1
NEWS RELEASE
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 Fourth Quarter 2022 Results
Fourth Quarter ROE of 20.1%, Operating ROE of 19.4%
Underwriting Discipline Drove Strong Combined Ratio of 87.8%
with Margin Improvement in both Segments
Significant Momentum Following Outstanding 1/1 Renewals
HAMILTON, Bermuda – (BUSINESS WIRE) - February 8, 2023 –
“Group”) today reported its fourth quarter 2022 results.
Fourth Quarter 2022 Highlights
•
Net Operating Income of $478 million, and Net Income of $496 million driven by continued underwriting
margin improvement. YTD 2022 Net Operating Income of $1.1 billion, Net Income of $597 million
•
$3.6 billion in gross written premium (“GWP”) with year over year growth of 9% in constant dollars for
the Group, 21% in constant dollars for Insurance, and 3.7% in constant dollars and excluding
reinstatements for Reinsurance
•
Combined ratios of 87.8% for the Group, 86.4% for Reinsurance and 91.4% for Insurance
•
Strong attritional combined ratios of 87.3% for the Group, 86.0% for Reinsurance and 90.8% for
Insurance
•
Pre-tax underwriting income of $368 million including $15 million of pre-tax catastrophe losses net of
estimated recoveries and reinstatement premiums. The catastrophe losses were from Winter Storm Elliott
•
Net investment income of $210 million, driven by stronger fixed income returns as new money yields
continue to improve
2
“Everest’s fourth quarter results capped a strong year of consistent execution and positive momentum for the
company,” said Juan C. Andrade, Everest President and CEO.
“We grew both underwriting franchises with improved margins, significantly reduced volatility and generated
solid returns despite ongoing market uncertainty and another elevated catastrophe year. This led to over $1
billion in operating income, and a double-digit operating return on equity for both the quarter and the full year.
We had a successful January 1 reinsurance renewal executing a precise and well-orchestrated strategy. We
leveraged Everest’s global leadership position to capitalize on the robust property market and the flight to quality
was evident across virtually all lines and geographies. We drove improved pricing, terms and conditions and
deepened relationships with new and existing core clients throughout the world, which significantly improved risk
adjusted returns across the entire portfolio. We are well positioned with the talent and the platform to continue
this momentum in 2023.”
Summary of Fourth Quarter 2022 Net Income and Other Items
•
Net Income of $496 million, equal to $12.66 per diluted share versus fourth quarter 2021 net income of
$431 million, equal to $10.94 per diluted share
•
Net operating income of $478 million, equal to $12.21 per diluted share versus fourth quarter 2021 net
operating income of $359 million, equal to $9.12 per diluted share
•
GAAP combined ratio of 87.8% including 0.5 points of catastrophe losses versus the fourth quarter 2021
figures of 91.9% including 4.5 points of catastrophe losses
•
Strong operating cashflow for the quarter of $1.0 billion which is flat versus the fourth quarter 2021
The following table summarizes the Company’s net income and related financial metrics.
Net income and operating income
Q4
Year to Date
Q4
Year to Date
All values in USD millions except for per share amounts and percentages
2022
2022
2021
2021
Everest Re Group
Net income (loss)
496
597
431
1,379
Net operating income (loss)
(1)
478
1,065
359
1,153
Net income (loss) per diluted common share
12.66
15.19
10.94
34.62
Net operating income (loss) per diluted common share
12.21
27.08
9.12
28.97
Net income (loss) return on average equity (annualized)
20.1%
6.0%
17.7%
14.6%
After-tax operating income (loss) return on average equity (annualized)
19.4%
10.6%
14.8%
12.2%
Notes
(1) Refer to the reconciliation of net income to net operating income found on page 6 of this press release
3
Shareholders' Equity and Book Value per Share
Q4
Year to Date
Q4
Year to Date
All values in USD millions except for per share amounts and percentages
2022
2022
2021
2021
Beginning shareholders' equity
7,649
10,139
9,979
9,726
Net income (loss)
496
597
431
1,379
Change - unrealized gains (losses) - Fixed inc. investments
250
(1,948)
(177)
(485)
Dividends to shareholders
(65)
(255)
(61)
(247)
Purchase of treasury shares
-
(61)
(25)
(225)
Other
110
(31)
(7)
(10)
Ending shareholders' equity
8,441
8,441
10,139
10,139
Common shares outstanding
39.2
39.3
Book value per common share outstanding
215.54
258.21
Less: Unrealized appreciation/depreciation of fixed maturity investments ("URAD")
(43.64)
6.09
Adjusted book value per common share outstanding excluding URAD
259.18
252.12
Total Shareholder Return ("TSR") - Annualized
5.4%
14.7%
Common share dividends paid - last 12 months
6.50
6.20
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
Q4
Year to Date
Q4
Year to Date
Year on Year Change
All values in USD millions except for percentages
2022
2022
2021
2021
Q4
Year to Date
Gross written premium
3,639
13,952
3,431
13,050
6.1%
6.9%
Net written premium
3,188
12,344
3,056
11,446
4.3%
7.9%
Loss ratio
60.1%
68.7%
64.9%
71.0%
Commission and brokerage ratio
21.6%
21.4%
21.3%
21.2%
Other underwriting expenses
6.0%
5.8%
5.7%
5.6%
Combined ratio
87.8%
96.0%
91.9%
97.8%
Attritional combined ratio
(1)
87.3%
87.4%
87.4%
87.6%
Pre-tax net catastrophe losses
(2)
15
945
125
1,065
Pre-tax net Russia/Ukraine losses
45
Pre-tax net prior year reserve development
(1)
(3)
(9)
Notes
(1) Attritional ratios exclude catastrophe losses, net CAT reinstatement premiums earned, prior year development, COVID-19 losses, CECL and losses from the
Russia/Ukraine war
(2) Pre-tax net catastrophe losses are net of reinsurance and reinstatement premiums
Reinsurance Segment – Quarterly Highlights
•
Gross written premiums of $2.38 billion for the quarter versus $2.37 billion a year ago. On a constant
dollar basis, growth was 3.7% in the quarter. Casualty and Financial Lines grew by 3.9%, driven by
growth with our core casualty clients and taking advantage of increased mortgage opportunities. This
growth was largely offset by a combination of targeted reductions in our property portfolio and foreign
exchange movements
•
Pre-tax catastrophe losses of $10 million net of estimated recoveries and reinstatement premiums,
compared with $110 million a year ago
4
•
Improved profitability of the portfolio driven by targeted underwriting actions, resulting in a 150-basis
point improvement in the attritional loss ratio for the quarter vs. the prior year (58.2% vs. 59.7%) and an
attritional combined ratio of 86.0% vs 86.4% a year ago
•
Continued expense discipline with a 2.8% expense ratio
•
Execution for the January 1 renewals was precise and well-orchestrated achieving an excellent outcome
Underwriting information - Reinsurance segment
Q4
Year to Date
Q4
Year to Date
Year on Year Change
All values in USD millions except for percentages
2022
2022
2021
2021
Q4
Year to Date
Gross written premium
2,378
9,316
2,372
9,067
0.3%
2.7%
Net written premium
2,320
8,983
2,270
8,536
2.2%
5.2%
Loss ratio
58.7%
69.2%
64.8%
71.6%
Commission and brokerage ratio
25.0%
24.6%
24.1%
23.9%
Other underwriting expenses
2.8%
2.5%
2.6%
2.6%
Combined ratio
86.4%
96.4%
91.5%
98.1%
Attritional combined ratio
(1)
86.0%
86.2%
86.4%
86.3%
Pre-tax net catastrophe losses
(2)
10
820
110
913
Pre-tax net Russia/Ukraine losses
45
Pre-tax net prior year reserve development
(2)
(3)
(8)
Notes
(1) Attritional ratios exclude catastrophe losses, net CAT reinstatement premiums earned, prior year development, COVID-19 losses, CECL and losses from the
Russia/Ukraine war
(2) Pre-tax net catastrophe losses are net of reinsurance and reinstatement premiums
Insurance Segment – Quarterly Highlights
•
Gross written premiums of $1.3 billion, a 21% increase year over year in constant dollars (19% increase
as reported), driven by balanced and diversified growth across most lines of business and geographies
•
Strong profitability with combined ratio of 91.4% and an attritional combined ratio of 90.8%
•
Continued robust expense management with a total expense ratio of 27.4% versus 27.8% a year ago
•
Rate and exposure trends remain favorable
Underwriting information - Insurance segment
Q4
Year to Date
Q4
Year to Date
Year on Year Change
All values in USD millions except for percentages
2022
2022
2021
2021
Q4
Year to Date
Gross written premium
1,260
4,636
1,059
3,982
19.0%
16.4%
Net written premium
869
3,361
787
2,910
10.5%
15.5%
Loss ratio
64.0%
67.3%
65.1%
69.3%
Commission and brokerage ratio
12.4%
12.6%
13.4%
13.4%
Other underwriting expenses
15.0%
14.8%
14.4%
14.5%
Combined ratio
91.4%
94.8%
92.8%
97.1%
Attritional combined ratio
(1)
90.8%
90.4%
90.4%
91.2%
Pre-tax net catastrophe losses
(2)
5
125
15
153
Pre-tax net Russia/Ukraine 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
5
Investments and Shareholders’ Equity as of December 31, 2022
•
Total invested assets and cash of $29.9 billion versus the year end 2021 value of $29.7 billion
•
Shareholders’ equity of $8.4 billion vs. $10.1 billion at year end 2021, largely driven by $1.7 billion of
unrealized net losses on fixed maturity investments
•
Shareholders’ equity excluding unrealized gains (losses) on fixed maturity investments of $10.1 billion
vs. $9.9 billion at year end 2021
•
Book value per diluted share of $215.54 vs. $258.21 at year end 2021
•
Book value per diluted share excluding unrealized gains (losses) on fixed maturity investments of
$259.18 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 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
Everest is a global underwriting leader providing best-in-class property, casualty, and specialty reinsurance and
insurance solutions that address customers’ most pressing challenges. Known for a 50-year track record of
disciplined underwriting, capital and risk management, Everest, through its global operating affiliates, is
committed to underwriting opportunity for colleagues, customers, shareholders, and communities worldwide.
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.
A conference call discussing the results will be held at 8:00 a.m. Eastern Time on February 9, 2023. 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
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www.everestre.com in the “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 December 31,
Twelve Months Ended December 31,
(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
After-tax operating income (loss)
$478
$12.21
$359
$9.12
$1,065
$27.08
$1,153
$28.97
After-tax net gains (losses) on investments
$49
$1.25
$90
$2.29
$(366)
$(9.30)
$202
$5.06
After-tax net foreign exchange income (expense)
$(31)
$(0.80)
$(19)
$(0.48)
$(102)
$(2.60)
$24
$0.60
Net income (loss)
$496
$12.66
$431
$10.94
$597
$15.19
$1,379
$34.62
(Some amounts may not reconcile due to rounding.)
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
Twelve Months Ended
December 31,
December 31,
(Dollars in millions, except per share amounts)
2022
2021
2022
2021
(unaudited)
(unaudited)
REVENUES:
Premiums earned
$3,012
$2,804
$11,787
$10,406
Net investment income
210
205
830
1,165
Net gains (losses) on investments:
Credit allowances on fixed maturity securities
(15)
2
(33)
(28)
Gains (losses) from fair value adjustments
2
108
(460)
236
Net realized gains (losses) from dispositions
77
9
38
50
Total net gains (losses) on investments
64
119
(455)
258
Other income (expense)
(30)
(7)
(102)
37
Total revenues
3,256
3,121
12,060
11,866
CLAIMS AND EXPENSES:
Incurred losses and loss adjustment expenses
1,811
1,819
8,100
7,391
Commission, brokerage, taxes and fees
651
598
2,528
2,209
Other underwriting expenses
182
158
682
583
Corporate expenses
16
21
61
68
Interest, fees and bond issue cost amortization expense
27
23
101
70
Total claims and expenses
2,687
2,620
11,472
10,321
INCOME (LOSS) BEFORE TAXES
568
500
588
1,546
Income tax expense (benefit)
72
69
(9)
167
NET INCOME (LOSS)
$496
$431
$597
$1,379
Other comprehensive income (loss), net of tax:
Unrealized appreciation (depreciation) ("URA(D)") on securities arising
during the period
223
(184)
(2,037)
(488)
Reclassification adjustment for realized losses (gains) included in net income
(loss)
28
7
89
4
Total URA(D) on securities arising during the period
251
(177)
(1,948)
(485)
Foreign currency translation adjustments
86
(33)
(77)
(62)
Benefit plan actuarial net gain (loss) for the period
15
17
15
17
Reclassification adjustment for amortization of net (gain) loss included in net
income (loss)
-
1
2
6
Total benefit plan net gain (loss) for the period
15
18
17
23
Total other comprehensive income (loss), net of tax
352
(192)
(2,008)
(523)
COMPREHENSIVE INCOME (LOSS)
$848
$238
$(1,411)
$856
EARNINGS PER COMMON SHARE:
Basic
$12.66
$10.95
$15.19
$34.66
Diluted
12.66
10.94
15.19
34.62
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EVEREST RE GROUP, LTD.
CONSOLIDATED BALANCE SHEETS
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
$22,236
$22,308
(amortized cost: 2022, $24,191; 2021, $22,064, credit allowances: 2022, ($54); 2021, ($30))
Fixed maturities - held to maturity, at amortized cost
(fair value: 2022, $821, credit allowances: 2022, ($9))
839
-
Equity securities, at fair value
281
1,826
Other invested assets
4,085
2,920
Short-term investments (cost: 2022, $1,032; 2021, $1,178)
1,032
1,178
Cash
1,398
1,441
Total investments and cash
29,872
29,673
Accrued investment income
217
149
Premiums receivable (credit allowances: 2022, ($29); 2021, ($26))
3,619
3,294
Reinsurance paid loss recoverables (credit allowances: 2022, ($23); 2021, ($17))
136
107
Reinsurance unpaid loss recoverables
2,105
1,946
Funds held by reinsureds
1,056
869
Deferred acquisition costs
962
872
Prepaid reinsurance premiums
610
515
Income tax asset, net
459
2
Other assets (credit allowances: 2022, ($5); 2021, ($4))
930
757
TOTAL ASSETS
$39,966
$38,185
LIABILITIES:
Reserve for losses and loss adjustment expenses
22,065
19,009
Future policy benefit reserve
29
36
Unearned premium reserve
5,147
4,610
Funds held under reinsurance treaties
13
18
Other net payable to reinsurers
567
450
Losses in course of payment
74
261
Senior notes
2,347
2,346
Long term notes
218
224
Borrowings from FHLB
519
519
Accrued interest on debt and borrowings
19
17
Unsettled securities payable
1
17
Other liabilities
526
540
Total liabilities
31,525
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
2,302
2,274
Accumulated other comprehensive income (loss), net of deferred income tax expense
(benefit) of ($250) at 2022 and $27 at 2021
(1,996)
12
Treasury shares, at cost; 30.8 (2022) and 30.5 shares (2021)
(3,908)
(3,847)
Retained earnings
12,042
11,700
Total shareholders' equity
8,441
10,139
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY
$39,966
$38,185
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EVEREST RE GROUP, LTD.
CONSOLIDATED STATEMENTS OF CASH FLOWS
Twelve Months Ended
December 31,
(Dollars in millions)
2022
2021
(unaudited)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss)
$597
$1,379
Adjustments to reconcile net income to net cash provided by operating activities:
Decrease (increase) in premiums receivable
(435)
(649)
Decrease (increase) in funds held by reinsureds, net
(197)
(151)
Decrease (increase) in reinsurance recoverables
(413)
(125)
Decrease (increase) in income taxes
(181)
68
Decrease (increase) in prepaid reinsurance premiums
(166)
(128)
Increase (decrease) in reserve for losses and loss adjustment expenses
3,477
2,805
Increase (decrease) in future policy benefit reserve
(7)
(2)
Increase (decrease) in unearned premiums
655
1,146
Increase (decrease) in other net payable to reinsurers
201
186
Increase (decrease) in losses in course of payment
(186)
134
Change in equity adjustments in limited partnerships
(94)
(613)
Distribution of limited partnership income
180
211
Change in other assets and liabilities, net
(291)
(290)
Non-cash compensation expense
45
43
Amortization of bond premium (accrual of bond discount)
55
76
Net (gains) losses on investments
455
(258)
Net cash provided by (used in) operating activities
3,695
3,833
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from fixed maturities matured/called/repaid - available for sale
2,626
3,893
Proceeds from fixed maturities sold - available for sale
1,403
1,916
Proceeds from fixed maturities matured/called/repaid - held to maturity
39
-
Proceeds from equity securities sold
2,217
990
Distributions from other invested assets
266
257
Cost of fixed maturities acquired - available for sale
(7,344)
(8,825)
Cost of fixed maturities acquired - held to maturity
(153)
-
Cost of equity securities acquired
(1,003)
(1,098)
Cost of other invested assets acquired
(1,547)
(757)
Net change in short-term investments
149
(43)
Net change in unsettled securities transactions
(71)
(203)
Net cash provided by (used in) investing activities
(3,418)
(3,869)
CASH FLOWS FROM FINANCING ACTIVITIES:
Common shares issued (redeemed) during the period for share-based compensation, net of expense
(17)
(14)
Purchase of treasury shares
(61)
(225)
Dividends paid to shareholders
(255)
(247)
Proceeds from issuance of senior notes
-
968
Cost of debt repurchase
(6)
-
Net FHLB borrowings (repayments)
-
209
Cost of shares withheld on settlements of share-based compensation awards
(20)
(17)
Net cash provided by (used in) financing activities
(359)
674
EFFECT OF EXCHANGE RATE CHANGES ON CASH
39
1
Net increase (decrease) in cash
(42)
639
Cash, beginning of period
1,441
802
Cash, end of period
$1,398
$1,441
SUPPLEMENTAL CASH FLOW INFORMATION:
Income taxes paid (recovered)
$171
$98
Interest paid
98
62
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
$722
$-