Everest Re Group, Ltd. (NYSE: RE) reported second quarter 2008 after-tax operating income¹, which excludes realized capital gains and losses, of $180.0 million, or $2.90 per diluted share, compared to after-tax operating income¹ of $213.3 million, or $3.36 per diluted share, in the second quarter of 2007. Net income, including net realized capital gains and losses, was $153.0 million, or $2.47 per diluted share, for the second quarter of 2008 compared to $282.9 million, or $4.45 per diluted share, for the same period last year.

For the six months ended June 30, 2008, after-tax operating income was $370.6 million, or $5.94 per diluted share, compared to $481.2 million, or $7.50 per diluted share, for the six months ended June 30, 2007. Net income, including realized capital gains and losses was $231.0 million in the first six months of 2008, or $3.70 per diluted share, compared to $580.5 million or $9.05 per diluted share, for the first six months of 2007.

Operating highlights for the second quarter of 2008 included the following:

• Gross written premiums of $905.3 million decreased 3% from the same period in 2007. Reinsurance premiums, across all segments, were down 8% while the Insurance segment’s premiums increased 18%. The ramp up of several new specialty programs has provided the strong growth in insurance, partially offsetting the impact of lower writings due to softening reinsurance markets, particularly in the U.S.
• Net investment income was down 2% to $175.9 million compared to $179.7 million for the second quarter of 2007. The reduction primarily resulted from a slight reduction in the average yield on the fixed income portfolio.
• Cash flow from operations was negative $18.4 million for the period compared to positive $100.4 million for the second quarter of 2007. Lower premium collections and several large claim settlements contributed to this negative swing. On a year-to-date basis, cash flow from operations was $232.3 million as compared to $262.7 million in the prior year.
• The GAAP combined ratio in the second quarter was 94.4% compared to 89.2% in the same period last year.
• Net adverse reserve development was $54.2 million pre-tax for the quarter compared to unfavorable development of $2.4 million in the second quarter of 2007. The Company increased its reserves for the runoff of its subprime auto loan credit insurance program, resulting in an after-tax charge of $45.5 million in the quarter.
• For the quarter, the annualized after-tax operating income¹ return on average adjusted shareholders’ equity² was 12.8% compared to 16.2% in 2007.
• Shareholders’ equity ended the quarter at $5.6 billion down from $5.7 billion at year-end, after year-to-date share repurchases of $125.7 million and dividend payouts of $59.7 million. Book value per share moved down from $90.43 to $90.32 over this same period.
• Since year end 2007, the Company has repurchased 1.3 million of its common shares at an average price of $94.52. Since January 2007, the Company has repurchased 3.9 million of its common shares at an average price of $95.21. The total cost to date of the repurchased shares under this program is $367.3 million. The repurchases were made pursuant to a 5 million share repurchase authorization provided by the Company’s Board of Directors, leaving 1.1 million shares available under the authorization. Moreover, the Company's share repurchase authorization has been increased by an additional 5 million shares allowing for the repurchase of up to 6.1 million shares.

During the quarter, the Company recorded an after-tax charge of $45.5 million ($0.73 per diluted share) due to deterioration in the runoff experience on the Centrix subprime auto loan credit insurance program. Weakening U.S. economic fundamentals are the primary driver behind this action as higher than expected default rates and higher than expected average claim amounts, due to declining used car values, have negatively impacted the loss trends on the runoff of this program.

This program has been in runoff since December 31, 2005, and the Company has not written any other similar business. Subsequent to June 30, 2008, the Company settled its potential claim liability with the largest policyholder under this program. As of June 30, 2008, after giving effect to this settlement, only 9% of the originally insured portfolio remains. The related reserve for future losses is $51 million, which provides for a default rate of 30% on the remaining active loans. The remaining active insured loans have persisted for 47 months, on average, and 93% were either current or less than 60 days past due at June 30. Management believes this action recognizes the ultimate runoff liability in light of current conditions. Moreover, future loss development, if any, on this program will not be material given the magnitude of the reserve for future losses, the maturity of the loan portfolio and the reduced principal exposure.

Commenting on the Company’s results, Chairman and Chief Executive Officer, Joseph V. Taranto said, “Our core business continues to perform very well as we maintain disciplined underwriting in an increasingly competitive marketplace.”

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 fluctuations, trends in insured and paid losses, catastrophes, 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.

Everest Re Group, Ltd. is a Bermuda holding company that operates through the following subsidiaries: Everest Reinsurance Company provides reinsurance to property and casualty insurers in both the U.S. and international markets. Everest Reinsurance (Bermuda), Ltd., including through its branch in the United Kingdom, provides reinsurance and insurance to worldwide property and casualty markets and reinsurance to life insurers. Everest National Insurance Company and Everest Security Insurance Company provide property and casualty insurance to policyholders in the U.S. Everest Indemnity Insurance Company offers excess and surplus lines insurance in the U.S. Additional information on Everest Re Group companies can be found at the Group’s web site at www.everestre.com.

A conference call discussing the first quarter results will be held at 8:30 a.m. Eastern Time on July 22, 2008. The call will be available on the Internet through the Company’s web site or at www.streetevents.com.

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.

¹The Company generally uses after-tax operating income, a non-GAAP financial measure, to evaluate its performance. After-tax operating income consists of net income excluding after-tax net realized capital gains (losses) as the following reconciliation displays:

Although net realized capital gains (losses) are an integral part of the Company’s insurance operations, the determination of net realized capital gains (losses) is independent of the insurance underwriting process. The Company believes that the level of net realized gains (losses) 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 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 in their analyses for the reasons discussed above. The Company provides after-tax operating income to investors so that they have what management believes to be a useful supplement to GAAP information concerning the Company’s performance.

²Adjusted shareholders’ equity excludes net after-tax unrealized (appreciation) depreciation of investments.