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MarketScreener Homepage  >  Equities  >  Nyse  >  Everest Re Group, Ltd.    RE   BMG3223R1088

EVEREST RE GROUP, LTD.

(RE)
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Everest Re : Reports Third Quarter 2020 Results; Net Income of $243.1 Million and 16% Growth in Gross Written Premium Year Over Year

10/29/2020 | 03:23pm EST

  • Net income available to Everest common shareholders of $243.1 million, equal to $6.07 per diluted common share, an 11.0% annualized return on average common equity
  • Gross written premium of $2.8 billion, reflecting growth of 16% over the same quarter in 2019, comprised of Reinsurance segment growth of 20% and Insurance segment growth of 6%. Growth was driven by continued rate acceleration, new business opportunities and increased share with existing customers
  • An attritional combined ratio excluding the impact of catastrophe and Covid-19 pandemic losses of 85.8%, an improvement vs. the 87.1% for the same quarter in 2019
  • Net investment income of $234.2 million
  • Net operating income available to Everest common shareholders of $97.0 million, equal to $2.42 per diluted common share, a 4.4% annualized operating return on average common equity

Everest Re Group, Ltd. (“Everest” or the “Company”) today reported that for the three months ended September 30, 2020, net income was $243.1 million, or $6.07 per diluted common share, compared to net income of $104.4 million, or $2.56 per diluted common share, for the three months ended September 30, 2019. After-tax operating income¹ for the quarter was $97.0 million, or $2.42 per diluted common share, compared to after-tax operating income¹ of $138.4 million, or $3.39 per diluted common share, for the same period in 2019.

Everest Re Group President & CEO Juan C. Andrade commented: “Everest is benefitting from a flight to quality and strength in the reinsurance and insurance markets. This is an underwriter’s market. Our broadly diversified reinsurance and insurance franchises, our financial strength, deep distribution relationships, and our focus on providing solutions to our customers position us well for this environment. Everest’s core strength is evidenced by our third quarter 2020 results where we achieved 16% growth in gross written premium, an improved attritional combined ratio of 85.8% and net income of $243 million.”

Group Quarterly Results

  • Excluding the catastrophe and Covid-19 Pandemic (“Pandemic”) losses, the Company reported an attritional combined ratio of 85.8%, as compared to 87.1% in the same period during 2019.
  • Pre-tax catastrophe losses in the amount of $300 million, this amount is net of reinsurance and reinstatement premiums. These losses include the impact of Hurricanes Laura, Isaias and Sally, wildfires in California and Oregon, and other events including the Midwest United States Derecho windstorm.
  • $125 million of net pre-tax losses related to the Pandemic, primarily IBNR and attributed $110 million to reinsurance and $15 million to insurance. To date, Everest has incurred $435 million of losses related to the Pandemic.

Segmental Quarterly Results

Reinsurance segment

  • Gross written premiums of $2.1 billion, a 20% increase over the same period in 2019
  • Strong premium growth in facultative risk and property and casualty treaty reinsurance in the US, Canada, and Latin America
  • Attritional combined ratio of 83.0%, excluding catastrophe and Pandemic losses vs. the prior year comparative figure of 84.0%
  • Combined ratio of 105.4%, which included catastrophe losses of 16.3% and Pandemic losses of 6.7%
  • Pre-tax catastrophe losses of $262.7 million, net of reinsurance and reinstatement premiums, and pre-tax net pandemic losses of $110 million

Insurance segment

  • Gross written premiums of $705 million, a 6% increase over the same period in 2019
  • Strong renewal rate change of 19% excluding Worker’s Comp and 13% across all lines
  • Attritional combined ratio of 94.2%, excluding catastrophe and Pandemic, vs. the prior year comparative figure of 96.0%
  • Combined ratio of 104.5%, which included catastrophe losses of 7.0% and Pandemic losses of 3.4%
  • Pre-tax catastrophe losses of $37.5 million, net of reinsurance and reinstatement premiums, and pre-tax net pandemic losses of $15.0 million

Balance Sheet and Investments

  • Shareholders’ equity increased to a record $9.6 billion
  • Book value per diluted share of $239.98, up 9.3% on a dividend adjusted basis since year end 2019
  • Net investment income of $234.2 million includes limited partnership gains of $88.8 million. Note that net investment income from limited partnerships is generally subject to a quarterly reporting lag, with current quarter results reflective of the rebound in US and global equity markets during the second quarter of 2020
  • Net after-tax realized gains of $88.9 million for the quarter, with net after-tax unrealized gains of $52.0 million
  • Cash flow from operations of $1.1 billion for the quarter
  • Common share dividends declared and paid of $1.55 per share, equal to $61.9 million
  • The Company repurchased no common shares in the quarter

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 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 second quarter results will be held at 8:00 a.m. Eastern Time on October 30, 2020. 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 “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   Nine Months Ended
  September 30,   September 30,
(Dollars in thousands, except per share amounts)

2020

 

2019

 

2020

 

2019

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

 $   243,057

 

 $       6.07

 

 $   104,398

 

 $        2.56

 

 $          450,549

 

 $     11.18

 

 $   791,817

 

 $       19.38

After-tax net realized capital gains (losses)

        88,911

 

          2.22

 

      (10,143)

 

          (0.25)

 

              67,067

 

          1.66

 

        89,756

 

           2.20

After-tax net foreign exchange income (expense)

        57,157

 

          1.43

 

      (23,821)

 

          (0.58)

 

              39,233

 

          0.97

 

      (39,530)

 

          (0.97)

                               
After-tax operating income (loss)

 $     96,989

 

 $       2.42

 

 $   138,362

 

 $        3.39

 

 $          344,249

 

 $       8.54

 

 $   741,592

 

 $       18.15

                               
(Some amounts may not reconcile due to rounding.)                              

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--

 
EVEREST RE GROUP, LTD.
CONSOLIDATED STATEMENTS OF OPERATIONS
AND COMPREHENSIVE INCOME (LOSS)
 
 
Three Months Ended  Nine Months Ended 
September 30, September 30,
(Dollars in thousands, except per share amounts)

2020

 

2019

 

2020

 

2019

(unaudited) (unaudited)
REVENUES:
Premiums earned 

 $   2,205,811

 $   1,905,619

 $   6,285,030

 $   5,455,615

Net investment income

         234,233

         181,058

         420,116

         501,062

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

              6,196

                        -

          (19,641)

                        -

Other-than-temporary impairments on fixed maturity securities

                        -

             (7,314)

                        -

          (15,404)

Other net realized capital gains (losses)

         104,007

             (5,629)

         103,904

         124,965

Total net realized capital gains (losses)

         110,203

          (12,943)

            84,263

         109,561

Net derivative gain (loss)

              2,456

                (189)

             (1,048)

              3,395

Other income (expense)

            57,481

          (31,025)

            48,354

          (52,550)

Total revenues

      2,610,184

      2,042,520

      6,836,715

      6,017,083

 
CLAIMS AND EXPENSES:
Incurred losses and loss adjustment expenses 

      1,736,210

1,371,924

      4,574,066

3,515,104

Commission, brokerage, taxes and fees

         445,332

443,076

      1,360,170

1,253,500

Other underwriting expenses  

         138,875

118,158

         385,865

321,976

Corporate expenses

            10,618

8,435

            29,184

22,622

Interest, fees and bond issue cost amortization expense

              6,641

7,907

            21,477

23,972

Total claims and expenses

      2,337,676

      1,949,500

      6,370,762

      5,137,174

 
INCOME (LOSS) BEFORE TAXES

         272,508

            93,020

         465,953

         879,909

Income tax expense (benefit)

            29,451

(11,378)

            15,404

88,092

 
NET INCOME (LOSS)

 $      243,057

 $      104,398

 $      450,549

 $      791,817

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

            63,480

            93,765

         335,835

         524,589

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

          (11,453)

                (529)

            12,689

             (4,220)

Total URA(D) on securities arising during the period

            52,027

            93,236

         348,524

         520,369

 
Foreign currency translation adjustments

            60,628

             (3,426)

            30,390

          (15,206)

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

              1,806

              1,363

              4,532

              3,665

Total benefit plan net gain (loss) for the period

              1,806

              1,363

              4,532

              3,665

Total other comprehensive income (loss), net of tax

         114,461

            91,173

         383,446

         508,828

 
COMPREHENSIVE INCOME (LOSS)

 $      357,518

 $      195,571

 $      833,995

 $   1,300,645

 
EARNINGS PER COMMON SHARE:
Basic

 $             6.08

 $             2.56

 $           11.20

 $           19.44

Diluted

                 6.07

                 2.56

              11.18

              19.38

EVEREST RE GROUP, LTD.
CONSOLIDATED BALANCE SHEETS
 
 

 September 30, 

 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

 $     17,856,377

 $     16,824,944

(amortized cost: 2020, $17,131,414; 2019, $16,473,491, credit allowances: 2020, $19,641; 2019, $0)
Fixed maturities - available for sale, at fair value

                   3,748

                   5,826

Equity securities, at fair value

           1,173,162

              931,457

Short-term investments (cost: 2020, $1,221,198; 2019, $414,639)

           1,220,753

              414,706

Other invested assets (cost: 2020, $1,911,757; 2019, $1,763,531)

           1,911,757

           1,763,531

Cash

              938,881

              808,036

Total investments and cash

        23,104,678

        20,748,500

Accrued investment income

              132,513

              116,804

Premiums receivable

           2,611,036

           2,259,088

Reinsurance receivables 

           1,923,012

           1,763,471

Funds held by reinsureds

              548,940

              489,901

Deferred acquisition costs

              601,784

              581,863

Prepaid reinsurance premiums

              455,961

              445,716

Income taxes

                 77,761

              305,711

Other assets

              697,342

              612,997

TOTAL ASSETS

 $     30,153,027

 $     27,324,051

 
LIABILITIES:
Reserve for losses and loss adjustment expenses

        15,233,125

        13,611,313

Future policy benefit reserve

                 40,374

                 42,592

Unearned premium reserve

           3,447,455

           3,056,735

Funds held under reinsurance treaties

                 15,931

                 10,668

Other net payable to reinsurers

              364,654

              291,660

Losses in course of payment

              184,894

                 51,950

Senior notes due 6/1/2044

              397,164

              397,074

Long term notes due 5/1/2067

              223,649

              236,758

Borrowings from FHLB

                 90,000

                             -

Accrued interest on debt and borrowings

                   7,215

                   2,878

Equity index put option liability

                   6,632

                   5,584

Unsettled securities payable

              119,869

                 30,650

Other liabilities

              430,773

              453,264

Total liabilities

        20,561,735

        18,191,126

 
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; (2020) 69,603
and (2019) 69,464 outstanding before treasury shares

                      696

                      694

Additional paid-in capital

           2,235,378

           2,219,660

Accumulated other comprehensive income (loss), net of deferred income tax expense
(benefit) of $74,481 at 2020 and $30,996 at 2019

              411,598

                 28,152

Treasury shares, at cost; 29,636 shares (2020) and 28,665 shares (2019)

         (3,622,172)

         (3,422,152)

Retained earnings

        10,565,792

        10,306,571

Total shareholders' equity 

           9,591,292

           9,132,925

TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY

 $     30,153,027

 $     27,324,051

EVEREST RE GROUP, LTD.
CONSOLIDATED STATEMENTS OF CASH FLOWS  
 
 

Nine Months Ended 

September 30,

(Dollars in thousands)

2020

 

2019

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

 $        450,549

 $        791,817

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

          (357,162)

          (219,637)

Decrease (increase) in funds held by reinsureds, net

            (53,878)

            (17,961)

Decrease (increase) in reinsurance receivables

          (172,454)

            (42,891)

Decrease (increase) in income taxes

           184,311

           168,360

Decrease (increase) in prepaid reinsurance premiums

               (7,963)

          (145,846)

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

        1,665,982

           553,668

Increase (decrease) in future policy benefit reserve

               (2,218)

               (2,502)

Increase (decrease) in unearned premiums

           392,904

           388,597

Increase (decrease) in other net payable to reinsurers

              68,784

           160,306

Increase (decrease) in losses in course of payment

           132,208

               (6,438)

Change in equity adjustments in limited partnerships

            (12,475)

          (104,987)

Distribution of limited partnership income

              55,576

              62,359

Change in other assets and liabilities, net

          (131,224)

            (37,449)

Non-cash compensation expense 

              29,337

              25,386

Amortization of bond premium (accrual of bond discount)

              32,594

              23,642

Net realized capital (gains) losses 

            (84,263)

          (109,561)

Net cash provided by (used in) operating activities

        2,190,608

        1,486,863

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

        1,781,821

        1,631,298

Proceeds from fixed maturities sold - available for sale, at market value

        1,390,747

        2,589,232

Proceeds from fixed maturities sold - available for sale, at fair value

                2,054

                2,706

Proceeds from equity securities sold, at fair value

           329,750

           185,157

Distributions from other invested assets

           210,527

           215,800

Cost of fixed maturities acquired - available for sale, at market value

       (3,874,890)

       (5,039,728)

Cost of equity securities acquired, at fair value

          (460,953)

          (269,969)

Cost of other invested assets acquired

          (392,650)

          (299,480)

Net change in short-term investments

          (804,744)

          (213,048)

Net change in unsettled securities transactions

              89,064

            (13,770)

Net cash provided by (used in) investing activities

       (1,729,274)

       (1,211,802)

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

            (13,617)

               (7,836)

Purchase of treasury shares

          (200,020)

            (24,604)

Dividends paid to shareholders

          (187,110)

          (171,131)

Cost of debt repurchase

            (10,647)

                          -

FHLB advances (repayments)

              90,000

                          -

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

            (15,298)

            (12,473)

Net cash provided by (used in) financing activities

          (336,692)

          (216,044)

 
EFFECT OF EXCHANGE RATE CHANGES ON CASH

                6,203

                2,060

 
Net increase (decrease) in cash

           130,845

              61,077

Cash, beginning of period

           808,036

           656,095

Cash, end of period

 $        938,881

 $        717,172

 
SUPPLEMENTAL CASH FLOW INFORMATION:
Income taxes paid (recovered)

 $       (169,149)

 $         (80,544)

Interest paid 

              16,731

              19,078

 


© Business Wire 2020
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Financials (USD)
Sales 2020 - - -
Net income 2020 647 M - -
Net Debt 2020 - - -
P/E ratio 2020 14,2x
Yield 2020 2,72%
Capitalization 9 149 M 9 149 M -
Capi. / Sales 2020 -
Capi. / Sales 2021 -
Nbr of Employees 1 603
Free-Float 56,4%
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Technical analysis trends EVEREST RE GROUP, LTD.
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Income Statement Evolution
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Mean consensus OUTPERFORM
Number of Analysts 9
Average target price 264,78 $
Last Close Price 228,92 $
Spread / Highest target 34,5%
Spread / Average Target 15,7%
Spread / Lowest Target 2,66%
EPS Revisions
Managers and Directors
NameTitle
Juan C. Andrade President, Chief Executive Officer & Director
Joseph V. Taranto Chairman
Jim Williamson Chief Operating Officer & Executive Vice President
Mark Kociancic Chief Financial Officer & Executive Vice President
Ralph H. Groce Chief Information Officer & Senior Vice President
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