Everest Re Group's 2007 fourth-quarter profits dropped by 94 percent compared to a year earlier, mainly due to a $311.2 million pre-tax charge for potential asbestos exposures in a bid to strengthen its reserves.

The Bermuda-based reinsurance giant posted a net income including net realised capital gains and losses, of $12.2 million or 19 cents per diluted share for the fourth quarter 2007, down significantly from the $206.4 million total or $3.15 per diluted share recorded for the same period in 2006.

Meanwhile, for the year ended December 31, 2007, after-tax operating income was $776.9 million or $12.21 per diluted share, compared to $817.9 million or $12.52 per diluted share reported the previous year.

Net income, including net realised capital gains and losses, was $839.3 million for the last quarter of 2007, just below the $840.8 million reported for 2006. Elsewhere, gross premiums written totalled $1.1 billion, a 6.4 percent increase compared to $987.3 million in the fourth quarter of 2006.

Other highlights included net investment income down by five percent to $174.1 million compared to $183.5 million, but cash flow from operations was up from $142.1 million to $235.7 million, with lower catastrophe payouts of $87.9 million in the fourth quarter 2007 in contrast to $188.4 million for the same period the previous year contributing to this positive swing.

Chairman and CEO of Everest Re, Joseph Taranto, said: "It was yet another exceptional year for Everest, with net income in excess of $800 million, which provided a return on shareholders' equity of 16 percent and book value growth per share of 15 percent.

"This was accomplished while strengthening our balance sheet and returning capital to shareholders.

"As we look at 2008, we feel extremely well-positioned to deal with any challenges that the market may bring."