Everest Re (EG) 8-K Completion of Acquisition or Disposition of Assets

NEWS RELEASE

EVEREST RE GROUP, LTD.
Wessex House, 45 Reid Street, 2^nd Floor, Hamilton HM DX, Bermuda

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

For Immediate Release

Everest Re Group Reports Second Quarter Earnings and GAAP Equity Over $4 Billion

        HAMILTON, Bermuda – July 25, 2005 — Everest Re Group, Ltd. (NYSE: RE) reported second quarter 2005 after-tax operating income⁽¹⁾, which excludes realized capital gains and losses, of $173.3 million, or $3.03 per diluted share, a nominal decrease compared to $174.4 million, or $3.07 per diluted share, in the second quarter of 2004. Second quarter 2005 net income decreased 26.4% to $194.2 million, or $3.40 per diluted share, compared to $264.0 million, or $4.64 per diluted share, in the second quarter of 2004. Operating income differs from net income only by the exclusion of realized gains and losses on investments.

        For the six months ended June 30, 2005, after-tax operating income was $338.6 million, or $5.93 per diluted share, an increase of 3.9% compared to $325.9 million, or $5.73 per diluted share, in 2004. Net income in the first six months of 2005 was $361.3 million, or $6.33 per diluted share, a decrease of 7.4% compared to $390.1 million, or $6.86 per diluted share, in 2004.

        Gross premiums written for the second quarter of 2005 were $1.11 billion, a 2.2% increase compared to $1.09 billion in 2004. Net premiums written were $1.07 billion, an increase of 2.2% from $1.05 billion for the second quarter of 2004. The Company’s GAAP combined ratio in the second quarter was 91.3% compared to 91.5% in 2004. Net investment income for the second quarter was $137.4 million compared to $136.8 million in the second quarter of 2004. Cash flow from operations for the second quarter of 2005 was $291.1 million, a decrease of 25.9% from $392.9 million in the second quarter of 2004.

        For the six months ended June 30, 2005, gross premiums written were $2.16 billion, a 6.6% decrease from $2.31 billion in the first six months of 2004. Net premiums written for the same period decreased 6.4% to $2.09 billion from $2.23 billion in 2004. The GAAP combined ratio for the first six months of 2005 was 91.3% compared to 91.1% in 2004. Net investment income for the six months ended June 30, 2005 was $270.3 million, an increase of 13.7% from $237.7 million in 2004. Cash flow from operations in the first six months was $616.3 million, compared to $792.5 million in the first six months of 2004.

        At June 30, 2005, the Company’s shareholders’ equity was $4.08 billion, or $72.37 per outstanding share. The change in book value represents a 9.9% increase from shareholders’ equity of $3.71 billion, or $66.09 per outstanding share, at December 31, 2004.

        Commenting on the Company’s results, Chairman and Chief Executive Officer, Joseph V. Taranto said, “We have reached yet another milestone with shareholders’ equity now in excess of $4 billion and continue our disciplined pursuit of opportunities to keep this capital effectively deployed.”

        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 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 second quarter results will be held at 8:30 a.m. Eastern Time on July 26, 2005. 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 “Financial Reports” section of the “Investor Center”. The supplemental financial information may also be obtained by contacting the Company directly.

⁽¹⁾     The Company generally uses after-tax 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) as the following reconciliation displays:

	Three Months Ended June 30,								Six Months Ended June 30,
(Dollars in thousands, except per share amounts)	2005				2004				2005				2004
	(unaudited)								(unaudited)
		amount		per diluted share		amount		per diluted share		amount		per diluted share		amount		per diluted share
Net income	$	194,180	$	3.40	$	263,967	$	4.64	$	361,275	$	6.33	$	390,068	$	6.86
After-tax realized gains		20,873		0.37		89,584		1.58		22,721		0.40		64,142		1.13
After-tax operating income	$	173,307	$	3.03	$	174,383	$	3.07	$	338,554	$	5.93	$	325,926	$	5.73

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 June 30,						Six Months Ended June 30,
(Dollars in thousands, except per share amounts)	2005			2004			2005			2004
	(unaudited)						(unaudited)
REVENUES:
Premiums earned	$	1,092,500		$	1,004,258		$	2,098,415		$	2,059,323
Net investment income		137,448			136,845			270,334			237,742
Net realized capital gains		27,309			116,681			29,786			81,773
Net derivative (expense) income		(6,816	)		4,382			(8,037	)		630
Other (expense) income		(885	)		1,951			(6,275	)		3,411
Total revenues		1,249,556			1,264,117			2,384,223			2,382,879
CLAIMS AND EXPENSES:
Incurred losses and loss adjustment expenses		690,615			675,513			1,358,869			1,387,041
Commission, brokerage, taxes and fees		276,585			214,886			498,907			437,665
Other underwriting expenses		30,151			28,369			58,907			51,967
Interest expense on senior notes		7,709			9,736			19,944			19,472
Interest expense on junior subordinated debt		9,362			9,248			18,724			13,667
Interest expense on credit facility		98			334			208			658
Total claims and expenses		1,014,520			938,086			1,955,559			1,910,470
INCOME BEFORE TAXES		235,036			326,031			428,664			472,409
Income tax expense		40,856			62,064			67,389			82,341
NET INCOME	$	194,180		$	263,967		$	361,275		$	390,068
Other comprehensive income (loss), net of tax		134,158			(266,467	)		5,533			(199,604	)
COMPREHENSIVE INCOME (LOSS)	$	328,338		$	(2,500	)	$	366,808		$	190,464
PER SHARE DATA:
Average shares outstanding (000's)		56,266			55,933			56,204			55,852
Net income per common share - basic	$	3.45		$	4.72		$	6.43		$	6.98
Average diluted shares outstanding (000's)		57,128			56,860			57,102			56,846
Net income per common share - diluted	$	3.40		$	4.64		$	6.33		$	6.86

EVEREST RE GROUP, LTD. CONSOLIDATED BALANCE SHEETS
(Dollars in thousands, except par value per share)	June 30, 2005			December 31, 2004
	(unaudited)
ASSETS:
Fixed maturities - available for sale, at market value
(amortized cost: 2005, $9,622,490; 2004, $9,609,617)	$	9,984,159		$	9,947,172
Equity securities, at market value (cost: 2005, $961,417; 2004, $571,717)		1,050,192			650,871
Short-term investments		581,832			585,875
Other invested assets (cost: 2005, $230,250; 2004, $160,188)		231,469			161,324
Cash		112,949			184,930
Total investments and cash		11,960,601			11,530,172
Accrued investment income		130,247			130,216
Premiums receivable		1,301,677			1,314,160
Reinsurance receivables		1,079,501			1,210,795
Funds held by reinsureds		222,373			195,944
Deferred acquisition costs		327,926			331,909
Prepaid reinsurance premiums		80,207			84,646
Deferred tax asset		163,341			159,874
Taxes recoverable		2,209			-
Other assets		151,587			115,050
TOTAL ASSETS	$	15,419,669		$	15,072,766
LIABILITIES:
Reserve for losses and adjustment expenses	$	8,049,026		$	7,836,306
Future policy benefit reserve		142,405			152,179
Unearned premium reserve		1,573,369			1,595,630
Funds held under reinsurance treaties		221,173			282,472
Losses in the course of payment		41,039			19,069
Contingent commissions		1,422			2,509
Other net payable to reinsurers		37,049			47,462
Current federal income taxes		-			31,854
8.5% Senior notes due 3/15/2005		-			249,976
8.75% Senior notes due 3/15/2010		199,392			199,341
5.4% Senior notes due 10/15/2014		249,600			249,584
Junior subordinated debt securities payable		546,393			546,393
Accrued interest on debt and borrowings		10,041			16,426
Other liabilities		267,225			131,047
Total liabilities		11,338,134			11,360,248
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;
(2005) 56.4 million and (2004) 56.2 million issued		569			566
Additional paid-in capital		997,626			983,025
Unearned compensation		(7,103	)		(7,108	)
Accumulated other comprehensive income, net of deferred income taxes of
$139.9 million at 2005 and $135.6 million at 2004		334,270			328,737
Retained earnings		2,779,123			2,430,248
Treasury shares, at cost; 0.5 million shares (2005 and 2004)		(22,950	)		(22,950	)
Total shareholders' equity		4,081,535			3,712,518
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY	$	15,419,669		$	15,072,766

EVEREST RE GROUP, LTD. CONSOLIDATED STATEMENTS OF CASH FLOWS
	Three Months Ended June 30,						Six Months Ended June 30,
(Dollars in thousands)	2005			2004			2005			2004
	(unaudited)						(unaudited)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$	194,180		$	263,967		$	361,275		$	390,068
Adjustments to reconcile net income to net cash provided by
operating activities:
(Increase) decrease in premiums receivable		(26,235	)		(23,261	)		6,543			(159,345	)
(Increase) decrease in funds held by reinsureds, net		(56,041	)		4,179			(93,123	)		(53,588	)
Decrease (increase) in reinsurance receivables		106,051			(21,448	)		117,194			(528	)
Decrease (increase) in deferred tax asset		3,466			(17,764	)		(9,182	)		(15,354	)
Increase in reserve for losses and loss adjustment expenses		136,651			283,059			277,343			621,244
Decrease in future policy benefit reserve		(7,428	)		(44,884	)		(9,774	)		(47,293	)
(Decrease) increase in unearned premiums		(19,345	)		23,994			(18,503	)		142,739
(Decrease) increase in other assets and liabilities		(17,034	)		34,304			2,040			(17,825	)
Non-cash compensation expense		449			286			893			572
Amortization of bond premium		3,633			7,070			11,277			13,501
Amortization of underwriting discount on senior notes		33			49			91			97
Realized capital gains		(27,309	)		(116,681	)		(29,786	)		(81,773	)
Net cash provided by operating activities		291,071			392,870			616,288			792,515
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from fixed maturities matured/called - available for sale		205,674			191,095			328,689			359,881
Proceeds from fixed maturities sold - available for sale		1,051,729			625,788			1,171,999			1,138,675
Proceeds from equity securities sold		10,331			6,678			10,331			7,995
Proceeds from other invested assets sold		28,941			4,032			30,722			4,312
Cost of fixed maturities acquired - available for sale		(1,186,966	)		(740,624	)		(1,554,934	)		(1,800,771	)
Cost of equity securities acquired		(232,696	)		(101,462	)		(400,717	)		(209,692	)
Cost of other invested assets acquired		(82,761	)		(8,163	)		(89,178	)		(8,452	)
Net (purchases) sales of short-term securities		(152,672	)		(252,449	)		6,194			(680,247	)
Net increase (decrease) in unsettled securities transactions		39,758			(120,045	)		70,932			(18,890	)
Net cash used in investing activities		(318,662	)		(395,150	)		(425,962	)		(1,207,189	)
CASH FLOWS FROM FINANCING ACTIVITIES:
Common shares issued during the period		3,271			7,986			13,716			20,030
Dividends paid to shareholders		(6,202	)		(5,605	)		(12,400	)		(11,197	)
Repayment of senior notes		-			-			(250,000	)		-
Net proceeds from issuance of junior subordinated notes		-			-			-			319,997
Net cash (used in) provided by financing activities		(2,931	)		2,381			(248,684	)		328,830
EFFECT OF EXCHANGE RATE CHANGES ON CASH		(8,051	)		3,294			(13,623	)		5,572
Net (decrease) increase in cash		(38,573	)		3,395			(71,981	)		(80,272	)
Cash, beginning of period		151,522			101,192			184,930			184,859
Cash, end of period	$	112,949		$	104,587		$	112,949		$	104,587
SUPPLEMENTAL CASH FLOW INFORMATION
Cash transactions:
Income taxes paid, net	$	70,561		$	36,651		$	107,451		$	56,179
Interest paid	$	16,322		$	9,727		$	45,169		$	33,684
Non-cash financing transactions:
Issuance of common shares	$	888		$	-		$	888		$	-