| Delaware(State or other jurisdictionof incorporation or organization) |   | 22-3263609(I.R.S EmployerIdentification No.)  |
|-----------------------------------------------------------------------|--------|----------------------------------------------------|

|   |   |   |   |   |   |   |
|--------|--------|--------|--------|--------|--------|--------|

| Title of Each Class                                |   | Name of Each Exchange on Which Registered |
|----------------------------------------------------|--------|-------------------------------------------|
| 5.40% Senior Notes Due 2014                        |   | NYSE                                      |
| 6.60% Long Term Notes Due 2067                     |   | NYSE                                      |
| 6.20% Trust Preferred Securities of Everest Re     |   |                                      |
| Capital Trust II guaranteed by Everest Reinsurance |   |
| Holdings, Inc.                                     |   | NYSE                                      |

|   |   |   |   |   |   |   |
|--------|--------|--------|--------|--------|--------|--------|

|   |   |   |   |   |   |   |
|--------|--------|--------|--------|--------|--------|--------|

| Yes | X |   | No |   |
|-----|---|--------|----|--------|

| Yes |   |   | No | X |
|-----|--------|--------|----|---|

| Yes | X |   | No |   |
|-----|---|--------|----|--------|

| Yes |   |   | No |   |
|-----|--------|--------|----|--------|

| Yes | X |   | No |   |
|-----|---|--------|----|--------|

| Large accelerated filer                     |   |   | Accelerated filer         |   |
|---------------------------------------------|--------|--------|---------------------------|--------|
| Non-accelerated filer                       | X      |   | Smaller reporting company |   |
| (Do not check if smaller reporting company) |   |

| Yes |   |   | No | X |
|-----|--------|--------|----|---|

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|     | Page                                                                                |
|----------|-------------------------------------------------------------------------------------|
|     |
| PART I   |
|     |                                                                                |   |
| Item 1.  | Business                                                                            | 1 |
| Item 1A. | Risk Factors                                                                        | 7 |
| Item 1B. | Unresolved Staff Comments                                                           | 13 |
| Item 2.  | Properties                                                                          | 13 |
| Item 3.  | Legal Proceedings                                                                   | 13 |
| Item 4.  | Reserved                                                                            | 13 |
|     |                                                                                |   |
|     |                                                                                |   |
| PART II  |
|     |                                                                                |   |
| Item 5.  | Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer | 14 |
|     | Purchases of Equity Securities                                                      |   |
| Item 6.  | Selected Financial Data                                                             | 14 |
| Item 7.  | Management’s Discussion and Analysis of Financial Condition and Results of    | 14 |
|     | Operations                                                                          |   |
| Item 7A. | Quantitative and Qualitative Disclosures About Market Risk                          | 31 |
| Item 8.  | Financial Statements and Supplementary Data                                         | 34 |
| Item 9.  | Changes in and Disagreements With Accountants on Accounting and Financial           | 34 |
|     | Disclosure                                                                          |   |
| Item 9A. | Controls and Procedures                                                             | 34 |
| Item 9B. | Other Information                                                                   | 34 |
|     |                                                                                |   |
| PART III |
|     |                                                                                |   |
| Item 10. | Directors, Executive Officers and Corporate Governance                              | 35 |
| Item 11. | Executive Compensation                                                              | 35 |
| Item 12. | Security Ownership of Certain Beneficial Owners and Management and Related          | 35 |
|     | Stockholder Matters                                                                 |   |
| Item 13. | Certain Relationships and Related Transactions, and Director Independence           | 35 |
| Item 14. | Principal Accountant Fees and Services                                              | 35 |
|     |                                                                                |   |
|     |                                                                                |   |
| PART IV  |
|     |                                                                                |   |
| Item 15. | Exhibits and Financial Statement Schedules                                          | 36 |

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ITEM 1.   BUSINESS

| ·   | Everest Re, a Delaware insurance company and a direct subsidiary of Holdings, is a licensed property and casualty insurer and/or reinsurer in all states, the District of Columbia and Puerto Rico and is authorized to conduct reinsurance business in Canada, Singapore and Brazil. Everest Re underwrites property and casualty reinsurance for insurance and reinsurance companies in the U.S. and international markets.  Everest Re engages in reinsurance transactions with Everest Reinsurance (Bermuda), Ltd. (“Bermuda Re”) and Everest International Reinsurance, Ltd. (“Everest International”), affiliates, primarily driven by enterprise risk and capital management considerations under which business is ceded at market rates and terms (“the affiliated quota share agreement”).  At December 31, 2009 Everest Re had statutory surplus of $2.8 billion. |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Everest National Insurance Company (“Everest National”), a Delaware insurance company and a direct subsidiary of Everest Re, is licensed in 47 states and the District of Columbia and is authorized to write property and casualty insurance on an admitted basis in the jurisdictions in which it is licensed. The majority of Everest National’s business is reinsured by its parent, Everest Re. |
|--------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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| ·   | Everest Indemnity Insurance Company (“Everest Indemnity”), a Delaware insurance company and a direct subsidiary of Everest Re, writes excess and surplus lines insurance business in the U.S. on a non-admitted basis. Excess and surplus lines insurance is specialty property and liability coverage that an insurer not licensed to write insurance in a particular jurisdiction is permitted to provide to insureds when the specific specialty coverage is unavailable from admitted insurers. Everest Indemnity is licensed in Delaware and is eligible to write business on a non-admitted basis in all other states, the District of Columbia and Puerto Rico.  The majority of Everest Indemnity’s business is reinsured by its parent, Everest Re. |
|--------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Everest Security Insurance Company (“Everest Security”), a Georgia insurance company and a direct subsidiary of Everest Re, writes property and casualty insurance on an admitted basis in Georgia and Alabama.  The majority of Everest Security’s business is reinsured by its parent, Everest Re. |
|--------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Mt. McKinley, a Delaware insurance company and a direct subsidiary of Holdings, was acquired by Holdings in September 2000 from The Prudential Insurance Company of America (“The Prudential”).  In 1985, Mt. McKinley ceased writing new and renewal insurance and commenced a run-off operation to service claims arising from its previously written business.  Effective September 19, 2000, Mt. McKinley and Bermuda Re entered into a loss portfolio transfer reinsurance agreement, whereby Mt. McKinley transferred, for arm’s length consideration, all of its net insurance exposures and reserves to Bermuda Re. |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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| Operating Subsidiary: |   | A.M. Best     |   | Standard & Poor's |   | Moody's         |
|-----------------------|--------|---------------|--------|-----------------------|--------|-----------------|
| Everest Re            |   | A+ (Superior) |   | A+ (Strong)           |   | Aa3 (Excellent) |
| Everest National      |   | A+ (Superior) |   | A+ (Strong)           |   | Not Rated       |
| Everest Indemnity     |   | A+ (Superior) |   | Not Rated             |   | Not Rated       |
| Everest Security      |   | A+ (Superior) |   | Not Rated             |   | Not Rated       |
| Mt. McKinley          |   | Not Rated     |   | Not Rated             |   | Not Rated       |

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|                       | A.M. Best |       | Standard & Poor's |   | Moody's    |
|----------------------------|-----------|------------|-----------------------|--------|------------|
| Senior Notes               | a-        | (Strong)   |                  | BBB+   | (Adequate) |   | A3 | (Good) |
| Trust Preferred Securities | bbb+      | (Adequate) |                  | BBB-   | (Adequate) |   | Baa1 | (Adequate) |
| Long Term Notes            | bbb       | (Adequate) |                  | BBB-   | (Adequate) |   | Baa1 | (Adequate) |

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ITEM 1A.   RISK FACTORS

| Calendar year:        |   | Pre-tax catastrophe losses |   |
|-----------------------|--------|----------------------------|--------|
| (Dollars in millions) |   |                       |   |
| 2009                  |   | $                          | 23.9   |   |
| 2008                  |   |                       | 202.4  |   |
| 2007                  |   |                       | 73.3   |   |
| 2006                  |   |                       | 209.6  |   |
| 2005                  |   |                       | 833.0  |   |

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| Calendar year:        |   | Effect on pre-tax net income |
|-----------------------|--------|------------------------------|
| (Dollars in millions) |   |                         |   |   |
| 2009                  |   | $                            | 70.0 |   |  decrease |
| 2008                  |   |                         | 142.0 |   |  decrease |
| 2007                  |   |                         | 275.7 |   |  decrease |
| 2006                  |   |                         | 67.4 |   |  decrease |
| 2005                  |   |                         | 67.3 |   |  increase |

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| Percentage of ceded written premiums to gross written premiums |   | 2009   |   | 2008   |   | 2007   |   | 2006   |   | 2005   |
|----------------------------------------------------------------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|
|                                                           |   |   |   |   |   |   |   |   |   |   |
| Unaffiliated                                                   |   | 6.0%   |   | 6.0%   |   | 5.0%   |   | 3.9%   |   | 4.0%   |
| Affiliated                                                     |   | 42.0%  |   | 36.2%  |   | 29.4%  |   | 24.2%  |   | 24.2%  |

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|                                              |   | At                |    |   |       |   |
|---------------------------------------------------|--------|-------------------|---------|--------|------------|--------|
| (Dollars in millions)                             |   | December 31, 2009 |    |   | % of Total |   |
| Mortgage-backed securities                        |   |              |    |   |       |   |
| Commercial                                        |   | $                 | 29.1    |   |       |   | 0.4 | % |
| Agency residential                                |   |              | 564.7   |   |       |   | 7.0 | % |
| Non-agency residential                            |   |              | 55.0    |   |       |   | 0.7 | % |
| Other asset-backed                                |   |              | 15.1    |   |       |   | 0.2 | % |
| Total asset-backed                                |   |              | 663.9   |   |       |   | 8.3 | % |
| Other fixed income                                |   |              | 5,799.3 |   |       |   | 72.2 | % |
| Total fixed income, at market value               |   |              | 6,463.2 |   |       |   | 80.5 | % |
| Fixed maturities, at fair value                   |   |              | 50.5    |   |       |   | 0.6 | % |
| Equity securities, at fair value                  |   |              | 380.0   |   |       |   | 4.7 | % |
| Other invested assets, at market value            |   |              | 386.3   |   |       |   | 4.8 | % |
| Other invested assets, at fair value              |   |              | 382.6   |   |       |   | 4.8 | % |
| Cash and short-term investments                   |   |              | 368.9   |   |       |   | 4.6 | % |
| Total investments and cash                        |   | $                 | 8,031.6 |   |       |   | 100.0 | % |
|                                              |   |              |    |   |       |   |   |   |
| (Some amounts may not reconcile due to rounding.) |   |              |    |   |       |   |   |   |

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ITEM 1B.   UNRESOLVED STAFF COMMENTS

ITEM 2.      PROPERTIES

ITEM 3.      LEGAL PROCEEDINGS

ITEM 4.      RESERVED

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| ITEM 5. | MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES |
|---------|--------------------------------------------------------------------------------------------------------------------|

ITEM 6.      SELECTED FINANCIAL DATA

| Information for Item 6 is not required pursuant to General Instruction I(2) of Form 10-K. |
|-------------------------------------------------------------------------------------------|

| ITEM 7. | MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATION |
|---------|--------------------------------------------------------------------------------------------|

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|                                                   |   | Years Ended December 31, |     |   | Percentage Increase/(Decrease)  |   |
|--------------------------------------------------------|--------|--------------------------|----------|--------|---------------------------------|--------|
| (Dollars in millions)                                  |   | 2009                     |     |   | 2008                            |   |   | 2007 |   |   |   | 2009/2008 |   |   |   | 2008/2007 |   |
| Gross written premiums                                 |   | $                        | 3,334.1  |   |                            | $      | 2,894.8 |   |   | $ | 3,155.1 |   |   |   | 15.2 | % |   |   | -8.2 | % |
| Net written premiums                                   |   |                     | 1,735.3  |   |                            |   | 1,675.4 |   |   |   | 2,072.9 |   |   |   | 3.6 | % |   |   | -19.2 | % |
|                                                   |   |                     |     |   |                            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| REVENUES:                                              |   |                     |     |   |                            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Premiums earned                                        |   | $                        | 1,785.1  |   |                            | $      | 1,881.8 |   |   | $ | 2,178.9 |   |   |   | -5.1 | % |   |   | -13.6 | % |
| Net investment income                                  |   |                     | 262.1    |   |                            |   | 363.1 |   |   |   | 406.6 |   |   |   | -27.8 | % |   |   | -10.7 | % |
| Net realized capital gains (losses)                    |   |                     | 56.9     |   |                            |   | (489.2 | ) |   |   | 80.9 |   |   |   | -111.6 | % |   | NM |
| Realized gain on debt repurchase                       |   |                     | 78.3     |   |                            |   | - |   |   |   | - |   |   | NM |   | NA |
| Other income (expense)                                 |   |                     | 0.4      |   |                            |   | 57.9 |   |   |   | (73.6 | ) |   |   | -99.4 | % |   |   | -178.7 | % |
| Total revenues                                         |   |                     | 2,182.7  |   |                            |   | 1,813.6 |   |   |   | 2,592.7 |   |   |   | 20.4 | % |   |   | -30.1 | % |
|                                                   |   |                     |     |   |                            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| CLAIMS AND EXPENSES:                                   |   |                     |     |   |                            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Incurred losses and loss adjustment expenses           |   |                     | 1,091.7  |   |                            |   | 1,465.6 |   |   |   | 1,507.6 |   |   |   | -25.5 | % |   |   | -2.8 | % |
| Commission, brokerage, taxes and fees                  |   |                     | 344.6    |   |                            |   | 398.6 |   |   |   | 465.9 |   |   |   | -13.6 | % |   |   | -14.4 | % |
| Other underwriting expenses                            |   |                     | 150.3    |   |                            |   | 129.9 |   |   |   | 123.9 |   |   |   | 15.7 | % |   |   | 4.8 | % |
| Interest, fee and bond issue cost amortization expense |   |                     | 70.9     |   |                            |   | 79.0 |   |   |   | 91.1 |   |   |   | -10.3 | % |   |   | -13.3 | % |
| Total claims and expenses                              |   |                     | 1,657.5  |   |                            |   | 2,073.1 |   |   |   | 2,188.5 |   |   |   | -20.0 | % |   |   | -5.3 | % |
|                                                   |   |                     |     |   |                            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| INCOME (LOSS) BEFORE TAXES                             |   |                     | 525.2    |   |                            |   | (259.5 | ) |   |   | 404.3 |   |   | NM |   |   | -164.2 | % |
| Income tax expense (benefit)                           |   |                     | 129.4    |   |                            |   | (134.7 | ) |   |   | 100.1 |   |   |   | -196.0 | % |   |   | -234.6 | % |
| NET INCOME (LOSS)                                      |   | $                        | 395.9    |   |                            | $      | (124.8 | ) |   | $ | 304.2 |   |   | NM |   |   | -141.0 | % |
|                                                   |   |                     |     |   |                            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| RATIOS:                                                |   |                     |     |   |                            |   |   |   |   |   |   |   |   | Point Change |   |
| Loss ratio                                             |   |                     | 61.2     | %      |                            |   | 77.9 | % |   |   | 69.2 | % |   |   | (16.7 | ) |   |   | 8.7 |   |
| Commission and brokerage ratio                         |   |                     | 19.3     | %      |                            |   | 21.2 | % |   |   | 21.4 | % |   |   | (1.9 | ) |   |   | (0.2 | ) |
| Other underwriting expense ratio                       |   |                     | 8.4      | %      |                            |   | 6.9 | % |   |   | 5.7 | % |   |   | 1.5 |   |   |   | 1.2 |   |
| Combined ratio                                         |   |                     | 88.9     | %      |                            |   | 106.0 | % |   |   | 96.3 | % |   |   | (17.1 | ) |   |   | 9.7 |   |
|                                                   |   |                     |     |   |                            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                   |   |                     |     |   |                            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                   |   | At December 31,          |     |   | Percentage Increase/ (Decrease) |   |
| (Dollars in millions)                                  |   |                     | 2009     |   |                            |   | 2008 |   |   |   | 2007 |   |   |   | 2009/2008 |   |   |   | 2008/2007 |   |
| Balance sheet data:                                    |   |                     |     |   |                            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total investments and cash                             |   | $                        | 8,031.6  |   |                            | $      | 7,395.1 |   |   | $ | 8,992.8 |   |   |   | 8.6 | % |   |   | -17.8 | % |
| Total assets                                           |   |                     | 13,379.6 |   |                            |   | 12,866.6 |   |   |   | 13,543.5 |   |   |   | 4.0 | % |   |   | -5.0 | % |
| Loss and loss adjustment expense reserves              |   |                     | 7,300.1  |   |                            |   | 7,420.0 |   |   |   | 7,538.7 |   |   |   | -1.6 | % |   |   | -1.6 | % |
| Total debt                                             |   |                     | 1,018.0  |   |                            |   | 1,179.1 |   |   |   | 1,178.9 |   |   |   | -13.7 | % |   |   | 0.0 | % |
| Total liabilities                                      |   |                     | 10,520.8 |   |                            |   | 10,663.7 |   |   |   | 10,976.0 |   |   |   | -1.3 | % |   |   | -2.8 | % |
| Stockholder's equity                                   |   |                     | 2,858.8  |   |                            |   | 2,203.0 |   |   |   | 2,567.5 |   |   |   | 29.8 | % |   |   | -14.2 | % |
|                                                   |   |                     |     |   |                            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| (NM, not meaningful)                                   |   |                     |     |   |                            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| (NA, not applicable)                                   |   |                     |     |   |                            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| (Some amounts may not reconcile due to rounding)       |   |                     |     |   |                            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |

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|                                                                |   | Years Ended December 31, |    |   |
|---------------------------------------------------------------------|--------|--------------------------|---------|--------|
|                                                                |   | Current                  |    |   | Ratio %/ |   | Prior |   |   | Ratio %/ |   | Total |   |   | Ratio %/ |
| (Dollars in millions)                                               |   | Year                     |    |   | Pt Change |   | Years |   |   | Pt Change |   | Incurred |   |   | Pt Change |
| 2009                                                                |   |                     |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Attritional (a)                                                     |   | $                        | 999.6   |   |   |   | 56.0 | % |   |   | $ | 67.7 |   |   |   | 3.8 | % |   |   | $ | 1,067.3 |   |   |   | 59.8 | % |   |
| Catastrophes                                                        |   |                     | 22.1    |   |   |   | 1.2 | % |   |   |   | 1.8 |   |   |   | 0.1 | % |   |   |   | 23.9 |   |   |   | 1.3 | % |   |
| A&E                                                             |   |                     | -       |   |   |   | 0.0 | % |   |   |   | 0.4 |   |   |   | 0.0 | % |   |   |   | 0.4 |   |   |   | 0.0 | % |   |
| Total                                                               |   | $                        | 1,021.7 |   |   |   | 57.2 | % |   |   | $ | 70.0 |   |   |   | 3.9 | % |   |   | $ | 1,091.7 |   |   |   | 61.2 | % |   |
|                                                                |   |                     |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| 2008                                                                |   |                     |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Attritional (a)                                                     |   | $                        | 1,134.8 |   |   |   | 60.3 | % |   |   | $ | 128.4 |   |   |   | 6.8 | % |   |   | $ | 1,263.1 |   |   |   | 67.1 | % |   |
| Catastrophes                                                        |   |                     | 188.7   |   |   |   | 10.0 | % |   |   |   | 13.7 |   |   |   | 0.7 | % |   |   |   | 202.4 |   |   |   | 10.8 | % |   |
| A&E                                                             |   |                     | -       |   |   |   | 0.0 | % |   |   |   | - |   |   |   | 0.0 | % |   |   |   | - |   |   |   | 0.0 | % |   |
| Total                                                               |   | $                        | 1,323.5 |   |   |   | 70.3 | % |   |   | $ | 142.0 |   |   |   | 7.5 | % |   |   | $ | 1,465.6 |   |   |   | 77.9 | % |   |
|                                                                |   |                     |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| 2007                                                                |   |                     |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Attritional (a)                                                     |   | $                        | 1,174.9 |   |   |   | 53.9 | % |   |   | $ | (6.9 | ) |   |   | -0.3 | % |   |   | $ | 1,168.0 |   |   |   | 53.6 | % |   |
| Catastrophes                                                        |   |                     | 56.9    |   |   |   | 2.6 | % |   |   |   | 16.3 |   |   |   | 0.8 | % |   |   |   | 73.3 |   |   |   | 3.4 | % |   |
| A&E                                                             |   |                     | -       |   |   |   | 0.0 | % |   |   |   | 266.4 |   |   |   | 12.2 | % |   |   |   | 266.4 |   |   |   | 12.2 | % |   |
| Total                                                               |   | $                        | 1,231.8 |   |   |   | 56.5 | % |   |   | $ | 275.7 |   |   |   | 12.7 | % |   |   | $ | 1,507.6 |   |   |   | 69.2 | % |   |
|                                                                |   |                     |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Variance 2009/2008                                                  |   |                     |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Attritional (a)                                                     |   | $                        | (135.2  | )      |   |   | (4.3 | ) | pts |   | $ | (60.6 | ) |   |   | (3.0 | ) | pts |   | $ | (195.8 | ) |   |   | (7.3 | ) | pts |
| Catastrophes                                                        |   |                     | (166.6  | )      |   |   | (8.8 | ) | pts |   |   | (11.9 | ) |   |   | (0.6 | ) | pts |   |   | (178.5 | ) |   |   | (9.5 | ) | pts |
| A&E                                                             |   |                     | -       |   |   |   | - |   | pts |   |   | 0.4 |   |   |   | - |   | pts |   |   | 0.4 |   |   |   | - |   | pts |
| Total                                                               |   | $                        | (301.8  | )      |   |   | (13.1 | ) | pts |   | $ | (72.0 | ) |   |   | (3.6 | ) | pts |   | $ | (373.9 | ) |   |   | (16.7 | ) | pts |
|                                                                |   |                     |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Variance 2008/2007                                                  |   |                     |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Attritional (a)                                                     |   | $                        | (40.1   | )      |   |   | 6.4 |   | pts |   | $ | 135.3 |   |   |   | 7.1 |   | pts |   | $ | 95.2 |   |   |   | 13.5 |   | pts |
| Catastrophes                                                        |   |                     | 131.8   |   |   |   | 7.4 |   | pts |   |   | (2.6 | ) |   |   | - |   | pts |   |   | 129.2 |   |   |   | 7.4 |   | pts |
| A&E                                                             |   |                     | -       |   |   |   | - |   | pts |   |   | (266.4 | ) |   |   | (12.2 | ) | pts |   |   | (266.4 | ) |   |   | (12.2 | ) | pts |
| Total                                                               |   | $                        | 91.7    |   |   |   | 13.8 |   | pts |   | $ | (133.7 | ) |   |   | (5.1 | ) | pts |   | $ | (42.0 | ) |   |   | 8.7 |   | pts |
|                                                                |   |                     |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| (a) Attritional losses exclude catastrophe and A&E losses. |   |                     |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| (Some amounts may not reconcile due to rounding.)                   |   |                     |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |

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|                                |   | Years Ended December 31, |   |
|-------------------------------------|--------|--------------------------|--------|
| (Dollars in millions)               |   | 2009                     |   |   | 2008 |   |   | 2007 |   |
| Fixed maturities                    |   | $                        | 286.0  |   |   | $ | 313.7 |   |   | $ | 294.7 |   |
| Equity securities                   |   |                     | 3.6    |   |   |   | 6.0 |   |   |   | 15.7 |   |
| Short-term investments and cash     |   |                     | 3.5    |   |   |   | 28.6 |   |   |   | 61.9 |   |
| Other invested assets               |   |                     |   |   |   |   |   |   |   |   |   |   |
| Limited partnerships                |   |                     | (28.5  | ) |   |   | 13.2 |   |   |   | 35.5 |   |
| Other                               |   |                     | 8.1    |   |   |   | 9.5 |   |   |   | 7.1 |   |
| Total gross investment income       |   |                     | 272.7  |   |   |   | 370.9 |   |   |   | 414.9 |   |
| Interest credited and other expense |   |                     | (10.6  | ) |   |   | (7.8 | ) |   |   | (8.3 | ) |
| Total net investment income         |   | $                        | 262.1  |   |   | $ | 363.1 |   |   | $ | 406.6 |   |

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|                                                                | 2009   | 2008   | 2007   |
|---------------------------------------------------------------------|--------|--------|--------|
| Imbedded pre-tax yield of cash and invested assets at December 31   | 3.7%   | 4.3%   | 4.6%   |
| Imbedded after-tax yield of cash and invested assets at December 31 | 3.1%   | 3.5%   | 3.6%   |
|                                                                |   |   |   |
| Annualized pre-tax yield on average cash and invested assets        | 3.4%   | 4.5%   | 4.9%   |
| Annualized after-tax yield on average cash and invested assets      | 2.9%   | 3.6%   | 3.9%   |

|                                             |   | Years Ended December 31, |   |   |   | 2009/2008 |   |   | 2008/2007 |
|--------------------------------------------------|--------|--------------------------|--------|--------|--------|-----------|--------|--------|-----------|
| (Dollars in millions)                            |   | 2009                     |   |   | 2008   |      |   | 2007   |      |   | Variance |   | Variance |
| (Losses) gains from sales:                       |   |                     |   |   |   |      |   |   |      |   |   |   |   |   |   |   |   |
| Fixed maturity securities, market value          |   |                     |   |   |   |      |   |   |      |   |   |   |   |   |   |   |   |
| Gains                                            |   | $                        | 7.3    |   |   | $         | 7.0    |   |      | $ | 1.0 |   |   | $ | 0.3 |   |   | $ | 6.0 |   |
| Losses                                           |   |                     | (41.4  | )      |   |      | (94.4  | )      |      |   | (2.0 | ) |   |   | 53.0 |   |   |   | (92.4 | ) |
| Total                                            |   |                     | (34.1  | )      |   |      | (87.4  | )      |      |   | (1.0 | ) |   |   | 53.3 |   |   |   | (86.4 | ) |
|                                             |   |                     |   |   |   |      |   |   |      |   |   |   |   |   |   |   |   |   |   |   |
| Fixed maturity securities, fair value            |   |                     |   |   |   |      |   |   |      |   |   |   |   |   |   |   |   |   |   |   |
| Gains                                            |   |                     | 0.8    |   |   |      | -      |   |      |   | - |   |   |   | 0.8 |   |   |   | - |   |
| Losses                                           |   |                     | (0.2   | )      |   |      | -      |   |      |   | - |   |   |   | (0.2 | ) |   |   | - |   |
| Total                                            |   |                     | 0.7    |   |   |      | -      |   |      |   | - |   |   |   | 0.6 |   |   |   | - |   |
|                                             |   |                     |   |   |   |      |   |   |      |   |   |   |   |   |   |   |   |   |   |   |
| Equity securities, market value                  |   |                     |   |   |   |      |   |   |      |   |   |   |   |   |   |   |   |   |   |   |
| Gains                                            |   |                     | 8.0    |   |   |      | -      |   |      |   | - |   |   |   | 8.0 |   |   |   | - |   |
| Losses                                           |   |                     | -      |   |   |      | -      |   |      |   | - |   |   |   | - |   |   |   | - |   |
| Total                                            |   |                     | 8.0    |   |   |      | -      |   |      |   | - |   |   |   | 8.0 |   |   |   | - |   |
|                                             |   |                     |   |   |   |      |   |   |      |   |   |   |   |   |   |   |   |   |   |   |
| Equity securities, fair value                    |   |                     |   |   |   |      |   |   |      |   |   |   |   |   |   |   |   |   |   |   |
| Gains                                            |   |                     | 8.4    |   |   |      | 6.4    |   |      |   | 3.0 |   |   |   | 2.0 |   |   |   | 3.4 |   |
| Losses                                           |   |                     | (0.9   | )      |   |      | (112.3 | )      |      |   | (13.7 | ) |   |   | 111.4 |   |   |   | (98.6 | ) |
| Total                                            |   |                     | 7.5    |   |   |      | (105.9 | )      |      |   | (10.7 | ) |   |   | 113.4 |   |   |   | (95.2 | ) |
|                                             |   |                     |   |   |   |      |   |   |      |   |   |   |   |   |   |   |   |   |   |   |
| Short-term assets                                |   |                     |   |   |   |      |   |   |      |   |   |   |   |   |   |   |   |   |   |   |
| Gains                                            |   |                     | -      |   |   |      | -      |   |      |   | - |   |   |   | - |   |   |   | - |   |
| Losses                                           |   |                     | -      |   |   |      | (0.2   | )      |      |   | - |   |   |   | 0.2 |   |   |   | (0.2 | ) |
| Total                                            |   |                     | -      |   |   |      | (0.2   | )      |      |   | - |   |   |   | 0.2 |   |   |   | (0.2 | ) |
|                                             |   |                     |   |   |   |      |   |   |      |   |   |   |   |   |   |   |   |   |   |   |
| Total net realized (losses) gains from sales     |   |                     |   |   |   |      |   |   |      |   |   |   |   |   |   |   |   |   |   |   |
| Gains                                            |   |                     | 24.5   |   |   |      | 13.4   |   |      |   | 4.0 |   |   |   | 11.1 |   |   |   | 9.4 |   |
| Losses                                           |   |                     | (42.5  | )      |   |      | (206.9 | )      |      |   | (15.7 | ) |   |   | 164.4 |   |   |   | (191.2 | ) |
| Total                                            |   |                     | (17.9  | )      |   |      | (193.5 | )      |      |   | (11.7 | ) |   |   | 175.5 |   |   |   | (181.8 | ) |
|                                             |   |                     |   |   |   |      |   |   |      |   |   |   |   |   |   |   |   |   |   |   |
| Other than temporary impairments:                |   |                     | (5.5   | )      |   |      | (74.5  | )      |      |   | (4.0 | ) |   |   | 69.0 |   |   |   | (70.5 | ) |
|                                             |   |                     |   |   |   |      |   |   |      |   |   |   |   |   |   |   |   |   |   |   |
| Gains (losses) from fair value adjustments:      |   |                     |   |   |   |      |   |   |      |   |   |   |   |   |   |   |   |   |   |   |
| Fixed maturities, fair value                     |   |                     | 9.3    |   |   |      | 1.5    |   |      |   | - |   |   |   | 7.8 |   |   |   | 1.5 |   |
| Equity securities, fair value                    |   |                     | 30.9   |   |   |      | (134.9 | )      |      |   | 84.4 |   |   |   | 165.8 |   |   |   | (219.3 | ) |
| Other invested assets, fair value                |   |                     | 40.1   |   |   |      | (87.8  | )      |      |   | 12.2 |   |   |   | 127.9 |   |   |   | (100.0 | ) |
| Total                                            |   |                     | 80.3   |   |   |      | (221.2 | )      |      |   | 96.6 |   |   |   | 301.5 |   |   |   | (317.8 | ) |
|                                             |   |                     |   |   |   |      |   |   |      |   |   |   |   |   |   |   |   |   |   |   |
| Total net realized gains (losses)                |   | $                        | 56.9   |   |   | $         | (489.2 | )      |      | $ | 80.9 |   |   | $ | 546.0 |   |   | $ | (570.1 | ) |
|                                             |   |                     |   |   |   |      |   |   |      |   |   |   |   |   |   |   |   |   |   |   |
| (Some amounts may not reconcile due to rounding) |   |                     |   |   |   |      |   |   |      |   |   |   |   |   |   |   |   |   |   |   |

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|                                             |   |  Years Ended December 31, |    |  2009/2008 |   |   |  2008/2007 |   |
|--------------------------------------------------|--------|--------------------------------|---------|-----------------|--------|--------|-----------------|--------|
| (Dollars in millions)                            |   | 2009                           |    |            | 2008   |   |            | 2007   |   |   | Variance |   |   | % Change |   |   | Variance |   |   | % Change |   |
| Gross written premiums                           |   | $                              | 1,172.3 |            |   | $      | 957.9           |   |   | $ | 1,193.5 |   |   | $ | 214.4 |   |   |   | 22.4 | % |   | $ | (235.6 | ) |   |   | -19.7 | % |
| Net written premiums                             |   |                           | 660.6   |            |   |   | 569.9           |   |   |   | 854.8 |   |   |   | 90.7 |   |   |   | 15.9 | % |   |   | (284.9 | ) |   |   | -33.3 | % |
|                                             |   |                           |    |            |   |   |            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Premiums earned                                  |   | $                              | 676.4   |            |   | $      | 685.1           |   |   | $ | 939.7 |   |   | $ | (8.7 | ) |   |   | -1.3 | % |   | $ | (254.6 | ) |   |   | -27.1 | % |
| Incurred losses and LAE                          |   |                           | 344.5   |            |   |   | 560.0           |   |   |   | 636.9 |   |   |   | (215.5 | ) |   |   | -38.5 | % |   |   | (76.9 | ) |   |   | -12.1 | % |
| Commission and brokerage                         |   |                           | 142.1   |            |   |   | 159.7           |   |   |   | 230.5 |   |   |   | (17.6 | ) |   |   | -11.0 | % |   |   | (70.9 | ) |   |   | -30.7 | % |
| Other underwriting expenses                      |   |                           | 36.2    |            |   |   | 32.2            |   |   |   | 33.3 |   |   |   | 4.0 |   |   |   | 12.4 | % |   |   | (1.1 | ) |   |   | -3.3 | % |
| Underwriting gain (loss)                         |   | $                              | 153.6   |            |   | $      | (66.8           | )      |   | $ | 39.0 |   |   | $ | 220.4 |   |   | NM |   |   | $ | (105.7 | ) |   | NM |   |
|                                             |   |                           |    |            |   |   |            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                             |   |                           |    |            |   |   |            |   |   |   |   |   |   |   |   |   |   | Point Chg |   |   |   |   |   |   | Point Chg |   |
| Loss ratio                                       |   |                           | 50.9    | %               |   |   | 81.7            | %      |   |   | 67.8 | % |   |   |   |   |   |   | (30.8 | ) |   |   |   |   |   |   | 14.0 |   |
| Commission and brokerage ratio                   |   |                           | 21.0    | %               |   |   | 23.3            | %      |   |   | 24.5 | % |   |   |   |   |   |   | (2.3 | ) |   |   |   |   |   |   | (1.2 | ) |
| Other underwriting expense ratio                 |   |                           | 5.4     | %               |   |   | 4.7             | %      |   |   | 3.6 | % |   |   |   |   |   |   | 0.7 |   |   |   |   |   |   |   | 1.1 |   |
| Combined ratio                                   |   |                           | 77.3    | %               |   |   | 109.7           | %      |   |   | 95.9 | % |   |   |   |   |   |   | (32.4 | ) |   |   |   |   |   |   | 13.9 |   |
|                                             |   |                           |    |            |   |   |            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| (NM, not meaningful)                             |   |                           |    |            |   |   |            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| (Some amounts may not reconcile due to rounding) |   |                           |    |            |   |   |            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |

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|                                              |   | Years Ended December 31, |   |   |
|---------------------------------------------------|--------|--------------------------|--------|--------|
|                                              |   | Current                  |   |   | Ratio %/ |   | Prior |   |   | Ratio %/ |   | Total |   |   | Ratio %/ |
| (Dollars in millions)                             |   | Year                     |   |   | Pt Change |   | Years |   |   | Pt Change |   | Incurred |   |   | Pt Change |
| 2009                                              |   |                     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Attritional                                       |   | $                        | 314.4  |   |   |   | 46.5 | % |   |   | $ | 34.9 |   |   |   | 5.2 | % |   |   | $ | 349.3 |   |   |   | 51.6 | % |   |
| Catastrophes                                      |   |                     | -      |   |   |   | 0.0 | % |   |   |   | (5.2 | ) |   |   | -0.8 | % |   |   |   | (5.2 | ) |   |   | -0.8 | % |   |
| A&E                                           |   |                     | -      |   |   |   | 0.0 | % |   |   |   | 0.4 |   |   |   | 0.1 | % |   |   |   | 0.4 |   |   |   | 0.1 | % |   |
| Total segment                                     |   | $                        | 314.4  |   |   |   | 46.5 | % |   |   | $ | 30.1 |   |   |   | 4.4 | % |   |   | $ | 344.5 |   |   |   | 50.9 | % |   |
|                                              |   |                     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| 2008                                              |   |                     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Attritional                                       |   | $                        | 346.6  |   |   |   | 50.6 | % |   |   | $ | 46.1 |   |   |   | 6.7 | % |   |   | $ | 392.7 |   |   |   | 57.3 | % |   |
| Catastrophes                                      |   |                     | 152.1  |   |   |   | 22.2 | % |   |   |   | 15.2 |   |   |   | 2.2 | % |   |   |   | 167.3 |   |   |   | 24.4 | % |   |
| A&E                                           |   |                     | -      |   |   |   | 0.0 | % |   |   |   | - |   |   |   | 0.0 | % |   |   |   | - |   |   |   | 0.0 | % |   |
| Total segment                                     |   | $                        | 498.7  |   |   |   | 72.8 | % |   |   | $ | 61.3 |   |   |   | 8.9 | % |   |   | $ | 560.0 |   |   |   | 81.7 | % |   |
|                                              |   |                     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| 2007                                              |   |                     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Attritional                                       |   | $                        | 423.4  |   |   |   | 45.1 | % |   |   | $ | (49.5 | ) |   |   | -5.3 | % |   |   | $ | 374.0 |   |   |   | 39.8 | % |   |
| Catastrophes                                      |   |                     | 0.1    |   |   |   | 0.0 | % |   |   |   | (3.5 | ) |   |   | -0.4 | % |   |   |   | (3.4 | ) |   |   | -0.4 | % |   |
| A&E                                           |   |                     | -      |   |   |   | 0.0 | % |   |   |   | 266.4 |   |   |   | 28.4 | % |   |   |   | 266.4 |   |   |   | 28.3 | % |   |
| Total segment                                     |   | $                        | 423.5  |   |   |   | 45.1 | % |   |   | $ | 213.4 |   |   |   | 22.7 | % |   |   | $ | 636.9 |   |   |   | 67.8 | % |   |
|                                              |   |                     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Variance 2009/2008                                |   |                     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Attritional                                       |   | $                        | (32.2  | )      |   |   | (4.1 | ) | pts |   | $ | (11.2 | ) |   |   | (1.5 | ) | pts |   | $ | (43.4 | ) |   |   | (5.6 | ) | pts |
| Catastrophes                                      |   |                     | (152.1 | )      |   |   | (22.2 | ) | pts |   |   | (20.4 | ) |   |   | (3.0 | ) | pts |   |   | (172.5 | ) |   |   | (25.2 | ) | pts |
| A&E                                           |   |                     | -      |   |   |   | - |   | pts |   |   | 0.4 |   |   |   | 0.1 |   | pts |   |   | 0.4 |   |   |   | 0.1 |   | pts |
| Total segment                                     |   | $                        | (184.3 | )      |   |   | (26.3 | ) | pts |   | $ | (31.2 | ) |   |   | (4.4 | ) | pts |   | $ | (215.5 | ) |   |   | (30.7 | ) | pts |
|                                              |   |                     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Variance 2008/2007                                |   |                     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Attritional                                       |   | $                        | (76.9  | )      |   |   | 5.5 |   | pts |   | $ | 95.6 |   |   |   | 12.0 |   | pts |   | $ | 18.7 |   |   |   | 17.5 |   | pts |
| Catastrophes                                      |   |                     | 152.0  |   |   |   | 22.2 |   | pts |   |   | 18.7 |   |   |   | 2.6 |   | pts |   |   | 170.7 |   |   |   | 24.8 |   | pts |
| A&E                                           |   |                     | -      |   |   |   | - |   | pts |   |   | (266.4 | ) |   |   | (28.4 | ) | pts |   |   | (266.4 | ) |   |   | (28.4 | ) | pts |
| Total segment                                     |   | $                        | 75.2   |   |   |   | 27.7 |   | pts |   | $ | (152.1 | ) |   |   | (13.8 | ) | pts |   | $ | (76.9 | ) |   |   | 14.0 |   | pts |
|                                              |   |                     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| (Some amounts may not reconcile due to rounding.) |   |                     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |

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Table of Contents

|                                             |   | Years Ended December 31, |   |   |  2009/2008 |   |   |  2008/2007 |   |
|--------------------------------------------------|--------|--------------------------|--------|--------|-----------------|--------|--------|-----------------|--------|
| (Dollars in millions)                            |   | 2009                     |   |   | 2008            |   |   | 2007            |   |   | Variance |   |   | % Change |   |   | Variance |   |   | % Change |   |
| Gross written premiums                           |   | $                        | 842.6  |   |            | $      | 771.8  |            |   | $ | 885.6 |   |   | $ | 70.8 |   |   |   | 9.2 | % |   | $ | (113.8 | ) |   |   | -12.9 | % |
| Net written premiums                             |   |                     | 352.1  |   |            |   | 398.7  |            |   |   | 479.8 |   |   |   | (46.6 | ) |   |   | -11.7 | % |   |   | (81.1 | ) |   |   | -16.9 | % |
|                                             |   |                     |   |   |            |   |   |            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Premiums earned                                  |   | $                        | 382.8  |   |            | $      | 482.7  |            |   | $ | 496.2 |   |   | $ | (99.9 | ) |   |   | -20.7 | % |   | $ | (13.4 | ) |   |   | -2.7 | % |
| Incurred losses and LAE                          |   |                     | 317.8  |   |            |   | 422.2  |            |   |   | 412.7 |   |   |   | (104.4 | ) |   |   | -24.7 | % |   |   | 9.5 |   |   |   | 2.3 | % |
| Commission and brokerage                         |   |                     | 29.8   |   |            |   | 68.2   |            |   |   | 64.3 |   |   |   | (38.4 | ) |   |   | -56.3 | % |   |   | 3.9 |   |   |   | 6.0 | % |
| Other underwriting expenses                      |   |                     | 74.6   |   |            |   | 64.3   |            |   |   | 58.2 |   |   |   | 10.3 |   |   |   | 16.0 | % |   |   | 6.1 |   |   |   | 10.5 | % |
| Underwriting loss                                |   | $                        | (39.4  | )      |            | $      | (72.0  | )               |   | $ | (39.1 | ) |   | $ | 32.6 |   |   |   | -45.3 | % |   | $ | (32.9 | ) |   |   | 84.3 | % |
|                                             |   |                     |   |   |            |   |   |            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                             |   |                     |   |   |            |   |   |            |   |   |   |   |   |   |   |   |   | Point Chg |   |   |   |   |   |   | Point Chg |   |
| Loss ratio                                       |   |                     | 83.0   | %      |            |   | 87.5   | %               |   |   | 83.2 | % |   |   |   |   |   |   | (4.5 | ) |   |   |   |   |   |   | 4.3 |   |
| Commission and brokerage ratio                   |   |                     | 7.8    | %      |            |   | 14.1   | %               |   |   | 13.0 | % |   |   |   |   |   |   | (6.3 | ) |   |   |   |   |   |   | 1.1 |   |
| Other underwriting expense ratio                 |   |                     | 19.5   | %      |            |   | 13.3   | %               |   |   | 11.7 | % |   |   |   |   |   |   | 6.2 |   |   |   |   |   |   |   | 1.6 |   |
| Combined ratio                                   |   |                     | 110.3  | %      |            |   | 114.9  | %               |   |   | 107.9 | % |   |   |   |   |   |   | (4.6 | ) |   |   |   |   |   |   | 7.0 |   |
|                                             |   |                     |   |   |            |   |   |            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| (Some amounts may not reconcile due to rounding) |   |                     |   |   |            |   |   |            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |

----

Table of Contents

|                                              |   | Years Ended December 31, |   |   |
|---------------------------------------------------|--------|--------------------------|--------|--------|
|                                              |   | Current                  |   |   | Ratio %/ |   | Prior |   |   | Ratio %/ |   | Total |   |   | Ratio %/ |
| (Dollars in millions)                             |   | Year                     |   |   | Pt Change |   | Years |   |   | Pt Change |   | Incurred |   |   | Pt Change |
| 2009                                              |   |                     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Attritional                                       |   | $                        | 291.8  |   |   |   | 76.2 | % |   |   | $ | 26.0 |   |   |   | 6.8 | % |   |   | $ | 317.8 |   |   |   | 83.0 | % |   |
| Catastrophes                                      |   |                     | -      |   |   |   | 0.0 | % |   |   |   | - |   |   |   | 0.0 | % |   |   |   | - |   |   |   | 0.0 | % |   |
| Total segment                                     |   | $                        | 291.8  |   |   |   | 76.2 | % |   |   | $ | 26.0 |   |   |   | 6.8 | % |   |   | $ | 317.8 |   |   |   | 83.0 | % |   |
|                                              |   |                     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| 2008                                              |   |                     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Attritional                                       |   | $                        | 335.0  |   |   |   | 69.4 | % |   |   | $ | 87.4 |   |   |   | 18.1 | % |   |   | $ | 422.4 |   |   |   | 87.5 | % |   |
| Catastrophes                                      |   |                     | -      |   |   |   | 0.0 | % |   |   |   | (0.2 | ) |   |   | 0.0 | % |   |   |   | (0.2 | ) |   |   | 0.0 | % |   |
| Total segment                                     |   | $                        | 335.0  |   |   |   | 69.4 | % |   |   | $ | 87.2 |   |   |   | 18.1 | % |   |   | $ | 422.2 |   |   |   | 87.5 | % |   |
|                                              |   |                     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| 2007                                              |   |                     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Attritional                                       |   | $                        | 360.6  |   |   |   | 72.7 | % |   |   | $ | 52.4 |   |   |   | 10.6 | % |   |   | $ | 413.0 |   |   |   | 83.2 | % |   |
| Catastrophes                                      |   |                     | -      |   |   |   | 0.0 | % |   |   |   | (0.3 | ) |   |   | -0.1 | % |   |   |   | (0.3 | ) |   |   | -0.1 | % |   |
| Total segment                                     |   | $                        | 360.6  |   |   |   | 72.7 | % |   |   | $ | 52.1 |   |   |   | 10.5 | % |   |   | $ | 412.7 |   |   |   | 83.2 | % |   |
|                                              |   |                     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Variance 2009/2008                                |   |                     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Attritional                                       |   | $                        | (43.2  | )      |   |   | 6.8 |   | pts |   | $ | (61.4 | ) |   |   | (11.3 | ) | pts |   | $ | (104.6 | ) |   |   | (4.5 | ) | pts |
| Catastrophes                                      |   |                     | -      |   |   |   | - |   | pts |   |   | 0.2 |   |   |   | - |   | pts |   |   | 0.2 |   |   |   | - |   | pts |
| Total segment                                     |   | $                        | (43.2  | )      |   |   | 6.8 |   | pts |   | $ | (61.2 | ) |   |   | (11.3 | ) | pts |   | $ | (104.4 | ) |   |   | (4.5 | ) | pts |
|                                              |   |                     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Variance 2008/2007                                |   |                     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Attritional                                       |   | $                        | (25.6  | )      |   |   | (3.3 | ) | pts |   | $ | 35.0 |   |   |   | 7.5 |   | pts |   | $ | 9.4 |   |   |   | 4.3 |   | pts |
| Catastrophes                                      |   |                     | -      |   |   |   | - |   | pts |   |   | 0.1 |   |   |   | - |   | pts |   |   | 0.1 |   |   |   | - |   | pts |
| Total segment                                     |   | $                        | (25.6  | )      |   |   | (3.3 | ) | pts |   | $ | 35.1 |   |   |   | 7.6 |   | pts |   | $ | 9.5 |   |   |   | 4.3 |   | pts |
|                                              |   |                     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| (Some amounts may not reconcile due to rounding.) |   |                     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |

----

Table of Contents

|                                             |   | Years Ended December 31, |   |   |  2009/2008 |   |   |  2008/2007 |   |
|--------------------------------------------------|--------|--------------------------|--------|--------|-----------------|--------|--------|-----------------|--------|
| (Dollars in millions)                            |   | 2009                     |   |   | 2008            |   |   | 2007            |   |   | Variance |   |   | % Change |   |   | Variance |   |   | % Change |   |
| Gross written premiums                           |   | $                        | 234.8  |   |            | $      | 260.4  |            |   | $ | 270.1 |   |   | $ | (25.6 | ) |   |   | -9.8 | % |   | $ | (9.7 | ) |   |   | -3.6 | % |
| Net written premiums                             |   |                     | 132.9  |   |            |   | 167.7  |            |   |   | 185.4 |   |   |   | (34.8 | ) |   |   | -20.7 | % |   |   | (17.7 | ) |   |   | -9.5 | % |
|                                             |   |                     |   |   |            |   |   |            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Premiums earned                                  |   | $                        | 139.1  |   |            | $      | 168.4  |            |   | $ | 184.9 |   |   | $ | (29.3 | ) |   |   | -17.4 | % |   | $ | (16.5 | ) |   |   | -8.9 | % |
| Incurred losses and LAE                          |   |                     | 96.3   |   |            |   | 116.3  |            |   |   | 118.3 |   |   |   | (20.0 | ) |   |   | -17.2 | % |   |   | (2.0 | ) |   |   | -1.7 | % |
| Commission and brokerage                         |   |                     | 40.9   |   |            |   | 40.9   |            |   |   | 44.3 |   |   |   | - |   |   |   | 0.0 | % |   |   | (3.3 | ) |   |   | -7.5 | % |
| Other underwriting expenses                      |   |                     | 8.7    |   |            |   | 8.1    |            |   |   | 8.5 |   |   |   | 0.7 |   |   |   | 8.2 | % |   |   | (0.4 | ) |   |   | -4.8 | % |
| Underwriting (loss) gain                         |   | $                        | (6.8   | )      |            | $      | 3.1    |            |   | $ | 13.8 |   |   | $ | (9.9 | ) |   | NM |   |   | $ | (10.7 | ) |   |   | -77.4 | % |
|                                             |   |                     |   |   |            |   |   |            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                             |   |                     |   |   |            |   |   |            |   |   |   |   |   |   |   |   |   | Point Chg |   |   |   |   |   |   | Point Chg |   |
| Loss ratio                                       |   |                     | 69.2   | %      |            |   | 69.0   | %               |   |   | 64.0 | % |   |   |   |   |   |   | 0.2 |   |   |   |   |   |   |   | 5.0 |   |
| Commission and brokerage ratio                   |   |                     | 29.4   | %      |            |   | 24.3   | %               |   |   | 23.9 | % |   |   |   |   |   |   | 5.1 |   |   |   |   |   |   |   | 0.4 |   |
| Other underwriting expense ratio                 |   |                     | 6.3    | %      |            |   | 4.8    | %               |   |   | 4.6 | % |   |   |   |   |   |   | 1.5 |   |   |   |   |   |   |   | 0.2 |   |
| Combined ratio                                   |   |                     | 104.9  | %      |            |   | 98.1   | %               |   |   | 92.5 | % |   |   |   |   |   |   | 6.8 |   |   |   |   |   |   |   | 5.6 |   |
|                                             |   |                     |   |   |            |   |   |            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| (NM, not meaningful)                             |   |                     |   |   |            |   |   |            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| (Some amounts may not reconcile due to rounding) |   |                     |   |   |            |   |   |            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |

----

Table of Contents

|                                              |   | Years Ended December 31, |   |   |
|---------------------------------------------------|--------|--------------------------|--------|--------|
|                                              |   | Current                  |   |   | Ratio %/ |   | Prior |   |   | Ratio %/ |   | Total |   |   | Ratio %/ |
| (Dollars in millions)                             |   | Year                     |   |   | Pt Change |   | Years |   |   | Pt Change |   | Incurred |   |   | Pt Change |
| 2009                                              |   |                     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Attritional                                       |   | $                        | 97.0   |   |   |   | 69.7 | % |   |   | $ | (5.7 | ) |   |   | -4.1 | % |   |   | $ | 91.3 |   |   |   | 65.6 | % |   |
| Catastrophes                                      |   |                     | -      |   |   |   | 0.0 | % |   |   |   | 4.9 |   |   |   | 3.5 | % |   |   |   | 4.9 |   |   |   | 3.5 | % |   |
| Total segment                                     |   | $                        | 97.0   |   |   |   | 69.7 | % |   |   | $ | (0.7 | ) |   |   | -0.5 | % |   |   | $ | 96.3 |   |   |   | 69.2 | % |   |
|                                              |   |                     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| 2008                                              |   |                     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Attritional                                       |   | $                        | 103.2  |   |   |   | 61.3 | % |   |   | $ | (1.2 | ) |   |   | -0.7 | % |   |   | $ | 102.0 |   |   |   | 60.6 | % |   |
| Catastrophes                                      |   |                     | 10.5   |   |   |   | 6.2 | % |   |   |   | 3.8 |   |   |   | 2.2 | % |   |   |   | 14.3 |   |   |   | 8.5 | % |   |
| Total segment                                     |   | $                        | 113.7  |   |   |   | 67.5 | % |   |   | $ | 2.6 |   |   |   | 1.5 | % |   |   | $ | 116.3 |   |   |   | 69.0 | % |   |
|                                              |   |                     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| 2007                                              |   |                     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Attritional                                       |   | $                        | 105.3  |   |   |   | 57.0 | % |   |   | $ | (4.7 | ) |   |   | -2.6 | % |   |   | $ | 100.6 |   |   |   | 54.4 | % |   |
| Catastrophes                                      |   |                     | 0.3    |   |   |   | 0.2 | % |   |   |   | 17.4 |   |   |   | 9.4 | % |   |   |   | 17.7 |   |   |   | 9.6 | % |   |
| Total segment                                     |   | $                        | 105.6  |   |   |   | 57.1 | % |   |   | $ | 12.7 |   |   |   | 6.9 | % |   |   | $ | 118.3 |   |   |   | 64.0 | % |   |
|                                              |   |                     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Variance 2009/2008                                |   |                     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Attritional                                       |   | $                        | (6.2   | )      |   |   | 8.4 |   | pts |   | $ | (4.5 | ) |   |   | (3.4 | ) | pts |   | $ | (10.7 | ) |   |   | 5.0 |   | pts |
| Catastrophes                                      |   |                     | (10.5  | )      |   |   | (6.2 | ) | pts |   |   | 1.2 |   |   |   | 1.3 |   | pts |   |   | (9.3 | ) |   |   | (4.9 | ) | pts |
| Total segment                                     |   | $                        | (16.7  | )      |   |   | 2.2 |   | pts |   | $ | (3.3 | ) |   |   | (2.1 | ) | pts |   | $ | (20.0 | ) |   |   | 0.1 |   | pts |
|                                              |   |                     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Variance 2008/2007                                |   |                     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Attritional                                       |   | $                        | (2.1   | )      |   |   | 4.3 |   | pts |   | $ | 3.5 |   |   |   | 1.8 |   | pts |   | $ | 1.4 |   |   |   | 6.2 |   | pts |
| Catastrophes                                      |   |                     | 10.2   |   |   |   | 6.1 |   | pts |   |   | (13.7 | ) |   |   | (7.2 | ) | pts |   |   | (3.5 | ) |   |   | (1.1 | ) | pts |
| Total segment                                     |   | $                        | 8.1    |   |   |   | 10.4 |   | pts |   | $ | (10.1 | ) |   |   | (5.4 | ) | pts |   | $ | (2.0 | ) |   |   | 5.1 |   | pts |
|                                              |   |                     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| (Some amounts may not reconcile due to rounding.) |   |                     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |

----

Table of Contents

|                                             |   | Years Ended December 31, |    |   |  2009/2008 |   |   |  2008/2007 |   |
|--------------------------------------------------|--------|--------------------------|---------|--------|-----------------|--------|--------|-----------------|--------|
| (Dollars in millions)                            |   | 2009                     |    |   | 2008            |   |   | 2007            |   |   | Variance |   |   | % Change |   |   | Variance |   |   | % Change |   |
| Gross written premiums                           |   | $                        | 1,084.5 |   |            | $      | 904.7  |            |   | $ | 805.9 |   |   | $ | 179.8 |   |   |   | 19.9 | % |   | $ | 98.8 |   |   |   | 12.3 | % |
| Net written premiums                             |   |                     | 589.7   |   |            |   | 539.1  |            |   |   | 553.0 |   |   |   | 50.6 |   |   |   | 9.4 | % |   |   | (13.9 | ) |   |   | -2.5 | % |
|                                             |   |                     |    |   |            |   |   |            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Premiums earned                                  |   | $                        | 586.7   |   |            | $      | 545.6  |            |   | $ | 558.2 |   |   | $ | 41.1 |   |   |   | 7.5 | % |   | $ | (12.6 | ) |   |   | -2.3 | % |
| Incurred losses and LAE                          |   |                     | 333.2   |   |            |   | 367.1  |            |   |   | 339.7 |   |   |   | (33.9 | ) |   |   | -9.2 | % |   |   | 27.4 |   |   |   | 8.1 | % |
| Commission and brokerage                         |   |                     | 131.7   |   |            |   | 129.7  |            |   |   | 126.7 |   |   |   | 1.9 |   |   |   | 1.5 | % |   |   | 3.0 |   |   |   | 2.4 | % |
| Other underwriting expenses                      |   |                     | 23.1    |   |            |   | 19.8   |            |   |   | 18.6 |   |   |   | 3.3 |   |   |   | 16.7 | % |   |   | 1.1 |   |   |   | 6.2 | % |
| Underwriting gain                                |   | $                        | 98.8    |   |            | $      | 28.9   |            |   | $ | 73.1 |   |   | $ | 69.8 |   |   |   | 241.4 | % |   | $ | (44.2 | ) |   |   | -60.4 | % |
|                                             |   |                     |    |   |            |   |   |            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                             |   |                     |    |   |            |   |   |            |   |   |   |   |   |   |   |   |   | Point Chg |   |   |   |   |   |   | Point Chg |   |
| Loss ratio                                       |   |                     | 56.8    | %      |            |   | 67.3   | %               |   |   | 60.9 | % |   |   |   |   |   |   | (10.5 | ) |   |   |   |   |   |   | 6.4 |   |
| Commission and brokerage ratio                   |   |                     | 22.4    | %      |            |   | 23.8   | %               |   |   | 22.7 | % |   |   |   |   |   |   | (1.4 | ) |   |   |   |   |   |   | 1.1 |   |
| Other underwriting expense ratio                 |   |                     | 4.0     | %      |            |   | 3.6    | %               |   |   | 3.3 | % |   |   |   |   |   |   | 0.4 |   |   |   |   |   |   |   | 0.3 |   |
| Combined ratio                                   |   |                     | 83.2    | %      |            |   | 94.7   | %               |   |   | 86.9 | % |   |   |   |   |   |   | (11.5 | ) |   |   |   |   |   |   | 7.8 |   |
|                                             |   |                     |    |   |            |   |   |            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| (Some amounts may not reconcile due to rounding) |   |                     |    |   |            |   |   |            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |

----

Table of Contents

|                                              |   | Years Ended December 31, |   |   |
|---------------------------------------------------|--------|--------------------------|--------|--------|
|                                              |   | Current                  |   |   | Ratio %/ |   | Prior |   |   | Ratio %/ |   | Total |   |   | Ratio %/ |
| (Dollars in millions)                             |   | Year                     |   |   | Pt Change |   | Years |   |   | Pt Change |   | Incurred |   |   | Pt Change |
| 2009                                              |   |                     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Attritional                                       |   | $                        | 296.4  |   |   |   | 50.5 | % |   |   | $ | 12.5 |   |   |   | 2.1 | % |   |   | $ | 309.0 |   |   |   | 52.7 | % |   |
| Catastrophes                                      |   |                     | 22.1   |   |   |   | 3.8 | % |   |   |   | 2.1 |   |   |   | 0.4 | % |   |   |   | 24.2 |   |   |   | 4.1 | % |   |
| Total segment                                     |   | $                        | 318.5  |   |   |   | 54.3 | % |   |   | $ | 14.7 |   |   |   | 2.5 | % |   |   | $ | 333.2 |   |   |   | 56.8 | % |   |
|                                              |   |                     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| 2008                                              |   |                     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Attritional                                       |   | $                        | 350.0  |   |   |   | 64.2 | % |   |   | $ | (3.9 | ) |   |   | -0.7 | % |   |   | $ | 346.1 |   |   |   | 63.4 | % |   |
| Catastrophes                                      |   |                     | 26.1   |   |   |   | 4.8 | % |   |   |   | (5.0 | ) |   |   | -0.9 | % |   |   |   | 21.1 |   |   |   | 3.9 | % |   |
| Total segment                                     |   | $                        | 376.1  |   |   |   | 68.9 | % |   |   | $ | (9.0 | ) |   |   | -1.6 | % |   |   | $ | 367.1 |   |   |   | 67.3 | % |   |
|                                              |   |                     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| 2007                                              |   |                     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Attritional                                       |   | $                        | 285.5  |   |   |   | 51.2 | % |   |   | $ | (5.1 | ) |   |   | -0.9 | % |   |   | $ | 280.4 |   |   |   | 50.2 | % |   |
| Catastrophes                                      |   |                     | 56.6   |   |   |   | 10.1 | % |   |   |   | 2.7 |   |   |   | 0.5 | % |   |   |   | 59.3 |   |   |   | 10.6 | % |   |
| Total segment                                     |   | $                        | 342.1  |   |   |   | 61.3 | % |   |   | $ | (2.4 | ) |   |   | -0.4 | % |   |   | $ | 339.7 |   |   |   | 60.9 | % |   |
|                                              |   |                     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Variance 2009/2008                                |   |                     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Attritional                                       |   | $                        | (53.6  | )      |   |   | (13.7 | ) | pts |   | $ | 16.5 |   |   |   | 2.8 |   | pts |   | $ | (37.1 | ) |   |   | (10.7 | ) | pts |
| Catastrophes                                      |   |                     | (4.0   | )      |   |   | (1.0 | ) | pts |   |   | 7.2 |   |   |   | 1.3 |   | pts |   |   | 3.1 |   |   |   | 0.2 |   | pts |
| Total segment                                     |   | $                        | (57.6  | )      |   |   | (14.6 | ) | pts |   | $ | 23.6 |   |   |   | 4.1 |   | pts |   | $ | (33.9 | ) |   |   | (10.5 | ) | pts |
|                                              |   |                     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Variance 2008/2007                                |   |                     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Attritional                                       |   | $                        | 64.5   |   |   |   | 13.0 |   | pts |   | $ | 1.2 |   |   |   | 0.2 |   | pts |   | $ | 65.7 |   |   |   | 13.2 |   | pts |
| Catastrophes                                      |   |                     | (30.5  | )      |   |   | (5.3 | ) | pts |   |   | (7.8 | ) |   |   | (1.4 | ) | pts |   |   | (38.2 | ) |   |   | (6.8 | ) | pts |
| Total segment                                     |   | $                        | 34.0   |   |   |   | 7.7 |   | pts |   | $ | (6.6 | ) |   |   | (1.2 | ) | pts |   | $ | 27.4 |   |   |   | 6.4 |   | pts |
|                                              |   |                     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| (Some amounts may not reconcile due to rounding.) |   |                     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |

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Table of Contents

ITEM 7A.   QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

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Table of Contents

|                                   |   | Impact of Interest Rate Shift in Basis Points |    |
|----------------------------------------|--------|-----------------------------------------------|---------|
|                                   |   | At December 31, 2009                          |    |
| (Dollars in millions)                  |   |                                          | -200    |   |   |   | -100 |   |   |   | 0 |   |   |   | 100 |   |   |   | 200 |   |
| Total Market/Fair Value                |   | $                                             | 7,393.3 |   |   | $ | 7,105.3 |   |   | $ | 6,775.1 |   |   | $ | 6,418.1 |   |   | $ | 6,076.8 |   |
| Market/Fair Value Change from Base (%) |   |                                          | 9.1     | % |   |   | 4.9 | % |   |   | 0.0 | % |   |   | -5.3 | % |   |   | -10.3 | % |
| Change in Unrealized Appreciation      |   |                                          |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| After-tax from Base ($)                |   | $                                             | 401.8   |   |   | $ | 214.6 |   |   | $ | - |   |   | $ | (232.1 | ) |   | $ | (453.9 | ) |

|                                   |   | Impact of Interest Rate Shift in Basis Points |    |
|----------------------------------------|--------|-----------------------------------------------|---------|
|                                   |   | At December 31, 2008                          |    |
| (Dollars in millions)                  |   |                                          | -200    |   |   |   | -100 |   |   |   | 0 |   |   |   | 100 |   |   |   | 200 |   |
| Total Market/Fair Value                |   | $                                             | 7,209.1 |   |   | $ | 6,855.1 |   |   | $ | 6,473.7 |   |   | $ | 6,083.4 |   |   | $ | 5,720.2 |   |
| Market/Fair Value Change from Base (%) |   |                                          | 11.4    | % |   |   | 5.9 | % |   |   | 0.0 | % |   |   | -6.0 | % |   |   | -11.6 | % |
| Change in Unrealized Appreciation      |   |                                          |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| After-tax from Base ($)                |   | $                                             | 478.0   |   |   | $ | 247.9 |   |   | $ | - |   |   | $ | (253.7 | ) |   | $ | (489.7 | ) |

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Table of Contents

|                                      |   | Impact of Percentage Change in Equity Fair/Market Values |   |
|-------------------------------------------|--------|----------------------------------------------------------|--------|
|                                      |   | At December 31, 2009                                     |   |
| (Dollars in millions)                     |   |                                                     | -20%   |   |   |   | -10% |   |   |   | 0% |   |   |   | 10% |   |   |   | 20% |   |
| Fair/Market Value of the Equity Portfolio |   | $                                                        | 304.0  |   |   | $ | 342.0 |   |   | $ | 380.0 |   |   | $ | 418.0 |   |   | $ | 456.0 |   |
| After-tax Change in Fair/Market Value     |   |                                                     | (49.4  | ) |   |   | (24.7 | ) |   |   | - |   |   |   | 24.7 |   |   |   | 49.4 |   |

|                                      |   | Impact of Percentage Change in Equity Fair/Market Values |   |
|-------------------------------------------|--------|----------------------------------------------------------|--------|
|                                      |   | At December 31, 2008                                     |   |
| (Dollars in millions)                     |   |                                                     | -20%   |   |   |   | -10% |   |   |   | 0% |   |   |   | 10% |   |   |   | 20% |   |
| Fair/Market Value of the Equity Portfolio |   | $                                                        | 95.9   |   |   | $ | 107.8 |   |   | $ | 119.8 |   |   | $ | 131.8 |   |   | $ | 143.8 |   |
| After-tax Change in Fair/Market Value     |   |                                                     | (15.6  | ) |   |   | (7.8 | ) |   |   | - |   |   |   | 7.8 |   |   |   | 15.6 |   |

|                                      |   | Change in Foreign Exchange Rates in Percent |   |
|-------------------------------------------|--------|---------------------------------------------|--------|
|                                      |   | At December 31, 2009                        |   |
| (Dollars in millions)                     |   |                                        | -20%   |   |   |   | -10% |   |   |   | 0% |   |   |   | 10% |   |   |   | 20% |   |
| Total After-tax Foreign Exchange Exposure |   | $                                           | (63.2  | ) |   | $ | (35.6 | ) |   | $ | - |   |   | $ | 41.5 |   |   | $ | 87.4 |   |

|                                      |   | Change in Foreign Exchange Rates in Percent |   |
|-------------------------------------------|--------|---------------------------------------------|--------|
|                                      |   | At December 31, 2008                        |   |
| (Dollars in millions)                     |   |                                        | -20%   |   |   |   | -10% |   |   |   | 0% |   |   |   | 10% |   |   |   | 20% |   |
| Total After-tax Foreign Exchange Exposure |   | $                                           | (51.7  | ) |   | $ | (29.4 | ) |   | $ | - |   |   | $ | 34.6 |   |   | $ | 73.2 |   |

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Table of Contents

ITEM 8.      FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

| ITEM 9. | CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE |
|---------|--------------------------------------------------------------------------------------|

ITEM 9A.   CONTROLS AND PROCEDURES

ITEM 9B.   OTHER INFORMATION

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Table of Contents

ITEM 10.    DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

ITEM 11.    EXECUTIVE COMPENSATION

| ITEM 12. | SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS |
|----------|------------------------------------------------------------------------------------------------|

ITEM 13.    CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE

ITEM 14.    PRINCIPAL ACCOUNTANT FEES AND SERVICES

| (Dollars in thousands) |   | 2009               |   |   | 2008    |   |
|------------------------|--------|--------------------|--------|--------|---------|--------|
| (1                     | )      | Audit Fees         |   | $      | 1,995.6 |   |   | $ | 1,946.0 |   |
| (2                     | )      | Audit-Related Fees |   |   | 78.9    |   |   |   | 105.2 |   |
| (3                     | )      | Tax Fees           |   |   | 17.0    |   |   |   | 179.7 |   |
| (4                     | )      | All Other Fees     |   |   | 5.4     |   |   |   | 5.0 |   |

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Table of Contents

ITEM 15.    EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

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Table of Contents

|   | EVEREST REINSURANCE HOLDINGS, INC. |                                                    |
|--------|------------------------------------|---------------------------------------------------------|
|   |                               |                                                    |   |
|   |                               |                                                    |   |
|   | By:                                | /S/ JOSEPH V. TARANTO                                   |   |
|   |                               | Joseph V. Taranto(Chairman and Chief Executive Officer) |   |

| Signature               |   | Title                                                                              |   | Date           |
|-------------------------|--------|------------------------------------------------------------------------------------|--------|----------------|
|                    |   |                                                                               |   |           |
| /S/ JOSEPH V. TARANTO   |   | Chairman and Chief Executive Officer and Director (Principal Executive Officer)    |   | March 31, 2010 |
| Joseph V. Taranto       |
|                    |   |                                                                               |   |           |
| /S/ RALPH E. JONES, III |   | President and Chief Operating Officer                                              |   | March 31, 2010 |
| Ralph E. Jones, III     |
|                    |   |                                                                               |   |           |
| /S/ DOMINIC J. ADDESSO  |   | Executive Vice President and Chief Financial Officer (Principal Financial Officer) |   | March 31, 2010 |
| Dominic J. Addesso      |
|                    |   |                                                                               |   |           |
| /S/ KEITH T. SHOEMAKER  |   | Comptroller (Principal Accounting Officer)                                         |   | March 31, 2010 |
| Keith T. Shoemaker      |

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Table of Contents

| INDEX TO EXHIBITS |
|-------------------|
|              |   |   |
| Exhibit No.       |
|              |   |   |
|              | 2.1 | Agreement and Plan of Merger among Everest Reinsurance Holdings, Inc., Everest Re Group, Ltd. and Everest Re Merger Corporation, incorporated herein by reference to Exhibit 2.1 to the Registration Statement on Form S-4 (No. 333-87361) |
|              |   |   |
|              | 3.1 | Certificate of Incorporation of Everest Reinsurance Holdings, Inc., incorporated herein by reference to Exhibit 4.1 to the Registration Statement on Form S-8 (No. 333-05771) |
|              |   |   |
|              | 3.2 | By-Laws of Everest Reinsurance Holdings, Inc., incorporated herein by reference to Exhibit 3.2 to the Everest Reinsurance Holdings, Inc. Quarterly Report on Form 10-Q for the quarter ended March 31, 2000 |
|              |   |   |
|              | 4.1 | Indenture, dated March 14, 2000, between Everest Reinsurance Holdings, Inc. and The Chase Manhattan Bank, as Trustee, incorporated herein by reference to Exhibit 4.1 to Everest Reinsurance Holdings, Inc. Form 8-K filed on March 15, 2000 |
|              |   |   |
|              | 4.2 | First Supplemental Indenture relating to the 8.5% Senior Notes due March 15, 2005, dated March 14, 2000, between Everest Reinsurance Holdings, Inc. and The Chase Manhattan Bank, as Trustee, incorporated herein by reference to Exhibit 4.2 to Everest Reinsurance Holdings, Inc. Form 8-K filed on March 15, 2000 |
|              |   |   |
|              | 4.3 | Second Supplemental Indenture relating to the 8.75% Senior Notes due March 15, 2010, dated March 14, 2000, between Everest Reinsurance Holdings, Inc. and The Chase Manhattan Bank, as Trustee, incorporated herein by reference to Exhibit 4.3 to the Everest Reinsurance Holdings, Inc. Form 8-K filed on March 15, 2000 |
|              |   |   |
|              | 4.4 | Junior Subordinated Indenture, dated November 14, 2002, between Everest Reinsurance Holdings, Inc. and JPMorgan Chase Bank as Trustee, incorporated herein by reference to Exhibit 4.5 to the Registration Statement on Form S-3 (No. 333-106595) |
|              |   |   |
|              | 4.5 | First Supplemental Indenture relating to Holdings 7.85% Junior Subordinated Debt Securities due November 15, 2032, dated as of November 14, 2002, among Holdings, Group and JPMorgan Chase Bank, as Trustee, incorporated herein by reference to Exhibit 10.2 to Everest Re Group, Ltd. Quarterly Report on Form 10-Q for the quarter ended June 30, 2003 (the “second quarter 2003 10-Q”) |
|              |   |   |
|              | 4.6 | Amended and Restated Trust Agreement of Everest Re Capital Trust, dated as of November 14, 2002, incorporated herein by reference to Exhibit 10.1 to the second quarter 2003 10-Q |
|              |   |   |
|              | 4.7 | Guarantee Agreement, dated as of November 14, 2002, between Holdings and JPMorgan Chase Bank, incorporated herein by reference to Exhibit 10.3 to the second quarter 2003 10-Q |
|              |   |   |
|              | 4.8 | Expense Agreement, dated as of November 14, 2002, between Holdings and Everest Re Capital Trust, incorporated herein by reference to Exhibit 10.4 to the second quarter 2003 10-Q |
|              |   |   |
|              | 4.9 | Second Supplemental Indenture relating to Holdings 6.20% Junior Subordinated Debt Securities due March 29, 2034, dated as of March 29, 2004, among Holdings, Group and JPMorgan Chase Bank, as Trustee, incorporated herein by reference to Exhibit 4.1 to Everest Reinsurance Holdings, Inc. Form 8-K filed on March 30, 2004 (the “March 30, 2004 8-K”) |
|              |   |   |

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Table of Contents

|      | 4.10   | Amended and Restated Trust Agreement of Everest Re Capital Trust II, dated as of March 29, 2004, incorporated herein by reference to Exhibit 4.2 to the March 30, 2004 8-K                                                                                                                                                                                               |
|-----------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|      |   |                                                                                                                                                                                                                                                                                                                                                                     |
|      | 4.11   | Guarantee Agreement, dated as of March 29, 2004, between Holdings and JPMorgan Chase Bank, incorporated herein by reference to Exhibit 4.3 to the March 30, 2004 8-K                                                                                                                                                                                                     |
|      |   |                                                                                                                                                                                                                                                                                                                                                                     |
|      | 4.12   | Expense Agreement, dated as of March 29, 2004, between Holdings and Everest Re Capital Trust II, incorporated herein by reference to Exhibit 4.4 to the March 30, 2004 8-K                                                                                                                                                                                               |
|      |   |                                                                                                                                                                                                                                                                                                                                                                     |
|      | 4.13   | Third Supplemental Indenture relating to Holdings 5.40% Senior Notes due October 15, 2014, dated as of October 12, 2004, among Holdings and JPMorgan Chase Bank, as Trustee, incorporated herein by reference to Exhibit 4.1 to Everest Reinsurance Holdings, Inc. Form 8-K filed on October 12, 2004                                                                    |
|      |   |                                                                                                                                                                                                                                                                                                                                                                     |
|  *1  | 0.1    | Employment Agreement with Joseph V. Taranto executed on July 15, 1998, incorporated herein by reference to Exhibit 10.21 to Everest Reinsurance Holdings, Inc. Quarterly Report on Form 10-Q for the quarter ended June 30, 1998 (the “second quarter 1998 10-Q”)                                                                                            |
|      |   |                                                                                                                                                                                                                                                                                                                                                                     |
|   *1 | 0.2    | Amendment of Employment Agreement by and among Everest Reinsurance Company, Everest Reinsurance Holdings, Inc., Everest Re Group, Ltd. and Joseph V. Taranto dated February 15, 2000, incorporated herein by reference to Exhibit 10.29 to Everest Re Group, Ltd. Annual Report on Form 10-K for the year ended December 31, 1999 (the “1999 10-K”)          |
|      |   |                                                                                                                                                                                                                                                                                                                                                                     |
|   *1 | 0.3    | Change of Control Agreement with Joseph V. Taranto effective July 15, 1998, incorporated herein by reference to Exhibit 10.22 to the second quarter 1998 10-Q                                                                                                                                                                                                            |
|      |   |                                                                                                                                                                                                                                                                                                                                                                     |
|   *1 | 0.4    | Amendment of Change of Control Agreement by and among Everest Reinsurance Company, Everest Reinsurance Holdings, Inc., Everest Re Group, Ltd. and Joseph V. Taranto dated February 15, 2000, incorporated herein by reference to Exhibit 10.30 to the 1999 10-K                                                                                                          |
|      |   |                                                                                                                                                                                                                                                                                                                                                                     |
| 1         | 0.5    | Stock Purchase Agreement between The Prudential Insurance Company of America and Everest Reinsurance Holdings, Inc. for the sale of common stock of Gibraltar Casualty Company dated February 24, 2000, incorporated herein by reference to Exhibit 10.32 to the 1999 10-K                                                                                               |
|      |   |                                                                                                                                                                                                                                                                                                                                                                     |
|   1  | 0.6    | Amendment No. 1 to Stock Purchase Agreement between The Prudential Insurance Company of America and Everest Reinsurance Holdings, Inc. for the sale of common stock of Gibraltar Casualty Company dated August 8, 2000, incorporated herein by reference to Exhibit 10.1 to the Everest Re Group, Ltd. Quarterly Report on Form 10-Q for the quarter ended June 30, 2000 |
|      |   |                                                                                                                                                                                                                                                                                                                                                                     |
|   1  | 0.7    | Proportional Excess of Loss Reinsurance Agreement entered into between Gibraltar Casualty Company and Prudential Property and Casualty Insurance Company, incorporated herein by reference to Exhibit 10.24 to the Everest Re Group, Ltd. Annual Report on Form 10-K for the year ended December 31, 2000 (the “2000 10-K”)                                  |
|      |   |                                                                                                                                                                                                                                                                                                                                                                     |
|   1  | 0.8    | Guarantee Agreement made by The Prudential Insurance Company of America in favor of Gibraltar Casualty Company, incorporated herein by reference to Exhibit 10.25 to the 2000 10-K                                                                                                                                                                                       |
|      |   |                                                                                                                                                                                                                                                                                                                                                                     |
|   1  | 0.9    | Lease, effective December 26, 2000 between OTR, an Ohio general partnership, and Everest Reinsurance Company, incorporated herein by reference to Exhibit 10.26 to the 2000 10-K                                                                                                                                                                                         |
|      |   |                                                                                                                                                                                                                                                                                                                                                                     |

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Table of Contents

|   *1 | 0.10   | Amendment of Employment Agreement by and among Everest Reinsurance Company, Everest Reinsurance Holdings, Inc., Everest Re Group, Ltd., Everest Global Services, Inc. and Joseph V. Taranto, dated March 30, 2001, incorporated herein by reference to Exhibit 10.1 to Everest Re Group, Ltd. Report on Form 10-Q for the quarter ended March 31, 2001 (the “first quarter 2001 10-Q”)                                                                                                                               |
|-----------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|      |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
|   *1 | 0.11   | Amendment of Employment Agreement by and among Everest Reinsurance Company, Everest Reinsurance Holdings, Inc., Everest Re Group, Ltd., Everest Global Services, Inc. and Joseph V. Taranto, dated April 20, 2001, incorporated herein by reference to Exhibit 10.2 to the first quarter 2001 10-Q                                                                                                                                                                                                                               |
|      |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
|   *1 | 0.12   | Amendment of Change of Control Agreement by and among Everest Reinsurance Company, Everest Reinsurance Holdings, Inc., Everest Re Group, Ltd., Everest Global Services, Inc. and Joseph V. Taranto, dated March 30, 2001, incorporated herein by reference to Exhibit 10.3 to the first quarter 2001 10-Q                                                                                                                                                                                                                        |
|      |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
|   *1 | 0.13   | Amendment of Employment Agreement by and among Everest Reinsurance Company, Everest Reinsurance Holdings, Inc., Everest Re Group Ltd., Everest Global Services Inc. and Joseph V. Taranto, dated April 18, 2003, incorporated herein by reference to Exhibit 10.1 to Everest Re Group, Ltd. Form 8-K filed on April 21, 2003                                                                                                                                                                                                     |
|      |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
|   *1 | 0.14   | Amendment of Employment Agreement by and among Everest Reinsurance Company, Everest Reinsurance Holdings, Inc., Everest Re Group, Ltd., Everest Global Services, Inc. and Joseph V. Taranto, dated August 31, 2005, incorporated by reference to Exhibit 10.1 to Everest Re Group, Ltd. From 8-K filed on August 31, 2005                                                                                                                                                                                                        |
|      |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
| 1         | 0.15   | Credit Agreement, dated August 23, 2006, between Everest Reinsurance Holdings, Inc., the lenders named therein and Citibank N.A., as administrative agent, providing for $150.0 million five year senior revolving credit facility, incorporated herein by reference to Exhibit 10.1 to Everest Re Group, Ltd. Quarterly Report on Form 10-Q for the quarter ended September 30, 2006.  This new agreement replaces the October 10, 2003 three year senior revolving credit facility which expired on October 10, 2006 |
|      |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
|   *1 | 0.16   | Employment Agreement by and among Everest Reinsurance Company, Everest Reinsurance Holdings, Inc., Everest Re Group, Ltd., Everest Global Services, Inc. and Craig E. Eisenacher, dated December 18, 2006, incorporated by reference to Exhibit 10.1 to Everest Re Group, Ltd. Form 8-K filed on December 5, 2006                                                                                                                                                                                                                |
|      |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
|   *1 | 0.17   | Amendment to Employment Agreement by and among Everest Reinsurance Company, Everest Reinsurance Holdings, Inc. and Joseph V. Taranto, dated April 5, 2007, incorporated herein by reference to Exhibit 10.1 to Everest Re Group, Ltd. Form 8-K filed on April 5, 2007                                                                                                                                                                                                                                                            |
|      |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
|   *1 | 0.18   | Amendment to Change of Control Agreement by and among Everest Reinsurance Company, Everest Reinsurance Holdings, Inc., Everest Re Group, Ltd., Everest Global Services and Joseph V. Taranto, dated April 5, 2007, incorporated herein by reference to Exhibit 10.2 to Everest Re Group, Ltd. Form 8-K filed on April 5, 2007                                                                                                                                                                                                    |
|      |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
|   *1 | 0.19   | Amendment to Change of Control Agreement by and among Everest Reinsurance Company, Everest Reinsurance Holdings, Inc., Everest Re Group, Ltd., Everest Global Services, Inc. and Joseph V. Taranto, dated January 1, 2009, incorporated herein by reference to Exhibit 10.1 to Everest Re Group, Ltd. Form 8-K filed on January 2, 2009                                                                                                                                                                                          |
|      |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
|   1  | 0.20   | Completion of Tender Offer relating to Everest Reinsurance Holdings, Inc. 6.60% Fixed to Floating Rate Long Term Subordinated Notes (LoTSSM) dated March 19, 2009, incorporated herein by reference to Exhibit 99.1 to Everest Re Group, Ltd. Form 8-K filed on March 31, 2009                                                                                                                                                                                                                                                   |

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Table of Contents

|   *1                                                             | 0.21   | Amendment of Employment Agreement by and among Everest Reinsurance Company, Everest Reinsurance Holdings, Inc., Everest Global Services, Inc., Everest Re Group, Ltd. and Joseph V. Taranto, dated September 25, 2009, incorporated herein by reference to Exhibit 10.1 to Everest Re Group, Ltd. Form 8-K filed on October 1, 2009 |
|-----------------------------------------------------------------------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                                                                  |   |                                                                                                                                                                                                                                                                                                                                |
|   2                                                              | 3.1    | Consent of PricewaterhouseCoopers LLP, filed herewith                                                                                                                                                                                                                                                                               |
|                                                                  |   |                                                                                                                                                                                                                                                                                                                                |
|   3                                                              | 1.1    | Section 302 Certification of Joseph V. Taranto, filed herewith                                                                                                                                                                                                                                                                      |
|                                                                  |   |                                                                                                                                                                                                                                                                                                                                |
|   3                                                              | 1.2    | Section 302 Certification of Dominic J. Addesso, filed herewith                                                                                                                                                                                                                                                                     |
|                                                                  |   |                                                                                                                                                                                                                                                                                                                                |
|   3                                                              | 2.1    | Section 906 Certification of Joseph V. Taranto and Dominic J. Addesso, furnished herewith                                                                                                                                                                                                                                           |
|                                                                  |   |                                                                                                                                                                                                                                                                                                                                |
| *  Management contract or compensatory plan or arrangement. |

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INDEX TO FINANCIAL STATEMENTS AND SCHEDULES

|                                                                                 | Pages                                                                                                             |
|--------------------------------------------------------------------------------------|-------------------------------------------------------------------------------------------------------------------|
|                                                                                 |
| Report of Independent Registered Public Accounting Firm                              | F-2                                                                                                               |
|                                                                                 |                                                                                                              |   |
| Consolidated Balance Sheets at December 31, 2009 and 2008                            | F-3                                                                                                               |
|                                                                                 |                                                                                                              |   |
| Consolidated Statements of Operations and Comprehensive Income (Loss) for the        |                                                                                                              |
|                                                                                 | Years Ended December 31, 2009, 2008 and 2007                                                                      | F-4 |
|                                                                                 |                                                                                                              |   |
| Consolidated Statements of Changes in Stockholder’s Equity for the Years Ended |                                                                                                              |
|                                                                                 | December 31, 2009, 2008 and 2007                                                                                  | F-5 |
|                                                                                 |                                                                                                              |   |
| Consolidated Statements of Cash Flows for the Years Ended                            |                                                                                                              |
|                                                                                 | December 31, 2009, 2008 and 2007                                                                                  | F-6 |
|                                                                                 |                                                                                                              |   |
| Notes to Consolidated Financial Statements                                           | F-7                                                                                                               |
|                                                                                 |                                                                                                              |   |
| Schedules                                                                            |                                                                                                              |
|                                                                                 |                                                                                                              |   |
| I                                                                                    | Summary of Investments Other Than Investments in Related Parties at December 31, 2009                             | S-1 |
|                                                                                 |                                                                                                              |   |
| II                                                                                   | Condensed Financial Information of Registrant:                                                                    |   |
|                                                                                 |                                                                                                              |   |
|                                                                                 |       Balance Sheets as of December 31, 2009 and 2008                               | S-2 |
|                                                                                 |                                                                                                              |   |
|                                                                                 |       Statements of Operations for the Years Ended December 31, 2009, 2008 and 2007 | S-3 |
|                                                                                 |                                                                                                              |   |
|                                                                                 |       Statements of Cash Flows for the Years Ended December 31, 2009, 2008 and 2007 | S-4 |
|                                                                                 |                                                                                                              |   |
| III                                                                                  | Supplementary Insurance Information for the Years Ended                                                           |   |
|                                                                                 |     December 31, 2009, 2008 and 2007                                                          | S-5 |
|                                                                                 |                                                                                                              |   |
| IV                                                                                   | Reinsurance for the Years Ended December 31, 2009, 2008 and 2007                                                  | S-6 |

----

Index

Report of Independent Registered Public Accounting Firm

----

Index

CONSOLIDATED BALANCE SHEETS

|                                                                                         |   | December 31, |       |
|----------------------------------------------------------------------------------------------|--------|--------------|------------|
| (Dollars in thousands, except par value per share)                                           |   | 2009         |       |   | 2008 |   |
|                                                                                         |   |         |       |   |   |   |
| ASSETS:                                                                                      |   |         |       |   |   |   |
| Fixed maturities - available for sale, at market value                                       |   | $            | 6,463,168  |   |   | $ | 5,511,856 |   |
|      (amortized cost: 2009, $6,255,759; 2008, $5,610,483)           |   |         |       |   |   |   |   |   |
| Fixed maturities - available for sale, at fair value                                         |   |         | 50,528     |   |   |   | 43,090 |   |
| Equity securities - available for sale, at market value (cost: 2009, $15; 2008, $15)         |   |         | 13         |   |   |   | 16 |   |
| Equity securities - available for sale, at fair value                                        |   |         | 380,025    |   |   |   | 119,815 |   |
| Short-term investments                                                                       |   |         | 261,438    |   |   |   | 918,712 |   |
| Other invested assets (cost: 2009, $387,200; 2008, $400,498)                                 |   |         | 386,326    |   |   |   | 392,589 |   |
| Other invested assets, at fair value                                                         |   |         | 382,639    |   |   |   | 316,750 |   |
| Cash                                                                                         |   |         | 107,480    |   |   |   | 92,264 |   |
|          Total investments and cash             |   |         | 8,031,617  |   |   |   | 7,395,092 |   |
| Accrued investment income                                                                    |   |         | 83,705     |   |   |   | 82,860 |   |
| Premiums receivable                                                                          |   |         | 769,744    |   |   |   | 714,035 |   |
| Reinsurance receivables - unaffiliated                                                       |   |         | 618,081    |   |   |   | 637,890 |   |
| Reinsurance receivables - affiliated                                                         |   |         | 2,492,152  |   |   |   | 2,480,016 |   |
| Funds held by reinsureds                                                                     |   |         | 156,223    |   |   |   | 147,287 |   |
| Deferred acquisition costs                                                                   |   |         | 183,498    |   |   |   | 192,096 |   |
| Prepaid reinsurance premiums                                                                 |   |         | 562,146    |   |   |   | 456,180 |   |
| Deferred tax asset                                                                           |   |         | 210,493    |   |   |   | 518,042 |   |
| Federal income tax recoverable                                                               |   |         | 135,682    |   |   |   | 70,299 |   |
| Other assets                                                                                 |   |         | 136,234    |   |   |   | 172,825 |   |
| TOTAL ASSETS                                                                                 |   | $            | 13,379,575 |   |   | $ | 12,866,622 |   |
|                                                                                         |   |         |       |   |   |   |   |   |
| LIABILITIES:                                                                                 |   |         |       |   |   |   |   |   |
| Reserve for losses and loss adjustment expenses                                              |   | $            | 7,300,139  |   |   | $ | 7,419,993 |   |
| Unearned premium reserve                                                                     |   |         | 1,239,320  |   |   |   | 1,176,834 |   |
| Funds held under reinsurance treaties                                                        |   |         | 175,257    |   |   |   | 134,698 |   |
| Losses in the course of payment                                                              |   |         | 42,633     |   |   |   | 35,805 |   |
| Commission reserves                                                                          |   |         | 50,897     |   |   |   | 45,531 |   |
| Other net payable to reinsurers                                                              |   |         | 444,535    |   |   |   | 378,800 |   |
| 8.75% Senior notes due 3/15/2010                                                             |   |         | 199,970    |   |   |   | 199,821 |   |
| 5.4% Senior notes due 10/15/2014                                                             |   |         | 249,769    |   |   |   | 249,728 |   |
| 6.6% Long term notes due 05/01/2067                                                          |   |         | 238,348    |   |   |   | 399,643 |   |
| Junior subordinated debt securities payable                                                  |   |         | 329,897    |   |   |   | 329,897 |   |
| Accrued interest on debt and borrowings                                                      |   |         | 9,885      |   |   |   | 11,217 |   |
| Other liabilities                                                                            |   |         | 240,151    |   |   |   | 281,687 |   |
|          Total liabilities                      |   |         | 10,520,801 |   |   |   | 10,663,654 |   |
|                                                                                         |   |         |       |   |   |   |   |   |
| Commitments and Contingencies (Note 17)                                                      |   |         |       |   |   |   |   |   |
|                                                                                         |   |         |       |   |   |   |   |   |
| STOCKHOLDER'S EQUITY:                                                                        |   |         |       |   |   |   |   |   |
| Common stock, par value: $0.01; 3,000 shares authorized;                                     |   |         |       |   |   |   |   |   |
|      1,000 shares issued and outstanding (2009 and 2008)            |   |         | -          |   |   |   | - |   |
| Additional paid-in capital                                                                   |   |         | 321,185    |   |   |   | 315,771 |   |
| Accumulated other comprehensive income (loss), net of deferred income tax expense of         |   |         |       |   |   |   |   |   |
|      $89.9 million at 2009 and tax benefit of $38.8 million at 2008 |   |         | 166,978    |   |   |   | (72,063 | ) |
| Retained earnings                                                                            |   |         | 2,370,611  |   |   |   | 1,959,260 |   |
|          Total stockholder's equity             |   |         | 2,858,774  |   |   |   | 2,202,968 |   |
| TOTAL LIABILITIES AND STOCKHOLDER'S EQUITY                                                   |   | $            | 13,379,575 |   |   | $ | 12,866,622 |   |
|                                                                                         |   |         |       |   |   |   |   |   |
| The accompanying notes are an integral part of the consolidated financial statements.        |   |         |       |   |   |   |   |   |

----

Index

AND COMPREHENSIVE INCOME (LOSS)

|                                                                                  |   | Years Ended December 31, |      |
|---------------------------------------------------------------------------------------|--------|--------------------------|-----------|
| (Dollars in thousands)                                                                |   | 2009                     |      |   | 2008 |   |   | 2007 |   |
|                                                                                  |   |                     |      |   |   |   |   |   |   |
| REVENUES:                                                                             |   |                     |      |   |   |   |   |   |   |
| Premiums earned                                                                       |   | $                        | 1,785,060 |   |   | $ | 1,881,782 |   |   | $ | 2,178,900 |   |
| Net investment income                                                                 |   |                     | 262,086   |   |   |   | 363,053 |   |   |   | 406,592 |   |
| Net realized capital gains (losses):                                                  |   |                     |      |   |   |   |   |   |   |   |   |   |
| Other-than-temporary impairments on fixed maturity securities                         |   |                     | (5,510    | ) |   |   | (74,500 | ) |   |   | (4,014 | ) |
| Other-than-temporary impairments on fixed maturity securities                         |   |                     |      |   |   |   |   |   |   |   |   |   |
| transferred to other comprehensive income                                             |   |                     | -         |   |   |   | - |   |   |   | - |   |
| Other net realized capital gains (losses)                                             |   |                     | 62,438    |   |   |   | (414,686 | ) |   |   | 84,901 |   |
| Total net realized capital gains (losses)                                             |   |                     | 56,928    |   |   |   | (489,186 | ) |   |   | 80,887 |   |
| Realized gain on debt repurchase                                                      |   |                     | 78,271    |   |   |   | - |   |   |   | - |   |
| Other income (expense)                                                                |   |                     | 366       |   |   |   | 57,921 |   |   |   | (73,641 | ) |
| Total revenues                                                                        |   |                     | 2,182,711 |   |   |   | 1,813,570 |   |   |   | 2,592,738 |   |
|                                                                                  |   |                     |      |   |   |   |   |   |   |   |   |   |
| CLAIMS AND EXPENSES:                                                                  |   |                     |      |   |   |   |   |   |   |   |   |   |
| Incurred losses and loss adjustment expenses                                          |   |                     | 1,091,676 |   |   |   | 1,465,560 |   |   |   | 1,507,574 |   |
| Commission, brokerage, taxes and fees                                                 |   |                     | 344,577   |   |   |   | 398,610 |   |   |   | 465,912 |   |
| Other underwriting expenses                                                           |   |                     | 150,332   |   |   |   | 129,926 |   |   |   | 123,916 |   |
| Interest, fee and bond issue cost amortization expense                                |   |                     | 70,883    |   |   |   | 78,979 |   |   |   | 91,059 |   |
| Total claims and expenses                                                             |   |                     | 1,657,468 |   |   |   | 2,073,075 |   |   |   | 2,188,461 |   |
|                                                                                  |   |                     |      |   |   |   |   |   |   |   |   |   |
| INCOME (LOSS) BEFORE TAXES                                                            |   |                     | 525,243   |   |   |   | (259,505 | ) |   |   | 404,277 |   |
| Income tax expense (benefit)                                                          |   |                     | 129,392   |   |   |   | (134,748 | ) |   |   | 100,086 |   |
|                                                                                  |   |                     |      |   |   |   |   |   |   |   |   |   |
| NET INCOME (LOSS)                                                                     |   | $                        | 395,851   |   |   | $ | (124,757 | ) |   | $ | 304,191 |   |
|                                                                                  |   |                     |      |   |   |   |   |   |   |   |   |   |
| Other comprehensive income (loss), net of tax                                         |   |                     | 254,541   |   |   |   | (235,339 | ) |   |   | 35,482 |   |
|                                                                                  |   |                     |      |   |   |   |   |   |   |   |   |   |
| COMPREHENSIVE INCOME (LOSS)                                                           |   | $                        | 650,392   |   |   | $ | (360,096 | ) |   | $ | 339,673 |   |
|                                                                                  |   |                     |      |   |   |   |   |   |   |   |   |   |
| The accompanying notes are an integral part of the consolidated financial statements. |   |                     |      |   |   |   |   |   |   |   |   |   |

----

Index

CHANGES IN STOCKHOLDER’S EQUITY

|                                                                                                                                                                                    |   | Years Ended December 31, |      |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------------------------|-----------|
| (Dollars in thousands, except share amounts)                                                                                                                                            |   | 2009                     |      |   | 2008 |   |   | 2007 |   |
|                                                                                                                                                                                    |   |                     |      |   |   |   |   |   |   |
| COMMON STOCK (shares outstanding):                                                                                                                                                      |   |                     |      |   |   |   |   |   |   |
| Balance, beginning of period                                                                                                                                                            |   |                     | 1,000     |   |   |   | 1,000 |   |   |   | 1,000 |   |
| Balance, end of period                                                                                                                                                                  |   |                     | 1,000     |   |   |   | 1,000 |   |   |   | 1,000 |   |
|                                                                                                                                                                                    |   |                     |      |   |   |   |   |   |   |   |   |   |
| ADDITIONAL PAID-IN CAPITAL:                                                                                                                                                             |   |                     |      |   |   |   |   |   |   |   |   |   |
| Balance, beginning of period                                                                                                                                                            |   | $                        | 315,771   |   |   | $ | 310,206 |   |   | $ | 300,764 |   |
| Share-based compensation plans                                                                                                                                                          |   |                     | 5,414     |   |   |   | 5,565 |   |   |   | 9,442 |   |
| Balance, end of period                                                                                                                                                                  |   |                     | 321,185   |   |   |   | 315,771 |   |   |   | 310,206 |   |
|                                                                                                                                                                                    |   |                     |      |   |   |   |   |   |   |   |   |   |
| ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS),                                                                                                                                          |   |                     |      |   |   |   |   |   |   |   |   |   |
| NET OF DEFERRED INCOME TAXES:                                                                                                                                                           |   |                     |      |   |   |   |   |   |   |   |   |   |
| Balance, beginning of period                                                                                                                                                            |   |                     | (72,063   | ) |   |   | 163,276 |   |   |   | 332,578 |   |
| Cumulative adjustment of initial adoption(1), net of tax                                                                                                                           |   |                     | (15,500   | ) |   |   | - |   |   |   | - |   |
| Cumulative adjustment of initial adoption(2), net of tax                                                                                                                           |   |                     | -         |   |   |   | - |   |   |   | (204,784 | ) |
| Net increase (decrease) during the period                                                                                                                                               |   |                     | 254,541   |   |   |   | (235,339 | ) |   |   | 35,482 |   |
| Balance, end of period                                                                                                                                                                  |   |                     | 166,978   |   |   |   | (72,063 | ) |   |   | 163,276 |   |
|                                                                                                                                                                                    |   |                     |      |   |   |   |   |   |   |   |   |   |
| RETAINED EARNINGS:                                                                                                                                                                      |   |                     |      |   |   |   |   |   |   |   |   |   |
| Balance, beginning of period                                                                                                                                                            |   |                     | 1,959,260 |   |   |   | 2,094,017 |   |   |   | 1,585,042 |   |
| Cumulative adjustment of initial adoption(1), net of tax                                                                                                                           |   |                     | 15,500    |   |   |   | - |   |   |   | - |   |
| Cumulative adjustment of initial adoption(2), net of tax                                                                                                                           |   |                     | -         |   |   |   | - |   |   |   | 204,784 |   |
| Net income (loss)                                                                                                                                                                       |   |                     | 395,851   |   |   |   | (124,757 | ) |   |   | 304,191 |   |
| Dividends declared                                                                                                                                                                      |   |                     | -         |   |   |   | (10,000 | ) |   |   | - |   |
| Balance, end of period                                                                                                                                                                  |   |                     | 2,370,611 |   |   |   | 1,959,260 |   |   |   | 2,094,017 |   |
|                                                                                                                                                                                    |   |                     |      |   |   |   |   |   |   |   |   |   |
| TOTAL STOCKHOLDER'S EQUITY, END OF PERIOD                                                                                                                                               |   | $                        | 2,858,774 |   |   | $ | 2,202,968 |   |   | $ | 2,567,499 |   |
|                                                                                                                                                                                    |   |                     |      |   |   |   |   |   |   |   |   |   |
| (1)   The cumulative adjustment to accumulated other comprehensive income (loss) and retained earnings, net of deferred income taxes, represents the effect of initially |   |                     |      |   |   |   |   |   |   |
|        adopting new guidance for other-than-temporary impairments of debt securities.                                                                |   |                     |      |   |   |   |   |   |   |   |   |   |
|                                                                                                                                                                                    |   |                     |      |   |   |   |   |   |   |   |   |   |
| (2)   The cumulative adjustment to accumulated other comprehensive income (loss) and retained earnings, net of deferred income taxes, represents the effect of initially |   |                     |      |   |   |   |   |   |   |   |
|        adopting new guidance for fair value option for financial assets.                                                                             |   |                     |      |   |   |   |   |   |   |   |   |   |
|                                                                                                                                                                                    |   |                     |      |   |   |   |   |   |   |   |   |   |
| The accompanying notes are an integral part of the consolidated financial statements.                                                                                                   |   |                     |      |   |   |   |   |   |   |   |   |   |

----

Index

CONSOLIDATED STATEMENTS OF CASH FLOWS

|                                                                                  |   | Years Ended December 31, |       |
|---------------------------------------------------------------------------------------|--------|--------------------------|------------|
| (Dollars in thousands)                                                                |   | 2009                     |       |   | 2008 |   |   | 2007 |   |
|                                                                                  |   |                     |       |   |   |   |   |   |   |
| CASH FLOWS FROM OPERATING ACTIVITIES:                                                 |   |                     |       |   |   |   |   |   |   |
| Net income (loss)                                                                     |   | $                        | 395,851    |   |   | $ | (124,757 | ) |   | $ | 304,191 |   |
| Adjustments to reconcile net income to net cash provided by operating activities:     |   |                     |       |   |   |   |   |   |   |   |   |   |
| (Increase) decrease in premiums receivable                                            |   |                     | (51,103    | ) |   |   | 82,398 |   |   |   | 145,022 |   |
| Decrease in funds held by reinsureds, net                                             |   |                     | 31,915     |   |   |   | 2,426 |   |   |   | 6,808 |   |
| Decrease (increase) in reinsurance receivables                                        |   |                     | 15,207     |   |   |   | (50,349 | ) |   |   | (63,541 | ) |
| Decrease (increase) in deferred tax asset                                             |   |                     | 170,490    |   |   |   | (112,021 | ) |   |   | (50,191 | ) |
| (Decrease) increase in reserve for losses and loss adjustment expenses                |   |                     | (175,589   | ) |   |   | (42,354 | ) |   |   | 66,119 |   |
| Increase (decrease) in unearned premiums                                              |   |                     | 54,760     |   |   |   | (181,240 | ) |   |   | (66,483 | ) |
| Change in equity adjustments in limited partnerships                                  |   |                     | 28,467     |   |   |   | 30,985 |   |   |   | (22,726 | ) |
| Change in other assets and liabilities, net                                           |   |                     | (78,685    | ) |   |   | (65,102 | ) |   |   | (83,460 | ) |
| Non-cash compensation expense                                                         |   |                     | 5,384      |   |   |   | 4,983 |   |   |   | 4,832 |   |
| Non-cash loss portfolio transfer transaction                                          |   |                     | -          |   |   |   | 315 |   |   |   | - |   |
| Amortization of bond premium/(accrual of bond discount)                               |   |                     | 11,665     |   |   |   | 9,257 |   |   |   | (7,969 | ) |
| Amortization of underwriting discount on senior notes                                 |   |                     | 192        |   |   |   | 179 |   |   |   | 164 |   |
| Realized gain on debt repurchase                                                      |   |                     | (78,271    | ) |   |   | - |   |   |   | - |   |
| Net realized capital (gains) losses                                                   |   |                     | (56,928    | ) |   |   | 489,186 |   |   |   | (80,887 | ) |
| Net cash provided by operating activities                                             |   |                     | 273,355    |   |   |   | 43,906 |   |   |   | 151,879 |   |
|                                                                                  |   |                     |       |   |   |   |   |   |   |   |   |   |
| CASH FLOWS FROM INVESTING ACTIVITIES:                                                 |   |                     |       |   |   |   |   |   |   |   |   |   |
| Proceeds from fixed maturities matured/called - available for sale, at market value   |   |                     | 445,817    |   |   |   | 486,174 |   |   |   | 736,297 |   |
| Proceeds from fixed maturities matured/called - available for sale, at fair value     |   |                     | 15,358     |   |   |   | 1,900 |   |   |   | - |   |
| Proceeds from fixed maturities sold - available for sale, at market value             |   |                     | 102,396    |   |   |   | 140,139 |   |   |   | 38,504 |   |
| Proceeds from fixed maturities sold - available for sale, at fair value               |   |                     | 14,778     |   |   |   | - |   |   |   | - |   |
| Proceeds from equity securities sold - available for sale, at market value            |   |                     | 23,028     |   |   |   | (15 | ) |   |   | 6,497 |   |
| Proceeds from equity securities sold - available for sale, at fair value              |   |                     | 43,483     |   |   |   | 777,250 |   |   |   | 760,729 |   |
| Distributions from other invested assets                                              |   |                     | 28,460     |   |   |   | 94,082 |   |   |   | 48,712 |   |
| Cost of fixed maturities acquired - available for sale, at market value               |   |                     | (1,152,966 | ) |   |   | (1,362,282 | ) |   |   | (585,910 | ) |
| Cost of fixed maturities acquired - available for sale, at fair value                 |   |                     | (27,555    | ) |   |   | (43,414 | ) |   |   | - |   |
| Cost of equity securities acquired - available for sale, at fair value                |   |                     | (265,272   | ) |   |   | (322,530 | ) |   |   | (329,486 | ) |
| Cost of other invested assets acquired                                                |   |                     | (43,628    | ) |   |   | (76,384 | ) |   |   | (135,357 | ) |
| Cost of other invested assets acquired, at fair value                                 |   |                     | (25,840    | ) |   |   | (150,744 | ) |   |   | (241,584 | ) |
| Net change in short-term investments                                                  |   |                     | 666,882    |   |   |   | 364,811 |   |   |   | (628,453 | ) |
| Net change in unsettled securities transactions                                       |   |                     | 6,042      |   |   |   | 7,436 |   |   |   | (5,609 | ) |
| Net cash used in investing activities                                                 |   |                     | (169,017   | ) |   |   | (83,577 | ) |   |   | (335,660 | ) |
|                                                                                  |   |                     |       |   |   |   |   |   |   |   |   |   |
| CASH FLOWS FROM FINANCING ACTIVITIES:                                                 |   |                     |       |   |   |   |   |   |   |   |   |   |
| Tax benefit from share-based compensation                                             |   |                     | 30         |   |   |   | 582 |   |   |   | 4,610 |   |
| Net proceeds from issuance of long term notes                                         |   |                     | -          |   |   |   | - |   |   |   | 395,637 |   |
| Redemption of junior subordinated debt securities                                     |   |                     | -          |   |   |   | - |   |   |   | (216,496 | ) |
| Net cost of debt repurchase                                                           |   |                     | (83,026    | ) |   |   | - |   |   |   | - |   |
| Dividends paid to stockholder                                                         |   |                     | -          |   |   |   | (10,000 | ) |   |   | - |   |
| Net cash (used in) provided by financing activities                                   |   |                     | (82,996    | ) |   |   | (9,418 | ) |   |   | 183,751 |   |
|                                                                                  |   |                     |       |   |   |   |   |   |   |   |   |   |
| EFFECT OF EXCHANGE RATE CHANGES ON CASH                                               |   |                     | (6,126     | ) |   |   | (5,094 | ) |   |   | 9,942 |   |
|                                                                                  |   |                     |       |   |   |   |   |   |   |   |   |   |
| Net increase (decrease) in cash                                                       |   |                     | 15,216     |   |   |   | (54,183 | ) |   |   | 9,912 |   |
| Cash, beginning of period                                                             |   |                     | 92,264     |   |   |   | 146,447 |   |   |   | 136,535 |   |
| Cash, end of period                                                                   |   | $                        | 107,480    |   |   | $ | 92,264 |   |   | $ | 146,447 |   |
|                                                                                  |   |                     |       |   |   |   |   |   |   |   |   |   |
| SUPPLEMENTAL CASH FLOW INFORMATION:                                                   |   |                     |       |   |   |   |   |   |   |   |   |   |
| Cash transactions:                                                                    |   |                     |       |   |   |   |   |   |   |   |   |   |
| Income taxes paid (recovered)                                                         |   | $                        | 30,859     |   |   | $ | (46,666 | ) |   | $ | 250,909 |   |
| Interest paid                                                                         |   | $                        | 71,256     |   |   | $ | 77,948 |   |   | $ | 82,635 |   |
|                                                                                  |   |                     |       |   |   |   |   |   |   |   |   |   |
| The accompanying notes are an integral part of the consolidated financial statements. |   |                     |       |   |   |   |   |   |   |   |   |   |

----

Index

----

Index

----

Index

----

Index

|                                                      |   | At December 31, 2009 |      |
|-----------------------------------------------------------|--------|----------------------|-----------|
|                                                      |   | Amortized            |      |   | Unrealized |   |   | Unrealized |   |   | Market |   |
| (Dollars in thousands)                                    |   | Cost                 |      |   | Appreciation |   |   | Depreciation |   |   | Value |   |
| Fixed maturity securities  - available for sale |   |                 |      |   |   |   |   |   |   |   |   |   |
| U.S. Treasury securities and obligations of               |   |                 |      |   |   |   |   |   |   |   |   |   |
| U.S. government agencies and corporations                 |   | $                    | 132,348   |   |   | $ | 3,614 |   |   | $ | (1,671 | ) |   | $ | 134,291 |   |
| Obligations of U.S. states and political subdivisions     |   |                 | 3,694,267 |   |   |   | 183,848 |   |   |   | (24,256 | ) |   |   | 3,853,859 |   |
| Corporate securities                                      |   |                 | 618,507   |   |   |   | 30,298 |   |   |   | (13,424 | ) |   |   | 635,381 |   |
| Asset-backed securities                                   |   |                 | 16,597    |   |   |   | 460 |   |   |   | (1,909 | ) |   |   | 15,148 |   |
| Mortgage-backed securities                                |   |                 |      |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Commercial                                                |   |                 | 24,213    |   |   |   | 4,956 |   |   |   | (111 | ) |   |   | 29,058 |   |
| Agency residential                                        |   |                 | 556,032   |   |   |   | 10,366 |   |   |   | (1,691 | ) |   |   | 564,707 |   |
| Non-agency residential                                    |   |                 | 61,098    |   |   |   | 916 |   |   |   | (7,055 | ) |   |   | 54,959 |   |
| Foreign government securities                             |   |                 | 638,204   |   |   |   | 27,700 |   |   |   | (6,687 | ) |   |   | 659,217 |   |
| Foreign corporate securities                              |   |                 | 514,493   |   |   |   | 17,184 |   |   |   | (15,129 | ) |   |   | 516,548 |   |
| Total fixed maturity securities                           |   | $                    | 6,255,759 |   |   | $ | 279,342 |   |   | $ | (71,933 | ) |   | $ | 6,463,168 |   |
| Equity securities                                         |   | $                    | 15        |   |   | $ | - |   |   | $ | (2 | ) |   | $ | 13 |   |

----

Index

|                                                      |   | At December 31, 2008 |      |
|-----------------------------------------------------------|--------|----------------------|-----------|
|                                                      |   | Amortized            |      |   | Unrealized |   |   | Unrealized |   |   | Market |   |
| (Dollars in thousands)                                    |   | Cost                 |      |   | Appreciation |   |   | Depreciation |   |   | Value |   |
| Fixed maturity securities  - available for sale |   |                 |      |   |   |   |   |   |   |   |   |   |
| U.S. Treasury securities and obligations of               |   |                 |      |   |   |   |   |   |   |   |   |   |
| U.S. government agencies and corporations                 |   | $                    | 139,776   |   |   | $ | 15,456 |   |   | $ | - |   |   | $ | 155,232 |   |
| Obligations of U.S. states and political subdivisions     |   |                 | 3,846,754 |   |   |   | 113,885 |   |   |   | (164,921 | ) |   |   | 3,795,718 |   |
| Corporate securities                                      |   |                 | 482,533   |   |   |   | 18,404 |   |   |   | (64,620 | ) |   |   | 436,317 |   |
| Asset-backed securities                                   |   |                 | 13,795    |   |   |   | 7 |   |   |   | (4,441 | ) |   |   | 9,361 |   |
| Mortgage-backed securities                                |   |                 |      |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Commercial                                                |   |                 | 6,516     |   |   |   | - |   |   |   | (1,067 | ) |   |   | 5,449 |   |
| Agency residential                                        |   |                 | 170,299   |   |   |   | 4,838 |   |   |   | (33 | ) |   |   | 175,104 |   |
| Non-agency residential                                    |   |                 | 54,816    |   |   |   | - |   |   |   | (18,252 | ) |   |   | 36,564 |   |
| Foreign government securities                             |   |                 | 467,935   |   |   |   | 32,538 |   |   |   | (7,776 | ) |   |   | 492,697 |   |
| Foreign corporate securities                              |   |                 | 428,059   |   |   |   | 6,602 |   |   |   | (29,247 | ) |   |   | 405,414 |   |
| Total fixed maturity securities                           |   | $                    | 5,610,483 |   |   | $ | 191,730 |   |   | $ | (290,357 | ) |   | $ | 5,511,856 |   |
| Equity securities                                         |   | $                    | 15        |   |   | $ | 1 |   |   | $ | - |   |   | $ | 16 |   |

|                                                           |   | At December 31, 2009 |      |   | At December 31, 2008 |   |
|----------------------------------------------------------------|--------|----------------------|-----------|--------|----------------------|--------|
|                                                           |   | Amortized            |      |   | Market               |   |   | Amortized |   |   | Market |   |
| (Dollars in thousands)                                         |   | Cost                 |      |   | Value                |   |   | Cost |   |   | Value |   |
| Fixed maturity securities – available for sale           |   |                 |      |   |                 |   |   |   |   |   |   |   |
|     Due in one year or less                |   | $                    | 334,054   |   |                 | $      | 335,948 |   |   | $ | 293,575 |   |   | $ | 286,141 |   |
|     Due after one year through five years  |   |                 | 1,276,968 |   |                 |   | 1,316,918 |   |   |   | 951,147 |   |   |   | 976,704 |   |
|     Due after five years through ten years |   |                 | 1,224,457 |   |                 |   | 1,282,470 |   |   |   | 1,152,818 |   |   |   | 1,161,999 |   |
|     Due after ten years                    |   |                 | 2,762,340 |   |                 |   | 2,863,960 |   |   |   | 2,967,517 |   |   |   | 2,860,534 |   |
| Asset-backed securities                                        |   |                 | 16,597    |   |                 |   | 15,148 |   |   |   | 13,795 |   |   |   | 9,361 |   |
| Mortgage-backed securities                                     |   |                 |      |   |                 |   |   |   |   |   |   |   |   |   |   |   |
| Commercial                                                     |   |                 | 24,213    |   |                 |   | 29,058 |   |   |   | 6,516 |   |   |   | 5,449 |   |
| Agency residential                                             |   |                 | 556,032   |   |                 |   | 564,707 |   |   |   | 170,299 |   |   |   | 175,104 |   |
| Non-agency residential                                         |   |                 | 61,098    |   |                 |   | 54,959 |   |   |   | 54,816 |   |   |   | 36,564 |   |
| Total fixed maturity securities                                |   | $                    | 6,255,759 |   |                 | $      | 6,463,168 |   |   | $ | 5,610,483 |   |   | $ | 5,511,856 |   |

----

Index

|                                                                             |   | Years Ended December 31, |     |
|----------------------------------------------------------------------------------|--------|--------------------------|----------|
| (Dollars in thousands)                                                           |   | 2009                     |     |   | 2008 |   |
| Increase (decrease) during the period between the market value and cost          |   |                     |     |   |   |   |
| of investments carried at market value, and deferred taxes thereon:              |   |                     |     |   |   |   |
| Fixed maturity securities                                                        |   | $                        | 329,881  |   |   | $ | (266,108 | ) |
| Fixed maturity securities, cumulative other-than-temporary impairment adjustment |   |                     | (23,846  | ) |   |   | - |   |
| Equity securities                                                                |   |                     | (3       | ) |   |   | - |   |
| Other invested assets                                                            |   |                     | 7,035    |   |   |   | (10,366 | ) |
| Change in unrealized  appreciation (depreciation), pre-tax             |   |                     | 313,067  |   |   |   | (276,474 | ) |
| Deferred tax (expense) benefit                                                   |   |                     | (117,920 | ) |   |   | 96,766 |   |
| Deferred tax benefit, cumulative other-than-temporary impairment adjustment      |   |                     | 8,346    |   |   |   | - |   |
| Change in unrealized appreciation (depreciation),                                |   |                     |     |   |   |   |   |   |
| net of deferred taxes, included in stockholder's equity                          |   | $                        | 203,493  |   |   | $ | (179,708 | ) |

----

Index

|                                                  |   | Duration by security type of unrealized loss at December 31, 2009 |    |
|-------------------------------------------------------|--------|-------------------------------------------------------------------|---------|
|                                                  |   | Less than 12 months                                               |    |   | Greater than 12 months |   |   | Total |   |
|                                                  |   |                                                              |    |   | Gross |   |   |   |   |   | Gross |   |   |   |   |   | Gross |   |
|                                                  |   |                                                              |    |   | Unrealized |   |   |   |   |   | Unrealized |   |   |   |   |   | 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             |   | $                                                                 | 44,943  |   |   | $ | (1,671 | ) |   | $ | - |   |   | $ | - |   |   | $ | 44,943 |   |   | $ | (1,671 | ) |
| Obligations of U.S. states and political subdivisions |   |                                                              | 559     |   |   |   | (4 | ) |   |   | 452,018 |   |   |   | (24,252 | ) |   |   | 452,577 |   |   |   | (24,256 | ) |
| Corporate securities                                  |   |                                                              | 45,045  |   |   |   | (1,056 | ) |   |   | 118,153 |   |   |   | (12,368 | ) |   |   | 163,198 |   |   |   | (13,424 | ) |
| Asset-backed securities                               |   |                                                              | 366     |   |   |   | (26 | ) |   |   | 8,233 |   |   |   | (1,883 | ) |   |   | 8,599 |   |   |   | (1,909 | ) |
| Mortgage-backed securities                            |   |                                                              |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Commercial                                            |   |                                                              | 959     |   |   |   | (34 | ) |   |   | 3,312 |   |   |   | (77 | ) |   |   | 4,271 |   |   |   | (111 | ) |
| Agency residential                                    |   |                                                              | 213,093 |   |   |   | (1,691 | ) |   |   | - |   |   |   | - |   |   |   | 213,093 |   |   |   | (1,691 | ) |
| Non-agency residential                                |   |                                                              | 1,272   |   |   |   | (31 | ) |   |   | 47,202 |   |   |   | (7,024 | ) |   |   | 48,474 |   |   |   | (7,055 | ) |
| Foreign government securities                         |   |                                                              | 159,493 |   |   |   | (2,158 | ) |   |   | 69,109 |   |   |   | (4,529 | ) |   |   | 228,602 |   |   |   | (6,687 | ) |
| Foreign corporate securities                          |   |                                                              | 124,325 |   |   |   | (4,205 | ) |   |   | 98,772 |   |   |   | (10,924 | ) |   |   | 223,097 |   |   |   | (15,129 | ) |
| Total fixed maturity securities                       |   | $                                                                 | 590,055 |   |   | $ | (10,876 | ) |   | $ | 796,799 |   |   | $ | (61,057 | ) |   | $ | 1,386,854 |   |   | $ | (71,933 | ) |
| Equity securities                                     |   |                                                              | 13      |   |   |   | (2 | ) |   |   | - |   |   |   | - |   |   |   | 13 |   |   |   | (2 | ) |
| Total                                                 |   | $                                                                 | 590,068 |   |   | $ | (10,878 | ) |   | $ | 796,799 |   |   | $ | (61,057 | ) |   | $ | 1,386,867 |   |   | $ | (71,935 | ) |

|                                |   | Duration by maturity of unrealized loss at December 31, 2009 |    |
|-------------------------------------|--------|--------------------------------------------------------------|---------|
|                                |   | Less than 12 months                                          |    |   | Greater than 12 months |   |   | Total |   |
|                                |   |                                                         |    |   | Gross |   |   |   |   |   | Gross |   |   |   |   |   | Gross |   |
|                                |   |                                                         |    |   | Unrealized |   |   |   |   |   | Unrealized |   |   |   |   |   | Unrealized |   |
| (Dollars in thousands)              |   | Market Value                                                 |    |   | Depreciation |   |   | Market Value |   |   | Depreciation |   |   | Market Value |   |   | Depreciation |   |
| Fixed maturity securities           |   |                                                         |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Due in one year or less             |   | $                                                            | -       |   |   | $ | - |   |   | $ | 58,010 |   |   | $ | (4,887 | ) |   | $ | 58,010 |   |   | $ | (4,887 | ) |
| Due in one year through five years  |   |                                                         | 192,929 |   |   |   | (2,975 | ) |   |   | 140,349 |   |   |   | (9,129 | ) |   |   | 333,278 |   |   |   | (12,104 | ) |
| Due in five years through ten years |   |                                                         | 137,196 |   |   |   | (2,934 | ) |   |   | 54,279 |   |   |   | (3,401 | ) |   |   | 191,475 |   |   |   | (6,335 | ) |
| Due after ten years                 |   |                                                         | 44,240  |   |   |   | (3,185 | ) |   |   | 485,414 |   |   |   | (34,656 | ) |   |   | 529,654 |   |   |   | (37,841 | ) |
| Asset-backed securities             |   |                                                         | 366     |   |   |   | (26 | ) |   |   | 8,233 |   |   |   | (1,883 | ) |   |   | 8,599 |   |   |   | (1,909 | ) |
| Mortgage-backed securities          |   |                                                         | 215,324 |   |   |   | (1,756 | ) |   |   | 50,514 |   |   |   | (7,101 | ) |   |   | 265,838 |   |   |   | (8,857 | ) |
| Total fixed maturity securities     |   | $                                                            | 590,055 |   |   | $ | (10,876 | ) |   | $ | 796,799 |   |   | $ | (61,057 | ) |   | $ | 1,386,854 |   |   | $ | (71,933 | ) |
| Equity securities                   |   | $                                                            | 13      |   |   | $ | (2 | ) |   | $ | - |   |   | $ | - |   |   | $ | 13 |   |   | $ | (2 | ) |

----

Index

|                                                  |   | Duration by security type of unrealized loss at December 31, 2008 |      |
|-------------------------------------------------------|--------|-------------------------------------------------------------------|-----------|
|                                                  |   | Less than 12 months                                               |      |   | Greater than 12 months |   |   | Total |   |
|                                                  |   |                                                              |      |   | Gross |   |   |   |   |   | Gross |   |   |   |   |   | Gross |   |
|                                                  |   |                                                              |      |   | Unrealized |   |   |   |   |   | Unrealized |   |   |   |   |   | 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             |   | $                                                                 | -         |   |   | $ | - |   |   | $ | - |   |   | $ | - |   |   | $ | - |   |   | $ | - |   |
| Obligations of U.S. states and political subdivisions |   |                                                              | 1,471,807 |   |   |   | (146,292 | ) |   |   | 176,555 |   |   |   | (18,629 | ) |   |   | 1,648,362 |   |   |   | (164,921 | ) |
| Corporate securities                                  |   |                                                              | 189,385   |   |   |   | (42,278 | ) |   |   | 97,407 |   |   |   | (22,342 | ) |   |   | 286,792 |   |   |   | (64,620 | ) |
| Asset-backed securities                               |   |                                                              | 4,230     |   |   |   | (62 | ) |   |   | 3,983 |   |   |   | (4,379 | ) |   |   | 8,213 |   |   |   | (4,441 | ) |
| Mortgage-backed securities                            |   |                                                              |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Commercial                                            |   |                                                              | 2,474     |   |   |   | (450 | ) |   |   | 2,974 |   |   |   | (617 | ) |   |   | 5,448 |   |   |   | (1,067 | ) |
| Agency residential                                    |   |                                                              | 3,291     |   |   |   | (29 | ) |   |   | 466 |   |   |   | (4 | ) |   |   | 3,757 |   |   |   | (33 | ) |
| Non-agency residential                                |   |                                                              | -         |   |   |   | - |   |   |   | 36,171 |   |   |   | (18,252 | ) |   |   | 36,171 |   |   |   | (18,252 | ) |
| Foreign government securities                         |   |                                                              | 79,063    |   |   |   | (7,715 | ) |   |   | 2,759 |   |   |   | (61 | ) |   |   | 81,822 |   |   |   | (7,776 | ) |
| Foreign corporate securities                          |   |                                                              | 167,132   |   |   |   | (13,702 | ) |   |   | 67,537 |   |   |   | (15,545 | ) |   |   | 234,669 |   |   |   | (29,247 | ) |
| Total fixed maturity securities                       |   | $                                                                 | 1,917,382 |   |   | $ | (210,528 | ) |   | $ | 387,852 |   |   | $ | (79,829 | ) |   | $ | 2,305,234 |   |   | $ | (290,357 | ) |

|                                |   | Duration by maturity of unrealized loss at December 31, 2008 |      |
|-------------------------------------|--------|--------------------------------------------------------------|-----------|
|                                |   | Less than 12 months                                          |      |   | Greater than 12 months |   |   | Total |   |
|                                |   |                                                         |      |   | Gross |   |   |   |   |   | Gross |   |   |   |   |   | Gross |   |
|                                |   |                                                         |      |   | Unrealized |   |   |   |   |   | Unrealized |   |   |   |   |   | Unrealized |   |
| (Dollars in thousands)              |   | Market Value                                                 |      |   | Depreciation |   |   | Market Value |   |   | Depreciation |   |   | Market Value |   |   | Depreciation |   |
| Fixed maturity securities           |   |                                                         |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Due in one year or less             |   | $                                                            | 87,124    |   |   | $ | (8,412 | ) |   | $ | 22,024 |   |   | $ | (1,516 | ) |   | $ | 109,148 |   |   | $ | (9,928 | ) |
| Due in one year through five years  |   |                                                         | 198,004   |   |   |   | (10,813 | ) |   |   | 52,705 |   |   |   | (5,676 | ) |   |   | 250,709 |   |   |   | (16,489 | ) |
| Due in five years through ten years |   |                                                         | 145,943   |   |   |   | (10,767 | ) |   |   | 85,396 |   |   |   | (17,662 | ) |   |   | 231,339 |   |   |   | (28,429 | ) |
| Due after ten years                 |   |                                                         | 1,476,316 |   |   |   | (179,995 | ) |   |   | 184,133 |   |   |   | (31,723 | ) |   |   | 1,660,449 |   |   |   | (211,718 | ) |
| Asset-backed securities             |   |                                                         | 4,230     |   |   |   | (62 | ) |   |   | 3,983 |   |   |   | (4,379 | ) |   |   | 8,213 |   |   |   | (4,441 | ) |
| Mortgage-backed securities          |   |                                                         | 5,765     |   |   |   | (479 | ) |   |   | 39,611 |   |   |   | (18,873 | ) |   |   | 45,376 |   |   |   | (19,352 | ) |
| Total fixed maturity securities     |   | $                                                            | 1,917,382 |   |   | $ | (210,528 | ) |   | $ | 387,852 |   |   | $ | (79,829 | ) |   | $ | 2,305,234 |   |   | $ | (290,357 | ) |

----

Index

|                                |   | Years Ended December 31, |    |
|-------------------------------------|--------|--------------------------|---------|
| (Dollars in thousands)              |   | 2009                     |    |   | 2008 |   |   | 2007 |   |
| Fixed maturity securities           |   | $                        | 286,031 |   |   | $ | 313,651 |   |   | $ | 294,707 |   |
| Equity securities                   |   |                     | 3,573   |   |   |   | 5,968 |   |   |   | 15,725 |   |
| Short-term investments and cash     |   |                     | 3,484   |   |   |   | 28,553 |   |   |   | 61,940 |   |
| Other invested assets               |   |                     |    |   |   |   |   |   |   |   |   |   |
| Limited partnerships                |   |                     | (28,467 | ) |   |   | 13,191 |   |   |   | 35,472 |   |
| Other                               |   |                     | 8,061   |   |   |   | 9,494 |   |   |   | 7,054 |   |
| Total gross investment income       |   |                     | 272,682 |   |   |   | 370,857 |   |   |   | 414,898 |   |
| Interest credited and other expense |   |                     | (10,596 | ) |   |   | (7,804 | ) |   |   | (8,306 | ) |
| Total net investment income         |   | $                        | 262,086 |   |   | $ | 363,053 |   |   | $ | 406,592 |   |

|                                       |   | Years Ended December 31, |    |
|--------------------------------------------|--------|--------------------------|---------|
| (Dollars in thousands)                     |   | 2009                     |    |   | 2008 |   |   | 2007 |   |
| Fixed maturity securities, market value:   |   |                     |    |   |   |   |   |   |   |
| Other-than-temporary impairments           |   | $                        | (5,510  | ) |   | $ | (74,500 | ) |   | $ | (4,014 | ) |
| Losses from sales                          |   |                     | (34,100 | ) |   |   | (87,410 | ) |   |   | (977 | ) |
| Fixed maturity securities, fair value:     |   |                     |    |   |   |   |   |   |   |   |   |   |
| Gain from sales                            |   |                     | 682     |   |   |   | 102 |   |   |   | - |   |
| Gains from fair value adjustments          |   |                     | 9,337   |   |   |   | 1,473 |   |   |   | - |   |
| Equity securities, market value:           |   |                     |    |   |   |   |   |   |   |   |   |   |
| Gains from sales                           |   |                     | 8,041   |   |   |   | - |   |   |   | - |   |
| Equity securities, fair value:             |   |                     |    |   |   |   |   |   |   |   |   |   |
| Gains (losses) from sales                  |   |                     | 7,513   |   |   |   | (105,931 | ) |   |   | (10,767 | ) |
| Gains (losses) from fair value adjustments |   |                     | 30,908  |   |   |   | (134,907 | ) |   |   | 84,434 |   |
| Other invested assets, fair value:         |   |                     |    |   |   |   |   |   |   |   |   |   |
| Gains (losses) from fair value adjustments |   |                     | 40,048  |   |   |   | (87,786 | ) |   |   | 12,207 |   |
| Short-term investment gains (losses)       |   |                     | 9       |   |   |   | (227 | ) |   |   | 4 |   |
| Total net realized capital gains (losses)  |   | $                        | 56,928  |   |   | $ | (489,186 | ) |   | $ | 80,887 |   |

----

Index

|                                    |   | At December 31, |       |
|-----------------------------------------|--------|-----------------|------------|
| (Dollars in thousands)                  |   | 2009            |       |   | 2008 |   |   | 2007 |   |
| Gross reserves at January 1             |   | $               | 7,419,993  |   |   | $ | 7,538,704 |   |   | $ | 7,397,270 |   |
| Less reinsurance recoverables           |   |            | (3,045,692 | ) |   |   | (2,279,417 | ) |   |   | (2,179,002 | ) |
| Net reserves at January 1               |   |            | 4,374,301  |   |   |   | 5,259,287 |   |   |   | 5,218,268 |   |
|                                    |   |            |       |   |   |   |   |   |   |   |   |   |
| Incurred related to:                    |   |            |       |   |   |   |   |   |   |   |   |   |
| Current year                            |   |            | 1,021,687  |   |   |   | 1,323,520 |   |   |   | 1,231,834 |   |
| Prior years                             |   |            | 69,989     |   |   |   | 142,040 |   |   |   | 275,740 |   |
| Total incurred losses and LAE           |   |            | 1,091,676  |   |   |   | 1,465,560 |   |   |   | 1,507,574 |   |
|                                    |   |            |       |   |   |   |   |   |   |   |   |   |
| Paid related to:                        |   |            |       |   |   |   |   |   |   |   |   |   |
| Current year                            |   |            | 183,566    |   |   |   | 305,122 |   |   |   | 290,474 |   |
| Prior years                             |   |            | 1,117,940  |   |   |   | 1,931,267 |   |   |   | 1,242,072 |   |
| Total paid losses and LAE               |   |            | 1,301,506  |   |   |   | 2,236,389 |   |   |   | 1,532,546 |   |
|                                    |   |            |       |   |   |   |   |   |   |   |   |   |
| Foreign exchange/translation adjustment |   |            | 83,964     |   |   |   | (114,157 | ) |   |   | 65,991 |   |
|                                    |   |            |       |   |   |   |   |   |   |   |   |   |
| Net reserves at December 31             |   |            | 4,248,435  |   |   |   | 4,374,301 |   |   |   | 5,259,287 |   |
| Plus reinsurance recoverables           |   |            | 3,051,704  |   |   |   | 3,045,692 |   |   |   | 2,279,417 |   |
| Gross reserves at December 31           |   | $               | 7,300,139  |   |   | $ | 7,419,993 |   |   | $ | 7,538,704 |   |

----

Index

|                         |   | At December 31, |     |
|------------------------------|--------|-----------------|----------|
| (Dollars in thousands)       |   | 2009            |     |   | 2008 |   |   | 2007 |   |
| Gross basis:                 |   |            |     |   |   |   |   |   |   |
| Beginning of period reserves |   | $               | 786,843  |   |   | $ | 922,843 |   |   | $ | 650,134 |   |
| Incurred losses              |   |            | -        |   |   |   | - |   |   |   | 405,000 |   |
| Paid losses                  |   |            | (148,169 | ) |   |   | (136,000 | ) |   |   | (132,291 | ) |
| End of period reserves       |   | $               | 638,674  |   |   | $ | 786,843 |   |   | $ | 922,843 |   |
|                         |   |            |     |   |   |   |   |   |   |   |   |   |
| Net basis:                   |   |            |     |   |   |   |   |   |   |   |   |   |
| Beginning of period reserves |   | $               | 485,296  |   |   | $ | 537,549 |   |   | $ | 313,308 |   |
| Incurred losses              |   |            | (4,715   | ) |   |   | - |   |   |   | 266,362 |   |
| Paid losses                  |   |            | (50,160  | ) |   |   | (52,253 | ) |   |   | (42,121 | ) |
| End of period reserves       |   | $               | 430,421  |   |   | $ | 485,296 |   |   | $ | 537,549 |   |

----

Index

----

Index

|                                                  |   |              |      |   | Fair Value Measurement Using: |   |
|-------------------------------------------------------|--------|-------------------|-----------|--------|-------------------------------|--------|
|                                                  |   |              |      |   | Quoted Prices                 |   |   |   |   |   |   |   |
|                                                  |   |              |      |   | in Active                     |   |   | Significant |   |   |   |   |
|                                                  |   |              |      |   | Markets for                   |   |   | Other |   |   | Significant |   |
|                                                  |   |              |      |   | Identical                     |   |   | Observable |   |   | Unobservable |   |
|                                                  |   |              |      |   | Assets                        |   |   | Inputs |   |   | Inputs |   |
| (Dollars in thousands)                                |   | December 31, 2009 |      |   | (Level 1)                     |   |   | (Level 2) |   |   | (Level 3) |   |
| Assets:                                               |   |              |      |   |                          |   |   |   |   |   |   |   |
| Fixed maturities, market value                        |   |              |      |   |                          |   |   |   |   |   |   |   |
| U.S. Treasury securities and obligations of           |   |              |      |   |                          |   |   |   |   |   |   |   |
| U.S. government agencies and corporations             |   | $                 | 134,291   |   |                          | $      | - |   |   | $ | 134,291 |   |   | $ | - |   |
| Obligations of U.S. States and political subdivisions |   |              | 3,853,859 |   |                          |   | - |   |   |   | 3,853,859 |   |   |   | - |   |
| Corporate securities                                  |   |              | 635,381   |   |                          |   | - |   |   |   | 628,451 |   |   |   | 6,930 |   |
| Asset-backed securities                               |   |              | 15,148    |   |                          |   | - |   |   |   | 8,890 |   |   |   | 6,258 |   |
| Mortgage-backed securities                            |   |              |      |   |                          |   |   |   |   |   |   |   |   |   |   |   |
| Commercial                                            |   |              | 29,058    |   |                          |   | - |   |   |   | 29,058 |   |   |   | - |   |
| Agency residential                                    |   |              | 564,707   |   |                          |   | - |   |   |   | 564,707 |   |   |   | - |   |
| Non-agency residential                                |   |              | 54,959    |   |                          |   | - |   |   |   | 54,533 |   |   |   | 426 |   |
| Foreign government securities                         |   |              | 659,217   |   |                          |   | - |   |   |   | 659,217 |   |   |   | - |   |
| Foreign corporate securities                          |   |              | 516,548   |   |                          |   | - |   |   |   | 516,548 |   |   |   | - |   |
| Total fixed maturities, market value                  |   |              | 6,463,168 |   |                          |   | - |   |   |   | 6,449,554 |   |   |   | 13,614 |   |
|                                                  |   |              |      |   |                          |   |   |   |   |   |   |   |   |   |   |   |
| Fixed maturities, fair value                          |   |              | 50,528    |   |                          |   | - |   |   |   | 50,528 |   |   |   | - |   |
| Equity securities, market value                       |   |              | 13        |   |                          |   | 13 |   |   |   | - |   |   |   | - |   |
| Equity securities, fair value                         |   |              | 380,025   |   |                          |   | 379,058 |   |   |   | 967 |   |   |   | - |   |
| Other invested assets, fair value                     |   |              | 382,639   |   |                          |   | 382,639 |   |   |   | - |   |   |   | - |   |

|                                                  |   |              |      |   | Fair Value Measurement Using: |   |
|-------------------------------------------------------|--------|-------------------|-----------|--------|-------------------------------|--------|
|                                                  |   |              |      |   | Quoted Prices                 |   |   |   |   |   |   |   |
|                                                  |   |              |      |   | in Active                     |   |   | Significant |   |   |   |   |
|                                                  |   |              |      |   | Markets for                   |   |   | Other |   |   | Significant |   |
|                                                  |   |              |      |   | Identical                     |   |   | Observable |   |   | Unobservable |   |
|                                                  |   |              |      |   | Assets                        |   |   | Inputs |   |   | Inputs |   |
| (Dollars in thousands)                                |   | December 31, 2008 |      |   | (Level 1)                     |   |   | (Level 2) |   |   | (Level 3) |   |
| Assets:                                               |   |              |      |   |                          |   |   |   |   |   |   |   |
| Fixed maturities, market value                        |   |              |      |   |                          |   |   |   |   |   |   |   |
| U.S. Treasury securities and obligations of           |   |              |      |   |                          |   |   |   |   |   |   |   |
| U.S. government agencies and corporations             |   | $                 | 155,232   |   |                          | $      | - |   |   | $ | 155,232 |   |   | $ | - |   |
| Obligations of U.S. States and political subdivisions |   |              | 3,795,718 |   |                          |   | - |   |   |   | 3,795,718 |   |   |   | - |   |
| Corporate securities                                  |   |              | 436,317   |   |                          |   | - |   |   |   | 429,317 |   |   |   | 7,000 |   |
| Asset-backed securities                               |   |              | 9,361     |   |                          |   | - |   |   |   | 5,952 |   |   |   | 3,409 |   |
| Mortgage-backed securities                            |   |              |      |   |                          |   |   |   |   |   |   |   |   |   |   |   |
| Commercial                                            |   |              | 5,449     |   |                          |   | - |   |   |   | 5,449 |   |   |   | - |   |
| Agency residential                                    |   |              | 175,104   |   |                          |   | - |   |   |   | 175,104 |   |   |   | - |   |
| Non-agency residential                                |   |              | 36,564    |   |                          |   | - |   |   |   | 36,006 |   |   |   | 558 |   |
| Foreign government securities                         |   |              | 492,697   |   |                          |   | - |   |   |   | 492,697 |   |   |   | - |   |
| Foreign corporate securities                          |   |              | 405,414   |   |                          |   | - |   |   |   | 405,414 |   |   |   | - |   |
| Total fixed maturities, market value                  |   |              | 5,511,856 |   |                          |   | - |   |   |   | 5,500,889 |   |   |   | 10,967 |   |
|                                                  |   |              |      |   |                          |   |   |   |   |   |   |   |   |   |   |   |
| Fixed maturities, fair value                          |   |              | 43,090    |   |                          |   | - |   |   |   | 43,090 |   |   |   | - |   |
| Equity securities, market value                       |   |              | 16        |   |                          |   | 16 |   |   |   | - |   |   |   | - |   |
| Equity securities, fair value                         |   |              | 119,815   |   |                          |   | 119,092 |   |   |   | 723 |   |   |   | - |   |
| Other invested assets, fair value                     |   |              | 316,750   |   |                          |   | 316,750 |   |   |   | - |   |   |   | - |   |

----

Index

|                                                                    |   | Years Ended December 31, |   |
|-------------------------------------------------------------------------|--------|--------------------------|--------|
| (Dollars in thousands)                                                  |   | 2009                     |   |   | 2008 |   |
| Assets:                                                                 |   |                     |   |   |   |   |
| Balance, beginning of period                                            |   | $                        | 10,967 |   |   | $ | 78,709 |   |
| Total gains or (losses) (realized/unrealized)                           |   |                     |   |   |   |   |   |   |
| Included in earnings (or changes in net assets)                         |   |                     | 76     |   |   |   | (13,550 | ) |
| Included in other comprehensive income                                  |   |                     | 2,446  |   |   |   | (3,691 | ) |
| Purchases, issuances and settlements                                    |   |                     | (241   | ) |   |   | (9,732 | ) |
| Transfers in and/or (out) of Level 3                                    |   |                     | 366    |   |   |   | (40,769 | ) |
| Balance, end of period                                                  |   | $                        | 13,614 |   |   | $ | 10,967 |   |
|                                                                    |   |                     |   |   |   |   |   |   |
| 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     |   | $                        | (58    | ) |   | $ | (1,585 | ) |

----

Index

----

Index

| (Dollars in thousands)                  |   |       |    |   |   |   |           |
|-----------------------------------------|--------|------------|---------|--------|--------|--------|----------------|
| Bank                                    |   | Commitment |    |   | In Use |   | Date of Expiry |
| Citibank Holdings Credit Facility       |   | $          | 150,000 |   |   | $      | 27,959         |   | 12/31/2010 |
| Total Citibank Holdings Credit Facility |   | $          | 150,000 |   |   | $      | 27,959         |   |   |

| (Dollars in thousands) |   |   |   |
|------------------------|--------|--------|--------|
| 2010                   |   | $      | 9,018  |   |
| 2011                   |   |   | 7,079  |   |
| 2012                   |   |   | 9,770  |   |
| 2013                   |   |   | 9,339  |   |
| 2014                   |   |   | 7,814  |   |
| Thereafter             |   |   | 49,030 |   |
| Net commitments        |   | $      | 92,050 |   |

----

Index

|                                      |   | Years Ended December 31, |    |
|-------------------------------------------|--------|--------------------------|---------|
| (Dollars in thousands)                    |   | 2009                     |    |   | 2008 |   |   | 2007 |   |
| Current tax:                              |   |                     |    |   |   |   |   |   |   |
| U.S.                                      |   | $                        | (49,644 | ) |   | $ | (48,382 | ) |   | $ | 131,021 |   |
| Foreign                                   |   |                     | 8,184   |   |   |   | 26,081 |   |   |   | 19,899 |   |
| Total current tax (benefit) expense       |   |                     | (41,460 | ) |   |   | (22,301 | ) |   |   | 150,920 |   |
| Total deferred U.S. tax expense (benefit) |   |                     | 170,852 |   |   |   | (112,447 | ) |   |   | (50,834 | ) |
| Total income tax expense (benefit)        |   | $                        | 129,392 |   |   | $ | (134,748 | ) |   | $ | 100,086 |   |

|                                          |  Years Ended December 31, |
|-----------------------------------------------|--------------------------------|
|                                          | 2009                           |   | 2008 |   | 2007 |
| Federal income tax rate                       | 35.0%                          |   | -35.0% |   | 35.0% |
| Increase (reduction) in taxes resulting from: |                           |   |   |   |   |
| Tax exempt income                             | -15.5%                         |   | -23.8% |   | -15.0% |
| Dividend received deduction                   | -0.4%                          |   | -1.1% |   | -1.1% |
| Proration                                     | 2.3%                           |   | 3.6% |   | 2.4% |
| Other, net                                    | 3.2%                           |   | 4.4% |   | 3.5% |
| Effective tax rate                            | 24.6%                          |   | -51.9% |   | 24.8% |

----

Index

|                                       |   | At December 31, |    |
|--------------------------------------------|--------|-----------------|---------|
| (Dollars in thousands)                     |   | 2009            |    |   | 2008 |   |
| Deferred tax assets:                       |   |            |    |   |   |   |
| Reserve for losses and LAE                 |   | $               | 166,943 |   |   | $ | 194,910 |   |
| Unearned premium reserve                   |   |            | 47,266  |   |   |   | 50,727 |   |
| Investment impairments                     |   |            | 5,528   |   |   |   | 26,997 |   |
| Net unrealized depreciation of investments |   |            | -       |   |   |   | 63,245 |   |
| Fair value adjustments                     |   |            | 204     |   |   |   | 31,697 |   |
| Deferred compensation                      |   |            | 7,485   |   |   |   | 15,088 |   |
| Deferred reinsurance                       |   |            | 39,371  |   |   |   | 52,677 |   |
| AMT credits                                |   |            | 10,561  |   |   |   | 10,561 |   |
| Foreign tax credits                        |   |            | 46,472  |   |   |   | 38,353 |   |
| Uncollectible reinsurance                  |   |            | 16,175  |   |   |   | 84,898 |   |
| Minimum pension                            |   |            | 13,068  |   |   |   | 17,080 |   |
| Other assets                               |   |            | 34,503  |   |   |   | 38,961 |   |
| Total deferred tax assets                  |   |            | 387,576 |   |   |   | 625,194 |   |
|                                       |   |            |    |   |   |   |   |   |
| Deferred tax liabilities:                  |   |            |    |   |   |   |   |   |
| Deferred acquisition costs                 |   |            | 63,531  |   |   |   | 67,069 |   |
| Investment discounts                       |   |            | 3,493   |   |   |   | 8,653 |   |
| Net unrealized appreciation of investments |   |            | 46,147  |   |   |   | - |   |
| Foreign currency translation               |   |            | 30,675  |   |   |   | 16,561 |   |
| Gain on debt repurchase                    |   |            | 27,395  |   |   |   | - |   |
| Other liabilities                          |   |            | 5,842   |   |   |   | 14,869 |   |
| Total deferred tax liabilities             |   |            | 177,083 |   |   |   | 107,152 |   |
|                                       |   |            |    |   |   |   |   |   |
| Net deferred tax assets                    |   | $               | 210,493 |   |   | $ | 518,042 |   |

| (Dollars in thousands)                                       |   | 2009   |    |   | 2008   |   |   | 2007   |   |
|--------------------------------------------------------------|--------|--------|---------|--------|--------|--------|--------|--------|--------|
| Balance at January 1                                         |   | $      | 34,366  |   |   | $      | 29,132 |   |   | $ | 13,800 |   |
| Additions based on tax positions related to the current year |   |   | 6,997   |   |   |   | 5,234  |   |   |   | 4,423 |   |
| Additions for tax positions of prior years                   |   |   | -       |   |   |   | -      |   |   |   | 10,909 |   |
| Reductions for tax positions of prior years                  |   |   | -       |   |   |   | -      |   |   |   | - |   |
| Settlements with taxing authorities                          |   |   | (12,353 | )      |   |   | -      |   |   |   | - |   |
| Lapses of applicable statutes of limitations                 |   |   | -       |   |   |   | -      |   |   |   | - |   |
| Balance at December 31                                       |   | $      | 29,010  |   |   | $      | 34,366 |   |   | $ | 29,132 |   |

----

Index

|                        |   | Years Ended December 31, |       |
|-----------------------------|--------|--------------------------|------------|
| (Dollars in thousands)      |   | 2009                     |       |   | 2008 |   |   | 2007 |   |
| Written premiums:           |   |                     |       |   |   |   |   |   |   |
| Direct                      |   | $                        | 824,267    |   |   | $ | 778,243 |   |   | $ | 838,406 |   |
| Assumed                     |   |                     | 2,509,850  |   |   |   | 2,116,545 |   |   |   | 2,316,675 |   |
| Ceded                       |   |                     | (1,598,816 | ) |   |   | (1,219,426 | ) |   |   | (1,082,155 | ) |
| Net written premiums        |   | $                        | 1,735,301  |   |   | $ | 1,675,362 |   |   | $ | 2,072,926 |   |
|                        |   |                     |       |   |   |   |   |   |   |   |   |   |
| Premiums earned:            |   |                     |       |   |   |   |   |   |   |   |   |   |
| Direct                      |   | $                        | 808,634    |   |   | $ | 839,251 |   |   | $ | 899,328 |   |
| Assumed                     |   |                     | 2,471,667  |   |   |   | 2,235,381 |   |   |   | 2,322,698 |   |
| Ceded                       |   |                     | (1,495,241 | ) |   |   | (1,192,850 | ) |   |   | (1,043,126 | ) |
| Net premiums earned         |   | $                        | 1,785,060  |   |   | $ | 1,881,782 |   |   | $ | 2,178,900 |   |
|                        |   |                     |       |   |   |   |   |   |   |   |   |   |
| Incurred losses and LAE:    |   |                     |       |   |   |   |   |   |   |   |   |   |
| Direct                      |   | $                        | 654,409    |   |   | $ | 655,964 |   |   | $ | 777,000 |   |
| Assumed                     |   |                     | 1,348,581  |   |   |   | 1,439,019 |   |   |   | 1,427,019 |   |
| Ceded                       |   |                     | (911,314   | ) |   |   | (629,423 | ) |   |   | (696,445 | ) |
| Net incurred losses and LAE |   | $                        | 1,091,676  |   |   | $ | 1,465,560 |   |   | $ | 1,507,574 |   |

----

Index

| ·   | Effective September 19, 2000, Mt. McKinley and Bermuda Re entered into a loss portfolio transfer reinsurance agreement, whereby Mt. McKinley transferred all of its net insurance exposures and reserves to Bermuda Re. |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Effective October 1, 2001, Everest Re and Bermuda Re entered into a loss portfolio reinsurance agreement, whereby Everest Re transferred all of its Belgium branch net insurance exposures and reserves to Bermuda Re. |
|--------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | For premiums earned and losses incurred for the period January 1, 2002 through December 31, 2002, Everest Re, Everest National and Everest Security entered into an Excess of Loss Reinsurance Agreement with Bermuda Re, covering workers’ compensation losses occurring on and after January 1, 2002, as respects new, renewal and in force policies effective on that date through December 31, 2002.  Bermuda Re is liable for any loss exceeding $100,000 per occurrence, with its liability not to exceed $150,000 per occurrence. |
|--------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Effective January 1, 2002 for the 2002 underwriting year, Everest Re ceded 20.0% of its net retained liability to Bermuda Re through a quota share reinsurance agreement (“whole account quota share”). This remained in effect through December 31, 2002. |
|--------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Effective January 1, 2003, Everest Re and Bermuda Re amended the whole account quota share, through which Everest Re previously ceded 20.0% of its business to Bermuda Re so that effective January 1, 2003 Everest Re ceded 25.0% to Bermuda Re of the net retained liability on all new and renewal policies underwritten during the term of this agreement.  This amendment remained in effect through December 31, 2003. |
|--------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Effective January 1, 2003, Everest Re entered into a whole account quota share with Bermuda Re, whereby Everest Re’s Canadian branch ceded to Bermuda Re 50.0% of its net retained liability on all new and renewal property business.  This remained in effect through December 31, 2006. |
|--------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Effective January 1, 2004, Everest Re and Bermuda Re amended the whole account quota share through which Everest Re previously ceded 25.0% of its business to Bermuda Re so that effective January 1, 2004 Everest Re ceded 22.5% to Bermuda Re and 2.5% to Everest International of the net retained liability on all new and renewal covered business written during the term of this agreement.  This amendment remained in effect through December 31, 2005. |
|--------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Effective January 1, 2006, Everest Re, Bermuda Re and Everest International amended the whole account quota share so that for all new and renewal business recorded on or after January 1, 2006, Everest Re ceded 31.5% and 3.5% of its casualty business to Bermuda Re and Everest International, respectively, and Everest Re ceded 18.0% and 2.0% of its property business to Bermuda Re and Everest International, respectively. However, in no event shall the loss cessions to Bermuda Re and Everest International relating to any one occurrence on the property business exceed $125.0 million.  The property portion of this amendment remained in effect through December 31, 2006.  The casualty portion remained in effect through December 31, 2007. |
|--------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Effective January 1, 2007, Everest Re and Bermuda Re amended the whole account quota share so that for all new and renewal business recorded on or after January 1, 2007, Everest Re ceded 60.0% of its Canadian branch property business to Bermuda Re.  This remained in effect through December 31, 2009. |
|--------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

Index

| ·   | Effective January 1, 2007, Everest Re, Bermuda Re and Everest International amended the whole account quota share so that for all new and renewal property business recorded on or after January 1, 2007, Everest Re ceded 22.5% and 2.5% to Bermuda Re and Everest International, respectively.  However, in no event shall the loss cessions to Bermuda Re and Everest International relating to any one occurrence on the property business exceed $130.0 million.  This amendment remained in effect through December 31, 2007. |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Effective January 1, 2008, Everest Re, Bermuda Re and Everest International amended the whole account quota share whereby, for all new and renewal casualty and property business recorded on or after January 1, 2008, Everest Re ceded 36.0% and 4.0% to Bermuda Re and Everest International, respectively.  However, in no event shall the loss cessions to Bermuda Re and Everest International relating to any one catastrophe occurrence on the property business exceed $130.0 million or in the aggregate for each underwriting year for all property catastrophes exceed $275.0 million. This amendment remained in effect through December 31, 2008. |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Effective October 1, 2008, Everest Re and Bermuda Re entered into a loss portfolio transfer reinsurance agreement, whereby Everest Re transferred a percentage of its net loss reserves ($747.0 million) corresponding to all existing open and future liabilities at December 31, 2007, arising from policies, insurance or reinsurance written or renewed by or on behalf of Everest Re during the period of January 1, 2002 through December 31, 2007, classified by Everest Re as casualty. |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Effective January 1, 2009, Everest Re, Bermuda Re and Everest International amended the whole account quota share whereby, for all new and renewal casualty and property business recorded on or after January 1, 2009, Everest Re ceded 36.0% and 8.0% to Bermuda Re and Everest International, respectively.  However, in no event shall the loss cessions to Bermuda Re and Everest International relating to any one occurrence exceed $150.0 million or in the aggregate for each underwriting year for all occurrences exceed $325.0 million.  This amendment remained in effect through December 31, 2009. |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Effective January 1, 2010, Everest Re entered into a whole account quota share with Bermuda Re, whereby Everest Re’s Canadian branch cedes to Bermuda Re 60.0% of its net retained liability on all new and renewal property business.  However, in no event shall the loss cessions to Bermuda Re relating to any one occurrence exceed $350.0 million. |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Effective January 1, 2010, Everest Re entered into a whole account quota share with Bermuda Re, whereby for all new and renewal business recorded on or after January 1, 2010, Everest Re cedes 44.0% of its net retained liability to Bermuda Re.  However, in no event shall the loss cessions to Bermuda Re relating to any one occurrence exceed $150.0 million or in the aggregate for each underwriting year for all such occurrences exceed $325.0 million. |
|--------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

Index

| Bermuda Re               |   | Years Ended December 31, |      |
|--------------------------|--------|--------------------------|-----------|
| (Dollars in thousands)   |   | 2009                     |      |   | 2008 |   |   | 2007 |   |
| Ceded written premiums   |   | $                        | 1,181,875 |   |   | $ | 947,344 |   |   | $ | 837,129 |   |
| Ceded earned premiums    |   |                     | 1,142,223 |   |   |   | 915,706 |   |   |   | 820,400 |   |
| Ceded losses and LAE (a) |   |                     | 699,515   |   |   |   | 467,717 |   |   |   | 540,851 |   |

| Everest International  |   | Years Ended December 31, |    |
|------------------------|--------|--------------------------|---------|
| (Dollars in thousands) |   | 2009                     |    |   | 2008 |   |   | 2007 |   |
| Ceded written premiums |   | $                        | 217,708 |   |   | $ | 99,633 |   |   | $ | 86,980 |   |
| Ceded earned premiums  |   |                     | 182,436 |   |   |   | 95,835 |   |   |   | 85,162 |   |
| Ceded losses and LAE   |   |                     | 100,768 |   |   |   | 54,380 |   |   |   | 41,318 |   |

----

Index

|                                                                                           |   | Years Ended December 31, |     |
|------------------------------------------------------------------------------------------------|--------|--------------------------|----------|
| (Dollars in thousands)                                                                         |   | 2009                     |     |   | 2008 |   |   | 2007 |   |
|                                                                                           |   |                     |     |   |   |   |   |   |   |
| Net income (loss)                                                                              |   | $                        | 395,851  |   |   | $ | (124,757 | ) |   | $ | 304,191 |   |
| Other comprehensive income (loss), before tax:                                                 |   |                     |     |   |   |   |   |   |   |   |   |   |
| Unrealized appreciation (depreciation) ("URA(D)") on securities arising during the period      |   |                     |     |   |   |   |   |   |   |   |   |   |
| URA(D) of investments - temporary                                                              |   |                     | 294,401  |   |   |   | (438,383 | ) |   |   | (14,194 | ) |
| URA(D) of investments - non-credit OTTI                                                        |   |                     | 10,943   |   |   |   | - |   |   |   | - |   |
| URA(D) on securities arising during the period                                                 |   |                     | 305,344  |   |   |   | (438,383 | ) |   |   | (14,194 | ) |
| Less:  reclassification adjustment for realized losses included in net income (loss) |   |                     | 31,569   |   |   |   | 161,910 |   |   |   | 4,991 |   |
| Total URA(D) on securities arising during the period                                           |   |                     | 336,913  |   |   |   | (276,473 | ) |   |   | (9,203 | ) |
| Foreign currency translation adjustments                                                       |   |                     | 43,223   |   |   |   | (46,872 | ) |   |   | 46,349 |   |
| Pension adjustments                                                                            |   |                     | 11,466   |   |   |   | (38,714 | ) |   |   | 17,442 |   |
| Total other comprehensive income (loss), before tax                                            |   |                     | 391,602  |   |   |   | (362,059 | ) |   |   | 54,588 |   |
|                                                                                           |   |                     |     |   |   |   |   |   |   |   |   |   |
| Income tax (expense) benefit related to items of other comprehensive income (loss):            |   |                     |     |   |   |   |   |   |   |   |   |   |
| Tax (expense) benefit on URA(D) arising during the period                                      |   |                     |     |   |   |   |   |   |   |   |   |   |
| Tax (expense) benefit on URA(D) of investments - temporary                                     |   |                     | (103,041 | ) |   |   | 153,434 |   |   |   | 4,968 |   |
| Tax expense on URA(D) of investments - non-credit OTTI                                         |   |                     | (3,830   | ) |   |   | - |   |   |   | - |   |
| Tax (expense) benefit on URA(D) on securities arising during the period                        |   |                     | (106,871 | ) |   |   | 153,434 |   |   |   | 4,968 |   |
| Tax reclassification due to realized losses included in net income (loss)                      |   |                     | (11,049  | ) |   |   | (56,669 | ) |   |   | (1,747 | ) |
| Total tax (expense) benefit from URA(D) arising during the period                              |   |                     | (117,920 | ) |   |   | 96,765 |   |   |   | 3,221 |   |
| Tax (expense) benefit from foreign currency translation                                        |   |                     | (15,128  | ) |   |   | 16,405 |   |   |   | (16,222 | ) |
| Tax (expense) benefit on pension                                                               |   |                     | (4,013   | ) |   |   | 13,550 |   |   |   | (6,105 | ) |
| Total income tax (expense) benefit related to items of other comprehensive income (loss):      |   |                     | (137,061 | ) |   |   | 126,720 |   |   |   | (19,106 | ) |
| Other comprehensive income (loss), net of tax                                                  |   |                     | 254,541  |   |   |   | (235,339 | ) |   |   | 35,482 |   |
| Comprehensive income (loss)                                                                    |   | $                        | 650,392  |   |   | $ | (360,096 | ) |   | $ | 339,673 |   |

|                                                              |   | Years Ended December 31, |    |
|-------------------------------------------------------------------|--------|--------------------------|---------|
| (Dollars in thousands)                                            |   | 2009                     |    |   | 2008 |   |
|                                                              |   |                     |    |   |   |   |
| Beginning balance of  URA (D) on  securities  |   | $                        | (69,248 | ) |   | $ | 110,460 |   |
| Current period change in URA (D) of investments - temporary       |   |                     | 204,818 |   |   |   | (179,708 | ) |
| Current period change in URA (D) of investments - non-credit OTTI |   |                     | (1,325  | ) |   |   | - |   |
| Ending balance of URA (D) on securities                           |   |                     | 134,245 |   |   |   | (69,248 | ) |
|                                                              |   |                     |    |   |   |   |   |   |
| Beginning balance of foreign currency translation adjustments     |   |                     | 28,906  |   |   |   | 59,373 |   |
| Current period change in foreign currency translation adjustments |   |                     | 28,095  |   |   |   | (30,467 | ) |
| Ending balance of foreign currency translation adjustments        |   |                     | 57,001  |   |   |   | 28,906 |   |
|                                                              |   |                     |    |   |   |   |   |   |
| Beginning balance of pension                                      |   |                     | (31,721 | ) |   |   | (6,557 | ) |
| Current period change in pension                                  |   |                     | 7,453   |   |   |   | (25,164 | ) |
| Ending balance of pension                                         |   |                     | (24,268 | ) |   |   | (31,721 | ) |
|                                                              |   |                     |    |   |   |   |   |   |
| Ending balance of accumulated other comprehensive income (loss)   |   | $                        | 166,978 |   |   | $ | (72,063 | ) |

----

Index

|                                           |   | Years Ended December 31, |    |
|------------------------------------------------|--------|--------------------------|---------|
| (Dollars in thousands)                         |   | 2009                     |    |   | 2008 |   |
| Change in projected benefit obligation:        |   |                     |    |   |   |   |
| Benefit obligation at beginning of year        |   | $                        | 102,907 |   |   | $ | 90,645 |   |
| Service cost                                   |   |                     | 6,015   |   |   |   | 5,174 |   |
| Interest cost                                  |   |                     | 6,385   |   |   |   | 5,916 |   |
| Actuarial loss                                 |   |                     | 6,808   |   |   |   | 5,650 |   |
| Benefits paid                                  |   |                     | (3,949  | ) |   |   | (4,478 | ) |
| Projected benefit obligation at end of year    |   |                     | 118,166 |   |   |   | 102,907 |   |
|                                           |   |                     |    |   |   |   |   |   |
| Change in plan assets:                         |   |                     |    |   |   |   |   |   |
| Fair value of plan assets at beginning of year |   |                     | 75,798  |   |   |   | 82,963 |   |
| Actual return on plan assets                   |   |                     | 21,113  |   |   |   | (26,391 | ) |
| Actual contributions during the year           |   |                     | 7,851   |   |   |   | 23,843 |   |
| Administrative expenses paid                   |   |                     | (85     | ) |   |   | (139 | ) |
| Benefits paid                                  |   |                     | (3,949  | ) |   |   | (4,478 | ) |
| Fair value of plan assets at end of year       |   |                     | 100,728 |   |   |   | 75,798 |   |
|                                           |   |                     |    |   |   |   |   |   |
| Funded status at end of year                   |   | $                        | (17,438 | ) |   | $ | (27,109 | ) |

|                                                    |   | At December 31, |    |
|---------------------------------------------------------|--------|-----------------|---------|
| (Dollars in thousands)                                  |   | 2009            |    |   | 2008 |   |
| Other assets (due beyond one year)                      |   | $               | 8,394   |   |   | $ | - |   |
| Other liabilities (due within one year)                 |   |            | (8,679  | ) |   |   | (6,077 | ) |
| Other liabilities (due beyond one year)                 |   |            | (17,153 | ) |   |   | (21,032 | ) |
| Net amount recognized in the consolidated balance sheet |   | $               | (17,438 | ) |   | $ | (27,109 | ) |

|                                 |   | At December 31, |    |
|--------------------------------------|--------|-----------------|---------|
| (Dollars in thousands)               |   | 2009            |    |   | 2008 |   |
| Prior service cost                   |   | $               | (266    | ) |   | $ | (315 | ) |
| Accumulated loss                     |   |            | (33,708 | ) |   |   | (46,252 | ) |
| Accumulated other comprehensive loss |   | $               | (33,974 | ) |   | $ | (46,567 | ) |

----

Index

|                                                       |   | Years Ended December 31, |    |
|------------------------------------------------------------|--------|--------------------------|---------|
| (Dollars in thousands)                                     |   | 2009                     |    |   | 2008 |   |
| Other comprehensive loss at December 31, prior year        |   | $                        | (46,567 | ) |   | $ | (9,240 | ) |
| Net gain (loss) arising during period                      |   |                     | 8,076   |   |   |   | (38,763 | ) |
| Recognition of amortizations in net periodic benefit cost: |   |                     |    |   |   |   |   |   |
| Prior service cost                                         |   |                     | 49      |   |   |   | 51 |   |
| Actuarial loss                                             |   |                     | 4,468   |   |   |   | 1,385 |   |
| Other comprehensive loss at December 31, current year      |   | $                        | (33,974 | ) |   | $ | (46,567 | ) |

|                                                              |   | Years Ended December 31, |    |
|-------------------------------------------------------------------|--------|--------------------------|---------|
| (Dollars in thousands)                                            |   | 2009                     |    |   | 2008 |   |   | 2007 |   |
| Service cost                                                      |   | $                        | 6,015   |   |   | $ | 5,174 |   |   | $ | 5,096 |   |
| Interest cost                                                     |   |                     | 6,385   |   |   |   | 5,916 |   |   |   | 5,263 |   |
| Expected return on assets                                         |   |                     | (6,145  | ) |   |   | (6,583 | ) |   |   | (5,538 | ) |
| Amortization of actuarial loss from earlier periods               |   |                     | 3,663   |   |   |   | 601 |   |   |   | 1,425 |   |
| Amortization of unrecognized prior service cost                   |   |                     | 49      |   |   |   | 51 |   |   |   | 126 |   |
| Settlement                                                        |   |                     | 805     |   |   |   | 784 |   |   |   | - |   |
| Net periodic benefit cost                                         |   | $                        | 10,772  |   |   | $ | 5,943 |   |   | $ | 6,372 |   |
|                                                              |   |                     |    |   |   |   |   |   |   |   |   |   |
| Other changes recognized in other comprehensive income:           |   |                     |    |   |   |   |   |   |   |   |   |   |
| Other comprehensive income attributable to change from prior year |   |                     | (12,593 | ) |   |   | 37,327 |   |   |   |   |   |
|                                                              |   |                     |    |   |   |   |   |   |   |   |   |   |
| Total recognized in net periodic benefit cost and other           |   |                     |    |   |   |   |   |   |   |   |   |   |
| comprehensive income                                              |   | $                        | (1,821  | ) |   | $ | 43,270 |   |   |   |   |   |

|                   |   | At December 31, |   |
|------------------------|--------|-----------------|--------|
| (Dollars in thousands) |   | 2009            |   |   | 2008 |   |
| Qualified Plan         |   | $               | 73,969 |   |   | $ | 63,663 |   |
| Non-qualified Plan     |   |            | 21,898 |   |   |   | 20,171 |   |
| Total                  |   | $               | 95,867 |   |   | $ | 83,834 |   |

----

Index

|                         |   | At December 31, |   |
|------------------------------|--------|-----------------|--------|
| (Dollars in thousands)       |   | 2009            |   |   | 2008 |   |
| Qualified Plan               |   |            |   |   |   |   |
| Projected benefit obligation |   | NA              |   |   | $ | 79,574 |   |
| Fair value of plan assets    |   | NA              |   |   |   | 75,798 |   |
| Non-qualified Plan           |   |            |   |   |   |   |   |
| Projected benefit obligation |   | $               | 25,831 |   |   | $ | 23,333 |   |
| Fair value of plan assets    |   |            | -      |   |   |   | - |   |

|                           |   | At December 31, |   |
|--------------------------------|--------|-----------------|--------|
| (Dollars in thousands)         |   | 2009            |   |   | 2008 |   |
| Qualified Plan                 |   |            |   |   |   |   |
| Accumulated benefit obligation |   | NA              |   |   | NA |   |
| Fair value of plan assets      |   | NA              |   |   | NA |   |
| Non-qualified Plan             |   |            |   |   |   |   |
| Accumulated benefit obligation |   | $               | 21,898 |   |   | $ | 20,171 |   |
| Fair value of plan assets      |   |            | -      |   |   |   | - |   |

| (Dollars in thousands) |   |   |   |
|------------------------|--------|--------|--------|
| 2010                   |   | $      | 10,629 |   |
| 2011                   |   |   | 4,311  |   |
| 2012                   |   |   | 5,246  |   |
| 2013                   |   |   | 5,607  |   |
| 2014                   |   |   | 7,176  |   |
| Next 5 years           |   |   | 37,659 |   |

----

Index

|                                                      |   |              |    |   | Fair Value Measurement Using: |   |
|-----------------------------------------------------------|--------|-------------------|---------|--------|-------------------------------|--------|
|                                                      |   |              |    |   | Quoted Prices                 |   |   |   |   |   |   |   |
|                                                      |   |              |    |   | in Active                     |   |   | Significant |   |   |   |   |
|                                                      |   |              |    |   | Markets for                   |   |   | Other |   |   | Significant |   |
|                                                      |   |              |    |   | Identical                     |   |   | Observable |   |   | Unobservable |   |
|                                                      |   |              |    |   | Assets                        |   |   | Inputs |   |   | Inputs |   |
| (Dollars in thousands)                                    |   | December 31, 2009 |    |   | (Level 1)                     |   |   | (Level 2) |   |   | (Level 3) |   |
| Assets:                                                   |   |              |    |   |                          |   |   |   |   |   |   |   |
| Cash                                                      |   | $                 | 36      |   |                          | $      | 36 |   |   | $ | - |   |   | $ | - |   |
| Short-term investments, which approximates fair value (a) |   |              | 7,436   |   |                          |   | 7,436 |   |   |   | - |   |   |   | - |   |
| Mutual funds, fair value                                  |   |              |    |   |                          |   |   |   |   |   |   |   |   |   |   |   |
| Fixed income (b)                                          |   |              | 33,566  |   |                          |   | 33,566 |   |   |   | - |   |   |   | - |   |
| Equities (c)                                              |   |              | 53,126  |   |                          |   | 53,126 |   |   |   | - |   |   |   | - |   |
| Multi-strategy equity fund, fair value (d)                |   |              | 6,564   |   |                          |   | - |   |   |   | - |   |   |   | 6,564 |   |
| Total                                                     |   | $                 | 100,728 |   |                          | $      | 94,164 |   |   | $ | - |   |   | $ | 6,564 |   |

| (a)   | This category includes high quality, short-term money market instruments, which are issued and payable in U.S. dollars. |
|-----------------|-------------------------------------------------------------------------------------------------------------------------|

| (b)   | This category includes three fixed income funds, which invest in investment grade securities of corporations, governments and government agencies with approximately half in U.S. securities and half in international securities. |
|-----------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (c)   | This category includes eight funds, which invest in small, mid and multi-cap equity securities including common stocks, securities convertible into common stock and securities with common stock characteristics, such as rights and warrants, with approximately two-thirds in U.S. equities and one-third in international equities. |
|-----------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (d)   | This category consists of a fund of U.S. and international equity funds and may include currency hedges for the foreign funds. The underlying equity funds are valued at their net asset value. |
|-----------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|                                                |   | Year Ended        |   |
|-----------------------------------------------------|--------|-------------------|--------|
| (Dollars in thousands)                              |   | December 31, 2009 |   |
| Assets:                                             |   |              |   |
| Balance, beginning of period                        |   | $                 | -      |   |
| Actual return on plan assets:                       |   |              |   |   |
| Relating to assets still held at the reporting date |   |              | 564    |   |
| Relating to assets sold during the period           |   |              | -      |   |
| Purchases, issuances and settlements                |   |              | 6,000  |   |
| Transfers in and/or (out) of Level 3                |   |              | -      |   |
| Balance, end of period                              |   | $                 | 6,564  |   |

----

Index

|                                                              |   | Percentage     |   |   | Percentage     |   |
|-------------------------------------------------------------------|--------|----------------|--------|--------|----------------|--------|
|                                                              |   | Point Increase |   |   | Point Decrease |   |
| (Dollars in thousands)                                            |   | ($ Impact)     |   |   | ($ Impact)     |   |
| a.  Effect on total service and interest cost components     |   | $              | 358    |   |           | $      | (281 | ) |
| b.  Effect on accumulated post-retirement benefit obligation |   |           | 2,734  |   |           |   | (2,195 | ) |

|                                           |   | At December 31, |    |
|------------------------------------------------|--------|-----------------|---------|
| (Dollars in thousands)                         |   | 2009            |    |   | 2008 |   |
| Change in projected benefit obligation:        |   |            |    |   |   |   |
| Benefit obligation at beginning of year        |   | $               | 12,356  |   |   | $ | 9,832 |   |
| Service cost                                   |   |            | 902     |   |   |   | 732 |   |
| Interest cost                                  |   |            | 780     |   |   |   | 664 |   |
| Actuarial loss                                 |   |            | 1,213   |   |   |   | 1,401 |   |
| Benefits paid                                  |   |            | (332    | ) |   |   | (273 | ) |
| Benefit obligation at end of year              |   |            | 14,919  |   |   |   | 12,356 |   |
|                                           |   |            |    |   |   |   |   |   |
| Change in plan assets:                         |   |            |    |   |   |   |   |   |
| Fair value of plan assets at beginning of year |   |            | -       |   |   |   | - |   |
| Employer contributions                         |   |            | 332     |   |   |   | 273 |   |
| Benefits paid                                  |   |            | (332    | ) |   |   | (273 | ) |
| Fair value of plan assets at end of year       |   |            | -       |   |   |   | - |   |
|                                           |   |            |    |   |   |   |   |   |
| Funded status at end of year                   |   | $               | (14,919 | ) |   | $ | (12,356 | ) |

----

Index

|                                                     |   | At December 31, |    |
|----------------------------------------------------------|--------|-----------------|---------|
| (Dollars in thousands)                                   |   | 2009            |    |   | 2008 |   |
| Other liabilities (due within one year)                  |   | $               | (323    | ) |   | $ | (219 | ) |
| Other liabilities (due beyond one year)                  |   |            | (14,596 | ) |   |   | (12,137 | ) |
| Net amount recognized in the consolidated balance sheets |   | $               | (14,919 | ) |   | $ | (12,356 | ) |

|                                 |   | At December 31, |   |
|--------------------------------------|--------|-----------------|--------|
| (Dollars in thousands)               |   | 2009            |   |   | 2008 |   |
| Accumulated loss                     |   | $               | (3,361 | ) |   | $ | (2,234 | ) |
| Accumulated other comprehensive loss |   | $               | (3,361 | ) |   | $ | (2,234 | ) |

|                                                       |   | Years Ended December 31, |   |
|------------------------------------------------------------|--------|--------------------------|--------|
| (Dollars in thousands)                                     |   | 2009                     |   |   | 2008 |   |
| Other comprehensive loss at December 31, prior year        |   | $                        | (2,234 | ) |   | $ | (848 | ) |
| Net loss arising during period                             |   |                     | (1,213 | ) |   |   | (1,401 | ) |
| Recognition of amortizations in net periodic benefit cost: |   |                     |   |   |   |   |   |   |
| Actuarial loss                                             |   |                     | 86     |   |   |   | 15 |   |
| Other comprehensive loss at December 31, current year      |   | $                        | (3,361 | ) |   | $ | (2,234 | ) |

|                                                            |   | Years Ended December 31, |   |
|-----------------------------------------------------------------|--------|--------------------------|--------|
| (Dollars in thousands)                                          |   | 2009                     |   |   | 2008 |   |   | 2007 |   |
| Service cost                                                    |   | $                        | 902    |   |   | $ | 732 |   |   | $ | 663 |   |
| Interest cost                                                   |   |                     | 780    |   |   |   | 664 |   |   |   | 536 |   |
| Net loss recognition                                            |   |                     | 87     |   |   |   | 15 |   |   |   | 18 |   |
| Net periodic cost                                               |   | $                        | 1,769  |   |   | $ | 1,411 |   |   | $ | 1,217 |   |
|                                                            |   |                     |   |   |   |   |   |   |   |   |   |   |
| Other changes recognized in other comprehensive income:         |   |                     |   |   |   |   |   |   |   |   |   |   |
| Other comprehensive gain attributable to change from prior year |   |                     | 1,127  |   |   |   | 1,386 |   |   |   |   |   |
|                                                            |   |                     |   |   |   |   |   |   |   |   |   |   |
| Total recognized in net periodic benefit cost and               |   |                     |   |   |   |   |   |   |   |   |   |   |
| other comprehensive income                                      |   | $                        | 2,896  |   |   | $ | 2,797 |   |   |   |   |   |

----

Index

|                   |   | Years Ended December 31, |   |
|------------------------|--------|--------------------------|--------|
| (Dollars in thousands) |   | 2009                     |   |   | 2008 |   |
| Post-retirement Plan   |   | $                        | 14,919 |   |   | $ | 12,356 |   |

| (Dollars in thousands) |   |   |   |
|------------------------|--------|--------|--------|
| 2010                   |   | $      | 323    |   |
| 2011                   |   |   | 389    |   |
| 2012                   |   |   | 458    |   |
| 2013                   |   |   | 548    |   |
| 2014                   |   |   | 643    |   |
| Next 5 years           |   |   | 5,030  |   |

----

Index

----

Index

| U.S. Reinsurance            |   | Years Ended December 31, |      |
|-----------------------------|--------|--------------------------|-----------|
| (Dollars in thousands)      |   | 2009                     |      |   | 2008 |   |   | 2007 |   |
| Gross written premiums      |   | $                        | 1,172,304 |   |   | $ | 957,900 |   |   | $ | 1,193,524 |   |
| Net written premiums        |   |                     | 660,595   |   |   |   | 569,866 |   |   |   | 854,801 |   |
|                        |   |                     |      |   |   |   |   |   |   |   |   |   |
| Premiums earned             |   | $                        | 676,415   |   |   | $ | 685,075 |   |   | $ | 939,684 |   |
| Incurred losses and LAE     |   |                     | 344,481   |   |   |   | 559,985 |   |   |   | 636,895 |   |
| Commission and brokerage    |   |                     | 142,119   |   |   |   | 159,677 |   |   |   | 230,540 |   |
| Other underwriting expenses |   |                     | 36,181    |   |   |   | 32,180 |   |   |   | 33,275 |   |
| Underwriting gain (loss)    |   | $                        | 153,634   |   |   | $ | (66,767 | ) |   | $ | 38,974 |   |

| U.S. Insurance              |   | Years Ended December 31, |    |
|-----------------------------|--------|--------------------------|---------|
| (Dollars in thousands)      |   | 2009                     |    |   | 2008 |   |   | 2007 |   |
| Gross written premiums      |   | $                        | 842,564 |   |   | $ | 771,798 |   |   | $ | 885,604 |   |
| Net written premiums        |   |                     | 352,077 |   |   |   | 398,723 |   |   |   | 479,812 |   |
|                        |   |                     |    |   |   |   |   |   |   |   |   |   |
| Premiums earned             |   | $                        | 382,802 |   |   | $ | 482,729 |   |   | $ | 496,166 |   |
| Incurred losses and LAE     |   |                     | 317,753 |   |   |   | 422,183 |   |   |   | 412,669 |   |
| Commission and brokerage    |   |                     | 29,848  |   |   |   | 68,238 |   |   |   | 64,349 |   |
| Other underwriting expenses |   |                     | 74,627  |   |   |   | 64,324 |   |   |   | 58,216 |   |
| Underwriting loss           |   | $                        | (39,426 | ) |   | $ | (72,016 | ) |   | $ | (39,068 | ) |

| Specialty Underwriting      |   | Years Ended December 31, |    |
|-----------------------------|--------|--------------------------|---------|
| (Dollars in thousands)      |   | 2009                     |    |   | 2008 |   |   | 2007 |   |
| Gross written premiums      |   | $                        | 234,774 |   |   | $ | 260,422 |   |   | $ | 270,081 |   |
| Net written premiums        |   |                     | 132,915 |   |   |   | 167,677 |   |   |   | 185,350 |   |
|                        |   |                     |    |   |   |   |   |   |   |   |   |   |
| Premiums earned             |   | $                        | 139,140 |   |   | $ | 168,399 |   |   | $ | 184,894 |   |
| Incurred losses and LAE     |   |                     | 96,267  |   |   |   | 116,277 |   |   |   | 118,324 |   |
| Commission and brokerage    |   |                     | 40,946  |   |   |   | 40,948 |   |   |   | 44,278 |   |
| Other underwriting expenses |   |                     | 8,719   |   |   |   | 8,055 |   |   |   | 8,464 |   |
| Underwriting (loss) gain    |   | $                        | (6,792  | ) |   | $ | 3,119 |   |   | $ | 13,828 |   |

| International               |   | Years Ended December 31, |      |
|-----------------------------|--------|--------------------------|-----------|
| (Dollars in thousands)      |   | 2009                     |      |   | 2008 |   |   | 2007 |   |
| Gross written premiums      |   | $                        | 1,084,476 |   |   | $ | 904,668 |   |   | $ | 805,872 |   |
| Net written premiums        |   |                     | 589,714   |   |   |   | 539,096 |   |   |   | 552,963 |   |
|                        |   |                     |      |   |   |   |   |   |   |   |   |   |
| Premiums earned             |   | $                        | 586,703   |   |   | $ | 545,579 |   |   | $ | 558,156 |   |
| Incurred losses and LAE     |   |                     | 333,175   |   |   |   | 367,115 |   |   |   | 339,686 |   |
| Commission and brokerage    |   |                     | 131,664   |   |   |   | 129,747 |   |   |   | 126,745 |   |
| Other underwriting expenses |   |                     | 23,083    |   |   |   | 19,780 |   |   |   | 18,633 |   |
| Underwriting gain           |   | $                        | 98,781    |   |   | $ | 28,937 |   |   | $ | 73,092 |   |

----

Index

|                                                   |   | Years Ended December 31, |    |
|--------------------------------------------------------|--------|--------------------------|---------|
| (Dollars in thousands)                                 |   | 2009                     |    |   | 2008 |   |   | 2007 |   |
| Underwriting gain (loss)                               |   | $                        | 206,197 |   |   | $ | (106,727 | ) |   | $ | 86,826 |   |
| Net investment income                                  |   |                     | 262,086 |   |   |   | 363,053 |   |   |   | 406,592 |   |
| Net realized capital gains (losses)                    |   |                     | 56,928  |   |   |   | (489,186 | ) |   |   | 80,887 |   |
| Corporate expense                                      |   |                     | (7,722  | ) |   |   | (5,587 | ) |   |   | (5,328 | ) |
| Interest, fee and bond issue cost amortization expense |   |                     | (70,883 | ) |   |   | (78,979 | ) |   |   | (91,059 | ) |
| Realized gain on debt repurchase                       |   |                     | 78,271  |   |   |   | - |   |   |   | - |   |
| Other income (expense)                                 |   |                     | 366     |   |   |   | 57,921 |   |   |   | (73,641 | ) |
| Income (loss) before taxes                             |   | $                        | 525,243 |   |   | $ | (259,505 | ) |   | $ | 404,277 |   |

----

Index

|                                   |   | 2009        |    |
|----------------------------------------|--------|-------------|---------|
| (Dollars in thousands)                 |   | 1st Quarter |    |   | 2nd Quarter |   |   | 3rd Quarter |   |   | 4th Quarter |   |
|                                   |   |        |    |   |   |   |   |   |   |   |   |   |
| Operating data:                        |   |        |    |   |   |   |   |   |   |   |   |   |
| Gross written premiums                 |   | $           | 778,721 |   |   | $ | 811,103 |   |   | $ | 916,276 |   |   | $ | 828,017 |   |
| Net written premiums                   |   |        | 428,545 |   |   |   | 447,199 |   |   |   | 452,655 |   |   |   | 406,902 |   |
|                                   |   |        |    |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Premiums earned                        |   |        | 438,445 |   |   |   | 460,774 |   |   |   | 438,320 |   |   |   | 447,521 |   |
| Net investment income                  |   |        | 39,659  |   |   |   | 74,516 |   |   |   | 65,492 |   |   |   | 82,419 |   |
| Net realized capital (loss) gain       |   |        | (68,184 | ) |   |   | 22,941 |   |   |   | 101,394 |   |   |   | 777 |   |
| Total claims and underwriting expenses |   |        | 410,040 |   |   |   | 369,767 |   |   |   | 359,115 |   |   |   | 447,663 |   |
| Net income                             |   |        | 45,664  |   |   |   | 128,500 |   |   |   | 164,141 |   |   |   | 57,546 |   |

|                                   |   | 2008        |     |
|----------------------------------------|--------|-------------|----------|
| (Dollars in thousands)                 |   | 1st Quarter |     |   | 2nd Quarter |   |   | 3rd Quarter |   |   | 4th Quarter |   |
|                                   |   |        |     |   |   |   |   |   |   |   |   |   |
| Operating data:                        |   |        |     |   |   |   |   |   |   |   |   |   |
| Gross written premiums                 |   | $           | 685,468  |   |   | $ | 694,511 |   |   | $ | 778,137 |   |   | $ | 736,672 |   |
| Net written premiums                   |   |        | 410,796  |   |   |   | 425,744 |   |   |   | 424,438 |   |   |   | 414,384 |   |
|                                   |   |        |     |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Premiums earned                        |   |        | 500,030  |   |   |   | 471,414 |   |   |   | 449,892 |   |   |   | 460,446 |   |
| Net investment income                  |   |        | 87,977   |   |   |   | 106,981 |   |   |   | 97,305 |   |   |   | 70,790 |   |
| Net realized capital losses            |   |        | (101,900 | ) |   |   | (50,795 | ) |   |   | (108,652 | ) |   |   | (227,839 | ) |
| Total claims and underwriting expenses |   |        | 451,869  |   |   |   | 501,427 |   |   |   | 553,581 |   |   |   | 487,219 |   |
| Net income (loss)                      |   |        | 4,640    |   |   |   | 13,652 |   |   |   | (78,899 | ) |   |   | (64,150 | ) |

----

Index

| SCHEDULE I - SUMMARY OF INVESTMENTS -                                                                                                   |   |     |      |   |     |   |      |     |   |
|-----------------------------------------------------------------------------------------------------------------------------------------|--------|----------|-----------|--------|----------|--------|-----------|----------|--------|
| OTHER THAN INVESTMENTS IN RELATED PARTIES                                                                                               |   |     |      |   |     |   |      |     |   |
| DECEMBER 31, 2009                                                                                                                       |   |     |      |   |     |   |      |     |   |
|                                                                                                                                    |   |     |      |   |     |   |      |     |   |
| Column A                                                                                                                                |   | Column B |      |   | Column C |   |      | Column D |   |
|                                                                                                                                    |   |     |      |   |     |   |      | Amount   |   |
|                                                                                                                                    |   |     |      |   |     |   |      | Shown in |   |
|                                                                                                                                    |   |     |      |   | Market   |   |      | Balance  |   |
| (Dollars in thousands)                                                                                                                  |   | Cost     |      |   | Value    |   |      | Sheet    |   |
| Fixed maturities-available for sale                                                                                                     |   |     |      |   |     |   |      |     |   |
| Bonds:                                                                                                                                  |   |     |      |   |     |   |      |     |   |
| U.S. government and government agencies                                                                                                 |   | $        | 132,348   |   |     | $      | 134,291   |     |   | $ | 134,291 |   |
| State, municipalities and political subdivisions                                                                                        |   |     | 3,694,267 |   |     |   | 3,853,859 |     |   |   | 3,853,859 |   |
| Foreign government securities                                                                                                           |   |     | 638,204   |   |     |   | 659,217   |     |   |   | 659,217 |   |
| Foreign corporate securities                                                                                                            |   |     | 514,493   |   |     |   | 516,548   |     |   |   | 516,548 |   |
| Public utilities                                                                                                                        |   |     | 57,471    |   |     |   | 59,499    |     |   |   | 59,499 |   |
| All other corporate bonds                                                                                                               |   |     | 557,343   |   |     |   | 573,747   |     |   |   | 573,747 |   |
| Mortgage pass-through securities                                                                                                        |   |     |      |   |     |   |      |     |   |   |   |   |
| Commercial                                                                                                                              |   |     | 24,213    |   |     |   | 29,058    |     |   |   | 29,058 |   |
| Agency residential                                                                                                                      |   |     | 556,032   |   |     |   | 564,707   |     |   |   | 564,707 |   |
| Non-agency residential                                                                                                                  |   |     | 61,098    |   |     |   | 54,959    |     |   |   | 54,959 |   |
| Redeemable preferred stock                                                                                                              |   |     | 20,290    |   |     |   | 17,283    |     |   |   | 17,283 |   |
| Total fixed maturities-available for sale                                                                                               |   |     | 6,255,759 |   |     |   | 6,463,168 |     |   |   | 6,463,168 |   |
| Fixed maturities - available for sale, at fair value(1)                                                                                 |   |     | 42,769    |   |     |   | 50,528    |     |   |   | 50,528 |   |
| Equity securities - available for sale, at market value                                                                                 |   |     | 15        |   |     |   | 13        |     |   |   | 13 |   |
| Equity securities - available for sale, at fair value(1)                                                                                |   |     | 365,244   |   |     |   | 380,025   |     |   |   | 380,025 |   |
| Short-term investments                                                                                                                  |   |     | 261,438   |   |     |   | 261,438   |     |   |   | 261,438 |   |
| Other invested assets                                                                                                                   |   |     | 387,200   |   |     |   | 386,326   |     |   |   | 386,326 |   |
| Other invested assets, at fair value (1)                                                                                                |   |     | 418,169   |   |     |   | 382,639   |     |   |   | 382,639 |   |
| Cash                                                                                                                                    |   |     | 107,480   |   |     |   | 107,480   |     |   |   | 107,480 |   |
|                                                                                                                                    |   |     |      |   |     |   |      |     |   |   |   |   |
| Total investments and cash                                                                                                              |   | $        | 7,838,074 |   |     | $      | 8,031,617 |     |   | $ | 8,031,617 |   |
|                                                                                                                                    |   |     |      |   |     |   |      |     |   |   |   |   |
| (1) Original cost does not reflect adjustments, which have been realized through the statements of operations and comprehensive income. |   |     |      |   |     |   |      |     |   |   |   |   |

----

Index

| SCHEDULE II - CONDENSED FINANCIAL INFORMATION OF THE REGISTRANT       |   |            |      |   |   |   |
|-----------------------------------------------------------------------|--------|-----------------|-----------|--------|--------|--------|
| CONDENSED BALANCE SHEETS                                              |   |            |      |   |   |   |
|                                                                  |   |            |      |   |   |   |
|                                                                  |   |            |      |   |   |   |
|                                                                  |   | At December 31, |      |
| (Dollars in thousands, except par value per share)                    |   | 2009            |      |   | 2008   |   |
| ASSETS:                                                               |   |            |      |   |   |   |
| Fixed maturities - available for sale, at market value                |   | $               | 131,961   |   |   | $      | - |   |
| (amortized cost: 2009, $133,295)                                      |   |            |      |   |   |   |   |   |
| Equity securities - available for sale, at fair value                 |   |            | 19,945    |   |   |   | - |   |
| Other invested assets, at market value                                |   |            | 12,943    |   |   |   | 12,943 |   |
| Other invested assets, at fair value                                  |   |            | 382,639   |   |   |   | 316,750 |   |
| Short-term investments                                                |   |            | 7,049     |   |   |   | 271,830 |   |
| Cash                                                                  |   |            | 1,259     |   |   |   | 284 |   |
| Total investments and cash                                            |   |            | 555,796   |   |   |   | 601,807 |   |
| Investment in subsidiaries, at equity in the underlying net assets    |   |            | 3,271,079 |   |   |   | 2,710,192 |   |
| Accrued investment income                                             |   |            | 597       |   |   |   | 217 |   |
| Deferred tax asset                                                    |   |            | -         |   |   |   | 22,093 |   |
| Current federal income tax receivable                                 |   |            | 63,233    |   |   |   | 46,130 |   |
| Other assets                                                          |   |            | 15,164    |   |   |   | 14,397 |   |
| TOTAL ASSETS                                                          |   | $               | 3,905,869 |   |   | $      | 3,394,836 |   |
|                                                                  |   |            |      |   |   |   |   |   |
| LIABILITIES:                                                          |   |            |      |   |   |   |   |   |
| 8.75% Senor notes due 3/15/2010                                       |   | $               | 199,970   |   |   | $      | 199,821 |   |
| 5.4% Senior notes due 10/15/2014                                      |   |            | 249,769   |   |   |   | 249,728 |   |
| 6.6% Long term notes due 5/1/2067                                     |   |            | 238,348   |   |   |   | 399,643 |   |
| Junior subordinated debt securities                                   |   |            | 329,897   |   |   |   | 329,897 |   |
| Accrued interest on debt and borrowings                               |   |            | 9,885     |   |   |   | 11,217 |   |
| Deferred tax liability                                                |   |            | 18,818    |   |   |   | - |   |
| Due to subsidiaries                                                   |   |            | -         |   |   |   | 889 |   |
| Other liabilities                                                     |   |            | 408       |   |   |   | 673 |   |
| Total liabilities                                                     |   |            | 1,047,095 |   |   |   | 1,191,868 |   |
|                                                                  |   |            |      |   |   |   |   |   |
| STOCKHOLDER'S EQUITY:                                                 |   |            |      |   |   |   |   |   |
| Common stock, par value:  $0.01; 3,000 shares authorized;   |   |            |      |   |   |   |   |   |
| 1,000 shares issued and outstanding (2009 and 2008)                   |   |            | -         |   |   |   | - |   |
| Additional paid-in capital                                            |   |            | 321,185   |   |   |   | 315,771 |   |
| Accumulated other comprehensive income (loss), net of deferred income |   |            |      |   |   |   |   |   |
| tax benefit of $0.5 million at 2009 and $0.0 million at 2008          |   |            | 166,978   |   |   |   | (72,063 | ) |
| Retained earnings                                                     |   |            | 2,370,611 |   |   |   | 1,959,260 |   |
| Total stockholder's equity                                            |   |            | 2,858,774 |   |   |   | 2,202,968 |   |
| TOTAL LIABILITIES AND STOCKHOLDER'S EQUITY                            |   | $               | 3,905,869 |   |   | $      | 3,394,836 |   |
|                                                                  |   |            |      |   |   |   |   |   |
| See notes to consolidated financial statements.                       |   |            |      |   |   |   |   |   |

----

Index

| SCHEDULE II - CONDENSED FINANCIAL INFORMATION OF THE REGISTRANT |   |                     |    |   |   |   |     |
|-----------------------------------------------------------------|--------|--------------------------|---------|--------|--------|--------|----------|
| CONDENSED STATEMENTS OF OPERATIONS                              |   |                     |    |   |   |   |     |   |   |
|                                                            |   |                     |    |   |   |   |     |   |   |
|                                                            |   |                     |    |   |   |   |     |   |   |
|                                                            |   | Years Ended December 31, |    |
| (Dollars in thousands)                                          |   | 2009                     |    |   | 2008   |   |     | 2007 |   |
| REVENUES:                                                       |   |                     |    |   |   |   |     |   |   |
| Net investment income                                           |   | $                        | 9,567   |   |   | $      | 11,863   |   |   | $ | 17,756 |   |
| Net realized capital gains (losses)                             |   |                     | 40,000  |   |   |   | (87,786  | ) |   |   | 12,207 |   |
| Realized gain on debt repurchase                                |   |                     | 78,271  |   |   |   | -        |   |   |   | - |   |
| Other expense                                                   |   |                     | (207    | )      |   |   | (186     | ) |   |   | (148 | ) |
| Net income (loss) of subsidiaries                               |   |                     | 360,065 |   |   |   | (23,542  | ) |   |   | 345,936 |   |
| Total revenues                                                  |   |                     | 487,696 |   |   |   | (99,651  | ) |   |   | 375,751 |   |
|                                                            |   |                     |    |   |   |   |     |   |   |   |   |   |
| EXPENSES:                                                       |   |                     |    |   |   |   |     |   |   |   |   |   |
| Interest expense                                                |   |                     | 70,855  |   |   |   | 78,979   |   |   |   | 91,059 |   |
| Other expense                                                   |   |                     | 3,609   |   |   |   | 3,219    |   |   |   | 3,456 |   |
| Total expenses                                                  |   |                     | 74,464  |   |   |   | 82,198   |   |   |   | 94,515 |   |
|                                                            |   |                     |    |   |   |   |     |   |   |   |   |   |
| INCOME (LOSS) BEFORE TAXES                                      |   |                     | 413,232 |   |   |   | (181,849 | ) |   |   | 281,236 |   |
| Income tax expense (benefit)                                    |   |                     | 17,381  |   |   |   | (57,092  | ) |   |   | (22,955 | ) |
|                                                            |   |                     |    |   |   |   |     |   |   |   |   |   |
| NET INCOME (LOSS)                                               |   | $                        | 395,851 |   |   | $      | (124,757 | ) |   | $ | 304,191 |   |
|                                                            |   |                     |    |   |   |   |     |   |   |   |   |   |
| See notes to consolidated financial statements.                 |   |                     |    |   |   |   |     |   |   |   |   |   |

----

Index

| SCHEDULE II - CONDENSED FINANCIAL INFORMATION OF THE REGISTRANT                   |   |                     |     |   |   |   |     |   |   |
|-----------------------------------------------------------------------------------|--------|--------------------------|----------|--------|--------|--------|----------|--------|--------|
| CONDENSED STATEMENTS OF CASH FLOWS                                                |   |                     |     |   |   |   |     |   |   |
|                                                                              |   |                     |     |   |   |   |     |   |   |
|                                                                              |   | Years Ended December 31, |     |
| (Dollars in thousands)                                                            |   | 2009                     |     |   | 2008   |   |     | 2007   |   |
|                                                                              |   |                     |     |   |   |   |     |   |   |
| CASH FLOWS FROM OPERATING ACTIVITIES                                              |   |                     |     |   |   |   |     |   |   |
| Net income (loss)                                                                 |   | $                        | 395,851  |   |   | $      | (124,757 | )      |   | $ | 304,191 |   |
| Adjustments to reconcile net income to net cash provided by operating activities: |   |                     |     |   |   |   |     |   |   |   |   |   |
| Equity in retained earnings of subsidiaries                                       |   |                     | (360,065 | )      |   |   | 23,542   |   |   |   | (345,936 | ) |
| Dividends received from subsidiaries                                              |   |                     | 60,000   |   |   |   | 285,000  |   |   |   | 245,000 |   |
| (Decrease) increase in accrued interest on debt and borrowings                    |   |                     | (1,332   | )      |   |   | -        |   |   |   | 1,176 |   |
| (Increase) decrease in federal income tax recoverable                             |   |                     | (17,102  | )      |   |   | 8,110    |   |   |   | (44,830 | ) |
| Decrease (increase) in deferred tax asset                                         |   |                     | 41,377   |   |   |   | (26,383  | )      |   |   | 4,290 |   |
| Change in other assets and liabilities                                            |   |                     | (2,301   | )      |   |   | 2,194    |   |   |   | 6,139 |   |
| Accrual of bond premium/(accrual of bond discount)                                |   |                     | 58       |   |   |   | -        |   |   |   | (7,255 | ) |
| Amortization of underwriting discount on senior notes                             |   |                     | 192      |   |   |   | 179      |   |   |   | 164 |   |
| Realized gain on debt repurchase                                                  |   |                     | (78,271  | )      |   |   | -        |   |   |   | - |   |
| Realized capital (gains) losses                                                   |   |                     | (40,000  | )      |   |   | 87,786   |   |   |   | (12,207 | ) |
| Net cash (used in) provided by operating activities                               |   |                     | (1,593   | )      |   |   | 255,671  |   |   |   | 150,732 |   |
|                                                                              |   |                     |     |   |   |   |     |   |   |   |   |   |
| CASH FLOWS FROM INVESTING ACTIVITIES                                              |   |                     |     |   |   |   |     |   |   |   |   |   |
| Cost of fixed maturities acquired - available for sale, at fair value             |   |                     | (133,353 | )      |   |   | -        |   |   |   | - |   |
| Cost of equity securities acquired - available for sale, at fair value            |   |                     | (19,993  | )      |   |   | -        |   |   |   | 6,496 |   |
| Cost to acquire other invested assets                                             |   |                     | (25,841  | )      |   |   | (150,747 | )      |   |   | (241,584 | ) |
| Net change of short-term investments                                              |   |                     | 264,781  |   |   |   | (95,556  | )      |   |   | (94,229 | ) |
| Net cash provided by (used in) investing activities                               |   |                     | 85,594   |   |   |   | (246,303 | )      |   |   | (329,317 | ) |
|                                                                              |   |                     |     |   |   |   |     |   |   |   |   |   |
| CASH FLOWS FROM FINANCING ACTIVITIES                                              |   |                     |     |   |   |   |     |   |   |   |   |   |
| Dividends to stockholder                                                          |   |                     | -        |   |   |   | (10,000  | )      |   |   | - |   |
| Redemption of junior subordinated debt securities                                 |   |                     | -        |   |   |   | -        |   |   |   | (216,496 | ) |
| Net proceeds from issuance of long term subordinated notes                        |   |                     | -        |   |   |   | -        |   |   |   | 395,637 |   |
| Net cost of debt repurchase                                                       |   |                     | (83,026  | )      |   |   | -        |   |   |   | - |   |
| Net cash (used in) provided by financing activities                               |   |                     | (83,026  | )      |   |   | (10,000  | )      |   |   | 179,141 |   |
|                                                                              |   |                     |     |   |   |   |     |   |   |   |   |   |
| Net increase (decrease) in cash                                                   |   |                     | 975      |   |   |   | (632     | )      |   |   | 556 |   |
| Cash, beginning of period                                                         |   |                     | 284      |   |   |   | 916      |   |   |   | 360 |   |
| Cash, end of period                                                               |   | $                        | 1,259    |   |   | $      | 284      |   |   | $ | 916 |   |
|                                                                              |   |                     |     |   |   |   |     |   |   |   |   |   |
| Non-cash financing transaction:                                                   |   |                     |     |   |   |   |     |   |   |   |   |   |
| Non-cash contribution from parent                                                 |   | $                        | 5,414    |   |   | $      | 5,565    |   |   | $ | 9,442 |   |
| Non-cash contribution to subsidiaries                                             |   | $                        | (5,414   | )      |   | $      | (5,565   | )      |   | $ | (9,442 | ) |
|                                                                              |   |                     |     |   |   |   |     |   |   |   |   |   |
| See notes to consolidated financial statements.                                   |   |                     |     |   |   |   |     |   |   |   |   |   |

----

Index

| EVEREST REINSURANCE HOLDINGS, INC.                      |   |        |    |   |       |   |      |     |   |   |      |   |   |       |      |   |       |   |    |         |   |   |
|---------------------------------------------------------|--------|-------------|---------|--------|------------|--------|-----------|----------|--------|--------|-----------|--------|--------|------------|-----------|--------|------------|--------|---------|--------------|--------|--------|
| SCHEDULE III - SUPPLEMENTARY INSURANCE INFORMATION |   |        |    |   |       |   |      |     |   |   |      |   |   |       |      |   |       |   |    |
|                                                    |   |        |    |   |       |   |      |     |   |   |      |   |   |       |      |   |       |   |    |         |   |   |   |   |   |   |   |
|                                                    |   |        |    |   |       |   |      |     |   |   |      |   |   |       |      |   |       |   |    |         |   |   |   |   |   |   |   |
|  Column A                                          |   | Column B    |    |   | Column C   |   |      | Column D |   |   | Column E  |   |   | Column F   |      |   | Column G   |   |    | Column H     |   |   | Column I |   |   | Column J |   |
|                                                    |   |        |    |   | Reserve    |   |      |     |   |   |      |   |   |       |      |   | Incurred   |   |    |         |   |   |   |   |   |   |   |
|  Geographic Area                                   |   |        |    |   | for Losses |   |      |     |   |   |      |   |   |       |      |   | Loss and   |   |    | Amortization |   |   |   |   |   |   |   |
|                                                    |   | Deferred    |    |   | and Loss   |   |      | Unearned |   |   |      |   |   | Net        |      |   | Loss       |   |    | of Deferred  |   |   | Other |   |   | Net |   |
|                                                    |   | Acquisition |    |   | Adjustment |   |      | Premium  |   |   | Premiums  |   |   | Investment |      |   | Adjustment |   |    | Acquisition  |   |   | Operating |   |   | Written |   |
|  (Dollars in thousands)                            |   | Costs       |    |   | Expenses   |   |      | Reserves |   |   | Earned    |   |   | Income     |      |   | Expenses   |   |    | Costs        |   |   | Expenses |   |   | Premium |   |
| December 31, 2009                                       |   |        |    |   |       |   |      |     |   |   |      |   |   |       |      |   |       |   |    |         |   |   |   |   |   |   |   |
| Domestic                                                |   | $           | 120,491 |   |       | $      | 5,952,679 |     |   | $      | 988,901   |   |   | $          | 1,198,357 |   |       | $      | 224,405 |         |   | $      | 758,501 |   |   | $ | 212,913 |   |   | $ | 127,249 |   |   | $ | 1,145,587 |   |
| International                                           |   |        | 63,007  |   |       |   | 1,347,460 |     |   |   | 250,419   |   |   |       | 586,703   |   |       |   | 37,681  |         |   |   | 333,175 |   |   |   | 131,664 |   |   |   | 23,083 |   |   |   | 589,714 |   |
| Total                                                   |   | $           | 183,498 |   |       | $      | 7,300,139 |     |   | $      | 1,239,320 |   |   | $          | 1,785,060 |   |       | $      | 262,086 |         |   | $      | 1,091,676 |   |   | $ | 344,577 |   |   | $ | 150,332 |   |   | $ | 1,735,301 |   |
|                                                    |   |        |    |   |       |   |      |     |   |   |      |   |   |       |      |   |       |   |    |         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| December 31, 2008                                       |   |        |    |   |       |   |      |     |   |   |      |   |   |       |      |   |       |   |    |         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Domestic                                                |   | $           | 137,021 |   |       | $      | 6,279,851 |     |   | $      | 962,884   |   |   | $          | 1,336,203 |   |       | $      | 323,896 |         |   | $      | 1,098,445 |   |   | $ | 268,863 |   |   | $ | 110,146 |   |   | $ | 1,136,266 |   |
| International                                           |   |        | 55,075  |   |       |   | 1,140,142 |     |   |   | 213,950   |   |   |       | 545,579   |   |       |   | 39,157  |         |   |   | 367,115 |   |   |   | 129,747 |   |   |   | 19,780 |   |   |   | 539,096 |   |
| Total                                                   |   | $           | 192,096 |   |       | $      | 7,419,993 |     |   | $      | 1,176,834 |   |   | $          | 1,881,782 |   |       | $      | 363,053 |         |   | $      | 1,465,560 |   |   | $ | 398,610 |   |   | $ | 129,926 |   |   | $ | 1,675,362 |   |
|                                                    |   |        |    |   |       |   |      |     |   |   |      |   |   |       |      |   |       |   |    |         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| December 31, 2007                                       |   |        |    |   |       |   |      |     |   |   |      |   |   |       |      |   |       |   |    |         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Domestic                                                |   | $           | 182,501 |   |       | $      | 6,383,401 |     |   | $      | 1,159,409 |   |   | $          | 1,620,744 |   |       | $      | 367,646 |         |   | $      | 1,167,888 |   |   | $ | 339,167 |   |   | $ | 105,283 |   |   | $ | 1,519,963 |   |
| International                                           |   |        | 52,218  |   |       |   | 1,155,303 |     |   |   | 208,687   |   |   |       | 558,156   |   |       |   | 38,946  |         |   |   | 339,686 |   |   |   | 126,745 |   |   |   | 18,633 |   |   |   | 552,963 |   |
| Total                                                   |   | $           | 234,719 |   |       | $      | 7,538,704 |     |   | $      | 1,368,096 |   |   | $          | 2,178,900 |   |       | $      | 406,592 |         |   | $      | 1,507,574 |   |   | $ | 465,912 |   |   | $ | 123,916 |   |   | $ | 2,072,926 |   |

----

Index

| SCHEDULE IV - REINSURANCE    |   |     |    |   |      |   |      |       |   |   |      |   |   |     |      |
|------------------------------|--------|----------|---------|--------|-----------|--------|-----------|------------|--------|--------|-----------|--------|--------|----------|-----------|
|                         |   |     |    |   |      |   |      |       |   |   |      |   |   |     |      |
| Column A                     |   | Column B |    |   | Column C  |   |      | Column D   |   |   | Column E  |   |   | Column F |      |
|                         |   |     |    |   | Ceded to  |   |      | Assumed    |   |   |      |   |   |     |      |
|                         |   | Gross    |    |   | Other     |   |      | from Other |   |   | Net       |   |   | Assumed  |      |
| (Dollars in thousands)       |   | Amount   |    |   | Companies |   |      | Companies  |   |   | Amount    |   |   | to Net   |      |
|                         |   |     |    |   |      |   |      |       |   |   |      |   |   |     |      |
| December 31, 2009            |   |     |    |   |      |   |      |       |   |   |      |   |   |     |      |
| Total property and liability |   |     |    |   |      |   |      |       |   |   |      |   |   |     |      |
| insurance premiums earned    |   | $        | 808,634 |   |      | $      | 1,495,241 |       |   | $      | 2,471,667 |   |   | $        | 1,785,060 |   |   |   | 138.5 | % |
|                         |   |     |    |   |      |   |      |       |   |   |      |   |   |     |      |   |   |   |   |   |
| December 31, 2008            |   |     |    |   |      |   |      |       |   |   |      |   |   |     |      |   |   |   |   |   |
| Total property and liability |   |     |    |   |      |   |      |       |   |   |      |   |   |     |      |   |   |   |   |   |
| insurance premiums earned    |   | $        | 839,251 |   |      | $      | 1,192,850 |       |   | $      | 2,235,381 |   |   | $        | 1,881,782 |   |   |   | 118.8 | % |
|                         |   |     |    |   |      |   |      |       |   |   |      |   |   |     |      |   |   |   |   |   |
| December 31, 2007            |   |     |    |   |      |   |      |       |   |   |      |   |   |     |      |   |   |   |   |   |
| Total property and liability |   |     |    |   |      |   |      |       |   |   |      |   |   |     |      |   |   |   |   |   |
| insurance premiums earned    |   | $        | 899,328 |   |      | $      | 1,043,126 |       |   | $      | 2,322,698 |   |   | $        | 2,178,900 |   |   |   | 106.6 | % |

----