|
NEWS RELEASE
|
 |
EVEREST RE GROUP, LTD.
Seon Place, 141 Front Street, 4th Floor, Hamilton HM 19, Bermuda
Everest Re Group Reports Second Quarter 2019 Results
HAMILTON, Bermuda--(BUSINESS WIRE – July 29, 2019)
Everest Re Group, Ltd. (“Everest”) (NYSE: RE) today reported second quarter 2019 net income of $342.9 million, or $8.39 per diluted common share,
compared to net income of $69.9 million, or $1.70 per diluted common share for the second quarter of 2018. After-tax operating income1 was $320.9 million, or $7.85 per diluted common share, for the second quarter of 2019, compared to
after-tax operating income¹ of $40.4 million, or $0.98 per diluted common share, for the same period last year.
For the six months ended June 30, 2019, net income was $691.8 million, or $16.93 per diluted common share, compared to net income of $280.2 million, or
$6.81 per diluted common share for the six months ended June 30, 2018. After-tax operating income1 was $603.2 million, or $14.76 per diluted common share, for the six months ended June 30, 2019, compared to after-tax operating income¹
of $260.1 million, or $6.32 per diluted common share, for the same period last year.
Commenting on the Company’s results, President and Chief Executive Officer Dominic J.
Addesso said: “Everest delivered outstanding results for the quarter, with a 16.1% annualized net income return on equity, driven by both solid underwriting and investment performance. With nearly $9 billion in common equity and strong franchises
in both reinsurance and insurance, our ability to adjust the mix of business to optimize our portfolio was again evident this quarter, as Everest added top line in insurance and casualty reinsurance along with a strong property cat renewal to
take advantage of the improved market conditions.”
Operating highlights for the second quarter of 2019 included the following:
|
•
|
Gross written premiums for the quarter were $2.2 billion, an increase of 5% compared to the second quarter of 2018. Direct insurance premiums were up 17%,
from second quarter 2018, to $757.1 million, continuing with the diversified growth trends noted in recent years. Worldwide reinsurance premiums were essentially flat at $1.4 billion for both the second quarter of 2019 and 2018.
|
|
•
|
The combined ratio was 89.2% for the quarter compared to 105.1% in the second quarter of 2018. Excluding catastrophe losses, reinstatement premiums and the
favorable prior period loss development, the current quarter attritional combined ratio was 88.6% compared to 83.5% in the same period last year.
|
|
•
|
There was $30 million of adverse development recorded in the quarter related to prior year catastrophe events, mostly offset by $21 million of favorable prior
year attritional losses.
|
|
•
|
Net investment income increased 27% for the quarter to $179.0 million.
|
|
•
|
Net after-tax realized capital gains amounted to $26.0 million for the quarter compared to $10.5 million during the second quarter of 2018.
|
|
•
|
Cash flow from operations was $853.5 million for the six months ended June 30, 2019 compared to $132.6 million for the same period in 2018.
|
|
•
|
During the quarter, the Company purchased 39,440 shares at a total cost of $8.5 million. The repurchases were made pursuant to a share repurchase
authorization, provided by the Company’s Board of Directors, under which there remains 1.3 million shares available.
|
|
•
|
Shareholders’ equity ended the quarter at $8.9 billion compared to $7.9 billion at year end 2018. Book value per share was up from $194.43 at December 31,
2018 to $218.07 at June 30, 2019.
|
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 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.
About Everest Re Group, Ltd.
Everest Re Group, Ltd. (“Everest”) is a leading global provider of reinsurance and insurance, operating for more than 40 years
through subsidiaries in the U.S., Europe, 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.
A conference call discussing the second quarter results will be held at 10:30 a.m. Eastern Time on July 30, 2019. The call will be available on the
Internet through the Company’s web site or at www.streetevents.com.
Additional information about Everest, our people, and our products can be found on our website at www.everestre.com
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), after-tax net foreign exchange income (expense), and the tax charge related to the enactment of the Tax Cuts
and Jobs Act of 2017 (TCJA), as the following reconciliation displays:
|
|
Three Months Ended
|
Three Months Ended
|
||||||||||||||||||||||||||||||
|
|
March 31,
|
March 31,
|
||||||||||||||||||||||||||||||
|
(Dollars in thousands, except per share amounts)
|
2019
|
2018
|
2019
|
2018
|
||||||||||||||||||||||||||||
|
|
(unaudited)
|
(unaudited)
|
||||||||||||||||||||||||||||||
|
|
||||||||||||||||||||||||||||||||
|
|
Per
|
Per Diluted
|
Per Diluted
|
Per Diluted
|
||||||||||||||||||||||||||||
|
|
Common
|
Common
|
Common
|
Common
|
||||||||||||||||||||||||||||
|
|
Amount
|
Share
|
Amount
|
Share
|
Amount
|
Share
|
Amount
|
Share
|
||||||||||||||||||||||||
|
|
||||||||||||||||||||||||||||||||
|
Net income (loss)
|
$
|
342,855
|
$
|
8.39
|
$
|
69,895
|
$
|
1.70
|
$
|
691,755
|
$
|
16.93
|
$
|
280,213
|
$
|
6.81
|
||||||||||||||||
|
After-tax net realized capital gains (losses)
|
25,994
|
0.64
|
10,519
|
0.26
|
99,899
|
2.44
|
(8,836
|
)
|
(0.21
|
)
|
||||||||||||||||||||||
|
After-tax net foreign exchange income (expense)
|
(4,001
|
)
|
(0.10
|
)
|
19,026
|
0.46
|
(11,374
|
)
|
(0.28
|
)
|
28,959
|
0.70
|
||||||||||||||||||||
|
|
||||||||||||||||||||||||||||||||
|
After-tax operating income (loss)
|
$
|
320,862
|
$
|
7.85
|
$
|
40,350
|
$
|
0.98
|
$
|
603,230
|
$
|
14.76
|
$
|
260,090
|
$
|
6.32
|
||||||||||||||||
|
|
||||||||||||||||||||||||||||||||
|
(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.
Return on equity calculations use adjusted shareholders’ equity excluding net after-tax unrealized (appreciation) depreciation of investments.
Contact:
Everest Re Group, Ltd.
Jon Levenson, Head of Investor Relations
Investor.relations@everestre.com
Phone (908) 604-3169
--Financial Details Follow--
|
CONSOLIDATED STATEMENTS OF OPERATIONS
|
||||||||||||||||
|
AND COMPREHENSIVE INCOME (LOSS)
|
||||||||||||||||
|
Three Months Ended
|
Six Months Ended
|
|||||||||||||||
|
June 30,
|
June 30,
|
|||||||||||||||
|
(Dollars in thousands, except per share amounts)
|
2019
|
2018
|
2019
|
2018
|
||||||||||||
|
(unaudited)
|
(unaudited)
|
|||||||||||||||
|
REVENUES:
|
||||||||||||||||
|
Premiums earned
|
$
|
1,817,299
|
$
|
1,729,818
|
$
|
3,549,996
|
$
|
3,349,245
|
||||||||
|
Net investment income
|
179,028
|
141,322
|
320,004
|
279,616
|
||||||||||||
|
Net realized capital gains (losses):
|
||||||||||||||||
|
Other-than-temporary impairments on fixed maturity securities
|
(5,157
|
)
|
(888
|
)
|
(8,090
|
)
|
(958
|
)
|
||||||||
|
Other-than-temporary impairments on fixed maturity securities
|
||||||||||||||||
|
transferred to other comprehensive income (loss)
|
-
|
-
|
-
|
-
|
||||||||||||
|
Other net realized capital gains (losses)
|
35,429
|
16,664
|
130,594
|
(8,167
|
)
|
|||||||||||
|
Total net realized capital gains (losses)
|
30,272
|
15,776
|
122,504
|
(9,125
|
)
|
|||||||||||
|
Net derivative gain (loss)
|
353
|
2,987
|
3,584
|
3,260
|
||||||||||||
|
Other income (expense)
|
(7,977
|
)
|
3,036
|
(17,030
|
)
|
15,100
|
||||||||||
|
Total revenues
|
2,018,975
|
1,892,939
|
3,979,058
|
3,638,096
|
||||||||||||
|
CLAIMS AND EXPENSES:
|
||||||||||||||||
|
Incurred losses and loss adjustment expenses
|
1,094,630
|
1,341,314
|
2,143,180
|
2,398,491
|
||||||||||||
|
Commission, brokerage, taxes and fees
|
420,950
|
383,402
|
810,424
|
741,041
|
||||||||||||
|
Other underwriting expenses
|
104,833
|
93,099
|
203,818
|
189,383
|
||||||||||||
|
Corporate expenses
|
7,535
|
6,633
|
14,187
|
15,629
|
||||||||||||
|
Interest, fees and bond issue cost amortization expense
|
8,434
|
7,728
|
16,065
|
15,146
|
||||||||||||
|
Total claims and expenses
|
1,636,382
|
1,832,176
|
3,187,674
|
3,359,690
|
||||||||||||
|
INCOME (LOSS) BEFORE TAXES
|
382,593
|
60,763
|
791,384
|
278,406
|
||||||||||||
|
Income tax expense (benefit)
|
39,738
|
(9,132
|
)
|
99,629
|
(1,807
|
)
|
||||||||||
|
NET INCOME (LOSS)
|
$
|
342,855
|
$
|
69,895
|
$
|
691,755
|
$
|
280,213
|
||||||||
|
Other comprehensive income (loss), net of tax:
|
||||||||||||||||
|
Unrealized appreciation (depreciation) ("URA(D)") on securities arising during the period
|
197,759
|
(41,776
|
)
|
430,824
|
(232,400
|
)
|
||||||||||
|
Reclassification adjustment for realized losses (gains) included in net income (loss)
|
(1,869
|
)
|
249
|
(3,691
|
)
|
(8,523
|
)
|
|||||||||
|
Total URA(D) on securities arising during the period
|
195,890
|
(41,527
|
)
|
427,133
|
(240,923
|
)
|
||||||||||
|
Foreign currency translation adjustments
|
(25,832
|
)
|
(63,652
|
)
|
(11,780
|
)
|
(45,953
|
)
|
||||||||
|
Reclassification adjustment for amortization of net (gain) loss included in net income (loss)
|
1,151
|
1,815
|
2,302
|
3,630
|
||||||||||||
|
Total benefit plan net gain (loss) for the period
|
1,151
|
1,815
|
2,302
|
3,630
|
||||||||||||
|
Total other comprehensive income (loss), net of tax
|
171,209
|
(103,364
|
)
|
417,655
|
(283,246
|
)
|
||||||||||
|
COMPREHENSIVE INCOME (LOSS)
|
$
|
514,064
|
$
|
(33,469
|
)
|
$
|
1,109,410
|
$
|
(3,033
|
)
|
||||||
|
EARNINGS PER COMMON SHARE:
|
||||||||||||||||
|
Basic
|
$
|
8.42
|
$
|
1.71
|
$
|
16.98
|
$
|
6.85
|
||||||||
|
Diluted
|
8.39
|
1.70
|
16.93
|
6.81
|
||||||||||||
|
CONSOLIDATED BALANCE SHEETS
|
||||||||
|
June 30,
|
December 31,
|
|||||||
|
(Dollars and share amounts in thousands, except par value per share)
|
2019
|
2018
|
||||||
|
(unaudited)
|
||||||||
|
ASSETS:
|
||||||||
|
Fixed maturities - available for sale, at market value
|
$
|
15,804,524
|
$
|
15,225,263
|
||||
|
(amortized cost: 2019, $15,506,555; 2018, $15,406,572)
|
||||||||
|
Fixed maturities - available for sale, at fair value
|
-
|
2,337
|
||||||
|
Equity securities, at fair value
|
914,654
|
716,639
|
||||||
|
Short-term investments (cost: 2019, $744,486; 2018, $241,010)
|
744,602
|
240,987
|
||||||
|
Other invested assets (cost: 2019, $1,668,705; 2018, $1,591,745)
|
1,668,705
|
1,591,745
|
||||||
|
Cash
|
661,367
|
656,095
|
||||||
|
Total investments and cash
|
19,793,852
|
18,433,066
|
||||||
|
Accrued investment income
|
109,273
|
104,619
|
||||||
|
Premiums receivable
|
2,389,943
|
2,218,283
|
||||||
|
Reinsurance receivables
|
1,797,866
|
1,787,648
|
||||||
|
Funds held by reinsureds
|
498,043
|
445,040
|
||||||
|
Deferred acquisition costs
|
510,861
|
511,573
|
||||||
|
Prepaid reinsurance premiums
|
476,429
|
343,343
|
||||||
|
Income taxes
|
358,457
|
592,385
|
||||||
|
Other assets
|
453,067
|
358,042
|
||||||
|
TOTAL ASSETS
|
$
|
26,387,791
|
$
|
24,793,999
|
||||
|
LIABILITIES:
|
||||||||
|
Reserve for losses and loss adjustment expenses
|
$
|
13,249,488
|
$
|
13,119,090
|
||||
|
Future policy benefit reserve
|
45,130
|
46,778
|
||||||
|
Unearned premium reserve
|
2,729,376
|
2,517,612
|
||||||
|
Funds held under reinsurance treaties
|
10,899
|
13,099
|
||||||
|
Other net payable to reinsurers
|
346,151
|
218,439
|
||||||
|
Senior notes due 6/1/2044
|
397,014
|
396,954
|
||||||
|
Long term notes due 5/1/2067
|
236,709
|
236,659
|
||||||
|
Accrued interest on debt and borrowings
|
3,063
|
3,093
|
||||||
|
Equity index put option liability
|
8,374
|
11,958
|
||||||
|
Unsettled securities payable
|
145,568
|
51,112
|
||||||
|
Other liabilities
|
331,859
|
275,401
|
||||||
|
Total liabilities
|
17,503,631
|
16,890,195
|
||||||
|
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; (2019) 69,406
|
||||||||
|
and (2018) 69,202 outstanding before treasury shares
|
694
|
692
|
||||||
|
Additional paid-in capital
|
2,198,461
|
2,188,777
|
||||||
|
Accumulated other comprehensive income (loss), net of deferred income tax expense
|
||||||||
|
(benefit) of $32,754 at 2019 and ($20,697) at 2018
|
(44,902
|
)
|
(462,557
|
)
|
||||
|
Treasury shares, at cost; 28,665 shares (2019) and 28,551 shares (2018)
|
(3,422,152
|
)
|
(3,397,548
|
)
|
||||
|
Retained earnings
|
10,152,059
|
9,574,440
|
||||||
|
Total shareholders' equity
|
8,884,160
|
7,903,804
|
||||||
|
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY
|
$
|
26,387,791
|
$
|
24,793,999
|
||||
|
CONSOLIDATED STATEMENTS OF CASH FLOWS
|
||||||||
|
Six Months Ended
|
||||||||
|
June 30,
|
||||||||
|
(Dollars in thousands)
|
2019
|
2018
|
||||||
|
(unaudited)
|
||||||||
|
CASH FLOWS FROM OPERATING ACTIVITIES:
|
||||||||
|
Net income (loss)
|
$
|
691,755
|
$
|
280,213
|
||||
|
Adjustments to reconcile net income to net cash provided by operating activities:
|
||||||||
|
Decrease (increase) in premiums receivable
|
(178,319
|
)
|
(126,355
|
)
|
||||
|
Decrease (increase) in funds held by reinsureds, net
|
(56,180
|
)
|
(77,794
|
)
|
||||
|
Decrease (increase) in reinsurance receivables
|
(19,319
|
)
|
(467,011
|
)
|
||||
|
Decrease (increase) in income taxes
|
180,285
|
43,516
|
||||||
|
Decrease (increase) in prepaid reinsurance premiums
|
(137,092
|
)
|
(86,044
|
)
|
||||
|
Increase (decrease) in reserve for losses and loss adjustment expenses
|
155,096
|
223,202
|
||||||
|
Increase (decrease) in future policy benefit reserve
|
(1,648
|
)
|
(2,169
|
)
|
||||
|
Increase (decrease) in unearned premiums
|
219,263
|
151,528
|
||||||
|
Increase (decrease) in other net payable to reinsurers
|
132,474
|
101,970
|
||||||
|
Increase (decrease) in losses in course of payment
|
35,738
|
162,073
|
||||||
|
Change in equity adjustments in limited partnerships
|
(57,031
|
)
|
(45,898
|
)
|
||||
|
Distribution of limited partnership income
|
41,321
|
42,269
|
||||||
|
Change in other assets and liabilities, net
|
(60,820
|
)
|
(111,220
|
)
|
||||
|
Non-cash compensation expense
|
17,171
|
17,566
|
||||||
|
Amortization of bond premium (accrual of bond discount)
|
13,321
|
17,677
|
||||||
|
Net realized capital (gains) losses
|
(122,504
|
)
|
9,125
|
|||||
|
Net cash provided by (used in) operating activities
|
853,511
|
132,648
|
||||||
|
CASH FLOWS FROM INVESTING ACTIVITIES:
|
||||||||
|
Proceeds from fixed maturities matured/called - available for sale, at market value
|
1,009,921
|
1,099,762
|
||||||
|
Proceeds from fixed maturities sold - available for sale, at market value
|
2,318,207
|
1,225,373
|
||||||
|
Proceeds from fixed maturities sold - available for sale, at fair value
|
2,706
|
1,065
|
||||||
|
Proceeds from equity securities sold, at fair value
|
149,233
|
576,382
|
||||||
|
Distributions from other invested assets
|
143,752
|
2,978,865
|
||||||
|
Cost of fixed maturities acquired - available for sale, at market value
|
(3,466,331
|
)
|
(2,163,331
|
)
|
||||
|
Cost of fixed maturities acquired - available for sale, at fair value
|
-
|
(4,381
|
)
|
|||||
|
Cost of equity securities acquired, at fair value
|
(229,070
|
)
|
(722,797
|
)
|
||||
|
Cost of other invested assets acquired
|
(207,323
|
)
|
(3,168,655
|
)
|
||||
|
Net change in short-term investments
|
(499,983
|
)
|
213,242
|
|||||
|
Net change in unsettled securities transactions
|
88,531
|
(33,351
|
)
|
|||||
|
Net cash provided by (used in) investing activities
|
(690,357
|
)
|
2,174
|
|||||
|
CASH FLOWS FROM FINANCING ACTIVITIES:
|
||||||||
|
Common shares issued during the period for share-based compensation, net of expense
|
(7,485
|
)
|
(9,431
|
)
|
||||
|
Purchase of treasury shares
|
(24,604
|
)
|
(25,304
|
)
|
||||
|
Dividends paid to shareholders
|
(114,136
|
)
|
(106,480
|
)
|
||||
|
Cost of shares withheld on settlements of share-based compensation awards
|
(11,748
|
)
|
(14,859
|
)
|
||||
|
Net cash provided by (used in) financing activities
|
(157,973
|
)
|
(156,074
|
)
|
||||
|
EFFECT OF EXCHANGE RATE CHANGES ON CASH
|
91
|
5,678
|
||||||
|
Net increase (decrease) in cash
|
5,272
|
(15,574
|
)
|
|||||
|
Cash, beginning of period
|
656,095
|
635,067
|
||||||
|
Cash, end of period
|
$
|
661,367
|
$
|
619,493
|
||||
|
SUPPLEMENTAL CASH FLOW INFORMATION:
|
||||||||
|
Income taxes paid (recovered)
|
$
|
(83,995
|
)
|
$
|
(44,151
|
)
|
||
|
Interest paid
|
15,984
|
14,754
|
||||||