Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATION

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Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATION

Industry Conditions.

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

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

Worldwide insurance and reinsurance market conditions historically have been competitive. Generally, there was ample insurance and reinsurance capacity relative to demand, as well as, additional capital from the capital markets through insurance linked financial instruments. These financial instruments such as side cars, catastrophe bonds and collateralized reinsurance funds, provided capital markets with access to insurance and reinsurance risk exposure. The capital markets demand for these products was being primarily driven by a low interest environment and the desire to achieve greater risk diversification and potentially higher returns on their investments. This increased competition was generally having a negative impact on rates, terms and conditions; however, the impact varies widely by market and coverage.

The industry continues to deal with the impacts of a global pandemic, COVID-19 and its subsequent variants. Globally, many countries mandated that their citizens remain at home and many non-essential businesses have continued to be physically closed. We activated our operational resiliency plan across our global footprint and all of our critical operations are functioning effectively from remote locations. We continue to service and meet the needs of our clients while ensuring the safety and health of our employees and customers.

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

Prior to the pandemic, there was a growing industry consensus that there was some firming of (re)insurance rates for the areas impacted by the recent catastrophes. The increased frequency of catastrophe losses in 2020 and 2021 appears to be further pressuring the increase of rates. As business activity continues to regain strength, rates also appear to be firming in most lines of business, particularly in the casualty lines that had seen significant losses such as excess casualty and directors’ and officers’ liability. Other casualty lines are experiencing modest rate increase, while some lines such as workers’ compensation were experiencing softer market conditions. It is too early to tell what will be the impact on pricing conditions but it is likely to change depending on the line of business and geography.

While we are unable to predict the full impact the pandemic will have on the insurance industry as it continues to have a negative impact on the global economy, we are well positioned to continue to service our clients. Our capital position remains a source of strength, with high quality invested assets, significant liquidity and a low operating expense ratio. Our diversified global platform with its broad mix of products, distribution and geography is resilient.

Financial Summary.

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

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

REVENUES:
Premiums earned	$	2,656.4		$	2,205.8		20.4	%	$	7,602.6		$	6,285.0		21.0	%
Net investment income		292.8			234.2		25.0			960.3			420.1		128.6
Net realized capital gains (losses)		(4.2)			110.2		-103.8	%		138.8			84.3		64.7
Other income (expense)		(19.5)			59.9		-132.6	%		44.2			47.3		-6.5
Total revenues		2,925.4			2,610.2		12.1	%		8,745.9			6,836.7		27.4	%

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

INCOME (LOSS) BEFORE TAXES		(87.7)			272.5		-132.2	%		1,045.6			466.0		124.4
Income tax expense (benefit)		(14.3)			29.5		-148.4	%		97.2			15.4		NM	%
NET INCOME (LOSS)	$	(73.5)		$	243.1		-130.2		$	948.4		$	450.5		110.5

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

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

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

Revenues.

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

Net written premiums increased by 23.6% to $3,025.8 million for the three months ended September 30, 2021, compared to $2,448.7 million for the three months ended September 30, 2020. Net written premiums increased by 25.8% to $8,389.1 million for the nine months ended September 30, 2021, compared to $6,667.6 million for the nine months ended September 30, 2020. These increases are consistent with the changes in gross written premiums. Premiums earned increased by 20.4% to $2,656.4 million for the three months ended September 30, 2021, compared to $2,205.8 million for the three months ended September 30, 2020. Premiums earned increased by 21.0% to $7,602.6 million for the nine months ended September 30, 2021, compared to $6,285.0 million for the nine months ended September 30, 2020. The changes in premiums earned relative to net written premiums are the result of timing; premiums are earned ratably over the coverage period whereas written premiums are recorded at the initiation of the coverage period.

Net Investment Income. Net investment income increased to $292.8 million for the three months ended September 30, 2021, compared with investment income of $234.2 million for the three months ended September 30, 2020 and increased to $960.3 million for the nine months ended September 30, 2021, compared to $420.1 million for the nine months ended September 30, 2020. Net pre-tax investment income, as a percentage of average invested assets, was 4.4% for the three months ended September 30, 2021 and 2020. Net pre-tax investment income, as a percentage of average invested assets, was 5.0% for the nine months ended September 30, 2021 compared to 2.7% for the nine months ended September 30, 2020. The increases in both income and yield were primarily the result of a significant increase in limited partnership income and higher income from other alternative investments. The limited partnership income primarily reflects increases in their reported net asset values. As such, until these asset values are monetized and the resultant income is distributed, they are subject to future increases or decreases in the asset value, and the results may be volatile.

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

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

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

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

Claims and Expenses.

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

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

2020
Attritional	$	1,427.5	64.8	%	$	(1.3)	-0.1	%	$	1,426.2	64.7	%
Catastrophes		310.0	14.0	%		-	-	%		310.0	14.0	%
Total	$	1,737.5	78.8	%	$	(1.3)	-0.1	%	$	1,736.2	78.7	%

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

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

2020
Attritional	$	4,217.6	67.1	%	$	1.4	0.1	%	$	4,219.1	67.2	%
Catastrophes		355.0	5.6	%		-	-	%		355.0	5.6	%
Total	$	4,572.6	72.7	%	$	1.4	0.1	%	$	4,574.1	72.8	%

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

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

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

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

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

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

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

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

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

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

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

Net Income (Loss).

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

Ratios.

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

Shareholders’ Equity.

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

Consolidated Investment Results

Net Investment Income.

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

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

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

(Some amounts may not reconcile due to rounding.)

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

Net Realized Capital Gains (Losses).

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

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

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

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

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

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

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

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

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

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

(Some amounts may not reconcile due to rounding.)

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

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

Segment Results.

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

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

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

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

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

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

Reinsurance.

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

	Three Months Ended September 30,										Nine Months Ended September 30,
(Dollars in millions)	2021			2020			Variance		% Change		2021			2020			Variance		% Change
Gross written premiums	$	2,488.3		$	2,087.0		$	401.3	19.2	%	$	6,695.6		$	5,403.1		$	1,292.5	23.9	%
Net written premiums		2,293.0			1,936.9			356.1	18.4	%		6,265.8			4,974.0			1,291.8	26.0	%

Premiums earned	$	1,976.5		$	1,669.3		$	307.2	18.4	%	$	5,674.7		$	4,656.7		$	1,018.0	21.9	%
Incurred losses and LAE		1,766.2			1,335.0			431.2	32.3	%		4,206.2			3,361.4			844.8	25.1	%
Commission and brokerage		471.1			373.3			97.8	26.2	%		1,353.1			1,130.9			222.2	19.6	%
Other underwriting expenses		45.3			51.3			(6.0)	-11.7	%		144.4			135.2			9.2	6.8	%
Underwriting gain (loss)	$	(306.2)		$	(90.4)		$	(215.8)	-238.8	%	$	(29.0)		$	29.3		$	(58.3)	-199.2	%

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Insurance.

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

	Three Months Ended September 30,										Nine Months Ended September 30,
(Dollars in millions)	2021			2020			Variance		% Change		2021			2020			Variance		% Change
Gross written premiums	$	1,009.3		$	704.6		$	304.7	43.2	%	$	2,923.6		$	2,328.7		$	594.9	25.5	%
Net written premiums		732.8			511.8			221.0	43.2	%		2,123.3			1,693.6			429.7	25.4	%

Premiums earned	$	679.9		$	536.6		$	143.3	26.7	%	$	1,927.9		$	1,628.3		$	299.6	18.4	%
Incurred losses and LAE		508.1			401.2			106.9	26.7	%		1,365.6			1,212.7			152.9	12.6	%
Commission and brokerage		93.3			72.1			21.2	29.4	%		258.0			229.2			28.8	12.6	%
Other underwriting expenses		95.8			87.5			8.3	9.4	%		279.8			250.7			29.1	11.6	%
Underwriting gain (loss)	$	(17.2)		$	(24.2)		$	6.9	29.0	%	$	24.5		$	(64.3)		$	88.8	138.0	%

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

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

Premiums. Gross written premiums increased by 43.2% to $1,009.3 million for the three months ended September 30, 2021 compared to $704.6 million for the three months ended September 30, 2020. This rise was primarily related to increases in specialty casualty business, professional liability business and short-tail business, including property. Net written premiums increased by 43.2% to $732.8 million for the three months ended September 30, 2021 compared to $511.8 million for the three months ended September 30, 2020, which is consistent with the change in gross written premiums. Premiums earned increased 26.7% to $679.9 million for the three months ended September 30, 2021 compared to $536.6 million for the three months ended September 30, 2020. The change in premiums earned relative to net written premiums is the result of timing; premiums are earned ratably over the coverage period whereas written premiums are recorded at the initiation of the coverage period.

Gross written premiums increased by 25.5% to $2,923.6 million for the nine months ended September 30, 2021 compared to $2,328.7 million for the nine months ended September 30, 2020. This rise was related to increases in specialty casualty business, professional liability business and short-tail business, including property, partially offset by a decline in workers’ compensation business. Net written premiums increased by 25.4% to $2,123.3 million for the nine months ended September 30, 2021 compared to $1,693.6 million for the nine months ended September 30, 2020, which is consistent with the change in gross written premiums. Premiums earned increased by 18.4% to $1,927.9 million for the nine months ended September 30, 2021 compared to $1,628.3 million for the nine months ended September 30, 2020. The change in premiums earned relative to net written premiums is the result of timing; premiums are earned ratably over the coverage period whereas written premiums are recorded at the initiation of the coverage period.

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

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

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

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

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

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

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

(Some amounts may not reconcile due to rounding.)

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

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

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

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

FINANCIAL CONDITION

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

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

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

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

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

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

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

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

(Some amounts may not reconcile due to rounding.)

	At	At
	September 30, 2021	December 31, 2020
Fixed income portfolio duration (years)	3.3	3.6
Fixed income composite credit quality	A1	Aa3

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

	Nine Months Ended		Twelve Months Ended
	September 30, 2021		December 31, 2020
Fixed income portfolio total return	0.5	%	6.3	%
Barclay's Capital - U.S. aggregate index	(1.6)	%	7.5	%

Common equity portfolio total return	11.6	%	26.7	%
S&P 500 index	15.9	%	18.4	%

Other invested asset portfolio total return	33.8	%	8.3	%

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

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

Reinsurance Recoverables.

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

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

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

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

(Some amounts may not reconcile due to rounding.)

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

(Some amounts may not reconcile due to rounding.)

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

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

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

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

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

(Some amounts may not reconcile due to rounding.)

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

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

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

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

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

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

LIQUIDITY AND CAPITAL RESOURCES

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

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

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

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

	Bermuda Re (1)				Everest Re (2)
	At December 31,				At December 31,
(Dollars in millions)	2020		2019		2020		2019
Regulatory targeted capital	$	1,923.2	$	2,061.1	$	2,489.8	$	2,001.2
Actual capital	$	2,930.3	$	3,197.4	$	5,276.0	$	3,739.1

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Market Sensitive Instruments.

The SEC’s Financial Reporting Release #48 requires registrants to clarify and expand upon the existing financial statement disclosure requirements for derivative financial instruments, derivative commodity instruments and other financial instruments (collectively, “market sensitive instruments”). We do not generally enter into market sensitive instruments for trading purposes.

Our current investment strategy seeks to maximize after-tax income through a high quality, diversified, fixed maturity portfolio, while maintaining an adequate level of liquidity. Our mix of investments is adjusted periodically, consistent with our current and projected operating results and market conditions. The fixed maturity securities in the investment portfolio are comprised of non-trading available for sale securities. Additionally, we have invested in equity securities.

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

Interest Rate Risk. Our $27.8 billion investment portfolio, at September 30, 2021, is principally comprised of fixed maturity securities, which are generally subject to interest rate risk and some foreign currency exchange rate risk, and some equity securities, which are subject to price fluctuations and some foreign exchange rate risk. The overall economic impact of the foreign exchange risks on the investment portfolio is partially mitigated by changes in the dollar value of foreign currency denominated liabilities and their associated income statement impact.

Interest rate risk is the potential change in value of the fixed maturity securities portfolio, including short-term investments, from a change in market interest rates. In a declining interest rate environment, it includes prepayment risk on the $3,341.2 million of mortgage-backed securities in the $21,623.1 million fixed maturity

portfolio. Prepayment risk results from potential accelerated principal payments that shorten the average life and thus the expected yield of the security.

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

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

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

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

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

	Impact of Percentage Change in Equity Fair/Market Values
	At September 30, 2021
(Dollars in millions)	-20%		-10%		0%		10%		20%
Fair/Market Value of the Equity Portfolio	$	1,218.9	$	1,371.2	$	1,523.6	$	1,676.0	$	1,828.3
After-tax Change in Fair/Market Value	$	(241.2)	$	(120.6)	$	-	$	120.6	$	241.2

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

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

Safe Harbor Disclosure.

This report contains forward-looking statements within the meaning of the U.S. federal securities laws. We intend these forward-looking statements to be covered by the safe harbor provisions for forward-looking statements in the federal securities laws. In some cases, these statements can be identified by the use of forward-looking words such as “may”, “will”, “should”, “could”, “anticipate”, “estimate”, “expect”, “plan”, “believe”, “predict”, “potential” and “intend”. Forward-looking statements contained in this report include information regarding our reserves for losses and LAE, the CARES Act, the impact of the Tax Cut and Jobs Act, the adequacy of capital in relation to regulatory required capital, the adequacy of our provision for uncollectible balances, estimates of our catastrophe exposure, the effects of catastrophic and pandemic events on our financial statements, the ability of Everest Re, Holdings, Holdings Ireland, Dublin Holdings, Bermuda Re and Everest International to pay dividends and the settlement costs of our specialized equity index put option contracts. Forward-looking statements only reflect our expectations and are not guarantees of performance. These statements involve risks, uncertainties and assumptions. Actual events or results may differ materially from our expectations. Important factors that could cause our actual events or results to be materially different from our expectations include those discussed under the caption ITEM 1A, “Risk Factors” in the Company’s most recent 10-K filing. We undertake no obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise.

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