Everest: Disasters Had ‘Significant Impact’
Bermuda’s Everest Re Group reported fourth quarter 2011 net income of $41.0 million, or $0.76 per diluted common share, compared to $302.5 million, or $5.51 per diluted common share, for the same period last year.
Excluding net realized capital gains and losses, the after-tax operating loss was $50.7 million, or $0.94 per diluted common share, compared to after-tax operating income of $257.8 million, or $4.70 per diluted common share, in the fourth quarter of 2010.
For the year ended December 31, 2011, the net loss was $80.5 million, or $1.49 per common share, compared to net income of $610.8 million, or $10.70 per diluted common share, for 2010. Excluding net realized capital gains and losses, the after-tax operating loss was $93.6 million, or $1.73 per common share, for the full year 2011, compared to net operating income of $518.1 million, or $9.08 per diluted common share, for the same period in 2010.
Commenting on the company’s results, chairman and CEO Joseph V. Taranto said, “While catastrophe losses have had a significant impact on our results this year, our balance sheet remains strong with capital still in excess of $6 billion, a testament to the strength of our franchise.
“This served us well during January renewals as we constructed a portfolio that enjoyed better rates and terms and, accordingly, we are optimistic about the prospects for 2012.”
Operating highlights for the fourth quarter and full year 2011 included the following:
- Gross written premiums were $1.1 billion for the quarter, an increase of 10% when compared to the same quarter in 2010. Worldwide reinsurance premiums were up 12% and direct insurance premiums were up 5% in the period. For the full year, gross written premiums totaled $4.3 billion, an increase of 2% compared to last year. Adjusting for the impact of foreign exchange and reinstatement premiums generated year over year on catastrophe losses, premium was flat to last year.
- Pre-tax catastrophe losses, net of reinstatement premiums, were $370.7 million in the quarter compared to $52.6 million in the fourth quarter of 2010. As previously announced, the current quarter losses include $218.0 million for the Thailand floods, increased reported loss estimates on the earthquakes in Japan and New Zealand that occurred earlier in the year, and an additional catastrophe reserve provision of $50.0 million for all 2011 events due to their complexity and the systemic late reporting that has resulted. For the full year, net after-tax catastrophe losses amounted to $959.7 million in 2011.
- The loss ratio was 101.4% for the quarter and 90.9% for the year, compared to 70.6% and 74.9%, respectively, for the same periods in 2010. For the full year, excluding catastrophe losses noted above, related reinstatement premiums, and nominal prior year loss development, the attritional loss ratio was trending positive at 60.0% compared to 61.2% for 2010 reflecting portfolio changes and improved rates.
- Net investment income declined to $126.3 million for the quarter and $620.0 million for the year compared to $184.9 million and $653.5 million, respectively, for 2010. Eliminating the impact of limited partnership results, investment income was down 3% for the year due to lower re-investment rates.
- Net after-tax realized capital gains totaled $91.7 million for the quarter and $13.1 million, mainly due to after-tax fair value adjustments on the equity portfolio.
- Cash flow from operations was $112.9 million for the quarter compared to $127.9 million for the same period in 2010. For the full year 2011, cash flow from operations was $659.5 million.
- During the quarter, the company repurchased approximately 105,000 of its common shares at an average price of $78.56 and a total cost of $8.3 million. For the year, the Company repurchased 1.1 million of its common shares, or 2% of its total outstanding shares at year end 2010, for a total cost of $92.5 million. 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 year at $6.1 billion, with book value per share of $112.99, down 2% when compared to year-end 2010.
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], Limited provides reinsurance to non-life insurers in Europe. Everest National Insurance Company and Everest Security Insurance Company provide property and casualty insurance to policyholders in the US Everest Indemnity Insurance Company offers excess and surplus lines insurance in the US Everest Insurance Company of Canada provides property and casualty insurance to policyholders in Canada.
