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 insurance and reinsurance is generally not consistent across lines of business, domestic and international geographical areas and distribution channels.

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 ongoing Middle East war and the war in Ukraine continue to evolve. 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 these wars and associated sanctions have impacted economic and investment markets both within Russia, Ukraine, the Middle East region, and around the world.

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 March 31,												Percentage Increase/ (Decrease)
(Dollars in millions)																		2024						2023
Gross written premiums																					$	4,411					$	3,743					17.9		%
Net written premiums																					3,900						3,329						17.1		%
REVENUES:
Premiums earned																					$	3,652					$	3,100					17.8		%
Net investment income																					457						260						76.0		%
Net gains (losses) on investments																					(7)						5						NM
Other income (expense)																					31						(79)						NM
Total revenues																					4,133						3,286						25.8		%
CLAIMS AND EXPENSES:
Incurred losses and loss adjustment expenses																					2,237						1,966						13.8		%
Commission, brokerage, taxes and fees																					782						661						18.2		%
Other underwriting expenses																					224						200						12.1		%
Corporate expenses																					22						19						15.2		%
Interest, fees and bond issue cost amortization expense																					37						32						16.5		%
Total claims and expenses																					3,302						2,878						14.7		%
INCOME (LOSS) BEFORE TAXES																					832						408						NM
Income tax expense (benefit)																					99						43						NM
NET INCOME (LOSS)																					$	733					$	365					NM
RATIOS:																																	Point Change
Loss ratio																					61.3		%				63.4		%				(2.1)
Commission and brokerage ratio																					21.4		%				21.3		%				0.1
Other underwriting expense ratio																					6.1		%				6.4		%				(0.3)
Combined ratio																					88.8		%				91.2		%				(2.4)

			At March 31,						At December 31,						Percentage Increase/ (Decrease)
(Dollars in millions, except per share amounts)			2024						2023
Balance sheet data:
Total investments and cash			$	38,148					$	37,142					2.7		%
Total assets			50,937						49,399						3.1		%
Reserve for losses and loss adjustment expenses			25,211						24,604						2.5		%
Total debt			3,386						3,385						—		%
Total liabilities			37,308						36,197						3.1		%
Shareholders' equity			13,628						13,202						3.2		%
Book value per share			313.55						304.29						3.0		%

(NM, not meaningful)

(Some amounts may not reconcile due to rounding.)

Revenues.

Premiums. Gross written premiums increased by 17.9% to $4.4 billion for the three months ended March 31, 2024, compared to $3.7 billion for the three months ended March 31, 2023, reflecting a $555 million, or 21.2%, increase in our reinsurance business and a $114 million, or 10.1%, increase in our insurance business. The increase in reinsurance premiums was primarily due to property pro rata business and casualty pro rata business. The increase in insurance premiums was primarily due to property/short tail business and other specialty business.

Net written premiums increased by 17.1% to $3.9 billion for the three months ended March 31, 2024, compared to $3.3 billion for the three months ended March 31, 2023, which is consistent with the percentage change in gross written premiums. Premiums earned increased by 17.8% to $3.7 billion during the three months ended March 31, 2024, compared to $3.1 billion during the three months ended March 31, 2023. The change in premiums earned relative to net written premiums was primarily the result of timing; premiums are earned ratably over the coverage period whereas written premiums are recorded at the initiation of the coverage period.

Other Income (Expense). We recorded other income of $31 million and other expense of $79 million for the three months ended March 31, 2024 and 2023, respectively. The changes were primarily the result of fluctuations in foreign currency exchange rates. We recognized foreign currency exchange income of $32 million for the three months ended March 31, 2024 and foreign currency exchange expense of $85 million for the three months ended March 31, 2023.

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 March 31,
(Dollars in millions)			Current Year						Ratio %/ Pt Change						Prior Years						Ratio %/ Pt Change						Total Incurred						Ratio %/ Pt Change
2024
Attritional			$	2,152					58.9		%				$	—					—		%				$	2,152					58.9		%
Catastrophes			85						2.3		%				—						—		%				85						2.3		%
Total			$	2,237					61.3		%				$	—					—		%				$	2,237					61.3		%
2023
Attritional			$	1,851					59.7		%				$	—					—		%				$	1,851					59.7		%
Catastrophes			115						3.7		%				—						—		%				115						3.7		%
Total			$	1,966					63.4		%				$	—					—		%				$	1,966					63.4		%
Variance 2024/2023
Attritional			$	301					(0.8)		pts				$	—					—		pts				$	301					(0.8)		pts
Catastrophes			(30)						(1.4)		pts				—						—		pts				(30)						(1.4)		pts
Total			$	271					(2.2)		pts				$	—					—		pts				$	271					(2.2)		pts

(Some amounts may not reconcile due to rounding.)

Incurred losses and LAE increased by 13.8% to $2.2 billion for the three months ended March 31, 2024, compared to $2.0 billion for the three months ended March 31, 2023, primarily due to an increase of $301 million in current year attritional losses, partially offset by a decrease of $30 million in current year catastrophe losses. The increase in current year attritional losses was mainly due to the impact of the increase in underlying exposures due to increased premiums earned. The current year catastrophe losses of $85 million for the three months ended March 31, 2024 related primarily to the 2024 Baltimore bridge collapse ($70 million) and the 2024 United States (“U.S.”) East Coast convective storms ($15 million). The $115 million of current year catastrophe losses for the three months ended March 31, 2023 related primarily to the 2023 Turkey earthquakes ($75.0 million), and the 2023 New Zealand storms ($40.0 million).

Catastrophe losses and loss expenses typically have a material effect on our incurred losses and loss adjustment expense results and can vary significantly from period to period. Losses from natural and man-made catastrophes contributed 2.3 percentage points to the combined ratio for the three months ended March 31, 2024, compared with 3.7 percentage points for the three months ended March 31, 2023. The Company has up to $350 million of catastrophe bond protection (“CAT Bond”) that attaches at a $48.1 billion Property Claims Services (“PCS”) Industry loss threshold. This recovery would be recognized on a pro-rata basis up to a $63.8 billion PCS Industry loss level. As a result of Hurricane Ian, PCS’s current industry estimate of $48.3 billion issued in April 2024 exceeds the attachment point. The potential recovery under the CAT Bond is not expected to be material.

Commission, Brokerage, Taxes and Fees. Commission, brokerage, taxes and fees increased by 18.2% to $782 million for the three months ended March 31, 2024 compared to $661 million for the three months ended March 31, 2023. The increase was primarily due to the impact of the increase in premiums earned and changes in the mix of business.

Other Underwriting Expenses. Other underwriting expenses were $224 million and $200 million for the three months ended March 31, 2024 and March 31, 2023, respectively. The increase in other underwriting expenses was mainly due to the impact of the increase in premiums earned as well as the continued build out of our insurance operations, including an expansion of the international insurance platform.

Corporate Expenses. Corporate expenses, which are general operating expenses that are not allocated to segments, were $22 million and $19 million for the three months ended March 31, 2024 and 2023, respectively. The increase from 2023 to 2024 was mainly due to information technology costs.

Interest, Fees and Bond Issue Cost Amortization Expense. Interest, fees and other bond amortization expense was $37 million and $32 million for the three months ended March 31, 2024 and 2023, respectively. Interest expense was mainly impacted by the movement in the floating interest rate related to the Company’s long-term subordinated notes, which is reset quarterly per the note agreement, as well as variable interest rate costs on borrowings from FHLB.

Income Tax Expense (Benefit). We had income tax expense of $99 million and $43 million for the three months ended March 31, 2024 and 2023, 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.

With the assent of the governor on December 27, 2023, the Bermuda Corporate Income Tax Act of 2023 (“The 2023 Act”) became law. Beginning in 2025, a 15% corporate income tax will be applicable to Bermuda businesses that are part of multinational enterprise groups with annual revenue of €750 million or more. Group’s Bermuda entities will be subject to the new corporate income tax. The Company has evaluated The 2023 Act and has recorded $578 million of net deferred income tax benefits as of December 31, 2023. The net deferred income tax benefits relate primarily to a default provision in the law which allows for what is called an “Economic Transition Adjustment” (“ETA”). The ETA allowed companies to establish deferred tax assets or liabilities related to the revaluation of intangible assets, excluding goodwill, and their other assets and liabilities, based on fair value as of September 30, 2023.

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.

Net Income (Loss).

Our net income was $733 million and $365 million for the three months ended March 31, 2024 and 2023, respectively. These changes were primarily driven by the financial component fluctuations explained above.

Ratios.

Our combined ratio decreased by 2.4 points to 88.8% for the three months ended March 31, 2024, compared to 91.2% for the three months ended March 31, 2023. The loss ratio component decreased by 2.1 points for the three months ended March 31, 2024 over the same period last year mainly due to a $30 million decrease in catastrophe losses and changes in the mix of business. The commission and brokerage ratio components increased to 21.4% for the three months ended March 31, 2024 compared to 21.3% for the three months ended March 31, 2023. The increase was mainly due to changes in the mix of business. The other underwriting expense ratios decreased to 6.1% for the three months ended March 31, 2024 compared to 6.4% for the three months ended March 31, 2023. This decrease was mainly due to higher insurance operations costs offset by higher earned premium base.

Shareholders’ Equity.

Shareholders’ equity increased by $426 million to $13.6 billion at March 31, 2024 from $13.2 billion at December 31, 2023, principally as a result of $733 million of net income, partially offset by $153 million of unrealized depreciation on available for sale fixed maturity portfolio net of tax, $38 million of net foreign currency translation adjustments, $76 million of shareholder dividends and $35 million of treasury share purchases.

Consolidated Investment Results

Net Investment Income.

Net investment income increased by 76.0% to $457 million for the three months ended March 31, 2024 compared with net investment income of $260 million for the three months ended March 31, 2023. The increase for the three months ended March 31, 2024 was primarily the result of an increase of $105 million in income from fixed maturity investments, an increase of $21 million in short-term investments and an increase of $69 million in limited partnership income. The limited partnership income primarily reflects changes in their reported net asset values. As such, until these asset values are monetized and the resultant income is distributed, they are subject to future increases or decreases in the asset value, and the results may be volatile.

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

									Three Months Ended March 31,
(Dollars in millions)															2024						2023
Fixed maturities															$	352					$	247
Equity securities															1						1
Short-term investments and cash															38						17
Other invested assets
Limited partnerships															54						(15)
Other															20						22
Gross investment income before adjustments															465						272
Funds held interest income (expense)															6						—
Future policy benefit reserve income (expense)															—						—
Gross investment income															470						272
Investment expenses															13						12
Net investment income															$	457					$	260

(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 March 31,
															2024						2023
Annualized pre-tax yield on average cash and invested assets															4.8		%				3.2		%
Annualized after-tax yield on average cash and invested assets															4.1		%				2.8		%
Annualized return on invested assets															4.7		%				3.3		%

Net Gains (Losses) on Investments.

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

			Three Months Ended March 31,
(Dollars in millions)			2024						2023						Variance
Realized gains (losses) from dispositions:
Fixed maturity securities - available for sale
Gains			$	11					$	11					$	—
Losses			(18)						(9)						(9)
Total			(7)						2						(9)
Equity securities
Gains			1						7						(6)
Losses			—						—						—
Total			1						7						(6)
Other Invested Assets
Gains			—						—						—
Losses			—						—						—
Total			—						—						—
Total net realized gains (losses) from dispositions
Gains			12						18						(7)
Losses			(18)						(9)						(9)
Total			(6)						9						(16)
Allowance for credit losses			2						(8)						10
Gains (losses) from fair value adjustments
Equity securities			(2)						4						(7)
Total			(2)						4						(7)
Total net gains (losses) on investments			$	(7)					$	5					$	(12)

(Some amounts may not reconcile due to rounding.)

Net gains (losses) on investments during the three months ended March 31, 2024 primarily relate to $6 million of losses due to the disposition of investments, $2 million of losses from fair value adjustments on equity securities, partially offset by a decrease to the allowance for credit losses of $2 million. The realized losses from dispositions of investments mainly related to the execution of a Company strategy to sell lower yielding investments in order to reinvest the proceeds at higher interest rates.

Segment Results.

The Company operates through two operating segments. The Reinsurance operation writes worldwide property and casualty reinsurance and specialty lines of business, on both a treaty and facultative basis, through reinsurance brokers, as well as directly with ceding companies. Business is written in the U.S., Bermuda, and Ireland offices, as well as, through branches in Canada, Singapore, the United Kingdom (“UK”) and Switzerland. The Insurance operation writes property and casualty insurance directly and through brokers, including for surplus lines, 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 UK, Ireland, and branches located in the UK, the Netherlands, France, Germany and Spain. The two 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.

Our two operating segments each have executive leadership who are responsible for the overall performance of their respective segments and who are directly accountable to our chief operating decision maker (“CODM”), the Chief

Executive Officer of Everest Group, Ltd., who is ultimately responsible for reviewing the business to assess performance, make operating decisions and allocate resources. We report the results of our operations consistent with the manner in which our CODM reviews the business.

During the fourth quarter of 2023, the Company revised the classification and presentation of certain products related to its accident and health business within the segment groupings. These products have been realigned from within the Reinsurance segment to the Insurance segment to appropriately reflect how the business segments are managed. These changes have been reflected retrospectively.

The Company does not review and evaluate the financial results of its operating segments based upon balance sheet data. Management generally monitors and evaluates the financial performance of these operating segments based upon their underwriting results. Underwriting results include earned premium less losses and loss adjustment expenses (“LAE”) incurred, commission and brokerage expenses and other underwriting expenses. The Company measures its underwriting results using ratios, in particular, loss, commission and brokerage and other underwriting expense ratios, which, respectively, divide incurred losses, commissions and brokerage and other underwriting expenses by premiums earned. Management has determined that these measures are appropriate and align with how the business is managed. We continue to evaluate our segments as our business evolves and may further refine our segments and financial performance measures.

The following tables present the underwriting results for 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 March 31,
(Dollars in millions)																											2024						2023						Variance						% Change
Gross written premiums																											$	3,175					$	2,620					$	555					21.2		%
Net written premiums																											2,942						2,438						504						20.7		%
Premiums earned																											$	2,728					$	2,226					$	503					22.6		%
Incurred losses and LAE																											1,641						1,401						240						17.1		%
Commission and brokerage																											671						556						115						20.7		%
Other underwriting expenses																											71						63						8						12.1		%
Underwriting gain (loss)																											$	345					$	205					$	140					68.1		%
																																													Point Chg
Loss ratio																											60.2		%				63.0		%										(2.8)
Commission and brokerage ratio																											24.6		%				25.0		%										(0.4)
Other underwriting expense ratio																											2.6		%				2.8		%										(0.2)
Combined ratio																											87.3		%				90.8		%										(3.5)

(NM, Not Meaningful)

(Some amounts may not reconcile due to rounding.)

Premiums. Gross written premiums increased by 21.2% to $3.2 billion for the three months ended March 31, 2024 from $2.6 billion for the three months ended March 31, 2023, primarily due to property and casualty pro rata business. Net written premiums increased by 20.7% to $2.9 billion for the three months ended March 31, 2024 compared to $2.4 billion for the three months ended March 31, 2023. 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 22.6% to $2.7 billion for the three months ended March 31, 2024, compared to $2.2 billion for the three months ended March 31, 2023.

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

			Three Months Ended March 31,
(Dollars in millions)			Current Year						Ratio %/ Pt Change						Prior Years						Ratio %/ Pt Change						Total Incurred						Ratio %/ Pt Change
2024
Attritional			$	1,561					57.2		%				$	—					—		%				1,561						57.2		%
Catastrophes			80						2.9		%				—						—		%				80						2.9		%
Total Segment			$	1,641					60.2		%				$	—					—		%				$	1,641					60.2		%
2023
Attritional			$	1,288					57.9		%				$	—					—		%				1,288						57.9		%
Catastrophes			113						5.1		%				—						—		%				113						5.1		%
Total Segment			$	1,401					63.0		%				$	—					—		%				$	1,401					63.0		%
Variance 2024/2023
Attritional			$	273					(0.7)		pts				$	—					—		pts				$	273					(0.7)		pts
Catastrophes			(33)						(2.1)		pts				—						—		pts				(33)						(2.1)		pts
Total Segment			$	240					(2.8)		pts				$	—					—		pts				$	240					(2.8)		pts

(Some amounts may not reconcile due to rounding.)

Incurred losses increased by 17.1% to $1.6 billion for the three months ended March 31, 2024, compared to $1.4 billion for the three months ended March 31, 2023. The increase was primarily due to an increase of $273 million in current year attritional losses, partially offset by a decrease of $33 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 $80 million for the three months ended March 31, 2024 related primarily to the 2024 Baltimore bridge collapse ($65 million) and the 2024 U.S. East Coast convective storms ($15 million). The $113 million of current year catastrophe losses for the three months ended March 31, 2023 related primarily to the 2023 Turkey earthquakes ($75.0 million) and the 2023 New Zealand storms ($38.0 million).

Segment Expenses. Commission and brokerage expense increased by 20.7% to $671 million for the three months ended March 31, 2024 compared to $556 million for the three months ended March 31, 2023. The increase was mainly due to the impact of the increase in premiums earned. Segment other underwriting expenses increased to $71 million for the three months ended March 31, 2024 from $63 million for the three months ended March 31, 2023. The increase was due to increased expenditures supporting the increased premium volume of the segment.

Insurance.

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

									Three Months Ended March 31,
(Dollars in millions)																											2024						2023						Variance						% Change
Gross written premiums																											$	1,236					$	1,122					$	114					10.1		%
Net written premiums																											958						891						67						7.5		%
Premiums earned																											$	923					$	874					$	49					5.6		%
Incurred losses and LAE																											596						565						30						5.4		%
Commission and brokerage																											111						105						6						5.3		%
Other underwriting expenses																											153						137						16						12.0		%
Underwriting gain (loss)																											$	64					$	67					$	(3)					(5.0)		%
																																													Point Chg
Loss ratio																											64.5		%				64.6		%										(0.1)
Commission and brokerage ratio																											12.0		%				12.0		%										—
Other underwriting expense ratio																											16.6		%				15.6		%										1.0
Combined ratio																											93.1		%				92.3		%										0.8

(NM not meaningful)

(Some amounts may not reconcile due to rounding.)

Premiums. Gross written premiums increased by 10.1% to $1.2 billion for the three months ended March 31, 2024 compared to $1.1 billion for the three months ended March 31, 2023. The increase in insurance premiums was primarily due to increases in property/short tail business, other specialty lines of business, and specialty casualty business. Net written premiums increased by 7.5% to $958 million for the three months ended March 31, 2024, compared to $891 million for the three months ended March 31, 2023. The lower percentage change in net written premiums compared to gross written premiums is due to lower net retention resulting from changes in the mix of business. Premiums earned increased by 5.6% to $923 million for the three months ended March 31, 2024, compared to $874 million for the three months ended March 31, 2023.

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

			Three Months Ended March 31,
(Dollars in millions)			Current Year						Ratio %/ Pt Change						Prior Years						Ratio %/ Pt Change						Total Incurred						Ratio %/ Pt Change
2024
Attritional			$	591					64.0		%				$	—					—		%				591						64.0		%
Catastrophes			5						0.5		%				—						—		%				5						0.5		%
Total Segment			$	596					64.5		%				$	—					—		%				$	596					64.5		%
2023
Attritional			$	563					64.4		%				$	—					—		%				563						64.4		%
Catastrophes			2						0.2		%				—						—		%				2						0.2		%
Total Segment			$	565					64.6		%				$	—					—		%				$	565					64.6		%
Variance 2024/2023
Attritional			$	27					(0.4)		pts				$	—					—		pts				$	27					(0.4)		pts
Catastrophes			3						0.3		pts				—						—		pts				3						0.3		pts
Total Segment			$	30					(0.1)		pts				$	—					—		pts				$	30					(0.1)		pts

(Some amounts may not reconcile due to rounding.)

Incurred losses and LAE increased by 5.4% to $596 million for the three months ended March 31, 2024, compared to $565 million for the three months ended March 31, 2023. The increase was mainly due to an increase of $27 million in current year attritional losses and an increase of $3 million in current year catastrophe losses. The increase in current year attritional losses was primarily due to the impact of the increase in premiums earned and changes in mix of business. The $5 million of current year catastrophe losses for the three months ended March 31, 2024 related to the 2024 Baltimore bridge collapse. The $2 million of current year catastrophe losses for the three months ended March 31, 2023 related to the 2023 New Zealand storms.

Segment Expenses. Commission and brokerage increased by 5.3% to $111 million for the three months ended March 31, 2024 compared to $105 million for the three months ended March 31, 2023. Segment other underwriting expenses increased to $153 million for the three months ended March 31, 2024 compared to $137 million for the three months ended March 31, 2023. The 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 $36.6 billion at March 31, 2024, an increase of $898 million compared to $35.7 billion at December 31, 2023. The rise in investments was primarily related to an increase in fixed maturities - available for sale due to an overall net purchase of $828 million of fixed maturities - available for sale during the three months ended March 31, 2024.

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 March 31, 2024						At December 31, 2023
Fixed income portfolio duration (years)			3.4						3.3
Fixed income composite credit quality			AA-						AA-

Reinsurance Recoverables.

Reinsurance recoverables for both paid and unpaid losses totaled $2.3 billion and $2.3 billion at March 31, 2024 and December 31, 2023, respectively. At March 31, 2024, $403 million, or 17.4%, was receivable from Mt. Logan Re collateralized segregated accounts; $248 million, or 10.7%, was receivable from Munich Reinsurance America, Inc. and $171 million, or 7.4% was receivable from Endurance Specialty Holdings, Ltd. No other retrocessionaire accounted for more than 5% of our recoverables.

Loss and LAE Reserves. Gross loss and LAE reserves totaled $25.2 billion and $24.6 billion at March 31, 2024 and December 31, 2023, 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 March 31, 2024
(Dollars in millions)			Case Reserves						IBNR Reserves						Total Reserves						% of Total
Reinsurance			$	6,347					$	11,547					$	17,894					71.0		%
Insurance			2,051						5,033						7,084						28.1		%
Total excluding A&E			8,398						16,580						24,978						99.1		%
A&E			153						80						233						0.9		%
Total including A&E			$	8,551					$	16,660					$	25,211					100.0		%

(Some amounts may not reconcile due to rounding.)

			At December 31, 2023
(Dollars in millions)			Case Reserves						IBNR Reserves						Total Reserves						% of Total
Reinsurance			$	6,355					$	11,051					$	17,406					70.7		%
Insurance			2,027						4,924						6,952						28.3		%
Total excluding A&E			8,383						15,975						24,357						99.0		%
A&E			159						88						246						1.0		%
Total including A&E			$	8,541					$	16,063					$	24,604					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 and are subject to variation, which may be significant.

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

Asbestos and Environmental Exposures. 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 March 31,						At December 31,
(Dollars in millions)			2024						2023
Gross reserves			$	233					$	247
Ceded reserves			(13)						(15)
Net reserves			$	220					$	232

(Some amounts may not reconcile due to rounding.)

With respect to asbestos only, at March 31, 2024, we had net asbestos loss reserves of $200 million, or 90.9%, 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 6.4 years at March 31, 2024. 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 March 31, 2024 and December 31, 2023 was $13.6 billion and $13.2 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)			2023						2022						2023						2022
Regulatory targeted capital			$	2,669					$	2,217					$	4,242					$	3,353
Actual capital			$	3,711					$	2,759					$	6,963					$	5,553

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

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

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

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

During the first quarter of 2024, we repurchased 0.1 million of our shares at a cost of $35 million in the open market. We paid $76 million in dividends to adjust our capital position and enhance long-term expected returns to our shareholders. In 2023, we repurchased no shares in the open market and paid $288 million in dividends. 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 March 31, 2024, we had repurchased 30.9 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 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 $1.1 billion and $1.1 billion for the three months ended March 31, 2024 and 2023, respectively. Additionally, these cash flows reflected net catastrophe loss payments of $229 million and $198 million for the three months ended March 31, 2024 and 2023, respectively, and net tax payments of $16 million and $2 million for the three months ended March 31, 2024 and 2023, 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 March 31, 2024 and December 31, 2023, we held cash and short-term investments of $3.9 billion and $3.6 billion, respectively. Our short-term investments are generally readily marketable and can be converted to cash. In addition to these cash and short-term investments, at March 31, 2024, we had $1.5 billion of available for sale fixed maturity securities maturing within one year or less, $6.9 billion maturing within one to five years and $8.4 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 March 31, 2024, we had $1.0 billion of net pre-tax unrealized depreciation related to fixed maturity - available for sale securities, comprised of $1.2 billion of pre-tax unrealized depreciation and $240 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 $1.7 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 $240 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 available for sale and held to maturity securities. Additionally, we have invested in equity securities.

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

Interest Rate Risk. Our $38.1 billion investment portfolio at March 31, 2024 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 $6.3 billion of mortgage-backed securities in the $29.1 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 $2.4 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 March 31, 2024
			-200						-100						0						100						200
(Dollars in millions)
Total Fair Value			$	33,746					$	32,640					$	31,533					$	30,427					$	29,320
Fair Value Change from Base (%)			7.0		%				3.5		%				—		%				(3.5)		%				(7.0)		%
Change in Unrealized Appreciation
After-tax from Base ($)			$	1,914					$	957					$	—					$	(957)					$	(1,914)

We had $25.2 billion and $24.6 billion of gross reserves for losses and LAE as of March 31, 2024 and December 31, 2023, 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 3.9 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 $4.3 billion resulting in a discounted reserve balance of approximately $18.8 billion, representing approximately 59.6% of the value of the fixed maturity investment portfolio funds.

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 operations maintains capital in the currency of the country of its geographic location consistent with local regulatory guidelines. Each non-U.S. 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 non-U.S. 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.