Everest Re Group, Ltd. joined a growing list of Bermuda-based insurers who have seen their third quarter profits rebound sharply from last year’s disastrous results. The Group reported third quarter 2006 after-tax operating income, which excludes realized capital gains and losses, of $240.2 million, or $3.68 per diluted share, as compared to an after-tax operating loss of $438.9 million, or $7.79 per share, in the third quarter of 2005.
Overall net income for the third quarter 2006 was $245.7 million, or $3.76 per diluted share, which also largely exceeded the net loss of $417.7 million, or $7.41 per share for the third quarter of 2005.
Other highlights in the Group’s earnings statement included the following:
— For the nine months ended September 30, 2006, after-tax operating income was $616.8 million, or $9.44 per diluted share, as compared to an after-tax operating loss of $100.3 million, or ($1.78) per share, in 2005.
— Net income in the first nine months of 2006 was $634.5 million, or $9.71 per diluted share in contrast to the net loss of $56.5 million, or ($1.00) per share, in 2005.
— The GAAP combined ratio in the third quarter was 83.1 percent compared to 162.3 percent in the same period last year. The bulletin further noted: “While 2005 was impacted by significant catastrophe losses from Hurricanes Katrina, Rita, and Wilma, 2006 has been a relatively benign period for such event losses. Favorable market conditions, particularly in the U.S. Reinsurance segment, as well as net favorable reserve development on 2005 and prior accident years of $29.0 million also benefited the current period.”
— Gross premiums written were $1.05 billion, a 3.0 percent decline compared to $1.08 billion in the third quarter of 2005. “Our global reinsurance writings were down 8.2 percent from 2005 but up 11.7 percent sequentially as our reinsurance portfolio continues to transition. Our U.S. insurance writings were up 18.3 percent generally reflecting the expected contribution from new programs,” the announcement explained.
— Net investment income increased by 25.5 percent to $147.5 million as compared to $117.5 million in 2005.
— Cash flow from operations amounted to $180.9 million for the period as compared to $377.2 million in 2005. These include catastrophe loss payouts of $202.2 million and $61.7 million, respectively, for the three months ended September 30, 2006 and 2005.
— The annualized return on average shareholders’ equity was 21.5 percent for the quarter and 19.3 percent for the first nine months of 2006; and
— Shareholders’ equity was up $444.8 million for the quarter to $4.82 billion or $74.26 per outstanding share representing a 16.5 percent increase from shareholders’ equity of $4.14 billion, or $64.04 per outstanding share at December 31, 2005.
Chairman and CEO Joseph V. Taranto commented; “Our strong performance trend continues with quarterly earnings again reaching new levels and shareholder equity up over 10 percent for the quarter. This is a reflection of the underlying strength of our diversified business platform as well as still favorable market conditions, particularly in the U.S. While top line continues to lag last year’s volume, the gap is closing and we still expect strong production in the fourth quarter to further close this gap.”
For further information go to the Group’s Website at: http://www.everestre.com.
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