EVEREST RE GROUP, LTD.

NOTICE OF ANNUAL GENERAL MEETING OF SHAREHOLDERS

TO BE HELD MAY 9, 201214, 2014

TO THE SHAREHOLDERS OF EVEREST RE GROUP, LTD.:

The Annual General Meeting of Shareholders of Everest Re Group, Ltd. (the “Company”), a Bermuda company, will be held at Fairmont Hamilton Princess, 76 Pitts Bay Road, Hamilton, Bermuda on May 9, 201214, 2014 at 10:00 a.m., local time, for the following purposes:

The Company’s financial statements for the year ended December 31, 2011,2013, together with the report of the Company’s independent registered public accounting firm in respect of those financial statements, as approved by the Company’s Board of Directors, will be presented at this Annual General Meeting.

Only shareholders of record identified in the Company’s Register of Members at the close of business on March 20, 20122014 are entitled to notice of, and vote at, the Annual General Meeting.

You are cordially invited to attend the meeting in person.  Whether or not you expect to attend the meeting in person, you are urged to sign and date the enclosed proxy and return it promptly in the postage prepaid envelope provided.

April 9, 201211, 2014

Hamilton, Bermuda

PROXY STATEMENT

---------------------------

ANNUAL GENERAL MEETING OF SHAREHOLDERS

MAY 9, 201214, 2014

TABLE OF CONTENTS

The proxy statement and annual report to shareholders are available at

EVEREST RE GROUP, LTD.

ANNUAL GENERAL MEETING OF SHAREHOLDERS

The enclosed Proxy Card is being solicited on behalf of the Board of Directors (the “Board”) for use at the 20122014 Annual General Meeting of Shareholders of Everest Re Group, Ltd., a Bermuda company (the “Company”), to be held on May 9, 2012,14, 2014, and at any adjournment thereof.   It may be revoked at any time before it is exercised by giving a later-dated proxy, notifying the Secretary of the Company in writing at the Company’s registered office at Clarendon House, 2 Church Street, Hamilton HM 11, Bermuda, or by voting in person at the Annual General Meeting.  All shares represented at the meeting by properly executed proxies will be voted as specified and, unless otherwise specified, will be voted: (1) for the election of Dominic J. Addesso, John J. Amore, John R. Dunne, William F. Galtney, Jr., Roger M. Singer, Joseph V. Taranto and John A. Weber as directors of the Company;  (2) for the appointment of PricewaterhouseCoopers LLP as the Company’s independent registered public accounting firm to act as the Company’s auditor for 20122014 and for authorizing the Company’s Board of Directors acting through its Audit Committee to set the fees forretain the independent registered public accounting firm serving as the Company’s auditor; and (3) for the approval, by non-binding advisory vote, of the 20112013 compensation paid to the Named Executive Officers.Officers (as defined herein).

Only shareholders of record at the close of business on March 20, 20122014 will be entitled to vote at the meeting.  On that date, 62,643,60255,821,464 Common Shares, par value $.01 per share (“Common Shares”), were outstanding.  However, this amount includes 9,719,971 Common Shares held by Everest Reinsurance Holdings, Inc. (“Everest Holdings”), the Company’s subsidiary.  As provided in the Company’s Bye-laws, Everest Holdings may vote only 6,201,7175,526,324 of its shares.  The outstanding share amount also excludes 26,347 shares resultingwith no voting rights.  The limitation of Everest Holdings voting shares to 5,526,324 and

the exclusion of 26,347 shares with no voting rights results in 59,125,34851,601,470 Common Shares entitled to vote.

The election of each nominee for director and the approval of all other matters to be voted upon at the Annual General Meeting require the affirmative vote of a majority of the votes cast at the Annual General Meeting, provided there is a quorum consisting of not less than two persons present in person or by proxy holding in excess of 50% of the issued and outstanding Common Shares entitled to attend and vote at the Annual General Meeting.  The Company has appointed inspectors of election to count votes cast in person or by proxy.  Common Shares owned by shareholders who are present in person or by proxy at the Annual General Meeting but who elect to abstain from voting will be counted towards the presence of a quorum.  However, such Common Shares and Common Shares owned by shareholders and not voted in person or by proxy at the Annual General Meeting (including “broker non-votes”) will not be counted towards the majority needed to elect a director or approve any other matter before the shareholders and, thus, will have no effect on the outcome of those votes.

This Proxy Statement, the attached Notice of Annual General Meeting, the Annual Report of the Company for the year ended December 31, 20112013 (including financial statements) and the enclosed Proxy Card are first being mailed to the Company’s shareholders on or about April 9, 2012.11, 2014.

All references in this document to “$” or “dollars” are references to the currency of the United States of America.

The Company knows of no specific matter to be brought before the Annual General Meeting that is not referred to in the attached Notice of Annual General Meeting of Shareholders and this Proxy Statement.  If any such matter comes before the meeting, including any shareholder proposal properly made, the proxy holders will vote proxies in accordance with their best judgment with respect to such matters.  To be properly made, a shareholder proposal must comply with the Company’s Bye-laws and, in order for any matter to come before the meeting, it must relate to matters referred to in the attached Notice of Annual General Meeting.

The Company’s Bye-laws as amended by the Shareholders on May 18, 2011, provide that beginning in 2012, theall directors who arewill be elected for one-year terms at each Annual General Meeting are elected for one-year terms.Meeting.

At the 20122014 Annual General Meeting, twothe nominees for director positions are to be elected to serve until the 20132015 Annual General Meeting of Shareholders or until their qualified successors are elected or until such director’s office is otherwise vacated. At its regularly scheduled meeting on February 22, 2012,26, 2014, the Nominating and Governance Committee recommended to the Board the nominations of Dominic J. Addesso, John J. Amore, John R. Dunne, William F. Galtney, Jr., John P. Phelan, Roger M. Singer, Joseph V. Taranto and John A. Weber as directors.  Mr. Dunne and Mr. Weberdirectors, all of whom are currently directors of the Company.  Martin Abrahams, whose term expires on May 9, 2012, will not be seeking re-election as a director.

The Board accepted the Nominating and Governance Committee recommendations, and each nominee accepted his nomination except for Mr. Phelan.  Subsequent to his nomination, Mr. Phelan advised the nominees have accepted their nominationsBoard of his decision to not stand for director positions.re-election for personal reasons.  It is not expected that any of the remaining nominees will become unavailable for election as a director, but if any nominee should become unavailable prior to the meeting, proxies will be voted for such persons as the Board shall recommend, unless the Board reduces the number of directors accordingly.  There are no arrangements or understandings between any director, or any nominee for election as a director, and any other person pursuant to which such person was selected as a director or nominee.

The following information has been furnished by the respective nominees for election of directors to serve for a one year term expiring in May, 2013.2015.

Southeastern Security Insurance Company) (“Everest Security”).  Mr. Addesso serves as director, ChairmanMutual and President (May 15, 2009) of Mt. Whitney Securities, Inc.State House. Mr. Weber was selected to serve on the Board because of his experience as an insurance industry executive and investment adviser.

Before joining Mt. McKinley in 2000, Mr. Mukherjee was engaged in the private practice of law as a litigator specializing in insurance and reinsurance coverage disputes and commercial litigation.  Prior to that, Mr. Mukherjee was a Senior Consultant with Andersen Consulting specializing in the manufacturing and the financial services industries.

The Board conducts its business through its meetings and meetings of its committees.  The Board currently maintains Audit, Nominating and Governance, Compensation, Executive and Investment Policy Committees.

Four formal meetings of the Board were held in 2011.  No2013.  Each director either in person or through an alternate director appointment as permitted under Bermuda law, attended fewer than 75%100% of the total number of meetings of the Board and meetings of all committees of the Board on which the director served. All of the directors attended last year’s Annual General Meeting of Shareholders.  The directors are expected to attend the Annual General Meeting pursuant to the Company’s Corporate Governance Guidelines.  All of the directors attended the 2013 Annual General Meeting of Shareholders.

The members of our Compensation Committee must meet the following additional independence requirements:

Our Board has affirmatively determined that each of Messrs. Amore, Dunne, Galtney, Phelan, Singer and Weber meets the following directors, who constitute a majority of the Boardcriteria for independence set forth above, and who serve asthat all members of the Audit Committee, Compensation Committee and Nominating and Governance Committees, are independent: Mr. Abrahams, Mr. Duffy, Mr. Dunne, Mr. Phelan, Mr. Singer and Mr. Weber.  To determine independence, the Board applied the categorical standards contained in the Company’s Corporate Governance Guidelines.  A copy of those standards, which are stricter thanCommittee meet the corporate governance listing standards of the New York Stock Exchange (the “NYSE”), isfurther requirements for independence set forth as Appendix A to this Proxy Statement.  above.

The Board also considered whether these directors had any other material relationships with the Company, its affiliates or the Company’s external auditor and concluded that none of them had a relationship that impaired his independence.  The Board based its determination on personal discussions with the directors and a review of each director’s responses on theto an annual questionnaire regarding employment, compensation history, affiliations and family and other relationships.  The questionnaire responses form the basis for reviewing a director’s financial transactions involving the Company and preparing a report on every relationship that is disclosed by a director, regardless of the amount in question.  This annual review is performed in compliance with the Company’s Bye-laws and the Bermuda Companies Act 1981 and the resulting report is approved by resolution of the Board of Directors.    The report’s findings are disclosed in the section entitled “Certain Transactions with Directors” that appears in this Proxy Statement.  Directors are also subject to the Company’s Ethics Guidelines which require full and timely disclosure to the Company of any situation that may result in a conflict or appearance of a conflict.

Additionally, in accordance with theour Corporate Governance Guidelines and the disclosure requirement set forth in Bye-law 21(b) of the Company’s Bye-laws (which in turn requires compliance with the Bermuda Companies Act 1981), each director must disclose to the other directors any potential conflicts of interest he may have with respect to any matter

under discussion.  If a director is disqualified by the Chairman because of a conflict, he must refrain from voting on a matter in which he may have a material interest.

Mr. Taranto serves as the Chief Executive Officer and as Chairman of the Board.  We believe that having a single leaderBoard leadership structure consisting of a separate CEO and Chairman and independent chairs for both the Company and the Board of Directors who is intimately familiar with the Company’s history as well as its operations eliminates the potential for confusion or duplication of efforts and provides clear leadership for the Company.  In addition to Mr. Taranto, the Board is comprised of seven outside directors, six of whom are independent.

Prior to each scheduled meeting of the Board of Directors, the directors who are not officers of the Company meet in executive session outside the presence of management to determine and discuss any items including those that should be brought to the attention of management.  The executive sessions are chaired by alternating directors on an alphabetically based rotation.  In addition, the independent directors meet in executive session outside the presence of management on a regular basis. We believe that having a combined CEO/Chairman and independent chairs for our Audit, Nominating and Governance and Compensation Committees provides the appropriate balance between management and independent, non-management leadership. The Board retains the flexibility to consider other leadership structures in the future.

Prudent risk management is embodied throughout our Company as part of our culture and is a key point of emphasis by our Board.  In accordance with NYSE requirements, the Company’s Audit Committee Charter provides that the Audit Committee has the responsibility to discuss with management the Company’s major financial risk exposures and the steps management has taken to monitor and control its risk profile, including the Company’s risk assessment and risk management guidelines.  Prudent risk management is embodied throughout our Company as part of our culture. To foster a better understanding of our risk profile, the head of our enterprise risk management team presents a comprehensive report, on a quarterly basis, to the Audit Committee with respect to our risk management procedures and our exposure to various types of risk on an aggregate and per risk basis, including exposure from our worldwide property and casualty insurance and reinsurance businesses and our investment portfolio. Upon the Audit Committee’s recommendation, the Board adoptshas adopted a formal Risk Appetite Statement that establishes upper boundaries on risk taking in certain areas of the Company including assets, investments, property and casualty business, including catastrophe business.  In

The CompensationBoard has determined that all members of the Audit Committee is comprised of Mr. Abrahams, Mr. Duffy, Mr. Dunne, Mr. Phelan,are financially literate. The Board has also determined that Mr. Singer qualifies as an “audit committee financial expert” as defined by SEC rules and Mr. Weber, none of whom is a currenthas accounting or former employee or officer of the Company and all of whom meet the independence standards of the NYSE.  Mr. Duffy servesrelated financial management expertise as Chairman of the Compensation Committee.  The Compensationrequired by NYSE listing standards.

Audit Committee held four meetings in 2011.Report

The Audit Committee devoted substantial time in 20112013 to discussing with the Company’s independent auditors and internal auditors the status and operating effectiveness of the Company’s internal control over financial reporting.  The Audit Committee’s oversight involved several meetings, both with management and with the auditors outside the presence of management, to monitor the preparation of management’s report on the effectiveness of the Company’s internal control.  The meetings reviewed in detail the standards that were established, the content of management’s assessment, and the auditors’ testing and evaluation of the design and operating effectiveness of the internal control.  As reported in the Company’s Annual Report on Form 10-K filed February 29, 2012,March 3, 2014, the independent auditors concluded that, as of December 31, 2011,2013, the Company

maintained, in all material respects, effective internal control over financial reporting based upon the criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

Under its Charter and the “Audit and Non-Audit Services Pre-Approval Policy” (the “Policy”), the Audit Committee is required to pre-approve the audit and non-audit services to be performed by the independent auditors.  The Policy mandates specific approval by the Audit Committee for any service that has not received a general pre-approval or that exceeds pre-approved cost levels or budgeted amounts. For both specific and general pre-approval, the Audit Committee considers whether such services are consistent with the SEC’s rules on auditor independence.  The Audit Committee also considers whether the independent auditors are best positioned to provide the most effective and efficient service and whether the service might enhance the Company’s ability to manage or control risk or improve audit quality.  The Audit Committee is also mindful of the relationship between fees for audit and non-audit services in deciding whether to pre-approve any such services.  It may determine, for each fiscal year, the appropriate ratio between the total amount of  audit, audit-related and tax fees and a total amount of fees for certain permissible non-audit services classified below as “All Other Fees”.  All such factors are considered as a whole, and no one factor is determinative. The Audit Committee further considered whether the performance by PricewaterhouseCoopers LLP of the non-audit related services disclosed below is compatible with maintaining their independence.  The Audit Committee approved all of the audit-related fees, tax fees and all other fees for 20112013 and 2010.2012.

The fees billed to the Company by PricewaterhouseCoopers LLP and its worldwide affiliates in 2011related to 2013 and 20102012 are as follows:

 

 

 

John R. Dunne Chairman

John P. Phelan

Management has the primary responsibility for the Company’s financial statements and reporting process, including the disclosure of executive compensation.  The Compensation Committee has reviewed and discussed with management the Compensation Discussion and Analysis contained in this Proxy Statement and, based on this review and discussion, recommended to the Board of Directors that the Compensation Discussion and Analysis be included in this Proxy Statement.

John J. Duffy, Chairman

John R. Dunne

Roger M. Singer

John A. Weber

Shareholders and interested parties may communicate directly with the Board of Directors or with individual directors.  All communications should be directed to the Company’s Secretary at the following address and in the following manner:

Everest Re Group, Ltd. Corporate Secretary

c/o Everest Global Services, Inc.

Westgate Corporate Center

477 Martinsville Road

P.O. Box 830

Liberty Corner, New Jersey 07938-0830

Any such communication should prominently indicate on the outside of the envelope that it is intended for the Board of Directors, for the Non-Management Directors or for any individual director.  Each communication addressed to an individual director and received by the Company’s Secretary from shareholders or interested parties, which is related to the operation of the Company and is not solely commercial in nature, will promptly be forwarded to the specified party.  Communications addressed to the “Board of Directors” or to the “Non-Management Directors” will be forwarded to the Chairman of the Nominating and Governance Committee.

The following table sets forth the beneficial ownership of Common Shares as of March 20, 20122014 by the directors of the Company, by the Named Executive Officersexecutive officers listed in the Summary Compensation Table and by all directors and Named Executive Officersexecutive officers of the Company as a group.  Information in this table was furnished to the Company by the respective directors and Named Executive Officers.  Unless otherwise indicated in a footnote, each person listed in the table possesses sole voting power and sole dispositive power with respect to the shares shown in the table as owned by that person.

*           Less than 1%

 

 

 

 

 

 

 

 

 

 

 

To the best of the Company’s knowledge, the only beneficial owners of 5% or more of the outstanding Common Shares as of December 31, 20112013 are set forth below.  This table is based on information provided in Schedule 13G Information Statements filed with the SEC by the parties listed in the table.

 

 

 

Each member of the Board who is not otherwise affiliated with the Company as an employee and/or officer (“Non-Employee Director” or “Non-Management Director”) was compensated in 20112013 for services as a director and was also reimbursed for out-of-pocket expenses associated with each meeting attended.  Each Non-Employee Director received a retainer of $75,000, payable in the form of cash or Common Shares at the director’s election.  Giving Non-Employee Directors an opportunity to receive their compensation in the form of Common Shares is intended to align their interests with those of the Company’s shareholders.  The value of Common Shares issued is calculated based on the average of the highest and lowest sale prices of the Common Shares on each installment date or, if no sale is reported for that day, the preceding day for which there is a reported sale.  During 2011,2013, each of the Non-Employee Directors elected to receive their retainers in the form of cash except for Mr. AbrahamsAmore who elected to receive his in the form of Common Shares.  Each wasShares paid in quarterly installments.

The table below summarizes the compensation paid by the Company to Non-Employee Directors for the fiscal year ended December 31, 2011.2013.

 

 

 

The Company’s executive compensation program is designedintended to attract, retainalign the interests of our executive officers with those of our shareholders.  We stress merit based performance awards and motivate highly talented individuals whose abilities are criticalstructure overall compensation to provide appropriate incentives to executives to optimize net earnings and to increase book value per share.  Named Executive Officers receive annual awards based largely on such value-based financial performance metrics as growth in diluted earnings per share, net after-tax operating income and return on equity.  At the same time, the Compensation Committee retains the flexibility to adhere to a degree of subjectivity when evaluating executive performance with a view towards necessary investment in the company’s infrastructure, the impact of expected volatility in such areas as catastrophe reinsurance and to recognize measures taken by management to improve corporate performance not yet reflected in financial results.  We believe that the success of such a thoughtful philosophy can be measured by the Company.  To achieve these ends,positive correlation between the Company’s executive compensation program utilizes a two-prong approach.  First, a short-term component consisting of a base salary and merit-based discretionary bonus is designed to attract, reward and retain executives for achieving optimal performance in the current year.  Second, a long-term component consisting of discretionary equity awards in the form of share options and/or restricted shares is designed to align key executive’s interests with those of the Company’s shareholders and incentivize the executive to work towards achieving the Company’s long-term goals of profitability and strongtotal shareholder returns by providing a significant retention incentive.  Thus, theover time.

Our executive compensation program is designed to reward those employees who are integral to the Company’s success this year as well as into the future.

The Compensation Committee meets outsidebelieves that it has responded to shareholder concerns and that these changes, together with our existing compensation and governance practices, results in an executive compensation program that best serves the presenceCompany and its long-term value oriented shareholders.

The Company’s executive compensation program is designed to attract, motivate and retain highly talented individuals whose abilities are critical to the ongoing success of managementthe Company.  In this regard, the Company’s executive compensation program utilizes a dual approach.  In the first instance, the program has a short-term component consisting of a base salary and merit-based discretionary cash bonus.  Secondly, the Compensation Committee rewards long-term performance through the use of discretionary equity awards designed to discuss compensation decisions.  closely align the interests of key executives with the longer term interests of the Company’s shareholders.

The Compensation Committee is guided by the following principles when making compensation decisions individually and collectively:collectively with respect to our executives:

Components of the Company’s Compensation Program.Program

In 2011,2013, annual compensation for the Company’s executive officers consisted principally of a base salary, a cash bonus, and equity based awards.  Apart from the salary, bonus and equity award components,In addition, all employees including executive officers received other formscompensation in the form of compensation from the Company.  Thatbenefits.  Such other compensation included Company paid term life insurance, partially subsidized medical and dental plan,plans, Company paid disability insurance, and participation in a Company sponsored 401(k) employee savings plan.  Executives mayCertain executives also participateparticipated in a supplemental savings planSupplemental Savings Plan and supplemental retirement plan, both of whichtwo defined benefit plans – the Everest Reinsurance Retirement Plan and Everest Reinsurance Supplemental Retirement Plan.  The Supplemental Savings Plan and Supplemental Retirement Plan are non-qualified with respect to current tax deductibility in the U.S.  The purpose of these supplemental plans is principally to restore benefits which would otherwise have been limited by U.S. benefit plan rules.rules applicable to the 401(k) employee savings plan and the Everest Reinsurance Retirement Plan.

The base salaries for all executive officers are determined by the Compensation Committee, established upon hire or assignment date and reconsidered annually or as responsibilities change.  Adjustments are based on each executive officer’s performance and the respective officer’s contribution to the Company’s performance over time and may also take into account competitive conditions in the industry. All base salary determinations are in the subjective judgment and discretion of the Compensation Committee. Although the Compensation Committee does not identify any specific factors in setting a respective officer’san executive’s initial base salary, the Compensation Committee does take into accountconsiders the individual’s years of experience in the positionexecutive’s abilities, qualifications, accomplishments and theprior experience.  The Compensation Committee also considers base salaries of similarly situated executive officers in other publicly traded, international property & casualty insurance and reinsurance companies.

Subsequent adjustments to the Compensation Committee does not engageexecutive’s base salary in formal benchmarkingthe form of annual raises or upon renewal of an employment agreement take into account the executive’s performance under the prior agreement, the financial performance of the Company and the executive’s contribution to the Company’s performance over time, as well as competitive conditions in determining compensationthe industry.  In general, annual raises in base salaries of executive officers are limited to 0%, 3% or 5%, with 5% or higher increases being reserved for Named Executive Officers.truly outstanding performance.

The Company awards annual merit-based cash bonuses to executive officers underpursuant to one of two performance plans - the Executive Performance Annual Incentive Plan and the Executive Performance Annual Incentive Plan.  The Annual Incentive Plan is applicable to all executive officers and management employees except for Mr. Tarantothose Named Executive Officers who is subjectare selected by

the Compensation Committee to participate in the Executive Performance Annual Incentive Plan.

Under the Annual Incentive Plan, the Company may make cash payments each year to employees who hold positions of significant responsibility and/orand whose performance, or potential contribution, in the judgment of the Compensation Committee, will contributecontributed materially to the success of the Company and its subsidiaries.  The Annual Incentive Plan is designed to reward past accomplishments, to motivate future accomplishments, and to aid in attracting and retaining employees of the caliber necessary for the continued success of the Company.  The actual cash bonus amounts recommended for individual plan participants are subjectively and judgmentally determined by executive management based on a variety of factors including individual responsibilities and performance, experience, contributions andto Company performance, as well as position relative to internal peers.  ConsiderationManagement and the Compensation Committee believe that consideration of these factors encourages executives to strive to improve their performance. performance without feeling limited or “boxed-in” by the constraints of pre-defined metrics.

The Compensation Committee reviews management’s recommendation,recommendations for awards under the Annual Incentive Plan, and has the discretion to reject or modify the recommended individual awards. All bonus determinations pursuant to the Annual Incentive Plan are in the subjective judgment and discretion of management and the Compensation Committee.  Management and the Compensation Committee do not identify any specific factors or particular criteria that must be met by each executive officer. Nor do they rely upon any predefined formula for determining the amount of bonus.

The second component of the Company’s executive compensation plan is premised on a strategic view of compensation.  This long-term compensation component is achieved through the Everest Re Group, Ltd. 2010 Stock Incentive Plan (“2010 Stock Incentive Plan”).  Awards under the 2010 Stock Incentive Plan are generally intended to reinforce management’s long-term perspectiveemphasis on corporate performance, provide an incentive for key executives to remain with the Company for the long-term, and provide a strong incentive for employees to work to increase shareholder value by aligning employees’ interests with the shareholders.

Equity awards may take the form of share options, share appreciation rights, restricted shares or share awards.  To date, the Company has only awarded restricted shares and non-qualified share options.  Options and restricted shares are awarded on the day that they are granted by the Compensation Committee and valued as of the grant date.

Options are issued with an exercise price equal to the fair market value of the Company’s stock on the grant date.  The Company determines fair market value by averaging the high and low market price on the grant date.

Equity grants are made in conjunction with the meeting of the Compensation Committee, and thereCommittee’s February meeting.  There is no plan or practice to grant options or restricted sharesequity awards in coordination with the release of material non-public information.

In the case of equity awards, the CEO makes recommendations to the Compensation Committee for each executive officer,The final amounts and the awards are discussedfactors considered by the Compensation Committee in making its decisions with regard to the 2013 performance for each Named Executive Officer are described more fully below.  Although the Compensation Committee establishes certain Company performance metrics and recommendedtarget ceilings for action by the Board.   All award determinationscash bonuses regarding those Named Executive Officers who are selected to participate in the subjective judgment and discretionExecutive Incentive Plan, the Compensation Committee feels that an effective compensation program must be linked to the medium to longer-term performance of the Compensation Committee.Company and value generated for shareholders over the medium to longer-term.  In this regard, performance measuring metrics are limited to those measurements that are deemed especially important to creating medium to longer-term shareholder value, while retaining the flexibility to also make awards based on subjective criteria.  The Compensation Committee doesconsiders, but is not identify any specific factors or particular criteria that must be metbound by, eachfixed metrics as pre-defined determinants of executive officer.  Nor does it rely upon any predefined formulaperformance.

The Compensation Committee’s philosophy is to encourage management to “do the right thing” in the best interest of the Company and of its shareholders even when such actions may temporarily reduce short-term profitability, for determining the amount of equity award.  Rather,example:

Consequently, although the Compensation Committee reviewsestablishes certain Company performance factors and targets and identifies certain individual performance factors when assessing the recipient’s demonstrated pastoverall performance of Named Executive Officers, the Compensation Committee makes decisions on incentive-based compensation and expectedequity awards for our Named Executive Officers based on a reasoned assessment of (i) Company financial performance and (ii) individual performance.

The Compensation Committee assesses the financial performance of the Company in the context of the business environment in which it operates, the performance of competitors with reasonably comparable operations and against management’s operating business plan for the period under review.  The Compensation Committee also considers management’s decisions and strategies deployed in positioning the Company for future individual

growth and profitability.  Our compensation program is designed to reward executive officers for developing and achieving a business strategy that emphasizes creation of longer-term shareholder value.  While the Compensation Committee looks at the performance of a number of insurers and reinsurers of similar size based on publicly available information, it does not formally benchmark the Company’s performance to that of any pre-defined peer group.

The Compensation Committee attaches significant importance to our executives’ ability to generate shareholder value over time by achieving an attractive increase in book value per common share and in the achievement of returns that provide an attractive compound growth rate in shareholder return.  Since going public in 1995 through fiscal year 2013, the Company has returned on average more than 13% per annum to shareholders.  This attractive longer-term performance has been achieved during a period of significant natural catastrophe activity, a protracted period of very low interest rates as well as his/her contributionrepeated periods of soft market conditions and directly correlates to our compensation practices over that time.

Mr. Taranto’s compensation is comprised of a base salary, annual performance bonus and share awards.  Mr. Taranto’s base salary of $1 million for 2013 was set forth in his employment agreement.  As previously noted, Mr. Taranto’s annual bonus award is derived formulaically through his participation in the Company’s shareholder approved Executive Incentive Plan, which outlines specific performance metrics relating to the financial performance of the Company that must be met when determining the applicable bonus amount.  Finally, the Compensation Committee takes into account the CEO’s overall performance in leading the Company over time the recipient’s level of responsibility within the Company, his/her ability to affect shareholder value, and past share awards.when determining any equity award grants.

In the case of Mr. Taranto, the Compensation Committee established a performance grid in February, 2013 that related various levels of the Company’s earnings per share awards and share options encourage employee retention because such awards vest overcorresponding net operating income and return on equity, to a fivemaximum potential cash incentive award based upon the given level of Company performance. The Compensation

In determining the recipient leavesamount of Mr. Taranto’s final bonus award, the Company before vesting.  In addition,Compensation Committee also compared the expiration of share options ten years after they are granted is designedCompany’s Performance Factors relating the 2013 budgeted operating plan to encourage recipients to workactual full year results:

Based on the Company’s growth overforegoing achievements, the long-termCompensation Committee awarded Mr. Taranto the maximum potential cash bonus of $3.5 million.

The decision as to whether and not simply caterhow much of an equity award to short-term profits. In general, equity awards are considered andbe granted to eligible individuals once per year at the February meetingCEO is in the sole subjective discretion of the Compensation Committee.  In November 2013, the Compensation Committee reviewed Mr. Taranto’s performance and met outside his presence to make its award determination in accordance with Mr. Taranto’s employment agreement.  In evaluating whether to make an award, the Compensation Committee took into consideration Mr. Taranto’s overall compensation as compared to total shareholder return in the current year and over time as well as his execution of responsibilities as CEO which, most importantly, included a smooth and successful transition to his successor, Mr. Addesso.

The equity awards for Messrs. Addesso, de Saram, DoucetteCompensation Committee also took note of the fact that, since taking the Company public in 1995, Mr. Taranto has delivered to shareholders a compound annual growth rate of 13% in total return (as measured by book value growth per common share plus dividends), even as the industry faced several unprecedented catastrophe loss events in the course of his 20 year tenure as the Company’s CEO.  Indeed, over the past 5 years, shareholders have benefited from a 14% compound annual growth rate.  As highlighted by the performance graph below, relative to this exceptionally strong growth in shareholder return, Mr. Taranto’s compensation has remained a conservative 10% compounded annually.

These exceptionally strong results clearly show that Mr. Taranto “outperformed” his final contract, and that the Company and its shareholders have been and will continue to be the beneficiaries of an extraordinary and unique leader and visionary. Accordingly, based on their contributionsall the foregoing, the Compensation Committee determined that Mr. Taranto’s performance exceeded expectations and awarded him restricted shares valued at $12.5 million on November 20, 2013.

In determining the amount of Mr. Addesso’s final bonus award and his equity award, the Compensation Committee favorably considered the positive planned versus actual results, the recommendation of the CEO, Mr. Addesso’s target incentive bonus of 200% of base salary and Mr. Addesso’s notable success in achieving his following individual goals and performance factors:

With respect to adjustments to Mr. de Saram’s base salary, his bonus award, and his long term compensation, the Compensation Committee considered the recommendation of the CEO as well as Mr. de Saram’s execution of his responsibilities as Deputy Chairman, Managing Director and the Chief Executive Officer’sOfficer of Bermuda Re and Deputy Chairman of Everest Re Advisors and International Re.  In arriving at Mr. de Saram’s bonus award, the Compensation Committee also compared the Bermuda Re Performance Factors that were budgeted for its 2013 operating plan to actual full year results: