Everest Re Group, Ltd. (NYSE: RE) today reported third quarter 2012 net income of $250.9 million, or $4.82 per diluted common share, compared to net income of $63.1 million, or $1.16 per diluted common share, for the third quarter of 2011. After-tax operating income 1, excluding realized capital gains and losses, was $210.6 million, or $4.05 per diluted common share, for the third quarter of 2012, compared to after-tax operating income 1 of $146.7 million, or $2.70 per diluted common share, for the same period last year.
For the nine months ended September 30, 2012, net income was $770.2 million, or $14.61 per diluted common share, compared to a net loss of $121.5 million, or $2.24 per common share, for the first nine months of 2011. After-tax operating income 1, excluding realized capital gains and losses, was $673.5 million, or $12.78 per diluted common share, compared to an after-tax operating loss of $42.9 million or $0.79 per common share, for the same period in 2011.
Commenting on the Company’s results, Chairman and Chief Executive Officer, Joseph V. Taranto said, “Our record pace continues with another quarter of comprehensive income in excess of $400 million. Through nine months, we have generated almost $1 billion of comprehensive income for our shareholders, resulting in growth in book value per share, adjusted for dividends, of 17.4%.”
Operating highlights for the third quarter of 2012 included the following:
- Gross written premiums were $1.2 billion, an increase of 7% compared to the third quarter of 2011. Worldwide, reinsurance premiums were down 2.5% to $869.5 million, but adjusting for the higher level of reinstatement premiums in 2011 and the effects of foreign currency fluctuations, reinsurance premiums were relatively flat. Insurance premiums increased 42%, quarter over quarter, primarily due to the acquisition of Heartland.
- The loss and combined ratios for the quarter were 59.8% and 87.2%, respectively, compared to 69.0% and 95.6% in 2011. Excluding catastrophe losses, reinstatement premiums, and prior period loss development, the current quarter attritional loss ratio was 57.5% and the current quarter attritional combined ratio was 84.9%. This compared to 56.6% and 83.5%, respectively, for the same period last year. It should be noted that the current year attritional combined ratio does include a $33.2 million underwriting loss in the quarter for crop business, $20.0 million on primary business and $13.2 million on reinsurance business. Adjusting for this, the current year attritional combined ratio would be 81.6%.
- Net investment income for the quarter was $152.0 million, down 3% compared to last year, primarily driven by declining reinvestment rates.
- Net after-tax realized and unrealized capital gains totaled $40.4 million and $118.2 million, respectively, for the quarter.
- Cash flow from operations was $174.9 million compared to $207.9 million for the same period in 2011. Higher underwriting cash flow was partially offset by lower investment income receipts and higher tax payments in the current quarter.
- Through nine months, the annualized after-tax operating income 1 return on average adjusted shareholders’ equity 2 was 15.3%.
- During the quarter, the Company repurchased 229,100 of its common shares at an average price of $109.22 and a total cost of $25 million. For the year, the Company repurchased 2.6 million of its common shares for a total cost of $250 million. The repurchases were made pursuant to a share repurchase authorization, provided by the Company’s Board of Directors, under which there remains 4.7 million shares available.
- Shareholders’ equity ended the quarter at $6.8 billion, up 12% from the $6.1 billion at December 31, 2011. Book value per share increased 16% from $112.99 at December 31, 2011 to $131.22 at September 30, 2012.