Everest Re Group’s 2016 Fourth Quarter Results

February 7, 2017

Bermuda-based Everest Re Group, Ltd. 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 income 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 income 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 income 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 income 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.
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