EVEREST RE GROUP, LTD.
EXECUTIVE PERFORMANCE ANNUAL INCENTIVE PLAN

(AS AMENDED THROUGH FIRST AMENDMENT)

1.  PURPOSE

        The purpose of the Everest Re Group, Ltd. Executive Performance Annual
Incentive Plan (the “Plan”) is to provide incentive for executives who are in a
position to contribute materially to the success of the Company and its
Subsidiaries; to reward their accomplishments; to motivate future
accomplishments; and to aid in attracting and retaining executives of the
caliber necessary for the continued success of the Company and its Subsidiaries.

2.   DEFINITIONS

        The following terms as used herein shall have the meaning specified:

  (a) “Award” means a performance incentive bonus paid pursuant to the Plan.

  (b) “Board” means the Board of Directors of the Company.

  (c) “Code” means the Internal Revenue Code of 1986 as amended. Reference to a
specific section of the Code shall include such section, any valid regulation
promulgated thereunder, and any comparable provision of any future legislation
or regulation amending, supplementing or superseding such section or regulation.

  (d) “Committee” means the Committee appointed by the Board to administer the
Plan. The Committee shall consist of no fewer than two members of the Board. The
members of the Committee shall be appointed by, and serve at the pleasure of,
the Board. Each member of the Committee shall qualify as an “outside director”
under Code Section 162 (m).

  (e) “Company” means Everest Re Group, Ltd. or any successor corporation.

  (f) “Participant” means a corporate officer of the Company or a Subsidiary
selected by the Committee in its sole discretion to participate in the Plan.

  (g) “Performance Criteria” means the following measures of performance:

  •net income, before or after taxes
• operating income, before or after taxes
• premiums earned
• earnings per share
• return on stockholders’ equity
• return on assets
• appreciation in and/or maintenance of the price of the common stock or any
other publicly traded securities of the Company
•comparisons with various stock market indices
• market share
• statutory combined ratio
• expense ratio
• reductions in costs and expense growth
• gross or net premium growth

        A performance criteria may be applied by the Committee as a measure of
the performance of any, all, or any combination of the Company or a Subsidiary.

 

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  (h) “Performance Goal” means the goal or goals established for a Participant
by the Committee in accordance with paragraph 4 (a).

  (i) Subsidiary” means any corporation in which the Company, directly or
indirectly, controls 50% or more of the total combined voting power of all
classes of such corporation’s stock.

  (j) “Target Awards” means the amount of the target award established for each
Participant by the Committee in accordance with paragraph 4 (a).

  3. TERM

        The Plan shall be effective as of January 1, 1999, subject to approval
by a vote of the shareholders at the 1999 Annual Meeting of Shareholders, and
such shareholder approval shall be a condition to the right of any Participant
to receive any benefits hereunder. As long as the Plan remains in effect, it
shall be resubmitted to shareholders as necessary to enable the Plan to continue
to qualify as performance-based compensation under Section 162(m) of the Code.

  4. AWARDS

  (a) Within ninety (90) days after the beginning of each year, the Committee,
in its sole discretion, shall select Participants for the year and establish in
writing (i) objective Performance Goal or Goals for each Participant for that
year based on one or more of the Performance Criteria (ii) the specific award
amounts that will be paid to each Participant if the Performance Goal or Goals
are achieved (the “Target Award”) and (iii) an objective method by which such
amounts will be calculated, which calculation will be based upon a comparison of
actual performance to the Performance Goal or Goals. The calculation of the
amount of an Award shall be objectively determinable. The maximum Award that may
be paid to any Participant under the Plan for any year will be $2.5 million. The
selection of a Participant for any given year does not mean that the Participant
will be selected or will be entitled to be selected as a Participant in any
subsequent year.

  (b) The Committee, in its sole discretion, may eliminate or reduce, but not
increase, any Award calculated under the methodology established in accordance
with paragraph 4 (a).

  (c) As soon as practicable following each year while the Plan is in effect,
the Committee shall determine and certify in writing the extent to which the
Performance Goal or Goals applicable to each Participant for the year were
achieved and the amount of the Award, if any, to be made. Awards will be paid to
the Participants in cash following such certification by the Committee and no
later than ninety (90) days following the close of the year with respect to
which the Awards are made, unless a Participant has elected to defer all or a
portion of such payment pursuant to the Company’s or a Subsidiary’s Deferred
Compensation Plan, in which event, payment of the amount deferred will be made
in accordance with the terms of the Deferred Compensation Plan.

  (d) No Award will be paid to any Participant who is not an employee of the
Company on the last day of the year, except that if during the last eight (8)
months of the year, the Participant retires, dies, or is involuntarily
terminated, the Participant may be entitled to a prorated Award as and to the
extent determined by the Committee in its sole discretion. If a Participant is
on disability for more than four (4) months of the year, the Participant will be
entitled to a prorated Award. Participants, who resign voluntarily after the end
of the year, but before Award payments are payments are actually made, will be
eligible for an Award as and to the extent determined by the Committee in its
sole discretion. The provisions of this subparagraph are subject to the terms of
any written agreement between a Participant and the Company.

  (e) In no event shall the total amount of Awards granted to the Participants
in any one year exceed ten percent (10%) of the Company’s average annual income
before taxes for the preceding five years.

 

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  5. ADMINISTRATION

  (a) The Plan shall be administered by the Committee. The Committee shall have
all discretion and authority necessary or appropriate to administer the Plan and
to interpret the provisions of the Plan, consistent with qualification of the
Plan as performance-based compensation under Code Section 162(m). Any
determination, decision or action of the Committee in connection with the
construction, interpretation, administration or application of the Plan shall be
final, conclusive and binding upon all persons.

  (b) No member of the Committee or the Board shall be liable for any action
taken or determination made in good faith with respect to the Plan or any Award
thereunder, and the Company shall defend and indemnify Committee and Board
members for any actions taken or decisions made in good faith under the Plan.

  6. MISCELLANEOUS

  (a) NON-ASSIGNABILITY. No Award shall be assignable or transferable (including
pursuant to a pledge or security interest) other than by will or by laws of
descent and distribution.

  (b) WITHHOLDING TAXES. Whenever payments under the Plan are to be made, the
Company and/or the Subsidiary shall withhold therefrom an amount sufficient to
satisfy any applicable governmental withholding tax requirements related
thereto.

  (c) AMENDMENT OR TERMINATION OF THE PLAN. The Board may at any time and
without notice to any corporate officer of the Company or a Subsidiary suspend,
discontinue, revise, amend or terminate the Plan; provided, that any such
revision, or amendment which requires approval of the Company’s shareholders in
order to maintain the qualification of Awards as performance-based compensation
pursuant to Code Section 162(m) shall not be made without such approval.

  (d) NON-UNIFORM DETERMINATIONS. The Committee’s determinations under the Plan
need not be uniform and may be made by it selectively among persons who receive,
or are eligible to receive, Awards under the Plan, whether or not such persons
are similarly situated. Without limiting the generality of the foregoing, the
Committee shall be entitled, among other things, to make non-uniform and
selective determinations and to establish non-uniform and selective Performance
Goals.

  (e) OTHER PAYMENTS OR AWARDS. Nothing contained in the Plan shall be deemed in
any way to limit or restrict the Company, its Subsidiaries, or the Committee
from making any award or payment to any person under any other plan, arrangement
or understanding, whether now existing or hereafter in effect.

  (f) PAYMENTS TO OTHER PERSONS. If payments are legally required to be made to
any person other than the person to whom any amount is available under the Plan,
payments shall be made accordingly. Any such payment shall be a complete
discharge of the liability of the Company, its Subsidiaries, and the Committee.

  (g) UNFUNDED PLAN. A Participant shall have no interest in any fund or
specified asset of the Company or a Subsidiary. Nothing contained in the Plan,
and no action taken pursuant to its provisions, shall create or be construed to
create a trust of any kind, or a fiduciary relationship between the Company or
its Subsidiaries and any Participant, beneficiary, legal representative or any
other person. To the extent that any person acquires a right to receive payments
from the Company and its Subsidiaries under the Plan, such right shall be no
greater than the right of an unsecured general creditor of the Company and its
Subsidiaries. All payments to be made hereunder shall be paid from the general
funds of the Company and its Subsidiaries and no special or separate fund shall
be established and no segregation of assets shall be made to assure payment of
such amounts. The Plan is not intended to be an employee benefit plan subject to
the Employee Retirement Income Security Act of 1974, as amended.

 

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  (h) LIMITS OF LIABILITY. Neither the Company, its Subsidiaries, nor any member
of the Board or of the Committee, nor any other person participating in any
determination of any question under the Plan, or in the interpretation,
administration or application of the Plan, shall have any liability to any party
for any good faith action taken or not taken under the Plan.

  (i) NO RIGHT TO EMPLOYMENT. Nothing contained in this Plan shall confer upon
any Participant any right to continue in the employ or other service of the
Company or a Subsidiary, or constitute any contract or limit in any way the
right of the Company or a Subsidiary to change such person’s compensation or
other benefits or to terminate the employment or other service of such person
with or without cause.

  (j) INVALIDITY. If any term or provision contained herein shall to any extent
be invalid or unenforceable, such term or provision shall be reformed so that it
is valid and such invalidity or unenforceability shall not affect any other
provision or part hereof.

  (k) APPLICABLE LAW. The Plan shall be governed by the laws of the State of
Delaware as determined without regard to the conflict of law principles thereof.

  (l) CODE SECTION 162 (M). It is the intent of the Company that all Awards
under the Plan qualify as performance-based compensation for purposes of Code
Section 162 (m) so that the Company’s tax deduction for such Awards is not
disallowed in whole or in part under Code Section 162 (m). The Plan is to be
applied and interpreted accordingly.

  (m) SUCCESSORS. The obligations of the Company and its Subsidiaries under this
Plan shall be binding upon any organization that shall succeed to all or
substantially all of the Company’s or a Subsidiary’s assets.

 

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