Fourth Quarter ROE of 20.1%, Operating ROE
of 19.4%
Underwriting Discipline Drove Strong
Combined Ratio of 87.8% with Margin Improvement in both
Segments
Significant Momentum Following Outstanding
1/1 Renewals
Everest Re Group, Ltd. (“Everest” or the “Group”) today reported
its fourth quarter 2022 results.
Fourth Quarter 2022 Highlights
- Net Operating Income of $478 million, and Net Income of $496
million driven by continued underwriting margin improvement. YTD
2022 Net Operating Income of $1.1 billion, Net Income of $597
million
- $3.6 billion in gross written premium (“GWP”) with year over
year growth of 9% in constant dollars for the Group, 21% in
constant dollars for Insurance, and 3.7% in constant dollars and
excluding reinstatements for Reinsurance
- Combined ratios of 87.8% for the Group, 86.4% for Reinsurance
and 91.4% for Insurance
- Strong attritional combined ratios of 87.3% for the Group,
86.0% for Reinsurance and 90.8% for Insurance
- Pre-tax underwriting income of $368 million including $15
million of pre-tax catastrophe losses net of estimated recoveries
and reinstatement premiums. The catastrophe losses were from Winter
Storm Elliott
- Net investment income of $210 million, driven by stronger fixed
income returns as new money yields continue to improve
“Everest’s fourth quarter results capped a strong year of
consistent execution and positive momentum for the company,” said
Juan C. Andrade, Everest President and CEO. “We grew both
underwriting franchises with improved margins, significantly
reduced volatility and generated solid returns despite ongoing
market uncertainty and another elevated catastrophe year. This led
to over $1 billion in operating income, and a double-digit
operating return on equity for both the quarter and the full year.
We had a successful January 1 reinsurance renewal executing a
precise and well-orchestrated strategy. We leveraged Everest’s
global leadership position to capitalize on the robust property
market and the flight to quality was evident across virtually all
lines and geographies. We drove improved pricing, terms and
conditions and deepened relationships with new and existing core
clients throughout the world, which significantly improved risk
adjusted returns across the entire portfolio. We are well
positioned with the talent and the platform to continue this
momentum in 2023.”
Summary of Fourth Quarter 2022 Net Income
and Other Items
- Net Income of $496 million, equal to $12.66 per diluted share
versus fourth quarter 2021 net income of $431 million, equal to
$10.94 per diluted share
- Net operating income of $478 million, equal to $12.21 per
diluted share versus fourth quarter 2021 net operating income of
$359 million, equal to $9.12 per diluted share
- GAAP combined ratio of 87.8% including 0.5 points of
catastrophe losses versus the fourth quarter 2021 figures of 91.9%
including 4.5 points of catastrophe losses
- Strong operating cashflow for the quarter of $1.0 billion which
is flat versus the fourth quarter 2021
The following table summarizes the Company’s net income and
related financial metrics.
Net income and operating
income
Q4
Year to Date
Q4
Year to Date
All values in USD millions
except for per share amounts and percentages
2022
2022
2021
2021
Everest Re
Group
Net income (loss)
496
597
431
1,379
Operating income (loss) (1)
478
1,065
359
1,153
Net income (loss) per diluted
common share
12.66
15.19
10.94
34.62
Net operating income (loss) per
diluted common share
12.21
27.08
9.12
28.97
Net income (loss) return on
average equity (annualized)
20.1%
6.0%
17.7%
14.6%
After-tax operating income (loss)
return on average equity (annualized)
19.4%
10.6%
14.8%
12.2%
Notes
(1) Refer to the reconciliation
of net income to net operating income found on page 6 of this press
release
Shareholders' Equity and Book
Value per Share
Q4
Year to Date
Q4
Year to Date
All values in USD millions
except for per share amounts and percentages
2022
2022
2021
2021
Beginning shareholders'
equity
7,649
10,139
9,979
9,726
Net income (loss)
496
597
431
1,379
Change - unrealized gains
(losses) - Fixed inc. investments
250
(1,948)
(177)
(485)
Dividends to shareholders
(65)
(255)
(61)
(247)
Purchase of treasury shares
-
(61)
(25)
(225)
Other
110
(31)
(7)
(10)
Ending shareholders' equity
8,441
8,441
10,139
10,139
Common shares outstanding
39.2
39.3
Book value per common share
outstanding
215.54
258.21
Less: Unrealized
appreciation/depreciation of fixed maturity investments
("URAD")
(43.64)
6.09
Adjusted book value per common
share outstanding excluding URAD
259.18
252.12
Total Shareholder Return ("TSR")
- Annualized
5.4%
14.7%
Common share dividends paid -
last 12 months
6.50
6.20
The following information summarizes the Company’s underwriting
results, on a consolidated basis and by segment – Reinsurance and
Insurance, with selected commentary on results by segment.
Underwriting information -
Everest Re Group
Q4
Year to Date
Q4
Year to Date
Year on Year Change
All values in USD millions
except for percentages
2022
2022
2021
2021
Q4
Year to Date
Gross written premium
3,639
13,952
3,431
13,050
6.1%
6.9%
Net written premium
3,188
12,344
3,056
11,446
4.3%
7.9%
Loss ratio
60.1%
68.7%
64.9%
71.0%
(4.8) pts
(2.3) pts
Commission and brokerage
ratio
21.6%
21.4%
21.3%
21.2%
0.3 pts
0.2 pts
Other underwriting expenses
6.0%
5.8%
5.7%
5.6%
0.3 pts
0.2 pts
Combined ratio
87.8%
96.0%
91.9%
97.8%
(4.1) pts
(1.8) pts
Attritional combined ratio
(1)
87.3%
87.4%
87.4%
87.6%
(0.1) pts
(0.2) pts
Pre-tax net catastrophe losses
(2)
15
945
125
1,065
Pre-tax net Russia/Ukraine
losses
-
45
-
-
Pre-tax net prior year reserve
development
-
(1)
(3)
(9)
Notes
(1) Attritional ratios exclude
catastrophe losses, net CAT reinstatement premiums earned, prior
year development, COVID-19 losses, CECL and losses from the
Russia/Ukraine war
(2) Pre-tax net catastrophe
losses are net of reinsurance and reinstatement premiums
Reinsurance Segment – Quarterly Highlights
- Gross written premiums of $2.38 billion for the quarter versus
$2.37 billion a year ago. On a constant dollar basis, growth was
3.7% in the quarter. Casualty and Financial Lines grew by 3.9%,
driven by growth with our core casualty clients and taking
advantage of increased mortgage opportunities. This growth was
largely offset by a combination of targeted reductions in our
property portfolio and foreign exchange movements
- Pre-tax catastrophe losses of $10 million net of estimated
recoveries and reinstatement premiums, compared with $110 million a
year ago
- Improved profitability of the portfolio driven by targeted
underwriting actions, resulting in a 150-basis point improvement in
the attritional loss ratio for the quarter vs. the prior year
(58.2% vs. 59.7%) and an attritional combined ratio of 86.0% vs
86.4% a year ago
- Continued expense discipline with a 2.8% expense ratio
- Execution for the January 1 renewals was precise and
well-orchestrated achieving an excellent outcome
Underwriting information -
Reinsurance segment
Q4
Year to Date
Q4
Year to Date
Year on Year Change
All values in USD millions
except for percentages
2022
2022
2021
2021
Q4
Year to Date
Gross written premium
2,378
9,316
2,372
9,067
0.3%
2.7%
Net written premium
2,320
8,983
2,270
8,536
2.2%
5.2%
Loss ratio
58.7%
69.2%
64.8%
71.6%
(6.1) pts
(2.4) pts
Commission and brokerage
ratio
25.0%
24.6%
24.1%
23.9%
0.9 pts
0.7 pts
Other underwriting expenses
2.8%
2.5%
2.6%
2.6%
0.2 pts
(0.1) pts
Combined ratio
86.4%
96.4%
91.5%
98.1%
(5.1) pts
(1.7) pts
Attritional combined ratio
(1)
86.0%
86.2%
86.4%
86.3%
(0.4) pts
(0.1) pts
Pre-tax net catastrophe losses
(2)
10
820
110
913
Pre-tax net Russia/Ukraine
losses
-
45
-
-
Pre-tax net prior year reserve
development
-
(2)
(3)
(8)
Notes
(1) Attritional ratios exclude
catastrophe losses, net CAT reinstatement premiums earned, prior
year development, COVID-19 losses, CECL and losses from the
Russia/Ukraine war
(2) Pre-tax net catastrophe
losses are net of reinsurance and reinstatement premiums
Insurance Segment – Quarterly Highlights
- Gross written premiums of $1.3 billion, a 21% increase year
over year in constant dollars (19% increase as reported), driven by
balanced and diversified growth across most lines of business and
geographies
- Strong profitability with combined ratio of 91.4% and an
attritional combined ratio of 90.8%
- Continued robust expense management with a total expense ratio
of 27.4% versus 27.8% a year ago
- Rate and exposure trends remain favorable
Underwriting information -
Insurance segment
Q4
Year to Date
Q4
Year to Date
Year on Year Change
All values in USD millions
except for percentages
2022
2022
2021
2021
Q4
Year to Date
Gross written premium
1,260
4,636
1,059
3,982
19.0%
16.4%
Net written premium
869
3,361
787
2,910
10.5%
15.5%
Loss ratio
64.0%
67.3%
65.1%
69.3%
(1.1) pts
(2.0) pts
Commission and brokerage
ratio
12.4%
12.6%
13.4%
13.4%
(1.0) pts
(0.8) pts
Other underwriting expenses
15.0%
14.8%
14.4%
14.5%
0.6 pts
0.3 pts
Combined ratio
91.4%
94.8%
92.8%
97.1%
(1.4) pts
(2.3) pts
Attritional combined ratio
(1)
90.8%
90.4%
90.4%
91.2%
0.4 pts
(0.8) pts
Pre-tax net catastrophe losses
(2)
5
125
15
153
Pre-tax net Russia/Ukraine
losses
-
-
-
-
Pre-tax net prior year reserve
development
-
1
-
(1)
Notes
(1) Attritional ratios exclude
catastrophe losses, net CAT reinstatement premiums earned, prior
year development, COVID-19 losses, CECL and losses from the
Russia/Ukraine war
(2) Pre-tax net catastrophe
losses are net of reinsurance and reinstatement premiums
Investments and Shareholders’ Equity as of December 31,
2022
- Total invested assets and cash of $29.9 billion versus the year
end 2021 value of $29.7 billion
- Shareholders’ equity of $8.4 billion vs. $10.1 billion at year
end 2021, largely driven by $1.7 billion of unrealized net losses
on fixed maturity investments
- Shareholders’ equity excluding unrealized gains (losses) on
fixed maturity investments of $10.1 billion vs. $9.9 billion at
year end 2021
- Book value per diluted share of $215.54 vs. $258.21 at year end
2021
- Book value per diluted share excluding unrealized gains
(losses) on fixed maturity investments of $259.18 vs. $252.12 at
year end 2021
- Common share dividends declared and paid in the quarter of
$1.65 per share equal to $65 million
This news release contains forward-looking statements within the
meaning of the U.S. federal securities laws. We intend these
forward-looking statements to be covered by the safe harbor
provisions for forward-looking statements in the U.S. Federal
securities laws. These statements involve risks and uncertainties
that could cause actual results to differ materially from those
contained in forward-looking statements made on behalf of the
Company. These risks and uncertainties include the impact of
general economic conditions and conditions affecting the insurance
and reinsurance industry, the adequacy of our reserves, our ability
to assess underwriting risk, trends in rates for property and
casualty insurance and reinsurance, competition, investment market
and investment income fluctuations, trends in insured and paid
losses, catastrophes, pandemic, regulatory and legal uncertainties
and other factors described in our latest Annual Report on Form
10-K. The Company undertakes no obligation to publicly update or
revise any forward-looking statements, whether as a result of new
information, future events or otherwise.
About Everest
Everest is a global underwriting leader providing best-in-class
property, casualty, and specialty reinsurance and insurance
solutions that address customers’ most pressing challenges. Known
for a 50-year track record of disciplined underwriting, capital and
risk management, Everest, through its global operating affiliates,
is committed to underwriting opportunity for colleagues, customers,
shareholders, and communities worldwide.
Everest common stock (NYSE: RE) is a component of the S&P
500 index.
Additional information about Everest, our people, and our
products can be found on our website at www.everestre.com.
A conference call discussing the results will be held at 8:00
a.m. Eastern Time on February 9, 2023. The call will be available
on the Internet through the Company’s web site at
everestre.com/investors.
Recipients are encouraged to visit the Company’s web site to
view supplemental financial information on the Company’s results.
The supplemental information is located at www.everestre.com in the
“Investors/Financials/Quarterly Results” section of the website.
The supplemental financial information may also be obtained by
contacting the Company directly.
_______________________________________________
The Company generally uses after-tax operating income (loss), a
non-GAAP financial measure, to evaluate its performance. After-tax
operating income (loss) consists of net income (loss) excluding
after-tax net gains (losses) on investments and after-tax net
foreign exchange income (expense) as the following reconciliation
displays:
Three Months Ended December
31,
Twelve Months Ended December
31,
(Dollars in millions, except per
share amounts)
2022
2021
2022
2021
(unaudited)
(unaudited)
Per Diluted
Per Diluted
Per Diluted
Per Diluted
Amount
Share
Amount
Share
Amount
Share
Amount
Share
After-tax operating income
(loss)
$
478
$
12.21
$
359
$
9.12
$
1,065
$
27.08
$
1,153
$
28.97
After-tax net gains (losses) on
investments
$
49
$
1.25
$
90
$
2.29
$
(366
)
$
(9.30
)
$
202
$
5.06
After-tax net foreign exchange
income (expense)
$
(31
)
$
(0.80
)
$
(19
)
$
(0.48
)
$
(102
)
$
(2.60
)
$
24
$
0.60
Net income (loss)
$
496
$
12.66
$
431
$
10.94
$
597
$
15.19
$
1,379
$
34.62
(Some amounts may not reconcile
due to rounding.)
Although net gains (losses) on investments and net foreign
exchange income (expense) are an integral part of the Company’s
insurance operations, the determination of net gains (losses) on
investments and foreign exchange income (expense) is independent of
the insurance underwriting process. The Company believes that the
level of net gains (losses) on investments and net foreign exchange
income (expense) for any particular period is not indicative of the
performance of the underlying business in that particular period.
Providing only a GAAP presentation of net income (loss) makes it
more difficult for users of the financial information to evaluate
the Company’s success or failure in its basic business and may lead
to incorrect or misleading assumptions and conclusions. The Company
understands that the equity analysts who follow the Company focus
on after-tax operating income (loss) in their analyses for the
reasons discussed above. The Company provides after-tax operating
income (loss) to investors so that they have what management
believes to be a useful supplement to GAAP information concerning
the Company’s performance.
--Financial Details Follow--
EVEREST RE GROUP, LTD.
CONSOLIDATED STATEMENTS OF
OPERATIONS
AND COMPREHENSIVE INCOME
(LOSS)
Three Months Ended
Twelve Months Ended
December 31,
December 31,
(Dollars in millions, except per share amounts)
2022
2021
2022
2021
(unaudited)
(unaudited)
REVENUES: Premiums earned
$
3,012
$
2,804
$
11,787
$
10,406
Net investment income
210
205
830
1,165
Net gains (losses) on investments: Credit allowances on fixed
maturity securities
(15
)
2
(33
)
(28
)
Gains (losses) from fair value adjustments
2
108
(460
)
236
Net realized gains (losses) from dispositions
77
9
38
50
Total net gains (losses) on investments
64
119
(455
)
258
Other income (expense)
(30
)
(7
)
(102
)
37
Total revenues
3,256
3,121
12,060
11,866
CLAIMS AND EXPENSES: Incurred losses and loss adjustment
expenses
1,811
1,819
8,100
7,391
Commission, brokerage, taxes and fees
651
598
2,528
2,209
Other underwriting expenses
182
158
682
583
Corporate expenses
16
21
61
68
Interest, fees and bond issue cost amortization expense
27
23
101
70
Total claims and expenses
2,687
2,620
11,472
10,321
INCOME (LOSS) BEFORE TAXES
568
500
588
1,546
Income tax expense (benefit)
72
69
(9
)
167
NET INCOME (LOSS)
$
496
$
431
$
597
$
1,379
Other comprehensive income (loss), net of tax: Unrealized
appreciation (depreciation) ("URA(D)") on securities arising during
the period
223
(184
)
(2,037
)
(488
)
Reclassification adjustment for realized losses (gains) included in
net income (loss)
28
7
89
4
Total URA(D) on securities arising during the period
251
(177
)
(1,948
)
(485
)
Foreign currency translation adjustments
86
(33
)
(77
)
(62
)
Benefit plan actuarial net gain (loss) for the period
15
17
15
17
Reclassification adjustment for amortization of net (gain) loss
included in net income (loss)
-
1
2
6
Total benefit plan net gain (loss) for the period
15
18
17
23
Total other comprehensive income (loss), net of tax
352
(192
)
(2,008
)
(523
)
COMPREHENSIVE INCOME (LOSS)
$
848
$
238
$
(1,411
)
$
856
EARNINGS PER COMMON SHARE: Basic
$
12.66
$
10.95
$
15.19
$
34.66
Diluted
12.66
10.94
15.19
34.62
EVEREST RE GROUP, LTD.
CONSOLIDATED BALANCE SHEETS
December 31,
(Dollars and share amounts in millions, except par value per share)
2022
2021
(unaudited)
ASSETS: Fixed maturities - available for sale, at fair value
$
22,236
$
22,308
(amortized cost: 2022, $24,191; 2021, $22,064, credit allowances:
2022, ($54); 2021, ($30)) Fixed maturities - held to maturity, at
amortized cost (fair value: 2022, $821, credit allowances: 2022,
($9))
839
-
Equity securities, at fair value
281
1,826
Other invested assets
4,085
2,920
Short-term investments (cost: 2022, $1,032; 2021, $1,178)
1,032
1,178
Cash
1,398
1,441
Total investments and cash
29,872
29,673
Accrued investment income
217
149
Premiums receivable (credit allowances: 2022, ($29); 2021, ($26))
3,619
3,294
Reinsurance paid loss recoverables (credit allowances: 2022, ($23);
2021, ($17))
136
107
Reinsurance unpaid loss recoverables
2,105
1,946
Funds held by reinsureds
1,056
869
Deferred acquisition costs
962
872
Prepaid reinsurance premiums
610
515
Income tax asset, net
459
2
Other assets (credit allowances: 2022, ($5); 2021, ($4))
930
757
TOTAL ASSETS
$
39,966
$
38,185
LIABILITIES: Reserve for losses and loss adjustment expenses
22,065
19,009
Future policy benefit reserve
29
36
Unearned premium reserve
5,147
4,610
Funds held under reinsurance treaties
13
18
Other net payable to reinsurers
567
450
Losses in course of payment
74
261
Senior notes
2,347
2,346
Long term notes
218
224
Borrowings from FHLB
519
519
Accrued interest on debt and borrowings
19
17
Unsettled securities payable
1
17
Other liabilities
526
540
Total liabilities
31,525
28,046
SHAREHOLDERS' EQUITY: Preferred shares, par value: $0.01;
50.0 shares authorized; no shares issued and outstanding
-
-
Common shares, par value: $0.01; 200.0 shares authorized; (2022)
69.9 and (2021) 69.8 outstanding before treasury shares
1
1
Additional paid-in capital
2,302
2,274
Accumulated other comprehensive income (loss), net of deferred
income tax expense (benefit) of ($250) at 2022 and $27 at 2021
(1,996
)
12
Treasury shares, at cost; 30.8 (2022) and 30.5 shares (2021)
(3,908
)
(3,847
)
Retained earnings
12,042
11,700
Total shareholders' equity
8,441
10,139
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY
$
39,966
$
38,185
EVEREST RE GROUP, LTD.
CONSOLIDATED STATEMENTS OF CASH
FLOWS
Twelve Months Ended
December 31,
(Dollars in millions)
2022
2021
(unaudited)
CASH FLOWS FROM OPERATING ACTIVITIES: Net income (loss)
$
597
$
1,379
Adjustments to reconcile net income to net cash provided by
operating activities: Decrease (increase) in premiums receivable
(435
)
(649
)
Decrease (increase) in funds held by reinsureds, net
(197
)
(151
)
Decrease (increase) in reinsurance recoverables
(413
)
(125
)
Decrease (increase) in income taxes
(181
)
68
Decrease (increase) in prepaid reinsurance premiums
(166
)
(128
)
Increase (decrease) in reserve for losses and loss adjustment
expenses
3,477
2,805
Increase (decrease) in future policy benefit reserve
(7
)
(2
)
Increase (decrease) in unearned premiums
655
1,146
Increase (decrease) in other net payable to reinsurers
201
186
Increase (decrease) in losses in course of payment
(186
)
134
Change in equity adjustments in limited partnerships
(94
)
(613
)
Distribution of limited partnership income
180
211
Change in other assets and liabilities, net
(291
)
(290
)
Non-cash compensation expense
45
43
Amortization of bond premium (accrual of bond discount)
55
76
Net (gains) losses on investments
455
(258
)
Net cash provided by (used in) operating activities
3,695
3,833
CASH FLOWS FROM INVESTING ACTIVITIES: Proceeds from fixed
maturities matured/called/repaid - available for sale
2,626
3,893
Proceeds from fixed maturities sold - available for sale
1,403
1,916
Proceeds from fixed maturities matured/called/repaid - held to
maturity
39
-
Proceeds from equity securities sold
2,217
990
Distributions from other invested assets
266
257
Cost of fixed maturities acquired - available for sale
(7,344
)
(8,825
)
Cost of fixed maturities acquired - held to maturity
(153
)
-
Cost of equity securities acquired
(1,003
)
(1,098
)
Cost of other invested assets acquired
(1,547
)
(757
)
Net change in short-term investments
149
(43
)
Net change in unsettled securities transactions
(71
)
(203
)
Net cash provided by (used in) investing activities
(3,418
)
(3,869
)
CASH FLOWS FROM FINANCING ACTIVITIES: Common shares issued
(redeemed) during the period for share-based compensation, net of
expense
(17
)
(14
)
Purchase of treasury shares
(61
)
(225
)
Dividends paid to shareholders
(255
)
(247
)
Proceeds from issuance of senior notes
-
968
Cost of debt repurchase
(6
)
-
Net FHLB borrowings (repayments)
-
209
Cost of shares withheld on settlements of share-based compensation
awards
(20
)
(17
)
Net cash provided by (used in) financing activities
(359
)
674
EFFECT OF EXCHANGE RATE CHANGES ON CASH
39
1
Net increase (decrease) in cash
(42
)
639
Cash, beginning of period
1,441
802
Cash, end of period
$
1,398
$
1,441
SUPPLEMENTAL CASH FLOW INFORMATION: Income taxes paid
(recovered)
$
171
$
98
Interest paid
98
62
NON-CASH TRANSACTIONS: Reclassification of specific
investments from fixed maturity securities, available for sale at
fair value to fixed maturity securities, held to maturity at
amortized cost net of credit allowances
$
722
$
-
View source
version on businesswire.com: https://www.businesswire.com/news/home/20230208005888/en/
Media: Dawn Lauer Chief Communications Officer Everest Global
Services, Inc. 908.300.7670
Investors: Matt Rohrmann Head of Investor Relations Everest
Global Services, Inc. 908.604.7343
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