Bermuda
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1-15731
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98-0365432
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(State or other jurisdiction
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(Commission
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(IRS Employer
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of incorporation)
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File Number)
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Identification No.)
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Wessex House – 2nd Floor
45 Reid Street
PO Box HM 845
Hamilton HM DX, Bermuda
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Not Applicable
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(Address of principal executive offices)
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(Zip Code)
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ITEM 2.02
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DISCLOSURE OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION
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ITEM 9.01
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FINANCIAL STATEMENTS AND EXHIBITS
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(c)
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Exhibits
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Exhibit No.
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Description
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99.1
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News Release of the registrant,
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dated July 27, 2011
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EVEREST RE GROUP, LTD.
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By:
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/S/ DOMINIC J. ADDESSO
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Dominic J. Addesso
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President and
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Chief Financial Officer
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EXHIBIT INDEX
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Exhibit
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Number
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Description of Document
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Page No.
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99.1
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News Release of the registrant,
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dated July 27, 2011
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5
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NEWS RELEASE
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![]() |
·
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Gross written premiums decreased 2.5% to $987.9 million compared to the same period in 2010. Excluding the impact of foreign exchange and reinstatement premiums, gross written premiums were down 5.5% in the quarter and 2% year-to-date, primarily driven by a continued reduction in casualty business.
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·
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Total pre-tax catastrophe losses, net of reinstatement premiums, were $113 million in the current quarter compared to $64.6 million in the second quarter of 2010. On an after-tax basis, net catastrophe losses amounted to $90 million in the quarter, or $1.65 per diluted common share. These losses were higher than previously announced due to the late reporting by a single client of increased exposures to the New Zealand earthquake that occurred earlier this year.
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·
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The current quarter loss ratio was 70.8% compared to 65.1% in 2010. Excluding the impact of net catastrophe losses, related reinstatement premiums, and favorable prior period loss development, the current year attritional loss ratio was 59.7%, a modest increase when compared to the 59.3% reported for last year’s second quarter.
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·
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Net investment income for the quarter was $158.6 million, a decline of 4% when compared to last year, driven by declining reinvestment rates and lower income on limited partnership investments.
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·
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Net after-tax realized capital losses amounted to $2.7 million for the quarter compared to net after-tax realized capital losses of $28.1 million in the same period last year.
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·
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Net after-tax unrealized capital gains increased $111.6 million during the quarter, primarily due to changes in interest rates.
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·
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Cash flow from operations was $150.6 million compared to $221.5 million for the same period in 2010.
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·
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For the quarter, the annualized after-tax operating income1 return on average adjusted shareholders’ equity2 was 9.5% compared to 13.1% in 2010.
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·
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During the quarter, the Company did not repurchase any of its common shares. For the year, the Company repurchased 428,038 of its common shares for a total cost of $37.6 million. The repurchases were made pursuant to a share repurchase authorization, provided by the Company’s Board of Directors, under which there remains 3.0 million shares available.
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·
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Shareholders’ equity ended the quarter at $6.2 billion, down 2% from the $6.3 billion at December 31, 2010. Book value per share was $113.21 as of June 30, 2011 compared to $115.45 at December 31, 2010.
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Three Months Ended
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Six Months Ended
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|||||||||||||||||||||||||||||||
June 30,
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June 30,
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|||||||||||||||||||||||||||||||
(Dollars in thousands, except per share amounts)
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2011
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2010
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2011
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2010
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||||||||||||||||||||||||||||
(unaudited)
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(unaudited)
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|||||||||||||||||||||||||||||||
Per Diluted
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Per Diluted
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Per
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Per Diluted
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|||||||||||||||||||||||||||||
Common
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Common
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Common
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Common
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|||||||||||||||||||||||||||||
Amount
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Share
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Amount
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Share
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Amount
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Share
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Amount
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Share
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|||||||||||||||||||||||||
Net income (loss)
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$ | 131,312 | $ | 2.41 | $ | 156,673 | $ | 2.70 | $ | (184,582 | ) | $ | (3.40 | ) | $ | 134,021 | $ | 2.28 | ||||||||||||||
After-tax net realized capital gains (losses)
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(2,661 | ) | (0.05 | ) | (28,141 | ) | (0.48 | ) | 5,007 | 0.09 | 23,000 | 0.39 | ||||||||||||||||||||
After-tax operating income (loss)
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$ | 133,971 | $ | 2.46 | $ | 184,814 | $ | 3.18 | $ | (189,590 | ) | $ | (3.49 | ) | $ | 111,021 | $ | 1.89 | ||||||||||||||
(Some amounts may not reconcile due to rounding.)
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Three Months Ended
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Six Months Ended
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|||||||||||||||
June 30,
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June 30,
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|||||||||||||||
(Dollars in thousands, except per share amounts)
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2011
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2010
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2011
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2010
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||||||||||||
(unaudited)
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(unaudited)
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|||||||||||||||
REVENUES:
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Premiums earned
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$ | 1,039,835 | $ | 989,899 | $ | 2,051,281 | $ | 1,917,201 | ||||||||
Net investment income
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158,618 | 165,731 | 337,323 | 327,230 | ||||||||||||
Net realized capital gains (losses):
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||||||||||||||||
Other-than-temporary impairments on fixed maturity securities
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- | - | (14,767 | ) | - | |||||||||||
Other-than-temporary impairments on fixed maturity securities
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||||||||||||||||
transferred to other comprehensive income (loss)
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- | - | - | - | ||||||||||||
Other net realized capital gains (losses)
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(4,845 | ) | (41,693 | ) | 22,078 | 31,025 | ||||||||||
Total net realized capital gains (losses)
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(4,845 | ) | (41,693 | ) | 7,311 | 31,025 | ||||||||||
Net derivative gain (loss)
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(3,371 | ) | (22,304 | ) | 4,154 | (19,250 | ) | |||||||||
Other income (expense)
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(13,446 | ) | 7,798 | (16,833 | ) | 13,137 | ||||||||||
Total revenues
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1,176,791 | 1,099,431 | 2,383,236 | 2,269,343 | ||||||||||||
CLAIMS AND EXPENSES:
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||||||||||||||||
Incurred losses and loss adjustment expenses
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735,789 | 643,948 | 1,985,565 | 1,550,804 | ||||||||||||
Commission, brokerage, taxes and fees
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237,374 | 236,493 | 473,831 | 449,155 | ||||||||||||
Other underwriting expenses
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45,897 | 41,747 | 90,853 | 80,691 | ||||||||||||
Corporate expenses
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3,790 | 3,887 | 7,718 | 8,462 | ||||||||||||
Interest, fees and bond issue cost amortization expense
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13,116 | 13,016 | 26,114 | 29,658 | ||||||||||||
Total claims and expenses
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1,035,966 | 939,091 | 2,584,081 | 2,118,770 | ||||||||||||
INCOME (LOSS) BEFORE TAXES
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140,825 | 160,340 | (200,845 | ) | 150,573 | |||||||||||
Income tax expense (benefit)
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9,513 | 3,667 | (16,263 | ) | 16,552 | |||||||||||
NET INCOME (LOSS)
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$ | 131,312 | $ | 156,673 | $ | (184,582 | ) | $ | 134,021 | |||||||
Other comprehensive income (loss), net of tax
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123,066 | 65,889 | 128,145 | 94,828 | ||||||||||||
COMPREHENSIVE INCOME (LOSS)
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$ | 254,378 | $ | 222,562 | $ | (56,437 | ) | $ | 228,849 | |||||||
EARNINGS PER COMMON SHARE:
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||||||||||||||||
Basic
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$ | 2.42 | $ | 2.70 | $ | (3.40 | ) | $ | 2.29 | |||||||
Diluted
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2.41 | 2.70 | (3.40 | ) | 2.28 | |||||||||||
Dividends declared
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0.48 | 0.48 | 0.96 | 0.96 |
June 30,
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December 31,
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|||||||
(Dollars and share amounts in thousands, except par value per share)
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2011
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2010
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||||||
(unaudited)
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ASSETS:
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Fixed maturities - available for sale, at market value
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$ | 12,456,773 | $ | 12,450,469 | ||||
(amortized cost: 2011, $11,924,068; 2010, $12,011,336)
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Fixed maturities - available for sale, at fair value
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128,337 | 180,482 | ||||||
Equity securities - available for sale, at market value (cost: 2011, $452,942; 2010, $363,283)
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461,503 | 363,736 | ||||||
Equity securities - available for sale, at fair value
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1,012,214 | 721,449 | ||||||
Short-term investments
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784,681 | 785,279 | ||||||
Other invested assets (cost: 2011, $581,803; 2010, $603,681)
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581,588 | 605,196 | ||||||
Cash
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411,523 | 258,408 | ||||||
Total investments and cash
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15,836,619 | 15,365,019 | ||||||
Accrued investment income
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144,322 | 148,990 | ||||||
Premiums receivable
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1,007,428 | 844,832 | ||||||
Reinsurance receivables
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693,952 | 684,718 | ||||||
Funds held by reinsureds
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350,595 | 379,616 | ||||||
Deferred acquisition costs
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352,067 | 383,769 | ||||||
Prepaid reinsurance premiums
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95,210 | 133,007 | ||||||
Deferred tax asset
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129,605 | 149,101 | ||||||
Federal income taxes recoverable
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158,943 | 147,988 | ||||||
Other assets
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235,176 | 170,931 | ||||||
TOTAL ASSETS
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$ | 19,003,917 | $ | 18,407,971 | ||||
LIABILITIES:
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Reserve for losses and loss adjustment expenses
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$ | 10,145,655 | $ | 9,340,183 | ||||
Future policy benefit reserve
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62,608 | 63,002 | ||||||
Unearned premium reserve
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1,348,332 | 1,455,219 | ||||||
Funds held under reinsurance treaties
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100,544 | 99,213 | ||||||
Commission reserves
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37,330 | 45,936 | ||||||
Other net payable to reinsurers
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20,136 | 47,519 | ||||||
Revolving credit borrowings
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40,000 | 50,000 | ||||||
5.4% Senior notes due 10/15/2014
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249,835 | 249,812 | ||||||
6.6% Long term notes due 5/1/2067
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238,352 | 238,351 | ||||||
Junior subordinated debt securities payable
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329,897 | 329,897 | ||||||
Accrued interest on debt and borrowings
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4,789 | 4,793 | ||||||
Equity index put option liability
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54,313 | 58,467 | ||||||
Other liabilities
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219,568 | 142,062 | ||||||
Total liabilities
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12,851,359 | 12,124,454 | ||||||
SHAREHOLDERS' EQUITY:
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Preferred shares, par value: $0.01; 50,000 shares authorized;
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no shares issued and outstanding
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- | - | ||||||
Common shares, par value: $0.01; 200,000 shares authorized; (2011) 66,363
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and (2010) 66,017 outstanding before treasury shares
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664 | 660 | ||||||
Additional paid-in capital
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1,878,242 | 1,863,031 | ||||||
Accumulated other comprehensive income (loss), net of deferred income tax expense
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||||||||
(benefit) of $121,456 at 2011 and $102,868 at 2010
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460,403 | 332,258 | ||||||
Treasury shares, at cost; 12,017 shares (2011) and 11,589 shares (2010)
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(1,019,091 | ) | (981,480 | ) | ||||
Retained earnings
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4,832,340 | 5,069,048 | ||||||
Total shareholders' equity
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6,152,558 | 6,283,517 | ||||||
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY
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$ | 19,003,917 | $ | 18,407,971 |
Three Months Ended
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Six Months Ended
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June 30,
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June 30,
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(Dollars in thousands)
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2011
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2010
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2011
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2010
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(unaudited)
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(unaudited)
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CASH FLOWS FROM OPERATING ACTIVITIES:
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Net income (loss)
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$ | 131,312 | $ | 156,673 | $ | (184,582 | ) | $ | 134,021 | |||||||
Adjustments to reconcile net income to net cash provided by operating activities:
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||||||||||||||||
Decrease (increase) in premiums receivable
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(35,074 | ) | 2,624 | (153,497 | ) | (5,135 | ) | |||||||||
Decrease (increase) in funds held by reinsureds, net
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22,645 | (11,156 | ) | 39,488 | (13,585 | ) | ||||||||||
Decrease (increase) in reinsurance receivables
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537 | (29,147 | ) | 17,755 | (62,291 | ) | ||||||||||
Decrease (increase) in deferred tax asset
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(17,582 | ) | (11,853 | ) | 1,658 | (5,064 | ) | |||||||||
Decrease (increase) in prepaid reinsurance premiums
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22,319 | (13,098 | ) | 39,346 | (12,688 | ) | ||||||||||
Increase (decrease) in reserve for losses and loss adjustment expenses
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146,938 | 30,445 | 693,385 | 449,390 | ||||||||||||
Increase (decrease) in future policy benefit reserve
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(176 | ) | (434 | ) | (394 | ) | (569 | ) | ||||||||
Increase (decrease) in unearned premiums
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(106,556 | ) | (28,341 | ) | (113,687 | ) | 13,257 | |||||||||
Change in equity adjustments in limited partnerships
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(14,309 | ) | (16,091 | ) | (50,614 | ) | (32,255 | ) | ||||||||
Change in other assets and liabilities, net
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(21,301 | ) | 86,141 | 23,947 | 30,264 | |||||||||||
Non-cash compensation expense
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4,212 | 3,589 | 7,658 | 7,130 | ||||||||||||
Amortization of bond premium (accrual of bond discount)
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12,818 | 10,454 | 25,570 | 21,339 | ||||||||||||
Amortization of underwriting discount on senior notes
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12 | 11 | 24 | 53 | ||||||||||||
Net realized capital (gains) losses
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4,845 | 41,693 | (7,311 | ) | (31,025 | ) | ||||||||||
Net cash provided by (used in) operating activities
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150,640 | 221,510 | 338,746 | 492,842 | ||||||||||||
CASH FLOWS FROM INVESTING ACTIVITIES:
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||||||||||||||||
Proceeds from fixed maturities matured/called - available for sale, at market value
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372,401 | 369,775 | 810,665 | 783,165 | ||||||||||||
Proceeds from fixed maturities matured/called - available for sale, at fair value
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5,875 | - | 12,775 | - | ||||||||||||
Proceeds from fixed maturities sold - available for sale, at market value
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336,770 | 238,940 | 867,680 | 723,462 | ||||||||||||
Proceeds from fixed maturities sold - available for sale, at fair value
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17,168 | 6,115 | 50,120 | 8,612 | ||||||||||||
Proceeds from equity securities sold - available for sale, at market value
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110 | 712 | 27,206 | 712 | ||||||||||||
Proceeds from equity securities sold - available for sale, at fair value
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37,000 | 51,400 | 93,667 | 72,742 | ||||||||||||
Distributions from other invested assets
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40,535 | 19,630 | 127,094 | 30,360 | ||||||||||||
Cost of fixed maturities acquired - available for sale, at market value
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(582,696 | ) | (938,124 | ) | (1,537,328 | ) | (1,961,623 | ) | ||||||||
Cost of fixed maturities acquired - available for sale, at fair value
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(7,148 | ) | (9,486 | ) | (15,224 | ) | (23,680 | ) | ||||||||
Cost of equity securities acquired - available for sale, at market value
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(28,683 | ) | (1,426 | ) | (115,811 | ) | (1,426 | ) | ||||||||
Cost of equity securities acquired - available for sale, at fair value
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(213,658 | ) | (38,095 | ) | (342,300 | ) | (80,417 | ) | ||||||||
Cost of other invested assets acquired
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(27,544 | ) | (10,034 | ) | (52,102 | ) | (37,078 | ) | ||||||||
Cost of businesses acquired
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- | - | (63,100 | ) | - | |||||||||||
Net change in short-term investments
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(130,222 | ) | 209,878 | 2,717 | 291,897 | |||||||||||
Net change in unsettled securities transactions
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175,061 | (58,493 | ) | 47,201 | (11,195 | ) | ||||||||||
Net cash provided by (used in) investing activities
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(5,031 | ) | (159,208 | ) | (86,740 | ) | (204,469 | ) | ||||||||
CASH FLOWS FROM FINANCING ACTIVITIES:
|
||||||||||||||||
Common shares issued during the period, net
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5,879 | 128 | 7,557 | 849 | ||||||||||||
Purchase of treasury shares
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- | (200,079 | ) | (37,611 | ) | (247,111 | ) | |||||||||
Revolving credit borrowings
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- | 133,000 | (10,000 | ) | 133,000 | |||||||||||
Net cost of senior notes maturing
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- | - | - | (200,000 | ) | |||||||||||
Dividends paid to shareholders
|
(26,081 | ) | (27,556 | ) | (52,126 | ) | (55,840 | ) | ||||||||
Net cash provided by (used in) financing activities
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(20,202 | ) | (94,507 | ) | (92,180 | ) | (369,102 | ) | ||||||||
EFFECT OF EXCHANGE RATE CHANGES ON CASH
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1,969 | 9,499 | (6,711 | ) | 24,584 | |||||||||||
Net increase (decrease) in cash
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127,376 | (22,706 | ) | 153,115 | (56,145 | ) | ||||||||||
Cash, beginning of period
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284,147 | 214,159 | 258,408 | 247,598 | ||||||||||||
Cash, end of period
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$ | 411,523 | $ | 191,453 | $ | 411,523 | $ | 191,453 | ||||||||
SUPPLEMENTAL CASH FLOW INFORMATION:
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||||||||||||||||
Income taxes paid (recovered)
|
$ | (24,471 | ) | $ | (48,597 | ) | $ | (12,546 | ) | $ | (35,838 | ) | ||||
Interest paid
|
20,259 | 20,160 | 25,778 | 34,361 | ||||||||||||
Non-cash transaction:
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||||||||||||||||
Net assets acquired and liabilities assumed from business acquisitions
|
- | - | 19,130 | - |