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

Industry Conditions.

The worldwide insurance and reinsurance businesses are highly competitive, as well as cyclical by product and market. As a result, 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 insurance and reinsurance 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 insurance and reinsurance 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 insurance and reinsurance 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 insurance and reinsurance 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 is 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, provide capital markets with access to insurance and reinsurance risk exposure. The capital markets demand for these products is primarily driven by the desire to achieve greater risk diversification and potentially higher returns on their investments. This competition generally has a negative impact on rates, terms and conditions; however, the impact varies widely by market and coverage. Based on recent competitive behaviors in the insurance and reinsurance industry, natural catastrophe events and the macroeconomic backdrop, there has been dislocation in the market which has had a positive impact on rates and terms and conditions, generally, though specifics in local markets can vary.

Specifically, recent market conditions in property, particularly catastrophe excess of loss, have resulted in rate increases. As a result of the rate increases, most of the lines within property have been affected. Other casualty lines have been experiencing modest rate increases, while some lines such as workers’ compensation and directors and officers liability have been experiencing softer market conditions. The impact on pricing conditions is likely to change depending on the line of business and geography.

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 in 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.

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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 June 30,												Percentage Increase/ (Decrease)						Six Months Ended June 30,												Percentage Increase/ (Decrease)
(Dollars in millions)			2023						2022									2023						2022
Gross written premiums			$	4,180					$	3,447					21.3		%				$	7,923					$	6,633					19.4		%
Net written premiums			3,674						3,021						21.6		%				7,003						5,833						20.1		%
REVENUES:
Premiums earned			$	3,251					$	2,916					11.5		%				$	6,352					$	5,708					11.3		%
Net investment income			357						226						57.8		%				617						469						31.5		%
Net gains (losses) on investments			5						(236)						NM						10						(390)						NM
Other income (expense)			38						(71)						NM						(42)						(56)						-25.6		%
Total revenues			3,650						2,835						28.8		%				6,936						5,731						21.0		%
CLAIMS AND EXPENSES:
Incurred losses and loss adjustment expenses			1,960						1,876						4.5		%				3,927						3,666						7.1		%
Commission, brokerage, taxes and fees			686						630						8.8		%				1,347						1,236						9.0		%
Other underwriting expenses			205						170						20.9		%				405						331						22.3		%
Corporate expenses			17						15						12.2		%				36						29						23.2		%
Interest, fees and bond issue cost amortization expense			33						24						35.0		%				65						48						34.0		%
Total claims and expenses			2,901						2,715						6.8		%				5,779						5,310						8.8		%
INCOME (LOSS) BEFORE TAXES			750						119						NM						1,157						421						NM
Income tax expense (benefit)			80						(4)						NM						122						1						NM
NET INCOME (LOSS)			$	670					$	123					NM						$	1,035					$	420					NM
RATIOS:															Point Change																		Point Change
Loss ratio			60.3		%				64.3		%				(4.0)						61.8		%				64.2		%				(2.4)
Commission and brokerage ratio			21.1		%				21.6		%				(0.5)						21.2		%				21.6		%				(0.4)
Other underwriting expense ratio			6.3		%				5.8		%				0.5						6.4		%				5.8		%				0.6
Combined ratio			87.7		%				91.8		%				(4.1)						89.4		%				91.7		%				(2.3)

			At June 30,						At December 31,						Percentage Increase/ (Decrease)
(Dollars in millions, except per share amounts)			2023						2022
Balance sheet data:
Total investments and cash			$	33,550					$	29,872					12.3		%
Total assets			44,668						39,966						11.8		%
Loss and loss adjustment expense reserves			23,405						22,065						6.1		%
Total debt			3,085						3,084						—		%
Total liabilities			33,766						31,525						7.1		%
Shareholders' equity			10,902						8,441						29.2		%
Book value per share			251.17						215.54						16.5		%

(NM, not meaningful)

(Some amounts may not reconcile due to rounding.)

Revenues.

Premiums. Gross written premiums increased by 21.3% to $4.2 billion for the three months ended June 30, 2023, compared to $3.4 billion for the three months ended June 30, 2022, reflecting a $565 million, or 25.7%, increase in our reinsurance business and a $168 million, or 13.5%, increase in our insurance business. The increase in reinsurance premiums was primarily due to increases across all lines of business. The increase in insurance premiums was primarily

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due to growth in property/short tail business, specialty casualty business and other specialty lines of business. Gross written premiums increased by 19.4% to $7.9 billion for the six months ended June 30, 2023, compared to $6.6 billion for the six months ended June 30, 2022, reflecting a $1.0 billion, or 23.2%, increase in our reinsurance business and a $274 million, or 12.2%, increase in our insurance business. The increase in reinsurance premiums was primarily due to increases in property pro rata business, casualty pro rata business, property catastrophe excess of loss business and financial lines of business. The increase in insurance premiums reflects growth across most lines of business driven by positive rate and exposure increases, new business and strong renewal retention.

Net written premiums increased by 21.6% to $3.7 billion for the three months ended June 30, 2023, compared to $3.0 billion for the three months ended June 30, 2022. Net written premiums increased by 20.1% to $7.0 billion for the six months ended June 30, 2023, compared to $5.8 billion for the six months ended June 30, 2022. These increases were consistent with the percentage changes in gross written premiums. Premiums earned generally reflect the portion of net premiums written that was recorded as revenues for the period as the exposure periods expire. Premiums earned increased by 11.5% to $3.3 billion for the three months ended June 30, 2023, compared to $2.9 billion for the three months ended June 30, 2022. Premiums earned increased by 11.3% to $6.4 billion for the six months ended June 30, 2023, compared to $5.7 billion for the six months ended June 30, 2022.

Other Income (Expense). We recorded other income of $38 million and other expense of $71 million for the three months ended June 30, 2023 and 2022, respectively. We recorded other expense of $42 million and other expense of $56 million for the six months ended June 30, 2023 and 2022, respectively. The changes were primarily the result of fluctuations in foreign currency exchange rates. We recognized foreign currency exchange income of $36 million and foreign currency expense of $74 million for the three months ended June 30, 2023 and 2022, respectively. We recognized foreign currency exchange expense of $49 million and $61 million for the six months ended June 30, 2023 and 2022, 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 tables present our incurred losses and LAE for the periods indicated.

			Three Months Ended June 30,
(Dollars in millions)			Current Year						Ratio %/ Pt Change						Prior Years						Ratio %/ Pt Change						Total Incurred						Ratio %/ Pt Change
2023
Attritional			$	1,933					59.5		%				$	—					—		%				$	1,933					59.5		%
Catastrophes			27						0.8		%				—						—		%				27						0.8		%
Total			$	1,960					60.3		%				$	—					—		%				$	1,960					60.3		%
2022
Attritional			$	1,792					61.4		%				$	(1)					—		%				$	1,791					61.4		%
Catastrophes			85						2.9		%				—						—		%				85						2.9		%
Total			$	1,877					64.3		%				$	(1)					—		%				$	1,876					64.3		%
Variance 2023/2022
Attritional			$	141					(2.0)		pts				$	1					—		pts				$	142					(2.0)		pts
Catastrophes			(58)						(2.1)		pts				—						—		pts				(58)						(2.1)		pts
Total			$	83					(4.0)		pts				$	1					—		pts				$	84					(4.0)		pts

(Some amounts may not reconcile due to rounding.)

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			Six Months Ended June 30,
(Dollars in millions)			Current Year						Ratio %/ Pt Change						Prior Years						Ratio %/ Pt Change						Total Incurred						Ratio %/ Pt Change
2023
Attritional			$	3,784					59.6		%				$	—					—		%				$	3,784					59.6		%
Catastrophes			142						2.2		%				—						—		%				142						2.2		%
Total			$	3,927					61.8		%				$	—					—		%				$	3,927					61.8		%
2022
Attritional			$	3,468					60.8		%				$	(2)					—		%				$	3,466					60.8		%
Catastrophes			200						3.5		%				—						—		%				200						3.5		%
Total			$	3,668					64.3		%				$	(2)					—		%				$	3,666					64.2		%
Variance 2023/2022
Attritional			$	317					(1.2)		pts				$	2					—		pts				318						(1.2)		pts
Catastrophes			(58)						(1.3)		pts				—						—		pts				(58)						(1.3)		pts
Total			$	259					(2.4)		pts				$	2					—		pts				$	261					(2.4)		pts

(Some amounts may not reconcile due to rounding.)

Incurred losses and LAE increased by 4.5% to $2.0 billion for the three months ended June 30, 2023, compared to $1.9 billion for the three months ended June 30, 2022, primarily due to an increase of $141 million in current year attritional losses, partially offset by a decrease of $58 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. The current year catastrophe losses of $27 million for the three months ended June 30, 2023 related primarily to the 2023 Turkey earthquakes ($20 million), Typhoon Mawar ($12 million), the 2023 Italian floods ($10 million), and the 2023 2nd quarter U.S. storms ($10 million), partially offset by $30 million of reinsurance recoveries related to Hurricane Ian. The $85 million of current year catastrophe losses for the three months ended June 30, 2022 related primarily to the 2022 South Africa flood ($45 million), the 2022 Canada derecho ($18 million), the 2022 2nd quarter U.S. storms ($12 million) and the 2022 Western Europe Convective storm ($10 million).

Incurred losses and LAE increased by 7.1% to $3.9 billion for the six months ended June 30, 2023, compared to $3.7 billion for the six months ended June 30, 2022, primarily due to an increase of $317 million in current year attritional losses, partially offset by a decrease of $58 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. The current year catastrophe losses of $142 million for the six months ended June 30, 2023 related primarily to the 2023 Turkey earthquakes ($95 million) the 2023 New Zealand storms ($45 million), Typhoon Mawar ($12 million), the 2023 Italian floods ($10 million) and the 2023 2nd quarter U.S. storms ($10 million), partially offset by $30 million of reinsurance recoveries related to Hurricane Ian. The $200 million of current year catastrophe losses for the six months ended June 30, 2022 related primarily to the 2022 Australia floods ($76 million), the 2022 South Africa flood ($45 million), the 2022 European storms ($30 million), the 2022 Canada derecho ($18 million), the 2022 2nd quarter U.S. storms ($12 million), the 2022 Western Europe Convective Storm ($10 million) and the 2022 March U.S. storms ($9 million).

Catastrophe losses and loss expenses typically have a material effect on our incurred losses and LAE results and can vary significantly from period to period. Losses from natural catastrophes contributed 0.8 percentage points to the combined ratio for the three months ended June 30, 2023, compared with 2.9 percentage points in the same period of 2022, and 2.2 percentage points to the combined ratio for the six months ended June 30, 2023, compared with 3.5 percentage points in the corresponding period of 2022. The Company has up to $350 million of a CAT Bond that attaches at a $48.1 billion PCS Industry loss threshold. This recovery would be recognized on a pro-rata basis up to a $63.8 billion PCS Industry loss level. PCS’s current industry estimate of $49.4 billion exceeds the attachment point. The recovery under the CAT Bond, included in the Company’s financial results, is estimated to be $25 million, subject to further revision of the industry loss estimate. In addition to the recoveries under the CAT Bond, the Company has an additional reinsurance agreement in place resulting in $5 million of recoveries related to Hurricane Ian.

Commission, Brokerage, Taxes and Fees. Commission, brokerage, taxes and fees increased by 8.8% to $686 million for the three months ended June 30, 2023, compared to $630 million for the three months ended June 30, 2022. Commission, brokerage, taxes and fees increased by 9.0% to $1.3 billion for the six months ended June 30, 2023, compared to $1.2 billion for the six months ended June 30, 2022. The increases were primarily due to the impact of the increase in premiums earned and changes in the mix of business.

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Other Underwriting Expenses. Other underwriting expenses were $205 million and $170 million for the three months ended June 30, 2023 and 2022, respectively. Other underwriting expenses were $405 million and $331 million for the six months ended June 30, 2023 and 2022, respectively. The increases in other underwriting expenses were mainly due to the impact of the increases 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 $17 million and $15 million for the three months ended June 30, 2023 and 2022, respectively, and $36 million and $29 million for the six months ended June 30, 2023 and 2022, respectively.

Interest, Fees and Bond Issue Cost Amortization Expense. Interest, fees and other bond amortization expense was $33 million and $24 million for the three months ended June 30, 2023 and 2022, respectively. Interest, fees and other bond amortization expense was $65 million and $48 million for the six months ended June 30, 2023 and 2022, respectively. The increases were mainly due to higher interest costs on the FHLBNY borrowing as a result of the rising interest rate environment. Interest expense was also impacted by the movements in the floating interest rate related to the Company’s long-term Subordinated Notes Issued 2007, which is reset quarterly per the note agreement. The floating rate was 7.71% as of June 30, 2023.

Income Tax Expense (Benefit). We had income tax expense of $80 million and income tax benefit of $4 million for the three months ended June 30, 2023 and 2022, respectively. We had income tax expense of $122 million and income tax expense of $1 million for the six months ended June 30, 2023 and 2022, 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.

On August 16, 2022, the Inflation Reduction Act of 2022 (“IRA”) was enacted. We have evaluated the tax provisions of the IRA, the most significant of which are the corporate alternative minimum tax and the share repurchase excise tax and do not expect the legislation to have a material impact on our results of operations. As the IRS issues additional guidance, we will evaluate any impact to our consolidated financial statements.

Net Income (Loss).

Our net income was $670 million and $123 million for the three months ended June 30, 2023 and 2022, respectively. Our net income was $1.0 billion and $420 million for the six months ended June 30, 2023 and 2022, respectively. These changes were primarily driven by the financial component fluctuations explained above.

Ratios.

Our combined ratio decreased by 4.1 points to 87.7% for the three months ended June 30, 2023, compared to 91.8% for the three months ended June 30, 2022 and decreased by 2.3 points to 89.4% for the six months ended June 30, 2023, compared to 91.7% for the six months ended June 30, 2022. The loss ratio component decreased by 4.0 points for the three months ended June 30, 2023 over the corresponding period last year primarily due to lower current year catastrophe losses and lack of losses from the war in the Ukraine in 2023. In the second quarter 2022, the Company established reserves of $45 million for losses from the war in the Ukraine in 2023. The loss ratio component decreased by 2.4 points for the six months ended June 30, 2022 over the corresponding period last year primarily due to lower current year catastrophe losses and no losses from the war in the Ukraine. The commission and brokerage ratio components decreased slightly to 21.1% for the three months ended June 30, 2023 compared to 21.6% for the three months ended June 30, 2022 and decreased to 21.2% for the six months ended June 30, 2023 compared to 21.6% for the six months ended June 30, 2022. These changes were mainly due to changes in the mix of business. The other underwriting expense ratios increased to 6.3% for the three months ended June 30, 2023 compared to 5.8% for the three months ended June 30, 2022 and increased to 6.4% for the six months ended June 30, 2023 compared to 5.8% for the six months ended June 30, 2022. These increases were mainly due to insurance operations costs associated with the continued build out of the insurance platform.

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Shareholders’ Equity.

Shareholders’ equity increased by $2.5 billion to $10.9 billion at June 30, 2023 from $8.4 billion at December 31, 2022, principally as a result of $1.4 billion from a public offering of shares, $1.0 billion of net income, $82 million of unrealized appreciation on available for sale fixed maturity portfolio net of tax and $30 million of net foreign currency translation adjustments, partially offset by $136 million of shareholder dividends.

Consolidated Investment Results

Net Investment Income.

Net investment income increased by 57.8% to $357 million for the three months ended June 30, 2023, compared with net investment income of $226 million for the three months ended June 30, 2022. The increase for the three months ended June 30, 2023 was primarily the result of an increase of $107 million of income from fixed maturity investments and $27 million from short-term investments and cash. Net investment income increased by 31.5% to $617 million for the six months ended June 30, 2023, compared with investment income of $469 million for the six months ended June 30, 2022. The increase for the six months ended June 30, 2023 was primarily the result of an increase of $206 million from fixed maturity investments and $44 million from short-term investments and cash, partially offset by a decline of $98 million in limited partnership income. The limited partnership income primarily reflects decreases in their reported NAVs. Accordingly, 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 June 30,												Six Months Ended June 30,
(Dollars in millions)			2023						2022						2023						2022
Fixed maturities			$	276					$	169					$	523					$	317
Equity securities			1						5						2						9
Short-term investments and cash			34						7						51						7
Other invested assets
Limited partnerships			53						48						38						136
Other			6						14						27						26
Gross investment income before adjustments			369						242						641						494
Funds held interest income (expense)			2						1						2						4
Future policy benefit reserve income (expense)			—						—						—						—
Gross investment income			371						242						643						498
Investment expenses			14						16						26						30
Net investment income			$	357					$	226					$	617					$	469

(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 June 30,												Six Months Ended June 30,
			2023						2022						2023						2022
Annualized pre-tax yield on average cash and invested assets			4.2		%				3.0		%				3.7		%				3.2		%
Annualized after-tax yield on average cash and invested assets			3.6		%				2.6		%				3.2		%				2.7		%
Annualized return on invested assets			4.2		%				(0.1)		%				3.7		%				0.5		%

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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)			2023						2022						Variance						2023						2022						Variance
Realized gains (losses) from dispositions:
Fixed maturity securities - available for sale
Gains			$	7					$	7					$	(1)					$	17					$	28					(10)
Losses			(10)						(23)						13						(19)						(40)						22
Total			(3)						(16)						12						(2)						(13)						11
Equity securities
Gains			—						4						(4)						7						8						(1)
Losses			—						(35)						35						—						(50)						50
Total			—						(31)						31						7						(43)						49
Other Invested Assets
Gains			—						3						(3)						—						8						(8)
Losses			—						(3)						3						—						(3)						3
Total			—						1						(1)						—						5						(5)
Short-Term Investments
Gains			1						—						1						1						—						1
Losses			—						—						—						—						—						—
Total			—						—						—						1						—						1
Total net realized gains (losses) from dispositions
Gains			7						15						(8)						24						43						(19)
Losses			(10)						(61)						51						(19)						(94)						75
Total			(3)						(46)						43						5						(51)						56
Allowance for credit losses			—						(1)						2						(8)						(13)						5
Gains (losses) from fair value adjustments
Equity securities			8						(189)						197						12						(326)						338
Total			8						(189)						197						12						(326)						338
Total net gains (losses) on investments			$	5					$	(236)					$	241					$	10					$	(390)					$	400

(Some amounts may not reconcile due to rounding.)

Net gains (losses) on investments during the three months ended June 30, 2023 primarily relate to net gains from fair value adjustments on equity securities in the amount of $8 million as a result of equity market improvement during the second quarter of 2023. In addition, we realized $3 million of net losses due to the disposition of investments. There were no allowances for credit losses during the second quarter of 2023.

Net gains (losses) on investments during the six months ended June 30, 2023 primarily relate to net gains from fair value adjustments on equity securities in the amount of $12 million as a result of equity market improvement during the first six months of 2023. In addition, we realized $5 million of net losses due to the disposition of investments and recorded an increase to the allowance for credit losses of $8 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.

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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. We write reinsurance business from entities chartered in the U.S., Bermuda, and Ireland, as well as through branches of those entities established 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., Bermuda, Canada, Chile, Singapore, the United Kingdom, Ireland and branches located in the Netherlands, France, Germany and Spain.

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 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, result from dividing 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)			2023						2022						Variance						% Change						2023						2022						Variance						% Change
Gross written premiums			$	2,766					$	2,201					565						25.7		%				$	5,403					$	4,387					$	1,016					23.2		%
Net written premiums			2,639						2,122						517						24.4		%				5,093						4,204						890						21.2		%
Premiums earned			$	2,382					$	2,140					$	242					11.3		%				$	4,624					$	4,206					$	418					9.9		%
Incurred losses and LAE			1,400						1,382						18						1.3		%				2,811						2,707						105						3.9		%
Commission and brokerage			583						531						52						9.8		%				1,143						1,045						98						9.4		%
Other underwriting expenses			62						52						10						18.5		%				125						103						22						21.9		%
Underwriting gain (loss)			$	337					$	175					$	162					93.0		%				$	544					$	351					$	193					54.8		%
																					Point Chg																								Point Chg
Loss ratio			58.8		%				64.6		%										(5.8)						60.8		%				64.4		%										(3.6)
Commission and brokerage ratio			24.5		%				24.8		%										(0.3)						24.7		%				24.8		%										(0.1)
Other underwriting expense ratio			2.6		%				2.4		%										0.2						2.7		%				2.4		%										0.3
Combined ratio			85.9		%				91.8		%										(5.9)						88.2		%				91.6		%										(3.4)

(NM, Not Meaningful)

(Some amounts may not reconcile due to rounding.)

Premiums. Gross written premiums increased by 25.7% to $2.8 billion for the three months ended June 30, 2023 from $2.2 billion for the three months ended June 30, 2022, primarily due to increases across all lines of business. Net written premiums increased by 24.4% to $2.6 billion for the three months ended June 30, 2023, compared to $2.1 billion for the three months ended June 30, 2022, which is consistent with the percentage change in gross written premiums. Premiums earned generally reflect the portion of net premiums written that was recorded as revenues for the period as the exposure periods expire. Premiums earned increased by 11.3% to $2.4 billion for the three months ended June 30, 2023, compared to $2.1 billion for the three months ended June 30, 2022.

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Gross written premiums increased by 23.2% to $5.4 billion for the six months ended June 30, 2023 from $4.4 billion for the six months ended June 30, 2022, primarily due to increases across all lines of business. Net written premiums increased by 21.2% to $5.1 billion for the six months ended June 30, 2023 compared to $4.2 billion for the six months ended June 30, 2022. The increase was consistent with the percentage increase in gross written premiums. Premiums earned generally reflect the portion of net premiums written that was recorded as revenues for the period as the exposure periods expire. Premiums earned increased by 9.9% to $4.6 billion for the six months ended June 30, 2023, compared to $4.2 billion for the six months ended June 30, 2022.

Incurred Losses and LAE. The following tables present the incurred losses and LAE for the Reinsurance segment for the periods indicated.

			Three Months Ended June 30,
(Dollars in millions)			Current Year						Ratio %/ Pt Change						Prior Years						Ratio %/ Pt Change						Total Incurred						Ratio %/ Pt Change
2023
Attritional			$	1,373					57.6		%				$	—					—		%				1,373						57.6		%
Catastrophes			27						1.1		%				—						—		%				27						1.1		%
Total Segment			$	1,400					58.8		%				$	—					—		%				$	1,400					58.8		%
2022
Attritional			$	1,303					60.9		%				$	(1)					0.0		%				1,302						60.9		%
Catastrophes			80						3.7		%				—						—		%				80						3.7		%
Total Segment			$	1,383					64.6		%				$	(1)					0.0		%				$	1,382					64.6		%
Variance 2023/2022
Attritional			$	70					(3.2)		pts				$	1					—		pts				$	71					(3.2)		pts
Catastrophes			(53)						(2.6)		pts				—						—		pts				(53)						(2.6)		pts
Total Segment			$	17					(5.8)		pts				$	1					—		pts				$	18					(5.8)		pts

			Six Months Ended June 30,
(Dollars in millions)			Current Year						Ratio %/ Pt Change						Prior Years						Ratio %/ Pt Change						Total Incurred						Ratio %/ Pt Change
2023
Attritional			$	2,671					57.8		%				$	—					—		%				2,671						57.8		%
Catastrophes			140						3.0		%				—						—		%				140						3.0		%
Total Segment			$	2,811					60.8		%				$	—					—		%				$	2,811					60.8		%
2022
Attritional			$	2,519					59.9		%				$	(2)					-0.1		%				2,517						59.9		%
Catastrophes			190						4.5		%				—						—		%				190						4.5		%
Total Segment			$	2,709					64.4		%				$	(2)					-0.1		%				$	2,707					64.4		%
Variance 2023/2022
Attritional			$	152					(2.1)		pts				$	2					0.1		pts				$	154					(2.2)		pts
Catastrophes			$	(50)					(1.5)		pts				—						—		pts				(50)						(1.5)		pts
Total Segment			$	102					(3.6)		pts				$	2					0.1		pts				$	105					(3.6)		pts

Incurred losses increased by 1.3% to $1.4 billion for the three months ended June 30, 2023, compared to $1.4 billion for the three months ended June 30, 2022. The increase was primarily due to an increase of $70 million in current year attritional losses, partially offset by a decrease of $53 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. The current year catastrophe losses of $27 million for the three months ended June 30, 2023 related primarily to the 2023 Turkey earthquakes ($20 million), Typhoon Mawar ($12 million), the 2023 Italian floods ($10 million), the 2023 2nd quarter U.S. storms ($10 million) and the 2023 New Zealand storms ($5 million), partially offset by $30 million of reinsurance recoveries related to Hurricane Ian. The $80 million of current year catastrophe losses for the three months ended June 30, 2022 related primarily to the 2022 South Africa flood ($45 million), the 2022 Canada derecho ($18 million), the 2022 Western Europe Convective storm ($10 million) and the 2022 2nd quarter U.S. storms ($7 million).

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Incurred losses increased by 3.9% to $2.8 billion for the six months ended June 30, 2023, compared to $2.7 billion for the six months ended June 30, 2022. The increase was primarily due to an increase of $152 million in current year attritional losses, partially offset by a decrease of $50 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. The current year catastrophe losses of $140 million for the six months ended June 30, 2023 related primarily to the 2023 Turkey earthquakes ($95 million) the 2023 New Zealand storms ($43 million), Typhoon Mawar ($12 million), the 2023 Italian floods ($10 million) and the 2023 2nd quarter U.S. storms ($10 million), partially offset by $30 million of reinsurance recoveries related to Hurricane Ian. The $190 million of current year catastrophe losses for the six months ended June 30, 2022 related primarily to the 2022 Australia floods ($76 million), the 2022 South Africa flood ($45 million), the 2022 European storms ($30 million), the 2022 Canada derecho ($18 million), the 2022 Western Europe Convective storm ($10 million), the 2022 2nd quarter U.S. storms ($7 million) and the 2022 March U.S. storms ($4 million).

Segment Expenses. Commission and brokerage expense increased by 9.8% to $583 million for the three months ended June 30, 2023, compared to $531 million for the three months ended June 30, 2022. Commission and brokerage expense increased by 9.4% to $1.1 billion for the six months ended June 30, 2023, compared to $1.0 billion for the six months ended June 30, 2022. The increases were mainly due to the impact of the increase in premiums earned and changes in the mix of business.

Segment other underwriting expenses increased to $62 million for the three months ended June 30, 2023 from $52 million for the three months ended June 30, 2022. Segment other underwriting expenses increased to $125 million for the six months ended June 30, 2023 from $103 million for the six months ended June 30, 2022. The increases were mainly due to the increase in written premium attributable to the planned expansion of the business.

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)			2023						2022						Variance						% Change						2023						2022						Variance						% Change
Gross written premiums			$	1,414					$	1,246					$	168					13.5		%				$	2,520					$	2,247					$	274					12.2		%
Net written premiums			1,035						899						135						15.0		%				1,910						1,630						280						17.2		%
Premiums earned			$	869					$	777					$	93					11.9		%				$	1,728					$	1,502					$	226					15.0		%
Incurred losses and LAE			560						494						66						13.3		%				1,115						959						156						16.3		%
Commission and brokerage			103						99						3						3.1		%				204						190						13						6.9		%
Other underwriting expenses			143						117						26						21.9		%				280						228						51						22.5		%
Underwriting gain (loss)			$	64					$	66					$	(2)					(3.0)		%				$	129					$	124					$	5					4.1		%
																					Point Chg																								Point Chg
Loss ratio			64.4%						63.6%												0.8						64.6%						63.9%												0.7
Commission and brokerage ratio			11.8%						12.8%												(1.0)						11.8%						12.7%												(0.9)
Other underwriting expense ratio			16.5%						15.1%												1.4						16.2%						15.2%												1.0
Combined ratio			92.7%						91.5%												1.2						92.5%						91.7%												0.8

(NM not meaningful)

(Some amounts may not reconcile due to rounding.)

Premiums. Gross written premiums increased by 13.5% to $1.4 billion for the three months ended June 30, 2023 compared to $1.2 billion for the three months ended June 30, 2022. The increase in insurance premiums was primarily due to increases in property/short tail business, specialty casualty business and other specialty lines of business. Net written premiums increased by 15.0% to $1.0 billion for the three months ended June 30, 2023, compared to $899 million for the three months ended June 30, 2022. The higher percentage change in net written premiums compared to gross written premiums is due to higher net retention resulting from changes in the mix of business. Premiums earned increased by 11.9% to $869 million for the three months ended June 30, 2023, compared to $777 million for the three months ended June 30, 2022.

Gross written premiums increased by 12.2% to $2.5 billion for the six months ended June 30, 2023, compared to $2.2 billion for the six months ended June 30, 2022. The increase in insurance premiums was primarily due to increases in

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property/short tail business, specialty casualty business and other specialty lines of business. Net written premiums increased by 17.2% to $1.9 billion for the six months ended June 30, 2023, compared to $1.6 billion for the six months ended June 30, 2022. The higher percentage increase in net written premiums compared to gross written premiums was mainly due to higher net retention resulting from changes in the mix of business. Premiums earned increased by 15.0% to $1.7 billion for the six months ended June 30, 2023, compared to $1.5 billion for the six months ended June 30, 2022. The change in premiums earned relative to net written premiums is the result of timing; premiums are earned ratably over the coverage period, whereas written premiums are recorded at the initiation of the coverage period.

Incurred Losses and LAE. The following tables present the incurred losses and LAE for the Insurance segment for the periods indicated.

			Three Months Ended June 30,
(Dollars in millions)			Current Year						Ratio %/ Pt Change						Prior Years						Ratio %/ Pt Change						Total Incurred						Ratio %/ Pt Change
2023
Attritional			$	560					64.4		%				$	—					—		%				560						64.4		%
Catastrophes			—						—		%				—						—		%				—						—		%
Total Segment			$	560					64.4		%				$	—					—		%				$	560					64.4		%
2022
Attritional			$	489					63.0		%				$	—					—		%				489						63.0		%
Catastrophes			5						0.6		%				—						—		%				5						0.6		%
Total Segment			$	494					63.6		%				$	—					—		%				$	494					63.6		%
Variance 2023/2022
Attritional			$	71					1.4		pts				$	—					—		pts				$	71					1.4		pts
Catastrophes			(5)						(0.6)		pts				—						—		pts				(5)						(0.6)		pts
Total Segment			$	66					0.8		pts				$	—					—		pts				$	66					0.8		pts

			Six Months Ended June 30,
(Dollars in millions)			Current Year						Ratio %/ Pt Change						Prior Years						Ratio %/ Pt Change						Total Incurred						Ratio %/ Pt Change
2023
Attritional			$	1,113					64.4		%				$	—					—		%				1,113						64.4		%
Catastrophes			2						0.1		%				—						—		%				2						0.1		%
Total Segment			$	1,115					64.6		%				$	—					—		%				$	1,115					64.6		%
2022
Attritional			$	949					63.1		%				$	1					—		%				949						63.1		%
Catastrophes			10						0.7		%				—						—		%				10						0.7		%
Total Segment			$	959					63.8		%				$	1					—		%				$	959					63.9		%
Variance 2023/2022
Attritional			$	165					1.3		pts				$	(1)					—		pts				164						1.3		pts
Catastrophes			(8)						(0.6)		pts				—						—		pts				(8)						(0.6)		pts
Total Segment			$	157					0.7		pts				$	(1)					—		pts				$	156					0.7		pts

(Some amounts may not reconcile due to rounding.)

Incurred losses and LAE increased by 13.3% to $560 million for the three months ended June 30, 2023, compared to $494 million for the three months ended June 30, 2022. The increase was mainly due to an increase of $71 million in current year attritional losses. The increase in current year attritional losses was primarily due to a change in mix of business and to a one-time premium adjustment, which reduced net premiums written and net premiums earned by approximately $6 million. There were no current year catastrophe losses for the three months ended June 30, 2023. The $5 million of current year catastrophe losses for the three months ended June 30, 2022 related to the 2022 2nd quarter U.S. storms.

Incurred losses and LAE increased by 16.3% to $1.1 billion for the six months ended June 30, 2023, compared to $959 million for the six months ended June 30, 2022. The increase was mainly due to an increase of $165 million in current

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year attritional losses, partially offset by a decrease in current year catastrophe losses of $8 million. The increase in current year attritional losses was primarily due to a change in mix of business and to a one-time premium adjustment, which reduced net premiums written and net premiums earned by approximately $6 million. The current year catastrophe losses of $2 million for the six months ended June 30, 2023 related to the 2023 New Zealand storms. The $10 million of current year catastrophe losses for the six months ended June 30, 2022 related to the 2022 March U.S. storms ($5 million) and the 2022 2nd quarter U.S. storms ($5 million).

Segment Expenses. Commission and brokerage expenses increased by 3.1% to $103 million for the three months ended June 30, 2023 compared to $99 million for the three months ended June 30, 2022. Commission and brokerage expenses increased by 6.9% to $204 million for the six months ended June 30, 2023, compared to $190 million for the six months ended June 30, 2022. These increases were mainly due to the impact of the increase in premiums earned and increased expenses related to the continued build out of the insurance business, including an expansion of the international insurance platform.

Segment other underwriting expenses increased to $143 million for the three months ended June 30, 2023, compared to $117 million for the three months ended June 30, 2022. Segment other underwriting expenses increased to $280 million for the six months ended June 30, 2023, compared to $228 million for the six months ended June 30, 2022. These increases were mainly due to the impact of the increase 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 $31.5 billion at June 30, 2023, an increase of $3.0 billion compared to $28.5 billion at December 31, 2022. The rise in investments was primarily related to an increase in fixed maturities - available for sale due to an overall net purchase of $2.1 billion of fixed maturities - available for sale during the first half of 2023.

The Company’s limited partnership investments are comprised of limited partnerships that invest in private equity, private credit and private real estate. Generally, the limited partnerships are reported on a month or quarter lag. We receive annual audited financial statements for all 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 summarizes the composition and characteristics of our investment portfolio for the periods indicated.

			At June 30, 2023						At December 31, 2022
Fixed income portfolio duration (years)			2.9						3.1
Fixed income composite credit quality			A+						A+

Reinsurance Recoverables.

Reinsurance recoverables for both paid and unpaid losses totaled $2.4 billion and $2.2 billion at June 30, 2023 and December 31, 2022, respectively. At June 30, 2023, $470 million, or 19.8%, was receivable from Mt. Logan Re collateralized segregated accounts; $256 million, or 10.8%, was receivable from Munich Reinsurance America, Inc. and $166 million, or 7.0% was receivable from Endurance Specialty Holdings, Ltd. No other retrocessionaire accounted for more than 5% of our recoverables.

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Loss and LAE Reserves. Gross loss and LAE reserves totaled $23.4 billion and $22.1 billion at June 30, 2023 and December 31, 2022, 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, 2023
(Dollars in millions)			Case Reserves						IBNR Reserves						Total Reserves						% of Total
Reinsurance			$	6,251					$	10,550					$	16,801					71.8		%
Insurance			1,923						4,417						6,340						27.1		%
Total excluding A&E			8,174						14,967						23,141						98.9		%
A&E			143						121						264						1.1		%
Total including A&E			$	8,316					$	15,088					$	23,405					100.0		%

(Some amounts may not reconcile due to rounding.)

			At December 31, 2022
(Dollars in millions)			Case Reserves						IBNR Reserves						Total Reserves						% of Total
Reinsurance			$	6,045					$	9,818					$	15,862					71.9		%
Insurance			1,863						4,062						5,925						26.9		%
Total excluding A&E			7,908						13,880						21,787						98.7		%
A&E			138						140						278						1.3		%
Total including A&E			$	8,046					$	14,019					$	22,065					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 carried 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, accident years, legal entities, and in the aggregate. In order to set appropriate reserves, we make qualitative and quantitative analyses and judgments 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. Management’s best estimate is developed through collaboration with actuarial, underwriting, claims, legal and finance departments and culminates with the input of reserve committees. Each segment reserve committee includes the participation of the relevant parties from actuarial, finance, claims and segment senior management and has the responsibility for recommending and approving management’s best estimate. Reserves are further reviewed by Everest’s Chief Reserving Actuary and senior management. The objective of this process is to determine a single best estimate viewed by management to be the best estimate of its ultimate loss liability. 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.

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Asbestos and Environmental Exposures. Asbestos and Environmental (“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 June 30,						At December 31,
(Dollars in millions)			2023						2022
Gross reserves			$	264					$	278
Ceded reserves			(17)						(21)
Net reserves			$	247					$	257

(Some amounts may not reconcile due to rounding.)

With respect to asbestos only, at June 30, 2023, we had net asbestos loss reserves of $223 million, or 90.5%, 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 7.0 years at June 30, 2023. 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, 2023 and December 31, 2022 was $10.9 billion and $8.4 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 and the State of Delaware’s 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)			2022						2021						2022						2021
Regulatory targeted capital			$	2,217					$	2,169					$	3,353					$	2,960
Actual capital			$	2,759					$	3,184					$	5,553					$	5,717

(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.

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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 terms of probable maximum loss (“PML”). A full discussion on PMLs is included in our December 31, 2022 Form 10-K filing in PART 1, Item 1. 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, 2022 Form 10-K, we reported that our projected net economic loss from our largest projected 100-year event represented approximately 6.9% of our December 31, 2022 shareholders’ equity. During the first half of 2023, 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 6.5% of our June 30, 2023 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, 2023.

Return Periods (in years)			1 in 20						1 in 50						1 in 100						1 in 250						1 in 500
Exceeding Probability			5.0%						2.0%						1.0%						0.4%						0.2%
(Dollars in millions)
Zone/ Peril
California, Earthquake			$	169					$	726					$	1,029					$	1,313					$	1,576
Southeast U.S., Wind			487						693						886						1,132						1,297
Europe Wind			167						384						611						913						1,058
Texas Wind			141						378						592						825						1,102

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
Exceeding Probability			5.0%						2.0%						1.0%						0.4%						0.2%
(Dollars in millions)
Zone/ Peril
California, Earthquake			$	134					$	514					$	707					$	874					$	1,039
Southeast U.S., Wind			333						452						546						701						803
Europe Wind			137						296						458						686						781
Texas Wind			104						273						403						525						685

During the first half of 2023, we conducted no repurchases of our shares in the open market. We paid $136 million in dividends to adjust our capital position and enhance long-term expected returns to our shareholders. In 2022, we repurchased 241,273 shares for $61 million in the open market and paid $255 million in dividends. We may at times enter into a Rule 10b5-1 repurchase plan agreement to facilitate the repurchase of shares or conduct such repurchases under an arrangement that complies with the requirements of Rule 10b-18. On May 22, 2020, our existing Board authorization to purchase up to 30 million of our shares was amended to authorize the purchase of up to 32 million shares. As of June 30, 2023, we had repurchased 30.8 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.

On May 19, 2023, the Company completed the public offering of 4,140,000 common shares, which includes full exercise of the underwriters’ option to purchase an additional 540,000 common shares, at a public offering price of $360.00 per share. Total net proceeds from the public offering were $1,445 million, after underwriting discount and expenses. The

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Company intends to use the net proceeds from this offering for long-term reinsurance opportunity and continuing build out of the global insurance business.

Liquidity. Our liquidity requirements are generally met from positive cash flow from operations. Positive cash flow results from reinsurance and insurance premiums being collected prior to disbursements for claims, which disbursements generally take place over an extended period after the collection of premiums, sometimes a period of many years. Collected premiums are generally invested, prior to their use in such disbursements, and investment income provides additional funding for loss payments. Our net cash flows from operating activities were $2.2 billion and $1.6 billion for the six months ended June 30, 2023 and 2022, respectively. Additionally, these cash flows reflected net catastrophe loss payments of $458 million and $377 million for the six months ended June 30, 2023 and 2022, respectively, and net tax payments of $73 million and $101 million for the six months ended June 30, 2023 and 2022, respectively.

If disbursements for losses and LAE, 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 of both short-term investments and longer term maturities are available to supplement other operating cash flows. We do not expect to supplement negative insurance operations cash flows with investment dispositions.

As the timing of payments for losses and LAE 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, 2023 and December 31, 2022, we held cash and short-term investments of $3.7 billion and $2.4 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, 2023, we had $1.6 billion of available for sale fixed maturity securities maturing within one year or less, $7.8 billion maturing within one to five years and $5.7 billion maturing after five years. We believe that these fixed maturity 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 and LAE in the near future. We do not anticipate selling a significant amount of securities to pay losses and LAE. At June 30, 2023, we had $1.8 billion of net pre-tax unrealized depreciation related to fixed maturity - available for sale securities, comprised of $1.9 billion of pre-tax unrealized depreciation and $63 million of pre-tax unrealized appreciation.

Management generally expects annual positive cash flow from operations, which reflects the strength of overall pricing. However, given catastrophic events observed in recent periods, 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 and/or any payments due for its catastrophe bond program.

In addition to our cash flows from operations and liquid investments, we also have multiple active credit facilities that provide commitments of up to $1.5 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 $440 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 7 – Credit Facilities for further details.

Market Sensitive Instruments.

The Securities and Exchange Commission’s (“SEC”) 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 securities. Additionally, we have invested in equity securities.

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

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Interest Rate Risk. Our $33.5 billion investment portfolio at June 30, 2023 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, interest rate risk includes prepayment risk on the $4.4 billion of mortgage-backed securities in the $25.3 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 market value fluctuations and after-tax unrealized appreciation on our fixed maturity portfolio (including $1.7 billion of short-term investments) for the period indicated based on upward and downward parallel and immediate 100 and 200 basis point shifts in interest rates. For legal entities with a U.S. dollar functional currency, this modeling was performed on each security individually. To generate appropriate price estimates on mortgage-backed securities, changes in prepayment expectations under different interest rate environments were taken into account. For legal entities with a non-U.S. dollar functional currency, the effective duration of the involved portfolio of securities was used as a proxy for the market value change under the various interest rate change scenarios.

			Impact of Interest Rate Shift in Basis Points At June 30, 2023
			-200						-100						0						100						200
(Dollars in millions)
Total Fair Value			$	28,428					$	27,695					$	26,962					$	26,229					$	25,496
Fair Value Change from Base (%)			5.4		%				2.7		%				—		%				(2.7)		%				(5.4)		%
Change in Unrealized Appreciation
After-tax from Base ($)			$	1,280					$	640					$	—					$	(640)					$	(1,280)

We had $23.4 billion and $22.1 billion of gross reserves for losses and LAE as of June 30, 2023 and December 31, 2022, respectively. These amounts are recorded at their nominal value, as opposed to present value, which would reflect a discount adjustment to reflect the time value of money. Since losses are paid out over a period of time, the present value of the reserves is less than the nominal value. As interest rates rise, the present value of the reserves decreases and, conversely, as interest rates decline, the present value increases. These movements are the opposite of the interest rate impacts on the fair value of investments. While the difference between present value and nominal value is not reflected in our financial statements, our financial results will include investment income over time from the investment portfolio until the claims are paid. Our loss and loss reserve obligations have an expected duration of approximately 3.8 years, which is reasonably consistent with our fixed income portfolio. If we were to discount our loss and LAE reserves, net of ceded reserves, the discount would be approximately $3.8 billion resulting in a discounted reserve balance of approximately $17.4 billion, representing approximately 64.5% 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 Values At June 30, 2023
(Dollars in millions)			-20%						-10%						0%						10%						20%
Fair Value of the Equity Portfolio			$	208					$	233					$	259					$	285					$	311
After-tax Change in Fair Value			$	(42)					$	(21)					$	—					$	21					$	42

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

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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:

• the effects of catastrophic and pandemic events on our financial statements;

• estimates of our catastrophe exposure;

• information regarding our reserves for losses and LAE;

• our failure to accurately assess underwriting risk;

• decreases in pricing for property and casualty reinsurance and insurance;

• our ability to maintain our financial strength ratings;

• the failure of our insured, intermediaries and reinsurers to satisfy their obligations;

• our inability or failure to purchase reinsurance;

• consolidation of competitors, customers and insurance and reinsurance brokers;

• the effect on our business of the highly competitive nature of our industry, including the effect of new entrants to, competing products for and consolidation in the (re)insurance industry;

• our ability to retain our key executive officers and to attract or retain the executives and employees necessary to manage our business;

• the performance of our investment portfolio;

• our ability to determine any impairments taken on our investments;

• foreign currency exchange rate fluctuations;

• the effect of cybersecurity risks, including technology breaches or failure, on our business;

• the CARES Act;

• the impact of the Tax Cut and Jobs Act;

• the adequacy of capital in relation to regulatory required capital; and

• the ability of Everest Re, Holdings, Everest Underwriting Group (Ireland) Limited, Everest Dublin Insurance Holdings Limited (Ireland), Bermuda Re and Everest International Reinsurance, Ltd. to pay dividends.

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.