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MarketScreener Homepage  >  Equities  >  Nyse  >  Everest Re Group, Ltd.    RE   BMG3223R1088

EVEREST RE GROUP, LTD.

(RE)
  Report
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EVEREST RE : MANAGEMENT'S DISCUSSION (form 10-Q)

11/09/2020 | 02:04pm EST
AND ANALYSIS

OF FINANCIAL CONDITION

AND RESULTS

OF
OPERATION


Industry Conditions.
The worldwide reinsurance

and insurance businesses

are highly competitive,

as well as

cyclical by product

and
market.

As such,

financial results

tend to

fluctuate with

periods of

constrained availability,

higher rates

and
stronger profits

followed by

periods of abundant capacity,

lower rates and constrained

profitability.

Competition in the

types of reinsurance

and insurance business

that we

underwrite is based

on many

factors,

including the perceived overall financial strength

of the reinsurer or insurer,


ratings of the reinsurer or insurer by
A.M. Best and/or

Standard &

Poor's, underwriting expertise,

the jurisdictions where

the reinsurer

or insurer is
licensed or

otherwise authorized,

capacity and

coverages offered,

premiums charged,

other terms

and
conditions of

the reinsurance

and insurance

business offered,

services offered,

speed of

claims payment

and
reputation and

experience in

lines written.

Furthermore, the

market impact

from these

competitive factors
related to

reinsurance and

insurance is

generally not

consistent across

lines of business,

domestic and
international geographical areas and distribution channels.


We compete

in the U.S.,

Bermuda and international

reinsurance and

insurance markets

with numerous

global
competitors. Our

competitors include

independent reinsurance

and insurance

companies, subsidiaries or
affiliates of

established worldwide

insurance companies,

reinsurance departments

of certain

insurance
companies, domestic and

international underwriting operations,

including underwriting syndicates

at Lloyd's

of
London and

certain government

sponsored risk

transfer vehicles.

Some of

these competitors

have greater
financial resources than we

do and have established

long term and continuing

business relationships, which can
be a

significant competitive

advantage.

In addition,

the lack

of strong

barriers to

entry into

the reinsurance
business and

recently, the

securitization of

reinsurance and

insurance risks

through capital

markets provide
additional sources of potential reinsurance and insurance capacity and
competition.


Worldwide insurance

and reinsurance

market conditions

historically have

been competitive.

Generally, there
was ample insurance and

reinsurance capacity relative

to demand, as well

as, additional capital from

the capital
markets through

insurance linked

financial instruments.

These financial

instruments such

as side

cars,
catastrophe bonds

and collateralized

reinsurance funds, provided

capital markets

with access to

insurance and
reinsurance risk exposure.

The capital markets

demand for these

products was being

primarily driven by

a low
interest environment and

the desire to achieve greater

risk diversification and potentially higher returns


on their
investments.

This increased competition was generally

having a negative impact on

rates, terms and conditions;
however,

the impact varies widely by market and coverage.

The industry

continues to

deal with

the impacts

of a

global pandemic,

COVID-19.

Globally, many

countries

mandated that their citizens remain at

home and many non-essential businesses have continued

to be physically
closed.

We closed our

physical offices; however,

we activated

our operational resiliency

plan across our

global
footprint and

all of

our critical

operations are

functioning effectively

from remote

locations.

We continue

to

service and meet the needs of our clients while ensuring the safety and health of our employees and customers.

The pandemic has

caused significant volatility

in the global

financial markets.

Interest rates

plummeted, credit
spreads widened and

the equity markets

lost value.

We saw our

fixed maturity and

equity portfolios decline in
value resulting in

realized and unrealized

investment losses in

our March 31,

2020 financial statements.

However,

the financial

markets rebounded

during the

second and

third quarters

and we

recognized after

-tax
realized gains of

$239.4 million and

unrealized gains of

$596.5 million in

our financial statements

for these two
quarters.

Nevertheless, the lack of business

activity may lead to

an increase in bankruptcies

and corresponding
credit losses.


There will also

be a negative

impact on future

industry underwriting results.

With the closing

of non-essential
businesses, there has

been a significant

decline in business activity.

To the

extent that premiums

are based on
business activity, there will be a

decline in premium volume.


Incurred losses from the pandemic will be
impacted by

the duration

of the

event and

will vary

by line

of business

and geographical

location.

For the

37
quarter ended September 30,

2020, our underwriting results

include $125 million of

estimated losses related

to
the pandemic and

$435 million for

the nine months

ended September 30,

2020.

We anticipate

this Pandemic
could have

a meaningful

impact on

our revenue,

as well

as net

and operating

income in

future quarters

as a
result of

reinsurance and

insurance claims

due to

the pandemic and

resulting macro

-economic market
conditions.

Many regulators

had issued moratoriums

on the cancellation

of policies for

the non-payment of

premiums and
also on

non-renewals. We

are complying

with the

various regulatory

requests for

accommodations to
policyholders during this difficult

period.

The moratoriums combined with

the forced closure

of businesses may
lead to an increase in uncollectible premium expense.

Prior to

the pandemic,

there was

a growing

industry consensus

that there

was some

firming of

(re)insurance
rates for the

areas impacted by the

recent catastrophes.

The increased frequency of

catastrophe losses in

2020
appears to be

further pressuring the

increase of rates.

Rates also appear

to be firming

in some of

the casualty
lines of

business, particularly in

the casualty

lines that

had seen

significant losses

such as

excess casualty

and
directors' and

officers' liability.

Other casualty

lines are

experiencing modest

rate increase,

while some

lines

such as workers' compensation were

experiencing softer market conditions. It is too early


to tell what will be the
impact on pricing conditions but it is likely to change depending on the line of
business and geography.

While we are

unable to predict

the full impact the

pandemic will have

on the insurance

industry as it continues
to have a negative

impact on the global economy,

we are well positioned to

continue to service our clients.

Our
capital position

remains a

source of

strength, with

high quality

invested assets,

significant liquidity

and a

low
operating expense ratio.

Our diversified global

platform with its

broad mix of

products, distribution and
geography is resilient.



































































































































































































































































































































38
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
Percentag
e
Nine Months Ended
Percentag
e
September 30,
Increase/
September 30,
Increase/
(Dollars in millions)
2020
2019
(Decrease)
2020
2019
(Decrease)
Gross written premiums

$
2,791.6$
2,403.3


16.2
%

$
7,731.8$
6,697.0


15.5
%
Net written premiums

2,448.7
2,068.6
18.4
%
6,667.6
5,704.2
16.9
%












REVENUES:
Premiums earned
$
2,205.8$
1,905.6


15.8
%

$
6,285.0$
5,455.6


15.2
%
Net investment income
234.2
181.1
29.4
%
420.1
501.1
-16.2
%
Net realized capital gains (losses)
110.2


(12.9)


NM
%

84.3


109.6


-23.1
%
Net derivative gain (loss)
2.5
(0.2)
NM
%
(1.0)
3.4
-130.9
%
Other income (expense)
57.5


(31.0)


NM
%

48.4


(52.6)


-192.0
%
Total revenues
2,610.2
2,042.5
27.8
%
6,836.7
6,017.1
13.6
%













CLAIMS AND EXPENSES:
Incurred losses and loss adjustment expenses
1,736.2


1,371.9


26.6
%

4,574.1


3,515.1


30.1
%
Commission, brokerage, taxes and fees
445.3
443.1
0.5
%
1,360.2
1,253.5
8.5
%
Other underwriting expenses
138.9


118.2


17.5
%

385.9


322.0


19.8
%
Corporate expenses
10.6
8.4
25.9
%
29.2
22.6
29.0
%
Interest, fees and bond issue cost amortization expense
6.6


7.9


-16.0
%

21.5


24.0


-10.4
%
Total claims and expenses
2,337.7
1,949.5
19.9
%
6,370.8
5,137.2
24.0
%













INCOME (LOSS) BEFORE TAXES
272.5
93.0
193.0
%
466.0
879.9
-47.0
%
Income tax expense (benefit)

29.5


(11.4)


NM
%

15.4


88.1


-82.5
%
NET INCOME (LOSS)
$
243.1$
104.4
132.8
%
$
450.5$
791.8
-43.1
%
RATIOS:
Point
Change
Point
Change
Loss ratio
78.7
%
72.0
%
6.7

72.8
%
64.4
%
8.4
Commission and brokerage ratio
20.2
%
23.3
%
(3.1)
21.7
%
23.0
%
(1.3)
Other underwriting expense ratio
6.3
%
6.1
%
0.2

6.1
%
5.9
%
0.2
Combined ratio
105.2
%
101.4
%
3.8
100.6
%
93.3
%
7.3
At
At
Percentag
e
September 30,
December 31,
Increase/
(Dollars in millions, except per share amounts)
2020
2019
(Decrease)
Balance sheet data:
Total investments and cash
$
23,104.7$
20,748.5

11.4
%
Total assets
30,153.0
27,324.1
10.4
%
Loss and loss adjustment expense reserves
15,233.1

13,611.3

11.9
%
Total debt
710.8
633.8
12.1
%
Total liabilities
20,561.7

18,191.1

13.0
%
Shareholders' equity
9,591.3
9,132.9
5.0
%
Book value per share
239.98

223.85

7.2
%
(NM, not meaningful)
(Some amounts may not reconcile due to rounding.)

Revenues.

Premiums.

Gross written premiums increased

by 16.2% to $2,791.6 million

for the three months

ended

September 30, 2020, compared to $2,403.3 million for

the three months ended September 30, 2019, reflecting

a
$350.3 million,

or 20.2%,

increase in

our re

insurance business

and a

$38.0 million,

or 5.7%,

increase in

our
insurance business.

The increase

in reinsurance

premiums was

mainly due

to increases

in treaty

property
business and facultative

business.

The rise in

insurance premiums was

primarily due to

increases in many

lines

of business, including casualty,

specialty lines and business written

through the Lloyd's

Syndicate.

Gross written
premiums increased by 15.5%

to $7,731.8 million for

the nine months ended

September 30, 2020, compared

to
$6,697.0 million for

the nine months

ended September 30, 2019,

reflecting a $724.8

million, or 15.5%, increase
in our re

insurance business and

a $310.0 million,

or 15.4%, increase

in our insurance

business.

The increase in
reinsurance premiums was

mainly due to increases

in treaty property

business, casualty writings and facultative




39
business.

The rise

in insurance

premiums was

primarily due

to increases

in many

lines of

business, including
property, casualty,

specialty lines, accident and health and business written through the Lloyd's
Syndicate.


Net written premiums

increased by 18.4%

to $2,448.7 million for

the three months

ended September 30, 2020,
compared to $2,068.6 million for the three months ended September 30, 2019.

Net written premiums increased
by 16.9% to

$6,667.6 million for

the nine months

ended September 30,

2020, compared to

$5,704.2 million for
the nine months

ended September 30,

2019.

The differences

between the changes

in gross written

premiums
compared to the

changes in net written premiums are primarily due to varying utiliza

tion of reinsurance.

Premiums earned

increased by

15.8% to

$2,205.8 million

for the

three months

ended September

30, 2020,
compared to $1,905.6

million for the three

months ended September 30,

2019.

Premiums earned increased by
15.2% to $6,285.0 million for

the nine months ended September

30, 2020, compared to


$5,455.6 million for the
nine months ended September 30, 2019.

The changes in premiums earned relative

to net written premiums are
the result

of timing;

premiums are

earned ratably

over the

coverage period

whereas written

premiums are
recorded at the initiation of the coverage period.


Net Investment

Income.

Net investment

income increased

by 29.4%

to $234.2

million for

the three

months
ended September

30, 2020,

compared with

investment income

of $181.1

million for

the three

months ended
September 30, 2019.

This increase was

primarily the result of

an increase in limited

partnership income, as

the
improvement in the

equity markets during

the second quarter

had a positive

impact on the

limited partnership
valuations, and we had higher income

from our growing fixed

income portfolio.

Net investment income
decreased by 16.2%

to $420.1 million

for the nine

months ended September

30, 2020, compared

with
investment income

of $501.1 million

for the nine

months ended September

30, 2019.

This decrease in

income
was primarily the

result of losses

from our limited

partnerships in the

second quarter,

partially offset by

higher
income from our

growing fixed

maturity portfolio.

Net pre-tax

investment income,

as a percentage

of average
invested assets,

was 4.4%

for the

three months

ended September

30, 2020,

compared to

3.7% for

the three
months ended September 30, 2019.

Net pre-tax investment income, as

a percentage of average

invested assets,
was 2.7%

for the

nine months

ended September

30, 2020,

compared to

3.5% for

the nine

months ended
September 30, 2019.


Net Realized Capital Gains

(Losses).

Net realized capital gains

were $110.2 million and net realized


capital losses
were $12.9 million for the three months ended September 30, 2020 and

2019, respectively.

As discussed earlier, the COVID-19 pandemic caused significant volatility in the global financial markets.


The net realized capital gains
of $110.2 million for the three months

ended September 30, 2020 were comprised of

$100.0 million of net gains
from fair

value re

-measurements,

resulting primarily from

increases in equity

security valuations which

further
rebounded from

declines in

the first

quarter of

2020, $6.2

million from

a decline

in net

allowances for

credit
losses and $4.0 million

of net realized

capital gains from

sales of investments

.

The net realized

capital losses of
$12.9 million

for the

three months

ended September

30, 2019

were comprised

of $12.0

million of

net losses
from fair value

re-measurements and $7.3 million

of other-than-temporary impairments,


partially offset by $6.5
million of net realized capital gains from sales of investments.


Net realized capital

gains were $84.3

million and $109.6 million for

the nine months ended

September 30, 2020
and 2019, respectively.

The net realized capital

gains of $84.3 million for

the nine months ended September

30,
2020 were

comprised of $116.3

million of net

gains from

fair value

re-measurements, partially offset

by $19.6
million of net

allowances for credit

losses and $12.4 million

of net realized

capital losses from

sales of
investments.

The net

realized capital

gains

of $109.6

million for

the nine

months ended

September 30,

2019

were comprised of $102.8 million of

net gains from fair

value re-measurements and $22.3 million


of net realized
capital gains from sales of investments, partially offset by $15.4 million of
other-than-temporary

impairments.


Net Derivative

Gain (Loss).

In 2005

and prior,

we sold

seven equity

index put

option contracts,

one of which
remained outstanding at September 30,

2020.

These contracts meet the definition

of a derivative in accordance
with FASB guidance

and as such, are fair

valued each quarter with

the change recorded as

net derivative gain

or

loss in the consolidated statements of operations and

comprehensive income (loss).

As a result of these
adjustments in value, we

recognized a net derivative

gain of $2.5 million and

a net derivative loss of

$0.2 million
































































































































































































































40

for the three months ended September 30,

2020 and 2019, respectively,


and net derivative losses of $1.0 million
and net derivative

gains of $3.4

million for the

nine months ended

September 30, 2020

and 2019, respectively.

The changes in the

fair value of

these equity index

put option contracts

is generally indicat

ive of the changes

in

the equity markets and interest rates over

the same periods.


Other Income (Expense).

We recorded

other income of

$57.5 million and

$48.4 million for

the three and

nine

months ended September 30, 2020, respectively.

We recorded other


expense of $31.0 million and $52.6 million
for the three

and nine months

ended September 30,

2019, respectively.

The changes were

primarily the result
of fluctuations in foreign currency exchange

rates, income related to

Mt. Logan Re and changes in deferred

gains

related to any

retroactive reinsurance

transactions.

We recognized

foreign currency exchange


income of $61.4
million and $37.9 million for the three and nine months ended September 30,
2020, respectively.

We recognized
foreign currency

exchange expense

of $26.0

million and

$44.5 million

for the

three and

nine months

ended

September 30, 2019, respectively.


Claims and Expenses.
Incurred Losses

and Loss

Adjustment Expenses.

The following

tables present

our incurred

losses and

loss

adjustment expenses ("LAE") for the periods indicated.



Three Months Ended September 30,
Current
Ratio %/
Prior
Ratio %/
Total
Ratio %/
(Dollar in millions)
Year
Pt Change
Years
Pt Change
Incurred
Pt Change
2020
Attritional
$
1,427.5
64.8
%
$
(1.3)
-0.1
%
$
1,426.2
64.7
%
Catastrophes
310.0
14.0
%
-
-
%
310.0
14.0
%
Total
$
1,737.5
78.8
%
$
(1.3)
-0.1
%
$
1,736.2
78.7
%
2019



Attritional
$
1,128.7
59.2
%
$
(52.2)
-2.7
%
$
1,076.4
56.5
%
Catastrophes
295.5
15.5
%
-
-
%
295.5
15.5
%
Total
$
1,424.2
74.7
%
$
(52.2)
-2.7
%
$
1,371.9
72.0
%



Variance 2020/2019
Attritional
$
298.8
5.6
pts
$
50.9
2.6
pts
$
349.8
8.2
pts
Catastrophes
14.5
(1.5)
pts
-
-
pts
14.5
(1.5)
pts
Total
$
313.3
4.1
pts
$
50.9
2.6
pts
$
364.3
6.7
pts

Nine Months Ended September 30,
Current
Ratio %/
Prior
Ratio %/
Total
Ratio %/
(Dollar in millions)
Year
Pt Change
Years
Pt Change
Incurred
Pt Change
2020
Attritional
$
4,217.6
67.1
%
$
1.4
0.1
%
$
4,219.1
67.2
%
Catastrophes
355.0
5.6
%
-
-
%
355.0
5.6
%
Total
$
4,572.6
72.7
%
$
1.4
0.1
%
$
4,574.1
72.8
%
2019
Attritional
$
3,239.0
59.4
%
$
(74.4)
-1.4
%
$
3,164.6
58.0
%
Catastrophes
320.5
5.9
%
30.0
0.5
%
350.5
6.4
%
Total
$
3,559.5
65.3
%
$
(44.4)
-0.9
%
$
3,515.1
64.4
%
Variance 2020/2019
Attritional
$
978.6
7.7
pts
$
75.8
1.5
pts
$
1,054.5
9.2
pts
Catastrophes
34.5
(0.3)
pts
(30.0)
(0.5)
pts
4.5
(0.8)
pts
Total
$
1,013.1
7.4
pts
$
45.8
1.0
pts
$
1,059.0
8.4
pts

Incurred losses and LAE increased by 26.6% to $1,736.2


million for the three months ended September 30, 2020,
compared to $1,371.9

million for the

three months ended

September 30, 2019.

The increase was

primarily due
to a rise of

$298.8 million in current

year attritional losses,

mainly due to $124.9

million of losses related

to the
COVID-19 pandemic and

the impact of the

increase in premiums

earned, as well

as an increase

of $14.5 million
in current year

catastrophe losses.

The current year

catastrophe losses

of $310.0 million

for the three

months
ended September 30,

2020 related to

Hurricane Laura ($131.0

million), the Northern

California wildfires ($52.0
million), the California

Glass wildfire ($30.0

million), Hurricane Sally

($26.0 million), the


Oregon wildfires ($21.0
million), Hurricane Isaias

($19.9 million), the

Derecho storms

($15.1 million) and

the Calgary storms

in Canada






41
($15.0 million).

The $295.5 million of current year catastrophe losses for the three


months ended September 30,
2019 related to Hurricane Dorian ($164.5 million) and Typhoon Faxai ($131.0
million).


Incurred losses and LAE

increased by 30.1% to

$4,574.1 million for the

nine months ended September

30, 2020,
compared to $3,515.1 million for the nine months ended September 30, 2019.

The increase was primarily due to
a rise of

$978.6 million in

current year

attritional losses,

mainly due to

$434.9 million of

losses related

to the
COVID-19 pandemic and

the impact of the

increase in premiums

earned, as well

as an increase

of $34.5 million
in current

year catastrophe

losses.

The current

year catastrophe

losses of $355.0

million fo

r

the nine months
ended September 30,

2020 related to

Hurricane Laura ($131.0

million), the Northern

California wildfires ($52.0
million), the California

Glass wildfire ($30.0

million), Hurricane Sally

($26.0 million), the

Oregon wildfires ($21.0
million), Hurricane

Isaias ($19.9

million), the

2020 U.S.

civil unrest

($17.4 million),

Nashville tornadoes

($15.2
million), the Derecho

storms ($15.1 million),

the Calgary storms

in Canada ($15.0

million), AustraliaEast Coast
Storm ($6.8 million)

and the 2020

Australia fires

($5.6 million).

The $320.5 million

of current year

catastrophe
losses for

the nine

months ended

September 30,

2019 related

to Hurricane

Dorian ($164.5

million), Typhoon
Faxai ($131.0 million) and the Townsville

monsoon in Australia ($25.0 million).


Commission, Brokerage,

Taxes

and Fees.

Commission, brokerage,

taxes and

fees increased

by 0.5% to

$445.3
million for

the three

months ended

September 30,

2020, compared

to $443.1

million for

the three

months
ended September 30,

2019.

Commission, brokerage,

taxes and

fees increased

by 8.5% to

$1,360.2 million for
the nine months

ended September 30,

2020, compared to

$1,253.5 million for

the nine months

ended
September 30, 2019.

The increases were

primarily due to

the impact of

the increases in

premiums earned and
changes in the mix of business.


Other Underwriting

Expenses.

Other underwriting

expenses were

$138.9 million

and $118.2

million for

the
three months

ended September

30, 2020

and 2019,

respectively.

Other underwriting

expenses were

$385.9

million and $322.0 million for the nine months ended

September 30, 2020 and 2019, respectively.


The increases
in other underwriting expenses were mainly due to the impact of the increases in
premiums earned.


Corporate Expenses.

Corporate expenses,

which are

general operating

expenses that

are not

allocated to
segments, were

$10.6 million

and $8.4

million for

the three

months ended

September 30,

2020 and

2019,
respectively,

and $29.2

million and

$22.6 million

for the

nine months

ended September

30, 2020

and 2019,
respectively.

These increases were mainly due to costs associated with the relocation of our
U.S. headquarters.


Interest, Fees

and Bond

Issue Cost

Amortization Expense.

Interest, fees

and other

bond amortization

expense
was $6.6

million and

$7.9 million

for the

three months

ended September

30, 2020

and 2019,

respectively.

Interest, fees

and other

bond amortization

expense was

$21.5 million

and $24.0

million for

the nine

months

ended September 30, 2020 and 2019, respectively.

Any variance in expense was primarily

due to the movement
in the floating

interest rate

related to

the long term

subordinated notes,

which is reset

quarterly per the

note
agreement.

The floating rate was 2.67% as of September 30, 2020.


Income Tax

Expense (Benefit).

We had an

income tax expense

of $29.5 million

and $15.4 million

for the three
and nine months

ended September 30,

2020, respectively.

We had

an income tax

benefit of $11.4

million and
income tax

expense of

$88.1 million

for the

three and

nine months

ended September

30, 2019,

respectively.

Income tax

benefit or

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.

The change in

income tax expense

(benefit) for the

three

months ended September 30, 2020 as compared to the three months ended


September 30, 2019 results
primarily from higher investment

income and realized

investment gains, partially

offset by the estimated
incurred losses from

the COVID-19 pandemic.

The change in income

tax for the

nine months ended September
30, 2020

as compared

to the

nine months

ended September

30, 2019

was primarily

due to

the estimated

42
incurred losses from the

COVID-19 pandemic and the

beneficial tax impact

from the Coronavirus

Aid, Relief and
Economic Securities Act ("the CARES Act").


The CARES Act

was passed by

Congress and signed

into law by

the President on

March 27, 2020

in response to
the COVID

-19 pandemic.

Among the

provisions of

the CARES

Act was

a special

tax provision

which allows
companies to elect to carryback five years net operating

losses incurred in the 2018, 2019 and/or 2020 tax years.

The Tax

Cuts and

Jobs Act

of 2017

had eliminated

net operating

loss carrybacks

for most

companies. The
Company determined that

the special 5 year

loss carryback tax

provision provided a

tax benefit of

$31.0 million
which it recorded in the quarter ended March 31, 2020.


Net Income (Loss).

Our net

income was

$243.1 million

and $104.4

million for

the three

months ended

September 30,

2020 and
2019, respectively.

Our net income was $450.5 million and $791.8 million for the nine months ended
September
30, 2020

and 2019,

respectively.

The changes

were primarily

driven by

the financial

component fluctuations
explained above.


Ratios.

Our combined ratio increased by 3.8 points

to 105.2% for the three months ended September


30, 2020,
compared to 101.4% for the three months

ended September 30, 2019, and increased by 7.3 points to 100.6% for
the nine

months ended

September 30,

2020, compared

to 93.3%

for the

nine months

ended September

30,
2019.

The loss

ratio component

increased 6.7

points and

8.4 points

for the

three and

nine months

ended

September 30, 2020 over the same periods last


year mainly due to $124.9 million and $434.9 million of
attritional losses related

to the COVID

-19 pandemic for

the three and

nine months ended

September 30, 2020,
respectively.

The commission and

brokerage ratio

component decreased to

20.2% for the

three months ended
September 30,

2020 compared

to 23.3%

for the

three months

ended September

30, 2019

and decreased

to
21.7% for the

nine months ended

September 30, 2020

compared to 23.0%

for the nine

months ended
September 30, 2019.

The declines were

mainly due to

changes in the

mix of business.

The other underwriting
expense ratio increased slightly to 6.3% for the three months

ended September 30, 2020 from 6.1% for the three
months ended

September 30,

2019 and

increased slightly

to 6.1%

for the

nine months

ended September

30,
2020 from

5.9% for

the nine months

ended September 30,

2019.

The increases for

the three and

nine month
periods were mainly due to employee benefit expenses.


Shareholders' Equity.
Shareholders' equity

increased by

$458.4 million

to $9,591.3

million at

September 30,

2020 from

$9,132.9

million at December 31, 2019, principally as a result of $450.5 million of


net income, $348.5 million of unrealized
appreciation on

investments net

of tax,

$30.4 million

of net

foreign currency

translation adjustments,

$15.7
million of share

-based compensation

transactions and

$4.5 million of

net benefit

plan obligation

adjustments,
partially offset

by the repurchase

of 970,892 common

shares for

$200.0 million, $187.1

million of shareholder dividends, and $4.2 million of cumulative adjustment from the adoption of ASU 2016-13.

Consolidated Investment Results

Net Investment Income.
Net investment

income increased by

29.4% to $234.2

million for the

three months ended

September 30, 2020,
compared with

investment income

of $181.1

million for

the three

months ended

September 30,

2019.

This
increase was primarily the

result of an increase

in limited partnership income,

as the improvement in

the equity
markets during

the second

quarter had

a positive

impact on

the limited

partnership valuations,

and we

had
higher income from

our growing fixed

income portfolio.

Net investment income

decreased by 16.2%

to $420.1
million for the nine months

ended September 30, 2020, compared

with investment income of


$501.1 million for
the nine months ended September 30, 2019.

This decrease in income was primarily the result of losses from

our
limited partnerships

in the

second quarter,

partially offset

by higher

income from

our growing

fixed maturity
portfolio.

























































































































43
The following table shows the components of net investment income for the
periods indicated.


Three Months Ended
Nine Months Ended
September 30,
September 30,
(Dollars in millions)
2020
2019
2020
2019
Fixed maturities
$
136.1$
130.1$
407.9$
383.4
Equity securities

4.4
4.2
11.6
12.3
Short-term investments and cash
0.5

3.9
4.4
13.5
Other invested assets
Limited partnerships
88.8

43.8
22.1
100.3
Other
14.7
7.3
(1.3)
13.6

Gross investment income before

adjustments
244.5

189.3
444.7
523.1
Funds held interest income (expense)
0.7
2.3
10.9
9.7
Future policy benefit reserve income (expense)
(0.3)

(0.4)
(0.8)
(1.0)
Gross investment income
244.9
191.2
454.8
531.8
Investment expenses
(10.7)

(10.1)
(34.7)
(30.7)
Net investment income
$
234.2$
181.1$
420.1$
501.1
(Some amounts may not reconcile due to rounding.)

The following tables show a comparison of various investment yields for the periods indicated.

At
At
September 30,
December 31,
2020
2019
Imbedded pre-tax yield of cash and invested

assets
3.1
%
3.4
%

Imbedded after-tax yield of cash and invested

assets
2.7
%
3.0
%

Three Months Ended
Nine Months Ended
September 30,
September 30,
2020
2019
2020
2019
Annualized pre-tax yield on average

cash and invested assets
4.4
%
3.7
%
2.7
%
3.5
%
Annualized after-tax yield on average

cash and invested assets
3.8
%
3.3
%
2.3
%
3.1
%









































































































































































































































































































44

Net Realized Capital Gains (Losses). The following table presents the composition of our net realized capital gains (losses) for the periods indicated.



Three Months Ended September 30,
Nine Months Ended September 30,
(Dollars in millions)
2020
2019
Variance
2020
2019
Variance
Gains (losses) from sales:

Fixed maturity securities, market value:

Gains
$
18.7$
14.3$
4.4$
54.1$
42.0$
12.1

Losses
(13.3)

(9.0)

(4.3)
(53.1)
(25.3)
(27.8)

Total
5.4
5.3
0.1
0.9
16.7
(15.8)





Fixed maturity securities, fair value:

Gains
$
-

$
-

$
-
-
0.4
(0.4)

Losses
(2.0)
-
(2.0)
(2.0)
-
(2.0)

Total
(2.0)

-

(2.0)
(2.0)
0.4
(2.4)

Equity securities, fair value:

Gains
9.5

1.0

8.5
30.3
9.3
21.0

Losses
(10.8)
(2.2)
(8.6)
(42.9)
(6.7)
(36.2)

Total
(1.3)

(1.1)

(0.1)
(12.6)
2.6
(15.2)

Other Invested Assets:






Gains
1.4
2.6
(1.2)
6.0
2.9
3.1

Losses
(0.3)

(0.5)

0.3
(5.9)
(0.6)
(5.3)

Total
1.1
2.1
(0.9)
0.1
2.3
(2.2)






Short Term Investments:

Gains
0.8

0.2

0.6
1.2
0.3
0.9

Losses
-
-
-
-
-
-

Total
0.8

0.2

0.6
1.2
0.3
0.9
Total net realized

gains (losses) from sales:






Gains
30.4
18.2
12.2
91.5
54.9
36.7

Losses
(26.4)
(11.7)
(14.7)
(103.9)
(32.6)
(71.3)

Total
4.0
6.5
(2.4)
(12.4)
22.3
(34.6)


Allowance for credit losses
6.2
-
6.2
(19.6)
-
(19.6)


Other-than-temporary impairments:
-
(7.3)
7.3
-
(15.4)
15.4

Gains (losses) from fair value adjustments:


Fixed maturities, fair value
3.3
-
3.3
1.9
-
1.9

Equity securities, fair value
96.7
(12.0)
108.7
114.4
102.8
11.6
Total
100.0
(12.0)
112.0
116.3
102.8
13.5
Total net realized

capital gains (losses)
$
110.2$
(12.9)$
123.1
84.3
109.6
(25.3)
(Some amounts may not reconcile due to rounding.)

Net realized

capital gains

were $110.2

million and net

realized capital

losses were

$12.9 million

for the

three

months ended September 30, 2020 and 2019, respectively.

As discussed earlier,

the COVID-19 pandemic caused
significant volatility

in the

global financial

markets.

For the

three months

ended September

30, 2020,

we
recorded $100.0

million of

net gains

from fair

value re

-measurements,

resulting primarily

from increases

in

equity security valuations which further rebounded from declines in the first

quarter of 2020, $6.2 million from a decline in net allowances for credit losses and $4.0 million of net realized capital

gains from sales of investments.

For the

three months

ended September

30, 2019,

we recorded

$12.0 million of

net losses

from fair

value re-
measurements and

$7.3 million

of other-than-temporary

impairments, partially

offset by

$6.5 million

of net
realized capital gains from

sales of investments.

The fixed maturity and equity sales for

the three months ended

45
September 30,

2020 and

2019 related

primarily to

adjusting the

portfolios for

overall market

changes and
individual credit shifts.


Net realized capital

gains were $84.3

million and $109.6 million for

the nine months ended

September 30, 2020
and 2019, respectively.

For the nine months ended September 30, 2020, we recorded $116.3 million of net
gains
from fair

value re-measurements,

partially offset by

$19.6 million of

net allowances for

credit losses and

$12.4

million of net realized capital

losses from sales of investments


.

For the nine months ended September

30, 2019,
we recorded

$102.8 million

of net

gains from

fair value

re-measurements and

$22.3 million

of net

realized
capital gains

from sales of

investments, partially

offset by

$15.4 million of

other-than-temporary impairments.


The fixed maturity and equity sales for the nine months ended September 30, 2020
and 2019 related primarily to
adjusting the portfolios for overall market changes and individual credit
shifts.


Segment Results.
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
and the United

Kingdom.

The Insurance operation

writes property and

casualty insurance directly

and through
brokers, surplus

lines brokers

and general agents

within the U.S.,

Canada and Europe

through its offices

in the
U.S., Canada, Ireland and a branch located in Zurich.


These segments are managed independently,

but conform with corporate


guidelines with respect to pricing, risk
management, control

of aggregate

catastrophe exposures,

capital, investments

and support

operations.

Management generally

monitors and

evaluates the

financial performance

of these

operating segments

based

upon their underwriting results.


Underwriting results include

earned premium less

losses and loss

adjustment expenses ("LAE")

incurred,
commission and

brokerage expenses

and other underwriting

expenses.

We measure

our underwriting results
using ratios, in

particular loss, commission and

brokerage and

other underwriting expense ratios,

which,
respectively, divide

incurred losses, commissions

and brokerage

and other underwriting expenses

by premiums
earned.


The Company

does not

maintain separate

balance sheet

data for

its operating

segments.

Accordingly, the
Company does not review and evaluate

the financial results of its operating


segments based upon balance sheet
data.


The following discusses the underwriting results for each of our segments for
the periods indicated.




















































































































































































46
Reinsurance.
The following

table presents

the underwriting

results and

ratios for

the Reinsurance

segment for

the periods
indicated.

Three Months Ended September 30,
Nine Months Ended September 30,
(Dollars in millions)
2020
2019
Variance
% Change
2020
2019
Variance
% Change
Gross written premiums
$
2,087.0$
1,736.7$
350.3

20.2
%

$
5,403.1$
4,678.3$
724.8

15.5
%
Net written premiums
1,936.9
1,583.7
353.1
22.3
%
4,974.0
4,213.0
761.1
18.1
%


















Premiums earned
$
1,669.3$
1,420.8$
248.5
17.5
%
$
4,656.7$
4,072.1$
584.7
14.4
%
Incurred losses and LAE
1,335.0


1,050.6


284.4

27.1
%

3,361.4


2,605.9


755.5

29.0
%
Commission and brokerage
373.3
371.1
2.2
0.6
%
1,130.9
1,039.1
91.8
8.8
%
Other underwriting expenses
51.3


43.8


7.5

17.1
%

135.2


117.0


18.1

15.5
%
Underwriting gain (loss)
$
(90.4)$
(44.8)$
(45.6)
101.9
%
$
29.3$
310.0$
(280.8)
-90.6
%
Point Chg
Point Chg
Loss ratio
80.0
%
73.9
%
6.1
72.2
%
64.0
%
8.2
Commission and brokerage ratio
22.3
%
26.1
%
(3.8)
24.3
%
25.5
%
(1.2)
Other underwriting expense ratio
3.1
%
3.1
%
-
2.9
%
2.9
%
-
Combined ratio
105.4
%
103.1
%
2.3
99.4
%
92.4
%
7.0
(NM, Not Meaningful)
(Some amounts may not reconcile due to rounding.)

Premiums.

Gross written premiums increased

by 20.2% to $2,087.0 million

for the three months

ended
September 30, 2020 from

$1,736.7 million for the three

months ended September 30, 2019,

primarily due to an
increase in

treaty property

writings and

facultative business.

Net written

premiums increased

by 22.3%

to
$1,936.9 million

for the

three months

ended September

30, 2020

compared to

$1,583.7 million for

the three
months ended September 30, 2019.

The difference between the change in gross written

premiums compared to
the change

in net

written premiums

is primarily

due to

varying utilization

of reinsurance.

Premiums earned
increased by 17.5%

to $1,669.3 million for

the three months

ended September 30,

2020, compared to

$1,420.8

million for the three months ended September 30, 2019.

The change in premiums earned relative to net

written
premiums is

primarily the

result of

timing; premiums

are earned

ratably over

the coverage

period whereas
written premiums are recorded at the initiation of the coverage

period.


Gross written premiums

increased by 15.5% to

$5,403.1 million for the

nine months ended September

30, 2020
from $4,678.3

million for

the nine

months ended

September 30,

2019, primarily

due to

an increase

in treaty
property

writings, casualty

business and

facultative business.

Net written

premiums increased

by 18.1%

to
$4,974.0 million

for the

nine months

ended September

30, 2020

compared to

$4,213.0 million

for the

nine

months ended September 30, 2019.

The difference between the change in gross written

premiums compared to
the change

in net

written premiums

is primarily

due to

varying utilization

of reinsurance.

Premiums earned
increased by 14.4%

to $4,656.7 million

for the nine

months ended September

30, 2020, compared

to $4,072.1
million for the nine

months ended September 30,

2019.

The change in premiums earned

relative to net

written
premiums is

primarily the

result of

timing; premiums

are earned

ratably over

the coverage

period whereas
written premiums are recorded at the initiation of the coverage

period.








































































































































































































































































47
Incurred Losses and LAE
.

The following table

presents the incurred

losses and LAE for

the Reinsurance segment
for the periods indicated.


Three Months Ended September 30,
Current
Ratio %/
Prior
Ratio %/
Total
Ratio %/
(Dollars in millions)
Year
Pt Change
Years
Pt Change
Incurred
Pt Change
2020
Attritional
$
1,063.8
63.8
%
$
(1.3)
-0.1
%
$
1,062.5
63.7
%
Catastrophes
272.5
16.3
%
-
-
%
272.5
16.3
%
Total Segment
$
1,336.3
80.1
%
$
(1.3)
-0.1
%
$
1,335.0
80.0
%
2019



Attritional
$
808.0
56.9
%
$
(52.2)
-3.7
%
755.8
53.2
%
Catastrophes
291.5
20.5
%
3.4
0.2
%
294.9
20.7
%
Total Segment
$
1,099.5
77.4
%
$
(48.8)
-3.5
%
$
1,050.6
73.9
%



Variance 2020/2019
Attritional
$
255.8
6.9
pts
$
50.9
3.6
pts
306.7
10.5
pts
Catastrophes
(19.0)
(4.2)
pts
(3.4)
(0.2)
pts
(22.4)
(4.4)
pts
Total Segment
$
236.8
2.7
pts
$
47.5
3.4
pts
$
284.4
6.1
pts

Nine Months Ended September 30,
Current
Ratio %/
Prior
Ratio %/
Total
Ratio %/
(Dollars in millions)
Year
Pt Change
Years
Pt Change
Incurred
Pt Change
2020
Attritional
$
3,067.5
65.9
%
$
(3.1)
-0.1
%
3,064.4
65.8
%
Catastrophes
297.0
6.4
%
-
-
%
297.0
6.4
%
Total Segment
$
3,364.5
72.3
%
$
(3.1)
-0.1
%
$
3,361.4
72.2
%
2019
Attritional
$
2,330.5
57.2
%
$
(74.4)
-1.8
%
2,256.0
55.4
%
Catastrophes
316.5
7.8
%
33.4
0.8
%
349.9
8.6
%
Total Segment
$
2,647.0
65.0
%
$
(41.1)
-1.0
%
$
2,605.9
64.0
%
Variance 2020/2019
Attritional
$
737.0
8.7
pts
$
71.3
1.7
pts
$
808.3
10.4
pts
Catastrophes
(19.5)
(1.4)
pts
(33.4)
(0.8)
pts
(52.9)
(2.2)
pts
Total Segment
$
717.5
7.3
pts
$
37.9
0.9
pts
$
755.5
8.2
pts
(Some amounts may not reconcile due to rounding.)

Incurred losses increased by 27.1% to

$1,335.0 million for the three months


ended September 30, 2020,
compared to $1,050.6 million

for the three

months ended September 30,

2019.

The increase was primarily

due
to an increase of

$255.8 million in current

year attritional losses,

mainly related to

$109.9 million of losses from
the COVID

-19 pandemic

and the

impact of

the increase

in premiums

earned, as

well at

$50.9 million

less of
favorable development

on prior years

attritional losses

in 2020 compared

to 2019.

The increase

was partially
offset by

a decline of

$19.0 million in

current year

catastrophe losses.

The current

year catastrophe

losses of
$272.5 million

for the

three months

ended September

30, 2020

related primarily

to Hurricane

Laura ($116.0
million), the Northern California wildfires ($52.0

million), the California Glass wildfire ($30.0


million), the Oregon
wildfires ($21.0 million), Hurricane

Isaias ($17.9 million), the

Derecho storms ($13.1

million), the Calgary storms
in Canada

($12.5 million)

and Hurricane

Sally ($10.0

million).

The $291.5

million of

current year

catastrophe
losses for the three months

ended September 30, 2019 related


to Hurricane Dorian ($160.5 million) and
Typhoon Faxai ($131.0 million).


Incurred losses increased

by 29.0% to $3,361.4

million for the nine

months ended September 30,

2020,

compared to $2,605.9 million for the nine months ended September 30, 2019.


The increase was primarily due to
an increase of $737.0 million in current year attritional

losses, mainly related to $351.0 million of losses from the
COVID-19 pandemic and the impact of the increase in premiums earned, as well as
$71.3 million less of favorable
development on prior

years attritional

losses in 2020

compared to 2019.

The increase was

partially offset by

a
decline of $19.5

million in current

year catastrophe

losses and $33.4

million of less

favorable development

on
prior year catastrophe

losses.

The current year

catastrophe losses of

$297.0 million for

the nine months ended




































































































































































48
September 30,

2020 related

primarily to

Hurricane Laura

($116.0 million),

the Northern

California wildfires
($52.0 million), the California

Glass wildfire ($30.0 million),

the Oregon wildfires ($21.0


million), Hurricane Isaias
($17.9 million), the Derecho storms

($13.1 million), the Calgary storms

in Canada ($12.5 million), Hurricane

Sally

($10.0 million), the Nashville tornadoes

($9.7 million), the Australia East

Coast storm ($6.8 million), the

Australia
fires ($5.6 million)

and the 2020

U.S. Civil Unrest

($2.4 million).

The $316.5 million of

current year catastrophe
losses for the nine months ended September 30,

2019 were related to Hurricane Dorian ($160.5

million),

Typhoon Faxai ($131.0 million) and the Townsville

monsoon in Australia ($25.0 million).


Segment Expenses.

Commission and

brokerage expenses

increased by

0.6% to

$373.3 million

for the

three
months ended

September 30,

2020 compared

to $371.1

million for

the three

months ended

September 30,
2019.

Commission and brokerage

expenses increased

by 8.8%

to $1,130.9 million

for the

nine months

ended
September 30, 2020 compared to $1,039.1 million for the nine months ended
September

30, 2019.

The
increases

were mainly

due to

the impact

of the

increases in

premiums earned

and changes

in the

mix of
business.


Segment other

underwriting expenses

increased to

$51.3 million

for the

three months

ended September

30,
2020 from $43.8 million

for the three months

ended September 30, 2019.


Segment other underwriting
expenses increased to $135.2 million for the nine months ended

September 30, 2020 from $117.0 million for the
nine months

ended September

30, 2019.

These increases

were mainly

due to

the impact

of the

increase in
premiums earned.


Insurance.
The following

table presents

the underwriting

results and

ratios for

the Insurance

segment for

the periods
indicated.

Three Months Ended September 30,
Nine Months Ended September 30,
(Dollars in millions)
2020
2019
Variance
% Change
2020
2019
Variance
% Change
Gross written premiums
$
704.6$
666.6$
38.0

5.7
%

$
2,328.7$
2,018.7$
310.0

15.4
%
Net written premiums
511.8
484.8
27.0
5.6
%
1,693.6
1,491.3
202.3
13.6
%


















Premiums earned
$
536.6$
484.8$
51.7
10.7
%
$
1,628.3$
1,383.5$
244.8
17.7
%
Incurred losses and LAE
401.2


321.3


79.9

24.9
%

1,212.7


909.2


303.5

33.4
%
Commission and brokerage
72.1
72.0
0.1
0.1
%
229.2
214.4
14.8
6.9
%
Other underwriting expenses
87.5


74.3


13.2

17.8
%

250.7


204.9


45.8

22.3
%
Underwriting gain (loss)
$
(24.2)$
17.2$
(41.4)
-240.8
%
$
(64.3)$
55.0$
(119.3)
-216.9
%
Point Chg
Point Chg
Loss ratio
74.8
%
66.2
%
8.6
74.6
%
65.8
%
8.8
Commission and brokerage ratio
13.4
%
14.8
%
(1.4)
14.0
%
15.5
%
(1.5)
Other underwriting expense ratio
16.3
%
15.4
%
0.9
15.4
%
14.7
%
0.7
Combined ratio
104.5
%
96.4
%
8.1
104.0
%
96.0
%
8.0
(NM not meaningful)
(Some amounts may not reconcile due to rounding.)

Premiums.

Gross written premiums increased

by 5.7% to $704.6 million for

the three months ended September 30, 2020 compared to $666.6 million for the three months ended September 30, 2019.


This increase was related
to many lines

of business including casualty,

specialty lines and business

written through Lloyd's

syndicate.

Net
written premiums increased

by 5.6% to $511.8

million for the three

months ended September 30,

2020

compared to $484.8 million for

the three months ended September

30, 2019.

The change is consistent

with the
change in

gross written

premiums.

Premiums earned increased

10.7% to $536.6

million for the

three months
ended September 30,

2020 compared to

$484.8 million for

the three months

ended September 30,

2019.

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.


Gross written premiums

increased by 15.4% to

$2,328.7 million for the

nine months ended September

30, 2020
compared to $2,018.7 million for the nine months ended September 30, 2019.

This increase was related to most
lines of business

including property,

casualty, specialty

lines, accident and

health and business

written through







































































































































































































































































49
Lloyd's syndicate

.

Net written

premiums increased

by 13.6%

to $1,693.6

million for

the nine

months ended
September 30, 2020 compared to $1,491.3 million for the nine months ended
September 30, 2019.

The
difference between

the change in

gross written

premiums compared to

the change in

net written premiums

is

primarily due to varying utilization of

reinsurance.

Premiums earned increased 17.7% to $1,628.3 million for

the

nine months ended September 30, 2020 compared to $1,383.5 million for the nine
months ended September 30,
2019.

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 table presents the incurred


losses and LAE for the Insurance segment for
the periods indicated.


Three Months Ended September 30,
Current
Ratio %/
Prior
Ratio %/
Total
Ratio %/
(Dollars in millions)
Year
Pt Change
Years
Pt Change
Incurred
Pt Change
2020
Attritional
$
363.7
67.8
%
$
-
-
%
$
363.7
67.8
%
Catastrophes
37.5
7.0
%
-
-
%
37.5
7.0
%
Total Segment
$
401.2
74.8
%
$
-
-
%
$
401.2
74.8
%
2019



Attritional
$
320.7
66.1
%
$
-
-
%
$
320.7
66.1
%
Catastrophes
4.0
0.8
%
(3.4)
-0.7
%
0.6
0.1
%
Total Segment
$
324.7
66.9
%
$
(3.4)
-0.7
%
$
321.3
66.2
%



Variance 2020/2019
Attritional
$
43.0
1.7
pts
$
-
-
pts
$
43.0
1.7
pts
Catastrophes
33.5
6.2
pts
3.4
0.7
pts
36.9
6.9
pts
Total Segment
$
76.5
7.9
pts
$
3.4
0.7
pts
$
79.9
8.6
pts

Nine Months Ended September 30,
Current
Ratio %/
Prior
Ratio %/
Total
Ratio %/
(Dollars in millions)
Year
Pt Change
Years
Pt Change
Incurred
Pt Change
2020
Attritional
$
1,150.1
70.7
%
$
4.6
0.3
%
$
1,154.7
71.0
%
Catastrophes
58.0
3.6
%
-
-
%
58.0
3.6
%
Total Segment
$
1,208.1
74.3
%
$
4.6
0.3
%
$
1,212.7
74.6
%
2019
Attritional
$
908.5
65.7
%
$
-
-
%
$
908.6
65.7
%
Catastrophes
4.0
0.3
%
(3.4)
-0.2
%
0.6
0.1
%
Total Segment
$
912.5
66.0
%
$
(3.4)
-0.2
%
$
909.2
65.8
%
Variance 2020/2019
Attritional
$
241.6
5.0
pts
$
4.5
0.3
pts
$
246.1
5.3
pts
Catastrophes
54.0
3.3
pts
3.4
0.2
pts
57.4
3.5
pts
Total Segment
$
295.6
8.3
pts
$
7.9
0.5
pts
$
303.5
8.8
pts
(Some amounts may not reconcile due to rounding.)

Incurred losses and

LAE increased by

24.9% to $401.2

million for the

three months ended

September 30, 2020
compared to $321.3 million

for the three months

ended September 30, 2019.

The increase was mainly due

to a
rise of $43.0 million in current year attritional

losses, primarily related to $15.0 million of losses

from the COVID-
19 pandemic

and the

impact of

the increase

in premiums

earned, as

well as

an increase

of $33.5

million in
current year

catastrophe losses.

The current

year catastrophe

losses of

$37.5 million

for the

three months
ended September 30, 2020 related to Hurricane Sally

($16.0 million), Hurricane Laura ($15.0 million), the Calgary
storms in Canada

($2.5 million), the

Derecho storms ($2.0

million) and Hurricane

Isaias ($2.0 million).

The $4.0
million of current year

catastrophe losses for

the three months ended

September 30, 2019 related

to Hurricane
Dorian ($4.0 million).





50
Incurred losses and

LAE increased by

33.4% to $1,212.7 million

for the nine

months ended September

30, 2020
compared to $909.2

million for the

nine months ended September

30, 2019.

The increase was

mainly due to a
rise of

$241.6 million

in current

year attritional

losses, primarily

related to

$84.0 million

of losses

from the
COVID-19 pandemic and

the impact of the

increase in premiums

earned, as well

as an increase

of $54.0 million
in current

year catastrophe

losses.

The current

year catastrophe

losses of

$58.0 million

for the

nine months
ended September 30,

2020 related

to Hurricane Sally

($16.0 million), Hurricane

Laura ($15.0 million),

the 2020
U.S. Civil

Unrest ($15.0

million), the

Nashville tornadoes

($5.5 million),

the Calgary

storms in

Canada ($2.5
million), the Derecho

storms ($2.0 million)

and Hurricane Isaias

($2.0 million).

The $4.0 million

of current year catastrophe losses for the nine months ended September 30, 2019 related to Hurricane Dorian ($4.0 million).


Segment Expenses.

Commission and brokerage

increased by 0.1%

to $72.1 million

for the three

months ended
September 30, 2020

compared to $72.0

million for the

three months ended

September 30, 2019.

Commission
and brokerage increased

by 6.9% to $229.2 million for

the nine months ended September 30, 2020


compared to
$214.4 million for the

nine months ended September 30,

2019.

The increases were mainly

due to the impact of
the increases in premiums earned.


Segment other

underwriting expenses

increased to

$87.5 million

for the

three months

ended September

30,
2020 compared to

$74.3 million for

the three months

ended September 30, 2019.

Segment other underwriting
expenses increased

to $250.7

million for

the nine

months ended

September 30,

2020 compared

to $204.9
million for

the nine

months ended

September 30,

2019.

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.


FINANCIAL CONDITION


Cash and Invested

Assets.

Aggregate invested

assets, including cash

and short-term investments,

were
$23,104.7 million

at September

30, 2020,

an increase

of $2,356.2

million compared

to $20,748.5

million at
December 31, 2019.

This increase

was primarily

the result

of $2,190.6 million

of cash

flows from

operations,

$392.6 million of pre-tax unrealized

appreciation, $89.1 million of unsettled

securities, $88.0 million in fair

value

re-measurements, $12.5 million in

equity adjustments of our

limited partnership investments,


$11.8 million due
to fluctuations in foreign currencies, partially offset by repurchases

of 970,892 million common shares for $200.0
million, $187.1 million

paid out in

dividends to shareholders,

$32.6 million of

amortization bond premium

and

$19.6 million of allowance for credit losses.


Our principal

investment objectives

are to

ensure funds

are available

to meet

our insurance

and reinsurance
obligations and to maximize

after-tax investment income

while maintaining a high quality

diversified investment
portfolio.

Considering these

objectives, we

view our

investment portfolio

as having

two components:

1) the
investments needed

to satisfy

outstanding liabilities

(our core

fixed maturities

portfolio) and

2) investments
funded by our shareholders' equity.


For the

portion needed to

satisfy global

outstanding liabilities,

we generally

invest in

taxable and

tax-
preferenced fixed

income securities with an

average credit quality

of Aa3.

For the U.S.

portion of this portfolio,
our mix

of taxable

and tax

-preferenced investments

is adjusted

periodically, consistent

with our

current and
projected U.S.

operating results,

market conditions

and our

tax position.

This global

fixed maturity

securities
portfolio is

externally managed

by independent,

professional investment

managers using

portfolio guidelines
approved by internal management.


Over the past several years,

we have expanded the allocation

of our investments funded by shareholders'

equity
to include:

1) a

greater percentage

of publicly

traded equity

securities, 2)

emerging market

fixed maturities
through mutual fund structures,

as well as individual holdings,

3) high yield fixed


maturities, 4) bank and private
loan securities

and 5)

private equity

limited partnership

investments.

The objective

of this

portfolio
diversification is

to enhance

the risk-adjusted

total return

of the

investment portfolio

by allocating

a prudent
portion of

the portfolio

to higher

return asset

classes, which

are also

less subject

to changes

in value

with







































































































51
movements in

interest rates.

We limit

our allocation

to these

asset classes

because of

1) the

potential for
volatility in their values and 2) the impact of these investments

on regulatory and rating agency capital adequacy
models.

We use investment

managers experienced in

these markets and

adjust our allocation

to these
investments based

upon market

conditions.

At September

30, 2020, the

market value

of investments

in these
investment market sectors, carried at

both market and fair value, approximated 58.3% of shareholders'

equity.


The Company's

limited partnership

investments are

comprised of

limited partnerships

that invest

in private
equities.

Generally, the

limited partnerships are reported

on a quarter lag.

We receive annual

audited financial
statements for all

of the limited partnerships

which are prepared

using fair value accounting

in accordance with
FASB guidance.

For the quarterly reports,

the Company's staff

performs reviews of

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 tables

below summarize

the composition

and characteristics

of our

investment portfolio

as of

the dates
indicated.


(Dollars in millions)
At September 30, 2020
At December 31, 2019
Fixed maturities, market value
$
17,856.4

77.3
%

$
16,824.9

81.1
%
Fixed maturities, fair value
3.7
0.0
%
5.8
0.0
%
Equity securities, fair value
1,173.2

5.1
%

931.5

4.5
%
Short-term investments
1,220.8
5.2
%
414.7
2.0
%
Other invested assets
1,911.8

8.3
%

1,763.5

8.5
%
Cash
938.9
4.1
%
808.0
3.9
%
Total investmen

ts and cash
$
23,104.7

100.0
%

$
20,748.5

100.0
%

(Some amounts may not reconcile due to rounding.)

At

At

September 30, 2020December 31, 2019
Fixed income portfolio duration (years)
3.5
3.5
Fixed income composite credit quality
Aa3
A1
Imbedded end of period yield, pre-tax
3.1
%
3.4
%
Imbedded end of period yield, after-tax
2.7
%
3.0
%

The following table provides a comparison

of our total return by asset

class relative to broadly accepted

industry

benchmarks for the periods indicated:


Nine Months Ended
Twelve Months Ended
September 30, 2020December 31, 2019
Fixed income portfolio total return
4.4
%
6.2
%
Barclay's Capital - U.S. aggregate

index
6.8
%
8.7
%


Common equity portfolio total return
11.0
%
23.8
%
S&P 500 index
5.6
%
31.5
%
Other invested asset portfolio total

return
1.5
%
9.9
%

The pre-tax equivalent total return for

the bond portfolio was approximately 4.5% and 6.3%, respectively,

for the
nine months ended

September 30,

2020 and

the twelve months ended December

31, 2019.


The pre-tax
equivalent return adjusts the yield on tax-exempt bonds to the fully taxable

equivalent.


Our fixed

income and

equity portfolios

have different

compositions than

the benchmark

indexes.

Our fixed
income portfolios have a shorter duration

because we align our investment portfolio with our

liabilities.

We also
hold foreign

securities to match

our foreign

liabilities while the

index is comprised

of only U.S.

securities.

Our











































































































































52
equity portfolios reflect

an emphasis on dividend

yield and growth

equities, while the index

is comprised of the
largest 500 equities by market capitalization.


Reinsurance Receivables.

Reinsurance receivables

for both

paid and recoverable

on unpaid losses

totaled $1,923.0

million and $1,763.5
million at September 30,

2020 and December 31,

2019, respectively.

At September 30,

2020, $716.2 million, or
37.2%, was

receivable from

Mt. Logan

Re collateralized

segregated accounts

and $153.1 million,

or 8.0%,

was

receivable from Munich Reinsurance America, Inc. ("Munich Re").


No other retrocessionaire accounted for more
than 5% of our receivables.


Loss and LAE Reserves.

Gross loss and LAE reserves

totaled $15,233.1 million and $13,611.3 million

at

September 30, 2020 and December 31, 2019, 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 September 30, 2020
Case
IBNR
Total
% of

(Dollars in millions)
Reserves
Reserves
Reserves
Total
Reinsurance
$
4,847.2$
5,987.0$
10,834.1

71.1
%
Insurance
1,249.4
2,924.1
4,173.5
27.4
%
Total excluding

A&E
6,096.5

8,911.1

15,007.6

98.5
%
A&E
181.5
43.9
225.5
1.5
%
Total including

A&E
$
6,278.1$
8,955.0$
15,233.1

100.0
%

(Some amounts may not reconcile due to rounding.)

At December 31, 2019
Case
IBNR
Total
% of

(Dollars in millions)
Reserves
Reserves
Reserves
Total
Reinsurance
$
5,050.5$
4,839.4$
9,889.9

72.7
%
Insurance
1,090.4
2,373.2
3,463.5
25.4
%
Total excluding

A&E
6,140.9

7,212.5

13,353.4

98.1
%
A&E
203.4
54.5
257.9
1.9
%
Total including

A&E
$
6,344.3$
7,267.0$
13,611.3

100.0
%

(Some amounts may not reconcile due to rounding.)

Changes in premiums earned and business mix, reserve re-estimations, catastrophe

losses and changes in catastrophe loss reserves and claim settlement activity all impact loss and LAE reserves by segment and in total.

Our loss and LAE reserves

represent management's best

estimate of our ultimate

liability for unpaid claims.

We
continuously re-evaluate

our reserves, including

re-estimates of prior

period reserves, taking

into consideration
all available

information and,

in particular,

newly reported

loss and

claim experience.

Changes in

reserves
resulting from such re

-evaluations are reflected

in incurred losses in the

period when the re-evaluation

is made.

Our analytical methods and

processes operate at

multiple levels including individual

contracts, groupings of

like

contracts, classes and lines of business,

internal business units, segments, legal entities,

and in the aggregate.

In

order to set appropriate reserves,

we make qualitative and quantitative


analyses and judgments at these various
levels.

Additionally, the

attribution of

reserves, changes in

reserves and incurred

losses among accident

years
requires qualitative

and quantitative

adjustments and

allocations at

these various

levels.

We utilize

actuarial

science, business expertise and management judgment in a manner intended to ensure


the accuracy and
consistency of our

reserving practices.

Nevertheless, our reserves are

estimates, which are

subject to variation,
which may be significant.































53
There can

be no assurance

that reserves for,

and losses from,

claim obligations

will not increase

in the future,
possibly by

a material

amount.

However,

we believe

that our

existing reserves

and reserving

methodologies
lessen the

probability that

any such

increase would

have a

material adverse

effect on

our financial condition,
results of operations or cash flows.


Asbestos and Environmental Exposures.

A&E exposures represent a separate exposure


group for monitoring and
evaluating reserve adequacy.

The following table summarizes the

outstanding loss reserves with respect to

A&E

reserves on both a gross and net of retrocessions basis for the periods
indicated.


At
At
September 30,
December 31,
(Dollars in millions)
2020
2019
Gross reserves

$
227.3$
257.9
Reinsurance receivable
(20.0)
(29.2)
Net reserves

$
207.3$
228.7

(Some amounts may not reconcile due to rounding.)

With respect to

asbestos only,

at September 30,

2020, we had

net asbestos loss

reserves of $203.1

million, or
97.9%, of total net A&E reserves, all of which was for assumed business.

In 2015, we sold Mt. McKinley to Clearwater Insurance Company.


Concurrently with the closing, we entered into
a retrocession

treaty with

an affiliate

of Clearwater.

Per the

retrocession treaty,

we retroceded

100% of

the
liabilities associated with

certain Mt. McKinley

policies, which had

been reinsured

by Bermuda Re.

As
consideration for

entering into

the retrocession

treaty, Bermuda

Re transferred

cash of

$140.3 million,

an
amount equal

to the

net loss

reserves as

of the

closing date.

Of the

$140.3 million

of net

loss reserves
retroceded, $100.5

million were related

to A&E business.

The maximum liability

retroceded under

the
retrocession treaty will

be $440.3 million, equal to

the retrocession payment plus

$300.0 million.

We will retain liability for any amounts exceeding the maximum liability retroceded under the retrocession treaty.

On December 20, 2019, the retrocession treaty was amended and included a

partial commutation.

As a result of
this amendment and partial

commutation, gross A&E

reserves and correspondingly reinsurance

receivable were
reduced by

$43.4 million.

In addition,

the maximum

liability permitted

to be

retroceded increased

to $450.3
million.

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

5.3 years

at September

30, 2020.

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.


Shareholders' Equity.

Our shareholders'

equity increased

to $9,591.3

million as

of September

30, 2020

from
$9,132.9 million as of

December 31, 2019.

This increase was

the result of

$450.5 million of net

income, $348.5
million of

unrealized appreciation

on investments

net of

tax, $30.4

million of

net foreign

currency translation
adjustments, $15.7 million of share-based compensation transactions

and $4.5 million of net benefit plan
obligation adjustments, partially

offset by the

repurchase of 970,892

common shares for

$200.0 million, $187.1 million of shareholder dividends, and $4.2 million of cumulative adjustment from the adoption of ASU 2016-13.



























54

LIQUIDITY AND CAPITAL RESOURCES

Capital.

Shareholders' equity at September

30, 2020 and December 31,

2019 was $9,591.3 million and

$9,132.9
million, respectively.

Management's objective in managing

capital is to ensure

its overall capital level,

as well as
the capital levels of its operating subsidiaries, exceed the amounts required

by regulators, the amount needed to
support our current

financial strength ratings

from rating

agencies and our

own economic capital

models.

The

Company's capital has historically exceeded

these benchmark levels.

Our two main operating companies

Bermuda Re

and Everest Re are regulated

by the Bermuda

Monetary
Authority ("BMA")

and the

State of

Delaware, Department

of Insurance,

respectively.

Both regulatory

bodies
have their own

capital adequacy models based

on statutory capital

as opposed to GAAP

basis equity.

Failure to
meet the

required statutory

capital levels

could result

in various

regulatory restrictions,

including business
activity and the payment of dividends to their parent companies.


The regulatory targeted capital and the actual statutory capital

for Bermuda Re and Everest Re were

as follows:

Bermuda Re
(1)
Everest Re
(2)
At December 31,
At December 31,
(Dollars in millions)
2019
2018
2019
2018
Regulatory targeted capital
$
2,061.1$
1,753.2$
2,001.2$
2,173.0
Actual capital
$
3,197.4$
3,068.5$
3,739.1$
3,650.6

(1)

Regulatory targeted capital represents the target capital level

from the applicable year's BSCR calculation.

(2)

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

Our financial strength ratings as

determined by A.M. Best, Standard & Poor's

and Moody's are important as

they
provide our

customers and

investors with

an independent

assessment of

our financial

strength using

a rating
scale that provides for relative

comparisons.

We continue to possess significant


financial flexibility and access to
debt and equity

markets as

a result

of our financial

strength, as

evidenced by the

financial strength

ratings as
assigned by independent rating agencies.


We maintain our

own economic capital models

to monitor and project

our overall capital,

as well as, the

capital

at our operating subsidiaries.

A key input to the economic models is projected income and this


input is
continually compared to actual results, which may require a change in the
capital strategy.


As part

of our

capital strategy,

we model

our potential

exposure to

catastrophe losses

arising from

a single
event.

Projected catastrophe losses are generally

summarized in term of probable maximum loss ("PML").

A full
discussion on

PMLs is

included in

our December

31, 2019

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, 2019 Form 10-K, we

reported that our projected net economic

loss from our
largest projected 100-year

event represented

approximately 6% of

our December 31, 2019

shareholders'
equity.

During the first three quarters of 2020, in response

to current favorable market

conditions, we increased
our net exposure

to catastrophes.

As a result, our

projected net economic

loss from our largest

100-year event
in a given zone represents approximately 7% of our June 30, 2020 shareholders'
equity.

The table below

reflects the Company's

PML exposure, net

of third party

reinsurance at various

return periods
for its top

three zones/perils (as

ranked by

largest 1

in 100 year

economic loss) based

on projection data

as of
July 1, 2020.






































































55
Return Periods (in years)
1 in 20
1 in 50
1 in 100
1 in 250
1 in 500
1 in 1,000
Exceeding Probability
5.0%
2.0%
1.0%
0.4%
0.2%
0.1%
(Dollars in millions)
Zone/ Peril
California, Earthquake
$

164$

582$

914$

1,135$

1,342$

1,887Southeast U.S., Wind
530
726
891
1,140
1,418
2,170
Europe Wind

147

378

632

993

1,106

1,245

The projected economic

losses, defined as PML

exposures, net of

third party reinsurance,

reinstatement

premiums and estimated income taxes, for the top three zones/perils

scheduled are as follows:

Return Periods (in years)
1 in 20
1 in 50
1 in 100
1 in 250
1 in 500
1 in 1,000
Exceeding Probability
5.0%
2.0%
1.0%
0.4%
0.2%
0.1%
(Dollars in millions)
Zone/ Peril
California, Earthquake
$
130$
443$
689$
853$
1,034$
1,648Southeast U.S., Wind
358
495
635
840
1,068
1,705
Europe Wind
122

310

509

815

909

1,022

During the first

three quarters

of 2020, we

repurchased 970,892

shares for

$200.0 million in

the open market
and paid $187.1

million in dividends

to adjust

our capital

position and enhance

long term expected

returns to
our shareholders.

We also

repurchased $13.2

million of

our long-term

subordinated notes

in the

first three
quarters of 2020.

We recognized a realized gain

of $2.5 million on the repurchase.

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 October 7,

2020, we issued

an additional $1,000.0

million of 30

year senior notes

at a

rate of

3.5%. These senior notes will mature on October 15, 2050 and will pay interest semi-annually.

In 2019, we repurchased 114,633 shares for $24.6 million in the open market and

paid $234.3 million in
dividends.

We may at

times enter into a

Rule 10b5-1 repurchase plan

agreement to facilitate

the repurchase of
shares.

On May

22, 2020,

our existing

Board authorization

to purchase

up to

30 million

of our

shares was
amended to authorize

the purchase of up

to 32 million shares.

As of September

30, 2020, we had

repurchased

29.6 million shares under this authorization.


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 $2,190.6

million and $1,486.9

million for

the nine months

ended September 30,

2020 and 2019,
respectively.

Additionally, these

cash flows

reflected net

catastrophe loss

payments of

$505.9 million

and
$678.0 million for

the nine months

ended September 30, 2020

and 2019, respectively

and net tax

recoveries of
$169.1 million and $80.5 million for the nine months ended September 30, 2020
and 2019, respectively.


If disbursements for

claims and benefits,

policy acquisition costs

and other operating

expenses were to

exceed
premium inflows, cash

flow from reinsurance

and insurance operations

would be negative.

The effect

on cash
flow from

insurance operations

would be

partially offset

by cash

flow from

investment income.

Additionally,

56
cash inflows

from investment

maturities and dispositions,

both short-term

investments and

longer term
maturities are available to supplement other operating cash flows.


As the timing of

payments for claims

and benefits cannot be

predicted with certainty,

we maintain portfolios

of
long term

invested assets

with varying

maturities, along

with short-term

investments that

provide additional
liquidity for payment

of claims.

At September

30, 2020 and

December 31, 2019,

we held cash

and short-term
investments of

$2,159.6 million

and $1,222.7

million, 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
September 30, 2020,

we had $1,483.6 million

of available for

sale fixed maturity

securities maturing within one
year or

less, $6,624.8 million

maturing within one

to five

years and

$5,319.3 million maturing

after five

years.

Our $1,173.2 million

of equity securities

are comprised primarily

of publicly traded

securities that can

be easily
liquidated.

We believe

that these

fixed maturity

and equity

securities, in

conjunction with

the short-term
investments and positive

cash flow from operations,

provide ample sources of

liquidity for the expected
payment of

losses in the

near future.

We do

not anticipate

selling a significant

amount of

securities or using
available credit

facilities to

pay losses and

LAE but have

the ability to

do so.

Sales of securities

might result in
realized capital gains

or losses.

At September 30, 2020 we

had $744.6 million of net pre-tax

unrealized
appreciation related to

fixed maturity securities,

comprised of $891.2

million of pre

-tax unrealized appreciation
and $146.6 million of pre-tax unrealized depreciation.


Management generally

expects annual

positive cash

flow from

operations.

Cash flow

from operations

may
decline and could

become negative;

however,

as indicated above,

the Company has

ample liquidity to

settle its
claims.

In addition to our

cash flows from

operations and liquid

investments, we also

have multiple credit

facilities that
provide up to $200.0 million of unsecured revolving

credit for liquidity and letters of

credit but more importantly
provide for up

to $600.0 million

and £52.2 million of

collateralized standby

letters of credit

to support business
written by our Bermuda operating subsidiaries.


Effective May

26, 2016,

Group, Bermuda

Re and

Everest International

entered into

a five

year,

$800.0 million
senior credit facility

with a syndicate

of lenders, which

amended and restated

in its entirety

the June 22,

2012,
four year,

$800.0 million senior credit

facility.

Both the May

26, 2016 and June

22, 2012 senior credit

facilities,
which have similar

terms, are referred

to as the

"Group Credit Facility".

Wells Fargo

Corporation ("Wells

Fargo
Bank") is

the administrative

agent for

the Group

Credit Facility,

which consists

of two

tranches.

Tranche one
provides up to $200.0

million of unsecured revolving credit

for liquidity and general

corporate purposes, and for
the issuance of unsecured

standby letters

of credit.

The interest on

the revolving loans

shall, at the

Company's
option, be

either (1) the Base Rate (as

defined below)

or (2) an adjusted London Interbank Offered

Rate
("LIBOR") plus a

margin.

The Base Rate

is the higher

of (a)

the prime commercial

lending rate

established by
Wells Fargo

Bank, (b) the

Federal Funds Rate

plus 0.5% per

annum or (c)

the one month

LIBOR Rate plus

1.0%
per annum.

The amount of margin and the fees

payable for the Group

Credit Facility depends on Group's

senior
unsecured debt rating.

Tranche two

exclusively provides up to

$600.0 million for the issuance of


standby letters
of credit on a collateralized basis.

The Group Credit

Facility requires Group

to maintain a

debt to capital

ratio of not

greater than 0.35

to 1 and to
maintain a minimum net worth.

Minimum net worth is an amount equal to the sum of $5,371.0 million plus 25%
of consolidated net

income for each

of Group's

fiscal quarters, for

which statements are

available ending on

or

after March 31, 2016 and for which consolidated net

income is positive, plus 25% of any increase in consolidated net worth during such

period attributable to the

issuance of ordinary and prefe

rred shares, which at

September

30, 2020, was $6,372.7 million.

As of September 30, 2020, the Company was in compliance with all Group

Credit
Facility covenants.


At September

30, 2020 and

December 31, 2019,

the Company had

no outstanding short

-term borrowings from
the Group Credit Facility revolving credit line.

At September 30, 2020, the Group Credit Facility had $99.1 million
outstanding letters

of credit under

tranche one and

$586.2 million outstanding

letters of

credit under tranche

57
two.

At December

31, 2019,

the Group

Credit Facility

had $33.7

million outstanding

letters of

credit under
tranche one and $589.7 million outstanding letters of credit under tranche two.

Effective May

12 2020,

Everest International

amended its credit

facility with

Lloyds Bank

plc ("Everest
International Credit Facility").

The current amendment of the Everest

International Credit Facility provides

up to
£52.2 million

for the

issuance of

standby letters

of credit

on a

collateralized basis.

The Company

pays a
commitment fee of 0.1%

per annum on the average

daily amount of the remainder

of (1) the aggregate

amount
available under

the facility

and (2)

the aggregate

amount of

drawings outstanding

under the

facility.

The
Company pays a credit commission fee of 0.35% per annum on drawings outstanding
under the facility.


The Everest

International Credit

Facility requires

Group to

maintain a

debt to

capital ratio

of not greater

than

0.35 to 1 and to maintain a minimum net worth.


Minimum net worth is an amount equal to the sum of $5,532.7
million (70% of consolidated

net worth as of December

31, 2018), plus 25% of

consolidated net income for

each
of Group's

fiscal quarters, for

which statements

are available ending

on or after

January 1, 2019

and for which
net income is positive, plus

25% of any increase in

consolidated net worth of Group

during such period
attributable to

the issuance

of ordinary

and preferred

shares, which

at September

30, 2020,

was $5,910.4
million.

As of September 30,

2020, the Company was

in compliance with all

Everest International

Credit Facility
requirements.


At September 30, 2020 and

December 31, 2019, Everest

International Credit Facility had


£52.2 million and £47.0
million, respectively, of outstanding lette

rs of credit.


Costs incurred

in connection

with the

Group Credit

Facility and

Everest International

Credit Facility

were $0.1
million for

the three

months ended September

30, 2020 and

2019, respectively

.

Costs incurred

in connection
with the Group Cred

it Facility and Everest

International Credit Facility

were $0.6 million and

$0.3 million for the
nine months ended September 30, 2020 and 2019, respectively.

Effective August 15,

2019, Everest Re

became a member of the Federal


Home Loan Banks ("FHLB") organization,
which allows Everest Re to borrow

up to 10% of its statutory admitted assets.


As of September 30, 2020, Everest
Re had admitted

assets of approximately

$14,667.1 million which

provides borrowing

capacity of up

to

approximately $1,466.7 million. On

August 31, 2020, Everest

Re borrowed $90.0 million

under its FHLB available
capacity.

The $90.0 million

collateralized borrowing

has interest payable

at a rate

of 0.35% and

will mature on
November 30, 2020.

Market Sensitive Instruments.

The SEC's Financial

Reporting Release #48

requires registrants

to clarify and

expand upon the

existing financial
statement disclosure

requirements for

derivative financial

instruments, derivative

commodity instruments

and

other financial instruments (collectively,

"market sensitive instruments").

We do not generally enter into

market

sensitive instruments for trading purposes.


Our current investment

strategy seeks

to maximize after

-tax income through

a high quality,

diversified, taxable
and tax

-preferenced fixed

maturity portfolio,

while maintaining

an adequate

level of

liquidity.

Our mix

of
taxable and

tax-preferenced investments

is adjusted

periodically, consistent

with our

current and

projected
operating results,

market conditions

and our

tax position.

The fixed

maturity securities

in the

investment
portfolio are

comprised of

non-trading available

for sale

securities.

Additionally, we

have invested

in equity
securities.


The overall investment

strategy considers the

scope of present and

anticipated Company operations.

In

particular, estimates

of the financial impact resulting from non-investment


asset and liability transactions,
together with our

capital structure

and other factors,

are used to

develop a net

liability analysis.

This analysis
includes estimated payout characteristics for

which our investments provide liquidity.


This analysis is considered
in the development of specific investment strategies for

asset allocation, duration and credit quality.


The change
in overall market sensitive risk exposure principally reflects the asset changes
that took

place during the period.




























58

Interest Rate

Risk.

Our $23.1

billion investment

portfolio, at

September 30,

2020, is

principally comprised

of
fixed maturity

securities, which are

generally subject

to interest

rate risk

and some foreign

currency exchange
rate risk, and some equity securities, which are subject to price fluctuations
and some foreign

exchange rate risk.

The overall economic

impact of the

foreign exchange

risks on the

investment portfolio

is partially mitigated

by
changes in

the dollar value

of foreign

currency denominated

liabilities and

their associated

income statement
impact.


Interest rate

risk is the

potential change in

value of the

fixed maturity securities

portfolio,

including short-term
investments, from

a change

in market

interest rates.

In a

declining interest

rate environment,

it includes
prepayment risk

on the

$3,090.5 million of

mortgage-backed securities

in the $17,860.1

million 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

$1,220.8 million 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 September 30, 2020
-200
-100
0

100
200
(Dollars in millions)
Total Market/Fair

Value
$
20,414.9$
19,747.9$
19,080.9$
18,413.9

17,746.9
Market/Fair Value

Change from Base (%)
7.0
%
3.5
%
0.0
%
(3.5)
%
(7.0)
%
Change in Unrealized Appreciation
After-tax from Base ($)
$
1,177.3$
588.6
$
-
$
(588.6)$
(1,177.3)

We had

$15,233.1 million and

$13,611.3 million of

gross reserves for

losses and LAE

as of September

30, 2020
and December

31, 2019,

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

3.1 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 $1.4

billion resulting

in a discounted

reserve balance of
approximately $12.0

billion, representing

approximately 63.2%

of the

value of

the fixed

maturity investment
portfolio funds.


Equity Risk.

Equity risk is the potential

change in fair and/or market

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.































59
The table below displays the

impact on fair/market value

and after-tax change in fair/market


value of a 10% and
20% change in equity prices up and down for the period indicated.


Impact of Percentage Change in Equity Fair/Ma

rket Values
At September 30, 2020
(Dollars in millions)
-20%
-10%
0%
10%
20%
Fair/Market Value

of the Equity Portfolio
$
938.5$
1,055.8$
1,173.2$
1,290.5$
1,407.8

After-tax Change in Fair/Market

Value
$
(191.3)$
(95.7)
$
-
$
95.7$
191.3

Foreign Currency Risk.

Foreign currency risk

is the potential change

in value, income and

cash flow arising from
adverse changes

in foreign

currency exchange

rates.

Each of

our non-U.S./Bermuda

("foreign") operations
maintains capital

in the

currency of

the country

of its

geographic location

consistent with

local regulatory
guidelines.

Each foreign

operation may

conduct business in

its local currency,

as well as

the currency of

other
countries in

which it

operates.

The primary

foreign currency

exposures for

these foreign

operations are

the
Canadian Dollar,

the Singapore

Dollar, the

British Pound

Sterling and the

Euro.

We mitigate

foreign exchange
exposure by generally

matching the currency

and duration of

our assets to our

corresponding operating
liabilities.

In accordance with FASB

guidance, the impact on the market

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.


In January

2020, the

United Kingdom

exited the

European Union

(commonly referred

to as

"Brexit").

The

Company has a Lloyd's of London Syndicate

and Bermuda Re has a branch operation in the United Kingdom.

The
nature and extent

of the long

term impact of

Brexit on regulation,

interest rates,

currency exchange

rates and
financial markets is still uncertain and may adversely affect our

operations.


Safe Harbor Disclosure.
This report

contains forward

-looking statements

within the

meaning of

the U.S.

federal securities

laws.

We

intend these forward-looking statements

to be covered by

the safe harbor provisions for

forward-looking
statements in

the federal

securities laws.

In some

cases, these

statements can

be identified

by the

use of
forward-looking words such

as "may",

"will", "should",

"could",

"anticipate",

"estimate",

"expect",

"plan",
"believe",

"predict", "potential"

and "intend".

Forward-looking statements

contained in

this report

include

information regarding our reserves for losses and LAE, the CARES


Act, the impact of the Tax Cut and Jobs Act, the
adequacy of

capital in

relation to

regulatory required

capital, the

adequacy of

our provision

for uncollectible
balances, estimates of our catastrophe exposure,

the effects of catastrophic

and pandemic events on our
financial statements,

the ability

of Everest

Re, Holdings,

Holdings Ireland,

Dublin Holdings,

Bermuda Re

and
Everest International

to pay

dividends and

the settlement

costs of

our specialized

equity index

put option
contracts.

Forward-looking statements

only reflect

our expectations

and are

not guarantees

of performance.

These statements

involve risks,

uncertainties and

assumptions.

Actual events

or results

may differ

materially
from our expectations.

Important factors that

could cause our actual events

or results to be materially

different

from our expectations include those

discussed under the caption ITEM 1A, "Risk Factors"

in the Company's most
recent 10-K

filing.

We undertake

no obligation

to update

or revise

publicly any

forward-looking statements,
whether as a result of new information, future events or otherwise.


ITEM 3. QUANTITATIVE

AND QUALITATIVE

DISCLOSURES ABOUT MARKET RISK

Market Risk Instruments.

See "Liquidity and Capital Resources - Market Sensitive Instruments" in PART

I - ITEM
2.


60

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Financials (USD)
Sales 2020 - - -
Net income 2020 647 M - -
Net Debt 2020 - - -
P/E ratio 2020 14,7x
Yield 2020 2,63%
Capitalization 9 455 M 9 455 M -
Capi. / Sales 2020 -
Capi. / Sales 2021 -
Nbr of Employees 1 603
Free-Float 56,4%
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Technical analysis trends EVEREST RE GROUP, LTD.
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Income Statement Evolution
Consensus
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Mean consensus OUTPERFORM
Number of Analysts 9
Average target price 264,78 $
Last Close Price 236,58 $
Spread / Highest target 30,2%
Spread / Average Target 11,9%
Spread / Lowest Target -0,67%
EPS Revisions
Managers and Directors
NameTitle
Juan C. Andrade President, Chief Executive Officer & Director
Joseph V. Taranto Chairman
Jim Williamson Chief Operating Officer & Executive Vice President
Mark Kociancic Chief Financial Officer & Executive Vice President
Ralph H. Groce Chief Information Officer & Senior Vice President
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