Everest Re Group Reports Fourth Quarter and Full Year 2012 Earnings

Everest Re Group Reports Fourth Quarter and Full Year 2012 Earnings

HAMILTON, Bermuda--(BUSINESS WIRE)-- Everest Re Group, Ltd. (NYS: RE) today reported fourth quarter 2012 net income of $58.8 million, or $1.13 per diluted common share, compared to net income of $41.0 million, or $0.76 per diluted common share, for the fourth quarter of 2011. After-tax operating income¹, excluding realized capital gains and losses, was $41.7 million, or $0.80 per diluted common share, for the fourth quarter of 2012, compared to an after-tax operating loss¹ of $50.7 million, or $0.94 per common share, for the same period in 2011.

For the year ended December 31, 2012, net income was $829.0 million, or $15.79 per diluted common share, compared to a net loss of $80.5 million, or $1.49 per common share, for 2011. After-tax operating income¹, excluding realized capital gains and losses, was $715.2 million, or 13.62 per diluted common share, for the full year 2012, compared to an after-tax operating loss of $93.6 million or $1.73 per common share, for 2011.

Commenting on the Company's results, Chairman and Chief Executive Officer, Joseph V. Taranto said, "Despite losses from Sandy and the industry suffering record crop losses, Everest had $1.0 billion in comprehensive income for 2012 and increased shareholder value by 18%. These results demonstrate the strength of our organization. We are pleased with how our portfolio is positioned post January renewals and expect another strong year in 2013."

Operating highlights for the fourth quarter and full year of 2012 included the following:

• Gross written premiums were $1.15 billion, an increase of 4% compared to the fourth quarter of 2011. Worldwide reinsurance premiums were generally flat while direct insurance premiums were up 21% in the period. For the full year, gross written premiums totaled $4.3 billion and, after adjusting for the impact of foreign exchange and reinstatement premiums, were up 2% compared to last year.

• The combined ratio was 108.4% for the quarter and 93.8% for the year, compared to 130.3% and 118.5%, respectively, for the same periods in 2011. As previously announced, the fourth quarter included losses for Superstorm Sandy, which, on a net pre-tax basis, after reinstatement premiums, amounted to $287 million. For the full year, net pre-tax catastrophe losses totaled $361 million. Excluding catastrophe losses, reinstatement premiums and nominal favorable prior year loss development, the calendar year attritional combined ratio improved 3 points to 85.0% for 2012.

• Net investment income amounted to $146 million for the quarter and $600 million for the full year 2012. This included limited partnership income of $17 million and $65 million in each period, respectively.

• Net after-tax realized capital gains totaled $17 million for the quarter. For the full year, net after-tax realized and unrealized capital gains totaled $114 million and $154 million, respectively.

• Cash flow from operations was $184 million for the quarter and $664 million for the full year 2012. This compared to $113 million and $660 million for the same periods, respectively, in 2011.

• For the year, the after-tax operating income¹ return on average adjusted shareholders' equity² was 12% and net income return on equity was 14%.

• During the quarter, the Company repurchased 370,939 of its common shares at an average price of $107.72 and a total cost of $40 million. For the year, the Company repurchased 3.0 million of its common shares for a total cost of $290 million. During January, the Company repurchased an additional 343,981 shares for a total cost of $38 million, which will be reflected in first quarter 2013 reporting. The repurchases were made pursuant to a share repurchase authorization, provided by the Company's Board of Directors, under which there remains 4.0 million shares available.

• Shareholders' equity ended the year at $6.7 billion, up 11% from the $6.1 billion at December 31, 2011. Book value per share increased 16% from $112.99 at year-end 2011 to $130.96 at December 31, 2012.

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 fluctuations, trends in insured and paid losses, catastrophes, 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.

Everest Re Group, Ltd. is a Bermuda holding company that operates through the following subsidiaries: Everest Reinsurance Company provides reinsurance to property and casualty insurers in both the U.S. and international markets. Everest Reinsurance (Bermuda), Ltd., including through its branch in the United Kingdom, provides reinsurance and insurance to worldwide property and casualty markets and reinsurance to life insurers. Everest Reinsurance Company (Ireland), Limited provides reinsurance to non-life insurers in Europe. Everest National Insurance Company and Everest Security Insurance Company provide property and casualty insurance to policyholders in the U.S. Everest Indemnity Insurance Company offers excess and surplus lines insurance in the U.S. Everest Insurance Company of Canada provides property and casualty insurance to policyholders in Canada. Additional information on Everest Re Group companies can be found at the Group's web site at www.everestregroup.com.

A conference call discussing the fourth quarter results will be held at 10:30 a.m. Eastern Time on February 7, 2013. The call will be available on the Internet through the Company's web site or at www.streetevents.com.

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.everestregroup.com in the "Financial Reports" section of the "Investor Center". The supplemental financial information may also be obtained by contacting the Company directly.

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¹The 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 realized capital gains (losses) as the following reconciliation displays:

Although net realized capital gains (losses) are an integral part of the Company's insurance operations, the determination of net realized capital gains (losses) is independent of the insurance underwriting process. The Company believes that the level of net realized capital gains (losses) 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.

²Adjusted shareholders' equity excludes net after-tax unrealized (appreciation) depreciation of investments.

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