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Everest Re profit beats expectations

Everest Re Group Ltd beat expectations with a fourth quarter profit of $571.0 million, or $13.85 per share.

The net income for the final three months of 2017 was up on the $373.6 million, or $9.08 per share, for the same period a year ago.

After-tax operating income was $556 million, or $13.48 per share, which excludes realised capital gains and losses and the tax charge related to the enactment of the Tax Cuts and Jobs Act of 2017. That result was well above the $5.24 per share consensus forecast by analysts.

For the full year, the Bermudian-based company's profit fell by about 50 per cent, decreasing from $996.3 million to $496 million.

Dominic Addesso, president and chief executive officer, said: “Everest experienced an exceptional quarter with $556 million of net operating income, giving rise to a respectable year of earnings, despite 2017 being one of the most costly catastrophe loss years on record.

“The underlying results were quite strong with an attritional combined ratio for the year of 85 per cent. More importantly is that all segments contributed to these positive results. For the full year, Everest generated a 6 per cent return on equity and reached a new milestone with premium of $7.2 billion.”

Gross written premiums for the quarter were $1.9 billion, an increase of 26 per cent compared to the fourth quarter of 2016.

For the full year, gross written premiums grew 19 per cent to $7.2 billion. Eliminating reinstatement premiums and the effects of foreign currency fluctuations, total premiums were up 16 per cent for the year.

Worldwide reinsurance premiums were up 17 per cent, on this same basis, while direct insurance premiums were up 15 per cent for the year.

The combined ratio was 70 per cent for the quarter and 103.5 per cent for the year.

The fourth quarter benefited from net prior year reserve releases of $262.1 million and a net reduction to prior period catastrophe loss estimates of $132.7 million, including a $102.7 million reduction in the catastrophe loss estimates for the third quarter 2017 events.

However, this was offset by $161.5 million for catastrophe losses that occurred in the quarter, including the wildfires in California. For the full year, catastrophe losses, net of reinstatement premiums, were $1.3 billion. Excluding catastrophe losses, reinstatement premiums and favourable prior year loss development, the calendar year attritional combined ratio was 85 per cent.

Net investment income amounted to $149.1 million for the quarter and $542.9 million for the full year 2017, up 15 per cent for the full year.

The enactment of the Tax Cuts and Jobs Act of 2017 resulted in a charge of $8.2 million in the quarter, or $0.20 per share.

During the quarter and for the full year, the company purchased 236,493 shares for a total cost of $50 million. Shareholders' equity ended the year at $8.4 billion. Book value per share increased 4 per cent from $197.45 at the end of 2016, to $204.95 at the end of 2017.

Everest Re CEO Dominic Addesso

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Published February 05, 2018 at 5:52 pm (Updated February 05, 2018 at 6:02 pm)

Everest Re profit beats expectations

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