1
NEWS RELEASE
EVEREST RE GROUP, LTD.
Seon place, 141 Front Street, 4
th
Contacts
Media: Dawn Lauer Investors: Matt Rohrmann
Chief Communications Officer Head of Investor Relations
Everest Global Services, Inc. Everest Global Services, Inc.
908.300.7670 908.604.7343
Everest Re Group Reports First Quarter 2023 Results
19.5%
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Reinsurance Growth and Strong Pricing Momentum
14.2% Net Income ROE, 17.2 % Operating ROE
91.2% Combined Ratio and 87.5% Attritional Combined Ratio
HAMILTON, Bermuda – (BUSINESS WIRE) – May 1, 2023 –
Everest Re Group, Ltd. (“Everest” or the
“Group”) today reported its first quarter 2023 results.
First Quarter 2023 Highlights
•
Strong year-over-year improvements in Net Operating Income of $443 million, and Net Income of $365
million driven by continued underwriting margin improvement
•
14.1% Total Shareholder Return, 14.2% Net Income ROE, and 17.2% Operating Income ROE
•
$3.7 billion in gross written premium (“GWP”) with year-over-year growth of 19.5% in constant dollars
as reported for the Group, 23.2% in constant dollars excluding reinstatements for Reinsurance and 11.5%
in constant dollars for Insurance
•
Combined ratios of 91.2% for the Group, 90.8% for Reinsurance and 92.4% for Insurance driven by
improved pricing and lower catastrophe losses year-over-year
•
Strong attritional combined ratios of 87.5% for the Group, 85.9% for Reinsurance and 91.7% for
Insurance
•
Pre-tax underwriting income of $273 million, third highest result over past 5 years
•
$110 million of pre-tax catastrophe losses net of estimated recoveries and reinstatement premiums driven
by the Turkey earthquake as well as the New Zealand floods and cyclone.
•
Year -over-year improvement in net investment income of $260 million, driven by stronger fixed income
returns as new money yields remain attractive
•
Strong operating cashflow for the quarter of $1.1 billion versus $846 million in the first quarter 2022
Footnote 1 in header denotes constant currency figure
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“Everest had a strong start to the year, with first quarter results that delivered significant underwriting profit, a
17.2% operating return on equity and a total shareholder return in excess of 14%,” said Juan C. Andrade, Everest
President & CEO. “We delivered profitable growth across both underwriting franchises, particularly in
reinsurance, where we continued to drive expanding margins. With our industry leading position, ongoing flight
to quality, and relentless execution, we are well equipped to take advantage of market tailwinds. We also
continued to invest in scaling our primary business in a disciplined manner. The insurance division generated an
increased year-over-year underwriting profit by capitalizing on our diversified portfolio and improved pricing
conditions. We advanced many of our strategic objectives this quarter, resulting in improved risk adjusted returns
across the portfolio, and continued to manage natural catastrophe volatility demonstrated by the limited exposure
to the severe weather events in North America during the quarter. We remain focused on bolstering our world
class talent and I am confident in their ability to capitalize on attractive market opportunities in the year ahead.”
Summary of First Quarter 2023 Net Income and Other Items
•
Net Income of $365 million, equal to $9.31 per diluted share versus first quarter 2022 net income of $298
million, equal to $7.56 per diluted share
•
Net operating income of $443 million, equal to $11.31 per diluted share versus first quarter 2022 net
operating income of $406 million, equal to $10.31 per diluted share
•
GAAP combined ratio of 91.2% including 3.7 points of catastrophe losses versus the first quarter 2022
figures of 91.6% including 4.1 points of catastrophe losses
The following table summarizes the Company’s Net Income and related financial metrics.
Net income and operating income
Q1
Year to Date
Q1
Year to Date
All values in USD millions except for per share amounts and percentages
2023
2023
2022
2022
Everest Re Group
Net income (loss)
365
365
298
298
Net operating income (loss)
(1)
443
443
406
406
Net income (loss) per diluted common share
9.31
9.31
7.56
7.56
Net operating income (loss) per diluted common share
11.31
11.31
10.31
10.31
Net income (loss) return on average equity (annualized)
14.2%
14.2%
11.9%
11.9%
After-tax operating income (loss) return on average equity (annualized)
17.2%
17.2%
16.2%
16.2%
Notes
(1) Refer to the reconciliation of net income to net operating income found on page 6 of this press release
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Shareholders' Equity and Book Value per Share
Q1
Year to Date
Q1
Year to Date
All values in USD millions except for per share amounts and percentages
2023
2023
2022
2022
Beginning shareholders' equity
8,441
8,441
10,139
10,139
Net income (loss)
365
365
298
298
Change - unrealized gains (losses) - Fixed inc. investments
249
249
(811)
(811)
Dividends to shareholders
(65)
(65)
(61)
(61)
Purchase of treasury shares
(1)
(1)
Other
24
24
(36)
(36)
Ending shareholders' equity
9,014
9,014
9,528
9,528
Common shares outstanding
39.3
39.4
Book value per common share outstanding
229.49
241.52
Less: Unrealized appreciation/depreciation of fixed maturity investments ("URAD")
(37.15)
(14.49)
Adjusted book value per common share outstanding excluding URAD
266.64
256.01
Change in BVPS adjusted for dividends
7.2%
Total Shareholder Return ("TSR") - Annualized
14.1%
Common share dividends paid - last 12 months
6.60
6.20
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
Q1
Year to Date
Q1
Year to Date
Year on Year Change
All values in USD millions except for percentages
2023
2023
2022
2022
Q1
Year to Date
Gross written premium
3,743
3,743
3,186
3,186
17.5%
17.5%
Net written premium
3,329
3,329
2,812
2,812
18.4%
18.4%
Loss ratio
63.4%
63.4%
64.1%
64.1%
Commission and brokerage ratio
21.3%
21.3%
21.7%
21.7%
Other underwriting expenses
6.4%
6.4%
5.8%
5.8%
Combined ratio
91.2%
91.2%
91.6%
91.6%
Attritional combined ratio
(1)
87.5%
87.5%
87.4%
87.4%
Pre-tax net catastrophe losses
(2)
110
110
115
115
Pre-tax net Russia/Ukraine losses
-
Pre-tax net prior year reserve development
-
(1)
(1)
Notes
(1) Attritional ratios exclude catastrophe losses, net CAT reinstatement premiums earned, prior year development, COVID-19 losses, CECL and losses from the
Russia/Ukraine war
(2) Pre-tax net catastrophe losses are net of reinsurance and reinstatement premiums
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Reinsurance Segment – Quarterly Highlights
•
Gross written premiums grew 23.2% on a constant dollar basis to $2.64 billion, a new quarterly premium
record for the segment, and broad-based, double-digit growth across every business unit.
•
Growth was driven by 19.4% growth in property pro-rata, 27.5% growth in property Cat, 22.1% in
Casualty pro-rata as a flight to quality continues across various markets.
•
Robust pricing momentum at April 1 renewal continued, with Cat pricing up over 44% in North America
and 26% Internationally, with improved terms/conditions.
•
90-basis point improvement in the attritional loss ratio to 58.0% year over year and an attritional
combined ratio of 85.9% vs 86.2% a year ago.
•
Pre-tax catastrophe losses of $108 million net of estimated recoveries and reinstatement premiums,
compared with $110 million a year ago. Catastrophe losses driven by the Turkey Earthquake as well as
the New Zealand floods and cyclone.
Underwriting information - Reinsurance segment
Q1
Year to Date
Q1
Year to Date
Year on Year Change
All values in USD millions except for percentages
2023
2023
2022
2022
Q1
Year to Date
Gross written premium
2,637
2,637
2,186
2,186
20.6%
20.6%
Net written premium
2,454
2,454
2,081
2,081
17.9%
17.9%
Loss ratio
62.9%
62.9%
64.1%
64.1%
Commission and brokerage ratio
25.0%
25.0%
24.9%
24.9%
Other underwriting expenses
2.8%
2.8%
2.4%
2.4%
Combined ratio
90.8%
90.8%
91.4%
91.4%
Attritional combined ratio
(1)
85.9%
85.9%
86.2%
86.2%
Pre-tax net catastrophe losses
(2)
108
108
110
110
Pre-tax net Russia/Ukraine losses
-
Pre-tax net prior year reserve development
-
(2)
(2)
Notes
(1) Attritional ratios exclude catastrophe losses, net CAT reinstatement premiums earned, prior year development, COVID-19 losses, CECL and losses from the
Russia/Ukraine war
(2) Pre-tax net catastrophe losses are net of reinsurance and reinstatement premiums
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Insurance Segment – Quarterly Highlights
•
Gross written premiums of $1.1 billion, an 11.5% increase year-over-year in constant dollars, led by a
diversified mix of property, marine, energy and other specialty lines.
•
Strong underwriting profit of $66 million, up12% year-over-year.
•
Lower catastrophe losses in the quarter at $2 million.
•
Attritional loss ratio of 64.2% slightly up over prior year resulting in attritional combined ratio of 91.7%.
•
The quarter included a one-time current accident-year adjustment of $15 million related to a non-renewed
medical stop loss book.
•
Disciplined expense management of 27.7%, an improvement of 10 basis points over prior year.
•
Rate accelerated sequentially for the second straight quarter, driven by property and umbrella.
Underwriting information - Insurance segment
Q1
Year to Date
Q1
Year to Date
Year on Year Change
All values in USD millions except for percentages
2023
2023
2022
2022
Q1
Year to Date
Gross written premium
1,106
1,106
1,001
1,001
10.5%
10.5%
Net written premium
875
875
731
731
19.7%
19.7%
Loss ratio
64.7%
64.7%
64.1%
64.1%
Commission and brokerage ratio
11.8%
11.8%
12.5%
12.5%
Other underwriting expenses
15.9%
15.9%
15.3%
15.3%
Combined ratio
92.4%
92.4%
91.9%
91.9%
Attritional combined ratio
(1)
91.7%
91.7%
90.9%
90.9%
Pre-tax net catastrophe losses
(2)
2
2
5
5
Pre-tax net Russia/Ukraine losses
Pre-tax net prior year reserve development
1
1
Notes
(1) Attritional combined ratio excludes catastrophe losses, reinstatement premiums, prior year development, Covid-19 losses, CECL, and losses from the
Russian/Ukraine war.
(2) Pre-tax net catastrophe losses are net of reinsurance and reinstatement premiums
Investments and Shareholders’ Equity as of March 31, 2023
•
Total invested assets and cash of $31.4 billion versus $29.9 billion on December 31, 2022
•
Shareholders’ equity of $9.0 billion vs. $8.4 billion on December 31, 2022, includes $1.5 billion of
unrealized net losses on AFS fixed maturity investments
•
Shareholders’ equity excluding unrealized gains (losses) on AFS fixed maturity investments of $10.5
billion versus $10.1 billion on December 31, 2022
•
Book value per share of $229.49 versus $215.54 at December 31, 2022
•
Book value per share excluding unrealized gains (losses) on AFS fixed maturity investments of $266.64
versus $259.18 at December 31, 2022
•
Common share dividends declared and paid in the quarter of $1.65 per share equal to $65 million
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
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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
Everest is a global underwriting leader providing best-in-class property, casualty, and specialty reinsurance and
insurance solutions that address customers’ most pressing challenges. Known for a 50-year track record of
disciplined underwriting, capital and risk management, Everest, through its global operating affiliates, is
committed to underwriting opportunity for colleagues, customers, shareholders, and communities worldwide.
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.
A conference call discussing the results will be held at 8:00 a.m. Eastern Time on May 2, 2023. 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 gains (losses)
on investments and after-tax net foreign exchange income (expense) as the following reconciliation displays:
Three Months Ended March 31,
Three Months Ended March 31,
(Dollars in millions, except per share amounts)
2023
2022
2023
2022
(unaudited)
(unaudited)
Per Diluted
Per Diluted
Per Diluted
Per Diluted
Amount
Share
Amount
Share
Amount
Share
Amount
Share
After-tax operating income (loss)
$443
$11.31
$406
$10.31
$443
$11.31
$406
$10.31
After-tax net gains (losses) on investments
$6
$0.14
$(123)
$(3.14)
$6
$0.14
$(123)
$(3.14)
After-tax net foreign exchange income (expense)
$(84)
$(2.14)
$15
$0.39
$(84)
$(2.14)
$15
$0.39
Net income (loss)
$365
$9.31
$298
$7.56
$365
$9.31
$298
$7.56
(Some amounts may not reconcile due to rounding.)
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Although net gains (losses) on investments and net foreign exchange income (expense) are an integral part of the
Company’s insurance operations, the determination of net gains (losses) on investments and foreign exchange
income (expense) is independent of the insurance underwriting process. The Company believes that the level of
net gains (losses) on investments 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--
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EVEREST RE GROUP, LTD.
CONSOLIDATED STATEMENTS OF OPERATIONS
AND COMPREHENSIVE INCOME (LOSS)
Three Months Ended
March 31,
(Dollars in millions, except per share amounts)
2023
2022
(unaudited)
REVENUES:
Premiums earned
$3,100
$2,792
Net investment income
260
243
Net gains (losses) on investments:
Credit allowances on fixed maturity securities
(8)
(12)
Gains (losses) from fair value adjustments
4
(137)
Net realized gains (losses) from dispositions
9
(5)
Total net gains (losses) on investments
5
(154)
Other income (expense)
(79)
15
Total revenues
3,286
2,896
CLAIMS AND EXPENSES:
Incurred losses and loss adjustment expenses
1,966
1,790
Commission, brokerage, taxes and fees
661
605
Other underwriting expenses
200
161
Corporate expenses
19
14
Interest, fees and bond issue cost amortization expense
32
24
Total claims and expenses
2,878
2,594
INCOME (LOSS) BEFORE TAXES
408
302
Income tax expense (benefit)
43
4
NET INCOME (LOSS)
$365
$298
Other comprehensive income (loss), net of tax:
Unrealized appreciation (depreciation) ("URA(D)") on securities arising during the period
246
(815)
Reclassification adjustment for realized losses (gains) included in net income (loss)
3
4
Total URA(D) on securities arising during the period
249
(811)
Foreign currency translation adjustments
31
(34)
Reclassification adjustment for amortization of net (gain) loss included in net income (loss)
-
1
Total benefit plan net gain (loss) for the period
-
1
Total other comprehensive income (loss), net of tax
280
(844)
COMPREHENSIVE INCOME (LOSS)
$645
$(547)
EARNINGS PER COMMON SHARE:
Basic
$9.31
$7.57
Diluted
9.31
7.56
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EVEREST RE GROUP, LTD.
CONSOLIDATED BALANCE SHEETS
March 31,
(Dollars and share amounts in millions, except par value per share)
2023
2022
(unaudited)
ASSETS:
Fixed maturities - available for sale, at fair value
$23,560
$22,236
(amortized cost: 2023, $25,247; 2022, $24,191, credit allowances: 2023, ($62); 2022, ($54))
Fixed maturities - held to maturity, at amortized cost
(fair value: 2023, $814; 2022, $821, net of credit allowances: 2023, ($9); 2022, ($9))
825
839
Equity securities, at fair value
250
281
Other invested assets
4,156
4,085
Short-term investments
1,034
1,032
Cash
1,610
1,398
Total investments and cash
31,435
29,872
Accrued investment income
235
217
Premiums receivable (net of credit allowances: 2023, ($30); 2022, ($29))
3,922
3,619
Reinsurance paid loss recoverables (net of credit allowances: 2023, ($24); 2022, ($23))
182
136
Reinsurance unpaid loss recoverables
2,125
2,105
Funds held by reinsureds
1,071
1,056
Deferred acquisition costs
1,011
962
Prepaid reinsurance premiums
611
610
Income tax asset, net
387
459
Other assets (net of credit allowances: 2023, ($7); 2022, ($5))
860
930
TOTAL ASSETS
$41,839
$39,966
LIABILITIES:
Reserve for losses and loss adjustment expenses
22,878
22,065
Future policy benefit reserve
29
29
Unearned premium reserve
5,418
5,147
Funds held under reinsurance treaties
10
13
Other net payable to reinsurers
618
567
Losses in course of payment
123
74
Senior notes
2,348
2,347
Long term notes
218
218
Borrowings from FHLB
519
519
Accrued interest on debt and borrowings
41
19
Unsettled securities payable
201
1
Other liabilities
422
526
Total liabilities
32,825
31,525
SHAREHOLDERS' EQUITY:
Preferred shares, par value: $0.01; 50.0 shares authorized;
no shares issued and outstanding
Common shares, par value: $0.01; 200.0 shares authorized; (2023) 70.0
and (2022) 69.9 outstanding before treasury shares
1
1
Additional paid-in capital
2,295
2,302
Accumulated other comprehensive income (loss), net of deferred income tax expense
(benefit) of ($218) at 2023 and ($250) at 2022
(1,716)
(1,996)
Treasury shares, at cost: 30.8 shares (2023) and 30.8 shares (2022)
(3,908)
(3,908)
Retained earnings
12,342
12,042
Total shareholders' equity
9,014
8,441
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY
$41,839
$39,966
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EVEREST RE GROUP, LTD.
CONSOLIDATED STATEMENTS OF CASH FLOWS
Three Months Ended
March 31,
(Dollars in millions)
2023
2022
(unaudited)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss)
$365
$298
Adjustments to reconcile net income to net cash provided by operating activities:
Decrease (increase) in premiums receivable
(259)
(14)
Decrease (increase) in funds held by reinsureds, net
(17)
(67)
Decrease (increase) in reinsurance recoverables
7
(126)
Decrease (increase) in income taxes
41
1
Decrease (increase) in prepaid reinsurance premiums
28
(7)
Increase (decrease) in reserve for losses and loss adjustment expenses
681
632
Increase (decrease) in future policy benefit reserve
-
(1)
Increase (decrease) in unearned premiums
226
4
Increase (decrease) in other net payable to reinsurers
17
46
Increase (decrease) in losses in course of payment
47
(125)
Change in equity adjustments in limited partnerships
(5)
(98)
Distribution of limited partnership income
48
71
Change in other assets and liabilities, net
(121)
47
Non-cash compensation expense
12
12
Amortization of bond premium (accrual of bond discount)
(1)
19
Net (gains) losses on investments
(5)
154
Net cash provided by (used in) operating activities
1,064
846
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from fixed maturities matured/called/repaid - available for sale
562
849
Proceeds from fixed maturities sold - available for sale
72
419
Proceeds from fixed maturities matured/called/repaid - held to maturity
28
-
Proceeds from equity securities sold
46
90
Distributions from other invested assets
137
163
Cost of fixed maturities acquired - available for sale
(1,613)
(2,011)
Cost of fixed maturities acquired - held to maturity
(11)
-
Cost of equity securities acquired
(1)
(195)
Cost of other invested assets acquired
(242)
(137)
Net change in short-term investments
4
355
Net change in unsettled securities transactions
267
46
Net cash provided by (used in) investing activities
(752)
(421)
CASH FLOWS FROM FINANCING ACTIVITIES:
Common shares issued (redeemed) during the period for share-based compensation, net of expense
(19)
(14)
Purchase of treasury shares
-
(1)
Dividends paid to shareholders
(65)
(61)
Cost of shares withheld on settlements of share-based compensation awards
(19)
(17)
Net cash provided by (used in) financing activities
(103)
(94)
EFFECT OF EXCHANGE RATE CHANGES ON CASH
3
6
Net increase (decrease) in cash
212
337
Cash, beginning of period
1,398
1,441
Cash, end of period
$1,610
$1,778
SUPPLEMENTAL CASH FLOW INFORMATION:
Income taxes paid (recovered)
$2
$3
Interest paid
10
2