Everest Re (EG) 8-K Everest Re Group Announces Third Quarter Earnings

NEWS RELEASE

EVEREST RE GROUP, LTD.
c/o ABG Financial & Management Services, Inc.
Parker House, Wildey Business Park, Wildey Road, St. Michael, Barbados

Contact:
James H. Foster
Senior Vice President, Investor Relations
Everest Global Services, Inc.
908.604.3169

For Immediate Release

Everest Re Group Announces Third Quarter Earnings

    ST. MICHAEL, Barbados – October 20, 2003 — Everest Re Group, Ltd. (NYSE: RE) reported third quarter 2003 after-tax operating income, which excludes realized capital gains and losses, of $126.2 million, or $2.23 per diluted share, an 89.9% increase compared to $66.5 million, or $1.29 per diluted share, in the third quarter of 2002. Third quarter 2003 net income increased 63.7% to $100.3 million, or $1.77 per diluted share, compared to $61.3 million, or $1.19 per diluted share, in the third quarter of 2002. Operating income differs from net income only by the exclusion of realized gains and losses on investments.

        For the nine months ended September 30, 2003, after-tax operating income was $337.4 million,or $6.20 per diluted share, an increase of 66.9% compared to $202.2 million, or $3.97 per diluted share, in 2002. Net income in the first nine months of 2003 was $304.2 million, or $5.59 per diluted share, an increase of 73.1% compared to $175.7 million, or $3.45 per diluted share, in 2002.

        Gross premiums written for the third quarter of 2003 were $1.24 billion, a 75.1% increase compared to $708.0 million in 2002. Net premiums written were $1.18 billion, an increase of 79.2% from $660.6 million for the third quarter of 2002. The Company’s GAAP combined ratio in the third quarter was 95.0% compared to 96.7% in 2002. Net investment income for the third quarter was $100.3 million compared to $86.4 million in the third quarter of 2002. Cash flow from operations for the third quarter of 2003 was $492.3 million, an increase of 173.6% from $179.9 million in the third quarter of 2002.

        For the nine months ended September 30, 2003, gross premiums written were $3.31billion, a 71.1% increase from $1.93 billion in the first nine months of 2002. Net premiums written grew 71.1% to $3.12 billion from $1.83 billion in 2002. The GAAP combined ratio for the first nine months of 2003 was 94.7% compared to 97.8% in 2002. Net investment income for the nine months ended September 30, 2003 was $295.7 million, an increase of 12.5% from $262.8 million in 2002. Cash flow from operations in the first nine months was $1.17 billion, compared to $455.0 million in the first nine months of 2002.

        At September 30, 2003, the Company’s shareholders’ equity was $3.03 billion, or $54.47 per outstanding share. The change in book value per share represents a 17.0% increase from shareholders’ equity of $2.37 billion, or $46.55 per outstanding share, at December 31, 2002.

        The Company also increased its estimate of 2004 operating earnings to $10.00 — $11.00 per diluted share, absent any unusual losses or market developments.

        The Company also announced that its subsidiary, Everest Reinsurance Company has reached agreement, subject to regulatory approval, to sell its United Kingdom branch to another of the Company’s subsidiaries, Everest Reinsurance (Bermuda) Ltd. The Company further announced that another of its subsidiaries, Everest National Insurance Company, has opened a regional office in California to better serve its western United States businesses.

        This press 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. In particular, our forecasts of future earnings are forward looking statements. 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 US and international markets. Everest Reinsurance (Bermuda), Ltd. provides reinsurance and insurance to worldwide property and casualty markets and reinsurance to life insurers. Everest National Insurance Company and Everest Security Insurance Company provide property and casualty insurance to policyholders in the United States. Everest Indemnity Insurance Company offers excess and surplus lines insurance in the United States. Additional information on Everest Re Group companies can be found at the Group’s web site atwww.everestre.com.

        A conference call discussing the third quarter results will be held at 8:30 a.m. Eastern Standard Time on October 21, 2003. The call will be available on the Internet through the Company’s web site or atwww.streetevents.com.

        Anyone receiving this release by wire or through the Internet may visit the Company’s web site to view supplemental financial information on the Company’s results. The supplemental information is located atwww.everestre.com in the “Financials/Financial Reports” section. The supplemental financial information may also be obtained by contacting the Company directly.

— Financial Details Follow —

EVEREST RE GROUP, LTD.
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME
(Dollars in thousands, except per share amounts)

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2003			2002			2003			2002
	(unaudited)						(unaudited)
REVENUES:
Premiums earned	$	1,046,353		$	555,600		$	2,643,211		$	1,549,138
Net investment income		100,283			86,412			295,720			262,782
Net realized capital loss		(30,055	)		(7,680	)		(41,543	)		(42,543	)
Net derivative income (expense)		3,784			(12,466	)		2,389			(17,606	)
Other (expense) income		(424	)		1,136			(6,024	)		(435	)
Total revenues		1,119,941			623,002			2,893,753			1,751,336
CLAIMS AND EXPENSES:
Incurred loss and loss adjustment expenses		738,254			392,082			1,836,767			1,097,765
Commission, brokerage, taxes and fees		232,548			127,956			599,762			369,285
Other underwriting expenses		22,933			17,299			66,717			48,148
Distributions related to trust preferred securities		4,121			--			12,364			--
Interest expense on senior notes		9,733			9,730			29,197			29,186
Interest expense on credit facility		327			966			1,035			2,728
Total claims and expenses		1,007,916			548,033			2,545,842			1,547,112
INCOME BEFORE TAXES		112,025			74,969			347,911			204,224
Income tax expense		11,699			13,699			43,663			28,486
NET INCOME	$	100,326		$	61,270		$	304,248		$	175,738
Other comprehensive (loss) income, net of tax		(126,705	)		117,718			45,544			88,920
COMPREHENSIVE (LOSS) INCOME	$	(26,379	)	$	178,988		$	349,792		$	264,658
PER SHARE DATA:
Average shares outstanding (000's)		55,499			50,977			53,514			50,139
Net income per common share - basic	$	1.81		$	1.20		$	5.69		$	3.51
Average diluted shares outstanding (000's)		56,562			51,627			54,408			50,974
Net income per common share - diluted	$	1.77		$	1.19		$	5.59		$	3.45

EVEREST RE GROUP, LTD.
CONSOLIDATED BALANCE SHEETS
(Dollars in thousands, except par value per share)

	September 30,			December 31,
		2003			2002
ASSETS:		(unaudited)
Fixed maturities - available for sale, at market value
(amortized cost: 2003, $7,877,293; 2002, $6,460,839)	$	8,241,804		$	6,779,858
Equity securities, at market value (cost: 2003, $59,965 ; 2002, $56,841)		57,427			47,473
Short-term investments		395,498			169,116
Other invested assets		92,419			53,856
Cash		141,637			208,830
Total investments and cash		8,928,785			7,259,133
Accrued investment income		115,314			85,959
Premiums receivable		946,464			673,377
Reinsurance receivables		1,190,314			1,116,362
Funds held by reinsureds		156,378			121,308
Deferred acquisition costs		301,479			207,416
Prepaid reinsurance premiums		89,126			63,437
Deferred tax asset		147,926			139,176
Other assets		217,439			198,435
TOTAL ASSETS	$	12,093,225		$	9,864,603
LIABILITIES:
Reserve for losses and adjustment expenses	$	5,786,721		$	4,905,582
Future policy benefit reserve		213,603			227,925
Unearned premium reserve		1,383,017			872,340
Funds held under reinsurance treaties		378,978			347,360
Losses in the course of payment		53,691			45,511
Contingent commissions		79			1,932
Other net payable to reinsurers		80,500			61,244
Current federal income taxes		3,110			(16,696	)
8.5% Senior notes due 3/15/2005		249,850			249,780
8.75% Senior notes due 3/15/2010		199,223			199,158
Revolving credit agreement borrowings		70,000			70,000
Company-obligated mandatorily redeemable preferred securities
of subsidiary trusts holding solely subordinated debentures
("trust preferred securities")		210,000			210,000
Accrued interest on debt and borrowings		3,830			13,481
Other liabilities		433,551			308,340
Total liabilities		9,066,153			7,495,957
SHAREHOLDERS' EQUITY:
Preferred shares, par value: $0.01; 50 million shares authorized;
no shares issued and outstanding		--			--
Common shares, par value: $0.01; 200 million shares authorized;
55.6 million shares issued in 2003 and 50.9 million shares
issued in 2002		560			513
Additional paid-in capital		946,878			618,521
Unearned compensation		(5,543	)		(340	)
Accumulated other comprehensive income, net of
deferred income taxes of $97.3 million in 2003 and
$74.4 million in 2002		267,086			221,542
Retained earnings		1,841,041			1,551,360
Treasury shares, at cost; 0.5 million shares in 2003 and 0.5 million
shares in 2002		(22,950	)		(22,950	)
Total shareholders' equity		3,027,072			2,368,646
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY	$	12,093,225		$	9,864,603

EVEREST RE GROUP, LTD.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in thousands)

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2003			2002			2003			2002
	(unaudited)						(unaudited)
CASH FLOWS FROM OPERATING ACTIVITIES:	$	492,282		$	179,898		$	1,173,147		$	454,978
CASH FLOWS FROM INVESTING ACTIVITIES :
Proceeds from investments sold		354,750			250,447			973,973			1,379,049
Proceeds from investments maturing or called		266,219			201,891			668,164			477,886
Cost of investments acquired		(914,343	)		(590,937	)		(2,969,313	)		(2,367,638	)
Net purchases of short-term investments		(182,587	)		(42,376	)		(224,051	)		(237,272	)
Net cash used in investing activities		(475,961	)		(180,975	)		(1,551,227	)		(747,975	)
CASH FLOWS FROM FINANCING ACTIVITIES:
Common shares issued during the period		3,028			100			323,104			348,085
Purchase of treasury stock		--			(22,895	)		--			(22,895	)
Dividends paid to shareholders		(4,996	)		(4,069	)		(14,567	)		(12,276	)
Borrowings on revolving credit agreement		--			25,000			--			45,000
Repayments on revolving credit agreement		--			(5,000	)		--			(25,000	)
Net cash (used in) provided by financing activities		(1,968	)		(6,864	)		308,537			332,914
EFFECT OF EXCHANGE RATE CHANGES ON CASH		(7,625	)		3,236			2,350			8,431
Net increase (decrease) in cash		6,728			(4,705	)		(67,193	)		48,348
Cash, beginning of period		134,909			124,931			208,830			71,878
Cash, end of period	$	141,637		$	120,226		$	141,637		$	120,226