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| 8-K - EARNINGS RELEASE 8-K 2Q21 - EVEREST RE GROUP LTD | re-20210728.htm |
1
N
EWS
R
ELEASE
EVEREST RE GROUP, LTD.
Seon Place, 141 Front Street, 4
th
Contacts
Investors and Media:
Jon Levenson
Head of Investor Relations
Everest Global Services, Inc.
908.604.3169
For Immediate Release
Everest Re Group Reports Second Quarter 2021 Results
Net Income of $680 Million
35% Growth in Gross Written Premium with an 89.3% Combined Ratio
HAMILTON, Bermuda -- (BUSINESS WIRE) – July 28, 2021 – Everest Re Group, Ltd. (“Everest” or the
“Company”) today reported its 2021 second quarter results.
Second Quarter 2021 Highlights
●
Net income of $680 million equal to $16.95 per share
●
Net operating income of $587 million, equal to $14.63 per share
●
Gross written premium growth of 35% and net written premium growth of 39%
●
GAAP calendar year combined ratio of 89.3%, an 8-point improvement year over year, and
attritional combined ratio of 87.6%, a 0.9 point improvement year over year
●
Underwriting income of $274 million inclusive of pre-tax net catastrophe losses of $45 million
primarily from several global events in the Quarter.
●
No change to Covid-19 Pandemic (“Pandemic”) loss provision of $511 million
●
Operating cashflow of $724 million for the quarter
2
The following table summarizes the Company’s net income and related financial metrics.
Net income and operating income
Q2
Year to Date
Q2
Year to Date
All values in USD millions except for per share
2021
2021
2020
2020
Everest Re Group
Net income
680.0
1,021.8
190.9
207.5
Net operating income (loss)
587.0
847.2
82.9
247.3
Net income per diluted common share
16.95
25.47
4.77
5.13
Net operating income per diluted common share
14.63
21.12
2.07
6.12
Net income annualized return on average equity
28.4%
21.6%
8.9%
4.7%
Net operating income annualized return on average equity
24.5%
17.9%
3.9%
5.6%
Period end equity and book value
Q2 2021
Year to Date
Q4 2020
Shareholders' equity
10,416.8
9,726.2
Book value per share
260.32
243.25
Change in BVPS adjusted for dividends
8.3%
Total Shareholder Return ("TSR") - Annualized
22.5%
Notes
1/ Refer to the reconciliation of net income to net operating income found on page 6 of this
press release
Everest Re Group President & CEO Juan C. Andrade commented on the Company’s results:
“Everest had an excellent quarter across the board with very strong growth and outstanding
underwriting and investment performance. These results serve as the foundation for our exceptional
net income result of $1.02 billion through the first half of 2021 and are another important step
toward achieving our strategic plan objectives. Everest achieved an annualized Total Shareholder
Return (“TSR”) of 22.5% through the first half of 2021, exceeding our strategic plan target of
13.0%. Everest capitalized on market opportunities to expand our franchises in both reinsurance and
insurance, driven by the relentless execution of our strategies and the valuable risk solutions
provided to our customers and broker partners. Our focus on disciplined underwriting drove strong
profitability in both reinsurance and insurance across our global operations. Finally, the standout
performance this quarter demonstrates the quality of Everest’s diversified earnings, and it is an
important step toward achieving our strategic objectives and the commitments made to our
shareholders.”
The following information summarizes the Company’s underwriting results, on a consolidated basis and by
3
segment – Reinsurance and Insurance, with selected commentary on results by segment.
Underwriting information - Everest Re Group
Q2
Year to Date
Q2
Year to Date
Year on Year
All values in USD millions except for percentages
2021
2021
2020
2020
Q2
Year to Date
Gross written premium
3,190.1
6,121.6
2,369.3
4,940.2
34.6%
23.9%
Net written premium
2,809.4
5,363.3
2,017.5
4,219.0
39.3%
27.1%
Loss ratio
62.0%
66.7%
68.9%
69.6%
Commission and brokerage ratio
21.8%
21.2%
22.8%
22.4%
Other underwriting expenses
5.5%
5.7%
5.8%
6.1%
Combined ratio
89.3%
93.6%
97.5%
98.1%
Attritional combined ratio
87.6%
87.4%
88.5%
89.1%
Pre-tax net catastrophe losses
45.0
305.0
15.0
45.0
Pre-tax net covid losses
-
-
160.0
310.0
Pre-tax net prior year reserve development
(2.6)
(4.5)
5.3
2.7
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
●
The reinsurance segment recorded 40% growth in gross written premiums for the quarter. This
growth reflects the strength of the Everest global franchise, as we saw broad demand for our
reinsurance solutions in the US and across the world, notably in Europe, Bermuda, London, and
Latin America.
●
Our growth was well balanced by product line and geography and illustrates our ability to deploy
capital strategically in attractive markets and in attractive and diversifying product lines.
●
We had favorable renewals at April 1 and June 1 and we continue to write a stronger, less volatile,
more diversified, and more profitable book on a risk adjusted basis.
Underwriting information - Reinsurance segment
Q2
Year to Date
Q2
Year to Date
Year on Year
All values in USD millions except for percentages
2021
2021
2020
2020
Q2
Year to Date
Gross written premium
2,148.2
4,207.3
1,538.3
3,316.1
39.6%
26.9%
Net written premium
2,059.9
3,972.9
1,424.1
3,037.2
44.6%
30.8%
Loss ratio
60.8%
66.0%
67.0%
67.8%
Commission and brokerage ratio
24.6%
23.8%
25.8%
25.4%
Other underwriting expenses
2.5%
2.7%
2.6%
2.8%
Combined ratio
87.9%
92.5%
95.4%
96.0%
Attritional combined ratio
86.1%
85.8%
86.7%
87.2%
Pre-tax net catastrophe losses
35.0
247.5
-
24.5
Pre-tax net covid losses
-
-
131.0
241.0
Pre-tax net prior year reserve development
(1.4)
(3.3)
0.8
(1.8)
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
4
Insurance segment
●
Everest Insurance reported our first ever quarter with over $1.0 billion in gross written premium,
reflecting 25% growth year over year. New business in North America was the most significant
contributor to this growth, as the economy regains momentum and our responsive and focused
product offerings continue to resonate with our broker partners and insureds.
●
We continue to expand our margins and the attritional loss ratio improvement for the quarter reflects
the continuing success of our nimble and disciplined underwriting process, reacting quickly to
market conditions to best position our portfolio for long term profitability.
Underwriting information - Insurance segment
Q2
Year to Date
Q2
Year to Date
Year on Year
All values in USD millions except for percentages
2021
2021
2020
2020
Q2
Year to Date
Gross written premium
1,041.9
1,914.3
831.0
1,624.1
25.4%
17.9%
Net written premium
749.5
1,390.5
593.4
1,181.8
26.3%
17.7%
Loss ratio
65.6%
68.7%
74.3%
74.3%
Commission and brokerage ratio
13.3%
13.2%
14.6%
14.4%
Other underwriting expenses
14.6%
14.8%
14.5%
15.0%
Combined ratio
93.5%
96.7%
103.4%
103.7%
Attritional combined ratio
92.1%
92.2%
93.7%
94.3%
Pre-tax net catastrophe losses
10.0
57.5
15.0
20.5
Pre-tax net covid losses
-
-
29.0
69.0
Pre-tax net prior year reserve development
(1.2)
(1.2)
4.5
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
●
Net investment income of $407 million for the quarter including alternative investment gains of $266 million
for the quarter
●
Total invested assets and cash of $27.1 billion at June 30, 2021, 6.3% growth versus year end 2020
●
Shareholders’ equity of $10.4 billion as of June 30, 2021
●
Book value per diluted share of $260.32 at June 30, 2021
●
Common share dividends declared and paid in the quarter of $1.55 per share, equal to $62.0 million
●
Common share repurchases of $16.8 million during the quarter, representing 68,100 shares at an average price
of $246.44 per share
5
Equity and Book Value per Share
Q2
Year to Date
Q2
Year to Date
All values in USD millions
2021
2021
2020
2020
Beginning shareholders' equity
9,682.9
9,726.2
8,580.9
9,132.9
Net income
680.0
1,021.8
190.9
207.5
Change in investment unrealized gains (URAD)
85.8
(206.5)
544.5
296.5
Dividends to shareholders
(62.0)
(124.3)
(61.9)
(125.2)
Purchase of treasury shares
(16.8)
(40.3)
-
(200.0)
Other
46.9
39.9
31.9
(25.4)
Ending shareholders' equity
10,416.8
10,416.8
9,286.3
9,286.3
Diluted common shares outstanding
40.0
40.0
40.0
40.0
Book value per diluted common share
260.32
260.32
232.32
232.32
Common share dividends paid - last 12 months
6.20
6.20
6.05
6.05
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
6
www.everestre.com
. All issuing companies may not do business in all jurisdictions.
A conference call discussing the second quarter results will be held at 8:00 a.m. Eastern Time on July 29, 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
Reports/Quarterly Reports” 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 June 30,
Six Months Ended June 30,
(Dollars in thousands, except per share amounts)
2021
2020
2021
2020
(unaudited)
(unaudited)
Per Diluted
Per Diluted
Per Diluted
Per Diluted
Common
Common
Common
Common
Amount
Share
Amount
Share
Amount
Share
Amount
Share
Net income (loss)
$679,982
$16.95
$190,880
$4.77
$1,021,844
$25.47
$207,492
$5.13
After-tax net realized capital gains (losses)
$83,752
$2.09
$150,519
$3.76
$113,787
$2.84
($21,844)
($0.54)
After-tax net foreign exchange income (expense)
$9,222
$0.23
($42,528)
($1.06)
$60,840
$1.52
($17,924)
($0.44)
After-tax operating income (loss)
$587,008
$14.63
$82,889
$2.07
$847,217
$21.12
$247,260
$6.12
(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.
7
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--
8
EVEREST RE GROUP, LTD.
CONSOLIDATED STATEMENTS OF OPERATIONS
AND COMPREHENSIVE INCOME (LOSS)
Three Months Ended
Six Months Ended
June 30,
June 30,
(Dollars in thousands, except per share amounts)
2021
2020
2021
2020
(unaudited)
(unaudited)
REVENUES:
Premiums earned
$2,558,372
$2,042,405
$4,946,237
$4,079,219
Net investment income
407,095
38,083
667,508
185,883
Net realized capital gains (losses):
Credit allowances on fixed maturity securities
(15,927)
(4,063)
(22,904)
(25,837)
Other net realized capital gains (losses)
120,036
188,711
165,915
(103)
Total net realized capital gains (losses)
104,109
184,648
143,011
(25,940)
Other income (expense)
7,114
(20,621)
63,707
(12,631)
Total revenues
3,076,690
2,244,515
5,820,463
4,226,531
CLAIMS AND EXPENSES:
Incurred losses and loss adjustment expenses
$1,586,141
$1,407,016
$3,297,560
$2,837,856
Commission, brokerage, taxes and fees
557,749
466,316
1,046,760
914,838
Other underwriting expenses
140,844
118,130
283,075
246,990
Corporate expenses
16,168
8,733
28,546
18,566
Interest, fees and bond issue cost amortization expense
15,607
7,253
31,246
14,836
Total claims and expenses
2,316,509
2,007,448
4,687,187
4,033,086
INCOME (LOSS) BEFORE TAXES
760,181
237,067
1,133,276
193,445
Income tax expense (benefit)
80,199
46,187
111,432
(14,047)
NET INCOME (LOSS)
$679,982
$190,880
$1,021,844
$207,492
Other comprehensive income (loss), net of tax:
Unrealized appreciation (depreciation) ("URA(D)") on securities arising
during the period
84,171
551,753
(204,444)
272,354
Reclassification adjustment for realized losses (gains) included in net
income (loss)
1,590
(7,257)
(2,076)
24,142
Total URA(D) on securities arising during the period
85,761
544,496
(206,520)
296,496
Foreign currency translation adjustments
34,295
20,586
24,713
(30,238)
Reclassification adjustment for amortization of net (gain) loss included in
net income (loss)
2,043
1,806
4,086
2,726
Total benefit plan net gain (loss) for the period
2,043
1,806
4,086
2,726
Total other comprehensive income (loss), net of tax
122,099
566,888
(177,721)
268,984
COMPREHENSIVE INCOME (LOSS)
$802,081
$757,768
$844,123
$476,476
EARNINGS PER COMMON SHARE:
Basic
$16.97
$4.78
$25.50
$5.14
Diluted
16.95
4.77
25.47
5.13
9
EVEREST RE GROUP, LTD.
CONSOLIDATED BALANCE SHEETS
June 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 (amortized cost: 2021, $20,718,717; 2020,
$19,225,067, credit allowances: 2021, ($24,650); 2020, ($1,745))
$21,275,199
$20,040,173
Equity securities, at fair value
1,485,833
1,472,236
Short-term investments (cost: 2021, $629,943; 2020, $1,135,088)
629,943
1,134,950
Other invested assets (cost: 2021, $2,558,631; 2020, $2,012,581)
2,558,631
2,012,581
Cash
1,106,345
801,651
Total investments and cash
27,055,951
25,461,591
Accrued investment income
170,907
141,304
Premiums receivable
3,199,024
2,680,562
Reinsurance receivables
2,032,363
1,994,555
Funds held by reinsureds
798,780
716,655
Deferred acquisition costs
748,897
622,053
Prepaid reinsurance premiums
495,657
412,015
Income taxes net recoverable
-
17,253
Other assets
868,477
742,369
TOTAL ASSETS
$35,370,056
$32,788,357
LIABILITIES:
Reserve for losses and loss adjustment expenses
17,645,762
16,398,997
Future policy benefit reserve
36,497
37,723
Unearned premium reserve
4,024,050
3,501,359
Funds held under reinsurance treaties
17,520
15,807
Other net payable to reinsurers
379,524
294,347
Losses in course of payment
198,352
127,971
Senior notes due 6/1/2044
397,254
397,194
Senior notes due 10/1/2050
979,784
979,524
Long term notes due 5/1/2067
223,724
223,674
Borrowings from FHLB
310,000
310,000
Accrued interest on debt and borrowings
9,641
10,460
Unsettled securities payable
124,559
206,693
Income taxes net payable
35,089
-
Other liabilities
571,511
558,432
Total liabilities
24,953,267
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) 69,817
and (2020) 69,620 outstanding before treasury shares
698
696
Additional paid-in capital
2,256,390
2,245,301
Accumulated other comprehensive income (loss), net of deferred income tax expense
(benefit) of $56,797 at 2021 and $80,451 at 2020
357,178
534,899
Treasury shares, at cost; 29,802 shares (2021) and 29,636 shares (2020)
(3,662,499)
(3,622,172)
Retained earnings
11,465,022
10,567,452
Total shareholders' equity
10,416,789
9,726,176
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY
$35,370,056
$32,788,357
10
EVEREST RE GROUP, LTD.
CONSOLIDATED STATEMENTS OF CASH FLOWS
Six Months Ended
June 30,
(Dollars in thousands)
2021
2020
(unaudited)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss)
$1,021,844
$207,492
Adjustments to reconcile net income to net cash provided by operating activities:
Decrease (increase) in premiums receivable
(499,647)
(252,609)
Decrease (increase) in funds held by reinsureds, net
(79,485)
(23,498)
Decrease (increase) in reinsurance receivables
15,836
(147,515)
Decrease (increase) in income taxes
76,452
(25,000)
Decrease (increase) in prepaid reinsurance premiums
(71,566)
(29,699)
Increase (decrease) in reserve for losses and loss adjustment expenses
1,144,620
800,816
Increase (decrease) in future policy benefit reserve
(1,226)
(1,933)
Increase (decrease) in unearned premiums
500,077
159,744
Increase (decrease) in other net payable to reinsurers
72,850
89,499
Increase (decrease) in losses in course of payment
70,653
147,427
Change in equity adjustments in limited partnerships
(377,120)
84,066
Distribution of limited partnership income
49,053
40,447
Change in other assets and liabilities, net
(211,735)
(10,313)
Non-cash compensation expense
22,439
19,175
Amortization of bond premium (accrual of bond discount)
37,928
20,547
Net realized capital (gains) losses
(143,011)
25,940
Net cash provided by (used in) operating activities
1,627,962
1,104,586
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from fixed maturities matured/called - available for sale, at market value
1,897,536
1,261,650
Proceeds from fixed maturities sold - available for sale, at market value
599,737
990,273
Proceeds from equity securities sold, at fair value
474,663
213,185
Distributions from other invested assets
112,398
164,975
Cost of fixed maturities acquired - available for sale, at market value
(3,949,973)
(2,301,701)
Cost of equity securities acquired, at fair value
(360,016)
(224,086)
Cost of other invested assets acquired
(309,691)
(343,332)
Net change in short-term investments
506,285
(439,457)
Net change in unsettled securities transactions
(103,527)
49,504
Net cash provided by (used in) investing activities
(1,132,588)
(628,989)
CASH FLOWS FROM FINANCING ACTIVITIES:
Common shares issued during the period for share-based compensation, net of expense
(11,349)
(12,841)
Purchase of treasury shares
(40,328)
(200,019)
Dividends paid to shareholders
(124,274)
(125,205)
Cost of debt repurchase
(10,647)
Cost of shares withheld on settlements of share-based compensation awards
(13,713)
(14,141)
Net cash provided by (used in) financing activities
(189,664)
(362,853)
EFFECT OF EXCHANGE RATE CHANGES ON CASH
(1,016)
1,699
Net increase (decrease) in cash
304,694
114,443
Cash, beginning of period
801,651
808,036
Cash, end of period
$1,106,345
$922,479
SUPPLEMENTAL CASH FLOW INFORMATION:
Income taxes paid (recovered)
$34,780
$10,895
Interest paid
31,695
14,992