(Source: Business Wire)
Everest Re Group, Ltd. (NYSE: RE) reported second quarter 2009 net income of $272.6 million, or $4.43 per diluted common share, compared to net income of $153.0 million, or $2.46 per diluted common share, for the second quarter of 2008. After-tax operating income1, excluding realized capital gains and losses, was $256.2 million, or $4.16 per diluted common share, for the second quarter 2009, compared to after-tax operating income1 of $180.0 million, or $2.89 per diluted common share, for the same period last year.
For the six months ended June 30, 2009, net income was $381.1 million, or $6.19 per diluted common share, compared to $231.0 million or $3.69 per diluted common share, for the first six months of 2008. After-tax operating income1, excluding realized capital gains and losses and the gain on the first quarter's debt repurchase, was $362.4 million for the first six months of 2009, or $5.88 per diluted common share, compared to $370.6 million, or $5.92 per diluted common share, for the same period in 2008.
Commenting on the Company's results, Chairman and Chief Executive Officer, Joseph V. Taranto said, "We are pleased with the results that have been achieved for the first half of the year, and believe we are well positioned to continue to produce quality earnings. During the quarter, we bought back $49.4 million of our common shares under our share repurchase program and we remain committed to delivering value to our shareholders through efficient and effective capital management. Since the beginning of the year, we have returned more than $108 million of capital, both in the form of dividends and share repurchases and opportunistically repurchased outstanding debt at a significant discount."
Operating highlights for the second quarter of 2009 included the following:
Gross written premiums increased 8% to $973.8 million for the quarter compared to $905.3 million for the same period in 2008. Excluding the impact of foreign exchange, gross written premiums were up approximately 12%. Worldwide reinsurance premiums increased 6%, but adjusting for foreign exchange grew approximately 11%. Insurance premiums, which are entirely derived from the U.S. markets, were up 12%. New business opportunities, created by market dislocations and security concerns in select markets, are driving the growth in the overall book.
The GAAP loss ratio and combined ratio were 59.2% and 87.9%, respectively, for the quarter compared to 64.2% and 94.4%, respectively, in the second quarter of 2008. Excluding prior year development and catastrophe losses, the current year attritional loss ratio was 57.7%, up slightly from the 56.5% reported in last year's second quarter.
Net investment income was $167.2 million, 5% lower than in the second quarter of 2008. The decrease was primarily due to lower income from equity securities and limited partnership investments.
Net after-tax realized capital gains totaled $16.3 million for the quarter compared to net after-tax realized capital losses of $27.0 million in the same period last year. The favorable turn in the equity markets during the current quarter provided for an increase in the fair value of the common equity portfolio.
Net after-tax unrealized capital gains totaled $185.2 million for the quarter before the $57.3 million adjustment resulting from the adoption of the new accounting pronouncement, FAS 115-2.
Cash flow from operations was $103.4 million compared to negative cash flows of $18.4 million for the same period in 2008, with much of the variance attributable to timing. On a year-to-date basis, cash flows were $283.9 million for 2009 compared to $232.3 million for 2008.
For the quarter, the annualized after-tax operating income1 return on average adjusted shareholders' equity2 was 19.2% compared to 12.8% in 2008.
Shareholders' equity ended the quarter at $5.5 billion, up 12% from year-end 2008. Accordingly, book value per share increased 13% to $91.13 as of June 30, 2009 from $80.77 at year-end 2008.
During the quarter, the Company repurchased 707,900 of its common shares at an average price of $69.81. The total cost of the repurchased shares under this program was $49.4 million. The repurchases were made pursuant to a share repurchase authorization, provided by the Company's Board of Directors, under which there remains 5.1 million shares available.
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 non-life 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 second quarter results will be held at 8:30 a.m. Eastern Time on August 4, 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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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:
Three Months Ended Six Months Ended June 30, June 30, (Dollars in thousands, except per share amounts) 2009 2008 2009 2008 (unaudited) (unaudited) Per Diluted Per Diluted Per Diluted Per Diluted Common Common Common Common Amount Share Amount Share Amount Share Amount Share Net income $ 272,588 $ 4.43 $ 153,027 $ 2.46 $ 381,144 $ 6.19 $ 230,960 $ 3.69 After-tax net realized capital gains/(losses) 16,343 0.27 (27,020 ) (0.43 ) (32,120 ) (0.52 ) (139,672 ) (2.23 ) After-tax gain on tender of debt - - - - 50,876 0.83 - - After-tax operating income $ 256,245 $ 4.16 $ 180,047 $ 2.89 $ 362,388 $ 5.88 $ 370,632 $ 5.92 -------------------------------------------------------------------------------
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 capital 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.
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EVEREST RE GROUP, LTD.
