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 March 1, 2019.

	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.

Signature	Title	Date

/S/ DOMINIC J. ADDESSO	President and Chief Executive Officer and Director (Principal Executive Officer)	March 1, 2019
Dominic J. Addesso

/S/ CRAIG HOWIE	Executive Vice President and Chief Financial Officer	March 1, 2019
Craig Howie

/S/ KEITH T. SHOEMAKER	Comptroller (Principal Accounting Officer)	March 1, 2019
Keith T. Shoemaker

/S/ JOSEPH V. TARANTO	Chairman	March 1, 2019
Joseph V. Taranto

/S/ JOHN J. AMORE	Director	March 1, 2019
John J. Amore

/S/ WILLIAM F. GALTNEY, JR.	Director	March 1, 2019
William F. Galtney, Jr.

/S/ JOHN A. GRAF	Director	March 1, 2019
John A. Graf

/S/ GERALDINE LOSQUADRO	Director	March 1, 2019
Geraldine Losquadro

/S/ ROGER M. SINGER	Director	March 1, 2019
Roger M. Singer

/S/ JOHN A. WEBER	Director	March 1, 2019
John A. Weber

INDEX TO EXHIBITS

Exhibit No.

	2.	1	Agreement and Plan of Merger among Everest Reinsurance Holdings, Inc., Everest Re Group, Ltd. and Everest Re Merger Corporation, incorporated herein by reference to Exhibit 2.1 to the Registration Statement on Form S-4 (No. 333-87361)

	3.	1	Memorandum 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.	2	Bye-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.	1	Specimen 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.	2	Indenture, 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.	3	Fourth Supplemental Indenture relating to Holdings $400.0 million 4.868% Senior Notes due June 1, 2044, dated June 5, 2014, between Holdings and The Bank of New York Mellon, as Trustee, incorporated herein by reference to Exhibit 4.1 to Everest Reinsurance Holdings, Inc. Form 8-K filed on June 5, 2014

	*10.	1	Everest 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”)

	*10.	2	Everest 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.	3	Form 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.	4	Amendment 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.	5	Form 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.	6	Completion 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.	7	Everest 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

E-1

*10.	8	Everest 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.	9	Amendment 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.	10	Credit 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.	11	Chairmanship 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.	12	Employment 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.	13	Employment 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.	14	Employment 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.	15	Amendment 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.	16	Amendment 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.	17	Employment agreement between Everest Global Services, Inc., Everest Reinsurance Holdings Inc. and Dominic J. Addesso, dated December 4, 2015, incorporated herein by reference to Exhibit 10.1 to Everest Re Group, Ltd. Form 8-K filed on December 8, 2015

10.	18	Standby Letter of Credit, dated November 9, 2015, between Everest International Reinsurance, Ltd. and Lloyds Bank, Plc. providing £175.0 million four year credit facility, incorporated herein by reference to Exhibit 10.23 to Everest Re Group, Ltd. Annual Report on Form 10-K- for the year ended December 31, 2015 filed on February 29, 2016

*10.	19	Amendment 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.	20	Amendment 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

	*10.	21	Employment agreement between Everest Global Services, Inc. and Craig Howie, dated April 7, 2016, incorporated herein by reference to Exhibit 10.1 to Everest Re Group, Ltd. Form 8-K filed on April 8, 2016

E-2

10.	22	Credit Agreement, dated May 26, 2016, 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, 2016. This new agreement replaces the June 22, 2012 four year, $800.0 million senior credit facility

*10.	23	Chairmanship agreement between Everest Re Group, Ltd. and Joseph V. Taranto, dated August 15, 2016 and effective January 1, 2017, incorporated herein by reference to Exhibit 10.1 to Everest Re Group, Ltd. Form 8-K filed on August 16, 2016

*10.	24	Employment agreement between Everest Global Services, Inc., and John P. Doucette, dated October 21, 2016, incorporated herein by reference to Exhibit 10.1 to Everest Re Group, Ltd. Form 8-K filed on October 26, 2016

10.	25	Amendment of Standby Letter of Credit, dated November 9, 2016, between Everest International Reinsurance, Ltd. and Lloyds Bank, Plc. providing £140.0 million four year credit facility, herein by reference to Exhibit 10.26 to Everest Re Group, Ltd., Form 10-K filed on March 1, 2017

10.	26	Amendment of Standby Letter of Credit, dated December 30, 2016, between Everest Reinsurance (Bermuda), Ltd. and Citibank Europe plc providing $200.0 million four year credit facility, herein by reference to Exhibit 10.27 to Everest Re Group, Ltd., Form 10-Kfiled on March 1, 2017

*10.	27	Employment agreement between Everest Global Services, Inc., and Sanjoy Mukherjee, dated January 3, 2017, incorporated herein by reference to Exhibit 10.1 to Everest Re Group, Ltd. Form 8-K filed on January 6, 2017

10.	28	Amendment of Standby Letter of Credit, dated May 17, 2017, between Everest International Reinsurance, Ltd. and Lloyds Bank, Plc. providing £145.0 million four year credit facility, herein by reference to Exhibit 10.1 to Everest Re Group, Ltd., Form 10-Q filed on August 9, 2017

*10.	29	Employment agreement between Everest Re Group, Ltd., and Jonathan Zaffino dated September 8, 2017, incorporated herein by reference to Exhibit 10.1 to Everest Re Group, Ltd. Form 8-K filed on September 12, 2017

*10.	30	Amendment of employment agreement between Everest Global Services, Inc., Everest Re Group, Ltd., Everest Reinsurance Holdings Inc. and Dominic J. Addesso, dated November 20, 2017, incorporated herein by reference to Exhibit 10.1 to Everest Re Group, Ltd. Form 8-K filed on November 20, 2017

10.	31	Bye-Law waiver agreement between Everest Re Group, Ltd., and BlackRock, Inc. dated December 1, 2017, incorporated herein by reference to exhibit 10.1 to the Everest Re Group, Ltd., Form 8-K filed on December 4, 2017

10.	32	Amendment of Standby Letter of Credit, dated December 29, 2017, between Everest Reinsurance (Bermuda), Ltd. and Citibank Europe plc providing $250.0 million four year credit facility, incorporated herein by reference to exhibit 10.26 to the Everest Re Group, Ltd., Form 10-K filed on March 1, 2018

10.	33	Amendment of Standby Letter of Credit, dated November 9, 2018, between Everest International Reinsurance, Ltd. and Lloyds Bank, Plc. providing £30.0 million four year credit facility, filed herewith

E-3

		10.	34	Amendment of Committed Facility Letter, dated December 10, 2018, between Everest Reinsurance (Bermuda), Ltd. and Citibank Europe plc providing $200.0 million annually, filed herewith

		21.	1	Subsidiaries of the registrant, filed herewith

		23.	1	Consent of PricewaterhouseCoopers LLP, filed herewith

	31.		1	Section 302 Certification of Dominic J. Addesso, filed herewith

	31.		2	Section 302 Certification of Craig Howie, filed herewith

	32.		1	Section 906 Certification of Dominic J. Addesso and Craig Howie, furnished herewith

	101.		INS	XBRL Instance Document

	101.		SCH	XBRL Taxonomy Extension Schema

	101.		CAL	XBRL Taxonomy Extension Calculation Linkbase

	101.		DEF	XBRL Taxonomy Extension Definition Linkbase

	101.		LAB	XBRL Taxonomy Extension Label Linkbase

	101.		PRE	XBRL Taxonomy Extension Presentation Linkbase

* 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 Firm			F-2

Consolidated Balance Sheets at December 31, 2018 and 2017			F-4

Consolidated Statements of Operations and Comprehensive Income (Loss) for the Years Ended
	December 31, 2018, 2017 and 2016		F-5

Consolidated Statements of Changes in Shareholders’ Equity for the Years Ended
	December 31, 2018, 2017 and 2016		F-6

Consolidated Statements of Cash Flows for the Years Ended
	December 31, 2018, 2017 and 2016		F-7

Notes to Consolidated Financial Statements			F-8

Schedules

I	Summary of Investments Other Than Investments in Related Parties at December 31, 2018		S-1

II	Condensed Financial Information of Registrant:

		Balance Sheets as of December 31, 2018 and 2017	S-2

		Statements of Operations for the Years Ended December 31, 2018, 2017 and 2016	S-3

		Statements of Cash Flows for the Years Ended December 31, 2018, 2017 and 2016	S-4

		Notes to Condensed Financial Information	S-5

III	Supplementary Insurance Information for the Years Ended
		December 31, 2018, 2017 and 2016	S-6

IV	Reinsurance for the Years Ended December 31, 2018, 2017 and 2016		S-7

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

F-1

Report of Independent Registered Public Accounting Firm

To the Board of Directors and Shareholders

of Everest Re Group, Ltd.:

Opinions on the Financial Statements and Internal Control over Financial Reporting

We have audited the accompanying consolidated balance sheets of Everest Re Group, Ltd. and its subsidiaries (the “Company”) as of December 31, 2018 and 2017, and the related consolidated statements of operations and comprehensive income (loss), of changes in shareholders’ equity and of cash flows for each of the three years in the period ended December 31, 2018, including the related notes and financial statement schedules listed in the index appearing on page F-1 (collectively referred to as the “consolidated financial statements”). We also have audited the Company's internal control over financial reporting as of December 31, 2018, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, 2018 and 2017, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2018 in conformity with accounting principles generally accepted in the United States of America. Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2018 based on criteria established in Internal Control - Integrated Framework (2013) issued by the COSO.

Basis for Opinions

The Company's management is responsible for these consolidated financial statements, 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 the Company’s consolidated financial statements and on the Company's internal control over financial reporting based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud, and whether effective internal control over financial reporting was maintained in all material respects.

Our audits of the consolidated financial statements included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. 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.

F-2

Definition and Limitations of Internal Control over Financial Reporting

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.

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.

/s/ PricewaterhouseCoopers LLP

New York, New York

March 1, 2019

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

F-3

EVEREST RE GROUP, LTD.

CONSOLIDATED BALANCE SHEETS

	December 31,
(Dollars and share amounts in thousands, except par value per share)	2018			2017

ASSETS:
Fixed maturities - available for sale, at market value	$	15,225,263		$	14,756,834
(amortized cost: 2018, $15,406,572; 2017, $14,689,598)
Fixed maturities - available for sale, at Fair value		2,337			-
Equity securities, at market value (cost: 2018, $0; 2017, $130,287)		-			129,530
Equity securities, at fair value		716,639			963,572
Short-term investments (cost: 2018, $241,010; 2017, $509,682)		240,987			509,682
Other invested assets (cost: 2018, $1,591,745; 2017, $1,628,753)		1,591,745			1,631,850
Cash		656,095			635,067
Total investments and cash		18,433,066			18,626,535
Accrued investment income		104,619			97,704
Premiums receivable		2,218,283			1,844,881
Reinsurance receivables		1,787,648			1,348,226
Funds held by reinsureds		445,040			292,927
Deferred acquisition costs		511,573			411,587
Prepaid reinsurance premiums		343,343			288,211
Income taxes		592,385			299,438
Other assets		358,042			382,283
TOTAL ASSETS	$	24,793,999		$	23,591,792

LIABILITIES:
Reserve for losses and loss adjustment expenses	$	13,119,090			11,884,321
Future policy benefit reserve		46,778			51,014
Unearned premium reserve		2,517,612			2,000,556
Funds held under reinsurance treaties		13,099			18,030
Other net payable to reinsurers		218,439			218,017
Senior notes due 6/1/2044		396,954			396,834
Long term notes due 5/1/2067		236,659			236,561
Accrued interest on debt and borrowings		3,093			2,727
Equity index put option liability		11,958			12,477
Unsettled securities payable		51,112			38,743
Other liabilities		275,401			363,280
Total liabilities		16,890,195			15,222,560

Commitments and contingencies (Note 15)

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; (2018) 69,202
and (2017) 69,044 outstanding before treasury shares		692			691
Additional paid-in capital		2,188,777			2,165,768
Accumulated other comprehensive income (loss), net of deferred income tax expense
(benefit) of ($20,697) at 2018 and $9,356 at 2017		(462,557	)		(160,891	)
Treasury shares, at cost; 28,551 shares (2018) and 28,208 shares (2017)		(3,397,548	)		(3,322,244	)
Retained earnings		9,574,440			9,685,908
Total shareholders' equity		7,903,804			8,369,232
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY	$	24,793,999		$	23,591,792

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)	2018			2017			2016

REVENUES:
Premiums earned	$	6,931,699		$	5,937,840		$	5,320,466
Net investment income		581,183			542,898			473,085
Net realized capital gains (losses):
Other-than-temporary impairments on fixed maturity securities		(8,110	)		(7,093	)		(31,595	)
Other-than-temporary impairments on fixed maturity securities
transferred to other comprehensive income (loss)		-			-			-
Other net realized capital gains (losses)		(119,026	)		160,287			24,379
Total net realized capital gains (losses)		(127,136	)		153,194			(7,216	)
Net derivative gain (loss)		520			9,581			18,647
Other income (expense)		(9,060	)		(35,442	)		(10,636	)
Total revenues		7,377,206			6,608,071			5,794,346

CLAIMS AND EXPENSES:
Incurred losses and loss adjustment expenses		5,651,403			4,522,581			3,139,629
Commission, brokerage, taxes and fees		1,519,030			1,303,963			1,188,692
Other underwriting expenses		371,541			318,817			302,722
Corporate expenses		30,672			25,923			27,231
Interest, fees and bond issue cost amortization expense		31,031			31,603			36,228
Total claims and expenses		7,603,677			6,202,887			4,694,502

INCOME (LOSS) BEFORE TAXES		(226,471	)		405,184			1,099,844
Income tax expense (benefit)		(330,023	)		(63,784	)		103,500

NET INCOME (LOSS)	$	103,552		$	468,968		$	996,344

Other comprehensive income (loss), net of tax:
Unrealized appreciation (depreciation) ("URA(D)") on securities arising during the period		(255,656	)		(64,348	)		57,629
Reclassification adjustment for realized losses (gains) included in net income (loss)		27,496			(6,950	)		15,118
Total URA(D) on securities arising during the period		(228,160	)		(71,298	)		72,747

Foreign currency translation adjustments		(76,816	)		121,917			(55,341	)

Benefit plan actuarial net gain (loss) for the period		(510	)		1,027			(7,488	)
Reclassification adjustment for amortization of net (gain) loss included in net income (loss)		5,021			5,477			5,073
Total benefit plan net gain (loss) for the period		4,511			6,504			(2,415	)
Total other comprehensive income (loss), net of tax		(300,465	)		57,123			14,991

COMPREHENSIVE INCOME (LOSS)	$	(196,913	)	$	526,091		$	1,011,335

EARNINGS PER COMMON SHARE:
Basic	$	2.54		$	11.43		$	23.85
Diluted		2.53			11.36			23.68

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)	2018			2017			2016

COMMON SHARES (shares outstanding):
Balance, beginning of period		40,835,272			40,898,864			42,694,252
Issued during the period, net		158,055			172,901			264,313
Treasury shares acquired		(342,179	)		(236,493	)		(2,059,701	)
Balance, end of period		40,651,148			40,835,272			40,898,864

COMMON SHARES (par value):
Balance, beginning of period	$	691		$	689		$	686
Issued during the period, net		1			2			3
Balance, end of period		692			691			689

ADDITIONAL PAID-IN CAPITAL:
Balance, beginning of period		2,165,768			2,140,783			2,103,638
Share-based compensation plans		23,009			24,985			37,145
Balance, end of period		2,188,777			2,165,768			2,140,783

ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS),
NET OF DEFERRED INCOME TAXES:
Balance, beginning of period		(160,891	)		(216,764	)		(231,755	)
Change to beginning balance due to adoption of Accounting Standards Update 2016-01		(1,201	)		-			-
Reclass due to early adoption of Accounting Standards Update 2018-02		-			(1,250	)		-
Net increase (decrease) during the period		(300,465	)		57,123			14,991
Balance, end of period		(462,557	)		(160,891	)		(216,764	)

RETAINED EARNINGS:
Balance, beginning of period		9,685,908			9,422,932			8,621,972
Change to beginning balance due to adoption of Accounting Standards Update 2016-01		1,201			-			-
Reclass due to early adoption of Accounting Standards Update 2018-02		-			1,250			-
Net income (loss)		103,552			468,968			996,344
Dividends declared ($5.30 per share in 2018, $5.05 per share in 2017
and $4.70 per share in 2016)		(216,221	)		(207,242	)		(195,384	)
Balance, end of period		9,574,440			9,685,908			9,422,932

TREASURY SHARES AT COST:
Balance, beginning of period		(3,322,244	)		(3,272,244	)		(2,885,956	)
Purchase of treasury shares		(75,304	)		(50,000	)		(386,288	)
Balance, end of period		(3,397,548	)		(3,322,244	)		(3,272,244	)

TOTAL SHAREHOLDERS' EQUITY, END OF PERIOD	$	7,903,804		$	8,369,232		$	8,075,396

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)	2018			2017			2016
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss)	$	103,552		$	468,968		$	996,344
Adjustments to reconcile net income to net cash provided by operating activities:
Decrease (increase) in premiums receivable		(392,981	)		(338,335	)		(15,655	)
Decrease (increase) in funds held by reinsureds, net		(159,344	)		(31,104	)		22,219
Decrease (increase) in reinsurance receivables		(511,592	)		(238,485	)		(202,950	)
Decrease (increase) in income taxes		(263,865	)		(114,521	)		54,526
Decrease (increase) in prepaid reinsurance premiums		(65,925	)		(86,049	)		(32,455	)
Increase (decrease) in reserve for losses and loss adjustment expenses		1,377,711			1,376,321			545,967
Increase (decrease) in future policy benefit reserve		(4,236	)		(4,060	)		(3,836	)
Increase (decrease) in unearned premiums		542,023			401,174			(22,072	)
Increase (decrease) in other net payable to reinsurers		12,276			10,071			26,200
Increase (decrease) in losses in course of payment		123,209			(105,371	)		(45,933	)
Change in equity adjustments in limited partnerships		(102,052	)		(82,713	)		(37,939	)
Distribution of limited partnership income		84,623			50,825			62,008
Change in other assets and liabilities, net		(322,107	)		(66,998	)		(45,605	)
Non-cash compensation expense		32,369			30,297			26,398
Amortization of bond premium (accrual of bond discount)		29,272			45,867			49,167
Net realized capital (gains) losses		127,136			(153,194	)		7,216
Net cash provided by (used in) operating activities		610,069			1,162,693			1,383,600

CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from fixed maturities matured/called - available for sale, at market value		1,973,652			2,160,298			1,919,808
Proceeds from fixed maturities sold - available for sale, at market value		3,148,428			2,401,844			1,258,434
Proceeds from fixed maturities sold - available for sale, at fair value		1,751			-			5,837
Proceeds from equity securities sold, at market value		-			19,574			6,423
Proceeds from equity securities sold, at fair value		1,199,409			631,859			723,359
Distributions from other invested assets		3,102,018			5,579,043			4,823,484
Proceeds from sale of subsidiary (net of cash disposed)		-			-			47,721
Cost of fixed maturities acquired - available for sale, at market value		(5,909,504	)		(5,131,098	)		(4,061,896	)
Cost of fixed maturities acquired - available for sale, at fair value		(4,381	)		-			(3,940	)
Cost of equity securities acquired, at market value		-			(22,033	)		(12,538	)
Cost of equity securities acquired, at fair value		(921,937	)		(438,641	)		(346,929	)
Cost of other invested assets acquired		(3,370,455	)		(5,829,271	)		(5,396,001	)
Net change in short-term investments		455,350			(73,923	)		368,977
Net change in unsettled securities transactions		46,048			(30,229	)		9,388
Net cash provided by (used in) investing activities		(279,621	)		(732,577	)		(657,873	)

CASH FLOWS FROM FINANCING ACTIVITIES:
Common shares issued during the period for share-based compensation, net of expense		(8,157	)		(5,310	)		10,751
Purchase of treasury shares		(75,304	)		(50,000	)		(386,288	)
Dividends paid to shareholders		(216,221	)		(207,242	)		(195,384	)
Cost of shares withheld on settlements of share-based compensation awards		(16,912	)		(12,906	)		(10,595	)
Net cash provided by (used in) financing activities		(316,594	)		(275,458	)		(581,516	)

EFFECT OF EXCHANGE RATE CHANGES ON CASH		7,174			(1,513	)		54,053

Net increase (decrease) in cash		21,028			153,145			198,264
Cash, beginning of period		635,067			481,922			283,658
Cash, end of period	$	656,095		$	635,067		$	481,922

SUPPLEMENTAL CASH FLOW INFORMATION:
Income taxes paid (recovered)	$	(65,064	)	$	53,743		$	42,636
Interest paid		30,447			32,194			36,010

NON-CASH TRANSACTIONS:
Reclassification of investment balances due to prospective consolidation of private placement
liquidity sweep facility effective July 1, 2018

Fixed maturities - available for sale, at market value	$	143,656		$	-		$	-
Short-term investments		243,864			-			-
Other invested assets		(387,520	)		-			-

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

F-7

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Years Ended December 31, 2018, 2017 and 2016

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 2017, the Company established a new Irish insurance subsidiary, Everest Insurance (Ireland), designated activity company (“Ireland Insurance”), which will write insurance business mainly in the European markets.

During the third quarter of 2016, the Company established domestic subsidiaries, Everest Premier Insurance Company (“Everest Premier”) and Everest Denali Insurance Company (“Everest Denali”), which are used in the continued expansion of the Insurance operations.

Effective August 24, 2016, the Company sold its wholly-owned subsidiary, Heartland Crop Insurance Company (“Heartland”), a managing agent for crop insurance, to CGB Diversified Services, Inc. (“CGB”). The operating results of Heartland through August 24, 2016, are included within the Company’s financial statements.

Effective July 1, 2016, the Company established a new Irish holding company, Everest Dublin Insurance Holdings Limited (Ireland) (“Everest Dublin Holdings”).

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”), Mt. Logan Insurance Managers, Ltd., Mt. Logan Management, Ltd., Everest International Holdings (Bermuda), 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 Global Services, Inc. (“Global Services”), Everest Insurance Company of Canada (“Everest Canada”), Premiere Insurance Underwriting Services (“Premiere”), Everest Dublin Holdings, Ireland Insurance, Everest Reinsurance Company (Ireland), designated activity company (“Ireland Re”), Everest Reinsurance Holdings, Inc. (“Holdings”), 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 Managers, L.L.C., Everest Specialty Underwriters Services, LLC, 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”), Everest Denali, Everest Premier and Everest Security Insurance Company (“Everest Security”). All amounts are reported in U.S. dollars.

The Company consolidates the results of operations and financial position of all voting interest entities ("VOE") in which the Company has a controlling financial interest and all variable interest entities ("VIE") in which the Company is considered to be the primary beneficiary. The consolidation assessment, including the determination as to whether an entity qualifies as a VIE or VOE, depends on the facts and circumstances surrounding each entity.

Effective January 1, 2016, the Company adopted Accounting Standards Update (“ASU”) 2015-02, “Consolidation (Topic 810) Amendments to the Consolidation Analysis” issued by the United States Financial Accounting Standards Board (“FASB”), which changed the method in which the Company determines whether entities are consolidated by the Company. The adoption of this amended accounting guidance was implemented utilizing a full retrospective application for prior periods.

F-8

The amended guidance includes changes in the identification of the primary beneficiary of companies considered to be VIEs. These changes resulted in the Company concluding that Mt. Logan Re, Ltd. (Bermuda) (“Mt. Logan Re”) is a VIE given it has insufficient equity at risk and that each underlying separate segregated account is likewise a VIE. The Company has concluded that it is the primary beneficiary of Mt. Logan Re, but not of the underlying separate segregated accounts and therefore has deconsolidated these segregated accounts. This change had no impact to the net income or retained earnings of the Company.

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

All intercompany accounts and transactions have been eliminated.

Certain reclassifications and format changes have been made to prior years’ amounts to conform to the 2018 presentation.

B. Investments.

Fixed maturity investments available for sale, at market value, reflect unrealized appreciation and depreciation, as a result of temporary changes in market value during the period, in 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. As of January 1, 2018, the Company carries all of its equity securities at fair value. For equity securities, at fair value, the Company reflects changes in value as net realized capital gains and losses since these securities may be sold in the near term depending on financial market conditions. Interest income on all fixed maturities and dividend income on all equity securities are included as part of net investment income in the consolidated statements of operations and comprehensive income (loss). Unrealized losses on fixed maturities, which are deemed other-than-temporary and related to the credit quality of a security, are charged to net income (loss) as net realized capital losses. Short-term investments are stated at cost, which approximates market value. Realized gains or losses on sales of investments are determined on the basis of identified cost. For some non-publicly traded securities, market prices are determined through the use of pricing models that evaluate securities relative to the U.S. Treasury yield curve, taking into account the issue type, credit quality, and cash flow characteristics of each security. For other non-publicly traded securities, investment managers’ valuation committees will estimate fair value and in many instances, these fair values are supported with opinions from qualified independent third parties. All fair value estimates from investment managers are reviewed by the Company for reasonableness. For publicly traded securities, market value is based on quoted market prices or valuation models that use observable market inputs. When a sector of the financial markets is inactive or illiquid, the Company may use its own assumptions about future cash flows and risk-adjusted discount rates to determine fair value. Retrospective adjustments are employed to recalculate the values of asset-backed securities. Each acquisition lot is reviewed to recalculate the effective yield. The recalculated effective yield is used to derive a book value as if the new yield were applied at the time of acquisition. Outstanding principal factors from the time of acquisition to the adjustment date are used to calculate the prepayment history for all applicable securities. Conditional prepayment rates, computed with life to date factor histories and weighted average maturities, are used to effect the calculation of projected and prepayments for pass-through security types. Other invested assets include limited partnerships, rabbi trusts and prior to July 1, 2018, a private placement liquidity sweep facility. Cash contributions to and cash distributions from the sweep facility were reported gross in cash flows from investing activities in the consolidated statements of cash flows. Limited partnerships are accounted for under the equity method of accounting, which can be recorded on a monthly or quarterly lag.

F-9

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)		2018				2017
Reinsurance receivables and premium receivables		$	25,611			$	23,473

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)		2018				2017				2016
Deferred acquisition costs		$	1,519,030			$	1,303,963			$	1,188,692

E. Reserve for Losses and Loss Adjustment Expenses.

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

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

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

F-10

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, 2018 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 subsidiaries and 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. Deferred income taxes have been recorded to recognize the tax effect of temporary differences between the financial 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 shareholders’ equity.

F-11

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) 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)		2018			2017			2016
Net income (loss) per share:
Numerator
Net income (loss)		$	103,552		$	468,968		$	996,344
Less: dividends declared-common shares and nonvested common shares			(216,221	)		(207,242	)		(195,384	)
Undistributed earnings			(112,669	)		261,725			800,960
Percentage allocated to common shareholders (1)			99.0	%		98.9	%		98.9	%
			(111,490	)		258,952			792,415
Add: dividends declared-common shareholders			214,088			205,182			193,413
Numerator for basic and diluted earnings per common share		$	102,598		$	464,134		$	985,829

Denominator
Denominator for basic earnings per weighted-average common shares			40,388			40,595			41,329
Effect of dilutive securities:
Options			198			248			300
Denominator for diluted earnings per adjusted weighted-average common shares			40,586			40,843			41,628

Per common share net income (loss)
Basic		$	2.54		$	11.43		$	23.85
Diluted		$	2.53		$	11.36		$	23.68

(1)	Basic weighted-average common shares outstanding		40,388			40,595			41,329
	Basic weighted-average common shares outstanding and nonvested common shares expected to vest		40,816			41,030			41,774
	Percentage allocated to common shareholders		99.0	%		98.9	%		98.9	%

(Some amounts may not reconcile due to rounding.)

There were no anti-diluted options outstanding for the years ended December 31, 2018, 2017 and 2016.

All outstanding options expire on or between February 18, 2019 and September 19, 2022.

L. Segmentation.

The Company, through its subsidiaries, operates in four segments: U.S. Reinsurance, International, Bermuda and Insurance. See also Note 17.

M. Derivatives.

The Company sold seven equity index put option contracts, based on two indices, in 2001 and 2005. 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). One of these contracts expired on June 9, 2017, with no liability due under the terms of the contract.

F-12

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 as	Location of fair value	At December 31,
hedging instruments	in balance sheets	2018		2017

Equity index put option contracts	Equity index put option liability	$	11,958	$	12,477
Total		$	11,958	$	12,477

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 as	Location of gain (loss) in statements of	For the Years Ended December 31,
hedging instruments	operations and comprehensive income (loss)	2018		2017		2016

Equity index put option contracts	Net derivative gain (loss)	$	520	$	9,581	$	18,647
Total		$	520	$	9,581	$	18,647

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 16.

P. Application of Recently Issued Accounting Guidance.

Simplification of Disclosure Requirements. In August 2018, the Securities and Exchange Commission (“SEC”) issued Final Rule Release #33-10532 (“the Rule”) which addresses the simplification of the SEC’s disclosure requirements for quarterly and annual financial reports. The main changes addressed by the Rule that are applicable to the Company are 1) elimination of the requirement to disclose dividend per share information on the face of the Statements of Operations and Comprehensive Income (Loss) and 2) a new requirement to disclose changes in equity by line item with subtotals for each interim reporting period on the Statements of Changes in Shareholders’ Equity. The Rule became effective for all financial reports filed after November 5, 2018 (30 days after its publication in the Federal Register), except for the additional requirement for the Statements of Changes in Shareholders’ Equity which can be implemented for first quarter 2019 reporting. The Company has adopted the portions of the Rule that became effective November 5, 2018. The portion of the Rule related to the new requirement for the Statements of Changes in Shareholders’ Equity will be adopted by the Company in the first quarter of 2019.

Accounting for Cloud Computing Arrangement. In August 2018, The Financial Accounting Standards Board (“FASB”) issued ASU 2018-15, which outlines accounting for implementation costs of a cloud computing arrangement that is a service contract. This guidance requires that implementation costs of a cloud computing arrangement that is a service contract must be capitalized and expensed in accordance with the existing provisions provided in Subtopic 350-40 regarding development of internal use software. In addition, any capitalized implementation costs should be amortized over the term of the hosting arrangement. The guidance is effective for annual reporting periods beginning after December 15, 2019 and interim periods within that annual reporting period. The Company is currently evaluating the impact of the adoption of ASU 2018-15 on its financial statements.

F-13

Accounting for Long Duration Contracts. In August 2018, FASB issued ASU 2018-12, which discusses changes to the recognition, measurement and presentation of long duration contracts. The main provisions of this guidance address the following: 1) In determining liability for future policy benefits, companies must review cash flow assumptions at least annually and the discount rate assumption at each reporting period date 2) Amortization of deferred acquisition costs has been simplified to be in constant level proportion to either premiums, gross profits or gross margins 3) Disaggregated roll forwards of beginning and ending liabilities for future policy benefits are required. The guidance is effective for annual reporting periods beginning after December 15, 2020 and interim periods within that annual reporting period. The Company is currently evaluating the impact of the adoption of ASU 2018-12 on its financial statements.

Accounting for Deferred Taxes in Accumulated Other Comprehensive Income (AOCI). In February 2018, FASB issued ASU 2018-02 which outlines guidance on the treatment of trapped deferred taxes contained within AOCI on the consolidated balance sheets. The new guidance allows the amount of trapped deferred taxes in AOCI, resulting from the change in the U.S. tax rate from 35% to 21% upon enactment of the Tax Cuts and Jobs Act (“TCJA”), to be reclassified as part of retained earnings in the consolidated balance sheets. The guidance is effective for annual and interim reporting periods beginning after December 15, 2018, but early adoption is allowed. The Company decided to early adopt the guidance as of December 31, 2017. The adoption resulted in a reclass of $1,250 thousand between AOCI and retained earnings during the fourth quarter of 2017. As an accounting policy, the Company has adopted the aggregate portfolio approach for releasing disproportionate income tax effects from AOCI.

Accounting for Impact on Income Taxes due to Tax Reform. In December 2017, the SEC issued Staff Accounting Bulletin (“SAB”) 118 which provides guidance on the application of FASB Accounting Standards Codification (“ASC”) Topic 740, Income Taxes, due to the enactment of TCJA. SAB 118 became effective upon release. The Company has adopted the provisions of SAB 118 with respect to measuring the tax effects for the modifications to the determination of tax basis loss reserves. In 2018, the Company recorded adjustments to the amount of tax expense it recorded in 2017 with respect to the TCJA as estimated amounts were finalized, which did not have a material impact on the Company’s financial statements.

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

Presentation and Disclosure of Net Periodic Benefit Costs. In March 2017, FASB issued ASU 2017-07 which outlines guidance on the presentation of net periodic costs of benefit plans. The new guidance requires that the service cost component of net periodic benefit costs be reported within the same line item of the statements of operations as other compensation costs are reported. Other components of net periodic benefit costs should be reported separately. Footnote disclosure is required to state within which line items of the statements of operations the components are reported. The guidance is effective for annual and interim reporting periods beginning after December 15, 2017. The Company adopted the guidance effective January 1, 2018. The adoption of ASU 2017-07 did not have a material impact on the Company’s financial statements.

Disclosure of Restricted Cash. In November 2016, FASB issued ASU 2016-18 and in August 2016, FASB issued ASU 2016-15 which outline guidance on the presentation in the statements of cash flows of changes in restricted cash. The new guidance requires that the statements of cash flows should reflect all changes in cash, cash equivalents and restricted cash in total and not segregated individually. The guidance is effective for annual and interim reporting periods beginning after December 15, 2017. The Company adopted the guidance effective January 1, 2018. The adoption of ASU 2016-18 and ASU 2016-15 did not have a material impact on the Company’s financial statements.

F-14

Intra-Entity Asset Transfers. In October 2016, FASB issued ASU 2016-16 which outlines guidance on the tax accounting for intra-entity asset sales and transfers, other than inventory. The new guidance requires that reporting entities recognize tax expense from the intra-entity transfer of an asset in the seller’s tax jurisdiction at the time of transfer and recognize any deferred tax asset in the buyer’s tax jurisdiction at the time of transfer. The guidance is effective for annual and interim reporting periods beginning after December 15, 2017. The Company adopted the guidance effective January 1, 2018. The adoption of ASU 2016-16 did not have a material impact on the Company’s financial statements.

Valuation of Financial Instruments. In June 2016, FASB issued ASU 2016-13 which outlines guidance on the valuation of and accounting for assets measured at amortized cost and available for sale debt securities. The carrying value of assets measured at amortized cost will now be presented as the amount expected to be collected on the financial asset (amortized cost less an allowance for credit losses valuation account). Available for sale debt securities will now record credit losses through an allowance for credit losses, which will be limited to the amount by which fair value is below amortized cost. The guidance is effective for annual and interim reporting periods beginning after December 15, 2019. The Company is currently evaluating the impact of the adoption of ASU 2016-13 on its financial statements.

Accounting for Share-Based Compensation. In March 2016, the FASB issued ASU 2016-09, authoritative guidance regarding the accounting for share-based compensation. This guidance requires that the income tax effects resulting from the change in the value of share-based compensation awards between grant and settlement will be recorded as part of the consolidated statements of operations and comprehensive income/(loss). Previously, excess tax benefits have been recorded as part of the additional paid in capital within the consolidated balance sheets. The guidance is effective for annual reporting periods beginning after December 15, 2016 and interim periods within that annual reporting period. The Company has implemented this guidance prospectively as of January 1, 2017. The guidance also requires that the cost of employee taxes paid via shares withheld upon settlement of share-based compensation awards must be shown as a financing activity within the Statements of Cash Flows. The Company has implemented this guidance retrospectively as of January 1, 2017.

The following table presents certain financial statement line items as previously reported in 2016, the effect of those line items due to treating the cost of shares withheld upon settlement of share-based compensation awards as a financing activity with the Statements of Cash Flows and the line items as currently reported within the financial statements.

Consolidated Statements of Cash Flows:	At December 31, 2016
				Effect of
				adoption of
	As previously			new accounting
	reported			policy			As adopted
(Dollars in thousands)
CASH FLOWS FROM OPERATING ACTIVITIES:
Change in other assets and liabilities, net	$	(56,204	)	$	10,595		$	(45,609	)
Net cash provided by (used in) operating activities		1,373,005			10,595			1,383,600

CASH FLOWS FROM FINANCING ACTIVITIES:
Cost of shares withheld for taxes on settlements of
share-based compensation awards		-			(10,595	)		(10,595	)
Net cash provided by (used in) financing activities		(570,921	)		(10,595	)		(581,516	)

Leases. In February 2016, FASB issued ASU 2016-02 (and subsequently issued ASU 2018-11 in July, 2018) which outline new guidance on the accounting for leases. The new guidance requires the recognition of lease assets and lease liabilities on the balance sheets for most leases that were previously deemed operating leases and required only lease expense presentation in the statements of operations. The guidance is effective for annual and interim reporting periods beginning after December 15, 2018. The Company will adopt ASU 2016-02 effective January 1, 2019 and estimates that its increase in lease liability will be $75,000 thousand with no impact on shareholders’ equity upon adoption and no material impact on future consolidated statements of operation and comprehensive income (loss).

F-15

Recognition and Measurement of Financial Instruments. In January 2016, the FASB issued ASU 2016-01 which outlines revised guidance on the accounting for equity investments. The new guidance states that all equity investments in unconsolidated entities will be measured at fair value, with the change in value being recorded through the income statement rather than being recorded within other comprehensive income. The updated guidance is effective for annual and interim reporting periods beginning after December 15, 2017. The Company adopted the guidance effective January 1, 2018. The adoption of ASU 2016-01 resulted in a cumulative change adjustment of $1,201 thousand between AOCI and retained earnings, which is disclosed separately within the consolidated statement of changes in shareholders’ equity.

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 implemented this guidance effective in the fourth quarter of 2016.

Disclosures for Investments in Certain Entities that Calculate Net Asset Value Per Share. In May 2015, the FASB issued ASU 2015-07, which removes the requirement to categorize, within the fair value hierarchy, investments for which fair values are estimated using the net asset value practical expedient provided by Accounting Standards Codification 820, Fair Value Measurement. The updated guidance is effective for annual reporting periods beginning after December 15, 2015. The Company implemented this guidance effective in the fourth quarter of 2016. The adoption did not have a material impact on the Company’s financial statements.

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 related interim reporting periods. The Company implemented this guidance effective in the second quarter of 2016. The adoption did not have a material impact on the Company’s 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. Based upon this guidance, the Company has determined that the separate segregated accounts associated with Mt. Logan Re should not be consolidated. The Company implemented the guidance effective January 1, 2016.

Revenue Recognition. In May 2014, the FASB issued ASU 2014-09 and in August 2015, FASB issued ASU 2015-14 which outline revised guidance on the recognition of revenue arising from contracts with customers. The new guidance states that reporting entities should apply certain steps to determine when revenue should be recognized, based upon fulfillment of performance obligations to complete contracts. The updated guidance is effective for annual and interim reporting periods beginning after December 15, 2017. The Company adopted the guidance effective January 1, 2018. The adoption of ASU 2014-09 and ASU 2015-14 did not have a material impact on the Company’s financial statements.

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

F-16

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, 2018
	Amortized		Unrealized		Unrealized			Market		OTTI in AOCI
(Dollars in thousands)	Cost		Appreciation		Depreciation			Value		(a)
Fixed maturity securities
U.S. Treasury securities and obligations of
U.S. government agencies and corporations	$	2,629,454	$	16,781	$	(15,101	)	$	2,631,134	$	-
Obligations of U.S. states and political subdivisions		490,018		12,915		(2,839	)		500,094		439
Corporate securities		5,538,582		48,465		(141,515	)		5,445,532		1,688
Asset-backed securities		545,427		162		(5,492	)		540,097		-
Mortgage-backed securities
Commercial		329,883		2,167		(5,340	)		326,710		-
Agency residential		1,832,760		7,325		(43,821	)		1,796,264		-
Non-agency residential		10,198		37		(26	)		10,209		-
Foreign government securities		1,335,328		34,743		(55,906	)		1,314,165		98
Foreign corporate securities		2,694,922		63,994		(97,858	)		2,661,058		320
Total fixed maturity securities	$	15,406,572	$	186,589	$	(367,898	)	$	15,225,263	$	2,545
Equity securities	$	-	$	-	$	-		$	-	$	-

	At December 31, 2017
	Amortized		Unrealized		Unrealized			Market		OTTI in AOCI
(Dollars in thousands)	Cost		Appreciation		Depreciation			Value		(a)
Fixed maturity securities
U.S. Treasury securities and obligations of
U.S. government agencies and corporations	$	1,540,952	$	9,816	$	(14,076	)	$	1,536,692	$	-
Obligations of U.S. states and political subdivisions		563,790		22,123		(444	)		585,469		-
Corporate securities		5,658,456		81,724		(41,175	)		5,699,005		2,488
Asset-backed securities		532,473		869		(1,982	)		531,360		-
Mortgage-backed securities
Commercial		235,794		616		(2,369	)		234,041		-
Agency residential		2,236,361		10,379		(35,838	)		2,210,902		-
Non-agency residential		497		41		(44	)		494		-
Foreign government securities		1,305,070		43,804		(34,847	)		1,314,027		178
Foreign corporate securities		2,616,205		77,045		(48,406	)		2,644,844		950
Total fixed maturity securities	$	14,689,598	$	246,417	$	(179,181	)	$	14,756,834	$	3,616
Equity securities	$	130,287	$	2,615	$	(3,372	)	$	129,530	$	-

(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.

Effective January 1, 2018, the Company adopted ASU 2016-01, which requires equity investments in unconsolidated entities to be measured at fair value, with any change in value being recorded within net realized capital gains/(losses) as part of the consolidated statements of operations and comprehensive income (loss). Previously, changes in the market value had been recorded within AOCI as part of the consolidated balance sheets. Therefore, effective January 1, 2018, equity security investments no longer have an impact upon the AOCI balance.

F-17

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, 2018				At December 31, 2017
	Amortized		Market		Amortized		Market
(Dollars in thousands)	Cost		Value		Cost		Value
Fixed maturity securities – available for sale:
Due in one year or less	$	1,328,571	$	1,330,534	$	1,041,885	$	1,050,094
Due after one year through five years		8,114,247		8,016,490		7,545,731		7,554,248
Due after five years through ten years		2,455,911		2,413,846		2,214,473		2,231,456
Due after ten years		789,575		791,113		882,384		944,239
Asset-backed securities		545,427		540,097		532,473		531,360
Mortgage-backed securities:
Commercial		329,883		326,710		235,794		234,041
Agency residential		1,832,760		1,796,264		2,236,361		2,210,902
Non-agency residential		10,198		10,209		497		494
Total fixed maturity securities	$	15,406,572	$	15,225,263	$	14,689,598	$	14,756,834

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)	2018			2017
Increase (decrease) during the period between the market value and cost
of investments carried at market value, and deferred taxes thereon:
Fixed maturity securities	$	(247,497	)	$	(101,940	)
Fixed maturity securities, other-than-temporary impairment		(1,071	)		(5,618	)
Equity securities		-			9,730
Other invested assets		-			3,037
Change in unrealized appreciation (depreciation), pre-tax		(248,568	)		(94,791	)
Deferred tax benefit (expense)		20,543			21,905
Deferred tax benefit (expense), other-than-temporary impairment		(135	)		1,588
Change in unrealized appreciation (depreciation),
net of deferred taxes, included in shareholders’ equity	$	(228,160	)	$	(71,298	)

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.

F-18

Upon the adoption of ASU 2016-01 as of January 1, 2018, all equity investments in unconsolidated entities are recorded at fair value. Prior to the adoption of ASU 2016-01, the Company presented certain equity securities at market value. The majority of the Company’s equity securities presented at market value prior to January 1, 2018 were primarily comprised of mutual fund investments whose underlying securities consisted of fixed maturity securities. When a fund’s value reflected an unrealized loss, the Company assessed whether the decline in value was temporary or other-than-temporary. In making its assessment, the Company considered the composition of its portfolios and their related markets, reports received from the portfolio managers and discussions with portfolio managers. If the Company determined that the declines were temporary and it had the ability and intent to continue to hold the investments, then the declines were recorded as unrealized losses in accumulated other comprehensive income (loss). If declines were deemed to be other-than-temporary, then the carrying value of the investment was 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.

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, 2018 By Security Type
	Less than 12 months					Greater than 12 months					Total
			Gross					Gross					Gross
			Unrealized					Unrealized					Unrealized
(Dollars in thousands)	Market Value		Depreciation			Market Value		Depreciation			Market Value		Depreciation
Fixed maturity securities - available for sale
U.S. Treasury securities and obligations of
U.S. government agencies and corporations	$	76,226	$	(158	)	$	777,409	$	(14,943	)	$	853,635	$	(15,101	)
Obligations of U.S. states and political subdivisions		71,559		(1,444	)		38,105		(1,395	)		109,664		(2,839	)
Corporate securities		2,513,463		(69,619	)		1,683,729		(71,896	)		4,197,192		(141,515	)
Asset-backed securities		230,285		(2,746	)		245,300		(2,746	)		475,585		(5,492	)
Mortgage-backed securities
Commercial		71,167		(1,128	)		154,201		(4,212	)		225,368		(5,340	)
Agency residential		156,930		(975	)		1,373,629		(42,846	)		1,530,559		(43,821	)
Non-agency residential		10,174		(26	)		-		-			10,174		(26	)
Foreign government securities		196,303		(9,719	)		494,156		(46,187	)		690,459		(55,906	)
Foreign corporate securities		939,808		(35,023	)		782,405		(62,835	)		1,722,213		(97,858	)
Total fixed maturity securities	$	4,265,915	$	(120,838	)	$	5,548,934	$	(247,060	)	$	9,814,849	$	(367,898	)
Equity securities		-		-			-		-			-		-
Total	$	4,265,915	$	(120,838	)	$	5,548,934	$	(247,060	)	$	9,814,849	$	(367,898	)

	Duration of Unrealized Loss at December 31, 2018 By Maturity
	Less than 12 months					Greater than 12 months					Total
			Gross					Gross					Gross
			Unrealized					Unrealized					Unrealized
(Dollars in thousands)	Market Value		Depreciation			Market Value		Depreciation			Market Value		Depreciation
Fixed maturity securities
Due in one year or less	$	454,239	$	(2,558	)	$	427,513	$	(20,675	)	$	881,752	$	(23,233	)
Due in one year through five years		2,014,704		(45,148	)		2,764,981		(129,940	)		4,779,685		(175,088	)
Due in five years through ten years		1,082,568		(51,300	)		492,216		(34,210	)		1,574,784		(85,510	)
Due after ten years		245,848		(16,957	)		91,094		(12,431	)		336,942		(29,388	)
Asset-backed securities		230,285		(2,746	)		245,300		(2,746	)		475,585		(5,492	)
Mortgage-backed securities		238,271		(2,129	)		1,527,830		(47,058	)		1,766,101		(49,187	)
Total fixed maturity securities	$	4,265,915	$	(120,838	)	$	5,548,934	$	(247,060	)	$	9,814,849	$	(367,898	)

F-19

The aggregate market value and gross unrealized losses related to investments in an unrealized loss position at December 31, 2018 were $9,814,849 thousand and $367,898 thousand, respectively. The market value of securities for the single issuer (the United States government) whose securities comprised the largest unrealized loss position at December 31, 2018, did not exceed 5.7% of the overall market value of the Company’s fixed maturity securities. The market value of the securities for the issuer with the second largest unrealized loss comprised less than 1.0% 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 $120,838 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 asset-backed securities. Of these unrealized losses, $74,729 thousand were related to securities that were rated investment grade by at least one nationally recognized statistical rating agency. The $247,060 thousand of unrealized losses related to fixed maturity securities in an unrealized loss position for more than one year related primarily to domestic and foreign corporate securities, foreign government securities, agency residential mortgage-backed securities and U.S. government agencies and corporations. Of these unrealized losses, $230,560 thousand were related to securities that were rated investment grade by at least one nationally recognized statistical rating agency. There was no gross unrealized depreciation for mortgage-backed securities related to sub-prime and alt-A loans. In all instances, there were no projected cash flow shortfalls to recover the full book value of the investments and the related interest obligations. The mortgage-backed securities still have excess credit coverage and are current on interest and principal payments.

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

	Duration of Unrealized Loss at December 31, 2017 By Security Type
	Less than 12 months					Greater than 12 months					Total
			Gross					Gross					Gross
			Unrealized					Unrealized					Unrealized
(Dollars in thousands)	Market Value		Depreciation			Market Value		Depreciation			Market Value		Depreciation
Fixed maturity securities - available for sale
U.S. Treasury securities and obligations of
U.S. government agencies and corporations	$	1,077,051	$	(8,380	)	$	224,189	$	(5,696	)	$	1,301,240	$	(14,076	)
Obligations of U.S. states and political subdivisions		4,400		(27	)		37,886		(417	)		42,286		(444	)
Corporate securities		1,779,292		(24,942	)		700,098		(16,233	)		2,479,390		(41,175	)
Asset-backed securities		301,316		(1,467	)		72,780		(515	)		374,096		(1,982	)
Mortgage-backed securities
Commercial		101,821		(572	)		64,272		(1,797	)		166,093		(2,369	)
Agency residential		610,941		(4,836	)		1,343,547		(31,002	)		1,954,488		(35,838	)
Non-agency residential		-		-			69		(44	)		69		(44	)
Foreign government securities		327,790		(12,811	)		331,432		(22,036	)		659,222		(34,847	)
Foreign corporate securities		691,865		(19,381	)		450,860		(29,025	)		1,142,725		(48,406	)
Total fixed maturity securities	$	4,894,476	$	(72,416	)	$	3,225,133	$	(106,765	)	$	8,119,609	$	(179,181	)
Equity securities		-		-			113,506		(3,372	)		113,506		(3,372	)
Total	$	4,894,476	$	(72,416	)	$	3,338,639	$	(110,137	)	$	8,233,115	$	(182,553	)

F-20

	Duration of Unrealized Loss at December 31, 2017 By Maturity
	Less than 12 months					Greater than 12 months					Total
			Gross					Gross					Gross
			Unrealized					Unrealized					Unrealized
(Dollars in thousands)	Market Value		Depreciation			Market Value		Depreciation			Market Value		Depreciation
Fixed maturity securities
Due in one year or less	$	247,927	$	(962	)	$	206,113	$	(7,643	)	$	454,040	$	(8,605	)
Due in one year through five years		2,930,977		(42,480	)		1,200,414		(52,143	)		4,131,391		(94,623	)
Due in five years through ten years		612,702		(20,154	)		292,245		(12,680	)		904,947		(32,834	)
Due after ten years		88,792		(1,945	)		45,693		(941	)		134,485		(2,886	)
Asset-backed securities		301,316		(1,467	)		72,780		(515	)		374,096		(1,982	)
Mortgage-backed securities		712,762		(5,408	)		1,407,888		(32,843	)		2,120,650		(38,251	)
Total fixed maturity securities	$	4,894,476	$	(72,416	)	$	3,225,133	$	(106,765	)	$	8,119,609	$	(179,181	)

The aggregate market value and gross unrealized losses related to investments in an unrealized loss position at December 31, 2017 were $8,233,115 thousand and $182,553 thousand, respectively. The market value of securities for the single issuer (the United States government) whose securities comprised the largest unrealized loss position at December 31, 2017, did not exceed 8.9% of the overall market value of the Company’s fixed maturity securities. The market value of the securities for the issuer with the second largest unrealized loss comprised less than 1.1% 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 $72,416 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, U.S. government agencies and corporations and agency residential mortgage-backed securities. Of these unrealized losses, $68,107 thousand were related to securities that were rated investment grade by at least one nationally recognized statistical rating agency. The $106,765 thousand of unrealized losses related to fixed maturity securities in an unrealized loss position for more than one year related primarily to agency residential mortgage-backed securities, foreign corporate securities, foreign government securities, domestic corporate securities and U.S. government agencies and corporations. Of these unrealized losses, $103,739 thousand were related to securities that were rated investment grade by at least one nationally recognized statistical rating agency. There was no gross unrealized depreciation for mortgage-backed securities related to sub-prime and alt-A loans. In all instances, there were no projected cash flow shortfalls to recover the full book value of the investments and the related interest obligations. The mortgage-backed securities still have excess credit coverage and are current on interest and principal payments.

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

	Years Ended December 31,
(Dollars in thousands)	2018			2017			2016
Fixed maturities	$	465,793		$	427,379		$	410,337
Equity securities		25,327			34,523			40,707
Short-term investments and cash		14,395			4,177			1,769
Other invested assets
Limited partnerships		93,327			83,569			38,647
Other		16,960			10,125			2,852
Gross investment income before adjustments		615,802			559,773			494,312
Funds held interest income (expense)		6,300			11,874			7,853
Future policy benefit reserve income (expense)		(1,419	)		(1,282	)		(1,633	)
Gross investment income		620,683			570,365			500,532
Investment expenses		(39,500	)		(27,467	)		(27,447	)
Net investment income	$	581,183		$	542,898		$	473,085

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.

F-21

The Company had contractual commitments to invest up to an additional $648,423 thousand in limited partnerships at December 31, 2018. These commitments will be funded when called in accordance with the partnership agreements, which have investment periods that expire, unless extended, through 2023.

Beginning in the first quarter of 2016, the Company participated in a private placement liquidity sweep facility (“the facility”). The primary purpose of the facility is to enhance the Company’s return on its short-term investments and cash positions. The facility invests in high quality, short-duration securities and permits daily liquidity. Through the second quarter of 2018, the Company’s participation in the facility was classified within other invested assets on the Company’s Balance Sheets.

Starting in the third quarter of 2018, the Company has consolidated its participation in the facility. As a result of the consolidation of the underlying investments of the facility, effective July 1, 2018, the Company has reclassified $143,656 thousand from other invested assets to fixed maturity securities, available for sale, at market value and has reclassified $243,864 thousand from other invested assets to short-term investments. As of December 31, 2018, the market value of investments in the facility consolidated within the Company’s balance sheets was $263,292 thousand.

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)	2018			2017			2016
Fixed maturity securities, market value:
Other-than-temporary impairments	$	(8,110	)	$	(7,093	)	$	(31,595	)
Gains (losses) from sales		(21,719	)		17,714			6,918
Fixed maturity securities, fair value:
Gains (losses) from sales		(1,799	)		-			(1,586	)
Gains (losses) from fair value adjustments		1,506			-			1,381
Equity securities, market value:
Gains (losses) from sales		-			(3,424	)		1,426
Equity securities, fair value:
Gains (losses) from sales		(29,941	)		6,969			(13,442	)
Gains (losses) from fair value adjustments		(68,832	)		138,973			57,686
Sale of Subsidiary		-			-			(28,032	)
Other invested assets		1,815			61			18
Short-term investments gain (loss)		(56	)		(6	)		10
Total net realized capital gains (losses)	$	(127,136	)	$	153,194		$	(7,216	)

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 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)	2018			2017			2016
Proceeds from sales of fixed maturity securities	$	3,150,179		$	2,401,844		$	1,264,271
Gross gains from sales		33,996			58,589			53,093
Gross losses from sales		(57,514	)		(40,875	)		(47,761	)

Proceeds from sales of equity securities	$	1,199,409		$	651,433		$	729,782
Gross gains from sales		31,718			24,809			18,462
Gross losses from sales		(61,659	)		(21,264	)		(30,478	)

Securities with a carrying value amount of $1,471,451 thousand at December 31, 2018 were on deposit with various state or governmental insurance departments in compliance with insurance laws.

F-22

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)	2018			2017			2016
Gross reserves at January 1	$	11,884,321		$	10,312,313		$	9,951,798
Less reinsurance recoverables		(1,212,649	)		(990,862	)		(881,503	)
Net reserves at January 1		10,671,672			9,321,451			9,070,295

Incurred related to:
Current year		5,264,327			4,815,967			3,434,964
Prior years		387,076			(293,386	)		(295,335	)
Total incurred losses and LAE		5,651,403			4,522,581			3,139,629

Paid related to:
Current year		1,700,765			1,280,605			745,642
Prior years		3,011,175			2,062,634			2,042,972
Total paid losses and LAE		4,711,940			3,343,239			2,788,614

Foreign exchange/translation adjustment		(111,686	)		170,879			(99,859	)

Net reserves at December 31		11,499,449			10,671,672			9,321,451
Plus reinsurance recoverables		1,619,641			1,212,649			990,862
Gross reserves at December 31	$	13,119,090		$	11,884,321		$	10,312,313

Current year incurred losses were $5,264,327 thousand, $4,815,967 thousand and $3,434,964 thousand at December 31, 2018, 2017 and 2016, respectively. The increase in current year incurred losses was primarily due to an increase in attritional losses due to a 16.7% increase in premiums earned. The $406,992 thousand increase in reinsurance recoverables from December 31, 2018 to December 31, 2017 is primarily related to the additional catastrophe losses incurred in 2018 as well as a retroactive reinsurance transaction with a Mt. Logan Re segregated account effective in the second quarter of 2018.

Incurred prior years’ reserves increased by $387,076 thousand in 2018 and decreased by $293,386 thousand and $295,335 thousand in 2017 and 2016, respectively. The increase for 2018 was mainly due to $561,197 thousand of adverse development on prior years catastrophe losses, primarily related to Hurricanes Harvey, Irma and Maria, as well as the 2017 California wildfires. The increase in loss estimates for Hurricanes Harvey, Irma and Maria was mostly driven by re-opened claims, loss inflation from higher than expected loss adjustment expenses and in particular, their impact on aggregate covers. This reserve increase was partially offset by $174,121 thousand of favorable development on prior years attritional losses which mainly related to U.S. and international property and casualty reinsurance business, as well as favorable development in the Insurance segment which largely related to workers’ compensation business.

The decrease for 2017 was attributable to favorable development in the reinsurance segments of $238,378 thousand, related primarily to property and short-tail business in the U.S. and Bermuda as well as favorable development on prior year catastrophe losses, partially offset by $37,137 thousand of adverse development on A&E reserves. The insurance segment also experienced favorable development on prior year reserves of $55,007 thousand mainly on its workers compensation business, which is largely written in California.

The decrease for 2016 was attributable to favorable development in the reinsurance segments of $468,749 thousand related primarily to property and short-tail business in the U.S., property business in Canada, Latin America, Middle East and Africa, as well as favorable development on prior year catastrophe losses, partially offset by $53,909 thousand of adverse development on A&E reserves. Part of the favorable development in the reinsurance segments related to the 2015 loss from the explosion at the Chinese port of Tianjin. In 2015, this loss was originally estimated to be $60,000 thousand. At December 31, 2016, this loss was projected to be $16,720 thousand resulting in $43,280 thousand of favorable development in 2016. The net favorable development in the reinsurance segments was partially offset by $173,414 thousand of unfavorable development in the insurance segment primarily related to run-off construction liability and umbrella program business.

F-23

The following is information about incurred and paid claims development as of December 31, 2018, net of reinsurance, as well as cumulative claim frequency and the total of incurred but not reported liabilities (IBNR) plus expected development on reported claims included within the net incurred claims amounts. Each of the Company’s financial reporting segments has been disaggregated into casualty and property business. The casualty and property segregation results in groups that have homogeneous loss development characteristics and are large enough to represent credible trends. Generally, casualty claims take longer to be reported and settled, resulting in longer payout patterns and increased volatility. Property claims on the other hand, tend to be reported and settled quicker and therefore tend to exhibit less volatility. The property business is more exposed to catastrophe losses, which can result in year over year fluctuations in incurred claims depending on the frequency and severity of catastrophes claims in any one accident year.

The information about incurred and paid claims development for the years ended December 31, 2012 to December 31, 2017 is presented as supplementary information.

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

The Cumulative Number of Reported Claims is shown only for Insurance Casualty as it is impracticable to provide the information for the remaining groups. The reinsurance groups each include pro rata contracts for which ceding companies provide only summary information via a bordereau. This summary information does not include the number of reported claims underlying the paid and reported losses. Therefore, it is not possible to provide this information. The Insurance Property group includes Accident & Health insurance business. This business is written via a master contract and individual claim counts are not provided. This business represents a significant enough portion of the business in the Insurance Property group so that including the number of reported claims for the remaining business would distort any analytics performed on the group.

The Cumulative Number of Reported Claims shown for the Insurance Casualty is determined by claim and line of business. For example, a claim event with three claimants in the same line of business is a single claim. However, a claim event with a single claimant that spans two lines of business contributes two claims.

F-24

The following tables present the ultimate loss and ALAE and the paid loss and ALAE, net of reinsurance for casualty and property, as well as the average annual percentage payout of incurred claims by age, net of reinsurance for each of our disclosed lines of business.

U.S. Reinsurance – Casualty Business

															At December 31, 2018
															Total of
															IBNR Liabilites
	Incurred Claims and Allocated Claim Adjustment Expenses, Net of reinsurance														Plus Expected
	Years Ended December 31,														Development		Cumulative
	2012		2013		2014		2015		2016		2017		2018		on Reported		Number of
Accident Year	(unaudited)		(unaudited)		(unaudited)		(unaudited)		(unaudited)		(unaudited)				Claims		Reported Claims
(Dollars in thousands)
2012	$	401,071	$	395,957	$	329,314	$	325,429	$	321,461	$	321,479	$	326,806		10,999		N/A
2013				311,025		388,483		385,863		388,568		372,805		365,605		19,447		N/A
2014						367,551		383,763		392,514		375,608		365,466		39,295		N/A
2015								326,374		354,296		346,420		347,972		64,286		N/A
2016										330,366		345,836		347,112		126,677		N/A
2017												337,211		383,183		205,494		N/A
2018														424,578		306,262		N/A
													$	2,560,722

(Some amounts may not reconcile due to rounding.)

	Cumulative Paid Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance
	Years Ended December 31,
	2012		2013		2014		2015		2016		2017		2018
Accident Year	(unaudited)		(unaudited)		(unaudited)		(unaudited)		(unaudited)		(unaudited)
(Dollars in thousands)
2012	$	10,024	$	38,586	$	83,172	$	143,722	$	187,522	$	218,966	$	273,144
2013				14,885		49,047		108,956		171,047		211,503		286,865
2014						18,841		54,321		110,327		164,664		256,790
2015								19,920		53,639		107,033		206,455
2016										18,929		58,309		136,547
2017												25,802		87,654
2018														44,519
													$	1,291,974
All outstanding liabilities prior to 2012, net of reinsurance														766,701
Liabilities for claims and claim adjustment expenses, net of reinsurance													$	2,035,448

(Some amounts may not reconcile due to rounding.)

		Average Annual Percentage Payout of Incurred Claims by Age, Net of Reinsurance (unaudited)
Years		1		2		3		4		5		6		7
Casualty		6.0%		10.9%		16.7%		19.7%		16.7%		15.4%		16.6%

F-25

U.S. Reinsurance – Property Business

															At December 31, 2018
															Total of
															IBNR Liabilites
	Incurred Claims and Allocated Claim Adjustment Expenses, Net of reinsurance														Plus Expected
	Years Ended December 31,														Development		Cumulative
	2012		2013		2014		2015		2016		2017		2018		on Reported		Number of
Accident Year	(unaudited)		(unaudited)		(unaudited)		(unaudited)		(unaudited)		(unaudited)				Claims		Reported Claims
(Dollars in thousands)
2012	$	937,847	$	724,114	$	622,599	$	609,592	$	609,221	$	605,617	$	588,422		447		N/A
2013				622,319		548,468		495,300		456,379		449,359		445,910		388		N/A
2014						641,682		550,695		474,136		438,584		432,638		563		N/A
2015								679,227		544,371		488,878		463,808		9,543		N/A
2016										966,373		791,526		763,544		26,165		N/A
2017												1,583,224		1,370,879		80,155		N/A
2018														2,510,226		1,018,868		N/A
													$	6,575,427

(Some amounts may not reconcile due to rounding.)

	Cumulative Paid Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance
	Years Ended December 31,
	2012		2013		2014		2015		2016		2017		2018
Accident Year	(unaudited)		(unaudited)		(unaudited)		(unaudited)		(unaudited)		(unaudited)
(Dollars in thousands)
2012	$	242,393	$	402,441	$	493,375	$	529,745	$	547,202	$	564,014	$	566,019
2013				234,591		323,178		381,893		405,980		420,329		426,444
2014						218,743		321,677		370,142		396,142		406,522
2015								226,256		327,633		389,474		417,755
2016										286,110		552,068		641,815
2017												570,824		946,466
2018														923,030
													$	4,328,051
All outstanding liabilities prior to 2012, net of reinsurance														44,374
Liabilities for claims and claim adjustment expenses, net of reinsurance													$	2,291,749

(Some amounts may not reconcile due to rounding.)

		Average Annual Percentage Payout of Incurred Claims by Age, Net of Reinsurance (unaudited)
Years		1		2		3		4		5		6		7
Property		41.1%		26.9%		13.0%		5.9%		2.9%		2.2%		0.3%

F-26

International – Casualty Business

															At December 31, 2018
															Total of
															IBNR Liabilites
	Incurred Claims and Allocated Claim Adjustment Expenses, Net of reinsurance														Plus Expected
	Years Ended December 31,														Development		Cumulative
	2012		2013		2014		2015		2016		2017		2018		on Reported		Number of
Accident Year	(unaudited)		(unaudited)		(unaudited)		(unaudited)		(unaudited)		(unaudited)				Claims		Reported Claims
(Dollars in thousands)
2012	$	222,133	$	144,930	$	134,301	$	134,537	$	117,757	$	119,753		118,521		12,511		N/A
2013				182,248		166,761		164,076		145,345		142,454		140,933		22,458		N/A
2014						193,655		186,565		169,129		167,361		167,300		38,937		N/A
2015								192,112		178,898		173,427		176,819		50,962		N/A
2016										182,864		180,313		194,754		82,359		N/A
2017												190,450		212,683		112,439		N/A
2018														213,696		139,575		N/A
													$	1,224,708

(Some amounts may not reconcile due to rounding.)

	Cumulative Paid Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance
	Years Ended December 31,
	2012		2013		2014		2015		2016		2017		2018
Accident Year	(unaudited)		(unaudited)		(unaudited)		(unaudited)		(unaudited)		(unaudited)
(Dollars in thousands)
2012	$	18,951	$	30,257	$	46,283	$	56,773	$	66,611	$	77,658	$	84,250
2013				17,931		41,532		54,912		68,095		76,594		87,864
2014						25,920		45,022		62,968		74,571		87,331
2015								24,324		49,039		70,370		83,888
2016										26,556		51,325		73,376
2017												26,751		65,352
2018														42,745
													$	524,806
All outstanding liabilities prior to 2012, net of reinsurance														134,507
Liabilities for claims and claim adjustment expenses, net of reinsurance													$	834,410

(Some amounts may not reconcile due to rounding.)

		Average Annual Percentage Payout of Incurred Claims by Age, Net of Reinsurance (unaudited)
Years		1		2		3		4		5		6		7
Casualty		15.0%		14.1%		11.4%		8.1%		7.3%		8.6%		5.6%

F-27

International – Property Business

															At December 31, 2018
															Total of
															IBNR Liabilites
	Incurred Claims and Allocated Claim Adjustment Expenses, Net of reinsurance														Plus Expected
	Years Ended December 31,														Development		Cumulative
	2012		2013		2014		2015		2016		2017		2018		on Reported		Number of
Accident Year	(unaudited)		(unaudited)		(unaudited)		(unaudited)		(unaudited)		(unaudited)				Claims		Reported Claims
(Dollars in thousands)
2012	$	560,846	$	513,661	$	460,161	$	464,190	$	464,468	$	465,344		464,331		1,684		N/A
2013				488,693		439,340		403,169		394,940		394,770		394,293		2,327		N/A
2014						585,885		528,957		482,816		427,469		419,651		4,077		N/A
2015								560,099		427,930		426,695		415,349		5,363		N/A
2016										525,694		495,804		473,262		6,494		N/A
2017												898,568		735,824		63,579		N/A
2018														900,443		283,147		N/A
													$	3,803,153

(Some amounts may not reconcile due to rounding.)

	Cumulative Paid Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance
	Years Ended December 31,
	2012		2013		2014		2015		2016		2017		2018
Accident Year	(unaudited)		(unaudited)		(unaudited)		(unaudited)		(unaudited)		(unaudited)
(Dollars in thousands)
2012	$	199,774	$	325,557	$	393,284	$	417,136	$	430,438	$	441,346	$	445,139
2013				133,577		268,313		321,289		351,447		365,252		371,349
2014						160,761		279,587		345,699		376,890		388,877
2015								143,474		259,981		328,818		364,391
2016										154,471		284,995		375,090
2017												275,487		481,665
2018														331,806
													$	2,758,317
All outstanding liabilities prior to 2012, net of reinsurance														71,452
Liabilities for claims and claim adjustment expenses, net of reinsurance													$	1,116,288

(Some amounts may not reconcile due to rounding.)

		Average Annual Percentage Payout of Incurred Claims by Age, Net of Reinsurance (unaudited)
Years		1		2		3		4		5		6		7
Property		36.8%		28.7%		16.0%		7.1%		3.1%		2.0%		0.8%

F-28

Bermuda – Casualty Business

															At December 31, 2018
															Total of
															IBNR Liabilites
	Incurred Claims and Allocated Claim Adjustment Expenses, Net of reinsurance														Plus Expected
	Years Ended December 31,														Development		Cumulative
	2012		2013		2014		2015		2016		2017		2018		on Reported		Number of
Accident Year	(unaudited)		(unaudited)		(unaudited)		(unaudited)		(unaudited)		(unaudited)				Claims		Reported Claims
(Dollars in thousands)
2012	$	281,244	$	259,000	$	238,059	$	227,918	$	234,498	$	234,752	$	239,750		41,516		N/A
2013				225,224		255,280		249,831		258,408		247,754		236,753		59,324		N/A
2014						208,813		241,109		258,275		254,844		243,331		89,698		N/A
2015								272,058		299,304		305,728		309,221		116,863		N/A
2016										290,327		348,318		358,604		165,626		N/A
2017												349,666		401,587		273,964		N/A
2018														465,351		407,072		N/A
													$	2,254,597

(Some amounts may not reconcile due to rounding.)

	Cumulative Paid Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance
	Years Ended December 31,
	2012		2013		2014		2015		2016		2017		2018
Accident Year	(unaudited)		(unaudited)		(unaudited)		(unaudited)		(unaudited)		(unaudited)
(Dollars in thousands)
2012	$	12,858	$	24,498	$	50,981	$	75,262	$	101,357	$	129,265	$	148,732
2013				16,852		33,681		51,906		76,711		102,137		124,532
2014						13,555		24,904		42,751		67,476		93,245
2015								13,827		59,746		93,949		128,983
2016										46,440		84,942		123,837
2017												30,073		70,228
2018														26,304
													$	715,862
All outstanding liabilities prior to 2012, net of reinsurance														396,191
Liabilities for claims and claim adjustment expenses, net of reinsurance													$	1,934,926

(Some amounts may not reconcile due to rounding.)

		Average Annual Percentage Payout of Incurred Claims by Age, Net of Reinsurance (unaudited)
Years		1		2		3		4		5		6		7
Casualty		7.1%		9.5%		9.4%		10.6%		10.7%		10.6%		8.1%

F-29

Bermuda – Property Business

															At December 31, 2018
															Total of
															IBNR Liabilites
	Incurred Claims and Allocated Claim Adjustment Expenses, Net of reinsurance														Plus Expected
	Years Ended December 31,														Development		Cumulative
	2012		2013		2014		2015		2016		2017		2018		on Reported		Number of
Accident Year	(unaudited)		(unaudited)		(unaudited)		(unaudited)		(unaudited)		(unaudited)				Claims		Reported Claims
(Dollars in thousands)
2012	$	235,647	$	178,542	$	163,046	$	158,650	$	159,011	$	159,810	$	158,772		44		N/A
2013				205,875		148,275		130,693		121,612		121,024		120,638		93		N/A
2014						180,617		158,678		132,743		129,395		129,403		1,345		N/A
2015								190,578		156,407		143,576		149,560		5,773		N/A
2016										204,475		173,515		183,022		14,247		N/A
2017												397,639		326,371		68,179		N/A
2018														417,933		211,999		N/A
													$	1,485,698

(Some amounts may not reconcile due to rounding.)

	Cumulative Paid Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance
	Years Ended December 31,
	2012		2013		2014		2015		2016		2017		2018
Accident Year	(unaudited)		(unaudited)		(unaudited)		(unaudited)		(unaudited)		(unaudited)
(Dollars in thousands)
2012	$	45,230	$	84,263	$	115,420	$	141,232	$	147,802	$	150,694	$	152,352
2013				31,476		68,081		107,590		114,644		116,653		117,649
2014						28,654		82,208		101,831		121,289		123,600
2015								32,878		72,123		109,036		132,327
2016										26,771		76,426		128,948
2017												39,296		130,013
2018														76,805
													$	861,694
All outstanding liabilities prior to 2012, net of reinsurance														35,767
Liabilities for claims and claim adjustment expenses, net of reinsurance													$	659,771

(Some amounts may not reconcile due to rounding.)

		Average Annual Percentage Payout of Incurred Claims by Age, Net of Reinsurance (unaudited)
Years		1		2		3		4		5		6		7
Property		18.9%		28.9%		24.2%		13.5%		2.7%		1.4%		1.0%

F-30

Insurance – Casualty Business

															At December 31, 2018
															Total of
															IBNR Liabilites
	Incurred Claims and Allocated Claim Adjustment Expenses, Net of reinsurance														Plus Expected
	Years Ended December 31,														Development		Cumulative
	2012		2013		2014		2015		2016		2017		2018		on Reported		Number of
Accident Year	(unaudited)		(unaudited)		(unaudited)		(unaudited)		(unaudited)		(unaudited)				Claims		Reported Claims
(Dollars in thousands)
2012	$	349,247	$	351,052	$	346,636	$	347,954	$	353,113	$	343,717	$	346,604		26,417		15,746
2013				393,165		393,076		392,513		392,818		351,105		344,070		24,697		21,314
2014						430,475		456,454		453,994		460,074		396,313		48,264		25,112
2015								518,596		526,974		534,548		540,769		160,787		26,729
2016										552,091		554,468		578,911		211,614		31,120
2017												615,187		601,464		309,285		33,822
2018														701,774		526,090		27,224
													$	3,509,905

(Some amounts may not reconcile due to rounding.)

	Cumulative Paid Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance
	Years Ended December 31,
	2012		2013		2014		2015		2016		2017		2018
Accident Year	(unaudited)		(unaudited)		(unaudited)		(unaudited)		(unaudited)		(unaudited)
(Dollars in thousands)
2012	$	33,158	$	101,253	$	157,822	$	213,349	$	246,274	$	271,891	$	294,202
2013				33,301		117,013		176,273		224,548		260,075		285,680
2014						41,181		124,856		201,527		256,586		297,317
2015								44,296		134,644		218,475		291,468
2016										54,707		164,012		268,510
2017												53,869		171,978
2018														63,379
													$	1,672,535
All outstanding liabilities prior to 2012, net of reinsurance														354,740
Liabilities for claims and claim adjustment expenses, net of reinsurance													$	2,192,111

(Some amounts may not reconcile due to rounding.)

		Average Annual Percentage Payout of Incurred Claims by Age, Net of Reinsurance (unaudited)
Years		1		2		3		4		5		6		7
Casualty		9.2%		19.7%		17.3%		14.2%		10.0%		7.4%		6.4%

F-31

Insurance – Property Business

															At December 31, 2018
															Total of
															IBNR Liabilites
	Incurred Claims and Allocated Claim Adjustment Expenses, Net of reinsurance														Plus Expected
	Years Ended December 31,														Development		Cumulative
	2012		2013		2014		2015		2016		2017		2018		on Reported		Number of
Accident Year	(unaudited)		(unaudited)		(unaudited)		(unaudited)		(unaudited)		(unaudited)				Claims		Reported Claims
(Dollars in thousands)
2012	$	106,216	$	88,892	$	81,671	$	82,369	$	81,945	$	81,729	$	81,906		103		N/A
2013				111,910		97,831		91,017		91,921		92,011		92,171		499		N/A
2014						131,473		123,455		119,753		119,296		119,105		464		N/A
2015								172,467		152,521		143,558		146,356		695		N/A
2016										300,481		273,901		278,813		1,185		N/A
2017												523,669		485,125		27,538		N/A
2018														416,396		86,295		N/A
													$	1,619,872

(Some amounts may not reconcile due to rounding.)

	Cumulative Paid Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance
	Years Ended December 31,
	2012		2013		2014		2015		2016		2017		2018
Accident Year	(unaudited)		(unaudited)		(unaudited)		(unaudited)		(unaudited)		(unaudited)
(Dollars in thousands)
2012	$	56,497	$	81,700	$	80,394	$	81,674	$	81,818	$	81,609	$	81,747
2013				68,649		92,914		91,618		91,888		91,498		91,537
2014						81,755		115,890		118,060		118,043		118,375
2015								101,975		140,960		142,089		144,823
2016										161,993		248,555		270,765
2017												206,334		408,176
2018														254,270
													$	1,369,694
All outstanding liabilities prior to 2012, net of reinsurance														330
Liabilities for claims and claim adjustment expenses, net of reinsurance													$	250,508

(Some amounts may not reconcile due to rounding.)

		Average Annual Percentage Payout of Incurred Claims by Age, Net of Reinsurance (unaudited)
Years		1		2		3		4		5		6		7
Property		63.4%		30.8%		3.2%		1.0%		0.1%		0.1%		0.2%

F-32

Reconciliation of the Disclosure of Incurred and Paid Claims Development to the Liability for Unpaid Claims and Claim Adjustment Expenses

The reconciliation of the net incurred and paid claims development tables to the liability for claims and claim adjustment expenses in the consolidated statement of financial position is as follows.

	December 31, 2018
(Dollars in thousands)
Net outstanding liabilities
U.S. Reinsurance Casualty	$	2,035,448
U.S. Reinsurance Property		2,291,749
International Casualty		834,410
International Property		1,116,288
Bermuda Casualty		1,934,926
Bermuda Property		659,771
Insurance Casualty		2,192,111
Insurance Property		250,508
Liabilities for unpaid claims and claim adjustment expenses, net of reinsurance		11,315,210

Reinsurance recoverable on unpaid claims
U.S. Reinsurance Casualty		395,446
U.S. Reinsurance Property		232,957
International Casualty		100,335
International Property		99,430
Bermuda Casualty		(25	)
Bermuda Property		143,752
Insurance Casualty		520,754
Insurance Property		126,992
Total reinsurance recoverable on unpaid claims		1,619,641

Insurance lines other than short-duration		-
Unallocated claims adjustment expenses		144,554
Other		39,685
		184,239

Total gross liability for unpaid claims and claim adjustment expense	$	13,119,090

(Some amounts may not reconcile due to rounding.)

Reserving Methodology

The Company maintains reserves equal to our estimated ultimate liability for losses and loss adjustment expense (LAE) for reported and unreported claims for our insurance and reinsurance businesses. Because reserves are based on estimates of ultimate losses and LAE by underwriting or accident year, the Company uses a variety of statistical and actuarial techniques to monitor reserve adequacy over time, evaluate new information as it becomes known, and adjust reserves whenever an adjustment appears warranted. The Company considers many factors when setting reserves including: (1) exposure base and projected ultimate premium; (2) expected loss ratios by product and class of business, which are developed collaboratively by underwriters and actuaries; (3) actuarial methodologies which analyze loss reporting and payment experience, reports from ceding companies and historical trends, such as reserving patterns, loss payments, and product mix; (4) current legal interpretations of coverage and liability; and (5) economic conditions. Insurance and reinsurance loss and LAE reserves represent the Company’s best estimate of its ultimate liability. Actual loss and LAE ultimately paid may deviate, perhaps substantially, from such reserves. Net income (gain or loss) will be impacted in a period in which the change in estimated ultimate loss and LAE is recorded.

The detailed data required to evaluate ultimate losses for the Company’s insurance business is accumulated from its underwriting and claim systems. Reserving for reinsurance requires evaluation of loss information received from ceding companies. Ceding companies report losses in many forms depending on the type of contract and the agreed or contractual reporting requirements. Generally, pro rata contracts require the submission of a monthly/quarterly account, which includes premium and loss activity for the period with

F-33

corresponding reserves as established by the ceding company. This information is recorded into the Company’s records. For certain pro rata contracts, the Company may require a detailed loss report for claims that exceed a certain dollar threshold or relate to a particular type of loss. Excess of loss and facultative contracts generally require individual loss reporting with precautionary notices provided when a loss reaches a significant percentage of the attachment point of the contract or when certain causes of loss or types of injury occur. Experienced claims staff handles individual loss reports and supporting claim information. Based on evaluation of a claim, the Company may establish additional case reserves in addition to the case reserves reported by the ceding company. To ensure ceding companies are submitting required and accurate data, Everest’s Underwriting, Claim, Reinsurance Accounting, and Internal Audit Departments perform various reviews of ceding companies, particularly larger ceding companies, including on-site audits.

The Company segments both reinsurance and insurance reserves into exposure groupings for actuarial analysis. The Company assigns business to exposure groupings so that the underlying exposures have reasonably homogeneous loss development characteristics and are large enough to facilitate credible estimation of ultimate losses. The Company periodically reviews its exposure groupings and may change groupings over time as business changes. The Company currently uses approximately 200 exposure groupings to develop reserve estimates. One of the key selection characteristics for the exposure groupings is the historical duration of the claims settlement process. Business in which claims are reported and settled relatively quickly are commonly referred to as short tail lines, principally property lines. On the other hand, casualty claims tend to take longer to be reported and settled and casualty lines are generally referred to as long tail lines. Estimates of ultimate losses for shorter tail lines, with the exception of loss estimates for large catastrophic events, generally exhibit less volatility than those for the longer tail lines.

The Company uses a variety of actuarial methodologies, such as the expected loss ratio method, chain ladder methods, and Bornhuetter-Ferguson methods, supplemented by judgment where appropriate, to estimate ultimate loss and LAE for each exposure group.

Expected Loss Ratio Method: The expected loss ratio method uses earned premium times an expected loss ratio to calculate ultimate losses for a given underwriting or accident year. This method relies entirely on expectation to project ultimate losses with no consideration given to actual losses. As such, it may be appropriate for an immature underwriting or accident year where few, if any, losses have been reported or paid, but less appropriate for a more mature year.

Chain Ladder Method: Chain ladder methods use a standard loss development triangle to project ultimate losses. Age-to-age development factors are selected for each development period and combined to calculate age-to-ultimate development factors which are then applied to paid or reported losses to project ultimate losses. This method relies entirely on actual paid or reported losses to project ultimate losses. No other factors such as changes in pricing or other expectations are taken into account. It is most appropriate for groups with homogeneous, stable experience where past development patterns are expected to continue in the future. It is least appropriate for groups which have changed significantly over time or which are more volatile.

Bornhuetter-Ferguson Method: The Bornhuetter-Ferguson method is a combination of the expected loss ratio method and the chain ladder method. Ultimate losses are projected based partly on actual paid or reported losses and partly on expectation. Incurred but not reported (IBNR) reserves are calculated using earned premium, an a priori loss ratio, and selected age-to-age development factors and added to actual reported (paid) losses to determine ultimate losses. It is more responsive to actual reported or paid development than the expected loss ratio method but less responsive than the chain ladder method. The reliability of the method depends on the accuracy of the selected a priori loss ratio.

Although the Company uses similar actuarial methods for both short tail and long tail lines, the faster reporting of experience for the short tail lines allows the Company to have greater confidence in its estimates of ultimate losses for short tail lines at an earlier stage than for long tail lines. As a result, the Company utilizes, as well, exposure-based methods to estimate its ultimate losses for longer tail lines, especially for immature underwriting or accident years. For both short and long tail lines, the Company supplements these general approaches with analytically based judgments.

F-34

Key actuarial assumptions contain no explicit provisions for reserve uncertainty nor does the Company supplement the actuarially determined reserves for uncertainty.

Carried reserves at each reporting date are the Company’s best estimate of ultimate unpaid losses and LAE at that date. The Company completes detailed reserve studies for each exposure group annually for both reinsurance and insurance operations. The completed annual reserve studies are “rolled-forward” for each accounting period until the subsequent reserve study is completed. Analyzing the roll-forward process involves comparing actual reported losses to expected losses based on the most recent reserve study. The Company analyzes significant variances between actual and expected losses and post adjustments to its reserves as warranted.

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)	2018			2017			2016
Gross basis:
Beginning of period reserves	$	448,994		$	441,111		$	433,117
Incurred losses		(2,473	)		90,009			73,336
Paid losses		(99,026	)		(82,126	)		(65,342	)
End of period reserves	$	347,495		$	448,994		$	441,111

Net basis:
Beginning of period reserves	$	318,081		$	319,072		$	319,620
Incurred losses		-			37,137			53,909
Paid losses		(56,624	)		(38,128	)		(54,457	)
End of period reserves	$	261,456		$	318,081		$	319,072

In 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-35

Reinsurance Receivables.

Reinsurance receivables for both paid and recoverable on unpaid losses totaled $1,787,648 thousand and $1,348,226 thousand at December 31, 2018 and December 31, 2017, respectively. At December 31, 2018, $683,775 thousand, or 38.3%, was receivable from Mt. Logan Re collateralized segregated accounts; $125,519 thousand, or 7.0% was receivable from Munich Reinsurance America, Inc. (“Munich Re”); $122,050 thousand, or 6.8%, was receivable from Zurich Versicherungs Gesellschaft (“Zurich”); and $103,052 thousand, or 5.8%, was receivable from Resolution Group Reinsurance (Barbados) Limited (“Resolution Group”). The receivables from Resolution Group are fully collateralized by an individual trust agreement. 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)	2018			2017			2016
Balance at beginning of year	$	51,014		$	55,074		$	58,910
Liabilities assumed		110			115			175
Adjustments to reserves		806			(437	)		303
Benefits paid in the current year		(5,151	)		(3,738	)		(4,315	)
Balance at end of year	$	46,778		$	51,014		$	55,074

(Some amounts may not reconcile due to rounding.)

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-36

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. At December 31, 2018, $435,959 thousand of fixed maturities, market value and $2,337 thousand of fixed maturities, fair value were fair valued using unobservable inputs. The majority of the fixed maturities, market value, $354,143 thousand and all of the $2,337 thousand of fixed maturities, fair value were valued by investment managers’ valuation committees and a majority of these fair values were substantiated by valuations from independent third parties. The Company has procedures in place to review and evaluate these independent third party valuations. The remaining Level 3 fixed maturities $80,663 thousand were fair valued by the Company at either par or amortized cost and $1,153 thousand were priced using a non-binding broker quote. Due to the unavailability of prices for private placement securities at December 31, 2017, an investment manager’s valuation committee valued these private placement securities at $165,173 thousand. In addition, the Company valued one private placement security at $51,965 thousand, representing par value.

The Company internally manages a public equity portfolio which had a fair value at December 31, 2018 and December 31, 2017 of $124,228 thousand and $386,241 thousand, respectively, and all prices were obtained from publicly published sources.

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

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 or receive fair values from investment managers.

F-37

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;

·	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 has five remaining equity index put option contracts, based on the Standard & Poor’s 500 (“S&P 500”) index. Based on historical index volatilities and trends and the December 31, 2018 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 2%. The theoretical maximum payouts under these five 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, 2018, the present value of these theoretical maximum payouts using a 3% discount factor was $412,550 thousand. Conversely, if the contracts had all expired on December 31, 2018, with the S&P index at $2,506.85, there would have been no settlement amount.

The Company has one equity index put option contract based on the FTSE 100 index. Based on historical index volatilities and trends and the December 31, 2018 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 24%. 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, 2018, the present value of the theoretical maximum payout using a 3% discount factor and current exchange rate was $40,058 thousand. Conversely, if the contract had expired on December 31, 2018, with the FTSE index at ₤6,728.13, there would have been no settlement amount.

F-38

At December 31, 2018 and 2017, the fair value for these equity put options was $11,958 thousand and $12,477 thousand, respectively.

The Company’s liability for equity index put options is categorized as level 3 since there is no active market for these 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.

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 Active		Significant
			Markets for		Other		Significant
			Identical		Observable		Unobservable
			Assets		Inputs		Inputs
(Dollars in thousands)	December 31, 2018		(Level 1)		(Level 2)		(Level 3)
Assets:
Fixed maturities, market value
U.S. Treasury securities and obligations of
U.S. government agencies and corporations	$	2,631,134	$	-	$	2,631,134	$	-
Obligations of U.S. States and political subdivisions		500,094		-		500,094		-
Corporate securities		5,445,532		-		5,017,317		428,215
Asset-backed securities		540,097		-		540,097		-
Mortgage-backed securities
Commercial		326,710		-		326,710		-
Agency residential		1,796,264		-		1,796,264		-
Non-agency residential		10,209		-		10,209		-
Foreign government securities		1,314,165		-		1,314,165		-
Foreign corporate securities		2,661,058		-		2,653,314		7,744
Total fixed maturities, market value		15,225,263		-		14,789,304		435,959

Fixed maturities, fair value		2,337		-		-		2,337
Equity securities, fair value		716,639		674,433		42,206		-

Liabilities:
Equity index put option contracts	$	11,958	$	-	$	-	$	11,958

There were no transfers between Level 1 and Level 2 for the twelve months ended December 31, 2018.

F-39

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 Active		Significant
			Markets for		Other		Significant
			Identical		Observable		Unobservable
			Assets		Inputs		Inputs
(Dollars in thousands)	December 31, 2017		(Level 1)		(Level 2)		(Level 3)
Assets:
Fixed maturities, market value
U.S. Treasury securities and obligations of
U.S. government agencies and corporations	$	1,536,692	$	-	$	1,536,692	$	-
Obligations of U.S. States and political subdivisions		585,469		-		585,469		-
Corporate securities		5,699,005		-		5,488,819		210,186
Asset-backed securities		531,360		-		531,360		-
Mortgage-backed securities
Commercial		234,041		-		234,041		-
Agency residential		2,210,902		-		2,210,902		-
Non-agency residential		494		-		494		-
Foreign government securities		1,314,027		-		1,314,027		-
Foreign corporate securities		2,644,844		-		2,637,892		6,952
Total fixed maturities, market value		14,756,834		-		14,539,696		217,138

Equity securities, market value		129,530		113,506		16,024		-
Equity securities, fair value		963,572		941,739		21,833		-

Liabilities:
Equity index put option contracts	$	12,477	$	-	$	-	$	12,477

In addition, $117,662 thousand and $79,505 thousand of investments within other invested assets on the consolidated balance sheets as December 31, 2018 and 2017, respectively, are not included within the fair value hierarchy tables as the assets are measured at NAV as a practical expedient to determine fair value.

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

	Total Fixed Maturities, Market Value
	December 31, 2018									December 31, 2017
	Corporate			Foreign						Corporate			Foreign
(Dollars in thousands)	Securities			Corporate			Total			Securities			Corporate			Total
Beginning balance fixed maturities at market value	$	210,186		$	6,952		$	217,138		$	65,197		$	2,538		$	67,735
Total gains or (losses) (realized/unrealized)
Included in earnings		(92	)		(660	)		(752	)		1,655			356			2,011
Included in other comprehensive income (loss)		1,091			-			1,091			(992	)		46			(946	)
Purchases, issuances and settlements		215,838			(298	)		215,540			144,326			4,800			149,126
Transfers in and/or (out) of Level 3		1,192			1,750			2,942			-			(788	)		(788	)
Ending balance	$	428,215		$	7,744		$	435,959		$	210,186		$	6,952		$	217,138

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

(Some amounts may not reconcile due to rounding.)

F-40

	Total Fixed Maturities, Fair Value
	December 31, 2018						December 31, 2017
	Foreign						Foreign
(Dollars in thousands)	Corporate			Total			Corporate		Total
Beginning balance fixed maturities at fair value	$	-		$	-		$	-	$	-
Total gains or (losses) (realized/unrealized)
Included in earnings		(293	)		(293	)		-		-
Included in other comprehensive income (loss)		-			-			-		-
Purchases, issuances and settlements		2,630			2,630			-		-
Transfers in and/or (out) of Level 3		-			-			-		-
Ending balance	$	2,337		$	2,337		$	-	$	-

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

(Some amounts may not reconcile due to rounding.)

The net transfers to/(from) level 3, fair value measurements using significant unobservable inputs were $2,942 thousand and ($788) thousand as of December 31, 2018 and 2017, respectively, for fixed maturities, market value. The transfers during 2018 were related to securities that were priced using a recognized pricing service as of December 31, 2017. The securities were subsequently priced using single non-binding broker quotes as of December 31, 2018.

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)	2018			2017
Liabilities:
Balance, beginning of period	$	12,477		$	22,059
Total (gains) or losses (realized/unrealized)
Included in earnings		(520	)		(9,581	)
Included in other comprehensive income (loss)		-			-
Purchases, issuances and settlements		-			-
Transfers in and/or (out) of Level 3		-			-
Balance, end of period	$	11,958		$	12,477

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.)

CREDIT FACILITIES

The Company has two active credit facilities for a total commitment of up to $1,000,000 thousand and an additional credit facility for a total commitment of up to £30,000 thousand, providing for the issuance of letters of credit and/or unsecured revolving credit lines. The following table presents the interest and fees incurred in connection with the two credit facilities for the periods indicated:

		Years Ended December 31,
(Dollars in thousands)		2018				2017				2016
Credit facility fees incurred		$	420			$	420			$	793

F-41

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

Group Credit Facility

Effective May 26, 2016, Group, Everest Reinsurance (Bermuda), Ltd. (“Bermuda Re”) and Everest International Reinsurance, Ltd. (“Everest International”), both direct subsidiaries of Group, entered into a five year, $800,000 thousand senior credit facility with a syndicate of lenders, which amended and restated in its entirety the June 22, 2012, four year, $800,000 thousand senior credit facility. Both the May 26, 2016 and June 22, 2012 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 $5,370,979 thousand plus 25% of consolidated net income for each of Group’s fiscal quarters, for which statements are available ending on or after March 31, 2016 and for which consolidated net income is positive, plus 25% of any increase in consolidated net worth during such period attributable to the issuance of ordinary and preferred shares, which at December 31, 2018, was $5,994,924 thousand. As of December 31, 2018, 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, 2018					At December 31, 2017
Bank		Commitment		In Use		Date of Expiry	Commitment		In Use		Date of Expiry
Wells Fargo Bank Group Credit Facility	Tranche One	$	200,000	$	-		$	200,000	$	-
	Tranche Two		600,000		558,818	12/31/2019		600,000		538,214	12/31/2018
Total Wells Fargo Bank Group Credit Facility		$	800,000	$	558,818		$	800,000	$	538,214

Bermuda Re Letter of Credit Facility

Effective December 10, 2018, Bermuda Re renewed its 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 current renewal of the Bermuda Re Letter of Credit Facility provides for the issuance of up to $200,000 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.

F-42

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

(Dollars in thousands)	At December 31, 2018					At December 31, 2017
Bank	Commitment		In Use		Date of Expiry	Commitment		In Use		Date of Expiry
Citibank Bilateral Letter of Credit Agreement	$	200,000	$	3,482	2/28/2019	$	250,000	$	3,297	2/28/2018
				3,672	11/24/2019				3,672	11/24/2018
				72,443	12/31/2019				73,626	12/31/2018
				296	8/15/2020				344	8/30/2019
				177	12/16/2020				93,855		12/30/2021
				125	12/20/2020				-
				1,851	11/4/2022				-
				407	11/13/2022				-
				59,293	12/30/2022				-
Total Citibank Bilateral Agreement	$	200,000	$	141,746		$	250,000	$	174,794

Everest International Credit Facility

Effective November 9, 2018, Everest International renewed its credit facility with Lloyds Bank plc (“Everest International Credit Facility”). The current renewal of the Everest International Credit Facility has a four year term and provides up to £30,000 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 $5,326,009 thousand (70% of consolidated net worth as of December 31, 2015), 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, 2018, was $5,985,672 thousand. As of December 31, 2018, 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, 2018					At December 31, 2017
Bank	Commitment		In Use		Date of Expiry	Commitment		In Use		Date of Expiry
Lloyd's Bank plc	£	30,000	£	26,000	12/31/2022	£	145,000	£	-
		-		-			-		-
Total Lloyd's Bank Credit Facility	£	30,000	£	26,000		£	145,000	£	-

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, 2018				December 31, 2017
					Consolidated Balance				Consolidated Balance
(Dollars in thousands)	Date Issued	Date Due	Principal Amounts		Sheet Amount		Market Value		Sheet Amount		Market Value
Senior notes	06/05/2014	06/01/2044		400,000	$	396,954	$	396,968	$	396,834	$	420,340

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.

F-43

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

		Years Ended December 31,
(Dollars in thousands)		2018				2017				2016
Interest expense incurred		$	19,472			$	19,472			$	19,472

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 Date		December 31, 2018				December 31, 2017
		Original				Consolidated Balance				Consolidated Balance
(Dollars in thousands)	Date Issued	Principal Amount		Scheduled	Final	Sheet Amount		Market Value		Sheet Amount		Market Value
Long term subordinated notes	04/26/2007	$	400,000	05/15/2037	05/01/2067	$	236,659	$	200,390	$	236,561	$	233,072

During the fixed rate interest period from May 3, 2007 through May 14, 2017, interest was at the annual rate of 6.6%, payable semi-annually in arrears on November 15 and May 15 of each year, commencing on November 15, 2007. During the floating rate interest period from May 15, 2017 through maturity, interest will be based on the 3 month LIBOR plus 238.5 basis points, reset quarterly, payable quarterly in arrears on February 15, May 15, August 15 and November 15 of each year, subject to Holdings’ right to defer interest on one or more occasions for up to ten consecutive years. Deferred interest will accumulate interest at the applicable rate compounded quarterly for periods from and including May 15, 2017. The reset quarterly interest rate for November 15, 2018 to February 14, 2019 is 5.0%.

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)		2018				2017				2016
Interest expense incurred		$	10,926			$	11,498			$	15,749

F-44

COLLATERALIZED 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, 2018, the total amount on deposit in trust accounts was $772,497 thousand.

The Company reinsures some of its catastrophe exposures with the segregated accounts of 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 for Mt. Logan Re began being established effective July 1, 2013 and non-voting, redeemable preferred shares have been issued to capitalize the segregated accounts. Each segregated account invests predominantly in a diversified set of catastrophe exposures, diversified by risk/peril and across different geographic regions globally.

The following table summarizes the premiums and losses that are ceded by the Company to Mt. Logan Re segregated accounts and assumed by the Company from Mt. Logan Re segregated accounts.

	Years Ended December 31,
Mt. Logan Re Segregated Accounts	2018	2017	2016
(Dollars in thousands)
Ceded written premiums	242,755	228,514	197,537
Ceded earned premiums	247,334	226,505	191,568
Ceded losses and LAE	311,274	323,664	44,802

Assumed written premiums	10,582	11,984	14,563
Assumed earned premiums	10,582	11,984	14,563
Assumed losses and LAE	-	-	-

Each segregated account is permitted to assume net risk exposures equal to the amount of its available posted collateral, which in the aggregate was $1,156,853 thousand and $837,202 thousand at December 31, 2018 and 2017, respectively. Of this amount, Group had investments valued at $45,625 thousand and $50,373 thousand at December 31, 2018 and 2017, respectively, in the segregated accounts.

Effective April 1, 2018, the Company entered into a retroactive reinsurance transaction with one of the Mt. Logan Re segregated accounts to retrocede $269,198 thousand of casualty reserves held by Bermuda Re related to accident years 2002 through 2015. As consideration for entering the agreement, the Company transferred cash of $252,000 thousand to the Mt. Logan Re segregated account. The maximum liability to be retroceded under the agreement will be $319,000 thousand. The Company will retain liability for any amounts exceeding the maximum liability.

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

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

F-45

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

On April 13, 2017 the Company entered into six collateralized reinsurance agreements with Kilimanjaro to provide the Company with annual aggregate catastrophe reinsurance coverage. The initial three agreements are four year reinsurance contracts which cover named storm and earthquake events. These agreements provide up to $225,000 thousand, $400,000 thousand and $325,000 thousand, respectively, of annual aggregate reinsurance coverage from named storms and earthquakes in the United States, Puerto Rico and Canada. The subsequent three agreements are five year reinsurance contracts which cover named storm and earthquake events. These agreements provide up to $50,000 thousand, $75,000 thousand and $175,000 thousand, respectively, of annual aggregate reinsurance coverage from named storms and earthquakes in the United States, Puerto Rico and Canada.

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

Recoveries under these collateralized reinsurance agreements with Kilimanjaro are primarily dependent on estimated industry level insured losses from covered events, as well as, the geographic location of the events. The estimated industry level of insured losses is obtained from published estimates by an independent recognized authority on insured property losses. Currently, none of the published insured loss estimates for the 2017 catastrophe events have exceeded the single event retentions under the terms of the agreements that would result in a recovery. In addition, the aggregation of the to-date published insured loss estimates for the 2017 covered events have not exceeded the aggregated retentions for recovery. However, if the published estimates for insured losses for the covered 2017 events increase, the aggregate losses may exceed the aggregate event retentions under the agreements resulting in a recovery.

Kilimanjaro has financed the various property catastrophe reinsurance coverages by issuing catastrophe bonds to unrelated, external investors. On April 24, 2014, Kilimanjaro issued $450,000 thousand of notes (“Series 2014-1 Notes”). The $450,000 thousand of Series 2014-1 Notes were fully redeemed on April 30, 2018 and are no longer outstanding. On November 18, 2014, Kilimanjaro issued $500,000 thousand of notes (“Series 2014-2 Notes”). On December 1, 2015, Kilimanjaro issued $625,000 thousand of notes (“Series 2015-1 Notes). On April 13, 2017, Kilimanjaro issued $950,000 thousand of notes (“Series 2017-1 Notes) and $300,000 thousand of notes (“Series 2017-2 Notes). On April 30, 2018, Kilimanjaro issued $262,500 thousand of notes (“Series 2018-1 Notes”) and $262,500 thousand of notes (“Series 2018-2 Notes”). The proceeds from the issuance of the Notes listed above are held in reinsurance trust throughout the duration of the applicable reinsurance agreements and invested solely in US government money market funds with a rating of at least “AAAm” by Standard & Poor’s.

F-46

OPERATING LEASE AGREEMENTS

The future minimum rental commitments, exclusive of cost escalation clauses, at December 31, 2018, for all of the Company’s operating leases with remaining non-cancelable terms in excess of one year are as follows:

(Dollars in thousands)
2019	$	18,992
2020		18,365
2021		9,469
2022		9,180
2023		8,919
Thereafter		26,916
Net commitments	$	91,841

(Some amounts may not reconcile due to rounding.)

All of these leases, the expiration terms of which range from 2019 to 2032, are for the rental of office space. Rental expense was $22,883 thousand, $19,490 thousand and $17,663 thousand for the years ended December 31, 2018, 2017 and 2016, respectively.

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 the 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% U.S. withholding tax. Currently, however, no withholding tax has been 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 TCJA, enacted on December 22, 2017, caused the Company to record income tax expense of $8,246 thousand in 2017. The income tax expense reflects the lower 21% tax benefit to be realized by the Company under the TCJA upon the reversal of the temporary differences in its deferred tax inventory account versus the 35% tax benefit that had been expected to be realized before TCJA. The significant components of the provision are as follows for the periods indicated:

	Years Ended December 31,
(Dollars in thousands)	2018			2017			2016
Current tax expense (benefit):
U.S.	$	(38,625	)	$	(117,173	)	$	30,971
Non-U.S.		6,497			2,849			4,228
Total current tax expense (benefit)		(32,128	)		(114,324	)		35,199
Deferred tax expense (benefit):
U.S.		(297,798	)		49,763			70,995
Non-U.S.		(97	)		777			(2,694	)
Total deferred tax expense (benefit)		(297,895	)		50,540			68,301

Total income tax expense (benefit)	$	(330,023	)	$	(63,784	)	$	103,500

(Some amounts may not reconcile due to rounding.)

F-47

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)	2018						2017						2016
	U.S.			Non-U.S.			U.S.			Non-U.S.			U.S.			Non-U.S.
Underwriting gain (loss)	$	(1,407,020	)	$	796,745		$	(516,167	)	$	308,646		$	208,821		$	480,602
Net investment income		283,569			297,614			255,310			287,588			230,691			242,393
Net realized capital gains (losses)		(90,033	)		(37,103	)		148,099			5,095			(16,465	)		9,249
Net derivative gain (loss)		-			520			-			9,581			-			18,647
Corporate expenses		(11,035	)		(19,637	)		(7,394	)		(18,529	)		(8,276	)		(18,955	)
Interest, fee and bond issue cost amortization expense		(30,611	)		(420	)		(31,183	)		(420	)		(35,435	)		(793	)
Other income (expense)		(177	)		(8,883	)		30,325			(65,767	)		(5,536	)		(5,101	)
Pre-tax income (loss)	$	(1,255,307	)	$	1,028,836		$	(121,010	)	$	526,194		$	373,801		$	726,043

Expected tax provision at the applicable statutory rate(s)		(263,712	)		9,647			(42,355	)		6,843			130,830			2,387
Increase (decrease) in taxes resulting from:
Tax exempt income		(3,824	)		-			(8,488	)		-			(9,078	)		-
Dividend received deduction		(1,520	)		-			(4,639	)		-			(4,913	)		-
Proration		1,150			-			1,760			-			1,931			-
Affiliated preferred stock dividends		6,517			-			10,861			-			10,861			-
Creditable foreign premium tax		(13,475	)		-			(7,515	)		-			(6,134	)		-
Tax audit settlement		(2,094	)		-			(11,516	)		-			(18,644	)		-
U.S. rate differential on carryback of net operation losses to PY		(43,734	)		-			-			-			-			-
U.S. rate differential on deferred tax 2017 return to provision		(28,411	)		-			-			-			-			-
Share based compensation tax benefits formerly in APIC		(3,333	)		(120	)		(6,716	)		(235	)		-			-
Impact of U.S. tax reform		-			-			8,246			-			-			-
Impact of prior year accounting adjustment		-			-			(8,986	)		-			-			-
Change in uncertain tax positions		8,434			-			-			-			-			-
Other		7,579			(3,127	)		1,938			(2,982	)		(2,887	)		(853	)
Total income tax provision	$	(336,423	)	$	6,400		$	(67,410	)	$	3,626		$	101,966		$	1,534

(Some amounts may not reconcile due to rounding.)

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

(Dollars in thousands)	2018		2017		2016
Balance at January 1	$	-	$	-	$	-
Additions based on tax positions related to the current year		-		-		-
Additions for tax positions of prior years		8,434		-		-
Reductions for tax positions of prior years		-		-		-
Settlements with taxing authorities		-		-		-
Lapses of applicable statutes of limitations		-		-		-
Balance at December 31	$	8,434	$	-	$	-

At December 31, 2018, the Company’s unrecognized tax benefits, excluding interest and penalties, that would impact the effective tax rate were $8,434 thousand, and is all related to the Company’s U.S. operations.

Interest and penalties related to unrecognized tax benefits are recognized in income tax expense. At December 31, 2018, the Company accrued $0 thousand for the payment of interest (net of the federal benefit) and penalties. Although it is reasonably possible that a change in the balance of unrecognized tax benefits may occur within the next 12 months, based on the information currently available, the Company does not expect any change to be material to the Company’s financial statements.

During 2016, the Internal Revenue Service (“IRS”) completed its audit of the Company for the 2009 through 2013 tax years and issued a final Revenue Agent Report (“RAR”). The Company received the expected net tax refund for $43,682 thousand plus net interest (meaning interest income, net of federal income tax) of $1,252 thousand from the IRS in January, 2018.

F-48

The Company’s 2014 and subsequent U.S. tax years are open to audit by the IRS and, in 2018, the IRS opened an audit of the 2014 tax year. To date, the Company has not received any notices of proposed adjustments. The Company did propose affirmative beneficial tax return adjustments to the IRS at the start of the audit. In total, the Company expects a net tax refund of $35,087 thousand plus net interest of $1,539 thousand for the 2014 tax year. This refund is subject to IRS Joint Committee review and approval.

For tax year 2015, the total amount expected to be refunded from the IRS is $44,611 thousand plus net interest of $668 thousand as a result of the Company amending their originally filed tax return and filing of a Net Operating Loss (“NOL”) carryback claim with the IRS in 2018 for the 2017 NOL incurred in the U.S.

For tax year 2016, the total amount expected to be refunded from the IRS is $48,268 thousand plus net interest of $267 thousand as a result of the Company planning to file an amended US income tax return and carryback of its expected 2018 NOL incurred in the U.S.

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/(liabilities) are as follows for the periods indicated:

	Years Ended December 31,
(Dollars in thousands)	2018			2017
Deferred tax assets:
Foreign Tax Credits	$	167,685		$	15,914
Net operating loss carryforward		105,787			9,645
Loss reserves		64,135			52,649
Unearned premium reserves		63,309			55,034
Net unrealized losses on benefit plans		17,921			19,120
Unrealized foreign currency losses		12,596			1,550
Net unrealized investment losses		10,815			-
Net fair value losses		7,196			-
Uncollectible reinsurance reserves		3,142			3,320
Deferred expenses		1,992			1,759
Investment impairments		1,291			1,144
Benefit plan liability		-			10,417
Alternative minimum tax credits		-			363
Other assets		9,529			10,494
Total deferred tax assets		465,398			181,409

Deferred tax liabilities:
Deferred acquisition costs		74,736			64,997
Partnership investments		14,936			2,149
Benefit plan asset		3,600			-
Net fair value income		-			58,983
Net unrealized investment gains		-			11,576
Gain on tender of debt		-			3,287
Other liabilities		3,868			2,174
Total deferred tax liabilities		97,140			143,165

Net deferred tax assets		368,258			38,244
Less: Valuation allowance		(9,309	)		(9,560	)
Total net deferred tax assets	$	358,949		$	28,684

(Some amounts may not reconcile due to rounding.)

At December 31, 2018, the Company has $167,685 thousand of Foreign Tax Credits (“FTCs”) and $0 thousand of Alternative Minimum Tax (“AMT”) credit carry forwards. The FTCs expire in various amounts between 2019 and 2028. Beginning in 2018, AMT credits are recorded as a current receivable as a result of the TCJA converting them into refundable credits to be received no later than with the filing of the 2021 US corporation income tax return. The Company also has a tax effected US NOL carryforward of $96,564 thousand. This NOL carryforward does not expire until 2038.

F-49

Management believes that it is more likely than not that the Company will realize the majority of its deferred tax assets, however, a valuation allowance of $9,309 thousand and $9,560 thousand has been recorded in 2018 and 2017, respectively, against the NOL deferred tax assets in its Canadian and UK subsidiaries. The Canadian NOLs begin to expire in 2035 and the UK NOLs do not expire.

In performing our assessment of the recoverability of the deferred tax asset pursuant to ASC 740, the Company considered tax laws governing the utilization of the net operating loss and foreign tax credit carryforwards and other deferred tax assets in each applicable jurisdiction. Under U.S. tax law, a company generally must use its net operating loss carryforwards before it can use its foreign tax credit carryforwards. The Company evaluated all negative and positive evidence impacting the realization of its deferred tax assets as of December 31, 2018 in the U.S. tax jurisdiction. Evidence considered in the analysis included the Company’s ability to carryback net operating losses generated in 2017 and 2018. In addition, the Company implemented planning actions during 2018 and early 2019 to increase its planned U.S. source and foreign source income to better enable it to utilize its U.S. deferred tax assets and tax attributes. As of December 31, 2018, based on all available evidence, the Company has concluded it is more likely than not that the U.S. net operating loss and foreign tax credit carryforwards will be utilized prior to expiration and, thus, no valuation allowance has been established in the U.S. jurisdiction.

As a result of the TCJA, the Company recognized an $8,246 thousand tax expense in the Company’s Consolidated Statements of Operations for the year ended December 31, 2017. In accordance with SEC Staff Accounting Bulletin 118, in 2017 the Company recorded the effects of the TCJA using reasonable estimates due to the need for further analysis to complete the accounting.

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

Effective January 1, 2017, the Company adopted ASU 2016-09 which provided new guidance on the treatment of the tax effects of share based compensation transactions. ASU 2016-09 required that the income tax effects of restricted stock vestings and stock option exercises resulting from the change in value of share based compensation awards between the grant date and settlement (vesting/exercise) date be recorded as part of income tax expense (benefit) within the consolidated statements of operations and comprehensive income (loss). Per the new guidance, the Company recorded excess tax benefits of $3,453 thousand and $6,951 thousand related to restricted stock vestings and stock option exercises as part of income tax expense (benefit) within the consolidated statements of operations and comprehensive income (loss) in 2018 and 2017, respectively.

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

The adoption of ASU 2016-09 did not impact the accounting treatment of tax benefits related to dividends on restricted stock. The tax benefits related to the payment of dividends on restricted stock have been recorded as part of additional paid-in capital in the shareholders' equity section of the consolidated balance sheets in all years. The tax benefits related to the payment of dividends on restricted stock were $403 thousand, $626 thousand and $597 thousand in 2018, 2017 and 2016, respectively.

F-50

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 8.

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)	2018			2017			2016
Written premiums:
Direct	$	2,240,951		$	2,083,555		$	1,819,588
Assumed		6,234,203			5,090,367			4,214,286
Ceded		(1,060,726	)		(929,261	)		(762,969	)
Net written premiums	$	7,414,428		$	6,244,661		$	5,270,905

Premiums earned:
Direct	$	2,129,320		$	1,825,705		$	1,694,702
Assumed		5,807,332			4,945,522			4,361,944
Ceded		(1,004,953	)		(833,387	)		(736,180	)
Net premiums earned	$	6,931,699		$	5,937,840		$	5,320,466

Incurred losses and LAE:
Direct	$	1,372,589		$	1,311,682		$	1,496,455
Assumed		5,046,947			3,909,816			2,121,902
Ceded		(768,133	)		(698,917	)		(478,728	)
Net incurred losses and LAE	$	5,651,403		$	4,522,581		$	3,139,629

F-51

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,
	2018									2017									2016
(Dollars in thousands)	Before Tax			Tax Effect			Net of Tax			Before Tax			Tax Effect			Net of Tax			Before Tax			Tax Effect			Net of Tax
Unrealized appreciation (depreciation) ("URA(D)") on securities - temporary	$	(275,511	)	$	21,061		$	(254,450	)	$	(81,915	)	$	21,597		$	(60,318	)	$	65,645		$	(13,961	)	$	51,684
URA(D) on securities - OTTI		(1,071	)		(135	)		(1,206	)		(5,618	)		1,588			(4,030	)		7,734			(1,789	)		5,945
Reclassification of net realized losses (gains) included in net income (loss)		28,014			(518	)		27,496			(7,258	)		308			(6,950	)		23,232			(8,114	)		15,118
Foreign currency translation adjustments		(86,520	)		9,704			(76,816	)		142,054			(20,137	)		121,917			(53,802	)		(1,539	)		(55,341	)
Benefit plan actuarial net gain (loss)		(646	)		136			(510	)		1,300			(273	)		1,027			(11,520	)		4,032			(7,488	)
Reclassification of benefit plan liability amortization included in net income (loss)		6,356			(1,335	)		5,021			8,426			(2,949	)		5,477			7,805			(2,732	)		5,073
Total other comprehensive income (loss)	$	(329,378	)	$	28,913		$	(300,465	)	$	56,989		$	134		$	57,123		$	39,094		$	(24,103	)	$	14,991

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 component	2018			2017			operations and comprehensive income (loss)
(Dollars in thousands)
URA(D) on securities	$	28,014		$	(7,258	)	Other net realized capital gains (losses)
		(518	)		308		Income tax expense (benefit)
	$	27,496		$	(6,950	)	Net income (loss)

Benefit plan net gain (loss)	$	6,356		$	8,426		Other underwriting expenses
		(1,335	)		(2,949	)	Income tax expense (benefit)
	$	5,021		$	5,477		Net 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)	2018			2017
Beginning balance of URA (D) on securities	$	49,969		$	115,558
Change to beginning balance due to adoption of ASU 2016-01		(1,201	)		-
Current period change in URA (D) of investments - temporary		(226,954	)		(67,268	)
Current period change in URA (D) of investments - non-credit OTTI		(1,206	)		(4,030	)
Reclass due to early adoption of ASU 2018-02		-			5,709
Ending balance of URA (D) on securities		(179,392	)		49,969

Beginning balance of foreign currency translation adjustments		(138,931	)		(266,818	)
Current period change in foreign currency translation adjustments		(76,816	)		121,917
Reclass due to early adoption of ASU 2018-02		-			5,970
Ending balance of foreign currency translation adjustments		(215,747	)		(138,931	)

Beginning balance of benefit plan net gain (loss)		(71,929	)		(65,504	)
Current period change in benefit plan net gain (loss)		4,511			6,504
Reclass due to early adoption of ASU 2018-02		-			(12,929	)
Ending balance of benefit plan net gain (loss)		(67,418	)		(71,929	)

Ending balance of accumulated other comprehensive income (loss)	$	(462,557	)	$	(160,891	)

(Some amounts may not reconcile due to rounding.)

F-52

EMPLOYEE BENEFIT PLANS

Defined Benefit Pension Plans.

The Company maintains both qualified and non-qualified defined benefit pension plans for its U.S. employees employed prior to April 1, 2010. Generally, the Company computes the benefits based on average earnings over a period prescribed by the plans and credited length of service. The Company’s non-qualified defined benefit pension plan provided compensating pension benefits for participants whose benefits have been curtailed under the qualified plan due to Internal Revenue Code limitations. Effective January 1, 2018, participants of the Company’s non-qualified defined benefit pension plan may no longer accrue additional service benefits.

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

		Years Ended December 31,
(Dollars in thousands)		2018				2017				2016
Company contributions		$	77,743			$	10,534			$	30,821

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

		Years Ended December 31,
(Dollars in thousands)		2018				2017				2016
Pension expense		$	9,728			$	16,299			$	17,188

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)	2018			2017
Change in projected benefit obligation:
Benefit obligation at beginning of year	$	316,202		$	281,853
Service cost		9,801			10,949
Interest cost		10,290			10,034
Actuarial (gain)/loss		(29,966	)		24,679
Curtailment		-			(6,209	)
Benefits paid		(6,084	)		(5,104	)
Projected benefit obligation at end of year		300,244			316,202

Change in plan assets:
Fair value of plan assets at beginning of year		210,267			171,506
Actual return on plan assets		(21,395	)		33,331
Actual contributions during the year		77,743			10,534
Administrative expenses paid		-			-
Benefits paid		(6,084	)		(5,104	)
Fair value of plan assets at end of year		260,531			210,267

Funded status at end of year	$	(39,713	)	$	(105,935	)

(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)	2018			2017
Other assets (due beyond one year)	$	-		$	-
Other liabilities (due within one year)		(7,530	)		(3,871	)
Other liabilities (due beyond one year)		(32,182	)		(102,065	)
Net amount recognized in the consolidated balance sheets	$	(39,713	)	$	(105,935	)

(Some amounts may not reconcile due to rounding.)

F-53

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)	2018			2017
Accumulated income (loss)	$	(88,580	)	$	(86,788	)
Accumulated other comprehensive income (loss)	$	(88,580	)	$	(86,788	)

(Some amounts may not reconcile due to rounding.)

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

	Years Ended December 31,
(Dollars in thousands)	2018			2017
Other comprehensive income (loss) at December 31, prior year	$	(86,788	)	$	(96,965	)
Net gain (loss) arising during period		(8,631	)		(4,398	)
Recognition of amortizations in net periodic benefit cost:
Actuarial loss		6,839			8,366
Curtailment loss recognized		-			6,209
Other comprehensive income (loss) at December 31, current year	$	(88,580	)	$	(86,788	)

(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)	2018			2017			2016
Service cost	$	9,801		$	10,949		$	10,924
Interest cost		10,290			10,034			9,485
Expected return on assets		(17,202	)		(13,050	)		(11,158	)
Amortization of actuarial loss from earlier periods		6,839			8,366			7,937
Net periodic benefit cost	$	9,728		$	16,299		$	17,188

Other changes recognized in other comprehensive income (loss):
Other comprehensive income (loss) attributable to change from prior year		1,792			(10,177	)

Total recognized in net periodic benefit cost and other
comprehensive income (loss)	$	11,520		$	6,122

(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, $8,107 thousand and $0 thousand, respectively.

The weighted average discount rates used to determine net periodic benefit cost for 2018, 2017 and 2016 were 3.62%, 4.16% and 4.38%, respectively. The rate of compensation increase used to determine the net periodic benefit cost for 2018, 2017 and 2016 was 4.00%. The expected long-term rate of return on plan assets was 7.00% for 2018 and was 7.50% for both 2017 and 2016 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 2018, 2017 and 2016 were 4.27%, 3.62% and 4.16%, respectively.

F-54

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

	At December 31,
(Dollars in thousands)	2018		2017
Qualified Plan	$	237,855	$	245,430
Non-qualified Plan		24,472		24,482
Total	$	262,327	$	269,912

(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)	2018		2017
Qualified Plan
Projected benefit obligation	$	275,772	$	291,720
Fair value of plan assets		260,531		210,267
Non-qualified Plan
Projected benefit obligation	$	24,472	$	24,482
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)	2018		2017
Qualified Plan
Accumulated benefit obligation	$	-	$	245,430
Fair value of plan assets		-		210,267
Non-qualified Plan
Accumulated benefit obligation	$	24,472	$	24,482
Fair value of plan assets		-		-

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

(Dollars in thousands)
2019			14,772
2020			13,087
2021			11,137
2022			12,104
2023			12,779
Next 5 years			79,289

Plan assets consist of shares in investment trusts with 59%, 32%, 8% and 1% of the underlying assets consisting of equity securities, fixed maturities, limited partnerships and multi-strategy equity funds and cash, respectively. The Company manages the qualified plan investments for U.S. employees. The assets in the plan consist of debt and equity mutual funds. Due to the long term nature of the plan, the target asset allocation has historically been 70% equities and 30% bonds.

F-55

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 Active		Significant
			Markets for		Other		Significant
			Identical		Observable		Unobservable
			Assets		Inputs		Inputs
(Dollars in thousands)	December 31, 2018		(Level 1)		(Level 2)		(Level 3)
Assets:
Short-term investments, which approximates fair value (a)	$	2,872	$	2,872	$	-	$	-
Mutual funds, fair value
Fixed income (b)		82,633		82,633		-		-
Equities (c)		154,935		154,935		-		-
Total	$	240,440	$	240,440	$	-	$	-

(Some amounts may not reconcile due to rounding.)

(a)	This category includes high quality, short-term money market instruments, which are issued and payable in U.S. dollars.

(b)	This category includes fixed income funds, which invest in investment grade securities of corporations, governments and government agencies with approximately 70% in U.S. securities and 30% in international securities.

(c)	This category includes funds, which invest in small, mid and multi-cap equity securities including common stocks, securities convertible into common stock and securities with common stock characteristics, such as rights and warrants, with approximately 50% in U.S. equities and 50% in international equities.

There were no transfers between Level 1 and Level 2 for the twelve months ended December 31, 2018.

			Fair Value Measurement Using:
			Quoted Prices
			in Active		Significant
			Markets for		Other		Significant
			Identical		Observable		Unobservable
			Assets		Inputs		Inputs
(Dollars in thousands)	December 31, 2017		(Level 1)		(Level 2)		(Level 3)
Assets:
Short-term investments, which approximates fair value (a)	$	1,031	$	1,031	$	-	$	-
Mutual funds, fair value
Fixed income (b)		23,361		23,361		-		-
Equities (c)		159,578		159,578		-		-
Total	$	183,970	$	183,970	$	-	$	-

(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.

In addition, $20,091 thousand and $26,297 thousand of investments which were recorded as part of the qualified plan assets at December 31, 2018 and 2017, respectively, are not included within the fair value hierarchy tables as the assets are valued using the NAV practical expedient guidance within ASU 2015-07.

The Company contributed $77,000 thousand and $10,000 thousand to the qualified pension benefit plan for the years ended December 31, 2018 and 2017, respectively.

F-56

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)		2018				2017				2016
Incurred expenses		$	9,301			$	7,167			$	6,058

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, Zurich 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. In the current year, the contributions as a percentage of salary for the branch offices ranged from 3.4% to 48.4%. 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)		2018				2017				2016
Incurred expenses		$	2,057			$	1,849			$	1,560

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.

A medical cost trend rate of 7.25% in 2018 was assumed to decrease gradually to 4.50% in 2029 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:

	Percentage		Percentage
	Point Increase		Point Decrease
(Dollars in thousands)	($ Impact)		($ Impact)
a. Effect on total service and interest cost components	$	577	$	(436	)
b. Effect on accumulated post-retirement benefit obligation		5,987		(4,643	)

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

		Years Ended December 31,
(Dollars in thousands)		2018				2017				2016
Post-retirement benefit expenses		$	1,829			$	2,814			$	2,293

F-57

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

	At December 31,
(Dollars in thousands)	2018			2017
Change in projected benefit obligation:
Benefit obligation at beginning of year	$	34,717		$	32,071
Service cost		1,312			1,570
Interest cost		999			1,184
Amendments		-			(3,526	)
Actuarial (gain)/loss		(7,985	)		4,038
Benefits paid		(561	)		(619	)
Benefit obligation at end of year		28,483			34,717

Change in plan assets:
Fair value of plan assets at beginning of year		-			-
Employer contributions		561			619
Benefits paid		(561	)		(619	)
Fair value of plan assets at end of year		-			-

Funded status at end of year	$	(28,483	)	$	(34,717	)

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

	At December 31,
(Dollars in thousands)	2018			2017
Other liabilities (due within one year)	$	(608	)	$	(655	)
Other liabilities (due beyond one year)		(27,875	)		(34,062	)
Net amount recognized in the consolidated balance sheets	$	(28,483	)	$	(34,717	)

(Some amounts may not reconcile due to rounding.)

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

	At December 31,
(Dollars in thousands)	2018			2017
Accumulated income (loss)	$	(238	)	$	(8,317	)
Accumulated prior service credit (cost)		3,480			4,057
Accumulated other comprehensive income (loss)	$	3,242		$	(4,260	)

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

	Years Ended December 31,
(Dollars in thousands)	2018			2017
Other comprehensive income (loss) at December 31, prior year	$	(4,260	)	$	(3,809	)
Net gain (loss) arising during period		7,985			(4,038	)
Prior Service credit (cost) arising during period		-			3,526
Recognition of amortizations in net periodic benefit cost:
Actuarial loss (gain)		94			192
Prior service cost		(577	)		(131	)
Other comprehensive income (loss) at December 31, current year	$	3,242		$	(4,260	)

F-58

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

	Years Ended December 31,
(Dollars in thousands)	2018			2017			2016
Service cost	$	1,312		$	1,570		$	1,418
Interest cost		999			1,184			1,007
Prior service credit recognition		(577	)		(131	)		(132	)
Net gain recognition		94			192			-
Net periodic cost	$	1,829		$	2,814		$	2,293

Other changes recognized in other comprehensive income (loss):
Other comprehensive gain (loss) attributable to change from prior year		(7,502	)		451

Total recognized in net periodic benefit cost and
other comprehensive income (loss)	$	(5,673	)	$	3,265

(Some amounts may not reconcile due to rounding.)

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

The weighted average discount rates used to determine net periodic benefit cost for 2018, 2017 and 2016 were 3.62%, 4.16% and 4.38%, respectively.

The weighted average discount rates used to determine the actuarial present value of the projected benefit obligation at year end 2018, 2017 and 2016 were 4.27%, 3.62% and 4.16%, respectively.

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

(Dollars in thousands)
2019	$	608
2020		663
2021		740
2022		852
2023		944
Next 5 years		6,469

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.

F-59

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 statutory capital and surplus of Bermuda Re was $3,061,136 thousand and $3,085,882 thousand at December 31, 2018 and 2017, respectively. The statutory net income of Bermuda Re was $865,225 thousand, $582,128 thousand and $666,155 thousand for the years ended December 31, 2018, 2017 and 2016, 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, 2018, Everest Re has $365,059 thousand available for payment of dividends in 2019 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 $3,650,594 thousand and $3,391,852 thousand at December 31, 2018 and 2017, respectively. The statutory net loss of Everest Re was $1,317,991 thousand and $391,419 thousand for the years ended December 31, 2018 and 2017, respectively. The statutory net income of Everest Re was $523,547 thousand for the year ended December 31, 2016.

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

Capital Restrictions.

In 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)	2018 (3)		2017		2018		2017
Regulatory targeted capital	$	-	$	2,368,620	$	2,172,958	$	2,076,892
Actual capital	$	3,061,136	$	3,085,882	$	3,650,594	$	3,391,852

(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 2018 BSCR calculation is not yet due to be completed; however, the Company anticipates that Bermuda Re's December 31, 2018 actual capital will exceed the targeted capital level.

F-60

COMMITMENTS AND 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)	2018		2017
The Prudential Insurance Company of America	$	142,754	$	144,618
Unaffiliated life insurance company		34,717		34,444

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, 2018, there were 2,476,261 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, 2018, 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, 2018, there were 34,957 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, 2018 there were 336,214 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 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.

F-61

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 $32,369 thousand, $30,297 thousand and $26,398 thousand for the years ended December 31, 2018, 2017 and 2016, respectively. The corresponding income tax benefit recorded in the consolidated statements of operations and comprehensive income (loss) for share-based compensation was $7,401 thousand, $14,824 thousand and $6,898 thousand for the years ended December 31, 2018, 2017 and 2016, respectively. In accordance with ASU 2016-09, the income tax effect resulting from the change in the value of share based compensation awards between grant date and settlement date has been recorded as part of the income tax benefit in the consolidation statements of operations and comprehensive income (loss) effective January 1, 2017. Prior to that date, the income tax impact of the change in value of share based compensation awards between grant date and settlement date was recorded within additional paid in capital in the Consolidated Balance Sheets.

For the year ended December 31, 2018, a total of 173,065 restricted shares were granted on February 21, 2018, May 15, 2018, September 13, 2018, and November 13, 2018, with a fair value of $242.39, $226.95, $218.065 and $215.2175 per share, respectively. Additionally, 13,325 performance share units were awarded on February 21, 2018, with a fair value of $242.39 per unit. No share options were granted during the year ended December 31, 2018. 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.

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, 2018, 2017 and 2016, the Company recognized $403 thousand, $626 thousand and $597 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, 2018, 2017 and 2016, and changes during the year then ended is presented in the following tables:

					Weighted-
			Weighted-		Average
			Average		Remaining		Aggregate
(Aggregate Intrinsic Value in thousands)			Exercise		Contractual		Intrinsic
Options	Shares		Price/Share		Term		Value
Outstanding at January 1, 2018		360,364	$	84.10
Granted		-		-
Exercised		81,200		84.99
Forfeited/Cancelled/Expired		-		-
Outstanding at December 31, 2018		279,164		83.84		1.9	$	37,386

Exercisable at December 31, 2018		279,164		83.84		1.9	$	37,386

F-62

					Weighted-
			Weighted-		Average
			Average		Remaining		Aggregate
(Aggregate Intrinsic Value in thousands)			Exercise		Contractual		Intrinsic
Options	Shares		Price/Share		Term		Value
Outstanding at January 1, 2017		454,994	$	84.88
Granted		-		-
Exercised		94,630		87.84
Forfeited/Cancelled/Expired		-		-
Outstanding at December 31, 2017		360,364		84.10		2.7	$	49,428

Exercisable at December 31, 2017		360,364		84.10		2.7	$	49,428

					Weighted-
			Weighted-		Average
			Average		Remaining		Aggregate
(Aggregate Intrinsic Value in thousands)			Exercise		Contractual		Intrinsic
Options	Shares		Price/Share		Term		Value
Outstanding at January 1, 2016		648,034	$	85.61
Granted		-		-
Exercised		187,940		87.31
Forfeited/Cancelled/Expired		5,100		88.25
Outstanding at December 31, 2016		454,994		84.88		3.7	$	59,843

Exercisable at December 31, 2016		410,694		84.50		3.5	$	54,169

There were no share options granted in 2018, 2017 and 2016. The aggregate intrinsic value (market price less exercise price) of options exercised during the years ended December 31, 2018, 2017 and 2016 was $11,737 thousand, $14,130 thousand and $19,876 thousand, respectively. The cash received from the exercised share options for the year ended December 31, 2018 was $6,902 thousand. The tax benefit realized from the options exercised for the year ended December 31, 2018 was $2,311 thousand.

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

	At December 31, 2018
	Options Outstanding						Options Exercisable
			Weighted-
			Average		Weighted-				Weighted-
	Number		Remaining		Average		Number		Average
Range of	Outstanding		Contractual		Exercise		Exercisable		Exercise
Exercise Prices	at 12/31/18		Life		Price		at 12/31/18		Price
$71.7150 - $78.1700		57,770		0.1	$	71.72		57,770	$	71.72
$78.1800 - $85.6300		51,300		1.1		84.63		51,300		84.63
$85.6400 - $87.4700		73,140		2.2		86.62		73,140		86.62
$87.4800 - $89.4100		91,000		3.1		88.32		91,000		88.32
$89.4200 - $110.1300		5,954		2.5		91.99		5,954		91.99
		279,164		1.9		83.84		279,164		83.84

F-63

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

	Years Ended December 31,
	2018				2017				2016
			Weighted-				Weighted-				Weighted-
			Average				Average				Average
			Grant Date				Grant Date				Grant Date
Restricted (non-vested) Shares	Shares		Fair Value		Shares		Fair Value		Shares		Fair Value
Outstanding at January 1,		421,261	$	194.01		435,338	$	164.21		435,336	$	143.02
Granted		173,065		240.59		160,185		234.01		173,546		186.37
Vested		141,982		178.31		152,397		151.80		145,834		130.54
Forfeited		37,937		212.48		21,865		187.82		27,710		147.32
Outstanding at December 31,		414,407		217.15		421,261		194.01		435,338		164.21

As of December 31, 2018, there was $60,439 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, 2018, 2017 and 2016, was $25,317 thousand, $23,134 thousand and $19,037 thousand, respectively. The tax benefit realized from the shares vested for the year ended December 31, 2018 was $6,267 thousand.

In addition to the 2010 Employee Plan, the 2009 Director Plan and the 2003 Director Plan, Group issued 480 common shares in 2018, 404 common shares in 2017 and 547 common shares in 2016 to the Company’s non-employee directors as compensation for their service as directors. These issuances had aggregate values of approximately $113 thousand, $94 thousand and $103 thousand, respectively.

Since its 1995 initial public offering, the Company has issued to certain key employees of the Company 2,304,122 restricted common shares, of which 318,389 restricted shares have been cancelled. The Company has issued to non-employee directors of the Company 156,317 restricted common shares, of which no restricted shares have been cancelled. The Company acquired 65,974, 60,453 and 70,010 common shares at a cost of $14,202 thousand, $14,240 thousand and $12,111 thousand in 2018, 2017 and 2016, respectively, from employees who chose to pay required withholding taxes and/or the exercise cost on option exercises or restricted share vestings by withholding shares.

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,
	2018					2017				2016
				Weighted-				Weighted-				Weighted-
				Average				Average				Average
				Grant Date				Grant Date				Grant Date
Performance Share Unit Awards	Shares			Fair Value		Shares		Fair Value		Shares		Fair Value
Outstanding at January 1,		33,454		$	-		21,223	$	-		10,705	$	-
Granted		13,325			242.39		11,245		234.03		11,130		186.02
Increase/(Decrease) on vesting units due to performance		(267	)		-		986		-		894		-
Vested		12,435			242.39		-		-		-		-
Forfeited		1,695			-		-		-		1,506		-
Outstanding at December 31,		32,382			-		33,454		-		21,223		-

The Company acquired 5,214 common shares at a cost of $1,264 thousand in 2018 from employees who chose to pay required withholding taxes on performance share unit settlements by withholding shares.

F-64

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 brokers, surplus lines brokers and general agents within the U.S., Canada and Europe.

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

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

For inter-affiliate reinsurance and business written through the Lloyd’s Syndicate, business is generally reported within the segment in which the business was first produced, consistent with how the business is managed.

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-65

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

U.S. Reinsurance	Years Ended December 31,
(Dollars in thousands)	2018			2017		2016
Gross written premiums	$	3,014,338		$	2,592,972	$	2,125,792
Net written premiums		2,642,182			2,245,422		1,970,575

Premiums earned	$	2,528,991		$	2,181,160	$	2,072,155
Incurred losses and LAE		2,784,181			1,632,795		1,068,475
Commission and brokerage		568,374			462,487		465,953
Other underwriting expenses		60,266			55,881		54,107
Underwriting gain (loss)	$	(883,830	)	$	29,997	$	483,620

International	Years Ended December 31,
(Dollars in thousands)	2018		2017			2016
Gross written premiums	$	1,543,946	$	1,316,701		$	1,230,683
Net written premiums		1,458,745		1,229,597			1,082,712

Premiums earned	$	1,439,882	$	1,202,043		$	1,119,121
Incurred losses and LAE		992,704		1,059,640			486,550
Commission and brokerage		364,010		287,688			283,447
Other underwriting expenses		39,042		38,844			35,512
Underwriting gain (loss)	$	44,126	$	(184,129	)	$	313,612

Bermuda	Years Ended December 31,
(Dollars in thousands)	2018		2017		2016
Gross written premiums	$	1,666,317	$	1,205,001	$	890,375
Net written premiums		1,605,526		1,139,082		831,931

Premiums earned	$	1,324,198	$	1,093,250	$	837,964
Incurred losses and LAE		808,717		735,292		461,909
Commission and brokerage		319,197		303,707		233,989
Other underwriting expenses		43,566		38,011		36,331
Underwriting gain (loss)	$	152,718	$	16,240	$	105,735

Insurance	Years Ended December 31,
(Dollars in thousands)	2018		2017			2016
Gross written premiums	$	2,250,552	$	2,059,248		$	1,787,024
Net written premiums		1,707,975		1,630,560			1,385,687

Premiums earned	$	1,638,628	$	1,461,387		$	1,291,226
Incurred losses and LAE		1,065,801		1,094,854			1,122,695
Commission and brokerage		267,449		250,081			205,303
Other underwriting expenses		228,667		186,081			176,772
Underwriting gain (loss)	$	76,711	$	(69,629	)	$	(213,544	)

F-66

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)	2018			2017			2016
Underwriting gain (loss)	$	(610,275	)	$	(207,521	)	$	689,423
Net investment income		581,183			542,898			473,085
Net realized capital gains (losses)		(127,136	)		153,194			(7,216	)
Net derivative gain (loss)		520			9,581			18,647
Corporate expenses		(30,672	)		(25,923	)		(27,231	)
Interest, fee and bond issue cost amortization expense		(31,031	)		(31,603	)		(36,228	)
Other income (expense)		(9,060	)		(35,442	)		(10,636	)
Income (loss) before taxes	$	(226,471	)	$	405,184		$	1,099,844

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)		2018				2017				2016
United Kingdom		$	914,612			$	730,826			$	688,598

Approximately 19.7%, 20.4% and 19.4% of the Company’s gross written premiums in 2018, 2017 and 2016, respectively, were sourced through the Company’s largest intermediary.

DISPOSITIONS

On August 24, 2016, the Company sold Heartland, its crop Managing General Agent to CGB for $49,000 thousand. The sale agreement includes a provision for a long term strategic reinsurance relationship with CGB. The Company has recognized an after-tax loss on the sale of Heartland of $12,942 thousand. Under the terms of the reinsurance arrangement, there has not been a material fluctuation in the level of crop business, although it has been reflected as reinsurance rather than insurance.

SUBSEQUENT EVENTS

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

F-67

UNAUDITED QUARTERLY FINANCIAL DATA

Summarized quarterly financial data for the periods indicated:

	2018
(Dollars in thousands, except per share amounts)	1st Quarter			2nd Quarter		3rd Quarter		4th Quarter

Operating data:
Gross written premiums	$	1,931,607		$	2,066,521	$	2,198,664	$	2,278,361
Net written premiums		1,672,206			1,746,378		1,938,773		2,057,071

Premiums earned		1,619,427			1,729,818		1,731,479		1,850,975
Net investment income		138,294			141,322		161,363		140,204
Net realized capital gains (losses)		(24,901	)		15,776		54,804		(172,815	)
Total claims and underwriting expenses		1,511,100			1,817,815		1,731,201		2,481,858
Net income (loss)		210,318			69,895		205,613		(382,274	)

Earnings per common share attributable to Everest Re Group:
Basic	$	5.14		$	1.71	$	5.04	$	(9.50	)
Diluted	$	5.11		$	1.70	$	5.02	$	(9.50	)

	2017
(Dollars in thousands, except per share amounts)	1st Quarter		2nd Quarter		3rd Quarter			4th Quarter

Operating data:
Gross written premiums	$	1,600,944	$	1,601,649	$	2,044,902		$	1,926,427
Net written premiums		1,413,814		1,339,133		1,798,089			1,693,625

Premiums earned		1,312,097		1,369,681		1,598,875			1,657,187
Net investment income		122,289		134,508		136,973			149,128
Net realized capital gains (losses)		52,728		25,268		41,535			33,663
Total claims and underwriting expenses		1,128,944		1,240,100		2,616,340			1,159,977
Net income (loss)		291,643		245,674		(639,374	)		571,025

Earnings per common share attributable to Everest Re Group:
Basic	$	7.12	$	5.98	$	(15.73	)	$	13.92
Diluted	$	7.07	$	5.95	$	(15.73	)	$	13.85

F-68

SCHEDULE I — SUMMARY OF INVESTMENTS —
OTHER THAN INVESTMENTS IN RELATED PARTIES
December 31, 2018

Column A	Column B		Column C		Column D
					Amount
					Shown in
			Market		Balance
(Dollars in thousands)	Cost		Value		Sheet
Fixed maturities-available for sale
Bonds:
U.S. government and government agencies	$	2,629,454	$	2,631,134	$	2,631,134
State, municipalities and political subdivisions		490,018		500,094		500,094
Foreign government securities		1,335,328		1,314,165		1,314,165
Foreign corporate securities		2,694,922		2,661,058		2,661,058
Public utilities		287,784		283,903		283,903
All other corporate bonds		5,792,179		5,698,522		5,698,522
Mortgage - backed securities:
Commercial		329,883		326,710		326,710
Agency residential		1,832,760		1,796,264		1,796,264
Non-agency residential		10,198		10,209		10,209
Redeemable preferred stock		4,046		3,204		3,204
Total fixed maturities-available for sale		15,406,572		15,225,263		15,225,263
Fixed maturities - available for sale at fair value		2,337		2,337		2,337
Equity securities - at fair value (1)		766,102		716,639		716,639
Short-term investments		241,010		240,987		240,987
Other invested assets		1,591,745		1,591,745		1,591,745
Cash		656,095		656,095		656,095

Total investments and cash	$	18,663,861	$	18,433,066	$	18,433,066

(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)	2018			2017

ASSETS:
Fixed maturities - available for sale, at market value	$	76,170		$	100,697
(amortized cost: 2018, $76,274; 2017, $100,703)
Other invested assets (cost: 2018, $91; 2017, $102,559)		91			102,559
Cash		198			3,275
Investment in subsidiaries, at equity in the underlying net assets		7,776,940			8,356,791
Accrued investment income		277			394
Receivable from subsidiaries		6,726			7,361
Other assets		44,737			49,829
TOTAL ASSETS	$	7,905,139		$	8,620,906

LIABILITIES:
Long term note payable - Affiliated	$	-		$	250,000
Due to subsidiaries		1,065			1,017
Other liabilities		270			657
Total liabilities		1,335			251,674

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;
(2018) 69,202 and (2017) 69,044 issued outstanding before treasury shares		692			691
Additional paid-in capital		2,188,777			2,165,768
Accumulated other comprehensive income (loss), net of deferred income
tax expense (benefit) of ($20,697) at 2018 and $9,356 at 2017		(462,557	)		(160,891	)
Treasury shares, at cost; 28,551 shares (2018) and 28,208 shares (2017)		(3,397,548	)		(3,322,244	)
Retained earnings		9,574,440			9,685,908
Total shareholders' equity		7,903,804			8,369,232
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY	$	7,905,139		$	8,620,906

See notes to consolidated financial statements.

S-2

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


	Years Ended December 31,
	2018			2017			2016
(Dollars in thousands)
REVENUES:
Net investment income	$	3,790		$	1,344		$	879
Net realized capital gains (losses)		(57	)		80			144
Other income (expense)		(5,298	)		(6,873	)		5,022
Net income (loss) of subsidiaries		127,369			495,496			1,012,315
Total revenues		125,804			490,048			1,018,360

EXPENSES:
Interest expense - affiliated		4,085			4,300			4,300
Other expenses		18,167			16,780			17,716
Total expenses		22,252			21,080			22,016

INCOME (LOSS) BEFORE TAXES		103,552			468,968			996,344
Income tax expense (benefit)		-			-			-

NET INCOME (LOSS)	$	103,552		$	468,968		$	996,344

Other comprehensive income (loss), net of tax:
Unrealized appreciation (depreciation) ("URA(D)") on securities arising during the period		(255,656	)		(64,348	)		57,629
Reclassification adjustment for realized losses (gains) included in net income (loss)		27,496			(6,950	)		15,118
Total URA(D) on securities arising during the period		(228,160	)		(71,298	)		72,747

Foreign currency translation adjustments		(76,816	)		121,917			(55,341	)

Benefit plan actuarial net gain (loss) for the period		(510	)		1,027			(7,488	)
Reclassification adjustment for amortization of net (gain) loss included in net income (loss)		5,021			5,477			5,073
Total benefit plan net gain (loss) for the period		4,511			6,504			(2,415	)
Total other comprehensive income (loss), net of tax		(300,465	)		57,123			14,991

COMPREHENSIVE INCOME (LOSS)	$	(196,913	)	$	526,091		$	1,011,335

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)	2018			2017			2016
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss)	$	103,552		$	468,968		$	996,344
Adjustments to reconcile net income to net cash provided by operating activities:
Equity in retained (earnings) deficit of subsidiaries		(127,369	)		(495,496	)		(1,012,315	)
Dividends received from Bermuda Re		750,000			400,000			650,000
Dividends received from Everest International		200,000			-			40,000
Dividends received from Mt. Logan Re		-			25,000			-
Change in other assets and liabilities, net		4,823			6,107			66
Increase (decrease) in due to/from affiliates		683			(6,470	)		(206	)
Amortization of bond premium (accrual of bond discount)		(577	)		12			(56	)
Realized capital losses (gains)		57			(80	)		(144	)
Non-cash compensation expense		2,740			3,448			2,311
Net cash provided by (used in) operating activities		933,909			401,489			676,000

CASH FLOWS FROM INVESTING ACTIVITIES:
Additional investment in subsidiaries		(542,965	)		(109,815	)		(77,324	)
Proceeds from fixed maturities matured/called - available for sale, at market value		93			696			1,152
Proceeds from fixed maturities sold - available for sale, at market value		24,856			90,154			75,025
Distribution from other invested assets		1,026,297			546,414			757,399
Cost of fixed maturities acquired - available for sale, at market value		-			(189,308	)		-
Cost of other invested assets acquired		(923,828	)		(503,937	)		(902,435	)
Net change in short-term investments		-			-			18,288
Net cash provided by (used in) investing activities		(415,547	)		(165,796	)		(127,895	)

CASH FLOWS FROM FINANCING ACTIVITIES:
Common shares issued during the period, net		20,086			22,790			34,861
Purchase of treasury shares		(75,304	)		(50,000	)		(386,288	)
Dividends paid to shareholders		(216,221	)		(207,242	)		(195,384	)
Cost of repayment of long term note - affiliated		(250,000	)		-			-
Net cash provided by (used in) financing activities		(521,439	)		(234,452	)		(546,811	)

EFFECT OF EXCHANGE RATE CHANGES ON CASH		-			-			-

Net increase (decrease) in cash		(3,077	)		1,241			1,294
Cash, beginning of period		3,275			2,034			740
Cash, end of period	$	198		$	3,275		$	2,034

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 was scheduled to mature on December 31, 2023 but was repaid in December 2018. As of December 31, 2017, this transaction was presented as a Long Term Note Payable – Affiliated in the Condensed Balance Sheets of Everest Re Group, Ltd.

3.)

Everest Re Group, Ltd. has invested funds in the segregated accounts of Mt. Logan Re, Ltd. (“Mt. Logan Re”), an affiliated entity. On the Condensed Balance Sheets, investments in Mt. Logan Re valued at $45,625 thousand and $50,373 thousand as of December 31, 2018 and 2017, respectively, have been recorded within Other Assets. On the Condensed Statements of Operations, expense of $4,695 thousand, expense of $6,352 thousand and income of $5,536 thousand for the years ended December 31, 2018, 2017 and 2016, respectively, have been recorded in other income (expense).

S-5

SCHEDULE III — SUPPLEMENTARY INSURANCE INFORMATION



Column A	Column B		Column C		Column D		Column E		Column F		Column G		Column H		Column I		Column J
			Reserve								Incurred
Geographic Area			for Losses								Loss and		Amortization
	Deferred		and Loss		Unearned				Net		Loss		of Deferred		Other		Net
	Acquisition		Adjustment		Premium		Premiums		Investment		Adjustment		Acquisition		Operating		Written
(Dollars in thousands)	Costs		Expenses		Reserves		Earned		Income		Expenses		Costs		Expenses		Premium
December 31, 2018
Domestic	$	334,818	$	8,154,003	$	1,695,208	$	4,167,619	$	287,002	$	3,849,982	$	835,823	$	288,933	$	4,350,157
International		54,253		2,209,202		261,611		1,439,882		34,965		992,704		364,010		39,042		1,458,745
Bermuda		122,502		2,755,885		560,793		1,324,198		259,216		808,717		319,197		43,566		1,605,526
Total	$	511,573	$	13,119,090	$	2,517,612	$	6,931,699	$	581,183	$	5,651,403	$	1,519,030	$	371,541	$	7,414,428

December 31, 2017
Domestic	$	289,636	$	7,254,043	$	1,460,291	$	3,642,547	$	259,621	$	2,727,649	$	712,568	$	241,962	$	3,875,982
International		53,186		2,175,500		253,626		1,202,043		32,407		1,059,640		287,688		38,844		1,229,597
Bermuda		68,765		2,454,778		286,639		1,093,250		250,870		735,292		303,707		38,011		1,139,082
Total	$	411,587	$	11,884,321	$	2,000,556	$	5,937,840	$	542,898	$	4,522,581	$	1,303,963	$	318,817	$	6,244,661

December 31, 2016
Domestic	$	220,864	$	6,604,867	$	1,110,528	$	3,363,381	$	234,123	$	2,191,170	$	671,256	$	230,879	$	3,356,262
International		52,014		1,748,380		237,120		1,119,121		33,059		486,550		283,447		35,512		1,082,712
Bermuda		71,174		1,959,065		229,898		837,964		205,902		461,909		233,989		36,331		831,931
Total	$	344,052	$	10,312,313	$	1,577,546	$	5,320,466	$	473,085	$	3,139,629	$	1,188,692	$	302,722	$	5,270,905

(Some amounts may not reconcile due to rounding.)

S-6

SCHEDULE IV — REINSURANCE


Column A	Column B		Column C		Column D		Column E		Column F
			Ceded to		Assumed
	Gross		Other		from Other		Net		Assumed
(Dollars in thousands)	Amount		Companies		Companies		Amount		to Net

December 31, 2018
Total property and liability insurance
premiums earned	$	2,129,320	$	1,004,953	$	5,807,332	$	6,931,699		83.8	%

December 31, 2017
Total property and liability insurance
premiums earned	$	1,825,705	$	833,387	$	4,945,522	$	5,937,840		83.3	%

December 31, 2016
Total property and liability insurance
premiums earned	$	1,694,702	$	736,180	$	4,361,944	$	5,320,466		82.0	%

S-7

Previous: Item 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES