Log in
E-mail
Password
Show password
Remember
Forgot password ?
Become a member for free
Sign up
Sign up
New member
Sign up for FREE
New customer
Discover our services
Settings
Settings
Dynamic quotes 
OFFON

EVEREST RE GROUP, LTD.

(RE)
  Report
SummaryQuotesChartsNewsRatingsCalendarCompanyFinancialsConsensusRevisions 
SummaryMost relevantAll NewsAnalyst Reco.Other languagesPress ReleasesOfficial PublicationsSector newsMarketScreener Strategies

EVEREST RE GROUP LTD MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATION (form 10-Q)

11/04/2021 | 03:58pm EST

Industry Conditions.


The worldwide reinsurance and insurance businesses are highly competitive, as
well as cyclical by product and market. As such, financial results tend to
fluctuate with periods of constrained availability, higher rates and stronger
profits followed by periods of abundant capacity, lower rates and constrained
profitability. Competition in the types of reinsurance and insurance business
that we underwrite is based on many factors, including the perceived overall
financial strength of the reinsurer or insurer, ratings of the reinsurer or
insurer by A.M. Best and/or Standard & Poor's, underwriting expertise, the
jurisdictions where the reinsurer or insurer is licensed or otherwise
authorized, capacity and coverages offered, premiums charged, other terms and
conditions of the reinsurance and insurance business offered, services offered,
speed of claims payment and reputation and experience in lines written.
Furthermore, the market impact from these competitive factors related to
reinsurance and insurance is generally not consistent across lines of business,
domestic and international geographical areas and distribution channels.



We compete in the U.S., Bermuda and international reinsurance and insurance
markets with numerous global competitors. Our competitors include independent
reinsurance and insurance companies, subsidiaries or affiliates of established
worldwide insurance companies, reinsurance departments of certain insurance
companies, domestic and international underwriting operations, including
underwriting syndicates at Lloyd's of London and certain government sponsored
risk transfer vehicles. Some of these competitors have greater financial
resources than we do and have established long term and continuing business
relationships, which can be a significant competitive advantage. In addition,
the lack of strong barriers to entry into the reinsurance business and recently,
the securitization of reinsurance and insurance risks through capital markets
provide additional sources of potential reinsurance and insurance capacity and
competition.



Worldwide insurance and reinsurance market conditions historically have been
competitive. Generally, there 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
and its subsequent variants. 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.



There continues to be a negative impact on industry underwriting results from
the pandemic. These impacts vary significantly from country to country depending
on the rate of infections and the corresponding mandated business restrictions.



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 and 2021
appears to be further pressuring the increase of rates. As business activity
continues to regain strength, rates also appear to be firming in most lines of
business, particularly in the casualty lines that had seen significant losses
such as excess casualty and directors' and officers' liability. Other casualty
lines are experiencing modest rate increase, while some lines such as workers'
compensation were experiencing softer market conditions. It is too early to tell
what will be the impact on pricing conditions but it is likely to change
depending on the line of business and geography.

                                       31

--------------------------------------------------------------------------------




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.



Financial Summary.

We monitor and evaluate our overall performance based upon financial results.
The following table displays a summary of the consolidated net income (loss),
ratios and shareholders' equity for the periods indicated.



                                  Three Months Ended        Percentage             Nine Months Ended             Percentage
                                     September 30,           Increase/               September 30,                Increase/
(Dollars in millions)             2021          2020        (Decrease)           2021              2020          (Decrease)
Gross written premiums         $ 3,497.6$ 2,791.6            25.3 %   $      9,619.2$     7,731.8            24.4 %
Net written premiums             3,025.8       2,448.7            23.6 %          8,389.1           6,667.6            25.8 %

REVENUES:
Premiums earned                $ 2,656.4$ 2,205.8            20.4 %   $      7,602.6$     6,285.0            21.0 %
Net investment income              292.8         234.2            25.0              960.3             420.1           128.6

Net realized capital gains (4.2) 110.2 -103.8 %

        138.8              84.3            64.7
(losses)
Other income (expense)            (19.5)          59.9          -132.6 %             44.2              47.3            -6.5
Total revenues                   2,925.4       2,610.2            12.1 %          8,745.9           6,836.7            27.4 %

CLAIMS AND EXPENSES:
Incurred losses and loss         2,274.3       1,736.2            31.0 %          5,571.9           4,574.1            21.8 %
adjustment expenses
Commission, brokerage, taxes       564.3         445.3            26.7 %          1,611.1           1,360.2            18.4 %
and fees
Other underwriting expenses        141.2         138.9             1.6 %            424.2             385.9             9.9 %
Corporate expenses                  17.8          10.6            67.8 %             46.4              29.2            58.9 %
Interest, fees and bond issue       15.5           6.6           134.0 %             46.8              21.5           117.8 %
cost amortization expense
Total claims and expenses        3,013.1       2,337.7            28.9 %          7,700.3           6,370.8            20.9 %

INCOME (LOSS) BEFORE TAXES (87.7) 272.5 -132.2 %

       1,045.6             466.0           124.4

Income tax expense (benefit) (14.3) 29.5 -148.4 %

         97.2              15.4              NM %
NET INCOME (LOSS)              $  (73.5)$   243.1          -130.2     $        948.4$       450.5           110.5

RATIOS:                                                    Point Change                                         Point Change
Loss ratio                          85.6 %        78.7 %           6.9               73.3 %            72.8 %           0.5
Commission and brokerage ratio      21.2 %        20.2 %           1.0               21.2 %            21.7 %         (0.5)
Other underwriting expense                         6.3                                                  6.1           (0.5)
ratio                                5.3 %             %         (1.0)                5.6 %                 %
Combined ratio                     112.2 %       105.2 %           7.0              100.1 %           100.6 %         (0.5)

                                                                                  At                At           Percentage
                                                                            September 30,      December 31,       Increase/
(Dollars in millions, except                                                     2021              2020          (Decrease)
per share amounts)
Balance sheet data:
Total investments and cash                                                 $     27,783.7$    25,461.6             9.1 %
Total assets                                                                     36,606.1          32,788.4            11.6 %
Loss and loss adjustment                                                         18,957.0          16,399.0            15.6 %
expense reserves
Total debt                                                                        1,910.9           1,910.4               - %
Total liabilities                                                                26,627.5          23,062.2            15.5 %
Shareholders' equity                                                              9,978.6           9,726.2             2.6 %
Book value per share                                                               253.40            243.25             4.2 %

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




                                       32
--------------------------------------------------------------------------------

Revenues.


Premiums. Gross written premiums increased by 25.3% to $3,497.6 million for the
three months ended September 30, 2021, compared to $2,791.6 million for the
three months ended September 30, 2020, reflecting a $401.3 million, or 19.2%,
increase in our reinsurance business and a $304.6 million, or 43.2%, increase in
our insurance business. The increase in reinsurance premiums was due to
increases in most lines of business, notably casualty pro rata business,
casualty excess of loss and property catastrophe excess of loss business, as
well as $24.0 million positive impact from the movement of foreign exchange
rates. The rise in insurance premiums was primarily due to increases in
specialty casualty business, professional liability business and short-tail
business, including property. Gross written premiums increased by 24.4% to
$9,619.2 million for the nine months ended September 30, 2021, compared to
$7,731.8 million for the nine months ended September 30, 2020, reflecting a
$1,292.5 million, or 23.9%, increase in our reinsurance business and a $594.9
million, or 25.5%, increase in our insurance business. The increase in
reinsurance premiums was due to increases in most lines of business, notably
property pro rata business, casualty pro rata business and casualty excess of
loss, as well as $94.2 million positive impact from the movement of foreign
exchange rates. The rise in insurance premiums was primarily due to increases in
specialty casualty business, professional liability business and short-tail
business, including property, partially offset by a decline in workers'
compensation business.



Net written premiums increased by 23.6% to $3,025.8 million for the three months
ended September 30, 2021, compared to $2,448.7 million for the three months
ended September 30, 2020. Net written premiums increased by 25.8% to $8,389.1
million for the nine months ended September 30, 2021, compared to $6,667.6
million for the nine months ended September 30, 2020. These increases are
consistent with the changes in gross written premiums. Premiums earned increased
by 20.4% to $2,656.4 million for the three months ended September 30, 2021,
compared to $2,205.8 million for the three months ended September 30, 2020.
Premiums earned increased by 21.0% to $7,602.6 million for the nine months ended
September 30, 2021, compared to $6,285.0 million for the nine months ended
September 30, 2020. The changes in premiums earned relative to net written
premiums are 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 to $292.8 million for the
three months ended September 30, 2021, compared with investment income of $234.2
million for the three months ended September 30, 2020 and increased to $960.3
million for the nine months ended September 30, 2021, compared to $420.1 million
for the nine months ended September 30, 2020. Net pre-tax investment income, as
a percentage of average invested assets, was 4.4% for the three months ended
September 30, 2021 and 2020. Net pre-tax investment income, as a percentage of
average invested assets, was 5.0% for the nine months ended September 30, 2021
compared to 2.7% for the nine months ended September 30, 2020. The increases in
both income and yield were primarily the result of a significant increase in
limited partnership income and higher income from other alternative investments.
The limited partnership income primarily reflects increases in their reported
net asset values. As such, until these asset values are monetized and the
resultant income is distributed, they are subject to future increases or
decreases in the asset value, and the results may be volatile.



Net Realized Capital Gains (Losses). Net realized capital losses were $4.2
million and net realized capital gains were $110.2 million for the three months
ended September 30, 2021 and 2020, respectively. The net realized capital losses
of $4.2 million for the three months ended September 30, 2021 were comprised of
$4.6 million of net losses from fair value re-measurements and $7.3 million of
allowances for credit losses, partially offset by $7.7 million of net realized
capital gains from sales of investments. The net realized capital gains of
$110.2 million for the three months ended September 30, 2020 were comprised of
$100.0 million of net gains from fair value re-measurements, resulting primarily
from increases in equity security valuations which rebounded from declines in
the first quarter of 2020, $6.2 million from a decline in net allowances for
credit losses and $4.0 million of net realized capital gains from sales of
investments.



Net realized capital gains were $138.8 million and $84.3 million for the nine
months ended September 30, 2021 and 2020, respectively. The net realized capital
gains of $138.8 million for the nine months ended September 30, 2021 were
comprised of $128.0 million of net gains from fair value re-measurements and
$41.0 million of net

                                       33
--------------------------------------------------------------------------------


realized capital gains from sales of investments, partially offset by $30.2
million of allowances for credit losses. The net realized capital gains of $84.3
million for the nine months ended September 30, 2020 were comprised of $116.3
million of net gains from fair value re-measurements, partially offset by $19.6
million of net allowances for credit losses and $12.4 million of net realized
capital losses from sales of investments.



Other Income (Expense). We recorded other expense of $19.5 million and other
income of $59.9 million for the three months ended September 30, 2021 and 2020,
respectively. We recorded other income of $44.2 million and $47.3 million for
the nine months ended September 30, 2021 and 2020, respectively. The changes
were primarily the result of fluctuations in foreign currency exchange rates. We
recognized foreign currency exchange expense of $16.6 million and foreign
currency exchange income of $61.4 million for the three months ended September
30, 2021 and 2020, respectively. We recognized foreign currency exchange income
of $44.0 million and $37.9 million for the nine months ended September 30, 2021
and 2020, respectively.



Claims and Expenses.

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



                                        Three Months Ended September 30,
                      Current     Ratio %/     Prior     Ratio %/      Total      Ratio %/
(Dollar in millions)   Year      Pt Change     Years    Pt Change    Incurred    Pt Change
2021
Attritional          $ 1,580.9     59.5 %     $ (1.6)     -0.1 %     $ 1,579.3     59.4 %
Catastrophes             695.0     26.2 %           -        - %         695.0     26.2 %
Total                $ 2,275.9     85.7 %     $ (1.6)     -0.1 %     $ 2,274.3     85.6 %

2020

Attritional $ 1,427.5 64.8 % $ (1.3) -0.1 % $ 1,426.2 64.7 % Catastrophes

             310.0     14.0 %           -        - %         310.0     14.0 %
Total                $ 1,737.5     78.8 %     $ (1.3)     -0.1 %     $ 1,736.2     78.7 %

Variance 2021/2020
Attritional          $   153.4    (5.3) pts   $ (0.3)        - pts   $   153.1    (5.3) pts
Catastrophes             385.0     12.2 pts         -        - pts       385.0     12.2 pts
Total                $   538.4      6.9 pts   $ (0.3)        - pts   $   538.1      6.9 pts




                                        Nine Months Ended September 30,
                      Current     Ratio %/     Prior     Ratio %/      Total      Ratio %/
(Dollar in millions)   Year      Pt Change     Years    Pt Change    Incurred    Pt Change
2021
Attritional          $ 4,567.9     60.1 %     $ (6.1)     -0.1 %       4,561.9     60.0 %
Catastrophes           1,010.0     13.3 %           -        - %       1,010.0     13.3 %
Total                $ 5,577.9     73.4 %     $ (6.1)     -0.1 %     $ 5,571.9     73.3 %

2020

Attritional $ 4,217.6 67.1 % $ 1.4 0.1 % $ 4,219.1 67.2 % Catastrophes

             355.0      5.6 %           -        - %         355.0      5.6 %
Total                $ 4,572.6     72.7 %     $   1.4      0.1 %     $ 4,574.1     72.8 %

Variance 2021/2020
Attritional          $   350.3    (7.0) pts   $ (7.5)    (0.2) pts   $   342.8    (7.2) pts
Catastrophes             655.0      7.7 pts         -        - pts       655.0      7.7 pts
Total                $ 1,005.3      0.7 pts   $ (7.5)    (0.2) pts   $   997.8      0.5 pts




Incurred losses and LAE increased by 31.0% to $2,274.3 million for the three
months ended September 30, 2021, compared to $1,736.2 million for the three
months ended September 30, 2020, primarily due to an increase of $385.0 million
in current year catastrophe losses and a rise of $153.4 million in current year
attritional losses, mainly due to the impact of the increase in premiums earned.
The increase in attritional losses was partially offset by $124.9 million of
COVID-19 Pandemic losses incurred in 2020 which did not recur in 2021. The
current year catastrophe losses of $695.0 million for the three months ended
September 30, 2021 mainly related to Hurricane Ida ($463.0 million) and the
European floods ($232.0 million). The $310.0 million of current year catastrophe
losses for the three months ended September 30, 2020 related to Hurricane Laura
($131.0 million), the Northern California wildfires ($52.0 million), the
California Glass wildfire ($30.0 million), Hurricane Sally

                                       34

--------------------------------------------------------------------------------


($26.0 million), the Oregon wildfires ($21.0 million), Hurricane Isaias ($19.9
million), the Derecho storms ($15.1 million) and the Calgary storms in Canada
($15.0 million).



Incurred losses and LAE increased by 21.8% to $5,571.9 million for the nine
months ended September 30, 2021, compared to $4,574.1 million for the nine
months ended September 30, 2020, primarily due to an increase of $655.0 million
in current year catastrophe losses and a rise of $350.3 million in current year
attritional losses, mainly due to the impact of the increase in premiums earned.
The increase in attritional losses was partially offset by $434.9 million of
COVID-19 Pandemic losses incurred in 2020 which did not recur in 2021. The
current year catastrophe losses of $1,010.0 million for the nine months ended
September 30, 2021 related primarily to Hurricane Ida ($463.0 million), the
Texas winter storms ($285.0 million) and the European floods ($242.0 million)
with the rest of the losses emanating from the 2021 Australia floods and
Victoria Australia flooding. The $355.0 million of current year catastrophe
losses for the nine months ended September 30, 2020 related to Hurricane Laura
($131.0 million), the Northern California wildfires ($52.0 million), the
California Glass wildfire ($30.0 million), Hurricane Sally ($26.0 million), the
Oregon wildfires ($21.0 million), Hurricane Isaias ($19.9 million), the 2020
U.S. civil unrest ($17.4 million), Nashville tornadoes ($15.2 million), the
Derecho storms ($15.1 million) the Calgary storms in Canada ($15.0 million),
Australia East Coast Storm ($6.8 million) and the 2020 Australia fires ($5.6
million).



Commission, Brokerage, Taxes and Fees. Commission, brokerage, taxes and fees
increased by 26.7% to $564.3 million for the three months ended September 30,
2021, compared to $445.3 million for the three months ended September 30, 2020.
Commission, brokerage, taxes and fees increased by 18.4% to $1,611.1 million for
the nine months ended September 30, 2021, compared to $1,360.2 million for the
nine months ended September 30, 2020. The increases were primarily due to the
impact of the increases in premiums earned and changes in the mix of business.



Other Underwriting Expenses. Other underwriting expenses were $141.2 million and
$138.9 million for the three months ended September 30, 2021 and 2020,
respectively. Other underwriting expenses were $424.2 million and $385.9 million
for the nine months ended September 30, 2021 and 2020, respectively. The
increases in other underwriting expenses were mainly due to the continued build
out of our insurance operations and the impact of the increases in premiums
earned.



Corporate Expenses. Corporate expenses, which are general operating expenses
that are not allocated to segments, were $17.8 million and $10.6 million for the
three months ended September 30, 2021 and 2020, respectively, and $46.4 million
and $29.2 million for the nine months ended September 30, 2021 and 2020,
respectively. These increases were mainly due to higher compensation expenses
from an increased staff count.



Interest, Fees and Bond Issue Cost Amortization Expense. Interest, fees and
other bond amortization expense was $15.5 million and $6.6 million for the three
months ended September 30, 2021 and 2020, respectively. Interest, fees and other
bond amortization expense was $46.8 million and $21.5 million for the nine
months ended September 30, 2021 and 2020, respectively. These increases were
primarily due to interest expense on the $1,000.0 million senior note issuance
in October 2020, partially offset by a decrease due to the movement in the
floating interest rate related to the long term subordinated notes, which is
reset quarterly per the note agreement. The floating rate was 2.51% as of
September 30, 2021.



Income Tax Expense (Benefit). We had an income tax benefit of $14.3 million and
an income tax expense of $29.5 million for the three months ended September 30,
2021 and 2020, respectively. We had an income tax expense of $97.2 million and
$15.4 million for the nine months ended September 30, 2021 and 2020,
respectively. Income tax benefit or expense is primarily a function of the
geographic location of the Company's pre-tax income and the statutory tax rates
in those jurisdictions. The annualized effective tax rate ("AETR") is primarily
affected by tax-exempt investment income, qualifying dividends and foreign tax
credits. Variations in the AETR generally result from changes in the relative
levels of pre-tax income, including the impact of catastrophe losses and net
capital gains (losses), among jurisdictions with different tax rates. The
changes in income tax expense (benefit) for the three and nine months ended
September 30, 2021 as compared to the

                                       35

--------------------------------------------------------------------------------

three and nine months ended September 30, 2020 results primarily from higher investment income from limited partnerships and higher realized investment capital, partially offset by an increase in catastrophe losses.




The CARES Act was passed by Congress and signed into law by the President on
March 27, 2020 in response to the COVID-19 Pandemic. Among the provisions of the
CARES Act was a special tax provision which allowed companies to elect to
carryback five years net operating losses incurred in the 2018, 2019 and/or 2020
tax years. The Tax Cuts and Jobs Act of 2017 had eliminated net operating loss
carrybacks for most companies. The Company determined that the special five year
loss carryback tax provision provided a tax benefit of $31.0 million which it
recorded in the quarter ended March 31, 2020.



Net Income (Loss).


Our net loss was $73.5 million and our net income was $243.1 million for the
three months ended September 30, 2021 and 2020, respectively. Our net income was
$948.4 million and $450.5 million for the nine months ended September 30, 2021
and 2020, respectively. These changes were primarily driven by the financial
component fluctuations explained above.



Ratios.


Our combined ratio increased by 7.0 points to 112.2% for the three months ended
September 30, 2021, compared to 105.2% for the three months ended September 30,
2020, and decreased by 0.5 points to 100.1% for the nine months ended September
30, 2021, compared to 100.6% for the nine months ended September 30, 2020. The
loss ratio component increased 6.9 points and 0.5 points for the three and nine
months ended September 30, 2021 over the same period last year mainly due to
increase catastrophe losses, partially offset by COVID-19 Pandemic attritional
losses incurred in the three and nine months ended September 30, 2020 which did
not re-cur in 2021. The commission and brokerage ratio components increased to
21.2% for the three months ended September 30, 2021 compared to 20.2% for the
three months ended September 30, 2020 and decreased to 21.2% for the nine months
ended September 30, 2021 compared to 21.7% for the nine months ended September
30, 2020. These changes were mainly due to changes in the mix of business. The
other underwriting expense ratios decreased to 5.3% for the three months ended
September 30, 2021 compared to 6.3% for the three months ended September 30,
2020 and decreased to 5.6% for the nine months ended September 30, 2021 compared
to 6.1% for the nine months ended September 30, 2020. These decreases were
mainly due to changes in the mix of business.



Shareholders' Equity.


Shareholders' equity increased by $252.5 million to $9,978.6 million at
September 30, 2021 from $9,726.2 million at December 31, 2020, principally as a
result of $948.4 million of net income, $21.0 million of share-based
compensation transactions and $5.6 million of net benefit plan obligation
adjustments, net of tax, partially offset by $307.9 million of unrealized
depreciation on investments net of tax, the repurchase of 790,920 common shares
for $200.1 million, $185.7 million of shareholder dividends and $28.9 million of
net foreign currency translation adjustments.



Consolidated Investment Results

Net Investment Income.


Net investment income increased to $292.8 million for the three months ended
September 30, 2021, compared with investment income of $234.2 million for the
three months ended September 30, 2020. Net investment income increased to $960.3
million for the nine months ended September 30, 2021, compared with investment
income of $420.1 million for the nine months ended September 30, 2020. These
increases were primarily the result of a significant increase in limited
partnership income and higher income from other alternative investments. The
limited partnership income primarily reflects increases in their reported net
asset values. As such, until these asset values are monetized and the resultant
income is distributed, they are subject to future increases or decreases in the
asset value, and the results may be volatile.



                                       36

--------------------------------------------------------------------------------


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



                                            Three Months Ended         Nine Months Ended
                                              September 30,              September 30,
(Dollars in millions)                       2021          2020         2021          2020
Fixed maturities                         $     134.2$    136.1$     423.3$    407.9
Equity securities                                3.8          4.4          12.1         11.6
Short-term investments and cash                    -          0.5           1.0          4.4
Other invested assets
Limited partnerships                           138.8         88.8         493.1         22.1
Other                                           30.9         14.7          62.8        (1.3)
Gross investment income before
adjustments                                    307.6        244.5         992.3        444.7
Funds held interest income (expense)             1.2          0.7          12.5         10.9
Future policy benefit reserve income
(expense)                                      (0.2)        (0.3)         (0.7)        (0.8)
Gross investment income                        308.6        244.9       1,004.0        454.8
Investment expenses                           (15.9)       (10.7)        (43.8)       (34.7)
Net investment income                    $     292.8$    234.2$     960.3$    420.1

(Some amounts may not reconcile due to rounding.)




                                               Three Months Ended       Nine Months Ended
                                                 September 30,            September 30,
                                               2021         2020        2021         2020
Annualized pre-tax yield on average cash and    4.4 %        4.4 %       5.0 %        2.7 %
invested assets
Annualized after-tax yield on average cash      3.8 %        3.8 %       4.4 %        2.3 %
and invested assets




                                       37
--------------------------------------------------------------------------------

Net Realized Capital Gains (Losses).

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




                                   Three Months Ended September 30,           Nine Months Ended September 30,
(Dollars in millions)              2021           2020        Variance         2021            2020      Variance
Gains (losses) from sales:
Fixed maturity securities,
market value:
Gains                           $      17.0$      18.7$   (1.7)$      51.7$        54.1$   (2.4)
Losses                               (10.8)         (13.3)          2.5        (26.3)           (53.1)        26.8
Total                                   6.3            5.4          0.9          25.5              0.9        24.5

Fixed maturity securities, fair
value:
Gains                                     -              -            -             -                -           -
Losses                                    -          (2.0)          2.0             -            (2.0)         2.0
Total                                     -          (2.0)          2.0             -            (2.0)         2.0

Equity securities, fair value:
Gains                                   2.8            9.5        (6.7)          20.9             30.3       (9.4)
Losses                                (3.3)         (10.8)          7.5        (11.4)           (42.9)        31.5
Total                                 (0.5)          (1.3)          0.8           9.5           (12.6)        22.1

Other Invested Assets:
Gains                                   2.4            1.4          1.0           8.0              6.0         2.0
Losses                                (0.5)          (0.3)        (0.2)         (2.0)            (5.9)         3.9
Total                                   1.9            1.1          0.8           6.0              0.1         5.9

Short Term Investments:
Gains                                     -            0.8        (0.8)             -              1.2       (1.2)
Losses                                    -              -            -             -                -           -
Total                                     -            0.8        (0.8)             -              1.2       (1.2)

Total net realized gains
(losses) from sales:
Gains                                  22.2           30.4        (8.2)          80.6             91.5      (10.9)
Losses                               (14.6)         (26.4)         11.8        (39.7)          (103.9)        64.2
Total                                   7.7            4.0          3.7          41.0           (12.4)        53.4

Allowance for credit losses:          (7.3)            6.2       (13.5)        (30.2)           (19.6)      (10.6)

Gains (losses) from fair value
adjustments:
Fixed maturities, fair value              -            3.3        (3.3)             -              1.9       (1.9)
Equity securities, fair value         (4.6)           96.7      (101.3)         128.0            114.4        13.6
Total                                 (4.6)          100.0      (104.6)         128.0            116.3        11.7

Total net realized capital
gains (losses)                  $     (4.2)$     110.2$ (114.4)$     138.8$        84.3$    54.5

(Some amounts may not reconcile
due to rounding.)




Net realized capital losses were $4.2 million and net realized capital gains
were $110.2 million for the three months ended September 30, 2021 and 2020,
respectively. For the three months ended September 30, 2021, we recorded $4.6
million of net losses from fair value re-measurements and $7.3 million of
allowances for credit losses, partially offset by $7.7 million of net realized
capital gains from sales of investments. For the three months ended September
30, 2020, we recorded $100.0 million of net gains from fair value
re-measurements, resulting primarily from increases in equity security
valuations which rebounded from declines in the first quarter of 2020, $6.2
million from a decline in net allowances for credit losses and $4.0 million of
net realized capital gains from sales of investments. The fixed maturity and
equity sales for the three months ended September 30, 2021 and 2020 related
primarily to adjusting the portfolios for overall market changes and individual
credit shifts.



                                       38
--------------------------------------------------------------------------------


Net realized capital gains were $138.8 million and $84.3 million for the nine
months ended September 30, 2021 and 2020, respectively. For the nine months
ended September 30, 2021 we recorded $128.0 million of net gains from fair value
re-measurements and $41.0 million of net realized capital gains from sales of
investments, partially offset by $30.2 million of allowances for credit losses.
For the nine months ended September 30, 2020 we recorded $116.3 million of net
gains from fair value re-measurements, partially offset by $19.6 million of net
allowances for credit losses and $12.4 million of net realized capital losses
from sales of investments.



Segment Results.

The Reinsurance operation writes worldwide property and casualty reinsurance and
specialty lines of business, on both a treaty and facultative basis, through
reinsurance brokers, as well as directly with ceding companies. Business is
written in the U.S., Bermuda, and Ireland offices, as well as through branches
in Canada, Singapore, the United Kingdom and Switzerland. The Insurance
operation writes property and casualty insurance directly and through brokers,
surplus lines brokers and general agents within the U.S., Bermuda, Canada and
Europe through its offices in the U.S., Canada, United Kingdom, Ireland and a
branch in the Netherlands.



These segments are managed independently, but conform with corporate guidelines
with respect to pricing, risk management, control of aggregate catastrophe
exposures, capital, investments and support operations. Management generally
monitors and evaluates the financial performance of these operating segments
based upon their underwriting results.



Underwriting results include earned premium less losses and loss adjustment
expenses ("LAE") incurred, commission and brokerage expenses and other
underwriting expenses. We measure our underwriting results using ratios, in
particular loss, commission and brokerage and other underwriting expense ratios,
which, respectively, divide incurred losses, commissions and brokerage and other
underwriting expenses by premiums earned.



The Company does not maintain separate balance sheet data for its operating segments. Accordingly, the Company does not review and evaluate the financial results of its operating segments based upon balance sheet data.




Our loss and LAE reserves are management's best estimate of our ultimate
liability for unpaid claims. We re-evaluate our estimates on an ongoing basis,
including all prior period reserves, taking into consideration all available
information, and in particular, recently reported loss claim experience and
trends related to prior periods. Such re-evaluations are recorded in incurred
losses in the period in which re-evaluation is made.



The following discusses the underwriting results for each of our segments for the periods indicated.




                                       39

--------------------------------------------------------------------------------

Reinsurance.

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




                                 Three Months Ended September 30,                       Nine Months Ended September 30,
(Dollars in millions)     2021             2020       Variance     % Change 

2021 2020 Variance % Change Gross written premiums

              $  2,488.3$  2,087.0$   401.3       19.2 

% $ 6,695.6$ 5,403.1$ 1,292.5 23.9 % Net written premiums 2,293.0 1,936.9 356.1 18.4 % 6,265.8 4,974.0 1,291.8 26.0 %


Premiums earned       $  1,976.5$  1,669.3$   307.2       18.4 %   $ 5,674.7$ 4,656.7$ 1,018.0       21.9 %
Incurred losses and
LAE                      1,766.2          1,335.0         431.2       32.3 %     4,206.2       3,361.4         844.8       25.1 %
Commission and
brokerage                  471.1            373.3          97.8       26.2

% 1,353.1 1,130.9 222.2 19.6 % Other underwriting expenses

                    45.3             51.3         (6.0)      -11.7 %       144.4         135.2           9.2        6.8 %
Underwriting gain
(loss)                $  (306.2)$   (90.4)$ (215.8)     -238.8 %   $  (29.0)$    29.3$  (58.3)     -199.2 %

                                                                  Point Chg                                            Point Chg
Loss ratio                  89.4 %           80.0 %                    9.4          74.1 %        72.2 %                    1.9
Commission and
brokerage ratio             23.8 %           22.3 %                    1.5          23.8 %        24.3 %                  (0.4)
Other underwriting
expense ratio                2.3 %            3.1 %                  (0.8)           2.5 %         2.9 %                  (0.4)
Combined ratio             115.5 %          105.4 %                   10.1         100.5 %        99.4 %                    1.1

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




Premiums. Gross written premiums increased by 19.2% to $2,488.3 million for the
three months ended September 30, 2021 from $2,087.0 million for the three months
ended September 30, 2020, due to increases in most lines of business, notably
casualty pro rata business, casualty excess of loss business and property
catastrophe excess of loss business, as well as a $24.0 million positive impact
from the movement of foreign exchange rates. Net written premiums increased by
18.4% to $2,293.0 million for the three months ended September 30, 2021 compared
to $1,936.9 million for the three months ended September 30, 2020, which is
consistent with the change in gross written premiums. Premiums earned increased
by 18.4% to $1,976.5 million for the three months ended September 30, 2021,
compared to $1,669.3 million for the three months ended September 30, 2020. The
change in premiums earned relative to net written premiums is primarily the
result of timing; premiums are earned ratably over the coverage period whereas
written premiums are recorded at the initiation of the coverage period.



Gross written premiums increased by 23.9% to $6,695.6 million for the nine
months ended September 30, 2021 from $5,403.1 million for the nine months ended
September 30, 2020, due to increases in most lines of business, notably property
pro rata business, casualty pro rata business and casualty excess of loss, as
well as a $94.2 million positive impact from the movement of foreign exchange
rates. Net written premiums increased by 26.0% to $6,265.8 million for the nine
months ended September 30, 2021 compared to $4,974.0 million for the nine months
ended September 30, 2020. The difference between the change in gross written
premiums compared to the change in net written premiums was primarily due to
varying utilization of reinsurance. Premiums earned increased by 21.9% to
$5,674.7 million for the nine months ended September 30, 2021, compared to
$4,656.7 million for the nine months ended September 30, 2020. The change in
premiums earned relative to net written premiums is primarily the result of
timing; premiums are earned ratably over the coverage period whereas written
premiums are recorded at the initiation of the coverage period.



                                       40

--------------------------------------------------------------------------------

Incurred Losses and LAE. The following table presents the incurred losses and LAE for the Reinsurance segment for the periods indicated.



                                         Three Months Ended September 30,
                       Current     Ratio %/     Prior     Ratio %/      Total      Ratio %/
(Dollars in millions)   Year      Pt Change     Years    Pt Change    Incurred    Pt Change
2021
Attritional           $ 1,152.8     58.3 %     $ (1.6)     -0.1 %       1,151.2     58.2 %
Catastrophes              615.0     31.1 %           -        - %         615.0     31.1 %
Total Segment         $ 1,767.8     89.4 %     $ (1.6)     -0.1 %     $ 1,766.2     89.4 %

2020
Attritional           $ 1,063.8     63.8 %     $ (1.3)     -0.1 %     $ 1,062.5     63.7 %
Catastrophes              272.5     16.3 %           -        - %         272.5     16.3 %
Total Segment         $ 1,336.3     80.1 %     $ (1.3)     -0.1 %     $ 1,335.0     80.0 %

Variance 2021/2020
Attritional           $    89.0    (5.5) pts   $ (0.3)        - pts   $    88.7    (5.5) pts
Catastrophes              342.5     14.8 pts         -        - pts       342.5     14.8 pts
Total Segment         $   431.5      9.3 pts   $ (0.3)        - pts   $   431.2      9.4 pts




                                         Nine Months Ended September 30,
                       Current     Ratio %/     Prior     Ratio %/      Total      Ratio %/
(Dollars in millions)   Year      Pt Change     Years    Pt Change    Incurred    Pt Change
2021
Attritional           $ 3,338.6     58.8 %     $ (4.9)     -0.1 %       3,333.7     58.7 %
Catastrophes              872.5     15.4 %           -        - %         872.5     15.4 %
Total Segment         $ 4,211.1     74.2 %     $ (4.9)     -0.1 %     $ 4,206.2     74.1 %

2020
Attritional           $ 3,067.5     65.9 %     $ (3.1)     -0.1 %     $ 3,064.4     65.8 %
Catastrophes              297.0      6.4 %           -        - %         297.0      6.4 %
Total Segment         $ 3,364.5     72.3 %     $ (3.1)     -0.1 %     $ 3,361.4     72.2 %

Variance 2021/2020
Attritional           $   271.1    (7.1) pts   $ (1.8)        - pts   $   269.3    (7.1) pts
Catastrophes              575.5      9.0 pts         -        - pts       575.5      9.0 pts
Total Segment         $   846.6      1.9 pts   $ (1.8)        - pts   $   844.8      1.9 pts





Incurred losses increased by 32.3% to $1,766.2 million for the three months
ended September 30, 2021, compared to $1,335.0 million for the three months
ended September 30, 2020. The increase was primarily due to an increase of
$342.5 million in current year catastrophe losses, as well as an increase of
$89.0 million in current year attritional losses, mainly related to the impact
of the increase in premiums earned, and partially offset by $109.9 million of
COVID-19 Pandemic losses incurred in 2020 which did not recur in 2021. The
current year catastrophe losses of $615.0 million for the three months ended
September 30, 2021 related primarily to Hurricane Ida ($383.0 million) and the
European floods ($232.0 million). The $272.5 million of current year catastrophe
losses for the three months ended September 30, 2020 related primarily to
Hurricane Laura ($116.0 million), the Northern California wildfires ($52.0
million), the California Glass wildfire ($30.0 million), the Oregon wildfires
($21.0 million), Hurricane Isaias ($17.9 million), the Derecho storms ($13.1
million), the Calgary storms in Canada ($12.5 million) and Hurricane Sally
($10.0 million).



Incurred losses increased by 25.1% to $4,206.2 million for the nine months ended
September 30, 2021, compared to $3,361.4 million for the nine months ended
September 30, 2020. The increase was primarily due to an increase of $575.5
million in current year catastrophe losses and an increase of $271.1 million in
current year attritional losses, mainly related to the impact of the increase in
premiums earned. The increase in attritional losses was partially offset by
$351.0 million of COVID-19 Pandemic losses incurred in 2020 which did not re-cur
in 2021. The current year catastrophe losses of $872.5 million for the nine
months ended September 30, 2021 related primarily to Hurricane Ida ($383.0
million), the European floods ($242.0 million) and the Texas winter storms
($227.5 million) with the rest of the losses emanating from the 2021 Australia
floods and the Victoria Australia flooding. The $297.0 million of current year
catastrophe losses for the nine months ended September

                                       41

--------------------------------------------------------------------------------


30, 2020 related primarily to Hurricane Laura ($116.0 million), the Northern
California wildfires ($52.0 million), the California Glass wildfire ($30.0
million), the Oregon wildfires ($21.0 million), Hurricane Isaias ($17.9
million), the Derecho storms ($13.1 million), the Calgary storms in Canada
($12.5 million), Hurricane Sally ($10.0 million), the Nashville tornadoes ($9.7
million), the Australia East Coast storm ($6.8 million), the Australia fires
($5.6 million) and the 2020 U.S. Civil Unrest ($2.4 million).



Segment Expenses. Commission and brokerage expenses increased by 26.2% to $471.1
million for the three months ended September 30, 2021 compared to $373.3 million
for the three months ended September 30, 2020. Commission and brokerage expenses
increased by 19.6% to $1,353.1 million for the nine months ended September 30,
2021 compared to $1,130.9 million for the nine months ended September 30, 2020.
These increases were mainly due to the impact of the increases in premiums
earned and changes in the mix of business.



Segment other underwriting expenses decreased to $45.3 million for the three
months ended September 30, 2021 from $51.3 million for the three months ended
September 30, 2020. The quarter over quarter decline was mainly due to changes
in the mix of business. Segment other underwriting expenses increased to $144.4
million for the nine months ended September 30, 2021 from $135.2 million for the
nine months ended September 30, 2020. The year over year increase was mainly due
to the impact of the changes in premiums earned.



Insurance.

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




                                Three Months Ended September 30,                        Nine Months Ended September 30,
(Dollars in millions)     2021            2020       Variance     % Change  

2021 2020 Variance % Change Gross written premiums

              $  1,009.3$  704.6$    304.7       43.2 % 

$ 2,923.6$ 2,328.7$ 594.9 25.5 % Net written premiums 732.8 511.8 221.0 43.2 %

2,123.3 1,693.6 429.7 25.4 %

Premiums earned $ 679.9$ 536.6$ 143.3 26.7 %

   $ 1,927.9$ 1,628.3$    299.6       18.4 %
Incurred losses and
LAE                        508.1          401.2          106.9       26.7 %     1,365.6       1,212.7          152.9       12.6 %
Commission and
brokerage                   93.3           72.1           21.2       29.4 %       258.0         229.2           28.8       12.6 %
Other underwriting
expenses                    95.8           87.5            8.3        9.4 %       279.8         250.7           29.1       11.6 %
Underwriting gain
(loss)                $   (17.2)$ (24.2)$      6.9       29.0 % 

$ 24.5$ (64.3)$ 88.8 138.0 %


                                                                 Point Chg                                             Point Chg
Loss ratio                  74.7 %         74.8 %                       -          70.8 %        74.6 %                    -3.8
Commission and
brokerage ratio             13.7 %         13.4 %                     0.3          13.4 %        14.0 %                    -0.6
Other underwriting
expense ratio               14.1 %         16.3 %                    -2.2          14.5 %        15.4 %                    -0.9
Combined ratio             102.5 %        104.5 %                    -2.0          98.7 %       104.0 %                    -5.3

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




Premiums. Gross written premiums increased by 43.2% to $1,009.3 million for the
three months ended September 30, 2021 compared to $704.6 million for the three
months ended September 30, 2020. This rise was primarily related to increases in
specialty casualty business, professional liability business and short-tail
business, including property. Net written premiums increased by 43.2% to $732.8
million for the three months ended September 30, 2021 compared to $511.8 million
for the three months ended September 30, 2020, which is consistent with the
change in gross written premiums. Premiums earned increased 26.7% to $679.9
million for the three months ended September 30, 2021 compared to $536.6 million
for the three months ended September 30, 2020. 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.



                                       42

--------------------------------------------------------------------------------


Gross written premiums increased by 25.5% to $2,923.6 million for the nine
months ended September 30, 2021 compared to $2,328.7 million for the nine months
ended September 30, 2020. This rise was related to increases in specialty
casualty business, professional liability business and short-tail business,
including property, partially offset by a decline in workers' compensation
business. Net written premiums increased by 25.4% to $2,123.3 million for the
nine months ended September 30, 2021 compared to $1,693.6 million for the nine
months ended September 30, 2020, which is consistent with the change in gross
written premiums. Premiums earned increased by 18.4% to $1,927.9 million for the
nine months ended September 30, 2021 compared to $1,628.3 million for the nine
months ended September 30, 2020. 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 Insurance segment for the periods indicated.



                                         Three Months Ended September 30,
                      Current     Ratio %/     Prior     Ratio %/      Total       Ratio %/
(Dollars in millions)   Year     Pt Change     Years    Pt Change     Incurred    Pt Change
2021
Attritional           $  428.1     63.0 %     $     -     - %             428.1     63.0 %
Catastrophes              80.0     11.8 %           -     - %              80.0     11.8 %
Total Segment         $  508.1     74.7 %     $     -     - %        $    508.1     74.7 %

2020
Attritional           $  363.7     67.8 %     $     -     - %        $    363.7     67.8 %
Catastrophes              37.5      7.0 %           -     - %              37.5      7.0 %
Total Segment         $  401.2     74.8 %     $     -     - %        $    401.2     74.8 %

Variance 2021/2020
Attritional           $   64.4    (4.8) pts   $     -     - pts      $     64.4    (4.8) pts
Catastrophes              42.5      4.8 pts         -     - pts            42.5      4.8 pts
Total Segment         $  106.9        - pts   $     -     - pts      $    106.9        - pts




                                                 Nine Months Ended September 30,
                              Current        Ratio %/     Prior      Ratio %/      Total      Ratio %/
(Dollars in millions)          Year         Pt Change     Years     Pt Change    Incurred    Pt Change
2021
Attritional               $       1,229.3     63.8 %     $  (1.2)     -0.1 %       1,228.1     63.7 %
Catastrophes                        137.5      7.1 %            -        - %         137.5      7.1 %
Total Segment             $       1,366.8     70.9 %     $  (1.2)     -0.1 %     $ 1,365.6     70.8 %

2020
Attritional               $       1,150.1     70.7 %     $    4.6      0.3 %     $ 1,154.7     71.0 %
Catastrophes                         58.0      3.6 %            -        - %          58.0      3.6 %
Total Segment             $       1,208.1     74.3 %     $    4.6      0.3 %     $ 1,212.7     74.6 %

Variance 2021/2020
Attritional               $          79.2    (6.9) pts   $  (5.8)    (0.4) pts   $    73.4    (7.3) pts
Catastrophes                         79.5      3.5 pts          -        - pts        79.5      3.5 pts
Total Segment             $         158.7    (3.4) pts   $  (5.8)    (0.4) pts   $   152.9    (3.8) pts

(Some amounts may not reconcile due to
rounding.)




Incurred losses and LAE increased by 26.7% to $508.1 million for the three
months ended September 30, 2021 compared to $401.2 million for the three months
ended September 30, 2020. The increase was mainly due to an increase in current
year attritional losses of $64.4 million primarily related to the impact of the
increase in premiums earned, as well as an increase of $42.5 million in current
year catastrophe losses. The increase in attritional losses was partially offset
by $15.0 million of COVID-19 Pandemic losses incurred in 2020 which did not
recur in 2021. The current year catastrophe losses of $80.0 million for the
three months ended September 30, 2021 related to Hurricane Ida. The $37.5
million of current year catastrophe losses for the three months ended September
30, 2020 related to Hurricane Sally ($16.0 million), Hurricane Laura ($15.0
million), the Calgary storms in Canada ($2.5 million), the Derecho storms ($2.0
million) and Hurricane Isaias ($2.0 million).

                                       43

--------------------------------------------------------------------------------




Incurred losses and LAE increased by 12.6% to $1,365.6 million for the nine
months ended September 30, 2021 compared to $1,212.7 million for the nine months
ended September 30, 2020. The increase was mainly due to an increase in current
year catastrophe losses of $79.5 million and an increase of $79.2 million in
current year attritional losses primarily related to the impact of the increase
in premiums earned. The increase in attritional losses was partially offset by
$84.0 million of COVID-19 Pandemic losses incurred in 2020 which did not recur
in 2021. The current year catastrophe losses of $137.5 million for the nine
months ended September 30, 2021 related to Hurricane Ida ($80.0 million) and the
Texas winter storms ($57.5 million). The $58.0 million of current year
catastrophe losses for the nine months ended September 30, 2020 related to
Hurricane Sally ($16.0 million), Hurricane Laura ($15.0 million), the 2020 U.S.
Civil Unrest ($15.0 million), the Nashville tornadoes ($5.5 million), the
Calgary storms in Canada ($2.5 million), the Derecho storms ($2.0 million) and
Hurricane Isaias ($2.0 million).



Segment Expenses. Commission and brokerage increased by 29.4% to $93.3 million
for the three months ended September 30, 2021 compared to $72.1 million for the
three months ended September 30, 2020. Commission and brokerage increased by
12.6% to $258.0 million for the nine months ended September 30, 2021 compared to
$229.2 million for the nine months ended September 30, 2020. The increases were
mainly due to the impact of the increases in premiums earned.



Segment other underwriting expenses increased to $95.8 million for the three
months ended September 30, 2021 compared to $87.5 million for the three months
ended September 30, 2020. Segment other underwriting expenses increased to
$279.8 million for the nine months ended September 30, 2021 compared to $250.7
million for the nine months ended September 30, 2020. The increases were mainly
due to the impact of the increases in premiums earned and increased expenses
related to the continued build out of the insurance business.



FINANCIAL CONDITION



Cash and Invested Assets. Aggregate invested assets, including cash and
short-term investments, were $27,783.7 million at September 30, 2021, an
increase of $2,322.1 million compared to $25,461.6 million at December 31, 2020.
This increase was primarily the result of $2,790.5 million of cash flows from
operations, $543.4 million in equity adjustments of our limited partnership
investments, and $13.7 million in fair value re-measurements, partially offset
by $344.5 million of pre-tax unrealized depreciation, the repurchases of 790,920
common shares for $200.1 million, $185.7 million paid out in dividends to
shareholders, $177.3 million decrease in unsettled securities, $57.1 million of
amortization bond premium and $53.3 million due to fluctuations in foreign
currencies.



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



For the portion needed to satisfy global outstanding liabilities, we generally
invest in fixed maturities with an average credit quality of A1. This global
fixed maturity securities portfolio is externally managed by independent,
professional investment managers using portfolio guidelines approved by internal
management.



Over the past several years, we have expanded the allocation of our investments
funded by shareholders' equity to include: 1) a greater percentage of publicly
traded equity securities, 2) emerging market fixed maturities through mutual
fund structures, as well as individual holdings, 3) high yield fixed maturities,
4) bank and private loan securities and 5) private equity limited partnership
investments. The objective of this portfolio diversification is to enhance the
risk-adjusted total return of the investment portfolio by allocating a prudent
portion of the portfolio to higher return asset classes. We limit our allocation
to these asset classes because of

                                       44

--------------------------------------------------------------------------------


1) the potential for volatility in their values and 2) the impact of these
investments on regulatory and rating agency capital adequacy models. We use
investment managers experienced in these markets and adjust our allocation to
these investments based upon market conditions. At September 30, 2021, the
market value of investments in these investment market sectors, carried at both
market and fair value, approximated 95.6% of shareholders' equity.



The Company's limited partnership investments are comprised of limited
partnerships that invest in private equities. Generally, the limited
partnerships are reported on a quarter lag. We receive annual audited financial
statements for all of the limited partnerships which are prepared using fair
value accounting in accordance with FASB guidance. For the quarterly reports,
the Company reviews the financial reports for any unusual changes in carrying
value. If the Company becomes aware of a significant decline in value during the
lag reporting period, the loss will be recorded in the period in which the
Company identifies the decline.



The tables below summarize the composition and characteristics of our investment portfolio as of the dates indicated.




(Dollars in millions)                   At September 30, 2021          At December 31, 2020
Fixed maturities, market value       $     21,623.1        77.8 %   $    20,040.2        78.7 %
Equity securities, fair value               1,523.6         5.5 %         1,472.2         5.8 %
Short-term investments                        713.1         2.6 %         1,135.0         4.5 %
Other invested assets                       2,855.4        10.3 %         2,012.6         7.9 %
Cash                                        1,068.4         3.8 %           801.7         3.1 %
Total investments and cash           $     27,783.7       100.0 %   $    25,461.6       100.0 %

(Some amounts may not reconcile due
to rounding.)




                                                 At                    At
                                         September 30, 2021     December 31, 2020
Fixed income portfolio duration (years)            3.3                   

3.6

Fixed income composite credit quality               A1                   Aa3



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



                                                                         Twelve Months
                                                 Nine Months Ended           Ended
                                                September 30, 2021        December 31,
                                                                              2020
Fixed income portfolio total return                        0.5 %               6.3 %
Barclay's Capital - U.S. aggregate index                 (1.6) %            

7.5 %


Common equity portfolio total return                      11.6 %              26.7 %
S&P 500 index                                             15.9 %            

18.4 %


Other invested asset portfolio total return               33.8 %               8.3 %




The pre-tax equivalent total return for the bond portfolio was approximately
(0.5)% and 5.3%, respectively, for the nine months ended September 30, 2021 and
the twelve months ended December 31, 2020. The pre-tax equivalent return adjusts
the yield on tax-exempt bonds to the fully taxable equivalent.



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



                                       45
--------------------------------------------------------------------------------

Reinsurance Recoverables.


Reinsurance recoverables for both paid and unpaid losses totaled $2,215.4
million and $1,994.6 million at September 30, 2021 and December 31, 2020,
respectively. At September 30, 2021, $778.7 million, or 35.1%, was receivable
from Mt. Logan Re collateralized segregated accounts; $205.6 million, or 9.3%,
was receivable from Munich Reinsurance America, Inc. ("Munich Re") and $110.9
million or 5.0% was receivable from Endurance Specialty Holdings, Ltd.
("Endurance"). No other retrocessionaire accounted for more than 5% of our
recoverables.



Loss and LAE Reserves. Gross loss and LAE reserves totaled $18,957.0 million and $16,399.0 million at September 30, 2021 and December 31, 2020, respectively.




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



                                                 At September 30, 2021
                                    Case          IBNR          Total         % of
(Dollars in millions)             Reserves      Reserves      Reserves        Total
Reinsurance                      $   5,497.6$   8,304.1$  13,801.7        72.8 %
Insurance                            1,354.5       3,619.8       4,974.3        26.2 %
Total excluding A&E                  6,852.1      11,923.9      18,776.0        99.0 %
A&E                                    167.8          13.1         180.9         1.0 %
Total including A&E              $   7,019.9$  11,937.0$  18,957.0       100.0 %

(Some amounts may not reconcile
due to rounding.)




                                                 At December 31, 2020
                                    Case          IBNR          Total         % of
(Dollars in millions)             Reserves      Reserves      Reserves        Total
Reinsurance                      $   5,092.7$   6,723.8$  11,816.5        72.1 %
Insurance                            1,282.1       3,082.6       4,364.8        26.6 %
Total excluding A&E                  6,374.8       9,806.4      16,181.3        98.7 %
A&E                                    184.0          33.8         217.7         1.3 %
Total including A&E              $   6,558.8$   9,840.2$  16,399.0       100.0 %

(Some amounts may not reconcile
due to rounding.)




Changes in premiums earned and business mix, reserve re-estimations, catastrophe
losses and changes in catastrophe loss reserves and claim settlement activity
all impact loss and LAE reserves by segment and in total.



Our loss and LAE reserves represent management's best estimate of our ultimate
liability for unpaid claims. We continuously re-evaluate our reserves, including
re-estimates of prior period reserves, taking into consideration all available
information and, in particular, newly reported loss and claim experience.
Changes in reserves resulting from such re-evaluations are reflected in incurred
losses in the period when the re-evaluation is made. Our analytical methods and
processes operate at multiple levels including individual contracts, groupings
of like contracts, classes and lines of business, internal business units,
segments, legal entities, and in the aggregate. In order to set appropriate
reserves, we make qualitative and quantitative analyses and judgments at these
various levels. Additionally, the attribution of reserves, changes in reserves
and incurred losses among accident years requires qualitative and quantitative
adjustments and allocations at these various levels. We utilize actuarial
science, business expertise and management judgment in a manner intended to
ensure the accuracy and consistency of our reserving practices. Nevertheless,
our reserves are estimates, which are subject to variation, which may be
significant.



There can be no assurance that reserves for, and losses from, claim obligations
will not increase in the future, possibly by a material amount. However, we
believe that our existing reserves and reserving methodologies lessen the
probability that any such increase would have a material adverse effect on our
financial condition, results of operations or cash flows.

                                       46

--------------------------------------------------------------------------------




Asbestos and Environmental Exposures. A&E exposures represent a separate
exposure group for monitoring and evaluating reserve adequacy. The following
table summarizes the outstanding loss reserves with respect to A&E reserves on
both a gross and net of retrocessions basis for the periods indicated.



                                                        At                At
                                                   September 30,     December 31,
(Dollars in millions)                                  2021              2020
Gross reserves                                    $         182.5   $        219.3
Ceded reserves                                             (13.7)           (21.1)
Net reserves                                      $         168.8   $        198.3

(Some amounts may not reconcile due to rounding.)





With respect to asbestos only, at September 30, 2021, we had net asbestos loss
reserves of $167.7 million, or 99.3%, of total net A&E reserves, all of which
was for assumed business.



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



On December 20, 2019, the retrocession treaty was amended and included a partial
commutation. As a result of this amendment and partial commutation, gross A&E
reserves and correspondingly ceded reserves were reduced by $43.4 million. In
addition, the maximum liability permitted to be retroceded increased to $450.3
million. We will retain liability for any amounts exceeding the maximum
liability retroceded under the retrocession treaty.



Ultimate loss projections for A&E liabilities cannot be accomplished using
standard actuarial techniques. We believe that our A&E reserves represent
management's best estimate of the ultimate liability; however, there can be no
assurance that ultimate loss payments will not exceed such reserves, perhaps by
a significant amount.



Industry analysts use the "survival ratio" to compare the A&E reserves among
companies with such liabilities. The survival ratio is typically calculated by
dividing a company's current net reserves by the three year average of annual
paid losses. Hence, the survival ratio equals the number of years that it would
take to exhaust the current reserves if future loss payments were to continue at
historical levels. Using this measurement, our net three year asbestos survival
ratio was 5.5 years at September 30, 2021. These metrics can be skewed by
individual large settlements occurring in the prior three years and therefore,
may not be indicative of the timing of future payments.



Shareholders' Equity. Our shareholders' equity increased to $9,978.6 million as
of September 30, 2021 from $9,726.2 million as of December 31, 2020. This
increase was the result of $948.4 million of net income, $21.0 million of
share-based compensation transactions and $5.6 million of net benefit plan
obligation adjustments, net of tax, partially offset by $307.9 million of
unrealized depreciation on investments net of tax, the repurchase of 790,920
common shares for $200.1 million, $185.7 million of shareholder dividends and
$28.9 million of net foreign currency translation adjustments.



LIQUIDITY AND CAPITAL RESOURCES




Capital. Shareholders' equity at September 30, 2021 and December 31, 2020 was
$9,978.6 million and $9,726.2 million, respectively. Management's objective in
managing capital is to ensure its overall capital level, as well as

                                       47

--------------------------------------------------------------------------------


the capital levels of its operating subsidiaries, exceed the amounts required by
regulators, the amount needed to support our current financial strength ratings
from rating agencies and our own economic capital models. The Company's capital
has historically exceeded these benchmark levels.



Our two main operating companies Bermuda Re and Everest Re are regulated by the
Bermuda Monetary Authority ("BMA") and the State of Delaware, Department of
Insurance, respectively. Both regulatory bodies have their own capital adequacy
models based on statutory capital as opposed to GAAP basis equity. Failure to
meet the required statutory capital levels could result in various regulatory
restrictions, including business activity and the payment of dividends to their
parent companies.


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



                               Bermuda Re (1)          Everest Re (2)
                               At December 31,         At December 31,

(Dollars in millions) 2020 2019 2020 2019 Regulatory targeted capital $ 1,923.2$ 2,061.1$ 2,489.8$ 2,001.2 Actual capital

              $ 2,930.3$ 3,197.4$ 5,276.0$ 3,739.1

(1) Regulatory targeted capital represents the target capital level from the applicable year's BSCR calculation.

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




Our financial strength ratings as determined by A.M. Best, Standard & Poor's and
Moody's are important as they provide our customers and investors with an
independent assessment of our financial strength using a rating scale that
provides for relative comparisons. We continue to possess significant financial
flexibility and access to debt and equity markets as a result of our financial
strength, as evidenced by the financial strength ratings as assigned by
independent rating agencies.



We maintain our own economic capital models to monitor and project our overall
capital, as well as, the capital at our operating subsidiaries. A key input to
the economic models is projected income and this input is continually compared
to actual results, which may require a change in the capital strategy.



On October 7, 2020, we issued $1,000.0 million of 30 year senior notes at a rate of 3.5%. These senior notes will mature on October 15, 2050 and will pay interest semi-annually.




On October 4, 2021, we issued an additional $1,000.0 million of 31 year senior
notes at a rate of 3.125%. These senior notes will mature on October 15, 2052
and will pay interest semi-annually.



During the first three quarters of 2021, we repurchased 790,920 shares for
$200.1 million in the open market and paid $185.7 million in dividends to adjust
our capital position and enhance long term expected returns to our shareholders.
In 2020, we repurchased 970,892 shares for $200.0 million in the open market and
paid $249.1 million in dividends to adjust our capital position and enhance long
term expected returns to our shareholders. We may at times enter into a Rule
10b5-1 repurchase plan agreement to facilitate the repurchase of shares. On May
22, 2020, our existing Board authorization to purchase up to 30 million of our
shares was amended to authorize the purchase of up to 32 million shares. As of
September 30, 2021, we had repurchased 30.4 million shares under this
authorization.



We also repurchased $13.2 million of our long-term subordinated notes in 2020.
We recognized a realized gain of $2.5 million on the repurchase. We may
continue, from time to time, to seek to retire portions of our outstanding debt
securities through cash repurchases, in open-market purchases, privately
negotiated transactions or otherwise. Such repurchases, if any, will be subject
to and depend on prevailing market conditions, our liquidity requirements,
contractual restrictions and other factors. The amounts involved in any such
transactions, individually or in the aggregate, may be material.



                                       48

--------------------------------------------------------------------------------


Liquidity. Our liquidity requirements are generally met from positive cash flow
from operations. Positive cash flow results from reinsurance and insurance
premiums being collected prior to disbursements for claims, which disbursements
generally take place over an extended period after the collection of premiums,
sometimes a period of many years. Collected premiums are generally invested,
prior to their use in such disbursements, and investment income provides
additional funding for loss payments. Our net cash flows from operating
activities were $2,790.5 million and $2,190.6 million for the nine months ended
September 30, 2021 and 2020, respectively. Additionally, these cash flows
reflected net catastrophe loss payments of $525.9 million and $505.9 million for
the nine months ended September 30, 2021 and 2020, respectively and net tax
payments of $39.8 million and net tax recoveries of $169.1 million for the nine
months ended September 30, 2021 and 2020, respectively.



If disbursements for claims and benefits, policy acquisition costs and other
operating expenses were to exceed premium inflows, cash flow from reinsurance
and insurance operations would be negative. The effect on cash flow from
insurance operations would be partially offset by cash flow from investment
income. Additionally, cash inflows from investment maturities and dispositions,
both short-term investments and longer term maturities are available to
supplement other operating cash flows.



As the timing of payments for claims and benefits cannot be predicted with
certainty, we maintain portfolios of long term invested assets with varying
maturities, along with short-term investments that provide additional liquidity
for payment of claims. At September 30, 2021 and December 31, 2020, we held cash
and short-term investments of $1,781.6 million and $1,936.6 million,
respectively. Our short-term investments are generally readily marketable and
can be converted to cash. In addition to these cash and short-term investments,
at September 30, 2021, we had $1,621.5 million of available for sale fixed
maturity securities maturing within one year or less, $6,826.9 million maturing
within one to five years and $6, 528.2 million maturing after five years. Our
$1,523.6 million of equity securities are comprised primarily of publicly traded
securities that can be easily liquidated. We believe that these fixed maturity
and equity securities, in conjunction with the short-term investments and
positive cash flow from operations, provide ample sources of liquidity for the
expected payment of losses in the near future. We do not anticipate selling a
significant amount of securities to pay losses and LAE but have the ability to
do so. Sales of securities might result in realized capital gains or losses. At
September 30, 2021 we had $472.3 million of net pre-tax unrealized appreciation
related to fixed maturity securities, comprised of $626.4 million of pre-tax
unrealized appreciation and $154.1 million of pre-tax unrealized depreciation.



Management generally expects annual positive cash flow from operations, which
reflects the strength of overall pricing. However, given the recent set of
catastrophic events, cash flow from operations may decline and could become
negative in the near term as significant claim payments are made related to the
catastrophes. However, as indicated above, the Company has ample liquidity to
settle its catastrophe claims.



In addition to our cash flows from operations and liquid investments, we also
have multiple credit facilities that provide commitment of up to $1,530.0
million and £52.2 million of collateralized standby letters of credit to support
business written by our Bermuda operating subsidiaries. In addition, the Company
has the ability to request access to an additional $140.0 million of uncommitted
credit facilities, which would require approval from the applicable lender.



Effective May 26, 2016, Group, Bermuda Re and Everest International entered into
a five year, $800.0 million senior credit facility with a syndicate of lenders,
which amended and restated in its entirety the June 22, 2012, four year, $800.0
million senior credit facility. Both the May 26, 2016 and June 22, 2012 senior
credit facilities, which have similar terms, are referred to as the "2016 Group
Credit Facility". Wells Fargo Corporation ("Wells Fargo Bank") is the
administrative agent for the 2016 Group Credit Facility, which consists of two
tranches. Tranche one provides up to $200.0 million of unsecured revolving
credit for liquidity and general corporate purposes, and for the issuance of
unsecured standby letters of credit. Tranche two exclusively provides up to
$600.0 million for the issuance of standby letters of credit on a collateralized
basis.



                                       49
--------------------------------------------------------------------------------


Effective May 26, 2021, the term of the 2016 Group Credit Facility expired. The
Company elected not to renew this facility to allow for the replacement by new
credit facilities, including the 2021 Bermuda Re Wells Fargo Letter of Credit
Facility. As a result, Tranche One of the Group Credit Facility (unsecured
revolving credit in the amount of $200.0 million) is no longer effective or
available for use. The $600 million of credit availability in Tranche two will
be in run-off and able to support standby letters of credit currently in force
through December 31, 2021. As of December 31, 2021, the entirety of the 2016
Group Credit Facility will have expired and will no longer be effective.



The Group Credit Facility requires Group to maintain a debt to capital ratio of
not greater than 0.35 to 1 and to maintain a minimum net worth. Minimum net
worth is an amount equal to the sum of $5,371.0 million plus 25% of consolidated
net income for each of Group's fiscal quarters, for which statements are
available ending on or after March 31, 2016 and for which consolidated net
income is positive, plus 25% of any increase in consolidated net worth during
such period attributable to the issuance of ordinary and preferred shares, which
at September 30, 2021, was $6,651.8 million. As of September 30, 2021, the
Company was in compliance with all Group Credit Facility covenants.



At September 30, 2021 and December 31, 2020, the Company had no outstanding
short-term borrowings from the Group Credit Facility revolving credit line. At
September 30, 2021, the Group Credit Facility had $402.3 million outstanding
letters of credit under tranche two. At December 31, 2020, the Group Credit
Facility had $164.2 million outstanding letters of credit under tranche one and
$589.7 million outstanding letters of credit under tranche two.



Effective August 9, 2021 Bermuda Re entered into a new letter of credit issuance
facility with Citibank N.A. which superseded the previous letter of credit
issuance facility with Citibank N.A. that was effective December 31, 2020. Both
of these agreements are referred to as the "Bermuda Re Citibank Letter of Credit
Facility". The current Bermuda Re Letter of Credit Facility provides for the
committed issuance of up to $230.0 million of secured letters of credit. In
addition, the facility provides for the uncommitted issuance of up to $140.0
million, which may be accessible via written request by the Company and
corresponding authorization from Citibank N.A.



At September 30, 2021 and December 31, 2020, the Bermuda Re Citibank Letter of
Credit Facility had $200.7 million and $185.5 million of outstanding letters of
credit, respectively.



Effective February 23, 2021, Bermuda Re entered into a letter of credit issuance
facility with Wells Fargo referred to as the "Bermuda Re Wells Fargo Letter of
Credit Facility." The Bermuda Re Wells Fargo Letter of Credit Facility
originally provided for the issuance of up to $50.0 million of secured letters
of credit. Effective May 5, 2021, the agreement was amended to provide for the
issuance of up to $500.0 million of secured letters of credit.



At September 30, 2021, the Bermuda Re Wells Fargo Letter of Credit Facility had $404.2 million of outstanding letters of credit.




Effective August 9, 2021 Bermuda Re entered into a letter of credit issuance
facility with Bayerische Landesbank, an agreement referred to as the "Bermuda Re
Bayerische Landesbank Credit Facility". The Bermuda Re Bayerische Landesbank
Credit Facility provides for the committed issuance of up to $200.0 million of
secured letters of credit.


At September 30, 2021, the Bermuda Re Bayerische Landesbank Credit Facility had no outstanding letters of credit.




Effective May 12, 2020, Everest International amended its credit facility with
Lloyds Bank plc ("Everest International Credit Facility"). The current amendment
of the Everest International Credit Facility provides up to £52.2 million for
the issuance of standby letters of credit on a collateralized basis.



                                       50

--------------------------------------------------------------------------------


The Everest International Credit Facility requires Group to maintain a debt to
capital ratio of not greater than 0.35 to 1 and to maintain a minimum net worth.
Minimum net worth is an amount equal to the sum of $6,393.0, million (70% of
consolidated net worth as of December 31, 2019), plus 25% of consolidated net
income for each of Group's fiscal quarters, for which statements are available
ending on or after January 1, 2019 and for which net income is positive, plus
25% of any increase in consolidated net worth of Group during such period
attributable to the issuance of ordinary and preferred shares, which at
September 30, 2021, was $6,788.7 million. As of September 30, 2021, the Company
was in compliance with all Everest International Credit Facility requirements.



At September 30, 2021 and December 31, 2020, Everest International Credit Facility had £52.2 million of outstanding letters of credit.




Costs incurred in connection with the Group Credit Facility and Everest
International Credit Facility were $0 million and $0.1 million for the three
months ended September 30, 2021 and 2020, respectively. Costs incurred in
connection with the Group Credit Facility and Everest International Credit
Facility were $0.2 million and $0.6 million for the nine months ended September
30, 2021 and 2020, respectively.



Everest Re is a member of the Federal Home Loan Banks ("FHLB") organization,
which allows Everest Re to borrow up to 10% of its statutory admitted assets. As
of September 30, 2021, Everest Re had admitted assets of approximately $18,874.0
million which provides borrowing capacity of up to approximately $1,887.4
million. As of September 30, 2021, Everest Re had $310.0 million of outstanding
borrowings through its FHLB borrowing capacity. The $310.0 million of
collateralized borrowings have interest payable at a rate of 0.35%.



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



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



Interest Rate Risk. Our $27.8 billion investment portfolio, at September 30,
2021, 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 $3,341.2 million of mortgage-backed securities in the $21,623.1
million fixed maturity

                                       51

--------------------------------------------------------------------------------

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
$713.1 million of short-term investments) for the period indicated based on
upward and downward parallel and immediate 100 and 200 basis point shifts in
interest rates. For legal entities with a U.S. dollar functional currency, this
modeling was performed on each security individually. To generate appropriate
price estimates on mortgage-backed securities, changes in prepayment
expectations under different interest rate environments were taken into account.
For legal entities with a non-U.S. dollar functional currency, the effective
duration of the involved portfolio of securities was used as a proxy for the
market value change under the various interest rate change scenarios.



                                           Impact of Interest Rate Shift in Basis Points
                                                       At September 30, 2021
                                 -200            -100           0              100            200
(Dollars in millions)
Total Market/Fair Value      $ 23,888.3$ 23,112.3$ 22,336.3$ 21,560.2$  20,784.2
Market/Fair Value Change            6.9 %          3.5 %          0.0 %        (3.5) %         (6.9) %
from Base (%)
Change in Unrealized
Appreciation
After-tax from Base ($)      $  1,339.0$    669.5     $        -     $  (669.5)$ (1,339.0)




We had $18,957.0 million and $16,399.0 million of gross reserves for losses and
LAE as of September 30, 2021 and December 31, 2020, respectively. These amounts
are recorded at their nominal value, as opposed to present value, which would
reflect a discount adjustment to reflect the time value of money. Since losses
are paid out over a period of time, the present value of the reserves is less
than the nominal value. As interest rates rise, the present value of the
reserves decreases and, conversely, as interest rates decline, the present value
increases. These movements are the opposite of the interest rate impacts on the
fair value of investments. While the difference between present value and
nominal value is not reflected in our financial statements, our financial
results will include investment income over time from the investment portfolio
until the claims are paid. Our loss and loss reserve obligations have an
expected duration of approximately 3.8 years, which is reasonably consistent
with our fixed income portfolio. If we were to discount our loss and LAE
reserves, net of ceded reserves, the discount would be approximately $0.8
billion resulting in a discounted reserve balance of approximately $16.1
billion, representing approximately 72.0% of the value of the fixed maturity
investment portfolio funds.



Equity Risk. Equity risk is the potential change in fair and/or market value of
the common stock, preferred stock and mutual fund portfolios arising from
changing prices. Our equity investments consist of a diversified portfolio of
individual securities and mutual funds, which invest principally in high quality
common and preferred stocks that are traded on the major exchanges, and mutual
fund investments in emerging market debt. The primary objective of the equity
portfolio is to obtain greater total return relative to our core bonds over time
through market appreciation and income.



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



                                                Impact of Percentage Change

in Equity Fair/Market Values

                                                                  At September 30, 2021
(Dollars in millions)                         -20%            -10%             0%            10%         20%

Fair/Market Value of the Equity Portfolio $ 1,218.9$ 1,371.2 $

    1,523.6    $ 1,676.0$ 1,828.3
After-tax Change in Fair/Market Value     $    (241.2)$    (120.6)    $          -    $   120.6$   241.2




Foreign Currency Risk. Foreign currency risk is the potential change in value,
income and cash flow arising from adverse changes in foreign currency exchange
rates. Each of our non-U.S./Bermuda ("foreign") operations maintains capital in
the currency of the country of its geographic location consistent with local
regulatory

                                       52
--------------------------------------------------------------------------------


guidelines. Each foreign operation may conduct business in its local currency,
as well as the currency of other countries in which it operates. The primary
foreign currency exposures for these foreign operations are the Canadian Dollar,
the Singapore Dollar, the British Pound Sterling and the Euro. We mitigate
foreign exchange exposure by generally matching the currency and duration of our
assets to our corresponding operating liabilities. In accordance with FASB
guidance, the impact on the market value of available for sale fixed maturities
due to changes in foreign currency exchange rates, in relation to functional
currency, is reflected as part of other comprehensive income. Conversely, the
impact of changes in foreign currency exchange rates, in relation to functional
currency, on other assets and liabilities is reflected through net income as a
component of other income (expense). In addition, we translate the assets,
liabilities and income of non-U.S. dollar functional currency legal entities to
the U.S. dollar. This translation amount is reported as a component of other
comprehensive income.



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 CARES Act, the impact
of the Tax Cut and Jobs Act, the adequacy of capital in relation to regulatory
required capital, the adequacy of our provision for uncollectible balances,
estimates of our catastrophe exposure, the effects of catastrophic and pandemic
events on our financial statements, the ability of Everest Re, Holdings,
Holdings Ireland, Dublin Holdings, Bermuda Re and Everest International to pay
dividends and the settlement costs of our specialized equity index put option
contracts. Forward-looking statements only reflect our expectations and are not
guarantees of performance. These statements involve risks, uncertainties and
assumptions. Actual events or results may differ materially from our
expectations. Important factors that could cause our actual events or results to
be materially different from our expectations include those discussed under the
caption ITEM 1A, "Risk Factors" in the Company's most recent 10-K filing. We
undertake no obligation to update or revise publicly any forward-looking
statements, whether as a result of new information, future events or otherwise.

© Edgar Online, source Glimpses

All news about EVEREST RE GROUP, LTD.
01/14Morgan Stanley Adjusts Everest Re Group's Price Target to $331 from $321, Keeps Overwei..
MT
01/13Everest Names Global Industry Leader Artur Klinger Head of International Reinsurance
BU
01/13Everest Re Group, Ltd. Names Artur Klinger as Head of International Reinsurance
CI
2021Everest Re Group to Hold Fourth Quarter 2021 Earnings Conference Call on Thursday, Febr..
BU
2021EVEREST RE : Dated December 17, 2021 - Form 8-K
PU
2021Everest Re Group Extends Chief Executive's Employment Term
MT
2021Everest Extends Employment Agreement with President and CEO Juan C. Andrade
BU
2021EVEREST RE GROUP, LTD. : Ex-dividend day for
FA
2021Jefferies Initiates Coverage of Everest Re Group With Buy Rating, $335 Price Target
MT
2021Everest Re Group Maintains Quarterly Dividend at $1.55 a Share, Payable Dec. 22 to Shar..
MT
More news
Analyst Recommendations on EVEREST RE GROUP, LTD.
More recommendations