Everest Group 10-Q 2022-06-30

Cover and table of contents

UNITED STATES

SECURITIES AND EXCHANGE

COMMISSION

Washington, D.C.

20549

FORM

10-Q

_

X

_

Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the quarterly period ended

June 30, 2022

Transition Report Pursuant

to Section 13 or 15(d) of the Securities Exchange Act of 1934

Commission file number

1-15731

EVEREST RE GROUP, LTD.

(Exact name of registrant as specified in its charter)

Bermuda

98-0365432

(State or other jurisdiction of

incorporation or organization)

(I.R.S. Employer

Identification No.)

Seon Place – 4th Floor

141 Front Street

PO Box HM 845

Hamilton

HM 19

,

Bermuda

-

295-0006

(Address, including zip code, and telephone number, including area code,

of registrant’s principal executive office)

Indicate

by

check

mark

whether

the

registrant:

(1)

has

filed

all

reports

required

to

be

filed

by

Section

or

15(d)

of

the

Securities

Exchange Act

of 1934

during the

preceding 12

months (or

for such

shorter period

that the

registrant

was required

to file

such reports),

and (2) has been subject to such filing requirements for the past 90 days.

Yes

X

No

Indicate by check mark

whether the registrant

has submitted electronically

every Interactive Data

File required to be

submitted pursuant

to Rule 405 of

Regulation S-T during the

preceding 12 months (or

for such shorter period

that the registrant

was required to

submit such

files).

Yes

X

No

Indicate by check mark

whether the registrant

is a large accelerated

filer, an

accelerated filer,

a non-accelerated filer,

a smaller reporting

company

or

an

emerging

growth

company.

See

the

definitions

of

“large

accelerated

filer,”

“accelerated

filer,”

“smaller

reporting

company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large Accelerated Filer

X

Accelerated filer

Non-accelerated filer

Smaller reporting company

Emerging growth company

Indicate by

check mark

if the

registrant

is an

emerging growth

company

and has

elected not

to use

the extended

transition period

for

complying with any new or revised financial accounting standards provided

pursuant to Section 13(a) of the Exchange act.

YES

NO

X

Indicate by check mark whether the registrant is a shell company (as defined in

Rule 12b-2 of the Exchange Act).

YES

NO

X

Securities registered pursuant to Section 12(b) of the Act:

Class

Trading Symbol

Name of Exchange where

Registered

Number of Shares Outstanding

At August 1, 2022

Common Shares, $0.01 par value

RE

New York Stock Exchange

39,410,456

EVEREST RE GROUP,

LTD

Table of Contents

Form 10-Q

Page

PART I

FINANCIAL INFORMATION

Item 1.

Financial Statements

Consolidated Balance Sheets as of June 30, 2022 (unaudited)

and December 31, 2021

Consolidated Statements of Operations and Comprehensive Income (Loss) for the

three and six months ended June 30, 2022 and 2021 (unaudited)

Consolidated Statements of Changes in Shareholders’ Equity for the three and six

months ended June 30, 2022 and 2021 (unaudited)

Consolidated Statements of Cash Flows for the six months ended

June 30, 2022 and 2021 (unaudited)

Notes to Consolidated Interim Financial Statements (unaudited)

Item 2.

Management’s Discussion and Analysis of Financial Condition and

Results of Operation

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

Item 4.

Controls and Procedures

PART II

OTHER INFORMATION

Item 1.

Legal Proceedings

Item 1A.

Risk Factors

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

Item 3.

Defaults Upon Senior Securities

Item 4.

Mine Safety Disclosures

Item 5. [Other Information](a26123)

Other Information

Item 6. [Exhibits](a26135)

Exhibits

EVEREST RE GROUP,

LTD.

CONSOLIDATED

BALANCE SHEETS

June 30,

December 31,

(Dollars and share amounts in thousands, except par value per share)

2022

2021

(unaudited)

ASSETS:

Fixed maturities - available for sale, at fair value

$

21,880,443

$

22,308,272

(amortized cost: 2022, $

23,408,417

; 2021, $

22,063,592

, credit allowances: 2022, $

(

42,714

)

; 2021, $

(

29,738

)

Fixed maturities - held to maturity, at amortized cost, net of credit allowances

(fair value: 2022, $

71,245

, credit allowances: 2022, $

(

)

71,390

-

Equity securities, at fair value

1,299,221

1,825,908

Short-term investments (cost: 2022, $

300,854

; 2021, $

1,178,386

)

300,840

1,178,337

Other invested assets

3,055,356

2,919,965

Cash

2,116,049

1,440,861

Total investments and cash

28,723,299

29,673,343

Accrued investment income

178,123

149,105

Premiums receivable

3,406,564

3,293,598

Reinsurance recoverables

2,096,968

2,053,354

Funds held by reinsureds

909,454

868,601

Deferred acquisition costs

836,496

872,289

Prepaid reinsurance premiums

562,550

515,445

Income taxes

336,646

2,381

Other assets

857,550

757,167

TOTAL

ASSETS

$

37,907,650

$

38,185,283

LIABILITIES:

Reserve for losses and loss adjustment expenses

$

19,993,054

$

19,009,486

Future policy benefit reserve

33,580

35,669

Unearned premium reserve

4,681,010

4,609,634

Funds held under reinsurance treaties

12,658

18,391

Other net payable to reinsurers

492,556

449,723

Losses in course of payment

79,549

260,684

Senior notes

2,346,495

2,345,800

Long term notes

223,824

223,774

Borrowings from FHLB

519,000

Accrued interest on debt and borrowings

16,664

17,348

Unsettled securities payable

66,150

16,698

Other liabilities

590,244

539,896

Total liabilities

29,054,784

28,046,103

Commitments and contingencies (Note 7)

(nil)

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; (2022)

69,947

and (2021)

69,790

outstanding before treasury shares

Additional paid-in capital

2,283,513

2,274,431

Accumulated other comprehensive income (loss), net of deferred income

tax expense (benefit) of $

(208,066)

at 2022 and $

26,781

at 2021

(1,576,854)

11,523

Treasury shares, at cost;

30,529

shares (2022) and

30,524

shares (2021)

(3,848,630)

(3,847,308)

Retained earnings

11,994,137

11,699,836

Total shareholders' equity

8,852,866

10,139,180

TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY

$

37,907,650

$

38,185,283

The accompanying notes are an integral part of the consolidated

financial statements.

EVEREST RE GROUP,

LTD.

CONSOLIDATED

STATEMENTS

OF OPERATIONS

AND COMPREHENSIVE INCOME (LOSS)

Three Months Ended

Six Months Ended

June 30,

(Dollars in thousands, except per share amounts)

2022

2021

2022

2021

(unaudited)

REVENUES:

Premiums earned

$

2,916,237

$

2,558,372

$

5,708,003

$

4,946,237

Net investment income

225,978

407,095

468,808

667,508

Net gains (losses) on investments:

Credit allowances on fixed maturity securities

(1,490)

(15,927)

(13,343)

(22,904)

Gains (losses) from fair value adjustments

(188,924)

103,525

(325,784)

132,581

Net realized gains (losses) from

dispositions

(45,851)

16,511

(50,765)

33,334

Total net gains

(losses) on investments

(236,265)

104,109

(389,892)

143,011

Other income (expense)

(71,337)

7,114

(55,977)

63,707

Total revenues

2,834,613

3,076,690

5,730,942

5,820,463

CLAIMS AND EXPENSES:

Incurred losses and loss adjustment expenses

1,876,247

1,586,141

3,666,110

3,297,560

Commission, brokerage, taxes

and fees

630,294

557,749

1,235,523

1,046,760

Other underwriting expenses

169,533

140,844

330,826

283,075

Corporate expenses

15,018

16,168

29,038

28,546

Interest, fees and bond issue

cost amortization expense

24,398

15,607

48,476

31,246

Total claims and expenses

2,715,490

2,316,509

5,309,973

4,687,187

INCOME (LOSS) BEFORE TAXES

119,123

760,181

420,969

1,133,276

Income tax expense (benefit)

(3,507)

80,199

111,432

NET INCOME (LOSS)

$

122,630

$

679,982

$

420,381

$

1,021,844

Other comprehensive income (loss), net

of tax:

Unrealized appreciation (depreciation)

("URA(D)") on securities arising during the period

(732,364)

84,171

(1,547,540)

(204,444)

Reclassification adjustment for

realized losses (gains) included

in net income (loss)

15,841

1,590

20,019

(2,076)

Total URA(D) on

securities arising during the period

(716,523)

85,761

(1,527,521)

(206,520)

Foreign currency translation adjustments

(28,269)

34,295

(62,371)

24,713

Reclassification adjustment for

amortization of net (gain) loss included

in net income (loss)

2,043

1,515

4,086

Total benefit plan

net gain (loss) for the period

2,043

1,515

4,086

Total other comprehensive

income (loss), net of tax

(744,034)

122,099

(1,588,377)

(177,721)

COMPREHENSIVE INCOME (LOSS)

$

(621,404)

$

802,081

$

(1,167,996)

$

844,123

EARNINGS PER COMMON SHARE:

Basic

$

3.11

$

16.97

$

10.67

$

25.50

Diluted

3.11

16.95

10.67

25.47

The accompanying notes are an integral part of the consolidated

financial statements.

EVEREST RE GROUP,

LTD.

CONSOLIDATED

STATEMENTS

OF

CHANGES IN SHAREHOLDERS’ EQUITY

Three Months Ended

Six Months Ended

June 30,

(Dollars in thousands, except share and dividends per share

amounts)

2022

2021

2022

2021

(unaudited)

COMMON SHARES (shares outstanding):

Balance beginning of period

39,448,677

40,082,500

39,266,633

39,983,481

Issued (redeemed) during the period, net

(30,923)

156,121

197,421

Treasury shares acquired

-

(68,100)

(5,000)

(165,562)

Balance end of period

39,417,754

40,015,340

39,417,754

40,015,340

COMMON SHARES (par value):

Balance beginning of period

$

Issued during the period, net

-

Balance end of period

ADDITIONAL PAID-IN CAPITAL:

Balance beginning of period

2,271,890

2,245,737

2,274,431

2,245,301

Share-based compensation plans

11,623

10,653

9,082

11,089

Balance end of period

2,283,513

2,256,390

2,283,513

2,256,390

ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS),

NET OF DEFERRED INCOME TAXES:

Balance beginning of period

(832,820)

235,079

11,523

534,899

Net increase (decrease) during the period

(744,034)

122,099

(1,588,377)

(177,721)

Balance end of period

(1,576,854)

357,178

(1,576,854)

357,178

RETAINED EARNINGS:

Balance beginning of period

11,936,489

10,847,086

11,699,836

10,567,452

Net income (loss)

122,630

679,982

420,381

1,021,844

Dividends declared ($

1.65

per share in 2Q 2022 and $

3.20

per share YTD

in 2022; $

1.55

per share in 2Q 2021 and $

3.10

per share YTD in 2021)

(64,982)

(62,046)

(126,079)

(124,274)

Balance, end of period

11,994,137

11,465,022

11,994,137

11,465,022

TREASURY SHARES AT COST:

Balance beginning of period

(3,848,630)

(3,645,717)

(3,847,308)

(3,622,172)

Purchase of treasury shares

-

(16,782)

(1,322)

(40,327)

Balance end of period

(3,848,630)

(3,662,499)

(3,848,630)

(3,662,499)

TOTAL

SHAREHOLDERS' EQUITY, END OF PERIOD

$

8,852,866

$

10,416,789

$

8,852,866

$

10,416,789

The accompanying notes are an integral part

of the consolidated financial statements.

EVEREST RE GROUP,

LTD.

CONSOLIDATED

STATEMENTS

OF CASH FLOWS

Six Months Ended

June 30,

(Dollars in thousands)

2022

2021

(unaudited)

CASH FLOWS FROM OPERATING ACTIVITIES:

Net income (loss)

$

420,381

$

1,021,844

Adjustments to reconcile net income to net cash provided by operating activities:

Decrease (increase) in premiums receivable

(223,030)

(499,647)

Decrease (increase) in funds held by reinsureds, net

(51,451)

(79,485)

Decrease (increase) in reinsurance recoverables

(236,849)

15,836

Decrea

Showing the first 8K of 95K characters. Open the full section

Item 2. MANAGEMENT’S

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

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

Item 3. QUANTITATIVE

QUANTITATIVE

AND QUALITATIVE

DISCLOSURES ABOUT MARKET RISK

Market Risk Instruments.

See “Liquidity and Capital Resources - Market

Sensitive Instruments” in PART

I – ITEM

Item 4. CONTROLS AND PROCEDURES

CONTROLS AND PROCEDURES

As

of

the

end

of

the

period

covered

by

this

report,

our

management

carried

out

an

evaluation,

with

the

participation

of

the

Chief

Executive

Officer

and

Chief

Financial

Officer,

of

the

effectiveness

of

our

disclosure

controls and

procedures (as

defined in Rule

13a-15(e) under the

Securities Exchange

Act of 1934

(the “Exchange

Act”)).

Based

on

their

evaluation,

the

Chief

Executive

Officer

and

Chief

Financial

Officer

concluded

that

our

disclosure controls

and procedures are

effective to

ensure that

information required

to be disclosed

by us in the

reports that

it files

or submits

under the

Exchange Act

is recorded,

processed, summarized

and reported

within

the time periods specified in

Securities and Exchange

Commission’s

rules and forms.

Our management, with

the

participation

of

the

Chief

Executive

Officer

and

Chief

Financial

Officer,

also

conducted

an

evaluation

of

our

internal control

over financial reporting

to determine

whether any

changes occurred

during the quarter

covered

by this report that have

materially affected,

or are reasonably

likely to materially

affect, our internal

control over

financial reporting.

Based on that

evaluation, there

has been no

such change during

the quarter covered

by this

report.

PART II

Item 1. LEGAL PROCEEDINGS

LEGAL PROCEEDINGS

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

these

insurance

and

reinsurance

agreements,

the

Company

is

not a party to any other material litigation

or arbitration.

Item 1A. RISK FACTORS

RISK FACTORS

No material changes.

ITEM 2.

UNREGISTERED SALES OF EQUITY SECURITIES

AND USE OF PROCEEDS

Issuer Purchases of Equity Securities.

Issuer Purchases of Equity Securities

(a)

(b)

(c)

(d)

Maximum Number (or

Total Number of

Approximate Dollar

Shares (or Units)

Value) of Shares (or

Purchased as Part

Units) that May Yet

Total Number of

of Publicly

Be Purchased Under

Shares (or Units)

Average Price Paid

Announced Plans or

the Plans or

Period

Purchased

per Share (or Unit)

Programs

Programs (1)

April 1 - 30, 2022

-

$

-

1,465,181

May 1 - 31, 2022

1,601

$

276.8129

-

1,465,181

June 1 - 30, 2022

$

270.2875

-

1,465,181

Total

2,402

$

-

(1)

On

May

22,

2020,

the

Company’s

executive

committee

of

the

Board

of

Directors

approved

an

amendment

to

the

share

repurchase

program

authorizing the

Company

and/or its

subsidiary

Holdings, to

purchase

up to

a current

aggregate

of 32.0

million of

the Company’s

shares (recognizing

that the

number

of

shares

authorized

for

repurchase

has

been

reduced

by

those

shares

that

have

already

been

purchased)

in

open

market

transactions,

privately

negotiated transactions or both.

Currently, the Company

and/or its subsidiary Holdings have repurchased

30.5 million of the Company’s shares.

ITEM 3.

DEFAULTS

UPON SENIOR SECURITIES

None.

ITEM 4.

MINE SAFETY DISCLOSURES

Not applicable.

ITEM 5.

OTHER INFORMATION

None.

ITEM 6.

EXHIBITS

Exhibit Index

Exhibit No.

Description

31.1

Section 302 Certification of Juan C. Andrade

31.2

Section 302 Certification of Mark Kociancic

32.1

Section 906 Certification of Juan C. Andrade and Mark Kociancic

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 Labels Linkbase

101.PRE

XBRL Taxonomy

Extension Presentation Linkbase

Cover Page Interactive

Data File (embedded within the Inline XBRL document)

Everest Re Group,

Ltd.

Signatures

Pursuant

to the

requirements

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.

Everest Re Group,

Ltd.

(Registrant)

/S/ MARK KOCIANCIC

Mark Kociancic

Executive Vice President and

Chief Financial Officer

(Duly Authorized Officer and Principal Financial Officer)

Dated:

August 4, 2022