10-K 1 holdings2020q4.htm HOLDINGS 10-K 2020

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, 2020

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

Commission file number 1-14527

EVEREST REINSURANCE HOLDINGS, INC.

(Exact name of registrant as specified in its charter)

Delaware

(State or other jurisdiction

of incorporation or organization)

22-3263609

(I.R.S Employer

Identification No.)

100 Everest Way

Warren, New Jersey 07059

(908) 604-3000

(Address, including zip code, and telephone number, including area code, of registrant’s principal executive office)

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

Title of Each Class		Name of Each Exchange on Which Registered
4.868% Senior Notes Due 2044 3.50% Senior Notes Due 2050		NYSE NYSE
6.60% Long Term Notes Due 2067		NYSE


	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

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

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes

Indicate by check mark whether the registrant has submitted electronically 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

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.

Yes

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

Large accelerated filer		Accelerated filer
Non-accelerated filer	X	Smaller reporting company
		Emerging growth company

Indicate by check mark if the registrant is an emerging growth company and has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange act.

Yes

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

Yes

Indicate 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

The aggregate market value on June 30, 2020, the last business day of the registrant’s most recently completed second quarter, of the voting stock held by non-affiliates of the registrant was zero.

At March 15, 2021, the number of shares outstanding of the registrant common shares was 1,000, all of which are owned by Everest Underwriting Group (Ireland) Limited, a wholly-owned direct subsidiary of Everest Re Group, Ltd.

The Registrant meets the conditions set forth in General Instruction I(1)(a) and (b) of Form 10-K and is therefore filing this form with the reduced disclosure format permitted by General Instruction I of Form 10-K.

EVEREST REINSURANCE HOLDINGS, INC.

Table of Contents

FORM 10-K

		Page

PART I

Item 1.	Business	1
Item 1A.	Risk Factors	6
Item 1B.	Unresolved Staff Comments	13
Item 2.	Properties	14
Item 3.	Legal Proceedings	14
Item 4.	Mine Safety Disclosures	14


PART II

Item 5.	Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities	14
Item 6.	Selected Financial Data	15
Item 7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	15
Item 7A.	Quantitative and Qualitative Disclosures About Market Risk	29
Item 8.	Financial Statements and Supplementary Data	32
Item 9.	Changes in and Disagreements With Accountants on Accounting and Financial Disclosure	32
Item 9A.	Controls and Procedures	32
Item 9B.	Other Information	32

PART III

Item 10.	Directors, Executive Officers and Corporate Governance	33
Item 11.	Executive Compensation	33
Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	33
Item 13.	Certain Relationships and Related Transactions, and Director Independence	33
Item 14.	Principal Accountant Fees and Services	33


PART IV

Item 15.	Exhibits and Financial Statement Schedules	34

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, “Holdings” means Everest Reinsurance Holdings, Inc., a Delaware company and direct subsidiary of Everest Underwriting Group (Ireland) Limited (“Holdings Ireland”); “Group” means Everest Re Group, Ltd. (Holdings Ireland’s parent); “Bermuda Re” means Everest Reinsurance (Bermuda), Ltd., a subsidiary of Group; “Everest Re” means Everest Reinsurance Company and its subsidiaries, a subsidiary of Holdings (unless the context otherwise requires); and the “Company”, “we”, “us”, and “our” means Holdings and its subsidiaries (unless the context otherwise requires).

ITEM 1. BUSINESS

The Company.

Holdings, a Delaware corporation, is a wholly-owned subsidiary of Holdings Ireland. On December 30, 2008, Group contributed Holdings to its recently established Irish holding company, Holdings Ireland. Holdings Ireland is a direct subsidiary of Group and serves as a holding company for the U.S. reinsurance and insurance subsidiaries. Group is a Bermuda holding company whose common shares are publicly traded in the U.S. on the New York Stock Exchange under the symbol “RE”. Group files an annual report on Form 10-K with the Securities and Exchange Commission (the “SEC”) with respect to its consolidated operations, including Holdings.

The Company’s principal business, conducted through its operating segments, is the underwriting of reinsurance and insurance in the U.S. and international markets. The Company had gross written premiums, in 2020, of $8.0 billion, with approximately 66% representing reinsurance and 34% representing insurance. Stockholder’s equity at December 31, 2020 was $6.4 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 through brokers, surplus lines brokers and general agent relationships. Holdings’ 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.

Following is a summary of the Company’s operating subsidiaries:

· Everest Re, a Delaware insurance 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. Everest Re has engaged in reinsurance transactions with Bermuda Re, Everest International Reinsurance, Ltd. (“Everest International”), Mt. Logan Re, Ltd. (“Mt. Logan Re”) and Everest Insurance Company of Canada (“Everest Canada”), which are affiliated companies, primarily driven by enterprise risk and capital management considerations under which business is transacted at market rates and terms. At December 31, 2020, Everest Re had statutory surplus of $5.3 billion.

· 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 licensed in Delaware 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.

· 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 50 states and the District of Columbia. The majority of Everest Denali’s business is reinsured by its parent, Everest Re.

· 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 50 states and the District of Columbia. The majority of Everest Premier’s business is reinsured by its parent, Everest Re.

· 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 will be authorized to write life reinsurance and casualty reinsurance in both Bermuda and the U.S.

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 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 stockholder. 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, 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 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 participate in those 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.

Commencing 2015, the Company initiated a strategic build out of its insurance platform through the investment in key leadership hires which in turn has brought significant underwriting talent and stronger direction in achieving its insurance program strategic goals of increased premium volume and improved underwriting results. Recent growth is coming from highly diversified areas including newly launched lines of business, as well as, product and geographic expansion in existing lines of business. The Company is building a world-class insurance platform capable of offering products across lines and geographies, complementing its leading global reinsurance franchise.

Capital Transactions.

The Company’s business operations are in part dependent on its financial strength and financial strength ratings, and the market’s perception of its financial strength. The Company stockholder’s equity was $6,414.3 million and $5,857.4 million at December 31, 2020 and 2019, respectively. The Company possesses significant financial flexibility with access to the debt markets and, through its ultimate parent, equity markets, as a result of its perceived financial strength, as evidenced by the financial strength ratings as assigned by independent rating agencies. The Company’s capital position remains strong, commensurate with its financial ratings and the Company has ample liquidity to meet its financial obligations for the foreseeable future.

Financial Strength Ratings.

The following table shows the current financial strength ratings of the Company’s operating subsidiaries as reported by A.M. Best, Standard & Poor’s (S&P), and Moody’s. These ratings are based upon factors relevant to policyholders and are not intended to be an indication of the degree or lack of risk involved in a direct or indirect equity investment in an insurance or reinsurance company.

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, 2021.

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 may 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 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)	Not Rated	Not Rated
Everest International Assurance, 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

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 May 29, 2020. 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 issued a new rating to Everest Denali Insurance Co and Everest Premier Insurance Co of A+ (Strong), upgraded the rating of Everest International Assurance Ltd from A to A+ (Strong) and affirmed all other ratings on May 29, 2020. 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 5, 2020.

Subsidiaries other than Everest Re may not be rated by some or any rating agencies because such ratings are not considered essential by the individual subsidiary’s customers or 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, and Junior Subordinated 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.

	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)
Long Term Notes	bbb	(Adequate)	BBB	(Adequate)	Baa2	(Medium Grade)

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. 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, and certain government sponsored risk transfer vehicles. Some of these competitors have greater financial resources than we do and have established long term and continuing business relationships, which can be a significant competitive advantage. In addition, the lack of strong barriers to entry into the reinsurance business and recently, the securitization of reinsurance and insurance risks through capital markets provide additional sources of potential reinsurance and insurance capacity and competition.

Worldwide insurance and reinsurance market conditions historically have been competitive. Generally, there was ample insurance and reinsurance capacity relative to demand, as well as, additional capital from the capital markets through insurance linked financial instruments. These financial instruments such as side cars, catastrophe bonds and collateralized reinsurance funds, provided capital markets with access to insurance and reinsurance risk exposure. The capital markets demand for these products was being primarily driven by a low interest environment and the desire to achieve greater risk diversification and potentially higher returns on their investments. This increased competition was generally having a negative impact on rates, terms and conditions; however, the impact varies widely by market and coverage.

The industry continues to deal with the impacts of a global pandemic, COVID-19. Globally, many countries mandated that their citizens remain at home and many non-essential businesses have continued to be physically closed. We activated our operational resiliency plan across our global footprint and all of our critical operations are functioning effectively from remote locations. We continue to service and meet the needs of our clients while ensuring the safety and health of our employees and customers.

The pandemic has caused significant volatility in the global financial markets. Interest rates plummeted, credit spreads widened and the equity markets lost value. We saw our fixed maturity and equity portfolios decline in value resulting in unrealized investment losses in our March 31, 2020 financial statements. However, the financial markets rebounded during the remaining quarters of 2020 and we recognized after-tax unrealized gains of $338.2 million in our financial statements for these three quarters. Nevertheless, the lack of business activity may lead to an increase in bankruptcies and corresponding credit losses.

There will also be a negative impact on future industry underwriting results. With the closing of non-essential businesses, there has been a significant decline in business activity. To the extent that premiums are based on business activity, there will be a decline in premium volume. Incurred losses from the pandemic will be impacted by the duration of the event and will vary by line of business and geographical location. For the full year 2020, our underwriting results include $154.8 million of estimated losses related to the pandemic.

Many regulators had issued moratoriums on the cancellation of policies for the non-payment of premiums and also on non-renewals. We are complying with the various regulatory requests for accommodations to policyholders during this difficult period. The moratoriums combined with the forced closure of businesses may lead to an increase in uncollectible premium expense.

Prior to the pandemic, there was a growing industry consensus that there was some firming of (re)insurance rates for the areas impacted by the recent catastrophes. The increased frequency of catastrophe losses in 2020 appears to be further pressuring the increase of rates. Rates also appear to be firming in some of the casualty 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 will be the impact on pricing conditions but it is likely to change depending on the line of business and geography.

While we are unable to predict the full impact the pandemic will have on the insurance industry as it continues to have a negative impact on the global economy, we are well positioned to continue to service our clients. Our capital position remains a source of strength, with high quality invested assets, significant liquidity and a low operating expense ratio. Our diversified global platform with its broad mix of products, distribution and geography is resilient.

Employees.

As of February 1, 2021, the Company employed 1,487 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.

Available Information.

The Company’s Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and amendments to those reports are available free of charge through the Company’s internet website at http://www.everestregroup.com as soon as reasonably practicable after such reports are electronically filed with 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 our ability to service our debt, our debt ratings and our ability to issue new debt could decline significantly.

Risks relating to our Business

Fluctuations in the financial markets could result in investment losses.

Prolonged and severe disruptions in the overall public debt and equity markets, such as occurred during 2008, or temporary disruption, as occurred in early 2020 related to the Covid-19 pandemic, could result in significant realized and unrealized losses in our investment portfolio. Although financial markets have significantly improved since 2008, they could deteriorate in the future. 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.

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. 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 catastrophe losses
(Dollars in millions)
2020	$	397.4
2019		573.7
2018		1,712.6
2017		941.4
2016		109.2

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.

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 loss adjustment expenses (“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. By way of illustration, during the past five calendar years, the reserve re-estimation process resulted in a decrease to our pre-tax net income in 2020, 2019 and 2018, and an increase for the years 2017 and 2016:

Calendar year:	Effect on pre-tax net income
(Dollars in millions)
2020	$	200.3	decrease
2019		44.4	decrease
2018		558.8	decrease
2017		117.7	increase
2016		91.7	increase

The difficulty in estimating our reserves is significantly more challenging as it relates to reserving for potential asbestos and environmental (“A&E”) liabilities. At December 31, 2020, 1.9% 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 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. Our active subsidiaries that have been rated carry an “A+” (“Superior”) rating from A.M. Best. Everest Re, Everest National, Everest Indemnity and Everest Assurance all hold an “A+” (“Strong”) rating from Standard & Poor’s and Everest Assurance holds an “A” (“Strong”) rating from this same agency. Everest Re holds an “A1” (“upper-medium grade”) rating from Moody’s. Financial strength ratings are used by client companies and agents and brokers that place the business as an important means of assessing the financial strength and quality of reinsurers. A downgrade or withdrawal of any of these ratings might adversely affect our ability to market our insurance products and could have a material and adverse effect on future prospects for growth and profitability.

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, which is three levels below Everest Re’s current rating of A+. 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 starting in 2014. In addition, some of our quota share contracts with larger retrocessions have increased. 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.

We entered into affiliated whole account quota share reinsurance agreements for 2002 through 2017 with Bermuda Re but we did not renew the quota share reinsurance agreement with Bermuda Re after 2017. We believe that the terms, conditions and pricing of the quota share agreements reflect arm’s length market conditions.

Percentage of ceded written premiums to gross written premiums	2020		2019		2018		2017		2016
Unaffiliated	14.9	%	16.7	%	14.7	%	14.6	%	13.6	%
Affiliated	1.7	%	1.4	%	8.7	%	38.4	%	45.9	%

If we are unable to purchase affiliated or unaffiliated reinsurance in the future, we may have to reduce our premium volume and we may be more exposed to reductions in net income from large losses.

Our industry is highly competitive and we may not be able to compete 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, 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 Standard & Poor’s, Group ranks among the top ten global 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 $225.1 billion in 2018 according to data compiled by Standard & Poor’s. In addition to competitors, the entry of alternative capital market products and vehicles provide additional sources of reinsurance and insurance capacity and increased competition.

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 71) 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 55), Executive Vice President and Chief Financial Officer, Mark Kociancic (age 51), Executive Vice President and Chief Operating Officer, Jim Williamson (age 47), Executive Vice President and Chief Executive Officer Reinsurance Division, John P. Doucette (age 55), Executive Vice President, General Counsel, Chief Compliance Officer and

Secretary, Sanjoy Mukherjee (age 54) and Executive Vice President, President and Chief Executive Officer of the Everest Insurance^® Division, Mike Karmilowicz (age 52). 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.

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. Both the fair market value of our invested assets and associated investment income fluctuate depending on general economic and market conditions. For example, the fair market value of our predominant fixed income portfolio generally increases or decreases inversely to fluctuations in interest rates. The market 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.

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 market value of these investments are reflected as changes to our stockholder’s 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.

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.

The following table quantifies the portion of our investment portfolio that consists of fixed income securities, equity securities and investments that carry prepayment risk.

	At
(Dollars in millions)	December 31, 2020		% of Total
Mortgage-backed securities
Commercial	$	550.1		3.5	%
Agency residential		965.1		6.1	%
Non-agency residential		3.2		-	%
Other asset-backed		2,474.2		15.6	%
Total asset-backed		3,992.6		25.1	%
Other fixed income		6,651.0		41.8	%
Total fixed income, at market value		10,643.6		66.9	%
Equity securities - at fair value		1,288.8		8.1	%
Other invested assets		1,094.9		6.9	%
Other invested assets, at fair value		1,796.5		11.3	%
Cash and short-term investments		1,086.4		6.8	%
Total investments and cash	$	15,910.2		100.0	%

We may experience foreign currency exchange losses that reduce our net income and capital levels.

Through our international operations, we conduct business in a variety of foreign (non-U.S.) currencies, principally 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 2020, we wrote approximately 15.8% of our coverages in non-U.S. currencies; as of December 31, 2020, we maintained approximately 8.6% of our investment portfolio in investments denominated in non-U.S. currencies. During 2020, 2019 and 2018, the impact on our quarterly pre-tax net income from exchange rate fluctuations ranged from a loss of $7.7 million to a gain of $5.2 million.

Changes in the method for determining LIBOR and the potential replacement of LIBOR may affect our cost of capital and net investment income.

On July 27, 2017, the UK Financial Conduct Authority announced that it intends to stop persuading or compelling banks to submit LIBOR rates after 2021, which is expected to result in these widely used reference rates no longer being available. Potential changes to LIBOR, as well as uncertainty related to such potential changes and the establishment of any alternative reference rates, may adversely affect the market for LIBOR-based securities and could adversely impact the interest rate on our long term subordinate notes. In addition, the discontinuance of LIBOR or changes or reforms to the determination or supervision of LIBOR may result in a sudden or prolonged increase or decrease in reported LIBOR, which could have an adverse impact on the market for LIBOR-based securities or the value of our investment portfolio.

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.

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 adopted a regulation pertaining to cybersecurity for all banking and insurance entities under its jurisdiction, 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.

The continuing COVID-19 pandemic has adversely affected, and may materially and adversely affect, our results of operations, financial position and liquidity in the future.

The ongoing COVID-19 pandemic, including the related impact on the U.S. and global economies, has adversely affected our results of operations. We expect the pandemic and its impact on our business to continue and potentially even worsen, but we cannot predict the magnitude or duration of its continued impact, particularly given the great uncertainties associated with COVID-19, including regarding the reopening of the U.S. and global economies and the recovery from its economic and other effects. The full impact of COVID-19 on our results of operations, financial position and liquidity is not yet known, and likely will not be known for some time, but includes the following:

Claim Losses Related to COVID-19 May Exceed Reserves: We have established reserves for COVID-19-related losses. Our reserves represent management’s best estimate of what the settlement and claims administration will cost for claims that have occurred, whether reported or unreported. Given the great uncertainties associated with COVID-19 and its impact and the limited information upon which our current assumptions and assessments have been made, our preliminary reserves and the underlying estimated level of claim losses and costs arising from COVID-19 may materially change.

Adverse Legislative and Regulatory Action: Legislative and regulatory initiatives taken or which may be taken in response to COVID-19 may adversely affect us. For example, our business may be subject to, certain initiatives, including, but not limited to: legislative and regulatory action that seeks to retroactively mandate coverage for losses which our insurance policies would not otherwise cover and which were not priced to cover; actions prohibiting us from cancelling insurance policies in accordance with our policy terms or non-renewing policies at their natural expiration; and/or orders to provide premium refunds, grant extended grace periods for premium payments, and provide extended time to pay past due premiums. Any such action would likely increase both our underwriting losses and our expenses and any legal challenges to any such action could take years to resolve.

Reduction in Premiums: The demand for insurance is significantly influenced by general economic conditions. Consequently, reduced economic activity relating to the COVID-19 pandemic is likely to decrease demand for our insurance products and services and negatively impact our premium volumes (and, in certain cases, may result in return of premiums due to a decrease in exposures). This may continue for an indefinite period, with the magnitude of the impact impossible to predict.

Investments: Further disruptions in global financial markets due to the continuing impact of COVID-19 could cause us to incur additional unrealized and/or realized investment losses, including credit impairments in our fixed maturity portfolio. In addition, the economic uncertainty resulting from COVID-19 may result in a decline in interest rates, which may negatively impact our future net investment income.

Credit Risk: As credit risk is generally a function of the economy, we face greater credit risk from our policyholders, independent agents and brokers in connection with the payment and remittance of premiums as a result of the economic conditions caused by COVID-19. Similarly, our credit risk related to the reimbursement of deductibles from policyholders and in connection with reinsurance recoverables has increased.

Operational Disruptions and Costs: Our operations could be disrupted if key members of our senior management or a significant percentage of our workforce or the workforce of our agents, brokers, suppliers or other third party service providers are unable to continue to work because of illness, government directives or otherwise. In addition, our agents, brokers, suppliers and other third party service providers, which we rely on for key aspects of our operations, are subject to risks and uncertainties related to the COVID-19 pandemic, which may interfere with their ability to fulfill their respective commitments and responsibilities to us in a timely manner and in accordance with the agreed-upon terms. In response to the COVID-19 pandemic, we have implemented remote working policies which have resulted in disruptions to our business routines, heightened risk to cybersecurity attacks and data security incidents and a greater dependency on internet and telecommunication access and capabilities.

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.

Risk Relating to our 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.

We are a holding company, whose most significant asset consists of the stock of our operating subsidiaries. As a result, our ability to pay dividends, interest or other payments on our 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 us. 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 us in the future, which could prevent us from paying dividends, interest or other payments on our securities.

Risk Relating to taxation

If U.S. tax law changes, our net income may be impacted.

The 2017 TCJA addressed concerns by members of Congress regarding 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 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 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 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.

ITEM 1B. UNRESOLVED STAFF COMMENTS

None.

ITEM 2. PROPERTIES

As of December 2020, Everest Re has relocated its corporate offices to Warren, NJ with approximately 321,500 square feet of leased office space. The Company’s other 18 locations occupy a total of approximately 219,950 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 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 STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

Market Information and Holder of Common Stock.

As of December 31, 2020, all of the Company’s common stock was owned by Holdings Ireland and was not publicly traded.

Dividend History and Restrictions.

The Company did not pay any dividends in 2020, 2019 and 2018. 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 dependent on dividends and other permitted payments from its subsidiaries to pay cash dividends to its stockholder. 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 $5,276.0 million at December 31, 2020, 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 an insurer’s statutory surplus as of the end of the prior calendar year or (2) the insurer’s statutory net income, not including realized capital gains, for the prior calendar year. The maximum amount that is available for the payment of dividends by Everest Re in 2021 without prior regulatory approval is $592.1 million.

Recent Sales of Unregistered Securities.

None.

ITEM 6. SELECTED FINANCIAL DATA

Information for Item 6 is not required pursuant to General Instruction I(2) of Form 10-K.

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. It should be read in conjunction with the Consolidated Financial Statements and accompanying notes thereto presented under ITEM 8, “Financial Statements and Supplementary Data”.

Industry Conditions.

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 stockholder’s equity for the periods indicated:

	Years Ended December 31,						Percentage Increase/(Decrease)
(Dollars in millions)	2020		2019		2018		2020/2019		2019/2018
Gross written premiums	$	7,957.0	$	7,053.1	$	6,573.7		12.8%	7.3%
Net written premiums		6,638.7		5,774.9		5,031.9		15.0%	14.8%

REVENUES:
Premiums earned	$	6,406.6	$	5,489.0	$	4,839.1		16.7%	13.4%
Net investment income		375.9		356.2		314.4		5.5%	13.3%
Net realized capital gains (losses)		49.8		419.4		(185.4)		-88.1%	NM
Other income (expense)		(14.6)		(1.6)		(9.6)		NM	-83.4%
Total revenues		6,817.7		6,263.0		4,958.5		8.9%	26.3%

CLAIMS AND EXPENSES:
Incurred losses and loss adjustment expenses		4,608.1		3,829.1		4,811.0		20.3%	-20.4%
Commission, brokerage, taxes and fees		1,373.4		1,270.1		1,141.7		8.1%	11.2%
Other underwriting expenses		401.0		350.9		293.3		14.3%	19.6%
Corporate expense		16.0		13.1		11.0		22.4%	18.4%
Interest, fee and bond issue cost amortization expense		35.7		34.9		30.6		2.1%	14.1%
Total claims and expenses		6,434.2		5,498.1		6,287.7		17.0%	-12.6%

INCOME (LOSS) BEFORE TAXES		383.5		765.0		(1,329.2)		-49.9%	-157.5%
Income tax expense (benefit)		31.7		135.2		(367.0)		-76.6%	-136.8%
NET INCOME (LOSS)	$	351.9	$	629.7	$	(962.2)		-44.1%	-165.4%

RATIOS:								Point Change
Loss ratio		71.9%		69.8%		99.4%		2.1	(29.6)
Commission and brokerage ratio		21.4%		23.1%		23.6%		(1.7)	(0.5)
Other underwriting expense ratio		6.3%		6.4%		6.1%		(0.1)	0.3
Combined ratio		99.6%		99.3%		129.1%		0.3	(29.8)


	At December 31,						Percentage Increase/ (Decrease)
(Dollars in millions)	2020		2019		2018		2020/2019		2019/2018
Balance sheet data:
Total investments and cash	$	15,910.2	$	11,956.3	$	10,707.4		33.1%	11.7%
Total assets		23,717.1		19,706.2		18,680.3		20.4%	5.5%
Loss and loss adjustment expense reserves		11,655.0		10,209.5		10,167.0		14.2%	0.4%
Total debt		1,910.4		633.8		933.6		201.4%	-32.1%
Total liabilities		17,302.8		13,848.8		13,643.5		24.9%	1.5%
Stockholder's equity		6,414.3		5,857.4		5,036.8		9.5%	16.3%

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

Revenues.

Premiums. Gross written premiums increased by 12.8% to $7,957.0 million in 2020, compared to $7,053.1 million in 2019, reflecting a $665.3 million, or 14.5%, increase in our reinsurance business and a $238.6 million, or 9.7%, increase in our insurance business. The rise in reinsurance premiums was mainly due to increases in property pro rata business, casualty excess of loss writings and property catastrophe excess of loss business. The rise in insurance premiums was mainly due to increases in specialty casualty business, property business and professional liability business. Net written premiums increased by 15.0% to $6,638.7 million in 2020, compared to $5,774.9 million in 2019. The difference between the change in gross written premiums compared to the change in net written premiums is primarily due to the impact of changes in affiliated reinsurance contracts. Premiums earned increased by 16.7% to $6,406.6 million in 2020, compared to $5,489.0 million in 2019. 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.

Gross written premiums increased by 7.3% to $7,053.1 million in 2019, compared to $6,573.7 million in 2018, reflecting a $445.7 million, or 22.2%, increase in our insurance business and a $33.7 million, or 0.7%, increase in our reinsurance business. The rise in insurance premiums was primarily due to increases in many lines of business, including casualty, energy and accident and health. The increase in reinsurance premiums was mainly due to the increase in treaty casualty writings, partially offset by a decline in treaty property business. Net written premiums increased by 14.8% to $5,774.9 million in 2019, compared to $5,031.9 million in 2018. The difference between the change in gross written premiums compared to the change in net written premiums is primarily due to the impact of changes in affiliated reinsurance contracts. Premiums ceded to Bermuda Re in 2019 were $100.1 million compared with $572.6 million in 2018. Premiums earned increased by 13.4% to $5,489.0 million in 2019, compared to $4,839.1 million in 2018. The change in premiums earned relative to net written premiums is the result of timing; premiums are earned ratably over the coverage period whereas written premiums are recorded at the initiation of the coverage period.

Net Investment Income. Net investment income increased 5.5% to $375.9 million in 2020 compared with net investment income of $356.2 million in 2019. Net pre-tax investment income as a percentage of average invested assets was 2.8% in 2020 and 3.2% in 2019. The increase in income was primarily the result of higher income from our growing fixed maturity portfolio, offsetting the impact from the lower interest rate environment, and from our limited partnerships.

Net investment income increased 13.3% to $356.2 million in 2019 compared with net investment income of $314.4 million in 2018. Net pre-tax investment income as a percentage of average invested assets was 3.2% in both 2019 and 2018. The increase in income was primarily the result of higher income from our growing fixed maturity portfolio, partially offset by lower income from our limited partnerships and lower dividend income from our equity portfolio.

Net Realized Capital Gains (Losses). Net realized capital gains were $49.8 million in 2020 and $419.4 million in 2019 and net realized capital losses were $185.4 million in 2018. The net realized capital gains of $49.8 million in 2020, were comprised of $91.9 million of gains from fair value re-measurements, partially offset by $40.6 million of losses from sales of investments and $1.6 million increase in allowances for credit loss. The net realized capital gains of $419.4 million in 2019, were comprised of $420.8 million of gains from fair value re-measurements, $18.2 million of gains from sales of investments, partially offset by $19.6 million of other-than-temporary impairments. The net realized capital losses of $185.4 million in 2018 were comprised of $148.0 million of losses from fair value re-measurements, $31.2 million of losses from sales of investments and $6.2 million of other-than-temporary impairments.

Other Income (Expense). We recorded other expense of $14.6 million $1.6 million and $9.6 million in 2020, 2019 and 2018, respectively. The changes were primarily the result of fluctuations in foreign currency exchange rates.

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.

	Total
	Current		Ratio %/		Prior		Ratio %/		Total		Ratio %/
(Dollars in millions)	Year		Pt Change		Years		Pt Change		Incurred		Pt Change
2020
Attritional (a)	$	3,997.2	62.4%		$	213.5	3.3%		$	4,210.8	65.7%
Catastrophes		410.6	6.4%			(13.2)	(0.2)%			397.4	6.2%
Total	$	4,407.8	68.8%		$	200.3	3.1%		$	4,608.1	71.9%

2019
Attritional (a)	$	3,271.4	59.6%		$	(16.0)	-0.3%		$	3,255.5	59.3%
Catastrophes		513.3	9.4%			60.3	1.1%			573.7	10.5%
Total	$	3,784.8	69.0%		$	44.4	0.8%		$	3,829.1	69.8%

2018
Attritional (a)	$	3,092.6	63.9%		$	5.8	0.1%		$	3,098.4	64.0%
Catastrophes		1,159.6	24.0%			553.0	11.4%			1,712.6	35.4%
Total	$	4,252.2	87.9%		$	558.8	11.5%		$	4,811.0	99.4%

Variance 2020/2019
Attritional (a)	$	725.8	2.8	pts	$	229.5	3.6	pts	$	955.3	6.4	pts
Catastrophes		(102.7)	(3.0)	pts		(73.5)	(1.3)	pts		(176.3)	(4.3)	pts
Total	$	623.0	(0.2)	pts	$	155.9	2.3	pts	$	779.0	2.1	pts

Variance 2019/2018
Attritional (a)	$	178.8	(4.3)	pts	$	(21.8)	(0.4)	pts	$	157.1	(4.7)	pts
Catastrophes		(646.3)	(14.6)	pts		(492.7)	(10.3)	pts		(1,138.9)	(24.9)	pts
Total	$	(467.4)	(18.9)	pts	$	(514.4)	(10.7)	pts	$	(981.9)	(29.6)	pts

(a) Attritional losses exclude catastrophe losses.
(Some amounts may not reconcile due to rounding.)

Incurred losses and LAE increased by 20.3% to $4,608.1 million in 2020 compared to $3,829.1 million in 2019, primarily due to an increase of $725.8 million in current year attritional losses, related to $154.8 million of losses from the COVID-19 pandemic and the impact of the increase in premiums earned and $229.5 million increase in development on prior years attritional losses in 2020 compared to 2019. The increase in incurred losses was partially offset by a decrease of $102.7 million in current year catastrophe losses and a $73.5 million improvement in development on prior years catastrophe losses. The current year catastrophe losses of $410.6 million in 2020 related to Hurricane Laura ($115.0 million), the Northern California wildfires ($44.1 million), Hurricane Zeta ($36.5 million), Hurricane Sally ($31.4 million), the California Glass wildfire ($29.5 million), the Nashville tornadoes ($22.8 million), the Derecho storms ($20.5 million), Hurricane Isaias ($20.0 million), Hurricane Delta ($18.5 million), the Calgary storms in Canada ($17.4 million), Oregon wildfires ($17.0 million), the U.S. Civil Unrest ($14.5 million) the Queensland hailstorm ($10.0 million), the Australia East Coast storm ($6.8 million) and the 2020 Australia fires ($6.5 million). The current year catastrophe losses of $513.3 million in 2019 related to Typhoon Hagibis ($184.0 million), Hurricane Dorian ($161.0 million), Typhoon Faxai ($119.3 million), the Dallas tornadoes ($25.0 million), and the Townsville Monsoon in Australia ($24.0 million).

Incurred losses and LAE decreased by 20.4% to $3,829.1 million in 2019 compared to $4,811.0 million in 2018, primarily due to a decrease in current year catastrophe losses of $646.3 million and a decrease in unfavorable development on prior year catastrophe losses of $492.7 million mainly related to the development on Hurricanes Harvey, Irma and Maria and the California wildfires in 2018. The decrease in losses was partially offset by an increase of $178.8 million on current year attritional losses mainly due to the increase in premiums earned. The current year catastrophe losses of $513.3 million in 2019 are outlined above. The

current year catastrophe losses of $1,159.6 million in 2018 related to Hurricane Michael ($443.5 million), Camp wildfire ($297.0 million), Woolsey wildfire (151.0 million), Typhoon Jebi ($66.6 million), Hurricane Florence ($60.8 million), Cyclone Mekunu ($43.7 million), Typhoon Trami ($25.0 million), other 2018 California wildfires ($24.6 million), Australian hailstorm ($24.0 million), Japan Floods ($15.0 million) and the U.S. winter storms ($8.4 million).

Commission, Brokerage, Taxes and Fees. Commission, brokerage, taxes and fees increased to $1,373.4 million in 2020 compared to $1,270.1 million in 2019. The increase was mainly due to increases in premiums earned and changes in the mix of business.

Commission, brokerage, taxes and fees increased to $1,270.1 million in 2019 compared to $1,141.7 million in 2018. The increase was mainly due to changes in affiliated reinsurance agreements, increases in premiums earned and changes in the mix of business toward additional pro rata business.

Other Underwriting Expenses. Other underwriting expenses were $401.0 million, $350.9 million and $293.3 million in 2020, 2019 and 2018, respectively. The increases were mainly due to the impact of increases in premium earned, costs incurred to support the expansion of the insurance business and changes in affiliated reinsurance agreements.

Corporate Expenses. Corporate expenses, which are general operating expenses that are not allocated to segments, were $16.0 million, $13.1 million and $11.0 million for the years ended December 31, 2020, 2019 and 2018, respectively. The variances were mainly due to changes in variable compensation.

Interest, Fees and Bond Issue Cost Amortization Expense. Interest, fees and other bond amortization expense were $35.7 million, $34.9 million and $30.6 million in 2020, 2019 and 2018, respectively. The changes in expense were primarily due to 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 2.6% as of December 31, 2020. The increase from 2019 to 2020 was also related to the interest expense incurred on the $1,000.0 million senior note issuance in October 2020.

Income Tax Expense (Benefit). The Company had an income tax expense of $31.7 million in 2020, an income tax expense of $135.2 million in 2019, and an income tax benefit of $367.0 million in 2018. The TCJA impact was an income tax benefit of $28.4 million in 2018. Variations in income taxes generally result from changes in the relative levels of pre-tax income, including the impact of catastrophe losses and net capital gains (losses) as well as changes in tax exempt investment income and creditable foreign taxes. The change in income tax expense was primarily due to the increase in incurred losses, including from COVID 19 reserves and a reserve charge from 2019 to 2020.

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 $32.5 million and obtain federal income tax cash refunds of $182.5 million including interest in 2020.

Net Income (Loss).

Our net income was $351.9 million and $629.7 million in 2020 and 2019, respectively and our net loss was $962.2 million in 2018. The changes were primarily driven by the financial component fluctuations explained above.

Ratios.

Our combined ratio increased by 0.3 points to 99.6% in 2020 compared to 99.3% in 2019. The loss ratio component increased by 2.1 points in 2020 over the same period last year mainly due to $229.5 million increase in development on prior years attritional losses and $154.8 million of losses related to the Covid-19 pandemic in 2020. The commission and brokerage ratio component decreased to 21.4% in 2020 compared to 23.1% in 2019, reflecting changes in affiliated reinsurance agreements and changes in the mix of business. The other underwriting expense ratio decreased slightly to 6.3% in 2020 from 6.4% in 2019.

Our combined ratio decreased by 29.8 points to 99.3% in 2019 compared to 129.1% in 2018. The loss ratio component decreased by 29.6 points in 2019 over the same period last year mainly due to a lower loss ratio on current year catastrophe losses and less unfavorable development on prior years catastrophe losses in 2019 compared to 2018. The commission and brokerage ratio component decreased slightly to 23.1% in 2019 compared to 23.6% in 2018, reflecting changes in affiliated reinsurance agreements and changes in the mix of business. The other underwriting expense ratio increased slightly to 6.4% in 2019 from 6.1% in 2018.

Stockholder's Equity.

Stockholder’s equity increased by $556.9 million to $6,414.3 million at December 31, 2020 from $5,857.4 million at December 31, 2019, principally as a result of $351.9 million of net income, $188.5 million of net unrealized appreciation on investments, net of tax, $14.5 million of net foreign currency translation adjustments, $0.9 million of cumulative adjustment from the adoption of ASU 2016-13, $0.7 million of net benefit plan obligation adjustments and $0.4 million of capital contributions

Stockholder’s equity increased by $820.6 million to $5,857.4 million at December 31, 2019 from $5,036.8 million at December 31, 2018, principally as a result of $629.7 million of net income, $180.6 million of net unrealized appreciation on investments, net of tax, $17.2 million of net foreign currency translation adjustments and $0.4 million of capital contributions, partially offset by $7.1 million of net benefit plan obligation adjustments.

Consolidated Investment Results

Net Investment Income.

Net investment income increased by 5.5% to $375.9 million in 2020 compared to $356.2 million in 2019. The increase in 2020 was primarily due to higher income from our growing fixed maturity portfolio, offsetting the impact of the lower interest rate environment, and from our limited partnerships.

Net investment income increased by 13.3% to $356.2 million in 2019 compared to $314.4 million in 2018. The increase in 2019 was primarily due to higher income from our growing fixed maturity portfolio, partially offset by lower income from our limited partnerships and lower dividend income from our equity portfolio.

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

	Years Ended December 31,
(Dollars in millions)	2020		2019		2018
Fixed maturities	$	305.4	$	273.1	$	201.1
Equity securities		11.5		10.8		14.9
Short-term investments and cash		3.0		10.2		7.7
Other invested assets
Limited partnerships		48.9		43.3		61.6
Dividends from preferred shares of affiliate		31.0		31.0		31.0
Other		1.7		14.1		17.8
Gross investment income before adjustments		401.5		382.6		334.2
Funds held interest income (expense)		5.7		6.5		5.2
Interest income from Parent		5.2		0.2		4.1
Gross investment income		412.3		389.3		343.5
Investment expenses		(36.4)		(33.1)		(29.1)
Net investment income	$	375.9	$	356.2	$	314.4

(Some amounts may not reconcile due to rounding.)

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

	2020		2019		2018
Imbedded pre-tax yield of cash and invested assets at December 31	3.1	%	3.5	%	3.5	%
Imbedded after-tax yield of cash and invested assets at December 31	2.5	%	2.8	%	2.8	%

Annualized pre-tax yield on average cash and invested assets	2.8	%	3.2	%	3.2	%
Annualized after-tax yield on average cash and invested assets	2.3	%	2.6	%	2.6	%

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,						2020/2019		2019/2018
(Dollars in millions)	2020		2019		2018		Variance		Variance
Gains (losses) from sales:
Fixed maturity securities, market value
Gains	$	24.2	$	24.7	$	15.3	$	(0.5)	$	9.4
Losses		(56.8)		(17.1)		(14.4)		(39.7)		(2.7)
Total		(32.6)		7.6		0.9		(40.2)		6.7

Fixed maturity securities, fair value
Gains		—		0.4		—		(0.4)		0.4
Losses		(2.9)		—		(1.8)		(2.9)		1.8
Total		(2.9)		0.4		(1.8)		(3.3)		2.2

Equity securities, fair value
Gains		37.4		14.2		25.2		23.2		(11.0)
Losses		(45.3)		(10.1)		(57.3)		(35.2)		47.2
Total		(7.9)		4.1		(32.1)		(12.0)		36.2

Other invested assets
Gains		7.7		6.7		1.8		1.0		4.9
Losses		(6.0)		(0.7)		—		(5.3)		(0.7)
Total		1.7		6.0		1.8		(4.3)		4.2

Short Term Investments:
Gains		1.1		0.2		—		0.9		0.2
Losses		—		—		—		—		—
Total		1.1		0.2		—		0.9		0.2

Total net realized gains (losses) from sales
Gains		70.4		46.3		42.3		24.1		4.0
Losses		(111.0)		(27.9)		(73.5)		(83.1)		45.6
Total		(40.6)		18.4		(31.2)		(59.0)		49.6

Allowances for credit losses:		(1.6)		—		—		(1.6)		—

Other than temporary impairments:		—		(19.6)		(6.2)		19.6		(13.4)

Gains (losses) from fair value adjustments:
Fixed maturities, fair value		1.9		1.8		1.5		0.1		0.3
Equity securities, fair value		276.1		153.7		(59.4)		122.4		213.1
Other invested assets, fair value		(186.1)		265.2		(90.1)		(451.3)		355.3
Total		91.9		420.7		(148.0)		(328.8)		568.7

Total net realized gains (losses)	$	49.8	$	419.4	$	(185.4)	$	(369.6)	$	604.8
(Some amounts may not reconcile due to rounding.)

Net realized capital gains were $49.8 million in 2020 and $419.4 million in 2019 and net realized capital losses were $185.4 million in 2018. The net realized capital gains of $49.8 million in 2020, were comprised of $91.9 million of gains from fair value re-measurements, partially offset by $40.6 million of losses from sales of investments and $1.6 million increase in allowances for credit loss. The net realized capital gains of $419.4 million in 2019, were comprised of $420.8 million of gains from fair value re-measurements, $18.2 million of gains from sales of investments, partially offset by $19.6 million of other-than-temporary impairments. The net realized capital losses of $185.4 million in 2018 were comprised of $148.0 million of losses from fair value re-measurements, $31.2 million of losses from sales of investments and $6.2 million of other-than-temporary impairments.

Segment Results.

The Reinsurance operation writes 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 primarily written in the U.S. as well as through branches in Canada and Singapore. The Insurance operation writes property and casualty insurance directly, through brokers, surplus lines brokers and general agents mainly within the U.S.

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 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.

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 the 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,						2020/2019			2019/2018
(Dollars in millions)	2020		2019		2018		Variance		% Change	Variance		% Change
Gross written premiums	$	5,265.7	$	4,600.4	$	4,569.5	$	665.3	14.5%	$	30.9	0.7%
Net written premiums		4,632.3		3,923.8		3,519.7		708.5	18.1%		404.1	11.5%

Premiums earned	$	4,484.7	$	3,796.2	$	3,386.4	$	688.5	18.1%	$	409.8	12.1%
Incurred losses and LAE		3,209.2		2,692.7		3,811.7		516.5	19.2%		(1,119.0)	(29.4)%
Commission and brokerage		1,120.0		1,027.3		923.9		92.7	9.0%		103.4	11.2%
Other underwriting expenses		119.3		110.0		97.9		9.3	8.5%		12.1	12.4%
Underwriting gain (loss)	$	36.2	$	(33.9)	$	(1,447.2)	$	70.1	-207.0%	$	1,413.3	(97.7)%

									Point Chg			Point Chg
Loss ratio		71.6%		70.9%		112.6%			0.7			(41.7)
Commission and brokerage ratio		25.0%		27.1%		27.3%			(2.1)			(0.2)
Other underwriting expense ratio		2.6%		2.9%		2.8%			(0.3)			0.1
Combined ratio		99.2%		100.9%		142.7%			(1.7)			(41.8)

(Some amounts may not reconcile due to rounding)

Premiums. Gross written premiums increased by 14.5% to $5,265.7 million in 2020 from $4,600.4 million in 2019, primarily due to increases in property pro rata business, casualty excess of loss writings and property catastrophe excess of loss business. Net written premiums increased by 18.1% to $4,632.3 million in 2020 compared to $3,923,8 million in 2019. The difference between the change in gross written premiums compared to the change in net written premiums is primarily due to the impact of changes in affiliated reinsurance contracts. Premiums earned increased 18.1% to $4,484.7 million in 2020 compared to $3,796.2 million in 2019. 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.

Gross written premiums increased by 0.7% to $4,600.4 million in 2019 from $4,569.5 million in 2018, primarily due to an increase in treaty casualty writings and mortgage business, partially offset by a decline in treaty property business, including lower reinstatement premiums. Net written premiums increased by 11.5% to $3,923.8 million in 2019 compared to $3,519.7 million in 2018. The difference between the change in gross written premiums compared to the change in net written premiums is primarily due to the impact of changes in affiliated reinsurance contracts. Premiums earned increased 12.1% to $3,796.2 million in 2019 compared to $3,386.4 million in 2018. The change in premiums earned relative to net written premiums is the result of timing; premiums are earned ratably over the coverage period whereas written premiums are recorded at the initiation of the coverage period.

Incurred Losses and LAE. The following 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
2020
Attritional	$	2,692.2	60.0%		$	187.3	4.2%		$	2,879.5	64.2%
Catastrophes		342.5	7.6%			(12.8)	(0.3)%			329.7	7.4%
Total segment	$	3,034.7	67.7%		$	174.5	3.9%		$	3,209.2	71.6%

2019
Attritional	$	2,140.1	56.4%		$	(15.4)	(0.4)%		$	2,124.7	56.0%
Catastrophes		509.3	13.4%			58.7	1.5%			568.0	14.9%
Total segment	$	2,649.4	69.8%		$	43.3	1.1%		$	2,692.7	70.9%

2018
Attritional	$	2,130.0	62.9%		$	5.8	0.2%		$	2,135.8	63.1%
Catastrophes		1,117.5	33.0%			558.4	16.5%			1,675.9	49.5%
Total segment	$	3,247.6	95.9%		$	564.2	16.7%		$	3,811.7	112.6%

Variance 2020/2019
Attritional	$	552.1	3.6	pts	$	202.7	4.6	pts	$	754.8	8.2	pts
Catastrophes		(166.8)	(5.8)	pts		(71.5)	(1.8)	pts		(238.3)	(7.5)	pts
Total segment	$	385.3	(2.1)	pts	$	131.2	2.8	pts	$	516.5	0.7	pts

Variance 2019/2018
Attritional	$	10.1	(6.5)	pts	$	(21.2)	(0.6)	pts	$	(11.1)	(7.1)	pts
Catastrophes		(608.2)	(19.6)	pts		(499.7)	(15.0)	pts		(1,107.9)	(34.6)	pts
Total segment	$	(598.2)	(26.1)	pts	$	(520.9)	(15.6)	pts	$	(1,119.0)	(41.7)	pts

(Some amounts may not reconcile due to rounding.)

Incurred losses increased by 19.2% to $3,209.2 million in 2020 compared to $2,692.7 million in 2019. The increase was primarily due to an increase of $552.1 million in current year attritional losses, primarily related to $116.4 million of losses from the COVID-19 pandemic and the impact of the increase in premiums earned, as well as a $202.7 million increase in development on prior years attritional losses in 2020 compared to 2019. The increase in incurred losses was partially offset by a decline of $166.8 million in current year catastrophe losses and $71.5 million of improvement in development on prior years catastrophe losses in 2020 compared to 2019. The current year catastrophe losses of $342.5 million in 2020 primarily related to Hurricane Laura ($96.5 million), the Northern California wildfires ($44.1 million), the California Glass wildfire ($29.5 million), Hurricane Zeta ($28.5 million), Hurricane Isaias ($17.8 million), the Derecho storms ($17.5 million), the Nashville tornadoes ($17.3 million), Oregon wildfires ($17.0 million), Hurricane Delta ($16.5 million), Hurricane Sally ($15.5 million), the Calgary storms in Canada ($14.9 million), the Queensland hailstorm ($10.0 million), the Australia East Coast storm ($6.8 million), the 2020 Australia fires ($6.5 million), and the U.S. Civil Unrest ($4.1 million). The current year catastrophe losses of $509.3 million in 2019 primarily related to Typhoon Hagibis ($184.0 million), Hurricane Dorian ($157.0 million), Typhoon Faxai ($119.3 million), the Dallas tornadoes ($25.0 million), and the Townsville Monsoon in Australia ($24.1 million).

Incurred losses decreased by 29.4% to $2,692.7 million in 2019 compared to $3,811.7 million in 2018. The decrease was primarily due to a decline of $608.2 million in current year catastrophe losses and a $499.7 million decrease in development on prior year catastrophe losses in 2019 compared to 2018, primarily related to development on Hurricane Harvey, Irma and Maria and the 2017 California wildfires in 2018. The increases

in loss estimates in 2018 for Hurricane Harvey, Irma and Maria were mostly driven by re-opened claims reported in the second quarter of 2018 and loss inflation from higher than expected loss adjustment expenses and in particular, their impact on aggregate covers. The current year catastrophe losses of $509.3 million in 2019 are outlined above. The current year catastrophe losses of $1,117.5 million in 2018 primarily related to Hurricane Michael ($419.5 million), Camp wildfire ($297.0 million), Woolsey wildfire ($151.0 million), Typhoon Jebi ($66.6 million), Hurricane Florence ($51.3 million), Cyclone Mekunu ($43.7 million), Typhoon Trami ($25.0 million), Australia hailstorm ($24.0 million), other 2018 California wildfires ($23.1 million), Japan Floods ($5.5 million), and the U.S. winter storms ($1.3 million).

Segment Expenses. Commission and brokerage increased to $1,120.0 million in 2020 compared to $1,027.3 million in 2019. The increase was mainly due to the impact of the increase in premiums earned and changes in the mix of business. Segment other underwriting expenses increased to $119.3 million in 2020 from $110.0 million in 2019, mainly due to the impact of the increase in premiums earned.

Commission and brokerage increased to $1,027.3 million in 2019 compared to $923.9 million in 2018. The increase was mainly due to changes in affiliated reinsurance agreements, the impact of the increase in premiums earned and changes in the mix of business. Segment other underwriting expenses increased to $110.0 million in 2019 from $97.9 million in 2018, mainly due to the impact of changes in affiliated reinsurance contracts and the impact of the increases in premiums earned.

Insurance.

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

	Years Ended December 31,						2020/2019				2019/2018
(Dollars in millions)	2020		2019		2018		Variance		% Change		Variance		% Change
Gross written premiums	$	2,691.3	$	2,452.7	$	2,004.1	$	238.6		9.7%	$	448.6		22.4%
Net written premiums		2,006.4		1,851.2		1,512.2		155.2		8.4%		339.0		22.4%

Premiums earned	$	1,921.9	$	1,692.9	$	1,452.7	$	229.0		13.5%	$	240.2		16.5%
Incurred losses and LAE		1,399.0		1,136.4		999.3		262.7		23.1%		137.2		13.7%
Commission and brokerage		253.4		242.8		217.8		10.6		4.4%		25.0		11.5%
Other underwriting expenses		281.7		240.9		195.4		40.7		16.9%		45.4		23.2%
Underwriting gain (loss)	$	(12.2)	$	72.8	$	40.2	$	(84.9)		(116.7)%	$	32.7		81.3%

										Point Chg				Point Chg
Loss ratio		72.8%		67.1%		68.8%				5.7				(1.7)
Commission and brokerage ratio		13.2%		14.3%		15.0%				(1.1)				(0.7)
Other underwriting expense ratio		14.6%		14.3%		13.4%				0.3				0.9
Combined ratio		100.6%		95.7%		97.2%				4.9				(1.5)

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

Premiums. Gross written premiums increased by 9.7% to $2,691.3 million in 2020 compared to $2,452.7 million in 2019. This increase was related to increases in specialty casualty business, property business and professional liability business. Net written premiums increased by 8.4% to $2,006.4 million in 2020 compared to $1,851.2 million in 2019 which is consistent with the change in gross written premiums. Premiums earned increased 13.5% to $1,921.9 million in 2020 compared to $1,692.9 million in 2019. The change in premiums earned 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.

Gross written premiums increased by 22.4% to $2,452.7 million in 2019 compared to $2,004.1 million in 2018. This increase was related to most lines of business including casualty, energy and accident and health. Net written premiums increased by 22.4% to $1,851.2 million in 2019 compared to $1,512.2 million in 2018 which is consistent with the change in gross written premiums. Premiums earned increased 16.5% to $1,692.9 million in 2019 compared to $1,452.7 million in 2018. The change in premiums earned is the result of timing; premiums are earned ratably over the coverage period whereas written premiums are recorded at the initiation of the coverage period.

Incurred Losses and LAE. The following 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
2020
Attritional	$	1,305.1	67.9%		$	26.3	1.4%		$	1,331.3	69.3%
Catastrophes		68.0	3.5%			(0.4)	(0.0)%			67.7	3.5%
Total segment	$	1,373.1	71.4%		$	25.9	1.3%		$	1,399.0	72.8%

2019
Attritional	$	1,131.3	66.8%		$	(0.5)	—%		$	1,130.8	66.8%
Catastrophes		4.0	0.2%			1.7	0.1%			5.7	0.3%
Total segment	$	1,135.3	67.0%		$	1.2	0.1%		$	1,136.4	67.1%

2018
Attritional	$	962.6	66.3%		$	—	—%		$	962.6	66.3%
Catastrophes		42.1	2.9%			(5.4)	(0.4)%			36.7	2.5%
Total segment	$	1,004.7	69.2%		$	(5.4)	(0.4)%		$	999.3	68.8%

Variance 2020/2019
Attritional	$	173.8	1.1	pts	$	26.8	1.4	pts	$	200.6	2.5	pts
Catastrophes		64.0	3.3	pts		(2.1)	(0.1)	pts		62.0	3.2	pts
Total segment	$	237.8	4.4	pts	$	24.7	1.2	pts	$	262.7	5.7	pts

Variance 2019/2018
Attritional	$	168.7	0.5	pts	$	(0.5)	—	pts	$	168.2	0.5	pts
Catastrophes		(38.1)	(2.7)	pts		7.1	0.5	pts		(31.0)	(2.2)	pts
Total segment	$	130.6	(2.2)	pts	$	6.6	0.5	pts	$	137.2	(1.7)	pts

(Some amounts may not reconcile due to rounding.)

Incurred losses and LAE increased by 23.1% to $1,399.0 million in 2020 compared to $1,136.4 million in 2019, mainly due to an increase of $173.8 million in current year attritional losses, resulting from $38.4 million of losses from the COVID-19 pandemic and the impact of the increase in premiums earned, an increase of $64.0 million in current year catastrophe losses and a $26.8 million increase in development on prior years attritional losses in 2020 compared to 2019. The $68.0 million of current year catastrophe losses in 2020, primarily related to Hurricane Laura ($18.5 million), Hurricane Sally ($15.9 million), the U.S. Civil Unrest ($10.4 million), Hurricane Zeta ($8.0 million), the Nashville tornadoes ($5.5 million), the Derecho storms ($3.0 million), the Calgary storms in Canada ($2.5 million), Hurricane Isaias ($2.2 million), and Hurricane Delta ($2.0 million).The current year catastrophe losses of $4.0 million in 2019 primarily related to Hurricane Dorian ($4.0 million).

Incurred losses and LAE increased by 13.7% to $1,136.4 million in 2019 compared to $999.3 million in 2018, mainly due to an increase of $168.7 million in current year attritional losses, resulting from the impact of the increase in premiums earned, partially offset by a decrease of $38.1 million in current year catastrophe losses. The current year catastrophe losses of $4.0 million in 2019 primarily related to Hurricane Dorian ($4.0 million). The current year catastrophe losses of $42.1 million in 2018 primarily related to Hurricane Michael ($24.0 million), Hurricane Florence ($9.5 million), the U.S. winter storms ($7.1 million) and other 2018 California wildfires ($1.5 million).

Segment Expenses. Commission and brokerage increased to $253.4 million in 2020 compared to $242.8 million in 2019. The increase was mainly due to changes in affiliated reinsurance agreements and the impact of increases in premiums earned. Segment other underwriting expenses increased to $281.7 million in 2020 compared to $240.9 million in 2019. The increases were mainly due to the impact of the increases in premiums earned and expenses related to the continued build out of the insurance business.

Commission and brokerage increased to $242.8 million in 2019 compared to $217.8 million in 2018. The increase was mainly due to changes in affiliated reinsurance agreements and the impact of increases in premiums earned. Segment other underwriting expenses increased to $240.9 million in 2019 compared to $195.4 million in 2018. The increases were mainly due to the impact of the increases in premiums earned and expenses related to the continued build out of the insurance business.

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 TCJA, the adequacy of our provision for uncollectible balances, estimates of our catastrophe exposure, the effects of catastrophic and pandemic events on our financial statements and the ability of our subsidiaries to pay dividends. 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

Market Sensitive Instruments.

The SEC’s Financial Reporting Release #48 requires registrants to clarify and expand upon the existing financial statement disclosure requirements for derivative financial instruments, derivative commodity instruments and other financial instruments (collectively, “market sensitive instruments”). We do not generally enter into market sensitive instruments for trading purposes.

Our current investment strategy seeks to maximize after-tax income through a high quality, diversified, fixed maturity portfolio, while maintaining an adequate level of liquidity. The fixed maturity securities in the investment portfolio are comprised of non-trading available for sale securities. Additionally, we have invested in equity securities, private equity and private placement loans.

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 $15.9 billion investment portfolio, at December 31, 2020, 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 $1,518.4 million of mortgage-backed securities in the $10,643.6 million fixed maturity portfolio. Prepayment risk results from potential accelerated principal payments that shorten the average life and thus the expected yield of the security.

The table below displays the potential impact of market value fluctuations and after-tax unrealized appreciation on our fixed maturity portfolio (including $707.9 million of short-term investments) for the period indicated based on upward and downward parallel and immediate 100 and 200 basis point shifts in interest rates. For legal entities with a U.S. dollar functional currency, this modeling was performed on each security individually. To generate appropriate price estimate on mortgage-backed securities, changes in prepayment expectations under different interest rate environments were taken into account. For legal entities with 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, 2020
(Dollars in millions)	-200			-100			O			100			200
Total Market/Fair Value	$	12,041.1		$	11,696.3		$	11,351.5		$	11,006.7		$	10,661.9
Market/Fair Value Change from Base (%)		6.1	%		3.0	%		-	%		-3.0	%		-6.1	%
Change in Unrealized Appreciation
After-tax from Base ($)	$	544.8		$	272.4		$	—		$	(272.4)		$	(544.8)

	Impact of Interest Rate Shift in Basis Points
	At December 31, 2019
(Dollars in millions)	-200			-100			O			100			200
Total Market/Fair Value	$	8,314.4		$	8,046.1		$	7,777.8		$	7,509.5		$	7,241.2
Market/Fair Value Change from Base (%)		6.9	%		3.4	%		-	%		-3.4	%		-6.9	%
Change in Unrealized Appreciation
After-tax from Base ($)	$	423.9		$	211.9		$	—		$	(211.9)		$	(423.9)

We had $11,654.9 million and $10,209.5 million of gross reserves for losses and LAE as of December 31, 2020 and December 31, 2019, 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 that is reasonably consistent with our fixed income portfolio.

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. The primary objective of the equity portfolio is to obtain greater total return relative to our core bonds over time through market appreciation and income.

The table below displays the impact on fair/market value and after-tax change in fair/market value of a 10% and 20% change in equity prices up and down for the periods indicated.

	Impact of Percentage Change in Equity Fair/Market Values
	At December 31, 2020
(Dollars in millions)	-20%		-10%		0%		10%		20%
Fair/Market Value of the Equity Portfolio	$	1,031.0	$	1,159.9	$	1,288.8	$	1,417.6	$	1,546.5
After-tax Change in Fair/Market Value		(203.6)		(101.8)		—		101.8		203.6

	Impact of Percentage Change in Equity Fair/Market Values
	At December 31, 2019
(Dollars in millions)	-20%		-10%		0%		10%		20%
Fair/Market Value of the Equity Portfolio	$	611.2	$	687.6	$	764.0	$	840.5	$	916.9
After-tax Change in Fair/Market Value		(120.7)		(60.4)		—		60.4		120.7

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. (“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 Singapore and Canadian Dollars. 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.

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, 2020
(Dollars in millions)	-20%		-10%		0%		10%		20%
Total After-tax Foreign Exchange Exposure	$	(162.3)	$	(81.1)	$	—	$	81.1	$	162.3

	Change in Foreign Exchange Rates in Percent
	At December 31, 2019
(Dollars in millions)	-20%		-10%		0%		10%		20%
Total After-tax Foreign Exchange Exposure	$	(159.4)	$	(79.7)	$	—	$	79.7	$	159.4

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.

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 Annual 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, 2020. 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, 2020, our internal control over financial reporting is effective based on those criteria.

Attestation Report of the Registered Public Accounting Firm

This annual report does not include an attestation report of the Company’s registered public accounting firm regarding internal control over financial reporting. Management’s internal controls are not subject to attestation by the Company’s registered public accounting firm pursuant to rules of the Securities and Exchange Commission that permit the Company to provide only management’s report in this annual report due to the Company’s status as a non-accelerated filer.

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.

PART III

ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

Information for Item 10 is not required pursuant to General Instruction I(2) of Form 10-K.

ITEM 11. EXECUTIVE COMPENSATION

Information for Item 11 is not required pursuant to General Instruction I(2) of Form 10-K.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

Information for Item 12 is not required pursuant to General Instruction I(2) of Form 10-K.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE

Information for Item 13 is not required pursuant to General Instruction I(2) of Form 10-K.

ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES

The PricewaterhouseCoopers LLP (and its worldwide affiliates) fees incurred are as follows for the periods indicated:

(Dollars in thousands)		2020		2019
(1)	Audit Fees	$	3,406.1	$	3,519.7
(2)	Audit-Related Fees		133.7		181.6
(3)	Tax Fees		691.0		497.0
(4)	All Other Fees		17.0		17.5

Audit fees include the annual audit and quarterly financial statement reviews, subsidiary audits, and procedures required to be performed by the independent auditor to be able to form an opinion on our consolidated financial statements. These other procedures include information systems and procedural reviews and testing performed in order to understand and place reliance on the systems of internal control, and consultations relating to the audit or quarterly review. Audit fees may also include statutory audits or financial audits for our subsidiaries or affiliates and services associated with SEC registration statements, periodic reports and other documents filed with the SEC or other documents issued in connection with securities offerings.

Audit-related fees include assurance and related services that are reasonably related to the performance of the audit or review of our financial statements, including due diligence services pertaining to potential business acquisitions/dispositions, accounting consultations related to accounting, financial reporting or disclosure matters not classified as “audit services”; assistance with understanding and implementing new accounting and financial reporting guidance from rule making authorities; financial audits of employee benefit plans; agreed-upon or expanded audit procedures related to accounting and/or billing records required to respond to or comply with financial, accounting or regulatory reporting matters and assistance with internal control reporting requirements.

Tax fees include tax compliance, tax planning and tax advice and is granted general pre-approval by Group’s Audit Committee.

All other fees represent an accounting research subscription and software.

Under its Charter and the “Audit and Non-Audit Services Pre-Approval Policy” (the “Policy”), the Audit Committee is required to pre-approve the audit and non-audit services to be performed by the independent auditors. The Policy mandates specific approval by the Audit Committee for any service that has not received a

general pre-approval or that exceeds pre-approved cost levels or budgeted amounts. For both specific and general pre-approval, the Audit Committee considers whether such services are consistent with the SEC’s rules on auditor independence. The Audit Committee also considers whether the independent auditors are best positioned to provide the most effective and efficient service and whether the service might enhance the Company’s ability to manage or control risk or improve audit quality. The Audit Committee is also mindful of the relationship between fees for audit and non-audit services in deciding whether to pre-approve any such services. It may determine, for each fiscal year, the appropriate ratio between the total amount of audit, audit-related and tax fees and a total amount of fees for certain permissible non-audit services classified below as “All Other Fees”. All such factors are considered as a whole, and no one factor is determinative. The Audit Committee further considered whether the performance by PricewaterhouseCoopers LLP of the non-audit related services disclosed below is compatible with maintaining their independence. The Audit Committee approved all of the audit-related fees, tax fees and all other fees for 2020 and 2019.

PART IV

ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

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.

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.

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 March 30, 2021.

	EVEREST REINSURANCE HOLDINGS, INC.


	By:	/S/ JUAN C. ANDRADE
		Juan C. Andrade (Chairman, President and Chief Executive Officer)

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	Chairman, President and Chief Executive Officer (Principal Executive Officer)	March 30, 2021
Juan C. Andrade		March 30, 2021

/S/ MARK KOCIANCIC	Executive Vice President and Chief Financial Officer (Principal Financial Officer)	March 30, 2021
Mark Kociancic		March 30, 2021

/S/ KEITH T. SHOEMAKER	Comptroller (Principal Accounting Officer)	March 30, 2021
Keith T. Shoemaker	Comptroller (Principal Accounting Officer)	March 30, 2021

INDEX TO EXHIBITS

Exhibit No.

E-1


	2.1		Agreement and Plan of Merger among Everest Reinsurance Holdings, Inc., Everest Re Group, Ltd. and Everest Re Merger Corporation, incorporated herein by reference to Exhibit 2.1 to the Registration Statement on Form S-4 (No. 333-87361)

	3.1		Certificate of Incorporation of Everest Reinsurance Holdings, Inc., incorporated herein by reference to Exhibit 4.1 to the Registration Statement on Form S-8 (No. 333-05771)

	3.2		By-Laws of Everest Reinsurance Holdings, Inc., incorporated herein by reference to Exhibit 3.2 to the Everest Reinsurance Holdings, Inc. Quarterly Report on Form 10-Q for the quarter ended March 31, 2000.

	4.1		Indenture, dated March 14, 2000, between Everest Reinsurance Holdings, Inc. and The Chase Manhattan Bank, as Trustee, incorporated herein by reference to Exhibit 4.1 to Everest Reinsurance Holdings, Inc. Form 8-K filed on March 15, 2000.

	4.2		Fourth Supplemental Indenture relating to Holdings $400.0 million 4.868% Senior Notes due June 1, 2044, dated June 5 2014, between Holdings and the Bank of New York Mellon, as Trustee, incorporated herein by reference to Exhibit 4.1 to Everest Reinsurance Holdings, Inc. Form 8-K filed on July 5, 2014.

	4.3		Fifth Supplemental Indenture relating to Holdings $1,000.0 million 3.50% Senior Notes due October 15, 2050, dated October 7, 2020, between Holdings and the Bank of New York Mellon, as Trustee, incorporated herein by reference to Exhibit 4.1 to Everest Reinsurance Holdings, Inc. Form 8-K filed on October 7, 2020.
	10.1		Completion of Tender Offer relating to Everest Reinsurance Holdings, Inc. 6.60% Fixed to Floating Rate Long Term Subordinated Notes (LoTS^SM) dated March 19, 2009, incorporated herein by reference to Exhibit 99.1 to Everest Re Group, Ltd. Form 8-K filed on March 31, 2009.

	*10.2		Employment agreement between Everest Global Services, Inc., Everest Reinsurance Holdings Inc. and Dominic J. Addesso, dated December 4, 2015, incorporated herein by reference to Exhibit 10.1 to Everest Re Group, Ltd. Form 8-K filed on December 8, 2015.

	*10.3		Employment agreement between Everest National Insurance Company and Jonathan M. Zaffino, dated September 8, 2017, incorporated herein by reference to Exhibit 10.1 to Everest Re Group, Ltd. Form 8-K filed on September 12, 2017.

	*10.4		Amendment of employment agreement between Everest Global Services, Inc., Everest Re Group, Ltd., Everest Reinsurance Holdings Inc. and Dominic J. Addesso, dated November 20, 2017, incorporated herein by reference to Exhibit 10.1 to Everest Re Group, Ltd. Form 8-K filed November 20, 2017.

	*10.5		Employment agreement between Everest Re Group Ltd., Everest Global Services, Inc., Everest Reinsurance Holdings Inc. and Juan C Andrade, dated August 1, 2019, incorporated herein by reference to Exhibit 10.1 to Everest Re Group, Ltd. Form 8-K filed August 8, 2019.
	*10.6		Employment agreement between Everest Global Services, Inc. and Mark Kociancic, incorporated herein by reference to Exhibit 10.1 to Everest Re Group, Ltd. Form 8-K filed on October 1, 2020
	*10.7		Employment agreement between Everest Global Services, Inc. and James Williamson, incorporated herein by reference to Exhibit 10.2 to Everest Re Group, Ltd. Form 8-K filed on October 1, 2020

E-2

	23.1		Consent of PricewaterhouseCoopers LLP, filed herewith

	31.1		Section 302 Certification of Juan C. Andrade, filed herewith

	31.2		Section 302 Certification of Mark Kociancic, filed herewith

	32.1		Section 906 Certification of Juan C. Andrade and Mark Kociancic, filed herewith

	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

E-3

EVEREST REINSURANCE HOLDINGS, INC.

INDEX TO FINANCIAL STATEMENTS AND SCHEDULES

		Pages
Report of Independent Registered Public Accounting Firm		F-2

Consolidated Balance Sheets at December 31, 2020 and 2019		F-4


Consolidated Statements of Operations and Comprehensive Income (Loss) for the Years Ended
	December 31, 2020, 2019 and 2018	F-5


Consolidated Statements of Changes in Stockholder’s Equity for the Years Ended
	December 31, 2020, 2019 and 2018	F-6


Consolidated Statements of Cash Flows for the Years Ended
	December 31, 2020, 2019 and 2018	F-7

Notes to Consolidated Financial Statements		F-8


Schedules

I	Summary of Investments Other Than Investments in Related Parties at December 31, 2020	S-1

II	Condensed Financial Information of Registrant:

	Balance Sheets as of December 31, 2020 and 2019	S-2


	Statements of Operations for the Years Ended December 31, 2020, 2019 and 2018	S-3


	Statements of Cash Flows for the Years Ended December 31, 2020, 2019 and 2018	S-4


	Notes to Condensed Financial Information	S-5

III	Supplementary Insurance Information as of and for the Years Ended
	December 31, 2020, 2019 and 2018	S-6


IV	Reinsurance for the Years Ended December 31, 2020, 2019 and 2018	S-7

Schedules other than those listed above are omitted for the reason that they are not applicable or the information is otherwise contained in the Financial Statements.

F-1

Report of Independent Registered Public Accounting Firm

To the Board of Directors and Stockholder of Everest Reinsurance Holdings, Inc.

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of Everest Reinsurance Holdings, Inc. and its subsidiaries (the “Company”) as of December 31, 2020 and 2019, and the related consolidated statements of operations and comprehensive income (loss), of changes in stockholder's equity and of cash flows for each of the three years in the period ended December 31, 2020, including the related notes and financial statement schedules listed in the accompanying index (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2020 and 2019, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2020 in conformity with accounting principles generally accepted in the United States of America.

Basis for Opinion

These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s consolidated financial statements 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 of these consolidated financial statements in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion.

Our audits 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. We believe that our audits provide a reasonable basis for our opinion.

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, 2020 was $11.7 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

F-2

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 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

March 30, 2021

We have served as the Company’s auditor since 1996.

F-3

E VEREST REINSURANCE HOLDINGS, INC.

CONSOLIDATED BALANCE SHEETS

	December 31,
(Dollars in thousands, except share amounts and par value per share)	2020		2019

ASSETS:
Fixed maturities - available for sale, at market value (amortized cost: 2020, $10,248,650; 2019, $7,334,425 allowances for credit losses: 2020, $1,566; 2019, $0)	$	10,643,565	$	7,492,079
Fixed maturities - available for sale, at fair value		-		5,826
Equity securities, at fair value		1,288,767		764,049
Short-term investments (cost: 2020, $708,043; 2019, $279,824)		707,905		279,879
Other invested assets (cost: 2020, $1,094,933; 2019, $1,020,766)		1,094,933		1,020,766
Other invested assets, at fair value		1,796,479		1,982,582
Cash		378,518		411,122
Total investments and cash		15,910,167		11,956,303
Note Receivable - affiliated		300,000		300,000
Accrued investment income		80,196		54,383
Premiums receivable		1,591,980		1,337,344
Reinsurance receivables - unaffiliated		1,505,650		1,318,820
Reinsurance receivables - affiliated		2,701,655		3,125,269
Income taxes net recoverable		-		65,793
Funds held by reinsureds		267,599		228,297
Deferred acquisition costs		379,707		388,238
Prepaid reinsurance premiums		363,489		413,612
Other assets		616,640		518,127
TOTAL ASSETS	$	23,717,083	$	19,706,186

LIABILITIES:
Reserve for losses and loss adjustment expenses	$	11,654,950	$	10,209,519
Unearned premium reserve		2,385,174		2,198,932
Funds held under reinsurance treaties		46,894		41,233
Other net payable to reinsurers		277,390		267,367
Losses in course of payment		161,154		70,541
Income taxes net payable		192,877		-
Senior notes due 6/1/2044		397,194		397,074
Senior notes due 10/15/2050		979,524		-
Long term notes due 5/1/2067		223,674		236,758
Borrowings from FHLB		310,000		-
Accrued interest on debt and borrowings		10,460		2,878
Unsettled securities payable		206,693		25,230
Other liabilities		456,786		399,229
Total liabilities		17,302,770		13,848,761

Commitments and Contingencies (Note 15)		(nil)		(nil)

STOCKHOLDER'S EQUITY:
Common stock, par value: $0.01; 3,000 shares authorized; 1,000 shares issued and outstanding (2020 and 2019)		-		-
Additional paid-in capital		1,101,092		1,100,678
Accumulated other comprehensive income (loss), net of deferred income tax expense (benefit) of $71,080 at 2020 and $16,997 at 2019		268,018		64,324
Retained earnings		5,045,203		4,692,423
Total stockholder's equity		6,414,313		5,857,425
TOTAL LIABILITIES AND STOCKHOLDER'S EQUITY	$	23,717,083	$	19,706,186

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

F-4

EVEREST REINSURANCE HOLDINGS, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

AND COMPREHENSIVE INCOME (LOSS)


	Years Ended December 31,
(Dollars in thousands)	2020		2019		2018

REVENUES:
Premiums earned	$	6,406,576	$	5,489,035	$	4,839,058
Net investment income		375,906		356,211		314,381
Net realized capital gains (losses):
Credit allowances on fixed maturity securities		(1,566)		-		-
Other-than-temporary impairments on fixed maturity securities		-		(19,643)		(6,164)
Other net realized capital gains (losses)		51,370		439,010		(179,192)
Total net realized capital gains (losses)		49,804		419,367		(185,356)
Other income (expense)		(14,579)		(1,589)		(9,568)
Total revenues		6,817,707		6,263,024		4,958,515

CLAIMS AND EXPENSES:
Incurred losses and loss adjustment expenses		4,608,144		3,829,122		4,811,018
Commission, brokerage, taxes and fees		1,373,355		1,270,053		1,141,714
Other underwriting expenses		401,033		350,901		293,347
Corporate expenses		15,985		13,063		11,034
Interest, fee and bond issue cost amortization expense		35,659		34,931		30,611
Total claims and expenses		6,434,176		5,498,070		6,287,724

INCOME (LOSS) BEFORE TAXES		383,531		764,955		(1,329,209)
Income tax expense (benefit)		31,658		135,228		(367,025)

NET INCOME (LOSS)	$	351,873	$	629,727	$	(962,184)

Other comprehensive income (loss), net of tax:
Unrealized appreciation (depreciation) ("URA(D)") on securities arising during the period		163,080		175,482		(92,966)
Less: reclassification adjustment for realized losses (gains) included in net income (loss)		25,468		5,080		2,021
Total URA(D) on securities arising during the period		188,548		180,562		(90,945)

Foreign currency translation adjustments		14,461		17,153		(36,431)

Benefit plan actuarial net gain (loss) for the period		(5,615)		(12,591)		(510)
Reclassification adjustment for amortization of net (gain) loss included in net income (loss)		6,300		5,453		5,021
Total benefit plan net gain (loss) for the period		685		(7,138)		4,511
Total other comprehensive income (loss), net of tax		203,694		190,577		(122,865)

COMPREHENSIVE INCOME (LOSS)	$	555,567	$	820,304	$	(1,085,049)

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

F-5

EVEREST REINSURANCE HOLDINGS, INC.

CONSOLIDATED STATEMENTS OF

CHANGES IN STOCKHOLDER’S EQUITY

	Years Ended December 31,
(Dollars in thousands, except share amounts)	2020		2019		2018

COMMON STOCK (shares outstanding):
Balance, January 1		1,000		1,000		1,000
Balance, December 31		1,000		1,000		1,000

ADDITIONAL PAID-IN CAPITAL:
Balance, January 1	$	1,100,678	$	1,100,315	$	387,841
Capital contribution from parent		-		-		712,253
Share-based compensation plans		414		363		221
Balance, December 31		1,101,092		1,100,678		1,100,315

ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS), NET OF DEFERRED INCOME TAXES:
Balance, January 1		64,324		(126,254)		(942)
Change to beginning balance due to adoption of ASU 2016-01		-		-		(2,447)
Net increase (decrease) during the period		203,694		190,577		(122,865)
Balance, December 31		268,018		64,324		(126,254)

RETAINED EARNINGS:
Balance, January 1		4,692,423		4,062,696		5,022,433
Change to beginning balance due to adoption of ASU 2016-01		-		-		2,447
Change to beginning balance due to adoption of ASU 2016-13		907		-		-
Net income (loss)		351,873		629,727		(962,184)
Balance, December 31		5,045,203		4,692,423		4,062,696

TOTAL STOCKHOLDER'S EQUITY, December 31	$	6,414,313	$	5,857,425	$	5,036,757

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

F-6

EVEREST REINSURANCE HOLDINGS, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS


	Years Ended December 31,
(Dollars in thousands)	2020		2019		2018

CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss)	$	351,873	$	629,727	$	(962,184)
Adjustments to reconcile net income to net cash provided by operating activities:
Decrease (increase) in premiums receivable		(252,850)		(24,618)		(171,642)
Decrease (increase) in funds held by reinsureds, net		(33,519)		(57)		(20,963)
Decrease (increase) in reinsurance receivables		247,165		405,574		1,260,865
Decrease (increase) in income taxes		204,419		295,667		(292,728)
Decrease (increase) in prepaid reinsurance premiums		51,352		(84,181)		17,302
Increase (decrease) in reserve for losses and loss adjustment expenses		1,427,214		21,399		859,691
Increase (decrease) in unearned premiums		183,417		370,246		221,850
Increase (decrease) in other net payable to reinsurers		8,078		(50,560)		(173,810)
Increase (decrease) in losses in course of payment		90,044		113,306		66,148
Change in equity adjustments in limited partnerships		(39,880)		(45,843)		(70,494)
Distribution of limited partnership income		91,403		51,982		55,350
Change in other assets and liabilities, net		(84,902)		(60,250)		(143,047)
Non-cash compensation expense		32,217		27,421		13,863
Amortization of bond premium (accrual of bond discount)		13,926		4,308		3,735
Net realized capital (gains) losses		(49,804)		(419,367)		185,356
Net cash provided by (used in) operating activities		2,240,153		1,234,754		849,292

CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from fixed maturities matured/called - available for sale, at market value		1,126,309		937,871		741,360
Proceeds from fixed maturities sold - available for sale, at market value		626,378		2,400,869		791,368
Proceeds from fixed maturities sold - available for sale, at fair value		4,907		2,917		1,751
Proceeds from equity securities sold - at fair value		375,112		283,707		1,029,920
Distributions from other invested assets		243,002		185,116		1,043,131
Cost of fixed maturities acquired - available for sale, at market value		(4,695,090)		(3,626,139)		(3,714,695)
Cost of fixed maturities acquired - available for sale, at fair value		-		(4,243)		(4,381)
Cost of equity securities acquired - at fair value		(625,694)		(325,546)		(702,221)
Cost of other invested assets acquired		(363,101)		(323,453)		(1,138,317)
Net change in short-term investments		(425,878)		(102,302)		193,623
Net change in unsettled securities transactions		200,070		(30,904)		55,967
Proceeds from repayment of long term note receivable, affiliated		-		(300,000)		250,000
Net cash provided by (used in) investing activities		(3,533,985)		(902,107)		(1,452,494)

CASH FLOWS FROM FINANCING ACTIVITIES:
Tax benefit from share-based compensation, net of expense		(31,803)		(27,059)		(11,195)
Capital contribution from parent		-		-		500,324
FHLB advances (repayments)		310,000		-		-
Cost of debt repurchase		(10,647)		-		-
Proceeds from issuance of senior notes		979,417		-		-
Proceeds from issuance (cost of repayment) of note payable-affiliated		-		(300,000)		300,000
Net cash provided by (used in) financing activities		1,246,967		(327,059)		789,129

EFFECT OF EXCHANGE RATE CHANGES ON CASH		14,261		1,012		(10,957)

Net increase (decrease) in cash		(32,604)		6,600		174,970
Cash, beginning of period		411,122		404,522		229,552
Cash, end of period	$	378,518	$	411,122	$	404,522

SUPPLEMENTAL CASH FLOW INFORMATION:
Income taxes paid (recovered)	$	(173,056)	$	(160,748)	$	(73,669)
Interest paid		27,670		34,928		30,027

NON-CASH TRANSACTIONS
Equity value of non-cash capital contribution of affiliate from parent, net of cash held by affiliate	$	-	$	-	$	211,928

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

F-7

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Years Ended December 31, 2020, 2019 and 2018

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

A. Business and Basis of Presentation.

Everest Reinsurance Holdings, Inc. (“Holdings”), a Delaware company and direct subsidiary of Everest Underwriting Group (Ireland) Limited (“Holdings Ireland”), which is a direct subsidiary of Everest Re Group, Ltd. (“Group”), through its subsidiaries, principally provides property and casualty reinsurance and insurance in the United States of America and internationally. As used in this document, “Company” means Holdings 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 the Company: Everest Reinsurance Company (“Everest Re”), Everest Global Services, Inc. (“Global Services”), Everest National Insurance Company (“Everest National”), Everest Indemnity Insurance Company (“Everest Indemnity”), Everest Security Insurance Company (“Everest Security”), Everest Reinsurance Company – Escritório de Representação No Brasil Ltda. (“Everest Brazil”), Mt. Whitney Securities, Inc., Everest Denali Insurance Company (“Everest Denali”), Everest Premier Insurance Company (“Everest Premier”), Everest Specialty Underwriters Services, LLC, Everest International Assurance, Ltd. (“Everest Assurance”), Specialty Insurance Group, Inc. (“Specialty”), Specialty Insurance Group - Leisure and Entertainment Risk Purchasing Group LLC (“Specialty RPG”), Salus Systems (“Salus”) and Mt. McKinley Managers, L.L.C. All amounts are reported in U.S. dollars.

During the fourth quarter of 2018, Global Services was contributed to Holdings from its parent company, Holdings Ireland. The operating results of Global Services for the fourth quarter of 2018 are included within the Company’s consolidated financial statements.

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities (and disclosure of contingent assets and liabilities) at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Ultimate actual results could differ, possibly materially, from those estimates.

All intercompany accounts and transactions have been eliminated.

Certain reclassifications and format changes have been made to prior years’ amounts to conform to the 2020 presentation.

B. Investments.

Fixed maturity investments available for sale, at market value, reflect unrealized appreciation and depreciation, as a result of temporary changes in market value during the period, in stockholder’s equity, net of income taxes in “accumulated other comprehensive income (loss)” in the consolidated balance sheets, since cash flows from these investments will be primarily used to settle its reserve for losses and loss adjustment expense liabilities. The Company anticipates holding these investments for an extended period as the cash flow from interest and maturities will fund the projected payout of these liabilities. The Company reviews all of its fixed 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 market value. Non-credit related declines in market value are recorded as unrealized losses in accumulated other comprehensive income (loss). If the Company intends to sell the security or is more likely than not to sell the security, the Company records the entire fair value adjustment in net realized capital gains (losses) 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

F-8

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 realized capital gains (losses) in the Company’s consolidated statements of operations and comprehensive income (loss). 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 fair value adjustment that is non-credit related is recorded as a component of other comprehensive income (loss), net of tax, and is included in accumulated other comprehensive income (loss) in the Company’s consolidated balance sheets. The Company will adjust the credit allowance account for future changes in credit loss estimates for a security and record this adjustment through net realized capital gains (losses) in the Company’s consolidated statements of operations and comprehensive income (loss).

For equity securities, at fair value, the Company reflects changes in value as net realized capital gains and losses since these securities may be sold in the near term depending on financial market conditions. 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). Unrealized losses on fixed maturities, which are deemed other-than-temporary and related to the credit quality of a security, are charged to net income (loss) as net realized capital losses. Short-term investments are stated at cost, which approximates market 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. For publicly traded securities, market 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. Retrospective adjustments are employed to recalculate the values of asset-backed securities. 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 to effect the calculation of projected and prepayments for pass-through security types. Other invested assets include limited partnerships, rabbi trusts and, prior to July 1, 2018, a private placement liquidity sweep facility. Cash contributions to and cash distributions from the sweep facility were reported gross in cash flows from investing activities in the consolidated statements of cash flows. Limited partnerships are accounted for under the equity method of accounting, which can be recorded on a monthly or quarterly lag. Other invested assets, at fair value, are comprised of convertible preferred stock of Everest Preferred International Holdings, Ltd. (“Preferred Holdings”), an affiliated entity. The fair values of the Preferred Holdings convertible preferred stock at December 31, 2020 and December 31, 2019 were determined using a pricing model.

C. Allowance for Receivable Balances.

Effective January 1, 2020, the Company adopted the Current Expected Credit Losses (CECL) methodology for estimating allowances for credit losses. The Company evaluates the recoverability of its premiums and reinsurance receivable balances and establishes an allowance for estimated uncollectible amounts. Prior to the adoption of CECL, an allowance for doubtful accounts was estimated on the basis of periodic evaluations of balances due from third parties, considering historical collection experience, solvency and current economic conditions.

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. In response to significant economic stress experienced as a result of the COVID-19 pandemic, during 2020, the Company increased the expected loss factors used to estimate the allowance based on collection experience during past moderate and severe recessions as well as experience during periods when we provided policyholders additional time to make premiums payments.

F-9

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 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 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.

In response to significant economic stress experienced as a result of the COVID-19 pandemic, the Company increased the weight of both a moderate and severe recession scenario in our estimate of the allowance for loss within a deductible and retrospectively-rated policy premiums. The ultimate impact to the Company’s financial statements from the COVID-19 pandemic could vary significantly from our estimates depending on the duration and severity of the pandemic, the duration and severity of the economic downturn and the degree to which federal, state and local government actions to mitigate the economic impact of COVID-19 are effective.

The Company records total credit loss expenses related to premiums receivable in other underwriting expenses and records credit loss expenses related to deductibles through losses incurred

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.

The allowance is estimated as the amount of reinsurance receivable exposed to loss multiplied by estimated factors for the probability of default. The reinsurance receivable exposed is the amount of reinsurance receivable 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 receivable considers the current economic environment as well as macroeconomic scenarios.

The Company expects the impact of the COVID-19 pandemic to reinsurers to be somewhat mitigated by their regulated capital and liquidity positions. The ultimate impact to the Company's financial statements could vary significantly from our estimates depending on the duration and severity of the pandemic, the duration and severity of the economic downturn and the degree to which federal, state and local government actions to mitigate the economic impact of COVID-19 are effective.

F-10

Allowances are presented in the table below for the periods indicated.

	Years Ended December 31,
(Dollars in thousands)	2020		2019
Reinsurance receivables and premium receivables	$	33,370	$	25,163

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. Deferred acquisition costs amortized to income are presented in the table below for the periods indicated.

	Years Ended December 31,
(Dollars in thousands)	2020		2019		2018
Deferred acquisition costs	$	1,373,355	$	1,270,053	$	1,141,714

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. A provision is also included for certain potential liabilities relating to asbestos and environmental (“A&E”) exposures, for which liabilities cannot be estimated using traditional 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 receivables and incurred losses and LAE are presented net of reinsurance.

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. 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 received on reinsurance coverages, most prevalently catastrophe related, when limits have been depleted under the original reinsurance contract and additional coverage is granted. 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.

G. 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, 2020 were collateralized either through collateralized trust arrangements, rights of offset or letters of credit, thereby limiting the credit risk to the Company.

H. Income Taxes.

The Company and its wholly owned subsidiaries file a consolidated U.S. Corporation Income Tax Return. The Company’s foreign subsidiaries and foreign branches of its U.S. subsidiaries file country and local corporation income tax returns as required. Deferred U.S. federal and foreign income taxes have been recorded to

F-11

recognize the tax effect of temporary differences between the GAAP and income tax bases of assets and liabilities, which arise because of differences between the financial reporting and income tax rules.

As an accounting policy, the Company has adopted the aggregate portfolio approach for releasing disproportionate income tax effects from AOCI.

I. Foreign Currency.

As a global entity, 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 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 investments, which are excluded from net income (loss) and accumulated in stockholder’s 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 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 stockholder’s equity.

J. Segmentation.

With recent changes in executive management and organizational structure, 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. Accordingly, effective January 1, 2020, the Company revised it reporting segments to Reinsurance Operations and Insurance Operations. This replaces the previous reported segments of U.S. Reinsurance, International (reinsurance) and Insurance. The prior year presented segment information has been reformatted to reflect this change. See also Note 17.

K. Retroactive Reinsurance.

Premiums on ceded retroactive contracts are earned when written with a corresponding reinsurance recoverable established for the amount of reserves ceded. The initial gain, if applicable, is deferred and amortized into income over an actuarially determined expected payout period. Any future loss is recognized immediately and charged against earnings.

L. Application of Recently Issued Accounting Standard Changes.

Accounting for Income Taxes. In December 2019, The Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2019-12, which provides simplification of existing guidance for income taxes, including the removal of certain exceptions related to recognition of deferred tax liabilities on foreign subsidiaries. The guidance is effective for annual reporting periods beginning after December 15, 2020 and interim periods within that annual reporting period. The Company is currently evaluating the impact of the adoption of ASU 2019-12 on its financial statements.

Accounting for Cloud Computing Arrangement. In August 2018, FASB issued ASU 2018-15, which outlines accounting for implementation costs of a cloud computing arrangement that is a service contract. This guidance requires that implementation costs of a cloud computing arrangement that is a service contract must be capitalized and expensed in accordance with the existing provisions provided in Subtopic 350-40 regarding development of internal use software. In addition, any capitalized implementation costs should be amortized over the term of the hosting arrangement. The guidance is effective for annual reporting periods beginning after December 15, 2019 and interim periods within that annual reporting period. The adoption of ASU 2018-15 did not have a material impact on the Company’s financial statements.

Accounting for Impact on Income Taxes due to Tax Reform. In December 2017, the SEC issued Staff Accounting Bulletin (“SAB”) 118, which provides guidance on the application of FASB Accounting Standards Codification (“ASC”) Topic 740, Income Taxes, due to the enactment of TCJA. SAB 118 became effective upon release. The Company has adopted the provisions of SAB 118 with respect to measuring the tax effects for the modifications to the determination of tax basis loss reserves. In 2018, the Company recorded adjustments to

F-12

the amount of tax expense it recorded in 2017 with respect to the TCJA as estimated amounts were finalized, which did not have a material impact on the Company’s financial statements.

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

Valuation of Financial Instruments. In June 2016, FASB issued ASU 2016-13 (and has subsequently issued related guidance and amendments in ASU 2019-11 and ASU 2019-10 in November 2019) which outline guidance on the valuation of and accounting for assets measured at amortized cost and available for sale debt securities. The new guidance requires the carrying value of assets measured at amortized cost, including reinsurance and premiums receivables to be presented as the net amount expected to be collected on the financial asset (amortized cost less an allowance for credit losses valuation account). The allowance reflects expected credit losses of the financial asset which considers available information using a combination both historical information, current market conditions and reasonable and supportable forecasts. For available-for-sale debt securities, the guidance modified the previous other than temporary impairment model, now requiring an allowance for estimated credit related losses rather than a permanent impairment, which will be limited to the amount by which fair value is below amortized cost. The guidance is effective for annual and interim reporting periods beginning after December 15, 2019. The Company adopted the guidance effective January 1, 2020, on a modified retrospective basis. The adoption resulted in a cumulative adjustment of $907 thousand in retained earnings, net of tax, which is disclosed separately within the Consolidated Statements of Stockholder’s Equity.

Leases. In February 2016, FASB issued ASU 2016-02 (and subsequently issued ASU 2018-11 in July, 2018) which outline new guidance on the accounting for leases. The new guidance requires the recognition of lease assets and lease liabilities on the balance sheets for most leases that were previously deemed operating leases and required only lease expense presentation in the statements of operations. The guidance is effective for annual and interim reporting periods beginning after December 15, 2018. The Company adopted ASU 2016-02 effective January 1, 2019 and elected to utilize a cumulative-effect adjustment to the opening balance of retained earnings for the year of adoption. Accordingly, the Company’s reporting for the comparative periods prior to adoption continue to be presented in the financial statements in accordance with previous lease accounting guidance. The Company also elected to apply the package of practical expedients applicable to the Company in the updated guidance for transition for leases in effect at adoption. The Company did not elect the hindsight practical expedient to determine the lease term of existing leases (e.g. The Company did not re-assess lease renewals, termination options nor purchase options in determining lease terms). The adoption of the updated guidance resulted in the Company recognizing a right-of-use asset of $60,325 thousand as part of other assets and a lease liability of $66,551 thousand as part of other liabilities in the consolidated balance sheet, as well as de-recognizing the liability for deferred rent that was required under the previous guidance. The cumulative effect adjustment to the opening balance of retained earnings was zero. The adoption of the updated guidance did not have a material effect on the Company’s results of operations or liquidity.

Recognition and Measurement of Financial Instruments. In January 2016, the FASB issued ASU 2016-01, which outlines revised guidance on the accounting for equity investments. The new guidance states that all equity investments in unconsolidated entities will be measured at fair value, with the change in value being recorded through the income statement rather than being recorded within other comprehensive income. The updated guidance is effective for annual and interim reporting periods beginning after December 15, 2017. The Company adopted the guidance effective January 1, 2018. The adoption of ASU 2016-01 resulted in a cumulative change adjustment of $2,447 thousand between AOCI and retained earnings, which is disclosed separately within the consolidated statement of changes in shareholders equity.

Any issued guidance and pronouncements, other than those directly referenced above, are deemed by the Company to be either not applicable or immaterial to its financial statements.

F-13

2. INVESTMENTS

Effective January 1, 2020, the Company adopted ASU 2016-13 which modified the previous other than temporary impairment model for available for sale fixed maturity securities. The guidance requires the Company to record allowances for credit losses for securities that are deemed to have valuation deterioration due to credit related factors. The initial table below presents the amortized cost, allowance for credit losses, gross unrealized appreciation/(depreciation) and market value of fixed maturity securities at December 31, 2020 in accordance with ASU 2016-13 guidance. The second table presents the amortized cost, gross unrealized appreciation/(depreciation), market value and other-than-temporary impairments (“OTTI”) in AOCI at December 31, 2019, in accordance with previously applicable guidance

	At December 31, 2020
	Amortized		Allowances for		Unrealized		Unrealized		Market
(Dollars in thousands)	Cost		Credit Loss		Appreciation		Depreciation		Value
Fixed maturity securities
U.S. Treasury securities and obligations of U.S. government agencies and corporations	$	659,957	$	-	$	22,032	$	-	$	681,989
Obligations of U.S. states and political subdivisions		543,646		-		34,655		(1,255)		577,046
Corporate securities		3,316,525		(1,205)		166,072		(31,480)		3,449,912
Asset-backed securities		2,450,807		-		28,585		(5,222)		2,474,170
Mortgage-backed securities
Commercial		512,388		-		37,875		(183)		550,080
Agency residential		937,166		-		28,630		(696)		965,100
Non-agency residential		3,164		-		2		(2)		3,164
Foreign government securities		694,132		-		51,317		(3,211)		742,238
Foreign corporate securities		1,130,865		(361)		73,265		(3,903)		1,199,866
Total fixed maturity securities	$	10,248,650	$	(1,566)	$	442,433	$	(45,952)	$	10,643,565

F-14

	At December 31, 2019
	Amortized		Unrealized		Unrealized		Market		OTTI in AOCI
(Dollars in thousands)	Cost		Appreciation		Depreciation		Value		(a)
Fixed maturity securities
U.S. Treasury securities and obligations of U.S. government agencies and corporations	$	768,374	$	10,128	$	(987)	$	777,515	$	-
Obligations of U.S. states and political subdivisions		506,347		29,651		(87)		535,911		-
Corporate securities		2,777,097		70,898		(26,438)		2,821,557		245
Asset-backed securities		761,607		5,659		(1,309)		765,957		-
Mortgage-backed securities
Commercial		311,961		17,242		(154)		329,049		-
Agency residential		625,612		19,395		(320)		644,687		-
Non-agency residential		1,638		-		-		1,638		-
Foreign government securities		646,149		18,908		(7,050)		658,007		27
Foreign corporate securities		935,640		31,257		(9,139)		957,758		333
Total fixed maturity securities	$	7,334,425	$	203,138	$	(45,484)	$	7,492,079	$	605

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

The amortized cost and market value of fixed maturity securities are shown in the following tables 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, 2020				At December 31, 2019
	Amortized		Market		Amortized		Market
(Dollars in thousands)	Cost		Value		Cost		Value
Fixed maturity securities – available for sale
Due in one year or less	$	658,561	$	659,622	$	569,506	$	563,730
Due after one year through five years		2,911,285		3,036,151		2,919,966		2,963,903
Due after five years through ten years		1,927,265		2,079,866		1,541,695		1,602,642
Due after ten years		848,014		875,412		602,440		620,473
Asset-backed securities		2,450,807		2,474,170		761,607		765,957
Mortgage-backed securities
Commercial		512,388		550,080		311,961		329,049
Agency residential		937,166		965,100		625,612		644,687
Non-agency residential		3,164		3,164		1,638		1,638
Total fixed maturity securities	$	10,248,650	$	10,643,565	$	7,334,425	$	7,492,079

F-15

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

	Years Ended December 31,
(Dollars in thousands)	2020		2019
Increase (decrease) during the period between the market value and cost of investments carried at market value, and deferred taxes thereon:
Fixed maturity securities	$	238,634	$	228,953
Fixed maturity securities, other-than-temporary impairment		-		(546)
Change in unrealized appreciation (depreciation), pre-tax		238,634		228,408
Deferred tax benefit (expense)		(50,086)		(47,959)
Deferred tax benefit (expense), other-than-temporary impairment		-		115
Change in unrealized appreciation (depreciation), net of deferred taxes, included in stockholder's equity	$	188,548	$	180,562

The Company reviews all of its fixed 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 market value. Non-credit related declines in market value are recorded as unrealized losses in accumulated other comprehensive income (loss). If the Company intends to sell the security or is more likely than not to sell the security, the Company records the entire fair value adjustment in net realized capital gains (losses) 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 realized capital gains (losses) in the Company’s consolidated statements of operations and comprehensive income (loss). 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 fair value adjustment that is non-credit related is recorded as a component of other comprehensive income (loss), net of tax, and is included in accumulated other comprehensive income (loss) in the Company’s consolidated balance sheets. The Company will adjust the credit allowance account for future changes in credit loss estimates for a security and record this adjustment through net realized capital gains (losses) in the Company’s consolidated statements of operations and comprehensive income (loss).

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.

Prior to the adoption of ASU 2016-13 effective January 1, 2020, estimated credit losses were recorded as adjustments to the carrying value of the security and any subsequent improvement in market value were recorded through other comprehensive income.

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.

F-16

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, 2020 By Security Type
	Less than 12 months				Greater than 12 months				Total
			Gross				Gross				Gross
	Market		Unrealized		Market		Unrealized		Market		Unrealized
(Dollars in thousands)	Value		Depreciation		Value		Depreciation		Value		Depreciation
Fixed maturity securities - available for sale
Obligations of U.S. states and political subdivisions		19,524		(999)		4,059		(256)		23,583		(1,255)
Corporate securities		240,601		(7,799)		188,853		(23,681)		429,454		(31,480)
Asset-backed securities		223,919		(4,573)		81,952		(649)		305,871		(5,222)
Mortgage-backed securities
Commercial		37,414		(182)		3,983		(1)		41,397		(183)
Agency residential		235,809		(682)		1,573		(14)		237,382		(696)
Non-agency residential		161		(2)		-		-		161		(2)
Foreign government securities		10,505		(373)		25,793		(2,838)		36,298		(3,211)
Foreign corporate securities		57,900		(2,182)		18,349		(1,721)		76,249		(3,903)
Total fixed maturity securities	$	825,833	$	(16,792)	$	324,562	$	(29,160)	$	1,150,395	$	(45,952)

	Duration of Unrealized Loss at December 31, 2020 By Maturity
	Less than 12 months				Greater than 12 months				Total
			Gross				Gross				Gross
	Market		Unrealized		Market		Unrealized		Market		Unrealized
(Dollars in thousands)	Value		Depreciation		Value		Depreciation		Value		Depreciation
Fixed maturity securities
Due in one year or less	$	28,802	$	(1,218)	$	34,555	$	(4,142)	$	63,357	$	(5,360)
Due in one year through five years		150,106		(5,828)		116,987		(4,783)		267,093		(10,611)
Due in five years through ten years		81,492		(1,634)		13,118		(435)		94,610		(2,069)
Due after ten years		68,130		(2,673)		72,394		(19,136)		140,524		(21,809)
Asset-backed securities		223,919		(4,573)		81,952		(649)		305,871		(5,222)
Mortgage-backed securities		273,384		(866)		5,556		(15)		278,940		(881)
Total fixed maturity securities	$	825,833	$	(16,792)	$	324,562	$	(29,160)	$	1,150,395	$	(45,952)

The aggregate market value and gross unrealized losses related to investments in an unrealized loss position at December 31, 2020 were $1,150,395 thousand and $45,952 thousand, respectively. The market value of securities for the single issuer whose securities comprised the largest unrealized loss position at December 31, 2020, did not exceed 0.2% of the overall market value of the Company’s fixed maturity securities. In addition, as indicated on the above table, there was no significant concentration of unrealized losses in any one market sector. The $16,792 thousand of unrealized losses related to fixed maturity securities that have been in an unrealized loss position for less than one year were generally comprised of domestic and foreign corporate securities as well as asset backed securities. Of these unrealized losses, $12,522 thousand were related to securities that were rated investment grade by at least one nationally recognized statistical rating agency. The $29,160 thousand 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 and foreign government securities. Of these unrealized losses $5,856 thousand were related to securities that were rated investment grade by at least one nationally recognized statistical rating agency. There was no gross unrealized depreciation for mortgage-backed securities related to sub-prime and alt-A loans. In all instances, there were no projected cash flow shortfalls to recover the full book value of the investments and the related interest obligations. The mortgage-backed securities still have excess credit coverage and are current on interest and principal payments.

F-17

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

	Duration of Unrealized Loss at December 31, 2019 By Security Type
	Less than 12 months				Greater than 12 months				Total
			Gross				Gross				Gross
	Market		Unrealized		Market		Unrealized		Market		Unrealized
(Dollars in thousands)	Value		Depreciation		Value		Depreciation		Value		Depreciation
Fixed maturity securities - available for sale
U.S. Treasury securities and obligations of U.S. government agencies and corporations	$	8,997	$	(141)	$	203,780	$	(846)	$	212,777	$	(987)
Obligations of U.S. states and political subdivisions		4,600		(38)		4,518		(49)		9,118		(87)
Corporate securities		334,973		(5,186)		230,679		(21,252)		565,652		(26,438)
Asset-backed securities		159,695		(887)		76,351		(422)		236,046		(1,309)
Mortgage-backed securities
Commercial		13,083		(87)		16,374		(67)		29,457		(154)
Agency residential		19,019		(82)		17,147		(238)		36,166		(320)
Non-agency residential		-		-		690		-		690		-
Foreign government securities		113,256		(858)		109,953		(6,192)		223,209		(7,050)
Foreign corporate securities		105,551		(1,260)		121,710		(7,879)		227,261		(9,139)
Total fixed maturity securities	$	759,174	$	(8,539)	$	781,202	$	(36,945)	$	1,540,376	$	(45,484)

	Duration of Unrealized Loss at December 31, 2019 By Maturity
	Less than 12 months				Greater than 12 months				Total
			Gross				Gross				Gross
	Market		Unrealized		Market		Unrealized		Market		Unrealized
(Dollars in thousands)	Value		Depreciation		Value		Depreciation		Value		Depreciation
Fixed maturity securities
Due in one year or less	$	34,542	$	(1,067)	$	188,755	$	(6,411)	$	223,297	$	(7,478)
Due in one year through five years		226,521		(2,554)		357,728		(11,562)		584,249		(14,116)
Due in five years through ten years		251,967		(3,292)		43,129		(6,785)		295,096		(10,077)
Due after ten years		54,347		(570)		81,028		(11,460)		135,375		(12,030)
Asset-backed securities		159,695		(887)		76,351		(422)		236,046		(1,309)
Mortgage-backed securities		32,102		(169)		34,211		(305)		66,313		(474)
Total fixed maturity securities	$	759,174	$	(8,539)	$	781,202	$	(36,945)	$	1,540,376	$	(45,484)

The aggregate market value and gross unrealized losses related to investments in an unrealized loss position at December 31, 2019 were $1,540,376 thousand and $45,484 thousand, respectively. The market value of securities for the single issuer whose securities comprised the largest unrealized loss position at December 31, 2019, did not exceed 0.2% of the overall market value of the Company’s fixed maturity securities. In addition, as indicated on the above table, there was no significant concentration of unrealized losses in any one market sector. The $8,539 thousand of unrealized losses related to fixed maturity securities that have been in an unrealized loss position for less than one year were generally comprised of domestic and foreign corporate securities. Of these unrealized losses, $5,645 thousand were related to securities that were rated investment grade by at least one nationally recognized statistical rating agency. The $36,945 thousand 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 and foreign government securities. Of these unrealized losses $16,976 thousand were related to securities that were rated investment grade by at least

F-18

one nationally recognized statistical rating agency. There was no gross unrealized depreciation for mortgage-backed securities related to sub-prime and alt-A loans. In all instances, there were no projected cash flow shortfalls to recover the full book value of the investments and the related interest obligations. The mortgage-backed securities still have excess credit coverage and are current on interest and principal payments.

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

	Years Ended December 31,
(Dollars in thousands)	2020		2019		2018
Fixed maturities	$	305,399	$	273,122	$	201,108
Equity securities		11,466		10,782		14,909
Short-term investments and cash		2,978		10,231		7,715
Other invested assets
Limited partnerships		48,899		43,316		61,645
Dividends from preferred shares of affiliate		31,032		31,031		31,032
Other		1,699		14,117		17,825
Gross investment income before adjustments		401,473		382,599		334,234
Funds held interest income (expense)		5,705		6,459		5,188
Interest income from Parent		5,154		211		4,085
Gross investment income		412,332		389,269		343,507
Investment expenses		(36,426)		(33,058)		(29,126)
Net investment income	$	375,906	$	356,211	$	314,381

(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. 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 $1,187,996 thousand in limited partnerships and private placement loans at December 31, 2020. These commitments will be funded when called in accordance with the partnership and loan agreements, which have investment periods that expire, unless extended, through 2026.

The Company participates in a private placement liquidity sweep facility (“the facility”). The primary purpose of the facility is to enhance the Company’s return on its short-term investments and cash positions. The facility invests in high quality, short-duration securities and permits daily liquidity. The Company consolidates its participation in the facility. As of December 31, 2020, the market value of investments in the facility consolidated within the Company’s balance sheets was $223,815 thousand.

Other invested assets, at fair value, as of December 31, 2020 and December 31, 2019, were comprised of preferred shares held in Preferred Holdings, an affiliated company.

F-19

The components of net realized capital gains (losses) are presented in the table below for the periods indicated:

	Years Ended December 31,
(Dollars in thousands)	2020		2019		2018
Fixed maturity securities, market value:
Allowances for credit losses	$	(1,566)	$	-	$	-
Other-than-temporary impairments		-		(19,643)		(6,164)
Gains (losses) from sales		(32,614)		7,571		933
Fixed maturity securities, fair value:
Gains (losses) from sales		(2,863)		355		(1,799)
Gains (losses) from fair value adjustments		1,944		1,808		1,506
Equity securities, fair value:
Gains (losses) from sales		(7,931)		4,144		(32,092)
Gains (losses) from fair value adjustments		276,093		153,728		(59,409)
Other invested assets		1,705		6,003		1,815
Other invested assets, fair value:
Gains (losses) from fair value adjustments		(186,102)		265,245		(90,136)
Short-term investment gains (losses)		1,138		156		(10)
Total net realized capital gains (losses)	$	49,804	$	419,367	$	(185,356)

	Roll Forward of Allowance for Credit Losses
	Twelve Months Ended December 31, 2020
			Foreign		Foreign
	Corporate		Government		Corporate
	Securities		Securities		Securities		Total

Beginning Balance	$	-	$	-	$	-	$	-
Credit losses on securities where credit
losses were not previously recorded		(21,829)		(70)		(561)		(22,460)
Increases in allowance on previously
impaired securities		(5,909)		-		(211)		(6,120)
Decreases in allowance on previously
impaired securities		1,824		-		282		2,106
Reduction in allowance due to disposals		24,709		70		129		24,908

Balance as of December 31, 2020	$	(1,205)	$	-	$	(361)	$	(1,566)

The Company recorded as net realized capital gains (losses) in the consolidated statements of operations and comprehensive income (loss) fair value re-measurements, allowances for credit losses per ASU 2016-13 and write-downs in the value of securities deemed to be impaired on an other-than-temporary basis in prior years as displayed in the table above. The Company had no other-than-temporary impaired securities where the impairment had both a credit and non-credit component.

F-20

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


	Years Ended December 31,
(Dollars in thousands)	2020		2019		2018
Proceeds from sales of fixed maturity securities	$	631,285	$	2,403,786	$	793,119
Gross gains from sales		24,177		25,076		15,349
Gross losses from sales		(59,654)		(17,150)		(16,215)

Proceeds from sales of equity securities	$	375,112	$	283,707	$	1,029,920
Gross gains from sales		37,403		14,270		25,160
Gross losses from sales		(45,334)		(10,126)		(57,252)

Securities with a carrying value amount of $1,617,928 thousand at December 31, 2020, were on deposit with various state or governmental insurance departments in compliance with insurance laws.

3. RESERVES FOR LOSSES AND LAE

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

	At December 31,
(Dollars in thousands)	2020		2019		2018
Gross reserves beginning of period	$	10,209,519	$	10,167,018	$	9,343,028
Less reinsurance recoverables		(4,215,348)		(4,697,543)		(5,727,268)
Net reserves beginning of period		5,994,171		5,469,475		3,615,760

Incurred related to:
Current year		4,407,795		3,784,771		4,252,220
Prior years		200,349		44,351		558,798
Total incurred losses and LAE		4,608,144		3,829,122		4,811,018

Paid related to:
Current year		1,901,971		1,885,443		1,524,635
Prior years		1,020,761		1,431,336		1,408,256
Total paid losses and LAE		2,922,731		3,316,778		2,932,891

Foreign exchange/translation adjustment		23,892		12,352		(24,412)

Net reserves end of period		7,703,476		5,994,171		5,469,475
Plus reinsurance recoverables		3,951,474		4,215,348		4,697,543
Gross reserves end of period	$	11,654,950	$	10,209,519	$	10,167,018

(Some amounts may not reconcile due to rounding.)

Current year incurred losses were $4,407,795 thousand, $3,784,771 thousand and $4,252,220 thousand at December 31, 2020, 2019 and 2018, respectively. The increase in current year incurred losses in 2020 compared to 2019 was primarily due to $154,812 thousand of incurred losses due to COVID-19 as well as the impact of the increase in premiums earned.

Incurred prior years’ reserves increased by $200,349 thousand, $44,351 thousand and $558,798 thousand in 2020, 2019 and 2018 respectively. 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

F-21

property lines, primarily for the 2017 to 2019 accident years and driven by a few large losses to aggregate programs.

The increase for 2019 was mainly due to adverse development on prior years catastrophe losses.

The increase for 2018 was mainly due to $553,036 thousand of adverse development on prior years catastrophe losses, primarily related to Hurricanes Harvey, Irma and Maria, as well as the 2017 California wildfires. The increase in loss estimates for Hurricanes Harvey, Irma and Maria was mostly driven by re-opened claims, loss inflation from higher than expected loss adjustment expenses and in particular, their impact on aggregate covers.

The following is information about incurred and paid claims development as of December 31, 2020, 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, 2012 to December 31, 2019 is presented as supplementary information.

These tables present nine years of incurred and paid claims development as it is impracticable to retrospectively create the tables for ten years. For the reinsurance groups, for the years prior to 2012, the total of IBNR plus expected development on reported claims was not prepared on an accident year basis. The Company calculated these IBNR amounts in the aggregate for each business unit in total as of prior year end points in time. While business written in the United States would have been allocated to accident year for regulatory reporting purposes, business written outside of the United States would not have been similarly allocated. Attempting to allocate the non-U.S. business IBNR reserves to accident year currently for older year end valuations would require making assumptions and estimates which may not be in line with assumptions that would have been made at the time. A similar situation applies to insurance where the accumulation of the business lines reported in the regulatory filings are not consistent with the breakout of the tables presented below. As a result of not being able to present the information prior to 2012, prospectively an additional year will be added to the tables each reporting year until a ten year table is presented.

The Cumulative Number of Reported Claims is shown only for Insurance Casualty as it is impracticable 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. Cessions under affiliated quota share agreements reduce net losses but do not impact claim counts.

The following tables present the incurred 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.

F-22

Reinsurance – Casualty Business

																			At December 31, 2020
																			Total of
																			IBNR Liabilities
		Incurred Claims and Allocated Claim Adjustment Expenses, Net of reinsurance																	Plus Expected
		Years Ended December 31,																	Development	Cumulative
		2012		2013		2014		2015		2016		2017		2018		2019		2020	on Reported	Number of
Accident Year		(unaudited)		(unaudited)		(unaudited)		(unaudited)		(unaudited)		(unaudited)		(unaudited)		(unaudited)			Claims	Reported Claims
(Dollars in thousands)
2012	$	374,581	$	268,305	$	175,657	$	183,055	$	189,967	$	192,489	$	192,489	$	192,489	$	192,489	5,251	N/A
2013				178,120		224,394		222,607		229,607		219,107		219,107		219,107		219,107	9,966	N/A
2014						255,906		235,921		258,526		230,089		230,089		230,089		230,089	14,699	N/A
2015								209,024		250,053		238,770		238,770		238,770		238,770	22,961	N/A
2016										242,764		240,268		240,268		240,268		240,268	53,538	N/A
2017												198,615		204,376		204,376		204,376	52,439	N/A
2018														776,194		760,762		807,055	256,591	N/A
2019																981,818		1,029,966	577,799	N/A
2020																		1,031,905	701,538	N/A
																	$	4,194,026

(Some amounts may not reconcile due to rounding.)

		Cumulative Paid Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance
		Years Ended December 31,
		2012		2013		2014		2015		2016		2017		2018		2019		2020
Accident Year		(unaudited)		(unaudited)		(unaudited)		(unaudited)		(unaudited)		(unaudited)		(unaudited)		(unaudited)
(Dollars in thousands)
2012	$	13,409	$	30,203	$	60,838	$	95,914	$	121,840	$	126,832	$	153,361	$	155,900	$	160,352
2013				12,781		29,008		64,796		98,583		127,230		159,352		180,489		185,773
2014						15,040		35,248		76,829		107,438		144,211		176,451		185,767
2015								15,673		39,048		85,397		147,974		171,247		189,227
2016										17,534		52,958		89,871		147,881		163,012
2017												25,552		83,783		97,788		133,265
2018														121,180		201,861		301,050
2019																155,949		251,999
2020																		136,609
																	$	1,707,054
All outstanding liabilities prior to 2012, net of reinsurance																		434,553
Liabilities for claims and claim adjustment expenses, net of reinsurance																	$	2,921,525

(Some amounts may not reconcile due to rounding.)

	Average Annual Percentage Payout of Incurred Claims by Age, Net of Reinsurance (unaudited)
Years	1		2		3		4		5		6		7		8		9
Casualty	12.2	%	11.0	%	14.3	%	19.3	%	11.6	%	9.9	%	8.9	%	1.9	%	2.3	%

F-23

Reinsurance – Property Business

																			At December 31, 2020
																			Total of
																			IBNR Liabilities
		Incurred Claims and Allocated Claim Adjustment Expenses, Net of reinsurance																	Plus Expected
		Years Ended December 31,																	Development	Cumulative
		2012		2013		2014		2015		2016		2017		2018		2019		2020	on Reported	Number of
Accident Year		(unaudited)		(unaudited)		(unaudited)		(unaudited)		(unaudited)		(unaudited)		(unaudited)		(unaudited)			Claims	Reported Claims
(Dollars in thousands)
2012	$	694,850	$	603,498	$	549,946	$	565,581	$	555,562	$	557,723	$	543,215	$	540,256	$	538,697	1,822	N/A
2013				409,477		309,139		267,409		228,629		228,071		227,969		227,969		227,969	853	N/A
2014						603,513		528,498		407,734		378,739		379,860		379,860		379,860	908	N/A
2015								561,942		373,099		347,758		347,758		347,758		347,758	2,305	N/A
2016										639,055		665,589		665,904		662,060		660,691	6,623	N/A
2017												1,291,894		1,876,143		2,044,656		2,138,415	12,396	N/A
2018														2,261,663		2,150,440		2,140,579	57,122	N/A
2019																1,784,412		1,790,026	340,939	N/A
2020																		1,903,989	927,203	N/A
																	$	10,127,985

(Some amounts may not reconcile due to rounding.)

		Cumulative Paid Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance
		Years Ended December 31,
		2012		2013		2014		2015		2016		2017		2018		2019		2020
Accident Year		(unaudited)		(unaudited)		(unaudited)		(unaudited)		(unaudited)		(unaudited)		(unaudited)		(unaudited)
(Dollars in thousands)
2012	$	157,927	$	303,383	$	380,761	$	447,169	$	465,594	$	495,246	$	504,145	$	504,486	$	506,738
2013				139,086		169,750		183,757		199,224		208,135		214,946		217,457		222,290
2014						159,408		250,751		308,906		339,654		353,890		356,600		367,141
2015								161,844		241,406		296,128		313,689		318,938		332,022
2016										238,620		502,419		603,988		627,130		649,604
2017												791,142		1,577,892		1,992,968		2,122,476
2018														501,315		1,402,713		1,731,440
2019																701,324		1,084,988
2020																		562,144
																	$	7,578,843
All outstanding liabilities prior to 2012, net of reinsurance																		20,682
Liabilities for claims and claim adjustment expenses, net of reinsurance																	$	2,569,824

(Some amounts may not reconcile due to rounding.)

	Average Annual Percentage Payout of Incurred Claims by Age, Net of Reinsurance (unaudited)
Years	1		2		3		4		5		6		7		8		9
Property	33.7	%	32.6	%	16.3	%	6.6	%	3.2	%	3.5	%	1.9	%	0.7	%	0.4	%

Insurance – Casualty Business

																			At December 31, 2020
																			Total of
																			IBNR Liabilities
		Incurred Claims and Allocated Claim Adjustment Expenses, Net of reinsurance																	Plus Expected
		Years Ended December 31,																	Development	Cumulative
		2012		2013		2014		2015		2016		2017		2018		2019		2020	on Reported	Number of
Accident Year		(unaudited)		(unaudited)		(unaudited)		(unaudited)		(unaudited)		(unaudited)		(unaudited)		(unaudited)			Claims	Reported Claims
(Dollars in thousands)
2012	$	212,023	$	175,030	$	185,371	$	184,659	$	188,273	$	185,810	$	185,809	$	185,861	$	185,862	986	15,780
2013				256,187		228,227		230,748		224,724		194,739		194,748		194,914		194,914	1,283	21,385
2014						238,086		239,091		240,985		255,041		255,166		255,125		255,125	1,550	25,221
2015								259,243		259,563		278,217		278,217		278,388		278,388	1,028	26,996
2016										352,060		276,960		279,684		281,780		281,771	1,944	31,673
2017												304,361		238,006		238,187		237,491	2,293	35,020
2018														645,825		645,109		665,436	219,887	34,884
2019																768,845		757,958	355,225	37,597
2020																		819,368	562,143	26,068
																	$	3,676,311

(Some amounts may not reconcile due to rounding.)

F-24

		Cumulative Paid Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance
		Years Ended December 31,
		2012		2013		2014		2015		2016		2017		2018		2019		2020
Accident Year		(unaudited)		(unaudited)		(unaudited)		(unaudited)		(unaudited)		(unaudited)		(unaudited)		(unaudited)
(Dollars in thousands)
2012	$	15,688	$	55,230	$	84,408	$	116,622	$	133,279	$	147,011	$	154,412	$	168,867	$	170,944
2013				17,120		68,588		101,649		129,756		149,775		167,584		182,789		189,215
2014						20,377		71,918		114,199		143,893		229,001		229,608		250,490
2015								19,962		67,996		116,982		199,532		244,477		260,269
2016										24,810		101,234		275,801		299,145		308,358
2017												22,808		151,283		157,000		216,893
2018														63,229		189,299		271,737
2019																10,612		216,483
2020																		78,760
																	$	1,963,148
All outstanding liabilities prior to 2012, net of reinsurance																		20,931
Liabilities for claims and claim adjustment expenses, net of reinsurance																	$	1,734,095

(Some amounts may not reconcile due to rounding.)

	Average Annual Percentage Payout of Incurred Claims by Age, Net of Reinsurance (unaudited)
Years	1		2		3		4		5		6		7		8		9
Casualty	7.4	%	12.5	%	19.8	%	17.8	%	14.7	%	5.2	%	6.8	%	5.5	%	1.1	%

Insurance – Property Business

																			At December 31, 2020
																			Total of
																			IBNR Liabilities
		Incurred Claims and Allocated Claim Adjustment Expenses, Net of reinsurance																	Plus Expected
		Years Ended December 31,																	Development	Cumulative
		2012		2013		2014		2015		2016		2017		2018		2019		2020	on Reported	Number of
Accident Year		(unaudited)		(unaudited)		(unaudited)		(unaudited)		(unaudited)		(unaudited)		(unaudited)		(unaudited)			Claims	Reported Claims
(Dollars in thousands)
2012	$	58,483	$	47,228	$	43,423	$	44,867	$	44,297	$	44,105	$	44,150	$	44,098	$	44,097	-	N/A
2013				64,493		56,351		52,176		52,866		52,677		52,668		52,502		52,443	2	N/A
2014						67,660		70,077		67,447		66,645		66,520		66,561		66,561	3	N/A
2015								81,137		75,673		75,830		75,787		75,616		75,666	8	N/A
2016										143,279		169,791		165,078		164,045		164,144	67	N/A
2017												230,638		293,577		297,588		299,199	229	N/A
2018														376,805		373,389		377,079	339	N/A
2019																337,993		349,750	514	N/A
2020																		546,870	232,975	N/A
																	$	1,975,810

(Some amounts may not reconcile due to rounding.)

		Cumulative Paid Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance
		Years Ended December 31,
		2012		2013		2014		2015		2016		2017		2018		2019		2020
Accident Year		(unaudited)		(unaudited)		(unaudited)		(unaudited)		(unaudited)		(unaudited)		(unaudited)		(unaudited)
(Dollars in thousands)
2012	$	26,868	$	44,408	$	42,865	$	44,517	$	44,230	$	44,040	$	44,049	$	44,075	$	44,098
2013				35,201		54,220		52,588		52,849		52,474		52,459		52,467		52,441
2014						40,277		66,436		66,601		65,968		66,449		66,482		66,558
2015								45,422		70,398		75,168		75,192		75,049		75,240
2016										72,264		153,120		169,134		164,445		163,274
2017												161,592		293,417		282,607		296,805
2018														236,430		342,828		368,756
2019																218,339		337,091
2020																		263,379
																	$	1,667,642
All outstanding liabilities prior to 2012, net of reinsurance																		33
Liabilities for claims and claim adjustment expenses, net of reinsurance																	$	308,201

(Some amounts may not reconcile due to rounding.)

	Average Annual Percentage Payout of Incurred Claims by Age, Net of Reinsurance (unaudited)
Years	1		2		3		4		5		6		7		8		9
Property	55.7	%	36.8	%	3.0	%	1.5	%	1.6	%	1.3	%	0.1	%	-	%	0.1	%

F-25

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.

	At December 31,
	2020
(Dollars in thousands)
Net outstanding liabilities
Reinsurance Casualty	$	2,921,525
Reinsurance Property		2,569,824
Insurance Casualty		1,734,095
Insurance Property		308,201
Liabilities for unpaid claims and claim adjustment expenses, net of reinsurance		7,533,645

Reinsurance recoverable on unpaid claims
Reinsurance Casualty		1,163,264
Reinsurance Property		1,097,995
Insurance Casualty		1,505,962
Insurance Property		184,253
Total reinsurance recoverable on unpaid claims		3,951,474

Unallocated claims adjustment expenses		142,289
Other		27,542
		169,831

Total gross liability for unpaid claims and claim adjustment expense	$	11,654,950

(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. Insurance and reinsurance loss and LAE reserves represent the Company’s best estimate of its ultimate liability. Actual loss and LAE ultimately paid may deviate, perhaps substantially, from such reserves. Net income (gain or loss) will be impacted in a period in which the change in estimated ultimate loss and LAE is recorded.

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

F-26

corresponding reserves as established by the ceding company. This information is recorded into 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 handles 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. On the other hand, 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 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.

F-27

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 Company’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 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.

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 thousands)		2020		2019		2018
Gross basis:
Beginning of period reserves	$	257,921	$	347,495	$	448,993
Incurred losses		1,540		2,071		(2,473)
Paid losses		(40,120)		(91,645)		(99,026)
End of period reserves	$	219,341	$	257,921	$	347,495

Net basis:
Beginning of period reserves	$	196,574	$	223,548	$	269,153
Incurred losses		(4,753)		-		-
Paid losses		(24,382)		(26,974)		(45,605)
End of period reserves	$	167,439	$	196,574	$	223,548

Reinsurance Receivables. Reinsurance receivables for both paid and unpaid losses totaled $4,207,305 thousand and $4,444,089 thousand at December 31, 2020 and 2019, respectively. At December 31, 2020, $2,687,497 thousand, or 63.9%, was receivable from Everest Reinsurance (Bermuda), Ltd. (“Bermuda Re”), an affiliated entity, and is fully collateralized by a trust agreement and $349,447 thousand, or 8.3%, was

F-28

receivable from Mt. Logan Re Ltd. (Bermuda) (“Mt. Logan Re”) collateralized segregated accounts. No other retrocessionaire accounted for more than 5% of reinsurance receivables.

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. In addition, the Company continually performs analytical reviews of price changes and tests the prices on a random basis to an independent pricing source. No material variances were noted during these price validation procedures. In limited situations, where financial markets are inactive or illiquid, the Company may use its own assumptions about future cash flows and risk-adjusted discount rates to determine fair value. At December 31, 2020, $1,259,576 thousand of fixed maturities, market value were fair valued using unobservable inputs. The majority of the fixed maturities, market value, 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, 2019, $702,331 thousand of fixed maturities, market value and $5,826 thousand 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, 2020 and December 31, 2019 of $784,746 thousand and $170,888 thousand, respectively, and all prices were obtained from publicly published sources.

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

F-29

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

The fixed maturities with fair values categorized as Level 3 result when prices are not available from the nationally recognized pricing services.

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

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

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

· Corporate securities are primarily comprised of U.S. corporate and public utility bond issuances and the fair values are based on observable market inputs such as quoted market prices, quoted prices for similar securities, benchmark yields and credit spreads;

· Asset-backed and mortgage-backed securities fair values are based on observable inputs such as quoted prices, reported trades, quoted prices for similar issuances or benchmark yields and cash flow models using observable inputs such as prepayment speeds, collateral performance and default spreads;

· Foreign government securities are comprised of global non-U.S. sovereign bond issuances and the fair values are based on observable market inputs such as quoted market prices, quoted prices for similar securities and models with observable inputs such as benchmark yields and credit spreads and then, where applicable, converted to U.S. dollars using an exchange rate from a nationally recognized source;

· Foreign corporate securities are comprised of global non-U.S. corporate bond issuances and the fair values are based on observable market inputs such as quoted market prices, quoted prices for similar securities and models with observable inputs such as benchmark yields and credit spreads and then, where applicable, converted to U.S. dollars using an exchange rate from a nationally recognized source.

Other invested assets, at fair value, were categorized as Level 3 at December 31, 2020 and December 31, 2019, since it represented a privately placed convertible preferred stock issued by an affiliate. The stock was received in exchange for shares of the Company’s parent. The 25 year redeemable, convertible preferred stock with a 1.75% coupon is valued using a pricing model. The pricing model includes observable inputs such as the U.S. Treasury yield curve rate T note constant maturity 10 year and the swap rate on the Company’s June 1, 2044, 4.868% senior notes, with adjustments to reflect the Company’s own assumptions about the inputs that market participants would use in pricing the asset.

F-30

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

			Fair Value Measurement Using:
			Quoted Prices
			in Active		Significant
			Markets for		Other		Significant
			Identical		Observable		Unobservable
	December 31,		Assets		Inputs		Inputs
(Dollars in thousands)	2020		(Level 1)		(Level 2)		(Level 3)
Assets:
Fixed maturities, market value
U.S. Treasury securities and obligations of U.S. government agencies and corporations	$	681,989	$	-	$	681,989	$	-
Obligations of U.S. States and political subdivisions		577,046		-		577,046		-
Corporate securities		3,449,912		-		2,819,068		630,844
Asset-backed securities		2,474,170		-		1,851,137		623,033
Mortgage-backed securities
Commercial		550,080		-		550,080		-
Agency residential		965,100		-		965,100		-
Non-agency residential		3,164		-		3,164		-
Foreign government securities		742,238		-		742,238		-
Foreign corporate securities		1,199,866		-		1,194,167		5,699
Total fixed maturities, market value		10,643,565		-		9,383,989		1,259,576

Equity securities, fair value		1,288,767		1,222,158	-	66,609		-
Other invested assets, fair value		1,796,479		-		-		1,796,479

There were no transfers between Level 1 and Level 2 for the twelve months ended December 31, 2020.

F-31

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

			Fair Value Measurement Using:
			Quoted Prices
			in Active		Significant
			Markets for		Other		Significant
			Identical		Observable		Unobservable
	December 31,		Assets		Inputs		Inputs
(Dollars in thousands)	2019		(Level 1)		(Level 2)		(Level 3)
Assets:
Fixed maturities, market value
U.S. Treasury securities and obligations of U.S. government agencies and corporations	$	777,515	$	-	$	777,515	$	-
Obligations of U.S. States and political subdivisions		535,911		-		535,911		-
Corporate securities		2,821,557		-		2,274,618		546,939
Asset-backed securities		765,957		-		612,316		153,641
Mortgage-backed securities
Commercial		329,049		-		329,049		-
Agency residential		644,687		-		644,687		-
Non-agency residential		1,638		-		1,638		-
Foreign government securities		658,007		-		658,007		-
Foreign corporate securities		957,758		-		956,007		1,751
Total fixed maturities, market value		7,492,079		-		6,789,748		702,331

Fixed maturities, fair value		5,826		-		-		5,826
Equity securities, fair value		764,049		719,548		44,501		-
Other invested assets, fair value		1,982,582		-		-		1,982,582

In addition, $224,698 thousand and $209,578 thousand of investments within other invested assets on the consolidated balance sheets as of December 31, 2020 and December 31, 2019, respectively, are not included within the fair value hierarchy tables as the assets are measured at NAV as a practical expedient to determine fair value.

F-32

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

	Total Fixed Maturities, Market Value
	December 31, 2020								December 31, 2019
	Corporate		Asset		Foreign				Corporate		Asset		Foreign
(Dollars in thousands)	Securities		Backed Securities		Corporate		Total		Securities		Backed Securities		Corporate		Total
Beginning balance	$	546,939	$	153,641	$	1,751	$	702,331	$	376,250	$	-	$	7,744	$	383,994
Total gains or (losses) (realized/unrealized)
Included in earnings		1,216		681		(125)		1,772		4,937		-		(12)		4,925
Included in other comprehensive income (loss)		(1,115)		11,678		147		10,710		(21)		3,632		(110)		3,501
Purchases, issuances and settlements		84,840		457,033		3,814		545,687		161,078		150,009		(5,871)		305,216
Transfers in and/or (out) of Level 3		(1,037)		-		113		(924)		4,695		-		-		4,695
Ending balance	$	630,843	$	623,033	$	5,700	$	1,259,576	$	546,939	$	153,641	$	1,751	$	702,331
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	$	(539)	$	-	$	-	$	(539)	$	-	$	-	$	-	$	-

(Some amounts may not reconcile due to rounding.)

	Total Fixed Maturities, Fair Value
	December 31, 2020				December 31, 2019
	Foreign				Foreign
(Dollars in thousands)	Corporate		Total		Corporate		Total
Beginning balance fixed maturities at fair value		5,826		5,826		2,337		2,337
Total gains or (losses) (realized/unrealized)
Included in earnings		(919)		(919)		2,163		2,163
Included in other comprehensive income (loss)		-		-		-		-
Purchases, issuances and settlements		(4,907)		(4,907)		1,326		1,326
Transfers in and/or (out) of Level 3		-		-		-		-
Ending balance	$	-	$	-	$	5,826	$	5,826
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	$	-	$	-	$	1,796	$	1,796
(Some amounts may not reconcile due to rounding.)

The net transfers to/(from) Level 3, fair value measurements using significant unobservable inputs for fixed maturities, market value were $(924) thousand and $4,695 thousand for the years ended December 31, 2020 and 2019, respectively. The transfers during 2020 were previously priced with investment managers and were subsequently priced by a recognized pricing service as of December 31, 2020. The transfers during 2019 were previously priced by a recognized pricing service and were subsequently priced using investment managers as of December 31, 2019.

The following table presents the activity under Level 3, fair value measurements using significant unobservable inputs by equity securities, for the periods indicated:

F-33

	December 31,
(Dollars in thousands)	2020		2019
Equity securities
Balance, beginning of period	$	-	$	-
Total (gains) or losses (realized/unrealized)
Included in earnings		-		-
Included in other comprehensive income (loss)		-		-
Purchases, issuances and settlements		9,877		-
Transfers in and/or (out) of Level 3		(9,877)		-
Balance, end of period	$	-	$	-

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

(Some amounts may not reconcile due to rounding.)

The net transfers to/(from) Level 3, fair value measurements using significant unobservable inputs for equity securities, fair value were $(9,877) thousand for 2020 and $0 Thousand for 2019. The transfers of ($9,877) thousand during 2020, were related to preferred stock in a private entity purchased during the second quarter of 2020 which was priced at cost originally and was subsequently priced based upon the book value of the underlying private entity as of December 31, 2020.

The following table presents the activity under Level 3, fair value measurements using significant unobservable inputs by other invested assets, for the periods indicated:

	Years Ended December 31,
(Dollars in thousands)	2020		2019
Other invested assets, fair value:
Beginning balance	$	1,982,582	$	1,717,336
Total gains or (losses) (realized/unrealized)
Included in earnings		(186,103)		265,246
Included in other comprehensive income (loss)		-		-
Purchases, issuances and settlements		-		-
Transfers in and/or (out) of Level 3		-		-
Ending balance	$	1,796,479	$	1,982,582
The amount of total gains or losses for the period included in earnings (or changes in net assets) attributable to the change in unrealized gains or losses relating to assets still held at the reporting date	$	-	$	-

(Some amounts may not reconcile due to rounding.)

F-34

5. S ENIOR 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, 2020				December 31, 2019
				Consolidated				Consolidated
			Principal	Balance Sheet		Market		Balance Sheet		Market
(Dollars in thousands)	Date Issued	Date Due	Amounts	Amount		Value		Amount		Value
4.868% Senior notes	06/05/2014	06/01/2044	400,000	$	397,194	$	528,000	$	397,074	$	452,848
3.5% Senior notes	10/07/2020	10/15/2050	1,000,000	$	979,524	$	1,138,100	$	-	$	-

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

On October 7, 2020, Holdings issued $1,000,000 thousand of 30 year senior notes an interest coupon rate of 3.5% which will mature on October 15, 2050. Interest will be paid semi-annually on April 15th and October 15th of each year.

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

	Years Ended December 31,
(Dollars in thousands)	2020		2019		2018
Interest expense incurred	$	19,472	$	19,472	$	19,472
10/15/2050 Senior Note	$	8,115	$	-	$	-

6. 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.

December 31, 2020

December 31, 2019

Original

Consolidated

Principal

Maturity Date

Balance

Market

Balance

Market

(Dollars in thousands)

Date Issued

Amount

Scheduled

Final

Sheet Amount

Value

Sheet Amount

Value

Long term subordinated notes

04/26/2007

400,000

05/15/2037

05/01/2067

223,674

206,447

236,758

233,191

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 16, 2020 to February 15, 2021 is 2.6%.

Holdings may redeem the long term subordinated notes on or after May 15, 2017, in whole or in part at 100% of the principal amount plus accrued and unpaid interest; however, redemption on or after the scheduled maturity date and prior to May 1, 2047 is subject to a replacement capital covenant. This covenant is for the benefit of certain senior note holders and it mandates that Holdings receive proceeds from the sale of another subordinated debt issue, of at least similar size, before it may redeem the subordinated notes. Effective upon the maturity of the Company’s 5.40% senior notes on October 15, 2014, the Company’s 4.868% senior notes, due on June 1, 2044, have become the Company’s long term indebtedness that ranks senior to the long term subordinated notes.

F-35

The Company repurchased and retired $13,183 thousand and $0 thousand of its outstanding long term subordinated notes during the years ended December, 2020 and 2019, respectively. The Company realized a gain of $2,536 thousand and $0 thousand from the repurchase of the long term subordinated notes the years ended December, 2020 and 2019, respectively.

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

	Years Ended December 31,
(Dollars in thousands)	2020		2019		2018
Interest expense incurred	$	7,645	$	11,587	$	10,926

7 . FEDERAL HOME LOAN BANK MEMBERSHIP

Effective August 15, 2019, Everest Reinsurance Company (“Everest Re”) became 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, 2020, Everest Re had admitted assets of approximately $16,840,721 thousand which provides borrowing capacity of up to approximately $1,684,072 thousand. During 2020, Everest Re borrowed $400,000 thousand under its FHLBNY capacity. The borrowings have interest payable at an interest rate of 0.35%. As of December 31, 2020, $310,000 of these borrowings remain outstanding, with maturities in November and December 2021. The FHLBNY membership agreement requires that 4.5% of borrowed funds be used to acquire additional membership stock.

8. COLLATERALIZED REINSURANCE AND TRUST AGREEMENTS

A subsidiary of the Company, Everest Re, has established a trust agreement, which effectively uses Everest Re’s investments as collateral, as security for assumed losses payable to non-affiliated ceding companies. At December 31, 2020, the total amount on deposit in the trust account was $886,148 thousand.

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

On November 18, 2014, the Company entered into a collateralized reinsurance agreement with Kilimanjaro to provide the Company with catastrophe reinsurance coverage. This agreement is a multi-year reinsurance contract which covers specified earthquake events. The agreement provides up to $500,000 thousand of reinsurance coverage from earthquakes in the United States, Puerto Rico and Canada. These reinsurance agreements expired in November, 2019.

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

On April 13, 2017, the Company entered into six collateralized reinsurance agreements with Kilimanjaro to provide the Company with annual aggregate catastrophe reinsurance coverage. The initial three agreements

F-36

are four year reinsurance contracts which cover named storm and earthquake events. These agreements provide up to $225,000 thousand, $400,000 thousand and $325,000 thousand, respectively, of annual aggregate reinsurance coverage from named storms and earthquakes in the United States, Puerto Rico and Canada. The subsequent three agreements are five year reinsurance contracts which cover named storm and earthquake events. These agreements provide up to $50,000 thousand, $75,000 thousand and $175,000 thousand, respectively, of annual aggregate reinsurance coverage from named storms and earthquakes in the United States, Puerto Rico and Canada.

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

On December 12, 2019, the Company entered into four collateralized reinsurance agreements with Kilimanjaro to provide the Company with catastrophe reinsurance coverage. These agreements are multi-year reinsurance contracts which cover named storm and earthquake events. The first two agreements are four year reinsurance contracts which provide up to $150,000 thousand and $275,000 thousand, respectively, of annual aggregate reinsurance coverage from named storms and earthquakes in the United States, Puerto Rico, the U.S. Virgin Islands and Canada. The remaining two agreements are five year reinsurance contracts which provide up to $150,000 thousand and $275,000 thousand, respectively, of annual aggregate reinsurance coverage from named storms and earthquakes in the United State, Puerto Rico, the U.S. Virgin Islands and Canada.

Recoveries under these collateralized reinsurance agreements with Kilimanjaro are primarily dependent on estimated industry level insured losses from covered events, as well as, the geographic location of the events. The estimated industry level of insured losses is obtained from published estimates by an independent recognized authority on insured property losses. 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. On April 24, 2014, Kilimanjaro issued $450,000 thousand of notes (“Series 2014-1 Notes”). The $450,000 thousand of Series 2014-1 Notes were fully redeemed on April 30, 2018 and are no longer outstanding. On November 18, 2014, Kilimanjaro issued $500,000 thousand of notes (“Series 2014-2 Notes”). The $500,000 thousand of Series 2014-2 Notes were fully redeemed in November 2019 and are no longer outstanding. On December 1, 2015, Kilimanjaro issued $625,000 thousand of notes (“Series 2015-1 Notes). On April 13, 2017, Kilimanjaro issued $950,000 thousand of notes (“Series 2017-1 Notes) and $300,000 thousand of notes (“Series 2017-2 Notes). On April 30, 2018, Kilimanjaro issued $262,500 thousand of notes (“Series 2018-1 Notes”) and $262,500 thousand of notes (“Series 2018-2 Notes”). On December 12, 2019 Kilimanjaro issued $425,000 thousand of notes (“Series 2019-1 Notes”) and $425,000 thousand of notes (“Series 2019-2 Notes’”). The proceeds from the issuance of the Notes listed above are held in reinsurance trust throughout the duration of the applicable reinsurance agreements and invested solely in US government money market funds with a rating of at least “AAAm” by Standard & Poor’s.

9. LEASES

Effective January 1, 2019, the Company adopted ASU 2016-02 and ASU 2018-11 which outline new guidance on the accounting for 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

F-37

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)	2020		2019
Lease expense incurred:
Operating lease cost	$	29,822	$	21,471

	At December 31,
(Dollars in thousands)	2020		2019
Operating lease right of use assets	$	139,835	$	152,978
Operating lease liabilities		155,144		160,387

	Year Ended
	December 31,
(Dollars in thousands)	2020		2019
Operating cash flows from operating leases	$	(18,411)	$	(17,617)

	At December 31,
	2020		2019
Weighted average remaining operating lease term	12.5 years			12.8 years
Weighted average discount rate on operating leases	4.02	%		3.91	%

Maturities of the existing lease liabilities are expected to occur as follows:

(Dollars in thousands)

2021	$	16,191
2022		18,623
2023		18,211
2024		18,217
2025		15,225
Thereafter		116,197
Undiscounted lease payments		202,664
Less: present value adjustment		47,520
Total operating lease liability	$	155,144

On July 2, 2019, the Company entered into a lease agreement to relocate its U.S. corporate offices from Liberty Corner, New Jersey to Warren, New Jersey. The new lease, which covers approximately 315,000 square feet of office space, was effective October 1, 2019 and runs through 2036. The initial base rent payment of the lease will be approximately $650 thousand per month or $7,800 thousand per year. The Company relocated the existing operations and employees of the Liberty Corner, New Jersey facility to the new corporate complex as of December 2020.

F-38

10. INCOME TAXES

All of the income of Holdings U.S. subsidiaries, including its foreign branches, is subject to the applicable federal, foreign, state and local income taxes on corporations. The provision for income taxes in the consolidated statement of operations and comprehensive income (loss) has been determined by applying the respective tax laws to the income of 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 $32.5 million and obtain federal income tax cash refunds of $182.5 million including interest in 2020.

The significant components of the provision are as follows for the periods indicated:

	Years Ended December 31,
(Dollars in thousands)	2020		2019		2018
Current tax expense (benefit):
U.S.	$	(106,719)	$	(1,684)	$	(50,964)
Foreign		(11)		77		8
Total current tax expense (benefit)		(106,730)		(1,607)		(50,956)
Total deferred U.S. tax expense (benefit)		138,388		136,834		(316,069)
Total income tax expense (benefit)	$	31,658	$	135,228	$	(367,025)

A reconciliation of the total income tax provision using the statutory U.S. Federal Income tax rate to the Company’s total income tax provision is as follows for the periods indicated:

(Dollars in thousands)	2020		2019		2018
Expected income tax provision at the U.S. statutory tax rate	$	80,588	$	160,762	$	(279,216)
Increase (decrease) in taxes resulting from:
Tax exempt income		(3,598)		(3,680)		(3,824)
Dividend received deduction		(1,100)		(998)		(1,277)
Proration		1,049		1,050		1,150
Creditable foreign premium tax		(11,513)		(9,852)		(13,475)
Tax audit settlement		-		(1,576)		(2,060)
U.S. rate differential on carryback of net operation losses to PY		-		-		(43,734)
U.S. rate differential on deferred tax 2017 return to provision		-		-		(28,832)
Share based compensation tax benefits formerly in APIC		(2,612)		(2,987)		(1,450)
Impact of CARES Act		(32,500)		-		-
Change in uncertain tax positions		-		(8,434)		8,434
Other		1,345		942		(2,741)
Total income tax provision	$	31,658	$	135,228	$	(367,025)

(Some amounts may not reconcile due to rounding.)

F-39

A reconciliation of the beginning and ending unrecognized tax benefits, for the periods indicated, is as follows:

(Dollars in thousands)	2020		2019		2018
Balance at January 1	$	-	$	8,434	$	-
Additions based on tax positions related to the current year		-		-		8,434
Additions for tax positions of prior years		-		-		-
Reductions for tax positions of prior years		-		(8,434)		-
Settlements with taxing authorities		-		-		-
Lapses of applicable statutes of limitations		-		-		-
Balance at December 31	$	-	$	-	$	8,434

At December 31, 2020, the Company’s unrecognized tax benefits, excluding interest and penalties, that would impact the effective tax rate were $0 thousand. Interest and penalties related to unrecognized tax benefits are recognized in income tax expense. At December 31, 2020, the Company accrued $0 thousand for the payment of interest (net of the federal benefit) and penalties. At December 31, 2020 and 2019, there were no accrued liabilities, respectively, for the payment of interest and penalties.

The Company’s 2014 and subsequent U.S. tax years are open to audit by the IRS. In 2018, the IRS opened an audit of the 2014 tax year. To date, the Company has received only one notice of proposed adjustment for an immaterial amount of tax. The Company proposed affirmative beneficial income tax return adjustments to the IRS at the start of the audit. Subsequent to the Company’s CARES Act net operating loss carryback, the Company expects a tax refund of $16,287 thousand of recaptured foreign tax credits related to the affirmative adjustments.

In 2019, the IRS opened an audit of the 2015 through 2017 tax years. To date, the Company has not received any Information Document Requests (“IDRs”) or notices of proposed adjustment. The Company had filed amended tax returns for 2015 and 2016 for $1,519 thousand and $4,685 thousand respectively.

During 2020, the IRS added 2018 to the audit and indicated that, subsequent to the CARES Act, it would audit tax years 2014 – 2018 all together and conclude its audits simultaneously. To date, the Company has not received any IDRs or notices of proposed adjustment for the 2018 tax year.

F-40

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 as measured by 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:

	At December 31,
(Dollars in thousands)	2020		2019
Deferred tax assets:
Loss reserves	$	96,840	$	66,025
Unearned premium reserve		85,028		75,130
Foreign tax credits		46,109		186,706
Lease Liability		31,989		33,042
Net unrecognized losses on benefit plans		19,636		19,818
Equity compensation		6,749		7,229
Other tax credits		4,591		2,294
Uncollectible reinsurance reserve		3,142		3,142
Investment impairments		1,121		3,961
Net operating loss		684		19,027
Deferred expense		622		517
Unrealized foreign currency losses		597		7,958
Other assets		6,559		5,885
Total deferred tax assets		303,667		430,734

Deferred tax liabilities:
Net fair value income		277,525		266,850
Net unrealized investment gains		84,869		38,074
Deferred acquisition costs		79,994		81,931
Right of use asset		28,822		31,510
Partnership Investments		26,119		15,039
Bond market discount		2,257		1,466
Benefit plan asset		1,765		2,333
Other liabilities		5,056		3,796
Total deferred tax liabilities		506,407		440,999

Net deferred tax assets/(liabilities)	$	(202,740)	$	(10,265)

Due to the passage of the CARES Act in 2020, which allowed for a five-year carryback of NOLs, as of December 31, 2020 the Company no longer has a Consolidated U.S. NOL carryforward. Without the Consolidated U.S. NOL carryforward, the Company was able to utilize a significant amount of U.S. Foreign Tax Credits (“FTCs”) in both 2019 and 2020. As a result, its FTC carryforwards were significantly reduced at December 31, 2020 to only $46,109 thousand. The remaining FTC carryforwards expire between 2025 and 2030.

During 2018, the Company completed its accounting for the TCJA in accordance with SEC Staff Accounting Bulletin 118, including interpretation of the additional guidance issued by the IRS and U.S. Department of the Treasury, and recognized an income tax benefit of $28,411 thousand primarily related to the 2017 tax return to tax provision true-up recorded in 2018.

Tax effected U.S. Separate Return Limitation Year NOLs of $684 thousand begin to expire in 2037.

Effective January 1, 2017, the Company adopted ASU 2016-09 which provided new guidance on the treatment of the tax effects of share-based compensation transactions. ASU 2016-09 required that the income tax

F-41

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/exercising) date be recorded as part of income tax expense (benefit) within the consolidated statements of operations and comprehensive income (loss). Per the new guidance, the Company recorded excess tax benefits of $2,612 thousand, $2,987 thousand and $1,450 thousand 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 2020, 2019 and 2018, respectively.

In years prior to 2017, the Company recorded tax benefits related to restricted stock vestings and stock option exercises as part of additional paid-in capital in the stockholder’s equity section of the consolidated balance sheets.

The adoption of ASU 2016-09 did 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 stockholder’s equity section of the consolidated balance sheets in all years. The tax benefits related to the payment of dividends on restricted stock were $414 thousand, $363 thousand and $241 thousand in 2020, 2019 and 2018, respectively.

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 receivables include balances due from reinsurance companies and are presented net of an allowance for uncollectible reinsurance. Reinsurance receivables 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 receivables 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.

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.

The Company periodically evaluates the recoverability of its reinsurance receivable assets and establishes an allowance for uncollectible reinsurance. 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.

F-42

Due to the inherent uncertainties as to collection and the length of time before reinsurance receivable become due, it is possible that future adjustments to the Company’s reinsurance receivable, 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 receivable exposed to loss multiplied by estimated factors for the probability of default. The probability of default is assigned based on each reinsurer's credit rating, or a rating is estimated if no external rating is available. Credit ratings are reviewed and updated at least annually. 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 receivable considers the current economic environment as well as macroeconomic scenarios.

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.

The Company records credit loss expenses related to reinsurance receivable in losses and loss adjustment expenses. Write-offs of reinsurance receivable and any related allowance are recorded in the period in which the balance is deemed uncollectible. The allowance for the reinsurance receivables is $14,233 thousand and $12,836 thousand as of December 31, 2020 and 2019, respectively.

Premiums written and earned and incurred losses and LAE are comprised of the following for the periods indicated:

	Years Ended December 31,
(Dollars in thousands)	2020		2019		2018
Written premiums:
Direct	$	2,698,100	$	2,449,198	$	1,996,606
Assumed		5,258,938		4,603,866		4,577,070
Ceded		(1,318,338)		(1,278,115)		(1,541,814)
Net written premiums	$	6,638,700	$	5,774,949	$	5,031,862

Premiums earned:
Direct	$	2,591,613	$	2,255,388	$	1,903,576
Assumed		5,183,399		4,427,006		4,447,862
Ceded		(1,368,436)		(1,193,359)		(1,512,380)
Net premiums earned	$	6,406,576	$	5,489,035	$	4,839,058

Incurred losses and LAE:
Direct	$	1,784,616	$	1,401,251	$	1,182,399
Assumed		3,576,252		2,913,987		4,162,776
Ceded		(752,724)		(486,116)		(534,157)
Net incurred losses and LAE	$	4,608,144	$	3,829,122	$	4,811,018

The Company has engaged in reinsurance transactions with Bermuda Re, Everest International Reinsurance, Ltd. (“Everest International”), Mt. Logan Re, Everest Insurance Company of Canada (“Everest Canada”) and Lloyd’s Syndicate 2786, which are affiliated companies primarily driven by enterprise risk and capital management considerations under which business is ceded at market rates and terms.

F-43

The table below represents affiliated quota share reinsurance agreements ("whole account quota share") for all new and renewal business for the indicated coverage period:

(Dollars in thousands)
						Single
		Percent		Assuming		Occurrence		Aggregate
Coverage Period	Ceding Company	Ceded		Company	Type of Business	Limit		Limit
01/01/2010-12/31/2010	Everest Re	44.0	%	Bermuda Re	property / casualty business	150,000		325,000
01/01/2011-12/31/2011	Everest Re	50.0	%	Bermuda Re	property / casualty business	150,000		300,000
01/01/2012-12/31/2014	Everest Re	50.0	%	Bermuda Re	property / casualty business	100,000		200,000
01/01/2015-12/31/2016	Everest Re	50.0	%	Bermuda Re	property / casualty business	162,500		325,000
01/01/2017-12/31/2017	Everest Re	60.0	%	Bermuda Re	property / casualty business	219,000		438,000
01/01/2010-12/31/2010	Everest Re- Canadian Branch	60.0	%	Bermuda Re	property business	350,000	⁽¹⁾	-
01/01/2011-12/31/2011	Everest Re- Canadian Branch	60.0	%	Bermuda Re	property business	350,000	⁽¹⁾	-
01/01/2012-12/31/2012	Everest Re- Canadian Branch	75.0	%	Bermuda Re	property / casualty business	206,250	⁽¹⁾	412,500	⁽¹⁾
01/01/2013-12/31/2013	Everest Re- Canadian Branch	75.0	%	Bermuda Re	property / casualty business	150,000	⁽¹⁾	412,500	⁽¹⁾
01/01/2014-12/31/2017	Everest Re- Canadian Branch	75.0	%	Bermuda Re	property / casualty business	262,500	⁽¹⁾	412,500	⁽¹⁾
01/01/2012-12/31/2017	Everest Canada	80.0	%	Everest Re- Canadian Branch	property business	-		-
01/01/2020-01/01/2021	Everest International Assurance	100.0	%	Bermuda Re	life business	-		-

(1) Amounts shown are Canadian dollars.

Effective January 1, 2018, Everest Re entered into a twelve month whole account aggregate stop loss reinsurance contract (“stop loss agreement”) with Bermuda Re. The stop loss agreement provides coverage for ultimate net losses on applicable net earned premiums above a retention level, subject to certain other coverage limits and conditions. The stop loss agreement has been renewed annually and was most recently renewed effective January 1, 2020.

In addition, Everest Re entered into a property catastrophe excess of loss reinsurance contract with Bermuda Re, effective January 1, 2019. The contract provided $100,000 thousand of reinsurance coverage for property catastrophe losses above certain attachment points. This contract was not renewed and expired as of December 31, 2019.

The table below represents loss portfolio transfer (“LPT”) reinsurance agreements whereby net insurance exposures and reserves were transferred to an affiliate.

(Dollars in thousands)
Effective	Transferring	Assuming		% of Business or		Covered Period
Date	Company	Company		Amount of Transfer		of Transfer
10/01/2001	Everest Re (Belgium Branch)	Bermuda Re		100	%	All years
10/01/2008	Everest Re	Bermuda Re	$	747,022		01/01/2002-12/31/2007
12/31/2017	Everest Re	Bermuda Re	$	970,000		All years

On December 31, 2017, the Company entered into a LPT agreement with Bermuda Re. The LPT agreement covers subject loss reserves of $2,336,242 thousand for accident years 2017 and prior. As a result of the LPT agreement, the Company transferred $1,000,000 thousand of cash and fixed maturity securities and transferred $970,000 thousand of loss reserves to Bermuda Re. As part of the LPT agreement, Bermuda Re will provide an additional $500,000 thousand of adverse development coverage on the subject loss reserves.

The following tables summarize the premiums and losses ceded by the Company to Bermuda Re and Everest International, respectively, and premiums and losses assumed by the Company from Everest Canada and Lloyd’s syndicate 2786 for the periods indicated:


Bermuda Re	Years Ended December 31,
(Dollars in thousands)	2020		2019		2018
Ceded written premiums	$	131,341	$	100,084	$	572,620
Ceded earned premiums		131,574		101,681		586,120
Ceded losses and LAE		108,477		(51,686)		(49,955)

F-44


Everest International	Years Ended December 31,
(Dollars in thousands)	2020		2019		2018
Ceded written premiums	$	-	$	-	$	-
Ceded earned premiums		-		-		-
Ceded losses and LAE		(503)		324		(753)


Everest Canada	Years Ended December 31,
(Dollars in thousands)	2020		2019		2018
Assumed written premiums	$	1	$	-	$	-
Assumed earned premiums		(7)		-		-
Assumed losses and LAE		(2,102)		3,024		6,238


Lloyd's Syndicate 2786	Years Ended December 31,
(Dollars in thousands)	2020		2019		2018
Assumed written premiums	$	(3,592)	$	(11,470)	$	10,800
Assumed earned premiums		(3,375)		(18,650)		35,826
Assumed losses and LAE		(2,636)		8,355		27,550

In 2013, Group established Mt. Logan Re, which is a Class 3 insurer based in Bermuda. Mt. Logan Re then established separate segregated accounts for its business activity, which invest in a diversified set of catastrophe exposures.

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.


Mt. Logan Re Segregated Accounts	Years Ended December 31,
(Dollars in thousands)	2020		2019		2018
Ceded written premiums	$	263,487	$	240,721	$	207,439
Ceded earned premiums		265,381		235,500		212,046
Ceded losses and LAE		175,087		171,900		234,471
Assumed written premiums		-		-		10,582
Assumed earned premiums		-		-		10,582
Assumed losses and LAE		-		-		-

12. COMPREHENSIVE INCOME (LOSS)

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

	Year Ended						Year Ended						Year Ended
(Dollars in thousands)	December 31, 2020						December 31, 2019						December 31, 2018
	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 - temporary	$	206,159		(43,078)	$	163,080	$	222,884		(46,971)	$	175,913	$	(119,058)	$	25,582	$	(93,476)
URA(D) on securities - OTTI		-		-		-		(546)		115		(431)		645		(135)		510
Reclassification of net realized losses (gains) included in net income (loss)		32,475		(7,007)		25,468		6,068		(988)		5,080		3,416		(1,395)		2,021
Foreign currency translation adjustments		18,277		(3,815)		14,461		21,708		(4,555)		17,153		(46,136)		9,705		(36,431)
Benefit plan actuarial net gain (loss)		(7,107)		1,492		(5,615)		(15,938)		3,347		(12,591)		(646)		136		(510)
Reclassification of amortization of net gain (loss) included in net income (loss)		7,974		(1,674)		6,300		6,902		(1,449)		5,453		6,356		(1,335)		5,021
Total other comprehensive income (loss)	$	257,778	$	(54,082)	$	203,694	$	241,078	$	(50,501)	$	190,577	$	(155,423)	$	32,558	$	(122,865)

(Some amounts may not reconcile due to rounding)

F-45

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

					Affected line item within the
	Years Ended December 31,				statements of operations and
AOCI component	2020		2019		comprehensive income (loss)
(Dollars in thousands)
URA(D) on securities	$	32,475	$	6,068	Other net realized capital gains (losses)
		(7,007)		(988)	Income tax expense (benefit)
	$	25,468	$	5,080	Net income (loss)
Benefit plan net gain (loss)	$	7,974	$	6,902	Other underwriting expenses
		(1,674)		(1,449)	Income tax expense (benefit)
	$	6,300	$	5,453	Net income (loss)

(Some amounts may not reconcile due to rounding)

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 thousands)	2020		2019
Beginning balance of URA (D) on securities	$	124,612	$	(55,950)
Current period change in URA (D) of investments - temporary		188,548		180,993
Current period change in URA (D) of investments - non-credit OTTI		-		(431)
Ending balance of URA (D) on securities		313,161		124,612
Beginning balance of foreign currency translation adjustments		14,267		(2,886)
Current period change in foreign currency translation adjustments		14,461		17,153
Ending balance of foreign currency translation adjustments		28,727		14,267
Beginning balance of benefit plan net gain (loss)		(74,556)		(67,418)
Current period change in benefit plan net gain (loss)		685		(7,138)
Ending balance of benefit plan net gain (loss)		(73,870)		(74,556)
Ending balance of accumulated other comprehensive income (loss)	$	268,018	$	64,324

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:

F-46

	Years Ended December 31,
(Dollars in thousands)	2020		2019		2018
Company contributions	$	6,825	$	4,750	$	77,743

The following table summarizes the Company’s pension expense for the periods indicated:

	Years Ended December 31,
(Dollars in thousands)	2020		2019		2018
Pension expense	$	8,429	$	10,042	$	9,728

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 thousands)	2020		2019
Change in projected benefit obligation:
Benefit obligation at beginning of year	$	355,356	$	300,244
Service cost		9,522		8,255
Interest cost		10,112		11,712
Actuarial (gain)/loss		43,595		46,206
Curtailment		-		-
Benefits paid		(14,115)		(11,062)
Projected benefit obligation at end of year		404,471		355,356

Change in plan assets:
Fair value of plan assets at beginning of year		301,467		260,531
Actual return on plan assets		60,286		47,247
Actual contributions during the year		6,825		4,750
Benefits paid		(14,115)		(11,062)
Fair value of plan assets at end of year		354,464		301,467

Funded status at end of year	$	(50,007)	$	(53,889)

(Some amounts may not reconcile due to rounding.)

Amounts recognized in the consolidated balance sheets for the periods indicated:

F-47

	At December 31,
(Dollars in thousands)	2020		2019
Other assets (due beyond one year)	$	-	$	-
Other liabilities (due within one year)		(2,197)		(7,362)
Other liabilities (due beyond one year)		(47,810)		(46,527)
Net amount recognized in the consolidated balance sheets	$	(50,007)	$	(53,889)

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 thousands)	2020		2019
Accumulated income (loss)	$	(91,979)	$	(97,466)
Accumulated other comprehensive income (loss)	$	(91,979)	$	(97,466)

(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 thousands)	2020		2019
Other comprehensive income (loss) at December 31, prior year	$	(97,466)	$	(88,580)
Net gain (loss) arising during period		(4,090)		(16,927)
Recognition of amortizations in net periodic benefit cost:
Actuarial loss		9,576		8,042
Curtailment loss recognized		-		-
Other comprehensive income (loss) at December 31, current year	$	(91,979)	$	(97,466)

(Some amounts may not reconcile due to rounding.)

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

F-48

	Years Ended December 31,
(Dollars in thousands)	2020		2019		2018
Service cost	$	9,522	$	8,255	$	9,801
Interest cost		10,112		11,712		10,290
Expected return on assets		(20,781)		(17,968)		(17,202)
Amortization of actuarial loss from earlier periods		8,551		7,635		6,839
Settlement		1,025		408		-
Net periodic benefit cost	$	8,429	$	10,042	$	9,728

Other changes recognized in other comprehensive income (loss):
Other comprehensive income (loss) attributable to change from prior year		(5,486)		8,885

Total recognized in net periodic benefit cost and other
comprehensive income (loss)	$	2,943	$	18,927

(Some amounts may not reconcile due to rounding.)

The estimated transition obligation, actuarial loss and prior service cost that will be amortized from accumulated other comprehensive income into net periodic benefit cost over the next year are $0 thousand, $7,709 thousand and $0 thousand, respectively.

The weighted average discount rates used to determine net periodic benefit cost for 2020, 2019 and 2018 were 3.28%, 4.27% and 3.62%, respectively. The rate of compensation increase used to determine the net periodic benefit cost for 2020, 2019 and 2018 was 4.00 %. The expected long-term rate of return on plan assets was 7.00 % for 2020, 2019 and 2018 based on expected portfolio returns and allocations.

The weighted average discount rates used to determine the actuarial present value of the projected benefit obligation for years end 2020, 2019 and 2018 were 2.55%, 3.28% and 4.27%, respectively.

The following table summarizes the accumulated benefit obligation for the periods indicated:

	At December 31,
(Dollars in thousands)	2020		2019
Qualified Plan	$	336,027	$	288,328
Non-qualified Plan		16,258		21,642
Total	$	352,285	$	309,970

(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:

F-49

	At December 31,
(Dollars in thousands)	2020		2019
Qualified Plan
Projected benefit obligation	$	388,213	$	333,715
Fair value of plan assets		354,464		301,467
Non-qualified Plan
Projected benefit obligation	$	16,258	$	21,642
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 thousands)	2020		2019
Qualified Plan
Accumulated benefit obligation	$	-	$	-
Fair value of plan assets		-		-
Non-qualified Plan
Accumulated benefit obligation	$	16,258	$	21,642
Fair value of plan assets		-		-

The following table displays the expected benefit payments in the periods indicated:

(Dollars in thousands)
2021	$	11,757
2022		12,220
2023		13,064
2024		14,100
2025		15,190
Next 5 years		90,808

Plan assets consist of shares in investment trusts with 72%, 27%, 1% and 0% of the underlying assets consisting of equity securities, fixed maturities, limited partnerships and multi-strategy equity funds 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.

The following tables present the fair value measurement levels for the qualified plan assets at fair value for the periods indicated:

F-50

			Fair Value Measurement Using:
			Quoted Prices
			in Active		Significant
			Markets for		Other		Significant
			Identical		Observable		Unobservable
	December 31,		Assets		Inputs		Inputs
(Dollars in thousands)	2020		(Level 1)		(Level 2)		(Level 3)
Assets:
Short-term investments, which approximates fair value (a)	$	1,204	$	1,204	$	-	$	-
Mutual funds, fair value
Fixed income (b)		93,609		93,609		-		-
Equities (c)		255,054		255,054		-		-
Total	$	349,867	$	349,867	$	-	$	-

(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.

There were no transfers between Level 1 and Level 2 for the twelve months ended December 31, 2020.

			Fair Value Measurement Using:
			Quoted Prices
			in Active		Significant
			Markets for		Other		Significant
			Identical		Observable		Unobservable
	December 31,		Assets		Inputs		Inputs
(Dollars in thousands)	2019		(Level 1)		(Level 2)		(Level 3)
Assets:
Short-term investments, which approximates fair value (a)	$	1,749	$	1,749	$	-	$	-
Mutual funds, fair value
Fixed income (b)		90,483		90,483		-		-
Equities (c)		188,884		188,884		-		-
Total	$	281,116	$	281,116	$	-	$	-

(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 50% in U.S. securities and 50% in international securities.

F-51

In addition, $4,596 thousand and $20,351 thousand of investments which were recorded as part of the qualified plan assets at December 31, 2020 and 2019, respectively, are not included within the fair value hierarchy tables as the assets are valued using the NAV practical expedient guidance within ASU 2015-07.

The Company contributed $0 thousand to the qualified pension benefit plan for the years ended December 31, 2020 and 2019.

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 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 following table presents the Company’s incurred expenses related to these plans for the periods indicated:

	Years Ended December 31,
(Dollars in thousands)	2020		2019		2018
Incurred expenses	$	14,386	$	10,794	$	9,301

In addition, the Company maintains several defined contribution pension plans covering non-U.S. employees. Each non-U.S. office (Brazil, Canada and Singapore) 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. The contributions as a percentage of salary for the branch offices range from 7.9% to 8.8%. The contributions are generally used to purchase pension benefits from local insurance providers.

The following table presents the Company’s incurred expenses related to these plans for the periods indicated:

	Years Ended December 31,
(Dollars in thousands)	2020		2019		2018
Incurred expenses	$	774	$	474	$	489

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 6.75% in 2020 was assumed to decrease gradually to 4.75% in 2030 and then remain at that level.

F-52

The following table presents the post-retirement benefit expenses for the periods indicated:

	Years Ended December 31,
(Dollars in thousands)	2020		2019		2018
Post-retirement benefit expenses	$	1,334	$	1,231	$	1,829

The following table summarizes the status of this plan for the periods indicated:

	At December 31,
(Dollars in thousands)	2020		2019
Change in projected benefit obligation:
Benefit obligation at beginning of year	$	29,376	$	28,483
Service cost		1,066		983
Interest cost		845		980
Amendments		-		-
Actuarial (gain)/loss		4,042		(582)
Benefits paid		(232)		(488)
Benefit obligation at end of year		35,098		29,376

Change in plan assets:
Fair value of plan assets at beginning of year		-		-
Employer contributions		232		488
Benefits paid		(232)		(488)
Fair value of plan assets at end of year		-		-

Funded status at end of year	$	(35,098)	$	(29,376)

Amounts recognized in the consolidated balance sheets for the periods indicated:

	At December 31,
(Dollars in thousands)	2020		2019
Other liabilities (due within one year)	$	(613)	$	(611)
Other liabilities (due beyond one year)		(34,484)		(28,764)
Net amount recognized in the consolidated balance sheets	$	(35,098)	$	(29,376)

(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:

F-53

	At December 31,
(Dollars in thousands)	2020		2019
Accumulated income (loss)	$	(3,854)	$	188
Accumulated prior service credit (cost)		2,327		2,904
Accumulated other comprehensive income (loss)	$	(1,527)	$	3,092

Other changes in other comprehensive income (loss) for the periods indicated are as follows:

	Years Ended December 31,
(Dollars in thousands)	2020		2019
Other comprehensive income (loss) at December 31, prior year	$	3,092	$	3,242
Net gain (loss) arising during period		(4,042)		582
Prior Service credit (cost) arising during period		-		-
Recognition of amortizations in net periodic benefit cost:
Actuarial loss (gain)		-		(155)
Prior service cost		(577)		(577)
Other comprehensive income (loss) at December 31, current year	$	(1,527)	$	3,092

Net periodic benefit cost included the following components for the periods indicated:

	Years Ended December 31,
(Dollars in thousands)	2020		2019		2018
Service cost	$	1,066	$	983	$	1,312
Interest cost		845		980		999
Prior service credit recognition		(577)		(577)		(577)
Net gain recognition		-		(155)		94
Net periodic cost	$	1,334	$	1,231	$	1,829

Other changes recognized in other comprehensive income (loss):
Other comprehensive gain (loss) attributable to change from prior year		4,619		150

Total recognized in net periodic benefit cost and
other comprehensive income (loss)	$	5,953	$	1,381

(Some amounts may not reconcile due to rounding.)

The estimated transition obligation, actuarial gain and prior service credit that will be amortized from accumulated other comprehensive income (loss) into net periodic benefit cost over the next fiscal year are $0 thousand, $46 thousand and $577 thousand, respectively.

The weighted average discount rates used to determine net periodic benefit cost for 2020, 2019 and 2018 were 3.28%, 4.27% and 3.62%, respectively.

The weighted average discount rates used to determine the actuarial present value of the projected benefit obligation at year end 2020, 2019 and 2018 were 2.55%, 3.28% and 4.27%, respectively.

F-54

The following table displays the expected benefit payments in the years indicated:

(Dollars in thousands)
2021	$	613
2022		715
2023		806
2024		851
2025		989
Next 5 years		6,955

14. DIVIDEND RESTRICTIONS AND STATUTORY FINANCIAL INFORMATION

Holdings 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 statutory capital as opposed to GAAP basis equity or net assets. Holdings’ primary operating subsidiary, Everest Re, is regulated by Delaware law and is subject to the Risk-Based Capital Model (“RBC”) developed by the National Association of Insurance Commissioners (“NAIC”). This model represents the aggregate regulatory restrictions on net assets and statutory capital and surplus.

Dividend Restrictions.

Delaware law provides that an insurance company which is a member of an insurance holding company system and is domiciled in the state shall not pay dividends without giving prior notice to the Insurance Commissioner of Delaware and may not pay dividends without the approval of the Insurance Commissioner if the value of the proposed dividend, together with all other dividends and distributions made in the preceding twelve months, exceeds the greater of (1) 10% of statutory surplus or (2) net income, not including realized capital gains, each as reported in the prior year’s statutory annual statement. In addition, no dividend may be paid in excess of unassigned earned surplus. At December 31, 2020, Everest Re has $592,082 thousand available for payment of dividends in 2021 without the need for prior regulatory approval.

Statutory Financial Information.

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 $5,276,003 thousand and $3,739,140 thousand at December 31, 2020 and 2019, respectively. The statutory net income of Everest Re was $595,077 thousand and $363,034 thousand, for the years ended December 31, 2020 and 2019, respectively. The statutory net loss of Everest Re was $1,317,991 for the year ended December 31, 2018.

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 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.

F-55

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

	Everest Re ⁽¹⁾
	At December 31,
(Dollars in thousands)	2020		2019
Regulatory targeted capital	$	2,489,772	$	2,001,226
Actual capital	$	5,276,003	$	3,739,140

⁽¹⁾Regulatory targeted capital represents 200% of the RBC authorized control level calculation for the applicable year.

15. COMMITMENTS AND C ONTINGENCIES

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

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

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

	At December 31,
(Dollars in thousands)	2020		2019
The Prudential	$	140,773	$	141,703
Unaffiliated life insurance company		35,128		35,082

16. RELATED-PARTY TRANSACTIONS

Group

Group entered into a $300,000 thousand long term note agreement with Everest Re as of December 17, 2019. The note will pay interest annually at a rate of 1.69% and is scheduled to mature in December, 2028. This transaction is presented as a Note Receivable – Affiliated in the Consolidated Balance Sheet of Holdings. The Company recognized interest income related to this long term note of $5,155 thousand and $211 thousand for years ended December 31, 2020 and 2019, respectively.

Group entered into a $250,000 thousand long term promissory note agreement with Holdings as of December 31, 2014. The note was repaid in December 2018, including $4,085 thousand of interest income.

F-56

Group’s Board of Directors approved an amended share repurchase program authorizing Group and/or its subsidiary Holdings to purchase Group’s common shares through open market transactions, privately negotiated transactions or both. The table below represents the amendments to the share repurchase program for the common shares approved for repurchase.

		Common
		Shares
		Authorized for
Amendment Date		Repurchase
(Dollars in thousands)
09/21/2004		5,000,000
07/21/2008		5,000,000
02/24/2010		5,000,000
02/22/2012		5,000,000
05/15/2013		5,000,000
11/19/2014		5,000,000
05/22/2020		2,000,000
		32,000,000

Holdings had purchased and held 9,719,971 Common Shares of Group, which were purchased in the open market between February 2007 and March 2011.

In December, 2015, Holdings transferred the 9,719,971 Common Shares of Group, which it held as other invested assets, at fair value, valued at $1,773,214 thousand, to Preferred Holdings, an affiliated entity and subsidiary of Group, in exchange for 1,773.214 preferred shares of Preferred Holdings with a $1,000 thousand par value and 1.75% annual dividend rate. After the exchange, Holdings no longer holds any shares or has any ownership interest in Group.

Holdings has reported the preferred shares in Preferred Holdings, as other invested assets, fair value, in the consolidated balance sheets with changes in fair value re-measurement recorded in net realized capital gains (losses) in the consolidated statements of operations and comprehensive income (loss). The following table presents the dividends received on the preferred shares of Preferred Holdings and on the Parent shares that are reported as net investment income in the consolidated statements of operations and comprehensive income (loss) for the period indicated.

	Years Ended December 31,
(Dollars in thousands)	2020		2019		2018
Dividends received on preferred stock of affiliate	$	31,032	$	31,032	$	31,032

Affiliated Companies

Effective December 31, 2018, Holdings entered into a $300,000 thousand long-term promissory note agreement with Bermuda Re. The note was repaid in May, 2019. This transaction was presented as a Note Payable – Affiliated in the consolidated balance sheets of Holdings as of December 31, 2018. Interest expense in the amount of $0 thousand and $3,658 thousand was recorded by Holdings for the years ended December 2020 and 2019, respectively.

Effective October 1, 2018, Holdings Ireland made a capital contribution of Global Services, an affiliated entity, to Holdings. Global Services had an equity value of $227,253 thousand at the time of contribution and that value is classified as additional paid in capital in the Company’s consolidated balance sheet as of December 31, 2018.

Everest Global Services, Inc. (“Global Services”), an affiliate of Holdings, provides centralized management and home office services, through a management agreement, to Holdings and other affiliated companies within Holdings’ consolidated structure. Services provided by Everest Global include executive managerial services, legal services, actuarial services, accounting services, information technology services and others.

F-57

The following table presents the expenses incurred by Holdings from services provided by Everest Global for the periods indicated.

	Years Ended December 31,
(Dollars in thousands)	2020		2019		2018
Expenses incurred	$	124,486	$	107,851	$	81,346

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 United States as well as through branches in Canada and Singapore. The Insurance operation writes property and casualty insurance directly and through brokers, surplus lines brokers and general agents within the United States.

Underwriting results include earned premium less losses and 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.

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

Reinsurance	Years Ended December 31,
(Dollars in thousands)	2020		2019		2018
Gross written premiums	$	5,265,698	$	4,600,373	$	4,569,582
Net written premiums		4,632,265		3,923,799		3,519,704
Premiums earned	$	4,484,693	$	3,796,136	$	3,386,386
Incurred losses and LAE		3,209,160		2,692,680		3,811,747
Commission and brokerage		1,119,966		1,027,286		923,902
Other underwriting expenses		119,320		110,032		97,927
Underwriting gain (loss)	$	36,247	$	(33,862)	$	(1,447,190)

Insurance	Years Ended December 31,
(Dollars in thousands)	2020		2019		2018
Gross written premiums	$	2,691,340	$	2,452,691	$	2,004,093
Net written premiums		2,006,435		1,851,150		1,512,158
Premiums earned	$	1,921,883	$	1,692,899	$	1,452,672
Incurred losses and LAE		1,398,984		1,136,442		999,271
Commission and brokerage		253,389		242,767		217,812
Other underwriting expenses		281,713		240,869		195,420
Underwriting gain (loss)	$	(12,203)	$	72,821	$	40,169

F-58

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

	Years Ended December 31,
(Dollars in thousands)	2020		2019		2018
Underwriting gain (loss)	$	24,044	$	38,959	$	(1,407,021)
Net investment income		375,906		356,211		314,381
Net realized capital gains (losses)		49,804		419,367		(185,356)
Corporate expense		(15,985)		(13,063)		(11,034)
Interest, fee and bond issue cost amortization expense		(35,659)		(34,931)		(30,611)
Other income (expense)		(14,579)		(1,589)		(9,568)
Income (loss) before taxes	$	383,531	$	764,955	$	(1,329,209)

The Company produces business in the U.S. and internationally. The net income deriving from 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:

	Years Ended December 31,
(Dollars in thousands)	2020		2019		2018
Canada gross written premiums	$	320,665	$	214,594	$	173,530

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

Approximately 20.1%, 25.8% and 21.1% of the Company’s gross written premiums in 2020, 2019 and 2018, 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 2021, a severe winter storm impacted Texas and other southern states. Due to the recentness of this event, the Company is unable to estimate the amount of losses at this time. However, the Company anticipates that the losses from this event will adversely impact first quarter 2021 financial statements.

19. UNAUDITED QUARTERLY FINANCIAL DATA

Summarized quarterly financial data for the periods indicated:

	2020
(Dollars in thousands)	1st Quarter		2nd Quarter		3rd Quarter		4th Quarter

Operating data:
Gross written premiums	$	1,974,965	$	1,838,247	$	2,064,961	$	2,078,865
Net written premiums		1,638,708		1,501,550		1,725,701		1,772,741

Premiums earned		1,494,005		1,538,960		1,615,457		1,758,154
Net investment income		74,201		35,153		135,428		131,124
Net realized capital gains (losses)		256,867		(479,360)		115,193		157,104
Total claims and underwriting expenses		1,465,006		1,436,098		1,720,362		1,812,710
Net income (loss)		316,645		(270,593)		119,806		186,015

F-59

	2019
(Dollars in thousands)	1st Quarter		2nd Quarter		3rd Quarter		4th Quarter

Operating data:
Gross written premiums	$	1,684,882	$	1,688,038	$	1,890,002	$	1,790,142
Net written premiums		1,392,243		1,319,865		1,569,954		1,492,886

Premiums earned		1,270,454		1,375,623		1,428,400		1,414,558
Net investment income		84,534		90,709		95,592		85,376
Net realized capital gains (losses)		135,056		142,563		112,542		29,206
Total claims and underwriting expenses		1,174,175		1,255,551		1,562,452		1,505,892
Net income (loss)		251,608		280,922		61,137		36,060

F-60

SCHEDULE I - SUMMARY OF INVESTMENTS -
OTHER THAN INVESTMENTS IN RELATED PARTIES
DECEMBER 31, 2020

Column A		Column B		Column C		Column D
						Amount
						Shown in
				Market		Balance
(Dollars in thousands)		Cost		Value		Sheet
Fixed maturities-available for sale
Bonds:
U.S. government and government agencies	$	659,957	$	681,989	$	681,989
State, municipalities and political subdivisions		543,646		577,046		577,046
Foreign government securities		694,132		742,238		742,238
Foreign corporate securities		1,130,865		1,199,866		1,199,866
Public utilities		113,206		120,749		120,749
All other corporate bonds		5,645,979		5,796,383		5,796,383
Mortgage - backed securities
Commercial		512,388		550,080		550,080
Agency residential		937,166		965,100		965,100
Non-agency residential		3,164		3,164		3,164
Redeemable preferred stock		8,147		6,950		6,950
Total fixed maturities-available for sale		10,248,650		10,643,565		10,643,565
Equity securities at fair value(1)		927,324		1,288,767		1,288,767
Short-term investments		708,043		707,905		707,905
Other invested assets		1,094,933		1,094,933		1,094,933
Other invested assets, at fair value (1)		1,773,214		1,796,479		1,796,479
Cash		378,518		378,518		378,518
Total investments and cash	$	15,130,682	$	15,910,167	$	15,910,167



(Some amounts may not reconcile due to rounding.)

(1) Original cost does not reflect adjustments, which have been realized through the statements of operations and comprehensive income.

S-1

SCHEDULE II - CONDENSED FINANCIAL INFORMATION OF THE REGISTRANT
CONDENSED BALANCE SHEETS


	At December 31,
(Dollars in thousands, except share amounts and par value per share)	2020		2019
ASSETS:
Fixed maturities - available for sale, at market value	$	-	$	1,750
(amortized cost: 2020, $0; 2019, $1,750)
Equity securities - available for sale, at fair value		311,009		75,585
Other invested assets		146,968		56,909
Other invested assets, at fair value		1,796,479		1,982,582
Short-term investments		9,985		20,514
Cash		10,482		10,384
Total investments and cash		2,274,923		2,147,724
Investment in subsidiaries, at equity in the underlying net assets		6,115,130		4,580,852
Note receivable - affiliated		-		10,000
Accrued investment income		87		573
Advances to affiliates		165		(39)
Other assets		(104)		162
TOTAL ASSETS	$	8,390,201	$	6,739,272

LIABILITIES:
Senior notes due 6/1/2044	$	397,194	$	397,074
Senior notes due 10/15/2050		979,524		-
Long term notes due 5/1/2067		223,674		236,758
Accrued interest on debt and borrowings		10,388		2,878
Income taxes		362,393		243,062
Due to affiliates		1,835		1,016
Other liabilities		880		1,059
Total liabilities	$	1,975,888	$	881,847

STOCKHOLDER'S EQUITY:
Common stock, par value: $0.01; 3,000 shares authorized;
1,000 shares issued and outstanding (2020 and 2019)		-		-
Additional paid-in capital		1,101,092		1,100,678
Accumulated other comprehensive income (loss), net of deferred income
tax expense (benefit) of $71,080 at 2020 and $16,997 at 2019		268,018		64,324
Retained earnings		5,045,203		4,692,423
Total stockholder's equity		6,414,313		5,857,425
TOTAL LIABILITIES AND STOCKHOLDER'S EQUITY	$	8,390,201	$	6,739,272

See notes to consolidated financial statements.

S-2

SCHEDULE II - CONDENSED FINANCIAL INFORMATION OF THE REGISTRANT
CONDENSED STATEMENTS OF OPERATIONS


	Years Ended December 31,
(Dollars in thousands)	2020		2019		2018
REVENUES:
Net investment income	$	26,021	$	34,970	$	38,951
Net investment income - Affiliated		320		412		4,085
Net realized capital gains (losses)		(73,338)		274,110		(87,267)
Other income (expense)		3,105		524		(6,085)
Net income (loss) of subsidiaries		393,552		370,084		(906,211)
Total revenues		349,659		680,100		(956,527)

EXPENSES:
Interest expense		35,508		34,931		30,611
Corporate expense		9,392		6,810		6,337
Total expenses		44,900		41,741		36,948

INCOME (LOSS) BEFORE TAXES		304,760		638,359		(993,475)
Income tax expense (benefit)		(47,113)		8,632		(31,291)

NET INCOME (LOSS)	$	351,873	$	629,727	$	(962,184)

Other comprehensive income (loss), net of tax :
Unrealized appreciation (depreciation) ("URA(D)") on securities arising during the period		163,080		175,482		(92,966)
Less: reclassification adjustment for realized losses (gains) included in net income (loss)		25,468		5,080		2,021
Total URA(D) on securities arising during the period		188,548		180,562		(90,945)

Foreign currency translation adjustments		14,461		17,153		(36,431)

Benefit plan actuarial net gain (loss) for the period		(5,615)		(12,591)		(510)
Reclassification adjustment for amortization of net (gain) loss included in net income (loss)		6,300		5,453		5,021
Total benefit plan net gain (loss) for the period		685		(7,138)		4,511
Total other comprehensive income (loss), net of tax		203,694		190,577		(122,865)

COMPREHENSIVE INCOME (LOSS)	$	555,567	$	820,304	$	(1,085,049)


See notes to consolidated financial statements.

S-3

SCHEDULE II - CONDENSED FINANCIAL INFORMATION OF THE REGISTRANT
CONDENSED STATEMENTS OF CASH FLOWS

	Years Ended December 31,
(Dollars in thousands)	2020		2019		2018

CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss)	$	351,873	$	629,727	$	(962,184)
Adjustments to reconcile net income to net cash provided by operating activities:
Equity in (earnings) deficit of subsidiaries		(393,552)		(370,084)		906,211
Dividends received from subsidiary		-		300,000		90,000
Increase (decrease) in income taxes		119,331		40,695		4,687
Change in equity adjustments in limited partnerships		8,491		2,468		(2,617)
Change in other assets and liabilities, net		20,179		(16,615)		(20,450)
Amortization of bond premium (accrual of bond discount)		63		13		370
Net realized capital losses (gains)		73,338		(274,110)		87,267
Net cash provided by (used in) operating activities		179,722		312,094		103,284

CASH FLOWS FROM INVESTING ACTIVITIES:
Additional investment in subsidiaries		(949,464)		15,174		(1,383,659)
Proceeds from fixed maturities matured/called - available for sale, at market value		1,750		-		9,385
Proceeds from fixed maturities sold - available for sale, at market value		-		12,000		96,836
Proceeds from equity maturities sold - at fair value		61,883		18,905		182,552
Distributions from other invested assets		1,113,176		389,200		1,401,606
Cost of fixed maturities acquired - available for sale, at market value		-		-		(13,510)
Cost of equity securities acquired - at fair value		(184,542)		(32,597)		(39,449)
Cost of other invested assets acquired		(1,211,726)		(388,598)		(1,407,352)
Net change in short-term investments		10,529		(16,403)		396
Net change in unsettled securities transaction		-		-		(99)
Proceeds from repayment (cost of issuance) of note receivable, affiliated		10,000		(10,000)		250,000
Net cash provided by (used in) investing activities		(1,148,394)		(12,319)		(903,294)

CASH FLOWS FROM FINANCING ACTIVITIES:
Capital contribution from parent		-		-		500,324
Proceeds from issuance of senior notes		979,417		-		-
Cost of debt repurchase		(10,647)		-		-
Proceeds from issuance (cost of repayment) for note payable, affiliated		-		(300,000)		300,000
Net cash provided by (used in) financing activities		968,770		(300,000)		800,324

Net increase (decrease) in cash		98		(225)		314
Cash, beginning of period		10,384		10,609		10,295
Cash, end of period	$	10,482	$	10,384	$	10,609

Non-cash financing transaction:
Equity value of non-cash capital contribution of affiliate from
parent, net of cash held by affiliate	$	-	$	-	$	211,928
Non-cash contribution from parent		-		-		221
Non-cash contribution to subsidiaries		-		-		(221)
See notes to consolidated financial statements.

S-4

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 Reinsurance Holdings, Inc. and its Subsidiaries.

2) The Senior Notes and Long-Term Subordinated Notes presented in Notes 5 and 6 are direct obligations of the Registrant.

3) Everest Re Group, Ltd., the parent company, entered into a $250,000 thousand long term promissory note agreement with Everest Reinsurance Holdings, Inc. as of December 31, 2014. The note was scheduled to mature on December 31, 2023 but was repaid in December 2018.

4) Effective December 31, 2018, Everest Reinsurance Holdings, Inc. entered into a $300,000 thousand long-term promissory note agreement with Everest Reinsurance (Bermuda) Ltd., an affiliated entity. The note was scheduled to mature on December 31, 2023 but was repaid in May, 2019.

5) Effective February 19, 2019, Everest Reinsurance Holdings, Inc. entered into a $10,000 thousand long term promissory note with Everest Indemnity Insurance Company, an affiliated entity. The note was scheduled to mature on February 19, 2049 but was repaid in September 2020.

6) In December, 2015, Holdings transferred the 9,719,971 Common Shares of Group, which it held as other invested assets, at fair value, valued at $1,773,214 thousand, to Preferred Holdings, an affiliated entity and subsidiary of Group, in exchange for 1,773.214 preferred shares of Preferred Holdings with a $1,000 thousand par value and 1.75% annual dividend rate. After the exchange, Holdings no longer holds any shares or has any ownership interest in Group.

S-5

EVEREST REINSURANCE HOLDINGS, INC.
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 thousands)		Costs		Expenses		Reserves		Earned		Income		Expenses		Costs		Expenses		Premium
As of and for the year ended December 31, 2020
Reinsurance	$	169,346	$	7,896,076	$	1,127,815	$	4,484,693	$	254,671	$	3,209,160	$	1,119,966	$	119,320	$	4,632,265
Insurance		210,361		3,758,874		1,257,359		1,921,883		121,235		1,398,984		253,389		281,713		2,006,435
Total	$	379,707	$	11,654,950	$	2,385,174	$	6,406,576	$	375,906	$	4,608,144	$	1,373,355	$	401,033	$	6,638,700

As of and for the year ended December 31, 2019
Reinsurance	$	182,531	$	7,138,800	$	1,069,829	$	3,796,136	$	249,073	$	2,692,680	$	1,027,286	$	110,032	$	3,923,799
Insurance		205,707		3,070,719		1,129,103		1,692,899		107,138		1,136,442		242,767		240,869		1,851,150
Total	$	388,238	$	10,209,519	$	2,198,932	$	5,489,035	$	356,211	$	3,829,122	$	1,270,053	$	350,901	$	5,774,949

As of and for the year ended December 31, 2018
Reinsurance	$	185,328	$	7,417,941	$	939,693	$	3,386,386	$	229,375	$	3,811,747	$	923,902	$	97,927	$	3,519,704
Insurance		168,302		2,749,077		887,175		1,452,672		85,006		999,271		217,812		195,420		1,512,158
Total	$	353,630	$	10,167,018	$	1,826,868	$	4,839,058	$	314,381	$	4,811,018	$	1,141,714	$	293,347	$	5,031,862


(Some amounts may not reconcile due to rounding.)

S-6

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 thousands)		Amount		Companies		Companies		Amount		to Net

December 31, 2020
Total property and liability
insurance premiums earned	$	2,591,613	$	1,368,436	$	5,183,399	$	6,406,576	$	80.9%

December 31, 2019
Total property and liability
insurance premiums earned	$	2,255,387	$	1,193,359	$	4,427,006	$	5,489,034	$	80.7%

December 31, 2018
Total property and liability
insurance premiums earned	$	1,903,576	$	1,512,380	$	4,447,862	$	4,839,058	$	91.9%

S-7