UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
_
For the quarterly period ended
Commission file number
(Exact name of registrant as specified in its charter)
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(State or other jurisdiction of incorporation or organization)
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| (I.R.S. Employer Identification No.) |
(Address, including zip code, and telephone number, including area code,
of registrant’s principal executive office)
Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
X |
| No |
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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).
X |
| No |
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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.
X |
| Accelerated filer |
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Non-accelerated filer |
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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 |
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| X |
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
YES |
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| X |
Securities registered pursuant to Section 12(b) of the Act:
Class |
Trading Symbol | Name of Exchange where Registered | Number of Shares Outstanding At May 1, 2022 |
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EVEREST RE GROUP, LTD
Table of Contents
Form 10-Q
Page
PART I
FINANCIAL INFORMATION
PART II
OTHER INFORMATION
Item 1. | 42 | |
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Item 1A. | 43 | |
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Item 2. | 43 | |
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Item 3. | 43 | |
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Item 4. | 43 | |
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Item 5. | 43 | |
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Item 6. | 44 | |
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EVEREST RE GROUP, LTD.
CONSOLIDATED BALANCE SHEETS
| March 31, |
| December 31, | ||
(Dollars and share amounts in thousands, except par value per share) | 2022 |
| 2021 | ||
| (unaudited) |
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ASSETS: |
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Fixed maturities - available for sale | $ |
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(amortized cost: 2022, $ |
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Equity securities, at fair value |
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Short-term investments (cost: 2022, $ |
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Other invested assets |
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Cash |
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Total investments and cash |
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Accrued investment income |
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Premiums receivable |
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Reinsurance recoverables |
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Funds held by reinsureds |
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Deferred acquisition costs |
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Prepaid reinsurance premiums |
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Income taxes |
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Other assets |
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TOTAL ASSETS | $ |
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LIABILITIES: |
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Reserve for losses and loss adjustment expenses | $ |
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Future policy benefit reserve |
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Unearned premium reserve |
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Funds held under reinsurance treaties |
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Other net payable to reinsurers |
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Losses in course of payment |
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Senior notes |
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Long term notes |
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Borrowings from FHLB |
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Accrued interest on debt and borrowings |
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Unsettled securities payable |
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Other liabilities |
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Total liabilities |
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Commitments and contingencies (Note 7) |
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SHAREHOLDERS' EQUITY: |
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Preferred shares, par value: $ |
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Common shares, par value: $ |
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and (2021) |
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Additional paid-in capital |
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Accumulated other comprehensive income (loss), net of deferred income |
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tax expense (benefit) of $( |
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Treasury shares, at cost; |
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Retained earnings |
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Total shareholders' equity |
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TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY | $ |
| $ | ||
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The accompanying notes are an integral part of the consolidated financial statements. |
1
EVEREST RE GROUP, LTD.
CONSOLIDATED STATEMENTS OF OPERATIONS
AND COMPREHENSIVE INCOME (LOSS)
| Three Months Ended | ||||
| March 31, | ||||
(Dollars in thousands, except per share amounts) | 2022 |
| 2021 | ||
| (unaudited) | ||||
REVENUES: |
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Premiums earned | $ |
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Net investment income |
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Net gains (losses) on investments: |
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Credit allowances on fixed maturity securities |
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Gains (losses) from fair value adjustments |
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Net realized gains (losses) from dispositions |
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Total net gains (losses) on investments |
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Other income (expense) |
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Total revenues |
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CLAIMS AND EXPENSES: |
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Incurred losses and loss adjustment expenses |
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Commission, brokerage, taxes and fees |
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Other underwriting expenses |
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Corporate expenses |
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Interest, fees and bond issue cost amortization expense |
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Total claims and expenses |
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INCOME (LOSS) BEFORE TAXES |
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Income tax expense (benefit) |
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NET INCOME (LOSS) | $ |
| $ | ||
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Other comprehensive income (loss), net of tax: |
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Unrealized appreciation (depreciation) ("URA(D)") on securities arising during the period |
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Reclassification adjustment for realized losses (gains) included in net income (loss) |
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Total URA(D) on securities arising during the period |
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Foreign currency translation adjustments |
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Reclassification adjustment for amortization of net (gain) loss included in net income (loss) |
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Total benefit plan net gain (loss) for the period |
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Total other comprehensive income (loss), net of tax |
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COMPREHENSIVE INCOME (LOSS) | $ | ( |
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EARNINGS PER COMMON SHARE: |
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Basic | $ |
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Diluted |
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The accompanying notes are an integral part of the consolidated financial statements. |
2
EVEREST RE GROUP, LTD.
CONSOLIDATED STATEMENTS OF
CHANGES IN SHAREHOLDERS’ EQUITY
(Dollars in thousands, except share and dividends per share amounts) | 2022 |
| 2021 | ||
| (unaudited) | ||||
COMMON SHARES (shares outstanding): |
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Balance, January 1 |
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Issued during the period, net |
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Treasury shares acquired |
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Balance, March 31 |
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COMMON SHARES (par value): |
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Balance, January 1 | $ |
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Issued during the period, net |
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Balance, March 31 |
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ADDITIONAL PAID-IN CAPITAL: |
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Balance, January 1 |
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Share-based compensation plans |
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Balance, March 31 |
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ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS), |
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NET OF DEFERRED INCOME TAXES: |
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Balance, January 1 |
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Net increase (decrease) during the period |
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Balance, March 31 |
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RETAINED EARNINGS: |
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Balance, January 1 |
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Net income (loss) |
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Dividends declared ($ |
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Balance, March 31 |
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TREASURY SHARES AT COST: |
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Balance, January 1 |
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Purchase of treasury shares |
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Balance, March 31 |
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TOTAL SHAREHOLDERS' EQUITY, March 31 | $ |
| $ | ||
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The accompanying notes are an integral part of the consolidated financial statements. | |||||
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3
EVEREST RE GROUP, LTD.
CONSOLIDATED STATEMENTS OF CASH FLOWS
| Three Months Ended | ||||
| March 31, | ||||
(Dollars in thousands) | 2022 |
| 2021 | ||
| (unaudited) | ||||
CASH FLOWS FROM OPERATING ACTIVITIES: |
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Net income (loss) | $ |
| $ | ||
Adjustments to reconcile net income to net cash provided by operating activities: |
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Decrease (increase) in premiums receivable |
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Decrease (increase) in funds held by reinsureds, net |
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Decrease (increase) in reinsurance recoverables |
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Decrease (increase) in income taxes |
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Decrease (increase) in prepaid reinsurance premiums |
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Increase (decrease) in reserve for losses and loss adjustment expenses |
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Increase (decrease) in future policy benefit reserve |
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Increase (decrease) in unearned premiums |
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Increase (decrease) in other net payable to reinsurers |
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Increase (decrease) in losses in course of payment |
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Change in equity adjustments in limited partnerships |
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Distribution of limited partnership income |
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Change in other assets and liabilities, net |
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Non-cash compensation expense |
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Amortization of bond premium (accrual of bond discount) |
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Net (gains) losses on investments |
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Net cash provided by (used in) operating activities |
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CASH FLOWS FROM INVESTING ACTIVITIES: |
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Proceeds from fixed maturities matured/called - available for sale |
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Proceeds from fixed maturities sold - available for sale |
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Proceeds from equity securities sold, at fair value |
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Distributions from other invested assets |
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Cost of fixed maturities acquired - available for sale |
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Cost of equity securities acquired, at fair value |
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Cost of other invested assets acquired |
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Net change in short-term investments |
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Net change in unsettled securities transactions |
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Net cash provided by (used in) investing activities |
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CASH FLOWS FROM FINANCING ACTIVITIES: |
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Common shares issued during the period for share-based compensation, net of expense |
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Purchase of treasury shares |
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Dividends paid to shareholders |
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Cost of shares withheld on settlements of share-based compensation awards |
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Net cash provided by (used in) financing activities |
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EFFECT OF EXCHANGE RATE CHANGES ON CASH |
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Net increase (decrease) in cash |
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Cash, beginning of period |
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Cash, end of period | $ |
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SUPPLEMENTAL CASH FLOW INFORMATION: |
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Income taxes paid (recovered) | $ |
| $ | ||
Interest paid |
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The accompanying notes are an integral part of the consolidated financial statements. |
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4
NOTES TO CONSOLIDATED INTERIM FINANCIAL STATEMENTS (UNAUDITED)
For the Three Months Ended March 31, 2022 and 2021
1. GENERAL
Everest Re Group, Ltd. (“Group”), a Bermuda company, through its subsidiaries, principally provides reinsurance and insurance in the U.S., Bermuda and international markets. As used in this document, “Company” means Group and its subsidiaries.
2. BASIS OF PRESENTATION
The unaudited consolidated financial statements of the Company as of March 31, 2022 and December 31, 2021 and for the three months ended March 31, 2022 and 2021 include all adjustments, consisting of normal recurring accruals, which, in the opinion of management, are necessary for a fair statement of the results on an interim basis. Certain financial information, which is normally included in annual financial statements prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”), has been omitted since it is not required for interim reporting purposes. The December 31, 2021 consolidated balance sheet data was derived from audited financial statements but does not include all disclosures required by GAAP. The results for the three months ended March 31, 2022 and 2021 are not necessarily indicative of the results for a full year. These financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto for the years ended December 31, 2021, 2020 and 2019, included in the Company’s most recent Form 10-K filing.
The Company consolidates the results of operations and financial position of all voting interest entities ("VOE") in which the Company has a controlling financial interest and all variable interest entities ("VIE") in which the Company is considered to be the primary beneficiary. The consolidation assessment, including the determination as to whether an entity qualifies as a VIE or VOE, depends on the facts and 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.
All intercompany accounts and transactions have been eliminated.
Certain reclassifications and format changes have been made to prior years’ amounts to conform to the 2022 presentation.
Application of Recently Issued Accounting Standard Changes.
The Company did not adopt any new accounting standards that had a material impact during the three months ended March 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 new material accounting standards issued in the three months ended March 31, 2022, that impacted Group.
Any issued guidance and pronouncements, other than those directly referenced above, are deemed by the Company to be either not applicable or immaterial to its financial statements.
5
3. INVESTMENTS
The following tables show amortized cost, allowance for credit losses, gross unrealized appreciation/(depreciation) and market value of fixed maturity securities as of the dates indicated:
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| At March 31, 2022 | |||||||||||||
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| Amortized |
| Allowance for |
| Unrealized |
| Unrealized |
| Market | |||||
(Dollars in thousands) | Cost |
| Credit Losses |
| Appreciation |
| Depreciation |
| Value | ||||||
Fixed maturity securities |
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| U.S. Treasury securities and obligations of |
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| U.S. government agencies and corporations | $ |
| $ |
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| Obligations of U.S. states and political subdivisions |
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| Corporate securities |
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| Asset-backed securities |
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| Mortgage-backed securities |
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| Commercial |
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| Agency residential |
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| Non-agency residential |
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| Foreign government securities |
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| Foreign corporate securities |
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Total fixed maturity securities | $ |
| $ | ( |
| $ |
| $ | ( |
| $ |
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| At December 31, 2021 | |||||||||||||
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| Amortized |
| Allowance for |
| Unrealized |
| Unrealized |
| Market | |||||
(Dollars in thousands) | Cost |
| Credit Losses |
| Appreciation |
| Depreciation |
| Value | ||||||
Fixed maturity securities |
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| U.S. Treasury securities and obligations of |
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| U.S. government agencies and corporations | $ |
| $ |
| $ |
| $ | ( |
| $ | ||||
| Obligations of U.S. states and political subdivisions |
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| Corporate securities |
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| Asset-backed securities |
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| Mortgage-backed securities |
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| Commercial |
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| Agency residential |
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| Non-agency residential |
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| Foreign government securities |
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| Foreign corporate securities |
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Total fixed maturity securities | $ |
| $ | ( |
| $ |
| $ | ( |
| $ |
The amortized cost and market value of fixed maturity securities are shown in the following table by contractual maturity. Mortgage-backed securities are generally more likely to be prepaid than other fixed maturity securities. As the stated maturity of such securities may not be indicative of actual maturities, the totals for mortgage-backed and asset-backed securities are shown separately.
| At March 31, 2022 |
| At December 31, 2021 | ||||||||
| Amortized |
| Market |
| Amortized |
| Market | ||||
(Dollars in thousands) | Cost |
| Value |
| Cost |
| Value | ||||
Fixed maturity securities – available for sale: |
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Due in one year or less | $ |
| $ |
| $ |
| $ | ||||
Due after one year through five years |
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Due after five years through ten years |
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Due after ten years |
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Asset-backed securities |
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Mortgage-backed securities: |
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Commercial |
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Agency residential |
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Non-agency residential |
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Total fixed maturity securities | $ |
| $ |
| $ |
| $ |
6
| Three Months Ended | ||||
| March 31, | ||||
(Dollars in thousands) | 2022 |
| 2021 | ||