Everest Re Group Reports Record Earnings for Fourth Quarter and Full Year 2013; Return on Equity of 20% and 12% Growth in Book Value Per Share for Full Year

HAMILTON, Bermuda--(BUSINESS WIRE)--

Everest Re Group, Ltd. RE today reported fourth quarter 2013 net income available to common shareholders of $364.6 million, or $7.54 per diluted common share, compared to net income of $58.8 million, or $1.13 per diluted common share, for the fourth quarter of 2012. After-tax operating income¹ available to common shareholders, excluding realized capital gains and losses, was $303.4 million, or $6.28 per diluted common share, for the fourth quarter of 2013, compared to $41.7 million, or $0.80 per diluted common share, for the same period in 2012.

For the year ended December 31, 2013, net income available to common shareholders was $1.3 billion, or $25.44 per diluted common share, compared to net income of $829.0 million, or $15.79 per diluted common share, for 2012. After-tax operating income¹ available to common shareholders, excluding realized capital gains and losses, was $1.1 billion, or $21.47 per diluted common share, for the full year 2013, compared to $715.2 million or $13.62 per common share, for 2012.

Commenting on the Company's results, President and Chief Executive Officer, Dominic J. Addesso said, “Everest has reached another milestone with record earnings of $1.3 billion and a 20% return on equity. This is certainly a reflection of the effort over the last several years to position the company for profitable growth. We continue to strategically maneuver through a challenging marketplace and are confident that the portfolio we put together post January renewals can produce another strong year in 2014.”

Operating highlights for the fourth quarter and full year of 2013 included the following:

• Gross written premiums for the quarter were $1.3 billion, an increase of 14% compared to the fourth quarter of 2012. For the full year, gross written premiums grew 21% to $5.2 billion with reinsurance premiums up 21% and direct insurance premiums up 18%.
• The combined ratio was 81.5% for the quarter and 84.5% for the year, compared to 108.4% and 93.8%, respectively, for the same periods in 2012. The quarter included $24.5m of catastrophe losses, net of reinstatement premiums, for the Pacific storm, Typhoon Fitow, which largely impacted China. For the full year, net pre-tax catastrophe losses totaled $177.7 million. Excluding catastrophe losses, reinstatement premiums and favorable prior year loss development, the calendar year attritional combined ratio improved 4 points to 81.0% for 2013.
• Net investment income amounted to $126.1 million for the quarter and $548.5 million for the full year 2013. This included limited partnership income of $5.3 million and $46.9 million in each period, respectively.
• Net after-tax realized capital gains totaled $61.3 million for the quarter and $196.8 million for the full year. Unrealized losses, net of tax, on the fixed income portfolio amounted to $55.0 million in the quarter and $402.8 million for the year, driven by changes in interest rates.
• Cash flow from operations was $273.3 million for the quarter and $1.1 billion for the full year 2013. This compared to $193.4 million and $694.6 million for the same periods, respectively, in 2012.
• For the year, the after-tax operating income¹ return on average adjusted shareholders' equity² was 16.5% and net income return on equity was 19.5%.
• During the quarter, the Company repurchased 472,437 of its common shares at an average price of $152.29 and a total cost of $72.0 million. For the year, the Company repurchased 4.7 million of its common shares for a total cost of $621.9 million. During January, the Company repurchased an additional 185,619 shares for a total cost of $28.0 million, which will be reflected in first quarter 2014 reporting. The repurchases were made pursuant to a share repurchase authorization, provided by the Company's Board of Directors, under which there remains 4.4 million shares available.
• Shareholders' equity ended the year at $7.0 billion, up 3.5% from the $6.7 billion at December 31, 2012. Book value per share increased 12% from $130.96 at year-end 2012 to $146.57 at December 31, 2013.

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. Mt. Logan Re, a segregated cell company, capitalized by the Company and third party investors, is a specialty reinsurer of catastrophe risks. 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 6, 2014. 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.

___________________________

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:

					Three Months Ended																Twelve Months Ended
					December 31,																December 31,
(Dollars in thousands, except per share amounts)					2013								2012								2013								2012
					(unaudited)																(unaudited)
									Per Diluted								Per Diluted								Per Diluted								Per Diluted
									Common								Common								Common								Common
					Amount				Share				Amount				Share				Amount				Share				Amount				Share
Net income (loss)*					$	364,638			$	7.54			$	58,777			$	1.13			$	1,259,382			$	25.44			$	828,954			$	15.79
After-tax net realized capital gains (losses)						61,285				1.27				17,126				0.33				196,829				3.98				113,792				2.17
After-tax operating income (loss)*					$	303,353			$	6.28			$	41,651			$	0.80			$	1,062,553			$	21.47			$	715,162			$	13.62
* attributable to common shareholders
(Some amounts may not reconcile due to rounding.)

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

EVEREST RE GROUP, LTD.
CONSOLIDATED STATEMENTS OF OPERATIONS
AND COMPREHENSIVE INCOME (LOSS)
					Three Months Ended										Twelve Months Ended
					December 31,										December 31,
(Dollars in thousands, except per share amounts)					2013					2012					2013							2012
					(unaudited)										(unaudited)
REVENUES:
Premiums earned					$	1,287,496				$	1,119,396				$	4,753,543					$	4,164,628
Net investment income						126,127					146,411					548,509						600,202
Net realized capital gains (losses):
Other-than-temporary impairments on fixed maturity securities						(861	)				(120	)				(1,052	)					(10,022	)
Other-than-temporary impairments on fixed maturity securities
transferred to other comprehensive income (loss)						-					-					-						-
Other net realized capital gains (losses)						95,490					19,638					301,279						174,422
Total net realized capital gains (losses)						94,629					19,518					300,227						164,400
Net derivative gain (loss)						11,039					(318	)				44,044						(9,738	)
Other income (expense)						(2,169	)				(12,357	)				(5,487	)					3,318
Total revenues						1,517,122					1,272,650					5,640,836						4,922,810
CLAIMS AND EXPENSES:
Incurred losses and loss adjustment expenses						725,915					931,275					2,800,251						2,745,265
Commission, brokerage, taxes and fees						253,858					228,327					977,558						952,701
Other underwriting expenses						69,419					53,727					237,126						207,659
Corporate expenses						8,174					7,293					24,817						23,976
Interest, fees and bond issue cost amortization expense						7,638					13,930					46,118						53,683
Total claims and expenses						1,065,004					1,234,552					4,085,870						3,983,284
INCOME (LOSS) BEFORE TAXES						452,118					38,098					1,554,966						939,526
Income tax expense (benefit)						85,370					(20,679	)				289,706						110,572
NET INCOME (LOSS)					$	366,748				$	58,777				$	1,265,260					$	828,954
Net (income) loss attributable to noncontrolling interests						(2,110	)				-					(5,878	)					-
NET INCOME (LOSS) ATTRIBUTABLE TO EVEREST RE GROUP					$	364,638				$	58,777				$	1,259,382					$	828,954
Other comprehensive income (loss), net of tax:
Unrealized appreciation (depreciation) ("URA(D)") on securities arising during the period						(55,530	)				(28,204	)				(395,797	)					174,025
Reclassification adjustment for realized losses (gains) included in net income (loss)						534					(13,974	)				(6,977	)					(19,676	)
Total URA(D) on securities arising during the period						(54,996	)				(42,178	)				(402,774	)					154,349
Foreign currency translation adjustments						13,066					(4,427	)				(162	)					22,698
Benefit plan actuarial net gain (loss) for the period						17,837					(11,771	)				17,837						(11,771	)
Reclassification adjustment for amortization of net (gain) loss included in net income (loss)						1,617					1,629					5,778						4,795
Total benefit plan net gain (loss) for the period						19,454					(10,142	)				23,615						(6,976	)
Total other comprehensive income (loss), net of tax						(22,476	)				(56,747	)				(379,321	)					170,071
Other comprehensive (income) loss attributable to noncontrolling interests						-					-					-						-
Total other comprehensive income (loss), net of tax attributable to Everest Re Group						(22,476	)				(56,747	)				(379,321	)					170,071
COMPREHENSIVE INCOME (LOSS)					$	342,162				$	2,030				$	880,061					$	999,025
EARNINGS PER COMMON SHARE ATTRIBUTABLE TO EVEREST RE GROUP:
Basic					$	7.62				$	1.14				$	25.67					$	15.85
Diluted						7.54					1.13					25.44						15.79
Dividends declared						0.75					0.48					2.19						1.92

EVEREST RE GROUP, LTD.
CONSOLIDATED BALANCE SHEETS
					December 31,
(Dollars and share amounts in thousands, except par value per share)					2013					2012
					(unaudited)
ASSETS:
Fixed maturities - available for sale, at market value					$	12,636,907				$	13,141,657
(amortized cost: 2013, $12,391,164; 2012, $12,444,880)
Fixed maturities - available for sale, at fair value						19,388					41,470
Equity securities - available for sale, at market value (cost: 2013, $148,342; 2012, $131,630)						144,081					143,493
Equity securities - available for sale, at fair value						1,462,079					1,255,557
Short-term investments						1,214,199					860,379
Other invested assets (cost: 2013, $508,447; 2012, $596,590)						508,447					596,590
Cash						611,382					537,050
Total investments and cash						16,596,483					16,576,196
Accrued investment income						119,058					130,209
Premiums receivable						1,453,114					1,237,859
Reinsurance receivables						540,883					659,081
Funds held by reinsureds						228,000					228,375
Deferred acquisition costs						363,721					303,268
Prepaid reinsurance premiums						81,779					71,107
Deferred tax asset						146,281					262,024
Income taxes recoverable						32,053					68,442
Other assets						246,664					241,346
TOTAL ASSETS					$	19,808,036				$	19,777,907
LIABILITIES:
Reserve for losses and loss adjustment expenses					$	9,673,240				$	10,069,055
Future policy benefit reserve						59,512					66,107
Unearned premium reserve						1,579,945					1,322,525
Funds held under reinsurance treaties						2,692					2,755
Commission reserves						66,160					65,533
Other net payable to reinsurers						116,387					162,778
Losses in course of payment						332,631					191,076
5.4% Senior notes due 10/15/2014						249,958					249,907
6.6% Long term notes due 5/1/2067						238,361					238,357
Junior subordinated debt securities payable						-					329,897
Accrued interest on debt and borrowings						4,781					4,781
Equity index put option liability						35,423					79,467
Unsettled securities payable						53,867					48,830
Other liabilities						333,425					213,372
Total liabilities						12,746,382					13,044,440
NONCONTROLLING INTERESTS:
Redeemable noncontrolling interests - Mt. Logan Re						93,378					-
SHAREHOLDERS' EQUITY:
Preferred shares, par value: $0.01; 50,000 shares authorized;
no shares issued and outstanding						-					-
Common shares, par value: $0.01; 200,000 shares authorized; (2013) 67,965
and (2012) 67,105 outstanding before treasury shares						680					671
Additional paid-in capital						2,029,774					1,946,439
Accumulated other comprehensive income (loss), net of deferred income tax expense
(benefit) of $57,661 at 2013 and $119,629 at 2012						157,728					537,049
Treasury shares, at cost; 20,422 shares (2013) and 15,687 shares (2012)						(1,985,873	)				(1,363,958	)
Retained earnings						6,765,967					5,613,266
Total shareholders' equity attributable to Everest Re Group, Ltd.						6,968,276					6,733,467
TOTAL LIABILITIES, NONCONTROLLING INTERESTS AND SHAREHOLDERS' EQUITY					$	19,808,036				$	19,777,907

EVEREST RE GROUP, LTD.
CONSOLIDATED STATEMENTS OF CASH FLOWS
					Three Months Ended												Twelve Months Ended
					December 31,												December 31,
(Dollars in thousands)					2013						2012						2013						2012
					(unaudited)												(unaudited)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss)					$	366,748					$	58,777					$	1,265,260					$	828,954
Adjustments to reconcile net income to net cash provided by operating activities:
Decrease (increase) in premiums receivable						183,945						(33,771	)					(217,678	)					(153,694	)
Decrease (increase) in funds held by reinsureds, net						(323	)					(3,791	)					162						42,298
Decrease (increase) in reinsurance receivables						196,128						(19,302	)					118,963						(55,274	)
Decrease (increase) in current income taxes						19,503						(48,217	)					36,233						(26,831	)
Decrease (increase) in deferred tax asset						64,337						16,013						177,615						64,909
Decrease (increase) in prepaid reinsurance premiums						8,736						34,759						(12,777	)					16,358
Increase (decrease) in reserve for losses and loss adjustment expenses						(98,134	)					235,945						(374,027	)					(169,595	)
Increase (decrease) in future policy benefit reserve						(5,743	)					374						(6,595	)					(1,080	)
Increase (decrease) in unearned premiums						(42,769	)					(46,193	)					261,959						(98,418	)
Increase (decrease) in other net payable to reinsurers						(108,745	)					(64,576	)					(45,043	)					100,566
Increase (decrease) in losses in course of payment						(262,644	)					85,895						142,192						173,232
Change in equity adjustments in limited partnerships						(5,212	)					(17,013	)					(45,905	)					(63,779	)
Distribution of limited partnership income						8,249						8,910						56,982						30,718
Change in other assets and liabilities, net						10,900						(20,125	)					(57,212	)					76,788
Non-cash compensation expense						16,756						9,158						31,844						31,984
Amortization of bond premium (accrual of bond discount)						16,181						16,049						66,461						61,844
Amortization of underwriting discount on senior notes						13						14						54						52
Net realized capital (gains) losses						(94,629	)					(19,518	)					(300,227	)					(164,400	)
Net cash provided by (used in) operating activities						273,297						193,388						1,098,261						694,632
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from fixed maturities matured/called - available for sale, at market value						502,752						535,686						2,415,730						1,830,582
Proceeds from fixed maturities matured/called - available for sale, at fair value						-						-						7,213						1,300
Proceeds from fixed maturities sold - available for sale, at market value						247,030						273,838						1,092,387						913,139
Proceeds from fixed maturities sold - available for sale, at fair value						3,175						11,991						21,573						84,917
Proceeds from equity securities sold - available for sale, at market value						393						150,015						46,142						280,807
Proceeds from equity securities sold - available for sale, at fair value						245,886						171,823						705,831						558,740
Distributions from other invested assets						20,392						22,512						100,081						53,736
Cost of fixed maturities acquired - available for sale, at market value						(749,741	)					(1,184,638	)					(3,543,776	)					(3,328,409	)
Cost of fixed maturities acquired - available for sale, at fair value						(1,398	)					(791	)					(6,196	)					(7,955	)
Cost of equity securities acquired - available for sale, at market value						(5,172	)					(6,445	)					(59,756	)					(26,571	)
Cost of equity securities acquired - available for sale, at fair value						(196,786	)					(121,461	)					(621,038	)					(426,507	)
Cost of other invested assets acquired						(6,872	)					(8,688	)					(21,935	)					(58,369	)
Net change in short-term investments						(350,043	)					112,153						(357,451	)					(175,043	)
Net change in unsettled securities transactions						11,710						(30,872	)					(2,808	)					35,085
Net cash provided by (used in) investing activities						(278,674	)					(74,877	)					(224,003	)					(264,548	)
CASH FLOWS FROM FINANCING ACTIVITIES:
Common shares issued during the period, net						(172	)					1,605						51,500						21,473
Purchase of treasury shares						(71,959	)					(39,963	)					(621,915	)					(289,988	)
Net cost of junior subordinated debt securities maturing						-						-						(329,897	)					-
Third party investment in redeemable noncontrolling interest						-						-						87,500						-
Subscription advances for third party redeemable noncontrolling interest						143,000						-						143,000						-
Dividends paid to shareholders						(35,961	)					(24,735	)					(106,681	)					(100,402	)
Net cash provided by (used in) financing activities						34,908						(63,093	)					(776,493	)					(368,917	)
EFFECT OF EXCHANGE RATE CHANGES ON CASH						(7,683	)					3,074						(23,433	)					27,232
Net increase (decrease) in cash						21,848						58,492						74,332						88,399
Cash, beginning of period						589,534						478,558						537,050						448,651
Cash, end of period					$	611,382					$	537,050					$	611,382					$	537,050
SUPPLEMENTAL CASH FLOW INFORMATION:
Income taxes paid (recovered)					$	4,384					$	5,291					$	69,302					$	59,754
Interest paid						14,866						21,072						38,390						53,008
Non-cash transaction:
Conversion of equity securities - available for sale, at market value, to fixed
maturity securities - available for sale, at market value, including accrued
interest at time of conversion						-						-						-						92,981