Everest Re Group Reports Second Quarter 2022 Results

$386 Million of Net Operating Income and 15.3% Annualized Operating ROE

$123 Million of Net Income and 91.8% Combined Ratio

HAMILTON, Bermuda--(BUSINESS WIRE)--
Everest Re Group, Ltd. (“Everest” or the “Group”) today reported its second quarter 2022 results.

Second Quarter 2022 Highlights

$386 Million of Net Operating Income, 15.3% annualized Operating ROE, and Net Income of $123 Million
$3.4 billion in gross written premium (“GWP”) with year over year growth of 8.1% for the Group (10.3% in constant dollars), 19.6% for Insurance (20.5% in constant dollars), and 2.5% for Reinsurance (5.2% in constant dollars)
Combined ratios of 91.8% for the Group, 91.8% for Reinsurance and 91.5% for Insurance
Attritional combined ratios of 87.2% for the Group, 86.0% for Reinsurance and 90.2% for Insurance
Pre-tax underwriting income of $240 million including $85 million of catastrophe losses net of recoveries and reinstatement premiums. Catastrophe events comprised of South Africa flood losses, Canadian and European storms, and 2Q events in the United States
Everest posted a $45M estimate for the Russia/Ukraine war. We have limited direct exposure to the Russia/Ukraine war but, significant uncertainty regarding market and industry losses remains
Net investment income of $226 million, balanced between fixed income and a strong alternative investments performance

Everest Re Group President & CEO Juan C. Andrade commented on the Company’s results:

“Everest’s solid second quarter results reflect the successful execution of our strategy with strong momentum across our key performance objectives. Our focus on underwriting profitability and operational efficiency, supported by our investment portfolio delivered $386 million in net operating income and a $15.3% operating ROE. We expanded margins across our insurance and reinsurance businesses with disciplined growth, continued to scale our insurance platform and in reinsurance capitalized on strategic market opportunities that improved the diversity and economics of our book, while reducing volatility. Everest’s breadth of global talent, disciplined underwriting and market leadership provide strength and stability to our customers in the increasingly complex environment. Entering the second half of the year, we are well-positioned to continue executing our strategy and providing attractive shareholder returns.”

Summary of Second Quarter 2022 Net Income and Other Items

Net income of $123 million, equal to $3.11 per diluted share vs. second quarter 2021 net income of $680 million, equal to $16.95 per diluted share
Net operating income of $386 million, equal to $9.79 per diluted share vs. second quarter 2021 net operating income of $587 million, equal to $14.63 per diluted share
GAAP combined ratio of 91.8% including 2.9 points of catastrophe losses vs. the second quarter 2021 figures of 89.3% including 1.8 points of catastrophe losses
Operating cashflow for the quarter of $715 million vs. the second quarter 2021 figure of $724 million

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 amounts and percentages	2022		2022		2021		2021
Everest Re Group
Net income	123		420		680		1,022
Net operating income (loss)	386		792		587		847

Net income per diluted common share	3.11		10.67		16.95		25.47
Net operating income per diluted common share	9.79		20.10		14.63		21.12

Net income annualized return on average equity	4.8	%	8.4	%	28.4	%	21.6	%
Net operating income annualized return on average equity	15.3	%	15.8	%	24.5	%	17.9	%

Notes

1/ Refer to the reconciliation of net income to net operating income found on page 6 of this press release

Equity and Book Value per Share	Q2		Year to Date		Q2		Year to Date
All values in USD millions except for per share amounts and percentages	2022		2022		2021		2021
Beginning shareholders' equity	9,528		10,139		9,683		9,726
Net income	123		420		680		1,022
Change- unrealized gains (losses) - Fixed inc. investments	(717	)	(1,528	)	86		(207	)
Dividends to shareholders	(65	)	(126	)	(62	)	(124	)
Purchase of treasury shares	-		(1	)	(17	)	(40	)
Other	(16	)	(52	)	47		40
Ending shareholders' equity	8,853		8,853		10,417		10,417

Common shares outstanding			39.42				40.02
Book value per common share outstanding			224.59				260.32
Less: Unrealized on fixed inc. investments ("URAD")			(32.68	)			12.93
Book value excl. URAD per common share outstanding			257.27				247.39

Change in BVPS adjusted for dividends			-11.8	%
Total Shareholder Return ("TSR") - Annualized			6.6	%
Common share dividends paid - last 12 months			6.30				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	Q2		Year to Date		Q2		Year to Date		Year on Year Change
All values in USD millions except for percentages	2022		2022		2021		2021		Q2		Year to Date
Gross written premium	3,447		6,633		3,190		6,122		8.1	%	8.4	%
Net written premium	3,022		5,834		2,809		5,363		7.5	%	8.8	%

Loss ratio	64.3	%	64.2	%	62.0	%	66.7	%	2.3 pts		(2.5) pts
Commission and brokerage ratio	21.6	%	21.6	%	21.8	%	21.2	%	(0.2) pts		0.4 pts
Other underwriting expenses	5.8	%	5.8	%	5.5	%	5.7	%	0.3 pts		0.1 pts
Combined ratio	91.8	%	91.7	%	89.3	%	93.6	%	2.5pts		(1.9) pts
Attritional combined ratio	87.2	%	87.3	%	87.6	%	87.4	%	(0.4) pts		(0.1) pts

Pre-tax net catastrophe losses	85		200		45		305
Pre-tax net covid losses	-		-		-		-
Pre-tax net Russian / Ukraine War losses	45		45		-		-
Pre-tax net prior year reserve development	(1	)	(2	)	(3	)	(4	)

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

Reinsurance Segment – Quarterly Highlights

Gross written premiums of $2.2 billion for the quarter. The June 1 and July 1 renewals were successful as we continue to write a stronger, less volatile, more diversified, and more profitable book of business.
Improved risk-adjusted profitability of the portfolio driven by targeted underwriting actions, resulting in a 30-basis point improvement in the attritional loss ratio for the quarter vs. the prior year (58.8% vs. 59.1%) and an attritional combined ratio of 86.0%
Continued expense discipline resulting in an operating expense ratio for the quarter of 2.4%, and a combined ratio of 91.8%

Underwriting information - Reinsurance segment	Q2		Year to Date		Q2		Year to Date		Year on Year Change
All values in USD millions except for percentages	2022		2022		2021		2021		Q2		Year to Date
Gross written premium	2,201		4,387		2,148		4,207		2.5	%	4.3	%
Net written premium	2,122		4,204		2,060		3,973		3.0	%	5.8	%

Loss ratio	64.6	%	64.4	%	60.8	%	66.0	%	3.8 pts		(1.6) pts
Commission and brokerage ratio	24.8	%	24.8	%	24.6	%	23.8	%	0.2 pts		1.0 pts
Other underwriting expenses	2.4	%	2.4	%	2.5	%	2.7	%	(0.1) pts		(0.3) pts
Combined ratio	91.8	%	91.6	%	87.9	%	92.5	%	3.9 pts		(0.9) pts
Attritional combined ratio	86.0	%	86.1	%	86.1	%	85.8	%	(0.1) pts		0.3 pts

Pre-tax net catastrophe losses	80		190		35		248
Pre-tax net covid losses	-		-		-		-
Pre-tax net Russian / Ukraine War losses	45		45		-		-
Pre-tax net prior year reserve development	(1	)	(2	)	(1	)	(3	)

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

Insurance Segment – Quarterly Highlights

Gross written premiums of $1.2 billion reflecting a 19.6% increase year over year, driven by balanced and diversified growth across most lines of business and geographies, partially offset by our continued focus to reduce exposure in property CAT
Excellent profitability with a 91.5% combined ratio and 90.2% attritional combined ratio (a 1.9 points improvement compared to 2Q 2021)
Rate increases remain solid and above loss trend

Underwriting information - Insurance segment	Q2		Year to Date		Q2		Year to Date		Year on Year Change
All values in USD millions except for percentages	2022		2022		2021		2021		Q2		Year to Date
Gross written premium	1,246		2,247		1,042		1,914		19.6	%	17.4	%
Net written premium	899		1,630		749		1,390		20.0	%	17.2	%

Loss ratio	63.6	%	63.9	%	65.6	%	68.7	%	(2.0) pts		(4.8) pts
Commission and brokerage ratio	12.8	%	12.7	%	13.3	%	13.2	%	(0.5) pts		(0.5) pts
Other underwriting expenses	15.1	%	15.2	%	14.6	%	14.8	%	0.5 pts		0.4 pts
Combined ratio	91.5	%	91.7	%	93.5	%	96.7	%	(2.0) pts		(5.0) pts
Attritional combined ratio	90.2	%	90.6	%	92.1	%	92.2	%	(1.9) pts		(1.6) pts

Pre-tax net catastrophe losses	5		10		10		58
Pre-tax net covid losses	-		-		-		-
Pre-tax net Russian / Ukraine War losses	-		-		-		-
Pre-tax net prior year reserve development	-		1		(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 at June 30, 2022

Total invested assets and cash of $28.7 billion versus the year end 2021 value of $29.7 billion
Shareholders’ equity of $8.9 billion vs. $10.1 billion at year end 2021, largely driven by $1.5 billion of unrealized net losses on fixed maturity investments
Book value per diluted share of $224.59 vs. $258.21 at year end 2021
Book value per diluted share excluding unrealized gains (losses) on fixed maturity investments of $257.27 vs. $252.12 at year end 2021
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 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 results will be held at 8:00 a.m. Eastern Time on July 28, 2022. 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 June 30,										Six Months Ended June 30,

(Dollars in thousands, except per share amounts)	2022						2021				2022						2021
	(unaudited)										(unaudited)

				Per Diluted										Per Diluted

	Amount			Share			Amount		Share		Amount			Share			Amount		Share

Net income (loss)	$	122,630		$	3.11		$	679,982	$	16.95	$	420,381		$	10.67		$	1,021,844	$	25.47
After-tax net (gains) losses on investments	$	(189,060	)	$	(4.79	)	$	83,752	$	2.09	$	(312,429	)	$	(7.93	)	$	113,787	$	2.84
After-tax net foreign exchange income (expense)	$	(74,217	)	$	(1.88	)	$	9,222	$	0.23	$	(58,879	)	$	(1.49	)	$	60,840	$	1.52

After-tax operating income (loss)	$	385,907		$	9.79		$	587,008	$	14.63	$	791,689		$	20.10		$	847,217	$	21.12

(Some amounts may not reconcile due to rounding.)

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--

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)	2022			2021			2022			2021
	(unaudited)						(unaudited)
REVENUES:
Premiums earned	$	2,916,237		$	2,558,372		$	5,708,003		$	4,946,237
Net investment income		225,978			407,095			468,808			667,508
Net gains (losses) on investments:
Credit allowances on fixed maturity securities		(1,490	)		(15,927	)		(13,343	)		(22,904	)
Gains (losses) from fair value adjustments		(188,924	)		103,525			(325,784	)		132,581
Net realized gains (losses) from dispositions		(45,851	)		16,511			(50,765	)		33,334
Total net gains (losses) on investments		(236,265	)		104,109			(389,892	)		143,011
Other income (expense)		(71,337	)		7,114			(55,977	)		63,707
Total revenues		2,834,613			3,076,690			5,730,942			5,820,463

CLAIMS AND EXPENSES:
Incurred losses and loss adjustment expenses		1,876,247			1,586,141			3,666,110			3,297,560
Commission, brokerage, taxes and fees		630,294			557,749			1,235,523			1,046,760
Other underwriting expenses		169,533			140,844			330,826			283,075
Corporate expenses		15,018			16,168			29,038			28,546
Interest, fees and bond issue cost amortization expense		24,398			15,607			48,476			31,246
Total claims and expenses		2,715,490			2,316,509			5,309,973			4,687,187

INCOME (LOSS) BEFORE TAXES		119,123			760,181			420,969			1,133,276
Income tax expense (benefit)		(3,507	)		80,199			588			111,432

NET INCOME (LOSS)	$	122,630		$	679,982		$	420,381		$	1,021,844

Other comprehensive income (loss), net of tax:
Unrealized appreciation (depreciation) ("URA(D)") on securities arising during the period		(732,364	)		84,171			(1,547,540	)		(204,444	)
Reclassification adjustment for realized losses (gains) included in net income (loss)		15,841			1,590			20,019			(2,076	)
Total URA(D) on securities arising during the period		(716,523	)		85,761			(1,527,521	)		(206,520	)

Foreign currency translation adjustments		(28,269	)		34,295			(62,371	)		24,713

Reclassification adjustment for amortization of net (gain) loss included in net income (loss)		758			2,043			1,515			4,086
Total benefit plan net gain (loss) for the period		758			2,043			1,515			4,086
Total other comprehensive income (loss), net of tax		(744,034	)		122,099			(1,588,377	)		(177,721	)

COMPREHENSIVE INCOME (LOSS)	$	(621,404	)	$	802,081		$	(1,167,996	)	$	844,123

EARNINGS PER COMMON SHARE:
Basic	$	3.11		$	16.97		$	10.67		$	25.50
Diluted		3.11			16.95			10.67			25.47

EVEREST RE GROUP, LTD.
CONSOLIDATED BALANCE SHEETS


	June 30,			December 31,
(Dollars and share amounts in thousands, except par value per share)	2022			2021
	(unaudited)
ASSETS:
Fixed maturities - available for sale, at fair value	$	21,880,443		$	22,308,272
(amortized cost: 2022, $23,408,417; 2021, $22,063,592, credit allowances: 2022, ($42,714); 2021, ($29,738))
Fixed maturities - held to maturity, at amortized cost, net of credit allowances
(fair value: 2022, $71,245, credit allowances: 2022, ($366))		71,390			-
Equity securities, at fair value		1,299,221			1,825,908
Short-term investments (cost: 2022, $300,854; 2021, $1,178,386)		300,840			1,178,337
Other invested assets		3,055,356			2,919,965
Cash		2,116,049			1,440,861
Total investments and cash		28,723,299			29,673,343
Accrued investment income		178,123			149,105
Premiums receivable		3,406,564			3,293,598
Reinsurance recoverables		2,096,968			2,053,354
Funds held by reinsureds		909,454			868,601
Deferred acquisition costs		836,496			872,289
Prepaid reinsurance premiums		562,550			515,445
Income taxes		336,646			2,381
Other assets		857,550			757,167
TOTAL ASSETS	$	37,907,650		$	38,185,283

LIABILITIES:
Reserve for losses and loss adjustment expenses		19,993,054			19,009,486
Future policy benefit reserve		33,580			35,669
Unearned premium reserve		4,681,010			4,609,634
Funds held under reinsurance treaties		12,658			18,391
Other net payable to reinsurers		492,556			449,723
Losses in course of payment		79,549			260,684
Senior notes		2,346,495			2,345,800
Long term notes		223,824			223,774
Borrowings from FHLB		519,000			519,000
Accrued interest on debt and borrowings		16,664			17,348
Unsettled securities payable		66,150			16,698
Other liabilities		590,244			539,896
Total liabilities		29,054,784			28,046,103

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; (2022) 69,947
and (2021) 69,790 outstanding before treasury shares		700			698
Additional paid-in capital		2,283,513			2,274,431
Accumulated other comprehensive income (loss), net of deferred income tax expense
(benefit) of ($208,066) at 2022 and $26,781 at 2021		(1,576,854	)		11,523
Treasury shares, at cost; 30,529 (2022) and 30,524 shares (2021)		(3,848,630	)		(3,847,308	)
Retained earnings		11,994,137			11,699,836
Total shareholders' equity		8,852,866			10,139,180
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY	$	37,907,650		$	38,185,283

EVEREST RE GROUP, LTD.
CONSOLIDATED STATEMENTS OF CASH FLOWS


	Six Months Ended
	June 30,
(Dollars in thousands)	2022			2021
	(unaudited)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss)	$	420,381		$	1,021,844
Adjustments to reconcile net income to net cash provided by operating activities:
Decrease (increase) in premiums receivable		(223,030	)		(499,647	)
Decrease (increase) in funds held by reinsureds, net		(51,451	)		(79,485	)
Decrease (increase) in reinsurance recoverables		(236,849	)		15,836
Decrease (increase) in income taxes		(100,230	)		76,452
Decrease (increase) in prepaid reinsurance premiums		(109,716	)		(71,566	)
Increase (decrease) in reserve for losses and loss adjustment expenses		1,360,076			1,139,879
Increase (decrease) in future policy benefit reserve		(2,089	)		(1,226	)
Increase (decrease) in unearned premiums		176,631			500,077
Increase (decrease) in other net payable to reinsurers		119,858			72,850
Increase (decrease) in losses in course of payment		(178,091	)		70,653
Change in equity adjustments in limited partnerships		(156,868	)		(377,120	)
Distribution of limited partnership income		105,452			49,053
Change in other assets and liabilities, net		(11,031	)		(206,994	)
Non-cash compensation expense		23,919			22,439
Amortization of bond premium (accrual of bond discount)		35,052			37,928
Net (gains) losses on investments		389,892			(143,011	)
Net cash provided by (used in) operating activities		1,561,906			1,627,962

CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from fixed maturities matured/called/repaid - available for sale		1,661,128			1,897,536
Proceeds from fixed maturities matured/called/repaid - held to maturity		333			-
Proceeds from fixed maturities sold - available for sale		772,148			599,737
Proceeds from equity securities sold, at fair value		437,815			474,663
Distributions from other invested assets		204,790			112,398
Cost of fixed maturities acquired - available for sale		(4,070,949	)		(3,949,973	)
Cost of fixed maturities acquired - held to maturity		(72,061	)		-
Cost of equity securities acquired, at fair value		(283,352	)		(360,016	)
Cost of other invested assets acquired		(307,525	)		(309,691	)
Net change in short-term investments		878,360			506,285
Net change in unsettled securities transactions		22,512			(103,527	)
Net cash provided by (used in) investing activities		(756,801	)		(1,132,588	)

CASH FLOWS FROM FINANCING ACTIVITIES:
Common shares issued during the period for share-based compensation, net of expense		(14,835	)		(11,349	)
Purchase of treasury shares		(1,322	)		(40,328	)
Dividends paid to shareholders		(126,079	)		(124,274	)
Cost of shares withheld on settlements of share-based compensation awards		(17,352	)		(13,713	)
Net cash provided by (used in) financing activities		(159,588	)		(189,664	)

EFFECT OF EXCHANGE RATE CHANGES ON CASH		29,671			(1,016	)

Net increase (decrease) in cash		675,188			304,694
Cash, beginning of period		1,440,861			801,651
Cash, end of period	$	2,116,049		$	1,106,345

SUPPLEMENTAL CASH FLOW INFORMATION:
Income taxes paid (recovered)	$	100,506		$	34,780
Interest paid		31,835			31,695