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 February 6, 2013
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EVEREST RE GROUP, LTD.
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||||
By:
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/S/ CRAIG HOWIE |
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||
Craig Howie
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||||
Executive Vice 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 February 6, 2013
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5
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NEWS RELEASE
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|
·
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Gross written premiums were $1.15 billion, an increase of 4% compared to the fourth quarter of 2011. Worldwide reinsurance premiums were generally flat while direct insurance premiums were up 21% in the period. For the full year, gross
|
|
written premiums totaled $4.3 billion and, after adjusting for the impact of foreign exchange and reinstatement premiums, were up 2% compared to last year.
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·
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The combined ratio was 108.4% for the quarter and 93.8% for the year, compared to 130.3% and 118.5%, respectively, for the same periods in 2011. As previously announced, the fourth quarter included losses for Superstorm Sandy, which, on a net pre-tax basis, after reinstatement premiums, amounted to $287 million. For the full year, net pre-tax catastrophe losses totaled $361 million. Excluding catastrophe losses, reinstatement premiums and nominal favorable prior year loss development, the calendar year attritional combined ratio improved 3 points to 85.0% for 2012.
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·
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Net investment income amounted to $146 million for the quarter and $600 million for the full year 2012. This included limited partnership income of $17 million and $65 million in each period, respectively.
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·
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Net after-tax realized capital gains totaled $17 million for the quarter. For the full year, net after-tax realized and unrealized capital gains totaled $114 million and $154 million, respectively.
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·
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Cash flow from operations was $184 million for the quarter and $664 million for the full year 2012. This compared to $113 million and $660 million for the same periods, respectively, in 2011.
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·
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For the year, the after-tax operating income1 return on average adjusted shareholders’ equity2 was 12% and net income return on equity was 14%.
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·
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During the quarter, the Company repurchased 370,939 of its common shares at an average price of $107.72 and a total cost of $40 million. For the year, the Company repurchased 3.0 million of its common shares for a total cost of $290 million. During January, the Company repurchased an additional 343,981 shares for a total cost of $38 million, which will be reflected in first quarter 2013 reporting. The repurchases were made pursuant to a share repurchase authorization, provided by the Company’s Board of Directors, under which there remains 4.0 million shares available.
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·
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Shareholders’ equity ended the year at $6.7 billion, up 11% from the $6.1 billion at December 31, 2011. Book value per share increased 16% from $112.99 at year-end 2011 to $130.96 at December 31, 2012.
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Three Months Ended
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Twelve Months Ended
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|||||||||||||||||||||||||||||||
December 31,
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December 31,
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|||||||||||||||||||||||||||||||
(Dollars in thousands, except per share amounts)
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2012
|
2011
|
2012
|
2011
|
||||||||||||||||||||||||||||
(unaudited) | (unaudited) | |||||||||||||||||||||||||||||||
Per Diluted
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Per Diluted
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Per Diluted
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Per
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|||||||||||||||||||||||||||||
Common
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Common
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Common
|
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)
|
$ | 58,777 | $ | 1.13 | $ | 41,042 | $ | 0.76 | $ | 828,954 | $ | 15.79 | $ | (80,486 | ) | $ | (1.49 | ) | ||||||||||||||
After-tax net realized capital gains (losses)
|
17,126 | 0.33 | 91,726 | 1.70 | 113,792 | 2.17 | 13,114 | 0.24 | ||||||||||||||||||||||||
After-tax operating income (loss)
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$ | 41,651 | $ | 0.80 | $ | (50,684 | ) | $ | (0.94 | ) | $ | 715,162 | $ | 13.62 | $ | (93,600 | ) | $ | (1.73 | ) | ||||||||||||
(Some amounts may not reconcile due to rounding.)
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Three Months Ended
|
Twelve Months Ended
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|||||||||||||||
December 31,
|
December 31,
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|||||||||||||||
(Dollars in thousands, except per share amounts)
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2012
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2011
|
2012
|
2011
|
||||||||||||
(unaudited)
|
(unaudited) |
|
||||||||||||||
REVENUES:
|
||||||||||||||||
Premiums earned
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$ | 1,119,396 | $ | 1,005,728 | $ | 4,164,628 | $ | 4,101,347 | ||||||||
Net investment income
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146,411 | 126,253 | 600,202 | 620,041 | ||||||||||||
Net realized capital gains (losses):
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||||||||||||||||
Other-than-temporary impairments on fixed maturity securities
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(120 | ) | (406 | ) | (10,022 | ) | (16,223 | ) | ||||||||
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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19,638 | 137,689 | 174,422 | 23,146 | ||||||||||||
Total net realized capital gains (losses)
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19,518 | 137,283 | 164,400 | 6,923 | ||||||||||||
Net derivative gain (loss)
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(318 | ) | 8,012 | (9,738 | ) | (11,261 | ) | |||||||||
Other income (expense)
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(12,357 | ) | 8,655 | 3,318 | (23,089 | ) | ||||||||||
Total revenues
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1,272,650 | 1,285,931 | 4,922,810 | 4,693,961 | ||||||||||||
CLAIMS AND EXPENSES:
|
||||||||||||||||
Incurred losses and loss adjustment expenses
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931,275 | 1,019,928 | 2,745,265 | 3,726,204 | ||||||||||||
Commission, brokerage, taxes and fees
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228,327 | 248,721 | 952,701 | 950,521 | ||||||||||||
Other underwriting expenses
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53,727 | 42,113 | 207,659 | 182,403 | ||||||||||||
Corporate expenses
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7,293 | 4,539 | 23,976 | 16,461 | ||||||||||||
Interest, fees and bond issue cost amortization expense
|
13,930 | 13,120 | 53,683 | 52,319 | ||||||||||||
Total claims and expenses
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1,234,552 | 1,328,421 | 3,983,284 | 4,927,908 | ||||||||||||
INCOME (LOSS) BEFORE TAXES
|
38,098 | (42,490 | ) | 939,526 | (233,947 | ) | ||||||||||
Income tax expense (benefit)
|
(20,679 | ) | (83,532 | ) | 110,572 | (153,461 | ) | |||||||||
NET INCOME (LOSS)
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$ | 58,777 | $ | 41,042 | $ | 828,954 | $ | (80,486 | ) | |||||||
Other comprehensive income (loss), net of tax:
|
||||||||||||||||
Unrealized appreciation (depreciation) ("URA(D)") on securities arising during the period
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(28,204 | ) | 38,340 | 174,025 | 91,481 | |||||||||||
Less: reclassification adjustment for realized losses (gains) included in net income (loss)
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(13,974 | ) | (10,391 | ) | (19,676 | ) | (11,340 | ) | ||||||||
Total URA(D) on securities arising during the period
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(42,178 | ) | 27,949 | 154,349 | 80,141 | |||||||||||
Foreign currency translation adjustments
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(4,427 | ) | (32,227 | ) | 22,698 | (15,969 | ) | |||||||||
Pension adjustments
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(10,142 | ) | (31,690 | ) | (6,976 | ) | (29,452 | ) | ||||||||
Total other comprehensive income (loss), net of tax
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(56,747 | ) | (35,968 | ) | 170,071 | 34,720 | ||||||||||
COMPREHENSIVE INCOME (LOSS)
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$ | 2,030 | $ | 5,074 | $ | 999,025 | $ | (45,766 | ) | |||||||
EARNINGS PER COMMON SHARE:
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||||||||||||||||
Basic
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$ | 1.14 | $ | 0.76 | $ | 15.85 | $ | (1.49 | ) | |||||||
Diluted
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1.13 | 0.76 | 15.79 | (1.49 | ) | |||||||||||
Dividends declared
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0.48 | 0.48 | 1.92 | 1.92 |
December 31,
|
||||||||
(Dollars and share amounts in thousands, except par value per share)
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2012
|
2011
|
||||||
(unaudited)
|
||||||||
ASSETS:
|
||||||||
Fixed maturities - available for sale, at market value
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$ | 13,141,657 | $ | 12,293,524 | ||||
(amortized cost: 2012, $12,444,880; 2011, $11,731,173)
|
||||||||
Fixed maturities - available for sale, at fair value
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41,470 | 113,606 | ||||||
Equity securities - available for sale, at market value (cost: 2012, $131,630; 2011, $463,620)
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143,493 | 448,930 | ||||||
Equity securities - available for sale, at fair value
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1,255,557 | 1,249,106 | ||||||
Short-term investments
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860,379 | 685,332 | ||||||
Other invested assets (cost: 2012, $596,590; 2011, $558,232)
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596,590 | 558,232 | ||||||
Cash
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537,050 | 448,651 | ||||||
Total investments and cash
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16,576,196 | 15,797,381 | ||||||
Accrued investment income
|
130,209 | 130,193 | ||||||
Premiums receivable
|
1,237,859 | 1,077,548 | ||||||
Reinsurance receivables
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659,081 | 580,339 | ||||||
Funds held by reinsureds
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228,375 | 267,295 | ||||||
Deferred acquisition costs
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303,268 | 378,026 | ||||||
Prepaid reinsurance premiums
|
71,107 | 85,409 | ||||||
Deferred tax asset
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262,024 | 332,783 | ||||||
Income taxes recoverable
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68,442 | 41,623 | ||||||
Other assets
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241,346 | 202,958 | ||||||
TOTAL ASSETS
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$ | 19,777,907 | $ | 18,893,555 | ||||
LIABILITIES:
|
||||||||
Reserve for losses and loss adjustment expenses
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$ | 10,069,055 | $ | 10,123,215 | ||||
Future policy benefit reserve
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66,107 | 67,187 | ||||||
Unearned premium reserve
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1,322,525 | 1,412,778 | ||||||
Funds held under reinsurance treaties
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2,755 | 2,528 | ||||||
Commission reserves
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65,533 | 55,103 | ||||||
Other net payable to reinsurers
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162,778 | 60,775 | ||||||
Losses in course of payment
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191,076 | 18,392 | ||||||
5.4% Senior notes due 10/15/2014
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249,907 | 249,858 | ||||||
6.6% Long term notes due 5/1/2067
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238,357 | 238,354 | ||||||
Junior subordinated debt securities payable
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329,897 | 329,897 | ||||||
Accrued interest on debt and borrowings
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4,781 | 4,781 | ||||||
Equity index put option liability
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79,467 | 69,729 | ||||||
Unsettled securities payable
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48,830 | 8,793 | ||||||
Other liabilities
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213,372 | 180,790 | ||||||
Total liabilities
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13,044,440 | 12,822,180 | ||||||
SHAREHOLDERS' EQUITY:
|
||||||||
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; (2012) 67,105
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||||||||
and (2011) 66,455 outstanding before treasury shares
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671 | 665 | ||||||
Additional paid-in capital
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1,946,439 | 1,892,988 | ||||||
Accumulated other comprehensive income (loss), net of deferred income tax expense
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||||||||
(benefit) of $119,629 at 2012 and $112,969 at 2011
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537,049 | 366,978 | ||||||
Treasury shares, at cost; 15,687 shares (2012) and 12,719 shares (2011)
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(1,363,958 | ) | (1,073,970 | ) | ||||
Retained earnings
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5,613,266 | 4,884,714 | ||||||
Total shareholders' equity
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6,733,467 | 6,071,375 | ||||||
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY
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$ | 19,777,907 | $ | 18,893,555 |
Three Months Ended
|
Twelve Months Ended
|
|||||||||||||||
December 31,
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December 31,
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|||||||||||||||
(Dollars in thousands)
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2012
|
2011
|
2012
|
2011
|
||||||||||||
(unaudited)
|
(unaudited) |
|
||||||||||||||
CASH FLOWS FROM OPERATING ACTIVITIES:
|
||||||||||||||||
Net income (loss)
|
$ | 58,777 | $ | 41,042 | $ | 828,954 | $ | (80,486 | ) | |||||||
Adjustments to reconcile net income to net cash provided by operating activities:
|
||||||||||||||||
Decrease (increase) in premiums receivable
|
(33,771 | ) | (75,692 | ) | (153,694 | ) | (235,560 | ) | ||||||||
Decrease (increase) in funds held by reinsureds, net
|
(3,791 | ) | 784 | 42,298 | 18,236 | |||||||||||
Decrease (increase) in reinsurance receivables
|
(19,302 | ) | (10,061 | ) | (55,274 | ) | 97,549 | |||||||||
Decrease (increase) in current income taxes
|
(48,217 | ) | 75,497 | (26,831 | ) | 82,702 | ||||||||||
Decrease (increase) in deferred tax asset
|
16,013 | (120,471 | ) | 64,909 | (194,029 | ) | ||||||||||
Decrease (increase) in prepaid reinsurance premiums
|
34,759 | (3,098 | ) | 16,358 | 46,374 | |||||||||||
Increase (decrease) in reserve for losses and loss adjustment expenses
|
235,945 | 247,859 | (169,595 | ) | 826,230 | |||||||||||
Increase (decrease) in future policy benefit reserve
|
374 | 5,217 | (1,080 | ) | 4,185 | |||||||||||
Increase (decrease) in unearned premiums
|
(46,193 | ) | 39,179 | (98,418 | ) | (39,822 | ) | |||||||||
Increase (decrease) in other net payable to reinsurers
|
(64,576 | ) | 20,849 | 100,566 | 4,911 | |||||||||||
Increase (decrease) in losses in course of payment
|
85,895 | (34,035 | ) | 173,232 | 18,477 | |||||||||||
Change in equity adjustments in limited partnerships
|
(17,013 | ) | 10,504 | (63,779 | ) | (56,549 | ) | |||||||||
Change in other assets and liabilities, net
|
(20,125 | ) | 34,332 | 76,788 | 108,611 | |||||||||||
Non-cash compensation expense
|
9,158 | 4,740 | 31,984 | 17,693 | ||||||||||||
Amortization of bond premium (accrual of bond discount)
|
16,049 | 13,488 | 61,844 | 47,872 | ||||||||||||
Amortization of underwriting discount on senior notes
|
14 | 13 | 52 | 49 | ||||||||||||
Net realized capital (gains) losses
|
(19,518 | ) | (137,283 | ) | (164,400 | ) | (6,923 | ) | ||||||||
Net cash provided by (used in) operating activities
|
184,478 | 112,864 | 663,914 | 659,520 | ||||||||||||
CASH FLOWS FROM INVESTING ACTIVITIES:
|
||||||||||||||||
Proceeds from fixed maturities matured/called - available for sale, at market value
|
535,686 | 354,593 | 1,830,582 | 1,702,973 | ||||||||||||
Proceeds from fixed maturities matured/called - available for sale, at fair value
|
- | - | 1,300 | 12,775 | ||||||||||||
Proceeds from fixed maturities sold - available for sale, at market value
|
273,838 | 376,593 | 913,139 | 1,732,246 | ||||||||||||
Proceeds from fixed maturities sold - available for sale, at fair value
|
11,991 | 2,526 | 84,917 | 65,158 | ||||||||||||
Proceeds from equity securities sold - available for sale, at market value
|
150,015 | - | 280,807 | 27,207 | ||||||||||||
Proceeds from equity securities sold - available for sale, at fair value
|
171,823 | 92,480 | 558,740 | 247,227 | ||||||||||||
Distributions from other invested assets
|
31,422 | 23,256 | 84,454 | 166,273 | ||||||||||||
Cost of fixed maturities acquired - available for sale, at market value
|
(1,184,638 | ) | (944,353 | ) | (3,328,409 | ) | (3,238,113 | ) | ||||||||
Cost of fixed maturities acquired - available for sale, at fair value
|
(791 | ) | (2,456 | ) | (7,955 | ) | (27,481 | ) | ||||||||
Cost of equity securities acquired - available for sale, at market value
|
(6,445 | ) | (7,254 | ) | (26,571 | ) | (127,837 | ) | ||||||||
Cost of equity securities acquired - available for sale, at fair value
|
(121,461 | ) | (70,867 | ) | (426,507 | ) | (755,734 | ) | ||||||||
Cost of other invested assets acquired
|
(8,688 | ) | (7,000 | ) | (58,369 | ) | (64,832 | ) | ||||||||
Cost of businesses acquired
|
- | - | - | (63,100 | ) | |||||||||||
Net change in short-term investments
|
112,153 | 149,585 | (175,043 | ) | 100,969 | |||||||||||
Net change in unsettled securities transactions
|
(30,872 | ) | (21,883 | ) | 35,085 | 13,563 | ||||||||||
Net cash provided by (used in) investing activities
|
(65,967 | ) | (54,780 | ) | (233,830 | ) | (208,706 | ) | ||||||||
CASH FLOWS FROM FINANCING ACTIVITIES:
|
||||||||||||||||
Common shares issued during the period, net
|
1,605 | 3,761 | 21,473 | 12,269 | ||||||||||||
Purchase of treasury shares
|
(39,963 | ) | (8,251 | ) | (289,988 | ) | (92,490 | ) | ||||||||
Revolving credit borrowings
|
- | - | - | (50,000 | ) | |||||||||||
Dividends paid to shareholders
|
(24,735 | ) | (25,786 | ) | (100,402 | ) | (103,848 | ) | ||||||||
Net cash provided by (used in) financing activities
|
(63,093 | ) | (30,276 | ) | (368,917 | ) | (234,069 | ) | ||||||||
EFFECT OF EXCHANGE RATE CHANGES ON CASH
|
3,074 | (22,863 | ) | 27,232 | (26,502 | ) | ||||||||||
Net increase (decrease) in cash
|
58,492 | 4,945 | 88,399 | 190,243 | ||||||||||||
Cash, beginning of period
|
478,558 | 443,706 | 448,651 | 258,408 | ||||||||||||
Cash, end of period
|
$ | 537,050 | $ | 448,651 | $ | 537,050 | $ | 448,651 | ||||||||
SUPPLEMENTAL CASH FLOW INFORMATION:
|
||||||||||||||||
Income taxes paid (recovered)
|
$ | 5,291 | $ | (38,618 | ) | $ | 59,754 | $ | (44,537 | ) | ||||||
Interest paid
|
21,072 | 20,262 | 53,008 | 51,647 | ||||||||||||
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 | - |