Everest Re's improved second-quarter profits of $282.9m came despite the company suffering catastrophe losses of $70.4m, with the bulk resulting from flooding in England and Australia.

The company is expecting to pay out $25m in relation to floods that hit central and northern England in June, and around $42m in respect of flooding in New South Wales.

Its exposure to further major flooding in England, which occurred last weekend, is not yet known.

Everest Re is the first Bermuda reinsurer to present an estimate pointing to the level of losses it may experience as a result of the record-breaking floods that have struck England this summer and which are thought to have caused $4 billion of insured losses.

During a conference call yesterday following the release of second-quarter results, Everest's chief financial officer Craig Eisenacher said the England and New South Wales floods were the two largest catastrophe losses experienced by the company between April and the end of June.

"It is still early days assessing the losses arising from these storms, but recent industry estimates have these losses pegged or estimated at $1.5 billion and 1.5 billion Australian dollars respectively," said Mr. Eisenacher.

Tom Gallagher said: "It's the wettest June on record in England and it hasn't stopped raining since May. If the activity continues the way it is now I would expect losses to continue."

Everest chairman and CEO Joe Taranto revealed the company's intention to bolster its performance in the second half of 2007 by starting three new programmes.

He said: "We have recently agreed to three new programmes in classes of business that we believe are more insulated from the current market erosion. Two of these will go live in the third quarter and one will go live in the fourth quarter.

"The programmes are very specific, niche areas which are insulated from some of the tougher competition."

Company president Tom Gallagher said it was believed the programmes would pull in a total of $150m in premiums.

"One is related to a moving storage facility, some forestry and some agricultural, another one is a towing and recovery and the last one is a programme covering brown zones in New York and Boston, for both property and casualty," he explained.

Everest CEO Mr. Taranto is disappointed by the scale of the market decline in some casualty lines, which had been greater than he would have guessed at the start of the year.

In its US casualty book, representing 16 percent of written business during the past six months, the company saw its biggest downturn as a result of "rates declining, ceding companies keeping more net, and ceding companies looking for more favourable terms on their reinsurance treaties," according to Mr. Taranto.

However, good results elsewhere gave the company a 28 percent year-on-year increase in profits for the second quarter.

The CEO said: "We are pleased that our world-wide gross premiums are essentially flat through the past six months given the changes in the market that's also quite a good result." The international property/casualty reinsurance book, roughly one-third of Everest's world-wide written business and covering the UK, Europe, Latin America, Asia and Canada, have shown insurance rates generally continuing to decline.

"Reinsurance terms have weakened modestly. Through six months our international premium has not declined," said Mr. Taranto.

"Recent losses in the UK and Australia may mitigate some of the decline on property business but we do not expect they will produce material upward market corrections."

Everest's insurance operation, representing 20 percent of world-wide premiums and written on US business of which 95 percent is casualty and five percent property, was down eight percent during the first six months of 2007.

Mr. Taranto explained: "We are finding competition has intensified for many classes of US casualty, in particular contracting liability business is much tougher. Competition on workers comp' has intensified and rates in California have now settled back to one-third of what they were at their peak in 2003.

"Further rates for medical malpractice business have reduced to the point where we are essentially out of the market."

Everest's decline in US casualty reinsurance was largely offset in the US property reinsurance sector, particularly in Florida.

"With all the changes in Florida it was initially unclear what we would achieve in 2007. We have now concluded our 2007 Florida deals and expect to write as much, if not a bit more, in the next year. We are finding our clients are not having to a adopt rate decreases that represent significantly more savings than what they will receive from switching to the Florida Hurricane Catastrophe Funds," said Mr. Taranto.

"We are also finding that Citizens has tended to write the business our clients don't want and has not meaningfully invaded their portfolios, further many clients have purchased pro rata and excess of loss reinsurance from the professional reinsurance market beyond what was contemplated in January."