RE Everest Re Group Ltd

Everest Re Group, Ltd. (NYSE: RE) today reported first quarter 2018 net income of $210.3 million, or $5.11 per diluted common share, compared to net income of $291.6 million, or $7.07 per diluted common share for the first quarter of 2017. After-tax operating income1 was $219.7 million, or $5.34 per diluted common share, for the first quarter of 2018, compared to after-tax operating income¹ of $267.1 million, or $6.48 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 continues to deliver a solid performance with double digit returns on equity. Our diversified growth strategies, with premium up 21%, continue to provide balance and stability to the overall portfolio. In fact, excluding catastrophe losses, our net operating income was up 5% and underwriting income was above $200 million. We are pleased with our overall results and believe they once again demonstrate the strength of the Everest franchise.”

Effective this quarter, the Company changed its reporting of operating income, a non-GAAP financial measure. Historically operating income represented net income, excluding realized capital gains and losses and the tax impact related to the enactment of the Tax Cuts and Jobs Act in 2017. Starting in first quarter 2018, the Company further adjusted operating income to exclude foreign exchange gains and losses as it believes the impact of foreign currency movements on income is not indicative of the performance of the underlying business in a particular period.

Operating highlights for the first quarter of 2018 included the following:

• Gross written premiums for the quarter were $1.9 billion, an increase of 21% compared to the first quarter of 2017. On a constant dollar basis, premium was up 19%, quarter over quarter. Worldwide reinsurance premiums were up 22% to $1.4 billion, with growth across each segment primarily driven by increased pro-rata premium. Direct insurance premiums were up 16%, from first quarter 2017, to $505 million, consistent with the growth trends noted through 2017.
• The combined ratio was 93.3% for the quarter compared to 86.0% in the first quarter of 2017. Excluding the previously announced catastrophe losses arising from the 2017 Northern and Southern California wildfires, the attritional combined ratio was 87.1% compared to 84.5% in the same period last year. The higher attritional loss ratio is driven by changes in mix of business as well as higher retrocessional costs in the quarter.
• Net investment income increased 13% for the quarter to $138.3 million.
• Net after-tax realized and unrealized capital losses amounted to $19.4 million and $199.4 million, respectively.
• Cash flow from operations was $195.6 million compared to $381.8 million for the same period in 2017.
• For the quarter, the annualized after-tax operating income¹ return on average adjusted shareholders’ equity² was 10.5%.
• Shareholders’ equity ended the quarter at $8.3 billion, relatively flat compared to year end 2017. Book value per share was modestly down from $204.95 at December 31, 2017 to $203.62 at March 31, 2018.

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), dac. provides reinsurance to non-life insurers in Europe. Everest Insurance® refers to the primary insurance operations of Everest Re Group, Ltd., and its affiliated companies which offer property, casualty and specialty lines insurance on both an admitted and non-admitted basis in the U.S. and internationally. 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 first quarter results will be held at 10:30 a.m. Eastern Time on April 26, 2018. 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), 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 March 31, (Dollars in thousands, except per share amounts) 2018     2017     (unaudited)     Per Diluted     Per Diluted Common Common Amount     Share Amount     Share   Net income (loss) $ 210,318 $ 5.11 $ 291,643 $ 7.07 After-tax net realized capital gains (losses) (19,355) (0.47) 32,110 0.78 After-tax net foreign exchange income (expense) 9,933 0.24 (7,558) (0.18) Impact of TCJA enactment   -       -   -       -   After-tax operating income (loss) $ 219,740     $ 5.34 $ 267,091     $ 6.48   (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.

2Adjusted shareholders’ equity excludes net after-tax unrealized (appreciation) depreciation of investments

--Financial Details Follow--

          EVEREST RE GROUP, LTD. CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)     Three Months Ended March 31, (Dollars in thousands, except per share amounts) 2018 2017 (unaudited) REVENUES: Premiums earned $ 1,619,427 $ 1,312,097 Net investment income 138,294 122,289 Net realized capital gains (losses): Other-than-temporary impairments on fixed maturity securities (70) (1,229) Other-than-temporary impairments on fixed maturity securities transferred to other comprehensive income (loss) - - Other net realized capital gains (losses)   (24,831)   53,957 Total net realized capital gains (losses) (24,901) 52,728 Net derivative gain (loss) 273 2,630 Other income (expense)   12,064   (4,966) Total revenues   1,745,157   1,484,778   CLAIMS AND EXPENSES: Incurred losses and loss adjustment expenses 1,057,177 770,788 Commission, brokerage, taxes and fees 357,639 282,269 Other underwriting expenses 96,284 75,887 Corporate expenses 8,996 8,457 Interest, fees and bond issue cost amortization expense   7,418   8,964 Total claims and expenses   1,527,514   1,146,365   INCOME (LOSS) BEFORE TAXES 217,643 338,413 Income tax expense (benefit)   7,325   46,770   NET INCOME (LOSS) $ 210,318 $ 291,643   Other comprehensive income (loss), net of tax: Unrealized appreciation (depreciation) ("URA(D)") on securities arising during the period (190,624) 19,548 Reclassification adjustment for realized losses (gains) included in net income (loss)   (8,772)   (2,199) Total URA(D) on securities arising during the period (199,396) 17,349   Foreign currency translation adjustments 17,699 11,893   Reclassification adjustment for amortization of net (gain) loss included in net income (loss)   1,815   2,004 Total benefit plan net gain (loss) for the period   1,815   2,004 Total other comprehensive income (loss), net of tax   (179,882)   31,246   COMPREHENSIVE INCOME (LOSS) $ 30,436 $ 322,889   EARNINGS PER COMMON SHARE: Basic $ 5.14 $ 7.12 Diluted 5.11 7.07 Dividends declared 1.30 1.25             EVEREST RE GROUP, LTD. CONSOLIDATED BALANCE SHEETS     March 31, December 31, (Dollars and share amounts in thousands, except par value per share) 2018 2017 (unaudited) ASSETS: Fixed maturities - available for sale, at market value $ 14,844,581 $ 14,756,834 (amortized cost: 2018, $14,997,018; 2017, $14,689,598) Fixed maturities - available for sale, at fair value 1,821 - Equity securities - available for sale, at market value (cost: 2018, $0; 2017, $130,287) - 129,530 Equity securities - available for sale, at fair value 1,169,531 963,572 Short-term investments 338,694 509,682 Other invested assets (cost: 2018, $1,527,701; 2017, $1,628,753) 1,527,701 1,631,850 Cash   700,586   635,067 Total investments and cash 18,582,914 18,626,535 Accrued investment income 100,129 97,704 Premiums receivable 1,906,427 1,844,881 Reinsurance receivables 1,356,888 1,348,226 Funds held by reinsureds 197,419 292,927 Deferred acquisition costs 420,724 411,587 Prepaid reinsurance premiums 321,203 288,211 Income taxes 265,228 299,438 Other assets   362,264   382,283 TOTAL ASSETS $ 23,513,196 $ 23,591,792   LIABILITIES: Reserve for losses and loss adjustment expenses $ 11,793,346 $ 11,884,321 Future policy benefit reserve 49,106 51,014 Unearned premium reserve 2,089,628 2,000,556 Funds held under reinsurance treaties 16,965 18,030 Commission reserves 23,251 30,660 Other net payable to reinsurers 244,280 218,017 4.868% Senior notes due 6/1/2044 396,864 396,834 6.6% Long term notes due 5/1/2067 236,585 236,561 Accrued interest on debt and borrowings 7,668 2,727 Equity index put option liability 12,205 12,477 Unsettled securities payable 49,569 38,743 Other liabilities   249,549   332,620 Total liabilities   15,169,016   15,222,560   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; (2018) 69,187 and (2017) 69,044 outstanding before treasury shares 692 691 Additional paid-in capital 2,163,519 2,165,768 Accumulated other comprehensive income (loss), net of deferred income tax expense (benefit) of ($11,933) at 2018 and $9,356 at 2017 (341,974) (160,891) Treasury shares, at cost; 28,208 shares at 2018 and 2017 (3,322,244) (3,322,244) Retained earnings   9,844,187   9,685,908 Total shareholders' equity   8,344,180   8,369,232 TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 23,513,196 $ 23,591,792             EVEREST RE GROUP, LTD. CONSOLIDATED STATEMENTS OF CASH FLOWS     Three Months Ended March 31, (Dollars in thousands) 2018 2017 (unaudited) CASH FLOWS FROM OPERATING ACTIVITIES: Net income (loss) $ 210,318 $ 291,643 Adjustments to reconcile net income to net cash provided by operating activities: Decrease (increase) in premiums receivable (56,826) (220,367) Decrease (increase) in funds held by reinsureds, net 95,416 1,211 Decrease (increase) in reinsurance receivables 236 (30,158) Decrease (increase) in income taxes 55,905 37,010 Decrease (increase) in prepaid reinsurance premiums (32,194) (23,704) Increase (decrease) in reserve for losses and loss adjustment expenses (121,415) 99,095 Increase (decrease) in future policy benefit reserve (1,907) 83 Increase (decrease) in unearned premiums 85,598 125,614 Increase (decrease) in other net payable to reinsurers 24,410 13,666 Increase (decrease) in losses in course of payment 45,919 113,815 Change in equity adjustments in limited partnerships (24,596) (10,998) Distribution of limited partnership income 15,524 5,384 Change in other assets and liabilities, net (142,935) 12,999 Non-cash compensation expense 8,336 7,501 Amortization of bond premium (accrual of bond discount) 8,950 11,746 Net realized capital (gains) losses   24,901   (52,728) Net cash provided by (used in) operating activities   195,640   381,812   CASH FLOWS FROM INVESTING ACTIVITIES: Proceeds from fixed maturities matured/called - available for sale, at market value 512,384 525,873 Proceeds from fixed maturities sold - available for sale, at market value 364,288 428,491 Proceeds from equity securities sold - available for sale, at market value - 18,802 Proceeds from equity securities sold - available for sale, at fair value 199,875 140,315 Distributions from other invested assets 1,061,894 1,165,905 Cost of fixed maturities acquired - available for sale, at market value (1,150,718) (1,552,743) Cost of fixed maturities acquired - available for sale, at fair value (1,836) - Cost of equity securities acquired - available for sale, at market value - (1,282) Cost of equity securities acquired - available for sale, at fair value (310,426) (66,902) Cost of other invested assets acquired (947,290) (1,184,270) Net change in short-term investments 169,705 (45,178) Net change in unsettled securities transactions   46,708   236,702 Net cash provided by (used in) investing activities   (55,416)   (334,287)   CASH FLOWS FROM FINANCING ACTIVITIES: Common shares issued during the period for share-based compensation, net of expense (9,383) (6,629) Dividends paid to shareholders (53,240) (51,281) Cost of shares withheld for taxes on settlements of share-based compensation awards   (14,245)   (11,517) Net cash provided by (used in) financing activities   (76,868)   (69,427)   EFFECT OF EXCHANGE RATE CHANGES ON CASH   2,163   8,220   Net increase (decrease) in cash 65,519 (13,682) Cash, beginning of period   635,067   481,922 Cash, end of period $ 700,586 $ 468,240   SUPPLEMENTAL CASH FLOW INFORMATION: Income taxes paid (recovered) $ (51,253) $ 9,593 Interest paid 2,422 105  

View source version on businesswire.com: https://www.businesswire.com/news/home/20180425006667/en/

Everest Global Services, Inc.Elizabeth B. Farrell, 908-604-3169Vice President, Investor Relations