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

NEWS RELEASE

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

Contact:
Elizabeth B. Farrell
Vice President, Investor Relations
Everest Global Services, Inc.
908.604.3169

For Immediate Release

Everest Re Group Announces First Quarter Earnings

        ST. MICHAEL, Barbados – April 19, 2004 — Everest Re Group, Ltd. (NYSE: RE) reported first quarter 2004 after-tax operating income¹, which excludes realized capital gains and losses, of $151.5 million, or $2.67 per diluted share, a 45.6% increase compared to $104.1 million, or $2.02 per diluted share, in the first quarter of 2003. First quarter 2004 net income increased 33.6% to $126.1 million, or $2.22 per diluted share, compared to $94.4 million, or $1.83 per diluted share, in the first quarter of 2003. Operating income differs from net income only by the exclusion of realized gains and losses on investments.

        Gross premiums written for the first quarter of 2004 were $1.22 billion, a 22.3% increase compared to $1.0 billion in 2003. Net premiums written were $1.18 billion, an increase of 23.7% from $951.9 million for the first quarter of 2003. The Company’s GAAP combined ratio in the first quarter was 90.8% compared to 93.5% in 2003. Net investment income for the first quarter was $100.9 million compared to $93.5 million in the first quarter of 2003. Cash flow from operations for the first quarter of 2004 was $399.6 million, an increase of 22.0% from $327.7 million in the first quarter of 2003.

        At March 31, 2004, the Company’s shareholders’ equity was $3.36 billion, or $60.17 per outstanding share. The change in book value per share represents a 6.3% increase from shareholders’ equity of $3.16 billion, or $56.84 per outstanding share, at December 31, 2003.

        Commenting on the Company’s results, Chairman and Chief Executive Officer, Joseph V. Taranto said, “The Company continues to build on its leadership position and with strong earnings and a solid balance sheet, we believe we are well positioned to have another excellent year.”

        The Company also reaffirmed its estimate of 2004 operating earnings at $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 completed the sale of its United Kingdom branch to its affiliate, Everest Reinsurance (Bermuda), Ltd.

        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 U.S. 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 U.S.    Everest Indemnity Insurance Company offers excess and surplus lines insurance in the U.S.   Additional information on Everest Re Group companies can be found at the Group’s web site atwww.everestre.com.

        A conference call discussing the first quarter results will be held at 8:30 a.m. Eastern Standard Time on April 20, 2004. 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.

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¹ The company generally uses operating income, a non-GAAP financial measure, to evaluate its performance. After-tax operating income consists of net income excluding after-tax realized gains (losses). Although realized capital gains (losses) are an integral part of the Company’s insurance operations, the determination of realized capital gains (losses) is independent of the insurance underwriting process. The Company believes that the level of realized 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 makes it more difficult for users of the financial information to evaluate the Company’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 in their analyses for the reasons discussed above. The Company provides after-tax operating income to investors so that they have what management believes to be a useful supplement to GAAP information concerning the Company’s performance.

— Financial Details Follow —

EVEREST RE GROUP, LTD
CONSOLIDATED STATEMENTS OF OPERATIONS
AND COMPREHENSIVE INCOME
	Three Months Ended March 31,
(Dollars in thousands, except per share amounts)			2004			2003
			(unaudited)
REVENUES:
Premiums earned		$	1,055,065		$	744,870
Net investment income			100,897			93,505
Net realized capital loss			(34,908	)		(13,235	)
Net derivative expense			(3,752	)		(2,700	)
Other income (expense)			1,460			(1,147	)
Total revenues			1,118,762			821,293
CLAIMS AND EXPENSES:
Incurred losses and loss adjustment expenses			711,528			513,471
Commission, brokerage, taxes and fees			222,779			162,805
Other underwriting expenses			23,598			19,864
Interest expense on senior notes			9,736			9,731
Interest expense on junior subordinated debt			4,419			4,249
Interest expense on credit facility			324			360
Total claims and expenses			972,384			710,480
INCOME BEFORE TAXES			146,378			110,813
Income tax expense			20,277			16,446
NET INCOME		$	126,101		$	94,367
Other comprehensive income, net of tax			66,863			29,988
COMPREHENSIVE INCOME		$	192,964		$	124,355
PER SHARE DATA:
Average shares outstanding (000's)			55,771			50,897
Net income per common share - basic		$	2.26		$	1.85
Average diluted shares outstanding (000's)			56,834			51,521
Net income per common share - diluted		$	2.22		$	1.83

EVEREST RE GROUP, LTD
CONSOLIDATED BALANCE SHEETS
	March 31,			December 31,
(Dollars in thousands, except par value per share)		2004			2003
	(unaudited)
ASSETS:
Fixed maturities - available for sale, at market value
(amortized cost: 2004, $8,687,893; 2003, $8,357,723)	$	9,128,836		$	8,726,886
Equity securities, at market value (cost: 2004, $253,671; 2003, $146,407)		268,664			154,381
Short-term investments		579,570			151,853
Other invested assets (cost: 2004, $103,072; 2003, $102,742)		104,015			103,359
Cash		101,192			184,859
Total investments and cash		10,182,277			9,321,338
Accrued investment income		118,916			113,989
Premiums receivable		1,184,575			1,047,856
Reinsurance receivables		1,259,755			1,284,139
Funds held by reinsureds		172,198			157,364
Deferred acquisition costs		347,171			333,214
Prepaid reinsurance premiums		94,642			98,384
Deferred tax asset		135,872			145,271
Other assets		225,836			187,981
TOTAL ASSETS	$	13,721,242		$	12,689,536
LIABILITIES:
Reserve for losses and adjustment expenses	$	6,694,449		$	6,361,245
Future policy benefit reserve		202,866			205,275
Unearned premium reserve		1,618,602			1,499,640
Funds held under reinsurance treaties		343,415			385,768
Losses in the course of payment		39,292			11,133
Contingent commissions		3,626			2,135
Other net payable to reinsurers		35,124			46,037
Current federal income taxes		35,685			41,308
8.5% Senior notes due 3/15/2005		249,899			249,874
8.75% Senior notes due 3/15/2010		199,269			199,245
Revolving credit agreement borrowings		70,000			70,000
Junior subordinated debt securities payable		546,393			216,496
Accrued interest on debt and borrowings		4,169			13,695
Other liabilities		313,851			222,785
Total liabilities		10,356,640			9,524,636
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;
55.9 million shares issued in 2004 and 55.7 million shares issued in 2003		564			561
Additional paid-in capital		966,699			954,658
Unearned compensation		(4,971	)		(5,257	)
Accumulated other comprehensive income, net of deferred income taxes of
$125.6 million in 2004 and $117.5 million in 2003		346,940			280,077
Retained earnings		2,078,320			1,957,811
Treasury shares, at cost; 0.5 million shares in 2004 and 0.5 million
shares in 2003		(22,950	)		(22,950	)
Total shareholders' equity		3,364,602			3,164,900
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY	$	13,721,242		$	12,689,536

EVEREST RE GROUP, LTD
CONSOLIDATED STATEMENTS OF CASH FLOWS
	Three Months Ended March 31,
(Dollars in thousands)		2004		2003
		(unaudited)
CASH FLOWS FROM OPERATING ACTIVITIES:		$    399,645		$ 327,655
CASH FLOWS FROM INVESTING ACTIVITIES :
Proceeds from investments sold		615,639		465,809
Proceeds from investments maturing or called		168,786		196,985
Cost of investments acquired		(1,168,666	)	(967,282	)
Net purchases of short-term investments		(427,798	)	(72,283	)
Net cash used in investing activities		(812,039	)	(376,771	)
CASH FLOWS FROM FINANCING ACTIVITIES:
Common shares issued during the period		12,044		887
Dividends paid to shareholders		(5,592	)	(4,581	)
Proceeds from issuance of junior subordinated notes		319,997		--
Net cash provided by (used in) financing activities		326,449		(3,694	)
EFFECT OF EXCHANGE RATE CHANGES ON CASH		2,278		(2,299	)
Net decrease in cash		(83,667	)	(55,109	)
Cash, beginning of period		184,859		208,830
Cash, end of period		$    101,192		$ 153,721