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Everest Re Group Reports Second Quarter 2021 Results

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Net Income of $680 Million

35% Growth in Gross Written Premium with an 89.3% Combined Ratio

HAMILTON, Bermuda, July 28, 2021--(BUSINESS WIRE)--Everest Re Group, Ltd. ("Everest" or the "Company") today reported its 2021 second quarter results.

Second Quarter 2021 Highlights

  • Net income of $680 million equal to $16.95 per share

  • Net operating income of $587 million, equal to $14.63 per share

  • Gross written premium growth of 35% and net written premium growth of 39%

  • GAAP calendar year combined ratio of 89.3%, an 8-point improvement year over year, and attritional combined ratio of 87.6%, a 0.9 point improvement year over year

  • Underwriting income of $274 million inclusive of pre-tax net catastrophe losses of $45 million primarily from several global events in the Quarter.

  • No change to Covid-19 Pandemic ("Pandemic") loss provision of $511 million

  • Operating cashflow of $724 million for the quarter

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

Net income and operating income

Q2

Year to Date

Q2

Year to Date

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

2021

2021

2020

2020

Everest Re Group

Net income

680.0

1,021.8

190.9

207.5

Net operating income (loss)

587.0

847.2

82.9

247.3

Net income per diluted common share

16.95

25.47

4.77

5.13

Net operating income per diluted common share

14.63

21.12

2.07

6.12

Net income annualized return on average equity

28.4%

21.6%

8.9%

4.7%

Net operating income annualized return on average equity

24.5%

17.9%

3.9%

5.6%

Period end equity and book value

Q2 2021

Year to Date

Q4 2020

Shareholders' equity

10,416.8

9,726.2

Book value per share

260.32

243.25

Change in BVPS adjusted for dividends

8.3%

Total Shareholder Return ("TSR") - Annualized

22.5%

Notes

1/ Refer to the reconciliation of net income to net operating income found on page 6 of this press release

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

"Everest had an excellent quarter across the board with very strong growth and outstanding underwriting and investment performance. These results serve as the foundation for our exceptional net income result of $1.02 billion through the first half of 2021 and are another important step toward achieving our strategic plan objectives. Everest achieved an annualized Total Shareholder Return ("TSR") of 22.5% through the first half of 2021, exceeding our strategic plan target of 13.0%. Everest capitalized on market opportunities to expand our franchises in both reinsurance and insurance, driven by the relentless execution of our strategies and the valuable risk solutions provided to our customers and broker partners. Our focus on disciplined underwriting drove strong profitability in both reinsurance and insurance across our global operations. Finally, the standout performance this quarter demonstrates the quality of Everest’s diversified earnings, and it is an important step toward achieving our strategic objectives and the commitments made to our shareholders."

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

Q2

Year to Date

Q2

Year to Date

Year on Year Change

All values in USD millions except for percentages

2021

2021

2020

2020

Q2

Year to Date

Gross written premium

3,190.1

6,121.6

2,369.3

4,940.2

34.6%

23.9%

Net written premium

2,809.4

5,363.3

2,017.5

4,219.0

39.3%

27.1%

Loss ratio

62.0%

66.7%

68.9%

69.6%

-6.9 pts

-2.9 pts

Commission and brokerage ratio

21.8%

21.2%

22.8%

22.4%

-1.0 pts

-1.2 pts

Other underwriting expenses

5.5%

5.7%

5.8%

6.1%

-0.3 pts

-0.4 pts

Combined ratio

89.3%

93.6%

97.5%

98.1%

-8.2 pts

-4.5 pts

Attritional combined ratio

87.6%

87.4%

88.5%

89.1%

-0.9 pts

-1.7 pts

Pre-tax net catastrophe losses

45.0

305.0

15.0

45.0

Pre-tax net covid losses

-

-

160.0

310.0

Pre-tax net prior year reserve development

(2.6)

(4.5)

5.3

2.7

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

Reinsurance segment

  • The reinsurance segment recorded 40% growth in gross written premiums for the quarter. This growth reflects the strength of the Everest global franchise, as we saw broad demand for our reinsurance solutions in the US and across the world, notably in Europe, Bermuda, London, and Latin America.

  • Our growth was well balanced by product line and geography and illustrates our ability to deploy capital strategically in attractive markets and in attractive and diversifying product lines.

  • We had favorable renewals at April 1 and June 1 and we continue to write a stronger, less volatile, more diversified, and more profitable book on a risk adjusted basis.

Underwriting information - Reinsurance segment

Q2

Year to Date

Q2

Year to Date

Year on Year Change

All values in USD millions except for percentages

2021

2021

2020

2020

Q2

Year to Date

Gross written premium

2,148.2

4,207.3

1,538.3

3,316.1

39.6%

26.9%

Net written premium

2,059.9

3,972.9

1,424.1

3,037.2

44.6%

30.8%

Loss ratio

60.8%

66.0%

67.0%

67.8%

-6.2 pts

-1.8 pts

Commission and brokerage ratio

24.6%

23.8%

25.8%

25.4%

-1.2 pts

-1.6 pts

Other underwriting expenses

2.5%

2.7%

2.6%

2.8%

-0.1 pts

-0.1 pts

Combined ratio

87.9%

92.5%

95.4%

96.0%

-7.5 pts

-3.5 pts

Attritional combined ratio

86.1%

85.8%

86.7%

87.2%

-0.6 pts

-1.4 pts

Pre-tax net catastrophe losses

35.0

247.5

-

24.5

Pre-tax net covid losses

-

-

131.0

241.0

Pre-tax net prior year reserve development

(1.4)

(3.3)

0.8

(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

  • Everest Insurance reported our first ever quarter with over $1.0 billion in gross written premium, reflecting 25% growth year over year. New business in North America was the most significant contributor to this growth, as the economy regains momentum and our responsive and focused product offerings continue to resonate with our broker partners and insureds.

  • We continue to expand our margins and the attritional loss ratio improvement for the quarter reflects the continuing success of our nimble and disciplined underwriting process, reacting quickly to market conditions to best position our portfolio for long term profitability.

Underwriting information - Insurance segment

Q2

Year to Date

Q2

Year to Date

Year on Year Change

All values in USD millions except for percentages

2021

2021

2020

2020

Q2

Year to Date

Gross written premium

1,041.9

1,914.3

831.0

1,624.1

25.4%

17.9%

Net written premium

749.5

1,390.5

593.4

1,181.8

26.3%

17.7%

Loss ratio

65.6%

68.7%

74.3%

74.3%

-8.7 pts

-5.6 pts

Commission and brokerage ratio

13.3%

13.2%

14.6%

14.4%

-1.3 pts

-1.2 pts

Other underwriting expenses

14.6%

14.8%

14.5%

15.0%

0.1 pts

-0.2 pts

Combined ratio

93.5%

96.7%

103.4%

103.7%

-9.9 pts

-7.0 pts

Attritional combined ratio

92.1%

92.2%

93.7%

94.3%

-1.6 pts

-2.1 pts

Pre-tax net catastrophe losses

10.0

57.5

15.0

20.5

Pre-tax net covid losses

-

-

29.0

69.0

Pre-tax net prior year reserve development

(1.2)

(1.2)

4.5

4.6

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

  • Net investment income of $407 million for the quarter including alternative investment gains of $266 million for the quarter

  • Total invested assets and cash of $27.1 billion at June 30, 2021, 6.3% growth versus year end 2020

  • Shareholders’ equity of $10.4 billion as of June 30, 2021

  • Book value per diluted share of $260.32 at June 30, 2021

  • Common share dividends declared and paid in the quarter of $1.55 per share, equal to $62.0 million

  • Common share repurchases of $16.8 million during the quarter, representing 68,100 shares at an average price of $246.44 per share

Equity and Book Value per Share

Q2

Year to Date

Q2

Year to Date

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

2021

2021

2020

2020

Beginning shareholders' equity

9,682.9

9,726.2

8,580.9

9,132.9

Net income

680.0

1,021.8

190.9

207.5

Change in investment unrealized gains (URAD)

85.8

(206.5)

544.5

296.5

Dividends to shareholders

(62.0)

(124.3)

(61.9)

(125.2)

Purchase of treasury shares

(16.8)

(40.3)

-

(200.0)

Other

46.9

39.9

31.9

(25.4)

Ending shareholders' equity

10,416.8

10,416.8

9,286.3

9,286.3

Diluted common shares outstanding

40.0

40.0

40.0

40.0

Book value per diluted common share

260.32

260.32

232.32

232.32

Common share dividends paid - last 12 months

6.20

6.20

6.05

6.05

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 July 29, 2021. 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/Financial Reports/Quarterly Reports" 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 realized capital gains (losses) and after-tax net foreign exchange income (expense) as the following reconciliation displays:

Three Months Ended June 30,

Six Months Ended June 30,

(Dollars in thousands, except per share amounts)

2021

2020

2021

2020

(unaudited)

(unaudited)

Per Diluted

Per Diluted

Amount

Share

Amount

Share

Amount

Share

Amount

Share

Net income (loss)

$

679,982

$

16.95

$

190,880

$

4.77

$

1,021,844

$

25.47

$

207,492

$

5.13

After-tax net realized capital gains (losses)

$

83,752

$

2.09

$

150,519

$

3.76

$

113,787

$

2.84

$

(21,844

)

$

(0.54

)

After-tax net foreign exchange income (expense)

$

9,222

$

0.23

$

(42,528

)

$

(1.06

)

$

60,840

$

1.52

$

(17,924

)

$

(0.44

)

After-tax operating income (loss)

$

587,008

$

14.63

$

82,889

$

2.07

$

847,217

$

21.12

$

247,260

$

6.12

(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

Six Months Ended

June 30,

June 30,

(Dollars in thousands, except per share amounts)

2021

2020

2021

2020

(unaudited)

(unaudited)

REVENUES:

Premiums earned

$

2,558,372

$

2,042,405

$

4,946,237

$

4,079,219

Net investment income

407,095

38,083

667,508

185,883

Net realized capital gains (losses):

Credit allowances on fixed maturity securities

(15,927

)

(4,063

)

(22,904

)

(25,837

)

Other net realized capital gains (losses)

120,036

188,711

165,915

(103

)

Total net realized capital gains (losses)

104,109

184,648

143,011

(25,940

)

Other income (expense)

7,114

(20,621

)

63,707

(12,631

)

Total revenues

3,076,690

2,244,515

5,820,463

4,226,531

CLAIMS AND EXPENSES:

Incurred losses and loss adjustment expenses

1,586,141

1,407,016

3,297,560

2,837,856

Commission, brokerage, taxes and fees

557,749

466,316

1,046,760

914,838

Other underwriting expenses

140,844

118,130

283,075

246,990

Corporate expenses

16,168

8,733

28,546

18,566

Interest, fees and bond issue cost amortization expense

15,607

7,253

31,246

14,836

Total claims and expenses

2,316,509

2,007,448

4,687,187

4,033,086

INCOME (LOSS) BEFORE TAXES

760,181

237,067

1,133,276

193,445

Income tax expense (benefit)

80,199

46,187

111,432

(14,047

)

NET INCOME (LOSS)

$

679,982

$

190,880

$

1,021,844

$

207,492

Other comprehensive income (loss), net of tax:

Unrealized appreciation (depreciation) ("URA(D)") on securities arising during the period

84,171

551,753

(204,444

)

272,354

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

1,590

(7,257

)

(2,076

)

24,142

Total URA(D) on securities arising during the period

85,761

544,496

(206,520

)

296,496

Foreign currency translation adjustments

34,295

20,586

24,713

(30,238

)

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

2,043

1,806

4,086

2,726

Total benefit plan net gain (loss) for the period

2,043

1,806

4,086

2,726

Total other comprehensive income (loss), net of tax

122,099

566,888

(177,721

)

268,984

COMPREHENSIVE INCOME (LOSS)

$

802,081

$

757,768

$

844,123

$

476,476

EARNINGS PER COMMON SHARE:

Basic

$

16.97

$

4.78

$

25.50

$

5.14

Diluted

16.95

4.77

25.47

5.13

EVEREST RE GROUP, LTD.

CONSOLIDATED BALANCE SHEETS

June 30,

December 31,

(Dollars and share amounts in thousands, except par value per share)

2021

2020

(unaudited)

ASSETS:

Fixed maturities - available for sale, at market value

$

21,275,199

$

20,040,173

(amortized cost: 2021, $20,718,717; 2020, $19,225,067, credit allowances: 2021, ($24,650); 2020, ($1,745))

Equity securities, at fair value

1,485,833

1,472,236

Short-term investments (cost: 2021, $629,943; 2020, $1,135,088)

629,943

1,134,950

Other invested assets (cost: 2021, $2,558,631; 2020, $2,012,581)

2,558,631

2,012,581

Cash

1,106,345

801,651

Total investments and cash

27,055,951

25,461,591

Accrued investment income

170,907

141,304

Premiums receivable

3,199,024

2,680,562

Reinsurance receivables

2,032,363

1,994,555

Funds held by reinsureds

798,780

716,655

Deferred acquisition costs

748,897

622,053

Prepaid reinsurance premiums

495,657

412,015

Income taxes net recoverable

-

17,253

Other assets

868,477

742,369

TOTAL ASSETS

$

35,370,056

$

32,788,357

LIABILITIES:

Reserve for losses and loss adjustment expenses

17,645,762

16,398,997

Future policy benefit reserve

36,497

37,723

Unearned premium reserve

4,024,050

3,501,359

Funds held under reinsurance treaties

17,520

15,807

Other net payable to reinsurers

379,524

294,347

Losses in course of payment

198,352

127,971

Senior notes due 6/1/2044

397,254

397,194

Senior notes due 10/1/2050

979,784

979,524

Long term notes due 5/1/2067

223,724

223,674

Borrowings from FHLB

310,000

310,000

Accrued interest on debt and borrowings

9,641

10,460

Unsettled securities payable

124,559

206,693

Income taxes net payable

35,089

-

Other liabilities

571,511

558,432

Total liabilities

24,953,267

23,062,181

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; (2021) 69,817

and (2020) 69,620 outstanding before treasury shares

698

696

Additional paid-in capital

2,256,390

2,245,301

Accumulated other comprehensive income (loss), net of deferred income tax expense

(benefit) of $56,797 at 2021 and $80,451 at 2020

357,178

534,899

Treasury shares, at cost; 29,802 shares (2021) and 29,636 shares (2020)

(3,662,499

)

(3,622,172

)

Retained earnings

11,465,022

10,567,452

Total shareholders' equity

10,416,789

9,726,176

TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY

$

35,370,056

$

32,788,357

EVEREST RE GROUP, LTD.

CONSOLIDATED STATEMENTS OF CASH FLOWS

Six Months Ended

June 30,

(Dollars in thousands)

2021

2020

(unaudited)

CASH FLOWS FROM OPERATING ACTIVITIES:

Net income (loss)

$

1,021,844

$

207,492

Adjustments to reconcile net income to net cash provided by operating activities:

Decrease (increase) in premiums receivable

(499,647

)

(252,609

)

Decrease (increase) in funds held by reinsureds, net

(79,485

)

(23,498

)

Decrease (increase) in reinsurance receivables

15,836

(147,515

)

Decrease (increase) in income taxes

76,452

(25,000

)

Decrease (increase) in prepaid reinsurance premiums

(71,566

)

(29,699

)

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

1,144,620

800,816

Increase (decrease) in future policy benefit reserve

(1,226

)

(1,933

)

Increase (decrease) in unearned premiums

500,077

159,744

Increase (decrease) in other net payable to reinsurers

72,850

89,499

Increase (decrease) in losses in course of payment

70,653

147,427

Change in equity adjustments in limited partnerships

(377,120

)

84,066

Distribution of limited partnership income

49,053

40,447

Change in other assets and liabilities, net

(211,735

)

(10,313

)

Non-cash compensation expense

22,439

19,175

Amortization of bond premium (accrual of bond discount)

37,928

20,547

Net realized capital (gains) losses

(143,011

)

25,940

Net cash provided by (used in) operating activities

1,627,962

1,104,586

CASH FLOWS FROM INVESTING ACTIVITIES:

Proceeds from fixed maturities matured/called - available for sale, at market value

1,897,536

1,261,650

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

599,737

990,273

Proceeds from equity securities sold, at fair value

474,663

213,185

Distributions from other invested assets

112,398

164,975

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

(3,949,973

)

(2,301,701

)

Cost of equity securities acquired, at fair value

(360,016

)

(224,086

)

Cost of other invested assets acquired

(309,691

)

(343,332

)

Net change in short-term investments

506,285

(439,457

)

Net change in unsettled securities transactions

(103,527

)

49,504

Net cash provided by (used in) investing activities

(1,132,588

)

(628,989

)

CASH FLOWS FROM FINANCING ACTIVITIES:

Common shares issued during the period for share-based compensation, net of expense

(11,349

)

(12,841

)

Purchase of treasury shares

(40,328

)

(200,019

)

Dividends paid to shareholders

(124,274

)

(125,205

)

Cost of debt repurchase

-

(10,647

)

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

(13,713

)

(14,141

)

Net cash provided by (used in) financing activities

(189,664

)

(362,853

)

EFFECT OF EXCHANGE RATE CHANGES ON CASH

(1,016

)

1,699

Net increase (decrease) in cash

304,694

114,443

Cash, beginning of period

801,651

808,036

Cash, end of period

$

1,106,345

$

922,479

SUPPLEMENTAL CASH FLOW INFORMATION:

Income taxes paid (recovered)

$

34,780

$

10,895

Interest paid

31,695

14,992

View source version on businesswire.com: https://www.businesswire.com/news/home/20210728005986/en/

Contacts

Investors and Media:
Jon Levenson
Head of Investor Relations
Everest Global Services, Inc.
908.604.3169