1、EVEREST RE GROUP,LTD.2020 ANNUAL REPORT The Company generally uses after-tax operating income(loss),a non-GAAP financial measure,to evaluate its performance.After-tax operating income(loss)consists of net income(loss)excluding after-tax net realized capital gains(losses),after-tax net foreign exchan
2、ge income(expense),and the tax charge related to the enactment of the Tax Cuts and Jobs Act of 2017(TCJA).Further explanation and a reconciliation of net income(loss)to after-tax operating income(loss)can be found at the back of the 10-K insert.*Excluding catastrophe losses,reinstatement premiums,CO
3、VID-19 pandemic impact,and prior year development.FINANCIAL HIGHLIGHTSE V E R E S T R E G R O U P,LT D.(in millions,except per share data)20202019201820172016BALANCE SHEETCash and Investments$25,461.6$20,748.5$18,433.1$18,626.5$17,483.1Shareholders equity9,726.29,132.97,860.88,340.78,033.1Book value
4、 per common share 243.25 223.85 193.37 204.25 196.41 RESULTSGross written premiums$10,482.4$9,133.4$8,475.2$7,173.9$6,033.9Net investment income 642.5 647.1 581.2 542.9 473.1 After-tax operating income 300.1 872.4 190.7 412.6 1,004.3 per diluted common share$7.46$21.34$4.65$10.00$23.87 Net income514
5、.21,009.589.0482.8996.3per diluted common share$12.78$24.70$2.17$11.70$23.68 Dividends declared6.205.755.305.054.70FINANCIAL RATIOSCombined ratio102.9%95.5%108.8%103.5%87.0%Attritional combined ratio*87.5%88.4%87.0%85.0%85.5%After-tax operating return on average adjusted equity3.4%10.3%2.3%5.1%12.9%
6、Net income return on average equity5.8%12.0%1.1%5.8%12.9%CELEBRATING 25 YEARS AS A PUBLICLY TRADED COMPANY;BACKED BY 48 YEARS OF EXCELLENCEROBUST FINANCIAL STRENGTHWe are focused on sustainably growing a balanced and diversified insurance and reinsurance portfolio and relentlessly executing our stra
7、tegies to deliver consistent underwriting profitability and superior returns.We have positioned Everest to deliver shareholder value in every stage of the market cycle.$9.6B16.4%$25.5BGAAPEquityDebt toCapitalInvestment Portfolio with Aa3 Average RatingA+A1A+A.M.BestStable OutlookMoodysStable Outlook
8、S&PStable OutlookOn October 6,2020 Everest celebrated 25 years as a publicly traded company(NYSE:RE)Compound Annual Return Since 199511.5%2 0 2 0 A N N U A L R E P O R T1TOP-TIER RATING2Looking ahead to 2021 and beyond,we see a very bright future for our company.We have an outstanding global platfor
9、m and financial resources,vibrant insurance and reinsurance businesses,and dedicated leadership and employees.Everest is extremely well-positioned for the current market conditions,and we will continue to build on our legacy of success.SENIOR LEADERSHIP TEAM(bottom left to right):Juan C.Andrade,Pres
10、ident and Chief Executive Officer;Mark Kociancic,Executive Vice President,Group Chief Financial Officer;Jim Williamson,Executive Vice President,Group Chief Operating Officer(middle):John P.Doucette,Executive Vice President and President and Chief Executive Officer,Reinsurance Division;Mike Karmilowi
11、cz,Executive Vice President and President and Chief Executive Officer,Insurance Division;Sanjoy Mukherjee,Executive Vice President,General Counsel,Chief Compliance Officer and Secretary of Everest Re Group,Ltd.;Gail M.Van Beveren,Executive Vice President,Chief Human Resources Officer(top):Don Mango,
12、Senior Vice President,Group Chief Risk Officer and Chief Actuary;Michael Mulray,Executive Vice President and Chief Operating Officer,Insurance Division;Terry Walker,Senior Vice President,Chief Information Officer;Dane Lopes,Senior Vice President,Chief Communications Officer E V E R E S T R E G R O U
13、 P,LT D.LETTER FROM THE CHAIRMANEverest met the challenges of 2020 with great strength and resiliency.Like other businesses,and society as a whole,we faced unprecedented challenges as the COVID-19 pandemic affected our employees,customers,and business operations around the world.I am proud of the Ev
14、erest leadership team and all employees for their dedication during this time.2020 was also the first year that Juan C.Andrade served as Everest President and Chief Executive Officer.Since his arrival,Juan has deepened our experienced management team and directed meaningful improvements in our under
15、writing,financial,and operational processes.He also brings a truly global perspective and genuine understanding of the important societal roles that Everest can serve.Juans leadership and dedication to Everest were evident from day one,and the Board and I thank him for his unwavering commitment to o
16、ur company during these most unusual of times.Juan also joined the Board in 2020 and our board now includes nine members,all of whom bring relevant experience and a commitment to excellent governance over the long term.In 2020,Everest celebrated our 25th year as a public company with a history spann
17、ing nearly 50 years.Our longevity and consistency are a genuine advantage,and we saw the importance of this clearly demonstrated at the January 1,2021 reinsurance renewals.Based on our deep relationships and significant financial resources,Everest underwriters were able to craft an attractive portfo
18、lio of risks by providing meaningful solutions to our customers across multiple geographies,classes of business,and program structures.Everest Insurance also continued to hit new milestones,writing more than$3 billion in premium for the first time.This is reflective of its increasing importance in t
19、he commercial insurance market and ability to provide creative and valuable solutions to our customers.Looking ahead to 2021 and beyond,the Board sees a very bright future for our company.We have an outstanding global platform and financial resources,vibrant insurance and reinsurance businesses,and
20、dedicated leadership and employees.Everest is extremely well-positioned for the current market conditions,and we will continue to build on our legacy of success.To all our shareholders,I thank you for your continued support.MY FELLOW SHAREHOLDERS,JOSEPH V.TARANTO Chairman of the Board2 0 2 0 A N N U
21、 A L R E P O R T3E V E R E S T R E G R O U P,LT D.4A MESSAGE FROM THE PRESIDENT AND CHIEF EXECUTIVE OFFICERAt the start of 2020,I had the privilege of writing to you for the first time as the President and CEO of Everest Re Group.Looking back on the year,I had the honor of leading Everest through th
22、is complex and uncertain period in the worlds history.I am very appreciative of the support that we received from our Board of Directors and our Chairman during this challenging time.COVID-19 must lead any discussion of 2020.The pandemic affected all our communities and resulted in an inconceivable
23、loss of life.It impacted all aspects of the worlds economies,including the insurance and reinsurance sectors.Despite the unprecedented challenges,and through the resilience and dedication of our employees,we ended 2020 with stronger growth and improved underlying profitability.We have a deep and tal
24、ented management team,a stronger balance sheet,and outstanding prospects.Most importantly,we have continued to be a valued partner to our distribution partners and our customers.PANDEMIC RESPONSE From the earliest days of the pandemic,our top priority has been the health,safety,and well-being of our
25、 employees.In February,we formed an internal COVID-19 Task Force to manage the evolving situation.In early March,we shifted our entire global employee base to work remotely.Thanks to the outstanding planning and preparation from our COVID-19 Task Force,led by our Chief Human Resources Officer,and by
26、 our technology and operations teams,the transition to a remote work environment was seamless.We continued to serve our customers and deliver outstanding service.I am proud of the tremendous dedication and perseverance of our team.We recognized the need to help our neighbors hit hardest by the pande
27、mic.We established a company-wide matching gifts program to support employee contributions to charities directly involved in pandemic response(hospitals,health care workers,first responders,food banks,and similar organizations).We also focused on key organizations that support the fight against soci
28、al injustice,inequality,racism,and discrimination.DIVERSITY,EQUITY,AND INCLUSION(DEI)2020 was also a year during which social justice and the need for change became even more apparent.At Everest,our commitment to diversity,equity,and inclusion has always been a critical part of our culture.We are at
29、 our best when we embrace diverse views and perspectives.Because it is our obligation as responsible corporate citizens to advocate for change,we advanced a robust strategy to enhance our Diversity,Equity,and Inclusion efforts and established our DEI Council,among other actions.The DEI Council suppo
30、rts our mission to foster an environment that attracts,retains,and develops the best talent;values the diversity of people,their life experiences,and perspectives;and serves as a conduit to senior management to promote company-wide engagement on equity and cultural inclusivity.We will continue to su
31、pport and celebrate diversity,equity,and inclusion in the workplace,and the formation of the DEI Council and the many other tangible steps that we have taken are key steps in reinforcing that commitment.DEEPENING OUR TEAM Talent is the lifeblood of our organization and fuels our continued profitable
32、 growth.In 2020,we added top talent across the organization and welcomed nearly 300 new colleagues.Notably,we appointed Mark Kociancic as Group Chief Financial Officer,Jim Williamson as Group Chief Operating Officer,Seth Vance as Chief Investment Officer,Mike Karmilowicz as President and Chief Execu
33、tive Officer of the Insurance Division,Mike Mulray as Insurance Division Chief Operating Officer,Don Mango as Group Chief Risk Officer and Chief Actuary,Gail Van Beveren as Chief Human Resources Officer,Terry Walker as Chief Information Officer,Dane Lopes as Chief Communications Officer,and Brian Be
34、dner as Head of Corporate Finance.In addition,we also made several key hires at the divisional level.MY FELLOW SHAREHOLDERS,2 0 2 0 A N N U A L R E P O R T5With this team of exemplary professionals at the helm of our organization,our pool of talent,knowledge and expertise continues to grow.We also e
35、xpanded our Underwriting Associates program and virtually welcomed over 60 summer interns to Everest last summer.CORPORATE MILESTONES With a vision of creating the Everest of tomorrow,we moved into our new U.S.headquarters in Warren,NJ,which is expected to receive LEED certification in 2021.This bui
36、lding,designed with the health and safety of employees in mind,exemplifies our commitment to sustainable,environmentally friendly initiatives,while providing updated and modern facilities that foster collaboration amongst our employees and provide the space needed for our continued growth.On October
37、 6,2020,we celebrated our 25th anniversary as a publicly traded company with a 48-year history.Our clients,brokers,and employees joined us virtually throughout the year to commemorate this milestone.The future is bright at Everest,and I am excited to lead the organization as we embark upon our next
38、25 years.We were honored to receive numerous accolades in 2020,including:Everest was recognized as one of the Business Insurance Best Places to Work Everest Reinsurance was recognized as the Reactions Latin America Caribbean Reinsurer of the Year Everest Insurance was named an Insurance Business Ame
39、rica Five-Star Carrier Everest Insurance was recognized as the Insurance Insider Risk Carrier of the Year Everest won two Novarica Impact Awards for the technological transformations we achievedFINANCIAL STRENGTH Turning to results,we had a solid year,considering the pandemic,record catastrophes,and
40、 economic,social,and political upheaval.For the full year 2020,Everest recorded 15%gross written premium growth and 17%in net written premiums.Despite the$511 million COVID-19 loss provision,and a$400 million prior accident year reserve strengthening,we delivered$514 million in net income and$300 mi
41、llion in operating income,demonstrating the earnings generating power of the franchise.Our book value per share grew 11%from year end 2019 on a dividend adjusted basis.While our combined ratio for the year was above 100%due to COVID-19 losses,an active CAT year,and our reserve strengthening,the unde
42、rlying underwriting profitability,as measured by the attritional combined ratio,improved almost a full point from 2019 to 87.5%,with our insurance segment improving 2.3 points to 94.2%.Net investment income was in line with 2019,despite the market downturn in the first half of 2020.Our decisive acti
43、on to strengthen reinsurance reserves,primarily in long-tail lines,serves to further strengthen our balance sheet.In October we executed a successful$1 billion debt offering of Senior Notes with a 30-year tenor and a low 3.5%coupon,lowering our cost of capital.This further solidifies our already str
44、ong capital position,while providing long-term funding for the Company.We finished 2020 with a strong capital base.We continue to approach capital management with a view towards long-term growth,employing a heightened focus on risk management and underwriting discipline.We have vibrant and well-dive
45、rsified reinsurance and insurance businesses with experienced teams who provide industry-leading solutions to our customers.Building upon the work achieved throughout 2020,we are well-positioned to continue diversifying our business for profitable growth and to build upon our momentum.The Company is
46、 on solid ground with excellent financial strength ratings,top talent,and a prudent capital management philosophy.We are focused on sustained profitable growth and the relentless execution of our strategies to maximize shareholder returns.I am confident in Everests future and our ability to deliver
47、the commitments to our customers,shareholders,and the marketplace.2020 showed us all just how resilient we truly are.Thank you for your continued support.JUAN C.ANDRADE President and CEOWe have vibrant and well-diversified reinsurance and insurance businesses with experienced teams who provide indus
48、try-leading solutions to our customers.Building upon the work achieved throughout 2020,we are well-positioned to continue diversifying our business for profitable growth and to build upon our momentum.The Company is on solid ground with excellent financial strength ratings,top talent,and a prudent c
49、apital management philosophy.We are focused on sustained profitable growth and the relentless execution of our strategies to maximize shareholder returns.E V E R E S T R E G R O U P,LT D.6INSURANCEMIKE KARMILOWICZ Executive Vice President and President and Chief Executive Officer,Insurance DivisionP
50、REMIER GLOBAL SPECIALTY INSURERCollaboration and execution drove success at Everest Insurance in 2020.In a year of great turmoil,our Insurance Division strengthened its foundation an innovative and inclusive culture,flexible,best-in-class services,a deep bench of specialty products,strong expertise
51、and knowledge,and solid industry relationships to rapidly deliver solutions to our trading partners and customers.Despite transitioning to a fully remote work environment,and through consistent,meaningful communication,our commitment to collaboration enabled us to respond to the needs of our clients
52、 as the COVID-19 pandemic unfolded.Our actions delivered solid results,despite the adverse economic conditions and an active CAT season.The underlying performance of our portfolio continued to improve year over year,and we saw 15%growth in gross written premium.Looking back at 2020,our diverse and b
53、alanced portfolio allowed for a rapid,resilient response to the COVID-19 pandemic,as we continued to strategically develop our business.We remained focused on strengthening our core through supporting technology and infrastructure initiatives to keep us at the forefront of innovation.These efforts w
54、ere acknowledged across the industry through the following achievements:Our insurance business earned an Impact Award in the Core category from the Novarica Insurance Technology Research Council for creating a standard library of APIs to speed up the partner onboarding process.Our eIQTM InsurTech In
55、novation team received the Reactions North America InsurTech Incubator of the Year award for their efforts in identifying and implementing technology such as machine-learning and automation tools that make a meaningful impact on our clients and their business productivity and safety.Ongoing technolo
56、gy and infrastructure developments have allowed Everest Insurance to offer our clients a breadth and depth of capabilities across the globe.Talent is the oxygen of our organization.Despite the myriad of individual and collective challenges we faced this year,we did not miss a beat.This was made poss
57、ible through the focus and commitment of our close to 1,000 colleagues,who showed relentless dedication to achieving underwriting excellence and providing our trading partners and customers with unparalleled service and expertise.We were excited to welcome more than 125 members to our Insurance team
58、 this year,while also expanding our development and training programs to support the professional growth of colleagues at all levels and tenure.This included inviting over 60 college students across the Group to partake in an all-virtual internship program and graduating our inaugural class of under
59、writers from our Associate Underwriter program.We continue to focus on diversity,equity,and inclusion as part of our recruitment,retention,and talent development efforts,with the goal of fostering a positive work environment where all perspectives are valued and respected.This year was unlike any ot
60、her,and despite this,Everest rose to the challenge.Our greatest strength is our ability to be agile,flexible,and dynamic allowing us to respond quickly to emerging challenges,navigate global risks,and respond to our clients needs with a sense of urgency.Our balance sheet is strong,our business is we
61、ll-diversified and resilient,and we remain well-positioned for success in 2021 and beyond.“It all starts with talent.Never has our culture been more critical to achieving success than during the COVID-19 pandemic.Throughout 2020,it was the incredible resiliency,commitment,and execution of our people
62、 that allowed us to deliver excellence when it mattered most.”2 0 2 0 A N N U A L R E P O R TThe Everest Insurance eIQTM InsurTech Innovation team was named InsurTech Incubator of the Year at the 2020 Reactions North America AwardsGROSS WRITTEN PREMIUM BY LINE OF BUSINESSGROSS WRITTEN PREMIUM BY CLA
63、SS OF BUSINESS12%16%31%19%6%16%Accident and HealthProfessional LiabilitySpecialty CasualtyProperty/Short TailOther SpecialtyWorkers Compensation42%26%32%Short TailMedium TailLong Tail752%22%11%4%4%4%3%17%33%7%21%9%13%12%6%31%16%16%19%42%26%32%52%22%11%4%4%4%3%17%33%7%21%9%13%12%6%31%16%16%19%42%26%3
64、2%(bottom left to right):Dana Lodge,Senior Vice President,Chief Financial Officer;Mike Karmilowicz,Executive Vice President and President and Chief Executive Officer,Insurance Division;Michael Mulray,Executive Vice President and Chief Operating Officer,Insurance Division(top):Vincent Vandendael,Chie
65、f Executive Officer,Everest Global Markets;William Thygeson,Senior Vice President,Chief Administrative Officer;Patricia McMahon,Senior Vice President,Chief Claims Officer;Marcus Cooper,Senior Vice President,Head of North American DistributionREINSURANCE“Our broad product offering,experienced underwr
66、iting staff in Property and Casualty lines around the globe,innovative risk solutions,best-in-class technology,deep industry relationships,and sound third-party capital strategies are what set us apart.”JOHN P.DOUCETTE Executive Vice President and President and Chief Executive Officer,Reinsurance Di
67、visionE V E R E S T R E G R O U P,LT D.8TRUSTED GLOBAL REINSURANCE PARTNER FOR OVER 45 YEARSTurning challenge into opportunity defines the success of our business in 2020.Despite an unprecedented year brought on by the COVID-19 pandemic,our reinsurance colleagues further strengthened longstanding re
68、lationships and successfully executed our business in a virtual work environment.Over the past few years,the reinsurance industry has experienced a number of social and economic challenges:significant property catastrophe losses,both in frequency and severity;social inflation impacting casualty rein
69、surance and influencing catastrophe loss costs;historically low interest rates;and,recently,the effects of the pandemic.Despite these circumstances and conditions,our Reinsurance business has remained committed to our customers.Our broad product offering,experienced underwriting staff in Property an
70、d Casualty lines around the globe,innovative risk solutions,best-in-class technology,deep industry relationships,and sound third-party capital strategies are what set us apart.Our ability to effectively absorb risk and potential volatility from our clients continues to position us as a key player in
71、 the global reinsurance market.While that effectiveness comes from Everests overall financial strength,it is also a nod to the diligent underwriting,modeling,and actuarial expertise of the reinsurance team.Our underwriters are located around the globe and empowered to deliver tailored reinsurance so
72、lutions that fit the unique needs of each customer.While our view of risk,underwriting expertise,and reach are global,our market expertise and execution capabilities are local.As the industry transitioned to a remote work environment in March 2020,we leveraged the opportunity to engage in more frequ
73、ent virtual conversations with clients and brokers around the world.When the annual reinsurance industry event,Rendez-Vous de Septembre,was cancelled in September,the Everest leadership team hosted Everests Virtual Reinsurance Rendez-Vous,to share insights into our business and maintain connections
74、with important external stakeholders.Throughout the year,we also met virtually with hundreds of long-standing clients and brokers,from 48 countries,to better understand their risk transfer needs,risk management strategies,and how to best provide solutions to help achieve their business goals and obj
75、ectives.In addition to strong customer engagement throughout 2020,we completed the implementation of Galaxy,an end-to-end,global underwriting platform that enables us to deliver effective underwriting and risk management across all lines of business and territories.We are also investing meaningfully
76、 in automation and remain focused on improving efficiency across all areas of our operations,including pricing,modeling,underwriting,claims handling,and account management.These efforts led us to receive the Impact Award in the Digital Category from the Novarica Insurance Technology Research Council
77、 for our automation platform.Despite an overall challenging year,we provided underwriting excellence and reinsurance solutions to our clients and brokers across the globe.We saw continued growth in an improving market environment and underwrote a strong book of business with robust risk-adjusted ret
78、urns,all while managing our overall net volatility.We remain resilient,nimble,and willing to adapt to a changing work environment and market conditions,and we are optimistic for what the future holds.Everest Reinsurance was recognized as the Reactions Latin America Caribbean Reinsurer of the YearGRO
79、SS WRITTEN PREMIUM BY REGIONGROSS WRITTEN PREMIUM BY LINE OF BUSINESS17%21%33%13%7%9%Property Cat XOLCasualty ProRataProperty ProRataCasualty XOLProperty Non-Cat XOLFinancial Lines2 0 2 0 A N N U A L R E P O R T9(bottom left to right):Sharry Tibbitt,Senior Vice President,Deputy Chief Underwriting Of
80、ficer;John P.Doucette,Executive Vice President and President and Chief Executive Officer,Reinsurance Division;Chris Downey,Chief Underwriting Officer,Everest Reinsurance and Managing Director/Chief Executive Officer,Everest Re Bermuda(middle):Dennis Alba,Senior Vice President,U.S.Casualty and Surety
81、;Chuck Volker,Senior Vice President,Treaty Property and Marine(top):Ronald Diaz,Executive Vice President,Latin America,Middle East and South Africa52%4%22%4%11%3%4%U.S.Asia/AustraliaEurope/U.K.Middle East/AfricaLatin AmericaWorldwideCanada52%22%11%4%4%4%3%17%33%7%21%9%13%12%6%31%16%16%19%42%26%32%52
82、%22%11%4%4%4%3%17%33%7%21%9%13%12%6%31%16%16%19%42%26%32%E V E R E S T R E G R O U P,LT D.1 0CORPORATERESPONSIBILITYAt Everest,we believe that a sustainable future for our company must encompass the core values most important to our customers,employees,stakeholders and the communities in which we op
83、erate and serve.The values that define our corporate responsibility include:A commitment to diversity,equity,and inclusion,employee learning and development,environmental sustainability,and philanthropy.DIVERSITY,EQUITY,AND INCLUSION Our commitment to diversity,equity,and inclusion has always been a
84、 critical part of our culture.We are at our best when we embrace diversity in race,gender,sexual orientation,culture,educational background,views,and perspectives.Everest has an obligation as a responsible corporate citizen to advance change,educate,and promote equality and unity and respect for all
85、,not only within our own organization,but also across the communities in which we participate.In this regard,our Diversity,Equity,and Inclusion Council supports initiatives in collaboration with Human Resources that promote diversity,representation,and awareness across the organization.The Council,f
86、ormed in 2020,was created to help us execute on the learnings from various global listening sessions with employees in underrepresented groups.To facilitate more open dialogue on the unique concerns of our colleagues,the Council formed two new Employee Resource Groups(“ERGs”)focusing on our Black an
87、d LGBTQ+employees.In the coming year,we expect to create additional ERGs in support of other underrepresented groups across our organization.We also established industry partnerships with key organizations promoting diversity,including the National African American Insurance Association,Internationa
88、l Association of Black Actuaries,and Grace Hopper(Women in Technology);implemented mandatory bias and diversity training for all Everest employ-ees;introduced a civic engagement time off benefit for all employees;incorporated DEI into leadership objectives;and expanded Everests recruitment strategy
89、at all levels to capture a more diverse talent pool.EMPLOYEE LEARNING AND DEVELOPMENT The continued talent development of all employees is a core value that exemplifies our culture.Attracting and developing a diverse,talented workforce is an essential part of enacting that value.Everest is focused o
90、n the advancement of our employees across all levels and investing in the future generation of the(re)insurance industry.Our strength as an organization begins with our talent.To this end,Everests comprehensive Talent Development program supports our corporate goals and objectives while promoting a
91、culture of continuous learning,professional development,coaching,and mentorship among all our employees.ENVIRONMENTAL SUSTAINABILITYWe believe that environmental consciousness is of the utmost importance at every level of our organization.Everest leadership maintains an active role in determining ho
92、w managing environmental risk and controlling ecological impact is incorporated into our business and operations.As a global insurance and reinsurance company,we recognize the potential impact of climate change and related extreme natural perils on both our business and the world.We are also acutely
93、 aware that our industry plays a critical role in the economic and social recovery of both our communities Our strength as an organization begins with our talent.To this end,Everests comprehensive Talent Development program supports our corporate goals and objectives while promoting a culture of con
94、tinuous learning,professional development,coaching,and mentorship among all our employees.Building a stronger future for the global communities in which we operate and serve.2 0 2 0 A N N U A L R E P O R T11and wider populations after such extreme weather events.In order to responsibly navigate our
95、role in efforts to moderate climate change,we partner with our clients and policyholders in developing insurance and reinsurance solutions to help companies better manage their environmental risks.These include expanded coverages to renewable energy programs,advanced insurance coverage for specializ
96、ed environmental contractors,and providing premium credits to clients for promoting environmentally sound and friendly facilities and workplaces.As part of these efforts,we also recognize the importance of integrating environmental standards into our own corporate practices,and we are dedicated to m
97、anaging and reducing our own ecological footprint wherever possible.For example,Everests new U.S.headquarters in Warren,New Jersey,is on track to be officially LEED certified in 2021,and includes environmentally friendly features throughout,including charging stations for electric vehicles,energy-ef
98、ficient lighting systems,and a focus on reducing paper and plastic waste.PHILANTHROPYEverest strongly believes in the importance of philanthropic commitment.In 2020,Everest established a company-wide program to match employee contributions to charities directly involved with providing pandemic relie
99、f and assistance.We also focused on various charities that support the fight against social injustice,racism,and discrimination.In addition,we introduced civic engagement paid time off for global employees to engage in civic activities and events.Throughout the year,the Everest Charitable Outreach C
100、ommittee organizes events that support various charities.Organizations supported by Everest include Soles4Souls,United Ways Tools for School Supply Drive,Ronald McDonald House Charities,Hole in the Wall Gang Camp,Morris Habitat for Humanity,The TEARS Foundation,Ability First,FlyPups,Boys and Girls C
101、lub of Mercer Country,the National Association for the Advancement of Colored People and Equal Justice Initiative.Everest was proud to receive the United Way Impact Award in 2020 for our new corporate headquarters,featuring 321,000 square feet of commercial real estate and enabling us to create 600
102、jobs over the duration of the lease.At Everest,we are committed to fostering a work environment that not only benefits our employees but also makes a positive impact on,and builds a stronger future for,the communities in which we operate and serve around the world.We are thrilled with our progress t
103、hus far and look forward to the continuation of these efforts in years to come.Continue sustainability efforts company-wideFurther implementation of the UN-PRI and collaboration with third-party asset managers to pursue compliance with the bedrocks of the UN-PRI PrinciplesWork with the architect and
104、 contractors of the new U.S.Headquarters toward implementation of our sustainability goals for the siteEstablish a better system of emissions and energy usage tracking for our leased office spaceContinue our efforts to enhance our privacy and data risk programPublication of disclosures compliant wit
105、h the Sustainability Accounting Standards Board(SASB)OUR GOALSBianca Armand,Everest Technology Services Regional Support,was focused on making a positive impact during the pandemic.Bianca,a member of the National Guard,was called to help construct an emergency Field Medical Station at the Meadowland
106、s Exposition Center in New Jersey earlier this year.As a result of her efforts,hundreds of COVID-19 patients were provided with a place to recover when hospitals were at capacity.The Everest Insurance Transactional Risk team partnered with Aon and the Mergers and Acquisitions underwriting community
107、to help raise funds for the Memorial Sloan Kettering Cancer Center in support of a cure for rare cancers at a local Cycle for Survival event.Throughout the COVID-19 pandemic,we were proud to see employees across our company give back in various ways,whether it be delivering PPE to hospitals,hosting
108、a winter clothing drive to support the homeless,spending time with our veterans,or contributing to local food pantries.A few examples are shown below:In the winter of 2020,Everest employees at our U.S.Headquarters donated 40 bags of winter clothing to help benefit Bridges Outreach,Inc.Since 1988,Bri
109、dges has been delivering food and clothing to the homeless in New York and New Jersey.Early in the pandemic,Sanjoy Mukherjee,Executive Vice President and General Counsel,and a 30-year pilot,flew his personal homebuilt airplane to transport PPE to hospitals along the East Coast.Sanjoy also volunteers
110、 with organizations such as Remote Area Medical and Doctors Without Borders,flying medicine and supplies to rural locations.E V E R E S T R E G R O U P,LT D.1 2“Attracting and retaining high-quality people,capable of becoming the next-generation leaders that can carry on the Everest culture,is criti
111、cal to our ongoing success.”JUAN C.ANDRADE President and Chief Executive OfficerGLOBAL FOOTPRINTAtlanta,GA Boston,MAChicago,ILHouston,TXIndianapolis,INLos Angeles,CAMiami,FLNew York,NYOrange,CAPhiladelphia,PASan Francisco,CAStamford,CT Tampa,FLWalnut Creek,CAWarren,NJ BelgiumBermudaBrazilCanadaIrela
112、ndNetherlandsU.K.SingaporeSwitzerland UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington,D.C.20549 FORM 10FORM 10-K K _X_ Annual Report Pursuant to Section 13 or 15(d)of the Securities Exchange Act of 1934Annual Report Pursuant to Section 13 or 15(d)of the Securities Exchange Act of 1934 Fo
113、r the fiscal year ended December 31,2020 _ TransitionTransition Report Pursuant to Section 13 or 15(d)of the Securities Exchange Act of 1934Report Pursuant to Section 13 or 15(d)of the Securities Exchange Act of 1934 Commission file number 1-15731 EVEREST RE GROUP,LTD.EVEREST RE GROUP,LTD.(Exact nam
114、e of registrant as specified in its charter)BermudaBermuda 9898-03654320365432 (State or other jurisdiction of incorporation or organization)(I.R.S.Employer Identification No.)Seon Place 4th Floor 141 Front Street PO Box HM 845 Hamilton HM 19,Bermuda 441-295-0006 (Address,including zip code,and tele
115、phone number,including area code,of registrants principal executive office)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 X NO Indicate by check mark if the regis
116、trant is not required to file reports pursuant to Section 13 or Section 15(d)of the Act.YES NO X 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
117、 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 X NO Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regu
118、lation S-T during the preceding 12 months(or for such shorter period that the registrant was required to submit such files).YES X 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 r
119、egistrants 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.Indicate by check mark whether the registrant is a large accelerated filer,an accelerated filer,a non-accelerated filer,a smaller reporting co
120、mpany 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 X Accelerated filer Non-accelerated filer Smaller reporting company Emerging growth
121、 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 X Indicate by check mark whether
122、 the registrant is a shell company(as defined in Rule 12b-2 of the Exchange Act).YES NO X Indicate by check mark whether the registrant has filed a report on and attestation to its managements assessment of the effectiveness of its internal control over financial reporting under Section 404(b)of the
123、 Sarbanes-Oxley Act(15 U.S.C.7262(b)by the registered public accounting firm that prepared or issued its audit report.YES x NO The aggregate market value on June 30,2020,the last business day of the registrants most recently completed second quarter,of the voting shares held by non-affiliates of the
124、 registrant was$8,242,153 thousand.Securities registered pursuant to Section 12(b)of the Act:Class Trading Symbol Name of Exchange where Registered Number of Shares Outstanding At February 1,2021 Common Shares,$0.01 par valueCommon Shares,$0.01 par value RERE New York Stock ExchangeNew York Stock Ex
125、change 39,991,66239,991,662 DOCUMENTS INCORPORATED BY REFERENCE Certain information required by Items 10,11,12,13 and 14 of Form 10-K is incorporated by reference into Part III hereof from the registrants proxy statement for the 2021 Annual General Meeting of Shareholders,which will be filed with th
126、e Securities and Exchange Commission within 120 days of the close of the registrants fiscal year ended December 31,2020.EVEREST RE GROUP,LTDEVEREST RE GROUP,LTD TABLE OF CONTENTSTABLE OF CONTENTS FORM 10FORM 10-K K PagePage PART IPART I Item 1.Business 1 Item 1A.Risk Factors 25 Item 1B.Unresolved St
127、aff Comments 38 Item 2.Properties 38 Item 3.Legal Proceedings 38 Item 4.Mine Safety Disclosures 38 PART IIPART II Item 5.Market for Registrants Common Equity,Related Shareholder Matters and Issuer Purchases of Equity Securities 38 Item 6.Selected Financial Data 41 Item 7.Managements Discussion and A
128、nalysis of Financial Condition and Results of Operations 42 Item 7A.Quantitative and Qualitative Disclosures About Market Risk 74 Item 8.Financial Statements and Supplementary Data 74 Item 9.Changes in and Disagreements With Accountants on Accounting and Financial Disclosure 74 Item 9A.Controls and
129、Procedures 75 Item 9B.Other Information 75 PART IIIPART III Item 10.Directors,Executive Officers and Corporate Governance 75 Item 11.Executive Compensation 75 Item 12.Security Ownership of Certain Beneficial Owners and Management and Related Shareholder Matters 76 Item 13.Certain Relationships and R
130、elated Transactions,and Director Independence 76 Item 14.Principal Accountant Fees and Services 76 PART IVPART IV Item 15.Exhibits and Financial Statement Schedules 76 1 PART IPART I Unless otherwise indicated,all financial data in this document have been prepared using accounting principles general
131、ly accepted in the United States of America(“GAAP”).As used in this document,“Group”means Everest Re Group,Ltd.;“Holdings Ireland”means Everest Underwriting Group(Ireland)Limited;“Ireland Re”means Everest Reinsurance Company(Ireland),designated activity company;“Holdings”means Everest Reinsurance Ho
132、ldings,Inc.;“Everest Re”means Everest Reinsurance Company and its subsidiaries(unless the context otherwise requires);and the“Company”,“we”,“us”,and“our”means Everest Re Group,Ltd.and its subsidiaries.ITEM 1.BUSINESSITEM 1.BUSINESS The Company.The Company.Group,a Bermuda company,was established in 1
133、999 as a wholly-owned subsidiary of Holdings.On February 24,2000,a corporate restructuring was completed and Group became the new parent holding company of Holdings.Holdings continues to be the holding company for the Companys U.S.based operations.Holders of shares of common stock of Holdings automa
134、tically became holders of the same number of common shares of Group.Prior to the restructuring,Group had no significant assets or capitalization and had not engaged in any business or prior activities other than in connection with the restructuring.In connection with the February 24,2000 restructuri
135、ng,Group established a Bermuda-based reinsurance subsidiary,Everest Reinsurance(Bermuda),Ltd.(“Bermuda Re”),which commenced business in the second half of 2000.Group also formed Everest Global Services,Inc.,a Delaware subsidiary,to perform administrative functions for Group and its U.S.based and non
136、-U.S.based subsidiaries.On December 30,2008,Group contributed Holdings to its Irish holding company,Holdings Ireland.Holdings Ireland is a direct subsidiary of Group and was established to serve as a holding company for the U.S.and Irish reinsurance and insurance subsidiaries.Effective July 1,2016,t
137、he Company established a new Irish holding company,Everest Dublin Insurance Holdings Limited(Ireland)(“Everest Dublin Holdings”)and contributed Ireland Re to Everest Dublin Holdings.Holdings,a Delaware corporation,was established in 1993 to serve as the parent holding company of Everest Re,a Delawar
138、e property and casualty reinsurer formed in 1973.Until October 6,1995,Holdings was an indirect wholly-owned subsidiary of The Prudential Insurance Company of America(“The Prudential”).On October 6,1995,The Prudential sold its entire interest in Holdings in an initial public offering.During the fourt
139、h quarter of 2017,the Company established a new Irish insurance subsidiary,Everest Insurance Ireland,designated activity company(“Ireland Insurance”),which writes insurance business mainly in the European markets.The Companys principal business,conducted through its operating segments,is the underwr
140、iting of reinsurance and insurance in the U.S.,Bermuda and international markets.The Company had gross written premiums,in 2020,of$10.5 billion with approximately 69.5%representing reinsurance and 30.5%representing insurance.Shareholders equity at December 31,2020 was$9.7 billion.The Company underwr
141、ites reinsurance both through brokers and directly with ceding companies,giving it the flexibility to pursue business based on the ceding companys preferred reinsurance purchasing method.The Company underwrites insurance principally through brokers,surplus lines brokers and general agent relationshi
142、ps.Groups 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.2 Following is a summary of the
143、Companys principal operating subsidiaries:Bermuda Re,a Bermuda insurance company and a direct subsidiary of Group,is registered in Bermuda as a Class 4 insurer and long-term insurer and is authorized to write both reinsurance and insurance property and casualty and life and annuity business.Bermuda
144、Res UK branch writes property and casualty reinsurance to the United Kingdom and European markets.At December 31,2020,Bermuda Re had shareholders equity of$2.9 billion.Everest International Reinsurance,Ltd.(“Everest International”),a Bermuda insurance company and a direct subsidiary of Group,is regi
145、stered in Bermuda as a Class 4 insurer and is authorized to write property and casualty business.Through 2020,all of Everest Internationals business has been inter-affiliate quota share reinsurance assumed from Everest Re,the UK branch of Bermuda Re,Ireland Re and Ireland Insurance.At December 31,20
146、20,Everest International had shareholders equity of$3.4 billion.Ireland Re,an Ireland reinsurance company and an indirect subsidiary of Group,is licensed to write non-life reinsurance,both directly and through brokers,for the London and European markets.Ireland Insurance,an Ireland insurance company
147、 and an indirect subsidiary of Group,is licensed to write insurance for the European markets.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 aut
148、horized 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.At December 31,2020,Everest Re had statutory surplus of$5.3 billion.Everest Insurance Company o
149、f Canada(“Everest Canada”),a Canadian insurance company and direct subsidiary of Holdings Ireland,is licensed to write property and casualty insurance in all Canadian provinces.Everest National Insurance Company(“Everest National”),a Delaware insurance company and a direct subsidiary of Everest Re,i
150、s 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 Nationals business is reinsured by its parent,Everest Re.Everest Indemnity Insurance C
151、ompany(“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 i
152、nsurance in a particular jurisdiction is permitted to provide to insureds when the specific specialty coverage is unavailable from admitted insurers.Everest Indemnity is licensed in Delaware and is eligible to write business on a non-admitted basis in all other states,the District of Columbia and Pu
153、erto Rico.The majority of Everest Indemnitys 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
154、is approved as an eligible surplus lines insurer in Delaware.The majority of Everest Securitys 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
155、 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
156、 casualty reinsurance in both Bermuda and the U.S.3 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.Everest Denali Insurance Comp
157、any(“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.Reinsurance Industry Overview.Reinsurance Industry Overview.Reinsurance is an arrangement in which an insurance
158、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 re
159、duction 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 underwrit
160、ing capacity by permitting it to accept larger risks and write more business than would be acceptable relative to the ceding companys financial resources.Reinsurance does not discharge the ceding company from its liability to policyholders;rather,it reimburses the ceding company for covered losses.T
161、here 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 in
162、dividual 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 reinsura
163、nce 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 trea
164、ty 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
165、 the ceding company against all or a specified portion of losses and expenses in excess of a specified dollar amount,known as the ceding companys retention or reinsurers attachment point,generally subject to a negotiated reinsurance contract limit.In pro rata reinsurance,the reinsurer generally pays
166、 the ceding company a ceding commission.The ceding commission generally is based on the ceding companys cost of acquiring the business being reinsured(commissions,premium taxes,assessments and miscellaneous administrative expense and may contain profit sharing provisions,whereby the ceding commissio
167、n 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
168、 excess of loss reinsurance.Reinsurers may purchase reinsurance to cover their own risk exposure.Reinsurance of a reinsurers business is called a retrocession.Reinsurance companies cede risks under retrocessional agreements to other reinsurers,known as retrocessionaires,for reasons similar to those
169、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 broker
170、s,or directly with ceding companies.From a ceding companys perspective,the broker and the direct distribution channels have advantages and disadvantages.A ceding companys decision to select one distribution channel over the other will be influenced by its perception of such advantages and disadvanta
171、ges relative to the reinsurance coverage being placed.4 Business Strategy.Business Strategy.The Companys 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
172、thereby achieve an attractive return for its shareholders.The Companys 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 dis
173、ciplined 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 Companys products include the full range of property and casualty reinsurance and i
174、nsurance 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 Companys underwriting strategies emphasizes underwri
175、ting profitability over premium volume.Key elements of this strategy include careful risk selection,appropriate pricing through strict underwriting discipline and adjustment of the Companys business mix in response to changing market conditions.The Company focuses on reinsuring companies that effect
176、ively manage the underwriting cycle through proper analysis and pricing of underlying risks and whose underwriting guidelines and performance are compatible with its objectives.The Companys underwriting strategies emphasize flexibility and responsiveness to changing market conditions.The Company bel
177、ieves 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 participate in those market opportunit
178、ies that provide the greatest potential for underwriting profitability.The Companys 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 geogr
179、aphic or other risk concentrations.Commencing in 2015 the Company initiated a strategic build out of its insurance platform through the investment in key leadership hires which in turn has brought significant underwriting talent and stronger direction in achieving its insurance program strategic goa
180、ls of increased premium volume and improved underwriting results.Recent growth is coming from highly diversified areas including newly launched lines of business,as well as product and geographic expansion in existing lines of business.The Company is building a world-class insurance platform capable
181、 of offering products across lines and geographies,complementing its leading global reinsurance franchise.As part of this initiative,the Company launched a new syndicate through Lloyds of London and formed Ireland Insurance,providing access to additional international business and new product opport
182、unities to further diversify and broaden its insurance portfolio going forward.Marketing.Marketing.The Company writes business on a worldwide basis for many different customers and lines of business,thereby obtaining a broad spread of risk.The Company is not substantially dependent on any single cus
183、tomer,small group of customers,line of business or geographic area.For the 2020 calendar year,no single customer(ceding company or insured)generated more than 4%of the Companys gross written premiums.The Company believes that a reduction of business from any one customer would not have a material ad
184、verse effect on its future financial condition or results of operations.Approximately 63%,31%and 6%of the Companys 2020 gross written premiums were written in the broker reinsurance,insurance and direct reinsurance markets,respectively.The broker reinsurance market consists of several substantial na
185、tional and international brokers and a number of smaller specialized brokers.Brokers do not have the authority to bind the Company with respect to reinsurance agreements,nor does the Company commit in advance to accept any portion of a brokers 5 submitted business.Reinsurance business from any cedin
186、g company,whether new or renewal is subject to acceptance by the Company.Brokerage fees are generally paid by reinsurers.The Companys ten largest brokers accounted for an aggregate of approximately 55%of gross written premiums in 2020.The largest broker,Marsh and McLennan,accounted for approximately
187、 20%of gross written premiums.The second largest broker,Aon,accounted for approximately 16%of gross written premiums.The Company believes that a reduction of business assumed from any one broker would not have a material adverse effect on the Company.The direct reinsurance market remains an importan
188、t distribution channel for reinsurance business written by the Company.Direct placement of reinsurance enables the Company to access clients who prefer to place their reinsurance directly with reinsurers based upon the reinsurers in-depth understanding of the ceding companys needs.The Companys insur
189、ance business mainly writes commercial property and casualty on an admitted and non-admitted basis.The business is written through wholesale and retail brokers,surplus lines brokers and through program administrators.In 2020,two program administrators accounted for approximately 12%of the Companys g
190、ross written premium each and included multiple independent programs for each program administrator with the largest representing 7%of the overall gross written premium.No other program administrator generated more than 2%of the Companys gross written premium.The Company continually evaluates each b
191、usiness relationship,including the underwriting expertise and experience brought to bear through the involved distribution channel,performs analyses to evaluate financial security,monitors performance and adjusts underwriting decisions accordingly.Segment Results.Segment Results.With recent changes
192、in executive management and organizational structure,the Company manages its reinsurance and insurance operations as autonomous units and key strategic decisions are based on the aggregate operating results and projections for these segments of business.Accordingly,effective January 1,2020,the Compa
193、ny revised it reporting segments to Reinsurance Operations and Insurance Operations.This replaces the previous reported segments of U.S.Reinsurance,International(reinsurance),Bermuda(reinsurance)and Insurance.The prior year presented segment information has been reformatted to reflect this change.Th
194、e Reinsurance operation writes worldwide property and casualty reinsurance and specialty lines of business,on both a treaty and facultative basis,through reinsurance brokers,as well as directly with ceding companies.Business is written in the U.S.,Bermuda,and Ireland offices,as well as,through branc
195、hes in Canada,Singapore and the United Kingdom.The Insurance operation writes property and casualty insurance directly and through brokers,surplus lines brokers and general agents within the U.S.,Canada and Europe through its offices in the U.S.,Canada,Ireland and a branch located in Zurich.These se
196、gments 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
197、 upon their underwriting results.Underwriting results include earned premium less losses and loss adjustment expenses(“LAE”)incurred,commission and brokerage expenses and other underwriting expenses.We measure our underwriting results using ratios,in particular loss,commission and brokerage and othe
198、r underwriting expense ratios,which,respectively,divide incurred losses,commissions and brokerage and other underwriting expenses by premiums earned.For selected financial information regarding these segments,see ITEM 8,“Financial Statements and Supplementary Data”-Note 17 of Notes to Consolidated F
199、inancial Statements and ITEM 7,“Managements Discussion and Analysis of Financial Condition and Results of Operation-Segment Results”.6 Underwriting Operations.Underwriting Operations.The following five year table presents the distribution of the Companys gross written premiums by its segments:Reinsu
200、rance and Insurance.The premiums for each segment are further split between property and casualty business and,for reinsurance business,between pro rata or excess of loss business:Gross Written Premiums by Segment Years Ended December 31,(Dollars in millions)2020 2019 2018 2017 2016 ReinsuranceReins
201、urance Property Pro Rata(1)$2,397.3 22.9%$1,974.2 21.6%$2,172.0 25.6%1,719.9 24.0%1,428.2 23.7%Excess 1,784.9 17.0%1,629.6 17.8%1,686.0 19.9%1,685.1 23.5%1,567.1 26.0%Casualty Pro Rata(1)2,120.1 20.2%1,994.7 21.8%1,756.9 20.7%1,104.8 15.4%808.5 13.4%Excess 979.3 9.3%757.3 8.3%609.7 7.2%604.9 8.4%443
202、.1 7.3%Total(2)7,281.7 69.5%6,355.9 69.6%6,224.6 73.4%5,114.7 71.3%4,246.9 70.4%InsuranceInsurance Property Pro Rata(1)$973.7 9.3%$857.7 9.4%$645.9 7.6%725.1 10.1%716.4 11.9%Casualty Pro Rata(1)2,226.9 21.2%1,919.8 21.0%1,604.6 18.9%1,334.1 18.6%1,070.6 17.7%Total(2)3,200.6 30.5%2,777.5 30.4%2,250.6
203、 26.6%2,059.2 28.7%1,787.0 29.6%Total CompanyTotal Company Property Pro Rata(1)$3,371.0 32.2%$2,831.9 31.0%$2,818.0 33.2%2,445.1 34.1%2,144.6 35.5%Excess 1,784.9 17.0%1,629.6 17.8%1,686.0 19.9%1,685.1 23.5%1,567.1 26.0%Casualty Pro Rata(1)4,347.1 41.5%3,914.5 42.9%3,361.5 39.7%2,438.9 34.0%1,879.1 3
204、1.1%Excess 979.3 9.3%757.3 8.3%609.7 7.2%604.9 8.4%443.1 7.3%Total(2)10,482.4 100.0%9,133.4 100.0%8,475.2 100.0%7,173.9 100.0%6,033.9 100.0%_ (1)For purposes of the presentation above,pro rata includes all insurance and reinsurance attaching to the first dollar of loss incurred by the ceding company
205、.(2)Certain totals and subtotals may not reconcile due to rounding.Reinsurance Segment.The Companys Reinsurance segment writes 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 companie
206、s.The Companys Reinsurance segment business is written within three main Reinsurance markets-its U.S.Reinsurance market,its International Reinsurance market,and its Bermuda Reinsurance market.The Companys U.S.Reinsurance market includes property and casualty reinsurance and specialty lines of busine
207、ss,including marine,aviation,surety and A&H business,on both a treaty and facultative basis,through reinsurance brokers,as well as directly with ceding companies within the U.S.The treaty property underwriters utilize sophisticated underwriting methods to analyze and price property business.The Comp
208、any manages its exposures to catastrophe and other large losses by limiting exposures on individual contracts and limiting aggregate exposures to catastrophes in any zone and across contiguous zones.The treaty casualty business consists of professional liability,D&O liability,workers compensation,fi
209、nancial lines,excess and surplus lines and other liability coverages.As a result of the complex technical nature of most of these risks,the Companys casualty underwriters tend to specialize by line of business and work closely with the Companys pricing actuaries.Facultative business includes propert
210、y,casualty,and national brokerage lines of business.The marine and aviation business is written primarily through brokers and contains a significant international component.Surety business consists mainly of reinsurance of contract surety bonds.In 2020,$3,331.8 million of the Companys gross written
211、premiums were attributable to its U.S.Reinsurance market of which 53.9%was treaty property business,$31.8%treaty casualty business,8.0%facultative business,3.2%marine&aviation business,1.6%surety business,and 1.5%A&H business.In addition,60.6%was written on a pro rata basis and 39.4%was written on a
212、n excess of loss basis.The Company targets certain brokers and,through the broker market,specialty companies and small to medium sized standard lines companies.The Company also targets companies that place their business predominantly in the direct market,including small to medium sized regional ced
213、ing companies,and seeks 7 to develop long-term relationships with those companies.In addition,the U.S.Reinsurance market includes portions of reinsurance programs for large,national insurance companies.In 2020,95.7%and 4.3%of the Companys gross written premiums in the U.S.reinsurance market were wri
214、tten in the broker reinsurance and direct reinsurance markets,respectively.The Companys International Reinsurance market focuses on opportunities in several targeted international locations,including Canada,with a branch in Toronto;Asia,with a branch in Singapore;and Latin America,Brazil,Africa and
215、the Middle East,which business is serviced from Everest Res Miami and New Jersey offices.The Company also writes from New Jersey“home-foreign”business,which provides reinsurance on the international portfolios of U.S.insurers.In 2020,$1,935.1 million of gross written premiums were attributable to In
216、ternational operation.Of the Companys 2020 international gross written premiums,$1,410.9 million was written out of our Miami and New Jersey offices of which 71.8%was treaty reinsurance and 28.2%facultative reinsurance,$269.9 million out of our Canadian branch which 78.6%was treaty reinsurance and 2
217、1.4%facultative reinsurance,and$254.3 million out of our Singapore branch which mainly was treaty business.40.6%of International business represented property pro rata business,32.1%represented property excess of loss business,13.7%represented casualty pro rata business and 13.6%represented casualty
218、 excess of loss business.As with the U.S.Reinsurance market,the Companys International Reinsurance market focuses on financially sound companies that have strong management and underwriting discipline and expertise.Of the Companys 2020 gross written premiums in its International Reinsurance market,7
219、6.4%was written through brokers,with 23.6%written directly with ceding companies.The Companys Bermuda Reinsurance market includes property and casualty reinsurance through Bermuda Re and property and casualty reinsurance through its UK branch as well as through Ireland Re.The Company also writes ass
220、umed business with the segregated cells of Mt.Logan Re Ltd.(Bermuda)(“Mt.Logan Re”)which represents a diversified set of catastrophe exposures,diversified by risk/peril and across different geographical regions globally.In 2020,$2,014.8 million of gross written premiums were attributable to Bermuda
221、operation.Of the Companys 2020 gross written premiums in its Bermuda Reinsurance market,$909.2 million was written through Bermuda Re,$666.4 million through our UK branch,$420.4 million through Ireland Re and$18.8 million through Mt.Logan.46.6%of Bermuda business represented casualty pro rata busine
222、ss,25.4%represented property pro rata business,14.8%represented casualty excess of loss business and 13.2%represented property excess of loss business.95.4%of Bermuda operations was written through brokers,with 4.6%written directly with ceding companies.Insurance Segment.The Insurance segment writes
223、 property and casualty insurance through general agents,wholesale and retail brokers and surplus lines brokers within the U.S.,Canada,Ireland,Bermuda,and through the Companys Lloyds Syndicate.In 2020,the Companys Insurance segment wrote$3,200.6 million of gross written premiums,of which 70%was casua
224、lty and 30%was property,principally targeting commercial business.Insurance business written directly through the Companys offices represented$2,527.6 million or 79%of the segments premium and$673.0 million or 21%was written through program administrators.In 2020 the Insurance Segment wrote$1,004.5
225、million of Specialty Casualty business consisting primarily of auto liability,primary and excess general liability,and some products liability written by multiple divisions with the largest including Specialty Casualty,Everest Underwriting Partners(“EUP”),Energy,Sports and Leisure,and Risk Managemen
226、t.Workers Compensation totaled$510.1 million of premium,written with a focus on the manufacturing,hospitality,construction and real estate industries,and written principally by the Risk Management,EUP and Energy divisions.Property/Short Tail business totaled$604.9 million consisting of commercial pr
227、operty,auto physical damage and contingency business,written principally by the US Property,EUP,Lloyds Syndicate and Everest Canada divisions.Professional Liability totaled$523.3 million consisting primarily of directors and officers liability,error and omissions,fiduciary liability,cyber liability,
228、crime and employment practices liability written principally by the Everest Specialty Underwriters(“ESU”)and Lloyds Syndicate divisions.Accident and Health totaled$370.0 million which includes principally medical stop loss,specialty medical business,pro sports disability and medicare supplement busi
229、ness.Other Specialty totaled$187.8 million consisting of reps and warranty,credit and political risk,and surety written within the ESU division.8 Geographic Areas.The Company conducts its business in Bermuda,the U.S.and a number of foreign countries.For select financial information about geographic
230、areas,see ITEM 8,“Financial Statements and Supplementary Data”-Note 17 of Notes to the Consolidated Financial Statements.Risks attendant to the foreign operations of the Company parallel those attendant to the U.S.operations of the Company,with the primary exception of foreign exchange risks.For mor
231、e information about the risks,see ITEM 7,“Managements Discussion and Analysis of Financial Condition and Results of Operations Safe Harbor Disclosure”.Underwriting.Underwriting.One of the Companys strategies is to lead as many of the reinsurance treaties it underwrites as possible.The Company leads
232、on approximately two-thirds of its treaty reinsurance business as measured by premium.The lead reinsurer on a treaty generally accepts one of the largest percentage shares of the treaty and is in the strongest position to negotiate price,terms and conditions.Management believes this strategy enables
233、 it to obtain more favorable terms and conditions on the treaties on which it participates.When the Company does not lead the treaty,it may still suggest changes to any aspect of the treaty.The Company may decline to participate on a treaty based upon its assessment of all relevant factors.The Compa
234、nys treaty underwriting process involves a team approach among the Companys underwriters,actuaries and claim staff.Treaties are reviewed for compliance with the Companys general underwriting standards and most larger treaties are subjected to detailed actuarial analysis.The actuarial models used in
235、such analyses are tailored in each case to the subject exposures and loss experience.The Company does not separately evaluate each of the individual risks assumed under its treaties.The Company does,however,evaluate the underwriting guidelines,data and other information of its ceding companies to de
236、termine their adequacy prior to entering into a treaty.The Company may also conduct underwriting,operational and claim audits at the offices of ceding companies to monitor adherence to underwriting guidelines.Underwriting audits focus on the quality of the underwriting staff,pricing and risk selecti
237、on and rate monitoring over time.Claim audits may be performed in order to evaluate the clients claims handling abilities and practices.The Companys facultative underwriters operate within guidelines specifying acceptable types of risks,limits and maximum risk exposures.Specified classes of large pr
238、emium U.S.risks are referred to Everest Res New York facultative headquarters for specific review before premium quotations are given to clients.In addition,the Companys guidelines require certain types of risks to be submitted for review because of their aggregate limits,complexity or volatility,re
239、gardless of premium amount on the underlying contract.Non-U.S.risks exhibiting similar characteristics are reviewed by senior managers within the involved operations.In addition to its own underwriting staff,the Companys insurance operations write casualty coverages for homogeneous risks through sel
240、ect program managers.These programs are evaluated based upon actuarial analysis and the program managers capabilities.The Companys rates,forms and underwriting guidelines are tailored to specific risk types.The Companys underwriting,actuarial,claim and financial functions work closely with its progr
241、am managers to establish appropriate underwriting and processing guidelines as well as appropriate performance monitoring mechanisms.Risk Management of Underwriting and Reinsurance ArrangementsRisk Management of Underwriting and Reinsurance Arrangements Underwriting Risk and Accumulation Controls.Ea
242、ch segment and business unit manages its underwriting risk in accordance with established guidelines.These guidelines place dollar limits on the amount of business that can be written based on a variety of factors,including(re)insured company profile,line of business,geographic location and risk haz
243、ards.In each case,the guidelines permit limited exceptions,which must be authorized by the Companys senior management.Management regularly reviews and revises these guidelines in response to changes in business unit product offerings,market conditions,risk versus reward analyses and the Companys ent
244、erprise and underwriting risk management processes.The operating results and financial condition of the Company can be adversely affected by catastrophe and other large losses.The Company manages its exposure to catastrophes and other large losses by:selective underwriting practices;9 diversifying i
245、ts risk portfolio by geographic area and by types and classes of business;limiting its aggregate catastrophe loss exposure in any particular geographic zone and contiguous zones;purchasing reinsurance and/or retrocessional protection to the extent that such coverage can be secured cost-effectively.S
246、ee“Reinsurance and Retrocession Arrangements”.Like other insurance and reinsurance companies,the Company is exposed to multiple insured losses arising out of a single occurrence,whether a natural event,such as a hurricane or an earthquake,or other catastrophe,such as an explosion at a major factory.
247、A large catastrophic event can be expected to generate insured losses to multiple reinsurance treaties,facultative certificates and direct insurance policies across various lines of business.The Company focuses on potential losses that could result from any single event or series of events as part o
248、f its evaluation and monitoring of its aggregate exposures to catastrophic events.Accordingly,the Company employs various techniques to estimate the amount of loss it could sustain from any single catastrophic event or series of events in various geographic areas.These techniques range from determin
249、istic approaches,such as tracking aggregate limits exposed in catastrophe-prone zones and applying reasonable damage factors,to modeled approaches that attempt to scientifically measure catastrophe loss exposure using sophisticated Monte Carlo simulation techniques that forecast frequency and severi
250、ty of potential losses on a probabilistic basis.No single computer model,or group of models,is currently capable of projecting the amount and probability of loss in all global geographic regions in which the Company conducts business.In addition,the form,quality and granularity of underwriting expos
251、ure data furnished by(re)insureds is not uniformly compatible with the data requirements for the Companys licensed models,which adds to the inherent imprecision in the potential loss projections.Further,the results from multiple models and analytical methods must be combined to estimate potential lo
252、sses by and across business units.Also,while most models have been updated to incorporate claims information from recent catastrophic events,catastrophe model projections are still inherently imprecise.In addition,uncertainties with respect to future climatic patterns and cycles could add further un
253、certainty to loss projections from models based on historical data.Nevertheless,when combined with traditional risk management techniques and sound underwriting judgment,catastrophe models are a useful tool for underwriters to price catastrophe exposed risks and for providing management with quantit
254、ative analyses with which to monitor and manage catastrophic risk exposures by zone and across zones for individual and multiple events.Projected catastrophe losses are generally summarized in terms of the probable maximum loss(“PML”).The Company defines PML as its anticipated loss,taking into accou
255、nt contract terms and limits,caused by a single catastrophe affecting a broad contiguous geographic area,such as that caused by a hurricane or earthquake.The PML will vary depending upon the modeled simulated losses and the make-up of the in force book of business.The projected severity levels are d
256、escribed in terms of“return periods”,such as“100-year events”and“250-year events”.For example,a 100-year PML is the estimated loss to the current in-force portfolio from a single event which has a 1%probability of being exceeded in a twelve month period.In other words,it corresponds to a 99%probabil
257、ity that the loss from a single event will fall below the indicated PML.It is important to note that PMLs are estimates.Modeled events are hypothetical events produced by a stochastic model.As a result,there can be no assurance that any actual event will align with the modeled event or that actual l
258、osses from events similar to the modeled events will not vary materially from the modeled event PML.From an enterprise risk management perspective,management sets limits on the levels of catastrophe loss exposure the Company may underwrite.The limits are revised periodically based on a variety of fa
259、ctors,including but not limited to the Companys financial resources and expected earnings and risk/reward analyses of the business being underwritten.10 The Company may purchase reinsurance to cover specific business written or the potential accumulation or aggregation of exposures across some or al
260、l of its operations.Reinsurance purchasing decisions consider both the potential coverage and market conditions including the pricing,terms,conditions,availability and collectability of coverage,with the aim of securing cost effective protection from financially secure counterparties.The amount of r
261、einsurance purchased has varied over time,reflecting the Companys view of its exposures and the cost of reinsurance.Management estimates that the projected net economic loss from its largest 100-year event in a given zone represents approximately 6.7%of its December 31,2020 shareholders equity.Econo
262、mic loss is the PML exposure,net of third party reinsurance,reduced by estimated reinstatement premiums to renew coverage and estimated income taxes.The impact of income taxes on the PML depends on the distribution of the losses by corporate entity,which is also affected by inter-affiliate reinsuran
263、ce.Management also monitors and controls its largest PMLs at multiple points along the loss distribution curve,such as loss amounts at the 20,50,100,250,500 and 1,000 year return periods.This process enables management to identify and control exposure accumulations and to integrate such exposures in
264、to enterprise risk,underwriting and capital management decisions.The Companys catastrophe loss projections,segmented by risk zones,are updated quarterly and reviewed as part of a formal risk management review process.The table below reflects the Companys PML exposure,net of third party reinsurance a
265、t various return periods for its top three zones/perils(as ranked by the largest 1 in 100 year economic loss)based on loss projection data as of January 1,2021:Return Periods(in years)1 in 20 1 in 50 1 in 100 1 in 250 1 in 500 1 in 1,000 Exceeding Probability 5.0%2.0%1.0%0.4%0.2%0.1%(Dollars in mill
266、ions)Zone/Peril Southeast U.S.,Wind$564$774$925$1,130$1,493$2,205 California,Earthquake 168 574 779 998 1,131 1,863 Texas Wind 185 467 677 859 1,012 1,075 The projected net economic losses,defined as PML exposures,net of third party reinsurance,reinstatement premiums and estimated income taxes,for t
267、he top three zones/perils scheduled above are as follows:Return Periods(in years)1 in 20 1 in 50 1 in 100 1 in 250 1 in 500 1 in 1,000 Exceeding Probability 5.0%2.0%1.0%0.4%0.2%0.1%(Dollars in millions)Zone/Peril Southeast U.S.,Wind$389$531$648$822$1,099$1,648 California,Earthquake 138 433 577 749 8
268、70 1,421 Texas Wind 141 355 504 625 726 779 The Company believes that its methods of monitoring,analyzing and managing catastrophe exposures provide a credible risk management framework,which is integrated with its enterprise risk management,underwriting and capital management plans.However,there is
269、 much uncertainty and imprecision inherent in the catastrophe models and the catastrophe loss estimation process generally.As a result,there can be no assurance that the Company will not experience losses from individual events that exceed the PML or other return period projections,perhaps by a mate
270、rial amount.Nor can there be assurance that the Company will not experience events impacting multiple zones,or multiple severe events that could,in the aggregate,exceed the Companys PML expectations by a significant amount.Terrorism Risk.While the Company writes some reinsurance contracts covering t
271、errorism,the Companys risk management philosophy is to limit the amount of exposure by geographic region,and to strictly manage coverage for properties in areas that may be considered a target for terrorists.Providing terrorism coverage on reinsurance contracts is negotiable,and many,but not all,tre
272、aties contain exclusions which limit much of this risk.While many property insurance policies are required to offer coverage for terrorism,this coverage is often not purchased.However,terrorism is typically covered by worker compensation policies.As a result,11 the Company is exposed to losses from
273、terrorism on both its reinsurance and its insurance book of business,particularly its workers compensation and property policies.However,the insurance book generally does not insure large corporations or corporate locations that represent large concentrations of risk.The U.S.Terrorism Risk Insurance
274、 Program Reauthorization Act of 2019 provides some protection to the insurance book of business.It also provides indirect protection to exposed reinsurance treaties.However,the Company is still exposed to risk of loss from terrorism due to deductibles,co-pays and uncovered lines of business.Reinsura
275、nce and Retrocession Arrangements.The Company may purchase reinsurance to cover specific business written or the potential accumulation or aggregation of exposures across some or all of its operations.Reinsurance purchasing decisions consider both the potential coverage and market conditions includi
276、ng the pricing,terms,conditions and availability of coverage,with the aim of securing cost effective protection.The amount of reinsurance purchased has varied over time,reflecting the Companys view of its exposures and the cost of reinsurance.In recent years,the Company has increased its use of rein
277、surance offered through capital market facilities.The Company participates in“common account”retrocessional arrangements for certain reinsurance treaties whereby a ceding company purchases reinsurance for the benefit of itself and its reinsurers under one or more of its reinsurance treaties.Common a
278、ccount retrocessional arrangements reduce the effect of individual or aggregate losses to all participating companies,including the ceding company,with respect to the involved treaties.All of the Companys reinsurance and retrocessional agreements transfer significant reinsurance risk and therefore,a
279、re accounted for as reinsurance in accordance with the Financial Accounting Standards Board(“FASB”)guidance.At December 31,2020,the Company had$1,994.6 million in reinsurance receivables with respect to both paid and unpaid losses ceded.Of this amount,$699.7 million,or 35.1%,was receivable from Mt.L
280、ogan Re collateralized segregated accounts and$211.6 million,or 10.6%,was receivable from Munich Reinsurance America,Inc.(“Munich Re”).No other retrocessionaire accounted for more than 5%of our receivables.Although management carefully selects its reinsurers,the Company is subject to credit risk wit
281、h respect to its reinsurance because the ceding of risk to reinsurers does not relieve the Company of its liability to insureds or ceding companies.See ITEM 7,“Managements Discussion and Analysis of Financial Condition and Results of Operations Financial Condition”.Claims.Claims.Reinsurance and insu
282、rance claims are managed by the Companys professional claims staff whose responsibilities include reviewing initial loss reports and coverage issues,monitoring claims handling activities of ceding companies,establishing and adjusting proper case reserves and approving payment of claims.In addition t
283、o claims assessment,processing and payment,the claims staff selectively conducts comprehensive claim audits of both specific claims and overall claim procedures at the offices of selected ceding companies.Some insurance claims are handled by third party claims service providers who have limited auth
284、ority and are subject to oversight by the Companys professional claims staff.The Company intensively manages its asbestos and environmental(“A&E”)exposures through a dedicated,centrally managed claim staff with experienced claim and legal professionals who specialize in the handling of such exposure
285、s.They actively manage each individual insured and reinsured account,responding to claim developments with evaluations of the involved exposures and adjustment of reserves as appropriate.Specific or general claim developments that may have material implications for the Company are regularly communic
286、ated to senior management,actuarial,legal and financial areas.Senior management and claim management personnel meet at least quarterly to review the Companys overall reserve positions and make changes,if appropriate.The Company continually reviews its internal processing,communications and analytics
287、,seeking to enhance the management of its A&E exposures,in particular in regard to changes in asbestos claims and litigation.12 Reserves for Unpaid Property and Casualty Losses and LAE.Reserves for Unpaid Property and Casualty Losses and LAE.Significant periods of time may elapse between the occurre
288、nce of an insured loss,the reporting of the loss to the insurer and the reinsurer and the payment of that loss by the insurer and subsequent payments to the insurer by the reinsurer.To recognize liabilities for unpaid losses and LAE,insurers and reinsurers establish reserves,which are balance sheet
289、liabilities representing estimates of future amounts needed to pay reported and unreported claims and related expenses for losses that have already occurred.Actual losses and LAE paid may deviate,perhaps substantially,from such reserves.To the extent reserves prove to be insufficient to cover actual
290、 losses and LAE after taking into account available reinsurance coverage,the Company would have to recognize such reserve shortfalls and incur a charge to earnings,which could be material in the period such recognition takes place.See ITEM 7,“Managements Discussion and Analysis of Financial Conditio
291、n and Results of Operations Loss and LAE Reserves”.As part of the reserving process,insurers and reinsurers evaluate historical data and trends and make judgments as to the impact of various factors such as legislative and judicial developments that may affect future claim amounts,changes in social
292、and political attitudes that may increase loss exposures and inflationary and general economic trends.While the reserving process is difficult and subjective for insurance companies,the inherent uncertainties of estimating such reserves are even greater for the reinsurer,due primarily to the longer
293、time between the date of an occurrence and the reporting of any attendant claims to the reinsurer,the diversity of development patterns among different types of reinsurance treaties or facultative contracts,the necessary reliance on the ceding companies for information regarding reported claims and
294、differing reserving practices among ceding companies.In addition,trends that have affected development of liabilities in the past may not necessarily occur or affect liability development in the same manner or to the same degree in the future.As a result,actual losses and LAE may deviate,perhaps sub
295、stantially,from estimates of reserves reflected in the Companys consolidated financial statements.The Companys loss and LAE reserves represent managements best estimate of the ultimate liability.While there can be no assurance that these reserves will not need to be increased in the future,managemen
296、t believes that the Companys existing reserves and reserving methodologies reduce the likelihood that any such increases would have a material adverse effect on the Companys financial condition,results of operations or cash flows.These statements regarding the Companys loss reserves are forward look
297、ing statements within the meaning of the U.S.federal securities laws and are intended to be covered by the safe harbor provisions contained therein.See ITEM 7,“Managements Discussion and Analysis of Financial Condition and Results of Operations Safe Harbor Disclosure”.Like many other property and ca
298、sualty insurance and reinsurance companies,the Company has experienced loss development for prior accident years,which has impacted losses and LAE reserves and caused corresponding effects to income(loss)in the periods in which the adjustments were made.There can be no assurance that adverse develop
299、ment from prior years will not occur in the future or that such adverse development will not have a material adverse effect on net income(loss).13 The following table presents a reconciliation of beginning and ending reserve balances for the periods indicated on a GAAP basis:Years Ended December 31,
300、(Dollars in millions)2020 2019 2018 Gross reserves at beginning of period$13,611.3$13,119.1$11,884.3 Incurred related to:Current year 6,149.4 4,986.5 5,264.3 Prior years 401.4 (63.6)387.1 Total incurred losses 6,550.8 4,922.9 5,651.4 Paid related to:Current year 2,046.3 2,042.3 1,700.7 Prior years 2
301、,080.8 2,460.8 3,011.2 Total paid losses 4,127.1 4,503.1 4,711.9 Foreign exchange/translation adjustment 160.9 51.3 (111.7)Change in reinsurance receivables on unpaid losses and LAE 203.0 21.1 407.0 Gross reserves at end of period$16,399.0$13,611.3$13,119.1 (Some amounts may not reconcile due to rou
302、nding.)Current year incurred losses were$6,149.4 million,$4,986.5 million and$5,264.3 million at December 31,2020,2019 and 2018,respectively.The increase in current year incurred losses from 2019 to 2020 was primarily due to an increase of$772.4 million in current year attritional losses primarily d
303、ue to higher premiums earned and$511.1 million of losses related to COVID-19 in 2020,partially offset by a$120.5 million decline in current year catastrophe losses.The decrease in current year incurred losses in 2019 compared to 2018 was primarily due to$693.5 million of lower catastrophe losses in
304、2019 compared to 2018,partially offset by$415.6 million of additional attritional losses attributable to higher premiums earned in 2019 compared to 2018.Incurred prior years losses increased by$401.4 million in 2020,decreased by$63.6 million in 2019 and increased by$387.1 million in 2018.The increas
305、e 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.The reserve change also includes actions on non-CAT property lines,primarily for t
306、he 2017 to 2019 accident years and driven by a few large losses to aggregate programs.The decrease for 2019 primarily related to reserve reductions associated with short-tail lines of business and workers compensation.The increase for 2018 was mainly due to$561.2 million of adverse development on pr
307、ior years catastrophe losses,primarily related to Hurricanes Harvey,Irma and Maria,as well as the 2017 California wildfires.The increase in loss estimates for Hurricanes Harvey,Irma and Maria was mostly driven by re-opened claims,loss inflation from higher than expected loss adjustment expenses and
308、in particular,their impact on aggregate covers.This reserve increase was partially offset by$174.1 million of favorable development on prior years attritional losses which mainly related to U.S.and international property and casualty reinsurance business,as well as favorable development in the Insur
309、ance segment which largely related to workers compensation business.Since the Company has operations in many countries,part of the Companys loss and LAE reserves are in foreign currencies and translated to U.S.dollars for each reporting period.Fluctuations in the exchange rates for the currencies,pe
310、riod over period,affect the U.S.dollar amount of outstanding reserves.The translation adjustment line at the bottom of the table eliminates the impact of the exchange fluctuations from the reserve re-estimates.Reserves for Asbestos and Environmental Losses and LAE.Reserves for Asbestos and Environme
311、ntal Losses and LAE.At December 31,2020,the Companys gross reserves for A&E claims represented 1.3%of its total reserves.The Companys A&E liabilities stem from Mt.McKinley Insurance Companys(“Mt.McKinley”)direct 14 insurance business and Everest Res assumed reinsurance business.Liabilities related t
312、o Mt.McKinleys direct business,which had been ceded to Bermuda Re previously,were retroceded to an affiliate of Clearwater Insurance Company in July 2015,concurrent with the sale of Mt.McKinley to Clearwater Insurance Company.There are significant uncertainties in estimating the amount of the Compan
313、ys potential losses from A&E claims and ultimate values cannot be estimated using traditional reserving techniques.See ITEM 7,“Managements Discussion and Analysis of Financial Condition and Results of Operations Asbestos and Environmental Exposures”and Item 8,“Financial Statements and Supplementary
314、Data”-Note 3 of Notes to Consolidated Financial Statements.The following table summarizes the composition of the Companys total reserves for A&E losses,gross and net of reinsurance,for the periods indicated:Years Ended December 31,(Dollars in millions)2020 2019 2018 Gross reserves$219.3$257.9$347.5
315、Reinsurance receivable (21.1)(29.2)(86.0)Net reserves$198.3$228.7$261.5 (Some amounts may not reconcile due to rounding.)On July 13,2015,the Company sold Mt.McKinley to Clearwater Insurance Company.Concurrently with the closing,the Company entered into a retrocession treaty with an affiliate of Clea
316、rwater.Per the retrocession treaty,the Company retroceded 100%of the liabilities associated with certain Mt.McKinley policies,which had been reinsured by Bermuda Re.As consideration for entering into the retrocession treaty,Bermuda Re transferred cash of$140.3 million,an amount equal to the net loss
317、 reserves as of the closing date.Of the$140.3 million of net loss reserves retroceded,$100.5 million were related to A&E business.The maximum liability retroceded under the retrocession treaty will be$440.3 million,equal to the retrocession payment plus$300.0 million.The Company will retain liabilit
318、y for any amounts exceeding the maximum liability retroceded under the retrocession treaty.On December 20,2019,the retrocession treaty was amended and included a partial commutation.As a result of this amendment and partial commutation,gross A&E reserves and correspondingly reinsurance receivable we
319、re reduced by$43.4 million.In addition,the maximum liability permitted to be retroceded increased to$450.3 million.Additional losses,including those relating to latent injuries and other exposures,which are as yet unrecognized,the type or magnitude of which cannot be foreseen by either the Company o
320、r the industry,may emerge in the future.Such future emergence could have material adverse effects on the Companys future financial condition,results of operations and cash flows.Future Policy Benefit Reserves.Future Policy Benefit Reserves.The Company wrote a limited amount of life and annuity reins
321、urance in its Reinsurance segment.Future policy benefit liabilities for annuities are reported at the accumulated fund balance of these contracts.Reserves for those liabilities include mortality provisions with respect to life and annuity claims,both reported and unreported.Actual experience in a pa
322、rticular period may be worse than assumed experience and,consequently,may adversely affect the Companys operating results for that period.See ITEM 8,“Financial Statements and Supplementary Data”-Note 1F of Notes to Consolidated Financial Statements.15 Activity in the reserve for future policy benefi
323、ts is summarized for the periods indicated:At December 31,(Dollars in millions)2020 2019 2018 Balance at beginning of year$42.6$46.8$51.0 Liabilities assumed 0.1 0.1 Adjustments to reserves (1.1)0.4 0.8 Benefits paid in the current year (3.8)(4.6)(5.1)Balance at end of year$37.7$42.6$46.8 (Some amou
324、nts may not reconcile due to rounding.)Investments.Investments.The board of directors of each of the Companys operating subsidiaries is responsible for establishing investment policy and guidelines and,together with senior management,for overseeing their execution.The Companys principal investment o
325、bjectives are to ensure funds are available to meet its insurance and reinsurance obligations and to maximize after-tax investment income while maintaining a high quality diversified investment portfolio.Considering these objectives,the Company views its investment portfolio as having two components
326、:1)the investments needed to satisfy outstanding liabilities(its core fixed maturities portfolio)and 2)investments funded by the Companys shareholders equity.For the portion needed to satisfy global outstanding liabilities,the Company generally invests in fixed maturities with an average credit qual
327、ity of Aa3.This global fixed maturity securities portfolio is externally managed by independent,professional investment managers using portfolio guidelines approved by the Company.Over the past several years,the Company has expanded the allocation of its investments funded by shareholders equity to
328、include:1)a greater percentage of publicly traded equity securities,2)emerging market fixed maturities through mutual fund structures,as well as individual holdings,3)high yield fixed maturities,4)bank and private loan securities and 5)private equity limited partnership investments.The objective of
329、this portfolio diversification is to enhance the risk-adjusted total return of the investment portfolio by allocating a prudent portion of the portfolio to higher return asset classes.The Company limits its allocation to these asset classes because of 1)the potential for volatility in their values a
330、nd 2)the impact of these investments on regulatory and rating agency capital adequacy models.The Company uses investment managers experienced in these markets and adjusts its allocation to these investments based upon market conditions.At December 31,2020,the market value of investments in these inv
331、estment market sectors,carried at both market and fair value,approximated 76%of shareholders equity.The duration of an investment is based on the maturity of the security but also reflects the payment of interest and the possibility of early prepayments.The Companys fixed income investment guideline
332、s include a general duration guideline.This investment duration guideline is established and periodically revised by management,which considers economic and business factors,as well as the Companys average duration of potential liabilities,which,at December 31,2020,is estimated at approximately 3.2
333、years,based on the estimated payouts of underwriting liabilities using standard duration calculations.The duration of the fixed income portfolio at December 31,2020 and 2019 was 3.6 years and 3.5 years,respectively.For each currency in which the Company has established substantial loss and LAE reserves,the Company seeks to maintain invested assets denominated in such currency in an amount approxim
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