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Everest Re Group Reports Full Year and Fourth Quarter 2019 Results

February 10, 2020 GMT

HAMILTON, Bermuda--(BUSINESS WIRE)--Feb 10, 2020--

Everest Re Group, Ltd. (“Everest” or the “Company”) today reported that for the full year ended December 31, 2019, net income was $1,009.5 million, or $24.70 per diluted common share, compared to net income of $89.0 million, or $2.17 per diluted common share, for the year ended December 31, 2018. After-tax operating income 1 for the year was $872.4 million, or $21.34 per diluted common share, compared to after-tax operating income 1 of $190.7 million, or $4.65 per diluted common share, for the same period in 2018.

For the fourth quarter 2019, the Company reported net income of $217.6 million, or $5.32 per diluted common share, compared to a net loss of $385.3 million, or ($9.58) per common share for the fourth quarter of 2018. After-tax operating income 1 was $130.8 million, or $3.20 per diluted common share, for the fourth quarter of 2019, compared to an after-tax operating loss of $236.9 million, or ($5.89) per common share, for the same period last year.

Commenting on the Company’s results, President and Chief Executive Officer Juan C. Andrade said, “For the full year 2019, Everest produced net income of over $1 billion, the best result since 2014. On an ROE basis, this equates to a 12% return on average equity. These numbers speak to the strength and diversification of our business, and the strength of our underwriting and investment operations. Everest has a great franchise, a well-diversified platform and top talent. We are well positioned for the future.”

Operating highlights for the full year 2019 included the following:

Operating highlights for the fourth quarter of 2019 included the following:

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.

About Everest Re Group, Ltd.

Everest Re Group, Ltd. (“Everest”) is a leading global provider of reinsurance and insurance, operating for more than 40 years through subsidiaries in the U.S., Europe, 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.

A conference call discussing the fourth quarter results will be held at 10:30 a.m. Eastern Time on February 11, 2020. The call will be available on the Internet through the Company’s web site at everestre.com/investors or at www.streetevents.com.

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.

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), after-tax net foreign exchange income (expense), and the tax charge related to the enactment of the Tax Cuts and Jobs Act of 2017 (TCJA), as the following reconciliation displays:

 
Three Months EndedTwelve Months Ended
December 31,December 31,
(Dollars in thousands, except per share amounts)

 

 

 

 

 

(unaudited)(unaudited)
 
Per DilutedPer DilutedPer DilutedPer Diluted
CommonCommonCommonCommon
AmountShareAmountShareAmountShareAmountShare
 
Net income (loss)

$

217,644

$

5.32

$

(385,313

)

$

(9.58

)

$

1,009,461

 

$

24.70

 

$

89,041

 

$

2.17

 

After-tax net realized capital gains (losses)

 

61,052

 

1.49

 

(143,870

)

 

(3.58

)

 

150,808

 

 

3.69

 

 

(109,149

)

 

(2.66

)

After-tax net foreign exchange income (expense)

 

25,763

 

0.63

 

(5,274

)

 

(0.13

)

 

(13,767

)

 

(0.34

)

 

6,779

 

 

0.17

 

Impact of TCJA enactment

 

-

 

-

 

703

 

 

0.02

 

 

-

 

 

-

 

 

703

 

 

0.02

 

 
After-tax operating income (loss)

$

130,828

$

3.20

$

(236,872

)

$

(5.89

)

$

872,420

 

$

21.34

 

$

190,709

 

$

4.65

 

 
(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.

Return on equity calculations use adjusted shareholders’ equity excluding net after-tax unrealized (appreciation) depreciation of investments.

--Financial Details Follow--

 
EVEREST RE GROUP, LTD.
CONSOLIDATED STATEMENTS OF OPERATIONS
AND COMPREHENSIVE INCOME (LOSS)
 
 
Three Months EndedTwelve Months Ended
December 31,December 31,
(Dollars in thousands, except per share amounts)

 

2019

 

 

2018

 

 

2019

 

 

2018

 

(unaudited)(unaudited)
REVENUES:
Premiums earned

$

1,948,071

 

$

1,850,975

 

$

7,403,686

 

$

6,931,699

 

Net investment income

 

146,077

 

 

140,204

 

 

647,139

 

 

581,183

 

Net realized capital gains (losses):
Other-than-temporary impairments on fixed maturity securities

 

(5,495

)

 

(3,327

)

 

(20,899

)

 

(8,110

)

Other-than-temporary impairments on fixed maturity securities
transferred to other comprehensive income (loss)

 

-

 

 

-

 

 

-

 

 

-

 

Other net realized capital gains (losses)

 

80,938

 

 

(169,488

)

 

205,903

 

 

(119,026

)

Total net realized capital gains (losses)

 

75,443

 

 

(172,815

)

 

185,004

 

 

(127,136

)

Net derivative gain (loss)

 

2,979

 

 

(4,965

)

 

6,374

 

 

520

 

Other income (expense)

 

41,516

 

 

(21,823

)

 

(11,034

)

 

(24,771

)

Total revenues

 

2,214,086

 

 

1,791,576

 

 

8,231,169

 

 

7,361,495

 

 
CLAIMS AND EXPENSES:
Incurred losses and loss adjustment expenses

 

1,407,794

 

 

2,001,054

 

 

4,922,898

 

 

5,651,403

 

Commission, brokerage, taxes and fees

 

450,226

 

 

396,588

 

 

1,703,726

 

 

1,519,030

 

Other underwriting expenses

 

118,923

 

 

84,216

 

 

440,899

 

 

371,541

 

Corporate expenses

 

10,344

 

 

7,153

 

 

32,966

 

 

30,672

 

Interest, fees and bond issue cost amortization expense

 

7,721

 

 

7,984

 

 

31,693

 

 

31,031

 

Total claims and expenses

 

1,995,008

 

 

2,496,995

 

 

7,132,182

 

 

7,603,677

 

 
INCOME (LOSS) BEFORE TAXES

 

219,078

 

 

(705,419

)

 

1,098,987

 

 

(242,182

)

Income tax expense (benefit)

 

1,434

 

 

(320,106

)

 

89,526

 

 

(331,223

)

 
NET INCOME (LOSS)

$

217,644

 

$

(385,313

)

$

1,009,461

 

$

89,041

 

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

 

(28,159

)

 

(974

)

 

496,430

 

 

(255,656

)

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

 

(8,393

)

 

34,602

 

 

(12,613

)

 

27,496

 

Total URA(D) on securities arising during the period

 

(36,552

)

 

33,628

 

 

483,817

 

 

(228,160

)

 
Foreign currency translation adjustments

 

29,235

 

 

(24,933

)

 

14,030

 

 

(76,816

)

 
Benefit plan actuarial net gain (loss) for the period

 

(12,591

)

 

(510

)

 

(12,591

)

 

(510

)

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

 

1,788

 

 

(425

)

 

5,453

 

 

5,021

 

Total benefit plan net gain (loss) for the period

 

(10,803

)

 

(935

)

 

(7,138

)

 

4,511

 

Total other comprehensive income (loss), net of tax

 

(18,120

)

 

7,760

 

 

490,709

 

 

(300,465

)

 
COMPREHENSIVE INCOME (LOSS)

$

199,524

 

$

(377,553

)

$

1,500,170

 

$

(211,424

)

 
EARNINGS PER COMMON SHARE:
Basic

$

5.34

 

$

(9.58

)

$

24.77

 

$

2.18

 

Diluted

 

5.32

 

 

(9.58

)

 

24.70

 

 

2.17

 

  
EVEREST RE GROUP, LTD. 
CONSOLIDATED BALANCE SHEETS 
  
  
 December 31,
(Dollars and share amounts in thousands, except par value per share) 

 

2019

 

 

2018

 

 (unaudited)
ASSETS: 
Fixed maturities - available for sale, at market value 

$

16,824,944

 

$

15,225,263

 

(amortized cost: 2019, $16,473,491; 2018, $15,406,572) 
Fixed maturities - available for sale, at fair value 

 

5,826

 

 

2,337

 

Equity securities, at fair value 

 

931,457

 

 

716,639

 

Short-term investments (cost: 2019, $414,639; 2018, $241,010) 

 

414,706

 

 

240,987

 

Other invested assets (cost: 2019, $1,763,531; 2018, $1,591,745) 

 

1,763,531

 

 

1,591,745

 

Cash 

 

808,036

 

 

656,095

 

Total investments and cash 

 

20,748,500

 

 

18,433,066

 

Accrued investment income 

 

116,804

 

 

104,619

 

Premiums receivable 

 

2,259,088

 

 

2,183,183

 

Reinsurance receivables 

 

1,763,471

 

 

1,787,648

 

Funds held by reinsureds 

 

489,901

 

 

435,031

 

Deferred acquisition costs 

 

581,863

 

 

511,573

 

Prepaid reinsurance premiums 

 

445,716

 

 

343,343

 

Income taxes 

 

305,711

 

 

594,487

 

Other assets 

 

612,997

 

 

358,042

 

TOTAL ASSETS 

$

27,324,051

 

$

24,750,992

 

  
LIABILITIES: 
Reserve for losses and loss adjustment expenses 

 

13,611,313

 

 

13,119,090

 

Future policy benefit reserve 

 

42,592

 

 

46,778

 

Unearned premium reserve 

 

3,056,735

 

 

2,517,612

 

Funds held under reinsurance treaties 

 

10,668

 

 

13,099

 

Other net payable to reinsurers 

 

291,660

 

 

218,439

 

Losses in course of payment 

 

51,950

 

 

85,519

 

Senior notes due 6/1/2044 

 

397,074

 

 

396,954

 

Long term notes due 5/1/2067 

 

236,758

 

 

236,659

 

Accrued interest on debt and borrowings 

 

2,878

 

 

3,093

 

Equity index put option liability 

 

5,584

 

 

11,958

 

Unsettled securities payable 

 

30,650

 

 

51,112

 

Other liabilities 

 

453,264

 

 

189,882

 

Total liabilities 

 

18,191,126

 

 

16,890,195

 

  
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; (2019) 69,464 
and (2018) 69,202 outstanding before treasury shares 

 

694

 

 

692

 

Additional paid-in capital 

 

2,219,660

 

 

2,188,777

 

Accumulated other comprehensive income (loss), net of deferred income tax expense 
(benefit) of $30,996 at 2019 and ($20,697) at 2018 

 

28,152

 

 

(462,557

)

Treasury shares, at cost; 28,665 shares (2019) and 28,551 shares (2018) 

 

(3,422,152

)

 

(3,397,548

)

Retained earnings 

 

10,306,571

 

 

9,531,433

 

Total shareholders' equity 

 

9,132,925

 

 

7,860,797

 

TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY 

$

27,324,051

 

$

24,750,992

 

  
 
EVEREST RE GROUP, LTD.
CONSOLIDATED STATEMENTS OF CASH FLOWS
 
 
Twelve Months Ended
December 31,
(Dollars in thousands)

 

2019

 

 

2018

 

(unaudited)

CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss)

$

1,009,461

 

$

89,041

 

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

 

(62,018

)

 

(382,987

)

Decrease (increase) in funds held by reinsureds, net

 

(56,722

)

 

(153,627

)

Decrease (increase) in reinsurance receivables

 

67,444

 

 

(511,592

)

Decrease (increase) in income taxes

 

237,479

 

 

(265,065

)

Decrease (increase) in prepaid reinsurance premiums

 

(95,207

)

 

(65,925

)

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

 

402,380

 

 

1,377,711

 

Increase (decrease) in future policy benefit reserve

 

(4,186

)

 

(4,236

)

Increase (decrease) in unearned premiums

 

521,709

 

 

542,023

 

Increase (decrease) in other net payable to reinsurers

 

66,477

 

 

12,276

 

Increase (decrease) in losses in course of payment

 

(33,557

)

 

123,209

 

Change in equity adjustments in limited partnerships

 

(108,332

)

 

(102,052

)

Distribution of limited partnership income

 

81,300

 

 

84,623

 

Change in other assets and liabilities, net

 

(54,176

)

 

(322,107

)

Non-cash compensation expense

 

34,018

 

 

32,369

 

Amortization of bond premium (accrual of bond discount)

 

30,936

 

 

29,272

 

Net realized capital (gains) losses

 

(185,004

)

 

127,136

 

Net cash provided by (used in) operating activities

 

1,852,002

 

 

610,069

 

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

 

2,302,299

 

 

1,973,652

 

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

 

3,280,237

 

 

3,148,428

 

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

 

2,917

 

 

1,751

 

Proceeds from equity securities sold, at fair value

 

283,965

 

 

1,199,409

 

Distributions from other invested assets

 

284,558

 

 

3,102,018

 

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

 

(6,613,917

)

 

(5,909,504

)

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

 

(4,243

)

 

(4,381

)

Cost of equity securities acquired, at fair value

 

(329,417

)

 

(921,937

)

Cost of other invested assets acquired

 

(425,438

)

 

(3,370,455

)

Net change in short-term investments

 

(167,290

)

 

455,350

 

Net change in unsettled securities transactions

 

(26,163

)

 

46,048

 

Net cash provided by (used in) investing activities

 

(1,412,492

)

 

(279,621

)

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

 

(3,134

)

 

(8,157

)

Purchase of treasury shares

 

(24,604

)

 

(75,304

)

Dividends paid to shareholders

 

(234,322

)

 

(216,221

)

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

 

(13,627

)

 

(16,912

)

Net cash provided by (used in) financing activities

 

(275,687

)

 

(316,594

)

 
EFFECT OF EXCHANGE RATE CHANGES ON CASH

 

(11,882

)

 

7,174

 

 
Net increase (decrease) in cash

 

151,941

 

 

21,028

 

Cash, beginning of period

 

656,095

 

 

635,067

 

Cash, end of period

$

808,036

 

$

656,095

 

 
SUPPLEMENTAL CASH FLOW INFORMATION:
Income taxes paid (recovered)

$

(148,585

)

$

(65,064

)

Interest paid

 

31,689

 

 

30,447

 

 
NON-CASH TRANSACTIONS:
Reclassification of investment balances due to prospective consolidation of private placement
liquidity sweep facility effective July 1, 2018
 
Fixed maturities - available for sale, at market value

$

-

 

$

143,656

 

Short-term investments

 

-

 

 

243,864

 

Other invested assets

 

-

 

 

(387,520

)

 

View source version on businesswire.com:https://www.businesswire.com/news/home/20200210005803/en/

CONTACT: Everest Re Group, Ltd.

Jon Levenson, Head of Investor Relations

Investor.relations@everestre.com

Phone (908) 604-3169

KEYWORD: UNITED STATES UNITED KINGDOM CARIBBEAN BERMUDA NORTH AMERICA EUROPE

INDUSTRY KEYWORD: PROFESSIONAL SERVICES INSURANCE FINANCE

SOURCE: Everest Re Group, Ltd.

Copyright Business Wire 2020.

PUB: 02/10/2020 04:25 PM/DISC: 02/10/2020 04:25 PM

http://www.businesswire.com/news/home/20200210005803/en