Everest Re Losses Are Higher Than Expected
Everest Re Group Ltd , a Bermuda-based reinsurer, yesterday [Apr. 27] posted a higher-than-anticipated quarterly operating loss, hurt by hcatastrophe losses from natural disasters in Japan, New Zealand, and Australia.
The company reported first-quarter operating loss of $323.6 million, or $5.95 a share, compared with a loss of $73.8 million, or $1.25 a share a year earlier.
“The quarter was significantly impacted by the disasters in Japan, New Zealand, and Australia. Notwithstanding these events, we were pleased with the underlying performance of our business portfolio and investment results, which were strong for the quarter,” chief executive Joseph Taranto said.
“Looking ahead, we expect the market for property catastrophe reinsurance to change in response to the unusual level of loss activity the industry experienced in the first quarter.”
Operating highlights for the first quarter of 2011 included the following:
Gross written premiums increased 4 percent to $1.1 billion, compared to the same period in 2010, with 1% of this increase attributable to the benefit of foreign currency movements.
Worldwide, reinsurance premiums were up 2% to $810 million, but adjusting for the higher level of reinstatement premiums and the effects of foreign exchange rates in the quarter, these premiums were relatively flat. Insurance premiums increased 11.5 percent, quarter over quarter, primarily due to new business premium generated on the acquisition of Heartland.
The loss ratio was 123.6% for the quarter compared to 97.8% in the first quarter of 2010. The attritional loss ratio, excluding 65.8 points of catastrophe losses and modest favorable development, was 57.9% for the current year as compared to 59.5 percent for the same period last year. Reinstatement premiums related to the catastrophe losses in the quarter provided a benefit of 1.8 points to the current year attritional loss ratio.
Net investment income was $178.7 million, an increase of 11% when compared to the comparable period in 2010. Adjusting for income on limited partnership investments, underlying investment income was down 2%, quarter over quarter.
Net after-tax realized capital gains totaled $7.7 million for the quarter.
Net after-tax unrealized capital gains decreased $24.5 million during the quarter, driven by changes in interest rates.
Cash flow from operations was $188.1 million compared to cash flows of $271.3 million in the same quarter last year.
The Company repurchased 428,038 of its common shares during the quarter at an average price of $87.87 for a total cost of $37.6 million. The repurchases were made pursuant to a share repurchase authorization, provided by the Company’s Board of Directors, under which there remains 3.0 million shares available.
Shareholders’ equity at March 31, 2011, was $5.9 billion, down from the $6.3 billion at December 31, 2010. Book value per share was $109.07 as of March 31, 2011 compared to $115.45 at December 31, 2010.
