After-tax operating income-1 for the quarter was
'Our thoughts and sympathies go out to all those directly affected by the coronavirus. We would like to offer our sincere gratitude and thanks to those on the front lines who are putting themselves at risk to keep everyone safe. Additionally, we'd like to share our tremendous appreciation to all of those who are working hard to keep the supply chains going,' said
Above all it is the ingenuity, perseverance and dedication of our employees during these unique times that allows us to operate our business without interruption. Despite the impacts of the pandemic, Everest remains profitable and resilient with a strong capital base.'
'Turning to the Company's results, Everest wrote nearly
Our combined ratio for the quarter was 98.6%, which includes
Operating highlights for the first quarter of 2020 included the following:
The combined ratio was 98.6% for the first quarter of 2020 compared with 88.7% for the first quarter of 2019. Excluding the impacts of catastrophe losses, reinstatement premiums, and the 7.4% impact of Covid-19 pandemic the comparable combined ratios are 89.9% for the first quarter of 2020 and 87.4% for the first quarter of 2019. The increase in these comparable combined ratios is primarily attributable to the continued business mix shift toward more pro-rata business in Reinsurance.
Catastrophe losses, net of reinsurance and reinstatement premiums, amounted to
Cash flow from operations was
Net income of
Net investment income of
Net after-tax realized losses amounted to
Shareholders' equity at quarter end was
The Company paid
Everest repurchased 970,892 shares at an average cost of
Book value per share declined 4.1% during the quarter, to
Note that beginning with this quarter's results, the Company's operations as detailed in the Financial Supplement will be presented as two (2) segments, Reinsurance and Insurance, in line with how management views results. The former three (3) reinsurance sub-segments of US Reinsurance,
This news release contains forward-looking statements within the meaning of the
About
Everest offers property, casualty, and specialty products through its various operating affiliates located in key markets around the world.
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 first quarter results will be held at
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.
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 'Financial Reports' section of the 'Investor Center'. The supplemental financial information may also be obtained by contacting the Company directly.
1 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 realized capital gains (losses) and after-tax net foreign exchange income (expense) as the following reconciliation displays:
Three Months Ended
(Dollars in thousands, except per share amounts)
2020
2019
(unaudited)
Per Diluted Per Diluted
Common Common
Amount Share Amount Share
Net income (loss)
$
16,612
$
0.41
$
354,551
$
8.67
After-tax net realized capital gains (losses)
(172,364
)
(4.22
)
73,905
1.81
After-tax net foreign exchange income (expense)
24,604
0.60
(1,722
)
(0.04
)
After-tax operating income (loss)
$
164,372
$
4.03
$
282,368
$
6.91
Although net realized capital gains (losses) and net foreign exchange income (expense) are an integral part of the Company's insurance operations, the determination of net realized capital gains (losses) and foreign exchange income (expense) is independent of the insurance underwriting process. The Company believes that the level of net realized capital gains (losses) 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-
CONSOLIDATED STATEMENTS OF OPERATIONS
AND COMPREHENSIVE INCOME (LOSS)
Three Months Ended
(Dollars in thousands, except per share amounts)
2020
2019
(unaudited)
REVENUES:
Premiums earned
$
2,036,814
$
1,732,697
Net investment income
147,800
140,976
Net realized capital gains (losses):
Credit allowances on fixed maturity securities
(21,774
)
-
Other-than-temporary impairments on fixed maturity securities
-
(2,933
)
Other net realized capital gains (losses)
(188,814
)
95,165
Total net realized capital gains (losses)
(210,588
)
92,232
Net derivative gain (loss)
(15,373
)
3,231
Other income (expense)
23,363
(3,300
)
Total revenues
1,982,016
1,965,836
CLAIMS AND EXPENSES:
Incurred losses and loss adjustment expenses
1,430,840
1,048,550
Commission, brokerage, taxes and fees
448,522
389,474
Other underwriting expenses
128,860
98,985
Corporate expenses
9,833
6,652
Interest, fees and bond issue cost amortization expense
7,583
7,631
Total claims and expenses
2,025,638
1,551,292
INCOME (LOSS) BEFORE TAXES
(43,622
)
414,544
Income tax expense (benefit)
(60,234
)
59,993
NET INCOME (LOSS)
$
16,612
$
354,551
Other comprehensive income (loss), net of tax:
Unrealized appreciation (depreciation) ('URA(D)') on securities arising during the period
(279,398
)
233,065
Reclassification adjustment for realized losses (gains) included in net income (loss)
31,399
(1,822
)
Total URA(D) on securities arising during the period
(247,999
)
231,243
Foreign currency translation adjustments
(50,824
)
14,052
Reclassification adjustment for amortization of net (gain) loss included in net income (loss)
920
1,151
Total benefit plan net gain (loss) for the period
920
1,151
Total other comprehensive income (loss), net of tax
(297,903
)
246,446
COMPREHENSIVE INCOME (LOSS)
$
(281,291
)
$
600,997
EARNINGS PER COMMON SHARE:
Basic
$
0.41
$
8.70
Diluted
0.41
8.67
CONSOLIDATED BALANCE SHEETS
March 31 ,December 31 ,
(Dollars and share amounts in thousands, except par value per share)
2020
2019
(unaudited)
ASSETS:
Fixed maturities - available for sale, at market value
$
16,545,895
$
16,824,944
(amortized cost: 2020,
Fixed maturities - available for sale, at fair value
4,703
5,826
Equity securities, at fair value
722,851
931,457
Short-term investments (cost: 2020,
441,722
414,706
Other invested assets (cost: 2020,
1,803,785
1,763,531
Cash
817,626
808,036
Total investments and cash
20,336,582
20,748,500
Accrued investment income
117,791
116,804
Premiums receivable
2,340,392
2,259,088
Reinsurance receivables
1,808,601
1,763,471
Funds held by reinsureds
515,076
489,901
Deferred acquisition costs
603,735
581,863
Prepaid reinsurance premiums
438,308
445,716
Income taxes
406,413
305,711
Other assets
655,740
612,997
TOTAL ASSETS
$
27,222,638
$
27,324,051
LIABILITIES:
Reserve for losses and loss adjustment expenses
13,820,504
13,611,313
Future policy benefit reserve
41,677
42,592
Unearned premium reserve
3,176,292
3,056,735
Funds held under reinsurance treaties
9,163
10,668
Other net payable to reinsurers
369,385
291,660
Losses in course of payment
50,510
51,950
Senior notes due
397,104
397,074
Long term notes due
235,083
236,758
Revolving credit borrowings
50,000
-
Accrued interest on debt and borrowings
7,589
2,878
Equity index put option liability
20,958
5,584
Unsettled securities payable
77,042
30,650
Other liabilities
386,387
453,264
Total liabilities
18,641,694
18,191,126
SHAREHOLDERS' EQUITY:
Preferred shares, par value:
no shares issued and outstanding
-
-
Common shares, par value:
and (2019) 69,464 outstanding before treasury shares
696
694
Additional paid-in capital
2,216,479
2,219,660
Accumulated other comprehensive income (loss), net of deferred income tax expense
(benefit) of (
(269,751
)
28,152
(3,622,172
)
(3,422,152
)
Retained earnings
10,255,692
10,306,571
Total shareholders' equity
8,580,944
9,132,925
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY
$
27,222,638
$
27,324,051
CONSOLIDATED STATEMENTS OF CASH FLOWS
Three Months Ended
(Dollars in thousands)
2020
2019
(unaudited)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss)
$
16,612
$
354,551
Adjustments to reconcile net income to net cash provided by operating activities:
Decrease (increase) in premiums receivable
(119,548
)
(168,377
)
Decrease (increase) in funds held by reinsureds, net
(28,973
)
9,353
Decrease (increase) in reinsurance receivables
(130,593
)
34,556
Decrease (increase) in income taxes
(65,114
)
91,856
Decrease (increase) in prepaid reinsurance premiums
(10,572
)
(11,677
)
Increase (decrease) in reserve for losses and loss adjustment expenses
406,257
58,073
Increase (decrease) in future policy benefit reserve
(915
)
103
Increase (decrease) in unearned premiums
158,744
135,157
Increase (decrease) in other net payable to reinsurers
95,555
63,326
Increase (decrease) in losses in course of payment
(1,422
)
(66,714
)
Change in equity adjustments in limited partnerships
(8,512
)
(8,079
)
Distribution of limited partnership income
11,108
14,799
Change in other assets and liabilities, net
(45,259
)
30,152
Non-cash compensation expense
9,393
9,056
Amortization of bond premium (accrual of bond discount)
8,640
5,899
Net realized capital (gains) losses
210,588
(92,232
)
Net cash provided by (used in) operating activities
505,989
459,802
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from fixed maturities matured/called - available for sale, at market value
656,070
460,537
Proceeds from fixed maturities sold - available for sale, at market value
501,953
1,798,226
Proceeds from equity securities sold, at fair value
112,841
69,500
Distributions from other invested assets
104,085
54,692
Cost of fixed maturities acquired - available for sale, at market value
(1,359,281
)
(2,249,663
)
Cost of equity securities acquired, at fair value
(76,513
)
(146,435
)
Cost of other invested assets acquired
(152,269
)
(115,028
)
Net change in short-term investments
(27,882
)
(354,388
)
Net change in unsettled securities transactions
(17,185
)
49,809
Net cash provided by (used in) investing activities
(258,181
)
(432,750
)
CASH FLOWS FROM FINANCING ACTIVITIES:
Common shares issued during the period for share-based compensation, net of expense
(12,573
)
(8,288
)
Purchase of treasury shares
(200,020
)
(16,153
)
Dividends paid to shareholders
(63,277
)
(57,137
)
Proceeds from revolving credit borrowings
50,000
-
Cost of debt repurchase
(1,198
)
-
Cost of shares withheld on settlements of share-based compensation awards
(13,982
)
(11,443
)
Net cash provided by (used in) financing activities
(241,050
)
(93,021
)
EFFECT OF EXCHANGE RATE CHANGES ON CASH
2,832
(6,152
)
Net increase (decrease) in cash
9,590
(72,121
)
Cash, beginning of period
808,036
656,095
Cash, end of period
$
817,626
$
583,974
SUPPLEMENTAL CASH FLOW INFORMATION:
Income taxes paid (recovered)
$
4,920
$
(90,846
)
Interest paid
2,817
3,154
Media:
Group Head of
203.388.3977
Investors:
Head of Investor Relations
908.604.3169
Source:
(C) 2020 Electronic News Publishing, source