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Everest Re Group Reports First Quarter 2011 Earnings

^{Published on 2011-04-27 13:15:49 - Market Wire}
 

HAMILTON, Bermuda--([ BUSINESS WIRE ])--Everest Re Group, Ltd. (NYSE: RE) reported a net loss of $315.9 million, or $5.81 per common share, for the first quarter of 2011, compared to a net loss of $22.7 million, or $0.38 per common share, for the first quarter of 2010. The after-tax operating loss¹, which excludes realized capital gains and losses, was $323.6 million, or $5.95 per common share, for the first quarter 2011, compared to an after-tax operating loss¹ of $73.8 million, or $1.25 per common share, for the same period last year.

Catastrophe losses, net of reinstatement premiums and taxes, were $530.9 million, or $9.77 per common share, in the first quarter of 2011 compared with $275.6 million, or $4.66 per common share, in the first quarter of 2010.

Commenting on the Companya™s results, Chairman and Chief Executive Officer, Joseph V. Taranto said, aThe quarter was significantly impacted by the disasters in Japan, New Zealand, and Australia. Notwithstanding these events, we were pleased with the underlying performance of our business portfolio and investment results, which were strong for the quarter. Looking ahead, we expect the market for property catastrophe reinsurance to change in response to the unusual level of loss activity the industry experienced in the first quarter.a

Operating highlights for the first quarter of 2011 included the following:

• Gross written premiums increased 4% to $1.1 billion, compared to the same period in 2010, with 1% of this increase attributable to the benefit of foreign currency movements. Worldwide, reinsurance premiums were up 2% to $810 million, but adjusting for the higher level of reinstatement premiums and the effects of foreign exchange rates in the quarter, these premiums were relatively flat. Insurance premiums increased 11.5%, quarter over quarter, primarily due to new business premium generated on the acquisition of Heartland.
• The loss ratio was 123.6% for the quarter compared to 97.8% in the first quarter of 2010. The attritional loss ratio, excluding 65.8 points of catastrophe losses and modest favorable development, was 57.9% for the current year as compared to 59.5% for the same period last year. Reinstatement premiums related to the catastrophe losses in the quarter provided a benefit of 1.8 points to the current year attritional loss ratio.
• Net investment income was $178.7 million, an increase of 11% when compared to the comparable period in 2010. Adjusting for income on limited partnership investments, underlying investment income was down 2%, quarter over quarter.
• Net after-tax realized capital gains totaled $7.7 million for the quarter.
• Net after-tax unrealized capital gains decreased $24.5 million during the quarter, driven by changes in interest rates.
• Cash flow from operations was $188.1 million compared to cash flows of $271.3 million in the same quarter last year.
• The Company repurchased 428,038 of its common shares during the quarter at an average price of $87.87 for a total cost of $37.6 million. The repurchases were made pursuant to a share repurchase authorization, provided by the Companya™s Board of Directors, under which there remains 3.0 million shares available.
• Shareholdersa™ equity at March 31, 2011, was $5.9 billion, down from the $6.3 billion at December 31, 2010. Book value per share was $109.07 as of March 31, 2011 compared to $115.45 at December 31, 2010.

This news release 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 U.S. Federal securities laws. These statements involve risks and uncertainties that could cause actual results to differ materially from those contained in forward-looking statements made on behalf of the Company.These risks and uncertainties include the impact of general economic conditions and conditions affecting the insurance and reinsurance industry, the adequacy of our reserves, our ability to assess underwriting risk, trends in rates for property and casualty insurance and reinsurance, competition, investment market fluctuations, trends in insured and paid losses, catastrophes, regulatory and legal uncertainties and other factors described in our latest Annual Report on Form 10-K.The Company undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

Everest Re Group, Ltd. is a Bermuda holding company that operates through the following subsidiaries: Everest Reinsurance Company provides reinsurance to property and casualty insurers in both the U.S. and international markets. Everest Reinsurance (Bermuda), Ltd., including through its branch in the United Kingdom, provides reinsurance and insurance to worldwide property and casualty markets and reinsurance to life insurers. Everest Reinsurance Company (Ireland), Limited provides reinsurance to non-life insurers in Europe. Everest National Insurance Company and Everest Security Insurance Company provide property and casualty insurance to policyholders in the U.S. Everest Indemnity Insurance Company offers excess and surplus lines insurance in the U.S. Everest Insurance Company of Canada provides property and casualty insurance to policyholders in Canada. Additional information on Everest Re Group companies can be found at the Groupa™s web site at [ www.everestre.com ].

A conference call discussing the first quarter results will be held at 10:30 a.m. Eastern Time on April 28, 2011. The call will be available on the Internet through the Companya™s web site or at [ www.streetevents.com ].

Recipients are encouraged to visit the Companya™s web site to view supplemental financial information on the Companya™s results. The supplemental information is located at [ www.everestre.com ] in the aFinancial Reportsa section of the aInvestor Centera. The supplemental financial information may also be obtained by contacting the Company directly.

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¹The Company generally uses after-tax operating income (loss), a non-GAAP financial measure, to evaluate its performance. After-tax operating income (loss) consists of net income (loss) excluding after-tax net realized capital gains (losses) as the following reconciliation displays:

Although net realized capital gains (losses) are an integral part of the Companya™s insurance operations, the determination of net realized capital gains (losses) is independent of the insurance underwriting process. The Company believes that the level of net realized capital gains (losses) for any particular period is not indicative of the performance of the underlying business in that particular period. Providing only a GAAP presentation of net income (loss) makes it more difficult for users of the financial information to evaluate the Companya™s success or failure in its basic business, and may lead to incorrect or misleading assumptions and conclusions. The Company understands that the equity analysts who follow the Company focus on after-tax operating income (loss) in their analyses for the reasons discussed above. The Company provides after-tax operating income (loss) to investors so that they have what management believes to be a useful supplement to GAAP information concerning the Companya™s performance.

--Financial Details Follow--