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 Record Operating Earnings for 2014;
Net Income Return on Equity of 17%
HAMILTON, Bermuda – February 4, 2015 -- Everest Re Group, Ltd. (NYSE: RE) today reported fourth quarter 2014 net income available to common shareholders of $340.1 million, or $7.47 per diluted common share, compared to net income of $364.6 million, or $7.54 per diluted common share, for the fourth quarter of 2013. After-tax operating income1 available to common shareholders, excluding realized capital gains and losses, was $331.5 million, or $7.28 per diluted common share, for the fourth quarter of 2014, compared to $303.4 million, or $6.28 per diluted common share, for the same period in 2013.
For the year ended December 31, 2014, net income available to common shareholders was $1.2 billion, or $25.91 per diluted common share, compared to net income of $1.3 billion, or $25.44 per diluted common share, for 2013. After-tax operating income1 available to common shareholders, excluding realized capital gains and losses, was $1.1 billion, or $24.71 per diluted common share, for the full year 2013, compared to $1.1 billion or $21.47 per diluted common share, for 2013.
Commenting on the Company’s results, President and Chief Executive Officer, Dominic J. Addesso said, “Everest has had another stellar year with 10% growth in premium, 15% growth in operating earnings per share, and 16% growth in book value per share, adjusted for dividends. While it is a challenging marketplace, Everest continues to find and create opportunities for profitable growth due to our broadly diversified platform. Post January renewals, we remain confident in our ability to continue to generate strong returns for our shareholders.”
Operating highlights for the fourth quarter and full year of 2014 included the following:
| · | Gross written premiums for the quarter were $1.4 billion, an increase of 7% compared to the fourth quarter of 2013. For the full year, gross written premiums grew 10% to $5.7 billion with worldwide reinsurance premiums, including the Mt. Logan Re segment, up 15%. Direct insurance premiums were down 4% for the year. |
| · | The combined ratio was 80.5% for the quarter and 82.8% for the year, compared to 81.5% and 84.5%, respectively, for the same periods in 2013. The quarter included $15.0 million of catastrophe losses for the Brisbane, Australia hail storm that occurred in November, offset by reserve take downs on prior year catastrophe loss events. For the full year, catastrophe losses, net of reinstatement premiums totaled $56.0 million. Excluding catastrophe losses, reinstatement premiums and favorable prior year loss development, the calendar year attritional combined ratio was 82.0% compared to 81.0% for 2013. |
| · | Net investment income amounted to $134.0 million for the quarter and $530.6 million for the full year 2014. This included limited partnership income of $15.2 million and $40.9 million in each period, respectively. |
| · | Net after-tax realized capital gains totaled $8.7 million for the quarter and $55.5 million for the full year. Unrealized capital gains, net of tax, amounted to $22.1 million for the full year, largely driven by changes in interest rates. |
| · | Cash flow from operations was $387.9 million for the quarter and $1.3 billion for the full year 2014. This compared to $273.3 million and $1.1 billion for the same periods, respectively, in 2013. |
| · | For the year, the after-tax operating income1 return on average adjusted shareholders’ equity2 was 16.3% and net income return on equity was 17.1%. |
| · | During the quarter, the Company repurchased 590,791 of its common shares at an average price of $169.38 and a total cost of $100.1 million. For the year, the Company repurchased 3.2 million of its common shares for a total cost of $500.0 million. During January, the Company repurchased an additional 213,754 shares for a total cost of $36.0 million, which will be reflected in first quarter 2015 reporting. The repurchases were made pursuant to a share repurchase authorization, provided by the Company’s Board of Directors, under which there remains 6.1 million shares available. |
| · | Shareholders’ equity ended the year at $7.5 billion, up 7% from the $7.0 billion at December 31, 2013. Book value per share increased 14% from $146.57 at year-end 2013 to $166.75 at December 31, 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 fourth quarter results will be held at 10:30 a.m. Eastern Time on February 5, 2015. 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 | | | Twelve Months Ended | |
| | | December 31, | | | December 31, | |
| (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)* | | $ | 340,123 | | | $ | 7.47 | | | $ | 364,638 | | | $ | 7.54 | | | $ | 1,199,156 | | | $ | 25.91 | | | $ | 1,259,382 | | | $ | 25.44 | |
| After-tax net realized capital gains (losses) | | | 8,655 | | | | 0.19 | | | | 61,285 | | | | 1.27 | | | | 55,469 | | | | 1.20 | | | | 196,829 | | | | 3.98 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| After-tax operating income (loss)* | | $ | 331,468 | | | $ | 7.28 | | | $ | 303,353 | | | $ | 6.28 | | | $ | 1,143,687 | | | $ | 24.71 | | | $ | 1,062,553 | | | $ | 21.47 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| * attributable to common shareholders | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| (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--
