Everest Re: Q3 2014 Net Income $274.9 Million

Bermuda-based Everest Re Group, Ltd. reported third quarter 2014 net income available to common shareholders of $274.9 million, or $6.00 per diluted common share, compared to net income of $234.8 million, or $4.81 per diluted common share, for the third quarter of 2013.

After-tax operating income1 available to common shareholders, excluding realized capital gains and losses, was $280.5 million, or $6.12 per diluted common share, for the third quarter of 2014, compared to after-tax operating income1 of $205.0 million, or $4.20 per diluted common share, for the same period last year.

For the nine months ended September 30, 2014, net income available to common shareholders was $859.0 million, or $18.47 per diluted common share, compared to $894.7 million, or $17.94 per diluted common share, for the first nine months of 2013. After-tax operating income1 available to common shareholders, excluding realized capital gains and losses, was $812.2 million, or $17.46 per diluted common share, compared to $759.2 million or $15.22 per diluted common share, for the same period in 2013.

Commenting on the Company’s results, President and Chief Executive Officer, Dominic J. Addesso said, “We enjoyed another strong quarter with double digit growth in premium and a 16% annualized operating return on equity. Adjusted for dividends, book value per share has grown by 13% since the end of the year. Everest has distinguished itself in this challenging marketplace as a global leader with the demonstrable ability to leverage our resources and create opportunities that add value for both our clients and our shareholders.”

Operating highlights for the third quarter of 2014 included the following:

• Gross written premiums were $1.7 billion, an increase of 14% compared to the third quarter of 2013. Worldwide reinsurance premiums, including the Mt. Logan Re segment, were up 19.5% to $1.3 billion driven by growth opportunities in U.S. property and specialty lines business as well as strategic opportunities in Latin America. Insurance premiums were down 3% for the quarter primarily due to lower premium on crop business.
• The combined ratio for the quarter was 85.7% compared to 88.0% in the third quarter of 2013. Excluding catastrophe losses, reinstatement premiums, and prior period loss development, the current quarter attritional combined ratio was 83.7% compared to 82.3% for the same period last year.
• Catastrophe losses were $30.0 million for the quarter arising from Hurricane Odile, which affected the Baja peninsula, and an increase in estimated losses for the second quarter Chile earthquake event. The net impact of these losses in the quarter, after reinstatement premiums, taxes and non-controlling interest, was $23.2 million, or $0.51 per diluted common share.
• Net investment income for the quarter was $142.1 million and includes $21.7 million of limited partnership income.
• Net after-tax realized and unrealized capital losses amounted to $5.6 million and $79.8 million, respectively, for the quarter.
• Cash flow from operations was $335.5 million compared to $386.0 million for the same period in 2013.
• The year-to-date effective tax rate on operating income decreased from 14.4% at June 30, 2014 to 12.3% at September 30, 2014 resulting in a $12.8 million, or $0.28 per diluted common share, benefit and an effective tax rate of 8.1% for the quarter. The decrease in the effective tax rate was primarily attributable to additional foreign tax credits.
• Through nine months, the annualized after-tax operating income1 return on average adjusted shareholders’ equity2 was 15.6% compared to 16.1% in 2013. For this same period, the annualized net income return on average adjusted shareholders’ equity2 was 16.5% compared to 19.0% in 2013.
• During the quarter, the Company repurchased 470,807 of its common shares at an average price of $159.26 and a total cost of $75.0 million. For the year, the Company repurchased 2.6 million of its common shares for a total cost of $400.0 million. The repurchases were made pursuant to a share repurchase authorization, provided by the Company’s Board of Directors, under which there remains 1.9 million shares available.
• Shareholders’ equity ended the quarter at $7.4 billion. Book value per share increased 11.3% from $146.57 at December 31, 2013 to $163.14 at September 30, 2014.

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