Despite experiencing an adverse loss development of $300 million from 2005 storms and asbestos losses, Everest Re reported its best earnings 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 net loss in 2005 of $286.1 million, or $4.96 per share.

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

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

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

The full-year results also took a hit from $112 million of adverse development from pre-1995 asbestos losses, the company reported.

Offsetting the two unfavorable items, favorable development on other business--amounting to $253 million--brought overall net development down to $131 million when the pluses and minuses were added up for the year.

On the top line, after some disappointing quarters earlier in 2006, Everest reported that gross premiums were up 13.4 percent to $987.3 million in the fourth quarter. That put the full-year premium decline at just 2.6 percent--an improvement from a 6.9 percent drop the group had reported through nine months last year.

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

During the morning's conference, Joseph Taranto, chairman and chief executive officer, told analysts not to expect growth in 2007, anticipating that premiums will be "flat-to-down" overall.

He said that while the company's U.S. insurance book will continue to grow, casualty reinsurance premiums will likely fall--reflecting declines in underlying primary insurance rates--while the picture for property reinsurance remains unclear.

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

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

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

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

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