Business Wire | Oct 29, 2020 04:16PM EDT

Everest Re Group Reports Third Quarter 2020 Results; Net Income of $243.1 Million and 16% Growth in Gross Written Premium Year Over Year

Oct. 29, 2020

HAMILTON, Bermuda--(BUSINESS WIRE)--Oct. 29, 2020--Everest Re Group, Ltd. ("Everest" or the "Company") today reported that for the three months ended September 30, 2020, net income was $243.1 million, or $6.07 per diluted common share, compared to net income of $104.4 million, or $2.56 per diluted common share, for the three months ended September 30, 2019. After-tax operating income? for the quarter was $97.0 million, or $2.42 per diluted common share, compared to after-tax operating income? of $138.4 million, or $3.39 per diluted common share, for the same period in 2019.

Everest Re Group President & CEO Juan C. Andrade commented: "Everest is benefitting from a flight to quality and strength in the reinsurance and insurance markets. This is an underwriter's market. Our broadly diversified reinsurance and insurance franchises, our financial strength, deep distribution relationships, and our focus on providing solutions to our customers position us well for this environment. Everest's core strength is evidenced by our third quarter 2020 results where we achieved 16% growth in gross written premium, an improved attritional combined ratio of 85.8% and net income of $243 million."

Group Quarterly Results

* Excluding the catastrophe and Covid-19 Pandemic ("Pandemic") losses, the Company reported an attritional combined ratio of 85.8%, as compared to 87.1% in the same period during 2019. * Pre-tax catastrophe losses in the amount of $300 million, this amount is net of reinsurance and reinstatement premiums. These losses include the impact of Hurricanes Laura, Isaias and Sally, wildfires in California and Oregon, and other events including the Midwest United States Derecho windstorm. * $125 million of net pre-tax losses related to the Pandemic, primarily IBNR and attributed $110 million to reinsurance and $15 million to insurance. To date, Everest has incurred $435 million of losses related to the Pandemic.

Segmental Quarterly Results

Reinsurance segment

* Gross written premiums of $2.1 billion, a 20% increase over the same period in 2019 * Strong premium growth in facultative risk and property and casualty treaty reinsurance in the US, Canada, and Latin America * Attritional combined ratio of 83.0%, excluding catastrophe and Pandemic losses vs. the prior year comparative figure of 84.0% * Combined ratio of 105.4%, which included catastrophe losses of 16.3% and Pandemic losses of 6.7% * Pre-tax catastrophe losses of $262.7 million, net of reinsurance and reinstatement premiums, and pre-tax net pandemic losses of $110 million

Insurance segment

* Gross written premiums of $705 million, a 6% increase over the same period in 2019 * Strong renewal rate change of 19% excluding Worker's Comp and 13% across all lines * Attritional combined ratio of 94.2%, excluding catastrophe and Pandemic, vs. the prior year comparative figure of 96.0% * Combined ratio of 104.5%, which included catastrophe losses of 7.0% and Pandemic losses of 3.4% * Pre-tax catastrophe losses of $37.5 million, net of reinsurance and reinstatement premiums, and pre-tax net pandemic losses of $15.0 million

Balance Sheet and Investments

* Shareholders' equity increased to a record $9.6 billion * Book value per diluted share of $239.98, up 9.3% on a dividend adjusted basis since year end 2019 * Net investment income of $234.2 million includes limited partnership gains of $88.8 million. Note that net investment income from limited partnerships is generally subject to a quarterly reporting lag, with current quarter results reflective of the rebound in US and global equity markets during the second quarter of 2020 * Net after-tax realized gains of $88.9 million for the quarter, with net after-tax unrealized gains of $52.0 million * Cash flow from operations of $1.1 billion for the quarter * Common share dividends declared and paid of $1.55 per share, equal to $61.9 million * 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, 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 October 30, 2020. 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 in the "Financial Reports" section of the "Investor Center". The supplemental financial information may also be obtained by contacting the Company directly.

_______________________________________________ 1 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 Nine Months Ended September 30, September 30,(Dollarsinthousands, 2020 2019 2020 2019except pershareamounts) (unaudited) (unaudited) Per Per Per Per Diluted Diluted Diluted Common Common Common Common Amount Share Amount Share Amount Share Amount Share Net income $ $ $ $ $ $ $ $ (loss) 243,057 6.07 104,398 2.56 450,549 11.18 791,817 19.38

After-taxnet realized 88,911 2.22 (10,143) (0.25) 67,067 1.66 89,756 2.20capitalgains(losses)After-taxnet foreign 57,157 1.43 (23,821) (0.58) 39,233 0.97 (39,530) (0.97)exchangeincome(expense) After-tax $ $ $ $ $ $ $ $ operating 96,989 2.42 138,362 3.39 344,249 8.54 741,592 18.15income(loss) (Someamountsmay not reconciledue torounding.) 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--

EVEREST RE GROUP,LTD.CONSOLIDATEDSTATEMENTS OFOPERATIONSAND COMPREHENSIVEINCOME (LOSS) Three Months Ended Nine Months Ended September 30, September 30,(Dollars in 2020 2019 2020 2019thousands, exceptper share amounts) (unaudited) (unaudited)REVENUES:Premiums earned $ 2,205,811 $ 1,905,619 $ 6,285,030 $ 5,455,615

Net investment 234,233 181,058 420,116 501,062incomeNet realized capitalgains (losses):Credit allowances on 6,196 (19,641) fixed maturity - -securitiesOther-than-temporary (7,314) (15,404)impairments on fixed - -maturity securitiesOther net realized 104,007 (5,629) 103,904 124,965capital gains(losses)Total net realized 110,203 (12,943) 84,263 109,561capital gains(losses)Net derivative gain 2,456 (189) (1,048) 3,395(loss)Other income 57,481 (31,025) 48,354 (52,550)(expense)Total revenues 2,610,184 2,042,520 6,836,715 6,017,083

CLAIMS AND EXPENSES:Incurred losses and 1,736,210 1,371,924 4,574,066 3,515,104loss adjustmentexpenses Commission, 445,332 443,076 1,360,170 1,253,500brokerage, taxes andfeesOther underwriting 138,875 118,158 385,865 321,976expenses Corporate expenses 10,618 8,435 29,184 22,622

Interest, fees and 6,641 7,907 21,477 23,972bond issue costamortization expenseTotal claims and 2,337,676 1,949,500 6,370,762 5,137,174expenses INCOME (LOSS) BEFORE 272,508 93,020 465,953 879,909TAXESIncome tax expense 29,451 (11,378) 15,404 88,092(benefit) NET INCOME (LOSS) $ 243,057 $ 104,398 $ 450,549 $ 791,817

Other comprehensiveincome (loss), netof tax:Unrealizedappreciation(depreciation) ("URA 63,480 93,765 335,835 524,589(D)") on securitiesarising during theperiodReclassificationadjustment for (11,453) (529) 12,689 (4,220)realized losses(gains) included innet income (loss)Total URA(D) on 52,027 93,236 348,524 520,369securities arisingduring the period Foreign currency 60,628 (3,426) 30,390 (15,206)translationadjustments Reclassificationadjustment for 1,806 1,363 4,532 3,665amortization of net(gain) loss includedin net income (loss)Total benefit plan 1,806 1,363 4,532 3,665net gain (loss) forthe periodTotal other 114,461 91,173 383,446 508,828comprehensive income(loss), net of tax COMPREHENSIVE INCOME $ 357,518 $ 195,571 $ 833,995 $ 1,300,645(LOSS) EARNINGS PER COMMONSHARE:Basic $ 6.08 $ 2.56 $ 11.20 $ 19.44

Diluted 6.07 2.56 11.18 19.38

EVEREST RE GROUP, LTD.CONSOLIDATED BALANCE SHEETSSeptember 30,

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$ 17,856,377

$ 16,824,944

(amortized cost: 2020, $17,131,414; 2019, $16,473,491, credit allowances: 2020, $19,641; 2019, $0)Fixed maturities - available for sale, at fair value3,748

5,826

Equity securities, at fair value1,173,162

931,457

Short-term investments (cost: 2020, $1,221,198; 2019, $414,639)1,220,753

414,706

Other invested assets (cost: 2020, $1,911,757; 2019, $1,763,531)1,911,757

1,763,531

Cash938,881

808,036

Total investments and cash23,104,678

20,748,500

Accrued investment income132,513

116,804

Premiums receivable2,611,036

2,259,088

Reinsurance receivables 1,923,012

1,763,471

Funds held by reinsureds548,940

489,901

Deferred acquisition costs601,784

581,863

Prepaid reinsurance premiums455,961

445,716

Income taxes77,761

305,711

Other assets697,342

612,997

TOTAL ASSETS$ 30,153,027

$ 27,324,051

LIABILITIES:Reserve for losses and loss adjustment expenses15,233,125

13,611,313

Future policy benefit reserve40,374

42,592

Unearned premium reserve3,447,455

3,056,735

Funds held under reinsurance treaties15,931

10,668

Other net payable to reinsurers364,654

291,660

Losses in course of payment184,894

51,950

Senior notes due 6/1/2044397,164

397,074

Long term notes due 5/1/2067223,649

236,758

Borrowings from FHLB90,000

-

Accrued interest on debt and borrowings7,215

2,878

Equity index put option liability6,632

5,584

Unsettled securities payable119,869

30,650

Other liabilities430,773

453,264

Total liabilities20,561,735

18,191,126

SHAREHOLDERS' EQUITY:Preferred shares, par value: $0.01; 50,000 shares authorized;no shares issued and outstanding-

-

Common shares, par value: $0.01; 200,000 shares authorized; (2020) 69,603and (2019) 69,464 outstanding before treasury shares696

694

Additional paid-in capital2,235,378

2,219,660

Accumulated other comprehensive income (loss), net of deferred income tax expense(benefit) of $74,481 at 2020 and $30,996 at 2019411,598

28,152

Treasury shares, at cost; 29,636 shares (2020) and 28,665 shares (2019)(3,622,172)

(3,422,152)

Retained earnings10,565,792

10,306,571

Total shareholders' equity 9,591,292

9,132,925

TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY$ 30,153,027

$ 27,324,051

EVEREST RE GROUP,LTD.CONSOLIDATED BALANCESHEETS September 30, December 31,

(Dollars and shareamounts in 2020 2019thousands, exceptpar value per share) (unaudited)ASSETS:Fixed maturities - $ 17,856,377 $ 16,824,944available for sale,at market value(amortized cost:2020, $17,131,414;2019, $16,473,491,credit allowances:2020, $19,641; 2019,$0)Fixed maturities - 3,748 5,826available for sale,at fair valueEquity securities, 1,173,162 931,457at fair valueShort-terminvestments (cost: 1,220,753 414,7062020, $1,221,198;2019, $414,639)Other investedassets (cost: 2020, 1,911,757 1,763,531$1,911,757; 2019,$1,763,531)Cash 938,881 808,036

Total investments 23,104,678 20,748,500and cashAccrued investment 132,513 116,804incomePremiums receivable 2,611,036 2,259,088

Reinsurance 1,923,012 1,763,471receivables Funds held by 548,940 489,901reinsuredsDeferred acquisition 601,784 581,863costsPrepaid reinsurance 455,961 445,716premiumsIncome taxes 77,761 305,711

Other assets 697,342 612,997

TOTAL ASSETS $ 30,153,027 $ 27,324,051

LIABILITIES:Reserve for losses 15,233,125 13,611,313and loss adjustmentexpensesFuture policy 40,374 42,592benefit reserveUnearned premium 3,447,455 3,056,735reserveFunds held under 15,931 10,668reinsurance treatiesOther net payable to 364,654 291,660reinsurersLosses in course of 184,894 51,950paymentSenior notes due 6/1 397,164 397,074/2044Long term notes due 223,649 236,7585/1/2067 90,000 Borrowings from FHLB -

Accrued interest on 7,215 2,878debt and borrowingsEquity index put 6,632 5,584option liabilityUnsettled securities 119,869 30,650payableOther liabilities 430,773 453,264

Total liabilities 20,561,735 18,191,126

SHAREHOLDERS'EQUITY:Preferred shares,par value: $0.01;50,000 sharesauthorized;no shares issued and outstanding - -

Common shares, parvalue: $0.01;200,000 sharesauthorized; (2020)69,603and (2019) 69,464 696 694outstanding beforetreasury sharesAdditional paid-in 2,235,378 2,219,660capitalAccumulated othercomprehensive income(loss), net ofdeferred income taxexpense(benefit) of $74,481 411,598 28,152at 2020 and $30,996at 2019Treasury shares, atcost; 29,636 shares (3,622,172) (3,422,152)(2020) and 28,665shares (2019)Retained earnings 10,565,792 10,306,571

Total shareholders' 9,591,292 9,132,925equity TOTAL LIABILITIES $ 30,153,027 $ 27,324,051AND SHAREHOLDERS'EQUITYEVEREST RE GROUP, LTD.CONSOLIDATED STATEMENTS OF CASH FLOWS Nine Months Ended

September 30,

(Dollars in thousands)2020

2019

(unaudited)CASH FLOWS FROM OPERATING ACTIVITIES:Net income (loss)$ 450,549

$ 791,817

Adjustments to reconcile net income to net cash provided by operating activities:Decrease (increase) in premiums receivable(357,162)

(219,637)

Decrease (increase) in funds held by reinsureds, net(53,878)

(17,961)

Decrease (increase) in reinsurance receivables(172,454)

(42,891)

Decrease (increase) in income taxes184,311

168,360

Decrease (increase) in prepaid reinsurance premiums(7,963)

(145,846)

Increase (decrease) in reserve for losses and loss adjustment expenses1,665,982

553,668

Increase (decrease) in future policy benefit reserve(2,218)

(2,502)

Increase (decrease) in unearned premiums392,904

388,597

Increase (decrease) in other net payable to reinsurers68,784

160,306

Increase (decrease) in losses in course of payment132,208

(6,438)

Change in equity adjustments in limited partnerships(12,475)

(104,987)

Distribution of limited partnership income55,576

62,359

Change in other assets and liabilities, net(131,224)

(37,449)

Non-cash compensation expense 29,337

25,386

Amortization of bond premium (accrual of bond discount)32,594

23,642

Net realized capital (gains) losses (84,263)

(109,561)

Net cash provided by (used in) operating activities2,190,608

1,486,863

CASH FLOWS FROM INVESTING ACTIVITIES:Proceeds from fixed maturities matured/called - available for sale, at market value1,781,821

1,631,298

Proceeds from fixed maturities sold - available for sale, at market value1,390,747

2,589,232

Proceeds from fixed maturities sold - available for sale, at fair value2,054

2,706

Proceeds from equity securities sold, at fair value329,750

185,157

Distributions from other invested assets210,527

215,800

Cost of fixed maturities acquired - available for sale, at market value(3,874,890)

(5,039,728)

Cost of equity securities acquired, at fair value(460,953)

(269,969)

Cost of other invested assets acquired(392,650)

(299,480)

Net change in short-term investments(804,744)

(213,048)

Net change in unsettled securities transactions89,064

(13,770)

Net cash provided by (used in) investing activities(1,729,274)

(1,211,802)

CASH FLOWS FROM FINANCING ACTIVITIES:Common shares issued during the period for share-based compensation, net of expense(13,617)

(7,836)

Purchase of treasury shares(200,020)

(24,604)

Dividends paid to shareholders(187,110)

(171,131)

Cost of debt repurchase(10,647)

-

FHLB advances (repayments)90,000

-

Cost of shares withheld on settlements of share-based compensation awards(15,298)

(12,473)

Net cash provided by (used in) financing activities(336,692)

(216,044)

EFFECT OF EXCHANGE RATE CHANGES ON CASH6,203

2,060

Net increase (decrease) in cash130,845

61,077

Cash, beginning of period808,036

656,095

Cash, end of period$ 938,881

$ 717,172

SUPPLEMENTAL CASH FLOW INFORMATION:Income taxes paid (recovered)$ (169,149)

$ (80,544)

Interest paid 16,731

19,078

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CONTACT: Media: Dane Lopes Group Head of Marketing & Communications Everest Global Services, Inc. 203.388.3977

CONTACT: Investors: Jon Levenson Head of Investor Relations Everest Global Services, Inc. 908.604.3169