Despite experiencing an adverse loss development of $300 millionfrom 2005 storms and asbestos losses, Everest Re reported its bestearnings year ever.

The Bermuda-based company's full-year 2006 net income figure of$840.8 million, or $12.87 per share, compared to a bottom-line netloss in 2005 of $286.1 million, or $4.96 per share.

During a conference call this morning, Craig Eisenacher, Everestchief financial officer, attributed much of the 2006 full-yearincome result and record low full-year combined ratio of 89.7 to arelative lack of catastrophe activity.

He also cited the ability of the firm to tailor its riskappetite to market conditions.

But 2005 hurricanes continued to impact Everest Re's numbers,with $62 million of losses from 2005's catastrophes coming throughin the fourth quarter and $272 million coming through for theyear.

The full-year results also took a hit from $112 million ofadverse development from pre-1995 asbestos losses, the companyreported.

Offsetting the two unfavorable items, favorable development onother business--amounting to $253 million--brought overall netdevelopment down to $131 million when the pluses and minuses wereadded up for the year.

On the top line, after some disappointing quarters earlier in2006, Everest reported that gross premiums were up 13.4 percent to$987.3 million in the fourth quarter. That put the full-yearpremium decline at just 2.6 percent--an improvement from a 6.9percent drop the group had reported through nine months lastyear.

With nearly $1 billion of gross premiums hitting the books inthe fourth-quarter, Everest wound up the year with overall grosspremiums of $4 billion.

During the morning's conference, Joseph Taranto, chairman andchief executive officer, told analysts not to expect growth in2007, anticipating that premiums will be "flat-to-down"overall.

He said that while the company's U.S. insurance book willcontinue to grow, casualty reinsurance premiums will likelyfall--reflecting declines in underlying primary insurancerates--while the picture for property reinsurance remainsunclear.

"The Florida legislation is a curveball from our marketplace,"Mr. Taranto said, referring to insurance reform legislation passedlast week that will have the Florida Hurricane Catastrophe Fundproviding most of the property-catastrophe reinsurance that wasplaced by reinsurers in 2006.

For Everest Re, that will mean about $50 million inexcess-of-loss reinsurance business will be lost, he said, adding,however, that the company also writes nearly $200 million ofproperty pro-rata reinsurance in Florida which its primary clientsmay still purchase.

Echoing other commentators on the Florida legislation--likeanalyst V.J. Dowling of Hartford, Conn.-based Dowling &Partners, who has said that the Florida lawmakers "decided to playRussian Roulette with the state's insurance market"--Mr. Tarantosaid, "I agree."

"Moving away from the Florida catastrophe market, I am happy tonote that reinsurance has not been legislated away and replaced bystructures with inability to pay in other product lines, in otherstates and in other countries," Mr. Taranto continued.