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Table of Contents
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q

| ☒ |  | Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
|  |  | For the quarterly period ended March 31, 2023
|  |  | Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Commission file number 1-15731
EVEREST RE GROUP, LTD.
(Exact name of registrant as specified in its charter)

Bermuda |  | 98-0365432
(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 Bermuda |  | HM 19
(Address of principal executive offices) |  | (Zip Code)

441-295-0006
(Registrant’s telephone number, including area code)
Not Applicable
(Former name, former address and former fiscal year, if changed since last report)

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

Class |  | Trading Symbol |  | Name of Exchange where Registered |  |
Common Shares, $0.01 par value |  | RE |  | New York Stock Exchange |  |

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

Yes | 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 Regulation S-T (§232.405 of this chapter) 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 whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large Accelerated Filer | X |  | Accelerated filer |
Non-accelerated filer |  |  | Smaller reporting company |
|  |  | Emerging growth company |

If an emerging growth company, indicate by check mark if the registrant 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. [ ]
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

YES |  |  | NO | X

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

Class |  |  |  |  |  | Number of Shares Outstanding At May 1, 2023
Common Shares, $0.01 par value |  |  |  |  |  | 39,275,224

Table of Contents
EVEREST RE GROUP, LTD
Table of Contents
Form 10-Q

|  | Page
| PART I |
| FINANCIAL INFORMATION |
Item 1. | Financial Statements |
| Consolidated Balance Sheets as of March 31, 2023 (unaudited) and December 31, 2022 | 1
| Consolidated Statements of Operations and Comprehensive Income (Loss) for the three months ended March 31, 2023 and 2022 (unaudited) | 2
| Consolidated Statements of Changes in Shareholders’ Equity for the three months ended March 31, 2023 and 2022 (unaudited) | 3
| Consolidated Statements of Cash Flows for the three months ended March 31, 2023 and 2022 (unaudited) | 4
| Notes to Consolidated Interim Financial Statements (unaudited) | 5
Item 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operation | 29
Item 3. | Quantitative and Qualitative Disclosures About Market Risk | 43
Item 4. | Controls and Procedures | 43
| PART II |
| OTHER INFORMATION |
Item 1. | Legal Proceedings | 44
Item 1A. | Risk Factors | 44
Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds | 44
Item 3. | Defaults Upon Senior Securities | 44
Item 4. | Mine Safety Disclosures | 44
Item 5. | Other Information | 45
Item 6. | Exhibits | 46

Table of Contents
EVEREST RE GROUP, LTD.
CONSOLIDATED BALANCE SHEETS

| March 31, |  | December 31,
(Dollars and share amounts in millions, except par value per share) | 2023 |  | 2022
| (unaudited) |  |
ASSETS: |  |  |
Fixed maturities - available for sale, at fair value (amortized cost: 2023, $25,247; 2022, $24,191, credit allowances: 2023, $(62); 2022, $(54)) | $ | 23,560 |  |  | $ | 22,236 |
Fixed maturities - held to maturity, at amortized cost (fair value: 2023, $814; 2022, $821, net of credit allowances: 2023, $(9); 2022, $(9)) | 825 |  |  | 839 |
Equity securities, at fair value | 250 |  |  | 281 |
Other invested assets | 4,156 |  |  | 4,085 |
Short-term investments | 1,034 |  |  | 1,032 |
Cash | 1,610 |  |  | 1,398 |
Total investments and cash | 31,435 |  |  | 29,872 |
Accrued investment income | 235 |  |  | 217 |
Premiums receivable (net of credit allowances: 2023, $(30); 2022, $(29)) | 3,922 |  |  | 3,619 |
Reinsurance paid loss recoverables (net of credit allowances: 2023, $(24); 2022, $(23)) | 182 |  |  | 136 |
Reinsurance unpaid loss recoverables | 2,125 |  |  | 2,105 |
Funds held by reinsureds | 1,071 |  |  | 1,056 |
Deferred acquisition costs | 1,011 |  |  | 962 |
Prepaid reinsurance premiums | 611 |  |  | 610 |
Income tax asset, net | 387 |  |  | 459 |
Other assets (net of credit allowances: 2023, $(7); 2022, $(5)) | 860 |  |  | 930 |
TOTAL ASSETS | $ | 41,839 |  |  | $ | 39,966 |
LIABILITIES: |  |  |
Reserve for losses and loss adjustment expenses | $ | 22,878 |  |  | $ | 22,065 |
Future policy benefit reserve | 29 |  |  | 29 |
Unearned premium reserve | 5,418 |  |  | 5,147 |
Funds held under reinsurance treaties | 10 |  |  | 13 |
Other net payable to reinsurers | 618 |  |  | 567 |
Losses in course of payment | 123 |  |  | 74 |
Senior notes | 2,348 |  |  | 2,347 |
Long-term notes | 218 |  |  | 218 |
Borrowings from FHLB | 519 |  |  | 519 |
Accrued interest on debt and borrowings | 41 |  |  | 19 |
Unsettled securities payable | 201 |  |  | 1 |
Other liabilities | 422 |  |  | 526 |
Total liabilities | 32,825 |  |  | 31,525 |
Commitments and contingencies (Note 7) |  |  |
SHAREHOLDERS' EQUITY: |  |  |
Preferred shares, par value: $0.01; 50.0 shares authorized; no shares issued and outstanding | — |  |  | — |
Common shares, par value: $0.01; 200.0 shares authorized; (2023) 70.0 and (2022) 69.9 outstanding before treasury shares | 1 |  |  | 1 |
Additional paid-in capital | 2,295 |  |  | 2,302 |
Accumulated other comprehensive income (loss), net of deferred income tax expense (benefit) of $(218) at 2023 and $(250) at 2022 | (1,716) |  |  | (1,996) |
Treasury shares, at cost; 30.8 shares (2023) and 30.8 shares (2022) | (3,908) |  |  | (3,908) |
Retained earnings | 12,342 |  |  | 12,042 |
Total shareholders' equity | 9,014 |  |  | 8,441 |
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY | $ | 41,839 |  |  | $ | 39,966 |

The accompanying notes are an integral part of the consolidated financial statements.
1

Table of Contents
EVEREST RE GROUP, LTD.
CONSOLIDATED STATEMENTS OF OPERATIONS
AND COMPREHENSIVE INCOME (LOSS)

| Three Months Ended March 31, |  |
(Dollars in millions, except per share amounts) | 2023 |  | 2022 |  |  |  |
| (unaudited) |  |
REVENUES: |  |  |  |  |  |  |
Premiums earned | $ | 3,100 |  |  | $ | 2,792 |  |  |  |  |
Net investment income | 260 |  |  | 243 |  |  |  |  |
Net gains (losses) on investments: |  |  |  |  |  |  |
Credit allowances on fixed maturity securities | (8) |  |  | (12) |  |  |  |  |
Gains (losses) from fair value adjustments | 4 |  |  | (137) |  |  |  |  |
Net realized gains (losses) from dispositions | 8 |  |  | (5) |  |  |  |  |
Total net gains (losses) on investments | 5 |  |  | (154) |  |  |  |  |
Other income (expense) | (79) |  |  | 15 |  |  |  |  |
Total revenues | 3,286 |  |  | 2,896 |  |  |  |  |
CLAIMS AND EXPENSES: |  |  |  |  |  |  |
Incurred losses and loss adjustment expenses | 1,966 |  |  | 1,790 |  |  |  |  |
Commission, brokerage, taxes and fees | 661 |  |  | 605 |  |  |  |  |
Other underwriting expenses | 200 |  |  | 161 |  |  |  |  |
Corporate expenses | 19 |  |  | 14 |  |  |  |  |
Interest, fees and bond issue cost amortization expense | 32 |  |  | 24 |  |  |  |  |
Total claims and expenses | 2,878 |  |  | 2,594 |  |  |  |  |
INCOME (LOSS) BEFORE TAXES | 408 |  |  | 302 |  |  |  |  |
Income tax expense (benefit) | 43 |  |  | 4 |  |  |  |  |
NET INCOME (LOSS) | $ | 365 |  |  | $ | 298 |  |  |  |  |
Other comprehensive income (loss), net of tax: |  |  |  |  |  |  |
Unrealized appreciation (depreciation) ("URA(D)") on securities arising during the period | 246 |  |  | (815) |  |  |  |  |
Reclassification adjustment for realized losses (gains) included in net income (loss) | 3 |  |  | 4 |  |  |  |  |
Total URA(D) on securities arising during the period | 249 |  |  | (811) |  |  |  |  |
Foreign currency translation adjustments | 31 |  |  | (34) |  |  |  |  |
Reclassification adjustment for amortization of net (gain) loss included in net income (loss) | — |  |  | 1 |  |  |  |  |
Total benefit plan net gain (loss) for the period | — |  |  | 1 |  |  |  |  |
Total other comprehensive income (loss), net of tax | 280 |  |  | (844) |  |  |  |  |
COMPREHENSIVE INCOME (LOSS) | $ | 645 |  |  | $ | (547) |  |  |  |  |
EARNINGS PER COMMON SHARE: |  |  |  |  |  |  |
Basic | $ | 9.31 |  |  | $ | 7.57 |  |  |  |  |
Diluted | 9.31 |  |  | 7.56 |  |  |  |  |

The accompanying notes are an integral part of the consolidated financial statements.
2

Table of Contents
EVEREST RE GROUP, LTD.
CONSOLIDATED STATEMENTS OF
CHANGES IN SHAREHOLDERS’ EQUITY

|  |  | Three Months Ended March 31,
(Dollars in millions, except dividends per share amounts) |  |  |  |  | 2023 |  | 2022
|  |  | (unaudited)
COMMON SHARES (shares outstanding): |  |  |  |  |  |  |
Balance beginning of period |  |  |  |  | 39 |  |  | 39 |
Issued (redeemed) during the period, net |  |  |  |  | — |  |  | — |
Treasury shares acquired |  |  |  |  | — |  |  | — |
Balance end of period |  |  |  |  | 39 |  |  | 39 |
COMMON SHARES (par value): |  |  |  |  |  |  |
Balance beginning of period |  |  |  |  | $ | 1 |  |  | $ | 1 |
Issued during the period, net |  |  |  |  | — |  |  | — |
Balance end of period |  |  |  |  | 1 |  |  | 1 |
ADDITIONAL PAID-IN CAPITAL: |  |  |  |  |  |  |
Balance beginning of period |  |  |  |  | 2,302 |  |  | 2,274 |
Share-based compensation plans |  |  |  |  | (7) |  |  | (3) |
Balance end of period |  |  |  |  | 2,295 |  |  | 2,272 |
ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS), NET OF DEFERRED INCOME TAXES: |  |  |  |  |  |  |
Balance beginning of period |  |  |  |  | (1,996) |  |  | 12 |
Net increase (decrease) during the period |  |  |  |  | 280 |  |  | (844) |
Balance end of period |  |  |  |  | (1,716) |  |  | (833) |
RETAINED EARNINGS: |  |  |  |  |  |  |
Balance beginning of period |  |  |  |  | 12,042 |  |  | 11,700 |
Net income (loss) |  |  |  |  | 365 |  |  | 298 |
Dividends declared ($1.65 per share in 1Q2023 and $1.55 per share in 1Q2022) |  |  |  |  | (65) |  |  | (61) |
Balance, end of period |  |  |  |  | 12,342 |  |  | 11,936 |
TREASURY SHARES AT COST: |  |  |  |  |  |  |
Balance beginning of period |  |  |  |  | (3,908) |  |  | (3,847) |
Purchase of treasury shares |  |  |  |  | — |  |  | (1) |
Balance end of period |  |  |  |  | (3,908) |  |  | (3,849) |
TOTAL SHAREHOLDERS' EQUITY, END OF PERIOD |  |  |  |  | $ | 9,014 |  |  | $ | 9,528 |

The accompanying notes are an integral part of the consolidated financial statements.
3

Table of Contents
EVEREST RE GROUP, LTD.
CONSOLIDATED STATEMENTS OF CASH FLOWS

| Three Months Ended March 31,
(Dollars in millions) | 2023 |  | 2022
| (unaudited)
CASH FLOWS FROM OPERATING ACTIVITIES: |  |  |
Net income (loss) | $ | 365 |  |  | $ | 298 |
Adjustments to reconcile net income to net cash provided by operating activities: |  |  |
Decrease (increase) in premiums receivable | (259) |  |  | (14) |
Decrease (increase) in funds held by reinsureds, net | (17) |  |  | (67) |
Decrease (increase) in reinsurance recoverables | 7 |  |  | (126) |
Decrease (increase) in income taxes | 41 |  |  | 1 |
Decrease (increase) in prepaid reinsurance premiums | 28 |  |  | (7) |
Increase (decrease) in reserve for losses and loss adjustment expenses | 681 |  |  | 632 |
Increase (decrease) in future policy benefit reserve | — |  |  | (1) |
Increase (decrease) in unearned premiums | 226 |  |  | 4 |
Increase (decrease) in other net payable to reinsurers | 17 |  |  | 46 |
Increase (decrease) in losses in course of payment | 47 |  |  | (125) |
Change in equity adjustments in limited partnerships | (5) |  |  | (98) |
Distribution of limited partnership income | 48 |  |  | 71 |
Change in other assets and liabilities, net | (121) |  |  | 47 |
Non-cash compensation expense | 12 |  |  | 12 |
Amortization of bond premium (accrual of bond discount) | (1) |  |  | 19 |
Net (gains) losses on investments | (5) |  |  | 154 |
Net cash provided by (used in) operating activities | 1,064 |  |  | 846 |
CASH FLOWS FROM INVESTING ACTIVITIES: |  |  |
Proceeds from fixed maturities matured/called/repaid - available for sale | 562 |  |  | 849 |
Proceeds from fixed maturities sold - available for sale | 72 |  |  | 419 |
Proceeds from fixed maturities matured/called/repaid - held to maturity | 28 |  |  | — |
Proceeds from equity securities sold | 46 |  |  | 90 |
Distributions from other invested assets | 137 |  |  | 163 |
Cost of fixed maturities acquired - available for sale | (1,613) |  |  | (2,011) |
Cost of fixed maturities acquired - held to maturity | (11) |  |  | — |
Cost of equity securities acquired | (1) |  |  | (195) |
Cost of other invested assets acquired | (242) |  |  | (137) |
Net change in short-term investments | 4 |  |  | 355 |
Net change in unsettled securities transactions | 267 |  |  | 46 |
Net cash provided by (used in) investing activities | (752) |  |  | (421) |
CASH FLOWS FROM FINANCING ACTIVITIES: |  |  |
Common shares issued (redeemed) during the period for share-based compensation, net of expense | (19) |  |  | (14) |
Purchase of treasury shares | — |  |  | (1) |
Dividends paid to shareholders | (65) |  |  | (61) |
Cost of shares withheld on settlements of share-based compensation awards | (19) |  |  | (17) |
Net cash provided by (used in) financing activities | (103) |  |  | (94) |
EFFECT OF EXCHANGE RATE CHANGES ON CASH | 3 |  |  | 6 |
Net increase (decrease) in cash | 212 |  |  | 337 |
Cash, beginning of period | 1,398 |  |  | 1,441 |
Cash, end of period | $ | 1,610 |  |  | $ | 1,778 |
SUPPLEMENTAL CASH FLOW INFORMATION: |  |  |
Income taxes paid (recovered) | $ | 2 |  |  | $ | 3 |
Interest paid | 10 |  |  | 2 |

The accompanying notes are an integral part of the consolidated financial statements.
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NOTES TO CONSOLIDATED INTERIM FINANCIAL STATEMENTS (UNAUDITED)
For the Three Months Ended March 31, 2023 and 2022
1. GENERAL
Everest Re Group, Ltd. (“Group”), a Bermuda company, through its subsidiaries, principally provides reinsurance and insurance in the U.S., Bermuda and international markets. As used in this document, “Company” means Group and its subsidiaries.
2. BASIS OF PRESENTATION
The unaudited consolidated financial statements of the Company as of March 31, 2023 and December 31, 2022 and for the three months ended March 31, 2023 and 2022 include all adjustments, consisting of normal recurring accruals, which, in the opinion of management, are necessary for a fair statement of the results on an interim basis. Certain financial information, which is normally included in annual financial statements prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”), has been omitted since it is not required for interim reporting purposes. The December 31, 2022 consolidated balance sheet data was derived from audited financial statements but does not include all disclosures required by GAAP. The results for the three months ended March 31, 2023 and 2022 are not necessarily indicative of the results for a full year. These financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto for the years ended December 31, 2022, 2021 and 2020, included in the Company’s most recent Form 10-K filing.
The Company consolidates the results of operations and financial position of all voting interest entities ("VOE") in which the Company has a controlling financial interest and all variable interest entities ("VIE") in which the Company is considered to be the primary beneficiary. The consolidation assessment, including the determination as to whether an entity qualifies as a VIE or VOE, depends on the facts and circumstances surrounding each entity.
The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities (and disclosure of contingent assets and liabilities) at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Ultimate actual results could differ, possibly materially, from those estimates.
All intercompany accounts and transactions have been eliminated.
Application of Recently Issued Accounting Standard Changes.
The Company did not adopt any new accounting standards that had a material impact during the three months ended March 31, 2023. The Company assessed the adoption impacts of recently issued accounting standards by the Financial Accounting Standards Board on the Company’s consolidated financial statements as well as material updates to previous assessments, if any, from the Company’s Annual Report on Form 10-K for the year ended December 31, 2022. There were no accounting standards issued in the three months ended March 31, 2023, that are expected to have a material impact to Group.
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3. INVESTMENTS
The tables below present the amortized cost, allowance for credit losses, gross unrealized appreciation/(depreciation) and market value of fixed maturity securities - available for sale for the periods indicated:

| At March 31, 2023
(Dollars in millions) | Amortized Cost |  | Allowance for Credit Losses |  | Unrealized Appreciation |  | Unrealized Depreciation |  | Fair Value
Fixed maturity securities - available for sale |  |  |  |  |  |  |  |  |
U.S. Treasury securities and obligations of U.S. government agencies and corporations | $ | 1,323 |  |  | $ | — |  |  | $ | 5 |  |  | $ | (69) |  |  | $ | 1,259 |
Obligations of U.S. states and political subdivisions | 424 |  |  | — |  |  | 2 |  |  | (30) |  |  | 396 |
Corporate securities | 7,202 |  |  | (55) |  |  | 29 |  |  | (497) |  |  | 6,679 |
Asset-backed securities | 4,567 |  |  | — |  |  | 5 |  |  | (129) |  |  | 4,443 |
Mortgage-backed securities |  |  |  |  |  |  |  |  |
Commercial | 1,075 |  |  | — |  |  | 1 |  |  | (102) |  |  | 974 |
Agency residential | 3,690 |  |  | — |  |  | 19 |  |  | (244) |  |  | 3,465 |
Non-agency residential | 5 |  |  | — |  |  | — |  |  | (1) |  |  | 4 |
Foreign government securities | 1,616 |  |  | — |  |  | 8 |  |  | (153) |  |  | 1,471 |
Foreign corporate securities | 5,345 |  |  | (7) |  |  | 22 |  |  | (491) |  |  | 4,869 |
Total fixed maturity securities - available for sale | $ | 25,247 |  |  | $ | (62) |  |  | $ | 91 |  |  | $ | (1,716) |  |  | $ | 23,560 |

(Some amounts may not reconcile due to rounding.)

| At December 31, 2022
(Dollars in millions) | Amortized Cost |  | Allowance for Credit Losses |  | Unrealized Appreciation |  | Unrealized Depreciation |  | Fair Value
Fixed maturity securities - available for sale |  |  |  |  |  |  |  |  |
U.S. Treasury securities and obligations of U.S. government agencies and corporations | $ | 1,334 |  |  | $ | — |  |  | $ | 6 |  |  | $ | (82) |  |  | $ | 1,257 |
Obligations of U.S. states and political subdivisions | 444 |  |  | — |  |  | 2 |  |  | (32) |  |  | 413 |
Corporate securities | 7,044 |  |  | (45) |  |  | 31 |  |  | (561) |  |  | 6,469 |
Asset-backed securities | 4,229 |  |  | — |  |  | 5 |  |  | (171) |  |  | 4,063 |
Mortgage-backed securities |  |  |  |  |  |  |  |  |
Commercial | 1,023 |  |  | — |  |  | — |  |  | (105) |  |  | 919 |
Agency residential | 3,382 |  |  | — |  |  | 7 |  |  | (290) |  |  | 3,099 |
Non-agency residential | 5 |  |  | — |  |  | — |  |  | (1) |  |  | 4 |
Foreign government securities | 1,586 |  |  | — |  |  | 8 |  |  | (179) |  |  | 1,415 |
Foreign corporate securities | 5,143 |  |  | (10) |  |  | 23 |  |  | (562) |  |  | 4,596 |
Total fixed maturity securities - available for sale | $ | 24,191 |  |  | $ | (54) |  |  | $ | 81 |  |  | $ | (1,982) |  |  | $ | 22,236 |

(Some amounts may not reconcile due to rounding.)
The following tables show amortized cost, allowance for credit losses, gross unrealized appreciation/(depreciation) and fair value of fixed maturity securities - held to maturity for the periods indicated:

| At March 31, 2023
(Dollars in millions) | Amortized Cost |  | Allowance for Credit Losses |  | Unrealized Appreciation |  | Unrealized Depreciation |  | Fair Value
Fixed maturity securities - held to maturity |  |  |  |  |  |  |  |  |
Corporate securities | $ | 152 |  |  | $ | (2) |  |  | $ | 1 |  |  | $ | (3) |  |  | $ | 148 |
Asset-backed securities | 640 |  |  | (6) |  |  | 1 |  |  | (12) |  |  | 624 |
Mortgage-backed securities |  |  |  |  |  |  |  |  |
Commercial | 14 |  |  | — |  |  | — |  |  | — |  |  | 14 |
Foreign corporate securities | 28 |  |  | (1) |  |  | 2 |  |  | — |  |  | 29 |
Total fixed maturity securities - held to maturity | $ | 834 |  |  | (9) |  |  | $ | 4 |  |  | $ | (15) |  |  | $ | 814 |

(Some amounts may not reconcile due to rounding.)
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| At December 31, 2022
(Dollars in millions) | Amortized Cost |  | Allowance for Credit Losses |  | Unrealized Appreciation |  | Unrealized Depreciation |  | Fair Value
Fixed maturity securities - held to maturity |  |  |  |  |  |  |  |  |
Corporate securities | $ | 152 |  |  | $ | (2) |  |  | $ | — |  |  | $ | (6) |  |  | $ | 144 |
Asset-backed securities | 661 |  |  | (6) |  |  | 2 |  |  | (15) |  |  | 642 |
Mortgage-backed securities |  |  |  |  |  |  |  |  |
Commercial | 7 |  |  | — |  |  | — |  |  | — |  |  | 7 |
Foreign corporate securities | 28 |  |  | (1) |  |  | 2 |  |  | — |  |  | 28 |
Total fixed maturity securities - held to maturity | $ | 848 |  |  | $ | (9) |  |  | $ | 3 |  |  | $ | (22) |  |  | $ | 821 |

(Some amounts may not reconcile due to rounding.)
The amortized cost and fair value of fixed maturity securities - available for sale are shown in the following table by contractual maturity. As the stated maturity of such securities may not be indicative of actual maturities, the totals for mortgage-backed and asset-backed securities are shown separately.

| At March 31, 2023 |  | At December 31, 2022
(Dollars in millions) | Amortized Cost |  | Fair Value |  | Amortized Cost |  | Fair Value
Fixed maturity securities – available for sale |  |  |  |  |  |  |
Due in one year or less | $ | 1,449 |  |  | $ | 1,417 |  |  | $ | 1,331 |  |  | $ | 1,314 |
Due after one year through five years | 8,385 |  |  | 7,877 |  |  | 8,131 |  |  | 7,546 |
Due after five years through ten years | 4,548 |  |  | 4,072 |  |  | 4,636 |  |  | 4,057 |
Due after ten years | 1,528 |  |  | 1,310 |  |  | 1,454 |  |  | 1,233 |
Asset-backed securities | 4,567 |  |  | 4,443 |  |  | 4,229 |  |  | 4,063 |
Mortgage-backed securities |  |  |  |  |  |  |
Commercial | 1,075 |  |  | 974 |  |  | 1,023 |  |  | 919 |
Agency residential | 3,690 |  |  | 3,465 |  |  | 3,382 |  |  | 3,099 |
Non-agency residential | 5 |  |  | 4 |  |  | 5 |  |  | 4 |
Total fixed maturity securities - available for sale | $ | 25,247 |  |  | $ | 23,560 |  |  | $ | 24,191 |  |  | $ | 22,236 |

(Some amounts may not reconcile due to rounding.)
The amortized cost and fair value of fixed maturity securities - held to maturity are shown in the following table by contractual maturity. As the stated maturity of such securities may not be indicative of actual maturities, the totals for mortgage-backed and asset-backed securities are shown separately.

| At March 31, 2023 |  | At December 31, 2022
(Dollars in millions) | Amortized Cost |  | Fair Value |  | Amortized Cost |  | Fair Value
Fixed maturity securities – held to maturity |  |  |  |  |  |  |
Due in one year or less | $ | 5 |  |  | $ | 5 |  |  | $ | 5 |  |  | $ | 5 |
Due after one year through five years | 63 |  |  | 63 |  |  | 63 |  |  | 61 |
Due after five years through ten years | 43 |  |  | 42 |  |  | 43 |  |  | 41 |
Due after ten years | 68 |  |  | 67 |  |  | 68 |  |  | 65 |
Asset-backed securities | 640 |  |  | 624 |  |  | 661 |  |  | 642 |
Mortgage-backed securities |  |  |  |  |  |  |
Commercial | 14 |  |  | 14 |  |  | 7 |  |  | 7 |
Total fixed maturity securities - held to maturity | $ | 834 |  |  | $ | 814 |  |  | $ | 848 |  |  | $ | 821 |

(Some amounts may not reconcile due to rounding.)
During the third quarter of 2022, the Company re-designated a portion of its fixed maturity securities from its fixed maturity – available for sale portfolio to its fixed maturity – held to maturity portfolio. The fair value of the securities reclassified at the date of transfer was $722 million, net of allowance for current expected credit losses, which was subsequently recognized as the new amortized cost basis. As of March 31, 2023, these securities had an unrealized loss
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of $48 million, which remained in accumulated other comprehensive income on the balance sheet and will be amortized into income through an adjustment to the yields of the underlying securities over the remaining life of the securities.
The Company evaluated fixed maturity securities classified as held to maturity for current expected credit losses as of March 31, 2023 utilizing risk characteristics of each security, including credit rating, remaining time to maturity, adjusted for prepayment considerations, and subordination level, and applying default and recovery rates, which include the incorporation of historical credit loss experience and macroeconomic forecasts, to develop an estimate of current expected credit losses. These fixed maturities classified as held to maturity are of a high credit quality and are all rated investment grade as of March 31, 2023.
The changes in net unrealized appreciation (depreciation) for the Company’s investments are derived from the following sources for the periods indicated:

| Three Months Ended March 31, |  |
(Dollars in millions) | 2023 |  | 2022 |  |  |  |
Increase (decrease) during the period between the fair value and cost of investments carried at fair value, and deferred taxes thereon: |  |  |  |  |  |  |
Fixed maturity securities - available for sale and short-term investments | $ | 279 |  |  | $ | (927) |  |  |  |  |
Change in unrealized appreciation (depreciation), pre-tax | 279 |  |  | (927) |  |  |  |  |
Deferred tax benefit (expense) | (30) |  |  | 116 |  |  |  |  |
Change in unrealized appreciation (depreciation), net of deferred taxes, included in shareholders’ equity | $ | 249 |  |  | $ | (811) |  |  |  |  |

(Some amounts may not reconcile due to rounding.)
The tables below display the aggregate fair value and gross unrealized depreciation of fixed maturity securities - available for sale by security type and contractual maturity, in each case subdivided according to length of time that individual securities had been in a continuous unrealized loss position for the periods indicated:

| Duration of Unrealized Loss at March 31, 2023 By Security Type
| Less than 12 months |  | Greater than 12 months |  | Total
(Dollars in millions) | Fair Value |  | Gross Unrealized Depreciation |  | Fair Value |  | Gross Unrealized Depreciation |  | Fair Value |  | Gross Unrealized Depreciation
Fixed maturity securities - available for sale |  |  |  |  |  |  |  |  |  |  |
U.S. Treasury securities and obligations of U.S. government agencies and corporations | $ | 359 |  |  | $ | (10) |  |  | $ | 764 |  |  | $ | (59) |  |  | $ | 1,124 |  |  | $ | (69) |
Obligations of U.S. states and political subdivisions | 113 |  |  | (6) |  |  | 119 |  |  | (22) |  |  | 232 |  |  | (28) |
Corporate securities | 2,358 |  |  | (89) |  |  | 3,177 |  |  | (407) |  |  | 5,536 |  |  | (496) |
Asset-backed securities | 1,644 |  |  | (37) |  |  | 1,881 |  |  | (92) |  |  | 3,525 |  |  | (129) |
Mortgage-backed securities |  |  |  |  |  |  |  |  |  |  |
Commercial | 317 |  |  | (20) |  |  | 634 |  |  | (82) |  |  | 951 |  |  | (102) |
Agency residential | 1,270 |  |  | (49) |  |  | 1,373 |  |  | (195) |  |  | 2,643 |  |  | (244) |
Non-agency residential | 1 |  |  | — |  |  | 4 |  |  | (1) |  |  | 4 |  |  | (1) |
Foreign government securities | 392 |  |  | (17) |  |  | 895 |  |  | (136) |  |  | 1,287 |  |  | (153) |
Foreign corporate securities | 1,504 |  |  | (67) |  |  | 2,743 |  |  | (425) |  |  | 4,247 |  |  | (492) |
Total | $ | 7,958 |  |  | $ | (295) |  |  | $ | 11,590 |  |  | $ | (1,419) |  |  | $ | 19,548 |  |  | $ | (1,714) |
Securities where an allowance for credit loss was recorded | 3 |  |  | (1) |  |  | — |  |  | (1) |  |  | 3 |  |  | (2) |
Total fixed maturity securities - available for sale | $ | 7,961 |  |  | $ | (296) |  |  | $ | 11,591 |  |  | $ | (1,420) |  |  | $ | 19,551 |  |  | $ | (1,716) |

(Some amounts may not reconcile due to rounding.)
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| Duration of Unrealized Loss at March 31, 2023 By Maturity
| Less than 12 months |  | Greater than 12 months |  | Total
(Dollars in millions) | Fair Value |  | Gross Unrealized Depreciation |  | Fair Value |  | Gross Unrealized Depreciation |  | Fair Value |  | Gross Unrealized Depreciation
Fixed maturity securities - available for sale |  |  |  |  |  |  |  |  |  |  |
Due in one year or less | $ | 849 |  |  | $ | (14) |  |  | $ | 285 |  |  | $ | (19) |  |  | $ | 1,134 |  |  | $ | (32) |
Due in one year through five years | 2,342 |  |  | (86) |  |  | 4,391 |  |  | (436) |  |  | 6,733 |  |  | (523) |
Due in five years through ten years | 1,196 |  |  | (66) |  |  | 2,308 |  |  | (422) |  |  | 3,503 |  |  | (489) |
Due after ten years | 339 |  |  | (22) |  |  | 715 |  |  | (172) |  |  | 1,055 |  |  | (194) |
Asset-backed securities | 1,644 |  |  | (37) |  |  | 1,881 |  |  | (92) |  |  | 3,525 |  |  | (129) |
Mortgage-backed securities | 1,588 |  |  | (70) |  |  | 2,010 |  |  | (278) |  |  | 3,598 |  |  | (347) |
Total | $ | 7,958 |  |  | $ | (295) |  |  | $ | 11,590 |  |  | $ | (1,419) |  |  | $ | 19,548 |  |  | $ | (1,714) |
Securities where an allowance for credit loss was recorded | 3 |  |  | (1) |  |  | — |  |  | (1) |  |  | 3 |  |  | (2) |
Total fixed maturity securities - available for sale | $ | 7,961 |  |  | $ | (296) |  |  | $ | 11,591 |  |  | $ | (1,420) |  |  | $ | 19,551 |  |  | $ | (1,716) |

(Some amounts may not reconcile due to rounding.)
The aggregate fair value and gross unrealized losses related to fixed maturity securities - available for sale in an unrealized loss position at March 31, 2023 were $19.6 billion and $1.7 billion, respectively. The fair value of securities for the single issuer (the United States government), whose securities comprised the largest unrealized loss position at March 31, 2023, did not exceed 4.8% of the overall fair value of the Company’s fixed maturity securities available for sale. The fair value of the securities for the issuer with the second largest unrealized loss position at March 31, 2023, comprised less than 0.8% of the Company’s fixed maturity securities available for sale. In addition, as indicated on the above table, there was no significant concentration of unrealized losses in any one market sector. The $296 million of unrealized losses related to fixed maturity securities - available for sale that have been in an unrealized loss position for less than one year were generally comprised of domestic and foreign corporate securities, agency residential and commercial mortgage-backed securities, asset-backed securities and foreign government securities. Of these unrealized losses, $263 million were related to securities that were rated investment grade by at least one nationally recognized rating agency. The $1.4 billion of unrealized losses related to fixed maturity securities - available for sale in an unrealized loss position for more than one year related primarily to foreign and domestic corporate securities, agency residential mortgage-backed securities, foreign government securities and asset-backed securities. Of these unrealized losses, $1.3 billion were related to securities that were rated investment grade by at least one nationally recognized rating agency. In all instances, there were no projected cash flow shortfalls to recover the full book value of the investments and the related interest obligations. The mortgage-backed securities still have excess credit coverage and are current on interest and principal payments. Based upon the Company’s current evaluation of securities in an unrealized loss position as of March 31, 2023, the unrealized losses are due to changes in interest rates and non-issuer specific credit spreads and are not credit-related. In addition, the contractual terms of these securities do not permit these securities to be settled at a price less than their amortized cost.
The Company, given the size of its investment portfolio and capital position, does not have the intent to sell these securities; and it is more likely than not that the Company will not have to sell the security before recovery of its cost basis. In addition, all securities currently in an unrealized loss position are current with respect to principal and interest payments.
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The tables below display the aggregate fair value and gross unrealized depreciation of fixed maturity securities - available for sale by security type and contractual maturity, in each case subdivided according to length of time that individual securities had been in a continuous unrealized loss position for the periods indicated:

| Duration of Unrealized Loss at December 31, 2022 By Security Type
| Less than 12 months |  | Greater than 12 months |  | Total
(Dollars in millions) | Fair Value |  | Gross Unrealized Depreciation |  | Fair Value |  | Gross Unrealized Depreciation |  | Fair Value |  | Gross Unrealized Depreciation
Fixed maturity securities - available for sale |  |  |  |  |  |  |  |  |  |  |
U.S. Treasury securities and obligations of U.S. government agencies and corporations | $ | 668 |  |  | $ | (31) |  |  | $ | 487 |  |  | $ | (52) |  |  | $ | 1,155 |  |  | $ | (82) |
Obligations of U.S. states and political subdivisions | 235 |  |  | (23) |  |  | 27 |  |  | (9) |  |  | 261 |  |  | (32) |
Corporate securities | 4,143 |  |  | (326) |  |  | 1,316 |  |  | (234) |  |  | 5,459 |  |  | (561) |
Asset-backed securities | 3,204 |  |  | (142) |  |  | 456 |  |  | (29) |  |  | 3,661 |  |  | (171) |
Mortgage-backed securities |  |  |  |  |  |  |  |  |  |  |
Commercial | 806 |  |  | (90) |  |  | 101 |  |  | (15) |  |  | 907 |  |  | (105) |
Agency residential | 1,905 |  |  | (132) |  |  | 870 |  |  | (158) |  |  | 2,776 |  |  | (289) |
Non-agency residential | 4 |  |  | — |  |  | 1 |  |  | (1) |  |  | 4 |  |  | — |
Foreign government securities | 985 |  |  | (100) |  |  | 321 |  |  | (79) |  |  | 1,306 |  |  | (179) |
Foreign corporate securities | 3,264 |  |  | (372) |  |  | 853 |  |  | (189) |  |  | 4,117 |  |  | (561) |
Total | $ | 15,213 |  |  | $ | (1,217) |  |  | $ | 4,432 |  |  | $ | (764) |  |  | $ | 19,645 |  |  | $ | (1,982) |
Securities where an allowance for credit loss was recorded | 2 |  |  | — |  |  | — |  |  | — |  |  | 2 |  |  | — |
Total fixed maturity securities - available for sale | $ | 15,215 |  |  | $ | (1,217) |  |  | $ | 4,432 |  |  | $ | (764) |  |  | $ | 19,647 |  |  | $ | (1,982) |

(Some amounts may not reconcile due to rounding.)

| Duration of Unrealized Loss at December 31, 2022 By Maturity
| Less than 12 months |  | Greater than 12 months |  | Total
(Dollars in millions) | Fair Value |  | Gross Unrealized Depreciation |  | Fair Value |  | Gross Unrealized Depreciation |  | Fair Value |  | Gross Unrealized Depreciation
Fixed maturity securities - available for sale |  |  |  |  |  |  |  |  |  |  |
Due in one year or less | $ | 989 |  |  | $ | (19) |  |  | $ | 40 |  |  | $ | (7) |  |  | $ | 1,029 |  |  | $ | (26) |
Due in one year through five years | 4,935 |  |  | (383) |  |  | 1,645 |  |  | (209) |  |  | 6,580 |  |  | (592) |
Due in five years through ten years | 2,698 |  |  | (360) |  |  | 911 |  |  | (230) |  |  | 3,609 |  |  | (590) |
Due after ten years | 672 |  |  | (91) |  |  | 408 |  |  | (116) |  |  | 1,080 |  |  | (207) |
Asset-backed securities | 3,204 |  |  | (142) |  |  | 456 |  |  | (29) |  |  | 3,661 |  |  | (171) |
Mortgage-backed securities | 2,715 |  |  | (222) |  |  | 972 |  |  | (173) |  |  | 3,687 |  |  | (395) |
Total | $ | 15,213 |  |  | $ | (1,217) |  |  | $ | 4,432 |  |  | $ | (764) |  |  | $ | 19,645 |  |  | $ | (1,982) |
Securities where an allowance for credit loss was recorded | 2 |  |  | — |  |  | — |  |  | — |  |  | 2 |  |  | — |
Total fixed maturity securities - available for sale | $ | 15,215 |  |  | $ | (1,217) |  |  | $ | 4,432 |  |  | $ | (764) |  |  | $ | 19,647 |  |  | $ | (1,982) |

(Some amounts may not reconcile due to rounding.)
The aggregate fair value and gross unrealized losses related to fixed maturity - available for sale investments in an unrealized loss position at December 31, 2022 were $19.6 billion and $2.0 billion, respectively. The fair value of securities for the single issuer (the United States government), whose securities comprised the largest unrealized loss position at December 31, 2022, did not exceed 5.2% of the overall fair value of the Company’s fixed maturity securities - available for sale. The fair value of the securities for the issuer with the second largest unrealized loss comprised less than 0.2% of the Company’s fixed maturity securities - available for sale. In addition, as indicated on the above table, there was no significant concentration of unrealized losses in any one market sector. The $1.2 billion of unrealized losses related to fixed maturity securities - available for sale that have been in an unrealized loss position for less than one year were generally comprised of domestic and foreign corporate securities, asset-backed securities, agency residential mortgage-backed securities and foreign government securities. Of these unrealized losses, $1.1 billion were related to securities that were rated investment grade by at least one nationally recognized rating agency. The $764 million of unrealized losses related to fixed maturity securities - available for sale in an unrealized loss position for more than one year related
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primarily to domestic and foreign corporate securities, agency residential mortgage-backed securities and foreign government securities. Of these unrealized losses, $732 million were related to securities that were rated investment grade by at least one nationally recognized rating agency. In all instances, there were no projected cash flow shortfalls to recover the full book value of the investments and the related interest obligations. The mortgage-backed securities still have excess credit coverage and are current on interest and principal payments.
The components of net investment income are presented in the table below for the periods indicated:

| Three Months Ended March 31, |  |
(Dollars in millions) | 2023 |  | 2022 |  |  |  |
Fixed maturities | $ | 247 |  |  | $ | 148 |  |  |  |  |
Equity securities | 1 |  |  | 4 |  |  |  |  |
Short-term investments and cash | 17 |  |  | — |  |  |  |  |
Other invested assets |  |  |  |  |  |  |
Limited partnerships | (15) |  |  | 88 |  |  |  |  |
Other | 22 |  |  | 12 |  |  |  |  |
Gross investment income before adjustments | 272 |  |  | 253 |  |  |  |  |
Funds held interest income (expense) | — |  |  | 4 |  |  |  |  |
Future policy benefit reserve income (expense) | — |  |  | — |  |  |  |  |
Gross investment income | 272 |  |  | 256 |  |  |  |  |
Investment expenses | (12) |  |  | (13) |  |  |  |  |
Net investment income | $ | 260 |  |  | $ | 243 |  |  |  |  |

(Some amounts may not reconcile due to rounding.)
The Company records results from limited partnership investments on the equity method of accounting with changes in value reported through net investment income. The net investment income from limited partnerships is dependent upon the Company’s share of the net asset values of interests underlying each limited partnership. Due to the timing of receiving financial information from these partnerships, the results are generally reported on a one month or quarter lag. If the Company determines there has been a significant decline in value of a limited partnership during this lag period, a loss will be recorded in the period in which the Company identifies the decline.
The Company had contractual commitments to invest up to an additional $2.7 billion in limited partnerships and private placement loan securities at March 31, 2023. These commitments will be funded when called in accordance with the partnership and loan agreements, which have investment periods that expire, unless extended, through 2027.
During the fourth quarter of 2022, the Company entered into corporate-owned life insurance policies, which are carried within other invested assets at policy cash surrender value of $954 million and $939 million as of March 31, 2023 and December 31, 2022, respectively.
Variable Interest Entities
The Company is engaged with various special purpose entities and other entities that are deemed to be VIEs primarily as an investor through normal investment activities but also as an investment manager. A VIE is an entity that either has investors that lack certain essential characteristics of a controlling financial interest, such as simple majority kick-out rights, or lacks sufficient funds to finance its own activities without financial support provided by other entities. The Company performs ongoing qualitative assessments of its VIEs to determine whether the Company has a controlling financial interest in the VIE and therefore is the primary beneficiary. The Company is deemed to have a controlling financial interest when it has both the ability to direct the activities that most significantly impact the economic performance of the VIE and the obligation to absorb losses or right to receive benefits from the VIE that could potentially be significant to the VIE. Based on the Company’s assessment, if it determines it is the primary beneficiary, the Company consolidates the VIE in the Company’s Consolidated Financial Statements. As of March 31, 2023 and December 31, 2022, the Company did not hold any securities for which it is the primary beneficiary.
The Company, through normal investment activities, makes passive investments in general and limited partnerships and other alternative investments. For these non-consolidated VIEs, the Company has determined it is not the primary beneficiary as it has no ability to direct activities that could significantly affect the economic performance of the investments. The Company’s maximum exposure to loss as of March 31, 2023 and December 31, 2022 is limited to the
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total carrying value of $4.2 billion and $4.1 billion, respectively, which are included in general and limited partnerships and other alternative investments in Other Invested Assets in the Company's Consolidated Balance Sheets. As of March 31, 2023, the Company has outstanding commitments totaling $2.2 billion whereby the Company is committed to fund these investments and may be called by the partnership during the commitment period to fund the purchase of new investments and partnership expenses. These investments are generally of a passive nature in that the Company does not take an active role in management.
In addition, the Company makes passive investments in structured securities issued by VIEs for which the Company is not the manager. These investments are included in asset-backed securities, which includes collateralized loan obligations and are classified as fixed maturities, available for sale. The Company has not provided financial or other support with respect to these investments other than its original investment. For these investments, the Company determined it is not the primary beneficiary due to the relative size of the Company’s investment in comparison to the principal amount of the structured securities issued by the VIEs, the level of credit subordination which reduces the Company’s obligation to absorb losses or right to receive benefits and the Company’s inability to direct the activities that most significantly impact the economic performance of the VIEs. The Company’s maximum exposure to loss on these investments is limited to the amount of the Company’s investment.
The components of net gains (losses) on investments are presented in the table below for the periods indicated:

| Three Months Ended March 31, |  |
(Dollars in millions) | 2023 |  | 2022 |  |  |  |
Fixed maturity securities |  |  |  |  |  |  |
Allowance for credit losses | $ | (8) |  |  | $ | (12) |  |  |  |  |
Net realized gains (losses) from dispositions | 2 |  |  | 3 |  |  |  |  |
Equity securities, fair value |  |  |  |  |  |  |
Net realized gains (losses) from dispositions | 7 |  |  | (12) |  |  |  |  |
Gains (losses) from fair value adjustments | 4 |  |  | (137) |  |  |  |  |
Other invested assets | — |  |  | 4 |  |  |  |  |
Total net gains (losses) on investments | $ | 5 |  |  | $ | (154) |  |  |  |  |

(Some amounts may not reconcile due to rounding.)
The following tables provide a roll forward of the Company’s beginning and ending balance of allowance for credit losses for the periods indicated:

| Roll Forward of Allowance for Credit Losses - Fixed Maturities - Available for Sale
| Three Months Ended March 31, 2023 |  |
(Dollars in millions) | Corporate Securities |  |  |  | Foreign Corporate Securities |  | Total |  |  |  |  |  |  |  |
Beginning Balance | $ | (45) |  |  |  |  | $ | (10) |  |  | $ | (54) |  |  |  |  |  |  |  |  |
Credit losses on securities where credit losses were not previously recorded | (12) |  |  |  |  | — |  |  | (12) |  |  |  |  |  |  |  |  |
Increases in allowance on previously impaired securities | — |  |  |  |  | — |  |  | — |  |  |  |  |  |  |  |  |
Decreases in allowance on previously impaired securities | — |  |  |  |  | — |  |  | — |  |  |  |  |  |  |  |  |
Reduction in allowance due to disposals | 2 |  |  |  |  | 3 |  |  | 5 |  |  |  |  |  |  |  |  |
Balance, end of period | $ | (55) |  |  |  |  | $ | (7) |  |  | $ | (62) |  |  |  |  |  |  |  |  |

(Some amounts may not reconcile due to rounding.)
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| Roll Forward of Allowance for Credit Losses - Fixed Maturities - Held to Maturity
| Three Months Ended March 31, 2023 |  |
(Dollars in millions) | Corporate Securities |  | Asset-Backed Securities |  | Foreign Corporate Securities |  | Total |  |  |  |  |  |  |  |
Beginning Balance | $ | (2) |  |  | $ | (6) |  |  | $ | (1) |  |  | $ | (9) |  |  |  |  |  |  |  |  |
Credit losses on securities where credit losses were not previously recorded | — |  |  | — |  |  | — |  |  | — |  |  |  |  |  |  |  |  |
Increases in allowance on previously impaired securities | — |  |  | — |  |  | — |  |  | — |  |  |  |  |  |  |  |  |
Decreases in allowance on previously impaired securities | — |  |  | — |  |  | — |  |  | — |  |  |  |  |  |  |  |  |
Reduction in allowance due to disposals | — |  |  | — |  |  | — |  |  | — |  |  |  |  |  |  |  |  |
Balance, end of period | $ | (2) |  |  | $ | (6) |  |  | $ | (1) |  |  | $ | (9) |  |  |  |  |  |  |  |  |

(Some amounts may not reconcile due to rounding.)

|  |  |  |  |  |  |  |  | Roll Forward of Allowance for Credit Losses - Fixed Maturities - Available for Sale
|  |  | Three Months Ended March 31, 2022
(Dollars in millions) |  |  |  |  |  |  |  |  | Corporate Securities |  | Asset-Backed Securities |  | Foreign Corporate Securities |  | Total
Beginning Balance |  |  |  |  |  |  |  |  | $ | (19) |  |  | $ | (8) |  |  | $ | (3) |  |  | $ | (30) |
Credit losses on securities where credit losses were not previously recorded |  |  |  |  |  |  |  |  | (2) |  |  | — |  |  | (11) |  |  | (13) |
Increases in allowance on previously impaired securities |  |  |  |  |  |  |  |  | — |  |  | — |  |  | — |  |  | — |
Decreases in allowance on previously impaired securities |  |  |  |  |  |  |  |  | — |  |  | — |  |  | — |  |  | — |
Reduction in allowance due to disposals |  |  |  |  |  |  |  |  | 1 |  |  | — |  |  | — |  |  | 1 |
Balance, end of period |  |  |  |  |  |  |  |  | $ | (20) |  |  | $ | (8) |  |  | $ | (14) |  |  | $ | (42) |

(Some amounts may not reconcile due to rounding.)
The proceeds and split between gross gains and losses from dispositions of fixed maturity and equity securities, are presented in the table below for the periods indicated:

| Three Months Ended March 31, |  |
(Dollars in millions) | 2023 |  | 2022 |  |  |  |
Proceeds from sales of fixed maturity securities - available for sale | $ | 72 |  |  | $ | 419 |  |  |  |  |
Gross gains from dispositions | 11 |  |  | 20 |  |  |  |  |
Gross losses from dispositions | (9) |  |  | (17) |  |  |  |  |
Proceeds from sales of equity securities | $ | 46 |  |  | $ | 90 |  |  |  |  |
Gross gains from dispositions | 7 |  |  | 4 |  |  |  |  |
Gross losses from dispositions | — |  |  | (15) |  |  |  |  |

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4. RESERVE FOR LOSSES, LAE AND FUTURE POLICY BENEFIT RESERVE
Activity in the reserve for losses and loss adjustment expenses (“LAE”) is summarized for the periods indicated:

| Three Months Ended March 31,
| 2023 |  | 2022
(Dollars in millions) |  |  |
Gross reserves beginning of period | $ | 22,065 |  |  | $ | 19,009 |
Less reinsurance recoverables on unpaid losses | (2,105) |  |  | (1,946) |
Net reserves beginning of period | 19,960 |  |  | 17,063 |
Incurred related to: |  |  |
Current year | 1,966 |  |  | 1,791 |
Prior years | — |  |  | (1) |
Total incurred losses and LAE | 1,966 |  |  | 1,790 |
Paid related to: |  |  |
Current year | 684 |  |  | 308 |
Prior years | 641 |  |  | 919 |
Total paid losses and LAE | 1,325 |  |  | 1,226 |
Foreign exchange/translation adjustment | 152 |  |  | (122) |
Net reserves end of period | 20,753 |  |  | 17,505 |
Plus reinsurance recoverables on unpaid losses | 2,125 |  |  | 1,991 |
Gross reserves end of period | $ | 22,878 |  |  | $ | 19,496 |

(Some amounts may not reconcile due to rounding.)
Current year incurred losses were $2.0 billion and $1.8 billion for the three months ended March 31, 2023 and 2022, respectively. Gross and net reserves increased for the three months ended March 31, 2023, reflecting an increase in underlying exposure due to earned premium growth, year over year, and an increase of $175 million in 2023 current year attritional losses compared to 2022.
5. FAIR VALUE
GAAP guidance regarding fair value measurements addresses how companies should measure fair value when they are required to use fair value measures for recognition or disclosure purposes under GAAP and provides a common definition of fair value to be used throughout GAAP. It defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly fashion between market participants at the measurement date. In addition, it establishes a three-level valuation hierarchy for the disclosure of fair value measurements. The valuation hierarchy is based on the transparency of inputs to the valuation of an asset or liability. The level in the hierarchy within which a given fair value measurement falls is determined based on the lowest level input that is significant to the measurement, with Level 1 being the highest priority and Level 3 being the lowest priority.
The levels in the hierarchy are defined as follows:
Level 1: Inputs to the valuation methodology are observable inputs that reflect unadjusted quoted prices for identical assets or liabilities in an active market;
Level 2: Inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, and inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the financial instrument;
Level 3: Inputs to the valuation methodology are unobservable and significant to the fair value measurement.
The Company’s fixed maturity and equity securities are primarily managed by third party investment asset managers. The investment asset managers managing publicly traded securities obtain prices from nationally recognized pricing services. These services seek to utilize market data and observations in their evaluation process. They use pricing
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applications that vary by asset class and incorporate available market information and when fixed maturity securities do not trade on a daily basis the services will apply available information through processes such as benchmark curves, benchmarking of like securities, sector groupings and matrix pricing. In addition, they use model processes, such as the Option Adjusted Spread model to develop prepayment and interest rate scenarios for securities that have prepayment features.
The investment asset managers do not make any changes to prices received from either the pricing services or the investment brokers. In addition, the investment asset managers have procedures in place to review the reasonableness of the prices from the service providers and may request verification of the prices. The Company also continually performs quantitative and qualitative analysis of prices, including but not limited to initial and ongoing review of pricing methodologies, review of prices obtained from pricing services and third party investment asset managers, review of pricing statistics and trends, and comparison of prices for certain securities with a secondary price source for reasonableness. No material variances were noted during these price validation procedures. In limited situations, where financial markets are inactive or illiquid, the Company may use its own assumptions about future cash flows and risk-adjusted discount rates to determine fair value. At March 31, 2023, $1.7 billion of fixed maturities were fair valued using unobservable inputs. The majority of these fixed maturities were valued by investment managers’ valuation committees and many of these fair values were substantiated by valuations from independent third parties. The Company has procedures in place to evaluate these independent third party valuations. At December 31, 2022, $1.7 billion of fixed maturities were fair valued using unobservable inputs.
The Company internally manages a portfolio of assets which had a fair value at March 31, 2023 and December 31, 2022 of $3.4 billion and $2.7 billion, respectively, primarily comprised of collateralized loan obligations included in asset-backed securities and US treasury fixed maturities. All prices for these securities were obtained from publicly published sources or nationally recognized pricing vendors.
Equity securities denominated in U.S. currency with quoted prices in active markets for identical assets are categorized as Level 1 since the quoted prices are directly observable. Equity securities traded on foreign exchanges are categorized as Level 2 due to the added input of a foreign exchange conversion rate to determine fair value. The Company uses foreign currency exchange rates published by nationally recognized sources.
Fixed maturity securities listed in the tables have been categorized as Level 2, since a particular security may not have traded but the pricing services are able to use valuation models with observable market inputs such as interest rate yield curves and prices for similar fixed maturity securities in terms of issuer, maturity and seniority. For foreign government securities and foreign corporate securities, the fair values provided by the third party pricing services in local currencies, and where applicable, are converted to U.S. dollars using currency exchange rates from nationally recognized sources.
In addition to the valuations from investment managers, some of the fixed maturities with fair values categorized as Level 3 result when prices are not available from the nationally recognized pricing services and are derived using unobservable inputs. The Company will value the securities with unobservable inputs using comparable market information or receive fair values from investment managers. The investment managers may obtain non-binding price quotes for the securities from brokers. The single broker quotes are provided by market makers or broker-dealers who are recognized as market participants in the markets in which they are providing the quotes. The prices received from brokers are reviewed for reasonableness by the third party asset managers and the Company. If the broker quotes are for foreign denominated securities, the quotes are converted to U.S. dollars using currency exchange rates from nationally recognized sources.
The composition and valuation inputs for the presented fixed maturities categories Level 1 and Level 2 are as follows:
•U.S. Treasury securities and obligations of U.S. government agencies and corporations are primarily comprised of U.S. Treasury bonds and the fair value is based on observable market inputs such as quoted prices, reported trades, quoted prices for similar issuances or benchmark yields;
•Obligations of U.S. states and political subdivisions are comprised of state and municipal bond issuances and the fair values are based on observable market inputs such as quoted market prices, quoted prices for similar securities, benchmark yields and credit spreads;
•Corporate securities are primarily comprised of U.S. corporate and public utility bond issuances and the fair values are based on observable market inputs such as quoted market prices, quoted prices for similar securities, benchmark yields and credit spreads;
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•Asset-backed and mortgage-backed securities fair values are based on observable inputs such as quoted prices, reported trades, quoted prices for similar issuances or benchmark yields and cash flow models using observable inputs such as prepayment speeds, collateral performance and default spreads;
•Foreign government securities are comprised of global non-U.S. sovereign bond issuances and the fair values are based on observable market inputs such as quoted market prices, quoted prices for similar securities and models with observable inputs such as benchmark yields and credit spreads and then, where applicable, converted to U.S. dollars using an exchange rate from a nationally recognized source;
•Foreign corporate securities are comprised of global non-U.S. corporate bond issuances and the fair values are based on observable market inputs such as quoted market prices, quoted prices for similar securities and models with observable inputs such as benchmark yields and credit spreads and then, where applicable, converted to U.S. dollars using an exchange rate from a nationally recognized source.
The following tables present the fair value measurement levels for all assets and liabilities, which the Company has recorded at fair value as of the periods indicated:

|  |  | Fair Value Measurement Using
| March 31, 2023 |  | Quoted Prices in Active Markets for Identical Assets (Level 1) |  | Significant Other Observable Inputs (Level 2) |  | Significant Unobservable Inputs (Level 3)
(Dollars in millions) |  |  |  |  |  |  |
Assets: |  |  |  |  |  |  |
Fixed maturities - available for sale |  |  |  |  |  |  |
U.S. Treasury securities and obligations of U.S. government agencies and corporations | $ | 1,259 |  |  | $ | — |  |  | $ | 1,259 |  |  | $ | — |
Obligations of U.S. States and political subdivisions | 396 |  |  | — |  |  | 396 |  |  | — |
Corporate securities | 6,679 |  |  | — |  |  | 5,970 |  |  | 709 |
Asset-backed securities | 4,443 |  |  | — |  |  | 3,422 |  |  | 1,020 |
Mortgage-backed securities |  |  |  |  |  |  |
Commercial | 974 |  |  | — |  |  | 974 |  |  | — |
Agency residential | 3,465 |  |  | — |  |  | 3,465 |  |  | — |
Non-agency residential | 4 |  |  | — |  |  | 4 |  |  | — |
Foreign government securities | 1,471 |  |  | — |  |  | 1,471 |  |  | — |
Foreign corporate securities | 4,869 |  |  | — |  |  | 4,853 |  |  | 16 |
Total fixed maturities - available for sale | 23,560 |  |  | — |  |  | 21,815 |  |  | 1,745 |
Equity securities, fair value | 250 |  |  | 140 |  |  | 110 |  |  | — |

(Some amounts may not reconcile due to rounding.)
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|  |  | Fair Value Measurement Using
(Dollars in millions) | December 31, 2022 |  | Quoted Prices in Active Markets for Identical Assets (Level 1) |  | Significant Other Observable Inputs (Level 2) |  | Significant Unobservable Inputs (Level 3)
Assets: |  |  |  |  |  |  |
Fixed maturities - available for sale |  |  |  |  |  |  |
U.S. Treasury securities and obligations of U.S. government agencies and corporations | $ | 1,257 |  |  | $ | — |  |  | $ | 1,257 |  |  | $ | — |
Obligations of U.S. States and political subdivisions | 413 |  |  | — |  |  | 413 |  |  | — |
Corporate securities | 6,469 |  |  | — |  |  | 5,754 |  |  | 715 |
Asset-backed securities | 4,063 |  |  | — |  |  | 3,069 |  |  | 994 |
Mortgage-backed securities |  |  |  |  |  |  |
Commercial | 919 |  |  | — |  |  | 919 |  |  | — |
Agency residential | 3,099 |  |  | — |  |  | 3,099 |  |  | — |
Non-agency residential | 4 |  |  | — |  |  | 4 |  |  | — |
Foreign government securities | 1,415 |  |  | — |  |  | 1,415 |  |  | — |
Foreign corporate securities | 4,596 |  |  | — |  |  | 4,579 |  |  | 16 |
Total fixed maturities - available for sale | 22,236 |  |  | — |  |  | 20,511 |  |  | 1,725 |
Equity securities, fair value | 281 |  |  | 132 |  |  | 150 |  |  | — |

(Some amounts may not reconcile due to rounding.)
In addition, $316 million and $292 million of investments within other invested assets on the consolidated balance sheets as of March 31, 2023 and December 31, 2022, respectively, are not included within the fair value hierarchy tables as the assets are measured at net asset value (“NAV”) as a practical expedient to determine fair value.
The following table presents the activity under Level 3, fair value measurements using significant unobservable inputs for fixed maturities available for sale, for the periods indicated:

|  |  |  |  |  |  |  |  |  |  | Total Fixed Maturities, Available for Sale
|  |  | Three Months Ended March 31, 2023
(Dollars in millions) |  |  |  |  |  |  |  |  |  |  | Corporate Securities |  | Asset-Backed Securities |  |  |  | Foreign Corporate |  | Total
Beginning balance fixed maturities |  |  |  |  |  |  |  |  |  |  | $ | 715 |  |  | $ | 994 |  |  |  |  | $ | 16 |  |  | $ | 1,725 |
Total gains or (losses) (realized/unrealized) |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Included in earnings |  |  |  |  |  |  |  |  |  |  | 1 |  |  | — |  |  |  |  | — |  |  | 1 |
Included in other comprehensive income (loss) |  |  |  |  |  |  |  |  |  |  | (4) |  |  | 18 |  |  |  |  | — |  |  | 14 |
Purchases, issuances and settlements |  |  |  |  |  |  |  |  |  |  | (3) |  |  | 9 |  |  |  |  | — |  |  | 5 |
Transfers in/(out) of Level 3 and reclassification of securities in/(out) of investment categories |  |  |  |  |  |  |  |  |  |  | — |  |  | — |  |  |  |  | — |  |  | — |
Ending balance |  |  |  |  |  |  |  |  |  |  | $ | 709 |  |  | $ | 1,020 |  |  |  |  | $ | 16 |  |  | $ | 1,745 |
The amount of total gains or losses for the period included in earnings (or changes in net assets) attributable to the change in unrealized gains or losses relating to assets still held at the reporting date |  |  |  |  |  |  |  |  |  |  | $ | — |  |  | $ | — |  |  |  |  | $ | — |  |  | $ | — |

(Some amounts may not reconcile due to rounding.)
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|  |  |  |  |  |  |  |  |  |  | Total Fixed Maturities, Available for Sale
|  |  | Three Months Ended March 31, 2022
(Dollars in millions) |  |  |  |  |  |  |  |  |  |  | Corporate Securities |  | Asset-Backed Securities |  | CMBS |  | Foreign Corporate |  | Total
Beginning balance fixed maturities |  |  |  |  |  |  |  |  |  |  | $ | 801 |  |  | $ | 1,251 |  |  | $ | — |  |  | $ | 16 |  |  | $ | 2,068 |
Total gains or (losses) (realized/unrealized) |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Included in earnings |  |  |  |  |  |  |  |  |  |  | 16 |  |  | — |  |  | — |  |  | — |  |  | 16 |
Included in other comprehensive income (loss) |  |  |  |  |  |  |  |  |  |  | (4) |  |  | (29) |  |  | — |  |  | — |  |  | (33) |
Purchases, issuances and settlements |  |  |  |  |  |  |  |  |  |  | (98) |  |  | 166 |  |  | 6 |  |  | — |  |  | 74 |
Transfers in/(out) of Level 3 and reclassification of securities in/(out) of investment categories |  |  |  |  |  |  |  |  |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |
Ending balance |  |  |  |  |  |  |  |  |  |  | $ | 715 |  |  | $ | 1,389 |  |  | $ | 6 |  |  | $ | 16 |  |  | $ | 2,125 |
The amount of total gains or losses for the period included in earnings (or changes in net assets) attributable to the change in unrealized gains or losses relating to assets still held at the reporting date |  |  |  |  |  |  |  |  |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |

(Some amounts may not reconcile due to rounding.)
There were no transfers of assets in/(out) of Level 3 for the three months ended March 31, 2022.
Financial Instruments Disclosed, But Not Reported, at Fair Value
Certain financial instruments disclosed, but not reported, at fair value are excluded from the fair value hierarchy tables above. Fair values of fixed maturity securities held to maturity and senior notes can be found within Notes 3 and 11, respectively. Short-term investments are stated at cost, which approximates fair value.
6. EARNINGS PER COMMON SHARE
Basic earnings per share are calculated by dividing net income by the weighted average number of common shares outstanding. Diluted earnings per share reflect the potential dilution that would occur if options granted under various share-based compensation plans were exercised resulting in the issuance of common shares that would participate in the earnings of the entity.
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Net income (loss) per common share has been computed as per below, based upon weighted average common basic and dilutive shares outstanding.

|  |  | Three Months Ended March 31,
(Dollars in millions, except per share amounts) |  |  |  |  | 2023 |  | 2022
Net income (loss) per share: |  |  |  |  |  |  |
Numerator |  |  |  |  |  |  |
Net income (loss) |  |  |  |  | $ | 365 |  |  | $ | 298 |
Less: dividends declared-common shares and unvested common shares |  |  |  |  | (65) |  |  | (61) |
Undistributed earnings |  |  |  |  | 300 |  |  | 237 |
Percentage allocated to common shareholders (1) |  |  |  |  | 98.7 | % |  | 98.7 | %
|  |  |  |  | 296 |  |  | 234 |
Add: dividends declared-common shareholders |  |  |  |  | 64 |  |  | 60 |
Numerator for basic and diluted earnings per common share |  |  |  |  | $ | 360 |  |  | $ | 294 |
Denominator |  |  |  |  |  |  |
Denominator for basic earnings per weighted-average common shares |  |  |  |  | 38.7 |  | 38.8
Effect of dilutive securities: |  |  |  |  |  |  |
Options |  |  |  |  | — |  | —
Denominator for diluted earnings per adjusted weighted-average common shares |  |  |  |  | 38.7 |  | 38.8
Per common share net income (loss) |  |  |  |  |  |  |
Basic |  |  |  |  | $ | 9.31 |  |  | $ | 7.57 |
Diluted |  |  |  |  | $ | 9.31 |  |  | $ | 7.56 |
(1) Basic weighted-average common shares outstanding |  |  |  |  | 38.7 |  | 38.8
Basic weighted-average common shares outstanding and unvested common shares expected to vest |  |  |  |  | 39.2 |  | 39.3
Percentage allocated to common shareholders |  |  |  |  | 98.7 | % |  | 98.7 | %

(Some amounts may not reconcile due to rounding.)
There were no options outstanding as of March 31, 2023. Options granted under share-based compensation plans have all expired as of September 19, 2022.
7. COMMITMENTS AND CONTINGENCIES
In the ordinary course of business, the Company is involved in lawsuits, arbitrations and other formal and informal dispute resolution procedures, the outcomes of which will determine the Company’s rights and obligations under insurance and reinsurance agreements. In some disputes, the Company seeks to enforce its rights under an agreement or to collect funds owing to it. In other matters, the Company is resisting attempts by others to collect funds or enforce alleged rights. These disputes arise from time to time and are ultimately resolved through both informal and formal means, including negotiated resolution, arbitration and litigation. In all such matters, the Company believes that its positions are legally and commercially reasonable. The Company considers the statuses of these proceedings when determining its reserves for unpaid loss and LAE.
Aside from litigation and arbitrations related to these insurance and reinsurance agreements, the Company is not a party to any other material litigation or arbitration.
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8. OTHER COMPREHENSIVE INCOME (LOSS)
The following tables present the components of comprehensive income (loss) in the consolidated statements of operations for the periods indicated:

| Three Months Ended March 31, 2023 |  |
(Dollars in millions) | Before Tax |  | Tax Effect |  | Net of Tax |  |  |  |  |  |
Unrealized appreciation (depreciation) ("URA(D)") on securities - non-credit related | $ | 273 |  |  | $ | (27) |  |  | $ | 246 |  |  |  |  |  |  |
Reclassification of net realized losses (gains) included in net income (loss) | 6 |  |  | (3) |  |  | 3 |  |  |  |  |  |  |
Foreign currency translation adjustments | 33 |  |  | (2) |  |  | 31 |  |  |  |  |  |  |
Reclassification of benefit plan liability amortization included in net income (loss) | — |  |  | — |  |  | — |  |  |  |  |  |  |
Total other comprehensive income (loss) | $ | 312 |  |  | $ | (32) |  |  | $ | 280 |  |  |  |  |  |  |

| Three Months Ended March 31, 2022 |  |
(Dollars in millions) | Before Tax |  | Tax Effect |  | Net of Tax |  |  |  |  |  |
Unrealized appreciation (depreciation) ("URA(D)") on securities - non-credit related | $ | (932) |  |  | $ | 117 |  |  | $ | (815) |  |  |  |  |  |  |
Reclassification of net realized losses (gains) included in net income (loss) | 5 |  |  | (1) |  |  | 4 |  |  |  |  |  |  |
Foreign currency translation adjustments | (35) |  |  | 1 |  |  | (34) |  |  |  |  |  |  |
Reclassification of benefit plan liability amortization included in net income (loss) | 1 |  |  | — |  |  | 1 |  |  |  |  |  |  |
Total other comprehensive income (loss) | $ | (961) |  |  | $ | 117 |  |  | $ | (844) |  |  |  |  |  |  |

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

|  | Three Months Ended March 31, |  |  |  | Affected line item within the statements of operations and comprehensive income (loss)
AOCI component |  | 2023 |  | 2022 |  |  |  |  |
(Dollars in millions) |  |  |  |  |  |  |  |  |  |
URA(D) on securities |  | $ | 6 |  |  | $ | 5 |  |  |  |  |  |  | Other net realized capital gains (losses)
|  | (3) |  |  | (1) |  |  |  |  |  |  | Income tax expense (benefit)
|  | $ | 3 |  |  | $ | 4 |  |  |  |  |  |  | Net income (loss)
Benefit plan net gain (loss) |  | $ | — |  |  | $ | 1 |  |  |  |  |  |  | Other underwriting expenses
|  | — |  |  | — |  |  |  |  |  |  | Income tax expense (benefit)
|  | $ | — |  |  | $ | 1 |  |  |  |  |  |  | Net income (loss)

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

| Three Months Ended March 31, |  |
(Dollars in millions) | 2023 |  | 2022 |  |  |  |
Beginning balance of URA(D) on securities | $ | (1,709) |  |  | $ | 239 |  |  |  |  |
Current period change in URA(D) of investments - non-credit related | 249 |  |  | (811) |  |  |  |  |
Ending balance of URA(D) on securities | (1,460) |  |  | (572) |  |  |  |  |
Beginning balance of foreign currency translation adjustments | (254) |  |  | (177) |  |  |  |  |
Current period change in foreign currency translation adjustments | 31 |  |  | (34) |  |  |  |  |
Ending balance of foreign currency translation adjustments | (223) |  |  | (212) |  |  |  |  |
Beginning balance of benefit plan net gain (loss) | (33) |  |  | (50) |  |  |  |  |
Current period change in benefit plan net gain (loss) | — |  |  | 1 |  |  |  |  |
Ending balance of benefit plan net gain (loss) | (33) |  |  | (49) |  |  |  |  |
Ending balance of accumulated other comprehensive income (loss) | $ | (1,716) |  |  | $ | (833) |  |  |  |  |

(Some amounts may not reconcile due to rounding.)
9. CREDIT FACILITIES
The Company has multiple active letter of credit facilities for a total commitment of up to $1.5 billion as of March 31, 2023. The Company also has additional uncommitted letter of credit facilities of up to $440 million which may be accessible via written request and corresponding authorization from the applicable lender. There is no guarantee the uncommitted capacity will be available to us on a future date.
The terms and outstanding amounts for each facility are discussed below:
Bermuda Re Wells Fargo Bilateral Letter of Credit Facility
Effective February 23, 2021, Bermuda Re entered into a letter of credit issuance facility with Wells Fargo referred to as the “2021 Bermuda Re Wells Fargo Bilateral Letter of Credit Facility.” The Bermuda Re Wells Fargo Bilateral Letter of Credit Facility originally provided for the issuance of up to $50 million of secured letters of credit. Effective May 5, 2021, the agreement was amended to provide for the issuance of up to $500 million of secured letters of credit.
The following table summarizes the outstanding letters of credit for the periods indicated:

(Dollars in millions) |  | At March 31, 2023 |  | At December 31, 2022
Bank |  | Commitment |  | In Use |  | Date of Expiry |  | Commitment |  | In Use |  | Date of Expiry
Wells Fargo Bank Bilateral LOC Agreement |  | $ | 500 |  |  | $ | 445 |  |  | 12/29/2023 |  | $ | 500 |  |  | $ | 463 |  |  | 12/29/2023

(Some amounts may not reconcile due to rounding.)
Bermuda Re Citibank Letter of Credit Facility
Effective August 9, 2021, Bermuda Re entered into a new letter of credit issuance facility with Citibank N.A. which superseded the previous letter of credit issuance facility with Citibank that was effective December 31, 2020. Both of these are referred to as the “Bermuda Re Letter of Credit Facility”. The current Bermuda Re Citibank Letter of Credit Facility provides for the committed issuance of up to $230 million of secured letters of credit. In addition, the facility provided for the uncommitted issuance of up the $140 million, which may be accessible via written request by the Company and corresponding authorization from Citibank N.A.
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The following table summarizes the outstanding letters of credit for the periods indicated:

(Dollars in millions) |  | At March 31, 2023 |  | At December 31, 2022
Bank |  | Commitment |  | In Use |  | Date of Expiry |  | Commitment |  | In Use |  | Date of Expiry
Bermuda Re Citibank LOC Facility- Committed |  | $ | 230 |  |  | $ | 1 |  |  | 8/15/2023 |  | $ | 230 |  |  | $ | 1 |  |  | 1/1/2023
|  | — |  |  | 3 |  |  | 9/23/2023 |  | — |  |  | 4 |  |  | 2/28/2023
|  | — |  |  | 217 |  |  | 12/31/2023 |  | — |  |  | 1 |  |  | 3/1/2023
|  | — |  |  | 4 |  |  | 2/29/2024 |  | — |  |  | 1 |  |  | 8/15/2023
|  | — |  |  | 1 |  |  | 3/1/2024 |  | — |  |  | 3 |  |  | 9/23/2023
|  | — |  |  | 1 |  |  | 12/1/2024 |  | — |  |  | 212 |  |  | 12/31/2023
Bermuda Re Citibank LOC Facility - Uncommitted |  | 140 |  |  | 106 |  |  | 12/31/2023 |  | 140 |  |  | 87 |  |  | 12/31/2023
|  | — |  |  | 18 |  |  | 3/30/2027 |  | — |  |  | 18 |  |  | 12/30/2026
Total Citibank Bilateral Agreement |  | $ | 370 |  |  | $ | 353 |  |  |  |  | $ | 370 |  |  | $ | 329 |  |  |

(Some amounts may not reconcile due to rounding.)
Bermuda Re Bayerische Landesbank Bilateral Secured Credit Facility
Effective August 27, 2021 Bermuda Re entered into a letter of credit issuance facility with Bayerische Landesbank, an agreement referred to as the “Bermuda Re Bayerische Landesbank Bilateral Secured Credit Facility”. The Bermuda Re Bayerische Landesbank Bilateral Secured Credit Facility provides for the committed issuance of up to $200 million of secured letters of credit.
The following table summarizes the outstanding letters of credit for the periods indicated:

(Dollars in millions) |  | At March 31, 2023 |  | At December 31, 2022
Bank |  | Commitment |  | In Use |  | Date of Expiry |  | Commitment |  | In Use |  | Date of Expiry
Bayerische Landesbank Bilateral Secured Credit Facility |  | $ | 200 |  |  | $ | 175 |  |  | 12/31/2023 |  | $ | 200 |  |  | $ | 183 |  |  | 12/31/2023

(Some amounts may not reconcile due to rounding.)
Bermuda Re Bayerische Landesbank Bilateral Unsecured Letter of Credit Facility
Effective December 30, 2022, Bermuda Re entered into a new additional letter of credit issuance facility with Bayerische Landesbank, New York Branch, referred to as the “Bayerische Landesbank Bilateral Unsecured Letter of Credit Facility”. The Bermuda Re Bayerische Landesbank Bilateral Unsecured Letter of Credit Facility provides for the committed issuance of up to $150 million of unsecured letters of credit.
The following table summarizes the outstanding letters of credit for the periods indicated:

(Dollars in millions) |  | At March 31, 2023 |  | At December 31, 2022
Bank |  | Commitment |  | In Use |  | Date of Expiry |  | Commitment |  | In Use |  | Date of Expiry
Bayerische Landesbank Bilateral Unsecured LOC Agreement - Committed |  | $ | 150 |  |  | $ | 150 |  |  | 12/31/2023 |  | $ | 150 |  |  | $ | 150 |  |  | 12/31/2023

(Some amounts may not reconcile due to rounding.)
Bermuda Re Lloyd’s Bank Credit Facility
Effective October 8, 2021 Bermuda Re entered into a letter of credit issuance facility with Lloyd’s Bank Corporate Markets PLC, an agreement referred to as the “Bermuda Re Lloyd’s Bank Credit Facility”. The Bermuda Re Lloyd’s Bank Credit Facility provides for the committed issuance of up to $50 million of secured letters of credit, and subject to credit approval a maximum total facility amount of $250 million.
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The following table summarizes the outstanding letters of credit for the periods indicated:

(Dollars in millions) |  | At March 31, 2023 |  | At December 31, 2022
Bank |  | Commitment |  | In Use |  | Date of Expiry |  | Commitment |  | In Use |  | Date of Expiry
Bermuda Re Lloyd's Bank Credit Facility-Committed |  | $ | 50 |  |  | $ | 50 |  |  | 12/31/2023 |  | $ | 50 |  |  | $ | 50 |  |  | 12/31/2023
Bermuda Re Lloyd's Bank Credit Facility-Uncommitted |  | 200 |  |  | 156 |  |  | 12/31/2023 |  | 200 |  |  | 136 |  |  | 45291
Total Bermuda Re Lloyd's Bank Credit Facility |  | $ | 250 |  |  | $ | 206 |  |  |  |  | $ | 250 |  |  | $ | 186 |  |  |

(Some amounts may not reconcile due to rounding.)
Bermuda Re Barclays Bank Credit Facility
Effective November 3, 2021 Bermuda Re entered into a letter of credit issuance facility with Barclays Bank PLC, an agreement referred to as the “Bermuda Re Barclays Credit Facility”. The Bermuda Re Barclays Credit Facility provides for the committed issuance of up to $200 million of secured letters of credit.
The following table summarizes the outstanding letters of credit for the periods indicated:

(Dollars in millions) |  | At March 31, 2023 |  | At December 31, 2022
Bank |  | Commitment |  | In Use |  | Date of Expiry |  | Commitment |  | In Use |  | Date of Expiry
Bermuda Re Barclays Bilateral Letter of Credit Facility |  | $ | 200 |  |  | $ | 179 |  |  | 12/31/2023 |  | $ | 200 |  |  | $ | 179 |  |  | 12/31/2023

Bermuda Re Nordea Bank Letter of Credit Facility
Effective November 21, 2022, Bermuda Re entered into a letter of credit issuance facility with Nordea Bank ABP, New York Branch, referred to as the “Nordea Bank Letter of Credit Facility”. The Bermuda Re Nordea Bank Letter of Credit Facility provides for the committed issuance of up to $200 million of unsecured letters of credit, and subject to credit approval, uncommitted issuance of $100 million for a maximum total facility amount of $300 million.
The following table summarizes the outstanding letters of credit for the periods indicated:

(Dollars in millions) |  | At March 31, 2023 |  | At December 31, 2022
Bank |  | Commitment |  | In Use |  | Date of Expiry |  | Commitment |  | In Use |  | Date of Expiry
Nordea Bank ABP, NY Unsecured LOC Facility - Committed |  | $ | 200 |  |  | $ | 200 |  |  | 12/31/2023 |  | $ | 200 |  |  | $ | 50 |  |  | 12/31/2023
Nordea Bank ABP, NY Unsecured LOC Facility - Uncommitted |  | 100 |  |  | 100 |  |  | 12/31/2023 |  | 100 |  |  | 100 |  |  | 12/31/2023
Total Nordea Bank ABP, NY LOC Facility |  | $ | 300 |  |  | $ | 300 |  |  |  |  | $ | 300 |  |  | $ | 150 |  |  |

(Some amounts may not reconcile due to rounding.)
Federal Home Loan Bank Membership
Everest Reinsurance Company (“Everest Re”) is a member of the Federal Home Loan Bank of New York (“FHLBNY”), which allows Everest Re to borrow up to 10% of its statutory admitted assets. As of March 31, 2023, Everest Re had admitted assets of approximately $23.1 billion which provides borrowing capacity of up to approximately $2.3 billion. As of March 31, 2023, Everest Re has $519 million of borrowings outstanding, all of which expire in 2023. Everest Re incurred interest expense of $6 million and $0.7 million for the three months ended March 31, 2023 and 2022, respectively. The FHLBNY membership agreement requires that 4.5% of borrowed funds be used to acquire additional membership stock.
10. COLLATERALIZED REINSURANCE AND TRUST AGREEMENTS
Certain subsidiaries of Group have established trust agreements, which effectively use the Company’s investments as collateral, as security for assumed losses payable to certain non-affiliated ceding companies. At March 31, 2023, the total
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amount on deposit in trust accounts was $2.5 billion, which includes $202 million of restricted cash. At March 31, 2022, the total amount on deposit in trust accounts was $1.8 billion, which includes $365 million of restricted cash.
The Company reinsures some of its catastrophe exposures with the segregated accounts of Mt. Logan Re. Mt. Logan Re is a Collateralized insurer registered in Bermuda and 100% of the voting common shares are owned by Group. Each segregated account invests predominantly in a diversified set of catastrophe exposures, diversified by risk/peril and across different geographic regions globally.
The following table summarizes the premiums and losses that are ceded by the Company to Mt. Logan Re segregated accounts and assumed by the Company from Mt. Logan Re segregated accounts.

|  |  |  | Three Months Ended March 31,
Mt. Logan Re Segregated Accounts |  |  |  |  |  | 2023 |  | 2022
(Dollars in millions) |  |  |  |  |  |  |  |
Ceded written premiums |  |  |  |  |  | $ | 53 |  |  | $ | 50 |
Ceded earned premiums |  |  |  |  |  | 46 |  |  | 50 |
Ceded losses and LAE |  |  |  |  |  | 36 |  |  | 41 |
Assumed written premiums |  |  |  |  |  | 1 |  |  | 1 |
Assumed earned premiums |  |  |  |  |  | 1 |  |  | 1 |
Assumed losses and LAE |  |  |  |  |  | — |  |  | — |

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

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

Recoveries under these collateralized reinsurance agreements with Kilimanjaro are primarily dependent on estimated industry level insured losses from covered events, as well as the geographic location of the events. The estimated
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industry level of insured losses is obtained from published estimates by an independent recognized authority on insured property losses. As of March 31, 2023, none of the published insured loss estimates for catastrophe events during the applicable covered periods of the various agreements have exceeded the single event retentions or aggregate retentions under the terms of the agreements that would result in a recovery.
Kilimanjaro has financed the various property catastrophe reinsurance coverages by issuing catastrophe bonds to unrelated, external investors. The proceeds from the issuance of the catastrophe bonds are held in reinsurance trusts throughout the duration of the applicable reinsurance agreements and invested solely in U.S. government money market funds with a rating of at least “AAAm” by Standard & Poor’s. The catastrophe bonds’ issue date, maturity date and amount correspond to the reinsurance agreements listed above.
11. SENIOR NOTES
The table below displays Everest Reinsurance Holdings’ (“Holdings”) outstanding senior notes. Fair value is based on quoted market prices, but due to limited trading activity, these senior notes are considered Level 2 in the fair value hierarchy.

|  |  |  |  |  |  | March 31, 2023 |  | December 31, 2022
(Dollars in millions) | Date Issued |  | Date Due |  | Principal Amounts |  | Consolidated Balance Sheet Amount |  | Fair Value |  | Consolidated Balance Sheet Amount |  | Fair Value
4.868% Senior notes | 6/5/2014 |  | 6/1/2044 |  | $ | 400 |  |  | $ | 397 |  |  | $ | 373 |  |  | $ | 397 |  |  | $ | 343 |
3.5% Senior notes | 10/7/2020 |  | 10/15/2050 |  | 1,000 |  |  | 981 |  |  | 728 |  |  | 981 |  |  | 677 |
3.125% Senior notes | 10/4/2021 |  | 10/15/2052 |  | 1,000 |  |  | 969 |  |  | 677 |  |  | 969 |  |  | 627 |
|  |  |  |  | $ | 2,400 |  |  | $ | 2,348 |  |  | $ | 1,778 |  |  | $ | 2,347 |  |  | $ | 1,647 |

(Some amounts may not reconcile due to rounding.)
Interest expense incurred in connection with these senior notes is as follows for the periods indicated:

|  |  |  |  |  |  | Three Months Ended March 31,
(Dollars in millions) | Interest Paid |  | Payable Dates |  |  |  |  |  | 2023 |  | 2022
4.868% Senior notes | semi-annually |  | June 1/ December 1 |  |  |  |  |  | $ | 5 |  |  | $ | 5 |
3.5% Senior notes | semi-annually |  | April 15/October 15 |  |  |  |  |  | 9 |  |  | 9 |
3.125% Senior notes | semi-annually |  | April 15/October 15 |  |  |  |  |  | 8 |  |  | 8 |
|  |  |  |  |  |  |  |  | $ | 22 |  |  | $ | 22 |

(Some amounts may not reconcile due to rounding.)
12. LONG-TERM SUBORDINATED NOTES
The table below displays Holdings’ outstanding fixed to floating rate long-term subordinated notes. Fair value is based on quoted market prices, but due to limited trading activity, these subordinated notes are considered Level 2 in the fair value hierarchy.

|  |  |  |  | Maturity Date |  | March 31, 2023 |  | December 31, 2022
(Dollars in millions) | Date Issued |  | Original Principal Amount |  | Scheduled |  | Final |  | Consolidated Balance Sheet Amount |  | Fair Value |  | Consolidated Balance Sheet Amount |  | Fair Value
Long-term subordinated notes | 4/26/2007 |  | $ | 400 |  |  | 5/15/2037 |  | 5/1/2067 |  | $ | 218 |  |  | $ | 197 |  |  | $ | 218 |  |  | $ | 187 |

During the fixed rate interest period from May 3, 2007 through May 14, 2017, interest was at the annual rate of 6.6%, payable semi-annually in arrears on November 15 and May 15 of each year, commencing on November 15, 2007. During the floating rate interest period from May 15, 2017 through maturity, interest will be based on the 3 month LIBOR plus 238.5 basis points, reset quarterly, payable quarterly in arrears on February 15, May 15, August 15 and November 15 of each year, subject to Holdings’ right to defer interest on one or more occasions for up to ten consecutive years. Deferred interest will accumulate interest at the applicable rate compounded quarterly for periods from and including May 15, 2017. The reset quarterly interest rate for February 15, 2023 to May 14, 2023 is 7.25%.
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Holdings may redeem the long-term subordinated notes on or after May 15, 2017, in whole or in part at 100% of the principal amount plus accrued and unpaid interest; however, redemption on or after the scheduled maturity date and prior to May 1, 2047 is subject to a replacement capital covenant. This covenant is for the benefit of certain senior note holders and it mandates that Holdings receive proceeds from the sale of another subordinated debt issue, of at least similar size, before it may redeem the subordinated notes. The Company’s 4.868% senior notes, due on June 1, 2044, 3.5% senior notes due on October 15, 2050 and 3.125% senior notes due on October 15, 2052 are the Company’s long-term indebtedness that rank senior to the long-term subordinated notes.
In 2009, the Company had reduced its outstanding amount of long-term subordinated notes through the initiation of a cash tender offer for any and all of the long-term subordinated notes.
Interest expense incurred in connection with these long-term subordinated notes is as follows for the periods indicated:

|  |  | Three Months Ended March 31,
(Dollars in millions) |  |  |  |  | 2023 |  | 2022
Interest expense incurred |  |  |  |  | $ | 4 |  |  | $ | 2 |

13. SEGMENT REPORTING
The Reinsurance operation writes worldwide property and casualty reinsurance and specialty lines of business, on both a treaty and facultative basis, through reinsurance brokers, as well as directly with ceding companies. Business is written in the U.S., Bermuda, and Ireland offices, as well as, through branches in Canada, Singapore, the United Kingdom and Switzerland. The Insurance operation writes property and casualty insurance directly and through brokers, surplus lines brokers and general agents within the U.S., Bermuda, Canada, Europe, Singapore and South America through its offices in the U.S., Canada, Chile, Singapore, the United Kingdom, Ireland, and branches located in the Netherlands, France, Germany and Spain.
These segments are managed independently, but conform with corporate guidelines with respect to pricing, risk management, control of aggregate catastrophe exposures, capital, investments and support operations. Management generally monitors and evaluates the financial performance of these operating segments based upon their underwriting results.
Underwriting results include earned premium less losses and loss adjustment expenses (“LAE”) incurred, commission and brokerage expenses and other underwriting expenses. The Company measures its underwriting results using ratios, in particular loss, commission and brokerage and other underwriting expense ratios, which, respectively, divide incurred losses, commissions and brokerage and other underwriting expenses by premiums earned.
The Company does not maintain separate balance sheet data for its operating segments. Accordingly, the Company does not review and evaluate the financial results of its operating segments based upon balance sheet data.
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The following tables present the underwriting results for the operating segments for the periods indicated:

| Three Months Ended March 31, 2023 |  |
(Dollars in millions) | Reinsurance |  | Insurance |  | Total |  |  |  |  |  |
Gross written premiums | $ | 2,637 |  |  | $ | 1,106 |  |  | $ | 3,743 |  |  |  |  |  |  |
Net written premiums | 2,454 |  |  | 875 |  |  | 3,329 |  |  |  |  |  |  |
Premiums earned | $ | 2,242 |  |  | $ | 858 |  |  | $ | 3,100 |  |  |  |  |  |  |
Incurred losses and LAE | 1,411 |  |  | 555 |  |  | 1,966 |  |  |  |  |  |  |
Commission and brokerage | 560 |  |  | 101 |  |  | 661 |  |  |  |  |  |  |
Other underwriting expenses | 63 |  |  | 136 |  |  | 200 |  |  |  |  |  |  |
Underwriting gain (loss) | $ | 207 |  |  | $ | 66 |  |  | $ | 273 |  |  |  |  |  |  |
Net investment income |  |  |  |  | 260 |  |  |  |  |  |  |
Net gains (losses) on investments |  |  |  |  | 5 |  |  |  |  |  |  |
Corporate expenses |  |  |  |  | (19) |  |  |  |  |  |  |
Interest, fee and bond issue cost amortization expense |  |  |  |  | (32) |  |  |  |  |  |  |
Other income (expense) |  |  |  |  | (79) |  |  |  |  |  |  |
Income (loss) before taxes |  |  |  |  | $ | 408 |  |  |  |  |  |  |

(Some amounts may not reconcile due to rounding.)

| Three Months Ended March 31, 2022 |  |
(Dollars in millions) | Reinsurance |  | Insurance |  | Total |  |  |  |  |  |
Gross written premiums | $ | 2,186 |  |  | $ | 1,001 |  |  | $ | 3,186 |  |  |  |  |  |  |
Net written premiums | 2,081 |  |  | 731 |  |  | 2,812 |  |  |  |  |  |  |
Premiums earned | $ | 2,066 |  |  | $ | 726 |  |  | $ | 2,792 |  |  |  |  |  |  |
Incurred losses and LAE | 1,325 |  |  | 465 |  |  | 1,790 |  |  |  |  |  |  |
Commission and brokerage | 514 |  |  | 91 |  |  | 605 |  |  |  |  |  |  |
Other underwriting expenses | 50 |  |  | 111 |  |  | 161 |  |  |  |  |  |  |
Underwriting gain (loss) | $ | 177 |  |  | $ | 59 |  |  | $ | 235 |  |  |  |  |  |  |
Net investment income |  |  |  |  | 243 |  |  |  |  |  |  |
Net gains (losses) on investments |  |  |  |  | (154) |  |  |  |  |  |  |
Corporate expenses |  |  |  |  | (14) |  |  |  |  |  |  |
Interest, fee and bond issue cost amortization expense |  |  |  |  | (24) |  |  |  |  |  |  |
Other income (expense) |  |  |  |  | 15 |  |  |  |  |  |  |
Income (loss) before taxes |  |  |  |  | $ | 302 |  |  |  |  |  |  |

(Some amounts may not reconcile due to rounding.)
14. SHARE-BASED COMPENSATION PLANS
For the three months ended March 31, 2023, a total of 174,171 restricted stock awards were granted on February 23, 2023, with a fair value of $382.385 per share. Also, 14,975 performance share unit awards were granted on February 23, 2023, with a fair value of $382.385 per share.
15. INCOME TAXES
The Company is domiciled in Bermuda and has subsidiaries and/or branches in Belgium, Canada, Chile, France, Germany, Ireland, the Netherlands, Singapore, Spain, Switzerland, the United Kingdom, and the United States. The Company’s Bermuda domiciled subsidiaries are exempt from income taxation under Bermuda law until 2035. The Company’s non-Bermudian subsidiaries and branches are subject to income taxation at varying rates in their respective domiciles.
The Company generally applies the estimated Annualized Effective Tax Rate (“AETR”) approach for calculating its tax provision for interim periods as prescribed by ASC 740-270, Interim Reporting. Under the AETR approach, the estimated annualized effective tax rate is applied to the interim year-to-date pre-tax income/(loss) to determine the income tax
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expense or benefit for the year-to-date period. The tax expense or benefit for the quarter represents the difference between the year-to-date tax expense or benefit for the current year-to-date period less such amount for the immediately preceding year-to-date period. Management considers the impact of all known events in its estimation of the Company’s annual pre-tax income/(loss) and annualized effective tax rate.
16. SUBSEQUENT EVENTS
The Company has evaluated known recognized and non-recognized subsequent events. The Company does not have any subsequent events to report.
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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATION
Industry Conditions.
The worldwide insurance and reinsurance businesses are highly competitive, as well as cyclical by product and market. As such, financial results tend to fluctuate with periods of constrained availability, higher rates and stronger profits followed by periods of abundant capacity, lower rates and constrained profitability. Competition in the types of insurance and reinsurance business that we underwrite is based on many factors, including the perceived overall financial strength of the reinsurer or insurer, ratings of the reinsurer or insurer by A.M. Best and/or Standard & Poor’s, underwriting expertise, the jurisdictions where the reinsurer or insurer is licensed or otherwise authorized, capacity and coverages offered, premiums charged, other terms and conditions of the insurance and reinsurance business offered, services offered, speed of claims payment and reputation and experience in lines written. Furthermore, the market impact from these competitive factors related to reinsurance and insurance is generally not consistent across lines of business, domestic and international geographical areas and distribution channels.
We compete in the U.S., Bermuda and international insurance and reinsurance markets with numerous global competitors. Our competitors include independent reinsurance and insurance companies, subsidiaries or affiliates of established worldwide insurance companies, reinsurance departments of certain insurance companies, domestic and international underwriting operations, including underwriting syndicates at Lloyd’s of London and certain government sponsored risk transfer vehicles. Some of these competitors have greater financial resources than we do and have established long-term and continuing business relationships, which can be a significant competitive advantage. In addition, the lack of strong barriers to entry into the reinsurance business and recently, the securitization of insurance and reinsurance risks through capital markets provide additional sources of potential reinsurance and insurance capacity and competition.
Worldwide insurance and reinsurance market conditions historically have been competitive. Generally, there is ample insurance and reinsurance capacity relative to demand, as well as additional capital from the capital markets through insurance linked financial instruments. These financial instruments such as side cars, catastrophe bonds and collateralized reinsurance funds, provided capital markets with access to insurance and reinsurance risk exposure. The capital markets demand for these products is primarily driven by the desire to achieve greater risk diversification and potentially higher returns on their investments. This competition generally has a negative impact on rates, terms and conditions; however, the impact varies widely by market and coverage. Based on recent competitive behaviors in the insurance and reinsurance industry, natural catastrophe events and the macroeconomic backdrop, there has been some dislocation in the market which we expect to have a positive impact on rates and terms and conditions, generally, though local market specificities can vary.
The increased frequency of catastrophe losses experienced throughout recent years appears to be pressuring the increase of rates. As business activity continues to regain strength after the pandemic and current macroeconomic uncertainty, rates appear to be firming in most lines of business, particularly in the casualty lines that had seen significant losses such as excess casualty and directors’ and officers’ liability. Other casualty lines are experiencing modest rate increase, while some lines such as workers’ compensation were experiencing softer market conditions. The impact on pricing conditions is likely to change depending on the line of business and geography.
Our capital position remains a source of strength, with high quality invested assets, significant liquidity and a low operating expense ratio. Our diversified global platform with its broad mix of products, distribution and geography is resilient.
The war in the Ukraine is ongoing and an evolving event. Economic and legal sanctions have been levied against Russia, specific named individuals and entities connected to the Russian government, as well as businesses located in the Russian Federation and/or owned by Russian nationals by numerous countries, including the United States. The significant political and economic uncertainty surrounding the war and associated sanctions have impacted economic and investment markets both within Russia and around the world.
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Financial Summary.
We monitor and evaluate our overall performance based upon financial results. The following table displays a summary of the consolidated net income (loss), ratios and shareholders’ equity for the periods indicated.

| Three Months Ended March 31, |  | Percentage Increase/ (Decrease) |  |  |  |
(Dollars in millions) | 2023 |  | 2022 |  |  |  |  |  |
Gross written premiums | $ | 3,743 |  |  | $ | 3,186 |  |  | 17.5 | % |  |  |  |  |  |
Net written premiums | 3,329 |  |  | 2,812 |  |  | 18.4 | % |  |  |  |  |  |
REVENUES: |  |  |  |  |  |  |  |  |  |  |
Premiums earned | $ | 3,100 |  |  | $ | 2,792 |  |  | 11.0 | % |  |  |  |  |  |
Net investment income | 260 |  |  | 243 |  |  | 7.0 | % |  |  |  |  |  |
Net gains (losses) on investments | 5 |  |  | (154) |  |  | -103.3 | % |  |  |  |  |  |
Other income (expense) | (79) |  |  | 15 |  |  | NM |  |  |  |  |  |
Total revenues | 3,286 |  |  | 2,896 |  |  | 13.5 | % |  |  |  |  |  |
CLAIMS AND EXPENSES: |  |  |  |  |  |  |  |  |  |  |
Incurred losses and loss adjustment expenses | 1,966 |  |  | 1,790 |  |  | 9.9 | % |  |  |  |  |  |
Commission, brokerage, taxes and fees | 661 |  |  | 605 |  |  | 9.3 | % |  |  |  |  |  |
Other underwriting expenses | 200 |  |  | 161 |  |  | 23.8 | % |  |  |  |  |  |
Corporate expenses | 19 |  |  | 14 |  |  | 34.9 | % |  |  |  |  |  |
Interest, fees and bond issue cost amortization expense | 32 |  |  | 24 |  |  | 33.1 | % |  |  |  |  |  |
Total claims and expenses | 2,878 |  |  | 2,594 |  |  | 10.9 | % |  |  |  |  |  |
INCOME (LOSS) BEFORE TAXES | 408 |  |  | 302 |  |  | 35.0 | % |  |  |  |  |  |
Income tax expense (benefit) | 43 |  |  | 4 |  |  | NM |  |  |  |  |  |
NET INCOME (LOSS) | $ | 365 |  |  | $ | 298 |  |  | 22.6 | % |  |  |  |  |  |
RATIOS: |  |  |  |  | Point Change |  |  |  |  |  |
Loss ratio | 63.4 | % |  | 64.1 | % |  | (0.7) |  |  |  |  |  |  |
Commission and brokerage ratio | 21.3 | % |  | 21.7 | % |  | (0.4) |  |  |  |  |  |  |
Other underwriting expense ratio | 6.4 | % |  | 5.8 | % |  | 0.6 |  |  |  |  |  |  |
Combined ratio | 91.2 | % |  | 91.6 | % |  | (0.4) |  |  |  |  |  |  |

| At March 31, |  | At December 31, |  | Percentage Increase/ (Decrease)
(Dollars in millions, except per share amounts) | 2023 |  | 2022 |
Balance sheet data: |  |  |  |  |
Total investments and cash | $ | 31,435 |  |  | $ | 29,872 |  |  | 5.2 | %
Total assets | 41,839 |  |  | 39,966 |  |  | 4.7 | %
Loss and loss adjustment expense reserves | 22,878 |  |  | 22,065 |  |  | 3.7 | %
Total debt | 3,085 |  |  | 3,084 |  |  | — | %
Total liabilities | 32,825 |  |  | 31,525 |  |  | 4.1 | %
Shareholders' equity | 9,014 |  |  | 8,441 |  |  | 6.8 | %
Book value per share | 229.49 |  |  | 215.54 |  |  | 6.5 | %

(NM, not meaningful)
(Some amounts may not reconcile due to rounding.)
Revenues.
Premiums. Gross written premiums increased by 17.5% to $3.7 billion for the three months ended March 31, 2023, compared to $3.2 billion for the three months ended March 31, 2022, reflecting a $451 million, or 20.6%, increase in our reinsurance business and a $105 million, or 10.5%, increase in our insurance business. The increase in reinsurance premiums was primarily due to increases in casualty pro rata business, property pro rata business and financial lines of
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business. The increase in insurance premiums was primarily due to increases in property/short tail business and other specialty lines of business.
Net written premiums increased by 18.4% to $3.3 billion for the three months ended March 31, 2023, compared to $2.8 billion for the three months ended March 31, 2022, which is consistent with the percentage change in gross written premiums. Premiums earned increased by 11.0% to $3.1 billion during the three months ended March 31, 2023, compared to $2.8 billion during the three months ended March 31, 2022. The change in premiums earned relative to net written premiums was primarily the result of timing; premiums are earned ratably over the coverage period whereas written premiums are recorded at the initiation of the coverage period.
Other Income (Expense). We recorded other expense of $79 million and other income of $15 million for the three months ended March 31, 2023 and 2022, respectively. The changes were primarily the result of fluctuations in foreign currency exchange rates. We recognized foreign currency exchange expense of $85 million for the three months ended March 31, 2023 and foreign currency exchange income of $13 million for the three months ended March 31, 2022.
Net Investment Income. Refer to Consolidated Investments Results Section below.
Net Gains (Losses) on Investments. Refer to Consolidated Investments Results Section below.
Claims and Expenses.
Incurred Losses and Loss Adjustment Expenses. The following table presents our incurred losses and loss adjustment expenses (“LAE”) for the periods indicated.

| Three Months Ended March 31,
(Dollars in millions) | Current Year |  | Ratio %/ Pt Change |  | Prior Years |  | Ratio %/ Pt Change |  | Total Incurred |  | Ratio %/ Pt Change
2023 |  |  |  |  |  |  |  |  |  |  |
Attritional | $ | 1,851 |  |  | 59.7 | % |  | $ | — |  |  | — | % |  | $ | 1,851 |  |  | 59.7 | %
Catastrophes | 115 |  |  | 3.7 | % |  | — |  |  | — | % |  | 115 |  |  | 3.7 | %
Total | $ | 1,966 |  |  | 63.4 | % |  | $ | — |  |  | — | % |  | $ | 1,966 |  |  | 63.4 | %
2022 |  |  |  |  |  |  |  |  |  |  |
Attritional | $ | 1,676 |  |  | 60.0 | % |  | $ | (1) |  |  | — | % |  | $ | 1,675 |  |  | 60.0 | %
Catastrophes | 115 |  |  | 4.1 | % |  | — |  |  | — | % |  | 115 |  |  | 4.1 | %
Total | $ | 1,791 |  |  | 64.1 | % |  | $ | (1) |  |  | — | % |  | $ | 1,790 |  |  | 64.1 | %
Variance 2023/2022 |  |  |  |  |  |  |  |  |  |  |
Attritional | $ | 175 |  |  | (0.3) | pts |  | $ | 1 |  |  | — | pts |  | $ | 176 |  |  | (0.3) | pts
Catastrophes | — |  |  | (0.4) | pts |  | — |  |  | — | pts |  | — |  |  | (0.4) | pts
Total | $ | 175 |  |  | (0.7) | pts |  | $ | 1 |  |  | — | pts |  | $ | 176 |  |  | (0.7) | pts

(Some amounts may not reconcile due to rounding.)
Incurred losses and LAE increased by 9.9% to $2.0 billion for the three months ended March 31, 2023, compared to $1.8 billion for the three months ended March 31, 2022, primarily due to an increase of $175 million in current year attritional losses. The increase in current year attritional losses was mainly due to the impact of the increase in premiums earned. The current year catastrophe losses of $115 million for the three months ended March 31, 2023 related primarily to the 2023 Turkey earthquakes ($75.0 million), and the 2023 New Zealand storms ($40.0 million). The $115 million of current year catastrophe losses for the three months ended March 31, 2022 related primarily to the 2022 Australia floods ($75.0 million), the 2022 European storms ($30.0 million), and the 2022 March U.S. storms ($10.0 million).
Catastrophe losses and loss expenses typically have a material effect on our incurred losses and loss adjustment expense results and can vary significantly from period to period. Losses from natural catastrophes contributed 3.7 percentage points to the combined ratio for the three months ended March 31, 2023, compared with 4.1 percentage points for the three months ended March 31, 2022. The Company has up to $350.0 million of catastrophe bond protection (“CAT Bond”) that attaches at a $48.1 billion Property Claims Services (“PCS”) Industry loss threshold. This recovery would be recognized on a pro-rata basis up to a $63.8 billion PCS Industry loss level. PCS’s current industry estimate of $48.9 billion issued in April 2023 exceeds the attachment point. The potential recovery under the CAT Bond is currently estimated to
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be $19 million but is subject to further revision of the industry loss estimate. No portion of the potential CAT bond recovery has been included in the Company’s current financial results.
Commission, Brokerage, Taxes and Fees. Commission, brokerage, taxes and fees increased by 9.3% to $661 million for the three months ended March 31, 2023 compared to $605 million for the three months ended March 31, 2022. The increase was primarily due to the impact of the increase in premiums earned and changes in the mix of business.
Other Underwriting Expenses. Other underwriting expenses were $200 million and $161 million for the three months ended March 31, 2023 and March 31, 2022, respectively. The increase in other underwriting expenses was mainly due to the impact of the increase in premiums earned as well as the continued build out of our insurance operations, including an expansion of the international insurance platform.
Corporate Expenses. Corporate expenses, which are general operating expenses that are not allocated to segments, were $19 million and $14 million for the three months ended March 31, 2023 and 2022, respectively. The increase from 2022 to 2023 was mainly due to information technology costs and external consulting costs.
Interest, Fees and Bond Issue Cost Amortization Expense. Interest, fees and other bond amortization expense was $32 million and $24 million for the three months ended March 31, 2023 and 2022, respectively. Interest expense was mainly impacted by the movement in the floating interest rate related to the long-term subordinated notes, which is reset quarterly per the note agreement, as well as variable interest rate costs on borrowings from FHLB.
Income Tax Expense (Benefit). We had income tax expense of $43 million and $4 million for the three months ended March 31, 2023 and 2022, respectively. Income tax expense is primarily a function of the geographic location of the Company’s pre-tax income and the statutory tax rates in those jurisdictions. The effective tax rate (“ETR”) is primarily affected by tax-exempt investment income, foreign tax credits and dividends. Variations in the ETR generally result from changes in the relative levels of pre-tax income, including the impact of catastrophe losses and net capital gains (losses), among jurisdictions with different tax rates.
On August 16, 2022, the Inflation Reduction Act of 2022 (“IRA”) was enacted. We have evaluated the tax provisions of the IRA, the most significant of which are the corporate alternative minimum tax and the share repurchase excise tax and do not expect the legislation to have a material impact on our results of operations. As the IRS issues additional guidance, we will evaluate any impact to our consolidated financial statements.
Net Income (Loss).
Our net income was $365 million and $298 million for the three months ended March 31, 2023 and 2022, respectively. These changes were primarily driven by the financial component fluctuations explained above.
Ratios.
Our combined ratio decreased by 0.4 points to 91.2% for the three months ended March 31, 2023, compared to 91.6% for the three months ended March 31, 2022. The loss ratio component decreased by 0.7 points for the three months ended March 31, 2023 over the same period last year mainly due to changes in the mix of business and no change in catastrophe losses despite the considerable increase in gross written premiums. The commission and brokerage ratio components decreased to 21.3% for the three months ended March 31, 2023 compared to 21.7% for the three months ended March 31, 2022. The decrease was mainly due to changes in the mix of business. The other underwriting expense ratios increased to 6.4% for the three months ended March 31, 2023 compared to 5.8% for the three months ended March 31, 2022. These increases were mainly due to higher insurance operations costs.
Shareholders’ Equity.
Shareholders’ equity increased by $573 million to $9.0 billion at March 31, 2023 from $8.4 billion at December 31, 2022, principally as a result of $365 million of net income, $249 million of unrealized appreciation on available for sale fixed maturity portfolio net of tax and $31 million of net foreign currency translation adjustments, partially offset by $65 million of shareholder dividends and $7 million of share-based compensation transactions.
Consolidated Investment Results
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Net Investment Income.
Net investment income increased by 7.0% to $260 million for the three months ended March 31, 2023 compared with net investment income of $243 million for the three months ended March 31, 2022. The increase for the three months ended March 31, 2023 was primarily the result of higher income from fixed maturity investments and short-term investments due to rising reinvestment rates, partially offset by a decline in limited partnership income. The limited partnership income primarily reflects decreases in their reported net asset values. As such, until these asset values are monetized and the resultant income is distributed, they are subject to future increases or decreases in the asset value, and the results may be volatile.
The following table shows the components of net investment income for the periods indicated.

| Three Months Ended March 31, |  |
(Dollars in millions) | 2023 |  | 2022 |  |  |  |
Fixed maturities | $ | 247 |  |  | $ | 148 |  |  |  |  |
Equity securities | 1 |  |  | 4 |  |  |  |  |
Short-term investments and cash | 17 |  |  | — |  |  |  |  |
Other invested assets |  |  |  |  |  |  |
Limited partnerships | (15) |  |  | 88 |  |  |  |  |
Other | 22 |  |  | 12 |  |  |  |  |
Gross investment income before adjustments | 272 |  |  | 253 |  |  |  |  |
Funds held interest income (expense) | — |  |  | 4 |  |  |  |  |
Future policy benefit reserve income (expense) | — |  |  | — |  |  |  |  |
Gross investment income | 272 |  |  | 256 |  |  |  |  |
Investment expenses | (12) |  |  | (13) |  |  |  |  |
Net investment income | $ | 260 |  |  | $ | 243 |  |  |  |  |

(Some amounts may not reconcile due to rounding.)
The following table shows a comparison of various investment yields for the periods indicated.

| Three Months Ended March 31, |  |
| 2023 |  | 2022 |  |  |  |
Annualized pre-tax yield on average cash and invested assets | 3.2 | % |  | 3.3 | % |  |  |  |
Annualized after-tax yield on average cash and invested assets | 2.8 | % |  | 2.9 | % |  |  |  |
Annualized return on invested assets | 3.3 | % |  | 1.2 | % |  |  |  |

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Net Gains (Losses) on Investments.
The following table presents the composition of our net gains (losses) on investments for the periods indicated.

| Three Months Ended March 31, |  |
(Dollars in millions) | 2023 |  | 2022 |  | Variance |  |  |  |  |  |
Realized gains (losses) from dispositions: |  |  |  |  |  |  |  |  |  |  |
Fixed maturity securities - available for sale |  |  |  |  |  |  |  |  |  |  |
Gains | $ | 11 |  |  | $ | 20 |  |  | $ | (9) |  |  |  |  |  |  |
Losses | (9) |  |  | (17) |  |  | 8 |  |  |  |  |  |  |
Total | 2 |  |  | 3 |  |  | (1) |  |  |  |  |  |  |
Equity securities |  |  |  |  |  |  |  |  |  |  |
Gains | 7 |  |  | 4 |  |  | 4 |  |  |  |  |  |  |
Losses | — |  |  | (15) |  |  | 15 |  |  |  |  |  |  |
Total | 7 |  |  | (12) |  |  | 19 |  |  |  |  |  |  |
Other Invested Assets |  |  |  |  |  |  |  |  |  |  |
Gains | — |  |  | 5 |  |  | (5) |  |  |  |  |  |  |
Losses | — |  |  | — |  |  | — |  |  |  |  |  |  |
Total | — |  |  | 4 |  |  | (4) |  |  |  |  |  |  |
Total net realized gains (losses) from dispositions |  |  |  |  |  |  |  |  |  |  |
Gains | 18 |  |  | 28 |  |  | (10) |  |  |  |  |  |  |
Losses | (9) |  |  | (33) |  |  | 24 |  |  |  |  |  |  |
Total | 9 |  |  | (5) |  |  | 14 |  |  |  |  |  |  |
Allowance for credit losses | (8) |  |  | (12) |  |  | 4 |  |  |  |  |  |  |
Gains (losses) from fair value adjustments |  |  |  |  |  |  |  |  |  |  |
Equity securities | 4 |  |  | (137) |  |  | 141 |  |  |  |  |  |  |
Total | 4 |  |  | (137) |  |  | 141 |  |  |  |  |  |  |
Total net gains (losses) on investments | $ | 5 |  |  | $ | (154) |  |  | $ | 159 |  |  |  |  |  |  |

(Some amounts may not reconcile due to rounding.)
Net gains (losses) on investments during the three months ended March 31, 2023 primarily relate to net gains from fair value adjustments on equity securities in the amount of $4 million as a result of equity market increases during the first quarter of 2023. In addition, we realized $9 million of gains due to the disposition of investments and recorded an increase to the allowance for credit losses of $8 million.
Segment Results.
The Company manages its reinsurance and insurance operations as autonomous units and key strategic decisions are based on the aggregate operating results and projections for these segments of business.
The Reinsurance operation writes 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 branches in Canada, Singapore, the United Kingdom and Switzerland. The Insurance operation writes property and casualty insurance directly and through brokers, surplus lines brokers and general agents within the U.S., Bermuda, Canada, Europe, Singapore and South America through its offices in the U.S., Canada, Chile, Singapore, the United Kingdom, Ireland and branches located in the Netherlands, France, Germany and Spain.
These segments are managed independently, but conform with corporate guidelines with respect to pricing, risk management, control of aggregate catastrophe exposures, capital, investments and support operations. Management
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generally monitors and evaluates the financial performance of these operating segments based upon their underwriting results.
Underwriting results include earned premium less LAE incurred, commission and brokerage expenses and other underwriting expenses. We measure our underwriting results using ratios, in particular loss, commission and brokerage and other underwriting expense ratios, which, respectively, divide incurred losses, commissions and brokerage and other underwriting expenses by premiums earned.
The Company does not maintain separate balance sheet data for its operating segments. Accordingly, the Company does not review and evaluate the financial results of its operating segments based upon balance sheet data.
Our loss and LAE reserves are management’s best estimate of our ultimate liability for unpaid claims. We re-evaluate our estimates on an ongoing basis, including all prior period reserves, taking into consideration all available information, and in particular, recently reported loss claim experience and trends related to prior periods. Such re-evaluations are recorded in incurred losses in the period in which re-evaluation is made.
The following discusses the underwriting results for each of our segments for the periods indicated.
Reinsurance.
The following table presents the underwriting results and ratios for the Reinsurance segment for the periods indicated.

| Three Months Ended March 31, |  |
(Dollars in millions) | 2023 |  | 2022 |  | Variance |  | % Change |  |  |  |  |  |  |  |
Gross written premiums | $ | 2,637 |  |  | $ | 2,186 |  |  | 451 |  |  | 20.6 | % |  |  |  |  |  |  |  |
Net written premiums | 2,454 |  |  | 2,081 |  |  | 373 |  |  | 17.9 | % |  |  |  |  |  |  |  |
Premiums earned | $ | 2,242 |  |  | $ | 2,066 |  |  | $ | 176 |  |  | 8.5 | % |  |  |  |  |  |  |  |
Incurred losses and LAE | 1,411 |  |  | 1,325 |  |  | 86 |  |  | 6.5 | % |  |  |  |  |  |  |  |
Commission and brokerage | 560 |  |  | 514 |  |  | 46 |  |  | 9.0 | % |  |  |  |  |  |  |  |
Other underwriting expenses | 63 |  |  | 50 |  |  | 13 |  |  | 25.4 | % |  |  |  |  |  |  |  |
Underwriting gain (loss) | $ | 207 |  |  | $ | 177 |  |  | $ | 30 |  |  | 17.1 | % |  |  |  |  |  |  |  |
|  |  |  |  |  |  | Point Chg |  |  |  |  |  |  |  |
Loss ratio | 62.9 | % |  | 64.1 | % |  |  |  | (1.2) |  |  |  |  |  |  |  |  |
Commission and brokerage ratio | 25.0 | % |  | 24.9 | % |  |  |  | 0.1 |  |  |  |  |  |  |  |  |
Other underwriting expense ratio | 2.8 | % |  | 2.4 | % |  |  |  | 0.4 |  |  |  |  |  |  |  |  |
Combined ratio | 90.8 | % |  | 91.4 | % |  |  |  | (0.6) |  |  |  |  |  |  |  |  |

(NM, Not Meaningful)
(Some amounts may not reconcile due to rounding.)
Premiums. Gross written premiums increased by 20.6% to $2.6 billion for the three months ended March 31, 2023 from $2.2 billion for the three months ended March 31, 2022, primarily due to increases in casualty pro rata business, property pro rata business and financial lines of business. Net written premiums increased by 17.9% to $2.5 billion for the three months ended March 31, 2023 compared to $2.1 billion for the three months ended March 31, 2022, which is consistent with the percentage change in gross written premiums. Premiums earned increased by 8.5% to $2.2 billion for the three months ended March 31, 2023, compared to $2.1 billion for the three months ended March 31, 2022. The change in premiums earned relative to net written premiums was primarily the result of timing; premiums are earned ratably over the coverage period whereas written premiums are recorded at the initiation of the coverage period.
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Incurred Losses and LAE. The following table presents the incurred losses and LAE for the Reinsurance segment for the periods indicated.

| Three Months Ended March 31,
(Dollars in millions) | Current Year |  | Ratio %/ Pt Change |  | Prior Years |  | Ratio %/ Pt Change |  | Total Incurred |  | Ratio %/ Pt Change
2023 |  |  |  |  |  |  |  |  |  |  |
Attritional | $ | 1,298 |  |  | 57.9 | % |  | $ | — |  |  | — | % |  | 1,298 |  |  | 57.9 | %
Catastrophes | 113 |  |  | 5.0 | % |  |  |  | — | % |  | 113 |  |  | 5.0 | %
Total Segment | $ | 1,411 |  |  | 62.9 | % |  | $ | — |  |  | — | % |  | $ | 1,411 |  |  | 62.9 | %
2022 |  |  |  |  |  |  |  |  |  |  |
Attritional | $ | 1,216 |  |  | 58.9 | % |  | $ | (2) |  |  | -0.1 | % |  | 1,215 |  |  | 58.8 | %
Catastrophes | 110 |  |  | 5.3 | % |  | — |  |  | — | % |  | 110 |  |  | 5.3 | %
Total Segment | $ | 1,326 |  |  | 64.2 | % |  | $ | (2) |  |  | -0.1 | % |  | $ | 1,325 |  |  | 64.1 | %
Variance 2023/2022 |  |  |  |  |  |  |  |  |  |  |
Attritional | $ | 82 |  |  | (1.0) | pts |  | $ | 2 |  |  | 0.1 | pts |  | $ | 83 |  |  | (0.9) | pts
Catastrophes | 3 |  |  | (0.3) | pts |  | — |  |  | — | pts |  | 3 |  |  | (0.3) | pts
Total Segment | $ | 85 |  |  | (1.3) | pts |  | $ | 2 |  |  | 0.1 | pts |  | $ | 86 |  |  | (1.2) | pts

Incurred losses increased by 6.5% to $1.4 billion for the three months ended March 31, 2023, compared to $1.3 billion for the three months ended March 31, 2022. The increase was primarily due to an increase of $82 million in current year attritional losses. The increase in current year attritional losses was mainly related to the impact of the increase in premiums earned. The current year catastrophe losses of $113 million for the three months ended March 31, 2023 related primarily to the 2023 Turkey earthquakes ($75.0 million) and the 2023 New Zealand storms ($38.0 million). The $110 million of current year catastrophe losses for the three months ended March 31, 2022 related primarily to the 2022 Australia floods ($75.0 million), the 2022 European storms ($30.0 million), and the 2022 March U.S. storms ($5.0 million).
Segment Expenses. Commission and brokerage expense increased by 9.0% to $560 million for the three months ended March 31, 2023 compared to $514 million for the three months ended March 31, 2022. The increase was mainly due to the impact of the increase in premiums earned. Segment other underwriting expenses increased to $63 million for the three months ended March 31, 2023 from $50 million for the three months ended March 31, 2022. The increase was due to increased personnel and direct and indirect expenditures supporting the increased premium volume of the segment.
Insurance.
The following table presents the underwriting results and ratios for the Insurance segment for the periods indicated.

| Three Months Ended March 31, |  |
(Dollars in millions) | 2023 |  | 2022 |  | Variance |  | % Change |  |  |  |  |  |  |  |
Gross written premiums | $ | 1,106 |  |  | $ | 1,001 |  |  | $ | 105 |  |  | 10.5 | % |  |  |  |  |  |  |  |
Net written premiums | 875 |  |  | 731 |  |  | 145 |  |  | 19.7 | % |  |  |  |  |  |  |  |
Premiums earned | $ | 858 |  |  | $ | 726 |  |  | $ | 133 |  |  | 18.2 | % |  |  |  |  |  |  |  |
Incurred losses and LAE | 555 |  |  | 465 |  |  | 90 |  |  | 19.4 | % |  |  |  |  |  |  |  |
Commission and brokerage | 101 |  |  | 91 |  |  | 10 |  |  | 11.1 | % |  |  |  |  |  |  |  |
Other underwriting expenses | 136 |  |  | 111 |  |  | 25 |  |  | 23.1 | % |  |  |  |  |  |  |  |
Underwriting gain (loss) | $ | 66 |  |  | $ | 59 |  |  | $ | 7 |  |  | 12.1 | % |  |  |  |  |  |  |  |
|  |  |  |  |  |  | Point Chg |  |  |  |  |  |  |  |
Loss ratio | 64.7% |  | 64.1% |  |  |  | 0.6 |  |  |  |  |  |  |  |
Commission and brokerage ratio | 11.8% |  | 12.5% |  |  |  | (0.7) |  |  |  |  |  |  |  |
Other underwriting expense ratio | 15.9% |  | 15.3% |  |  |  | 0.6 |  |  |  |  |  |  |  |
Combined ratio | 92.4% |  | 91.9% |  |  |  | 0.5 |  |  |  |  |  |  |  |

(NM not meaningful)
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(Some amounts may not reconcile due to rounding.)
Premiums. Gross written premiums increased by 10.5% to $1.1 billion for the three months ended March 31, 2023 compared to $1.0 billion for the three months ended March 31, 2022. The increase in insurance premiums was primarily due to increases in property/short tail business and other specialty lines of business. Net written premiums increased by 19.7% to $875 million for the three months ended March 31, 2023 compared to $731 million for the three months ended March 31, 2022. The higher percentage change in net written premiums compared to gross written premiums is due to higher net retention resulting from changes in the mix of business. Premiums earned increased 18.2% to $858 million for the three months ended March 31, 2023 compared to $726 million for the three months ended March 31, 2022.
Incurred Losses and LAE. The following table presents the incurred losses and LAE for the Insurance segment for the periods indicated.

| Three Months Ended March 31,
(Dollars in millions) | Current Year |  | Ratio %/ Pt Change |  | Prior Years |  | Ratio %/ Pt Change |  | Total Incurred |  | Ratio %/ Pt Change
2023 |  |  |  |  |  |  |  |  |  |  |
Attritional | $ | 553 |  |  | 64.5 | % |  | $ | — |  |  | — | % |  | 553 |  |  | 64.5 | %
Catastrophes | 2 |  |  | 0.2 | % |  | — |  |  | — | % |  | 2 |  |  | 0.2 | %
Total Segment | $ | 555 |  |  | 64.7 | % |  | $ | — |  |  | — | % |  | $ | 555 |  |  | 64.7 | %
2022 |  |  |  |  |  |  |  |  |  |  |
Attritional | $ | 460 |  |  | 63.3 | % |  | $ | 1 |  |  | 0.1 | % |  | 460 |  |  | 63.4 | %
Catastrophes | 5 |  |  | 0.7 | % |  | — |  |  | — | % |  | 5 |  |  | 0.7 | %
Total Segment | $ | 465 |  |  | 64.0 | % |  | $ | 1 |  |  | 0.1 | % |  | $ | 465 |  |  | 64.1 | %
Variance 2023/2022 |  |  |  |  |  |  |  |  |  |  |
Attritional | $ | 94 |  |  | 1.2 | pts |  | $ | (1) |  |  | (0.1) | pts |  | $ | 93 |  |  | 1.1 | pts
Catastrophes | (3) |  |  | (0.5) | pts |  | — |  |  | — | pts |  | (3) |  |  | (0.5) | pts
Total Segment | $ | 91 |  |  | 0.7 | pts |  | $ | (1) |  |  | (0.1) | pts |  | $ | 90 |  |  | 0.6 | pts

(Some amounts may not reconcile due to rounding.)
Incurred losses and LAE increased by 19.4% to $555 million for the three months ended March 31, 2023 compared to $465 million for the three months ended March 31, 2022. The increase was mainly due to an increase of $94 million in current year attritional losses. The increase in current year attritional losses was primarily due to the impact of the increase in premiums earned. The current year catastrophe losses of $2 million related to the 2023 New Zealand storms. The $5 million of current year catastrophe losses for the three months ended March 31, 2022 related to the 2022 March U.S. storms.
Segment Expenses. Commission and brokerage increased by 11.1% to $101 million for the three months ended March 31, 2023 compared to $91 million for the three months ended March 31, 2022. Segment other underwriting expenses increased to $136 million for the three months ended March 31, 2023 compared to $111 million for the three months ended March 31, 2022. The increases were mainly due to the impact of the increase in premiums earned and increased expenses related to the continued build out of the insurance business, including an expansion of the international insurance platform.
FINANCIAL CONDITION
Investments. Total investments were $29.8 billion at March 31, 2023, an increase of $1.3 billion compared to $28.5 billion at December 31, 2022. The rise in investments was primarily related to an increase in fixed maturities, available for sale due to an overall net purchase of $1.0 billion of fixed maturities, available for sale during the first quarter of 2023.
The Company’s limited partnership investments are comprised of limited partnerships that invest in private equity, private credit and private real estate. Generally, the limited partnerships are reported on a month or quarter lag. We receive annual audited financial statements for all of the limited partnerships which are prepared using fair value accounting in accordance with FASB guidance. For the quarterly reports, the Company reviews the financial reports for
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any unusual changes in carrying value. If the Company becomes aware of a significant decline in value during the lag reporting period, the loss will be recorded in the period in which the Company identifies the decline.
The table below summarizes the composition and characteristics of our investment portfolio for the periods indicated.

| At March 31, 2023 |  | At December 31, 2022
Fixed income portfolio duration (years) | 3.0 |  | 3.1
Fixed income composite credit quality | A+ |  | A+

Reinsurance Recoverables.
Reinsurance recoverables for both paid and unpaid losses totaled $2.3 billion and $2.2 billion at March 31, 2023 and December 31, 2022, respectively. At March 31, 2023, $500 million, or 21.6%, was receivable from Mt. Logan Re collateralized segregated accounts; $269 million, or 11.7%, was receivable from Munich Reinsurance America, Inc. (“Munich Re”) and $135 million, or 5.8% was receivable from Endurance Specialty Holdings, Ltd. (“Endurance”). No other retrocessionaire accounted for more than 5% of our recoverables.
Loss and LAE Reserves. Gross loss and LAE reserves totaled $22.9 billion and $22.1 billion at March 31, 2023 and December 31, 2022, respectively.
The following tables summarize gross outstanding loss and LAE reserves by segment, classified by case reserves and IBNR reserves, for the periods indicated.

| At March 31, 2023
(Dollars in millions) | Case Reserves |  | IBNR Reserves |  | Total Reserves |  | % of Total
Reinsurance | $ | 6,186 |  |  | $ | 10,329 |  |  | $ | 16,515 |  |  | 72.2 | %
Insurance | 1,842 |  |  | 4,250 |  |  | 6,093 |  |  | 26.6 | %
Total excluding A&E | 8,028 |  |  | 14,579 |  |  | 22,607 |  |  | 98.8 | %
A&E | 132 |  |  | 139 |  |  | 271 |  |  | 1.2 | %
Total including A&E | $ | 8,160 |  |  | $ | 14,718 |  |  | $ | 22,878 |  |  | 100.0 | %

(Some amounts may not reconcile due to rounding.)

| At December 31, 2022
(Dollars in millions) | Case Reserves |  | IBNR Reserves |  | Total Reserves |  | % of Total
Reinsurance | $ | 6,045 |  |  | $ | 9,818 |  |  | $ | 15,862 |  |  | 71.9 | %
Insurance | 1,863 |  |  | 4,062 |  |  | 5,925 |  |  | 26.9 | %
Total excluding A&E | 7,908 |  |  | 13,880 |  |  | 21,787 |  |  | 98.7 | %
A&E | 138 |  |  | 140 |  |  | 278 |  |  | 1.3 | %
Total including A&E | $ | 8,046 |  |  | $ | 14,019 |  |  | $ | 22,065 |  |  | 100.0 | %

(Some amounts may not reconcile due to rounding.)
Changes in premiums earned and business mix, reserve re-estimations, catastrophe losses and changes in catastrophe loss reserves and claim settlement activity all impact loss and LAE reserves by segment and in total.
Our carried loss and LAE reserves represent management’s best estimate of our ultimate liability for unpaid claims. We continuously re-evaluate our reserves, including re-estimates of prior period reserves, taking into consideration all available information and, in particular, newly reported loss and claim experience. Changes in reserves resulting from such re-evaluations are reflected in incurred losses in the period when the re-evaluation is made. Our analytical methods and processes operate at multiple levels including individual contracts, groupings of like contracts, classes and lines of business, internal business units, segments, accident years, legal entities, and in the aggregate. In order to set appropriate reserves, we make qualitative and quantitative analyses and judgments at these various levels. We utilize actuarial science, business expertise and management judgment in a manner intended to ensure the accuracy and consistency of our reserving practices. Management’s best estimate is developed through collaboration with actuarial, underwriting, claims, legal and finance departments and culminates with the input of reserve committees. Each segment
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reserve committee includes the participation of the relevant parties from actuarial, finance, claims and segment senior management and has the responsibility for recommending and approving management’s best estimate. Reserves are further reviewed by Everest’s Chief Reserving Actuary and senior management. The objective of such process is to determine a single best estimate viewed by management to be the best estimate of its ultimate loss liability. Nevertheless, our reserves are estimates, which are subject to variation, which may be significant.
There can be no assurance that reserves for, and losses from, claim obligations will not increase in the future, possibly by a material amount. However, we believe that our existing reserves and reserving methodologies lessen the probability that any such increase would have a material adverse effect on our financial condition, results of operations or cash flows.
Asbestos and Environmental Exposures. Asbestos and Environmental (“A&E”) exposures represent a separate exposure group for monitoring and evaluating reserve adequacy. The following table summarizes the outstanding loss reserves with respect to A&E reserves on both a gross and net of retrocessions basis for the periods indicated.

| At March 31, |  | At December 31,
(Dollars in millions) | 2023 |  | 2022
Gross reserves | $ | 271 |  |  | $ | 278 |
Ceded reserves | (20) |  |  | (21) |
Net reserves | $ | 251 |  |  | $ | 257 |

(Some amounts may not reconcile due to rounding.)
With respect to asbestos only, at March 31, 2023, we had net asbestos loss reserves of $227 million, or 90.4%, of total net A&E reserves, all of which was for assumed business.
Ultimate loss projections for A&E liabilities cannot be accomplished using standard actuarial techniques. We believe that our A&E reserves represent management’s best estimate of the ultimate liability; however, there can be no assurance that ultimate loss payments will not exceed such reserves, perhaps by a significant amount.
Industry analysts use the “survival ratio” to compare the A&E reserves among companies with such liabilities. The survival ratio is typically calculated by dividing a company’s current net reserves by the three year average of annual paid losses. Hence, the survival ratio equals the number of years that it would take to exhaust the current reserves if future loss payments were to continue at historical levels. Using this measurement, our net three year asbestos survival ratio was 6.7 years at March 31, 2023. These metrics can be skewed by individual large settlements occurring in the prior three years and therefore, may not be indicative of the timing of future payments.
LIQUIDITY AND CAPITAL RESOURCES
Capital. Shareholders’ equity at March 31, 2023 and December 31, 2022 was $9.0 billion and $8.4 billion, respectively. Management’s objective in managing capital is to ensure its overall capital level, as well as the capital levels of its operating subsidiaries, exceed the amounts required by regulators, the amount needed to support our current financial strength ratings from rating agencies and our own economic capital models. The Company’s capital has historically exceeded these benchmark levels.
Our two main operating companies Bermuda Re and Everest Re are regulated by the Bermuda Monetary Authority (“BMA”) and the State of Delaware, Department of Insurance, respectively. Both regulatory bodies have their own capital adequacy models based on statutory capital as opposed to GAAP basis equity. Failure to meet the required statutory capital levels could result in various regulatory restrictions, including business activity and the payment of dividends to their parent companies.
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The regulatory targeted capital and the actual statutory capital for Bermuda Re and Everest Re were as follows:

| Bermuda Re (2) At December 31, |  | Everest Re (2) At December 31,
(Dollars in millions) | 2023 |  | 2022 |  | 2023 |  | 2022
Regulatory targeted capital | $ | 2,217 |  |  | $ | 2,169 |  |  | $ | 3,353 |  |  | $ | 2,960 |
Actual capital | $ | 2,759 |  |  | $ | 3,184 |  |  | $ | 5,553 |  |  | $ | 5,717 |

(1)Regulatory targeted capital represents the target capital level from the applicable year's BSCR calculation.
(2)Regulatory targeted capital represents 200% of the RBC authorized control level calculation for the applicable year.
Our financial strength ratings as determined by A.M. Best, Standard & Poor’s and Moody’s are important as they provide our customers and investors with an independent assessment of our financial strength using a rating scale that provides for relative comparisons. We continue to possess significant financial flexibility and access to debt and equity markets as a result of our financial strength, as evidenced by the financial strength ratings as assigned by independent rating agencies.
We maintain our own economic capital models to monitor and project our overall capital, as well as the capital at our operating subsidiaries. A key input to the economic models is projected income and this input is continually compared to actual results, which may require a change in the capital strategy.
During the first quarter of 2023, there were no shares repurchased in the open market. We paid $65 million in dividends to adjust our capital position and enhance long-term expected returns to our shareholders. In 2022, we repurchased 241,273 shares for $61 million in the open market and paid $255 million in dividends. We may at times enter into a Rule 10b5-1 repurchase plan agreement to facilitate the repurchase of shares. On May 22, 2020, our existing Board authorization to purchase up to 30 million of our shares was amended to authorize the purchase of up to 32 million shares. As of March 31, 2023, we had repurchased 30.8 million shares under this authorization.
We may continue, from time to time, to seek to retire portions of our outstanding debt securities through cash repurchases, in open-market purchases, privately negotiated transactions or otherwise. Such repurchases, if any, will be subject to and depend on prevailing market conditions, our liquidity requirements, contractual restrictions and other factors. The amounts involved in any such transactions, individually or in the aggregate, may be material.
Liquidity. Our liquidity requirements are generally met from positive cash flow from operations. Positive cash flow results from reinsurance and insurance premiums being collected prior to disbursements for claims, which disbursements generally take place over an extended period after the collection of premiums, sometimes a period of many years. Collected premiums are generally invested, prior to their use in such disbursements, and investment income provides additional funding for loss payments. Our net cash flows from operating activities were $1.1 billion and $846 million for the three months ended March 31, 2023 and 2022, respectively. Additionally, these cash flows reflected net catastrophe loss payments of $198 million and $196 million for the three months ended March 31, 2023 and 2022, respectively and net tax payments of $2 million and $3 million for the three months ended March 31, 2023 and 2022, respectively.
If disbursements for claims and benefits, policy acquisition costs and other operating expenses were to exceed premium inflows, cash flow from reinsurance and insurance operations would be negative. The effect on cash flow from insurance operations would be partially offset by cash flow from investment income. Additionally, cash inflows from investment maturities - both short-term investments and longer term maturities are available to supplement other operating cash flows. We do not expect to supplement negative insurance operations cash flows from investment dispositions.
As the timing of payments for claims and benefits cannot be predicted with certainty, we maintain portfolios of long-term invested assets with varying maturities, along with short-term investments that provide additional liquidity for payment of claims. At March 31, 2023 and December 31, 2022, we held cash and short-term investments of $2.6 billion and $2.4 billion, respectively. Our short-term investments are generally readily marketable and can be converted to cash. In addition to these cash and short-term investments, at March 31, 2023, we had $1.4 billion of available for sale fixed maturity securities maturing within one year or less, $7.9 billion maturing within one to five years and $5.4 billion maturing after five years. Our $250 million of equity securities are comprised primarily of publicly traded securities that we believe can be easily liquidated. We believe that these fixed maturity and equity securities, in conjunction with the short-term investments and positive cash flow from operations, provide ample sources of liquidity for the expected payment of losses in the near future. We do not anticipate selling a significant amount of securities to pay losses and LAE. At March 31, 2023 we had $1.6 billion of net pre-tax unrealized depreciation related to fixed maturity - available for
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sale securities, comprised of $1.7 billion of pre-tax unrealized depreciation and $91 million of pre-tax unrealized appreciation.
Management generally expects annual positive cash flow from operations, which reflects the strength of overall pricing. However, given the recent set of catastrophic events, cash flow from operations may decline and could become negative in the near term as significant claim payments are made related to the catastrophes. However, as indicated above, the Company has ample liquidity to settle its catastrophe claims and/or any payments due for its catastrophe bond program.
In addition to our cash flows from operations and liquid investments, we also have multiple active credit facilities that provide commitments of up to $1.5 billion of collateralized standby letters of credit to support business written by our Bermuda operating subsidiaries. In addition, the Company has the ability to request access to an additional $440 million of uncommitted credit facilities, which would require approval from the applicable lender. There is no guarantee the uncommitted capacity will be available to us on a future date. See Note 9 – Credit Facilities for further details.
Market Sensitive Instruments.
The SEC’s Financial Reporting Release #48 requires registrants to clarify and expand upon the existing financial statement disclosure requirements for derivative financial instruments, derivative commodity instruments and other financial instruments (collectively, “market sensitive instruments”). We do not generally enter into market sensitive instruments for trading purposes.
Our current investment strategy seeks to maximize after-tax income through a high quality, diversified, fixed maturity portfolio, while maintaining an adequate level of liquidity. Our mix of investments is adjusted periodically, consistent with our current and projected operating results and market conditions. The fixed maturity securities in the investment portfolio are comprised of non-trading securities. Additionally, we have invested in equity securities.
The overall investment strategy considers the scope of present and anticipated Company operations. In particular, estimates of the financial impact resulting from non-investment asset and liability transactions, together with our capital structure and other factors, are used to develop a net liability analysis. This analysis includes estimated payout characteristics for which our investments provide liquidity. This analysis is considered in the development of specific investment strategies for asset allocation, duration and credit quality. The change in overall market sensitive risk exposure principally reflects the asset changes that took place during the period.
Interest Rate Risk. Our $31.4 billion investment portfolio, at March 31, 2023, is principally comprised of fixed maturity securities, which are generally subject to interest rate risk and some foreign currency exchange rate risk, and some equity securities, which are subject to price fluctuations and some foreign exchange rate risk. The overall economic impact of the foreign exchange risks on the investment portfolio is partially mitigated by changes in the dollar value of foreign currency denominated liabilities and their associated income statement impact.
Interest rate risk is the potential change in value of the fixed maturity securities portfolio, including short-term investments, from a change in market interest rates. In a declining interest rate environment, it includes prepayment risk on the $4.5 billion of mortgage-backed securities in the $24.4 billion fixed maturity portfolio. Prepayment risk results from potential accelerated principal payments that shorten the average life and thus the expected yield of the security.
The table below displays the potential impact of market value fluctuations and after-tax unrealized appreciation on our fixed maturity portfolio (including $1.0 billion of short-term investments) for the period indicated based on upward and downward parallel and immediate 100 and 200 basis point shifts in interest rates. For legal entities with a U.S. dollar functional currency, this modeling was performed on each security individually. To generate appropriate price estimates on mortgage-backed securities, changes in prepayment expectations under different interest rate environments were
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taken into account. For legal entities with a non-U.S. dollar functional currency, the effective duration of the involved portfolio of securities was used as a proxy for the market value change under the various interest rate change scenarios.

| Impact of Interest Rate Shift in Basis Points At March 31, 2023
| -200 |  | -100 |  | 0 |  | 100 |  | 200
(Dollars in millions) |  |  |  |  |  |  |  |  |
Total Fair Value | $ | 26,918 |  |  | $ | 26,168 |  |  | $ | 25,419 |  |  | $ | 24,670 |  |  | $ | 23,921 |
Fair Value Change from Base (%) | 5.9 | % |  | 2.9 | % |  | — | % |  | (2.9) | % |  | (5.9) | %
Change in Unrealized Appreciation |  |  |  |  |  |  |  |  |
After-tax from Base ($) | $ | 1,317 |  |  | $ | 659 |  |  | $ | — |  |  | $ | (659) |  |  | $ | (1,317) |

We had $22.9 billion and $22.1 billion of gross reserves for losses and LAE as of March 31, 2023 and December 31, 2022, respectively. These amounts are recorded at their nominal value, as opposed to present value, which would reflect a discount adjustment to reflect the time value of money. Since losses are paid out over a period of time, the present value of the reserves is less than the nominal value. As interest rates rise, the present value of the reserves decreases and, conversely, as interest rates decline, the present value increases. These movements are the opposite of the interest rate impacts on the fair value of investments. While the difference between present value and nominal value is not reflected in our financial statements, our financial results will include investment income over time from the investment portfolio until the claims are paid. Our loss and loss reserve obligations have an expected duration of approximately 3.8 years, which is reasonably consistent with our fixed income portfolio. If we were to discount our loss and LAE reserves, net of ceded reserves, the discount would be approximately $3.8 billion resulting in a discounted reserve balance of approximately $16.9 billion, representing approximately 66.6% of the value of the fixed maturity investment portfolio funds.
Equity Risk. Equity risk is the potential change in fair value of the common stock, preferred stock and mutual fund portfolios arising from changing prices. Our equity investments consist of a diversified portfolio of individual securities and mutual funds, which invest principally in high quality common and preferred stocks that are traded on the major exchanges, and mutual fund investments in emerging market debt. The primary objective of the equity portfolio is to obtain greater total return relative to our core bonds over time through market appreciation and income.
The table below displays the impact on fair value and after-tax change in fair value of a 10% and 20% change in equity prices up and down for the period indicated.

| Impact of Percentage Change in Equity Fair Values At March 31, 2023
(Dollars in millions) | -20% |  | -10% |  | 0% |  | 10% |  | 20%
Fair Value of the Equity Portfolio | $ | 200 |  |  | $ | 225 |  |  | $ | 250 |  |  | $ | 275 |  |  | $ | 300 |
After-tax Change in Fair Value | $ | (41) |  |  | $ | (20) |  |  | $ | — |  |  | $ | 20 |  |  | $ | 41 |

Foreign Currency Risk. Foreign currency risk is the potential change in value, income and cash flow arising from adverse changes in foreign currency exchange rates. Each of our non-U.S./Bermuda (“foreign”) operations maintains capital in the currency of the country of its geographic location consistent with local regulatory guidelines. Each foreign operation may conduct business in its local currency, as well as the currency of other countries in which it operates. The primary foreign currency exposures for these foreign operations are the Canadian Dollar, the Singapore Dollar, the British Pound Sterling and the Euro. We mitigate foreign exchange exposure by generally matching the currency and duration of our assets to our corresponding operating liabilities. In accordance with FASB guidance, the impact on the fair value of available for sale fixed maturities due to changes in foreign currency exchange rates, in relation to functional currency, is reflected as part of other comprehensive income. Conversely, the impact of changes in foreign currency exchange rates, in relation to functional currency, on other assets and liabilities is reflected through net income as a component of other income (expense). In addition, we translate the assets, liabilities and income of non-U.S. dollar functional currency legal entities to the U.S. dollar. This translation amount is reported as a component of other comprehensive income.
Safe Harbor Disclosure.
This report contains forward-looking statements within the meaning of the U.S. federal securities laws. We intend these forward-looking statements to be covered by the safe harbor provisions for forward-looking statements in the federal securities laws. In some cases, these statements can be identified by the use of forward-looking words such as “may”,
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“will”, “should”, “could”, “anticipate”, “estimate”, “expect”, “plan”, “believe”, “predict”, “potential” and “intend”. Forward-looking statements contained in this report include:
•the effects of catastrophic and pandemic events on our financial statements;
•estimates of our catastrophe exposure;
•information regarding our reserves for losses and LAE;
•our failure to accurately assess underwriting risk;
•decreases in pricing for property and casualty reinsurance and insurance;
•our ability to maintain our financial strength ratings;
•the failure of our insured, intermediaries and reinsurers to satisfy their obligations;
•our inability or failure to purchase reinsurance;
•consolidation of competitors, customers and insurance and reinsurance brokers;
•the effect on our business of the highly competitive nature of our industry, including the effect of new entrants to, competing products for and consolidation in the (re)insurance industry;
•our ability to retain our key executive officers and to attract or retain the executives and employees necessary to manage our business;
•the performance of our investment portfolio;
•our ability to determine any impairments taken on our investments;
•foreign currency exchange rate fluctuations;
•the effect of cybersecurity risks, including technology breaches or failure, on our business;
•the CARES Act;
•the impact of the Tax Cut and Jobs Act;
•the adequacy of capital in relation to regulatory required capital; and
•the ability of Everest Re, Holdings, Everest Underwriting Group (Ireland) Limited, Everest Dublin Insurance Holdings Limited (Ireland), Bermuda Re and Everest International Reinsurance, Ltd. to pay dividends.
Forward-looking statements only reflect our expectations and are not guarantees of performance. These statements involve risks, uncertainties and assumptions. Actual events or results may differ materially from our expectations. Important factors that could cause our actual events or results to be materially different from our expectations include those discussed under the caption ITEM 1A, “Risk Factors” in the Company’s most recent 10-K filing. We undertake no obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Market Risk Instruments. See “Liquidity and Capital Resources - Market Sensitive Instruments” in PART I – ITEM 2.
ITEM 4. CONTROLS AND PROCEDURES
As of the end of the period covered by this report, our management carried out an evaluation, with the participation of the Chief Executive Officer and Chief Financial Officer, of the effectiveness of our disclosure controls and procedures (as defined in Rule 13a-15(e) under the Securities Exchange Act of 1934 (the “Exchange Act”)). Based on their evaluation, the Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures are effective to ensure that information required to be disclosed by us in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in Securities and Exchange Commission’s rules and forms. Our management, with the participation of the Chief Executive Officer and Chief Financial Officer, also conducted an evaluation of our internal control over financial reporting to determine whether any changes occurred during the quarter covered by this report that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting. Based on that evaluation, there has been no such change during the quarter covered by this report.
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PART II
ITEM 1. LEGAL PROCEEDINGS
In the ordinary course of business, the Company is involved in lawsuits, arbitrations and other formal and informal dispute resolution procedures, the outcomes of which will determine the Company’s rights and obligations under insurance and reinsurance agreements. In some disputes, the Company seeks to enforce its rights under an agreement or to collect funds owing to it. In other matters, the Company is resisting attempts by others to collect funds or enforce alleged rights. These disputes arise from time to time and are ultimately resolved through both informal and formal means, including negotiated resolution, arbitration and litigation. In all such matters, the Company believes that its positions are legally and commercially reasonable. The Company considers the statuses of these proceedings when determining its reserves for unpaid loss and loss adjustment expenses.
Aside from litigation and arbitrations related to these insurance and reinsurance agreements, the Company is not a party to any other material litigation or arbitration.
ITEM 1A. RISK FACTORS
No material changes.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
Issuer Purchases of Equity Securities.

Issuer Purchases of Equity Securities
| (a) | (b) | (c) | (d)
Period | Total Number of Shares (or Units) Purchased (2) | Average Price Paid per Share (or Unit) | Total Number of Shares (or Units) Purchased as Part of Publicly Announced Plans or Programs | Maximum Number (or Approximate Dollar Value) of Shares (or Units) that May Yet Be Purchased Under the Plans or Programs (1)
January 1 - 31, 2023 | — | $ | — |  | — | 1,228,908
February 1 - 28, 2023 | 44,937 | $ | 382.9829 |  | — | 1,228,908
March 1 - 31, 2023 | 6,273 | $ | 340.8460 |  | — | 1,228,908
Total | 51,210 | $ | — |  | — | 1,228,908

(1)On May 22, 2020, the Company’s executive committee of the Board of Directors approved an amendment to the share repurchase program authorizing the Company and/or its subsidiary Holdings, to purchase up to a current aggregate of 32.0 million of the Company’s shares (recognizing that the number of shares authorized for repurchase has been reduced by those shares that have already been purchased) in open market transactions, privately negotiated transactions or both. Currently, the Company and/or its subsidiary Holdings have repurchased 30.8 million of the Company’s shares.
(2)Shares that have not been repurchased through a publicly announced plan or program consist of shares repurchased by the Company from employees in order to satisfy tax withholding obligations on vestings and/or settlements of share based compensation awards.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4. MINE SAFETY DISCLOSURES
Not applicable.
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ITEM 5. OTHER INFORMATION
None.
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ITEM 6. EXHIBITS
Exhibit Index

Exhibit No. |  | Description
10.1 |  | Employment Agreement, effective January 1, 2023, between Everest Global Services, Inc. and Joseph V. Taranto, filed herewith
10.2 |  | Separation, Transition Services, and General Release Agreement between Everest Global Services, Inc., Everest Re Group, Ltd., and its current and former parents, subsidiaries, affiliates, predecessors, successors and assigns, and Sanjoy Mukherjee, filed herewith
31.1 |  | Section 302 Certification of Juan C. Andrade
31.2 |  | Section 302 Certification of Mark Kociancic
32.1 |  | Section 906 Certification of Juan C. Andrade and Mark Kociancic
101.INS |  | XBRL Instance Document
101.SCH |  | XBRL Taxonomy Extension Schema
101.CAL |  | XBRL Taxonomy Extension Calculation Linkbase
101.DEF |  | XBRL Taxonomy Extension Definition Linkbase
101.LAB |  | XBRL Taxonomy Extension Labels Linkbase
101.PRE |  | XBRL Taxonomy Extension Presentation Linkbase
104 |  | Cover Page Interactive Data File (embedded within the Inline XBRL document)

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Everest Re Group, Ltd.
Signatures
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

| Everest Re Group, Ltd.
| (Registrant)
| /S/ MARK KOCIANCIC
| Mark Kociancic
| Executive Vice President and Chief Financial Officer
| (Duly Authorized Officer and Principal Financial Officer)

Dated: May 4, 2023
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