Everest Re Group, Ltd. (NYSE: RE) reported first quarter 2009 after-tax operating income¹, which excludes realized capital gains and losses and gain on debt repurchase, of $106.1 million, or $1.73 per diluted share, compared to after-tax operating income¹ of $190.6 million, or $3.03 per diluted share, in the first quarter of 2008. Net income, including net realized capital gains and losses and the gain on debt repurchase, was $108.6 million, or $1.77 per diluted share, for the first quarter of 2009 compared to $77.9 million, or $1.24 per diluted share, for the same period last year.

Operating highlights for the first quarter of 2009 included the following:

• Gross written premiums increased 14% to $997.8 million in 2009 from $877.5 million in the first quarter of 2008. Globally, reinsurance premiums were up almost 19% while insurance premiums were down 3%. International reinsurance business, across almost all regions, saw the largest increases, despite period over period currency devaluations relative to strengthening of the U.S. dollar. The U.S. Reinsurance segment also saw growth with new business opportunities in select markets such as crop hail and treaty casualty. Improving conditions across most markets, due to shrinking capacity and financial security concerns, are catalysts for growth.
• The GAAP combined ratio in the first quarter was 89.7% compared to 89.1% in the same period last year. The current year attritional loss ratio, which excludes prior year development and catastrophe losses, was up slightly from 55.2% in the first quarter last year to 55.6% in the current quarter. Reserve development and catastrophe losses in both periods were modest.
• Net investment income was $68.8 million compared to $150.1 million in the first quarter of 2008. The reduction primarily resulted from losses of $72.9 million on limited partnership investments, whose results are generally received on a one quarter lag. Most of this loss emanated from the reported fourth quarter results of private equity partnerships. Excluding the impact of limited partnership investments, investment income was down 9% compared to the first quarter of 2008.
• Net loss on derivatives totaled $19.7 million for the quarter compared to $3.8 million in the same period last year.
• Net after-tax realized capital losses totaled $48.5 million compared to $112.7 million in the first quarter of 2008. The current quarter loss was primarily due to the sale of long dated financial sector bonds, where the accumulated exposures of merged banking entities exceeded the Company’s risk tolerance levels for a single issuer. Included in the 2009 net after-tax realized capital losses were other-than-temporary impairments of $7.6 million.
• During the quarter, the Company completed a cash tender offer for the purchase of its 6.6% Fixed to Floating Rate Long Term Subordinated Notes (“LoTS^SM”) due 2067. It purchased approximately 40% of the outstanding notes, reducing debt by $161.3 million at an approximate cost of $83 million. This transaction resulted in an after-tax gain of $50.9 million.
• For the quarter, the annualized after-tax operating income¹ return on average adjusted shareholders’ equity² was 8.3% compared to 13.6% in 2008.
• Cash flow from operations was $180.5 million for the period compared to $250.6 million for the first quarter of 2008. Higher paid losses in the current quarter compared to last year resulted in this reduction although last year’s level of paid losses was unusually low compared to all subsequent quarters due to the timing on settlement of accounts.
• Shareholders’ equity ended the quarter at $5.0 billion, up $79 million from year end 2008. Net income of $108.6 million and after-tax unrealized gains of $46.9 million were offset by foreign currency translation adjustments of $49.7 million and shareholder dividend payments of $29.5 million. Book value per share ended the quarter at $81.89, up 1.4% from $80.77 at December 31, 2008.

Commenting on the Company’s results, Chairman and Chief Executive Officer, Joseph V. Taranto said, “We are pleased with the opportunities we are seeing in our markets. Everest’s solid franchise, long term relationships, sound balance sheet, and excellent financial ratings, have facilitated growth as our clients seek stability and security from their reinsurance partners.”

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 Reinsurance Company (Ireland), Limited provides reinsurance to nonlife insurers in Europe. 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 April 30, 2009. 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.

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¹ The 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) and the gain on debt repurchase 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.

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

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Everest Global Services, Inc.
Elizabeth B. Farrell, 908-604-3169
Vice President, Investor Relations