EVEREST RE GROUP, LTD.
Wessex House, 45 Reid Street, 2nd 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 Results with 12% Growth in Premium,
17% Net Income Return on Equity, and 5% Growth in Book Value per Share
HAMILTON, Bermuda – July 23, 2014 -- Everest Re Group, Ltd. (NYSE: RE) today reported second quarter 2014 net income of $290.2 million, or $6.26 per diluted common share, compared to net income of $275.6 million, or $5.56 per diluted common share, for the second quarter of 2013. After-tax operating income1, excluding realized capital gains and losses, was $250.8 million, or $5.41 per diluted common share, for the second quarter of 2014, compared to after-tax operating income1 of $253.2 million, or $5.10 per diluted common share, for the same period last year.
For the six months ended June 30, 2014, net income was $584.1 million, or $12.46 per diluted common share, compared to $660.0 million, or $13.09 per diluted common share, for the first six months of 2013. After-tax operating income1, excluding realized capital gains and losses, was $531.7 million, or $11.35 per diluted common share, compared to $554.2 million or $10.99 per diluted common share, for the same period in 2013.
Commenting on the Company’s results, President and Chief Executive Officer, Dominic J. Addesso said, “Everest continues to generate strong earnings, despite a challenging marketplace. We are seeing select market opportunities, which is driving top-line growth and producing excellent underwriting margins and double digit returns on equity. This is driving growth in shareholder value with book value per share, adjusted for dividends, up over 10% through the first six months of the year. We continue to strategically maneuver our underwriting portfolio to find the best opportunities and look forward to continuing this strong pace through the remainder of the year.”
Operating highlights for the second quarter of 2014 included the following:
| · | Gross written premiums increased 12% to $1.4 billion compared to the second quarter of 2013. Worldwide, reinsurance premiums, including the Mt. Logan Re segment, were up 16% while insurance premiums were flat, quarter over quarter. Growth opportunities in U.S. property and specialty lines continue to drive the growth in the reinsurance book. |
| · | The combined ratio for the quarter was 84.7% compared to 87.6% in the second quarter of 2013. Excluding catastrophe losses, reinstatement premiums, and prior period loss development, the current quarter attritional combined ratio was 81.4% compared to 80.2% in the same period last year. |
| · | Catastrophe losses amounted to $45.0 million in the quarter, arising from the Chile earthquake that occurred during the quarter and late reported losses from severe snowstorms in Japan during February. The net impact of these losses, after reinstatement premiums, taxes, and non-controlling interest, was $32.1 million. |
| · | Net investment income for the quarter was $131.2 million, including limited partnership income of $6.2 million. |
| · | Net after-tax realized and unrealized capital gains totaled $39.4 million and $88.1 million, respectively, for the quarter. |
| · | Cash flow from operations was $223.3 million compared to $179.6 million for the same period in 2013. |
| · | For the quarter, the annualized after-tax operating income1 return on average adjusted shareholders’ equity2 was 14.6%. |
| · | During the quarter, the Company repurchased 475,092 of its common shares at an average price of $157.78 and a total cost of $75.0 million. Subsequent to the quarter, the Company purchased an additional 64,827 shares for a total cost of $10.3 million. Through the date of this release, the Company had repurchased 2.2 million of its common shares for a total cost of $335.2 million. The repurchases were made pursuant to a share repurchase authorization, provided by the Company’s Board of Directors, under which there remains 2.3 million shares available. |
| · | Shareholders’ equity ended the quarter at $7.3 billion. Book value per share increased 9.3% from $146.57 at December 31, 2013 to $160.27 at June 30, 2014. |
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. Mt. Logan Re, a segregated cell company, capitalized by the Company and third party investors, is a specialty reinsurer of catastrophe risks. 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 Group’s web site at www.everestregroup.com.
A conference call discussing the second quarter results will be held at 10:30 a.m. Eastern Time on July 24, 2014. The call will be available on the Internet through the Company’s web site or at www.streetevents.com.
Recipients are encouraged to visit the Company’s web site to view supplemental financial information on the Company’s results. The supplemental information is located at www.everestregroup.com in the “Financial Reports” section of the “Investor Center”. 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:
| | | Three Months Ended | | | Six Months Ended | |
| | | June 30, | | | June 30, | |
| (Dollars in thousands, except per share amounts) | | 2014 | | | 2013 | | | 2014 | | | 2013 | |
| | | (unaudited) | | (unaudited) |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | Per Diluted | | | | | | Per Diluted | | | | | | Per Diluted | | | | | | Per Diluted | |
| | | | | | Common | | | | | | Common | | | | | | Common | | | | | | Common | |
| | | Amount | | | Share | | | Amount | | | Share | | | Amount | | | Share | | | Amount | | | Share | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| Net income (loss) | | $ | 290,184 | | | $ | 6.26 | | | $ | 275,642 | | | $ | 5.56 | | | $ | 584,117 | | | $ | 12.46 | | | $ | 659,985 | | | $ | 13.09 | |
| After-tax net realized capital gains (losses) | | | 39,413 | | | | 0.85 | | | | 22,492 | | | | 0.45 | | | | 52,377 | | | | 1.12 | | | | 105,763 | | | | 2.10 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| After-tax operating income (loss) | | $ | 250,771 | | | $ | 5.41 | | | $ | 253,150 | | | $ | 5.10 | | | $ | 531,740 | | | $ | 11.35 | | | $ | 554,222 | | | $ | 10.99 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| (Some amounts may not reconcile due to rounding.) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Although net realized capital gains (losses) are an integral part of the Company’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 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 (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 Company’s performance.
2Adjusted shareholders’ equity excludes net after-tax unrealized (appreciation) depreciation of investments.
--Financial Details Follow--
