Everest Re Group reported that, despite previously unrevealedadditional after-tax losses of $50 million from last year'shurricanes, it had first-quarter net income of $168.4 million, aslight boost over last year.

The first-quarter income figure for the Hamilton, Bermuda-basedfirm, equivalent to $2.57 per share, was a little less than 1percent higher than last year's first-quarter income amount, $167.1million, or $2.93 per share.

During a conference call yesterday, analysts expressed surprisethat Everest management chose not to disclose the $50 million inhurricane losses development earlier. But executives said they hadonly recently made the decision to boost loss estimates, andcharacterized the addition as a typical outcome of assembling–andmaking high-level judgments about–vast amounts of underlying datain the months following storms.

Stephen Limauro, Everest's chief financial officer, said: “Atthe end of the day we look at our 15.7 percent annualizedreturn-on-equity, and we had a very solid quarter….We wouldcontrast that with the [late] quarters of last year and 2004, whenwe were talking about significant movement in [analysts']expectations and really needing to get out information with respectto the implications” of the catastrophes.

Mr. Limauro said that loss additions were principally forHurricanes Wilma and Rita, with Katrina. Some development came frommarine and energy business, where Everest saw some losses begin toinvade high layers of coverage. And there was some movement inlosses emerging from Mexico, “where the loss adjustment processwas…overwhelmed by Wilma,” he said.

Executives characterized the overall adjustment as minor, notingthat it represented about 5 percent of last year's overallhurricane losses.

Although Everest reported a combined ratio more than 5 pointsless than break-even at 94.5 (with 6.9 points related to thehurricane development), analysts who zoned in on the top line,rather than underwriting profits, were also disappointed.

Asked whether a prediction for double-digit growth in 2006 madeearlier this year when Everest reported fourth-quarter 2005 resultswould still hold, Everest's chief executive officer, JosephTaranto, said, “Probably not.”

“Two items that affected us in the first quarter will impact thesecond quarter in our insurance operations,” he said, referring todeclines in workers' compensation premiums and premiums related toa credit insurance program.

Declines in those two areas pushed gross written premiums forEverest U.S. insurance segment down 21 percent. Premiums grew 8percent for worldwide reinsurance, helping to bring total grosspremiums for the group up 1 percent to roughly $1.1 billion.

Although he put a damper on analysts' hopes for full-yearpremium growth above 10 percent, Mr. Taranto said, “I'm stillbullish on the second half of the year,” pointing to several newprograms that he said should “propel growth.”

In particular, he said that Everest will be the beneficiary ofthe rift between American International Group and a specialtyagency of C.V. Starr (which is headed up by Maurice Greenberg, theformer American International Group chairman), with Everest signingon to accept roughly $250 million in contractors liability andpublic entity liability business in California.

In addition, Mr. Taranto said, a separate program forcontractors in New York will add $100 million in premiums. And, inJune, Everest will start writing property insurance for smallcommercial risks on an excess and surplus lines basis, where“brokers have a crying need for someone to come into the vacuumthat's been created.”

During the call, Mr. Limauro noted that Everest is remixing itsbusiness on the property side. If a replay of the 2005 loss eventsoccurred in 2006, he said Everest's losses “would be downappreciably–on the order of half what they were” last year.