check mark if disclosure
 
of delinquent filers pursuant
 
to Item 405 of Regulation S-K
 
is not contained herein, and
 
will not be contained, to the best
 
of the registrant’s
 
knowledge, in
definitive proxy or information
 
statements incorporated
 
by reference in Part III
 
of this Form 10-K or any amendment to
 
this Form 10-K.
 
[
 
]
Indicate by check mark whether
 
the registrant is a
 
large accelerated filer,
 
an accelerated filer,
 
a non-accelerated filer,
 
a smaller reporting company
 
or an emerging growth
 
company.
 
See the
definitions of “large accelerated filer,”
 
“accelerated filer,”
 
“smaller reporting company” and “emerging
 
growth company” in Rule 12b-2 of the Exchange
 
Act.
Large accelerated filer
X
Accelerated filer
Non-accelerated filer
Smaller reporting company
Emerging growth company
Indicate by check mark if the
 
registrant is an emerging
 
growth company and
 
has elected not to use the
 
extended transition period for
 
complying with any new or revised
 
financial accounting
standards provided pursuant
 
to Section 13(a) of the Exchange act.
 
YES
NO
X
Indicate by check mark whether the registrant
 
is a shell company (as defined in Rule 12b-2
 
of the Exchange Act).
YES
NO
X
Indicate by check mark
 
whether the registrant
 
has filed a report on
 
and attestation
 
to its management’s
 
assessment of the effectiveness
 
of its internal control
 
over financial reporting
 
under
Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C.
 
7262(b)) by the registered public accounting
 
firm that prepared or issued its audit report.
 
YES
X
NO
If securities are
 
registered
 
pursuant to
 
Section 12(b)
 
of the
 
Act, indicate
 
by check
 
mark whether the
 
financial statements
 
of the
 
registrant included
 
in the filing
 
reflect the
 
correction of
 
an
error to previously issued financial statements.
YES
NO
X
Indicate
 
by
 
check mark
 
whether
 
any
 
of
 
those
 
error
 
corrections
 
are
 
restatements
 
that
 
required
 
a recovery
 
analysis
 
of
 
incentive-based
 
compensation
 
received
 
by
 
any
 
of
 
the registrant’s
executive officers during the relevant
 
recovery period pursuant
 
to §240.10D-1(b).
YES
NO
x
The aggregate
 
market value
 
on June
 
30, 2022, the
 
last business
 
day of the
 
registrant’s
 
most recently
 
completed second
 
quarter,
 
of the voting
 
shares held
 
by non-affiliates
 
of the registrant
was $
11.0
 
billion.
 
Securities registered pursuant
 
to Section 12(b) of the Act:
Class
Trading Symbol
Name of Exchange where
 
Registered
Number of Shares Outstanding
At February 1, 2023
Common Shares, $0.01 par value
RE
New York Stock Exchange
39,157,235
DOCUMENTS INCORPORATED BY
 
REFERENCE
Certain information
 
required by
 
Items 10,
 
11, 12, 13
 
and 14 of
 
Form 10-K
 
is incorporated
 
by reference
 
into Part
 
III hereof
 
from the registrant’s
 
proxy statement
 
for the
 
2023 Annual General
 
Meeting of
Shareholders,
 
which
 
will
 
be
 
filed
 
with
 
the
 
Securities
 
and
 
Exchange
 
Commission
 
within
 
120
 
days
 
of
 
the
 
close
 
of
 
the
 
registrant’s
 
fiscal
 
year
 
ended
 
December
 
31,
 
2022.
 
1
PART I
Unless otherwise
 
indicated,
 
all financial
 
data
 
in this
 
document have
 
been prepared
 
using
 
accounting
 
principles
generally accepted
 
in the United
 
States of America
 
(“GAAP”).
 
As used in
 
this document, “Group”
 
means Everest
Re
 
Group,
 
Ltd.;
 
“Holdings
 
Ireland”
 
means
 
Everest
 
Underwriting
 
Group
 
(Ireland)
 
Limited;
 
“Ireland
 
Re”
 
means
Everest
 
Reinsurance
 
Company
 
(Ireland),
 
dac,
 
designated
 
activity
 
company;
 
“Ireland
 
Insurance”
 
means
 
Everest
Insurance
 
(Ireland),
 
dac,
 
designated
 
activity
 
company,
 
“Holdings”
 
means
 
Everest
 
Reinsurance
 
Holdings,
 
Inc.;
“Everest
 
Re”
 
means Everest
 
Reinsurance
 
Company
 
and its
 
subsidiaries
 
(unless the
 
context
 
otherwise requires);
and the “Company”,
 
“we”,
 
“us”,
 
and “our” means Everest Re Group,
 
Ltd. and its subsidiaries.
ITEM 1.
 
BUSINESS
The Company.
Group, a Bermuda company,
 
was established in
 
1999 as a wholly-owned
 
subsidiary of Holdings.
 
On February 24,
2000, a corporate restructuring
 
was completed and Group
 
became the new parent holding company
 
of Holdings.
 
Holdings
 
continues
 
to
 
be the
 
holding
 
company
 
for
 
the Company’s
 
U.S.
 
based
 
operations.
 
Holders
 
of shares
 
of
common
 
stock
 
of
 
Holdings
 
automatically
 
became
 
holders
 
of
 
the
 
same
 
number
 
of
 
common
 
shares
 
of
 
Group.
 
Prior to the
 
restructuring, Group
 
had no significant
 
assets or capitalization
 
and had
 
not engaged
 
in any
 
business
or prior activities other than in connection with the restructuring.
 
In
 
connection
 
with
 
the
 
February
 
24,
 
2000
 
restructuring,
 
Group
 
established
 
a
 
Bermuda-based
 
reinsurance
subsidiary,
 
Everest
 
Reinsurance (Bermuda),
 
Ltd. (“Bermuda
 
Re”), which
 
commenced business
 
in the
 
second half
of
 
2000.
 
Group
 
also
 
formed
 
Everest
 
Global
 
Services,
 
Inc.,
 
a
 
Delaware
 
subsidiary,
 
to
 
perform
 
administrative
functions for Group and its U.S. based
 
and non-U.S. based subsidiaries.
 
On
 
December
 
30,
 
2008,
 
Group
 
contributed
 
Holdings
 
to
 
its
 
Irish
 
holding
 
company,
 
Holdings
 
Ireland.
 
Holdings
Ireland is
 
a direct
 
subsidiary of
 
Group and
 
was established
 
to serve
 
as a
 
holding company
 
for the
 
U.S. and
 
Irish
reinsurance
 
and
 
insurance
 
subsidiaries.
 
Effective
 
July
 
1,
 
2016,
 
the
 
Company
 
established
 
a
 
new
 
Irish
 
holding
company,
 
Everest
 
Dublin
 
Insurance
 
Holdings
 
Limited
 
(Ireland)
 
(“Everest
 
Dublin
 
Holdings”)
 
and
 
contributed
Ireland Re to Everest
 
Dublin Holdings.
 
Holdings, a Delaware corporation,
 
was established in 1993 to serve
 
as the parent holding company
 
of Everest Re,
a
 
Delaware
 
property
 
and
 
casualty
 
reinsurer
 
formed
 
in
 
1973.
 
Until
 
October
 
6,
 
1995,
 
Holdings
 
was
 
an
 
indirect
wholly-owned
 
subsidiary
 
of
 
The
 
Prudential
 
Insurance
 
Company
 
of
 
America
 
(“The Prudential”).
 
On
 
October
 
6,
1995, The Prudential sold its entire interest
 
in Holdings in an initial public offering.
The Company’s
 
principal business, conducted
 
through its operating
 
segments, is the
 
underwriting of reinsurance
and
 
insurance
 
in
 
the
 
U.S.,
 
Bermuda
 
and
 
international
 
markets.
 
The
 
Company
 
had
 
gross
 
written
 
premiums,
 
in
2022,
 
of
 
$14.0
 
billion
 
with
 
approximately
 
66.8%
 
representing
 
reinsurance
 
and
 
33.2%
 
representing
 
insurance.
 
Shareholders’
 
equity
 
at
 
December
 
31,
 
2022
 
was
 
$8.4
 
billion.
 
The
 
Company
 
underwrites
 
reinsurance
 
both
through
 
brokers
 
and
 
directly
 
with
 
ceding
 
companies,
 
giving
 
it
 
the
 
flexibility
 
to
 
pursue
 
business
 
based
 
on
 
the
ceding
 
company’s
 
preferred
 
reinsurance
 
purchasing
 
method.
 
The
 
Company
 
underwrites
 
insurance
 
principally
through brokers,
 
surplus lines brokers
 
and general agent
 
relationships.
 
Group’s
 
active operating
 
subsidiaries are
each rated A+ (“Superior”) by
 
A.M. Best Company (“A.M.
 
Best”), a leading provider of
 
insurer ratings that
 
assigns
financial
 
strength
 
ratings
 
to
 
insurance
 
companies
 
based
 
on
 
their
 
ability
 
to
 
meet
 
their
 
obligations
 
to
policyholders.
 
2
Following is a summary of the Company’s
 
principal operating subsidiaries:
Bermuda Re,
 
a Bermuda
 
insurance company
 
and a direct
 
subsidiary of
 
Group, is
 
registered in
 
Bermuda as
 
a
Class
 
4
 
insurer
 
and
 
long-term
 
insurer
 
and
 
is
 
authorized
 
to
 
write
 
both
 
reinsurance
 
and
 
insurance
 
property
and
 
casualty
 
and
 
life
 
and
 
annuity
 
business.
 
Bermuda
 
Re’s
 
UK
 
branch
 
writes
 
property
 
and
 
casualty
reinsurance to
 
the United
 
Kingdom,
 
China and European
 
markets.
 
At December
 
31, 2022,
 
Bermuda Re
 
had
shareholder’s equity of $2.7 billion.
 
Everest International
 
Reinsurance, Ltd.
 
(“Everest International”),
 
a Bermuda insurance company
 
and a direct
subsidiary
 
of Group,
 
is
 
registered
 
in
 
Bermuda
 
as
 
a
 
Class
 
4 insurer
 
and
 
is authorized
 
to
 
write
 
property
 
and
casualty
 
business.
 
All
 
of
 
Everest
 
International’s
 
business
 
has
 
inter-affiliate
 
reinsurance
 
assumed
 
from
Everest Re,
 
the UK branch
 
of Bermuda Re,
 
Ireland Re
 
and Ireland Insurance
 
.
 
At December 31,
 
2022, Everest
International had shareholder’s
 
equity of $1.0 billion.
 
Ireland Re,
 
an Ireland
 
reinsurance company
 
and an indirect
 
subsidiary of Group,
 
is licensed to
 
write non-life
reinsurance, both directly and through
 
brokers, for
 
the London and European markets.
Ireland
 
Insurance,
 
an
 
Ireland
 
insurance
 
company
 
and
 
an
 
indirect
 
subsidiary
 
of
 
Group,
 
is
 
licensed
 
to
 
write
insurance for
 
the European markets.
 
In addition, Ireland
 
Insurance is
 
considered an approved/eligible
 
alien
surplus lines insurer in the 50 states
 
and the District of Columbia.
Everest
 
Compañia
 
de
 
Seguros
 
Generales
 
Chile
 
S.A.,
 
a
 
Chile
 
based
 
insurance
 
company,
 
is
 
licensed
 
to
 
write
insurance and reinsurance
 
within Chile.
Everest
 
Re, a
 
Delaware reinsurance
 
company and
 
a direct
 
subsidiary of
 
Holdings, is
 
a licensed
 
property and
casualty
 
insurer
 
and/or
 
reinsurer
 
in
 
all
 
states,
 
the
 
District
 
of
 
Columbia,
 
Puerto
 
Rico
 
and
 
Guam
 
and
 
is
authorized
 
to
 
conduct
 
reinsurance
 
business
 
in
 
Canada,
 
Singapore
 
and
 
Brazil.
 
Everest
 
Re
 
underwrites
property
 
and
 
casualty
 
reinsurance
 
for
 
insurance
 
and
 
reinsurance
 
companies
 
in
 
the
 
U.S.
 
and
 
international
markets.
 
At December 31, 2022 Everest
 
Re had statutory surplus of $5.6 billion.
 
Everest
 
Insurance
 
Company
 
of
 
Canada
 
(“Everest
 
Canada”),
 
a
 
Canadian
 
insurance
 
company
 
and
 
direct
subsidiary of Holdings Ireland, is licensed to write property
 
and casualty insurance in all Canadian provinces.
 
Everest
 
National
 
Insurance
 
Company
 
(“Everest
 
National”),
 
a
 
Delaware
 
insurance
 
company
 
and
 
a
 
direct
subsidiary of
 
Everest
 
Re, is
 
licensed in
 
50 states,
 
the District
 
of Columbia
 
and Puerto
 
Rico and
 
is authorized
to write property and
 
casualty insurance on
 
an admitted basis in
 
the jurisdictions in which it is
 
licensed.
 
The
majority of Everest National’s
 
business is reinsured by its parent,
 
Everest Re.
Everest
 
Indemnity
 
Insurance
 
Company
 
(“Everest
 
Indemnity”), a
 
Delaware
 
insurance
 
company
 
and
 
a
 
direct
subsidiary
 
of Everest
 
Re,
 
writes
 
excess
 
and
 
surplus
 
lines
 
insurance
 
business
 
in
 
the
 
U.S.
 
on
 
a
 
non-admitted
basis.
 
Excess
 
and
 
surplus
 
lines
 
insurance
 
is
 
specialty
 
property
 
and
 
liability
 
coverage
 
that
 
an
 
insurer
 
not
licensed to
 
write insurance
 
in a
 
particular jurisdiction
 
is permitted
 
to provide
 
to insureds
 
when the
 
specific
specialty coverage
 
is unavailable
 
from admitted insurers.
 
Everest Indemnity
 
is a Delaware
 
Domestic Surplus
Lines
 
Insurer
 
and
 
is
 
eligible
 
to
 
write
 
business
 
on
 
a
 
non-admitted
 
basis
 
in
 
all
 
other
 
states,
 
the
 
District
 
of
Columbia and
 
Puerto Rico.
 
The majority
 
of Everest
 
Indemnity’s
 
business is
 
reinsured
 
by its
 
parent,
 
Everest
Re.
 
Everest
 
Security
 
Insurance
 
Company
 
(“Everest
 
Security”),
 
a
 
Georgia
 
insurance
 
company
 
and
 
a
 
direct
subsidiary
 
of
 
Everest
 
Re,
 
writes
 
property
 
and
 
casualty
 
insurance
 
on
 
an
 
admitted
 
basis
 
in
 
Georgia
 
and
Alabama and is
 
approved as
 
an eligible surplus
 
lines insurer in
 
Delaware.
 
The majority
 
of Everest
 
Security’s
business is reinsured by its parent,
 
Everest Re.
 
3
Everest
 
International
 
Assurance, Ltd.
 
(“Everest
 
Assurance”), a
 
Bermuda company
 
and a
 
direct subsidiary
 
of
Holdings is
 
registered
 
in Bermuda
 
as a
 
Class 3A
 
general business
 
insurer and
 
as a
 
Class C long-term
 
insurer.
 
Everest
 
Assurance has
 
made a one-time
 
election under
 
section 953(d)
 
of the
 
U.S. Internal
 
Revenue Code
 
to
be a U.S. income
 
tax paying
 
“Controlled Foreign
 
Corporation.”
 
By making this
 
election, Everest
 
Assurance is
authorized to write life rein
 
surance and casualty reinsurance
 
in both Bermuda and the U.S.
 
Everest
 
Premier
 
Insurance
 
Company
 
(“Everest
 
Premier”),
 
a
 
Delaware
 
insurance
 
company
 
and
 
a
 
direct
subsidiary of Everest
 
Re, is
 
licensed to write
 
property and
 
casualty insurance
 
in all 50
 
states and
 
the District
of Columbia.
 
Everest Denali Insurance
 
Company (“Everest
 
Denali”), a Delaware insurance company
 
and a direct subsidiary
of
 
Everest
 
Re,
 
is
 
licensed
 
to
 
write
 
property
 
and
 
casualty
 
insurance
 
in
 
all
 
50
 
states
 
and
 
the
 
District
 
of
Columbia.
 
Reinsurance Industry Overview.
Reinsurance
 
is
 
an
 
arrangement
 
in
 
which
 
an
 
insurance
 
company,
 
the
 
reinsurer,
 
agrees
 
to
 
indemnify
 
another
insurance
 
or
 
reinsurance
 
company,
 
the
 
ceding
 
company,
 
against
 
all
 
or
 
a
 
portion
 
of
 
the
 
insurance
 
risks
underwritten by
 
the ceding company
 
under one or
 
more insurance
 
contracts.
 
Reinsurance can
 
provide a
 
ceding
company
 
with
 
several
 
benefits,
 
including
 
a
 
reduction
 
in
 
its
 
net
 
liability
 
on
 
individual
 
risks
 
or
 
classes
 
of
 
risks,
catastrophe
 
protection from
 
large and/or
 
multiple losses
 
and/or a
 
reduction in
 
operating
 
leverage
 
as measured
by
 
the
 
ratio
 
of
 
net
 
premiums
 
and
 
reserves
 
to
 
capital.
 
Reinsurance
 
also
 
provides
 
a
 
ceding
 
company
 
with
additional
 
underwriting capacity
 
by
 
permitting
 
it to
 
accept larger
 
risks
 
and write
 
more business
 
than
 
would be
acceptable
 
relative
 
to
 
the
 
ceding
 
company’s
 
financial
 
resources.
 
Reinsurance
 
does
 
not
 
discharge
 
the
 
ceding
company from its liability to policyholders;
 
rather,
 
it reimburses the ceding company
 
for covered losses.
 
There are two basic
 
types of reinsurance
 
arrangements:
 
treaty and facultative.
 
Treaty
 
reinsurance obligates
 
the
ceding company to
 
cede and the reinsurer
 
to assume a specified
 
portion of a type or
 
category of risks
 
insured by
the
 
ceding
 
company.
 
Treaty
 
reinsurers
 
do
 
not separately
 
evaluate
 
each
 
of the
 
individual
 
risks
 
assumed
 
under
their
 
treaties,
 
instead,
 
the
 
reinsurer
 
relies
 
upon
 
the
 
pricing
 
and
 
underwriting
 
decisions
 
made
 
by
 
the
 
ceding
company.
 
In facultative
 
reinsurance, the
 
ceding company
 
cedes and the
 
reinsurer assumes
 
all or part of
 
the risk
under
 
a single
 
insurance
 
contract.
 
Facultative
 
reinsurance
 
is
 
negotiated
 
separately
 
for
 
each insurance
 
contract
that
 
is
 
reinsured.
 
Facultative
 
reinsurance,
 
when
 
purchased
 
by
 
ceding
 
companies,
 
usually
 
is
 
intended
 
to
 
cover
individual risks not
 
covered by their
 
reinsurance treaties
 
because of the dollar
 
limits involved or
 
because the risk
is unusual.
 
Both treaty and facultative
 
reinsurance can be written
 
on either a pro rata basis
 
or an excess of loss basis.
 
Under
pro
 
rata
 
reinsurance,
 
the
 
ceding
 
company
 
and
 
the
 
reinsurer
 
share
 
the
 
premiums
 
as
 
well
 
as
 
the
 
losses
 
and
expenses
 
in
 
an
 
agreed
 
proportion.
 
Under
 
excess
 
of
 
loss
 
reinsurance,
 
the
 
reinsurer
 
indemnifies
 
the
 
ceding
company against
 
all or
 
a specified
 
portion of
 
losses and
 
expenses in
 
excess of
 
a specified
 
dollar amount,
 
known
as the ceding company's
 
retention or reinsurer's
 
attachment point,
 
generally subject to a
 
negotiated reinsurance
contract limit.
 
In
 
pro
 
rata
 
reinsurance,
 
the
 
reinsurer
 
generally
 
pays
 
the
 
ceding
 
company
 
a
 
ceding
 
commission.
 
The
 
ceding
commission
 
generally
 
is
 
based
 
on
 
the
 
ceding
 
company’s
 
cost
 
of
 
acquiring
 
the
 
business
 
being
 
reinsured
(commissions,
 
premium
 
taxes,
 
assessments
 
and
 
miscellaneous
 
administrative
 
expense
 
and
 
may
 
contain
 
profit
sharing provisions, whereby
 
the ceding commission is adjusted
 
based on loss experience).
 
Premiums paid by the
ceding company
 
to a
 
reinsurer for
 
excess of
 
loss reinsurance
 
are not
 
directly proportional
 
to the
 
premiums that
the ceding
 
company
 
receives
 
because
 
the reinsurer
 
does not
 
assume a
 
proportionate
 
risk.
 
There is
 
usually
 
no
ceding commission on excess of loss
 
reinsurance.
Reinsurers
 
may purchase
 
reinsurance
 
to cover
 
their own
 
risk exposure.
 
Reinsurance
 
of a
 
reinsurer's
 
business is
called
 
a
 
retrocession.
 
Reinsurance
 
companies
 
cede risks
 
under
 
retrocessional
 
agreements
 
to
 
other reinsurers,
known as
 
retrocessionaires,
 
for reasons
 
similar to
 
those that
 
cause insurers
 
to purchase
 
reinsurance:
 
to reduce
4
net
 
liability
 
on
 
individual
 
or
 
classes
 
of
 
risks,
 
protect
 
against
 
catastrophic
 
losses,
 
stabilize
 
financial
 
ratios
 
and
obtain additional underwriting capacity.
 
Reinsurance
 
can be
 
written
 
through intermediaries,
 
generally
 
professional
 
reinsurance
 
brokers,
 
or directly
 
with
ceding companies.
 
From a
 
ceding company's
 
perspective,
 
the broker
 
and the
 
direct distribution
 
channels have
advantages
 
and disadvantages.
 
A ceding
 
company's
 
decision to
 
select one
 
distribution
 
channel over
 
the other
will be
 
influenced by
 
its perception
 
of such
 
advantages
 
and disadvantages
 
relative
 
to the
 
reinsurance
 
coverage
being placed.
Business Strategy.
The Company’s
 
business strategy
 
is to
 
sustain
 
its leadership
 
position within
 
targeted
 
reinsurance
 
and insurance
markets,
 
provide
 
effective
 
management
 
throughout
 
the
 
property
 
and
 
casualty
 
underwriting
 
cycle
 
and
 
thereby
achieve an attractive
 
return for
 
its shareholders.
 
The Company’s
 
underwriting strategies
 
seek to capitalize
 
on its
i)
 
financial
 
strength
 
and
 
capacity,
 
ii)
 
global
 
franchise,
 
iii)
 
stable
 
and
 
experienced
 
management
 
team,
 
iv)
diversified
 
product
 
and
 
distribution
 
offerings,
 
v)
 
underwriting
 
expertise
 
and
 
disciplined
 
approach,
 
vi)
 
efficient
and low-cost operating
 
structure and vii) effective
 
enterprise risk management practices.
 
The
 
Company
 
offers
 
treaty
 
and
 
facultative
 
reinsurance
 
and
 
admitted
 
and
 
non-admitted
 
insurance.
 
The
Company’s
 
products
 
include
 
the
 
full
 
range
 
of
 
property
 
and
 
casualty
 
reinsurance
 
and
 
insurance
 
coverages,
including marine, aviation,
 
surety,
 
errors and omissions
 
liability (“E&O”), directors’
 
and officers’ liability (“D&O”),
medical
 
malpractice,
 
mortgage
 
reinsurance,
 
other
 
specialty
 
lines,
 
accident
 
and
 
health
 
(“A&H”)
 
and
 
workers’
compensation.
 
The
 
Company’s
 
underwriting
 
strategies
 
emphasizes
 
underwriting
 
profitability
 
over
 
premium
 
volume.
 
Key
elements of this
 
strategy
 
include careful
 
risk selection,
 
appropriate pricing
 
through strict
 
underwriting discipline
and
 
adjustment
 
of
 
the
 
Company’s
 
business
 
mix
 
in
 
response
 
to
 
changing
 
market
 
conditions.
 
The
 
Company
focuses
 
on
 
reinsuring
 
companies
 
that
 
effectively
 
manage
 
the
 
underwriting
 
cycle
 
through
 
proper
 
analysis
 
and
appropriate pricing
 
of underlying risks
 
and whose underwriting
 
guidelines and performance
 
are compatible
 
with
its objectives.
 
The Company’s
 
underwriting strategies
 
emphasize flexibility
 
and responsiveness
 
to changing
 
market conditions.
 
The
 
Company
 
believes
 
that
 
its
 
existing
 
strengths,
 
including
 
its
 
broad
 
underwriting
 
expertise,
 
global
 
presence,
strong financial ratings and
 
substantial capital, facilitate
 
adjustments to its mix of business geographically,
 
by line
of
 
business
 
and
 
by
 
type
 
of
 
coverage,
 
allowing
 
it
 
to
 
fully
 
participate
 
in
 
market
 
opportunities
 
that
 
provide
 
the
greatest
 
potential
 
for
 
underwriting
 
profitability.
 
The
 
Company’s
 
insurance
 
operations
 
complement
 
these
strategies by
 
accessing business that
 
is not available
 
on a reinsurance
 
basis.
 
The Company carefully
 
monitors its
mix of business across all operations
 
to avoid unacceptable geographic
 
or other risk concentrations.
 
Marketing.
The Company
 
writes business
 
on a
 
worldwide basis
 
for many
 
different
 
customers
 
and lines
 
of business,
 
thereby
obtaining
 
a
 
broad
 
spread
 
of
 
risk.
 
The
 
Company
 
is
 
not
 
substantially
 
dependent
 
on
 
any
 
single
 
customer,
 
small
group of customers,
 
line of business
 
or geographic area.
 
For the 2022
 
calendar year,
 
no single customer
 
(ceding
company
 
or
 
insured)
 
generated
 
more
 
than
 
3.7%
 
of
 
the
 
Company’s
 
gross
 
written
 
premiums.
 
The
 
Company
believes
 
that
 
a
 
reduction
 
of
 
business
 
from
 
any
 
one
 
customer
 
would
 
not
 
have
 
a
 
material
 
adverse
 
effect
 
on
 
its
future financial condition or results of operations.
Approximately
 
60.2%,
 
33.2%
 
and
 
6.6%
 
of
 
the
 
Company’s
 
2022
 
gross
 
written
 
premiums
 
were
 
written
 
in
 
the
broker reinsurance,
 
insurance and direct reinsurance
 
markets, respectively.
 
The broker
 
reinsurance
 
market
 
consists
 
of several
 
substantial
 
national
 
and international
 
brokers
 
and a
 
number
of
 
smaller
 
specialized
 
brokers.
 
Brokers
 
do
 
not
 
have
 
the
 
authority
 
to
 
bind
 
the
 
Company
 
with
 
respect
 
to
reinsurance
 
agreements,
 
nor
 
does
 
the
 
Company
 
commit
 
in
 
advance
 
to
 
accept
 
any
 
portion
 
of
 
a
 
broker’s
submitted
 
business.
 
Reinsurance
 
business
 
from
 
any
 
ceding
 
company,
 
whether
 
new
 
or
 
renewal
 
is
 
subject
 
to
5
acceptance
 
by
 
the
 
Company.
 
Brokerage
 
fees
 
are
 
generally
 
paid
 
by
 
reinsurers.
 
The
 
Company’s
 
ten
 
largest
brokers
 
accounted
 
for
 
an
 
aggregate
 
of
 
approximately
 
52.7%
 
of
 
gross
 
written
 
premiums
 
in
 
2022.
 
The
 
largest
broker,
 
Marsh
 
and
 
McLennan,
 
accounted
 
for
 
approximately
 
20.0%
 
of
 
gross
 
written
 
premiums.
 
The
 
second
largest broker,
 
Aon, accounted
 
for approximately
 
16.6% of gross
 
written premiums.
 
The Company
 
believes that
a reduction of business assumed from any one
 
broker would not have
 
a material adverse effect
 
on the Company.
 
The
 
direct
 
reinsurance
 
market
 
is
 
an
 
important
 
distribution
 
channel
 
for
 
reinsurance
 
business
 
written
 
by
 
the
Company.
 
Direct
 
placement
 
of
 
reinsurance
 
enables
 
the
 
Company
 
to
 
access
 
clients
 
who
 
prefer
 
to
 
place
 
their
reinsurance directly
 
with reinsurers
 
based upon the
 
reinsurer’s in-depth
 
understanding of
 
the ceding company’s
needs.
The
 
Company’s
 
insurance
 
business
 
mainly
 
writes
 
commercial
 
property
 
and
 
casualty
 
on
 
an
 
admitted
 
and
 
non-
admitted basis.
 
The business
 
is written
 
through wholesale
 
and retail
 
brokers,
 
surplus lines
 
brokers
 
and through
program
 
administrators.
 
In
 
2022,
 
two
 
program
 
administrators
 
accounted
 
for
 
approximately
 
12%
 
of
 
the
Company’s
 
gross
 
written
 
premium
 
in
 
total
 
and
 
included
 
multiple
 
independent
 
programs
 
for
 
each
 
program
administrator with the largest
 
representing 2% of the overall
 
gross written premium.
 
The
 
Company
 
continually
 
evaluates
 
each
 
business
 
relationship,
 
including
 
the
 
underwriting
 
expertise
 
and
experience
 
brought
 
to
 
bear
 
through
 
the
 
involved
 
distribution
 
channel,
 
performs
 
analyses
 
to
 
evaluate
 
financial
security, monitors
 
performance and adjusts underwriting decisions accordingly.
 
Segment Results.
 
The
 
Company
 
manages
 
its
 
reinsurance
 
and
 
insurance
 
operations
 
as
 
autonomous
 
units
 
and
 
key
 
strategic
decisions are based on the aggregate operating
 
results and projections for
 
these segments of business.
 
The Reinsurance
 
operation
 
writes worldwide
 
property
 
and casualty
 
reinsurance
 
and specialty
 
lines of
 
business,
on both
 
a treaty
 
and facultative
 
basis,
 
through
 
reinsurance
 
brokers,
 
as well
 
as directly
 
with ceding
 
companies.
 
Business is
 
written in
 
the U.S.,
 
Bermuda, and
 
Ireland offices,
 
as well as,
 
through branches
 
in Canada,
 
Singapore,
the United
 
Kingdom
 
and Switzerland.
 
The Insurance
 
operation
 
writes property
 
and casualty
 
insurance
 
directly
and
 
through
 
brokers,
 
surplus
 
lines
 
brokers
 
and
 
general
 
agents
 
within
 
the
 
U.S.,
 
Bermuda,
 
Canada,
 
Europe,
Singapore
 
and South
 
America through
 
its offices
 
in the
 
U.S.,
 
Canada, Chile,
 
Singapore,
 
United Kingdom,
 
Ireland
and branches in the Netherlands,
 
France, Germany and Spain.
 
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
 
selected
 
financial
 
information
 
regarding
 
these
 
segments,
 
see
 
ITEM
 
8,
 
“Financial
 
Statements
 
and
Supplementary
 
Data”
 
-
 
Note
 
17
 
of
 
Notes
 
to
 
Consolidated
 
Financial
 
Statements
 
and
 
ITEM
 
7,
 
“Management’s
Discussion and Analysis of Financial Condition and Results
 
of Operation - Segment Results”.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
6
Underwriting Operations.
The following five year
 
table presents the distribution
 
of the Company’s
 
gross written premiums
 
by its segments:
 
Reinsurance
 
and
 
Insurance.
 
The
 
premiums
 
for
 
each
 
segment
 
are
 
further
 
split
 
between
 
property
 
and
 
casualty
business and, for reinsurance business,
 
between pro rata or excess
 
of loss business:
 
Gross Written Premiums by Segment
Years Ended December 31,
(Dollars in millions)
2022
2021
2020
2019
2018
Reinsurance
Property Pro Rata (1)
$
2,606
28.0%
$
2,843
31.4%
$
2,397
32.9%
$
1,974
31.1%
$
2,147
34.5%
Property Non-Catastrophe XOL
574
6.2%
625
6.9%
508
7.0%
443
7.0%
398
6.4%
Property Catastrophe XOL
1,422
15.3%
1,468
16.2%
1,277
17.5%
1,187
18.6%
1,313
21.1%
Casualty Pro Rata
2,654
28.5%
2,251
24.8%
1,527
21.0%
1,443
22.7%
1,172
18.8%
Casualty XOL
1,321
14.2%
1,267
14.0%
948
13.0%
730
11.5%
574
9.2%
Financial Lines
740
7.9%
612
6.8%
625
8.6%
578
9.1%
620
10.0%
Reinsurance Total (2)
$
9,316
100.0%
$
9,067
100.0%
$
7,282
100.0%
$
6,356
100.0%
$
6,225
100.0%
Insurance (3)
Accident and Health
$
501
10.8%
$
418
10.5%
$
370
11.6%
$
337
12.1%
$
286
12.7%
Specialty Casualty
1,622
35.0%
1,360
34.0%
1,005
31.4%
798
28.4%
588
25.9%
Other Specialty
324
7.0%
233
5.9%
169
5.3%
134
4.8%
94
4.2%
Professional Liability
821
17.7%
781
19.7%
542
16.9%
409
15.0%
304
13.8%
Property/Short Tail
855
18.4%
717
18.0%
605
18.9%
531
19.1%
447
19.9%
Workers' Compensation
513
11.1%
473
11.9%
510
15.9%
569
20.5%
531
23.6%
Insurance Total (2)
4,636
100.0%
3,982
100.0%
3,201
100.0%
2,778
100.0%
2,251
100.0%
Total Company (2)
$
13,952
100.0%
$
13,050
100.0%
$
10,482
100.0%
$
9,133
100.0%
$
8,475
100.0%
__________________
(1)
 
For purposes of the presentation above, pro rata includes all insurance and reinsurance
 
attaching to the first dollar of loss incurred by the ceding company.
(2)
 
Certain totals and subtotals may not reconcile due to rounding.
(3)
 
Certain reclassifications have been made to prior years’ amounts to conform to the 2022 presentation
(Some amounts may not reconcile due to rounding.)
Reinsurance
 
Segment.
 
In
 
2022,
 
the
 
Company’s
 
Reinsurance
 
segment
 
wrote
 
$9.3
 
billion
 
of
 
gross
 
written
premiums.
 
Reinsurance
 
business
 
written
 
directly
 
through
 
the
 
Company’s
 
offices
 
represented
 
$8.4
 
billion
 
or
90.2% of the segment’s premium and
 
$914 million or 9.8% was written directly with
 
ceding companies.
 
Property
 
Pro
 
Rata
 
business,
 
which
 
accounted
 
for
 
28.0%
 
of
 
reinsurance
 
gross
 
written
 
premiums,
 
contains
predominantly
 
contracts
 
providing
 
coverage
 
to
 
cedents
 
for
 
property
 
damage
 
and
 
related
 
losses,
 
which
 
may
include business
 
interruption
 
and other
 
non-property
 
losses, resulting
 
from natural
 
or man-made
 
perils arising
from their underlying portfolio of policies at an
 
agreed upon percentage for both
 
premium and loss.
 
Property
 
Non-Catastrophe
 
Excess
 
of
 
Loss
 
(“XOL”)
 
business,
 
which
 
accounted
 
for
 
6.2%
 
of
 
reinsurance
 
gross
written
 
premiums,
 
contains
 
predominantly
 
contracts
 
providing
 
coverage
 
to
 
cedents
 
for
 
a
 
portion
 
of
 
property
damage
 
and
 
related
 
losses,
 
which
 
may
 
include
 
business
 
interruption
 
and
 
other
 
non-property
 
losses,
 
resulting
from natural or man-made perils in excess
 
of an agreed upon deductible up to a stated
 
limit.
Property Catastrophe
 
XOL business, which
 
accounted for
 
15.3% of reinsurance
 
gross written
 
premiums, contains
predominantly
 
contracts
 
providing
 
coverage
 
to
 
cedents
 
for
 
a
 
portion
 
of
 
property
 
damage
 
and
 
related
 
losses,
which
 
may
 
include
 
business
 
interruption
 
and
 
other
 
non-property
 
losses,
 
resulting
 
from
 
catastrophic
 
losses,
 
in
excess of an agreed upon deductible
 
up to a stated limit.
 
The main perils covered include hurricane,
 
earthquake,
flood, convective storm and
 
fire.
Casualty
 
Pro
 
Rata
 
business,
 
which
 
accounted
 
for
 
28.5%
 
of
 
reinsurance
 
gross
 
written
 
premiums,
 
contains
predominantly
 
contracts
 
providing
 
coverage
 
to
 
cedents
 
for
 
losses
 
arising
 
from,
 
but
 
not
 
limited
 
to,
 
general
liability,
 
professional
 
indemnity,
 
product
 
liability,
 
workers'
 
compensation,
 
employers
 
liability,
 
aviation
 
and auto
liability from their underlying portfolio of policies
 
at an agreed upon percentage
 
for both premium and loss.
 
 
 
7
Casualty
 
XOL
 
business,
 
which
 
accounted
 
for
 
14.2%
 
of
 
reinsurance
 
gross
 
written
 
premiums,
 
contains
predominantly
 
contracts
 
providing
 
coverage
 
to
 
cedents
 
for
 
losses
 
arising
 
from,
 
but
 
not
 
limited
 
to,
 
general
liability,
 
professional
 
indemnity,
 
product
 
liability,
 
workers'
 
compensation,
 
aviation
 
and auto
 
liability
 
from
 
their
underlying portfolio of policies in excess
 
of an agreed upon deductible up to a stated
 
limit.
 
Financial
 
Lines
 
business,
 
which
 
accounted
 
for
 
7.9%
 
of
 
reinsurance
 
gross
 
written
 
premiums,
 
contains
predominantly
 
contracts
 
providing
 
coverage
 
to
 
cedents
 
for
 
losses
 
arising
 
from
 
political
 
risk,
 
credit,
 
surety,
mortgage and alternative risk lines of business
 
on both a pro rata and excess
 
of loss basis.
Insurance Segment.
 
In 2022, the Company’s Insurance
 
segment wrote $4.6 billion of gross written
 
premiums.
Accident
 
and
 
Health
 
business,
 
which
 
accounted
 
for
 
10.8%
 
of
 
Insurance
 
gross
 
written
 
premiums,
 
contains
Predominantly
 
includes
 
policies
 
covering
 
Participant
 
Accident,
 
Short-Term
 
Medical,
 
and
 
Medical
 
Stop-Loss
protection for employers
 
with Self-funded medical plans.
Specialty
 
Casualty
 
business,
 
which
 
accounted
 
for
 
35.0%
 
of
 
Insurance
 
gross
 
written
 
premiums,
 
predominantly
includes
 
policies
 
covering
 
General
 
Liability
 
(Premises/Operations
 
and
 
Products),
 
Auto
 
Liability,
 
and
Umbrella/Excess Liability.
Other
 
Specialty
 
business,
 
which
 
accounted
 
for
 
7.0%
 
of
 
Insurance
 
gross
 
written
 
premiums,
 
predominantly
includes
 
policies
 
covering
 
specialty
 
areas
 
including
 
but
 
not
 
limited
 
to
 
Surety,
 
Trade
 
Credit
 
&
 
Political
 
Risk,
Transactional
 
Liability, Energy
 
& Construction, and Aviation.
Professional
 
Liability business,
 
which accounted
 
for 17.7%
 
of Insurance
 
gross written
 
premiums,
 
predominantly
includes
 
policies
 
covering
 
Directors
 
&
 
Officers
 
Liability,
 
Errors
 
&
 
Omissions,
 
Cyber
 
Liability,
 
and
 
other
 
ancillary
financial lines products.
Property/Short-Tail
 
business,
 
which
 
accounted
 
for
 
18.4%
 
of
 
Insurance
 
gross
 
written
 
premiums,
 
predominantly
includes policies covering Property,
 
Inland Marine, and other short-tail lines.
Workers’
 
Compensation
 
business,
 
which
 
accounted
 
for
 
11.1%
 
of
 
Insurance
 
gross
 
written
 
premiums,
predominantly
 
includes
 
policies
 
covering
 
Workers
 
Compensation
 
including
 
both
 
guaranteed
 
cost
 
and
 
loss
sensitive product offerings.
Geographic Areas.
 
The Company
 
conducts its
 
business in
 
Bermuda, the
 
U.S. and
 
a number
 
of foreign
 
countries.
 
For
 
select financial
 
information
 
about
 
geographic
 
areas,
 
see ITEM
 
8, “Financial
 
Statements
 
and Supplementary
Data” -
 
Note 17 of Notes
 
to the Consolidated
 
Financial Statements.
 
Risks attendant
 
to the foreign
 
operations of
the
 
Company
 
parallel
 
those
 
attendant
 
to
 
the
 
U.S.
 
operations
 
of
 
the
 
Company,
 
with
 
the
 
primary
 
exception
 
of
foreign
 
exchange
 
risks.
 
For
 
more
 
information
 
about
 
the
 
risks,
 
see
 
ITEM
 
7,
 
“Management’s
 
Discussion
 
and
Analysis of Financial Condition and Results of Operations
 
– Safe Harbor Disclosure”.
 
Underwriting.
One of the
 
Company’s strategies
 
is to "lead"
 
as many
 
of the reinsurance
 
treaties it
 
underwrites as possible.
 
The
lead
 
reinsurer
 
on
 
a
 
treaty
 
generally
 
accepts
 
one
 
of
 
the
 
largest
 
percentage
 
shares
 
of
 
the
 
treaty
 
and
 
is
 
in
 
the
strongest
 
position to
 
negotiate price,
 
terms and
 
conditions.
 
The Company
 
leads on approximately
 
two-thirds of
its
 
treaty
 
reinsurance
 
business
 
as
 
measured
 
by
 
premium.
 
Management
 
believes
 
this
 
strategy
 
enables
 
it
 
to
obtain
 
more favorable
 
terms and
 
conditions on
 
the treaties
 
on which
 
it participates.
 
When the
 
Company does
not
 
lead
 
the
 
treaty,
 
it
 
may
 
still
 
suggest
 
changes
 
to
 
any
 
aspect
 
of
 
the
 
treaty.
 
The
 
Company
 
may
 
decline
 
to
participate on a treaty based upon
 
its assessment of all relevant factors.
The
 
Company’s
 
treaty
 
underwriting
 
process
 
involves
 
a
 
team
 
approach
 
among
 
the
 
Company’s
 
underwriters,
actuaries,
 
modelling
 
and
 
claim
 
staff.
 
Treaties
 
are
 
reviewed
 
for
 
compliance
 
with
 
the
 
Company’s
 
general
underwriting
 
standards
 
and
 
most
 
larger
 
treaties
 
are
 
subjected
 
to
 
detailed
 
actuarial
 
analysis.
 
The
 
actuarial
 
8
models
 
used
 
in
 
such
 
analyses
 
are
 
tailored
 
in
 
each
 
case
 
to
 
the
 
subject
 
exposures
 
and
 
loss
 
experience.
 
The
Company
 
does
 
not
 
separately
 
evaluate
 
each
 
of
 
the
 
individual
 
risks
 
assumed
 
under
 
its
 
treaties.
 
The
 
Company
does,
 
however,
 
evaluate
 
the
 
underwriting
 
guidelines,
 
data
 
and
 
other
 
information
 
of
 
its
 
ceding
 
companies
 
to
determine
 
their
 
adequacy
 
prior
 
to
 
entering
 
into
 
a
 
treaty.
 
The
 
Company
 
may
 
also
 
conduct
 
underwriting,
operational
 
and
 
claim
 
audits
 
at
 
the
 
offices
 
of
 
ceding
 
companies
 
to
 
monitor
 
adherence
 
to
 
underwriting
guidelines.
 
Underwriting audits focus
 
on the quality of
 
the underwriting staff,
 
pricing and risk
 
selection and rate
monitoring over
 
time.
 
Claim audits
 
may be
 
performed in
 
order to
 
evaluate
 
the client’s
 
claims handling
 
abilities
and practices.
The Company’s
 
facultative underwriters
 
operate within guidelines
 
specifying acceptable types
 
of risks, limits and
maximum
 
risk
 
exposures.
 
Specified
 
classes
 
of
 
large
 
premium
 
U.S.
 
risks
 
are
 
referred
 
to
 
Everest
 
Re’s
 
New
 
York
facultative
 
headquarters
 
for
 
specific
 
review
 
before
 
premium
 
quotations
 
are
 
given
 
to
 
clients.
 
In
 
addition,
 
the
Company’s guidelines
 
require certain
 
types of risks
 
to be submitted
 
for review
 
because of their
 
aggregate limits,
complexity
 
or
 
volatility,
 
regardless
 
of
 
premium
 
amount
 
on
 
the
 
underlying
 
contract.
 
Non-U.S.
 
risks
 
exhibiting
similar characteristics are reviewed
 
by senior managers within the involved
 
operations.
In
 
addition
 
to
 
its
 
own
 
underwriting
 
staff,
 
the
 
Company’s
 
insurance
 
operations
 
write
 
property
 
and
 
casualty
coverages for
 
homogeneous risks
 
through select program
 
managers.
 
These programs
 
are evaluated
 
based upon
actuarial
 
analysis
 
and
 
the
 
program
 
manager’s
 
capabilities.
 
The
 
Company’s
 
rates,
 
forms
 
and
 
underwriting
guidelines
 
are
 
tailored
 
to
 
specific
 
risk
 
types.
 
The
 
Company’s
 
underwriting,
 
actuarial,
 
claim
 
and
 
financial
functions
 
work
 
closely
 
with
 
its
 
program
 
managers
 
to
 
establish
 
appropriate
 
underwriting
 
and
 
processing
guidelines as well as appropriate performance
 
monitoring mechanisms.
 
Risk Management of Underwriting and Reinsurance
 
Arrangements
Underwriting Risk
 
and Accumulation
 
Controls.
 
Each segment
 
and business
 
unit manages
 
its underwriting
 
risk in
accordance with
 
established guidelines.
 
These guidelines
 
place dollar
 
limits on
 
the amount
 
of business
 
that can
be
 
written
 
based
 
on
 
a
 
variety
 
of
 
factors,
 
including
 
(re)insured
 
company
 
profile,
 
line
 
of
 
business,
 
geographic
location
 
and risk
 
hazards.
 
In each
 
case,
 
the guidelines
 
permit limited
 
exceptions,
 
which
 
must
 
be authorized
 
by
the Company’s
 
senior management.
 
Management regularly
 
reviews and
 
revises these
 
guidelines in
 
response to
changes
 
in
 
business
 
unit
 
product
 
offerings,
 
market
 
conditions,
 
risk
 
versus
 
reward
 
analyses
 
and
 
the
 
Company’s
enterprise and underwriting risk management processes.
 
The operating results and financial condition
 
of the Company can be adversely
 
affected by catastrophe
 
and other
large losses. The Company manages its
 
exposure to catastrophes
 
and other large losses by:
 
selective underwriting practices;
diversifying its risk portfolio by geographic
 
area and by types and classes of business;
limiting its aggregate catastrophe
 
loss exposure in any particular geographic
 
zone and contiguous zones;
purchasing
 
reinsurance
 
and/or
 
retrocessional
 
protection
 
to
 
the
 
extent
 
that
 
such
 
coverage
 
can
 
be
 
secured
cost-effectively.
 
See “Reinsurance and Retrocession
 
Arrangements”.
 
Like other
 
insurance
 
and reinsurance
 
companies, the
 
Company is
 
exposed to
 
multiple insured
 
losses arising
 
out
of a single occurrence, whether a natural
 
event, such as a hurricane or an earthquake,
 
or other catastrophe, such
as
 
an
 
explosion
 
at
 
a
 
major
 
factory.
 
A
 
large
 
catastrophic
 
event
 
can
 
be
 
expected
 
to
 
generate
 
insured
 
losses
 
to
multiple
 
reinsurance
 
treaties,
 
facultative
 
certificates
 
and
 
direct
 
insurance
 
policies
 
across
 
various
 
lines
 
of
business.
 
The Company focuses
 
on potential losses
 
that could result
 
from any single
 
event or series
 
of events as
 
part of its
evaluation and
 
monitoring of its aggregate
 
exposures to
 
catastrophic events.
 
Accordingly,
 
the Company employs
9
various techniques to
 
estimate the amount of
 
loss it could sustain
 
from any single catastrophic
 
event or series of
events
 
in
 
various
 
geographic
 
areas.
 
These
 
techniques
 
range
 
from
 
deterministic
 
approaches,
 
such
 
as
 
tracking
aggregate
 
limits
 
exposed
 
in
 
catastrophe-prone
 
zones
 
and
 
applying
 
reasonable
 
damage
 
factors,
 
to
 
modeled
approaches
 
that
 
attempt
 
to
 
scientifically
 
measure
 
catastrophe
 
loss
 
exposure
 
using
 
sophisticated
 
Monte
 
Carlo
simulation techniques that forecast
 
frequency and severity of potential losses
 
on a probabilistic basis.
 
No single computer
 
model, or
 
group of
 
models, is currently
 
capable of
 
projecting the
 
amount and
 
probability of
loss in
 
all global
 
geographic regions
 
in which
 
the Company
 
conducts business.
 
In addition,
 
the form,
 
quality and
granularity
 
of
 
underwriting
 
exposure
 
data
 
furnished
 
by
 
(re)insureds
 
is
 
not
 
uniformly
 
compatible
 
with
 
the
 
data
requirements
 
for
 
the
 
Company’s
 
licensed
 
models,
 
which adds
 
to
 
the inherent
 
imprecision
 
in the
 
potential
 
loss
projections.
 
Further,
 
the
 
results
 
from
 
multiple
 
models
 
and
 
analytical
 
methods
 
must
 
be
 
combined
 
to
 
estimate
potential losses
 
by and across
 
business units.
 
Also, while most
 
models have been
 
updated to incorporate
 
claims
information
 
from
 
recent
 
catastrophic
 
events,
 
catastrophe
 
model
 
projections
 
are
 
still
 
inherently
 
imprecise.
 
In
addition, uncertainties
 
with respect
 
to future
 
climatic patterns
 
and cycles
 
could add
 
further uncertainty
 
to loss
projections from models based on historical
 
data.
 
Nevertheless,
 
when combined
 
with traditional
 
risk management
 
techniques
 
and sound
 
underwriting judgment,
catastrophe
 
models
 
are
 
a
 
useful
 
tool
 
for
 
underwriters
 
to
 
price
 
catastrophe
 
exposed
 
risks
 
and
 
for
 
providing
management with
 
quantitative
 
analyses with
 
which to monitor
 
and manage
 
catastrophic
 
risk exposures
 
by zone
and across zones for individual and
 
multiple events.
Projected
 
catastrophe
 
losses
 
are
 
generally
 
summarized
 
in
 
terms
 
of
 
the
 
probable
 
maximum
 
loss
 
(“PML”).
 
The
Company
 
defines
 
PML
 
as its
 
anticipated
 
loss,
 
taking
 
into
 
account
 
contract
 
terms
 
and limits,
 
caused
 
by
 
a single
catastrophe
 
affecting
 
a
 
broad
 
contiguous
 
geographic
 
area,
 
such
 
as
 
that
 
caused
 
by
 
a
 
hurricane
 
or
 
earthquake.
 
The
 
PML
 
will
 
vary
 
depending
 
upon
 
the
 
modeled
 
simulated
 
losses
 
and
 
the
 
make-up
 
of
 
the
 
in
 
force
 
book
 
of
business.
 
The projected severity levels are
 
described in terms of “return periods”,
 
such as “100-year events” and
“250-year
 
events”.
 
For
 
example,
 
a 100-year
 
PML is
 
the estimated
 
loss
 
to
 
the current
 
in-force
 
portfolio
 
from
 
a
single
 
event
 
which
 
has
 
a
 
1%
 
probability
 
of
 
being
 
exceeded
 
in
 
a
 
twelve
 
month
 
period.
 
In
 
other
 
words,
 
it
corresponds
 
to
 
a
 
99%
 
probability
 
that
 
the
 
loss
 
from
 
a
 
single
 
event
 
will
 
fall
 
below
 
the
 
indicated
 
PML.
 
It
 
is
important
 
to note
 
that PMLs
 
are estimates.
 
Modeled events
 
are hypothetical
 
events
 
produced
 
by a
 
stochastic
model.
 
As a
 
result,
 
there
 
can
 
be no
 
assurance
 
that
 
any
 
actual event
 
will align
 
with the
 
modeled event
 
or that
actual losses from events similar to the
 
modeled events will not vary materially
 
from the modeled event PML.
From
 
an
 
enterprise
 
risk
 
management
 
perspective,
 
management
 
sets
 
limits
 
on
 
the
 
levels
 
of
 
catastrophe
 
loss
exposure
 
the
 
Company
 
may
 
underwrite.
 
The
 
limits
 
are
 
revised
 
periodically
 
based
 
on
 
a
 
variety
 
of
 
factors,
including but
 
not limited
 
to the
 
Company’s
 
financial resources
 
and expected
 
earnings and
 
risk/reward
 
analyses
of the business being underwritten.
The
 
Company
 
may
 
purchase
 
reinsurance
 
to
 
cover
 
specific
 
business
 
written
 
or
 
the
 
potential
 
accumulation
 
or
aggregation
 
of exposures
 
across some
 
or all
 
of its
 
operations.
 
Reinsurance
 
purchasing
 
decisions consider
 
both
the
 
potential
 
coverage
 
and
 
market
 
conditions
 
including
 
the
 
pricing,
 
terms,
 
conditions,
 
availability
 
and
collectability
 
of
 
coverage,
 
with
 
the
 
aim
 
of
 
securing
 
cost
 
effective
 
protection
 
from
 
financially
 
secure
counterparties. The
 
amount of reinsurance
 
purchased has
 
varied over
 
time, reflecting
 
the Company’s
 
view of its
exposures and the cost of reinsurance.
Management
 
estimates
 
that
 
the
 
projected
 
net
 
economic
 
loss
 
from
 
its
 
largest
 
100-year
 
event
 
in
 
a
 
given
 
zone
represents
 
approximately
 
6.9%
 
of
 
its
 
December
 
31,
 
2022
 
shareholders’
 
equity.
 
Economic
 
loss
 
is
 
the
 
PML
exposure,
 
net
 
of
 
third
 
party
 
reinsurance
 
including
 
catastrophe
 
industry
 
loss
 
warranty
 
cover,
 
reduced
 
by
estimated reinstatement
 
premiums to renew coverage
 
and estimated income
 
taxes.
 
The impact of income taxes
on the PML depends
 
on the distribution
 
of the losses
 
by corporate
 
entity,
 
which is also
 
affected by
 
inter-affiliate
reinsurance.
 
Management
 
also
 
monitors
 
and
 
controls
 
its
 
largest
 
PMLs
 
at
 
multiple
 
points
 
along
 
the
 
loss
distribution
 
curve,
 
such
 
as
 
loss
 
amounts
 
at
 
the
 
20,
 
50,
 
100,
 
250
 
and
 
500
 
year
 
return
 
periods.
 
This
 
process
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
10
enables
 
management
 
to
 
identify
 
and
 
control
 
exposure
 
accumulations
 
and
 
to
 
integrate
 
such
 
exposures
 
into
enterprise risk, underwriting and capital management
 
decisions.
 
The Company’s
 
catastrophe
 
loss
 
projections,
 
segmented
 
by
 
risk
 
zones,
 
are
 
updated
 
quarterly
 
and
 
reviewed
 
as
part of a formal
 
risk management review
 
process.
 
The table below reflects
 
the Company’s
 
PML exposure, net
 
of
third
 
party reinsurance
 
including catas
 
trophe
 
industry
 
loss warranty
 
cover,
 
at various
 
return
 
periods for
 
its top
four
 
zones/perils
 
(as
 
ranked
 
by
 
the
 
largest
 
1
 
in
 
100
 
year
 
economic
 
loss)
 
based
 
on
 
loss
 
projection
 
data
 
as
 
of
January 1, 2023:
Return Periods (in years)
1 in 20
1 in 50
1 in 100
1 in 250
1 in 500
Exceeding Probability
5.0%
2.0%
1.0%
0.4%
0.2%
(Dollars in millions)
Zone/ Peril
California, Earthquake
$
143
$
619
$
842
$
1,326
$
1,762
Southeast U.S., Wind
486
677
878
1,094
1,224
Europe, Wind
176
388
585
855
979
Texas Wind
126
360
545
844
1,096
The
 
projected
 
net
 
economic
 
losses,
defined
 
as
 
PML
 
exposures,
 
net
 
of
 
third
 
party
 
reinsurance
 
including
catastrophe
 
industry loss warranty
 
cover,
 
reinstatement
 
premiums and estimated
 
income taxes,
 
for the top
 
four
zones/perils scheduled above are as follows
 
:
Return Periods (in years)
1 in 20
1 in 50
1 in 100
1 in 250
1 in 500
Exceeding Probability
5.0%
2.0%
1.0%
0.4%
0.2%
(Dollars in millions)
Zone/ Peril
California, Earthquake
$
114
$
440
$
580
$
846
$
1,242
Southeast U.S., Wind
302
423
515
643
764
Europe, Wind
138
286
423
620
708
Texas
 
Wind
94
250
368
486
663
The Company believes
 
that its methods
 
of monitoring, analyzing
 
and managing catastrophe
 
exposures provide
 
a
credible risk management framework,
 
which is integrated
 
with its enterprise risk management,
 
underwriting and
capital
 
management
 
plans.
 
However,
 
there
 
is
 
much
 
uncertainty
 
and
 
imprecision
 
inherent
 
in
 
the
 
catastrophe
models and
 
the catastrophe
 
loss estimation
 
process
 
generally.
 
As a
 
result,
 
there can
 
be no
 
assurance
 
that the
Company
 
will
 
not
 
experience
 
losses
 
from
 
individual
 
events
 
that
 
exceed
 
the
 
PML
 
or
 
other
 
return
 
period
projections,
 
perhaps
 
by a
 
material amount.
 
Nor can
 
there
 
be assurance
 
that the
 
Company
 
will not
 
experience
events impacting
 
multiple zones,
 
or multiple
 
severe
 
events that
 
could, in
 
the aggregate,
 
exceed
 
the Company’s
PML expectations by a significant
 
amount.
 
Terrorism
 
Risk.
While
 
the
 
Company
 
writes some
 
reinsurance
 
contracts
 
covering
 
terrorism,
 
the Company’s
 
risk
management
 
philosophy
 
is
 
to
 
limit
 
the
 
amount
 
of
 
exposure
 
by
 
geographic
 
region,
 
and
 
to
 
strictly
 
manage
coverage for
 
properties in
 
areas that
 
may be considered
 
a target
 
for terrorists.
 
Providing terrorism
 
coverage on
reinsurance
 
contracts
 
is negotiable,
 
and many,
 
but not
 
all, treaties
 
contain
 
exclusions
 
which limit
 
much of
 
this
risk.
 
While many
 
property insurance
 
policies are required
 
to offer
 
coverage
 
for terrorism,
 
this coverage
 
is often
not
 
purchased.
 
However,
 
terrorism
 
is
 
typically
 
covered
 
by
 
worker
 
compensation
 
policies.
 
As
 
a
 
result,
 
the
Company
 
is
 
exposed
 
to
 
losses
 
from
 
terrorism
 
on
 
both
 
its
 
reinsurance
 
and
 
its
 
insurance
 
book
 
of
 
business,
particularly
 
its workers’
 
compensation
 
and property
 
policies.
 
However,
 
the
 
insurance
 
book
 
generally
 
does
 
not
insure large corporations
 
or corporate locations that
 
represent large concentrations
 
of risk.
 
The
 
U.S.
 
Terrorism
 
Risk
 
Insurance
 
Program
 
Reauthorization
 
Act
 
of
 
2019
 
provides
 
some
 
protection
 
to
 
the
insurance
 
book of
 
business.
 
It also
 
provides
 
indirect protection
 
to exposed
 
reinsurance
 
treaties.
 
However,
 
the
 
11
Company
 
is
 
still
 
exposed
 
to
 
risk
 
of
 
loss
 
from
 
terrorism
 
due
 
to
 
deductibles,
 
co-pays
 
and
 
uncovered
 
lines
 
of
business.
 
Reinsurance and Retrocession
 
Arrangements.
 
The Company may purchase reinsurance
 
to cover specific business
written
 
or
 
the
 
potential
 
accumulation
 
or
 
aggregation
 
of
 
exposures
 
across
 
some
 
or
 
all
 
of
 
its
 
operations.
 
Reinsurance
 
purchasing
 
decisions
 
consider
 
both
 
the
 
potential
 
coverage
 
and
 
market
 
conditions
 
including
 
the
pricing,
 
terms,
 
conditions
 
and
 
availability
 
of
 
coverage,
 
with
 
the
 
aim
 
of securing
 
cost
 
effective
 
protection.
 
The
amount of
 
reinsurance
 
purchased
 
has varied
 
over time,
 
reflecting the
 
Company’s
 
view of
 
its exposures
 
and the
cost
 
of reinsurance.
 
In recent
 
years,
 
the Company
 
has increased
 
its use
 
of reinsurance
 
offered
 
through
 
capital
market facilities.
 
The
 
Company
 
participates
 
in
 
“common
 
account”
 
retrocessional
 
arrangements
 
for
 
certain
 
reinsurance
 
treaties
whereby a
 
ceding company
 
purchases reinsurance
 
for the
 
benefit of
 
itself and
 
its reinsurers
 
under one
 
or more
of
 
its
 
reinsurance
 
treaties.
 
Common
 
account
 
retrocessional
 
arrangements
 
reduce
 
the
 
effect
 
of
 
individual
 
or
aggregate
 
losses
 
to
 
all
 
participating
 
companies,
 
including
 
the
 
ceding
 
company,
 
with
 
respect
 
to
 
the
 
involved
treaties.
All
 
of
 
the
 
Company’s
 
reinsurance
 
and
 
retrocessional
 
agreements
 
transfer
 
significant
 
reinsurance
 
risk
 
and
therefore,
 
are
 
accounted
 
for
 
as
 
reinsurance
 
in
 
accordance
 
with
 
the
 
Financial
 
Accounting
 
Standards
 
Board
(“FASB”) guidance.
 
At December
 
31, 2022,
 
the Company
 
had $2.2
 
billion in
 
reinsurance recoverables
 
with respect
 
to both
 
paid and
unpaid losses
 
ceded.
 
Of this
 
amount $520
 
million, or
 
23.2%, was
 
recoverable
 
from Mt.
 
Logan Re
 
collateralized
segregated
 
accounts;
 
$283 million,
 
or 12.6%,
 
was recoverable
 
from Munich
 
Reinsurance
 
America, Inc.
 
(“Munich
Re”)
 
and
 
$148
 
million,
 
or
 
6.6%,
 
was
 
recoverable
 
from
 
Endurance
 
Reinsurance
 
Corporation
 
of
 
America
(“Endurance
 
Re”).
 
No
 
other
 
retrocessionaire
 
accounted
 
for
 
more
 
than
 
5%
 
of
 
our
 
recoverables.
 
Although
management carefully
 
selects its
 
reinsurers, the
 
Company is
 
subject to credit
 
risk with respect
 
to its reinsurance
because
 
the
 
ceding
 
of
 
risk
 
to
 
reinsurers
 
does
 
not
 
relieve
 
the
 
Company
 
of
 
its
 
liability
 
to
 
insureds
 
or
 
ceding
companies.
 
See
 
ITEM
 
7,
 
“Management’s
 
Discussion
 
and
 
Analysis
 
of
 
Financial
 
Condition
 
and
 
Results
 
of
Operations – Financial Condition”.
 
Claims.
Insurance
 
claims
 
are
 
managed
 
by
 
the
 
Company’s
 
professional
 
Claims
 
staff
 
many
 
of
 
whom
 
have
 
insurance
 
and
legal
 
professional
 
qualifications.
 
Their
 
responsibilities
 
include
 
reviewing
 
initial
 
loss
 
reports,
 
analyzing
 
coverage
issues,
 
evaluating
 
and
 
reserving
 
claims,
 
and
 
paying
 
settlements.
 
When
 
appropriate
 
the
 
Claims
 
staff
 
engage
external
 
professional
 
advisors
 
such
 
as
 
Counsel,
 
Loss
 
Adjusters
 
and
 
Engineers
 
to
 
support
 
the
 
effective
management
 
of
 
claims.
 
Claims
 
are
 
allocated
 
to
 
staff
 
according
 
to
 
their
 
expertise
 
and
 
experience
 
and
 
most
specialize
 
in
 
particular
 
product
 
segments
 
and
 
geographies.
 
Some
 
insurance
 
claims
 
are
 
handled
 
by
 
third
 
party
claims service
 
providers
 
who have
 
limited authority
 
and are
 
subject to
 
oversight
 
by the
 
Company’s
 
professional
Claims
 
staff.
 
The
 
Claims
 
staff
 
work
 
closely
 
with
 
senior
 
management,
 
as
 
well
 
as
 
underwriting,
 
finance
 
and
actuarial.
Reinsurance
 
claims
 
are
 
managed
 
by
 
the
 
Company’s
 
professional
 
claims
 
staff
 
whose
 
responsibilities
 
include
reviewing
 
initial
 
loss
 
reports
 
and
 
coverage
 
issues,
 
monitoring
 
claims
 
handling
 
activities
 
of
 
ceding
 
companies,
establishing
 
and
 
adjusting
 
proper
 
case
 
reserves
 
and
 
approving
 
payment
 
of
 
claims.
 
In
 
addition
 
to
 
claims
assessment,
 
processing
 
and payment,
 
the claims
 
staff
 
selectively
 
conducts
 
comprehensive
 
claim audits
 
of both
specific claims and
 
overall claim
 
procedures at
 
the offices of
 
selected ceding companies.
 
Some insurance
 
claims
are
 
handled
 
by
 
third
 
party
 
claims service
 
providers
 
who have
 
limited authority
 
and are
 
subject
 
to
 
oversight
 
by
the Company’s professional
 
claims staff.
The
 
Company
 
intensively
 
manages
 
its
 
asbestos
 
and
 
environmental
 
(“A&E”)
 
exposures
 
through
 
a
 
dedicated,
centrally
 
managed
 
claim staff
 
with
 
experienced
 
claim
 
and legal
 
professionals
 
who
 
specialize
 
in
 
the
 
handling
 
of
such
 
exposures.
 
They
 
actively
 
manage
 
each
 
individual
 
insured
 
and
 
reinsured
 
account,
 
responding
 
to
 
claim
12
developments with evaluations
 
of the involved exposures
 
and adjustment of reserves
 
as appropriate.
 
Specific or
general
 
claim developments
 
that may
 
have
 
material implications
 
for the
 
Company
 
are regularly
 
communicated
to
 
senior
 
management,
 
actuarial,
 
legal
 
and
 
financial
 
areas.
 
Senior
 
management
 
and
 
claim
 
management
personnel
 
meet
 
at
 
least
 
quarterly
 
to
 
review
 
the
 
Company’s
 
overall
 
reserve
 
positions
 
and
 
make
 
changes,
 
if
appropriate.
 
The Company continually
 
reviews its internal
 
processing, communications
 
and analytics, seeking to
enhance
 
the
 
management
 
of
 
its
 
A&E
 
exposures,
 
in
 
particular
 
in
 
regard
 
to
 
changes
 
in
 
asbestos
 
claims
 
and
litigation.
 
Reserves for Unpaid Property and Casualty Losses and
 
LAE.
Significant periods of time may elapse
 
between the occurrence of an insured
 
loss, the reporting of the loss to the
insurer and the reinsurer and
 
the payment of that loss by the insurer
 
and subsequent payments to
 
the insurer by
the reinsurer.
 
To
 
recognize liabilities
 
for unpaid losses and
 
LAE, insurers and
 
reinsurers establish
 
reserves, which
are
 
balance sheet
 
liabilities representing
 
estimates
 
of future
 
amounts
 
needed to
 
pay
 
reported
 
and unreported
claims
 
and
 
related
 
expenses
 
for
 
losses
 
that
 
have
 
already
 
occurred.
 
Actual
 
losses
 
and
 
LAE
 
paid
 
may
 
deviate,
perhaps substantially,
 
from such
 
reserves.
 
To
 
the extent
 
reserves prove
 
to be
 
insufficient to
 
cover actual
 
losses
and
 
LAE
 
after
 
taking
 
into
 
account
 
available
 
reinsurance
 
coverage,
 
the
 
Company
 
would
 
have
 
to
 
recognize
 
such
reserve
 
shortfalls
 
and incur
 
a charge
 
to
 
earnings,
 
which could
 
be material
 
in the
 
period such
 
recognition
 
takes
place.
 
See ITEM
 
7, “Management’s
 
Discussion and
 
Analysis of
 
Financial Condition
 
and Results
 
of Operations
 
Loss and LAE Reserves”.
As part of the reserving
 
process, insurers
 
and reinsurers
 
evaluate historical
 
data and trends
 
and make judgments
as
 
to
 
the
 
impact
 
of
 
various
 
factors
 
such
 
as
 
legislative
 
and
 
judicial
 
developments
 
that
 
may
 
affect
 
future
 
claim
amounts, changes
 
in social
 
and political
 
attitudes that
 
may increase
 
loss exposures
 
and inflationary
 
and general
economic
 
trends.
 
While
 
the
 
reserving
 
process
 
is
 
difficult
 
and
 
subjective
 
for
 
insurance
 
companies,
 
the
 
inherent
uncertainties
 
of
 
estimating
 
such
 
reserves
 
are
 
even
 
greater
 
for
 
the
 
reinsurer,
 
due
 
primarily
 
to
 
the
 
longer
 
time
between the
 
date
 
of an
 
occurrence and
 
the reporting
 
of any
 
attendant
 
claims to
 
the reinsurer,
 
the diversity
 
of
development
 
patterns
 
among
 
different
 
types
 
of
 
reinsurance
 
treaties
 
or
 
facultative
 
contracts,
 
the
 
necessary
reliance
 
on
 
the
 
ceding
 
companies
 
for
 
information
 
regarding
 
reported
 
claims
 
and
 
differing
 
reserving
 
practices
among ceding
 
companies.
 
In addition,
 
trends
 
that have
 
affected
 
development
 
of liabilities
 
in the
 
past
 
may
 
not
necessarily occur
 
or affect
 
liability development
 
in the
 
same manner
 
or to
 
the same
 
degree in
 
the future.
 
As a
result,
 
actual
 
losses
 
and
 
LAE
 
may
 
deviate,
 
perhaps
 
substantially,
 
from
 
estimates
 
of
 
reserves
 
reflected
 
in
 
the
Company's consolidated financial statem
 
ents.
 
The
 
Company’s
 
loss
 
and
 
LAE
 
reserves
 
represent
 
management’s
 
best
 
estimate
 
of
 
the
 
ultimate
 
liability.
 
Management’s
 
best estimate
 
is developed
 
through
 
collaboration
 
with actuarial,
 
underwriting, claims,
 
legal
 
and
finance
 
departments
 
and
 
culminates
 
with
 
the
 
input
 
of
 
reserve
 
committees.
 
Each
 
segment
 
reserve
 
committee
includes the participation of the relevant parties
 
from actuarial, finance, claims and segment senior management
and has
 
the responsibility
 
for recommending
 
and approving
 
management’s
 
best estimate.
 
Reserves are
 
further
reviewed
 
by
 
Everest’s
 
Chief
 
Reserving
 
Actuary
 
and
 
senior
 
management.
 
The
 
objective
 
of
 
such
 
process
 
is
 
to
determine
 
a
 
single
 
best
 
estimate
 
viewed
 
by
 
management
 
to
 
be
 
the
 
best
 
estimate
 
of
 
its
 
ultimate
 
loss
 
liability.
 
While there
 
can
 
be no
 
assurance
 
that
 
these reserves
 
will not
 
need to
 
be increased
 
in the
 
future,
 
management
believes that
 
the Company’s
 
existing reserves
 
and reserving
 
methodologies reduce
 
the likelihood
 
that any
 
such
increases
 
would
 
have
 
a
 
material
 
adverse
 
effect
 
on
 
the
 
Company’s
 
financial
 
condition,
 
results
 
of
 
operations
 
or
cash flows.
 
These statements
 
regarding the
 
Company’s
 
loss reserves
 
are forward
 
looking statements
 
within the
meaning
 
of
 
the
 
U.S.
 
federal
 
securities
 
laws
 
and
 
are
 
intended
 
to
 
be
 
covered
 
by
 
the
 
safe
 
harbor
 
provisions
contained
 
therein.
 
See
 
ITEM
 
7,
 
“Management’s
 
Discussion
 
and
 
Analysis
 
of
 
Financial
 
Condition
 
and
 
Results
 
of
Operations – Safe Harbor Disclosure”.
 
Like many other
 
property and casualty
 
insurance and reinsurance
 
companies, the Company
 
has experienced loss
development
 
for
 
prior
 
accident
 
years,
 
which
 
has
 
impacted
 
losses
 
and
 
LAE
 
reserves
 
and
 
caused
 
corresponding
effects
 
to
 
income
 
(loss)
 
in
 
the
 
periods
 
in
 
which
 
the
 
adjustments
 
were
 
made.
 
There
 
can
 
be
 
no
 
assurance
 
that
adverse
 
development
 
from
 
prior
 
years
 
will
 
not
 
occur
 
in
 
the
 
future
 
or
 
that
 
such
 
adverse
 
development
 
will
 
not
have a material adverse
 
effect on net income (loss).
 
13
Since the Company
 
has operations
 
in many countries,
 
part of the Company’s
 
loss and LAE reserves
 
are in foreign
currencies
 
and
 
translated
 
to
 
U.S.
 
dollars
 
for
 
each
 
reporting
 
period.
 
Fluctuations
 
in
 
the
 
exchange
 
rates
 
for
 
the
currencies,
 
period
 
over
 
period,
 
affect
 
the
 
U.S.
 
dollar
 
amount
 
of
 
outstanding
 
reserves.
 
The
 
translation
adjustment eliminates
 
the impact of the
 
exchange fluctuations
 
from the reserve
 
re-estimates.
 
For reconciliation
of beginning and ending reserves, see Note 3 of Notes
 
to Consolidated Financial Statements.
 
Reserves for Asbestos and Environmental
 
Loss and LAE.
At December 31,
 
2022, the Company’s
 
gross reserves
 
for A&E claims
 
represented 1.3%
 
of its total
 
reserves.
 
The
Company’s
 
A&E
 
liabilities
 
stem
 
from
 
Mt.
 
McKinley
 
Insurance
 
Company’s
 
(“Mt.
 
McKinley”)
 
direct
 
insurance
business
 
and Everest
 
Re’s
 
assumed reinsurance
 
business.
 
Mt. McKinley
 
was a
 
former
 
wholly-owned subsidiary
that was sold in
 
2015 to Clearwater Insurance
 
Company (Clearwater”), a subsidiary
 
of Fairfax Financial.
 
Liabilities
related to
 
Mt. McKinley’s
 
direct business,
 
which had been
 
ceded to
 
Bermuda Re
 
previously,
 
were retroceded
 
to
an affiliate of Clearwater in July
 
2015, concurrent with the sale of Mt. McKinley to Clearwater.
 
Concurrently
 
with
 
the
 
closing,
 
the
 
Company
 
entered
 
into
 
a
 
retrocession
 
treaty
 
with
 
an
 
affiliate
 
of
 
Clearwater.
 
Per the retrocession
 
treaty,
 
the Company 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.
 
The Company will
 
retain liability
 
for any
 
amounts exceeding
 
the maximum liability
retroceded under the retrocession
 
treaty.
 
On December 20, 2019, the retrocession
 
treaty was amended and
 
included a partial commutation.
 
As a result of
this amendment
 
and partial
 
commutation, gross
 
A&E reserves
 
and correspondingly
 
reinsurance receivable
 
were
reduced
 
by
 
$43.4
 
million.
 
In
 
addition,
 
the
 
maximum
 
liability
 
permitted
 
to
 
be
 
retroceded
 
increased
 
to
 
$450.3
million.
Additional losses,
 
including those relating
 
to latent
 
injuries and
 
other exposures,
 
which are as
 
yet unrecognized,
the type
 
or magnitude
 
of which
 
cannot be
 
foreseen by
 
either the
 
Company or
 
the industry,
 
may emerge
 
in the
future. Such
 
future emergence
 
could have
 
material adverse
 
effects on
 
the Company’s
 
future financial condition,
results of operations and cash flows.
 
There are
 
significant uncertainties
 
in estimating
 
the amount
 
of the
 
Company’s
 
potential losses
 
from A&E
 
claims
and
 
ultimate
 
values
 
cannot
 
be
 
estimated
 
using
 
traditional
 
reserving
 
techniques.
 
See
 
ITEM
 
7,
 
“Management’s
Discussion
 
and
 
Analysis
 
of
 
Financial
 
Condition
 
and
 
Results
 
of
 
Operations
 
 
Asbestos
 
and
 
Environmental
Exposures”
 
and
 
ITEM
 
8,
 
“Financial
 
Statements
 
and
 
Supplementary
 
Data”
 
 
Note
 
3
 
of
 
Notes
 
to
 
Consolidated
Financial Statements.
 
Future Policy Benefit Reserves.
The Company
 
wrote a
 
limited amount
 
of life
 
and annuity
 
reinsurance in
 
its Reinsurance
 
segment.
 
Future policy
benefit
 
liabilities
 
for
 
annuities
 
are
 
reported
 
at
 
the
 
accumulated
 
fund
 
balance
 
of these
 
contracts.
 
Reserves
 
for
those
 
liabilities
 
include
 
mortality
 
provisions
 
with
 
respect
 
to
 
life
 
and
 
annuity
 
claims,
 
both
 
reported
 
and
unreported. Actual
 
experience in a
 
particular period may
 
be worse than
 
assumed
experience and, consequently,
may
 
adversely
 
affect
 
the
 
Company’s
 
operating
 
results
 
for
 
that
 
period.
 
See
 
ITEM
 
8,
 
“Financial
 
Statements
 
and
Supplementary Data” - Note 1F and
 
Note 3 of Notes to Consolidated Financial Statements.
Investments.
The board of directors
 
of each of the Company’s
 
operating subsidiaries is
 
responsible for establishing
 
investment
policy and guidelines and, together with senior management,
 
for overseeing their execution.
 
14
The
 
Company’s
 
principal
 
investment
 
objectives
 
are
 
to
 
ensure
 
funds
 
are
 
available
 
to
 
meet
 
its
 
insurance
 
and
reinsurance obligations
 
and to maximize after-tax
 
investment income
 
while maintaining a high
 
quality diversified
investment
 
portfolio.
 
Considering
 
these objectives,
 
the
 
Company
 
views
 
its investment
 
portfolio
 
as having
 
two
components: 1)
 
the investments
 
needed to
 
satisfy outstanding
 
liabilities (its
 
core fixed
 
maturities portfolio)
 
and
2) investments funded by the Company’s
 
shareholders’ equity.
 
For the portion
 
needed to satisfy
 
global outstanding
 
liabilities, the Company
 
generally invests
 
in fixed maturities
with a high level of average
 
credit quality.
 
This global fixed maturity securities portfolio
 
is largely managed on an
external
 
basis
 
by
 
independent,
 
professional
 
investment
 
managers
 
using
 
portfolio
 
guidelines
 
approved
 
by
 
the
Company.
 
Over
 
the
 
past
 
several
 
years,
 
the
 
Company
 
has
 
expanded
 
the
 
allocation
 
of
 
its
 
investments
 
funded
 
by
shareholders’ equity
 
to include:
 
1) publicly traded
 
equity securities, 2) emerging
 
market fixed
 
maturities, as well
as individual holdings,
 
3) high yield
 
fixed maturities,
 
4) bank and
 
private loan
 
securities, 5) private
 
equity limited
partnership
 
investments
 
and 6)
 
Company
 
owned life
 
insurance.
 
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.
 
The Company limits its 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.
 
The Company uses
 
investment managers
 
experienced in these
 
markets and
 
adjusts its
allocation to these investments
 
based upon market conditions.
 
The duration
 
of an
 
investment
 
is based
 
on the
 
maturity of
 
the security
 
but also
 
reflects the
 
payment of
 
interest
and the
 
possibility of
 
early prepayments.
 
The Company’s
 
fixed income
 
investment
 
guidelines include
 
a general
duration
 
guideline.
 
This investment
 
duration
 
guideline is
 
established
 
and periodically
 
revised
 
by management,
which
 
considers
 
economic
 
and
 
business
 
factors,
 
as
 
well
 
as
 
the
 
Company’s
 
average
 
duration
 
of
 
potential
liabilities, which, at December 31, 2022, is estimated
 
at approximately 3.8 years,
 
based on the estimated payouts
of
 
underwriting
 
liabilities
 
using
 
standard
 
duration
 
calculations.
 
The
 
average
 
duration
 
of
 
the
 
fixed
 
income
portfolio at December 31, 2022
 
and 2021 was 3.1 years and 3.2 years,
 
respectively.
 
For each
 
currency in
 
which the
 
Company has
 
established
 
substantial
 
loss and
 
LAE reserves,
 
the Company
 
seeks
to maintain
 
invested
 
assets
 
denominated in
 
such currency
 
in an
 
amount approximately
 
equal to
 
the estimated
liabilities.
 
Approximately
 
42.7%
 
of
 
the
 
Company’s
 
consolidated
 
reserves
 
for
 
losses
 
and
 
LAE
 
and
 
unearned
premiums represent amounts
 
payable in foreign currencies.
 
The Company’s
 
cash and
 
invested
 
assets
 
totaled
 
$29.9 billion
 
at December
 
31, 2022,
 
which consisted
 
of 85.4%
fixed maturities,
 
short term investments
 
and cash, of which
 
93.2% were investment
 
grade; 13.7% other
 
invested
assets and
 
0.9% equity
 
securities.
 
The average
 
maturity of
 
fixed maturity
 
securities was
 
4.6 years
 
at December
31, 2022, and their overall average
 
duration was 3.1 years.
 
As of
 
December 31,
 
2022, the
 
Company did
 
not have
 
any direct
 
investments
 
in commercial
 
real estate
 
or direct
commercial
 
mortgages
 
or
 
securities
 
of
 
issuers
 
that
 
are
 
experiencing
 
cash
 
flow
 
difficulty
 
to
 
an
 
extent
 
that
 
the
Company’s
 
management
 
believes
 
could
 
threaten
 
the
 
issuer’s
 
ability
 
to
 
meet
 
debt
 
service
 
payments,
 
except
where an allowance for credit
 
losses has been recognized.
 
The Company’s
 
investment
 
portfolio includes
 
structured commercial
 
mortgage-backed
 
securities (“CMBS”)
 
with
a book
 
value of
 
$1.0 billion
 
and a
 
fair val
 
ue of
 
$925.8 million.
 
CMBS securities
 
comprising more
 
than 86.6%
 
of
the
 
December
 
31,
 
2022
 
fair
 
value
 
are
 
rated
 
AAA
 
by
 
S&P
 
Global
 
Ratings
 
(“S&P”).
 
Furthermore,
 
all
 
held
 
CMBS
securities are rated investment
 
grade by S&P.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
15
The following table reflects investment
 
results for the Company for
 
the periods indicated:
 
December 31,
Pre-tax
Pre-tax
Pre-tax
Pre-tax
Realized Net
Unrealized Net
Average
Investment
Effective
Gains (Losses)
Gains (Losses)
(Dollars in millions)
Investments
 
(1)
Income
 
(2)
Yield
On Investments
 
(3)
On Investments
2022
$
29,788
$
830
2.79%
$
(455)
$
(2,225)
2021
27,606
1,165
4.22%
258
(542)
2020
23,253
643
2.76%
268
465
2019
19,632
647
3.30%
185
533
2018
18,426
581
3.15%
(127)
(251)
(1)
Average of
 
the beginning and
 
ending carrying values
 
of investments
 
and cash,
 
less net funds
 
held, future policy
 
benefit reserve,
 
and non-interest
 
bearing
cash.
 
Fixed
 
maturities,
 
available
 
for
 
sale
 
and
 
equity
 
securities
 
are
 
carried
 
at
 
fair
 
value.
 
Fixed
 
maturities,
 
held
 
to
 
maturity
 
securities
 
are
 
carried
 
at
amortized cost net of the expected
 
credit loss allowance.
(2)
After investment expenses,
 
excluding realized net gains
 
(losses) on investments.
(3)
Included in
 
2022, 2021,
 
2020, 2019
 
and 2018
 
are fair
 
value re-measurements
 
of $460
 
million, $236
 
million, $280
 
million,
 
$167 million
 
and ($67)
 
million,
respectively. In addition,
 
2022 & 2021 includes ($33 million) and ($28 million) of
 
expected credit losses.
(Some amounts may not reconcile due
 
to rounding.)
The following
 
table
 
represents
 
the credit
 
quality distribution
 
of the
 
Company’s
 
fixed
 
maturities
 
for
 
the periods
indicated:
 
At December 31,
2022
2021
(Dollars in millions)
Fair Value/
Percent of
Fair Value/
Percent of
Rating Agency Credit Quality Distribution:
Amortized Cost
 
(1)
Total
Amortized Cost
 
(1)
Total
AAA
$
8,432
36.6%
$
7,111
31.8%
AA
2,886
12.5%
2,591
11.6%
A
6,268
27.2%
5,833
26.1%
BBB
3,768
16.3%
4,763
21.4%
BB
1,227
5.3%
1,204
5.4%
B
163
0.7%
325
1.5%
Rated below B
49
0.2%
57
0.3%
Other
283
1.2%
425
1.9%
Total
$
23,075
100.0%
$
22,308
100.0%
(Some amounts may not reconcile due
 
to rounding.)
(1)
 
Fixed maturities-available for
 
sale are at fair value and fixed
 
maturities-held to maturity are at amortized
 
cost, net of allowances for
 
credit losses
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
16
The following table summarizes fixed
 
maturities by contractual maturity
 
for the periods indicated:
 
At December 31,
2022
2021
Fair Value/
Percent of
Fair Value/
Percent of
(Dollars in millions)
Amortized Cost
 
(1)
Total
Amortized Cost
 
(1)
Total
Fixed maturity securities
Due in one year or less
$
1,319
5.7%
$
1,398
6.2%
Due after one year through five years
7,607
33.0%
7,155
32.1%
Due after five years through ten years
4,098
17.8%
5,101
22.9%
Due after ten years
1,299
5.6%
1,627
7.3%
Asset-backed securities
4,705
20.4%
3,582
16.1%
Mortgage-backed securities
4,029
17.5%
3,446
15.4%
Total fixed
 
maturity securities
$
23,057
100.0%
$
22,308
100.0%
(Some amounts may not reconcile due
 
to rounding.)
(1) The amortized cost and fair value
 
of fixed maturity securities are shown
 
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.
 
Financial Strength Ratings.
The
 
following
 
table
 
shows
 
the
 
current
 
financial
 
strength
 
ratings
 
of
 
the
 
Company’s
 
operating
 
subsidiaries
 
as
reported
 
by
 
A.M.
 
Best,
 
S&P
 
Global
 
Ratings
 
(“S&P”)
 
and
 
Moody’s.
 
These
 
ratings
 
represent
 
an
 
independent
opinion
 
of
 
the
 
financial
 
strength,
 
operating
 
performance,
 
business
 
profile
 
and
 
ability
 
to
 
meet
 
policyholder
obligations.
 
The ratings
 
are not
 
intended to
 
be an
 
indication of
 
the degree
 
or lack
 
of risk
 
involved
 
in a
 
direct or
indirect
 
equity
 
investment
 
or
 
a
 
recommendation
 
to
 
buy,
 
sell
 
or
 
hold
 
our
 
securities.
 
Additionally,
 
rating
organizations
 
may
 
change
 
their
 
rating
 
methodology,
 
which
 
could
 
have
 
a
 
material
 
impact
 
on
 
our
 
financial
strength ratings.
All
 
of
 
the
 
below-mentioned
 
ratings
 
are
 
continually
 
monitored
 
and
 
revised,
 
if
 
necessary,
 
by
 
each
 
of
 
the
 
rating
agencies.
 
The ratings presented in
 
the following table were in
 
effect as of January 31, 2023.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
17
The Company
 
believes that
 
its ratings
 
are important
 
as they
 
provide the
 
Company’s
 
customers
 
and others
 
with
an
 
independent
 
assessment
 
of
 
the
 
Company’s
 
financial
 
strength
 
using
 
a
 
rating
 
scale
 
that
 
provides
 
for
 
relative
comparisons.
 
Strong financial
 
ratings are
 
particularly important
 
for reinsurance
 
and insurance
 
companies given
that customers
 
rely on a company
 
to pay covered
 
losses well into the future.
 
As a result, a highly rated
 
company
is generally preferred.
 
Operating Subsidiary:
A.M. Best
S&P
Moody's
Everest Reinsurance Company
A+ (Superior)
A+ (Strong)
A1 (upper-medium)
Everest Reinsurance (Bermuda) Ltd.
A+ (Superior)
A+ (Strong)
A1 (upper-medium)
Everest Reinsurance Company (Ireland) dac
A+ (Superior)
A+ (Strong)
Not Rated
Everest National Insurance Company
A+ (Superior)
A+ (Strong)
Not Rated
Everest Indemnity Insurance Company
A+ (Superior)
A+ (Strong)
Not Rated
Everest Security Insurance Company
A+ (Superior)
A+ (Strong)
Not Rated
Everest International Assurance, Ltd.
 
A+ (Superior)
A+ (Strong)
Not Rated
Everest Compañia de Seguros Generales Chile S.A.
A+ (Superior)
Not Rated
Not Rated
Everest Insurance Company of Canada
A+ (Superior)
A+ (Strong)
Not Rated
Everest International Reinsurance,
 
Ltd.
A+ (Superior)
A+ (Strong)
Not Rated
Everest Denali Insurance Company
A+ (Superior)
A+ (Strong)
Not Rated
Everest Premier Insurance Company
A+ (Superior)
A+ (Strong)
Not Rated
Everest Insurance (Ireland), dac
A+ (Superior)
A+ (Strong)
Not Rated
A.M. Best
 
states
 
that
 
the
 
“A+”
 
(“Superior”) rating
 
is
 
assigned to
 
those
 
companies
 
which, in
 
its opinion,
 
have
 
a
superior
 
ability
 
to
 
meet
 
their
 
ongoing
 
insurance
 
policy
 
and
 
contract
 
obligations
 
based
 
on
 
A.M.
 
Best’s
comprehensive
 
quantitative
 
and
 
qualitative
 
evaluation
 
of
 
a
 
company’s
 
balance
 
sheet
 
strength,
 
operating
performance
 
and
 
business
 
profile.
 
A.M.
 
Best
 
affirmed
 
these
 
ratings
 
on
 
June
 
15,
 
2022.
 
S&P
 
states
 
that
 
the
“A+”/”A”
 
ratings
 
are assigned
 
to those
 
insurance companies
 
which, in
 
its opinion,
 
have strong
 
financial security
characteristics
 
with respect
 
to their
 
ability to
 
pay under
 
its insurance
 
policies and
 
contracts
 
in accordance
 
with
their
 
terms.
 
S&P
 
affirmed
 
all
 
ratings
 
on
 
May
 
27,
 
2022.
 
Moody’s
 
states
 
that
 
an
 
“A1”
 
rating
 
is
 
assigned
 
to
companies that, in
 
their opinion, offer
 
upper-medium grade
 
security and are
 
subject to low
 
credit risk.
 
Moody’s
affirmed these ratings on June 17, 2022.
 
Subsidiaries
 
other
 
than
 
Everest
 
Reinsurance
 
Co.
 
and
 
Everest
 
Reinsurance
 
(Bermuda)
 
Ltd.
 
may
 
not
 
be
 
rated
 
by
some
 
or
 
any
 
rating
 
agencies
 
given
 
that
 
such
 
ratings
 
are
 
not
 
considered
 
essential
 
by
 
the
 
individual
 
subsidiary’s
customers
 
because
 
of
 
the
 
limited
 
nature
 
of
 
the
 
subsidiary’s
 
operations
 
or
 
because
 
the
 
subsidiaries
 
are
 
newly
established and have not yet
 
been rated by the agencies.
 
Debt Ratings.
The
 
following
 
table
 
shows
 
the
 
debt
 
ratings
 
by
 
A.M.
 
Best,
 
S&P
 
and
 
Moody’s
 
of
 
the
 
Holdings’
 
senior
 
notes
 
due
June 1,
 
2044, senior
 
notes due
 
October
 
15, 2050,
 
senior notes
 
due October
 
15, 2052
 
and long-term
 
notes
 
due
May
 
1,
 
2067
 
all
 
of
 
which
 
are
 
considered
 
investment
 
grade.
 
Debt
 
ratings
 
are
 
the
 
rating
 
agencies’
 
current
assessment of the credit worthiness of an
 
obligor with respect to a specific obligation.
 
Instrument
A.M. Best
S&P
Moody's
Senior Notes due June 1, 2044
a-
(Strong)
A-
(Strong)
Baa1
(Medium Grade)
Senior Notes due October 15, 2050
a-
(Strong)
A-
(Strong)
Baa1
(Medium Grade)
Senior Notes due October 15, 2052
NR
A-
(Strong)
Baa1
(Medium Grade)
Long-Term Notes due May
 
1, 2067
bbb
(Adequate)
BBB
(Adequate)
Baa2
(Medium Grade)
18
Competition.
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
 
the
 
securitization
 
of
 
reinsurance
 
and
 
insurance
 
risks
 
through
 
capital
 
markets
 
provide
 
additional
sources of potential reinsurance
 
and insurance capacity and competition.
 
Worldwide insurance
 
and reinsurance
 
market conditions
 
historically have
 
been competitive.
 
Generally,
 
there is
ample
 
insurance
 
and
 
reinsurance
 
capacity
 
relative
 
to
 
demand,
 
as
 
well
 
as
 
additional
 
capital
 
from
 
the
 
capital
markets
 
through
 
insurance
 
linked
 
financial
 
instruments.
 
These
 
financial
 
instruments
 
such
 
as
 
side
 
cars,
catastrophe
 
bonds and
 
collateralized
 
reinsurance
 
funds, provided
 
capital
 
markets
 
with access
 
to insurance
 
and
reinsurance
 
risk exposure.
 
The capital
 
markets
 
demand
 
for
 
these products
 
is primarily
 
driven
 
by
 
the desire
 
to
achieve
 
greater
 
risk
 
diversification
 
and
 
potentially
 
higher
 
returns
 
on
 
their
 
investments.
 
This
 
competition
generally has a negative impact
 
on rates, terms and conditions;
 
however,
 
the impact varies widely by market
 
and
coverage.
 
Based on recent competitive
 
behaviors in the
 
insurance and reinsurance
 
industry, natural
 
catastrophe
events
 
and
 
the
 
macroeconomic
 
backdrop,
 
there
 
has
 
been
 
some
 
dislocation
 
in
 
the
 
market
 
which
 
we
 
expect
 
to
have a positive impact on rates
 
and terms and conditions, generally,
 
though local market specificities can
 
vary.
 
The
 
increased
 
frequency
 
of
 
catastrophe
 
losses
 
experienced
 
throughout
 
2022
 
appears
 
to
 
be
 
pressuring
 
the
increase
 
of
 
rates.
 
As
 
business
 
activity
 
continues
 
to
 
regain
 
strength
 
after
 
the
 
pandemic
 
and
 
current
macroeconomic uncertainty,
 
rates appear to be firming in
 
most lines of business, particularly in the casualty
 
lines
that had
 
seen significant
 
losses such
 
as excess
 
casualty and
 
directors’
 
and officers’
 
liability.
 
Other casualty
 
lines
are
 
experiencing
 
modest
 
rate
 
increase,
 
while
 
some
 
lines
 
such
 
as
 
workers’
 
compensation
 
were
 
experiencing
softer
 
market
 
conditions.
 
It
 
is
 
too
 
early
 
to
 
tell
 
what
 
the
 
impact
 
on
 
pricing
 
conditions
 
will
 
be,
 
but
 
it
 
is
 
likely
 
to
change depending on the line of business and geography.
Our capital position remains
 
a source of strength,
 
with high quality invested
 
assets, significant liquidity
 
and a low
operating
 
expense
 
ratio.
 
Our
 
diversified
 
global
 
platform
 
with
 
its
 
broad
 
mix
 
of
 
products,
 
distribution
 
and
geography is resilient.
The war in the
 
Ukraine is ongoing
 
and an evolving
 
event.
 
Economic and legal
 
sanctions have been
 
levied against
Russia,
 
specific
 
named
 
individuals
 
and
 
entities
 
connected
 
to
 
the
 
Russian
 
government,
 
as
 
well
 
as
 
businesses
located
 
in
 
the
 
Russian
 
Federation
 
and/or
 
owned
 
by
 
Russian
 
nationals
 
by
 
numerous
 
countries,
 
including
 
the
United States.
 
The significant
 
political and
 
economic uncertainty
 
surrounding the
 
war and
 
associated sanctions
have
 
impacted
 
economic and
 
investment
 
markets
 
both within
 
Russia and
 
around
 
the world.
 
The Company
 
has
recorded $45 million of losses related
 
to the Ukraine/Russia war during 2022.
 
 
19
Human Capital Management.
Our employees are essential to
 
the success of our business, and so we strive
 
to attract and retain
 
a high standard
of insurance
 
professionals
 
to meet
 
our business
 
needs as
 
well as
 
the needs
 
of our
 
clients and
 
customers.
 
As of
February
 
1,
 
2023,
 
the
 
Company
 
employed
 
2,428
 
persons.
 
Management
 
believes
 
that
 
employee
 
relations
 
are
good.
 
None of
 
the Company’s
 
employees
 
are
 
subject
 
to
 
collective
 
bargaining
 
agreements,
 
and the
 
Company
 
is
not aware of any current
 
efforts to implement such agreements.
 
Everest
 
is
 
committed
 
to
 
providing
 
our
 
employees
 
with
 
an
 
engaging
 
and
 
supportive
 
environment
 
so
 
that
employees
 
can
 
develop
 
personally
 
and
 
help
 
us
 
achieve
 
success
 
as
 
an
 
organization.
 
We
 
consider
 
the
 
ability
 
to
attract,
 
develop and
 
retain
 
a high
 
caliber of
 
insurance
 
professionals
 
to be
 
critical to
 
our success.
 
Opportunities
for continued
 
learning and
 
talent development
 
are provided
 
to all
 
employee levels.
 
Employees are
 
encouraged
to
 
take
 
ownership
 
of
 
their
 
development
 
by
 
using
 
the
 
tools
 
that
 
the
 
Company
 
has
 
made
 
available
 
to
 
them
 
-
including
 
industry
 
training,
 
mentorships
 
and
 
personal
 
development
 
classes.
 
Everest
 
actively
 
manages
 
its
succession
 
planning
 
throughout
 
our
 
organization
 
and
 
strives
 
to
 
provide
 
job
 
growth
 
and
 
advancement
opportunities to internal talent, where
 
possible.
Diversity and Inclusion.
Our strength
 
and success derive
 
from our diversity,
 
and we are
 
at our best
 
when we embrace
 
diverse views
 
and
perspectives.
 
Equality
 
in
 
opportunity,
 
career
 
development,
 
compensation
 
and
 
respect
 
for
 
all
 
individuals
 
are
fundamental human
 
rights that
 
are at
 
the forefront
 
of our
 
culture and
 
promoted not
 
only within
 
our workplace
but also the global
 
communities in which
 
we operate.
 
Our Board is
 
committed to
 
diversity within
 
its structure as
well as
 
emphasizing its
 
importance in
 
our senior
 
executive
 
leadership. We
 
believe that
 
diversity
 
in gender,
 
age,
ethnicity
 
and
 
skill
 
set
 
allows
 
for
 
dynamic
 
and
 
evolving
 
perspectives
 
in
 
governance,
 
strategy,
 
corporate
responsibility,
 
human rights and risk management.
 
Proactive
 
diversity
 
recruitment
 
is
 
an
 
integral
 
aspect
 
of
 
succession
 
planning
 
at
 
both
 
the
 
board
 
level
 
and
throughout
 
all
 
levels
 
in
 
the
 
organization.
 
Our
 
Talent
 
Development
 
team
 
works
 
with
 
senior
 
management
 
to
identify
 
women
 
and
 
persons
 
of color
 
across
 
the
 
Company
 
as
 
potential
 
leaders.
 
These
 
individuals
 
are
 
provided
management
 
and
 
executive
 
leadership
 
training
 
and
 
education
 
to
 
enhance
 
their
 
skillsets
 
and
 
provide
opportunities for
 
advancement.
 
Indeed, our
 
executive
 
officers are
 
measured on
 
their forward-thinking
 
diversity
initiatives
 
as
 
part
 
of
 
their
 
annual
 
performance
 
evaluations.
 
Such
 
diversity
 
at
 
the
 
most
 
senior
 
levels
 
of
 
our
organization
 
reflects our commitment
 
to identify and
 
develop highly qualified
 
women and individuals
 
of color to
help lead our Company into the future.
 
The
 
work
 
of
 
the
 
DEI
 
Council
 
has
 
helped
 
enhance
 
the
 
employee
 
experience
 
for
 
all
 
our
 
colleagues
 
across
 
the
organization
 
worldwide.
 
The
 
council
 
encourages
 
continuous
 
and
 
open
 
dialogue
 
between
 
executive
 
and
 
senior
management
 
and
 
traditionally
 
underrepresented
 
groups
 
at
 
all
 
levels,
 
without
 
fear
 
of
 
reprisal
 
or
 
retaliation,
 
to
identify areas
 
of improvement
 
and carry
 
out the
 
message of
 
inclusion both
 
inside and
 
outside our
 
organization.
The
 
DEI
 
council
 
was
 
instrumental
 
in
 
forming
 
and
 
supporting
 
additional
 
Employee
 
Resource
 
Groups
 
(“ERGs”),
developing
 
a
 
Regional
 
Representation
 
network
 
and
 
leveraging
 
specific
 
Talent
 
Development
 
and
 
Talent
Acquisition initiatives that will positively influence
 
the composition of our workforce.
Regulatory Matters.
The Company and
 
its insurance subsidiaries
 
are subject to
 
regulation under the
 
insurance statutes
 
of the various
jurisdictions in which they
 
conduct business, including
 
essentially all states
 
of the U.S., Canada,
 
Singapore, Brazil,
the United Kingdom,
 
Ireland, Chile and
 
Bermuda.
 
These regulations vary
 
from jurisdiction to
 
jurisdiction and are
generally
 
designed
 
to
 
protect
 
ceding
 
insurance
 
companies
 
and
 
policyholders
 
by
 
regulating
 
the
 
Company’s
conduct
 
of
 
business,
 
financial
 
integrity
 
and
 
ability
 
to
 
meet
 
its
 
obligations.
 
Many
 
of
 
these
 
regulations
 
require
reporting of information designed to
 
allow insurance regulators
 
to closely monitor the Company’s
 
performance.
 
Insurance
 
Holding Company
 
Regulation.
 
Under applicable
 
U.S. laws
 
and regulations,
 
no person,
 
corporation
 
or
other
 
entity
 
may
 
acquire
 
a
 
controlling
 
interest
 
in
 
the
 
Company,
 
unless
 
such
 
person,
 
corporation
 
or
 
entity
 
has
obtained
 
the prior
 
approval
 
for
 
such
 
acquisition
 
from
 
the insurance
 
commissioners
 
of Delaware
 
and
 
the
 
other
 
20
states
 
in
 
which
 
the
 
Company’s
 
insurance
 
subsidiaries
 
are
 
domiciled
 
or
 
deemed
 
domiciled,
 
currently
 
California
and Georgia.
 
Under these
 
laws, “control”
 
is presumed
 
when any
 
person acquires,
 
directly or
 
indirectly,
 
10% or
more
 
of
 
the
 
voting
 
securities
 
of
 
an
 
insurance
 
company.
 
To
 
obtain
 
the
 
approval
 
of
 
any
 
change
 
in
 
control,
 
the
proposed
 
acquirer
 
must
 
file
 
an
 
application
 
with
 
the
 
relevant
 
insurance
 
commissioner
 
disclosing,
 
among
 
other
things, the background of the acquirer and that
 
of its directors and officers, the
 
acquirer’s financial condition
 
and
its proposed
 
changes in
 
the management
 
and operations
 
of the
 
insurance
 
company.
 
U.S.
 
state
 
regulators
 
also
require
 
prior
 
notice
 
or
 
regulatory
 
approval
 
of
 
material
 
inter-affiliate
 
transactions
 
within
 
the
 
holding
 
company
structure.
 
The Insurance Companies Act
 
of Canada requires prior
 
approval by
 
the Minister of Finance of
 
anyone acquiring a
significant
 
interest
 
in an
 
insurance
 
company
 
authorized
 
to do
 
business
 
in Canada.
 
In addition,
 
the Company
 
is
subject to regulation by the insurance
 
regulators of other states
 
and foreign jurisdictions in which it is
 
authorized
to do
 
business.
 
Certain of
 
these states
 
and foreign
 
jurisdictions impose
 
regulations regulating
 
the ability
 
of any
person
 
to
 
acquire
 
control
 
of
 
an
 
insurance
 
company
 
authorized
 
to
 
do
 
business
 
in
 
that
 
jurisdiction
 
without
appropriate regulatory
 
approval similar to those described above.
 
Dividends.
Under Bermuda law,
 
Group is
 
prohibited from
 
declaring or paying
 
a dividend
 
if such payment
 
would
reduce the realizable
 
value of its
 
assets to an amount
 
less than the aggregate
 
value of its liabilities
 
and its issued
share
 
capital
 
and share
 
premium
 
(additional
 
paid-in
 
capital)
 
accounts.
 
Group’s
 
ability
 
to
 
pay
 
dividends
 
and its
operating
 
expenses
 
is
 
partially
 
dependent
 
upon
 
dividends
 
from
 
its
 
subsidiaries.
 
The
 
payment
 
of
 
dividends
 
by
insurance
 
subsidiaries
 
is
 
limited
 
under
 
Bermuda
 
law
 
as
 
well
 
as
 
the
 
laws
 
of
 
the
 
various
 
U.S.
 
states
 
in
 
which
Group’s
 
insurance
 
and
 
reinsurance
 
subsidiaries
 
are
 
domiciled
 
or
 
deemed
 
domiciled.
 
The
 
limitations
 
are
generally
 
based
 
upon
 
net
 
income
 
(loss)
 
and
 
compliance
 
with
 
applicable
 
policyholders’
 
surplus
 
or
 
minimum
solvency
 
and
 
liquidity
 
requirements
 
as
 
determined
 
in
 
accordance
 
with
 
the
 
relevant
 
statutory
 
accounting
practices.
 
Under
 
Irish
 
corporate
 
and
 
regulatory
 
law,
 
Holdings
 
Ireland,
 
Everest
 
Dublin
 
Holdings
 
and
 
their
subsidiaries are limited as to the dividends
 
they can pay based on retained earnings
 
and net income (loss) and/or
capital and minimum solvency requirements.
 
As Holdings has outstanding debt obligations,
 
it is dependent upon
dividends
 
and
 
other
 
permissible
 
payments
 
from
 
its
 
operating
 
subsidiaries
 
to
 
enable
 
it
 
to
 
meet
 
its
 
debt
 
and
operating expense obligations
 
and to pay dividends.
 
Under
 
Bermuda
 
law,
 
Bermuda
 
Re,
 
Everest
 
International
 
and
 
Everest
 
Assurance
 
are
 
unable
 
to
 
declare
 
or
 
make
payment
 
of a
 
dividend if
 
they
 
fail to
 
meet their
 
minimum solvency
 
margin or
 
minimum liquidity
 
ratio.
 
As long
term insurers,
 
Bermuda Re and
 
Everest Assurance
 
are also unable
 
to declare or
 
pay a dividend
 
to anyone
 
who is
not a policyholder unless, after
 
payment of the dividend,
 
the value of the assets in
 
their long term business fund,
as
 
certified by
 
their
 
approved
 
actuary,
 
exceeds
 
their
 
liabilities
 
for
 
long
 
term
 
business
 
by
 
at
 
least
 
the
 
$250,000
minimum
 
solvency
 
margin.
 
Prior
 
approval
 
of
 
the
 
Bermuda
 
Monetary
 
Authority
 
is
 
required
 
if
 
Bermuda
 
Re’s,
Everest
 
International’s
 
or
 
Everest
 
Assurance’s
 
dividend
 
payments
 
would
 
exceed
 
25%
 
of
 
their
 
prior
 
year
 
end
statutory
 
capital and
 
surplus.
 
At December
 
31, 2022,
 
Bermuda Re,
 
Everest
 
International and
 
Everest
 
Assurance
exceeded their solvency and liquidity
 
requirements.
 
The
 
payment
 
of
 
dividends
 
to
 
Holdings
 
by
 
Everest
 
Re
 
is
 
subject
 
to
 
limitations
 
imposed
 
by
 
Delaware
 
law.
 
Generally,
 
Everest
 
Re
 
may
 
only
 
pay
 
dividends
 
out
 
of
 
its
 
statutory
 
earned
 
surplus,
 
which
 
was
 
$5.6
 
billion
 
at
December
 
31, 2022,
 
and only
 
after
 
it
 
has
 
given
 
10 days
 
prior
 
notice to
 
the
 
Delaware
 
Insurance
 
Commissioner.
 
During this 10-day
 
period, the
 
Commissioner may,
 
by order,
 
limit or disallow
 
the payment
 
of ordinary
 
dividends
if the
 
Commissioner finds
 
the insurer
 
to be
 
presently
 
or potentially
 
in financial
 
distress.
 
Further,
 
the maximum
amount
 
of dividends
 
that
 
may
 
be paid
 
without
 
the
 
prior
 
approval
 
of the
 
Delaware
 
Insurance
 
Commissioner
 
in
any
 
twelve
 
month
 
period is
 
the
 
greater
 
of (1)
 
10% of
 
the
 
insurer’s
 
statutory
 
surplus
 
as of
 
the
 
end of
 
the
 
prior
calendar year
 
or (2) the
 
insurer’s statutory
 
net income (loss),
 
not including realized
 
capital gains
 
(losses), for
 
the
prior calendar
 
year.
 
Accordingly,
 
the maximum
 
amount
 
that
 
will be
 
available
 
for
 
the payment
 
of dividends
 
by
Everest
 
Re in
 
2023 without triggering
 
the requirement
 
for prior
 
approval of
 
regulatory authorities
 
in connection
with a dividend is $555 million.
 
 
 
21
Insurance Regulation.
Bermuda Re
 
and Everest
 
International are
 
not admitted
 
to do
 
business in any
 
jurisdiction
in
 
the
 
U.S.
 
These
 
entities
 
conduct
 
their
 
insurance
 
business
 
from
 
their
 
offices
 
in
 
Bermuda,
 
and
 
in
 
the
 
case
 
of
Bermuda Re,
 
its branch
 
in the UK.
 
Everest
 
Assurance, by
 
virtue of its
 
one-time election
 
under section
 
953(d) of
the U.S.
 
Internal Revenue
 
Code to
 
be a
 
U.S. income
 
tax paying
 
“Controlled Foreign
 
Corporation”,
 
is admitted
 
to
do
 
business
 
in the
 
U.S.
 
and
 
Bermuda.
 
In
 
Bermuda,
 
Bermuda
 
Re,
 
Everest
 
International,
 
Everest
 
Assurance
 
and
Mt. Logan Re are
 
regulated by the
 
Insurance Act 1978 (as
 
amended) and related
 
regulations (the “Act”).
 
The Act
establishes solvency
 
and liquidity
 
standards
 
and auditing
 
and reporting
 
requirements and
 
subjects Bermuda
 
Re,
Everest
 
International
 
and
 
Everest
 
Assurance
 
to
 
the
 
supervision,
 
investigation
 
and
 
intervention
 
powers
 
of
 
the
Bermuda
 
Monetary
 
Authority.
 
Under
 
the
 
Act,
 
Bermuda
 
Re
 
and
 
Everest
 
International,
 
as
 
Class
 
4
 
insurers,
 
are
each
 
required
 
to
 
maintain
 
a
 
principal
 
office
 
in
 
Bermuda,
 
to
 
maintain
 
a
 
minimum
 
of
 
$100
 
million
 
in
 
statutory
capital
 
and surplus,
 
to have
 
an independent
 
auditor approved
 
by the
 
Bermuda Monetary
 
Authority conduct
 
an
annual audit and
 
report on their
 
respective statutory
 
and U.S. GAAP
 
financial statements
 
and filings and
 
to have
an appointed
 
loss reserve
 
specialist (also
 
approved
 
by the
 
Bermuda Monetary
 
Authority) review
 
and report
 
on
their
 
respective
 
loss
 
reserves
 
annually.
 
Under
 
the
 
Act,
 
Everest
 
Assurance
 
is
 
licensed
 
as
 
a
 
Class
 
3A
 
insurer
 
for
general business and as a Class C insurer for
 
long-term business.
 
Bermuda
 
Re
 
is
 
also
 
registered
 
under
 
the
 
Act
 
as
 
long
 
term
 
insurer
 
and
 
is
 
thereby
 
authorized
 
to
 
write
 
life
 
and
annuity
 
business.
 
As
 
a
 
long
 
term
 
insurer,
 
Bermuda
 
Re
 
is
 
required
 
to
 
maintain
 
$250,000
 
in
 
statutory
 
capital
separate
 
from
 
their
 
Class
 
4
 
minimum
 
statutory
 
capital
 
and
 
surplus,
 
to
 
maintain
 
long
 
term
 
business
 
funds,
 
to
separately account
 
for this business
 
and to have
 
an approved
 
actuary prepare a
 
certificate concerning
 
their long
term
 
business
 
assets
 
and
 
liabilities
 
to
 
be
 
filed
 
annually.
 
Bermuda
 
Re’s
 
operations
 
in
 
the
 
United
 
Kingdom
 
and
worldwide
 
are
 
subject
 
to
 
regulation
 
by
 
the
 
Prudential
 
Regulation
 
Authority
 
(the
 
“PRA”).
 
The
 
PRA
 
imposes
solvency,
 
capital adequacy,
 
audit, financial
 
reporting and
 
other regulatory
 
requirements
 
on insurers
 
transacting
business
 
in the
 
United Kingdom.
 
Bermuda Re
 
presently
 
meets or
 
exceeds
 
all of
 
the PRA’s
 
solvency
 
and capital
requirements.
 
U.S.
 
domestic
 
property
 
and
 
casualty
 
insurers,
 
including
 
reinsurers,
 
are
 
subject
 
to
 
regulation
 
by
 
their
 
state
 
of
domicile
 
and
 
by
 
those
 
states
 
in
 
which
 
they
 
are
 
licensed.
 
The
 
regulation
 
of
 
reinsurers
 
is
 
typically
 
focused
 
on
financial
 
condition,
 
investments,
 
management
 
and
 
operation.
 
The
 
rates
 
and
 
policy
 
terms
 
of
 
reinsurance
agreements are generally not
 
subject to direct regulation by any
 
governmental authority.
 
The operations
 
of Everest
 
Re’s
 
foreign
 
branch
 
offices in
 
Canada
 
and Singapore
 
are subject
 
to regulation
 
by the
insurance
 
regulatory
 
officials
 
of
 
those
 
jurisdictions.
 
Management
 
believes
 
that
 
the
 
Company
 
is
 
in
 
compliance
with applicable laws and regulations
 
pertaining to its business and operations.
 
Everest
 
Indemnity,
 
Everest
 
National,
 
Everest
 
Security,
 
Everest
 
Denali
 
and
 
Everest
 
Premier
 
are
 
subject
 
to
regulations
 
similar to
 
the U.S.
 
regulations
 
applicable
 
to
 
Everest
 
Re.
 
In addition,
 
these companies
 
must
 
comply
with
 
substantial
 
regulatory
 
requirements
 
in
 
each
 
state
 
where
 
they
 
conduct
 
business.
 
These
 
additional
requirements
 
include,
 
but
 
are
 
not
 
limited
 
to,
 
rate
 
and
 
policy
 
form
 
requirements,
 
requirements
 
with
 
regard
 
to
licensing,
 
agent
 
appointments,
 
participation
 
in
 
residual
 
markets
 
and
 
claim
 
handling
 
procedures.
 
These
regulations are primarily designed for the protection
 
of policyholders.
 
The operations of Ireland Insurance
 
and its branch offices in Netherlands,
 
Germany, France
 
and Spain are subject
to
 
regulation
 
by
 
the
 
insurance
 
regulatory
 
officials
 
of
 
those
 
jurisdictions.
 
Management
 
believes
 
that
 
the
Company is in compliance with applicable laws
 
and regulations pertaining to its business
 
and operations.
 
Licenses.
Everest
 
Re
 
is
 
a
 
licensed
 
property
 
and
 
casualty
 
insurer
 
and/or
 
reinsurer
 
in
 
all
 
states,
 
the
 
District
 
of
Columbia, Puerto Rico and
 
Guam.
 
Such licensing enables U.S. domestic
 
ceding company clients
 
to take credit
 
for
uncollateralized reinsurance
 
receivables from Everest
 
Re in their statutory
 
financial statements.
 
Everest Re
 
is licensed as a property
 
and casualty reinsurer
 
in Canada. It is also
 
authorized to conduct
 
reinsurance
business in Singapore
 
and Brazil.
 
Everest Re
 
can also write
 
reinsurance in other
 
foreign countries.
 
Because some
jurisdictions
 
require
 
a reinsurer
 
to register
 
in order
 
to be
 
an acceptable
 
market
 
for local
 
insurers,
 
Everest
 
Re is
 
 
22
registered as
 
a foreign insurer
 
and/or reinsurer
 
in the following
 
countries:
 
Bolivia, Brazil, Chile,
 
China, Colombia,
Dominican
 
Republic,
 
Ecuador,
 
El
 
Salvador,
 
Guatemala,
 
Honduras,
 
India,
 
Mexico,
 
Nicaragua,
 
Panama,
 
Paraguay,
the Philippines, Singapore and Venezuela.
 
Everest National
 
is licensed in 50 states, the District of Columbia and
 
Puerto Rico.
 
Everest
 
Indemnity
 
is
 
a
 
Delaware
 
Domestic
 
Surplus
 
Lines
 
Insurer
 
and
 
is
 
eligible
 
to
 
write
 
insurance
 
on
 
a
 
surplus
lines basis in the 50 states, the District of Columbia
 
and Puerto Rico.
 
Everest
 
Security
 
is
 
licensed
 
in
 
Georgia
 
and
 
Alabama
 
and
 
is
 
approved
 
as
 
an
 
eligible
 
surplus
 
lines
 
insurer
 
in
Delaware.
 
Everest
 
Denali is
 
licensed in
 
50 states
 
and the
 
District of
 
Columbia.
 
Everest
 
Premier is
 
licensed in
 
50 states
 
and
the District of Columbia.
 
Bermuda
 
Re
 
and
 
Everest
 
International
 
are
 
registered
 
as
 
Class
 
4
 
insurers
 
in
 
Bermuda,
 
and
 
Bermuda
 
Re
 
is
 
also
registered as
 
a long-term insurer
 
in Bermuda.
 
Bermuda Re is
 
also registered
 
as a certified
 
reinsurer in New
 
York
and
 
Delaware
 
and
 
is
 
registered
 
as
 
a
 
reciprocal
 
reinsurer
 
in:
 
Delaware;
 
California;
 
Massachusetts;
 
Michigan;
Minnesota; New
 
Hampshire; New
 
York;
 
Ohio and
 
Texas.
 
Bermuda Re
 
is also
 
an authorized
 
reinsurer in
 
the U.K.
 
and is also registered as a reinsurer
 
in China.
Everest Assurance
 
is registered as a
 
Class 3A general business
 
insurer in Bermuda and a Class
 
C long-term insurer
in Bermuda.
 
By virtue
 
of its
 
one-time election
 
under section
 
953(d) of
 
the U.S.
 
Internal
 
Revenue
 
Code to
 
be a
U.S.
 
income
 
tax
 
paying
 
“Controlled
 
Foreign
 
Corporation,”
 
Everest
 
Assurance
 
may
 
operate
 
in
 
both
 
the U.S.
 
and
Bermuda. Everest
 
Assurance
 
is also
 
considered
 
an approved/eligible
 
alien
 
surplus
 
lines insurer
 
in the
 
50 states
and the District of Columbia
 
In addition, Everest
 
Assurance can also write reinsurance
 
in other foreign countries.
 
Because some jurisdictions
 
require a reinsurer
 
to register
 
in order to
 
be an acceptable
 
market for
 
local insurers
 
,
Everest
 
Assurance
 
is
 
registered
 
as
 
a
 
foreign
 
insurer
 
and/or
 
reinsurance
 
in
 
the
 
following
 
countries:
 
Bolivia,
Columbia, Chile, Ecuador,
 
Guatemala, Mexico and Paraguay.
Ireland Re is licensed to write non-life
 
reinsurance for the London
 
and European markets.
 
Ireland
 
Insurance
 
is
 
licensed
 
to
 
write
 
insurance
 
for
 
the
 
European
 
markets.
 
In
 
addition,
 
Ireland
 
Insurance
 
is
 
considered an approved/eligible
 
alien surplus lines insurer in the 50 states
 
and the District of Columbia
Everest Canada is licensed to
 
write property and casualty insurance
 
in Canada.
 
Everest
 
Compañia de Seguros
 
Generales Chile
 
S.A. is an
 
insurance corporation
 
authorized by
 
the general
 
laws of
Chile.
Periodic Examinations.
Led by their
 
state of
 
domicile, U.S.
 
insurance companies
 
are subject
 
to periodic financial
examination
 
of
 
their
 
affairs,
 
usually
 
every
 
three
 
to
 
five
 
years.
 
U.S.
 
insurance
 
companies
 
are
 
also
 
subject
 
to
examinations
 
by the
 
various
 
state
 
insurance
 
departments
 
where they
 
are
 
licensed concerning
 
compliance with
applicable conduct
 
of business
 
regulations.
 
In addition,
 
foreign insurance
 
companies and
 
foreign branch
 
offices
are subject
 
to examination
 
and review
 
by regulators
 
in their
 
various
 
jurisdictions.
 
None of
 
the reports
 
of these
examinations or reviews contained
 
any material findings or recommendations.
 
NAIC Risk-Based
 
Capital Requirements.
 
The U.S.
 
National
 
Association of
 
Insurance
 
Commissioners
 
(“NAIC”) has
developed a
 
formula to
 
measure the
 
statutory minimum
 
amount of
 
capital required
 
for a
 
property and
 
casualty
insurance
 
company
 
to
 
support
 
its
 
overall
 
business
 
operations
 
in
 
light
 
of
 
its
 
size
 
and
 
risk
 
profile.
 
The
 
major
categories
 
of
 
a
 
company’s
 
risk
 
profile
 
are
 
its
 
asset
 
risk,
 
credit
 
risk,
 
and
 
underwriting
 
risk.
 
The
 
standard
 
is
 
an
effort
 
to
 
anticipate
 
insolvencies.
 
This
 
allows
 
regulators
 
to
 
take
 
actions
 
that
 
could
 
limit
 
the
 
impact
 
of
 
these
insolvencies on policyholders.
 
 
 
 
23
Under the
 
approved
 
formula,
 
a company’s
 
adjusted
 
statutory
 
surplus (end
 
of period
 
surplus adjusted
 
for items
not currently
 
applicable
 
to
 
the Everest
 
companies)
 
is compared
 
to
 
its risk
 
based
 
capital
 
(“RBC”).
 
If this
 
ratio
 
is
above a minimum
 
threshold, no
 
action is necessary.
 
Below this threshold
 
are four distinct
 
action levels at
 
which
an insurer’s
 
domiciliary state
 
regulator can
 
intervene with
 
increasing degrees
 
of authority
 
over an insurer
 
as the
ratio
 
of
 
adjusted
 
surplus
 
to
 
RBC
 
decreases.
 
The
 
mildest
 
intervention
 
requires
 
an
 
insurer
 
to
 
submit
 
a
 
plan
 
of
appropriate corrective actions.
 
The most severe action requires
 
an insurer to be rehabilitated or
 
liquidated.
 
Based on their financial positions at December 31, 2022, Everest
 
Re, Everest National,
 
Everest Indemnity,
 
Everest
Security, Everest
 
Denali and Everest Premier exceed
 
the minimum thresholds.
 
Tax Matters.
The following summary
 
of the taxation
 
of the Company
 
is based on current
 
law.
 
There can be
 
no assurance that
legislative, judicial, or administrative
 
changes will not be enacted that might materially
 
affect this summary.
Bermuda.
 
Under Bermuda
 
law,
 
no income,
 
withholding or
 
capital
 
gains
 
taxes
 
are imposed
 
upon Group
 
and its
Bermuda
 
subsidiaries.
 
Group
 
and its
 
Bermuda
 
subsidiaries
 
have
 
received
 
an undertaking
 
from
 
the
 
Minister
 
of
Finance in
 
Bermuda
 
that,
 
in the
 
event
 
of any
 
taxes
 
being imposed,
 
Group
 
and its
 
Bermuda
 
subsidiaries
 
will be
exempt
 
from
 
taxation
 
in
 
Bermuda
 
until
 
March
 
2035.
 
Non-Bermuda
 
branches
 
of
 
Bermuda
 
subsidiaries
 
are
subject to local taxes in
 
the jurisdictions in which they operate.
 
United
 
States.
 
On
 
December
 
22,
 
2017,
 
the
 
Tax
 
Cuts
 
and
 
Jobs
 
Act
 
(“TCJA”)
 
was
 
signed
 
into
 
law.
 
The
 
Internal
Revenue Service
 
(“IRS”) and
 
the United
 
States
 
Treasury
 
Department (“U.S.
 
Treasury”)
 
have subsequently
 
issued
both proposed and
 
final regulations related
 
to the new law.
 
Management continues
 
to monitor this
 
guidance as
it
 
is
 
issued
 
to
 
determine
 
the
 
impact
 
on
 
the
 
Company
 
and
 
acts
 
if necessary.
 
Group’s
 
U.S.
 
subsidiaries
 
conduct
business in and are
 
subject to taxation
 
in the U.S. Non-U.S.
 
branches of U.S. subsidiaries
 
are subject to both
 
local
taxation in
 
the jurisdictions in which
 
they operate
 
and U.S. corporate
 
income tax but
 
are generally
 
relieved from
double
 
taxation
 
through
 
the
 
use
 
of
 
foreign
 
tax
 
credits
 
against
 
their
 
U.S.
 
income
 
tax
 
liability.
 
Should
 
the
 
U.S.
subsidiaries
 
distribute
 
current
 
or
 
accumulated
 
earnings
 
and
 
profits
 
in
 
the
 
form
 
of
 
dividends
 
or
 
otherwise,
 
the
Company
 
would
 
be
 
subject
 
to
 
withholding
 
taxes.
 
The
 
cumulative
 
amount
 
that
 
would
 
be
 
subject
 
to
 
U.S.
withholding
 
tax,
 
if distributed,
 
is not
 
practicable
 
to
 
compute.
 
Group
 
and its
 
Bermuda subsidiaries
 
believe
 
that
they
 
have
 
operated
 
and
 
will
 
continue
 
to
 
operate
 
their
 
businesses
 
in
 
a
 
manner
 
that
 
will
 
not
 
cause
 
them
 
to
generate income treated
 
as effectively connected
 
with the conduct of a trade or
 
business within the U.S.
 
On this
basis, Group
 
does not
 
expect that
 
it and
 
its Bermuda
 
subsidiaries will
 
be required
 
to pay
 
U.S. corporate
 
income
taxes
 
other
 
than
 
withholding
 
taxes
 
on
 
certain
 
investment
 
income
 
and
 
premium
 
excise
 
taxes.
 
If
 
Group
 
or
 
its
Bermuda
 
subsidiaries
 
were
 
to
 
become
 
subject
 
to
 
U.S.
 
income
 
tax,
 
there
 
could
 
be a
 
material
 
adverse
 
effect
 
on
the Company’s financial condition,
 
results of operations and cash flows.
 
On August 16, 2022, the Inflation Reduction Act of 2022 (“IRA”)
 
was enacted. We have
 
evaluated the tax
provisions of the IRA, the most significant of which are
 
the corporate alternative
 
minimum tax and the share
repurchase excise tax
 
and do not expect the legislation to have
 
a material impact on our results of operations.
 
As
the IRS issues additional guidance, we will evaluate
 
any impact to our consolidated
 
financial statements.
United Kingdom.
 
Bermuda Re’s
 
UK branch,
 
the Company’s
 
Lloyd’s
 
Syndicate and
 
Ireland Insurance’s
 
UK branch
conduct business
 
in the UK
 
and are subject
 
to taxation
 
in the UK.
 
Bermuda Re believes
 
that it has
 
operated and
will
 
continue
 
to
 
operate
 
its
 
Bermuda
 
operation
 
in
 
a
 
manner
 
which
 
will
 
not
 
cause
 
them
 
to
 
be
 
subject
 
to
 
UK
taxation.
 
If
 
Bermuda
 
Re’s
 
Bermuda
 
operations
 
were
 
to
 
become
 
subject
 
to
 
UK
 
income
 
tax,
 
there
 
could
 
be
 
a
material adverse impact on the Company’s
 
financial condition, results of operations
 
and cash flow.
 
Ireland.
 
Holdings Ireland,
 
Everest
 
Dublin Holdings,
 
Ireland Re
 
and Ireland
 
Insurance conduct
 
business in
 
Ireland
and are subject to taxation
 
in Ireland.
 
 
 
 
 
 
 
 
24
Switzerland.
 
Ireland
 
Re’s
 
Zurich
 
branch
 
conducts
 
business
 
in
 
Switzerland
 
and
 
is
 
subject
 
to
 
taxation
 
in
Switzerland.
 
Netherlands.
 
Ireland
 
Insurance’s
 
Netherland
 
branch
 
conducts
 
business
 
in
 
the
 
Netherlands
 
and
 
is
 
subject
 
to
taxation in the Netherlands.
 
Germany:
 
Ireland
 
Insurance’s
 
German
 
branch
 
conducts
 
business
 
in
 
Germany
 
and
 
is
 
subject
 
to
 
taxation
 
in
Germany.
 
Spain:
 
Ireland Insurance’s
 
Spanish branch conducts business in Spain and is subject
 
to taxation in Spain.
France:
 
Ireland Insurance’s
 
French branch conducts business in France
 
and is subject to taxation in France.
Belgium: Ireland Insurance’s
 
Belgium branch conducts business in Belgium and is subject
 
to taxation in Belgium.
Singapore:
 
Everest
 
International
 
Reinsurance
 
Ltd’s
 
Singapore
 
branch
 
conducts
 
business
 
in
 
Singapore
 
and
 
is
subject to taxation in Singapore.
Chile:
 
Everest Insurance
 
Chile conducts business in Chile and is subject to taxation
 
in Chile.
Available Information.
The Company’s
 
Annual
 
Reports
 
on Form
 
10-K, Quarterly
 
Reports
 
on
 
Form
 
10-Q, Current
 
Reports
 
on Form
 
8-K,
proxy statements
 
and amendments to those reports
 
are available free of charge
 
through the Company’s
 
internet
website
 
at
 
http://www.everestre.com
 
as
 
soon
 
as
 
reasonably
 
practicable
 
after
 
such
 
reports
 
are
 
electronically
filed with the Securities and Exchange Commission (the “SEC”).
 
ITEM 1A.
 
RISK FACTORS
In addition to the other information
 
provided in this report,
 
the following risk factors
 
should be considered when
evaluating
 
an
 
investment
 
in
 
our
 
securities.
 
If
 
the
 
circumstances
 
contemplated
 
by
 
the
 
individual
 
risk
 
factors
materialize, our business, financial condition
 
and results of operations could
 
be materially and adversely affected
and the trading price of our common shares could
 
decline significantly.
 
 
 
 
 
 
 
 
 
 
 
 
25
RISKS RELATING TO
 
OUR BUSINESS
Our results could be adversely affected by catastrophic
 
events.
 
We are exposed
 
to unpredictable catastrophic
 
events, including weather-related
 
and other natural
 
catastrophes,
as well as acts of
 
terrorism.
 
The frequency and/or
 
severity of catastrophic
 
events may be
 
impacted in the future
by
 
the
 
continued
 
effects
 
of
 
climate
 
change.
 
Climate
 
change
 
and
 
resulting
 
changes
 
in
 
global
 
temperatures,
weather patterns,
 
and sea
 
levels may
 
both increase
 
the frequency
 
and severity
 
of natural
 
catastrophes
 
and the
resulting
 
losses
 
in
 
the
 
future
 
and
 
impact
 
our
 
risk
 
modeling
 
assumptions.
 
We
 
cannot
 
predict
 
the
 
impact
 
that
changing
 
climate
 
conditions,
 
if
 
any,
 
may
 
have
 
on
 
our
 
results
 
of
 
operations
 
or
 
our
 
financial
 
condition.
Additionally,
 
we cannot
 
predict how
 
legal, regulatory
 
and/or social
 
responses to
 
concerns around
 
global climate
change
 
and
 
the
 
resulting
 
impact
 
on
 
various
 
sectors
 
of
 
the
 
economy
 
may
 
impact
 
our
 
business.
 
Any
 
material
reduction in our operating
 
results caused by
 
the occurrence of one or
 
more catastrophes
 
could inhibit our ability
to
 
pay
 
dividends
 
or
 
to
 
meet our
 
interest
 
and
 
principal
 
payment
 
obligations.
 
By
 
way
 
of illustration,
 
during
 
the
past five calendar years, pre
 
-tax catastrophe
 
losses, net of reinsurance, were as follows:
 
Calendar year:
Pre-tax net catastrophe losses
(Dollars in millions)
2022
$
1,055
2021
1,135
2020
425
2019
576
2018
1,800
Our losses from future catastrophic events
 
could exceed our projections.
 
We
 
use
 
projections
 
of
 
possible
 
losses
 
from
 
future
 
catastrophic
 
events
 
of
 
varying
 
types
 
and
 
magnitudes
 
as
 
a
strategic underwriting tool.
 
We use these loss projections
 
to estimate our potential
 
catastrophe losses
 
in certain
geographic areas
 
and decide
 
on the placement
 
of retrocessional
 
coverage or
 
other actions
 
to limit the
 
extent of
potential
 
losses
 
in
 
a
 
given
 
geographic
 
area.
 
These
 
loss
 
projections
 
are
 
approximations,
 
reliant
 
on
 
a
 
mix
 
of
quantitative
 
and
 
qualitative
 
processes,
 
and
 
actual
 
losses
 
may
 
exceed
 
the
 
projections
 
by
 
a
 
material
 
amount,
resulting in a material adverse effect
 
on our financial condition and results of operations.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
26
If our loss
 
reserves are inadequate
 
to meet our
 
actual losses, our
 
net income
 
would be reduced
 
or we could
 
incur
a loss.
 
We
 
are
 
required
 
to
 
maintain
 
reserves
 
to
 
cover
 
our
 
estimated
 
ultimate
 
liability
 
of
 
losses
 
and
 
LAE
 
for
 
both
reported and
 
unreported claims
 
incurred.
 
These reserves
 
are only
 
estimates of
 
what we
 
believe the
 
settlement
and administration
 
of claims will
 
cost based
 
on facts and
 
circumstances known
 
to us.
 
In setting
 
reserves for
 
our
reinsurance
 
liabilities,
 
we
 
rely
 
on
 
claim
 
data
 
supplied
 
by
 
our
 
ceding
 
companies
 
and
 
brokers
 
and
 
we
 
employ
actuarial and statistical
 
projections.
 
The information received
 
from our ceding companies
 
is not always timely or
accurate,
 
which
 
can
 
contribute
 
to
 
inaccuracies
 
in
 
our
 
loss
 
projections.
 
Because
 
of
 
the
 
uncertainties
 
that
surround
 
our estimates
 
of loss
 
and LAE
 
reserves,
 
we
 
cannot
 
be certain
 
that
 
ultimate
 
losses
 
and LAE
 
payments
will not exceed our estimates.
 
If our reserves are deficient, we
 
would be required to increase
 
loss reserves in the
period in
 
which such
 
deficiencies are
 
identified which
 
would cause
 
a charge
 
to our
 
earnings and
 
a reduction
 
of
capital.
 
During the past five
 
calendar years,
 
the reserve re-estimation
 
process resulted in
 
an increase to our
 
pre-
tax net income in 2022, 2021 and 2019 and resulted
 
in a decrease to our pre-tax net income
 
in 2020 and 2018:
 
Calendar year:
Effect on pre-tax net income
(Dollars in millions)
2022
$
1
increase
2021
9
increase
2020
401
decrease
2019
64
increase
2018
387
decrease
The difficulty
 
in
 
estimating
 
our
 
reserves
 
is significantly
 
more challenging
 
as
 
it
 
relates
 
to
 
reserving
 
for
 
potential
A&E liabilities.
 
At year-end 2022,
 
1.3% of our gross
 
reserves were comprised
 
of A&E reserves.
 
A&E liabilities are
especially hard
 
to estimate
 
for many
 
reasons, including
 
the long
 
delays between
 
exposure and
 
manifestation
 
of
any
 
bodily
 
injury
 
or
 
property
 
damage,
 
difficulty
 
in
 
identifying
 
the
 
source
 
of
 
the
 
asbestos
 
or
 
environmental
contamination,
 
long
 
reporting
 
delays
 
and
 
difficulty
 
in
 
properly
 
allocating
 
liability
 
for
 
the
 
asbestos
 
or
environmental
 
damage.
 
Legal
 
tactics
 
and judicial
 
and legislative
 
developments
 
affecting
 
the scope
 
of insurers’
liability,
 
which
 
can
 
be
 
difficult
 
to
 
predict,
 
also
 
contribute
 
to
 
uncertainties
 
in
 
estimating
 
reserves
 
for
 
A&E
liabilities.
 
The
 
failure
 
to
 
accurately
 
assess
 
underwriting
 
risk
 
and
 
establish
 
adequate
 
premium
 
rates
 
could
 
reduce
 
our
 
net
income or result in a net loss.
 
Our success depends on our ability to accurately
 
assess the risks associated with the businesses
 
on which the risk
is retained.
 
If we fail to accurately
 
assess the risks we retain, we may
 
fail to establish adequate
 
premium rates to
cover our losses and LAE.
 
This could reduce our net income and even result
 
in a net loss.
 
In addition,
 
losses may
 
arise from
 
events or
 
exposures that
 
are not
 
anticipated when
 
the coverage
 
is priced.
 
In
addition to unanticipated events,
 
we also face the unanticipated expansion
 
of our exposures, particularly in long-
tail liability lines.
 
An example
 
of this is the
 
expansion over time
 
of the scope
 
of insurers’
 
legal liability within
 
the
mass tort arena, particularly for A&E exposures
 
discussed above.
 
Decreases in pricing for property and casualty reinsurance
 
and insurance could reduce our net income.
 
The worldwide
 
reinsurance
 
and insurance
 
businesses
 
are highly
 
competitive,
 
as well
 
as cyclical
 
by
 
product
 
and
market.
 
These
 
cycles,
 
as
 
well
 
as
 
other
 
factors
 
that
 
influence
 
aggregate
 
supply
 
and
 
demand
 
for
 
property
 
and
casualty insurance
 
and reinsurance products,
 
are outside of our
 
control.
 
The supply of (re)insurance
 
is driven by
prevailing
 
prices
 
and
 
levels
 
of
 
capacity
 
that
 
may
 
fluctuate
 
in
 
response
 
to
 
a
 
number
 
of
 
factors
 
including
 
large
catastrophic
 
losses and investment
 
returns being
 
realized in
 
the insurance
 
industry.
 
Demand for
 
(re)insurance is
influenced by
 
underwriting results
 
of insurers
 
and insureds,
 
including catastrophe
 
losses, and
 
prevailing general
 
 
 
 
 
 
 
 
 
27
economic
 
conditions.
 
If
 
any
 
of
 
these
 
factors
 
were
 
to
 
result
 
in
 
a
 
decline
 
in
 
the
 
demand
 
for
 
(re)insurance
 
or
 
an
overall increase in (re)insurance
 
capacity, our
 
net income could decrease.
If
 
rating
 
agencies
 
downgrade
 
the
 
ratings
 
of
 
our
 
insurance
 
subsidiaries,
 
future
 
prospects
 
for
 
growth
 
and
profitability could be significantly and adversely
 
affected.
 
Our active insurance
 
company subsidiaries
 
currently hold financial
 
strength ratings
 
assigned by third-party rating
agencies
 
which
 
assess
 
and
 
rate
 
the
 
claims
 
paying
 
ability
 
and
 
financial
 
strength
 
of
 
insurers
 
and
 
reinsurers.
 
Financial
 
strength
 
ratings
 
are
 
used
 
by
 
cedents,
 
agents
 
and
 
brokers
 
to
 
assess
 
the
 
financial
 
strength
 
and
 
credit
quality of reinsurers
 
and insurers.
 
A downgrade
 
or withdrawal
 
of any
 
of these ratings
 
could adversely
 
affect our
ability
 
to
 
market
 
our
 
reinsurance
 
and
 
insurance
 
products,
 
our
 
ability
 
to
 
compete
 
with
 
other
 
reinsurers
 
and
insurers,
 
and
 
could
 
have
 
a
 
material
 
and
 
adverse
 
effect
 
on
 
our
 
ability
 
to
 
write
 
new
 
business
 
that
 
in
 
turn
 
could
impact our profitability and operating
 
results.
 
In December 2021, S&P announced proposed
 
changes to its rating
methodologies.
 
The
 
proposed
 
changes
 
have
 
not
 
been
 
finalized,
 
so
 
the
 
impact,
 
if
 
any,
 
that
 
these
 
changes
 
may
have on our financial strength
 
ratings is unknown.
Consistent
 
with
 
market
 
practice,
 
much
 
of
 
our
 
treaty
 
reinsurance
 
business
 
allows
 
the
 
ceding
 
company
 
to
terminate
 
the
 
contract
 
or
 
seek
 
collateralization
 
of our
 
obligations
 
in
 
the
 
event
 
of a
 
rating
 
downgrade
 
below
 
a
certain
 
threshold.
 
The termination
 
provision
 
would
 
generally
 
be triggered
 
if a
 
rating
 
fell
 
below
 
A.M. Best’s
 
A-
rating
 
level.
 
To
 
a
 
lesser
 
extent,
 
Everest
 
Re
 
also
 
has
 
modest
 
exposure
 
to
 
reinsurance
 
contracts
 
that
 
contain
provisions
 
for
 
obligatory
 
funding
 
of
 
outstanding
 
liabilities
 
in
 
the
 
event
 
of
 
a
 
rating
 
agency
 
downgrade.
 
Those
provisions would also generally
 
be triggered if Everest Re’s
 
rating fell below A.M. Best’s
 
A- rating level.
 
The
 
failure
 
of
 
our
 
insureds,
 
intermediaries
 
and
 
reinsurers
 
to
 
satisfy
 
their
 
obligations
 
to
 
us
 
could
 
reduce
 
our
income.
 
In
 
accordance
 
with
 
industry
 
practice,
 
we
 
have
 
uncollateralized
 
receivables
 
from
 
insureds,
 
agents
 
and
 
brokers
and/or rely
 
on agents
 
and brokers
 
to process
 
our payments.
 
We may
 
not be
 
able to
 
collect amounts
 
due from
insureds, agents and brokers,
 
resulting in a reduction to net income.
We are
 
subject to
 
credit risk
 
of reinsurers
 
in connection
 
with retrocessional
 
arrangements
 
because the
 
transfer
of risk to a
 
reinsurer does not
 
relieve us of
 
our liability to the insured.
 
In addition, reinsurers
 
may be unwilling
 
to
pay
 
us
 
even
 
though
 
they
 
are
 
able
 
to
 
do
 
so.
 
The
 
failure
 
of
 
one
 
or
 
more
 
of
 
our
 
reinsurers
 
to
 
honor
 
their
obligations
 
to us
 
in a
 
timely fashion
 
would impact
 
our cash
 
flow and
 
reduce our
 
net income
 
and could
 
cause us
to incur a significant loss.
If
 
we
 
are
 
unable
 
or
 
choose
 
not
 
to
 
purchase
 
reinsurance
 
and
 
transfer
 
risk
 
to
 
the
 
reinsurance
 
markets,
 
our
 
net
income could be reduced or we could incur a net
 
loss in the event of unusual loss experience.
We
 
are
 
generally
 
less reliant
 
on the
 
purchase
 
of reinsurance
 
than many
 
of our
 
competitors,
 
in part
 
because of
our strategic
 
emphasis on
 
underwriting discipline
 
and management
 
of the
 
cycles inherent
 
in our
 
business.
 
We
try to
 
separate
 
our risk
 
taking process
 
from our
 
risk mitigation
 
process in
 
order to
 
avoid developing
 
too great
 
a
reliance on
 
reinsurance.
 
With the
 
expansion
 
of the
 
capital
 
markets
 
into insurance
 
linked
 
financial instruments,
we
 
increased
 
our
 
use
 
of
 
capital
 
market
 
products
 
for
 
catastrophe
 
reinsurance.
 
In
 
addition,
 
we
 
have
 
increased
some of
 
our quota
 
share contracts
 
with larger
 
retrocessions.
 
The percentage
 
of business
 
that we
 
reinsure may
vary
 
considerably
 
from
 
year
 
to
 
year,
 
depending
 
on
 
our
 
view
 
of
 
the
 
relationship
 
between
 
cost
 
and
 
expected
benefit for the contract period.
 
2022
2021
2020
2019
2018
Percentage of ceded written premiums to gross
 
written premiums
11.5%
12.3%
13.0%
14.3%
12.5%
28
Our industry is highly competitive and we may not be able
 
to compete as successfully in the future.
Our industry
 
is highly competitive
 
and subject
 
to pricing cycles
 
that can
 
be pronounced.
 
We compete
 
globally in
the
 
United
 
States,
 
Bermuda
 
and
 
international
 
reinsurance
 
and
 
insurance
 
markets
 
with
 
numerous
 
competitors.
 
Our
 
competitors
 
include
 
independent
 
reinsurance
 
and
 
insurance
 
companies,
 
subsidiaries
 
or
 
affiliates
 
of
established
 
worldwide
 
insurance
 
companies,
 
reinsurance
 
departments
 
of
 
certain
 
insurance
 
companies
 
and
domestic and international underwriting operations,
 
including underwriting syndicates at
 
Lloyd’s
 
of London.
 
According to
 
S&P,
 
Everest
 
ranks among
 
the top
 
ten global
 
property &
 
casualty reinsurance
 
groups,
 
where more
than two-thirds
 
of the
 
market share
 
is concentrated.
 
The worldwide
 
net premium
 
written by
 
the Top
 
40 global
reinsurance groups
 
for both life and
 
non-life business was
 
estimated to be
 
$292 billion in 2022 according
 
to data
compiled by
 
S&P.
 
In addition to
 
competitors the
 
entry of alternative
 
capital market
 
products and
 
new company
formations provide additional sources
 
of reinsurance and insurance capacity.
We are dependent on our key
 
personnel.
Our success
 
has been,
 
and will
 
continue to
 
be, dependent
 
on our
 
ability to
 
retain
 
the services
 
of our
 
Chairman,
Joseph
 
V.
 
Taranto
 
(age
 
73)
 
and
 
existing
 
key
 
executive
 
officers
 
and
 
to
 
attract
 
and
 
retain
 
additional
 
qualified
personnel
 
in the
 
future.
 
The loss
 
of the
 
services of
 
any
 
key
 
executive
 
officer or
 
the inability
 
to hire
 
and retain
other highly
 
qualified personnel
 
in the
 
future could
 
adversely
 
affect
 
our ability
 
to conduct
 
business.
 
Generally,
we
 
consider
 
key
 
executive
 
officers
 
to
 
be
 
those
 
individuals
 
who
 
have
 
the
 
greatest
 
influence
 
in
 
setting
 
overall
policy
 
and
 
controlling
 
operations:
 
President
 
and
 
Chief
 
Executive
 
Officer,
 
Juan
 
C.
 
Andrade
 
(age
 
57);
 
Executive
Vice
 
President
 
and
 
Chief
 
Financial
 
Officer,
 
Mark
 
Kociancic
 
(age
 
53),
 
Executive
 
Vice
 
President,
 
Group,
 
Chief
Operating
 
Officer and
 
Head of
 
Reinsurance
 
Division,
 
Jim Williamson
 
(age 49),
 
Executive
 
Vice President,
 
General
Counsel,
 
Chief
 
Compliance
 
Officer
 
and
 
Secretary,
 
Sanjoy
 
Mukherjee
 
(age
 
56)
 
and
 
Executive
 
Vice
 
President,
President
 
and
 
Chief
 
Executive
 
Officer
 
of
 
the
 
Everest
 
Insurance
®
 
Division,
 
Mike
 
Karmilowicz
 
(age
 
54).
 
We
 
have
employment contracts
 
with all
 
of our
 
key
 
officers,
 
which contain
 
automatic renewal
 
provisions
 
that provide
 
for
the contracts
 
to continue
 
indefinitely unless
 
sooner terminated
 
in accordance
 
with the contract
 
or as
 
otherwise
may be agreed.
Special
 
considerations
 
apply
 
to
 
our
 
Bermuda
 
operations.
 
Under
 
Bermuda
 
law,
 
non-Bermudians,
 
other
 
than
spouses of Bermudians
 
and individuals holding
 
permanent or working
 
resident certificates,
 
are not
 
permitted to
engage in any gainful occupation
 
in Bermuda without a work permit issued by the Bermuda
 
government.
 
A work
permit
 
is
 
only
 
granted
 
or
 
extended
 
if
 
the
 
employer
 
can
 
show
 
that,
 
after
 
a
 
proper
 
public
 
advertisement,
 
no
Bermudian, spouse
 
of a Bermudian
 
or individual holding
 
a permanent or
 
working resident
 
certificate is
 
available
who meets the minimum standards
 
reasonably required for
 
the position.
 
The Bermuda government places
 
a six-
year term
 
limit on individuals
 
with work
 
permits, subject
 
to specified
 
exemptions
 
for persons
 
deemed to be
 
key
employees
 
of
 
businesses
 
with
 
a
 
significant
 
physical
 
presence
 
in
 
Bermuda.
 
Currently,
 
all
 
our
 
Bermuda-based
professional
 
employees who
 
require work
 
permits have
 
been granted
 
permits by the
 
Bermuda government
 
that
expire at various times between
 
February 2024 and October 2027.
 
Our
 
investment
 
values
 
and
 
investment
 
income
 
could
 
decline
 
because
 
they
 
are
 
exposed
 
to
 
interest
 
rate,
 
credit,
and market risks.
A significant
 
portion of
 
our investment
 
portfolio consists
 
of fixed
 
income securities
 
and smaller
 
portions consist
of
 
equity
 
securities
 
and
 
other
 
investments.
 
The
 
fair
 
value
 
of
 
our
 
invested
 
assets
 
and
 
associated
 
investment
income
 
fluctuate
 
depending
 
on
 
general
 
economic
 
and
 
market
 
conditions.
 
For
 
example,
 
the
 
fair
 
value
 
of
 
our
predominant
 
fixed
 
income
 
portfolio
 
generally
 
increases
 
or decreases
 
inversely
 
to
 
fluctuations
 
in interest
 
rates.
 
The fair
 
value of
 
our fixed
 
income securities
 
could also
 
decrease as
 
a result
 
of a
 
downturn in
 
the business
 
cycle
that causes
 
the credit quality
 
of such securities
 
to deteriorate.
 
The net investment
 
income that
 
we realize
 
from
future investments in fixed
 
income securities will generally increase
 
or decrease with interest
 
rates.
 
29
Interest
 
rate
 
fluctuations
 
also
 
can
 
cause
 
net
 
investment
 
income
 
from
 
fixed
 
income
 
investments
 
that
 
carry
prepayment
 
risk,
 
such
 
as
 
mortgage-backed
 
and
 
other
 
asset-backed
 
securities,
 
to
 
differ
 
from
 
the
 
income
anticipated
 
from
 
those
 
securities
 
at
 
the
 
time
 
of
 
purchase.
 
In
 
addition,
 
if
 
issuers
 
of
 
individual
 
investments
 
are
unable to meet their obligations, investment
 
income will be reduced and realized capital
 
losses may arise.
The majority
 
of our
 
fixed income
 
securities are
 
classified as
 
available for
 
sale and
 
temporary
 
changes in
 
the fair
value
 
of these
 
investments
 
are reflected
 
as changes
 
to
 
our shareholders’
 
equity.
 
Our actively
 
managed
 
equity
security
 
portfolios
 
are
 
fair
 
valued
 
and
 
any
 
changes
 
in
 
fair
 
value
 
are
 
reflected
 
as
 
net
 
realized
 
capital
 
gains
 
or
losses.
 
As a result, a decline in the value of our securities reduces
 
our capital or could cause us to incur a loss.
 
As a
 
part of
 
our ongoing
 
analysis of
 
our investment
 
portfolio, we
 
are required
 
to assess
 
current expected
 
credit
losses
 
for
 
all
 
held-to-maturity
 
securities
 
and
 
evaluate
 
expected
 
credit
 
losses
 
for
 
available-for-sale
 
securities
when
 
fair
 
value
 
is
 
below
 
amortized
 
cost,
 
which
 
considers
 
reasonable
 
and
 
supportable
 
forecasts
 
of
 
future
economic conditions in addition to information
 
about past events and current
 
conditions. This analysis requires
 
a
high degree of
 
judgment. Financial assets
 
with similar risk characteristics
 
and relevant
 
historical loss
 
information
are included
 
in the development
 
of an estimate
 
of expected
 
lifetime losses.
 
Declines in relevant
 
stock and
 
other
financial markets
 
and other
 
factors
 
impacting the
 
value of
 
our investments
 
could result
 
in an
 
adverse
 
effect
 
on
our net income and
 
other financial results
We have
 
invested
 
a portion of
 
our investment
 
portfolio in
 
equity securities.
 
The value
 
of these assets
 
fluctuates
with changes in the markets.
 
In times of economic weakness,
 
the fair value of
 
these assets may decline,
 
and may
negatively
 
impact
 
net
 
income.
 
We
 
also
 
invest
 
in
 
non-traditional
 
investments
 
which
 
have
 
different
 
risk
characteristics
 
than traditional
 
fixed income
 
and equity
 
securities. These
 
alternative
 
investments
 
are comprised
primarily
 
of
 
private
 
equity
 
limited
 
partnerships.
 
The
 
changes
 
in
 
value
 
and
 
investment
 
income/(loss)
 
for
 
these
partnerships may be more volatile
 
than over-the-counter securities.
 
Prolonged and
 
severe disruptions
 
in the overall
 
public and
 
private debt
 
and equity
 
markets, such
 
as occurred
 
in
early
 
2020
 
related
 
to
 
the
 
COVID-19
 
pandemic,
 
could
 
result
 
in
 
significant
 
realized
 
and
 
unrealized
 
losses
 
in
 
our
investment portfolio.
 
There could also
 
be disruption in individual
 
market sectors,
 
such as occurred in the
 
energy
sector in
 
recent years.
 
Such declines
 
in the
 
financial markets
 
could result
 
in significant
 
realized
 
and unrealized
losses
 
on investments
 
and could
 
have
 
a material
 
adverse
 
impact on
 
our results
 
of operations,
 
equity,
 
business
and insurer financial strength and
 
debt ratings.
 
We may experience
 
foreign currency exchange losses that
 
reduce our net income and capital levels.
Through
 
our
 
Bermuda
 
and
 
international
 
operations,
 
we
 
conduct
 
business
 
in
 
a
 
variety
 
of
 
foreign
 
(non-U.S.)
currencies,
 
principally
 
the
 
Euro,
 
the
 
British
 
pound,
 
the
 
Canadian
 
dollar,
 
and
 
the
 
Singapore
 
dollar.
 
Assets,
liabilities,
 
revenues
 
and
 
expenses
 
denominated
 
in
 
foreign
 
currencies
 
are
 
exposed
 
to
 
changes
 
in
 
currency
exchange
 
rates.
 
Our reporting
 
currency is
 
the U.S.
 
dollar,
 
and exchange
 
rate
 
fluctuations,
 
especially relative
 
to
the U.S. dollar,
 
may materially
 
impact our results and
 
financial position.
 
In 2022, we wrote
 
approximately
 
25.8%
of our
 
coverages
 
in non-U.S.
 
currencies;
 
as of
 
December
 
31,
 
2022,
 
we
 
maintained
 
approximately
 
19.3%
 
of our
investment portfolio in investments
 
denominated in non-U.S. currencies.
 
We are subject to cybersecurity risks
 
that could negatively impact our business operations.
 
We
 
are
 
dependent
 
upon
 
our
 
information
 
technology
 
platform,
 
including
 
our
 
processing
 
systems,
 
data
 
and
electronic transmissions
 
in our
 
business operations.
 
Security breaches
 
could expose
 
us to
 
the loss
 
or misuse
 
of
our
 
information,
 
litigation
 
and
 
potential
 
liability.
 
In
 
addition,
 
cyber
 
incidents
 
that
 
impact
 
the
 
availability,
reliability,
 
speed, accuracy or
 
other proper functioning
 
of these systems
 
could have a
 
significant negative
 
impact
on our
 
operations and
 
possibly our
 
results.
 
An incident
 
could also
 
result in
 
a violation
 
of applicable
 
privacy and
other laws, damage
 
our reputation,
 
cause a loss
 
of customers
 
or give rise to
 
monetary fines and
 
other penalties,
which could be
 
significant.
 
Management is not
 
aware of a
 
cybersecurity incident
 
that has had
 
a material impact
on our operations.
 
30
The NAIC
 
has
 
adopted
 
an
 
Insurance
 
Data
 
Security
 
Model
 
Law,
 
which,
 
when
 
adopted
 
by
 
the
 
states
 
will require
insurers,
 
insurance
 
producers
 
and
 
other
 
entities
 
required
 
to
 
be licensed
 
under
 
state
 
insurance
 
laws
 
to
 
comply
with certain requirements
 
under state
 
insurance laws, such
 
as developing and
 
maintaining a written
 
information
security program,
 
conducting risk assessments
 
and overseeing the
 
data
 
security practices of
 
third-party vendors.
 
In
 
addition,
 
certain
 
state
 
insurance
 
regulators
 
are
 
developing
 
or
 
have
 
developed
 
regulations
 
that
 
may
 
impose
regulatory requirements
 
relating to cybersecurity
 
on insurance and
 
reinsurance companies
 
(potentially including
insurance
 
and
 
reinsurance
 
companies
 
that
 
are
 
not
 
domiciled,
 
but
 
are
 
licensed,
 
in
 
the
 
relevant
 
state).
 
For
example, the New York
 
State Department of
 
Financial Services has a
 
regulation pertaining to
 
cybersecurity for all
banking and
 
insurance
 
entities under
 
its jurisdiction,
 
which was
 
effective
 
as of
 
March 1,
 
2017, which
 
applies to
us.
 
We
 
cannot
 
predict
 
the
 
impact these
 
laws
 
and regulations
 
will have
 
on our
 
business,
 
financial
 
condition
 
or
results
 
of operations,
 
but our
 
insurance
 
and reinsurance
 
companies
 
could
 
incur additional
 
costs
 
resulting
 
from
compliance with such laws and regulations.
 
RISKS RELATING TO
 
REGULATION
Insurance
 
laws
 
and
 
regulations
 
restrict
 
our
 
ability
 
to
 
operate
 
and
 
any
 
failure
 
to
 
comply
 
with
 
those
 
laws
 
and
regulations could have a material adverse effect on
 
our business.
We are
 
subject to
 
extensive
 
and increasing
 
regulation under
 
U.S., state
 
and foreign
 
insurance laws.
 
These laws
limit the
 
amount
 
of dividends
 
that
 
can
 
be paid
 
to
 
us
 
by
 
our operating
 
subsidiaries,
 
impose
 
restrictions
 
on
 
the
amount and type of
 
investments that
 
we can hold, prescribe
 
solvency,
 
accounting and internal
 
control standards
that
 
must
 
be
 
met
 
and
 
maintained
 
and
 
require
 
us
 
to
 
maintain
 
reserves.
 
These
 
laws
 
also
 
require
 
disclosure
 
of
material
 
inter-affiliate
 
transactions
 
and
 
require
 
prior
 
approval
 
of
 
“extraordinary”
 
transactions.
 
Such
“extraordinary”
 
transactions
 
include
 
declaring
 
dividends
 
from
 
operating
 
subsidiaries
 
that
 
exceed
 
statutory
thresholds.
 
These
 
laws
 
also
 
generally
 
require
 
approval
 
of
 
changes
 
of
 
control
 
of
 
insurance
 
companies.
 
The
application
 
of these
 
laws could
 
affect our
 
liquidity and
 
ability to
 
pay dividends,
 
interest
 
and other
 
payments on
securities, as
 
applicable, and
 
could restrict
 
our ability to
 
expand our
 
business operations
 
through acquisitions
 
of
new
 
insurance
 
subsidiaries.
 
We
 
may
 
not
 
have
 
or
 
maintain
 
all
 
required
 
licenses
 
and
 
approvals
 
or
 
fully
 
comply
with the wide variety of applicable laws and
 
regulations or the relevant authority’s
 
interpretation of the laws and
regulations.
 
If we do
 
not have
 
the requisite
 
licenses and
 
approvals
 
or do
 
not comply
 
with applicable
 
regulatory
requirements,
 
the
 
insurance
 
regulatory
 
authorities
 
could
 
preclude
 
or
 
temporarily
 
suspend
 
us
 
from
 
carrying
 
on
some
 
or
 
all
 
of
 
our
 
activities
 
or
 
monetarily
 
penalize
 
us.
 
These
 
types
 
of
 
actions
 
could
 
have
 
a
 
material
 
adverse
effect
 
on
 
our
 
business.
 
To
 
date,
 
no
 
material
 
fine, penalty
 
or
 
restriction
 
has been
 
imposed
 
on us
 
for
 
failure
 
to
comply with any insurance law or regulation.
As
 
a
 
result
 
of
 
the
 
previous
 
dislocation
 
of
 
the
 
financial
 
markets,
 
Congress
 
and
 
the
 
previous
 
Presidential
administration
 
in the United
 
States implemented
 
changes in
 
the way
 
the financial services
 
industry is
 
regulated.
 
Some of these changes are also impacting the insurance
 
industry.
 
For example, the U.S. Treasury
 
established the
Federal Insurance
 
Office with
 
the authority
 
to monitor all
 
aspects of the
 
insurance sector,
 
monitor the
 
extent to
which
 
traditionally
 
underserved
 
communities
 
and
 
consumers
 
have
 
access
 
to
 
affordable
 
non-health
 
insurance
products, to
 
represent the
 
United States
 
on prudential
 
aspects of international
 
insurance matters,
 
to assist
 
with
administration
 
of the
 
Terrorism
 
Risk
 
Insurance
 
Program
 
and
 
to
 
advise
 
on
 
important
 
national
 
and
 
international
insurance
 
matters.
 
In
 
addition,
 
several
 
European
 
regulatory
 
bodies
 
are
 
in
 
process
 
of
 
updating
 
existing
 
or
developing new
 
capital adequacy
 
directives for
 
insurers
 
and reinsurers.
 
The future
 
impact of
 
such initiatives
 
or
new
 
initiatives
 
from
 
the
 
current
 
Government
 
Administration,
 
if
 
any,
 
on
 
our
 
operation,
 
net
 
income
 
(loss)
 
or
financial condition cannot be determined at this
 
time.
 
Regulatory challenges in the United States
 
could adversely affect the ability of Bermuda Re to
 
conduct business.
Bermuda Re does
 
not intend to
 
be licensed or admitted
 
as an insurer or
 
reinsurer in any
 
U.S. jurisdiction.
 
Under
current
 
law,
 
Bermuda
 
Re
 
generally
 
will
 
be
 
permitted
 
to
 
reinsure
 
U.S.
 
risks
 
from
 
its
 
office
 
in
 
Bermuda
 
without
obtaining
 
those licenses.
 
However,
 
the
 
insurance
 
and reinsurance
 
regulatory
 
framework
 
is subject
 
to
 
periodic
31
legislative
 
review
 
and
 
revision.
 
In
 
the
 
past,
 
there
 
have
 
been
 
congressional
 
and
 
other
 
initiatives
 
in
 
the
 
United
States regarding
 
increased supervision
 
and regulation of
 
the insurance industry,
 
including proposals to
 
supervise
and
 
regulate
 
reinsurers
 
domiciled
 
outside
 
the
 
United
 
States.
 
If
 
Bermuda
 
Re
 
were
 
to
 
become
 
subject
 
to
 
any
insurance
 
laws
 
of
 
the
 
United
 
States
 
or
 
any
 
U.S.
 
state
 
at
 
any
 
time
 
in
 
the
 
future,
 
it
 
might
 
be
 
required
 
to
 
post
deposits or maintain
 
minimum surplus levels
 
and might be
 
prohibited from
 
engaging in lines
 
of business or
 
from
writing some types
 
of policies.
 
Complying with those
 
laws could
 
have a
 
material adverse
 
effect on
 
our ability to
conduct business in Bermuda and international
 
markets.
 
Bermuda Re may need to be licensed or admitted
 
in additional jurisdictions to develop its business.
As
 
Bermuda
 
Re’s
 
business
 
develops,
 
it
 
will
 
monitor
 
the
 
need
 
to
 
obtain
 
licenses
 
in
 
jurisdictions
 
other
 
than
Bermuda and the U.K., where
 
it has an authorized branch,
 
in order to comply with applicable
 
law or to be able to
engage in additional
 
insurance-related activities.
 
In addition, Bermuda Re
 
may be at
 
a competitive disadvantage
in
 
jurisdictions
 
where
 
it
 
is
 
not
 
licensed
 
or
 
does
 
not
 
enjoy
 
an
 
exemption
 
from
 
licensing
 
relative
 
to
 
competitors
that
 
are
 
so
 
licensed
 
or
 
exempt
 
from
 
licensing.
 
Bermuda
 
Re
 
may
 
not
 
be able
 
to
 
obtain
 
any
 
additional
 
licenses
that
 
it
 
determines
 
are
 
necessary
 
or
 
desirable.
 
Furthermore,
 
the
 
process
 
of
 
obtaining
 
those
 
licenses
 
is
 
often
costly and may take
 
a long time.
Bermuda Re’s
 
ability to write
 
reinsurance may be
 
severely limited if
 
it is unable to
 
arrange for security to
 
back its
reinsurance.
Many
 
jurisdictions
 
do not
 
permit insurance
 
companies
 
to take
 
credit
 
for reinsurance
 
obtained
 
from unlicensed
or
 
non-admitted
 
insurers
 
on
 
their
 
statutory
 
financial
 
statements
 
without
 
appropriate
 
security.
 
Bermuda
 
Re’s
reinsurance
 
clients
 
typically
 
require
 
it
 
to
 
post
 
a
 
letter
 
of
 
credit
 
or
 
enter
 
into
 
other
 
security
 
arrangements.
 
If
Bermuda
 
Re
 
is
 
unable
 
to
 
obtain
 
or
 
maintain
 
a
 
letter
 
of
 
credit
 
facility
 
on
 
commercially
 
acceptable
 
terms
 
or
 
is
unable
 
to
 
arrange
 
for
 
other
 
types
 
of
 
security,
 
its
 
ability
 
to
 
operate
 
its
 
business
 
may
 
be
 
severely
 
limited.
 
If
Bermuda
 
Re
 
defaults
 
on
 
any
 
letter
 
of
 
credit
 
that
 
it
 
obtains,
 
it
 
may
 
be
 
required
 
to
 
prematurely
 
liquidate
 
a
substantial portion of its investment
 
portfolio and other assets pledged as collateral.
RISKS RELATING TO
 
GROUP’S SECURITIES
Because of our holding company
 
structure, our ability to pay
 
dividends, interest and
 
principal is dependent on our
receipt of dividends, loan payments and other funds from our subsidiaries.
Group
 
and
 
Holdings
 
are
 
holding
 
companies,
 
each
 
of
 
whose
 
most
 
significant
 
asset
 
consists
 
of
 
the
 
stock
 
of
 
its
operating
 
subsidiaries.
 
As
 
a
 
result,
 
each
 
of
 
Group’s
 
and
 
Holdings’
 
ability
 
to
 
pay
 
dividends,
 
interest
 
or
 
other
payments on
 
its securities in
 
the future will
 
depend on the
 
earnings and cash
 
flows of the
 
operating subsidiaries
and the
 
ability of
 
the subsidiaries
 
to pay
 
dividends
 
or to
 
advance or
 
repay
 
funds to
 
it.
 
This ability
 
is subject
 
to
general economic, financial, competitive,
 
regulatory and other factors
 
beyond our control.
 
Payment of dividends
and advances
 
and repayments
 
from some
 
of the
 
operating
 
subsidiaries are
 
regulated
 
by U.S.,
 
state
 
and foreign
insurance
 
laws
 
and
 
regulatory
 
restrictions,
 
including
 
minimum
 
solvency
 
and
 
liquidity
 
thresholds.
 
Accordingly,
the operating
 
subsidiaries may
 
not be able to
 
pay dividends
 
or advance or
 
repay funds
 
to Group and
 
Holdings in
the future, which could prevent
 
us from paying dividends, interest
 
or other payments on our securities.
 
Provisions in
 
Group’s
 
bye-laws could
 
have an
 
anti-takeover
 
effect, which
 
could diminish
 
the value
 
of its
 
common
shares.
 
Group’s
 
bye-laws
 
contain
 
provisions
 
that
 
could
 
delay
 
or
 
prevent
 
a
 
change
 
of control
 
that
 
a
 
shareholder
 
might
consider favorable.
 
The effect
 
of these
 
provisions
 
could be
 
to prevent
 
a shareholder
 
from receiving
 
the benefit
from
 
any
 
premium
 
over
 
the
 
market
 
price
 
of
 
our
 
common
 
shares
 
offered
 
by
 
a
 
bidder
 
in
 
a
 
potential
 
takeover.
 
Even
 
in the
 
absence
 
of an
 
attempt
 
to
 
effect
 
a
 
change
 
in management
 
or
 
a
 
takeover
 
attempt,
 
these
 
provisions
may
 
adversely
 
affect
 
the
 
prevailing
 
market
 
price
 
of
 
our
 
common
 
shares
 
if
 
they
 
are
 
viewed
 
as
 
discouraging
takeover attempts
 
in the future.
 
32
For example, Group’s
 
bye-laws contain the
 
following provisions that could have
 
an anti-takeover effect:
 
the total voting
 
power of any
 
shareholder owning more
 
than 9.9% of the
 
common shares will
 
be reduced to
9.9% of the total voting power of the common shares;
the board of
 
directors may
 
decline to register
 
any transfer
 
of common shares
 
if it has reason
 
to believe that
the transfer would result
 
in:
i.)
any person that
 
is not an investment
 
company beneficially
 
owning more than 5.0%
 
of any class
of the issued and outstanding share capital
 
of Group,
ii.)
any
 
person
 
holding
 
controlled
 
shares
 
in
 
excess
 
of
 
9.9%
 
of
 
any
 
class
 
of
 
the
 
issued
 
and
outstanding share capital
 
of Group, or
iii.)
any adverse
 
tax, regulatory
 
or legal consequences
 
to Group, any
 
of its subsidiaries
 
or any of
 
its
shareholders;
 
Group also has the
 
option to redeem or purchase
 
all or part of a shareholder’s
 
common shares to
 
the extent
the
 
board
 
of
 
directors
 
determines
 
it
 
is
 
necessary
 
or
 
advisable
 
to
 
avoid
 
or
 
cure
 
any
 
adverse
 
or
 
potential
adverse consequences if:
i.)
any person that is not an investment
 
company beneficially owns more than
 
5.0% of any class of
the issued and outstanding share capital
 
of Group,
 
ii.)
any person
 
holds controlled shares
 
in excess of
 
9.9% of any class
 
of the issued and
 
outstanding
share capital of Group, or
 
iii.)
share ownership
 
by any
 
person may
 
result in
 
adverse tax,
 
regulatory or
 
legal consequences
 
to
Group, any of its subsidiaries or any
 
other shareholder.
The
 
Board
 
of
 
Directors
 
has
 
indicated
 
that
 
it
 
will
 
apply
 
these
 
bye-law
 
provisions
 
in
 
such
 
manner
 
that
 
“passive
institutional investors”
 
will be treated similarly
 
to investment
 
companies.
 
For this purpose, “passive
 
institutional
investors”
 
include all
 
persons who
 
are eligible,
 
pursuant
 
to Rule
 
13d-1(b)(1) under
 
the U.S.
 
Securities Exchange
Act
 
of
 
1934,
 
(“the
 
Exchange
 
Act”)
 
to
 
file
 
a
 
short-form
 
statement
 
on
 
Schedule
 
13G,
 
other
 
than
 
an
 
insurance
company or any parent
 
holding company or control person
 
of an insurance company.
 
Applicable insurance laws may also have an anti-takeover
 
effect.
Before a
 
person can
 
acquire control
 
of a U.S.
 
insurance company,
 
prior written
 
approval must
 
be obtained
 
from
the
 
insurance
 
commissioner
 
of the
 
state
 
where
 
that
 
insurance
 
company
 
is
 
domiciled
 
or
 
deemed
 
commercially
domiciled.
 
Prior
 
to
 
granting
 
approval
 
of an
 
application
 
to acquire
 
control
 
of a
 
domestic
 
insurance
 
company,
 
a
state
 
insurance
 
commissioner
 
will consider
 
such
 
factors
 
as the
 
financial strength
 
of the
 
applicant,
 
the integrity
and competence
 
of the
 
applicant’s
 
board of
 
directors
 
and executive
 
officers,
 
the acquiror’s
 
plans for
 
the future
operations of the insurance
 
company and any
 
anti-competitive results
 
that may arise from
 
the consummation of
the
 
acquisition
 
of control.
 
Because any
 
person
 
who acquired
 
control
 
of Group
 
would
 
thereby
 
acquire
 
indirect
control
 
of
 
its
 
insurance
 
company
 
subsidiaries
 
in
 
the
 
U.S.,
 
the
 
insurance
 
change
 
of
 
control
 
laws
 
of
 
Delaware,
California
 
and
 
Georgia
 
would
 
apply
 
to
 
such
 
a
 
transaction.
 
This
 
could
 
have
 
the
 
effect
 
of
 
delaying
 
or
 
even
preventing such a change of control.
 
 
 
 
 
33
The ownership of common
 
shares of Group by Everest
 
Re Advisors, Ltd.,
 
a direct subsidiary of Group
 
may have an
impact on securing approval of shareholder proposals that Group’s
 
management supports.
 
As
 
of
 
December
 
31,
 
2022,
 
Everest
 
Re
 
Advisors,
 
Ltd.
 
(Bermuda)
 
owned
 
9,719,971
 
or
 
19.9%
 
of
 
the
 
outstanding
common shares of Group.
 
Under Group’s
 
bye-laws, the total voting
 
power of any shareholder owning more
 
than
9.9% of the
 
common shares
 
is reduced
 
to 9.9%
 
of the
 
total voting
 
power of
 
the common
 
shares.
 
Nevertheless,
Everest
 
Re Advisors,
 
Ltd., which
 
is controlled
 
by Group,
 
has the ability
 
to vote
 
9.9% of the
 
total voting
 
power of
Group’s common
 
shares.
 
Investors in Group may have more difficulty in protecting
 
their interests than investors in
 
a U.S. corporation.
The Companies Act 1981 of Bermuda (the “Companies Act”), differs
 
in material respects from
 
the laws applicable
to
 
U.S.
 
corporations
 
and
 
their
 
shareholders.
 
The
 
following
 
is
 
a
 
summary
 
of
 
material
 
differences
 
between
 
the
Companies
 
Act,
 
as modified
 
in
 
some
 
instances
 
by
 
provisions
 
of Group’s
 
bye-laws,
 
and Delaware
 
corporate
 
law
that
 
could
 
make
 
it
 
more
 
difficult
 
for
 
investors
 
in
 
Group
 
to
 
protect
 
their
 
interests
 
than
 
investors
 
in
 
a
 
U.S.
corporation.
 
Because the
 
following statements
 
are summaries,
 
they do
 
not address
 
all aspects
 
of Bermuda
 
law
that may be relevant to
 
Group and its shareholders.
Alternate Directors.
 
Group’s bye
 
-laws provide,
 
as permitted by
 
Bermuda law,
 
that each director
 
may appoint
 
an
alternate
 
director,
 
who
 
shall
 
have
 
the
 
power
 
to
 
attend
 
and
 
vote
 
at
 
any
 
meeting
 
of
 
the
 
board
 
of
 
directors
 
or
committee at
 
which that director
 
is not personally
 
present and to
 
sign written consents
 
in place of that
 
director.
 
Delaware
 
law
 
permits
 
a
 
director
 
to
 
appoint
 
another
 
director
 
as
 
an
 
alternate
 
to
 
attend
 
any
 
board
 
committee
meeting.
 
However,
 
Delaware
 
law does
 
not provide
 
for the
 
designation
 
of alternate
 
directors
 
with authority
 
to
attend or vote at a meeting of
 
the board of directors.
 
Committees of
 
the Board
 
of Directors.
 
Group’s
 
bye-laws provide,
 
as permitted
 
by Bermuda
 
law,
 
that the
 
board
of directors
 
may delegate
 
any of
 
its powers
 
to committees
 
that the
 
board appoints,
 
and those
 
committees may
consist
 
partly
 
or
 
entirely
 
of
 
non-directors.
 
Delaware
 
law
 
allows
 
the
 
board
 
of
 
directors
 
of
 
a
 
corporation
 
to
delegate many of its powers
 
to committees, but those committees
 
may consist only of directors.
Interested
 
Directors.
 
Bermuda law
 
and Group’s
 
bye-laws
 
provide
 
that if
 
a director
 
has a
 
personal
 
interest
 
in a
transaction to
 
which the company
 
is also a party
 
and if the director
 
discloses the nature
 
of this personal
 
interest
at the first
 
opportunity,
 
either at a
 
meeting of directors
 
or in writing
 
to the directors,
 
then the company
 
will not
be able to
 
declare the transaction
 
void solely
 
due to the
 
existence of
 
that personal
 
interest and
 
the director
 
will
not be liable
 
to the company
 
for any
 
profit realized
 
from the
 
transaction.
 
In addition,
 
after a director
 
has made
the
 
declaration
 
of
 
interest
 
referred
 
to
 
above,
 
he
 
or
 
she
 
is
 
allowed
 
to
 
be
 
counted
 
for
 
purposes
 
of determining
whether a quorum
 
is present and
 
to vote
 
on a transaction
 
in which he
 
or she has
 
an interest,
 
unless disqualified
from doing so by
 
the chairman of the relevant
 
board meeting.
 
Under Delaware law,
 
an interested
 
director could
be held liable
 
for a
 
transaction in
 
which that
 
director derived
 
an improper
 
personal benefit.
 
Additionally,
 
under
Delaware
 
law,
 
a corporation
 
may be
 
able to
 
declare a
 
transaction
 
with an
 
interested
 
director to
 
be void
 
unless
one of the following conditions is fulfilled:
the material
 
facts as
 
to the
 
interested
 
director’s
 
relationship
 
or interests
 
are disclosed
 
or are
 
known to
 
the
board
 
of
 
directors
 
and
 
the
 
board
 
in
 
good
 
faith
 
authorizes
 
the
 
transaction
 
by
 
the
 
affirmative
 
vote
 
of
 
a
majority of the disinterested directors;
the material facts are
 
disclosed or are known to
 
the shareholders entitled to
 
vote on the transaction
 
and the
transaction is specifically approved
 
in good faith by the holders of a majority of the voting
 
shares; or
the transaction is fair to the corporation
 
as of the time it is authorized, approved or
 
ratified.
Transactions
 
with Significant Shareholders.
 
As a Bermuda company,
 
Group may
 
enter into business
 
transactions
with
 
its
 
significant
 
shareholders,
 
including
 
asset
 
sales,
 
in
 
which
 
a
 
significant
 
shareholder
 
receives,
 
or
 
could
 
 
 
34
receive,
 
a
 
financial
 
benefit
 
that
 
is
 
greater
 
than
 
that
 
received,
 
or
 
to
 
be
 
received,
 
by
 
other
 
shareholders
 
with
prior approval
 
from Group’s
 
board
 
of directors
 
but without
 
obtaining
 
prior approval
 
from the
 
shareholders.
 
In
the case of an amalgamation, in which
 
two or more companies join together
 
and continue as a single company,
 
a
resolution of
 
shareholders approved
 
by a majority
 
of at least
 
75% of the
 
votes cast
 
is required in
 
addition to the
approval
 
of
 
the
 
board
 
of
 
directors,
 
except
 
in
 
the
 
case
 
of
 
an
 
amalgamation
 
with
 
and
 
between
 
wholly-owned
subsidiaries.
 
If
 
Group
 
was
 
a
 
Delaware
 
corporation,
 
any
 
business
 
combination
 
with
 
an
 
interested
 
shareholder
(which, for this purpose, would include mergers
 
and asset sales of greater than
 
10% of Group’s
 
assets that would
otherwise be considered
 
transactions in
 
the ordinary course
 
of business) within
 
a period of three
 
years from
 
the
time the
 
person
 
became
 
an
 
interested
 
shareholder
 
would
 
require
 
prior
 
approval
 
from shareholders
 
holding
 
at
least
 
66
 
2/3%
 
of
 
Group’s
 
outstanding
 
common
 
shares
 
not
 
owned
 
by
 
the
 
interested
 
shareholder,
 
unless
 
the
transaction
 
qualified
 
for
 
one
 
of
 
the
 
exemptions
 
in
 
the
 
relevant
 
Delaware
 
statute
 
or
 
Group
 
opted
 
out
 
of
 
the
statute.
 
For purposes of the
 
Delaware statute,
 
an “interested
 
shareholder” is generally defined
 
as a person
 
who
together
 
with that
 
person’s
 
affiliates
 
and associates
 
owns, or
 
within the
 
previous
 
three
 
years
 
did own,
 
15% or
more of a corporation’s
 
outstanding voting shares.
 
Takeovers.
 
Under Bermuda law,
 
if an acquiror
 
makes an
 
offer for
 
shares of
 
a company
 
and, within
 
four months
of the
 
offer,
 
the holders
 
of not less
 
than 90%
 
of the
 
shares that
 
are the
 
subject of
 
the offer
 
tender their
 
shares,
the acquiror may
 
give the nontendering shareholders
 
notice requiring them to
 
transfer their shares
 
on the terms
of the offer.
 
Within one month
 
of receiving the notice,
 
dissenting shareholders
 
may apply to the
 
court objecting
to
 
the
 
transfer.
 
The
 
burden
 
is
 
on
 
the
 
dissenting
 
shareholders
 
to
 
show
 
that
 
the
 
court
 
should
 
exercise
 
its
discretion
 
to
 
enjoin the
 
transfer.
 
The court
 
will be
 
unlikely
 
to
 
do this
 
unless there
 
is evidence
 
of fraud
 
or bad
faith
 
or
 
collusion
 
between
 
the
 
acquiror
 
and
 
the
 
tendering
 
shareholders
 
aimed
 
at
 
unfairly
 
forcing
 
out
 
minority
shareholders.
 
Under
 
another
 
provision
 
of
 
Bermuda
 
law,
 
the
 
holders
 
of
 
95%
 
of
 
the
 
shares
 
of
 
a
 
company
 
(the
“acquiring
 
shareholders”)
 
may
 
give notice
 
to the
 
remaining
 
shareholders
 
requiring them
 
to sell
 
their shares
 
on
the terms described
 
in the notice.
 
Within one month
 
of receiving the
 
notice, dissenting
 
shareholders may
 
apply
to
 
the
 
court
 
for
 
an
 
appraisal
 
of
 
their
 
shares.
 
Within
 
one
 
month
 
of
 
the
 
court’s
 
appraisal,
 
the
 
acquiring
shareholders are
 
entitled either to
 
acquire all shares
 
involved at
 
the price fixed
 
by the court
 
or cancel the notice
given
 
to
 
the
 
remaining
 
shareholders.
 
If
 
shares
 
were
 
acquired
 
under
 
the
 
notice
 
at
 
a
 
price
 
below
 
the
 
court’s
appraisal price, the acquiring shareholders
 
must either pay the difference
 
in price or cancel the notice and return
the
 
shares
 
thus
 
acquired
 
to
 
the
 
shareholder,
 
who
 
must
 
then
 
refund
 
the
 
purchase
 
price.
 
There
 
are
 
no
comparable provisions under Delaware
 
law.
Inspection of Corporate
 
Records.
 
Members of the
 
general public
 
have the right
 
to inspect the public
 
documents
of Group
 
available
 
at
 
the office
 
of the
 
Registrar
 
of Companies
 
and Group’s
 
registered
 
office, both
 
in Bermuda.
 
These
 
documents
 
include
 
the
 
memorandum
 
of
 
association,
 
which
 
describes
 
Group’s
 
permitted
 
purposes
 
and
powers,
 
any
 
amendments
 
to
 
the
 
memorandum
 
of
 
association
 
and
 
documents
 
relating
 
to
 
any
 
increase
 
or
reduction in Group’s
 
authorized share capital. Shareholders
 
of Group have the additional right
 
to inspect Group’s
bye-laws, minutes
 
of general meetings
 
of shareholders
 
and audited financial
 
statements that
 
must be presented
to the annual
 
general meeting
 
of shareholders.
 
The register
 
of shareholders
 
of Group
 
also is open
 
to inspection
by shareholders and to members
 
of the public without charge.
 
Group is required to maintain
 
its share register at
its registered
 
office in Bermuda.
 
Group also maintains
 
a branch register
 
in the offices
 
of its transfer
 
agent in the
U.S., which
 
is open
 
for public
 
inspection as
 
required under
 
the Companies
 
Act.
 
Group is
 
required to
 
keep at
 
its
registered
 
office
 
a
 
register
 
of
 
its
 
directors
 
and
 
officers
 
that
 
is
 
open
 
for
 
inspection
 
by
 
members
 
of
 
the
 
public
without charge.
 
However,
 
Bermuda law
 
does not
 
provide
 
a general
 
right for
 
shareholders
 
to inspect
 
or obtain
copies of
 
any other
 
corporate
 
records.
 
Under Delaware
 
law,
 
any shareholder
 
may inspect
 
or obtain
 
copies of
 
a
corporation’s
 
shareholder
 
list
 
and
 
its
 
other
 
books
 
and
 
records
 
for
 
any
 
purpose
 
reasonably
 
related
 
to
 
that
person’s
 
interest as a shareholder.
Shareholder’s
 
Suits.
 
The
 
rights
 
of
 
shareholders
 
under
 
Bermuda
 
law
 
are
 
not
 
as
 
extensive
 
as
 
the
 
rights
 
of
shareholders
 
under
 
legislation
 
or
 
judicial
 
precedent
 
in
 
many
 
U.S.
 
jurisdictions.
 
Class
 
actions
 
and
 
derivative
actions
 
are
 
generally
 
not available
 
to
 
shareholders
 
under the
 
laws
 
of Bermuda.
 
However,
 
the Bermuda
 
courts
ordinarily would be expected to
 
follow English case law precedent,
 
which would permit a shareholder to bring
 
an
action
 
in
 
the
 
name
 
of
 
Group
 
to
 
remedy
 
a
 
wrong
 
done
 
to
 
Group
 
where
 
the
 
act
 
complained
 
of is
 
alleged
 
to
 
be
 
 
 
 
35
beyond
 
the
 
corporate
 
power
 
of
 
Group
 
or
 
illegal
 
or
 
would
 
result
 
in
 
the
 
violation
 
of
 
Group’s
 
memorandum
 
of
association or bye-laws.
 
Furthermore, the court would
 
give consideration
 
to acts that are
 
alleged to constitute
 
a
fraud against the minority shareholders
 
or where an act requires the approval
 
of a greater percentage of Group’s
shareholders
 
than actually
 
approved
 
it.
 
The winning
 
party in
 
an action
 
of this
 
type generally
 
would
 
be able
 
to
recover
 
a
 
portion
 
of attorneys’
 
fees
 
incurred
 
in
 
connection
 
with
 
the
 
action.
 
Under
 
Delaware
 
law,
 
class
 
actions
and derivative
 
actions generally
 
are available
 
to stockholders
 
for breach
 
of fiduciary
 
duty,
 
corporate
 
waste
 
and
actions not taken
 
in accordance with applicable
 
law.
 
In these types of actions,
 
the court has discretion
 
to permit
the winning party to recover its attorneys’
 
fees.
 
Limitation of
 
Liability of Directors
 
and Officers.
 
Group’s
 
bye-laws provide
 
that Group and
 
its shareholders
 
waive
all
 
claims
 
or
 
rights
 
of
 
action
 
that
 
they
 
might
 
have,
 
individually
 
or
 
in
 
the
 
right
 
of
 
the
 
Company,
 
against
 
any
director or
 
officer for any
 
act or failure
 
to act in
 
the performance of
 
that director’s
 
or officer’s duties.
 
However,
this waiver
 
does not
 
apply
 
to
 
claims or
 
rights
 
of action
 
that
 
arise out
 
of fraud
 
or dishonesty.
 
This waiver
 
may
have
 
the
 
effect
 
of barring
 
claims
 
arising
 
under U.S.
 
federal
 
securities
 
laws.
 
Under
 
Delaware
 
law,
 
a
 
corporation
may
 
include
 
in
 
its
 
certificate
 
of
 
incorporation
 
provisions
 
limiting
 
the
 
personal
 
liability
 
of
 
its
 
directors
 
to
 
the
corporation
 
or
 
its
 
stockholders
 
for
 
monetary
 
damages
 
for
 
many
 
types
 
of
 
breach
 
of
 
fiduciary
 
duty.
 
However,
these provisions may
 
not limit liability for any
 
breach of the duty of loyalty,
 
acts or omissions not in good
 
faith or
that involve
 
intentional misconduct
 
or a knowing
 
violation of law,
 
the authorization
 
of unlawful dividends,
 
stock
repurchases
 
or
 
stock
 
redemptions,
 
or
 
any
 
transaction
 
from
 
which
 
a
 
director
 
derived
 
an
 
improper
 
personal
benefit.
 
Moreover,
 
Delaware
 
provisions
 
would
 
not
 
be likely
 
to
 
bar
 
claims
 
arising
 
under
 
U.S.
 
federal
 
securities
laws.
Indemnification
 
of Directors
 
and Officers.
 
Group’s
 
bye-laws
 
provide
 
that Group
 
shall indemnify
 
its directors
 
or
officers to
 
the full extent
 
permitted by
 
law against
 
all actions,
 
costs, charges,
 
liabilities, loss, damage
 
or expense
incurred
 
or
 
suffered
 
by
 
them
 
by
 
reason
 
of
 
any
 
act
 
done,
 
concurred
 
in
 
or
 
omitted
 
in
 
the
 
conduct
 
of
 
Group’s
business
 
or
 
in
 
the
 
discharge
 
of
 
their
 
duties.
 
Under
 
Bermuda
 
law,
 
this
 
indemnification
 
may
 
not
 
extend
 
to
 
any
matter
 
involving
 
fraud
 
or dishonesty
 
of which
 
a director
 
or officer
 
may be
 
guilty in
 
relation to
 
the company,
 
as
determined
 
in
 
a
 
final
 
judgment
 
or
 
decree
 
not
 
subject
 
to
 
appeal.
 
Under
 
Delaware
 
law,
 
a
 
corporation
 
may
indemnify a director
 
or officer who
 
becomes a party
 
to an action,
 
suit or proceeding
 
because of his
 
position as a
director or officer if (1) the director or officer
 
acted in good faith and in a manner he reasonably
 
believed to be in
or
 
not
 
opposed
 
to
 
the
 
best
 
interests
 
of the
 
corporation
 
and (2)
 
if the
 
action
 
or
 
proceeding
 
involves
 
a criminal
offense, the director or officer had
 
no reasonable cause to believe his or her conduct
 
was unlawful.
Enforcement of Civil
 
Liabilities.
 
Group is organized
 
under the laws of Bermuda.
 
Some of its directors
 
and officers
may reside outside
 
the U.S.
 
A substantial portion
 
of our assets are
 
or may be
 
located in jurisdictions
 
outside the
U.S.
 
As a result, a
 
person may not
 
be able to affect
 
service of process within
 
the U.S. on directors
 
and officers of
Group and
 
those experts
 
who reside outside
 
the U.S.
 
A person
 
also may
 
not be able
 
to recover
 
against them
 
or
Group
 
on
 
judgments
 
of
 
U.S.
 
courts
 
or
 
to
 
obtain
 
original
 
judgments
 
against
 
them or
 
Group
 
in
 
Bermuda
 
courts,
including judgments predicated upon
 
civil liability provisions of the U.S. federal
 
securities laws.
Dividends.
 
Bermuda law
 
does not
 
allow a
 
company
 
to declare
 
or pay
 
a dividend,
 
or make
 
a distribution
 
out of
contributed surplus,
 
if there are
 
reasonable grounds
 
for believing that
 
the company,
 
after the payment
 
is made,
would
 
be unable
 
to
 
pay
 
its liabilities
 
as they
 
become due,
 
or that
 
the realizable
 
value
 
of the
 
company’s
 
assets
would
 
be
 
less,
 
as
 
a
 
result
 
of
 
the
 
payment,
 
than
 
the
 
aggregate
 
of
 
its
 
liabilities
 
and
 
its
 
issued
 
share
 
capital
 
and
share premium accounts.
 
The share capital account represents
 
the aggregate par value
 
of issued shares, and the
share premium
 
account represents
 
the aggregate
 
amount paid
 
for issued shares
 
over and above
 
their par value.
 
Under Delaware law,
 
subject to any restrictions
 
contained in a company’s
 
certificate of incorporation,
 
a company
may pay
 
dividends out
 
of the
 
surplus or,
 
if there
 
is no
 
surplus, out
 
of net
 
profits for
 
the fiscal
 
year in
 
which the
dividend
 
is
 
declared
 
and/or
 
the
 
preceding
 
fiscal
 
year.
 
Surplus
 
is
 
the
 
amount
 
by
 
which
 
the
 
net
 
assets
 
of
 
a
corporation
 
exceed
 
its
 
stated
 
capital.
 
Delaware
 
law
 
also
 
provides
 
that
 
dividends
 
may
 
not
 
be
 
paid
 
out
 
of
 
net
profits at any
 
time when stated
 
capital is less
 
than the capital represented
 
by the outstanding
 
stock of all
 
classes
having a preference upon
 
the distribution of assets.
 
 
36
RISKS RELATING TO
 
TAXATION
If international tax laws change, our net income
 
may be impacted.
The
 
Organization
 
for
 
Economic
 
Co-operation
 
and
 
Development
 
(“OECD”)
 
and
 
its
 
member
 
countries
 
which
includes the
 
U.S., have
 
been focusing
 
for an
 
extended
 
period on
 
issues related
 
to the
 
taxation
 
of multinational
corporations,
 
such as the
 
comprehensive plan
 
set forth
 
by the OECD to
 
create an
 
agreed set
 
of international
 
tax
rules
 
for
 
preventing
 
base
 
erosion
 
and
 
profit
 
shifting.
 
Recently
 
they
 
agreed
 
upon
 
a
 
broad
 
framework
 
for
overhauling
 
the
 
taxation
 
of
 
multinational
 
corporations
 
that
 
includes,
 
among
 
other
 
things,
 
profit
 
reallocation
rules
 
and
 
a
 
15%
 
global
 
minimum
 
corporate
 
income
 
tax
 
rate.
 
These
 
proposals,
 
if
 
implemented,
 
could
 
have
 
an
impact
 
our
 
net
 
income
 
and
 
effective
 
tax
 
rate.
 
Group
 
and/or
 
various
 
Group
 
companies
 
may
 
be
 
subject
 
to
additional income taxes, which
 
would reduce our net income.
If U.S. tax law changes, our net income
 
may be impacted.
The
 
2017
 
TCJA
 
addressed
 
what
 
some
 
members
 
of
 
Congress
 
had
 
expressed
 
concern
 
about
 
for
 
several
 
years,
which was
 
U.S. corporations
 
moving their
 
place of
 
incorporation
 
to low-tax
 
jurisdictions to
 
obtain a
 
competitive
advantage
 
over
 
domestic
 
corporations
 
that
 
are
 
subject
 
to
 
the
 
U.S.
 
corporate
 
income
 
tax
 
rate
 
of
 
21%.
 
Specifically,
 
it addressed
 
their concern
 
over a
 
perceived
 
competitive
 
advantage
 
that foreign
 
-controlled
 
insurers
and
 
reinsurers
 
may
 
have
 
had
 
over
 
U.S.
 
controlled
 
insurers
 
and
 
reinsurers
 
resulting
 
from
 
the
 
purchase
 
of
reinsurance
 
by
 
U.S.
 
insurers
 
from
 
affiliates
 
operating
 
in
 
some
 
foreign
 
jurisdictions,
 
including
 
Bermuda.
 
Such
affiliated reinsurance
 
transactions
 
may subject
 
the U.S.
 
ceding companies
 
to a
 
Base Erosion
 
and Anti-abuse
 
Tax
(“BEAT”)
 
of 10% from
 
2019 to
 
2025 and 12.5%
 
thereafter which
 
may exceed
 
its regular
 
income tax.
 
In addition,
new legislation as
 
well as proposed
 
and final regulations
 
may further limit
 
the ability of the
 
Company to
 
execute
alternative
 
capital balancing
 
transactions
 
with unrelated
 
parties. This
 
would further
 
impact our
 
net income
 
and
effective tax rate.
 
On
 
August
 
16,
 
2022,
 
the
 
Inflation
 
Reduction
 
Act
 
of
 
2022
 
(“IRA”)
 
was
 
enacted.
 
We
 
have
 
evaluated
 
the
 
tax
provisions
 
of
 
the
 
IRA,
 
the
 
most
 
significant
 
of
 
which
 
are
 
the
 
corporate
 
alternative
 
minimum
 
tax
 
and
 
the
 
share
repurchase excise tax
 
and do not expect the legislation to have
 
a material impact on our results of operations.
 
As
the IRS issues additional guidance, we will evaluate
 
any impact to our consolidated
 
financial statements.
Group and/or Bermuda Re may be subject to
 
U.S. corporate income tax, which
 
would reduce our net income.
Bermuda Re.
 
The income
 
of Bermuda Re
 
is a significant
 
portion of our
 
worldwide income
 
from operations.
 
We
have
 
established
 
guidelines
 
for
 
the
 
conduct
 
of our
 
operations
 
that
 
are
 
designed
 
to
 
ensure
 
that
 
Bermuda
 
Re
 
is
not engaged in
 
the conduct of
 
a trade or
 
business in the
 
U.S.
 
Based on its
 
compliance with
 
those guidelines, we
believe that Bermuda Re
 
should not be required
 
to pay U.S. corporate
 
income tax, other
 
than withholding tax
 
on
U.S. source
 
dividend income.
 
However,
 
if the IRS
 
were to
 
successfully assert
 
that Bermuda Re
 
was engaged
 
in a
U.S. trade
 
or business,
 
Bermuda Re would
 
be required
 
to pay
 
U.S. corporate
 
income tax
 
on all of
 
its income and
possibly
 
the
 
U.S.
 
branch
 
profits
 
tax.
 
However,
 
if
 
the
 
IRS
 
were
 
to
 
successfully
 
assert
 
that
 
Bermuda
 
Re
 
was
engaged in
 
a U.S.
 
trade or
 
business, we believe
 
the U.S.-Bermuda
 
tax treaty
 
would preclude
 
the IRS
 
from taxing
Bermuda Re’s
 
income except
 
to the
 
extent
 
that its
 
income was
 
attributable
 
to a
 
U.S. permanent
 
establishment
maintained by that
 
subsidiary.
 
We do not believe that
 
Bermuda Re has a permanent
 
establishment in the U.S.
 
If
the IRS were
 
to successfully
 
assert that
 
Bermuda Re did
 
have income attributable
 
to a permanent
 
establishment
in the U.S., Bermuda Re would be subject to
 
U.S. tax only on that income.
 
This would reduce our net income.
 
Group.
We
 
conduct
 
our
 
operations
 
in
 
a
 
manner
 
designed
 
to
 
minimize
 
our
 
U.S.
 
tax
 
exposures.
 
Based
 
on
 
our
compliance with guidelines designed
 
to ensure that we
 
generate only
 
immaterial amounts, if
 
any,
 
of income that
is
 
subject
 
to
 
the
 
taxing
 
jurisdiction
 
of
 
the
 
U.S.,
 
we
 
believe
 
that
 
we
 
should
 
be
 
required
 
to
 
pay
 
only
 
immaterial
amounts,
 
if
 
any,
 
of
 
U.S.
 
corporate
 
income
 
tax,
 
other
 
than
 
withholding
 
tax
 
on
 
U.S.
 
source
 
dividend
 
income.
 
However,
 
if the IRS
 
successfully asserted
 
that we had
 
material amounts
 
of income that
 
was subject to
 
the taxing
 
37
jurisdiction of the
 
U.S., we would
 
be required to
 
pay U.S. corporate
 
income tax on
 
that income, and
 
possibly the
U.S. branch profits
 
tax.
 
The imposition of such tax
 
would reduce our net income.
 
If Bermuda Re became
 
subject
to U.S. income tax
 
on its income, or if we became
 
subject to U.S. income tax,
 
our income could also be subject
 
to
the
 
U.S.
 
branch
 
profits
 
tax.
 
In
 
that
 
event,
 
Group
 
and
 
Bermuda
 
Re
 
would
 
be
 
subject
 
to
 
taxation
 
at
 
a
 
higher
combined effective
 
rate
 
than if
 
they were
 
organized
 
as U.S.
 
corporations.
 
The combined
 
effect of
 
the 21%
 
U.S.
corporate income tax
 
rate and the
 
30% branch profits tax
 
rate is a net tax
 
rate of 44.7%.
 
The imposition of these
taxes would reduce our net
 
income.
 
Group and/or Bermuda Re may become
 
subject to Bermuda tax, which would reduce our net
 
income.
Group
 
and
 
Bermuda
 
Re
 
are
 
not
 
subject
 
to
 
income
 
or
 
profits
 
tax,
 
withholding
 
tax
 
or
 
capital
 
gains
 
taxes
 
in
Bermuda.
 
Both
 
companies
 
have
 
received
 
an
 
assurance
 
from
 
the
 
Bermuda
 
Minister
 
of
 
Finance
 
under
 
The
Exempted Undertakings
 
Tax
 
Protection Amendment
 
Act of 2011
 
to the effect
 
that if any
 
legislation is
 
enacted in
Bermuda
 
that
 
imposes
 
any
 
tax
 
computed
 
on
 
profits
 
or
 
income,
 
or
 
computed
 
on
 
any
 
capital
 
asset,
 
gain
 
or
appreciation,
 
or any
 
tax
 
in the
 
nature
 
of estate
 
duty or
 
inheritance tax,
 
then that
 
tax
 
will not
 
apply to
 
us or
 
to
any of
 
our operations
 
or our shares,
 
debentures or
 
other obligations
 
until March
 
31, 2035.
 
This assurance
 
does
not prevent the application
 
of any of those taxes
 
to persons ordinarily resident
 
in Bermuda and does not prevent
the
 
imposition
 
of
 
any
 
tax
 
payable
 
in
 
accordance
 
with
 
the
 
provisions
 
of
 
The
 
Land
 
Tax
 
Act
 
1967
 
of
 
Bermuda
 
or
otherwise payable in relation to
 
any land leased to Group or Bermuda Re.
 
Our net income will be reduced if U.S. excise
 
and withholding taxes are increased.
Reinsurance and
 
insurance premiums
 
paid to Bermuda
 
Re with respect
 
to risks
 
located in
 
the U.S. are
 
subject to
a U.S.
 
federal excise
 
tax of
 
one percent.
 
In addition,
 
Bermuda Re
 
is subject
 
to federal
 
excise tax
 
on reinsurance
and
 
insurance
 
premiums
 
with
 
respect
 
to
 
risks
 
located
 
in
 
the
 
U.S.
 
In
 
addition,
 
Bermuda
 
Re
 
is
 
subject
 
to
withholding
 
tax
 
on
 
dividend
 
income
 
from
 
U.S.
 
sources.
 
These
 
taxes
 
could
 
increase,
 
and
 
other
 
taxes
 
could
 
be
imposed in the future on Bermuda Re’s
 
business, which would reduce our net income.
 
If U.S. tax law changes, our U.S. shareholders net
 
income may be impacted.
U.S.
 
shareholders.
 
In
 
January
 
2022,
 
Treasury
 
and
 
the
 
IRS
 
released
 
proposed
 
regulations
 
regarding
 
the
determination
 
and
 
inclusion
 
of
 
related-person
 
insurance
 
income
 
(RPII).
 
The
 
regulations,
 
if
 
finalized
 
without
modifications,
 
could
 
cause
 
RPII
 
to
 
be
 
attributable
 
to
 
the
 
Company’s
 
U.S.
 
shareholders
 
prospectively
 
and
therefore
 
additional
 
income
 
tax.
 
The
 
imposition
 
of
 
such
 
tax
 
could
 
reduce
 
our
 
U.S.
 
shareholders
 
return
 
on
investment
 
in the
 
Company.
 
Our U.S.
 
shareholders
 
net income
 
and tax
 
liabilities might
 
be increased,
 
reducing
their net income.
ITEM 1B.
 
UNRESOLVED
 
STAFF COMMENTS
None.
ITEM 2.
 
PROPERTIES
Everest Re’s
 
corporate offices are
 
located in approximately
 
321,500 square feet of
 
leased office space in Warren,
New
 
Jersey.
 
Bermuda
 
Re’s
 
corporate
 
offices
 
are
 
located
 
in
 
approximately
 
12,300
 
total
 
square
 
feet
 
of
 
leased
office space
 
in Hamilton,
 
Bermuda.
 
The Company’s
 
other 24
 
locations occupy
 
a total
 
of approximately
 
271,200
square feet, all of which are leased.
 
ITEM 3.
 
LEGAL PROCEEDINGS
In
 
the
 
ordinary
 
course
 
of
 
business,
 
the
 
Company
 
is
 
involved
 
in
 
lawsuits,
 
arbitrations
 
and
 
other
 
formal
 
and
informal
 
dispute
 
resolution
 
procedures,
 
the
 
outcomes
 
of
 
which
 
will
 
determine
 
the
 
Company’s
 
rights
 
and
obligations
 
under insurance
 
and reinsurance
 
agreements.
 
In some
 
disputes,
 
the Company
 
seeks
 
to
 
enforce
 
its
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
38
rights under an agreement or to
 
collect funds owing to it.
 
In other matters, the Company
 
is resisting attempts by
others
 
to
 
collect
 
funds
 
or
 
enforce
 
alleged
 
rights.
 
These
 
disputes
 
arise
 
from
 
time
 
to
 
time
 
and
 
are
 
ultimately
resolved through
 
both informal
 
and formal
 
means, including
 
negotiated resolution,
 
arbitration and
 
litigation.
 
In
all such matters,
 
the Company believes
 
that its positions
 
are legally and
 
commercially reasonable.
 
The Company
considers
 
the statuses
 
of these
 
proceedings
 
when determining
 
its reserves
 
for unpaid
 
loss and
 
loss adjustment
expenses.
 
Aside from litigation and arbitrations
 
related to these insurance and reinsurance
 
agreements, the Company is
not a party to any other material litigation
 
or arbitration.
 
ITEM 4.
 
MINE SAFETY DISCLOSURES
Not Applicable.
PART II
ITEM 5.
 
MARKET
 
FOR
 
REGISTRANT’S
 
COMMON
 
EQUITY,
 
RELATED
 
SHAREHOLDER
 
MATTERS
 
AND
 
ISSUER
PURCHASES OF EQUITY SECURITIES
Market Information.
The common shares of Group
 
trade on the New York
 
Stock Exchange under
 
the symbol, “RE”.
 
The quarterly high
and low closing market prices of Group’s
 
common shares for the periods indicated
 
were:
 
2022
2021
High
Low
High
Low
First Quarter
$
304.72
$
267.35
$
255.97
$
211.08
Second Quarter
307.10
265.00
276.95
236.21
Third Quarter
285.67
245.79
273.68
236.68
Fourth Quarter
337.94
260.84
286.62
250.41
Number of Holders of Common Shares.
The number of record
 
holders of common
 
shares as of February
 
1, 2023 was 729.
 
That number does not
 
include
the beneficial
 
owners
 
of shares
 
held in
 
“street”
 
name or
 
held through
 
participants
 
in depositories,
 
such as
 
The
Depository Trust
 
Company.
 
Dividend History and Restrictions.
The Board
 
of Directors
 
of the
 
Company
 
has
 
an established
 
policy
 
of declaring
 
regular
 
quarterly
 
cash
 
dividends
and
 
has
 
paid
 
a
 
regular
 
quarterly
 
dividend
 
in
 
each
 
quarter
 
since
 
the
 
fourth
 
quarter
 
of
 
1995.
 
The
 
Company
declared
 
and
 
paid
 
its
 
quarterly
 
cash
 
dividend
 
of $1.55
 
per
 
share
 
for
 
the
 
four
 
quarters
 
of 2021.
 
The
 
Company
declared
 
and
 
paid
 
its
 
quarterly
 
cash
 
dividend
 
of
 
$1.55
 
per
 
share
 
for
 
the
 
first
 
quarter
 
of
 
2022
 
and
 
paid
 
its
quarterly cash
 
dividend of $1.65
 
per share
 
for the
 
remaining three
 
quarters of
 
2022.
 
On February
 
23, 2023, the
Company’s
 
Board of
 
Directors
 
declared a
 
dividend of
 
$1.65 per
 
share,
 
payable
 
on or
 
before
 
March 30,
 
2023 to
shareholders of record on
 
March 16, 2023.
 
The declaration and payment
 
of future dividends, if any,
 
by the Company will be at
 
the discretion of the Board
 
of
Directors
 
and
 
will
 
depend
 
upon
 
many
 
factors,
 
including
 
the
 
Company’s
 
earnings,
 
financial
 
condition,
 
business
needs
 
and
 
growth
 
objectives,
 
capital
 
and
 
surplus
 
requirements
 
of
 
its
 
operating
 
subsidiaries,
 
regulatory
restrictions,
 
rating
 
agency considerations
 
and other
 
factors.
 
As an
 
insurance
 
holding company,
 
the Company
 
is
partially dependent on dividends
 
and other permitted payments
 
from its subsidiaries
 
to pay cash dividends
 
to its
shareholders.
 
The
 
payment
 
of
 
dividends
 
to
 
Group
 
by
 
Holdings
 
and
 
to
 
Holdings
 
by
 
Everest
 
Re
 
is
 
subject
 
to
Delaware
 
regulatory
 
restrictions
 
and the
 
payment
 
of dividends
 
to Group
 
by Bermuda
 
Re is
 
subject to
 
Bermuda
insurance
 
regulatory
 
restrictions.
 
See “Regulatory
 
Matters
 
– Dividends”
 
and ITEM
 
8, “Financial
 
Statements
 
and
Supplementary Data” - Note 14 of Notes
 
to Consolidated Financial Statements.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
39
Purchases of Equity Securities by the Issuer and
 
Affiliated Purchasers
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, 2022
$
1,470,181
February 1 - 28, 2022
44,455
$
299.5577
1,470,181
March 1 - 31, 2022
11,175
$
269.9151
5,000
1,465,181
April 1 - 30, 2022
$
1,465,181
May 1 - 31, 2022
1,601
$
276.8129
1,465,181
June 1 - 30, 2022
801
$
270.2875
1,465,181
July 1 - 31, 2022
$
1,465,181
August 1 - 31, 2022
128,764
$
252.6871
128,764
1,336,417
September 1 - 30, 2022
110,531
$
252.6578
105,007
1,231,410
October 1 - 31, 2022
2,502
$
256.7054
2,502
1,228,908
November 1 - 30, 2022
3,828
$
321.1994
1,228,908
December 1 - 31, 2022
$
1,228,908
Total
303,657
$
241,273
1,228,908
(1)
 
On
 
May
 
22,
 
2020,
 
the
 
Company’s
 
executive
 
committee
 
of
 
the
 
Board
 
of
 
Directors
 
approved
 
an
 
amendment
 
to
 
the
 
share
 
repurchase
 
program
authorizing the
 
Company
 
and/or its
 
subsidiary Holdings,
 
to purchase
 
up to
 
a current
 
aggregate
 
of 32.0
 
million of
 
the Company’s
 
shares (recognizing
 
that the
number
 
of
 
shares
 
authorized
 
for
 
repurchase
 
has
 
been
 
reduced
 
by
 
those
 
shares
 
that
 
have
 
already
 
been
 
purchased)
 
in
 
open
 
market
 
transactions,
 
privately
negotiated transactions or both.
 
As of December 31, 2022 the Company and/or
 
its subsidiary Holdings have repurchased
 
30.8 million of the Company’s shares.
Recent Sales of Unregistered
 
Securities.
 
None.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
re-20221231p42i0
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
re-20221231p42i1 re-20221231p42i2 re-20221231p42i3 re-20221231p42i4
 
 
 
 
 
 
re-20221231p42i5
 
re-20221231p42i6
40
168.99
156.89
181.93
$0
$50
$100
$150
$200
$250
1/1/2017
1/1/2018
1/1/2019
1/1/2020
1/1/2021
1/1/2022
COMPARISON
 
OF 5 YEAR CUMULATIVE
 
TOTAL
 
RETURN*
Among Everest Re Group,
 
Ltd., the S&P 500 Index
and the S&P Property & Casualty Insurance
 
Index
Everest Re Group, Ltd.
S&P 500
S&P Property & Casualty Insurance
Performance Graph.
The
 
following
 
Performance
 
Graph
 
compares
 
cumulative
 
total
 
shareholder
 
returns
 
on
 
the
 
Common
 
Shares
(assuming reinvestment of
 
dividends) from December 31, 2017 through
 
December 31, 2022, with the cumulative
total
 
return
 
of
 
the
 
Standard
 
&
 
Poor’s
 
500
 
Index
 
and
 
the
 
Standard
 
&
 
Poor’s
 
Insurance
 
(Property
 
and
 
Casualty)
Index.
 
12/17
12/18
12/19
12/20
12/21
12/22
Everest Re Group, Ltd.
100.00
100.73
131.11
113.99
136.61
168.99
S&P 500
100.00
95.62
125.72
148.85
191.58
156.89
S&P Property & Casualty Insurance
100.00
95.31
119.97
128.31
153.05
181.93
*$100 invested on 12/31/22 in stock or index, including reinvestment of dividends.
Fiscal year ending December 31.
Copyright© 2021 Standard & Poor's, a division of S&P Global. All rights reserved.
ITEM 6.
 
SELECTED FINANCIAL DATA
Information for Item 6 is not
 
required pursuant to General
 
Instruction I(2) of Form 10-K.
 
41
ITEM 7.
 
MANAGEMENT’S
 
DISCUSSION
 
AND
 
ANALYSIS
 
OF
 
FINANCIAL
 
CONDITION
 
AND
 
RESULTS
 
OF
OPERATION
The following is
 
a discussion and analysis
 
of our results of
 
operations and financial
 
condition for the
 
years ended
December
 
31,
 
2022
 
and
 
2021.
 
This
 
discussion
 
should
 
be
 
read
 
in
 
conjunction
 
with
 
the
 
Consolidated
 
Financial
Statements
 
and
 
related
 
Notes,
 
under
 
ITEM
 
8
 
of
 
this
 
Form
 
10-K.
 
Pursuant
 
to
 
the
 
FAST
 
Act
 
Modernization
 
and
Simplification
 
of Regulation
 
S-K, comparisons
 
between
 
2020 and
 
2019 have
 
been omitted
 
from this
 
Form 10-K
but can be
 
found in "Management's
 
Discussion and Analysis
 
of Financial Condition
 
and Results of
 
Operations" in
Part II, Item 7 of our Form 10-K for the
 
year ended December 31, 2020.
 
All comparisons in this discussion are to the corresponding
 
prior year unless otherwise indicated.
 
Industry Conditions.
The worldwide
 
reinsurance
 
and insurance
 
businesses
 
are highly
 
competitive,
 
as well
 
as cyclical
 
by
 
product
 
and
market.
 
As
 
such,
 
financial
 
results
 
tend
 
to
 
fluctuate
 
with
 
periods
 
of
 
constrained
 
availability,
 
higher
 
rates
 
and
stronger
 
profits
 
followed
 
by
 
periods
 
of
 
abundant
 
capacity,
 
lower
 
rates
 
and
 
constrained
 
profitability.
 
Competition
 
in
 
the
 
types
 
of reinsurance
 
and
 
insurance
 
business
 
that
 
we
 
underwrite
 
is
 
based
 
on
 
many
 
factors,
including the perceived overall
 
financial strength of
 
the reinsurer or insurer,
 
ratings of the reinsurer
 
or insurer by
A.M. Best
 
and/or
 
Standard
 
& Poor’s,
 
underwriting expertise,
 
the jurisdictions
 
where the
 
reinsurer
 
or insurer
 
is
licensed
 
or
 
otherwise
 
authorized,
 
capacity
 
and
 
coverages
 
offered,
 
premiums
 
charged,
 
other
 
terms
 
and
conditions
 
of
 
the
 
reinsurance
 
and
 
insurance
 
business
 
offered,
 
services
 
offered,
 
speed
 
of
 
claims
 
payment
 
and
reputation
 
and
 
experience
 
in
 
lines
 
written.
 
Furthermore,
 
the
 
market
 
impact
 
from
 
these
 
competitive
 
factors
related
 
to
 
reinsurance
 
and
 
insurance
 
is
 
generally
 
not
 
consistent
 
across
 
lines
 
of
 
business,
 
domestic
 
and
international geographical
 
areas and distribution channels.
 
We
 
compete
 
in
 
the
 
U.S.,
 
Bermuda
 
and
 
international
 
reinsurance
 
and
 
insurance
 
markets
 
with
 
numerous
 
global
competitors.
 
Our
 
competitors
 
include
 
independent
 
reinsurance
 
and
 
insurance
 
companies,
 
subsidiaries
 
or
affiliates
 
of
 
established
 
worldwide
 
insurance
 
companies,
 
reinsurance
 
departments
 
of
 
certain
 
insurance
companies, domestic
 
and international
 
underwriting operations,
 
including underwriting
 
syndicates
 
at Lloyd’s
 
of
London
 
and
 
certain
 
government
 
sponsored
 
risk
 
transfer
 
vehicles.
 
Some
 
of
 
these
 
competitors
 
have
 
greater
financial resources
 
than we do
 
and have
 
established long
 
term and continuing
 
business relationships,
 
which can
be
 
a
 
significant
 
competitive
 
advantage.
 
In
 
addition,
 
the
 
lack
 
of
 
strong
 
barriers
 
to
 
entry
 
into
 
the
 
reinsurance
business
 
and
 
recently,
 
the
 
securitization
 
of
 
reinsurance
 
and
 
insurance
 
risks
 
through
 
capital
 
markets
 
provide
additional sources of potential reinsurance
 
and insurance capacity and competition.
 
Worldwide insurance
 
and reinsurance
 
market conditions
 
historically have
 
been competitive.
 
Generally,
 
there is
ample
 
insurance
 
and
 
reinsurance
 
capacity
 
relative
 
to
 
demand,
 
as
 
well
 
as
 
additional
 
capital
 
from
 
the
 
capital
markets
 
through
 
insurance
 
linked
 
financial
 
instruments.
 
These
 
financial
 
instruments
 
such
 
as
 
side
 
cars,
catastrophe
 
bonds and
 
collateralized
 
reinsurance
 
funds, provided
 
capital
 
markets
 
with access
 
to insurance
 
and
reinsurance
 
risk exposure.
 
The capital
 
markets
 
demand for
 
these products
 
is
 
primarily driven
 
by the
 
desire to
achieve
 
greater
 
risk
 
diversification
 
and
 
potentially
 
higher
 
returns
 
on
 
their
 
investments.
 
This
 
competition
generally has a negative impact
 
on rates, terms and conditions;
 
however,
 
the impact varies widely by market
 
and
coverage.
 
Based on recent competitive
 
behaviors in the
 
insurance and reinsurance
 
industry, natural
 
catastrophe
events
 
and
 
the
 
macroeconomic
 
backdrop,
 
there
 
has
 
been
 
some
 
dislocation
 
in
 
the
 
market
 
which
 
we
 
expect
 
to
have a positive impact on rates
 
and terms and conditions, generally,
 
though local market specificities can
 
vary.
 
The
 
increased
 
frequency
 
of
 
catastrophe
 
losses
 
experienced
 
throughout
 
2022
 
appears
 
to
 
be
 
pressuring
 
the
increase
 
of
 
rates.
 
As
 
business
 
activity
 
continues
 
to
 
regain
 
strength
 
after
 
the
 
pandemic
 
and
 
current
macroeconomic uncertainty,
 
rates appear to be firming in
 
most lines of business, particularly in the casualty
 
lines
that had
 
seen significant
 
losses such
 
as excess
 
casualty and
 
directors’
 
and officers’
 
liability.
 
Other casualty
 
lines
are
 
experiencing
 
modest
 
rate
 
increase,
 
while
 
some
 
lines
 
such
 
as
 
workers’
 
compensation
 
were
 
experiencing
softer
 
market
 
conditions.
 
It
 
is
 
too
 
early
 
to
 
tell
 
what
 
the
 
impact
 
on
 
pricing
 
conditions
 
will
 
be,
 
but
 
it
 
is
 
likely
 
to
change depending on the line of business and geography.
42
Our capital position remains
 
a source of strength,
 
with high quality invested
 
assets, significant liquidity
 
and a low
operating
 
expense
 
ratio.
 
Our
 
diversified
 
global
 
platform
 
with
 
its
 
broad
 
mix
 
of
 
products,
 
distribution
 
and
geography is resilient.
The war in the
 
Ukraine is ongoing
 
and an evolving
 
event.
 
Economic and legal
 
sanctions have been
 
levied against
Russia,
 
specific
 
named
 
individuals
 
and
 
entities
 
connected
 
to
 
the
 
Russian
 
government,
 
as
 
well
 
as
 
businesses
located
 
in
 
the
 
Russian
 
Federation
 
and/or
 
owned
 
by
 
Russian
 
nationals
 
by
 
numerous
 
countries,
 
including
 
the
United States.
 
The significant
 
political and
 
economic uncertainty
 
surrounding the
 
war and
 
associated sanctions
have
 
impacted
 
economic and
 
investment
 
markets
 
both within
 
Russia and
 
around
 
the world.
 
The Company
 
has
recorded $45 million of losses related
 
to the Ukraine/Russia war during 2022.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
43
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.
Years Ended December 31,
Percentage Increase/(Decrease)
(Dollars in millions)
2022
2021
2020
2022/2021
2021/2020
Gross written premiums
 
$
13,952
$
13,050
$
10,482
6.9%
24.5%
Net written premiums
 
12,344
11,446
9,117
7.9%
25.5%
REVENUES:
Premiums earned
$
11,787
$
10,406
$
8,682
13.3%
19.9%
Net investment income
830
1,165
643
(28.8)%
81.3%
Net gains (losses) on investments
(455)
258
268
(276.4)%
-3.6%
Other income (expense)
(102)
37
7
NM
NM
Total revenues
12,060
11,866
9,598
1.6%
23.6%
CLAIMS AND EXPENSES:
Incurred losses and loss adjustment expenses
8,100
7,391
6,551
9.6%
12.8%
Commission, brokerage, taxes
 
and fees
2,528
2,209
1,873
14.5%
17.9%
Other underwriting expenses
682
583
511
17.0%
14.0%
Corporate expenses
61
68
41
(10.1)%
65.0%
Interest, fees and bond issue
 
cost amortization expense
101
70
36
43.9%
93.1%
Total claims and expenses
11,472
10,321
9,013
11.2%
14.5%
INCOME (LOSS) BEFORE TAXES
588
1,546
585
(62.0)%
164.1%
Income tax expense (benefit)
 
(9)
167
71
(105.3)%
133.9%
NET INCOME (LOSS)
$
597
$
1,379
$
514
(56.7)%
168.2%
RATIOS:
Point Change
Loss ratio
68.7%
71.0%
75.5%
(2.3)
(4.5)
Commission and brokerage ratio
21.4%
21.2%
21.6%
0.2
(0.4)
Other underwriting expense ratio
5.8%
5.6%
5.8%
0.2
(0.2)
Combined ratio
96.0%
97.8%
102.9%
(1.8)
(5.1)
At December 31,
Percentage Increase/(Decrease)
(Dollars in millions, except per share amounts)
2022
2021
2020
2022/2021
2021/2020
Balance sheet data:
Total investments
 
and cash
$
29,872
$
29,673
$
25,462
0.7%
16.5%
Total assets
39,966
38,185
32,712
4.7%
16.7%
Loss and loss adjustment expense reserves
22,065
19,009
16,322
16.1%
16.5%
Total debt
3,084
3,089
1,910
(0.2)%
61.7%
Total liabilities
31,525
28,046
22,985
12.4%
22.0%
Shareholders' equity
8,441
10,139
9,726
(16.8)%
4.2%
Book value per share
215.54
258.21
243.25
(16.5)%
6.2%
(NM, not meaningful)
(Some amounts may not reconcile due to rounding.)
 
 
44
Revenues.
 
Premiums.
 
Gross
 
written
 
premiums
 
increased
 
by
 
6.9%
 
to
 
$14.0
 
billion
 
in
 
2022,
 
compared
 
to
 
$13.1
 
billion
 
in
2021,
 
reflecting
 
a
 
$653.4
 
million,
 
or
 
16.4%,
 
increase
 
in
 
our
 
insurance
 
business
 
and
 
a
 
$248.8
 
million,
 
or
 
2.7%,
increase
 
in our
 
reinsurance
 
business.
 
The increase
 
in insurance
 
premiums
 
reflects
 
growth
 
across
 
most lines
 
of
business,
 
particularly
 
specialty
 
casualty
 
business
 
and
 
property/short
 
tail
 
business,
 
driven
 
by
 
positive
 
rate
 
and
exposure
 
increases,
 
new
 
business
 
and
 
strong
 
renewal
 
retention.
 
The
 
increase
 
in
 
reinsurance
 
premiums
 
was
primarily due to increases in casualty pro
 
rata business and financial lines of business, partially offset
 
by a decline
in
 
property
 
pro
 
rata
 
business.
 
Net
 
written
 
premiums
 
increased
 
by
 
7.9% to
 
$12.3 billion
 
in
 
2022, compared
 
to
$11.4
 
billion
 
in
 
2021.
 
The
 
higher
 
percentage
 
increase
 
in
 
net
 
written
 
premiums
 
compared
 
to
 
gross
 
written
premiums was primarily
 
due to a reduction
 
in business ceded to
 
the segregated
 
accounts of Mt. Logan
 
Re during
2022
 
compared
 
to
 
2021.
 
Premiums
 
earned
 
increased
 
by
 
13.3%
 
to
 
$11.8
 
billion
 
in
 
2022,
 
compared
 
to
 
$10.4
billion
 
in
 
2021.
 
The
 
change
 
in
 
premiums
 
earned
 
relative
 
to
 
net
 
written
 
premiums
 
was
 
primarily
 
the
 
result
 
of
timing; premiums
 
are
 
earned
 
ratably
 
over
 
the coverage
 
period whereas
 
written
 
premiums
 
are
 
recorded
 
at
 
the
initiation of
 
the coverage
 
period.
 
Accordingly,
 
the significant
 
increase in
 
gross written
 
premiums from
 
pro rata
business
 
during
 
the
 
latter
 
half
 
of
 
2021
 
contributed
 
to
 
the
 
current
 
year-to-date
 
percentage
 
increases
 
in
 
net
earned premiums.
 
Other Income
 
(Expense).
 
We
 
recorded
 
other expense
 
of $102
 
million and
 
other income
 
of $37
 
million in
 
2022
and 2021, respectively.
 
The changes were primarily
 
the result of fluctuations
 
in foreign currency exchange
 
rates.
 
We
 
recognized
 
foreign
 
currency
 
exchange
 
expense
 
of
 
$103
 
million
 
in
 
2022
 
and
 
foreign
 
currency
 
exchange
income of $28 million in 2021.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
45
Claims and Expenses.
Incurred
 
Losses
 
and
 
Loss
 
Adjustment
 
Expenses.
 
The
 
following
 
table
 
presents
 
our
 
incurred
 
losses
 
and
 
loss
adjustment expenses (“LAE”) for
 
the periods indicated.
 
Years Ended December 31,
Current
Ratio %/
Prior
Ratio %/
Total
Ratio %/
(Dollars in millions)
Year
Pt Change
Years
Pt Change
Incurred
Pt Change
2022
Attritional
$
7,047
59.8%
$
(2)
—%
$
7,045
59.8%
Catastrophes
1,055
 
9.0%
 
—%
1,055
 
9.0%
Total segment
$
8,102
68.8%
$
(2)
—%
$
8,100
68.7%
 
 
 
 
 
 
 
 
 
2021
Attritional
$
6,265
 
60.2%
$
(9)
 
(0.1)%
$
6,256
 
60.1%
Catastrophes
1,135
10.9%
—%
1,135
10.9%
Total segment
$
7,400
 
71.1%
$
(9)
 
(0.1)%
$
7,391
 
71.0%
2020
 
 
 
Attritional
$
5,724
66.0%
$
401
4.7%
$
6,126
70.7%
Catastrophes
425
 
4.9%
 
—%
425
 
4.9%
Total segment
$
6,150
70.9%
$
401
4.7%
$
6,551
75.5%
 
 
 
 
 
Variance 2022/2021
Attritional
$
782
 
(0.4)
pts
$
7
 
0.1
pts
$
789
 
(0.3)
pts
Catastrophes
(80)
(1.9)
pts
pts
(80)
(1.9)
pts
Total segment
$
702
 
(2.3)
pts
$
7
 
0.1
pts
$
709
 
(2.2)
pts
Variance 2021/2020
 
 
 
Attritional
$
541
(5.8)
pts
$
(411)
(4.8)
pts
$
130
(10.6)
pts
Catastrophes
710
 
6.0
pts
 
pts
710
 
6.0
pts
Total segment
$
1,251
0.2
pts
$
(411)
(4.8)
pts
$
840
(4.6)
pts
(Some amounts may not reconcile due to rounding.)
Incurred losses and LAE
 
increased by 9.6% to
 
$8.1 billion in 2022, compared
 
to $7.4 billion in 2021,
 
primarily due
to
 
an
 
increase
 
of $782
 
million
 
in
 
current
 
year
 
attritional
 
losses,
 
partially
 
offset
 
by
 
a
 
decrease
 
of $80
 
million
 
in
current year
 
catastrophe
 
losses.
 
The increase
 
in current
 
year attritional
 
losses was
 
mainly due
 
to the
 
impact of
the
 
increase
 
in
 
premiums
 
earned
 
and
 
$45 million
 
of attritional
 
losses
 
incurred
 
due
 
to
 
the
 
Ukraine/Russia
 
war.
 
The current
 
year catastrophe
 
losses of
 
$1.1 billion
 
in 2022
 
related primarily
 
to Hurricane
 
Ian ($699
 
million), the
2022
 
Australia
 
floods
 
($88
 
million),
 
the
 
2022
 
Western
 
Europe
 
hailstorms
 
($69
 
million),
 
the
 
2022
 
South
 
Africa
flood ($50
 
million), the
 
2022 Western
 
Europe Convective
 
Storm ($35
 
million), Hurricane
 
Fiona ($27
 
million), the
2022
 
European
 
storms
 
($21
 
million)
 
and
 
the
 
2022
 
Canada
 
derecho
 
($21
 
million),
 
with
 
the
 
remaining
 
losses
resulting from various
 
storm events.
 
The $1.1 billion of current
 
year catastrophe
 
losses in 2021 related
 
primarily
to Hurricane
 
Ida ($460
 
million), the
 
Texas
 
winter storms
 
($294 million),
 
the European
 
floods ($242
 
million), the
Canada
 
drought
 
loss
 
($80
 
million)
 
and
 
the
 
Quad
 
State
 
tornadoes
 
($45
 
million)
 
with
 
the
 
rest
 
of
 
the
 
losses
emanating from the South Africa riots and
 
the 2021 Australia floods.
 
Catastrophe
 
losses and loss
 
expenses typically
 
have a
 
material effect
 
on our incurred
 
losses and loss
 
adjustment
expense results
 
and can
 
vary significantly
 
from period
 
to period.
 
Losses from
 
natural
 
catastrophes
 
contributed
9.0
 
percentage
 
points
 
to
 
the
 
combined
 
ratio
 
in
 
2022,
 
compared
 
with
 
10.9
 
percentage
 
points
 
in
 
2021.
 
The
Company has
 
up to
 
$350.0 million
 
of catastrophe
 
bond protection
 
(“CAT
 
Bond”) that
 
attaches
 
at a
 
$48.1 billion
PCS
 
Industry
 
loss
 
threshold.
 
This
 
recovery
 
would
 
be
 
recognized
 
on
 
a
 
pro-rata
 
basis
 
up
 
to
 
a
 
$63.8
 
billion
 
PCS
Industry loss level.
 
PCS’s current
 
industry estimate of $47.4 million
 
is below the attachment point.
 
The potential
recovery
 
under
 
the
 
CAT
 
Bond
 
is
 
not
 
included
 
in
 
the
 
Company’s
 
estimate
 
for
 
Hurricane
 
Ian
 
but
 
would
 
provide
significant downside protection should
 
the industry loss estimate increase.
 
 
 
 
 
 
46
Commission,
 
Brokerage,
 
Taxes
 
and
 
Fees.
 
Commission,
 
brokerage,
 
taxes
 
and
 
fees
 
increased
 
by
 
14.5%
 
to
 
$2.5
billion for
 
the year
 
ended December
 
31, 2022
 
compared
 
to $2.2
 
billion for
 
the year
 
ended December
 
31, 2021.
 
The
 
increase
 
was
 
primarily
 
due
 
to
 
the
 
impact
 
of
 
the
 
increases
 
in
 
premiums
 
earned
 
and
 
changes
 
in
 
the
 
mix
 
of
business.
 
Other
 
Underwriting
 
Expenses.
 
Other
 
underwriting
 
expenses
 
were
 
$682
 
million
 
and
 
$583
 
million
 
in
 
2022
 
and
2021, respectively.
 
The increase in
 
other underwriting expenses
 
was mainly due to
 
the impact of the
 
increase in
premiums earned
 
as well
 
as the
 
continued build
 
out of
 
our insurance
 
operations,
 
including an
 
expansion of
 
the
international insurance platform.
 
Corporate
 
Expenses.
 
Corporate
 
expenses,
 
which
 
are
 
general
 
operating
 
expenses
 
that
 
are
 
not
 
allocated
 
to
segments, were $61
 
million and $68 million
 
for the years
 
ended December 31, 2022
 
and 2021, respectively.
 
The
decrease from 2021 to 2022 was mainly
 
due to a decrease in variable incentive compensation.
 
Interest,
 
Fees and
 
Bond Issue
 
Cost
 
Amortization
 
Expense.
 
Interest,
 
fees
 
and other
 
bond
 
amortization
 
expense
was
 
$101
 
million
 
and
 
$70
 
million
 
in
 
2022
 
and
 
2021,
 
respectively.
 
The
 
increases
 
were
 
primarily
 
due
 
to
 
the
issuance of $1.0
 
billion of senior
 
notes in October
 
2021.
 
Interest expense
 
was also
 
impacted by the
 
movements
in the
 
floating
 
interest
 
rate
 
related
 
to
 
the long
 
term
 
subordinated
 
notes,
 
which is
 
reset
 
quarterly
 
per the
 
note
agreement.
 
The floating rate was
 
6.99% as of December 31, 2022 compared to 2.54% as of December 31,
 
2021.
 
Income Tax
 
Expense (Benefit).
 
We had
 
income tax
 
benefit of $9
 
million and income
 
tax expense
 
of $167 million
in
 
2022
 
and
 
2021,
 
respectively.
 
Income
 
tax
 
expense
 
is
 
primarily
 
a
 
function
 
of
 
the
 
geographic
 
location
 
of
 
the
Company’s
 
pre-tax
 
income
 
and
 
the
 
statutory
 
tax
 
rates
 
in
 
those
 
jurisdictions.
 
The
 
effective
 
tax
 
rate
 
(“ETR”)
 
is
primarily
 
affected
 
by
 
tax-exempt
 
investment
 
income,
 
foreign
 
tax
 
credits
 
and
 
dividends.
 
Variations
 
in
 
the
 
ETR
generally result
 
from changes
 
in the relative
 
levels of pre
 
-tax income,
 
including the impact
 
of catastrophe
 
losses
and net capital gains (losses), among jurisdictions
 
with different tax rates.
 
On
 
August
 
16,
 
2022,
 
the
 
Inflation
 
Reduction
 
Act
 
of
 
2022
 
(“IRA”)
 
was
 
enacted.
 
We
 
have
 
evaluated
 
the
 
tax
provisions
 
of
 
the
 
IRA,
 
the
 
most
 
significant
 
of
 
which
 
are
 
the
 
corporate
 
alternative
 
minimum
 
tax
 
and
 
the
 
share
repurchase excise tax
 
and do not expect the legislation to have
 
a material impact on our results of operations.
 
As
the IRS issues additional guidance, we will evaluate
 
any impact to our consolidated
 
financial statements.
 
Net Income (Loss).
Our
 
net
 
income
 
was
 
$597
 
million
 
and
 
$1.4
 
billion
 
in
 
2022
 
and
 
2021,
 
respectively.
 
The
 
change
 
was
 
primarily
driven by the consolidated investment
 
results explained below.
 
Ratios.
Our
 
combined
 
ratio
 
decreased
 
by
 
1.8
 
points
 
to
 
96.0%
 
in
 
2022,
 
compared
 
to
 
97.8%
 
in
 
2021.
 
The
 
loss
 
ratio
component decreased by
 
2.3 points in 2022 over
 
the same period last year
 
mainly due to a decline $80 million
 
in
catastrophe
 
losses.
 
The
 
commission
 
and
 
brokerage
 
ratio
 
components
 
increased
 
slightly
 
to
 
21.4%
 
in
 
2022
compared
 
to
 
21.2%
 
in
 
2021.
 
The
 
increase
 
was
 
mainly
 
due
 
to
 
changes
 
in
 
the
 
mix
 
of
 
business.
 
The
 
other
underwriting expense ratios
 
increased slightly
 
to 5.8% in
 
2022 compared
 
to 5.6% in
 
2021.
 
These increases
 
were
mainly due to higher insurance operations
 
costs.
 
Shareholders’ Equity.
Shareholders’
 
equity
 
decreased
 
by
 
$1.7
 
billion
 
to
 
$8.4
 
billion
 
at
 
December
 
31,
 
2022
 
from
 
$10.1
 
billion
 
at
December
 
31,
 
2021,
 
principally
 
as
 
a
 
result
 
of $1.9
 
billion
 
of unrealized
 
depreciation
 
on
 
available
 
for
 
sale
 
fixed
maturity
 
portfolio
 
net
 
of
 
tax,
 
$255
 
million
 
of
 
shareholder
 
dividends,
 
$77
 
million
 
of
 
net
 
foreign
 
currency
translation adjustments,
 
and the repurchase
 
of 241,273 common
 
shares for
 
$61 million,
 
partially offset
 
by $597
million of net income.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
47
Consolidated Investment
 
Results
Net Investment Income.
Net
 
investment
 
income
 
decreased
 
by
 
28.8% to
 
$830 million
 
in 2022
 
compared
 
with
 
net
 
investment
 
income
 
of
$1.2
 
billion
 
in
 
2021.
 
The
 
decrease
 
was
 
primarily
 
the
 
result
 
of
 
a
 
decline
 
of
 
$490
 
million
 
in
 
limited
 
partnership
income,
 
partially
 
offset
 
by
 
an
 
additional
 
$181
 
million
 
of
 
income
 
from
 
fixed
 
maturity
 
investments.
 
The
 
limited
partnership
 
income
 
primarily
 
reflects
 
decreases
 
in
 
their
 
reported
 
net
 
asset
 
values.
 
As
 
such,
 
until
 
these
 
asset
values are monetized and the
 
resultant income is distributed,
 
they are subject to future increases
 
or decreases in
the asset value, and the results may be volatile.
 
The following table shows the components
 
of net investment income for
 
the periods indicated.
 
Years Ended December 31,
(Dollars in millions)
2022
2021
2020
Fixed maturities
$
742
$
561
$
542
Equity securities
 
16
17
19
Short-term investments and cash
28
1
5
Other invested assets
Limited partnerships
75
565
113
Other
29
63
2
Gross investment income before adjustments
890
1,208
681
Funds held interest income (expense)
2
12
13
Future policy benefit reserve income (expense)
(1)
(1)
Gross investment income
892
1,219
692
Investment expenses
(62)
(54)
(50)
Net investment income
$
830
$
1,165
$
643
(Some amounts may not reconcile due to rounding.)
The following tables show a comparison
 
of various investment yields for
 
the periods indicated.
2022
2021
2020
Annualized pre-tax yield on average cash and invested assets
2.7
%
4.4
%
2.9
%
Annualized after-tax yield on average cash and invested assets
2.3
%
3.8
%
2.5
%
Annualized return on invested assets
1.2
%
5.3
%
4.0
%
2022
2021
2020
Fixed income portfolio total return
(5.9)
%
0.5
%
6.3
%
Barclay's Capital - U.S. aggregate index
(13.0)
%
(1.5)
%
7.5
%
Common equity portfolio total return
(18.5)
%
19.0
%
26.7
%
S&P 500 index
(18.1)
%
28.7
%
18.4
%
Other invested asset portfolio total return
4.5
%
36.5
%
8.3
%
The pre
 
-tax
 
equivalent
 
total
 
return
 
for
 
the
 
bond
 
portfolio
 
was
 
approximately
 
(5.9)%
 
and
 
0.5%,
 
respectively,
 
in
2022
 
and
 
2021.
 
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.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
48
Net Realized Capital Gains (Losses).
The following table presents the composition
 
of our net realized capital gains
 
(losses) for the periods indicated.
Years Ended December 31,
2022/2021
2021/2020
(Dollars in millions)
2022
2021
2020
Variance
Variance
Realized gains (losses) from dispositions:
 
Fixed maturity securities - available for sale:
 
Gains
$
40
$
72
$
80
$
(32)
$
(8)
 
Losses
(127)
(55)
(85)
(72)
27
 
Total
(87)
17
(5)
(104)
19
 
Equity securities:
 
Gains
165
42
37
123
5
 
Losses
(53)
(15)
(46)
(38)
32
 
Total
112
28
(9)
85
37
 
Other Invested Assets
 
Gains
18
10
8
8
2
 
Losses
(5)
(4)
(6)
(1)
2
 
Total
13
6
2
7
4
 
Short Term Investments
 
Gains
1
(1)
 
Losses
 
Total
1
(1)
Total net realized gains (losses) from dispositions:
 
Gains
223
124
126
99
(2)
 
Losses
(185)
(74)
(137)
(111)
63
 
Total
38
50
(11)
(12)
61
Allowance for credit losses:
(33)
(28)
(2)
(5)
(26)
Gains (losses) from fair value adjustments:
 
Fixed maturities
2
(2)
 
Equity securities
(460)
236
279
(696)
(43)
Total
(460)
236
280
(696)
(45)
Total net gains (losses) on investments
$
(455)
$
258
$
268
$
(713)
$
(10)
(Some amounts may not reconcile due to rounding.)
Net
 
gains
 
(losses)
 
on
 
investments
 
in
 
2022
 
primarily
 
relate
 
to
 
net
 
losses
 
from
 
fair
 
value
 
adjustments
 
on
 
equity
securities in
 
the amount
 
of $460
 
million as
 
a result
 
of equity
 
market
 
declines in
 
2022.
 
In addition,
 
we realized
$38 million
 
of gains
 
due to
 
the disposition
 
of investments
 
and recorded
 
an increase
 
to the
 
allowance for
 
credit
losses of $33 million primarily related to our direct
 
holdings of Russian corporate
 
fixed maturity securities.
 
Segment Results.
The
 
Company
 
manages
 
its
 
reinsurance
 
and
 
insurance
 
operations
 
as
 
autonomous
 
units
 
and
 
key
 
strategic
decisions are based on the aggregate operating
 
results and projections for
 
these segments of business.
 
The Reinsurance
 
operation
 
writes worldwide
 
property
 
and casualty
 
reinsurance
 
and specialty
 
lines of
 
business,
on both
 
a treaty
 
and facultative
 
basis,
 
through
 
reinsurance
 
brokers,
 
as well
 
as directly
 
with ceding
 
companies.
 
Business is
 
written in
 
the U.S.,
 
Bermuda, and
 
Ireland offices,
 
as well as,
 
through branches
 
in Canada,
 
Singapore,
the United
 
Kingdom
 
and Switzerland.
 
The Insurance
 
operation
 
writes property
 
and casualty
 
insurance
 
directly
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
49
and
 
through
 
brokers,
 
surplus
 
lines
 
brokers
 
and
 
general
 
agents
 
within
 
the
 
U.S.,
 
Bermuda,
 
Canada,
 
Europe,
Singapore
 
and
 
South
 
America
 
through
 
its
 
offices
 
in
 
the
 
U.S.,
 
Canada,
 
Chile,
 
Singapore,
 
the
 
United
 
Kingdom,
Ireland and branches located
 
in the Netherlands, France, Germany and Spain.
 
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
 
LAE incurred,
 
commission and
 
brokerage
 
expenses and
 
other
underwriting
 
expenses.
 
We
 
measure
 
our
 
underwriting
 
results
 
using
 
ratios,
 
in
 
particular
 
loss,
 
commission
 
and
brokerage
 
and other
 
underwriting expense
 
ratios,
 
which, respectively,
 
divide
 
incurred
 
losses,
 
commissions
 
and
brokerage and other
 
underwriting expenses by premiums earned.
 
The
 
Company
 
does
 
not
 
maintain
 
separate
 
balance
 
sheet
 
data
 
for
 
its
 
operating
 
segments.
 
Accordingly,
 
the
Company does not
 
review and evaluate
 
the financial results
 
of its operating
 
segments based upon
 
balance sheet
data.
 
Our
 
loss
 
and LAE
 
reserves
 
are
 
management’s
 
best
 
estimate
 
of our
 
ultimate
 
liability
 
for
 
unpaid
 
claims.
 
We
 
re-
evaluate
 
our
 
estimates
 
on
 
an
 
ongoing
 
basis,
 
including
 
all
 
prior
 
period
 
reserves,
 
taking
 
into
 
consideration
 
all
available
 
information,
 
and
 
in
 
particular,
 
recently
 
reported
 
loss
 
claim
 
experience
 
and
 
trends
 
related
 
to
 
prior
periods.
 
Such re-evaluations are recorded
 
in incurred losses in the period in which re-evaluation
 
is made.
 
The following discusses the underwriting results for
 
each of our segments for the periods indicated.
 
Reinsurance.
The
 
following
 
table
 
presents
 
the
 
underwriting
 
results
 
and
 
ratios
 
for
 
the
 
Reinsurance
 
segment
 
for
 
the
 
periods
indicated.
 
Years Ended December 31,
2022/2021
2021/2020
(Dollars in millions)
2022
2021
2020
Variance
% Change
Variance
% Change
Gross written premiums
$
9,316
 
$
9,067
 
$
7,282
 
$
249
 
2.7%
$
1,786
 
24.5%
Net written premiums
8,983
8,536
6,768
447
5.2%
1,768
26.1%
 
 
 
 
 
 
 
 
 
 
 
 
Premiums earned
$
8,663
$
7,758
$
6,466
$
905
11.7%
$
1,291
20.0%
Incurred losses and LAE
5,997
 
5,556
 
4,933
 
441
 
7.9%
623
 
12.6%
Commission and brokerage
2,134
1,855
1,552
279
15.1%
302
19.5%
Other underwriting expenses
218
 
199
 
176
 
19
 
9.6%
23
 
13.3%
Underwriting gain (loss)
 
$
313
$
147
$
(195)
$
166
112.6%
$
343
175.4%
Point Chg
Point Chg
Loss ratio
69.2%
71.6%
76.3%
 
 
(2.4)
 
 
(4.7)
Commission and brokerage ratio
24.6%
23.9%
24.0%
0.7
(0.1)
Other underwriting expense ratio
2.5%
2.6%
2.7%
 
 
(0.1)
 
 
(0.1)
Combined ratio
96.4%
98.1%
103.0%
(1.8)
(4.9)
(NM, not meaningful)
(Some amounts may not reconcile due to rounding.)
Premiums.
 
Gross written
 
premiums increased by
 
2.7% to $9.3 billion
 
in 2022 from $9.1
 
billion in 2021, primarily
due
 
to
 
increases
 
in
 
casualty
 
pro
 
rata
 
business
 
and
 
financial
 
lines
 
of
 
business,
 
partially
 
offset
 
by
 
a
 
decline
 
in
property
 
pro rata
 
business.
 
Net written
 
premiums
 
increased
 
by 5.2%
 
to
 
$9.0 billion
 
in 2022
 
compared
 
to
 
$8.5
billion in
 
2021.
 
The higher
 
percentage
 
increase
 
in net
 
written
 
premiums
 
compared
 
to gross
 
written
 
premiums
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
50
mainly related to
 
a reduction in business ceded
 
to the segregated
 
accounts of Mt. Logan
 
Re in 2022 compared
 
to
2021.
 
Premiums
 
earned
 
increased
 
by
 
11.7%
 
to
 
$8.7
 
billion
 
in
 
2022,
 
compared
 
to
 
$7.8
 
billion
 
in
 
2021.
 
The
change
 
in
 
premiums
 
earned
 
relative
 
to
 
net
 
written
 
premiums
 
is
 
primarily
 
the
 
result
 
of
 
timing;
 
premiums
 
are
earned
 
ratably
 
over
 
the
 
coverage
 
period
 
whereas
 
written
 
premiums
 
are
 
recorded
 
at
 
the
 
initiation
 
of
 
the
coverage period.
 
Accordingly,
 
the significant
 
increases in
 
gross written
 
premiums from
 
pro rata
 
business during
the latter half of 2021 contributed
 
to the current year-to-date percentage
 
increase in net earned premiums.
 
Incurred Losses
 
and LAE.
 
The following table
 
presents the
 
incurred losses
 
and LAE for
 
the Reinsurance
 
segment
for the periods indicated.
 
Years Ended December 31,
Current
Ratio %/
Prior
Ratio %/
Total
Ratio %/
(Dollars in millions)
Year
Pt Change
Years
Pt Change
Incurred
Pt Change
2022
Attritional
$
5,070
 
58.5%
$
(2)
 
—%
$
5,067
 
58.5%
Catastrophes
930
10.7%
—%
930
10.7%
Total segment
$
6,000
 
69.2%
$
(2)
 
—%
$
5,997
 
69.2%
2021
 
 
 
Attritional
$
4,582
59.1%
$
(8)
(0.1)%
$
4,574
59.0%
Catastrophes
983
 
12.7%
 
—%
983
 
12.7%
Total segment
$
5,564
71.8%
$
(8)
(0.1)%
$
5,556
71.6%
 
 
 
 
 
 
 
 
 
2020
Attritional
$
4,180
 
64.6%
$
397
 
6.1%
$
4,576
 
70.7%
Catastrophes
357
5.5%
—%
357
5.5%
Total segment
$
4,537
 
70.1%
$
397
 
6.1%
$
4,933
 
76.3%
Variance 2022/2021
 
 
 
Attritional
$
488
(0.6)
pts
$
6
0.1
pts
$
494
(0.5)
pts
Catastrophes
(53)
 
(2.0)
pts
 
pts
(53)
 
(2.0)
pts
Total segment
$
435
(2.6)
pts
$
6
0.1
pts
$
441
(2.4)
pts
 
 
 
 
 
Variance 2021/2020
Attritional
$
402
 
(5.5)
pts
$
(405)
 
(6.2)
pts
$
(3)
 
(11.7)
pts
Catastrophes
626
7.2
pts
pts
626
7.2
pts
Total segment
$
1,028
 
1.7
pts
$
(405)
 
(6.2)
pts
$
623
 
(4.5)
pts
(Some amounts may not reconcile due to rounding.)
Incurred
 
losses
 
increased
 
by
 
7.9%
 
to
 
$6.0
 
billion
 
in
 
2022, compared
 
to
 
$5.6
 
billion
 
in
 
2021.
 
The
 
increase
 
was
primarily due to an increase
 
of $488 million in current
 
year attritional losses,
 
partially offset by a decrease
 
of $53
million in
 
current
 
year catastrophe
 
losses.
 
The increase
 
in current
 
year attritional
 
losses was
 
mainly related
 
to
the
 
impact
 
of the
 
increase
 
in
 
premiums
 
earned
 
and
 
$45 million
 
of attritional
 
losses
 
due to
 
the
 
Ukraine/Russia
war.
 
The
 
current
 
year
 
catastrophe
 
losses
 
of
 
$930
 
million
 
in
 
2022
 
related
 
primarily
 
to
 
Hurricane
 
Ian
 
($599
million),
 
the
 
2022
 
Australia
 
floods
 
($88
 
million),
 
the
 
Western
 
Europe
 
hailstorms
 
($69
 
million),
 
the
 
2022
 
South
Africa
 
flood
 
($50
 
million),
 
the
 
2022
 
Western
 
Europe
 
Convective
 
storm
 
($29
 
million),
 
Hurricane
 
Fiona
 
($22
million), the 2022 European
 
storms ($21 million)
 
and the 2022 Canada
 
derecho ($21 million),
 
with the remaining
losses resulting
 
from various
 
storm events.
 
The $983
 
million of
 
current year
 
catastrophe
 
losses in
 
2021 related
primarily
 
to
 
Hurricane
 
Ida
 
($380
 
million),
 
the
 
Texas
 
winter
 
storms
 
($237
 
million),
 
the
 
European
 
floods
 
($242
million), the
 
Canada drought
 
loss ($80
 
million) and
 
the Quad
 
state
 
tornadoes ($30
 
million), with
 
the rest
 
of the
losses emanating from the 2021 South Africa riots and
 
the 2021 Australia floods.
 
Segment Expenses.
 
Commission and
 
brokerage
 
expense increased
 
by 15.1% to
 
$2.1 billion in
 
2022 compared to
$1.9 billion in 2021.
 
The increase was mainly
 
due to the impact of the
 
increase in premiums earned
 
and changes
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
51
in
 
the
 
mix
 
of
 
business.
 
Segment
 
other
 
underwriting
 
expenses
 
increased
 
to
 
$218
 
million
 
in
 
2022
 
from
 
$199
million
 
in
 
2021.
 
The
 
increase
 
was
 
mainly
 
due
 
to
 
the
 
increase
 
in
 
written
 
premium
 
attributable
 
to
 
the
 
planned
expansion of the business.
Insurance.
The
 
following
 
table
 
presents
 
the
 
underwriting
 
results
 
and
 
ratios
 
for
 
the
 
Insurance
 
segment
 
for
 
the
 
periods
indicated.
 
Years Ended December 31,
2022/2021
2021/2020
(Dollars in millions)
2022
2021
2020
Variance
% Change
Variance
% Change
Gross written premiums
$
4,636
 
$
3,983
 
$
3,201
 
$
653
 
16.4%
$
782
 
24.4%
Net written premiums
3,361
2,910
2,349
451
15.5%
561
23.9%
 
 
 
 
 
 
 
 
 
 
 
 
Premiums earned
$
3,124
$
2,649
$
2,215
$
475
17.9%
$
434
19.6%
Incurred losses and LAE
2,103
 
1,835
 
1,617
 
268
 
14.6%
217
 
13.4%
Commission and brokerage
394
354
321
40
11.3%
33
10.4%
Other underwriting expenses
463
 
384
 
336
 
79
 
20.8%
48
 
14.3%
Underwriting gain (loss)
 
$
164
$
76
$
(58)
$
88
114.4%
$
135
230.7%
Point Chg
Point Chg
Loss ratio
67.3%
69.3%
73.0%
 
 
(2.0)
 
 
(3.7)
Commission and brokerage ratio
12.6%
13.4%
14.5%
(0.8)
(1.1)
Other underwriting expense ratio
14.8%
14.5%
15.1%
 
 
0.3
 
 
(0.6)
Combined ratio
94.8%
97.1%
102.6%
(2.5)
(5.5)
(Some amounts may not reconcile due to rounding.)
Premiums.
 
Gross written
 
premiums increased
 
by 16.4% to
 
$4.6 billion in
 
2022 compared
 
to $4.0 billion
 
in 2021.
 
The increase
 
in insurance
 
premiums reflects
 
growth across
 
most lines
 
of business,
 
particularly specialty
 
casualty
and
 
property/short
 
tail
 
business,
 
driven
 
by
 
positive
 
rate
 
and
 
exposure
 
increases,
 
new
 
business
 
and
 
strong
renewal retention.
 
Net written
 
premiums increased
 
by 15.5% to
 
$3.4 billion in
 
2022 compared
 
to $2.9 billion
 
in
2021, which
 
is consistent
 
with the
 
percentage
 
change
 
in gross
 
written
 
premiums.
 
Premiums
 
earned increased
17.9% to
 
$3.1 million
 
in 2022
 
compared to
 
$2.6 billion
 
in 2021.
 
The change
 
in premiums
 
earned relative
 
to net
written premiums is the result
 
of timing; premiums are earned ratably
 
over the coverage
 
period whereas written
premiums
 
are
 
recorded
 
at
 
the
 
initiation
 
of the
 
coverage
 
period.
 
Accordingly,
 
the significant
 
increases
 
in gross
written premiums
 
during the
 
latter
 
half of
 
2021 contributed
 
to the
 
current year
 
-to-date
 
percentage
 
increase in
net earned premiums.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
52
Incurred Losses and
 
LAE.
 
The following table presents
 
the incurred losses
 
and LAE for the Insurance
 
segment for
the periods indicated.
 
Years Ended December 31,
Current
Ratio %/
Prior
Ratio %/
Total
Ratio %/
(Dollars in millions)
Year
Pt Change
Years
Pt Change
Incurred
Pt Change
2022
Attritional
$
1,977
63.3%
$
1
—%
$
1,978
63.3%
Catastrophes
125
 
4.0%
 
—%
125
 
4.0%
Total segment
$
2,102
67.3%
$
1
—%
$
2,103
67.3%
 
 
 
 
 
 
 
 
 
2021
Attritional
$
1,684
 
63.6%
$
(1)
 
—%
$
1,682
 
63.6%
Catastrophes
153
5.8%
—%
153
5.8%
Total segment
$
1,836
 
69.4%
$
(1)
 
—%
$
1,835
 
69.3%
2020
 
 
 
Attritional
$
1,545
69.7%
$
5
0.2%
$
1,549
69.9%
Catastrophes
68
 
3.1%
 
—%
68
 
3.1%
Total segment
$
1,613
72.8%
$
5
0.2%
$
1,617
73.0%
 
 
 
 
 
Variance 2022/2021
Attritional
$
293
 
(0.3)
pts
$
1
 
pts
$
294
 
(0.3)
pts
Catastrophes
(28)
(1.8)
pts
pts
(28)
(1.8)
pts
Total segment
$
265
 
(2.1)
pts
$
1
 
pts
$
266
 
(2.0)
pts
Variance 2021/2020
 
 
 
Attritional
$
139
(6.1)
pts
$
(6)
(0.2)
pts
$
133
(6.3)
pts
Catastrophes
85
 
2.7
pts
 
pts
85
 
2.7
pts
Total segment
$
223
(3.4)
pts
$
(6)
(0.2)
pts
$
217
(3.7)
pts
(Some amounts may not reconcile due to rounding.)
Incurred losses and LAE increased by
 
14.6% to $2.1 billion in 2022 compared to $1.8 billion
 
in 2021.
 
The increase
was mainly
 
due to
 
an increase
 
of $293
 
million in
 
current year
 
attritional
 
losses,
 
partially offset
 
by a
 
decrease in
current year
 
catastrophe
 
losses of
 
$28 million.
 
The increase
 
in current
 
year attritional
 
losses was
 
primarily due
to the impact
 
of the increase
 
in premiums earned.
 
The current year
 
catastrophe
 
losses of $125
 
million primarily
related to
 
Hurricane Ian
 
($99 million),
 
with the
 
remaining losses
 
resulting from
 
various storm
 
events.
 
The $153
million of current
 
year catastrophe
 
losses in 2021 related
 
to Hurricane Ida
 
($80 million), the Texas
 
winter storms
($58 million) and the Quad State tornadoes
 
($15 million).
 
Segment
 
Expenses.
 
Commission and
 
brokerage
 
increased by
 
11.3% to
 
$394 million
 
in 2022
 
compared
 
to
 
$354
million
 
in
 
2021.
 
Segment
 
other
 
underwriting
 
expenses
 
increased
 
to
 
$463
 
million
 
in
 
2022
 
compared
 
to
 
$384
million
 
in
 
2021.
 
These
 
increases
 
were
 
mainly
 
due
 
to
 
the
 
impact
 
of
 
the
 
increase
 
in
 
premiums
 
earned
 
and
increased expenses
 
related
 
to the
 
continued
 
build out
 
of the
 
insurance
 
business, including
 
an expansion
 
of the
international insurance platform.
 
Critical Accounting Estimates
 
The following
 
is a
 
summary of
 
the critical
 
accounting estimates
 
related to
 
accounting estimates
 
that (1)
 
require
management
 
to
 
make
 
assumptions
 
about
 
highly
 
uncertain
 
matters
 
and
 
(2)
 
could
 
materially
 
impact
 
the
consolidated financial statements
 
if management made different
 
assumptions.
 
Loss and LAE
 
Reserves.
 
Our most critical
 
accounting estimate
 
is the determination
 
of our loss
 
and LAE reserves.
 
We
 
maintain
 
reserves
 
equal to
 
our estimated
 
ultimate
 
liability for
 
losses
 
and LAE
 
for
 
reported
 
and unreported
53
claims for our insurance and reinsurance
 
businesses.
 
Because reserves are based on estimates
 
of ultimate losses
and
 
LAE
 
by
 
underwriting
 
or
 
accident
 
year,
 
we
 
use
 
a
 
variety
 
of
 
statistical
 
and
 
actuarial
 
techniques
 
to
 
monitor
reserve
 
adequacy
 
over
 
time, evaluate
 
new information
 
as it
 
becomes known
 
and adjust
 
reserves
 
whenever
 
an
adjustment
 
appears
 
warranted.
 
We
 
consider
 
many
 
factors
 
when
 
setting
 
reserves
 
including:
 
(1)
 
our
 
exposure
base
 
and
 
projected
 
ultimate
 
premiums
 
earned;
 
(2)
 
our
 
expected
 
loss
 
ratios
 
by
 
product
 
and
 
class
 
of
 
business,
which are developed collaboratively
 
by underwriters and actuaries;
 
(3) actuarial methodologies and
 
assumptions
which analyze
 
our loss
 
reporting and
 
payment experience,
 
reports from
 
ceding companies
 
and historical
 
trends,
such
 
as
 
reserving
 
patterns,
 
loss
 
payments
 
and
 
product
 
mix;
 
(4)
 
current
 
legal
 
interpretations
 
of
 
coverage
 
and
liability;
 
and
 
(5)
 
economic
 
conditions.
 
Our
 
insurance
 
and
 
reinsurance
 
loss
 
and
 
LAE
 
reserves
 
represent
management’s best
 
estimate of our ultimate
 
liability. Actual
 
losses and LAE ultimately
 
paid may deviate,
 
perhaps
substantially,
 
from
 
such
 
reserves.
 
Our
 
net
 
income
 
(loss)
 
will
 
be
 
impacted
 
in
 
a
 
period
 
in
 
which
 
the
 
change
 
in
estimated ultimate losses
 
and LAE is recorded.
 
See also ITEM 8, “Financial Statements
 
and Supplementary Data”
- Note 1 of Notes to the Consolidated Financial
 
Statements.
 
It is more
 
difficult to
 
accurately
 
estimate loss
 
reserves for
 
reinsurance
 
liabilities than
 
for insurance
 
liabilities.
 
At
December 31,
 
2022, we
 
had reinsurance
 
reserves of
 
$16.1 billion,
 
of which
 
$278 million
 
were loss
 
reserves for
A&E
 
liabilities,
 
and
 
insurance
 
loss
 
reserves
 
of
 
$5.9
 
billion.
 
A
 
detailed
 
discussion
 
of
 
additional
 
considerations
related to A&E exposures
 
follows later in this section.
 
The
 
detailed
 
data
 
required
 
to
 
evaluate
 
ultimate
 
losses
 
for
 
our
 
insurance
 
business
 
is
 
accumulated
 
from
 
our
underwriting and claim systems.
 
Reserving for reinsurance
 
requires evaluation of loss
 
information received
 
from
ceding companies.
 
Ceding companies
 
report losses
 
to us
 
in many
 
forms dependent
 
on the type
 
of contract
 
and
the
 
agreed
 
or
 
contractual
 
reporting
 
requirements.
 
Generally,
 
proportional/quota
 
share
 
contracts
 
require
 
the
submission
 
of
 
a
 
monthly/quarterly
 
account,
 
which
 
includes
 
premium
 
and
 
loss
 
activity
 
for
 
the
 
period
 
with
corresponding reserves
 
as established by
 
the ceding company.
 
This information
 
is recorded into
 
our records.
 
For
certain
 
proportional
 
contracts,
 
we
 
may
 
require
 
a
 
detailed
 
loss
 
report
 
for
 
claims
 
that
 
exceed
 
a
 
certain
 
dollar
threshold
 
or
 
relate
 
to
 
a
 
particular
 
type
 
of
 
loss.
 
Excess
 
of
 
loss
 
and
 
facultative
 
contracts
 
generally
 
require
individual loss reporting
 
with precautionary notices
 
provided when a
 
loss reaches a
 
significant percentage
 
of the
attachment point
 
of the contract
 
or when certain causes
 
of loss or types
 
of injury occur.
 
Our experienced claims
staff
 
handles
 
individual
 
loss reports
 
and supporting
 
claim information.
 
Based on
 
our evaluation
 
of a
 
claim, we
may establish
 
additional case
 
reserves (ACRs)
 
in addition
 
to the
 
case reserves
 
reported by
 
the ceding
 
company.
To
 
ensure
 
ceding
 
companies
 
are
 
submitting
 
required
 
and accurate
 
data,
 
the
 
Underwriting,
 
Claim,
 
Reinsurance
Accounting
 
and Internal
 
Audit departments
 
of the
 
Company
 
perform various
 
reviews
 
of our
 
ceding companies,
particularly larger ceding companies, including
 
on-site audits of domestic ceding companies.
 
We sort
 
both our
 
reinsurance
 
and insurance
 
reserves into
 
exposure
 
groupings
 
for actuarial
 
analysis.
 
We assign
our
 
business
 
to
 
exposure
 
groupings
 
so
 
that
 
the
 
underlying
 
exposures
 
have
 
reasonably
 
homogeneous
 
loss
development
 
characteristics
 
and
 
are
 
large
 
enough
 
to
 
facilitate
 
credible
 
estimation
 
of
 
ultimate
 
losses.
 
We
periodically
 
review
 
our
 
exposure
 
groupings
 
and
 
we
 
may
 
change
 
our
 
groupings
 
over
 
time
 
as
 
our
 
business
changes.
 
We
 
currently
 
use
 
over
 
200
 
exposure
 
groupings
 
to
 
develop
 
our
 
reserve
 
estimates.
 
One
 
of
 
the
 
key
selection characteristics
 
for
 
the
 
exposure
 
groupings
 
is the
 
historical
 
duration
 
of the
 
claims
 
settlement
 
process.
 
Business in
 
which claims
 
are reported
 
and settled
 
relatively quickly
 
are commonly
 
referred
 
to as
 
short tail
 
lines,
principally property
 
lines.
 
Casualty claims
 
tend to
 
take
 
longer to
 
be reported
 
and settled
 
and casualty
 
lines are
generally referred
 
to as
 
long tail
 
lines.
 
Our estimates
 
of ultimate
 
losses for
 
shorter tail
 
lines, with
 
the exception
of loss estimates for large catastrophic
 
events,
 
generally exhibit less volatility
 
than those for the longer tail lines.
 
We
 
use
 
similar
 
actuarial
 
methodologies,
 
such
 
as
 
expected
 
loss
 
ratio,
 
chain
 
ladder
 
reserving
 
methods
 
and
Bornhuetter-Ferguson,
 
supplemented
 
by judgment
 
where appropriate,
 
to estimate
 
our ultimate
 
losses and
 
LAE
for each
 
exposure group.
 
Although we
 
use similar
 
actuarial methodologies
 
for both
 
short tail
 
and long
 
tail lines,
the faster reporting
 
of experience for
 
the short tail lines
 
allows us to
 
have greater confidence
 
in our estimates
 
of
ultimate
 
losses
 
for
 
short
 
tail
 
lines
 
at
 
an
 
earlier
 
stage
 
than
 
for
 
long
 
tail
 
lines.
 
As
 
a
 
result,
 
we
 
utilize,
 
as
 
well,
exposure-based
 
methods
 
to
 
estimate
 
our ultimate
 
losses
 
for
 
longer
 
tail
 
lines,
 
especially
 
for
 
immature
 
accident
years.
 
For
 
both
 
short
 
and
 
long
 
tail
 
lines,
 
we
 
supplement
 
these
 
general
 
approaches
 
with
 
analytically
 
based
 
54
judgments.
 
We
 
cannot
 
estimate
 
losses
 
from
 
widespread
 
catastrophic
 
events,
 
such
 
as
 
hurricanes
 
and
earthquakes,
 
using
 
traditional
 
actuarial
 
methods.
 
We
 
estimate
 
losses
 
for
 
these
 
types
 
of
 
events
 
based
 
on
information
 
derived
 
from
 
catastrophe
 
models,
 
quantitative
 
and
 
qualitative
 
exposure
 
analyses,
 
reports
 
and
communications
 
from
 
ceding
 
companies
 
and
 
development
 
patterns
 
for
 
historically
 
similar
 
events.
 
Due
 
to
 
the
inherent
 
uncertainty
 
in
 
estimating
 
such
 
losses,
 
these
 
estimates
 
are
 
subject
 
to
 
variability,
 
which
 
increases
 
with
the severity and complexity of the underlying event.
 
Our key
 
actuarial assumptions
 
contain
 
no explicit
 
provisions
 
for reserve
 
uncertainty
 
nor do
 
we supplement
 
the
actuarially determined reserves for uncertainty.
Our carried
 
reserves at
 
each reporting
 
date are
 
management’s
 
best estimate
 
of ultimate
 
unpaid losses
 
and LAE
at
 
that
 
date.
 
We
 
complete
 
detailed
 
reserve
 
studies
 
for
 
each exposure
 
group
 
annually
 
for our
 
reinsurance
 
and
insurance
 
operations.
 
The
 
completed
 
annual
 
reinsurance
 
reserve
 
studies
 
are
 
“rolled
 
forward”
 
for
 
each
accounting period
 
until the
 
subsequent reserve
 
study is
 
completed.
 
Analyzing the
 
roll-forward
 
process involves
comparing
 
actual
 
reported
 
losses
 
to
 
expected
 
losses
 
based
 
on
 
the
 
most
 
recent
 
reserve
 
study.
 
We
 
analyze
significant
 
variances
 
between
 
actual
 
and
 
expected
 
losses
 
and
 
also
 
consider
 
recent
 
market,
 
underwriting
 
and
management
 
criteria
 
to
 
determine
 
management’s
 
best
 
estimate
 
of
 
ultimate
 
unpaid
 
losses
 
and
 
LAE.
 
Management’s
 
best estimate
 
is developed
 
through
 
collaboration
 
with actuarial,
 
underwriting, claims,
 
legal
 
and
finance
 
departments
 
and
 
culminates
 
with
 
the
 
input
 
of
 
reserve
 
committees.
 
Each
 
segment
 
reserve
 
committee
includes the participation of the relevant parties
 
from actuarial, finance, claims and segment senior management
and has
 
the responsibility
 
for recommending
 
and approving
 
management’s
 
best estimate.
 
Reserves are
 
further
reviewed
 
by
 
Everest’s
 
Chief
 
Reserving
 
Actuary
 
and
 
senior
 
management.
 
The
 
objective
 
of
 
such
 
process
 
is
 
to
determine a single best
 
estimate viewed by
 
management to be
 
the best estimate
 
of its ultimate loss
 
liability.
 
As
a result of
 
these additional factors,
 
in some instances
 
the selected reserve
 
level may be
 
higher or lower than
 
the
actuarial indicated estimate.
 
Given
 
the
 
inherent
 
variability
 
in
 
our
 
loss
 
reserves,
 
we
 
have
 
developed
 
an
 
estimated
 
range
 
of
 
possible
 
gross
reserve
 
levels.
 
A
 
table
 
of
 
ranges
 
by
 
segment,
 
accompanied
 
by
 
commentary
 
on
 
potential
 
and
 
historical
variability,
 
is
 
included
 
in
 
“Financial
 
Condition
 
- Loss
 
and
 
LAE Reserves”.
 
The ranges
 
are
 
statistically
 
developed
using the exposure groups used in
 
the reserve estimation process
 
and aggregated to the segment
 
level.
 
For each
exposure
 
group,
 
our actuaries
 
calculate
 
a range
 
for each
 
accident year
 
based principally
 
on two
 
variables.
 
The
first
 
is
 
the
 
historical
 
changes
 
in
 
losses
 
and
 
LAE incurred
 
but not
 
reported
 
(“IBNR”)
 
for
 
each
 
accident
 
year
 
over
time; the second is
 
volatility of each
 
accident year’s
 
held reserves related
 
to estimated
 
ultimate losses, also
 
over
time.
 
Both are measured at various
 
ages from the end of the accident year through
 
the final payout of the year’s
losses.
 
Ranges are
 
developed for
 
the exposure
 
groups using
 
statistical
 
methods to
 
adjust for
 
diversification;
 
the
ranges
 
for
 
the
 
exposure
 
groups
 
are
 
aggregated
 
to
 
the
 
segment
 
level,
 
likewise,
 
with
 
an
 
adjustment
 
for
diversification.
 
Our
 
estimates
 
of
 
our
 
reserve
 
variability
 
may
 
not
 
be
 
comparable
 
to
 
those
 
of
 
other
 
companies
because there
 
are no
 
consistently
 
applied actuarial
 
or accounting
 
standards
 
governing such
 
presentations.
 
Our
recorded
 
reserves
 
reflect
 
our
 
best
 
point
 
estimate
 
of
 
our
 
liabilities
 
and
 
our
 
actuarial
 
methodologies
 
focus
 
on
developing
 
such
 
point
 
estimates.
 
We
 
calculate
 
the
 
ranges
 
subsequently,
 
based
 
on
 
the
 
historical
 
variability
 
of
such reserves.
Asbestos and Environmental
 
Exposures.
 
We continue to
 
receive claims under expired
 
insurance and reinsurance
contracts asserting
 
injuries and/or damages
 
relating to
 
or resulting
 
from environmental
 
pollution and hazardous
substances,
 
including
 
asbestos.
 
Environmental
 
claims
 
typically
 
assert
 
liability
 
for
 
(a)
 
the
 
mitigation
 
or
remediation
 
of environmental
 
contamination
 
or (b)
 
bodily injury
 
or property
 
damage
 
caused
 
by
 
the release
 
of
hazardous
 
substances
 
into the
 
land, air
 
or water.
 
Asbestos claims
 
typically assert
 
liability for
 
bodily injury
 
from
exposure to asbestos or for
 
property damage resulting from asbestos
 
or products containing asbestos.
Our
 
reserves
 
include
 
an
 
estimate
 
of
 
our
 
ultimate
 
liability
 
for
 
A&E
 
claims.
 
There
 
are
 
significant
 
uncertainties
surrounding our
 
estimates of
 
our potential
 
losses from
 
A&E claims.
 
Among the
 
uncertainties
 
are: (a)
 
potentially
long waiting periods
 
between exposure
 
and manifestation
 
of any
 
bodily injury or
 
property damage;
 
(b) difficulty
in
 
identifying
 
sources
 
of
 
asbestos
 
or
 
environmental
 
contamination;
 
(c)
 
difficulty
 
in
 
properly
 
allocating
 
 
55
responsibility
 
and/or liability
 
for asbestos
 
or environmental
 
damage; (d)
 
changes in
 
underlying laws
 
and judicial
interpretation
 
of those laws;
 
(e) the potential
 
for an
 
asbestos or
 
environmental
 
claim to involve
 
many insurance
providers
 
over
 
many
 
policy
 
periods;
 
(f)
 
questions
 
concerning
 
interpretation
 
and
 
application
 
of
 
insurance
 
and
reinsurance coverage;
 
and (g) uncertainty
 
regarding the
 
number and identity
 
of insureds with
 
potential asbestos
or environmental exposure.
 
Due to the uncertainties
 
discussed above, the ultimate
 
losses attributable to
 
A&E, and particularly asbestos,
 
may
be subject to more variability
 
than are non-A&E reserves
 
and such variation
 
could have a material
 
adverse effect
on our
 
financial condition,
 
results of
 
operations
 
and/or cash
 
flows.
 
See also
 
ITEM 8,
 
“Financial Statements
 
and
Supplementary Data” - Notes 1 and 3
 
of Notes to the Consolidated Financial Statements.
 
Reinsurance
 
Recoverables.
 
We
 
have
 
purchased
 
reinsurance
 
to
 
reduce
 
our
 
exposure
 
to
 
adverse
 
claim
experience,
 
large
 
claims
 
and catastrophic
 
loss
 
occurrences.
 
Our ceded
 
reinsurance
 
provides
 
for
 
recovery
 
from
reinsurers
 
of
 
a
 
portion
 
of
 
losses
 
and
 
loss
 
expenses
 
under
 
certain
 
circumstances.
 
Such
 
reinsurance
 
does
 
not
relieve us of our
 
obligation to
 
our policyholders.
 
In the event our
 
reinsurers are
 
unable to meet their obligations
under these agreements
 
or are able to successfully
 
challenge losses ceded by
 
us under the contracts,
 
we will not
be
 
able
 
to
 
realize
 
the
 
full
 
value
 
of
 
the
 
reinsurance
 
recoverable
 
balance.
 
In
 
some
 
cases,
 
we
 
may
 
hold
 
full
 
or
partial collateral
 
for the
 
receivable,
 
including letters
 
of credit,
 
trust assets
 
and cash.
 
Additionally,
 
creditworthy
foreign
 
reinsurers
 
of
 
business
 
written
 
in
 
the
 
U.S.,
 
as
 
well
 
as
 
capital
 
markets’
 
reinsurance
 
mechanisms,
 
are
generally required
 
to secure their
 
obligations.
 
We have
 
established reserves
 
for uncollectible balances
 
based on
our
 
assessment
 
of
 
the
 
collectability
 
of
 
the
 
outstanding
 
balances.
 
The
 
allowance
 
for
 
uncollectible
 
reinsurance
reflects
 
management’s
 
best
 
estimate
 
of
 
reinsurance
 
cessions
 
that
 
may
 
be
 
uncollectible
 
in
 
the
 
future
 
due
 
to
reinsurers’
 
unwillingness or
 
inability to pay.
 
The allowance for
 
uncollectible reinsurance
 
comprises an
 
allowance
and
 
an
 
allowance
 
for
 
disputed
 
balances.
 
Based
 
on
 
this
 
analysis,
 
the
 
Company
 
may
 
adjust
 
the
 
allowance
 
for
uncollectible reinsurance or charge
 
off reinsurer balances that are
 
determined to be uncollectible.
 
Due to the inherent
 
uncertainties as to
 
collection and the length
 
of time before reinsurance
 
recoverable become
due, it is possible that future adjustments
 
to the Company’s reinsurance
 
recoverable, net of the
 
allowance, could
be required,
 
which could
 
have a
 
material adverse
 
effect on
 
the Company’s
 
consolidated results
 
of operations
 
or
cash flows in a particular quarter or annual period.
 
The allowance
 
is
 
estimated
 
as
 
the
 
amount
 
of reinsurance
 
recoverable
 
exposed
 
to
 
loss multiplied
 
by
 
estimated
factors
 
for
 
the
 
probability
 
of
 
default.
 
The
 
reinsurance
 
recoverable
 
exposed
 
is
 
the
 
amount
 
of
 
reinsurance
recoverable
 
net of collateral
 
and other offsets,
 
considering the nature
 
of the collateral,
 
potential future
 
changes
in collateral
 
values, and
 
historical loss
 
information for
 
the type of
 
collateral obtained.
 
The probability
 
of default
factors are
 
historical insurer
 
and reinsurer
 
defaults for
 
liabilities with similar
 
durations to
 
the reinsured liabilities
as
 
estimated
 
through
 
multiple
 
economic
 
cycles.
 
Credit
 
ratings
 
are
 
forward-looking
 
and
 
consider
 
a
 
variety
 
of
economic outcomes.
 
The Company's
 
evaluation of
 
the required allowance
 
for reinsurance
 
recoverable
 
considers
the current economic environment
 
as well as macroeconomic scenarios.
 
The
 
Company
 
records
 
credit
 
loss
 
expenses
 
related
 
to
 
reinsurance
 
recoverable
 
in
 
Incurred
 
losses
 
and
 
loss
adjustment expenses in the Company’s
 
consolidated statements
 
of operations and comprehensive
 
income (loss).
 
Write-offs of
 
reinsurance recoverable
 
and any related
 
allowance are recorded
 
in the period in
 
which the balance
is deemed uncollectible.
 
Premiums
 
Written
 
and
 
Earned.
 
Premiums
 
written
 
by
 
us
 
are
 
earned
 
ratably
 
over
 
the
 
coverage
 
periods
 
of
 
the
related insurance
 
and reinsurance
 
contracts.
 
We
 
establish
 
unearned premium
 
reserves
 
to cover
 
the unexpired
portion of
 
each contract.
 
Such reserves,
 
for assumed
 
reinsurance,
 
are computed
 
using pro
 
rata
 
methods based
on statistical
 
data received from
 
ceding companies.
 
Premiums earned, and the
 
related costs,
 
which have not yet
been
 
reported
 
to
 
us,
 
are
 
estimated
 
and
 
accrued.
 
Because
 
of
 
the
 
inherent
 
lag
 
in
 
the
 
reporting
 
of
 
written
 
and
earned
 
premiums
 
by
 
our
 
ceding
 
companies,
 
we
 
use
 
standard
 
accepted
 
actuarial
 
methodologies
 
to
 
estimate
earned but not reported
 
premium at each financial reporting
 
date. These earned but
 
not reported premiums
 
are
combined
 
with
 
reported
 
earned
 
premiums
 
to
 
comprise
 
our
 
total
 
premiums
 
earned
 
for
 
determination
 
of
 
our
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
56
incurred
 
losses
 
and
 
loss
 
and
 
LAE
 
reserves.
 
Commission
 
expense
 
and
 
incurred
 
losses
 
related
 
to
 
the
 
change
 
in
earned
 
but
 
not
 
reported
 
premium are
 
included
 
in
 
current
 
period
 
company
 
and segment
 
financial
 
results.
 
See
also
 
ITEM
 
8,
 
“Financial
 
Statements
 
and
 
Supplementary
 
Data”
 
-
 
Note
 
1
 
of Notes
 
to
 
the
 
Consolidated
 
Financial
Statements.
The following table displays
 
the estimated components of net earned but
 
not reported premiums by segment for
the periods indicated.
At December 31,
(Dollars in millions)
2022
2021
2020
Reinsurance
$
2,255
$
2,055
$
1,774
Insurance
Total
$
2,255
$
2,055
$
1,774
(Some amounts may not reconcile due to rounding.)
Investment
 
Valuation.
 
Our fixed
 
income
 
investments
 
are
 
classified for
 
accounting
 
purposes
 
as either
 
available
for sale
 
or held to
 
maturity.
 
The available
 
for sale
 
fixed maturity
 
securities are
 
carried at fair
 
value and
 
the held
to maturity fixed
 
maturity portfolio
 
is carried at
 
amortized cost,
 
net of current
 
expected credit
 
allowance on our
consolidated
 
balance
 
sheets.
 
Our
 
equity
 
securities
 
are
 
all
 
carried
 
at
 
fair
 
value.
 
Most
 
securities
 
we
 
own
 
are
traded
 
on
 
national
 
exchanges
 
where
 
market
 
values
 
are
 
readily
 
available.
 
Some
 
of
 
our
 
commercial
 
mortgage-
backed
 
securities (“CMBS”)
 
are valued
 
using cash
 
flow models
 
and risk-adjusted
 
discount rates.
 
We hold
 
some
privately
 
placed securities,
 
less than
 
10% of
 
the portfolio,
 
that
 
are
 
either valued
 
by investment
 
advisors
 
or the
Company.
 
In
 
some
 
instances,
 
values
 
provided
 
by
 
an
 
investment
 
advisor
 
are
 
supported
 
with
 
opinions
 
from
qualified independent third parties.
 
The Company has procedures
 
in place to review the values
 
received from its
investment
 
advisors.
 
At
 
December 31,
 
2022 and
 
2021, our
 
investment
 
portfolio
 
included
 
$3.8 billion
 
and $2.6
billion,
 
respectively,
 
of
 
limited
 
partnership
 
investments
 
whose
 
values
 
are
 
reported
 
pursuant
 
to
 
the
 
equity
method
 
of
 
accounting.
 
We
 
carry
 
these
 
investments
 
at
 
values
 
provided
 
by
 
the
 
managements
 
of
 
the
 
limited
partnerships and
 
due to inherent
 
reporting lags,
 
the carrying values
 
are based on
 
values with “as
 
of” dates from
one month to one quarter prior to our financial statement
 
date.
 
At December 31, 2022, we had
 
net unrealized losses on our available
 
for sale fixed maturity
 
securities, net of tax,
of $1.7 billion
 
compared to
 
net unrealized
 
gains on
 
our available
 
for sale
 
fixed maturity
 
securities, net
 
of tax,
 
of
$239 million
 
at December
 
31, 2021.
 
Gains (losses)
 
from market
 
fluctuations on
 
available for
 
sale fixed
 
maturity
securities
 
at
 
fair
 
value
 
are
 
reflected
 
as
 
accumulated
 
other
 
comprehensive
 
income
 
(loss)
 
in
 
the
 
consolidated
balance sheets.
 
Market
 
value declines
 
for available
 
for sale
 
fixed income
 
portfolio,
 
which are
 
considered credit
related, are reflected
 
in our consolidated
 
statements of operations
 
and comprehensive income
 
(loss), as realized
capital
 
losses.
 
We
 
consider
 
many
 
factors
 
when
 
determining
 
whether
 
a
 
market
 
value
 
decline
 
is
 
credit
 
related,
including:
 
(1) we
 
have no
 
intent
 
to sell
 
and, more
 
likely than
 
not, will
 
not be
 
required to
 
sell prior
 
to recovery,
(2) the
 
length of
 
time the
 
market
 
value has
 
been below
 
book value,
 
(3) the
 
credit strength
 
of the
 
issuer,
 
(4) the
issuer’s
 
market
 
sector,
 
(5)
 
the
 
length
 
of
 
time
 
to
 
maturity
 
and
 
(6)
 
for
 
asset-backed
 
securities,
 
changes
 
in
prepayments,
 
credit
 
enhancements
 
and
 
underlying
 
default
 
rates.
 
If management’s
 
assessments
 
change
 
in
 
the
future, we may
 
ultimately record
 
a realized loss
 
after management
 
originally concluded that
 
the decline in value
was temporary.
 
Fixed
 
maturity
 
securities
 
designated
 
as
 
held
 
to
 
maturity
 
consist
 
of
 
debt
 
securities
 
for
 
which
 
the
 
Company
 
has
both the positive
 
intent and ability
 
to hold to
 
maturity or redemption
 
and are reported
 
at amortized cost,
 
net of
the
 
current
 
expected
 
credit
 
loss
 
allowance.
 
Interest
 
income
 
for
 
fixed
 
maturity
 
securities
 
held
 
to
 
maturity
 
is
determined in the
 
same manner as interest
 
income for fixed
 
maturity securities available
 
for sale.
 
The Company
evaluates
 
fixed
 
maturity
 
securities
 
classified as
 
held to
 
maturity
 
for
 
current
 
expected
 
credit
 
losses
 
utilizing
 
risk
characteristics
 
of
 
each
 
security,
 
including
 
credit
 
rating,
 
remaining
 
time
 
to
 
maturity,
 
adjusted
 
for
 
prepayment
considerations,
 
and
 
subordination
 
level,
 
and
 
applying
 
default
 
and
 
recovery
 
rates,
 
which
 
include
 
the
 
 
 
 
 
 
 
 
 
 
 
 
 
 
57
incorporation
 
of
 
historical
 
credit
 
loss
 
experience
 
and
 
macroeconomic
 
forecasts,
 
to
 
develop
 
an
 
estimate
 
of
current expected credit losses.
See also ITEM 8, “Financial
 
Statements and
 
Supplementary Data”
 
- Note 1 of Notes
 
to the Consolidated
 
Financial
Statements.
 
FINANCIAL CONDITION
 
Investments.
 
Total
 
investments were
 
$28.5 billion at
 
December 31, 2022,
 
an increase
 
of $241 million
 
compared
to
 
$28.2
 
billion
 
at
 
December
 
31,
 
2021.
 
The
 
rise
 
in
 
investments
 
was
 
primarily
 
related
 
to
 
an
 
increase
 
in
 
other
invested assets, partially
 
offset by a decline in equity
 
securities.
 
The increase in other invested
 
assets was due to
the inclusion
 
of assets held
 
for the implementation
 
of a Company
 
Owned Life Insurance
 
(“COLI”) program
 
in the
fourth quarter
 
of 2022.
 
A portion of
 
the equity securities
 
portfolio was
 
sold in order
 
to invest
 
in the COLI
 
assets
which accounted for the decline in equity
 
securities.
 
The
 
Company’s
 
limited
 
partnership
 
investments
 
are
 
comprised
 
of
 
limited
 
partnerships
 
that
 
invest
 
in
 
private
equity,
 
private
 
credit
 
and
 
private
 
real
 
estate.
 
Generally,
 
the
 
limited
 
partnerships
 
are
 
reported
 
on
 
a
 
month
 
or
quarter
 
lag.
 
We
 
receive
 
annual
 
audited
 
financial
 
statements
 
for
 
all
 
of
 
the
 
limited
 
partnerships
 
which
 
are
prepared using
 
fair value accounting
 
in accordance with
 
FASB guidance.
 
For the quarterly
 
reports, the Company
reviews
 
the
 
financial
 
reports
 
for
 
any
 
unusual
 
changes
 
in
 
carrying
 
value.
 
If
 
the
 
Company
 
becomes
 
aware
 
of
 
a
significant
 
decline in
 
value during
 
the lag
 
reporting
 
period, the
 
loss will
 
be recorded
 
in the
 
period in
 
which the
Company identifies the decline.
 
The
 
table
 
below
 
summarizes
 
the
 
composition
 
and
 
characteristics
 
of
 
our
 
investment
 
portfolio
 
as
 
of
 
the
 
dates
indicated.
At December 31,
2022
2021
Fixed income portfolio duration (years)
3.1
3.2
Fixed income composite credit quality
A+
A+
Reinsurance Recoverables
 
.
 
Reinsurance
 
recoverables
 
for
 
both
 
paid
 
and
 
unpaid
 
losses
 
totaled
 
$2.2
 
billion
 
at
 
December
 
31,
 
2022
 
and
 
$2.1
billion at
 
December 31,
 
2021.
 
At
 
December 31,
 
2022, $520
 
million, or
 
23.2%, was
 
recoverable
 
from Mt.
 
Logan
Re
 
collateralized
 
segregated
 
accounts;
 
$283
 
million,
 
or
 
12.6%,
 
was
 
recoverable
 
from
 
Munich
 
Re
 
and
 
$148
million, or 6.6%, was
 
recoverable
 
from Endurance
 
Re.
 
No other retrocessionaire
 
accounted for
 
more than 5% of
our recoverables.
 
Loss and LAE Reserves.
 
Gross loss and LAE reserves
 
totaled $22.1 billion and
 
$19.0 billion at December 31,
 
2022
and 2021, respectively.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
58
The following
 
tables summarize
 
gross outstanding
 
loss and
 
LAE reserves
 
by segment,
 
classified by
 
case reserves
and IBNR reserves, for the periods indicated.
 
At December 31, 2022
Case
IBNR
Total
% of
 
(Dollars in millions)
Reserves
Reserves
Reserves
Total
Reinsurance
$
6,045
$
9,818
$
15,862
71.9%
Insurance
1,863
4,062
5,925
26.9%
Total excluding A&E
7,908
13,880
21,787
98.7%
A&E
138
140
278
1.3%
Total including A&E
$
8,046
$
14,019
$
22,065
100.0%
(Some amounts may not reconcile due to rounding.)
At December 31, 2021
Case
IBNR
Total
% of
 
(Dollars in millions)
Reserves
Reserves
Reserves
Total
Reinsurance
$
5,415
$
8,312
$
13,727
72.2%
Insurance
1,546
3,562
5,109
26.9%
Total excluding A&E
6,961
11,875
18,836
99.1%
A&E
164
10
174
0.9%
Total including A&E
$
7,125
$
11,885
$
19,009
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
 
carried
 
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,
 
accident years,
 
legal
entities,
 
and
 
in
 
the
 
aggregate.
 
In
 
order
 
to
 
set
 
appropriate
 
reserves,
 
we
 
make
 
qualitative
 
and
 
quantitative
analyses
 
and
 
judgments
 
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.
 
Management’s
 
best estimate
 
is developed
 
through
 
collaboration
 
with actuarial,
 
underwriting, claims,
 
legal
 
and
finance
 
departments
 
and
 
culminates
 
with
 
the
 
input
 
of
 
reserve
 
committees.
 
Each
 
segment
 
reserve
 
committee
includes the participation of the relevant parties
 
from actuarial, finance, claims and segment senior management
and has
 
the responsibility
 
for recommending
 
and approving
 
management’s
 
best estimate.
 
Reserves are
 
further
reviewed
 
by
 
Everest’s
 
Chief
 
Reserving
 
Actuary
 
and
 
senior
 
management.
 
The
 
objective
 
of
 
such
 
process
 
is
 
to
determine
 
a
 
single
 
best
 
estimate
 
viewed
 
by
 
management
 
to
 
be
 
the
 
best
 
estimate
 
of
 
its
 
ultimate
 
loss
 
liability.
 
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.
 
We
 
have
 
included
 
ranges
 
for
 
loss
 
reserve
 
estimates
 
determined
 
by
 
our
 
actuaries,
 
which
 
have
 
been
 
developed
through
 
a
 
combination
 
of
 
objective
 
and
 
subjective
 
criteria.
 
Our
 
presentation
 
of
 
this
 
information
 
may
 
not
 
be
directly comparable
 
to similar presentations
 
of other companies
 
as there are
 
no consistently
 
applied actuarial or
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
59
accounting standards
 
governing such presentations.
 
Our recorded reserves
 
are an aggregation
 
of our best
 
point
estimates
 
for
 
approximately
 
200
 
reserve
 
groups
 
and
 
reflect
 
our
 
best
 
point
 
estimate
 
of
 
our
 
liabilities.
 
Our
actuarial methodologies develop
 
point estimates
 
rather than ranges
 
and the ranges
 
are developed subsequently
based upon historical and prospective
 
variability measures.
 
The
 
following
 
table
 
below
 
represents
 
the
 
reserve
 
levels
 
and
 
ranges
 
for
 
each
 
of
 
our
 
business
 
segments
 
for
 
the
period indicated.
 
Outstanding Reserves and Ranges By Segment (1)
At December 31, 2022
As
Low
Low
High
High
(Dollars in millions)
Reported
Range %
Range
Range %
Range
Gross Reserves By Segment
Reinsurance
$
15,862
-7.4%
$
14,689
7.8%
$
17,095
Insurance
5,925
-9.9%
5,340
10.8%
6,565
Total Gross Reserves (excluding A&E)
21,787
-8.1%
20,029
8.6%
23,660
A&E (All Segments)
 
278
-22.9%
214
22.7%
341
Total Gross Reserves
$
22,065
-8.3%
20,243
8.8%
24,001
(Some amounts may not reconcile due
 
to rounding.)
______________________________________________________
(1)
There can be no assurance that reserves
 
will not ultimately exceed the
 
indicated ranges requiring additional
 
income (loss) statement expense.
Depending
 
on
 
the
 
specific
 
segment,
 
the
 
range
 
derived
 
for
 
the
 
loss
 
reserves,
 
excluding
 
reserves
 
for
 
A&E
exposures,
 
ranges
 
from minus
 
7.4% to
 
minus 9.9%
 
for the
 
low range
 
and from
 
plus 7.8%
 
to plus
 
10.8% for
 
the
high range.
 
Both the higher
 
and lower ranges
 
are associated
 
with the Insurance
 
segment.
 
The size of
 
the range
is
 
dependent
 
upon
 
the
 
level
 
of
 
confidence
 
associated
 
with
 
the
 
reserve
 
estimates.
 
Within
 
each
 
range,
management’s
 
best
 
estimate
 
of
 
loss
 
reserves
 
is
 
based
 
upon
 
the
 
point
 
estimate
derived
 
by
 
our
 
actuaries
 
in
detailed reserve
 
studies.
 
Such ranges
 
are necessarily
 
subjective due
 
to the
 
lack of
 
generally
 
accepted actuarial
standards with
 
respect to their
 
development.
 
There can be
 
no assurance that
 
our claim obligations
 
will not vary
outside of these ranges.
 
Additional losses, including
 
those relating to
 
latent injuries, and
 
other exposures, which
 
are as yet
 
unrecognized,
the type
 
or magnitude
 
of which
 
cannot be
 
foreseen
 
by us
 
or the
 
reinsurance
 
and insurance
 
industry
 
generally,
may
 
emerge
 
in
 
the
 
future.
 
Such
 
future
 
emergence,
 
to
 
the
 
extent
 
not
 
covered
 
by
 
existing
 
retrocessional
contracts,
 
could have
 
material
 
adverse
 
effects
 
on our
 
future financial
 
condition,
 
results of
 
operations
 
and cash
flows.
 
Asbestos and Environmental
 
Exposures.
 
A&E exposures represent a separate
 
exposure group for monitoring
 
and
evaluating reserve adequacy.
 
With
 
respect
 
to
 
asbestos
 
only,
 
at
 
December
 
31,
 
2022,
 
we
 
had
 
net
 
asbestos
 
loss
 
reserves
 
of
 
$233
 
million,
 
or
90.5%, of total net A&E reserves, all of which was
 
for assumed business.
 
See
 
Note
 
3
 
of
 
Notes
 
to
 
Consolidated
 
Financial
 
Statements
 
for
 
a
 
summary
 
of
 
Asbestos
 
and
 
Environmental
Exposures.
 
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
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
60
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
 
6.9
 
years
 
at
 
December
 
31,
 
2022.
 
These
 
metrics
 
can
 
be
 
skewed
 
by
individual large settlements
 
occurring in the
 
prior three years
 
and therefore,
 
may not be
 
indicative of
 
the timing
of future payments.
 
LIQUIDITY AND CAPITAL RESOURCES
 
Capital.
 
Shareholders’
 
equity at
 
December 31,
 
2022 and
 
December 31,
 
2021 was
 
$8.4 billion
 
and $10.1
 
billion,
respectively.
 
Management’s
 
objective
 
in
 
managing
 
capital
 
is
 
to
 
ensure
 
its
 
overall
 
capital
 
level,
 
as
 
well
 
as
 
the
capital
 
levels
 
of
 
its
 
operating
 
subsidiaries,
 
exceed
 
the
 
amounts
 
required
 
by
 
regulators,
 
the
 
amount
 
needed
 
to
support
 
our current
 
financial strength
 
ratings
 
from rating
 
agencies and
 
our own
 
economic capital
 
models.
 
The
Company’s capital
 
has historically exceeded these benchmark
 
levels.
 
Our
 
two
 
main
 
operating
 
companies
 
Bermuda
 
Re
 
and
 
Everest
 
Re
 
are
 
regulated
 
by
 
the
 
Bermuda
 
Monetary
Authority
 
(“BMA”)
 
and
 
the
 
State
 
of
 
Delaware,
 
Department
 
of
 
Insurance,
 
respectively.
 
Both
 
regulatory
 
bodies
have their
 
own capital
 
adequacy models
 
based on
 
statutory capital
 
as opposed
 
to GAAP basis
 
equity.
 
Failure to
meet
 
the
 
required
 
statutory
 
capital
 
levels
 
could
 
result
 
in
 
various
 
regulatory
 
restrictions,
 
including
 
business
activity and the payment of dividends to
 
their parent companies.
 
The regulatory targeted
 
capital and the actual statutory
 
capital for Bermuda Re and Everest
 
Re were as follows:
Bermuda Re
(1)
Everest Re
(2)
At December 31,
At December 31,
(Dollars in millions)
2022
(3)
2021
2022
2021
Regulatory targeted capital
$
$
2,169
$
3,353
$
2,960
Actual capital
$
2,759
$
3,184
$
5,553
$
5,717
(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.
 
(3)
 
The 2022 BSCR calculation is not
 
yet due to be completed;
 
however,
 
the Company anticipates that
 
Bermuda Re's December
 
31, 2022 actual capital will
 
exceed
the targeted capital level.
Our financial strength
 
ratings as determined
 
by A.M. Best, Moody’s
 
and Standard & Poor’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.
 
See also ITEM 1, Business – “Financial Strength Ratings”.
 
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.
 
In 2022,
 
we repurchased
 
241,273 shares
 
for $61
 
million in
 
the open
 
market
 
and paid
 
$255 million
 
in dividends.
 
During
 
2021,
 
we
 
repurchased
 
887,622
 
shares
 
for
 
$225
 
million
 
in
 
the
 
open
 
market
 
and
 
paid
 
$247
 
million
 
in
dividends.
 
We may
 
at times enter
 
into a
 
Rule 10b5-1 repurchase
 
plan agreement
 
to facilitate
 
the repurchase
 
of
shares.
 
On
 
May
 
22,
 
2020,
 
our
 
existing
 
Board
 
authorization
 
to
 
purchase
 
up
 
to
 
30
 
million
 
of
 
our
 
shares
 
was
amended to
 
authorize
 
the purchase
 
of up
 
to 32
 
million shares.
 
As of
 
December 31,
 
2022, we
 
had repurchased
30.8 million shares under this authorization.
 
We repurchased
 
$6 million of our
 
long term subordinated
 
notes during the
 
third quarter of
 
2022 and recognized
a gain
 
of $1
 
million on
 
the repurchase.
 
We
 
may continue,
 
from time
 
to time,
 
to
 
seek to
 
retire
 
portions of
 
our
outstanding
 
debt
 
securities
 
through
 
cash
 
repurchases,
 
in
 
open-market
 
purchases,
 
privately
 
negotiated
transactions
 
or
 
otherwise.
 
Such
 
repurchases,
 
if
 
any,
 
will
 
be
 
subject
 
to
 
and
 
depend
 
on
 
prevailing
 
market
 
61
conditions,
 
our
 
liquidity
 
requirements,
 
contractual
 
restrictions
 
and
 
other
 
factors.
 
The amounts
 
involved
 
in
 
any
such transactions, individually or in the aggregate,
 
may be material.
 
On October 7,
 
2020, we
 
issued
 
an additional
 
$1.0 billion of
 
30 year senior
 
notes with
 
an interest
 
coupon rate
 
of
3.5%.
 
These senior notes will mature on October
 
15, 2050 and will pay interest
 
semi-annually.
 
On October 4,
 
2021, we
 
issued an
 
additional $1.0
 
billion of 31
 
year senior
 
notes with
 
an interest
 
coupon rate
 
of
3.125%.
 
These senior notes will mature on October 15, 2052 and
 
will pay interest semi-annually.
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 $3.7
 
billion and
 
$3.8 billion
 
for the
 
years
 
ended December
 
31, 2022
 
and 2021,
 
respectively.
 
Additionally,
these cash
 
flows reflected
 
net catastrophe
 
loss payments
 
of $677
 
million and
 
$834 million
 
for the
 
years
 
ended
December 31,
 
2022
 
and 2021,
 
respectively
 
and net
 
tax
 
payments
 
of $171
 
million and
 
$98 million
 
for the
 
years
ended December 31, 2022 and 2021, respectively.
 
If disbursements
 
for claims
 
and benefits,
 
policy acquisition
 
costs and
 
other operating
 
expenses
 
were to
 
exceed
premium inflows,
 
cash flow
 
from reinsurance
 
and insurance
 
operations
 
would be
 
negative.
 
The effect
 
on cash
flow
 
from
 
insurance
 
operations
 
would
 
be
 
partially
 
offset
 
by
 
cash
 
flow
 
from
 
investment
 
income.
 
Additionally,
cash inflows
 
from investment
 
maturities - both
 
short-term investments
 
and longer
 
term maturities
 
are available
to supplement other
 
operating cash
 
flows.
 
We do not
 
expect to supplement
 
negative insurance
 
operations cash
flows from investment dispositions.
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
 
December
 
31,
 
2022
 
and
 
December
 
31,
 
2021,
 
we
 
held
 
cash
 
and short
 
-term
investments
 
of
 
$2.4
 
billion
 
and
 
$2.6
 
billion,
 
respectively.
 
Our
 
short-term
 
investments
 
are
 
generally
 
readily
marketable
 
and can
 
be converted
 
to cash.
 
In addition
 
to these
 
cash and
 
short-term investments,
 
at December
31, 2022, we had
 
$1.3 billion of
 
available for
 
sale fixed
 
maturity securities
 
maturing within one
 
year or less,
 
$7.5
billion maturing
 
within one
 
to
 
five years
 
and
 
$5.3 billion
 
maturing
 
after
 
five
 
years.
 
Our
 
$281 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 December 31,
2022
 
we
 
had
 
$1.9
 
billion
 
of
 
net
 
pre-tax
 
unrealized
 
depreciation
 
related
 
to
 
available
 
for
 
sale
 
fixed
 
maturity
securities,
 
comprised
 
of
 
$2.0
 
billion
 
of
 
pre-tax
 
unrealized
 
depreciation
 
and
 
$81
 
million
 
of
 
pre-tax
 
unrealized
appreciation.
 
Management generally
 
expects annual
 
positive cash
 
flow from operations,
 
which reflects
 
the strength
 
of overall
pricing.
 
However,
 
given the recent
 
set of catastrophic
 
events, cash
 
flow from operations
 
may decline
 
and could
become negative in the near term as
 
significant claim payments are
 
made related to the catastrophes.
 
However,
as indicated
 
above,
 
the Company
 
has ample
 
liquidity to
 
settle its
 
catastrophe
 
claims and/or
 
any
 
payments
 
due
for its catastrophe
 
bond program.
 
In addition to our cash flows from operations
 
and liquid investments, we also have
 
multiple active credit facilities
that
 
provide
 
commitments
 
of
 
up
 
to
 
$1.5
 
billion
 
of
 
collateralized
 
standby
 
letters
 
of
 
credit
 
to
 
support
 
business
written by
 
our Bermuda operating
 
subsidiaries.
 
In addition, the
 
Company has the
 
ability to request
 
access to an
additional
 
$440
 
million
 
of
 
uncommitted
 
credit
 
facilities,
 
which
 
would
 
require
 
approval
 
from
 
the
 
applicable
 
62
lender.
 
There is
 
no guarantee
 
the uncommitted
 
capacity will
 
be available
 
to us
 
on a
 
future date.
 
See Note
 
5 –
Credit Facilities for further details.
 
Exposure to
 
Catastrophes.
 
Like other insurance
 
and reinsurance
 
companies, we are
 
exposed to
 
multiple insured
losses arising out of a
 
single occurrence, whether a
 
natural event,
 
such as a hurricane
 
or an earthquake,
 
or other
catastrophe,
 
such
 
as
 
an
 
explosion
 
at
 
a
 
major
 
factory.
 
A
 
large
 
catastrophic
 
event
 
can
 
be
 
expected
 
to
 
generate
insured
 
losses
 
to
 
multiple
 
reinsurance
 
treaties,
 
facultative
 
certificates
 
and
 
direct
 
insurance
 
policies
 
across
various lines of business.
 
We focus on
 
potential losses that
 
could result from
 
any single event,
 
or series of events
 
as part of our evaluation
and monitoring
 
of our
 
aggregate
 
exposures
 
to
 
catastrophic
 
events.
 
Accordingly,
 
we employ
 
various
 
techniques
to estimate
 
the amount of
 
loss we could
 
sustain from
 
any single catastrophic
 
event or series
 
of events in
 
various
geographic
 
areas.
 
These
 
techniques
 
range
 
from
 
deterministic
 
approaches,
 
such
 
as
 
tracking
 
aggregate
 
limits
exposed
 
in
 
catastrophe-prone
 
zones
 
and
 
applying
 
reasonable
 
damage
 
factors,
 
to
 
modeled
 
approaches
 
that
attempt
 
to
 
scientifically
 
measure
 
catastrophe
 
loss
 
exposure
 
using
 
sophisticated
 
Monte
 
Carlo
 
simulation
techniques that forecast
 
frequency and severity of potential losses
 
on a probabilistic basis.
 
No single
 
computer
 
model or
 
group
 
of models
 
is currently
 
capable of
 
projecting
 
the amount
 
and probability
 
of
loss in
 
all global geographic
 
regions in
 
which we
 
conduct business.
 
In addition,
 
the form,
 
quality and
 
granularity
of underwriting exposure
 
data furnished
 
by (re)insureds
 
is not uniformly
 
compatible with the
 
data requirements
for
 
our
 
licensed
 
models,
 
which
 
adds
 
to
 
the
 
inherent
 
imprecision
 
in
 
the
 
potential
 
loss
 
projections.
 
Further,
 
the
results
 
from
 
multiple
 
models
 
and
 
analytical
 
methods
 
must
 
be
 
combined
 
to
 
estimate
 
potential
 
losses
 
by
 
and
across
 
business
 
units.
 
Also,
 
while
 
most
 
models
 
have
 
been
 
updated
 
to
 
incorporate
 
claims
 
information
 
from
recent
 
catastrophic
 
events,
 
catastrophe
 
model
 
projections
 
are
 
still
 
inherently
 
imprecise.
 
In
 
addition,
uncertainties with respect
 
to future climatic patterns
 
and cycles could add
 
further uncertainty to loss
 
projections
from models based on historical data.
Nevertheless,
 
when combined
 
with traditional
 
risk management
 
techniques
 
and sound
 
underwriting judgment,
catastrophe
 
models
 
are
 
a
 
useful
 
tool
 
for
 
underwriters
 
to
 
price
 
catastrophe
 
exposed
 
risks
 
and
 
for
 
providing
management with
 
quantitative
 
analyses with
 
which to monitor
 
and manage
 
catastrophic
 
risk exposures
 
by zone
and across zones for individual and
 
multiple events.
 
Projected catastrophe
 
losses are
 
generally summarized
 
in terms
 
of the
 
PML.
 
We define
 
PML as
 
our anticipated
loss, taking
 
into account
 
contract
 
terms and
 
limits, caused
 
by a
 
single catastrophe
 
affecting
 
a broad
 
contiguous
geographic
 
area,
 
such
 
as
 
that
 
caused
 
by
 
a
 
hurricane
 
or
 
earthquake.
 
The
 
PML
 
will
 
vary
 
depending
 
upon
 
the
modeled simulated
 
losses
 
and the
 
make-up
 
of the
 
in force
 
book
 
of business.
 
The projected
 
severity
 
levels
 
are
described
 
in
 
terms
 
of “return
 
periods”,
 
such
 
as
 
“100-year
 
events”
 
and
 
“250-year
 
events”.
 
For
 
example,
 
a
 
100-
year PML is
 
the estimated loss
 
to the current
 
in-force portfolio
 
from a single
 
event which has
 
a 1% probability
 
of
being exceeded in
 
a twelve month
 
period.
 
In other words, it
 
corresponds to a
 
99% probability that
 
the loss from
a
 
single
 
event
 
will
 
fall
 
below
 
the
 
indicated
 
PML.
 
It
 
is
 
important
 
to
 
note
 
that
 
PMLs
 
are
 
estimates.
 
Modeled
events are
 
hypothetical events
 
produced by
 
a stochastic
 
model.
 
As a result,
 
there can be
 
no assurance
 
that any
actual event
 
will align
 
with the
 
modeled event
 
or that
 
actual losses
 
from events
 
similar to
 
the modeled
 
events
will not vary materially from the modeled event
 
PML.
 
From
 
an
 
enterprise
 
risk
 
management
 
perspective,
 
management
 
sets
 
limits
 
on
 
the
 
levels
 
of
 
catastrophe
 
loss
exposure we
 
may underwrite.
 
The limits are
 
revised periodically
 
based on a
 
variety of factors,
 
including but not
limited
 
to
 
our
 
financial
 
resources
 
and
 
expected
 
earnings
 
and
 
risk/reward
 
analyses
 
of
 
the
 
business
 
being
underwritten.
Management estimates
 
that the projected
 
net economic loss
 
from its largest
 
100-year event in
 
a given zone is
 
to
an
 
Earthquake
 
event
 
affecting
 
California
 
which
 
represents
 
approximately
 
6.9%
 
of
 
its
 
December
 
31,
 
2022
shareholders’
 
equity.
 
Economic
 
loss
 
is the
 
PML
 
exposure,
 
net of
 
third
 
party
 
reinsurance
 
including
 
catastrophe
industry loss
 
warranty
 
cover,
 
reduced by
 
estimated
 
reinstatement
 
premiums
 
to renew
 
coverage
 
and estimated
 
63
income taxes.
 
The impact
 
of income
 
taxes
 
on the
 
PML depends
 
on the
 
distribution
 
of the
 
losses
 
by corporate
entity,
 
which is
 
also affected
 
by
 
inter-affiliate
 
reinsurance.
 
Management
 
also monitors
 
and controls
 
its largest
PMLs at
 
multiple points
 
along the
 
loss distribution
 
curve, such
 
as loss
 
amounts at
 
the 20,
 
50, 100,
 
250, and
 
500
year return
 
periods.
 
This process
 
enables management
 
to identify
 
and control
 
exposure
 
accumulations
 
and to
integrate such exposures
 
into enterprise risk, underwriting and capital
 
management decisions.
 
Our
 
catastrophe
 
loss
 
projections,
 
segmented
 
by
 
risk
 
zones,
 
are
 
updated
 
quarterly
 
and
 
reviewed
 
as
 
part
 
of
 
a
formal risk management review
 
process.
 
We
 
believe
 
that our
 
greatest
 
worldwide 1
 
in 100
 
year
 
exposure
 
to a
 
single catastrophic
 
event
 
is to
 
a hurricane
event
 
affecting
 
Southeast
 
U.S.,
 
where
 
we
 
estimate
 
we
 
have
 
a
 
PML
 
exposure,
 
net
 
of
 
third
 
party
 
reinsurance
including catastrophe
 
industry loss warranty
 
cover,
 
of $878 million. See also
 
table under ITEM
 
1, “Business -
 
Risk
Management of Underwriting and Retrocession
 
Arrangements”.
 
If such a single catastrophe
 
loss were to occur,
 
management estimates that
 
the net economic loss to us would be
approximately
 
$515
 
million.
 
The
 
estimate
 
involves
 
multiple
 
variables,
 
including
 
which
 
Everest
 
entity
 
would
experience the loss, and as a result there can be no
 
assurance that this amount would not be exceeded.
We may
 
purchase reinsurance
 
to cover specific
 
business written
 
or the potential
 
accumulation or aggregation
 
of
exposures
 
across
 
some or
 
all of
 
our operations.
 
Reinsurance
 
purchasing
 
decisions
 
consider
 
both
 
the
 
potential
coverage
 
and
 
market
 
conditions
 
including
 
the
 
pricing,
 
terms,
 
conditions,
 
availability
 
and
 
collectability
 
of
coverage, with the
 
aim of securing cost
 
effective protection
 
from financially secure counterparts.
 
The amount of
reinsurance purchased has varied
 
over
 
time, reflecting our view of our exposures
 
and the cost of reinsurance.
 
Information
 
Technology.
 
Everest’s
 
information
 
technology
 
is
 
a
 
key
 
component
 
of
 
its
 
business
 
operations.
 
Information
 
technology
 
systems
 
and
 
services
 
are
 
hosted
 
at
 
public
 
and
 
private
 
cloud
 
service
 
providers
 
across
multiple
 
datacenters
 
with
 
processing
 
performed
 
at
 
the
 
office
 
locations
 
of
 
our
 
operating
 
subsidiaries
 
and
branches.
 
We have
 
implemented security
 
procedures,
 
and regularly
 
assess and
 
enhance our
 
security protocols,
to ensure
 
that our
 
key business
 
systems
 
are protected,
 
secured and
 
backed up
 
at off-site
 
locations so
 
that they
can be restored
 
promptly if necessary.
 
We have business
 
continuity plans and disaster
 
recovery plans along with
periodic testing
 
of those
 
plans
 
to
 
ensure
 
we are
 
capable
 
of providing
 
uninterrupted
 
technology
 
services in
 
the
event of major systems
 
outages with alternative secure datacenters
 
available in case of broader outages.
 
Our
 
business
 
operations
 
depend
 
on
 
the
 
proper
 
functioning
 
and
 
availability
 
of
 
our
 
information
 
technology
platform,
 
which
 
includes
 
data
 
processing
 
and
 
related
 
electronic
 
communications.
 
We
 
communicate
electronically
 
internally
 
and
 
externally
 
with
 
our
 
brokers,
 
program
 
managers,
 
clients,
 
third-party
 
vendors,
regulators,
 
and
 
others.
 
These
 
communications
 
and
 
the
 
data
 
we
 
handle
 
may
 
include
 
personal,
 
confidential
 
or
proprietary
 
information.
 
We
 
ensure
 
that
 
all
 
our
 
systems,
 
data
 
and
 
electronic
 
transmissions
 
are
 
appropriately
protected with the latest technology
 
safeguards and meet regulatory
 
standards.
 
Despite these safeguards,
 
a significant cyber incident,
 
including system
 
failure, security
 
breach and disruption
 
by
malware or other
 
damage could
 
interrupt or delay
 
our operations
 
and possibly our
 
results.
 
This type of incident
may result
 
in a
 
violation of
 
applicable data
 
security,
 
privacy,
 
or other
 
laws, damage
 
our reputation,
 
cause a
 
loss
of customers
 
or give
 
rise to
 
regulatory
 
scrutiny
 
as well
 
as monetary
 
fines and
 
other penalties.
 
Management
 
is
not aware of a cybersecurity incident that
 
has had a material impact on our operations.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
64
Expected
 
Cash
 
Outflows.
 
The
 
following
 
table
 
shows
 
our
 
significant
 
expected
 
cash
 
outflows
 
for
 
the
 
period
indicated.
 
Payments due by period
Less than
More than
(Dollars in millions)
Total
1 year
1-3 years
 
3-5 years
5 years
Senior notes
$
2,400
$
$
$
$
2,400
Long term notes
219
219
Interest expense (1)
3,018
101
202
202
2,513
Operating lease agreements
187
21
38
32
95
Gross reserve for losses and LAE (2)
22,065
2,430
7,971
5,230
6,435
Total
$
28,409
$
3,071
$
8,211
$
5,464
$
11,662
(Some amounts may not reconcile due to rounding.)
(1)
Interest expense on long term notes is calculated
 
at the variable floating rate of 6.99% as of
 
December 31, 2022.
 
(2)
Loss and LAE reserves
 
represent management’s
 
best estimate of
 
losses from claim
 
and related settlement
 
costs.
 
Both the amounts
 
and timing of such
 
payments are
estimates, and
 
the inherent
 
variability of
 
resolving claims as
 
well as
 
changes in
 
market conditions
 
make the
 
timing of
 
cash flows
 
uncertain.
 
Therefore,
 
the ultimate
amount and timing of loss and LAE payments could differ
 
from our estimates.
 
The cash
 
outflows for
 
senior notes
 
and long
 
term notes
 
are the
 
responsibility
 
of Holdings.
 
We
 
strive to
 
ensure
that
 
we
 
have
 
sufficient
 
cash
 
flow,
 
liquidity,
 
investments
 
and
 
access
 
to
 
capital
 
markets
 
to
 
satisfy
 
these
obligations.
 
Holdings generally
 
depends upon
 
dividends from
 
Everest
 
Re, its
 
operating
 
insurance
 
subsidiary for
its funding,
 
capital contributions
 
from Group
 
or access
 
to the
 
capital markets.
 
Our various
 
operating
 
insurance
and reinsurance
 
subsidiaries
 
have
 
sufficient
 
cash
 
flow,
 
liquidity
 
and investments
 
to settle
 
outstanding
 
reserves
for losses and LAE.
 
Management believes that
 
we, and each of our entities,
 
have sufficient financial
 
resources or
ready access thereto, to
 
meet all obligations.
 
Dividends.
During 2022
 
and 2021,
 
we declared
 
and paid
 
common shareholder
 
dividends
 
of $255
 
million and
 
$247 million,
respectively.
 
As
 
an insurance
 
holding
 
company,
 
we
 
are
 
partially
 
dependent
 
on dividends
 
and other
 
permitted
payments from
 
our subsidiaries
 
to pay
 
cash dividends
 
to our
 
shareholders.
 
The payment
 
of dividends
 
to Group
by
 
Holdings
 
Ireland
 
and
 
Everest
 
Dublin
 
Holdings
 
is
 
subject
 
to
 
Irish
 
corporate
 
and
 
regulatory
 
restrictions;
 
the
payment
 
of
 
dividends
 
to
 
Holdings
 
Ireland
 
by
 
Holdings
 
and
 
to
 
Holdings
 
by
 
Everest
 
Re
 
is
 
subject
 
to
 
Delaware
regulatory
 
restrictions;
 
and
 
the
 
payment
 
of
 
dividends
 
to
 
Group
 
by
 
Bermuda
 
Re,
 
Everest
 
International,
 
Everest
Preferred International
 
Holdings (“Preferred
 
Holdings”), Everest
 
Re Advisors Ltd.
 
(“Advisors
 
Re”) or Mt. Logan
 
Re
is
 
subject
 
to
 
Bermuda
 
insurance
 
regulatory
 
restrictions.
 
Management
 
expects
 
that,
 
absent
 
extraordinary
catastrophe
 
losses, such restrictions
 
should not affect
 
Everest Re’s
 
ability to declare
 
and pay
 
dividends sufficient
to
 
support
 
Holdings’
 
general
 
corporate
 
needs
 
and
 
that
 
Holdings
 
Ireland,
 
Everest
 
Dublin
 
Holdings,
 
Bermuda
 
Re
and Everest
 
International will
 
have the
 
ability to declare
 
and pay dividends
 
sufficient to
 
support Group’s
 
general
corporate needs.
 
For the years
 
ended December 31, 2022
 
and 2021, Everest
 
Re paid $250 million
 
and $0 million
of
 
cash
 
dividends
 
to
 
Holdings.
 
For
 
the
 
years
 
ended
 
December
 
31,
 
2022
 
and
 
2021,
 
Bermuda
 
Re
 
paid
 
cash
dividends
 
to Group
 
of $430
 
million and
 
$300 million,
 
respectively;
 
Everest
 
International
 
paid no
 
cash dividends
to Group;
 
Preferred
 
Holdings paid
 
cash dividends
 
to Group
 
of $46 million
 
and $10 million,
 
respectively; Advisors
Re
 
paid
 
cash
 
dividends
 
to
 
Group
 
of
 
$0
 
million
 
and
 
$10
 
million,
 
respectively;
 
and
 
Mt.
 
Logan
 
Re
 
paid
 
no
 
cash
dividends to Group.
 
See ITEM 1, “Business
 
– Regulatory Matters
 
– Dividends” and ITEM 8,
 
“Financial Statements
and Supplementary Data” - Note 14 of Notes
 
to Consolidated Financial Statements.
 
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.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
65
Our
 
current
 
investment
 
strategy
 
seeks
 
to
 
maximize
 
after-tax
 
income
 
through
 
a
 
high
 
quality,
 
diversified,
 
fixed
maturity
 
portfolio,
 
while
 
maintaining
 
an
 
adequate
 
level
 
of
 
liquidity.
 
Our
 
mix
 
of
 
investments
 
is
 
adjusted
periodically,
 
consistent
 
with
 
our
 
current
 
and
 
projected
 
operating
 
results
 
and
 
market
 
conditions.
 
The
 
fixed
maturity
 
securities
 
in
 
the
 
investment
 
portfolio
 
are
 
comprised
 
of
 
non-trading
 
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 $29.9 billion investment
 
portfolio at December
 
31, 2022, is principally
 
comprised of fixed
maturity
 
securities,
 
which
 
are
 
generally
 
subject
 
to
 
interest
 
rate
 
risk
 
and
 
some
 
foreign
 
currency
 
exchange
 
rate
risk, and some equity securities, which are subject to price
 
fluctuations and some foreign exchange
 
rate risk.
 
The
overall
 
economic
 
impact
 
of
 
the
 
foreign
 
exchange
 
risks
 
on
 
the
 
investment
 
portfolio
 
is
 
partially
 
mitigated
 
by
changes
 
in
 
the
 
dollar
 
value
 
of
 
foreign
 
currency
 
denominated
 
liabilities
 
and
 
their
 
associated
 
income
 
statement
impact.
 
Interest
 
rate
 
risk is
 
the potential
 
change in
 
value of
 
the fixed
 
maturity securities
 
portfolio,
 
including short-term
investments,
 
from
 
a
 
change
 
in
 
market
 
interest
 
rates.
 
In
 
a
 
declining
 
interest
 
rate
 
environment,
 
it
 
includes
prepayment
 
risk
 
on
 
the
 
$4.0 billion
 
of mortgage
 
-backed
 
securities
 
in
 
the
 
$23.1 billion
 
fixed
 
maturity
 
portfolio.
 
Prepayment risk results
 
from potential accelerated
 
principal payments that
 
shorten the average
 
life and thus
 
the
expected yield of the security.
 
The tables below
 
display the
 
potential impact
 
of market
 
value fluctuations
 
and after-tax
 
unrealized appreciation
on our
 
fixed maturity
 
portfolio (including
 
$1.0 billion
 
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 December 31, 2022
-200
-100
-
100
200
(Dollars in millions)
Total Fair Value
$
25,618
$
24,863
$
24,107
$
23,352
$
22,596
Fair Value Change from Base (%)
6.3%
3.1%
-%
(3.1)%
(6.3)%
Change in Unrealized Appreciation
After-tax from Base ($)
$
1,316
$
658
$
$
(658)
$
(1,316)
Impact of Interest Rate Shift in Basis Points
At December 31, 2021
-200
-100
-
100
200
(Dollars in millions)
Total Fair Value
$
24,973
$
24,230
$
23,487
$
22,744
$
22,001
Fair Value Change from Base (%)
6.3%
3.2%
-%
(3.2)%
(6.3)%
Change in Unrealized Appreciation
After-tax from Base ($)
$
1,294
$
647
$
$
(647)
$
(1,294)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
66
We
 
had $22.1
 
billion and
 
$19.0 billion
 
of gross
 
reserves for
 
losses and
 
LAE as
 
of December
 
31, 2022
 
and 2021,
respectively.
 
These
 
amounts
 
are
 
recorded
 
at
 
their
 
nominal
 
value,
 
as
 
opposed
 
to
 
present
 
value,
 
which
 
would
reflect a discount
 
adjustment to reflect the
 
time value of money.
 
Since losses are paid
 
out over a period of
 
time,
the present
 
value of
 
the reserves
 
is less
 
than the
 
nominal value.
 
As interest
 
rates
 
rise, the
 
present value
 
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
 
3.8
 
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
 
$3.6 billion resulting
 
in a discounted
 
reserve balance
 
of approximately
 
$16.4 billion,
 
representing
approximately 67.9% 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.
 
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 tables below display 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 December 31, 2022
(Dollars in millions)
-20%
-10%
0%
10%
20%
Fair Value of the Equity Portfolio
$
225
 
$
253
 
$
281
 
$
309
 
$
337
After-tax Change in Fair Value
$
(46)
$
(23)
$
$
23
$
46
Impact of Percentage Change in Equity Fair/Market Values
At December 31, 2021
(Dollars in millions)
-20%
-10%
0%
10%
20%
Fair Value of the Equity Portfolio
$
1,461
 
$
1,643
 
$
1,826
 
$
2,009
 
$
2,191
After-tax Change in Fair Value
$
(290)
$
(145)
$
$
145
$
290
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.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
67
The tables below display
 
the potential impact of a
 
parallel and immediate 10%
 
and 20% increase and decrease
 
in
foreign exchange
 
rates
 
on the
 
valuation
 
of invested
 
assets subject
 
to foreign
 
currency exposure
 
for the
 
periods
indicated.
 
This
 
analysis
 
includes
 
the
 
after-tax
 
impact
 
of
 
translation
 
from
 
transactional
 
currency
 
to
 
functional
currency
 
as
 
well
 
as
 
the
 
after-tax
 
impact
 
of
 
translation
 
from
 
functional
 
currency
 
to
 
the
 
U.S.
 
dollar
 
reporting
currency.
 
Change in Foreign Exchange Rates in Percent
At December 31, 2022
(Dollars in millions)
-20%
-10%
0%
10%
20%
Total After-tax
 
Foreign Exchange Exposure
$
(814)
 
$
(407)
 
$
 
$
407
 
$
814
Change in Foreign Exchange Rates in Percent
At December 31, 2021
(Dollars in millions)
-20%
-10%
0%
10%
20%
Total After-tax
 
Foreign Exchange Exposure
$
(688)
 
$
(344)
$
 
$
303
 
$
606
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
 
and
 
pandemic
 
events
 
on
 
our
 
financial
statements,
 
the
 
ability
 
of
 
Everest
 
Re,
 
Holdings,
 
Holdings
 
Ireland,
 
Dublin
 
Holdings,
 
Bermuda
 
Re
 
and
 
Everest
International
 
to
 
pay
 
dividends
 
and
 
the
 
settlement
 
costs
 
of
 
our
 
specialized
 
equity
 
index
 
put
 
option
 
contracts.
 
Forward-looking
 
statements
 
only
 
reflect
 
our
 
expectations
 
and
 
are
 
not
 
guarantees
 
of
 
performance.
 
These
statements
 
involve risks,
 
uncertainties and
 
assumptions.
 
Actual events
 
or results may
 
differ materially
 
from our
expectations.
 
Important factors
 
that could cause
 
our actual events
 
or results to
 
be materially different
 
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 7A.
 
QUANTITATIVE
 
AND QUALITATIVE
 
DISCLOSURES ABOUT MARKET RISK
See “Market Sensitive Instruments”
 
in ITEM 7.
ITEM 8.
 
FINANCIAL STATEMENTS
 
AND SUPPLEMENTARY
 
DATA
The financial
 
statements
 
and schedules
 
listed in
 
the accompanying
 
Index to
 
Financial Statements
 
and Schedules
on page F-1 are filed as part of this report.
ITEM 9.
 
CHANGES
 
IN
 
AND
 
DISAGREEMENTS
 
WITH
 
ACCOUNTANTS
 
ON
 
ACCOUNTING
 
AND
 
FINANCIAL
DISCLOSURE
None.
68
ITEM 9A.
 
CONTROLS AND PROCEDURES
Disclosure Controls and Procedures.
As
 
required
 
by
 
Rule
 
13a-15(b)
 
of
 
the
 
Securities
 
Exchange
 
Act
 
of
 
1934
 
(the
 
“Exchange
 
Act”), our
 
management,
including our Chief Executive Officer
 
and Chief Financial Officer,
 
has evaluated the effectiveness
 
of our disclosure
controls
 
and procedures
 
(as defined
 
in Rule
 
13a-15(e) under
 
the Exchange
 
Act).
 
Based on
 
that evaluation,
 
the
Chief
 
Executive
 
Officer
 
and
 
Chief
 
Financial
 
Officer
 
have
 
concluded
 
that
 
our disclosure
 
controls
 
and procedures
were effective as of the
 
end of the period covered by this annual report.
Management’s Report
 
on Internal Control Over Financial Reporting.
Our
 
management
 
is
 
responsible
 
for
 
establishing
 
and
 
maintaining
 
adequate
 
internal
 
controls
 
over
 
financial
reporting.
 
Our
 
internal
 
control
 
over
 
financial
 
reporting
 
is designed
 
to
 
provide
 
reasonable
 
assurance
 
regarding
the
 
reliability
 
of
 
financial
 
reporting
 
and
 
the
 
preparation
 
of
 
our
 
financial
 
statements
 
for
 
external
 
purposes
 
in
accordance with generally accepted
 
accounting principles.
 
Because
 
of
 
its
 
inherent
 
limitations,
 
internal
 
control
 
over
 
financial
 
reporting
 
may
 
not
 
prevent
 
or
 
detect
misstatements.
 
Also, projections
 
of any evaluation
 
of effectiveness
 
to future periods
 
are subject to
 
the risk that
controls
 
may
 
become inadequate
 
because
 
of changes
 
in conditions,
 
or that
 
the degree
 
of compliance
 
with the
policies or procedures may deteriorate.
 
Management has
 
assessed the
 
effectiveness
 
of our
 
internal control
 
over financial
 
reporting as
 
of December
 
31,
2022.
 
In making this assessment, we used the
 
criteria set forth by the Committee
 
of Sponsoring Organizations
 
of
the Treadway
 
Commission (COSO)
 
in
Internal Control
 
– Integrated
 
Framework (2013)
.
 
Based on
 
our assessment
we concluded
 
that, as
 
of December
 
31, 2022,
 
our internal
 
control
 
over financial
 
reporting is
 
effective
 
based on
those criteria.
 
The effectiveness
 
of the
 
Company’s
 
internal control
 
over financial
 
reporting as
 
of December
 
31, 2022,
 
has been
audited
 
by
 
PricewaterhouseCoopers
 
LLP,
 
an
 
independent
 
registered
 
public
 
accounting
 
firm,
 
as
 
stated
 
in
 
their
report, which appears herein.
 
Changes in Internal Control over
 
Financial Reporting.
As required
 
by Rule
 
13a-15(d) of
 
the Exchange
 
Act, our
 
management, including
 
our Chief
 
Executive
 
Officer and
Chief
 
Financial
 
Officer,
 
has
 
evaluated
 
our
 
internal
 
control
 
over
 
financial
 
reporting
 
to
 
determine
 
whether
 
any
changes occurred during
 
the fourth
 
fiscal quarter covered
 
by this annual
 
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 fourth
 
quarter.
 
ITEM 9B.
 
OTHER INFORMATION
None.
ITEM 9C.
 
DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT
 
PREVENT INSPECTIONS
None.
PART III
ITEM 10.
 
DIRECTORS, EXECUTIVE OFFICERS
 
AND CORPORATE GOVERNANCE
Reference
 
is
 
made
 
to
 
the
 
sections
 
captioned
 
“Information
 
Concerning
 
Nominees”,
 
“Information
 
Concerning
Continuing
 
Directors
 
and
 
Executive
 
Officers”,
 
“Audit
 
Committee”,
 
“Nominating
 
and
 
Governance
 
Committee”,
“Code
 
of
 
Ethics
 
for
 
CEO
 
and
 
Senior
 
Financial
 
Officers”
 
and
 
“Section
 
16(a)
 
Beneficial
 
Ownership
 
Reporting
Compliance” in
 
our proxy
 
statement
 
for
 
the 2023
 
Annual
 
General
 
Meeting
 
of Shareholders,
 
which will
 
be filed
 
69
with
 
the
 
Commission
 
within
 
120
 
days
 
of
 
the
 
close
 
of
 
our
 
fiscal
 
year
 
ended
 
December
 
31,
 
2022
 
(the
 
“Proxy
Statement”), which sections are incorporated
 
herein by reference.
 
ITEM 11.
 
EXECUTIVE COMPENSATION
Reference
 
is
 
made
 
to
 
the
 
sections
 
captioned
 
“Directors’
 
Compensation”
 
and
 
“Compensation
 
of
 
Executive
Officers” in the Proxy Statement,
 
which are incorporated herein
 
by reference.
 
ITEM 12.
 
SECURITY
 
OWNERSHIP
 
OF
 
CERTAIN
 
BENEFICIAL
 
OWNERS
 
AND
 
MANAGEMENT
 
AND
 
RELATED
SHAREHOLDER MATTERS
Reference
 
is
 
made to
 
the
 
sections
 
captioned
 
“Common
 
Share
 
Ownership
 
by
 
Directors
 
and
 
Executive
 
Officers”,
“Principal
 
Beneficial
 
Owners
 
of
 
Common
 
Shares”
 
and
 
“Securities
 
Authorized
 
for
 
Issuance
 
Under
 
Equity
Compensation Plans” in the Proxy Statement,
 
which are incorporated herein
 
by reference.
ITEM 13.
 
CERTAIN RELATIONSHIPS
 
AND RELATED TRANSACTIONS,
 
AND DIRECTOR INDEPENDENCE
Reference
 
is made to
 
the section captioned
 
“Certain Transactions
 
with Directors”
 
in the Proxy
 
Statement, which
is incorporated herein by
 
reference.
ITEM 14.
 
PRINCIPAL ACCOUNTANT
 
FEES AND SERVICES
Reference is made to the section
 
captioned “Audit
 
Committee Report” in the Proxy Statement,
 
which is
incorporated herein by
 
reference.
PART IV
ITEM 15.
 
EXHIBITS AND FINANCIAL STATEMENT
 
SCHEDULES
Financial Statements and Schedules.
The financial
 
statements
 
and schedules
 
listed in
 
the accompanying
 
Index to
 
Financial Statements
 
and Schedules
on page F-1 are filed as part of this report.
Exhibits.
The exhibits
 
listed on
 
the accompanying
 
Index to
 
Exhibits on page
 
E-1 are
 
filed as part
 
of this report
 
except that
the certifications
 
in Exhibit 32
 
are being furnished
 
to the SEC,
 
rather than
 
filed with the
 
SEC, as permitted
 
under
applicable SEC rules.
 
SIGNATURES
Pursuant
 
to the
 
requirements
 
of Section
 
13 or
 
15(d) 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
 
on February 24,
2023.
 
EVEREST RE GROUP,
 
LTD.
By:
/S/ JUAN C. ANDRADE
Juan C. Andrade
(President and Chief Executive
 
Officer)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
70
Pursuant
 
to the
 
requirements
 
of the
 
Securities Exchange
 
Act of
 
1934, this
 
report has
 
been signed
 
below by
 
the
following persons on behalf of the registrant
 
and in the capacities and on the dates indicated.
Signature
Title
Date
/S/ JUAN C. ANDRADE
President and Chief Executive
 
Officer
(Principal Executive Officer)
 
February 24, 2023
Juan C. Andrade
/S/ MARK KOCIANCIC
Executive Vice President and Chief
 
Financial
Officer
February 24, 2023
Mark Kociancic
/S/ ROBERT J. FREILING
Senior Vice President and Chief
 
February 24, 2023
Robert J. Freiling
Accounting Officer
/S/ JOSEPH V.
 
TARANTO
Chairman
February 24, 2023
Joseph V.
 
Taranto
/S/ JOHN J. AMORE
Director
February 24, 2023
John J. Amore
/S/ WILLIAM F.
 
GALTNEY,
 
JR.
Director
February 24, 2023
William F.
 
Galtney, Jr.
/S/ JOHN A. GRAF
Director
February 24, 2023
John A. Graf
/S/ MERYL HARTZBAND
Director
February 24, 2023
Meryl Hartzband
/S/ GERALDINE LOSQUADRO
Director
February 24, 2023
Geraldine Losquadro
/S/ HAZEL McNEILAGE
Director
February 24, 2023
Hazel McNeilage
/S/ ROGER M. SINGER
Director
February 24, 2023
Roger M. Singer
 
71
INDEX TO EXHIBITS
Exhibit No.
2.
1
3.
1
 
3.
2
 
4.
1
 
4.
2
 
4.
3
 
 
4.
4
 
4.
5
 
*10.
1
 
*10.
2
*10.
3
*10.
4
72
*10.
5
10.
6
*10.
7
 
*10.
8
 
*10.
9
*10.
10
*10.
11
*10.
12
 
10.
13
 
*10.
14
*10.
15
10.
16
73
*10.
17
 
*10.
18
*10.
19
10.
20
 
*10.
21
*10.
22
10.
23
10.
24
 
10.
25
 
10.
26
 
*10.
27
10.
28
74
10.
29
 
10.
30
10.
31
10.
32
10.
33
10.
34
 
10.
35
10.
36
10.
37
 
10.
38
10.
39
 
75
10.
40
10.
41
10.
42
21.
1
23.
1
31.
1
31.
2
32.
1
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 Label Linkbase
101.
PRE
XBRL Taxonomy
 
Extension Presentation Linkbase
104
 
Cover Page Interactive
 
Data File (embedded within the Inline XBRL document)
*
 
Management contract or compensatory plan or arrangement.
F-2
Report of Independent Registered Public Accounting Firm
 
To the Board of Directors and Shareholders of Everest Re Group,
 
Ltd.
Opinions on the Financial Statements and Internal
 
Control over Financial Reporting
We have audited the accompanying consolidated balance
 
sheets of Everest Re Group, Ltd. and its subsidiaries
(the “Company”) as of December 31, 2022 and 2021, and
 
the related consolidated statements of operations and
comprehensive income (loss), of changes in shareholders'
 
equity and of cash flows for each of the three years in
the period ended December 31, 2022, including the related
 
notes and financial statement schedules listed in the
index appearing on page F-1 (collectively referred to as
 
the “consolidated financial statements”). We also have
audited the Company's internal control over financial reporting as
 
of December 31, 2022, based on criteria
established in
Internal Control - Integrated Framework
 
(2013) issued by the Committee of Sponsoring
Organizations of the Treadway Commission (COSO).
In our opinion, the consolidated financial statements referred to
 
above present fairly, in all material respects,
the financial position of the Company as of December
 
31, 2022 and 2021, and the results of its operations and
its cash flows for each of the three years in the period ended
 
December 31, 2022 in conformity with accounting
principles generally accepted in the United States of America.
 
Also in our opinion, the Company maintained, in
all material respects, effective internal control over financial
 
reporting as of December 31, 2022, based on
criteria established in
Internal Control - Integrated Framework
 
(2013) issued by the COSO.
Basis for Opinions
The Company's management is responsible for these consolidated
 
financial statements, for maintaining
effective internal control over financial reporting, and for
 
its assessment of the effectiveness of internal control
over financial reporting, included in Management’s Report on Internal
 
Control over Financial Reporting
appearing under Item 9A. Our responsibility is to express opinions
 
on the Company’s consolidated financial
statements and on the Company's internal control over financial
 
reporting based on our audits. We are a public
accounting firm registered with the Public Company Accounting
 
Oversight Board (United States) (PCAOB) and
are required to be independent with respect to the Company in
 
accordance with the U.S. federal securities laws
and the applicable rules and regulations of the Securities and
 
Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards
 
of the PCAOB. Those standards require that we plan
and perform the audits to obtain reasonable assurance about
 
whether the consolidated financial statements are
free of material misstatement, whether due to error or
 
fraud, and whether effective internal control over
financial reporting was maintained in all material respects.
Our audits of the consolidated financial statements included
 
performing procedures to assess the risks of
material misstatement of the consolidated financial statements,
 
whether due to error or fraud, and performing
procedures that respond to those risks. Such procedures
 
included examining, on a test basis, evidence regarding
the amounts and disclosures in the consolidated financial
 
statements. Our audits also included evaluating the
accounting principles used and significant estimates made
 
by management, as well as evaluating the overall
presentation of the consolidated financial statements. Our
 
audit of internal control over financial reporting
included obtaining an understanding of internal control over financial
 
reporting, assessing the risk that a
material weakness exists, and testing and evaluating the design
 
and operating effectiveness of internal control
based on the assessed risk. Our audits also included performing
 
such other procedures as we considered
necessary in the circumstances. We believe that our audits
 
provide a reasonable basis for our opinions.
Definition and Limitations of Internal Control
 
over Financial Reporting
A company’s internal control over financial reporting is a process
 
designed to provide reasonable assurance
regarding the reliability of financial reporting and the preparation
 
of financial statements for external purposes
in accordance with generally accepted accounting principles.
 
A company’s internal control over financial
reporting includes those policies and procedures that (i)
 
pertain to the maintenance of records that, in
 
F-3
reasonable detail, accurately and fairly reflect the transactions
 
and dispositions of the assets of the company;
(ii) provide reasonable assurance that transactions are
 
recorded as necessary to permit preparation of financial
statements in accordance with generally accepted accounting
 
principles, and that receipts and expenditures of
the company are being made only in accordance with authorizations
 
of management and directors of the
company; and (iii) provide reasonable assurance regarding
 
prevention or timely detection of unauthorized
acquisition, use, or disposition of the company’s assets
 
that could have a material effect on the financial
statements.
Because of its inherent limitations, internal control over financial
 
reporting may not prevent or detect
misstatements. Also, projections of any evaluation of effectiveness
 
to future periods are subject to the risk that
controls may become inadequate because of changes in
 
conditions, or that the degree of compliance with the
policies or procedures may deteriorate.
Critical Audit Matters
The critical audit matter communicated below is a matter arising
 
from the current period audit of the
consolidated financial statements that was communicated
 
or required to be communicated to the audit
committee and that (i) relates to accounts or disclosures
 
that are material to the consolidated financial
statements and (ii) involved our especially challenging, subjective,
 
or complex judgments. The communication
of critical audit matters does not alter in any way our opinion
 
on the consolidated financial statements, taken as
a whole, and we are not, by communicating the critical
 
audit matter below, providing a separate opinion on the
critical audit matter or on the accounts or disclosures to
 
which it relates.
Valuation of the Reserve for Losses and Loss Adjustment
 
Expenses
As described in Notes 1 and 3 to the consolidated financial
 
statements, the Company maintains reserves equal to
the estimated ultimate liability for losses and loss adjustment
 
expense for reported and unreported claims for
both insurance and reinsurance businesses. The Company’s
 
reserve for losses and loss adjustment expenses as
of December 31, 2022 was $22.1 billion. Reserves are based
 
on estimates of ultimate losses and loss adjustment
expenses by underwriting or accident year. Management
 
uses a variety of statistical and actuarial techniques to
monitor reserve adequacy over time, evaluate new information
 
as it becomes known and adjust reserves as
warranted. Management considers many factors when setting reserves
 
including (i) exposure base and projected
ultimate premium; (ii) expected loss ratios by product
 
and class of business, which are developed collaboratively
by underwriters and actuaries; (iii) actuarial methodologies and
 
assumptions which analyze loss reporting and
payment experience, reports from ceding companies and historical
 
trends, such as reserving patterns, loss
payments and product mix; (iv) current legal interpretations
 
of coverage and liability; and (v) economic
conditions.
 
The principal considerations for our determination that
 
performing procedures relating to the valuation of the
reserve for losses and loss adjustment expenses is a critical audit
 
matter are the significant judgment by
management when developing their estimate; this in turn
 
led to a high degree of auditor subjectivity, judgment
and effort in performing procedures and evaluating the audit
 
evidence relating to the methodologies and the
significant assumptions related to expected loss ratios
 
and historical trends, such as reserving patterns, loss
payments and product mix, and the audit effort involved
 
the use of professionals with specialized skill and
knowledge.
 
Addressing the matter involved performing procedures
 
and evaluating audit evidence in connection with
forming our overall opinion on the consolidated financial statements.
 
These procedures included testing the
effectiveness of controls relating to management’s valuation
 
of the reserve for losses and loss adjustment
expenses, including controls over the selection of methodologies and
 
development of significant assumptions.
 
These procedures also included, among others, testing
 
the completeness and accuracy of data provided by
management and the involvement of professionals with specialized
 
skill and knowledge to assist in performing
procedures for a sample of products and lines of business
 
including: (i) evaluating management’s methodologies
and assumptions related to expected loss ratios and historical
 
trends, such as, reserving patterns, loss payment
 
F-4
and product mix used for determining reserves for losses and
 
loss adjustment expenses; and (ii) developing an
independent estimate of the reserve for losses and loss adjustment
 
expenses and comparing the independent
estimate to management’s actuarially determined reserves.
 
 
 
/s/
PricewaterhouseCoopers LLP
 
New York, New York
February 24, 2023
We have served as the Company’s or its predecessor's auditor
 
since 1996.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
F-5
EVEREST RE GROUP,
 
LTD.
CONSOLIDATED
 
BALANCE SHEETS
 
December 31,
(Dollars and share amounts in millions, except par value per share)
2022
2021
ASSETS:
Fixed maturities - available for sale, at fair value
$
22,236
$
22,308
(amortized cost: 2022, $
24,191
; 2021, $
22,064
, credit allowances: 2022, $
(54)
; 2021, $
(30)
)
Fixed maturities - held to maturity, at amortized cost
(fair value: 2022, $
821
, net of credit allowances: 2022, $
(
9
)
)
839
-
Equity securities, at fair value
281
1,826
Other invested assets
4,085
2,920
Short-term investments (cost: 2022, $
1,032
; 2021, $
1,178
)
1,032
1,178
Cash
1,398
1,441
Total investments and cash
29,872
29,673
Accrued investment income
217
149
Premiums receivable (net of credit allowances: 2022, $
(
29
)
; 2021, $
(
26
)
)
3,619
3,294
Reinsurance paid loss recoverables (net of credit allowances: 2021, $
(
23
)
; 2021, $
(
17
)
)
136
107
Reinsurance unpaid loss recoverables
 
2,105
1,946
Funds held by reinsureds
1,056
869
Deferred acquisition costs
962
872
Prepaid reinsurance premiums
610
515
Income tax asset, net
459
2
Other assets (net of credit allowances: 2022, $
(
5
)
; 2021, $
(
4
)
)
930
757
TOTAL ASSETS
$
39,966
$
38,185
LIABILITIES:
Reserve for losses and loss adjustment expenses
$
22,065
$
19,009
Future policy benefit reserve
29
36
Unearned premium reserve
5,147
4,610
Funds held under reinsurance treaties
13
18
Other net payable to reinsurers
567
450
Losses in course of payment
74
261
Senior notes
2,347
2,346
Long term notes
218
224
Borrowings from FHLB
519
519
Accrued interest on debt and borrowings
19
17
Unsettled securities payable
1
17
Other liabilities
526
540
Total liabilities
31,525
28,046
Commitments and contingencies (Note
 
15)
(nil)
(nil)
SHAREHOLDERS' EQUITY:
Preferred shares, par value: $
0.01
;
50.0
 
shares authorized;
no
 
shares issued and outstanding
-
-
Common shares, par value: $
0.01
;
200.0
 
shares authorized; (2022)
69.9
and (2021)
69.8
 
outstanding before treasury shares
1
1
Additional paid-in capital
2,302
2,274
Accumulated other comprehensive income (loss), net of deferred income tax expense
(benefit) of $
(250)
 
at 2022 and $
27
 
at 2021
(1,996)
12
Treasury shares, at cost:
30.8
 
shares (2022) and
30.5
 
shares (2021)
(3,908)
(3,847)
Retained earnings
12,042
11,700
Total shareholders' equity
 
8,441
10,139
TOTAL
 
LIABILITIES AND SHAREHOLDERS' EQUITY
$
39,966
$
38,185
The accompanying notes are an integral
 
part of the consolidated financial statements.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
F-6
EVEREST RE GROUP,
 
LTD.
CONSOLIDATED
 
STATEMENTS
 
OF OPERATIONS
 
AND COMPREHENSIVE INCOME (LOSS)
 
 
Years Ended December 31,
(Dollars in millions, except per share amounts)
2022
2021
2020
REVENUES:
Premiums earned
 
$
11,787
$
10,406
$
8,682
Net investment income
830
1,165
642
Net gains (losses) on investments:
Credit allowances on fixed maturity securities
(33)
(28)
(2)
Gains (losses) from fair value adjustments
(460)
236
280
Net realized gains (losses) from dispositions
38
50
(11)
Total net realized capital gains
 
(losses)
(455)
258
268
Other income (expense)
(102)
37
6
Total revenues
12,060
11,866
9,598
CLAIMS AND EXPENSES:
Incurred losses and loss adjustment expenses
 
8,100
7,391
6,551
Commission, brokerage, taxes and fees
2,528
2,209
1,873
Other underwriting expenses
 
682
583
511
Corporate expenses
61
68
41
Interest, fees and bond issue cost amortization expense
101
70
36
Total claims and expenses
11,472
10,321
9,013
INCOME (LOSS) BEFORE TAXES
588
1,546
585
Income tax expense (benefit)
(9)
167
71
NET INCOME (LOSS)
$
597
$
1,379
$
514
Other comprehensive income (loss), net of tax:
Unrealized appreciation (depreciation) ("URA(D)") on securities arising during the period
(2,037)
(488)
423
Reclassification adjustment for realized losses (gains) included in net income (loss)
89
4
(3)
Total URA(D) on securities arising during the period
(1,948)
(485)
420
Foreign currency translation adjustments
(77)
(62)
86
Benefit plan actuarial net gain (loss) for the period
15
17
(6)
Reclassification adjustment for amortization of net (gain) loss included in net income (loss)
2
6
6
Total benefit plan net gain (loss) for the period
17
23
1
Total other comprehensive income (loss), net of tax
(2,008)
(523)
507
COMPREHENSIVE INCOME (LOSS)
$
(1,411)
$
856
$
1,021
EARNINGS PER COMMON SHARE:
Basic
$
15.19
$
34.66
$
12.81
Diluted
15.19
34.62
12.78
The accompanying notes are an integral part of the consolidated
 
financial statements.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
F-7
EVEREST RE GROUP,
 
LTD.
CONSOLIDATED
 
STATEMENTS
 
OF
 
CHANGES IN SHAREHOLDERS’ EQUITY
Years Ended December 31,
(Dollars in millions, except dividends per share amounts)
2022
2021
2020
COMMON SHARES (shares outstanding):
Balance beginning of period
39
40
41
Issued during the period, net
-
-
-
Treasury shares acquired
-
(1)
(1)
Balance end of period
39
39
40
COMMON SHARES (par value):
Balance beginning of period
$
1
$
1
$
1
Issued during the period, net
-
-
-
Balance end of period
1
1
1
ADDITIONAL PAID-IN CAPITAL:
Balance beginning of period
2,274
2,245
2,220
Share-based compensation plans
28
29
26
Balance end of period
2,302
2,274
2,245
ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS),
NET OF DEFERRED INCOME TAXES:
Balance beginning of period
12
535
28
Net increase (decrease) during the period
(2,008)
(523)
507
Balance end of period
(1,996)
12
535
RETAINED EARNINGS:
Balance beginning of period
11,700
10,567
10,307
Change to beginning balance due to adoption of Accounting Standards Update 2016-13
-
-
(4)
Net income (loss)
 
597
1,379
514
Dividends declared ($
6.50
 
per share 2022, $
6.20
 
per share 2021 and $
6.20
 
per share 2020)
(255)
(247)
(249)
Balance end of period
12,042
11,700
10,567
TREASURY SHARES AT COST:
Balance beginning of period
(3,847)
(3,622)
(3,422)
Purchase of treasury shares
(61)
(225)
(200)
Balance end of period
(3,908)
(3,847)
(3,622)
TOTAL SHAREHOLDERS' EQUITY,
 
END OF PERIOD
$
8,441
$
10,139
$
9,726
The accompanying notes are an integral
 
part of the consolidated financial statements.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
F-8
EVEREST RE GROUP,
 
LTD.
CONSOLIDATED
 
STATEMENTS
 
OF CASH FLOWS
 
 
Years Ended December 31,
(Dollars in millions)
2022
2021
2020
CASH FLOWS FROM OPERATING
 
ACTIVITIES:
Net income (loss)
$
597
$
1,379
$
514
Adjustments to reconcile net income
 
to net cash provided by operating
 
activities:
Decrease (increase) in premiums receivable
(435)
(649)
(387)
Decrease (increase) in funds held by reinsureds,
 
net
(197)
(151)
(219)
Decrease (increase) in reinsurance
 
recoverables
(413)
(125)
(151)
Decrease (increase) in income taxes
(181)
68
240
Decrease (increase) in prepaid reinsurance
 
premiums
(166)
(128)
55
Increase (decrease) in reserve for losses
 
and loss adjustment expenses
3,477
2,805
2,631
Increase (decrease) in future policy benefit
 
reserve
(7)
(2)
(5)
Increase (decrease) in unearned premiums
655
1,146
404
Increase (decrease) in other net payable
 
to reinsurers
201
186
(24)
Increase (decrease) in losses in course
 
of payment
(186)
134
75
Change in equity adjustments in limited partnerships
(94)
(613)
(104)
Distribution of limited partnership income
180
211
122
Change in other assets and liabilities, net
(291)
(290)
(99)
Non-cash compensation expense
 
45
43
39
Amortization of bond premium (accrual of
 
bond discount)
55
76
50
Net (gains) losses on investments
455
(258)
(268)
Net cash provided by (used in) operating
 
activities
3,695
3,833
2,874
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from fixed maturities
 
matured/called/repaid - available
 
for sale
2,626
3,893
2,586
Proceeds from fixed maturities sold
 
- available for sale
1,403
1,916
1,951
Proceeds from fixed maturities
 
matured/called/repaid - held to
 
maturity
39
-
-
Proceeds from equity securities sold
2,217
990
376
Distributions from other invested
 
assets
266
257
310
Cost of fixed maturities acquired -
 
available for sale
(7,344)
(8,825)
(7,189)
Cost of fixed maturities acquired -
 
held to maturity
(153)
-
-
Cost of equity securities acquired
(1,003)
(1,098)
(637)
Cost of other invested assets acquired
(1,547)
(757)
(557)
Net change in short-term investments
149
(43)
(718)
Net change in unsettled securities transactions
(71)
(203)
195
Net cash provided by (used in) investing
 
activities
(3,418)
(3,869)
(3,683)
CASH FLOWS FROM FINANCING ACTIVITIES:
Common shares issued during the period for
 
share-based compensation, net of expense
(17)
(14)
(14)
Purchase of treasury shares
(61)
(225)
(200)
Dividends paid to shareholders
(255)
(247)
(249)
Proceeds from issuance of senior notes
-
968
979
Cost of debt repurchase
(6)
-
(11)
Net FHLB borrowings (repayments)
-
209
310
Cost of shares withheld on settlements of
 
share-based compensation awards
(20)
(17)
(16)
Net cash provided by (used in) financing
 
activities
(359)
674
800
EFFECT OF EXCHANGE RATE
 
CHANGES ON CASH
39
1
3
Net increase (decrease) in cash
(42)
639
(6)
Cash, beginning of period
1,441
802
808
Cash, end of period
$
1,398
$
1,441
$
802
SUPPLEMENTAL CASH FLOW
 
INFORMATION:
Income taxes paid (recovered)
$
171
$
98
$
(170)
Interest paid
 
98
62
28
NON-CASH TRANSACTIONS:
Reclassification of specific investments
 
from fixed maturity securities,
 
available for sale
at fair value to fixed maturity
 
securities, held to maturity at amortized
 
cost net of credit allowances
$
722
$
-
$
-
The accompanying notes are an integral part of the consolidated
 
financial statements.
F-9
NOTES TO CONSOLIDATED
 
FINANCIAL STATEMENTS
 
Years Ended
 
December 31, 2022, 2021
 
and 2020
1.
 
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
A.
 
Business and Basis of Presentation.
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.
The
 
accompanying
 
consolidated
 
financial
 
statements
 
have
 
been
 
prepared
 
in
 
conformity
 
with
 
accounting
principles
 
generally
 
accepted
 
in
 
the
 
United
 
States
 
of
 
America
 
(“GAAP”).
 
The
 
statements
 
include
 
all
 
of
 
the
following domestic
 
and foreign
 
direct and indirect
 
subsidiaries of Gro
 
up:
 
Everest International
 
Reinsurance, Ltd.
(“Everest
 
International”),
 
Mt.
 
Logan
 
Insurance
 
Managers,
 
Ltd.,
 
Mt.
 
Logan
 
Management,
 
Ltd.,
 
Everest
International
 
Holdings
 
(Bermuda),
 
Ltd.
 
(“International
 
Holdings”),
 
Everest
 
Corporate
 
Member
 
Limited,
 
Everest
Service
 
Company
 
(UK),
 
Ltd.,
 
Everest
 
Preferred
 
International
 
Holdings,
 
Ltd.
 
(“Preferred
 
International”),
 
Everest
Reinsurance
 
(Bermuda),
 
Ltd.
 
(“Bermuda
 
Re”),
 
Everest
 
Re
 
Advisors,
 
Ltd.,
 
Everest
 
Advisors
 
(UK),
 
Ltd.,
 
Everest
Compañia
 
de
 
Seguros
 
Generales
 
Chile
 
S.A.
 
(“Everest
 
Chile”),
 
Everest
 
Underwriting
 
Group
 
(Ireland),
 
Limited
(“Holdings
 
Ireland”),
 
Everest
 
Global
 
Services,
 
Inc.
 
(“Global
 
Services”),
 
Everest
 
Insurance
 
Company
 
of
 
Canada
(“Everest
 
Canada”),
 
Premiere
 
Insurance
 
Underwriting Services
 
(“Premiere”),
 
Everest
 
Dublin
 
Insurance
 
Holdings
Limited (Ireland)
 
(“Everest
 
Dublin Holdings”),
 
Everest
 
Insurance (Ireland),
 
designated
 
activity company
 
(“Ireland
Insurance”),
 
Everest
 
Reinsurance
 
Company
 
(Ireland),
 
designated
 
activity
 
company
 
(“Ireland
 
Re”),
 
Everest
Reinsurance
 
Holdings,
 
Inc.
 
(“Holdings”),
 
Salus
 
Systems,
 
LLC
 
(“Salus”),
 
Everest
 
International
 
Assurance,
 
Ltd.
(Bermuda)
 
(“Everest
 
Assurance”),
 
Specialty
 
Insurance
 
Group,
 
Inc.
 
(“Specialty”),
 
Specialty
 
Insurance
 
Group
 
-
Leisure and
 
Entertainment
 
Risk Purchasing
 
Group LLC
 
(“Specialty RPG”),
 
Mt. McKinley
 
Managers,
 
L.L.C., Everest
Specialty
 
Underwriters
 
Services,
 
LLC,
 
Everest
 
Reinsurance
 
Company
 
(“Everest
 
Re”),
 
Everest
 
National
 
Insurance
Company (“Everest
 
National”), Everest
 
Reinsurance Company
 
Ltda. (Brazil),
 
Mt. Whitney
 
Securities, Inc.,
 
Everest
Indemnity
 
Insurance
 
Company
 
(“Everest
 
Indemnity”),
 
Everest
 
Denali
 
Insurance
 
Company
 
(“Everest
 
Denali”),
Everest
 
Premier
 
Insurance
 
Company
 
(“Everest
 
Premier”)
 
and
 
Everest
 
Security
 
Insurance
 
Company
 
(“Everest
Security”).
 
All intercompany
 
accounts and
 
transactions have
 
been eliminated.
 
All amounts
 
are reported
 
in U.S.
dollars.
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.
Certain
 
reclassifications
 
and
 
format
 
changes
 
have
 
been
 
made
 
to
 
prior
 
years’
 
amounts
 
to
 
conform
 
to
 
the
 
2022
presentation.
B.
 
Investments and Cash.
 
Fixed
 
maturity
 
securities designated
 
as available
 
for
 
sale
 
reflect
 
unrealized
 
appreciation
 
and depreciation,
 
as a
result
 
of change
 
s
 
in
 
fair
 
value during
 
the
 
period,
 
in shareholders’
 
equity,
 
net
 
of income
 
taxes
 
in
 
“accumulated
other
 
comprehensive
 
income
 
(loss)”
 
in
 
the
 
consolidated
 
balance
 
sheets. The
 
Company
 
reviews
 
all
 
of
 
its
 
fixed
F-10
maturity,
 
available
 
for
 
sale
 
securities
 
whose
 
fair
 
value
 
has
 
fallen
 
below
 
their
 
amortized
 
cost
 
at
 
the
 
time
 
of
review.
 
The Company
 
then assesses
 
whether the
 
decline in
 
value is
 
due to
 
non-credit
 
related
 
or credit
 
related
factors.
 
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
 
a credit
 
impairment, but
 
rather
 
a non-credit
related
 
decline
 
in
 
fair
 
value.
 
Non-credit
 
related
 
declines
 
in
 
fair
 
value
 
are
 
recorded
 
as
 
unrealized
 
losses
 
in
accumulated other comprehensive
 
income (loss).
 
If the Company intends
 
to sell the impaired security
 
or is more
likely than
 
not to
 
be required
 
to sell
 
the security
 
before
 
an anticipated
 
recovery
 
in value,
 
the Company
 
records
the
 
entire
 
impairment
 
in
 
net
 
gains
 
(losses)
 
on
 
investments
 
in
 
the
 
Company’s
 
consolidated
 
statements
 
of
operations
 
and comprehensive
 
income (loss).
 
If the
 
Company
 
determines that
 
the decline
 
is credit
 
related 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 Company
 
establishes a
 
credit allowance
 
equal
to the
 
estimated
 
credit loss
 
and is
 
recorded
 
in net
 
gains (losses)
 
on investments
 
in the
 
Company’s
 
consolidated
statements
 
of operations
 
and comprehensive
 
income
 
(loss).
 
The determination
 
of credit
 
related
 
or non-credit
related impairment is
 
first based on an
 
assessment of qualitative
 
factors, which may
 
determine that a qualitative
analysis is
 
sufficient to
 
support the
 
conclusion that
 
the present
 
value of
 
expected
 
cash flows
 
equals or
 
exceeds
the
 
security’s
 
amortized
 
cost
 
basis.
 
However,
 
if
 
the
 
qualitative
 
assessment
 
suggests
 
a
 
credit
 
loss
 
may
 
exist,
 
a
quantitative assessment
 
is performed, and the
 
amount of the allowance
 
for a given security
 
will generally be the
difference
 
between a
 
discounted
 
cash flow
 
model and
 
the Company’s
 
carrying value.
 
The Company
 
will adjust
the credit allowance account
 
for future changes
 
in credit loss estimates
 
for a security and record
 
this adjustment
through
 
net
 
gains
 
(losses)
 
on
 
investments
 
in
 
the
 
Company’s
 
consolidated
 
statements
 
of
 
operations
 
and
comprehensive income (loss).
 
Fixed
 
maturity
 
securities
 
designated
 
as
 
held
 
to
 
maturity
 
consist
 
of
 
debt
 
securities
 
for
 
which
 
the
 
Company
 
has
both the positive
 
intent and ability
 
to hold to
 
maturity or redemption
 
and are reported
 
at amortized cost,
 
net of
the
 
current
 
expected
 
credit
 
loss
 
allowance.
 
Interest
 
income
 
for
 
fixed
 
maturity
 
securities
 
held
 
to
 
maturity
 
is
determined in the
 
same manner as interest
 
income for fixed
 
maturity securities available
 
for sale.
 
The Company
evaluates
 
fixed
 
maturity
 
securities
 
classified as
 
held to
 
maturity
 
for
 
current
 
expected
 
credit
 
losses
 
utilizing risk
characteristics
 
of
 
each
 
security,
 
including
 
credit
 
rating,
 
remaining
 
time
 
to
 
maturity,
 
adjusted
 
for
 
prepayment
considerations,
 
and
 
subordination
 
level,
 
and
 
applying
 
default
 
and
 
recovery
 
rates,
 
which
 
include
 
the
incorporation
 
of
 
historical
 
credit
 
loss
 
experience
 
and
 
macroeconomic
 
forecasts,
 
to
 
develop
 
an
 
estimate
 
of
current expected credit losses.
The Company
 
does not
 
create an
 
allowance for
 
uncollectible
 
interest.
 
If interest
 
is not
 
received when
 
due, the
interest
 
receivable
 
is
 
immediately
 
reversed
 
and
 
no
 
additional
 
interest
 
is
 
accrued.
 
If
 
future
 
interest
 
is
 
received
that has not been accrued, it is recorded as income
 
at that time.
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.
 
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.
 
For
 
equity securities,
 
the
 
Company
 
reflects
 
changes
 
in fair
 
value
 
as net
 
gains
 
(losses)
 
on investments.
 
Interest
income on all fixed maturities
 
and dividend income on all equity securities
 
are included as part of net
 
investment
income in the consolidated statements
 
of operations and comprehensive
 
income (loss).
 
F-11
Short-term
 
investments
 
comprise
 
securities due
 
to
 
mature
 
within one
 
year
 
from
 
the date
 
of purchase
 
and are
stated at cost, which appro
 
ximates fair value.
 
Realized
 
gains
 
or losses
 
on sales
 
of investments
 
are
 
determined
 
on the
 
basis of
 
identified
 
cost.
 
For some
 
non-
publicly
 
traded
 
securities,
 
market
 
prices
 
are
 
determined
 
through
 
the
 
use
 
of
 
pricing
 
models
 
that
 
evaluate
securities
 
relative
 
to
 
the
 
U.S.
 
Treasury
 
yield
 
curve,
 
taking
 
into
 
account
 
the
 
issue
 
type,
 
credit
 
quality,
 
and
 
cash
flow characteristics
 
of each
 
security.
 
For
 
other
 
non-publicly
 
traded
 
securities,
 
investment
 
managers’
 
valuation
committees
 
will estimate
 
fair
 
value
 
and in
 
many
 
instances,
 
these fair
 
values
 
are
 
supported
 
with opinions
 
from
qualified
 
independent
 
third
 
parties.
 
All
 
fair
 
value
 
estimates
 
from
 
investment
 
managers
 
are
 
reviewed
 
by
 
the
Company
 
for
 
reasonableness.
 
For
 
publicly
 
traded
 
securities,
 
fair
 
value
 
is
 
based
 
on
 
quoted
 
market
 
prices
 
or
valuation
 
models
 
that
 
use
 
observable
 
market
 
inputs.
 
When
 
a
 
sector
 
of
 
the
 
financial
 
markets
 
is
 
inactive
 
or
illiquid, the
 
Company may
 
use its
 
own assumptions
 
about future
 
cash flows
 
and risk-adjusted
 
discount
 
rates
 
to
determine fair value.
 
Other
 
invested
 
assets
 
include
 
limited
 
partnerships,
 
company-owned
 
life
 
insurance,
 
rabbi
 
trusts
 
and
 
other
investments.
 
Limited
 
partnerships
 
are
 
accounted
 
for
 
under
 
the
 
equity
 
method
 
of
 
accounting,
 
which
 
can
 
be
recorded
 
on
 
a
 
monthly
 
or
 
quarterly
 
lag.
 
Company-owned
 
life
 
insurance
 
policies
 
are
 
carried
 
at
 
policy
 
cash
surrender value and changes in the policy cash
 
surrender value are included within net investment
 
income.
 
Cash
 
includes
 
cash
 
on
 
hand.
 
Restricted
 
cash
 
is
 
included
 
within
 
cash
 
in
 
the
 
consolidated
 
balance
 
sheets
 
and
represents
 
amounts
 
held
 
for
 
the
 
benefit
 
of
 
third
 
parties
 
that
 
is
 
legally
 
or
 
contractually
 
restricted
 
as
 
to
 
its
withdrawal or usage. Amounts
 
include trust funds set up for the benefit of ceding companies.
C.
 
Allowance for Premium Receivable
 
and Reinsurance Recoverables
 
.
The
 
Company
 
applies
 
the
 
Current
 
Expected
 
Credit
 
Losses
 
(CECL)
 
methodology
 
for
 
estimating
 
allowances
 
for
credit losses.
 
The Company
 
evaluates
 
the recoverability
 
of its
 
premiums and
 
reinsurance
 
recoverable
 
balances
and establishes an allowance for estimated
 
uncollectible amounts.
 
Premiums
 
receivable,
 
excluding
 
receivables
 
for
 
losses
 
within
 
a
 
deductible
 
and
 
retrospectively-rated
 
policy
premiums, are primarily
 
comprised of premiums
 
due from policyholders/
 
cedants.
 
Balances are considered
 
past
due
 
when
 
amounts
 
that
 
have
 
been
 
billed
 
are
 
not
 
collected
 
within
 
contractually
 
stipulated
 
time
 
periods.
 
For
these
 
balances,
 
the
 
allowance
 
is
 
estimated
 
based
 
on
 
recent
 
historical
 
credit
 
loss
 
and
 
collection
 
experience,
adjusted for current economic
 
conditions and reasonable and supportable
 
forecasts, when appropriate.
 
A portion of the
 
Company's commercial
 
lines business is
 
written with large
 
deductibles or under
 
retrospectively-
rated
 
plans.
 
Under some
 
commercial
 
insurance
 
contracts
 
with a
 
large
 
deductible,
 
the
 
Company
 
is obligated
 
to
pay the
 
claimant the
 
full amount
 
of the
 
claim and the
 
Company is
 
subsequently reimbursed
 
by the
 
policyholder
for
 
the
 
deductible
 
amount.
 
As
 
such,
 
the
 
Company
 
is
 
subject
 
to
 
credit
 
risk
 
until
 
reimbursement
 
is
 
made.
Retrospectively-rated
 
policies
 
are
 
policies
 
whereby
 
the
 
ultimate
 
premium
 
is
 
adjusted
 
based
 
on
 
actual
 
losses
incurred.
 
Although
 
the
 
premium
 
adjustment
 
feature
 
of
 
a
 
retrospectively-rated
 
policy
 
substantially
 
reduces
insurance
 
risk
 
for
 
the
 
Company,
 
it
 
presents
 
credit
 
risk
 
to
 
the
 
Company.
 
The
 
Company’s
 
results
 
of
 
operations
could be adversely
 
affected if
 
a significant portion of
 
such policyholders failed
 
to reimburse
 
the Company for
 
the
deductible
 
amount
 
or
 
the
 
amount
 
of
 
additional
 
premium
 
owed
 
under
 
retrospectively-rated
 
policies.
 
The
Company
 
manages
 
these
 
credit
 
risks
 
through
 
credit
 
analysis,
 
collateral
 
requirements,
 
and
 
oversight.
 
The
allowance
 
for
 
receivables
 
for
 
loss
 
within
 
a
 
deductible
 
and
 
retrospectively-rated
 
policy
 
premiums
 
is
 
recorded
within
 
other
 
assets
 
in
 
the
 
consolidated
 
balance
 
sheets.
 
The
 
allowance
 
is
 
estimated
 
as
 
the
 
amount
 
of
 
the
receivable exposed
 
to loss multiplied
 
by estimated
 
factors for
 
probability of
 
default. The
 
probability of
 
default is
assigned
 
based
 
on
 
each
 
policyholder's
 
credit
 
rating,
 
or
 
a
 
rating
 
is
 
estimated
 
if
 
no
 
external
 
rating
 
is
 
available.
Credit ratings
 
are reviewed
 
and updated
 
at least
 
annually.
 
The exposure
 
amount is
 
estimated
 
net of
 
collateral
and
 
other
 
offsets,
 
considering
 
the
 
nature
 
of
 
the
 
collateral,
 
potential
 
future
 
changes
 
in
 
collateral
 
values,
 
and
historical
 
loss
 
information
 
for
 
the
 
type
 
of
 
collateral
 
obtained.
 
The
 
probability
 
of
 
default
 
factors
 
are
 
historical
corporate
 
defaults
 
for
 
receivables
 
with
 
similar
 
durations
 
estimated
 
through
 
multiple
 
economic
 
cycles.
 
Credit
F-12
ratings
 
are
 
forward-looking
 
and
 
consider
 
a
 
variety
 
of
 
economic
 
outcomes.
 
The
 
Company's
 
evaluation
 
of
 
the
required
 
allowance
 
for
 
receivables
 
for
 
loss
 
within
 
a
 
deductible
 
and
 
retrospectively-rated
 
policy
 
premiums
considers the current economic
 
environment as well as the probability
 
-weighted macroeconomic scenarios.
The Company
 
records total
 
credit loss
 
expenses related
 
to premiums
 
receivable in
 
Other underwriting
 
expenses
and records
 
credit
 
loss
 
expenses
 
related
 
to
 
deductibles
 
in Incurred
 
losses
 
and loss
 
adjustment
 
expenses
 
in the
Company’s consolidate
 
d
 
statements of operations
 
and comprehensive income (loss).
The
 
allowance
 
for
 
uncollectible
 
reinsurance
 
recoverable
 
reflects
 
management’s
 
best
 
estimate
 
of
 
reinsurance
cessions
 
that
 
may
 
be
 
uncollectible
 
in
 
the
 
future
 
due
 
to
 
reinsurers’
 
unwillingness
 
or
 
inability
 
to
 
pay.
 
The
allowance
 
for
 
uncollectible
 
reinsurance
 
recoverable
 
comprises
 
an
 
allowance
 
and
 
an
 
allowance
 
for
 
disputed
balances.
 
Based
 
on
 
this
 
analysis,
 
the
 
Company
 
may
 
adjust
 
the
 
allowance
 
for
 
uncollectible
 
reinsurance
recoverable or charge
 
off reinsurer balances that are
 
determined to be uncollectible.
 
Due to the inherent
 
uncertainties as to
 
collection and the length
 
of time before reinsurance
 
recoverable become
due, it is possible that future adjustments
 
to the Company’s reinsurance
 
recoverable, net
 
of the allowance, could
be required,
 
which could
 
have a
 
material adverse
 
effect on
 
the Company’s
 
consolidated results
 
of operations
 
or
cash flows in a particular quarter or annual period.
 
The allowance
 
is
 
estimated
 
as
 
the
 
amount
 
of reinsurance
 
recoverable
 
exposed
 
to
 
loss multiplied
 
by
 
estimated
factors
 
for
 
the
 
probability
 
of
 
default.
 
The
 
reinsurance
 
recoverable
 
exposed
 
is
 
the
 
amount
 
of
 
reinsurance
recoverable net
 
of collateral
 
and other offsets,
 
considering the nature
 
of the collateral,
 
potential future
 
changes
in collateral
 
values, and
 
historical loss
 
information for
 
the type of
 
collateral obtained.
 
The probability
 
of default
factors are
 
historical insurer
 
and reinsurer
 
defaults for
 
liabilities with similar
 
durations to
 
the reinsured liabilities
as
 
estimated
 
through
 
multiple
 
economic
 
cycles.
 
Credit
 
ratings
 
are
 
forward-looking
 
and
 
consider
 
a
 
variety
 
of
economic outcomes.
 
The Company's
 
evaluation of
 
the required allowance
 
for reinsurance
 
recoverable
 
considers
the current economic environment
 
as well as macroeconomic scenarios.
 
The
 
Company
 
records
 
credit
 
loss
 
expenses
 
related
 
to
 
reinsurance
 
recoverable
 
in
 
Incurred
 
losses
 
and
 
loss
adjustment expenses in the Company’s
 
consolidated statements
 
of operations and comprehensive
 
income (loss).
 
Write-offs of
 
reinsurance recoverable
 
and any related
 
allowance are recorded
 
in the period in
 
which the balance
is deemed uncollectible.
 
D.
 
Deferred Acquisition Costs.
Acquisition costs,
 
consisting principally
 
of commissions
 
and brokerage
 
expenses and
 
certain premium
 
taxes
 
and
fees
 
incurred
 
at
 
the
 
time
 
a
 
contract
 
or
 
policy
 
is
 
issued
 
and
 
that
 
vary
 
with
 
and
 
are
 
directly
 
related
 
to
 
the
Company’s reinsurance
 
and insurance business,
 
are deferred
 
and amortized over
 
the period in which the
 
related
premiums
 
are
 
earned.
 
Deferred
 
acquisition
 
costs
 
are
 
limited
 
to
 
their
 
estimated
 
realizable
 
value
 
by
 
line
 
of
business
 
based
 
on
 
the
 
related
 
unearned
 
premiums,
 
anticipated
 
claims
 
and
 
claim
 
expenses
 
and
 
anticipated
investment income.
 
E.
 
Reserve for Losses and Loss Adjustment
 
Expenses.
The reserve
 
for
 
losses
 
and loss
 
adjustment
 
expenses
 
(“LAE”) is
 
based
 
on individual
 
case estimates
 
and
 
reports
received from
 
ceding companies.
 
A provision
 
is included
 
for losses
 
and LAE
 
incurred but
 
not reported
 
(“IBNR”)
based on past
 
experience.
 
Provisions are
 
also included for
 
certain potential
 
liabilities, including those
 
relating to
asbestos
 
and
 
environmental
 
(“A&E”)
 
exposures,
 
catastrophe
 
exposures,
 
COVID-19
 
and
 
other
 
exposures,
 
for
which liabilities
 
cannot be
 
estimated
 
using trad
 
itional reserving
 
techniques.
 
See also
 
Note
 
3.
 
The reserves
 
are
reviewed
 
periodically
 
and
 
any
 
changes
 
in
 
estimates
 
are
 
reflected
 
in
 
earnings
 
in
 
the
 
period
 
the
 
adjustment
 
is
made.
 
The
 
Company’s
 
loss
 
and
 
LAE
 
reserves
 
represent
 
management’s
 
best
 
estimate
 
of
 
the
 
ultimate
liability.
 
Loss and
 
LAE reserves
 
are presented
 
gross of
 
reinsurance
 
recoverable
 
and incurred
 
losses and
 
LAE are
presented net of reinsurance.
F-13
Accruals
 
for
 
commissions
 
are
 
established
 
for
 
reinsurance
 
contracts
 
that
 
provide
 
for
 
the
 
stated
 
commission
percentage to
 
increase or
 
decrease based
 
on the loss
 
experience of the
 
contract.
 
Changes in
 
estimates for
 
such
arrangements are
 
recorded as
 
commission expense.
 
Commission accruals
 
for contracts
 
with adjustable
 
features
are estimated based on expected
 
loss and LAE.
F.
 
Future Policy Benefit Reserve.
Liabilities
 
for
 
future
 
policy
 
benefits
 
on
 
annuity
 
policies
 
are
 
carried
 
at
 
their
 
accumulated
 
values.
 
Reserves
 
for
policy
 
benefits
 
include
 
mortality
 
claims
 
in
 
the
 
process
 
of
 
settlement
 
and
 
IBNR
 
claims.
 
Actual
 
experience
 
in
 
a
particular period may fluctuate from
 
expected results.
G.
 
Premium Revenues.
Written
 
premiums
 
are
 
earned
 
ratably
 
over
 
the
 
periods
 
of
 
the
 
related
 
insurance
 
and
 
reinsurance
contracts.
 
Unearned
 
premium
 
reserves
 
are
 
established
 
relative
 
to
 
the
 
unexpired
 
contract
 
period.
 
For
reinsurance
 
contracts,
 
such
 
reserves
 
are
 
established
 
based
 
upon
 
reports
 
received
 
from
 
ceding
 
companies
 
or
estimated
 
using
 
pro
 
rata
 
methods
 
based
 
on
 
statistical
 
data.
 
Reinstatement
 
premiums
 
represent
 
additional
premium
 
recognized
 
and
 
earned
 
at
 
the
 
time
 
a
 
loss
 
event
 
occurs
 
and
 
losses
 
are
 
recorded,
 
most
 
prevalently
catastrophe
 
related,
 
when
 
limits
 
have
 
been
 
depleted
 
under
 
the
 
original
 
reinsurance
 
contract
 
and
 
additional
coverage
 
is granted.
 
The recognition
 
of reinstatement
 
premiums
 
is based
 
on estimates
 
of loss
 
and LAE,
 
which
reflects
 
management’s
 
judgement.
 
Written
 
and
 
earned
 
premiums
 
and
 
the
 
related
 
costs,
 
which
 
have
 
not
 
yet
been reported to the Company,
 
are estimated and accrued.
 
Premiums are net of ceded reinsurance.
H.
 
Prepaid Reinsurance Premiums.
Prepaid
 
reinsurance
 
premiums
 
represent
 
unearned
 
premium
 
reserves
 
ceded
 
to
 
other
 
reinsurers.
 
Prepaid
reinsurance
 
premiums
 
for
 
any
 
foreign
 
reinsurers
 
comprising
 
more
 
than
10
%
 
of
 
the
 
outstanding
 
balance
 
at
December 31,
 
2022 were
 
secured either
 
through collateralized
 
trust arrangements,
 
rights of
 
offset or
 
letters
 
of
credit, thereby limiting the credit risk to
 
the Company.
I.
 
Income Taxes.
Holdings
 
and
 
its
 
wholly
 
owned
 
subsidiaries
 
file
 
a
 
consolidated
 
U.S.
 
federal
 
income
 
tax
 
return.
 
Foreign
subsidiaries and branches of subsidiaries
 
file local tax returns as required.
 
Group and subsidiaries not included in
Holdings’
 
consolidated
 
tax
 
return
 
file separate
 
company
 
U.S.
 
federal
 
income
 
tax
 
returns
 
as required.
 
Deferred
income
 
taxes
 
have
 
been
 
recorded
 
to
 
recognize
 
the
 
tax
 
effect
 
of
 
temporary
 
differences
 
between
 
the
 
financial
reporting and
 
income tax
 
bases of
 
assets
 
and liabilities,
 
which arise
 
because of
 
differences
 
between
 
GAAP and
income tax accounting rules.
As
 
an
 
accounting
 
policy,
 
the
 
Company
 
has
 
adopted
 
the
 
aggregate
 
portfolio
 
approach
 
for
 
releasing
disproportionate income tax
 
effects from Accumulated
 
Other Comprehensive Income.
J.
 
Foreign Currency.
The Company
 
transacts business
 
in numerous
 
currencies through
 
business units
 
located around
 
the world.
 
The
base transactional
 
currency for
 
each business
 
unit is
 
determined by
 
the local
 
currency used
 
for most
 
economic
activity
 
in
 
that
 
area.
 
Movements
 
in
 
exchange
 
rates
 
related
 
to
 
foreign
 
currency
 
denominated
 
monetary
 
assets
and liabilities
 
at
 
the business
 
units
 
between the
 
original
 
currency
 
and the
 
base currency
 
are
 
recorded
 
through
the consolidated
 
statements
 
of operations
 
and comprehensive
 
income (loss)
 
in other
 
income (expense),
 
except
for
 
currency
 
movements
 
related
 
to
 
available
 
for
 
sale
 
fixed
 
maturities
 
securities,
 
which
 
are
 
excluded
 
from
 
net
income (loss) and accumulated in shareholders’
 
equity, net of deferred
 
taxes.
The business
 
units’ base
 
currency financial
 
statements
 
are translated
 
to U.S.
 
dollars using
 
the exchange
 
rates
 
at
the end of period for the balance sheets and the average
 
exchange rates
 
in effect for the reporting
 
period for the
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
F-14
income statements.
 
Gains and losses
 
resulting from translating
 
the foreign currency
 
financial statements,
 
net of
deferred income taxes,
 
are excluded from net income
 
loss and accumulated in shareholders’
 
equity.
K.
 
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.
Years Ended December 31,
(Amounts in millions, except per share amounts)
2022
2021
2020
Net income (loss) per share:
Numerator
Net income (loss)
$
597
$
1,379
$
514
Less:
 
dividends declared-common shares and nonvested common shares
(255)
(247)
(249)
Undistributed earnings
342
1,132
265
Percentage allocated to common shareholders (1)
98.7
%
98.7
%
98.7
%
337
1,117
262
Add:
 
dividends declared-common shareholders
252
244
246
Numerator for basic and diluted earnings per common share
$
589
$
1,361
$
508
Denominator
Denominator for basic earnings per weighted-average common shares
39
39
40
Effect of dilutive securities:
Options
-
-
-
Denominator for diluted earnings per adjusted weighted-average common shares
39
39
40
Per common share net income (loss)
Basic
$
15.19
$
34.66
$
12.81
Diluted
$
15.19
$
34.62
$
12.78
(1)
Basic weighted-average common shares outstanding
39
39
40
Basic weighted-average common shares outstanding
 
and nonvested common shares expected
 
to vest
 
39
40
40
Percentage allocated to common shareholders
 
98.7
%
98.7
%
98.7
%
(Some amounts may not reconcile due to rounding.)
There were
no
 
options outstanding as of December 31, 2022.
 
Options granted
 
under share-based
 
compensation plans
 
have all
 
expired as
 
of September
 
19, 2022.
 
There were
no
 
anti-diluted options outstanding as
 
of December 31, 2021 and 2020, respectively.
 
L.
 
Segmentation.
The Company,
 
through its subsidiaries, operates
 
in
two
 
segments: Reinsurance and Insurance.
 
See also Note 17.
 
M.
 
Share-Based Compensation.
Share-based compensation
 
stock option,
 
restricted
 
share and
 
performance share
 
unit awards
 
are fair
 
valued at
the grant
 
date and
 
expensed over
 
the vesting
 
period of
 
the award.
 
The tax
 
benefit on
 
the recorded
 
expense is
deferred until the time the award
 
is exercised or vests
 
(becomes unrestricted).
 
See Note 16.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
F-15
N.
 
Application of Recently Issued Accounting
 
Guidance.
The Company
 
did not
 
adopt any
 
new accounting
 
standards
 
that
 
had a
 
material
 
impact
 
in 2022.
 
The Company
assessed
 
the
 
adoption
 
impacts
 
of
 
recently
 
issued
 
accounting
 
standards
 
by
 
the
 
Financial
 
Accounting
 
Standards
Board on
 
the Company’s
 
consolidated financial
 
statements as
 
well as material
 
updates to
 
previous assessments,
if any,
 
from the Company’s
 
Annual Report on
 
Form 10-K for
 
the year ended
 
December 31, 2021.
 
There were no
accounting standards
 
issued for the year
 
ended December 31, 2022, that
 
are expected to
 
have a material
 
impact
to Group.
 
2.
 
INVESTMENTS
 
The
 
tables
 
below
 
present
 
the
 
amortized
 
cost,
 
allowance
 
for
 
credit
 
losses,
 
gross
 
unrealized
appreciation/(depreciation)
 
and
 
market
 
value
 
of
 
fixed
 
maturity
 
securities
 
-
 
available
 
for
 
sale
 
for
 
the
 
periods
indicated.
 
At December 31, 2022
Amortized
Allowance for
Unrealized
Unrealized
Fair
(Dollars in millions)
Cost
Credit Losses
Appreciation
Depreciation
Value
Fixed maturity securities - available for sale:
U.S. Treasury securities and obligations of
 
U.S. government agencies and corporations
$
1,334
$
-
$
6
$
(82)
$
1,257
Obligations of U.S. states and political subdivisions
444
-
2
(32)
413
Corporate securities
7,044
(45)
31
(561)
6,469
Asset-backed securities
4,229
-
5
(171)
4,063
Mortgage-backed securities
Commercial
1,023
-
-
(105)
919
Agency residential
3,382
-
7
(290)
3,099
Non-agency residential
5
-
-
(1)
4
Foreign government securities
1,586
-
8
(179)
1,415
Foreign corporate securities
5,143
(10)
23
(562)
4,596
Total fixed maturity securities - available for sale
$
24,191
$
(54)
$
81
$
(1,982)
$
22,236
(Some amounts may not reconcile due to rounding.)
At December 31, 2021
Amortized
Allowance for
Unrealized
Unrealized
Fair
(Dollars in millions)
Cost
Credit Losses
Appreciation
Depreciation
Value
Fixed maturity securities - available for sale:
U.S. Treasury securities and obligations of
 
U.S. government agencies and corporations
$
1,407
$
-
$
24
$
(10)
$
1,421
Obligations of U.S. states and political subdivisions
559
-
29
(1)
587
Corporate securities
7,444
(19)
195
(63)
7,557
Asset-backed securities
3,579
(8)
22
(12)
3,582
Mortgage-backed securities
Commercial
1,032
-
38
(6)
1,064
Agency residential
2,361
-
33
(19)
2,375
Non-agency residential
7
-
-
-
7
Foreign government securities
1,424
-
42
(28)
1,438
Foreign corporate securities
4,251
(3)
95
(65)
4,279
Total fixed maturity securities - available for sale
$
22,064
$
(30)
$
478
$
(203)
$
22,308
(Some amounts may not reconcile due to rounding.)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
F-16
The
 
following
 
table
 
shows
 
amortized
 
cost,
 
allowance
 
for
 
credit
 
losses,
 
gross
 
unrealized
appreciation/(depreciation) and fair
 
value of fixed maturity securities held to
 
maturity for the periods indicated:
 
 
At December 31, 2022
Amortized
Allowance for
Unrealized
Unrealized
Fair
(Dollars in millions)
Cost
Credit Losses
Appreciation
Depreciation
Value
Fixed maturity securities - held to maturity:
Corporate securities
$
152
$
(2)
$
-
$
(6)
$
144
Asset-backed securities
661
(6)
2
(15)
642
Mortgage-backed securities
-
Commercial
7
-
-
-
7
Foreign corporate securities
28
(1)
2
-
28
Total fixed maturity securities - held to maturity
$
848
$
(9)
$
3
$
(22)
$
821
(Some amounts may not reconcile due
 
to rounding.)
The amortized
 
cost
 
and
 
market
 
value
 
of
 
fixed
 
maturity
 
securities
 
available
 
for
 
sale
 
are
 
shown
 
in
 
the
 
following
table
 
by
 
contractual
 
maturity.
 
Mortgage-backed
 
securities
 
are
 
generally
 
more
 
likely
 
to
 
be
 
prepaid
 
than
 
other
fixed maturity
 
securities. As the
 
stated maturity
 
of such securities may
 
not be indicative
 
of actual maturities,
 
the
totals for mortgage-backed
 
and asset-backed
 
securities are shown separately.
 
At December 31, 2022
At December 31, 2021
Amortized
Fair
Amortized
Fair
(Dollars in millions)
Cost
Value
Cost
Value
Fixed maturity securities – available for sale:
 
Due in one year or less
$
1,331
$
1,314
$
1,399
$
1,398
 
Due after one year through five years
8,131
7,546
7,075
7,154
 
Due after five years through ten years
4,636
4,057
5,004
5,101
 
Due after ten years
1,454
1,233
1,606
1,627
Asset-backed securities
4,229
4,063
3,579
3,582
Mortgage-backed securities:
Commercial
1,023
919
1,032
1,064
Agency residential
3,382
3,099
2,361
2,375
Non-agency residential
5
4
7
7
Total fixed maturity securities -available for sale
$
24,191
$
22,236
$
22,064
$
22,308
(Some amounts may not reconcile due to rounding.)
The amortized
 
cost and
 
fair value
 
of fixed
 
maturity securities
 
held to
 
maturity are
 
shown in
 
the following
 
table
by
 
contractual
 
maturity.
 
Mortgage-backed
 
securities
 
are
 
generally
 
more
 
likely
 
to
 
be
 
prepaid
 
than
 
other
 
fixed
maturity securities. As the stated
 
maturity of such securities may not be indicative
 
of actual maturities, the totals
for mortgage-backed and
 
asset-backed securities
 
are shown separately.
 
At December 31, 2022
Amortized
Fair
(Dollars in millions)
Cost
Value
Fixed maturity securities – held to maturity:
 
Due in one year or less
$
5
$
5
 
Due after one year through five years
63
61
 
Due after five years through ten years
43
41
 
Due after ten years
68
65
Asset-backed securities
661
642
Mortgage-backed securities:
Commercial
7
7
Total fixed maturity securities - held to maturity
$
848
$
821
(Some amounts may not reconcile due
 
to rounding.)
During
 
2022,
 
the
 
Company
 
re-designated
 
a
 
portion
 
of
 
its
 
fixed
 
maturity
 
securities
 
from
 
its
 
fixed
 
maturity
 
available
 
for
 
sale
 
portfolio
 
to
 
its
 
fixed
 
maturity
 
 
held
 
to
 
maturity
 
portfolio.
 
The
 
fair
 
value
 
of
 
the
 
securities
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
F-17
reclassified at
 
the date
 
of transfer
 
was $
722
 
million, net
 
of allowance
 
for current
 
expected
 
credit losses,
 
which
was subsequently recognized
 
as the new amortized
 
cost basis.
 
As of the date of transfer,
 
these securities had an
unrealized
 
loss
 
of
 
$
53
 
million,
 
which
 
remained
 
in
 
accumulated
 
other
 
comprehensive
 
income
 
on
 
the
 
balance
sheet and
 
will be
 
amortized
 
into
 
income through
 
an adjustment
 
to
 
the yields
 
of the
 
underlying
 
securities over
the remaining life of the securities.
 
The Company evaluated
 
fixed maturity
 
securities classified as
 
held to maturity
 
for current
 
expected credit
 
losses
as of
 
December 31,
 
2022 utilizing
 
risk characteristics
 
of each
 
security,
 
including credit
 
rating, remaining
 
time to
maturity,
 
adjusted
 
for
 
prepayment
 
considerations,
 
and
 
subordination
 
level,
 
and
 
applying
 
default
 
and
 
recovery
rates,
 
which
 
include
 
the
 
incorporation
 
of
 
historical
 
credit
 
loss
 
experience
 
and
 
macroeconomic
 
forecasts,
 
to
develop an estimate
 
of current expected
 
credit losses. These
 
fixed maturities classified
 
as held to maturity
 
are of
a high credit quality and are all rated
 
investment grade as of December
 
31, 2022.
 
The changes
 
in net
 
unrealized
 
appreciation
 
(depreciation)
 
for the
 
Company’s
 
investments
 
are derived
 
from the
following sources for the periods
 
indicated:
 
 
Years Ended December 31,
(Dollars in millions)
2022
2021
Increase (decrease) during the period between the fair value and cost
of investments carried at fair value, and deferred taxes thereon:
Fixed maturity securities and short-term investments
$
(2,225)
$
(542)
Change in unrealized appreciation (depreciation), pre-tax
(2,225)
(542)
Deferred tax benefit (expense)
277
58
Change in unrealized appreciation (depreciation),
 
net of deferred taxes, included in shareholders’ equity
 
$
(1,948)
$
(485)
(Some amounts may not reconcile due to rounding.)
The
 
tables
 
below
 
display
 
the
 
aggregate
 
market
 
value
 
and
 
gross
 
unrealized
 
depreciation
 
of
 
fixed
 
maturity
securities,
 
by
 
security
 
type
 
and
 
contractual
 
maturity,
 
in
 
each
 
case
 
subdivided
 
according
 
to
 
length
 
of
 
time
 
that
individual securities had been in a continuous unrealized
 
loss position for the periods indicated.
 
 
Duration of Unrealized Loss at December
 
31, 2022 By Security Type
Less than 12 months
Greater than 12 months
Total
Gross
Gross
Gross
Unrealized
Unrealized
Unrealized
(Dollars in millions)
Fair Value
Depreciation
Fair Value
Depreciation
Fair Value
Depreciation
Fixed maturity securities - available for
 
sale:
U.S. Treasury securities and
 
obligations of
U.S. government agencies and corporations
$
668
$
(31)
$
487
$
(52)
$
1,155
$
(82)
Obligations of U.S. states and
 
political subdivisions
235
(23)
27
(9)
261
(32)
Corporate securities
4,143
(326)
1,316
(234)
5,459
(561)
Asset-backed securities
3,204
(142)
456
(29)
3,661
(171)
Mortgage-backed securities
Commercial
806
(90)
101
(15)
907
(105)
Agency residential
1,905
(132)
870
(158)
2,776
(289)
Non-agency residential
4
-
1
(1)
4
-
Foreign government securities
985
(100)
321
(79)
1,306
(179)
Foreign corporate securities
3,264
(372)
853
(189)
4,117
(561)
Total
 
$
15,213
$
(1,217)
$
4,432
$
(764)
$
19,645
$
(1,982)
Securities where an allowance for credit
 
loss was recorded
2
-
-
-
2
-
Total fixed
 
maturity securities - available for
 
sale
$
15,215
$
(1,217)
$
4,432
$
(764)
$
19,647
$
(1,982)
(Some amounts may not reconcile due to rounding.)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
F-18
Duration of Unrealized Loss at December
 
31, 2022 By Maturity
Less than 12 months
Greater than 12 months
Total
Gross
Gross
Gross
Unrealized
Unrealized
Unrealized
(Dollars in millions)
Fair Value
Depreciation
Fair Value
Depreciation
Fair Value
Depreciation
Fixed maturity securities - available for
 
sale:
Due in one year or less
$
989
$
(19)
$
40
$
(7)
$
1,029
$
(26)
Due in one year through five years
4,935
(383)
1,645
(209)
6,580
(592)
Due in five years through ten years
2,698
(360)
911
(230)
3,609
(590)
Due after ten years
672
(91)
408
(116)
1,080
(207)
Asset-backed securities
3,204
(142)
456
(29)
3,661
(171)
Mortgage-backed securities
2,715
(222)
972
(173)
3,687
(395)
Total
$
15,213
$
(1,217)
$
4,432
$
(764)
$
19,645
$
(1,982)
Securities where an allowance for credi
 
t
 
loss was recorded
2
-
-
-
2
-
Total fixed
 
maturity securities - available for
 
sale
$
15,215
$
(1,217)
$
4,432
$
(764)
$
19,647
$
(1,982)
(Some amounts may not reconcile due to rounding.)
The aggregate
 
market
 
value and
 
gross unrealized
 
losses related
 
to investments
 
in an
 
unrealized loss
 
position at
December 31, 2022 were $
19.6
 
billion and $
2.0
 
billion, 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, 2022,
 
did not exceed
5.2
% 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
0.2
%
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 $
1.2
 
billion 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,
 
asset-backed
 
securities,
 
agency
 
residential
 
mortgage-backed
securities and
 
foreign
 
government
 
securities.
 
Of these
 
unrealized
 
losses, $
1.1
 
billion were
 
related
 
to securities
that
 
were
 
rated
 
investment
 
grade
 
by
 
at
 
least
 
one
 
nationally
 
recognized
 
statistical
 
rating
 
agency.
 
The
 
$
764
million of
 
unrealized
 
losses related
 
to fixed
 
maturity securities
 
in an
 
unrealized
 
loss position
 
for more
 
than one
year
 
related
 
primarily
 
to
 
domestic
 
and
 
foreign
 
corporate
 
securities,
 
agency
 
residential
 
mortgage-backed
securities and
 
foreign government
 
securities.
 
Of these unrealized
 
losses, $
732
 
million were
 
related to
 
securities
that were rated
 
investment
 
grade by
 
at least one
 
nationally recognized
 
statistical
 
rating agency.
 
In all instances,
there
 
were
 
no projected
 
cash
 
flow shortfalls
 
to
 
recover
 
the full
 
book
 
value
 
of the
 
investments
 
and the
 
related
interest obligations.
 
The mortgage-backed securities still
 
have excess credit coverage
 
and are current on interest
and principal payments.
 
The
 
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.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
F-19
The
 
tables
 
below
 
display
 
the
 
aggregate
 
market
 
value
 
and
 
gross
 
unrealized
 
depreciation
 
of
 
fixed
 
maturity
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.
 
The
 
amounts
presented
 
in
 
the
 
tables
 
below
 
include
 
$
16
 
million
 
of
 
market
 
value
 
and
 
$
(0.4)
 
million
 
of
 
gross
 
unrealized
depreciation as
 
of December
 
31, 2021
 
related
 
to fixed
 
maturity securities
 
for which
 
the Company
 
has recorded
an allowance for credit losses.
 
 
Duration of Unrealized Loss at December
 
31, 2021 By Security Type
 
Less than 12 months
Greater than 12 months
Total
Gross
Gross
Gross
Unrealized
Unrealized
Unrealized
(Dollars in millions)
Fair Value
Depreciation
Fair Value
Depreciation
Fair Value
Depreciation
Fixed maturity securities - available for
 
sale:
U.S. Treasury securities and
 
obligations of
U.S. government agencies and corporations
$
504
$
(6)
$
92
$
(4)
$
596
$
(10)
Obligations of U.S. states and
 
political subdivisions
51
(1)
3
-
54
(1)
Corporate securities
2,133
(38)
473
(24)
2,605
(63)
Asset-backed securities
1,954
(11)
42
(1)
1,996
(12)
Mortgage-backed securities
Commercial
222
(3)
40
(3)
262
(6)
Agency residential
1,101
(12)
280
(7)
1,381
(19)
Non-agency residential
2
-
-
-
2
-
Foreign government securities
392
(10)
101
(18)
493
(28)
Foreign corporate securities
1,735
(46)
211
(18)
1,945
(65)
Total fixed
 
maturity securities - available for
 
sale
$
8,094
$
(128)
$
1,241
$
(75)
$
9,335
$
(203)
(Some amounts may not reconcile due to rounding.)
Duration of Unrealized Loss at December
 
31, 2021 By Maturity
Less than 12 months
Greater than 12 months
Total
Gross
Gross
Gross
Unrealized
Unrealized
Unrealized
(Dollars in millions)
Fair Value
Depreciation
Fair Value
Depreciation
Fair Value
Depreciation
Fixed maturity securities - available for
 
sale:
Due in one year or less
$
130
$
(2)
$
137
$
(12)
$
267
$
(14)
Due in one year through five years
2,165
(35)
446
(29)
2,612
(64)
Due in five years through ten years
1,728
(47)
244
(22)
1,972
(69)
Due after ten years
792
(16)
51
(3)
843
(19)
Asset-backed securities
1,954
(11)
42
(1)
1,996
(12)
Mortgage-backed securities
1,325
(15)
320
(10)
1,646
(25)
Total fixed
 
maturity securities - available for
 
sale
$
8,094
$
(128)
$
1,241
$
(75)
$
9,335
$
(203)
(Some amounts may not reconcile due to rounding.)
The aggregate
 
market
 
value and
 
gross unrealized
 
losses related
 
to investments
 
in an
 
unrealized loss
 
position at
December 31, 2021 were $
9.3
 
billion and $
203
 
million, 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, 2021,
 
did not exceed
2.7
% of the
 
overall market
 
value of the
 
Company’s
 
fixed maturity
 
securities.
 
The market value of the securities
 
for the issuer with the second largest
 
unrealized loss comprised less
 
than
0.5
%
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
 
$
128
 
million
 
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,
 
agency
 
residential
 
asset-backed
 
securities
 
and foreign
government
 
securities.
 
Of
 
these
 
unrealized
 
losses,
 
$
116
 
million
 
were
 
related
 
to
 
securities
 
that
 
were
 
rated
investment
 
grade
 
by
 
at
 
least one
 
nationally
 
recognized
 
statistical
 
rating
 
agency.
 
The $
75
 
million
 
of unrealized
losses related
 
to fixed
 
maturity securities
 
in an unrealized
 
loss position
 
for more
 
than one year
 
related primarily
to
 
domestic
 
and
 
foreign
 
corporate
 
securities,
 
foreign
 
government
 
securities
 
and
 
agency
 
residential
 
mortgage-
backed securities.
 
Of these
 
unrealized losses,
 
$
72
 
million were
 
related to
 
securities that
 
were rated
 
investment
grade
 
by
 
at
 
least
 
one
 
nationally
 
recognized
 
statistical
 
rating
 
agency.
 
In
 
all
 
instances,
 
there
 
were
 
no
 
projected
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
F-20
cash flow
 
shortfalls
 
to recover
 
the full
 
book value
 
of the
 
investments
 
and the
 
related
 
interest
 
obligations.
 
The
mortgage-backed securities still
 
have excess credit coverage
 
and are current on interest
 
and principal payments.
 
The components of net investment
 
income are presented in the table
 
below for the periods indicated:
 
 
Years Ended December 31,
(Dollars in millions)
2022
2021
2020
Fixed maturities
$
742
$
561
$
542
Equity securities
16
17
19
Short-term investments and cash
28
1
5
Other invested assets
Limited partnerships
75
565
113
Other
 
29
63
2
Gross investment income before adjustments
890
1,208
681
Funds held interest income (expense)
2
12
13
Future policy benefit reserve income (expense)
-
(1)
(1)
Gross investment income
892
1,219
692
Investment expenses
(62)
(54)
(50)
Net investment income
$
830
$
1,165
$
642
(Some amounts may not reconcile due to rounding.)
The
 
Company
 
records
 
results
 
from
 
limited
 
partnership
 
investments
 
on
 
the
 
equity
 
method
 
of
 
accounting
 
with
changes
 
in
 
value
 
reported
 
through
 
net
 
investment
 
income.
 
The
 
net
 
investment
 
income
 
from
 
limited
partnerships is dependent
 
upon the Company’s
 
share of the net asset
 
values of interests
 
underlying each limited
partnership.
 
Due
 
to
 
the
 
timing
 
of
 
receiving
 
financial
 
information
 
from
 
these
 
partnerships,
 
the
 
results
 
are
generally
 
reported
 
on
 
a
 
one
 
month
 
or
 
quarter
 
lag.
 
If
 
the
 
Company
 
determines
 
there
 
has
 
been
 
a
 
significant
decline in value
 
of a limited
 
partnership during
 
this lag period,
 
a loss will
 
be recorded
 
in the period
 
in which the
Company identifies the decline.
 
The Company had
 
contractual commitments
 
to invest
 
up to an additional
 
$
2.6
 
billion in limited partnerships
 
and
private
 
placement loans
 
at December
 
31, 2022.
 
These commitments
 
will be
 
funded when
 
called in
 
accordance
with the partnership and
 
loan agreements, which have
 
investment periods that
 
expire, unless extended,
 
through
2026
.
 
During the fourth
 
quarter of 2022, the
 
Company entered
 
into corporate
 
-owned life insurance
 
policies, which are
carried within other invested assets
 
at policy cash surrender value of $
939
 
million as of December 31, 2022.
 
Variable Interest
 
Entities
The
 
Company
 
is
 
engaged
 
with
 
various
 
special
 
purpose
 
entities
 
and
 
other
 
entities
 
that
 
are
 
deemed
 
to
 
be
 
VIEs
primarily
 
as
 
an
 
investor
 
through
 
normal
 
investment
 
activities
 
but
 
also
 
as
 
an
 
investment
 
manager.
 
A
 
VIE
 
is
 
an
entity that
 
either has
 
investors
 
that lack
 
certain essential
 
characteristics
 
of a
 
controlling
 
financial interest,
 
such
as simple
 
majority kick-out
 
rights, or
 
lacks sufficient
 
funds to
 
finance its
 
own activities
 
without financial
 
support
provided
 
by
 
other
 
entities.
 
The
 
Company
 
performs
 
ongoing
 
qualitative
 
assessments
 
of
 
its
 
VIEs
 
to
 
determine
whether the Company has
 
a controlling financial interest
 
in the VIE and therefore
 
is the primary beneficiary.
 
The
Company
 
is
 
deemed to
 
have
 
a
 
controlling
 
financial
 
interest
 
when
 
it
 
has
 
both
 
the
 
ability to
 
direct
 
the
 
activities
that most
 
significantly impact
 
the economic
 
performance of
 
the VIE
 
and the
 
obligation to
 
absorb losses
 
or right
to
 
receive
 
benefits
 
from
 
the
 
VIE
 
that
 
could
 
potentially
 
be
 
significant
 
to
 
the
 
VIE.
 
Based
 
on
 
the
 
Company’s
assessment,
 
if it
 
determines
 
it
 
is
 
the
 
primary
 
beneficiary,
 
the
 
Company
 
consolidates
 
the
 
VIE
 
in
 
the
 
Company’s
Consolidated Financial Statements.
 
As of December 31, 2022 and
 
2021, the Company did
no
t hold any securities
for which it is the primary beneficiary.
The
 
Company,
 
through
 
normal
 
investment
 
activities,
 
makes
 
passive
 
investments
 
in
 
general
 
and
 
limited
partnerships
 
and other
 
alternative
 
investments.
 
For these
 
non-consolidated
 
VIEs, the
 
Company has
 
determined
it is not the
 
primary beneficiary as
 
it has no ability
 
to direct activities
 
that could significantly
 
affect the economic
performance of the
 
investments.
 
The Company’s
 
maximum exposure
 
to loss as
 
of December 31, 2022
 
and 2021
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
F-21
is limited
 
to
 
the total
 
carrying
 
value
 
of $
4.1
 
billion and
 
$
2.9
 
billion,
 
respectively,
 
which
 
are
 
included in
 
general
and
 
limited
 
partnerships
 
and
 
other
 
alternative
 
investments
 
in
 
Other
 
Invested
 
Assets
 
in
 
the
 
Company's
Consolidated
 
Balance
 
Sheets.
 
As
 
of
 
December 31,
 
2022,
 
the
 
Company
 
has
 
outstanding
 
commitments
 
totaling
$
2.1
 
billion whereby the
 
Company is committed
 
to fund these investments
 
and may be called
 
by the partnership
during
 
the
 
commitment
 
period
 
to
 
fund
 
the
 
purchase
 
of
 
new
 
investments
 
and
 
partnership
 
expenses.
 
These
investments are generally
 
of a passive nature in that the Company
 
does not take an active role in management.
In
 
addition,
 
the
 
Company
 
makes
 
passive
 
investments
 
in
 
structured
 
securities
 
issued
 
by
 
VIEs
 
for
 
which
 
the
Company
 
is
 
not
 
the
 
manager.
 
These
 
investments
 
are
 
included
 
in
 
asset-backed
 
securities,
 
which
 
includes
collateralized
 
loan obligations
 
and are
 
classified as
 
fixed maturities.
 
The Company
 
has not
 
provided financial
 
or
other support
 
with respect
 
to these
 
investments
 
other than
 
its original
 
investment.
 
For these
 
investments,
 
the
Company
 
determined
 
it is
 
not
 
the primary
 
beneficiary
 
due
 
to
 
the relative
 
size
 
of the
 
Company’s
 
investment
 
in
comparison
 
to
 
the
 
principal
 
amount
 
of
 
the
 
structured
 
securities
 
issued
 
by
 
the
 
VIEs,
 
the
 
level
 
of
 
credit
subordination
 
which
 
reduces
 
the
 
Company’s
 
obligation
 
to
 
absorb
 
losses
 
or
 
right
 
to
 
receive
 
benefits
 
and
 
the
Company’s
 
inability to
 
direct the activities
 
that most
 
significantly impact
 
the economic
 
performance of
 
the VIEs.
 
The
 
Company’s
 
maximum
 
exposure
 
to
 
loss
 
on
 
these
 
investments
 
is
 
limited
 
to
 
the
 
amount
 
of
 
the
 
Company’s
investment.
The components of net realized capital
 
gains (losses) are presented in the
 
table below for the periods indicated:
 
 
Years Ended December 31,
(Dollars in millions)
2022
2021
2020
Fixed maturity securities:
Allowance for credit losses
$
(33)
$
(28)
$
(2)
Net realized gains (losses) from dispositions
(87)
17
(5)
Gains (losses) from fair value adjustments
-
-
2
Equity securities:
Net realized gains (losses) from dispositions
112
28
(9)
Gains (losses) from fair value adjustments
(460)
236
278
Other invested assets
13
6
2
Short-term investments gain (loss)
-
-
1
Total net realized gains (losses) on investments
$
(455)
$
258
$
268
(Some amounts may not reconcile due to rounding.)
The
 
following
 
tables
 
provide
 
a
 
roll
 
forward
 
of
 
the
 
Company’s
 
beginning
 
and
 
ending
 
balance
 
of
 
allowance
 
for
credit losses for the periods indicated:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
F-22
Roll Forward of Allowance for Credit Losses
Twelve Months Ended December 31, 2022
Foreign
Corporate
Asset-Backed
Corporate
Securities
Securities
Securities
Total
(Dollars in millions)
Beginning Balance
$
(19)
$
(8)
$
(3)
$
(30)
Credit losses on securities where credit
losses were not previously recorded
(1)
(13)
(6)
(17)
(35)
Increases in allowance on previously
impaired securities
(20)
-
(1)
(21)
Decreases in allowance on previously
 
impaired securities
-
-
-
-
Reduction in allowance due to disposals
6
8
10
23
Balance as of December 31
$
(46)
$
(6)
$
(11)
$
(63)
(Some amounts may not reconcile due to rounding.)
(1)
 
Credit losses recorded as of December 31,
 
2022 for HTM were $
2
 
million, $
6
 
million and $
1
 
million for Corporate, asset-backed
 
securities and foreign
corporate securities, respectively.
 
Roll Forward of Allowance for Credit Losses
Twelve Months Ended December 31, 2021
Foreign
Corporate
Asset-Backed
Corporate
Securities
Securities
Securities
Total
(Dollars in millions)
Beginning Balance
$
(1)
$
-
$
(1)
$
(2)
Credit losses on securities where credit
losses were not previously recorded
(21)
(5)
(2)
(29)
Increases in allowance on previously
impaired securities
(3)
(3)
-
(5)
Decreases in allowance on previously
 
Reduction in allowance due to disposals
6
-
-
6
Balance as of December 31
$
(19)
$
(8)
$
(3)
$
(30)
(Some amounts may not reconcile due to rounding.)
The proceeds and
 
split between gross
 
gains and losses,
 
from sales of
 
fixed maturity
 
securities - available
 
for sale
and equity securities, are presented in the table
 
below for the periods indicated:
 
 
Years Ended December 31,
(Dollars in millions)
2022
2021
2020
Proceeds from sales of fixed maturity securities - available for sale
$
1,403
$
1,916
$
1,951
Gross gains from sales
40
72
80
Gross losses from sales
(127)
(55)
(85)
Proceeds from sales of equity securities
$
2,217
$
990
$
376
Gross gains from sales
165
42
37
Gross losses from sales
(53)
(15)
(46)
Securities with a
 
carrying value
 
amount of
 
$
1.4
 
billion at
 
December 31, 2022
 
were on
 
deposit with various
 
state
or governmental insurance departments
 
in compliance with insurance laws.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
F-23
3.
 
RESERVE FOR LOSSES, LAE AND FUTURE
 
POLICY BENEFIT RESERVE
 
Reserves for losses and LAE.
The following
 
table provides
 
a roll forward
 
of the Company’s
 
beginning and
 
ending reserve
 
for losses
 
and LAE is
summarized for the periods indicated:
 
 
 
Years Ended December 31,
(Dollars in millions)
2022
2021
2020
Gross reserves beginning of period
$
19,009
$
16,322
$
13,531
 
Less reinsurance recoverables on unpaid losses
(1,946)
(1,844)
(1,641)
 
Net reserves beginning of period
17,063
14,478
11,891
Incurred related to:
 
Current year
8,102
7,400
6,149
 
Prior years
(2)
(9)
401
 
Total incurred losses and LAE
8,100
7,391
6,551
Paid related to:
 
Current year
 
1,220
2,491
2,046
 
Prior years
3,740
2,226
2,078
 
Total paid losses and LAE
4,960
4,717
4,124
Foreign exchange/translation adjustment
(243)
(89)
161
Net reserves end of period
19,960
17,063
14,478
 
Plus reinsurance recoverables on unpaid losses
2,105
1,946
1,844
 
Gross reserves end of period
$
22,065
$
19,009
$
16,322
(Some amounts may not reconcile due
 
to rounding.)
Current year
 
incurred losses
 
were $
8.1
 
billion, $
7.4
 
billion and
 
$
6.1
 
billion in
 
2022, 2021
 
and 2020, respectively.
 
Gross and
 
net reserves
 
increased in
 
2022, reflecting
 
an increase
 
in underlying
 
exposure due
 
to earned
 
premium
growth, year
 
over year,
 
the impact
 
of $
45
 
million of
 
incurred losses
 
related to
 
the Ukraine/Russia
 
war,
 
partially
offset by decrease of $
80
 
million in 2022 current year catastrophe
 
losses compared to 2021.
 
The war in
 
the Ukraine
 
is ongoing
 
and an evolving
 
event. Economic
 
and legal
 
sanctions have
 
been levied against
Russia,
 
specific
 
named
 
individuals
 
and
 
entities
 
connected
 
to
 
the
 
Russian
 
government,
 
as
 
well
 
as
 
businesses
located
 
in
 
the
 
Russian
 
Federation
 
and/or
 
owned
 
by
 
Russian
 
nationals
 
by
 
numerous
 
countries,
 
including
 
the
United States.
 
The significant
 
political and
 
economic uncertainty
 
surrounding
 
the war
 
and associated
 
sanctions
have impacted economic and investment
 
markets both within Russia and around
 
the world.
The
 
increase
 
in
 
current
 
year
 
incurred
 
losses
 
from
 
2020
 
to
 
2021
 
was
 
primarily
 
related
 
to
 
an
 
increase
 
of
 
$
710
million in
 
current year
 
catastrophe
 
losses and
 
an increase
 
of $
541
 
million in
 
current year
 
attritional losses.
 
The
increase in
 
current year
 
attritional losses
 
was mainly
 
due to
 
the growth
 
in premiums
 
earned, partially
 
mitigated
by $
511
 
million of losses related to COVID-19
 
in 2020 which did not recur in 2021.
 
Incurred prior years
 
losses were $(
2
) million in 2022, ($
9
) million in 2021 and $
401
 
million in 2020. The favorable
development
 
on
 
prior
 
year
 
reserves
 
of
 
($
2
)
 
million
 
in
 
2022
 
is
 
primarily
 
driven
 
by
 
better
 
than
 
expected
 
loss
emergence in
 
workers’
 
compensation and
 
surety lines
 
of business, as
 
well as attritional
 
property.
 
The favorable
development
 
on
 
prior
 
year
 
reserves
 
of
 
($
9
)
 
million
 
in
 
2021
 
is
 
primarily
 
driven
 
by
 
a
 
commutation
 
and
 
reserve
releases
 
within
 
the
 
reinsurance
 
segment.
 
The
 
increase
 
for
 
2020
 
primarily
 
related
 
to
 
higher
 
ultimate
 
loss
estimates
 
for
 
long-tail
 
casualty
 
business
 
in
 
the
 
reinsurance
 
segment
 
for
 
accident
 
years
 
2015
 
to
 
2018,
 
notably
general
 
liability,
 
professional
 
lines,
 
and
 
auto
 
liability.
 
The
 
reserve
 
charge
 
also
 
includes
 
actions
 
on
 
non-CAT
property
 
lines,
 
primarily
 
for
 
the
 
2017
 
to
 
2019
 
accident
 
years
 
and
 
driven
 
by
 
a
 
few
 
large
 
losses
 
to
 
aggregate
programs.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
F-24
The
 
following
 
is
 
information
 
about
 
incurred
 
and
 
paid
 
claims
 
development
 
as
 
of
 
December
 
31,
 
2022,
 
net
 
of
reinsurance,
 
as
 
well as
 
cumulative
 
claim frequency
 
and
 
the total
 
of incurred
 
but not
 
reported
 
liabilities
 
(IBNR)
plus
 
expected
 
development
 
on
 
reported
 
claims
 
included
 
within
 
the
 
net
 
incurred
 
claims
 
amounts.
 
Each
 
of the
Company’s
 
financial
 
reporting
 
segments
 
has
 
been
 
disaggregated
 
into
 
casualty
 
and
 
property
 
business.
 
The
casualty
 
and
 
property
 
segregation
 
results
 
in
 
groups
 
that
 
have
 
homogeneous
 
loss
 
development
 
characteristics
and
 
are
 
large
 
enough
 
to
 
represent
 
credible
 
trends.
 
Generally,
 
casualty
 
claims
 
take
 
longer
 
to
 
be
 
reported
 
and
settled, resulting
 
in longer
 
payout
 
patterns
 
and increased
 
volatility.
 
Property claims
 
on the
 
other hand,
 
tend to
be
 
reported
 
and
 
settled
 
quicker
 
and
 
therefore
 
tend
 
to
 
exhibit
 
less
 
volatility.
 
The
 
property
 
business
 
is
 
more
exposed
 
to
 
catastrophe
 
losses, which
 
can result
 
in year
 
over year
 
fluctuations
 
in incurred
 
claims depending
 
on
the frequency and severity of catastrophes
 
claims in any one accident year.
The
 
information
 
about
 
incurred
 
and
 
paid
 
claims
 
development
 
for
 
the
 
years
 
ended
 
December
 
31,
 
2013
 
to
December 31, 2021 is presented as supplementary
 
information.
The Cumulative
 
Number of
 
Reported
 
Claims is
 
shown only
 
for Insurance
 
Casualty as
 
it is
 
impractical
 
to provide
the
 
information
 
for
 
the
 
remaining
 
groups.
 
The
 
reinsurance
 
groups
 
each
 
include
 
pro
 
rata
 
contracts
 
for
 
which
ceding
 
companies
 
provide
 
only
 
summary
 
information
 
via
 
a
 
bordereau.
 
This
 
summary
 
information
 
does
 
not
include the
 
number of
 
reported claims
 
underlying the
 
paid and
 
reported
 
losses.
 
Therefore,
 
it is
 
not possible
 
to
provide
 
this
 
information.
 
The
 
Insurance
 
Property
 
group
 
includes
 
Accident
 
&
 
Health
 
insurance
 
business.
 
This
business is
 
written via
 
a master
 
contract and
 
individual claim
 
counts are
 
not provided.
 
This business
 
represents
a
 
significant
 
enough
 
portion
 
of
 
the
 
business
 
in
 
the
 
Insurance
 
Property
 
group
 
so
 
that
 
including
 
the
 
number
 
of
reported claims for the remaining
 
business would distort any analytics
 
performed on the group.
The Cumulative Number
 
of Reported
 
Claims shown for
 
the Insurance Casualty
 
is determined by
 
claim and line of
business.
 
For
 
example,
 
a
 
claim
 
event
 
with
 
three
 
claimants
 
in
 
the
 
same
 
line
 
of
 
business
 
is
 
a
 
single
 
claim.
 
However,
 
a claim event with a single claimant that
 
spans two lines of business contributes two claims.
The
 
following
 
tables
 
present
 
the
 
ultimate
 
loss
 
and
 
ALAE
 
and
 
the
 
paid
 
loss
 
and
 
ALAE,
 
net
 
of
 
reinsurance
 
for
casualty
 
and
 
property,
 
as
 
well
 
as
 
the
 
average
 
annual
 
percentage
 
payout
 
of
 
incurred
 
claims
 
by
 
age,
 
net
 
of
reinsurance for each of our disclosed lines
 
of business.
Reinsurance – Casualty Business
At December 31, 2022
Total of
IBNR Liabilities
Ultimate Incurred Loss and Allocated Loss Adjustment Expenses, Net of reinsurance
Plus Expected
Cumulative
Years Ended December 31,
Development
Number of
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
on Reported
Reported
Accident Year
(unaudited)
(unaudited)
(unaudited)
(unaudited)
(unaudited)
(unaudited)
(unaudited)
(unaudited)
(unaudited)
Claims
Claims
(Dollars in millions)
2013
$
710
$
801
$
788
$
779
$
748
$
719
$
699
$
699
$
694
$
684
$
11
N/A
2014
762
800
807
783
741
719
732
730
720
13
N/A
2015
777
818
814
811
795
832
832
829
47
N/A
2016
790
865
862
857
933
935
965
91
N/A
2017
870
830
837
918
926
982
132
N/A
2018
1,311
1,309
1,386
1,416
1,485
354
N/A
2019
1,683
1,748
1,751
1,775
727
N/A
2020
1,896
1,867
1,846
1,178
N/A
2021
2,454
2,449
1,829
N/A
2022
2,818
2,133
N/A
$
14,554
(Some amounts may not reconcile due to rounding.)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
F-25
Cumulative Paid Loss and Allocated Loss Adjustment Expenses, Net of Reinsurance
Years Ended December 31,
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
Accident Year
(unaudited)
(unaudited)
(unaudited)
(unaudited)
(unaudited)
(unaudited)
(unaudited)
(unaudited)
(unaudited)
(Dollars in millions)
2013
$
48
$
121
$
211
$
310
$
383
$
489
$
540
$
565
$
593
$
603
2014
57
122
212
301
426
501
545
585
607
2015
57
157
263
408
497
565
611
647
2016
88
187
320
426
539
614
690
2017
80
185
316
455
575
677
2018
154
284
456
616
803
2019
208
338
511
718
2020
190
300
489
2021
214
318
2022
200
$
5,754
All outstanding liabilities prior to 2013, net of reinsurance
916
Liabilities for claims and claim adjustment expenses, net of reinsurance
$
9,715
(Some amounts may not reconcile due to rounding.)
Average Annual Percentage
 
Payout of Incurred Loss by
 
Age, Net of Reinsurance (unaudited)
Years
1
2
3
4
5
6
7
8
9
10
Casualty
8.9
%
7.8
%
11.7
%
12.7
%
12.5
%
10.2
%
6.8
%
4.5
%
3.6
%
1.5
%
Reinsurance – Property Business
 
At December 31, 2022
Total of
IBNR Liabilities
Ultimate Incurred Loss and Allocated Loss Adjustment Expenses, Net of reinsurance
Plus Expected
Cumulative
Years Ended December 31,
Development
Number of
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
on Reported
Reported
Accident Year
(unaudited)
(unaudited)
(unaudited)
(unaudited)
(unaudited)
(unaudited)
(unaudited)
(unaudited)
(unaudited)
Claims
Claims
(Dollars in millions)
2013
$
1,275
$
930
$
819
$
763
$
757
$
753
$
760
$
758
$
758
$
757
$
2
N/A
2014
1,343
1,181
1,030
937
933
937
930
930
928
3
N/A
2015
1,386
1,053
976
950
952
945
946
943
2
N/A
2016
1,695
1,518
1,554
1,548
1,526
1,527
1,523
10
N/A
2017
2,784
3,407
3,518
3,647
3,692
3,703
3
N/A
2018
2,611
2,486
2,488
2,426
2,379
24
N/A
2019
2,038
2,070
2,015
1,899
29
N/A
2020
2,408
2,481
2,425
240
N/A
2021
2,754
2,780
476
N/A
2022
3,257
1,898
N/A
$
20,594
(Some amounts may not reconcile due to rounding.)
Cumulative Paid Loss and Allocated Loss Adjustment Expenses, Net of Reinsurance
Years Ended December 31,
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
Accident Year
(unaudited)
(unaudited)
(unaudited)
(unaudited)
(unaudited)
(unaudited)
(unaudited)
(unaudited)
(unaudited)
(Dollars in millions)
2013
$
375
$
510
$
638
$
693
$
713
$
723
$
732
$
733
$
733
$
735
2014
366
641
769
842
874
884
891
892
893
2015
377
607
759
842
869
891
900
905
2016
469
961
1,249
1,367
1,421
1,441
1,454
2017
819
2,180
2,744
3,130
3,332
3,426
2018
545
1,525
1,878
2,065
2,136
2019
730
1,185
1,505
1,667
2020
584
1,321
1,733
2021
684
1,534
2022
652
$
15,134
All outstanding liabilities prior to 2013, net of reinsurance
103
Liabilities for claims and claim adjustment expenses, net of reinsurance
$
5,562
(Some amounts may not reconcile due to rounding.)
Average Annual Percentage
 
Payout of Incurred Loss by
 
Age, Net of Reinsurance (unaudited)
Years
1
2
3
4
5
6
7
8
9
10
Property
27.2
%
31.8
%
16.1
%
8.8
%
4.0
%
2.0
%
0.9
%
0.3
%
0.1
%
0.1
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
F-26
Insurance – Casualty Business
At December 31, 2022
Total of
IBNR Liabilities
Ultimate Incurred Loss and Allocated Loss Adjustment Expenses, Net of reinsurance
Plus Expected
Cumulative
Years Ended December 31,
Development
Number of
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
on Reported
Reported
Accident Year
(unaudited)
(unaudited)
(unaudited)
(unaudited)
(unaudited)
(unaudited)
(unaudited)
(unaudited)
(unaudited)
Claims
Claims
(Dollars in millions)
2013
$
393
$
393
$
393
$
393
$
351
$
344
$
351
$
350
$
350
$
347
$
25
$
22,031
2014
431
457
454
460
396
397
398
397
398
32
26,449
2015
519
527
535
541
467
471
471
477
40
29,020
2016
552
550
579
612
549
538
540
53
34,164
2017
610
600
620
652
628
629
85
38,344
2018
701
705
742
755
769
154
39,029
2019
848
844
876
885
204
42,006
2020
993
1,049
1,043
416
39,545
2021
1,189
1,246
732
44,274
2022
1,367
865
37,739
$
7,703
(Some amounts may not reconcile due to rounding.)
Cumulative Paid Loss and Allocated Loss Adjustment Expenses, Net of Reinsurance
Years Ended December 31,
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
Accident Year
(unaudited)
(unaudited)
(unaudited)
(unaudited)
(unaudited)
(unaudited)
(unaudited)
(unaudited)
(unaudited)
(Dollars in millions)
2013
$
33
$
117
$
176
$
225
$
260
$
286
$
304
$
311
$
317
$
321
2014
41
125
202
257
297
325
339
350
360
2015
44
135
219
292
353
382
413
435
2016
55
164
268
341
400
443
481
2017
54
172
280
378
453
529
2018
63
207
317
443
594
2019
72
234
397
551
2020
66
236
388
2021
109
261
2022
85
$
4,003
All outstanding liabilities prior to 2013, net of reinsurance
127
Liabilities for claims and claim adjustment expenses, net of reinsurance
$
3,828
(Some amounts may not reconcile due to rounding.)
Average Annual Percentage
 
Payout of Incurred Loss by
 
Age, Net of Reinsurance (unaudited)
Years
1
2
3
4
5
6
7
8
9
10
Casualty
8.1
%
17.6
%
16.8
%
15.5
%
13.4
%
8.4
%
5.7
%
3.3
%
2.1
%
1.3
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
F-27
Insurance – Property Business
At December 31, 2022
Total of
IBNR Liabilities
Ultimate Incurred Loss and Allocated Loss Adjustment Expenses, Net of reinsurance
Plus Expected
Cumulative
Years Ended December 31,
Development
Number of
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
on Reported
Reported
Accident Year
(unaudited)
(unaudited)
(unaudited)
(unaudited)
(unaudited)
(unaudited)
(unaudited)
(unaudited)
(unaudited)
Claims
Claims
(Dollars in millions)
2013
$
112
$
98
$
91
$
92
$
92
$
92
$
92
$
92
$
92
$
92
$
-
N/A
2014
132
123
120
119
119
119
119
119
120
1
N/A
2015
173
153
144
146
144
146
146
150
1
N/A
2016
288
274
279
289
292
294
294
-
N/A
2017
494
499
492
495
489
504
-
N/A
2018
405
400
394
407
422
1
N/A
2019
347
347
351
363
1
N/A
2020
599
507
498
27
N/A
2021
646
579
66
N/A
2022
767
273
N/A
$
3,789
(Some amounts may not reconcile due to rounding.)
Cumulative Paid Loss and Allocated Loss Adjustment Expenses, Net of Reinsurance
Years Ended December 31,
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
Accident Year
(unaudited)
(unaudited)
(unaudited)
(unaudited)
(unaudited)
(unaudited)
(unaudited)
(unaudited)
(unaudited)
(Dollars in millions)
2013
$
69
$
93
$
92
$
92
$
92
$
92
$
92
$
92
$
92
$
92
2014
82
116
118
118
118
119
119
119
119
2015
102
141
142
145
146
146
147
147
2016
162
249
271
287
290
293
293
2017
179
423
457
479
496
499
2018
245
357
376
404
418
2019
227
315
339
357
2020
293
416
453
2021
328
473
2022
372
$
3,223
All outstanding liabilities prior to 2013, net of reinsurance
-
Liabilities for claims and claim adjustment expenses, net of reinsurance
566
(Some amounts may not reconcile due to rounding.)
Average Annual Percentage
 
Payout of Incurred Loss by
 
Age, Net of Reinsurance (unaudited)
Years
1
2
3
4
5
6
7
8
9
10
Property
54.3
%
31.5
%
5.7
%
4.5
%
2.3
%
1.0
%
0.6
%
0.1
%
0.1
%
-
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
F-28
Reconciliation of the Disclosure of Incurred
 
and Paid Claims Development to the Liability for
 
Unpaid Claims
and Claim Adjustment Expenses
The reconciliation of the net incurred and
 
paid claims development tables to the liability
 
for claims and claim
adjustment expenses in the consolidated
 
statement of financial position is as follows.
December 31, 2022
(Dollars in thousands)
Net outstanding liabilities
Reinsurance Casualty
$
9,715
Reinsurance Property
5,562
Insurance Casualty
3,828
Insurance Property
566
Liabilities for unpaid claims and claim adjustment expenses, net of reinsurance
19,671
Reinsurance recoverable on unpaid claims
Reinsurance Casualty
150
Reinsurance Property
576
Insurance Casualty
1,220
Insurance Property
160
Total reinsurance recoverable
 
on unpaid claims
2,105
Insurance lines other than short-duration
-
Unallocated claims adjustment expenses
244
Other
45
289
Total gross liability for unpaid claims and claim adjustment expense
$
22,065
(Some amounts may not reconcile due to rounding.)
Reserving Methodology
The Company maintains
 
reserves equal to our estimated
 
ultimate liability for losses
 
and loss adjustment expense
(LAE)
 
for
 
reported
 
and
 
unreported
 
claims
 
for
 
our
 
insurance
 
and
 
reinsurance
 
businesses.
 
Because
 
reserves
 
are
based on
 
estimates
 
of ultimate
 
losses and
 
LAE by
 
underwriting or
 
accident year,
 
the Company
 
uses a
 
variety of
statistical
 
and
 
actuarial
 
techniques
 
to
 
monitor
 
reserve
 
adequacy
 
over
 
time,
 
evaluate
 
new
 
information
 
as
 
it
becomes
 
known,
 
and
 
adjust
 
reserves
 
whenever
 
an
 
adjustment
 
appears
 
warranted.
 
The
 
Company
 
considers
many factors
 
when setting
 
reserves including:
 
(1) exposure
 
base and
 
projected ultimate
 
premium; (2)
 
expected
loss ratios
 
by product
 
and class
 
of business,
 
which are
 
developed collaboratively
 
by underwriters
 
and actuaries;
(3)
 
actuarial
 
methodologies
 
and
 
assumptions
 
which
 
analyze
 
loss
 
reporting
 
and
 
payment
 
experience,
 
reports
from
 
ceding
 
companies
 
and
 
historical
 
trends,
 
such
 
as
 
reserving
 
patterns,
 
loss
 
payments,
 
and
 
product
 
mix;
 
(4)
current
 
legal
 
interpretations
 
of
 
coverage
 
and
 
liability;
 
and
 
(5)
 
economic
 
conditions.
 
Management’s
 
best
estimate is
 
developed through
 
collaboration
 
with actuarial,
 
underwriting, claims,
 
legal and
 
finance departments
and
 
culminates
 
with
 
the
 
input
 
of
 
reserve
 
committees.
 
Each
 
segment
 
reserve
 
committee
 
includes
 
the
participation of the relevant
 
parties from actuarial, finance,
 
claims and segment senior management
 
and has the
responsibility for
 
recommending and
 
approving management’s
 
best estimate.
 
Reserves are
 
further reviewed
 
by
Everest’s
 
Chief
 
Reserving
 
Actuary
 
and
 
senior
 
management.
 
The
 
objective
 
of
 
such
 
process
 
is
 
to
 
determine
 
a
single best estimate
 
viewed by management
 
to be the best
 
estimate of its ultimate
 
loss liability.
 
Actual loss and
LAE
 
ultimately
 
paid
 
may
 
deviate,
 
perhaps
 
substantially,
 
from
 
such
 
reserves.
 
Net
 
income
 
will be
 
impacted
 
in
 
a
period in which the change in estimated ultimate
 
loss and LAE is recorded.
F-29
The
 
detailed
 
data
 
required
 
to
 
evaluate
 
ultimate
 
losses
 
for
 
the
 
Company’s
 
insurance
 
business
 
is
 
accumulated
from
 
its
 
underwriting
 
and
 
claim
 
systems.
 
Reserving
 
for
 
reinsurance
 
requires
 
evaluation
 
of
 
loss
 
information
received
 
from
 
ceding
 
companies.
 
Ceding
 
companies
 
report
 
losses
 
in
 
many
 
forms
 
depending
 
on
 
the
 
type
 
of
contract
 
and
 
the
 
agreed
 
or
 
contractual
 
reporting
 
requirements.
 
Generally,
 
pro
 
rata
 
contracts
 
require
 
the
submission
 
of
 
a
 
monthly/quarterly
 
account,
 
which
 
includes
 
premium
 
and
 
loss
 
activity
 
for
 
the
 
period
 
with
corresponding
 
reserves
 
as
 
established
 
by
 
the
 
ceding
 
company.
 
This
 
information
 
is
 
recorded
 
in
 
the
 
Company’s
records.
 
For certain pro
 
rata contracts,
 
the Company may
 
require a detailed
 
loss report for
 
claims that exceed
 
a
certain
 
dollar threshold
 
or relate
 
to
 
a particular
 
type of
 
loss.
 
Excess
 
of loss
 
and facultative
 
contracts
 
generally
require
 
individual
 
loss
 
reporting
 
with
 
precautionary
 
notices
 
provided
 
when
 
a
 
loss
 
reaches
 
a
 
significant
percentage
 
of
 
the
 
attachment
 
point
 
of
 
the
 
contract
 
or
 
when
 
certain
 
causes
 
of
 
loss
 
or
 
types
 
of
 
injury
occur.
 
Experienced
 
claims
 
staff
 
handle
 
individual
 
loss
 
reports
 
and
 
supporting
 
claim
 
information.
 
Based
 
on
evaluation
 
of
 
a
 
claim,
 
the
 
Company
 
may
 
establish
 
additional
 
case
 
reserves
 
in
 
addition
 
to
 
the
 
case
 
reserves
reported
 
by
 
the
 
ceding
 
company.
 
To
 
ensure
 
ceding
 
companies
 
are
 
submitting
 
required
 
and
 
accurate
 
data,
Everest’s
 
Underwriting, Claim, Reinsurance Accounting,
 
and Internal Audit
 
Departments perform various
 
reviews
of ceding companies, particularly larger ceding companies,
 
including on-site audits.
The
 
Company
 
segments
 
both
 
reinsurance
 
and
 
insurance
 
reserves
 
into
 
exposure
 
groupings
 
for
 
actuarial
analysis.
 
The
 
Company
 
assigns
 
business
 
to
 
exposure
 
groupings
 
so
 
that
 
the
 
underlying
 
exposures
 
have
reasonably homogeneous loss
 
development characteristics
 
and are large enough
 
to facilitate
 
credible estimation
of
 
ultimate
 
losses.
 
The
 
Company
 
periodically
 
reviews
 
its
 
exposure
 
groupings
 
and
 
may
 
change
 
groupings
 
over
time
 
as
 
business
 
changes.
 
The
 
Company
 
currently
 
uses
 
approximately
200
 
exposure
 
groupings
 
to
 
develop
reserve estimates.
 
One of
 
the key
 
selection characteristics
 
for the
 
exposure groupings
 
is the
 
historical duration
of
 
the
 
claims
 
settlement
 
process.
 
Business
 
in
 
which
 
claims
 
are
 
reported
 
and
 
settled
 
relatively
 
quickly
 
are
commonly
 
referred
 
to
 
as
 
short
 
tail
 
lines,
 
principally
 
property
 
lines.
 
Casualty
 
claims
 
tend
 
to
 
take
 
longer
 
to
 
be
reported and settled and casualty
 
lines are generally referred
 
to as long tail lines. Estimates
 
of ultimate losses for
shorter
 
tail
 
lines,
 
with
 
the
 
exception
 
of
 
loss
 
estimates
 
for
 
large
 
catastrophic
 
events,
 
generally
 
exhibit
 
less
volatility than those for the longer tail
 
lines.
The
 
Company
 
uses
 
a
 
variety
 
of
 
actuarial
 
methodologies,
 
such
 
as
 
the
 
expected
 
loss
 
ratio
 
method,
 
chain
 
ladder
methods,
 
and
 
Bornhuetter-Ferguson
 
methods,
 
supplemented
 
by
 
judgment
 
where
 
appropriate,
 
to
 
estimate
ultimate loss and LAE for each exposure
 
group.
Expected Loss Ratio Method:
 
The expected loss ratio
 
method uses earned premium
 
times an expected
 
loss ratio
to calculate
 
ultimate losses for
 
a given underwriting or
 
accident year.
 
This method relies entirely
 
on expectation
to
 
project
 
ultimate
 
losses
 
with
 
no
 
consideration
 
given
 
to
 
actual
 
losses.
 
As
 
such,
 
it
 
may
 
be
 
appropriate
 
for
 
an
immature
 
underwriting
 
or
 
accident
 
year
 
where
 
few,
 
if
 
any,
 
losses
 
have
 
been
 
reported
 
or
 
paid,
 
but
 
less
appropriate for a more mature
 
year.
Chain
 
Ladder
 
Method:
 
Chain
 
ladder
 
methods
 
use
 
a
 
standard
 
loss
 
development
 
triangle
 
to
 
project
 
ultimate
losses.
 
Age-to-age
 
development
 
factors
 
are
 
selected
 
for
 
each
 
development
 
period
 
and
 
combined
 
to
 
calculate
age-to-ultimate
 
development
 
factors
 
which
 
are
 
then
 
applied
 
to
 
paid
 
or
 
reported
 
losses
 
to
 
project
 
ultimate
losses.
 
This method relies
 
entirely on
 
actual paid or
 
reported losses
 
to project
 
ultimate losses.
 
No other factors
such as
 
changes in
 
pricing or
 
other expectations
 
are taken
 
into
 
account.
 
It is
 
most appropriate
 
for groups
 
with
homogeneous, stable
 
experience where
 
past development
 
patterns are
 
expected to
 
continue in
 
the future.
 
It is
least appropriate for groups
 
which have changed significantly
 
over time or which are more volatile.
Bornhuetter-Ferguson
 
Method:
 
The Bornhuetter
 
-Ferguson
 
method is
 
a combination
 
of the
 
expected
 
loss
 
ratio
method
 
and
 
the
 
chain
 
ladder
 
method.
 
Ultimate
 
losses
 
are
 
projected
 
based
 
partly
 
on
 
actual
 
paid
 
or
 
reported
losses
 
and
 
partly
 
on
 
expectation.
 
Incurred
 
but
 
not
 
reported
 
(IBNR)
 
reserves
 
are
 
calculated
 
using
 
earned
premium, an a priori loss ratio,
 
and selected age-to-age development
 
factors and added to actual
 
reported (paid)
losses
 
to
 
determine
 
ultimate
 
losses.
 
It
 
is
 
more
 
responsive
 
to
 
actual
 
reported
 
or
 
paid
 
development
 
than
 
the
F-30
expected
 
loss
 
ratio
 
method
 
but
 
less
 
responsive
 
than
 
the
 
chain
 
ladder
 
method.
 
The
 
reliability
 
of
 
the
 
method
depends on the accuracy of the selected a priori loss
 
ratio.
Although the
 
Company uses
 
similar actuarial
 
methods for
 
both short
 
tail and
 
long tail
 
lines, the
 
faster reporting
of experience
 
for the
 
short tail
 
lines allows
 
the Company
 
to have
 
greater confidence
 
in its
 
estimates of
 
ultimate
losses
 
for
 
short
 
tail
 
lines
 
at
 
an
 
earlier
 
stage
 
than
 
for
 
long
 
tail
 
lines.
 
As
 
a
 
result,
 
the
 
Company
 
utilizes,
 
as
 
well,
exposure-based
 
methods
 
to
 
estimate
 
its
 
ultimate
 
losses
 
for
 
longer
 
tail
 
lines,
 
especially
 
for
 
immature
underwriting
 
or
 
accident
 
years.
 
For
 
both
 
short
 
and
 
long
 
tail
 
lines,
 
the
 
Company
 
supplements
 
these
 
general
approaches with analytically based judgments.
Key
 
actuarial
 
assumptions
 
contain
 
no
 
explicit
 
provisions
 
for
 
reserve
 
uncertainty
 
nor
 
does
 
the
 
Company
supplement the actuarially determined reserves
 
for uncertainty.
Carried reserves
 
at each
 
reporting date
 
are the
 
management’s
 
best estimate
 
of ultimate
 
unpaid losses
 
and LAE
at
 
that
 
date.
 
The
 
Company
 
completes
 
detailed
 
reserve
 
studies
 
for
 
each
 
exposure
 
group
 
annually
 
for
 
both
reinsurance
 
and
 
insurance
 
operations.
 
The
 
completed
 
annual
 
reserve
 
studies
 
are
 
“rolled-forward”
 
for
 
each
accounting period
 
until the
 
subsequent reserve
 
study is
 
completed.
 
Analyzing the
 
roll-forward
 
process involves
comparing
 
actual
 
reported
 
losses
 
to
 
expected
 
losses
 
based
 
on
 
the
 
most
 
recent
 
reserve
 
study.
 
The
 
Company
analyzes
 
significant
 
variances
 
between
 
actual
 
and
 
expected
 
losses
 
and
 
post
 
adjustments
 
to
 
its
 
reserves
 
as
warranted.
Certain reserves,
 
including losses
 
from widespread
 
catastrophic
 
events
 
and COVID
 
-19 related
 
losses, cannot
 
be
estimated
 
using traditional
 
actuarial methods.
 
These types
 
of events
 
are reserved
 
for separately
 
using a
 
variety
of
 
statistical
 
and
 
actuarial
 
techniques.
 
We
 
estimate
 
losses
 
for
 
these
 
types
 
of
 
events
 
based
 
on
 
information
derived from
 
catastrophe
 
models, quantitative
 
and qualitative
 
exposure
 
analyses,
 
reports
 
and communications
from ceding companies and development patterns
 
for historically similar events,
 
where available.
 
The Company
 
continues
 
to
 
receive
 
claims under
 
expired
 
insurance
 
and reinsurance
 
contracts
 
asserting
 
injuries
and/or
 
damages
 
relating
 
to
 
or
 
resulting
 
from
 
environmental
 
pollution
 
and
 
hazardous
 
substances,
 
including
asbestos.
 
Environmental
 
claims
 
typically
 
assert
 
liability
 
for
 
(a) the
 
mitigation
 
or
 
remediation
 
of environmental
contamination
 
or (b)
 
bodily injury
 
or property
 
damage caused
 
by the
 
release of
 
hazardous
 
substances
 
into
 
the
land,
 
air
 
or
 
water.
 
Asbestos
 
claims
 
typically
 
assert
 
liability
 
for
 
bodily
 
injury
 
from
 
exposure
 
to
 
asbestos
 
or
 
for
property damage resulting from asbestos
 
or products containing asbestos.
The Company’s
 
reserves include
 
an estimate
 
of the Company’s
 
ultimate liability
 
for A&E
 
claims.
 
The Company’s
A&E
 
liabilities
 
emanate
 
from
 
Mt.
 
McKinley
 
Insurance
 
Company’s,
 
a
 
former
 
wholly
 
owned
 
subsidiary
 
that
 
was
sold
 
in 2015,
 
direct
 
insurance
 
business
 
and Everest
 
Re’s
 
assumed
 
reinsurance
 
business.
 
All of
 
the
 
contracts
 
of
insurance
 
and reinsurance,
 
under which
 
the Company
 
has received
 
claims during
 
the past
 
three
 
years,
 
expired
more
 
than
20
 
years
 
ago.
 
There
 
are
 
significant
 
uncertainties
 
surrounding
 
the
 
Company’s
 
reserves
 
for
 
its
 
A&E
losses.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
F-31
A&E
 
exposures
 
represent
 
a
 
separate
 
exposure
 
group
 
for
 
monitoring
 
and
 
evaluating
 
reserve
 
adequacy.
 
The
following table
 
summarizes incurred
 
losses with respect
 
to A&E
 
reserves on
 
both a gross
 
and net of
 
reinsurance
basis for the periods indicated:
At December 31,
(Dollars in millions)
2022
2021
2020
Gross basis:
Beginning of period reserves
$
175
$
219
$
258
Incurred losses
144
11
2
Paid losses
(42)
(55)
(40)
End of period reserves
$
278
$
175
$
219
Net basis:
Beginning of period reserves
$
156
$
198
$
229
Incurred losses
138
-
(1)
Paid losses
(37)
(42)
(30)
End of period reserves
$
257
$
156
$
198
(Some amounts may not reconcile due to rounding.)
In
 
2015,
 
the
 
Company
 
sold
 
Mt.
 
McKinley
 
to
 
Clearwater
 
Insurance
 
Company,
 
a
 
subsidiary
 
of
 
Fairfax
 
Financial.
 
Concurrently
 
with
 
the
 
closing,
 
the
 
Company
 
entered
 
into
 
a
 
retrocession
 
treaty
 
with
 
an
 
affiliate
 
of
 
Clearwater
Insurance Company.
 
Per the retrocession
 
treaty,
 
the Company retroceded
100
% of the liabilities associated
 
with
certain Mt. McKinley policies, which related
 
entirely to A&E business and had
 
been reinsured by Bermuda Re.
 
As
consideration
 
for entering
 
into the
 
retrocession treaty,
 
Everest
 
Re Bermuda
 
transferred
 
cash of $
140
 
million, an
amount
 
equal
 
to
 
the
 
net
 
loss
 
reserves
 
as
 
of
 
the
 
closing
 
date.
 
The
 
maximum
 
liability
 
retroceded
 
under
 
the
retrocession treaty
 
will be $
440
 
million, equal to
 
the retrocession
 
payment plus
 
$
300
 
million.
 
The Company
 
will
retain liability for any
 
amounts exceeding the maximum liability
 
retroceded under the retrocession
 
treaty.
On December 20, 2019, the retrocession
 
treaty was amended and
 
included a partial commutation.
 
As a result of
this amendment
 
and partial
 
commutation, gross
 
A&E reserves
 
and correspondingly
 
reinsurance receivable
 
were
reduced by $
43
 
million.
 
In addition, the maximum liability permitted to
 
be retroceded increased to
 
$
450
 
million.
 
In 2022
 
the Company
 
posted
 
additional A&E
 
reserves of
 
$
138
m, following
 
a comprehensive
 
actuarial reserving
review.
 
This
 
increase
 
in
 
reserves
 
brings
 
the
 
Company
 
A&E
 
position
 
in
 
line
 
with
 
the
 
overall
 
industry
 
survival
ratios.
Reinsurance Recoverables.
Reinsurance
 
recoverables
 
for
 
both paid
 
and unpaid
 
losses totaled
 
$
2.2
 
billion and
 
$
2.1
 
billion at
 
December 31,
2022 and December
 
31, 2021,
 
respectively.
 
At December
 
31, 2022, $
520
 
million, or
23.2
%, was receivable
 
from
Mt.
 
Logan
 
Re
 
collateralized
 
segregated
 
accounts;
 
$
283
 
million,
 
or
12.6
%,
 
was
 
receivable
 
from
 
Munich
Reinsurance
 
America, Inc.
 
and $
148
 
million, or
6.6
%, was
 
recoverable
 
from Endurance
 
Reinsurance
 
Corporation
of America.
 
No other retrocessionaire accounted
 
for more than
5
% of our receivables.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
F-32
Future Policy Benefit Reserve.
Activity in the reserve for future policy benefits
 
is summarized for the periods indicated:
At December 31,
(Dollars in thousands)
2022
2021
2020
Balance at beginning of year
$
36
$
38
$
43
Liabilities assumed
-
-
-
Adjustments to reserves
(3)
1
(1)
Benefits paid in the current year
(4)
(3)
(4)
Balance at end of year
$
29
$
36
$
38
(Some amounts may not reconcile due to rounding.)
4.
 
FAIR VALUE
 
GAAP guidance regarding fair
 
value measurements address
 
how companies should measure fair value
 
when they
are
 
required
 
to
 
use
 
fair
 
value
 
measures
 
for
 
recognition
 
or
 
disclosure
 
purposes
 
under
 
GAAP
 
and
 
provides
 
a
common
 
definition
 
of fair
 
value
 
to
 
be used
 
throughout
 
GAAP.
 
It
 
defines
 
fair
 
value
 
as
 
the
 
price that
 
would
 
be
received
 
to
 
sell an
 
asset
 
or paid
 
to
 
transfer
 
a liability
 
in an
 
orderly
 
fashion
 
between
 
market
 
participants
 
at the
measurement
 
date.
 
In
 
addition,
 
it
 
establishes
 
a
 
three-level
 
valuation
 
hierarchy
 
for
 
the
 
disclosure
 
of fair
 
value
measurements.
 
The valuation
 
hierarchy
 
is based
 
on the
 
transparency
 
of inputs
 
to
 
the valuation
 
of an
 
asset or
liability.
 
The level in the
 
hierarchy within
 
which a given fair
 
value measurement
 
falls is determined
 
based on the
lowest
 
level
 
input
 
that
 
is
 
significant
 
to
 
the
 
measurement,
 
with
 
Level
 
1
 
being
 
the
 
highest
 
priority
 
and
 
Level
 
3
being the lowest priority.
 
The levels in the hierarchy
 
are defined as follows:
Level 1:
 
Inputs
 
to
 
the valuation
 
methodology
 
are
 
observable
 
inputs that
 
reflect unadjusted
 
quoted
 
prices for
identical assets or liabilities in an active market;
Level 2:
 
Inputs
 
to
 
the
 
valuation
 
methodology
 
include
 
quoted
 
prices
 
for
 
similar
 
assets
 
and
 
liabilities
 
in
 
active
markets,
 
and
 
inputs
 
that
 
are
 
observable
 
for
 
the
 
asset
 
or
 
liability,
 
either
 
directly
 
or
 
indirectly,
 
for
substantially the full term of the financial instrument;
Level 3:
 
Inputs to the valuation methodology are
 
unobservable and significant to the fair value
 
measurement.
The
 
Company’s
 
fixed
 
maturity
 
and
 
equity
 
securities
 
are
 
primarily
 
managed
 
by
 
third
 
party
 
investment
 
asset
managers.
 
The
 
investment
 
asset
 
managers
 
managing
 
publicly
 
traded
 
securities
 
obtain
 
prices
 
from
 
nationally
recognized
 
pricing
 
services.
 
These
 
services
 
seek
 
to
 
utilize
 
market
 
data
 
and
 
observations
 
in
 
their
 
evaluation
process.
 
They use pricing
 
applications that
 
vary by asset
 
class and incorporate
 
available market
 
information and
when fixed
 
maturity securities
 
do not trade
 
on a daily
 
basis the services
 
will apply available
 
information through
processes
 
such
 
as
 
benchmark
 
curves,
 
benchmarking
 
of
 
like
 
securities,
 
sector
 
groupings
 
and
 
matrix
 
pricing.
 
In
addition,
 
they
 
use
 
model
 
processes,
 
such
 
as
 
the
 
Option
 
Adjusted
 
Spread
 
model
 
to
 
develop
 
prepayment
 
and
interest rate scenarios
 
for securities that have
 
prepayment features.
 
The investment
 
asset managers
 
do not
 
make any
 
changes to
 
prices received
 
from either
 
the pricing
 
services or
the
 
investment
 
brokers.
 
In
 
addition,
 
the
 
investment
 
asset
 
managers
 
have
 
procedures
 
in
 
place
 
to
 
review
 
the
reasonableness
 
of
 
the
 
prices
 
from
 
the
 
service
 
providers
 
and
 
may
 
request
 
verification
 
of
 
the
 
prices.
 
The
Company
 
also
 
continually
 
performs
 
quantitative
 
and
 
qualitative
 
analysis
 
of prices,
 
including
 
but
 
not
 
limited
 
to
initial
 
and
 
ongoing
 
review
 
of
 
pricing
 
methodologies,
 
review
 
of
 
prices
 
obtained
 
from
 
pricing
 
services
 
and
 
third
party
 
investment
 
asset
 
managers,
 
review
 
of
 
pricing
 
statistics
 
and
 
trends,
 
and
 
comparison
 
of
 
prices
 
for
 
certain
securities
 
with
 
a
 
secondary
 
price
 
source
 
for
 
reasonableness.
 
No
 
material
 
variances
 
were
 
noted
 
during
 
these
price validation
 
procedures.
 
In limited
 
situations,
 
where financial
 
markets
 
are inactive
 
or illiquid,
 
the Company
may use
 
its own
 
assumptions
 
about future
 
cash flows
 
and risk-adjusted
 
discount
 
rates
 
to determine
 
fair value.
 
F-33
At December 31, 2022, $
1.7
 
billion of fixed maturities, fair
 
value were fair valued
 
using unobservable inputs.
 
The
majority
 
of
 
these
 
fixed
 
maturities
 
were
 
valued
 
by
 
investment
 
managers’
 
valuation
 
committees
 
and
 
many
 
of
these fair values were substantiated
 
by valuations from independent third
 
parties.
 
The Company has procedures
in
 
place
 
to
 
evaluate
 
these
 
independent
 
third
 
party
 
valuations.
 
At
 
December
 
31,
 
2021,
 
$
2.1
 
billion
 
of
 
fixed
maturities, fair value were fair
 
valued using unobservable inputs.
 
The
 
Company
 
internally
 
manages
 
a
 
public
 
equity
 
portfolio
 
which
 
had
 
a
 
fair
 
value
 
at
 
December
 
31,
 
2022
 
and
December 31, 2021
 
of $
97
 
million and
 
$
1.3
 
billion, respectively.
 
The Company
 
internally manages
 
a portfolio
 
of
collateralized
 
loan obligations
 
included in
 
asset-backed
 
securities which
 
had a
 
fair value
 
of $
2.6
 
billion and
 
$
2.0
billion at December
 
31, 2022 and
 
December 31, 2021, respectively.
 
All prices for
 
these securities were
 
obtained
from publicly published sources or nationally
 
recognized pricing vendors.
 
Equity
 
securities
 
denominated
 
in
 
U.S.
 
currency
 
with
 
quoted
 
prices
 
in
 
active
 
markets
 
for
 
identical
 
assets
 
are
categorized
 
as
 
Level
 
1
 
since
 
the
 
quoted
 
prices
 
are
 
directly
 
observable.
 
Equity
 
securities
 
traded
 
on
 
foreign
exchanges are
 
categorized as
 
Level 2 due to
 
the added input of
 
a foreign exchange
 
conversion
 
rate to determine
fair value.
 
The Company uses foreign currency
 
exchange rates
 
published by nationally recognized sources.
 
Fixed maturity
 
securities listed in
 
the tables have
 
been categorized
 
as Level 2, since
 
a particular security may
 
not
have
 
traded
 
but
 
the
 
pricing
 
services
 
are
 
able
 
to
 
use
 
valuation
 
models
 
with
 
observable
 
market
 
inputs
 
such
 
as
interest rate yield
 
curves and prices for similar fixed
 
maturity securities in terms of issuer,
 
maturity and seniority.
 
For
 
foreign
 
government
 
securities
 
and
 
foreign
 
corporate
 
securities,
 
the
 
fair
 
values
 
provided
 
by
 
the
 
third
 
party
pricing services
 
in local
 
currencies, and
 
where applicable,
 
are converted
 
to U.S.
 
dollars using
 
currency exchange
rates from nationally recognized
 
sources.
 
In
 
addition
 
to
 
the
 
valuations
 
from
 
investment
 
managers,
 
some
 
of
 
the
 
fixed
 
maturities
 
with
 
fair
 
values
categorized
 
as
 
Level
 
3 result
 
when
 
prices
 
are
 
not
 
available
 
from
 
the
 
nationally
 
recognized
 
pricing
 
services
 
and
are
 
derived
 
using
 
unobservable
 
inputs.
 
The
 
Company
 
will
 
value
 
the
 
securities
 
with
 
unobservable
 
inputs
 
using
comparable
 
market
 
information
 
or
 
receive
 
fair
 
values
 
from
 
investment
 
managers.
 
The
 
investment
 
managers
may obtain
 
non-binding price
 
quotes for
 
the securities
 
from brokers.
 
The single
 
broker
 
quotes are
 
provided by
market
 
makers
 
or
 
broker-dealers
 
who
 
are
 
recognized
 
as
 
market
 
participants
 
in
 
the
 
markets
 
in
 
which
 
they
 
are
providing the quotes.
 
The prices received from
 
brokers are
 
reviewed for
 
reasonableness by the
 
third party asset
managers
 
and
 
the
 
Company.
 
If
 
the
 
broker
 
quotes
 
are
 
for
 
foreign
 
denominated
 
securities,
 
the
 
quotes
 
are
converted to U.S. dollars
 
using currency exchange rates
 
from nationally recognized
 
sources.
 
The composition
 
and
 
valuation
 
inputs
 
for
 
the
 
presented
 
fixed
 
maturities
 
categories
 
Level
 
1 and
 
Level
 
2
 
are
 
as
follows:
 
U.S.
 
Treasury
 
securities
 
and
 
obligations
 
of
 
U.S.
 
government
 
agencies
 
and
 
corporations
 
are
 
primarily
comprised
 
of U.S.
 
Treasury
 
bonds
 
and the
 
fair
 
value
 
is based
 
on observable
 
market
 
inputs
 
such as
 
quoted
prices, reported trades, quoted
 
prices for similar issuances or benchmark yields;
 
Obligations of U.S.
 
states and political
 
subdivisions are comprised
 
of state and municipal
 
bond issuances and
the
 
fair
 
values
 
are
 
based
 
on
 
observable
 
market
 
inputs
 
such
 
as
 
quoted
 
market
 
prices,
 
quoted
 
prices
 
for
similar securities, benchmark yields and credit spreads;
 
Corporate securities
 
are primarily
 
comprised of U.S.
 
corporate
 
and public
 
utility bond issuances
 
and the fair
values
 
are
 
based
 
on
 
observable
 
market
 
inputs
 
such
 
as
 
quoted
 
market
 
prices,
 
quoted
 
prices
 
for
 
similar
securities, benchmark yields and credit spreads;
 
 
Asset-backed
 
and
 
mortgage-backed
 
securities
 
fair
 
values
 
are
 
based
 
on
 
observable
 
inputs
 
such
 
as
 
quoted
prices, reported
 
trades, quoted
 
prices for
 
similar issuances
 
or benchmark yields
 
and cash flow
 
models using
observable inputs such as prepayment speeds,
 
collateral performance and default
 
spreads;
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
F-34
 
Foreign
 
government
 
securities
 
are
 
comprised
 
of
 
global
 
non-U.S.
 
sovereign
 
bond
 
issuances
 
and
 
the
 
fair
values
 
are
 
based
 
on
 
observable
 
market
 
inputs
 
such
 
as
 
quoted
 
market
 
prices,
 
quoted
 
prices
 
for
 
similar
securities and
 
models with observable
 
inputs such
 
as benchmark
 
yields and
 
credit spreads
 
and then,
 
where
applicable, converted to U.S.
 
dollars using an exchange rate
 
from a nationally recognized
 
source;
 
Foreign corporate
 
securities are
 
comprised of
 
global non-U.S.
 
corporate
 
bond issuances
 
and the
 
fair values
are
 
based
 
on
 
observable
 
market
 
inputs
 
such
 
as
 
quoted
 
market
 
prices,
 
quoted
 
prices
 
for
 
similar
 
securities
and models with observable inputs
 
such as benchmark yields and credit
 
spreads and then, where applicable,
converted to U.S. dollars
 
using an exchange rate
 
from a nationally recognized
 
source.
The following
 
table presents
 
the fair
 
value measurement
 
levels for
 
all assets
 
and liabilities,
 
which the
 
Company
has recorded at fair value
 
as of the periods indicated:
 
Fair Value Measurement Using:
Quoted Prices
in Active
Significant
Markets for
Other
Significant
Identical
Observable
Unobservable
Assets
Inputs
Inputs
(Dollars in millions)
December 31, 2022
(Level 1)
(Level 2)
(Level 3)
Assets:
Fixed maturities, available for sale
U.S. Treasury securities and obligations of
U.S. government agencies and corporations
$
1,257
$
-
$
1,257
$
-
Obligations of U.S. States and political subdivisions
413
-
413
-
Corporate securities
6,469
-
5,754
715
Asset-backed securities
4,063
-
3,069
994
Mortgage-backed securities
Commercial
919
-
919
-
Agency residential
3,099
-
3,099
-
Non-agency residential
4
-
4
-
Foreign government securities
1,415
-
1,415
-
Foreign corporate securities
4,596
-
4,579
16
Total fixed maturities, available for sale
22,236
-
20,511
1,725
Equity securities, fair value
281
132
150
-
(Some amounts may not reconcile due to rounding.)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
F-35
The following
 
table presents
 
the fair
 
value measurement
 
levels for
 
all assets
 
and liabilities,
 
which the
 
Company
has recorded at fair value
 
as of the periods indicated:
Fair Value Measurement Using:
Quoted Prices
in Active
Significant
Markets for
Other
Significant
Identical
Observable
Unobservable
Assets
Inputs
Inputs
(Dollars in millions)
December 31, 2021
(Level 1)
(Level 2)
(Level 3)
Assets:
Fixed maturities, available for sale
U.S. Treasury securities and obligations of
U.S. government agencies and corporations
$
1,421
$
-
$
1,421
$
-
Obligations of U.S. States and political subdivisions
587
-
587
-
Corporate securities
7,557
-
6,756
801
Asset-backed securities
3,582
-
2,330
1,251
Mortgage-backed securities
Commercial
1,064
-
1,064
-
Agency residential
2,375
-
2,375
-
Non-agency residential
7
-
7
-
Foreign government securities
1,438
-
1,438
-
Foreign corporate securities
4,279
-
4,262
16
Total fixed maturities, available for sale
22,308
-
20,240
2,068
Equity securities, fair value
1,826
1,742
84
-
(Some amounts may not reconcile due to rounding.)
In
 
addition,
 
$
292
 
million
 
and
 
$
287
 
million
 
of
 
investments
 
within
 
other
 
invested
 
assets
 
on
 
the
 
consolidated
balance sheets
 
as of December
 
31, 2022 and
 
2021, respectively,
 
are not
 
included within
 
the fair value
 
hierarchy
tables as the assets are measured at
 
net asset value (“NAV”) as a pract
 
ical expedient to determine fair value.
 
The following
 
table presents
 
the activity
 
under Level
 
3, fair
 
value measurements
 
using significant
 
unobservable
inputs by asset type, for the periods indicated:
 
Total Fixed Maturities,
 
Available for Sale
December 31, 2022
December 31, 2021
Corporate
Asset-Backed
Foreign
Corporate
Asset-Backed
Foreign
(Dollars in millions)
Securities
Securities
CMBS
Corporate
Total
Securities
Securities
Corporate
Total
Beginning balance fixed maturities
 
$
801
$
1,251
$
-
$
16
$
2,068
$
701
$
623
$
6
$
1,330
Total gains or (losses) (realized/unrealized)
Included in earnings
(10)
-
-
-
(10)
(12)
(6)
-
(18)
Included in other comprehensive income (loss)
3
(35)
-
(4)
(36)
4
(7)
-
(2)
Purchases, issuances and settlements
(45)
513
6
8
481
107
641
10
758
Transfers in and/or (out) of Level
 
3
(35)
(735)
(6)
(4)
(779)
-
-
-
-
Ending balance
$
715
$
994
$
-
$
16
$
1,725
$
801
$
1,251
$
16
$
2,068
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
$
(23)
$
8
$
-
$
-
$
(15)
$
(16)
$
(8)
$
-
$
(24)
(Some amounts may not reconcile due to rounding.)
The $
779
 
million
 
shown
 
as transfers
 
in/(out)
 
of Level
 
3 and
 
reclassification
 
of securities
 
in/(out)
 
of investment
categories for
 
the year ended
 
December 31, 2022
 
related mainly
 
to previously
 
designated Level
 
3 securities that
the Company
 
has reclassified
 
from “fixed
 
maturities – available
 
for sale”
 
to “fixed
 
maturities –
 
held to maturity”
during
 
2022.
 
As
 
“fixed
 
maturities
 
 
held
 
to
 
maturity"
 
are
 
carried
 
at
 
amortized
 
cost,
 
net
 
of
 
credit
 
allowances
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
F-36
rather
 
than at
 
fair value
 
as “fixed
 
maturities –
 
available
 
for sale”,
 
these securities
 
are no
 
longer included
 
within
the fair
 
value hierarchy
 
table
 
or in
 
the roll
 
forward
 
of Level
 
3 securities.
 
The fair
 
values
 
of these
 
securities are
determined in a
 
similar manner as
 
the Company’s
 
fixed maturity
 
securities available
 
for sale as
 
described above.
 
The
 
fair
 
values
 
of
 
these
 
securities
 
incorporate
 
the
 
use
 
of
 
significant
 
unobservable
 
inputs
 
and
 
therefore
 
are
classified as Level 3 within the fair value hierarchy
 
as of December 31, 2022.
There were
no
 
transfers of assets
 
in/(out) Level 3 during 2021.
 
Financial Instruments Disclosed, But Not Reported,
 
at Fair Value
Certain financial instruments
 
disclosed, but not
 
reported, at fair
 
value are excluded
 
from the fair
 
value hierarchy
tables above. Fair
 
values of fixed maturity
 
securities held to maturity and senior notes
 
can be found within Notes
2 and 6, respectively.
 
Short-term investments
 
are stated at cost,
 
which approximates fair value.
 
See Note 1.
5.
 
CREDIT FACILITIES
The
 
Company
 
has
 
multiple
 
active
 
letter
 
of
 
credit
 
facilities
 
for
 
a
 
total
 
commitment
 
of
 
up
 
to
 
$
1.5
 
billion
 
as
 
of
December
 
31,
 
2022,
 
providing
 
for
 
the
 
issuance
 
of
 
letters
 
of
 
credit.
 
The
 
Company
 
also
 
has
 
additional
uncommitted
 
letter
 
of
 
credit
 
facilities
 
of
 
up
 
to
 
$
440
 
million
 
which
 
may
 
be
 
accessible
 
via
 
written
 
request
 
and
corresponding authorization
 
from the applicable lender.
 
There is no guarantee the uncommitted
 
capacity will be
available to
 
us on
 
a future
 
date.
 
The following
 
table presents
 
the interest
 
and fees
 
incurred in
 
connection with
these committed credit facilities
 
for the periods indicated:
 
 
Years Ended December 31,
(Dollars in millions)
2022
2021
2020
Credit facility interest and fees incurred - Wells Fargo Bank
$
-
$
-
$
1
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
million senior credit
 
facility with
 
a syndicate
 
of lenders,
 
which amended and
 
restated
 
in its entirety
 
the June 22,
2012,
four year
,
 
$
800
 
million
 
senior
 
credit
 
facility.
 
Both
 
the
 
May
 
26,
 
2016
 
and
 
June
 
22,
 
2012
 
senior
 
credit
facilities, which
 
have similar
 
terms, are
 
referred
 
to as
 
the “2016 Group
 
Credit Facility”.
 
Wells Fargo
 
Corporation
(“Wells Fargo Bank”) is
 
the administrative agent
 
for the 2016 Group Credit Facility.
Effective
 
May 26,
 
2021, the
 
term of
 
the 2016
 
Group Credit
 
Facility expired.
 
The Company
 
elected not
 
to renew
this facility
 
to allow
 
for the
 
replacement by
 
other collateralized
 
letter of
 
credit facilities
 
such as
 
those described
below.
 
As a
 
result of
 
the non-renewal
 
in May
 
2021, letter
 
of credit
 
commitment/availability
 
in the
 
2016 Group
Credit Facility
 
as of December
 
21, 2021 was
 
limited to
 
the remaining
 
$
39
 
million of letters
 
of credit that
 
were in
force and which expired
 
in 2022.
 
The following table summarizes the
 
outstanding letters of credit
 
for the periods indicated:
 
(Dollars in millions)
At December 31, 2022
At December 31, 2021
Bank
Commitment
In Use
Date of Expiry
Commitment
In Use
Date of Expiry
Wells Fargo Bank Group Credit Facility
$
-
$
-
$
39
$
39
12/30/2022
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
F-37
Bermuda Re Wells Fargo
 
Bilateral Letter of
 
Credit Facility
Effective February
 
23, 2021, Bermuda Re entered into
 
a letter of credit issuance facility
 
with Wells Fargo
 
referred
to as the “2021 Bermuda
 
Re Wells
 
Fargo Bilateral
 
Letter of Credit
 
Facility.”
 
The Bermuda Re Wells
 
Fargo Bilateral
Letter
 
of
 
Credit
 
Facility
 
originally
 
provided
 
for
 
the
 
issuance
 
of
 
up
 
to
 
$
50
 
million
 
of
 
secured
 
letters
 
of
 
credit.
 
Effective
 
May 5, 2021,
 
the agreement
 
was amended to
 
provide for
 
the issuance of
 
up to $
500
 
million of secured
letters of credit.
 
The following table summarizes the
 
outstanding letters of credit
 
for the periods indicated:
 
(Dollars in millions)
At December 31, 2022
At December 31, 2021
Bank
Commitment
In Use
Date of Expiry
 
Commitment
In Use
Date of Expiry
Wells Fargo Bank Bilateral LOC Agreement
$
500
$
463
12/29/2023
$
500
$
351
12/30/2022
(Some amounts may not reconcile due to rounding.)
Bermuda Re Citibank Letter of Credit Facility
Effective
 
August
 
9,
 
2021,
 
Bermuda
 
Re
 
entered
 
into
 
a
 
new
 
letter
 
of
 
credit
 
issuance
 
facility
 
with
 
Citibank
 
N.A.
which
 
superseded
 
the
 
previous
 
letter
 
of
 
credit
 
issuance
 
facility
 
with
 
Citibank
 
that
 
was
 
effective
 
December
 
31,
2020.
 
Both
 
of
 
these
 
are
 
referred
 
to
 
as
 
the
 
“Bermuda
 
Re
 
Letter
 
of
 
Credit
 
Facility”.
 
The
 
current
 
Bermuda
 
Re
Citibank Letter
 
of Credit
 
Facility provides
 
for the
 
committed
 
issuance of
 
up to
 
$
230
 
million of
 
secured letters
 
of
credit.
 
In
 
addition,
 
the
 
facility
 
provided
 
for
 
the
 
uncommitted
 
issuance
 
of
 
up
 
to
 
$
140
 
million,
 
which
 
may
 
be
accessible
 
via written request by
 
the Company and corresponding authorization
 
from Citibank N.A.
 
The following table summarizes the
 
outstanding letters of credit
 
for the periods indicated:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
F-38
(Dollars in millions)
At December 31, 2022
At December 31, 2021
Bank
Commitment
In Use
Date of Expiry
Commitment
In Use
Date of Expiry
Bermuda Re Citibank LOC Facility-
 
Committed
$
230
$
1
1/21/2023
$
230
$
4
02/28/2022
4
2/28/2023
1
03/01/2022
1
3/1/2023
1
11/24/2022
1
8/15/2023
217
12/31/2022
3
9/23/2023
1
8/15/2023
212
12/31/2023
1
9/23/2023
Bermuda Re Citibank LOC Facility
 
- Uncommitted
140
87
12/31/2023
140
84
12/31/2022
18
12/30/2026
23
12/30/2025
Total Citibank Bilateral
 
Agreement
$
370
$
329
$
370
$
333
(Some amounts may not reconcile due to rounding.)
Bermuda Re Bayerische Landesbank
 
Bilateral Secured Credit Facility
Effective
 
August
 
27,
 
2021
 
Bermuda
 
Re
 
entered
 
into
 
a
 
letter
 
of
 
credit
 
issuance
 
facility
 
with
 
Bayerische
Landesbank,
 
an
 
agreement
 
referred
 
to
 
as
 
the
 
“Bermuda
 
Re
 
Bayerische
 
Landesbank
 
Bilateral
 
Secured
 
Credit
Facility”.
 
The Bermuda
 
Re
 
Bayerische
 
Landesbank
 
Bilateral
 
Secured
 
Credit
 
Facility
 
provides
 
for
 
the
 
committed
issuance of up to $
200
 
million of secured letters of credit.
 
The following table summarizes the
 
outstanding letters of credit
 
for the periods indicated:
 
(Dollars in millions)
At December 31, 2022
At December 31, 2021
Bank
Commitment
In Use
Date of Expiry
 
Commitment
In Use
Date of Expiry
Bayerische Landesbank Bilateral Secured
 
Credit Facility
$
200
$
183
12/31/2023
$
200
$
155
12/31/2022
(Some amounts may not reconcile due to rounding.)
Bermuda Re Bayerische Landesbank
 
Bilateral Unsecured Letter
 
of Credit Facility
Effective
 
December
 
30,
 
2022,
 
Bermuda
 
Re
 
entered
 
into
 
a
 
new
 
additional
 
letter
 
of
 
credit
 
issuance
 
facility
 
with
Bayerische Landesbank,
 
New York
 
Branch, referred
 
to as
 
the “Bayerische
 
Landesbank Bilateral
 
Unsecured Letter
of Credit Facility”.
 
The Bermuda Re
 
Bayerische Landesbank
 
Bilateral Unsecured
 
Letter of
 
Credit Facility
 
provides
for the committed issuance of up to
 
$
150
 
million of unsecured letters of credit.
The following table summarizes the
 
outstanding letters of credit
 
for the periods indicated:
 
(Dollars in millions)
At December 31, 2022
Bank
Commitment
In Use
Date of Expiry
Bayerische Landesbank Unsecured Bilateral LOC Agreement - Committed
$
150
$
150
12/31/2023
(Some amounts may not reconcile due to rounding.)
Bermuda Re Lloyd’s
 
Bank Credit Facility.
 
Effective October
 
8, 2021 Bermuda Re entered
 
into a letter of credit
 
issuance facility with Lloyd’s
 
Bank Corporate
Markets
 
PLC,
 
an
 
agreement
 
referred
 
to
 
as
 
the
 
“Bermuda
 
Re
 
Lloyd’s
 
Bank
 
Credit
 
Facility”.
 
The
 
Bermuda
 
Re
Lloyd’s
 
Bank Credit
 
Facility provides
 
for the
 
committed issuance
 
of up to
 
$
50
 
million of secured
 
letters
 
of credit,
and subject to credit approval a maximum
 
total facility amount
 
of $
250
 
million.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
F-39
The following table summarizes the
 
outstanding letters of credit
 
for the periods indicated:
 
(Dollars in millions)
At December 31, 2022
At December 31, 2021
Bank
Commitment
In Use
Date of Expiry
Commitment
In Use
Date of Expiry
Bermuda Re Lloyd's Bank Credit Facility-Committed
$
50
$
50
12/31/2023
$
50
$
46
12/31/2022
Bermuda Re Lloyd's Bank Credit Facility-Uncommitted
200
136
12/31/2023
-
-
Total Bermuda Re Lloyd's Bank Credit Facility
$
250
$
186
$
50
$
46
(Some amounts may not reconcile due to rounding.)
Bermuda Re Barclays Credit
 
Facility
Effective
 
November 3,
 
2021, Bermuda
 
Re entered
 
into a
 
letter of
 
credit issuance
 
facility with
 
Barclays
 
Bank PLC,
an agreement
 
referred
 
to as
 
the “Bermuda
 
Re Barclays
 
Credit Facility”.
 
The Bermuda
 
Re Barclays
 
Credit Facility
provides for the committed issuance
 
of up to $
200
 
million of secured letters of credit.
The following table summarizes the
 
outstanding letters of credit
 
for the periods indicated:
 
 
(Dollars in millions)
At December 31, 2022
At December 31, 2021
Bank
Commitment
In Use
Date of Expiry
Commitment
In Use
Date of Expiry
Bermuda Re Barclays Credit Facility
$
200
$
179
12/31/2023
$
200
$
186
12/31/2022
(Some amounts may not reconcile due to rounding.)
Bermuda Re Nordea Bank Letter of Credit
 
Facility
Effective November
 
21, 2022, Bermuda
 
Re entered
 
into a letter
 
of credit issuance
 
facility with Nordea
 
Bank ABP,
New
 
York
 
Branch,
 
referred
 
to
 
as
 
the
 
“Nordea
 
Bank
 
Letter
 
of
 
Credit
 
Facility”.
 
The
 
Bermuda
 
Re
 
Nordea
 
Bank
Letter of
 
Credit Facility
 
provides for
 
the committed
 
issuance of up
 
to $
200
 
million of unsecured
 
letters of
 
credit,
and
 
subject
 
to
 
credit
 
approval,
 
uncommitted
 
issuance
 
of
 
$
100
 
million
 
for
 
a
 
maximum
 
total
 
facility
 
amount
 
of
$
300
 
million.
 
The following table summarizes the
 
outstanding letters of credit
 
for the periods indicated:
 
 
(Dollars in millions)
At December 31, 2022
Bank
Commitment
In Use
Date of Expiry
Nordea Bank ABP, NY Unsecured LOC Facility - Committed
$
200
$
50
12/31/2023
Nordea Bank ABP, NY Unsecured LOC Facility - Uncommitted
100
100
12/31/2023
Total Nordea Bank ABP,
 
NY LOC Facility
$
300
$
150
(Some amounts may not reconcile due
 
to rounding.)
Federal Home Loan Bank Membership
Everest
 
Re
 
is
 
a
 
member
 
of
 
the
 
Federal
 
Home
 
Loan
 
Bank
 
of
 
New
 
York
 
(“FHLBNY”),
 
which
 
allows
 
Everest
 
Re
 
to
borrow up
 
to
10
% of its
 
statutory admitted
 
assets.
 
As of December
 
31, 2022, Everest
 
Re had
 
admitted assets
 
of
approximately
 
$
22.4
 
billion
 
which
 
provides
 
borrowing
 
capacity
 
of
 
up
 
to
 
approximately
 
$
2.2
 
billion.
 
As
 
of
December
 
31, 2022,
 
Everest
 
Re has
 
$
519
 
million of
 
borrowings
 
outstanding,
 
which all
 
mature
 
in 2023.
 
Everest
incurred
 
interest
 
expense
 
of
 
$
4
 
million
 
and
 
$
1
 
million
 
for
 
the
 
years
 
ended
 
December
 
31,
 
2022
 
and
 
2021,
respectively.
 
The
 
FHLBNY
 
membership
 
agreement
 
requires
 
that
4.5
%
 
of
 
borrowed
 
funds
 
be
 
used
 
to
 
acquire
additional membership stock.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
F-40
6.
 
SENIOR NOTES
The table
 
below
 
displays
 
Holdings’
 
outstanding
 
senior
 
notes.
 
Market
 
value
 
is
 
based
 
on
 
quoted
 
market
 
prices,
but due to limited trading activity,
 
these senior notes are considered Level 2 in the fair
 
value hierarchy.
 
December 31, 2022
December 31, 2021
Consolidated
Consolidated
Principal
Balance Sheet
Balance Sheet
(Dollars in millions)
Date Issued
Date Due
Amounts
 
Amount
Market Value
Amount
Market Value
4.868
% Senior notes
6/5/2014
6/1/2044
$
400
$
397
$
343
$
397
$
504
3.5
% Senior notes
10/7/2020
10/15/2050
1,000
981
677
980
1,055
3.125
% Senior notes
10/4/2021
10/15/2052
1,000
969
627
969
983
$
2,400
$
2,347
$
1,647
$
2,346
$
2,542
Interest expense incurred in
 
connection with these senior notes is as follows
 
for the periods indicated:
 
Years Ended December 31,
(Dollars in millions)
Interest Paid
Payable Dates
2022
2021
2020
4.868
% Senior Notes
semi-annually
June 1/December 1
$
19
$
19
$
19
3.5
% Senior Notes
semi-annually
April 15/October 15
35
35
8
3.125
% Senior Notes
semi-annually
April 15/October 15
32
8
-
$
86
$
62
$
28
(Some amounts may not reconcile due to rounding.)
7.
 
LONG-TERM SUBORDINATED
 
NOTES
 
The
 
table
 
below
 
displays
 
Holdings’
 
outstanding
 
fixed
 
to
 
floating
 
rate
 
long-term
 
subordinated
 
notes.
 
Market
value
 
is
 
based
 
on
 
quoted
 
market
 
prices,
 
but
 
due
 
to
 
limited
 
trading
 
activity,
 
these
 
subordinated
 
notes
 
are
considered Level 2 in the fair value
 
hierarchy.
 
Maturity Date
December 31, 2022
December 31, 2021
Original
Consolidated
Consolidated
Principal
Balance Sheet
Balance Sheet
(Dollars in millions)
Date Issued
Amount
Scheduled
Final
Amount
Market Value
Amount
Market Value
Long-term subordinated notes
4/26/2007
$
400
5/15/2037
5/1/2067
$
218
$
187
$
224
$
216
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 November
 
15, 2022
to February 14, 2023 is
6.99
%.
 
Holdings may redeem the
 
long-term subordinated
 
notes on or after May
 
15, 2017, in whole or in
 
part at
100
% of
the principal amount
 
plus accrued and unpaid
 
interest; however,
 
redemption on or
 
after the scheduled
 
maturity
date and
 
prior to
May 1, 2047
 
is subject
 
to a
 
replacement
 
capital covenant.
 
This covenant
 
is for
 
the benefit
 
of
certain
 
senior
 
note
 
holders
 
and
 
it
 
mandates
 
that
 
Holdings
 
receive
 
proceeds
 
from
 
the
 
sale
 
of
 
another
subordinated
 
debt issue,
 
of at
 
least similar
 
size, before
 
it may
 
redeem the
 
subordinated
 
notes.
 
The Company’s
4.868
% senior
 
notes due
 
on
June 1, 2044
,
3.5
% senior
 
notes due
 
on
October 15, 2050
 
and
3.125
% senior
 
notes
due
 
on
October 15, 2052
 
are
 
the
 
Company’s
 
long-term
 
indebtedness
 
that
 
rank
 
senior
 
to
 
the
 
long-term
subordinated notes.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
F-41
In
 
2009,
 
the
 
Company
 
had
 
reduced
 
its
 
outstanding
 
amount
 
of
 
long-term
 
subordinated
 
notes
 
through
 
the
initiation
 
of a
 
cash tender
 
offer for
 
any and
 
all of
 
the long-term
 
subordinated
 
notes.
 
In addition,
 
the Company
repurchased
 
and
 
retired
 
$
6
 
million
 
of
 
the
 
outstanding
 
long-term
 
subordinated
 
notes
 
for
 
the
 
year
 
ended
December 31, 2022.
 
The Company realized a gain
 
of $
1
 
million on the repurchases made during 2022.
Interest
 
expense
 
incurred
 
in
 
connection
 
with
 
these
 
long-term
 
subordinated
 
notes
 
is
 
as follows
 
for
 
the
 
periods
indicated:
 
Years Ended December 31,
(Dollars in millions)
2022
2021
2020
Interest expense incurred
$
9
$
6
$
8
8.
 
COLLATERALIZED REINSURANCE
 
AND TRUST AGREEMENTS
Certain
 
subsidiaries
 
of
 
Group
 
have
 
established
 
trust
 
agreements,
 
which
 
effectively
 
use
 
the
 
Company’s
investments
 
as collateral,
 
as security
 
for assumed
 
losses payable
 
to certain
 
non-affiliated
 
ceding companies.
 
At
December 31,
 
2022, the
 
total amount
 
on deposit
 
in trust
 
accounts was
 
$
2.4
 
billion, which
 
includes $
122
 
million
of restricted
 
cash.
 
At December
 
31, 2021, the
 
total amount
 
on deposit
 
in trust
 
accounts was
 
$
1.7
 
billion, which
includes $
190
 
million of restricted cash.
 
The Company
 
reinsures
 
some of
 
its catastrophe
 
exposures
 
with the
 
segregated
 
accounts
 
of Mt.
 
Logan
 
Re.
 
Mt.
Logan Re is
 
a Collateralized
 
insurer registered
 
in Bermuda and
100
% of the voting
 
common shares
 
are owned by
Group.
 
Each segregated
 
account invests
 
predominantly in
 
a diversified
 
set of catastrophe
 
exposures, diversified
by risk/peril and across different
 
geographic regions globally.
 
The
 
following
 
table
 
summarizes
 
the
 
premiums
 
and
 
losses
 
that
 
are
 
ceded
 
by
 
the
 
Company
 
to
 
Mt.
 
Logan
 
Re
segregated accounts and
 
assumed by the Company from Mt. Logan
 
Re segregated accounts.
 
Years Ended December 31,
Mt. Logan Re Segregated Accounts
2022
2021
2020
(Dollars in millions)
Ceded written premiums
201
341
303
Ceded earned premiums
206
333
306
Ceded losses and LAE
191
282
241
Assumed written premiums
5
12
19
Assumed earned premiums
5
12
19
Effective
 
April
 
1,
 
2018,
 
the
 
Company
 
entered
 
into
 
a
 
retroactive
 
reinsurance
 
transaction
 
with
 
one
 
of
 
the
 
Mt.
Logan
 
Re
 
segregated
 
accounts
 
to
 
retrocede
 
$
269
 
million
 
of
 
casualty
 
reserves
 
held
 
by
 
Bermuda
 
Re
 
related
 
to
accident years
2002
 
through
2015
.
 
As consideration
 
for entering
 
the agreement,
 
the Company
 
transferred
 
cash
of
 
$
252
 
million
 
to
 
the
 
Mt.
 
Logan
 
Re
 
segregated
 
account.
 
The
 
maximum
 
liability
 
to
 
be
 
retroceded
 
under
 
the
agreement
 
will
 
be
 
$
319
 
million.
 
The
 
Company
 
will
 
retain
 
liability
 
for
 
any
 
amounts
 
exceeding
 
the
 
maximum
liability.
 
The
 
Company
 
will
 
retain
 
liability
 
for
 
any
 
amounts
 
exceeding
 
the
 
maximum
 
liability.
 
Effective
 
July
 
1,
2022, the Company has commuted this reinsurance
 
agreement with Mt. Logan segregated
 
account.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
F-42
The
 
Company
 
entered
 
into
 
various
 
collateralized
 
reinsurance
 
agreements
 
with
 
Kilimanjaro
 
Re
 
Limited
(“Kilimanjaro”),
 
a
 
Bermuda
 
based
 
special
 
purpose
 
reinsurer,
 
to
 
provide
 
the
 
Company
 
with
 
catastrophe
reinsurance
 
coverage.
 
These
 
agreements
 
are
 
multi-year
 
reinsurance
 
contracts
 
which
 
cover
 
named
 
storm
 
and
earthquake events.
 
The table below summarizes the various
 
agreements.
 
 
(Dollars in millions)
Class
Description
Effective Date
Expiration
Date
Limit
Coverage Basis
Series 2018-1 Class A-2
US, Canada, Puerto Rico – Named Storm and Earthquake
 
Events
4/30/2018
5/5/2023
$
63
Aggregate
Series 2018-1 Class B-2
US, Canada, Puerto Rico – Named Storm and Earthquake
 
Events
4/30/2018
5/5/2023
200
Aggregate
Series 2019-1 Class A-1
US, Canada, Puerto Rico – Named Storm and Earthquake
 
Events
12/12/2019
12/19/2023
150
Occurrence
Series 2019-1 Class B-1
US, Canada, Puerto Rico – Named Storm and Earthquake
 
Events
12/12/2019
12/19/2023
275
Aggregate
Series 2019-1 Class A-2
US, Canada, Puerto Rico – Named Storm and Earthquake
 
Events
12/12/2019
12/19/2024
150
Occurrence
Series 2019-1 Class B-2
US, Canada, Puerto Rico – Named Storm and Earthquake
 
Events
12/12/2019
12/19/2024
275
Aggregate
Series 2021-1 Class A-1
US, Canada, Puerto Rico – Named Storm and Earthquake
 
Events
4/8/2021
4/21/2025
150
Occurrence
Series 2021-1 Class B-1
US, Canada, Puerto Rico – Named Storm and Earthquake
 
Events
4/8/2021
4/21/2025
85
Aggregate
Series 2021-1 Class C-1
US, Canada, Puerto Rico – Named Storm and Earthquake
 
Events
4/8/2021
4/21/2025
85
Aggregate
Series 2021-1 Class A-2
US, Canada, Puerto Rico – Named Storm and Earthquake
 
Events
4/8/2021
4/20/2026
150
Occurrence
Series 2021-1 Class B-2
US, Canada, Puerto Rico – Named Storm and Earthquake
 
Events
4/8/2021
4/20/2026
90
Aggregate
Series 2021-1 Class C-2
US, Canada, Puerto Rico – Named Storm and Earthquake
 
Events
4/8/2021
4/20/2026
90
Aggregate
Series 2022-1 Class A
US, Canada, Puerto Rico – Named Storm and Earthquake
 
Events
6/22/2022
6/22/2025
300
Aggregate
Total available limit as of
 
December 31, 2022
$
2,063
Recoveries
 
under
 
these
 
collateralized
 
reinsurance
 
agreements
 
with
 
Kilimanjaro
 
are
 
primarily
 
dependent
 
on
estimated
 
industry
 
level insured
 
losses
 
from covered
 
events,
 
as well
 
as, the
 
geographic
 
location
 
of the
 
events.
 
The
 
estimated
 
industry
 
level
 
of
 
insured
 
losses
 
is
 
obtained
 
from
 
published
 
estimates
 
by
 
an
 
independent
recognized
 
authority
 
on
 
insured
 
property
 
losses.
 
Currently,
 
none
 
of
 
the
 
published
 
insured
 
loss
 
estimates
 
for
catastrophe
 
events
 
during
 
the applicable
 
covered
 
periods
 
of the
 
various
 
agreements
 
have
 
exceeded
 
the
 
single
event retentions or aggregate
 
retentions under the terms of the agreements
 
that would result in a recovery.
 
Kilimanjaro
 
has
 
financed the
 
various
 
property
 
catastrophe
 
reinsurance
 
coverages
 
by
 
issuing catastrophe
 
bonds
to
 
unrelated,
 
external
 
investors.
 
The
 
proceeds
 
from
 
the
 
issuance
 
of
 
the
 
Notes
 
listed
 
below
 
are
 
held
 
in
reinsurance trusts
 
throughout the
 
duration of
 
the applicable reinsurance
 
agreements and
 
invested
 
solely in U.S.
government money market
 
funds with a rating of at least
 
“AAAm” by Standard
 
& Poor’s.
 
(Dollars in millions)
Note Series
Issue Date
Maturity Date
Amount
Series 2018-1 Class A-2
4/30/2018
5/5/2023
$
63
Series 2018-1 Class B-2
4/30/2018
5/5/2023
200
Series 2019-1 Class A-1
12/12/2019
12/19/2023
150
Series 2019-1 Class B-1
12/12/2019
12/19/2023
275
Series 2019-1 Class A-2
12/12/2019
12/19/2024
150
Series 2019-1 Class B-2
12/12/2019
12/19/2024
275
Series 2021-1 Class A-1
4/8/2021
4/21/2025
150
Series 2021-1 Class B-1
4/8/2021
4/21/2025
85
Series 2021-1 Class C-1
4/8/2021
4/21/2025
85
Series 2021-1 Class A-2
4/8/2021
4/20/2026
150
Series 2021-1 Class B-2
4/8/2021
4/20/2026
90
Series 2021-1 Class C-2
4/8/2021
4/20/2026
90
Series 2022-1 Class A
6/22/2022
6/22/2025
300
$
2,063
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
F-43
9.
 
LEASES
The Company
 
enters into
 
lease agreements
 
for real
 
estate
 
that is
 
primarily used
 
for office
 
space in
 
the ordinary
course of business.
 
These leases are
 
accounted for
 
as operating
 
leases, whereby lease
 
expense is recognized
 
on
a straight-line basis over the
 
term of the lease.
 
Most leases include an option to extend
 
or renew the lease term.
 
The exercise
 
of the renewal
 
is at the Company’s
 
discretion.
 
The operating lease
 
liability includes lease payments
related
 
to
 
options
 
to
 
extend
 
or
 
renew
 
the
 
lease
 
term
 
if
 
the
 
Company
 
is
 
reasonably
 
certain
 
of
 
exercise
 
those
options.
 
The Company,
 
in determining the present
 
value of lease payments
 
utilizes either the rate
 
implicit in the
lease if
 
that
 
rate
 
is readily
 
determinable
 
or the
 
Company’s
 
incremental
 
secured
 
borrowing
 
rate
 
commensurate
with terms of the underlying lease.
Supplemental information related
 
to operating leases is as follows
 
for the periods indicated:
 
Year Ended December 31,
(Dollars in thousands)
2022
2021
Lease expense incurred:
Operating lease cost
$
28
$
27
At December 31,
(Dollars in millions)
2022
2021
Operating lease right of use assets
$
128
$
139
Operating lease liabilities
147
158
Year Ended December 31,
(Dollars in millions)
2022
2021
Operating cash flows from operating leases
$
(20)
$
(18)
At December 31,
2022
2021
Weighted average remaining operating lease term
10.8
 
years
11.6 years
Weighted average discount rate on operating leases
4.08
%
4.08
%
Maturities of the existing lease liabilities are expected
 
to occur as follows:
 
(Dollars in thousands)
2023
$
21
2024
21
2025
18
2026
16
2027
16
Thereafter
95
Undiscounted lease payments
187
Less:
 
present value adjustment
40
Total operating lease liability
$
147
10.
 
INCOME TAXES
Under Bermuda
 
law,
 
no income
 
or capital
 
gains taxes
 
are imposed
 
on Group
 
and its
 
Bermuda Subsidiaries.
 
The
Minister of Finance of
 
Bermuda has assured
 
Group and its Bermuda
 
subsidiaries that, pursuant
 
to The Exempted
Undertakings
 
Tax
 
Protection
 
Amendment
 
Act
 
of
 
2011,
 
they
 
will
 
be
 
exempt
 
until
 
2035
 
from
 
imposition
 
of
 
any
such taxes.
All
 
of
 
the
 
income
 
of
 
Group's
 
non-Bermuda
 
subsidiaries
 
is
 
subject
 
to
 
the
 
applicable
 
federal,
 
foreign,
 
state,
 
and
local
 
taxes
 
on
 
corporations.
 
Additionally,
 
the
 
income
 
of
 
the
 
foreign
 
branches
 
of
 
the
 
Company's
 
insurance
operating
 
companies,
 
in
 
particular
 
the
 
UK
 
branch
 
of
 
Bermuda
 
Re,
 
is
 
subject
 
to
 
various
 
rates
 
of
 
income
 
tax.
Group's U.S.
 
subsidiaries conduct
 
business in
 
and are
 
subject to
 
taxation
 
in the
 
U.S. Should
 
the U.S.
 
subsidiaries
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
F-44
distribute
 
current
 
or
 
accumulated
 
earnings
 
and
 
profits
 
in
 
the
 
form
 
of
 
dividends
 
or
 
otherwise,
 
the
 
Company
would
 
be
 
subject
 
to
 
an
 
accrual
 
of
5
%
 
U.S.
 
withholding
 
tax.
 
Currently,
 
however,
 
no
 
withholding
 
tax
 
has
 
been
accrued
 
with
 
respect
 
to
 
such
 
un-remitted
 
earnings
 
as
 
management
 
has
 
no
 
intention
 
of
 
remitting
 
them.
 
The
cumulative amount
 
that would
 
be subject
 
to withholding
 
tax, if
 
distributed,
 
is not
 
practicable to
 
compute.
 
The
provision
 
for
 
income
 
taxes
 
in
 
the
 
consolidated
 
statement
 
of
 
operations
 
and
 
comprehensive
 
income
 
(loss)
 
has
been determined in
 
accordance with the
 
individual income of each
 
entity and the respective
 
applicable tax
 
laws.
 
The provision reflects the permanent differences
 
between financial and taxable income relevant
 
to each entity.
 
The
 
Coronavirus
 
Aid,
 
Relief,
 
and
 
Economic
 
Security
 
(“CARES”)
 
Act,
 
enacted
 
on
 
March
 
27,
 
2020,
 
provided
 
that
U.S.
 
companies
 
could
 
carryback
 
for
 
five
 
years
 
net
 
operating
 
losses
 
incurred
 
in
 
2018,
 
2019
 
and/or
 
2020.
 
This
beneficial
 
tax
 
provision
 
in
 
the
 
CARES
 
Act
 
enabled
 
the
 
Company
 
to
 
carryback
 
its
 
significant
 
2018 net
 
operating
losses to prior tax years
 
with higher effective tax
 
rates of
35
% versus
21
% in 2018 and later years.
 
As a result, the
Company
 
was
 
able
 
to
 
record
 
a
 
net
 
income
 
tax
 
benefit
 
from
 
the
 
five-year
 
carryback
 
of
 
$
33
 
million
 
and
 
obtain
federal income tax cash
 
refunds of $
183
 
million including interest in 2020.
 
On
 
August
 
16,
 
2022,
 
the
 
Inflation
 
Reduction
 
Act
 
of
 
2022
 
(“IRA”)
 
was
 
enacted.
 
We
 
have
 
evaluated
 
the
 
tax
provisions
 
of
 
the
 
IRA,
 
the
 
most
 
significant
 
of
 
which
 
are
 
the
 
corporate
 
alternative
 
minimum
 
tax
 
and
 
the
 
share
repurchase excise tax
 
and do not expect the legislation to have
 
a material impact on our results
 
of operations. As
the IRS issues additional guidance, we will evaluate
 
any impact to our consolidated
 
financial statements.
The significant components of the provision
 
are as follows for the periods indicated:
 
Years Ended December 31,
(Dollars in millions)
2022
2021
2020
Current tax expense (benefit):
U.S.
$
76
$
124
$
(108)
Non-U.S.
5
2
3
Total current tax expense (benefit)
81
126
(105)
Deferred tax expense (benefit):
U.S.
(90)
38
179
Non-U.S.
-
3
(3)
Total deferred tax expense
 
(benefit)
(90)
41
176
Total income tax expense (benefit)
$
(9)
$
167
$
71
(Some amounts may not reconcile due to rounding.)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
F-45
The
 
weighted
 
average
 
expected
 
tax
 
provision
 
has
 
been
 
calculated
 
using
 
the
 
pre-tax
 
income
 
(loss)
 
in
 
each
jurisdiction
 
multiplied
 
by
 
that
 
jurisdiction's
 
applicable
 
statutory
 
tax
 
rate.
 
Reconciliation
 
of
 
the
 
difference
between the
 
provision for
 
income taxes
 
and the expected
 
tax provision
 
at the weighted
 
average tax
 
rate for
 
the
periods indicated is provided below:
Years Ended December 31,
2022
2021
2020
(Dollars in millions)
U.S.
Non-U.S.
U.S.
Non-U.S.
U.S.
Non-U.S.
Underwriting gain (loss)
$
(81)
$
558
$
(83)
$
307
$
24
$
(278)
Net investment income
607
223
708
457
340
303
Net realized capital gains (losses)
(426)
(29)
266
(8)
235
33
Net derivative gain (loss)
-
-
-
3
-
2
Corporate expenses
(26)
(35)
(33)
(34)
(16)
(25)
Interest, fee and bond
 
issue cost amortization expense
(101)
-
(70)
-
(36)
(1)
Other income (expense)
(6)
(96)
23
11
(15)
20
Pre-tax income (loss)
$
(32)
$
620
$
811
$
735
$
532
$
53
Expected tax provision at the applicable
 
statutory rate(s)
(9)
-
170
14
112
(10)
Increase (decrease) in taxes resulting
 
from:
Tax exempt
 
income
(4)
-
(4)
-
(4)
-
Dividend received deduction
(3)
-
(1)
-
(1)
-
Proration
1
-
1
-
1
-
Affiliated preferred stock
 
dividends
7
-
7
-
7
-
Creditable foreign premium tax
(11)
-
(13)
-
(12)
-
Tax audit settlement
-
-
-
-
-
-
Share-based compensation tax benefits
 
formerly in APIC
(3)
-
(2)
-
(3)
-
Impact of CARES Act
-
-
-
-
(32)
-
Valuation allowance
-
5
-
(10)
-
15
Change in uncertain tax positions
-
-
-
-
-
-
Other
5
-
3
1
3
(5)
Total income tax
 
provision
$
(14)
$
5
$
161
$
5
$
71
$
-
(Some amounts may not reconcile due to rounding.)
At December 31, 2022, 2021 and 2020,
 
the Company had
no
 
uncertain tax positions.
 
The Company’s
 
2014 through
 
2018 U.S.
 
Federal
 
tax
 
returns
 
are
 
under audit
 
by the
 
IRS.
 
To
 
date,
 
the Company
has received
 
a significant
 
number of Information
 
Document Requests
 
(“IDRs”).
 
However,
 
the IRS has
 
not issued
any
 
Notice
 
of
 
Proposed
 
Adjustments
 
for
 
these
 
tax
 
years.
 
The
 
Company
 
had
 
filed
 
amended
 
tax
 
returns
requesting refunds for 2015 and
 
2016 for $
2
 
million and $
5
 
million, respectively.
 
Tax years
 
2019, 2020 and 2021 are open for examination
 
by the U.S. Federal income tax
 
jurisdiction.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
F-46
Deferred
 
Income
 
taxes
 
reflect
 
the
 
tax
 
effect
 
of
 
the
 
temporary
 
differences
 
between
 
the
 
value
 
of
 
assets
 
and
liabilities
 
for
 
financial
 
statement
 
purposes
 
and
 
such
 
values
 
are
 
measured
 
by
 
the
 
U.S.
 
tax
 
laws
 
and
regulations.
 
The principal
 
items making
 
up the
 
net deferred
 
income tax
 
assets/(liabilities) are
 
as follows
 
for the
periods indicated:
Years Ended December 31,
(Dollars in millions)
2022
2021
Deferred tax assets:
 
Net unrealized investment losses
$
218
$
-
 
Loss reserves
154
130
 
Unearned premium reserves
114
108
 
Lease liability
29
31
 
Net operating loss carryforward
28
20
 
Unrealized foreign currency losses
24
4
 
Investment impairments
12
6
 
Net unrealized losses on benefit plans
9
13
 
Equity compensation
8
8
 
Uncollectible reinsurance reserves
3
3
 
Foreign tax credits
3
22
 
Other assets
10
9
Total deferred tax assets
611
354
Deferred tax liabilities:
 
Deferred acquisition costs
105
99
 
Partnership investments
56
57
 
Right of use asset
25
27
 
Depreciation
16
4
 
Net fair value income
7
98
 
Benefit plan asset
3
2
 
Net unrealized investment gains
-
37
 
Other liabilities
8
6
Total deferred tax liabilities
220
329
Net deferred tax assets
392
25
 
Less:
 
Valuation allowance
(25)
(18)
Total net deferred tax
 
assets/(liabilities)
$
367
$
7
(Some amounts may not reconcile due to rounding.)
At
 
December 31,
 
2022 and
 
2021, the
 
Company
 
had $
25
 
million and
 
$
18
 
million of
 
Valuation
 
Allowance (“VA”),
respectively.
 
The VA is a
 
result of our conclusion
 
under US GAAP accounting principles
 
that the UK, Netherlands,
Ireland, Chile, Switzerland,
 
France, Germany,
 
Singapore, and
 
U.S. jurisdictions could
 
not demonstrate
 
that it was
more likely
 
than not
 
that the
 
related deferred
 
tax assets
 
will be realized.
 
This was
 
primarily due
 
to factors
 
such
as cumulative losses
 
in recent years
 
related to
 
COVID 19 and
 
market conditions
 
and the inability
 
to demonstrate
overall
 
profitability
 
within
 
the
 
specific
 
jurisdiction.
 
During
 
the
 
year
 
ended
 
December
 
31,
 
2022,
 
the
 
Company
recorded
 
an
 
overall
 
decrease
 
in
 
its
 
VA
 
of
 
$
7
 
million.
 
Tax
 
effected
 
UK
 
Net
 
Operating
 
Losses
 
(“NOLs”)
 
of
 
$
16
million do not
 
expire.
 
Tax
 
effected
 
Irish NOLs
 
of $
4
 
million do not
 
expire.
 
Tax
 
effected
 
Swiss NOLs
 
of $
5
 
million
begin to
 
expire
 
in
2028
.
 
The remaining
 
tax
 
effected
 
NOLs of
 
$
3
 
million arose
 
in various
 
jurisdictions and
 
begin
expiring in 2027.
 
Note that not all NOLs had a VA
 
up against them.
 
At December
 
31, 2022,
 
and 2021,
 
the Company
 
had $
3
 
million and
 
$
29
 
million respectively
 
of foreign
 
tax credit
(“FTC”) carryforwards, all related to
 
the branch basket.
 
The branch basket FTCs begin to
 
expire in
2030
.
 
At December 31, 2022, $
218
 
million of the Company’s
 
deferred tax asset
 
relates primarily to unrealized
 
losses on
available
 
for
 
sale fixed
 
maturity
 
securities.
 
The unrealized
 
losses
 
on available
 
for
 
sale fixed
 
maturity
 
securities
were a
 
result of
 
market conditions,
 
including rising
 
interest rates.
 
Ultimate realization
 
of the
 
deferred tax
 
asset
F-47
depends
 
on
 
the
 
Company’s
 
ability
 
and
 
intent
 
to
 
hold
 
the
 
available
 
for
 
sale
 
securities
 
until
 
they
 
recover
 
their
value or mature.
 
As of December 31, 2022, based on all the available
 
evidence, the Company has concluded
 
that
the deferred tax
 
asset related to
 
the unrealized losses
 
on the available for
 
sale fixed maturity
 
portfolio are, more
likely than not, expected to
 
be realized.
The Company
 
follows
 
ASU 2016-09
 
in
 
regard
 
to
 
the
 
treatment
 
of the
 
tax
 
effects
 
of share
 
-based
 
compensation
transactions.
 
ASU
 
2016-09
 
required
 
that
 
the
 
income
 
tax
 
effects
 
of
 
restricted
 
stock
 
vestings
 
and
 
stock
 
option
exercises
 
resulting
 
from the
 
change
 
in value
 
of share
 
-based compensation
 
awards
 
between the
 
grant
 
date
 
and
settlement
 
(vesting/exercise)
 
date be
 
recorded
 
as part
 
of income
 
tax
 
expense
 
(benefit) within
 
the consolidated
statements of operations
 
and comprehensive income
 
(loss).
 
Per ASU 2016-09, the Company
 
recorded excess
 
tax
benefits of $
2
 
million, $
2
 
million and $
3
 
million related
 
to restricted
 
stock vestings
 
and stock option
 
exercises
 
as
part
 
of
 
income
 
tax
 
expense
 
(benefit)
 
within
 
the
 
consolidated
 
statements
 
of
 
operations
 
and
 
comprehensive
income (loss) in 2022, 2021 and, 2020, respectively.
 
ASU 2016-09
 
does not
 
impact the
 
accounting treatment
 
of tax
 
benefits related
 
to dividends
 
on restricted
 
stock.
The tax benefits related to
 
the payment of dividends on restricted
 
stock have been recorded
 
as part of additional
paid-in
 
capital
 
in
 
the
 
shareholders'
 
equity
 
section
 
of
 
the
 
consolidated
 
balance
 
sheets
 
in
 
all
 
years.
 
The
 
tax
benefits related
 
to the
 
payment of
 
dividends on
 
restricted stock
 
were $
0.6
 
million, $
0.6
 
million and
 
$
0.6
 
million
in 2022, 2021 and 2020, respectively.
For
 
the
 
year
 
ended
 
December
 
31,
 
2022,
 
the
 
Company
 
considers
 
our
 
earnings
 
within
 
each
 
jurisdiction
 
to
 
be
indefinitely
 
reinvested.
 
Should
 
the
 
subsidiaries
 
distribute
 
current
 
or
 
accumulated
 
earnings
 
and
 
profits
 
in
 
the
form
 
of dividends
 
or otherwise,
 
the
 
Company
 
would
 
be subject
 
to
 
withholding
 
taxes.
 
The cumulative
 
amount
that would be subject to withholding tax,
 
if distributed, is not practicable to compute.
 
11.
 
REINSURANCE
The
 
Company
 
utilizes
 
reinsurance
 
agreements
 
to
 
reduce
 
its
 
exposure
 
to
 
large
 
claims
 
and
 
catastrophic
 
loss
occurrences.
 
These
 
agreements
 
provide
 
for
 
recovery
 
from
 
reinsurers
 
of
 
a
 
portion
 
of
 
losses
 
and
 
LAE
 
under
certain
 
circumstances
 
without
 
relieving
 
the Company
 
of its
 
underlying
 
obligations
 
to
 
the policyholders.
 
Losses
and LAE
 
incurred and
 
premiums earned
 
are reported
 
after deduction
 
for reinsurance.
 
In the
 
event that
 
one or
more of the reinsurers
 
were unable to meet their
 
obligations under these reinsurance
 
agreements, the Company
would
 
not
 
realize
 
the
 
full
 
value
 
of
 
the
 
reinsurance
 
recoverable
 
balances.
 
The
 
Company's
 
procedures
 
include
carefully
 
selecting
 
its
 
reinsurers,
 
structuring
 
agreements
 
to
 
provide
 
collateral
 
funds
 
where
 
necessary,
 
and
regularly
 
monitoring
 
the
 
financial
 
condition
 
and
 
ratings
 
of
 
its
 
reinsurers.
 
Reinsurance
 
recoverables
 
include
balances due
 
from reinsurance
 
companies and
 
are presented
 
net of
 
an allowance
 
for uncollectible
 
reinsurance.
 
Reinsurance
 
recoverables
 
include
 
an
 
estimate
 
of
 
the
 
amount
 
of
 
gross
 
losses
 
and
 
loss
 
adjustment
 
expense
reserves that may
 
be ceded under the
 
terms of the reinsurance
 
agreements, including
 
incurred but not
 
reported
unpaid
 
losses.
 
The
 
Company’s
 
estimate
 
of
 
losses
 
and
 
loss
 
adjustment
 
expense
 
reserves
 
ceded
 
to
 
reinsurers
 
is
based
 
on
 
assumptions
 
that
 
are
 
consistent
 
with
 
those
 
used
 
in
 
establishing
 
the
 
gross
 
reserves
 
for
 
amounts
 
the
Company owes
 
to its
 
claimants. The
 
Company estimates
 
its ceded
 
reinsurance
 
receivable based
 
on the terms
 
of
any applicable
 
facultative
 
and treaty
 
reinsurance, including
 
an estimate
 
of how incurred
 
but not reported
 
losses
will
 
ultimately
 
be
 
ceded
 
under
 
reinsurance
 
agreements.
 
Accordingly,
 
the
 
Company’s
 
estimate
 
of
 
reinsurance
recoverables
 
is subject
 
to
 
similar
 
risks
 
and uncertainties
 
as the
 
estimate
 
of the
 
gross
 
reserve
 
for
 
unpaid
 
losses
and
 
loss
 
adjustment
 
expenses.
 
The
 
Company
 
may
 
hold
 
partial
 
collateral,
 
including
 
letters
 
of
 
credit
 
and
 
funds
held, under these agreements.
 
See also Note 1C, Note 3 and Note 8.
Balances
 
are
 
considered
 
past
 
due
 
when
 
amounts
 
that
 
have
 
been
 
billed
 
are
 
not
 
collected
 
within
 
contractually
stipulated
 
time
 
periods,
 
generally
 
30,
 
60
 
or
 
90
 
days.
 
To
 
manage
 
reinsurer
 
credit
 
risk,
 
a
 
reinsurance
 
security
review committee
 
evaluates
 
the credit
 
standing, financial
 
performance, management
 
and operational
 
quality of
each
 
potential
 
reinsurer.
 
In
 
placing
 
reinsurance,
 
the
 
Company
 
considers
 
the
 
nature
 
of
 
the
 
risk
 
reinsured,
including the expected liability payout
 
duration, and establishes limits tiered
 
by reinsurer credit rating.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
F-48
Where
 
its
 
contracts
 
permit,
 
the
 
Company
 
secures
 
future
 
claim
 
obligations
 
with
 
various
 
forms
 
of
 
collateral
 
or
other credit
 
enhancement, including
 
irrevocable letters
 
of credit,
 
secured trusts,
 
funds held accounts
 
and group
wide offsets.
 
See Note 1C for discussion of allowance on reinsurance
 
recoverables.
Insurance
 
companies, including
 
reinsurers,
 
are regulated
 
and hold
 
risk-based
 
capital
 
to mitigate
 
the risk
 
of loss
due to economic
 
factors
 
and other risks.
 
Non-U.S. reinsurers
 
are either
 
subject to
 
a capital
 
regime substantively
equivalent to domestic
 
insurers or we hold
 
collateral to support
 
collection of reinsurance
 
receivable.
 
As a result,
there is limited history of losses from insurer
 
defaults.
 
Premiums
 
written
 
and
 
earned
 
and
 
incurred
 
losses
 
and
 
LAE
 
are
 
comprised
 
of
 
the
 
following
 
for
 
the
 
periods
indicated:
Years Ended December 31,
(Dollars in millions)
2022
2021
2020
Written premiums:
Direct
$
4,602
$
3,988
$
3,218
Assumed
9,350
9,062
7,264
Ceded
(1,608)
(1,604)
(1,365)
Net written premiums
$
12,344
$
11,446
$
9,117
Premiums earned:
Direct
$
4,218
$
3,589
$
3,028
Assumed
9,082
8,315
7,055
Ceded
(1,513)
(1,498)
(1,401)
Net premiums earned
$
11,787
$
10,406
$
8,682
Incurred losses and LAE:
Direct
$
2,804
$
2,385
$
2,141
Assumed
6,285
5,741
5,164
Ceded
(988)
(735)
(754)
Net incurred losses and LAE
$
8,100
$
7,391
$
6,551
12.
 
OTHER COMPREHENSIVE INCOME (LOSS)
The following
 
table presents
 
the components
 
of comprehensive
 
income (loss) in
 
the consolidated
 
statements
 
of
operations for the periods indicated:
 
 
Years Ended December 31,
2022
2021
2020
(Dollars in millions)
Before Tax
Tax Effect
Net of Tax
Before Tax
Tax Effect
Net of Tax
Before Tax
Tax Effect
Net of Tax
Unrealized appreciation (depreciation) ("URA(D)") on
securities - non-credit related
$
(2,332)
$
295
$
(2,037)
$
(548)
$
59
$
(488)
$
463
$
(40)
$
423
Reclassification of net realized losses (gains) included in
net income (loss)
107
(18)
89
5
(2)
4
2
(6)
(3)
Foreign currency translation adjustments
(82)
5
(77)
(64)
2
(62)
90
(4)
86
Benefit plan actuarial net gain (loss)
18
(4)
15
22
(5)
17
(7)
1
(6)
Reclassification of benefit plan liability amortization
included in net income (loss)
3
(1)
2
8
(2)
6
8
(2)
6
Total other comprehensive income
 
(loss)
$
(2,285)
$
277
$
(2,008)
$
(577)
$
54
$
(523)
$
556
$
(49)
$
507
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
F-49
The following table presents details
 
of the amounts reclassified from AOCI for
 
the periods indicated:
 
Years Ended
December 31,
Affected line item within the statements
 
of
AOCI component
2022
2021
operations and comprehensive
 
income (loss)
(Dollars in millions)
URA(D) on securities
$
107
$
5
Other net realized capital gains (losses)
(18)
(2)
Income tax expense (benefit)
$
89
$
4
Net income (loss)
Benefit plan net gain (loss)
$
3
$
8
Other underwriting expenses
(1)
(2)
Income tax expense (benefit)
$
2
$
6
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:
 
Years Ended
December 31,
(Dollars in millions)
 
2022
2021
Beginning balance of URA (D) on securities
$
239
$
724
Current period change in URA(D) of investments - non-credit related
(1,948)
(485)
Ending balance of URA(D) on securities
(1,709)
239
Beginning balance of foreign currency translation adjustments
(177)
(115)
Current period change in foreign currency translation adjustments
(77)
(62)
Ending balance of foreign currency translation adjustments
 
(254)
(177)
Beginning balance of benefit plan net gain (loss)
(50)
(74)
Current period change in benefit plan net gain (loss)
17
23
Ending balance of benefit plan net gain (loss)
(33)
(50)
Ending balance of accumulated other comprehensive income (loss)
$
(1,996)
$
12
(Some amounts may not reconcile due to rounding.)
13.
 
EMPLOYEE BENEFIT PLANS
Defined Benefit Pension Plans.
The
 
Company
 
maintains
 
both
 
qualified
 
and
 
non-qualified
 
defined
 
benefit
 
pension
 
plans
 
for
 
its
 
U.S.
 
employees
employed prior to April
 
1, 2010.
 
Generally,
 
the Company computes
 
the benefits based on
 
average earnings
 
over
a
 
period
 
prescribed
 
by
 
the
 
plans
 
and
 
credited
 
length
 
of
 
service.
 
The
 
Company’s
 
non-qualified
 
defined
 
benefit
pension plan provided
 
compensating pension benefits
 
for participants whose
 
benefits have been curtailed
 
under
the
 
qualified
 
plan
 
due
 
to
 
Internal
 
Revenue
 
Code
 
limitations.
 
Effective
 
January 1,
 
2018,
 
participants
 
of
 
the
Company’s non-qualified defined
 
benefit pension plan may no longer accrue additional
 
service benefits.
Although
 
not
 
required
 
to
 
make
 
contributions
 
under
 
IRS
 
regulations,
 
the
 
following
 
table
 
summarizes
 
the
Company’s contributions
 
to the defined benefit pension plans for the periods
 
indicated:
Years Ended December 31,
(Dollars in millions)
2022
2021
2020
Company contributions
$
6
$
4
$
7
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
F-50
The following table summarizes the
 
Company’s pension expense
 
for the periods indicated:
Years Ended December 31,
(Dollars in millions)
2022
2021
2020
Pension expense
$
(2)
$
3
$
8
The
 
following
 
table
 
summarizes
 
the
 
status
 
of
 
these
 
defined
 
benefit
 
plans
 
for
 
U.S.
 
employees
 
for
 
the
 
periods
indicated:
Years Ended December 31,
(Dollars in millions)
2022
2021
Change in projected benefit obligation:
Benefit obligation at beginning of year
$
403
$
404
Service cost
9
11
Interest cost
10
8
Actuarial (gain)/loss
(115)
(9)
Curtailment
-
-
Benefits paid
(15)
(12)
Projected benefit obligation at end of year
291
403
Change in plan assets:
Fair value of plan assets at beginning of year
377
354
Actual return on plan assets
(83)
31
Actual contributions during the year
6
4
Administrative expenses paid
-
-
Benefits paid
(15)
(12)
Fair value of plan assets at end of year
285
377
Funded status at end of year
$
(6)
$
(25)
(Some amounts may not reconcile due
 
to rounding.)
Amounts recognized in the consolidated
 
balance sheets for the periods indicated:
At December 31,
(Dollars in millions)
2022
2021
Other assets (due beyond one year)
$
1
$
-
Other liabilities (due within one year)
(1)
(1)
Other liabilities (due beyond one year)
(6)
(24)
Net amount recognized in the consolidated balance sheets
$
(6)
$
(25)
(Some amounts may not reconcile due to rounding.)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
F-51
Amounts not yet reflected in
 
net periodic benefit cost and included in accumulated
 
other comprehensive income
(loss) for the periods indicated:
At December 31,
(Dollars in millions)
2022
2021
Accumulated income (loss)
$
(56)
$
(68)
Accumulated other comprehensive income (loss)
$
(56)
$
(68)
(Some amounts may not reconcile due to rounding.)
Other changes in other comprehensive income (loss)
 
for the periods indicated are as
 
follows:
Years Ended December 31,
(Dollars in millions)
2022
2021
Other comprehensive income (loss) at December 31, prior year
$
(68)
$
(92)
Net gain (loss) arising during period
7
15
Recognition of amortizations in net periodic benefit cost:
Actuarial loss
4
9
Curtailment loss recognized
-
-
Other comprehensive income (loss) at December 31, current year
$
(56)
$
(68)
(Some amounts may not reconcile due to rounding.)
Net periodic benefit cost for U.S.
 
employees included the following components
 
for the periods indicated:
Years Ended December 31,
(Dollars in millions)
2022
2021
2020
Service cost
$
9
$
11
$
10
Interest cost
10
8
10
Expected return on assets
(25)
(24)
(21)
Amortization of actuarial loss from earlier periods
4
8
9
Settlement
1
-
1
Net periodic benefit cost
$
(2)
$
3
$
8
Other changes recognized in other comprehensive income (loss):
Other comprehensive income (loss) attributable to change from prior year
(12)
(24)
Total recognized in net periodic benefit cost and other
comprehensive income (loss)
$
(14)
$
(21)
(Some amounts may not reconcile due to rounding.)
The weighted
 
average
 
discount rates
 
used to determine
 
net periodic
 
benefit cost
 
for 2022,
 
2021 and 2020
 
were
2.86
%,
2.55
% and
3.28
%, respectively.
 
The rate
 
of
 
compensation
 
increase
 
used
 
to
 
determine
 
the
 
net
 
periodic
benefit cost for
 
2022, 2021 and 2020
 
was
4.00
%.
 
The expected long-term
 
rate of return
 
on plan assets for
 
2022,
2021 and 2020 was
6.75
%,
7.00
% and
7.00
% respectively.
 
The
 
weighted
 
average
 
discount
 
rates
 
used
 
to
 
determine
 
the
 
actuarial
 
present
 
value
 
of
 
the
 
projected
 
benefit
obligation for 2022, 2021 and 2020 were
5.25
%,
2.86
% and
2.55
%, respectively.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
F-52
The following table summarizes the
 
accumulated benefit obligation for
 
the periods indicated:
 
At December 31,
(Dollars in millions)
2022
2021
Qualified Plan
$
258
$
339
Non-qualified Plan
6
12
Total
$
264
$
352
(Some amounts may not reconcile due to rounding.)
The following
 
table displays
 
the plans
 
with projected
 
benefit obligations
 
in excess
 
of plan
 
assets for
 
the periods
indicated:
At December 31,
(Dollars in millions)
2022
2021
Qualified Plan
Projected benefit obligation
$
284
$
390
Fair value of plan assets
285
377
Non-qualified Plan
Projected benefit obligation
$
6
$
12
Fair value of plan assets
-
-
The
 
following
 
table
 
displays
 
the
 
plans
 
with
 
accumulated
 
benefit
 
obligations
 
in
 
excess
 
of
 
plan
 
assets
 
for
 
the
periods indicated:
At December 31,
(Dollars in millions)
2022
2021
Qualified Plan
Accumulated benefit obligation
$
-
$
-
Fair value of plan assets
-
-
Non-qualified Plan
Accumulated benefit obligation
$
6
$
12
Fair value of plan assets
-
-
The following table displays
 
the expected benefit payments in
 
the periods indicated:
(Dollars in millions)
2023
$
13
2024
14
2025
14
2026
15
2027
17
Next 5 years
100
Plan assets
 
consist of
 
shares in
 
investment
 
trusts with
74
%,
24
%,
1
% and
1
% of the
 
underlying assets
 
consisting
of
 
equity
 
securities,
 
fixed
 
maturities,
 
limited
 
partnerships
 
and
 
cash,
 
respectively.
 
The
 
Company
 
manages
 
the
qualified
 
plan
 
investments
 
for
 
U.S.
 
employees.
 
The
 
assets
 
in
 
the
 
plan
 
consist
 
of
 
debt
 
and
 
equity
 
mutual
funds.
 
Due to the long term nature
 
of the plan, the target
 
asset allocation has historically
 
been
70
% equities and
30
% bonds.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
F-53
The following
 
tables present
 
the fair
 
value measurement
 
levels for
 
the qualified
 
plan assets
 
at fair
 
value for
 
the
periods indicated:
Fair Value Measurement Using:
Quoted Prices
in Active
Significant
Markets for
Other
Significant
Identical
Observable
Unobservable
Assets
Inputs
Inputs
(Dollars in millions)
December 31, 2022
(Level 1)
(Level 2)
(Level 3)
Assets:
Short-term investments, which approximates fair value (a)
$
4
$
4
$
-
$
-
Mutual funds, fair value
Fixed income (b)
68
68
-
-
Equities (c)
211
211
-
-
Total
$
283
$
283
$
-
$
-
(Some amounts may not reconcile due to rounding.)
(a)
This category includes high quality, short-term
 
money market instruments, which are issued and payable in
 
U.S. dollars.
(b)
This category includes fixed income funds, which invest in
 
investment grade securities of corporations, governments
 
and government agencies with approximately
70
% in U.S.
securities and
30
% in international securities.
(c)
This category includes funds, which invest in small, mid and multi-cap equity securities
 
including common stocks, securities convertible into common stock
 
and securities with
common stock characteristics, such as rights and warrants, with
 
approximately
50
% in U.S. equities and
50
% in international equities.
Fair Value Measurement Using:
Quoted Prices
in Active
Significant
Markets for
Other
Significant
Identical
Observable
Unobservable
Assets
Inputs
Inputs
(Dollars in millions)
December 31, 2021
(Level 1)
(Level 2)
(Level 3)
Assets:
Short-term investments, which approximates fair value (a)
$
3
$
3
$
-
$
-
Mutual funds, fair value
Fixed income (b)
85
85
-
-
Equities (c)
287
287
-
-
Total
$
375
$
375
$
-
$
-
(Some amounts may not reconcile due to rounding.)
(a)
This category includes high quality, short-term
 
money market instruments, which are issued and payable in
 
U.S. dollars.
(b)
This category includes fixed income funds, which invest in
 
investment grade securities of corporations, governments
 
and government agencies with approximately
70
% in U.S.
securities and
30
% in international securities.
(c)
This category includes funds, which invest in small, mid and multi-cap equity securities
 
including common stocks, securities convertible into common stock
 
and securities with
common stock characteristics, such as rights and warrants, with
 
approximately
50
% in U.S. equities and
50
% in international equities.
In addition, $
1.5
 
million and $
2.6
 
million of investments
 
which were recorded
 
as part of the
 
qualified plan assets
at
 
December 31,
 
2022
 
and
 
2021,
 
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.
No
 
contributions
 
were made
 
to the
 
qualified pension
 
benefit plan
 
for the
 
years
 
ended December 31,
 
2022 and
2021.
Defined Contribution Plans.
The
 
Company
 
also
 
maintains
 
both
 
qualified
 
and
 
non-qualified
 
defined
 
contribution
 
plans
 
(“Savings
 
Plan”
 
and
“Non-Qualified Savings
 
Plan”,
 
respectively) covering
 
U.S. employees.
 
Under the plans,
 
the Company
 
contributes
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
F-54
up
 
to
 
a
 
maximum
3
%
 
of
 
the
 
participants’
 
compensation
 
based
 
on
 
the
 
contribution
 
percentage
 
of
 
the
employee.
 
The Non-Qualified
 
Savings
 
Plan provides
 
compensating
 
savings
 
plan benefits
 
for participants
 
whose
benefits
 
have
 
been
 
curtailed
 
under
 
the
 
Savings
 
Plan
 
due
 
to
 
Internal
 
Revenue
 
Code
 
limitations.
 
In
 
addition,
effective
 
for new
 
hires (and
 
rehires) on
 
or after
 
April 1, 2010,
 
the Company
 
will contribute
 
between
3
% and
8
%
of
 
an
 
employee’s
 
earnings
 
for
 
each
 
payroll
 
period
 
based
 
on
 
the
 
employee’s
 
age.
 
These
 
contributions
 
will
 
be
100
%
 
vested
 
after
 
three
 
years.
 
The
 
Company
 
incurred
 
expenses
 
related
 
to
 
these
 
plans
 
of
 
$
18
 
million,
 
$
15
million and $
14
 
million for the years ended December 31,
 
2022, 2021 and 2020, respectively.
 
In
 
addition,
 
the
 
Company
 
maintains
 
several
 
defined
 
contribution
 
pension
 
plans
 
covering
 
non-U.S.
employees.
 
Each
 
international
 
office
 
maintains
 
a
 
separate
 
plan
 
for
 
the
 
non-U.S.
 
employees
 
working
 
in
 
that
location.
 
The Company contributes
 
various amounts based
 
on salary,
 
age and/or years
 
of service.
 
In the current
year,
 
the contributions
 
as a
 
percentage
 
of salary
 
for
 
the international
 
offices
 
ranged
 
from
4.3
% to
39.5
%.
 
The
contributions
 
are
 
generally
 
used
 
to
 
purchase
 
pension
 
benefits
 
from
 
local
 
insurance
 
providers.
 
The
 
Company
incurred expenses
 
related to
 
these plans
 
of $
4
 
million, $
3
 
million and
 
$
3
 
million for
 
the years
 
ended December
31, 2022, 2021 and 2020, respectively.
 
Post-Retirement Plan.
The Company
 
sponsors a
 
Retiree Health
 
Plan for
 
employees employed
 
prior to
 
April 1, 2010.
 
This plan
 
provides
healthcare
 
benefits
 
for
 
eligible
 
retired
 
employees
 
(and
 
their
 
eligible
 
dependents),
 
who
 
have
 
elected
coverage.
 
The Company
 
anticipates that
 
most covered
 
employees will
 
become eligible for
 
these benefits
 
if they
retire
 
while
 
working
 
for
 
the
 
Company.
 
The
 
cost
 
of
 
these
 
benefits
 
is
 
shared
 
with
 
the
 
retiree.
 
The
 
Company
accrues the
 
post-retirement
 
benefit expense
 
during the
 
period of
 
the employee’s
 
service.
 
A medical
 
cost trend
rate
 
of
7.00
% in
 
2022 was
 
assumed to
 
decrease gradually
 
to
4.75
% in
 
2030 and
 
then remain
 
at that
 
level.
 
The
Company
 
incurred
 
expenses
 
of
 
$
1
 
million,
 
$
1
 
million
 
and
 
$
1
 
million
 
for
 
the
 
years
 
ended
 
December
 
31,
 
2022,
2021 and 2020, respectively.
 
The following table summarizes the
 
status of this plan for the periods indicated:
At December 31,
(Dollars in millions)
2022
2021
Change in projected benefit obligation:
Benefit obligation at beginning of year
$
31
$
35
Service cost
1
1
Interest cost
1
1
Amendments
-
-
Actuarial (gain)/loss
(10)
(6)
Benefits paid
-
-
Benefit obligation at end of year
21
31
Change in plan assets:
Fair value of plan assets at beginning of year
-
-
Employer contributions
-
-
Benefits paid
-
-
Fair value of plan assets at end of year
-
-
Funded status at end of year
$
(21)
$
(31)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
F-55
Amounts recognized in the consolidated
 
balance sheets for the periods indicated:
At December 31,
(Dollars in millions)
2022
2021
Other liabilities (due within one year)
$
(1)
$
(1)
Other liabilities (due beyond one year)
(21)
(30)
Net amount recognized in the consolidated balance sheets
$
(21)
$
(31)
(Some amounts may not reconcile due to rounding.)
Amounts not yet reflected in
 
net periodic benefit cost and included in accumulated
 
other comprehensive income
(loss) for the periods indicated:
At December 31,
(Dollars in millions)
2022
2021
Accumulated income (loss)
$
13
$
2
Accumulated prior service credit (cost)
1
2
Accumulated other comprehensive income (loss)
$
14
$
4
Other changes in other comprehensive income (loss)
 
for the periods indicated are as
 
follows:
Years Ended December 31,
(Dollars in millions)
2022
2021
Other comprehensive income (loss) at December 31, prior year
$
4
$
(2)
Net gain (loss) arising during period
10
6
Prior Service credit (cost) arising during period
-
-
Recognition of amortizations in net periodic benefit cost:
Actuarial loss (gain)
-
-
Prior service cost
-
(1)
Other comprehensive income (loss) at December 31, current year
$
14
$
4
Net periodic benefit cost included the following
 
components for the periods indicated:
Years Ended December 31,
(Dollars in millions)
2022
2021
2020
Service cost
$
1
$
1
$
1
Interest cost
1
1
1
Prior service credit recognition
-
(1)
(1)
Net gain recognition
-
-
-
Net periodic cost
$
1
$
1
$
1
Other changes recognized in other comprehensive income (loss):
Other comprehensive gain (loss) attributable to change from prior year
(10)
(5)
Total recognized in net periodic benefit cost and
other comprehensive income (loss)
$
(9)
$
(4)
(Some amounts may not reconcile due to rounding.)
The weighted
 
average
 
discount rates
 
used to determine
 
net periodic
 
benefit cost
 
for 2022,
 
2021 and 2020
 
were
2.86
%,
2.55
% and
3.28
%, respectively.
 
 
 
 
 
 
F-56
The
 
weighted
 
average
 
discount
 
rates
 
used
 
to
 
determine
 
the
 
actuarial
 
present
 
value
 
of
 
the
 
projected
 
benefit
obligation at year end 2022, 2021 and 2020 were
5.25
%,
2.86
% and
2.55
%, respectively.
The following table displays
 
the expected benefit payments
 
in the years indicated:
(Dollars in millions)
2023
$
1
2024
1
2025
1
2026
1
2027
1
Next 5 years
7
14.
 
DIVIDEND RESTRICTIONS AND STATUTORY
 
FINANCIAL INFORMATION
Group
 
and
 
its
 
operating
 
subsidiaries
 
are
 
subject
 
to
 
various
 
regulatory
 
restrictions,
 
including
 
the
 
amount
 
of
dividends that
 
may be
 
paid and
 
the level
 
of capital
 
that the
 
operating
 
entities must
 
maintain.
 
These regulatory
restrictions are based upon statut
 
ory capital as opposed to GAAP basis equity or net
 
assets.
 
Group and one of its
primary
 
operating
 
subsidiaries,
 
Bermuda
 
Re,
 
are
 
regulated
 
by
 
Bermuda
 
law
 
and
 
its
 
other
 
primary
 
operating
subsidiary,
 
Everest
 
Re,
 
is
 
regulated
 
by
 
Delaware
 
law.
 
Bermuda
 
Re
 
is
 
subject
 
to
 
the
 
Bermuda
 
Solvency
 
Capital
Requirement
 
(“BSCR”) administered
 
by
 
the Bermuda
 
Monetary
 
Authority
 
(“BMA”)
 
and Everest
 
Re is
 
subject
 
to
the
 
Risk-Based
 
Capital
 
Model
 
(“RBC”)
 
developed
 
by
 
the
 
National
 
Association
 
of
 
Insurance
 
Commissioners
(“NAIC”).
 
These models
 
represent
 
the aggregate
 
regulatory
 
restrictions
 
on net
 
assets and
 
statutory
 
capital and
surplus.
Dividend Restrictions.
Under Bermuda
 
law,
 
Group is
 
prohibited from
 
declaring or paying
 
a dividend
 
if such payment
 
would reduce
 
the
realizable
 
value
 
of
 
its
 
assets
 
to
 
an
 
amount
 
less
 
than
 
the
 
aggregate
 
value
 
of
 
its
 
liabilities
 
and
 
its
 
issued
 
share
capital
 
and
 
share
 
premium
 
(additional
 
paid-in
 
capital)
 
accounts.
 
Group’s
 
ability
 
to
 
pay
 
dividends
 
and
 
its
operating expenses is dependent
 
upon dividends from its subsidiaries.
Under Bermuda law,
 
Bermuda Re is
 
prohibited from
 
declaring or making payment
 
of a dividend if
 
it fails to meet
its minimum
 
solvency
 
margin or
 
minimum liquidity
 
ratio.
 
As a
 
long-term insurer,
 
Bermuda Re
 
is also
 
unable to
declare or pay a
 
dividend to anyone
 
who is not a policyholder unless,
 
after payment of the
 
dividend, the value of
the
 
assets
 
in
 
their
 
long-term
 
business
 
fund,
 
as
 
certified
 
by
 
their
 
approved
 
actuary,
 
exceeds
 
their
 
liabilities
 
for
long term business by at least the $
0.3
 
million minimum solvency margin.
 
Prior approval
 
of the BMA
 
is required
 
if Bermuda Re’s
 
dividend payments
 
would exceed
25
% of their
 
prior year-
end total statutory capital
 
and surplus.
Bermuda Re
 
prepares its
 
statutory
 
financial statements
 
in conformity
 
with the
 
accounting principles
 
set forth
 
in
Bermuda
 
in
 
The
 
Insurance
 
Act
 
1978,
 
amendments
 
thereto
 
and
 
related
 
regulations.
 
The
 
statutory
 
capital
 
and
surplus
 
of
 
Bermuda
 
Re
 
was
 
$
2.8
 
billion
 
and
 
$
3.1
 
billion
 
at
 
December 31,
 
2022
 
and
 
2021,
 
respectively.
 
The
statutory
 
net
 
income
 
of
 
Bermuda
 
Re
 
was
 
$
603
 
million,
 
$
681
 
million
 
and
 
$
223
 
million
 
for
 
the
 
years
 
ended
December 31, 2022, 2021 and 2020, respectively.
Delaware law
 
provides that
 
an insurance
 
company which
 
is a
 
member of
 
an insurance
 
holding company
 
system
and is domiciled in the state shall
 
not pay dividends without giving prior notice to
 
the Insurance Commissioner of
Delaware
 
and
 
may
 
not
 
pay
 
dividends
 
without
 
the
 
approval
 
of
 
the
 
Insurance
 
Commissioner
 
if
 
the
 
value
 
of
 
the
proposed
 
dividend,
 
together
 
with
 
all
 
other
 
dividends
 
and
 
distributions
 
made
 
in
 
the
 
preceding
twelve months
,
exceeds the greater
 
of (1)
10
% of statutory surplus
 
or (2) net income, not including
 
realized capital gains,
 
each as
reported
 
in
 
the
 
prior
 
year’s
 
statutory
 
annual
 
statement.
 
In
 
addition,
 
no
 
dividend
 
may
 
be
 
paid
 
in
 
excess
 
of
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
F-57
unassigned
 
earned
 
surplus.
 
At
 
December 31,
 
2022,
 
Everest
 
Re
 
has
 
$
555
 
million
 
available
 
for
 
payment
 
of
dividends in 2023 without the need for prior regulatory
 
approval.
Everest
 
Re
 
prepares
 
its
 
statutory
 
financial
 
statements
 
in
 
accordance
 
with
 
accounting
 
practices
 
prescribed
 
or
permitted
 
by the
 
NAIC and
 
the Delaware
 
Insurance
 
Department.
 
Prescribed statutory
 
accounting
 
practices
 
are
set forth
 
in the
 
NAIC Accounting
 
Practices and
 
Procedures Manual.
 
The capital
 
and statutory
 
surplus of
 
Everest
Re was
 
$
5.6
 
billion and
 
$
5.8
 
billion at
 
December 31, 2022
 
and 2021,
 
respectively.
 
The statutory
 
net income
 
of
Everest
 
Re
 
was
 
$
294
 
million,
 
$
336
 
million
 
and
 
$
595
 
million
 
for
 
the
 
years
 
ended
 
December 31,
 
2022, 2021
 
and
2020.
 
There
 
are
 
certain
 
regulatory
 
and
 
contractual
 
restrictions
 
on
 
the
 
ability
 
of
 
Holdings’
 
operating
 
subsidiaries
 
to
transfer
 
funds to
 
Holdings in
 
the form
 
of cash
 
dividends, loans
 
or advances.
 
The insurance
 
laws of
 
the State
 
of
Delaware, where
 
Holdings’ direct
 
insurance subsidiaries
 
are domiciled, require
 
regulatory
 
approval before
 
those
subsidiaries can pay dividends or make
 
loans or advances to Holdings that exceed
 
certain statutory thresholds.
Capital Restrictions.
In
 
Bermuda,
 
Bermuda
 
Re
 
is
 
subject
 
to
 
the
 
BSCR administered
 
by
 
the
 
BMA.
 
No regulatory
 
action
 
is taken
 
if an
insurer’s
 
capital
 
and
 
surplus
 
is equal
 
to
 
or
 
in
 
excess
 
of their
 
enhanced
 
capital
 
requirement
 
determined
 
by
 
the
BSCR model.
 
In addition,
 
the BMA
 
has
 
established
 
a target
 
capital
 
level for
 
each insurer,
 
which is
120
% of
 
the
enhanced capital requirement.
In
 
the
 
United
 
States,
 
Everest
 
Re
 
is
 
subject
 
to
 
the
 
RBC developed
 
by
 
the
 
NAIC
 
which
 
determines
 
an
 
authorized
control
 
level risk-based
 
capital.
 
As long
 
as the
 
total adjusted
 
capital
 
is
200
% or
 
more of
 
the authorized
 
control
level capital, no action is required by
 
the Company.
The regulatory targeted
 
capital and the actual statutory
 
capital for Bermuda Re and Everest
 
Re were as follows:
Bermuda Re
(1)
Everest Re
(2)
At December 31,
At December 31,
(Dollars in millions)
2022
(3)
2021
2022
2021
Regulatory targeted capital
$
-
$
2,169
$
3,353
$
2,960
Actual capital
$
2,759
$
3,184
$
5,553
$
5,717
(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.
(3)
The 2022 BSCR calculation is not yet due to be completed; however,
 
the Company anticipates that Bermuda Re's December 31, 2022 actual capital
 
will exceed the targeted capital
level.
15.
 
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
 
of
 
America
 
(“The
Prudential”)
 
and an
 
additional unaffiliated
 
life
 
insurance
 
company
 
in which
 
the Company
 
has either
 
purchased
 
 
 
 
 
 
 
 
 
F-58
annuity
 
contracts
 
or
 
become
 
the
 
assignee
 
of
 
annuity
 
proceeds
 
that
 
are
 
meant
 
to
 
settle
 
claim
 
payment
obligations
 
in
 
the
 
future.
 
In
 
both
 
instances,
 
the
 
Company
 
would
 
become
 
contingently
 
liable
 
if
 
either
 
The
Prudential
 
or the
 
unaffiliated
 
life
 
insurance
 
company
 
were
 
unable to
 
make
 
payments
 
related
 
to
 
the respective
annuity contract.
The
 
table
 
below
 
presents
 
the
 
estimated
 
cost
 
to
 
replace
 
all
 
such
 
annuities
 
for
 
which
 
the
 
Company
 
was
contingently liable for the periods
 
indicated:
 
At December 31,
(Dollars in thousands)
2022
2021
The Prudential
 
$
137
$
138
Unaffiliated life insurance company
34
35
16.
 
SHARE-BASED COMPENSATION
 
PLANS
The
 
Company
 
has
 
a
 
2020
 
Stock
 
Incentive
 
Plan
 
(“2020
 
Employee
 
Plan”),
 
a
 
2009
 
Non-Employee
 
Director
 
Stock
Option
 
and
 
Restricted
 
Stock
 
Plan
 
(“2009
 
Director
 
Plan”)
 
and
 
a
 
2003
 
Non-Employee
 
Director
 
Equity
Compensation Plan (“2003 Director Plan”).
The
 
2020
 
Employee
 
Plan
 
was
 
established
 
in
 
June
 
2020.
 
Under
 
the
 
2020
 
Employee
 
Plan,
1,400,000
 
common
shares
 
have been
 
authorized
 
to be
 
granted
 
as non-qualified
 
share options,
 
share appreciation
 
rights,
 
restricted
share
 
awards
 
or performance
 
share unit
 
awards
 
to officers
 
and key
 
employees
 
of the
 
Company.
 
At
 
December
31, 2022, there were
996,076
 
remaining shares
 
available to
 
be granted
 
under the 2020 Employee
 
Plan.
 
Through
December
 
31,
 
2022,
 
only
 
non-qualified
 
share
 
options,
 
restricted
 
share
 
awards
 
and
 
performance
 
share
 
unit
awards had been
 
granted under the employee
 
plans. Under the 2009 Director
 
Plan,
37,439
 
common shares have
been
 
authorized
 
to
 
be
 
granted
 
as
 
share
 
options
 
or
 
restricted
 
share
 
awards
 
to
 
non-employee
 
directors
 
of
 
the
Company.
 
At December
 
31, 2022,
 
there were
34,957
 
remaining
 
shares available
 
to be
 
granted
 
under the
 
2009
Director
 
Plan.
 
Under
 
the
 
2003
 
Director
 
Plan,
500,000
 
common
 
shares
 
have
 
been
 
authorized
 
to
 
be granted
 
as
share
 
options
 
or share
 
awards
 
to
 
non-employee directors
 
of the
 
Company.
 
At
 
December 31,
 
2022 there
 
were
299,461
 
remaining shares available
 
to be granted under the 2003 Director
 
Plan.
 
Options
 
and restricted
 
shares
 
granted
 
under the
 
2020 Employee
 
Plan vest
 
at
 
the earliest
 
of
20
% per
 
year
 
over
five years
 
or in
 
accordance with
 
any applicable
 
employment agreement.
 
Options and
 
restricted shares
 
granted
under the 2003
 
Director Plan
 
generally vest
 
at
33
% per year
 
over
three years
, unless an
 
alternate vesting
 
period
is
 
authorized
 
by
 
the
 
Board.
 
Options
 
and
 
restricted
 
shares
 
granted
 
under
 
the
 
2009
 
Director
 
Plan
 
will
 
vest
 
as
provided
 
in
 
the
 
award
 
agreement.
 
All
 
options
 
are
 
exercisable
 
at
 
fair
 
market
 
value
 
of
 
the
 
stock
 
at
 
the
 
date
 
of
grant and expire
ten years
 
after the date of grant.
 
Performance
 
Share
 
Unit
 
awards
 
granted
 
under
 
the
 
2020
 
Employee
 
Plan
 
will
 
vest
100
% after
three years
.
 
The
Performance
 
Share Unit
 
awards
 
represent the
 
right to
 
receive between
0
 
and
1.75
 
shares of
 
stock for
 
each unit
awarded
 
depending upon
 
performance in
 
relation to
 
certain metrics.
 
The performance
 
share unit
 
valuation
 
will
be based
 
partly on
 
growth in
 
book value
 
per share
 
over the
three year
 
vesting period,
 
compared to
 
designated
peer companies.
 
The remaining portion of
 
the performance share
 
valuation will be based
 
upon operating return
on equity for each of the separate operating
 
years within the vesting period.
 
For
 
share
 
options,
 
restricted
 
shares
 
and
 
performance
 
share
 
units
 
granted
 
under
 
the
 
2020
 
Employee
 
Plan,
 
the
2009
 
Director
 
Plan
 
and
 
the
 
2003
 
Director
 
Plan,
 
share-based
 
compensation
 
expense
 
recognized
 
in
 
the
consolidated
 
statements
 
of operations
 
and
 
comprehensive
 
income
 
(loss)
 
was
 
$
45
 
million,
 
$
43
 
million
 
and
 
$
39
million
 
for
 
the
 
years
 
ended
 
December
 
31,
 
2022,
 
2021
 
and
 
2020,
 
respectively.
 
The
 
corresponding
 
income
 
tax
benefit recorded in
 
the consolidated statements
 
of operations and
 
comprehensive income (loss)
 
for share-based
compensation was
 
$
4
 
million, $
8
 
million and $
7
 
million for the
 
years ended
 
December 31, 2022,
 
2021 and 2020,
respectively.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
F-59
For the year
 
ended December 31,
 
2022, a total
 
of
203,598
 
restricted shares
 
were granted
 
on February
 
23, 2022,
February
 
24,
 
2022,
 
May
 
10,
 
2022,
 
September
 
8,
 
2022
 
and
 
November
 
10,
 
2022,
 
with
 
a
 
fair
 
value
 
of
 
$
301.535
,
$
287.9425
, $
280.98
, $
283.7225
 
and $
323.085
 
per share,
 
respectively.
 
Additionally,
18,340
 
performance
 
share
units
 
were
 
awarded
 
on
 
February
 
23,
 
2022,
 
with
 
a
 
fair
 
value
 
of
 
$
301.5350
 
per
 
unit.
 
No
 
share
 
options
 
were
granted
 
during
 
the
 
year
 
ended
 
December
 
31,
 
2022.
 
For
 
share
 
options
 
granted
 
during
 
previous
 
years,
 
the
 
fair
value per option was calculated on the
 
date of the grant using the Black-Scholes
 
option valuation model.
 
The
 
Company
 
recognizes,
 
as
 
an
 
increase
 
to
 
additional
 
paid-in
 
capital,
 
a
 
realized
 
income
 
tax
 
benefit
 
from
dividends, charged
 
to retained
 
earnings and paid
 
to employees on
 
equity classified non-vested
 
equity shares.
 
In
addition, the
 
amount recognized
 
in additional
 
paid-in capital
 
for the
 
realized
 
income tax
 
benefit from
 
dividends
on those awards
 
is included in the pool of
 
excess tax
 
benefits available
 
to absorb tax
 
deficiencies on share-based
payment
 
awards.
 
For
 
the
 
years
 
ended
 
December
 
31,
 
2022,
 
2021
 
and
 
2020,
 
the
 
Company
 
recognized
 
$
0.6
million, $
0.6
 
million and $
0.6
 
million, respectively,
 
of additional paid-in capital due to tax
 
benefits from dividends
on restricted shares.
A summary
 
of
 
the
 
option
 
activity
 
under
 
the
 
Company’s
 
shareholder
 
approved
 
plans
 
as
 
of December
 
31,
 
2022,
2021 and 2020, and changes during the year then ended is presented
 
in the following tables:
Weighted-
Weighted-
Average
Average
Remaining
Aggregate
(Aggregate Intrinsic Value
 
in millions)
Exercise
Contractual
Intrinsic
Options
Shares
Price/Share
Term
Value
Outstanding at January 1, 2022
49,028
$
88.52
Granted
-
-
Exercised
49,028
88.52
Forfeited/Cancelled/Expired
-
Outstanding at December 31, 2022
-
 
-
 
$
-
.
Exercisable at December 31, 2022
-
 
-
 
$
-
Weighted-
Weighted-
Average
Average
Remaining
Aggregate
(Aggregate Intrinsic Value in millions; Shares in whole amounts)
Exercise
Contractual
Intrinsic
Options
Shares
Price/Share
Term
Value
Outstanding at January 1, 2021
116,871
$
87.87
Granted
-
-
Exercised
67,843
87.39
Forfeited/Cancelled/Expired
-
-
Outstanding at December 31, 2021
49,028
88.52
0.2
 
$
9
.
Exercisable at December 31, 2021
49,028
88.52
0.2
 
$
9
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
F-60
Weighted-
Weighted-
Average
Average
Remaining
Aggregate
(Aggregate Intrinsic Value in millions; Shares in whole amounts)
Exercise
Contractual
Intrinsic
Options
Shares
Price/Share
Term
Value
Outstanding at January 1, 2020
170,704
$
87.18
Granted
-
-
Exercised
53,833
85.69
Forfeited/Cancelled/Expired
-
-
Outstanding at December 31, 2020
116,871
87.87
0.7
 
$
17
.
Exercisable at December 31, 2020
116,871
87.87
0.7
 
$
17
There have
 
been
no
 
share options
 
granted
 
in since
 
2012.
 
As of
 
December 31,
 
2022, there
 
are no
 
share options
outstanding.
 
The
 
aggregate
 
intrinsic
 
value
 
(market
 
price
 
less
 
exercise
 
price)
 
of
 
options
 
exercised
 
during
 
the
years ended
 
December 31, 2022,
 
2021 and 2020
 
was $
10
 
million, $
11
 
million and $
10
 
million, respectively.
 
The
cash received from
 
the exercised
 
share options for
 
the years ended
 
December 31, 2022, 2021
 
and 2020 were
 
$
4
million, $
6
 
million and $
5
 
million, respectively.
 
The tax
 
benefit realized
 
from the
 
options exercised
 
for the
 
years
ended December 31, 2022, 2021 and 2020 were $
2
 
million, $
3
 
million and $
2
 
million, respectively.
 
The
 
following
 
table
 
summarizes
 
the
 
status
 
of
 
the
 
Company’s
 
non-vested
 
shares
 
and
 
changes
 
for
 
the
 
periods
indicated:
Years Ended December 31,
2022
2021
2020
Weighted-
Weighted-
Weighted-
Average
Average
Average
Grant Date
Grant Date
Grant Date
Restricted (non-vested) Shares
Shares
Fair Value
Shares
Fair Value
Shares
Fair Value
Outstanding at January 1,
496,094
$
247.76
483,427
$
246.60
495,137
$
228.02
Granted
203,598
300.38
213,901
243.51
200,929
269.86
Vested
162,579
246.41
158,735
238.67
175,413
220.88
Forfeited
57,483
262.28
42,499
247.02
37,226
246.20
Outstanding at December 31,
479,630
268.82
496,094
247.76
483,427
246.60
As of December
 
31, 2022,
 
there was
 
$
97
 
million of total
 
unrecognized compensation
 
cost related
 
to non-vested
share-based
 
compensation
 
expense.
 
That cost
 
is expected
 
to be
 
recognized
 
over a
 
weighted-average
 
period of
3.3
 
years.
 
The total
 
fair value
 
of shares
 
vested during
 
the years ended
 
December 31, 2022,
 
2021 and 2020,
 
was
$
40
 
million,
 
$
38
 
million
 
and
 
$
39
 
million,
 
respectively.
 
The
 
tax
 
benefit
 
realized
 
from
 
the
 
shares
 
vested
 
for
 
the
years ended December 31, 2022, 2021 and 2020 were
 
$
9
 
million, $
8
 
million and $
9
 
million, respectively.
 
In
 
addition
 
to
 
the
 
2020
 
Employee
 
Plan,
 
the
 
2009
 
Director
 
Plan
 
and
 
the
 
2003
 
Director
 
Plan,
 
Group
 
issued
774
common shares
 
in 2022,
506
 
common shares
 
in 2021
 
and
593
 
common
 
shares
 
in 2020
 
to
 
the Company’s
 
non-
employee directors
 
as compensation for
 
their service as directors.
 
These issuances had aggregate
 
values of $
0.2
million, $
0.1
 
million and $
0.1
 
million in 2022, 2021 and 2020.
The Company
 
acquired
69,833
,
79,308
 
and
66,289
 
common shares
 
at a
 
cost of
 
$
21
 
million, $
18
 
million and
 
$
18
million
 
in
 
2022,
 
2021
 
and
 
2020,
 
respectively,
 
from
 
employees
 
who
 
chose
 
to
 
pay
 
required
 
withholding
 
taxes
and/or the exercise cost
 
on option exercises or restricted
 
share vestings by withholding shares.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
F-61
The
 
following
 
table
 
summarized
 
the
 
status
 
of
 
the
 
Company’s
 
non-vested
 
performance
 
share
 
unit
 
awards
 
and
changes for the period indicated:
Years Ended December 31,
2022
2021
2020
Weighted-
Weighted-
Weighted-
Average
Average
Average
Grant Date
Grant Date
Grant Date
Performance Share Unit Awards
Shares
Fair Value
Shares
Fair Value
Shares
Fair Value
Outstanding at January 1,
50,495
$
-
38,891
$
-
34,850
$
-
Granted
18,340
301.54
22,205
242.24
16,120
277.15
Increase/(Decrease) on vesting units
due to performance
3,028
-
(800)
-
(2,227)
-
Vested
15,919
274.37
9,801
242.24
6,157
277.15
Forfeited
1,083
-
-
-
3,695
-
Outstanding at December 31,
54,861
-
50,495
-
38,891
-
The Company
 
acquired
6,175
,
3,104
 
and
2,587
 
common
 
shares
 
at
 
a cost
 
of $
1.7
 
million,
 
$
0.8
 
million
 
and
 
$
0.7
million in
 
2022, 2021
 
and 2020,
 
respectively,
 
from employees
 
who chose
 
to pay
 
required
 
withholding taxes
 
on
performance shares units settlements
 
by withholding shares.
17.
 
SEGMENT REPORTING
The Reinsurance
 
operation
 
writes worldwide
 
property
 
and casualty
 
reinsurance
 
and specialty
 
lines of
 
business,
on both
 
a treaty
 
and facultative
 
basis,
 
through
 
reinsurance
 
brokers,
 
as well
 
as directly
 
with ceding
 
companies.
 
Business is
 
written in
 
the U.S.,
 
Bermuda, and
 
Ireland offices,
 
as well as,
 
through branches
 
in Canada,
 
Singapore,
the United
 
Kingdom
 
and Switzerland.
 
The Insurance
 
operation
 
writes property
 
and casualty
 
insurance
 
directly
and
 
through
 
brokers,
 
surplus
 
lines
 
brokers
 
and
 
general
 
agents
 
within
 
the
 
U.S.,
 
Bermuda,
 
Canada,
 
Europe,
Singapore
 
and
 
South
 
America
 
through
 
its
 
offices
 
in
 
the
 
U.S.,
 
Canada,
 
Chile,
 
Singapore,
 
the
 
United
 
Kingdom,
Ireland, and branches located
 
in the Netherlands, France, Germany and Spain.
 
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.
 
The Company measures
 
its underwriting
results using
 
ratios, in
 
particular loss,
 
commission and
 
brokerage
 
and other
 
underwriting expense
 
ratios, which,
respectively,
 
divide incurred
 
losses, commissions
 
and brokerage
 
and other
 
underwriting expenses
 
by premiums
earned.
 
The
 
Company
 
does
 
not
 
maintain
 
separate
 
balance
 
sheet
 
data
 
for
 
its
 
operating
 
segments.
 
Accordingly,
 
the
Company does not
 
review and evaluate
 
the financial results
 
of its operating
 
segments based upon
 
balance sheet
data.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
F-62
The following tables present the underwriting
 
results for the operating segments
 
for the periods indicated:
 
Year Ended December 31, 2022
(Dollars in millions)
Reinsurance
Insurance
Total
Gross written premiums
$
9,316
$
4,636
$
13,952
Net written premiums
8,983
3,361
12,344
Premiums earned
$
8,663
$
3,124
$
11,787
Incurred losses and LAE
5,997
2,103
8,100
Commission and brokerage
2,134
394
2,528
Other underwriting expenses
218
463
682
Underwriting gain (loss)
$
313
$
164
$
477
Net investment income
830
Net realized capital gains (losses)
(455)
Corporate expenses
(61)
Interest, fee and bond issue cost amortization expense
(101)
Other income (expense)
(102)
Income (loss) before taxes
$
588
Year Ended December 31, 2021
(Dollars in millions)
Reinsurance
Insurance
Total
Gross written premiums
$
9,067
$
3,982
$
13,050
Net written premiums
8,536
2,910
11,446
Premiums earned
$
7,757
$
2,649
$
10,406
Incurred losses and LAE
5,556
1,835
7,391
Commission and brokerage
1,854
354
2,209
Other underwriting expenses
199
383
583
Underwriting gain (loss)
$
147
$
76
$
224
Net investment income
1,165
Net realized capital gains (losses)
258
Corporate expenses
(68)
Interest, fee and bond issue cost amortization expense
(70)
Other income (expense)
37
Income (loss) before taxes
$
1,546
Year Ended December 31, 2020
(Dollars in millions)
Reinsurance
Insurance
Total
Gross written premiums
$
7,282
$
3,201
$
10,482
Net written premiums
6,768
2,349
9,117
Premiums earned
$
6,466
$
2,215
$
8,682
Incurred losses and LAE
4,933
1,617
6,551
Commission and brokerage
1,552
321
1,873
Other underwriting expenses
176
336
511
Underwriting gain (loss)
$
(195)
$
(58)
$
(254)
Net investment income
642
Net realized capital gains (losses)
268
Corporate expenses
(41)
Interest, fee and bond issue cost amortization expense
(36)
Other income (expense)
6
Income (loss) before taxes
$
585
 
 
 
 
 
 
 
 
 
 
 
F-63
The
 
Company
 
produces
 
business
 
in
 
the
 
U.S.,
 
Bermuda
 
and
 
internationally.
 
The
 
net
 
income
 
deriving
 
from
 
and
assets
 
residing
 
in the
 
individual
 
foreign
 
countries
 
in which
 
the Company
 
writes
 
business
 
are
 
not identifiable
 
in
the Company’s
 
financial records.
 
Based on gross written
 
premium, the table below
 
presents the largest
 
country,
other than the U.S., in which the Company writes business,
 
for the periods indicated:
 
Year Ended December 31,
(Dollars in millions)
2022
2021
2020
United Kingdom gross written premium
$
1,217
$
1,246
$
1,116
Approximately
20.0
%,
20.5
%
 
and
20.1
%
 
of
 
the
 
Company’s
 
gross
 
written
 
premiums
 
in
 
2022,
 
2021
 
and
 
2020,
respectively,
 
were sourced through the Company’s
 
largest intermediary.
 
18.
 
SUBSEQUENT EVENTS
 
The
 
Company
 
has
 
evaluated
 
known
 
recognized
 
and
 
non-recognized
 
subsequent
 
events.
 
In
 
February
 
2023,
 
an
earthquake occurred
 
which impacted the
 
countries of
 
Turkey
 
and Syria. Due
 
to the recentness
 
of this event,
 
the
Company is unable to
 
estimate the magnitude of losses
 
at this time.
 
However,
 
the Company anticipates
 
that the
losses
 
from
 
this
 
event
 
will
 
adversely
 
impact
 
its
 
first
 
quarter
 
2023
 
financial
 
statements.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
S-1
SCHEDULE I — SUMMARY OF INVESTMENTS —
OTHER THAN INVESTMENTS IN RELATED
 
PARTIES
December 31, 2022
Column A
Column B
Column C
Column D
Amount
Shown in
Market
Balance
(Dollars in millions)
Cost
Value
Sheet
Fixed maturities - available for sale
Bonds:
U.S. government and government agencies
$
1,334
$
1,257
$
1,257
State, municipalities and political subdivisions
444
413
413
Foreign government securities
 
1,586
1,415
1,415
Foreign corporate securities
 
5,143
4,596
4,596
Public utilities
218
203
203
All other corporate bonds
10,688
10,013
10,013
Mortgage - backed securities:
Commercial
1,023
919
919
Agency residential
3,382
3,099
3,099
Non-agency residential
5
4
4
Redeemable preferred stock
368
316
316
Total fixed maturities-available for sale
24,191
22,236
22,236
Fixed maturities - held to maturity
Bonds:
Foreign corporate securities
 
28
28
27
All other corporate bonds
813
786
806
Mortgage - backed securities:
Commercial
7
7
7
Total fixed maturities-held to maturity
848
821
839
Equity securities - at fair value (1)
252
281
281
Short-term investments
1,032
1,032
1,032
Other invested assets
4,085
4,085
4,085
Cash
1,398
1,398
1,398
Total investments and cash
$
31,807
$
29,853
$
29,872
(Some amounts may not reconcile due to rounding.)
(1)
 
Original cost does not reflect fair value adjustments,
 
which have been realized through the statements
 
of operations and comprehensive income (loss).
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
S-2
SCHEDULE II — CONDENSED FINANCIAL INFORMATION OF THE REGISTRANT
CONDENSED BALANCE SHEETS
December 31,
(Dollars and share amounts in millions, except
 
par value per share)
2022
2021
ASSETS:
Fixed maturities - available for sale
$
-
$
-
(amortized cost: 2022, $
0
; 2021, $
0
)
Other invested assets (cost: 2022, $
0
; 2021, $
212
)
-
212
Cash
22
3
Investment in subsidiaries, at equity in the underlying net assets
11,116
10,353
Accrued investment income
-
-
Receivable from subsidiaries
11
10
Other assets
43
50
TOTAL ASSETS
$
11,192
$
10,628
LIABILITIES:
Long term notes payable, affiliated
$
2,738
$
500
Due to subsidiaries
4
2
Other liabilities
9
(13)
Total liabilities
2,751
489
SHAREHOLDERS' EQUITY:
Preferred shares, par value: $
0.01
;
50.0
 
shares authorized;
 
no
 
shares issued and outstanding
-
-
Common shares, par value: $
0.01
;
200.0
 
shares authorized;
(2022)
69.9
 
and (2021)
69.8
 
outstanding before treasury shares
1
1
Additional paid-in capital
2,302
2,274
Accumulated other comprehensive income (loss), net of deferred income
tax expense (benefit) of ($
250
) at 2022 and $
27
 
at 2021
(1,996)
12
Treasury shares, at cost;
30.8
 
shares (2022) and
30.5
 
shares (2021)
(3,908)
(3,847)
Retained earnings
12,042
11,700
Total shareholders' equity
8,441
10,139
TOTAL
 
LIABILITIES AND SHAREHOLDERS' EQUITY
$
11,192
$
10,628
(Some amounts may not reconcile due to rounding.)
See notes to consolidated financial statements.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
S-3
SCHEDULE II — CONDENSED FINANCIAL INFORMATION OF THE REGISTRANT
CONDENSED STATEMENTS
 
OF OPERATIONS
 
Years Ended December 31,
2022
 
2021
 
2020
 
(Dollars in thousands)
REVENUES:
Net investment income
$
-
$
-
$
1
Other income (expense)
-
-
6
Net income (loss) of subsidiaries
648
1,416
536
Total revenues
648
1,416
543
EXPENSES:
Interest expense - affiliated
13
6
5
Other expenses
38
31
24
Total expenses
51
37
29
INCOME (LOSS) BEFORE TAXES
597
1,379
514
NET INCOME (LOSS)
$
597
$
1,379
$
514
Other comprehensive income (loss), net of tax:
Unrealized appreciation (depreciation) ("URA(D)") on securities arising during the period
(2,037)
(488)
423
Reclassification adjustment for realized losses (gains) included in net income (loss)
89
4
(3)
Total URA(D) on securities arising during the period
(1,948)
(485)
420
Foreign currency translation adjustments
(77)
(62)
86
Benefit plan actuarial net gain (loss) for the period
15
17
(6)
Reclassification adjustment for amortization of net (gain) loss included in net income (loss)
2
6
6
Total benefit plan net gain (loss) for the period
17
23
1
Total other comprehensive income (loss), net of tax
(2,008)
(523)
507
COMPREHENSIVE INCOME (LOSS)
$
(1,411)
$
856
$
1,021
(Some amounts may not reconcile due to rounding.)
See notes to consolidated financial statements.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
S-4
SCHEDULE II — CONDENSED FINANCIAL INFORMATION OF THE REGISTRANT
CONDENSED STATEMENTS
 
OF CASH FLOWS
 
Years Ended December 31,
(Dollars in millions, except share amounts)
2022
2021
2020
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss)
$
597
$
1,379
$
514
Adjustments to reconcile net income to net cash provided by operating activities:
Equity in retained (earnings) deficit of subsidiaries
(648)
(1,416)
(536)
Cash dividends received from subsidiaries
476
320
650
Change in other assets and liabilities, net
28
3
(21)
Increase (decrease) in due to/from affiliates
2
8
(9)
Amortization of bond premium (accrual of bond discount)
-
-
-
Realized capital losses (gains)
-
-
-
Non-cash compensation expense
2
2
3
Net cash provided by (used in) operating activities
457
296
601
CASH FLOWS FROM INVESTING ACTIVITIES:
Additional investment in subsidiaries
(824)
(120)
(138)
Proceeds from fixed maturities matured/called - available for sale, at market value
-
-
1
Proceeds from fixed maturities sold - available for sale, at market value
-
-
200
Distribution from other invested assets
237
607
560
Cost of fixed maturities acquired - available for sale, at market value
-
-
-
Cost of other invested assets acquired
(26)
(535)
(801)
Net change in short-term investments
-
-
-
Net cash provided by (used in) investing activities
(613)
(48)
(178)
CASH FLOWS FROM FINANCING ACTIVITIES:
Common shares issued during the period, net
26
27
23
Purchase of treasury shares
(61)
(225)
(200)
Dividends paid to shareholders
(255)
(247)
(249)
Proceeds from issuance (cost of repayment) of long term notes payable - affiliated
465
200
-
Net cash provided by (used in) financing activities
175
(245)
(426)
EFFECT OF EXCHANGE RATE CHANGES ON CASH
-
-
-
Net increase (decrease) in cash
19
2
(3)
Cash, beginning of period
3
1
3
Cash, end of period
$
22
$
3
$
1
Non-Cash Transactions:
Dividend of
4,297,463
 
shares of Everest Re Group, Ltd. (“Group”) common stock
$
1,405
$
-
$
-
received by Group from Everest Preferred International Holdings
(“Preferred Holdings”), a direct subsidiary
Issuance of $
1,773
 
million promissory note payable by Group to Preferred
Holdings in exchange for
5,422,508
 
shares of Group common stock
received by Group from Preferred Holdings
1,773
-
-
Capital contribution of
9,719,971
 
shares of Group common stock provided from
Group to Everest Re Advisors, Ltd.
3,178
-
-
(Some amounts may not reconcile due to rounding.)
See notes to consolidated financial statements.
S-5
SCHEDULE II – CONDENSED FINANCIAL INFORMATION
 
OF THE REGISTRANT
NOTES TO CONDENSED
 
FINANCIAL INFORMATION
1.)
The
 
accompanying
 
condensed
 
financial
 
information
 
should
 
be
 
read
 
in
 
conjunction
 
with
 
the
 
consolidated
financial statements and related
 
Notes of Everest Re
 
Group, Ltd. and its Subsidiaries.
2.)
Everest
 
Re
 
Group,
 
Ltd.
 
entered
 
into
 
a
 
$
300
 
million
 
long-term
 
note
 
agreement
 
with
 
Everest
 
Reinsurance
Company,
 
an
 
affiliated
 
company,
 
as
 
of
 
December
 
2019.
 
The
 
note
 
will
 
pay
 
interest
 
annually
 
at
 
a
 
rate
 
of
1.69
% and
 
is
 
scheduled
 
to
 
mature
 
in
 
December
 
2028.
 
At
 
December
 
31,
 
2022
 
and
 
2021,
 
this
 
transaction
was
 
presented
 
as
 
a
 
Long-Term
 
Note
 
Payable
 
 
Affiliated
 
in
 
the
 
Condensed
 
Balance
 
sheets
 
of
 
Everest
 
Re
Group, Ltd.
3.)
Everest
 
Re
 
Group,
 
Ltd.
 
entered
 
into
 
a
 
$
200
 
million
 
long-term
 
note
 
agreement
 
with
 
Everest
 
Reinsurance
Company,
 
an affiliated
 
company,
 
as of August
 
2021.
 
The note
 
will pay
 
interest annually
 
at a rate
 
of
1.00
%
and
 
is
 
scheduled
 
to
 
mature
 
in
 
August
 
2030.
 
At
 
December
 
31,
 
2022
 
and
 
2021,
 
this
 
transaction
 
was
presented as
 
a Long-Term
 
Note Payable
 
– Affiliated
 
in the Condensed
 
Balance sheets of
 
Everest
 
Re Group,
Ltd.
4.)
Everest
 
Re
 
Group,
 
Ltd.
 
entered
 
into
 
a
 
$
215
 
million
 
long-term-note
 
agreement
 
with
 
Everest
 
Reinsurance
Holdings, Inc., an affiliated company,
 
as of June 2022.
 
The note will pay interest
 
annually at a rate of
3.11
%
and is scheduled to
 
mature in June 2052.
 
At December 31,
 
2022, this transaction
 
was presented as
 
a Long-
Term Note
 
Payable – Affiliated
 
in the Condensed Balance sheets of Everest
 
Re Group, Ltd.
5.)
Everest
 
Re
 
Group,
 
Ltd.
 
entered
 
into
 
a
 
$
125
 
million
 
long-term
 
note
 
agreement
 
with
 
Everest
 
Reinsurance
Holdings, Inc., an
 
affiliated company,
 
as of December 2022.
 
The note will pay
 
interest annually
 
at a rate
 
of
4.34
% and is scheduled to mature in June
 
2052.
 
At December 31, 2022, this transaction
 
was presented as a
Long-Term Note
 
Payable – Affiliated
 
in the Condensed Balance sheets of Everest
 
Re Group, Ltd.
6.)
Everest
 
Re
 
Group,
 
Ltd.
 
entered
 
into
 
a
 
$
125
 
million
 
long-term
 
note
 
agreement
 
with
 
Everest
 
International
Reinsurance,
 
an affiliated
 
company,
 
as of
 
December 2022.
 
The note
 
will pay
 
interest
 
annually at
 
a rate
 
of
4.34
%
 
and
 
is
 
scheduled
 
to
 
mature
 
in
 
December
 
2052.
 
At
 
December
 
31,
 
2022,
 
this
 
transaction
 
was
presented as
 
a Long-Term
 
Note Payable
 
– Affiliated
 
in the Condensed
 
Balance sheets of
 
Everest
 
Re Group,
Ltd.
7.)
Everest
 
Re
 
Group,
 
Ltd.
 
entered
 
into
 
a
 
$
1.773
 
billion
 
long-term
 
note
 
agreement
 
with
 
Everest
 
Preferred
International Holdings,
 
an affiliated
 
company,
 
as of December
 
2022.
 
The note will
 
pay interest
 
annually at
a rate of
4.34
% and is scheduled to
 
mature in December 2052.
 
At December 31, 2022,
 
this transaction was
presented as
 
a Long-Term
 
Note Payable
 
– Affiliated
 
in the Condensed
 
Balance sheets of
 
Everest
 
Re Group,
Ltd.
8.)
Everest
 
Re
 
Group,
 
Ltd.
 
has
 
invested
 
funds
 
in
 
the
 
segregated
 
accounts
 
of
 
Mt.
 
Logan
 
Re,
 
Ltd.
 
(“Mt.
 
Logan
Re”),
 
an
 
affiliated
 
entity.
 
On
 
the
 
Condensed
 
Balance
 
Sheets,
 
investments
 
in Mt.
 
Logan
 
Re
 
valued
 
at
 
$
65
million and $
66
 
million as
 
of December
 
31, 2022 and
 
2021, respectively,
 
have been
 
recorded
 
within Other
Assets.
 
On the Condensed Statements
 
of Operations, income (expense)
 
of $
(0.9)
 
million, $
(1.3)
 
million and
$(6.3) million for
 
the years
 
ended December 31,
 
2022, 2021 and
 
2020, respectively,
 
have been recorded
 
in
other income (expense).
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
S-6
SCHEDULE
 
III — SUPPLEMENTARY
 
INSURANCE INFORMATION
 
Column A
Column B
Column C
Column D
Column E
Column F
Column G
Column H
Column I
Column J
Reserve
Incurred
Segment
for Losses
Loss and
Amortization
Deferred
and Loss
Unearned
Net
Loss
of
 
Deferred
Other
Net
Acquisition
Adjustment
Premium
Premiums
Investment
Adjustment
Acquisition
Operating
Written
(Dollars in millions)
Costs
Expenses
Reserves
Earned
Income
Expenses
Costs
Expenses
Premium
As of and Year Ended December
 
31, 2022
Reinsurance
$
710
$
16,140
$
2,894
$
8,663
$
590
$
5,997
$
2,134
$
218
$
8,983
Insurance
252
5,925
2,253
3,124
240
2,103
394
463
3,361
Total
$
962
$
22,065
$
5,147
$
11,787
$
830
$
8,100
$
2,528
$
682
$
12,344
As of and Year Ended December
 
31, 2021
Reinsurance
$
654
$
13,895
$
2,723
$
7,757
$
823
$
5,556
$
1,854
$
199
$
8,536
Insurance
218
5,114
1,887
2,649
342
1,835
354
383
2,910
Total
$
872
$
19,009
$
4,610
$
10,406
$
1,165
$
7,391
$
2,209
$
583
$
11,446
As of and Year Ended December
 
31, 2020
Reinsurance
$
448
$
12,023
$
1,995
$
6,466
$
458
$
4,933
$
1,552
$
176
$
6,768
Insurance
174
4,376
1,506
2,215
184
1,617
321
336
2,349
Total
$
622
$
16,399
$
3,501
$
8,682
$
642
$
6,551
$
1,873
$
511
$
9,117
(Some amounts may not reconcile due to rounding.)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
S-7
SCHEDULE IV — REINSURANCE
 
Column A
Column B
Column C
Column D
Column E
Column F
Ceded to
Assumed
Gross
Other
 
from Other
Net
 
Assumed
(Dollars in millions)
Amount
 
Companies
 
Companies
Amount
to Net
December 31, 2022
Total property and
 
liability insurance premiums earned
$
4,218
$
1,513
$
9,082
$
11,787
$
77.1%
December 31, 2021
Total property and
 
liability insurance premiums earned
$
3,589
$
1,498
$
8,315
$
10,406
$
79.9%
December 31, 2020
Total property and
 
liability insurance premiums earned
$
3,028
$
1,401
$
7,055
$
8,682
$
81.3%