Everest Re Posts $22.7 Million Q1 Net Loss; Operating Loss $73.8 Million

April 30, 2010

The Bermuda-based Everest Re Group reported a net loss of $22.7 million, or $0.38 per common share, for the first quarter 2010, compared to net income of $108.6 million, or $1.76 per diluted common share, for the first quarter of 2009.

The after-tax operating loss, which excludes realized capital gains/losses, was $73.8 million, or $1.25 per common share, for the first quarter 2010, compared to after-tax operating income of $106.1 million, or $1.72 per diluted common share, for the same period last year.

As the Company had previously announced, as have many other insurers and reinsurers, the main cause “was the losses incurred in connection with the Chile earthquake and the European windstorm Xynthia.

Everest Re also indicated that “while there has been no change to the announced loss estimates for these events, additional catastrophe losses in the quarter, specifically the Australian storms in Melbourne and Perth, further contributed to these losses. Overall, catastrophe losses, net of reinstatement premiums and taxes, were $275.6 million, or $4.66 per common share, during the quarter.”

The report also listed the following operating highlights for the first quarter:
Gross written premiums increased 2 percent to $1.021 billion compared to the same period in 2009, but eliminating the effects of foreign exchange, gross written premiums were roughly flat to last year. Globally, reinsurance premiums were about even with last year but adjusting for foreign currency movements and reinstatement premiums for the Chile earthquake, reinsurance premiums were down 5 percent. Lower premium from U.S. casualty, crop reinsurance, marine, and European business offset the continued strong growth in U.S. property, South America and Asia-Pacific markets. Insurance premiums, which are entirely derived from the U.S. markets, were up 11 percent as specialty markets continued to provide growth opportunities.
— The loss and combined ratios were 97.8 percent and 124.9 percent, respectively, for the quarter compared to 61.1 percent and 89.3 percent, respectively, in the first quarter of 2009. Excluding the previously cited catastrophe losses, the current year attritional loss ratio was 59.5 percent, up from the 55.7 percent reported for last year’s first quarter.
Net investment income was $161.5 million, up significantly when compared to last year’s net investment income of $68.8 million. The first quarter of 2009 had been impacted by large losses on limited partnership investments compared to income from these same investments in the current quarter. Adjusting for limited partnerships, underlying investment income increased 3 percent quarter over quarter.
Net after-tax realized capital gains totaled $51.1 million for the quarter, primarily due to the sale of foreign bonds and the after-tax fair value adjustments to the public equity portfolio. This compares to net after-tax realized capital losses of $48.5 million in the first quarter of 2009.
Net after-tax unrealized capital gains increased $34.6 million during the quarter, driven by changes in interest rates.
Cash flow from operations was $271.3 million compared to cash flows of $180.5 million in the same quarter last year.
— The Company repurchased 562,306 of its common shares during the quarter at an average price of $83.64 for a total cost of $47 million. The repurchases were made pursuant to a share repurchase authorization, provided by the Company’s Board of Directors, under which there remains 7.9 million shares available.
Shareholders’ equity at March 31, 2010, was $6,037 million, down from the $6,102 million at December 31, 2009. Adjusting for share repurchases and dividend payments in the quarter, shareholders’ equity was flat compared to year end 2009. Book value per share was $102.46 as of March 31, 2010 compared to $102.87 at December 31, 2009.

Chairman and CEO Joseph V. Taranto commented: “As an industry, we experienced record catastrophe losses in the first quarter compared to the same period in any other year. While this had a significant impact on the quarterly results, our return to shareholders, including dividends paid, was slightly positive, attesting to the overall strength of our organization.”
The complete report and details on accessing the earnings conference call may be obtained on the Company’s web site at: www.everestre.com.

Source: Everest Re

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