19.5%1 GWP Growth and 16.2% Underwriting
Income Growth, Led by Record Reinsurance Growth and Strong Pricing
Momentum
14.2% Net Income ROE, 17.2 % Operating
ROE
91.2% Combined Ratio and 87.5% Attritional
Combined Ratio
Everest Re Group, Ltd. (“Everest” or the “Group”) today reported
its first quarter 2023 results.
First Quarter 2023 Highlights
- Strong year-over-year improvements in Net Operating Income of
$443 million, and Net Income of $365 million driven by continued
underwriting margin improvement
- 14.1% Total Shareholder Return, 14.2% Net Income ROE, and 17.2%
Operating Income ROE
- $3.7 billion in gross written premium (“GWP”) with
year-over-year growth of 19.5% in constant dollars as reported for
the Group, 23.2% in constant dollars excluding reinstatements for
Reinsurance and 11.5% in constant dollars for Insurance
- Combined ratios of 91.2% for the Group, 90.8% for Reinsurance
and 92.4% for Insurance driven by improved pricing and lower
catastrophe losses year-over-year
- Strong attritional combined ratios of 87.5% for the Group,
85.9% for Reinsurance and 91.7% for Insurance
- Pre-tax underwriting income of $273 million, third highest
result over past 5 years
- $110 million of pre-tax catastrophe losses net of estimated
recoveries and reinstatement premiums driven by the Turkey
earthquake as well as the New Zealand floods and cyclone.
- Year-over-year improvement in net investment income of $260
million, driven by stronger fixed income returns as new money
yields remain attractive
- Strong operating cashflow for the quarter of $1.1 billion
versus $846 million in the first quarter 2022
Footnote 1 in header denotes constant
currency figure.
“Everest had a strong start to the year, with first quarter
results that delivered significant underwriting profit, a 17.2%
operating return on equity and a total shareholder return in excess
of 14%,” said Juan C. Andrade, Everest President & CEO. “We
delivered profitable growth across both underwriting franchises,
particularly in reinsurance, where we continued to drive expanding
margins. With our industry leading position, ongoing flight to
quality, and relentless execution, we are well equipped to take
advantage of market tailwinds. We also continued to invest in
scaling our primary business in a disciplined manner. The insurance
division generated an increased year-over-year underwriting profit
by capitalizing on our diversified portfolio and improved pricing
conditions. We advanced many of our strategic objectives this
quarter, resulting in improved risk adjusted returns across the
portfolio, and continued to manage natural catastrophe volatility
demonstrated by the limited exposure to the severe weather events
in North America during the quarter. We remain focused on
bolstering our world class talent and I am confident in their
ability to capitalize on attractive market opportunities in the
year ahead.”
Summary of First Quarter 2023 Net Income
and Other Items
- Net Income of $365 million, equal to $9.31 per diluted share
versus first quarter 2022 net income of $298 million, equal to
$7.56 per diluted share
- Net operating income of $443 million, equal to $11.31 per
diluted share versus first quarter 2022 net operating income of
$406 million, equal to $10.31 per diluted share
- GAAP combined ratio of 91.2% including 3.7 points of
catastrophe losses versus the first quarter 2022 figures of 91.6%
including 4.1 points of catastrophe losses
The following table summarizes the Company’s Net Income and
related financial metrics.
Net income and operating income Q1 Year to
Date Q1 Year to Date All values in USD
millions except for per share amounts and percentages
2023
2023
2022
2022
Everest Re Group Net income (loss)
365
365
298
298
Operating income (loss) (1)
443
443
406
406
Net income (loss) per diluted common share
9.31
9.31
7.56
7.56
Net operating income (loss) per diluted common share
11.31
11.31
10.31
10.31
Net income (loss) return on average equity (annualized)
14.2%
14.2%
11.9%
11.9%
After-tax operating income (loss) return on average equity
(annualized)
17.2%
17.2%
16.2%
16.2%
Notes (1) Refer to the reconciliation of net income to net
operating income found on page 7 of this press release
Shareholders' Equity and Book Value per Share Q1
Year to Date Q1 Year to Date All values in
USD millions except for per share amounts and percentages
2023
2023
2022
2022
Beginning shareholders' equity
8,441
8,441
10,139
10,139
Net income (loss)
365
365
298
1,379
Change - unrealized gains (losses) - Fixed inc. investments
249
249
(811
)
(811
)
Dividends to shareholders
(65
)
(65
)
(61
)
(61
)
Purchase of treasury shares
-
-
(1
)
(1
)
Other
24
24
(36
)
(36
)
Ending shareholders' equity
9,014
9,014
9,528
9,528
Common shares outstanding
39.3
39.4
Book value per common share outstanding
229.49
241.52
Less: Unrealized appreciation/depreciation of fixed maturity
investments ("URAD")
(37.15
)
(14.49
)
Adjusted book value per common share outstanding excluding URAD
266.64
256.01
Change in BVPS adjusted for dividends
7.2
%
Total Shareholder Return ("TSR") - Annualized
14.1
%
Common share dividends paid - last 12 months
6.60
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 Q1
Year to Date Q1 Year to Date Year on Year
Change All values in USD millions except for percentages
2023
2023
2022
2022
Q1 Year to Date Gross written premium
3,743
3,743
3,186
3,186
17.5%
17.5%
Net written premium
3,329
3,329
2,812
2,812
18.4%
18.4%
Loss ratio
63.4%
63.4%
64.1%
64.1%
(0.7) pts (0.7) pts Commission and brokerage ratio
21.3%
21.3%
21.7%
21.7%
(0.4) pts (0.4) pts Other underwriting expenses
6.4%
6.4%
5.8%
5.8%
0.6 pts 0.6 pts Combined ratio
91.2%
91.2%
91.6%
91.6%
(0.4) pts (0.4) pts Attritional combined ratio (1)
87.5%
87.5%
87.4%
87.4%
0.1 pts 0.1 pts Pre-tax net catastrophe losses (2)
110
110
115
115
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/Ukriane war (2) Pre-tax net
catastrophe losses are net of reinsurance and reinstatement
premiums
Reinsurance Segment – Quarterly Highlights
- Gross written premiums grew 23.2% on a constant dollar basis to
$2.64 billion, a new quarterly premium record for the segment, and
broad-based, double-digit growth across every business unit.
- Growth was driven by 19.4% growth in property pro-rata, 27.5%
growth in property Cat, 22.1% in Casualty pro-rata as a flight to
quality continues across various markets.
- Robust pricing momentum at April 1 renewal continued, with Cat
pricing up over 44% in North America and 26% Internationally, with
improved terms/conditions.
- 90-basis point improvement in the attritional loss ratio to
58.0% year over year and an attritional combined ratio of 85.9% vs
86.2% a year ago.
- Pre-tax catastrophe losses of $108 million net of estimated
recoveries and reinstatement premiums, compared with $110 million a
year ago. Catastrophe losses driven by the Turkey Earthquake as
well as the New Zealand floods and cyclone.
Underwriting information - Reinsurance segment Q1
Year to Date Q1 Year to Date Year on Year
Change All values in USD millions except for percentages
2023
2023
2022
2022
Q1 Year to Date Gross written premium
2,637
2,637
2,186
2,186
20.6%
20.6%
Net written premium
2,454
2,454
2,081
2,081
17.9%
17.9%
Loss ratio
62.9%
62.9%
64.1%
64.1%
(1.2) pts (1.2) pts Commission and brokerage ratio
25.0%
25.0%
24.9%
24.9%
0.1 pts 0.1 pts Other underwriting expenses
2.8%
2.8%
2.4%
2.4%
0.4 pts 0.4 pts Combined ratio
90.8%
90.8%
91.4%
91.4%
(0.6) pts (0.6) pts Attritional combined ratio (1)
85.9%
85.9%
86.2%
86.2%
(0.3) pts (0.3) pts Pre-tax net catastrophe losses (2)
108
108
110
110
Pre-tax net Russia/Ukraine losses
-
-
-
-
Pre-tax net prior year reserve development
-
-
(2)
(2)
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 $1.1 billion, an 11.5% increase
year-over-year in constant dollars, led by a diversified mix of
property, marine, energy and other specialty lines.
- Strong underwriting profit of $66 million, up 12%
year-over-year.
- Lower catastrophe losses in the quarter at $2 million.
- Attritional loss ratio of 64.2% slightly up over prior year
resulting in attritional combined ratio of 91.7%.
- The quarter included a one-time current accident-year
adjustment of $15 million related to a non-renewed medical stop
loss book.
- Disciplined expense management of 27.7%, an improvement of 10
basis points over prior year.
- Rate accelerated sequentially for the second straight quarter,
driven by property and umbrella.
Underwriting information - Insurance segment Q1
Year to Date Q1 Year to Date Year on Year
Change All values in USD millions except for percentages
2023
2023
2022
2022
Q1 Year to Date Gross written premium
1,106
1,106
1,001
1,001
10.5%
10.5%
Net written premium
875
875
731
731
19.7%
19.7%
Loss ratio
64.7%
64.7%
64.1%
64.1%
0.6 pts 0.6 pts Commission and brokerage ratio
11.8%
11.8%
12.5%
12.5%
(0.7) pts (0.7) pts Other underwriting expenses
15.9%
15.9%
15.3%
15.3%
0.6 pts 0.6 pts Combined ratio
92.4%
92.4%
91.9%
91.9%
0.5 pts 0.5 pts Attritional combined ratio (1)
91.7%
91.7%
90.9%
90.9%
0.8 pts 0.8 pts Pre-tax net catastrophe losses (2)
2
2
5
5
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 March 31,
2023
- Total invested assets and cash of $31.4 billion versus $29.9
billion on December 31, 2022
- Shareholders’ equity of $9.0 billion vs. $8.4 billion on
December 31, 2022, includes $1.5 billion of unrealized net losses
on AFS fixed maturity investments
- Shareholders’ equity excluding unrealized gains (losses) on AFS
fixed maturity investments of $10.5 billion versus $10.1 billion on
December 31, 2022
- Book value per share of $229.49 versus $215.54 at December 31,
2022
- Book value per share excluding unrealized gains (losses) on AFS
fixed maturity investments of $266.64 versus $259.18 at December
31, 2022
- 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 May 2, 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 March 31, Three Months Ended March 31,
(Dollars in millions, except per share amounts)
2023
2022
2023
2022
(unaudited) (unaudited) Per Diluted Per Diluted Per
Diluted Per Diluted Amount Share Amount Share Amount Share
Amount Share After-tax operating income (loss)
$
443
$
11.31
$
406
$
10.31
$
443
$
11.31
$
406
$
10.31
After-tax net gains (losses) on investments
$
6
$
0.14
$
(123
)
$
(3.14
)
$
6
$
0.14
$
(123
)
$
(3.14
)
After-tax net foreign exchange income (expense)
$
(84
)
$
(2.14
)
$
15
$
0.39
$
(84
)
$
(2.14
)
$
15
$
0.39
Net income (loss)
$
365
$
9.31
$
298
$
7.56
$
365
$
9.31
$
298
$
7.56
(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
March 31,
(Dollars in millions, except per share amounts)
2023
2022
(unaudited)
REVENUES: Premiums earned
$
3,100
$
2,792
Net investment income
260
243
Net gains (losses) on investments: Credit allowances on fixed
maturity securities
(8
)
(12
)
Gains (losses) from fair value adjustments
4
(137
)
Net realized gains (losses) from dispositions
9
(5
)
Total net gains (losses) on investments
5
(154
)
Other income (expense)
(79
)
15
Total revenues
3,286
2,896
CLAIMS AND EXPENSES: Incurred losses and loss adjustment
expenses
1,966
1,790
Commission, brokerage, taxes and fees
661
605
Other underwriting expenses
200
161
Corporate expenses
19
14
Interest, fees and bond issue cost amortization expense
32
24
Total claims and expenses
2,878
2,594
INCOME (LOSS) BEFORE TAXES
408
302
Income tax expense (benefit)
43
4
NET INCOME (LOSS)
$
365
$
298
Other comprehensive income (loss), net of tax: Unrealized
appreciation (depreciation) ("URA(D)") on securities arising during
the period
246
(815
)
Reclassification adjustment for realized losses (gains) included in
net income (loss)
3
4
Total URA(D) on securities arising during the period
249
(811
)
Foreign currency translation adjustments
31
(34
)
Reclassification adjustment for amortization of net (gain)
loss included in net income (loss)
-
1
Total benefit plan net gain (loss) for the period
-
1
Total other comprehensive income (loss), net of tax
280
(844
)
COMPREHENSIVE INCOME (LOSS)
$
645
$
(547
)
EARNINGS PER COMMON SHARE: Basic
$
9.31
$
7.57
Diluted
9.31
7.56
EVEREST RE GROUP, LTD. CONSOLIDATED BALANCE SHEETS
March 31,
December 31,
(Dollars and share amounts in millions, except par value per share)
2023
2022
(unaudited) ASSETS: Fixed maturities - available for sale, at fair
value
$
23,560
$
22,236
(amortized cost: 2023, $25,247; 2022, $24,191, credit allowances:
2023, ($62); 2022, ($54)) Fixed maturities - held to maturity, at
amortized cost (fair value: 2023, $814; 2022, $821, net of credit
allowances: 2023, ($9); 2022, ($9))
825
839
Equity securities, at fair value
250
281
Other invested assets
4,156
4,085
Short-term investments
1,034
1,032
Cash
1,610
1,398
Total investments and cash
31,435
29,872
Accrued investment income
235
217
Premiums receivable (net of credit allowances: 2023, ($30); 2022,
($29))
3,922
3,619
Reinsurance paid loss recoverables (net of credit allowances: 2023,
($24); 2022, ($23))
182
136
Reinsurance unpaid loss recoverables
2,125
2,105
Funds held by reinsureds
1,071
1,056
Deferred acquisition costs
1,011
962
Prepaid reinsurance premiums
611
610
Income tax asset, net
387
459
Other assets (net of credit allowances: 2023, ($7); 2022, ($5))
860
930
TOTAL ASSETS
$
41,839
$
39,966
LIABILITIES: Reserve for losses and loss adjustment expenses
22,878
22,065
Future policy benefit reserve
29
29
Unearned premium reserve
5,418
5,147
Funds held under reinsurance treaties
10
13
Other net payable to reinsurers
618
567
Losses in course of payment
123
74
Senior notes
2,348
2,347
Long term notes
218
218
Borrowings from FHLB
519
519
Accrued interest on debt and borrowings
41
19
Unsettled securities payable
201
1
Other liabilities
422
526
Total liabilities
32,825
31,525
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; (2023)
70.0 and (2022) 69.9 outstanding before treasury shares
1
1
Additional paid-in capital
2,295
2,302
Accumulated other comprehensive income (loss), net of deferred
income tax expense (benefit) of ($218) at 2023 and ($250) at 2022
(1,716
)
(1,996
)
Treasury shares, at cost: 30.8 shares (2023) and 30.8 shares (2022)
(3,908
)
(3,908
)
Retained earnings
12,342
12,042
Total shareholders' equity
9,014
8,441
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY
$
41,839
$
39,966
EVEREST RE GROUP, LTD. CONSOLIDATED STATEMENTS OF CASH FLOWS
Three Months Ended
March 31,
(Dollars in millions)
2023
2022
(unaudited) CASH FLOWS FROM OPERATING ACTIVITIES: Net income (loss)
$
365
$
298
Adjustments to reconcile net income to net cash provided by
operating activities: Decrease (increase) in premiums receivable
(259
)
(14
)
Decrease (increase) in funds held by reinsureds, net
(17
)
(67
)
Decrease (increase) in reinsurance recoverables
7
(126
)
Decrease (increase) in income taxes
41
1
Decrease (increase) in prepaid reinsurance premiums
28
(7
)
Increase (decrease) in reserve for losses and loss adjustment
expenses
681
632
Increase (decrease) in future policy benefit reserve
-
(1
)
Increase (decrease) in unearned premiums
226
4
Increase (decrease) in other net payable to reinsurers
17
46
Increase (decrease) in losses in course of payment
47
(125
)
Change in equity adjustments in limited partnerships
(5
)
(98
)
Distribution of limited partnership income
48
71
Change in other assets and liabilities, net
(121
)
47
Non-cash compensation expense
12
12
Amortization of bond premium (accrual of bond discount)
(1
)
19
Net (gains) losses on investments
(5
)
154
Net cash provided by (used in) operating activities
1,064
846
CASH FLOWS FROM INVESTING ACTIVITIES: Proceeds from fixed
maturities matured/called/repaid - available for sale
562
849
Proceeds from fixed maturities sold - available for sale
72
419
Proceeds from fixed maturities matured/called/repaid - held to
maturity
28
-
Proceeds from equity securities sold
46
90
Distributions from other invested assets
137
163
Cost of fixed maturities acquired - available for sale
(1,613
)
(2,011
)
Cost of fixed maturities acquired - held to maturity
(11
)
-
Cost of equity securities acquired
(1
)
(195
)
Cost of other invested assets acquired
(242
)
(137
)
Net change in short-term investments
4
355
Net change in unsettled securities transactions
267
46
Net cash provided by (used in) investing activities
(752
)
(421
)
CASH FLOWS FROM FINANCING ACTIVITIES: Common shares issued
(redeemed) during the period for share-based compensation, net of
expense
(19
)
(14
)
Purchase of treasury shares
-
(1
)
Dividends paid to shareholders
(65
)
(61
)
Cost of shares withheld on settlements of share-based compensation
awards
(19
)
(17
)
Net cash provided by (used in) financing activities
(103
)
(94
)
EFFECT OF EXCHANGE RATE CHANGES ON CASH
3
6
Net increase (decrease) in cash
212
337
Cash, beginning of period
1,398
1,441
Cash, end of period
$
1,610
$
1,778
SUPPLEMENTAL CASH FLOW INFORMATION: Income taxes paid
(recovered)
$
2
$
3
Interest paid
10
2
View source
version on businesswire.com: https://www.businesswire.com/news/home/20230501005635/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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