Everest Re Q1 Profit Up 32.5%

NU Online News Service, April 20, 10:10 a.m. EDT?Bermuda-based reinsurer Everest Re Group Ltd. reported a 32.5 percent increase in its quarterly income, but some analysts expressed concerns yesterday over the reinsurer's diminished written premium figures.[@@]

The company posted $167.1 million for its 2005 first-quarter profit, up from $126.1 million one year ago, boosted by favorable capital gains and higher investment income.

Everest Re's after-tax operating income was $165.2 million, up 9 percent from $151.5 million last year. One year ago, the company suffered $34.9 million in realized capital losses, while this year it booked $2.5 million realized capital gains.

The reinsurer's underwriting remained profitable even as its combined ratio deteriorated slightly. Everest Re's combined ratio for the first quarter was 91.4, compared to 90.8 one year ago. Net investment income still made up the bulk of the reinsurer's overall profit. Everest Re said its investment income for the quarter was $132.9 million, improving from $100.9 million last year.

"We are pleased with the results achieved this quarter. Our superior existing portfolio of business, our ratings, our diversified operating platform, our people and our culture position us well in this changing market," said Everest Re Chief Executive Officer Joseph Taranto.

But William Wilt, insurance analyst at New York-based investment research firm Morgan Stanley, warned that he is keeping a "cautionary tone" because of the reinsurer's noticeably lower written premium figures. Everest Re said its net premiums written for the quarter were $1.01 billion, a 14.1 percent tumble from $1.18 billion one year ago.

"Investors will, and should, focus on the meaningfully lower-than-expected written premium figure as it is a harbinger of future earnings power," Mr. Wilt cautioned. Mr. Wilt said he was expecting a written premium decline of 5 percent compared with the 14.1 percent fall reported. But Everest Re's U.S reinsurance still came in "near expectations," he added.

Everest Re's net written premium figures also fell short of another analyst's expectation. Jay Gelb from investment firm Lehman Brothers in New York stated he was expecting $1.2 billion in quarterly net written premiums from the reinsurer.