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EVEREST RE GROUP, LTD.
Seon Place, 141 Front Street, 4
th
Contacts
Media: Dawn Lauer Investors: Matt Rohrmann
Chief Communications Officer Head of Investor Relations
Everest Global Services, Inc. Everest Global Services, Inc.
908.300.7670 908.604.7343
Everest Re Group Reports Third Quarter 2022 Results
Gross Written Premiums Up 6.3%¹ led by Consistent Double-Digit Growth in the Insurance Segment
Underwriting Discipline Drove Strong Attritional Combined Ratio of 87.6%
Consistent Execution of Diversification Strategy Mitigated Losses During Active Catastrophe Quarter
HAMILTON, Bermuda -- (BUSINESS WIRE) – October 26, 2022 – Everest Re Group, Ltd. (“Everest” or the
“Group”) today reported its third quarter 2022 results.
Third Quarter 2022 Highlights
●
Net Operating Loss of $205 million, and Net Loss of $319 Million driven by an active catastrophe quarter
and volatile market conditions. YTD 2022 Net Operating Income of $587 million, Net Income of $101
million, and Underwriting income of $109 million
●
$3.7 billion in gross written premium (“GWP”) with year over year growth of 6.3% in constant dollars for
the Group, 13.1% in constant dollars for Insurance, and 3.4% in constant dollars for Reinsurance
●
Combined ratios of 112.0% for the Group, 115.0% for Reinsurance and 103.5% for Insurance elevated
due to catastrophe losses in the quarter as previously announced
●
Strong attritional combined ratios of 87.6% for the Group, 86.8% for Reinsurance and 89.8% for
Insurance, which is a new record for that segment
●
Pre-tax underwriting loss of $367 million including $730 million of pre-tax catastrophe losses net of
estimated recoveries and reinstatement premiums as previously announced. The losses were primarily
from Hurricane Ian and other events including European Hailstorms, Hurricane Fiona and Typhoon
Nanmadol
●
Net investment income of $151 million, driven by stronger fixed income returns as new money yields
continue to improve partially offset by volatile equity markets and the lag in private equity reporting
¹In constant dollars
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Everest Re Group President & CEO Juan C. Andrade commented on the Company’s results:
“The third quarter’s heightened risk environment, including global catastrophe events and continued global
economic uncertainty further underscored the strength of Everest’s business and commitment to support our
customers with solutions vital to navigating this turbulent period in history. Everest’s diversification strategy and
underwriting discipline were key to mitigating our exposure to one of the industry’s largest hurricane losses in
U.S. history. With our well-defined strategy, we’re poised to take advantage of the hardening market, focused on
segments with the best risk adjusted returns.
Despite the challenging macroeconomic environment, both underwriting businesses delivered sub-90 attritional
combined ratios and we continue to make an underwriting, operating, and net income profit on a year-to-date
basis. We continued to grow and diversify across geographies, businesses and product lines with top talent
leading our platform. We are focused on executing our strategic plan as we continue to build the company for the
long-term.”
Summary of Third Quarter 2022 Net Income and Other Items
●
Net loss of $319 million, equal to $(8.22) per diluted share versus third quarter 2021 net loss of $73
million, equal to $(1.88) per diluted share
●
Net operating loss of $205 million, equal to $(5.28) per diluted share versus third quarter 2021 net
operating loss of $53 million, equal to $(1.34) per diluted share
●
GAAP combined ratio of 112.0% including 27.4 points of catastrophe losses versus the third quarter 2021
figures of 112.2% including 26.2 points of catastrophe losses
●
Strong operating cashflow for the quarter of $1.1 billion which is flat versus the third quarter 2021
3
The following table summarizes the Company’s net income and related financial metrics.
Net income and operating income
Q3
Year to Date
Q3
Year to Date
All values in USD millions except for per share amounts and percentages
2022
2022
2021
2021
Everest Re Group
Net income
(319)
101
(73)
948
Net operating income (loss)
(205)
587
(53)
795
Net income (loss) per diluted common share
(8.22)
2.57
(1.88)
23.72
Net operating income (loss) per diluted common share
(5.28)
14.91
(1.34)
19.87
Net income (loss) annualized return on average equity
-12.9%
1.4%
-3.0%
13.6%
Net operating income (loss) annualized return on average equity
-8.3%
8.0%
-2.2%
11.4%
Notes
1/ Refer to the reconciliation of net income to net operating income found on page 7 of this press release
Shareholders' Equity and Book Value per Share
Q3
Year to Date
Q3
Year to Date
All values in USD millions except for per share amounts and percentages
2022
2022
2021
2021
Beginning shareholders' equity
8,853
10,139
10,417
9,726
Net income (loss)
(319)
101
(73)
948
Change- unrealized gains (losses) - Fixed inc. investments
(671)
(2,199)
(101)
(308)
Dividends to shareholders
(65)
(191)
(61)
(186)
Purchase of treasury shares
(58.0)
(60)
(160)
(200)
Other
(91)
(141)
(43)
(2)
Ending shareholders' equity
7,649
7,649
9,979
9,979
Common shares outstanding
39.2
39.4
Book value per common share outstanding
195.27
253.40
Less: Unrealized on fixed inc. investments ("URAD")
(50.02)
10.57
Book value excl. URAD per common share outstanding
245.29
242.83
Change in BVPS adjusted for dividends
-22.5%
Total Shareholder Return ("TSR") - Annualized
-1.0%
Common share dividends paid - last 12 months
6.40
6.20
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The following information summarizes the Company’s underwriting results, on a consolidated basis and by
segment – Reinsurance and Insurance, with selected commentary on results by segment.
Underwriting information - Everest Re Group
Q3
Year to Date
Q3
Year to Date
All values in USD millions except for percentages
2022
2022
2021
2021
Gross written premium
3,680
10,313
3,498
9,619
Net written premium
3,323
9,156
3,026
8,389
Loss ratio
85.5%
71.7%
85.6%
73.3%
Commission and brokerage ratio
20.9%
21.4%
21.2%
21.2%
Other underwriting expenses
5.5%
5.7%
5.3%
5.6%
Combined ratio
112.0%
98.8%
112.2%
100.1%
Attritional combined ratio
87.6%
87.4%
87.9%
87.6%
Pre-tax net catastrophe losses
730
930
635
940
Pre-tax net covid losses
Pre-tax net Russian / Ukraine War losses
45
Pre-tax net prior year reserve development
(2)
(2)
(6)
Notes
1/ Attritional combined ratio excludes catastrophe losses, reinstatement premiums, prior year development, Covid-19 losses, CECL, and losses from the Russian/Ukraine war.
2/Pre-tax net catastrophe losses are net of reinsurance and reinstatement premiums
Reinsurance Segment – Quarterly Highlights
●
Gross written premiums of $2.6 billion for the quarter versus $2.5 billion a year ago. The quarter
includes $110 million of reinstatement premiums (vs $60 million a year ago). Growth was driven
by casualty lines and continued international expansion offset by targeted reductions in property
and headwinds from the strong dollar
●
Pre-tax catastrophe losses of $620 million net of estimated recoveries and reinstatement
premiums, primarily driven by Hurricane Ian (compared with $555 million a year ago)
●
Improved risk-adjusted profitability of the portfolio driven by targeted underwriting actions,
resulting in a 110 -basis point improvement in the attritional loss ratio for the quarter vs. the prior
year (59.1% vs. 60.2%) and an attritional combined ratio of 86.8% (vs 87.1% a year ago)
●
Continued expense discipline resulting in an operating expense ratio for the quarter of 2.4%, in
line with a year ago
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Underwriting information - Reinsurance segment
Q3
Year to Date
Q3
Year to Date
All values in USD millions except for percentages
2022
2022
2021
2021
Gross written premium
2,551
6,938
2,488
6,696
Net written premium
2,460
6,664
2,293
6,266
Loss ratio
88.7%
72.8%
89.4%
74.1%
Commission and brokerage ratio
23.9%
24.5%
23.8%
23.8%
Other underwriting expenses
2.4%
2.4%
2.3%
2.5%
Combined ratio
115.0%
99.8%
115.5%
100.5%
Attritional combined ratio
86.8%
86.3%
87.1%
86.3%
Pre-tax net catastrophe losses
620
810
555
803
Pre-tax net covid losses
Pre-tax net Russian / Ukraine War losses
45
Pre-tax net prior year reserve development
(2)
(2)
(5)
Notes
1/ Attritional combined ratio excludes catastrophe losses, reinstatement premiums, prior year development, Covid-19 losses, CECL, and losses from the
Russian/Ukraine war.
2/Pre-tax net catastrophe losses are net of reinsurance and reinstatement premiums
Insurance Segment – Quarterly Highlights
●
Gross written premiums of $1.1 billion, a 13.1% increase year over year in constant currency
(11.9% increase when adjusting for FX), driven by balanced and strong diversified growth across
most lines of business and geographies.
●
The attritional combined ratio of 89.8%, a 50-basis point improvement compared to 90.3% in 3Q
2021, is the best in the segment’s history
●
Rate and exposure increases continue to exceed loss trend.
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Underwriting information - Insurance segment
Q3
Year to Date
Q3
Year to Date
All values in USD millions except for percentages
2022
2022
2021
2021
Gross written premium
1,129
3,376
1,009
2,924
Net written premium
862
2,492
733
2,123
Loss ratio
76.8%
68.4%
74.7%
70.8%
Commission and brokerage ratio
12.7%
12.7%
13.7%
13.4%
Other underwriting expenses
14.0%
14.8%
14.1%
14.5%
Combined ratio
103.5%
95.9%
102.5%
98.7%
Attritional combined ratio
89.8%
90.3%
90.3%
91.5%
Pre-tax net catastrophe losses
110
120
80
138
Pre-tax net covid losses
Pre-tax net Russian / Ukraine War losses
Pre-tax net prior year reserve development
1
(1)
Notes
1/ Attritional combined ratio excludes catastrophe losses, reinstatement premiums, prior year development, Covid-19 losses, CECL, and losses from the
Russian/Ukraine war.
2/Pre-tax net catastrophe losses are net of reinsurance and reinstatement premiums
Investments and Shareholders’ Equity at September 30, 2022
●
Total invested assets and cash of $28.5 billion versus the year end 2021 value of $29.7 billion
●
$58 million of share repurchases in 3Q 2022 at an average price of $251.98 per share
●
Repurchased $6.2 million par amount of Long-Term Subordinated Notes due 2067 for $5.1
million plus accrued interest
●
Shareholders’ equity of $7.6 billion vs. $10.1 billion at year end 2021, largely driven by $2.2
billion of unrealized net losses on fixed maturity investments
●
Book value per diluted share of $195.27 vs. $258.21 at year end 2021
●
Book value per diluted share excluding unrealized gains (losses) on fixed maturity investments
of $245.29 vs. $252.12 at year end 2021
●
Common share dividends declared and paid in the quarter of $1.65 per share equal to $65 million
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
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property and casualty insurance and reinsurance, 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 results will be held at 8:00 a.m. Eastern Time on October 27, 2022. 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
“Investors/Financials/Quarterly Results” section of the website. The supplemental financial information
may also be obtained by contacting the Company directly.
_______________________________________________
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 gains (losses) on investments and after-tax net foreign exchange income (expense) as the
following reconciliation displays:
Three Months Ended September 30,
Nine Months Ended September 30,
(Dollars in millions, except per share amounts)
2022
2021
2022
2021
(unaudited)
(unaudited)
Per Diluted
Per Diluted
Per Diluted
Per Diluted
Amount
Share
Amount
Share
Amount
Share
Amount
Share
Net income (loss)
$(319)
$(8.22)
$(73)
$(1.88)
$101
$2.57
$948
$23.72
After-tax net gains (losses) on investments
$(102)
$(2.63)
$(3)
$(0.07)
$(415)
$(10.53)
$111
$2.78
After-tax net foreign exchange income (expense)
$(12)
$(0.31)
$(18)
$(0.47)
$(71)
$(1.80)
$43
$1.06
After-tax operating income (loss)
$(205)
$(5.28)
$(53)
$(1.34)
$587
$14.91
$795
$19.87
(Some amounts may not reconcile due to rounding.)
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Although net gains (losses) on investments and net foreign exchange income (expense) are an integral
part of the Company’s insurance operations, the determination of net gains (losses) on investments and
foreign exchange income (expense) is independent of the insurance underwriting process. The
Company believes that the level of net gains (losses) on investments 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--
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EVEREST RE GROUP, LTD.
CONSOLIDATED STATEMENTS OF OPERATIONS
AND COMPREHENSIVE INCOME (LOSS)
Three Months Ended
Nine Months Ended
September 30,
September 30,
(Dollars in millions, except per share amounts)
2022
2021
2022
2021
(unaudited)
(unaudited)
REVENUES:
Premiums earned
$3,067
$2,656
$8,775
$7,603
Net investment income
151
293
620
960
Net gains (losses) on investments:
Credit allowances on fixed maturity securities
(5)
(7)
(18)
(30)
Gains (losses) from fair value adjustments
(136)
(5)
(462)
128
Net realized gains (losses) from dispositions
12
8
(39)
41
Total net gains (losses) on investments
(129)
(4)
(519)
139
Other income (expense)
(16)
(20)
(71)
44
Total revenues
3,073
2,925
8,805
8,746
CLAIMS AND EXPENSES:
Incurred losses and loss adjustment expenses
2,623
2,274
6,289
5,572
Commission, brokerage, taxes and fees
641
564
1,877
1,611
Other underwriting expenses
169
141
500
424
Corporate expenses
16
18
45
46
Interest, fees and bond issue cost amortization expense
25
16
74
47
Total claims and expenses
3,474
3,013
8,785
7,700
INCOME (LOSS) BEFORE TAXES
(401)
(88)
20
1,046
Income tax expense (benefit)
(82)
(14)
(81)
97
NET INCOME (LOSS)
$(319)
$(73)
$101
$948
Other comprehensive income (loss), net of tax:
Unrealized appreciation (depreciation) ("URA(D)") on securities arising
during the period
(712)
(100)
(2,260)
(304)
Reclassification adjustment for realized losses (gains) included in net
income (loss)
41
(1)
61
(3)
Total URA(D) on securities arising during the period
(671)
(101)
(2,199)
(308)
Foreign currency translation adjustments
(101)
(54)
(163)
(29)
Reclassification adjustment for amortization of net (gain) loss included in
net income (loss)
1
2
2
6
Total benefit plan net gain (loss) for the period
1
2
2
6
Total other comprehensive income (loss), net of tax
(771)
(153)
(2,360)
(331)
COMPREHENSIVE INCOME (LOSS)
$(1,090)
$(227)
$(2,259)
$617
EARNINGS PER COMMON SHARE:
Basic
$(8.22)
$(1.88)
$2.57
$23.74
Diluted
(8.22)
(1.88)
2.57
23.72
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EVEREST RE GROUP, LTD.
CONSOLIDATED BALANCE SHEETS
September 30,
December 31,
(Dollars and share amounts in millions, except par value per share)
2022
2021
(unaudited)
ASSETS:
Fixed maturities - available for sale, at fair value
$21,009
$22,308
(amortized cost: 2022, $23,204; 2021, $22,064, credit allowances: 2022, ($38); 2021, ($30))
Fixed maturities - held to maturity, at amortized cost, net of credit allowances
(fair value: 2022, $817, credit allowances: 2022, ($9))
837
-
Equity securities, at fair value
1,301
1,826
Short-term investments (cost: 2022, $611; 2021, $1,178)
611
1,178
Other invested assets
3,079
2,920
Cash
1,679
1,441
Total investments and cash
28,516
29,673
Accrued investment income
200
149
Premiums receivable
3,452
3,294
Reinsurance recoverables
2,240
2,053
Funds held by reinsureds
893
869
Deferred acquisition costs
867
872
Prepaid reinsurance premiums
556
515
Income tax asset, net
544
2
Other assets
876
757
TOTAL ASSETS
$38,144
$38,185
LIABILITIES:
Reserve for losses and loss adjustment expenses
21,222
19,009
Future policy benefit reserve
34
36
Unearned premium reserve
4,795
4,610
Funds held under reinsurance treaties
18
18
Other net payable to reinsurers
511
450
Losses in course of payment
110
261
Senior notes
2,347
2,346
Long term notes
218
224
Borrowings from FHLB
519
519
Accrued interest on debt and borrowings
39
17
Unsettled securities payable
134
17
Other liabilities
548
540
Total liabilities
30,495
28,046
SHAREHOLDERS' EQUITY:
Preferred shares, par value: $0.01; 50.0 shares authorized;
no shares issued and outstanding
-
-
Common shares, par value: $0.01; 200.0 shares authorized; (2022) 69.9
and (2021) 69.8 outstanding before treasury shares
1
1
Additional paid-in capital
2,293
2,274
Accumulated other comprehensive income (loss), net of deferred income tax expense
(benefit) of ($269) at 2022 and $27 at 2021
(2,348)
12
Treasury shares, at cost; 30.8 (2022) and 30.5 shares (2021)
(3,907)
(3,847)
Retained earnings
11,610
11,700
Total shareholders' equity
7,649
10,139
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY
$38,144
$38,185
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EVEREST RE GROUP, LTD.
CONSOLIDATED STATEMENTS OF CASH FLOWS
Nine Months Ended
September 30,
(Dollars in millions)
2022
2021
(unaudited)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss)
$101
$948
Adjustments to reconcile net income to net cash provided by operating activities:
Decrease (increase) in premiums receivable
(405)
(737)
Decrease (increase) in funds held by reinsureds, net
(35)
(93)
Decrease (increase) in reinsurance recoverables
(662)
(231)
Decrease (increase) in income taxes
(249)
57
Decrease (increase) in prepaid reinsurance premiums
(194)
(147)
Increase (decrease) in reserve for losses and loss adjustment expenses
3,117
2,560
Increase (decrease) in future policy benefit reserve
(2)
(1)
Increase (decrease) in unearned premiums
435
928
Increase (decrease) in other net payable to reinsurers
242
199
Increase (decrease) in losses in course of payment
(150)
24
Change in equity adjustments in limited partnerships
(126)
(543)
Distribution of limited partnership income
139
106
Change in other assets and liabilities, net
(134)
(230)
Non-cash compensation expense
35
33
Amortization of bond premium (accrual of bond discount)
49
57
Net (gains) losses on investments
519
(139)
Net cash provided by (used in) operating activities
2,680
2,791
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from fixed maturities matured/called/repaid - available for sale
2,171
2,757
Proceeds from fixed maturities matured/called/repaid - held to maturity
18
-
Proceeds from fixed maturities sold - available for sale
1,177
883
Proceeds from equity securities sold, at fair value
1,030
579
Distributions from other invested assets
244
217
Cost of fixed maturities acquired - available for sale
(5,958)
(5,671)
Cost of fixed maturities acquired - held to maturity
(133)
-
Cost of equity securities acquired, at fair value
(960)
(508)
Cost of other invested assets acquired
(455)
(604)
Net change in short-term investments
568
423
Net change in unsettled securities transactions
102
(177)
Net cash provided by (used in) investing activities
(2,196)
(2,102)
CASH FLOWS FROM FINANCING ACTIVITIES:
Common shares issued (redeemed) during the period for share-based compensation, net of expense
(16)
(12)
Purchase of treasury shares
(60)
(200)
Dividends paid to shareholders
(191)
(186)
Cost of debt repurchase
(6)
-
Cost of shares withheld on settlements of share-based compensation awards
(19)
(15)
Net cash provided by (used in) financing activities
(292)
(413)
EFFECT OF EXCHANGE RATE CHANGES ON CASH
46
(9)
Net increase (decrease) in cash
238
267
Cash, beginning of period
1,441
802
Cash, end of period
$1,679
$1,068
SUPPLEMENTAL CASH FLOW INFORMATION:
Income taxes paid (recovered)
$167
$40
Interest paid
51
33
NON-CASH TRANSACTIONS:
Reclassification of specific investments from fixed maturity securities, available for sale
at fair value to fixed maturity securities, held to maturity at amortized cost net of credit allowances
$783
$-
12