Everest Group 10-Q 2022-09-30

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

September 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 November 1, 2022

Common Shares, $0.01 par value

RE

New York Stock Exchange

39,165,034

EVEREST RE GROUP,

LTD

Table of Contents

Form 10-Q

Page

PART I

FINANCIAL INFORMATION

Item 1.

Financial Statements

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

and December 31, 2021

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

three and nine months ended September 30, 2022 and 2021 (unaudited)

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

months ended September 30, 2022 and 2021 (unaudited)

Consolidated Statements of Cash Flows for the nine months ended

September 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](a27015)

Other Information

Item 6. [Exhibits](a27028)

Exhibits

EVEREST RE GROUP,

LTD.

CONSOLIDATED

BALANCE SHEETS

September 30,

December 31,

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

2022

2021

(unaudited)

ASSETS:

Fixed maturities - available for sale, at fair value

$

21,009

$

22,308

(amortized cost: 2022, $

23,204

; 2021, $

22,064

, credit allowances: 2022, $

(

)

; 2021, $

(

)

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

(fair value: 2022, $

, credit allowances: 2022, $

(

)

-

Equity securities, at fair value

1,301

1,826

Short-term investments (cost: 2022, $

; 2021, $

1,178

)

1,178

Other invested assets

3,079

2,920

Cash

1,679

1,441

Total investments and cash

28,516

29,673

Accrued investment income

Premiums receivable

3,452

3,294

Reinsurance recoverables

2,240

2,053

Funds held by reinsureds

Deferred acquisition costs

Prepaid reinsurance premiums

Income taxes

Other assets

TOTAL

ASSETS

$

38,144

$

38,185

LIABILITIES:

Reserve for losses and loss adjustment expenses

$

21,222

$

19,009

Future policy benefit reserve

Unearned premium reserve

4,795

4,610

Funds held under reinsurance treaties

Other net payable to reinsurers

Losses in course of payment

Senior notes

2,347

2,346

Long term notes

Borrowings from FHLB

Accrued interest on debt and borrowings

Unsettled securities payable

Other liabilities

Total liabilities

30,495

28,046

Commitments and contingencies (Note 7)

(nil)

SHAREHOLDERS' EQUITY:

Preferred shares, par value: $

0.01

;

50.0

shares authorized;

no

shares issued and outstanding

-

Common shares, par value: $

0.01

;

200.0

shares authorized; (2022)

69.9

and (2021)

69.8

outstanding before treasury shares

Additional paid-in capital

2,293

2,274

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

tax expense (benefit) of $

(269)

at 2022 and $

at 2021

(2,348)

Treasury shares, at cost;

30.8

shares (2022) and

30.5

shares (2021)

(3,907)

(3,847)

Retained earnings

11,610

11,700

Total shareholders' equity

7,649

10,139

TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY

$

38,144

$

38,185

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

Nine Months Ended

September 30,

(Dollars in millions, except per share amounts)

2022

2021

2022

2021

(unaudited)

REVENUES:

Premiums earned

$

3,067

$

2,656

$

8,775

$

7,603

Net investment income

Net gains (losses) on investments:

Credit allowances on fixed maturity securities

(5)

(7)

(18)

(30)

Gains (losses) from fair value adjustments

(136)

(5)

(462)

Net realized gains (losses) from dispositions

(39)

Total net gains (losses) on investments

(129)

(4)

(519)

Other income (expense)

(16)

(20)

(71)

Total revenues

3,073

2,925

8,805

8,746

CLAIMS AND EXPENSES:

Incurred losses and loss adjustment expenses

2,623

2,274

6,289

5,572

Commission, brokerage, taxes and fees

1,877

1,611

Other underwriting expenses

Corporate expenses

Interest, fees and bond issue cost amortization expense

Total claims and expenses

3,474

3,013

8,785

7,700

INCOME (LOSS) BEFORE TAXES

(401)

(88)

1,046

Income tax expense (benefit)

(82)

(14)

(81)

NET INCOME (LOSS)

$

(319)

$

(73)

$

Other comprehensive income (loss), net of tax:

Unrealized appreciation (depreciation) ("URA(D)") on securities arising during the

period

(712)

(100)

(2,260)

(304)

Reclassification adjustment for realized losses (gains) included in net income (loss)

(1)

(3)

Total URA(D) on securities arising during the period

(671)

(101)

(2,199)

(308)

Foreign currency translation adjustments

(101)

(54)

(163)

(29)

Reclassification adjustment for amortization of net (gain) loss included in net income (loss)

Total benefit plan net gain (loss) for the period

Total other comprehensive income (loss), net of tax

(771)

(153)

(2,360)

(331)

COMPREHENSIVE INCOME (LOSS)

$

(1,090)

$

(227)

$

(2,259)

$

EARNINGS PER COMMON SHARE:

Basic

$

(8.22)

$

(1.88)

$

2.57

$

23.74

Diluted

(8.22)

(1.88)

2.57

23.72

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

Nine Months Ended

September 30,

(Dollars in millions, except dividends per share amounts)

2022

2021

2022

2021

(unaudited)

COMMON SHARES (shares outstanding):

Balance beginning of period

Issued (redeemed) during the period, net

-

Treasury shares acquired

-

(1)

-

(1)

Balance end of period

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

2,284

2,256

2,274

2,245

Share-based compensation plans

Balance end of period

2,293

2,266

2,293

2,266

ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS),

NET OF DEFERRED INCOME TAXES:

Balance beginning of period

(1,577)

Net increase (decrease) during the period

(771)

(153)

(2,360)

(331)

Balance end of period

(2,348)

RETAINED EARNINGS:

Balance beginning of period

11,994

11,465

11,700

10,567

Net income (loss)

(319)

(73)

Dividends declared ($

1.65

per share in 3Q 2022 and $

4.85

per share YTD

in 2022; $

1.55

per share in 3Q 2021 and $

4.65

per share YTD in 2021)

(65)

(61)

(191)

(186)

Balance, end of period

11,610

11,330

11,610

11,330

TREASURY SHARES AT COST:

Balance beginning of period

(3,849)

(3,662)

(3,847)

(3,622)

Purchase of treasury shares

(58)

(160)

(60)

(200)

Balance end of period

(3,907)

(3,822)

(3,907)

(3,822)

TOTAL

SHAREHOLDERS' EQUITY, END OF PERIOD

$

7,649

$

9,979

$

7,649

$

9,979

The accompanying notes are an integral part

of the consolidated financial statements.

EVEREST RE GROUP,

LTD.

CONSOLIDATED

STATEMENTS

OF CASH FLOWS

Nine Months Ended

September 30,

(Dollars in millions)

2022

2021

(unaudited)

CASH FLOWS FROM OPERATING ACTIVITIES:

Net income (loss)

$

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

Decrease (increase) in premiums receivable

(405)

(737)

Decrease (increase) in funds held by reinsureds, net

(35)

(93)

Decrease (increase) in reinsurance recoverables

(662)

(231)

Decrease (increase) in income taxes

(249)

Decrease (increase) in prepaid reinsurance premiums

(194)

(147)

Increase (decrease) in reserve for losses and loss adjustment expenses

3,117

2,560

Increase (decrease) in future policy benefit reserve

(2)

(1)

Increase (decrease) in unearned premiums

Increase (decrease) in other net payable to reinsurers

Increase (decrease) in losses in course of payment

(150)

Change in equity adjustments in limited partnerships

(126)

(543)

Distribution of limited partnership income

Change in other assets and liabilities, net

(134)

(230)

Non-cash compensation expense

Amortization of bond premium (accrual of bond discount)

Net (gains) losses on investments

(139)

Net cash provided by (used in) operating activities

2,680

2,791

CASH FLOWS FROM INVESTING ACTIVITIES:

Proceeds from fixed maturities matured/called/repaid - available for sale

2,171

2,757

Proceeds from fixed maturities matured/called/repaid - held to maturity

-

Proceeds from fixed maturities sold - available for sale

1,177

Proceeds from equity securities sold, at fair value

1,030

Distributions from other invested assets

Cost of fixed maturities acquired - available for sale

(5,958)

(5,671)

Cost of fixed maturities acquired - held to maturity

(133)

-

Cost of equity securities acquired, at fair value

(960)

(508)

Cost of other invested assets acquired

(455)

(604)

Net chang

Showing the first 8K of 88K 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)

July 1 - 31, 2022

-

$

-

1,465,181

August 1 - 31, 2022

128,764

$

252.6871

128,764

1,336,417

September 1 - 30, 2022

110,531

$

252.6578

105,007

1,231,410

Total

239,295

$

-

233,771

1,231,410

(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

30.8 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

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101.SCH

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101.CAL

XBRL Taxonomy

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101.DEF

XBRL Taxonomy

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101.LAB

XBRL Taxonomy

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101.PRE

XBRL Taxonomy

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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:

November 3, 2022