Everest Re Report Q3 Net Income Of $205.6M
Bermuda-based Everest Re Group reported third quarter 2018 net income of $205.6 million, or $5.02 per diluted common share, compared to net loss of $639.4 million, or $15.73 per common share for the third quarter of 2017.
After-tax operating income was $167.5 million, or $4.09 per diluted common share, for the third quarter of 2018, compared to after-tax operating loss of $623.7 million, or $15.35 per common share, for the same period last year.
For the nine months ended September 30, 2018, net income was $485.8 million, or $11.83 per diluted common share, compared to net loss of $102.1 million, or $2.51 per common share, for the nine months ended September 30, 2017.
After-tax operating income was $427.6 million, or $10.41 per diluted common share, compared to after-tax operating loss of $122.8 million or $3.03 per common share, for the same period in 2017.
Commenting on the Company’s results, President and Chief Executive Officer, Dominic J. Addesso said, “Everest generated an annualized, net income return on equity for the quarter of 10%, despite the previously announced catastrophe losses. The underlying results were quite strong with an attritional combined ratio of 85.8% year to date as a result of our diversified portfolio.”
Effective this year, the Company changed its reporting of operating income, a non-GAAP financial measure. Historically operating income represented net income, excluding realized capital gains and losses and the tax impact related to the enactment of the Tax Cuts and Jobs Act in 2017.
Starting in first quarter 2018, the Company further adjusted operating income to exclude foreign exchange gains and losses as it believes the impact of foreign currency movements on income is not indicative of the performance of the underlying business in a particular period.
Operating highlights for the third quarter of 2018 included the following:
- Gross written premiums for the quarter were $2.2 billion, an increase of 8% compared to the third quarter of 2017. Worldwide reinsurance premiums were up 7% to $1.7 billion, with growth across each segment primarily driven by increased casualty and property pro-rata premium, rate improvement, increased shares on existing business and profitable new opportunities. Direct insurance premiums were up 8%, from third quarter 2017, to $517.3 million, continuing with the diversified growth trends noted in recent years.
- The combined ratio was 100.0% for the quarter compared to 163.6% in the third quarter of 2017. Excluding catastrophe losses, reinstatement premiums and the favorable prior period loss development, the current quarter attritional combined ratio was 86.8% compared to 85.5% in the same period last year.
- Catastrophe losses, net of reinsurance, amounted to $240.0 million in the quarter, primarily related to the 2018 losses from Hurricane Florence, Typhoon Jebi, Typhoon Trami, California wildfires and Japan floods.
- Net investment income increased 18% for the quarter to $161.4 million.
- Net after-tax realized gains amounted to $43.6 million and net after-tax unrealized capital losses were $20.9 million, for the quarter.
- Cash flow from operations was $543.6 million for the nine months ended September 30, 2018 compared to $1,044.2 million for the same period in 2017.
- During the third quarter, the Company purchased 229,432 shares at a total cost of $50.0 million. The repurchases were made pursuant to a share repurchase authorization, provided by the Company’s Board of Directors, under which there remains 1.4 million shares available.
- Shareholders’ equity ended the quarter at $8.3 billion compared to $8.4 billion at year end 2017. Book value per share was down slightly from $204.95 at December 31, 2017 to $204.91 at September 30, 2018.
