Everest Re Group, Ltd. (NYSE: RE) today reported fourth quarter
2016 net income available to common shareholders of $373.6 million,
or $9.08 per diluted common share, compared to net income of $357.3
million, or $8.26 per diluted common share, for the fourth quarter
of 2015. After-tax operating income1 available to common
shareholders was $363.4 million, or $8.83 per diluted common share,
for the fourth quarter of 2016, compared to after-tax operating
income¹ of $353.5 million, or $8.17 per diluted common share, for
the same period last year.
For the year ended December 31, 2016, net income available to
common shareholders was $996.3 million, or $23.68 per diluted
common share, compared to $977.9 million, or $22.10 per diluted
common share, for 2015. After-tax operating income1 available to
common shareholders was $993.5 million, or $23.61 per diluted
common share, for the full year 2016, compared to $1.1 billion or
$25.04 per diluted common share, for 2015.
Commenting on the Company’s results, President and Chief
Executive Officer, Dominic J. Addesso said, “Everest had another
record quarter and an outstanding year, generating 13% ROE and
strong growth in book value per share, despite what continues to be
a very challenging market. Our reinsurance book remains quite
strong with a 77.6% combined ratio, which is remarkable when
considering the string of global natural catastrophe events for the
year. While our insurance operations’ results were mostly impacted
by charges on discontinued books of business, the underlying
fundamentals of this book continue to improve. We are confident in
the future and expect Everest to continue to generate above average
returns for its shareholders.”
Operating highlights for the fourth quarter and full year 2016
included the following:
- Gross written premiums for the quarter
were $1.5 billion, an increase of 3% compared to the fourth quarter
of 2015. For the full year, gross written premiums grew 2% to $6.0
billion. Eliminating the unfavorable effects of foreign currency
fluctuations, total premiums were actually up 4% for the year.
Worldwide reinsurance premiums were essentially flat, on a constant
dollar basis, while direct insurance premiums were up 17% for the
year.
- The combined ratio was 82.1% for the
quarter and 87.0% for the year, compared to 78.9% and 85.1%,
respectively, for the same periods in 2015. The quarter benefitted
from net prior year reserve releases of $204.9 million and a net
reduction to prior year catastrophe loss estimates of $18.4
million. This was offset by $168.6 million for catastrophe losses
that occurred in the quarter, including Hurricane Matthew, the New
Zealand earthquake, and the Tennessee wildfires. For the full year,
catastrophe losses, net of reinstatement premiums, totaled $286.0
million. Excluding catastrophe losses, reinstatement premiums and
favorable prior year loss development, the calendar year
attritional combined ratio was 85.5% compared to 84.8% for
2015.
- Net investment income amounted to
$115.2 million for the quarter and $473.1 million for the full year
2016, with the latter essentially flat to 2015.
- Net after-tax realized capital gains
totaled $10.2 million in the quarter. For the full year, realized
and unrealized capital gains, net of tax, amounted to $2.9 million
and $72.7 million, respectively.
- Cash flow from operations was $422.3
million for the quarter and $1.4 billion for the full year 2016.
This compared to $294.8 million and $1.1 billion for the same
periods, respectively, in 2015.
- For the year, the after-tax operating
income1 return on average adjusted shareholders’ equity2 was
12.8%.
- During the quarter, the Company made
only modest share repurchases. For the year, the Company
repurchased 2.1 million of its common shares for a total cost of
$386.3 million. The repurchases were made pursuant to a share
repurchase authorization, provided by the Company’s Board of
Directors, under which there remains 2.0 million shares
available.
- Shareholders’ equity ended the year at
$8.1 billion. Book value per share increased 11% from $178.21 at
year-end 2015 to $197.45 at December 31, 2016.
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.
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 U.S. and international markets. Everest Reinsurance
(Bermuda), Ltd., including through its branch in the United
Kingdom, provides reinsurance and insurance to worldwide property
and casualty markets and reinsurance to life insurers. Everest
Reinsurance Company (Ireland), Limited provides reinsurance to
non-life insurers in Europe. Everest National Insurance Company and
Everest Security Insurance Company provide property and casualty
insurance to policyholders in the U.S. Everest Indemnity Insurance
Company offers excess and surplus lines insurance in the U.S.
Everest Insurance Company of Canada provides property and casualty
insurance to policyholders in Canada. The Company also operates
within the Lloyd's insurance market through Syndicate 2786. In
addition, through Mt. Logan Re, Ltd., the Company manages
segregated accounts, capitalized by the Company and third party
investors that provide reinsurance for property catastrophe risks.
Additional information on Everest Re Group companies can be found
at the Group’s web site at www.everestregroup.com.
A conference call discussing the fourth quarter results will be
held at 10:30 a.m. Eastern Time on February 7, 2017. The call will
be available on the Internet through the Company’s web site or at
www.streetevents.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.everestregroup.com
in the “Financial Reports” section of the “Investor Center”. The
supplemental financial information may also be obtained by
contacting the Company directly.
________________________________
1The 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) as the following
reconciliation displays:
Three Months Ended Twelve Months Ended
December 31, December 31, (Dollars in thousands, except per share
amounts) 2016 2015 2016 2015 (unaudited) (unaudited)
Per Diluted Per Diluted Per Diluted Per Diluted
Common Common Common Common Amount Share Amount Share Amount Share
Amount Share Net income (loss) $ 373,572 $ 9.08 $ 357,281 $
8.26 $ 996,344 $ 23.68 $ 977,869 $ 22.10 After-tax net realized
capital gains (losses) 10,180 0.25 3,831
0.09 2,878 0.07 (130,192 ) (2.94
) After-tax operating income (loss) $ 363,392 $ 8.83 $
353,450 $ 8.17 $ 993,466 $ 23.61 $ 1,108,061 $ 25.04
(Some amounts may not reconcile due to rounding.)
Although net realized capital gains (losses) are an integral
part of the Company’s insurance operations, the determination of
net realized capital gains (losses) is independent of the insurance
underwriting process. The Company believes that the level of net
realized capital gains (losses) 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.
2Adjusted shareholders’ equity excludes net after-tax unrealized
(appreciation) depreciation of investments
EVEREST RE GROUP,
LTD. CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME
(LOSS) Three Months Ended Twelve Months Ended
December 31, December 31, (Dollars in thousands, except per share
amounts) 2016 2015 2016 2015 (unaudited) (unaudited) REVENUES:
Premiums earned $ 1,441,265 $ 1,372,235 $ 5,320,466 $ 5,292,842 Net
investment income 115,167 110,514 473,085 473,473 Net realized
capital gains (losses): Other-than-temporary impairments on fixed
maturity securities (465 ) (39,498 ) (31,595 ) (102,199 )
Other-than-temporary impairments on fixed maturity securities
transferred to other comprehensive income (loss) - - - - Other net
realized capital gains (losses) 34,470 50,005
24,379 (81,948 ) Total net realized
capital gains (losses) 34,005 10,507 (7,216 ) (184,147 ) Net
derivative gain (loss) 13,161 11,542 18,647 6,317 Other income
(expense) 10,362 13,812 (10,636
) 88,280 Total revenues 1,613,960
1,518,610 5,794,346 5,676,765
CLAIMS AND EXPENSES: Incurred losses and loss
adjustment expenses 794,896 699,764 3,139,629 3,064,715 Commission,
brokerage, taxes and fees 308,639 314,839 1,188,692 1,183,646 Other
underwriting expenses 79,972 68,446 302,722 257,069 Corporate
expenses 5,828 5,942 27,231 23,254 Interest, fees and bond issue
cost amortization expense 9,034 9,185
36,228 36,191 Total claims and expenses
1,198,369 1,098,176 4,694,502
4,564,875 INCOME (LOSS) BEFORE TAXES
415,591 420,434 1,099,844 1,111,890 Income tax expense (benefit)
42,019 63,153 103,500
134,021 NET INCOME (LOSS) $ 373,572 $ 357,281
$ 996,344 $ 977,869 Other comprehensive income (loss), net
of tax: Unrealized appreciation (depreciation) ("URA(D)") on
securities arising during the period (200,656 ) (129,792 ) 57,629
(274,127 ) Reclassification adjustment for realized losses (gains)
included in net income (loss) (12,594 ) 34,162
15,118 93,688 Total URA(D) on
securities arising during the period (213,250 ) (95,630 ) 72,747
(180,439 ) Foreign currency translation adjustments (72,980
) (31,022 ) (55,341 ) (111,530 ) Benefit plan actuarial net
gain (loss) for the period (7,488 ) 5,681 (7,488 ) 5,681
Reclassification adjustment for amortization of net (gain) loss
included in net income (loss) 1,124 1,447
5,073 6,216 Total benefit plan
net gain (loss) for the period (6,364 ) 7,128
(2,415 ) 11,897 Total other comprehensive
income (loss), net of tax (292,594 ) (119,524 )
14,991 (280,072 ) COMPREHENSIVE INCOME
(LOSS) $ 80,978 $ 237,757 $ 1,011,335 $
697,797 EARNINGS PER COMMON SHARE ATTRIBUTABLE TO
EVEREST RE GROUP: Basic $ 9.14 $ 8.32 $ 23.85 $ 22.29 Diluted 9.08
8.26 23.68 22.10 Dividends declared 1.25 1.15 4.70 4.00
EVEREST RE GROUP, LTD.
CONSOLIDATED BALANCE SHEETS December 31, (Dollars and
share amounts in thousands, except par value per share) 2016 2015
(unaudited) ASSETS: Fixed maturities - available for sale, at
market value $ 14,107,408 $ 13,357,294 (amortized cost: 2016,
$13,932,613; 2015, $13,276,206) Fixed maturities - available for
sale, at fair value - 2,102 Equity securities - available for sale,
at market value (cost: 2016, $129,553; 2015, $122,271) 119,067
108,940 Equity securities - available for sale, at fair value
1,010,085 1,337,733 Short-term investments 431,478 799,684 Other
invested assets (cost: 2016, $1,333,069; 2015, $786,994) 1,333,129
786,994 Cash 481,922 283,658 Total
investments and cash 17,483,089 16,676,405 Accrued investment
income 96,473 100,942 Premiums receivable 1,485,990 1,483,090
Reinsurance receivables 1,018,325 894,037 Funds held by reinsureds
260,644 278,673 Deferred acquisition costs 344,052 372,351 Prepaid
reinsurance premiums 191,768 164,971 Income taxes 177,704 258,541
Other assets 263,459 316,408 TOTAL
ASSETS $ 21,321,504 $ 20,545,418 LIABILITIES:
Reserve for losses and loss adjustment expenses $ 10,312,313 $
9,951,798 Future policy benefit reserve 55,074 58,910 Unearned
premium reserve 1,577,546 1,613,390 Funds held under reinsurance
treaties 21,278 13,544 Commission reserves 70,335 60,098 Other net
payable to reinsurers 190,986 173,087 Losses in course of payment
67,107 112,170 4.868% Senior notes due 6/1/2044 396,714 396,594
6.6% Long term notes due 5/1/2067 236,462 236,364 Accrued interest
on debt and borrowings 3,537 3,537 Equity index put option
liability 22,059 40,705 Unsettled securities payable 27,927 15,314
Other liabilities 264,770 261,322 Total
liabilities 13,246,108 12,936,833
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; (2016)
68,871 and (2015) 68,606 outstanding before treasury shares 689 686
Additional paid-in capital 2,140,783 2,103,638 Accumulated other
comprehensive income (loss), net of deferred income tax expense
(benefit) of $8,240 at 2016 and ($15,863) at 2015 (216,764 )
(231,755 ) Treasury shares, at cost; 27,972 shares (2016) and
25,912 shares (2015) (3,272,244 ) (2,885,956 ) Retained earnings
9,422,932 8,621,972 Total shareholders'
equity 8,075,396 7,608,585 TOTAL
LIABILITIES AND SHAREHOLDERS' EQUITY $ 21,321,504 $
20,545,418 EVEREST
RE GROUP, LTD. CONSOLIDATED STATEMENTS OF CASH FLOWS
Twelve Months Ended December 31, (Dollars in thousands) 2016 2015
(unaudited) CASH FLOWS FROM OPERATING ACTIVITIES: Net income (loss)
$ 996,344 $ 977,869 Adjustments to reconcile net income to net cash
provided by operating activities: Decrease (increase) in premiums
receivable (15,655 ) (98,211 ) Decrease (increase) in funds held by
reinsureds, net 22,219 (43,775 ) Decrease (increase) in reinsurance
receivables (202,950 ) (265,103 ) Decrease (increase) in income
taxes 54,526 (36,771 ) Decrease (increase) in prepaid reinsurance
premiums (32,455 ) (21,819 ) Increase (decrease) in reserve for
losses and loss adjustment expenses 545,967 394,167 Increase
(decrease) in future policy benefit reserve (3,836 ) (910 )
Increase (decrease) in unearned premiums (22,072 ) (96,950 )
Increase (decrease) in other net payable to reinsurers 26,200
43,727 Increase (decrease) in losses in course of payment (45,933 )
(43,964 ) Change in equity adjustments in limited partnerships
(37,939 ) (12,965 ) Distribution of limited partnership income
62,008 53,984 Change in other assets and liabilities, net (56,204 )
(8,934 ) Non-cash compensation expense 26,398 21,237 Amortization
of bond premium (accrual of bond discount) 49,167 50,901
Amortization of underwriting discount on senior notes 4 4 Net
realized capital (gains) losses 7,216 184,147
Net cash provided by (used in) operating activities
1,373,005 1,096,634 CASH FLOWS FROM
INVESTING ACTIVITIES: Proceeds from fixed maturities matured/called
- available for sale, at market value 1,919,808 2,144,930 Proceeds
from fixed maturities sold - available for sale, at market value
1,258,434 1,724,093 Proceeds from fixed maturities sold - available
for sale, at fair value 5,837 1,824 Proceeds from equity securities
sold - available for sale, at market value 6,423 28,936 Proceeds
from equity securities sold - available for sale, at fair value
723,359 614,044 Distributions from other invested assets 4,823,484
57,201 Proceeds from sale of subsidiary (net of cash disposed)
47,721 3,934 Cost of fixed maturities acquired - available for
sale, at market value (4,061,896 ) (4,718,303 ) Cost of fixed
maturities acquired - available for sale, at fair value (3,940 )
(2,436 ) Cost of equity securities acquired - available for sale,
at market value (12,538 ) (10,850 ) Cost of equity securities
acquired - available for sale, at fair value (346,929 ) (556,889 )
Cost of other invested assets acquired (5,396,001 ) (286,599 ) Net
change in short-term investments 368,977 341,733 Net change in
unsettled securities transactions 9,388
(22,719 ) Net cash provided by (used in) investing activities
(657,873 ) (681,101 ) CASH FLOWS FROM
FINANCING ACTIVITIES: Common shares issued during the period, net
10,751 13,597 Purchase of treasury shares (386,288 ) (400,059 )
Dividends paid to shareholders (195,384 ) (175,107 )
Net cash provided by (used in) financing activities (570,921
) (561,569 ) EFFECT OF EXCHANGE RATE CHANGES ON CASH
54,053 (7,780 ) Net increase (decrease)
in cash 198,264 (153,816 ) Cash, beginning of period 283,658
437,474 Cash, end of period $ 481,922 $
283,658 SUPPLEMENTAL CASH FLOW INFORMATION: Income
taxes paid (recovered) $ 42,636 $ 164,856 Interest paid 36,010
35,973
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version on businesswire.com: http://www.businesswire.com/news/home/20170206006063/en/
Everest Global Services, Inc.Elizabeth B. Farrell,
908-604-3169Vice President, Investor Relations
Everest Re (NYSE:RE)
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