Everest Re Group CEO Discusses Q3 2010 Results – Earnings Call Transcript
Everest Re Group, Ltd (
)
Q3 2010 Earnings Conference Call
November 1, 2010 10:30 AM ET
Executives
Beth Farrell – IR
Joe Taranto – CEO
Dom Addesso – CFO
Analysts
Jay Gelb – Barclays Capital
Cliff Gallant – Keefe Bruyette & Woods
Vinay Misquith – Credit Suisse
Brian Meredith – UBS
Matthew Heimermann – JP Morgan
Ian Gutterman – Adage Capital
Josh Shanker – Deutsche Bank
Presentation
Operator
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Everest Re Group, Ltd. Q3 2009 Earnings Call Transcript
Ladies and gentlemen please standby. Good day everyone, welcome to the Everest Re Group Limited third quarter 2010 earnings call. Today’s conference is being recorded. At this time for opening remarks and introductions, I would like to turn the conference over to Ms. Beth Farrell, Vice President of Investor Relations. Please go ahead ma’am.
Beth Farrell
Thank you John. Good morning and welcome to Everest Re Group’s third quarter 2010 earnings conference call. With me today are Joe Taranto, the company’s Chairman and Chief Executive Officer, and Dom Addesso, our Chief Financial Officer.
Before we begin I will preface our comments by noting that our SEC filings include extensive disclosures with respect to forward-looking statements. In that regard I know such statements made during today’s call which are forward-looking in nature, such as statements about projections, estimates, expectations and the like are subject to various risks. As you know actual results could differ materially from current projections or expectations. Our SEC filings have a full listing of the risks that investors should consider in connection with such statements.
Now let me turn the call over to Joe.
Joe Taranto
Thanks Beth, good morning. We are pleased to have grown our book value per share in the quarter by 6.4% to over $114. Despite $514 million of catastrophe losses in the nine months, $347 million of share repurchases and $82 million in dividends, shareholder equity is up $180 million for the year attesting to the strength of our organization.
Despite these catastrophes, book value per share is up 11% through the first nine months. Cash flow remains quite strong at just over $790 million for the nine months. Gross written premium increased 3% to $1.16 billion as we continued to grow in the international and US property markets. During the quarter, we repurchased $100 million of our shares. For the year, we have repurchased $347 million of our shares, representing 7.5% of the outstanding shares at year-end 2009.
We have $4 million shares remaining available under our current authorization. We plan to continue to purchase shares in the fourth quarter. As previously announced, I will be continuing as CEO through 2011 and 2012. I am dedicated and energized to continue to lead the company forward. Going to our underwriting results by our segments, first, our international reinsurance book which represents 28% of our worldwide book through nine months. This segment includes Latin America, Canada, Asia, the Middle East and Africa. This segment has increased premium by 13.6% to $906 million through the first nine months. Excluding foreign exchange, the increase was 9.3%.
The increased volume was a combination of new business, increased participations, rate increases in select areas, and economic and insurance growth in some markets. Included in this segment is our initiative in Brazil which continues to go quite well. We have a long standing important position in the international reinsurance market. For example, we were the number three re-insurer in Latin America, number three in Canada and a strong household name in virtually all foreign markets. Historically, our international reinsurance book has been very profitable. Unfortunately this year has been hit by both the Chile quake and the New Zealand quake, whereas rates increased in Chile in response to losses, we expect to see rate increases for Australia and New Zealand as well.
Second, our Bermuda reinsurance operation, which has produced 18% of our worldwide business through nine months. Our Bermuda operation includes London, Ireland and continental Europe business written through our Brussels office. Our international reinsurance in Bermuda reinsurance operations together produced 46% of our worldwide premium and 58% of our reinsurance premium overall. Bermuda reinsurance premiums are down about 5% to $565 million through nine months, mainly being driven by reducing our book of business in continental Europe in response to softening market conditions.
The combined ratio for the Bermuda reinsurance operation was 92.7 for the quarter and 94.8 through the first nine months. The nine month combined ratio includes 13.1 points of catastrophe losses. Third, our US reinsurance book, accounted for 28% of our worldwide book. Premiums are at 1% in this segment to $885 million through nine. However within this segment, property reinsurance is up 5% and casualty reinsurance is down 7%. The property growth comes from increased writings from our Florida quota share business, mainly from rate increases our clients have implemented.
In casualty we continued to underwrite and respond to changing market conditions. We continued to see insurance rates decline in most casualty products. Within US reinsurance, property now accounts for 70% and casualty for 30%.
The combined ratio for our US reinsurance operation was 82.3 for the quarter and 84.1 for the first nine months. Our fourth and last reinsurance category is specialty reinsurance which accounts for 6% of our worldwide book. This category includes accident and health, surety and marine and aviation. Through nine months, this segment has grown by 8% to $198 million. The increase is driven by growth in our accident health book for both travel insurance and medical stop loss insurance.
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