1
N
EWS
R
ELEASE
EVEREST RE GROUP, LTD.
Seon Place, 141 Front Street, 4
th
Contacts
Media:
Dane
Lopes
Investors: Jon
Levenson
Group Head of Marketing
&
Communications
Head of Investor
Relations
Everest Global
Services,
Inc.
Everest Global Services, Inc.
203.388.3977
908.604.3169
For Immediate Release
Everest Re Group Reports Fourth Quarter and Full Year 2020 Results:
Full Year Net Income of $514 Million
15% Growth in Full Year Gross Written Premium with Underlying Profit Improvement
11.4% Year on Year Growth in Book Value Per Share Inclusive of Dividends
HAMILTON, Bermuda -- (BUSINESS WIRE) – February 8, 2021 – Everest Re Group, Ltd.
(“Everest” or the “Company”) today reported its 2020 fourth quarter and year end results.
Fourth Quarter 2020 Highlights
●
Net income of $64 million equal to $1.59 per share
●
Net operating loss of $(44) million, $(1.12) per common share
●
Gross written premium growth of 13%
●
Attritional combined ratio of 86.3%, a 4 point improvement year over year
●
Pre-tax net catastrophe losses of $70 million, Covid-19 Pandemic (“Pandemic”) losses of
$76 million, and a prior year reserve strengthening of $400 million
2
Full Year 2020 Highlights
●
Net income of $514 million, $12.78 per diluted common share
●
Net operating income of $300 million, $7.46 per diluted common share
●
Growth in diluted book value per share of 11.4% inclusive of dividends
●
Gross written premium growth of 15%
●
Attritional combined ratio of 87.5%, ~ 1 point improvement year over year
●
2020 cash flow from operations of $2.9 billion
The following table summarizes the Company’s net income and related financial metrics and
provides details on shareholders’ equity and book value per share.
Net income and operating income
Q4
Full Year
Q4
Full Year
All values in USD millions except for per share amounts and percentages
2020
2020
2019
2019
Everest Re Group
Net income
Net operating income (loss)
Net income per diluted common share
Net operating income (loss) per diluted common share
Net income annualized return on average equity
2.8%
5.8%
10.0%
12.0%
Net operating income annualized return on average equity
-2.0%
3.4%
6.0%
10.3%
Year end equity and book value
Shareholders' equity
9,726.2
9,132.9
Book value per share
243.25
223.85
Growth in bvps adjusted for dividends
11.4%
18.7%
Notes
1/ Refer to the reconciliation of net income to net operating income found later in this release
3
Everest Re Group President & CEO Juan C. Andrade commented: “We are relentlessly executing our
strategies from a position of strength in this robust market as evidenced by 2020 growth in gross written
premiums of 15% and net written premiums of 17% and improvement in
underlying underwriting
profitability. Our attritional combined ratio improved approximately one point to 87.5% versus the prior
year, with our Insurance segment improving 2.3 points to 94.2%. Despite the $511 million Pandemic loss
provision and a $400 million prior accident year reserve strengthening, we delivered $300 million in
operating income and $514 million in net income providing a return on equity of 5.8%. Everest’s
investment income remained resilient at $642 million despite the Pandemic’s impact on financial markets
and the sharp decline in interest rates. Our total shareholders’ equity grew to a record $9.7 billion from $9.1
billion during the year, representing net book value per share growth of 11.4% including dividends. Everest
has a strong capital position bolstered by the $1.0 billion senior notes offering and a leading global franchise
with great momentum entering 2021.”
The following information summarizes the Company’s underwriting results, on a consolidated basis and
also by segment – Reinsurance and Insurance, with selected commentary on results by segment.
Underwriting information - Everest Re Group
Q4
Full Year
Q4
Full Year
Year on year
change
All values in USD millions except for percentages
2020
2020
2019
2019
Q4
Full Year
Gross written premium
12.9%
14.8%
Net written premium
15.5%
16.5%
Combined ratio
109.1%
102.9%
101.5%
95.5%
7.6 pts
7.4 pts
Attritional combined ratio
86.3%
87.5%
90.3%
88.4%
-4.0 pts
-0.9 pts
Pre-tax net catastrophe losses
Pre-tax net covid losses
Pre-tax net prior year reserve development
Notes
1/ Attritional ratios exclude prior year reserve development, Covid-19 pandemic impacts, catastrophe losses, and reinstatement premiums
Reinsurance segment
●
The reinsurance segment achieved strong growth with gross written premiums up 12% for the
quarter and 15% for the year, driven by new business opportunities, growth with existing customers,
and improved rates and terms and conditions.
4
●
The combined ratio for the quarter and full year 2020 reflected the impact of catastrophe losses,
Covid-19 pandemic losses, and a reserve adjustment in the amount of $400 million.
●
We have a more profitable portfolio driven by the consistent execution of our underwriting
initiatives.
Underwriting information - Reinsurance segment
Q4
Full Year
Q4
Full Year
Year on year change
All values in USD millions except for percentages
2020
2020
2019
2019
Q4
Full Year
Gross written premium
12.0%
14.6%
Net written premium
18.0%
18.1%
Combined ratio
112.4%
103.0%
103.9%
95.4%
8.5 pts
7.6 pts
Attritional combined ratio
83.9%
85.2%
87.4%
85.5%
-3.5 pts
-0.3 pts
Pre-tax net catastrophe losses
Pre-tax net covid losses
Pre-tax net prior year reserve development
Notes
1/ Attritional ratios exclude prior year reserve development, Covid-19 pandemic impacts, catastrophe losses, and reinstatement premiums
Insurance segment
●
The Company’s insurance segment achieved strong growth with gross written premiums up 15% for
the quarter and 15% for the year, driven primarily by new business opportunities, strong renewal
retention, and rate improvement.
●
The combined ratio for the quarter and full year 2020 reflected the impact of catastrophe losses and
Covid-19 pandemic losses.
●
We achieved record renewal rate increases of +21% in the fourth quarter excluding workers
compensation, and up 14% including workers compensation where we are seeing rates flatten.
5
Underwriting information - Insurance segment
Q4
Full Year
Q4
Full Year
Year on year change
All values in USD millions except for percentages
2020
2020
2019
2019
Q4
Full Year
Gross written premium
14.9%
15.2%
Net written premium
9.1%
12.3%
Combined ratio
99.0%
102.6%
95.1%
95.8%
3.9 pts
6.8 pts
Attritional combined ratio
93.8%
94.2%
98.1%
96.5%
-4.3 pts
-2.3 pts
Pre-tax net catastrophe losses
Pre-tax net covid losses
Pre-tax net prior year reserve development
Notes
1/ Attritional ratios exclude prior year reserve development, Covid-19 pandemic impacts, catastrophe losses, and reinstatement premiums
Investments and capital
●
Net investment income of $222 million for the quarter and $647 million for the year, including
limited partnership gains of $91 million for the quarter and $113 million for the year
●
Total invested assets and cash of $25.5 billion at December 31, 2020, 23% growth year over year
●
Shareholders’ equity increased to a record $9.7 billion at December 31, 2020
●
Book value per diluted share at December 31, 2020 of $243.25, up 11.4% on a dividend adjusted
basis since year end 2019
●
Common share dividends declared and paid of $1.55 per share, equal to $62 million for the quarter
●
The Company repurchased no common shares in the quarter
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,
6
competition, investment market and investment income fluctuations, trends in insured and paid losses,
catastrophes, pandemic, 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.
About Everest Re Group, Ltd.
Everest Re Group, Ltd. (“Everest”) is a leading global provider of reinsurance and insurance, operating for
close to 50 years through subsidiaries in the U.S., Europe, Singapore, Canada, Bermuda, and other
territories.
Everest offers property, casualty, and specialty products through its various operating affiliates located in
key markets around the world.
Everest common stock (NYSE:RE) is a component of the S&P 500 index.
Additional information about Everest, our people, and our products can be found on our website at
www.everestre.com
. All issuing companies may not do business in all jurisdictions.
A conference call discussing the second quarter results will be held at 8:00 a.m. Eastern Time on February 9,
2021. The call will be available on the Internet through the Company’s web site at everestre.com/investors.
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.everestre.com
Reports/Quarterly Reports” section of the website. The supplemental financial information may also be
obtained by contacting the Company directly.
_______________________________________________
7
The 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) and after-tax net foreign exchange income (expense) as the following
reconciliation displays:
Three Months Ended
Twelve Months Ended
December 31,
December 31,
(Dollars in thousands, except per share amounts)
2020
2019
2020
2019
(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)
$63,601
$1.59
$217,644
$5.32
$514,151
$12.78
$1,009,461
$24.70
After-tax net realized capital gains (losses)
149,950
3.74
61,052
1.49
217,017
-
5.39
150,808
3.69
After-tax net foreign exchange income (expense)
(42,165)
(1.05)
25,763
0.63
(2,932)
(0.07)
(13,767)
(0.34)
After-tax operating income (loss)
$(44,184)
$(1.12)
$130,828
$3.20
$300,066
$7.46
$872,420
$21.34
(Some amounts may not reconcile due to rounding.)
Although net realized capital gains (losses) and net foreign exchange income (expense) are an integral part
of the Company’s insurance operations, the determination of net realized capital gains (losses) and foreign
exchange income (expense) is independent of the insurance underwriting process. The Company believes
that the level of net realized capital gains (losses) and net foreign exchange income (expense) 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.
--Financial Details Follow--
8
EVEREST RE GROUP, LTD.
CONSOLIDATED STATEMENTS OF OPERATIONS
AND COMPREHENSIVE INCOME (LOSS)
Three Months Ended
Twelve Months Ended
December 31,
December 31,
(Dollars in thousands, except per share amounts)
2020
2019
2020
2019
(unaudited)
(unaudited)
REVENUES:
Premiums earned
$2,396,483
$1,948,071
$8,681,513
$7,403,686
Net investment income
222,349
146,077
642,465
647,139
Net realized capital gains (losses):
Credit allowances on fixed maturity securities
17,896
-
(1,745)
-
Other-than-temporary impairments on fixed maturity securities
(5,495)
-
(20,899)
Other net realized capital gains (losses)
165,490
80,938
269,394
205,903
Total net realized capital gains (losses)
183,386
75,443
267,649
185,004
Other income (expense)
(40,819)
44,495
6,487
(4,660)
Total revenues
2,761,399
2,214,086
9,598,114
8,231,169
CLAIMS AND EXPENSES:
Incurred losses and loss adjustment expenses
1,976,771
1,407,794
6,550,837
4,922,898
Commission, brokerage, taxes and fees
513,080
450,226
1,873,250
1,703,726
Other underwriting expenses
125,372
118,923
511,237
440,899
Corporate expenses
11,934
10,344
41,118
32,966
Interest, fees and bond issue cost amortization expense
14,847
7,721
36,323
31,693
Total claims and expenses
2,642,004
1,995,008
9,012,765
7,132,182
INCOME (LOSS) BEFORE TAXES
119,395
219,078
585,349
1,098,987
Income tax expense (benefit)
55,794
1,434
71,198
89,526
NET INCOME (LOSS)
$63,601
$217,644
$514,151
$1,009,461
Other comprehensive income (loss), net of tax:
Unrealized appreciation (depreciation) ("URA(D)") on securities arising
during the period
87,375
(28,159)
423,210
496,430
Reclassification adjustment for realized losses (gains) included in net
income (loss)
(16,165)
(8,393)
(3,476)
(12,613)
Total URA(D) on securities arising during the period
71,210
(36,552)
419,734
483,817
Foreign currency translation adjustments
55,937
29,235
86,327
14,030
Benefit plan actuarial net gain (loss) for the period
(5,615)
(12,591)
(5,615)
(12,591)
Reclassification adjustment for amortization of net (gain) loss included
in net income (loss)
1,768
1,788
6,300
5,453
Total benefit plan net gain (loss) for the period
(3,847)
(10,803)
685
(7,138)
Total other comprehensive income (loss), net of tax
123,300
(18,120)
506,746
490,709
COMPREHENSIVE INCOME (LOSS)
$186,901
$199,524
$1,020,897
$1,500,170
EARNINGS PER COMMON SHARE:
Basic
$1.59
$5.34
$12.81
$24.77
Diluted
1.59
5.32
12.78
24.70
9
EVEREST RE GROUP, LTD.
CONSOLIDATED BALANCE SHEETS
December 31,
(Dollars and share amounts in thousands, except par value per share)
2020
2019
(unaudited)
ASSETS:
Fixed maturities - available for sale, at market value
$20,040,173
$16,824,944
(amortized cost: 2020, $19,225,068; 2019, $16,473,491, credit allowances: 2020,
($1,745); 2019, $0)
Fixed maturities - available for sale, at fair value
-
5,826
Equity securities, at fair value
1,472,236
931,457
Short-term investments (cost: 2020, $1,135,088; 2019, $414,639)
1,134,950
414,706
Other invested assets (cost: 2020, $2,012,581; 2019, $1,763,531)
2,012,581
1,763,531
Cash
801,651
808,036
Total investments and cash
25,461,591
20,748,500
Accrued investment income
141,304
116,804
Premiums receivable
2,680,562
2,259,088
Reinsurance receivables
1,994,555
1,763,471
Funds held by reinsureds
716,655
489,901
Deferred acquisition costs
622,053
581,863
Prepaid reinsurance premiums
412,015
445,716
Income taxes
17,253
305,711
Other assets
742,369
612,997
TOTAL ASSETS
$32,788,357
$27,324,051
LIABILITIES:
Reserve for losses and loss adjustment expenses
16,398,997
13,611,313
Future policy benefit reserve
37,723
42,592
Unearned premium reserve
3,501,359
3,056,735
Funds held under reinsurance treaties
15,807
10,668
Other net payable to reinsurers
294,347
291,660
Losses in course of payment
127,971
51,950
Senior notes due 6/1/2044
397,194
397,074
Senior notes due 10/1/2050
979,524
-
Long term notes due 5/1/2067
223,674
236,758
Borrowings from FHLB
310,000
-
Accrued interest on debt and borrowings
10,460
2,878
Unsettled securities payable
206,693
30,650
Other liabilities
558,432
458,848
Total liabilities
23,062,181
18,191,126
SHAREHOLDERS' EQUITY:
Common shares, par value: $0.01; 200,000 shares authorized; (2020) 69,620
and (2019) 69,464 outstanding before treasury shares
696
694
Additional paid-in capital
2,245,301
2,219,660
Accumulated other comprehensive income (loss), net of deferred income tax expense
'(benefit) of $80,451 at 2020 and $30,996 at 2019
534,899
28,152
Treasury shares, at cost; 29,636 shares (2020) and 28,665 shares (2019)
(3,622,172)
(3,422,152)
Retained earnings
10,567,452
10,306,571
Total shareholders' equity
9,726,176
9,132,925
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY
$32,788,357
$27,324,051
10
EVEREST RE GROUP, LTD.
CONSOLIDATED STATEMENTS OF CASH FLOWS
Twelve Months Ended
December 31,
(Dollars in thousands)
2020
2019
(unaudited)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss)
$514,151
$1,009,461
Adjustments to reconcile net income to net cash provided by operating activities:
Decrease (increase) in premiums receivable
(387,123)
(62,018)
Decrease (increase) in funds held by reinsureds, net
(219,321)
(56,722)
Decrease (increase) in reinsurance receivables
(150,753)
67,444
Decrease (increase) in income taxes
239,883
237,479
Decrease (increase) in prepaid reinsurance premiums
55,334
(95,207)
Increase (decrease) in reserve for losses and loss adjustment expenses
2,627,813
402,380
Increase (decrease) in future policy benefit reserve
(4,869)
(4,186)
Increase (decrease) in unearned premiums
404,049
521,709
Increase (decrease) in other net payable to reinsurers
(24,163)
66,477
Increase (decrease) in losses in course of payment
74,759
(33,557)
Change in equity adjustments in limited partnerships
(103,772)
(108,332)
Distribution of limited partnership income
122,326
81,300
Change in other assets and liabilities, net
(95,968)
(54,176)
Non-cash compensation expense
39,209
34,018
Amortization of bond premium (accrual of bond discount)
49,673
30,936
Net realized capital (gains) losses
(267,649)
(185,004)
Net cash provided by (used in) operating activities
2,873,579
1,852,002
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from fixed maturities matured/called - available for sale, at market value
2,586,405
2,302,299
Proceeds from fixed maturities sold - available for sale, at market value
1,945,867
3,280,237
Proceeds from fixed maturities sold - available for sale, at fair value
4,907
2,917
Proceeds from equity securities sold, at fair value
376,347
283,965
Distributions from other invested assets
309,912
284,558
Cost of fixed maturities acquired - available for sale, at market value
(7,189,301)
(6,613,917)
Cost of fixed maturities acquired - available for sale, at fair value
-
(4,243)
Cost of equity securities acquired, at fair value
(637,082)
(329,417)
Cost of other invested assets acquired
(557,473)
(425,438)
Net change in short-term investments
(717,527)
(167,290)
Net change in unsettled securities transactions
194,574
(26,163)
Net cash provided by (used in) investing activities
(3,683,371)
(1,412,492)
CASH FLOWS FROM FINANCING ACTIVITIES:
Common shares issued during the period for share-based compensation, net of expense
(13,566)
(3,134)
Purchase of treasury shares
(200,020)
(24,604)
Dividends paid to shareholders
(249,056)
(234,322)
Proceeds from issuance of senior notes
979,417
-
Cost of debt repurchase
(10,647)
-
FHLB advances (repayments)
310,000
-
Cost of shares withheld on settlements of share-based compensation awards
(15,908)
(13,627)
Net cash provided by (used in) financing activities
800,220
(275,687)
EFFECT OF EXCHANGE RATE CHANGES ON CASH
3,187
(11,882)
Net increase (decrease) in cash
(6,385)
151,941
Cash, beginning of period
808,036
656,095
Cash, end of period
$801,651
$808,036
SUPPLEMENTAL CASH FLOW INFORMATION:
Income taxes paid (recovered)
$(169,748)
$(148,585)
Interest paid
33,570
31,689