Business Wire | Aug 5, 2020 04:15PM EDT

Everest Re Group Reports Second Quarter 2020 Results

Aug. 05, 2020

HAMILTON, Bermuda--(BUSINESS WIRE)--Aug. 05, 2020--Everest Re Group, Ltd. ("Everest" or the "Company") today reported that for the three months ended June 30, 2020, net income was $190.9 million, or $4.77 per diluted common share, compared to net income of $332.9 million, or $8.15 per diluted common share, for the three months ended June 30, 2019. After-tax operating income? for the quarter was $82.9 million, or $2.07 per diluted common share, compared to after-tax operating income? of $320.9 million, or $7.85 per diluted common share, for the same period in 2019.

Everest Re Group President & CEO Juan C. Andrade commented: "Despite the current challenging and uncertain public health, economic, and social environment, Everest reported another solid quarter and first half of 2020 results. Our ability to successfully leverage our capital position, our global platform, and our success in executing against our objectives - even under adverse conditions - drive our results. Our people continue to demonstrate the passion and resilience to differentiate Everest and deliver value to our customers. We have strong forward momentum across our Reinsurance and Insurance Segments.

Turning to the Company's results, Everest wrote nearly $2.4 billion in gross written premiums for the quarter, an increase of 9.4% as compared to a year ago, 10.7% excluding the impact of foreign exchange. Our Reinsurance Segment ("Reinsurance") grew 9.1% while the Insurance Segment ("Insurance") was up 9.8% (11.0% and 10.0% respectively excluding the impact of foreign exchange). In Reinsurance, we continue to see excellent opportunities in several areas such as facultative risk, property and in certain territories including the US, Canada, Latin America and Asia, with an overall environment that gives us the opportunity to better shape our book towards deals with much better terms and pricing. In Insurance, the main growth drivers were continued strength in the Excess & Surplus business, strong and widespread rate momentum (excluding workers compensation up 18% and up over 12% including workers compensation) and high renewal retention across all of our businesses.

Insurance written rate also continues to exceed loss trend across our core P&C lines of business.

Our combined ratio for the quarter was 97.5%, 95.4% for Reinsurance and 103.4% for Insurance, resulting in $50.9 million of underwriting income and highlighting the underlying strength and sustainable profitability of the franchise. These results include $160 million in net pre-tax losses related to the Covid-19 Pandemic ("Pandemic"), attributed $130 million to Reinsurance and $30 million to Insurance. The Company also recorded $15 million of catastrophe losses from civil unrest in the United States. The attritional combined ratio excluding Pandemic impacts was 88.5%, 86.7% for Reinsurance and 93.7% for Insurance.

Our balance sheet and capital position remain a fundamental source of strength for Everest. This quarter reported record shareholder's equity of $9.3 billion; combined with our low financial leverage and top tier ratings we have more than ample capital to take advantage of current and future opportunities in the global reinsurance and insurance market."

Other operating highlights for the second quarter of 2020 included the following:

* Net written premium of $2.0 billion reflecting growth of 13.1% * Cash flow from operations was $598.6 million for the quarter compared to $393.7 million for 2019. * Net investment income of $38.1 million for the quarter including limited partnership losses of ($88.3) million. Note that net investment income from limited partnerships is generally subject to a quarterly reporting lag, which indicates that limited partnership losses in the first quarter of 2020 are reflected in our net investment income for the second quarter of 2020. * Net after-tax realized gains amounted to $150.5 million for the quarter, while net after-tax unrealized gains were $544.5 million for the quarter. * Shareholders' equity at quarter end was $9.3 billion vs. $9.1 billion at year end 2019. * The Company has paid $61.9 million in common share dividends during the quarter and $125.2 million thus far in 2020.

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 10:30 a.m. Eastern Time on August 6, 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 June 30, Six Months Ended June 30,



(Dollarsinthousands, 2020 2019 2020 2019except per shareamounts)



(unaudited) (unaudited)



Per Per Per Per Diluted Diluted Diluted Diluted

Common Common Common Common

Amount Share Amount Share Amount Share Amount Share



Net income $190,880 $4.77 $332,868 $8.15 $207,492 $5.13 $687,419 $16.82 (loss)

After-taxnetrealized 150,519 3.76 25,994 0.64 (21,844 ) (0.54 ) 99,899 2.44 capital gains(losses)

After-taxnetforeign (42,528 ) (1.06 ) (13,988 ) (0.34 ) (17,924 ) (0.44 ) (15,710 ) (0.38 )exchange income(expense)



After-taxoperating $82,889 $2.07 $320,862 $7.85 $247,260 $6.12 $603,230 $14.76 income (loss)



(Some amounts may not reconcile due to rounding.)

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 OF OPERATIONSAND COMPREHENSIVE INCOME (LOSS) Three Months Ended Six Months Ended June 30, June 30,(Dollars in 2020 2019 2020 2019thousands, except per share amounts) (unaudited) (unaudited)REVENUES: Premiums earned $ 2,042,405 $ 1,817,299 $ 4,079,219 $ 3,549,996

Net investment 38,083 179,028 185,883 320,004 incomeNet realized capital gains (losses):Credit allowances on (4,063 ) (25,837 ) fixed maturity - -securitiesOther-than-temporary (5,157 ) (8,090 )impairments on fixed - -maturity securitiesOther net realized 188,711 35,429 (103 ) 130,594 capital gains (losses)Total net realized 184,648 30,272 (25,940 ) 122,504 capital gains (losses)Net derivative gain 11,869 353 (3,504 ) 3,584 (loss)Other income (32,490 ) (18,225 ) (9,127 ) (21,525 )(expense)Total revenues 2,244,515 2,008,727 4,226,531 3,974,563

CLAIMS AND EXPENSES: Incurred losses and 1,407,016 1,094,630 2,837,856 2,143,180 loss adjustment expenses Commission, 466,316 420,950 914,838 810,424 brokerage, taxes and feesOther underwriting 118,130 104,833 246,990 203,818 expenses Corporate expenses 8,733 7,535 18,566 14,187

Interest, fees and 7,253 8,434 14,836 16,065 bond issue cost amortization expenseTotal claims and 2,007,448 1,636,382 4,033,086 3,187,674 expenses INCOME (LOSS) BEFORE 237,067 372,345 193,445 786,889 TAXESIncome tax expense 46,187 39,477 (14,047 ) 99,470 (benefit) NET INCOME (LOSS) $ 190,880 $ 332,868 $ 207,492 $ 687,419

Other comprehensiveincome (loss), net of tax:Unrealizedappreciation(depreciation) ("URA 551,753 197,759 272,354 430,824 (D)") on securitiesarising during theperiodReclassificationadjustment for (7,257 ) (1,869 ) 24,142 (3,691 )realized losses (gains) included innet income (loss)Total URA(D) on 544,496 195,890 296,496 427,133 securities arising during the period Foreign currency 20,586 (25,832 ) (30,238 ) (11,780 )translation adjustments Reclassificationadjustment for 1,806 1,151 2,726 2,302 amortization of net (gain) loss includedin net income (loss)Total benefit plan 1,806 1,151 2,726 2,302 net gain (loss) for the periodTotal other 566,888 171,209 268,984 417,655 comprehensive income (loss), net of tax COMPREHENSIVE INCOME $ 757,768 $ 504,077 $ 476,476 $ 1,105,074 (LOSS) EARNINGS PER COMMON SHARE:Basic $ 4.78 $ 8.17 $ 5.14 $ 16.88

Diluted 4.77 8.15 5.13 16.82

EVEREST RE GROUP, LTD.CONSOLIDATED BALANCE SHEETS June 30, December 31, (Dollars andshare amountsin thousands, 2020 2019except parvalue pershare) (unaudited)ASSETS: Fixedmaturities - $ 17,055,259 $ 16,824,944 available for sale, atmarket value(amortizedcost: 2020,$16,392,238;2019,$16,473,491, creditallowances:2020,$25,837;2019, $0)Fixedmaturities - 4,431 5,826 available for sale, at fairvalueEquity 949,170 931,457 securities, at fair valueShort-terminvestments(cost: 2020, 853,964 414,706 $854,248;2019,$414,639)Otherinvestedassets (cost: 1,816,373 1,763,531 2020, $1,816,373;2019,$1,763,531)Cash 922,479 808,036

Total 21,601,676 20,748,500 investments and cashAccrued 120,387 116,804 investment incomePremiums 2,484,271 2,259,088 receivableReinsurance 1,852,887 1,763,471 receivables Funds held by 513,123 489,901 reinsuredsDeferred 578,210 581,863 acquisition costsPrepaid 464,206 445,716 reinsurance premiumsIncome taxes 294,333 305,711

Other assets 675,700 612,997

TOTAL ASSETS $ 28,584,793 $ 27,324,051

LIABILITIES: Reserve forlosses and 14,276,641 13,611,313 loss adjustmentexpensesFuture policy 40,659 42,592 benefit reserveUnearned 3,190,174 3,056,735 premium reserveFunds heldunder 11,876 10,668 reinsurancetreatiesOther net 369,761 291,660 payable to reinsurersLosses in 199,157 51,950 course of paymentSenior notes 397,134 397,074 due 6/1/2044Long term 223,625 236,758 notes due 5/1 /2067Accruedinterest on 2,368 2,878 debt andborrowingsEquity index 9,088 5,584 put option liabilityUnsettled 89,749 30,650 securities payableOther 488,262 453,264 liabilitiesTotal 19,298,494 18,191,126 liabilities SHAREHOLDERS' EQUITY:Preferredshares, parvalue: $0.01; 50,000 sharesauthorized;no shares issued and - -outstandingCommonshares, parvalue: $0.01;200,000 sharesauthorized;(2020) 69,608and (2019)69,464outstanding 696 694 beforetreasurysharesAdditional 2,225,993 2,219,660 paid-in capitalAccumulatedothercomprehensiveincome (loss), netof deferredincome taxexpense(benefit) of$66,616 at 297,137 28,152 2020 and $30,996 at2019Treasuryshares, atcost; 29,636 (3,622,172 ) (3,422,152 )shares (2020)and 28,665shares (2019)Retained 10,384,645 10,306,571 earningsTotal 9,286,299 9,132,925 shareholders' equity TOTALLIABILITIES $ 28,584,793 $ 27,324,051 AND SHAREHOLDERS'EQUITY

EVEREST RE GROUP, LTD.CONSOLIDATEDSTATEMENTS OF CASH FLOWS Six Months Ended June 30,(Dollars in 2020 2019thousands) (unaudited)CASH FLOWSFROM OPERATINGACTIVITIES:Net income $ 207,492 $ 687,419 (loss)Adjustmentsto reconcilenet income tonet cash provided byoperatingactivities:Decrease(increase) in (252,609 ) (174,583 )premiumsreceivableDecrease(increase) in (23,498 ) (55,421 )funds held by reinsureds,netDecrease(increase) in (147,515 ) (19,319 )reinsurancereceivablesDecrease (25,000 ) 180,126 (increase) in income taxesDecrease(increase) in (29,699 ) (137,092 )prepaid reinsurancepremiumsIncrease(decrease) inreserve for 800,816 155,096 losses and lossadjustmentexpensesIncrease(decrease) in (1,933 ) (1,648 )future policy benefitreserveIncrease(decrease) in 159,744 219,263 unearnedpremiumsIncrease(decrease) in 89,499 132,474 other net payable toreinsurersIncrease(decrease) in 147,427 35,738 losses in course ofpaymentChange inequity 84,066 (57,031 )adjustments in limitedpartnershipsDistributionof limited 40,447 41,321 partnershipincomeChange inother assets (10,313 ) (60,820 )and liabilities,netNon-cash 19,175 17,171 compensation expense Amortizationof bondpremium 20,547 13,321 (accrual ofbonddiscount)Net realizedcapital 25,940 (122,504 )(gains)losses Net cashprovided by 1,104,586 853,511 (used in) operatingactivities CASH FLOWSFROM INVESTINGACTIVITIES:Proceeds fromfixedmaturitiesmatured/ 1,261,650 1,009,921 called -available forsale, atmarket valueProceeds fromfixedmaturities 990,273 2,318,207 sold - available forsale, atmarket valueProceeds fromfixedmaturities 2,706 sold - -available forsale, at fairvalueProceeds fromequity 213,185 149,233 securities sold, at fairvalueDistributionsfrom other 164,975 143,752 investedassetsCost of fixedmaturitiesacquired - (2,301,701 ) (3,466,331 )available forsale, atmarket valueCost ofequity (224,086 ) (229,070 )securities acquired, atfair valueCost of otherinvested (343,332 ) (207,323 )assetsacquiredNet change in (439,457 ) (499,983 )short-term investmentsNet change inunsettled 49,504 88,531 securitiestransactionsNet cashprovided by (628,989 ) (690,357 )(used in) investingactivities CASH FLOWSFROM FINANCINGACTIVITIES:Common sharesissued duringthe periodfor (12,841 ) (7,485 )share-basedcompensation,net ofexpensePurchase of (200,019 ) (24,604 )treasury sharesDividends (125,205 ) (114,136 )paid to shareholdersCost of debt (10,647 ) repurchase -

Cost ofshareswithheld onsettlements (14,141 ) (11,748 )ofshare-basedcompensationawardsNet cashprovided by (362,853 ) (157,973 )(used in) financingactivities EFFECT OFEXCHANGE RATE 1,699 91 CHANGES ONCASH Net increase 114,443 5,272 (decrease) in cashCash, 808,036 656,095 beginning of periodCash, end of $ 922,479 $ 661,367 period SUPPLEMENTALCASH FLOW INFORMATION:Income taxes $ 10,895 $ (83,995 )paid (recovered)Interest 14,992 15,984 paid

View source version on businesswire.com: https://www.businesswire.com/news/home/20200805006000/en/

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