Join today and have your say! It’s FREE!

Become a member today, It's free!

We will not release or resell your information to third parties without your permission.
Please Try Again
{{ error }}
By providing my email, I consent to receiving investment related electronic messages from Stockhouse.

or

Sign In

Please Try Again
{{ error }}
Password Hint : {{passwordHint}}
Forgot Password?

or

Please Try Again {{ error }}

Send my password

SUCCESS
An email was sent with password retrieval instructions. Please go to the link in the email message to retrieve your password.

Become a member today, It's free!

We will not release or resell your information to third parties without your permission.

Everest Re Group Reports First Quarter 2022 Results

RE

$406 Million of Net Operating Income and $298 Million of Net Income

$3.2 Billion in Gross Written Premium and a 91.6% Combined Ratio

Everest Re Group, Ltd. (“Everest” or the “Group”) today reported its first quarter 2022 results.

First Quarter 2022 Highlights

  • $406 Million of Net Operating Income and 16.2% annualized Operating ROE and Net Income of $298 Million
  • Year over year gross written premium (“GWP”) growth of 9% for the Group, 6% for Reinsurance and 15% for Insurance
  • Combined ratios of 91.6% for the Group, 91.4% for Reinsurance and 91.9% for Insurance
  • Attritional combined ratios of 87.4% for the Group, 86.2% for Reinsurance and 90.9% for Insurance
  • Pre-tax underwriting income of $235 million including $115 million of catastrophe losses net of recoveries and reinstatement premiums. Catastrophe events comprised of Australian flood losses, European storms, and March 2022 events in the United States
  • Pre-tax net investment income of $243 million, well balanced between fixed income and alternative investments

Everest Re Group President & CEO Juan C. Andrade commented on the Company’s results:

“Everest is off to a strong start in 2022 with first quarter results that reflect our relentless focus on profitability and margin expansion. Excellent performance across our underwriting businesses, as well as investments, contributed to $406 million in net operating income and a 16.2% annualized operating return on equity. Our discipline, strength and resilience stand out in the increasingly volatile external environment, which is compounded by a web of macroeconomic, geopolitical and societal issues. As underwriters, the protection and stability we provide has never been more important, and we continue to be a source of strength in the face of global uncertainty.”

Summary of First Quarter 2022 Net Income and Other Items

  • Net income of $298 million, equal to $7.56 per diluted share vs. first quarter 2021 net income of $342 million, equal to $8.52 per diluted share
  • Net operating income of $406 million, equal to $10.31 per diluted share vs. first quarter 2021 net operating income of $260 million, equal to $6.49 per diluted share
  • GAAP combined ratio of 91.6% including 4.1 points of catastrophe losses vs. the first quarter 2021 figures of 98.1% including 11.3 points of catastrophe losses
  • Covid-19 Pandemic (“Pandemic”) ultimate loss estimate remains at $511 million
  • Operating cashflow for the quarter of $846 million vs. the first quarter 2021 figure of $904 million
  • Everest has limited exposure related to the Russian invasion of the Ukraine. Given the ongoing nature of the war and the high degree of uncertainty around both exposure and coverage, no loss provision is being established at this time.

The following table summarizes the Company’s net income and related financial metrics.

Net income and operating income

Q1

Year to Date

Q1

Year to Date

All values in USD millions except for per share amounts and percentages

2022

2022

2021

2021

Everest Re Group
Net income

297.8

297.8

341.9

341.9

Net operating income (loss)

405.8

405.8

260.2

260.2

Net income per diluted common share

7.56

7.56

8.52

8.52

Net operating income per diluted common share

10.31

10.31

6.49

6.49

Net income annualized return on average equity

11.9%

11.9%

15.0%

15.0%

Net operating income annualized return on average equity

16.2%

16.2%

11.4%

11.4%

Period end equity and book value Q1 2022 Year to Date
Shareholders' equity

9,527.6

Book value per share

241.52

Change in BVPS adjusted for dividends

-5.9%

Total Shareholder Return ("TSR") - Annualized

8.6%

Notes
1/ Refer to the reconciliation of net income to net operating income found on page 7 of this press release

The following information summarizes the Company’s underwriting results, on a consolidated basis and by segment – Reinsurance and Insurance, with selected commentary on results by segment.

Underwriting information - Everest Re Group

Q1

Year to Date

Q1

Year to Date

Year on Year Change

All values in USD millions except for percentages

2022

2022

2021

2021

Q1

Year to Date

Gross written premium

3,186.4

3,186.4

2,931.4

2,931.4

8.7%

8.7%

Net written premium

2,812.0

2,812.0

2,553.9

2,553.9

10.1%

10.1%

Loss ratio

64.1%

64.1%

71.7%

71.7%

(7.6) pts (7.6) pts
Commission and brokerage ratio

21.7%

21.7%

20.5%

20.5%

1.2 pts 1.2 pts
Other underwriting expenses

5.8%

5.8%

5.9%

5.9%

(0.1) pts (0.1) pts
Combined ratio

91.6%

91.6%

98.1%

98.1%

(6.5) pts (6.5) pts
Attritional combined ratio

87.4%

87.4%

87.3%

87.3%

0.1 pts 0.1 pts
Pre-tax net catastrophe losses

115.0

115.0

260.0

260.0

Pre-tax net covid losses

-

-

-

-

Pre-tax net prior year reserve development

(0.9)

(0.9)

(1.8)

(1.8)

Notes
1/ Attritional ratios exclude prior year reserve development, Covid-19 pandemic impacts catastrophe losses, and reinstatement premiums
2/ Pre-tax net catastrophe losses are net of reinsurance and reinstatement premiums

Reinsurance Segment – Quarterly Highlights

  • Gross written premiums of $2.2 billion for the quarter including a highly successful January 1 renewal where Everest achieved growth in targeted classes notably casualty pro rata and international treaty, while optimizing the property portfolio to reduce catastrophe volatility and maximize returns
  • Improved risk-adjusted profitability of the portfolio driven by targeted underwriting actions, resulting in a 60 basis point improvement in the attritional loss ratio for the quarter vs. the prior year (58.9% vs. 59.5%) and an overall combined ratio of 91.4%
  • Continued expense discipline resulting in an operating expense ratio for the quarter of 2.4%
Underwriting information - Reinsurance segment Q1 Year to Date Q1 Year to Date Year on Year Change
All values in USD millions except for percentages

2022

2022

2021

2021

Q1

Year to Date

Gross written premium

2,185.6

2,185.6

2,059.0

2,059.0

6.1%

6.1%

Net written premium

2,081.4

2,081.4

1,912.9

1,912.9

8.8%

8.8%

Loss ratio

64.1%

64.1%

71.6%

71.6%

(7.5)pts (7.5)pts
Commission and brokerage ratio

24.9%

24.9%

23.0%

23.0%

1.9 pts 1.9 pts
Other underwriting expenses

2.4%

2.4%

2.9%

2.9%

(0.5)pts (0.5)pts
Combined ratio

91.4%

91.4%

97.5%

97.5%

(6.1) pts (6.1) pts
Attritional combined ratio

86.2%

86.2%

85.5%

85.5%

0.7 pts 0.7 pts
Pre-tax net catastrophe losses

110.0

110.0

212.5

212.5

Pre-tax net covid losses

-

-

-

-

Pre-tax net prior year reserve development

(1.6)

(1.6)

(1.8)

(1.8)

Notes
1/ Attritional ratios exclude prior year reserve development, Covid-19 pandemic impacts catastrophe losses, and reinstatement premiums
2/ Pre-tax net catastrophe losses are net of reinsurance and reinstatement premiums

Insurance Segment – Quarterly Highlights

  • Gross written premiums of $1.0 billion reflecting a 15% increase year over year, driven by balanced and diversified growth across core classes and geographies This growth was offset by intentional underwriting actions to reduce exposure in property CAT and targeted accounts that did not meet our risk adjusted return thresholds. Excluding these actions, growth was 25%
  • Excellent profitability with a 91.9% combined ratio and 90.9% attritional combined ratio (a 1.3 point improvement compared to 1Q 2021)
  • Rate increases remain solid and above loss trend
Underwriting information - Insurance segment Q1 Year to Date Q1 Year to Date Year on Year Change
All values in USD millions except for percentages

2022

2022

2021

2021

Q1

Year to Date

Gross written premium

1,000.7

1,000.7

872.4

872.4

14.7%

14.7%

Net written premium

730.6

730.6

641.0

641.0

14.0%

14.0%

Loss ratio

64.1%

64.1%

72.0%

72.0%

(7.9) pts (7.9) pts
Commission and brokerage ratio

12.5%

12.5%

13.2%

13.2%

(0.7) pts (0.7) pts
Other underwriting expenses

15.3%

15.3%

14.8%

14.8%

0.5 pts 0.5 pts
Combined ratio

91.9%

91.9%

99.9%

99.9%

(8.0) pts (8.0) pts
Attritional combined ratio

90.9%

90.9%

92.2%

92.2%

(1.3) pts (1.3) pts
Pre-tax net catastrophe losses

5.0

5.0

47.5

47.5

Pre-tax net covid losses

-

-

-

-

Pre-tax net prior year reserve development

0.7

0.7

-

-

Notes
1/ Attritional ratios exclude prior year reserve development, Covid-19 pandemic impacts catastrophe losses, and reinstatement premiums
2/ Pre-tax net catastrophe losses are net of reinsurance and reinstatement premiums

Investments and Shareholders’ Equity at March 31, 2022

  • Total invested assets and cash of $29.3 billion versus the year end 2021 value of $29.7 billion
  • Shareholders’ equity of $9.5 billion vs. $10.1 billion at year end 2021, largely driven by $811 million of unrealized net losses on fixed income investments
  • Book value per diluted share of $241.52 vs. $258.21 at year end 2021
  • Book value per diluted share excluding unrealized gains (losses) on fixed income investments of $256.01 vs. $252.12 at year end 2021
  • Common share dividends declared and paid in the quarter of $1.55 per share equal to $61 million
  • Common share repurchases of $1.3 million during the quarter, representing 5,000 shares at an average price of $264.42 per share
Equity and Book Value per Share Q1 Year to Date Q1 Year to Date
All values in USD millions except for per share amounts and percentages

2022

2022

2021

2021

Beginning shareholders' equity

10,139.2

10,139.2

9,726.2

9,726.2

Net income

297.8

297.8

341.9

341.9

Change- unrealized gains (losses) - Fixed inc. investments

(811.0)

(811.0)

(292.3)

(292.3)

Dividends to shareholders

(61.1)

(61.1)

(62.2)

(62.2)

Purchase of treasury shares

(1.3)

(1.3)

(23.5)

(23.5)

Other

(35.9)

(35.9)

(7.2)

(7.2)

Ending shareholders' equity

9,527.6

9,527.6

9,682.9

9,682.9

Common shares outstanding

39.45

40.08

Book value per common share outstanding

241.52

241.57

Less: Unrealized on fixed inc. investments ("URAD")

(14.49)

10.77

Book value excl. URAD per common share outstanding

256.01

230.80

Common share dividends paid - last 12 months

6.20

6.20

This news release contains forward-looking statements within the meaning of the U.S. federal securities laws. We intend these forward-looking statements to be covered by the safe harbor provisions for forward-looking statements in the U.S. Federal securities laws. These statements involve risks and uncertainties that could cause actual results to differ materially from those contained in forward-looking statements made on behalf of the Company. These risks and uncertainties include the impact of the ongoing war in Ukraine, the impact of general economic conditions and conditions affecting the insurance and reinsurance industry, the adequacy of our reserves, our ability to assess underwriting risk, trends in rates for property and casualty insurance and reinsurance, competition, investment market and investment income fluctuations, trends in insured and paid losses, catastrophes, pandemic, regulatory and legal uncertainties and other factors described in our latest Annual Report on Form 10-K. The Company undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

About Everest Re Group, Ltd.

Everest Re Group, Ltd. (“Everest”) is a leading global provider of reinsurance and insurance, operating for close to 50 years through subsidiaries in the U.S., Europe, Singapore, Canada, Bermuda, and other territories.

Everest offers property, casualty, and specialty products through its various operating affiliates located in key markets around the world.

Everest common stock (NYSE:RE) is a component of the S&P 500 index.

Additional information about Everest, our people, and our products can be found on our website at www.everestre.com. All issuing companies may not do business in all jurisdictions.

A conference call discussing the results will be held at 8:00 a.m. Eastern Time on April 28, 2022. The call will be available on the Internet through the Company’s web site at everestre.com/investors.

Recipients are encouraged to visit the Company’s web site to view supplemental financial information on the Company’s results. The supplemental information is located at www.everestre.com in the “Investors/Financials/Quarterly Results” section of the website. The supplemental financial information may also be obtained by contacting the Company directly.

The Company generally uses after-tax operating income (loss), a non-GAAP financial measure, to evaluate its performance. After-tax operating income (loss) consists of net income (loss) excluding after-tax net gains (losses) on investments and after-tax net foreign exchange income (expense) as the following reconciliation displays:

Three Months Ended March 31, Three Months Ended March 31,
(Dollars in thousands, except per share amounts)

2022

2021

2022

2021

(unaudited) (unaudited)
Per Diluted Per Diluted
Amount Share Amount Share Amount Share Amount Share
Net income (loss)

$

297,751

$

7.56

$

341,862

$

8.52

$

297,751

$

7.56

$

341,862

$

8.52

After-tax net (gains) losses on investments

$

(123,369

)

$

(3.14

)

$

30,035

$

0.75

$

(123,369

)

$

(3.14

)

$

30,035

$

0.75

After-tax net foreign exchange income (expense)

$

15,338

$

0.39

$

51,618

$

1.29

$

15,338

$

0.39

$

51,618

$

1.29

After-tax operating income (loss)

$

405,782

$

10.31

$

260,209

$

6.49

$

405,782

$

10.31

$

260,209

$

6.49

(Some amounts may not reconcile due to rounding.)

Although net gains (losses) on investments and net foreign exchange income (expense) are an integral part of the Company’s insurance operations, the determination of net gains (losses) on investments and foreign exchange income (expense) is independent of the insurance underwriting process. The Company believes that the level of net gains (losses) on investments and net foreign exchange income (expense) for any particular period is not indicative of the performance of the underlying business in that particular period. Providing only a GAAP presentation of net income (loss) makes it more difficult for users of the financial information to evaluate the Company’s success or failure in its basic business and may lead to incorrect or misleading assumptions and conclusions. The Company understands that the equity analysts who follow the Company focus on after-tax operating income (loss) in their analyses for the reasons discussed above. The Company provides after-tax operating income (loss) to investors so that they have what management believes to be a useful supplement to GAAP information concerning the Company’s performance.

--Financial Details Follow--

EVEREST RE GROUP, LTD.
CONSOLIDATED STATEMENTS OF OPERATIONS
AND COMPREHENSIVE INCOME (LOSS)
Three Months Ended
March 31,
(Dollars in thousands, except per share amounts)

2022

2021

(unaudited)
REVENUES:
Premiums earned

$

2,791,765

$

2,387,865

Net investment income

242,830

260,413

Net gains (losses) on investments:
Credit allowances on fixed maturity securities

(11,853

)

(6,977

)

Gains (losses) from fair value adjustments

(136,860

)

29,056

Net realized gains (losses) from dispositions

(4,914

)

16,823

Total net gains (losses) on investments

(153,627

)

38,902

Other income (expense)

15,363

56,593

Total revenues

2,896,331

2,743,773

CLAIMS AND EXPENSES:
Incurred losses and loss adjustment expenses

1,789,863

1,711,419

Commission, brokerage, taxes and fees

605,230

489,011

Other underwriting expenses

161,293

142,231

Corporate expenses

14,020

12,378

Interest, fees and bond issue cost amortization expense

24,078

15,639

Total claims and expenses

2,594,484

2,370,678

INCOME (LOSS) BEFORE TAXES

301,847

373,095

Income tax expense (benefit)

4,096

31,233

NET INCOME (LOSS)

$

297,751

$

341,862

Other comprehensive income (loss), net of tax:
Unrealized appreciation (depreciation) ("URA(D)") on securities arising during the period

(815,177

)

(288,615

)

Reclassification adjustment for realized losses (gains) included in net income (loss)

4,178

(3,666

)

Total URA(D) on securities arising during the period

(810,999

)

(292,281

)

Foreign currency translation adjustments

(34,102

)

(9,582

)

Reclassification adjustment for amortization of net (gain) loss included in net income (loss)

758

2,043

Total benefit plan net gain (loss) for the period

758

2,043

Total other comprehensive income (loss), net of tax

(844,343

)

(299,820

)

COMPREHENSIVE INCOME (LOSS)

$

(546,592

)

$

42,042

EARNINGS PER COMMON SHARE:
Basic

$

7.57

$

8.53

Diluted

7.56

8.52

EVEREST RE GROUP, LTD.
CONSOLIDATED BALANCE SHEETS
March 31, December 31,
(Dollars and share amounts in thousands, except par value per share)

2022

2021

(unaudited)
ASSETS:
Fixed maturities - available for sale

$

21,998,415

$

22,308,272

(amortized cost: 2022, $22,693,029; 2021, $22,063,592, credit allowances: 2022, ($41,591); 2021, ($29,738))
Equity securities, at fair value

1,780,526

1,825,908

Short-term investments (cost: 2022, $823,889; 2021, $1,178,386)

823,875

1,178,337

Other invested assets

2,917,039

2,919,965

Cash

1,778,218

1,440,861

Total investments and cash

29,298,073

29,673,343

Accrued investment income

156,997

149,105

Premiums receivable

3,264,023

3,293,598

Reinsurance recoverables

2,101,641

2,053,354

Funds held by reinsureds

920,054

868,601

Deferred acquisition costs

842,739

872,289

Prepaid reinsurance premiums

496,632

515,445

Income taxes

117,609

2,381

Other assets

789,014

757,167

TOTAL ASSETS

$

37,986,782

$

38,185,283

LIABILITIES:
Reserve for losses and loss adjustment expenses

19,495,637

19,009,486

Future policy benefit reserve

34,523

35,669

Unearned premium reserve

4,571,705

4,609,634

Funds held under reinsurance treaties

4,732

18,391

Other net payable to reinsurers

464,000

449,723

Losses in course of payment

133,888

260,684

Senior notes

2,346,147

2,345,800

Long term notes

223,799

223,774

Borrowings from FHLB

519,000

519,000

Accrued interest on debt and borrowings

38,843

17,348

Unsettled securities payable

67,698

16,698

Other liabilities

559,181

539,896

Total liabilities

28,459,153

28,046,103

SHAREHOLDERS' EQUITY:
Preferred shares, par value: $0.01; 50,000 shares authorized;
no shares issued and outstanding

-

-

Common shares, par value: $0.01; 200,000 shares authorized; (2022) 69,977
and (2021) 69,790 outstanding before treasury shares

700

698

Additional paid-in capital

2,271,890

2,274,431

Accumulated other comprehensive income (loss), net of deferred income tax expense
(benefit) of ($89,926) at 2022 and $26,781 at 2021

(832,820

)

11,523

Treasury shares, at cost; 30,529 (2022) and 30,524 shares (2021)

(3,848,630

)

(3,847,308

)

Retained earnings

11,936,489

11,699,836

Total shareholders' equity

9,527,629

10,139,180

TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY

$

37,986,782

$

38,185,283

EVEREST RE GROUP, LTD.
CONSOLIDATED STATEMENTS OF CASH FLOWS
Three Months Ended
March 31,
(Dollars in thousands)

2022

2021

(unaudited)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss)

$

297,751

$

341,862

Adjustments to reconcile net income to net cash provided by operating activities:
Decrease (increase) in premiums receivable

(14,203

)

(105,460

)

Decrease (increase) in funds held by reinsureds, net

(67,033

)

(25,584

)

Decrease (increase) in reinsurance recoverables

(125,881

)

(14,518

)

Decrease (increase) in income taxes

1,251

24,908

Decrease (increase) in prepaid reinsurance premiums

(7,167

)

(27,071

)

Increase (decrease) in reserve for losses and loss adjustment expenses

632,398

655,070

Increase (decrease) in future policy benefit reserve

(1,146

)

(162

)

Increase (decrease) in unearned premiums

4,045

196,631

Increase (decrease) in other net payable to reinsurers

46,310

105,390

Increase (decrease) in losses in course of payment

(125,074

)

11,980

Change in equity adjustments in limited partnerships

(97,831

)

(116,767

)

Distribution of limited partnership income

71,174

18,125

Change in other assets and liabilities, net

47,052

(149,480

)

Non-cash compensation expense

11,912

11,021

Amortization of bond premium (accrual of bond discount)

19,254

17,323

Net (gains) losses on investments

153,627

(38,902

)

Net cash provided by (used in) operating activities

846,439

904,366

CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from fixed maturities matured/called - available for sale

849,019

818,352

Proceeds from fixed maturities sold - available for sale

418,988

228,278

Proceeds from equity securities sold, at fair value

90,101

281,313

Proceeds from distributions and sales of other invested assets

162,719

52,211

Cost of fixed maturities acquired - available for sale

(2,010,859

)

(1,776,730

)

Cost of equity securities acquired, at fair value

(195,026

)

(174,981

)

Cost of other invested assets acquired

(137,430

)

(98,939

)

Net change in short-term investments

354,761

308,585

Net change in unsettled securities transactions

46,399

(93,610

)

Net cash provided by (used in) investing activities

(421,328

)

(455,521

)

CASH FLOWS FROM FINANCING ACTIVITIES:
Common shares issued during the period for share-based compensation, net of expense

(14,450

)

(10,583

)

Purchase of treasury shares

(1,322

)

(23,545

)

Dividends paid to shareholders

(61,097

)

(62,229

)

Cost of shares withheld on settlements of share-based compensation awards

(16,692

)

(12,507

)

Net cash provided by (used in) financing activities

(93,561

)

(108,864

)

EFFECT OF EXCHANGE RATE CHANGES ON CASH

5,807

(8,972

)

Net increase (decrease) in cash

337,357

331,009

Cash, beginning of period

1,440,861

801,651

Cash, end of period

$

1,778,218

$

1,132,660

SUPPLEMENTAL CASH FLOW INFORMATION:
Income taxes paid (recovered)

$

2,681

$

6,417

Interest paid

2,210

1,880