EVEREST RE GROUP LTD – 10-K –

MANAGEMENT'S

DISCUSSION

AND

ANALYSIS

OF

FINANCIAL

CONDITION

AND

RESULTS

OF
OPERATION
The following is

a discussion and analysis

of our results of

operations and financial

condition for the

years ended
December

31,

2022

and

2021.

This

discussion

should

be

read

in

conjunction

with

the

Consolidated

Financial
Statements

and

related

Notes,

under

ITEM

8

of

this

Form

10-K.

Pursuant

to

the

FAST

Act

Modernization

and
Simplification

of Regulation

S-K, comparisons

between

2020 and

2019 have

been omitted

from this

Form 10-K
but can be

found in "Management's

Discussion and Analysis

of Financial Condition

and Results of

Operations" in
Part II, Item 7 of our Form 10-K for the

year ended December 31, 2020.

All comparisons in this discussion are to the corresponding

prior year unless otherwise indicated.

Industry Conditions.
The worldwide

reinsurance

and insurance

businesses

are highly

competitive,

as well

as cyclical

by

product

and
market.

As

such,

financial

results

tend

to

fluctuate

with

periods

of

constrained

availability,

higher

rates

and
stronger

profits

followed

by

periods

of

abundant

capacity,

lower

rates

and

constrained

profitability.

Competition

in

the

types

of reinsurance

and

insurance

business

that

we

underwrite

is

based

on

many

factors,

including the perceived overall

financial strength of

the reinsurer or insurer,

ratings of the reinsurer

or insurer by
A.M. Best

and/or

Standard

& Poor's,

underwriting expertise,

the jurisdictions

where the

reinsurer

or insurer

is
licensed

or

otherwise

authorized,

capacity

and

coverages

offered,

premiums

charged,

other

terms

and
conditions

of

the

reinsurance

and

insurance

business

offered,

services

offered,

speed

of

claims

payment

and
reputation

and

experience

in

lines

written.

Furthermore,

the

market

impact

from

these

competitive

factors
related

to

reinsurance

and

insurance

is

generally

not

consistent

across

lines

of

business,

domestic

and
international geographical

areas and distribution channels.

We

compete

in

the

U.S.,

Bermuda

and

international

reinsurance

and

insurance

markets

with

numerous

global
competitors.

Our

competitors

include

independent

reinsurance

and

insurance

companies,

subsidiaries

or
affiliates

of

established

worldwide

insurance

companies,

reinsurance

departments

of

certain

insurance
companies, domestic

and international

underwriting operations,

including underwriting

syndicates

at Lloyd's

of
London

and

certain

government

sponsored

risk

transfer

vehicles.

Some

of

these

competitors

have

greater
financial resources

than we do

and have

established long

term and continuing

business relationships,

which can
be

a

significant

competitive

advantage.

In

addition,

the

lack

of

strong

barriers

to

entry

into

the

reinsurance
business

and

recently,

the

securitization

of

reinsurance

and

insurance

risks

through

capital

markets

provide

additional sources of potential reinsurance

and insurance capacity and competition.

Worldwide insurance

and reinsurance

market conditions

historically have

been competitive.

Generally,

there is
ample

insurance

and

reinsurance

capacity

relative

to

demand,

as

well

as

additional

capital

from

the

capital
markets

through

insurance

linked

financial

instruments.

These

financial

instruments

such

as

side

cars,
catastrophe

bonds and

collateralized

reinsurance

funds, provided

capital

markets

with access

to insurance

and
reinsurance

risk exposure.

The capital

markets

demand for

these products

is

primarily driven

by the

desire to
achieve

greater

risk

diversification

and

potentially

higher

returns

on

their

investments.

This

competition

generally has a negative impact

on rates, terms and conditions;

however,

the impact varies widely by market

and
coverage.

Based on recent competitive

behaviors in the

insurance and reinsurance

industry, natural

catastrophe
events

and

the

macroeconomic

backdrop,

there

has

been

some

dislocation

in

the

market

which

we

expect

to

have a positive impact on rates

and terms and conditions, generally,

though local market specificities can

vary.

The

increased

frequency

of

catastrophe

losses

experienced

throughout

2022

appears

to

be

pressuring

the
increase

of

rates.

As

business

activity

continues

to

regain

strength

after

the

pandemic

and

current
macroeconomic uncertainty,

rates appear to be firming in

most lines of business, particularly in the casualty

lines
that had

seen significant

losses such

as excess

casualty and

directors'

and officers'

liability.

Other casualty

lines
are

experiencing

modest

rate

increase,

while

some

lines

such

as

workers'

compensation

were

experiencing
softer

market

conditions.

It

is

too

early

to

tell

what

the

impact

on

pricing

conditions

will

be,

but

it

is

likely

to

change depending on the line of business and geography.
42
Our capital position remains

a source of strength,

with high quality invested

assets, significant liquidity

and a low
operating

expense

ratio.

Our

diversified

global

platform

with

its

broad

mix

of

products,

distribution

and
geography is resilient.
The war in the

Ukraine is ongoing

and an evolving

event.

Economic and legal

sanctions have been

levied against
Russia,

specific

named

individuals

and

entities

connected

to

the

Russian

government,

as

well

as

businesses
located

in

the

Russian

Federation

and/or

owned

by

Russian

nationals

by

numerous

countries,

including

the
United States.

The significant

political and

economic uncertainty

surrounding the

war and

associated sanctions
have

impacted

economic and

investment

markets

both within

Russia and

around

the world.

The Company

has

recorded $45 million of losses related

to the Ukraine/Russia war during 2022.

43
Financial Summary.
We monitor and evaluate

our overall performance based upon

financial results.

The following table displays a
summary of the consolidated

net income (loss), ratios and shareholders'

equity for the periods indicated.
Years Ended December 31,
Percentage Increase/(Decrease)
(Dollars in millions)
2022
2021
2020
2022/2021
2021/2020
Gross written premiums

$
13,952
$
13,050
$
10,482
6.9%
24.5%
Net written premiums

12,344
11,446
9,117
7.9%
25.5%
REVENUES:
Premiums earned
$
11,787
$
10,406
$
8,682
13.3%
19.9%
Net investment income
830
1,165
643
(28.8)%
81.3%
Net gains (losses) on investments
(455)
258
268
(276.4)%
-3.6%
Other income (expense)
(102)
37
7
NM
NM
Total revenues
12,060
11,866
9,598
1.6%
23.6%
CLAIMS AND EXPENSES:
Incurred losses and loss adjustment expenses
8,100
7,391
6,551
9.6%
12.8%
Commission, brokerage, taxes

and fees
2,528
2,209
1,873
14.5%
17.9%
Other underwriting expenses
682
583
511
17.0%
14.0%
Corporate expenses
61
68
41
(10.1)%
65.0%
Interest, fees and bond issue

cost amortization expense
101
70
36
43.9%
93.1%
Total claims and expenses
11,472
10,321
9,013
11.2%
14.5%
INCOME (LOSS) BEFORE TAXES
588
1,546
585
(62.0)%
164.1%
Income tax expense (benefit)

(9)
167
71
(105.3)%
133.9%
NET INCOME (LOSS)
$
597
$
1,379
$
514
(56.7)%
168.2%
RATIOS:
Point Change
Loss ratio
68.7%
71.0%
75.5%
(2.3)
(4.5)
Commission and brokerage ratio
21.4%
21.2%
21.6%
0.2
(0.4)
Other underwriting expense ratio
5.8%
5.6%
5.8%
0.2
(0.2)
Combined ratio
96.0%
97.8%
102.9%
(1.8)
(5.1)
At December 31,
Percentage Increase/(Decrease)
(Dollars in millions, except per share amounts)
2022
2021
2020
2022/2021
2021/2020
Balance sheet data:
Total investments

and cash
$
29,872
$
29,673
$
25,462
0.7%
16.5%
Total assets
39,966
38,185
32,712
4.7%
16.7%
Loss and loss adjustment expense reserves
22,065
19,009
16,322
16.1%
16.5%
Total debt
3,084
3,089
1,910
(0.2)%
61.7%
Total liabilities
31,525
28,046
22,985
12.4%
22.0%
Shareholders' equity
8,441
10,139
9,726
(16.8)%
4.2%
Book value per share
215.54
258.21
243.25
(16.5)%
6.2%
(NM, not meaningful)
(Some amounts may not reconcile due to rounding.)


44
Revenues.

Premiums.

Gross

written

premiums

increased

by

6.9%

to

$14.0

billion

in

2022,

compared

to

$13.1

billion

in
2021,

reflecting

a

$653.4

million,

or

16.4%,

increase

in

our

insurance

business

and

a

$248.8

million,

or

2.7%,
increase

in our

reinsurance

business.

The increase

in insurance

premiums

reflects

growth

across

most lines

of
business,

particularly

specialty

casualty

business

and

property/short

tail

business,

driven

by

positive

rate

and
exposure

increases,

new

business

and

strong

renewal

retention.

The

increase

in

reinsurance

premiums

was

primarily due to increases in casualty pro

rata business and financial lines of business, partially offset

by a decline
in

property

pro

rata

business.

Net

written

premiums

increased

by

7.9% to

$12.3 billion

in

2022, compared

to
$11.4

billion

in

2021.

The

higher

percentage

increase

in

net

written

premiums

compared

to

gross

written
premiums was primarily

due to a reduction

in business ceded to

the segregated

accounts of Mt. Logan

Re during
2022

compared

to

2021.

Premiums

earned

increased

by

13.3%

to

$11.8

billion

in

2022,

compared

to

$10.4
billion

in

2021.

The

change

in

premiums

earned

relative

to

net

written

premiums

was

primarily

the

result

of
timing; premiums

are

earned

ratably

over

the coverage

period whereas

written

premiums

are

recorded

at

the
initiation of

the coverage

period.

Accordingly,

the significant

increase in

gross written

premiums from

pro rata
business

during

the

latter

half

of

2021

contributed

to

the

current

year-to-date

percentage

increases

in

net
earned premiums.

Other Income

(Expense).

We

recorded

other expense

of $102

million and

other income

of $37

million in

2022
and 2021, respectively.

The changes were primarily

the result of fluctuations

in foreign currency exchange

rates.

We

recognized

foreign

currency

exchange

expense

of

$103

million

in

2022

and

foreign

currency

exchange

income of $28 million in 2021.

45
Claims and Expenses.
Incurred

Losses

and

Loss

Adjustment

Expenses.

The

following

table

presents

our

incurred

losses

and

loss

adjustment expenses ("LAE") for

the periods indicated.

Years Ended December 31,
Current
Ratio %/
Prior
Ratio %/
Total
Ratio %/
(Dollars in millions)
Year
Pt Change
Years
Pt Change
Incurred
Pt Change
2022
Attritional
$
7,047
59.8%
$
(2)
-%
$
7,045
59.8%
Catastrophes
1,055

9.0%
-

-%
1,055

9.0%
Total segment
$
8,102
68.8%
$
(2)
-%
$
8,100
68.7%









2021
Attritional
$
6,265

60.2%
$
(9)

(0.1)%
$
6,256

60.1%
Catastrophes
1,135
10.9%
-
-%
1,135
10.9%
Total segment
$
7,400

71.1%
$
(9)

(0.1)%
$
7,391

71.0%
2020



Attritional
$
5,724
66.0%
$
401
4.7%
$
6,126
70.7%
Catastrophes
425

4.9%
-

-%
425

4.9%
Total segment
$
6,150
70.9%
$
401
4.7%
$
6,551
75.5%





Variance 2022/2021
Attritional
$
782

(0.4)
pts
$
7

0.1
pts
$
789

(0.3)
pts
Catastrophes
(80)
(1.9)
pts
-
-
pts
(80)
(1.9)
pts
Total segment
$
702

(2.3)
pts
$
7

0.1
pts
$
709

(2.2)
pts
Variance 2021/2020



Attritional
$
541
(5.8)
pts
$
(411)
(4.8)
pts
$
130
(10.6)
pts
Catastrophes
710

6.0
pts
-

-
pts
710

6.0
pts
Total segment
$
1,251
0.2
pts
$
(411)
(4.8)
pts
$
840
(4.6)
pts
(Some amounts may not reconcile due to rounding.)
Incurred losses and LAE

increased by 9.6% to

$8.1 billion in 2022, compared

to $7.4 billion in 2021,

primarily due
to

an

increase

of $782

million

in

current

year

attritional

losses,

partially

offset

by

a

decrease

of $80

million

in
current year

catastrophe

losses.

The increase

in current

year attritional

losses was

mainly due

to the

impact of
the

increase

in

premiums

earned

and

$45 million

of attritional

losses

incurred

due

to

the

Ukraine/Russia

war.

The current

year catastrophe

losses of

$1.1 billion

in 2022

related primarily

to Hurricane

Ian ($699

million), the
2022

Australia

floods

($88

million),

the

2022

Western

Europe

hailstorms

($69

million),

the

2022

South

Africa
flood ($50

million), the

2022 Western

Europe Convective

Storm ($35

million), Hurricane

Fiona ($27

million), the
2022

European

storms

($21

million)

and

the

2022

Canada

derecho

($21

million),

with

the

remaining

losses
resulting from various

storm events.

The $1.1 billion of current

year catastrophe

losses in 2021 related

primarily
to Hurricane

Ida ($460

million), the

Texas

winter storms

($294 million),

the European

floods ($242

million), the
Canada

drought

loss

($80

million)

and

the

Quad

State

tornadoes

($45

million)

with

the

rest

of

the

losses

emanating from the South Africa riots and

the 2021 Australia floods.

Catastrophe

losses and loss

expenses typically

have a

material effect

on our incurred

losses and loss

adjustment
expense results

and can

vary significantly

from period

to period.

Losses from

natural

catastrophes

contributed
9.0

percentage

points

to

the

combined

ratio

in

2022,

compared

with

10.9

percentage

points

in

2021.

The
Company has

up to

$350.0 million

of catastrophe

bond protection

("CAT

Bond") that

attaches

at a

$48.1 billion
PCS

Industry

loss

threshold.

This

recovery

would

be

recognized

on

a

pro-rata

basis

up

to

a

$63.8

billion

PCS
Industry loss level.

PCS's current

industry estimate of $47.4 million

is below the attachment point.

The potential
recovery

under

the

CAT

Bond

is

not

included

in

the

Company's

estimate

for

Hurricane

Ian

but

would

provide

significant downside protection should

the industry loss estimate increase.

46
Commission,

Brokerage,

Taxes

and

Fees.

Commission,

brokerage,

taxes

and

fees

increased

by

14.5%

to

$2.5
billion for

the year

ended December

31, 2022

compared

to $2.2

billion for

the year

ended December

31, 2021.

The

increase

was

primarily

due

to

the

impact

of

the

increases

in

premiums

earned

and

changes

in

the

mix

of
business.

Other

Underwriting

Expenses.

Other

underwriting

expenses

were

$682

million

and

$583

million

in

2022

and
2021, respectively.

The increase in

other underwriting expenses

was mainly due to

the impact of the

increase in
premiums earned

as well

as the

continued build

out of

our insurance

operations,

including an

expansion of

the

international insurance platform.

Corporate

Expenses.

Corporate

expenses,

which

are

general

operating

expenses

that

are

not

allocated

to
segments, were $61

million and $68 million

for the years

ended December 31, 2022

and 2021, respectively.

The

decrease from 2021 to 2022 was mainly

due to a decrease in variable incentive compensation.

Interest,

Fees and

Bond Issue

Cost

Amortization

Expense.

Interest,

fees

and other

bond

amortization

expense
was

$101

million

and

$70

million

in

2022

and

2021,

respectively.

The

increases

were

primarily

due

to

the
issuance of $1.0

billion of senior

notes in October

2021.

Interest expense

was also

impacted by the

movements
in the

floating

interest

rate

related

to

the long

term

subordinated

notes,

which is

reset

quarterly

per the

note
agreement.

The floating rate was

6.99% as of December 31, 2022 compared to 2.54% as of December 31,

2021.

Income Tax

Expense (Benefit).

We had

income tax

benefit of $9

million and income

tax expense

of $167 million
in

2022

and

2021,

respectively.

Income

tax

expense

is

primarily

a

function

of

the

geographic

location

of

the
Company's

pre-tax

income

and

the

statutory

tax

rates

in

those

jurisdictions.

The

effective

tax

rate

("ETR")

is
primarily

affected

by

tax-exempt

investment

income,

foreign

tax

credits

and

dividends.

Variations

in

the

ETR
generally result

from changes

in the relative

levels of pre

-tax income,

including the impact

of catastrophe

losses

and net capital gains (losses), among jurisdictions

with different tax rates.

On

August

16,

2022,

the

Inflation

Reduction

Act

of

2022

("IRA")

was

enacted.

We

have

evaluated

the

tax
provisions

of

the

IRA,

the

most

significant

of

which

are

the

corporate

alternative

minimum

tax

and

the

share
repurchase excise tax

and do not expect the legislation to have

a material impact on our results of operations.

As

the IRS issues additional guidance, we will evaluate

any impact to our consolidated

financial statements.

Net Income (Loss).
Our

net

income

was

$597

million

and

$1.4

billion

in

2022

and

2021,

respectively.

The

change

was

primarily

driven by the consolidated investment

results explained below.

Ratios.
Our

combined

ratio

decreased

by

1.8

points

to

96.0%

in

2022,

compared

to

97.8%

in

2021.

The

loss

ratio
component decreased by

2.3 points in 2022 over

the same period last year

mainly due to a decline $80 million

in
catastrophe

losses.

The

commission

and

brokerage

ratio

components

increased

slightly

to

21.4%

in

2022
compared

to

21.2%

in

2021.

The

increase

was

mainly

due

to

changes

in

the

mix

of

business.

The

other
underwriting expense ratios

increased slightly

to 5.8% in

2022 compared

to 5.6% in

2021.

These increases

were

mainly due to higher insurance operations

costs.

Shareholders' Equity.
Shareholders'

equity

decreased

by

$1.7

billion

to

$8.4

billion

at

December

31,

2022

from

$10.1

billion

at
December

31,

2021,

principally

as

a

result

of $1.9

billion

of unrealized

depreciation

on

available

for

sale

fixed
maturity

portfolio

net

of

tax,

$255

million

of

shareholder

dividends,

$77

million

of

net

foreign

currency
translation adjustments,

and the repurchase

of 241,273 common

shares for

$61 million,

partially offset

by $597
million of net income.




















































































47
Consolidated Investment

Results
Net Investment Income.
Net

investment

income

decreased

by

28.8% to

$830 million

in 2022

compared

with

net

investment

income

of
$1.2

billion

in

2021.

The

decrease

was

primarily

the

result

of

a

decline

of

$490

million

in

limited

partnership
income,

partially

offset

by

an

additional

$181

million

of

income

from

fixed

maturity

investments.

The

limited
partnership

income

primarily

reflects

decreases

in

their

reported

net

asset

values.

As

such,

until

these

asset
values are monetized and the

resultant income is distributed,

they are subject to future increases

or decreases in
the asset value, and the results may be volatile.

The following table shows the components

of net investment income for

the periods indicated.

Years Ended December 31,
(Dollars in millions)
2022
2021
2020
Fixed maturities
$
742
$
561
$
542
Equity securities

16
17
19
Short-term investments and cash
28
1
5
Other invested assets
Limited partnerships
75
565
113
Other
29
63
2
Gross investment income before adjustments
890
1,208
681
Funds held interest income (expense)
2
12
13
Future policy benefit reserve income (expense)
-
(1)
(1)
Gross investment income
892
1,219
692
Investment expenses
(62)
(54)
(50)
Net investment income
$
830
$
1,165
$
643
(Some amounts may not reconcile due to rounding.)
The following tables show a comparison

of various investment yields for

the periods indicated.
2022
2021
2020
Annualized pre-tax yield on average cash and invested assets
2.7
%
4.4
%
2.9
%
Annualized after-tax yield on average cash and invested assets
2.3
%
3.8
%
2.5
%
Annualized return on invested assets
1.2
%
5.3
%
4.0
%
2022
2021
2020
Fixed income portfolio total return
(5.9)
%
0.5
%
6.3
%
Barclay's Capital - U.S. aggregate index
(13.0)
%
(1.5)
%
7.5
%
Common equity portfolio total return
(18.5)
%
19.0
%
26.7
%
S&P 500 index
(18.1)
%
28.7
%
18.4
%
Other invested asset portfolio total return
4.5
%
36.5
%
8.3
%
The pre

-tax

equivalent

total

return

for

the

bond

portfolio

was

approximately

(5.9)%

and

0.5%,

respectively,

in
2022

and

2021.

The

pre-tax

equivalent

return

adjusts

the

yield

on

tax-exempt

bonds

to

the

fully

taxable
equivalent.

Our

fixed

income

and

equity

portfolios

have

different

compositions

than

the

benchmark

indexes.

Our

fixed
income portfolios have

a shorter duration

because we align our investment

portfolio with our liabilities.

We also
hold

foreign

securities

to

match

our

foreign

liabilities

while

the

index

is

comprised

of

only

U.S.

securities.

Our
equity portfolios

reflect an

emphasis on

dividend yield

and growth

equities, while

the index

is comprised

of the
largest 500 equities by market

capitalization.




























































































































































































48
Net Realized Capital Gains (Losses).
The following table presents the composition

of our net realized capital gains

(losses) for the periods indicated.
Years Ended December 31,
2022/2021
2021/2020
(Dollars in millions)
2022
2021
2020
Variance
Variance
Realized gains (losses) from dispositions:

Fixed maturity securities - available for sale:

Gains
$
40
$
72
$
80
$
(32)
$
(8)

Losses
(127)
(55)
(85)
(72)
27

Total
(87)
17
(5)
(104)
19

Equity securities:

Gains
165
42
37
123
5

Losses
(53)
(15)
(46)
(38)
32

Total
112
28
(9)
85
37

Other Invested Assets

Gains
18
10
8
8
2

Losses
(5)
(4)
(6)
(1)
2

Total
13
6
2
7
4

Short Term Investments

Gains
-
-
1
-
(1)

Losses
-
-
-
-
-

Total
-
-
1
-
(1)

Total net realized gains (losses) from dispositions:

Gains
223
124
126
99
(2)

Losses
(185)
(74)
(137)
(111)
63

Total
38
50
(11)
(12)
61
Allowance for credit losses:
(33)
(28)
(2)
(5)
(26)
Gains (losses) from fair value adjustments:

Fixed maturities
-
-
2
-
(2)

Equity securities
(460)
236
279
(696)
(43)
Total
(460)
236
280
(696)
(45)
Total net gains (losses) on investments
$
(455)
$
258
$
268
$
(713)
$
(10)
(Some amounts may not reconcile due to rounding.)
Net

gains

(losses)

on

investments

in

2022

primarily

relate

to

net

losses

from

fair

value

adjustments

on

equity
securities in

the amount

of $460

million as

a result

of equity

market

declines in

2022.

In addition,

we realized
$38 million

of gains

due to

the disposition

of investments

and recorded

an increase

to the

allowance for

credit

losses of $33 million primarily related to our direct

holdings of Russian corporate

fixed maturity securities.

Segment Results.
The

Company

manages

its

reinsurance

and

insurance

operations

as

autonomous

units

and

key

strategic

decisions are based on the aggregate operating

results and projections for

these segments of business.

The Reinsurance

operation

writes worldwide

property

and casualty

reinsurance

and specialty

lines of

business,
on both

a treaty

and facultative

basis,

through

reinsurance

brokers,

as well

as directly

with ceding

companies.

Business is

written in

the U.S.,

Bermuda, and

Ireland offices,

as well as,

through branches

in Canada,

Singapore,
the United

Kingdom

and Switzerland.

The Insurance

operation

writes property

and casualty

insurance

directly









































































































































49
and

through

brokers,

surplus

lines

brokers

and

general

agents

within

the

U.S.,

Bermuda,

Canada,

Europe,
Singapore

and

South

America

through

its

offices

in

the

U.S.,

Canada,

Chile,

Singapore,

the

United

Kingdom,
Ireland and branches located

in the Netherlands, France, Germany and Spain.

These segments are

managed independently,

but conform

with corporate

guidelines with respect

to pricing, risk
management,

control

of

aggregate

catastrophe

exposures,

capital,

investments

and

support

operations.

Management

generally

monitors

and

evaluates

the

financial

performance

of

these

operating

segments

based

upon their underwriting results.

Underwriting results

include earned

premium less

LAE incurred,

commission and

brokerage

expenses and

other
underwriting

expenses.

We

measure

our

underwriting

results

using

ratios,

in

particular

loss,

commission

and
brokerage

and other

underwriting expense

ratios,

which, respectively,

divide

incurred

losses,

commissions

and
brokerage and other

underwriting expenses by premiums earned.

The

Company

does

not

maintain

separate

balance

sheet

data

for

its

operating

segments.

Accordingly,

the
Company does not

review and evaluate

the financial results

of its operating

segments based upon

balance sheet
data.

Our

loss

and LAE

reserves

are

management's

best

estimate

of our

ultimate

liability

for

unpaid

claims.

We

re-
evaluate

our

estimates

on

an

ongoing

basis,

including

all

prior

period

reserves,

taking

into

consideration

all
available

information,

and

in

particular,

recently

reported

loss

claim

experience

and

trends

related

to

prior
periods.

Such re-evaluations are recorded

in incurred losses in the period in which re-evaluation

is made.

The following discusses the underwriting results for

each of our segments for the periods indicated.

Reinsurance.
The

following

table

presents

the

underwriting

results

and

ratios

for

the

Reinsurance

segment

for

the

periods
indicated.

Years Ended December 31,
2022/2021
2021/2020
(Dollars in millions)
2022
2021
2020
Variance
% Change
Variance
% Change
Gross written premiums
$
9,316

$
9,067

$
7,282

$
249

2.7%
$
1,786

24.5%
Net written premiums
8,983
8,536
6,768
447
5.2%
1,768
26.1%












Premiums earned
$
8,663
$
7,758
$
6,466
$
905
11.7%
$
1,291
20.0%
Incurred losses and LAE
5,997

5,556

4,933

441

7.9%
623

12.6%
Commission and brokerage
2,134
1,855
1,552
279
15.1%
302
19.5%
Other underwriting expenses
218

199

176

19

9.6%
23

13.3%
Underwriting gain (loss)

$
313
$
147
$
(195)
$
166
112.6%
$
343
175.4%
Point Chg
Point Chg
Loss ratio
69.2%
71.6%
76.3%


(2.4)


(4.7)
Commission and brokerage ratio
24.6%
23.9%
24.0%
0.7
(0.1)
Other underwriting expense ratio
2.5%
2.6%
2.7%


(0.1)


(0.1)
Combined ratio
96.4%
98.1%
103.0%
(1.8)
(4.9)
(NM, not meaningful)
(Some amounts may not reconcile due to rounding.)
Premiums.

Gross written

premiums increased by

2.7% to $9.3 billion

in 2022 from $9.1

billion in 2021, primarily
due

to

increases

in

casualty

pro

rata

business

and

financial

lines

of

business,

partially

offset

by

a

decline

in
property

pro rata

business.

Net written

premiums

increased

by 5.2%

to

$9.0 billion

in 2022

compared

to

$8.5
billion in

2021.

The higher

percentage

increase

in net

written

premiums

compared

to gross

written

premiums












































































































































































































































































50
mainly related to

a reduction in business ceded

to the segregated

accounts of Mt. Logan

Re in 2022 compared

to
2021.

Premiums

earned

increased

by

11.7%

to

$8.7

billion

in

2022,

compared

to

$7.8

billion

in

2021.

The
change

in

premiums

earned

relative

to

net

written

premiums

is

primarily

the

result

of

timing;

premiums

are
earned

ratably

over

the

coverage

period

whereas

written

premiums

are

recorded

at

the

initiation

of

the
coverage period.

Accordingly,

the significant

increases in

gross written

premiums from

pro rata

business during
the latter half of 2021 contributed

to the current year-to-date percentage

increase in net earned premiums.

Incurred Losses

and LAE.

The following table

presents the

incurred losses

and LAE for

the Reinsurance

segment
for the periods indicated.

Years Ended December 31,
Current
Ratio %/
Prior
Ratio %/
Total
Ratio %/
(Dollars in millions)
Year
Pt Change
Years
Pt Change
Incurred
Pt Change
2022
Attritional
$
5,070

58.5%
$
(2)

-%
$
5,067

58.5%
Catastrophes
930
10.7%
-
-%
930
10.7%
Total segment
$
6,000

69.2%
$
(2)

-%
$
5,997

69.2%
2021



Attritional
$
4,582
59.1%
$
(8)
(0.1)%
$
4,574
59.0%
Catastrophes
983

12.7%
-

-%
983

12.7%
Total segment
$
5,564
71.8%
$
(8)
(0.1)%
$
5,556
71.6%









2020
Attritional
$
4,180

64.6%
$
397

6.1%
$
4,576

70.7%
Catastrophes
357
5.5%
-
-%
357
5.5%
Total segment
$
4,537

70.1%
$
397

6.1%
$
4,933

76.3%
Variance 2022/2021



Attritional
$
488
(0.6)
pts
$
6
0.1
pts
$
494
(0.5)
pts
Catastrophes
(53)

(2.0)
pts
-

-
pts
(53)

(2.0)
pts
Total segment
$
435
(2.6)
pts
$
6
0.1
pts
$
441
(2.4)
pts





Variance 2021/2020
Attritional
$
402

(5.5)
pts
$
(405)

(6.2)
pts
$
(3)

(11.7)
pts
Catastrophes
626
7.2
pts
-
-
pts
626
7.2
pts
Total segment
$
1,028

1.7
pts
$
(405)

(6.2)
pts
$
623

(4.5)
pts
(Some amounts may not reconcile due to rounding.)
Incurred

losses

increased

by

7.9%

to

$6.0

billion

in

2022, compared

to

$5.6

billion

in

2021.

The

increase

was
primarily due to an increase

of $488 million in current

year attritional losses,

partially offset by a decrease

of $53
million in

current

year catastrophe

losses.

The increase

in current

year attritional

losses was

mainly related

to
the

impact

of the

increase

in

premiums

earned

and

$45 million

of attritional

losses

due to

the

Ukraine/Russia
war.

The

current

year

catastrophe

losses

of

$930

million

in

2022

related

primarily

to

Hurricane

Ian

($599
million),

the

2022

Australia

floods

($88

million),

the

Western

Europe

hailstorms

($69

million),

the

2022

South
Africa

flood

($50

million),

the

2022

Western

Europe

Convective

storm

($29

million),

Hurricane

Fiona

($22
million), the 2022 European

storms ($21 million)

and the 2022 Canada

derecho ($21 million),

with the remaining
losses resulting

from various

storm events.

The $983

million of

current year

catastrophe

losses in

2021 related
primarily

to

Hurricane

Ida

($380

million),

the

Texas

winter

storms

($237

million),

the

European

floods

($242
million), the

Canada drought

loss ($80

million) and

the Quad

state

tornadoes ($30

million), with

the rest

of the
losses emanating from the 2021 South Africa riots and

the 2021 Australia floods.

Segment Expenses.

Commission and

brokerage

expense increased

by 15.1% to

$2.1 billion in

2022 compared to
$1.9 billion in 2021.

The increase was mainly

due to the impact of the

increase in premiums earned

and changes





































































































































51
in

the

mix

of

business.

Segment

other

underwriting

expenses

increased

to

$218

million

in

2022

from

$199
million

in

2021.

The

increase

was

mainly

due

to

the

increase

in

written

premium

attributable

to

the

planned
expansion of the business.
Insurance.
The

following

table

presents

the

underwriting

results

and

ratios

for

the

Insurance

segment

for

the

periods
indicated.

Years Ended December 31,
2022/2021
2021/2020
(Dollars in millions)
2022
2021
2020
Variance
% Change
Variance
% Change
Gross written premiums
$
4,636

$
3,983

$
3,201

$
653

16.4%
$
782

24.4%
Net written premiums
3,361
2,910
2,349
451
15.5%
561
23.9%












Premiums earned
$
3,124
$
2,649
$
2,215
$
475
17.9%
$
434
19.6%
Incurred losses and LAE
2,103

1,835

1,617

268

14.6%
217

13.4%
Commission and brokerage
394
354
321
40
11.3%
33
10.4%
Other underwriting expenses
463

384

336

79

20.8%
48

14.3%
Underwriting gain (loss)

$
164
$
76
$
(58)
$
88
114.4%
$
135
230.7%
Point Chg
Point Chg
Loss ratio
67.3%
69.3%
73.0%


(2.0)


(3.7)
Commission and brokerage ratio
12.6%
13.4%
14.5%
(0.8)
(1.1)
Other underwriting expense ratio
14.8%
14.5%
15.1%


0.3


(0.6)
Combined ratio
94.8%
97.1%
102.6%
(2.5)
(5.5)
(Some amounts may not reconcile due to rounding.)
Premiums.

Gross written

premiums increased

by 16.4% to

$4.6 billion in

2022 compared

to $4.0 billion

in 2021.

The increase

in insurance

premiums reflects

growth across

most lines

of business,

particularly specialty

casualty
and

property/short

tail

business,

driven

by

positive

rate

and

exposure

increases,

new

business

and

strong
renewal retention.

Net written

premiums increased

by 15.5% to

$3.4 billion in

2022 compared

to $2.9 billion

in
2021, which

is consistent

with the

percentage

change

in gross

written

premiums.

Premiums

earned increased
17.9% to

$3.1 million

in 2022

compared to

$2.6 billion

in 2021.

The change

in premiums

earned relative

to net
written premiums is the result

of timing; premiums are earned ratably

over the coverage

period whereas written
premiums

are

recorded

at

the

initiation

of the

coverage

period.

Accordingly,

the significant

increases

in gross
written premiums

during the

latter

half of

2021 contributed

to the

current year

-to-date

percentage

increase in
net earned premiums.
































































































































































































































































52
Incurred Losses and

LAE.

The following table presents

the incurred losses

and LAE for the Insurance

segment for
the periods indicated.

Years Ended December 31,
Current
Ratio %/
Prior
Ratio %/
Total
Ratio %/
(Dollars in millions)
Year
Pt Change
Years
Pt Change
Incurred
Pt Change
2022
Attritional
$
1,977
63.3%
$
1
-%
$
1,978
63.3%
Catastrophes
125

4.0%
-

-%
125

4.0%
Total segment
$
2,102
67.3%
$
1
-%
$
2,103
67.3%









2021
Attritional
$
1,684

63.6%
$
(1)

-%
$
1,682

63.6%
Catastrophes
153
5.8%
-
-%
153
5.8%
Total segment
$
1,836

69.4%
$
(1)

-%
$
1,835

69.3%
2020



Attritional
$
1,545
69.7%
$
5
0.2%
$
1,549
69.9%
Catastrophes
68

3.1%
-

-%
68

3.1%
Total segment
$
1,613
72.8%
$
5
0.2%
$
1,617
73.0%





Variance 2022/2021
Attritional
$
293

(0.3)
pts
$
1

-
pts
$
294

(0.3)
pts
Catastrophes
(28)
(1.8)
pts
-
-
pts
(28)
(1.8)
pts
Total segment
$
265

(2.1)
pts
$
1

-
pts
$
266

(2.0)
pts
Variance 2021/2020



Attritional
$
139
(6.1)
pts
$
(6)
(0.2)
pts
$
133
(6.3)
pts
Catastrophes
85

2.7
pts
-

-
pts
85

2.7
pts
Total segment
$
223
(3.4)
pts
$
(6)
(0.2)
pts
$
217
(3.7)
pts
(Some amounts may not reconcile due to rounding.)
Incurred losses and LAE increased by

14.6% to $2.1 billion in 2022 compared to $1.8 billion

in 2021.

The increase
was mainly

due to

an increase

of $293

million in

current year

attritional

losses,

partially offset

by a

decrease in
current year

catastrophe

losses of

$28 million.

The increase

in current

year attritional

losses was

primarily due
to the impact

of the increase

in premiums earned.

The current year

catastrophe

losses of $125

million primarily
related to

Hurricane Ian

($99 million),

with the

remaining losses

resulting from

various storm

events.

The $153
million of current

year catastrophe

losses in 2021 related

to Hurricane Ida

($80 million), the Texas

winter storms
($58 million) and the Quad State tornadoes

($15 million).

Segment

Expenses.

Commission and

brokerage

increased by

11.3% to

$394 million

in 2022

compared

to

$354
million

in

2021.

Segment

other

underwriting

expenses

increased

to

$463

million

in

2022

compared

to

$384
million

in

2021.

These

increases

were

mainly

due

to

the

impact

of

the

increase

in

premiums

earned

and
increased expenses

related

to the

continued

build out

of the

insurance

business, including

an expansion

of the
international insurance platform.

Critical Accounting Estimates

The following

is a

summary of

the critical

accounting estimates

related to

accounting estimates

that (1)

require
management

to

make

assumptions

about

highly

uncertain

matters

and

(2)

could

materially

impact

the

consolidated financial statements

if management made different

assumptions.

Loss and LAE

Reserves.

Our most critical

accounting estimate

is the determination

of our loss

and LAE reserves.

We

maintain

reserves

equal to

our estimated

ultimate

liability for

losses

and LAE

for

reported

and unreported
53
claims for our insurance and reinsurance

businesses.

Because reserves are based on estimates

of ultimate losses
and

LAE

by

underwriting

or

accident

year,

we

use

a

variety

of

statistical

and

actuarial

techniques

to

monitor
reserve

adequacy

over

time, evaluate

new information

as it

becomes known

and adjust

reserves

whenever

an
adjustment

appears

warranted.

We

consider

many

factors

when

setting

reserves

including:

(1)

our

exposure
base

and

projected

ultimate

premiums

earned;

(2)

our

expected

loss

ratios

by

product

and

class

of

business,

which are developed collaboratively

by underwriters and actuaries;

(3) actuarial methodologies and

assumptions
which analyze

our loss

reporting and

payment experience,

reports from

ceding companies

and historical

trends,
such

as

reserving

patterns,

loss

payments

and

product

mix;

(4)

current

legal

interpretations

of

coverage

and
liability;

and

(5)

economic

conditions.

Our

insurance

and

reinsurance

loss

and

LAE

reserves

represent
management's best

estimate of our ultimate

liability. Actual

losses and LAE ultimately

paid may deviate,

perhaps
substantially,

from

such

reserves.

Our

net

income

(loss)

will

be

impacted

in

a

period

in

which

the

change

in
estimated ultimate losses

and LAE is recorded.

See also ITEM 8, "Financial Statements

and Supplementary Data"
- Note 1 of Notes to the Consolidated Financial

Statements.

It is more

difficult to

accurately

estimate loss

reserves for

reinsurance

liabilities than

for insurance

liabilities.

At
December 31,

2022, we

had reinsurance

reserves of

$16.1 billion,

of which

$278 million

were loss

reserves for
A&E

liabilities,

and

insurance

loss

reserves

of

$5.9

billion.

A

detailed

discussion

of

additional

considerations
related to A&E exposures

follows later in this section.

The

detailed

data

required

to

evaluate

ultimate

losses

for

our

insurance

business

is

accumulated

from

our

underwriting and claim systems.

Reserving for reinsurance

requires evaluation of loss

information received

from
ceding companies.

Ceding companies

report losses

to us

in many

forms dependent

on the type

of contract

and
the

agreed

or

contractual

reporting

requirements.

Generally,

proportional/quota

share

contracts

require

the
submission

of

a

monthly/quarterly

account,

which

includes

premium

and

loss

activity

for

the

period

with
corresponding reserves

as established by

the ceding company.

This information

is recorded into

our records.

For
certain

proportional

contracts,

we

may

require

a

detailed

loss

report

for

claims

that

exceed

a

certain

dollar
threshold

or

relate

to

a

particular

type

of

loss.

Excess

of

loss

and

facultative

contracts

generally

require
individual loss reporting

with precautionary notices

provided when a

loss reaches a

significant percentage

of the
attachment point

of the contract

or when certain causes

of loss or types

of injury occur.

Our experienced claims
staff

handles

individual

loss reports

and supporting

claim information.

Based on

our evaluation

of a

claim, we
may establish

additional case

reserves (ACRs)

in addition

to the

case reserves

reported by

the ceding

company.
To

ensure

ceding

companies

are

submitting

required

and accurate

data,

the

Underwriting,

Claim,

Reinsurance
Accounting

and Internal

Audit departments

of the

Company

perform various

reviews

of our

ceding companies,
particularly larger ceding companies, including

on-site audits of domestic ceding companies.

We sort

both our

reinsurance

and insurance

reserves into

exposure

groupings

for actuarial

analysis.

We assign
our

business

to

exposure

groupings

so

that

the

underlying

exposures

have

reasonably

homogeneous

loss
development

characteristics

and

are

large

enough

to

facilitate

credible

estimation

of

ultimate

losses.

We
periodically

review

our

exposure

groupings

and

we

may

change

our

groupings

over

time

as

our

business
changes.

We

currently

use

over

200

exposure

groupings

to

develop

our

reserve

estimates.

One

of

the

key
selection characteristics

for

the

exposure

groupings

is the

historical

duration

of the

claims

settlement

process.

Business in

which claims

are reported

and settled

relatively quickly

are commonly

referred

to as

short tail

lines,
principally property

lines.

Casualty claims

tend to

take

longer to

be reported

and settled

and casualty

lines are
generally referred

to as

long tail

lines.

Our estimates

of ultimate

losses for

shorter tail

lines, with

the exception
of loss estimates for large catastrophic

events,

generally exhibit less volatility

than those for the longer tail lines.

We

use

similar

actuarial

methodologies,

such

as

expected

loss

ratio,

chain

ladder

reserving

methods

and
Bornhuetter-Ferguson,

supplemented

by judgment

where appropriate,

to estimate

our ultimate

losses and

LAE
for each

exposure group.

Although we

use similar

actuarial methodologies

for both

short tail

and long

tail lines,
the faster reporting

of experience for

the short tail lines

allows us to

have greater confidence

in our estimates

of
ultimate

losses

for

short

tail

lines

at

an

earlier

stage

than

for

long

tail

lines.

As

a

result,

we

utilize,

as

well,
exposure-based

methods

to

estimate

our ultimate

losses

for

longer

tail

lines,

especially

for

immature

accident
years.

For

both

short

and

long

tail

lines,

we

supplement

these

general

approaches

with

analytically

based

54
judgments.

We

cannot

estimate

losses

from

widespread

catastrophic

events,

such

as

hurricanes

and
earthquakes,

using

traditional

actuarial

methods.

We

estimate

losses

for

these

types

of

events

based

on
information

derived

from

catastrophe

models,

quantitative

and

qualitative

exposure

analyses,

reports

and
communications

from

ceding

companies

and

development

patterns

for

historically

similar

events.

Due

to

the
inherent

uncertainty

in

estimating

such

losses,

these

estimates

are

subject

to

variability,

which

increases

with

the severity and complexity of the underlying event.

Our key

actuarial assumptions

contain

no explicit

provisions

for reserve

uncertainty

nor do

we supplement

the
actuarially determined reserves for uncertainty.
Our carried

reserves at

each reporting

date are

management's

best estimate

of ultimate

unpaid losses

and LAE
at

that

date.

We

complete

detailed

reserve

studies

for

each exposure

group

annually

for our

reinsurance

and
insurance

operations.

The

completed

annual

reinsurance

reserve

studies

are

"rolled

forward"

for

each
accounting period

until the

subsequent reserve

study is

completed.

Analyzing the

roll-forward

process involves
comparing

actual

reported

losses

to

expected

losses

based

on

the

most

recent

reserve

study.

We

analyze
significant

variances

between

actual

and

expected

losses

and

also

consider

recent

market,

underwriting

and
management

criteria

to

determine

management's

best

estimate

of

ultimate

unpaid

losses

and

LAE.

Management's

best estimate

is developed

through

collaboration

with actuarial,

underwriting, claims,

legal

and
finance

departments

and

culminates

with

the

input

of

reserve

committees.

Each

segment

reserve

committee

includes the participation of the relevant parties

from actuarial, finance, claims and segment senior management
and has

the responsibility

for recommending

and approving

management's

best estimate.

Reserves are

further
reviewed

by

Everest's

Chief

Reserving

Actuary

and

senior

management.

The

objective

of

such

process

is

to
determine a single best

estimate viewed by

management to be

the best estimate

of its ultimate loss

liability.

As
a result of

these additional factors,

in some instances

the selected reserve

level may be

higher or lower than

the

actuarial indicated estimate.

Given

the

inherent

variability

in

our

loss

reserves,

we

have

developed

an

estimated

range

of

possible

gross
reserve

levels.

A

table

of

ranges

by

segment,

accompanied

by

commentary

on

potential

and

historical
variability,

is

included

in

"Financial

Condition

- Loss

and

LAE Reserves".

The ranges

are

statistically

developed

using the exposure groups used in

the reserve estimation process

and aggregated to the segment

level.

For each
exposure

group,

our actuaries

calculate

a range

for each

accident year

based principally

on two

variables.

The
first

is

the

historical

changes

in

losses

and

LAE incurred

but not

reported

("IBNR")

for

each

accident

year

over
time; the second is

volatility of each

accident year's

held reserves related

to estimated

ultimate losses, also

over
time.

Both are measured at various

ages from the end of the accident year through

the final payout of the year's
losses.

Ranges are

developed for

the exposure

groups using

statistical

methods to

adjust for

diversification;

the
ranges

for

the

exposure

groups

are

aggregated

to

the

segment

level,

likewise,

with

an

adjustment

for
diversification.

Our

estimates

of

our

reserve

variability

may

not

be

comparable

to

those

of

other

companies
because there

are no

consistently

applied actuarial

or accounting

standards

governing such

presentations.

Our
recorded

reserves

reflect

our

best

point

estimate

of

our

liabilities

and

our

actuarial

methodologies

focus

on
developing

such

point

estimates.

We

calculate

the

ranges

subsequently,

based

on

the

historical

variability

of
such reserves.
Asbestos and Environmental

Exposures.

We continue to

receive claims under expired

insurance and reinsurance
contracts asserting

injuries and/or damages

relating to

or resulting

from environmental

pollution and hazardous
substances,

including

asbestos.

Environmental

claims

typically

assert

liability

for

(a)

the

mitigation

or
remediation

of environmental

contamination

or (b)

bodily injury

or property

damage

caused

by

the release

of
hazardous

substances

into the

land, air

or water.

Asbestos claims

typically assert

liability for

bodily injury

from
exposure to asbestos or for

property damage resulting from asbestos

or products containing asbestos.
Our

reserves

include

an

estimate

of

our

ultimate

liability

for

A&E

claims.

There

are

significant

uncertainties
surrounding our

estimates of

our potential

losses from

A&E claims.

Among the

uncertainties

are: (a)

potentially
long waiting periods

between exposure

and manifestation

of any

bodily injury or

property damage;

(b) difficulty
in

identifying

sources

of

asbestos

or

environmental

contamination;

(c)

difficulty

in

properly

allocating


55
responsibility

and/or liability

for asbestos

or environmental

damage; (d)

changes in

underlying laws

and judicial
interpretation

of those laws;

(e) the potential

for an

asbestos or

environmental

claim to involve

many insurance
providers

over

many

policy

periods;

(f)

questions

concerning

interpretation

and

application

of

insurance

and
reinsurance coverage;

and (g) uncertainty

regarding the

number and identity

of insureds with

potential asbestos
or environmental exposure.

Due to the uncertainties

discussed above, the ultimate

losses attributable to

A&E, and particularly asbestos,

may

be subject to more variability

than are non-A&E reserves

and such variation

could have a material

adverse effect
on our

financial condition,

results of

operations

and/or cash

flows.

See also

ITEM 8,

"Financial Statements

and

Supplementary Data" - Notes 1 and 3

of Notes to the Consolidated Financial Statements.

Reinsurance

Recoverables.

We

have

purchased

reinsurance

to

reduce

our

exposure

to

adverse

claim
experience,

large

claims

and catastrophic

loss

occurrences.

Our ceded

reinsurance

provides

for

recovery

from
reinsurers

of

a

portion

of

losses

and

loss

expenses

under

certain

circumstances.

Such

reinsurance

does

not
relieve us of our

obligation to

our policyholders.

In the event our

reinsurers are

unable to meet their obligations
under these agreements

or are able to successfully

challenge losses ceded by

us under the contracts,

we will not
be

able

to

realize

the

full

value

of

the

reinsurance

recoverable

balance.

In

some

cases,

we

may

hold

full

or
partial collateral

for the

receivable,

including letters

of credit,

trust assets

and cash.

Additionally,

creditworthy
foreign

reinsurers

of

business

written

in

the

U.S.,

as

well

as

capital

markets'

reinsurance

mechanisms,

are
generally required

to secure their

obligations.

We have

established reserves

for uncollectible balances

based on
our

assessment

of

the

collectability

of

the

outstanding

balances.

The

allowance

for

uncollectible

reinsurance
reflects

management's

best

estimate

of

reinsurance

cessions

that

may

be

uncollectible

in

the

future

due

to
reinsurers'

unwillingness or

inability to pay.

The allowance for

uncollectible reinsurance

comprises an

allowance
and

an

allowance

for

disputed

balances.

Based

on

this

analysis,

the

Company

may

adjust

the

allowance

for

uncollectible reinsurance or charge

off reinsurer balances that are

determined to be uncollectible.

Due to the inherent

uncertainties as to

collection and the length

of time before reinsurance

recoverable become
due, it is possible that future adjustments

to the Company's reinsurance

recoverable, net of the

allowance, could
be required,

which could

have a

material adverse

effect on

the Company's

consolidated results

of operations

or

cash flows in a particular quarter or annual period.

The allowance

is

estimated

as

the

amount

of reinsurance

recoverable

exposed

to

loss multiplied

by

estimated
factors

for

the

probability

of

default.

The

reinsurance

recoverable

exposed

is

the

amount

of

reinsurance
recoverable

net of collateral

and other offsets,

considering the nature

of the collateral,

potential future

changes
in collateral

values, and

historical loss

information for

the type of

collateral obtained.

The probability

of default
factors are

historical insurer

and reinsurer

defaults for

liabilities with similar

durations to

the reinsured liabilities
as

estimated

through

multiple

economic

cycles.

Credit

ratings

are

forward-looking

and

consider

a

variety

of
economic outcomes.

The Company's

evaluation of

the required allowance

for reinsurance

recoverable

considers

the current economic environment

as well as macroeconomic scenarios.

The

Company

records

credit

loss

expenses

related

to

reinsurance

recoverable

in

Incurred

losses

and

loss

adjustment expenses in the Company's

consolidated statements

of operations and comprehensive

income (loss).

Write-offs of

reinsurance recoverable

and any related

allowance are recorded

in the period in

which the balance
is deemed uncollectible.

Premiums

Written

and

Earned.

Premiums

written

by

us

are

earned

ratably

over

the

coverage

periods

of

the
related insurance

and reinsurance

contracts.

We

establish

unearned premium

reserves

to cover

the unexpired
portion of

each contract.

Such reserves,

for assumed

reinsurance,

are computed

using pro

rata

methods based
on statistical

data received from

ceding companies.

Premiums earned, and the

related costs,

which have not yet
been

reported

to

us,

are

estimated

and

accrued.

Because

of

the

inherent

lag

in

the

reporting

of

written

and
earned

premiums

by

our

ceding

companies,

we

use

standard

accepted

actuarial

methodologies

to

estimate
earned but not reported

premium at each financial reporting

date. These earned but

not reported premiums

are
combined

with

reported

earned

premiums

to

comprise

our

total

premiums

earned

for

determination

of

our

































56
incurred

losses

and

loss

and

LAE

reserves.

Commission

expense

and

incurred

losses

related

to

the

change

in
earned

but

not

reported

premium are

included

in

current

period

company

and segment

financial

results.

See
also

ITEM

8,

"Financial

Statements

and

Supplementary

Data"

-

Note

1

of Notes

to

the

Consolidated

Financial
Statements.
The following table displays

the estimated components of net earned but

not reported premiums by segment for
the periods indicated.
At December 31,
(Dollars in millions)
2022
2021
2020
Reinsurance
$
2,255
$
2,055
$
1,774
Insurance
-
-
-
Total
$
2,255
$
2,055
$
1,774
(Some amounts may not reconcile due to rounding.)
Investment

Valuation.

Our fixed

income

investments

are

classified for

accounting

purposes

as either

available
for sale

or held to

maturity.

The available

for sale

fixed maturity

securities are

carried at fair

value and

the held
to maturity fixed

maturity portfolio

is carried at

amortized cost,

net of current

expected credit

allowance on our
consolidated

balance

sheets.

Our

equity

securities

are

all

carried

at

fair

value.

Most

securities

we

own

are
traded

on

national

exchanges

where

market

values

are

readily

available.

Some

of

our

commercial

mortgage-
backed

securities ("CMBS")

are valued

using cash

flow models

and risk-adjusted

discount rates.

We hold

some
privately

placed securities,

less than

10% of

the portfolio,

that

are

either valued

by investment

advisors

or the
Company.

In

some

instances,

values

provided

by

an

investment

advisor

are

supported

with

opinions

from

qualified independent third parties.

The Company has procedures

in place to review the values

received from its
investment

advisors.

At

December 31,

2022 and

2021, our

investment

portfolio

included

$3.8 billion

and $2.6
billion,

respectively,

of

limited

partnership

investments

whose

values

are

reported

pursuant

to

the

equity
method

of

accounting.

We

carry

these

investments

at

values

provided

by

the

managements

of

the

limited
partnerships and

due to inherent

reporting lags,

the carrying values

are based on

values with "as

of" dates from
one month to one quarter prior to our financial statement

date.

At December 31, 2022, we had

net unrealized losses on our available

for sale fixed maturity

securities, net of tax,
of $1.7 billion

compared to

net unrealized

gains on

our available

for sale

fixed maturity

securities, net

of tax,

of
$239 million

at December

31, 2021.

Gains (losses)

from market

fluctuations on

available for

sale fixed

maturity
securities

at

fair

value

are

reflected

as

accumulated

other

comprehensive

income

(loss)

in

the

consolidated
balance sheets.

Market

value declines

for available

for sale

fixed income

portfolio,

which are

considered credit
related, are reflected

in our consolidated

statements of operations

and comprehensive income

(loss), as realized
capital

losses.

We

consider

many

factors

when

determining

whether

a

market

value

decline

is

credit

related,
including:

(1) we

have no

intent

to sell

and, more

likely than

not, will

not be

required to

sell prior

to recovery,
(2) the

length of

time the

market

value has

been below

book value,

(3) the

credit strength

of the

issuer,

(4) the
issuer's

market

sector,

(5)

the

length

of

time

to

maturity

and

(6)

for

asset-backed

securities,

changes

in
prepayments,

credit

enhancements

and

underlying

default

rates.

If management's

assessments

change

in

the
future, we may

ultimately record

a realized loss

after management

originally concluded that

the decline in value
was temporary.

Fixed

maturity

securities

designated

as

held

to

maturity

consist

of

debt

securities

for

which

the

Company

has
both the positive

intent and ability

to hold to

maturity or redemption

and are reported

at amortized cost,

net of
the

current

expected

credit

loss

allowance.

Interest

income

for

fixed

maturity

securities

held

to

maturity

is
determined in the

same manner as interest

income for fixed

maturity securities available

for sale.

The Company
evaluates

fixed

maturity

securities

classified as

held to

maturity

for

current

expected

credit

losses

utilizing

risk
characteristics

of

each

security,

including

credit

rating,

remaining

time

to

maturity,

adjusted

for

prepayment
considerations,

and

subordination

level,

and

applying

default

and

recovery

rates,

which

include

the














57
incorporation

of

historical

credit

loss

experience

and

macroeconomic

forecasts,

to

develop

an

estimate

of
current expected credit losses.
See also ITEM 8, "Financial

Statements and

Supplementary Data"

- Note 1 of Notes

to the Consolidated

Financial
Statements.

FINANCIAL CONDITION

Investments.

Total

investments were

$28.5 billion at

December 31, 2022,

an increase

of $241 million

compared
to

$28.2

billion

at

December

31,

2021.

The

rise

in

investments

was

primarily

related

to

an

increase

in

other
invested assets, partially

offset by a decline in equity

securities.

The increase in other invested

assets was due to
the inclusion

of assets held

for the implementation

of a Company

Owned Life Insurance

("COLI") program

in the
fourth quarter

of 2022.

A portion of

the equity securities

portfolio was

sold in order

to invest

in the COLI

assets

which accounted for the decline in equity

securities.

The

Company's

limited

partnership

investments

are

comprised

of

limited

partnerships

that

invest

in

private
equity,

private

credit

and

private

real

estate.

Generally,

the

limited

partnerships

are

reported

on

a

month

or
quarter

lag.

We

receive

annual

audited

financial

statements

for

all

of

the

limited

partnerships

which

are
prepared using

fair value accounting

in accordance with

FASB guidance.

For the quarterly

reports, the Company
reviews

the

financial

reports

for

any

unusual

changes

in

carrying

value.

If

the

Company

becomes

aware

of

a
significant

decline in

value during

the lag

reporting

period, the

loss will

be recorded

in the

period in

which the
Company identifies the decline.

The

table

below

summarizes

the

composition

and

characteristics

of

our

investment

portfolio

as

of

the

dates
indicated.
At December 31,
2022
2021
Fixed income portfolio duration (years)
3.1
3.2
Fixed income composite credit quality
A+
A+
Reinsurance Recoverables

.

Reinsurance

recoverables

for

both

paid

and

unpaid

losses

totaled

$2.2

billion

at

December

31,

2022

and

$2.1
billion at

December 31,

2021.

At

December 31,

2022, $520

million, or

23.2%, was

recoverable

from Mt.

Logan
Re

collateralized

segregated

accounts;

$283

million,

or

12.6%,

was

recoverable

from

Munich

Re

and

$148
million, or 6.6%, was

recoverable

from Endurance

Re.

No other retrocessionaire

accounted for

more than 5% of
our recoverables.

Loss and LAE Reserves.

Gross loss and LAE reserves

totaled $22.1 billion and

$19.0 billion at December 31,

2022
and 2021, respectively.

















































































































58
The following

tables summarize

gross outstanding

loss and

LAE reserves

by segment,

classified by

case reserves
and IBNR reserves, for the periods indicated.

At December 31, 2022
Case
IBNR
Total
% of

(Dollars in millions)
Reserves
Reserves
Reserves
Total
Reinsurance
$
6,045
$
9,818
$
15,862
71.9%
Insurance
1,863
4,062
5,925
26.9%
Total excluding A&E
7,908
13,880
21,787
98.7%
A&E
138
140
278
1.3%
Total including A&E
$
8,046
$
14,019
$
22,065
100.0%
(Some amounts may not reconcile due to rounding.)
At December 31, 2021
Case
IBNR
Total
% of

(Dollars in millions)
Reserves
Reserves
Reserves
Total
Reinsurance
$
5,415
$
8,312
$
13,727
72.2%
Insurance
1,546
3,562
5,109
26.9%
Total excluding A&E
6,961
11,875
18,836
99.1%
A&E
164
10
174
0.9%
Total including A&E
$
7,125
$
11,885
$
19,009
100.0%
(Some amounts may not reconcile due to rounding.)
Changes

in

premiums

earned

and

business

mix,

reserve

re-estimations,

catastrophe

losses

and

changes

in
catastrophe loss reserves

and claim settlement activity all impact loss and LAE

reserves by segment and in total.
Our

carried

loss

and

LAE

reserves

represent

management's

best

estimate

of

our

ultimate

liability

for

unpaid
claims.

We

continuously

re-evaluate

our

reserves,

including

re-estimates

of

prior

period

reserves,

taking

into
consideration

all available

information and,

in particular,

newly reported

loss and

claim experience.

Changes in
reserves resulting

from such

re-evaluations are

reflected in

incurred losses

in the period

when the re-evaluation
is

made.

Our

analytical

methods

and

processes

operate

at

multiple

levels

including

individual

contracts,
groupings of

like contracts,

classes and

lines of business,

internal business

units, segments,

accident years,

legal
entities,

and

in

the

aggregate.

In

order

to

set

appropriate

reserves,

we

make

qualitative

and

quantitative
analyses

and

judgments

at

these

various

levels.

We

utilize

actuarial

science,

business

expertise

and
management judgment

in a manner

intended to

ensure the accuracy

and consistency

of our reserving

practices.

Management's

best estimate

is developed

through

collaboration

with actuarial,

underwriting, claims,

legal

and
finance

departments

and

culminates

with

the

input

of

reserve

committees.

Each

segment

reserve

committee

includes the participation of the relevant parties

from actuarial, finance, claims and segment senior management
and has

the responsibility

for recommending

and approving

management's

best estimate.

Reserves are

further
reviewed

by

Everest's

Chief

Reserving

Actuary

and

senior

management.

The

objective

of

such

process

is

to
determine

a

single

best

estimate

viewed

by

management

to

be

the

best

estimate

of

its

ultimate

loss

liability.

Nevertheless, our reserves are estimates,

which are subject to variation,

which may be significant.
There

can

be no

assurance

that reserves

for,

and losses

from,

claim obligations

will not

increase

in the

future,
possibly

by

a

material

amount.

However,

we

believe

that

our

existing

reserves

and

reserving

methodologies
lessen

the

probability

that

any

such

increase

would

have

a

material

adverse

effect

on

our

financial

condition,

results of operations or cash flows.

We

have

included

ranges

for

loss

reserve

estimates

determined

by

our

actuaries,

which

have

been

developed
through

a

combination

of

objective

and

subjective

criteria.

Our

presentation

of

this

information

may

not

be
directly comparable

to similar presentations

of other companies

as there are

no consistently

applied actuarial or
















































59
accounting standards

governing such presentations.

Our recorded reserves

are an aggregation

of our best

point
estimates

for

approximately

200

reserve

groups

and

reflect

our

best

point

estimate

of

our

liabilities.

Our

actuarial methodologies develop

point estimates

rather than ranges

and the ranges

are developed subsequently
based upon historical and prospective

variability measures.

The

following

table

below

represents

the

reserve

levels

and

ranges

for

each

of

our

business

segments

for

the
period indicated.

Outstanding Reserves and Ranges By Segment (1)
At December 31, 2022
As
Low
Low
High
High
(Dollars in millions)
Reported
Range %
Range
Range %
Range
Gross Reserves By Segment
Reinsurance
$
15,862
-7.4%
$
14,689
7.8%
$
17,095
Insurance
5,925
-9.9%
5,340
10.8%
6,565
Total Gross Reserves (excluding A&E)
21,787
-8.1%
20,029
8.6%
23,660
A&E (All Segments)

278
-22.9%
214
22.7%
341
Total Gross Reserves
$
22,065
-8.3%
20,243
8.8%
24,001
(Some amounts may not reconcile due

to rounding.)
______________________________________________________
(1)
There can be no assurance that reserves

will not ultimately exceed the

indicated ranges requiring additional

income (loss) statement expense.
Depending

on

the

specific

segment,

the

range

derived

for

the

loss

reserves,

excluding

reserves

for

A&E
exposures,

ranges

from minus

7.4% to

minus 9.9%

for the

low range

and from

plus 7.8%

to plus

10.8% for

the
high range.

Both the higher

and lower ranges

are associated

with the Insurance

segment.

The size of

the range
is

dependent

upon

the

level

of

confidence

associated

with

the

reserve

estimates.

Within

each

range,
management's

best

estimate

of

loss

reserves

is

based

upon

the

point

estimate
derived

by

our

actuaries

in
detailed reserve

studies.

Such ranges

are necessarily

subjective due

to the

lack of

generally

accepted actuarial
standards with

respect to their

development.

There can be

no assurance that

our claim obligations

will not vary
outside of these ranges.

Additional losses, including

those relating to

latent injuries, and

other exposures, which

are as yet

unrecognized,
the type

or magnitude

of which

cannot be

foreseen

by us

or the

reinsurance

and insurance

industry

generally,
may

emerge

in

the

future.

Such

future

emergence,

to

the

extent

not

covered

by

existing

retrocessional
contracts,

could have

material

adverse

effects

on our

future financial

condition,

results of

operations

and cash
flows.

Asbestos and Environmental

Exposures.

A&E exposures represent a separate

exposure group for monitoring

and
evaluating reserve adequacy.

With

respect

to

asbestos

only,

at

December

31,

2022,

we

had

net

asbestos

loss

reserves

of

$233

million,

or

90.5%, of total net A&E reserves, all of which was

for assumed business.

See

Note

3

of

Notes

to

Consolidated

Financial

Statements

for

a

summary

of

Asbestos

and

Environmental
Exposures.

Ultimate

loss

projections

for

A&E

liabilities

cannot

be

accomplished

using

standard

actuarial

techniques.

We
believe

that

our

A&E

reserves

represent

management's

best

estimate

of the

ultimate

liability;

however,

there

can be no assurance that ultimate loss

payments will not exceed such reserves,

perhaps by a significant amount.

Industry

analysts

use

the

"survival

ratio"

to

compare

the

A&E

reserves

among

companies

with

such

liabilities.

The survival ratio is typically calculated

by dividing a company's

current net reserves by the three year

average of





















60
annual

paid

losses.

Hence,

the

survival

ratio

equals

the

number

of

years

that

it

would

take

to

exhaust

the
current reserves

if future

loss payments

were to

continue at

historical

levels.

Using this

measurement,

our net
three

year

asbestos

survival

ratio

was

6.9

years

at

December

31,

2022.

These

metrics

can

be

skewed

by
individual large settlements

occurring in the

prior three years

and therefore,

may not be

indicative of

the timing
of future payments.

LIQUIDITY AND CAPITAL RESOURCES

Capital.

Shareholders'

equity at

December 31,

2022 and

December 31,

2021 was

$8.4 billion

and $10.1

billion,
respectively.

Management's

objective

in

managing

capital

is

to

ensure

its

overall

capital

level,

as

well

as

the
capital

levels

of

its

operating

subsidiaries,

exceed

the

amounts

required

by

regulators,

the

amount

needed

to
support

our current

financial strength

ratings

from rating

agencies and

our own

economic capital

models.

The
Company's capital

has historically exceeded these benchmark

levels.

Our

two

main

operating

companies

Bermuda

Re

and

Everest

Re

are

regulated

by

the

Bermuda

Monetary
Authority

("BMA")

and

the

State

of

Delaware,

Department

of

Insurance,

respectively.

Both

regulatory

bodies
have their

own capital

adequacy models

based on

statutory capital

as opposed

to GAAP basis

equity.

Failure to
meet

the

required

statutory

capital

levels

could

result

in

various

regulatory

restrictions,

including

business

activity and the payment of dividends to

their parent companies.

The regulatory targeted

capital and the actual statutory

capital for Bermuda Re and Everest

Re were as follows:
Bermuda Re
(1)
Everest Re
(2)
At December 31,
At December 31,
(Dollars in millions)
2022
(3)
2021
2022
2021
Regulatory targeted capital
$
-
$
2,169
$
3,353
$
2,960
Actual capital
$
2,759
$
3,184
$
5,553
$
5,717
(1)

Regulatory targeted capital represents

the target capital level from

the applicable year's BSCR calculation.
(2)

Regulatory targeted capital represents

200% of the RBC authorized control

level calculation for the applicable

year.

(3)

The 2022 BSCR calculation is not

yet due to be completed;

however,

the Company anticipates that

Bermuda Re's December

31, 2022 actual capital will

exceed

the targeted capital level.
Our financial strength

ratings as determined

by A.M. Best, Moody's

and Standard & Poor's

are important as

they
provide

our

customers

and

investors

with

an

independent

assessment

of

our

financial

strength

using

a

rating
scale that provides

for relative comparisons.

We continue

to possess significant

financial flexibility and

access to
debt

and

equity markets

as a

result

of our

financial

strength,

as evidenced

by

the

financial strength

ratings

as

assigned by independent rating agencies.

See also ITEM 1, Business - "Financial Strength Ratings".

We maintain

our own economic

capital models

to monitor

and project

our overall

capital, as

well as, the

capital
at

our

operating

subsidiaries.

A

key

input

to

the

economic

models

is

projected

income

and

this

input

is

continually compared to actual results,

which may require a change in the capital

strategy.

In 2022,

we repurchased

241,273 shares

for $61

million in

the open

market

and paid

$255 million

in dividends.

During

2021,

we

repurchased

887,622

shares

for

$225

million

in

the

open

market

and

paid

$247

million

in
dividends.

We may

at times enter

into a

Rule 10b5-1 repurchase

plan agreement

to facilitate

the repurchase

of
shares.

On

May

22,

2020,

our

existing

Board

authorization

to

purchase

up

to

30

million

of

our

shares

was
amended to

authorize

the purchase

of up

to 32

million shares.

As of

December 31,

2022, we

had repurchased
30.8 million shares under this authorization.

We repurchased

$6 million of our

long term subordinated

notes during the

third quarter of

2022 and recognized
a gain

of $1

million on

the repurchase.

We

may continue,

from time

to time,

to

seek to

retire

portions of

our
outstanding

debt

securities

through

cash

repurchases,

in

open-market

purchases,

privately

negotiated
transactions

or

otherwise.

Such

repurchases,

if

any,

will

be

subject

to

and

depend

on

prevailing

market

61
conditions,

our

liquidity

requirements,

contractual

restrictions

and

other

factors.

The amounts

involved

in

any

such transactions, individually or in the aggregate,

may be material.

On October 7,

2020, we

issued

an additional

$1.0 billion of

30 year senior

notes with

an interest

coupon rate

of
3.5%.

These senior notes will mature on October

15, 2050 and will pay interest

semi-annually.

On October 4,

2021, we

issued an

additional $1.0

billion of 31

year senior

notes with

an interest

coupon rate

of
3.125%.

These senior notes will mature on October 15, 2052 and

will pay interest semi-annually.
Liquidity.

Our liquidity

requirements

are generally

met from

positive

cash flow

from operations.

Positive

cash
flow results

from reinsurance

and insurance

premiums being

collected prior

to disbursements

for claims,

which
disbursements

generally

take

place

over

an

extended

period

after

the

collection

of

premiums,

sometimes

a
period of many

years.

Collected premiums

are generally

invested,

prior to

their use in

such disbursements,

and
investment

income provides

additional funding

for loss

payments.

Our net

cash flows

from operating

activities
were $3.7

billion and

$3.8 billion

for the

years

ended December

31, 2022

and 2021,

respectively.

Additionally,
these cash

flows reflected

net catastrophe

loss payments

of $677

million and

$834 million

for the

years

ended
December 31,

2022

and 2021,

respectively

and net

tax

payments

of $171

million and

$98 million

for the

years

ended December 31, 2022 and 2021, respectively.

If disbursements

for claims

and benefits,

policy acquisition

costs and

other operating

expenses

were to

exceed
premium inflows,

cash flow

from reinsurance

and insurance

operations

would be

negative.

The effect

on cash
flow

from

insurance

operations

would

be

partially

offset

by

cash

flow

from

investment

income.

Additionally,
cash inflows

from investment

maturities - both

short-term investments

and longer

term maturities

are available
to supplement other

operating cash

flows.

We do not

expect to supplement

negative insurance

operations cash
flows from investment dispositions.
As the

timing of

payments for

claims and

benefits cannot

be predicted

with certainty,

we maintain

portfolios of
long

term

invested

assets

with

varying

maturities,

along

with

short-term

investments

that

provide

additional
liquidity

for

payment

of claims.

At

December

31,

2022

and

December

31,

2021,

we

held

cash

and short

-term
investments

of

$2.4

billion

and

$2.6

billion,

respectively.

Our

short-term

investments

are

generally

readily
marketable

and can

be converted

to cash.

In addition

to these

cash and

short-term investments,

at December
31, 2022, we had

$1.3 billion of

available for

sale fixed

maturity securities

maturing within one

year or less,

$7.5
billion maturing

within one

to

five years

and

$5.3 billion

maturing

after

five

years.

Our

$281 million

of

equity
securities

are

comprised

primarily

of

publicly

traded

securities

that

can

be

easily

liquidated.

We

believe

that
these fixed

maturity and equity securities,

in conjunction with the short

-term investments and

positive cash flow
from operations,

provide ample

sources of

liquidity for

the expected

payment

of losses

in the

near future.

We
do not anticipate selling

a significant amount

of securities or using available

credit facilities to

pay losses and LAE
but have

the ability to

do so.

Sales of securities

might result

in realized capital

gains or losses.

At December 31,
2022

we

had

$1.9

billion

of

net

pre-tax

unrealized

depreciation

related

to

available

for

sale

fixed

maturity
securities,

comprised

of

$2.0

billion

of

pre-tax

unrealized

depreciation

and

$81

million

of

pre-tax

unrealized
appreciation.

Management generally

expects annual

positive cash

flow from operations,

which reflects

the strength

of overall
pricing.

However,

given the recent

set of catastrophic

events, cash

flow from operations

may decline

and could
become negative in the near term as

significant claim payments are

made related to the catastrophes.

However,
as indicated

above,

the Company

has ample

liquidity to

settle its

catastrophe

claims and/or

any

payments

due
for its catastrophe

bond program.

In addition to our cash flows from operations

and liquid investments, we also have

multiple active credit facilities
that

provide

commitments

of

up

to

$1.5

billion

of

collateralized

standby

letters

of

credit

to

support

business
written by

our Bermuda operating

subsidiaries.

In addition, the

Company has the

ability to request

access to an
additional

$440

million

of

uncommitted

credit

facilities,

which

would

require

approval

from

the

applicable

62
lender.

There is

no guarantee

the uncommitted

capacity will

be available

to us

on a

future date.

See Note

5 -
Credit Facilities for further details.

Exposure to

Catastrophes.

Like other insurance

and reinsurance

companies, we are

exposed to

multiple insured
losses arising out of a

single occurrence, whether a

natural event,

such as a hurricane

or an earthquake,

or other
catastrophe,

such

as

an

explosion

at

a

major

factory.

A

large

catastrophic

event

can

be

expected

to

generate
insured

losses

to

multiple

reinsurance

treaties,

facultative

certificates

and

direct

insurance

policies

across

various lines of business.

We focus on

potential losses that

could result from

any single event,

or series of events

as part of our evaluation
and monitoring

of our

aggregate

exposures

to

catastrophic

events.

Accordingly,

we employ

various

techniques
to estimate

the amount of

loss we could

sustain from

any single catastrophic

event or series

of events in

various
geographic

areas.

These

techniques

range

from

deterministic

approaches,

such

as

tracking

aggregate

limits
exposed

in

catastrophe-prone

zones

and

applying

reasonable

damage

factors,

to

modeled

approaches

that
attempt

to

scientifically

measure

catastrophe

loss

exposure

using

sophisticated

Monte

Carlo

simulation

techniques that forecast

frequency and severity of potential losses

on a probabilistic basis.

No single

computer

model or

group

of models

is currently

capable of

projecting

the amount

and probability

of
loss in

all global geographic

regions in

which we

conduct business.

In addition,

the form,

quality and

granularity
of underwriting exposure

data furnished

by (re)insureds

is not uniformly

compatible with the

data requirements
for

our

licensed

models,

which

adds

to

the

inherent

imprecision

in

the

potential

loss

projections.

Further,

the
results

from

multiple

models

and

analytical

methods

must

be

combined

to

estimate

potential

losses

by

and
across

business

units.

Also,

while

most

models

have

been

updated

to

incorporate

claims

information

from
recent

catastrophic

events,

catastrophe

model

projections

are

still

inherently

imprecise.

In

addition,
uncertainties with respect

to future climatic patterns

and cycles could add

further uncertainty to loss

projections
from models based on historical data.
Nevertheless,

when combined

with traditional

risk management

techniques

and sound

underwriting judgment,
catastrophe

models

are

a

useful

tool

for

underwriters

to

price

catastrophe

exposed

risks

and

for

providing
management with

quantitative

analyses with

which to monitor

and manage

catastrophic

risk exposures

by zone
and across zones for individual and

multiple events.

Projected catastrophe

losses are

generally summarized

in terms

of the

PML.

We define

PML as

our anticipated
loss, taking

into account

contract

terms and

limits, caused

by a

single catastrophe

affecting

a broad

contiguous
geographic

area,

such

as

that

caused

by

a

hurricane

or

earthquake.

The

PML

will

vary

depending

upon

the
modeled simulated

losses

and the

make-up

of the

in force

book

of business.

The projected

severity

levels

are
described

in

terms

of "return

periods",

such

as

"100-year

events"

and

"250-year

events".

For

example,

a

100-
year PML is

the estimated loss

to the current

in-force portfolio

from a single

event which has

a 1% probability

of
being exceeded in

a twelve month

period.

In other words, it

corresponds to a

99% probability that

the loss from
a

single

event

will

fall

below

the

indicated

PML.

It

is

important

to

note

that

PMLs

are

estimates.

Modeled
events are

hypothetical events

produced by

a stochastic

model.

As a result,

there can be

no assurance

that any
actual event

will align

with the

modeled event

or that

actual losses

from events

similar to

the modeled

events

will not vary materially from the modeled event

PML.

From

an

enterprise

risk

management

perspective,

management

sets

limits

on

the

levels

of

catastrophe

loss
exposure we

may underwrite.

The limits are

revised periodically

based on a

variety of factors,

including but not
limited

to

our

financial

resources

and

expected

earnings

and

risk/reward

analyses

of

the

business

being
underwritten.
Management estimates

that the projected

net economic loss

from its largest

100-year event in

a given zone is

to
an

Earthquake

event

affecting

California

which

represents

approximately

6.9%

of

its

December

31,

2022
shareholders'

equity.

Economic

loss

is the

PML

exposure,

net of

third

party

reinsurance

including

catastrophe
industry loss

warranty

cover,

reduced by

estimated

reinstatement

premiums

to renew

coverage

and estimated

63
income taxes.

The impact

of income

taxes

on the

PML depends

on the

distribution

of the

losses

by corporate
entity,

which is

also affected

by

inter-affiliate

reinsurance.

Management

also monitors

and controls

its largest
PMLs at

multiple points

along the

loss distribution

curve, such

as loss

amounts at

the 20,

50, 100,

250, and

500
year return

periods.

This process

enables management

to identify

and control

exposure

accumulations

and to
integrate such exposures

into enterprise risk, underwriting and capital

management decisions.

Our

catastrophe

loss

projections,

segmented

by

risk

zones,

are

updated

quarterly

and

reviewed

as

part

of

a

formal risk management review

process.

We

believe

that our

greatest

worldwide 1

in 100

year

exposure

to a

single catastrophic

event

is to

a hurricane
event

affecting

Southeast

U.S.,

where

we

estimate

we

have

a

PML

exposure,

net

of

third

party

reinsurance
including catastrophe

industry loss warranty

cover,

of $878 million. See also

table under ITEM

1, "Business -

Risk

Management of Underwriting and Retrocession

Arrangements".

If such a single catastrophe

loss were to occur,

management estimates that

the net economic loss to us would be
approximately

$515

million.

The

estimate

involves

multiple

variables,

including

which

Everest

entity

would

experience the loss, and as a result there can be no

assurance that this amount would not be exceeded.
We may

purchase reinsurance

to cover specific

business written

or the potential

accumulation or aggregation

of
exposures

across

some or

all of

our operations.

Reinsurance

purchasing

decisions

consider

both

the

potential
coverage

and

market

conditions

including

the

pricing,

terms,

conditions,

availability

and

collectability

of
coverage, with the

aim of securing cost

effective protection

from financially secure counterparts.

The amount of
reinsurance purchased has varied

over

time, reflecting our view of our exposures

and the cost of reinsurance.

Information

Technology.

Everest's

information

technology

is

a

key

component

of

its

business

operations.

Information

technology

systems

and

services

are

hosted

at

public

and

private

cloud

service

providers

across
multiple

datacenters

with

processing

performed

at

the

office

locations

of

our

operating

subsidiaries

and
branches.

We have

implemented security

procedures,

and regularly

assess and

enhance our

security protocols,
to ensure

that our

key business

systems

are protected,

secured and

backed up

at off-site

locations so

that they
can be restored

promptly if necessary.

We have business

continuity plans and disaster

recovery plans along with
periodic testing

of those

plans

to

ensure

we are

capable

of providing

uninterrupted

technology

services in

the
event of major systems

outages with alternative secure datacenters

available in case of broader outages.

Our

business

operations

depend

on

the

proper

functioning

and

availability

of

our

information

technology
platform,

which

includes

data

processing

and

related

electronic

communications.

We

communicate
electronically

internally

and

externally

with

our

brokers,

program

managers,

clients,

third-party

vendors,
regulators,

and

others.

These

communications

and

the

data

we

handle

may

include

personal,

confidential

or
proprietary

information.

We

ensure

that

all

our

systems,

data

and

electronic

transmissions

are

appropriately

protected with the latest technology

safeguards and meet regulatory

standards.

Despite these safeguards,

a significant cyber incident,

including system

failure, security

breach and disruption

by
malware or other

damage could

interrupt or delay

our operations

and possibly our

results.

This type of incident
may result

in a

violation of

applicable data

security,

privacy,

or other

laws, damage

our reputation,

cause a

loss
of customers

or give

rise to

regulatory

scrutiny

as well

as monetary

fines and

other penalties.

Management

is

not aware of a cybersecurity incident that

has had a material impact on our operations.

64
Expected

Cash

Outflows.

The

following

table

shows

our

significant

expected

cash

outflows

for

the

period
indicated.

Payments due by period
Less than
More than
(Dollars in millions)
Total
1 year
1-3 years

3-5 years
5 years
Senior notes
$
2,400
$
-
$
-
$
-
$
2,400
Long term notes
219
-
-
-
219
Interest expense (1)
3,018
101
202
202
2,513
Operating lease agreements
187
21
38
32
95
Gross reserve for losses and LAE (2)
22,065
2,430
7,971
5,230
6,435
Total
$
28,409
$
3,071
$
8,211
$
5,464
$
11,662
(Some amounts may not reconcile due to rounding.)
(1)
Interest expense on long term notes is calculated

at the variable floating rate of 6.99% as of

December 31, 2022.

(2)
Loss and LAE reserves

represent management's

best estimate of

losses from claim

and related settlement

costs.

Both the amounts

and timing of such

payments are
estimates, and

the inherent

variability of

resolving claims as

well as

changes in

market conditions

make the

timing of

cash flows

uncertain.

Therefore,

the ultimate
amount and timing of loss and LAE payments could differ

from our estimates.

The cash

outflows for

senior notes

and long

term notes

are the

responsibility

of Holdings.

We

strive to

ensure
that

we

have

sufficient

cash

flow,

liquidity,

investments

and

access

to

capital

markets

to

satisfy

these
obligations.

Holdings generally

depends upon

dividends from

Everest

Re, its

operating

insurance

subsidiary for
its funding,

capital contributions

from Group

or access

to the

capital markets.

Our various

operating

insurance
and reinsurance

subsidiaries

have

sufficient

cash

flow,

liquidity

and investments

to settle

outstanding

reserves
for losses and LAE.

Management believes that

we, and each of our entities,

have sufficient financial

resources or
ready access thereto, to

meet all obligations.

Dividends.
During 2022

and 2021,

we declared

and paid

common shareholder

dividends

of $255

million and

$247 million,
respectively.

As

an insurance

holding

company,

we

are

partially

dependent

on dividends

and other

permitted
payments from

our subsidiaries

to pay

cash dividends

to our

shareholders.

The payment

of dividends

to Group
by

Holdings

Ireland

and

Everest

Dublin

Holdings

is

subject

to

Irish

corporate

and

regulatory

restrictions;

the
payment

of

dividends

to

Holdings

Ireland

by

Holdings

and

to

Holdings

by

Everest

Re

is

subject

to

Delaware
regulatory

restrictions;

and

the

payment

of

dividends

to

Group

by

Bermuda

Re,

Everest

International,

Everest
Preferred International

Holdings ("Preferred

Holdings"), Everest

Re Advisors Ltd.

("Advisors

Re") or Mt. Logan

Re
is

subject

to

Bermuda

insurance

regulatory

restrictions.

Management

expects

that,

absent

extraordinary
catastrophe

losses, such restrictions

should not affect

Everest Re's

ability to declare

and pay

dividends sufficient
to

support

Holdings'

general

corporate

needs

and

that

Holdings

Ireland,

Everest

Dublin

Holdings,

Bermuda

Re
and Everest

International will

have the

ability to declare

and pay dividends

sufficient to

support Group's

general
corporate needs.

For the years

ended December 31, 2022

and 2021, Everest

Re paid $250 million

and $0 million
of

cash

dividends

to

Holdings.

For

the

years

ended

December

31,

2022

and

2021,

Bermuda

Re

paid

cash
dividends

to Group

of $430

million and

$300 million,

respectively;

Everest

International

paid no

cash dividends
to Group;

Preferred

Holdings paid

cash dividends

to Group

of $46 million

and $10 million,

respectively; Advisors
Re

paid

cash

dividends

to

Group

of

$0

million

and

$10

million,

respectively;

and

Mt.

Logan

Re

paid

no

cash
dividends to Group.

See ITEM 1, "Business

- Regulatory Matters

- Dividends" and ITEM 8,

"Financial Statements
and Supplementary Data" - Note 14 of Notes

to Consolidated Financial Statements.

Market Sensitive Instruments.

The SEC's

Financial Reporting

Release

#48 requires

registrants

to clarify

and expand

upon the

existing

financial
statement

disclosure

requirements

for

derivative

financial

instruments,

derivative

commodity

instruments

and

other financial instruments (collectively,

"market sensitive

instruments").

We do not generally

enter into market
sensitive instruments for trading

purposes.




















































65
Our

current

investment

strategy

seeks

to

maximize

after-tax

income

through

a

high

quality,

diversified,

fixed
maturity

portfolio,

while

maintaining

an

adequate

level

of

liquidity.

Our

mix

of

investments

is

adjusted
periodically,

consistent

with

our

current

and

projected

operating

results

and

market

conditions.

The

fixed
maturity

securities

in

the

investment

portfolio

are

comprised

of

non-trading

securities.

Additionally,

we

have

invested in equity securities.

The

overall

investment

strategy

considers

the

scope

of

present

and

anticipated

Company

operations.

In
particular,

estimates

of

the

financial

impact

resulting

from

non-investment

asset

and

liability

transactions,
together

with our

capital

structure

and other

factors,

are used

to

develop

a net

liability analysis.

This analysis
includes estimated payout

characteristics for

which our investments

provide liquidity.

This analysis is considered
in the development of specific investment

strategies for asset

allocation, duration and

credit quality.

The change
in overall market sensitive

risk exposure principally reflects

the asset changes that took place during the period.

Interest Rate

Risk.

Our $29.9 billion investment

portfolio at December

31, 2022, is principally

comprised of fixed
maturity

securities,

which

are

generally

subject

to

interest

rate

risk

and

some

foreign

currency

exchange

rate

risk, and some equity securities, which are subject to price

fluctuations and some foreign exchange

rate risk.

The
overall

economic

impact

of

the

foreign

exchange

risks

on

the

investment

portfolio

is

partially

mitigated

by
changes

in

the

dollar

value

of

foreign

currency

denominated

liabilities

and

their

associated

income

statement
impact.

Interest

rate

risk is

the potential

change in

value of

the fixed

maturity securities

portfolio,

including short-term
investments,

from

a

change

in

market

interest

rates.

In

a

declining

interest

rate

environment,

it

includes
prepayment

risk

on

the

$4.0 billion

of mortgage

-backed

securities

in

the

$23.1 billion

fixed

maturity

portfolio.

Prepayment risk results

from potential accelerated

principal payments that

shorten the average

life and thus

the

expected yield of the security.

The tables below

display the

potential impact

of market

value fluctuations

and after-tax

unrealized appreciation
on our

fixed maturity

portfolio (including

$1.0 billion

of short-term

investments)

for the

period indicated

based
on

upward

and

downward

parallel

and

immediate

100

and

200

basis

point

shifts

in

interest

rates.

For

legal
entities

with

a

U.S.

dollar

functional

currency,

this

modeling

was

performed

on

each

security

individually.

To
generate appropriate

price estimates on mortgage

-backed securities, changes in prepayment

expectations under
different interest

rate environments

were taken

into account.

For legal entities

with a non-U.S. dollar

functional
currency,

the effective

duration

of the

involved portfolio

of securities

was used

as a

proxy

for the

market

value

change under the various interest

rate change scenarios.

Impact of Interest Rate Shift in Basis Points
At December 31, 2022
-200
-100
-
100
200
(Dollars in millions)
Total Fair Value
$
25,618
$
24,863
$
24,107
$
23,352
$
22,596
Fair Value Change from Base (%)
6.3%
3.1%
-%
(3.1)%
(6.3)%
Change in Unrealized Appreciation
After-tax from Base ($)
$
1,316
$
658
$
-
$
(658)
$
(1,316)
Impact of Interest Rate Shift in Basis Points
At December 31, 2021
-200
-100
-
100
200
(Dollars in millions)
Total Fair Value
$
24,973
$
24,230
$
23,487
$
22,744
$
22,001
Fair Value Change from Base (%)
6.3%
3.2%
-%
(3.2)%
(6.3)%
Change in Unrealized Appreciation
After-tax from Base ($)
$
1,294
$
647
$
-
$
(647)
$
(1,294)
























































66
We

had $22.1

billion and

$19.0 billion

of gross

reserves for

losses and

LAE as

of December

31, 2022

and 2021,
respectively.

These

amounts

are

recorded

at

their

nominal

value,

as

opposed

to

present

value,

which

would
reflect a discount

adjustment to reflect the

time value of money.

Since losses are paid

out over a period of

time,
the present

value of

the reserves

is less

than the

nominal value.

As interest

rates

rise, the

present value

of the
reserves decreases and,

conversely,

as interest rates

decline, the present value

increases.

These movements are
the opposite of the interest

rate impacts on the

fair value of investments.

While the difference between

present
value and

nominal value

is not reflected

in our financial

statements, our

financial results

will include investment
income over

time from

the investment

portfolio until

the claims

are paid.

Our loss

and loss

reserve obligations
have

an

expected

duration

of

approximately

3.8

years,

which

is

reasonably

consistent

with

our

fixed

income
portfolio.

If

we

were

to

discount

our

loss

and

LAE

reserves,

net

of

ceded

reserves,

the

discount

would

be
approximately

$3.6 billion resulting

in a discounted

reserve balance

of approximately

$16.4 billion,

representing

approximately 67.9% of the value

of the fixed maturity investment

portfolio funds.

Equity Risk.

Equity risk is

the potential change

in fair and/or

market value

of the common

stock, preferred

stock
and mutual fund portfolios

arising from changing prices.

Our equity investments

consist of a diversified

portfolio
of individual

securities and

mutual funds,

which invest

principally in

high quality

common and

preferred

stocks
that are

traded on

the major exchanges.

The primary

objective of

the equity

portfolio is

to obtain

greater total
return relative to our core

bonds over time through market

appreciation and income.

The tables below display the impact on fair/market

value and after-tax change

in fair/market value

of a 10% and
20% change in equity prices up and down for the period indicated.
Impact of Percentage Change in Equity Fair/Market Values
At December 31, 2022
(Dollars in millions)
-20%
-10%
0%
10%
20%
Fair Value of the Equity Portfolio
$
225

$
253

$
281

$
309

$
337
After-tax Change in Fair Value
$
(46)
$
(23)
$
-
$
23
$
46
Impact of Percentage Change in Equity Fair/Market Values
At December 31, 2021
(Dollars in millions)
-20%
-10%
0%
10%
20%
Fair Value of the Equity Portfolio
$
1,461

$
1,643

$
1,826

$
2,009

$
2,191
After-tax Change in Fair Value
$
(290)
$
(145)
$
-
$
145
$
290
Foreign Currency

Risk.

Foreign currency

risk is the

potential change

in value,

income and

cash flow arising

from
adverse

changes

in

foreign

currency

exchange

rates.

Each

of

our

non-U.S./Bermuda

("foreign")

operations
maintains

capital

in

the

currency

of

the

country

of

its

geographic

location

consistent

with

local

regulatory
guidelines.

Each

foreign

operation

may

conduct

business in

its local

currency,

as well

as the

currency

of other
countries

in

which

it

operates.

The

primary

foreign

currency

exposures

for

these

foreign

operations

are

the
Canadian

Dollar,

the

Singapore

Dollar,

the

British

Pound

Sterling

and

the

Euro.

We

mitigate

foreign

exchange
exposure

by

generally

matching

the

currency

and

duration

of

our

assets

to

our

corresponding

operating
liabilities.

In

accordance

with

FASB

guidance,

the

impact

on

the

market

value

of

available

for

sale

fixed
maturities due

to changes

in foreign

currency exchange

rates,

in relation

to functional

currency,

is reflected

as
part of

other comprehensive

income.

Conversely,

the impact

of changes

in foreign

currency exchange

rates,

in
relation to functional

currency,

on other assets

and liabilities is

reflected through

net income as

a component

of
other income

(expense).

In addition,

we translate

the assets,

liabilities and income

of non-U.S.

dollar functional
currency

legal

entities

to

the

U.S.

dollar.

This

translation

amount

is

reported

as

a

component

of

other
comprehensive income.






















































67
The tables below display

the potential impact of a

parallel and immediate 10%

and 20% increase and decrease

in
foreign exchange

rates

on the

valuation

of invested

assets subject

to foreign

currency exposure

for the

periods
indicated.

This

analysis

includes

the

after-tax

impact

of

translation

from

transactional

currency

to

functional
currency

as

well

as

the

after-tax

impact

of

translation

from

functional

currency

to

the

U.S.

dollar

reporting
currency.

Change in Foreign Exchange Rates in Percent
At December 31, 2022
(Dollars in millions)
-20%
-10%
0%
10%
20%
Total After-tax

Foreign Exchange Exposure
$
(814)

$
(407)

$
-

$
407

$
814
Change in Foreign Exchange Rates in Percent
At December 31, 2021
(Dollars in millions)
-20%
-10%
0%
10%
20%
Total After-tax

Foreign Exchange Exposure
$
(688)

$
(344)
$
-

$
303

$
606
Safe Harbor Disclosure.
This

report

contains

forward-looking

statements

within

the

meaning

of

the

U.S.

federal

securities

laws.

We
intend

these

forward-looking

statements

to

be

covered

by

the

safe

harbor

provisions

for

forward-looking
statements

in

the

federal

securities

laws.

In

some

cases,

these

statements

can

be

identified

by

the

use

of
forward-looking

words

such

as

"may",

"will",

"should",

"could",

"anticipate",

"estimate",

"expect",

"plan",
"believe",

"predict",

"potential"

and

"intend".

Forward-looking

statements

contained

in

this

report

include
information

regarding

our reserves

for losses

and LAE,

the impact

of the

Tax

Cut and

Jobs Act,

the adequacy

of
capital

in

relation

to

regulatory

required

capital,

the

adequacy

of

our

provision

for

uncollectible

balances,
estimates

of

our

catastrophe

exposure,

the

effects

of

catastrophic

and

pandemic

events

on

our

financial
statements,

the

ability

of

Everest

Re,

Holdings,

Holdings

Ireland,

Dublin

Holdings,

Bermuda

Re

and

Everest
International

to

pay

dividends

and

the

settlement

costs

of

our

specialized

equity

index

put

option

contracts.

Forward-looking

statements

only

reflect

our

expectations

and

are

not

guarantees

of

performance.

These
statements

involve risks,

uncertainties and

assumptions.

Actual events

or results may

differ materially

from our
expectations.

Important factors

that could cause

our actual events

or results to

be materially different

from our
expectations include

those discussed under

the caption ITEM

1A, "Risk Factors".

We undertake

no obligation

to
update or revise

publicly any

forward-looking statements,

whether as a result

of new information,

future events
or otherwise.

ITEM 7A.

QUANTITATIVE

AND QUALITATIVE

DISCLOSURES ABOUT MARKET RISK
See "Market Sensitive Instruments"

in ITEM 7.