Everest Re Reports Third Quarter Earnings
Bermuda’s Everest Re Group, Ltd. this week reported third quarter 2011 after-tax operating income, which excludes net realised capital gains and losses, of $146.7 million, or $2.70 per diluted common share, compared to after-tax operating income of $149.3 million, or $2.67 per diluted common share, in the third quarter of 2010.
Net income, including net realized capital gains and losses, was $63.1 million, or $1.16 per diluted common share, for the third quarter of 2011 compared to $174.2 million, or $3.11 per diluted common share, for the same period last year.
For the nine months ended September 30, 2011, the after-tax operating loss was $42.9 million, or $0.79 per common share, compared to net operating income of $260.3 million or $4.50 per diluted common share, for the first nine months of 2010. Including net realized capital gains and losses, the net loss was $121.5 million, or $2.24 per common share, for the first nine months of 2011, compared to net income of $308.2 million, or $5.33 per diluted common share, for the same period in 2010.
Commenting on the company’s results, Chairman and Chief Executive Officer, Joseph V. Taranto said, “We are pleased to have generated operating income of $147 million for the quarter, driven by both strong underwriting results, with a combined ratio of 95.6 percent, and solid investment earnings, which were up 11 percent over last year.
“We expect property reinsurance rates to continue to rise into 2012 in response to 2011 catastrophe losses. We will continue to reposition our portfolio to respond to market opportunities.”
Operating highlights for the third quarter of 2011 included the following:
Gross written premiums were $1.13 billion, a decrease of 3% compared to the same period in 2010. Excluding the impact of foreign exchange and reinstatement premiums, gross written premiums were down 6% for the quarter.
Pre-tax catastrophe losses, net of reinstatement premiums, were $119.4 million in the current quarter compared to $89.4 million in the third quarter of 2010. The current quarter losses include $35 million for Hurricane Irene with the remainder primarily attributable to increased loss estimates on first quarter events, specifically the earthquakes in Japan and New Zealand. Recent commentary provided to the market, in general, by large cedants and brokers in these regions continue to indicate higher than anticipated loss costs for these events.
The current quarter loss ratio and combined ratio were 69.0 percent and 95.6 percent, respectively, compared to 67.7 percent and 95.9 percent, respectively, in 2010.
Net investment income was $156.5 million, an increase of 11 percent when compared to last year’s third quarter.
Net after-tax realized capital losses totaled $83.6 million for the quarter, due, in large part, to after-tax fair value adjustments on the equity portfolio. This compares to net after-tax realized capital gains of $24.9 million in the same period last year.
Cash flow from operations was $207.9 million for the quarter compared to $297.8 million for the same period in 2010.
For the quarter, the annualised after-tax operating income return on average adjusted shareholders’ equity was 10.3 percent compared to 10.6 percent in 2010.
During the quarter, the company repurchased 597,006 of its common shares at an average price of $78.08 and a total cost of $46.6 million. Subsequent to the quarter, the company repurchased an additional 105,000 of its common shares. The repurchases were made pursuant to a share repurchase authorization, provided by the company’s board of directors, under which there remains 2.3 million shares available.
Shareholders’ equity ended the quarter at $6.1 billion, a decrease of three percent from the $6.3 billion at December 31, 2010. Book value per share was $113.26 as of September 30, 2011 compared to $115.45 at December 31, 2010.
Everest Re Group, Ltd. is a Bermuda holding company that operates through the subsidiaries in the US and international markets, primarily providing reinsurance to property and casualty insurers.
