NEWS RELEASE

 

EVEREST RE GROUP, LTD.

Wessex House, 45 Reid Street, 2^nd Floor, Hamilton HM DX, Bermuda

Contact:

Elizabeth B. Farrell

Vice President, Investor Relations

Everest Global Services, Inc.

908.604.3169 For Immediate Release

Everest Re Group Reports Record Twelve Month Earnings

and GAAP Equity in Excess of $5 Billion

HAMILTON, Bermuda – January 29, 2007 -- Everest Re Group, Ltd. (NYSE: RE) reported fourth quarter 2006 after-tax operating income¹, which excludes realized capital gains and losses, of $201.2 million, or $3.07 per diluted share, compared to an after-tax operating loss of $185.8 million, or ($3.01) per share, in the fourth quarter of 2005. Net income for the fourth quarter 2006 of $206.4 million, or $3.15 per diluted share, also compares favorably to the fourth quarter of 2005 for which the Company reported a net loss of $162.2 million, or ($2.63) per share. Operating income differs from net income only by the exclusion of realized gains and losses on investments.

For the year ended December 31, 2006, after-tax operating income was $817.9 million, or $12.52 per diluted share, compared to an after-tax operating loss of $286.1 million, or ($4.96) per share, in 2005. Net income for the full year 2006 was $840.8 million, or $12.87 per diluted share in contrast to the net loss of $218.7 million, or ($3.79) per share, in 2005.

Operating highlights for the fourth quarter of 2006 included the following:

• The GAAP combined ratio in the fourth quarter was 92.9% compared to 142.8% in the same period last year. Significant catastrophic loss activity due to Hurricanes Katrina, Rita, and Wilma impacted 2005 while 2006 was a relatively benign period for such losses. The lack of catastrophe losses coupled with a firmer rate environment contributed to strong accident year results in 2006.

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• The Company incurred $44 million of net adverse loss reserve development in the quarter largely arising from the 2005 hurricane losses and pre-1995 asbestos liabilities, partially offset by favorable development on attritional loss reserves. The Company also incurred a pre-tax charge in the quarter of $23 million from 2006 accident year loss ratio reassessments. This charge included $80 million of losses related to a credit program in runoff, offset by $57 million of favorable experience in other lines of business, primarily in the U.S. Insurance segment.

• Gross premiums written were $987.3 million, a 13.4% increase compared to $871.0 million in the fourth quarter of 2005. The ramp up of new programs in the U.S. Insurance segment, which grew by 15% compared to the fourth quarter of 2005, was an important factor in the overall growth.

• Net investment income increased by 36% to $183.5 million as compared to $135.0 million for the fourth quarter of 2005. Income generated by several limited partnership investments and strong overall growth in the investment portfolio contributed to these favorable results.

• Cash flow from operations was $142.1 million for the period compared to $74.9 million for the fourth quarter of 2005. Catastrophe loss payouts were $188.4 million and $240.2 million, respectively, for the three months ended December 31, 2006 and 2005.

• The annualized return on average shareholders’ equity was 17.1% for the quarter and 18.7% for the full year 2006; and

• Shareholders’ equity reached $5.11 billion, or $78.53 per outstanding share, representing a 23.4% increase from shareholders’ equity of $4.14 billion, or $64.04 per outstanding share, at December 31, 2005.

Commenting on the Company’s results, Chairman and Chief Executive Officer, Joseph V. Taranto said, “With more than $5 billion in shareholders’ equity, we have reached yet another milestone in Everest’s history. This accomplishment is a testament to the strength of our operating platform and focused market strategy, which emphasizes profitability over growth. Year over year premium was down modestly but our financial results, and underlying accident year trends remain strong.”

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

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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.

Everest Re Group, Ltd. is a Bermuda holding company that operates through the following subsidiaries: Everest Reinsurance Company provides reinsurance to property and casualty insurers in both the U.S. and international markets. Everest Reinsurance (Bermuda), Ltd., including through its branch in the United Kingdom, provides reinsurance and insurance to worldwide property and casualty markets and reinsurance to life insurers. Everest National Insurance Company and Everest Security Insurance Company provide property and casualty insurance to policyholders in the U.S. Everest Indemnity Insurance Company offers excess and surplus lines insurance in the U.S. Additional information on Everest Re Group companies can be found at the Group’s web site at www.everestre.com.

A conference call discussing the third quarter results will be held at 8:30 a.m. Eastern Time on January 30, 2007. The call will be available on the Internet through the Company’s web site or at www.streetevents.com.

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, a non-GAAP financial measure, to evaluate its performance. After-tax operating income consists of net income excluding after-tax realized gains (losses) as the following reconciliation displays:

	Three Months Ended December 31,								Twelve Months Ended December 31,
(Dollars in thousands, except per share amounts)	2006				2005				2006				2005
	(unaudited)
		amount		per diluted share		amount		per share		amount		per diluted share		amount		per share
Net income (loss)	$	206,351	$	3.15	($	162,197)	($	2.63)	$	840,828	$	12.87	($	218,667)	($	3.79)
After-tax realized gains		5,195		0.08		23,613		0.38		22,912		0.35		67,481		1.17
After-tax operating income (loss)	$	201,156	$	3.07	($	185,810)	($	3.01)	$	817,916	$	12.52	($	286,148)	($	4.96)

Although realized capital gains (losses) are an integral part of the Company’s insurance operations, the determination of realized capital gains (losses) is independent of the insurance underwriting process. The Company believes that the level of realized gains (losses) 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 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

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Company understands that the equity analysts who follow the Company focus on after-tax operating income in their analyses for the reasons discussed above. The Company provides after-tax operating income 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 December 31,						Twelve Months Ended December 31,
(Dollars in thousands, except per share amounts)	2006			2005			2006			2005
	(unaudited)
REVENUES:
Premiums earned	$	979,688		$	905,269		$	3,853,153		$	3,963,093
Net investment income		183,549			134,967			629,378			522,833
Net realized capital gains		10,343			32,799			35,067			90,284
Net derivative income (expense)		596			380			(410	)		(2,638	)
Other (expense) income		(1,182	)		(2,228	)		112			(11,116	)
Total revenues		1,172,994			1,071,187			4,517,300			4,562,456
CLAIMS AND EXPENSES:
Incurred losses and loss adjustment expenses		645,170			1,045,742			2,434,420			3,724,317
Commission, brokerage, taxes and fees		223,378			211,276			883,254			914,847
Other underwriting expenses		41,200			35,536			137,977			129,800
Interest expense on senior notes		7,788			7,785			31,149			35,514
Interest expense on junior subordinated debt		9,363			9,363			37,449			37,449
Amortization of bond issue costs		234			235			938			1,019
Interest and fee expense on credit facilities		78			99			363			431
Total claims and expenses		927,211			1,310,036			3,525,550			4,843,377
INCOME (LOSS) BEFORE TAXES		245,783			(238,849	)		991,750			(280,921	)
Income tax expense (benefit)		39,432			(76,652	)		150,922			(62,254	)
NET INCOME (LOSS)	$	206,351		$	(162,197	)	$	840,828		$	(218,667	)
Other comprehensive income (loss), net of tax		81,764			(48,540	)		127,397			(107,591	)
COMPREHENSIVE INCOME (LOSS)	$	288,115		$	(210,737	)	$	968,225		$	(326,258	)
PER SHARE DATA:
Average shares outstanding (000's)		64,831			61,779			64,724			57,649
Net income (loss) per common share - basic	$	3.18		$	(2.63	)	$	12.99		$	(3.79	)
Average diluted shares outstanding (000's)		65,457			61,779			65,324			57,649
Net income (loss) per common share - diluted	$	3.15		$	(2.63	)	$	12.87		$	(3.79	)

EVEREST RE GROUP, LTD. CONSOLIDATED BALANCE SHEETS
	December 31,
(Dollars in thousands, except par value per share)	2006		2005
ASSETS:
Fixed maturities - available for sale, at market value
(amortized cost: 2006, $10,210,165; 2005, $9,872,239)	$	10,319,850	$	10,042,134
Equity securities, at market value (cost: 2006, $1,252,595; 2005, $922,090)		1,613,678		1,090,825
Short-term investments		1,306,498		1,443,751
Other invested assets (cost: 2006, $466,232; 2005, $285,385)		467,193		286,812
Cash		249,868		107,275
Total investments and cash		13,957,087		12,970,797
Accrued investment income		141,951		133,213
Premiums receivable		1,136,787		1,188,866
Reinsurance receivables		772,813		1,048,749
Funds held by reinsureds		284,809		286,856
Deferred acquisition costs		388,117		352,745
Prepaid reinsurance premiums		67,757		84,798
Deferred tax asset		220,047		234,562
Current federal income taxes receivable		-		75,022
Other assets		138,202		98,932
TOTAL ASSETS	$	17,107,570	$	16,474,539
LIABILITIES:
Reserve for losses and loss adjustment expenses	$	8,840,140	$	9,126,702
Future policy benefit reserve		100,962		133,155
Unearned premium reserve		1,612,250		1,596,309
Funds held under reinsurance treaties		70,982		190,641
Losses in the course of payment		55,290		19,434
Commission reserves		23,665		19,378
Other net payable to reinsurers		47,483		50,354
Current federal income taxes payable		43,002		-
8.75% Senior notes due 3/15/2010		199,560		199,446
5.4% Senior notes due 10/15/2014		249,652		249,617
Junior subordinated debt securities payable		546,393		546,393
Accrued interest on debt and borrowings		10,041		10,041
Other liabilities		200,463		193,375
Total liabilities		11,999,883		12,334,845
SHAREHOLDERS' EQUITY:
Preferred shares, par value: $0.01; 50 million shares authorized;
no shares issued and outstanding		-		-
Common shares, par value: $0.01; 200 million shares authorized;
(2006) 65.0 million and (2005) 64.6 million issued		650		646
Additional paid-in capital		1,770,496		1,731,746
Accumulated other comprehensive income, net of deferred income taxes of
$175.0 million at 2006 and $134.9 million at 2005		348,543		221,146
Retained earnings		2,987,998		2,186,156
Total shareholders' equity		5,107,687		4,139,694
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY	$	17,107,570	$	16,474,539

EVEREST RE GROUP, LTD. CONSOLIDATED STATEMENTS OF CASH FLOWS
	Three Months Ended December 31,						Twelve Months Ended December 31,
(Dollars in thousands)	2006			2005			2006			2005
	(unaudited)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss)	$	206,351		$	(162,197	)	$	840,828		$	(218,667	)
Adjustments to reconcile net income to net cash provided by
operating activities:
(Increase) decrease in premiums receivable		(4,471	)		97,157			70,596			113,548
Increase in funds held by reinsureds, net		(16,446	)		(46,411	)		(96,777	)		(198,243	)
Decrease in reinsurance receivables		88,459			28,424			304,769			139,423
Increase in deferred tax asset		(19,688	)		(28,160	)		(25,524	)		(71,048	)
(Decrease) increase in reserve for losses and loss adjustment expenses		(59,188	)		273,017			(432,494	)		1,398,935
Decrease in future policy benefit reserve		(10,334	)		(4,745	)		(32,193	)		(19,024	)
(Decrease) increase in unearned premiums		(27,395	)		(63,314	)		1,627			8,178
(Decrease) increase in other assets and liabilities, net		(13,016	)		3,146			3,477			(27,714	)
Non-cash compensation expense		5,572			2,990			15,127			8,003
Amortization of bond premium		2,567			7,760			21,797			27,298
Amortization of underwriting discount on senior notes		38			35			149			162
Realized capital gains		(10,343	)		(32,799	)		(35,067	)		(90,284	)
Net cash provided by operating activities		142,106			74,903			636,315			1,070,567
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from fixed maturities matured/called - available for sale		254,631			212,406			872,428			704,687
Proceeds from fixed maturities sold - available for sale		28,279			103,935			182,869			1,420,287
Proceeds from equity securities sold		94,598			100,976			281,093			217,909
Proceeds from other invested assets sold		33,986			14,368			76,307			53,565
Cost of fixed maturities acquired - available for sale		(341,412	)		(435,979	)		(1,291,871	)		(2,423,060	)
Cost of equity securities acquired		(128,616	)		(8,995	)		(568,966	)		(555,778	)
Cost of other invested assets acquired		(86,039	)		(57,666	)		(219,067	)		(175,782	)
Net sales (purchases) of short-term securities		33,769			(799,483	)		150,379			(853,499	)
Net (increase) decrease in unsettled securities transactions		(1,396	)		30,070			(11,322	)		159
Net cash used in investing activities		(112,200	)		(840,368	)		(528,150	)		(1,611,512	)
CASH FLOWS FROM FINANCING ACTIVITIES:
Common shares issued during the period		5,753			715,262			23,627			732,595
Dividends paid to shareholders		(15,609	)		(6,809	)		(38,986	)		(25,425	)
Sale of treasury shares		-			38,261			-			38,261
Repayment of senior notes		-			-			-			(250,000	)
Net cash (used in) provided by financing activities		(9,856	)		746,714			(15,359	)		495,431
EFFECT OF EXCHANGE RATE CHANGES ON CASH		20,056			(9,553	)		49,787			(32,141	)
Net increase (decrease) in cash		40,106			(28,304	)		142,593			(77,655	)
Cash, beginning of period		209,762			135,579			107,275			184,930
Cash, end of period	$	249,868		$	107,275		$	249,868		$	107,275
SUPPLEMENTAL CASH FLOW INFORMATION
Cash transactions:
Income taxes paid, net	$	33,984		$	1,042		$	46,616		$	110,945
Interest paid	$	16,289		$	16,211		$	68,910		$	79,617