Bermuda
|
1-15731
|
98-0365432
|
(State or other jurisdiction
|
(Commission
|
(IRS Employer
|
of incorporation)
|
File Number)
|
Identification No.)
|
Wessex House – 2nd Floor
45 Reid Street
PO Box HM 845
Hamilton HM DX, Bermuda
|
Not Applicable
|
|
(Address of principal executive offices)
|
(Zip Code)
|
ITEM 2.02
|
DISCLOSURE OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION
|
ITEM 9.01
|
FINANCIAL STATEMENTS AND EXHIBITS
|
(c)
|
Exhibits
|
||
Exhibit No.
|
Description
|
||
99.1
|
News Release of the registrant,
|
||
dated October 24, 2012
|
EVEREST RE GROUP, LTD.
|
||||
By:
|
/S/ CRAIG HOWIE | |||
Craig Howie
|
||||
Executive Vice President and
|
||||
Chief Financial Officer
|
EXHIBIT INDEX
|
Exhibit
|
|||
Number
|
Description of Document
|
Page No.
|
|
99.1
|
News Release of the registrant,
|
||
dated October 24, 2012
|
5
|
NEWS RELEASE
|
![]() |
·
|
Gross written premiums were $1.2 billion, an increase of 7% compared to the third quarter of 2011. Worldwide, reinsurance premiums were down 2.5% to $869.5 million, but adjusting for the higher level of reinstatement premiums in 2011 and the effects of foreign currency fluctuations, reinsurance premiums were relatively
|
|
flat. Insurance premiums increased 42%, quarter over quarter, primarily due to the acquisition of Heartland.
|
·
|
The loss and combined ratios for the quarter were 59.8% and 87.2%, respectively, compared to 69.0% and 95.6% in 2011. Excluding catastrophe losses, reinstatement premiums, and prior period loss development, the current quarter attritional loss ratio was 57.5% and the current quarter attritional combined ratio was 84.9%. This compared to 56.6% and 83.5%, respectively, for the same period last year. It should be noted that the current year attritional combined ratio does include a $33.2 million underwriting loss in the quarter for crop business, $20.0 million on primary business and $13.2 million on reinsurance business. Adjusting for this, the current year attritional combined ratio would be 81.6%.
|
·
|
Net investment income for the quarter was $152.0 million, down 3% compared to last year, primarily driven by declining reinvestment rates.
|
·
|
Net after-tax realized and unrealized capital gains totaled $40.4 million and $118.2 million, respectively, for the quarter.
|
·
|
Cash flow from operations was $174.9 million compared to $207.9 million for the same period in 2011. Higher underwriting cash flow was partially offset by lower investment income receipts and higher tax payments in the current quarter.
|
·
|
Through nine months, the annualized after-tax operating income1 return on average adjusted shareholders’ equity2 was 15.3%.
|
·
|
During the quarter, the Company repurchased 229,100 of its common shares at an average price of $109.22 and a total cost of $25 million. For the year, the Company repurchased 2.6 million of its common shares for a total cost of $250 million. The repurchases were made pursuant to a share repurchase authorization, provided by the Company’s Board of Directors, under which there remains 4.7 million shares available.
|
·
|
Shareholders’ equity ended the quarter at $6.8 billion, up 12% from the $6.1 billion at December 31, 2011. Book value per share increased 16% from $112.99 at December 31, 2011 to $131.22 at September 30, 2012.
|
Three Months Ended
|
Nine Months Ended
|
|||||||||||||||||||||||||||||||
September 30,
|
September 30,
|
|||||||||||||||||||||||||||||||
(Dollars in thousands, except per share amounts)
|
2012
|
2011
|
2012
|
2011
|
||||||||||||||||||||||||||||
(unaudited) | (unaudited) | |||||||||||||||||||||||||||||||
Per Diluted
|
Per Diluted
|
Per Diluted
|
Per
|
|||||||||||||||||||||||||||||
Common
|
Common
|
Common
|
Common
|
|||||||||||||||||||||||||||||
Amount
|
Share
|
Amount
|
Share
|
Amount
|
Share
|
Amount
|
Share
|
|||||||||||||||||||||||||
Net income (loss)
|
$ | 250,922 | $ | 4.82 | $ | 63,054 | $ | 1.16 | $ | 770,177 | $ | 14.61 | $ | (121,528 | ) | $ | (2.24 | ) | ||||||||||||||
After-tax net realized capital gains (losses)
|
40,351 | 0.78 | (83,619 | ) | (1.54 | ) | 96,665 | 1.83 | (78,612 | ) | (1.45 | ) | ||||||||||||||||||||
After-tax operating income (loss)
|
$ | 210,571 | $ | 4.05 | $ | 146,673 | $ | 2.70 | $ | 673,512 | $ | 12.78 | $ | (42,916 | ) | $ | (0.79 | ) | ||||||||||||||
(Some amounts may not reconcile due to rounding.)
|
Three Months Ended
|
Nine Months Ended
|
|||||||||||||||
September 30,
|
September 30,
|
|||||||||||||||
(Dollars in thousands, except per share amounts)
|
2012
|
2011
|
2012
|
2011
|
||||||||||||
(unaudited)
|
(unaudited)
|
|||||||||||||||
REVENUES:
|
||||||||||||||||
Premiums earned
|
$ | 1,009,454 | $ | 1,044,338 | $ | 3,045,232 | $ | 3,095,619 | ||||||||
Net investment income
|
152,024 | 156,465 | 453,791 | 493,788 | ||||||||||||
Net realized capital gains (losses):
|
||||||||||||||||
Other-than-temporary impairments on fixed maturity securities
|
(3,548 | ) | (1,050 | ) | (9,902 | ) | (15,817 | ) | ||||||||
Other-than-temporary impairments on fixed maturity securities
|
||||||||||||||||
transferred to other comprehensive income (loss)
|
- | - | - | - | ||||||||||||
Other net realized capital gains (losses)
|
66,291 | (136,621 | ) | 154,784 | (114,543 | ) | ||||||||||
Total net realized capital gains (losses)
|
62,743 | (137,671 | ) | 144,882 | (130,360 | ) | ||||||||||
Net derivative gain (loss)
|
703 | (23,427 | ) | (9,420 | ) | (19,273 | ) | |||||||||
Other income (expense)
|
(5,943 | ) | (14,911 | ) | 15,675 | (31,744 | ) | |||||||||
Total revenues
|
1,218,981 | 1,024,794 | 3,650,160 | 3,408,030 | ||||||||||||
CLAIMS AND EXPENSES:
|
||||||||||||||||
Incurred losses and loss adjustment expenses
|
603,654 | 720,711 | 1,813,990 | 2,706,276 | ||||||||||||
Commission, brokerage, taxes and fees
|
221,082 | 227,969 | 724,374 | 701,800 | ||||||||||||
Other underwriting expenses
|
55,762 | 49,437 | 153,932 | 140,290 | ||||||||||||
Corporate expenses
|
5,947 | 4,204 | 16,683 | 11,922 | ||||||||||||
Interest, fees and bond issue cost amortization expense
|
13,331 | 13,085 | 39,753 | 39,199 | ||||||||||||
Total claims and expenses
|
899,776 | 1,015,406 | 2,748,732 | 3,599,487 | ||||||||||||
INCOME (LOSS) BEFORE TAXES
|
319,205 | 9,388 | 901,428 | (191,457 | ) | |||||||||||
Income tax expense (benefit)
|
68,283 | (53,666 | ) | 131,251 | (69,929 | ) | ||||||||||
NET INCOME (LOSS)
|
$ | 250,922 | $ | 63,054 | $ | 770,177 | $ | (121,528 | ) | |||||||
Other comprehensive income (loss), net of tax :
|
||||||||||||||||
Unrealized appreciation (depreciation) ("URA(D)") on securities arising during the period
|
116,694 | (14,536 | ) | 202,229 | 53,141 | |||||||||||
Less: reclassification adjustment for realized losses (gains) included in net income (loss)
|
1,512 | (20,420 | ) | (5,702 | ) | (949 | ) | |||||||||
Total URA(D) on securities arising during the period
|
118,206 | (34,956 | ) | 196,527 | 52,192 | |||||||||||
Foreign currency translation adjustments
|
36,252 | (23,247 | ) | 27,125 | 16,258 | |||||||||||
Pension adjustments
|
1,199 | 746 | 3,166 | 2,238 | ||||||||||||
Total other comprehensive income (loss), net of tax
|
155,657 | (57,457 | ) | 226,818 | 70,688 | |||||||||||
COMPREHENSIVE INCOME (LOSS)
|
$ | 406,579 | $ | 5,597 | $ | 996,995 | $ | (50,840 | ) | |||||||
EARNINGS PER COMMON SHARE:
|
||||||||||||||||
Basic
|
$ | 4.84 | $ | 1.16 | $ | 14.66 | $ | (2.24 | ) | |||||||
Diluted
|
4.82 | 1.16 | 14.61 | (2.24 | ) | |||||||||||
Dividends declared
|
0.48 | 0.48 | 1.44 | 1.44 |
September 30,
|
December 31,
|
|||||||
(Dollars and share amounts in thousands, except par value per share)
|
2012
|
2011
|
||||||
(unaudited)
|
||||||||
ASSETS:
|
||||||||
Fixed maturities - available for sale, at market value
|
$ | 12,846,495 | $ | 12,293,524 | ||||
(amortized cost: 2012, $12,100,746; 2011, $11,731,173)
|
||||||||
Fixed maturities - available for sale, at fair value
|
52,217 | 113,606 | ||||||
Equity securities - available for sale, at market value (cost: 2012, $265,563; 2011, $463,620)
|
279,375 | 448,930 | ||||||
Equity securities - available for sale, at fair value
|
1,301,522 | 1,249,106 | ||||||
Short-term investments
|
973,560 | 685,332 | ||||||
Other invested assets (cost: 2012, $602,230; 2011, $558,232)
|
602,230 | 558,232 | ||||||
Cash
|
478,558 | 448,651 | ||||||
Total investments and cash
|
16,533,957 | 15,797,381 | ||||||
Accrued investment income
|
128,619 | 130,193 | ||||||
Premiums receivable
|
1,204,867 | 1,077,548 | ||||||
Reinsurance receivables
|
642,612 | 580,339 | ||||||
Funds held by reinsureds
|
224,344 | 267,295 | ||||||
Deferred acquisition costs
|
296,410 | 378,026 | ||||||
Prepaid reinsurance premiums
|
106,869 | 85,409 | ||||||
Deferred tax asset
|
260,809 | 332,783 | ||||||
Income taxes recoverable
|
20,378 | 41,623 | ||||||
Other assets
|
248,608 | 202,958 | ||||||
TOTAL ASSETS
|
$ | 19,667,473 | $ | 18,893,555 | ||||
LIABILITIES:
|
||||||||
Reserve for losses and loss adjustment expenses
|
$ | 9,847,174 | $ | 10,123,215 | ||||
Future policy benefit reserve
|
65,734 | 67,187 | ||||||
Unearned premium reserve
|
1,370,099 | 1,412,778 | ||||||
Funds held under reinsurance treaties
|
2,659 | 2,528 | ||||||
Commission reserves
|
51,453 | 55,103 | ||||||
Other net payable to reinsurers
|
228,641 | 60,775 | ||||||
5.4% Senior notes due 10/15/2014
|
249,894 | 249,858 | ||||||
6.6% Long term notes due 5/1/2067
|
238,356 | 238,354 | ||||||
Junior subordinated debt securities payable
|
329,897 | 329,897 | ||||||
Accrued interest on debt and borrowings
|
12,092 | 4,781 | ||||||
Equity index put option liability
|
79,148 | 69,729 | ||||||
Unsettled securities payable
|
105,869 | 8,793 | ||||||
Other liabilities
|
301,085 | 199,182 | ||||||
Total liabilities
|
12,882,101 | 12,822,180 | ||||||
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; (2012) 67,024
|
||||||||
and (2011) 66,455 outstanding before treasury shares
|
670 | 665 | ||||||
Additional paid-in capital
|
1,935,677 | 1,892,988 | ||||||
Accumulated other comprehensive income (loss), net of deferred income tax expense
|
||||||||
(benefit) of $136,906 at 2012 and $112,969 at 2011
|
593,796 | 366,978 | ||||||
Treasury shares, at cost; 15,316 shares (2012) and 12,719 shares (2011)
|
(1,323,995 | ) | (1,073,970 | ) | ||||
Retained earnings
|
5,579,224 | 4,884,714 | ||||||
Total shareholders' equity
|
6,785,372 | 6,071,375 | ||||||
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY
|
$ | 19,667,473 | $ | 18,893,555 |
Three Months Ended
|
Nine Months Ended
|
|||||||||||||||
September 30,
|
September 30,
|
|||||||||||||||
(Dollars in thousands)
|
2012
|
2011
|
2012
|
2011
|
||||||||||||
(unaudited)
|
(unaudited)
|
|||||||||||||||
CASH FLOWS FROM OPERATING ACTIVITIES:
|
||||||||||||||||
Net income (loss)
|
$ | 250,922 | $ | 63,054 | $ | 770,177 | $ | (121,528 | ) | |||||||
Adjustments to reconcile net income to net cash provided by operating activities:
|
||||||||||||||||
Decrease (increase) in premiums receivable
|
(227,333 | ) | (6,371 | ) | (119,923 | ) | (159,868 | ) | ||||||||
Decrease (increase) in funds held by reinsureds, net
|
37,682 | (22,036 | ) | 46,089 | 17,452 | |||||||||||
Decrease (increase) in reinsurance receivables
|
(22,945 | ) | 89,855 | (35,972 | ) | 107,610 | ||||||||||
Decrease (increase) in current income taxes
|
19,927 | 14,638 | 21,386 | 7,205 | ||||||||||||
Decrease (increase) in deferred tax asset
|
14,935 | (75,216 | ) | 48,896 | (73,558 | ) | ||||||||||
Decrease (increase) in prepaid reinsurance premiums
|
(27,524 | ) | 10,126 | (18,401 | ) | 49,472 | ||||||||||
Increase (decrease) in reserve for losses and loss adjustment expenses
|
(138,310 | ) | (115,014 | ) | (405,540 | ) | 578,371 | |||||||||
Increase (decrease) in future policy benefit reserve
|
(535 | ) | (638 | ) | (1,454 | ) | (1,032 | ) | ||||||||
Increase (decrease) in unearned premiums
|
121,344 | 34,686 | (52,225 | ) | (79,001 | ) | ||||||||||
Increase (decrease) in other net payable to reinsurers
|
138,239 | 13,645 | 165,142 | (15,938 | ) | |||||||||||
Change in equity adjustments in limited partnerships
|
(18,274 | ) | (16,439 | ) | (46,766 | ) | (67,053 | ) | ||||||||
Change in other assets and liabilities, net
|
65,247 | 65,828 | 184,250 | 126,791 | ||||||||||||
Non-cash compensation expense
|
9,452 | 5,295 | 22,826 | 12,953 | ||||||||||||
Amortization of bond premium (accrual of bond discount)
|
14,829 | 8,814 | 45,795 | 34,384 | ||||||||||||
Amortization of underwriting discount on senior notes
|
13 | 12 | 38 | 36 | ||||||||||||
Net realized capital (gains) losses
|
(62,743 | ) | 137,671 | (144,882 | ) | 130,360 | ||||||||||
Net cash provided by (used in) operating activities
|
174,926 | 207,910 | 479,436 | 546,656 | ||||||||||||
CASH FLOWS FROM INVESTING ACTIVITIES:
|
||||||||||||||||
Proceeds from fixed maturities matured/called - available for sale, at market value
|
503,303 | 537,715 | 1,294,896 | 1,348,380 | ||||||||||||
Proceeds from fixed maturities matured/called - available for sale, at fair value
|
1,300 | - | 1,300 | 12,775 | ||||||||||||
Proceeds from fixed maturities sold - available for sale, at market value
|
217,983 | 487,973 | 639,301 | 1,355,653 | ||||||||||||
Proceeds from fixed maturities sold - available for sale, at fair value
|
11,783 | 12,512 | 72,926 | 62,632 | ||||||||||||
Proceeds from equity securities sold - available for sale, at market value
|
76,000 | 1 | 130,792 | 27,207 | ||||||||||||
Proceeds from equity securities sold - available for sale, at fair value
|
89,311 | 61,080 | 386,917 | 154,747 | ||||||||||||
Distributions from other invested assets
|
32,015 | 15,923 | 53,032 | 143,017 | ||||||||||||
Cost of fixed maturities acquired - available for sale, at market value
|
(889,195 | ) | (756,432 | ) | (2,143,771 | ) | (2,293,760 | ) | ||||||||
Cost of fixed maturities acquired - available for sale, at fair value
|
(1,658 | ) | (9,801 | ) | (7,164 | ) | (25,025 | ) | ||||||||
Cost of equity securities acquired - available for sale, at market value
|
(7,472 | ) | (4,772 | ) | (20,126 | ) | (120,583 | ) | ||||||||
Cost of equity securities acquired - available for sale, at fair value
|
(111,767 | ) | (342,567 | ) | (305,046 | ) | (684,867 | ) | ||||||||
Cost of other invested assets acquired
|
(21,089 | ) | (5,730 | ) | (49,681 | ) | (57,832 | ) | ||||||||
Cost of businesses acquired
|
- | - | - | (63,100 | ) | |||||||||||
Net change in short-term investments
|
(24,466 | ) | (51,333 | ) | (287,196 | ) | (48,616 | ) | ||||||||
Net change in unsettled securities transactions
|
59,991 | (11,755 | ) | 65,957 | 35,446 | |||||||||||
Net cash provided by (used in) investing activities
|
(63,961 | ) | (67,186 | ) | (167,863 | ) | (153,926 | ) | ||||||||
CASH FLOWS FROM FINANCING ACTIVITIES:
|
||||||||||||||||
Common shares issued during the period, net
|
1,913 | 951 | 19,868 | 8,508 | ||||||||||||
Purchase of treasury shares
|
(25,026 | ) | (46,628 | ) | (250,025 | ) | (84,239 | ) | ||||||||
Revolving credit borrowings
|
- | (40,000 | ) | - | (50,000 | ) | ||||||||||
Dividends paid to shareholders
|
(24,897 | ) | (25,936 | ) | (75,667 | ) | (78,062 | ) | ||||||||
Net cash provided by (used in) financing activities
|
(48,010 | ) | (111,613 | ) | (305,824 | ) | (203,793 | ) | ||||||||
EFFECT OF EXCHANGE RATE CHANGES ON CASH
|
16,752 | 3,072 | 24,158 | (3,639 | ) | |||||||||||
Net increase (decrease) in cash
|
79,707 | 32,183 | 29,907 | 185,298 | ||||||||||||
Cash, beginning of period
|
398,851 | 411,523 | 448,651 | 258,408 | ||||||||||||
Cash, end of period
|
$ | 478,558 | $ | 443,706 | $ | 478,558 | $ | 443,706 | ||||||||
SUPPLEMENTAL CASH FLOW INFORMATION:
|
||||||||||||||||
Income taxes paid (recovered)
|
$ | 30,662 | $ | 6,627 | $ | 54,463 | $ | (5,919 | ) | |||||||
Interest paid
|
5,851 | 5,607 | 31,936 | 31,385 | ||||||||||||
Non-cash transaction:
|
||||||||||||||||
Net assets acquired and liabilities assumed from business acquisitions
|
- | - | - | 19,130 | ||||||||||||
Conversion of equity securities - available for sale, at market value, to fixed
|
||||||||||||||||
maturity securities - available for sale, at market value, including accrued
|
||||||||||||||||
interest at time of conversion
|
- | - | 92,981 | - |