Bermuda reinsurer, the Everest Re Group, has announced its after-tax operating loss for the third quarter of 2001 was $37.8 million, excluding the impact of September 11.

But the company's boss said that the outlook for the firm had never been better and that shareholder's equity improved from June 30, 2001.

The company said that the increase in surplus was effectively "confirming the strength of its capital position".

The net loss was $43.8 million, or $0.93 per diluted share, compared to income of $47.7 million, or $1.03 per diluted share, in the third quarter of 2000.

After taking account of the unusual losses caused by the attacks, the company's third quarter 2001 after-tax operating loss, which excludes realised capital gains and losses, was $37.8 million, or $0.80 per diluted share, compared to income of $47.7 million, or $1.03 per diluted share in the third quarter of 2000.

Everest's chairman and chief executive officer Joseph V. Taranto said: "Despite the losses arising from the attacks of September 11, our surplus grew in the quarter. With our strong capital position, product expertise and distribution capabilities, we are extremely well positioned to participate in the firming reinsurance market. The company's outlook has never been better."

Everest's estimate of the economic impact of the losses from the terrorist attacks remains at the $75 million and it added it estimated that its gross losses from the September 11 attacks were approximately $195 million.

The reinsurance company said cession of losses and adjustment premiums to reinsurers and tax benefits reduce the net impact to $75 million and over 90 percent of the losses ceded were to treaties where the reinsurers' obligations are fully collateralised, and said in its opinion, eliminates reinsurance collection risk.

For the nine months ended September 30, 2001, after-tax operating income was $70.5 million, or $1.50 per diluted share, compared to $135.3 million, or $2.93 per diluted share, in 2000.

Net income of the first nine months of 2001 was $63.7 million, or $1.35 per diluted share, compared to $135.0 million, or $2.92 per diluted share in 2000.

Gross premiums written for the third quarter were $503.3 million in 2001, a 41.5 percent increase compared to $355.6 million in 2000.

The company's GAAP combined ratio was 141.0 percent for this quarter compared to 102.6 percent in 2000. Net investment income for the third quarter was $84.0 million, an increase of 6.5 percent compared to $78.9 million in the third quarter of 2000.

After-tax cash flow from operations for the quarter was $71.7 million compared to $25.2 million in the third quarter of 2000.

At September 30, 2001, the company's shareholders' equity was $1.720 billion, or a book value of $37.20 per share, an increase from equity of $1.583 billion ($34.40 per share) at December 31, 2000 and $1.708 billion ($36.96 per share) at June 30,2001.

Everest Re said it now estimated that its operating earnings per diluted share, absent unusual loss activity in the fourth quarter, are expected to be in the range of $2.65 to $2.85 for the full year 2001.

For 2002, the company estimates that its operating earnings per diluted share, assuming no unusual loss activity and a firming reinsurance market, are expected to be in the range of $5.30 to $5.70.

Everest Re Group, Ltd. is a Bermuda holding company that operates through its subsidiaries Everest Reinsurance Company, Everest Reinsurance (Bermuda), Everest National Insurance Company, Everest Indemnity Insurance Company, Everest Security Insurance Company and Mt. McKinley Insurance Company. See www.everestre.com.