[GRAPHIC APPEARS HERE]
NEWS RELEASE
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EVEREST RE GROUP, LTD.
c/o ABG Financial & Management Services, Inc.
Parker House, Wildey Business Park, Wildey Road, St. Michael, Barbados
Contact:
James H. Foster
Senior Vice President, Investor Relations
Everest Global Services, Inc.
908.604.3169 For Immediate Release
Everest Re Group Announces Second Quarter Earnings with a 23% Increase in
Book Value to $3.06 billion or $55.09 per share
ST. MICHAEL, Barbados - July 21, 2003 -- Everest Re Group, Ltd. (NYSE: RE)
reported second quarter 2003 after-tax operating income, which excludes realized
capital gains and losses, of $107.1 million, or $1.94 per diluted share, a 53.7%
increase compared to $69.7 million, or $1.34 per diluted share, in the second
quarter of 2002. Net income increased 105.1% to $109.6 million, or $1.99 per
diluted share, compared to $53.4 million, or $1.02 per diluted share, in the
second quarter of 2002, which was affected by investment losses relating to the
WorldCom bankruptcy. Operating income differs from net income only by the
exclusion of realized gains and losses on investments.
For the six months ended June 30, 2003, after-tax operating income was
$211.2 million, or $3.96 per diluted share, an increase of 55.6% compared to
$135.7 million, or $2.68 per diluted share, in 2002. Net income in the first six
months of 2003 was $203.9 million, or $3.82 per diluted share, an increase of
78.1% compared to $114.5 million, or $2.26 per diluted share, in 2002.
Gross premiums written for the second quarter of 2003 were $1.07 billion, a
69.6% increase compared to $630 million in 2002. Net premiums written were $988
million, an increase of 64.6% from $601 million for the second quarter of 2002.
The Company's GAAP combined ratio in the second quarter was 95.5% compared to
97.6% in 2002. Net investment income for the second quarter was $102.1 million
compared to $90.8 million in the second quarter of 2002. Cash
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flow from operations for the quarter was $353.2 million, an increase of 108.3%
from $169.6 million in the second quarter of 2002.
For the six months ended June 30, 2003, gross premiums written were $2.07
billion, a 68.8% increase from $1.23 billion in the first six months of 2002.
Net written premiums grew 66.5% to $1.94 billion from $1.17 billion in 2002.
The GAAP combined ratio for the first six months of 2003 was 94.5% compared to
98.4% in 2002. Net investment income for the six months ended June 30, 2003 was
$195.4 million, an increase of 10.8% from $176.4 million in 2002. Cash flow from
operations in the first six months was $680.9 million, compared to $275.1
million in the first six months of 2002.
At June 30, 2003, the Company's shareholders' equity was $3.06 billion or
$55.09 per outstanding share. This represents a 29% increase from shareholders'
equity of $2.37 billion or $46.55 per share at December 31, 2002.
Commenting on the Company's results, Chairman and Chief Executive Officer
Joseph V. Taranto said, "Solid execution in firming markets contributed to the
Company's robust top-line growth, excellent cash flow, continued improvement in
underwriting margins and strong earnings and book value growth".
The Company also reaffirmed its estimate of 2003 operating earnings at
$7.75 - $8.25 per diluted share, and its estimate of 2004 operating earnings at
$9.50 - $10.50 per diluted share, both absent any unusual losses or market
developments.
This press 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. In particular, our forecasts of future
earnings are forward looking statements. 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 US and international
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markets. Everest Reinsurance (Bermuda), Ltd. provides reinsurance to property
and casualty and life insurers in both the Bermuda and international markets.
Everest National Insurance Company and Everest Security Insurance Company
provide property and casualty insurance to policyholders in the United States.
Everest Indemnity Insurance Company offers excess and surplus lines insurance in
the United States. Additional information on Everest Re Group companies can be
found at the Company's web site at www.everestre.com.
A conference call discussing the first quarter results will be held at 8:30
a.m. Eastern Standard Time on July 22, 2003. The call will be available on the
Internet through the Company's web site or at www.streetevents.com.
Anyone receiving this release by wire or through the Internet may 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 in the
"Financials/Financial Reports" section. The supplemental financial information
may also be obtained by contacting the Company directly.
--Financial Details Follow--
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EVEREST RE GROUP, LTD.
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME
(Dollars in thousands, except per share amounts)
Three Months Ended Six Months Ended
June 30, June 30,
--------------------- -------------------------
2003 2002 2003 2002
-------- -------- ---------- ----------
(unaudited) (unaudited)
REVENUES:
Premiums earned $851,988 $502,330 $1,596,858 $ 993,538
Net investment income 102,060 90,830 195,437 176,370
Net realized capital gain (loss) 1,747 (31,008) (11,488) (34,863)
Net derivative income (expense) 1,305 (4,890) (1,395) (5,140)
Other expense (4,453) (2,908) (5,600) (1,571)
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Total revenues 952,647 554,354 1,773,812 1,128,334
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CLAIMS AND EXPENSES:
Incurred loss and loss adjustment expenses 585,042 353,177 1,098,513 705,683
Commission, brokerage, taxes and fees 204,409 120,320 367,214 241,329
Other underwriting expenses 23,920 16,724 43,784 30,849
Distributions related to trust preferred securities 4,122 - 8,243 -
Interest expense on senior notes 9,733 9,728 19,464 19,456
Interest expense on credit facility 348 853 708 1,762
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Total claims and expenses 827,574 500,802 1,537,926 999,079
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INCOME BEFORE TAXES 125,073 53,552 235,886 129,255
Income tax expense 15,518 145 31,964 14,787
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NET INCOME $109,555 $ 53,407 $ 203,922 $ 114,468
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Other comprehensive income (loss), net of tax 142,261 39,328 172,249 (28,798)
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COMPREHENSIVE INCOME $251,816 $ 92,735 $ 376,171 $ 85,670
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PER SHARE DATA:
Average shares outstanding (000's) 54,096 51,301 52,505 49,713
Net income per common share-basic $ 2.03 $ 1.04 $ 3.88 $ 2.30
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Average diluted shares outstanding (000's) 55,091 52,177 53,314 50,633
Net income per common share-diluted $ 1.99 $ 1.02 $ 3.82 $ 2.26
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EVEREST RE GROUP, LTD.
CONSOLIDATED BALANCE SHEETS
(Dollars in thousands, except par value per share)
June 30, December 31,
------------ ------------
2003 2002
------------ ------------
ASSETS: (unaudited)
Fixed maturities - available for sale, at market value
(amortized cost: 2003, $7,478,198; 2002, $6,460,839) $8,000,791 $6,779,858
Equity securities, at market value (cost: 2003, $60,902; 2002, $56,841) 56,296 47,473
Short-term investments 212,668 169,116
Other invested assets 61,728 53,856
Cash 134,909 208,830
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Total investments and cash 8,466,392 7,259,133
Accrued investment income 107,769 85,959
Premiums receivable 890,656 673,377
Reinsurance receivables 1,151,733 1,116,362
Funds held by reinsureds 147,404 121,308
Deferred acquisition costs 270,383 207,416
Prepaid reinsurance premiums 88,060 63,437
Deferred tax asset 98,197 139,176
Other assets 199,576 198,435
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TOTAL ASSETS $11,420,170 $9,864,603
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LIABILITIES:
Reserve for losses and adjustment expenses $5,403,294 $4,905,582
Future policy benefit reserve 219,855 227,925
Unearned premium reserve 1,247,864 872,340
Funds held under reinsurance treaties 371,946 347,360
Losses in the course of payment 46,662 45,511
Contingent commissions (277) 1,932
Other net payable to reinsurers 99,971 61,244
Current federal income taxes (13,364) (16,696)
8.5% Senior notes due 3/15/2005 249,826 249,780
8.75% Senior notes due 3/15/2010 199,201 199,158
Revolving credit agreement borrowings 70,000 70,000
Company-obligated mandatorily redeemable preferred securities
of subsidiary trusts holding solely subordinated debentures ("trust
preferred securities") 210,000 210,000
Accrued interest on debt and borrowings 13,425 13,481
Other liabilities 246,403 308,340
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Total liabilities 8,364,806 7,495,957
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SHAREHOLDERS' EQUITY:
Preferred shares, par value: $0.01; 50 million shares authorized;
no shares issued and outstanding - -
Common shares, par value: $0.01; 200 million shares authorized;
55.5 million shares issued in 2003 and 50.9 million shares
issued in 2002 559 513
Additional paid-in capital 938,551 618,521
Unearned compensation (298) (340)
Accumulated other comprehensive income, net of
deferred income taxes of $133.2 million in 2003 and
$74.4 million in 2002 393,791 221,542
Retained earnings 1,745,711 1,551,360
Treasury shares, at cost; 0.5 million shares in 2003 and 0.5 million
shares in 2002 (22,950) (22,950)
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Total shareholders' equity 3,055,364 2,368,646
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TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $11,420,170 $9,864,603
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EVEREST RE GROUP, LTD.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in thousands)
Three Months Ended Six Months Ended
June 30, June 30,
----------------------- -------------------------
2003 2002 2003 2002
---------- -------- ---------- ----------
(unaudited) (unaudited)
CASH FLOWS FROM OPERATING ACTIVITIES: $ 353,209 $169,579 $ 680,865 $ 275,080
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from investments sold 210,480 693,752 676,289 1,137,834
Proceeds from investments maturing or called 204,960 128,401 401,945 275,995
Cost of investments acquired (1,144,754) (917,318) (2,112,036) (1,785,933)
Net sales (purchases) of short-term investments 30,819 (57,677) (41,464) (194,896)
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Net cash (used in) investing activities (698,495) (152,842) (1,075,266) (567,000)
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CASH FLOWS FROM FINANCING ACTIVITIES:
Common shares issued during the period 319,189 1,372 320,076 347,985
Dividends paid to shareholders (4,990) (4,105) (9,571) (8,207)
Borrowings on revolving credit agreement - - - 20,000
Repayments on revolving credit agreement - - - (20,000)
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Net cash provided (used in) by financing activities 314,199 (2,733) 310,505 339,778
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EFFECT OF EXCHANGE RATE CHANGES ON CASH 12,275 9,174 9,975 5,195
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Net (decrease) increase in cash (18,812) 23,178 (73,921) 53,053
Cash, beginning of period 153,721 101,753 208,830 71,878
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Cash, end of period $ 134,909 $124,931 $ 134,909 $ 124,931
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