filings.toolsItem 2. MANAGEMENT’S
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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
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.
We
continue to service and
meet the needs of our clients
while ensuring the safety
and health of our employees
and
customers.
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
that
continued
to
be
experienced
in
2022
and
throughout
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
the
impact
on
pricing
conditions will be, 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.
The war in the
Ukraine is ongoing
and an evolving
event.
Economic and legal
sanctions have been
levied against
Russia,
specific
named
individuals
and
entities
connected
to
the
Russian
government,
as
well
as
businesses
located
in
the
Russian
Federation
and/or
owned
by
Russian
nationals
by
numerous
countries,
including
the
United States.
The significant
political and
economic uncertainty
surrounding the
war and
associated sanctions
have
impacted
economic and
investment
markets
both within
Russia and
around
the world.
The Company
has
recorded $45.0
million of
incurred underwriting
losses related
to the
Ukraine/Russia
war as
of the
three and
six
months ended June 30, 2022.
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
Six Months Ended
Percentage
June 30,
Increase/
June 30,
Increase/
(Dollars in millions)
2022
2021
(Decrease)
2022
2021
(Decrease)
Gross written premiums
$
3,447.0
$
3,190.1
8.1
%
$
6,633.4
$
6,121.6
8.4
%
Net written premiums
3,021.5
2,809.4
7.5
%
5,833.5
5,363.3
8.8
%
REVENUES:
Premiums earned
$
2,916.2
$
2,558.4
14.0
%
$
5,708.0
$
4,946.2
15.4
%
Net investment income
226.0
407.1
-44.5
%
468.8
667.5
-29.8
%
Net gains (losses) on investments
(236.3)
104.1
NM
(389.9)
143.0
NM
Other income (expense)
(71.3)
7.1
NM
(56.0)
63.7
-187.9
%
Total revenues
2,834.6
3,076.7
-7.9
%
5,730.9
5,820.5
-1.5
%
CLAIMS AND EXPENSES:
Incurred losses and loss adjustment expenses
1,876.2
1,586.1
18.3
%
3,666.1
3,297.6
11.2
%
Commission, brokerage, taxes
and fees
630.3
557.7
13.0
%
1,235.5
1,046.8
18.0
%
Other underwriting expenses
169.5
140.8
20.4
%
330.8
283.1
16.9
%
Corporate expenses
15.0
16.2
-7.1
%
29.0
28.5
1.7
%
Interest, fees and bond issue
cost amortization expense
24.4
15.6
56.3
%
48.5
31.2
55.1
%
Total claims and expenses
2,715.4
2,316.5
17.2
%
5,309.9
4,687.2
13.3
%
INCOME (LOSS) BEFORE TAXES
119.1
760.2
-84.3
%
421.0
1,133.3
-62.9
%
Income tax expense (benefit)
(3.5)
80.2
-104.4
%
0.6
111.4
-99.5
%
NET INCOME (LOSS)
$
122.6
$
680.0
-82.0
$
420.4
$
1,021.8
-58.9
%
RATIOS:
Point
Change
Point
Change
Loss ratio
64.3
%
62.0
%
2.3
64.2
%
66.7
%
(2.5)
Commission and brokerage ratio
21.6
%
21.8
%
(0.2)
21.6
%
21.2
%
0.4
Other underwriting expense ratio
5.8
%
5.5
%
0.3
5.8
%
5.7
%
0.1
Combined ratio
91.8
%
89.3
%
2.5
91.7
%
93.6
%
(1.9)
At
At
Percentage
June 30,
December 31,
Increase/
(Dollars in millions, except per share amounts)
2022
2021
(Decrease)
Balance sheet data:
Total investments
and cash
$
28,723.3
$
29,673.3
-3.2
%
Total assets
37,907.7
38,185.3
-0.7
%
Loss and loss adjustment expense reserves
19,993.1
19,009.5
5.2
%
Total debt
3,089.3
3,088.6
-
%
Total liabilities
29,054.8
28,046.1
3.6
%
Shareholders' equity
8,852.9
10,139.2
-12.7
%
Book value per share
224.59
258.21
-13.0
%
(NM, not meaningful)
(Some amounts may not reconcile due to rounding.)
Revenues.
Premiums.
Gross written premiums
increased by 8.1% to
$3.4 billion for the
three months ended
June 30, 2022,
compared
to
$3.2
billion
for
the
three
months
ended
June
30,
2021,
reflecting
a
$203.9
million,
or
19.6%,
increase in our
insurance business
and a $53.0 million,
or 2.5%, increase
in our reinsurance
business.
The rise in
insurance
premiums
was
primarily
due
to
increases
across
all
lines
of
business,
notably
specialty
casualty
business,
professional liability
business and other
specialty business.
The increase in
reinsurance premiums
was
primarily
due
to
increases
in
property
catastrophe
excess
of
loss
business
and
casualty
pro
rata
business,
partially
offset
by
a
decline
in
property
pro
rata
business.
Gross
written
premiums
increased
by
8.4%
to
$6.6
billion for the six
months ended June 30,
2022, compared to
$6.1 billion for the
six months ended June
30, 2021,
reflecting a $332.2 million, or 17.4%, increase
in our insurance business and a $179.6
million, or 4.3%, increase in
our
reinsurance
business.
The
rise
in
insurance
premiums
was
primarily
due
to
increases
across
all
lines
of
business,
notably
specialty
casualty
business,
professional
liability
business
and
other
specialty
business.
The
increase in reinsurance
premiums was
primarily due to
increases in casualty
pro rata
business and financial
lines
of business.
Net written premiums
increased by
7.5% to $3.0
billion for the
three months ended
June 30, 2022, compared
to
$2.8 billion
for the
three months
ended June
30, 2021.
Net written
premiums increased
by 8.8%
to $5.8
billion
for the
six months
ended June
30, 2022,
compared to
$5.4 billion
for the
six months
ended June
30, 2021.
The
percentage
increases
in
net
written
premiums
are
consistent
with
the
percentage
changes
in
gross
written
premiums.
Premiums
earned
increased
by
14.0%
to
$2.9
billion
for
the
three
months
ended
June
30,
2022,
compared
to
$2.6 billion
for
the three
months
ended June
30, 2021.
Premiums
earned
increased
by
15.4% to
$5.7 billion for
the six months
ended June 30,
2022, compared
to $4.9
billion for
the six months
ended June 30,
The
changes
in
premiums
earned
relative
to
net
written
premiums
are
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.
Accordingly,
the significant
increases in
gross written
premiums from
pro rata
business
during
the
latter
half
of 2021
contributed
to
the
current
quarter
and
year-to-date
percentage
increases
in
net
earned premiums.
Other
Income
(Expense).
We
recorded
other
expense
of
$71.3
million
and
$56.0
million
for
the
three
and
six
months ended
June 30,
2022, respectively.
We recorded
other income
of $7.1
million and
$63.7 million
for the
three and six months
ended June 30, 2021, respectively.
The changes were primarily
the result of fluctuations
in
foreign currency exchange
rates.
We recognized
foreign currency exchange
expense of $73.9 million and
foreign
currency exchange
income of $8.8 million
for the three months
ended June 30, 2022 and 2021,
respectively.
We
recognized
foreign
currency exchange
expense of
$60.8 million
and foreign
currency exchange
income of
$60.6
million for the six months ended June 30, 2022 and 2021, respectively.
Net Investment Income.
Refer to Consolidated
Investments Results Section below.
Net Gains (Losses) on Investments.
Refer to Consolidated Investments
Results Section below.
Claims and Expenses.
Incurred
Losses
and
Loss
Adjustment
Expenses.
The
following
table
presents
our
incurred
losses
and
loss
adjustment expenses (“LAE”) for
the periods indicated.
Three Months Ended June 30,
Current
Ratio %/
Prior
Ratio %/
Total
Ratio %/
(Dollars in millions)
Year
Pt Change
Years
Pt Change
Incurred
Pt Change
2022
Attritional
$
1,792.0
61.4
%
$
(0.7)
-
%
$
1,791.2
61.4
%
Catastrophes
85.0
2.9
%
-
-
%
85.0
2.9
%
Total
$
1,877.0
64.3
%
$
(0.7)
-
%
$
1,876.2
64.3
%
2021
Attritional
$
1,543.8
60.3
%
$
(2.6)
-0.1
%
$
1,541.1
60.2
%
Catastrophes
45.0
1.8
%
-
-
%
45.0
1.8
%
Total
$
1,588.8
62.1
%
$
(2.6)
-0.1
%
$
1,586.1
62.0
%
Variance 2022/2021
Attritional
$
248.2
1.1
pts
$
1.9
0.1
pts
$
250.1
1.2
pts
Catastrophes
40.0
1.1
pts
-
-
pts
40.0
1.1
pts
Total
$
288.2
2.2
pts
$
1.9
0.1
pts
$
290.1
2.3
pts
Six Months Ended June 30,
Current
Ratio %/
Prior
Ratio %/
Total
Ratio %/
(Dollars in millions)
Year
Pt Change
Years
Pt Change
Incurred
Pt Change
2022
Attritional
$
3,467.8
60.8
%
$
(1.7)
-
%
3,466.1
60.8
%
Catastrophes
200.0
3.5
%
-
-
%
200.0
3.5
%
Total
$
3,667.8
64.3
%
$
(1.7)
-
%
$
3,666.1
64.2
%
2021
Attritional
$
2,987.0
60.4
%
$
(4.5)
-0.1
%
2,982.6
60.3
%
Catastrophes
315.0
6.4
%
-
-
%
315.0
6.4
%
Total
$
3,302.0
66.8
%
$
(4.5)
-0.1
%
$
3,297.6
66.7
%
Variance 2022/2021
Attritional
$
480.8
0.4
pts
$
2.8
0.1
pts
$
483.5
0.5
pts
Catastrophes
(115.0)
(2.9)
pts
-
-
pts
(115.0)
(2.9)
pts
Total
$
365.8
(2.5)
pts
$
2.8
0.1
pts
$
368.5
(2.5)
pts
(Some amounts may not reconcile due to rounding.)
Incurred losses and
LAE increased by
18.3% to $1.9 billion
for the three
months ended June
30, 2022, compared
to
$1.6
billion
for
the
three
months
ended
June
30,
2021,
primarily
due
to
an
increase
of
$248.2
million
in
current year attritional losses
and an increase of $40.0 million in current
year catastrophe losses.
The increase in
current
year
attritional
losses
was
mainly
due
to
the
impact
of
the
increase
in
premiums
earned
and
$45.0
million of attritional losses
incurred due to the
Ukraine/Russia war.
The current year catastrophe
losses of $85.0
million
for
the
three
months
ended
June
30,
2022
related
primarily
to
the
2022
South
Africa
flood
($45.0
million), the 2022
Canada derecho
($18.0 million), the
2022 2
nd
quarter U.S.
storms ($12.0
million) and the
2022
Western
Europe
Convective
storm
($10.0 million).
The $45.0
million of
current
year catastrophe
losses for
the
three
months
ended
June
30,
2021
related
to
Tropical
Storm
Claudette,
the
Texas
winter
storms,
the
2021
Australia floods and the Europe Convective
storms.
Incurred losses
and LAE increased
by 11.2% to
$3.7 billion for
the six months
ended June 30,
2022, compared
to
$3.3 billion for the six months ended
June 30, 2021, primarily due to an increase
of $480.8 million in current year
attritional
losses, partially
offset by
a decline
of $115.0
million in
current year
catastrophe
losses.
The increase
in
current
year
attritional
losses
was
mainly
due
to
the
impact
of
the
increase
in
premiums
earned
and
$45.0
million
of
attritional
losses
incurred
due
to
the
Ukraine/Russia
war.
The
current
year
catastrophe
losses
of
$200.0
million
for
the
six
months
ended
June
30,
2022
related
primarily
to
the
2022
Australia
floods
($76.4
million), the 2022
South Africa flood
($45.0 million), the
2022 European
storms ($30.0 million),
the 2022 Canada
derecho ($18.0
million), the
2022 2
nd
quarter
U.S. storms
($12.0 million),
the 2022
Western
Europe
Convective
Storm
($10.0
million)
and
the
2022
March
U.S.
storms
($8.6
million).
The
$315.0
million
of
current
year
catastrophe
losses for
the six
months ended
June 30,
2021 related
primarily to
the Texas
winter storms
($270.0
million) with
the rest
of the
losses emanating
from Tropical
Storm Claudette,
the 2021
Australia
floods, Victoria
Australia flooding and the Europe Convective
storms.
Commission,
Brokerage,
Taxes
and Fees.
Commission, brokerage,
taxes
and fees
increased by
13.0% to
$630.3
million for the
three months
ended June 30,
2022, compared to
$557.7 million for
the three months
ended June
30, 2021.
Commission,
brokerage,
taxes
and fees
increased
by
18.0% to
$1.2 billion
for
the six
months
ended
June 30,
2022, compared
to $1.0
billion for
the six
months ended
June 30,
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
$169.5
million
and
$140.8
million
for
the
three
months
ended
June
30,
2022
and
2021,
respectively.
Other
underwriting
expenses
were
$330.8
million
and
$283.1
million
for
the
six
months
ended
June
30,
2022
and
2021,
respectively.
The
increases
in
other
underwriting
expenses
were
mainly
due
to
the
impact
of
the
increase
in
premiums
earned
as
well
as
the
continued build out of our insurance operations
,
including an expansion of the international insurance
platform.
Corporate
Expenses.
Corporate
expenses,
which
are
general
operating
expenses
that
are
not
allocated
to
segments,
were
$15.0
million
and
$16.2
million
for
the
three
months
ended
June
30,
2022
and
2021,
respectively,
and $29.0 million
and $28.5 million
for the six
months ended June
30, 2022 and
2021, respectively.
The variances are mainly due to the changes
in variable incentive compensative expenses.
Interest,
Fees and
Bond Issue
Cost
Amortization
Expense.
Interest,
fees
and other
bond
amortization
expense
was $24.4
million and $15.6
million for
the three
months ended
June 30, 2022
and 2021,
respectively.
Interest,
fees and other bond
amortization expense was
$48.5 million and $31.2 million for
the six months ended June 30,
2022 and
2021, respectively.
The increases
were primarily
due to
the issuance
of $1.0
billion of
senior notes
in
October 2021.
Interest expense
was also impacted
by the movements
in the floating
interest rate
related to
the
long term
subordinated
notes, which
is reset
quarterly per
the note
agreement.
The floating
rate was
3.80% as
of June 30, 2022.
Income
Tax
Expense
(Benefit).
We
had
income
tax
benefit
of
$3.5
million
and
income
tax
expense
of
$80.2
million for
the three
months ended
June 30,
2022 and
2021,
respectively.
We
had income
tax
expense of
$0.6
million and $111.4 million for
the six months ended June
30, 2022 and 2021, respectively.
Income tax 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 effective tax
rate (“ETR”) is primarily
affected by tax
-exempt investment
income, foreign
tax
credits
and
dividends.
Variations
in
the
ETR
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.
Net Income (Loss).
Our
net
income
was
$122.6
million
and
$680.0
million
for
the
three
months
ended
June
30,
2022
and
2021,
respectively.
Our
net income
was
$420.4 million
and
$1.0 billion
for
the six
months
ended June
30,
2022 and
2021,
respectively.
These
changes
were
primarily
driven
by
the
financial
component
fluctuations
explained
above.
Ratios.
Our combined
ratio
increased
by
2.5 points
to
91.8% for
the three
months
ended June
30, 2022,
compared
to
89.3% for the three
months ended June 30,
2021 and decreased by
1.9 points to 91.7% for
the six months ended
June 30, 2022, compared
to 93.6% for
the six months
ended June 30,
The loss ratio
component increased
2.3 points for the
three months ended June
30, 2022 over the same period
last year mainly
due to an increase
of
$40.0 million in current
year catastrophe
losses and an increase
of $45.0 million in
current year
attritional losses
due to
the Ukraine/Russia
war.
The loss
ratio
component
decreased
2.5 points
for
the six
months
ended June
30,
2022 over
the
same
period
last
year
mainly
due to
a decline
of $115.0
million
in
current
year
catastrophe
losses,
partially offset
by an increase
of $45.0 million
in current
year attritional
losses due to
the Ukraine/Russia
war.
The commission
and brokera
ge ratio
components decreased
slightly to
21.6% for
the three
months ended
June 30, 2022
compared to
21.8%
for the
three months
ended June
30, 2021 and
increased to
21.6% for
the six
months ended
June 30,
2022 compared
to 21.2%
for the
six months
ended June
30, 2021.
These changes
were
mainly due
to changes
in the
mix of
business.
The other
underwriting expense
ratios
increased to
5.8% for
the
three months
ended June
30, 2022 compared
to 5.5%
for the
three months
ended June
30, 2021
and increased
slightly
to
5.8% for
the
six
months
ended
June 30,
2022 compared
to
5.7% for
the
six
months
ended
June
30,
These increases were mainly due to
higher insurance operations costs.
Shareholders’ Equity.
Shareholders’ equity decreased
by $1.3 billion to $8.9
billion at June 30, 2022 from
$10.1 billion at December 31,
2021,
principally
as
a
result
of
$1.5
billion
of
unrealized
depreciation
on
fixed
maturity
portfolio
net
of
tax,
$126.1 million
of shareholde
r
dividends,
$62.4 million
of net
foreign
currency translation
adjustments,
and the
repurchase of 5,000 common shares
for $1.3 million, partially offset by $420.4
million of net income,
$9.1 million
of
share-based
compensation
transactions
and
$1.5
million
of
net
benefit
plan
obligation
adjustments,
net
of
tax.
Consolidated Investment
Results
Net Investment Income.
Net
investment
income
decreased
by
44.5%
to
$226.0
million
for
the
three
months
ended
June
30,
2022
compared
with
net
investment
income
of
$407.1
million
for
the
three
months
ended
June
30,
The
decrease
for
the
three
months
ended
June
30,
2022
was
primarily
the
result
of
a
decline
of
$192.4
million
in
limited
partnership
income,
partially
offset
by
an
additional
$20.5
million
of
income
from
fixed
maturity
investments.
Net investment
income decreased
by
29.8% to
$468.8 million
for
the six
months
ended June
30,
2022 compared with investment
income of $667.5 million for the six
months ended June 30, 2021.
The decrease
for
the
six
months
ended
June
30,
2022
was
primarily
the
result
of
a
decline
of
$218.3
million
in
limited
partnership
income,
partially
offset
by
an
additional
$27.8
million
of
income
from
fixed
maturity
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
Six Months Ended
June 30,
June 30,
(Dollars in millions)
2022
2021
2022
2021
Fixed maturities
$
168.8
$
148.3
$
317.0
$
289.2
Equity securities
4.6
3.5
8.7
8.3
Short-term investments and cash
6.6
0.7
6.7
1.0
Other invested assets
Limited partnerships
47.6
240.0
136.0
354.3
Other
14.0
25.9
25.8
31.9
Gross investment income before adjustments
241.5
418.3
494.3
684.6
Funds held interest income (expense)
0.8
3.3
4.5
11.3
Future policy benefit reserve income (expense)
(0.1)
(0.2)
(0.4)
(0.5)
Gross investment income
242.2
421.5
498.4
695.4
Investment expenses
(16.2)
(14.4)
(29.6)
(27.9)
Net investment income
$
226.0
$
407.1
$
468.8
$
667.5
(Some amounts may not reconcile due
to rounding.)
The following table shows a comparison
of various investment yields for
the periods indicated.
Three Months Ended
Six Months Ended
June 30,
June 30,
2022
2021
2022
2021
Annualized pre-tax yield on average cash and invested assets
3.0
%
6.3
%
3.2
%
5.3
%
Annualized after-tax yield on average cash and invested assets
2.6
%
5.5
%
2.7
%
4.6
%
Annualized return on invested assets
-0.1
%
7.9
%
-0.5
%
6.3
%
Net Gains (Losses) on Investments.
The following table presents the composition
of our net gains (losses) on investments
for the periods indicated.
Three Months Ended June 30,
Six Months Ended June 30,
(Dollars in millions)
2022
2021
Variance
2022
2021
Variance
Realized gains (losses) from dispositions:
Fixed maturity securities, available for sale:
Gains
$
7.4
$
19.8
$
(12.4)
$
27.6
$
34.7
$
(7.1)
Losses
(23.0)
(9.8)
(13.2)
(40.3)
(15.5)
(24.8)
Total
(15.6)
10.0
(25.6)
(12.8)
19.2
(32.0)
Equity securities, fair value:
Gains
4.1
5.8
(1.7)
7.6
18.1
(10.5)
Losses
(35.1)
(2.0)
(33.1)
(50.4)
(8.1)
(42.3)
Total
(30.9)
3.8
(34.7)
(42.7)
10.0
(52.7)
Other Invested Assets:
Gains
3.4
4.1
(0.8)
7.9
5.6
2.3
Losses
(2.8)
(1.4)
(1.4)
(3.1)
(1.5)
(1.6)
Total
0.6
2.7
(2.1)
4.7
4.1
0.6
Total net realized gains (losses) from dispositions:
Gains
14.9
29.7
(14.8)
43.1
58.4
(15.4)
Losses
(60.8)
(13.2)
(47.6)
(93.8)
(25.1)
(68.7)
Total
(45.9)
16.5
(62.3)
(50.8)
33.3
(84.1)
Allowance for credit losses:
(1.5)
(15.9)
14.4
(13.3)
(22.9)
9.6
Gains (losses) from fair value adjustments:
Equity securities, fair value
(188.9)
103.5
(292.4)
(325.8)
132.6
(458.4)
Total
(188.9)
103.5
(292.4)
(325.8)
132.6
(458.4)
Total net gains (losses) on investments
$
(236.3)
$
104.1
$
(340.3)
$
(389.9)
$
143.0
$
(532.9)
(Some amounts may not reconcile due to rounding.)
Net
gains
(losses)
on
investments
during
the
three
months
ended
June
30,
2022
primarily
relate
to
net
losses
from
fair
value
adjustments
on
equity
securities
in
the
amount
of
$188.9
million
as
a
result
of
equity
market
declines
during
the
second
quarter
of
In
addition,
we
realized
$45.9
million
of
losses
due
to
the
disposition of investments and recorded
an increase to the allowance for credit
losses of $1.5 million.
Net gains
(losses) on investments
during the six
months ended
June 30, 2022
primarily relate
to net
losses from
fair value
adjustments on
equity securities
in the amount
of $325.8 million
as a
result of equity
market declines
during
the
first
six
months
of
In
addition,
we
realized
$50.8
million
of
losses
due
to
the
disposition
of
investments and
recorded an
increase to the
allowance for
credit losses of
$13.3 million primarily
related to
our
direct holdings of Russian corporate
fixed maturity securities.
Segment Results.
The
Company
manages
its
reinsurance
and
insurance
operations
as
autonomous
units
and
key
strategic
decisions are based on the aggregate operating
results and projections for
these segments of business.
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,
Europe,
Singapore
and
South
America
through
its
offices
in
the
U.S.,
Canada,
Chile,
Singapore,
the
United
Kingdom,
Ireland and a branch located 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 June 30,
Six Months Ended June 30,
(Dollars in millions)
2022
2021
Variance
% Change
2022
2021
Variance
% Change
Gross written premiums
$
2,201.2
$
2,148.2
$
53.0
2.5
%
$
4,386.8
$
4,207.3
$
179.6
4.3
%
Net written premiums
2,122.2
2,059.9
62.3
3.0
%
4,203.7
3,972.9
230.8
5.8
%
Premiums earned
$
2,139.6
$
1,920.8
$
218.8
11.4
%
$
4,205.8
$
3,698.3
$
507.6
13.7
%
Incurred losses and LAE
1,382.1
1,168.1
214.0
18.3
%
2,706.8
2,440.0
266.8
10.9
%
Commission and brokerage
530.9
473.3
57.6
12.2
%
1,045.1
882.0
163.1
18.5
%
Other underwriting expenses
52.1
47.1
5.0
10.6
%
102.5
99.1
3.4
3.5
%
Underwriting gain (loss)
$
174.5
$
232.3
$
(57.8)
-24.9
%
$
351.4
$
277.2
$
74.2
26.8
%
Point Chg
Point Chg
Loss ratio
64.6
%
60.8
%
3.8
64.4
%
66.0
%
(1.6)
Commission and brokerage ratio
24.8
%
24.6
%
0.2
24.8
%
23.8
%
1.0
Other underwriting expense ratio
2.4
%
2.5
%
(0.1)
2.4
%
2.7
%
(0.3)
Combined ratio
91.8
%
87.9
%
3.9
91.6
%
92.5
%
(0.9)
(NM, Not Meaningful)
(Some amounts may not reconcile due to rounding.)
Premiums.
Gross written
premiums increased
by 2.5% to
$2.2 billion for
the three months
ended June 30,
2022
from $2.1
billion for
the three
months ended
June 30,
2021, primarily
due to
increases in
property catastrophe
excess of
loss business
and casualty pro
rata business
,
partially offset
by a decline
in property
pro rata
business.
Net written premiums
increased by 3.0% to
$2.12 billion for the
three months ended June
30, 2022 compared to
$2.06
billion
for
the
three
months
ended
June
30,
The
higher
percentage
increase
in
net
written
premiums
compared
to
gross
written
premiums
mainly
related
to
a
reduction
in
business
ceded
to
the
segregated
accounts
of Mt.
Logan Re
in the
three months
ended June
30, 2022
compared
to the
three months
ended June 30,
Premiums earned increased
by 11.4% to
$2.1 billion for
the three months
ended June 30,
2022,
compared
to
$1.9
billion
for
the
three
months
ended
June
30,
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.
Accordingly,
the
significant increases
in gross written
premiums from
pro rata
business during the
latter half
of 2021 contributed
to the current quarter percentage
increase in net earned premiums.
Gross
written
premiums
increased
by
4.3%
to
$4.4
billion
for
the
six
months
ended
June
30,
2022
from
$4.2
billion
for
the
six
months
ended
June
30,
2021,
primarily
due
to
increases
in
casualty
pro
rata
business
and
financial lines of business.
Net written premiums increased
by 5.8% to $4.2 billion for the
six months ended June
30, 2022
compared
to
$4.0 billion
for
the six
months
ended June
30, 2021.
The higher
percentage
increase
in
net written
premiums
compared
to gross
written
premiums
mainly related
to a
reduction
in business
ceded to
the
segregated
accounts
of
Mt.
Logan
Re
in
the
six
months
ended
June
30,
2022
compared
to
the
six
months
ended
June
30,
Premiums
earned
increased
by
13.7%
to
$4.2 billion
for
the
six months
ended
June 30,
2022, compared to $3.7
billion for the six
months ended June 30, 2021.
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.
Accordingly,
the
significant
increases
in
gross
written
premiums
from
pro
rata
business
during
the
latter
half
of
2021
contributed
to
the
current year-to-date percentage
increase
in net earned premiums.
Incurred Losses
and LAE
.
The following
table presents
the incurred
losses and
LAE for
the Reinsurance
segment
for the periods indicated.
Three Months Ended June 30,
Current
Ratio %/
Prior
Ratio %/
Total
Ratio %/
(Dollars in millions)
Year
Pt Change
Years
Pt Change
Incurred
Pt Change
2022
Attritional
$
1,302.8
60.9
%
$
(0.7)
-
%
1,302.1
60.9
%
Catastrophes
80.0
3.7
%
-
-
%
80.0
3.7
%
Total Segment
$
1,382.8
64.6
%
$
(0.7)
-
%
$
1,382.1
64.6
%
2021
Attritional
$
1,134.6
59.1
%
$
(1.4)
-0.1
%
1,133.1
59.0
%
Catastrophes
35.0
1.8
%
-
-
%
35.0
1.8
%
Total Segment
$
1,169.6
60.9
%
$
(1.4)
-0.1
%
$
1,168.1
60.8
%
Variance 2022/2021
Attritional
$
168.2
1.8
pts
$
0.7
0.1
pts
$
169.0
1.9
pts
Catastrophes
45.0
1.9
pts
-
-
pts
45.0
1.9
pts
Total Segment
$
213.2
3.7
pts
$
0.7
0.1
pts
$
214.0
3.8
pts
Six Months Ended June 30,
Current
Ratio %/
Prior
Ratio %/
Total
Ratio %/
(Dollars in millions)
Year
Pt Change
Years
Pt Change
Incurred
Pt Change
2022
Attritional
$
2,519.1
59.9
%
$
(2.3)
-0.1
%
2,516.8
59.9
%
Catastrophes
190.0
4.5
%
-
-
%
190.0
4.5
%
Total Segment
$
2,709.1
64.4
%
$
(2.3)
-0.1
%
$
2,706.8
64.4
%
2021
Attritional
$
2,185.8
59.1
%
$
(3.3)
-0.1
%
2,182.5
59.0
%
Catastrophes
257.5
7.0
%
-
-
%
257.5
7.0
%
Total Segment
$
2,443.3
66.1
%
$
(3.3)
-0.1
%
$
2,440.0
66.0
%
Variance 2022/2021
Attritional
$
333.3
0.8
pts
$
0.9
-
pts
$
334.2
0.8
pts
Catastrophes
(67.5)
(2.5)
pts
-
-
pts
(67.5)
(2.5)
pts
Total Segment
$
265.8
(1.7)
pts
$
0.9
-
pts
$
266.7
(1.6)
pts
Incurred losses
increased by
18.3% to
$1.4 billion
for the
three months
ended June
30, 2022,
compared to
$1.2
billion
for
the
three
months
ended
June
30,
The
increase
was
primarily
due
to
an
increase
of
$168.2
million in current
year attritional
losses and
an increase of
$45.0 million in
current year
catastrophe
losses.
The
increase in
current
year attritional
losses was
mainly related
to the
impact of
the increase
in premiums
earned
and
$45.0
million
of
attritional
losses
incurred
due
to
the
Ukraine/Russia
war.
The
current
year
catastrophe
losses of $80.0 million for the three
months ended June 30, 2022 related
primarily to the 2022 South Africa
flood
($45.0
million),
the
2022
Canada
derecho
($18.0
million),
the
2022
Western
Europe
Convective
storm
($10.0
million) and the 2022
nd
quarter U.S. storms
($7.0 million).
The $35.0 million of
current year
catastrophe losses
for
the three
months
ended June
30, 2021
related
primarily
to
Tropical
Storm Claudette,
the Victoria
Australia
flooding and the Europe Convective storms.
Incurred
losses
increased
by
10.9%
to
$2.7
billion
for
the
six
months
ended
June
30,
2022,
compared
to
$2.4
billion for
the six
months ended
June 30,
The increase
was primarily
due to
an increase
of $333.3
million
in current year attritional losses,
partially offset by a decrease
of $67.5 million in current year
catastrophe losses.
The
increase
in
current
year
attritional
losses
was
mainly
related
to
the
impact
of
the
increase
in
premiums
earned and $45.0 million of attritional losses
due to the Ukraine/Russia war.
The current year catastrophe
losses
of $190.0
million
for
the
six
months
ended June
30, 2022
related
primarily
to
the 2022
Australia
floods ($76.4
million), the 2022
South Africa flood
($45.0 million), the
2022 European
storms ($30.0 million),
the 2022 Canada
derecho
($18.0
million),
the
2022 Western
Europe
Convective
storm
($10.0
million),
the
2022
nd
quarter
U.S.
storms
($7.0
million)
and
the
2022
March
U.S.
storms
($3.6
million).
The
$257.5
million
of
current
year
catastrophe
losses for
the six months
ended June
30, 2021
primarily related
to the
Texas
winter storms
($212.5
million)
with
the
rest
of
the
losses
emanating
from
Tropical
Storm
Claudette,
the
2021
Australia
floods,
the
Victoria Australia flooding and the Europe
Convective storms.
Segment
Expenses.
Commission
and
brokerage
expense
increased
by
12.2%
to
$530.9
million
for
the
three
months
ended
June
30,
2022
compared
to
$473.3
million
for
the
three
months
ended
June
30,
Commission and
brokerage
expense increased
by 18.5%
to $1.0
billion for
the six
months
ended June
30, 2022
compared
to
$882.0
million
for
the
six
months
ended
June
30,
The
increases
were
mainly
due
to
the
impact of the increases
in premiums earned and changes in the mix of business.
Segment other underwriting expenses increased
to $52.1 million for the three
months ended June 30, 2022 from
$47.1
million
for
the
three
months
ended
June
30,
Segment
other
underwriting
expenses
increased
to
$102.5
million
for
the
six
months
ended
June
30,
2022
from
$99.1
million
for
the
six
months
ended
June
30,
The increases
were mainly due to the impact of increases
in premiums earned.
Insurance.
The
following
table
presents
the
underwriting
results
and
ratios
for
the
Insurance
segment
for
the
periods
indicated.
Three Months Ended June 30,
Six Months Ended June 30,
(Dollars in millions)
2022
2021
Variance
% Change
2022
2021
Variance
% Change
Gross written premiums
$
1,245.8
$
1,041.9
$
203.9
19.6
%
$
2,246.7
$
1,914.3
$
332.2
17.4
%
Net written premiums
899.2
749.5
149.7
20.0
%
1,629.8
1,390.5
239.3
17.2
%
Premiums earned
$
776.7
$
637.6
$
139.1
21.8
%
$
1,502.2
$
1,248.0
$
254.2
20.4
%
Incurred losses and LAE
494.1
418.0
76.1
18.2
%
959.3
857.5
101.8
11.9
%
Commission and brokerage
99.4
84.5
14.9
17.7
%
190.4
164.8
25.6
15.6
%
Other underwriting expenses
117.5
93.8
23.7
25.3
%
228.3
184.0
44.3
24.1
%
Underwriting gain (loss)
$
65.6
$
41.3
$
24.3
58.9
%
$
124.2
$
41.7
$
82.5
197.9
%
Point Chg
Point Chg
Loss ratio
63.6
%
65.6
%
-2.0
63.9
%
68.7
%
(4.8)
Commission and brokerage ratio
12.8
%
13.3
%
-0.5
12.7
%
13.2
%
(0.5)
Other underwriting
expense ratio
15.1
%
14.6
%
0.5
15.2
%
14.8
%
0.4
Combined ratio
91.5
%
93.5
%
-2.0
91.7
%
96.7
%
(4.9)
(NM not meaningful)
(Some amounts may not reconcile due to rounding.)
Premiums.
Gross written premiums increased
by 19.6% to $1.2 billion for the three
months ended June 30, 2022
compared to
$1.0 billion for
the three
months ended
June 30, 2021.
This rise was
primarily related
to increases
across all
lines of business,
notably specialty
casualty business,
professional liability
business and other
specialty
business.
Net written premiums increased
by 20.0% to $899.2 million
for the three months
ended June 30, 2022
compared
to
$749.5 million
for
the three
months
ended June
30, 2021,
which is
consistent
with the
change
in
gross written
premiums.
Premiums earned
increased 21.8%
to $776.7
million for
the three
months ended
June
30,
2022
compared
to
$637.6
million
for
the
three
months
ended
June
30,
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.
Accordingly,
the
significant increases
in gross
written premiums
during the
latter half
of 2021 contributed
to the
current quarter
percentage increase in net earned
premiums.
Gross written
premiums increased
by 17.4% to
$2.2 billion for
the six months
ended June 30,
2022 compared
to
$1.9 billion for the six
months ended June 30, 2021.
This rise was primarily related
to increases across
all lines of
business,
notably
specialty
casualty
business,
professional
liability
business
and
other
specialty
business.
Net
written premiums
increased by
17.2% to
$1.6 billion
for the
six months
ended June
30, 2022
compared to
$1.4
billion for
the six
months ended
June 30,
2021, which
is consistent
with the
change in
gross
written premiums.
Premiums
earned
increased
20.4%
to
$1.5
million
for
the
six
months
ended
June
30,
2022
compared
to
$1.2
billion
for
the
six
months
ended
June
30,
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.
Accordingly,
the significant
increases
in gross
written premiums
during the
latter
half of
2021 contributed
to the
current year
-to-date
percentage
increase in
net earned premiums.
Incurred Losses and
LAE.
The following table presents
the incurred losses
and LAE for the Insurance
segment for
the periods indicated.
Three Months Ended June 30,
Current
Ratio %/
Prior
Ratio %/
Total
Ratio %/
(Dollars in millions)
Year
Pt Change
Years
Pt Change
Incurred
Pt Change
2022
Attritional
$
489.1
63.0
%
$
-
-
%
489.1
63.0
%
Catastrophes
5.0
0.6
%
-
-
%
5.0
0.6
%
Total Segment
$
494.1
63.6
%
$
-
-
%
$
494.1
63.6
%
2021
Attritional
$
409.2
64.2
%
$
(1.2)
-0.2
%
408.0
64.0
%
Catastrophes
10.0
1.6
%
-
-
%
10.0
1.6
%
Total Segment
$
419.2
65.8
%
$
(1.2)
-0.2
%
$
418.0
65.6
%
Variance 2022/2021
Attritional
$
79.9
(1.2)
pts
$
1.2
0.2
pts
$
81.1
(1.0)
pts
Catastrophes
(5.0)
(1.0)
pts
-
-
pts
(5.0)
(1.0)
pts
Total Segment
$
74.9
(2.2)
pts
$
1.2
0.2
pts
$
76.1
(2.0)
pts
Six Months Ended June 30,
Current
Ratio %/
Prior
Ratio %/
Total
Ratio %/
(Dollars in millions)
Year
Pt Change
Years
Pt Change
Incurred
Pt Change
2022
Attritional
$
948.6
63.1
%
$
0.7
-
%
949.3
63.1
%
Catastrophes
10.0
0.7
%
-
-
%
10.0
0.7
%
Total Segment
$
958.6
63.8
%
$
0.7
-
%
$
959.3
63.9
%
2021
Attritional
$
801.2
64.2
%
$
(1.2)
-0.1
%
800.0
64.1
%
Catastrophes
57.5
4.6
%
-
-
%
57.5
4.6
%
Total Segment
$
858.7
68.8
%
$
(1.2)
-0.1
%
$
857.5
68.7
%
Variance 2022/2021
Attritional
$
147.4
(1.1)
pts
$
1.9
0.1
pts
$
149.3
(1.0)
pts
Catastrophes
(47.5)
(3.9)
pts
-
-
pts
(47.5)
(3.9)
pts
Total Segment
$
99.9
(5.0)
pts
$
1.9
0.1
pts
$
101.8
(4.8)
pts
(Some amounts may not reconcile due to rounding.)
Incurred
losses
and
LAE
increased
by
18.2%
to
$494.1
million
for
the
three
months
ended
June
30,
2022
compared
to
$418.0
million
for
the
three
months
ended
June
30,
The
increase
was
mainly
due
to
an
increase
of
$79.9
million
in
current
year
attritional
losses,
partially
offset
by
a
decrease
in
current
year
catastrophe losses
of $5.0 million.
The increase in current
year attritional losses
was primarily due to the
impact
of the increase
in premiums
earned.
The current
year catastrophe
losses of $5.0
million related
to the
2022 2
nd
quarter U.S.
storms.
The $10.0
million of
current
year catastrophe
losses for
the three
months ended
June 30,
2021 related to the Texas
winter storms.
Incurred losses
and LAE increased
by 11.9% to
$959.3 million
for the
six months
ended June 30,
2022 compared
to $857.5 million
for the six
months ended June
30, 2021.
The increase was
mainly due to
an increase of
$147.4
million in current
year attritional
losses, partially offset
by a decrease in
current year
catastrophe losses
of $47.5
million.
The
increase
in
current
year
attritional
losses
was
primarily
due
to
the
impact
of
the
increase
in
premiums earned.
The current
year catastrophe
losses of
$10.0 million
related
to the
2022 March
U.S. storms
($5.0 million) and
the 2022
nd
quarter U.S.
storms ($5.0
million).
The $57.5
million of current
year catastrophe
losses for the six months ended June 30, 2021 related
to the Texas
winter storms.
Segment Expenses.
Commission and brokerage
increased by 17.7%
to $99.4 million
for the three
months ended
June 30, 2022 compared to
$84.5 million for the
three months ended
June 30, 2021.
Commission and brokerage
increased by 15.6% to
$190.4 million for
the six months ended
June 30, 2022 compared
to $164.8 million for
the
six months
ended June
30, 2021.
These increase
s
were
mainly due
to
the impact
of the
increase
in premiums
earned.
Segment
other
underwriting
expenses
increased
to
$117.5
million
for
the
three
months
ended
June
30,
2022
compared
to
$93.8
million
for
the
three
months
ended
June
30,
Segment
other
underwriting
expenses
increased
to
$228.3
million
for
the
six
months
ended
June
30,
2022
compared
to
$184.0
million
for
the
six
months
ended
June
30,
These
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,
including
an
expansion of the international insurance
platform.
FINANCIAL CONDITION
Investments.
Total
investments
were
$26.6
billion
at
June
30,
2022,
a
decrease
of
$1.6
million
compared
to
$28.2 billion
at December
31, 2021.
This decrease
was primarily
related
to declines
in fixed
maturity securities,
equity securities
and short
-term investments.
Fixed
maturity
securities decreased
due to
declines in
fair values
resulting primarily from
higher interest
rates, partially
offset by
net purchases
of fixed maturity
securities during
the period.
Equity securities
decreased due
to declines
in fair
values due
to diminished
market performance
as
well
as
net
sales
of
equity
securities
during
the
period.
Short-term
investments
decreased
as
a
result
of
the
reinvestment of funds into
other vehicles.
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
table
below
summarize
the
composition
and
characteristics
of
our
investment
portfolio
as
of
the
dates
indicated.
At
At
June 30, 2022
December 31, 2021
Fixed income portfolio duration (years)
3.1
3.2
Fixed income composite credit quality
A+
A+
Reinsurance Recoverables
.
Reinsurance
recoverables
for
both paid
and unpaid
losses totaled
$2.1 billion
and $2.1
billion at
June 30,
2022
and December 31, 2021, respectively.
At June 30, 2022, $618.1 million,
or 29.5%, was receivable
from Mt. Logan
Re
collateralized
segregated
accounts;
$224.2
million,
or
10.7%,
was
receivable
from
Munich
Reinsurance
America, Inc.
(“Munich Re”)
and $131.5
million, or
6.3% 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 $20.0
billion and $19.0
billion at
June 30, 2022
and
December 31, 2021, 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 June 30, 2022
Case
IBNR
Total
% of
(Dollars in millions)
Reserves
Reserves
Reserves
Total
Reinsurance
$
5,853.5
$
8,623.4
$
14,476.9
72.4
%
Insurance
1,639.8
3,731.1
5,370.9
26.9
%
Total excluding A&E
7,493.3
12,354.6
19,847.8
99.3
%
A&E
145.2
-
145.2
0.7
%
Total including A&E
$
7,638.5
$
12,354.6
$
19,993.1
100.0
%
(Some amounts may not reconcile due
to rounding.)
At December 31, 2021
Case
IBNR
Total
% of
(Dollars in millions)
Reserves
Reserves
Reserves
Total
Reinsurance
$
5,415.0
$
8,312.3
$
13,727.3
72.2
%
Insurance
1,546.2
3,562.4
5,108.6
26.9
%
Total excluding A&E
6,961.2
11,874.7
18,835.9
99.1
%
A&E
163.7
9.9
173.6
0.9
%
Total including A&E
$
7,124.8
$
11,884.7
$
19,009.5
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
June 30,
December 31,
(Dollars in millions)
2022
2021
Gross reserves
$
145.2
$
175.2
Ceded reserves
(15.8)
(19.0)
Net reserves
$
129.4
$
156.1
(Some amounts may not reconcile due
to rounding.)
With respect
to asbestos
only,
at June 30,
2022, we had
net asbestos
loss reserves
of $129.7 million,
or 100.2%,
of total net A&E reserves, all of which was for
assumed business.
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
3.6
years
at
June
30,
These
metrics
can
be
skewed
by
individual
large settlements
occurring in
the prior
three years
and therefore,
may not
be indicative
of the
timing of
future
payments.
LIQUIDITY AND CAPITAL RESOURCES
Capital.
Shareholders’
equity
at
June
30,
2022
and
December
31,
2021
was
$8.9
billion
and
$10.1
billion,
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)
2021
2020
2021
2020
Regulatory targeted capital
$
2,169.3
$
1,923.2
$
2,960.0
$
2,489.8
Actual capital
$
3,184.1
$
2,930.3
$
5,717.1
$
5,276.0
(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.
As
part
of
our
capital
strategy,
we
model
our
potential
exposure
to
catastrophe
losses
arising
from
a
single
event.
Projected catastrophe
losses are generally summarized
in term of probable maximum
loss (“PML”).
A full
discussion
on
PMLs
is
included
in
our
December
31,
2021
Form
10-K
filing
in
PART
1,
Item
Business,
Risk
Management
of
Underwriting
and
Reinsurance
Arrangements.
We
focus
on
the
projected
net
economic
loss
from a catastrophe
in a given zone as compared
to our shareholders’ equity.
Economic loss is the PML exposure,
net of third
party reinsurance,
reduced by estimated
reinstatement
premiums to renew
coverage and
estimated
income taxes.
In our December 31,
2021 Form 10-K, we
reported that
our projected net
economic loss from
our
largest
projected
100-year
event
represented
approximately
4.8%
of
our
December
31,
2021
shareholders’
equity.
During the first half of 2022, our net
exposure to catastrophes
has changed due to the market
conditions
and business
decisions.
As a
result, our
projected net
economic loss
from our
largest 100
-year event
in a
given
zone represents approximately
7.4% of our June 30, 2022 shareholders’ equity.
The table
below reflects
the Company’s
PML exposure,
net of
third
party reinsurance
at various
return
periods
for its
top zones/perils
(as ranked
by largest
1 in
100 year
economic loss)
based on
projection data
as of
July 1,
Return Periods (in years)
1 in 20
1 in 50
1 in 100
1 in 250
1 in 500
1 in 1,000
Exceeding Probability
5.0%
2.0%
1.0%
0.4%
0.2%
0.1%
(Dollars in millions)
Zone/ Peril
California, Earthquake
$
$
$
$
1,299
$
1,636
$
2,469
Southeast U.S., Wind
1,055
1,263
1,696
Texas Wind
1,111
1,350
Europe Wind
1,036
Chile Earthquake
1,084
The
projected
economic
losses,
defined
as
PML
exposures,
net
of
third
party
reinsurance,
reinstatement
premiums and estimated income taxes,
for the top zones/perils scheduled
are as follows:
Return Periods (in years)
1 in 20
1 in 50
1 in 100
1 in 250
1 in 500
1 in 1,000
Exceeding Probability
5.0%
2.0%
1.0%
0.4%
0.2%
0.1%
(Dollars in millions)
Zone/ Peril
California, Earthquake
$
$
$
$
$
1,226
$
1,834
Southeast U.S., Wind
1,165
Texas Wind
Europe Wind
Chile Earthquake
On October 4, 2021, we issued $1.0 billion of 31 year senior
notes with an interest coupon
rate of 3.125%.
These
senior notes will mature on October 15, 2052 and will pay
interest semi-annually.
During the
first half
of 2022,
we repurchased
5,000 shares
for $1.3
million in
the open
market
and paid
$126.1
million in
dividends to
adjust our
capital position
and enhance
long term
expected
returns to
our shareholders.
In
2021,
we
repurchased
887,622
shares
for
$225.1
million
in
the
open
market
and
paid
$246.7
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
million
shares.
As
of
June
30,
2022,
we
had
repurchased
30.5
million
shares
under
this
authorization.
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 $1.6
billion and
$1.6 billion
for the
six months
ended June
30, 2022
and 2021,
respectively.
Additionally,
these cash flows reflected
net catastrophe
loss payments of
$377.1 million and $334.7
million for the six
months
ended June 30,
2022 and 2021,
respectively and
net tax payments
of $100.5 million
and $34.8 million
for the six
months ended June 30, 2022 and 2021, 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
June
30,
2022
and
December
31,
2021,
we
held
cash
and
short-term
investments
of
$2.4
billion
and
$2.6
billion,
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
June
30,
2022,
we
had
$1.3
billion
of
available
for
sale
fixed
maturity
securities
maturing
within
one
year
or
less,
$7.2
billion
maturing
within
one
to
five
years
and
$5.9
billion
maturing
after
five
years.
Our
$1.3
billion
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
net gains
(losses) on
investments.
At June
30, 2022
we had
$1.5 billion
of net
pre-tax
unrealized
depreciation
related
to
fixed
maturity
securities,
comprised
of
$1.6
billion
of
pre-tax
unrealized depreciation and $80.3 million
of pre-tax unrealized appreciation.
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 active credit facilities
that
provide
commitments
of
up
to
$1.2
billion
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
$340.0
million
of
uncommitted
credit
facilities,
which
would
require
approval
from
the
applicable
lender.
There is
no guarantee
the uncommitted
capacity will
be available
to us
on a
future date.
See Note
9 –
Credit Facilities for further details.
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 sensi
tive risk exposure principally reflects
the asset changes that took place during the period.
Interest
Rate
Risk.
Our
$28.7
billion
investment
portfolio,
at
June
30,
2022,
is
principally
comprised
of
fixed
maturity
securities,
which
are
generally
subject
to
interest
rate
risk
and
some
foreign
currency
exchange
rate
risk, and some equity securities, which are subject to price
fluctuations and some foreign exchange
rate risk.
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
$3.6 billion
of mortgage
-backed
securities
in
the
$22.0 billion
fixed
maturity
portfolio.
Prepayment risk results
from potential accelerated
principal payments that
shorten the average
life and thus
the
expected yield of the security.
The table
below displays
the potential
impact of
fair value
fluctuations and
after-tax unrealized
appreciation on
our fixed
maturity portfolio
(including $300.8
million of
short-term
investments)
for the
period indicated
based
on
upward
and
downward
parallel
and
immediate
and
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
fair
value
change under the various interest
rate change scenarios.
Impact of Interest Rate Shift in Basis Points
At June 30, 2022
-200
-100
(Dollars in millions)
Total Fair Value
$
23,745.3
$
22,999.0
$
22,252.7
$
21,506.4
$
20,760.1
Fair Value Change from Base (%)
6.7
%
3.4
%
0.0
%
(3.4)
%
(6.7)
%
Change in Unrealized Appreciation
After-tax from Base ($)
$
1,296.2
$
648.1
$
-
$
(648.1)
$
(1,296.2)
We had $20.0
billion and $19.0 billion
of gross reserves
for losses and
LAE as of June 30, 20
22 and December 31,
2021,
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
3.7 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
$2.5
billion
resulting
in
a
discounted
reserve
balance
of
approximately
$15.5
billion,
representing approximately
69.8%
of the value of the fixed maturity
investment portfolio funds.
Equity
Risk.
Equity
risk is
the potential
change
in
fair
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 value
and after-tax
change in
fair 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 June 30, 2022
(Dollars in millions)
-20%
-10%
0%
10%
20%
Fair Value of the Equity Portfolio
$
1,039.4
$
1,169.3
$
1,299.2
$
1,429.1
$
1,559.1
After-tax Change in Fair Value
$
(206.0)
$
(103.0)
$
-
$
103.0
$
206.0
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
fair value
of available
for sale
fixed
maturities
due to changes in
foreign currency exchange
rates, in relation
to functional currency,
is reflected as part of
other
comprehensive
income.
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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