Item 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

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Item 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

Financial Statements and Schedules.

The financial statements and schedules listed in the accompanying Index to Financial Statements and Schedules on page F-1 are filed as part of this report.

Exhibits.

The exhibits listed on the accompanying Index to Exhibits on page E-1 are filed as part of this report except that the certifications in Exhibit 32 are being furnished to the SEC, rather than filed with the SEC, as permitted under applicable SEC rules.

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized on February 29, 2016.

EVEREST RE GROUP, LTD.
By:/S/ DOMINIC J. ADDESSO
Dominic J. Addesso
(President and Chief Executive Officer)

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

SignatureTitleDate
/S/ DOMINIC J. ADDESSOPresident and Chief Executive Officer and Director (Principal Executive Officer)February 29, 2016
Dominic J. Addesso
/S/ CRAIG HOWIEExecutive Vice President and Chief Financial OfficerFebruary 29, 2016
Craig Howie
/S/ KEITH T. SHOEMAKERComptroller (Principal Accounting Officer)February 29, 2016
Keith T. Shoemaker
/S/ JOSEPH V. TARANTOChairmanFebruary 29, 2016
Joseph V. Taranto
/S/ JOHN J. AMOREDirectorFebruary 29, 2016
John J. Amore
/S/ JOHN R. DUNNEDirectorFebruary 29, 2016
John R. Dunne
/S/ WILLIAM F. GALTNEY, JR.DirectorFebruary 29, 2016
William F. Galtney, Jr.
/S/ GERALDINE LOSQUADRODirectorFebruary 29, 2016
Geraldine Losquadro
/S/ ROGER M. SINGERDirectorFebruary 29, 2016
Roger M. Singer
/S/ JOHN A. WEBERDirectorFebruary 29, 2016
John A. Weber
INDEX TO EXHIBITS
Exhibit No.
2.1Agreement and Plan of Merger among Everest Reinsurance Holdings, Inc., Everest Re Group, Ltd. and Everest Re Merger Corporation, incorporated herein by reference to Exhibit 2.1 to the Registration Statement on Form S-4 (No. 333-87361)
3.1Memorandum of Association of Everest Re Group, Ltd., incorporated herein by reference to Exhibit 3.1 to the Registration Statement on Form S-4 (No. 333-87361)
3.2Bye-Laws of Everest Re Group, Ltd., incorporated herein by reference to exhibit 3.2 to the Everest Re Group, Ltd., Quarterly Report for Form 10-Q for the quarter ended June 30, 2011 (the "second quarter 2011 10-Q")
4.1Specimen Everest Re Group, Ltd. common share certificate, incorporated herein by reference to Exhibit 4.1 of the Registration Statement on Form S-4 (No. 333-87361)
4.2Indenture, dated March 14, 2000, between Everest Reinsurance Holdings, Inc. and The Chase Manhattan Bank (now known as JPMorgan Chase Bank), as Trustee, incorporated herein by reference to Exhibit 4.1 to Everest Reinsurance Holdings, Inc. Form 8-K filed on March 15, 2000
4.3Second Supplemental Indenture relating to Holdings 6.20% Junior Subordinated Debt Securities due March 29, 2034, dated as of March 29, 2004, among Holdings, Group and JPMorgan Chase Bank, as Trustee, incorporated herein by reference to Exhibit 4.1 to Everest Reinsurance Holdings, Inc. Form 8-K filed on March 30, 2004 (the "March 30, 2004 8-K")
4.4Amended and Restated Trust Agreement of Everest Re Capital Trust II, dated as of March 29, 2004, incorporated herein by reference to Exhibit 4.2 to the March 30, 2004 8-K
4.5Guarantee Agreement, dated as of March 29, 2004, between Holdings and JPMorgan Chase Bank, incorporated herein by reference to Exhibit 4.3 to the March 30, 2004 8-K
4.6Expense Agreement, dated as of March 29, 2004, between Holdings and Everest Re Capital Trust, incorporated herein by reference to Exhibit 4.4 to the March 30, 2004 8-K
4.7Third Supplemental Indenture relating to Holdings 5.40% Senior Notes due October 15, 2014, dated as of October 12, 2004, among Holdings and JPMorgan Chase Bank, as Trustee, incorporated herein by reference to Exhibit 4.1 to Everest Reinsurance Holdings, Inc. Form 8-K filed on October 12, 2004
4.8Fourth Supplemental Indenture relating to Holdings $400.0 million 4.868% Senior Notes due June 1, 2044, dated June 5, 2014, between Holdings and The Bank of New York Mellon, as Trustee, incorporated herein by reference to Exhibit 4.1 to Everest Reinsurance Holdings, Inc. Form 8-K filed on June 5, 2014
*10.1Everest Re Group, Ltd. Annual Incentive Plan effective January 1, 1999, incorporated herein by reference to Exhibit 10.1 to Everest Reinsurance Holdings, Inc. Annual Report on Form 10-K for the year ended December 31, 1998 (the "1998 10-K")

E-1

*10.2Everest Re Group, Ltd. 2003 Non-Employee Director Equity Compensation Plan, incorporated herein by reference to Exhibit 4.1 to the Registration Statement on Form S-8 (No. 333-105483)
*10.3Form of Non-Qualified Stock Option Award Agreement under the Everest Re Group, Ltd. 2003 Non-Employee Director Equity Compensation Plan, incorporated herein by reference to Exhibit 10.47 to Everest Re Group, Ltd., Report on Form 10-K for the year ended December 31, 2004
*10.4Amendment of Everest Re Group, Ltd. 2003 Non-Employee Director Equity Compensation Plan adopted by shareholders at the annual general meeting on May 25, 2005, incorporated herein by reference to Appendix B to the 2005 Proxy Statement filed on April 14, 2005
*10.5Form of Restricted Stock Award Agreement under the Everest Re Group, Ltd. 2003 Non-Employee Director Equity Compensation Plan, incorporated by reference to Exhibit 10.1 to Everest Re Group, Ltd. Form 8-K filed on September 22, 2005
10.6Completion of Tender Offer relating to Everest Reinsurance Holdings, Inc. 6.60% Fixed to Floating Rate Long Term Subordinated Notes (LoTSSM) dated March 19, 2009, incorporated herein by reference to Exhibit 99.1 to Everest Re Group, Ltd. Form 8-K filed on March 31, 2009
*10.7Everest Re Group, Ltd. 2009 Stock Option and Restricted Stock Plan for Non-Employee Directors incorporated herein by reference to Exhibit 10.1 to Everest Re Group, Ltd. second quarter 2009 10-Q
*10.8Everest Re Group, Ltd. 2010 Stock Incentive Plan for employees is incorporated herein by reference to exhibit 10.2 to Everest Re Group, Ltd. Form S-8 filed on September 30, 2010
*10.9Amendment of Executive Performance Annual Incentive Plan adopted by shareholders at the annual general meeting on May 18, 2011, incorporated herein by reference to Appendix B to the 2011 Proxy Statement filed on April 15, 2011
10.10Credit Agreement, dated August 15, 2011, between Everest Reinsurance Holdings, Inc., the lenders named therein and Citibank, National Association, as administrative agent, providing for a $150.0 million three year revolving credit facility, filed herewith. This new agreement replaces the August 23, 2006 five year senior revolving credit facility
10.11Credit Agreement, dated June 22, 2012, between Everest Re Group, Ltd., Everest Reinsurance (Bermuda), Ltd. and Everest International Reinsurance, Ltd., certain lenders party thereto and Wells Fargo Bank, N.A. as administrative agent, providing for an $800.0 million four year senior credit facility, incorporated herein by reference to Exhibit 10.31 to Everest Re Group, Ltd. Form 10-Q filed on August 9, 2012. This new agreement replaces the July 27, 2007 five year, $850.0 million senior credit facility
*10.12Employment agreement between Everest Global Services, Inc., Everest Reinsurance Holdings, Inc. and Dominic J. Addesso, dated July 1, 2012, incorporated herein by reference to Exhibit 10.1 to Everest Re Group, Ltd. Form 8-K filed on July 20, 2012
*10.13Employment agreement between Everest Global Services, Inc., Everest Reinsurance Holdings, Inc. and Joseph V. Taranto, dated July 1, 2012, incorporated herein by reference to Exhibit 10.2 to Everest Re Group, Ltd. Form 8-K filed on July 20, 2012

E-2

*10.14Change of Control Agreement between and among Everest Reinsurance Company, Everest Reinsurance Holdings, Inc., Everest Re Group, Ltd., Everest Global Services, Inc. and Joseph V. Taranto, dated January 1, 2012, incorporated herein by reference to Exhibit 10.3 to Everest Re Group, Ltd. Form 8-K filed on July 20, 2012
*10.15Employment agreement between Everest Reinsurance (Bermuda), Ltd. and Mark S. deSaram, dated September 13, 2012, incorporated herein by reference to Exhibit 10.1 to Everest Re Group, Ltd. Form 8-K filed on December 4, 2012
*10.16Chairmanship agreement between Everest Re Group, Ltd. and Joseph V. Taranto, dated June 19, 2013 and effective January 1, 2014, incorporated herein by reference to Exhibit 10.1 to Everest Re Group, Ltd. Form 8-K filed on June 24, 2013.
*10.17Employment agreement between Everest Global Services, Inc., and Sanjoy Mukherjee, dated September 1, 2013, incorporated herein by reference to Exhibit 10.1 to Everest Re Group, Ltd. Form 8-K filed on August 16, 2013
*10.18Employment agreement between Everest Global Services, Inc., and John P. Doucette, dated September 1, 2013, incorporated herein by reference to Exhibit 10.1 to Everest Re Group, Ltd. Form 8-K filed on September 13, 2013
*10.19Employment agreement between Everest Reinsurance (Bermuda), Ltd. and Mark S. deSaram, dated September 24, 2014, incorporated herein by reference to Exhibit 10.1 to Everest Re Group, Ltd. Form 8-K filed on September 29, 2014.
*10.20Amendment of Everest Re Group, Ltd. 2010 Stock Incentive Plan adopted by shareholders at the annual general meeting on May 13, 2015, incorporated herein by reference to Appendix A to the 2015 Proxy Statement filed on April 10, 2015
*10.21Amendment of Everest Re Group, Ltd. 2003 Non-Employee Director Equity Compensation Plan adopted by shareholders at the annual general meeting on May 13, 2015, incorporated herein by reference to Appendix B to the 2015 Proxy Statement filed on April 10, 2015
*10.22Employment agreement between Everest Global Services, Inc., Everest Reinsurance Holdings Inc. and Dominic J. Addesso, dated December 4, 2015, incorporated herein by reference to Exhibit 10.1 to Everest Re Group, Ltd. Form 8-K filed on December 8, 2015.
10.23Standby Letter of Credit, dated November 9, 2015, between Everest International Reinsurance, Ltd. and Lloyds Bank, Plc. providing £175.0 million four year credit facility, filed herewith
*10.24Amendment of employment agreement between Everest Global Services, Inc. and Sanjoy Mukherjee, dated February 12, 2016, incorporated herein by reference to Exhibit 10.1 to Everest Re Group, Ltd. Form 8-K filed on February 17, 2016
*10.25Amendment of employment agreement between Everest Global Services, Inc. and John P. Doucette, dated February 16, 2016, incorporated herein by reference to Exhibit 10.1 to Everest Re Group, Ltd. Form 8-K filed on February 17, 2016

E-3

21.1Subsidiaries of the registrant, filed herewith
23.1Consent of PricewaterhouseCoopers LLP, filed herewith
31.1Section 302 Certification of Dominic J. Addesso, filed herewith
31.2Section 302 Certification of Craig Howie, filed herewith
32.1Section 906 Certification of Dominic J. Addesso and Craig Howie, furnished herewith
101.INSXBRL Instance Document
101.SCHXBRL Taxonomy Extension Schema
101.CALXBRL Taxonomy Extension Calculation Linkbase
101.DEFXBRL Taxonomy Extension Definition Linkbase
101.LABXBRL Taxonomy Extension Label Linkbase
101.PREXBRL Taxonomy Extension Presentation Linkbase
* Management contract or compensatory plan or arrangement.

E-4

EVEREST RE GROUP, LTD.
INDEX TO FINANCIAL STATEMENTS AND SCHEDULES
Pages
Report of Independent Registered Public Accounting FirmF-2
Consolidated Balance Sheets at December 31, 2015 and 2014F-4
Consolidated Statements of Operations and Comprehensive Income (Loss) for the Years Ended
December 31, 2015, 2014 and 2013F-5
Consolidated Statements of Changes in Shareholders' Equity for the Years Ended
December 31, 2015, 2014 and 2013F-6
Consolidated Statements of Cash Flows for the Years Ended
December 31, 2015, 2014, and 2013F-7
Notes to Consolidated Financial StatementsF-8
Schedules
ISummary of Investments Other Than Investments in Related Parties at December 31, 2015S-1
IICondensed Financial Information of Registrant:
Balance Sheets as of December 31, 2015 and 2014S-2
Statements of Operations for the Years Ended December 31, 2015, 2014, and 2013S-3
Statements of Cash Flows for the Years Ended December 31, 2015, 2014, and 2013S-4
Notes to Condensed Financial InformationS-5
IIISupplementary Insurance Information for the Years Ended
December 31, 2015, 2014, and 2013S-6
IVReinsurance for the Years Ended December 31, 2015, 2014 and 2013S-7
Schedules other than those listed above are omitted for the reason that they are not applicable or the information is otherwise contained in the Financial Statements.

F-1

Report of Independent Registered Public Accounting Firm

To the Board of Directors and Shareholders

of Everest Re Group, Ltd.:

In our opinion, the consolidated financial statements listed in the accompanying index present fairly, in all material respects, the financial position of Everest Re Group, Ltd. and its subsidiaries (the "Company) at December 31, 2015 and 2014, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2015 in conformity with accounting principles generally accepted in the United States of America. In addition, in our opinion, the financial statement schedules listed in the accompanying index present fairly, in all material respects, the information set forth therein when read in conjunction with the related consolidated financial statements. Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2015, based on criteria established in Internal Control - Integrated Framework 2013 issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). The Company's management is responsible for these financial statements and financial statement schedules, for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in Management's Report on Internal Control over Financial Reporting appearing under Item 9A. Our responsibility is to express opinions on these financial statements, on the financial statement schedules, and on the Company's internal control over financial reporting based on our integrated audits. We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement and whether effective internal control over financial reporting was maintained in all material respects. Our audits of the financial statements included examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions.

A company's internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company's internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company's assets that could have a material effect on the financial statements.

F-2

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

PricewaterhouseCoopers LLP

New York, New York

February 29, 2016

F-3

EVEREST RE GROUP, LTD.

CONSOLIDATED BALANCE SHEETS

December 31,
(Dollars and share amounts in thousands, except par value per share)20152014
ASSETS:
Fixed maturities - available for sale, at market value$13,357,294$13,101,067
(amortized cost: 2015, $13,276,206; 2014, $12,831,159)
Fixed maturities - available for sale, at fair value2,1021,509
Equity securities - available for sale, at market value (cost: 2015, $122,271; 2014, $148,326)108,940140,210
Equity securities - available for sale, at fair value1,337,7331,447,820
Short-term investments1,795,4551,705,932
Other invested assets (cost: 2015, $786,994; 2014, $601,925)786,994601,925
Cash283,658437,474
Total investments and cash17,672,17617,435,937
Accrued investment income100,942111,075
Premiums receivable1,479,2931,397,983
Reinsurance receivables840,420670,854
Funds held by reinsureds278,673228,192
Deferred acquisition costs373,072398,408
Prepaid reinsurance premiums157,424154,177
Income taxes258,541184,762
Other assets265,634236,436
TOTAL ASSETS21,426,17520,817,824
LIABILITIES:
Reserve for losses and loss adjustment expenses$9,951,798$9,720,813
Future policy benefit reserve58,91059,820
Unearned premium reserve1,613,3901,728,745
Funds held under reinsurance treaties88,5443,932
Commission reserves79,84987,990
Other net payable to reinsurers166,822139,841
Losses in course of payment112,170157,527
4.868% Senior notes due 6/1/2044400,000400,000
6.6% Long term notes due 5/1/2067238,368238,364
Accrued interest on debt and borrowings3,5373,537
Equity index put option liability40,70547,022
Unsettled securities payable15,31441,092
Other liabilities291,322316,469
Total liabilities13,060,72912,945,152
NONCONTROLLING INTERESTS:
Redeemable noncontrolling interests - Mt. Logan Re756,861421,552
Commitments and contingencies (Note 17)
SHAREHOLDERS' EQUITY:
Preferred shares, par value: $0.01; 50,000 shares authorized;
no shares issued and outstanding--
Common shares, par value: $0.01; 200,000 shares authorized; (2015) 68,606
and (2014) 68,336 outstanding before treasury shares686683
Additional paid-in capital2,103,6382,068,807
Accumulated other comprehensive income (loss), net of deferred income tax expense
(benefit) of ($15,863) at 2015 and $20,715 at 2014(231,755)48,317
Treasury shares, at cost; 25,912 shares (2015) and 23,650 shares (2014)(2,885,956)(2,485,897)
Retained earnings8,621,9727,819,210
Total shareholders' equity attributable to Everest Re Group7,608,5857,451,120
TOTAL LIABILITIES, NONCONTROLLING INTERESTS AND SHAREHOLDERS' EQUITY21,426,17520,817,824
The accompanying notes are an integral part of the consolidated financial statements.

F-4

EVEREST RE GROUP, LTD.

CONSOLIDATED STATEMENTS OF OPERATIONS

AND COMPREHENSIVE INCOME (LOSS)

Years Ended December 31,
(Dollars in thousands, except per share amounts)201520142013
REVENUES:
Premiums earned$5,481,459$5,169,135$4,753,543
Net investment income473,825530,570548,509
Net realized capital gains (losses):
Other-than-temporary impairments on fixed maturity securities(102,199)(39,502)(1,052)
Other-than-temporary impairments on fixed maturity securities
transferred to other comprehensive income (loss)---
Other net realized capital gains (losses)(81,948)123,548301,279
Total net realized capital gains (losses)(184,147)84,046300,227
Net derivative gain (loss)6,317(11,599)44,044
Other income (expense)60,43518,437(5,487)
Total revenues5,837,8895,790,5895,640,836
CLAIMS AND EXPENSES:
Incurred losses and loss adjustment expenses3,101,9152,906,5342,800,251
Commission, brokerage, taxes and fees1,202,0361,135,586977,558
Other underwriting expenses265,984240,400237,126
Corporate expenses23,25423,42124,817
Interest, fees and bond issue cost amortization expense36,19138,53346,118
Total claims and expenses4,629,3804,344,4744,085,870
INCOME (LOSS) BEFORE TAXES1,208,5091,446,1151,554,966
Income tax expense (benefit)134,021187,652289,706
NET INCOME (LOSS)$1,074,488$1,258,463$1,265,260
Net (income) loss attributable to noncontrolling interests(96,619)(59,307)(5,878)
NET INCOME (LOSS) ATTRIBUTABLE TO EVEREST RE GROUP$977,869$1,199,156$1,259,382
Other comprehensive income (loss), net of tax:
Unrealized appreciation (depreciation) ("URA(D)") on securities arising during the period(274,127)704(395,797)
Reclassification adjustment for realized losses (gains) included in net income (loss)93,68821,392(6,977)
Total URA(D) on securities arising during the period(180,439)22,096(402,774)
Foreign currency translation adjustments(111,530)(95,417)(162)
Benefit plan actuarial net gain (loss) for the period5,681(39,110)17,837
Reclassification adjustment for amortization of net (gain) loss included in net income (loss)6,2163,0205,778
Total benefit plan net gain (loss) for the period11,897(36,090)23,615
Total other comprehensive income (loss), net of tax(280,072)(109,411)(379,321)
Other comprehensive (income) loss attributable to noncontrolling interests---
Total other comprehensive income (loss), net of tax attributable to Everest Re Group(280,072)(109,411)(379,321)
COMPREHENSIVE INCOME (LOSS)$697,797$1,089,745$880,061
EARNINGS PER COMMON SHARE ATTRIBUTABLE TO EVEREST RE GROUP:
Basic$22.29$26.16$25.67
Diluted22.1025.9125.44
Dividends declared4.003.202.19
The accompanying notes are an integral part of the consolidated financial statements.

F-5

EVEREST RE GROUP, LTD.

CONSOLIDATED STATEMENTS OF

CHANGES IN SHAREHOLDERS' EQUITY

Years Ended December 31,
(Dollars in thousands, except share and dividends per share amounts)201520142013
COMMON SHARES (shares outstanding):
Balance, beginning of period44,685,63747,543,13251,417,962
Issued during the period, net270,477371,359859,275
Treasury shares acquired(2,261,862)(3,228,854)(4,734,105)
Balance, end of period42,694,25244,685,63747,543,132
COMMON SHARES (par value):
Balance, beginning of period$683$680$671
Issued during the period, net339
Balance, end of period686683680
ADDITIONAL PAID-IN CAPITAL:
Balance, beginning of period2,068,8072,029,7741,946,439
Share-based compensation plans34,83139,03383,335
Balance, end of period2,103,6382,068,8072,029,774
ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS),
NET OF DEFERRED INCOME TAXES:
Balance, beginning of period48,317157,728537,049
Net increase (decrease) during the period(280,072)(109,411)(379,321)
Balance, end of period(231,755)48,317157,728
RETAINED EARNINGS:
Balance, beginning of period7,819,2106,765,9675,613,266
Net income (loss) attributable to Everest Re Group977,8691,199,1561,259,382
Dividends declared ($4.00 per share in 2015, $3.20 per share
in 2014 and $2.19 per share in 2013(175,107)(145,913)(106,681)
Balance, end of period8,621,9727,819,2106,765,967
TREASURY SHARES AT COST:
Balance, beginning of period(2,485,897)(1,985,873)(1,363,958)
Purchase of treasury shares(400,059)(500,024)(621,915)
Balance, end of period(2,885,956)(2,485,897)(1,985,873)
TOTAL SHAREHOLDERS' EQUITY, END OF PERIOD$7,608,585$7,451,120$6,968,276
The accompanying notes are an integral part of the consolidated financial statements.

F-6

EVEREST RE GROUP, LTD.

CONSOLIDATED STATEMENTS OF CASH FLOWS

Years Ended December 31,
(Dollars in thousands)201520142013
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss)$1,074,488$1,258,463$1,265,260
Adjustments to reconcile net income to net cash provided by operating activities:
Decrease (increase) in premiums receivable(93,837)45,282(217,678)
Decrease (increase) in funds held by reinsureds, net31,225(1,835)162
Decrease (increase) in reinsurance receivables(240,414)(186,014)118,963
Decrease (increase) in income taxes(36,771)31,340213,848
Decrease (increase) in prepaid reinsurance premiums(14,486)(79,086)(12,777)
Increase (decrease) in reserve for losses and loss adjustment expenses394,167195,524(374,027)
Increase (decrease) in future policy benefit reserve(910)308(6,595)
Increase (decrease) in unearned premiums(96,950)161,149261,959
Increase (decrease) in other net payable to reinsurers38,26229,410(45,043)
Increase (decrease) in losses in course of payment(43,964)(174,206)142,192
Change in equity adjustments in limited partnerships(12,965)(39,464)(45,905)
Distribution of limited partnership income53,98451,12056,982
Change in other assets and liabilities, net26435,419(57,212)
Non-cash compensation expense21,23721,19731,844
Amortization of bond premium (accrual of bond discount)50,90149,21466,461
Amortization of underwriting discount on senior notes44654
Net realized capital (gains) losses184,147(84,046)(300,227)
Net cash provided by (used in) operating activities1,308,3821,313,8211,098,261
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from fixed maturities matured/called - available for sale, at market value2,144,9302,142,6932,415,730
Proceeds from fixed maturities matured/called - available for sale, at fair value-8757,213
Proceeds from fixed maturities sold - available for sale, at market value1,724,0931,811,8011,092,387
Proceeds from fixed maturities sold - available for sale, at fair value1,82436,46721,573
Proceeds from equity securities sold - available for sale, at market value28,93616,90146,142
Proceeds from equity securities sold - available for sale, at fair value614,044584,069705,831
Distributions from other invested assets57,201115,482100,081
Proceeds from sale of subsidiary (net of cash disposed)3,934--
Cost of fixed maturities acquired - available for sale, at market value(4,718,303)(4,672,633)(3,543,776)
Cost of fixed maturities acquired - available for sale, at fair value(2,436)(24,098)(6,196)
Cost of equity securities acquired - available for sale, at market value(10,850)(18,016)(59,756)
Cost of equity securities acquired - available for sale, at fair value(556,889)(446,457)(621,038)
Cost of other invested assets acquired(286,599)(224,740)(21,935)
Net change in short-term investments(98,903)(497,983)(357,451)
Net change in unsettled securities transactions(22,719)(4,433)(2,808)
Net cash provided by (used in) investing activities(1,121,737)(1,180,072)(224,003)
CASH FLOWS FROM FINANCING ACTIVITIES:
Common shares issued during the period, net13,59717,83951,500
Purchase of treasury shares(400,059)(500,024)(621,915)
Net cost of junior subordinated debt securities redemption--(329,897)
Net cost of senior notes maturing-(250,000)-
Net proceeds from issuance of senior notes-400,000-
Third party investment in redeemable noncontrolling interest266,848136,20087,500
Subscription advances for third party redeemable noncontrolling interest30,00040,000143,000
Dividends paid to shareholders(175,107)(145,913)(106,681)
Dividends paid on third party investment in redeemable noncontrolling interest(68,158)(10,334)-
Net cash provided by (used in) financing activities(332,879)(312,232)(776,493)
EFFECT OF EXCHANGE RATE CHANGES ON CASH(7,582)4,575(23,433)
Net increase (decrease) in cash(153,816)(173,908)74,332
Cash, beginning of period437,474611,382537,050
Cash, end of period$283,658$437,474$611,382
SUPPLEMENTAL CASH FLOW INFORMATION:
Income taxes paid (recovered)$164,856$153,455$69,302
Interest paid35,97339,42438,390
The accompanying notes are an integral part of the consolidated financial statements.

F-7

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Years Ended December 31, 2015, 2014 and 2013

  1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

A. Business and Basis of Presentation.

Everest Re Group, Ltd. ("Group"), a Bermuda company, through its subsidiaries, principally provides reinsurance and insurance in the U.S., Bermuda and international markets. As used in this document, "Company" means Group and its subsidiaries.

During the fourth quarter of 2015, the Company established new subsidiaries, Everest Preferred International Holdings, Ltd. ("Preferred International"), a Bermuda based company and Everest International Holdings (Bermuda), Ltd. ("International Holdings"), a Bermuda based company. These new subsidiaries were part of a capital restructuring within the Company to support a planned increase in international business production, which includes directly supporting Group's new Lloyd's of London Syndicate corporate member.

Effective February 27, 2013, the Company established a new subsidiary, Mt. Logan Re Ltd. ("Mt. Logan Re") and effective July 1, 2013, Mt. Logan Re established separate segregated accounts and issued non-voting redeemable preferred shares to capitalize the segregated accounts. Accordingly, the financial position and operating results for Mt. Logan Re are consolidated with the Company and the non-controlling interests in Mt. Logan Re's operating results and equity are presented as separate captions in the Company's financial statements.

Effective July 13, 2015, the Company sold all of the outstanding shares of capital stock of a wholly-owned subsidiary entity, Mt. McKinley Insurance Company ("Mt. McKinley"), to Clearwater Insurance Company. The operating results of Mt. McKinley through July 13, 2015 are included within the Company's financial statements.

The accompanying consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America ("GAAP"). The statements include all of the following domestic and foreign direct and indirect subsidiaries of Group: Everest International Reinsurance, Ltd. ("Everest International"), Everest Global Services, Inc. ("Global Services"), Mt. Logan Re, Ltd. ("Mt. Logan"), Mt. Logan Insurance Managers, Ltd., Mt. Logan Management, Ltd., Everest International Holdings, Ltd. ("International Holdings"), Everest Corporate Member Limited, Everest Service Company (UK), Ltd., Everest Preferred International Holdings, Ltd. ("Preferred International"), Everest Reinsurance (Bermuda), Ltd. ("Bermuda Re"), Everest Re Advisors, Ltd., Everest Advisors (UK), Ltd., Everest Underwriting Group (Ireland), Limited ("Holdings Ireland"), Everest Reinsurance Company (Ireland) Limited ("Ireland Re"), Everest Insurance Company of Canada ("Everest Canada"), Premiere Insurance Underwriting Services ("Premiere"), Everest Reinsurance Holdings, Inc. ("Holdings"), Heartland Crop Insurance, Inc. ("Heartland"), Everest International Assurance, Ltd. (Bermuda) ("Everest Assurance"), Specialty Insurance Group, Inc. ("Specialty"), Specialty Insurance Group - Leisure and Entertainment Risk Purchasing Group LLC ("Specialty RPG"), Mt. McKinley Insurance Company ("Mt. McKinley"), Mt. McKinley Managers, L.L.C., Workcare Southeast of Georgia, Inc., Everest Reinsurance Company ("Everest Re"), Everest National Insurance Company ("Everest National"), Everest Reinsurance Company Ltda. (Brazil), Mt. Whitney Securities, Inc., Everest Indemnity Insurance Company ("Everest Indemnity") and Everest Security Insurance Company ("Everest Security"). All amounts are reported in U.S. dollars.

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

All intercompany accounts and transactions have been eliminated.

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Certain reclassifications and format changes have been made to prior years' amounts to conform to the 2015 presentation.

B. Investments.

Fixed maturity and equity security investments available for sale, at market value, reflect unrealized appreciation and depreciation, as a result of temporary changes in market value during the period, in shareholders' equity, net of income taxes in "accumulated other comprehensive income (loss)" in the consolidated balance sheets. Fixed maturity and equity securities carried at fair value reflect fair value re-measurements as net realized capital gains and losses in the consolidated statements of operations and comprehensive income (loss). The Company records changes in fair value for its fixed maturities available for sale, at market value through shareholders' equity, net of taxes in accumulated other comprehensive income (loss) since cash flows from these investments will be primarily used to settle its reserve for losses and loss adjustment expense liabilities. The Company anticipates holding these investments for an extended period as the cash flow from interest and maturities will fund the projected payout of these liabilities. Fixed maturities carried at fair value represent a portfolio of convertible bond securities, which have characteristics similar to equity securities and at times, designated foreign denominated fixed maturity securities, which will be used to settle loss and loss adjustment reserves in the same currency. The Company carries all of its equity securities at fair value except for mutual fund investments whose underlying investments are comprised of fixed maturity securities. For equity securities, available for sale, at fair value, the Company reflects changes in value as net realized capital gains and losses since these securities may be sold in the near term depending on financial market conditions. Interest income on all fixed maturities and dividend income on all equity securities are included as part of net investment income in the consolidated statements of operations and comprehensive income (loss). Unrealized losses on fixed maturities, which are deemed other-than-temporary and related to the credit quality of a security, are charged to net income (loss) as net realized capital losses. Short-term investments are stated at cost, which approximates market value. Realized gains or losses on sales of investments are determined on the basis of identified cost. For non-publicly traded securities, market prices are determined through the use of pricing models that evaluate securities relative to the U.S. Treasury yield curve, taking into account the issue type, credit quality, and cash flow characteristics of each security. For publicly traded securities, market value is based on quoted market prices or valuation models that use observable market inputs. When a sector of the financial markets is inactive or illiquid, the Company may use its own assumptions about future cash flows and risk-adjusted discount rates to determine fair value. Retrospective adjustments are employed to recalculate the values of asset-backed securities. Each acquisition lot is reviewed to recalculate the effective yield. The recalculated effective yield is used to derive a book value as if the new yield were applied at the time of acquisition. Outstanding principal factors from the time of acquisition to the adjustment date are used to calculate the prepayment history for all applicable securities. Conditional prepayment rates, computed with life to date factor histories and weighted average maturities, are used to effect the calculation of projected and prepayments for pass-through security types. Other invested assets include limited partnerships and rabbi trusts. Limited partnerships are accounted for under the equity method of accounting, which can be recorded on a monthly or quarterly lag.

C. Uncollectible Receivable Balances.

The Company provides reserves for uncollectible reinsurance recoverable and premium receivable balances based on management's assessment of the collectability of the outstanding balances. Such reserves are presented in the table below for the periods indicated.

Years Ended December 31,
(Dollars in thousands)20152014
Reinsurance receivables and premium receivables$22,878$29,497

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D. Deferred Acquisition Costs.

Acquisition costs, consisting principally of commissions and brokerage expenses and certain premium taxes and fees incurred at the time a contract or policy is issued and that vary with and are directly related to the Company's reinsurance and insurance business, are deferred and amortized over the period in which the related premiums are earned. Deferred acquisition costs are limited to their estimated realizable value by line of business based on the related unearned premiums, anticipated claims and claim expenses and anticipated investment income. Deferred acquisition costs amortized to income are presented in the table below for the periods indicated.

Years Ended December 31,
(Dollars in thousands)201520142013
Deferred acquisition costs$1,202,036$1,135,586$977,558

E. Reserve for Losses and Loss Adjustment Expenses.

The reserve for losses and loss adjustment expenses ("LAE") is based on individual case estimates and reports received from ceding companies. A provision is included for losses and LAE incurred but not reported ("IBNR") based on past experience. A provision is also included for certain potential liabilities relating to asbestos and environmental ("A&E") exposures, which liabilities cannot be estimated using traditional reserving techniques. See also Note 3. The reserves are reviewed periodically and any changes in estimates are reflected in earnings in the period the adjustment is made. The Company's loss and LAE reserves represent management's best estimate of the ultimate liability. Loss and LAE reserves are presented gross of reinsurance receivables and incurred losses and LAE are presented net of reinsurance.

Accruals for commissions are established for reinsurance contracts that provide for the stated commission percentage to increase or decrease based on the loss experience of the contract. Changes in estimates for such arrangements are recorded as commission expense. Commission accruals for contracts with adjustable features are estimated based on expected loss and LAE.

F. Future Policy Benefit Reserve.

Liabilities for future policy benefits on annuity policies are carried at their accumulated values. Reserves for policy benefits include mortality claims in the process of settlement and IBNR claims. Actual experience in a particular period may fluctuate from expected results.

G. Premium Revenues.

Written premiums are earned ratably over the periods of the related insurance and reinsurance contracts. Unearned premium reserves are established relative to the unexpired contract period. Such reserves are established based upon reports received from ceding companies or estimated using pro rata methods based on statistical data. Reinstatement premiums represent additional premium received on reinsurance coverages, most prevalently catastrophe related, when limits have been depleted under the original reinsurance contract and additional coverage is granted. Written and earned premiums and the related costs, which have not yet been reported to the Company, are estimated and accrued. Premiums are net of ceded reinsurance.

Payout annuity premiums are recognized as revenue over the premium-paying period of the policies.

H. Prepaid Reinsurance Premiums.

Prepaid reinsurance premiums represent unearned premium reserves ceded to other reinsurers. Prepaid reinsurance premiums for any foreign reinsurers comprising more than 10% of the outstanding balance at December 31, 2015 were secured either through collateralized trust arrangements, rights of offset or letters of credit, thereby limiting the credit risk to the Company.

I. Income Taxes.

Holdings and its wholly-owned subsidiaries file a consolidated U.S. federal income tax return. Foreign branches of subsidiaries file local tax returns as required. Group and subsidiaries not included in Holdings' consolidated tax return file separate company U.S. federal income tax returns as required. Holdings Ireland files an Irish income tax return. The UK branch of Bermuda Re files a UK income tax return. Deferred income taxes have been recorded to recognize the tax effect of temporary differences between the financial

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reporting and income tax bases of assets and liabilities, which arise because of differences between GAAP and income tax accounting rules.

J. Foreign Currency.

As a global entity, the Company transacts business in numerous currencies through business units located around the world. The base transactional currency for each business unit is determined by the local currency used for most economic activity in that area. Movements in exchange rates related to assets and liabilities at the business units between the original currency and the base currency are recorded through the consolidated statements of operations and comprehensive income (loss) in other income (expense), except for currency movements related to available for sale investments, which are excluded from net income (loss) and accumulated in shareholders' equity, net of deferred taxes.

The business units' base currency financial statements are translated to U.S. dollars using the exchange rates at the end of period for the balance sheets and the average exchange rates in effect for the reporting period for the income statements. Gains and losses resulting from translating the foreign currency financial statements, net of deferred income taxes, are excluded from net income loss and accumulated in shareholder's equity.

K. Earnings Per Common Share.

Basic earnings per share are calculated by dividing net income by the weighted average number of common shares outstanding. Diluted earnings per share reflect the potential dilution that would occur if options granted under various share-based compensation plans were exercised resulting in the issuance of common shares that would participate in the earnings of the entity.

Net income (loss) attributable to Everest Re Group per common share has been computed as per below, based upon weighted average common basic and dilutive shares outstanding.

Years Ended December 31,
(Dollars in thousands, except per share amounts)201520142013
Net income (loss) attributable to Everest Re Group per share:
Numerator
Net income (loss) attributable to Everest Re Group$977,869$1,199,156$1,259,382
Less: dividends declared-common shares and nonvested common shares(175,107)(145,913)(106,681)
Undistributed earnings802,7621,053,2431,152,701
Percentage allocated to common shareholders (1)98.9%99.0%99.1%
794,3091,042,4231,142,386
Add: dividends declared-common shareholders173,367144,447105,689
Numerator for basic and diluted earnings per common share$967,676$1,186,870$1,248,075
Denominator
Denominator for basic earnings per weighted-average common shares43,41545,37748,619
Effect of dilutive securities:
Options380425437
Denominator for diluted earnings per adjusted weighted-average common shares43,79545,80249,056
Per common share net income (loss)
Basic$22.29$26.16$25.67
Diluted$22.10$25.91$25.44
(1) Basic weighted-average common shares outstanding43,41545,37748,619
Basic weighted-average common shares outstanding and nonvested common shares expected to vest43,87745,84849,058
Percentage allocated to common shareholders98.9%99.0%99.1%
(Some amounts may not reconcile due to rounding.)

There were no anti-diluted options outstanding for the years ended December 31, 2015, 2014 and 2013.

All outstanding options expire on or between February 21, 2017 and September 19, 2022.

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L. Segmentation.

The Company, through its subsidiaries, operates in five segments: U.S. Reinsurance, International, Bermuda, Insurance and Mt. Logan Re. See also Note 19.

M. Derivatives.

The Company sold seven equity index put option contracts, based on two indices, in 2001 and 2005, which remain outstanding. The Company sold these equity index put options as insurance products with the intent of achieving a profit. These equity index put option contracts meet the definition of a derivative under FASB guidance and the Company's position in these equity index put option contracts is unhedged. Accordingly, these equity index put option contracts are carried at fair value in the consolidated balance sheets with changes in fair value recorded in the consolidated statements of operations and comprehensive income (loss).

The fair value of the equity index put options can be found in the Company's consolidated balance sheets as follows:

(Dollars in thousands)
Derivatives not designated asLocation of fair valueAt December 31,
hedging instrumentsin balance sheets20152014
Equity index put option contractsEquity index put option liability$40,705$47,022
Total$40,705$47,022

The change in fair value of the equity index put option contracts can be found in the Company's statement of operations and comprehensive income (loss) as follows:

(Dollars in thousands)
Derivatives not designated asLocation of gain (loss) in statements ofFor the Years Ended December 31,
hedging instrumentsoperations and comprehensive income (loss)201520142013
Equity index put option contractsNet derivative gain (loss)$6,317$(11,599)$44,044
Total$6,317$(11,599)$44,044

N. Deposit Assets and Liabilities.

In the normal course of its operations, the Company may enter into contracts that do not meet risk transfer provisions. Such contracts are accounted for using the deposit accounting method and are included in other liabilities in the Company's consolidated balance sheets. For such contracts, the Company originally records deposit liabilities for an amount equivalent to the assets received. Actuarial studies are used to estimate the final liabilities under such contracts with any change reflected in the consolidated statements of operations and comprehensive income (loss).

O. Share-Based Compensation.

Share-based compensation stock option, restricted share and performance share unit awards are fair valued at the grant date and expensed over the vesting period of the award. The tax benefit on the recorded expense is deferred until the time the award is exercised or vests (becomes unrestricted). See Note 18.

P. Application of Recently Issued Accounting Standard Changes.

Disclosures about Short-Duration Contracts. In May 2015, the FASB issued ASU 2015-09, authoritative guidance regarding required disclosures associated with short duration insurance contracts. The new disclosure requirements focus on information about initial claim estimates and subsequent claim estimate adjustment, methodologies in estimating claims and the timing, frequency and severity of claims related to short duration insurance contracts. This guidance is effective for annual reporting periods beginning after December 15, 2015 and interim reporting periods beginning after December 15, 2016. The Company has chosen not to early adopt and will implement this guidance as of January 1, 2016. The Company is still evaluating the impact of the implementation of this guidance but does not anticipate that it will have a significant impact on its financial statements.

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Debt Issuance Costs. In April 2015, The FASB issued ASU 2015–03, authoritative guidance on the presentation of debt issuance costs. This guidance requires that debt issuance costs be presented within the balance sheet as a reduction of the carrying value of the debt liability, rather than as a separate asset. This guidance is effective for annual reporting periods beginning after December 15, 2015 and interim reporting periods beginning after December 15, 2016. The Company has chosen not to early adopt and will implement this guidance as of January 1, 2016. The Company is still evaluating the impact of the implementation of this guidance but does not anticipate that it will have a significant impact on its financial statements.

Consolidation. In February 2015, the FASB issued ASU 2015-02, authoritative guidance regarding consolidation of reporting entities. The new guidance focuses on the required evaluation of whether certain legal entities should be consolidated. This guidance is effective for annual and interim reporting periods beginning after December 15, 2015. The Company has chosen not to early adopt and will implement this guidance as of January 1, 2016. The Company is still evaluating the impact of the implementation of this guidance but does not anticipate that it will have a significant impact on its financial statements.

Treatment of Insurance Contract Acquisition Costs. In October 2010, the FASB issued authoritative guidance for the accounting for costs associated with acquiring or renewing insurance contracts. The guidance identifies the incremental direct costs of contract acquisition and costs directly related to acquisition activities that should be capitalized. This guidance is effective for reporting periods beginning after December 15, 2011. The Company implemented this guidance as of January 1, 2012 and determined that $13,492 thousand of previously deferrable acquisition costs would be expensed, including $10,876 thousand and $2,616 thousand expensed in the years ended December 31, 2012 and 2013, respectively. No additional expense will be incurred related to this guidance implementation in future periods.

  1. INVESTMENTS

The amortized cost, market value and gross unrealized appreciation and depreciation of available for sale, fixed maturity, equity security investments, carried at market value and other-than-temporary impairments ("OTTI") in accumulated other comprehensive income ("AOCI") are as follows for the periods indicated:

At December 31, 2015
AmortizedUnrealizedUnrealizedMarketOTTI in AOCI
(Dollars in thousands)CostAppreciationDepreciationValue(a)
Fixed maturity securities
U.S. Treasury securities and obligations of
U.S. government agencies and corporations$805,273$13,465$(1,861)$816,877$-
Obligations of U.S. states and political subdivisions669,94534,020(890)703,075-
Corporate securities4,817,01497,159(109,310)4,804,8631,412
Asset-backed securities470,320719(3,813)467,226-
Mortgage-backed securities
Commercial264,9244,750(3,375)266,299-
Agency residential2,313,26525,318(18,059)2,320,524-
Non-agency residential89351(46)898-
Foreign government securities1,256,98354,403(52,205)1,259,18153
Foreign corporate securities2,677,589107,163(66,401)2,718,35136
Total fixed maturity securities$13,276,206$337,048$(255,960)$13,357,294$1,501
Equity securities$122,271$3,401$(16,732)$108,940$-

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At December 31, 2014
AmortizedUnrealizedUnrealizedMarketOTTI in AOCI
(Dollars in thousands)CostAppreciationDepreciationValue(a)
Fixed maturity securities
U.S. Treasury securities and obligations of
U.S. government agencies and corporations$221,052$10,290$(304)$231,038$-
Obligations of U.S. states and political subdivisions783,12941,969(626)824,472-
Corporate securities4,626,002143,889(62,906)4,706,985(6,910)
Asset-backed securities340,7611,691(1,230)341,222-
Mortgage-backed securities
Commercial231,43910,675(429)241,685-
Agency residential2,157,18237,555(11,573)2,183,164-
Non-agency residential2,73454(57)2,731-
Foreign government securities1,488,14471,177(26,866)1,532,455-
Foreign corporate securities2,980,716109,673(53,074)3,037,315-
Total fixed maturity securities$12,831,159$426,973$(157,065)$13,101,067$(6,910)
Equity securities$148,326$3,831$(11,947)$140,210$-

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

The amortized cost and market value of fixed maturity securities are shown in the following table by contractual maturity. Mortgage-backed securities are generally more likely to be prepaid than other fixed maturity securities. As the stated maturity of such securities may not be indicative of actual maturities, the totals for mortgage-backed and asset-backed securities are shown separately.

At December 31, 2015At December 31, 2014
AmortizedMarketAmortizedMarket
(Dollars in thousands)CostValueCostValue
Fixed maturity securities – available for sale:
Due in one year or less$1,021,200$1,036,016$1,183,247$1,189,416
Due after one year through five years6,193,4266,220,5635,646,4665,726,277
Due after five years through ten years2,217,0752,203,9322,270,0732,313,672
Due after ten years795,103841,836999,2571,102,900
Asset-backed securities470,320467,226340,761341,222
Mortgage-backed securities:
Commercial264,924266,299231,439241,685
Agency residential2,313,2652,320,5242,157,1822,183,164
Non-agency residential8938982,7342,731
Total fixed maturity securities$13,276,206$13,357,294$12,831,159$13,101,067

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

Years Ended December 31,
(Dollars in thousands)20152014
Increase (decrease) during the period between the market value and cost
of investments carried at market value, and deferred taxes thereon:
Fixed maturity securities$(197,231)$34,245
Fixed maturity securities, other-than-temporary impairment8,411(10,078)
Equity securities(5,215)(3,855)
Change in unrealized appreciation (depreciation), pre-tax(194,035)20,312
Deferred tax benefit (expense)16,979(1,623)
Deferred tax benefit (expense), other-than-temporary impairment(3,383)3,407
Change in unrealized appreciation (depreciation),
net of deferred taxes, included in shareholders' equity$(180,439)$22,096

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The Company frequently reviews all of its fixed maturity, available for sale securities for declines in market value and focuses its attention on securities whose fair value has fallen below 80% of their amortized cost at the time of review. The Company then assesses whether the decline in value is temporary or other-than-temporary. In making its assessment, the Company evaluates the current market and interest rate environment as well as specific issuer information. Generally, a change in a security's value caused by a change in the market, interest rate or foreign exchange environment does not constitute an other-than-temporary impairment, but rather a temporary decline in market value. Temporary declines in market value are recorded as unrealized losses in accumulated other comprehensive income (loss). If the Company determines that the decline is other-than-temporary and the Company does not have the intent to sell the security; and it is more likely than not that the Company will not have to sell the security before recovery of its cost basis, the carrying value of the investment is written down to fair value. The fair value adjustment that is credit or foreign exchange related is recorded in net realized capital gains (losses) in the Company's consolidated statements of operations and comprehensive income (loss). The fair value adjustment that is non-credit related is recorded as a component of other comprehensive income (loss), net of tax, and is included in accumulated other comprehensive income (loss) in the Company's consolidated balance sheets.

The Company's assessments are based on the issuers current and expected future financial position, timeliness with respect to interest and/or principal payments, speed of repayments and any applicable credit enhancements or breakeven constant default rates on mortgage-backed and asset-backed securities, as well as relevant information provided by rating agencies, investment advisors and analysts.

The majority of the Company's equity securities available for sale at market value are primarily comprised of mutual fund investments whose underlying securities consist of fixed maturity securities. When a fund's value reflects an unrealized loss, the Company assesses whether the decline in value is temporary or other-than-temporary. In making its assessment, the Company considers the composition of its portfolios and their related markets, reports received from the portfolio managers and discussions with portfolio managers. If the Company determines that the declines are temporary and it has the ability and intent to continue to hold the investments, then the declines are recorded as unrealized losses in accumulated other comprehensive income (loss). If declines are deemed to be other-than-temporary, then the carrying value of the investment is written down to fair value and recorded in net realized capital gains (losses) in the Company's consolidated statements of operations and comprehensive income (loss).

Retrospective adjustments are employed to recalculate the values of asset-backed securities. All of the Company's asset-backed and mortgage-backed securities have a pass-through structure. Each acquisition lot is reviewed to recalculate the effective yield. The recalculated effective yield is used to derive a book value as if the new yield were applied at the time of acquisition. Outstanding principal factors from the time of acquisition to the adjustment date are used to calculate the prepayment history for all applicable securities. Conditional prepayment rates, computed with life to date factor histories and weighted average maturities, are used in the calculation of projected prepayments for pass-through security types.

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The tables below display the aggregate market value and gross unrealized depreciation of fixed maturity and equity securities, by security type and contractual maturity, in each case subdivided according to length of time that individual securities had been in a continuous unrealized loss position for the periods indicated:

Duration of Unrealized Loss at December 31, 2015 By Security Type
Less than 12 monthsGreater than 12 monthsTotal
GrossGrossGross
UnrealizedUnrealizedUnrealized
(Dollars in thousands)Market ValueDepreciationMarket ValueDepreciationMarket ValueDepreciation
Fixed maturity securities - available for sale
U.S. Treasury securities and obligations of
U.S. government agencies and corporations$539,177$(1,855)$692$(6)$539,869$(1,861)
Obligations of U.S. states and political subdivisions6,434(84)4,917(806)11,351(890)
Corporate securities1,818,331(74,161)440,682(35,149)2,259,013(109,310)
Asset-backed securities348,545(2,510)67,230(1,303)415,775(3,813)
Mortgage-backed securities
Commercial145,490(3,375)--145,490(3,375)
Agency residential1,021,390(10,014)326,449(8,045)1,347,839(18,059)
Non-agency residential152(2)38(44)190(46)
Foreign government securities227,384(21,996)216,428(30,209)443,812(52,205)
Foreign corporate securities821,548(25,627)295,389(40,774)1,116,937(66,401)
Total fixed maturity securities$4,928,451$(139,624)$1,351,825$(116,336)$6,280,276$(255,960)
Equity securities--91,907(16,732)91,907(16,732)
Total$4,928,451$(139,624)$1,443,732$(133,068)$6,372,183$(272,692)
Duration of Unrealized Loss at December 31, 2015 By Maturity
Less than 12 monthsGreater than 12 monthsTotal
GrossGrossGross
UnrealizedUnrealizedUnrealized
(Dollars in thousands)Market ValueDepreciationMarket ValueDepreciationMarket ValueDepreciation
Fixed maturity securities
Due in one year or less$29,737$(1,840)$74,615$(13,440)$104,352$(15,280)
Due in one year through five years2,328,805(62,329)651,228(59,993)2,980,033(122,322)
Due in five years through ten years969,139(52,725)206,538(28,018)1,175,677(80,743)
Due after ten years85,193(6,829)25,727(5,493)110,920(12,322)
Asset-backed securities348,545(2,510)67,230(1,303)415,775(3,813)
Mortgage-backed securities1,167,032(13,391)326,487(8,089)1,493,519(21,480)
Total fixed maturity securities$4,928,451$(139,624)$1,351,825$(116,336)$6,280,276$(255,960)

The aggregate market value and gross unrealized losses related to investments in an unrealized loss position at December 31, 2015 were $6,372,183 thousand and $272,692 thousand, respectively. The market value of securities for the single issuer whose securities comprised the largest unrealized loss position at December 31, 2015, did not exceed 0.7% of the overall market value of the Company's fixed maturity securities. In addition, as indicated on the above table, there was no significant concentration of unrealized losses in any one market sector. The $139,624 thousand of unrealized losses related to fixed maturity securities that have been in an unrealized loss position for less than one year were generally comprised of domestic and foreign corporate securities, foreign government securities and agency residential mortgage-backed securities. The majority of these unrealized losses are attributable to unrealized losses in the energy sector, $46,793 thousand, as falling oil prices have disrupted the market values for this sector, particularly for oil exploration, production and servicing companies and net unrealized foreign exchange losses, $39,037 thousand, as the U.S. dollar has strengthened against other currencies. The $116,336 thousand of unrealized losses related to fixed maturity securities in an unrealized loss position for more than one year related primarily to foreign and domestic corporate securities, foreign government securities and agency residential mortgage-backed securities. The majority of these unrealized losses are attributable to net unrealized foreign exchange losses, $72,738 thousand, as the U.S. dollar has strengthened against other currencies and to unrealized losses in the energy sector, $18,447 thousand, as falling oil prices have disrupted the market values for this sector, particularly for oil exploration as well as production and servicing companies. There was no gross unrealized depreciation for mortgage-backed securities related to sub-prime and alt-A loans. In all instances, there were no projected cash flow shortfalls

F-16

to recover the full book value of the investments and the related interest obligations. The mortgage-backed securities still have excess credit coverage and are current on interest and principal payments.

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

The tables below display the aggregate market value and gross unrealized depreciation of fixed maturity and equity securities, by security type and contractual maturity, in each case subdivided according to length of time that individual securities had been in a continuous unrealized loss position for the periods indicated:

Duration of Unrealized Loss at December 31, 2014 By Security Type
Less than 12 monthsGreater than 12 monthsTotal
GrossGrossGross
UnrealizedUnrealizedUnrealized
(Dollars in thousands)Market ValueDepreciationMarket ValueDepreciationMarket ValueDepreciation
Fixed maturity securities - available for sale
U.S. Treasury securities and obligations of
U.S. government agencies and corporations$13,187$(20)$26,897$(284)$40,084$(304)
Obligations of U.S. states and political subdivisions20,428(242)18,199(384)38,627(626)
Corporate securities1,245,830(55,388)362,320(7,518)1,608,150(62,906)
Asset-backed securities192,253(1,230)--192,253(1,230)
Mortgage-backed securities
Commercial28,191(123)9,777(306)37,968(429)
Agency residential141,807(172)678,972(11,401)820,779(11,573)
Non-agency residential--266(57)266(57)
Foreign government securities235,725(15,415)139,200(11,451)374,925(26,866)
Foreign corporate securities567,905(36,926)290,234(16,148)858,139(53,074)
Total fixed maturity securities$2,445,326$(109,516)$1,525,865$(47,549)$3,971,191$(157,065)
Equity securities50,285(4,068)73,994(7,879)124,279(11,947)
Total$2,495,611$(113,584)$1,599,859$(55,428)$4,095,470$(169,012)
Duration of Unrealized Loss at December 31, 2014 By Maturity
Less than 12 monthsGreater than 12 monthsTotal
GrossGrossGross
UnrealizedUnrealizedUnrealized
(Dollars in thousands)Market ValueDepreciationMarket ValueDepreciationMarket ValueDepreciation
Fixed maturity securities
Due in one year or less$98,021$(5,166)$80,002$(8,174)$178,023$(13,340)
Due in one year through five years1,233,244(68,124)518,613(12,761)1,751,857(80,885)
Due in five years through ten years679,374(28,529)187,717(10,734)867,091(39,263)
Due after ten years72,436(6,172)50,518(4,116)122,954(10,288)
Asset-backed securities192,253(1,230)--192,253(1,230)
Mortgage-backed securities169,998(295)689,015(11,764)859,013(12,059)
Total fixed maturity securities$2,445,326$(109,516)$1,525,865$(47,549)$3,971,191$(157,065)

The aggregate market value and gross unrealized losses related to investments in an unrealized loss position at December 31, 2014 were $4,095,470 thousand and $169,012 thousand, respectively. The market value of securities for the single issuer whose securities comprised the largest unrealized loss position at December 31, 2014, did not exceed 0.2% of the overall market value of the Company's fixed maturity securities. In addition, as indicated on the above table, there was no significant concentration of unrealized losses in any one market sector. The $109,516 thousand of unrealized losses related to fixed maturity securities that have been in an unrealized loss position for less than one year were generally comprised of domestic and foreign corporate securities, as well as foreign government securities. The majority of these unrealized losses are attributable to unrealized losses in the energy sector, $58,891 thousand, as falling oil prices disrupted the market values for this sector, particularly for oil exploration, production and servicing companies during the fourth quarter of 2014 and unrealized foreign exchange losses, $34,687 thousand, as the U.S. dollar has strengthened against other currencies. The $47,549

F-17

thousand of unrealized losses related to fixed maturity securities in an unrealized loss position for more than one year related primarily to foreign and domestic corporate securities, foreign government securities and agency residential mortgage-backed securities. Of these unrealized losses, $42,884 thousand related to securities that were rated investment grade by at least one nationally recognized statistical rating organization. The gross unrealized depreciation for mortgage-backed securities included $15 thousand related to sub-prime and alt-A loans. In all instances, there were no projected cash flow shortfalls to recover the full book value of the investments and the related interest obligations. The mortgage-backed securities still have excess credit coverage and are current on interest and principal payments.

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

Years Ended December 31,
(Dollars in thousands)201520142013
Fixed maturities$433,097$462,757$473,493
Equity securities45,61747,19345,387
Short-term investments and cash1,5771,6351,295
Other invested assets
Limited partnerships14,43140,86846,921
Other1,8043,6197,329
Gross investment income before adjustments496,526556,072574,425
Funds held interest income (expense)10,7679,47110,613
Future policy benefit reserve income (expense)(1,907)(1,686)(2,770)
Gross investment income505,386563,857582,268
Investment expenses(31,561)(33,287)(33,759)
Net investment income$473,825$530,570$548,509

The Company records results from limited partnership investments on the equity method of accounting with changes in value reported through net investment income. Due to the timing of receiving financial information from these partnerships, the results are generally reported on a one month or quarter lag. If the Company determines there has been a significant decline in value of a limited partnership during this lag period, a loss will be recorded in the period in which the Company identifies the decline.

The Company had contractual commitments to invest up to an additional $490,441 thousand in limited partnerships at December 31, 2015. These commitments will be funded when called in accordance with the partnership agreements, which have investment periods that expire, unless extended, through 2020.

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

Years Ended December 31,
(Dollars in thousands)201520142013
Fixed maturity securities, market value:
Other-than-temporary impairments$(102,199)$(39,502)$(1,052)
Gains (losses) from sales(22,310)4,4086,792
Fixed maturity securities, fair value:
Gains (losses) from sales24(3,137)201
Gains (losses) from fair value adjustments(44)(1,498)307
Equity securities, market value:
Gains (losses) from sales(6,702)4262,648
Equity securities, fair value:
Gains (losses) from sales(7,305)15632,747
Gains (losses) from fair value adjustments(45,627)123,196258,569
Short-term investments gain (loss)16(3)15
Total net realized capital gains (losses)$(184,147)$84,046$300,227

The Company recorded as net realized capital gains (losses) in the consolidated statements of operations and comprehensive income (loss) both fair value re-measurements and write-downs in the value of securities deemed to be impaired on an other-than-temporary basis as displayed in the table above. The Company had

F-18

no other-than-temporary impaired securities where the impairment had both a credit and non-credit component.

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

Years Ended December 31,
(Dollars in thousands)201520142013
Proceeds from sales of fixed maturity securities$1,725,917$1,848,268$1,113,960
Gross gains from sales47,89937,42738,141
Gross losses from sales(70,185)(36,156)(31,148)
Proceeds from sales of equity securities$642,980$600,970$751,973
Gross gains from sales27,67520,90044,703
Gross losses from sales(41,682)(20,318)(9,308)

Securities with a carrying value amount of $1,398,874 thousand at December 31, 2015 were on deposit with various state or governmental insurance departments in compliance with insurance laws.

  1. RESERVE FOR LOSSES, LAE AND FUTURE POLICY BENEFIT RESERVE

Reserves for losses and LAE.

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

At December 31,
(Dollars in thousands)201520142013
Gross reserves at January 1$9,720,813$9,673,240$10,069,055
Less reinsurance recoverables(627,082)(473,866)(602,750)
Net reserves at January 19,093,7319,199,3749,466,305
Incurred related to:
Current year3,170,4822,946,3962,818,490
Prior years(68,567)(39,862)(18,239)
Total incurred losses and LAE3,101,9152,906,5342,800,251
Paid related to:
Current year697,778761,788664,719
Prior years2,186,2742,089,7342,353,817
Total paid losses and LAE2,884,0522,851,5223,018,536
Foreign exchange/translation adjustment(190,032)(160,655)(48,646)
Net reserves at December 319,121,5629,093,7319,199,374
Plus reinsurance recoverables830,236627,082473,866
Gross reserves at December 31$9,951,798$9,720,813$9,673,240

Incurred prior years' reserves decreased by $68,567 thousand, $39,862 thousand and $18,239 thousand for the years ended December 31, 2015, 2014 and 2013, respectively. The decrease for 2015 was attributable to favorable development in the reinsurance segments of $217,169 thousand related to treaty casualty and treaty property reserves and $3,539 thousand of favorable development related to Mt. Logan reserves, partially offset by $152,140 thousand of unfavorable development in the insurance segment primarily related to umbrella and construction liability business.

The decrease for 2014 was attributable to favorable development in the reinsurance segments of $202,418 thousand related to treaty casualty, treaty property and catastrophe reserves, partially offset by $137,769 thousand development on A&E reserves and $186 thousand of favorable development related to Mt. Logan reserves and $24,973 thousand of unfavorable development in the insurance segment primarily related to construction liability and umbrella business.

F-19

The decrease for 2013 was attributable to a $148,788 thousand decrease in reinsurance business, primarily related to favorable development on treaty property reserves, partially offset by a $130,548 thousand increase in insurance business, primarily related to development on contractors' liability, umbrella and workers compensation reserves.

The Company continues to receive claims under expired insurance and reinsurance contracts asserting injuries and/or damages relating to or resulting from environmental pollution and hazardous substances, including asbestos. Environmental claims typically assert liability for (a) the mitigation or remediation of environmental contamination or (b) bodily injury or property damage caused by the release of hazardous substances into the land, air or water. Asbestos claims typically assert liability for bodily injury from exposure to asbestos or for property damage resulting from asbestos or products containing asbestos.

The Company's reserves include an estimate of the Company's ultimate liability for A&E claims. The Company's A&E liabilities emanate from Mt. McKinley's direct insurance business and Everest Re's assumed reinsurance business. All of the contracts of insurance and reinsurance under which the Company has received claims during the past three years expired more than 20 years ago. There are significant uncertainties surrounding the Company's reserves for its A&E losses.

A&E exposures represent a separate exposure group for monitoring and evaluating reserve adequacy. The following table summarizes incurred losses with respect to A&E reserves on both a gross and net of reinsurance basis for the periods indicated:

At December 31,
(Dollars in thousands)201520142013
Gross basis:
Beginning of period reserves$476,205$402,461$442,821
Incurred losses40,000142,2335,599
Paid losses(83,088)(68,489)(45,959)
End of period reserves$433,117$476,205$402,461
Net basis:
Beginning of period reserves$458,211$386,677$425,691
Incurred losses38,440137,7695,400
Paid losses(177,031)(66,235)(44,414)
End of period reserves$319,620$458,211$386,677

On July 13, 2015, the Company sold Mt. McKinley, a Delaware domiciled insurance company and wholly-owned subsidiary of the Company to Clearwater Insurance Company, a Delaware domiciled insurance company. Concurrently with the closing, the Company entered into a retrocession treaty with an affiliate of Clearwater Insurance Company. Per the retrocession treaty, the Company retroceded 100% of the liabilities associated with certain Mt. McKinley policies, which related entirely to A&E business and had been reinsured by Bermuda Re. As consideration for entering into the retrocession treaty, Everest Re Bermuda transferred cash of $140,279 thousand, an amount equal to the net loss reserves as of the closing date. The maximum liability retroceded under the retrocession treaty will be $440,279 thousand, equal to the retrocession payment plus $300,000 thousand. The Company will retain liability for any amounts exceeding the maximum liability retroceded under the retrocession treaty.

F-20

Reinsurance Receivables.

Reinsurance receivables for both paid and recoverable on unpaid losses totaled $840,420 thousand at December 31, 2015 and $670,854 thousand at December 31, 2014. At December 31, 2015, $194,231 thousand, or 23.1%, was receivable from Resolution Group Reinsurance (Barbados) Limited ("Resolution Group"); $104,819 thousand, or 12.5%, was receivable from C.V. Starr (Bermuda) ("C.V. Starr"); $88,136 thousand, or 10.5%, was receivable from Zurich Vericherungs Gesellschaft ("Zurich"); $49,478 thousand, or 5.9% was receivable from Axis Reinsurance Company ("Axis"); $46,588 thousand, or 5.5%, was receivable from Hannover Rueck SE ("Hannover") and $43,992 thousand, or 5.2%, was receivable from Transatlantic Reinsurance Company ("Transatlantic"). The receivables from Resolution Group and C.V. Starr are fully collateralized by individual trust agreements. No other retrocessionaire accounted for more than 5% of our receivables.

Future Policy Benefit Reserve.

Activity in the reserve for future policy benefits is summarized for the periods indicated:

At December 31,
(Dollars in thousands)201520142013
Balance at beginning of year$59,820$59,512$66,107
Liabilities assumed315250103
Adjustments to reserves2,3104,724(3,066)
Benefits paid in the current year(3,535)(4,667)(3,632)
Balance at end of year$58,910$59,820$59,512
(Some amounts may not reconcile due to rounding.)
  1. FAIR VALUE

GAAP guidance regarding fair value measurements address how companies should measure fair value when they are required to use fair value measures for recognition or disclosure purposes under GAAP and provides a common definition of fair value to be used throughout GAAP. It defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly fashion between market participants at the measurement date. In addition, it establishes a three-level valuation hierarchy for the disclosure of fair value measurements. The valuation hierarchy is based on the transparency of inputs to the valuation of an asset or liability. The level in the hierarchy within which a given fair value measurement falls is determined based on the lowest level input that is significant to the measurement, with Level 1 being the highest priority and Level 3 being the lowest priority.

The levels in the hierarchy are defined as follows:

Level 1:Inputs to the valuation methodology are observable inputs that reflect unadjusted quoted prices for identical assets or liabilities in an active market;
Level 2:Inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, and inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the financial instrument;
Level 3:Inputs to the valuation methodology are unobservable and significant to the fair value measurement.

The Company's fixed maturity and equity securities are primarily managed by third party investment asset managers. The investment asset managers obtain prices from nationally recognized pricing services. These services seek to utilize market data and observations in their evaluation process. They use pricing applications that vary by asset class and incorporate available market information and when fixed maturity securities do not trade on a daily basis the services will apply available information through processes such as benchmark curves, benchmarking of like securities, sector groupings and matrix pricing. In addition, they use model processes, such as the Option Adjusted Spread model to develop prepayment and interest rate scenarios for securities that have prepayment features.

F-21

In limited instances where prices are not provided by pricing services or in rare instances when a manager may not agree with the pricing service, price quotes on a non-binding basis are obtained from investment brokers. The investment asset managers do not make any changes to prices received from either the pricing services or the investment brokers. In addition, the investment asset managers have procedures in place to review the reasonableness of the prices from the service providers and may request verification of the prices. In addition, the Company continually performs analytical reviews of price changes and tests the prices on a random basis to an independent pricing source. No material variances were noted during these price validation procedures. In limited situations, where financial markets are inactive or illiquid, the Company may use its own assumptions about future cash flows and risk-adjusted discount rates to determine fair value. Due to the unavailability of prices for two private placement securities, the Company valued the securities at $3,593 thousand at December 31, 2015 and made no such adjustments at December 31, 2014.

The Company internally manages a public equity portfolio which had a fair value at December 31, 2015 and December 31, 2014 of $253,575 thousand and $196,980 thousand, respectively, and all prices were obtained from publically published sources.

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

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

The fixed maturities with fair values categorized as level 3 result when prices are not available from the nationally recognized pricing services. The asset managers will then obtain non-binding price quotes for the securities from brokers. The single broker quotes are provided by market makers or broker-dealers who are recognized as market participants in the markets in which they are providing the quotes. The prices received from brokers are reviewed for reasonableness by the third party asset managers and the Company. If the broker quotes are for foreign denominated securities, the quotes are converted to U.S. dollars using currency exchange rates from nationally recognized sources. In limited circumstances when broker prices are not available for private placements, the Company will value the securities using comparable market information. Historically, most of the level 3 fixed maturities have resulted from new issuances and the third party prices services have not yet included the issuance in their data base. Generally, in subsequent measurement periods, the issuances will be included in the data base and the fair value will transfer to level 2.

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

·U.S. Treasury securities and obligations of U.S. government agencies and corporations are primarily comprised of U.S. Treasury bonds and the fair value is based on observable market inputs such as quoted prices, reported trades, quoted prices for similar issuances or benchmark yields;
·Obligations of U.S. states and political subdivisions are comprised of state and municipal bond issuances and the fair values are based on observable market inputs such as quoted market prices, quoted prices for similar securities, benchmark yields and credit spreads;
·Corporate securities are primarily comprised of U.S. corporate and public utility bond issuances and the fair values are based on observable market inputs such as quoted market prices, quoted prices for similar securities, benchmark yields and credit spreads;

F-22

·Asset-backed and mortgage-backed securities fair values are based on observable inputs such as quoted prices, reported trades, quoted prices for similar issuances or benchmark yields and cash flow models using observable inputs such as prepayment speeds, collateral performance and default spreads;
·Foreign government securities are comprised of global non-U.S. sovereign bond issuances and the fair values are based on observable market inputs such as quoted market prices, quoted prices for similar securities and models with observable inputs such as benchmark yields and credit spreads and then, where applicable, converted to U.S. dollars using an exchange rate from a nationally recognized source;
·Foreign corporate securities are comprised of global non-U.S. corporate bond issuances and the fair values are based on observable market inputs such as quoted market prices, quoted prices for similar securities and models with observable inputs such as benchmark yields and credit spreads and then, where applicable, converted to U.S. dollars using an exchange rate from a nationally recognized source.

The Company sold seven equity index put option contracts, based on two indices, in 2001 and 2005, which remain outstanding. The Company sold these equity index put options as insurance products with the intent of achieving a profit. These equity index put option contracts meet the definition of a derivative under FASB guidance and the Company's position in these equity index put option contracts is unhedged. Accordingly, these equity index put option contracts are carried at fair value in the consolidated balance sheets with changes in fair value recorded in the consolidated statements of operations and comprehensive income (loss).

The Company sold six equity index put option contracts, based on the Standard & Poor's 500 ("S&P 500") index, for total consideration, net of commissions, of $22,530 thousand. At December 31, 2015, fair value for these equity index put option contracts was $31,763 thousand. Based on historical index volatilities and trends and the December 31, 2015 S&P 500 index value, the Company estimates the probability that each equity index put option contract of the S&P 500 index falling below the strike price on the exercise date to be less than 16%. The theoretical maximum payouts under these six equity index put option contracts would occur if on each of the exercise dates the S&P 500 index value were zero. At December 31, 2015, the present value of these theoretical maximum payouts using a 3% discount factor was $432,613 thousand. Conversely, if the contracts had all expired on December 31, 2015, with the S&P index at $2,043.94, there would have been no settlement amount.

The Company sold one equity index put option contract based on the FTSE 100 index for total consideration, net of commissions, of $6,706 thousand. At December 31, 2015, fair value for this equity index put option contract was $8,942 thousand. Based on historical index volatilities and trends and the December 31, 2015 FTSE 100 index value, the Company estimates the probability that the equity index put option contract of the FTSE 100 index will fall below the strike price on the exercise date to be less than 46%. The theoretical maximum payout under the equity index put option contract would occur if on the exercise date the FTSE 100 index value was zero. At December 31, 2015, the present value of the theoretical maximum payout using a 3% discount factor and current exchange rate was $42,599 thousand. Conversely, if the contract had expired on December 31, 2015, with the FTSE index at ₤6,242.30, there would have been no settlement amount.

The Company's liability for equity index put options is categorized as level 3 since there is no active market for these seven long dated equity put options. The fair values for these options are calculated by the Company using an industry accepted pricing model, Black-Scholes. The model inputs and assumptions are: risk free interest rates, equity market indexes values, volatilities and dividend yields and duration. The model results are then adjusted for the Company's credit default swap rate. All of these inputs and assumptions are updated quarterly. One of the option contacts is in British Pound Sterling so the fair value for this contract is converted to U.S. dollars using an exchange rate from a nationally recognized source.

F-23

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

Fair Value Measurement Using:
Quoted Prices
in ActiveSignificant
Markets forOtherSignificant
IdenticalObservableUnobservable
AssetsInputsInputs
(Dollars in thousands)December 31, 2015(Level 1)(Level 2)(Level 3)
Assets:
Fixed maturities, market value
U.S. Treasury securities and obligations of
U.S. government agencies and corporations$816,877$-$816,877$-
Obligations of U.S. States and political subdivisions703,075-703,075-
Corporate securities4,804,863-4,800,9303,933
Asset-backed securities467,226-467,226-
Mortgage-backed securities
Commercial266,299-266,299-
Agency residential2,320,524-2,320,524-
Non-agency residential898-898-
Foreign government securities1,259,181-1,259,181-
Foreign corporate securities2,718,351-2,716,7581,593
Total fixed maturities, market value13,357,294-13,351,7685,526
Fixed maturities, fair value2,102-2,102-
Equity securities, market value108,94091,90717,033-
Equity securities, fair value1,337,7331,275,66662,067-
Liabilities:
Equity index put option contracts$40,705$-$-$40,705

There were no transfers between Level 1 and Level 2 for the twelve months ended December 31, 2015.

F-24

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

Fair Value Measurement Using:
Quoted Prices
in ActiveSignificant
Markets forOtherSignificant
IdenticalObservableUnobservable
AssetsInputsInputs
(Dollars in thousands)December 31, 2014(Level 1)(Level 2)(Level 3)
Assets:
Fixed maturities, market value
U.S. Treasury securities and obligations of
U.S. government agencies and corporations$231,038$-$231,038$-
Obligations of U.S. States and political subdivisions824,472-824,472-
Corporate securities4,706,985-4,706,985-
Asset-backed securities341,222-341,222-
Mortgage-backed securities
Commercial241,685-233,0888,597
Agency residential2,183,164-2,183,164-
Non-agency residential2,731-2,731-
Foreign government securities1,532,455-1,532,455-
Foreign corporate securities3,037,315-3,030,1497,166
Total fixed maturities, market value13,101,067-13,085,30415,763
Fixed maturities, fair value1,509-1,509-
Equity securities, market value140,210124,29515,915-
Equity securities, fair value1,447,8201,337,396110,424-
Liabilities:
Equity index put option contracts$47,022$-$-$47,022

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

December 31, 2015December 31, 2014
CorporateForeignCorporateAsset-backedForeignNon-agencyAgency
(Dollars in thousands)SecuritiesCMBSCorporateTotalSecuritiesSecuritiesCMBSCorporateRMBSRMBSTotal
Beginning balance$-$8,597$7,166$15,763$-$5,299$-$481$347$-$6,127
Total gains or (losses) (realized/unrealized)
Included in earnings4-(9,480)(9,476)-1,259-73329-1,661
Included in other comprehensive income (loss)(96)-3,9083,81242(126)(426)(5,221)(138)-(5,869)
Purchases, issuances and settlements3,626--3,6261,27421,3039,0234,038(538)29,84564,945
Transfers in and/or (out) of Level 3399(8,597)(1)(8,199)(1,316)(27,735)-7,795-(29,845)(51,101)
Ending balance$3,933$-$1,593$5,526$-$-$8,597$7,166$-$-$15,763
The amount of total gains or losses for the period
included in earnings (or changes in net assets)
attributable to the change in unrealized gains
or losses relating to assets still held
at the reporting date$-$-$9,721$9,721$-$-$-$-$-$-$-
(Some amounts may not reconcile due to rounding.)

The net transfers from level 3, fair value measurements using significant unobservable inputs, of $8,199 thousand and $51,101 thousand of investments for the years ended December 31, 2015 and 2014, respectively, primarily relate to securities that were priced using single non-binding broker quotes as of December 31, 2014 and 2013, respectively. The securities were subsequently priced using a recognized pricing service as of December 31, 2015 and 2014, and were classified as level 2 as of those dates.

F-25

The following table presents the activity under Level 3, fair value measurements using significant unobservable inputs for equity index put option contracts, for the periods indicated:

Years Ended December 31,
(Dollars in thousands)20152014
Liabilities:
Balance, beginning of period$47,022$35,423
Total (gains) or losses (realized/unrealized)
Included in earnings(6,317)11,599
Included in other comprehensive income (loss)--
Purchases, issuances and settlements--
Transfers in and/or (out) of Level 3--
Balance, end of period$40,705$47,022
The amount of total gains or losses for the period included in earnings
(or changes in net assets) attributable to the change in unrealized
gains or losses relating to liabilities still held at the reporting date$-$-
(Some amounts may not reconcile due to rounding.)
  1. REDEEMABLE NONCONTROLLING INTERESTS – MT. LOGAN RE

Mt. Logan Re is a Class 3 insurer registered in Bermuda effective February 27, 2013 under The Segregated Accounts Companies Act 2000 and 100% of the voting common shares are owned by Group. Separate segregated accounts have been established effective July 1, 2013 and non-voting, redeemable preferred shares have been issued to capitalize the segregated accounts. Each segregated account will invest in a diversified set of catastrophe exposures, diversified by risk/peril and across different geographic regions globally. The financial statements for Mt. Logan Re are consolidated with the Company with adjustments reflected for the third party noncontrolling interests reflected as separate captions in the Company's financial statements.

The following table presents the activity for redeemable noncontrolling interests in the consolidated balance sheets for the periods indicated:

At December 31,
(Dollars in thousands)20152014
Redeemable noncontrolling interests - Mt. Logan Re, beginning of period$421,552$93,378
Unaffiliated third party investments during period, net306,848279,200
Net income (loss) attributable to noncontrolling interests96,61959,307
Dividends paid on third party investment in redeemable noncontrolling interest(68,158)(10,334)
Redeemable noncontrolling interests - Mt. Logan Re, end of period$756,861$421,552

In addition, the Company has invested $50,000 thousand in the segregated accounts from inception to date.

Effective January 1, 2016, unaffiliated third parties have invested an additional $30,000 thousand in the segregated accounts, which were received prior to December 31, 2015, and are reflected as subscription advances.

  1. CREDIT FACILITIES

The Company has two active credit facilities for a total commitment of up to $1,100,000 thousand and an additional credit facility for a total commitment of up to £175,000 thousand, providing for the issuance of letters of credit and/or unsecured revolving credit lines. The following table presents the costs incurred in connection with the two credit facilities for the periods indicated:

Years Ended December 31,
(Dollars in thousands)201520142013
Credit facility fees incurred$756$659$964

F-26

The terms and outstanding amounts for each facility are discussed below:

Group Credit Facility

Effective June 22, 2012, Group, Bermuda Re and Everest International entered into a four year, $800,000 thousand senior credit facility with a syndicate of lenders, which amended and restated in its entirety the July 27, 2007, five year, $850,000 thousand senior credit facility. Both the June 22, 2012 and July 27, 2007 senior credit facilities, which have similar terms, are referred to as the "Group Credit Facility". Wells Fargo Corporation ("Wells Fargo Bank") is the administrative agent for the Group Credit Facility, which consists of two tranches. Tranche one provides up to $200,000 thousand of unsecured revolving credit for liquidity and general corporate purposes, and for the issuance of unsecured standby letters of credit. The interest on the revolving loans shall, at the Company's option, be either (1) the Base Rate (as defined below) or (2) an adjusted London Interbank Offered Rate ("LIBOR") plus a margin. The Base Rate is the higher of (a) the prime commercial lending rate established by Wells Fargo Bank, (b) the Federal Funds Rate plus 0.5% per annum or (c) the one month LIBOR Rate plus 1.0% per annum. The amount of margin and the fees payable for the Group Credit Facility depends on Group's senior unsecured debt rating. Tranche two exclusively provides up to $600,000 thousand for the issuance of standby letters of credit on a collateralized basis.

The Group Credit Facility requires Group to maintain a debt to capital ratio of not greater than 0.35 to 1 and to maintain a minimum net worth. Minimum net worth is an amount equal to the sum of $4,249,963 thousand plus 25% of consolidated net income for each of Group's fiscal quarters, for which statements are available ending on or after January 1, 2012 and for which consolidated net income is positive, plus 25% of any increase in consolidated net worth during such period attributable to the issuance of ordinary and preferred shares, which at December 31, 2015, was $5,368,970 thousand. As of December 31, 2015, the Company was in compliance with all Group Credit Facility covenants.

The following table summarizes the outstanding letters of credit and/or borrowings for the periods indicated:

(Dollars in thousands)At December 31, 2015At December 31, 2014
BankCommitmentIn UseDate of ExpiryCommitmentIn UseDate of Expiry
Wells Fargo Bank Group Credit FacilityTranche One$200,000$-$200,000$-
Tranche Two600,0002,48812/12/2016600,000444,01212/31/2015
-447,17812/31/2016--
Total Wells Fargo Bank Group Credit Facility$800,000$449,666$800,000$444,012

Bermuda Re Letter of Credit Facility

Effective December 31, 2015, Bermuda Re renewed its $300,000 thousand letter of credit issuance facility with Citibank N.A. referred to as the "Bermuda Re Letter of Credit Facility", which commitment is reconfirmed annually with updated fees. The Bermuda Re Letter of Credit Facility provides for the issuance of up to $300,000 thousand of secured letters of credit to collateralize reinsurance obligations as a non-admitted reinsurer. The interest on drawn letters of credit shall be (A) 0.35% per annum of the principal amount of issued standard letters of credit (expiry of 15 months or less) and (B) 0.45% per annum of the principal amount of issued extended tenor letters of credit (expiry maximum of up to 60 months). The commitment fee on undrawn credit shall be 0.15% per annum.

The following table summarizes the outstanding letters of credit for the periods indicated:

(Dollars in thousands)At December 31, 2015At December 31, 2014
BankCommitmentIn UseDate of ExpiryCommitmentIn UseDate of Expiry
Citibank Bilateral Letter of Credit Agreement$300,000$3,67211/24/2016$300,000$1128/30/2015
67,78312/31/20163,67211/24/2015
1798/30/201770,92212/31/2015
31612/31/20172,01412/31/2016
99,52112/31/2019149,35312/30/2018
Total Citibank Bilateral Agreement$300,000$171,471$300,000$226,073

F-27

Everest International Credit Facility

Effective November 9, 2015, Everest International entered into a four year, £175,000 thousand credit facility with Lloyd's of London Bank ("Everest International Credit Facility"). The Everest International Credit Facility provides up to £175,000 thousand for the issuance of standby letters of credit on a collateralized basis. The Company pays a commitment fee of 0.1% per annum on the average daily amount of the remainder of (1) the aggregate amount available under the facility and (2) the aggregate amount of drawings outstanding under the facility. The Company pays a credit commission fee of 0.35% per annum on drawings outstanding under the facility.

The Everest International Credit Facility requires Group to maintain a debt to capital ratio of not greater than 0.35 to 1 and to maintain a minimum net worth. Minimum net worth is an amount equal to the sum of $5,215,784 thousand (70% of consolidated net worth as of December 31, 2014), plus 25% of consolidated net income for each of Group's fiscal quarters, for which statements are available ending on or after January 1, 2015 and for which net income is positive, plus 25% of any increase in consolidated net worth of Group during such period attributable to the issuance of ordinary and preferred shares, which at December 31, 2015, was $5,468,960 thousand. As of December 31, 2015, the Company was in compliance with all Everest International Credit Facility requirements.

The following table summarizes the outstanding letters of credit for the periods indicated:

(Dollars in thousands)At December 31, 2015At December 31, 2014
BankCommitmentIn UseDate of ExpiryCommitmentIn UseDate of Expiry
Lloyd's Bank plc£175,000£164,96112/31/2019£-£-
----
Total Lloyd's Bank Credit Facility£175,000£164,961£-£-

Holdings Credit Facility - Expired

Effective August 15, 2011, the Company entered into a three year, $150,000 thousand unsecured revolving credit facility, referred to as the "Holdings Credit Facility", which expired on August 15, 2014. The Company decided not to renew the Holdings Credit Facility at expiration.

  1. SENIOR NOTES

The table below displays Holdings' outstanding senior notes. Market value is based on quoted market prices, but due to limited trading activity, these senior notes are considered Level 2 in the fair value hierarchy.

December 31, 2015December 31, 2014
Consolidated BalanceConsolidated Balance
(Dollars in thousands)Date IssuedDate DuePrincipal AmountsSheet AmountMarket ValueSheet AmountMarket Value
4.868% Senior notes06/05/201406/01/2044400,000$400,000$381,204$400,000$404,892
5.40% Senior notes10/12/200410/15/2014250,000----

On June 5, 2014, Holdings issued $400,000 thousand of 30 year senior notes at 4.868%, which will mature on June 1, 2044. Interest will be paid semi-annually on June 1 and December 1 of each year. The proceeds from the issuance have been used in part to pay off the $250,000 thousand of 5.40% senior notes which matured on October 15, 2014.

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

Years Ended December 31,
(Dollars in thousands)201520142013
Interest expense incurred$19,472$21,818$13,551

F-28

  1. LONG TERM SUBORDINATED NOTES

The table below displays Holdings' outstanding fixed to floating rate long term subordinated notes. Market value is based on quoted market prices, but due to limited trading activity, these subordinated notes are considered Level 2 in the fair value hierarchy.

Maturity DateDecember 31, 2015December 31, 2014
OriginalConsolidated BalanceConsolidated Balance
(Dollars in thousands)Date IssuedPrincipal AmountScheduledFinalSheet AmountMarket ValueSheet AmountMarket Value
6.6% Long term subordinated notes04/26/2007$400,00005/15/203705/01/2067$238,368$208,978$238,364$246,312

During the fixed rate interest period from May 3, 2007 through May 14, 2017, interest will be at the annual rate of 6.6%, payable semi-annually in arrears on November 15 and May 15 of each year, commencing on November 15, 2007, subject to Holdings' right to defer interest on one or more occasions for up to ten consecutive years. During the floating rate interest period from May 15, 2017 through maturity, interest will be based on the 3 month LIBOR plus 238.5 basis points, reset quarterly, payable quarterly in arrears on February 15, May 15, August 15 and November 15 of each year, subject to Holdings' right to defer interest on one or more occasions for up to ten consecutive years. Deferred interest will accumulate interest at the applicable rate compounded semi-annually for periods prior to May 15, 2017, and compounded quarterly for periods from and including May 15, 2017.

Holdings can redeem the long term subordinated notes prior to May 15, 2017, in whole but not in part at the applicable redemption price, which will equal the greater of (a) 100% of the principal amount being redeemed and (b) the present value of the principal payment on May 15, 2017 and scheduled payments of interest that would have accrued from the redemption date to May 15, 2017 on the long term subordinated notes being redeemed, discounted to the redemption date on a semi-annual basis at a discount rate equal to the treasury rate plus an applicable spread of either 0.25% or 0.50%, in each case plus accrued and unpaid interest. Holdings may redeem the long term subordinated notes on or after May 15, 2017, in whole or in part at 100% of the principal amount plus accrued and unpaid interest; however, redemption on or after the scheduled maturity date and prior to May 1, 2047 is subject to a replacement capital covenant. This covenant is for the benefit of certain senior note holders and it mandates that Holdings receive proceeds from the sale of another subordinated debt issue, of at least similar size, before it may redeem the subordinated notes. Effective upon the maturity of the Company's 5.40% senior notes on October 15, 2014, the Company's 4.868% senior notes, due on June 1, 2044, have become the Company's long term indebtedness that ranks senior to the long term subordinated notes.

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

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

Years Ended December 31,
(Dollars in thousands)201520142013
Interest expense incurred$15,749$15,749$15,748

F-29

  1. JUNIOR SUBORDINATED DEBT SECURITIES PAYABLE

In accordance with the provisions of the junior subordinated debt securities which were issued on March 29, 2004, Holdings elected to redeem the $329,897 thousand of 6.2% junior subordinated debt securities outstanding on May 24, 2013. As a result of the early redemption, the Company incurred pre-tax expense of $7,282 thousand related to the immediate amortization of the remaining capitalized issuance costs on the trust preferred securities.

Interest expense incurred in connection with these junior subordinated debt securities is as follows for the periods indicated:

Years Ended December 31,
(Dollars in thousands)201520142013
Interest expense incurred$-$-$8,181

Holdings considered the mechanisms and obligations relating to the trust preferred securities, taken together, constituted a full and unconditional guarantee by Holdings of Capital Trust II's payment obligations with respect to their trust preferred securities.

  1. REINSURANCE AND TRUST AGREEMENTS

Certain subsidiaries of Group have established trust agreements, which effectively use the Company's investments as collateral, as security for assumed losses payable to certain non-affiliated ceding companies. At December 31, 2015, the total amount on deposit in trust accounts was $454,384 thousand.

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

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

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

Kilimanjaro has financed the various property catastrophe reinsurance coverage by issuing catastrophe bonds to unrelated, external investors. On April 24, 2014, Kilimanjaro issued $450,000 thousand of notes ("Series 2014-1 Notes"). On November 18, 2014, Kilimanjaro issued $500,000 thousand of notes ("Series 2014-2 Notes"). On December 1, 2015, Kilimanjaro issued $625,000 thousand of notes ("Series 2015-1 Notes). The proceeds from the issuance of the Series 2014-1 Notes, the Series 2014-2 Notes and the Series 2015-1 Notes are held in reinsurance trust throughout the duration of the applicable reinsurance agreements and invested solely in US government money market funds with a rating of at least "AAAm" by Standard & Poor's.

F-30

  1. OPERATING LEASE AGREEMENTS

The future minimum rental commitments, exclusive of cost escalation clauses, at December 31, 2015, for all of the Company's operating leases with remaining non-cancelable terms in excess of one year are as follows:

(Dollars in thousands)
2016$14,594
201713,657
201813,544
201913,362
202012,798
Thereafter16,511
Net commitments$84,466

All of these leases, the expiration terms of which range from 2017 to 2027, are for the rental of office space. Rental expense was $15,986 thousand, $15,519 thousand and $14,407 thousand for the years ended December 31, 2015, 2014 and 2013, respectively.

  1. INCOME TAXES

Under Bermuda law, no income or capital gains taxes are imposed on Group and its Bermuda Subsidiaries. The Minister of Finance of Bermuda has assured Group and its Bermuda subsidiaries that, pursuant to The Exempted Undertakings Tax Protection Amendment Act of 2011, they will be exempt until 2035 from imposition of any such taxes.

All of the income of Group's non-Bermuda subsidiaries is subject to the applicable federal, foreign, state and local taxes on corporations. Additionally, the income of foreign branches of the Company's insurance operating companies, in particular the UK branch of Bermuda Re, is subject to various rates of income tax. Group's U.S. subsidiaries conduct business in and are subject to taxation in the U.S. Should the U.S. subsidiaries distribute current or accumulated earnings and profits in the form of dividends or otherwise, the Company would be subject to an accrual of 5% withholding taxes. Currently, however, no withholding taxes are accrued with respect to such un-remitted earnings as management has no intention of remitting them. The cumulative amount that would be subject to withholding tax, if distributed, is not practicable to compute. The provision for income taxes in the consolidated statement of operations and comprehensive income (loss) has been determined in accordance with the individual income of each entity and the respective applicable tax laws. The provision reflects the permanent differences between financial and taxable income relevant to each entity. The significant components of the provision are as follows for the periods indicated:

Years Ended December 31,
(Dollars in thousands)201520142013
Current tax expense (benefit):
U.S.$90,486$143,297$116,829
Non-U.S.14,81122,57518,219
Total current tax expense (benefit)105,297165,872135,048
Total deferred U.S. tax expense (benefit)28,72421,780154,658
Total income tax expense (benefit)$134,021$187,652$289,706
(Some amounts may not reconcile due to rounding.)

F-31

The weighted average expected tax provision has been calculated using the pre-tax income (loss) in each jurisdiction multiplied by that jurisdiction's applicable statutory tax rate. Reconciliation of the difference between the provision for income taxes and the expected tax provision at the weighted average tax rate for the periods indicated is provided below:

Years Ended December 31,
(Dollars in thousands)201520142013
U.S.Non-U.S.U.S.Non-U.S.U.S.Non-U.S.
Underwriting gain (loss)$294,386$617,137$228,194$658,421$246,699$491,909
Net investment income234,709239,115260,501270,069274,920273,589
Net realized capital gains (losses)(159,268)(24,879)78,0066,040295,8144,413
Net derivative gain (loss)-6,317-(11,599)-44,044
Corporate expenses(7,179)(16,075)(7,252)(16,169)(8,262)(16,555)
Interest, fee and bond issue cost amortization expense(35,434)(756)(37,970)(563)(45,452)(665)
Other income (expense)27,70632,730(1,561)19,998(7,086)1,598
Pre-tax income (loss)$354,920$853,589$519,918$926,197$756,633$798,333
Expected tax provision at the applicable statutory rate(s)124,22114,848181,97221,279264,82216,279
Increase (decrease) in taxes resulting from:
Tax exempt income(10,004)-(12,231)-(15,038)-
Dividend received deduction(5,364)-(5,910)-(7,809)-
Proration2,160-1,835-2,274-
Other8,197(37)(588)1,29627,2381,940
Total income tax provision$119,210$14,811$165,077$22,575$271,487$18,219
(Some amounts may not reconcile due to rounding.)

The Company has no reserve for uncertain tax positions.

The Company's U.S. Corporation Income Tax Returns from 2009 and forward are open to IRS audit.

Deferred Income taxes reflect the tax effect of the temporary differences between the value of assets and liabilities for financial statement purposes and such values as measured by the U.S. tax laws and regulations. The principal items making up the net deferred income tax assets are as follows for the periods indicated:

Years Ended December 31,
(Dollars in thousands)20152014
Deferred tax assets:
Loss reserves$169,771$153,978
Unearned premium reserves40,62444,582
Net unrecognized losses on benefit plans33,97140,377
Investment impairments23,48113,841
Benefit plan liability18,7479,873
Foreign tax credits11,83664,902
Alternative minimum tax credits7,60444,954
Uncollectible reinsurance reserves5,5345,237
Net operating loss carryforward3,4123,296
Deferred expenses3,1823,076
Other assets16,66321,048
Total deferred tax assets334,825405,164
Deferred tax liabilities:
Net fair value income80,268128,856
Deferred acquisition costs33,22738,636
Gain on tender of debt16,43721,916
Net unrealized investment gains7,49128,108
Other liabilities15,96015,379
Total deferred tax liabilities153,383232,895
Net deferred tax assets181,442172,269
Less: Valuation allowance(3,412)(3,296)
Total net deferred tax assets$178,030$168,973

F-32

For U.S. income tax purposes at December 31, 2015, the Company has foreign tax credit carry forwards of $11,836 thousand that begin to expire in 2021. In addition, the Company has $7,604 thousand of Alternative Minimum Tax credits that do not expire. Management believes that it is more likely than not that the Company will realized the benefits of the majority of its net deferred tax assets, however, a valuation allowance of $3,412 thousand and $3,269 thousand has been recorded in 2015 and 2014, respectively, against the deferred tax assets in its Everest Canada subsidiary.

The Company has recorded tax benefits related to share-based compensation deductions for dividends on restricted stock, vestings of restricted stock and exercised stock options in 2015 and 2014, respectively of $8,064 thousand and $6,603 thousand to additional paid-in capital in the shareholders' equity section of the consolidated balance sheets.

  1. REINSURANCE

The Company utilizes reinsurance agreements to reduce its exposure to large claims and catastrophic loss occurrences. These agreements provide for recovery from reinsurers of a portion of losses and LAE under certain circumstances without relieving the Company of its underlying obligations to the policyholders. Losses and LAE incurred and premiums earned are reported after deduction for reinsurance. In the event that one or more of the reinsurers were unable to meet their obligations under these reinsurance agreements, the Company would not realize the full value of the reinsurance recoverable balances. The Company may hold partial collateral, including letters of credit and funds held, under these agreements. See also Note 1C, Note 3 and Note 10.

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

Years Ended December 31,
(Dollars in thousands)201520142013
Written premiums:
Direct$1,569,791$1,227,645$1,268,698
Assumed4,306,5014,521,3423,949,936
Ceded(498,031)(492,084)(213,813)
Net written premiums$5,378,261$5,256,903$5,004,821
Premiums earned:
Direct$1,491,163$1,183,498$1,207,833
Assumed4,485,0214,405,2533,748,824
Ceded(494,725)(419,616)(203,114)
Net premiums earned$5,481,459$5,169,135$4,753,543
Incurred losses and LAE:
Direct$1,268,896$1,100,037$1,173,177
Assumed2,152,6332,160,6631,833,055
Ceded(319,614)(354,166)(205,981)
Net incurred losses and LAE$3,101,915$2,906,534$2,800,251

F-33

  1. COMPREHENSIVE INCOME (LOSS)

The following table presents the components of comprehensive income (loss) in the consolidated statements of operations for the periods indicated:

Years Ended December 31,
201520142013
(Dollars in thousands)Before TaxTax EffectNet of TaxBefore TaxTax EffectNet of TaxBefore TaxTax EffectNet of Tax
Unrealized appreciation (depreciation) ("URA(D)") on securities - temporary$(333,657)$54,502$(279,155)$(4,278)$11,653$7,375$(457,192)$62,834$(394,358)
URA(D) on securities - OTTI8,411(3,383)5,028(10,078)3,407(6,671)(1,579)140(1,439)
Reclassification of net realized losses (gains) included in net income (loss)131,211(37,523)93,68834,668(13,276)21,392(8,388)1,411(6,977)
Foreign currency translation adjustments(140,918)29,388(111,530)(111,145)15,728(95,417)(10,462)10,300(162)
Benefit plan actuarial net gain (loss)8,740(3,059)5,681(60,169)21,059(39,110)27,442(9,605)17,837
Reclassification of benefit plan liability amortization included in net income (loss)9,563(3,347)6,2164,647(1,627)3,0208,889(3,111)5,778
Total other comprehensive income (loss)$(316,650)$36,578$(280,072)$(146,355)$36,944$(109,411)$(441,290)$61,969$(379,321)

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

Years Ended December 31,Affected line item within the statements of
AOCI component20152014operations and comprehensive income (loss)
(Dollars in thousands)
URA(D) on securities$131,211$34,668Other net realized capital gains (losses)
(37,523)(13,276)Income tax expense (benefit)
$93,688$21,392Net income (loss)
Benefit plan net gain (loss)$9,563$4,647Other underwriting expenses
(3,347)(1,627)Income tax expense (benefit)
$6,216$3,020Net income (loss)

The following table presents the components of accumulated other comprehensive income (loss), net of tax, in the consolidated balance sheets for the periods indicated:

Years Ended December 31,
(Dollars in thousands)20152014
Beginning balance of URA (D) on securities$223,250$201,154
Current period change in URA (D) of investments - temporary(185,467)28,767
Current period change in URA (D) of investments - non-credit OTTI5,028(6,671)
Ending balance of URA (D) on securities42,811223,250
Beginning balance of foreign currency translation adjustments(99,947)(4,530)
Current period change in foreign currency translation adjustments(111,530)(95,417)
Ending balance of foreign currency translation adjustments(211,477)(99,947)
Beginning balance of benefit plan net gain (loss)(74,986)(38,896)
Current period change in benefit plan net gain (loss)11,897(36,090)
Ending balance of benefit plan net gain (loss)(63,089)(74,986)
Ending balance of accumulated other comprehensive income (loss)$(231,755)$48,317

F-34

  1. EMPLOYEE BENEFIT PLANS

Defined Benefit Pension Plans.

The Company maintains both qualified and non-qualified defined benefit pension plans for its U.S. employees employed prior to April 1, 2010. Generally, the Company computes the benefits based on average earnings over a period prescribed by the plans and credited length of service. The Company's non-qualified defined benefit pension plan, affected in October 1995, provides compensating pension benefits for participants whose benefits have been curtailed under the qualified plan due to Internal Revenue Code limitations.

Although not required to make contributions under IRS regulations, the following table summarizes the Company's contributions to the defined benefit pension plans for the periods indicated:

Years Ended December 31,
(Dollars in thousands)201520142013
Company contributions$5,949$16,484$22,536

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

Years Ended December 31,
(Dollars in thousands)201520142013
Pension expense$22,682$18,543$19,348

The following table summarizes the status of these defined benefit plans for U.S. employees for the periods indicated:

Years Ended December 31,
(Dollars in thousands)20152014
Change in projected benefit obligation:
Benefit obligation at beginning of year$270,065$214,059
Service cost12,51110,015
Interest cost10,75910,474
Actuarial (gain)/loss(18,595)55,107
Benefits paid(20,718)(19,588)
Projected benefit obligation at end of year254,022270,065
Change in plan assets:
Fair value of plan assets at beginning of year157,090152,446
Actual return on plan assets(7,234)7,747
Actual contributions during the year5,94916,484
Benefits paid(20,718)(19,588)
Fair value of plan assets at end of year135,087157,090
Funded status at end of year$(118,936)$(112,976)
(Some amounts may not reconcile due to rounding.)

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

At December 31,
(Dollars in thousands)20152014
Other assets (due beyond one year)$-$-
Other liabilities (due within one year)(1,869)(5,469)
Other liabilities (due beyond one year)(117,067)(107,507)
Net amount recognized in the consolidated balance sheets$(118,936)$(112,976)

F-35

Amounts not yet reflected in net periodic benefit cost and included in accumulated other comprehensive income (loss) for the periods indicated:

At December 31,
(Dollars in thousands)20152014
Prior service cost$-$(21)
Accumulated income (loss)(91,920)(102,671)
Accumulated other comprehensive income (loss)$(91,920)$(102,692)

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

Years Ended December 31,
(Dollars in thousands)20152014
Other comprehensive income (loss) at December 31, prior year$(102,692)$(53,387)
Net gain (loss) arising during period(259)(58,647)
Recognition of amortizations in net periodic benefit cost:
Prior service cost2149
Actuarial loss11,0119,294
Other comprehensive income (loss) at December 31, current year$(91,920)$(102,692)
(Some amounts may not reconcile due to rounding.)

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

Years Ended December 31,
(Dollars in thousands)201520142013
Service cost$12,511$10,015$11,182
Interest cost10,75910,4748,511
Expected return on assets(11,620)(11,288)(8,495)
Amortization of actuarial loss from earlier periods9,2434,3418,101
Amortization of unrecognized prior service cost214949
Settlement1,7684,953-
Net periodic benefit cost$22,682$18,543$19,348
Other changes recognized in other comprehensive income (loss):
Other comprehensive income (loss) attributable to change from prior year(10,773)49,305
Total recognized in net periodic benefit cost and other
comprehensive income (loss)$11,909$67,847
(Some amounts may not reconcile due to rounding.)

The estimated transition obligation, actuarial loss and prior service cost that will be amortized from accumulated other comprehensive income into net periodic benefit cost over the next year are $0 thousand, $8,055 thousand and $0 thousand, respectively.

The weighted average discount rates used to determine net periodic benefit cost for 2015, 2014 and 2013 were 4.00%, 5.00% and 4.00%, respectively. The rate of compensation increase used to determine the net periodic benefit cost for 2015, 2014 and 2013 was 4.0%. The expected long-term rate of return on plan assets for 2015, 2014 and 2013 was 7.50% and was based on expected portfolio returns and allocations.

The weighted average discount rates used to determine the actuarial present value of the projected benefit obligation for years end 2015, 2014 and 2013 were 4.38%, 4.00% and 5.00%, respectively.

F-36

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

At December 31,
(Dollars in thousands)20152014
Qualified Plan$188,702$200,205
Non-qualified Plan17,75619,167
Total$206,458$219,371
(Some amounts may not reconcile due to rounding.)

The following table displays the plans with projected benefit obligations in excess of plan assets for the periods indicated:

At December 31,
(Dollars in thousands)20152014
Qualified Plan
Projected benefit obligation$229,719$243,525
Fair value of plan assets135,087157,090
Non-qualified Plan
Projected benefit obligation$24,303$26,540
Fair value of plan assets--

The following table displays the plans with accumulated benefit obligations in excess of plan assets for the periods indicated:

At December 31,
(Dollars in thousands)20152014
Qualified Plan
Accumulated benefit obligation$188,702$200,205
Fair value of plan assets135,087157,090
Non-qualified Plan
Accumulated benefit obligation$17,756$19,167
Fair value of plan assets--

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

(Dollars in thousands)
2016$6,709
20177,779
20189,607
201912,139
202010,660
Next 5 years67,416

Plan assets consist of shares in investment trusts with 80%, 17% and 3% of the underlying assets consisting of equity securities, fixed maturities and cash, respectively. The Company manages the qualified plan investments for U.S. employees. The assets in the plan consist of debt and equity mutual funds. Due to the long term nature of the plan, the target asset allocation has historically been 70% equities and 30% bonds.

F-37

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

Fair Value Measurement Using:
Quoted Prices
in ActiveSignificant
Markets forOtherSignificant
IdenticalObservableUnobservable
AssetsInputsInputs
(Dollars in thousands)December 31, 2015(Level 1)(Level 2)(Level 3)
Assets:
Cash$-$-$-$-
Short-term investments, which approximates fair value (a)4,0344,034--
Mutual funds, fair value
Fixed income (b)22,53722,537--
Equities (c)86,50586,505--
Multi-strategy equity fund, fair value (d)10,673--10,673
Private equity limited partnerships (e)11,338--11,338
Total$135,087$113,076$-$22,011
(Some amounts may not reconcile due to rounding.)
(a)This category includes high quality, short-term money market instruments, which are issued and payable in U.S. dollars.
(b)This category includes fixed income funds, which invest in investment grade securities of corporations, governments and government agencies with approximately 50% in U.S. securities and 50% in international securities.
(c)This category includes funds, which invest in small, mid and multi-cap equity securities including common stocks, securities convertible into common stock and securities with common stock characteristics, such as rights and warrants, with approximately 90% in U.S. equities and 10% in international equities.
(d)This category consists of a privately held fund of U.S. and international equity funds and may include currency hedges for the foreign funds. The fair value is provided by the external investment manager.
(e)This category consists of private equity limited partnerships.
Fair Value Measurement Using:
Quoted Prices
in ActiveSignificant
Markets forOtherSignificant
IdenticalObservableUnobservable
AssetsInputsInputs
(Dollars in thousands)December 31, 2014(Level 1)(Level 2)(Level 3)
Assets:
Cash$-$-$-$-
Short-term investments, which approximates fair value (a)14,32814,328--
Mutual funds, fair value
Fixed income (b)23,94823,948--
Equities (c)96,76296,762--
Multi-strategy equity fund, fair value (d)10,629--10,629
Private equity limited partnerships (e)11,423--11,423
Total$157,090$135,037$-$22,053
(Some amounts may not reconcile due to rounding.)
(a)This category includes high quality, short-term money market instruments, which are issued and payable in U.S. dollars.
(b)This category includes fixed income funds, which invest in investment grade securities of corporations, governments and government agencies with approximately 50% in U.S. securities and 50% in international securities.
(c)This category includes funds, which invest in small, mid and multi-cap equity securities including common stocks, securities convertible into common stock and securities with common stock characteristics, such as rights and warrants, with approximately 90% in U.S. equities and 10% in international equities.
(d)This category consists of a privately held fund of U.S. and international equity funds and may include currency hedges for the foreign funds. The fair value is provided by the external investment manager.
(e)This category consists of private equity limited partnerships.

F-38

The following table presents the activity under Level 3, fair value measurements using significant unobservable inputs for fixed maturity investments, for the period indicated:

Year Ended December 31,
(Dollars in thousands)20152014
Assets:
Balance, beginning of period$22,053$19,921
Actual return on plan assets:
Realized gains (losses) relating to assets sold during the period8475
Unrealized gains (losses) relating to assets still held at the reporting date601331
Purchases and capital contributions1,7193,390
Investment income earned on assets--
Sales and capital distributions(2,446)(1,664)
Transfers in and/or (out) of Level 3--
Balance, end of period$22,011$22,053
The amount of total gains (losses) for the period included in changes in
net assets attributable to the change in unrealized gains (losses)
relating to assets still held at the reporting date$517$256
(Some amounts may not reconcile due to rounding.)

The Company does not expect to make any contributions to the qualified plan in 2016.

Defined Contribution Plans.

The Company also maintains both qualified and non-qualified defined contribution plans ("Savings Plan" and "Non-Qualified Savings Plan", respectively) covering U.S. employees. Under the plans, the Company contributes up to a maximum 3% of the participants' compensation based on the contribution percentage of the employee. The Non-Qualified Savings Plan provides compensating savings plan benefits for participants whose benefits have been curtailed under the Savings Plan due to Internal Revenue Code limitations. In addition, effective for new hires (and rehires) on or after April 1, 2010, the Company will contribute between 3% and 8% of an employee's earnings for each payroll period based on the employee's age. These contributions will be 100% vested after three years.

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

Years Ended December 31,
(Dollars in thousands)201520142013
Incurred expenses$5,468$4,676$3,903

In addition, the Company maintains several defined contribution pension plans covering non-U.S. employees. Each non-U.S. office (Brazil, Canada, London, Belgium, Singapore, Ireland and Bermuda) maintains a separate plan for the non-U.S. employees working in that location. The Company contributes various amounts based on salary, age and/or years of service. The contributions as a percentage of salary for the branch offices range from 5.0% to 17.7%. The contributions are generally used to purchase pension benefits from local insurance providers. The following table presents the Company's incurred expenses related to these plans for the periods indicated:

Years Ended December 31,
(Dollars in thousands)201520142013
Incurred expenses$1,423$1,387$1,195

F-39

Post-Retirement Plan.

The Company sponsors a Retiree Health Plan for employees employed prior to April 1, 2010. This plan provides healthcare benefits for eligible retired employees (and their eligible dependants), who have elected coverage. The Company anticipates that most covered employees will become eligible for these benefits if they retire while working for the Company. The cost of these benefits is shared with the retiree. The Company accrues the post-retirement benefit expense during the period of the employee's service.

The following medical cost trend rates were used to determine net cost and benefit obligations: a healthcare inflation rate for pre-Medicare claims of 7.0% in 2015 was assumed to decrease gradually to 4.5% in 2027 and then remain at that level; and a healthcare inflation rate for post-Medicare claims of 6.2% in 2015 was assumed to decrease gradually to 4.5% in 2027 and then remain at that level.

Changes in the assumed healthcare cost trend can have a significant effect on the amounts reported for the healthcare plans. A one percent change in the rate would have the following effects on:

PercentagePercentage
Point IncreasePoint Decrease
(Dollars in thousands)($ Impact)($ Impact)
a. Effect on total service and interest cost components$706$(537)
b. Effect on accumulated post-retirement benefit obligation6,504(5,064)

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

Years Ended December 31,
(Dollars in thousands)201520142013
Post-retirement benefit expenses$3,280$3,196$3,801

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

At December 31,
(Dollars in thousands)20152014
Change in projected benefit obligation:
Benefit obligation at beginning of year$36,506$27,594
Service cost1,7941,619
Interest cost1,1871,320
Actuarial (gain)/loss(7,231)6,475
Benefits paid(568)(502)
Benefit obligation at end of year31,68736,506
Change in plan assets:
Fair value of plan assets at beginning of year--
Employer contributions568502
Benefits paid(568)(502)
Fair value of plan assets at end of year--
Funded status at end of year$(31,687)$(36,506)

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

At December 31,
(Dollars in thousands)20152014
Other liabilities (due within one year)$(654)$(639)
Other liabilities (due beyond one year)(31,033)(35,867)
Net amount recognized in the consolidated balance sheets$(31,687)$(36,506)

F-40

Amounts not yet reflected in net periodic benefit cost and included in accumulated other comprehensive income (loss) for the periods indicated:

At December 31,
(Dollars in thousands)20152014
Accumulated income (loss)$(5,139)$(12,670)
Accumulated other comprehensive income (loss)$(5,139)$(12,670)

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

Years Ended December 31,
(Dollars in thousands)20152014
Other comprehensive income (loss) at December 31, prior year$(12,670)$(6,452)
Net gain (loss) arising during period7,231(6,475)
Recognition of amortizations in net periodic benefit cost:
Actuarial loss (gain)300257
Other comprehensive income (loss) at December 31, current year$(5,139)$(12,670)

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

Years Ended December 31,
(Dollars in thousands)201520142013
Service cost$1,794$1,619$1,899
Interest cost1,1871,3201,164
Net loss recognition300257739
Net periodic cost$3,280$3,196$3,801
Other changes recognized in other comprehensive income (loss):
Other comprehensive gain (loss) attributable to change from prior year(7,531)6,218
Total recognized in net periodic benefit cost and
other comprehensive income (loss)$(4,251)$9,414
(Some amounts may not reconcile due to rounding.)

The estimated transition obligation, actuarial loss and prior service cost that will be amortized from accumulated other comprehensive income (loss) into net periodic benefit cost over the next fiscal year are $0 thousand, $193 thousand and $0 thousand, respectively.

The weighted average discount rates used to determine net periodic benefit cost for 2015, 2014 and 2013 were 4.00%, 5.00% and 4.00%, respectively.

The weighted average discount rates used to determine the actuarial present value of the projected benefit obligation at year end 2015, 2014 and 2013 were 4.38%, 4.00% and 5.00%, respectively.

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

2016$654
2017717
2018844
2019972
20201,141
Next 5 years8,157

F-41

  1. DIVIDEND RESTRICTIONS AND STATUTORY FINANCIAL INFORMATION

Group and its operating subsidiaries are subject to various regulatory restrictions, including the amount of dividends that may be paid and the level of capital that the operating entities must maintain. These regulatory restrictions are based upon statutory capital as opposed to GAAP basis equity or net assets. Group and one of its primary operating subsidiaries, Bermuda Re, are regulated by Bermuda law and its other primary operating subsidiary, Everest Re, is regulated by Delaware law. Bermuda Re is subject to the Bermuda Solvency Capital Requirement ("BSCR") administered by the Bermuda Monetary Authority ("BMA") and Everest Re is subject to the Risk-Based Capital Model ("RBC") developed by the National Association of Insurance Commissioners ("NAIC"). These models represent the aggregate regulatory restrictions on net assets and statutory capital and surplus.

Dividend Restrictions.

Under Bermuda law, Group is prohibited from declaring or paying a dividend if such payment would reduce the realizable value of its assets to an amount less than the aggregate value of its liabilities and its issued share capital and share premium (additional paid-in capital) accounts. Group's ability to pay dividends and its operating expenses is dependent upon dividends from its subsidiaries.

Under Bermuda law, Bermuda Re is prohibited from declaring or making payment of a dividend if it fails to meet its minimum solvency margin or minimum liquidity ratio. As a long term insurer, Bermuda Re is also unable to declare or pay a dividend to anyone who is not a policyholder unless, after payment of the dividend, the value of the assets in their long term business fund, as certified by their approved actuary, exceeds their liabilities for long term business by at least the $250 thousand minimum solvency margin. Prior approval of the BMA is required if Bermuda Re's dividend payments would exceed 25% of their prior year-end total statutory capital and surplus.

Bermuda Re prepares its statutory financial statements in conformity with the accounting principles set forth in Bermuda in The Insurance Act 1978, amendments thereto and related regulations. The general business statutory capital and surplus of Bermuda Re was $2,628,274 thousand and $2,748,030 thousand at December 31, 2015 and 2014, respectively. The general business statutory net income of Bermuda Re was $617,506 thousand, $698,834 thousand and $634,147 thousand for the years ended December 31, 2015, 2014 and 2013, respectively.

Delaware law provides that an insurance company which is a member of an insurance holding company system and is domiciled in the state shall not pay dividends without giving prior notice to the Insurance Commissioner of Delaware and may not pay dividends without the approval of the Insurance Commissioner if the value of the proposed dividend, together with all other dividends and distributions made in the preceding twelve months, exceeds the greater of (1) 10% of statutory surplus or (2) net income, not including realized capital gains, each as reported in the prior year's statutory annual statement. In addition, no dividend may be paid in excess of unassigned earned surplus. At December 31, 2015, Everest Re has $498,455 thousand available for payment of dividends in 2016 without the need for prior regulatory approval.

Everest Re prepares its statutory financial statements in accordance with accounting practices prescribed or permitted by the NAIC and the Delaware Insurance Department. Prescribed statutory accounting practices are set forth in the NAIC Accounting Practices and Procedures Manual. The capital and statutory surplus of Everest Re was $3,210,891 thousand and $2,892,999 thousand at December 31, 2015 and 2014, respectively. The statutory net income of Everest Re was $498,455 thousand, $357,298 thousand and $540,020 thousand for the years ended December 31, 2015, 2014 and 2013, respectively.

There are certain regulatory and contractual restrictions on the ability of Holdings' operating subsidiaries to transfer funds to Holdings in the form of cash dividends, loans or advances. The insurance laws of the State of Delaware, where Holdings' direct insurance subsidiaries are domiciled, require regulatory approval before those subsidiaries can pay dividends or make loans or advances to Holdings that exceed certain statutory thresholds.

F-42

Capital Restrictions.

In Bermuda, Bermuda Re is subject to the BSCR administered by the BMA. No regulatory action is taken if an insurer's capital and surplus is equal to or in excess of their enhanced capital requirement determined by the BSCR model. In addition, the BMA has established a target capital level for each insurer, which is 120% of the enhanced capital requirement.

In the United States, Everest Re is subject to the RBC developed by the NAIC which determines an authorized control level risk-based capital. As long as the total adjusted capital is 200% or more of the authorized control level capital, no action is required by the Company.

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

Bermuda Re (1)Everest Re (2)
At December 31,At December 31,
(Dollars in thousands)2015 (3)2014 (3)20152014
Regulatory targeted capital$-$2,050,006$1,355,668$1,209,601
Actual capital$2,628,274$2,748,030$3,210,891$2,892,999

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

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

(3) The 2015 BSCR calculation is not yet due to be completed; however, the Company anticipates that Bermuda Re's December 31, 2015 actual capital will exceed the targeted capital level.

  1. CONTINGENCIES

In the ordinary course of business, the Company is involved in lawsuits, arbitrations and other formal and informal dispute resolution procedures, the outcomes of which will determine the Company's rights and obligations under insurance and reinsurance agreements. In some disputes, the Company seeks to enforce its rights under an agreement or to collect funds owing to it. In other matters, the Company is resisting attempts by others to collect funds or enforce alleged rights. These disputes arise from time to time and are ultimately resolved through both informal and formal means, including negotiated resolution, arbitration and litigation. In all such matters, the Company believes that its positions are legally and commercially reasonable. The Company considers the statuses of these proceedings when determining its reserves for unpaid loss and loss adjustment expenses.

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

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

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

At December 31,
(Dollars in thousands)20152014
The Prudential Insurance Company of America$142,427$142,653
Unaffiliated life insurance company$33,062$31,964

F-43

  1. SHARE-BASED COMPENSATION PLANS

The Company has a 2010 Stock Incentive Plan ("2010 Employee Plan"), a 2009 Non-Employee Director Stock Option and Restricted Stock Plan ("2009 Director Plan") and a 2003 Non-Employee Director Equity Compensation Plan ("2003 Director Plan").

Under the 2010 Employee Plan, 4,000,000 common shares have been authorized to be granted as non-qualified share options, incentive share options, share appreciation rights' restricted share awards or performance share unit awards to officers and key employees of the Company. At December 31, 2015, there were 2,715,908 remaining shares available to be granted under the 2010 Employee Plan. The 2010 Employee Plan replaced a 2002 Employee Plan, which replaced a 1995 Employee Plan; therefore, no further awards will be granted under the 2002 Employee Plan or the 1995 Employee Plan. Through December 31, 2015, only non-qualified share options, restricted share awards and performance share unit awards had been granted under the employee plans. Under the 2009 Director Plan, 37,439 common shares have been authorized to be granted as share options or restricted share awards to non-employee directors of the Company. At December 31, 2015, there were 35,215 remaining shares available to be granted under the 2009 Director Plan. The 2009 Director Plan replaced a 1995 Director Plan, which expired. Under the 2003 Director Plan, 500,000 common shares have been authorized to be granted as share options or share awards to non-employee directors of the Company. At December 31, 2015 there were 377,487 remaining shares available to be granted under the 2003 Director Plan.

Options and restricted shares granted under the 2010 Employee Plan and the 2002 Employee Plan vest at the earliest of 20% per year over five years or in accordance with any applicable employment agreement. Options granted under the 1995 Director Plan vested at 50% per year over two years. Options and restricted shares granted under the 2003 Director Plan generally vest at 33% per year over three years, unless an alternate vesting period is authorized by the Board. Options and restricted shares granted under the 2009 Director Plan will vest as provided in the award agreement. All options are exercisable at fair market value of the stock at the date of grant and expire ten years after the date of grant.

Performance Share Unit awards granted under the 2010 Employee Plan will vest 100% after three years. The Performance Share Unit awards represent the right to receive between and 0 and 1.75 shares of stock for each unit awarded depending upon performance in relation to certain metrics. The performance share unit valuation will be based 50% on growth in book value per share over the three year vesting period, compared to designated peer companies. The remaining 50% of the performance share valuation will be based upon operating return on equity for each of the separate operating years within the vesting period.

For share options, restricted shares and performance share units granted under the 2010 Employee Plan, the 2002 Employee Plan, the 2009 Director Plan and the 2003 Director Plan, share-based compensation expense recognized in the consolidated statements of operations and comprehensive income (loss) was $21,237 thousand, $21,196 thousand and $31,844 thousand for the years ended December 31, 2015, 2014 and 2013, respectively. The corresponding income tax benefit recorded in the consolidated statements of operations and comprehensive income (loss) for share-based compensation was $4,870 thousand, $5,819 thousand and $5,458 thousand for the years ended December 31, 2015, 2014 and 2013, respectively.

For the year ended December 31, 2015, a total of 156,262 restricted shares were granted on February 25, 2015, May 13, 2015, September 9, 2015 and November 17, 2015, with a fair value of $178.840, $181.895, $176.370 and $182.075 per share, respectively. Additionally, 10,705 performance share units were awarded on February 25, 2015, with a fair value of $178.84 per unit. No share options were granted during the year ended December 31, 2015. For share options granted during previous years, the fair value per option was calculated on the date of the grant using the Black-Scholes option valuation model.

F-44

The Company recognizes, as an increase to additional paid-in capital, a realized income tax benefit from dividends, charged to retained earnings and paid to employees on equity classified non-vested equity shares. In addition, the amount recognized in additional paid-in capital for the realized income tax benefit from dividends on those awards is included in the pool of excess tax benefits available to absorb tax deficiencies on share-based payment awards. For the years ended December 31, 2015, 2014 and 2013, the Company recognized $446 thousand, $401 thousand and $237 thousand, respectively, of additional paid-in capital due to tax benefits from dividends on restricted shares.

A summary of the option activity under the Company's shareholder approved plans as of December 31, 2015, 2014 and 2013, and changes during the year then ended is presented in the following tables:

Weighted-
Weighted-Average
AverageRemainingAggregate
(Aggregate Intrinsic Value in thousands)ExerciseContractualIntrinsic
OptionsSharesPrice/ShareTermValue
Outstanding at January 1, 2015888,184$86.05
Granted--
Exercised230,35087.21
Forfeited/Cancelled/Expired9,80087.68
Outstanding at December 31, 2015648,03485.614.5$64,352
Exercisable at December 31, 2015495,33484.944.1$49,517
Weighted-
Weighted-Average
AverageRemainingAggregate
(Aggregate Intrinsic Value in thousands)ExerciseContractualIntrinsic
OptionsSharesPrice/ShareTermValue
Outstanding at January 1, 20141,190,544$85.44
Granted--
Exercised286,12083.53
Forfeited/Cancelled/Expired16,24085.73
Outstanding at December 31, 2014888,18486.055.2$76,485
Exercisable at December 31, 2014562,68485.414.5$48,812
Weighted-
Weighted-Average
AverageRemainingAggregate
(Aggregate Intrinsic Value in thousands)ExerciseContractualIntrinsic
OptionsSharesPrice/ShareTermValue
Outstanding at January 1, 20132,012,164$87.25
Granted--
Exercised768,19090.26
Forfeited/Cancelled/Expired53,43084.23
Outstanding at December 31, 20131,190,54485.445.8$83,313
Exercisable at December 31, 2013579,41786.334.5$40,029

There were no share options granted in 2015, 2014 and 2013. The aggregate intrinsic value (market price less exercise price) of options exercised during the years ended December 31, 2015, 2014 and 2013 was $21,434 thousand, $21,202 thousand and $30,050 thousand, respectively. The cash received from the exercised share options for the year ended December 31, 2015 was $20,089 thousand. The tax benefit realized from the options exercised for the year ended December 31, 2015 was $6,892 thousand.

F-45

The following table summarizes information about share options outstanding for the period indicated:

At December 31, 2015
Options OutstandingOptions Exercisable
Weighted-
AverageWeighted-Weighted-
NumberRemainingAverageNumberAverage
Range ofOutstandingContractualExerciseExercisableExercise
Exercise Pricesat 12/31/15LifePriceat 12/31/15Price
$66.0780 - $77.0910111,1303.1$71.72111,130$71.72
$77.0911 - $88.1040277,2804.685.78225,88085.59
$88.1041 - $99.1170211,7705.689.46110,47090.49
$99.1171 - $110.13047,8542.299.8047,85499.80
648,0344.585.61495,33484.94

The following table summarizes the status of the Company's non-vested shares and changes for the periods indicated:

Years Ended December 31,
201520142013
Weighted-Weighted-Weighted-
AverageAverageAverage
Grant DateGrant DateGrant Date
Restricted (non-vested) SharesSharesFair ValueSharesFair ValueSharesFair Value
Outstanding at January 1,467,745$120.84429,041$103.50357,750$87.86
Granted156,262178.80176,159147.44274,715132.95
Vested154,387113.12128,54999.55187,397116.83
Forfeited34,284138.198,906118.8216,027103.29
Outstanding at December 31,435,336143.02467,745120.84429,041103.50

As of December 31, 2015, there was $46,024 thousand of total unrecognized compensation cost related to non-vested share-based compensation expense. That cost is expected to be recognized over a weighted-average period of 3.2 years. The total fair value of shares vested during the years ended December 31, 2015, 2014 and 2013, was $17,464 thousand, $12,797 thousand and $21,894 thousand, respectively. The tax benefit realized from the shares vested for the year ended December 31, 2015 was $6,915 thousand.

In addition to the 2010 Employee Plan, the 2009 Director Plan and the 2003 Director Plan, Group issued 426 common shares in 2015, 476 common shares in 2014 and 586 common shares in 2013 to the Company's non-employee directors as compensation for their service as directors. These issuances had aggregate values of approximately $75 thousand, $75 thousand and $75 thousand, respectively.

Since its 1995 initial public offering, the Company has issued to certain key employees of the Company 1,838,857 restricted common shares, of which 230,877 restricted shares have been cancelled. The Company has issued to non-employee directors of the Company 114,786 restricted common shares, of which no restricted shares have been cancelled. The Company acquired 64,160, 55,756 and 94,014 common shares at a cost of $11,437 thousand, $8,531 thousand and $13,180 thousand in 2015, 2014 and 2013, respectively, from employees and non-employee directors who chose to pay required withholding taxes with shares exercised or restricted shares vested. The Company acquired 18,117, 26,734 and 74,175 common shares at a cost of $3,229 thousand, $4,207 thousand and $9,313 thousand in 2015, 2014 and 2013, respectively, from employees and non-employee directors who chose to pay the option grant price with shares.

F-46

The following table summarized the status of the Company's non-vested performance share unit awards and changes for the period indicated:

Year Ended December 31, 2015
Weighted-
Average
Grant Date
Performance Share Unit AwardsSharesFair Value
Outstanding at January 1,-$-
Granted10,705178.84
Vested--
Forfeited--
Outstanding at December 31,10,705178.84
  1. SEGMENT REPORTING

The U.S. Reinsurance operation writes property and casualty reinsurance and specialty lines of business, including Marine, Aviation, Surety and Accident and Health ("A&H") business, on both a treaty and facultative basis, through reinsurance brokers, as well as directly with ceding companies primarily within the U.S. The International operation writes non-U.S. property and casualty reinsurance through Everest Re's branches in Canada and Singapore and through offices in Brazil, Miami and New Jersey. The Bermuda operation provides reinsurance and insurance to worldwide property and casualty markets through brokers and directly with ceding companies from its Bermuda office and reinsurance to the United Kingdom and European markets through its UK branch and Ireland Re. The Insurance operation writes property and casualty insurance directly and through general agents, brokers and surplus lines brokers within the U.S. and Canada. The Mt. Logan Re segment represents business written for the segregated accounts of Mt. Logan Re, which were formed on July 1, 2013. The Mt. Logan Re business represents a diversified set of catastrophe exposures, diversified by risk/peril and across different geographical regions globally.

These segments, with the exception of Mt. Logan Re, 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 Mt. Logan Re segment is managed independently and seeks to write a diverse portfolio of catastrophe risks for each segregated account to achieve desired risk and return criteria.

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

Mt. Logan Re's business is sourced through operating subsidiaries of the Company; however, the activity is only reflected in the Mt. Logan Re segment. For other inter-affiliate reinsurance, business is generally reported within the segment in which the business was first produced, consistent with how the business is managed.

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

F-47

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

U.S. ReinsuranceYears Ended December 31,
(Dollars in thousands)201520142013
Gross written premiums$1,963,466$2,039,578$1,809,669
Net written premiums1,855,8531,983,8001,807,067
Premiums earned$1,952,680$1,986,769$1,671,513
Incurred losses and LAE825,081954,525814,668
Commission and brokerage493,261466,291366,890
Other underwriting expenses50,08745,58347,176
Underwriting gain (loss)$584,251$520,370$442,779
InternationalYears Ended December 31,
(Dollars in thousands)201520142013
Gross written premiums$1,294,049$1,582,426$1,345,770
Net written premiums1,208,9781,336,6331,327,430
Premiums earned$1,251,111$1,310,903$1,289,341
Incurred losses and LAE749,891748,174675,362
Commission and brokerage298,180306,229295,883
Other underwriting expenses34,30334,59833,910
Underwriting gain (loss)$168,737$221,902$284,186
BermudaYears Ended December 31,
(Dollars in thousands)201520142013
Gross written premiums$852,489$770,249$774,268
Net written premiums791,594744,664765,660
Premiums earned$822,391$715,736$737,986
Incurred losses and LAE456,448361,792374,375
Commission and brokerage215,992198,848179,138
Other underwriting expenses36,01734,92334,654
Underwriting gain (loss)$113,934$120,173$149,819
InsuranceYears Ended December 31,
(Dollars in thousands)201520142013
Gross written premiums$1,532,287$1,218,372$1,268,745
Net written premiums1,325,8861,067,3331,086,217
Premiums earned$1,266,660$1,030,299$1,037,425
Incurred losses and LAE1,033,295811,445931,466
Commission and brokerage176,213149,777133,695
Other underwriting expenses136,661118,001119,283
Underwriting gain (loss)$(79,509)$(48,924)$(147,019)
Mt. Logan ReYears Ended December 31,
(Dollars in thousands)201520142013
Gross written premiums$234,001$138,362$20,182
Net written premiums195,950124,47318,447
Premiums earned$188,617$125,428$17,278
Incurred losses and LAE37,20030,5984,380
Commission and brokerage18,39014,4411,952
Other underwriting expenses8,9167,2952,103
Underwriting gain (loss)$124,111$73,094$8,843

F-48

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

Years Ended December 31,
(Dollars in thousands)201520142013
Underwriting gain (loss)$911,524$886,615$738,608
Net investment income473,825530,570548,509
Net realized capital gains (losses)(184,147)84,046300,227
Net derivative gain (loss)6,317(11,599)44,044
Corporate expenses(23,254)(23,421)(24,817)
Interest, fee and bond issue cost amortization expense(36,191)(38,533)(46,118)
Other income (expense)60,43518,437(5,487)
Income (loss) before taxes$1,208,509$1,446,115$1,554,966

The Company produces business in the U.S., Bermuda and internationally. The net income deriving from and assets residing in the individual foreign countries in which the Company writes business are not identifiable in the Company's financial records. Based on gross written premium, the table below presents the largest country, other than the U.S., in which the Company writes business, for the periods indicated:

Years Ended December 31,
(Dollars in thousands)201520142013
United Kingdom$740,763$676,490$555,332

Approximately 20.7%, 22.7% and 20.6% of the Company's gross written premiums in 2015, 2014 and 2013, respectively, were sourced through the Company's largest intermediary.

  1. DISPOSITIONS

On July 13, 2015, the Company closed its agreement to sell all of the outstanding shares of capital stock of Mt. McKinley, a Delaware domiciled insurance company and wholly-owned subsidiary of the Company to Clearwater Insurance Company, a Delaware domiciled insurance company. The Company received $20,156 thousand in cash for Mt. McKinley and did not recognize any realized gain or loss from the sale.

Concurrently with the closing, the Company entered into a retrocession treaty with an affiliate of Clearwater Insurance Company. Per the retrocession treaty, the Company retroceded 100% of the liabilities associated with certain Mt. McKinley policies, which had been reinsured by Everest Reinsurance (Bermuda), Ltd. ("Everest Re Bermuda"), a wholly-owned subsidiary of the Company. As consideration for entering into the retrocession treaty, Everest Re Bermuda transferred cash of $140,279 thousand, an amount equal to the net loss reserves as of the closing date. Of the $140,279 thousand of net loss reserves retroceded, $100,451 thousand were related to A&E business. The maximum liability retroceded under the retrocession treaty will be $440,279 thousand, equal to the retrocession payment plus $300,000 thousand. The Company will retain liability for any amounts exceeding the maximum liability retroceded under the retrocession treaty.

  1. SUBSEQUENT EVENTS

The Company has evaluated known recognized and non-recognized subsequent events. The Company does not have any subsequent events to report.

F-49

  1. UNAUDITED QUARTERLY FINANCIAL DATA

Summarized quarterly financial data for the periods indicated:

2015
(Dollars in thousands, except per share amounts)1st Quarter2nd Quarter3rd Quarter4th Quarter
Operating data:
Gross written premiums$1,414,041$1,258,248$1,720,713$1,483,290
Net written premiums1,283,8891,168,4961,561,2571,364,618
Premiums earned1,307,0771,332,3981,413,6401,428,344
Net investment income122,583125,046115,511110,685
Net realized capital gains (losses)(10,505)(24,178)(159,971)10,507
Total claims and underwriting expenses1,070,2961,149,5291,258,8121,091,298
Net income (loss)339,070235,472107,572392,374
Net (income) loss attributable to noncontrolling interests(16,092)(26,415)(19,019)(35,093)
Net income (loss) attributable to Everest Re Group322,978209,05788,553357,281
Earnings per common share attributable to Everest Re Group:
Basic$7.26$4.72$2.02$8.32
Diluted$7.19$4.68$2.00$8.26
2014
(Dollars in thousands, except per share amounts)1st Quarter2nd Quarter3rd Quarter4th Quarter
Operating data:
Gross written premiums$1,267,424$1,415,362$1,666,701$1,399,500
Net written premiums1,227,5891,217,4871,517,5801,294,247
Premiums earned1,144,4901,272,3171,389,9981,362,330
Net investment income123,157131,224142,143134,046
Net realized capital gains (losses)21,12659,016(9,448)13,352
Total claims and underwriting expenses916,0491,077,7981,191,3891,097,284
Net income (loss)302,022297,925301,253357,263
Net (income) loss attributable to noncontrolling interests(8,089)(7,741)(26,337)(17,140)
Net income (loss) attributable to Everest Re Group293,933290,184274,916340,123
Earnings per common share attributable to Everest Re Group:
Basic$6.26$6.32$6.05$7.54
Diluted$6.21$6.26$6.00$7.47

F-50

SCHEDULE I — SUMMARY OF INVESTMENTS —
OTHER THAN INVESTMENTS IN RELATED PARTIES
December 31, 2015
Column AColumn BColumn CColumn D
Amount
Shown in
MarketBalance
(Dollars in thousands)CostValueSheet
Fixed maturities-available for sale
Bonds:
U.S. government and government agencies$805,273$816,877$816,877
State, municipalities and political subdivisions669,945703,075703,075
Foreign government securities1,256,9831,259,1811,259,181
Foreign corporate securities2,677,5892,718,3512,718,351
Public utilities276,627281,937281,937
All other corporate bonds4,987,3214,965,9554,965,955
Mortgage - backed securities:
Commercial264,924266,299266,299
Agency residential2,313,2652,320,5242,320,524
Non-agency residential893898898
Redeemable preferred stock23,38624,19724,197
Total fixed maturities-available for sale13,276,20613,357,29413,357,294
Fixed maturities - available for sale at fair value (1)2,2022,1022,102
Equity securities - available for sale at market value122,271108,940108,940
Equity securities - available for sale at fair value (1)1,108,2951,337,7331,337,733
Short-term investments1,795,4551,795,4551,795,455
Other invested assets786,994786,994786,994
Cash283,658283,658283,658
Total investments and cash$17,375,081$17,672,176$17,672,176
(1) Original cost does not reflect fair value adjustments, which have been realized through the statements of operations and comprehensive income (loss).

S-1

SCHEDULE II — CONDENSED FINANCIAL INFORMATION OF THE REGISTRANT
CONDENSED BALANCE SHEETS
December 31,
(Dollars and share amounts in thousands, except par value per share)20152014
ASSETS:
Fixed maturities - available for sale, at market value$78,282$26,297
(amortized cost: 2015, $78,153; 2014, $26,016)
Short-term investments18,288297,751
Cash7401,398
Investment in subsidiaries, at equity in the underlying net assets7,761,5417,374,460
Accrued investment income71239
Receivable from subsidiaries7362,273
Other assets6411,075
TOTAL ASSETS$7,860,299$7,703,493
LIABILITIES:
Long term note payable - Affiliated$250,000$250,000
Due to subsidiaries1,0681,765
Other liabilities646608
Total liabilities251,714252,373
SHAREHOLDERS' EQUITY:
Preferred shares, par value: $0.01; 50,000 shares authorized;
no shares issued and outstanding--
Common shares, par value: $0.01; 200,000 shares authorized;
(2015) 68,606 and (2014) 68,336 issued outstanding before treasury shares686683
Additional paid-in capital2,103,6382,068,807
Accumulated other comprehensive income (loss), net of deferred income
tax expense (benefit) of ($15,863) at 2015 and $20,715 at 2014(231,755)48,317
Treasury shares, at cost; 25,912 shares (2015) and 23,650 shares (2014)(2,885,956)(2,485,897)
Retained earnings8,621,9727,819,210
Total shareholders' equity7,608,5857,451,120
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY$7,860,299$7,703,493
See notes to consolidated financial statements.

S-2

SCHEDULE II — CONDENSED FINANCIAL INFORMATION OF THE REGISTRANT
CONDENSED STATEMENTS OF OPERATIONS
Years Ended December 31,
201520142013
(Dollars in thousands)
REVENUES:
Net investment income$3,895$824$982
Net realized capital gains (losses)(3,057)15-
Other income (expense)(459)(574)(902)
Net income (loss) of subsidiaries997,7301,214,3341,275,955
Total revenues998,1091,214,5991,276,035
EXPENSES:
Interest expense - affiliated4,300--
Other expenses15,94015,44316,653
Total expenses20,24015,44316,653
INCOME (LOSS) BEFORE TAXES977,8691,199,1561,259,382
Income tax expense (benefit)---
NET INCOME (LOSS)$977,869$1,199,156$1,259,382
Other comprehensive income (loss), net of tax:
Unrealized appreciation (depreciation) ("URA(D)") on securities arising during the period(274,127)704(395,797)
Reclassification adjustment for realized losses (gains) included in net income (loss)93,68821,392(6,977)
Total URA(D) on securities arising during the period(180,439)22,096(402,774)
Foreign currency translation adjustments(111,530)(95,417)(162)
Benefit plan actuarial net gain (loss) for the period5,681(39,110)17,837
Reclassification adjustment for amortization of net (gain) loss included in net income (loss)6,2163,0205,778
Total benefit plan net gain (loss) for the period11,897(36,090)23,615
Total other comprehensive income (loss), net of tax(280,072)(109,411)(379,321)
COMPREHENSIVE INCOME (LOSS)$697,797$1,089,745$880,061
See notes to consolidated financial statements.

S-3

SCHEDULE II — CONDENSED FINANCIAL INFORMATION OF THE REGISTRANT
CONDENSED STATEMENTS OF CASH FLOWS
Years Ended December 31,
(Dollars in thousands)201520142013
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss)$977,869$1,199,156$1,259,382
Adjustments to reconcile net income to net cash provided by operating activities:
Equity in retained (earnings) deficit of subsidiaries(997,730)(1,214,334)(1,275,955)
Dividends received from subsidiaries590,000690,000665,000
Change in other assets and liabilities, net64220,6121,334
Increase (decrease) in due to/from affiliates839(2,520)1,378
Amortization of bond premium (accrual of bond discount)525156241
Realized capital losses (gains)3,057(15)-
Non-cash compensation expense1,8411,8281,087
Net cash provided by (used in) operating activities577,043694,883652,467
CASH FLOWS FROM INVESTING ACTIVITIES:
Additional investment in subsidiaries(60,600)(73,873)(93,967)
Subscription advances to Mt. Logan Re--(20,000)
Proceeds from fixed maturities matured/called - available for sale, at market value26,0744,7657,856
Proceeds from fixed maturities sold - available for sale, at market value252,04750,010-
Cost of fixed maturities acquired - available for sale, at market value(532,480)(49,994)(413)
Net change in short-term investments279,462(269,307)103,174
Net cash provided by (used in) investing activities(35,497)(338,399)(3,350)
CASH FLOWS FROM FINANCING ACTIVITIES:
Common shares issued during the period, net32,96237,20882,258
Purchase of treasury shares(400,059)(500,024)(621,915)
Proceeds from issuance of long term notes - affiliated-250,000-
Dividends paid to shareholders(175,107)(145,913)(106,681)
Net cash provided by (used in) financing activities(542,204)(358,729)(646,338)
EFFECT OF EXCHANGE RATE CHANGES ON CASH---
Net increase (decrease) in cash(658)(2,245)2,779
Cash, beginning of period1,3983,643864
Cash, end of period$740$1,398$3,643
See notes to consolidated financial statements.

S-4

SCHEDULE II – CONDENSED FINANCIAL INFORMATION OF THE REGISTRANT

NOTES TO CONDENSED FINANCIAL INFORMATION

1.)The accompanying condensed financial information should be read in conjunction with the Consolidated Financial Statements and related Notes of Everest Re Group, Ltd. and its Subsidiaries.
2.)Everest Re Group, Ltd. entered into a $250,000 thousand long term promissory note agreement with Everest Reinsurance Holdings, Inc., an affiliated company, as of December 31, 2014. The note will mature on December 31, 2023 and has an interest rate of 1.72% that will be paid annually, on December 15th of each year. This transaction is presented as a Long Term Note Payable – Affiliated in the Condensed Balance Sheets of Everest Re Group, Ltd.

S-5

SCHEDULE III — SUPPLEMENTARY INSURANCE INFORMATION
Column AColumn BColumn CColumn DColumn EColumn FColumn GColumn HColumn IColumn J
ReserveIncurred
Geographic Areafor LossesLoss andAmortization
Deferredand LossUnearnedNetLossof DeferredOtherNet
AcquisitionAdjustmentPremiumPremiumsInvestmentAdjustmentAcquisitionOperatingWritten
(Dollars in thousands)CostsExpensesReservesEarnedIncomeExpensesCostsExpensesPremium
December 31, 2015
Domestic$235,956$6,078,729$1,084,526$3,219,340$245,159$1,858,376$669,474$186,748$3,181,739
International59,3221,802,195267,1231,251,11134,181749,891298,18034,3031,208,978
Bermuda77,7942,070,874261,7411,011,008194,485493,648234,38244,933987,544
Total$373,072$9,951,798$1,613,390$5,481,459$473,825$3,101,915$1,202,036$265,984$5,378,261
December 31, 2014
Domestic$242,178$6,022,556$1,099,644$3,017,068$253,304$1,765,970$616,068$163,584$3,051,133
International69,0501,778,216347,2611,310,90340,262748,174306,22934,5981,336,633
Bermuda87,1801,920,041281,840841,164237,004392,390213,28942,218869,137
Total$398,408$9,720,813$1,728,745$5,169,135$530,570$2,906,534$1,135,586$240,400$5,256,903
December 31, 2013
Domestic$224,201$5,915,490$1,044,609$2,708,938$256,120$1,746,134$500,585$166,459$2,893,284
International68,5941,701,907275,0831,289,34144,325675,362295,88333,9101,327,430
Bermuda70,9262,055,843260,253755,264248,064378,755181,09036,757784,107
Total$363,721$9,673,240$1,579,945$4,753,543$548,509$2,800,251$977,558$237,126$5,004,821

S-6

SCHEDULE IV — REINSURANCE
Column AColumn BColumn CColumn DColumn EColumn F
Ceded toAssumed
GrossOtherfrom OtherNetAssumed
(Dollars in thousands)AmountCompaniesCompaniesAmountto Net
December 31, 2015
Total property and liability insurance
premiums earned$1,491,163$494,725$4,485,021$5,481,45981.8%
December 31, 2014
Total property and liability insurance
premiums earned$1,183,498$419,616$4,405,253$5,169,13585.2%
December 31, 2013
Total property and liability insurance
premiums earned$1,207,833$203,114$3,748,824$4,753,54378.9%

S-7

Previous: Item 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES