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:

June 30, ~~2015~~2016

Commission file number:

1-14527

EVEREST REINSURANCE HOLDINGS, INC.

(Exact name of registrant as specified in its charter)

Delaware		22-3263609
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

477 Martinsville Road

Post Office Box 830

Liberty Corner, New Jersey 07938-0830

(908) 604-3000

(Address, including zip code, and telephone number, including area code,

of registrant's principal executive office)

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

YES

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

YES

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

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

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

YES

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

		Number of Shares Outstanding
Class		At August 1, ~~2015~~2016
Common Shares, $0.01 par value		1,000

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

EVEREST REINSURANCE HOLDINGS, INC.

Table of Contents

Form 10-Q

Page

PART I

FINANCIAL INFORMATION


Item 1.	Financial Statements

	Consolidated Balance Sheets at June 30, ~~2015~~2016 (unaudited) and
		December 31, ~~2014~~2015	1

	Consolidated Statements of Operations and Comprehensive Income (Loss) for the
		three and six months ended June 30, ~~2015~~2016 and ~~2014~~2015 (unaudited)	2

	Consolidated Statements of Changes in Stockholder's Equity for the three and six
		months ended June 30, ~~2015~~2016 and ~~2014~~2015 (unaudited)	3

	Consolidated Statements of Cash Flows for the six months ended
		June 30, ~~2015~~2016 and ~~2014~~2015 (unaudited)	4

	Notes to Consolidated Interim Financial Statements (unaudited)		5

Item 2.	Management's Discussion and Analysis of Financial Condition and
		Results of Operation	28

Item 3.	Quantitative and Qualitative Disclosures About Market Risk		44

Item 4.	Controls and Procedures		44

PART II

OTHER INFORMATION


Item 1.	Legal Proceedings	44

Item 1A.	Risk Factors	45

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	45

Item 3.	Defaults Upon Senior Securities	45

Item 4.	Mine Safety Disclosures	45

Item 5.	Other Information	45

Item 6.	Exhibits	46

EVEREST REINSURANCE HOLDINGS, INC.

CONSOLIDATED BALANCE SHEETS

June 30, December 31,
(Dollars in thousands, except par value per share) 2015 2014
(unaudited)
ASSETS:
Fixed maturities - available for sale, at market value $ 5,281,672 $ 5,293,411
     (amortized cost: 2015, $5,197,111; 2014, $5,235,523)
Fixed maturities - available for sale, at fair value 228 1,509
Equity securities - available for sale, at market value (cost: 2015, $0; 2014, $15) - 16
Equity securities - available for sale, at fair value 1,317,420 1,299,037
Short-term investments 531,516 564,364
Other invested assets (cost: 2015, $448,281; 2014, $435,010) 448,281 435,010
Other invested assets, at fair value 1,769,132 1,655,311
Cash 250,419 323,975
         Total investments and cash 9,598,668 9,572,633
Note receivable - affiliated 250,000 250,000
Accrued investment income 45,210 45,386
Premiums receivable 1,103,666 1,086,203
Reinsurance receivables - unaffiliated 671,032 659,303
Reinsurance receivables - affiliated 3,515,294 3,372,715
Funds held by reinsureds 186,435 182,159
Deferred acquisition costs 87,884 109,262
Prepaid reinsurance premiums 769,083 809,083
Other assets 259,865 235,576
TOTAL ASSETS $ 16,487,137 $ 16,322,320

LIABILITIES:
Reserve for losses and loss adjustment expenses $ 7,888,302 $ 7,843,856
Unearned premium reserve 1,338,940 1,442,122
Funds held under reinsurance treaties 104,970 101,743
Losses in the course of payment 254,544 178,521
Commission reserves 48,644 63,110
Other net payable to reinsurers 881,522 1,028,549
4.868% Senior notes due 6/1/2044 400,000 400,000
6.6% Long term notes due 5/1/2067 238,366 238,364
Accrued interest on debt and borrowings 3,537 3,537
Income taxes 82,898 46,835
Unsettled securities payable 57,341 41,092
Other liabilities 355,267 361,874
         Total liabilities 11,654,331 11,749,603

Commitments and Contingencies (Note 6)

STOCKHOLDER'S EQUITY:
Common stock, par value: $0.01; 3,000 shares authorized;
     1,000 shares issued and outstanding (2015 and 2014) - -
Additional paid-in capital 369,284 362,293
Accumulated other comprehensive income (loss), net of deferred income tax expense
     (benefit) of $4,258 at 2015 and $2,434 at 2014 7,907 4,519
Retained earnings 4,455,615 4,205,905
         Total stockholder's equity 4,832,806 4,572,717
TOTAL LIABILITIES AND STOCKHOLDER'S EQUITY $ 16,487,137 $ 16,322,320

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

	June 30,		December 31,
(Dollars in thousands, except par value per share)	2016		2015
	(unaudited)
ASSETS:
Fixed maturities - available for sale, at market value	$	5,768,749	$	5,356,477
(amortized cost: 2016, $5,617,412; 2015, $5,335,472)
Fixed maturities - available for sale, at fair value		-		2,102
Equity securities - available for sale, at fair value		976,879		1,215,377
Short-term investments		387,705		563,536
Other invested assets (cost: 2016, $604,512; 2015, $450,154)		604,512		450,154
Other invested assets, at fair value		1,772,458		1,773,214
Cash		229,927		155,429
Total investments and cash		9,740,230		9,516,289
Note receivable - affiliated		250,000		250,000
Accrued investment income		42,454		41,727
Premiums receivable		1,119,371		1,129,656
Reinsurance receivables - unaffiliated		814,866		716,982
Reinsurance receivables - affiliated		3,676,433		3,742,105
Funds held by reinsureds		185,170		176,712
Deferred acquisition costs		72,696		92,651
Prepaid reinsurance premiums		750,713		772,686
Other assets		272,767		256,395
TOTAL ASSETS	$	16,924,700	$	16,695,203

LIABILITIES:
Reserve for losses and loss adjustment expenses	$	8,247,764	$	7,940,720
Unearned premium reserve		1,264,499		1,349,799
Funds held under reinsurance treaties		106,611		101,531
Losses in the course of payment		128,048		125,592
Commission reserves		61,254		51,873
Other net payable to reinsurers		860,872		1,225,260
4.868% Senior notes due 6/1/2044		396,654		396,594
6.6% Long term notes due 5/1/2067		236,413		236,364
Accrued interest on debt and borrowings		3,537		3,537
Income taxes		138,621		68,024
Unsettled securities payable		59,891		15,040
Other liabilities		256,483		249,658
Total liabilities		11,760,647		11,763,992

Commitments and Contingencies (Note 5)

STOCKHOLDER'S EQUITY:
Common stock, par value: $0.01; 3,000 shares authorized;
1,000 shares issued and outstanding (2016 and 2015)		-		-
Additional paid-in capital		382,537		374,789
Accumulated other comprehensive income (loss), net of deferred income tax expense
(benefit) of $29,988 at 2016 and ($33,458) at 2015		55,682		(62,136	)
Retained earnings		4,725,834		4,618,558
Total stockholder's equity		5,164,053		4,931,211
TOTAL LIABILITIES AND STOCKHOLDER'S EQUITY	$	16,924,700	$	16,695,203

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

EVEREST REINSURANCE HOLDINGS, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

AND COMPREHENSIVE INCOME (LOSS)

Three Months Ended Six Months Ended
June 30, June 30,
(Dollars in thousands) 2015 2014 2015 2014
(unaudited) (unaudited)
REVENUES:
Premiums earned $ 521,424 $ 520,736 $ 1,042,486 $ 991,181
Net investment income 70,925 68,636 143,506 132,423
Net realized capital gains (losses):
Other-than-temporary impairments on fixed maturity securities (8,810 ) (199 ) (32,931 ) (199 )
Other-than-temporary impairments on fixed maturity securities
transferred to other comprehensive income (loss) - - - -
Other net realized capital gains (losses) 60,035 125,313 105,452 121,263
Total net realized capital gains (losses) 51,225 125,114 72,521 121,064
Other income (expense) 12,289 (8,782 ) 28,122 (11,837 )
Total revenues 655,863 705,704 1,286,635 1,232,831

CLAIMS AND EXPENSES:
Incurred losses and loss adjustment expenses 322,879 321,517 631,759 599,563
Commission, brokerage, taxes and fees 72,953 85,322 169,484 161,416
Other underwriting expenses 51,573 47,158 100,116 86,409
Corporate expenses 1,785 (524 ) 3,394 778
Interest, fee and bond issue cost amortization expense 8,858 8,811 17,717 16,247
Total claims and expenses 458,048 462,284 922,470 864,413

INCOME (LOSS) BEFORE TAXES 197,815 243,420 364,165 368,418
Income tax expense (benefit) 64,049 85,246 114,455 123,778

NET INCOME (LOSS) $ 133,766 $ 158,174 $ 249,710 $ 244,640

Other comprehensive income (loss), net of tax :
Unrealized appreciation (depreciation) ("URA(D)") on securities arising during the period (35,938 ) 19,102 (19,988 ) 39,899
Less: reclassification adjustment for realized losses (gains) included in net income (loss) 13,661 857 37,326 2,155
Total URA(D) on securities arising during the period (22,277 ) 19,959 17,338 42,054

Foreign currency translation adjustments 16,145 6,721 (17,163 ) (1,115 )

Benefit plan actuarial net gain (loss) for the period - - - -
Reclassification adjustment for amortization of net (gain) loss included in net income (loss) 1,609 770 3,213 1,541
Total benefit plan net gain (loss) for the period 1,609 770 3,213 1,541
Total other comprehensive income (loss), net of tax (4,523 ) 27,450 3,388 42,480

COMPREHENSIVE INCOME (LOSS) $ 129,243 $ 185,624 $ 253,098 $ 287,120

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

	Three Months Ended						Six Months Ended
	June 30,						June 30,
(Dollars in thousands)	2016			2015			2016			2015
	(unaudited)						(unaudited)
REVENUES:
Premiums earned	$	488,855		$	521,424		$	970,780		$	1,042,486
Net investment income		73,872			70,925			132,317			143,506
Net realized capital gains (losses):
Other-than-temporary impairments on fixed maturity securities		(1,391	)		(8,810	)		(24,406	)		(32,931	)
Other-than-temporary impairments on fixed maturity securities
transferred to other comprehensive income (loss)		-			-			-			-
Other net realized capital gains (losses)		30,556			60,035			(12,806	)		105,452
Total net realized capital gains (losses)		29,165			51,225			(37,212	)		72,521
Other income (expense)		(10,700	)		12,289			2,402			28,122
Total revenues		581,192			655,863			1,068,287			1,286,635

CLAIMS AND EXPENSES:
Incurred losses and loss adjustment expenses		338,536			322,879			634,598			631,759
Commission, brokerage, taxes and fees		72,126			72,953			140,948			169,484
Other underwriting expenses		58,330			51,573			117,557			100,116
Corporate expenses		2,010			1,785			4,346			3,394
Interest, fee and bond issue cost amortization expense		8,858			8,858			17,717			17,717
Total claims and expenses		479,860			458,048			915,166			922,470

INCOME (LOSS) BEFORE TAXES		101,332			197,815			153,121			364,165
Income tax expense (benefit)		32,982			64,049			45,845			114,455

NET INCOME (LOSS)	$	68,350		$	133,766		$	107,276		$	249,710

Other comprehensive income (loss), net of tax:
Unrealized appreciation (depreciation) ("URA(D)") on securities arising during the period		39,264			(35,938	)		58,864			(19,988	)
Less: reclassification adjustment for realized losses (gains) included in net income (loss)		(63	)		13,661			25,852			37,326
Total URA(D) on securities arising during the period		39,201			(22,277	)		84,716			17,338

Foreign currency translation adjustments		15,489			16,145			30,421			(17,163	)

Benefit plan actuarial net gain (loss) for the period		-			-			-			-
Reclassification adjustment for amortization of net (gain) loss included in net income (loss)		1,341			1,609			2,681			3,213
Total benefit plan net gain (loss) for the period		1,341			1,609			2,681			3,213
Total other comprehensive income (loss), net of tax		56,031			(4,523	)		117,818			3,388

COMPREHENSIVE INCOME (LOSS)	$	124,381		$	129,243		$	225,094		$	253,098

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

EVEREST REINSURANCE HOLDINGS, INC.

CONSOLIDATED STATEMENTS OF

CHANGES IN STOCKHOLDER'S EQUITY

Three Months Ended Six Months Ended
June 30, June 30,
(Dollars in thousands, except share amounts) 2015 2014 2015 2014
(unaudited) (unaudited)
COMMON STOCK (shares outstanding):
Balance, beginning of period 1,000 1,000 1,000 1,000
Balance, end of period 1,000 1,000 1,000 1,000

ADDITIONAL PAID-IN CAPITAL:
Balance, beginning of period $ 366,258 $ 354,445 $ 362,293 $ 351,051
Share-based compensation plans 3,026 3,092 6,991 6,486
Balance, end of period 369,284 357,537 369,284 357,537

ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS),
NET OF DEFERRED INCOME TAXES:
Balance, beginning of period 12,430 102,678 4,519 87,648
Net increase (decrease) during the period (4,523 ) 27,450 3,388 42,480
Balance, end of period 7,907 130,128 7,907 130,128

RETAINED EARNINGS:
Balance, beginning of period 4,321,849 3,838,245 4,205,905 3,751,779
Net income (loss) 133,766 158,174 249,710 244,640
Balance, end of period 4,455,615 3,996,419 4,455,615 3,996,419

TOTAL STOCKHOLDER'S EQUITY, END OF PERIOD $ 4,832,806 $ 4,484,084 $ 4,832,806 $ 4,484,084

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

	Three Months Ended						Six Months Ended
	June 30,						June 30,
(Dollars in thousands, except share amounts)	2016			2015			2016			2015
	(unaudited)						(unaudited)
COMMON STOCK (shares outstanding):
Balance, beginning of period		1,000			1,000			1,000			1,000
Balance, end of period		1,000			1,000			1,000			1,000

ADDITIONAL PAID-IN CAPITAL:
Balance, beginning of period	$	379,582		$	366,258		$	374,789		$	362,293
Share-based compensation plans		2,955			3,026			7,748			6,991
Balance, end of period		382,537			369,284			382,537			369,284

ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS),
NET OF DEFERRED INCOME TAXES:
Balance, beginning of period		(349	)		12,430			(62,136	)		4,519
Net increase (decrease) during the period		56,031			(4,523	)		117,818			3,388
Balance, end of period		55,682			7,907			55,682			7,907

RETAINED EARNINGS:
Balance, beginning of period		4,657,484			4,321,849			4,618,558			4,205,905
Net income (loss)		68,350			133,766			107,276			249,710
Balance, end of period		4,725,834			4,455,615			4,725,834			4,455,615

TOTAL STOCKHOLDER'S EQUITY, END OF PERIOD	$	5,164,053		$	4,832,806		$	5,164,053		$	4,832,806

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

EVEREST REINSURANCE HOLDINGS, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

Six Months Ended
June 30,
(Dollars in thousands) 2015 2014
(unaudited)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $ 249,710 $ 244,640
Adjustments to reconcile net income to net cash provided by operating activities:
Decrease (increase) in premiums receivable (19,661 ) (82,537 )
Decrease (increase) in funds held by reinsureds, net (1,191 ) 401
Decrease (increase) in reinsurance receivables (167,876 ) (368,394 )
Decrease (increase) in income taxes 34,836 36,879
Decrease (increase) in prepaid reinsurance premiums 38,141 (100,075 )
Increase (decrease) in reserve for losses and loss adjustment expenses 75,995 7,882
Increase (decrease) in unearned premiums (99,896 ) 101,264
Increase (decrease) in other net payable to reinsurers (144,661 ) 83,206
Increase (decrease) in losses in course of payment 76,607 151,503
Change in equity adjustments in limited partnerships (13,872 ) 1,161
Distribution of limited partnership income 14,597 9,157
Change in other assets and liabilities, net 2,437 (51,901 )
Non-cash compensation expense 3,955 3,698
Amortization of bond premium (accrual of bond discount) 9,352 11,581
Amortization of underwriting discount on senior notes 2 28
Net realized capital (gains) losses (72,521 ) (121,064 )
Net cash provided by (used in) operating activities (14,046 ) (72,571 )

CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from fixed maturities matured/called - available for sale, at market value 493,648 519,733
Proceeds from fixed maturities matured/called - available for sale, at fair value - 875
Proceeds from fixed maturities sold - available for sale, at market value 288,211 327,859
Proceeds from fixed maturities sold - available for sale, at fair value 1,613 20,763
Proceeds from equity securities sold - available for sale, at market value 16 -
Proceeds from equity securities sold - available for sale, at fair value 303,477 292,943
Distributions from other invested assets 19,999 15,271
Cost of fixed maturities acquired - available for sale, at market value (850,526 ) (1,499,373 )
Cost of fixed maturities acquired - available for sale, at fair value (234 ) (1,309 )
Cost of equity securities acquired - available for sale, at fair value (306,602 ) (163,452 )
Cost of other invested assets acquired (33,996 ) (32,764 )
Net change in short-term investments 30,157 83,935
Net change in unsettled securities transactions 3,008 6,953
Net cash provided by (used in) investing activities (51,229 ) (428,566 )

CASH FLOWS FROM FINANCING ACTIVITIES:
Tax benefit from share-based compensation 3,036 2,788
Net proceeds from issuance of senior notes - 400,000
Net cash provided by (used in) financing activities 3,036 402,788

EFFECT OF EXCHANGE RATE CHANGES ON CASH (11,317 ) 8,575

Net increase (decrease) in cash (73,556 ) (89,774 )
Cash, beginning of period 323,975 316,807
Cash, end of period $ 250,419 $ 227,033

SUPPLEMENTAL CASH FLOW INFORMATION:
Income taxes paid (recovered) $ 77,577 $ 84,406
Interest paid 17,608 14,719

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

	Six Months Ended
	June 30,
(Dollars in thousands)	2016			2015
	(unaudited)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss)	$	107,276		$	249,710
Adjustments to reconcile net income to net cash provided by operating activities:
Decrease (increase) in premiums receivable		13,635			(19,661	)
Decrease (increase) in funds held by reinsureds, net		(3,111	)		(1,191	)
Decrease (increase) in reinsurance receivables		(9,694	)		(167,876	)
Decrease (increase) in income taxes		8,190			34,836
Decrease (increase) in prepaid reinsurance premiums		24,418			38,141
Increase (decrease) in reserve for losses and loss adjustment expenses		257,415			75,995
Increase (decrease) in unearned premiums		(89,903	)		(99,896	)
Increase (decrease) in other net payable to reinsurers		(370,242	)		(144,661	)
Increase (decrease) in losses in course of payment		1,813			76,607
Change in equity adjustments in limited partnerships		(11,352	)		(13,872	)
Distribution of limited partnership income		22,822			14,597
Change in other assets and liabilities, net		14,216			2,437
Non-cash compensation expense		5,433			3,955
Amortization of bond premium (accrual of bond discount)		8,972			9,352
Amortization of underwriting discount on senior notes		2			2
Net realized capital (gains) losses		37,212			(72,521	)
Net cash provided by (used in) operating activities		17,102			(14,046	)

CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from fixed maturities matured/called - available for sale, at market value		368,179			493,648
Proceeds from fixed maturities sold - available for sale, at market value		296,888			288,211
Proceeds from fixed maturities sold - available for sale, at fair value		1,587			1,613
Proceeds from equity securities sold - available for sale, at market value		-			16
Proceeds from equity securities sold - available for sale, at fair value		421,980			303,477
Distributions from other invested assets		696,889			19,999
Cost of fixed maturities acquired - available for sale, at market value		(923,755	)		(850,526	)
Cost of fixed maturities acquired - available for sale, at fair value		-			(234	)
Cost of equity securities acquired - available for sale, at fair value		(180,406	)		(306,602	)
Cost of other invested assets acquired		(862,717	)		(33,996	)
Net change in short-term investments		178,128			30,157
Net change in unsettled securities transactions		36,119			3,008
Net cash provided by (used in) investing activities		32,892			(51,229	)

CASH FLOWS FROM FINANCING ACTIVITIES:
Tax benefit from share-based compensation		2,315			3,036
Net cash provided by (used in) financing activities		2,315			3,036

EFFECT OF EXCHANGE RATE CHANGES ON CASH		22,189			(11,317	)

Net increase (decrease) in cash		74,498			(73,556	)
Cash, beginning of period		155,429			323,975
Cash, end of period	$	229,927		$	250,419

SUPPLEMENTAL CASH FLOW INFORMATION:
Income taxes paid (recovered)	$	35,375		$	77,577
Interest paid		17,608			17,608

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

NOTES TO CONSOLIDATED INTERIM FINANCIAL STATEMENTS (UNAUDITED)

For the Three and Six Months Ended June 30, ~~2015~~2016 and ~~2014~~2015

1. GENERAL

As used in this document, "Holdings" means Everest Reinsurance Holdings, Inc., a Delaware company and direct subsidiary of Everest Underwriting Group (Ireland) Limited ("Holdings Ireland"); "Group" means Everest Re Group, Ltd. (Holdings Ireland's parent); "Bermuda Re" means Everest Reinsurance (Bermuda), Ltd., a subsidiary of Group; "Everest Re" means Everest Reinsurance Company and its subsidiaries, a subsidiary of Holdings (unless the context otherwise requires)~~; "Mt. Logan Re" means Mt. Logan Re Ltd., a subsidiary of Group;~~ and the "Company" means Holdings and its subsidiaries.

Effective July 13, 2015, the Company sold all of the outstanding shares of capital stock of a wholly-owned subsidiary entity, Mt. McKinley Insurance Company ("Mt. McKinley"), to Clearwater Insurance Company. The operating results of Mt. McKinley for the three and six months ended June 30, 2015 are included within the Company's financial statements.

2. BASIS OF PRESENTATION

The unaudited consolidated financial statements of the Company for the three and six months ended June 30, ~~2015~~2016 and ~~2014~~2015 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, ~~2014~~2015 consolidated balance sheet data was derived from audited financial statements, but does not include all disclosures required by GAAP. The results for the three and six months ended June 30, ~~2015~~2016 and ~~2014~~2015 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, 2015, 2014 ~~2013~~ and ~~2012~~2013 included in the Company's most recent Form 10-K filing.

All intercompany accounts and transactions have been eliminated.

Certain reclassifications and format changes have been made to prior years' amounts to conform to the 2016 presentation.

Application of Recently Issued Accounting Standard ~~Changes~~Changes.

~~No accounting standards or~~Disclosures about Short-Duration Contracts. In May 2015, the FASB issued ASU 2015-09, authoritative guidance ~~have been issued recently that would have a material impact~~regarding required disclosures associated with short duration insurance contracts. The new disclosure requirements focus on information about initial claim estimates and subsequent claim estimate adjustment, methodologies in estimating claims and the timing, frequency and severity of claims related to short duration insurance contracts. This guidance is effective for annual reporting periods beginning after December 15, 2015 and interim reporting periods beginning after December 15, 2016. Therefore, the initial presentation of this guidance in the Company's financial statements orand footnotes will be for its 10-K filing as of December 31, 2016. The Company does not anticipate that it will have a significant impact on its financial statements.

Debt Issuance Costs. In April 2015, The FASB issued ASU 2015–03, authoritative guidance on the presentation of debt issuance costs. This guidance requires that debt issuance costs be presented within the balance sheet as a reduction of the carrying value of the debt liability, rather than as a separate asset. This guidance is effective for annual reporting ~~process.~~periods beginning after December 15, 2015 and related interim reporting periods. Based upon this guidance, the Company has adjusted prior financial statements and footnotes to conform with this new presentation.

Consolidation. In February 2015, the FASB issued ASU 2015-02, authoritative guidance regarding consolidation of reporting entities. The new guidance focuses on the required evaluation of whether certain legal entities should be consolidated. This guidance is effective for annual and interim reporting periods beginning after December 15, 2015. The Company has determined that the guidance will not have a significant impact on its financial statements.

3.INVESTMENTS

The amortized cost, market value and gross unrealized appreciation and depreciation of available for sale, fixed maturity, equity security investments, carried at market value and other-than-temporary impairments ("OTTI") in accumulated other comprehensive income ("AOCI") are as follows for the periods indicated:

	At June 30, 2015											At June 30, 2016
	Amortized		Unrealized		Unrealized			Market		OTTI in AOCI		Amortized		Unrealized		Unrealized			Market		OTTI in AOCI
(Dollars in thousands)	Cost		Appreciation		Depreciation			Value		(a)		Cost		Appreciation		Depreciation			Value		(a)
Fixed maturity securities
U.S. Treasury securities and obligations of
U.S. government agencies and corporations	$	178,425	$	2,229	$	(260	)	$	180,394	$	-	$	383,388	$	8,705	$	(149	)	$	391,944	$	-
Obligations of U.S. states and political subdivisions		712,000		29,604		(2,885	)		738,719		-		701,171		49,219		(478	)		749,912		-
Corporate securities		1,999,650		38,041		(17,825	)		2,019,866		-		2,032,340		54,062		(20,239	)		2,066,163		4,451
Asset-backed securities		132,181		582		(217	)		132,546		-		167,478		1,592		(157	)		168,913		-
Mortgage-backed securities
Commercial		65,410		2,091		(222	)		67,279		-		73,543		1,623		(65	)		75,101		-
Agency residential		592,096		6,527		(3,765	)		594,858		-		756,403		11,867		(574	)		767,696		-
Non-agency residential		152		29		-			181		-		103		17		-			120		-
Foreign government securities		443,543		24,757		(8,286	)		460,014		-		512,414		28,986		(7,997	)		533,403		-
Foreign corporate securities		1,073,654		30,668		(16,507	)		1,087,815		-		990,572		35,288		(10,363	)		1,015,497		2,123
Total fixed maturity securities	$	5,197,111	$	134,528	$	(49,967	)	$	5,281,672	$	-	$	5,617,412	$	191,359	$	(40,022	)	$	5,768,749	$	6,574
Equity securities	$	-	$	-	$	-		$	-	$	-	$	-	$	-	$	-		$	-	$	-

	At December 31, 2014												At December 31, 2015
	Amortized		Unrealized		Unrealized			Market		OTTI in AOCI			Amortized		Unrealized		Unrealized			Market		OTTI in AOCI
(Dollars in thousands)	Cost		Appreciation		Depreciation			Value		(a)			Cost		Appreciation		Depreciation			Value		(a)
Fixed maturity securities
U.S. Treasury securities and obligations of
U.S. government agencies and corporations	$	135,724	$	1,416	$	(304	)	$	136,836	$	-		$	329,281	$	2,422	$	(718	)	$	330,985	$	-
Obligations of U.S. states and political subdivisions		783,129		41,969		(626	)		824,472		-			669,945		34,020		(890	)		703,075		-
Corporate securities		1,992,200		39,954		(53,219	)		1,978,935		(9,735	)		2,011,997		27,286		(70,725	)		1,968,558		(86	)
Asset-backed securities		94,470		727		(374	)		94,823		-			145,755		290		(1,063	)		144,982		-
Mortgage-backed securities
Commercial		57,027		2,292		(51	)		59,268		-			61,527		1,430		(511	)		62,446		-
Agency residential		596,140		6,697		(4,720	)		598,117		-			714,907		3,994		(6,603	)		712,298		-
Non-agency residential		271		44		-			315		-			126		24		-			150		-
Foreign government securities		515,016		27,415		(5,344	)		537,087		-			447,244		24,255		(8,425	)		463,074		-
Foreign corporate securities		1,061,546		27,832		(25,820	)		1,063,558		-			954,690		27,616		(11,397	)		970,909		17
Total fixed maturity securities	$	5,235,523	$	148,346	$	(90,458	)	$	5,293,411	$	(9,735	)	$	5,335,472	$	121,337	$	(100,332	)	$	5,356,477	$	(69	)
Equity securities	$	15	$	1	$	-		$	16	$	-

^(a) Represents the amount of OTTI recognized in AOCI. Amount includes unrealized gains and losses on impaired securities relating to changes in the value of such securities subsequent to the impairment measurement date.

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

	At June 30, 2016				At December 31, 2015
	Amortized		Market		Amortized		Market
(Dollars in thousands)	Cost		Value		Cost		Value
Fixed maturity securities – available for sale
Due in one year or less	$	406,621	$	405,264	$	330,029	$	330,509
Due after one year through five years		2,809,371		2,856,628		2,617,079		2,618,056
Due after five years through ten years		692,168		717,637		870,266		856,230
Due after ten years		711,725		777,390		595,783		631,806
Asset-backed securities		167,478		168,913		145,755		144,982
Mortgage-backed securities
Commercial		73,543		75,101		61,527		62,446
Agency residential		756,403		767,696		714,907		712,298
Non-agency residential		103		120		126		150
Total fixed maturity securities	$	5,617,412	$	5,768,749	$	5,335,472	$	5,356,477

At June 30, 2015 At December 31, 2014
Amortized Market Amortized Market
(Dollars in thousands) Cost Value Cost Value
Fixed maturity securities – available for sale
    Due in one year or less $ 335,044 $ 333,993 $ 385,721 $ 384,022
    Due after one year through five years 2,487,331 2,513,000 2,387,533 2,369,917
    Due after five years through ten years 964,946 982,602 1,025,221 1,029,077
    Due after ten years 619,951 657,213 689,140 757,872
Asset-backed securities 132,181 132,546 94,470 94,823
Mortgage-backed securities
Commercial 65,410 67,279 57,027 59,268
Agency residential 592,096 594,858 596,140 598,117
Non-agency residential 152 181 271 315
Total fixed maturity securities $ 5,197,111 $ 5,281,672 $ 5,235,523 $ 5,293,411

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

	Three Months Ended						Six Months Ended						Three Months Eded						Six Months Eded
	June 30,						June 30,						June 30,						June 30,
(Dollars in thousands)	2015			2014			2015			2014			2016			2015			2016			2015
Increase (decrease) during the period between the market value and cost
of investments carried at market value, and deferred taxes thereon:
Fixed maturity securities	$	(34,272	)	$	30,702		$	16,939		$	64,695		$	53,863		$	(34,272	)	$	123,689		$	16,939
Fixed maturity securities, other-than-temporary impairment		-			-			9,735			-			6,446			-			6,643			9,735
Equity securities		(1	)		2			(1	)		2
Equity Securities														-			(1	)		-			(1	)
Change in unrealized appreciation (depreciation), pre-tax		(34,273	)		30,704			26,673			64,697			60,309			(34,273	)		130,332			26,673
Deferred tax benefit (expense)		11,996			(10,745	)		(5,928	)		(22,643	)		(18,852	)		11,996			(43,291	)		(5,928	)
Deferred tax benefit (expense), other-than-temporary impairment		-			-			(3,407	)		-			(2,256	)		-			(2,325	)		(3,407	)
Change in unrealized appreciation (depreciation),
net of deferred taxes, included in stockholder's equity	$	(22,277	)	$	19,959		$	17,338		$	42,054		$	39,201		$	(22,277	)	$	84,716		$	17,338

The Company frequently reviews all of its fixed maturity, available for sale securities for declines in market value and focuses its attention on securities whose fair value has fallen below 80% of their amortized cost at the time of review. The Company then assesses whether the decline in value is temporary or other-than-temporary. In making its assessment, the Company evaluates the current market and interest rate environment as well as specific issuer information. Generally, a change in a security's value caused by a change in the market, interest rate or foreign exchange environment does not constitute an other-than-temporary impairment, but rather a temporary decline in market value. Temporary declines in market value are recorded as unrealized losses in accumulated other comprehensive income (loss). If the Company determines that the decline is other-than-temporary and the Company does not have the intent to sell the security; and it is more likely than not that the Company will not have to sell the security before recovery of its cost basis, the carrying value of the investment is written down to fair value. The fair value adjustment that is credit or foreign exchange related is recorded in net realized capital gains (losses) in the Company's consolidated statements of operations and comprehensive income (loss). The fair value adjustment that is non-credit related is recorded as a component of other comprehensive income (loss), net of tax, and is included in accumulated other comprehensive income (loss) in the Company's consolidated balance sheets. The Company's assessments are based on the issuers current and expected future financial position, timeliness with respect to interest and/or principal payments, speed of repayments and any applicable credit enhancements or breakeven constant default rates on mortgage-backed and asset-backed securities, as well as relevant information provided by rating agencies, investment advisors and analysts.

The majority of the Company's equity securities available for sale at market value are primarily comprised of mutual fund investments whose underlying securities consist of fixed maturity securities. When a fund's value reflects an unrealized loss, the Company assesses whether the decline in value is temporary or other-than-temporary. In making its assessment, the Company considers the composition of its portfolios and their related markets, reports received from the portfolio managers and discussions with portfolio managers. If the Company determines that the declines are temporary and it has the ability and intent to continue to hold the investments, then the declines are recorded as unrealized losses in accumulated other comprehensive income (loss). If declines are deemed to be other-than-temporary, then the carrying value of the investment is written down to fair value and recorded in net realized capital gains (losses) in the Company's consolidated statements of operations and comprehensive income (loss).

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

The tables below display the aggregate market value and gross unrealized depreciation of fixed maturity and equity securities, 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 June 30, 2015 By Security Type															Duration of Unrealized Loss at June 30, 2016 By Security Type
	Less than 12 months					Greater than 12 months					Total					Less than 12 months					Greater than 12 months					Total
			Gross					Gross					Gross					Gross					Gross					Gross
			Unrealized					Unrealized					Unrealized					Unrealized					Unrealized					Unrealized
(Dollars in thousands)	Market Value		Depreciation			Market Value		Depreciation			Market Value		Depreciation			Market Value		Depreciation			Market Value		Depreciation			Market Value		Depreciation
Fixed maturity securities - available for sale
U.S. Treasury securities and obligations of
U.S. government agencies and corporations	$	9,059	$	(131	)	$	1,969	$	(129	)	$	11,028	$	(260	)	$	4,759	$	(149	)	$	-	$	-		$	4,759	$	(149	)
Obligations of U.S. states and political subdivisions		97,850		(2,141	)		17,686		(744	)		115,536		(2,885	)		-		-			562		(478	)		562		(478	)
Corporate securities		635,910		(13,064	)		195,206		(4,761	)		831,116		(17,825	)		261,660		(4,945	)		293,977		(15,294	)		555,637		(20,239	)
Asset-backed securities		69,783		(217	)		-		-			69,783		(217	)		13,337		(71	)		30,016		(86	)		43,353		(157	)
Mortgage-backed securities
Commercial		24,759		(222	)		-		-			24,759		(222	)		3,470		(20	)		3,352		(45	)		6,822		(65	)
Agency residential		84,776		(720	)		182,409		(3,045	)		267,185		(3,765	)		32,558		(106	)		107,907		(468	)		140,465		(574	)
Non-agency residential		-		-			-		-			-		-			29		-			-		-			29		-
Foreign government securities		101,412		(3,525	)		39,870		(4,761	)		141,282		(8,286	)		9,456		(209	)		66,601		(7,788	)		76,057		(7,997	)
Foreign corporate securities		263,156		(15,061	)		47,075		(1,446	)		310,231		(16,507	)		100,483		(3,051	)		83,260		(7,312	)		183,743		(10,363	)
Total fixed maturity securities	$	1,286,705	$	(35,081	)	$	484,215	$	(14,886	)	$	1,770,920	$	(49,967	)	$	425,752	$	(8,551	)	$	585,675	$	(31,471	)	$	1,011,427	$	(40,022	)
Equity securities		-		-			-		-			-		-			-		-			-		-			-		-
Total	$	1,286,705	$	(35,081	)	$	484,215	$	(14,886	)	$	1,770,920	$	(49,967	)	$	425,752	$	(8,551	)	$	585,675	$	(31,471	)	$	1,011,427	$	(40,022	)

Duration of Unrealized Loss at June 30, 2015 By Maturity
Less than 12 months Greater than 12 months Total
Gross Gross Gross
Unrealized Unrealized Unrealized
(Dollars in thousands) Market Value Depreciation Market Value Depreciation Market Value Depreciation
Fixed maturity securities
Due in one year or less $ 37,960 $ (1,428 ) $ 17,437 $ (2,982 ) $ 55,397 $ (4,410 )
Due in one year through five years 599,779 (18,162 ) 196,885 (5,617 ) 796,664 (23,779 )
Due in five years through ten years 337,189 (10,986 ) 68,131 (2,449 ) 405,320 (13,435 )
Due after ten years 132,459 (3,346 ) 19,353 (793 ) 151,812 (4,139 )
Asset-backed securities 69,783 (217 ) - - 69,783 (217 )
Mortgage-backed securities 109,535 (942 ) 182,409 (3,045 ) 291,944 (3,987 )
Total fixed maturity securities $ 1,286,705 $ (35,081 ) $ 484,215 $ (14,886 ) $ 1,770,920 $ (49,967 )

	Duration of Unrealized Loss at June 30, 2016 By Maturity
	Less than 12 months					Greater than 12 months					Total
			Gross					Gross					Gross
			Unrealized					Unrealized					Unrealized
(Dollars in thousands)	Market Value		Depreciation			Market Value		Depreciation			Market Value		Depreciation
Fixed maturity securities
Due in one year or less	$	19,629	$	(664	)	$	29,635	$	(3,386	)	$	49,264	$	(4,050	)
Due in one year through five years		217,063		(4,758	)		325,768		(22,222	)		542,831		(26,980	)
Due in five years through ten years		136,768		(2,909	)		87,271		(5,149	)		224,039		(8,058	)
Due after ten years		2,898		(23	)		1,726		(115	)		4,624		(138	)
Asset-backed securities		13,337		(71	)		30,016		(86	)		43,353		(157	)
Mortgage-backed securities		36,057		(126	)		111,259		(513	)		147,316		(639	)
Total fixed maturity securities	$	425,752	$	(8,551	)	$	585,675	$	(31,471	)	$	1,011,427	$	(40,022	)

The aggregate market value and gross unrealized losses related to investments in an unrealized loss position at June 30, ~~2015~~2016 were ~~$1,770,920~~$1,011,427 thousand and ~~$49,967~~$40,022 thousand, respectively. The market value of securities for the single issuer whose securities comprised the largest unrealized loss position at June 30, ~~2015,~~2016, did not exceed ~~0.4%~~0.9% of the overall market value of the Company's fixed maturity securities. In addition, as indicated on the above table, there was no significant concentration of unrealized losses in any one market sector. The ~~$35,081~~$8,551 thousand of unrealized losses related to fixed maturity securities that have been in an unrealized loss position for less than one year were primarily comprised of ~~foreign and~~ domestic ~~corporate securities~~ and foreign ~~government~~corporate securities. The majority of these unrealized losses are attributable to ~~unrealized losses in the energy sector, $15,413 thousand, as falling oil prices disrupted the market values for this sector, particularly for oil exploration, production and servicing companies and~~net unrealized foreign exchange losses, ~~$15,418~~$6,030 thousand, as the U.S. dollar has strengthened against other currencies. The ~~$14,886~~$31,471 thousand of unrealized losses related to fixed maturity securities in an unrealized loss position for more than one year related primarily to ~~foreign government securities,~~ domestic and foreign corporate securities and ~~agency residential mortgage-backed~~foreign government securities. OfThe majority of these unrealized losses ~~$11,648~~are attributable to net unrealized foreign

exchange losses, $22,677 thousand, ~~were related to securities that were rated investment grade by at least one nationally recognized statistical rating organization.~~as the U.S. dollar has strengthened against other currencies. The Company did not have any sub-prime or alt-A loans with gross unrealized depreciation at June 30, ~~2015.~~2016. 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 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.

	Duration of Unrealized Loss at December 31, 2014 By Security Type															Duration of Unrealized Loss at December 31, 2015 By Security Type
	Less than 12 months					Greater than 12 months					Total					Less than 12 months					Greater than 12 months					Total
			Gross					Gross					Gross					Gross					Gross					Gross
			Unrealized					Unrealized					Unrealized					Unrealized					Unrealized					Unrealized
(Dollars in thousands)	Market Value		Depreciation			Market Value		Depreciation			Market Value		Depreciation			Market Value		Depreciation			Market Value		Depreciation			Market Value		Depreciation
Fixed maturity securities - available for sale
U.S. Treasury securities and obligations of
U.S. government agencies and corporations	$	13,187	$	(20	)	$	26,897	$	(284	)	$	40,084	$	(304	)	$	216,352	$	(712	)	$	692	$	(6	)	$	217,044	$	(718	)
Obligations of U.S. states and political subdivisions		20,428		(242	)		18,199		(384	)		38,627		(626	)		6,434		(84	)		4,917		(806	)		11,351		(890	)
Corporate securities		830,928		(48,891	)		171,207		(4,328	)		1,002,135		(53,219	)		866,715		(49,034	)		307,215		(21,691	)		1,173,930		(70,725	)
Asset-backed securities		62,451		(374	)		-		-			62,451		(374	)		102,506		(791	)		28,048		(272	)		130,554		(1,063	)
Mortgage-backed securities
Commercial		11,742		(51	)		-		-			11,742		(51	)		26,483		(511	)		-		-			26,483		(511	)
Agency residential		24,230		(59	)		267,824		(4,661	)		292,054		(4,720	)		320,285		(3,094	)		150,095		(3,509	)		470,380		(6,603	)
Non-agency residential		-		-			-		-			-		-			-		-			-		-			-		-
Foreign government securities		45,521		(913	)		53,086		(4,431	)		98,607		(5,344	)		61,498		(2,182	)		77,911		(6,243	)		139,409		(8,425	)
Foreign corporate securities		228,733		(21,704	)		117,713		(4,116	)		346,446		(25,820	)		324,904		(6,289	)		76,951		(5,108	)		401,855		(11,397	)
Total fixed maturity securities	$	1,237,220	$	(72,254	)	$	654,926	$	(18,204	)	$	1,892,146	$	(90,458	)	$	1,925,177	$	(62,697	)	$	645,829	$	(37,635	)	$	2,571,006	$	(100,332	)
Equity securities		-		-			-		-			-		-
Total	$	1,237,220	$	(72,254	)	$	654,926	$	(18,204	)	$	1,892,146	$	(90,458	)

	Duration of Unrealized Loss at December 31, 2015 By Maturity
	Less than 12 months					Greater than 12 months					Total
			Gross					Gross					Gross
			Unrealized					Unrealized					Unrealized
(Dollars in thousands)	Market Value		Depreciation			Market Value		Depreciation			Market Value		Depreciation
Fixed maturity securities
Due in one year or less	$	21,780	$	(1,577	)	$	12,212	$	(1,171	)	$	33,992	$	(2,748	)
Due in one year through five years		1,023,437		(23,255	)		347,203		(21,582	)		1,370,640		(44,837	)
Due in five years through ten years		394,978		(31,423	)		99,335		(10,131	)		494,313		(41,554	)
Due after ten years		35,708		(2,046	)		8,936		(970	)		44,644		(3,016	)
Asset-backed securities		102,506		(791	)		28,048		(272	)		130,554		(1,063	)
Mortgage-backed securities		346,768		(3,605	)		150,095		(3,509	)		496,863		(7,114	)
Total fixed maturity securities	$	1,925,177	$	(62,697	)	$	645,829	$	(37,635	)	$	2,571,006	$	(100,332	)

Duration of Unrealized Loss at December 31, 2014 By Maturity
Less than 12 months Greater than 12 months Total
Gross Gross Gross
Unrealized Unrealized Unrealized
(Dollars in thousands) Market Value Depreciation Market Value Depreciation Market Value Depreciation
Fixed maturity securities
Due in one year or less $ 12,858 $ (550 ) $ 53,528 $ (4,224 ) $ 66,386 $ (4,774 )
Due in one year through five years 622,137 (51,262 ) 243,192 (6,306 ) 865,329 (57,568 )
Due in five years through ten years 467,187 (18,958 ) 66,630 (2,018 ) 533,817 (20,976 )
Due after ten years 36,615 (1,000 ) 23,752 (995 ) 60,367 (1,995 )
Asset-backed securities 62,451 (374 ) - - 62,451 (374 )
Mortgage-backed securities 35,972 (110 ) 267,824 (4,661 ) 303,796 (4,771 )
Total fixed maturity securities $ 1,237,220 $ (72,254 ) $ 654,926 $ (18,204 ) $ 1,892,146 $ (90,458 )

The aggregate market value and gross unrealized losses related to investments in an unrealized loss position at December 31, ~~2014~~2015 were ~~$1,892,146~~$2,571,006 thousand and ~~$90,458~~$100,332 thousand, respectively. The market value of securities for the single issuer whose securities comprised the largest unrealized loss position at December 31, ~~2014,~~2015, did not exceed ~~0.3%~~0.07% of the overall market value of the Company's fixed maturity securities. In addition, as indicated on the above table, there was no significant concentration of unrealized losses in any one market sector. The ~~$72,254~~$62,697 thousand of unrealized losses related to fixed maturity securities that have been in an unrealized loss position for less than one year were primarily comprised of domestic and foreign corporate securities, agency residential mortgage-backed securities and foreign government securities. The majority of these unrealized losses are attributable to unrealized losses in the energy sector, ~~$53,772~~$35,978 thousand, as falling oil prices disrupted the market values for this sector,

particularly for oil exploration, production and servicing companies ~~during the fourth quarter of 2014~~ and unrealized foreign exchange losses, ~~$7,298~~$6,090 thousand, as the U.S. dollar has strengthened against other currencies. The ~~$18,204~~$37,635 thousand of unrealized losses related to fixed maturity securities in an unrealized loss position for more than one year related primarily to domestic and foreign corporate securities, foreign government securities and agency residential mortgage-backed ~~securities, foreign and domestic corporate securities and foreign government~~ securities. OfThe majority of these unrealized losses ~~$16,680~~are attributable to unrealized foreign exchange losses, $14,807 thousand, ~~were related to securities that were rated investment grade by at least one nationally recognized statistical rating organization.~~as the U.S. dollar has strengthened against other currencies and unrealized losses in the energy sector, $6,959 thousand, as falling oil prices disrupted the market values for this sector, particularly for oil exploration, production and servicing companies. The Company did not have any sub-prime or alt-A loans with gross unrealized depreciation at December 31, ~~2014.~~2015. 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.

Other invested assets, at fair value, ~~are~~as of June 30, 2016, and December 31, 2015, were comprised of ~~common~~preferred shares ~~of the Company's ultimate parent, Group. At June 30, 2015, the Company~~ held ~~9,719,971 shares of Group representing 18% of the total outstanding shares.~~in Everest Preferred International Holdings ("Preferred Holdings"), an affiliated company.

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

	Three Months Ended						Six Months Ended						Three Months Ended						Six Months Ended
	June 30,						June 30,						June 30,						June 30,
(Dollars in thousands)	2015			2014			2015			2014			2016			2015			2016			2015
Fixed maturities	$	46,443		$	53,921		$	94,415		$	105,000		$	44,795		$	46,443		$	90,121		$	94,415
Equity securities		9,892			9,180			18,634			18,117			8,734			9,892			17,882			18,634
Short-term investments and cash		321			459			485			645			251			321			555			485
Other invested assets
Limited partnerships		7,276			2,695			14,655			(392	)		14,192			7,276			11,678			14,655
Dividends from Parent's shares		9,234			7,290			18,468			14,580			-			9,234			-			18,468
Dividends from preferred shares of affiliate														7,758			-			15,516			-
Other		983			330			1,608			2,351			729			983			(183	)		1,608
Gross investment income before adjustments		74,149			73,875			148,265			140,301			76,459			74,149			135,569			148,265
Funds held interest income (expense)		865			1,183			3,386			3,292			974			865			3,628			3,386
Interest income from Parent		1,075			-			2,150			-			1,075			1,075			2,150			2,150
Gross investment income		76,089			75,058			153,801			143,593			78,508			76,089			141,347			153,801
Investment expenses		(5,164	)		(6,422	)		(10,295	)		(11,170	)		(4,636	)		(5,164	)		(9,030	)		(10,295	)
Net investment income	$	70,925		$	68,636		$	143,506		$	132,423		$	73,872		$	70,925		$	132,317		$	143,506

(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. 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 ~~$234,311~~$290,398 thousand in limited partnerships at June 30, ~~2015.~~2016. These commitments will be funded when called in accordance with the partnership agreements, which have investment periods that expire, unless extended, through 2020.

The components of net realized capital gains (losses) are presented in the ~~tables~~table below for the periods indicated:

	Three Months Ended						Six Months Ended
	June 30,						June 30,
(Dollars in thousands)	2016			2015			2016			2015
Fixed maturity securities, market value:
Other-than-temporary impairments	$	(1,391	)	$	(8,810	)	$	(24,406	)	$	(32,931	)
Gains (losses) from sales		2,244			(12,208	)		(14,611	)		(23,726	)
Fixed maturity securities, fair value:
Gain (losses) from sales		(1,854	)		14			(1,854	)		42
Gains (losses) from fair value adjustments		1,571			(6	)		1,339			56
Equity securities, market value:
Gains (losses) from sales		-			1			-			1
Equity securities, fair value:
Gains (losses) from sales		(7,636	)		(289	)		(15,586	)		(354	)
Gains (losses) from fair value adjustments		36,987			(5,334	)		18,662			15,612
Other invested assets, fair value:
Gains (losses) from fair value adjustments		(756	)		77,857			(756	)		113,821
Total net realized capital gains (losses)	$	29,165		$	51,225		$	(37,212	)	$	72,521

Three Months Ended Six Months Ended
June 30, June 30,
(Dollars in thousands) 2015 2014 2015 2014
Fixed maturity securities, market value:
Other-than-temporary impairments $ (8,810 ) $ (199 ) $ (32,931 ) $ (199 )
Gains (losses) from sales (12,208 ) (928 ) (23,726 ) (2,925 )
Fixed maturity securities, fair value:
Gains (losses) from sales 14 - 42 940
Gains (losses) from fair value adjustments (6 ) - 56 -
Equity securities, market value:
Gains (losses) from sales 1 - 1 -
Equity securities, fair value:
Gains (losses) from sales (289 ) 1,721 (354 ) 385
Gains (losses) from fair value adjustments (5,334 ) 52,205 15,612 77,958
Other invested assets, fair value:
Gains (losses) from fair value adjustments 77,857 72,316 113,821 44,906
Short-term investment gains (losses) - (1 ) - (1 )
Total net realized capital gains (losses) $ 51,225 $ 125,114 $ 72,521 $ 121,064

The Company recorded as net realized capital gains (losses) in the consolidated statements of operations and comprehensive income (loss) both fair value re-measurements and write-downs in the value of securities deemed to be impaired on an other-than-temporary basis as displayed in the table above. The Company had no other-than-temporary impaired securities where the impairment had both a credit and non-credit component.

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

	Three Months Ended						Six Months Ended						Three Months Ended						Six Months Ended
	June 30,						June 30,						June 30,						June 30,
(Dollars in thousands)	2015			2014			2015			2014			2016			2015			2016			2015
Proceeds from sales of fixed maturity securities	$	175,742		$	178,281		$	289,824		$	348,622		$	110,429		$	175,742		$	298,475		$	289,824
Gross gains from sales		5,096			3,815			7,638			6,290			6,154			5,096			7,618			7,638
Gross losses from sales		(17,290	)		(4,743	)		(31,322	)		(8,275	)		(5,764	)		(17,290	)		(24,083	)		(31,322	)

Proceeds from sales of equity securities	$	169,533		$	116,827		$	303,493		$	292,943		$	335,831		$	169,533		$	421,980		$	303,493
Gross gains from sales		7,272			3,734			12,414			10,322			4,853			7,272			6,635			12,414
Gross losses from sales		(7,561	)		(2,013	)		(12,768	)		(9,937	)		(12,489	)		(7,561	)		(22,221	)		(12,768	)

4.FAIR VALUE

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

The levels in the hierarchy are defined as follows:

Level 1:

Inputs to the valuation methodology are observable inputs that reflect unadjusted quoted prices for identical assets or liabilities in an active market;

Level 2:

Inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, and inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the financial instrument;

Level 3:

Inputs to the valuation methodology are unobservable and significant to the fair value measurement.

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

In limited instances where prices are not provided by pricing services or in rare instances when a manager may not agree with the pricing service, price quotes on a non-binding basis are obtained from investment brokers. 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. In addition, the Company continually performs analytical reviews of price changes and tests the prices on a random basis to an independent pricing source. 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. Due to the unavailability of prices for ~~one~~fifteen private placement ~~security,~~securities, the Company valued the ~~security~~fifteen securities at ~~$7,350~~$34,431 thousand at June 30, ~~2015 and made no such adjustments~~2016. Due to the unavailability of prices for two private placement securities, the Company valued the two securities at $3,593 thousand at December 31, ~~2014.~~2015.

The Company internally manages a small public equity portfolio which had a fair value at June 30, ~~2015~~2016 and December 31, ~~2014~~2015 of ~~$117,838~~$124,776 thousand and ~~$96,890~~$131,219 thousand, respectively, and all prices were obtained from publically published sources.

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 or market value. The Company uses foreign currency exchange rates published by nationally recognized sources.

All categories of fixed maturity securities listed in the tables below are generally 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.

The fixed maturities with fair values categorized as level 3 result when prices are not available from the nationally recognized pricing services. The asset managers will then 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. ~~Historically, most of~~In limited circumstances when broker prices are not available for private placements, the ~~level 3 fixed maturities have resulted from new issuances and~~Company will value the third party prices services have not yet included the issuance in their data base. Generally, in subsequent measurement periods, the issuances will be included in the data base and the fair value will transfer to level 2.securities using comparable market information.

The composition and valuation inputs for the presented fixed maturities categories 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;

·	Asset-backed and mortgage-backed securities fair values are based on observable inputs such as quoted prices, reported trades, quoted prices for similar issuances or benchmark yields and cash flow models using observable inputs such as prepayment speeds, collateral performance and default spreads;

Foreign government securities are comprised of global non-U.S. sovereign bond issuances and the fair values are based on observable market inputs such as quoted market prices, quoted prices for similar securities and models with observable inputs such as benchmark yields and credit spreads and then, where applicable, converted to U.S. dollars using an exchange rate from a nationally recognized source;

Foreign corporate securities are comprised of global non-U.S. corporate bond issuances and the fair values are based on observable market inputs such as quoted market prices, quoted prices for similar securities and models with observable inputs such as benchmark yields and credit spreads and then, where applicable, converted to U.S. dollars using an exchange rate from a nationally recognized source.

Other invested assets, at fair value, ~~are~~was categorized as Level ~~1, Quoted Prices~~3 at June 30, 2016 and December 31, 2015, since it represented a privately placed convertible preferred stock issued by an affiliate. The stock was received in ~~Active Markets~~exchange for ~~Identical Assets, since the securities are~~ shares of the Company's parent, which ~~are actively traded on an exchange and the price is based~~were valued on a ~~quoted price.~~public securities exchange on December 21, 2015. The fair value of the preferred stock at June 30, 2016 was determined using a pricing model and at December 31, 2015 represented the original exchange value.

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

			Fair Value Measurement Using:								Fair Value Measurement Using:
			Quoted Prices								Quoted Prices
			in Active		Significant						in Active		Significant
			Markets for		Other		Significant				Markets for		Other		Significant
			Identical		Observable		Unobservable				Identical		Observable		Unobservable
			Assets		Inputs		Inputs				Assets		Inputs		Inputs
(Dollars in thousands)	June 30, 2015		(Level 1)		(Level 2)		(Level 3)		June 30, 2016		(Level 1)		(Level 2)		(Level 3)
Assets:
Fixed maturities, market value
U.S. Treasury securities and obligations of
U.S. government agencies and corporations	$	180,394	$	-	$	180,394	$	-	$	391,944	$	-	$	391,944	$	-
Obligations of U.S. States and political subdivisions		738,719		-		738,719		-		749,912		-		749,912		-
Corporate securities		2,019,866		-		2,017,908		1,958		2,066,163		-		2,033,753		32,410
Asset-backed securities		132,546		-		132,546		-		168,913		-		168,913		-
Mortgage-backed securities
Commercial		67,279		-		67,279		-		75,101		-		75,101		-
Agency residential		594,858		-		594,858		-		767,696		-		767,696		-
Non-agency residential		181		-		181		-		120		-		120		-
Foreign government securities		460,014		-		460,014		-		533,403		-		533,403		-
Foreign corporate securities		1,087,815		-		1,079,978		7,837		1,015,497		-		1,013,476		2,021
Total fixed maturities, market value		5,281,672		-		5,271,877		9,795		5,768,749		-		5,734,318		34,431

Fixed maturities, fair value		228		-		228		-
Equity securities, market value		-		-		-		-
Equity securities, fair value		1,317,420		1,198,984		118,436		-		976,879		915,003		61,876		-
Other invested assets, fair value		1,769,132		1,769,132		-		-		1,772,458		-		-		1,772,458

There were no transfers between Level 1 and Level 2 for the six months ended June 30, ~~2015.~~

2016.

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

Fair Value Measurement Using:
Quoted Prices
in Active Significant
Markets for Other Significant
Identical Observable Unobservable
Assets Inputs Inputs
(Dollars in thousands) December 31, 2014 (Level 1) (Level 2) (Level 3)
Assets:
Fixed maturities, market value
U.S. Treasury securities and obligations of
U.S. government agencies and corporations $ 136,836 $ - $ 136,836 $ -
Obligations of U.S. States and political subdivisions 824,472 - 824,472 -
Corporate securities 1,978,935 - 1,978,935 -
Asset-backed securities 94,823 - 94,823 -
Mortgage-backed securities
Commercial 59,268 - 50,671 8,597
Agency residential 598,117 - 598,117 -
Non-agency residential 315 - 315 -
Foreign government securities 537,087 - 537,087 -
Foreign corporate securities 1,063,558 - 1,056,392 7,166
Total fixed maturities, market value 5,293,411 - 5,277,648 15,763

Fixed maturities, fair value 1,509 - 1,509 -
Equity securities, market value 16 16 - -
Equity securities, fair value 1,299,037 1,188,613 110,424 -
Other invested assets, fair value 1,655,311 1,655,311 - -

			Fair Value Measurement Using:
			Quoted Prices
			in Active		Significant
			Markets for		Other		Significant
			Identical		Observable		Unobservable
			Assets		Inputs		Inputs
(Dollars in thousands)	December 31, 2015		(Level 1)		(Level 2)		(Level 3)
Assets:
Fixed maturities, market value
U.S. Treasury securities and obligations of
U.S. government agencies and corporations	$	330,985	$	-	$	330,985	$	-
Obligations of U.S. States and political subdivisions		703,075		-		703,075		-
Corporate securities		1,968,558		-		1,964,625		3,933
Asset-backed securities		144,982		-		144,982		-
Mortgage-backed securities
Commercial		62,446		-		62,446		-
Agency residential		712,298		-		712,298		-
Non-agency residential		150		-		150		-
Foreign government securities		463,074		-		463,074		-
Foreign corporate securities		970,909		-		969,316		1,593
Total fixed maturities, market value		5,356,477		-		5,350,951		5,526

Fixed maturities, fair value		2,102		-		2,102		-
Equity securities, fair value		1,215,377		1,153,310		62,067		-
Other invested assets, fair value		1,773,214		-		-		1,773,214

The following ~~tables present~~table presents the activity under Level 3, fair value measurements using significant unobservable inputs by asset type, for the periods indicated:

	Three Months Ended June 30, 2015								Six Months Ended June 30, 2015											Three Months Ended June 30, 2016								Six Months Ended June 30, 2016
	Corporate			Foreign					Corporate						Foreign					Corporate			Foreign					Corporate			Foreign
(Dollars in thousands)	Securities			Corporate		Total			Securities			CMBS			Corporate		Total			Securities			Corporate		Total			Securities			Corporate			Total
Beginning balance	$	2,653		$	6,125	$	8,778		$	-		$	8,597		$	7,166	$	15,763		$	15,706		$	596	$	16,302		$	3,933		$	1,593		$	5,526
Total gains or (losses) (realized/unrealized)
Included in earnings		2			58		60			4			-			115		119			(18	)		-		(18	)		(10	)		(997	)		(1,007	)
Included in other comprehensive income (loss)		(3	)		1,169		1,166			(2	)		-			71		69			(27	)		1,425		1,398			(33	)		1,425			1,392
Purchases, issuances and settlements		(12	)		-		(12	)		1,928			-			-		1,928			16,749			-		16,749			28,520			-			28,520
Transfers in and/or (out) of Level 3		(682	)		485		(197	)		28			(8,597	)		485		(8,084	)		-			-		-			-			-			-
Ending balance	$	1,958		$	7,837	$	9,795		$	1,958		$	-		$	7,837	$	9,795		$	32,410		$	2,021	$	34,431		$	32,410		$	2,021		$	34,431

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	$	-		$	-	$	-		$	-		$	-		$	-	$	-
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																				$	-		$	-	$	-		$	-		$	(997	)	$	(997	)

(Some amounts may not reconcile due to rounding.)

Three Months Ended June 30, 2014 Six Months Ended June 30, 2014
Asset-backed Foreign Non-agency Asset-backed Foreign Non-agency
(Dollars in thousands) Securities Corporate RMBS Total Securities Corporate RMBS Total
Beginning balance $ 3,044 $ 473 $ 4 $ 3,521 $ 3,533 $ 481 $ 4 $ 4,018
Total gains or (losses) (realized/unrealized)
Included in earnings 38 17 - 55 56 18 1 75
Included in other comprehensive income (loss) 28 (20 ) - 8 93 (20 ) - 73
Purchases, issuances and settlements (582 ) (470 ) - (1,052 ) (1,154 ) (479 ) (1 ) (1,634 )
Transfers in and/or (out) of Level 3 - - - - - - - -
Ending balance $ 2,528 $ - $ 4 $ 2,532 $ 2,528 $ - $ 4 $ 2,532

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.)

	Three Months Ended June 30, 2015								Six Months Ended June 30, 2015
	Corporate			Foreign					Corporate						Foreign
(Dollars in thousands)	Securities			Corporate		Total			Securities			CMBS			Corporate		Total
Beginning balance	$	2,653		$	6,125	$	8,778		$	-		$	8,597		$	7,166	$	15,763
Total gains or (losses) (realized/unrealized)
Included in earnings		2			58		60			4			-			115		119
Included in other comprehensive income (loss)		(3	)		1,169		1,166			(2	)		-			71		69
Purchases, issuances and settlements		(12	)		-		(12	)		1,928			-			-		1,928
Transfers in and/or (out) of Level 3		(682	)		485		(197	)		28			(8,597	)		485		(8,084	)
Ending balance	$	1,958		$	7,837	$	9,795		$	1,958		$	-		$	7,837	$	9,795

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.)

The net transfers from level 3, fair value measurements using significant unobservable inputs, of $0 thousand and $8,084 thousand of investments for the six months ended June 30, 2016 and 2015, respectively, primarily relate to securities that were priced using single non-binding broker quotes ~~and~~as of December 31, 2014. The securities were subsequently priced using a recognized pricing service as of June 30, 2015, and were ~~then~~ classified as level ~~2. There were no transfers from level~~2 as of that date.

The following table presents the activity under Level 3, fair value measurements using significant unobservable inputs by other invested assets, for the ~~six months ended June 30, 2014.~~periods indicated:

	Three months ended					Six months ended
	June 30,					June 30,
(Dollars in thousands)	2016			2015		2016			2015
Other invested assets, fair value:
Beginning balance	$	1,773,214		$	-	$	1,773,214		$	-
Total gains or (losses) (realized/unrealized)
Included in earnings		(756	)		-		(756	)		-
Included in other comprehensive income (loss)		-			-		-			-
Purchases, issuances and settlements		-			-		-			-
Transfers in and/or (out) of Level 3		-			-		-			-
Ending balance	$	1,772,458		$	-	$	1,772,458		$	-

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.)

5.~~CAPITAL TRANSACTIONS~~

On July 9, 2014, the Company renewed its shelf registration statement on Form S-3ASR with the Securities and Exchange Commission (the "SEC"), as a Well Known Seasoned Issuer. This shelf registration statement can be used by Group to register common shares, preferred shares, debt securities, warrants, share purchase contracts and share purchase units; by Holdings to register debt securities and by Everest Re Capital Trust III ("Capital Trust III") to register trust preferred securities.

6.5. 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 loss adjustment expenses.

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

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

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

	At June 30,		At December 31,		At June 30,		At December 31,
(Dollars in thousands)	2015		2014		2016		2015
The Prudential	$	142,618	$	142,653	$	141,562	$	142,427
Unaffiliated life insurance company		31,780		31,964		32,545		33,062

7.6. OTHER COMPREHENSIVE INCOME (LOSS)

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

	Three Months Ended June 30, 2015									Six Months Ended June 30, 2015									Three Months Ended June 30, 2016									Six Months Ended June 30, 2016
(Dollars in thousands)	Before Tax			Tax Effect			Net of Tax			Before Tax			Tax Effect			Net of Tax			Before Tax			Tax Effect			Net of Tax			Before Tax		Tax Effect			Net of Tax
Unrealized appreciation (depreciation) ("URA(D)") on securities - temporary	$	(55,290	)	$	19,352		$	(35,938	)	$	(39,718	)	$	13,402		$	(26,316	)	$	53,960		$	(18,886	)	$	35,074		$	83,916	$	(29,370	)	$	54,546
URA(D) on securities - OTTI		-			-			-			9,735			(3,407	)		6,328			6,446			(2,256	)		4,190			6,643		(2,325	)		4,318
Reclassification of net realized losses (gains) included in net income (loss)		21,017			(7,356	)		13,661			56,656			(19,330	)		37,326			(97	)		34			(63	)		39,773		(13,921	)		25,852
Foreign currency translation adjustments		24,839			(8,694	)		16,145			(26,404	)		9,241			(17,163	)		23,830			(8,341	)		15,489			46,807		(16,386	)		30,421
Benefit plan actuarial net gain (loss)		-			-			-			-			-			-			-			-			-			-		-			-
Reclassification of amortization of net gain (loss) included in net income (loss)		2,476			(867	)		1,609			4,943			(1,730	)		3,213			2,063			(722	)		1,341			4,125		(1,444	)		2,681
Total other comprehensive income (loss)	$	(6,958	)	$	2,435		$	(4,523	)	$	5,212		$	(1,824	)	$	3,388		$	86,202		$	(30,171	)	$	56,031		$	181,264	$	(63,446	)	$	117,818

(Some amounts may not reconcile due to rounding)

Three Months Ended June 30, 2014 Six Months Ended June 30, 2014
(Dollars in thousands) Before Tax Tax Effect Net of Tax Before Tax Tax Effect Net of Tax
Unrealized appreciation (depreciation) ("URA(D)") on securities - temporary $ 29,577 $ (10,475 ) $ 19,102 $ 61,573 $ (21,674 ) $ 39,899
URA(D) on securities - OTTI - - - - - -
Reclassification of net realized losses (gains) included in net income (loss) 1,127 (270 ) 857 3,124 (969 ) 2,155
Foreign currency translation adjustments 10,340 (3,619 ) 6,721 (1,715 ) 600 (1,115 )
Benefit plan actuarial net gain (loss) - - - - - -
Reclassification of amortization of net gain (loss) included in net income (loss) 1,185 (415 ) 770 2,371 (830 ) 1,541
Total other comprehensive income (loss) $ 42,229 $ (14,779 ) $ 27,450 $ 65,353 $ (22,873 ) $ 42,480

(Some amounts may not reconcile due to rounding)

	Three Months Ended June 30, 2015									Six Months Ended June 30, 2015
(Dollars in thousands)	Before Tax			Tax Effect			Net of Tax			Before Tax			Tax Effect			Net of Tax
Unrealized appreciation (depreciation) ("URA(D)") on securities - temporary	$	(55,290	)	$	19,352		$	(35,938	)	$	(39,718	)	$	13,402		$	(26,316	)
URA(D) on securities - OTTI		-			-			-			9,735			(3,407	)		6,328
Reclassification of net realized losses (gains) included in net income (loss)		21,017			(7,356	)		13,661			56,656			(19,330	)		37,326
Foreign currency translation adjustments		24,839			(8,694	)		16,145			(26,404	)		9,241			(17,163	)
Benefit plan actuarial net gain (loss)		-			-			-			-			-			-
Reclassification of amortization of net gain (loss) included in net income (loss)		2,476			(867	)		1,609			4,943			(1,730	)		3,213
Total other comprehensive income (loss)	$	(6,958	)	$	2,435		$	(4,523	)	$	5,212		$	(1,824	)	$	3,388

(Some amounts may not reconcile due to rounding)

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

Three Months Ended Six Months Ended
June 30, June 30, Affected line item within the statements of
AOCI component 2015 2014 2015 2014 operations and comprehensive income (loss)
(Dollars in thousands)
URA(D) on securities $ 21,017 $ 1,127 $ 56,656 $ 3,124 Other net realized capital gains (losses)
(7,356 ) (270 ) (19,330 ) (969 ) Income tax expense (benefit)
$ 13,661 $ 857 $ 37,326 $ 2,155 Net income (loss)

Benefit plan net gain (loss) $ 2,476 $ 1,185 $ 4,943 $ 2,371 Other underwriting expenses
(867 ) (415 ) (1,730 ) (830 ) Income tax expense (benefit)
$ 1,609 $ 770 $ 3,213 $ 1,541 Net income (loss)

(Some amounts may not reconcile due to rounding)

	Three Months Ended						Six Months Ended
	June 30,						June 30,						Affected line item within the statements of
AOCI component	2016			2015			2016			2015			operations and comprehensive income (loss)
(Dollars in thousands)
URA(D) on securities	$	(97	)	$	21,017		$	39,773		$	56,656		Other net realized capital gains (losses)
		34			(7,356	)		(13,921	)		(19,330	)	Income tax expense (benefit)
	$	(63	)	$	13,661		$	25,852		$	37,326		Net income (loss)

Benefit plan net gain (loss)	$	2,063		$	2,476		$	4,125		$	4,943		Other underwriting expenses
		(722	)		(867	)		(1,444	)		(1,730	)	Income tax expense (benefit)
	$	1,341		$	1,609		$	2,681		$	3,213		Net income (loss)

(Some amounts may not reconcile due to rounding)

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

	Six Months Ended			Twelve Months Ended			Six Months Ended			Twelve Months Ended
	June 30,			December 31,			June 30,			December 31,
(Dollars in thousands)	2015			2014			2016			2015

Beginning balance of URA (D) on securities	$	37,628		$	55,457		$	13,654		$	37,628
Current period change in URA (D) of investments - temporary		11,009			(11,501	)		80,398			(30,257	)
Current period change in URA (D) of investments - non-credit OTTI		6,328			(6,328	)		4,318			6,283
Ending balance of URA (D) on securities		54,965			37,628			98,370			13,654

Beginning balance of foreign currency translation adjustments		41,877			71,087			(12,701	)		41,877
Current period change in foreign currency translation adjustments		(17,163	)		(29,210	)		30,421			(54,578	)
Ending balance of foreign currency translation adjustments		24,715			41,877			17,720			(12,701	)

Beginning balance of benefit plan net gain (loss)		(74,986	)		(38,896	)		(63,089	)		(74,986	)
Current period change in benefit plan net gain (loss)		3,213			(36,090	)		2,681			11,897
Ending balance of benefit plan net gain (loss)		(71,773	)		(74,986	)		(60,408	)		(63,089	)

Ending balance of accumulated other comprehensive income (loss)	$	7,907		$	4,519		$	55,682		$	(62,136	)

8.~~CREDIT FACILITY - EXPIRED~~

Effective August 15, 2011, the Company entered into a three year, $150,000 thousand unsecured revolving credit facility, referred to as the "Holdings Credit Facility", which expired on August 15, 2014. The Company decided not to renew the Holdings Credit Facility at expiration.

9.7. REINSURANCE AND TRUST AGREEMENTS

A subsidiary of the Company, Everest Re, has established a trust agreement, which effectively uses Everest Re's investments as collateral, as security for assumed losses payable to a non-affiliated ceding company. At June 30, ~~2015,~~2016, the total amount on deposit in the trust account was ~~$270,095~~$297,465 thousand.

On April 24, 2014, the Company entered into two 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 specified named storm and earthquake events. The first agreement provides up to $250,000 thousand of reinsurance coverage from named storms in specified states of the Southeastern United States. The second agreement provides up to $200,000 thousand of reinsurance coverage from named storms in specified states of the Southeast, Mid-Atlantic and Northeast regions of the United States and Puerto Rico as well as reinsurance coverage from earthquakes in specified states of the Southeast, Mid-Atlantic, Northeast and West regions of the United States, Puerto Rico and British Columbia.

On November 18, 2014, the Company entered into a collateralized reinsurance agreement with Kilimanjaro Re to provide the Company with catastrophe reinsurance coverage. This agreement is a multi-year reinsurance contract which covers specified earthquake events. The agreement provides up to $500,000 thousand of reinsurance coverage from earthquakes in the United States, Puerto Rico and Canada.

On December 1, 2015 the Company entered into two collateralized reinsurance agreements with Kilimanjaro Re to provide the Company with catastrophe reinsurance coverage. These agreements are multi-year reinsurance contracts which cover named storm and earthquake events. The first agreement provides up to $300,000 thousand of reinsurance coverage from named storms and earthquakes in the United States, Puerto Rico and Canada. The second agreement provides up to $325,000 thousand of reinsurance coverage from named storms and earthquakes in the United States, Puerto Rico and Canada.

Kilimanjaro has financed the various property catastrophe reinsurance coverage by issuing catastrophe bonds to unrelated, external investors. On April 24, 2014, Kilimanjaro issued $450,000 thousand of ~~variable rate~~ notes ("Series 2014-1 Notes"). On November 18, 2014, Kilimanjaro issued $500,000 thousand of ~~variable rate~~ notes ("Series 2014-2 Notes"). On December 1, 2015, Kilimanjaro issued $625,000 thousand of notes ("Series 2015-1 Notes). The proceeds from the issuance of the Series 2014-1 Notes, the Series 2014-2 Notes and the Series ~~2014-2~~2015-1 Notes are held in reinsurance trust throughout the duration of the applicable reinsurance agreements and invested solely in US government money market funds with a rating of at least "AAAm" by Standard & Poor's.

~~10.~~8. SENIOR NOTES

The table below displays Holdings' outstanding senior notes. Market 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.

					June 30, 2015				December 31, 2014								June 30, 2016				December 31, 2015
					Consolidated Balance				Consolidated Balance								Consolidated Balance				Consolidated Balance
(Dollars in thousands)	Date Issued	Date Due	Principal Amounts		Sheet Amount		Market Value		Sheet Amount		Market Value		Date Issued	Date Due	Principal Amounts		Sheet Amount		Market Value		Sheet Amount		Market Value
4.868% Senior notes	06/05/2014	06/01/2044	$	400,000	$	400,000	$	388,680	$	400,000	$	404,892	06/05/2014	06/01/2044		400,000	$	396,654	$	404,096	$	396,594	$	381,204
5.40% Senior notes	10/12/2004	10/15/2014		250,000		-		-		-		-

On June 5, 2014, Holdings issued $400,000 thousand of 30 year senior notes at 4.868%, which will mature on June 1, 2044. Interest will be paid semi-annually on June 1 and December 1 of each year. ~~The proceeds from the issuance have been used in part to pay off the $250,000 thousand of 5.40% senior notes which matured on October 15, 2014.~~

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

	Three Months Ended				Six Months Ended				Three Months Ended				Six Months Ended
	June 30,				June 30,				June 30,				June 30,
(Dollars in thousands)	2015		2014		2015		2014		2016		2015		2016		2015
Interest expense incurred	$	4,868	$	4,741	$	9,736	$	8,129	$	4,868	$	4,868	$	9,736	$	9,736

~~11.~~9. LONG TERM SUBORDINATED NOTES

The table below displays Holdings' outstanding fixed to floating rate long term subordinated notes. Market 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

June 30, 2015

December 31, 2014

Maturity Date

June 30, 2016

December 31, 2015

Original

Consolidated Balance

Original

Consolidated Balance

(Dollars in thousands)

Date Issued

Principal Amount

Scheduled

Final

Sheet Amount

Market Value

Sheet Amount

Market Value

Date Issued

Principal Amount

Scheduled

Final

Sheet Amount

Market Value

Sheet Amount

Market Value

6.6% Long term subordinated notes

04/26/2007

400,000

05/15/2037

05/01/2067

238,366

232,027

238,364

246,312

04/26/2007

400,000

05/15/2037

05/01/2067

236,413

189,893

236,364

208,978

During the fixed rate interest period from May 3, 2007 through May 14, 2017, interest will be 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, subject to Holdings' right to defer interest on one or more occasions for up to ten consecutive years. 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 semi-annually for periods prior to May 15, 2017, and compounded quarterly for periods from and including May 15, 2017.

Holdings can redeem the long term subordinated notes prior to May 15, 2017, in whole but not in part at the applicable redemption price, which will equal the greater of (a) 100% of the principal amount being redeemed and (b) the present value of the principal payment on May 15, 2017 and scheduled payments of interest that would have accrued from the redemption date to May 15, 2017 on the long term subordinated notes being redeemed, discounted to the redemption date on a semi-annual basis at a discount rate equal to the treasury rate plus an applicable spread of either 0.25% or 0.50%, in each case plus accrued and unpaid interest. 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. Effective upon the maturity of the Company's 5.40% senior notes on October 15, 2014, the Company's 4.868% senior notes, due on June 1, 2044, have become the Company's long term indebtedness that ranks senior to the long term subordinated notes.

On March 19, 2009, Group announced the commencement of a cash tender offer for any and all of the 6.60% fixed to floating rate long term subordinated notes. Upon expiration of the tender offer, the Company had reduced its outstanding debt by $161,441 thousand.

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

	Three Months Ended				Six Months Ended				Three Months Ended				Six Months Ended
	June 30,				June 30,				June 30,				June 30,
(Dollars in thousands)	2015		2014		2015		2014		2016		2015		2016		2015
Interest expense incurred	$	3,937	$	3,937	$	7,874	$	7,874	$	3,937	$	3,937	$	7,874	$	7,874

~~12.~~10. SEGMENT REPORTING

The U.S. Reinsurance operation writes property and casualty reinsurance and specialty lines of business, including Marine, Aviation, Surety and Accident and Health ("A&H") business, on both a treaty and facultative basis, through reinsurance brokers, as well as directly with ceding companies primarily within the U.S. The International operation writes non-U.S. property and casualty reinsurance through Everest Re's branches in Canada, Singapore and through offices in Brazil, Miami and New Jersey. The Insurance operation writes property and casualty insurance directly and through general agents, brokers and surplus lines brokers mainly within the U.S.

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

Underwriting results include earned premium less losses and LAE incurred, commission and brokerage expenses and other underwriting expenses. Underwriting results are measured 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.

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

Three Months Ended Six Months Ended
U.S. Reinsurance
June 30, June 30,
(Dollars in thousands) 2015 2014 2015 2014
Gross written premiums $ 451,059 $ 453,115 $ 1,013,706 $ 983,416
Net written premiums 184,707 215,091 425,401 466,612

Premiums earned $ 235,426 $ 246,265 $ 490,838 $ 464,456
Incurred losses and LAE 116,473 129,676 227,928 245,660
Commission and brokerage 34,703 53,380 93,067 93,516
Other underwriting expenses 11,807 11,453 23,336 20,935
Underwriting gain (loss) $ 72,443 $ 51,756 $ 146,507 $ 104,345

	Three Months Ended				Six Months Ended				Three Months Ended				Six Months Ended
International	June 30,				June 30,
U.S. Reinsurance									June 30,				June 30,
(Dollars in thousands)	2015		2014		2015		2014		2016		2015		2016		2015
Gross written premiums	$	311,653	$	466,008	$	645,268	$	794,886	$	405,530	$	451,059	$	942,236	$	1,013,706
Net written premiums		147,399		147,210		269,080		288,667		161,031		184,707		384,458		425,401

Premiums earned	$	157,922	$	147,728	$	298,621	$	292,732	$	224,618	$	235,426	$	459,861	$	490,838
Incurred losses and LAE		110,027		88,888		211,472		172,463		110,152		116,473		226,322		227,928
Commission and brokerage		31,243		27,412		65,242		56,581		50,130		34,703		99,861		93,067
Other underwriting expenses		8,049		8,093		16,164		15,930		12,133		11,807		25,591		23,336
Underwriting gain (loss)	$	8,603	$	23,335	$	5,743	$	47,758	$	52,203	$	72,443	$	108,087	$	146,507

Three Months Ended Six Months Ended
Insurance
June 30, June 30,
(Dollars in thousands) 2015 2014 2015 2014
Gross written premiums $ 326,729 $ 305,697 $ 657,230 $ 530,973
Net written premiums 140,358 130,426 286,410 237,152

Premiums earned $ 128,076 $ 126,743 $ 253,027 $ 233,993
Incurred losses and LAE 96,379 102,953 192,359 181,440
Commission and brokerage 7,007 4,530 11,175 11,319
Other underwriting expenses 31,717 27,612 60,616 49,544
Underwriting gain (loss) $ (7,027 ) $ (8,352 ) $ (11,123 ) $ (8,310 )

	Three Months Ended				Six Months Ended
International	June 30,				June 30,
(Dollars in thousands)	2016		2015		2016		2015
Gross written premiums	$	348,178	$	311,653	$	586,656	$	645,268
Net written premiums		124,438		147,399		212,154		269,080

Premiums earned	$	131,285	$	157,922	$	244,458	$	298,621
Incurred losses and LAE		91,427		110,027		164,842		211,472
Commission and brokerage		26,140		31,243		52,250		65,242
Other underwriting expenses		7,969		8,049		15,792		16,164
Underwriting gain (loss)	$	5,749	$	8,603	$	11,574	$	5,743

	Three Months Ended						Six Months Ended
Insurance	June 30,						June 30,
(Dollars in thousands)	2016			2015			2016			2015
Gross written premiums	$	424,083		$	326,729		$	778,803		$	657,230
Net written premiums		155,786			140,358			308,712			286,410

Premiums earned	$	132,952		$	128,076		$	266,461		$	253,027
Incurred losses and LAE		136,957			96,379			243,434			192,359
Commission and brokerage		(4,144	)		7,007			(11,163	)		11,175
Other underwriting expenses		38,228			31,717			76,174			60,616
Underwriting gain (loss)	$	(38,089	)	$	(7,027	)	$	(41,984	)	$	(11,123	)

The following table reconciles the underwriting results for the operating segments to income (loss) before taxes as reported in the consolidated statements of operations and comprehensive income (loss) for the periods indicated:

Three Months Ended Six Months Ended
June 30, June 30,
(Dollars in thousands) 2015 2014 2015 2014
Underwriting gain (loss) $ 74,019 $ 66,739 $ 141,127 $ 143,793
Net investment income 70,925 68,636 143,506 132,423
Net realized capital gains (losses) 51,225 125,114 72,521 121,064
Corporate expense (1,785 ) 524 (3,394 ) (778 )
Interest, fee and bond issue cost amortization expense (8,858 ) (8,811 ) (17,717 ) (16,247 )
Other income (expense) 12,289 (8,782 ) 28,122 (11,837 )
Income (loss) before taxes $ 197,815 $ 243,420 $ 364,165 $ 368,418

	Three Months Ended						Six Months Ended
	June 30,						June 30,
(Dollars in thousands)	2016			2015			2016			2015
Underwriting gain (loss)	$	19,863		$	74,019		$	77,677		$	141,127
Net investment income		73,872			70,925			132,317			143,506
Net realized capital gains (losses)		29,165			51,225			(37,212	)		72,521
Corporate expense		(2,010	)		(1,785	)		(4,346	)		(3,394	)
Interest, fee and bond issue cost amortization expense		(8,858	)		(8,858	)		(17,717	)		(17,717	)
Other income (expense)		(10,700	)		12,289			2,402			28,122
Income (loss) before taxes	$	101,332		$	197,815		$	153,121		$	364,165

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

	Three Months Ended				Six Months Ended				Three Months Ended				Six Months Ended
	June 30,				June 30,				June 30,				June 30,
(Dollars in thousands)	2015		2014		2015		2014		2016		2015		2016		2015
Canada	$	30,160	$	36,830	$	53,672	$	74,489
Canada gross written premiums									$	34,630	$	30,160	$	58,216	$	53,672

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

~~13.~~11. RELATED-PARTY TRANSACTIONS

Parent

Group entered into a $250,000 thousand long term promissory note agreement with Holdings as of December 31, 2014. The note will mature on December 31, 2023 and has an interest rate of 1.72% that will be paid annually, on December 15^th of each year. This transaction is presented as a Note Receivable – Affiliated in the Consolidated Balance Sheets of Holdings. Interest income in the amount of $2,150 thousand was recorded by Holdings for the six months ended June 30, 2016, and June 30, 2015, respectively.

Group's Board of Directors approved an amended share repurchase program authorizing Group and/or its subsidiary Holdings to purchase Group's common shares through open market transactions, privately negotiated transactions or both. The table below represents the amendments to the share repurchase program for the common shares approved for repurchase.

		Common Shares
		Authorized for
Amendment Date		Repurchase
(Dollars in thousands)

09/21/2004		5,000,000
07/21/2008		5,000,000
02/24/2010		5,000,000
02/22/2012		5,000,000
05/15/2013		5,000,000
11/19/2014		5,000,000
		30,000,000

~~As of June 30,~~Through December, 2015, Holdings had purchased and held 9,719,971 ~~common shares~~Common Shares of Group, which ~~it had~~were purchased in the open market between February 1, 2007 and March 8, 2011. ~~The table below represents~~

In December, 2015, Holdings transferred the ~~total purchase price~~9,719,971 Common Shares of Group, which it held as other invested assets, at fair value, valued at $1,773,214 thousand, to Preferred Holdings, an affiliated entity and subsidiary of Group, in exchange for ~~these common~~1,773.214 preferred shares ~~purchased.~~

(Dollars in thousands)
Total purchase price $ 835,371

of Preferred Holdings with a $1,000 thousand par value and 1.75% annual dividend rate. After the exchange, Holdings no longer holds any shares or has any ownership interest in Group.

Holdings ~~reports these purchases~~reported both its Parent Shares and preferred shares in Preferred Holdings, as other invested assets, fair value, in the consolidated balance sheets with changes in fair value re-measurement recorded in net realized capital gains (losses) in the consolidated statements of operations and comprehensive income (loss). The following table presents the dividends received on ~~these common~~the preferred shares of preferred Holdings and on the Parent shares that are reported as net investment income in the consolidated statements of operations and comprehensive income (loss) for the period indicated.

Three Months Ended Six Months Ended
June 30, June 30,
(Dollars in thousands) 2015 2014 2015 2014
Dividends received $ 9,234 $ 7,290 $ 18,468 $ 14,580

	Three Months Ended				Six Months Ended
	June 30,				June 30,
(Dollars in thousands)	2016		2015		2016		2015
Dividends received on Parent shares	$	-	$	9,234	$	-	$	18,468
Dividends received on preferred stock of affiliate		7,758		-		15,516		-

Affiliated Companies

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

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

Three Months Ended Six Months Ended
June 30, June 30,
(Dollars in thousands) 2015 2014 2015 2014
Expenses incurred $ 19,833 $ 17,676 $ 38,196 $ 33,519

	Three Months Ended				Six Months Ended
	June 30,				June 30,
(Dollars in thousands)	2016		2015		2016		2015
Expenses incurred	$	20,289	$	19,833	$	41,459	$	38,196

Affiliates

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

(Dollars in thousands)
		Percent			Assuming		Single			Aggregate
Coverage Period	Ceding Company	Ceded			Company	Type of Business	Occurrence Limit			Limit

01/01/2002-12/31/2002	Everest Re		20.0	%	Bermuda Re	property / casualty business	$	-		$	-

01/01/2003-12/31/2003	Everest Re		25.0	%	Bermuda Re	property / casualty business		-			-

01/01/2004-12/31/2005	Everest Re		22.5	%	Bermuda Re	property / casualty business		-			-
	Everest Re		2.5	%	Everest International	property / casualty business		-			-

01/01/2006-12/31/2006	Everest Re		18.0	%	Bermuda Re	property business		125,000	(1)		-
	Everest Re		2.0	%	Everest International	property business		-			-

01/01/2006-12/31/2007	Everest Re		31.5	%	Bermuda Re	casualty business		-			-
	Everest Re		3.5	%	Everest International	casualty business		-			-

01/01/2007-12/31/2007	Everest Re		22.5	%	Bermuda Re	property business		130,000	(1)		-
	Everest Re		2.5	%	Everest International	property business		-			-

01/01/2008-12/31/2008	Everest Re		36.0	%	Bermuda Re	property / casualty business		130,000	(1)		275,000	(2)
	Everest Re		4.0	%	Everest International	property / casualty business		-			-

01/01/2009-12/31/2009	Everest Re		36.0	%	Bermuda Re	property / casualty business		150,000	(1)		325,000	(2)
	Everest Re		8.0	%	Everest International	property / casualty business		-			-

01/01/2010-12/31/2010	Everest Re		44.0	%	Bermuda Re	property / casualty business		150,000			325,000

01/01/2011-12/31/2011	Everest Re		50.0	%	Bermuda Re	property / casualty business		150,000			300,000

01/01/2012-12/31/2014	Everest Re		50.0	%	Bermuda Re	property / casualty business		100,000			200,000

01/01/2015	Everest Re		50.0	%	Bermuda Re	property / casualty business		162,500			325,000

01/01/2003-12/31/2006	Everest Re- Canadian Branch		50.0	%	Bermuda Re	property business		-			-
01/01/2007-12/31/2009	Everest Re- Canadian Branch		60.0	%	Bermuda Re	property business		-			-
01/01/2010-12/31/2010	Everest Re- Canadian Branch		60.0	%	Bermuda Re	property business		350,000	(3)		-
01/01/2011-12/31/2011	Everest Re- Canadian Branch		60.0	%	Bermuda Re	property business		350,000	(3)		-
01/01/2012-12/31/2012	Everest Re- Canadian Branch		75.0	%	Bermuda Re	property / casualty business		206,250	(3)		412,500	(3)
01/01/2013-12/31/2013	Everest Re- Canadian Branch		75.0	%	Bermuda Re	property / casualty business		150,000	(3)		412,500	(3)
01/01/2014	Everest Re- Canadian Branch		75.0	%	Bermuda Re	property / casualty business		262,500	(3)		412,500	(3)

01/01/2012

Everest Canada

80.0

Everest Re- Canadian Branch

property business


(1)	The single occurance limit is applied before the loss cessions to either Bermuda Re or Everest International.
(2)	The aggregate limit is applied before the loss cessions to either Bermuda Re or Everest International.
(3)	Amounts shown are Canadian dollars.

For premiums earned and losses incurred for the period January 1, 2002 through December 31, 2002, Everest Re, Everest National Insurance Company and Everest Security Insurance Company entered into an Excess of Loss Reinsurance Agreement with Bermuda Re, covering workers' compensation losses occurring on and after January 1, 2002, as respect to new, renewal and in force policies effective on that date through December 31, 2002. This agreement was commuted as of September 30, 2013. ~~The table below represents Bermuda Re's liability limits for any losses per one occurrence.~~

Liability Limits
(Dollars in thousands) Exceeding Not to Exceed
Losses per one occurrence $ 100,000 $ 150,000

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

~~(Dollars in thousands)~~

~~Effective~~	~~Transferring~~	~~Assuming~~	~~% of Business or~~			~~Covered Period~~
~~Date~~	~~Company~~	~~Company~~	~~Amount of Transfer~~			~~of Transfer~~

~~09/19/2000~~	~~Mt. McKinley~~	~~Bermuda Re~~		~~100~~	%	~~All years~~
~~10/01/2001~~	~~Everest Re (Belgium Branch)~~	~~Bermuda Re~~		~~100~~	%	~~All years~~
~~10/01/2008~~	~~Everest Re~~	~~Bermuda Re~~	$	~~747,022~~		~~01/01/2002-12/31/2007~~

Effective	Transferring	Assuming	% of Business or			Covered Period
Date	Company	Company	Amount of Transfer			of Transfer

09/19/2000	Mt. McKinley	Bermuda Re		100	%	All years
10/01/2001	Everest Re (Belgium Branch)	Bermuda Re		100	%	All years
10/01/2008	Everest Re	Bermuda Re	$	747,022		01/01/2002-12/31/2007

On July 13, 2015, the Company sold Mt. McKinley to Clearwater Insurance Company, a Delaware domiciled insurance company. As of that date, Mt. McKinley is no longer deemed an affiliated company or related party.

The following tables summarize the premiums and losses ceded by the Company to Bermuda Re and Everest International, respectively, and premiums and losses assumed by the Company from Everest Canada and Lloyd's syndicate 2786 for the periods indicated:

Three Months Ended Six Months Ended
Bermuda Re
June 30, June 30,
(Dollars in thousands) 2015 2014 2015 2014
Ceded written premiums $ 528,468 $ 524,057 $ 1,067,501 $ 1,042,074
Ceded earned premiums 563,100 535,287 1,117,151 1,015,100
Ceded losses and LAE (a) 345,580 296,322 640,711 534,823

	Three Months Ended				Six Months Ended				Three Months Ended				Six Months Ended
Everest International	June 30,				June 30,
Bermuda Re									June 30,				June 30,
(Dollars in thousands)	2015		2014		2015		2014		2016		2015		2016		2015
Ceded written premiums	$	147	$	203	$	145	$	88	$	544,495	$	528,468	$	1,061,178	$	1,067,501
Ceded earned premiums		192		348		233		274		593,349		563,100		1,132,302		1,117,151
Ceded losses and LAE(a)		1,702		260		880		2,144		404,667		345,580		695,143		640,711

Three Months Ended Six Months Ended
Everest Canada
June 30, June 30,
(Dollars in thousands) 2015 2014 2015 2014
Assumed written premiums $ 11,823 $ 11,215 $ 18,487 $ 15,225
Assumed earned premiums 8,625 5,268 17,324 9,956
Assumed losses and LAE 6,292 3,091 11,021 6,383

	Three Months Ended				Six Months Ended
Everest International	June 30,				June 30,
(Dollars in thousands)	2016		2015		2016		2015
Ceded written premiums	$	62	$	147	$	31	$	145
Ceded earned premiums		63		192		39		233
Ceded losses and LAE		756		1,702		898		880

	Three Months Ended				Six Months Ended
Everest Canada	June 30,				June 30,
(Dollars in thousands)	2016		2015		2016		2015
Assumed written premiums	$	16,228	$	11,823	$	26,427	$	18,487
Assumed earned premiums		12,675		8,625		23,129		17,324
Assumed losses and LAE		14,440		6,292		21,427		11,021

	Three Months Ended					Six Months Ended
Lloyd's Syndicate 2786	June 30,					June 30,
(Dollars in thousands)	2016			2015		2016		2015
Assumed written premiums	$	(157	)	$	-	$	539	$	-
Assumed earned premiums		28			-		116		-
Assumed losses and LAE		-			-		-		-

(a) Ceded losses and LAE include the Mt. McKinley loss portfolio transfer that constitutes losses ceded under retroactive reinsurance and therefore, in accordance with FASB guidance, aamortization of deferred gain on retroactive reinsurance is reflected in other ~~expenses~~income on the consolidated statements of operations and comprehensive income (loss).

Upon the sale of Mt. McKinley, the value of the remaining deferred gain on retroactive reinsurance was included in the calculation of the realized gain on sale of subsidiary.

Everest Re sold net assets of its UK branch to Bermuda Re and provided Bermuda Re with a reserve indemnity agreement allowing for indemnity payments of up to 90% of ₤25.0 million of the excess of 2002 and prior reserves, provided that any recognition of profit from the reserves for 2002 and prior underwriting years is taken into account.

Effective February 27, 2013, Group established a new subsidiary, Mt. Logan Re, which is a Class 3 insurer based in Bermuda. Effective July 1, 2013, Mt. Logan Re established separate segregated accounts for its business activity, which will invest in a diversified set of catastrophe exposures.

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

	Three Months Ended				Six Months Ended				Three Months Ended				Six Months Ended
Mt. Logan Re	June 30,				June 30,
Mt. Logan Re Segregated Accounts									June 30,				June 30,
(Dollars in thousands)	2015		2014		2015		2014		2016		2015		2016		2015
Ceded written premiums	$	32,892	$	20,228	$	94,562	$	48,594	$	29,450	$	32,892	$	70,381	$	94,562
Ceded earned premiums		47,751		22,680		86,434		40,517		39,356		47,751		74,228		86,434
Ceded losses and LAE		13,157		9,648		21,471		14,791		16,232		13,157		25,330		21,471

Assumed written premiums		3,412		-		7,396		9,919		3,074		3,412		6,634		7,396
Assumed earned premiums		3,412		2,605		7,396		4,711		3,074		3,412		6,634		7,396
Assumed losses and LAE		-		-		-		-		-		-		-		-

~~14.~~12. RETIREMENT BENEFITS

The Company maintains both qualified and non-qualified defined benefit pension plans and a retiree health plan for its U.S. employees employed prior to April 1, 2010.

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

Pension Benefits
Three Months Ended Six Months Ended
June 30, June 30,
(Dollars in thousands) 2015 2014 2015 2014
Service cost $ 3,255 $ 2,461 $ 6,195 $ 4,921
Interest cost 2,711 2,541 5,168 5,083
Expected return on plan assets (2,903 ) (2,823 ) (5,806 ) (5,646 )
Amortization of prior service cost 6 12 11 25
Amortization of net (income) loss 2,261 1,092 4,512 2,183
Net periodic benefit cost $ 5,330 $ 3,283 $ 10,080 $ 6,566

Other Benefits	Three Months Ended				Six Months Ended
Pension Benefits									Three Months Ended						Six Months Ended
	June 30,				June 30,				June 30,						June 30,
(Dollars in thousands)	2015		2014		2015		2014		2016			2015			2016			2015
Service cost	$	599	$	407	$	1,000	$	814	$	2,896		$	3,255		$	5,793		$	6,195
Interest cost		395		342		658		684		2,361			2,711			4,722			5,168
Expected return on plan assets										(2,484	)		(2,903	)		(4,968	)		(5,806	)
Amortization of prior service cost										-			6			-			11
Amortization of net (income) loss		210		82		421		164		2,014			2,261			4,028			4,512
Net periodic benefit cost	$	1,204	$	831	$	2,079	$	1,662	$	4,787		$	5,330		$	9,575		$	10,080

Other Benefits	Three Months Ended				Six Months Ended
	June 30,				June 30,
(Dollars in thousands)	2016		2015		2016		2015
Service cost	$	438	$	599	$	876	$	1,000
Interest cost		296		395		592		658
Amortization of net (income) loss		48		210		96		421
Net periodic benefit cost	$	782	$	1,204	$	1,564	$	2,079

The Company did not make any contributions to the qualified pension benefit plan for the three and six months ended June 30, ~~2015~~2016 and ~~2014.~~

2015.

~~15.~~13. INCOME TAXES

The Company is domiciled in the United States and has subsidiaries domiciled within the United States with significant branches in Canada and Singapore. The Company's non-U.S. branches are subject to income taxation at varying rates in their respective domiciles.

For interim reporting periods, the company is generally required to use the annualized effective tax rate ("AETR") method, as prescribed by ASC 740-270, Interim Reporting, to calculate its income tax provision. Under this method, the AETR is applied to the interim year-to-date pre-tax income to determine the income tax expense or benefit for the year-to-date period. The income tax expense or benefit for a quarter represents the difference between the year-to-date income 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 and AETR.

~~16.SUBSEQUENT EVENTS~~14. PENDING DISPOSITION

~~On July 13, 2015, the~~The Company ~~closed its agreement~~has signed a letter of intent to sell ~~all~~Heartland Crop Insurance, Inc., its crop Managing General Agent to CGB Diversified Services, Inc. The pending agreement includes a provision for a long term strategic reinsurance relationship with CGB Diversified Services, Inc. Under the terms of the ~~outstanding shares~~letter of ~~capital stock of Mt. McKinley Insurance Company ("Mt. McKinley"),~~intent, there will not be a Delaware domiciled insurance company and wholly-owned subsidiary of the Company to Clearwater Insurance Company, a Delaware domiciled insurance company. The purchase price of approximately $20,000 thousand was based upon the statutory book value of Mt. McKinley as of the closing date. The Company expects to recognize a realizedmaterial gain ~~of approximately $59,000 thousand~~or loss on the sale and with the proposed reinsurance arrangement, there will not be a material fluctuation in the level of ~~Mt. McKinley.~~crop business, although it will be reflected as reinsurance rather than insurance.

15. SUBSEQUENT EVENTS

The ~~transaction meets the criteria for Held for Sale accounting. In accordance with the guidance, the table below details the approximate assets~~Company has evaluated known recognized and ~~liabilities associated with the business classified as Held for Sale.~~

(Dollars in thousands)
Investments and cash $ 12,000
Reinsurance recoverables 147,000
Deferred tax asset 35,000
Total assets held for sale $ 194,000

Reserve for losses and loss adjustment expenses $ 138,000
Deferred gain on retroactive reinsurance 95,000
Total liabilities held for sale $ 233,000

Net liabilities held for sale $ (39,000 )

non-recognized subsequent events. The Company does not have any subsequent events to report.

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATION

Industry Conditions.

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

We compete in the U.S. and international reinsurance and insurance markets with numerous global competitors. Our competitors include independent reinsurance and insurance companies, subsidiaries or affiliates of established worldwide insurance companies, reinsurance departments of certain insurance companies, domestic and international underwriting operations, 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 reinsurance and insurance risks through capital markets provide additional sources of potential reinsurance and insurance capacity and competition.

Worldwide insurance and reinsurance market conditions continued to be very competitive, particularly in the property catastrophe and casualty reinsurance lines of business. Generally, there was 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, provide capital markets with access to insurance and reinsurance risk exposure. The capital markets demand for these products is being primarily driven by the current low interest environment and the desire to achieve greater risk diversification and potentially higher returns on their investments. This increased competition is generally having a negative impact on rates, terms and conditions; however, the impact varies widely by market and coverage.

Rates tend to fluctuate by specific region and products, particularly areas recently impacted by large catastrophic events. ~~During the second and third quarters of 2013, Canada experienced historic flooding in Alberta and Toronto, which resulted in higher catastrophe rates in these areas during 2014.~~ Although there ~~were~~have been flooding and wind storm events and earthquakes in ~~Europe and Asia in~~parts of the ~~latter part of 2013,~~world, the overall 2013, 2014 and 2015 catastrophe losses for the industry were considerably lower than average. During the first half of 2016, there has been an increase in catastrophes, such as the Fort McMurray Canadian wildfire, storms and an earthquake in Ecuador; however, the aggregate of these losses are below historical levels of catastrophe losses. This lower level of losses, combined with increased competition has resulted in downward pressure on insurance and reinsurance rates in certain geographical areas.

During 2015, we initiated a strategic build out of our insurance platform through the investment in key leadership hires which in turn has brought significant underwriting talent and stronger direction in achieving our insurance program strategic goals of increased volume and improved underwriting results. Recent growth is coming from highly diversified areas ~~during 2014. Catastrophe results during 2014~~including newly launched lines of business, as well as, product and ~~the first half~~geographic expansion in existing lines of ~~2015 were also generally benign, which could have~~business. We are building a ~~negative impact on worldwide regional catastrophe markets for the balance~~world-class insurance platform capable of ~~2015.~~offering products across lines and geographies, complementing our leading global reinsurance franchise.

Overall, we believe that given our size, strong ratings, distribution system, reputation, expertise and capital market vehicle activity the current marketplace conditions provide profit opportunities. We continue to

employ our strategy of targeting business that offers the greatest profit potential, while maintaining balance and diversification in our overall portfolio.

Financial Summary.

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

	Three Months Ended						Percentage			Six Months Ended						Percentage			Three Months Ended						Percentage			Six Months Ended						Percentage
	June 30,						Increase/			June 30,						Increase/			June 30,						Increase/			June 30,						Increase/
(Dollars in millions)	2015			2014			(Decrease)			2015			2014			(Decrease)			2016			2015			(Decrease)			2016			2015			(Decrease)
Gross written premiums	$	1,089.4		$	1,224.8			-11.1	%	$	2,316.2		$	2,309.3			0.3	%	$	1,177.8		$	1,089.4			8.1	%	$	2,307.7		$	2,316.2			-0.4	%
Net written premiums		472.5			492.7			-4.1	%		980.9			992.4			-1.2	%		441.3			472.5			-6.6	%		905.3			980.9			-7.7	%

REVENUES:
Premiums earned	$	521.4		$	520.7			0.1	%	$	1,042.5		$	991.2			5.2	%	$	488.9		$	521.4			-6.2	%	$	970.8		$	1,042.5			-6.9	%
Net investment income		70.9			68.6			3.3	%		143.5			132.4			8.4	%		73.9			70.9			4.2	%		132.3			143.5			-7.8	%
Net realized capital gains (losses)		51.2			125.1			-59.1	%		72.5			121.1			-40.1	%		29.2			51.2			-43.1	%		(37.2	)		72.5			-151.3	%
Other income (expense)		12.3			(8.8	)		-239.9	%		28.1			(11.8	)	NM				(10.7	)		12.3			-187.1	%		2.4			28.1			-91.5	%
Total revenues		655.9			705.7			-7.1	%		1,286.6			1,232.8			4.4	%		581.2			655.9			-11.4	%		1,068.3			1,286.6			-17.0	%

CLAIMS AND EXPENSES:
Incurred losses and loss adjustment expenses		322.9			321.5			0.4	%		631.8			599.6			5.4	%		338.5			322.9			4.8	%		634.6			631.8			0.4	%
Commission, brokerage, taxes and fees		73.0			85.3			-14.5	%		169.5			161.4			5.0	%		72.1			73.0			-1.1	%		140.9			169.5			-16.8	%
Other underwriting expenses		51.6			47.2			9.4	%		100.1			86.4			15.9	%		58.3			51.6			13.1	%		117.6			100.1			17.4	%
Corporate expense		1.8			(0.5	)	NM				3.4			0.8		NM				2.0			1.8			12.6	%		4.3			3.4			28.0	%
Interest, fee and bond issue cost amortization expense		8.9			8.8			0.5	%		17.7			16.2			9.0	%		8.9			8.9			0.0	%		17.7			17.7			0.0	%
Total claims and expenses		458.0			462.3			-0.9	%		922.5			864.4			6.7	%		479.9			458.0			4.8	%		915.2			922.5			-0.8	%

INCOME (LOSS) BEFORE TAXES		197.8			243.4			-18.7	%		364.2			368.4			-1.2	%		101.3			197.8			-48.8	%		153.1			364.2			-58.0	%
Income tax expense (benefit)		64.0			85.2			-24.9	%		114.5			123.8			-7.5	%		33.0			64.0			-48.5	%		45.8			114.5			-59.9	%
NET INCOME (LOSS)	$	133.8		$	158.2			-15.4	%	$	249.7		$	244.6			2.1	%	$	68.4		$	133.8			-48.9	%	$	107.3		$	249.7			-57.0	%

RATIOS:							Point Change									Point Change									Point Change									Point Change
Loss ratio		61.9	%		61.7	%		0.2			60.6	%		60.5	%		0.1			69.3	%		61.9	%		7.4			65.4	%		60.6	%		4.8
Commission and brokerage ratio		14.0	%		16.4	%		(2.4	)		16.3	%		16.3	%		-			14.8	%		14.0	%		0.8			14.5	%		16.3	%		(1.8	)
Other underwriting expense ratio		9.9	%		9.1	%		0.8			9.6	%		8.7	%		0.9			11.8	%		9.9	%		1.9			12.1	%		9.6	%		2.5
Combined ratio		85.8	%		87.2	%		(1.4	)		86.5	%		85.5	%		1.0			95.9	%		85.8	%		10.1			92.0	%		86.5	%		5.5

																												At			At			Percentage
										At			At			Percentage												June 30,			December 31,			Increase/
										June 30,			December 31,			Increase/
(Dollars in millions)											2015			2014		(Decrease)													2016			2015		(Decrease)
Balance sheet data:
Total investments and cash										$	9,598.7		$	9,572.6			0.3	%										$	9,740.2		$	9,516.3			2.4	%
Total assets											16,487.1			16,322.3			1.0	%											16,924.7			16,695.2			1.4	%
Loss and loss adjustment expense reserves											7,888.3			7,843.9			0.6	%											8,247.8			7,940.7			3.9	%
Total debt											638.4			638.4			0.0	%											633.1			633.0			0.0	%
Total liabilities											11,654.3			11,749.6			-0.8	%											11,760.6			11,764.0			0.0	%
Stockholder's equity											4,832.8			4,572.7			5.7	%											5,164.1			4,931.2			4.7	%

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

Revenues.

Premiums. Gross written premiums ~~decreased~~increased by ~~11.1%~~8.1% to $1,177.8 million for the three months ended June 30, 2016, compared to $1,089.4 million for the three months ended June 30, 2015, ~~compared~~reflecting, a $97.4 million, or 29.8%, increase in our insurance business, partially offset by a $9.0 million, or 1.2%, decrease in our reinsurance business. The rise in insurance premiums was primarily due to ~~$1,224.8~~increases in most lines of business, as we have focused on expanding the insurance operations. The decline in reinsurance premiums was due mainly to a negative impact of approximately $17.2 million from the year over year movement in foreign exchange rates. Gross written premiums decreased slightly to $2,307.7 million for the ~~three~~six months

ended June 30, 2016, compared to $2,316.2 million for the six months ended June 30, ~~2014,~~2015, reflecting a ~~$156.4~~$130.1 million, or ~~17.0%~~7.8%, decrease in our reinsurance business, partially offset by a ~~$21.0~~$121.6 million, or ~~6.9%~~18.5%, increase in our insurance business. The decline in reinsurance premiums were due mainly to ~~decreases~~a decrease in treaty ~~casualty~~property business, ~~reductions~~a decrease in ~~the~~international premiums related to quota share agreements ~~from the second quarter of 2014~~ and a negative impact of approximately $32.4 million from the year over year movement in foreign exchange rates. The rise in insurance premiums was primarily due to increases in ~~property and casualty~~most lines of business, ~~partially offset by a~~

~~decline in crop premium. Gross written premiums increased by 0.3% to $2,316.2 million for~~as we have focused on expanding the ~~six months ended June 30, 2015, compared to $2,309.3 million for the six months ended June 30, 2014, reflecting a $126.3 million, or 23.8%, increase in our~~ insurance business, partially offset by a $119.3 million, or 6.7%, decrease in our reinsurance business. The rise in insurance premiums was primarily due to increases in workers' compensation, property and casualty lines of business. The decline in reinsurance premiums were due mainly to decreases in treaty casualty business, reductions in the quota share agreements from the second quarter of 2014 and a negative impact from the year over year movement in foreign exchange rates.operations.

Net written premiums decreased by ~~4.1%~~6.6% to $441.3 million for the three months ended June 30, 2016, compared to $472.5 million for the three months ended June 30, 2015, ~~compared~~and decreased by 7.7% to ~~$492.7~~$905.3 million for the ~~three~~six months ended June 30, ~~2014, and decreased by 1.2%~~2016 compared to $980.9 million for the six months ended June 30, ~~2015 compared to $992.4 million for the six months ended June 30, 2014.~~2015. The difference between the change in gross written premiums compared to the change in net written premiums is primarily due to ~~varying~~higher utilization of reinsurance mainly related to new insurance business and to quota share ~~contracts.~~agreements. Premiums earned ~~increased~~decreased by ~~0.1%~~6.2% to $488.9 million for the three months ended June 30, 2016, compared to $521.4 million for the three months ended June 30, 2015, ~~compared~~and decreased by 6.9% to ~~$520.7~~$970.8 million for the ~~three~~six months ended June 30, ~~2014, and increased by 5.2%~~2016, compared to $1,042.5 million for the six months ended June 30, ~~2015, compared to $991.2 million for the six months ended June 30, 2014.~~2015. The change in premiums earned relative to net written premiums is the result of timing; premiums are earned ratably over the coverage period whereas written premiums are recorded at the initiation of the coverage period.

Net Investment Income. Net investment income increased by ~~3.3%~~4.2% to $73.9 million for the three months ended June 30, 2016, compared with net investment income of $70.9 million for the three months ended June 30, 2015, ~~compared with net investment income of $68.6 million for the three months ended June 30, 2014,~~ and ~~increased~~decreased by ~~8.4%~~7.8% to ~~$143.5~~$132.3 million for six months ended June 30, ~~2015,~~2016, compared with net investment income of ~~$132.4~~$143.5 million for the six months ended June 30, ~~2014.~~2015. Net pre-tax investment income, as a percentage of average invested assets, was ~~3.4%~~3.2% for the three months ended June 30, ~~2015,~~2016, compared to ~~3.2%~~3.4% for the three months ended June 30, ~~2014~~2015 and was 2.8% for the six months ended June 30, 2016 compared to 3.5% for the six months ended June 30, ~~2015~~2015. The increase in income for the three months ended June 30, 2016 compared to ~~3.1%~~the prior period was primarily due to higher income from our limited partnerships, partially offset by lower reinvestment rates for the fixed income portfolios. The decline in income and yield for the six months ended June 30, ~~2014. The increase in income and yield~~2016 compared to the prior period was primarily the result of ~~an increase in~~lower reinvestment rates for the fixed income portfolios and lower income from our limited partnership income, an increase in dividends from shares held of the Parent and interest income received from the Parent on the affiliated note receivable, partially offset by lower income on fixed income securities.partnerships.

Net Realized Capital Gains (Losses). Net realized capital gains were $~~51.2~~29.2 million and ~~$125.1~~$51.2 million for the three months ended June 30, ~~2015~~2016 and ~~2014,~~2015, respectively. The ~~$51.2~~net realized capital gains of $29.2 million ~~was~~were comprised of $37.7 million of gains from fair value re-measurements on fixed maturity securities, equity securities and other invested assets, partially offset by $7.3 million of losses from sales on our fixed maturity and equity securities and $1.4 million of other-than-temporary impairments. The net realized capital gains of $51.2 million for the three months ended June 30, 2015 were the result of $72.5 million of gains from fair value re-measurements on equity securities and other invested assets, partially offset by $12.4 million of losses from sales on our fixed maturity and equity securities and $8.8 million of other-than-temporary impairments.

Net realized capital losses were $37.2 million and net realized capital gains were $72.5 million for the six months ended June 30, 2016 and 2015, respectively. The net realized capital ~~gains~~losses of ~~$125.1~~$37.2 million ~~for the three months ended June 30, 2014~~were ~~the result~~comprised of ~~$124.5~~$32.1 million of ~~gains from fair value re-measurements on equity securities and other invested assets and $0.8 million of net realized capital gains~~losses from sales on our fixed maturity and equity securities and $24.4 million of other-than-temporary impairments, partially offset by ~~$0.2~~$19.2 million of ~~other-than-temporary impairments.~~

~~Net~~gains from fair value re-measurements on fixed maturity securities, equity securities and other invested assets. The net realized capital gains ~~were $72.5~~ ~~million and $121.1~~of $72.5 million for the six months ended June 30, 2015~~and 2014, respectively.~~ ~~The $72.5 million was comprised~~ were the result of ~~$129.5~~$129.5 million of gains from fair value re-measurements on fixed maturity securities, equity securities and other invested assets, partially offset by $32.9 million of other-than-temporary impairments and $24.0 million of losses from sales on our fixed maturity and equity securities. ~~The net realized capital gains of $121.1 million~~ ~~for the six months ended June 30, 2014~~ were the result of $122.9 million of gains from fair value re-measurements on equity securities and other invested assets, partially offset by $1.6 million of net realized capital losses from sales on our fixed maturity and equity securities and $0.2 million of other-than-temporary impairments.

Other Income (Expense). We recorded other expense of $10.7 million and other income of $2.4 million for the three and six months ended June 30, 2016, respectively. We recorded other income of $12.3 million and $28.1 million for the three and six months ended June 30, 2015, respectively. ~~We recorded other expense of $8.8~~ ~~million and $11.8~~ ~~million for the three and six months ended June 30, 2014, respectively.~~ The changes were primarily the result of fluctuations in foreign currency exchange rates for the corresponding periods.

Claims and Expenses.

Incurred Losses and Loss Adjustment Expenses. The following tables present our incurred losses and loss adjustment expenses ("LAE") for the periods indicated.

	Three Months Ended June 30,																					Three Months Ended June 30,
	Current			Ratio %/				Prior			Ratio %/				Total			Ratio %/				Current			Ratio %/				Prior			Ratio %/				Total			Ratio %/
(Dollars in millions)	Year			Pt Change				Years			Pt Change				Incurred			Pt Change				Year			Pt Change				Years			Pt Change				Incurred			Pt Change
2016
Attritional																						$	300.9			61.6	%		$	2.8			0.6	%		$	303.7			62.2	%
Catastrophes																							51.5			10.5	%			(16.7	)		-3.4	%			34.8			7.1	%
Total segment																						$	352.4			72.1	%		$	(13.9	)		-2.8	%		$	338.5			69.3	%

2015
Attritional (a)	$	309.3			59.3	%		$	0.4			0.0	%		$	309.7			59.3	%		$	309.3			59.3	%		$	0.4			0.0	%		$	309.7			59.3	%
Catastrophes		18.1			3.5	%			(4.9	)		-0.9	%			13.2			2.6	%			18.1			3.5	%			(4.9	)		-0.9	%			13.2			2.6	%
Total	$	327.4			62.8	%		$	(4.5	)		-0.9	%		$	322.9			61.9	%
Total segment																						$	327.4			62.8	%		$	(4.5	)		-0.9	%		$	322.9			61.9	%

2014
Attritional ~~(a)~~	$	302.6			58.1	%		$	(1.9	)		-0.4	%		$	300.7			57.7	%
Variance 2016/2015
Attritional																						$	(8.4	)		2.3		pts	$	2.4			0.6		pts	$	(6.0	)		2.9		pts
Catastrophes		20.5			3.9	%			0.3			0.1	%			20.8			4.0	%			33.4			7.0		pts		(11.8	)		(2.5	)	pts		21.6			4.5		pts
Total	$	323.1			62.0	%		$	(1.6	)		-0.3	%		$	321.5			61.7	%

Variance 2015/2014
Attritional (a)	$	6.7			1.2		pts	$	2.3			0.4		pts	$	9.0			1.6		pts
Catastrophes		(2.4	)		(0.4	)	pts		(5.2	)		(1.0	)	pts		(7.6	)		(1.4	)	pts
Total	$	4.3			0.8		pts	$	(2.9	)		(0.6	)	pts	$	1.4			0.2		pts

(a) Attritional losses exclude catastrophe losses.
(Some amounts may not reconcile due to rounding.)
Total segment																						$	25.0			9.3		pts	$	(9.4	)		(1.9	)	pts	$	15.6			7.4		pts

		Six Months Ended June 30,																					Six Months Ended June 30,
		Current			Ratio %/				Prior			Ratio %/				Total			Ratio %/				Current			Ratio %/				Prior			Ratio %/				Total			Ratio %/
(Dollars in millions)		Year			Pt Change				Years			Pt Change				Incurred			Pt Change				Year			Pt Change				Years			Pt Change				Incurred			Pt Change
2016
Attritional																							$	594.2			61.3	%		$	0.8			0.1	%		$	595.0			61.4	%
Catastrophes																								56.7			5.8	%			(17.2	)		-1.8	%			39.6			4.0	%
Total segment																							$	651.0			67.1	%		$	(16.4	)		-1.7	%		$	634.6			65.4	%

2015
Attritional (a)		$	622.1			59.7	%		$	(1.3	)		-0.1	%		$	620.8			59.6	%		$	622.1			59.7	%		$	(1.3	)		-0.1	%		$	620.8			59.6	%
Catastrophes			18.1			1.7	%			(7.1	)		-0.7	%			11.0			1.0	%			18.1			1.7	%			(7.1	)		-0.7	%			11.0			1.0	%
Total		$	640.2			61.4	%		$	(8.4	)		-0.8	%		$	631.8			60.6	%
Total segment																							$	640.2			61.4	%		$	(8.4	)		-0.8	%		$	631.8			60.6	%

2014
Attritional ~~(a)~~		$	583.9			58.8	%		$	(2.4	)		-0.2	%		$	581.5			58.6	%
Variance 2016/2015
Attritional																							$	(27.9	)		1.6		pts	$	2.1			0.2		pts	$	(25.8	)		1.8		pts
Catastrophes			20.5			2.1	%			(2.4	)		-0.2	%			18.1			1.9	%			38.6			4.1		pts		(10.1	)		(1.1	)	pts		28.6			3.0		pts
Total		$	604.4			60.9	%		$	(4.8	)		-0.4	%		$	599.6			60.5	%
Total segment																							$	10.8			5.7		pts	$	(8.0	)		(0.9	)	pts	$	2.8			4.8		pts

Variance 2015/2014
Attritional (a)		$	38.2			0.9		pts	$	1.1			0.1		pts	$	39.3			1.0		pts
Catastrophes			(2.4	)		(0.4	)	pts		(4.7	)		(0.5	)	pts		(7.1	)		(0.9	)	pts
Total		$	35.8			0.5		pts	$	(3.6	)		(0.4	)	pts	$	32.2			0.1		pts

(a) Attritional losses exclude catastrophe losses.
(Some amounts may not reconcile due to rounding.)	(Some amounts may not reconcile due to rounding.)

Incurred losses and LAE increased by ~~0.4%~~4.8% to $338.5 million for the three months ended June 30, 2016 compared to $322.9 million for the three months ended June 30, 2015, ~~compared~~primarily due to ~~$321.5~~an increase in current year catastrophe losses of $33.4 million, partially offset by a decrease in current year attritional losses of $8.4 million and a decrease in prior years' catastrophe losses of $11.8 million, mainly related to the 2011 Japan earthquake. The current year catastrophe losses of $51.5 million for the three months ended June 30, ~~2014, primarily due~~2016 were related to ~~increases in current year attritional losses of $6.7 million resulting primarily from higher losses in~~ the ~~International segment.~~Fort McMurray Canada Wildfire ($21.9 million), U.S. Storms ($18.2 million) and the Ecuador earthquake ($11.4 million). Current year catastrophe losses were $18.1 million for the three months ended June 30, 2015 and related to the Northern Chile storms ($10.0 million) and the New South Wales storms ($8.1 million). ~~The current year catastrophe losses of $20.5 million for the three months ended June 30, 2014 were due to the Japan snowstorm ($13.2 million) and the Chilean earthquake ($7.3 million).~~

Incurred losses and LAE increased ~~by 5.4%~~slightly to $634.6 million for the six months ended June 30, 2016 compared to $631.8 million for the six months ended June 30, 2015, ~~compared~~primarily due to ~~$599.6~~an increase in current year catastrophe losses of $38.6 million, partially offset by a decrease in current year attritional losses of $27.9 million and a decrease in prior years' catastrophe losses of $10.1 million, mainly related to the 2011 Japan earthquake. The current year catastrophe losses of $56.7 million for the six months ended June 30, ~~2014, primarily due~~2016 were related to ~~increases in~~the Fort McMurray Canada Wildfire ($21.9 million), U.S. Storms ($18.2 million), the Ecuador earthquake ($11.4 million) and the Taiwan earthquake ($5.2 million). The current ~~year attritional losses of $38.2 million resulting primarily from the impact of the increase in premiums earned. Current~~ year catastrophe losses were $18.1 million for the six months ended June 30, 2015 and related to the Northern Chile storms ($10.0 million) and the New South Wales storms ($8.1 million). ~~The current year catastrophe losses of $20.5 million for the six months ended June 30, 2014 were due to the Japan snowstorm ($13.2 million) and the Chilean earthquake ($7.3 million).~~

Commission, Brokerage, Taxes and Fees. Commission, brokerage, taxes and fees decreased by ~~14.5%~~1.1% to ~~$73.0~~$72.1 million for the three months ended June 30, ~~2015~~2016 compared to $~~85.3~~73.0 million for the three months ended June 30, ~~2014. The quarter over quarter decline was mainly due to the impact of changes related to affiliated quota share agreements.~~2015. Commission, brokerage, taxes and fees ~~increased~~decreased by ~~5.0%~~16.8% to $140.9 million for the six months ended June 30, 2016 compared to $169.5 million for the six months ended June 30, ~~2015 compared to $161.4 million for the six months ended June 30, 2014. The year over year change was~~2015. These changes were primarily due to the impact of the ~~increase~~decline in premiums earned and changes in the mix of business.

Other Underwriting Expenses. Other underwriting expenses were ~~$51.6~~$58.3 million and ~~$47.2~~$51.6 million for the three months ended June 30, 2016 and 2015, ~~and 2014, respectively,~~respectively. Other underwriting expenses were $117.6 million and $100.1 ~~million and $86.4~~ million for the six months ended June 30, ~~2015~~2016 and ~~2014,~~2015, respectively. The increases in other underwriting expenses were mainly due to costs incurred related to the ~~impact~~expansion of ~~the increase in premiums earned and growth in~~ the insurance operations.

Corporate Expenses. Corporate expenses, which are general operating expenses that are not allocated to segments, were ~~$1.8~~$2.0 million and ~~($0.5)~~$1.8 million for the three months ended June 30, ~~2015~~2016 and ~~2014,~~2015, respectively, and ~~$3.4~~$4.3 million and ~~$0.8~~$3.4 million for the six months ended June 30, 2016 and 2015, ~~and 2014,~~ respectively. ~~The increases in corporate expenses were mainly due to the timing of allocations and higher benefit plan costs.~~

Interest, Fees and Bond Issue Cost Amortization Expense. Interest, fees and other bond amortization expense ~~was~~remained the same at $8.9 ~~million and $8.8~~ million for the three months ended June 30, ~~2015~~2016 and ~~2014, respectively,~~2015. Interest, fees and other bond amortization remained the same at $17.7 ~~million and $16.2~~ million for the six months ended June 30, ~~2015~~2016 and 2014, respectively. The six months year over year increase was primarily due to the issuance of $400.0 million of senior notes in June, 2014, partially offset by the maturity of $250.0 million of senior notes on October 15, 2014.2015.

Income Tax Expense (Benefit). Income tax expense was ~~$64.0~~$33.0 million and ~~$85.2~~$64.0 million for the three months ended June 30, 2016 and 2015, ~~and 2014, respectively, and $114.5~~respectively. Income tax expense was $45.8 million and ~~$123.8~~$114.5 million for the six months ended June 30, ~~2015~~2016 and ~~2014,~~2015, 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, as affected by tax-exempt investment income. Variations in the income tax expense 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. The decreases in income tax expenses for the three and six months ended June 30, ~~2015~~2016 compared to ~~2014~~the three and six months ended June 30, 2015 were ~~primarily~~mainly due to ~~lower net realized capital gains~~the increase in ~~the U.S.~~current year catastrophe losses.

Net Income (Loss).

Our net income was ~~$133.8~~$68.4 million and ~~$158.2~~$133.8 million for the three months ended June 30, 2016 and 2015, ~~and 2014, respectively,~~respectively. Our net income was $107.3 million and $249.7 ~~million and $244.6~~ million for the six months ended June 30, ~~2015~~2016 and ~~2014,~~2015, respectively. The changes were primarily driven by the financial component fluctuations explained above.

Ratios.

Our combined ratio ~~decreased~~increased by ~~1.4~~10.1 points to 95.9% for the three months ended June 30, 2016, compared to 85.8% for the three months ended June 30, 2015, ~~compared~~and increased by 5.5 points to ~~87.2%~~92.0% for the ~~three~~six months ended June 30, ~~2014, and increased by 1.0 point~~2016, compared to 86.5% for the six months ended June 30, ~~2015, compared to 85.5% for the six months ended June 30, 2014.~~2015. The loss ratio component increased ~~slightly~~ by ~~0.2~~7.4 points and ~~0.1~~4.8 points for the three and six months ended June 30, 2015, respectively, over the same period last year. The commission and brokerage ratio components decreased 2.4 points for the three months ended June 30, 2015, over the same period last year, primarily due to changes related to affiliated quota share agreements and remained flat for the six months ended June 30, 2015 compared to the same period last year. The other underwriting expense ratio components increased 0.8 points and 0.9 points for the three and six months ended June 30, 2015,2016, respectively, over the same period last year mainly due to the increases of $33.4 million and $38.6 million in current year catastrophe losses. The commission and brokerage ratio components increased 0.8 points for the three months ended June 30, 2016, over the same period last year and decreased 1.8 points

for the six months ended June 30, 2016 compared to the same period last year. The variances are due to the impact of ~~increases in premiums earned~~affiliated quota share agreements and ~~growth~~changes in the mix of business. The other underwriting expense ratio components increased 1.9 points and 2.5 points for the three and six months ended June 30, 2016, respectively, over the same period last year mainly due to the increased focus on the expansion of the insurance ~~operations.~~

business.

Stockholder's Equity.

Stockholders' equity increased by ~~$260.1~~$232.8 million to ~~$4,832.8~~$5,164.1 million at June 30, ~~2015~~ 2016 from ~~$4,572.7~~$4,931.2 million at December 31, ~~2014,~~2015, principally as a result of ~~$249.7~~$107.3 million of net income, ~~$17.3~~$84.7 million of net unrealized appreciation on investments, net of tax, ~~$7.0~~$30.4 million of net foreign currency translation adjustments, $7.7 million of share-based compensation transactions and ~~$3.2~~$2.7 million of net benefit plan obligation ~~adjustments, partially offset by $17.2 million of net foreign currency translation~~ adjustments.

Consolidated Investment Results

Net Investment Income.

Net investment income increased ~~3.3%~~4.2% to $73.9 million for the three months ended June 30, 2016 compared to $70.9 million for the three months ended June 30, 2015, ~~compared~~primarily due to ~~$68.6~~an increase in limited partnership income, partially offset by lower reinvestment rates for the fixed income portfolios. Net investment income decreased by 7.8% to $132.3 million for the ~~three~~six months ended June 30, ~~2014, and increased by 8.4%~~2016 compared to $143.5 million for the six months ended June 30, 2015, ~~compared to $132.4 million for the six months ended June 30, 2014. These increases were~~ primarily due to ~~an increase~~a decline in income from ~~our~~fixed maturities, reflective of lower reinvestment rates, and a decline in income from limited partnership investments, an increase in dividends from Parent's shares and interest income received from the Parent on the affiliated note receivable, partially offset by lower income on fixed income securities.partnerships.

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

	Three Months Ended						Six Months Ended						Three Months Ended						Six Months Ended
	June 30,						June 30,						June 30,						June 30,
(Dollars in millions)	2015			2014			2015			2014			2016			2015			2016			2015
Fixed maturities	$	46.4		$	53.9		$	94.4		$	105.0		$	44.8		$	46.4		$	90.1		$	94.4
Equity securities		9.9			9.2			18.6			18.1			8.8			9.9			17.9			18.6
Short-term investments and cash		0.3			0.5			0.5			0.6			0.3			0.3			0.6			0.5
Other invested assets
Limited partnerships		7.3			2.7			14.7			(0.4	)		14.2			7.3			11.7			14.7
Dividends from Parent's shares		9.3			7.3			18.5			14.6			-			9.3			-			18.5
Dividends from preferred shares of affiliate														7.7			-			15.5			-
Other		1.0			0.3			1.6			2.4			0.7			1.0			(0.2	)		1.6
Gross investment income before adjustments		74.2			73.9			148.3			140.3			76.5			74.2			135.6			148.3
Funds held interest income (expense)		0.9			1.2			3.4			3.3			0.9			0.9			3.6			3.4
Interest income from Parent		1.1			-			2.2			-			1.1			1.1			2.2			2.2
Gross investment income		76.1			75.1			153.8			143.6			78.5			76.1			141.3			153.8
Investment expenses		(5.2	)		(6.4	)		(10.3	)		(11.2	)		(4.6	)		(5.2	)		(9.0	)		(10.3	)
Net investment income	$	70.9		$	68.6		$	143.5		$	132.4		$	73.9		$	70.9		$	132.3		$	143.5

(Some amounts may not reconcile due to rounding.)

The following tables show a comparison of various investment yields for the periods indicated:

At At
June 30, December 31,
2015 2014
Imbedded pre-tax yield of cash and invested assets at December 31 3.0% 3.1%
Imbedded after-tax yield of cash and invested assets at December 31 2.1% 2.2%

Three Months Ended Six Months Ended
June 30, June 30,
2015 2014 2015 2014
Annualized pre-tax yield on average cash and invested assets 3.4% 3.2% 3.5% 3.1%
Annualized after-tax yield on average cash and invested assets 2.4% 2.2% 2.4% 2.2%

	At	At
	June 30,	December 31,
	2016	2015
Imbedded pre-tax yield of cash and invested assets at December 31	2.8%	2.9%
Imbedded after-tax yield of cash and invested assets at December 31	2.0%	2.1%

	Three Months Ended		Six Months Ended
	June 30,		June 30,
	2016	2015	2016	2015
Annualized pre-tax yield on average cash and invested assets	3.2%	3.4%	2.8%	3.5%
Annualized after-tax yield on average cash and invested assets	2.2%	2.4%	2.0%	2.4%

Net Realized Capital Gains (Losses).

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

	Three Months Ended June 30,									Six Months Ended June 30,									Three Months Ended June 30,									Six Months Ended June 30,
(Dollars in millions)	2015			2014			Variance			2015			2014			Variance			2016			2015			Variance			2016			2015			Variance
Gains (losses) from sales:
Fixed maturity securities, market value
Gains	$	5.1		$	3.8		$	1.3		$	7.6		$	5.1		$	2.5		$	6.1		$	5.1		$	1.0		$	7.6		$	7.6		$	-
Losses		(17.3	)		(4.7	)		(12.6	)		(31.3	)		(8.0	)		(23.3	)		(3.9	)		(17.3	)		13.4			(22.2	)		(31.3	)		9.1
Total		(12.2	)		(0.9	)		(11.3	)		(23.7	)		(2.9	)		(20.8	)		2.2			(12.2	)		14.4			(14.6	)		(23.7	)		9.1

Fixed maturity securities, fair value
Gains		-			-			-			-			1.2			(1.2	)		-			-			-			-			-			-
Losses		-			-			-			-			(0.3	)		0.3			(1.9	)		-			(1.9	)		(1.9	)		-			(1.9	)
Total		-			-			-			-			0.9			(0.9	)		(1.9	)		-			(1.9	)		(1.9	)		-			(1.9	)

Equity securities, fair value
Gains		7.3			3.7			3.6			12.4			10.3			2.1			4.8			7.3			(2.5	)		6.6			12.4			(5.8	)
Losses		(7.6	)		(2.0	)		(5.6	)		(12.8	)		(9.9	)		(2.9	)		(12.5	)		(7.6	)		(4.9	)		(22.2	)		(12.8	)		(9.4	)
Total		(0.3	)		1.7			(2.0	)		(0.4	)		0.4			(0.8	)		(7.7	)		(0.3	)		(7.4	)		(15.6	)		(0.4	)		(15.2	)

Total net realized gains (losses) from sales
Gains		12.4			7.5			4.9			20.1			16.6			3.5			10.9			12.4			(1.5	)		14.2			20.1			(5.9	)
Losses		(24.9	)		(6.7	)		(18.2	)		(44.1	)		(18.2	)		(25.9	)		(18.2	)		(24.9	)		6.7			(46.3	)		(44.1	)		(2.2	)
Total		(12.4	)		0.8			(13.2	)		(24.0	)		(1.6	)		(22.4	)		(7.3	)		(12.4	)		5.2			(32.1	)		(24.0	)		(8.1	)

Other than temporary impairments:		(8.8	)		(0.2	)		(8.6	)		(32.9	)		(0.2	)		(32.7	)		(1.4	)		(8.8	)		7.4			(24.4	)		(32.9	)		8.5

Gains (losses) from fair value adjustments:
Fixed maturities, fair value		-			-			-			0.1			-			0.1			1.5			-			1.5			1.3			0.1			1.2
Equity securities, fair value		(5.3	)		52.2			(57.5	)		15.6			78.0			(62.4	)		37.0			(5.3	)		42.3			18.7			15.6			3.1
Other invested assets, fair value		77.8			72.3			5.5			113.8			44.9			68.9			(0.8	)		77.8			(78.6	)		(0.8	)		113.8			(114.6	)
Total		72.5			124.5			(52.0	)		129.5			122.9			6.6			37.7			72.5			(34.8	)		19.2			129.5			(110.3	)

Total net realized gains (losses)	$	51.2		$	125.1		$	(73.9	)	$	72.5		$	121.1		$	(48.6	)	$	29.2		$	51.2		$	(22.0	)	$	(37.2	)	$	72.5		$	(109.7	)

(Some amounts may not reconcile due to rounding)

Net realized capital gains were ~~$51.2~~$29.2 million and ~~$125.1~~$51.2 million for the three months ended June 30, ~~2015~~2016 and ~~2014,~~2015, respectively. For the three months ended June 30, 2016, we recorded $37.7 million of net realized capital gains due to fair value re-measurements on fixed maturity securities, equity securities and other invested assets, partially offset by $7.3 million of net realized capital losses from sales of fixed maturity and equity securities and $1.4 million of other-than-temporary impairments. For the three months ended June 30, 2015, we recorded $72.5 million of net realized capital gains due to fair value re-measurements on equity securities and other invested assets, partially offset by $12.4 million of net realized capital losses from sales of fixed maturity and equity securities and $8.8 million of other-than-temporary impairments. The fixed maturity and equity sales for the three months ended June 30, 2016 and June 30, 2015, respectively, related primarily to adjusting the portfolios for overall market changes and individual credit shifts. ~~For~~

Net realized capital losses were $37.2 million and net realized capital gains were $72.5 million for the ~~three~~six months ended June 30, ~~2014,~~2016 and 2015, respectively. For the six months ended June 30, 2016, we recorded ~~$124.5~~$32.1 million of net realized capital losses from sales of fixed maturity and equity securities and $24.4 million of other-than-temporary impairments, partially offset by $19.2 million of net realized capital gains due to fair value re-measurements on fixed maturity securities, equity securities and other invested ~~assets and $0.8 million of net realized capital gains from sales of fixed maturity and equity securities, partially offset by $0.2 million of other-than-temporary impairments.~~

~~Net realized capital gains were $72.5 million and $121.1 million~~ ~~for the six months ended June 30, 2015~~ ~~and 2014, respectively.~~assets. For the six months ended June 30, 2015, we recorded $129.5 million of net realized capital gains due to fair value re-measurements on fixed maturity securities, equity securities and other invested assets, partially offset by $32.9 million of other-than-temporary impairments and $24.0 million of net realized capital losses from sales of fixed maturity and equity securities. The fixed maturity and equity sales for the six months ended June 30, 2016 and June 30, 2015, respectively, related primarily to adjusting the portfolios for overall market changes and individual credit shifts. ~~For the six months ended June 30, 2014, we recorded $122.9 million of net realized capital gains due to fair value re-measurements on equity securities and other invested~~

~~assets, partially offset by $1.6 million of net realized capital losses from sales of fixed maturity and equity securities and $0.2 million of other-than-temporary impairments.~~

Segment Results.

The U.S. Reinsurance operation writes property and casualty reinsurance and specialty lines of business, including Marine, Aviation, Surety and A&H business, on both a treaty and facultative basis, through reinsurance brokers, as well as directly with ceding companies primarily within the U.S. The International operation writes non-U.S. property and casualty reinsurance through Everest Re's branches in Canada, Singapore and through offices in Brazil, Miami and New Jersey. The Insurance operation writes property and casualty insurance directly and through general agents, brokers and surplus lines brokers mainly within the U.S.

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

Our loss and LAE reserves are ~~our~~management's best estimate of our ultimate liability for unpaid claims. We re-evaluate our estimates on an ongoing basis, including all prior period reserves, taking into consideration all available information and, in particular, recently reported loss claim experience and trends related to prior periods. Such re-evaluations are recorded in incurred losses in the period in which the re-evaluation is made.

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

U.S. Reinsurance.

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

	Three Months Ended June 30,												Six Months Ended June 30,												Three Months Ended June 30,												Six Months Ended June 30,
(Dollars in millions)	2015			2014			Variance			% Change			2015			2014			Variance			% Change			2016			2015			Variance			% Change			2016			2015			Variance			% Change
Gross written premiums	$	451.1		$	453.1		$	(2.1	)		-0.5	%	$	1,013.7		$	983.4		$	30.3			3.1	%	$	405.5		$	451.1		$	(45.6	)		-10.1	%	$	942.2		$	1,013.7		$	(71.5	)		-7.1	%
Net written premiums		184.7			215.1			(30.4	)		-14.1	%		425.4			466.6			(41.2	)		-8.8	%		161.0			184.7			(23.7	)		-12.8	%		384.5			425.4			(40.9	)		-9.6	%

Premiums earned	$	235.4		$	246.3		$	(10.8	)		-4.4	%	$	490.8		$	464.5		$	26.4			5.7	%	$	224.6		$	235.4		$	(10.8	)		-4.6	%	$	459.9		$	490.8		$	(31.0	)		-6.3	%
Incurred losses and LAE		116.5			129.7			(13.2	)		-10.2	%		227.9			245.7			(17.7	)		-7.2	%		110.2			116.5			(6.3	)		-5.4	%		226.3			227.9			(1.6	)		-0.7	%
Commission and brokerage		34.7			53.4			(18.7	)		-35.0	%		93.1			93.5			(0.4	)		-0.5	%		50.1			34.7			15.4			44.4	%		99.9			93.1			6.8			7.3	%
Other underwriting expenses		11.8			11.5			0.4			3.1	%		23.3			20.9			2.4			11.5	%		12.1			11.8			0.3			2.8	%		25.6			23.3			2.3			9.7	%
Underwriting gain (loss)	$	72.4		$	51.8		$	20.7			40.0	%	$	146.5		$	104.3		$	42.2			40.4	%	$	52.2		$	72.4		$	(20.2	)		-27.9	%	$	108.1		$	146.5		$	(38.4	)		-26.2	%

										Point Chg												Point Chg												Point Chg												Point Chg
Loss ratio		49.5	%		52.7	%					(3.2	)		46.4	%		52.9	%					(6.5	)		49.0	%		49.5	%					(0.4	)		49.2	%		46.4	%					2.8
Commission and brokerage ratio		14.7	%		21.7	%					(7.0	)		19.0	%		20.1	%					(1.1	)		22.3	%		14.7	%					7.6			21.7	%		19.0	%					2.7
Other underwriting expense ratio		5.0	%		4.6	%					0.4			4.8	%		4.5	%					0.3
Other underwriting ratio																										5.5	%		5.0	%					0.5			5.6	%		4.8	%					0.8
Combined ratio		69.2	%		79.0	%					(9.8	)		70.2	%		77.5	%					(7.3	)		76.8	%		69.2	%					7.6			76.5	%		70.2	%					6.2

(Some amounts may not reconcile due to rounding)
(Some amounts may not reconcile due to rounding.)

Premiums. Gross written premiums decreased by ~~0.5%~~10.1% to $405.5 million for the three months ended June 30, 2016 from $451.1 million for the three months ended June 30, 2015 ~~from $453.1~~, primarily due to a decrease in treaty property business, partially offset by an increase in treaty casualty business. Net written premiums decreased by 12.8% to $161.0 million for the three months ended June 30, ~~2014~~2016~~, primarily due to a decrease in treaty casualty business, partially offset by an increase in treaty property business. Net written premiums decreased by 14.1%~~ compared to $184.7 million for the three months ended June 30, 2015 ~~compared~~, which is consistent with the change in written premiums. Premiums earned decreased 4.6% to ~~$215.1~~$224.6 million for the three months ended June 30, ~~2014~~2016~~. The difference between the change in gross written premiums~~ compared ~~to the change in net written premiums was due to a higher utilization of reinsurance primarily related to affiliated quota share contracts. Premiums earned decreased 4.4%~~ to $235.4 million for the three months ended June 30, 2015 ~~compared to $246.3 million~~ ~~for the three months ended June 30, 2014~~. The change in premiums earned relative to net written premiums is 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.

Gross written premiums ~~increased~~decreased by ~~3.1%~~7.1% to $942.2 million for the six months ended June 30, 2016 from $1,013.7 million for the six months ended June 30, 2015 ~~from $983.4~~, primarily due to a decrease in treaty property business. Net written premiums decreased by 9.6% to $384.5 million for the six months ended June 30, ~~2014~~2016~~, primarily due to an increase in treaty property business, partially offset by a decline in treaty casualty business. Net written premiums decreased by 8.8%~~ compared to $425.4 million for the six months ended June 30, 2015 ~~compared~~, which is consistent with the change in written premiums. Premiums earned decreased 6.3% to ~~$466.6~~$459.9 million for the six months ended June 30, ~~2014~~2016~~. The variance between the increase in gross written premiums~~ compared ~~to the decrease in net written premiums is primarily due to a higher utilization of reinsurance primarily related to affiliated quota share contracts. Premiums earned increased 5.7%~~ to $490.8 million for the six months ended June 30, 2015. The change in premiums earned relative to net written premiums is 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.

Incurred Losses and LAE. The following tables present the incurred losses and LAE for the U.S. Reinsurance segment for the periods indicated.

	Three Months Ended June 30,
	Current			Ratio %/				Prior			Ratio %/				Total			Ratio %/
(Dollars in millions)	Year			Pt Change				Years			Pt Change				Incurred			Pt Change
2016
Attritional	$	117.1			52.2	%		$	1.9			0.8	%		$	119.0			53.1	%
Catastrophes		1.4			0.6	%			(10.2	)		-4.6	%			(8.8	)		-3.9	%
Total segment	$	118.5			52.9	%		$	(8.4	)		-3.8	%		$	110.2			49.0	%

2015
Attritional	$	135.4			57.5	%		$	(15.3	)		-6.5	%		$	120.1			51.0	%
Catastrophes		-			0.0	%			(3.6	)		-1.5	%			(3.6	)		-1.5	%
Total segment	$	135.4			57.5	%		$	(18.9	)		-8.0	%		$	116.5			49.5	%

Variance 2016/2015
Attritional	$	(18.3	)		(5.3	)	pts	$	17.2			7.3		pts	$	(1.1	)		2.1		pts
Catastrophes		1.4			0.6		pts		(6.6	)		(3.1	)	pts		(5.2	)		(2.4	)	pts
Total segment	$	(16.9	)		(4.7	)	pts	$	10.6			4.2		pts	$	(6.3	)		(0.4	)	pts

	Six Months Ended June 30,
	Current			Ratio %/				Prior			Ratio %/				Total			Ratio %/
(Dollars in millions)	Year			Pt Change				Years			Pt Change				Incurred			Pt Change
2016
Attritional	$	235.4			51.2	%		$	(0.4	)		-0.1	%		$	235.1			51.1	%
Catastrophes		1.4			0.3	%			(10.2	)		-2.2	%			(8.8	)		-1.9	%
Total segment	$	236.9			51.5	%		$	(10.6	)		-2.3	%		$	226.3			49.2	%

2015
Attritional	$	252.9			51.5	%		$	(18.9	)		-3.9	%		$	233.9			47.6	%
Catastrophes		-			0.0	%			(6.0	)		-1.2	%			(6.0	)		-1.2	%
Total segment	$	252.9			51.5	%		$	(24.9	)		-5.1	%		$	227.9			46.4	%

Variance 2016/2015
Attritional	$	(17.5	)		(0.3	)	pts	$	18.5			3.8		pts	$	1.2			3.5		pts
Catastrophes		1.4			0.3		pts		(4.2	)		(1.0	)	pts		(2.8	)		(0.7	)	pts
Total segment	$	(16.0	)		-		pts	$	14.3			2.8		pts	$	(1.6	)		2.8		pts

(Some amounts may not reconcile due to rounding.)

Incurred losses decreased by 5.4% to $110.2 million for the three months ended June 30, 2016 compared to ~~$464.5~~$116.5 million for the three months ended June 30, 2015, primarily due to an $18.3 million decrease in current year attritional losses resulting primarily from the impact of the decline in premiums earned and favorable year over year development of $6.6 million on prior years' catastrophe losses mainly related to the 2011 Japan earthquake. These declines were partially offset by in a reduction in favorable development on prior years' attritional losses related to treaty casualty and marine business in 2015 and $1.4 million in current year catastrophe losses. The $1.4 million of current year catastrophe losses were mainly due to the 2016 U.S. storms. There were no current year catastrophe losses for the three months ended June 30, 2015.

Incurred losses decreased by 0.7% to $226.3 million for the six months ended June 30, ~~2014~~2016 compared to $227.9 million for the six months ended June 30, 2015, primarily due to a $17.5 million decrease in current year attritional losses resulting primarily from the impact of the decline in premiums earned and favorable year over year development of $4.2 million on prior years' catastrophe losses mainly related to the 2011 Japan earthquake. These declines were partially offset by a reduction in favorable development on prior years' attritional losses related to treaty casualty and marine business in 2015 and $1.4 million in current

year catastrophe losses. The $1.4 million of current year catastrophe losses were mainly due to the 2016 U.S. storms. There were no current year catastrophe losses for the six months ended June 30, 2015.

Segment Expenses. Commission and brokerage increased by 44.4% to $50.1 million for the three months ended June 30, 2016 compared to $34.7 million for the three months ended June 30, 2015. Commission and brokerage increased by 7.3% to $99.9 million for the six months ended June 30, 2016 compared to $93.1 million for the six months ended June 30, 2015. The increases were mainly due to the impact from affiliated quota share agreements and changes in the mix of business.

Segment other underwriting expenses were comparable at $12.1 million for the three months ended June 30, 2016 and $11.8 million for the three months ended June 30, 2015. Segment other underwriting expenses increased to $25.6 million for the six months ended June 30, 2016 from $23.3 million for the six months ended June 30, 2015, which was mainly due to increased compensation and benefit plan costs.

International.

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

	Three Months Ended June 30,												Six Months Ended June 30,
(Dollars in millions)	2016			2015			Variance			% Change			2016			2015			Variance			% Change
Gross written premiums	$	348.2		$	311.7		$	36.5			11.7	%	$	586.7		$	645.3		$	(58.6	)		-9.1	%
Net written premiums		124.4			147.4			(23.0	)		-15.6	%		212.2			269.1			(56.9	)		-21.2	%

Premiums earned	$	131.3		$	157.9		$	(26.6	)		-16.9	%	$	244.5		$	298.6		$	(54.2	)		-18.1	%
Incurred losses and LAE		91.4			110.0			(18.6	)		-16.9	%		164.8			211.5			(46.6	)		-22.1	%
Commission and brokerage		26.1			31.2			(5.1	)		-16.3	%		52.3			65.2			(13.0	)		-19.9	%
Other underwriting expenses		8.0			8.0			-			NM			15.8			16.2			(0.4	)		-2.3	%
Underwriting gain (loss)	$	5.7		$	8.6		$	(2.9	)		-33.2	%	$	11.6		$	5.7		$	5.8			101.8	%

										Point Chg												Point Chg
Loss ratio		69.6	%		69.7	%					(0.1	)		67.4	%		70.8	%					(3.4	)
Commission and brokerage ratio		19.9	%		19.8	%					0.1			21.4	%		21.8	%					(0.4	)
Other underwriting ratio		6.1	%		5.1	%					1.0			6.5	%		5.5	%					1.0
Combined ratio		95.6	%		94.6	%					1.0			95.3	%		98.1	%					(2.8	)

(NM, not meaningful)

Premiums. Gross written premiums increased by 11.7% to $348.2 million for the three months ended June 30, 2016 compared to $311.7 million for the three months ended June 30, 2015, primarily due to a negative impact on premiums during the second quarter of 2015 related to quota share agreements, partially offset by declines in Latin American and Asian business and the negative impact of approximately $17.1 million from the movement of foreign exchange rates. Net written premiums decreased by 15.6% to $124.4 million for the three months ended June 30, 2016 compared to $147.4 million for the three months ended June 30, 2015. The difference between the change in gross written premiums compared to the change in net written premiums is primarily due to varying utilization of reinsurance related to the quota share contracts. Premiums earned decreased 16.9% to $131.3 million for the three months ended June 30, 2016 compared to $157.9 million for the three months ended June 30, 2015. The change in premiums earned relative to net written premiums is 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.

Gross written premiums decreased by 9.1% to $586.7 million for the six months ended June 30, 2016 compared to $645.3 million for the six months ended June 30, 2015, primarily due to declines in Latin American and Asian business and the negative impact of approximately $31.9 million from the movement of foreign exchange rates, partially offset by the negative impact on premiums during the second quarter of 2015 related to quota share agreements. Net written premiums decreased by 21.1% to $212.2 million for the six months ended June 30, 2016 compared to $269.1 million for the six months ended June 30, 2015. The difference between the change in gross written premiums compared to the change in net written premiums is primarily due to varying utilization of reinsurance related to the quota share contracts.

Premiums earned decreased 18.1% to $244.5 million for the six months ended June 30, 2016 compared to $298.6 million for the six months ended June 30, 2015. The change in premiums earned relative to net written premiums is 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.

Incurred Losses and LAE. The following tables present the incurred losses and LAE for the ~~U.S. Reinsurance~~International segment for the periods indicated.

	Three Months Ended June 30,																					Three Months Ended June 30,
	Current			Ratio %/				Prior			Ratio %/				Total			Ratio %/				Current			Ratio %/				Prior			Ratio %/				Total			Ratio %/
(Dollars in millions)	Year			Pt Change				Years			Pt Change				Incurred			Pt Change				Year			Pt Change				Years			Pt Change				Incurred			Pt Change
2016
Attritional																						$	65.0			49.5	%		$	(0.6	)		-0.4	%		$	64.4			49.1	%
Catastrophes																							33.4			25.4	%			(6.4	)		-4.9	%			27.0			20.5	%
Total segment																						$	98.4			74.9	%		$	(7.0	)		-5.3	%		$	91.4			69.6	%

2015
Attritional	$	135.4			57.5	%		$	(15.3	)		-6.5	%		$	120.1			51.0	%		$	94.1			59.7	%		$	(0.9	)		-0.7	%		$	93.2			59.0	%
Catastrophes		-			0.0	%			(3.6	)		-1.5	%			(3.6	)		-1.5	%			18.1			11.5	%			(1.3	)		-0.8	%			16.8			10.7	%
Total segment	$	135.4			57.5	%		$	(18.9	)		-8.0	%		$	116.5			49.5	%		$	112.2			71.2	%		$	(2.2	)		-1.5	%		$	110.0			69.7	%

2014
Variance 2016/2015
Attritional	$	127.4			51.7	%		$	(1.6	)		-0.6	%		$	125.8			51.1	%		$	(29.1	)		(10.2	)	pts	$	0.3			0.3		pts	$	(28.8	)		(9.9	)	pts
Catastrophes		3.2			1.3	%			0.7			0.3	%			3.9			1.6	%			15.3			13.9		pts		(5.1	)		(4.1	)	pts		10.2			9.9		pts
Total segment	$	130.6			53.0	%		$	(0.9	)		-0.3	%		$	129.7			52.7	%		$	(13.8	)		3.8		pts	$	(4.8	)		(3.8	)	pts	$	(18.6	)		(0.1	)	pts

Variance 2015/2014
Attritional	$	8.0			5.8		pts	$	(13.7	)		(5.9	)	pts	$	(5.7	)		(0.1	)	pts
Catastrophes		(3.2	)		(1.3	)	pts		(4.3	)		(1.8	)	pts		(7.5	)		(3.1	)	pts
Total segment	$	4.8			4.5		pts	$	(18.0	)		(7.7	)	pts	$	(13.2	)		(3.2	)	pts

(Some amounts may not reconcile due to rounding.)

		Six Months Ended June 30,																					Six Months Ended June 30,
		Current			Ratio %/				Prior			Ratio %/				Total			Ratio %/				Current			Ratio %/				Prior			Ratio %/				Total			Ratio %/
(Dollars in millions)		Year			Pt Change				Years			Pt Change				Incurred			Pt Change				Year			Pt Change				Years			Pt Change				Incurred			Pt Change
2016
Attritional																							$	136.4			55.8	%		$	(3.4	)		-1.4	%		$	133.0			54.4	%
Catastrophes																								38.6			15.8	%			(6.8	)		-2.8	%			31.8			13.0	%
Total segment																							$	175.0			71.6	%		$	(10.2	)		-4.2	%		$	164.8			67.4	%

2015
Attritional		$	252.9			51.5	%		$	(18.9	)		-3.9	%		$	233.9			47.6	%		$	193.8			65.0	%		$	0.7			0.1	%		$	194.5			65.1	%
Catastrophes			-			0.0	%			(6.0	)		-1.2	%			(6.0	)		-1.2	%			18.1			6.1	%			(1.2	)		-0.4	%			17.0			5.7	%
Total segment		$	252.9			51.5	%		$	(24.9	)		-5.1	%		$	227.9			46.4	%		$	211.9			71.1	%		$	(0.5	)		-0.3	%		$	211.5			70.8	%

2014
Attritional		$	248.0			53.3	%		$	(4.8	)		-1.0	%		$	243.2			52.3	%
Catastrophes			3.2			0.7	%			(0.7	)		-0.1	%			2.5			0.6	%
Total segment		$	251.2			54.0	%		$	(5.5	)		-1.1	%		$	245.7			52.9	%

Variance 2015/2014
Variance 2016/2015
Attritional		$	4.9			(1.8	)	pts	$	(14.1	)		(2.9	)	pts	$	(9.2	)		(4.7	)	pts	$	(57.4	)		(9.2	)	pts	$	(4.1	)		(1.5	)	pts	$	(61.5	)		(10.7	)	pts
Catastrophes			(3.2	)		(0.7	)	pts		(5.3	)		(1.1	)	pts		(8.5	)		(1.8	)	pts		20.5			9.7		pts		(5.6	)		(2.4	)	pts		14.8			7.3		pts
Total segment		$	1.7			(2.5	)	pts	$	(19.4	)		(4.0	)	pts	$	(17.7	)		(6.5	)	pts	$	(36.9	)		0.5		pts	$	(9.7	)		(3.9	)	pts	$	(46.6	)		(3.4	)	pts

(Some amounts may not reconcile due to rounding.)	(Some amounts may not reconcile due to rounding.)

Incurred losses and LAE decreased by ~~10.2%~~16.9% to ~~$116.5~~$91.4 million for the three months ended June 30, ~~2015~~2016 compared to ~~$129.7~~$110.0 million for the three months ended June 30, ~~2014~~2015, primarily due to a decrease in ~~prior years'~~current year attritional losses of ~~$13.7~~$29.1 million, ~~related~~mainly due to ~~treaty casualty and marine lines~~the impact of ~~business and favorable development of $4.3 million on prior years' catastrophe losses~~the decrease in ~~2015 compared to 2014 mainly related to U.S. Storms,~~premiums earned, partially offset by an increase in current year ~~attritional~~catastrophe losses of ~~$8.0~~$15.3 million. ~~There were no current year catastrophe losses~~ ~~for the three months ended June 30, 2015.~~ The ~~$3.2~~$33.4 million of current year catastrophe losses for the three months ended June 30, ~~2014 related to the Japan snowstorm.~~

~~Incurred losses decreased by 7.2% to $227.9 million~~ ~~for the six months ended June 30, 2015~~ ~~compared to $245.7 million~~ ~~for the six months ended June 30, 2014~~, primarily due to a decrease in prior years' attritional losses of $14.1 million related to treaty casualty and marine lines of business and favorable development of $5.3 million on prior years' catastrophe losses in 2015 compared to 2014 mainly related to U.S. Storms, partially offset by an increase in current year attritional losses of $4.9 million. There2016 were ~~no current year catastrophe losses~~ ~~for the six months ended June 30, 2015. The $3.2 million of current year catastrophe losses for the six months ended June 30, 2014 related to the Japan snowstorm.~~

~~Segment Expenses.~~ ~~Commission and brokerage decreased by 35.0% to $34.7 million~~ ~~for the three months ended June 30, 2015~~ ~~compared to $53.4 million~~ ~~for the three months ended June 30, 2014. The variance was primarily~~ due to the ~~impact of the decrease in premiums earned and changes related to the affiliated quota share contracts. Commission and brokerage decreased by 0.5% to $93.1 million~~ ~~for the six months ended June 30, 2015~~ ~~compared to $93.5 million~~ ~~for the six months ended June 30, 2014. This variance was primarily due to higher contingent commissions and changes related to the affiliated quota share contracts, partially offset by the impact of the increase in premiums earned.~~

~~Segment other underwriting expenses were comparable at $11.8 million~~ ~~for the three months ended June 30, 2015~~ ~~from $11.5 million~~ ~~for the three months ended June 30, 2014.~~ ~~Segment other underwriting expenses increased to $23.3 million~~ ~~for the six months ended June 30, 2015~~ ~~from $20.9 million~~ ~~for the six months ended June 30, 2014. The six months year over year increase was primarily due to the impact of the increase in premiums earned.~~

~~International.~~

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

Three Months Ended June 30, Six Months Ended June 30,
(Dollars in millions) 2015 2014 Variance % Change 2015 2014 Variance % Change
Gross written premiums $ 311.7 $ 466.0 $ (154.4 ) -33.1 % $ 645.3 $ 794.9 $ (149.6 ) -18.8 %
Net written premiums 147.4 147.2 0.2 0.1 % 269.1 288.7 (19.6 ) -6.8 %

Premiums earned $ 157.9 $ 147.7 $ 10.2 6.9 % $ 298.6 $ 292.7 $ 5.9 2.0 %
Incurred losses and LAE 110.0 88.9 21.1 23.8 % 211.5 172.5 39.0 22.6 %
Commission and brokerage 31.2 27.4 3.8 14.0 % 65.2 56.6 8.7 15.3 %
Other underwriting expenses 8.0 8.1 - -0.5 % 16.2 15.9 0.2 1.5 %
Underwriting gain (loss) $ 8.6 $ 23.3 $ (14.7 ) -63.1 % $ 5.7 $ 47.8 $ (42.0 ) -88.0 %

Point Chg Point Chg
Loss ratio 69.7 % 60.2 % 9.5 70.8 % 58.9 % 11.9
Commission and brokerage ratio 19.8 % 18.6 % 1.2 21.8 % 19.3 % 2.5
Other underwriting expense ratio 5.1 % 5.4 % (0.3 ) 5.5 % 5.5 % -
Combined ratio 94.6 % 84.2 % 10.4 98.1 % 83.7 % 14.4

(Some amounts may not reconcile due to rounding)

~~Premiums.~~ ~~Gross written premiums decreased by 33.1% to $311.7 million~~ ~~for the three months ended June 30, 2015~~ ~~compared to $466.0 million~~ ~~for the three months ended June 30, 2014, primarily due to reductions in premiums related to the quota share agreements from the second quarter of 2014~~Fort McMurray Canada wildfire ($21.7 million) and the ~~negative impact of approximately $22.8 million from the movement of foreign exchange rates. Net written premiums increased by 0.1% to $147.4 million~~ ~~for the three months ended June 30, 2015~~ ~~compared to $147.2 million~~ ~~for the three months ended June 30, 2014~~Ecuador earthquake ($11.6 million). The difference between the change in gross written premiums compared to the change in net written premiums is primarily due to varying utilization of reinsurance related to the quota share contracts. Premiums earned increased 6.9% to $157.9 million ~~for the three months ended June 30, 2015~~ ~~compared to $147.7 million~~ ~~for the three months ended June 30, 2014~~. The change in premiums earned relative to net written premiums is 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.

~~Gross written premiums decreased by 18.8% to $645.3 million~~ ~~for the six months ended June 30, 2015~~ ~~compared to $794.9 million~~ ~~for the six months ended June 30, 2014~~, primarily due to reductions in premiums related to the quota share agreements from the second quarter of 2014 and the negative impact of approximately $35.2 million from the movement of foreign exchange rates. Net written premiums decreased by 6.8% to $269.1 million ~~for the six months ended June 30, 2015~~ ~~compared to $288.7 million~~ ~~for the six months ended June 30, 2014~~. The difference between the change in gross written premiums compared to the change in net written premiums is primarily due to varying utilization of reinsurance related to the quota share contracts. Premiums earned increased 2.0% to $298.6 million ~~for the six months ended June 30, 2015~~ ~~compared to $292.7 million~~ ~~for the six months ended June 30, 2014~~. The change in premiums earned relative to net written premiums is 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.

~~Incurred Losses and LAE.~~ ~~The following tables present the incurred losses and LAE for the International segment for the periods indicated.~~

Three Months Ended June 30,
Current Ratio %/ Prior Ratio %/ Total Ratio %/
(Dollars in millions) Year Pt Change Years Pt Change Incurred Pt Change
2015

Attritional $ 94.1 59.7 % $ (0.9 ) -0.7 % $ 93.2 59.0 %
Catastrophes 18.1 11.5 % (1.3 ) -0.8 % 16.8 10.7 %
Total segment $ 112.2 71.2 % $ (2.2 ) -1.5 % $ 110.0 69.7 %

2014

Attritional $ 72.4 49.0 % $ (0.5 ) -0.3 % $ 71.9 48.7 %
Catastrophes 17.3 11.7 % (0.4 ) -0.2 % 16.9 11.5 %
Total segment $ 89.7 60.7 % $ (0.9 ) -0.5 % $ 88.9 60.2 %

Variance 2015/2014

Attritional $ 21.7 10.7 pts $ (0.4 ) (0.4 ) pts $ 21.3 10.3 pts
Catastrophes 0.8 (0.2 ) pts (0.9 ) (0.6 ) pts (0.1 ) (0.8 ) pts
Total segment $ 22.5 10.5 pts $ (1.3 ) (1.0 ) pts $ 21.1 9.5 pts

(Some amounts may not reconcile due to rounding.)

Six Months Ended June 30,
Current Ratio %/ Prior Ratio %/ Total Ratio %/
(Dollars in millions) Year Pt Change Years Pt Change Incurred Pt Change
2015

Attritional $ 193.8 65.0 % $ 0.7 0.1 % $ 194.5 65.1 %
Catastrophes 18.1 6.1 % (1.2 ) -0.4 % 17.0 5.7 %
Total segment $ 211.9 71.1 % $ (0.5 ) -0.3 % $ 211.5 70.8 %

2014

Attritional $ 157.1 53.7 % $ (0.2 ) -0.1 % $ 156.9 53.6 %
Catastrophes 17.3 5.9 % (1.7 ) -0.6 % 15.6 5.3 %
Total segment $ 174.4 59.6 % $ (1.9 ) -0.7 % $ 172.5 58.9 %

Variance 2015/2014

Attritional $ 36.7 11.3 pts $ 0.9 0.2 pts $ 37.6 11.5 pts
Catastrophes 0.8 0.2 pts 0.5 0.2 pts 1.4 0.4 pts
Total segment $ 37.5 11.5 pts $ 1.4 0.4 pts $ 39.0 11.9 pts

(Some amounts may not reconcile due to rounding.)

~~Incurred losses and LAE increased by 23.8% to $110.0 million~~ ~~for the three months ended June 30, 2015~~ ~~compared to $88.9 million~~ ~~for the three months ended June 30, 2014~~, primarily due to the increase in current year attritional losses of $21.7 million. The increase in attritional losses was primarily due to the increase in premiums earned and higher losses in the Middle East, Africa and Latin America. The $18.1 million of current year catastrophe losses for the three months ended June 30, 2015 were due to the Northern Chile storms ($10.0 million) and the New South Wales storms ($8.1 million).

Incurred losses and LAE decreased by 22.1% to $164.8 million for the six months ended June 30, 2016 compared to $211.5 million for the six months ended June 30, 2015, primarily due to a decrease in current year attritional losses of $57.4 million, mainly due to the impact of the decrease in premiums earned,

partially offset by an increase of $20.5 million in current year catastrophe losses. The ~~$17.3~~$38.6 million of current year catastrophe losses for the ~~three months ended June 30, 2014 were due to the Japan snowstorm ($10.0 million) and the Chilean earthquake ($7.3 million).~~

~~Incurred losses and LAE increased by 22.6% to $211.5 million~~ ~~for the~~ six months ended June 30, ~~2015~~ ~~compared to $172.5 million~~ ~~for the six months ended June 30, 2014, primarily~~2016 were due to the ~~increase in current year attritional losses of $36.7 million. The increase in attritional losses was primarily due to higher losses in~~Fort McMurray Canada wildfire ($21.7 million), the ~~Middle East, Africa~~Ecuador earthquake ($11.6 million) and ~~Latin America.~~the Taiwan earthquake ($5.3 million). The $18.1 million of current year catastrophe losses for the six months ended June 30, 2015 were due to the Northern Chile storms ($10.0 million) and the New South Wales storms ($8.1 million). ~~The $17.3 million of current year catastrophe losses for the six months ended June 30, 2014 were due to the Japan snowstorm ($10.0 million) and the Chilean earthquake ($7.3 million).~~

Segment Expenses. Commission and brokerage ~~increased 14.0%~~decreased 16.3% to $26.1 million for the three months ended June 30, 2016 compared to $31.2 million for the three months ended June 30, 2015 ~~compared~~. Commission and brokerage decreased 19.9% to ~~$27.4~~$52.3 million for the ~~three~~six months ended June 30, ~~2014~~2016~~. Commission and brokerage increased 15.3%~~ compared to $65.2 million for the six months ended June 30, ~~2015~~ ~~compared to $56.6 million~~ ~~for the six months ended June 30, 2014.~~2015. The variances were primarily due to the impact of the ~~increases~~decreases in premiums ~~earned and changes related to the affiliated quota share contracts.~~earned.

Segment other underwriting expenses ~~decreased slightly to~~remained the same at $8.0 million for the three months ended June 30, ~~2015~~2016 ~~compared to $8.1 million~~and ~~for the three months ended June 30, 2014~~2015. Segment other underwriting expenses ~~increased~~decreased slightly to $15.8 million for the six months ended June 30, 2016 compared to $16.2 million for the six months ended June 30, ~~2015~~ ~~compared to $15.9 million~~ ~~for the six months ended June 30, 2014.~~2015.

Insurance.

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

	Three Months Ended June 30,												Six Months Ended June 30,												Three Months Ended June 30,													Six Months Ended June 30,
(Dollars in millions)	2015			2014			Variance			% Change			2015			2014			Variance			% Change			2016			2015			Variance				% Change			2016			2015			Variance			% Change
Gross written premiums	$	326.7		$	305.7		$	21.0			6.9	%	$	657.2		$	531.0		$	126.3			23.8	%	$	424.1		$	326.7		$	97.4				29.8	%	$	778.8		$	657.2		$	121.6			18.5	%
Net written premiums		140.4			130.4			9.9			7.6	%		286.4			237.2			49.3			20.8	%		155.8			140.4			15.4				11.0	%		308.7			286.4			22.3			7.8	%

Premiums earned	$	128.1		$	126.7		$	1.3			1.1	%	$	253.0		$	234.0		$	19.0			8.1	%	$	133.0		$	128.1		$	4.9				3.8	%	$	266.5		$	253.0		$	13.4			5.3	%
Incurred losses and LAE		96.4			103.0			(6.6	)		-6.4	%		192.4			181.4			10.9			6.0	%		137.0			96.4			40.6				42.1	%		243.4			192.4			51.1			26.6	%
Commission and brokerage		7.0			4.5			2.5			54.7	%		11.2			11.3			(0.1	)		-1.3	%		(4.1	)		7.0			(11.2	)		NM				(11.2	)		11.2			(22.3	)	NM
Other underwriting expenses		31.7			27.6			4.1			14.9	%		60.6			49.5			11.1			22.3	%		38.2			31.7			6.5				20.5	%		76.2			60.6			15.6			25.7	%
Underwriting gain (loss)	$	(7.0	)	$	(8.4	)	$	1.3			-15.9	%	$	(11.1	)	$	(8.3	)	$	(2.8	)		33.9	%	$	(38.1	)	$	(7.0	)	$	(31.1	)		NM			$	(42.0	)	$	(11.1	)	$	(30.9	)	NM
																																		��
										Point Chg												Point Chg													Point Chg												Point Chg
Loss ratio		75.3	%		81.2	%					(5.9	)		76.0	%		77.5	%					(1.5	)		103.0	%		75.3	%						27.8			91.4	%		76.0	%					15.3
Commission and brokerage ratio		5.5	%		3.6	%					1.9			4.4	%		4.8	%					(0.4	)		-3.1	%		5.5	%						(8.6	)		-4.2	%		4.4	%					(8.6	)
Other underwriting expense ratio		24.7	%		21.8	%					2.9			24.0	%		21.3	%					2.7
Other underwriting ratio																										28.7	%		24.7	%						4.0			28.6	%		24.0	%					4.6
Combined ratio		105.5	%		106.6	%					(1.1	)		104.4	%		103.6	%					0.8			128.6	%		105.5	%						23.2			115.8	%		104.4	%					11.4

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

Premiums. Gross written premiums increased by ~~6.9%~~29.8% to $424.1 million for the three months ended June 30, 2016 compared to $326.7 million for the three months ended June 30, 2015 ~~compared~~. This increase was primarily driven by increases in the crop, non-standard auto and accident and health lines of business and additional expansion of other insurance lines of business. Net written premiums increased by 11.0% to ~~$305.7~~$155.8 million for the three months ended June 30, ~~2014~~2016~~. This increase was primarily driven by an increase in various property and casualty lines of business, partially offset by a decline in crop premium. Net written premiums increased by 7.6%~~ compared to $140.4 million for the three months ended June 30, 2015. The difference between the change in gross written premiums compared to ~~$130.4~~the change in net written premiums is primarily due to varying utilization of reinsurance. Premiums earned increased 3.8% to $133.0 million for the three months ended June 30, ~~2014, which is consistent with the change in gross written premiums~~2016~~. Premiums earned increased 1.1%~~ compared to $128.1 million for the three months ended June 30, ~~2015~~ ~~compared to $126.7 million~~ ~~for the three months ended June 30, 2014.~~2015. The change in premiums earned relative to net written premiums is the result of timing; premiums are earned ratably over the coverage period whereas written premiums are recorded at the initiation of the coverage period.

Gross written premiums increased by ~~23.8%~~18.5% to $778.8 million for the six months ended June 30, 2016 compared to $657.2 million for the six months ended June 30, 2015 ~~compared~~. This increase was primarily driven by increases in the crop, non-standard auto and accident and health lines of business and additional expansion of other insurance lines of business. Net written premiums increased by 7.8% to ~~$531.0~~$308.7 million for the six months ended June 30, ~~2014~~2016~~. This increase was primarily driven by an increase in workers' compensation and other property and casualty lines of business. Net written premiums increased by 20.8%~~ compared to $286.4 million for the six months ended June 30, 2015. The

difference between the change in gross written premiums compared to ~~$237.2~~the change in net written premiums is primarily due to varying utilization of reinsurance. Premiums earned increased 5.3% to $266.5 million for the six months ended June 30, ~~2014, which is consistent with the change in gross written premiums~~2016~~. Premiums earned increased 8.1%~~ compared to $253.0 million for the six months ended June 30, 2015 ~~compared to $234.0 million~~ ~~for the six months ended June 30, 2014~~. The change in premiums earned relative to net written premiums is the result of timing; premiums are earned ratably over the coverage period whereas written premiums are recorded at the initiation of the coverage period.

Incurred Losses and LAE. The following tables present the incurred losses and LAE for the Insurance segment for the periods indicated.

	Three Months Ended June 30,																					Three Months Ended June 30,
	Current			Ratio %/				Prior			Ratio %/				Total			Ratio %/				Current		Ratio %/				Prior			Ratio %/				Total		Ratio %/
(Dollars in millions)	Year			Pt Change				Years			Pt Change				Incurred			Pt Change				Year		Pt Change				Years			Pt Change				Incurred		Pt Change
2016
Attritional																						$	118.8		89.3	%		$	1.5			1.2	%		$	120.3		90.5	%
Catastrophes																							16.7		12.5	%			-			0.0	%			16.7		12.5	%
Total segment																						$	135.5		101.8	%		$	1.5			1.2	%		$	137.0		103.0	%

2015
Attritional	$	79.7			62.3	%		$	16.6			13.0	%		$	96.3			75.3	%		$	79.7		62.3	%		$	16.6			13.0	%		$	96.3		75.3	%
Catastrophes		-			0.0	%			0.1			0.0	%			0.1			0.0	%			-		0.0	%			0.1			0.0	%			0.1		0.0	%
Total segment	$	79.7			62.3	%		$	16.7			13.0	%		$	96.4			75.3	%		$	79.7		62.3	%		$	16.7			13.0	%		$	96.4		75.3	%

2014
Variance 2016/2015
Attritional	$	102.8			81.1	%		$	0.2			0.1	%		$	103.0			81.2	%		$	39.1		27.0		pts	$	(15.1	)		(11.8	)	pts	$	24.0		15.2		pts
Catastrophes		-			0.0	%			(0.1	)		0.0	%			(0.1	)		0.0	%			16.7		12.5		pts		(0.1	)		-		pts		16.6		12.5		pts
Total segment	$	102.8			81.1	%		$	0.1			0.1	%		$	103.0			81.2	%		$	55.8		39.5		pts	$	(15.2	)		(11.8	)	pts	$	40.6		27.8		pts

Variance 2015/2014
Attritional	$	(23.1	)		(18.8	)	pts	$	16.4			12.9		pts	$	(6.7	)		(5.9	)	pts
Catastrophes		-			-		pts		0.2			-		pts		0.2			-		pts
Total segment	$	(23.1	)		(18.8	)	pts	$	16.6			12.9		pts	$	(6.6	)		(5.9	)	pts

(Some amounts may not reconcile due to rounding.)

		Six Months Ended June 30,																			Six Months Ended June 30,
		Current			Ratio %/				Prior		Ratio %/				Total		Ratio %/				Current		Ratio %/				Prior			Ratio %/				Total		Ratio %/
(Dollars in millions)		Year			Pt Change				Years		Pt Change				Incurred		Pt Change				Year		Pt Change				Years			Pt Change				Incurred		Pt Change
2016
Attritional																					$	222.4		83.5	%		$	4.5			1.7	%		$	226.9		85.2	%
Catastrophes																						16.7		6.3	%			(0.2	)		-0.1	%			16.5		6.2	%
Total segment																					$	239.1		89.8	%		$	4.3			1.6	%		$	243.4		91.4	%

2015
Attritional		$	175.4			69.3	%		$	17.0		6.7	%		$	192.4		76.0	%		$	175.4		69.3	%		$	17.0			6.7	%		$	192.4		76.0	%
Catastrophes			-			0.0	%			-		0.0	%			-		0.0	%			-		0.0	%			-			0.0	%			-		0.0	%
Total segment		$	175.4			69.3	%		$	17.0		6.7	%		$	192.4		76.0	%		$	175.4		69.3	%		$	17.0			6.7	%		$	192.4		76.0	%

2014
Attritional		$	178.8			76.4	%		$	2.6		1.1	%		$	181.4		77.5	%
Catastrophes			-			0.0	%			-		0.0	%			-		0.0	%
Total segment		$	178.8			76.4	%		$	2.6		1.1	%		$	181.4		77.5	%

Variance 2015/2014
Variance 2016/2015
Attritional		$	(3.4	)		(7.1	)	pts	$	14.4		5.6		pts	$	10.9		(1.5	)	pts	$	47.0		14.2		pts	$	(12.5	)		(5.0	)	pts	$	34.5		9.2		pts
Catastrophes			-			-		pts		-		-		pts		-		-		pts		16.7		6.3		pts		(0.2	)		(0.1	)	pts		16.5		6.2		pts
Total segment		$	(3.4	)		(7.1	)	pts	$	14.4		5.6		pts	$	10.9		(1.5	)	pts	$	63.7		20.5		pts	$	(12.7	)		(5.1	)	pts	$	51.1		15.3		pts

(Some amounts may not reconcile due to rounding.)	(Some amounts may not reconcile due to rounding.)

Incurred losses and LAE ~~decreased~~increased by ~~6.4%~~42.1% to $137.0 million for the three months ended June 30, 2016 compared to $96.4 million for the three months ended June 30, 2015 ~~compared~~, mainly due to ~~$103.0~~an increase of $39.1 million in current year attritional losses, primarily related to the impact of the increase in premiums earned and the impact of affiliated quota share agreements, and an increase of $16.7 million in current year catastrophe losses, partially offset by the impact from favorable quarter over quarter development of $15.1 million on prior years' attritional losses related to run-off umbrella and construction liability business. The $16.7 million of current year catastrophe losses for the three months ended June 30, ~~2014, mainly~~2016 were due to a decrease of $23.1 million in current year attritional losses, partially offset by an increase of $16.4 million in prior years' attritional losses primarily related to run-off excess casualty business.the U.S. storms ($15.0 million) and the Fort McMurray Canada wildfire ($1.7 million). There were no current year catastrophe losses for the three months ended June 30, 2015 ~~and 2014~~.

Incurred losses and LAE increased by ~~6.0%~~26.6% to $243.4 million for the six months ended June 30, 2016 compared to $192.4 million for the six months ended June 30, 2015 ~~compared~~, mainly due to ~~$181.4~~an increase of $47.0 million in current year attritional losses, primarily related to the impact of the increase in premiums earned and the impact of affiliated quota share agreements, and an increase of $16.7 million in current year catastrophe losses, partially offset by the impact from favorable year over year development of $12.5 million in prior year attritional losses related to run-off umbrella and construction liability business. The $16.7 million of current year catastrophe losses for the six months ended June 30, ~~2014, mainly~~2016 were due to ~~an increase of $14.4 million in prior years' attritional losses related primarily to run-off excess casualty business.~~the U.S. storms ($15.0 million) and the Fort McMurray Canada wildfire ($1.7 million). There were no current year catastrophe losses for the six months ended June 30, 2015 ~~and 2014~~.

Segment Expenses. Commission and brokerage ~~increased 54.7%~~decreased to ($4.1) million for the three months ended June 30, 2016 compared to $7.0 million for the three months ended June 30, 2015 ~~compared~~. Commission and brokerage decreased to ~~$4.5~~($11.2) million for the ~~three~~six months ended June 30, ~~2014~~2016~~. This increase was primarily driven by the impact of the increase in premiums earned and the change in the mix of business. Commission and brokerage decreased slightly~~ compared to $11.2 million for the six months ended June 30, ~~2015~~ ~~compared~~2015. The decreases were mainly due to ~~$11.3 million~~ ~~for~~ the ~~six months ended June 30, 2014.~~impact from affiliated quota share agreements and changes in mix of business.

Segment other underwriting expenses increased to $38.2 million for the three months ended June 30, 2016 compared to $31.7 million for the three months ended June 30, 2015 and ~~compared~~increased to ~~$27.6~~$76.2 million for the ~~three~~six months ended June 30, ~~2014.~~ 2016~~Segment other underwriting expenses increased~~ compared to $60.6 million for the six months ended June 30, ~~2015~~ ~~compared to $49.5 million~~ ~~for the six months ended June 30, 2014.~~2015. The increases were primarily due to the impact of the increases in premiums earned and ~~growth in~~increased expenses due to the build out of our insurance ~~operations.~~platform.

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, taxable and tax-preferenced fixed maturity portfolio, while maintaining an adequate level of liquidity. Our mix of taxable and tax-preferenced investments is adjusted periodically, consistent with our current and projected operating results, market conditions and our tax position. The fixed maturity securities in the investment portfolio are comprised of non-trading available for sale 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 ~~$9.6~~$9.7 billion investment portfolio, at June 30, ~~2015,~~2016, 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 ~~$662.3~~$842.9 million of mortgage-backed securities in the ~~$5,281.9~~$5,768.7 million 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 ~~$531.5~~$387.7 million of short-term investments) for the period indicated based on upward and downward parallel and immediate 100 and 200 basis point shifts in interest rates. For legal entities with a U.S. dollar functional currency, this modeling was performed on each security individually. To generate appropriate price estimates for mortgage-backed securities, changes in prepayment expectations under different interest rate environments were taken into account. For legal entities with non-U.S. dollar functional currency, the effective duration of the involved portfolio of securities was used as a proxy for the market value change under the various interest rate change scenarios.

	Impact of Interest Rate Shift in Basis Points															Impact of Interest Rate Shift in Basis Points
	At June 30, 2015															At June 30, 2016
(Dollars in millions)	-200			-100			0			100			200			-200			-100			0			100			200
Total Market/Fair Value	$	6,114.4		$	5,967.0		$	5,813.4		$	5,653.3		$	5,489.6		$	6,471.3		$	6,313.0		$	6,156.5		$	5,989.3		$	5,814.8
Market/Fair Value Change from Base (%)		5.2	%		2.6	%		0.0	%		-2.8	%		-5.6	%		5.1	%		2.5	%		0.0	%		-2.7	%		-5.5	%
Change in Unrealized Appreciation
After-tax from Base ($)	$	195.6		$	99.9		$	-		$	(104.1	)	$	(210.5	)	$	204.6		$	101.7		$	-		$	(108.6	)	$	(222.0	)

We had ~~$7,888.3~~$8,247.8 million and ~~$7,843.9~~$7,940.7 million of gross reserves for losses and LAE as of June 30, ~~2015~~2016 and December 31, ~~2014,~~2015, respectively. These amounts are recorded at their nominal value, as opposed to present value, which would reflect a discount adjustment to reflect the time value of money. Since losses are paid out over a period of time, the present value of the reserves is less than the nominal value. As interest rates rise, the present value of the reserves decreases and, conversely, as interest rates decline, the present value increases. These movements are the opposite of the interest rate impacts on the fair value of investments. While the difference between present value and nominal value is not reflected in our financial statements, our financial results will include investment income over time from the investment portfolio until the claims are paid. Our loss and loss reserve obligations have an expected duration that is reasonably consistent with our fixed income portfolio.

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

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

	Impact of Percentage Change in Equity Fair/Market Values												Impact of Percentage Change in Equity Fair/Market Values
	At June 30, 2015												At June 30, 2016
(Dollars in millions)	-20%			-10%			0%		10%		20%		-20%			-10%			0%		10%		20%
Fair/Market Value of the Equity Portfolio	$	1,053.9		$	1,185.7		$	1,317.4	$	1,449.2	$	1,580.9	$	781.5		$	879.2		$	976.9	$	1,074.6	$	1,172.3
After-tax Change in Fair/Market Value		(171.3	)		(85.6	)		-		85.6		171.3		(127.0	)		(63.5	)		-		63.5		127.0

Foreign Exchange Risk. Foreign currency risk is the potential change in value, income and cash flow arising from adverse changes in foreign currency exchange rates. Each of our non-U.S. ("foreign") operations maintains capital in the currency of the country of its geographic location consistent with local regulatory guidelines. Each foreign operation may conduct business in its local currency, as well as the currency of other countries in which it operates. The primary foreign currency exposures for these foreign operations are the Singapore and Canadian Dollars. We mitigate foreign exchange exposure by generally matching the currency and duration of our assets to our corresponding operating liabilities. In accordance with FASB guidance, the impact on the market 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. ~~As of June 30, 2015, there has been no material change in exposure to foreign exchange rates as compared to December 31, 2014.~~

SAFE HARBOR DISCLOSURE

This report contains forward-looking statements within the meaning of the U.S. federal securities laws. We intend these forward-looking statements to be covered by the safe harbor provisions for forward-looking statements in the federal securities laws. In some cases, these statements can be identified by the use of forward-looking words such as "may", "will", "should", "could", "anticipate", "estimate", "expect", "plan", "believe", "predict", "potential" and "intend". Forward-looking statements contained in this report include information regarding our reserves for losses and LAE, the adequacy of our provision for uncollectible balances, estimates of our catastrophe exposure, the effects of catastrophic events on our financial statements and the ability of our subsidiaries to pay dividends. Forward-looking statements only reflect our expectations and are not guarantees of performance. These statements involve risks, uncertainties and assumptions. Actual events or results may differ materially from our expectations. Important factors that could cause our actual events or results to be materially different from our expectations include those discussed under the caption ITEM 1A, "Risk Factors" 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 "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 we file or submit under the Exchange Act are recorded, processed, summarized and reported within the time periods specified in the 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.

PART II

ITEM 1. LEGAL PROCEEDINGS

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

None.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4. MINE SAFETY DISCLOSURES

Not applicable.

ITEM 5. OTHER INFORMATION

None.

ITEM 6. EXHIBITS

Exhibit Index:

Exhibit No.	Description

31.1	Section 302 Certification of Dominic J. Addesso

31.2	Section 302 Certification of Craig Howie

32.1	Section 906 Certification of Dominic J. Addesso and Craig Howie

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

Everest Reinsurance Holdings, Inc.

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 Reinsurance Holdings, Inc.
		(Registrant)


		/S/ CRAIG HOWIE
		Craig Howie
		Executive Vice President and
		Chief Financial Officer

		(Duly Authorized Officer and Principal Financial Officer)



Dated: August 15, 2016

~~Dated: August 14, 2015~~

	Three Months Ended June 30, 2014											Six Months Ended June 30, 2014
	Asset-backed			Foreign			Non-agency					Asset-backed			Foreign			Non-agency
(Dollars in thousands)	Securities			Corporate			RMBS		Total			Securities			Corporate			RMBS			Total
Beginning balance	$	3,044		$	473		$	4	$	3,521		$	3,533		$	481		$	4		$	4,018
Total gains or (losses) (realized/unrealized)
Included in earnings		38			17			-		55			56			18			1			75
Included in other comprehensive income (loss)		28			(20	)		-		8			93			(20	)		-			73
Purchases, issuances and settlements		(582	)		(470	)		-		(1,052	)		(1,154	)		(479	)		(1	)		(1,634	)
Transfers in and/or (out) of Level 3		-			-			-		-			-			-			-			-
Ending balance	$	2,528		$	-		$	4	$	2,532		$	2,528		$	-		$	4		$	2,532

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.)

	Liability Limits
(Dollars in thousands)	Exceeding		Not to Exceed
Losses per one occurrence	$	100,000	$	150,000

(Dollars in thousands)
Investments and cash	$	12,000
Reinsurance recoverables		147,000
Deferred tax asset		35,000
Total assets held for sale	$	194,000

Reserve for losses and loss adjustment expenses	$	138,000
Deferred gain on retroactive reinsurance		95,000
Total liabilities held for sale	$	233,000

Net liabilities held for sale	$	(39,000	)