Everest Re Group, Ltd. (NYSE: RE) today reported second quarter 2012 net income of $214.6 million, or $4.08 per diluted common share, compared to net income of $131.3 million, or $2.41 per diluted common share, for the second quarter of 2011. After-tax operating income 1, excluding realized capital gains and losses, was $223.0 million, or $4.25 per diluted common share, for the second quarter of 2012, compared to after-tax operating income 1 of $134.0 million, or $2.46 per diluted common share, for the same period last year.
For the six months ended June 30, 2012, net income was $519.3 million, or $9.79 per diluted common share, compared to a net loss of $184.6 million, or $3.40 per common share, for the first six months of 2011. After-tax operating income 1, excluding realized capital gains and losses, was $462.9 million, or $8.72 per diluted common share, compared to an after-tax operating loss of $189.6 million or $3.49 per common share, for the same period in 2011.
Commenting on the Company’s results, Chairman and Chief Executive Officer, Joseph V. Taranto said, “This has been an exceptional year with 10% growth in book value per share, adjusted for dividends, through the first six months of the year. Strong market dynamics coupled with the strategic positioning of our underwriting portfolio has provided significant margin expansion as evidenced by our underwriting results, with a combined ratio of 89%. Add to this the investment earnings generated off of our sizable portfolio and we produced an annualized operating return on equity of 16%. These are all strong metrics and point to the strength of our franchise and our operating strategy.”
Operating highlights for the second quarter of 2012 included the following:
- Gross written premiums were $909 million, down 8% compared to the second quarter of 2011, primarily driven by the non-renewal of a large Florida quota share reinsurance contract in the quarter, which resulted in a portfolio return of the unearned premium reserve. Excluding the impact of this transaction, gross written premiums would have been up 12%. The underwriting portfolio continues to be strategically rebalanced away from quota share business and towards excess of loss business, providing improved overall margins.
- The loss and combined ratio for the quarter were 58.6% and 89.0%, respectively, compared to 70.8% and 98.0% in 2011. Excluding catastrophe losses, reinstatement premiums, and prior period loss development, the current quarter attritional loss ratio was 56.1% and the current quarter attritional combined ratio was 86.8%. This compared to 59.7% and 87.2%, respectively, for the same period last year.
- Net investment income for the quarter was $149.3 million, down 6% compared to last year, primarily driven by declining reinvestment rates.
- Net after-tax realized and unrealized capital losses totaled $8.5 million and $2.0 million, respectively, for the quarter.
- Cash flow from operations was $138.8 million compared to $150.6 million for the same period in 2011. Higher catastrophe loss payouts and taxes contributed to the decline this year.
- For the quarter, the annualized after-tax operating income 1 return on average adjusted shareholders’ equity 2 was 15.3% compared to 9.5% in 2011.
- During the quarter, the Company repurchased 990,957 of its common shares at an average price of $100.89 and a total cost of $100 million. For the year, the Company repurchased 2.4 million of its common shares for a total cost of $225 million. The repurchases were made pursuant to a share repurchase authorization, provided by the Company’s Board of Directors, under which there remains 4.9 million shares available.
- Shareholders’ equity ended the quarter at $6.4 billion, up 6% from the $6.1 billion at December 31, 2011. Book value per share increased 9.5% from $112.99 at December 31, 2011 to $123.75 at June 30, 2012.