# EDGAR Filing Document

**Accession Number:** 0000914748
**File Stem:** 0000914748-23-000002
**Filing Date:** 2023-3
**Character Count:** 317259
**Document Hash:** 848e28159adc79b1604238676d7b9058
**Contains OCR:** False
**Source Format:** 

## Filing Content

## Filing Summary
**0000914748-23-000002.hdr.sgml**: 20230310

**ACCESSION NUMBER**: 0000914748-23-000002

**CONFORMED SUBMISSION TYPE**: 10-K

**PUBLIC DOCUMENT COUNT**: 134

**CONFORMED PERIOD OF REPORT**: 20221231

**FILED AS OF DATE**: 20230310

**DATE AS OF CHANGE**: 20230310

**FILER**: 

**COMPANY DATA:**
- **COMPANY CONFORMED NAME:** EVEREST REINSURANCE HOLDINGS INC
- **CENTRAL INDEX KEY:** 0000914748
- **STANDARD INDUSTRIAL CLASSIFICATION:** FIRE, MARINE & CASUALTY INSURANCE [6331]
- **IRS NUMBER:** 223263609
- **STATE OF INCORPORATION:** DE
- **FISCAL YEAR END:** 1231

**FILING VALUES:**
- **FORM TYPE:** 10-K
- **SEC ACT:** 1934 Act
- **SEC FILE NUMBER:** 033-71652
- **FILM NUMBER:** 23723974

**BUSINESS ADDRESS:**
- **STREET 1:** 100 EVEREST WAY
- **CITY:** WARREN
- **STATE:** NJ
- **ZIP:** 07059
- **BUSINESS PHONE:** 9086043000

**MAIL ADDRESS:**
- **STREET 1:** 100 EVEREST WAY
- **CITY:** WARREN
- **STATE:** NJ
- **ZIP:** 07059

**FORMER COMPANY:**
- **FORMER CONFORMED NAME:** PRUDENTIAL REINSURANCE HOLDINGS INC
- **DATE OF NAME CHANGE:** 19931115

# UNITED STATES

# SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

# FORM 10-K

☑ Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
For the fiscal year ended December 31, 2022

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

Commission file number 1-14527

# EVEREST REINSURANCE HOLDINGS, INC.

(Exact name of registrant as specified in its charter)

Delaware

(State or other jurisdiction

of incorporation or organization)

22-3263609

(I.R.S Employer

Identification No.)

100 Everest Way

Warren, New Jersey 07059

(908) 604-3000

(Address, including zip code, and telephone number, including area code, of registrant's principal executive office)

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

Title of Each Class

4.868% Senior Notes Due 2044

3.50% Senior Notes Due 2050

3.125% Senior Notes Due 2052

6.60% Long-Term Notes Due 2067

Name of Each Exchange on Which Registered

NYSE

NYSE

NYSE

NYSE

Securities registered pursuant to Section 12(g) of the Act: None

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.

Yes ☑ No ☐

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.

Yes ☐ No ☑

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes ☑ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).

Yes ☑ No ☐

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of the registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.

Yes ☑ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company" and "emerging growth company" in Rule 12b-2 of the Exchange Act.

Large accelerated filer

Non-accelerated filer

☑

Accelerated filer

Smaller reporting company

Emerging growth company

Indicate by check mark if the registrant is an emerging growth company and has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange act.

Yes ☐ No ☑

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act.)

Yes ☐ No ☑

Indicate by check mark whether the registrant has filed a report on and attestation to its management's assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report.

Yes ☐ No ☑

If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements.

☐

Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant's executive officers during the relevant recovery period pursuant to §240.10D-1(b).

☐

The aggregate market value on June 30, 2022, the last business day of the registrant's most recently completed second quarter, of the voting stock held by non-affiliates of the registrant was zero.

At March 9, 2023, the number of shares outstanding of the registrant common shares was 1,000, all of which are owned by Everest Underwriting Group (Ireland) Limited, a wholly-owned direct subsidiary of Everest Re Group, Ltd.

The Registrant meets the conditions set forth in General Instruction 1(1)(a) and (b) of Form 10-K and is therefore filing this form with the reduced disclosure format permitted by General Instruction I of Form 10-K.

# EVEREST REINSURANCE HOLDINGS, INC.

# Table of Contents
FORM 10-K

|  | 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. Mine Safety Disclosures | 13 |
| PART II |  |
| Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities | 13 |
| Item 6. [Reserved] | 14 |
| Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations | 14 |
| Item 7A. Quantitative and Qualitative Disclosures About Market Risk | 26 |
| Item 8. Financial Statements and Supplementary Data | 28 |
| Item 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure | 28 |
| Item 9A. Controls and Procedures | 29 |
| Item 9B. Other Information | 29 |
| Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections | 29 |
| PART III |  |
| Item 10. Directors, Executive Officers and Corporate Governance | 30 |
| Item 11. Executive Compensation | 30 |
| Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters | 30 |
| Item 13. Certain Relationships and Related Transactions, and Director Independence | 30 |
| Item 14. Principal Accountant Fees and Services | 30 |
| PART IV |  |
| Item 15. Exhibits and Financial Statement Schedules | 31 |

# PART I

Unless otherwise indicated, all financial data in this document have been prepared using accounting principles generally accepted in the United States of America (“GAAP”). As used in this document, “Holdings” means Everest Reinsurance Holdings, Inc., a Delaware company and direct subsidiary of Everest Underwriting Group (Ireland) Limited (“Holdings Ireland”); “Group” means Everest Re Group, Ltd. (Holdings Ireland’s parent); “Bermuda Re” means Everest Reinsurance (Bermuda), Ltd., a subsidiary of Group; “Everest Re” means Everest Reinsurance Company and its subsidiaries, a subsidiary of Holdings (unless the context otherwise requires); and the “Company”, “we”, “us”, and “our” means Holdings and its subsidiaries (unless the context otherwise requires).

# ITEM 1. BUSINESS

# The Company.

Holdings, a Delaware corporation, is a wholly-owned subsidiary of Holdings Ireland. On December 30, 2008, Group contributed Holdings to its recently established Irish holding company, Holdings Ireland. Holdings Ireland is a direct subsidiary of Group and serves as a holding company for the U.S. reinsurance and insurance subsidiaries. Group is a Bermuda holding company whose common shares are publicly traded in the U.S. on the New York Stock Exchange under the symbol “RE”. Group files an annual report on Form 10-K with the Securities and Exchange Commission (the “SEC”) with respect to its consolidated operations, including Holdings.

The Company’s principal business, conducted through its operating segments, is the underwriting of reinsurance and insurance in the U.S. and international markets. The Company had gross written premiums, in 2022, of $9.7 billion, with approximately 61% representing reinsurance and 39% representing insurance. Stockholder’s equity at December 31, 2022 was $5.7 billion. The Company underwrites reinsurance both through brokers and directly with ceding companies, giving it the flexibility to pursue business based on the ceding company’s preferred reinsurance purchasing method. The Company underwrites insurance through brokers, surplus lines brokers and general agent relationships. Holdings’ active operating subsidiaries are each rated A+ (“Superior”) by A.M. Best Company (“A.M. Best”), a leading provider of insurer ratings that assigns financial strength ratings to insurance companies based on their ability to meet their obligations to policyholders.

Following is a summary of the Company’s principal operating subsidiaries:

- 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, Puerto Rico and Guam 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 has engaged in reinsurance transactions with Bermuda Re, Everest International Reinsurance, Ltd. (“Everest International”), Mt. Logan Re, Ltd. (“Mt. Logan Re”) and Everest Insurance Company of Canada (“Everest Canada”), which are affiliated companies, primarily driven by enterprise risk and capital management considerations under which business is transacted at market rates and terms. At December 31, 2022, Everest Re had statutory surplus of $5.6 billion.
- Everest National Insurance Company (“Everest National”), a Delaware insurance company and a direct subsidiary of Everest Re, is licensed in 50 states, the District of Columbia and Puerto Rico 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.

1

- 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 a Delaware Domestic Surplus Lines Insurer 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 and is approved as an eligible surplus lines insurer in Delaware. The majority of Everest Security's business is reinsured by its parent, Everest Re.

- Everest Denali Insurance Company ("Everest Denali"), a Delaware insurance company and a direct subsidiary of Everest Re, is licensed to write property and casualty insurance in all 50 states and the District of Columbia. The majority of Everest Denali's business is reinsured by its parent, Everest Re.

- Everest Premier Insurance Company ("Everest Premier"), a Delaware insurance company and a direct subsidiary of Everest Re, is licensed to write property and casualty insurance in all 50 states and the District of Columbia. The majority of Everest Premier's business is reinsured by its parent, Everest Re.

- Everest International Assurance, Ltd. ("Everest Assurance"), a Bermuda company and a direct subsidiary of Holdings is registered in Bermuda as a Class 3A general business insurer and as a Class C long-term insurer. Everest Assurance has made a one-time election under section 953(d) of the U.S. Internal Revenue Code to be a U.S. income tax paying "Controlled Foreign Corporation." By making this election, Everest Assurance is authorized to write life reinsurance and casualty reinsurance in both Bermuda and the U.S.

### Reinsurance Industry Overview.

Reinsurance is an arrangement in which an insurance company, the reinsurer, agrees to indemnify another insurance or reinsurance company, the ceding company, against all or a portion of the insurance risks underwritten by the ceding company under one or more insurance contracts. Reinsurance can provide a ceding company with several benefits, including a reduction in its net liability on individual risks or classes of risks, catastrophe protection from large and/or multiple losses and/or a reduction in operating leverage as measured by the ratio of net premiums and reserves to capital. Reinsurance also provides a ceding company with additional underwriting capacity by permitting it to accept larger risks and write more business than would be acceptable relative to the ceding company's financial resources. Reinsurance does not discharge the ceding company from its liability to policyholders; rather, it reimburses the ceding company for covered losses.

There are two basic types of reinsurance arrangements: treaty and facultative. Treaty reinsurance obligates the ceding company to cede and the reinsurer to assume a specified portion of a type or category of risks insured by the ceding company. Treaty reinsurers do not separately evaluate each of the individual risks assumed under their treaties, instead, the reinsurer relies upon the pricing and underwriting decisions made by the ceding company. In facultative reinsurance, the ceding company cedes and the reinsurer assumes all or part of the risk under a single insurance contract. Facultative reinsurance is negotiated separately for each insurance contract that is reinsured. Facultative reinsurance, when purchased by ceding companies, usually is intended to cover individual risks not covered by their reinsurance treaties because of the dollar limits involved or because the risk is unusual.

Both treaty and facultative reinsurance can be written on either a pro rata basis or an excess of loss basis. Under pro rata reinsurance, the ceding company and the reinsurer share the premiums as well as the losses and expenses in an agreed proportion. Under excess of loss reinsurance, the reinsurer indemnifies the ceding company against all or a specified portion of losses and expenses in excess of a specified dollar amount, known as the ceding company's retention or reinsurer's attachment point, generally subject to a negotiated reinsurance contract limit.

2

In pro rata reinsurance, the reinsurer generally pays the ceding company a ceding commission. The ceding commission generally is based on the ceding company's cost of acquiring the business being reinsured (commissions, premium taxes, assessments and miscellaneous administrative expense and may contain profit sharing provisions, whereby the ceding commission is adjusted based on loss experience). Premiums paid by the ceding company to a reinsurer for excess of loss reinsurance are not directly proportional to the premiums that the ceding company receives because the reinsurer does not assume a proportionate risk. There is usually no ceding commission on excess of loss reinsurance.

Reinsurers may purchase reinsurance to cover their own risk exposure. Reinsurance of a reinsurer's business is called a retrocession. Reinsurance companies cede risks under retrocessional agreements to other reinsurers, known as retrocessionaires, for reasons similar to those that cause insurers to purchase reinsurance: to reduce net liability on individual or classes of risks, protect against catastrophic losses, stabilize financial ratios and obtain additional underwriting capacity.

Reinsurance can be written through intermediaries, generally professional reinsurance brokers, or directly with ceding companies. From a ceding company's perspective, the broker and the direct distribution channels have advantages and disadvantages. A ceding company's decision to select one distribution channel over the other will be influenced by its perception of such advantages and disadvantages relative to the reinsurance coverage being placed.

### **Business Strategy.**

The Company's business strategy is to sustain its leadership position within targeted reinsurance and insurance markets, provide effective management throughout the property and casualty underwriting cycle and thereby achieve an attractive return for its stockholder. The Company's underwriting strategies seek to capitalize on its i) financial strength and capacity, ii) global franchise, iii) stable and experienced management team, iv) diversified product and distribution offerings, v) underwriting expertise and disciplined approach, vi) efficient and low-cost operating structure and vii) effective enterprise risk management practices.

The Company offers treaty and facultative reinsurance and admitted and non-admitted insurance. The Company's products include the full range of property and casualty reinsurance and insurance coverages, including marine, aviation, surety, errors and omissions liability ('E&O'), directors' and officers' liability ('D&O'), medical malpractice, mortgage reinsurance, other specialty lines, accident and health ('A&H') and workers' compensation.

The Company's underwriting strategies emphasizes underwriting profitability over premium volume. Key elements of this strategy include careful risk selection, appropriate pricing through strict underwriting discipline and adjustment of the Company's business mix in response to changing market conditions. The Company focuses on reinsuring companies that effectively manage the underwriting cycle through proper analysis and appropriate pricing of underlying risks and whose underwriting guidelines and performance are compatible with its objectives.

The Company's underwriting strategies emphasize flexibility and responsiveness to changing market conditions. The Company believes that its existing strengths, including its broad underwriting expertise, global presence, strong financial ratings and substantial capital, facilitate adjustments to its mix of business geographically, by line of business and by type of coverage, allowing it to fully participate in market opportunities that provide the greatest potential for underwriting profitability. The Company's insurance operations complement these strategies by accessing business that is not available on a reinsurance basis. The Company carefully monitors its mix of business across all operations to avoid unacceptable geographic or other risk concentrations.

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## Capital Transactions.

The Company's business operations are in part dependent on its financial strength and financial strength ratings, and the market's perception of its financial strength. The Company stockholder's equity was $5.7 billion and $7.0 billion at December 31, 2022 and 2021, respectively. The Company possesses significant financial flexibility with access to the debt markets and, through its ultimate parent, equity markets, as a result of its perceived financial strength, as evidenced by the financial strength ratings as assigned by independent rating agencies. The Company's capital position remains strong, commensurate with its financial ratings and the Company has ample liquidity to meet its financial obligations for the foreseeable future.

## Financial Strength Ratings.

The following table shows the current financial strength ratings of the Company's operating subsidiaries as reported by A.M. Best, S&P Global Ratings ('S&P') and Moody's. These ratings represent an independent opinion of the financial strength, operating performance, business profile and ability to meet policyholder obligations. The ratings are not intended to be an indication of the degree or lack of risk involved in a direct or indirect equity investment or a recommendation to buy, sell or hold our securities. Additionally, rating organizations may change their rating methodology, which could have a material impact on our financial strength ratings.

All of the below-mentioned ratings are continually monitored and revised, if necessary, by each of the rating agencies. The ratings presented in the following table were in effect as of January 31, 2023.

The Company believes that its ratings are important as they provide the Company's customers and others with an independent assessment of the Company's financial strength using a rating scale that provides for relative comparisons. Strong financial ratings are particularly important for reinsurance and insurance companies given that customers rely on a company to pay covered losses well into the future. As a result, a highly rated company is generally preferred.

| Operating Subsidiary: | A.M. Best | S&P | Moody's |
| --- | --- | --- | --- |
| Everest Reinsurance Company | A+ (Superior) | A+ (Strong) | A1 (upper-medium) |
| Everest National Insurance Company | A+ (Superior) | A+ (Strong) | Not Rated |
| Everest Indemnity Insurance Company | A+ (Superior) | A+ (Strong) | Not Rated |
| Everest Security Insurance Company | A+ (Superior) | A+ (Strong) | Not Rated |
| Everest International Assurance, Ltd. | A+ (Superior) | A+ (Strong) | Not Rated |
| Everest Denali Insurance Company | A+ (Superior) | A+ (Strong) | Not Rated |
| Everest Premier Insurance Company | A+ (Superior) | A+ (Strong) | Not Rated |

A.M. Best states that the 'A+' ('Superior') rating is assigned to those companies which, in its opinion, have a superior ability to meet their ongoing insurance policy and contract obligations based on A.M. Best's comprehensive quantitative and qualitative evaluation of a company's balance sheet strength, operating performance and business profile. A.M. Best affirmed these ratings on June 15, 2022. S&P states that the 'A+'/'A' ratings are assigned to those insurance companies which, in its opinion, have strong financial security characteristics with respect to their ability to pay under its insurance policies and contracts in accordance with their terms. S&P affirmed all ratings on May 27, 2022. Moody's states that an 'A1' rating is assigned to companies that, in their opinion, offer upper-medium grade security and are subject to low credit risk. Moody's affirmed these ratings on June 17, 2022.

Subsidiaries other than Everest Re may not be rated by some or any rating agencies because such ratings are not considered essential by the individual subsidiary's customers or because of the limited nature of the subsidiary's operations or because the subsidiaries are newly established and have not yet been rated by the agencies.

4

### Debt Ratings.

The following table shows the debt ratings by A.M. Best, S&P and Moody's of the Holdings' senior notes due June 1, 2044, senior notes due October 15, 2050, senior notes due October 15, 2052, and long-term notes due May 1, 2067 all of which are considered investment grade. Debt ratings are the rating agencies' current assessment of the credit worthiness of an obligor with respect to a specific obligation.

| Instrument | A.M. Best |  | S&P |  | Moody's |  |
| --- | --- | --- | --- | --- | --- | --- |
| Senior Notes due June 1, 2044 | a- | (Strong) | A- | (Strong) | Baa1 | (Medium Grade) |
| Senior Notes due October 15, 2050 | a- | (Strong) | A- | (Strong) | Baa1 | (Medium Grade) |
| Senior Notes due October 15, 2052 | Not Rated |  | A- | (Strong) | Baa1 | (Medium Grade) |
| Long-Term Notes due May 1, 2067 | bbb | (Adequate) | BBB | (Adequate) | Baa2 | (Medium Grade) |

### Competition.

The worldwide reinsurance and insurance businesses are highly competitive, as well as cyclical by product and market. As such, financial results tend to fluctuate with periods of constrained availability, higher rates and stronger profits followed by periods of abundant capacity, lower rates and constrained profitability. Competition in the types of reinsurance and insurance business that we underwrite is based on many factors, including the perceived overall financial strength of the reinsurer or insurer, ratings of the reinsurer or insurer by A.M. Best and/or Standard & Poor's, underwriting expertise, the jurisdictions where the reinsurer or insurer is licensed or otherwise authorized, capacity and coverages offered, premiums charged, other terms and conditions of the reinsurance and insurance business offered, services offered, speed of claims payment and reputation and experience in lines written. Furthermore, the market impact from these competitive factors related to reinsurance and insurance is generally not consistent across lines of business, domestic and international geographical areas and distribution channels.

We compete in the U.S. and international reinsurance and insurance markets with numerous global competitors. Our competitors include independent reinsurance and insurance companies, subsidiaries or affiliates of established worldwide insurance companies, reinsurance departments of certain insurance companies, domestic and international underwriting operations, and certain government sponsored risk transfer vehicles. Some of these competitors have greater financial resources than we do and have established long-term and continuing business relationships, which can be a significant competitive advantage. In addition, the lack of strong barriers to entry into the reinsurance business and the securitization of reinsurance and insurance risks through capital markets provide additional sources of potential reinsurance and insurance capacity and competition.

Worldwide insurance and reinsurance market conditions historically have been competitive. Generally, there is ample insurance and reinsurance capacity relative to demand, as well as, additional capital from the capital markets through insurance linked financial instruments. These financial instruments such as side cars, catastrophe bonds and collateralized reinsurance funds, provided capital markets with access to insurance and reinsurance risk exposure. The capital markets demand for these products is primarily driven by the desire to achieve greater risk diversification and potentially higher returns on their investments. This competition generally has a negative impact on rates, terms and conditions; however, the impact varies widely by market and coverage. Based on recent competitive behaviors in the insurance and reinsurance industry, natural catastrophe events and the macroeconomic backdrop, there has been some dislocation in the market which we expect to have a positive impact on rates and terms and conditions generally, though local market specificities can vary.

The increased frequency of catastrophe losses experienced throughout 2022 appears to be pressuring the increase of rates. As business activity continues to regain strength after the pandemic and current macroeconomic uncertainty, rates also appear to be firming in most lines of business, particularly in the casualty lines that had seen significant losses such as excess casualty and directors' and officers' liability. Other casualty lines are experiencing modest rate increase, while some lines such as workers' compensation were experiencing softer market conditions. It is too early to tell what the impact on pricing conditions will be but it is likely to change depending on the line of business and geography.

5

The war in the Ukraine is ongoing and an evolving event. Economic and legal sanctions have been levied against Russia, specific named individuals and entities connected to the Russian government, as well as businesses located in the Russian Federation and/or owned by Russian nationals by numerous countries, including the United States. The significant political and economic uncertainty surrounding the war and associated sanctions have impacted economic and investment markets both within Russia and around the world. The Company has recorded $25 million of losses related to the Ukraine/Russia war during 2022.

### **Human Capital Management.**

Our employees are essential to the success of our business, and so we strive to attract and retain a high standard of insurance professionals to meet our business needs as well as the needs of our clients and customers. As of February 1, 2023, the Company employed 1,933 persons. Management believes that employee relations are good. None of the Company's employees are subject to collective bargaining agreements, and the Company is not aware of any current efforts to implement such agreements.

Everest is committed to providing our employees with an engaging and supportive environment so that employees can develop personally and help us achieve success as an organization. We consider the ability to attract, develop and retain a high caliber of insurance professionals to be critical to our success. Opportunities for continued learning and talent development are provided to all employee levels. Employees are encouraged to take ownership of their development by using the tools that the Company has made available to them including industry training, mentorships and personal development classes. Everest actively manages succession planning throughout our organization and strives to provide job growth and advancement opportunities to internal talent, where possible.

### **Diversity and Inclusion.**

Our strength and success derive from our diversity, and we are at our best when we embrace diverse views and perspectives. Equality in opportunity, career development, compensation and respect for all individuals are fundamental human rights that are at the forefront of our culture and promoted not only within our workplace but also the global communities in which we operate. Our Board is committed to diversity within its structure as well as emphasizing its importance in our senior executive leadership. We believe that diversity in gender, age, ethnicity and skill set allows for dynamic and evolving perspectives in governance, strategy, corporate responsibility, human rights and risk management.

Proactive diversity recruitment is an integral aspect of succession planning at both the board level and throughout all levels in the organization. Our Talent Development team works with senior management to identify women and persons of color across the Company as potential leaders. These individuals are provided management and executive leadership training and education to enhance their skillsets and provide opportunities for advancement. Indeed, our executive officers are measured on their forward-thinking diversity initiatives as part of their annual performance evaluations. Such diversity at the most senior levels of our organization reflects our commitment to identify and develop highly qualified women and individuals of color to help lead our Company into the future.

The work of the DEI Council has helped enhance the employee experience for all our colleagues across the organization worldwide. The council encourages continuous and open dialogue between executive and senior management and traditionally underrepresented groups at all levels, without fear of reprisal or retaliation, to identify areas of improvement and carry out the message of inclusion both inside and outside our organization. The DEI council was instrumental in forming and supporting additional Employee Resource Groups ('ERGs'), developing a Regional Representation network and leveraging specific Talent Development and Talent Acquisition initiatives that will positively influence the composition of our workforce.

6

#### **Available Information.**

The Company's Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and amendments to those reports are available free of charge through the Company's internet website at http://www.everestre group.com as soon as reasonably practicable after such reports are electronically filed with the SEC.

#### **ITEM 1A. RISK FACTORS**

In addition to the other information provided in this report, the following risk factors should be considered when evaluating an investment in our securities. If the circumstances contemplated by the individual risk factors materialize, our business, financial condition and results of operations could be materially and adversely affected and our ability to service our debt, our debt ratings and our ability to issue new debt could decline significantly.

#### **RISKS RELATING TO OUR BUSINESS**

*Our results could be adversely affected by catastrophic events.*

We are exposed to unpredictable catastrophic events, including weather-related and other natural catastrophes, as well as acts of terrorism. The frequency and/or severity of catastrophic events may be impacted in the future by the continued effects of climate change. Any material reduction in our operating results caused by the occurrence of one or more catastrophes could inhibit our ability to pay dividends or to meet our interest and principal payment obligations. By way of illustration, during the past five calendar years, pre-tax catastrophe losses, net of reinsurance, were as follows:

| Calendar year: | Pre-tax net catastrophe losses |
| --- | --- |
| (Dollars in millions) |  |
| 2022 | $984 |
| 2021 | 940 |
| 2020 | 397 |
| 2019 | 574 |
| 2018 | 1,713 |

*Our losses from future catastrophic events could exceed our projections.*

We use projections of possible losses from future catastrophic events of varying types and magnitudes as a strategic underwriting tool. We use these loss projections to estimate our potential catastrophe losses in certain geographic areas and decide on the placement of retrocessional coverage or other actions to limit the extent of potential losses in a given geographic area. These loss projections are approximations, reliant on a mix of quantitative and qualitative processes, and actual losses may exceed the projections by a material amount, resulting in a material adverse effect on our financial condition and results of operations.

*If our loss reserves are inadequate to meet our actual losses, our net income would be reduced or we could incur a loss.*

We are required to maintain reserves to cover our estimated ultimate liability of losses and loss adjustment expenses ('LAE') for both reported and unreported claims incurred. These reserves are only estimates of what we believe the settlement and administration of claims will cost based on facts and circumstances known to us. In setting reserves for our reinsurance liabilities, we rely on claim data supplied by our ceding companies and brokers and we employ actuarial and statistical projections. The information received from our ceding companies is not always timely or accurate, which can contribute to inaccuracies in our loss projections. Because of the uncertainties that surround our estimates of loss and LAE reserves, we cannot be certain that ultimate losses and LAE payments will not exceed our estimates. If our reserves are deficient, we would be required to increase loss

7

reserves in the period in which such deficiencies are identified which would cause a charge to our earnings and a reduction of capital. During the past five calendar years, the reserve re-estimation process resulted in a decrease to our pre-tax net income in all five years:

| Calendar year: | Effect on pre-tax net income |  |
| --- | --- | --- |
| (Dollars in millions) |  |  |
| 2022 | $8 | decrease |
| 2021 | 5 | decrease |
| 2020 | 200 | decrease |
| 2019 | 44 | decrease |
| 2018 | 559 | decrease |

The difficulty in estimating our reserves is significantly more challenging as it relates to reserving for potential asbestos and environmental ('A&E') liabilities. At December 31, 2022, 1.9% of our gross reserves were comprised of A&E reserves. A&E liabilities are especially hard to estimate for many reasons, including the long delays between exposure and manifestation of any bodily injury or property damage, difficulty in identifying the source of the asbestos or environmental contamination, long reporting delays and difficulty in properly allocating liability for the asbestos or environmental damage. Legal tactics and judicial and legislative developments affecting the scope of insurers' liability, which can be difficult to predict, also contribute to uncertainties in estimating reserves for A&E liabilities.

*The failure to accurately assess underwriting risk and establish adequate premium rates could reduce our net income or result in a net loss.*

Our success depends on our ability to accurately assess the risks associated with the businesses on which the risk is retained. If we fail to accurately assess the risks we retain, we may fail to establish adequate premium rates to cover our losses and LAE. This could reduce our net income and even result in a net loss.

In addition, losses may arise from events or exposures that are not anticipated when the coverage is priced. In addition to unanticipated events, we also face the unanticipated expansion of our exposures, particularly in long-tail liability lines. An example of this is the expansion over time of the scope of insurers' legal liability within the mass tort arena, particularly for A&E exposures discussed above.

*Decreases in pricing for property and casualty reinsurance and insurance could reduce our net income.*

The worldwide reinsurance and insurance businesses are highly competitive, as well as cyclical by product and market. These cycles, as well as other factors that influence aggregate supply and demand for property and casualty insurance and reinsurance products, are outside of our control. The supply of (re)insurance is driven by prevailing prices and levels of capacity that may fluctuate in response to a number of factors including large catastrophic losses and investment returns being realized in the insurance industry. Demand for (re)insurance is influenced by underwriting results of insurers and insureds, including catastrophe losses, and prevailing general economic conditions. If any of these factors were to result in a decline in the demand for (re)insurance or an overall increase in (re)insurance capacity, our net income could decrease.

*If rating agencies downgrade the ratings of our insurance subsidiaries, future prospects for growth and profitability could be significantly and adversely affected.*

Our active insurance company subsidiaries currently hold financial strength ratings assigned by third-party rating agencies which assess and rate the claims paying ability and financial strength of insurers and reinsurers. Financial strength ratings are used by cedents, agents and brokers to assess the financial strength and credit quality of reinsurers and insurers. A downgrade or withdrawal of any of these ratings could adversely affect our ability to market our reinsurance and insurance products, our ability to compete with other reinsurers and insurers, and

8

could have a material and adverse effect on our ability to write new business that in turn could impact our profitability and operating results. In December 2021, S&P announced proposed changes to its rating methodologies. The proposed changes have not been finalized, so the impact, if any, that these changes may have on our financial strength ratings is unknown.

Consistent with market practice, much of our treaty reinsurance business allows the ceding company to terminate the contract or seek collateralization of our obligations in the event of a rating downgrade below a certain threshold. The termination provision would generally be triggered if a rating fell below A.M. Best's A- rating level. To a lesser extent, Everest Re also has modest exposure to reinsurance contracts that contain provisions for obligatory funding of outstanding liabilities in the event of a rating agency downgrade. Those provisions would also generally be triggered if Everest Re's rating fell below A.M. Best's A- rating level.

*The failure of our insureds, intermediaries and reinsurers to satisfy their obligations to us could reduce our income.*

In accordance with industry practice, we have uncollateralized receivables from insureds, agents and brokers and/or rely on agents and brokers to process our payments. We may not be able to collect amounts due from insureds, agents and brokers, resulting in a reduction to net income.

We are subject to credit risk of reinsurers in connection with retrocessional arrangements because the transfer of risk to a reinsurer does not relieve us of our liability to the insured. In addition, reinsurers may be unwilling to pay us even though they are able to do so. The failure of one or more of our reinsurers to honor their obligations to us in a timely fashion would impact our cash flow and reduce our net income and could cause us to incur a significant loss.

*If we are unable or choose not to purchase reinsurance and transfer risk to the reinsurance markets, our net income could be reduced or we could incur a net loss in the event of unusual loss experience.*

We are generally less reliant on the purchase of reinsurance than many of our competitors, in part because of our strategic emphasis on underwriting discipline and management of the cycles inherent in our business. We try to separate our risk taking process from our risk mitigation process in order to avoid developing too great a reliance on reinsurance. With the expansion of the capital markets into insurance linked financial instruments, we increased our use of capital market products for catastrophe reinsurance. In addition, we have increased some of our quota share contracts with larger retrocessions. The percentage of business that we reinsure may vary considerably from year to year, depending on our view of the relationship between cost and expected benefit for the contract period.

| Percentage of ceded written premiums to gross written premiums | 2022 | 2021 | 2020 | 2019 | 2018 |
| --- | --- | --- | --- | --- | --- |
| Unaffiliated | 13.2% | 14.3% | 14.9% | 16.7% | 14.7% |
| Affiliated | 3.8% | 4.9% | 1.7% | 1.4% | 8.7% |

*Our industry is highly competitive and we may not be able to compete as successfully in the future.*

Our industry is highly competitive and subject to pricing cycles that can be pronounced. We compete globally in the United States, international reinsurance and insurance markets with numerous competitors. Our competitors include independent reinsurance and insurance companies, subsidiaries or affiliates of established worldwide insurance companies, reinsurance departments of certain insurance companies and domestic and international underwriting operations, including underwriting syndicates at Lloyd's of London.

According to S&P, Group ranks among the top ten global reinsurance groups, where more than two-thirds of the market share is concentrated. The worldwide net premium written by the Top 40 global reinsurance groups, for both life and non-life business, was estimated to be $274 billion in 2020 according to data compiled by S&P. In

9

addition to competitors, the entry of alternative capital market products and vehicles provide additional sources of reinsurance and insurance capacity.

*We are dependent on our key personnel.*

Our success has been, and will continue to be, dependent on our ability to retain the services of our existing key executives and other key employees, and to attract and retain additional qualified personnel in the future. The loss of the services of any key executive officer or the inability to hire and retain other highly qualified personnel in the future, particularly those experienced in the property and casualty industry, could adversely affect our ability to conduct business.

*Our investment values and investment income could decline because they are exposed to interest rate, credit and market risks.*

A significant portion of our investment portfolio consists of fixed income securities and smaller portions consist of equity securities and other investments. Both the fair value of our invested assets and associated investment income fluctuate depending on general economic and market conditions. For example, the fair value of our predominant fixed income portfolio generally increases or decreases inversely to fluctuations in interest rates. The fair value of our fixed income securities could also decrease as a result of a downturn in the business cycle that causes the credit quality of such securities to deteriorate. The net investment income that we realize from future investments in fixed income securities will generally increase or decrease with interest rates.

Interest rate fluctuations also can cause net investment income from fixed income investments that carry prepayment risk, such as mortgage-backed and other asset-backed securities, to differ from the income anticipated from those securities at the time of purchase. In addition, if issuers of individual investments are unable to meet their obligations, investment income will be reduced and realized capital losses may arise.

The majority of our fixed income securities are classified as available for sale and temporary changes in the fair value of these investments are reflected as changes to our stockholder's equity. Our actively managed equity security portfolios are fair valued and any changes in fair value are reflected as net realized capital gains or losses. As a result, a decline in the value of our securities reduces our capital or could cause us to incur a loss.

As a part of our ongoing analysis of our investment portfolio, we are required to assess current expected credit losses for all held-to-maturity securities and evaluate expected credit losses for available-for-sale securities when fair value is below amortized cost, which considers reasonable and supportable forecasts of future economic conditions in addition to information about past events and current conditions. This analysis requires a high degree of judgment. Financial assets with similar risk characteristics and relevant historical loss information are included in the development of an estimate of expected lifetime losses. Declines in relevant stock and other financial markets and other factors impacting the value of our investments could result in an adverse effect on our net income and other financial results.

We have invested a portion of our investment portfolio in equity securities. The value of these assets fluctuates with changes in the markets. In times of economic weakness, the fair value of these assets may decline, and may negatively impact net income. We also invest in non-traditional investments which have different risk characteristics than traditional fixed income and equity securities. These alternative investments are comprised primarily of private equity limited partnerships. The changes in value and investment income/(loss) for these partnerships may be more volatile than over-the-counter securities.

Prolonged and severe disruptions in the overall public and private debt and equity markets, such as occurred in early 2020 related to the COVID-19 pandemic, could result in significant realized and unrealized losses in our investment portfolio. There could also be disruption in individual market sectors, such as occurred in the energy sector in recent years. Such declines in the financial markets could result in significant realized and unrealized

10

losses on investments and could have a material adverse impact on our results of operations, equity, business and insurer financial strength and debt ratings.

*We may experience foreign currency exchange losses that reduce our net income and capital levels.*

Through our international operations, we conduct business in a variety of foreign (non-U.S.) currencies, principally the Canadian dollar and the Singapore dollar. Assets, liabilities, revenues and expenses denominated in foreign currencies are exposed to changes in currency exchange rates. Our reporting currency is the U.S. dollar, and exchange rate fluctuations, especially relative to the U.S. dollar, may materially impact our results and financial position. In 2022, we wrote approximately 15.2% of our coverages in non-U.S. currencies; as of December 31, 2022, we maintained approximately 8.8% of our investment portfolio in investments denominated in non-U.S. currencies. During 2022, 2021 and 2020, the impact on our quarterly pre-tax net income from exchange rate fluctuations ranged from a loss of $11 million to a gain of $11 million.

*We are subject to cybersecurity risks that could negatively impact our business operations.*

We are dependent upon our information technology platform, including our processing systems, data and electronic transmissions in our business operations. Security breaches could expose us to the loss or misuse of our information, litigation and potential liability. In addition, cyber incidents that impact the availability, reliability, speed, accuracy or other proper functioning of these systems could have a significant negative impact on our operations and possibly our results. An incident could also result in a violation of applicable privacy and other laws, damage our reputation, cause a loss of customers or give rise to monetary fines and other penalties, which could be significant. Management is not aware of a cybersecurity incident that has had a material impact on our operations.

The NAIC has adopted an Insurance Data Security Model Law, which, when adopted by the states will require insurers, insurance producers and other entities required to be licensed under state insurance laws to comply with certain requirements under state insurance laws, such as developing and maintaining a written information security program, conducting risk assessments and overseeing the data security practices of third-party vendors. In addition, certain state insurance regulators are developing or have developed regulations that may impose regulatory requirements relating to cybersecurity on insurance and reinsurance companies (potentially including insurance and reinsurance companies that are not domiciled, but are licensed, in the relevant state). For example, the New York State Department of Financial Services has a regulation pertaining to cybersecurity for all banking and insurance entities under its jurisdiction, which was effective as of March 1, 2017, which applies to us. We cannot predict the impact these laws and regulations will have on our business, financial condition or results of operations, but our insurance and reinsurance companies could incur additional costs resulting from compliance with such laws and regulations.

## **RISKS RELATING TO REGULATION**

*Insurance laws and regulations restrict our ability to operate and any failure to comply with those laws and regulations could have a material adverse effect on our business.*

We are subject to extensive and increasing regulation under U.S., state and foreign insurance laws. These laws limit the amount of dividends that can be paid to us by our operating subsidiaries, impose restrictions on the amount and type of investments that we can hold, prescribe solvency, accounting and internal control standards that must be met and maintained and require us to maintain reserves. These laws also require disclosure of material inter-affiliate transactions and require prior approval of “extraordinary” transactions. Such “extraordinary” transactions include declaring dividends from operating subsidiaries that exceed statutory thresholds. These laws also generally require approval of changes of control of insurance companies. The application of these laws could affect our liquidity and ability to pay dividends, interest and other payments on securities, as applicable, and could restrict our ability to expand our business operations through acquisitions of new insurance subsidiaries. We may not have or maintain all required licenses and approvals or fully comply with

11

the wide variety of applicable laws and regulations or the relevant authority's interpretation of the laws and regulations. If we do not have the requisite licenses and approvals or do not comply with applicable regulatory requirements, the insurance regulatory authorities could preclude or temporarily suspend us from carrying on some or all of our activities or monetarily penalize us. These types of actions could have a material adverse effect on our business. To date, no material fine, penalty or restriction has been imposed on us for failure to comply with any insurance law or regulation.

As a result of the previous dislocation of the financial markets, Congress and the previous Presidential administration in the United States implemented changes in the way the financial services industry is regulated. Some of these changes are also impacting the insurance industry. For example, the U.S. Treasury established the Federal Insurance Office with the authority to monitor all aspects of the insurance sector, monitor the extent to which traditionally underserved communities and consumers have access to affordable non-health insurance products, to represent the United States on prudential aspects of international insurance matters, to assist with administration of the Terrorism Risk Insurance Program and to advise on important national and international insurance matters. In addition, several European regulatory bodies are in process of updating existing or developing new capital adequacy directives for insurers and reinsurers. The future impact of such initiatives or new initiatives from the current Government Administration, if any, on our operation, net income (loss) or financial condition cannot be determined at this time.

## RISK RELATING TO OUR SECURITIES

*Because of our holding company structure, our ability to pay dividends, interest and principal is dependent on our receipt of dividends, loan payments and other funds from our subsidiaries.*

We are a holding company, whose most significant asset consists of the stock of our operating subsidiaries. As a result, our ability to pay dividends, interest or other payments on our securities in the future will depend on the earnings and cash flows of the operating subsidiaries and the ability of the subsidiaries to pay dividends or to advance or repay funds to us. This ability is subject to general economic, financial, competitive, regulatory and other factors beyond our control. Payment of dividends and advances and repayments from some of the operating subsidiaries are regulated by U.S., state and foreign insurance laws and regulatory restrictions, including minimum solvency and liquidity thresholds. Accordingly, the operating subsidiaries may not be able to pay dividends or advance or repay funds to us in the future, which could prevent us from paying dividends, interest or other payments on our securities.

## RISK RELATING TO TAXATION

*If U.S. tax law changes, our net income may be impacted.*

The 2017 TCJA addressed what some members of Congress had expressed concern about for several years, which was U.S. corporations moving their place of incorporation to low-tax jurisdictions to obtain a competitive advantage over domestic corporations that are subject to the U.S. corporate income tax rate of 21%. Specifically, it addressed their concern over a perceived competitive advantage that foreign-controlled insurers and reinsurers may have had over U.S. controlled insurers and reinsurers resulting from the purchase of reinsurance by U.S. insurers from affiliates operating in some foreign jurisdictions, including Bermuda. Such affiliated reinsurance transactions may subject the U.S. ceding companies to a Base Erosion and Anti-abuse Tax ('BEAT') of 10% from 2019 to 2025 and 12.5% thereafter which may exceed its regular income tax. In addition, new legislation as well as proposed and final regulations may further limit the ability of the Company to execute alternative capital balancing transactions with unrelated parties. This would further impact our net income and effective tax rate.

On August 16, 2022, the Inflation Reduction Act of 2022 ('IRA') was enacted. We have evaluated the tax provisions of the IRA, the most significant of which are the corporate alternative minimum tax and the share repurchase excise tax and do not expect the legislation to have a material impact on our results of operations. As the IRS issues additional guidance, we will evaluate any impact to our consolidated financial statements.

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## **ITEM 1B. UNRESOLVED STAFF COMMENTS**

None.

## **ITEM 2. PROPERTIES**

Everest Re's corporate offices are located in approximately 321,500 square feet of leased office space in Warren, New Jersey. The Company's other 18 locations occupy a total of approximately 226,500 square feet, all of which are leased.

## **ITEM 3. LEGAL PROCEEDINGS**

In the ordinary course of business, the Company is involved in lawsuits, arbitrations and other formal and informal dispute resolution procedures, the outcomes of which will determine the Company's rights and obligations under insurance and reinsurance agreements. In some disputes, the Company seeks to enforce its rights under an agreement or to collect funds owing to it. In other matters, the Company is resisting attempts by others to collect funds or enforce alleged rights. These disputes arise from time to time and are ultimately resolved through both informal and formal means, including negotiated resolution, arbitration and litigation. In all such matters, the Company believes that its positions are legally and commercially reasonable. The Company considers the statuses of these proceedings when determining its reserves for unpaid loss and loss adjustment expenses.

Aside from litigation and arbitrations related to these insurance and reinsurance agreements, the Company is not a party to any other material litigation or arbitration.

## **ITEM 4. MINE SAFETY DISCLOSURES**

Not applicable.

## **PART II**

## **ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES**

### **Market Information and Holder of Common Stock.**

As of December 31, 2022, all of the Company's common stock was owned by Holdings Ireland and was not publicly traded.

### **Dividend History and Restrictions.**

The Company did not pay any dividend's in 2022, 2021 and 2020. The declaration and payment of future dividends, if any, by the Company will be at the discretion of the Board of Directors and will depend upon many factors, including the Company's earnings, financial condition, business needs and growth objectives, capital and surplus requirements of its operating subsidiaries, regulatory restrictions, rating agency considerations and other factors. As an insurance holding company, the Company is dependent on dividends and other permitted payments from its subsidiaries to pay cash dividends to its stockholder. The payment of dividends to Holdings by Everest Re is subject to limitations imposed by Delaware law. Generally, Everest Re may only pay dividends out of its statutory earned surplus, which was $5.6 billion at December 31, 2022, and only after it has given 10 days prior notice to the Delaware Insurance Commissioner. During this 10-day period, the Commissioner may, by order, limit or disallow the payment of ordinary dividends if the Commissioner finds the insurer to be presently or potentially in financial distress. Further, the maximum amount of dividends that may be paid without the prior approval of the Delaware Insurance Commissioner in any twelve month period is the greater of (1) 10% of an insurer's statutory surplus as of the end of the prior calendar year or (2) the insurer's statutory net income, not including realized capital gains, for

13

the prior calendar year. The maximum amount that is available for the payment of dividends by Everest Re in 2023 without prior regulatory approval is $555 million.

#### **Recent Sales of Unregistered Securities.**

None.

#### **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**

The following is a discussion and analysis of our results of operations and financial condition. It should be read in conjunction with the Consolidated Financial Statements and accompanying notes thereto presented under ITEM 8, 'Financial Statements and Supplementary Data'.

##### **Industry Conditions.**

The worldwide reinsurance and insurance businesses are highly competitive, as well as cyclical by product and market. As such, financial results tend to fluctuate with periods of constrained availability, higher rates and stronger profits followed by periods of abundant capacity, lower rates and constrained profitability. Competition in the types of reinsurance and insurance business that we underwrite is based on many factors, including the perceived overall financial strength of the reinsurer or insurer, ratings of the reinsurer or insurer by A.M. Best and/or Standard & Poor's, underwriting expertise, the jurisdictions where the reinsurer or insurer is licensed or otherwise authorized, capacity and coverages offered, premiums charged, other terms and conditions of the reinsurance and insurance business offered, services offered, speed of claims payment and reputation and experience in lines written. Furthermore, the market impact from these competitive factors related to reinsurance and insurance is generally not consistent across lines of business, domestic and international geographical areas and distribution channels.

We compete in the U.S. and international reinsurance and insurance markets with numerous global competitors. Our competitors include independent reinsurance and insurance companies, subsidiaries or affiliates of established worldwide insurance companies, reinsurance departments of certain insurance companies, domestic and international underwriting operations, and certain government sponsored risk transfer vehicles. Some of these competitors have greater financial resources than we do and have established long-term and continuing business relationships, which can be a significant competitive advantage. In addition, the lack of strong barriers to entry into the reinsurance business and the securitization of reinsurance and insurance risks through capital markets provide additional sources of potential reinsurance and insurance capacity and competition.

Worldwide insurance and reinsurance market conditions historically have been competitive. Generally, there is ample insurance and reinsurance capacity relative to demand, as well as, additional capital from the capital markets through insurance linked financial instruments. These financial instruments such as side cars, catastrophe bonds and collateralized reinsurance funds, provided capital markets with access to insurance and reinsurance risk exposure. The capital markets demand for these products is primarily driven by the desire to achieve greater risk diversification and potentially higher returns on their investments. This competition generally has a negative impact on rates, terms and conditions; however, the impact varies widely by market and coverage. Based on recent competitive behaviors in the insurance and reinsurance industry, natural catastrophe events and the macroeconomic backdrop, there has been some dislocation in the market which we expect to have a positive impact on rates and terms and conditions generally, though local market specificities can vary.

The increased frequency of catastrophe losses experienced throughout 2022 appears to be pressuring the increase of rates. As business activity continues to regain strength after the pandemic and current macroeconomic

14

uncertainty, rates also appear to be firming in most lines of business, particularly in the casualty lines that had seen significant losses such as excess casualty and directors' and officers' liability. Other casualty lines are experiencing modest rate increase, while some lines such as workers' compensation were experiencing softer market conditions. It is too early to tell what the impact on pricing conditions will be but it is likely to change depending on the line of business and geography.

Our capital position remains a source of strength, with high quality invested assets, significant liquidity and a low operating expense ratio. Our diversified global platform with its broad mix of products, distribution and geography is resilient.

The war in the Ukraine is ongoing and an evolving event. Economic and legal sanctions have been levied against Russia, specific named individuals and entities connected to the Russian government, as well as businesses located in the Russian Federation and/or owned by Russian nationals by numerous countries, including the United States. The significant political and economic uncertainty surrounding the war and associated sanctions have impacted economic and investment markets both within Russia and around the world. The Company has recorded $25 million of losses related to the Ukraine/Russia war during 2022.

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## Financial Summary.

We monitor and evaluate our overall performance based upon financial results. The following table displays a summary of the consolidated net income (loss), ratios and stockholder's equity for the periods indicated:

| (Dollars in millions) | Years Ended December 31, |  |  | Percentage Increase/(Decrease) |  |
| --- | --- | --- | --- | --- | --- |
|  | 2022 | 2021 | 2020 | 2022/2021 | 2021/2020 |
| Gross written premiums | $9,677 | $9,331 | $7,957 | 3.7% | 17.3% |
| Net written premiums | 8,032 | 7,719 | 6,639 | 4.0% | 16.3% |
| REVENUES: |  |  |  |  |  |
| Premiums earned | $7,876 | $7,179 | $6,407 | 9.7% | 12.1% |
| Net investment income | 638 | 745 | 376 | -14.3% | 98.2% |
| Net gains (losses) on investments | (982) | 501 | 50 | NM | NM |
| Other income (expense) | (6) | 23 | (15) | -123.7% | NM |
| Total revenues | 7,526 | 8,448 | 6,818 | -10.9% | 23.9% |
| CLAIMS AND EXPENSES: |  |  |  |  |  |
| Incurred losses and loss adjustment expenses | 5,823 | 5,387 | 4,608 | 8.1% | 16.9% |
| Commission, brokerage, taxes and fees | 1,632 | 1,513 | 1,373 | 7.9% | 10.1% |
| Other underwriting expenses | 501 | 454 | 401 | 10.5% | 13.2% |
| Corporate expense | 26 | 33 | 16 | -22.9% | 108.5% |
| Interest, fee and bond issue cost amortization expense | 101 | 70 | 36 | 44.3% | 96.2% |
| Total claims and expenses | 8,083 | 7,457 | 6,434 | 8.4% | 15.9% |
| INCOME (LOSS) BEFORE TAXES | (557) | 991 | 384 | -156.1% | 158.5% |
| Income tax expense (benefit) | (112) | 192 | 32 | -158.4% | NM |
| NET INCOME (LOSS) | $(445) | $800 | $352 | -155.6% | 127.3% |
| RATIOS: |  |  |  |  |  |
| Loss ratio | 73.9% | 75.0% | 71.9% | (1.1) | 3.1 |
| Commission and brokerage ratio | 20.7% | 21.1% | 21.4% | (0.4) | (0.3) |
| Other underwriting expense ratio | 6.4% | 6.3% | 6.3% | 0.1 | - |
| Combined ratio | 101.0% | 102.4% | 99.6% | (1.4) | 2.8 |

| (Dollars in millions) | At December 31, |  |  | Percentage Increase/ (Decrease) |  |
| --- | --- | --- | --- | --- | --- |
|  | 2022 | 2021 | 2020 | 2022/2021 | 2021/2020 |
| Balance sheet data: |  |  |  |  |  |
| Total investments and cash | $19,195 | $19,719 | $15,910 | -2.7% | 23.9% |
| Total assets | 27,957 | 27,695 | 23,640 | 0.9% | 17.2% |
| Loss and loss adjustment expense reserves | 14,977 | 13,121 | 11,578 | 14.1% | 13.3% |
| Total debt | 3,084 | 3,089 | 1,910 | -0.2% | 61.7% |
| Total liabilities | 22,303 | 20,657 | 17,226 | 8.0% | 19.9% |
| Stockholder's equity | 5,654 | 7,038 | 6,414 | -19.7% | 9.7% |

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

## Revenues.

**Premiums.** Gross written premiums increased by 3.7% to $9.7 billion in 2022, compared to $9.3 billion in 2021, reflecting a $426 million, or 12.9%, increase in our insurance business and an $81 million, or 1.3%, decrease in our

16

reinsurance business. The increase in insurance premiums reflects growth across most lines of business, particularly specialty casualty business and property/short tail business, driven by positive rate and exposure increases, new business and strong renewal retention. The decrease in reinsurance premiums was mainly due to a decline in property pro rata business. Net written premiums increased by 4.0% to $8.0 billion in 2022, compared to $7.7 billion in 2021 which is consistent with the change in gross written premiums. Premiums earned increased by 9.7% to $7.9 billion in 2022, compared to $7.2 billion in 2021. The change in premiums earned relative to net written premiums is the result of timing; premiums are earned ratably over the coverage period whereas written premiums are recorded at the initiation of the coverage period.

**Other Income (Expense).** We recorded other expense of $6 million and other income of $23 million in 2022 and 2021, respectively. The changes were primarily the result of fluctuations in foreign currency exchange rates.

### Claims and Expenses.

**Incurred Losses and Loss Adjustment Expenses.** The following table presents our incurred losses and loss adjustment expenses ('LAE') for the periods indicated.

| (Dollars in millions) | Total |  |  |  |  |  |
| --- | --- | --- | --- | --- | --- | --- |
|  | Current Year | Ratio %/ Pt Change | Prior Years | Ratio %/ Pt Change | Total Incurred | Ratio %/ Pt Change |
| 2022 |  |  |  |  |  |  |
| Attritional (a) | $4,828 | 61.3% | $11 | 0.1% | $4,839 | 61.4% |
| Catastrophes | 987 | 12.5% | (4) | -% | 983 | 12.5% |
| Total | $5,815 | 73.8% | $7 | 0.1% | $5,823 | 73.9% |
| 2021 |  |  |  |  |  |  |
| Attritional (a) | $4,439 | 61.8% | $8 | 0.1% | $4,447 | 61.9% |
| Catastrophes | 943 | 13.1% | (3) | 0.0% | 940 | 13.1% |
| Total | $5,382 | 74.9% | $5 | 0.1% | $5,387 | 75.0% |
| 2020 |  |  |  |  |  |  |
| Attritional (a) | $3,997 | 62.4% | $214 | 3.3% | $4,211 | 65.7% |
| Catastrophes | 411 | 6.4% | (13) | -0.2% | 397 | 6.2% |
| Total | $4,408 | 68.8% | $200 | 3.1% | $4,608 | 71.9% |
| Variance 2022/2021 |  |  |  |  |  |  |
| Attritional (a) | $389 | (0.5) pts | $3 | - pts | $392 | (0.5) pts |
| Catastrophes | 44 | (0.6) pts | (1) | - pts | 43 | (0.6) pts |
| Total | $433 | (1.1) pts | $2 | - pts | $436 | (1.1) pts |
| Variance 2021/2020 |  |  |  |  |  |  |
| Attritional (a) | $442 | (0.6) pts | $(206) | (3.2) pts | $236 | (3.8) pts |
| Catastrophes | 532 | 6.7 pts | 10 | 0.2 pts | 543 | 6.9 pts |
| Total | $974 | 6.1 pts | $(195) | (3.0) pts | $779 | 3.1 pts |

(a) Attritional losses exclude catastrophe losses.

(Some amounts may not reconcile due to rounding.)

Incurred losses and LAE increased by 8.1% to $5.8 billion in 2022 compared to $5.4 billion in 2021, primarily due to an increase of $389 million in current year attritional losses and an increase of $44 million in current year catastrophe losses. The increase in current year attritional losses was mainly related to the impact of the increase in premiums earned and $25 million of attritional losses incurred due to the Ukraine/Russia war. The current year

17

catastrophe losses of $987 million in 2022 related primarily to Hurricane Ian ($768 million), the 2022 Australia floods ($75 million), the 2022 South Africa flood ($43 million), Hurricane Fiona ($27 million), and the 2022 Canada derecho ($20 million), with the remaining losses resulting from various storm events. The current year catastrophe losses of $943 million in 2021 primarily related to Hurricane Ida ($423 million), the Texas winter storms ($288 million), the European floods ($108 million), the Canada drought loss ($80 million) and the Quad State Tornadoes ($42 million), with the rest of the losses emanating from the 2021 Australia floods.

**Commission, Brokerage, Taxes and Fees.** Commission, brokerage, taxes and fees increased to $1.6 billion in 2022 compared to $1.5 billion in 2021. The increase was mainly due to increases in premiums earned and changes in the mix of business.

**Other Underwriting Expenses.** Other underwriting expenses were $501 million and $454 million in 2022 and 2021, respectively. The increase in other underwriting expenses was mainly due to the continued build out of our insurance operations, including an expansion of the international insurance platform.

**Corporate Expenses.** Corporate expenses, which are general operating expenses that are not allocated to segments, were $26 million and $33 million for the years ended December 31, 2022 and 2021, respectively. The decrease from 2021 to 2022 was mainly due to a decrease in variable incentive compensation.

**Interest, Fees and Bond Issue Cost Amortization Expense.** Interest, fees and other bond amortization expense were $101 million and $70 million in 2022 and 2021, respectively. The increase in interest expense was primarily due to the issuance of $1.0 billion of senior notes in October 2021. Interest expense was also impacted by the movements in the floating interest rate related to the long-term subordinated notes, which is reset quarterly per the note agreement. The floating rate was 6.99% as of December 31, 2022 compared to 2.54% as of December 31, 2021.

**Income Tax Expense (Benefit).** The Company had an income tax benefit of $112 million and income tax expense of $192 million in 2022 and 2021, respectively. Variations in income taxes generally result from changes in the relative levels of pre-tax income, including the impact of catastrophe losses and net gains (losses) on investments as well as changes in tax exempt investment income and creditable foreign taxes. The change from income tax expense to income tax benefit resulted primarily from increased fair value and capital losses as well as an increase in catastrophe losses.

The Coronavirus Aid, Relief, and Economic Security (“CARES”) Act, enacted on March 27, 2020, provided that U.S. companies could carryback for five years net operating losses incurred in 2018, 2019 and/or 2020. This beneficial tax provision in the CARES Act enabled the Company to carryback its significant 2018 net operating losses to prior tax years with higher effective tax rates of 35% versus 21% in 2018 and later years. As a result, the Company was able to record a net income tax benefit from the five-year carryback of $33 million and obtain federal income tax cash refunds of $183 million including interest in 2020.

On August 16, 2022, the Inflation Reduction Act of 2022 (“IRA”) was enacted. We have evaluated the tax provisions of the IRA, the most significant of which are the corporate alternative minimum tax and the share repurchase excise tax and do not expect the legislation to have a material impact on our results of operations. As the IRS issues additional guidance, we will evaluate any impact to our consolidated financial statements.

#### **Net Income (Loss).**

Our net loss was $445 million and net income was $800 million in 2022 and 2021, respectively. The change was primarily driven by the consolidated investment results explained below.

#### **Ratios.**

Our combined ratio decreased by 1.4 points to 101.0% in 2022 compared to 102.4% in 2021. The loss ratio component decreased by 1.1 points in 2022 over the same period last year. The decline in the ratio was mainly due to lower loss experience. Although both current year attritional and current year catastrophe losses were higher in

18

2022 than 2021, the rate of increase in the current year losses was lower than the rate of increase in earned premiums resulting in a reduction of the overall loss ratio. The commission and brokerage ratio component decreased to 20.7% in 2022 compared to 21.1% in 2021, reflecting changes in affiliated reinsurance agreements and changes in the mix of business. The other underwriting expense ratio slightly increased to 6.4% in 2022 from 6.3% in 2021. The increase was mainly due to higher insurance operations costs.

#### **Stockholder's Equity.**

Stockholder's equity decreased by $1.4 billion to $5.7 billion at December 31, 2022 from $7.0 billion at December 31, 2021, principally as a result of $445 million of net loss, $938 million of net unrealized depreciation on investments, net of tax and $18 million of net foreign currency translation adjustments, partially offset by $17 million of net benefit plan obligation adjustments.

#### **Consolidated Investment Results**

##### **Net Investment Income.**

Net investment income decreased by 14.3% to $638 million in 2022 compared to $745 million in 2021. The decrease was primarily the result of a decline of $249 million in limited partnership income, partially offset by an additional $166 million of income from fixed maturity investments. The limited partnership income primarily reflects decreases in their reported net asset values. As such, until these asset values are monetized and the resultant income is distributed, they are subject to future increases or decreases in the asset value, and the results may be volatile.

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

| (Dollars in millions) | Years Ended December 31, |  |  |
| --- | --- | --- | --- |
|  | 2022 | 2021 | 2020 |
| Fixed maturities | $510 | $344 | $305 |
| Equity securities | 16 | 15 | 11 |
| Short-term investments and cash | 16 | 1 | 3 |
| Other invested assets |  |  |  |
| Limited partnerships | 72 | 321 | 49 |
| Dividends from preferred shares of affiliate | 31 | 31 | 31 |
| Other | 30 | 63 | 2 |
| Gross investment income before adjustments | 675 | 775 | 401 |
| Funds held interest income (expense) | 6 | 8 | 6 |
| Interest income from Parent | 11 | 6 | 5 |
| Gross investment income | 691 | 788 | 412 |
| Investment expenses | (52) | (43) | (36) |
| Net investment income | $638 | $745 | $376 |

(Some amounts may not reconcile due to rounding.)

The following table shows a comparison of various investment yields for the periods indicated:

|  | 2022 | 2021 | 2020 |
| --- | --- | --- | --- |
| Annualized pre-tax yield on average cash and invested assets | 3.3% | 4.4% | 2.8% |
| Annualized after-tax yield on average cash and invested assets | 2.6% | 3.5% | 2.3% |

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## Net Gains (Losses) on Investments.

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

| (Dollars in millions) | Years Ended December 31, |  |  | 2022/2021 | 2021/2020 |
| --- | --- | --- | --- | --- | --- |
|  | 2022 | 2021 | 2020 | Variance | Variance |
| Realized gains (losses) from dispositions: |  |  |  |  |  |
| Fixed maturity securities, available for sale |  |  |  |  |  |
| Gains | $9 | $33 | $24 | $(24) | $9 |
| Losses | (88) | (25) | (60) | (63) | 35 |
| Total | (79) | 8 | (36) | (87) | 44 |
| Equity securities |  |  |  |  |  |
| Gains | 165 | 39 | 37 | 126 | 2 |
| Losses | (48) | (15) | (45) | (33) | 30 |
| Total | 117 | 24 | (8) | 93 | 32 |
| Other invested assets |  |  |  |  |  |
| Gains | 18 | 10 | 8 | 8 | 2 |
| Losses | (5) | (4) | (6) | (1) | 2 |
| Total | 13 | 6 | 2 | 7 | 4 |
| Short Term Investments: |  |  |  |  |  |
| Gains | - | - | 1 | - | (1) |
| Losses | - | - | - | - | - |
| Total | - | - | 1 | - | (1) |
| Total net realized gains (losses) from dispositions |  |  |  |  |  |
| Gains | 192 | 82 | 70 | 110 | 11 |
| Losses | (141) | (43) | (111) | (98) | 68 |
| Total | 51 | 39 | (41) | 12 | 79 |
| Allowances for credit losses: | (27) | (26) | (2) | (1) | (24) |
| Gains (losses) from fair value adjustments: |  |  |  |  |  |
| Fixed maturities | - | - | 2 | - | (2) |
| Equity securities | (447) | 254 | 276 | (701) | (22) |
| Other invested assets | (559) | 234 | (186) | (793) | 420 |
| Total | (1,006) | 488 | 92 | (1,494) | 396 |
| Total net gains (losses) on investments | $(982) | $501 | $50 | $(1,483) | $451 |

(Some amounts may not reconcile due to rounding.)

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Net gains (losses) on investments during 2022 primarily relate to net losses from fair value adjustments on equity securities of $447 million as a result of equity market declines in 2022, net losses of $559 million from fair value adjustments on other invested assets, $51 million of net realized gains from disposition of investments and $27 million of credit allowances on fixed maturity securities.

#### **Segment Results.**

The Company manages its reinsurance and insurance operations as autonomous units and key strategic decisions are based on the aggregate operating results and projections for these segments of business.

The Reinsurance operation writes risks on a worldwide basis in property and casualty reinsurance and specialty lines of business, on both a treaty and facultative basis, through reinsurance brokers, as well as directly with ceding companies. Business is written in the United States as well as through branches in Canada and Singapore. The Insurance operation writes property and casualty insurance directly and through brokers, surplus lines brokers and general agents within the United States.

These segments are managed independently, but conform with corporate guidelines with respect to pricing, risk management, control of aggregate catastrophe exposures, capital, investments and support operations. Management generally monitors and evaluates the financial performance of these operating segments based upon their underwriting results.

Underwriting results include earned premium less losses and LAE incurred, commission and brokerage expenses and other underwriting expenses. We measure our underwriting results using ratios, in particular loss, commission and brokerage and other underwriting expense ratios, which respectively, divide incurred losses, commissions and brokerage and other underwriting expenses by premiums earned.

The Company does not maintain separate balance sheet data for its operating segments. Accordingly, the Company does not review and evaluate the financial results of its operating segments based upon balance sheet data.

Our loss and LAE reserves are management's best estimate of our ultimate liability for unpaid claims. We re-evaluate our estimates on an ongoing basis, including all prior period reserves, taking into consideration all available information and, in particular, recently reported loss claim experience and trends related to prior periods. Such re-evaluations are recorded in incurred losses in the period in which the re-evaluation is made. Management's best estimate is developed through collaboration with actuarial, underwriting, claims, legal and finance departments and culminates with the input of reserve committees. Each segment reserve committee includes the participation of the relevant parties from actuarial, finance, claims and segment senior management and has the responsibility for recommending and approving management's best estimate. Reserves are further reviewed by Everest's Chief Reserving Actuary and senior management. The objective of such process is to determine a single best estimate viewed by management to be the best estimate of its ultimate loss liability.

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

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## Reinsurance.

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

| (Dollars in millions) | Years Ended December 31, |  |  | 2022/2021 |  | 2021/2020 |  |
| --- | --- | --- | --- | --- | --- | --- | --- |
|  | 2022 | 2021 | 2020 | Variance | % Change | Variance | % Change |
| Gross written premiums | $5,948 | $6,028 | $5,266 | $(80) | (1.3)% | $763 | 14.5% |
| Net written premiums | 5,269 | 5,265 | 4,632 | 4 | 0.1% | 632 | 13.7% |
| Premiums earned | $5,212 | $4,949 | $4,485 | $263 | 5.3% | $464 | 10.3% |
| Incurred losses and LAE | 3,957 | 3,761 | 3,209 | 196 | 5.2% | 552 | 17.2% |
| Commission and brokerage | 1,326 | 1,250 | 1,120 | 76 | 6.1% | 130 | 11.6% |
| Other underwriting expenses | 139 | 143 | 119 | (4) | (3.1)% | 24 | 19.9% |
| Underwriting gain (loss) | $(210) | $(206) | $36 | $(5) | 2.2% | $(242) | NM |
|  |  |  |  |  | Point Chg |  | Point Chg |
| Loss ratio | 75.9% | 76.0% | 71.6% |  | (0.1) |  | 4.4 |
| Commission and brokerage ratio | 25.4% | 25.3% | 25.0% |  | 0.1 |  | 0.3 |
| Other underwriting expense ratio | 2.7% | 2.9% | 2.6% |  | (0.2) |  | 0.3 |
| Combined ratio | 104.0% | 104.2% | 99.2% |  | (0.2) |  | 5.0 |

(Some amounts may not reconcile due to rounding)

**Premiums.** Gross written premiums decreased by 1.3% to $5.9 billion in 2022 from $6.0 billion in 2021, primarily due to a decline in property pro rata business. Net written premiums remained flat at $5.3 billion in 2022 and 2021. The difference in the percentage change in gross written premiums compared to the percentage change in net written premiums was primarily due to the reduction in business ceded to the segregated accounts of Mt. Logan Re during 2022 compared to 2021. Premiums earned increased 5.3% to $5.2 billion in 2022 compared to $4.9 billion in 2021. The change in premiums earned relative to net written premiums is the result of timing; premiums are earned ratably over the coverage period whereas written premiums are recorded at the initiation of the coverage period.

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**Incurred Losses and LAE.** The following table presents the incurred losses and LAE for the Reinsurance segment for the periods indicated.

| (Dollars in millions) | Years Ended December 31, |  |  |  |  |  |
| --- | --- | --- | --- | --- | --- | --- |
|  | Current Year | Ratio %/ Pt Change | Prior Years | Ratio %/ Pt Change | Total Incurred | Ratio %/ Pt Change |
| 2022 |  |  |  |  |  |  |
| Attritional | $3,115 | 59.8% | $(26) | (0.5)% | $3,089 | 59.3% |
| Catastrophes | 870 | 16.7% | (3) | (0.1)% | 867 | 16.6% |
| Total segment | $3,985 | 76.5% | $(29) | (0.6)% | $3,957 | 75.9% |
| 2021 |  |  |  |  |  |  |
| Attritional | $3,004 | 60.7% | $(32) | (0.6)% | $2,972 | 60.1% |
| Catastrophes | 792 | 16.0% | (3) | (0.1)% | 789 | 15.9% |
| Total segment | $3,796 | 76.7% | $(35) | (0.7)% | $3,761 | 76.0% |
| 2020 |  |  |  |  |  |  |
| Attritional | $2,692 | 60.0% | $187 | 4.2% | $2,880 | 64.2% |
| Catastrophes | 343 | 7.6% | (13) | (0.3)% | 330 | 7.4% |
| Total segment | $3,035 | 67.7% | $174 | 3.9% | $3,209 | 71.6% |
| Variance 2022/2021 |  |  |  |  |  |  |
| Attritional | $111 | (0.9) pts | $6 | 0.1 pts | $117 | (0.8) pts |
| Catastrophes | 78 | 0.7 pts | - | - pts | 78 | 0.7 pts |
| Total segment | $189 | (0.2) pts | $6 | 0.1 pts | $196 | (0.1) pts |
| Variance 2021/2020 |  |  |  |  |  |  |
| Attritional | $312 | 0.7 pts | $(219) | (4.8) pts | $92 | (4.1) pts |
| Catastrophes | 449 | 8.4 pts | 10 | 0.2 pts | 459 | 8.5 pts |
| Total segment | $761 | 9.0 pts | $(209) | (4.6) pts | $552 | 4.4 pts |

(Some amounts may not reconcile due to rounding.)

Incurred losses increased by 5.2% to $4.0 billion in 2022 compared to $3.8 billion in 2021. The increase was primarily due to an increase of $111 million in current year attritional losses and an increase of $78 million in current year catastrophe losses. The increase in current year attritional losses was primarily related to the impact of the increase in premiums earned and $25 million of attritional losses incurred due to the Ukraine/Russia war. The current year catastrophe losses of $870 million in 2022 related primarily to Hurricane Ian ($669 million), the 2022 Australia floods ($75 million), the 2022 South Africa flood ($43 million), Hurricane Fiona ($24 million), and the 2022 Canada derecho ($20 million), with the remaining losses resulting from various storm events. The current year catastrophe losses of $792 million in 2021 primarily related to Hurricane Ida ($345 million), the Texas winter storms ($231 million), the European floods ($108 million), the Canada drought loss ($80 million) and the Quad State Tornadoes ($27 million), with the rest of the losses emanating from the 2021 Australia floods.

**Segment Expenses.** Commission and brokerage increased to $1.33 billion in 2022 compared to $1.25 billion in 2021. The increase was due to the impact of the increase in premiums earned and changes in the mix of business. Segment other underwriting expenses decreased slightly to $139 million in 2022 from $143 million in 2021.

23

## Insurance.

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

| (Dollars in millions) | Years Ended December 31, |  |  | 2022/2021 |  | 2021/2020 |  |
| --- | --- | --- | --- | --- | --- | --- | --- |
|  | 2022 | 2021 | 2020 | Variance | % Change | Variance | % Change |
| Gross written premiums | $3,729 | $3,303 | $2,691 | $426 | 12.9% | $611 | 22.7% |
| Net written premiums | 2,763 | 2,455 | 2,006 | 308 | 12.5% | 448 | 22.3% |
| Premiums earned | $2,664 | $2,230 | $1,922 | $434 | 19.5% | $308 | 16.0% |
| Incurred losses and LAE | 1,865 | 1,626 | 1,399 | 239 | 14.7% | 227 | 16.2% |
| Commission and brokerage | 306 | 262 | 253 | 44 | 16.8% | 9 | 3.6% |
| Other underwriting expenses | 363 | 311 | 282 | 52 | 16.7% | 29 | 10.4% |
| Underwriting gain (loss) | $130 | $31 | $(12) | $99 | NM | $43 | NM |
|  |  |  |  |  | Point Chg |  | Point Chg |
| Loss ratio | 70.0% | 72.9% | 72.8% |  | (2.9) |  | 0.1 |
| Commission and brokerage ratio | 11.5% | 11.8% | 13.2% |  | (0.3) |  | (1.4) |
| Other underwriting expense ratio | 13.6% | 13.9% | 14.6% |  | (0.3) |  | (0.7) |
| Combined ratio | 95.1% | 98.6% | 100.6% |  | (3.5) |  | (2.0) |

(Some amounts may not reconcile due to rounding)

(NM, not meaningful)

**Premiums.** Gross written premiums increased by 12.9% to $3.7 billion in 2022 compared to $3.3 billion in 2021. The increase in insurance premiums reflects growth across most lines of business, particularly specialty casualty business and property/short tail business, driven by positive rate and exposure increases, new business and strong renewal retention. Net written premiums increased by 12.5% to $2.8 billion in 2022 compared to $2.5 billion in 2021 which is consistent with the change in gross written premiums. Premiums earned increased 19.5% to $2.7 billion in 2022 compared to $2.2 billion in 2021. The change in premiums earned is the result of timing; premiums are earned ratably over the coverage period whereas written premiums are recorded at the initiation of the coverage period.

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**Incurred Losses and LAE.** The following table presents the incurred losses and LAE for the Insurance segment for the periods indicated.

| (Dollars in millions) | Years Ended December 31, |  |  |  |  |  |
| --- | --- | --- | --- | --- | --- | --- |
|  | Current Year | Ratio %/ Pt Change | Prior Years | Ratio %/ Pt Change | Total Incurred | Ratio %/ Pt Change |
| 2022 |  |  |  |  |  |  |
| Attritional | $1,712 | 64.3% | $37 | 1.4% | $1,749 | 65.7% |
| Catastrophes | 117 | 4.4% | (1) | -% | 116 | 4.4% |
| Total segment | $1,829 | 68.7% | $36 | 1.4% | $1,865 | 70.0% |
| 2021 |  |  |  |  |  |  |
| Attritional | $1,435 | 64.4% | $40 | 1.8% | $1,475 | 66.1% |
| Catastrophes | 151 | 6.8% | - | -% | 151 | 6.8% |
| Total segment | $1,586 | 71.1% | $40 | 1.8% | $1,626 | 72.9% |
| 2020 |  |  |  |  |  |  |
| Attritional | $1,305 | 67.9% | $26 | 1.4% | $1,331 | 69.3% |
| Catastrophes | 68 | 3.5% | - | -% | 68 | 3.5% |
| Total segment | $1,373 | 71.4% | $26 | 1.3% | $1,399 | 72.8% |
| Variance 2022/2021 |  |  |  |  |  |  |
| Attritional | $277 | (0.1) pts | $(3) | (0.4) pts | $274 | (0.4) pts |
| Catastrophes | (34) | (2.4) pts | (1) | - pts | (35) | (2.4) pts |
| Total segment | $243 | (2.4) pts | $(4) | (0.4) pts | $239 | (2.9) pts |
| Variance 2021/2020 |  |  |  |  |  |  |
| Attritional | $130 | (3.5) pts | $14 | 0.4 pts | $144 | (3.2) pts |
| Catastrophes | 83 | 3.3 pts | - | - pts | 83 | 3.3 pts |
| Total segment | $213 | (0.3) pts | $14 | 0.5 pts | $227 | 0.1 pts |

(Some amounts may not reconcile due to rounding.)

Incurred losses and LAE increased by 14.7% to $1.9 billion in 2022 compared to $1.6 billion in 2021, mainly due to an increase of $277 million of current year attritional losses, partially offset by a decrease of $34 million in current year catastrophe losses. The rise in current year attritional losses was primarily due to the impact of the increase in premiums earned. The current year catastrophe losses of $117 million in 2022 related primarily to Hurricane Ian ($99 million), with the remaining losses resulting from various storm events. The $151 million of current year catastrophe losses in 2021, primarily related to Hurricane Ida ($78 million), the Texas winter storms ($58 million) and the Quad State Tornadoes ($15 million).

**Segment Expenses.** Commission and brokerage increased to $306 million in 2022 compared to $262 million in 2021. Segment other underwriting expenses increased to $363 million in 2022 compared to $311 million in 2021. The increases were mainly due to the impact of the increases in premiums earned and expenses related to the continued build out of the insurance business.

#### SAFE HARBOR DISCLOSURE

This report contains forward-looking statements within the meaning of the U.S. federal securities laws. We intend these forward-looking statements to be covered by the safe harbor provisions for forward-looking statements in the federal securities laws. In some cases, these statements can be identified by the use of forward-looking words such as “may”, “will”, “should”, “could”, “anticipate”, “estimate”, “expect”, “plan”, “believe”, “predict”,

25

“potential” and “intend”. Forward-looking statements contained in this report include information regarding our reserves for losses and LAE, the impact of the TCJA, the adequacy of our provision for uncollectible balances, estimates of our catastrophe exposure, the effects of catastrophic and pandemic events on our financial statements and the ability of our subsidiaries to pay dividends. Forward-looking statements only reflect our expectations and are not guarantees of performance. These statements involve risks, uncertainties and assumptions. Actual events or results may differ materially from our expectations. Important factors that could cause our actual events or results to be materially different from our expectations include those discussed under the caption ITEM 1A, “Risk Factors”. We undertake no obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise.

## ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

### Market Sensitive Instruments.

The SEC’s Financial Reporting Release #48 requires registrants to clarify and expand upon the existing financial statement disclosure requirements for derivative financial instruments, derivative commodity instruments and other financial instruments (collectively, “market sensitive instruments”). We do not generally enter into market sensitive instruments for trading purposes.

Our current investment strategy seeks to maximize after-tax income through a high quality, diversified, fixed maturity portfolio, while maintaining an adequate level of liquidity. Our mix of taxable and tax-preferred investments is adjusted periodically, consistent with our current and projected operating results, market conditions and our tax position. The fixed maturity securities in the investment portfolio are comprised of non-trading securities. Additionally, we have invested in equity securities.

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

**Interest Rate Risk.** Our $19.2 billion investment portfolio, at December 31, 2022, is principally comprised of fixed maturity securities, which are generally subject to interest rate risk and some foreign currency exchange rate risk, and some equity securities, which are subject to price fluctuations and some foreign exchange rate risk. The overall economic impact of the foreign exchange risks on the investment portfolio is partially mitigated by changes in the dollar value of foreign currency denominated liabilities and their associated income statement impact.

Interest rate risk is the potential change in value of the fixed maturity securities portfolio, including short-term investments, from a change in market interest rates. In a declining interest rate environment, it includes prepayment risk on the $2.1 billion of mortgage-backed securities in the $13.5 billion fixed maturity portfolio. Prepayment risk results from potential accelerated principal payments that shorten the average life and thus the expected yield of the security.

26

The table below displays the potential impact of fair value fluctuations and after-tax unrealized appreciation on our fixed maturity portfolio (including $812 million of short-term investments) for the period indicated based on upward and downward parallel and immediate 100 and 200 basis point shifts in interest rates. For legal entities with a U.S. dollar functional currency, this modeling was performed on each security individually. To generate appropriate price estimate on mortgage-backed securities, changes in prepayment expectations under different interest rate environments were taken into account. For legal entities with non-U.S. dollar functional currency, the effective duration of the involved portfolio of securities was used as a proxy for the fair value change under the various interest rate change scenarios.

# Impact of Interest Rate Shift in Basis Points

| (Dollars in millions) | At December 31, 2022 |  |  |  |  |
| --- | --- | --- | --- | --- | --- |
|  | -200 | -100 | 0 | 100 | 200 |
| Total Fair Value | $15,057 | $14,676 | $14,294 | $13,912 | $13,531 |
| Fair Value Change from Base (%) | 5.3% | 2.7% | - % | -2.7% | -5.3% |
| Change in Unrealized Appreciation |  |  |  |  |  |
| After-tax from Base ($) | $603 | $302 | $ - | $(302) | $(603) |

# Impact of Interest Rate Shift in Basis Points

| (Dollars in millions) | At December 31, 2021 |  |  |  |  |
| --- | --- | --- | --- | --- | --- |
|  | -200 | -100 | 0 | 100 | 200 |
| Total Fair Value | $14,300 | $13,928 | $13,556 | $13,185 | $12,813 |
| Fair Value Change from Base (%) | 5.5% | 2.7% | - % | -2.7% | -5.5% |
| Change in Unrealized Appreciation |  |  |  |  |  |
| After-tax from Base ($) | $587 | $294 | $ - | $(294) | $(587) |

We had $15.0 billion and $13.1 billion of gross reserves for losses and LAE as of December 31, 2022 and December 31, 2021, respectively. These amounts are recorded at their nominal value, as opposed to present value, which would reflect a discount adjustment to reflect the time value of money. Since losses are paid out over a period of time, the present value of the reserves is less than the nominal value. As interest rates rise, the present value of the reserves decreases and, conversely, as interest rates decline, the present value increases. These movements are the opposite of the interest rate impacts on the fair value of investments. While the difference between present value and nominal value is not reflected in our financial statements, our financial results will include investment income over time from the investment portfolio until the claims are paid. Our loss and loss reserve obligations have an expected duration that is reasonably consistent with our fixed income portfolio.

**Equity Risk.** Equity risk is the potential change in fair value of the common stock, preferred stock and mutual fund portfolios arising from changing prices. Our equity investments consist of a diversified portfolio of individual securities. The primary objective of the equity portfolio is to obtain greater total return relative to our core bonds over time through market appreciation and income.

The table below displays the impact on fair value and after-tax change in fair value of a 10% and 20% change in equity prices up and down for the periods indicated.

# Impact of Percentage Change in Equity Fair Values

| (Dollars in millions) | At December 31, 2022 |  |  |  |  |
| --- | --- | --- | --- | --- | --- |
|  | -20% | -10% | 0% | 10% | 20% |
| Fair Value of the Equity Portfolio | $156 | $175 | $194 | $214 | $233 |
| After-tax Change in Fair Value | (31) | (15) | - | 15 | 31 |

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# Impact of Percentage Change in Equity Fair Values

At December 31, 2021

| (Dollars in millions) | -20% | -10% | 0% | 10% | 20% |
| --- | --- | --- | --- | --- | --- |
| Fair Value of the Equity Portfolio | $1,406 | $1,582 | $1,758 | $1,934 | $2,109 |
| After-tax Change in Fair Value | (278) | (139) | - | 139 | 278 |

**Foreign Currency Risk.** Foreign currency risk is the potential change in value, income and cash flow arising from adverse changes in foreign currency exchange rates. Each of our non-U.S. (“foreign”) operations maintains capital in the currency of the country of its geographic location consistent with local regulatory guidelines. Each foreign operation may conduct business in its local currency, as well as the currency of other countries in which it operates. The primary foreign currency exposures for these foreign operations are the Singapore and Canadian Dollars. We mitigate foreign exchange exposure by generally matching the currency and duration of our assets to our corresponding operating liabilities. In accordance with FASB guidance, the impact on the fair value of available for sale fixed maturities due to changes in foreign currency exchange rates, in relation to functional currency, is reflected as part of other comprehensive income. Conversely, the impact of changes in foreign currency exchange rates, in relation to functional currency, on other assets and liabilities is reflected through net income as a component of other income (expense). In addition, we translate the assets, liabilities and income of non-U.S. dollar functional currency legal entities to the U.S. dollar. This translation amount is reported as a component of other comprehensive income.

The tables below display the potential impact of a parallel and immediate 10% and 20% increase and decrease in foreign exchange rates on the valuation of invested assets subject to foreign currency exposure for the periods indicated. This analysis includes the after-tax impact of translation from transactional currency to functional currency as well as the after-tax impact of translation from functional currency to the U.S. dollar reporting currency.

# Change in Foreign Exchange Rates in Percent

At December 31, 2022

| (Dollars in millions) | -20% | -10% | 0% | 10% | 20% |
| --- | --- | --- | --- | --- | --- |
| Total After-tax Foreign Exchange Exposure | $(157) | $(79) | $ - | $79 | $157 |

# Change in Foreign Exchange Rates in Percent

At December 31, 2021

| (Dollars in millions) | -20% | -10% | 0% | 10% | 20% |
| --- | --- | --- | --- | --- | --- |
| Total After-tax Foreign Exchange Exposure | $(190) | $(95) | $ - | $95 | $190 |

# **ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA**

The financial statements and schedules listed in the accompanying Index to Financial Statements and Schedules on page F-1 are filed as part of this report.

# **ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE**

None.

28

## ITEM 9A. CONTROLS AND PROCEDURES

### Disclosure Controls and Procedures

As required by Rule 13a-15(b) of the Securities Exchange Act of 1934 (the Exchange Act), our management, including our Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of our disclosure controls and procedures (as defined in Rule 13a-15(e) under the Exchange Act). Based on that evaluation, the Chief Executive Officer and Chief Financial Officer have concluded that our disclosure controls and procedures were effective as of the end of the period covered by this annual report.

### Management's Annual Report on Internal Control Over Financial Reporting

Our management is responsible for establishing and maintaining adequate internal controls over financial reporting. Our internal control over financial reporting is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of our financial statements for external purposes in accordance with generally accepted accounting principles.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Management has assessed the effectiveness of our internal control over financial reporting as of December 31, 2022. In making this assessment, we used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in *Internal Control - Integrated Framework* (2013). Based on our assessment we concluded that, as of December 31, 2022, our internal control over financial reporting is effective based on those criteria.

### Attestation Report of the Registered Public Accounting Firm

This annual report does not include an attestation report of the Company's registered public accounting firm regarding internal control over financial reporting. Management's internal controls are not subject to attestation by the Company's registered public accounting firm pursuant to rules of the Securities and Exchange Commission that permit the Company to provide only management's report in this annual report due to the Company's status as a non-accelerated filer.

### Changes in Internal Control Over Financial Reporting

As required by Rule 13a-15(d) of the Exchange Act, our management, including our Chief Executive Officer and Chief Financial Officer, has evaluated our internal control over financial reporting to determine whether any changes occurred during the fourth fiscal quarter covered by this annual report that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting. Based on that evaluation, there has been no such change during the fourth quarter.

## ITEM 9B. OTHER INFORMATION

None.

## ITEM 9C. DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS

None.

29

## PART III

### ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

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

### ITEM 11. EXECUTIVE COMPENSATION

Information for Item 11 is not required pursuant to General Instruction I(2) of Form 10-K.

### ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED OLDER MATTERS

Information for Item 12 is not required pursuant to General Instruction I(2) of Form 10-K.

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

Information for Item 13 is not required pursuant to General Instruction I(2) of Form 10-K.

### ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES

The PricewaterhouseCoopers LLP (and its worldwide affiliates) fees incurred are as follows for the periods indicated:

| (Dollars in millions) | 2022 | 2021 |
| --- | --- | --- |
| (1) Audit Fees | $3.4 | $3.6 |
| (2) Audit-Related Fees | 0.3 | 0.3 |
| (3) Tax Fees | 0.7 | 0.6 |
| (4) All Other Fees | - | - |

Audit fees include the annual audit and quarterly financial statement reviews, subsidiary audits, and procedures required to be performed by the independent auditor to be able to form an opinion on our consolidated financial statements. These other procedures include information systems and procedural reviews and testing performed in order to understand and place reliance on the systems of internal control, and consultations relating to the audit or quarterly review. Audit fees may also include statutory audits or financial audits for our subsidiaries or affiliates and services associated with SEC registration statements, periodic reports and other documents filed with the SEC or other documents issued in connection with securities offerings.

Audit-related fees include assurance and related services that are reasonably related to the performance of the audit or review of our financial statements, including due diligence services pertaining to potential business acquisitions/dispositions, accounting consultations related to accounting, financial reporting or disclosure matters not classified as 'audit services'; assistance with understanding and implementing new accounting and financial reporting guidance from rule making authorities; financial audits of employee benefit plans; agreed-upon or expanded audit procedures related to accounting and/or billing records required to respond to or comply with financial, accounting or regulatory reporting matters and assistance with internal control reporting requirements.

Tax fees include tax compliance, tax planning and tax advice and is granted general pre-approval by Group's Audit Committee.

All other fees represent an accounting research subscription and software.

30

Under its Charter and the “Audit and Non-Audit Services Pre-Approval Policy” (the “Policy”), the Audit Committee is required to pre-approve the audit and non-audit services to be performed by the independent auditors. The Policy mandates specific approval by the Audit Committee for any service that has not received a general pre-approval or that exceeds pre-approved cost levels or budgeted amounts. For both specific and general pre-approval, the Audit Committee considers whether such services are consistent with the SEC’s rules on auditor independence. The Audit Committee also considers whether the independent auditors are best positioned to provide the most effective and efficient service and whether the service might enhance the Company’s ability to manage or control risk or improve audit quality. The Audit Committee is also mindful of the relationship between fees for audit and non-audit services in deciding whether to pre-approve any such services. It may determine, for each fiscal year, the appropriate ratio between the total amount of audit, audit-related and tax fees and a total amount of fees for certain permissible non-audit services classified below as “All Other Fees”. All such factors are considered as a whole, and no one factor is determinative. The Audit Committee further considered whether the performance by PricewaterhouseCoopers LLP of the non-audit related services disclosed below is compatible with maintaining their independence. The Audit Committee approved all of the audit-related fees, tax fees and all other fees for 2022 and 2021.

## PART IV

### ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

#### Exhibits

The exhibits listed on the accompanying Index to Exhibits on page E-1 are filed as part of this report except that the certifications in Exhibit 32 are being furnished to the SEC, rather than filed with the SEC, as permitted under applicable SEC rules.

#### Financial Statements and Schedules.

The financial statements and schedules listed in the accompanying Index to Financial Statements and Schedules on page F-1 are filed as part of this report.

#### SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized on March 10, 2023.

EVEREST REINSURANCE HOLDINGS, INC.

By: /S/ JUAN C. ANDRADE  
Juan C. Andrade  
(Chairman, President and  
Chief Executive Officer)

31

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

| Signature | Title | Date |
| --- | --- | --- |
| /S/ JUAN C. ANDRADE Juan C. Andrade | President and Chief Executive Officer (Principal Executive Officer) | March 10, 2023 |
| /S/ MARK KOCIANCIC Mark Kociancic | Executive Vice President and Chief Financial Officer | March 10, 2023 |
| /S/ ROBERT J. FREILING Robert J. Freiling | Senior Vice President and Chief Accounting Officer | March 10, 2023 |

32

# 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 Fourth Supplemental Indenture relating to Holdings $400 million 4.868% Senior Notes due June 1, 2044, dated June 5 2014, between Holdings and the Bank of New York Mellon, as Trustee, incorporated herein by reference to Exhibit 4.1 to Everest Reinsurance Holdings, Inc. Form 8-K filed on July 5, 2014.

4.3 Fifth Supplemental Indenture relating to Holdings $1.0 billion 3.50% Senior Notes due October 15, 2050, dated October 7, 2020, between Holdings and the Bank of New York Mellon, as Trustee, incorporated herein by reference to Exhibit 4.1 to Everest Reinsurance Holdings, Inc. Form 8-K filed on October 7, 2020.

4.4 Sixth Supplemental Indenture relating to Holdings $1.0 billion 3.125% Senior Notes due October 15, 2052, dated October 4, 2021, between Holdings and the Bank of New York Mellon, as Trustee, incorporated herein by reference to Exhibit 4.1 to Everest Reinsurance Holdings, Inc. Form 8-K filed on October 4, 2021.

10.1 Completion of Tender Offer relating to Everest Reinsurance Holdings, Inc. 6.60% Fixed to Floating Rate Long-Term Subordinated Notes (LoT®), 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.

*10.2 Employment agreement between Everest Global Services, Inc., Everest Reinsurance Holdings Inc. and Dominic J. Addesso, dated December 4, 2015, incorporated herein by reference to Exhibit 10.1 to Everest Re Group, Ltd. Form 8-K filed on December 8, 2015.

*10.3 Employment agreement between Everest National Insurance Company and Jonathan M. Zaffino, dated September 8, 2017, incorporated herein by reference to Exhibit 10.1 to Everest Re Group, Ltd. Form 8-K filed on September 12, 2017.

*10.4 Amendment of employment agreement between Everest Global Services, Inc., Everest Re Group, Ltd., Everest Reinsurance Holdings Inc. and Dominic J. Addesso, dated November 20, 2017, incorporated herein by reference to Exhibit 10.1 to Everest Re Group, Ltd. Form 8-K filed November 20, 2017.

*10.5 Employment agreement between Everest Re Group Ltd., Everest Global Services, Inc., Everest Reinsurance Holdings Inc. and Juan C Andrade, dated August 1, 2019, incorporated

E-1

| *10.6 | herein by reference to Exhibit 10.1 to Everest Re Group, Ltd, Form 8-K filed August 8, 2019, Employment agreement between Everest Global Services, Inc. and Mark Kociancic, incorporated herein by reference to Exhibit 10.1 to Everest Re Group, Ltd, Form 8-K filed on October 1, 2020 |
| --- | --- |
| *10.7 | Employment agreement between Everest Global Services, Inc. and James Williamson, incorporated herein by reference to Exhibit 10.2 to Everest Re Group, Ltd, Form 8-K filed on October 1, 2020 |
| 23.1 | Consent of PricewaterhouseCoopers LLP, filed herewith |
| 31.1 | Section 302 Certification of Juan C. Andrade, filed herewith |
| 31.2 | Section 302 Certification of Mark Kociancic, filed herewith |
| 32.1 | Section 906 Certification of Juan C. Andrade and Mark Kociancic, filed herewith |
| 101 INS | XBRL Instance Document |
| 101 SCH | XBRL Taxonomy Extension Schema |
| 101 CAL | XBRL Taxonomy Extension Calculation Linkbase |
| 101 DEF | XBRL Taxonomy Extension Definition Linkbase |
| 101 LAB | XBRL Taxonomy Extension Label Linkbase |
| 101 PRE | XBRL Taxonomy Extension Presentation Linkbase |
| 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document) |

E-2

# EVEREST REINSURANCE HOLDINGS, INC.

# INDEX TO FINANCIAL STATEMENTS AND SCHEDULES

|  | Pages |
| --- | --- |
| Report of Independent Registered Public Accounting Firm (PCAOB FIRM 2018) | F-2 |
| Consolidated Balance Sheets at December 31, 2022 and 2021 | F-4 |
| Consolidated Statements of Operations and Comprehensive Income (Loss) for the Years Ended December 31, 2022, 2021 and 20 | F-5 |
| Consolidated Statements of Changes in Stockholder's Equity for the Years Ended December 31, 2022, 2021 and 20 | F-6 |
| Consolidated Statements of Cash Flows for the Years Ended December 31, 2022, 2021 and 20 | F-7 |
| Notes to Consolidated Financial Statements | F-8 |
| Schedules |  |
| I Summary of Investments Other Than Investments in Related Parties at December 31, 2022 | S-1 |
| II Condensed Financial Information of Registrant: |  |
| Balance Sheets as of December 31, 2022 and 2021 | S-2 |
| Statements of Operations for the Years Ended December 31, 2022, 2021 and 20 | S-3 |
| Statements of Cash Flows for the Years Ended December 31, 2022, 2021 and 20 | S-4 |
| Notes to Condensed Financial Information | S-5 |
| III Supplementary Insurance Information as of and for the Years Ended December 31, 2022, 2021 and 20 | S-6 |
| IV Reinsurance for the Years Ended December 31, 2022, 2021 and 20 | S-7 |

Schedules other than those listed above are omitted for the reason that they are not applicable or the information is otherwise contained in the Financial Statements.

F-1

# Report of Independent Registered Public Accounting Firm

To the Board of Directors and Stockholder of Everest Reinsurance Holdings, Inc.

## Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of Everest Reinsurance Holdings, Inc. and its subsidiaries (the “Company”) as of December 31, 2022 and 2021, and the related consolidated statements of operations and comprehensive income (loss), of changes in stockholder’s equity and of cash flows for each of the three years in the period ended December 31, 2022, including the related notes and financial statement schedules listed in the accompanying index appearing on page F-1 (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2022 and 2021, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2022 in conformity with accounting principles generally accepted in the United States of America.

## Basis for Opinion

These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s consolidated financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits of these consolidated financial statements in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.

Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion.

## Critical Audit Matters

The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that (i) relates to accounts or disclosures that are material to the consolidated financial statements and (ii) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

## Valuation of the Reserve for Losses and Loss Adjustment Expenses

As described in Notes 1 and 3 to the consolidated financial statements, the Company maintains reserves equal to the estimated ultimate liability for losses and loss adjustment expense for reported and unreported claims for both

F-2

insurance and reinsurance businesses. The Company's reserve for losses and loss adjustment expenses as of December 31, 2022 was $15.0 billion. Reserves are based on estimates of ultimate losses and loss adjustment expenses by underwriting or accident year. Management uses a variety of statistical and actuarial techniques to monitor reserve adequacy over time, evaluate new information as it becomes known and adjust reserves as warranted. Management considers many factors when setting reserves including (i) exposure base and projected ultimate premium; (ii) expected loss ratios by product and class of business, which are developed collaboratively by underwriters and actuaries; (iii) actuarial methodologies and assumptions which analyze loss reporting and payment experience, reports from ceding companies and historical trends, such as reserving patterns, loss payments and product mix; (iv) current legal interpretations of coverage and liability; and (v) economic conditions.

The principal considerations for our determination that performing procedures relating to the valuation of the reserve for losses and loss adjustment expenses is a critical audit matter are the significant judgment by management when developing their estimate; this in turn led to a high degree of auditor subjectivity, judgment and effort in performing procedures and evaluating the audit evidence relating to the methodologies and the significant assumptions related to expected loss ratios and historical trends, such as reserving patterns, loss payments and product mix, and the audit effort involved the use of professionals with specialized skill and knowledge.

Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements. These procedures included testing the effectiveness of controls relating to management's valuation of the reserve for losses and loss adjustment expenses, including controls over the selection of methodologies and development of significant assumptions. These procedures also included, among others, testing the completeness and accuracy of data provided by management and the involvement of professionals with specialized skill and knowledge to assist in performing procedures for a sample of products and lines of business including: (i) evaluating management's methodologies and assumptions related to expected loss ratios and historical trends, such as, reserving patterns, loss payment and product mix used for determining reserves for losses and loss adjustment expenses; and (ii) developing an independent estimate of the reserve for losses and loss adjustment expenses and comparing the independent estimate to management's actuarially determined reserves.

/s/ PricewaterhouseCoopers LLP  
New York, New York  
March 10, 2023

We have served as the Company's auditor since 1996.

F-3

# **EVEREST REINSURANCE HOLDINGS, INC.**  
 **CONSOLIDATED BALANCE SHEETS**

|  | December 31, |  |
| --- | --- | --- |
|  | 2022 | 2021 |
| (Dollars in millions, except share amounts and par value per share) |  |  |
| ASSETS: |  |  |
| Fixed maturities - available for sale, at fair value | $12,671 | $12,860 |
| (amortized cost: 2022, $13,699; 2021, $12,733, credit allowances: 2022, $(46); 2021, $(27)) |  |  |
| Fixed maturities - held to maturity, at amortized cost |  |  |
| (fair value: 2022, $793, net of credit allowances: 2022, $(9)) | 811 | - |
| Equity securities, at fair value | 194 | 1,758 |
| Other invested assets | 2,754 | 1,675 |
| Other invested assets, at fair value | 1,472 | 2,031 |
| Short-term investments (cost: 2022, $812; 2021, $696) | 812 | 696 |
| Cash | 481 | 699 |
| Total investments and cash | 19,195 | 19,719 |
| Notes receivable - affiliated | 840 | 500 |
| Accrued investment income | 150 | 90 |
| Premiums receivable (net of credit allowances: 2022, $(21); 2021, $(18)) | 1,721 | 1,720 |
| Reinsurance recoverables - unaffiliated (net of credit allowances: 2022, $(21); 2021, $(16)) | 1,841 | 1,569 |
| Reinsurance recoverables - affiliated | 1,935 | 2,299 |
| Income tax asset, net | 288 | - |
| Funds held by reinsureds | 303 | 299 |
| Deferred acquisition costs | 499 | 472 |
| Prepaid reinsurance premiums | 463 | 431 |
| Other assets (net of credit allowances: 2022, $(5); 2021, $(4)) | 722 | 596 |
| TOTAL ASSETS | $27,957 | $27,695 |
| LIABILITIES: |  |  |
| Reserve for losses and loss adjustment expenses | $14,977 | $13,121 |
| Unearned premium reserve | 3,177 | 2,993 |
| Funds held under reinsurance treaties | 43 | 48 |
| Other net payable to reinsurers | 436 | 392 |
| Losses in course of payment | 77 | 273 |
| Income tax liability, net | - | 246 |
| Senior notes | 2,347 | 2,346 |
| Long-term notes | 218 | 224 |
| Borrowings from FHLB | 519 | 519 |
| Accrued interest on debt and borrowings | 19 | 17 |
| Unsettled securities payable | 1 | 15 |
| Other liabilities | 489 | 463 |
| Total liabilities | 22,303 | 20,657 |
| Commitments and Contingencies (Note 15) |  |  |
| STOCKHOLDER'S EQUITY: |  |  |
| Common stock, par value: $0.01; 3,000 shares authorized; 1,000 shares issued and outstanding (2022 and 2021) | - | - |
| Additional paid-in capital | 1,102 | 1,102 |
| Accumulated other comprehensive income (loss), net of deferred income tax expense (benefit) of $(225) at 2022 and $24 at 2021 | (848) | 91 |
| Retained earnings | 5,400 | 5,845 |
| Total stockholder's equity | 5,654 | 7,038 |
| TOTAL LIABILITIES AND STOCKHOLDER'S EQUITY | $27,957 | $27,695 |

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

F-4

# EVEREST REINSURANCE HOLDINGS, INC.  
 CONSOLIDATED STATEMENTS OF OPERATIONS  
 AND COMPREHENSIVE INCOME (LOSS)

|  | Years Ended December 31, |  |  |
| --- | --- | --- | --- |
| (Dollars in millions) | 2022 | 2021 | 2020 |
| REVENUES: |  |  |  |
| Premiums earned | $7,876 | $7,179 | $6,407 |
| Net investment income | 638 | 745 | 376 |
| Net gains (losses) on investments: |  |  |  |
| Credit allowances on fixed maturity securities | (27) | (26) | (2) |
| Gains (losses) from fair value adjustments | (1,006) | 488 | 92 |
| Net realized gains (losses) from dispositions | 51 | 39 | (41) |
| Total net gains (losses) on investments | (982) | 501 | 50 |
| Other income (expense) | (6) | 23 | (15) |
| Total revenues | 7,526 | 8,448 | 6,818 |
| CLAIMS AND EXPENSES: |  |  |  |
| Incurred losses and loss adjustment expenses | 5,823 | 5,387 | 4,608 |
| Commission, brokerage, taxes and fees | 1,632 | 1,513 | 1,373 |
| Other underwriting expenses | 501 | 454 | 401 |
| Corporate expenses | 26 | 33 | 16 |
| Interest, fee and bond issue cost amortization expense | 101 | 70 | 36 |
| Total claims and expenses | 8,083 | 7,457 | 6,434 |
| INCOME (LOSS) BEFORE TAXES | (557) | 991 | 384 |
| Income tax expense (benefit) | (112) | 192 | 32 |
| NET INCOME (LOSS) | $(445) | $800 | $352 |
| Other comprehensive income (loss), net of tax: |  |  |  |
| Unrealized appreciation (depreciation) ('URA(D)') on securities arising during the period | (1,011) | (200) | 163 |
| Reclassification adjustment for realized losses (gains) included in net income (loss) | 73 | 9 | 25 |
| Total URA(D) on securities arising during the period | (938) | (191) | 189 |
| Foreign currency translation adjustments | (18) | (9) | 14 |
| Benefit plan actuarial net gain (loss) for the period | 15 | 17 | (6) |
| Reclassification adjustment for amortization of net (gain) loss included in net income (loss) | 2 | 6 | 6 |
| Total benefit plan net gain (loss) for the period | 17 | 23 | 1 |
| Total other comprehensive income (loss), net of tax | (939) | (177) | 204 |
| COMPREHENSIVE INCOME (LOSS) | $(1,384) | $623 | $556 |

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

F-5

# EVEREST REINSURANCE HOLDINGS, INC.  
 CONSOLIDATED STATEMENTS OF  
 CHANGES IN STOCKHOLDER'S EQUITY

(Dollars in millions, except share amounts)

|  | Years Ended December 31, |  |  |
| --- | --- | --- | --- |
|  | 2022 | 2021 | 2020 |

# 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 | $1,102 | $1,101 | $1,101 |
| --- | --- | --- | --- |
| Share-based compensation plans | - | - | - |
| Balance, end of period | 1,102 | 1,102 | 1,101 |

# ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS), NET OF DEFERRED INCOME TAXES:

| Balance, beginning of period | 91 | 268 | 64 |
| --- | --- | --- | --- |
| Net increase (decrease) during the period | (939) | (177) | 204 |
| Balance, end of period | (848) | 91 | 268 |

# RETAINED EARNINGS:

| Balance, beginning of period | 5,845 | 5,045 | 4,692 |
| --- | --- | --- | --- |
| Change to beginning balance due to adoption of ASU 2016-13 | - | - | 1 |
| Net income (loss) | (445) | 800 | 352 |
| Balance, end of period | 5,400 | 5,845 | 5,045 |

# TOTAL STOCKHOLDER'S EQUITY, END OF PERIOD

|  | $5,654 | $7,038 | $6,414 |
| --- | --- | --- | --- |

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

F-6

# **EVEREST REINSURANCE HOLDINGS, INC.**  
 **CONSOLIDATED STATEMENTS OF CASH FLOWS**

|  | Years Ended December 31, |  |  |
| --- | --- | --- | --- |
| (Dollars in millions) | 2022 | 2021 | 2020 |
| CASH FLOWS FROM OPERATING ACTIVITIES: |  |  |  |
| Net income (loss) | $(445) | $800 | $352 |
| Adjustments to reconcile net income to net cash provided by operating activities: |  |  |  |
| Decrease (increase) in premiums receivable | (3) | (128) | (253) |
| Decrease (increase) in funds held by reinsurers, net | (9) | (30) | (34) |
| Decrease (increase) in reinsurance recoverables | 70 | 337 | 247 |
| Decrease (increase) in income taxes | (286) | 100 | 204 |
| Decrease (increase) in prepaid reinsurance premiums | (36) | (68) | 51 |
| Increase (decrease) in reserve for losses and loss adjustment expenses | 1,885 | 1,478 | 1,430 |
| Increase (decrease) in unearned premiums | 189 | 609 | 183 |
| Increase (decrease) in other net payable to reinsurers | 50 | 114 | 8 |
| Increase (decrease) in losses in course of payment | (197) | 111 | 90 |
| Change in equity adjustments in limited partnerships | (90) | (368) | (40) |
| Distribution of limited partnership income | 107 | 114 | 91 |
| Change in other assets and liabilities, net | (130) | (10) | (88) |
| Non-cash compensation expense | 37 | 36 | 32 |
| Amortization of bond premium (accrual of bond discount) | 22 | 31 | 14 |
| Net (gains) losses on investments | 982 | (501) | (50) |
| Net cash provided by (used in) operating activities | 2,146 | 2,625 | 2,240 |
| CASH FLOWS FROM INVESTING ACTIVITIES: |  |  |  |
| Proceeds from fixed maturities matured/called/repaid - available for sale | 1,399 | 2,330 | 1,126 |
| Proceeds from fixed maturities sold - available for sale | 2,645 | 961 | 631 |
| Proceeds from fixed maturities matured/called/repaid - held to maturity | 39 | - | - |
| Proceeds from equity securities sold | 2,203 | 862 | 375 |
| Distributions from other invested assets | 135 | 127 | 243 |
| Cost of fixed maturities acquired - available for sale | (5,928) | (5,832) | (4,695) |
| Cost of fixed maturities acquired - held to maturity | (125) | - | - |
| Cost of equity securities acquired | (951) | (1,052) | (626) |
| Cost of other invested assets acquired | (1,241) | (430) | (363) |
| Net change in short-term investments | (113) | 13 | (426) |
| Net change in unsettled securities transactions | (52) | (206) | 200 |
| Proceeds from repayment (cost of issuance) of notes receivable - affiliated | (340) | (200) | - |
| Net cash provided by (used in) investing activities | (2,329) | (3,427) | (3,534) |
| CASH FLOWS FROM FINANCING ACTIVITIES: |  |  |  |
| Tax benefit from share-based compensation, net of expense | (37) | (36) | (32) |
| Net FHLB borrowings (repayments) | - | 209 | 310 |
| Cost of debt repurchase | (6) | - | (11) |
| Proceeds from issuance of senior notes | - | 968 | 979 |
| Net cash provided by (used in) financing activities | (43) | 1,142 | 1,247 |
| EFFECT OF EXCHANGE RATE CHANGES ON CASH |  |  |  |
|  | 8 | (18) | 14 |
| Net increase (decrease) in cash | (218) | 321 | (33) |
| Cash, beginning of period | 699 | 379 | 411 |
| Cash, end of period | $481 | $699 | $379 |
| SUPPLEMENTAL CASH FLOW INFORMATION: |  |  |  |
| Income taxes paid (recovered) | $174 | $91 | $(173) |
| Interest paid | 98 | 62 | 28 |
| NON-CASH TRANSACTIONS |  |  |  |
| Reclassification of specific investments from fixed maturity securities, available for sale |  |  |  |
| at fair value to fixed maturity securities, held to maturity at amortized cost net of credit allowances | $722 | $ - | $ - |

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

F-7

# NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Years Ended December 31, 2022, 2021 and 2020

## 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

### A. Business and Basis of Presentation.

Everest Reinsurance Holdings, Inc. ('Holdings'), a Delaware company and direct subsidiary of Everest Underwriting Group (Ireland) Limited ('Holdings Ireland'), which is a direct subsidiary of Everest Re Group, Ltd. ('Holdings'), subsidiaries, principally provides property and casualty reinsurance and insurance in the United States of America and internationally. As used in this document, 'Company' means Holdings and its subsidiaries.

The accompanying consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America ('GAAP'). The statements include all of the following domestic and foreign direct and indirect subsidiaries of the Company: Everest Reinsurance Company ('Everest Re'), Everest Global Services, Inc. ('Global Services'), Everest National Insurance Company ('Everest National'), Everest Indemnity Insurance Company ('Everest Indemnity'), Everest Security Insurance Company ('Everest Security'), Everest Reinsurance Company - Escritório de Representação No Brasil Ltda. ('Everest Brazil'), Mt. Wemire, Inc., Everest Denali Insurance Company ('Everest Denali'), Everest Premier Insurance Company ('Everest Premier'), Everest Specialty Underwriters Services, LLC, Everest International Assurance, Ltd. ('Everest'), EverSports & Entertainment Insurance, Inc. ('Specialty'), Specialty Insurance Group - Leisure and Entertainment Risk Purchasing Group LLC ('Specialty RPG'), Salus Systems ('Salus') and Mt. McKinley (M. K. G. A.) intercompany accounts and transactions have been eliminated. All amounts are reported in U.S. dollars.

The Company consolidates the results of operations and financial position of all voting interest entities ('VOE') in which the Company has a controlling financial interest and all variable interest entities ('VIE') in which the Company is considered to be the primary beneficiary. The consolidation assessment, including the determination as to whether an entity qualifies as a VIE or VOE, depends on the facts and circumstances surrounding each entity.

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities (and disclosure of contingent assets and liabilities) at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Ultimate actual results could differ, possibly materially, from those estimates.

Certain reclassifications and format changes have been made to prior years' amounts to conform to the 2022 presentation.

### Out of Period Adjustments

For the year ended December 31, 2021, the Company recorded out of period adjustments relating to prior years that decreased net income by $46 million. The out of period adjustments are related to the accounting for certain affiliated reinsurance agreements.

### B. Investments and Cash.

Fixed maturity securities designated as available for sale reflect unrealized appreciation and depreciation, as a result of changes in fair value during the period, in stockholder's equity, net of income taxes in 'accumulated other comprehensive income (loss)' in the consolidated balance sheets. The Company reviews all of its fixed maturity, available for sale securities whose fair value has fallen below their amortized cost at the time of review. The Company then assesses whether the decline in value is due to non-credit related or credit related factors. In making its assessment, the Company evaluates the current market and interest rate environment as well as specific issuer information. Generally, a change in a security's value caused by a change in the market, interest rate or foreign exchange environment does not constitute a credit impairment, but rather a non-credit related

F-8

decline in fair value. Non-credit related declines in fair value are recorded as unrealized losses in accumulated other comprehensive income (loss). If the Company intends to sell the impaired security or is more likely than not to be required to sell the security before an anticipated recovery in value, the Company records the entire impairment in net gains (losses) on investments in the Company's consolidated statements of operations and comprehensive income (loss). If the Company determines that the decline is credit related and the Company does not have the intent to sell the security; and it is more likely than not that the Company will not have to sell the security before recovery of its cost basis, the Company establishes a credit allowance equal to the estimated credit loss and is recorded in net gains (losses) on investments in the Company's consolidated statements of operations and comprehensive income (loss). The determination of credit-related or non-credit-related impairment is first based on an assessment of qualitative factors, which may determine that a qualitative analysis is sufficient to support the conclusion that the present value of expected cash flows equals or exceeds the security's amortized cost basis. However, if the qualitative assessment suggests a credit loss may exist, a quantitative assessment is performed, and the amount of the allowance for a given security will generally be the difference between a discounted cash flow model and the Company's carrying value. The Company will adjust the credit allowance account for future changes in credit loss estimates for a security and record this adjustment through net gains (losses) on investments in the Company's consolidated statements of operations and comprehensive income (loss).

Fixed maturity securities designated as held to maturity consist of debt securities for which the Company has both the positive intent and ability to hold to maturity or redemption and are reported at amortized cost, net of the current expected credit loss allowance. Interest income for fixed maturity securities held to maturity is determined in the same manner as interest income for fixed maturity securities available for sale. The Company evaluates fixed maturity securities classified as held to maturity for current expected credit losses utilizing risk characteristics of each security, including credit rating, remaining time to maturity, adjusted for prepayment considerations, and subordination level, and applying default and recovery rates, which include the incorporation of historical credit loss experience and macroeconomic forecasts, to develop an estimate of current expected credit losses.

The Company does not create an allowance for uncollectible interest. If interest is not received when due, the interest receivable is immediately reversed and no additional interest is accrued. If future interest is received that has not been accrued, it is recorded as income at that time.

The Company's assessments are based on the issuers' current and expected future financial position, timeliness with respect to interest and/or principal payments, speed of repayments and any applicable credit enhancements or breakeven constant default rates on mortgage-backed and asset-backed securities, as well as relevant information provided by rating agencies, investment advisors and analysts.

Retrospective adjustments are employed to recalculate the values of asset-backed securities. All of the Company's asset-backed and mortgage-backed securities have a pass-through structure. Each acquisition lot is reviewed to recalculate the effective yield. The recalculated effective yield is used to derive a book value as if the new yield were applied at the time of acquisition. Outstanding principal factors from the time of acquisition to the adjustment date are used to calculate the prepayment history for all applicable securities. Conditional prepayment rates, computed with life to date factor histories and weighted average maturities, are used in the calculation of projected prepayments for pass-through security types.

For equity securities, the Company reflects changes in fair value as net gains (losses) on investments. Interest income on all fixed maturities and dividend income on all equity securities are included as part of net investment income in the consolidated statements of operations and comprehensive income (loss).

Short-term investments comprise securities due to mature within one year from the date of purchase and are stated at cost, which approximates fair value.

Realized gains or losses on sales of investments are determined on the basis of identified cost. For some non-publicly traded securities, market prices are determined through the use of pricing models that evaluate securities

F-9

relative to the U.S. Treasury yield curve, taking into account the issue type, credit quality, and cash flow characteristics of each security. For other non-publicly traded securities, investment managers' valuation committees will estimate fair value, and in many instances, these fair values are supported with opinions from qualified independent third parties. For publicly traded securities, fair value is based on quoted market prices or valuation models that use observable market inputs. When a sector of the financial markets is inactive or illiquid, the Company may use its own assumptions about future cash flows and risk-adjusted discount rates to determine fair value.

Other invested assets include limited partnerships, company-owned life insurance and rabbi trusts. Limited partnerships are accounted for under the equity method of accounting, which can be recorded on a monthly or quarterly lag. Company-owned life insurance policies are carried at policy cash surrender value and changes in the policy cash surrender value are included within net investment income.

Other invested assets, at fair value, are comprised of convertible preferred stock of Everest Preferred International Holdings, Ltd. ('Preferred Holdings'), an affiliated entity. The fair values of the Preferred Holdings convertible preferred stock at December 31, 2022 and December 31, 2021 were determined using a pricing model.

Cash includes cash on hand. Restricted cash is included within cash in the consolidated balance sheets and represents amounts held for the benefit of third parties that is legally or contractually restricted as to its withdrawal or usage. Amounts include trust funds set up for the benefit of ceding companies.

### C. Allowance for Premium Receivable and Reinsurance Recoverables.

The Company applies the Current Expected Credit Losses (CECL) methodology for estimating allowances for credit losses. The Company evaluates the recoverability of its premiums and reinsurance recoverable balances and establishes an allowance for estimated uncollectible amounts.

Premiums receivable, excluding receivables for losses within a deductible and retrospectively-rated policy premiums, are primarily comprised of premiums due from policyholders/cedants. Balances are considered past due when amounts that have been billed are not collected within contractually stipulated time periods. For these balances, the allowance is estimated based on recent historical credit loss and collection experience, adjusted for current economic conditions and reasonable and supportable forecasts, when appropriate.

A portion of the Company's commercial lines business is written with large deductibles or under retrospectively-rated plans. Under some commercial insurance contracts with a large deductible, the Company is obligated to pay the claimant the full amount of the claim and the Company is subsequently reimbursed by the policyholder for the deductible amount. As such, the Company is subject to credit risk until reimbursement is made. Retrospectively-rated policies are policies whereby the ultimate premium is adjusted based on actual losses incurred. Although the premium adjustment feature of a retrospectively-rated policy substantially reduces insurance risk for the Company, it presents credit risk to the Company. The Company's results of operations could be adversely affected if a significant portion of such policyholders failed to reimburse the Company for the deductible amount or the amount of additional premium owed under retrospectively-rated policies. The Company manages these credit risks through credit analysis, collateral requirements, and oversight. The allowance for receivables for loss within a deductible and retrospectively-rated policy premiums is recorded within other assets in the consolidated balance sheets. The allowance is estimated as the amount of the receivable exposed to loss multiplied by estimated factors for probability of default. The probability of default is assigned based on each policyholder's credit rating, or a rating is estimated if no external rating is available. Credit ratings are reviewed and updated at least annually. The exposure amount is estimated net of collateral and other offsets, considering the nature of the collateral, potential future changes in collateral values, and historical loss information for the type of collateral obtained. The probability of default factors are historical corporate defaults for receivables with similar durations estimated through multiple economic cycles. Credit ratings are forward-looking and consider a variety of economic outcomes. The Company's evaluation of the required allowance for receivables for loss within a deductible and retrospectively-rated policy premiums considers the current economic environment as well as the probability-weighted macroeconomic scenarios.

F-10

The Company records total credit loss expenses related to premiums receivable in Other underwriting expenses and records credit loss expenses related to deductibles in Incurred losses and loss adjustment expenses in the Company's consolidated statements of operations and comprehensive income (loss).

The allowance for uncollectible reinsurance recoverable reflects management's best estimate of reinsurance cessions that may be uncollectible in the future due to reinsurers' unwillingness or inability to pay. The allowance for uncollectible reinsurance recoverable comprises an allowance and an allowance for disputed balances. Based on this analysis, the Company may adjust the allowance for uncollectible reinsurance recoverable or charge off reinsurer balances that are determined to be uncollectible.

Due to the inherent uncertainties as to collection and the length of time before reinsurance recoverable become due, it is possible that future adjustments to the Company's reinsurance recoverable, net of the allowance, could be required, which could have a material adverse effect on the Company's consolidated results of operations or cash flows in a particular quarter or annual period.

The allowance is estimated as the amount of reinsurance recoverable exposed to loss multiplied by estimated factors for the probability of default. The reinsurance recoverable exposed is the amount of reinsurance recoverable net of collateral and other offsets, considering the nature of the collateral, potential future changes in collateral values, and historical loss information for the type of collateral obtained. The probability of default factors are historical insurer and reinsurer defaults for liabilities with similar durations to the reinsured liabilities as estimated through multiple economic cycles. Credit ratings are forward-looking and consider a variety of economic outcomes. The Company's evaluation of the required allowance for reinsurance recoverable considers the current economic environment as well as macroeconomic scenarios.

The Company records credit loss expenses related to reinsurance recoverable in Incurred losses and loss adjustment expenses in the Company's consolidated statements of operations and comprehensive income (loss). Write-offs of reinsurance recoverable and any related allowance are recorded in the period in which the balance is deemed uncollectible.

#### **D. Deferred Acquisition Costs.**

Acquisition costs, consisting principally of commissions and brokerage expenses and certain premium taxes and fees incurred at the time a contract or policy is issued and that vary with and are directly related to the Company's reinsurance and insurance business, are deferred and amortized over the period in which the related premiums are earned. Deferred acquisition costs are limited to their estimated realizable value by line of business based on the related unearned premiums, anticipated claims and claim expenses and anticipated investment income.

#### **E. Reserve for Losses and Loss Adjustment Expenses.**

The reserve for losses and loss adjustment expenses ('LAE') is based on individual case estimates and reports received from ceding companies. A provision is included for losses and LAE incurred but not reported ('IBNR') based on past experience. Provisions are also included for certain potential liabilities, including those relating to asbestos and environmental ('A&E') exposures, catastrophe exposures, COVID-19 and other exposures, for which liabilities cannot be estimated using traditional reserving techniques. See also Note 3. The reserves are reviewed periodically and any changes in estimates are reflected in earnings in the period the adjustment is made. The Company's loss and LAE reserves represent management's best estimate of the ultimate liability. Loss and LAE reserves are presented gross of reinsurance recoverable and incurred losses and LAE are presented net of reinsurance.

Accruals for commissions are established for reinsurance contracts that provide for the stated commission percentage to increase or decrease based on the loss experience of the contract. Changes in estimates for such arrangements are recorded as commission expense. Commission accruals for contracts with adjustable features are estimated based on expected loss and LAE.

F-11

#### **F. Premium Revenues.**

Written premiums are earned ratably over the periods of the related insurance and reinsurance contracts. Unearned premium reserves are established relative to the unexpired contract period. For reinsurance contracts, such reserves are established based upon reports received from ceding companies or estimated using pro rata methods based on statistical data. Reinstatement premiums represent additional premium recognized and earned at the time a loss event occurs and losses are recorded, most prevalently catastrophe related, when limits have been depleted under the original reinsurance contract and additional coverage is granted. The recognition of reinstatement premiums is based on estimates of loss and LAE, which reflects management's judgement. Written and earned premiums and the related costs, which have not yet been reported to the Company, are estimated and accrued. Premiums are net of ceded reinsurance.

#### **G. Prepaid Reinsurance Premiums.**

Prepaid reinsurance premiums represent unearned premium reserves ceded to other reinsurers. Prepaid reinsurance premiums for any foreign reinsurers comprising more than 10% of the outstanding balance at December 31, 2022 were collateralized either through collateralized trust arrangements, rights of offset or letters of credit, thereby limiting the credit risk to the Company.

#### **H. Income Taxes.**

The Company and its wholly owned subsidiaries file a consolidated U.S. Corporation Income Tax Return. The Company's foreign subsidiaries and foreign branches of its U.S. subsidiaries file country and local corporation income tax returns as required. Deferred U.S. federal and foreign income taxes have been recorded to recognize the tax effect of temporary differences between the GAAP and income tax bases of assets and liabilities, which arise because of differences between the financial reporting and income tax rules.

As an accounting policy, the Company has adopted the aggregate portfolio approach for releasing disproportionate income tax effects from Accumulated Other Comprehensive Income.

#### **I. Foreign Currency.**

The Company transacts business in numerous currencies through business units located around the world. The base transactional currency for each business unit is determined by the local currency used for most economic activity in that area. Movements in exchange rates related to foreign currency denominated monetary assets and liabilities at the business units between the original currency and the base currency are recorded through the consolidated statements of operations and comprehensive income (loss) in other income (expense), except for currency movements related to available for sale fixed maturity securities, which are excluded from net income (loss) and accumulated in stockholder's equity, net of deferred taxes.

The business units' base currency financial statements are translated to U.S. dollars using the exchange rates at the end of period for the balance sheets and the average exchange rates in effect for the reporting period for the income statements. Gains and losses resulting from translating the foreign currency financial statements, net of deferred income taxes, are excluded from net income loss and accumulated in stockholder's equity.

#### **J. Segmentation.**

The Company, through its subsidiaries, operates in two segments: Reinsurance and Insurance. See also Note 17.

#### **K. Retroactive Reinsurance.**

Premiums on ceded retroactive contracts are earned when written with a corresponding reinsurance recoverable established for the amount of reserves ceded. The initial gain, if applicable, is deferred and amortized into income over an actuarially determined expected payout period. Any future loss is recognized immediately and charged against earnings.

F-12

## L. Application of Recently Issued Accounting Guidance.

The Company did not adopt any new accounting standards that had a material impact during the year ended December 31, 2022. The Company assessed the adoption impacts of recently issued accounting standards by the Financial Accounting Standards Board on the Company's consolidated financial statements as well as material updates to previous assessments, if any, from the Company's Annual Report on Form 10-K for the year ended December 31, 2021. There were no accounting standards issued during 2022 that are expected to have a material impact to Holdings.

## 2. INVESTMENTS

The following tables show amortized cost, allowance for credit losses, gross unrealized appreciation, gross unrealized depreciation and fair value of available for sale, fixed maturity securities available for sale as of the dates indicated:

| (Dollars in millions) | At December 31, 2022 |  |  |  |  |
| --- | --- | --- | --- | --- | --- |
|  | Amortized Cost | Allowances for Credit Loss | Unrealized Appreciation | Unrealized Depreciation | Fair Value |
| Fixed maturity securities - available for sale |  |  |  |  |  |
| U.S. Treasury securities and obligations of |  |  |  |  |  |
| U.S. government agencies and corporations | $575 | $ - | $ - | $(40) | $535 |
| Obligations of U.S. states and political subdivisions | 444 | - | 2 | (32) | 413 |
| Corporate securities | 3,913 | (45) | 14 | (322) | 3,561 |
| Asset-backed securities | 4,111 | - | 5 | (165) | 3,951 |
| Mortgage-backed securities |  |  |  |  |  |
| Commercial | 569 | - | - | (59) | 509 |
| Agency residential | 1,792 | - | 3 | (167) | 1,628 |
| Non-agency residential | 3 | - | - | - | 3 |
| Foreign government securities | 696 | - | 2 | (61) | 637 |
| Foreign corporate securities | 1,597 | (1) | 4 | (167) | 1,433 |
| Total fixed maturity securities - available for sale | $13,699 | $(46) | $30 | $(1,013) | $12,671 |

(Some amounts may not reconcile due to rounding.)

| (Dollars in millions) | At December 31, 2021 |  |  |  |  |
| --- | --- | --- | --- | --- | --- |
|  | Amortized Cost | Allowances for Credit Loss | Unrealized Appreciation | Unrealized Depreciation | Fair Value |
| Fixed maturity securities - available for sale |  |  |  |  |  |
| U.S. Treasury securities and obligations of |  |  |  |  |  |
| U.S. government agencies and corporations | $657 | $ - | $9 | $(3) | $663 |
| Obligations of U.S. states and political subdivisions | 559 | - | 29 | (1) | 587 |
| Corporate securities | 4,036 | (19) | 89 | (31) | 4,075 |
| Asset-backed securities | 3,464 | (8) | 21 | (11) | 3,466 |
| Mortgage-backed securities |  |  |  |  |  |
| Commercial | 586 | - | 21 | (4) | 603 |
| Agency residential | 1,255 | - | 16 | (10) | 1,261 |
| Non-agency residential | 4 | - | - | - | 4 |
| Foreign government securities | 677 | - | 22 | (7) | 692 |
| Foreign corporate securities | 1,494 | - | 34 | (18) | 1,510 |
| Total fixed maturity securities - available for sale | $12,733 | $(27) | $241 | $(86) | $12,860 |

(Some amounts may not reconcile due to rounding.)

F-13

The following table shows amortized cost, allowance for credit losses, gross unrealized appreciation/(depreciation) and fair value of fixed maturity securities held to maturity for the periods indicated:

| (Dollars in millions) | At December 31, 2022 |  |  |  |  |
| --- | --- | --- | --- | --- | --- |
|  | Amortized Cost | Allowances for Credit Loss | Unrealized Appreciation | Unrealized Depreciation | Fair Value |
| Fixed maturity securities - held to maturity |  |  |  |  |  |
| Corporate securities | $152 | $(2) | $ - | $(6) | $144 |
| Asset-backed securities | 634 | (6) | 2 | (15) | 614 |
| Mortgage-backed securities |  |  |  |  |  |
| Commercial | 7 | - | - | - | 7 |
| Foreign corporate securities | 28 | (1) | 2 | - | 28 |
| Total fixed maturity securities - held to maturity | $820 | $(9) | $3 | $(22) | $793 |

(Some amounts may not reconcile due to rounding.)

The amortized cost and fair value of fixed maturity securities available for sale are shown in the following table by contractual maturity. Mortgage-backed securities are generally more likely to be prepaid than other fixed maturity securities. As the stated maturity of such securities may not be indicative of actual maturities, the totals for mortgage-backed and asset-backed securities are shown separately.

| (Dollars in millions) | At December 31, 2022 |  | At December 31, 2021 |  |
| --- | --- | --- | --- | --- |
|  | Amortized Cost | Fair Value | Amortized Cost | Fair Value |
| Fixed maturity securities - available for sale |  |  |  |  |
| Due in one year or less | $581 | $563 | $586 | $584 |
| Due after one year through five years | 3,684 | 3,429 | 3,488 | 3,527 |
| Due after five years through ten years | 2,003 | 1,760 | 2,260 | 2,310 |
| Due after ten years | 958 | 827 | 1,088 | 1,106 |
| Asset-backed securities | 4,111 | 3,951 | 3,464 | 3,466 |
| Mortgage-backed securities |  |  |  |  |
| Commercial | 569 | 509 | 586 | 603 |
| Agency residential | 1,792 | 1,628 | 1,255 | 1,261 |
| Non-agency residential | 3 | 3 | 4 | 4 |
| Total fixed maturity securities - available for sale | $13,699 | $12,671 | $12,733 | $12,860 |

(Some amounts may not reconcile due to rounding.)

The amortized cost and fair value of fixed maturity securities held to maturity are shown in the following table by contractual maturity. Mortgage-backed securities are generally more likely to be prepaid than other fixed maturity securities. As the stated maturity of such securities may not be indicative of actual maturities, the totals for mortgage-backed and asset-backed securities are shown separately.

F-14

| (Dollars in millions) | At December 31, 2022 |  |
| --- | --- | --- |
|  | Amortized Cost | Fair Value |
| Fixed maturity securities - held to maturity: |  |  |
| Due in one year or less | $5 | $5 |
| Due after one year through five years | 63 | 61 |
| Due after five years through ten years | 43 | 41 |
| Due after ten years | 68 | 65 |
| Asset-backed securities | 634 | 614 |
| Mortgage-backed securities |  |  |
| Commercial | 7 | 7 |
| Total fixed maturity securities - held to maturity | $820 | $793 |

(Some amounts may not reconcile due to rounding.)

During 2022, the Company re-designated a portion of its fixed maturity securities from its fixed maturity - available for sale portfolio to its fixed maturity - held to maturity portfolio. The fair value of the securities reclassified at the date of transfer was $722 million, net of allowance for current expected credit losses, which was subsequently recognized as the new amortized cost basis. As of the date of transfer, these securities had an unrealized loss of $53 million, which remained in accumulated other comprehensive income on the balance sheet, and will be amortized into income through an adjustment to the yields of the underlying securities over the remaining life of the securities.

The Company evaluated fixed maturity securities classified as held to maturity for current expected credit losses as of December 31, 2022 utilizing risk characteristics of each security, including credit rating, remaining time to maturity, adjusted for prepayment considerations, and subordination level, and applying default and recovery rates, which include the incorporation of historical credit loss experience and macroeconomic forecasts, to develop an estimate of current expected credit losses. These fixed maturities classified as held to maturity are of a high credit quality and are all rated investment grade as of December 31, 2022.

The changes in net unrealized appreciation (depreciation) for the Company's investments are derived from the following sources for the periods indicated:

| (Dollars in millions) | Years Ended December 31, |  |
| --- | --- | --- |
|  | 2022 | 2021 |
| Increase (decrease) during the period between the fair value and cost of investments carried at fair value, and deferred taxes thereon: |  |  |
| Fixed maturity securities - short term investments | $(1,187) | $(242) |
| Change in unrealized appreciation (depreciation), pre-tax | (1,187) | (242) |
| Deferred tax benefit (expense) | 249 | 51 |
| Change in unrealized appreciation (depreciation), net of deferred taxes, included in stockholder's equity | $(938) | $(191) |

(Some amounts may not reconcile due to rounding.)

F-15

The tables below display the aggregate fair value and gross unrealized depreciation of fixed maturity securities available for sale, by security type and contractual maturity, in each case subdivided according to length of time that individual securities had been in a continuous unrealized loss position for the periods indicated.

|  | Duration of Unrealized Loss at December 31, 2022 By Security Type |  |  |  |  |  |
| --- | --- | --- | --- | --- | --- | --- |
|  | Less than 12 months |  | Greater than 12 months |  | Total |  |
|  | Fair Value | Gross Unrealized Depreciation | Fair Value | Gross Unrealized Depreciation | Fair Value | Gross Unrealized Depreciation |
| (Dollars in millions) |  |  |  |  |  |  |
| Fixed maturity securities - available for sale |  |  |  |  |  |  |
| U.S. Treasury securities and obligations of |  |  |  |  |  |  |
| U.S. government agencies and corporations | $290 | $(14) | $245 | $(26) | $535 | $(40) |
| Obligations of U.S. states and political subdivisions | 235 | (23) | 27 | (9) | 261 | (32) |
| Corporate securities | 2,138 | (175) | 841 | (146) | 2,979 | (321) |
| Asset-backed securities | 3,120 | (138) | 436 | (27) | 3,556 | (165) |
| Mortgage-backed securities |  |  |  |  |  |  |
| Commercial | 464 | (50) | 36 | (9) | 500 | (59) |
| Agency residential | 852 | (54) | 605 | (113) | 1,456 | (167) |
| Non-agency residential | 2 | - | 1 | - | 3 | - |
| Foreign government securities | 455 | (36) | 144 | (25) | 599 | (61) |
| Foreign corporate securities | 967 | (100) | 365 | (67) | 1,332 | (167) |
| Total | $8,522 | $(591) | $2,698 | $(421) | $11,220 | $(1,012) |
| Securities where an allowance for credit loss was recorded | 2 | (1) | - | - | 2 | (1) |
| Total fixed maturity securities - available for sale | $8,524 | $(591) | $2,698 | $(421) | $11,222 | $(1,013) |

(Some amounts may not reconcile due to rounding.)

|  | Duration of Unrealized Loss at December 31, 2022 By Maturity |  |  |  |  |  |
| --- | --- | --- | --- | --- | --- | --- |
|  | Less than 12 months |  | Greater than 12 months |  | Total |  |
|  | Fair Value | Gross Unrealized Depreciation | Fair Value | Gross Unrealized Depreciation | Fair Value | Gross Unrealized Depreciation |
| (Dollars in millions) |  |  |  |  |  |  |
| Fixed maturity securities - available for sale |  |  |  |  |  |  |
| Due in one year or less | $463 | $(8) | $29 | $(4) | $491 | $(11) |
| Due in one year through five years | 2,020 | (143) | 936 | (107) | 2,956 | (250) |
| Due in five years through ten years | 1,162 | (148) | 395 | (98) | 1,557 | (246) |
| Due after ten years | 439 | (50) | 262 | (64) | 701 | (114) |
| Asset-backed securities | 3,120 | (138) | 436 | (27) | 3,556 | (165) |
| Mortgage-backed securities | 1,318 | (105) | 641 | (122) | 1,959 | (226) |
| Total | $8,522 | $(591) | $2,698 | $(421) | $11,220 | $(1,012) |
| Securities where an allowance for credit loss was recorded | 2 | (1) | - | - | 2 | (1) |
| Total fixed maturity securities - available for sale | $8,524 | $(591) | $2,698 | $(421) | $11,222 | $(1,013) |

(Some amounts may not reconcile due to rounding.)

The aggregate fair value and gross unrealized losses related to fixed maturity securities available for sale in an unrealized loss position at December 31, 2022 were $11.2 billion and $1.0 billion, respectively. The fair value of securities for the single issuer (the United States government) whose securities comprised the largest unrealized loss position at December 31, 2022, did not exceed 4.3% of the overall fair value of the Company's fixed maturity securities available for sale. The fair value of the securities for the issuer with the second largest unrealized loss comprised less than 0.6% of the Company's fixed maturity securities. In addition, as indicated on the above table, there was no significant concentration of unrealized losses in any one market sector. The $591 million of unrealized losses related to fixed maturity securities available for sale that have been in an unrealized loss position for less than one year were generally comprised of domestic and foreign corporate securities, foreign government

F-16

securities, asset-backed securities as well as commercial and agency residential mortgage-backed securities. Of these unrealized losses, $520 million were related to securities that were rated investment grade by at least one nationally recognized rating agency. The $421 million of unrealized losses related to fixed maturity securities available for sale in an unrealized loss position for more than one year related primarily to domestic and foreign corporate securities as well as agency residential mortgage backed securities. Of these unrealized losses $392 million were related to securities that were rated investment grade by at least one nationally recognized rating agency. In all instances, there were no projected cash flow shortfalls to recover the full book value of the investments and the related interest obligations. The mortgage-backed securities still have excess credit coverage and are current on interest and principal payments. Based upon the Company's current evaluation of securities in an unrealized loss position as of December 31, 2022, the unrealized losses are due to changes in interest rates and non-issuer specific credit spreads and are not credit related. In addition, the contractual terms of these securities do not permit these securities to be settled at a price less than their amortized cost.

The Company, given the size of its investment portfolio and capital position, does not have the intent to sell these securities; and it is more likely than not that the Company will not have to sell the security before recovery of its cost basis. In addition, all securities currently in an unrealized loss position are current with respect to principal and interest payments.

The tables below display the aggregate fair value and gross unrealized depreciation of fixed maturity securities available for sale, by security type and contractual maturity, in each case subdivided according to length of time that individual securities had been in a continuous unrealized loss position for the periods indicated. The amounts presented in the tables below include $16 million of fair value and $(0.4) million of gross unrealized depreciation as of December 31, 2021 related to fixed maturity securities available for sale for which the Company has recorded an allowance for credit losses.

|  | Duration of Unrealized Loss at December 31, 2021 By Security Type |  |  |  |  |  |
| --- | --- | --- | --- | --- | --- | --- |
|  | Less than 12 months |  | Greater than 12 months |  | Total |  |
|  | Fair Value | Gross Unrealized Depreciation | Fair Value | Gross Unrealized Depreciation | Fair Value | Gross Unrealized Depreciation |
| (Dollars in millions) |  |  |  |  |  |  |
| Fixed maturity securities - available for sale |  |  |  |  |  |  |
| U.S. Treasury securities and obligations of |  |  |  |  |  |  |
| U.S. government agencies and corporations | $267 | $(3) | $ - | $ - | $267 | $(3) |
| Obligations of U.S. states and political subdivisions | 51 | (1) | 3 | - | 54 | (1) |
| Corporate securities | 1,465 | (25) | 201 | (6) | 1,666 | (31) |
| Asset-backed securities | 1,891 | (11) | 38 | - | 1,929 | (11) |
| Mortgage-backed securities |  |  |  |  |  |  |
| Commercial | 139 | (2) | 35 | (2) | 174 | (4) |
| Agency residential | 699 | (7) | 168 | (3) | 867 | (10) |
| Non-agency residential | 1 | - | - | - | 2 | - |
| Foreign government securities | 200 | (5) | 15 | (2) | 215 | (7) |
| Foreign corporate securities | 677 | (17) | 33 | (2) | 710 | (18) |
| Total fixed maturity securities - available for sale | $5,390 | $(71) | $492 | $(15) | $5,882 | $(86) |

(Some amounts may not reconcile due to rounding.)

F-17

|  | Duration of Unrealized Loss at December 31, 2021 By Maturity |  |  |  |  |  |
| --- | --- | --- | --- | --- | --- | --- |
|  | Less than 12 months |  | Greater than 12 months |  | Total |  |
|  | Fair Value | Gross Unrealized Depreciation | Fair Value | Gross Unrealized Depreciation | Fair Value | Gross Unrealized Depreciation |
| (Dollars in millions) |  |  |  |  |  |  |
| Fixed maturity securities - available for sale |  |  |  |  |  |  |
| Due in one year or less | $81 | $(2) | $36 | $(4) | $117 | $(6) |
| Due in one year through five years | 1,209 | (19) | 154 | (3) | 1,364 | (22) |
| Due in five years through ten years | 853 | (21) | 34 | (2) | 887 | (23) |
| Due after ten years | 517 | (10) | 27 | (1) | 543 | (11) |
| Asset-backed securities | 1,891 | (11) | 38 | - | 1,929 | (11) |
| Mortgage-backed securities | 839 | (9) | 203 | (5) | 1,042 | (14) |
| Total fixed maturity securities - available for sale | $5,390 | $(71) | $492 | $(15) | $5,882 | $(86) |

(Some amounts may not reconcile due to rounding.)

The aggregate fair value and gross unrealized losses related to investments in an unrealized loss position at December 31, 2021 were $5.9 billion and $86 million, respectively. The fair value of securities for the single issuer (the United States government) whose securities comprised the largest unrealized loss position at December 31, 2021, did not exceed 2.1% of the overall fair value of the Company's fixed maturity securities available for sale. The fair value of the securities for the issuer with the second largest unrealized loss comprised less than 0.4% of the Company's fixed maturity securities available for sale. In addition, as indicated on the above table, there was no significant concentration of unrealized losses in any one market sector. The $71 million of unrealized losses related to fixed maturity securities that have been in an unrealized loss position for less than one year were generally comprised of domestic and foreign corporate securities, foreign government securities, asset backed securities and agency residential mortgage backed securities. Of these unrealized losses, $62 million were related to securities that were rated investment grade by at least one nationally recognized rating agency. The $15 million of unrealized losses related to fixed maturity securities available for sale in an unrealized loss position for more than one year related primarily to domestic and foreign corporate securities as well as agency residential mortgage-backed securities. Of these unrealized losses $12 million were related to securities that were rated investment grade by at least one nationally recognized rating agency. In all instances, there were no projected cash flow shortfalls to recover the full book value of the investments and the related interest obligations. The mortgage-backed securities still have excess credit coverage and are current on interest and principal payments.

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

|  | Years Ended December 31, |  |  |
| --- | --- | --- | --- |
|  | 2022 | 2021 | 2020 |
| (Dollars in millions) |  |  |  |
| Fixed maturities | $510 | $344 | $305 |
| Equity securities | 16 | 15 | 11 |
| Short-term investments and cash | 16 | 1 | 3 |
| Other invested assets |  |  |  |
| Limited partnerships | 72 | 321 | 49 |
| Dividends from preferred shares of affiliate | 31 | 31 | 31 |
| Other | 30 | 63 | 2 |
| Gross investment income before adjustments | 675 | 774 | 401 |
| Funds held interest income (expense) | 6 | 8 | 6 |
| Interest income from Parent | 11 | 6 | 5 |
| Gross investment income | 691 | 788 | 412 |
| Investment expenses | (52) | (43) | (36) |
| Net investment income | $638 | $745 | $376 |

(Some amounts may not reconcile due to rounding.)

F-18

The Company records results from limited partnership investments on the equity method of accounting with changes in value reported through net investment income. The net investment income from limited partnerships is dependent upon the Company's share of the net asset values of interests underlying each limited partnership. Due to the timing of receiving financial information from these partnerships, the results are generally reported on a one month or quarter lag. If the Company determines there has been a significant decline in value of a limited partnership during this lag period, a loss will be recorded in the period in which the Company identifies the decline.

The Company had contractual commitments to invest up to an additional $927 million in limited partnerships and private placement loans at December 31, 2022. These commitments will be funded when called in accordance with the partnership and loan agreements, which have investment periods that expire, unless extended, through 2026.

During the fourth quarter of 2022, the Company entered into corporate-owned life insurance policies, which are carried within other invested assets at policy cash surrender value of $939 million as of December 31, 2022.

The Company participates in a private placement liquidity sweep facility ('the facility'). The primary purpose of the facility is to enhance the Company's return on its short-term investments and cash positions. The facility invests in high quality, short-duration securities and permits daily liquidity. The Company consolidates its participation in the facility. As of December 31, 2022, the fair value of investments in the facility consolidated within the Company's balance sheets was $309 million.

Other invested assets, at fair value, as of December 31, 2022 and December 31, 2021, were comprised of preferred shares held in Everest Preferred International Holdings, Ltd. ('Preferred Holdings'), a wholly-owned subsidiary of Group.

#### **Variable Interest Entities**

The Company is engaged with various special purpose entities and other entities that are deemed to be VIEs primarily as an investor through normal investment activities but also as an investment manager. A VIE is an entity that either has investors that lack certain essential characteristics of a controlling financial interest, such as simple majority kick-out rights, or lacks sufficient funds to finance its own activities without financial support provided by other entities. The Company performs ongoing qualitative assessments of its VIEs to determine whether the Company has a controlling financial interest in the VIE and therefore is the primary beneficiary. The Company is deemed to have a controlling financial interest when it has both the ability to direct the activities that most significantly impact the economic performance of the VIE and the obligation to absorb losses or right to receive benefits from the VIE that could potentially be significant to the VIE. Based on the Company's assessment, if it determines it is the primary beneficiary, the Company consolidates the VIE in the Company's Consolidated Financial Statements. As of December 31, 2022 and 2021, the Company did not hold any securities for which it is the primary beneficiary.

The Company, through normal investment activities, makes passive investments in general and limited partnerships and other alternative investments. For these non-consolidated VIEs, the Company has determined it is not the primary beneficiary as it has no ability to direct activities that could significantly affect the economic performance of the investments. The Company's maximum exposure to loss as of December 31, 2022 and 2021 is limited to the total carrying value of $2.8 billion and $1.7 billion, respectively, which are included in general and limited partnerships and other alternative investments in Other Invested Assets in the Company's Consolidated Balance Sheets. As of December 31, 2022, the Company has outstanding commitments totaling $857 million whereby the Company is committed to fund these investments and may be called by the partnership during the commitment period to fund the purchase of new investments and partnership expenses. These investments are generally of a passive nature in that the Company does not take an active role in management.

In addition, the Company makes passive investments in structured securities issued by VIEs for which the Company is not the manager. These investments are included in asset-backed securities, which includes collateralized loan obligations and are classified as fixed maturities. The Company has not provided financial or other support with respect to these investments other than its original investment. For these investments, the Company determined it

F-19

is not the primary beneficiary due to the relative size of the Company's investment in comparison to the principal amount of the structured securities issued by the VIEs, the level of credit subordination which reduces the Company's obligation to absorb losses or right to receive benefits and the Company's inability to direct the activities that most significantly impact the economic performance of the VIEs. The Company's maximum exposure to loss on these investments is limited to the amount of the Company's investment.

The components of net gains (losses) on investments are presented in the table below for the periods indicated:

| (Dollars in millions) | Years Ended December 31, |  |  |
| --- | --- | --- | --- |
|  | 2022 | 2021 | 2020 |
| Fixed maturity securities: |  |  |  |
| Allowances for credit losses | $(27) | $(26) | $(2) |
| Net realized gains (losses) from dispositions | (79) | 8 | (36) |
| Gains (losses) from fair value adjustments | - | - | 2 |
| Equity securities: |  |  |  |
| Net realized gains (losses) from dispositions | 116 | 24 | (8) |
| Gains (losses) from fair value adjustments | (447) | 254 | 276 |
| Other invested assets | 13 | 6 | 2 |
| Other invested assets, fair value: |  |  |  |
| Gains (losses) from fair value adjustments | (558) | 234 | (186) |
| Short-term investment gains (losses) | - | - | 1 |
| Total net gains (losses) on investments | $(982) | $501 | $50 |

(Some amounts may not reconcile due to rounding.)

The following tables provide a roll forward of the Company's beginning and ending balance of allowance for credit losses for the periods indicated:

| (Dollars in millions) | Roll Forward of Allowance for Credit Losses |  |  |  |
| --- | --- | --- | --- | --- |
|  | Years Ended December 31, 2022 |  |  |  |
|  | Corporate | Asset | Foreign | Total |
|  | Securities | Backed | Corporate |  |
|  | Securities | Securities | Securities |  |
| Balance, beginning of period | $(19) | $(8) | $ - | $(27) |
| Credit losses on securities where credit losses were not previously recorded (1) | (13) | (6) | (2) | (21) |
| Increases in allowance on previously impaired securities | (20) | - | - | (21) |
| Decreases in allowance on previously impaired securities | - | - | - | - |
| Reduction in allowance due to disposals | 6 | 8 | - | 14 |
| Balance, end of period | $(46) | $(6) | $(2) | $(55) |

(1) Credit losses recorded as of December 31, 2022 for fixed maturities - held to maturity were $(2) million, $(6) million and $(1) million for corporate, asset-backed and foreign corporate securities

(Some amounts may not reconcile due to rounding.)

F-20

|  | Roll Forward of Allowance for Credit Losses |  |  |
| --- | --- | --- | --- |
|  | Years Ended December 31, 2021 |  |  |
|  | Corporate Securities | Asset Backed Securities | Total |
| (Dollars in millions) |  |  |  |
| Balance, beginning of period | $(1) | $ - | $(2) |
| Credit losses on securities where credit losses were not previously recorded | (21) | (5) | (26) |
| Increases in allowance on previously impaired securities | (3) | (3) | (5) |
| Decreases in allowance on previously impaired securities | - | - | - |
| Reduction in allowance due to disposals | 6 | - | 6 |
| Balance, end of period | $(19) | $(8) | $(27) |

(Some amounts may not reconcile due to rounding.)

The proceeds and split between gross gains and losses from sales of fixed maturity securities - available for sale and equity securities, are presented in the table below for the periods indicated:

|  | Years Ended December 31, |  |  |
| --- | --- | --- | --- |
|  | 2022 | 2021 | 2020 |
| (Dollars in millions) |  |  |  |
| Proceeds from sales of fixed maturity securities - available for sale | $2,645 | $961 | $631 |
| Gross gains from dispositions | 9 | 33 | 24 |
| Gross losses from dispositions | (88) | (24) | (60) |
| Proceeds from sales of equity securities | $2,203 | $862 | $375 |
| Gross gains from dispositions | 165 | 39 | 37 |
| Gross losses from dispositions | (48) | (15) | (45) |

Securities with a carrying value amount of $1.4 billion at December 31, 2022, were on deposit with various state or governmental insurance departments in compliance with insurance laws.

F-21

### 3. RESERVES FOR LOSSES AND LAE

The following table provides a roll forward of the Company's beginning and ending reserve for losses and LAE is summarized for the periods indicated:

| (Dollars in millions) | At December 31, |  |  |
| --- | --- | --- | --- |
|  | 2022 | 2021 | 2020 |
| Gross reserves beginning of period | $13,121 | $11,578 | $10,129 |
| Less reinsurance recoverables on unpaid losses | (3,651) | (3,951) | (4,215) |
| Net reserves beginning of period | 9,470 | 7,627 | 5,914 |
| Incurred related to: |  |  |  |
| Current year | 5,815 | 5,382 | 4,408 |
| Prior years | 8 | 5 | 200 |
| Total incurred losses and LAE | 5,823 | 5,387 | 4,608 |
| Paid related to: |  |  |  |
| Current year | 1,097 | 2,374 | 1,902 |
| Prior years | 2,867 | 1,127 | 1,018 |
| Total paid losses and LAE | 3,964 | 3,501 | 2,920 |
| Foreign exchange/translation adjustment | (35) | (42) | 24 |
| Net reserves end of period | 11,294 | 9,470 | 7,627 |
| Plus reinsurance recoverables on unpaid losses | 3,684 | 3,651 | 3,951 |
| Gross reserves end of period | $14,977 | $13,121 | $11,578 |

(Some amounts may not reconcile due to rounding.)

Current year incurred losses were $5.8 billion, $5.4 billion and $4.4 billion for the years ended December 31, 2022, 2021 and 2020, respectively. The increase in current year incurred losses in 2022 compared to 2021 primarily related to an increase of $44 million in current year catastrophe losses and an increase of $389 million in current year attritional losses. The increase in current year attritional losses was mainly due to the growth in premiums earned and $25 million of losses due to the Russia/Ukraine conflict. The increase in current year incurred losses from 2020 to 2021 was primarily due to an increase of $532 million in current year catastrophe losses and an increase of $442 million in current year attritional losses including the impact of a change in the Company's reinsurance program with an affiliate. The increase in current year attritional losses was mainly due to the growth in premiums earned and the previously mentioned $155 million of losses related to COVID-19 in 2020.

The war in the Ukraine is ongoing and an evolving event. Economic and legal sanctions have been levied against Russia, specific named individuals and entities connected to the Russian government, as well as businesses located in the Russian Federation and/or owned by Russian nationals by numerous countries, including the United States. The significant political and economic uncertainty surrounding the war and associated sanctions have impacted economic and investment markets both within Russia and around the world. The Company has recorded $25 million of incurred underwriting losses related to the Ukraine and Russia conflict for the year ended December 31, 2022.

Incurred prior years' reserves increased by $8 million, $5 million and $200 million in 2022, 2021 and 2020 respectively. The 2022 prior year development was primarily due to $113 million of strengthening of asbestos reserves mitigated primarily by reserve releases from the reinsurance segment. The increase for 2021 related mainly to increases in insurance casualty reserves. The increase for 2020 primarily related to higher ultimate loss estimates for long-tail casualty business in the reinsurance segment for accident years 2015 to 2018, notably general liability, professional lines, and auto liability.

F-22

The following is information about incurred and paid claims development as of December 31, 2022, net of reinsurance, as well as cumulative claim frequency and the total of incurred but not reported liabilities (IBNR) plus expected development on reported claims included within the net incurred claims amounts. Each of the Company's financial reporting segments has been disaggregated into casualty and property business. The casualty and property segregation results in groups that have homogeneous loss development characteristics and are large enough to represent credible trends. Generally, casualty claims take longer to be reported and settled, resulting in longer payout patterns and increased volatility. Property claims on the other hand, tend to be reported and settled quicker and therefore tend to exhibit less volatility. The property business is more exposed to catastrophe losses, which can result in year over year fluctuations in incurred claims depending on the frequency and severity of catastrophes claims in any one accident year.

The information about incurred and paid claims development for the years ended December 31, 2013 to December 31, 2021 is presented as supplementary information.

The Cumulative Number of Reported Claims is shown only for Insurance Casualty as it is impractical to provide the information for the remaining groups. The reinsurance groups each include pro rata contracts for which ceding companies provide only summary information via a bordereau. This summary information does not include the number of reported claims underlying the paid and reported losses. Therefore, it is not possible to provide this information. The Insurance Property group includes Accident & Health insurance business. This business is written via a master contract and individual claim counts are not provided. This business represents a significant enough portion of the business in the Insurance Property group so that including the number of reported claims for the remaining business would distort any analytics performed on the group.

The Cumulative Number of Reported Claims shown for the Insurance Casualty is determined by claim and line of business. For example, a claim event with three claimants in the same line of business is a single claim. However, a claim event with a single claimant that spans two lines of business contributes two claims. Cessions under affiliated quota share agreements reduce net losses but do not impact claim counts.

The following tables present the incurred loss and ALAE and the paid loss and ALAE, net of reinsurance for casualty and property, as well as the average annual percentage payout of incurred claims by age, net of reinsurance for each of our disclosed lines of business.

## Reinsurance - Casualty Business

| Accident Year | Ultimate Incurred Loss and Allocated Loss Adjustment Expenses, Net of reinsurance |  |  |  |  |  |  |  |  |  | At December 31, 2022 |  |
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
|  | Years Ended December 31, |  |  |  |  |  |  |  |  |  | Total of IBNR Liabilities Plus Expected Development on Reported Claims | Cumulative Number of Reported Claims |
|  | 2013 | 2014 | 2015 | 2016 | 2017 | 2018 | 2019 | 2020 | 2021 | 2022 |  |  |
| (Dollars in millions) | (unaudited) | (unaudited) | (unaudited) | (unaudited) | (unaudited) | (unaudited) | (unaudited) | (unaudited) | (unaudited) |  |  |  |
| 2013 | $176 | $222 | $220 | $226 | $215 | $215 | $215 | $215 | $215 | $215 | - | N/A |
| 2014 |  | 254 | 234 | 256 | 227 | 227 | 227 | 227 | 227 | 227 | 1 | N/A |
| 2015 |  |  | 208 | 249 | 236 | 236 | 236 | 236 | 236 | 236 | 5 | N/A |
| 2016 |  |  |  | 242 | 238 | 238 | 238 | 238 | 238 | 238 | 12 | N/A |
| 2017 |  |  |  |  | 198 | 203 | 203 | 203 | 203 | 203 | 23 | N/A |
| 2018 |  |  |  |  |  | 769 | 754 | 800 | 822 | 874 | 117 | N/A |
| 2019 |  |  |  |  |  |  | 971 | 1,019 | 1,020 | 1,035 | 363 | N/A |
| 2020 |  |  |  |  |  |  |  | 1,061 | 1,033 | 1,001 | 590 | N/A |
| 2021 |  |  |  |  |  |  |  |  | 1,345 | 1,338 | 899 | N/A |
| 2022 |  |  |  |  |  |  |  |  |  | 1,413 | 1,036 | N/A |
|  |  |  |  |  |  |  |  |  |  | $6,780 |  |  |

(Some amounts may not reconcile due to rounding.)

F-23

# Cumulative Paid Loss and Allocated Loss Adjustment Expenses, Net of Reinsurance
Years Ended December 31,

|  | 2013 | 2014 | 2015 | 2016 | 2017 | 2018 | 2019 | 2020 | 2021 | 2022 |
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| Accident Year | (unaudited) | (unaudited) | (unaudited) | (unaudited) | (unaudited) | (unaudited) | (unaudited) | (unaudited) | (unaudited) |  |
| (Dollars in millions) |  |  |  |  |  |  |  |  |  |  |
| 2013 | $12 | $28 | $63 | $97 | $125 | $158 | $175 | $180 | $183 | $192 |
| 2014 |  | 15 | 34 | 76 | 106 | 143 | 173 | 182 | 186 | 208 |
| 2015 |  |  | 15 | 38 | 84 | 145 | 167 | 186 | 193 | 205 |
| 2016 |  |  |  | 17 | 53 | 87 | 143 | 159 | 185 | 206 |
| 2017 |  |  |  |  | 26 | 84 | 104 | 122 | 145 | 164 |
| 2018 |  |  |  |  |  | 119 | 194 | 300 | 402 | 466 |
| 2019 |  |  |  |  |  |  | 158 | 248 | 370 | 479 |
| 2020 |  |  |  |  |  |  |  | 137 | 227 | 329 |
| 2021 |  |  |  |  |  |  |  |  | 157 | 227 |
| 2022 |  |  |  |  |  |  |  |  |  | 116 |
|  |  |  |  |  |  |  |  |  |  | $2,592 |
| All outstanding liabilities prior to 2013, net of reinsurance |  |  |  |  |  |  |  |  |  | 204 |
| Liabilities for claims and claim adjustment expenses, net of reinsurance |  |  |  |  |  |  |  |  |  | $4,392 |

(Some amounts may not reconcile due to rounding.)

| Years | Average Annual Percentage Payout of Incurred Loss by Age, Net of Reinsurance (unaudited) |  |  |  |  |  |  |  |  |  |  |  |
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
|  | 1 | 2 | 3 | 4 | 5 | 6 | 7 | 8 | 9 | 10 |  |  |
| Causality | 11.3% | 9.1% | 12.6% | 13.5% | 9.6% | 11.3% | 5.9% | 3.2% | 5.5% | 4.2% |  |  |

F-24

## Reinsurance - Property Business

| Accident Year | Ultimate Incurred Loss and Allocated Loss Adjustment Expenses, Net of reinsurance |  |  |  |  |  |  |  |  |  | At December 31, 2022 |  |
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
|  | Years Ended December 31, |  |  |  |  |  |  |  |  |  | Total of IBNR Liabilities Plus Expected Development on Reported Claims | Cumulative Number of Reported Claims |
|  | 2013 (unaudited) | 2014 (unaudited) | 2015 (unaudited) | 2016 (unaudited) | 2017 (unaudited) | 2018 (unaudited) | 2019 (unaudited) | 2020 (unaudited) | 2021 (unaudited) | 2022 |  |  |
| (Dollars in millions) |  |  |  |  |  |  |  |  |  |  |  |  |
| 2013 | $390 | $286 | $244 | $204 | $203 | $203 | $203 | $203 | $203 | $203 | - | N/A |
| 2014 |  | 508 | 508 | 385 | 356 | 357 | 357 | 357 | 357 | 357 | - | N/A |
| 2015 |  |  | 546 | 355 | 328 | 328 | 328 | 328 | 328 | 328 | - | N/A |
| 2016 |  |  |  | 625 | 647 | 647 | 643 | 642 | 642 | 642 | 1 | N/A |
| 2017 |  |  |  |  | 1,273 | 1,857 | 2,025 | 2,119 | 2,172 | 2,210 | 1 | N/A |
| 2018 |  |  |  |  |  | 2,222 | 2,111 | 2,101 | 2,049 | 2,019 | 4 | N/A |
| 2019 |  |  |  |  |  |  | 1,685 | 1,691 | 1,618 | 1,513 | 9 | N/A |
| 2020 |  |  |  |  |  |  |  | 1,862 | 1,905 | 1,845 | 82 | N/A |
| 2021 |  |  |  |  |  |  |  |  | 2,158 | 2,144 | 303 | N/A |
| 2022 |  |  |  |  |  |  |  |  |  | 2,563 | 1,448 | N/A |
|  |  |  |  |  |  |  |  |  |  | $13,824 |  |  |

(Some amounts may not reconcile due to rounding.)

| Accident Year | Cumulative Paid Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance |  |  |  |  |  |  |  |  |  |
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
|  | Years Ended December 31, |  |  |  |  |  |  |  |  |  |
|  | 2013 (unaudited) | 2014 (unaudited) | 2015 (unaudited) | 2016 (unaudited) | 2017 (unaudited) | 2018 (unaudited) | 2019 (unaudited) | 2020 (unaudited) | 2021 (unaudited) | 2022 |
| (Dollars in millions) |  |  |  |  |  |  |  |  |  |  |
| 2013 | $128 | $152 | $163 | $177 | $185 | $191 | $195 | $196 | $197 | $199 |
| 2014 |  | 151 | 234 | 289 | 318 | 333 | 336 | 339 | 342 | 349 |
| 2015 |  |  | 155 | 227 | 279 | 294 | 299 | 304 | 309 | 319 |
| 2016 |  |  |  | 231 | 489 | 584 | 591 | 596 | 600 | 611 |
| 2017 |  |  |  |  | 781 | 1,542 | 1,900 | 2,022 | 2,118 | 2,195 |
| 2018 |  |  |  |  |  | 477 | 1,367 | 1,672 | 1,819 | 1,876 |
| 2019 |  |  |  |  |  |  | 670 | 1,037 | 1,279 | 1,398 |
| 2020 |  |  |  |  |  |  |  | 536 | 1,118 | 1,432 |
| 2021 |  |  |  |  |  |  |  |  | 638 | 1,293 |
| 2022 |  |  |  |  |  |  |  |  |  | 564 |
|  |  |  |  |  |  |  |  |  |  | $10,237 |
| All outstanding liabilities prior to 2013, net of reinsurance |  |  |  |  |  |  |  |  |  | 28 |
| Liabilities for claims and claim adjustment expenses, net of reinsurance |  |  |  |  |  |  |  |  |  | $3,615 |

(Some amounts may not reconcile due to rounding.)

| Years | Average Annual Percentage Payout of Incurred Loss by Age, Net of Reinsurance (unaudited) |  |  |  |  |  |  |  |  |  |
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
|  | 1 | 2 | 3 | 4 | 5 | 6 | 7 | 8 | 9 | 10 |
| Property | 31.3% | 32.8% | 15.7% | 6.2% | 3.3% | 2.5% | 1.5% | 1.5% | 1.6% | 0.9% |

F-25

# **Insurance - Casualty  
Business**

| Accident Year | Ultimate Incurred Loss and Allocated Loss Adjustment Expenses, Net of reinsurance Years Ended December 31, |  |  |  |  |  |  |  |  |  | At December 31, 2022 |  |
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
|  | 2013 | 2014 | 2015 | 2016 | 2017 | 2018 | 2019 | 2020 | 2021 | 2022 | Total of IBNR Liabilities Plus Expected Development on Reported Claims | Cumulative Number of Reported Claims |
|  | (unaudited) | (unaudited) | (unaudited) | (unaudited) | (unaudited) | (unaudited) | (unaudited) | (unaudited) | (unaudited) |  |  |  |
| (Dollars in millions) |  |  |  |  |  |  |  |  |  |  |  |  |
| 2013 | $256 | $228 | $230 | $224 | $194 | $194 | $195 | $195 | $195 | $195 | 1 | 21,078 |
| 2014 |  | 237 | 238 | 240 | 254 | 254 | 254 | 255 | 255 | 255 | 1 | 24,930 |
| 2015 |  |  | 258 | 258 | 277 | 277 | 277 | 265 | 265 | 269 | 3 | 26,455 |
| 2016 |  |  |  | 351 | 276 | 279 | 281 | 287 | 287 | 281 | - | 30,793 |
| 2017 |  |  |  |  | 304 | 237 | 237 | 237 | 236 | 232 | - | 34,648 |
| 2018 |  |  |  |  |  | 645 | 644 | 666 | 689 | 697 | 149 | 35,173 |
| 2019 |  |  |  |  |  |  | 768 | 755 | 794 | 813 | 168 | 39,110 |
| 2020 |  |  |  |  |  |  |  | 816 | 792 | 792 | 325 | 37,445 |
| 2021 |  |  |  |  |  |  |  |  | 1,112 | 1,112 | 595 | 42,574 |
| 2022 |  |  |  |  |  |  |  |  |  | 1,039 | 635 | 36,436 |
|  |  |  |  |  |  |  |  |  |  | $5,685 |  |  |

(Some amounts may not reconcile due to rounding.)

| Accident Year | Cumulative Paid Loss and Allocated Loss Adjustment Expenses, Net of Reinsurance Years Ended December 31, |  |  |  |  |  |  |  |  |  |
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
|  | 2013 | 2014 | 2015 | 2016 | 2017 | 2018 | 2019 | 2020 | 2021 | 2022 |
|  | (unaudited) | (unaudited) | (unaudited) | (unaudited) | (unaudited) | (unaudited) | (unaudited) | (unaudited) | (unaudited) |  |
| (Dollars in millions) |  |  |  |  |  |  |  |  |  |  |
| 2013 | $17 | $69 | $102 | $130 | $150 | $167 | $183 | $189 | $193 | $194 |
| 2014 |  | 20 | 72 | 114 | 144 | 229 | 229 | 250 | 253 | 254 |
| 2015 |  |  | 20 | 68 | 117 | 199 | 244 | 259 | 263 | 266 |
| 2016 |  |  |  | 25 | 101 | 275 | 299 | 308 | 313 | 318 |
| 2017 |  |  |  |  | 23 | 151 | 157 | 216 | 233 | 239 |
| 2018 |  |  |  |  |  | 63 | 189 | 271 | 383 | 435 |
| 2019 |  |  |  |  |  |  | 11 | 216 | 350 | 489 |
| 2020 |  |  |  |  |  |  |  | 81 | 209 | 340 |
| 2021 |  |  |  |  |  |  |  |  | 201 | 339 |
| 2022 |  |  |  |  |  |  |  |  |  | 221 |
|  |  |  |  |  |  |  |  |  |  | $3,097 |
| All outstanding liabilities prior to 2013, net of reinsurance |  |  |  |  |  |  |  |  |  | 19 |
| Liabilities for claims and claim adjustment expenses, net of reinsurance |  |  |  |  |  |  |  |  |  | $2,607 |

(Some amounts may not reconcile due to rounding.)

| Years | Average Annual Percentage Payout of Incurred Loss by Age, Net of Reinsurance (unaudited) |  |  |  |  |  |  |  |  |  |
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
|  | 1 | 2 | 3 | 4 | 5 | 6 | 7 | 8 | 9 | 10 |
| Casualty | 12.0% | 20.5% | 18.4% | 17.3% | 11.8% | 3.6% | 4.6% | 1.7% | 1.2% | 0.6% |

F-26

# **Insurance - Property**
**Business**

| Accident Year | Ultimate Incurred Loss and Allocated Loss Adjustment Expenses, Net of reinsurance Years Ended December 31, |  |  |  |  |  |  |  |  |  | At December 31, 2022 |  |
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
|  | 2013 | 2014 | 2015 | 2016 | 2017 | 2018 | 2019 | 2020 | 2021 | 2022 | Total of IBNR Liabilities Plus Expected Development on Reported Claims | Cumulative Number of Reported Claims |
|  | (unaudited) | (unaudited) | (unaudited) | (unaudited) | (unaudited) | (unaudited) | (unaudited) | (unaudited) | (unaudited) | (unaudited) | Claims | Reported Claims |
| (Dollars in millions) |  |  |  |  |  |  |  |  |  |  |  |  |
| 2013 | $64 | $56 | $52 | $53 | $52 | $52 | $52 | $52 | $52 | $52 | - | N/A |
| 2014 |  | 67 | 70 | 67 | 66 | 66 | 66 | 66 | 66 | 66 | - | N/A |
| 2015 |  |  | 81 | 75 | 75 | 75 | 75 | 88 | 88 | 85 | - | N/A |
| 2016 |  |  |  | 142 | 169 | 164 | 163 | 158 | 158 | 165 | - | N/A |
| 2017 |  |  |  |  | 230 | 293 | 297 | 299 | 305 | 315 | - | N/A |
| 2018 |  |  |  |  |  | 376 | 372 | 377 | 377 | 383 | - | N/A |
| 2019 |  |  |  |  |  |  | 337 | 349 | 348 | 354 | 1 | N/A |
| 2020 |  |  |  |  |  |  |  | 509 | 509 | 503 | 14 | N/A |
| 2021 |  |  |  |  |  |  |  |  | 539 | 536 | 8 | N/A |
| 2022 |  |  |  |  |  |  |  |  |  | 699 | 242 | N/A |
|  |  |  |  |  |  |  |  |  |  | $3,158 |  |  |

(Some amounts may not reconcile due to rounding.)

| Accident Year | Cumulative Paid Loss and Allocated Loss Adjustment Expenses, Net of Reinsurance Years Ended December 31, |  |  |  |  |  |  |  |  |  |
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
|  | 2013 | 2014 | 2015 | 2016 | 2017 | 2018 | 2019 | 2020 | 2021 | 2022 |
|  | (unaudited) | (unaudited) | (unaudited) | (unaudited) | (unaudited) | (unaudited) | (unaudited) | (unaudited) | (unaudited) | (unaudited) |
| (Dollars in millions) |  |  |  |  |  |  |  |  |  |  |
| 2013 | $35 | $54 | $52 | $53 | $52 | $52 | $52 | $52 | $52 | $52 |
| 2014 |  | 40 | 66 | 66 | 66 | 66 | 66 | 66 | 66 | 66 |
| 2015 |  |  | 45 | 70 | 75 | 75 | 75 | 76 | 76 | 76 |
| 2016 |  |  |  | 72 | 152 | 168 | 163 | 162 | 164 | 165 |
| 2017 |  |  |  |  | 161 | 293 | 282 | 296 | 312 | 315 |
| 2018 |  |  |  |  |  | 236 | 342 | 368 | 377 | 383 |
| 2019 |  |  |  |  |  |  | 218 | 336 | 350 | 353 |
| 2020 |  |  |  |  |  |  |  | 263 | 366 | 386 |
| 2021 |  |  |  |  |  |  |  |  | 360 | 506 |
| 2022 |  |  |  |  |  |  |  |  |  | 383 |
|  |  |  |  |  |  |  |  |  |  | $2,685 |
| All outstanding liabilities prior to 2013, net of reinsurance |  |  |  |  |  |  |  |  |  | - |
| Liabilities for claims and claim adjustment expenses, net of reinsurance |  |  |  |  |  |  |  |  |  | $473 |

(Some amounts may not reconcile due to rounding.)

| Years | Average Annual Percentage Payout of Incurred Loss by Age, Net of Reinsurance (unaudited) |  |  |  |  |  |  |  |  |  |
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
|  | 1 | 2 | 3 | 4 | 5 | 6 | 7 | 8 | 9 | 10 |
| Property | 57.4% | 34.0% | 3.5% | 1.5% | 1.9% | 0.9% | 0.2% | 0.4% | 0.1% | 0.1% |

F-27

## Reconciliation of the Disclosure of Incurred and Paid Claims Development to the Liability for Unpaid Claims and Claim Adjustment Expenses

The reconciliation of the net incurred and paid claims development tables to the liability for claims and claim adjustment expenses in the consolidated statement of financial position is as follows.

|  | At December 31, 2022 |
| --- | --- |
| (Dollars in millions) |  |
| Net outstanding liabilities |  |
| Reinsurance Casualty | $4,392 |
| Reinsurance Property | 3,615 |
| Insurance Casualty | 2,607 |
| Insurance Property | 473 |
| Liabilities for unpaid claims and claim adjustment expenses, net of reinsurance | 11,087 |
| Reinsurance recoverable on unpaid claims |  |
| Reinsurance Casualty | 980 |
| Reinsurance Property | 908 |
| Insurance Casualty | 1,626 |
| Insurance Property | 169 |
| Total reinsurance recoverable on unpaid claims | 3,684 |
| Unallocated claims adjustment expenses | 175 |
| Other | 32 |
|  | 207 |
| Total gross liability for unpaid claims and claim adjustment expense | $14,977 |

(Some amounts may not reconcile due to rounding.)

## Reserving Methodology

The Company maintains reserves equal to our estimated ultimate liability for losses and loss adjustment expense (LAE) for reported and unreported claims for our insurance and reinsurance businesses. Because reserves are based on estimates of ultimate losses and LAE by underwriting or accident year, the Company uses a variety of statistical and actuarial techniques to monitor reserve adequacy over time, evaluate new information as it becomes known, and adjust reserves whenever an adjustment appears warranted. The Company considers many factors when setting reserves including: (1) exposure base and projected ultimate premium; (2) expected loss ratios by product and class of business, which are developed collaboratively by underwriters and actuaries; (3) actuarial methodologies and assumptions which analyze loss reporting and payment experience, reports from ceding companies and historical trends, such as reserving patterns, loss payments, and product mix; (4) current legal interpretations of coverage and liability; and (5) economic conditions. Management's best estimate is developed through collaboration with actuarial, underwriting, claims, legal and finance departments and culminates with the input of reserve committees. Each segment reserve committee includes the participation of the relevant parties from actuarial, finance, claims and segment senior management and has the responsibility for recommending and approving management's best estimate. Reserves are further reviewed by Everest's Chief Reserving Actuary and senior management. The objective of such process is to determine a single best estimate viewed by management to be the best estimate of its ultimate loss liability. Actual loss and LAE ultimately paid may deviate, perhaps substantially, from such reserves. Net income will be impacted in a period in which the change in estimated ultimate loss and LAE is recorded.

F-28

The detailed data required to evaluate ultimate losses for the Company's insurance business is accumulated from its underwriting and claim systems. Reserving for reinsurance requires evaluation of loss information received from ceding companies. Ceding companies report losses in many forms depending on the type of contract and the agreed or contractual reporting requirements. Generally, pro rata contracts require the submission of a monthly/quarterly account, which includes premium and loss activity for the period with corresponding reserves as established by the ceding company. This information is recorded into the Company's records. For certain pro rata contracts, the Company may require a detailed loss report for claims that exceed a certain dollar threshold or relate to a particular type of loss. Excess of loss and facultative contracts generally require individual loss reporting with precautionary notices provided when a loss reaches a significant percentage of the attachment point of the contract or when certain causes of loss or types of injury occur. Experienced claims staff handles individual loss reports and supporting claim information. Based on evaluation of a claim, the Company may establish additional case reserves in addition to the case reserves reported by the ceding company. To ensure ceding companies are submitting required and accurate data, Everest's Underwriting, Claim, Reinsurance Accounting, and Internal Audit Departments perform various reviews of ceding companies, particularly larger ceding companies, including on-site audits of domestic ceding companies.

The Company segments both reinsurance and insurance reserves into exposure groupings for actuarial analysis. The Company assigns business to exposure groupings so that the underlying exposures have reasonably homogeneous loss development characteristics and are large enough to facilitate credible estimation of ultimate losses. The Company periodically reviews its exposure groupings and may change groupings over time as business changes. The Company currently uses approximately 200 exposure groupings to develop reserve estimates. One of the key selection characteristics for the exposure groupings is the historical duration of the claims settlement process. Business in which claims are reported and settled relatively quickly are commonly referred to as short tail lines, principally property lines. On the other hand, casualty claims tend to take longer to be reported and settled and casualty lines are generally referred to as long tail lines. Estimates of ultimate losses for shorter tail lines, with the exception of loss estimates for large catastrophic events, generally exhibit less volatility than those for the longer tail lines.

The Company uses a variety of actuarial methodologies, such as the expected loss ratio method, chain ladder methods, and Bornhuetter-Ferguson methods, supplemented by judgment where appropriate, to estimate ultimate loss and LAE for each exposure group.

**Expected Loss Ratio Method:** The expected loss ratio method uses earned premium times an expected loss ratio to calculate ultimate losses for a given underwriting or accident year. This method relies entirely on expectation to project ultimate losses with no consideration given to actual losses. As such, it may be appropriate for an immature underwriting or accident year where few, if any, losses have been reported or paid, but less appropriate for a more mature year.

**Chain Ladder Method:** Chain ladder methods use a standard loss development triangle to project ultimate losses. Age-to-age development factors are selected for each development period and combined to calculate age-to-ultimate development factors which are then applied to paid or reported losses to project ultimate losses. This method relies entirely on actual paid or reported losses to project ultimate losses. No other factors such as changes in pricing or other expectations are taken into account. It is most appropriate for groups with homogeneous, stable experience where past development patterns are expected to continue in the future. It is least appropriate for groups which have changed significantly over time or which are more volatile.

**Bornhuetter-Ferguson Method:** The Bornhuetter-Ferguson method is a combination of the expected loss ratio method and the chain ladder method. Ultimate losses are projected based partly on actual paid or reported losses and partly on expectation. Incurred but not reported (IBNR) reserves are calculated using earned premium, an a priori loss ratio, and selected age-to-age development factors and added to actual reported (paid) losses to determine ultimate losses. It is more responsive to actual reported or paid development than the expected loss ratio method but less responsive than the chain ladder method. The reliability of the method depends on the accuracy of the selected a priori loss ratio.

F-29

Although the Company uses similar actuarial methods for both short tail and long tail lines, the faster reporting of experience for the short tail lines allows the Company to have greater confidence in its estimates of ultimate losses for short tail lines at an earlier stage than for long tail lines. As a result, the Company utilizes, as well, exposure-based methods to estimate its ultimate losses for longer tail lines, especially for immature underwriting or accident years. For both short and long tail lines, the Company supplements these general approaches with analytically based judgments.

Key actuarial assumptions contain no explicit provisions for reserve uncertainty nor do we supplement the actuarially determined reserves for uncertainty.

Carried reserves at each reporting date are the Company's best estimate of ultimate unpaid losses and LAE at that date. The Company completes detailed reserve studies for each exposure group annually for both reinsurance and insurance operations. The completed annual reserve studies are 'rolled-forward' for each accounting period until the subsequent reserve study is completed. Analyzing the roll-forward process involves comparing actual reported losses to expected losses based on the most recent reserve study. The Company analyzes significant variances between actual and expected losses and post adjustments to its reserves as warranted.

Certain reserves, including losses from widespread catastrophic events and COVID-19 related losses, cannot be estimated using traditional actuarial methods. These types of events are reserved for separately using a variety of statistical and actuarial techniques. We estimate losses for these types of events based on information derived from catastrophe models, quantitative and qualitative exposure analyses, reports and communications from ceding companies and development patterns for historically similar events, where available.

The Company continues to receive claims under expired insurance and reinsurance contracts asserting injuries and/or damages relating to or resulting from environmental pollution and hazardous substances, including asbestos. Environmental claims typically assert liability for (a) the mitigation or remediation of environmental contamination or (b) bodily injury or property damage caused by the release of hazardous substances into the land, air or water. Asbestos claims typically assert liability for bodily injury from exposure to asbestos or for property damage resulting from asbestos or products containing asbestos.

The Company's reserves include an estimate of the Company's ultimate liability for A&E claims. The Company's A&E liabilities emanate from direct insurance business and Everest Re's assumed reinsurance business. All of the contracts of insurance and reinsurance, under which the Company has received claims during the past three years, expired more than 20 years ago. There are significant uncertainties surrounding the Company's reserves for its A&E losses.

A&E exposures represent a separate exposure group for monitoring and evaluating reserve adequacy. The following table summarizes incurred losses with respect to A&E reserves on both a gross and net of reinsurance basis for the periods indicated:

F-30

| (Dollars in millions) | At December 31, |  |  |
| --- | --- | --- | --- |
|  | 2022 | 2021 | 2020 |
| Gross basis: |  |  |  |
| Beginning of period reserves | $175 | $219 | $258 |
| Incurred losses | 144 | 11 | 2 |
| Paid losses | (42) | (55) | (40) |
| End of period reserves | $278 | $175 | $219 |
| Net basis: |  |  |  |
| Beginning of period reserves | $128 | $167 | $197 |
| Incurred losses | 113 | (3) | (5) |
| Paid losses | (32) | (36) | (24) |
| End of period reserves | $210 | $128 | $167 |

**Reinsurance Recoverables.** Reinsurance recoverables for both paid and unpaid losses totaled $3.8 billion and $3.9 billion at December 31, 2022 and 2021, respectively. At December 31, 2022, $1.9 billion, or 51.0%, was receivable from Everest Reinsurance (Bermuda), Ltd. ("Bermuda Re"), an affiliated entity, and is fully collateralized by a trust agreement and $378 million, or 10.0%, was receivable from Mt. Logan Re Ltd. (Bermuda) ("Mt. Logan Re") collateralized segregated accounts. No other retrocessionaire accounted for more than 5% of reinsurance receivables.

#### 4. FAIR VALUE

GAAP guidance regarding fair value measurements address how companies should measure fair value when they are required to use fair value measures for recognition or disclosure purposes under GAAP and provides a common definition of fair value to be used throughout GAAP. It defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly fashion between market participants at the measurement date. In addition, it establishes a three-level valuation hierarchy for the disclosure of fair value measurements. The valuation hierarchy is based on the transparency of inputs to the valuation of an asset or liability. The level in the hierarchy within which a given fair value measurement falls is determined based on the lowest level input that is significant to the measurement, with Level 1 being the highest priority and Level 3 being the lowest priority.

The levels in the hierarchy are defined as follows:

- Level 1: Inputs to the valuation methodology are observable inputs that reflect unadjusted quoted prices for identical assets or liabilities in an active market;
- Level 2: Inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, and inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the financial instrument;
- Level 3: Inputs to the valuation methodology are unobservable and significant to the fair value measurement.

The Company's fixed maturity and equity securities are primarily managed by third party investment asset managers. The investment asset managers managing publicly traded securities obtain prices from nationally recognized pricing services. These services seek to utilize market data and observations in their evaluation process. They use pricing applications that vary by asset class and incorporate available market information and when fixed maturity securities do not trade on a daily basis the services will apply available information through processes such as benchmark curves, benchmarking of like securities, sector groupings and matrix pricing. In addition, they use model processes, such as the Option Adjusted Spread model to develop prepayment and interest rate scenarios for securities that have prepayment features.

F-31

The investment asset managers do not make any changes to prices received from either the pricing services or the investment brokers. In addition, the investment asset managers have procedures in place to review the reasonableness of the prices from the service providers and may request verification of the prices. The Company also continually performs quantitative and qualitative analysis of prices, including but not limited to initial and ongoing review of pricing methodologies, review of prices obtained from pricing services and third party investment asset managers, review of pricing statistics and trends, and comparison of prices for certain securities with a secondary price source for reasonableness. No material variances were noted during these price validation procedures. In limited situations, where financial markets are inactive or illiquid, the Company may use its own assumptions about future cash flows and risk-adjusted discount rates to determine fair value. At December 31, 2022, $1.7 billion of fixed maturities were fair valued using unobservable inputs. The majority of these fixed maturities were valued by investment managers' valuation committees and many of these fair values were substantiated by valuations from independent third parties. The Company has procedures in place to evaluate these independent third party valuations. At December 31, 2021, $2.0 billion of fixed maturities were fair valued using unobservable inputs.

The Company internally manages a public equity portfolio which had a fair value at December 31, 2022 and December 31, 2021 of $97 million and $1.3 billion, respectively. The Company internally manages a portfolio of collateralized loan obligations included in asset-backed securities available for sale, which had a fair value of $2.6 billion at December 31, 2022 and $2.0 billion at December 31, 2021. All prices for these securities were obtained from publicly published sources or nationally recognized pricing vendors.

Equity securities denominated in U.S. currency with quoted prices in active markets for identical assets are categorized as Level 1 since the quoted prices are directly observable. Equity securities traded on foreign exchanges are categorized as Level 2 due to the added input of a foreign exchange conversion rate to determine fair value. The Company uses foreign currency exchange rates published by a nationally recognized source.

Fixed maturity securities listed in the tables have been categorized as Level 2, since a particular security may not have traded but the pricing services are able to use valuation models with observable market inputs such as interest rate yield curves and prices for similar fixed maturity securities in terms of issuer, maturity and seniority. For foreign government securities and foreign corporate securities, the fair values provided by the third party pricing services in local currencies, and where applicable, are converted to U.S. dollars using currency exchange rates from nationally recognized sources.

In addition to the valuations from investment managers, some of the fixed maturities with fair values categorized as Level 3 result when prices are not available from the nationally recognized pricing services and are derived using unobservable inputs. The Company will value the securities with unobservable inputs using comparable market information or receive fair values from investment managers. The investment managers may obtain non-binding price quotes for the securities from brokers. The single broker quotes are provided by market makers or broker-dealers who are recognized as market participants in the markets in which they are providing the quotes. The prices received from brokers are reviewed for reasonableness by the third party asset managers and the Company. If the broker quotes are for foreign denominated securities, the quotes are converted to U.S. dollars using currency exchange rates from nationally recognized sources.

The fixed maturities with fair values categorized as Level 3 result when prices are not available from the nationally recognized pricing services.

The composition and valuation inputs for the presented fixed maturities categories Level 1 and Level 2 are as follows:

- U.S. Treasury securities and obligations of U.S. government agencies and corporations are primarily comprised of U.S. Treasury bonds and the fair value is based on observable market inputs such as quoted prices, reported trades, quoted prices for similar issuances or benchmark yields;

F-32

- • Obligations of U.S. states and political subdivisions are comprised of state and municipal bond issuances and the fair values are based on observable market inputs such as quoted market prices, quoted prices for similar securities, benchmark yields and credit spreads;
- • Corporate securities are primarily comprised of U.S. corporate and public utility bond issuances and the fair values are based on observable market inputs such as quoted market prices, quoted prices for similar securities, benchmark yields and credit spreads;
- • Asset-backed and mortgage-backed securities fair values are based on observable inputs such as quoted prices, reported trades, quoted prices for similar issuances or benchmark yields and cash flow models using observable inputs such as prepayment speeds, collateral performance and default spreads;
- • Foreign government securities are comprised of global non-U.S. sovereign bond issuances and the fair values are based on observable market inputs such as quoted market prices, quoted prices for similar securities and models with observable inputs such as benchmark yields and credit spreads and then, where applicable, converted to U.S. dollars using an exchange rate from a nationally recognized source;
- • Foreign corporate securities are comprised of global non-U.S. corporate bond issuances and the fair values are based on observable market inputs such as quoted market prices, quoted prices for similar securities and models with observable inputs such as benchmark yields and credit spreads and then, where applicable, converted to U.S. dollars using an exchange rate from a nationally recognized source.

Other invested assets, at fair value, were categorized as Level 3 at December 31, 2022 and December 31, 2021, since it represented a privately placed convertible preferred stock issued by an affiliate. The stock was received in exchange for shares of the Company's parent. The 25 year redeemable, convertible preferred stock with a 1.75% coupon is valued using a pricing model. The pricing model includes observable inputs such as the U.S. Treasury yield curve rate T note constant maturity 10 year and the swap rate on the Company's June 1, 2044, 4.868% senior notes, with adjustments to reflect the Company's own assumptions about the inputs that market participants would use in pricing the asset.

F-33

The following table presents the fair value measurement levels for all assets, which the Company has recorded at fair value as of the period indicated:

|  | December 31, 2022 | Fair Value Measurement Using: |  |  |
| --- | --- | --- | --- | --- |
|  |  | Quoted Prices in Active Markets for Identical Assets (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3) |
| (Dollars in millions) |  |  |  |  |
| Assets: |  |  |  |  |
| Fixed maturities, available for sale |  |  |  |  |
| U.S. Treasury securities and obligations of U.S. government agencies and corporations | $535 | $ - | $535 | $ - |
| Obligations of U.S. states and political subdivisions | 413 | - | 413 | - |
| Corporate securities | 3,561 | - | 2,846 | 715 |
| Asset-backed securities | 3,951 | - | 2,957 | 994 |
| Mortgage-backed securities |  |  |  |  |
| Commercial | 509 | - | 509 | - |
| Agency residential | 1,628 | - | 1,628 | - |
| Non-agency residential | 3 | - | 3 | - |
| Foreign government securities | 637 | - | 637 | - |
| Foreign corporate securities | 1,433 | - | 1,417 | 16 |
| Total fixed maturities, available for sale | 12,671 | - | 10,946 | 1,725 |
| Equity securities, fair value | 194 | 132 | 63 | - |
| Other invested assets, fair value | 1,472 | - | - | 1,472 |

(Some amounts may not reconcile due to rounding.)

F-34

|  | December 31, 2021 | Fair Value Measurement Using: |  |  |
| --- | --- | --- | --- | --- |
|  |  | Quoted Prices in Active Markets for Identical Assets (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3) |
| (Dollars in millions) |  |  |  |  |
| Assets: |  |  |  |  |
| Fixed maturities, available for sale |  |  |  |  |
| U.S. Treasury securities and obligations of U.S. government agencies and corporations | $663 | $ - | $663 | $ - |
| Obligations of U.S. states and political subdivisions | 587 | - | 587 | - |
| Corporate securities | 4,075 | - | 3,345 | 730 |
| Asset-backed securities | 3,466 | - | 2,215 | 1,251 |
| Mortgage-backed securities |  |  |  |  |
| Commercial | 603 | - | 603 | - |
| Agency residential | 1,261 | - | 1,261 | - |
| Non-agency residential | 4 | - | 4 | - |
| Foreign government securities | 692 | - | 692 | - |
| Foreign corporate securities | 1,510 | - | 1,494 | 16 |
| Total fixed maturities, available for sale | 12,860 | - | 10,863 | 1,997 |
| Equity securities, fair value | 1,758 | 1,722 | 36 | - |
| Other invested assets, fair value | 2,031 | - | - | 2,031 |

(Some amounts may not reconcile due to rounding.)

In addition, $292 million and $287 million of investments within other invested assets on the consolidated balance sheets as of December 31, 2022 and December 31, 2021, respectively, are not included within the fair value hierarchy tables as the assets are measured at net asset value (NAV) as a practical expedient to determine fair value.

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The following table presents the activity under Level 3, fair value measurements using significant unobservable inputs for fixed maturities available for sale, for the periods indicated:

|  | Total Fixed Maturities, Available for Sale |  |  |  |  |  |  |  |  |
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
|  | December 31, 2022 |  |  |  | December 31, 2021 |  |  |  |  |
|  | Corporate Securities | Asset-Backed Securities | CMBS | Foreign Corporate | Total | Corporate Securities | Asset-Backed Securities | Foreign Corporate | Total |
| (Dollars in millions) |  |  |  |  |  |  |  |  |  |
| Beginning balance fixed maturities | $730 | $1,251 | $ - | $16 | $1,997 | $631 | $623 | $6 | $1,260 |
| Total gains or (losses) (realized/unrealized) |  |  |  |  |  |  |  |  |  |
| Included in earnings | (24) | - | - | - | (24) | (12) | (6) | - | (18) |
| Included in other comprehensive income (loss) | 3 | (35) | - | (4) | (36) | 4 | (7) | - | (2) |
| Purchases, issuances and settlements | 40 | 513 | 6 | 8 | 567 | 107 | 641 | 10 | 758 |
| Transfers in (out) of Level 3 and reclassification of securities in/(out) investment categories | (35) | (715) | (6) | (4) | (779) | - | - | - | - |
| Ending balance | $715 | $994 | $ - | $16 | $1,725 | $730 | $1,251 | $16 | $1,997 |
| 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 | $(23) | $8 | $ - | $ - | $(15) | $(16) | $(8) | $ - | $(24) |

(Some amounts may not reconcile due to rounding.)

The $779 million shown as transfers in/(out) of Level 3 and reclassification of securities in/(out) of investment categories for the year ended December 31, 2022 relate mainly to previously designated Level 3 securities that the Company has reclassified from “fixed maturities - available for sale” to “fixed maturities - held to maturity” during 2022. As “fixed maturities - held to maturity” are carried at amortized cost, net of credit allowances rather than at fair value as “fixed maturities - available for sale”, these securities are no longer included within the fair value hierarchy table or in the roll forward of Level 3 securities. The fair values of these securities are determined in a similar manner as the Company’s fixed maturity securities available for sale as described above. The fair values of these securities incorporate the use of significant unobservable inputs and therefore are classified as Level 3 within the fair value hierarchy as of December 31, 2022.

There were no transfers of assets in/(out) Level 3 during 2021.

#### Financial Instruments Disclosed, But Not Reported, at Fair Value

Certain financial instruments disclosed, but not reported, at fair value are excluded from the fair value hierarchy tables above. Fair values of fixed maturity securities held to maturity, senior notes and long-term subordinated notes can be found within Notes 2, 5 and 6, respectively. Fair values of long-term notes receivable from affiliates can be found within Note 16. Short-term investments are stated at cost, which approximates fair value. See Note 1.

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## 5. SENIOR NOTES

The table below displays Holdings' outstanding senior notes. Fair value is based on quoted market prices, but due to limited trading activity, these senior notes are considered Level 2 in the fair value hierarchy.

| (Dollars in millions) | Date Issued | Date Due | Principal Amounts | December 31, 2022 |  | December 31, 2021 |  |
| --- | --- | --- | --- | --- | --- | --- | --- |
|  |  |  |  | Consolidated Balance Sheet Amount | Fair Value | Consolidated Balance Sheet Amount | Fair Value |
| 4.868% Senior notes | 06/05/2014 | 06/01/2044 | 400 | $397 | $343 | $397 | $504 |
| 3.5% Senior notes | 10/07/2020 | 10/15/2050 | 1,000 | 981 | 677 | 980 | 1,055 |
| 3.125% Senior notes | 10/04/2021 | 10/15/2052 | 1,000 | 969 | 627 | 969 | 983 |
|  |  |  | 2,400 | $2,347 | $1,647 | $2,346 | $2,542 |

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

| (Dollars in millions) | Interest Paid | Payable Dates | Years Ended December 31, |  |  |
| --- | --- | --- | --- | --- | --- |
|  |  |  | 2022 | 2021 | 2020 |
| 4.868% Senior notes | semi-annually | June 1/December 1 | $19 | $19 | $19 |
| 3.5% Senior notes | semi-annually | April 15/October 15 | 35 | 35 | 8 |
| 3.125% Senior notes | semi-annually | April 15/October 15 | 32 | 8 | - |
|  |  |  | $86 | $62 | $28 |

## 6. LONG-TERM SUBORDINATED NOTES

The table below displays Holdings' outstanding fixed to floating rate long-term subordinated notes. Fair value is based on quoted market prices, but due to limited trading activity, these subordinated notes are considered Level 2 in the fair value hierarchy.

| (Dollars in millions) | Date Issued | Original Principal Amount | Maturity Date |  | December 31, 2022 |  | December 31, 2021 |  |
| --- | --- | --- | --- | --- | --- | --- | --- | --- |
|  |  |  | Scheduled | Final | Consolidated Balance Sheet Amount | Fair Value | Consolidated Balance Sheet Amount | Fair Value |
| Long-term subordinated notes | 04/26/2007 | $400 | 05/15/2037 | 05/01/2067 | $218 | $187 | $224 | $216 |

During the fixed rate interest period from May 3, 2007 through May 14, 2017, interest was at the annual rate of 6.6%, payable semi-annually in arrears on November 15 and May 15 of each year, commencing on November 15, 2007. During the floating rate interest period from May 15, 2017 through maturity, interest will be based on the 3 month LIBOR plus 238.5 basis points, reset quarterly, payable quarterly in arrears on February 15, May 15, August 15 and November 15 of each year, subject to Holdings' right to defer interest on one or more occasions for up to ten consecutive years. Deferred interest will accumulate interest at the applicable rate compounded quarterly for periods from and including May 15, 2017. The reset quarterly interest rate for November 15, 2022 to February 14, 2023 is 6.99%.

Holdings may redeem the long-term subordinated notes on or after May 15, 2017, in whole or in part at 100% of the principal amount plus accrued and unpaid interest; however, redemption on or after the scheduled maturity date and prior to May 1, 2047 is subject to a replacement capital covenant. This covenant is for the benefit of certain senior note holders and it mandates that Holdings receive proceeds from the sale of another subordinated debt issue, of at least similar size, before it may redeem the subordinated notes. The Company's 4.868% senior notes, due on June 1, 2044, 3.5% senior notes due on October 15, 2050 and 3.125% senior notes due on October 15, 2052 are the Company's long-term indebtedness that rank senior to the long-term subordinated notes.

In 2009, the Company had reduced its outstanding amount of long-term subordinated notes through the initiation of a cash tender offer for any and all of the long-term subordinated notes. In addition, the Company

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repurchased and retired $6 million of the outstanding long-term subordinated notes for the year ended December 31, 2022. The Company realized a gain of $1 million on the repurchases made during 2022.

Interest expense incurred in connection with these long-term subordinated notes is as follows for the periods indicated:

| (Dollars in millions) | Years Ended December 31, |  |  |
| --- | --- | --- | --- |
|  | 2022 | 2021 | 2020 |
| Interest expense incurred | $9 | $6 | $8 |

## 7. FEDERAL HOME LOAN BANK MEMBERSHIP

Everest Re is a member of the Federal Home Loan Bank of New York ('FHLBNY'), which allows Everest Re to borrow up to 10% of its statutory admitted assets. As of December 31, 2022, Everest Re had admitted assets of approximately $22.4 billion which provides borrowing capacity of up to approximately $2.2 billion. As of December 31, 2022, Everest Re has $519 million of borrowings outstanding, which will all mature in 2023. Everest incurred interest expense of $4 million and $1 million for the years ended December 31, 2022 and 2021, respectively. The FHLBNY membership agreement requires that 4.5% of borrowed funds be used to acquire additional membership stock.

## 8. COLLATERALIZED REINSURANCE AND TRUST AGREEMENTS

A subsidiary of the Company, Everest Re, has established a trust agreement, which effectively uses Everest Re's investments as collateral, as security for assumed losses payable to non-affiliated ceding companies. At December 31, 2022, the total amount on deposit in the trust account was $705 million which includes $21 million of restricted cash. At December 31, 2021, the total amount on deposit in the trust account was $592 million which includes $87 million of restricted cash.

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The Company entered into various collateralized reinsurance agreements with Kilimanjaro Re Limited (“Kilimanjaro”), a Bermuda based special purpose reinsurer, to provide the Company with catastrophe reinsurance coverage. These agreements are multi-year reinsurance contracts which cover named storm and earthquake events. The table below summarizes the various agreements:

(Dollars in millions)

| Class | Description | Effective Date | Expiration Date | Limit | Coverage Basis |
| --- | --- | --- | --- | --- | --- |
| Series 2018-1 Class A-2 | US, Canada, Puerto Rico - Named Storm and Earthquake Events | 4/30/2018 | 5/5/2023 | $63 | Aggregate |
| Series 2018-1 Class B-2 | US, Canada, Puerto Rico - Named Storm and Earthquake Events | 4/30/2018 | 5/5/2023 | 200 | Aggregate |
| Series 2019-1 Class A-1 | US, Canada, Puerto Rico - Named Storm and Earthquake Events | 12/12/2019 | 12/19/2023 | 150 | Occurrence |
| Series 2019-1 Class B-1 | US, Canada, Puerto Rico - Named Storm and Earthquake Events | 12/12/2019 | 12/19/2023 | 275 | Aggregate |
| Series 2019-1 Class A-2 | US, Canada, Puerto Rico - Named Storm and Earthquake Events | 12/12/2019 | 12/19/2024 | 150 | Occurrence |
| Series 2019-1 Class B-2 | US, Canada, Puerto Rico - Named Storm and Earthquake Events | 12/12/2019 | 12/19/2024 | 275 | Aggregate |
| Series 2021-1 Class A-1 | US, Canada, Puerto Rico - Named Storm and Earthquake Events | 4/8/2021 | 4/21/2025 | 150 | Occurrence |
| Series 2021-1 Class B-1 | US, Canada, Puerto Rico - Named Storm and Earthquake Events | 4/8/2021 | 4/21/2025 | 85 | Aggregate |
| Series 2021-1 Class C-1 | US, Canada, Puerto Rico - Named Storm and Earthquake Events | 4/8/2021 | 4/21/2025 | 85 | Aggregate |
| Series 2021-1 Class A-2 | US, Canada, Puerto Rico - Named Storm and Earthquake Events | 4/8/2021 | 4/20/2026 | 150 | Occurrence |
| Series 2021-1 Class B-2 | US, Canada, Puerto Rico - Named Storm and Earthquake Events | 4/8/2021 | 4/20/2026 | 90 | Aggregate |
| Series 2021-1 Class C-2 | US, Canada, Puerto Rico - Named Storm and Earthquake Events | 4/8/2021 | 4/20/2026 | 90 | Aggregate |
| Series 2022-1 Class A | US, Canada, Puerto Rico - Named Storm and Earthquake Events | 6/22/2022 | 6/25/2025 | 300 | Aggregate |
| Total available limit as of December 31, 2022 |  |  |  | $2,063 |  |

Recoveries under these collateralized reinsurance agreements with Kilimanjaro are primarily dependent on estimated industry level insured losses from covered events, as well as, the geographic location of the events. The estimated industry level of insured losses is obtained from published estimates by an independent recognized authority on insured property losses. Currently, none of the published insured loss estimates for catastrophe events during the applicable covered periods of the various agreements have exceeded the single event retentions or aggregate retentions under the terms of the agreements that would result in a recovery.

Kilimanjaro has financed the various property catastrophe reinsurance coverages by issuing catastrophe bonds to unrelated, external investors. The proceeds from the issuance of the Notes listed below are held in reinsurance trusts throughout the duration of the applicable reinsurance agreements and invested solely in US government money market funds with a rating of at least “AAAm” by Standard & Poor’s.

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(Dollars in millions)

| Note Series | Issue Date | Maturity Date | Amount |
| --- | --- | --- | --- |
| Series 2018-1 Class A-2 | 4/30/2018 | 5/5/2023 | $63 |
| Series 2018-1 Class B-2 | 4/30/2018 | 5/5/2023 | 200 |
| Series 2019-1 Class A-1 | 12/12/2019 | 12/19/2023 | 150 |
| Series 2019-1 Class B-1 | 12/12/2019 | 12/19/2023 | 275 |
| Series 2019-1 Class A-2 | 12/12/2019 | 12/19/2024 | 150 |
| Series 2019-1 Class B-2 | 12/12/2019 | 12/19/2024 | 275 |
| Series 2021-1 Class A-1 | 4/8/2021 | 4/21/2025 | 150 |
| Series 2021-1 Class B-1 | 4/8/2021 | 4/21/2025 | 85 |
| Series 2021-1 Class C-1 | 4/8/2021 | 4/21/2025 | 85 |
| Series 2021-1 Class A-2 | 4/8/2021 | 4/20/2026 | 150 |
| Series 2021-1 Class B-2 | 4/8/2021 | 4/20/2026 | 90 |
| Series 2021-1 Class C-2 | 4/8/2021 | 4/20/2026 | 90 |
| Series 2022-1 Class A | 6/22/2022 | 6/25/2025 | 300 |
|  |  |  | $2,063 |

## 9. LEASES

The Company enters into lease agreements for real estate that is primarily used for office space in the ordinary course of business. These leases are accounted for as operating leases, whereby lease expense is recognized on a straight-line basis over the term of the lease. Most leases include an option to extend or renew the lease term. The exercise of the renewal is at the Company's discretion. The operating lease liability includes lease payments related to options to extend or renew the lease term if the Company is reasonably certain of exercise those options. The Company, in determining the present value of lease payments utilizes either the rate implicit in the lease if that rate is readily determinable or the Company's incremental secured borrowing rate commensurate with terms of the underlying lease.

Supplemental information related to operating leases is as follows for the periods indicated:

|  | Year Ended December 31, |  |
| --- | --- | --- |
| (Dollars in millions) | 2022 | 2021 |
| Lease expense incurred: |  |  |
| Operating lease cost | $25 | $24 |
|  | At December 31, |  |
| (Dollars in millions) | 2022 | 2021 |
| Operating lease right of use assets | $121 | $131 |
| Operating lease liabilities | 139 | 150 |
|  | Year Ended December 31, |  |
| (Dollars in millions) | 2022 | 2021 |
| Operating cash flows from operating leases | $(18) | $(16) |

F-40

|  | At December 31, |  |
| --- | --- | --- |
|  | 2022 | 2021 |
| Weighted average remaining operating lease term | 11.1 years | 11.8 years |
| Weighted average discount rate on operating leases | 4.00% | 4.00% |

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

| (Dollars in millions) |  |
| --- | --- |
| 2023 | $19 |
| 2024 | 19 |
| 2025 | 16 |
| 2026 | 14 |
| 2027 | 14 |
| Thereafter | 90 |
| Undiscounted lease payments | 172 |
| Less: present value adjustment | 32 |
| Total operating lease liability | $139 |

## 10. INCOME TAXES

All of the income of Holdings U.S. subsidiaries, including its foreign branches, is subject to the applicable federal, foreign, state, and local income taxes on corporations. The provision for income taxes in the consolidated statement of operations and comprehensive income (loss) has been determined by applying the respective tax laws to the income of each entity.

The Coronavirus Aid, Relief, and Economic Security (“CARES”) Act, enacted on March 27, 2020, provided that companies could carryback for five years net operating losses incurred in 2018, 2019 and/or 2020. This beneficial tax provision in the CARES Act enabled the Company to carryback its significant 2018 net operating losses to prior tax years with higher effective tax rates of 35% versus 21% in 2018 and later years. As a result, the Company was able to record a net income tax benefit from the five-year carryback of $33 million and obtain federal income tax cash refunds of $183 million including interest in 2020.

On August 16, 2022, the Inflation Reduction Act of 2022 (“IRA”) was enacted. We have evaluated the tax provisions of the IRA, the most significant of which are the corporate alternative minimum tax and the share repurchase excise tax and do not expect the legislation to have a material impact on our results of operations. As the IRS issues additional guidance, we will evaluate any impact to our consolidated financial statements.

The significant components of the provision are as follows for the periods indicated:

|  | Years Ended December 31, |  |  |
| --- | --- | --- | --- |
| (Dollars in millions) | 2022 | 2021 | 2020 |
| Current tax expense (benefit): |  |  |  |
| U.S. | $95 | $102 | $(106) |
| Foreign | - | - | - |
| Total current tax expense (benefit) | 95 | 102 | (106) |
| Total deferred U.S. tax expense (benefit) | (207) | 90 | 138 |
| Total income tax expense (benefit) | $(112) | $192 | $32 |

F-41

A reconciliation of the total income tax provision using the statutory U.S. Federal Income tax rate to the Company's total income tax provision is as follows for the periods indicated:

| (Dollars in millions) | Years Ended December 31, |  |  |
| --- | --- | --- | --- |
|  | 2022 | 2021 | 2020 |
| Expected income tax provision at the U.S. statutory tax rate | $(117) | $208 | $81 |
| Increase (decrease) in taxes resulting from: |  |  |  |
| Tax exempt income | (4) | (4) | (4) |
| Dividend received deduction | (3) | (1) | (1) |
| Proration | 1 | 1 | 1 |
| Creditable foreign premium tax | (11) | (13) | (12) |
| Reserve adjustment | (19) | - | - |
| U.S. BEAT tax | 22 | - | - |
| Share based compensation | (3) | (2) | (3) |
| Impact of CARES Act | - | - | (33) |
| Prior year true up | 16 | - | (4) |
| Other | 6 | 3 | 7 |
| Total income tax provision | $(112) | $192 | $32 |

(Some amounts may not reconcile due to rounding.)

At December 31, 2022, 2021 and 2020, the Company had no uncertain tax positions.

The Company's 2014 through 2018 U.S. tax years are under audit by the Internal Revenue Service ('IRS'). To date, the Company has received a significant number of Information Document Requests. However, the IRS has not issued any Notice of Proposed Adjustments for these tax years. The Company had filed amended tax returns requesting refunds for 2015 and 2016 for $2 million and $5 million respectively.

Tax years 2019, 2020, and 2021 are open for examination by the IRS.

F-42

Deferred income taxes reflect the tax effect of the temporary differences between the value of assets and liabilities for financial statement purposes and such values as measured by U.S. tax laws and regulations. The principal items making up the net deferred income tax assets/(liabilities) are as follows for the periods indicated:

|  | At December 31, |  |
| --- | --- | --- |
| (Dollars in millions) | 2022 | 2021 |
| Deferred tax assets: |  |  |
| Net unrealized investment losses | $200 | $ - |
| Loss reserves | 154 | 130 |
| Unearned premium reserve | 114 | 108 |
| Lease Liability | 29 | 31 |
| Unrealized foreign currency losses | 24 | 4 |
| Investment impairments | 12 | 6 |
| Net unrecognized losses on benefit plans | 9 | 13 |
| Equity compensation | 7 | 7 |
| Foreign tax credits | 3 | 22 |
| Other assets | 12 | 12 |
| Total deferred tax assets | 564 | 333 |
| Deferred tax liabilities: |  |  |
| Net fair value income | 141 | 349 |
| Deferred acquisition costs | 105 | 99 |
| Partnership Investments | 56 | 57 |
| Right of use asset | 25 | 27 |
| Depreciation | 16 | 4 |
| Bond market discount | 5 | 3 |
| Net unrealized investment gains | - | 35 |
| Other liabilities | 6 | 5 |
| Total deferred tax liabilities | 354 | 579 |
| Net deferred tax assets/(liabilities) | $210 | $(246) |

(Some amounts may not reconcile due to rounding.)

At December 31, 2022, and 2021, the Company had $3 million and $29 million respectively of foreign tax credit ('FTC') carryforwards, all related to the branch basket. The branch basket FTCs begin to expire in 2030.

Tax effected U.S. Separate Return Limitation Year Net Operating Losses ('NOLs') of $ million begin to expire in 2037.

At December 31, 2022, $200 million of the Company's deferred tax asset relates primarily to unrealized losses on available for sale fixed maturity securities. The unrealized losses on available for sale fixed maturity securities were a result of market conditions, including rising interest rates. Ultimate realization of the deferred tax asset depends on the Company's ability and intent to hold the available for sale securities until they recover their value or mature. As of December 31, 2022, based on all the available evidence, the Company has concluded that the deferred tax asset related to the unrealized losses on the available for sale fixed maturity portfolio are, more likely than not, expect to be realized.

The Company follows ASU 2016-09 in regard to the treatment of the tax effects of share-based compensation transactions. ASU 2016-09 required that the income tax effects of restricted stock vestings and stock option exercises resulting from the change in value of share-based compensation awards between the grant date and

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settlement (vesting/exercising) date be recorded as part of income tax expense (benefit) within the consolidated statements of operations and comprehensive income (loss). Per ASU 2016-09, the Company recorded excess tax benefits of $3 million, $2 million and $3 million related to restricted stock vestings and stock option exercises as part of income tax expense (benefit) within the consolidated statements of operations and comprehensive income (loss) in 2022, 2021 and 2020, respectively.

ASU 2016-09 does not impact the accounting treatment of tax benefits related to dividends on restricted stock. The tax benefits related to the payment of dividends on restricted stock have been recorded as part of additional paid-in capital in the stockholder's equity section of the consolidated balance sheets in all years. The tax benefits related to the payment of dividends on restricted stock were $0.4 million, $0.4 million and $0.4 million in 2022, 2021 and 2020, respectively.

## 11. REINSURANCE

The Company utilizes reinsurance agreements to reduce its exposure to large claims and catastrophic loss occurrences. These agreements provide for recovery from reinsurers of a portion of losses and LAE under certain circumstances without relieving the Company of its underlying obligations to the policyholders. Losses and LAE incurred and premiums earned are reported after deduction for reinsurance. In the event that one or more of the reinsurers were unable to meet their obligations under these reinsurance agreements, the Company would not realize the full value of the reinsurance recoverables balances. The Company's procedures include carefully selecting its reinsurers, structuring agreements to provide collateral funds where necessary, and regularly monitoring the financial condition and ratings of its reinsurers. Reinsurance recoverable include balances due from reinsurance companies and are presented net of an allowance for uncollectible reinsurance. Reinsurance recoverables include an estimate of the amount of gross losses and loss adjustment expense reserves that may be ceded under the terms of the reinsurance agreements, including incurred but not reported unpaid losses. The Company's estimate of losses and loss adjustment expense reserves ceded to reinsurers is based on assumptions that are consistent with those used in establishing the gross reserves for amounts the Company owes to its claimants. The Company estimates its ceded reinsurance recoverable based on the terms of any applicable facultative and treaty reinsurance, including an estimate of how incurred but not reported losses will ultimately be ceded under reinsurance agreements. Accordingly, the Company's estimate of reinsurance recoverables is subject to similar risks and uncertainties as the estimate of the gross reserve for unpaid losses and loss adjustment expenses. The Company may hold partial collateral, including letters of credit and funds held, under these agreements. See also Note 1C, Note 3 and Note 8.

Balances are considered past due when amounts that have been billed are not collected within contractually stipulated time periods, generally 30, 60 or 90 days. To manage reinsurer credit risk, a reinsurance security review committee evaluates the credit standing, financial performance, management and operational quality of each potential reinsurer. In placing reinsurance, the Company considers the nature of the risk reinsured, including the expected liability payout duration, and establishes limits tiered by reinsurer credit rating.

Where its contracts permit, the Company secures future claim obligations with various forms of collateral or other credit enhancement, including irrevocable letters of credit, secured trusts, funds held accounts and group wide offsets.

See Note 1C for discussion of allowance on reinsurance recoverables.

Insurance companies, including reinsurers, are regulated and hold risk-based capital to mitigate the risk of loss due to economic factors and other risks. Non-U.S. reinsurers are either subject to a capital regime substantively equivalent to domestic insurers or we hold collateral to support collection of reinsurance receivable. As a result, there is limited history of losses from insurer defaults.

F-44

Premiums written and earned and incurred losses and LAE are comprised of the following for the periods indicated:

| (Dollars in millions) | Years Ended December 31, |  |  |
| --- | --- | --- | --- |
|  | 2022 | 2021 | 2020 |
| Written premiums: |  |  |  |
| Direct | $3,701 | $3,300 | $2,698 |
| Assumed | 5,975 | 6,031 | 5,259 |
| Ceded | (1,645) | (1,612) | (1,318) |
| Net written premiums | $8,032 | $7,719 | $6,639 |
| Premiums earned: |  |  |  |
| Direct | $3,544 | $2,982 | $2,592 |
| Assumed | 5,945 | 5,741 | 5,183 |
| Ceded | (1,613) | (1,544) | (1,368) |
| Net premiums earned | $7,876 | $7,179 | $6,407 |
| Incurred losses and LAE: |  |  |  |
| Direct | $2,423 | $2,043 | $1,785 |
| Assumed | 4,107 | 3,872 | 3,576 |
| Ceded | (708) | (528) | (753) |
| Net incurred losses and LAE | $5,823 | $5,387 | $4,608 |

The Company has engaged in reinsurance transactions with Bermuda Re, Everest Reinsurance Company (Ireland) dac ('Ireland Re'), Everest Insurance (Ireland) dac ('Ireland Insurance'), Everest International Reinsurance Ltd. ('Everest International'), Everest Insurance Company of Canada ('Everest Canada'), Lloyd's Syndicate 2786 and Mt. Logan Re, which are affiliated companies primarily driven by enterprise risk and capital management considerations under which business is ceded at market rates and terms.

The table below represents affiliated quota share reinsurance agreements ('whole account quota share') for all new and renewal business for the indicated coverage period:

| (Dollars in millions) |  |  |  |  |  |  |
| --- | --- | --- | --- | --- | --- | --- |
| Coverage Period | Ceding Company | Percent Ceded | Assuming Company | Type of Business | Single Occurrence Limit | Aggregate Limit |
| 01/01/2010-12/31/2010 | Everest Re | 44.0% | Bermuda Re | Property / Casualty Business | 150 | 325 |
| 01/01/2011-12/31/2011 | Everest Re | 50.0% | Bermuda Re | Property / Casualty Business | 150 | 300 |
| 01/01/2012-12/31/2014 | Everest Re | 50.0% | Bermuda Re | Property / Casualty Business | 100 | 200 |
| 01/01/2015-12/31/2016 | Everest Re | 50.0% | Bermuda Re | Property / Casualty Business | 163 | 325 |
| 01/01/2017-12/31/2017 | Everest Re | 60.0% | Bermuda Re | Property / Casualty Business | 219 | 438 |
| 01/01/2010-12/31/2010 | Everest Re- Canadian Branch | 60.0% | Bermuda Re | Property Business | 350 (1) | - |
| 01/01/2011-12/31/2011 | Everest Re- Canadian Branch | 60.0% | Bermuda Re | Property Business | 350 (1) | - |
| 01/01/2012-12/31/2012 | Everest Re- Canadian Branch | 75.0% | Bermuda Re | Property / Casualty Business | 206 (1) | 413 (1) |
| 01/01/2013-12/31/2013 | Everest Re- Canadian Branch | 75.0% | Bermuda Re | Property / Casualty Business | 150 (1) | 413 (1) |
| 01/01/2014-12/31/2017 | Everest Re- Canadian Branch | 75.0% | Bermuda Re | Property / Casualty Business | 263 (1) | 413 (1) |
| 01/01/2012-12/31/2017 | Everest Canada | 80.0% | Everest Re- Canadian Branch | Property Business | - | - |
| 01/01/2020 | Everest International Assurance | 100.0% | Bermuda Re | Life Business | - | - |

(1) Amounts shown are Canadian dollars.

Effective January 1, 2018, Everest Re entered into a twelve month whole account aggregate stop loss reinsurance contract ('stop loss agreement') with Bermuda Re. The stop loss agreement provides coverage for ultimate net losses on applicable net earned premiums above a retention level, subject to certain other coverage limits and conditions. The stop loss agreement was most recently renewed effective January 1, 2022.

Everest Re entered into a catastrophe excess of loss reinsurance contract with Bermuda Re (UK Branch), effective January 1, 2021 through December 31, 2021. The contract provides Bermuda Re (UK Branch), with up to £ 100

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million of reinsurance coverage for each catastrophe occurrence above £ 40 million. This agreement was most recently renewed effective January 1, 2022.

Everest Re entered into a catastrophe excess of loss reinsurance contract with Ireland Re, effective February 1, 2021 through January 31, 2022. The contract provides Ireland Re with up to € 145 million of reinsurance coverage for each catastrophe occurrence above € 16 million. This agreement was most recently renewed effective January 1, 2022.

The table below represents loss portfolio transfer (“LPT”) reinsurance agreements whereby net insurance exposures and reserves were transferred to an affiliate.

(Dollars in millions)

| Effective Date | Transferring Company | Assuming Company | % of Business or Amount of Transfer | Covered Period of Transfer |
| --- | --- | --- | --- | --- |
| 10/01/2001 | Everest Re (Belgian Branch) | Bermuda Re | 100% | All years |
| 10/01/2008 | Everest Re | Bermuda Re | $747 | 01/01/2002-12/31/2007 |
| 12/31/2017 | Everest Re | Bermuda Re | $970 | All years |

On December 31, 2017, the Company entered into a LPT agreement with Bermuda Re. The LPT agreement covers subject loss reserves of $2.3 billion for accident years 2017 and prior. As a result of the LPT agreement, the Company transferred $1.0 billion of cash and fixed maturity securities and transferred $970 million of loss reserves to Bermuda Re. As part of the LPT agreement, Bermuda Re will provide an additional $500 million of adverse development coverage on the subject loss reserves. As of December 31, 2022, and December 31, 2021, the Company has a reinsurance recoverable of $804 million and $856 million, respectively, recorded on its balance sheet due from Bermuda Re.

The following tables summarize the significant premiums and losses ceded and assumed by the Company in transactions with affiliated entities for the periods indicated:

| Bermuda Re (Dollars in millions) | Years Ended December 31, |  |  |
| --- | --- | --- | --- |
|  | 2022 | 2021 | 2020 |
| Ceded written premiums | $372 | $303 | $133 |
| Ceded earned premiums | 371 | 300 | 132 |
| Ceded losses and LAE | (16) | (59) | 110 |
| Assumed written premiums | 3 | 5 | - |
| Assumed earned premiums | 5 | 4 | - |

#### Ireland Re

| (Dollars in millions) | Years Ended December 31, |  |  |
| --- | --- | --- | --- |
|  | 2022 | 2021 | 2020 |
| Assumed written premiums | $10 | $16 | $ - |
| Assumed earned premiums | 10 | 15 | - |
| Assumed losses and LAE | 23 | 64 | - |

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# Ireland Insurance

| (Dollars in millions) | Years Ended December 31, |  |  |
| --- | --- | --- | --- |
|  | 2022 | 2021 | 2020 |
| Assumed written premiums | $9 | $9 | $5 |
| Assumed earned premiums | 8 | 6 | 4 |
| Assumed losses and LAE | 5 | 3 | 2 |

In 2013, Group established Mt. Logan Re, which is a Class 3 insurer based in Bermuda. Mt. Logan Re then established separate segregated accounts for its business activity, which invest in a diversified set of catastrophe exposures.

The following table summarizes the premiums and losses that are ceded by the Company to Mt. Logan Re segregated accounts and assumed by the Company from Mt. Logan Re segregated accounts.

# Mt. Logan Re Segregated Accounts

| (Dollars in millions) | Years Ended December 31, |  |  |
| --- | --- | --- | --- |
|  | 2022 | 2021 | 2020 |
| Ceded written premiums | $170 | $286 | $263 |
| Ceded earned premiums | 174 | 280 | 265 |
| Ceded losses and LAE | 150 | 194 | 175 |

## 12. COMPREHENSIVE INCOME (LOSS)

The following tables present the components of comprehensive income (loss) in the consolidated statements of operations and comprehensive income (loss) for the periods indicated:

| (Dollars in millions) | December 31, 2022 |  |  | December 31, 2021 |  |  | December 31, 2020 |  |  |
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
|  | Before Tax | Tax Effect | Net of Tax | Before Tax | Tax Effect | Net of Tax | Before Tax | Tax Effect | Net of Tax |
| Unrealized appreciation (depreciation) ('URA(D)') on securities - temporary | $(1,280) | 269 | $(1,011) | $(254) | 53 | $(208) | $296 | (43) | $163 |
| Reclassification of net realized losses (gains) included in net income (loss) | 93 | (20) | 73 | 12 | (3) | 9 | 32 | (7) | 25 |
| Foreign currency translation adjustments | (23) | 5 | (18) | (11) | 2 | (9) | 18 | (4) | 14 |
| Benefit plan actuarial net gain (loss) | 18 | (4) | 15 | 22 | (5) | 17 | (7) | 1 | (6) |
| Reclassification of amortization of net gain (loss) included in net income (loss) | 3 | (1) | 2 | 8 | (2) | 6 | 8 | (2) | 6 |
| Total other comprehensive income (loss) | $(1,189) | $249 | $(939) | $(223) | $47 | $(177) | $258 | $(54) | $204 |

(Some amounts may not reconcile due to rounding)

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

| AOCI component | Years Ended December 31, |  | Affected line item within the statements of operations and comprehensive income (loss) |
| --- | --- | --- | --- |
|  | 2022 | 2021 |  |
| (Dollars in millions) |  |  |  |
| URA(D) on securities | $93 | $12 | Other net realized capital gains (losses) |
|  | (20) | (3) | Income tax expense (benefit) |
|  | $73 | $9 | Net income (loss) |
| Benefit plan net gain (loss) | $3 | $8 | Other underwriting expenses |
|  | (1) | (2) | Income tax expense (benefit) |
|  | $2 | $6 | Net income (loss) |

(Some amounts may not reconcile due to rounding)

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The following table presents the components of accumulated other comprehensive income (loss), net of tax, in the consolidated balance sheets for the periods indicated:

| (Dollars in millions) | Years Ended December 31, |  |
| --- | --- | --- |
|  | 2022 | 2021 |
| Beginning balance of URA(D) on securities | $122 | $313 |
| Current period change in URA(D) of investments - temporary | (938) | (191) |
| Ending balance of URA(D) on securities | (816) | 122 |
| Beginning balance of foreign currency translation adjustments | 20 | 29 |
| Current period change in foreign currency translation adjustments | (18) | (9) |
| Ending balance of foreign currency translation adjustments | 2 | 20 |
| Beginning balance of benefit plan net gain (loss) | (50) | (74) |
| Current period change in benefit plan net gain (loss) | 17 | 23 |
| Ending balance of benefit plan net gain (loss) | (33) | (50) |
| Ending balance of accumulated other comprehensive income (loss) | $(848) | $91 |

(Some amounts may not reconcile due to rounding)

### 13. EMPLOYEE BENEFIT PLANS

#### Defined Benefit Pension Plans.

The Company maintains both qualified and non-qualified defined benefit pension plans for its U.S. employees employed prior to April 1, 2010. Generally, the Company computes the benefits based on average earnings over a period prescribed by the plans and credited length of service. The Company's non-qualified defined benefit pension plan provided compensating pension benefits for participants whose benefits have been curtailed under the qualified plan due to Internal Revenue Code limitations. Effective January 1, 2018, participants of the Company's non-qualified defined benefit pension plan may no longer accrue additional service benefits.

Although not required to make contributions under IRS regulations, the following table summarizes the Company's contributions to the defined benefit pension plans for the periods indicated:

| (Dollars in millions) | Years Ended December 31, |  |  |
| --- | --- | --- | --- |
|  | 2022 | 2021 | 2020 |
| Company contributions | $6 | $4 | $7 |

The following table summarizes the Company's pension expense for the periods indicated:

| (Dollars in millions) | Years Ended December 31, |  |  |
| --- | --- | --- | --- |
|  | 2022 | 2021 | 2020 |
| Pension expense | $(2) | $3 | $8 |

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The following table summarizes the status of these defined benefit plans for U.S. employees for the periods indicated:

| (Dollars in millions) | Years Ended December 31, |  |
| --- | --- | --- |
|  | 2022 | 2021 |
| Change in projected benefit obligation: |  |  |
| Benefit obligation at beginning of year | $403 | $404 |
| Service cost | 9 | 11 |
| Interest cost | 10 | 8 |
| Actuarial (gain)/loss | (115) | (9) |
| Curtailment | - | - |
| Benefits paid | (15) | (12) |
| Projected benefit obligation at end of year | 291 | 403 |
| Change in plan assets: |  |  |
| Fair value of plan assets at beginning of year | 377 | 354 |
| Actual return on plan assets | (83) | 31 |
| Actual contributions during the year | 6 | 4 |
| Benefits paid | (15) | (12) |
| Fair value of plan assets at end of year | 285 | 377 |
| Funded status at end of year | $(6) | $(25) |

(Some amounts may not reconcile due to rounding.)

Amounts recognized in the consolidated balance sheets for the periods indicated:

| (Dollars in millions) | At December 31, |  |
| --- | --- | --- |
|  | 2022 | 2021 |
| Other assets (due beyond one year) | $1 | $ - |
| Other liabilities (due within one year) | (1) | (1) |
| Other liabilities (due beyond one year) | (6) | (24) |
| Net amount recognized in the consolidated balance sheets | $(6) | $(25) |

Amounts not yet reflected in net periodic benefit cost and included in accumulated other comprehensive income (loss) for the periods indicated:

| (Dollars in millions) | At December 31, |  |
| --- | --- | --- |
|  | 2022 | 2021 |
| Accumulated income (loss) | $(56) | $(68) |
| Accumulated other comprehensive income (loss) | $(56) | $(68) |

(Some amounts may not reconcile due to rounding.)

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Other changes in other comprehensive income (loss) for the periods indicated are as follows:

| (Dollars in millions) | Years Ended December 31, |  |
| --- | --- | --- |
|  | 2022 | 2021 |
| Other comprehensive income (loss) at December 31, prior year | $(68) | $(92) |
| Net gain (loss) arising during period | 7 | 15 |
| Recognition of amortizations in net periodic benefit cost: |  |  |
| Actuarial loss | 4 | 9 |
| Curtailment loss recognized | - | - |
| Other comprehensive income (loss) at December 31, current year | $(56) | $(68) |

(Some amounts may not reconcile due to rounding.)

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

| (Dollars in millions) | Years Ended December 31, |  |  |
| --- | --- | --- | --- |
|  | 2022 | 2021 | 2020 |
| Service cost | $9 | $11 | $10 |
| Interest cost | 10 | 8 | 10 |
| Expected return on assets | (25) | (24) | (21) |
| Amortization of actuarial loss from earlier periods | 4 | 8 | 9 |
| Settlement | 1 | - | 1 |
| Net periodic benefit cost | $(2) | $3 | $8 |
| Other changes recognized in other comprehensive income (loss): |  |  |  |
| Other comprehensive income (loss) attributable to change from prior year | (12) | (24) |  |
| Total recognized in net periodic benefit cost and other comprehensive income (loss) | $(14) | $(21) |  |

(Some amounts may not reconcile due to rounding.)

The weighted average discount rates used to determine net periodic benefit cost for 2022, 2021 and 2020 were 2.86%, 2.55% and 3.28%, respectively. The rate of compensation increase used to determine the net periodic benefit cost for 2022, 2021 and 2020 was 4.00%. The expected long-term rate of return on plan assets for 2022, 2021 and 2020 was 6.75%, 7.00% and 7.00% respectively.

The weighted average discount rates used to determine the actuarial present value of the projected benefit obligation for 2022, 2021 and 2020 were 5.25%, 2.86% and 2.55%, respectively.

The following table summarizes the accumulated benefit obligation for the periods indicated:

| (Dollars in millions) | At December 31, |  |
| --- | --- | --- |
|  | 2022 | 2021 |
| Qualified Plan | $258 | $339 |
| Non-qualified Plan | 6 | 12 |
| Total | $264 | $352 |

(Some amounts may not reconcile due to rounding.)

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The following table displays the plans with projected benefit obligations in excess of plan assets for the periods indicated:

| (Dollars in millions) | At December 31, |  |
| --- | --- | --- |
|  | 2022 | 2021 |
| Qualified Plan |  |  |
| Projected benefit obligation | $284 | $390 |
| Fair value of plan assets | 285 | 377 |
| Non-qualified Plan |  |  |
| Projected benefit obligation | $6 | $12 |
| Fair value of plan assets | - | - |

The following table displays the plans with accumulated benefit obligations in excess of plan assets for the periods indicated:

| (Dollars in millions) | At December 31, |  |
| --- | --- | --- |
|  | 2022 | 2021 |
| Qualified Plan |  |  |
| Accumulated benefit obligation | $ - | $ - |
| Fair value of plan assets | - | - |
| Non-qualified Plan |  |  |
| Accumulated benefit obligation | 6 | 12 |
| Fair value of plan assets | $ - | $ - |

The following table displays the expected benefit payments in the periods indicated:

| (Dollars in millions) |  |
| --- | --- |
| 2023 | $13 |
| 2024 | 14 |
| 2025 | 14 |
| 2026 | 15 |
| 2027 | 17 |
| Next 5 years | 100 |

Plan assets consist of shares in investment trusts with 74%, 24%, 1% and 1% of the underlying assets consisting of equity securities, fixed maturities, limited partnerships and cash, respectively. The Company manages the qualified plan investments for U.S. employees. The assets in the plan consist of debt and equity mutual funds. Due to the long-term nature of the plan, the target asset allocation has historically been 70% equities and 30% bonds.

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The following tables present the fair value measurement levels for the qualified plan assets at fair value for the periods indicated:

| (Dollars in millions) | December 31, 2022 | Fair Value Measurement Using: |  |  |  |  |
| --- | --- | --- | --- | --- | --- | --- |
|  |  | Quoted Prices in Active Markets for Identical Assets (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3) |  |  |
|  |  | Assets: |  |  |  |  |
| Short-term investments, which approximates fair value (a) | $4 | $4 | $ - | $ - |  |  |
| Mutual funds, fair value |  |  |  |  |  |  |
| Fixed income (b) | 68 | 68 | - | - |  |  |
| Equities (c) | 211 | 211 | - | - |  |  |
| Total | $283 | $283 | $ - | $ - |  |  |

(Some amounts may not reconcile due to rounding.)

- (a) This category includes high quality, short-term money market instruments, which are issued and payable in U.S. dollars.
- (b) This category includes fixed income funds, which invest in investment grade securities of corporations, governments and government agencies with approximately 70% in U.S. securities and 30% in international securities.
- (c) This category includes 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 50% in U.S. equities and 50% in international equities.

| (Dollars in millions) | December 31, 2021 | Fair Value Measurement Using: |  |  |  |  |
| --- | --- | --- | --- | --- | --- | --- |
|  |  | Quoted Prices in Active Markets for Identical Assets (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3) |  |  |
|  |  | Assets: |  |  |  |  |
| Short-term investments, which approximates fair value (a) | $3 | $3 | $ - | $ - |  |  |
| Mutual funds, fair value |  |  |  |  |  |  |
| Fixed income (b) | 85 | 85 | - | - |  |  |
| Equities (c) | 287 | 287 | - | - |  |  |
| Total | $375 | $375 | $ - | $ - |  |  |

(Some amounts may not reconcile due to rounding.)

- (a) This category includes high quality, short-term money market instruments, which are issued and payable in U.S. dollars.
- (b) This category includes fixed income funds, which invest in investment grade securities of corporations, governments and government agencies with approximately 70% in U.S. securities and 30% in international securities.
- (c) This category includes 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 50% in U.S. equities and 50% in international equities.

In addition, $2 million and $3 million of investments which were recorded as part of the qualified plan assets at December 31, 2022 and 2021, respectively, are not included within the fair value hierarchy tables as the assets are valued using the NAV practical expedient guidance within ASU 2015-07.

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No contributions were made to the qualified pension benefit plan for the years ended December 31, 2022 and 2021.

#### **Defined Contribution Plans.**

The Company also maintains both qualified and non-qualified defined contribution plans (“Savings Plan” and “Non-Qualified Savings Plan”, respectively) covering U.S. employees. Under the plans, the Company contributes up to a maximum 3% of the participants’ compensation based on the contribution percentage of the employee. The Non-Qualified Savings Plan provides compensating savings plan benefits for participants whose benefits have been curtailed under the Savings Plan due to Internal Revenue Code limitations. In addition, effective for new hires (and rehires) on or after April 1, 2010, the Company will contribute between 3% and 8% of an employee’s earnings for each payroll period based on the employee’s age. These contributions will be 100% vested after three years. The Company incurred expenses related to these plans of $18 million, $15 million and $14 million for the years ended December 31, 2022, 2021 and 2020, respectively.

In addition, the Company maintains several defined contribution pension plans covering non-U.S. employees. Each international office maintains a separate plan for the non-U.S. employees working in that location. The Company contributes various amounts based on salary, age and/or years of service. In the current year, the contributions as a percentage of salary for the international offices ranged from 7.8% to 9.6%. The contributions are generally used to purchase pension benefits from local insurance providers. The Company incurred expenses related to these plans of $0.7 million, $0.6 million and $0.8 million for the years ended December 31, 2022, 2021 and 2020, respectively.

#### **Post-Retirement Plan.**

The Company sponsors a Retiree Health Plan for employees employed prior to April 1, 2010. This plan provides healthcare benefits for eligible retired employees (and their eligible dependents), who have elected coverage. The Company anticipates that most covered employees will become eligible for these benefits if they retire while working for the Company. The cost of these benefits is shared with the retiree. The Company accrues the post-retirement benefit expense during the period of the employee’s service. A medical cost trend rate of 7.00% in 2022 was assumed to decrease gradually to 4.75% in 2030 and then remain at that level. The Company incurred expenses of $1 million, $1 million and $1 million for the years ended December 31, 2022, 2021 and 2020, respectively.

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The following table summarizes the status of this plan for the periods indicated:

| (Dollars in millions) | At December 31, |  |
| --- | --- | --- |
|  | 2022 | 2021 |
| Change in projected benefit obligation: |  |  |
| Benefit obligation at beginning of year | $31 | $35 |
| Service cost | 1 | 1 |
| Interest cost | 1 | 1 |
| Amendments | - | - |
| Actuarial (gain)/loss | (10) | (6) |
| Benefits paid | - | - |
| Benefit obligation at end of year | 21 | 31 |
| Change in plan assets: |  |  |
| Fair value of plan assets at beginning of year | - | - |
| Employer contributions | - | - |
| Benefits paid | - | - |
| Fair value of plan assets at end of year | - | - |
| Funded status at end of year | $(21) | $(31) |

Amounts recognized in the consolidated balance sheets for the periods indicated:

| (Dollars in millions) | At December 31, |  |
| --- | --- | --- |
|  | 2022 | 2021 |
| Other liabilities (due within one year) | $(1) | $(1) |
| Other liabilities (due beyond one year) | (21) | (30) |
| Net amount recognized in the consolidated balance sheets | $(21) | $(31) |

(Some amounts may not reconcile due to rounding.)

Amounts not yet reflected in net periodic benefit cost and included in accumulated other comprehensive income (loss) for the periods indicated:

| (Dollars in millions) | At December 31, |  |
| --- | --- | --- |
|  | 2022 | 2021 |
| Accumulated income (loss) | $13 | $2 |
| Accumulated prior service credit (cost) | 1 | 2 |
| Accumulated other comprehensive income (loss) | $14 | $4 |

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Other changes in other comprehensive income (loss) for the periods indicated are as follows:

| (Dollars in millions) | Years Ended December 31, |  |
| --- | --- | --- |
|  | 2022 | 2021 |
| Other comprehensive income (loss) at December 31, prior year | $4 | $(2) |
| Net gain (loss) arising during period | 10 | 6 |
| Prior Service credit (cost) arising during period | - | - |
| Recognition of amortizations in net periodic benefit cost: |  |  |
| Actuarial loss (gain) | - | - |
| Prior service cost | - | (1) |
| Other comprehensive income (loss) at December 31, current year | $14 | $4 |

Net periodic benefit cost included the following components for the periods indicated:

| (Dollars in millions) | Years Ended December 31, |  |  |
| --- | --- | --- | --- |
|  | 2022 | 2021 | 2020 |
| Service cost | $1 | $1 | $1 |
| Interest cost | 1 | 1 | 1 |
| Prior service credit recognition | - | (1) | (1) |
| Net gain recognition | - | - | - |
| Net periodic cost | $1 | $1 | $1 |

Other changes recognized in other comprehensive income (loss):

| Other comprehensive gain (loss) attributable to change from prior year | (10) | (5) |
| --- | --- | --- |
| Total recognized in net periodic benefit cost and other comprehensive income (loss) | $(9) | $(4) |

(Some amounts may not reconcile due to rounding.)

The weighted average discount rates used to determine net periodic benefit cost for 2022, 2021 and 2020 were 2.86%, 2.55% and 3.28%, respectively.

The weighted average discount rates used to determine the actuarial present value of the projected benefit obligation at year end 2022, 2021 and 2020 were 5.25%, 2.86% and 2.55%, respectively.

The following table displays the expected benefit payments in the years indicated:

| (Dollars in millions) |  |
| --- | --- |
| 2023 | $1 |
| 2024 | 1 |
| 2025 | 1 |
| 2026 | 1 |
| 2027 | 1 |
| Next 5 years | 7 |

#### 14. DIVIDEND RESTRICTIONS AND STATUTORY FINANCIAL INFORMATION

Holdings and its operating subsidiaries are subject to various regulatory restrictions, including the amount of dividends that may be paid and the level of capital that the operating entities must maintain. These regulatory

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restrictions are based upon statutory capital as opposed to GAAP basis equity or net assets. Holdings' primary operating subsidiary, Everest Re, is regulated by Delaware law and is subject to the Risk-Based Capital Model ('RBC') developed by the National Association of Insurance Commissioners ('NAIC'). This model represents the aggregate regulatory restrictions on net assets and statutory capital and surplus.

#### **Dividend Restrictions.**

Delaware law provides that an insurance company which is a member of an insurance holding company system and is domiciled in the state shall not pay dividends without giving prior notice to the Insurance Commissioner of Delaware and may not pay dividends without the approval of the Insurance Commissioner if the value of the proposed dividend, together with all other dividends and distributions made in the preceding twelve months, exceeds the greater of (1) 10% of statutory surplus or (2) net income, not including realized capital gains, each as reported in the prior year's statutory annual statement. In addition, no dividend may be paid in excess of unassigned earned surplus. At December 31, 2022, Everest Re has $555 million available for payment of dividends in 2023 without the need for prior regulatory approval.

#### **Statutory Financial Information.**

Everest Re prepares its statutory financial statements in accordance with accounting practices prescribed or permitted by the NAIC and the Delaware Insurance Department. Prescribed statutory accounting practices are set forth in the NAIC Accounting Practices and Procedures Manual. The capital and statutory surplus of Everest Re was $5.6 billion and $5.7 billion at December 31, 2022 and 2021, respectively. The statutory net income of Everest Re was $294 million, $264 million and $595 million for the years ended December 31, 2022, 2021 and 2020, respectively.

There are certain regulatory and contractual restrictions on the ability of Holdings' operating subsidiaries to transfer funds to Holdings in the form of cash dividends, loans or advances. The insurance laws of the State of Delaware, where Holdings' direct insurance subsidiaries are domiciled, require regulatory approval before those subsidiaries can pay dividends or make loans or advances to Holdings that exceed certain statutory thresholds.

#### **Capital Restrictions.**

In the United States, Everest Re is subject to the RBC developed by the NAIC which determines an authorized control level risk-based capital. As long as the total adjusted capital is 200% or more of the authorized control level capital, no action is required by the Company.

The regulatory targeted capital and the actual statutory capital for Everest Re is as follows:

|  | Everest Re (1) |  |
| --- | --- | --- |
|  | At December 31, |  |
| (Dollars in millions) | 2022 | 2021 |
| Regulatory targeted capital | $3,353 | $2,960 |
| Actual capital | $5,553 | $5,717 |

$^{(1)}$ Regulatory targeted capital represents 200% of the RBC authorized control level calculation for the applicable year.

### **15. COMMITMENTS AND CONTINGENCIES**

In the ordinary course of business, the Company is involved in lawsuits, arbitrations and other formal and informal dispute resolution procedures, the outcomes of which will determine the Company's rights and obligations under insurance and reinsurance agreements. In some disputes, the Company seeks to enforce its rights under an agreement or to collect funds owing to it. In other matters, the Company is resisting attempts by others to collect funds or enforce alleged rights. These disputes arise from time to time and are ultimately resolved through both informal and formal means, including negotiated resolution, arbitration and litigation. In all such matters, the

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Company believes that its positions are legally and commercially reasonable. The Company considers the statuses of these proceedings when determining its reserves for unpaid loss and loss adjustment expenses.

Aside from litigation and arbitrations related to these insurance and reinsurance agreements, the Company is not a party to any other material litigation or arbitration.

The Company has entered into separate annuity agreements with The Prudential Insurance Company of America (“The Prudential”) and an additional unaffiliated life insurance company in which the Company has either purchased annuity contracts or become the assignee of annuity proceeds that are meant to settle claim payment obligations in the future. In both instances, the Company would become contingently liable if either The Prudential or the unaffiliated life insurance company were unable to make payments related to the respective annuity contract.

The table below presents the estimated cost to replace all such annuities for which the Company was contingently liable for the periods indicated:

| (Dollars in millions) | At December 31, |  |
| --- | --- | --- |
|  | 2022 | 2021 |
| The Prudential | $137 | $138 |
| Unaffiliated life insurance company | 34 | 35 |

## 16. RELATED-PARTY TRANSACTIONS

The table below displays long-term note agreements that Group entered into with Everest Re for the periods indicated. These transactions are presented as Notes Receivable - Affiliated in the Consolidated Balance Sheet of Holdings. Fair value of these long-term notes is considered Level 2 in the fair value hierarchy.

| (Dollars in millions) | Date Issued | Date Due | Principal Amounts | December 31, 2022 |  | December 31, 2021 |  |
| --- | --- | --- | --- | --- | --- | --- | --- |
|  |  |  |  | Consolidated Balance Sheet Amount | Fair Value | Consolidated Balance Sheet Amount | Fair Value |
| 1.69% Long-term Note | 12/17/2019 | 12/17/2028 | 300 | $300 | $242 | $300 | $264 |
| 1.00% Long-term Note | 08/05/2021 | 08/05/2030 | 200 | 200 | 151 | 200 | 165 |
| 3.11% Long-term Note | 06/14/2022 | 06/14/2052 | 215 | 215 | 171 | - | - |
| 4.34% Long-term Note | 12/12/2022 | 12/12/2052 | 125 | 125 | 125 | - | - |
|  |  |  | 840 | $840 | $689 | $500 | $429 |

Interest income recognized in connection with these long-term notes is as follows for the periods indicated:

| (Dollars in millions) | Interest Received | Receivable Dates | Years Ended December 31, |  |  |
| --- | --- | --- | --- | --- | --- |
|  |  |  | 2022 | 2021 | 2020 |
| 1.69% Long-term Note | annually | December 17 | $5 | $5 | $5 |
| 1.00% Long-term Note | annually | August 5 | 2 | 1 | - |
| 3.11% Long-term Note | annually | June 14 | 4 | - | - |
|  |  |  | $11 | $6 | $5 |

(Some amounts may not reconcile due to rounding.)

F-57

Holdings holds 1,773,214 preferred shares of Preferred Holdings with a $1 million par value and 1.75% annual dividend rate. Holdings received these shares in December 2015 in exchange for previously held 9,719,971 Common Shares of Group. After the exchange, Holdings no longer holds any shares or has any ownership interest in Group. Holdings has reported the preferred shares in Preferred Holdings, as other invested assets, fair value, in the consolidated balance sheets with changes in fair value re-measurement recorded in net realized capital gains (losses) in the consolidated statements of operations and comprehensive income (loss). The following table presents the dividends received on the preferred shares of Preferred Holdings and on the Parent shares that are reported as net investment income in the consolidated statements of operations and comprehensive income (loss) for the periods indicated.

| (Dollars in millions) | Years Ended December 31, |  |  |
| --- | --- | --- | --- |
|  | 2022 | 2021 | 2020 |
| Dividends received on preferred stock of affiliate | $31 | $31 | $31 |

#### Affiliated Companies

Everest Global Services, Inc. ('Global Services'), an affiliate of Holdings, provides centralized management and home office services, through a management agreement, to Holdings and other affiliated companies within Holdings' consolidated structure. Services provided by Everest Global include executive managerial services, legal services, actuarial services, accounting services, information technology services and others.

The following table presents the expenses incurred by Holdings from services provided by Everest Global for the periods indicated.

| (Dollars in millions) | Years Ended December 31, |  |  |
| --- | --- | --- | --- |
|  | 2022 | 2021 | 2020 |
| Expenses incurred | $204 | $133 | $124 |

#### 17. SEGMENT REPORTING

The Reinsurance operation writes worldwide property and casualty reinsurance and specialty lines of business, on both a treaty and facultative basis, through reinsurance brokers, as well as directly with ceding companies. Business is written in the United States as well as through branches in Canada and Singapore. The Insurance operation writes property and casualty insurance directly and through brokers, surplus lines brokers and general agents within the United States.

These segments are managed independently, but conform with corporate guidelines with respect to pricing, risk management, control of aggregate catastrophe exposures, capital, investments and support operations. Management generally monitors and evaluates the financial performance of these operating segments based upon their underwriting results.

Underwriting results include earned premium less losses and LAE incurred, commission and brokerage expenses and other underwriting expenses. We measure our underwriting results using ratios, in particular loss, commission and brokerage and other underwriting expense ratios, which, respectively, divide incurred losses, commissions and brokerage and other underwriting expenses by premiums earned.

The Company does not maintain separate balance sheet data for its operating segments. Accordingly, the Company does not review and evaluate the financial results of its operating segments based upon balance sheet data.

F-58

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

| (Dollars in millions) | Year Ended December 31, 2022 |  |  |
| --- | --- | --- | --- |
|  | Reinsurance | Insurance | Total |
| Gross written premiums | $5,948 | $3,729 | $9,677 |
| Net written premiums | 5,269 | 2,763 | 8,032 |
| Premiums earned | $5,212 | $2,664 | $7,876 |
| Incurred losses and LAE | 3,957 | 1,865 | 5,823 |
| Commission and brokerage | 1,326 | 306 | 1,632 |
| Other underwriting expenses | 139 | 363 | 501 |
| Underwriting gain (loss) | $(210) | $130 | $(81) |
| Net investment income |  |  | 638 |
| Net gains (losses) on investments |  |  | (982) |
| Corporate expenses |  |  | (26) |
| Interest, fee and bond issue cost amortization expense |  |  | (101) |
| Other income (expense) |  |  | (6) |
| Income (loss) before taxes |  |  | $(557) |

| (Dollars in millions) | Year Ended December 31, 2021 |  |  |
| --- | --- | --- | --- |
|  | Reinsurance | Insurance | Total |
| Gross written premiums | $6,028 | $3,303 | $9,331 |
| Net written premiums | 5,265 | 2,455 | 7,719 |
| Premiums earned | $4,949 | $2,230 | $7,179 |
| Incurred losses and LAE | 3,761 | 1,626 | 5,387 |
| Commission and brokerage | 1,250 | 262 | 1,513 |
| Other underwriting expenses | 143 | 311 | 454 |
| Underwriting gain (loss) | $(206) | $31 | $(175) |
| Net investment income |  |  | 745 |
| Net gains (losses) on investments |  |  | 501 |
| Corporate expenses |  |  | (33) |
| Interest, fee and bond issue cost amortization expense |  |  | (70) |
| Other income (expense) |  |  | 23 |
| Income (loss) before taxes |  |  | $991 |

(Some amounts may not reconcile due to rounding.)

F-59

| (Dollars in millions) | Year Ended December 31, 2020 |  |  |
| --- | --- | --- | --- |
|  | Reinsurance | Insurance | Total |
| Gross written premiums | $5,266 | $2,691 | $7,957 |
| Net written premiums | 4,632 | 2,006 | 6,639 |
| Premiums earned | $4,485 | $1,922 | $6,407 |
| Incurred losses and LAE | 3,209 | 1,399 | 4,608 |
| Commission and brokerage | 1,120 | 253 | 1,373 |
| Other underwriting expenses | 119 | 282 | 401 |
| Underwriting gain (loss) | $36 | $(12) | $24 |
| Net investment income |  |  | 376 |
| Net gains (losses) on investments |  |  | 50 |
| Corporate expenses |  |  | (16) |
| Interest, fee and bond issue cost amortization expense |  |  | (36) |
| Other income (expense) |  |  | (15) |
| Income (loss) before taxes |  |  | $384 |

(Some amounts may not reconcile due to rounding.)

The Company produces business in the U.S. and internationally. The net income deriving from assets residing in the individual foreign countries in which the Company writes business are not identifiable in the Company's financial records. Based on gross written premium, the table below presents the largest country, other than the U.S., in which the Company writes business, for the periods indicated:

| (Dollars in millions) | Years Ended December 31, |  |  |
| --- | --- | --- | --- |
|  | 2022 | 2021 | 2020 |
| Canada gross written premiums | $379 | $252 | $321 |

No other country represented more than 5% of the Company's revenues.

Approximately 17.6%, 19.3% and 20.1% of the Company's gross written premiums in 2022, 2021 and 2020, respectively, were sourced through the Company's largest intermediary.

## 18. SUBSEQUENT EVENTS

The Company has evaluated known recognized and non-recognized subsequent events. In February 2023, an earthquake occurred which impacted the countries of Turkey and Syria. The Company is unable to estimate the magnitude of losses at this time as this event has recently occurred. The Company will reflect the impact of this event in its first quarter 2023 results..

F-60

# SCHEDULE I - SUMMARY OF INVESTMENTS -  
 OTHER THAN INVESTMENTS IN RELATED PARTIES  
 DECEMBER 31, 2022

| Column A | Column B | Column C | Column D |
| --- | --- | --- | --- |
|  |  |  | Amount Shown in Balance Sheet |
| (Dollars in millions) | Cost | Market Value |  |
| Fixed maturities-available for sale |  |  |  |
| Bonds: |  |  |  |
| U.S. government and government agencies | $575 | $535 | $535 |
| State, municipalities and political subdivisions | 444 | 413 | 413 |
| Foreign government securities | 696 | 637 | 637 |
| Foreign corporate securities | 1,597 | 1,433 | 1,433 |
| Public utilities | 85 | 79 | 79 |
| All other corporate bonds | 7,571 | 7,117 | 7,117 |
| Mortgage - backed securities |  |  |  |
| Commercial | 568 | 509 | 509 |
| Agency residential | 1,792 | 1,628 | 1,628 |
| Non-agency residential | 3 | 3 | 3 |
| Redeemable preferred stock | 368 | 316 | 316 |
| Total fixed maturities-available for sale | 13,699 | 12,671 | 12,671 |
| Fixed maturities-held to maturity |  |  |  |
| Bonds: |  |  |  |
| Foreign corporate securities | 28 | 28 | 27 |
| All other corporate bonds | 785 | 758 | 778 |
| Mortgage - backed securities |  |  |  |
| Commercial | 7 | 7 | 7 |
| Total Fixed maturities-held to maturity | 820 | 793 | 811 |
| Equity securities at fair value(1) | 159 | 194 | 194 |
| Short-term investments | 812 | 812 | 812 |
| Other invested assets | 2,754 | 2,754 | 2,754 |
| Other invested assets, at fair value(1) | 1,773 | 1,472 | 1,472 |
| Cash | 481 | 481 | 481 |
| Total investments and cash | $20,498 | $19,177 | $19,195 |

(Some amounts may not reconcile due to rounding.)

(1) Original cost does not reflect fair value adjustments, which have been realized through the statements of operations and comprehensive income (loss).

S-1

# SCHEDULE II - CONDENSED FINANCIAL INFORMATION OF THE REGISTRANT  
CONDENSED BALANCE SHEETS

|  | At December 31, |  |
| --- | --- | --- |
|  | 2022 | 2021 |
| (Dollars in millions, except share amounts and par value per share) |  |  |
| ASSETS: |  |  |
| Fixed maturities - available for sale | $ - | $147 |
| (amortized cost: 2022, $0; 2021, $148) |  |  |
| Equity securities - at fair value | 12 | 679 |
| Other invested assets | 194 | 242 |
| Other invested assets, at fair value | 1,472 | 2,031 |
| Short-term investments | 30 | 5 |
| Cash | 2 | - |
| Total investments and cash | 1,710 | 3,104 |
| Investment in subsidiaries, at equity in the underlying net assets | 5,496 | 6,371 |
| Notes receivable - affiliated | 1,170 | 470 |
| Accrued investment income | 12 | 5 |
| Other assets | - | (2) |
| TOTAL ASSETS | $8,388 | $9,948 |
| LIABILITIES: |  |  |
| Senior notes | $2,347 | $2,346 |
| Long-term notes | 218 | 224 |
| Accrued interest on debt and borrowings | 17 | 17 |
| Income taxes | 144 | 317 |
| Due to affiliates | 7 | 5 |
| Total liabilities | $2,734 | $2,910 |
| STOCKHOLDER'S EQUITY: |  |  |
| Common stock, par value: $0.01; 3,000 shares authorized; 1,000 shares issued and outstanding (2022 and 2021) | - | - |
| Additional paid-in capital | 1,102 | 1,102 |
| Accumulated other comprehensive income (loss), net of deferred income tax expense (benefit) of $(225) at 2022 and $24 at 2021 | (848) | 91 |
| Retained earnings | 5,400 | 5,845 |
| Total stockholder's equity | 5,654 | 7,038 |
| TOTAL LIABILITIES AND STOCKHOLDER'S EQUITY | $8,388 | $9,948 |

See notes to consolidated financial statements.

S-2

# SCHEDULE II - CONDENSED FINANCIAL INFORMATION OF THE REGISTRANT  
CONDENSED STATEMENTS OF OPERATIONS

|  | Years Ended December 31, |  |  |
| --- | --- | --- | --- |
| (Dollars in millions) | 2022 | 2021 | 2020 |
| REVENUES: |  |  |  |
| Net investment income | $47 | $39 | $(5) |
| Net investment income - Affiliated | 57 | 34 | 31 |
| Net gains (losses) on investments | (704) | 329 | (73) |
| Other income (expense) | (3) | - | 3 |
| Net income (loss) of subsidiaries | 114 | 551 | 394 |
| Total revenues | (488) | 954 | 350 |
| EXPENSES: |  |  |  |
| Interest expense | 97 | 69 | 36 |
| Corporate expense | 10 | 18 | 9 |
| Total expenses | 107 | 86 | 45 |
| INCOME (LOSS) BEFORE TAXES | (595) | 867 | 305 |
| Income tax expense (benefit) | (150) | 68 | (47) |
| NET INCOME (LOSS) | $(445) | $800 | $352 |
| Other comprehensive income (loss), net of tax : |  |  |  |
| Unrealized appreciation (depreciation) ('URA(D)') on securities arising during the period | (1,011) | (200) | 163 |
| Less: reclassification adjustment for realized losses (gains) included in net income (loss) | 73 | 9 | 25 |
| Total URA(D) on securities arising during the period | (938) | (191) | 189 |
| Foreign currency translation adjustments | (18) | (9) | 14 |
| Benefit plan actuarial net gain (loss) for the period | 15 | 17 | (6) |
| Reclassification adjustment for amortization of net (gain) loss included in net income (loss) | 2 | 6 | 6 |
| Total benefit plan net gain (loss) for the period | 17 | 23 | 1 |
| Total other comprehensive income (loss), net of tax | (939) | (177) | 204 |
| COMPREHENSIVE INCOME (LOSS) | $(1,384) | $623 | $556 |

See notes to consolidated financial statements.

S-3

# SCHEDULE II - CONDENSED FINANCIAL INFORMATION OF THE REGISTRANT  
CONDENSED STATEMENTS OF CASH FLOWS

|  | Years Ended December 31, |  |  |
| --- | --- | --- | --- |
| (Dollars in millions) | 2022 | 2021 | 2020 |
| CASH FLOWS FROM OPERATING ACTIVITIES: |  |  |  |
| Net income (loss) | $(445) | $800 | $352 |
| Adjustments to reconcile net income to net cash provided by operating activities: |  |  |  |
| Equity in (earnings) deficit of subsidiaries | (114) | (551) | (394) |
| Dividends received from subsidiary | 250 | - | - |
| Increase (decrease) in income taxes | (173) | (45) | 119 |
| Change in equity adjustments in limited partnerships | (37) | (33) | 8 |
| Change in other assets and liabilities, net | (5) | 40 | 20 |
| Net realized capital losses (gains) | 704 | (329) | 73 |
| Net cash provided by (used in) operating activities | 180 | (118) | 180 |
| CASH FLOWS FROM INVESTING ACTIVITIES: |  |  |  |
| Additional investment in subsidiaries | (200) | 88 | (949) |
| Proceeds from fixed maturities matured/called/repaid - available for sale | - | - | 2 |
| Proceeds from fixed maturities sold - available for sale | 244 | - | - |
| Proceeds from equity maturities sold | 652 | 243 | 62 |
| Distributions from other invested assets | 1,362 | 2,014 | 1,113 |
| Cost of fixed maturities acquired - available for sale | (134) | (148) | - |
| Cost of equity securities acquired | (93) | (516) | (185) |
| Cost of other invested assets acquired | (1,278) | (2,076) | (1,212) |
| Net change in short-term investments | (24) | 5 | 11 |
| Proceeds from repayment (cost of issuance) of notes receivable - affiliated | (700) | (470) | 10 |
| Net cash provided by (used in) investing activities | (171) | (860) | (1,148) |
| CASH FLOWS FROM FINANCING ACTIVITIES: |  |  |  |
| Proceeds from issuance of senior notes | - | 968 | 979 |
| Cost of debt repurchase | (6) | - | (11) |
| Net cash provided by (used in) financing activities | (6) | 968 | 969 |
| Net increase (decrease) in cash | 2 | (10) | - |
| Cash, beginning of period | - | 10 | 10 |
| Cash, end of period | $2 | $ - | $10 |

See notes to consolidated financial statements.

S-4

# SCHEDULE II - CONDENSED FINANCIAL INFORMATION OF THE REGISTRANT
NOTES TO CONDENSED FINANCIAL INFORMATION

1) The accompanying condensed financial information should be read in conjunction with the Consolidated Financial Statements and related Notes of Everest Reinsurance Holdings, Inc. and its Subsidiaries.

2) The Senior Notes and Long-Term Subordinated Notes presented in Notes 5 and 6 are direct obligations of the Registrant.

3) Effective December 2022, Everest Reinsurance Holdings, Inc. entered into a $125 million long-term promissory note with Everest Reinsurance Company, a subsidiary entity. The promissory note has an interest rate of 4.34% payable annually and is scheduled to mature in June 2052.

4) Effective September 2022, Everest Reinsurance Holdings, Inc. entered into a $560 million long-term promissory note with Everest Reinsurance Company, a subsidiary entity. The promissory note has an interest rate of 3.35% payable annually and is scheduled to mature in September 2052.

5) Effective June 2022, Everest Reinsurance Holdings, Inc. entered into a $215 million long-term promissory note with Everest Re Group, Ltd., its parent entity. The promissory note has an interest rate of 3.11% payable annually and is scheduled to mature in June 2052.

6) Effective October 21, 2021, Everest Reinsurance Holdings, Inc. entered into a $470 million long-term promissory note with Everest Reinsurance Company, a subsidiary entity. The promissory note has an interest rate of 3.25% payable annually and is scheduled to mature on October 21, 2051. Everest Reinsurance Company has repaid $200 million of the promissory note to Everest Reinsurance Holdings, Inc., leaving $270 million of the promissory note still outstanding as of December 31, 2022.

7) Effective February 2019, Everest Reinsurance Holdings, Inc. entered into a $10 million long-term promissory note with Everest Indemnity Insurance Company, an affiliated entity. The note was scheduled to mature in February 2049 but was repaid in September 2020.

8) In December, 2015, Holdings transferred the 9,719,971 Common Shares of Group, which it held as other invested assets, at fair value, valued at $1.8 billion, to Preferred Holdings, an affiliated entity and subsidiary of Group, in exchange for 1,773,214 preferred shares of Preferred Holdings with a $1 million par value and 1.75% annual dividend rate. After the exchange, Holdings no longer holds any shares or has any ownership interest in Group.

S-5

# 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 |
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| Segments | Deferred Acquisition Costs | Reserve for Losses and Loss Adjustment Expenses | Unearned Premium Reserves | Premiums Earned | Net Investment Income | Incurred Loss and Loss Adjustment Expenses | Amortization of Deferred Acquisition Costs | Other Operating Expenses | Net Written Premium |

As of and for the year
ended December 31, 2022

| Reinsurance | $329 | $10,023 | $1,453 | $5,212 | $427 | $3,957 | $1,326 | $139 | $5,269 |
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| Insurance | 170 | 4,954 | 1,725 | 2,664 | 211 | 1,865 | 306 | 363 | 2,763 |
| Total | $490 | $14,977 | $3,177 | $7,876 | $638 | $5,823 | $1,632 | $501 | $8,032 |

As of and for the year
ended December 31, 2021

| Reinsurance | $315 | $8,829 | $1,427 | $4,949 | $501 | $3,761 | $1,250 | $143 | $5,265 |
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| Insurance | 157 | 4,292 | 1,566 | 2,230 | 244 | 1,626 | 262 | 311 | 2,455 |
| Total | $472 | $13,121 | $2,993 | $7,179 | $745 | $5,307 | $1,513 | $454 | $7,719 |

As of and for the year
ended December 31, 2020

| Reinsurance | $169 | $7,896 | $1,128 | $4,485 | $255 | $3,209 | $1,120 | $119 | $4,632 |
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| Insurance | 210 | 3,682 | 1,257 | 1,922 | 121 | 1,399 | 253 | 282 | 2,006 |
| Total | $380 | $11,578 | $2,385 | $6,467 | $376 | $4,608 | $1,373 | $401 | $6,639 |

(Some amounts may not reconcile due to rounding.)

S-6

# SCHEDULE IV - REINSURANCE

| Column A | Column B | Column C | Column D | Column E | Column F |
| --- | --- | --- | --- | --- | --- |
| (Dollars in millions) | Gross Amount | Ceded to Other Companies | Assumed from Other Companies | Net Amount | Assumed to Net |
| December 31, 2022 |  |  |  |  |  |
| Total property and liability insurance premiums earned | $3,544 | $1,613 | $5,945 | $7,876 | $75.5% |
| December 31, 2021 |  |  |  |  |  |
| Total property and liability insurance premiums earned | $2,982 | $1,544 | $5,741 | $7,179 | $80.0% |
| December 31, 2020 |  |  |  |  |  |
| Total property and liability insurance premiums earned | $2,592 | $1,368 | $5,183 | $6,407 | $80.9% |

S-7

## Exhibit 23.1

Exhibit 23.1

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

We hereby consent to the incorporation by reference in the Registration Statements on Form S-3 (No. 333-

259589-02) of Everest Reinsurance Holdings, Inc. of our report dated March 10, 2023 relating to the financial

statements and financial statement schedules, which appears in this Form 10-K.

/s/ PricewaterhouseCoopers LLP

New York, New York

March 10, 2023

## Exhibit 31.1

Exhibit 31.1

CERTIFICATIONS

I, Juan C. Andrade, certify that:

1. I have reviewed this annual report on Form 10-K of Everest Reinsurance Holdings, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to

state a material fact necessary to make the statements made, in light of the circumstances under which

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

3. Based on my knowledge, the financial statements, and other financial information included in this report,

fairly present in all material respects the financial condition, results of operations and cash flows of the

registrant as of, and for, the periods presented in this report;

4. The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure

controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control

over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and

have:

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

to be designed under our supervision, to ensure that material information relating to the registrant,

including its consolidated subsidiaries, is made known to us by others within those entities,

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

(b) Designed such internal control over financial reporting, or caused such internal control over financial

reporting to be designed under our supervision, to provide reasonable assurance regarding the

reliability of financial reporting and the preparation of financial statements for external purposes in

accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in

this report our conclusions about the effectiveness of the disclosure controls and procedures, as of

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

(d) Disclosed in this report any change in the registrant's internal control over financial reporting that

occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the

case of an annual report) that has materially affected, or is reasonably likely to materially affect, the

registrant's internal control over financial reporting; and

5. The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of

internal control over financial reporting, to the registrant's auditors and the audit committee of the

registrant's board of directors (or persons performing the equivalent functions):

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

financial reporting which are reasonably likely to adversely affect the registrant's ability to record,

process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a

significant role in the registrant's internal control over financial reporting.

March 10, 2023

/S/ JUAN C. ANDRADE

Juan C. Andrade

Chairman, President and

Chief Executive Officer

## Exhibit 31.2

Exhibit 31.2

CERTIFICATIONS

I, Mark Kociancic, certify that:

1. I have reviewed this annual report on Form 10-K of Everest Reinsurance Holdings, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to

state a material fact necessary to make the statements made, in light of the circumstances under which

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

3. Based on my knowledge, the financial statements, and other financial information included in this report,

fairly present in all material respects the financial condition, results of operations and cash flows of the

registrant as of, and for, the periods presented in this report;

4. The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure

controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control

over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and

have:

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

to be designed under our supervision, to ensure that material information relating to the registrant,

including its consolidated subsidiaries, is made known to us by others within those entities,

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

(b) Designed such internal control over financial reporting, or caused such internal control over financial

reporting to be designed under our supervision, to provide reasonable assurance regarding the

reliability of financial reporting and the preparation of financial statements for external purposes in

accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in

this report our conclusions about the effectiveness of the disclosure controls and procedures, as of

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

(d) Disclosed in this report any change in the registrant's internal control over financial reporting that

occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the

case of an annual report) that has materially affected, or is reasonably likely to materially affect, the

registrant's internal control over financial reporting; and

5. The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of

internal control over financial reporting, to the registrant's auditors and the audit committee of the

registrant's board of directors (or persons performing the equivalent functions):

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

financial reporting which are reasonably likely to adversely affect the registrant's ability to record,

process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a

significant role in the registrant's internal control over financial reporting.

March 10, 2023

/S/ MARK KOCIANCIC

Mark Kociancic

Executive Vice President and

Chief Financial Officer

## Exhibit 32.1

Exhibit 32.1

CERTIFICATIONS PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Annual Report on Form 10-K for the year ended December 31, 2022 of Everest Reinsurance

Holdings, Inc., a corporation organized under the laws of Delaware (the "Company"), filed with the Securities and

Exchange Commission on the date hereof (the "Report"), the undersigned hereby certify, pursuant to 18 U.S.C. ss.

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

1. The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of

1934, and

2. The information contained in the Report fairly presents, in all material respects, the financial condition

and results of operations of the Company.

March 10, 2023

/S/ JUAN C. ANDRADE

Juan C. Andrade

Chairman, President and

Chief Executive Officer

/S/ MARK KOCIANCIC

Mark Kociancic

Executive Vice President and

Chief Financial Officer