Bermuda reinsurer Everest Re Group Ltd. reported a net loss of $16.6 million for the fourth quarter as investment income plunged by more than half compared to the same period a year earlier.

Revenues also fell as gross premiums written fell 15 percent, the company revealed in its earnings statement last night

Chairman and chief executive officer Joseph Taranto said: "While this year has been challenging on the investment front, we are pleased with the performance of our core operations.

"Our capital and underwriting fundamentals remain strong, and we are well positioned to capitalise on future market opportunities."

The fourth quarter 2008 after-tax operating income was $179.5 million, or $2.93 per share, compared to $63.2 million, or $1.00 per share, in the fourth quarter of 2007.

Everest made a net loss for 2008 of $18.8 million, compared to a profit of $839.3 million the prior year.

In December last year, Standard & Poor's said it may downgrade Everest because of its "inability to generate sustainable very strong underwriting and operating results over multi-year periods". Everest has a AA- financial strength rating with S&P.

Everest's combined ratio — the percentage of premium dollars spent on claims and expenses — was 95.6 percent for the full year 2008, compared to 91.6 percent in 2007. For the fourth quarter, combined ratio was 83.5 percent, with favourable reserve development of $41.5 million reducing the ratio by five points. This compared to 108.4 percent for the same period in 2007.

Net investment income was $75.4 million for the fourth quarter 2008, down more than 50 percent compared to last three months of 2007. Losses emanating from limited partnership investments, primarily partnerships with significant public equity exposures, were the principal driver of the decline. Investment income totalled $565.9 million for the full year 2008; a 17-percent decline compared to the same period in 2007.

Gross written premiums were $896.1 million for the quarter, 15 percent lower than in the same period in 2007. A one-time assumption of a premium portfolio for a newly incepted insurance programme in 2007, which did not recur in 2008, contributed approximately half of the decrease.

Reinsurance premiums, in the aggregate, were down seven percent and insurance premiums, adjusted for the large premium accrual in 2007, were down 13 percent.

Everest said Insurance premiums were impacted by softer workers' compensation, public entity and contractors markets as well as the timing of new business.