Everest Re’s Q2 Net Income Battered by Catastrophe Costs, Investment Declines

Bermuda-based Everest Re Group Ltd. reported second quarter 2016 net income of $155.7 million, or $3.67 per diluted common share, compared to net income of $209.1 million, or $4.68 per diluted common share, for the same period in 2015.

After-tax operating income, excluding realized capital gains and losses, was $134.2 million, or $3.17 per diluted common share, for the second quarter of 2016, compared to after-tax operating income of $224.5 million, or $5.03 per diluted common share, for the same period last year.

For the six months ended June 30, 2016, net income was $327.4 million, or $7.68 per diluted common share, compared to $532.0 million, or $11.88 per diluted common share, for the first six months of 2015. After-tax operating income, excluding realized capital gains and losses, was $356.9 million, or $8.37 per diluted common share, compared to $554.4 million or $12.38 per diluted common share, for the same period in 2015.

“Everest’s six month annualized operating return on equity of 9.4 percent is an excellent result given the number of catastrophe loss events, the impact of foreign currency movements around the world, and the continued low interest rate environment. It remains a challenging environment but the strategic actions we have taken to position Everest for continued success are borne out by these results,” commented President and Chief Executive Officer Dominic J. Addesso.

Operating highlights for the second quarter of 2016 included the following:

• Gross written premiums for the second quarter were $1.4 billion, an increase of 8 percent compared to the second quarter of 2015. Eliminating the unfavorable effects of foreign currency fluctuations, premiums were up 10 percent for the quarter. Worldwide, reinsurance premiums were up 1 percent, on a constant dollar basis, and insurance premiums were up 32 percent, quarter over quarter.

• The combined ratio for the second quarter was 95.1 compared to 88.0 in the second quarter of 2015. Excluding catastrophe losses, reinstatement premiums, and prior period loss development, the current quarter attritional combined ratio was 86.1 percent compared to 85.9 percent in the same period last year.

• Catastrophe losses, net of reinsurance, amounted to $123.8 million in the quarter, with current quarter catastrophe losses for the Fort McMurray, Canada wildfires, Ecuador earthquake, and Texas hailstorms totaling $149.1 million, offset by reserve releases on several 2011 events. The net impact of these losses, after reinstatement premiums and taxes was $105.4 million.

• Net investment income for the quarter was $132.7 million, including income of $23.0 million on limited partnership investments.

• Net after-tax realized and unrealized capital gains amounted to $21.5 million and $122.9 million, respectively, for the quarter.

Source: Everest Re Group