10-Q - EG - Equibles

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM

10-Q

_X_

Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the quarterly period ended

September 30, 2020

___

Transition Report Pursuant to

Section 13 or 15(d) of the Securities Exchange Act of 1934

Commission file number

1-15731

EVEREST RE GROUP, LTD.

(Exact name of registrant as specified in its charter)

Bermuda

98-0365432

(State or other jurisdiction of

incorporation or organization)

(I.R.S. Employer

Identification No.)

Seon Place – 4th Floor

141 Front Street

PO Box HM 845

Hamilton

HM 19

Bermuda

441

295-0006

(Address, including zip code, and telephone number,

including area code,

of registrant’s principal executive

office)

Indicate by

check mark

whether the

registrant:

(1) has

filed all

reports required

to be

filed by

Section 13

or 15(d)

of the

Securities

Exchange Act of

1934 during the

preceding 12 months

(or for such

shorter period that

the registrant was

required to file

such reports),

and (2) has been subject to such filing requirements for the past 90 days.

Yes

Indicate by check mark whether

the registrant has submitted

electronically every Interactive

Data File required to

be submitted pursuant

to Rule 405 of Regulation

S-T during the preceding 12

months (or for such shorter

period that the registrant

was required to submit

such

files).

Yes

Indicate by check mark

whether the registrant

is a large accelerated

filer, an

accelerated filer,

a non-accelerated filer,

a smaller reporting

company or

an emerging

growth company.

See the

definitions of

“large accelerated

filer,”

“accelerated filer,”

“smaller reporting

company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large Accelerated Filer

Accelerated filer

Non-accelerated filer

Smaller reporting company

Emerging growth company

Indicate by

check mark if

the registrant

is an emerging

growth company

and has elected

not to use

the extended transition

period for

complying with any new or revised financial accounting standards provided

pursuant to Section 13(a) of the Exchange act.

YES

Indicate by check mark whether the registrant is a shell company

(as defined in Rule 12b-2 of the Exchange Act).

YES

Securities registered pursuant to Section 12(b) of the Act:

Class

Trading Symbol

Name of Exchange where Registered

Number of Shares Outstanding

At November 1, 2020

Common Shares, $0.01 par value

New York Stock Exchange

39,965,673

EVEREST RE GROUP,

LTD

Table of Contents

Form 10-Q

Page

PART I

FINANCIAL INFORMATION

Item 1.

Financial Statements

Consolidated Balance Sheets September 30, 2020 (unaudited)

and December 31, 2019

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

three and nine months ended September 30, 2020 and 2019 (unaudited)

Consolidated Statements of Changes in Shareholders’ Equity for the nine

months ended September 30, 2020 and 2019 (unaudited)

Consolidated Statements of Cash Flows for the nine months ended

September 30, 2020 and 2019 (unaudited)

Notes to Consolidated Interim Financial Statements (unaudited)

Item 2.

Management’s Discussion and Analysis of Financial Condition and

Results of Operation

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

Item 4.

Controls and Procedures

PART II

OTHER INFORMATION

Item 1.

Legal Proceedings

Item 1A.

Risk Factors

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

Item 3.

Defaults Upon Senior Securities

Item 4.

Mine Safety Disclosures

Item 5.

Other Information

Item 6.

Exhibits

EVEREST RE GROUP,

LTD.

CONSOLIDATED BALANCE SHEETS

September 30,

December 31,

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

2020

2019

(unaudited)

ASSETS:

Fixed maturities - available for sale, at

market value

17,856,377

16,824,944

(amortized cost: 2020, $

17,131,414

; 2019, $

16,473,491

, credit allowances: 2020,

19,641

; 2019, $

)

Fixed maturities - available for sale, at

fair value

3,748

5,826

Equity securities, at fair value

1,173,162

931,457

Short-term investments (cost:

2020, $

1,221,198

; 2019, $

414,639

)

1,220,753

414,706

Other invested assets (cost: 2020, $

1,911,757

; 2019, $

1,763,531

)

1,911,757

1,763,531

Cash

938,881

808,036

Total investments

and cash

23,104,678

20,748,500

Accrued investment income

132,513

116,804

Premiums receivable

2,611,036

2,259,088

Reinsurance receivables

1,923,012

1,763,471

Funds held by reinsureds

548,940

489,901

Deferred acquisition costs

601,784

581,863

Prepaid reinsurance premiums

455,961

445,716

Income taxes

77,761

305,711

Other assets

697,342

612,997

TOTAL

ASSETS

30,153,027

27,324,051

LIABILITIES:

Reserve for losses and loss adjustment expenses

15,233,125

13,611,313

Future policy benefit reserve

40,374

42,592

Unearned premium reserve

3,447,455

3,056,735

Funds held under reinsurance treaties

15,931

10,668

Other net payable to reinsurers

364,654

291,660

Losses in course of payment

184,894

51,950

Senior notes due

6/1/2044

397,164

397,074

Long term notes due

5/1/2067

223,649

236,758

Advances from FHLB

90,000

Accrued interest on debt and borrowings

7,215

2,878

Equity index put option liability

6,632

5,584

Unsettled securities payable

119,869

30,650

Other liabilities

430,773

453,264

Total liabilities

20,561,735

18,191,126

Commitments and contingencies (Note 8)

(nil)

SHAREHOLDERS' EQUITY:

Preferred shares, par value: $

0.01

;

50,000

shares authorized;

shares issued and outstanding

Common shares, par value: $

0.01

;

200,000

shares authorized; (2020)

69,603

and (2019)

69,464

outstanding before treasury shares

696

694

Additional paid-in capital

2,235,378

2,219,660

Accumulated other comprehensive income (loss), net of deferred

income

tax expense (benefit) of $

74,481

at 2020 and $

30,996

at 2019

411,598

28,152

Treasury shares, at cost;

29,636

shares (2020) and

28,665

shares (2019)

(3,622,172)

(3,422,152)

Retained earnings

10,565,792

10,306,571

Total shareholders'

equity

9,591,292

9,132,925

TOTAL

LIABILITIES AND SHAREHOLDERS' EQUITY

30,153,027

27,324,051

The accompanying notes are an integral part of the consolidated financial statements.

EVEREST RE GROUP,

LTD.

CONSOLIDATED STATEMENTS

OF OPERATIONS

AND COMPREHENSIVE INCOME (LOSS)

Three Months Ended

Nine Months Ended

September 30,

(Dollars in thousands, except per share amounts)

2020

2019

2020

2019

(unaudited)

REVENUES:

Premiums earned

2,205,811

1,905,619

6,285,030

5,455,615

Net investment income

234,233

181,058

420,116

501,062

Net realized capital gains (losses):

Credit allowances on fixed maturity securities

6,196

(19,641)

Other-than-temporary impairments on fixed maturity securities

(7,314)

(15,404)

Other net realized capital gains (losses)

104,007

(5,629)

103,904

124,965

Total net realized capital gains

(losses)

110,203

(12,943)

84,263

109,561

Net derivative gain (loss)

2,456

(189)

(1,048)

3,395

Other income (expense)

57,481

(31,025)

48,354

(52,550)

Total revenues

2,610,184

2,042,520

6,836,715

6,017,083

CLAIMS AND EXPENSES:

Incurred losses and loss adjustment expenses

1,736,210

1,371,924

4,574,066

3,515,104

Commission, brokerage, taxes and fees

445,332

443,076

1,360,170

1,253,500

Other underwriting expenses

138,875

118,158

385,865

321,976

Corporate expenses

10,618

8,435

29,184

22,622

Interest, fees and bond issue cost amortization expense

6,641

7,907

21,477

23,972

Total claims and expenses

2,337,676

1,949,500

6,370,762

5,137,174

INCOME (LOSS) BEFORE TAXES

272,508

93,020

465,953

879,909

Income tax expense (benefit)

29,451

(11,378)

15,404

88,092

NET INCOME (LOSS)

243,057

104,398

450,549

791,817

Other comprehensive income (loss), net of tax:

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

the period

63,480

93,765

335,835

524,589

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

(loss)

(11,453)

(529)

12,689

(4,220)

Total

URA(D) on securities arising during the period

52,027

93,236

348,524

520,369

Foreign currency translation adjustments

60,628

(3,426)

30,390

(15,206)

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

income (loss)

1,806

1,363

4,532

3,665

Total benefit plan net gain (loss) for the period

1,806

1,363

4,532

3,665

Total other comprehensive income (loss), net of tax

114,461

91,173

383,446

508,828

COMPREHENSIVE INCOME (LOSS)

357,518

195,571

833,995

1,300,645

EARNINGS PER COMMON SHARE:

Basic

6.08

2.56

11.20

19.44

Diluted

6.07

2.56

11.18

19.38

The accompanying notes are an integral part of the consolidated financial statements.

EVEREST RE GROUP,

LTD.

CONSOLIDATED STATEMENTS

CHANGES IN SHAREHOLDERS’ EQUITY

(Dollars in thousands, except share and dividends per share amounts)

2020

2019

(unaudited)

COMMON SHARES (shares outstanding):

Balance, January 1

40,798,963

40,651,148

Issued during the period, net

159,423

194,584

Treasury shares acquired

(970,892)

(75,193)

Balance, March 31

39,987,494

40,770,539

Issued during the period, net

(15,849)

9,403

Treasury shares acquired

(39,440)

Balance, June 30

39,971,645

40,740,502

Issued during the period, net

(5,129)

39,967

Treasury shares acquired

Balance, September 30

39,966,516

40,780,469

COMMON SHARES (par value):

Balance, January 1

694

692

Issued during the period, net

Balance, March 31

696

694

Issued during the period, net

Balance, June 30

696

694

Issued during the period, net

Balance, September 30

696

694

ADDITIONAL PAID-IN CAPITAL:

Balance, January 1

2,219,660

2,188,777

Share-based compensation plans

(3,181)

767

Balance, March 31

2,216,479

2,189,544

Share-based compensation plans

9,514

8,917

Balance, June 30

2,225,993

2,198,461

Share-based compensation plans

9,385

7,865

Balance, September 30

2,235,378

2,206,326

ACCUMULATED OTHER COMPREHENSIVE INCOME

(LOSS),

NET OF DEFERRED INCOME TAXES:

Balance, January 1

28,152

(462,557)

Net increase (decrease) during the period

(297,903)

246,446

Balance, March 31

(269,751)

(216,111)

Net increase (decrease) during the period

566,888

171,209

Balance, June 30

297,137

(44,902)

Net increase (decrease) during the period

114,461

91,174

Balance, September 30

411,598

46,272

RETAINED EARNINGS:

Balance, January 1

10,306,571

9,531,433

Change to beginning balance due to adoption of Accounting Standards Update 2016-13

(4,214)

Net income (loss)

16,612

354,551

Dividends declared ($

1.55

per share 2020 and

1.40

per share 2019)

(63,277)

(57,137)

Balance, March 31

10,255,692

9,828,847

Net income (loss)

190,880

332,868

Dividends declared ($

1.55

per share 2020 and

1.40

per share 2019)

(61,927)

(56,999)

Balance, June 30

10,384,645

10,104,716

Net income (loss)

243,057

104,398

Dividends declared ($

1.55

per share 2020 and

1.40

per share 2019)

(61,910)

(56,995)

Balance, September 30

10,565,792

10,152,118

TREASURY SHARES AT COST:

Balance, January 1

(3,422,152)

(3,397,548)

Purchase of treasury shares

(200,020)

(16,153)

Balance, March 31

(3,622,172)

(3,413,701)

Purchase of treasury shares

(8,451)

Balance, June 30

(3,622,172)

(3,422,152)

Purchase of treasury shares

Balance, September 30

(3,622,172)

(3,422,152)

TOTAL

SHAREHOLDERS' EQUITY,

September 30

9,591,292

8,983,258

The accompanying notes are an integral part of the consolidated financial statements.

EVEREST RE GROUP,

LTD.

CONSOLIDATED STATEMENTS

OF CASH FLOWS

Nine Months Ended

September 30,

(Dollars in thousands)

2020

2019

(unaudited)

CASH FLOWS FROM OPERATING ACTIVITIES:

Net income (loss)

450,549

791,817

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

Decrease (increase) in premiums receivable

(357,162)

(219,637)

Decrease (increase) in funds held by reinsureds, net

(53,878)

(17,961)

Decrease (increase) in reinsurance receivables

(172,454)

(42,891)

Decrease (increase) in income taxes

184,311

168,360

Decrease (increase) in prepaid reinsurance premiums

(7,963)

(145,846)

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

1,665,982

553,668

Increase (decrease) in future policy benefit reserve

(2,218)

(2,502)

Increase (decrease) in unearned premiums

392,904

388,597

Increase (decrease) in other net payable to reinsurers

68,784

160,306

Increase (decrease) in losses in course of payment

132,208

(6,438)

Change in equity adjustments in limited partnerships

(12,475)

(104,987)

Distribution of limited partnership income

55,576

62,359

Change in other assets and liabilities, net

(131,224)

(37,449)

Non-cash compensation expense

29,337

25,386

Amortization of bond premium (accrual of bond discount)

32,594

23,642

Net realized capital (gains) losses

(84,263)

(109,561)

Net cash provided by (used in) operating activities

2,190,608

1,486,863

CASH FLOWS FROM INVESTING ACTIVITIES:

Proceeds from fixed maturities matured/called - available for sale, at market value

1,781,821

1,631,298

Proceeds from fixed maturities sold - available for sale, at market value

1,390,747

2,589,232

Proceeds from fixed maturities sold - available for sale, at fair value

2,054

2,706

Proceeds from equity securities sold, at fair value

329,750

185,157

Distributions from other invested assets

210,527

215,800

Cost of fixed maturities acquired - available for sale, at market value

(3,874,890)

(5,039,728)

Cost of equity securities acquired, at fair value

(460,953)

(269,969)

Cost of other invested assets acquired

(392,650)

(299,480)

Net change in short-term investments

(804,744)

(213,048)

Net change in unsettled securities transactions

89,064

(13,770)

Net cash provided by (used in) investing activities

(1,729,274)

(1,211,802)

CASH FLOWS FROM FINANCING ACTIVITIES:

Common shares issued during the period for share-based compensation, net of expense

(13,617)

(7,836)

Purchase of treasury shares

(200,020)

(24,604)

Dividends paid to shareholders

(187,110)

(171,131)

Cost of debt repurchase

(10,647)

FHLB advances (repayments)

90,000

Cost of shares withheld on settlements of share-based compensation awards

(15,298)

(12,473)

Net cash provided by (used in) financing activities

(336,691)

(216,044)

EFFECT OF EXCHANGE RATE CHANGES ON CASH

6,203

2,060

Net increase (decrease) in cash

130,845

61,077

Cash, beginning of period

808,036

656,095

Cash, end of period

938,881

717,172

SUPPLEMENTAL CASH FLOW INFORMATION:

Income taxes paid (recovered)

(169,149)

(80,544)

Interest paid

16,731

19,078

The accompanying notes are an integral part of the consolidated financial statements.

NOTES TO CONSOLIDATED

INTERIM FINANCIAL STATEMENTS

(UNAUDITED)

For the Three and Nine Months Ended September 30, 2020 and 2019

GENERAL

Everest Re

Group, Ltd. (“Group”),

a Bermuda company,

through its subsidiaries, principally provides

reinsurance

and insurance

in the

U.S., Bermuda

and international

markets.

As used

in this

document, “Company” means

Group and its subsidiaries.

BASIS OF PRESENTATION

The unaudited interim

consolidated financial statements

of the Company

as of September 30,

2020 and

December 31, 2019 and for the three

and nine months ended September 30, 2020 and 2019 include

all

adjustments, consisting of

normal recurring accruals,

which, in the

opinion of management,

are necessary for

fair statement

of the

results on

an interim

basis.

Certain financial

information, which

is normally

included in

annual financial statements

prepared in accordance

with accounting principles generally

accepted in the United

States of

America (“GAAP”),

has been

omitted since

it is

not required

for interim

reporting purposes.

The

December 31, 2019 consolidated balance sheet data was derived from

audited financial statements but does not

include all disclosures required

by GAAP.

The results for

the three and nine

months ended September 30,

2020

and 2019 are not necessarily indicative of the results for a full year.

These financial statements should be read in

conjunction with the audited consolidated financial statements and notes

thereto for the years ended December

31, 2019, 2018 and 2017 included in the Company’s most recent Form 10-K filing.

The Company consolidates

the results of

operations and financial

position of all

voting interest

entities ("VOE")

in which the

Company has

a controlling

financial interest

and all variable

interest entities

("VIE") in which

the

Company is

considered to

be the

primary beneficiary.

The consolidation

assessment, including

the

determination as to whether an entity qualifies as a VIE

or VOE, depends on the facts and circumstance

surrounding each entity.

The preparation of

financial statements

in conformity with

GAAP requires management

to make estimates

and

assumptions that affect

the reported amounts

of assets and

liabilities (and disclosure

of contingent

assets and

liabilities) at the date of the financial statements and the reported amounts of

revenues and expenses during the

reporting period.

Ultimate actual results

could differ,

possibly materially,

from those estimates.

This is

particularly true given the

fluid and continuing

nature of the

COVID-19 pandemic.

This is an ongoing

event and

so is the

Company’s evaluation

and analysis.

While the Company’s

analysis considers all

aspects of its

operations, it

does not

take into

account legal,

regulatory or

legislative intervention

that could

retroactively

mandate or

expand coverage

provisions. Given

the uncertainties

in the

current public

health and

economic

environment, there could be an adverse impact on

results for the Property & Casualty industry and the Company

for the remainder of the year.

The impact is dependent on the shape and length of the economic recovery.

With recent

changes in

executive management

and organizational

structure, the

Company manages

its

reinsurance and insurance

operations as autonomous

units and key

strategic decisions are

based on the

aggregate operating

results and

projections for

these segments

of business.

Accordingly, effective

January 1,

2020, the

Company revised

it reporting

segments to

Reinsurance Operations

and Insurance

Operations.

This

replaces the

previous reported

segments of

U.S. Reinsurance,

International (reinsurance),

Bermuda

(reinsurance) and Insurance.

The prior year presented segment information

has been reformatted to

reflect this

change.

All intercompany accounts and transactions have been eliminated.

Certain reclassifications

and format

changes have

been made to

prior years’

amounts to

conform to

the 2020

presentation.

Application of Recently Issued Accounting Standard Changes.

Modernization of Regulation

S-K Disclosures.

In August 2020,

the Securities and

Exchange Commission

(“SEC”)

issued Final

Rule Release

#33-10825 which

addresses the

modernization of

the disclosure

requirements for

business, legal

proceeding and

risk factor

disclosures in

Regulation S-K

filings.

Rule #33-10825

will become

effective for

all financial

reports filed

after November

9, 2020

(30 days

after its

publication in

the Federal

be adopted by

the Company in

the fourth quarter

of 2020 for

implementation within its

2020

10-K filings.

Accounting for Income Taxes

In December 2019, The Financial Accounting Standards Board

(“FASB”) issued ASU

2019-12, which

provides simplification

of existing

guidance for

income taxes,

including the removal

of certain

exceptions related

to recognition of

deferred tax

liabilities on foreign

subsidiaries. The guidance

is effective

for

annual reporting

periods beginning after

December 15, 2020

and interim periods

within that

annual reporting

period. The Company is

currently evaluating the

impact of the adoption

of ASU 2019-12 on

its financial

statements.

Simplification of

Disclosure Requirements.

In August

2018, the

SEC issued

Final Rule

Release #33-10532

(“the

Rule”) which addresses the simplification

of the SEC’s disclosure

requirements for quarterly

and annual financial

reports.

The main changes

addressed by the

Rule that are

applicable to the

Company are 1)

elimination of the

requirement to disclose dividend per share information

on the face of the Statements of Operations

and

Comprehensive Income (Loss) and 2) a new requirement to disclose

changes in equity by line item with subtotals

for each

interim reporting

period on

the Statements

of Changes

in Shareholders’

Equity. The

Rule became

effective for

all financial

reports filed

after November

5, 2018

(30 days

after its

publication in

the Federal

for the

additional requirement

for the

Statements of

Changes in

Shareholders’ Equity

which

was to be implemented for

first quarter 2019 reporting. The

Company has adopted the portions of

the Rule that

became effective November 5, 2018.

The portion of the Rule related to the new requirement for the Statements

of Changes in Shareholders’ Equity was adopted by the Company in the first quarter of 2019.

Accounting for Cloud Computing Arrangement.

In August 2018, FASB

issued ASU 2018-15, which outlines

accounting for implementation costs

of a cloud computing arrangement that

is a service contract.

This guidance

requires that implementation costs

of a cloud computing arrangement that is

a service contract must be

capitalized and

expensed in

accordance with

the existing

provisions provided

in Subtopic

350-40 regarding

development of

internal use

software. In

addition, any

capitalized implementation

costs should

be amortized

over the term of the hosting arrangement.

The guidance is effective for annual reporting periods beginning after

December 15, 2019 and interim periods within that annual reporting period. The Company adopted the guidance

as of January

1, 2020. The

adoption of ASU

2018-15 did not

have a material

impact on the

Company’s financial

statements.

Accounting for Long

Duration Contracts.

In August 2018,

FASB issued

ASU 2018-12, which

discusses changes to

the recognition, measurement and presentation of long duration contracts.

The main provisions of this guidance

address the

following:

1) In

determining liability

for future

policy benefits,

companies must

review cash

flow

assumptions at least annually and the discount

rate assumption at each reporting

period date 2) Amortization of

deferred acquisition

costs has

been simplified

to be

in constant

level proportion

to either

premiums, gross

profits or

gross margins

3) Disaggregated

roll forwards

of beginning

and ending

liabilities for

future policy

benefits are required.

The guidance was

originally effective

for annual reporting

periods beginning after

December 15, 2020 and interim periods within that

annual reporting period. However,

FASB issued ASU 2019-09

in November 2019 which defers the

effective date of ASU 2018-12

until annual reporting periods beginning after

December 15,

Company is

currently evaluating

the impact

of the

adoption of

ASU 2018-12

on its

financial statements.

Accounting for Impact

on Income Taxes

due to Tax

Reform.

In December 2017, the

SEC issued Staff

Accounting

Bulletin (“SAB”)

118 which

provides guidance

on the

application of

FASB Accounting

Standards Codification

(“ASC”) Topic

740, Income Taxes,

due to the

enactment of TCJA.

SAB 118 became

effective upon

release.

The

Company has adopted the

provisions of SAB 118

with respect to measuring

the tax effects

for the modifications

to the determination

of tax basis

loss reserves.

In 2018, the

Company recorded

adjustments to the

amount of

tax expense

it recorded

in 2017 with

respect to

the TCJA

as estimated

amounts were

finalized, which

did not

have a material impact on the Company’s financial statements.

Amortization of

Bond Premium.

In March

2017, FASB

issued ASU

2017-08 which

outlines guidance

on the

amortization period for

premium on callable

debt securities.

The new guidance

requires that

the premium on

callable debt securities be

amortized through the

earliest call date

rather than through

the maturity date

of the

callable security.

The guidance is

effective for

annual and interim

reporting periods beginning

after December

15, 2018.

The Company adopted

the guidance effective

January 1, 2019.

The adoption of

ASU 2017-08 did

not

have a material impact on the Company’s financial statements.

Valuation of Financial Instruments.

In June 2016, FASB issued ASU 2016-13 (and has

subsequently issued related

guidance and amendments in

ASU 2019-11 and ASU

2019-10 in November 2019)

which outline guidance on the

valuation of

and accounting

for assets

measured at

amortized cost

and available

for sale

debt securities.

The

new guidance

requires the

carrying value

of assets

measured at

amortized cost,

including reinsurance

and

premiums receivables

to be

presented as

the net

amount expected

to be

collected on

the financial

asset

(amortized cost

less an

allowance for

credit losses

valuation account).

The allowance

reflects expected

credit

losses of

the financial

asset which

considers available

information using

a combination

both historical

information, current

market conditions

and reasonable

and supportable

forecasts.

For available

-for-sale debt

securities, the

guidance modified

the previous

other than

temporary impairment

model, now

requiring an

allowance for estimated

credit related losses

rather than a

permanent impairment, which

will be limited

to the

amount by which

fair value is

below amortized cost.

The guidance is

effective for

annual and interim

reporting

periods beginning after December 15, 2019.

The Company adopted the guidance effective

January 1, 2020, on a

modified retrospective

basis.

The adoption resulted

in a cumulative

reduction of $

4,214

thousand in retained

earnings, net of tax, which is disclosed separately within the Consolidated Statements

of Shareholders’ Equity.

Leases

In February 2016, FASB

issued ASU 2016-02 (and

subsequently issued ASU 2018-11

in July,

2018) which

outline new guidance

on the accounting

for leases.

The new guidance

requires the recognition

of lease assets

and lease

liabilities on

the balance

sheets for

most leases

that were

previously deemed

operating leases

and

required only lease

expense presentation in

the statements of

operations.

The guidance is

effective for

annual

and interim reporting periods beginning after

December 15, 2018.

The Company adopted ASU 2016-02 effective

January 1, 2019 and elected to utilize a cumulative

-effect adjustment to the opening balance of retained

earnings for

the year

of adoption.

Accordingly, the

Company’s reporting

for the

comparative periods

prior to

adoption continue

to be

presented in

the financial

statements in

accordance with

previous lease

accounting

guidance.

The Company also elected

to apply the package

of practical expedients

applicable to the Company

the updated

guidance for

transition for

leases in effect

at adoption.

The Company

did not elect

the hindsight

practical expedient

to determine

the lease

term of

existing leases

(e.g. The

Company did

not re

-assess lease

renewals, termination

options nor purchase

options in determining

lease terms).

The adoption of

the updated

guidance resulted in

the Company recognizing

a right-of-use

asset of $

69,869

thousand as part

other assets

and a lease liability of

77,270

thousand as part of

other liabilities

in the consolidated balance

sheet at the time

of adoption,

as well

as de-recognizing

the liability

for deferred

rent that

was required

under the

guidance.

The cumulative effect adjustment to

the opening balance of retained earnings was

zero

. The adoption

of the updated guidance did not have a material effect on the Company’s

results of operations or liquidity.

Any issued

guidance and

pronouncements, other

than those

directly referenced

above, are

deemed by

the

Company to be either not applicable or immaterial to its financial statements.

INVESTMENTS

Effective January

1, 2020, the

Company adopted

ASU 2016-13 which

modified the previous

other than

temporary impairment model

for available

for sale fixed

maturity securities.

The guidance requires

the

Company to

record allowances

for credit

losses for

securities that are

deemed to have

valuation deterioration

due to

credit related

factors.

The initial table

below presents

the amortized

cost, allowance

for credit

losses,

gross unrealized

appreciation/(depreciation) and

market value

of fixed maturity

securities as of

September 30,

2020 in accordance with ASU 2016-13

guidance.

The second table presents the

amortized cost, gross unrealized

appreciation/(depreciation), market

value and

other-than-temporary impairments

(“OTTI”) in

AOCI as

December 31, 2019, in accordance with previously applicable guidance.

At September 30, 2020

Amortized

Allowance for

Unrealized

Market

(Dollars in thousands)

Cost

Credit Losses

Appreciation

Depreciation

Value

Fixed maturity securities

U.S. Treasury securities and obligations of

U.S. government agencies and corporations

1,387,482

67,544

(3,023)

1,452,003

Obligations of U.S. states and political subdivisions

514,787

30,939

(2,443)

543,283

Corporate securities

6,526,127

(17,474)

363,613

(66,917)

6,805,349

Asset-backed securities

1,326,918

23,191

(11,907)

1,338,202

Mortgage-backed securities

Commercial

892,998

78,298

(1,976)

969,320

Agency residential

2,044,837

76,284

(2,468)

2,118,653

Non-agency residential

2,559

(39)

2,520

Foreign government securities

1,476,092

(119)

86,015

(26,913)

1,535,075

Foreign corporate securities

2,959,614

(2,048)

165,297

(30,891)

3,091,972

Total fixed maturity securities

17,131,414

(19,641)

891,181

(146,577)

17,856,377

At December 31, 2019

Amortized

Unrealized

Market

OTTI in AOCI

(Dollars in thousands)

Cost

Appreciation

Depreciation

Value

(a)

Fixed maturity securities

U.S. Treasury securities and obligations of

U.S. government agencies and corporations

1,489,660

28,357

(2,214)

1,515,803

Obligations of U.S. states and political subdivisions

507,353

29,651

(89)

536,915

Corporate securities

6,227,661

185,052

(37,767)

6,374,946

469

Asset-backed securities

892,373

6,818

(1,858)

897,333

Mortgage-backed securities

Commercial

814,570

31,236

(1,249)

844,557

Agency residential

2,173,099

36,361

(10,879)

2,198,581

Non-agency residential

5,723

(20)

5,703

Foreign government securities

1,492,315

47,148

(33,513)

1,505,950

Foreign corporate securities

2,870,737

107,999

(33,580)

2,945,156

447

Total fixed maturity securities

16,473,491

472,622

(121,169)

16,824,944

987

(a)

Represents the amount of

OTTI recognized in

AOCI.

Amount includes unrealized gains

and losses on impaired

securities relating to changes

in the value of

such securities subsequent to the impairment measurement date.

The amortized cost and market

value of fixed maturity

securities are shown in the following

table by contractual

maturity.

Mortgage-backed securities are

generally more likely

to be prepaid

than other fixed

maturity

securities. As

the stated

maturity of

such securities

may not

be indicative

of actual

maturities, the

totals for

mortgage-backed and asset-backed securities are

shown separately.

At September 30, 2020

At December 31, 2019

Amortized

Market

Amortized

Market

(Dollars in thousands)

Cost

Value

Cost

Value

Fixed maturity securities – available for sale:

Due in one year or less

1,475,335

1,483,621

1,456,960

1,457,919

Due after one year through five years

6,408,491

6,624,753

6,757,107

6,869,359

Due after five years through ten years

3,878,019

4,186,765

3,471,370

3,609,816

Due after ten years

1,102,257

1,132,543

902,289

941,676

Asset-backed securities

1,326,918

1,338,202

892,373

897,333

Mortgage-backed securities:

Commercial

892,998

969,320

814,570

844,557

Agency residential

2,044,837

2,118,653

2,173,099

2,198,581

Non-agency residential

2,559

2,520

5,723

5,703

Total fixed

maturity securities

17,131,414

17,856,377

16,473,491

16,824,944

The changes in

net unrealized

appreciation (depreciation) for

the Company’s

investments are

derived from the

following sources for the periods indicated:

Three Months Ended

Nine Months Ended

September 30,

(Dollars in thousands)

2020

2019

2020

2019

Increase (decrease) during the period between the market value and cost

of investments carried at market value, and deferred

taxes thereon:

Fixed maturity securities

55,587

103,173

392,640

584,333

Fixed maturity securities, other-than-temporary impairment

(1,671)

Change in unrealized appreciation (depreciation), pre-tax

55,587

103,245

392,640

582,662

Deferred tax benefit (expense)

(3,560)

(9,984)

(44,116)

(62,415)

Deferred tax benefit (expense), other-than-temporary

impairment

(25)

122

Change in unrealized appreciation (depreciation),

net of deferred taxes, included in shareholders’

equity

52,027

93,236

348,524

520,369

The Company reviews all of

its fixed maturity,

available for sale securities whose

fair value has fallen

below their

amortized cost

at the time

of review.

The Company then

assesses whether the

decline in value

is due to

non-

credit related or credit related factors.

In making its assessment, the Company evaluates the current market

and

interest rate

environment as well as

specific issuer information.

Generally, a

change in a security’s

value caused

by a change

in the market,

interest rate

or foreign exchange

environment does not

constitute a credit

impairment, but rather a non-credit related

decline in market value.

Non-credit related declines in market

value

are recorded as unrealized

losses in accumulated other comprehensive income (loss).

If the Company intends to

sell the

security or

is more

likely than

not to

sell the

security, the

Company records

the entire

fair value

adjustment in

net realized

capital gains

(losses) in

the Company’s

consolidated statements

of operations

and

comprehensive income

(loss).

If the Company

determines that

the decline is

credit related

and the Company

does not have the intent

to sell the security; and it

is more likely than

not that the Company will not

have to sell

the security before recovery

of its cost basis, the Company

establishes a credit allowance equal

to the estimated

credit loss

and is

recorded in

net realized

capital gains

(losses) in

the Company’s

consolidated statements

operations and comprehensive income

(loss).

The amount of the allowance for

a given security will generally be

the difference between a discounted

cash flow model and the Company’s

carrying value.

The fair value

adjustment that is

non-credit related is

recorded as a

component of other

comprehensive income (loss),

net of

tax, and is

included in accumulated

other comprehensive income

(loss) in the

Company’s consolidated

balance

sheets. We will adjust

the credit allowance account

for future changes in

credit loss estimates for

a security and

record this

adjustment through

net realized

capital gains

(losses) in the

Company’s consolidated

statements of

operations and comprehensive income (loss).

The Company does

not create an

allowance for uncollectible

interest.

If interest is

not received when

due, the

interest receivable

is immediately

reversed and

no additional

interest is

accrued. If

future interest

is received

that has not been accrued, it is recorded as income at that time.

Prior to

the adoption

of ASU

2016-13 effective

January 1,

2020, estimated

credit losses

were recorded

adjustments to

the carrying

value of

the security

and any

subsequent improvement

in market

value were

recorded through other comprehensive income.

The Company’s assessments

are based on the

issuers’ current and

expected future financial

position, timeliness

with respect to interest and/or principal payments,

speed of repayments and any applicable credit

enhancements or breakeven

constant default

rates on mortgage

-backed and asset-backed

securities, as well

relevant information provided by rating

agencies, investment advisors and analysts.

Retrospective adjustments

are employed to

recalculate the values

of asset-backed

securities.

All of the

Company’s asset-backed

and mortgage-backed

securities have a

pass-through structure.

Each acquisition lot

reviewed to

recalculate the

effective yield.

The recalculated

effective yield

is used to

derive a book

value as if

the new yield were applied

at the time of acquisition.

Outstanding principal factors

from the time of acquisition

to the

adjustment date

are used

to calculate

the prepayment

history for

all applicable

securities.

Conditional

prepayment rates,

computed with life

to date factor

histories and weighted

average maturities, are

used in the

calculation of projected prepayments for pass-through security types.

The tables below display

the aggregate market

value and gross unrealized

depreciation of fixed maturity

securities, by

security type and

contractual maturity,

in each case

subdivided according

to length

of time that

individual securities had been in a continuous unrealized loss position for the periods indicated:

Duration of Unrealized Loss at September 30, 2020 By Security Type

Less than 12 months

Greater than 12 months

Total

Gross

Unrealized

(Dollars in thousands)

Market Value

Depreciation

Market Value

Depreciation

Market Value

Depreciation

Fixed maturity securities - available for sale

U.S. Treasury securities and obligations of

U.S. government agencies and corporations

69,055

(3,023)

69,055

(3,023)

Obligations of U.S. states and political subdivisions

50,368

(2,278)

4,943

(165)

55,311

(2,443)

Corporate securities

752,828

(24,799)

196,660

(42,118)

949,488

(66,917)

Asset-backed securities

328,216

(8,346)

163,014

(3,561)

491,230

(11,907)

Mortgage-backed securities

Commercial

77,850

(1,524)

6,634

(452)

84,484

(1,976)

Agency residential

248,155

(1,256)

65,145

(1,212)

313,300

(2,468)

Non-agency residential

213

(3)

2,308

(36)

2,521

(39)

Foreign government securities

83,267

(4,352)

176,739

(22,561)

260,006

(26,913)

Foreign corporate securities

399,841

(11,117)

193,809

(19,774)

593,650

(30,891)

Total fixed maturity securities

2,009,793

(56,698)

809,252

(89,879)

2,819,045

(146,577)

Duration of Unrealized Loss at September 30, 2020 By Maturity

Less than 12 months

Greater than 12 months

Total

Gross

Unrealized

(Dollars in thousands)

Market Value

Depreciation

Market Value

Depreciation

Market Value

Depreciation

Fixed maturity securities

Due in one year or less

76,867

(2,652)

135,762

(21,608)

212,629

(24,260)

Due in one year through five years

675,450

(22,976)

304,410

(29,003)

979,860

(51,979)

Due in five years through ten years

377,219

(12,287)

69,424

(4,266)

446,643

(16,553)

Due after ten years

225,823

(7,654)

62,555

(29,741)

288,378

(37,395)

Asset-backed securities

328,216

(8,346)

163,014

(3,561)

491,230

(11,907)

Mortgage-backed securities

326,218

(2,783)

74,087

(1,700)

400,305

(4,483)

Total fixed maturity securities

2,009,793

(56,698)

809,252

(89,879)

2,819,045

(146,577)

The aggregate market

value and gross

unrealized losses related

to investments

in an unrealized

loss position at

September 30, 2020

were $

2,819,045

thousand and

146,577

thousand, respectively.

The market

value of

securities for the

single issuer whose securities

comprised the largest

unrealized loss position

at September 30,

2020, did not exceed

0.1

% of the overall market value

of the Company’s fixed maturity securities.

In addition, as

indicated on

the above

table, there

was no

significant concentration

of unrealized

losses in

any one

market

sector.

The $

56,698

thousand of

unrealized losses

related to

fixed maturity

securities that

have been

in an

unrealized loss

position for

less than

one year

were generally

comprised of

domestic and

foreign corporate

securities, asset-backed securities and

foreign government securities.

Of these unrealized losses, $

42,015

thousand were

related to

securities that

were rated

investment grade

by at

least one

nationally recognized

statistical rating

agency.

The $

89,879

thousand of

unrealized losses

related to

fixed maturity

securities in

unrealized loss

position for more

than one year

related primarily to

domestic and foreign

corporate securities,

foreign government

securities and asset-backed

securities.

Of these unrealized

losses, $

53,247

thousand were

related to

securities that

were rated

investment grade

by at

least one

nationally recognized

statistical rating

agency.

There was

gross unrealized

depreciation for

mortgage-backed securities

related to

sub-prime and

alt-A loans.

In all instances,

there were

no projected

cash flow shortfalls

to recover

the full book

value of the

investments and the

related interest obligations.

The mortgage-backed securities

still have excess

credit

coverage and are current on interest and principal payments.

The Company,

given the

size of

its investment

portfolio and

capital position,

does not

have the

intent to

sell

these securities; and it is more likely than not that the Company

will not have to sell the security before

recovery

of its

cost basis.

In addition,

all securities

currently in

an unrealized

loss position

are current

with respect

principal and interest payments.

The tables

below display

the aggregate

market value

and gross

unrealized depreciation

of fixed

maturity and

equity securities, by security

type and contractual

maturity, in

each case subdivided according

to length of

time

that individual securities had been in a continuous unrealized loss position for the periods indicated:

Duration of Unrealized Loss at December 31, 2019 By Security Type

Less than 12 months

Greater than 12 months

Total

Gross

Unrealized

(Dollars in thousands)

Market Value

Depreciation

Market Value

Depreciation

Market Value

Depreciation

Fixed maturity securities - available for sale

U.S. Treasury securities and obligations of

U.S. government agencies and corporations

85,527

(1,005)

249,371

(1,209)

334,898

(2,214)

Obligations of U.S. states and political subdivisions

4,600

(38)

5,522

(51)

10,122

(89)

Corporate securities

547,120

(9,877)

395,369

(27,890)

942,489

(37,767)

Asset-backed securities

176,222

(1,027)

94,190

(831)

270,412

(1,858)

Mortgage-backed securities

Commercial

83,127

(689)

23,063

(560)

106,190

(1,249)

Agency residential

344,267

(1,834)

488,680

(9,045)

832,947

(10,879)

Non-agency residential

332

3,976

(20)

4,308

(20)

Foreign government securities

210,766

(4,770)

283,648

(28,743)

494,414

(33,513)

Foreign corporate securities

278,403

(7,553)

365,808

(26,027)

644,211

(33,580)

Total fixed maturity securities

1,730,364

(26,793)

1,909,627

(94,376)

3,639,991

(121,169)

Duration of Unrealized Loss at December 31, 2019 By Maturity

Less than 12 months

Greater than 12 months

Total

Gross

Unrealized

(Dollars in thousands)

Market Value

Depreciation

Market Value

Depreciation

Market Value

Depreciation

Fixed maturity securities

Due in one year or less

67,879

(1,237)

416,583

(23,004)

484,462

(24,241)

Due in one year through five years

464,753

(7,960)

689,195

(38,138)

1,153,948

(46,098)

Due in five years through ten years

495,741

(12,388)

103,612

(11,100)

599,353

(23,488)

Due after ten years

98,043

(1,658)

90,328

(11,678)

188,371

(13,336)

Asset-backed securities

176,222

(1,027)

94,190

(831)

270,412

(1,858)

Mortgage-backed securities

427,726

(2,523)

515,719

(9,625)

943,445

(12,148)

Total fixed maturity securities

1,730,364

(26,793)

1,909,627

(94,376)

3,639,991

(121,169)

The aggregate market

value and gross

unrealized losses related

to investments

in an unrealized

loss position at

December 31,

2019 were

3,639,991

thousand and

121,169

thousand, respectively.

The market

value of

securities for the

single issuer whose

securities comprised the

largest unrealized

loss position at

December 31,

2019, did not exceed

0.8

% of the overall market value

of the Company’s fixed maturity securities.

In addition, as

indicated on

the above

table, there

was no

significant concentration

of unrealized

losses in

any one

market

sector.

The $

26,793

thousand of

unrealized losses

related to

fixed maturity

securities that

have been

in an

unrealized loss

position for

less than

one year

were generally

comprised of

domestic and

foreign corporate

securities and

foreign government

securities.

Of these

unrealized losses,

23,104

thousand were

related to

securities that were

rated investment

grade by at

least one nationally

recognized statistical

rating agency.

The

94,376

thousand of unrealized losses related

to fixed maturity securities in

an unrealized loss position for

than one year related

primarily to domestic and

foreign corporate

securities, foreign government

securities and

agency residential

mortgage-backed securities.

Of these

unrealized losses,

73,144

thousand were

related to

securities that were rated investment

grade by at least one nationally recognized

statistical rating agency.

There

was

gross unrealized depreciation

for mortgage-backed securities

related to sub-prime and

alt-A loans.

In all

instances, there were no

projected cash flow shortfalls to

recover the full book value

of the investments and the

related interest obligations.

The mortgage-backed securities still have

excess credit coverage

and are current on

interest and principal payments.

The components of net investment income are presented in the table below for the periods indicated:

Three Months Ended

Nine Months Ended

September 30,

(Dollars in thousands)

2020

2019

2020

2019

Fixed maturities

136,104

130,139

407,946

383,440

Equity securities

4,402

4,147

11,585

12,250

Short-term investments and cash

494

3,899

4,356

13,497

Other invested assets

Limited partnerships

88,778

43,758

22,092

100,298

Other

14,742

7,286

(1,291)

13,565

Gross investment income before

adjustments

244,520

189,229

444,688

523,050

Funds held interest

income (expense)

684

2,325

10,921

9,715

Future policy benefit reserve income (expense)

(291)

(372)

(805)

(965)

Gross investment income

244,913

191,182

454,804

531,800

Investment expenses

(10,680)

(10,124)

(34,688)

(30,738)

Net investment income

234,233

181,058

420,116

501,062

The Company

records results

from limited

partnership investments

on the

equity method

of accounting

with

changes in value

reported through net

investment income.

Due to the

timing of receiving

financial information

from these

partnerships, the

results are

generally reported

on a

one month

or quarter

lag.

If the

Company

determines there has been a significant

decline in value of a limited partnership

during this lag period, a loss will

be recorded in the period in which the Company identifies the decline.

The Company had contractual commitments to

invest up to an additional $

1,464,947

thousand in limited

partnerships and

private placement

loans at

September 30,

2020.

These commitments

will be

funded when

called in

accordance with

the partnership

and loan

agreements, which

have investment

periods that

expire,

unless extended, through

2026

The Company participates in

a private placement

liquidity sweep facility (“the

facility”).

The primary purpose of

the facility

is to

enhance the Company’s

return on

its short-term

investments and

cash positions.

The facility

invests in high quality,

short-duration securities and

permits daily liquidity.

The Company consolidates its

participation in the

facility.

As of September

30, 2020, the

market value of

investments in

the facility

consolidated within the Company’s balance sheets was $

1,101,256

thousand.

The components of net realized capital gains (losses) are presented in the tables below for

the periods indicated:

Three Months Ended

Nine Months Ended

September 30,

(Dollars in thousands)

2020

2019

2020

2019

Fixed maturity securities, market value:

Allowance for credit losses

6,196

(19,641)

Other-than-temporary impairments

(7,314)

(15,404)

Gains (losses) from sales

5,398

5,290

941

16,660

Fixed maturity securities, fair value:

Gains (losses) from sales

(1,968)

356

Gains (losses) from fair value adjustments

3,339

1,944

Equity securities, fair value:

Gains (losses) from sales

(1,317)

(1,192)

(12,642)

2,541

Gains (losses) from fair value adjustments

96,673

(12,008)

114,364

102,795

Other invested assets

1,084

2,098

2,341

Short-term investments gain

(loss)

798

183

1,215

259

Total net realized

capital gains (losses)

110,203

(12,943)

84,263

109,561

Roll Forward of Allowance for Credit Losses

Three Months Ended September 30, 2020

Nine Months Ended September 30, 2020

Foreign

Corporate

Government

Corporate

Government

Corporate

Securities

Total

Securities

Total

(Dollars in thousands)

Beginning Balance

(22,253)

(92)

(3,492)

(25,837)

Credit losses on securities where credit

losses were not previously recorded

(6)

(144)

(150)

(27,666)

(519)

(4,699)

(32,884)

Increases in allowance on previously

impaired securities

(5,354)

(27)

(181)

(5,562)

(6,136)

(27)

(481)

(6,644)

Decreases in allowance on previously

impaired securities

159

151

310

3,590

212

844

4,646

Reduction in allowance due to disposals

9,980

1,618

11,598

12,738

215

2,288

15,241

Balance as of September 30, 2020

(17,474)

(119)

(2,048)

(19,641)

(17,474)

(119)

(2,048)

(19,641)

The Company

recorded as

net realized

capital gains

(losses) in the

consolidated statements

of operations

and

comprehensive income

(loss) fair

value re-measurements,

allowances for

credit losses

per ASU

2016-13 and

write-downs in the value of securities deemed to

be impaired on an other-than-temporary basis in prior years

displayed in the table

above.

The Company had no other-than-temporary

impaired securities where the

impairment had both a credit and non-credit component.

The proceeds

and split

between gross

gains and

losses, from

sales of fixed

maturity and

equity securities, are

presented in the table below for the periods indicated:

Three Months Ended

Nine Months Ended

September 30,

(Dollars in thousands)

2020

2019

2020

2019

Proceeds from sales of fixed maturity securities

402,528

271,025

1,392,801

2,591,938

Gross gains from sales

18,721

14,270

54,077

42,316

Gross losses from sales

(15,291)

(8,980)

(55,104)

(25,300)

Proceeds from sales of equity securities

116,565

35,924

329,750

185,157

Gross gains from sales

9,512

1,035

30,268

9,286

Gross losses from sales

(10,829)

(2,227)

(42,910)

(6,745)

RESERVE FOR LOSSES, LAE AND FUTURE POLICY BENEFIT RESERVE

Activity in the reserve for losses and LAE is summarized for the periods indicated:

Nine Months Ended

September 30,

(Dollars in thousands)

2020

2019

Gross reserves beginning of period

13,611,313

13,119,090

Less reinsurance recoverables

(1,640,712)

(1,619,641)

Net reserves beginning of period

11,970,601

11,499,449

Incurred related to:

Current year

4,572,640

3,559,505

Prior years

1,426

(44,401)

Total incurred

losses and LAE

4,574,066

3,515,104

Paid related to:

Current year

1,015,538

550,724

Prior years

2,042,712

2,406,753

Total paid losses and LAE

3,058,250

2,957,477

Foreign exchange/translation

adjustment and cumulative adjustment due to adoption of

ASU

2016-13

(28,024)

(52,125)

Net reserves end of period

13,458,393

12,004,952

Plus reinsurance recoverables

1,774,732

1,632,687

Gross reserves end of period

15,233,125

13,637,639

(Some amounts may not reconcile due to rounding.)

Current year

incurred losses

were $

4,572,640

thousand and

3,559,505

thousand for

the nine

months ended

September 30,

2020 and 2019,

respectively. The

increase in current

year incurred

losses in 2020

compared to

2019 was primarily

due to $

434,918

thousand of incurred

losses due to

COVID-19 as well

as the impact

of the

increase in premiums earned.

DERIVATIVES

The Company

sold

seven

equity index

put option

contracts, based

two

indices, in

2001 and

2005.

The

Company sold these equity

index put options as

insurance products with

the intent of

achieving a profit.

These

equity index put

option contracts

meet the definition

of a derivative

under FASB

guidance and the

Company’s

position in

these equity

index put

option contracts

is unhedged.

Accordingly, these

equity index

put option

contracts are

carried at fair

value in the

consolidated balance sheets

with changes in

fair value recorded

in the

consolidated statements

of operations

and comprehensive

income (loss).

Six

of these

contracts had

expired

prior to

September 30, 2020

, with

liabilities due under the terms of the expired contracts.

The Company had

one

remaining equity index put option contract

at September 30, 2020, based on the

Standard &

Poor’s 500

(“S&P 500”) index.

Based on historical

index volatilities

and trends and

the September

30, 2020 S&P 500

index value, the

Company estimates the

probability that the

equity index put option

contract

of the S&P

500 index falling

below the strike

price on the

exercise date

to be

less than

0.5

The theoretical

maximum payout

under this equity

index put option

contract would

occur if on

the exercise

date the S&P

500

index value was

zero

At September 30,

2020, the present value

of the theoretical maximum

payout using a

discount factor

was $

146,796

thousand.

Conversely, if

the contract

had expired

on September 30,

2020, with

the S&P index at

3,363.00

, there would have been

settlement amount.

At September 30, 2020 and

December 31, 2019, the fair value

for these equity put options was

6,632

thousand

and $

5,584

thousand, respectively.

The fair

value of

the equity

index put

options can

be found

in the

Company’s consolidated

balance sheets

follows:

(Dollars in thousands)

Derivatives not designated as

Location of fair value

hedging instruments

in balance sheets

September 30, 2020

December 31, 2019

Equity index put option contracts

Equity index put option liability

6,632

5,584

Total

6,632

5,584

The change in

fair value

of the equity

index put option

contracts can

be found

in the Company’s

statement of

operations and comprehensive income (loss) as follows:

(Dollars in thousands)

For the Three Months Ended

For the, Nine Months Ended

Derivatives not designated as

Location of gain (loss) in statements of

September 30,

hedging instruments

operations and comprehensive income (loss)

2020

2019

2020

2019

Equity index put option contracts

Net derivative gain (loss)

2,456

(189)

(1,048)

3,395

Total

2,456

(189)

(1,048)

3,395

FAIR VALUE

GAAP guidance regarding fair value measurements address how

companies should measure fair value when they

are required

to use

fair value

measures for

recognition or

disclosure purposes

under GAAP

and provides

common definition of

fair value

to be

used throughout GAAP.

It defines fair

value as

the price that

would be

received to

sell an asset

or paid to

transfer a

liability in an

orderly fashion between

market participants

at the

measurement date.

In addition, it

establishes a

three-level valuation

hierarchy for

the disclosure

of fair

value

measurements.

The valuation hierarchy

is based on

the transparency

of inputs to

the valuation of

an asset or

liability.

The level in the hierarchy

within which a given fair value

measurement falls is determined based

on the

lowest level

input that

is significant

to the

measurement, with

Level 1

being the

highest priority

and Level

being the lowest priority.

The levels in the hierarchy are defined as follows:

Level 1: Inputs

to the valuation

methodology are observable

inputs that reflect

unadjusted quoted

prices for

identical assets or liabilities in an active market;

Level 2: Inputs

to the

valuation methodology

include quoted

prices for

similar assets

and liabilities

in active

markets, and

inputs that

are observable

for the

asset or

liability, either

directly or

indirectly, for

substantially the full term of the financial instrument;

Level 3: Inputs

to the valuation methodology are unobservable and significant to the fair value measurement.

The Company’s

fixed maturity

and equity

securities are

primarily managed

by third

party investment

asset

managers.

The investment

asset managers

managing publicly

traded securities

obtain prices

from nationally

recognized pricing

services.

These services

seek to

utilize market

data and

observations in

their evaluation

process.

They use pricing applications that vary

by asset class and incorporate

available market information

and

when fixed maturity securities do

not trade on a daily

basis the services will apply available

information through

processes such

as benchmark curves,

benchmarking of

like securities,

sector groupings

and matrix

pricing.

addition, they

use model

processes, such

as the

Option Adjusted

Spread model

to develop

prepayment and

interest rate scenarios for securities that have

prepayment features.

In limited instances

where prices are

not provided by

pricing services or in

rare instances when

a manager may

not agree

with the pricing

service, price quotes

on a non-binding

basis are obtained

from investment

brokers.

The investment

asset managers do

not make any

changes to prices

received from either

the pricing services or

the investment

brokers.

In addition,

the investment

asset managers

have procedures

in place

to review

the

reasonableness of the

prices from the

service providers and

may request verification

of the prices.

In addition,

the Company continually

performs analytical reviews

of price changes and

tests the prices on

a random basis to

an independent pricing

source.

No material variances

were noted during

these price validation

procedures.

limited situations,

where financial

markets are

inactive or

illiquid, the

Company may

use its

own assumptions

about future

cash flows

and risk-adjusted

discount rates

to determine

fair value.

At September

30, 2020,

1,134,535

thousand of fixed

maturities, market value

and $

3,748

thousand of fixed

maturities, fair value

were

fair valued

using unobservable inputs.

The majority of

the fixed maturities,

market value,

805,061

thousand,

were valued by

investment managers’ valuation

committees and many

of these fair values

and all of the

3,748

thousand of fixed

maturities, fair

value were

substantiated by

valuations from

independent third

parties.

The

Company has procedures

in place to

evaluate these independent

third party valuations.

The remaining Level

fixed maturities of $

329,474

thousand were valued at

either par or amortized cost,

which the Company believes

approximates fair value.

At December 31, 2019, $

772,979

thousand of fixed maturities, market value and $

5,826

thousand of fixed

maturities, fair

value were

fair valued

using unobservable

inputs.

The majority of

the fixed

maturities, market value, $

610,873

thousand, were valued by investment

managers’ valuation committees and a

majority of these fair

values and all of

the $

5,826

thousand of fixed

maturities, fair value

were substantiated

valuations from independent

third parties.

The Company has

procedures in place

to review and

evaluate these

independent third party valuations.

The remaining Level 3 fixed maturities of $

162,106

thousand were valued at

either par or amortized cost, which the Company believes approximates fair value.

The Company

internally manages

a public

equity portfolio

which had

a fair

value at

September 30,

2020 and

December 31,

2019 of

591,681

thousand and

170,888

thousand, respectively,

and all

prices were

obtained

from publicly published sources.

Equity securities

denominated in

U.S. currency

with quoted

prices in

active markets

for identical

assets are

categorized as

Level 1

since the

quoted prices

are directly

observable.

Equity securities

traded on

foreign

exchanges are categorized

as Level 2 due to the

added input of a foreign exchange

conversion rate

to determine

fair or

market value.

The Company

uses foreign

currency exchange

rates published

by nationally

recognized

sources.

All categories of

fixed maturity securities

listed in the

tables below are

generally categorized

as Level 2,

since a

particular security may not have traded but the pricing services are able to use valuation

models with observable

market inputs such as

interest rate yield

curves and prices for similar

fixed maturity securities in

terms of issuer,

maturity and

seniority.

For foreign

government securities

and foreign

corporate securities,

the fair

values

provided by

the third

party pricing

services in

local currencies,

and where

applicable, are

converted to

U.S.

dollars using currency exchange rates from nationally

recognized sources.

The fixed maturities with fair values categorized

as Level 3 result when prices are not available

from the

nationally recognized pricing services.

The composition and valuation inputs for the presented fixed maturities categories are as follows:

• U.S.

Treasury securities

and obligations

of U.S.

government agencies

and corporations

are primarily

comprised of U.S.

Treasury bonds

and the fair

value is based

on observable market

inputs such as

quoted

prices, reported trades, quoted prices for similar issuances or benchmark yields;

• Obligations

of U.S. states and political subdivisions are comprised

of state and municipal bond issuances and

the fair

values are

based on

observable market

inputs such

as quoted

market prices,

quoted prices

for

similar securities, benchmark yields and credit spreads;

• Corporate

securities are primarily comprised of

U.S. corporate and

public utility bond issuances and

the fair

values are

based on

observable market

inputs such

as quoted

market prices,

quoted prices

for similar

securities, benchmark yields and credit spreads;

• Asset-backed

and mortgage

-backed securities

fair values

are based

on observable

inputs such

as quoted

prices, reported trades,

quoted prices for similar

issuances or benchmark yields and

cash flow models using

observable inputs such as prepayment speeds, collateral performance and default spreads;

• Foreign

government securities

are comprised

of global

non-U.S. sovereign

bond issuances

and the

fair

values are

based on

observable market

inputs such

as quoted

market prices,

quoted prices

for similar

securities and models with

observable inputs such as

benchmark yields and credit

spreads and then, where

applicable, converted to U.S. dollars using an exchange

rate from a nationally recognized source;

• Foreign

corporate securities are

comprised of global

non-U.S. corporate

bond issuances and

the fair values

are based

on observable

market inputs

such as

quoted market

prices, quoted

prices for

similar securities

and models with observable inputs such as benchmark yields and credit spreads and then, where applicable,

converted to U.S. dollars using an exchange

rate from a nationally recognized source.

The Company’s liability

for equity index

put options is

categorized as

Level 3 since

there is no

active market for

these equity

put options.

The fair

values for

these options

are calculated

by the

Company using

an industry

accepted pricing

model, Black-Scholes.

The model inputs

and assumptions are:

risk free

interest rates,

equity

market indexes values,

volatilities and dividend yields and duration.

The model results are then adjusted

for the

Company’s credit default swap rate.

All of these inputs and assumptions are updated quarterly.

The following table

presents the fair

value measurement levels

for all assets

and liabilities, which

the Company

has recorded at fair value (fair and market

value) as of the periods indicated:

Fair Value Measurement Using:

Quoted Prices

in Active

Significant

Markets for

Other

Significant

Identical

Observable

Unobservable

Assets

Inputs

(Dollars in thousands)

September 30, 2020

(Level 1)

(Level 2)

(Level 3)

Assets:

Fixed maturities, market value

U.S. Treasury securities and obligations

U.S. government agencies and corporations

1,452,003

Obligations of U.S. States and political

subdivisions

543,283

Corporate securities

6,805,349

6,081,305

724,044

Asset-backed securities

1,338,202

933,413

404,789

Mortgage-backed securities

Commercial

969,320

Agency residential

2,118,653

Non-agency residential

2,520

Foreign government securities

1,535,075

Foreign corporate securities

3,091,972

3,086,270

5,702

Total fixed

maturities, market value

17,856,377

16,721,842

1,134,535

Fixed maturities, fair value

3,748

Equity securities, fair value

1,173,162

1,084,448

88,714

Liabilities:

Equity index put option contracts

6,632

There were

transfers between Level 1 and Level 2 for

the nine months ended September 30, 2020.

The following table

presents the fair

value measurement levels

for all assets

and liabilities, which

the Company

has recorded at fair value (fair and market

value) as of the periods indicated:

Fair Value Measurement Using:

Quoted Prices

in Active

Significant

Markets for

Other

Significant

Identical

Observable

Unobservable

Assets

Inputs

(Dollars in thousands)

December 31, 2019

(Level 1)

(Level 2)

(Level 3)

Assets:

Fixed maturities, market value

U.S. Treasury securities and obligations

U.S. government agencies and corporations

1,515,803

Obligations of U.S. States and political

subdivisions

536,915

Corporate securities

6,374,946

5,757,358

617,588

Asset-backed securities

897,333

743,692

153,641

Mortgage-backed securities

Commercial

844,557

Agency residential

2,198,581

Non-agency residential

5,703

Foreign government securities

1,505,950

Foreign corporate securities

2,945,156

2,943,406

1,750

Total fixed

maturities, market value

16,824,944

16,051,965

772,979

Fixed maturities, fair value

5,826

Equity securities, fair value

931,457

864,584

66,873

Liabilities:

Equity index put option contracts

5,584

In addition,

218,821

thousand and

209,578

thousand of

investments within

other invested

assets on

the

consolidated balance

sheets as of

September 30,

2020 and December

31, 2019, respectively,

are not included

within the fair

value hierarchy

tables as the

assets are measured

at NAV

as a practical

expedient to

determine

fair value.

The following tables

present the activity

under Level 3,

fair value measurements

using significant unobservable

inputs for fixed maturities, for the periods indicated:

Total Fixed Maturities, Market

Value

Three Months Ended September 30, 2020

Nine Months Ended September 30, 2020

Corporate

Asset-Backed

Foreign

Corporate

Asset-Backed

Foreign

(Dollars in thousands)

Securities

Corporate

Total

Securities

Corporate

Total

Beginning balance fixed maturities at market value

721,834

295,730

6,274

1,023,838

617,588

153,641

1,750

772,979

Total gains or (losses) (realized/unrealized)

Included in earnings

362

457

845

(100)

582

(71)

411

Included in other comprehensive income (loss)

(992)

5,028

126

4,162

(4,898)

7,238

2,426

Purchases, issuances and settlements

(1,349)

103,574

139

102,364

112,060

243,328

3,823

359,211

Transfers in and/or (out) of Level

4,189

(863)

3,326

(606)

114

(492)

Ending balance

724,044

404,789

5,702

1,134,535

724,044

404,789

5,702

1,134,535

The amount of total gains or losses for the period

included in earnings (or changes in net assets)

attributable to the change in unrealized gains

or losses relating to assets still held

at the reporting date

(539)

(Some amounts may not reconcile due to rounding.)

Total Fixed Maturities, Market

Value

Three Months Ended September 30, 2019

Nine Months Ended September 30, 2019

Corporate

Asset-Backed

Foreign

Corporate

Asset-Backed

Foreign

(Dollars in thousands)

Securities

Corporate

Total

Securities

Corporate

Total

Beginning balance fixed maturities at market value

542,878

2,093

544,971

428,215

7,744

435,959

Total gains or (losses) (realized/unrealized)

Included in earnings

1,018

3,348

(119)

3,229

Included in other comprehensive income (loss)

(1,314)

644

(670)

1,130

644

1,774

Purchases, issuances and settlements

42,289

40,000

82,289

150,659

40,000

(5,532)

185,127

Transfers in and/or (out) of Level

3,176

4,695

Ending balance

588,047

40,644

2,093

630,784

588,047

40,644

2,093

630,784

The amount of total gains or losses for the period

included in earnings (or changes in net assets)

attributable to the change in unrealized gains

or losses relating to assets still held

at the reporting date

(Some amounts may not reconcile due to rounding.)

Total Fixed Maturities, Fair Value

Three Months Ended September 30, 2020

Nine Months Ended September 30, 2020

Foreign

(Dollars in thousands)

Corporate

Total

Corporate

Total

Beginning balance fixed maturities at market value

4,431

5,826

Total gains or (losses) (realized/unrealized)

Included in earnings

1,371

(24)

Included in other comprehensive income (loss)

Purchases, issuances and settlements

(2,054)

Transfers in and/or (out) of Level 3

Ending balance

3,748

The amount of total gains or losses for the period

included in earnings (or changes in net assets)

attributable to the change in unrealized gains

or losses relating to assets still held

at the reporting date

(Some amounts may not reconcile due to rounding.)

Total Fixed Maturities, Fair Value

Three Months Ended September 30, 2019

Nine Months Ended September 30, 2019

Foreign

(Dollars in thousands)

Corporate

Total

Corporate

Total

Beginning balance fixed maturities at market value

2,337

Total gains or (losses) (realized/unrealized)

Included in earnings

369

Included in other comprehensive income (loss)

Purchases, issuances and settlements

(2,706)

Transfers in and/or (out) of Level 3

Ending balance

The amount of total gains or losses for the period

included in earnings (or changes in net assets)

attributable to the change in unrealized gains

or losses relating to assets still held

at the reporting date

(Some amounts may not reconcile due to rounding.)

The following table

presents the activity

under Level 3,

fair value measurements

using significant unobservable

inputs for equity securities, for the periods indicated:

Three Months Ended

Nine Months Ended

September 30,

(Dollars in thousands)

2020

2019

2020

2019

Common Stock

Balance, beginning of period

9,877

Total (gains) or losses (realized/unrealized)

Included in earnings

Included in other comprehensive income (loss)

Purchases, issuances and settlements

9,877

Transfers in and/or (out) of Level 3

(9,877)

Balance, end of period

The amount of total gains or losses for the period included in earnings

(or changes in net assets) attributable to the change in unrealized

gains or losses relating to liabilities still held at the reporting date

(Some amounts may not reconcile due to rounding.)

The net

transfers to/(from)

Level 3,

fair value

measurements using

significant unobservable

inputs for

fixed

maturities, market

value were

3,326

thousand and

492

) thousand

for the

three and

nine months

ended

September 30,

2020, respectively,

and were

3,176

thousand and

4,695

thousand for

the three

and nine

months ended

September 30,

2019, respectively.

The transfers

of $

3,326

thousand during

the three

months

ended September 30, 2020 were

previously priced by a recognized

pricing service and were subsequently priced

using investment managers as

of September 30, 2020.

The transfers of ($

492

) thousand during the nine months

ended September

30, 2020

were related

to securities

that were

previously priced

using investment

managers

and were subsequently priced by a

recognized pricing service as of September

30, 2020.

The transfers of $

3,176

thousand and $

4,695

thousand during 2019

were related

to securities that

were previously priced

by a

recognized pricing service and were subsequently priced using investment managers as of September 30, 2019.

The net

transfers to/(from)

Level 3,

fair value

measurements using

significant unobservable

inputs for

equity

securities, fair

value were

9,877

) thousand for

both the three

and nine

months ended

September 30,

2020.

The transfers

of ($

9,877

) thousand

during both

the three

and nine

months ended

September 30,

2020, were

related to

preferred stock

in a private

entity purchased during

the second quarter

of 2020 which

was priced at

cost as of June 30, 2020 and was subsequently priced based upon the

book value of the underlying private entity

as of September 30, 2020.

The following table

presents the activity

under Level 3,

fair value measurements

using significant unobservable

inputs for equity index put option contracts, for the periods indicated:

Three Months Ended

Nine Months Ended

September 30,

(Dollars in thousands)

2020

2019

2020

2019

Liabilities:

Balance, beginning of period

9,088

8,374

5,584

11,958

Total (gains) or losses (realized/unrealized)

Included in earnings

(2,456)

189

1,048

(3,395)

Included in other comprehensive income (loss)

Purchases, issuances and settlements

Transfers in and/or (out) of Level 3

Balance, end of period

6,632

8,563

6,632

8,563

The amount of total gains or losses for the period included in earnings

(or changes in net assets) attributable to the change in unrealized

gains or losses relating to liabilities still held at the reporting date

(Some amounts may not reconcile due to rounding.)

EARNINGS PER COMMON SHARE

Basic earnings

per share

are calculated

by dividing

net income

by the

weighted average

number of

common

shares outstanding.

Diluted earnings per share reflect

the potential dilution that

would occur if options granted

under various share

-based compensation plans

were exercised

resulting in the issuance

of common shares

that

would participate in the earnings of the entity.

Net income (loss) per

common share has been

computed as per

below, based

upon weighted average

common

basic and dilutive shares outstanding.

Three Months Ended

Nine Months Ended

September 30,

(Dollars in thousands, except per share amounts)

2020

2019

2020

2019

Net income (loss) per share:

Numerator

Net income (loss)

243,057

104,398

450,549

791,817

Less:

dividends declared-common shares and unvested common shares

(61,910)

(56,995)

(187,115)

(171,131)

Undistributed earnings

181,148

47,403

263,435

620,687

Percentage

allocated to common shareholders (1)

98.8

98.9

98.7

98.9

178,938

46,869

260,096

613,847

Add:

dividends declared-common shareholders

61,199

56,403

184,836

169,329

Numerator for basic and diluted earnings per common share

240,138

103,273

444,931

783,176

Denominator

Denominator for basic earnings per weighted-average common shares

39,483

40,287

39,711

40,289

Effect of dilutive securities:

Options

125

131

Denominator for diluted earnings per adjusted weighted-average common shares

39,557

40,411

39,790

40,421

Per common share net income (loss)

Basic

6.08

2.56

11.20

19.44

Diluted

6.07

2.56

11.18

19.38

(1)

Basic weighted-average common shares outstanding

39,483

40,287

39,711

40,289

Basic weighted-average common shares outstanding and unvested

common shares expected to vest

39,971

40,746

40,221

40,738

Percentage allocated to common shareholders

98.8

98.9

98.7

98.9

(Some amounts may not reconcile due to rounding.)

There were

anti-diluted options outstanding

for the three

and nine months

ended September 30,

2020 and

2019.

All outstanding options expire on or between

February 24, 2021

and

September 19, 2022

COMMITMENTS AND CONTINGENCIES

In the

ordinary course

of business,

the Company

is involved

in lawsuits,

arbitrations and

other formal

and

informal dispute resolution

procedures, the outcomes

of which will determine

the Company’s rights

and

obligations under

insurance and reinsurance

agreements.

In some disputes,

the Company seeks

to enforce

its

rights under an agreement or to collect funds owing to it.

In other matters, the Company is resisting attempts

others to

collect funds

or enforce

alleged rights.

These disputes

arise from

time to

time and

are ultimately

resolved through both

informal and formal means,

including negotiated resolution, arbitration

and litigation.

all such matters, the Company

believes that its positions are legally

and commercially reasonable.

The Company

considers the statuses

of these proceedings

when determining its

reserves for unpaid

loss and loss

adjustment

expenses.

Aside from

litigation and

arbitrations related

to these

insurance and

reinsurance agreements,

the Company

not a party to any other material litigation or arbitration.

The Company

has entered

into separate

annuity agreements

with The

Prudential Insurance

of America

(“The

Prudential”) and an

additional unaffiliated

life insurance

company in

which the Company

has either purchased

annuity contracts

or become the

assignee of annuity

proceeds that are

meant to settle

claim payment

obligations in

the future.

In both

instances, the

Company would

become contingently

liable if

either The

Prudential or the

unaffiliated life

insurance company

were unable to

make payments

related to

the respective

annuity contract.

The table below

presents the estimated

cost to

replace all such

annuities for which

the Company was

contingently liable for the periods indicated:

At September 30,

At December 31,

(Dollars in thousands)

2020

2019

The Prudential

141,488

141,703

Unaffiliated life insurance company

34,441

35,082

OTHER COMPREHENSIVE INCOME (LOSS)

The following table presents

the components of comprehensive

income (loss) in the

consolidated statements of

operations for the periods indicated:

Three Months Ended September 30, 2020

Nine Months Ended September 30, 2020

(Dollars in thousands)

Before Tax

Tax Effect

Net of Tax

Before Tax

Tax Effect

Net of Tax

Unrealized appreciation (depreciation) ("URA(D)") on securities - non-

credit related

68,264

(4,784)

63,480

373,990

(38,155)

335,835

Reclassification of net realized losses (gains) included in net income

(loss)

(12,678)

1,225

(11,453)

18,650

(5,961)

12,689

Foreign currency translation adjustments

64,453

(3,825)

60,628

28,555

1,835

30,390

Reclassification of benefit plan liability amortization included in net

income (loss)

2,285

(479)

1,806

5,736

(1,204)

4,532

Total other comprehensive income (loss)

122,324

(7,863)

114,461

426,931

(43,485)

383,446

Three Months Ended September 30, 2019

Nine Months Ended September 30, 2019

(Dollars in thousands)

Before Tax

Tax Effect

Net of Tax

Before Tax

Tax Effect

Net of Tax

Unrealized appreciation (depreciation) ("URA(D)") on securities - non-

credit related

103,247

(9,529)

93,718

587,930

(61,792)

526,138

URA(D) on securities - OTTI

(25)

(1,671)

122

(1,549)

Reclassification of net realized losses (gains) included in net income

(loss)

(74)

(455)

(529)

(3,597)

(623)

(4,220)

Foreign currency translation adjustments

(2,665)

(761)

(3,426)

(13,890)

(1,316)

(15,206)

Reclassification of benefit plan liability amortization included in net

income (loss)

1,726

(363)

1,363

4,640

(975)

3,665

Total other comprehensive income (loss)

102,306

(11,133)

91,173

573,412

(64,584)

508,828

The following table presents details of the amounts reclassified from AOCI for the periods indicated:

Three Months Ended

Nine Months Ended

September 30,

Affected line item within the statements of

AOCI component

2020

2019

2020

2019

operations and comprehensive income (loss)

(Dollars in thousands)

URA(D) on securities

(12,678)

(74)

18,650

(3,597)

Other net realized capital gains (losses)

1,225

(455)

(5,961)

(623)

Income tax expense (benefit)

(11,453)

(529)

12,689

(4,220)

Net income (loss)

Benefit plan net gain (loss)

2,285

1,726

5,736

4,640

Other underwriting expenses

(479)

(363)

(1,204)

(975)

Income tax expense (benefit)

1,806

1,363

4,532

3,665

Net income (loss)

The following table

presents the components

of accumulated other

comprehensive income (loss),

net of tax,

the consolidated balance sheets for the periods indicated:

Three Months Ended

Nine Months Ended

September 30,

(Dollars in thousands)

2020

2019

2020

2019

Beginning balance of URA (D) on securities

600,922

247,741

304,425

(179,392)

Current period change in URA (D) of investments - non-credit related

52,027

93,190

348,524

521,919

Current period change in URA (D) of investments - non-credit OTTI

(1,549)

Ending balance of URA (D) on securities

652,949

340,978

652,949

340,978

Beginning balance of foreign currency translation adjustments

(231,955)

(227,527)

(201,717)

(215,747)

Current period change in foreign currency translation adjustments

60,628

(3,426)

30,390

(15,206)

Ending balance of foreign currency translation adjustments

(171,327)

(230,953)

(171,327)

(230,953)

Beginning balance of benefit plan net gain (loss)

(71,830)

(65,116)

(74,556)

(67,418)

Current period change in benefit plan net gain (loss)

1,806

1,363

4,532

3,665

Ending balance of benefit plan net gain (loss)

(70,024)

(63,753)

(70,024)

(63,753)

Ending balance of accumulated other comprehensive income (loss)

411,598

46,272

411,598

46,272

(Some amounts may not reconcile due to rounding.)

10.

CREDIT FACILITIES

The Company

has

two

active credit

facilities for

a total

commitment of

up to

1,000,000

thousand and

additional credit facility

for a total

commitment of up to

52,175

thousand, providing for

the issuance of letters

of credit and/or

unsecured revolving credit

lines.

The following table

presents the interest

and fees incurred

connection with the

two

credit facilities for the periods indicated:

Three Months Ended

Nine Months Ended

September 30,

(Dollars in thousands)

2020

2019

2020

2019

Credit facility interest and fees incurred

105

560

315

The terms and outstanding amounts for each facility are discussed below:

Group Credit Facility

Effective May

26, 2016, Group,

Everest Reinsurance

(Bermuda), Ltd.

(“Bermuda Re”)

and Everest

International

Reinsurance, Ltd.

(“Everest International”),

both direct subsidiaries of

Group, entered into

five year

, $

800,000

thousand senior credit

facility with a

syndicate of lenders,

which amended and

restated in

its entirety the

June

22, 2012,

four year

, $

800,000

thousand 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 $

200,000

thousand 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

600,000

thousand 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

5,370,979

thousand

plus

% 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

% of any increase in

consolidated net worth

during such period attributable

to the issuance

of ordinary and

preferred shares,

which

at September 30,

2020, was $

6,372,662

thousand.

As of September

30, 2020, the

Company was in

compliance

with all Group Credit Facility covenants.

On March 25, 2020, Group

borrowed $

50,000

thousand under Tranche

one of the credit facility

as an unsecured

revolving credit loan.

The loan was

fully paid off

on June 26,

2020.

There were

revolving credit borrowings

from the facility during the year ended 2019.

The following table summarizes the outstanding letters of credit and/or

borrowings for the periods indicated:

(Dollars in thousands)

At September 30, 2020

At December 31, 2019

Bank

Commitment

In Use

Date of Expiry

Commitment

In Use

Date of Expiry

Wells Fargo Bank Group Credit Facility

Tranche One

200,000

99,077

12/31/2020

200,000

33,737

12/31/2020

Tranche Two

600,000

586,186

12/31/2020

600,000

2,381

7/29/2020

Tranche Two

1,649

9/30/2020

Tranche Two

573,353

12/31/2020

Tranche Two

12,364

1/4/2021

Total Wells Fargo

Bank Group Credit Facility

800,000

685,263

800,000

623,484

Bermuda Re Letter of Credit Facility

Effective December 31, 2019, Bermuda Re renewed

its letter of credit issuance facility with Citibank N.A.

referred to

as the

“Bermuda Re

Letter of

Credit Facility”,

which commitment

is reconfirmed

annually with

updated fees.

The current renewal of

the Bermuda Re Letter

of Credit Facility provides

for the issuance of up

200,000

thousand of secured letters

of credit to

collateralize reinsurance

obligations as a

non-admitted

reinsurer.

The interest on drawn letters

of credit shall be (A)

0.35

% per annum of the principal amount of issued

standard letters

of credit

(expiry of

15 months

or less)

and (B)

0.45

% per

annum of

the principal

amount of

issued extended tenor letters

of credit (expiry maximum of up

months).

The commitment fee on undrawn

credit shall be

0.15

% per annum.

The following table summarizes the outstanding letters of credit for

the periods indicated:

(Dollars in thousands)

At September 30, 2020

At December 31, 2019

Bank

Commitment

In Use

Date of Expiry

Commitment

In Use

Date of Expiry

Citibank Bilateral Letter of Credit Agreement

200,000

3,672

11/24/2020

200,000

4,425

02/29/2020

93,846

12/31/2020

512

09/03/2020

4,425

02/28/2021

3,672

11/24/2020

183

12/16/2021

177

12/16/2020

109

12/20/2021

125

12/20/2020

5,475

12/31/2021

101,404

12/31/2020

777

08/15/2022

559

08/15/2021

37,802

09/30/2024

37,096

12/30/2023

Total Citibank Bilateral Agreement

200,000

146,289

200,000

147,970

Everest International Credit Facility

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

52,175

thousand 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

5,532,663

thousand (

% of consolidated

net worth as

of December 31,

2018), plus

% 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

% 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

5,910,400

thousand.

As of September 30,

2020, the Company was

in compliance with all

Everest International

Credit Facility requirements.

The following table summarizes the outstanding letters of credit for

the periods indicated:

(Dollars in thousands)

At September 30, 2020

At December 31, 2019

Bank

Commitment

In Use

Date of Expiry

Commitment

In Use

Date of Expiry

Lloyd's Bank plc

52,175

12/31/2023

47,000

12/31/2023

Total Lloyd's Bank Credit Facility

52,175

47,000

Federal Home Loan Bank Membership

Effective August

15, 2019, Everest

Reinsurance Company (“Everest

Re”) became a member

of the Federal Home

Loan Bank

of New

York (“FHLBNY”),

which allows

Everest Re

to borrow

up to

% of

its statutory

admitted

assets.

As of

September 30,

2020, Everest

Re had

admitted assets

of approximately

14,667,099

thousand

which provides borrowing capacity of up to approximately $

1,466,709

thousand.

On August 31,

2020, Everest

Re borrowed

90,000

thousand under its

FHLBNY available capacity.

The $

90,000

thousand collateralized

borrowing has

interest payable

at a

rate of

0.35

% and

will mature

November 30,

2020

The FHLBNY membership agreement

requires that

4.5

% of borrowed funds

be used to acquire

additional

membership stock.

11.

COLLATERALIZED REINSURANCE AND TRUST AGREEMENTS

Certain subsidiaries

of Group

have established

trust agreements,

which effectively

use the

Company’s

investments as collateral,

as security for

assumed losses payable

to certain non-affiliated

ceding companies.

September 30, 2020, the total amount on deposit in trust accounts was $

1,158,783

thousand.

The Company reinsures

some of its

catastrophe exposures

with the segregated

accounts of Mt.

Logan Re.

Mt.

Logan Re is

a Class 3 insurer

registered in Bermuda

effective February 27,

2013 under The Segregated

Accounts

Companies Act 2000 and

100

% of the voting common

shares are owned

by Group.

Separate segregated

accounts for Mt.

Logan Re began

being established effective

July 1, 2013 and

non-voting, redeemable preferred

shares have been

issued to capitalize

the segregated accounts.

Each segregated

account invests predominantly

in a

diversified set

of catastrophe

exposures, diversified

by risk/peril

and across

different geographic

regions

globally.

The following

table summarizes

the premiums

and losses

that are

ceded by

the Company

to Mt.

Logan Re

segregated accounts and assumed by the Company from Mt. Logan Re segregated

accounts.

Three Months Ended

Nine Months Ended

September 30,

Mt. Logan Re Segregated Accounts

2020

2019

2020

2019

(Dollars in thousands)

Ceded written premiums

86,712

97,391

245,422

237,841

Ceded earned premiums

71,396

79,560

233,089

220,200

Ceded losses and LAE

87,917

79,499

173,968

164,914

Assumed written premiums

8,894

9,867

14,448

14,900

Assumed earned premiums

8,894

9,867

14,448

14,900

Assumed losses and LAE

Each segregated

account is permitted

to assume net

risk exposures equal

to the amount

of its available

posted

collateral, which

in the aggregate

was $

806,564

thousand and $

993,036

thousand at September

30, 2020 and

December 31, 2019,

respectively.

Of this

amount, Group

had investments

recorded at

66,175

thousand and

46,390

thousand at September 30, 2020 and December 31, 2019, respectively, in the segregated accounts.

Effective April

1, 2018,

the Company

entered into

a retroactive

reinsurance transaction

with one

of the

Mt.

Logan Re segregated

accounts to retrocede

269,198

thousand of casualty reserves held

by Bermuda Re related

to accident

years

2002

through

2015

As consideration

for entering

the agreement,

the Company

transferred

cash of

252,000

thousand to the

Mt. Logan

Re segregated

account.

The maximum

liability to

be retroceded

under the agreement

will be $

319,000

thousand.

The Company will

retain liability

for any

amounts exceeding

the maximum liability.

On April

24, 2014,

the Company

entered into

two

collateralized reinsurance

agreements with

Kilimanjaro Re

Limited (“Kilimanjaro”), a

Bermuda based special

purpose reinsurer,

to provide

the Company with

catastrophe

reinsurance coverage.

These agreements

are multi-year

reinsurance contracts

which cover

specified named

storm and earthquake

events.

The first agreement

provides up to

250,000

thousand of reinsurance

coverage

from named storms in specified states

of the Southeastern United States.

The second agreement provides up to

200,000

thousand of

reinsurance coverage

from named

storms in

specified states

of the

Southeast, Mid-

Atlantic and

Northeast regions

of the

United States

and Puerto

Rico as

well as

reinsurance coverage

from

earthquakes in specified states

of the Southeast, Mid-Atlantic,

Northeast and West

regions of the United States,

Puerto Rico and British Columbia.

These reinsurance agreements expired in

April, 2018

On November 18,

2014, the Company

entered into

a collateralized

reinsurance agreement

with Kilimanjaro to

provide the Company with catastrophe

reinsurance coverage.

This agreement is a multi-year reinsurance

contract which covers specified earthquake events.

The agreement provides up to $

500,000

thousand of

reinsurance coverage

from earthquakes in the

United States, Puerto

Rico and Canada. These reinsurance

agreements expired in

November 2019

On December 1, 2015

the Company entered

into

two

collateralized reinsurance

agreements with Kilimanjaro

provide the

Company with

catastrophe reinsurance

coverage.

These agreements

are multi-year

reinsurance

contracts which

cover named

storm and

earthquake events.

The first

agreement provides

up to

300,000

thousand of reinsurance

coverage from

named storms

and earthquakes

in the United

States, Puerto

Rico and

Canada.

The second agreement provides

up to $

325,000

thousand of reinsurance coverage

from named storms

and earthquakes in the United States, Puerto Rico and Canada.

On April

13, 2017

the Company

entered into

six

collateralized reinsurance

agreements with

Kilimanjaro to

provide the Company with annual aggregate catastrophe

reinsurance coverage.

The initial

three

agreements are

four year

reinsurance contracts which cover named storm and earthquake

events.

These agreements provide up

to $

225,000

thousand, $

400,000

thousand and

325,000

thousand, respectively,

of annual

aggregate

reinsurance coverage

from named storms

and earthquakes in

the United States,

Puerto Rico and

Canada.

The

subsequent

three

agreements are

five year

reinsurance contracts

which cover

named storm

and earthquake

events.

These agreements provide

up to $

50,000

thousand, $

75,000

thousand and $

175,000

thousand,

respectively, of

annual aggregate

reinsurance coverage

from named

storms and

earthquakes in

the United

States, Puerto Rico and Canada.

On April

30, 2018

the Company

entered into

four

collateralized reinsurance

agreements with

Kilimanjaro to

provide the

Company with

catastrophe reinsurance

coverage.

These agreements

are multi-year

reinsurance

contracts which cover named

storm and earthquake events.

The first

two

agreements are

four year

reinsurance

contracts which

provide up

to $

62,500

thousand and

200,000

thousand, respectively,

of annual

aggregate

reinsurance coverage

from named

storms and

earthquakes in

the United

States, Puerto

Rico, the

U.S. Virgin

Islands and

Canada.

The remaining

two

agreements are

five year

reinsurance contracts

which provide

up to

62,500

thousand and $

200,000

thousand, respectively,

of annual aggregate

reinsurance coverage

from named

storms and earthquakes in the United States, Puerto Rico, the U.S. Virgin

Islands and Canada.

On December 12,

2019, the Company

entered into

four

collateralized reinsurance

agreements with Kilimanjaro

to provide the

Company with catastrophe

reinsurance coverage.

These agreements are

multi-year reinsurance

contracts which cover named

storm and earthquake events.

The first

two

agreements are

four year

reinsurance

contracts which

provide up

to $

150,000

thousand and

275,000

thousand, respectively,

of annual

aggregate

reinsurance coverage

from named

storms and

earthquakes in

the United

States, Puerto

Rico, the

U.S. Virgin

Islands and

Canada.

The remaining

two

agreements are

five year

reinsurance contracts

which provide

up to

150,000

thousand and $

275,000

thousand, respectively, of annual aggregate

reinsurance coverage from named

storms and earthquakes in the United State, Puerto Rico, the U.S. Virgin

Islands and Canada.

Recoveries under

these collateralized

reinsurance agreements

with Kilimanjaro

are primarily

dependent on

estimated industry

level insured losses

from covered

events, as well

as, the geographic

location of the

events.

The estimated industry

level of insured

losses is obtained

from published estimates

by an independent

recognized authority

on insured

property losses.

Currently, none

of the

published insured

loss estimates

for

catastrophe events

during the applicable

covered periods

of the various

agreements have

exceeded the

single

event retentions or aggregate retentions

under the terms of the agreements that would result in a recovery.

Kilimanjaro has financed

the various property

catastrophe reinsurance

coverages by

issuing catastrophe

bonds

to unrelated,

external investors.

On April

24, 2014,

Kilimanjaro issued

450,000

thousand of

notes (“Series

2014-1 Notes”).

The $

450,000

thousand of Series 2014-1

Notes were fully

redeemed on April 30,

2018 and are

no longer outstanding.

On November 18,

2014, Kilimanjaro issued

500,000

thousand of notes

(“Series 2014-2

Notes”).

The $

500,000

thousand of

Series 2014-2

Notes were

fully redeemed

in November

2019 and

are no

longer outstanding.

On December

1, 2015,

Kilimanjaro issued

625,000

thousand of

notes (“Series

2015-1

Notes).

On April 13, 2017,

Kilimanjaro issued $

950,000

thousand of notes (“Series

2017-1 Notes) and $

300,000

thousand of

notes (“Series

2017-2 Notes).

On April

30, 2018,

Kilimanjaro issued

262,500

thousand of

notes

(“Series 2018-1

Notes”) and

262,500

thousand of

notes (“Series

2018-2 Notes”).

On December

12, 2019

Kilimanjaro issued

425,000

thousand of notes

(“Series 2019-1 Notes”)

and $

425,000

of notes

(“Series 2019-2

Notes”).

The proceeds from the

issuance of the Notes listed

above are held in

reinsurance trust throughout

the

duration of

the applicable reinsurance

agreements and invested

solely in US

government money

market funds

with a rating of at least “AAAm”

by Standard & Poor’s.

12.

SENIOR NOTES

The table below

displays Everest

Reinsurance Holdings’ (“Holdings”)

outstanding senior notes.

Market value

based on quoted

market prices, but

due to limited

trading activity,

these senior notes are

considered Level 2

the fair value hierarchy.

September 30, 2020

December 31, 2019

Consolidated Balance

(Dollars in thousands)

Date Issued

Date Due

Principal Amounts

Sheet Amount

Market Value

Sheet Amount

Market Value

Senior notes

06-05-2014

06-01-2044

400,000

397,164

460,252

397,074

452,848

On June 5,

2014, Holdings issued

400,000

thousand of

year senior notes

4.868

%, which will

mature on

June 1, 2044

Interest will be paid semi-annually on June 1 and December 1 of each year.

Interest expense incurred in connection with these senior notes is as follows for the periods indicated:

Three Months Ended

Nine Months Ended

September 30,

(Dollars In thousands

2020

2019

2020

2019

Interest expense incurred

4,868

14,604

In addition to the above senior notes outstanding, Holdings issued $

1,000,000

thousand of

30 year

senior notes

October 7, 2020

at an interest rate of

3.5

These senior notes will mature on

October 15, 2050

and will pay

interest semi-annually on April 15th and October 15th of each year.

13.

LONG TERM SUBORDINATED NOTES

The table

below displays

Holdings’ outstanding

fixed to

floating rate

long term

subordinated notes.

Market

value is

based on

quoted market

prices, but

due to

limited trading

activity, these

subordinated notes

are

considered Level 2 in the fair value hierarchy.

Maturity Date

September 30, 2020

December 31, 2019

Original

Consolidated

Balance

Consolidated

Balance

(Dollars in thousands)

Date Issued

Principal

Amount

Scheduled

Final

Sheet Amount

Market Value

Sheet Amount

Market Value

Long term subordinated notes

04-26-2007

400,000

05-15-2037

05-01-2067

223,649

191,301

236,758

233,191

During the fixed rate

interest period from

May 3, 2007

through

May 14, 2017

, interest was

at the annual rate

6.6

%, payable semi-annually in arrears on November 15 and May 15 of each year,

commencing on

November 15,

2007

During the floating rate interest

period from May 15, 2017 through maturity,

interest will be based on the

3 month

LIBOR plus

238.5

basis points,

reset quarterly,

payable quarterly

in arrears

on February

15, May

15,

August 15 and November

15 of each year,

subject to Holdings’ right

to defer interest

one

or more occasions

for up to

ten

consecutive years.

Deferred interest

will accumulate interest

at the applicable

rate compounded

quarterly for periods

from and including

May 15, 2017.

The reset quarterly interest

rate for August

17, 2020 to

November 15, 2020 is

2.67

Holdings may redeem the long term subordinated

notes on or after May 15,

2017, in whole or in part at

100

% of

the principal amount plus accrued and unpaid interest;

however,

redemption on or after the scheduled

maturity

date and prior

May 1, 2047

is subject to

a replacement capital

covenant.

This covenant is

for the benefit

certain senior

note holders

and it

mandates that

Holdings receive

proceeds from

the sale

of another

subordinated debt

issue, of at

least similar size,

before it

may redeem

the subordinated notes.

Effective upon

the maturity

of the Company’s

5.40

% senior notes

October 15, 2014

, the

Company’s

4.868

% senior notes,

due on

June 1, 2044

, have

become the

Company’s long

term indebtedness

that ranks

senior to

the long term

subordinated notes.

The Company repurchased

and retired $

thousand and $

13,183

thousand of its

outstanding long term

subordinated notes

during the three

and nine months

ended September 30,

2020, respectively.

The Company

realized a

gain of $

thousand and $

2,536

thousand from the

repurchase of the

long term subordinated

notes

for the three and nine months ended September 30, 2020, respectively.

On March 19,

2009, Group announced

the commencement of

a cash tender

offer for

any and all

of the

6.60

fixed to

floating rate

long term

subordinated notes.

Upon expiration

of the

tender offer,

the Company

had

reduced its outstanding debt by $

161,441

thousand.

Interest expense

incurred in

connection with these

long term subordinated

notes is as

follows for

the periods

indicated:

Three Months Ended

Nine Months Ended

September 30,

(Dollars in thousands)

2020

2019

2020

2019

Interest expense incurred

1,587

2,881

6,126

8,892

14.

LEASES

Effective January 1,

2019, the Company adopted

ASU 2016-02 and ASU

2018-11 which outline new

guidance on

the accounting for

leases.

The Company enters

into lease agreements

for real estate

that is primarily

used for

office space

in the

ordinary course

of business.

These leases are

accounted for

as operating

leases, whereby

lease expense is recognized

on a straight

-line basis over the term

of the lease.

Most leases include an option

extend or renew the lease term.

The exercise of the renewal is at the Company’s

discretion.

The operating lease

liability includes lease payments related to options to extend

or renew the lease term if the Company is

reasonably certain of exercise

those options.

The Company, in

determining the present value of

lease payments

utilizes either

the rate

implicit in

the lease

if that

rate is

readily determinable

or the

Company’s incremental

secured borrowing rate commensurate with terms of the underlying lease.

Supplemental information related to operating

leases is as follows for the periods indicated:

Three Months Ended

Nine Months Ended

September 30,

(Dollars in thousands)

2020

2019

2020

2019

Lease expense incurred:

Operating lease cost

8,424

5,384

24,572

16,602

At September 30,

At December 31,

(Dollars in thousands)

2020

2019

Operating lease right of use assets

149,206

161,435

Operating lease liabilities

163,329

169,909

Three Months Ended

Nine Months Ended

September 30,

(Dollars in thousands)

2020

2019

2020

2019

Operating cash flows from operating

leases

(5,047)

(5,739)

(14,883)

(14,665)

At September 30,

At December 31,

2020

2019

Weighted average

remaining operating lease term

12.3 years

12.6 years

Weighted average

discount rate on operating leases

4.11

3.91

Maturities of the existing lease liabilities are expected to occur as follows:

(Dollars in thousands)

Remainder of 2020

5,235

2021

18,433

2022

20,882

2023

20,110

2024

19,859

2025

16,868

Thereafter

119,204

Undiscounted lease payments

220,591

Less:

present value adjustment

57,262

Total operating

lease liability

163,329

On July

2, 2019,

the Company

entered into

a lease

agreement to

relocate its

corporate offices

from Liberty

Corner, New

Jersey to a

corporate complex in

Warren, New Jersey.

The new lease, which

covers approximately

315,000

square feet of

office space, was effective

October 1, 2019 and

runs through

2036

The initial base rent

payment of

the lease

will be

approximately $

650

thousand per

month or

7,800

thousand per

year.

The

Company expects to relocate

the existing operations and

employees of the Liberty Corner,

New Jersey facility to

the new corporate complex during 2021.

15.

SEGMENT REPORTING

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 tables present the underwriting results for the operating segments for the periods indicated:

Three Months Ended

Nine Months Ended

Reinsurance

September 30,

(Dollars in thousands)

2020

2019

2020

2019

Gross written premiums

2,086,961

1,736,672

5,403,080

4,678,310

Net written premiums

1,936,851

1,583,713

4,974,034

4,212,952

Premiums earned

1,669,257

1,420,799

4,656,733

4,072,078

Incurred losses and LAE

1,335,048

1,050,621

3,361,367

2,605,901

Commission and brokerage

373,251

371,098

1,130,946

1,039,113

Other underwriting expenses

51,333

43,832

135,170

117,031

Underwriting gain (loss)

(90,375)

(44,752)

29,250

310,033

Three Months Ended

Nine Months Ended

Insurance

September 30,

(Dollars in thousands)

2020

2019

2020

2019

Gross written premiums

704,643

666,602

2,328,733

2,018,727

Net written premiums

511,829

484,844

1,693,603

1,491,286

Premiums earned

536,554

484,820

1,628,297

1,383,537

Incurred losses and LAE

401,162

321,303

1,212,699

909,203

Commission and brokerage

72,081

71,978

229,224

214,387

Other underwriting expenses

87,542

74,326

250,695

204,945

Underwriting gain (loss)

(24,231)

17,213

(64,321)

55,002

The following

table reconciles

the underwriting

results for

the operating

segments to

income before

taxes as

reported in the

consolidated statements

of operations and

comprehensive income (loss)

for the periods

indicated:

Three Months Ended

Nine Months Ended

September 30,

(Dollars in thousands)

2020

2019

2020

2019

Underwriting gain (loss)

(114,606)

(27,539)

(35,071)

365,035

Net investment income

234,233

181,058

420,116

501,062

Net realized capital gains (losses)

110,203

(12,943)

84,263

109,561

Net derivative gain (loss)

2,456

(189)

(1,048)

3,395

Corporate expenses

(10,618)

(8,435)

(29,184)

(22,622)

Interest, fee and bond issue cost amortization

expense

(6,641)

(7,907)

(21,477)

(23,972)

Other income (expense)

57,481

(31,025)

48,354

(52,550)

Income (loss) before taxes

272,508

93,020

465,953

879,909

The Company

produces business

in the

U.S., Bermuda

and internationally.

The net

income deriving from

and

assets residing in

the individual foreign

countries in which

the Company writes

business are not

identifiable in

the Company’s financial records.

Based on gross written premium, the

table below presents the largest

country,

other than the U.S., in which the Company writes business, for the periods indicated:

Three Months Ended

Nine Months Ended

September 30,

(Dollars in thousands)

2020

2019

2020

2019

United Kingdom gross written premium

314,502

272,297

857,310

743,294

No other country represented more than

% of the Company’s revenues.

16.

SHARE-BASED COMPENSATION PLANS

For the three months

ended September 30, 2020,

5,590

restricted stock awards

were granted on

September 11,

2020

, with a fair value of $

207.5050

For the

nine months

ended September

30, 2020,

a total

173,419

restricted stock

awards were

granted:

167,829

restricted share awards were

granted on

February 26, 2020

, with a fair value

of $

277.145

per share and

5,590

September 11, 2020

with a fair value

of $

207.5050

Also,

16,120

performance share unit awards

were

granted on

February 26, 2020

, with a fair value of $

277.145

per unit.

17.

RETIREMENT BENEFITS

The Company

maintains both

qualified and non-qualified

defined benefit

pension plans for

its U.S.

employees

employed prior to April 1, 2010.

Generally, the Company

computes the benefits based on average

earnings over

a period prescribed

by the plans

and credited

length of service.

The Company’s

non-qualified defined benefit

pension plan provided compensating pension benefits for participants

whose benefits have been curtailed under

the qualified

plan due

to Internal

Revenue Code

limitations.

Effective January

1, 2018,

participants of

the

Company’s non-qualified defined benefit pension plan may no longer accrue additional service benefits.

Net periodic benefit cost for U.S. employees included the following components for the periods indicated:

Pension Benefits

Three Months Ended

Nine Months Ended

September 30,

(Dollars in thousands)

2020

2019

2020

2019

Service cost

2,040

2,064

8,092

6,616

Interest cost

2,562

2,928

7,608

8,788

Expected return on plan assets

(5,197)

(4,492)

(15,591)

(14,523)

Amortization of net (income) loss

2,462

1,909

6,137

5,111

FAS 88 settlement charge

871

102

871

309

Net periodic benefit cost

2,738

2,511

7,117

6,301

Other Benefits

Three Months Ended

Nine Months Ended

September 30,

(Dollars in thousands)

2020

2019

2020

2019

Service cost

311

245

763

818

Interest cost

215

245

644

835

Amortization of prior service cost

(177)

(144)

(401)

(433)

Amortization of net (income) loss

(39)

Net periodic benefit cost

349

307

1,006

1,181

The service cost component

of net periodic benefit

costs is included

within other underwriting expenses

on the

consolidated statement of operations

and comprehensive income (loss).

In accordance with ASU 2017-07, other

staff compensation costs are also primarily recorded within this line item.

The Company

did

t make

any contributions

to the

qualified pension

benefit plan

for the

three and

nine

months ended September 30, 2020 and 2019, respectively.

18.

INCOME TAXES

The Company

is domiciled

in Bermuda

and has

significant subsidiaries

and/or branches

in Canada,

Ireland,

Singapore, Switzerland, the

United Kingdom, and

the United States.

The Company’s Bermuda

domiciled

subsidiaries are exempt

from income taxation

under Bermuda law

until 2035.

The Company’s

non-Bermudian

subsidiaries and branches are subject to income taxation at varying rates

in their respective domiciles.

The Company generally applies the estimated

Annualized Effective Tax

Rate (“AETR”)

approach for calculating its

tax provision

for interim

periods as prescribed

by ASC 740-270,

Interim Reporting.

Under the AETR

approach,

the estimated annualized

effective tax

rate is applied

to the interim

year-to-date pre-tax

income/loss to

determine the

income tax

expense or

benefit for

the year-to-date

period.

The tax

expense or

benefit for

the

quarter represents the

difference between

the year-to-date

tax expense or

benefit for the

current year-to-date

period less such amount for

the immediately preceding year-to-date

period.

Management considers the impact

of all known

events in its

estimation of the

Company’s annual pre

-tax income/loss and

annualized effective

tax

rate.

19.

SUBSEQUENT EVENTS

The Company has

evaluated known recognized

and non-recognized subsequent

events. In October

2020,

Hurricanes Delta

and Zeta

impacted the Caribbean

and southeastern

United States.

Due to

the recentness

these events,

the Company

is unable

to estimate

the amount

of losses

at this

time.

However,

the Company

anticipates that the losses from these events will adversely impact its fourth quarter 2020 financial statements.

ITEM 2. MANAGEMENT’S DISCUSSION

AND ANALYSIS

OF FINANCIAL CONDITION

AND RESULTS

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

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

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

quarter ended September 30,

2020, our underwriting results

include $125 million of

estimated losses related

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.

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

Nine Months Ended

Percentag

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)

84.3

109.6

-23.1

Net derivative gain (loss)

2.5

(0.2)

(1.0)

3.4

-130.9

Other income (expense)

57.5

(31.0)

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)

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

Percentag

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

$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

$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

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

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

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

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

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

($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

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), Australia

East 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

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

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.

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

Three Months Ended

Nine Months Ended

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.

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,

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

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)

Total

(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

(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

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,

recorded $100.0

million of

net gains

from fair

value re

-measurements,

resulting primarily

from increases

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

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.

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

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

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%

$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%

$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.

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

decline of $19.5

million in current

year catastrophe

losses and $33.4

million of less

favorable development

prior year catastrophe

losses.

The current year

catastrophe losses of

$297.0 million for

the nine 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), 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

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

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

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

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

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).

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

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.)

September 30, 2020

December 31, 2019

Fixed income portfolio duration (years)

3.5

Fixed income composite credit quality

Aa3

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, 2020

December 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

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

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

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

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.

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

contracts, classes and lines of business,

internal business units, segments, legal entities,

and in the aggregate.

order to set appropriate reserves,

we make qualitative and quantitative

analyses and judgments at these various

levels.

Additionally, the

attribution of

reserves, changes in

reserves and incurred

losses among accident

years

requires qualitative

and quantitative

adjustments and

allocations at

these various

levels.

We utilize

actuarial

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

the accuracy and

consistency of our

reserving practices.

Nevertheless, our reserves are

estimates, which are

subject to variation,

which may be significant.

There can

be no assurance

that reserves for,

and losses from,

claim obligations

will not increase

in the future,

possibly by

a material

amount.

However,

we believe

that our

existing reserves

and reserving

methodologies

lessen the

probability that

any such

increase would

have a

material adverse

effect on

our financial condition,

results of operations or cash flows.

Asbestos and Environmental Exposures.

A&E exposures represent a separate exposure

group for monitoring and

evaluating reserve adequacy.

The following table summarizes the

outstanding loss reserves with respect to

A&E

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

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.

consideration for

entering into

the retrocession

treaty, Bermuda

Re transferred

cash of

$140.3 million,

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.

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

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.

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,

(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.

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

1,887

Southeast 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

1,648

Southeast 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

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,

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

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,

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

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

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

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

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.

particular, estimates

of the financial impact resulting from non-investment

asset and liability transactions,

together with our

capital structure

and other factors,

are used to

develop a net

liability analysis.

This analysis

includes estimated payout characteristics for

which our investments provide liquidity.

This analysis is considered

in the development of specific investment strategies for

asset allocation, duration and credit quality.

The change

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

place during the period.

Interest Rate

Risk.

Our $23.1

billion investment

portfolio, at

September 30,

2020, is

principally comprised

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

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

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

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.

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%

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,

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.

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

ITEM 4. CONTROLS AND PROCEDURES

As of

the end

of the

period covered

by this

report, our

management carried

out an

evaluation, with

the

participation of

the Chief

Executive Officer

and Chief

Financial Officer,

of the

effectiveness of

our disclosure

controls and procedures (as

defined in Rule 13a-15(e) under

the Securities Exchange Act of

1934 (the “Exchange

Act”)).

Based on

their evaluation,

the Chief

Executive Officer

and Chief

Financial Officer

concluded that

our

disclosure controls and procedures

are effective to

ensure that information required

to be disclosed by us in

the

reports that it

files or submits under

the Exchange Act

is recorded, processed,

summarized and reported

within

the time periods specified in Securities and Exchange

Commission’s rules and forms.

Our management, with the

participation of

the Chief

Executive Officer

and Chief

Financial Officer,

also conducted

an evaluation

of our

internal control over

financial reporting to determine whether

any changes occurred during the

quarter covered

by this report that have materially affected,

or are reasonably likely to materially affect,

our internal control over

financial reporting.

Based on that evaluation, there

has been no such change during

the quarter covered by

this

report.

PART II

ITEM 1. LEGAL PROCEEDINGS

In the

ordinary course

of business,

the Company

is involved

in lawsuits,

arbitrations and

other formal

and

informal dispute resolution

procedures, the outcomes

of which will determine

the Company’s rights

and

obligations under

insurance and reinsurance

agreements.

In some disputes,

the Company seeks

to enforce

its

rights under an agreement or to collect funds owing to it.

In other matters, the Company is resisting attempts

others to

collect funds

or enforce

alleged rights.

These disputes

arise from

time to

time and

are ultimately

resolved through both

informal and formal means,

including negotiated resolution, arbitration

and litigation.

all such matters, the Company

believes that its positions are legally

and commercially reasonable.

The Company

considers the statuses

of these proceedings

when determining its

reserves for unpaid

loss and loss

adjustment

expenses.

Aside from

litigation and

arbitrations related

to these

insurance and

reinsurance agreements,

the Company

not a party to any other material litigation or arbitration.

ITEM 1A. RISK FACTORS

Other than as set forth

below, there

have been no material

changes from the risk

factors previously disclosed

the Company’s annual report on Form 10-K for the fiscal year ended December 31, 2019.

The continuing

COVID-19 pandemic

has adversely

affected, and

may materially

and adversely

affect, our

results of operations, financial position and liquidity in the future.

The ongoing COVID

-19 pandemic, including the

related impact on

the U.S. and

global economies, has adversely

affected our

results of

operations.

We expect

the pandemic

and its

impact on

our business

to continue

and

potentially even worsen,

but we cannot

predict the magnitude

or duration of

its continued impact,

particularly

given the great uncertainties

associated with COVID-19, including regarding

the reopening of the U.S.

and global

economies and the recovery

from its economic and

other effects.

The full impact of

COVID-19 on our results

operations, financial

position and

liquidity is

not yet

known, and

likely will

not be

known for

some time,

but

includes the following:

Claim Losses

Related to

COVID-19 May

Exceed Reserves

We have

established reserves

for COVID

-19-related

losses.

Our reserves represent

management’s best

estimate of what

the settlement and

claims administration

will cost for

claims that have

occurred, whether reported

or unreported.

Given the great

uncertainties

associated with COVID

-19 and its

impact and the

limited information

upon which our

current assumptions and

assessments have

been made, our

preliminary reserves and

the underlying estimated

level of claim

losses and

costs arising from COVID-19 may materially change.

Adverse Legislative and

Regulatory Action:

Legislative and regulatory

initiatives taken or

which may be taken

response to COVID

-19 may adversely

affect us.

For example, our

business may be subject

to, certain initiatives,

including, but not

limited to: legislative

and regulatory action

that seeks to

retroactively mandate

coverage for

losses which

our insurance

policies would

not otherwise

cover and

which were

not priced

to cover;

actions

prohibiting us from cancelling insurance

policies in accordance with our policy

terms or non-renewing policies at

their natural expiration;

and/or orders to

provide premium refunds,

grant extended

grace periods for

premium

payments, and provide extended time

to pay past due premiums. Any

such action would likely increase both

our

underwriting losses and our expenses and any legal challenges to any such action could take years to resolve.

Reduction in

Premiums: The

demand for

insurance is

significantly influenced

by general

economic conditions.

Consequently, reduced economic activity relating to

the COVID-19 pandemic is likely to decrease demand for our

insurance products and services and negatively impact our premium volumes (and, in certain cases, may

result in

return of

premiums due

to a

decrease in

exposures). This

may continue

for an

indefinite period,

with the

magnitude of the impact impossible to predict.

Investments:

Further disruptions

in global

financial markets

due to

the continuing

impact of

COVID-19 could

cause us

to incur

additional unrealized

and/or realized

investment losses,

including credit

impairments in

our

fixed maturity portfolio.

In addition, the economic

uncertainty resulting from

COVID-19 may result

in a decline

in interest rates, which may negatively

impact our future net investment income.

Credit Risk:

As credit risk

is generally a

function of the economy,

we face greater

credit risk from

our

policyholders, independent agents

and brokers

in connection with the

payment and remittance

of premiums as

a result of the

economic conditions caused by

COVID-19.

Similarly, our credit

risk related to the

reimbursement

of deductibles from policyholders and in connection with reinsurance recoverables has increased.

Operational Disruptions

and Costs:

Our operations

could be

disrupted if

key members

of our

senior

management or a

significant percentage

of our workforce

or the workforce

of our agents,

brokers, suppliers

other third party

service providers are

unable to continue

to work because

of illness, government

directives or

otherwise. In addition,

our agents, brokers,

suppliers and other

third party service

providers, which

we rely on

for key aspects of our operations, are subject to risks and

uncertainties related to the COVID-19 pandemic, which

may interfere

with their

ability to

fulfill their

respective commitments

and responsibilities

to us

in a

timely

manner and

in accordance

with the

agreed-upon terms.

In response

to the

COVID-19 pandemic,

we have

implemented remote

working policies which

have resulted

in disruptions to

our business routines,

heightened

risk to

cybersecurity attacks

and data

security incidents

and a

greater dependency

on internet

and

telecommunication access and capabilities.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

Issuer Purchases of Equity Securities.

Issuer Purchases of Equity Securities

(a)

(b)

(c)

(d)

Maximum Number (or

Total Number of

Approximate Dollar

Shares (or Units)

Value) of Shares (or

Purchased as Part

Units) that May Yet

Total Number of

of Publicly

Be Purchased Under

Shares (or Units)

Average Price Paid

Announced Plans or

the Plans or

Period

Purchased

per Share (or Unit)

Programs

Programs (1)

July 1 - 31, 2020

357,803

August 1 - 31, 2020

357,803

September 1 - 30, 2020

5,435

205.4490

357,803

Total

5,435

357,803

(1) On

May 22,

2020, the

Company’s executive

committee of

the Board

of Directors

approved an

amendment to

the share

repurchase program

authorizing the Company

and/or its subsidiary

Holdings, to purchase

up to a

current aggregate

of 32.0 million

of the Company’s

shares (recognizing that

the

number of

shares authorized

for repurchase

has been

reduced by

those shares

that have

already been

purchased) in

open market

transactions, privately

negotiated transactions or both.

Currently, the Company and/or its subsidiary Holdings have repurchased 29.6 million of the Company’s shares.

ITEM 3. DEFAULTS

UPON SENIOR SECURITIES

None.

ITEM 4. MINE SAFETY DISCLOSURES

Not applicable.

ITEM 5. OTHER INFORMATION

None.

ITEM 6. EXHIBITS

Exhibit Index

Exhibit No.

Description

31.1

Section 302 Certification of Juan C. Andrade

31.2

Section 302 Certification of Mark Kociancic

32.1

Section 906 Certification of Juan C. Andrade and Mark Kociancic

Everest Re Group, Ltd.

Signatures

Pursuant to the

requirements of the

Securities Exchange Act

of 1934, the registrant

has duly caused

this report

to be signed on its behalf by the undersigned thereunto duly authorized.

Everest Re Group, Ltd.

(Registrant)

/S/ MARK KOCIANCIC

Mark Kociancic

Executive Vice President and

Chief Financial Officer

(Duly Authorized Officer and Principal Financial Officer)

Dated:

November 9, 2020

exhibit311

Exhibit 31.1

CERTIFICATIONS

I, Juan C. Andrade,

certify that:

have reviewed this quarterly report on Form 10-Q of Everest

Re Group, Ltd;

Based

on my knowledge, this report does not contain any untrue

statement of a material fact or omit to

state a material fact

necessary to make the statements

made, in light of the circumstances

under which

such statements were made, not misleading with respect to the period covered by this report;

Based

on my

knowledge, the

financial statements,

and other

financial information

included in

this

report, fairly present in all material respects the

financial condition, results of operations and cash flows

of the registrant as of,

and for, the periods presented

in this report;

registrant’s other

certifying officer(s) and

I are responsible

for establishing

and maintaining

disclosure controls

and procedures

(as defined

in Exchange

Act Rules

13a-15(e) and

15d-15(e)) and

internal control

over financial

reporting (as

defined in

Exchange Act

Rules 13a-15(f)and 15d-15(f)

)

for

the registrant and have:

(a) Designed such disclosure controls and procedures, or caused

such disclosure controls and

procedures to

be designed under

our supervision, to

ensure that

material information

relating to

the registrant,

including its consolidated

subsidiaries, is made

known to us

by others within

those

entities, particularly during the period in which this report is being prepared;

(b) Designed

such internal

control over

financial reporting,

or caused

such internal

control over

financial reporting

to be

designed under

our supervision,

to provide

reasonable assurance

regarding the reliability of

financial reporting and the preparation

of financial statements for

external purposes in accordance with generally accepted accounting principles;

of the registrant’s disclosure controls

and procedures and presented

in this report our

conclusions about the effectiveness

of the disclosure controls

and procedures, as

of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in

this report

any change

in the registrant’s

internal control

over financial

reporting

that occurred during

the registrant’s

most recent fiscal

quarter (the registrant’s

fourth fiscal

quarter in

the case

of an

annual report)

that has

materially affected,

or is

reasonably likely

materially affect, the registrant’s

internal control over financial reporting; and

registrant’s other

certifying officer(s) and I

have disclosed, based

on our most

recent evaluation of

internal control

over financial

reporting, to

the registrant’s

auditors and

the audit

committee of

the

registrant’s board of directors

(or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control

over financial

reporting which

are reasonably

likely to

adversely affect

the registrant’s

ability to

record, process, summarize and report financial information; and

(b) Any fraud,

whether or not material,

that involves management

or other employees who

have a

significant role in the registrant’s internal

control over financial reporting.

November 9, 2020

/S/ JUAN C. ANDRADE

Juan C. Andrade

President and

Chief Executive Officer

exhibit312

Exhibit 31.2

CERTIFICATIONS

I, Mark Kociancic,

certify that:

have reviewed this quarterly report on Form 10-Q of Everest

Re Group, Ltd;

Based

on my knowledge, this report does not contain any untrue

statement of a material fact or omit to

state a material fact

necessary to make the statements

made, in light of the circumstances

under which

such statements were made, not misleading with respect to the period covered by this report;

Based

on my

knowledge, the

financial statements,

and other

financial information

included in

this

report, fairly present in all material respects the

financial condition, results of operations and cash flows

of the registrant as of,

and for, the periods presented

in this report;

registrant’s other

certifying officer(s) and

I are responsible

for establishing

and maintaining

disclosure controls

and procedures

(as defined

in Exchange

Act Rules

13a-15(e) and

15d-15(e)) and

internal control

over financial

reporting (as

defined in

Exchange Act

Rules 13a-15(f)and 15d-15(f)

)

for

the registrant and have:

(a) Designed such disclosure controls and procedures, or caused

such disclosure controls and

procedures to

be designed under

our supervision, to

ensure that

material information

relating to

the registrant,

including its consolidated

subsidiaries, is made

known to us

by others within

those

entities, particularly during the period in which this report is being prepared;

(b) Designed

such internal

control over

financial reporting,

or caused

such internal

control over

financial reporting

to be

designed under

our supervision,

to provide

reasonable assurance

regarding the reliability of

financial reporting and the preparation

of financial statements for

external purposes in accordance with generally accepted accounting principles;

of the registrant’s disclosure controls

and procedures and presented

in this report our

conclusions about the effectiveness

of the disclosure controls

and procedures, as

of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in

this report

any change

in the registrant’s

internal control

over financial

reporting

that occurred during

the registrant’s

most recent fiscal

quarter (the registrant’s

fourth fiscal

quarter in

the case

of an

annual report)

that has

materially affected,

or is

reasonably likely

materially affect, the registrant’s

internal control over financial reporting; and

registrant’s other

certifying officer(s) and I

have disclosed, based

on our most

recent evaluation of

internal control

over financial

reporting, to

the registrant’s

auditors and

the audit

committee of

the

registrant’s board of directors

(or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control

over financial

reporting which

are reasonably

likely to

adversely affect

the registrant’s

ability to

record, process, summarize and report financial information; and

(b) Any fraud,

whether or not material,

that involves management

or other employees who

have a

significant role in the registrant’s internal

control over financial reporting.

November 9, 2020

/S/ MARK KOCIANCIC

Mark Kociancic

Executive Vice President and

Chief Financial Officer

exhibit321

Exhibit 32.1

CERTIFICATIONS PURSUANT

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the

Quarterly Report on Form

10-Q for the quarter

ended September 30, 2020

of Everest Re

Group, Ltd.,

a company

organized under

the laws

of Bermuda

(the “Company”), filed

with the

Securities and

Exchange Commission on

the date hereof

(the “Report”), the undersigned

hereby certify,

pursuant to 18

U.S.C.

ss. 1350, as enacted by section 906 of the Sarbanes-Oxley Act of 2002, that:

```
       The
```

Report fully complies with the requirements

of section 13(a) of the Securities Exchange Act of

1934, and

```
       The
```

information contained

in the

Report fairly

presents, in

all material

respects, the

financial

condition and results of operations of the Company.

November 9, 2020

/S/ JUAN C. ANDRADE

Juan C. Andrade

President and

Chief Executive Officer

/S/ MARK KOCIANCIC

Mark Kociancic

Executive Vice President and

Chief Financial Officer