Net Income of $680 Million
35% Growth in Gross Written Premium with an
89.3% Combined Ratio
Everest Re Group, Ltd. (“Everest” or the “Company”) today
reported its 2021 second quarter results.
Second Quarter 2021 Highlights
- Net income of $680 million equal to $16.95 per share
- Net operating income of $587 million, equal to $14.63 per
share
- Gross written premium growth of 35% and net written premium
growth of 39%
- GAAP calendar year combined ratio of 89.3%, an 8-point
improvement year over year, and attritional combined ratio of
87.6%, a 0.9 point improvement year over year
- Underwriting income of $274 million inclusive of pre-tax net
catastrophe losses of $45 million primarily from several global
events in the Quarter.
- No change to Covid-19 Pandemic (“Pandemic”) loss provision of
$511 million
- Operating cashflow of $724 million for the quarter
The following table summarizes the Company’s net income and
related financial metrics.
Net income and operating income Q2 Year to
Date Q2 Year to Date All values in USD
millions except for per share amounts and percentages
2021
2021
2020
2020
Everest Re Group Net income
680.0
1,021.8
190.9
207.5
Net operating income (loss)
587.0
847.2
82.9
247.3
Net income per diluted common share
16.95
25.47
4.77
5.13
Net operating income per diluted common share
14.63
21.12
2.07
6.12
Net income annualized return on average equity
28.4%
21.6%
8.9%
4.7%
Net operating income annualized return on average equity
24.5%
17.9%
3.9%
5.6%
Period end equity and book value Q2 2021
Year to Date Q4 2020 Shareholders' equity
10,416.8
9,726.2
Book value per share
260.32
243.25
Change in BVPS adjusted for dividends
8.3%
Total Shareholder Return ("TSR") - Annualized
22.5%
Notes 1/ Refer to the reconciliation of net income to net
operating income found on page 6 of this press release
Everest Re Group President & CEO Juan C. Andrade commented
on the Company’s results:
“Everest had an excellent quarter across the
board with very strong growth and outstanding underwriting and
investment performance. These results serve as the foundation for
our exceptional net income result of $1.02 billion through the
first half of 2021 and are another important step toward achieving
our strategic plan objectives. Everest achieved an annualized Total
Shareholder Return (“TSR”) of 22.5% through the first half of 2021,
exceeding our strategic plan target of 13.0%. Everest capitalized
on market opportunities to expand our franchises in both
reinsurance and insurance, driven by the relentless execution of
our strategies and the valuable risk solutions provided to our
customers and broker partners. Our focus on disciplined
underwriting drove strong profitability in both reinsurance and
insurance across our global operations. Finally, the standout
performance this quarter demonstrates the quality of Everest’s
diversified earnings, and it is an important step toward achieving
our strategic objectives and the commitments made to our
shareholders.”
The following information summarizes the Company’s underwriting
results, on a consolidated basis and by segment – Reinsurance and
Insurance, with selected commentary on results by segment.
Underwriting information - Everest Re Group Q2
Year to Date Q2 Year to Date Year on Year
Change All values in USD millions except for percentages
2021
2021
2020
2020
Q2
Year to Date
Gross written premium
3,190.1
6,121.6
2,369.3
4,940.2
34.6%
23.9%
Net written premium
2,809.4
5,363.3
2,017.5
4,219.0
39.3%
27.1%
Loss ratio
62.0%
66.7%
68.9%
69.6%
-6.9 pts -2.9 pts Commission and brokerage ratio
21.8%
21.2%
22.8%
22.4%
-1.0 pts -1.2 pts Other underwriting expenses
5.5%
5.7%
5.8%
6.1%
-0.3 pts -0.4 pts Combined ratio
89.3%
93.6%
97.5%
98.1%
-8.2 pts -4.5 pts Attritional combined ratio
87.6%
87.4%
88.5%
89.1%
-0.9 pts -1.7 pts Pre-tax net catastrophe losses
45.0
305.0
15.0
45.0
Pre-tax net covid losses
-
-
160.0
310.0
Pre-tax net prior year reserve development
(2.6)
(4.5)
5.3
2.7
Notes 1/ Attritional ratios exclude prior year reserve development,
Covid-19 pandemic impacts catastrophe losses, and reinstatement
premiums 2/ Pre-tax net catastrophe losses are net of reinsurance
and reinstatement premiums
Reinsurance segment
- The reinsurance segment recorded 40% growth in gross written
premiums for the quarter. This growth reflects the strength of the
Everest global franchise, as we saw broad demand for our
reinsurance solutions in the US and across the world, notably in
Europe, Bermuda, London, and Latin America.
- Our growth was well balanced by product line and geography and
illustrates our ability to deploy capital strategically in
attractive markets and in attractive and diversifying product
lines.
- We had favorable renewals at April 1 and June 1 and we continue
to write a stronger, less volatile, more diversified, and more
profitable book on a risk adjusted basis.
Underwriting information - Reinsurance segment Q2
Year to Date Q2 Year to Date Year on Year
Change All values in USD millions except for percentages
2021
2021
2020
2020
Q2
Year to Date
Gross written premium
2,148.2
4,207.3
1,538.3
3,316.1
39.6%
26.9%
Net written premium
2,059.9
3,972.9
1,424.1
3,037.2
44.6%
30.8%
Loss ratio
60.8%
66.0%
67.0%
67.8%
-6.2 pts -1.8 pts Commission and brokerage ratio
24.6%
23.8%
25.8%
25.4%
-1.2 pts -1.6 pts Other underwriting expenses
2.5%
2.7%
2.6%
2.8%
-0.1 pts -0.1 pts Combined ratio
87.9%
92.5%
95.4%
96.0%
-7.5 pts -3.5 pts Attritional combined ratio
86.1%
85.8%
86.7%
87.2%
-0.6 pts -1.4 pts Pre-tax net catastrophe losses
35.0
247.5
-
24.5
Pre-tax net covid losses
-
-
131.0
241.0
Pre-tax net prior year reserve development
(1.4)
(3.3)
0.8
(1.8)
Notes 1/ Attritional ratios exclude prior year reserve development,
Covid-19 pandemic impacts catastrophe losses, and reinstatement
premiums 2/ Pre-tax net catastrophe losses are net of reinsurance
and reinstatement premiums
Insurance segment
- Everest Insurance reported our first ever quarter with over
$1.0 billion in gross written premium, reflecting 25% growth year
over year. New business in North America was the most significant
contributor to this growth, as the economy regains momentum and our
responsive and focused product offerings continue to resonate with
our broker partners and insureds.
- We continue to expand our margins and the attritional loss
ratio improvement for the quarter reflects the continuing success
of our nimble and disciplined underwriting process, reacting
quickly to market conditions to best position our portfolio for
long term profitability.
Underwriting information - Insurance segment Q2
Year to Date Q2 Year to Date Year on Year
Change All values in USD millions except for percentages
2021
2021
2020
2020
Q2
Year to Date
Gross written premium
1,041.9
1,914.3
831.0
1,624.1
25.4%
17.9%
Net written premium
749.5
1,390.5
593.4
1,181.8
26.3%
17.7%
Loss ratio
65.6%
68.7%
74.3%
74.3%
-8.7 pts -5.6 pts Commission and brokerage ratio
13.3%
13.2%
14.6%
14.4%
-1.3 pts -1.2 pts Other underwriting expenses
14.6%
14.8%
14.5%
15.0%
0.1 pts -0.2 pts Combined ratio
93.5%
96.7%
103.4%
103.7%
-9.9 pts -7.0 pts Attritional combined ratio
92.1%
92.2%
93.7%
94.3%
-1.6 pts -2.1 pts Pre-tax net catastrophe losses
10.0
57.5
15.0
20.5
Pre-tax net covid losses
-
-
29.0
69.0
Pre-tax net prior year reserve development
(1.2)
(1.2)
4.5
4.6
Notes 1/ Attritional ratios exclude prior year reserve development,
Covid-19 pandemic impacts catastrophe losses, and reinstatement
premiums 2/ Pre-tax net catastrophe losses are net of reinsurance
and reinstatement premiums
Investments and Shareholders’ Equity
- Net investment income of $407 million for the quarter including
alternative investment gains of $266 million for the quarter
- Total invested assets and cash of $27.1 billion at June 30,
2021, 6.3% growth versus year end 2020
- Shareholders’ equity of $10.4 billion as of June 30, 2021
- Book value per diluted share of $260.32 at June 30, 2021
- Common share dividends declared and paid in the quarter of
$1.55 per share, equal to $62.0 million
- Common share repurchases of $16.8 million during the quarter,
representing 68,100 shares at an average price of $246.44 per
share
Equity and Book Value per Share Q2 Year to
Date Q2 Year to Date All values in USD
millions except for per share amounts and percentages
2021
2021
2020
2020
Beginning shareholders' equity
9,682.9
9,726.2
8,580.9
9,132.9
Net income
680.0
1,021.8
190.9
207.5
Change in investment unrealized gains (URAD)
85.8
(206.5)
544.5
296.5
Dividends to shareholders
(62.0)
(124.3)
(61.9)
(125.2)
Purchase of treasury shares
(16.8)
(40.3)
-
(200.0)
Other
46.9
39.9
31.9
(25.4)
Ending shareholders' equity
10,416.8
10,416.8
9,286.3
9,286.3
Diluted common shares outstanding
40.0
40.0
40.0
40.0
Book value per diluted common share
260.32
260.32
232.32
232.32
Common share dividends paid - last 12 months
6.20
6.20
6.05
6.05
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 July 29, 2021. 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
“Investors/Financial Reports/Quarterly Reports” section of the
website. The supplemental financial information may also be
obtained by contacting the Company directly.
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,
(Dollars in thousands, except per share amounts)
2021
2020
2021
2020
(unaudited) (unaudited)
Per Diluted
Per Diluted
Amount
Share Amount Share Amount Share
Amount Share
Net income (loss)
$
679,982
$
16.95
$
190,880
$
4.77
$
1,021,844
$
25.47
$
207,492
$
5.13
After-tax net realized capital gains (losses)
$
83,752
$
2.09
$
150,519
$
3.76
$
113,787
$
2.84
$
(21,844
)
$
(0.54
)
After-tax net foreign exchange income (expense)
$
9,222
$
0.23
$
(42,528
)
$
(1.06
)
$
60,840
$
1.52
$
(17,924
)
$
(0.44
)
After-tax operating income (loss)
$
587,008
$
14.63
$
82,889
$
2.07
$
847,217
$
21.12
$
247,260
$
6.12
(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. 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)
2021
2020
2021
2020
(unaudited) (unaudited) REVENUES: Premiums earned
$
2,558,372
$
2,042,405
$
4,946,237
$
4,079,219
Net investment income
407,095
38,083
667,508
185,883
Net realized capital gains (losses): Credit allowances on fixed
maturity securities
(15,927
)
(4,063
)
(22,904
)
(25,837
)
Other net realized capital gains (losses)
120,036
188,711
165,915
(103
)
Total net realized capital gains (losses)
104,109
184,648
143,011
(25,940
)
Other income (expense)
7,114
(20,621
)
63,707
(12,631
)
Total revenues
3,076,690
2,244,515
5,820,463
4,226,531
CLAIMS AND EXPENSES: Incurred losses and loss adjustment
expenses
1,586,141
1,407,016
3,297,560
2,837,856
Commission, brokerage, taxes and fees
557,749
466,316
1,046,760
914,838
Other underwriting expenses
140,844
118,130
283,075
246,990
Corporate expenses
16,168
8,733
28,546
18,566
Interest, fees and bond issue cost amortization expense
15,607
7,253
31,246
14,836
Total claims and expenses
2,316,509
2,007,448
4,687,187
4,033,086
INCOME (LOSS) BEFORE TAXES
760,181
237,067
1,133,276
193,445
Income tax expense (benefit)
80,199
46,187
111,432
(14,047
)
NET INCOME (LOSS)
$
679,982
$
190,880
$
1,021,844
$
207,492
Other comprehensive income (loss), net of tax: Unrealized
appreciation (depreciation) ("URA(D)") on securities arising during
the period
84,171
551,753
(204,444
)
272,354
Reclassification adjustment for realized losses (gains) included in
net income (loss)
1,590
(7,257
)
(2,076
)
24,142
Total URA(D) on securities arising during the period
85,761
544,496
(206,520
)
296,496
Foreign currency translation adjustments
34,295
20,586
24,713
(30,238
)
Reclassification adjustment for amortization of net (gain)
loss included in net income (loss)
2,043
1,806
4,086
2,726
Total benefit plan net gain (loss) for the period
2,043
1,806
4,086
2,726
Total other comprehensive income (loss), net of tax
122,099
566,888
(177,721
)
268,984
COMPREHENSIVE INCOME (LOSS)
$
802,081
$
757,768
$
844,123
$
476,476
EARNINGS PER COMMON SHARE: Basic
$
16.97
$
4.78
$
25.50
$
5.14
Diluted
16.95
4.77
25.47
5.13
EVEREST RE GROUP, LTD. CONSOLIDATED
BALANCE SHEETS June
30, December 31, (Dollars and share amounts in
thousands, except par value per share)
2021
2020
(unaudited) ASSETS: Fixed maturities - available for
sale, at market value
$
21,275,199
$
20,040,173
(amortized cost: 2021, $20,718,717; 2020, $19,225,067, credit
allowances: 2021, ($24,650); 2020, ($1,745)) Equity
securities, at fair value
1,485,833
1,472,236
Short-term investments (cost: 2021, $629,943; 2020, $1,135,088)
629,943
1,134,950
Other invested assets (cost: 2021, $2,558,631; 2020, $2,012,581)
2,558,631
2,012,581
Cash
1,106,345
801,651
Total investments and cash
27,055,951
25,461,591
Accrued investment income
170,907
141,304
Premiums receivable
3,199,024
2,680,562
Reinsurance receivables
2,032,363
1,994,555
Funds held by reinsureds
798,780
716,655
Deferred acquisition costs
748,897
622,053
Prepaid reinsurance premiums
495,657
412,015
Income taxes net recoverable
-
17,253
Other assets
868,477
742,369
TOTAL ASSETS
$
35,370,056
$
32,788,357
LIABILITIES: Reserve for losses and loss
adjustment expenses
17,645,762
16,398,997
Future policy benefit reserve
36,497
37,723
Unearned premium reserve
4,024,050
3,501,359
Funds held under reinsurance treaties
17,520
15,807
Other net payable to reinsurers
379,524
294,347
Losses in course of payment
198,352
127,971
Senior notes due 6/1/2044
397,254
397,194
Senior notes due 10/1/2050
979,784
979,524
Long term notes due 5/1/2067
223,724
223,674
Borrowings from FHLB
310,000
310,000
Accrued interest on debt and borrowings
9,641
10,460
Unsettled securities payable
124,559
206,693
Income taxes net payable
35,089
-
Other liabilities
571,511
558,432
Total liabilities
24,953,267
23,062,181
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; (2021)
69,817 and (2020) 69,620 outstanding before treasury shares
698
696
Additional paid-in capital
2,256,390
2,245,301
Accumulated other comprehensive income (loss), net of deferred
income tax expense (benefit) of $56,797 at 2021 and $80,451
at 2020
357,178
534,899
Treasury shares, at cost; 29,802 shares (2021) and 29,636 shares
(2020)
(3,662,499
)
(3,622,172
)
Retained earnings
11,465,022
10,567,452
Total shareholders' equity
10,416,789
9,726,176
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY
$
35,370,056
$
32,788,357
EVEREST RE GROUP, LTD.
CONSOLIDATED STATEMENTS OF CASH FLOWS
Six Months Ended June 30,
(Dollars in thousands)
2021
2020
(unaudited) CASH FLOWS FROM OPERATING ACTIVITIES: Net
income (loss)
$
1,021,844
$
207,492
Adjustments to reconcile net income to net cash provided by
operating activities: Decrease (increase) in premiums
receivable
(499,647
)
(252,609
)
Decrease (increase) in funds held by reinsureds, net
(79,485
)
(23,498
)
Decrease (increase) in reinsurance receivables
15,836
(147,515
)
Decrease (increase) in income taxes
76,452
(25,000
)
Decrease (increase) in prepaid reinsurance premiums
(71,566
)
(29,699
)
Increase (decrease) in reserve for losses and loss adjustment
expenses
1,144,620
800,816
Increase (decrease) in future policy benefit reserve
(1,226
)
(1,933
)
Increase (decrease) in unearned premiums
500,077
159,744
Increase (decrease) in other net payable to reinsurers
72,850
89,499
Increase (decrease) in losses in course of payment
70,653
147,427
Change in equity adjustments in limited partnerships
(377,120
)
84,066
Distribution of limited partnership income
49,053
40,447
Change in other assets and liabilities, net
(211,735
)
(10,313
)
Non-cash compensation expense
22,439
19,175
Amortization of bond premium (accrual of bond discount)
37,928
20,547
Net realized capital (gains) losses
(143,011
)
25,940
Net cash provided by (used in) operating activities
1,627,962
1,104,586
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from fixed maturities matured/called - available for sale,
at market value
1,897,536
1,261,650
Proceeds from fixed maturities sold - available for sale, at market
value
599,737
990,273
Proceeds from equity securities sold, at fair value
474,663
213,185
Distributions from other invested assets
112,398
164,975
Cost of fixed maturities acquired - available for sale, at market
value
(3,949,973
)
(2,301,701
)
Cost of equity securities acquired, at fair value
(360,016
)
(224,086
)
Cost of other invested assets acquired
(309,691
)
(343,332
)
Net change in short-term investments
506,285
(439,457
)
Net change in unsettled securities transactions
(103,527
)
49,504
Net cash provided by (used in) investing activities
(1,132,588
)
(628,989
)
CASH FLOWS FROM FINANCING ACTIVITIES:
Common shares issued during the period for share-based
compensation, net of expense
(11,349
)
(12,841
)
Purchase of treasury shares
(40,328
)
(200,019
)
Dividends paid to shareholders
(124,274
)
(125,205
)
Cost of debt repurchase
-
(10,647
)
Cost of shares withheld on settlements of share-based compensation
awards
(13,713
)
(14,141
)
Net cash provided by (used in) financing activities
(189,664
)
(362,853
)
EFFECT OF EXCHANGE RATE CHANGES ON CASH
(1,016
)
1,699
Net increase (decrease) in cash
304,694
114,443
Cash, beginning of period
801,651
808,036
Cash, end of period
$
1,106,345
$
922,479
SUPPLEMENTAL CASH FLOW INFORMATION: Income
taxes paid (recovered)
$
34,780
$
10,895
Interest paid
31,695
14,992
View source
version on businesswire.com: https://www.businesswire.com/news/home/20210728005986/en/
Investors and Media: Jon Levenson Head of Investor Relations
Everest Global Services, Inc. 908.604.3169
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