10q10k10q10k.net

What changed in Everest Group's 10-K — 2022 vs 2023

vs

Paragraph-level year-over-year comparison of Everest Group's 2022 and 2023 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2023 report.

+547 added−555 removedSource: 10-K (2024-02-28) vs 10-K (2023-02-24)

Top changes in Everest Group's 2023 10-K

547 paragraphs added · 555 removed · 392 edited across 6 sections

Item 1. Business

Business — how the company describes what it does

141 edited+80 added−99 removed32 unchanged
Biggest change(Some amounts may not reconcile due to rounding.) The following table represents the credit quality distribution of the Company’s fixed maturities for the periods indicated: At December 31, 2022 2021 (Dollars in millions) Fair Value/ Percent of Fair Value/ Percent of Rating Agency Credit Quality Distribution: Amortized Cost (1) Total Amortized Cost (1) Total AAA $ 8,432 36.6% $ 7,111 31.8% AA 2,886 12.5% 2,591 11.6% A 6,268 27.2% 5,833 26.1% BBB 3,768 16.3% 4,763 21.4% BB 1,227 5.3% 1,204 5.4% B 163 0.7% 325 1.5% Rated below B 49 0.2% 57 0.3% Other 283 1.2% 425 1.9% Total $ 23,075 100.0% $ 22,308 100.0% (Some amounts may not reconcile due to rounding.) (1) Fixed maturities-available for sale are at fair value and fixed maturities-held to maturity are at amortized cost, net of allowances for credit losses 16 The following table summarizes fixed maturities by contractual maturity for the periods indicated: At December 31, 2022 2021 Fair Value/ Percent of Fair Value/ Percent of (Dollars in millions) Amortized Cost (1) Total Amortized Cost (1) Total Fixed maturity securities Due in one year or less $ 1,319 5.7% $ 1,398 6.2% Due after one year through five years 7,607 33.0% 7,155 32.1% Due after five years through ten years 4,098 17.8% 5,101 22.9% Due after ten years 1,299 5.6% 1,627 7.3% Asset-backed securities 4,705 20.4% 3,582 16.1% Mortgage-backed securities 4,029 17.5% 3,446 15.4% Total fixed maturity securities $ 23,057 100.0% $ 22,308 100.0% (Some amounts may not reconcile due to rounding.) (1) The amortized cost and fair value of fixed maturity securities are shown by contractual maturity.
Biggest change(Some amounts may not reconcile due to rounding.) 12 Table of Contents The following table represents the credit quality distribution of the Company’s fixed maturities for the periods indicated: At December 31, 2023 2022 (Dollars in millions) Fair Value/ Amortized Cost (1) Percent of Total Fair Value/ Amortized Cost (1) Percent of Total Rating Agency Credit Quality Distribution: AAA $ 7,011 24.5 % $ 8,432 36.6 % AA 8,629 30.2 % 2,886 12.5 % A 7,297 25.5 % 6,268 27.2 % BBB 4,168 14.6 % 3,768 16.3 % BB 1,067 3.7 % 1,227 5.3 % B 132 0.5 % 163 0.7 % Rated below B 51 0.2 % 49 0.2 % Other 240 0.8 % 283 1.2 % Total $ 28,595 100.0 % $ 23,075 100.0 % (Some amounts may not reconcile due to rounding.) (1) Fixed maturities-available for sale are at fair value and fixed maturities-held to maturity are at amortized cost, net of allowances for credit losses.
The Company’s loss and LAE reserves represent management’s best estimate of the ultimate liability. Management’s best estimate is developed through collaboration with actuarial, underwriting, claims, legal and finance departments and culminates with the input of reserve committees.
The Company’s loss and LAE reserves represent management’s best estimate of the Company’s ultimate liability. Management’s best estimate is developed through collaboration with actuarial, underwriting, claims, legal and finance departments and culminates with the input of reserve committees.
Additional losses, including those relating to latent injuries and other exposures, which are as yet unrecognized, the type or magnitude of which cannot be foreseen by either the Company or the industry, may emerge in the future. Such future emergence could have material adverse effects on the Company’s future financial condition, results of operations and cash flows.
Additional losses, including those relating to latent injuries and other exposures, which are as yet unrecognized and the type or magnitude of which cannot be foreseen by either the Company or the industry, may emerge in the future. Such future emergence could have material adverse effects on the Company’s future financial condition, results of operations and cash flows.
Because some jurisdictions require a reinsurer to register in order to be an acceptable market for local insurers, Everest Re is 22 registered as a foreign insurer and/or reinsurer in the following countries: Bolivia, Brazil, Chile, China, Colombia, Dominican Republic, Ecuador, El Salvador, Guatemala, Honduras, India, Mexico, Nicaragua, Panama, Paraguay, the Philippines, Singapore and Venezuela.
Because some jurisdictions require a reinsurer to register in order to be an acceptable market for local insurers, Everest Re is registered as a foreign insurer and/or reinsurer in the following countries: Bolivia, Brazil, Chile, China, Colombia, Dominican Republic, Ecuador, El Salvador, Guatemala, Honduras, India, Mexico, Nicaragua, Panama, Paraguay, the Philippines, Singapore and Venezuela.
The board of directors of each of the Company’s operating subsidiaries is responsible for establishing investment policy and guidelines and, together with senior management, for overseeing their execution. 14 The Company’s principal investment objectives are to ensure funds are available to meet its insurance and reinsurance obligations and to maximize after-tax investment income while maintaining a high quality diversified investment portfolio.
The board of directors of each of the Company’s operating subsidiaries is responsible for establishing investment policy and guidelines and, together with senior management, for overseeing their execution. The Company’s principal investment objectives are to ensure funds are available to meet its insurance and reinsurance obligations and to maximize after-tax investment income while maintaining a high-quality diversified investment portfolio.
Internal Revenue Code to be a U.S. income tax paying “Controlled Foreign Corporation,” Everest Assurance may operate in both the U.S. and Bermuda. Everest Assurance is also considered an approved/eligible alien surplus lines insurer in the 50 states and the District of Columbia In addition, Everest Assurance can also write reinsurance in other foreign countries.
Internal Revenue Code to be a U.S. income tax paying “Controlled Foreign Corporation,” Everest Assurance may operate in both the U.S. and Bermuda. Everest Assurance is also considered an approved/eligible alien surplus lines insurer in all 50 states and the District of Columbia. In addition, Everest Assurance can also write reinsurance in other foreign countries.
Brokers do not have the authority to bind the Company with respect to reinsurance agreements, nor does the Company commit in advance to accept any portion of a broker’s submitted business. Reinsurance business from any ceding company, whether new or renewal is subject to 5 acceptance by the Company. Brokerage fees are generally paid by reinsurers.
Brokers do not have the authority to bind the Company with respect to reinsurance agreements, nor does the Company commit in advance to accept any portion of a broker’s submitted business. Reinsurance business from any ceding company, whether new or renewal is subject to acceptance by the Company. Brokerage fees are generally paid by reinsurers.
GAAP financial statements and filings and to have an appointed loss reserve specialist (also approved by the Bermuda Monetary Authority) review and report on their respective loss reserves annually. Under the Act, Everest Assurance is licensed as a Class 3A insurer for general business and as a Class C insurer for long-term business.
GAAP financial statements and filings, and have an appointed loss reserve specialist (also approved by the Bermuda Monetary Authority) review and report on their respective loss reserves annually. Under the Act, Everest Assurance is licensed as a Class 3A insurer for general business and as a Class C insurer for long-term business.
Premiums paid by the ceding company to a reinsurer for excess of loss reinsurance are not directly proportional to the premiums that the ceding company receives because the reinsurer does not assume a proportionate risk. There is usually no ceding commission on excess of loss reinsurance. Reinsurers may purchase reinsurance to cover their own risk exposure.
Premiums paid by the ceding company to a reinsurer for excess of loss reinsurance are not directly proportional to the premiums that the ceding company receives because the reinsurer does not assume a proportionate risk. There is usually no ceding commission on treaty excess of loss reinsurance. Reinsurers may purchase reinsurance to cover their own risk exposure.
On this basis, Group does not expect that it and its Bermuda subsidiaries will be required to pay U.S. corporate income taxes other than withholding taxes on certain investment income and premium excise taxes.
On this basis, Group does not expect that it or its Bermuda subsidiaries will be required to pay U.S. corporate income taxes other than withholding taxes on certain investment income and premium excise taxes.
Everest National is licensed in 50 states, the District of Columbia and Puerto Rico. Everest Indemnity is a Delaware Domestic Surplus Lines Insurer and is eligible to write insurance on a surplus lines basis in the 50 states, the District of Columbia and Puerto Rico.
Everest National is licensed in 50 states, the District of Columbia and Puerto Rico. Everest Indemnity is a Delaware domestic surplus lines insurer and is eligible to write insurance on a surplus lines basis in all 50 states, the District of Columbia and Puerto Rico.
Further, the maximum amount of dividends that may be paid without the prior approval of the Delaware Insurance Commissioner in any twelve month period is the greater of (1) 10% of the insurer’s statutory surplus as of the end of the prior calendar year or (2) the insurer’s statutory net income (loss), not including realized capital gains (losses), for the prior calendar year.
Further, the maximum amount of dividends that may be paid without the prior approval of the Delaware Insurance Commissioner in any twelve month period is the greater of (1) 10% of the insurer’s statutory surplus as of the end of the prior calendar year and (2) the insurer’s statutory net income (loss), not including realized capital gains (losses), for the prior calendar year.
The Company’s Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, proxy statements and amendments to those reports are available free of charge through the Company’s internet website at http://www.everestre.com as soon as reasonably practicable after such reports are electronically filed with the Securities and Exchange Commission (the “SEC”).
The Company’s Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, proxy statements and amendments to those reports are available free of charge through the Company’s internet website at http://www.everestglobal.com as soon as reasonably practicable after such reports are electronically filed with the Securities and Exchange Commission (the “SEC”).
As a long term insurer, Bermuda Re is required to maintain $250,000 in statutory capital separate from their Class 4 minimum statutory capital and surplus, to maintain long term business funds, to separately account for this business and to have an approved actuary prepare a certificate concerning their long term business assets and liabilities to be filed annually.
As a long-term insurer, Bermuda Re is required to maintain $250,000 in statutory capital separate from its Class 4 minimum statutory capital and surplus, to maintain long-term business funds, to separately account for this business and to have an approved actuary prepare a certificate concerning its long-term business assets and liabilities to be filed annually.
U.S. state regulators also require prior notice or regulatory approval of material inter-affiliate transactions within the holding company structure. The Insurance Companies Act of Canada requires prior approval by the Minister of Finance of anyone acquiring a significant interest in an insurance company authorized to do business in Canada.
U.S. state regulators also require prior notice or regulatory approval of material intercompany and inter-affiliate transactions within the holding company structure. The Insurance Companies Act of Canada requires prior approval by the Minister of Finance of anyone acquiring a significant interest in an insurance company authorized to do business in Canada.
Bermuda Re is also registered under the Act as long term insurer and is thereby authorized to write life and annuity business.
Bermuda Re is also registered under the Act as a long-term insurer and is thereby authorized to write life and annuity business.
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.
The two 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 the two operating segments based upon their underwriting results.
Certain of these states and foreign jurisdictions impose regulations regulating the ability of any person to acquire control of an insurance company authorized to do business in that jurisdiction without appropriate regulatory approval similar to those described above. Dividends.
Certain of these U.S. states and foreign jurisdictions impose regulations regulating the ability of any person to acquire control of an insurance company authorized to do business in that jurisdiction without appropriate regulatory approval similar to those described above. Dividends.
Non-U.S. branches of U.S. subsidiaries are subject to both local taxation in the jurisdictions in which they operate and U.S. corporate income tax but are generally relieved from double taxation through the use of foreign tax credits against their U.S. income tax liability.
Non-U.S. branches of U.S. subsidiaries are subject to both local taxation in the jurisdictions in which they operate and U.S. corporate income tax but are generally relieved from double taxation through the application of foreign tax credits against their U.S. income tax liability.
The majority of Everest National’s business is reinsured by its parent, Everest Re. ● Everest Indemnity Insurance Company (“Everest Indemnity”), a Delaware insurance company and a direct subsidiary of Everest Re, writes excess and surplus lines insurance business in the U.S. on a non-admitted basis.
The majority of Everest National’s business is reinsured by its parent, Everest Reinsurance Company. • Everest Indemnity Insurance Company (“Everest Indemnity”), a Delaware insurance company and a direct subsidiary of Everest Reinsurance Company, writes excess and surplus lines insurance business in the U.S. on a non-admitted basis.
The Company’s business strategy is to sustain its leadership position within targeted reinsurance and insurance markets, provide effective management throughout the property and casualty underwriting cycle and thereby achieve an attractive return for its shareholders.
The Company’s business strategy is to sustain its leadership position within targeted reinsurance and insurance markets and provide effective management throughout the property and casualty underwriting cycle, thereby achieving an attractive return for its shareholders.
Everest Indemnity is a Delaware Domestic Surplus Lines Insurer and is eligible to write business on a non-admitted basis in all other states, the District of Columbia and Puerto Rico.
Everest Indemnity is a Delaware domestic surplus lines insurer and is eligible to write business on a non-admitted basis in all other U.S. states, the District of Columbia and Puerto Rico.
In addition to claims assessment, processing and payment, the claims staff selectively conducts comprehensive claim audits of both specific claims and overall claim procedures at the offices of selected ceding companies. Some insurance claims are handled by third party claims service providers who have limited authority and are subject to oversight by the Company’s professional claims staff.
In addition to claims assessment, processing and payment, the Claims staff selectively conducts comprehensive claim audits of both specific claims and overall claim procedures at the offices of selected ceding companies. Some reinsurance claims are handled by third party claims service providers who have limited authority and are subject to oversight by the Company’s Claims staff.
In addition, trends that have affected development of liabilities in the past may not necessarily occur or affect liability development in the same manner or to the same degree in the future. As a result, actual losses and LAE may deviate, perhaps substantially, from estimates of reserves reflected in the Company's consolidated financial statem ents.
In addition, trends that have affected development of liabilities in the past may not necessarily occur or affect liability development in the same manner or to the same degree in the future. As a result, actual losses and LAE may deviate, perhaps substantially, from estimates of reserves reflected in the Company's consolidated financial statements.
Prior approval of the Bermuda Monetary Authority is required if Bermuda Re’s, Everest International’s or Everest Assurance’s dividend payments would exceed 25% of their prior year end statutory capital and surplus. At December 31, 2022, Bermuda Re, Everest International and Everest Assurance exceeded their solvency and liquidity requirements.
Prior approval of the Bermuda Monetary Authority is required if Bermuda Re’s, Everest International’s or Everest Assurance’s dividend payments would exceed 25% of their respective prior year end statutory capital and surplus. At December 31, 2023, Bermuda Re, Everest International and Everest Assurance exceeded their solvency and liquidity requirements.
Bermuda Re is also an authorized reinsurer in the U.K. and is also registered as a reinsurer in China. Everest Assurance is registered as a Class 3A general business insurer in Bermuda and a Class C long-term insurer in Bermuda. By virtue of its one-time election under section 953(d) of the U.S.
Bermuda Re is also an authorized reinsurer in the UK, registered as a reinsurer in China, and also an authorized insurer in Singapore. Everest Assurance is registered as a Class 3A general business insurer in Bermuda and a Class C long-term insurer in Bermuda. By virtue of its one-time election under section 953(d) of the U.S.
Reinsurance of a reinsurer's business is called a retrocession. Reinsurance companies cede risks under retrocessional agreements to other reinsurers, known as retrocessionaires, for reasons similar to those that cause insurers to purchase reinsurance: to reduce 4 net liability on individual or classes of risks, protect against catastrophic losses, stabilize financial ratios and obtain additional underwriting capacity.
Reinsurance of a reinsurer's business is called a retrocession. Reinsurance companies cede risks under retrocessional agreements to other reinsurers, known as 6 Table of Contents retrocessionaires, for reasons similar to those that cause insurers to purchase reinsurance: to reduce net liability on individual or classes of risks, protect against catastrophic losses, stabilize financial ratios and obtain additional underwriting capacity.
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.
Each segment’s reserve committee includes the participation of the relevant parties from actuarial, finance, claims and the segment’s senior management and has the responsibility for recommending and approving management’s best estimate for its respective segment. Reserves are further reviewed by Everest’s Chief Reserving Actuary and senior management.
In addition, the Company is subject to regulation by the insurance regulators of other states and foreign jurisdictions in which it is authorized to do business.
In addition, the Company is subject to regulation by the insurance regulators of other U.S. states and foreign jurisdictions in which it is authorized to do business.
Under the Act, Bermuda Re and Everest International, as Class 4 insurers, are each required to maintain a principal office in Bermuda, to maintain a minimum of $100 million in statutory capital and surplus, to have an independent auditor approved by the Bermuda Monetary Authority conduct an annual audit and report on their respective statutory and U.S.
Under the Act, each of Bermuda Re and Everest International, as a Class 4 insurer, is required to maintain a principal office in Bermuda, maintain a minimum of $100 million in statutory capital and surplus, have an independent auditor approved by the Bermuda Monetary Authority conduct an annual audit and report on their respective statutory and U.S.
Reinsurance Industry Overview. Reinsurance is an arrangement in which an insurance company, the reinsurer, agrees to indemnify another insurance or reinsurance company, the ceding company, against all or a portion of the insurance risks underwritten by the ceding company under one or more insurance contracts.
Overview Reinsurance is an arrangement in which an (re)insurance company, the reinsurer, agrees to indemnify another insurance or reinsurance company, the ceding company, against all or a portion of the risks underwritten by the ceding company under one or more insurance and/or reinsurance contracts.
This investment duration guideline is established and periodically revised by management, which considers economic and business factors, as well as the Company’s average duration of potential liabilities, which, at December 31, 2022, is estimated at approximately 3.8 years, based on the estimated payouts of underwriting liabilities using standard duration calculations.
This investment duration guideline is established and periodically revised by management, which considers economic and business factors, as well as the Company’s average duration of potential liabilities, which, at December 31, 2023, is estimated at approximately 3.9 years, based on the estimated payouts of underwriting liabilities using standard duration calculations.
The Company limits its allocation to these asset classes because of 1) the potential for volatility in their values and 2) the impact of these investments on regulatory and rating agency capital adequacy models. The Company uses investment managers experienced in these markets and adjusts its allocation to these investments based upon market conditions.
The Company limits its allocation to these asset classes because of (i) the potential for volatility in their values and (ii) the impact of these investments on regulatory and rating agency capital adequacy models. The Company uses investment managers experienced in these markets and adjusts its allocation to these investments based upon market conditions.
Under Irish corporate and regulatory law, Holdings Ireland, Everest Dublin Holdings and their subsidiaries are limited as to the dividends they can pay based on retained earnings and net income (loss) and/or capital and minimum solvency requirements.
Under Irish corporate and regulatory law, Holdings Ireland, Everest Dublin Insurance Holdings Limited (Ireland) (“Everest Dublin Holdings”) and their respective subsidiaries are limited as to the dividends they can pay based on retained earnings and net income (loss) and/or capital and minimum solvency requirements.
Best states that the “A+” (“Superior”) rating is assigned to those companies which, in its opinion, have a superior ability to meet their ongoing insurance policy and contract obligations based on A.M. Best’s comprehensive quantitative and qualitative evaluation of a company’s balance sheet strength, operating performance and business profile. A.M. Best affirmed these ratings on June 15, 2022.
Best states that the “A+” (“Superior”) rating is assigned to those companies which, in its opinion, have a superior ability to meet their ongoing insurance policies and contract obligations based on A.M. Best’s comprehensive quantitative and qualitative evaluation of a company’s balance sheet strength, operating performance and business profile. A.M. Best affirmed these ratings on June 29, 2023.
As of December 31, 2022, the Company did not have any direct investments in commercial real estate or direct commercial mortgages or securities of issuers that are experiencing cash flow difficulty to an extent that the Company’s management believes could threaten the issuer’s ability to meet debt service payments, except where an allowance for credit losses has been recognized.
As of December 31, 2023, the Company did not have any direct investments in commercial real estate, direct commercial mortgages or securities of issuers that are experiencing cash flow difficulty to an extent that the Company’s management believes that the issuer’s ability to meet debt service payments, except where an allowance for credit losses has been recognized, is threatened.
The Company and its insurance subsidiaries are subject to regulation under the insurance statutes of the various jurisdictions in which they conduct business, including essentially all states of the U.S., Canada, Singapore, Brazil, the United Kingdom, Ireland, Chile and Bermuda.
The Company and its insurance subsidiaries are subject to regulation under the insurance statutes of the various jurisdictions in which they conduct business, including all U.S. states, Canada, Singapore, Brazil, the UK, Ireland, Chile and Bermuda.
The ceding commission generally is based on the ceding company’s cost of acquiring the business being reinsured (commissions, premium taxes, assessments and miscellaneous administrative expense and may contain profit sharing provisions, whereby the ceding commission is adjusted based on loss experience).
The ceding commission generally is based on the ceding company’s cost of acquiring the business being reinsured (such as commissions, premium taxes, assessments, and miscellaneous administrative expenses and may contain profit sharing provisions, whereby the ceding commission is adjusted based on loss experience).
For selected financial information regarding these segments, see ITEM 8, “Financial Statements and Supplementary Data” - Note 17 of Notes to Consolidated Financial Statements and ITEM 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operation - Segment Results”. 6 Underwriting Operations.
For selected financial information regarding these segments, see ITEM 8, “Financial Statements and Supplementary Data” - Note 6 of Notes to Consolidated Financial Statements and ITEM 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operation - Segment Results”. Reinsurance Segment .
Subsidiaries other than Everest Reinsurance Co. and Everest Reinsurance (Bermuda) Ltd. may not be rated by some or any rating agencies given that such ratings are not considered essential by the individual subsidiary’s customers because of the limited nature of the subsidiary’s operations or because the subsidiaries are newly established and have not yet been rated by the agencies.
Subsidiaries other than Everest Re and Bermuda Re may not be rated by some or any rating agencies given that such ratings are not considered essential by the individual subsidiary’s customers because of the limited nature of the subsidiary’s operations or because the subsidiaries are newly established and have not yet been rated by the agencies. Debt Ratings.
The payment of dividends to Holdings by Everest Re is subject to limitations imposed by Delaware law. Generally, Everest Re may only pay dividends out of its statutory earned surplus, which was $5.6 billion at December 31, 2022, and only after it has given 10 days prior notice to the Delaware Insurance Commissioner.
The payment of dividends to Holdings by Everest Re is subject to limitations imposed by Delaware law. Generally, Everest Re may only pay dividends out of its statutory earned surplus, which was $7.0 billion at December 31, 2023, and only after it has given 10 days prior notice to the Delaware Insurance Commissioner.
The majority of Everest Security’s business is reinsured by its parent, Everest Re. 3 ● Everest International Assurance, Ltd. (“Everest Assurance”), a Bermuda company and a direct subsidiary of Holdings is registered in Bermuda as a Class 3A general business insurer and as a Class C long-term insurer.
The majority of Everest Denali’s business is reinsured by its parent, Everest Reinsurance Company. • Everest International Assurance, Ltd. (“Everest Assurance”), a Bermuda company and a direct subsidiary of Holdings is registered in Bermuda as a Class 3A general business insurer and as a Class C long-term insurer.
Because some jurisdictions require a reinsurer to register in order to be an acceptable market for local insurers , Everest Assurance is registered as a foreign insurer and/or reinsurance in the following countries: Bolivia, Columbia, Chile, Ecuador, Guatemala, Mexico and Paraguay. Ireland Re is licensed to write non-life reinsurance for the London and European markets.
Because some jurisdictions require a reinsurer to register in order to be an acceptable market for local insurers, Everest Assurance is registered as a foreign insurer and/or reinsurer in the following countries: Bolivia, Colombia, Chile, Ecuador, Guatemala, Mexico and Paraguay. Ireland Re is licensed to write non-life reinsurance for the European Union, European Economic Area and Swiss markets.
These additional requirements include, but are not limited to, rate and policy form requirements, requirements with regard to licensing, agent appointments, participation in residual markets and claim handling procedures. These regulations are primarily designed for the protection of policyholders.
These additional requirements include, but are not limited to, rate and policy form requirements, as well as requirements on licensing, agent appointments, participation in residual markets and claim handling procedures. These regulations are primarily designed for the protection of policyholders.
These regulations vary from jurisdiction to jurisdiction and are generally designed to protect ceding insurance companies and policyholders by regulating the Company’s conduct of business, financial integrity and ability to meet its obligations. Many of these regulations require reporting of information designed to allow insurance regulators to closely monitor the Company’s performance. Insurance Holding Company Regulation.
These regulations vary from jurisdiction to jurisdiction and are generally designed to protect ceding insurance companies and policyholders by regulating the Company’s conduct of business, financial integrity and ability to meet its obligations. Many of these regulations require reporting of information designed to allow insurance regulators to closely monitor the Company’s performance. Climate Risk Management.
S&P states that the “A+”/”A” ratings are assigned to those insurance companies which, in its opinion, have strong financial security characteristics with respect to their ability to pay under its insurance policies and contracts in accordance with their terms. S&P affirmed all ratings on May 27, 2022.
S&P states that the “A+”/ “A” ratings are assigned to those insurance companies which, in its opinion, have strong financial security characteristics with respect to their ability to pay under their insurance policies and contracts in accordance with their terms.
Considering these objectives, the Company views its investment portfolio as having two components: 1) the investments needed to satisfy outstanding liabilities (its core fixed maturities portfolio) and 2) investments funded by the Company’s shareholders’ equity. For the portion needed to satisfy global outstanding liabilities, the Company generally invests in fixed maturities with a high level of average credit quality.
Considering these objectives, the Company views its investment portfolio as having two components: (1) the investments needed to satisfy outstanding liabilities (i.e., its core fixed maturities portfolio) and (2) investments funded by the Company’s shareholders’ equity. For the portion needed to satisfy global outstanding liabilities, the Company generally invests in fixed maturities with strong average credit quality.
The operations of Ireland Insurance and its branch offices in Netherlands, Germany, France and Spain are subject to regulation by the insurance regulatory officials of those jurisdictions. Management believes that the Company is in compliance with applicable laws and regulations pertaining to its business and operations. Licenses.
Its branch offices in the Netherlands, Germany, France and Spain are subject to limited local regulation by the insurance regulatory officials of those jurisdictions. Management believes that the Company is in compliance with applicable laws and regulations pertaining to its business and operations in each of these jurisdictions.
This global fixed maturity securities portfolio is largely managed on an external basis by independent, professional investment managers using portfolio guidelines approved by the Company.
This global fixed maturity securities portfolio is managed both internally and on an external basis by independent, professional investment managers using portfolio guidelines approved by the Company.
U.S. insurance companies are also subject to examinations by the various state insurance departments where they are licensed concerning compliance with applicable conduct of business regulations. In addition, foreign insurance companies and foreign branch offices are subject to examination and review by regulators in their various jurisdictions.
U.S. insurance companies are also subject to examinations by the various state insurance departments where they are licensed concerning compliance with applicable conduct of business regulations. In addition, non-U.S. insurance companies and branches are subject to examination and review by regulators in their respective jurisdictions.
For the 2022 calendar year, no single customer (ceding company or insured) generated more than 3.7% of the Company’s gross written premiums. The Company believes that a reduction of business from any one customer would not have a material adverse effect on its future financial condition or results of operations.
For the year ended December 31, 2023, no single customer (ceding company or insured) generated more than 3.8% of the Company’s gross written premiums. The Company believes that a reduction of business from any one customer would not have a material adverse effect on its future financial condition or results of operations.
Debt Ratings. The following table shows the debt ratings by A.M. Best, S&P and Moody’s of the Holdings’ senior notes due June 1, 2044, senior notes due October 15, 2050, senior notes due October 15, 2052 and long-term notes due May 1, 2067 all of which are considered investment grade.
The following table shows the debt ratings by A.M. Best, S&P and Moody’s of the following series of notes issued by Holdings, all of which are considered investment grade: (1) senior notes due June 1, 2044, (2) senior notes due October 15, 2050, (3) senior notes due October 15, 2052 and (4) long-term notes due May 1, 2067.
Bermuda Re’s UK branch writes property and casualty reinsurance to the United Kingdom, China and European markets. At December 31, 2022, Bermuda Re had shareholder’s equity of $2.7 billion. ● Everest International Reinsurance, Ltd.
Bermuda Re’s UK branch writes property and casualty reinsurance to the United Kingdom, China and European markets. As of December 31, 2023, Bermuda Re had shareholder’s equity of $4.2 billion. • Everest International Reinsurance, Ltd.
Under applicable U.S. laws and regulations, no person, corporation or other entity may acquire a controlling interest in the Company, unless such person, corporation or entity has obtained the prior approval for such acquisition from the insurance commissioners of Delaware and the other 20 states in which the Company’s insurance subsidiaries are domiciled or deemed domiciled, currently California and Georgia.
Under applicable U.S. laws and regulations, no person, corporation or other entity may acquire a controlling interest in the Company, unless such person, corporation or entity has obtained prior approval for such acquisition from the insurance commissioners of Delaware and any other state in which the Company’s insurance subsidiaries are domiciled or deemed domiciled (as of this date, California).
Everest Compañia de Seguros Generales Chile S.A. is an insurance corporation authorized by the general laws of Chile. Periodic Examinations. Led by their state of domicile, U.S. insurance companies are subject to periodic financial examination of their affairs, usually every three to five years.
Everest Canada is licensed to write property and casualty insurance in Canada. Everest Compañia de Seguros Generales Chile S.A. is an insurance corporation authorized by the general laws of Chile. Periodic Examinations. Led by their states of domicile, U.S. insurance companies are subject to periodic financial examination of their affairs, usually every three to five years.
To recognize liabilities for unpaid losses and LAE, insurers and reinsurers establish reserves, which are balance sheet liabilities representing estimates of future amounts needed to pay reported and unreported claims and related expenses for losses that have already occurred. Actual losses and LAE paid may deviate, perhaps substantially, from such reserves.
To recognize liabilities for unpaid losses and LAE, insurers and reinsurers establish reserves, which are balance sheet liabilities representing estimates of future amounts needed to pay reported and unreported claims and related expenses for losses that have already occurred.
Employees are encouraged to take ownership of their development by using the tools that the Company has made available to them - including industry training, mentorships and personal development classes. Everest actively manages its succession planning throughout our organization and strives to provide job growth and advancement opportunities to internal talent, where possible. Diversity and Inclusion.
Our colleagues are encouraged to take ownership of their development by using the tools that the Company has made available to them including industry training, technical upskilling, mentorships and personal development classes. Everest also actively manages succession planning across our organization and strives to provide growth and advancement opportunities to internal talent, where possible.
The Insurance operation writes property and casualty insurance directly and through brokers, surplus lines brokers and general agents within the U.S., Bermuda, Canada, Europe, Singapore and South America through its offices in the U.S., Canada, Chile, Singapore, United Kingdom, Ireland and branches in the Netherlands, France, Germany and Spain.
The Insurance segment writes property and casualty insurance directly and through brokers, including for surplus lines, and general agents within the United States, Bermuda, Canada, Europe, Singapore and South America through its offices in the United States, Canada, Chile, Singapore, UK, Ireland and branches in the UK, the Netherlands, France, Germany and Spain.
If this ratio is above a minimum threshold, no action is necessary. Below this threshold are four distinct action levels at which an insurer’s domiciliary state regulator can intervene with increasing degrees of authority over an insurer as the ratio of adjusted surplus to RBC decreases. The mildest intervention requires an insurer to submit a plan of appropriate corrective actions.
Below this threshold are four distinct action levels at which an insurer’s domiciliary state regulator can intervene with increasing degrees of authority over an insurer as the ratio of adjusted surplus to RBC decreases. The mildest intervention requires an insurer to submit a plan of appropriate corrective actions. The most severe action requires an insurer to be rehabilitated or liquidated.
Our Board is committed to diversity within its structure as well as emphasizing its importance in our senior executive leadership. We believe that diversity in gender, age, ethnicity and skill set allows for dynamic and evolving perspectives in governance, strategy, corporate responsibility, human rights and risk management.
Our Board is committed to advancing diversity within its structure as well as emphasizing its importance in our senior executive leadership. We believe that diversity in gender, ethnicity, age, geography, skill sets, experiences and perspectives enhances our governance, strategy, corporate responsibility, human rights and risk management.
National Association of Insurance Commissioners (“NAIC”) has developed a formula to measure the statutory minimum amount of capital required for a property and casualty insurance company to support its overall business operations in light of its size and risk profile. The major categories of a company’s risk profile are its asset risk, credit risk, and underwriting risk.
National Association of Insurance Commissioners (“NAIC”) has developed a formula to measure the statutory minimum amount of capital required for a property and casualty insurance company to support its overall business 18 Table of Contents operations in light of its size and risk profile.
Significant periods of time may elapse between the occurrence of an insured loss, the reporting of the loss to the insurer and the reinsurer and the payment of that loss by the insurer and subsequent payments to the insurer by the reinsurer.
Reserves for Unpaid Property and Casualty Losses and LAE. Significant periods of time may elapse between the occurrence of an insured loss, the reporting of the loss to the insurer and the reinsurer, the payment of that loss by the insurer and subsequent payments to the insurer by the reinsurer.
On December 20, 2019, the retrocession treaty was amended and included a partial commutation. As a result of this amendment and partial commutation, gross A&E reserves and correspondingly reinsurance receivable were reduced by $43.4 million. In addition, the maximum liability permitted to be retroceded increased to $450.3 million.
As a result of this amendment and partial commutation, gross A&E reserves and the corresponding reinsurance receivable were reduced by $43.4 million. In addition, the maximum liability permitted to be retroceded increased to $450.3 million.
Everest Indemnity, Everest National, Everest Security, Everest Denali and Everest Premier are subject to regulations similar to the U.S. regulations applicable to Everest Re. In addition, these companies must comply with substantial regulatory requirements in each state where they conduct business.
Management believes that the Company is in compliance with applicable laws and regulations pertaining to its business and operations. Everest National, Everest Security, Everest Denali and Everest Premier are subject to regulations similar to the U.S. regulations applicable to Everest Re. In addition, these companies must comply with substantial regulatory requirements in each state where they conduct business.
The Company continually evaluates each business relationship, including the underwriting expertise and experience brought to bear through the involved distribution channel, performs analyses to evaluate financial security, monitors performance and adjusts underwriting decisions accordingly. Segment Results.
The Company continually evaluates each business relationship, including within its distribution channel bearing underwriting expertise and experience, performs analyses to evaluate financial security, monitors performance and adjusts underwriting decisions accordingly.
Fixed maturities, available for sale and equity securities are carried at fair value. Fixed maturities, held to maturity securities are carried at amortized cost net of the expected credit loss allowance. (2) After investment expenses, excluding realized net gains (losses) on investments.
Fixed maturities - available for sale and equity securities are carried at fair value. Fixed maturities - held to maturity securities are carried at amortized cost net of the expected credit loss allowance. (2) After investment expenses, excluding net gains (losses) on investments. (3) Included in 2023 and 2022 are fair value re-measurements of $0.5 million and $460 million, respectively.
The Claims staff work closely with senior management, as well as underwriting, finance and actuarial. Reinsurance claims are managed by the Company’s professional claims staff whose responsibilities include reviewing initial loss reports and coverage issues, monitoring claims handling activities of ceding companies, establishing and adjusting proper case reserves and approving payment of claims.
Reinsurance claims are also managed by the Company’s Claims staff whose responsibilities include reviewing initial loss reports and coverage issues, monitoring claims handling activities of ceding companies, establishing and adjusting proper case reserves and approving payment of claims.
At December 31, 2022 Everest Re had statutory surplus of $5.6 billion. ● Everest Insurance Company of Canada (“Everest Canada”), a Canadian insurance company and direct subsidiary of Holdings Ireland, is licensed to write property and casualty insurance in all Canadian provinces. ● Everest National Insurance Company (“Everest National”), a Delaware insurance company and a direct subsidiary of Everest Re, is licensed in 50 states, the District of Columbia and Puerto Rico and is authorized to write property and casualty insurance on an admitted basis in the jurisdictions in which it is licensed.
As of December 31, 2023, Everest Reinsurance Company had statutory surplus of $7.0 billion. • Everest National Insurance Company (“Everest National”), a Delaware insurance company and a direct subsidiary of Everest Reinsurance Company, is licensed in all 50 states, the District of Columbia and Puerto Rico and is authorized to write property and casualty insurance on an admitted basis in the jurisdictions in which it is licensed.
The majority of Everest Indemnity’s business is reinsured by its parent, Everest Re. ● Everest Security Insurance Company (“Everest Security”), a Georgia insurance company and a direct subsidiary of Everest Re, writes property and casualty insurance on an admitted basis in Georgia and Alabama and is approved as an eligible surplus lines insurer in Delaware.
The majority of Everest Indemnity’s business is reinsured by its parent, Everest Reinsurance Company. • Everest Security Insurance Company (“Everest Security”), a Delaware insurance company and a direct subsidiary of Everest Reinsurance Company, is licensed to write property and casualty insurance on an admitted basis in Delaware, Georgia and Alabama.
None of the reports of these examinations or reviews contained any material findings or recommendations. NAIC Risk-Based Capital Requirements. The U.S.
In 2023, there were no reports of these examinations or reviews issued that contained any material findings or recommendations. NAIC Risk-Based Capital Requirements. The U.S.
In addition, Ireland Insurance is considered an approved/eligible alien surplus lines insurer in the 50 states and the District of Columbia. ● Everest Compañia de Seguros Generales Chile S.A., a Chile based insurance company, is licensed to write insurance and reinsurance within Chile. ● Everest Re, a Delaware reinsurance company and a direct subsidiary of Holdings, is a licensed property and casualty insurer and/or reinsurer in all states, the District of Columbia, Puerto Rico and Guam and is authorized to conduct reinsurance business in Canada, Singapore and Brazil.
The syndicate is managed by a third-party managing agency. • Everest Compañia de Seguros Generales Chile S.A., a Chile based insurance company, is licensed to write insurance and reinsurance within Chile. • Everest Insurance Company of Canada (“Everest Canada”), a Canadian insurance company and direct subsidiary of Holdings Ireland, is licensed to write property and casualty insurance in all Canadian provinces. • Everest Reinsurance Company, a Delaware reinsurance company and a direct subsidiary of Holdings, is a licensed property and casualty insurer and/or reinsurer in all 50 states, the District of Columbia, Puerto Rico and Guam and is authorized to conduct reinsurance business in Canada, Singapore and Brazil.
A+ (Superior) A+ (Strong) Not Rated Everest Denali Insurance Company A+ (Superior) A+ (Strong) Not Rated Everest Premier Insurance Company A+ (Superior) A+ (Strong) Not Rated Everest Insurance (Ireland), dac A+ (Superior) A+ (Strong) Not Rated A.M.
A+ (Superior) A+ (Strong) Not Rated Everest Insurance Company of Canada A+ (Superior) A+ (Strong) Not Rated Everest International Reinsurance, Ltd. A+ (Superior) A+ (Strong) Not Rated Everest Denali Insurance Company A+ (Superior) A+ (Strong) Not Rated Everest Premier Insurance Company A+ (Superior) A+ (Strong) Not Rated Everest Insurance (Ireland), dac A+ (Superior) A+ (Strong) Not Rated (1) A.M.
We have evaluated the tax provisions of the IRA, the most significant of which are the corporate alternative minimum tax and the share repurchase excise tax and do not expect the legislation to have a material impact on our results of operations. As the IRS issues additional guidance, we will evaluate any impact to our consolidated financial statements. United Kingdom.
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. Other Countries .
The Company’s investment portfolio includes structured commercial mortgage-backed securities (“CMBS”) with a book value of $1.0 billion and a fair val ue of $925.8 million. CMBS securities comprising more than 86.6% of the December 31, 2022 fair value are rated AAA by S&P Global Ratings (“S&P”).
The Company’s investment portfolio includes structured commercial mortgage-backed securities (“CMBS”) with a book value of $1.1 billion and a fair value of $1.0 billion. As of the December 31, 2023, 82.2% of CMBS securities are rated AAA by S&P Global Ratings (“S&P”). The remainder of CMBS securities are rated investment grade by S&P.
Bermuda Re’s operations in the United Kingdom and worldwide are subject to regulation by the Prudential Regulation Authority (the “PRA”). The PRA imposes solvency, capital adequacy, audit, financial reporting and other regulatory requirements on insurers transacting business in the United Kingdom. Bermuda Re presently meets or exceeds all of the PRA’s solvency and capital requirements.
Bermuda Re’s operations in the UK are subject to regulation by the Prudential Regulation Authority (the “PRA”) and the Financial Conduct Authority (the “FCA”). The PRA imposes solvency, capital adequacy, audit, financial reporting and other regulatory requirements on insurers transacting business in the UK. The FCA regulates the conduct of insurers transacting business in the UK.
Treaty reinsurers do not separately evaluate each of the individual risks assumed under their treaties, instead, the reinsurer relies upon the pricing and underwriting decisions made by the ceding company. In facultative reinsurance, the ceding company cedes and the reinsurer assumes all or part of the risk under a single insurance contract.
Treaty reinsurers do not separately evaluate each of the individual risks assumed under their treaties; instead, the reinsurer evaluates portfolio level exposure based on information provided by the ceding company. I n facultative reinsurance, the ceding company cedes, and the reinsurer assumes, all or part of the risk under a single insurance contract.
At December 31, 2022, the Company’s gross reserves for A&E claims represented 1.3% of its total reserves. The Company’s A&E liabilities stem from Mt. McKinley Insurance Company’s (“Mt. McKinley”) direct insurance business and Everest Re’s assumed reinsurance business. Mt. McKinley was a former wholly-owned subsidiary that was sold in 2015 to Clearwater Insurance Company (Clearwater”), a subsidiary of Fairfax Financial.
The Company’s A&E liabilities stem from direct insurance business from Mt. McKinley Insurance Company (“Mt. McKinley”) and assumed reinsurance business of Everest Re. Mt. McKinley was a former wholly-owned subsidiary that was sold in 2015 to Clearwater Insurance Company (“Clearwater”), a subsidiary of Fairfax Financial.
Approximately 60.2%, 33.2% and 6.6% of the Company’s 2022 gross written premiums were written in the broker reinsurance, insurance and direct reinsurance markets, respectively. The broker reinsurance market consists of several substantial national and international brokers and a number of smaller specialized brokers.
Approximately 62.4%, 30.7% and 6.9% of the Company’s 2023 gross written premiums were written in the broker reinsurance market, the insurance business and the direct reinsurance market, respectively. 4 Table of Contents The broker reinsurance market consists of several substantial national and international brokers and a number of smaller specialized brokers.
Insurance claims are managed by the Company’s professional Claims staff many of whom have insurance and legal professional qualifications. Their responsibilities include reviewing initial loss reports, analyzing coverage issues, evaluating and reserving claims, and paying settlements. When appropriate the Claims staff engage external professional advisors such as Counsel, Loss Adjusters and Engineers to support the effective management of claims.
Insurance claims are managed by the Company’s professional claims staff (the “Claims staff”), many of whom have insurance and legal professional qualifications. Their responsibilities include reviewing initial loss reports, analyzing coverage issues, evaluating and reserving claims, and paying settlements.
(“Everest International”), a Bermuda insurance company and a direct subsidiary of Group, is registered in Bermuda as a Class 4 insurer and is authorized to write property and casualty business. All of Everest International’s business has inter-affiliate reinsurance assumed from Everest Re, the UK branch of Bermuda Re, Ireland Re and Ireland Insurance .
(“Everest International”), a Bermuda insurance company and a direct subsidiary of G roup, is registered in Bermuda as a Class 4 insurer and is authorized to write property and casualty business. Everest International’s Singapore branch writes property and casualty reinsurance to the Singapore market.

… 240 more changes not shown on this page.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

86 edited+22 added−17 removed73 unchanged
Biggest changeAssets, liabilities, revenues and expenses denominated in foreign currencies are exposed to changes in currency exchange rates. Our reporting currency is the U.S. dollar, and exchange rate fluctuations, especially relative to the U.S. dollar, may materially impact our results and financial position.
Biggest changeOur reporting currency is the U.S. dollar, and exchange rate fluctuations, especially relative to the U.S. dollar, may materially impact our results and financial position. In 2023, we wrote approximately 27.8% of our coverages in non-U.S. 23 Table of Contents currencies; as of December 31, 2023, we maintained approximately 20.9% of our investment portfolio in investments denominated in non-U.S. currencies.
Our competitors include independent reinsurance and insurance companies, subsidiaries or affiliates of established worldwide insurance companies, reinsurance departments of certain insurance companies and domestic and international underwriting operations, including underwriting syndicates at Lloyd’s of London. According to S&P, Everest ranks among the top ten global property & casualty reinsurance groups, where more than two-thirds of the market share is concentrated.
Our competitors include independent reinsurance and insurance companies, subsidiaries or affiliates of established worldwide insurance companies, reinsurance departments of certain insurance companies and domestic and international underwriting operations, including underwriting syndicates at Lloyd’s of London. According to S&P, Everest ranks among the top ten global property and casualty reinsurance groups, where more than two-thirds of the market share is concentrated.
Delaware law permits a director to appoint another director as an alternate to attend any board committee meeting. However, Delaware law does not provide for the designation of alternate directors with authority to attend or vote at a meeting of the board of directors. Committees of the Board of Directors.
Delaware law permits a director to appoint another director as an alternate to attend any board committee meeting. However, Delaware law does not provide for the designation of alternate directors with authority to attend or vote at a meeting of the Board. Committees of the Board of Directors.
Group’s bye-laws provide, as permitted by Bermuda law, that the board of directors may delegate any of its powers to committees that the board appoints, and those committees may consist partly or entirely of non-directors.
Group’s bye-laws provide, as permitted by Bermuda law, that the Board may delegate any of its powers to committees that the board appoints, and those committees may consist partly or entirely of non-directors.
In addition, new legislation as well as proposed and final regulations may further limit the ability of the Company to execute alternative capital balancing transactions with unrelated parties. This would further impact our net income and effective tax rate. On August 16, 2022, the Inflation Reduction Act of 2022 (“IRA”) was enacted.
In addition, new legislation as well as proposed and final regulations may further limit the ability of the Company to execute alternative capital balancing transactions with unrelated parties. This would further impact our net income and effective tax rate. On August 16, 2022, the Inflation Reduction Act (“IRA”) was enacted.
Based on our compliance with guidelines designed to ensure that we generate only immaterial amounts, if any, of income that is subject to the taxing jurisdiction of the U.S., we believe that we should be required to pay only immaterial amounts, if any, of U.S. corporate income tax, other than withholding tax on U.S. source dividend income.
Based on our compliance with guidelines designed to ensure that we generate only immaterial amounts, if any, of income that is subject to the U.S. taxing jurisdiction, we believe that we should be required to pay only immaterial amounts, if any, of U.S. corporate income tax, other than withholding tax on U.S. source dividend income.
As a Bermuda company, Group may enter into business transactions with its significant shareholders, including asset sales, in which a significant shareholder receives, or could 34 receive, a financial benefit that is greater than that received, or to be received, by other shareholders with prior approval from Group’s board of directors but without obtaining prior approval from the shareholders.
As a Bermuda company, Group may enter into business transactions with its significant shareholders, including asset sales, in which a significant shareholder receives, or could receive, a financial benefit that is greater than that received, or to be received, by other shareholders with prior approval from Group’s board of directors but without obtaining prior approval from the shareholders.
However, the Bermuda courts ordinarily would be expected to follow English case law precedent, which would permit a shareholder to bring an action in the name of Group to remedy a wrong done to Group where the act complained of is alleged to be 35 beyond the corporate power of Group or illegal or would result in the violation of Group’s memorandum of association or bye-laws.
However, the Bermuda courts ordinarily would be expected to follow English case law precedent, which would permit a shareholder to bring an action in the name of Group to remedy a wrong done to Group where the act complained of is alleged to be beyond the corporate power of Group or illegal or would result in the violation of Group’s memorandum of association or bye-laws.
To date, no material fine, penalty or restriction has been imposed on us for failure to comply with any insurance law or regulation. As a result of the previous dislocation of the financial markets, Congress and the previous Presidential administration in the United States implemented changes in the way the financial services industry is regulated.
To date, no material fine, penalty or restriction has been imposed on us for failure to comply with any insurance law or regulation. As a result of the previous dislocation of the financial markets, Congress and the previous administration in the United States implemented changes in the way the financial services industry is regulated.
The supply of (re)insurance is driven by prevailing prices and levels of capacity that may fluctuate in response to a number of factors including large catastrophic losses and investment returns being realized in the insurance industry. Demand for (re)insurance is influenced by underwriting results of insurers and insureds, including catastrophe losses, and prevailing general 27 economic conditions.
The supply of (re)insurance is driven by prevailing prices and levels of capacity that may fluctuate in response to a number of factors, including large catastrophic losses and investment returns being realized in the insurance industry. Demand for (re)insurance is influenced by underwriting results of insurers and insureds, including catastrophe losses, and prevailing general economic conditions.
Group’s bye -laws provide, as permitted by Bermuda law, that each director may appoint an alternate director, who shall have the power to attend and vote at any meeting of the board of directors or committee at which that director is not personally present and to sign written consents in place of that director.
Group’s bye-laws provide, as permitted by Bermuda law, that each director may appoint an alternate director, who shall have the power to attend and vote at any meeting of the Board or committee at which that director is not personally present and to sign written consents in place of that director.
We are generally less reliant on the purchase of reinsurance than many of our competitors, in part because of our strategic emphasis on underwriting discipline and management of the cycles inherent in our business. We try to separate our risk taking process from our risk mitigation process in order to avoid developing too great a reliance on reinsurance.
We are generally less reliant on the purchase of reinsurance than many of our competitors, in part because of our strategic emphasis on underwriting discipline and management of the cycles inherent in our business. We try to separate our risk-taking process from our risk mitigation process to avoid developing too great a reliance on reinsurance.
However, if the IRS were to successfully assert that Bermuda Re was engaged in a U.S. trade or business, we believe the U.S.-Bermuda tax treaty would preclude the IRS from taxing Bermuda Re’s income except to the extent that its income was attributable to a U.S. permanent establishment maintained by that subsidiary.
However, if the IRS were to successfully assert that Bermuda Re was engaged in a U.S. trade or business, we believe the U.S.-Bermuda tax treaty would preclude the IRS from taxing Bermuda Re’s income except to the extent that its income was attributable to a U.S. permanent establishment maintained by Bermuda Re.
We are exposed to unpredictable catastrophic events, including weather-related and other natural catastrophes, as well as acts of terrorism. The frequency and/or severity of catastrophic events may be impacted in the future by the continued effects of climate change.
We are exposed to unpredictable catastrophic events, including weather-related and other natural catastrophes, as well as acts of terrorism and wars. The frequency and/or severity of catastrophic events may be impacted in the future by the continued effects of climate change.
As a result, each of Group’s and Holdings’ ability to pay dividends, interest or other payments on its securities in the future will depend on the earnings and cash flows of the operating subsidiaries and the ability of the subsidiaries to pay dividends or to advance or repay funds to it.
As a result, each of Group’s and Holdings’ ability to pay dividends, interest or other payments on its securities in the future will depend on the earnings and cash flows of its respective operating subsidiaries and the ability of the subsidiaries to pay dividends or to advance or repay funds to it.
In addition, losses may arise from events or exposures that are not anticipated when the coverage is priced. In addition to unanticipated events, we also face the unanticipated expansion of our exposures, particularly in long- tail liability lines.
In addition, losses may arise from events or exposures that are not anticipated when the coverage is priced. In addition to such unanticipated events, we also face the unanticipated expansion of our exposures, particularly in long-tail liability lines.
Even in the absence of an attempt to effect a change in management or a takeover attempt, these provisions may adversely affect the prevailing market price of our common shares if they are viewed as discouraging takeover attempts in the future. 32 For example, Group’s bye-laws contain the following provisions that could have an anti-takeover effect: ● the total voting power of any shareholder owning more than 9.9% of the common shares will be reduced to 9.9% of the total voting power of the common shares; ● the board of directors may decline to register any transfer of common shares if it has reason to believe that the transfer would result in: i.) any person that is not an investment company beneficially owning more than 5.0% of any class of the issued and outstanding share capital of Group, ii.) any person holding controlled shares in excess of 9.9% of any class of the issued and outstanding share capital of Group, or iii.) any adverse tax, regulatory or legal consequences to Group, any of its subsidiaries or any of its shareholders; ● Group also has the option to redeem or purchase all or part of a shareholder’s common shares to the extent the board of directors determines it is necessary or advisable to avoid or cure any adverse or potential adverse consequences if: i.) any person that is not an investment company beneficially owns more than 5.0% of any class of the issued and outstanding share capital of Group, ii.) any person holds controlled shares in excess of 9.9% of any class of the issued and outstanding share capital of Group, or iii.) share ownership by any person may result in adverse tax, regulatory or legal consequences to Group, any of its subsidiaries or any other shareholder.
Even in the absence of an attempt to effect a change in management or a takeover attempt, these provisions may adversely affect the prevailing market price of our common shares if they are viewed as discouraging takeover attempts in the future. 25 Table of Contents For example, Group’s bye-laws contain the following provisions that could have an anti-takeover effect: • the total voting power of any shareholder owning more than 9.9% of the common shares will be reduced to 9.9% of the total voting power of the common shares; • the board of directors may decline to register any transfer of common shares if it has reason to believe that the transfer would result in: i.) any person that is not an investment company beneficially owning more than 5.0% of any class of the issued and outstanding share capital of Group, ii.) any person holding controlled shares in excess of 9.9% of any class of the issued and outstanding share capital of Group, or iii.) any adverse tax, regulatory or legal consequences to Group, any of its subsidiaries or any of its shareholders; • Group also has the option to redeem or purchase all or part of a shareholder’s common shares to the extent the board of directors determines it is necessary or advisable to avoid or cure any adverse or potential adverse consequences if: i.) any person that is not an investment company beneficially owns more than 5.0% of any class of the issued and outstanding share capital of Group, ii.) any person holds controlled shares in excess of 9.9% of any class of the issued and outstanding share capital of Group, or iii.) share ownership by any person may result in adverse tax, regulatory or legal consequences to Group, any of its subsidiaries or any other shareholder.
An example of this is the expansion over time of the scope of insurers’ legal liability within the mass tort arena, particularly for A&E exposures discussed above. Decreases in pricing for property and casualty reinsurance and insurance could reduce our net income. The worldwide reinsurance and insurance businesses are highly competitive, as well as cyclical by product and market.
An example of this is the expansion over time of the scope of insurers’ legal liability within the mass tort cases, particularly for A&E exposures discussed above. Decreases in pricing for property and casualty reinsurance and insurance could reduce our net income. The worldwide reinsurance and insurance businesses are highly competitive, as well as cyclical by product and market.
Under Delaware law, any shareholder may inspect or obtain copies of a corporation’s shareholder list and its other books and records for any purpose reasonably related to that person’s interest as a shareholder. Shareholder’s Suits. The rights of shareholders under Bermuda law are not as extensive as the rights of shareholders under legislation or judicial precedent in many U.S. jurisdictions.
Under Delaware law, any shareholder may inspect or obtain copies of a corporation’s shareholder list and its other books and records for any purpose reasonably related to that person’s interest as a shareholder. Shareholders’ Suits. The rights of shareholders under Bermuda law are not as extensive as the rights of shareholders under legislation or judicial precedent in many U.S. jurisdictions.
These taxes could increase, and other taxes could be imposed in the future on Bermuda Re’s business, which would reduce our net income. If U.S. tax law changes, our U.S. shareholders net income may be impacted. U.S. shareholders. In January 2022, Treasury and the IRS released proposed regulations regarding the determination and inclusion of related-person insurance income (RPII).
These taxes could increase, and other taxes could be imposed in the future on Bermuda Re’s business, which would reduce our net income. If U.S. tax law changes, our U.S. shareholders net income may be impacted. In January 2022, Treasury and the IRS released proposed regulations regarding the determination and inclusion of related-person insurance income (“RPII”).
The Board of Directors has indicated that it will apply these bye-law provisions in such manner that “passive institutional investors” will be treated similarly to investment companies. For this purpose, “passive institutional investors” include all persons who are eligible, pursuant to Rule 13d-1(b)(1) under the U.S.
The Board has indicated that it will apply these bye-law provisions in such manner that “passive institutional investors” will be treated similarly to investment companies. For this purpose, “passive institutional investors” include all persons who are eligible, pursuant to Rule 13d-1(b)(1) under the U.S.
This ability is subject to general economic, financial, competitive, regulatory and other factors beyond our control. Payment of dividends and advances and repayments from some of the operating subsidiaries are regulated by U.S., state and foreign insurance laws and regulatory restrictions, including minimum solvency and liquidity thresholds.
This ability is subject to general economic, financial, competitive, regulatory and other factors beyond our control. Payment of dividends and advances and repayments from some of the operating subsidiaries are regulated by U.S. states and foreign insurance laws and regulatory restrictions, including minimum solvency and liquidity thresholds.
Recently they agreed upon a broad framework for overhauling the taxation of multinational corporations that includes, among other things, profit reallocation rules and a 15% global minimum corporate income tax rate. These proposals, if implemented, could have an impact our net income and effective tax rate.
Recently they agreed upon a broad framework for overhauling the taxation of multinational corporations that includes, among other things, profit reallocation rules and a 15% global minimum corporate income tax rate. These proposals, if implemented, could have an impact on net income and effective tax rate.
If Bermuda Re became subject to U.S. income tax on its income, or if we became subject to U.S. income tax, our income could also be subject to the U.S. branch profits tax. In that event, Group and Bermuda Re would be subject to taxation at a higher combined effective rate than if they were organized as U.S. corporations.
If Bermuda Re became subject to U.S. income tax on its income, or if Group became subject to income tax, our income could also be subject to U.S. branch profits tax. In that event, Group and Bermuda Re would be subject to taxation at a higher combined effective rate than if they were organized as U.S. corporations.
Under Delaware law, a corporation may indemnify a director or officer who becomes a party to an action, suit or proceeding because of his position as a director or officer if (1) the director or officer acted in good faith and in a manner he reasonably believed to be in or not opposed to the best interests of the corporation and (2) if the action or proceeding involves a criminal offense, the director or officer had no reasonable cause to believe his or her conduct was unlawful.
Under Delaware law, a corporation may indemnify a director or officer who becomes a party to an action, suit or proceeding because of his position as a director or officer if (1) the director or officer acted in good faith and in a manner he reasonably believed to 28 Table of Contents be in or not opposed to the best interests of the corporation and (2) if the action or proceeding involves a criminal offense, the director or officer had no reasonable cause to believe his or her conduct was unlawful.
However, if the IRS were to successfully assert that Bermuda Re was engaged in a U.S. trade or business, Bermuda Re would be required to pay U.S. corporate income tax on all of its income and possibly the U.S. branch profits tax.
However, if the IRS were to successfully assert that Bermuda Re was engaged in a U.S. trade or business, Bermuda Re would be required to pay U.S. corporate income tax on all its income and possibly also the U.S. branch profits tax.
RISKS RELATING TO REGULATION Insurance laws and regulations restrict our ability to operate and any failure to comply with those laws and regulations could have a material adverse effect on our business. We are subject to extensive and increasing regulation under U.S., state and foreign insurance laws.
Insurance laws and regulations restrict our ability to operate and any failure to comply with those laws and regulations could have a material adverse effect on our business . We are subject to extensive and increasing regulation under U.S., state and foreign insurance laws.
Enforcement of Civil Liabilities. Group is organized under the laws of Bermuda. Some of its directors and officers may reside outside the U.S. A substantial portion of our assets are or may be located in jurisdictions outside the U.S.
Enforcement of Civil Liabilities. Group is organized under the laws of Bermuda. Some of its directors and officers may reside outside the U.S. A substantial portion of our assets are or may be located in jurisdictions outside the United States.
In addition, Bermuda Re is subject to federal excise tax on reinsurance and insurance premiums with respect to risks located in the U.S. In addition, Bermuda Re is subject to withholding tax on dividend income from U.S. sources.
In addition, Bermuda Re is subject to federal excise tax on reinsurance and insurance premiums with respect to risks located in the United States. In addition, Bermuda Re is subject to withholding tax on dividend income from U.S. sources.
If we do not have the requisite licenses and approvals or do not comply with applicable regulatory requirements, the insurance regulatory authorities could preclude or temporarily suspend us from carrying on some or all of our activities or monetarily penalize us. These types of actions could have a material adverse effect on our business.
If we do not have the requisite licenses and approvals or do not comply with applicable regulatory requirements, the insurance regulatory authorities could preclude or temporarily suspend us from carrying on some or all of our activities or fine us. These types of actions could have a material adverse effect on our business.
During the past five calendar years, the reserve re-estimation process resulted in an increase to our pre- tax net income in 2022, 2021 and 2019 and resulted in a decrease to our pre-tax net income in 2020 and 2018: Calendar year: Effect on pre-tax net income (Dollars in millions) 2022 $ 1 increase 2021 9 increase 2020 401 decrease 2019 64 increase 2018 387 decrease The difficulty in estimating our reserves is significantly more challenging as it relates to reserving for potential A&E liabilities.
During the past five calendar years, the reserve re-estimation process resulted in an increase to our pre-tax net income in 2023, 2022, 2021 and 2019 and resulted in a decrease to our pre-tax net income in 2020: Calendar year: Effect on pre-tax net income (Dollars in millions) 2023 $ 5 increase 2022 1 increase 2021 9 increase 2020 401 decrease 2019 64 increase The difficulty in estimating our reserves is significantly more challenging as it relates to reserving for potential A&E liabilities.
As Bermuda Re’s business develops, it will monitor the need to obtain licenses in jurisdictions other than Bermuda and the U.K., where it has an authorized branch, in order to comply with applicable law or to be able to engage in additional insurance-related activities.
As Bermuda Re’s business develops, it will monitor the need to obtain licenses in jurisdictions other than Bermuda and the UK, where it has an authorized branch, in order to comply with applicable law or to be able to engage in additional insurance-related activities.
The Organization for Economic Co-operation and Development (“OECD”) and its member countries which includes the U.S., have been focusing for an extended period on issues related to the taxation of multinational corporations, such as the comprehensive plan set forth by the OECD to create an agreed set of international tax rules for preventing base erosion and profit shifting.
The Organization for Economic Co-operation and Development (“OECD”) and its member countries which includes the United States, have been focusing for an extended period on issues related to the taxation of multinational corporations, such as the comprehensive plan set forth by the OECD to create an agreed set of international tax rules for preventing base erosion and profit shifting.
We are dependent upon our information technology platform, including our processing systems, data and electronic transmissions in our business operations. Security breaches could expose us to the loss or misuse of our information, litigation and potential liability.
We are dependent upon our information technology platform, including our processing systems, data and electronic transmissions in our business operations. Security breaches and other cyber threats could expose us to the loss or misuse of our technology systems or information, litigation and potential liability.
By way of illustration, during the past five calendar years, pre -tax catastrophe losses, net of reinsurance, were as follows: Calendar year: Pre-tax net catastrophe losses (Dollars in millions) 2022 $ 1,055 2021 1,135 2020 425 2019 576 2018 1,800 Our losses from future catastrophic events could exceed our projections.
By way of illustration, during the past five calendar years, pre-tax catastrophe losses, net of reinsurance, were as follows: Calendar year: Pre-tax net catastrophe losses (Dollars in millions) 2023 $ 470 2022 1,055 2021 1,135 2020 425 2019 576 Our losses from future catastrophic events could exceed our projections.
However, if the IRS successfully asserted that we had material amounts of income that was subject to the taxing 37 jurisdiction of the U.S., we would be required to pay U.S. corporate income tax on that income, and possibly the U.S. branch profits tax. The imposition of such tax would reduce our net income.
However, if the IRS successfully asserted that we had material amounts of income that was subject to the U.S. taxing jurisdiction, we would be required to pay U.S. corporate income tax on that income, and possibly the U.S. branch profits tax. The imposition of such tax would reduce our net income. Bermuda Re and Group.
In addition, several European regulatory bodies are in process of updating existing or developing new capital adequacy directives for insurers and reinsurers. The future impact of such initiatives or new initiatives from the current Government Administration, if any, on our operation, net income (loss) or financial condition cannot be determined at this time.
In addition, several European regulatory bodies are in process of updating existing regulations or developing new capital adequacy directives for insurers and reinsurers. The future impact of such initiatives or new initiatives from the current governmental authorities, if any, on our operation, net income (loss) or financial condition cannot be determined at this time.
Group is required to maintain its share register at its registered office in Bermuda. Group also maintains a branch register in the offices of its transfer agent in the U.S., which is open for public inspection as required under the Companies Act.
Group is required to maintain its share register at its registered office in Bermuda. Group also maintains a branch register in the offices of its transfer agent in the United States, which is open for public inspection as required under the Companies Act.
Members of the general public have the right to inspect the public documents of Group available at the office of the Registrar of Companies and Group’s registered office, both in Bermuda.
Inspection of Corporate Records. Members of the general public have the right to inspect the public documents of Group available at the office of the Registrar of Companies and Group’s registered office, both in Bermuda.
Delaware law allows the board of directors of a corporation to delegate many of its powers to committees, but those committees may consist only of directors. Interested Directors.
Delaware law allows the 26 Table of Contents board of directors of a corporation to delegate many of its powers to committees, but those committees may consist only of directors. Interested Directors.
To a lesser extent, Everest Re also has modest exposure to reinsurance contracts that contain provisions for obligatory funding of outstanding liabilities in the event of a rating agency downgrade. Those provisions would also generally be triggered if Everest Re’s rating fell below A.M. Best’s A- rating level.
To a lesser extent, Everest Re also has modest exposure to reinsurance contracts that contain provisions for obligatory funding of outstanding liabilities in the event of a rating agency downgrade. Those provisions would also generally be triggered if Everest Re’s rating fell below A.M. Best’s A- rating level. See also ITEM 1, “Financial Strength Ratings”.
If shares were acquired under the notice at a price below the court’s appraisal price, the acquiring shareholders must either pay the difference in price or cancel the notice and return the shares thus acquired to the shareholder, who must then refund the purchase price. There are no comparable provisions under Delaware law. Inspection of Corporate Records.
If shares were acquired under the notice at a price below the court’s appraisal price, the acquiring shareholders must either pay the difference in price or cancel the notice and return 27 Table of Contents the shares thus acquired to the shareholder, who must then refund the purchase price. There are no comparable provisions under Delaware law.
As a result, a person may not be able to affect service of process within the U.S. on directors and officers of Group and those experts who reside outside the U.S.
As a result, a person may not be able to affect service of process within the United States on directors and officers of Group and those experts who reside outside the United States.
In setting reserves for our reinsurance liabilities, we rely on claim data supplied by our ceding companies and brokers and we employ actuarial and statistical projections. The information received from our ceding companies is not always timely or accurate, which can contribute to inaccuracies in our loss projections.
In setting reserves for our reinsurance liabilities, we rely 20 Table of Contents on claims data supplied by our ceding companies and brokers, and we employ actuarial and statistical projections. The information received from our ceding companies is not always timely or accurate, which can contribute to inaccuracies in our loss projections.
The regulations, if finalized without modifications, could cause RPII to be attributable to the Company’s U.S. shareholders prospectively and therefore additional income tax. The imposition of such tax could reduce our U.S. shareholders return on investment in the Company. Our U.S. shareholders net income and tax liabilities might be increased, reducing their net income. ITEM 1B. UNRESOLVED STAFF COMMENTS None.
The regulations, if finalized without modifications, could cause RPII to be attributable to the Company’s U.S. shareholders prospectively and therefore would incur additional income tax. The imposition of such tax could reduce our U.S. shareholders return on investment in the Company. Our U.S. shareholders pre-tax income and tax liabilities might be increased, reducing their net income. ITEM 1B.
With the expansion of the capital markets into insurance linked financial instruments, we increased our use of capital market products for catastrophe reinsurance. In addition, we have increased some of our quota share contracts with larger retrocessions.
With the expansion of the capital markets into insurance linked financial instruments, we increased our use of capital market products for catastrophe reinsurance. In addition, we have increased some of our quota share contracts with larger 21 Table of Contents retrocessionaires.
We have established guidelines for the conduct of our operations that are designed to ensure that Bermuda Re is not engaged in the conduct of a trade or business in the U.S.
The income of Bermuda Re is a sizable portion of our worldwide income from operations. We have established guidelines for the conduct of our operations that are designed to ensure that Bermuda Re is not engaged in the conduct of a trade or business in the U.S.
Our industry is highly competitive and subject to pricing cycles that can be pronounced. We compete globally in the United States, Bermuda and international reinsurance and insurance markets with numerous competitors.
STRATEGIC Our industry is highly competitive, and we may not be able to compete successfully in the future. Our industry is highly competitive and subject to pricing cycles that can be pronounced. We compete globally in the United States, Bermuda and international reinsurance and insurance markets with numerous competitors.
These loss projections are approximations, reliant on a mix of quantitative and qualitative processes, and actual losses may exceed the projections by a material amount, resulting in a material adverse effect on our financial condition and results of operations. 26 If our loss reserves are inadequate to meet our actual losses, our net income would be reduced or we could incur a loss.
These loss projections are approximations, reliant on a mix of quantitative and qualitative processes, and actual losses may exceed the projections by a material amount. If our loss reserves are inadequate to meet our actual losses, our net income would be reduced or we could incur a loss.
A downgrade or withdrawal of any of these ratings could adversely affect our ability to market our reinsurance and insurance products, our ability to compete with other reinsurers and insurers, and could have a material and adverse effect on our ability to write new business that in turn could impact our profitability and operating results.
A downgrade or withdrawal of any of these ratings could adversely affect our ability to market our reinsurance and insurance products, our ability to compete with other reinsurers and insurers and our ability to write new business, which in turn could impact our profitability and results.
Group and/or various Group companies may be subject to additional income taxes, which would reduce our net income. If U.S. tax law changes, our net income may be impacted.
The Company may be subject to additional income taxes, which would reduce our net income. 30 Table of Contents Group and/or various Group companies may be subject to additional income taxes, which would reduce our net income. If U.S. tax law changes, our net income may be impacted.
We cannot predict the impact these laws and regulations will have on our business, financial condition or results of operations, but our insurance and reinsurance companies could incur additional costs resulting from compliance with such laws and regulations.
We cannot predict the impact these laws and regulations will have on our business, financial condition or results of operations, but our insurance and reinsurance companies could incur additional costs resulting from compliance with such laws and regulations. If international tax laws change, our net income may be impacted.
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.
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.
For example, the New York State Department of Financial Services has a regulation pertaining to cybersecurity for all banking and insurance entities under its jurisdiction, which was effective as of March 1, 2017, which applies to us.
For example, the New York State Department of Financial Services has an applicable regulation pertaining to cybersecurity for all banking and insurance entities under its jurisdiction, effective as of March 1, 2017 and amended on November 1, 2023.
If Bermuda Re defaults on any letter of credit that it obtains, it may be required to prematurely liquidate a substantial portion of its investment portfolio and other assets pledged as collateral.
If Bermuda Re defaults on any letter of credit that it obtains, it may be required to prematurely liquidate a substantial portion of its investment portfolio and other assets pledged as collateral. Regulatory and legislative developments related to cybersecurity could have an adverse impact on our business.
The loss of the services of any key executive officer or the inability to hire and retain other highly qualified personnel in the future could adversely affect our ability to conduct business.
The loss of the services of any key executive officer or the inability to hire and retain other highly qualified personnel in the future, particularly those experienced in the property and casualty industry, could adversely affect our ability to conduct business. Special considerations apply to our Bermuda operations.
However, the insurance and reinsurance regulatory framework is subject to periodic 31 legislative review and revision. In the past, there have been congressional and other initiatives in the United States regarding increased supervision and regulation of the insurance industry, including proposals to supervise and regulate reinsurers domiciled outside the United States.
In the past, there have been congressional and other initiatives in the United States regarding increased supervision and regulation of the insurance industry, including proposals to supervise and regulate reinsurers domiciled outside the United States.
Group’s bye-laws contain provisions that could delay or prevent a change of control that a shareholder might consider favorable. The effect of these provisions could be to prevent a shareholder from receiving the benefit from any premium over the market price of our common shares offered by a bidder in a potential takeover.
The effect of these provisions could be to prevent a shareholder from receiving the benefit from any premium over the market price of our common shares offered by a bidder in a potential takeover.
We are dependent on our key personnel. Our success has been, and will continue to be, dependent on our ability to retain the services of our Chairman, Joseph V. Taranto (age 73) and existing key executive officers and to attract and retain additional qualified personnel in the future.
OPERATIONAL We are dependent on our key personnel. Our success has been, and will continue to be, dependent on our ability to retain the services of our existing key executives and other key employees, and to attract and retain additional qualified personnel in the future.
Because any person who acquired control of Group would thereby acquire indirect control of its insurance company subsidiaries in the U.S., the insurance change of control laws of Delaware, California and Georgia would apply to such a transaction.
Because any person who acquired control of Group would thereby acquire indirect control of its insurance company subsidiaries in the United States, the insurance change of control laws of Delaware and California would apply to such a transaction. This could have the effect of delaying or even preventing such a change of control.
Delaware law also provides that dividends may not be paid out of net profits at any time when stated capital is less than the capital represented by the outstanding stock of all classes having a preference upon the distribution of assets. 36 RISKS RELATING TO TAXATION If international tax laws change, our net income may be impacted.
Surplus is the amount by which the net assets of a corporation exceed its stated capital. Delaware law also provides that dividends may not be paid out of net profits at any time when stated capital is less than the capital represented by the outstanding stock of all classes having a preference upon the distribution of assets.
If any of these factors were to result in a decline in the demand for (re)insurance or an overall increase in (re)insurance capacity, our net income could decrease. If rating agencies downgrade the ratings of our insurance subsidiaries, future prospects for growth and profitability could be significantly and adversely affected.
If any of these factors were to result in a decline in the demand for (re)insurance or an overall increase in (re)insurance capacity, our net income could decrease.
Regulatory challenges in the United States could adversely affect the ability of Bermuda Re to conduct business. Bermuda Re does not intend to be licensed or admitted as an insurer or reinsurer in any U.S. jurisdiction. Under current law, Bermuda Re generally will be permitted to reinsure U.S. risks from its office in Bermuda without obtaining those licenses.
Regulatory challenges in the United States could adversely affect the ability of Bermuda Re to conduct business. 29 Table of Contents Bermuda Re does not intend to be licensed or admitted as an insurer or reinsurer in any U.S. jurisdiction.
Securities Exchange Act of 1934, (“the Exchange Act”) to file a short-form statement on Schedule 13G, other than an insurance company or any parent holding company or control person of an insurance company. Applicable insurance laws may also have an anti-takeover effect.
Securities Exchange Act of 1934, (“the Exchange Act”) to file a short-form statement on Schedule 13G, other than an insurance company or any parent holding company or control person of an insurance company. Investors in Group may have more difficulty in protecting their interests than investors in a U.S. corporation.
An incident could also result in a violation of applicable privacy and other laws, damage our reputation, cause a loss of customers or give rise to monetary fines and other penalties, which could be significant.
An incident could also result in a violation of applicable privacy and other laws, damage our reputation, cause a loss of customers or give rise to monetary fines and other penalties, which could be significant. We are not aware of a cybersecurity incident that materially affected the Company, including its business strategy, results of operations or financial condition.
The worldwide net premium written by the Top 40 global reinsurance groups for both life and non-life business was estimated to be $292 billion in 2022 according to data compiled by S&P. In addition to competitors the entry of alternative capital market products and new company formations provide additional sources of reinsurance and insurance capacity.
The worldwide net premium written by the Top 40 global reinsurance groups for both life and non-life business was estimated to be $306 billion in 2022 according to data compiled by S&P.
This could have the effect of delaying or even preventing such a change of control. 33 The ownership of common shares of Group by Everest Re Advisors, Ltd., a direct subsidiary of Group may have an impact on securing approval of shareholder proposals that Group’s management supports. As of December 31, 2022, Everest Re Advisors, Ltd.
The ownership of common shares of Group by Everest Re Advisors, Ltd., a direct subsidiary of Group, may have an impact on securing approval of shareholder proposals that Group’s management supports. As of December 31, 2023, Everest Re Advisors, Ltd. (Bermuda) owned 9,719,971 or 18.3% of the outstanding common shares of Group.
In addition, reinsurers may be unwilling to pay us even though they are able to do so. The failure of one or more of our reinsurers to honor their obligations to us in a timely fashion would impact our cash flow and reduce our net income and could cause us to incur a significant loss.
The failure of one or more of our reinsurers to honor their obligations to us in a timely fashion would impact our cash flow and reduce our net income and could cause us to incur a significant loss. Our investment values and investment income could decline due to changed conditions in the financial markets.
Our net income will be reduced if U.S. excise and withholding taxes are increased. Reinsurance and insurance premiums paid to Bermuda Re with respect to risks located in the U.S. are subject to a U.S. federal excise tax of one percent.
Group and/or Bermuda Re may become subject to Bermuda tax, which would reduce our net income. 31 Table of Contents Reinsurance and insurance premiums paid to Bermuda Re with respect to risks located in the United States are subject to a U.S. federal excise tax of one percent.
The combined effect of the 21% U.S. corporate income tax rate and the 30% branch profits tax rate is a net tax rate of 44.7%. The imposition of these taxes would reduce our net income. Group and/or Bermuda Re may become subject to Bermuda tax, which would reduce our net income.
The combined effect of the 21% U.S. corporate income tax rate and the 30% branch profits tax rate is a net tax rate of 44.7%. The imposition of these taxes would reduce out net income. Our net income will be reduced if U.S. excise and withholding taxes are increased.
We may not be able to collect amounts due from insureds, agents and brokers, resulting in a reduction to net income. We are subject to credit risk of reinsurers in connection with retrocessional arrangements because the transfer of risk to a reinsurer does not relieve us of our liability to the insured.
We are subject to credit risk of reinsurers in connection with retrocessional arrangements because the transfer of risk to a reinsurer does not relieve us of our liability to the insured. In addition, reinsurers may be unwilling to pay us even though they are able to do so.
The percentage of business that we reinsure may vary considerably from year to year, depending on our view of the relationship between cost and expected benefit for the contract period. 2022 2021 2020 2019 2018 Percentage of ceded written premiums to gross written premiums 11.5% 12.3% 13.0% 14.3% 12.5% 28 Our industry is highly competitive and we may not be able to compete as successfully in the future.
The percentage of business that we reinsure may vary considerably from year to year, depending on our view of the relationship between cost and expected benefit for the contract period. 2023 2022 2021 2020 2019 Percentage of ceded written premiums to gross written premiums 11.5 % 11.5 % 12.3 % 13.0 % 14.3 % FINANCIAL A decline in our financial strength ratings could adversely affect our standing among cedents and broker partners and our ability to grow premiums and earnings.
A significant portion of our investment portfolio consists of fixed income securities and smaller portions consist of equity securities and other investments. The fair value of our invested assets and associated investment income fluctuate depending on general economic and market conditions.
A significant portion of our investment portfolio consists of fixed income securities and smaller portions consist of equity securities and other investments.
In addition, certain state insurance regulators are developing or have developed regulations that may impose regulatory requirements relating to cybersecurity on insurance and reinsurance companies (potentially including insurance and reinsurance companies that are not domiciled, but are licensed, in the relevant state).
The Insurance Data Security Model Law has now adopted in 23 states. In addition, certain state insurance regulators are developing or have developed their own regulations that may impose additional regulatory requirements relating to cybersecurity on insurance and reinsurance companies.
Nevertheless, Everest Re Advisors, Ltd., which is controlled by Group, has the ability to vote 9.9% of the total voting power of Group’s common shares. Investors in Group may have more difficulty in protecting their interests than investors in a U.S. corporation.
Under Group’s bye-laws, the total voting power of any shareholder owning more than 9.9% of the common shares is reduced to 9.9% of the total voting power of the common shares. Nevertheless, Everest Re Advisors, Ltd., which is controlled by Group, has the ability to vote 9.9% of the total voting power of Group’s common shares.
Currently, all our Bermuda-based professional employees who require work permits have been granted permits by the Bermuda government that expire at various times between February 2024 and October 2027. Our investment values and investment income could decline because they are exposed to interest rate, credit, and market risks.
Currently, all our Bermuda-based professional employees who require work permits have been granted permits by the Bermuda government that expire at various times between April 2024 and October 2028. We are subject to cybersecuri ty risks that could negatively impact our business operations.
In addition, if issuers of individual investments are unable to meet their obligations, investment income will be reduced and realized capital losses may arise. The majority of our fixed income securities are classified as available for sale and temporary changes in the fair value of these investments are reflected as changes to our shareholders’ equity.
If issuers of individual investments are unable to meet their obligations, investment income will be reduced and realized capital losses may arise. Equity Risk. We have invested a portion of our investment portfolio in equity securities. The value of these assets fluctuates with changes in the markets.
Management is not aware of a cybersecurity incident that has had a material impact on our operations. 30 The NAIC has adopted an Insurance Data Security Model Law, which, when adopted by the states will require insurers, insurance producers and other entities required to be licensed under state insurance laws to comply with certain requirements under state insurance laws, such as developing and maintaining a written information security program, conducting risk assessments and overseeing the data security practices of third-party vendors.
In October 2017, the NAIC adopted the Insurance Data Security Model Law, which was intended to establish the standards for data security and for the investigation and notification of data breaches applicable to insurance licensees in states adopting such law, requiring insurers, and other entities required to be licensed under state insurance laws to comply with certain requirements, such as developing and maintaining a written information security program, conducting risk assessments and overseeing the data security practices of third-party vendors.
The net investment income that we realize from future investments in fixed income securities will generally increase or decrease with interest rates. 29 Interest rate fluctuations also can cause net investment income from fixed income investments that carry prepayment risk, such as mortgage-backed and other asset-backed securities, to differ from the income anticipated from those securities at the time of purchase.
Additionally, net investment income from fixed income investments that carry prepayment risk, such as mortgage-backed and other asset-backed securities, can differ from the income anticipated from those securities at the time of purchase. Credit Risk. Our investment portfolio is subject to the risk of loss due to default or deterioration in credit quality.
Accordingly, the operating subsidiaries may not be able to pay dividends or advance or repay funds to Group and Holdings in the future, which could prevent us from paying dividends, interest or other payments on our securities. Provisions in Group’s bye-laws could have an anti-takeover effect, which could diminish the value of its common shares.
Accordingly, the operating subsidiaries may not be able to pay dividends or advance or repay funds to Group and Holdings in the future, which could prevent us from paying dividends or interest or making other payments on our securities. We may experience foreign currency exchange losses that reduce our net income and capital levels.

… 45 more changes not shown on this page.

Item 2. Properties

Properties — owned and leased real estate

1 edited+0 added−0 removed0 unchanged
Biggest changeITEM 2. PROPERTIES Everest Re’s corporate offices are located in approximately 321,500 square feet of leased office space in Warren, New Jersey. Bermuda Re’s corporate offices are located in approximately 12,300 total square feet of leased office space in Hamilton, Bermuda. The Company’s other 24 locations occupy a total of approximately 271,200 square feet, all of which are leased.
Biggest changeITEM 2. PROPERTIES Everest Re’s corporate offices are located in approximately 321,500 square feet of leased office space in Warren, New Jersey. Bermuda Re’s corporate offices are located in approximately 12,300 total square feet of leased office space in Hamilton, Bermuda. The Company’s 29 other locations occupy a total of approximately 329,100 square feet, all of which are leased.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

2 edited+1 added−1 removed1 unchanged
Biggest changeIn some disputes, the Company seeks to enforce its 38 rights under an agreement or to collect funds owing to it. In other matters, the Company is resisting attempts by others to collect funds or enforce alleged rights.
Biggest changeIn some disputes, the Company seeks to enforce its rights under an agreement or to collect funds owing to it. In other matters, the Company is resisting attempts by others to collect funds or enforce alleged rights. These disputes arise from time to time and are ultimately resolved through both informal and formal means, including negotiated resolution, arbitration and litigation.
Aside from litigation and arbitrations related to these insurance and reinsurance agreements, the Company is not a party to any other material litigation or arbitration. ITEM 4. MINE SAFETY DISCLOSURES Not Applicable. PART II
The Company considers the statuses of these proceedings when determining its reserves for unpaid loss and loss adjustment expenses. 33 Table of Contents Aside from litigation and arbitrations related to these insurance and reinsurance agreements, the Company is not a party to any other material litigation or arbitration. ITEM 4. MINE SAFETY DISCLOSURES Not Applicable. PART II
Removed
These disputes arise from time to time and are ultimately resolved through both informal and formal means, including negotiated resolution, arbitration and litigation. In all such matters, the Company believes that its positions are legally and commercially reasonable. The Company considers the statuses of these proceedings when determining its reserves for unpaid loss and loss adjustment expenses.
Added
In all such matters, the Company believes that its positions are legally and commercially reasonable.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

10 edited+0 added−2 removed2 unchanged
Biggest changeSee “Regulatory Matters – Dividends” and ITEM 8, “Financial Statements and Supplementary Data” - Note 14 of Notes to Consolidated Financial Statements. 39 Purchases of Equity Securities by the Issuer and Affiliated Purchasers Issuer Purchases of Equity Securities (a) (b) (c) (d) Maximum Number (or Total Number of Approximate Dollar Shares (or Units) Value) of Shares (or Purchased as Part Units) that May Yet Total Number of of Publicly Be Purchased Under Shares (or Units) Average Price Paid Announced Plans or the Plans or Period Purchased per Share (or Unit) Programs Programs (1) January 1 - 31, 2022 — $ — — 1,470,181 February 1 - 28, 2022 44,455 $ 299.5577 — 1,470,181 March 1 - 31, 2022 11,175 $ 269.9151 5,000 1,465,181 April 1 - 30, 2022 — $ — — 1,465,181 May 1 - 31, 2022 1,601 $ 276.8129 — 1,465,181 June 1 - 30, 2022 801 $ 270.2875 — 1,465,181 July 1 - 31, 2022 — $ — — 1,465,181 August 1 - 31, 2022 128,764 $ 252.6871 128,764 1,336,417 September 1 - 30, 2022 110,531 $ 252.6578 105,007 1,231,410 October 1 - 31, 2022 2,502 $ 256.7054 2,502 1,228,908 November 1 - 30, 2022 3,828 $ 321.1994 — 1,228,908 December 1 - 31, 2022 — $ — — 1,228,908 Total 303,657 $ — 241,273 1,228,908 (1) On May 22, 2020, the Company’s executive committee of the Board of Directors approved an amendment to the share repurchase program authorizing the Company and/or its subsidiary Holdings, to purchase up to a current aggregate of 32.0 million of the Company’s shares (recognizing that the number of shares authorized for repurchase has been reduced by those shares that have already been purchased) in open market transactions, privately negotiated transactions or both.
Biggest changeSee “Regulatory Matters - Dividends” and ITEM 8, “Financial Statements and Supplementary Data”- Note 17 of Notes to Consolidated Financial Statements. 34 Table of Contents Purchases of Equity Securities by the Issuer and Affiliated Purchasers Issuer Purchases of Equity Securities (a) (b) (c) (d) Period Total Number of Shares (or Units) Purchased Average Price Paid per Share (or Unit) Total Number of Shares (or Units) Purchased as Part of Publicly Announced Plans or Programs Maximum Number (or Approximate Dollar Value) of Shares (or Units) that May Yet Be Purchased Under the Plans or Programs (1) January 1 - 31, 2023 0 $ — 0 1,228,908 February 1 - 28, 2023 44,937 $ 382.9829 0 1,228,908 March 1 - 31, 2023 6,273 $ 340.8460 0 1,228,908 April 1 - 30, 2023 78 $ 374.9276 0 1,228,908 May 1 - 31, 2023 619 $ 372.0318 0 1,228,908 June 1 - 30, 2023 205 $ 341.5675 0 1,228,908 July 1 - 31, 2023 69 $ 349.7200 0 1,228,908 August 1 - 31, 2023 0 $ — 0 1,228,908 September 1 - 30, 2023 6,934 $ 377.3661 0 1,228,908 October 1 - 31, 2023 0 $ — 0 1,228,908 November 1 - 30, 2023 3,750 $ 397.1126 0 1,228,908 December 1 - 31, 2023 84 $ 352.7550 0 1,228,908 Total 62,949 $ — 0 1,228,908 (1) On May 22, 2020, the Company’s executive committee of the Board approved an amendment to the share repurchase program authorizing the Company and/or its subsidiary Holdings, to purchase up to a current aggregate of 32.0 million of the Company’s shares (recognizing that the number of shares authorized for repurchase has been reduced by those shares that have already been purchased) in open market transactions, privately negotiated transactions or both.
The declaration and payment of future dividends, if any, by the Company will be at the discretion of the Board of Directors and will depend upon many factors, including the Company’s earnings, financial condition, business needs and growth objectives, capital and surplus requirements of its operating subsidiaries, regulatory restrictions, rating agency considerations and other factors.
The declaration and payment of future dividends, if any, by the Company will be at the discretion of the Board and will depend upon many factors, including the Company’s earnings, financial condition, business needs and growth objectives, capital and surplus requirements of its operating subsidiaries, regulatory restrictions, rating agency considerations and other factors.
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED SHAREHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Market Information. The common shares of Group trade on the New York Stock Exchange under the symbol, “RE”.
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED SHAREHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Market Information. The common shares of Group trade on the New York Stock Exchange under the symbol, “EG”.
The number of record holders of common shares as of February 1, 2023 was 729. That number does not include the beneficial owners of shares held in “street” name or held through participants in depositories, such as The Depository Trust Company. Dividend History and Restrictions.
The number of record holders of common shares as of February 1, 2024 was 863. That number does not include the beneficial owners of shares held in “street” name or held through participants in depositories, such as The Depository Trust Company. Dividend History and Restrictions.
The Company declared and paid its quarterly cash dividend of $1.55 per share for the first quarter of 2022 and paid its quarterly cash dividend of $1.65 per share for the remaining three quarters of 2022.
The Company declared and paid its quarterly cash dividend of $1.55 per share for the first quarter of 2022, declared and paid its quarterly cash dividend of $1.65 per share for the second quarter of 2022 through the second quarter of 2023, and declared and paid its quarterly cash dividend of $1.75 per share for the remaining two quarters of 2023.
As of December 31, 2022 the Company and/or its subsidiary Holdings have repurchased 30.8 million of the Company’s shares. Recent Sales of Unregistered Securities.
As of December 31, 2023, the Company and/or its subsidiary Holdings have repurchased 30.8 million of the Company’s shares. Recent Sales of Unregistered Securities. None. 35 Table of Contents Performance Graph.
Fiscal year ending December 31. Copyright© 2021 Standard & Poor's, a division of S&P Global. All rights reserved.
Fiscal year ending December 31. Copyright© 2024 Standard & Poor's, a division of S&P Global. All rights reserved. ITEM 6. [RESERVED] 36 Table of Contents
The Board of Directors of the Company has an established policy of declaring regular quarterly cash dividends and has paid a regular quarterly dividend in each quarter since the fourth quarter of 1995. The Company declared and paid its quarterly cash dividend of $1.55 per share for the four quarters of 2021.
The Company’s Board has an established policy of declaring regular quarterly cash dividends and has paid a regular quarterly dividend in each quarter since the fourth quarter of 1995.
The quarterly high and low closing market prices of Group’s common shares for the periods indicated were: 2022 2021 High Low High Low First Quarter $ 304.72 $ 267.35 $ 255.97 $ 211.08 Second Quarter 307.10 265.00 276.95 236.21 Third Quarter 285.67 245.79 273.68 236.68 Fourth Quarter 337.94 260.84 286.62 250.41 Number of Holders of Common Shares.
The quarterly high and low closing market prices of Group’s common shares for the periods indicated were: 2023 2022 High Low High Low First Quarter $ 390.84 $ 333.38 $ 304.72 $ 267.35 Second Quarter 387.10 332.87 307.10 265.00 Third Quarter 392.47 339.63 285.67 245.79 Fourth Quarter 414.59 350.69 337.94 260.84 Number of Holders of Common Shares.
The following Performance Graph compares cumulative total shareholder returns on the Common Shares (assuming reinvestment of dividends) from December 31, 2017 through December 31, 2022, with the cumulative total return of the Standard & Poor’s 500 Index and the Standard & Poor’s Insurance (Property and Casualty) Index. 12/17 12/18 12/19 12/20 12/21 12/22 Everest Re Group, Ltd. 100.00 100.73 131.11 113.99 136.61 168.99 S&P 500 100.00 95.62 125.72 148.85 191.58 156.89 S&P Property & Casualty Insurance 100.00 95.31 119.97 128.31 153.05 181.93 *$100 invested on 12/31/22 in stock or index, including reinvestment of dividends.
The following Performance Graph compares cumulative total shareholder returns on the Common Shares (assuming reinvestment of dividends) from December 31, 2018 through December 31, 2023, with the cumulative total return of the Standard & Poor’s 500 Index and the Standard & Poor’s Insurance (Property and Casualty) Index. 12/18 12/19 12/20 12/21 12/22 12/23 Everest Group, Ltd. 100.00 130.16 113.17 135.62 167.77 182.39 S&P 500 100.00 131.49 155.68 200.37 164.08 207.21 S&P Property & Casualty Insurance 100.00 125.87 134.63 160.58 190.89 211.53 * $100 invested on 12/31/18 in stock or index, including reinvestment of dividends.
Removed
On February 23, 2023, the Company’s Board of Directors declared a dividend of $1.65 per share, payable on or before March 30, 2023 to shareholders of record on March 16, 2023.
Removed
None. 40 168.99 156.89 181.93 $0 $50 $100 $150 $200 $250 1/1/2017 1/1/2018 1/1/2019 1/1/2020 1/1/2021 1/1/2022 COMPARISON OF 5 YEAR CUMULATIVE TOTAL RETURN* Among Everest Re Group, Ltd., the S&P 500 Index and the S&P Property & Casualty Insurance Index Everest Re Group, Ltd. S&P 500 S&P Property & Casualty Insurance Performance Graph.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

152 edited+52 added−44 removed73 unchanged
Biggest changeYears 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.
Biggest changeThe 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) 2023 2022 2021 2023/2022 2022/2021 Gross written premiums $ 16,637 $ 13,952 $ 13,050 19.2 % 6.9 % Net written premiums 14,730 12,344 11,446 19.3 % 7.9 % REVENUES: Premiums earned $ 13,443 $ 11,787 $ 10,406 14.0 % 13.3 % Net investment income 1,434 830 1,165 72.7 % (28.8) % Net gains (losses) on investments (276) (455) 258 (39.3) % NM Other income (expense) (14) (102) 37 (86.3) % NM Total revenues 14,587 12,060 11,866 20.9 % 1.6 % CLAIMS AND EXPENSES: Incurred losses and loss adjustment expenses 8,427 8,100 7,391 4.0 % 9.6 % Commission, brokerage, taxes and fees 2,952 2,528 2,209 16.7 % 14.5 % Other underwriting expenses 846 682 583 24.1 % 17.0 % Corporate expenses 73 61 68 19.9 % (10.1) % Interest, fees and bond issue cost amortization expense 134 101 70 33.2 % 43.9 % Total claims and expenses 12,432 11,472 10,321 8.4 % 11.2 % INCOME (LOSS) BEFORE TAXES 2,154 588 1,546 NM (62.0) % Income tax expense (benefit) (363) (9) 167 NM NM NET INCOME (LOSS) $ 2,517 $ 597 $ 1,379 NM (56.7) % RATIOS: Point Change Loss ratio 62.7 % 68.7 % 71.0 % (6.0) (2.3) Commission and brokerage ratio 22.0 % 21.4 % 21.2 % 0.6 0.2 Other underwriting expense ratio 6.3 % 5.8 % 5.6 % 0.5 0.2 Combined ratio 90.9 % 96.0 % 97.8 % (5.1) (1.8) At December 31, Percentage Increase/(Decrease) (Dollars in millions, except per share amounts) 2023 2022 2021 2023/2022 2022/2021 Balance sheet data: Total investments and cash $ 37,142 $ 29,872 $ 29,673 24.3 % 0.7 % Total assets 49,399 39,966 38,185 23.6 % 4.7 % Loss and loss adjustment expense reserves 24,604 22,065 19,009 11.5 % 16.1 % Total debt 3,385 3,084 3,089 9.8 % (0.2) % Total liabilities 36,197 31,525 28,046 14.8 % 12.4 % Shareholders' equity 13,202 8,441 10,139 56.4 % (16.8) % Book value per share 304.29 215.54 258.21 41.2 % (16.5) % (NM - not meaningful) (Some amounts may not reconcile due to rounding.) Revenues.
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.
All comparisons in this discussion are to the corresponding prior year unless otherwise indicated. Industry Conditions. The worldwide insurance and reinsurance businesses are highly competitive, as well as cyclical by product and market.
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.
Competition in the types of insurance and reinsurance 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.
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 insurance and reinsurance business offered, services offered, speed of claims payment and reputation and experience in lines written.
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.
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 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.
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.
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. Expected Cash Outflows.
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.
The Company evaluates fixed maturity securities classified as held to maturity for current expected credit losses utilizing risk characteristics of each security, including credit rating, remaining time to maturity, adjusted for prepayment considerations, and subordination level, and applying default and recovery rates, which include the incorporation of historical credit loss experience and macroeconomic forecasts, to develop an estimate of current expected credit losses.
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.
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 judgments. We cannot estimate losses from widespread catastrophic events, such as hurricanes and earthquakes, using traditional actuarial methods.
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 translation amount is reported as a component of other comprehensive income. The tables below display the potential impact of a parallel and immediate 10% and 20% increase and decrease in foreign exchange rates on the valuation of invested assets subject to foreign currency exposure for the periods indicated.
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.
Economic loss is the PML exposure, net of third party reinsurance including catastrophe industry loss warranty cover, reduced by estimated reinstatement premiums to renew coverage and estimated income taxes. The impact of income taxes on the PML depends on the distribution of the losses by corporate entity, which is also affected by inter-affiliate reinsurance.
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.
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 operations maintains capital in the currency of the country of its geographic location consistent with local regulatory guidelines.
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.
These earned but not reported premiums are combined with reported earned premiums to comprise our total premiums earned for determination of our 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.
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.
Industry analysts use the “survival ratio” to compare the A&E reserves among companies with such liabilities. The survival ratio is typically calculated by dividing a company’s current net reserves by the three year average of annual paid losses.
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.
See also ITEM 8, “Financial Statements and Supplementary Data” - Notes 1 and 4 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.
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.
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 3.9 years, which is reasonably consistent with our fixed income portfolio.
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.
We consider many factors when setting reserves including: (1) our exposure base and projected ultimate premiums 46 Table of Contents 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.
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATION The following is a discussion and analysis of our results of operations and financial condition for the years ended December 31, 2022 and 2021. This discussion should be read in conjunction with the Consolidated Financial Statements and related Notes, under ITEM 8 of this Form 10-K.
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATION The following is a discussion and analysis of our results of operations and financial condition for the years ended December 31, 2023 and 2022. This discussion should be read in conjunction with the Consolidated Financial Statements and related Notes, under ITEM 8 of this Form 10-K.
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.
We maintain reserves equal to our estimated ultimate liability for losses and LAE for reported and unreported claims for our insurance and reinsurance businesses.
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.
We carry the limited partnership 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.
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 to our cash flows from operations and liquid investments, we also have multiple active credit facilities that provide commitments of up to $1.7 billion of collateralized standby letters of credit to support business written by our Bermuda operating subsidiaries.
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.
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, 2023, we had repurchased 30.8 million shares under this authorization.
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.
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. Net Income (Loss).
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.
Projected catastrophe losses are generally summarized in terms of the probable maximum loss (“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.
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.
Failure to meet the required statutory capital levels could result in various regulatory restrictions, including with respect to business activity and the payment of dividends to their parent companies.
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.
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 credit strength of the issuer, (3) the issuer’s market sector, (4) the length of time to maturity and (5) for asset-backed securities, changes in prepayments, credit enhancements and underlying default rates.
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.
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 data centers available in case of broader outages.
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.
Each non-U.S. 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 non-U.S. operations are the Canadian Dollar, the Singapore Dollar, the British Pound Sterling and the Euro.
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.
Pursuant to the FAST Act Modernization and Simplification of Regulation S-K, comparisons between 2022 and 2021 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, 2022.
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.
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 ways depending on the type of contract and the agreed or contractual reporting requirements.
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.
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 from a change in market interest rates.
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, 2023 and 2022, Everest Re paid $0 million and $250 million of cash dividends to Holdings.
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.
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 6.5 years at December 31, 2023.
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.
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 with disbursements generally taking place over an extended period after the collection of premiums, sometimes a period of many years.
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.
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 57 Table of Contents 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.
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.
In addition, the Company has the ability to request access to an additional $240 million of uncommitted credit facilities, which would require approval from the applicable lender. There is no guarantee the uncommitted capacity will be available to us on a future date. See Note 7 - Credit Facilities for further details. Exposure to Catastrophes.
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.
We mitigate foreign exchange exposure by generally matching the currency and duration of our assets to our corresponding operating liabilities. In accordance with US GAAP guidance, the impact on the fair 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.
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 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, 2023, we had $1.3 billion of available for sale fixed maturity securities maturing within one year or less, $6.9 billion maturing within one to five years and $7.9 billion maturing after five years.
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.
If disbursements for losses and LAE, 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.
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.
The tables below display the potential impact of market value fluctuations and after-tax unrealized appreciation on our fixed maturity portfolio (including $2.1 billion of short-term investments) for the period indicated based on upward and downward parallel shifts of 100 and 200 basis points in interest rates.
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.
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 $4.6 billion and $3.7 billion for the years ended December 31, 2023 and 2022, respectively.
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.
Management believes that we, and each of our entities, have sufficient financial resources or ready access thereto, to meet all obligations. Dividends. During 2023 and 2022, we declared and paid common shareholder dividends of $288 million and $255 million, respectively.
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.
As a result, 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.
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.
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 3.5 percentage points to the combined ratio in 2023, compared with 9.0 percentage points in 2022.
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.
As the timing of payments for losses and LAE 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, 2023 and December 31, 2022, we held cash and short-term investments of $3.6 billion and $2.4 billion, respectively.
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 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 and the Western Europe Convective Storm ($35 million), with the remaining losses resulting from various storm events.
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.
See also ITEM 8, “Financial Statements and Supplementary Data” - Note 1 of Notes to the Consolidated Financial Statements. FINANCIAL CONDITION Investments. Total investments were $35.7 billion at December 31, 2023, an increase of $7.2 billion compared to $28.5 billion at December 31, 2022.
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.
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 7.8% of its December 31, 2023 shareholders’ equity.
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.
With respect to asbestos only, at December 31, 2023, we had net asbestos loss reserves of $209 million, or 90.4%, of total net A&E reserves, all of which was for assumed business. See Note 4 of Notes to Consolidated Financial Statements for a summary of Asbestos and Environmental Exposures.
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.
Our $37.1 billion investment portfolio at December 31, 2023, 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.
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.
In a declining interest rate environment, it includes prepayment risk on the $6.2 billion of mortgage-backed securities in the $28.6 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.
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 following table shows the components of net investment income for the periods indicated: Years Ended December 31, (Dollars in millions) 2023 2022 2021 Fixed maturities $ 1,153 $ 742 $ 561 Equity securities 3 16 17 Short-term investments and cash 140 28 1 Other invested assets Limited partnerships 122 75 565 Other 59 29 63 Gross investment income before adjustments 1,477 890 1,208 Funds held interest income (expense) 10 2 12 Future policy benefit reserve income (expense) (1) — (1) Gross investment income 1,486 892 1,219 Investment expenses 53 62 54 Net investment income $ 1,434 $ 830 $ 1,165 (Some amounts may not reconcile due to rounding.) The following tables show a comparison of various investment yields for the periods indicated: 2023 2022 2021 Annualized pre-tax yield on average cash and invested assets 4.1 % 2.7 % 4.4 % Annualized after-tax yield on average cash and invested assets 3.6 % 2.3 % 3.8 % Annualized return on invested assets 3.3 % 1.2 % 5.3 % 2023 2022 2021 Fixed income portfolio total return 6.8 % (5.9) % 0.5 % Bloomberg's Capital - U.S. aggregate index 5.5 % (13.0) % (1.5) % Common equity portfolio total return 17.6 % (18.5) % 19.0 % S&P 500 index 26.3 % (18.1) % 28.7 % Other invested asset portfolio total return 4.3 % 4.5 % 36.5 % 41 Table of Contents The pre-tax equivalent total return for the bond portfolio was approximately 6.8% and (5.9)%, respectively, in 2023 and 2022.
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”.
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 developed using the exposure groups used in the published global loss triangles.
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.
Depending on the specific segment, the range derived for the loss reserves, excluding reserves for A&E exposures, ranges from minus 9.0% to minus 13.6% for the low range and from plus 9.0% to plus 13.6% for the high range. Both the higher and lower ranges are associated with the Insurance segment.
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.
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. 52 Table of Contents LIQUIDITY AND CAPITAL RESOURCES Capital. Shareholders’ equity at December 31, 2023 and December 31, 2022 was $13.2 billion and $8.4 billion, respectively.
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.
In 2023, we repurchased no shares in the open market and paid $288 million in dividends. During 2022, we repurchased 241,273 shares for $61 million in the open market and paid $255 million in dividends. We may at times enter into a Rule 10b5-1 repurchase plan agreement to facilitate the repurchase of shares.
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 $930 million of current year catastrophe losses 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), and the 2022 Western Europe Convective storm ($29 million), with the remaining losses resulting from various storm events. Segment Expenses.
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.
For the years ended December 31, 2023 and 2022, Bermuda Re paid cash dividends to Group of $235 million and $430 million, respectively; Everest International paid no cash dividends to Group; Preferred Holdings paid cash dividends to Group of $48 million and $46 million, respectively; Advisors Re paid cash dividends to Group of $67 million and $0 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.
Logan Re paid cash dividends to Group of $15 million and $0 million, respectively. See ITEM 1, “Business - Regulatory Matters - Dividends” and ITEM 8, “Financial Statements and Supplementary Data” - Note 17 of Notes to Consolidated Financial Statements. Market Sensitive Instruments.
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.
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.
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.
Additionally, these cash flows reflected net catastrophe loss payments of $858 million and $677 million for the years ended December 31, 2023 and 2022, respectively and net tax payments of $196 million and $171 million for the years ended December 31, 2023 and 2022, respectively.
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.
If we were to discount our loss and LAE reserves, net of ceded reserves, the discount would be approximately $4.3 billion resulting in a discounted reserve balance of approximately $18.3 billion, representing approximately 59.3% of the value of the fixed maturity investment portfolio funds. Foreign Currency Risk.
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.
Corporate expenses, which are general operating expenses that are not allocated to segments, were $73 million and $61 million for the years ended December 31, 2023 and 2022, respectively. The increase in 2023 compared to 2022 was mainly due to higher variable incentive compensation. Interest, Fees and Bond Issue Cost Amortization Expense.
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.
Based on recent competitive behaviors in the insurance and reinsurance industry, natural catastrophe events and the macroeconomic backdrop, there has been dislocation in the market which has had a positive impact on rates and terms and conditions, generally, though specifics in local markets can vary.
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.
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.
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.
The limited partnership income primarily reflects changes 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 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.
The Insurance operation writes property and casualty 42 Table of Contents insurance directly and through brokers, including for surplus lines, and general agents within the U.S., Bermuda, Canada, Europe, Singapore and South America through its offices in the U.S., Bermuda, Canada, Chile, Singapore, the UK, Ireland, and branches located in the UK, the Netherlands, France, Germany and Spain.
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.
Gross written premiums increased by 10.0% to $5.2 billion in 2023 compared to $4.7 billion in 2022. The increase in insurance premiums reflects growth across multiple lines of business, particularly specialty casualty, property/short tail business and other specialty business, driven by positive rate and exposure increases, new business and strong renewal retention.
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.
The change in premiums earned relative to net written premiums was primarily the result of 38 Table of Contents timing; premiums are earned ratably over the coverage period whereas written premiums are generally recorded at the initiation of the coverage period. Other Income (Expense).
(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.
(2) Regulatory targeted capital represents 200% of the RBC authorized control level calculation for the applicable year. (3) The 2023 BSCR calculation is not yet due to be completed; however, the Company anticipates that Bermuda Re's December 31, 2023 actual capital will exceed the targeted capital level.
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.
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 not attributed to credit related factors.
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.
At December 31, 2023, we had net unrealized losses on our available for sale fixed maturity securities, net of tax, of $723 million compared to net unrealized losses on our available for sale fixed maturity securities, net of tax, of $1.7 billion at 49 Table of Contents December 31, 2022.
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 reflects growth across all lines of business, particularly property pro rata, and property excess of loss business. The increase in insurance premiums reflects growth across multiple lines of business, particularly specialty casualty business, property/short tail business and other specialty business, driven by positive rate and exposure increases, new business and strong renewal retention.
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.
Segment other underwriting expenses increased to $591 million in 2023 compared to $464 million in 2022. 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.
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.
The regulatory targeted capital and the actual statutory capital for Bermuda Re and Everest Re were as follows: Bermuda Re (1) At December 31, Everest Re (2) At December 31, (Dollars in millions) 2023⁽³⁾ 2022 2023 2022 Regulatory targeted capital $ — $ 2,217 $ 4,242 $ 3,353 Actual capital $ 3,722 $ 2,759 $ 6,963 $ 5,553 (1) Regulatory targeted capital represents the target capital level from the applicable year's BSCR calculation.
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”).
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.
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.
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 generally recorded at the initiation of the coverage period. 45 Table of Contents Incurred Losses and LAE.
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.
Based on this analysis, the Company may adjust the allowance for uncollectible reinsurance or charge off reinsurer balances that are determined to be uncollectible. 48 Table of Contents 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.
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.
At December 31, 2023, we had reinsurance loss reserves of $17.4 billion, of which $246 million were loss reserves for A&E liabilities, and insurance loss reserves of $7.0 billion. A detailed discussion of additional considerations related to A&E exposures follows later in this section.
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 recent emergence of the Middle East war and t he ongoing war in the Ukraine are evolving events. 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 in numerous countries, including the United States.
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.
Information technology systems and services are hosted at public and private cloud service providers across multiple data centers with processing performed at the office locations of our operating subsidiaries and branches.

… 168 more changes not shown on this page.

Other EG 10-K year-over-year comparisons