Home About Everest News Everest Re Group Reports Third Quarter 2021 Results Everest Re Group Reports Third Quarter 2021 Results 25% Growth in Gross Written Premium with an 87.9% Attritional Combined Ratio. On Track to Achieve Strategic Plan Objectives 10/27/2021 BERMUDA Seon Place, 4th Floor Hamilton HM 19,, Bermuda CONTACT Jon Levenson Head of Investor Relations (908) 604-3169 SHARE in tw mail HAMILTON, Bermuda--(BUSINESS WIRE)-- Everest Re Group, Ltd. (“Everest” or the “Company”) today reported its 2021 third quarter results. Third Quarter 2021 Highlights Gross written premium (“GWP”) growth of 25% year over year to $3.5 billion Insurance segment GWP growth of 43% year over year to $1.0 billion. The second consecutive quarter above $1.0 billion GWP Reinsurance segment GWP growth of 19% year over year to $2.5 billion Attritional combined ratio of 87.9% Excellent Insurance segment attritional combined ratio of 90.3%, a 3.9-point improvement year over year Pre-tax Underwriting loss of $323 million inclusive of pre-tax net catastrophe losses of $635 million Robust net investment income of $293 million, led by outstanding alternative asset performance of $170 million Common share repurchases of $160 million during the quarter and $200 million year to date Annualized year to date Total Shareholder Return of 13.2% Everest Re Group President & CEO Juan C. Andrade commented on the Company’s results: “During the third quarter of 2021, Everest made significant progress toward the strategic plan objectives detailed in the June investor day presentation. We achieved outstanding top line premium growth across both of our insurance and reinsurance businesses, continued to improve the attritional profitability for our Insurance Division, remained focused on risk appetite discipline and the diversification of our business, demonstrated strong expense management, delivered excellent investment income results, opportunistically reduced our cost of capital, and returned capital to our shareholders. Despite the high frequency and severity of the natural catastrophe activity in the quarter, we also benefited from the de-risking of the CAT portfolio and we remain on track to achieve our total shareholder return objective. We continue to consistently demonstrate our ability to relentlessly execute against our plans regardless of the external environment.” Summary of Third Quarter 2021 Net Income and Other Items Net income (loss) of $(73.5) million, equal to $(1.88) per share vs. net income of $243.1 million, equal to $6.07 per share in the same period during 2020 Net operating income (loss) of $(52.6) million, equal to $(1.34) per share vs. net operating income of $97.0 million, equal to $2.42 per share in the same period during 2020 Underwriting loss of $323.4 million inclusive of catastrophe losses from Hurricane Ida and European Floods during the quarter, in the amount of $635 million net of recoveries and reinstatement premiums ($555 million in reinsurance and $80 million in Insurance) GAAP combined ratio of 112.2% which includes 26.2 points of catastrophe losses vs. 14.0 points of catastrophe losses in the same period during 2020 No change to Covid-19 Pandemic (“Pandemic”) ultimate loss estimates of $511 million Operating cashflow was $1.2 billion vs $1.1 billion a year ago. Year to date operating cashflow was $2.8 billion vs $2.2 billion a year ago. The following table summarizes the Company’s net income and related financial metrics. Net income and operating income Q3 Year to Date Q3 Year to Date All values in USD millions except for per share amounts and percentages 2021 2021 2020 2020 Everest Re Group Net income (73.5) 948.4 243.1 450.5 Net operating income (loss) (52.6) 794.7 97.0 344.2 Net income per diluted common share (1.88) 23.72 6.07 11.18 Net operating income per diluted common share (1.34) 19.87 2.42 8.54 Net income annualized return on average equity (3.0%) 13.6% 11.0% 6.8% Net operating income annualized return on average equity (2.2%) 11.4% 4.4% 5.2% Period end equity and book value Q3 2021 Year to Date Shareholders' equity 9,978.6 Book value per share 253.40 Change in BVPS adjusted for dividends 6.1% Total Shareholder Return ("TSR") - Annualized 13.2% Notes 1/ Refer to the reconciliation of net income to net operating income found on page 7 of this press release 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 Q3 Year to Date Q3 Year to Date Year on Year Change All values in USD millions except for percentages 2021 2021 2020 2020 Q3 Year to Date Gross written premium 3,497.6 9,619.2 2,791.6 7,731.8 25.3% 24.4% Net written premium 3,025.8 8,389.1 2,448.7 6,667.6 23.6% 25.8% Loss ratio 85.6% 73.3% 78.7% 72.8% 6.9 pts 0.5 pts Commission and brokerage ratio 21.2% 21.2% 20.2% 21.7% 1.0 pts (0.5) pts Other underwriting expenses 5.3% 5.6% 6.3% 6.1% (1.0) pts (0.5) pts Combined ratio 112.2% 100.1% 105.2% 100.6% 7.0 pts (0.5) pts Attritional combined ratio 87.9% 87.6% 85.8% 88.0% 2.1 pts (0.4) pts Pre-tax net catastrophe losses 635.0 940.0 300.0 345.0 Pre-tax net covid losses - - 124.9 434.9 Pre-tax net prior year reserve development (1.6) (6.1) (1.3) 1.4 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 Reinsurance achieved excellent growth in the quarter, growing premium 19% year over year to $2.5 billion. The growth was driven by continued partnership with our core clients and Everest’s position as a preferred reinsurance platform. All target classes of business and geographies saw growth in the quarter, and our portfolio is benefiting from improved economic conditions and strong rate performance by our cedants. The attritional combined ratio for the quarter of 87.1% reflects the deliberate and targeted shaping of our portfolio to maximize long term results with a higher mix of pro rata structures, an improved balance of property and casualty exposures, prudence in loss ratio selections, and continuous expense discipline. The operating expense ratio of 2.3% is world class and demonstrates the scalability of our franchise. Reinsurance CAT losses for the quarter totaled $555 million net of recoveries and reinstatement premiums, driven by Hurricane Ida and the Berndt flooding event in Europe. The cumulative, deliberate, and purposeful actions we have taken to reduce volatility have reduced our company’s risk profile. Underwriting information - Reinsurance segment Q3 Year to Date Q3 Year to Date Year on Year Change All values in USD millions except for percentages 2021 2021 2020 2020 Q3 Year to Date Gross written premium 2,488.3 6,695.6 2,087.0 5,403.1 19.2% 23.9% Net written premium 2,293.0 6,265.8 1,936.9 4,974.0 18.4% 26.0% Loss ratio 89.4% 74.1% 80.0% 72.2% 9.4 pts 1.9 pts Commission and brokerage ratio 23.8% 23.8% 22.3% 24.3% 1.5 pts (0.5) pts Other underwriting expenses 2.3% 2.5% 3.1% 2.9% (0.8) pts (0.4) pts Combined ratio 115.5% 100.5% 105.4% 99.4% 10.1 pts 1.1 pts Attritional combined ratio 87.1% 86.3% 83.0% 85.7% 4.1 pts 0.6 pts Pre-tax net catastrophe losses 555.0 802.5 262.5 287.0 Pre-tax net covid losses - - 109.9 351.0 Pre-tax net prior year reserve development (1.6) (4.9) (1.3) (3.1) 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 another outstanding premium quarter with record quarterly growth of 43% driving over $1.0 billion in gross written premium for a second consecutive quarter. The exceptional growth in Q3 was driven by increasingly favorable economic conditions, new business growth, and the combined impact of strong renewal retention and a continuing favorable rate environment. The Insurance segment also continues to expand attritional underwriting margins with improvement in the loss and expense ratio and delivered a record-setting attritional combined ratio of 90.3%. These results reflect our relentless focus on execution and the success of our nimble and disciplined underwriting, which reacts quickly to market conditions and best positions our portfolio for long term profitability. Underwriting information - Insurance segment Q3 Year to Date Q3 Year to Date Year on Year Change All values in USD millions except for percentages 2021 2021 2020 2020 Q3 Year to Date Gross written premium 1,009.3 2,923.6 704.6 2,328.7 43.2% 25.5% Net written premium 732.8 2,123.3 511.8 1,693.6 43.2% 25.4% Loss ratio 74.7% 70.8% 74.8% 74.6% (0.1) pts (3.8) pts Commission and brokerage ratio 13.7% 13.4% 13.4% 14.0% 0.3 pts (0.6) pts Other underwriting expenses 14.1% 14.5% 16.3% 15.4% (2.2) pts (0.9) pts Combined ratio 102.5% 98.7% 104.5% 104.0% (2.0) pts (5.3) pts Attritional combined ratio 90.3% 91.5% 94.2% 94.3% (3.9) pts (2.8) pts Pre-tax net catastrophe losses 80.0 137.5 37.5 58.0 Pre-tax net covid losses - - 15.0 84.0 Pre-tax net prior year reserve development - (1.2) - 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 Total invested assets and cash of $27.8 billion at September 30, 2021, 9.0% growth versus year end 2020 Shareholders’ equity of $10.0 billion as of September 30, 2021 Book value per diluted share of $253.40 at September 30, 2021 vs. $243.25 at December 31, 2020 Excluding unrealized gains (losses) on fixed income investments, book value per diluted share of $242.83 at September 30, 2021, vs. $225.15 at December 31, 2020 Common share dividends declared and paid in the quarter of $1.55 per share, equal to $61.5 million Common share repurchases of $160 million during the quarter, representing 625,358 shares at an average price of $255.43 per share Equity and Book Value per Share Q3 Year to Date Q3 Year to Date All values in USD millions except for per share amounts and percentages 2021 2021 2020 2020 Beginning shareholders' equity 10,416.8 9,726.2 9,286.3 9,132.9 Net income (73.5) 948.4 243.1 450.5 Change- unrealized gains (losses) - Fixed inc. investments (101.4) (307.9) 52.0 348.5 Dividends to shareholders (61.5) (185.7) (61.9) (187.1) Purchase of treasury shares (159.7) (200.1) - (200.0) Other (42.1) (2.3) 71.8 46.5 Ending shareholders' equity 9,978.6 9,978.6 9,591.3 9,591.3 Common shares outstanding 39.38 39.97 Book value per common share outstanding 253.40 239.98 Less: Unrealized on fixed inc. investments ("URAD") 10.57 16.34 Book value excl. URAD per common share outstanding 242.83 223.64 Common share dividends paid - last 12 months 6.20 6.20 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 third quarter results will be held at 8:00 a.m. Eastern Time on October 28, 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/Financials/Quarterly Results” 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 September 30, NIne Months Ended September 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) $ (73,468 ) $ (1.88 ) $ 243,057 $ 6.07 $ 948,376 $ 23.72 $ 450,549 $ 11.18 After-tax net realized capital gains (losses) $ (2,591 ) $ (0.07 ) $ 88,911 $ 2.22 $ 111,196 $ 2.78 $ 67,067 $ 1.66 After-tax net foreign exchange income (expense) $ (18,314 ) $ (0.47 ) $ 57,157 $ 1.43 $ 42,526 $ 1.06 $ 39,233 $ 0.97 After-tax operating income (loss) $ (52,563 ) $ (1.34 ) $ 96,989 $ 2.42 $ 794,654 $ 19.87 $ 344,249 $ 8.54 (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 Nine Months Ended September 30, September 30, (Dollars in thousands, except per share amounts) 2021 2020 2021 2020 (unaudited) (unaudited) REVENUES: Premiums earned $ 2,656,403 $ 2,205,811 $ 7,602,640 $ 6,285,030 Net investment income 292,759 234,233 960,267 420,116 Net realized capital gains (losses): Credit allowances on fixed maturity securities (7,329) 6,196 (30,234) (19,641) Other net realized capital gains (losses) 3,107 104,007 169,023 103,904 Total net realized capital gains (losses) (4,222) 110,203 138,789 84,263 Other income (expense) (19,517) 59,937 44,190 47,306 Total revenues 2,925,423 2,610,184 8,745,886 6,836,715 CLAIMS AND EXPENSES: Incurred losses and loss adjustment expenses 2,274,301 1,736,210 5,571,861 4,574,066 Commission, brokerage, taxes and fees 564,335 445,332 1,611,095 1,360,170 Other underwriting expenses 141,150 138,875 424,225 385,865 Corporate expenses 17,817 10,618 46,363 29,184 Interest, fees and bond issue cost amortization expense 15,539 6,641 46,785 21,477 Total claims and expenses 3,013,142 2,337,676 7,700,329 6,370,762 INCOME (LOSS) BEFORE TAXES (87,719) 272,508 1,045,557 465,953 Income tax expense (benefit) (14,251) 29,451 97,181 15,404 NET INCOME (LOSS) $ (73,468) $ 243,057 $ 948,376 $ 450,549 Other comprehensive income (loss), net of tax: Unrealized appreciation (depreciation) ("URA(D)") on securities arising during the period (100,021) 63,480 (304,465) 335,835 Reclassification adjustment for realized losses (gains) included in net income (loss) (1,388) (11,453) (3,464) 12,689 Total URA(D) on securities arising during the period (101,409) 52,027 (307,929) 348,524 Foreign currency translation adjustments (53,599) 60,628 (28,886) 30,390 Reclassification adjustment for amortization of net (gain) loss included in net income (loss) 1,563 1,806 5,649 4,532 Total benefit plan net gain (loss) for the period 1,563 1,806 5,649 4,532 Total other comprehensive income (loss), net of tax (153,445) 114,461 (331,166) 383,446 COMPREHENSIVE INCOME (LOSS) $ (226,913) $ 357,518 $ 617,210 $ 833,995 EARNINGS PER COMMON SHARE: Basic $ (1.88) $ 6.08 $ 23.74 $ 11.20 Diluted (1.88) 6.07 23.72 11.18 EVEREST RE GROUP, LTD. CONSOLIDATED BALANCE SHEETS September 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 $ 21,623,119 $ 20,040,173 (amortized cost: 2021, $21,182,756; 2020, $19,225,067, credit allowances: 2021, ($31,980); 2020, ($1,745)) Equity securities, at fair value 1,523,595 1,472,236 Short-term investments (cost: 2021, $713,144; 2020, $1,135,088) 713,144 1,134,950 Other invested assets 2,855,372 2,012,581 Cash 1,068,441 801,651 Total investments and cash 27,783,671 25,461,591 Accrued investment income 170,364 141,304 Premiums receivable 3,408,338 2,680,562 Reinsurance recoverables 2,215,380 1,994,555 Funds held by reinsureds 811,269 716,655 Deferred acquisition costs 797,735 622,053 Prepaid reinsurance premiums 552,468 412,015 Income taxes net recoverable - 17,253 Other assets 866,872 742,369 TOTAL ASSETS $ 36,606,097 $ 32,788,357 LIABILITIES: Reserve for losses and loss adjustment expenses 18,956,953 16,398,997 Future policy benefit reserve 36,533 37,723 Unearned premium reserve 4,421,098 3,501,359 Funds held under reinsurance treaties 18,279 15,807 Other net payable to reinsurers 485,682 294,347 Losses in course of payment 150,784 127,971 Senior notes due 6/1/2044 397,284 397,194 Senior notes due 10/1/2050 979,915 979,524 Long term notes due 5/1/2067 223,749 223,674 Borrowings from FHLB 310,000 310,000 Accrued interest on debt and borrowings 23,267 10,460 Unsettled securities payable 83,626 206,693 Income taxes net payable 4,074 - Other liabilities 536,218 558,432 Total liabilities 26,627,462 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) 69,806 and (2020) 69,620 outstanding before treasury shares 698 696 Additional paid-in capital 2,266,342 2,245,301 Accumulated other comprehensive income (loss), net of deferred income tax expense (benefit) of $44,338 at 2021 and $80,451 at 2020 203,733 534,899 Treasury shares, at cost; 30,427 shares (2021) and 29,636 shares (2020) (3,822,235) (3,622,172) Retained earnings 11,330,097 10,567,452 Total shareholders' equity 9,978,635 9,726,176 TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 36,606,097 $ 32,788,357 EVEREST RE GROUP, LTD. CONSOLIDATED STATEMENTS OF CASH FLOWS Nine Months Ended September 30, (Dollars in thousands) 2021 2020 (unaudited) CASH FLOWS FROM OPERATING ACTIVITIES: Net income (loss) $ 948,376 $ 450,549 Adjustments to reconcile net income to net cash provided by operating activities: Decrease (increase) in premiums receivable (736,614) (357,162) Decrease (increase) in funds held by reinsureds, net (92,512) (53,878) Decrease (increase) in reinsurance recoverables (230,593) (172,454) Decrease (increase) in income taxes 57,270 184,311 Decrease (increase) in prepaid reinsurance premiums (146,639) (7,963) Increase (decrease) in reserve for losses and loss adjustment expenses 2,576,049 1,665,982 Increase (decrease) in future policy benefit reserve (1,189) (2,218) Increase (decrease) in unearned premiums 927,524 392,904 Increase (decrease) in other net payable to reinsurers 198,954 68,784 Increase (decrease) in losses in course of payment 23,661 132,208 Change in equity adjustments in limited partnerships (543,401) (12,475) Distribution of limited partnership income 105,571 55,576 Change in other assets and liabilities, net (247,615) (131,224) Non-cash compensation expense 33,199 29,337 Amortization of bond premium (accrual of bond discount) 57,289 32,594 Net realized capital (gains) losses (138,789) (84,263) Net cash provided by (used in) operating activities 2,790,541 2,190,608 CASH FLOWS FROM INVESTING ACTIVITIES: Proceeds from fixed maturities matured/called - available for sale, at market value 2,756,963 1,781,821 Proceeds from fixed maturities sold - available for sale, at market value 883,149 1,390,747 Proceeds from fixed maturities sold - available for sale, at fair value - 2,054 Proceeds from equity securities sold, at fair value 578,894 329,750 Distributions from other invested assets 216,573 210,527 Cost of fixed maturities acquired - available for sale, at market value (5,670,636) (3,874,890) Cost of equity securities acquired, at fair value (507,862) (460,953) Cost of other invested assets acquired (604,180) (392,650) Net change in short-term investments 422,643 (804,744) Net change in unsettled securities transactions (177,259) 89,064 Net cash provided by (used in) investing activities (2,101,715) (1,729,274) CASH FLOWS FROM FINANCING ACTIVITIES: Common shares issued during the period for share-based compensation, net of expense (12,156) (13,617) Purchase of treasury shares (200,064) (200,020) Dividends paid to shareholders (185,731) (187,110) Cost of debt repurchase - (10,647) FHLB borrowings (repayments) - 90,000 Cost of shares withheld on settlements of share-based compensation awards (15,133) (15,298) Net cash provided by (used in) financing activities (413,084) (336,691) EFFECT OF EXCHANGE RATE CHANGES ON CASH (8,952) 6,203 Net increase (decrease) in cash 266,790 130,845 Cash, beginning of period 801,651 808,036 Cash, end of period $ 1,068,441 $ 938,881 SUPPLEMENTAL CASH FLOW INFORMATION: Income taxes paid (recovered) $ 39,767 $ (169,149) Interest paid 33,422 16,731 Media: Dawn Lauer Chief Communications Officer Everest Global Services, Inc. 908.300.7670 Investors: Jon Levenson Head of Investor Relations Everest Global Services, Inc. 908.604.3169 Source: Everest Re Group, Ltd.