EVEREST RE GROUP LTD [RE] Filings

10-Q 1 re-20210930.htm EVEREST RE GROUP 10-Q 3Q2021

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

_X_ Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the quarterly period ended September 30, 2021

___ Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Commission file number 1-15731

EVEREST RE GROUP, LTD.

(Exact name of registrant as specified in its charter)

Bermuda

98-0365432

(State or other jurisdiction of

incorporation or organization)

(I.R.S. Employer

Identification No.)

Seon Place – 4th Floor

141 Front Street

PO Box HM 845

HamiltonHM 19, Bermuda

441-295-0006

(Address, including zip code, and telephone number, including area code,

of registrant’s principal executive office)

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).

Yes

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large Accelerated Filer

Accelerated filer

Non-accelerated filer

Smaller reporting company

Emerging growth company

Indicate by check mark if the registrant is an emerging growth company and has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange act.

YES

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

YES

Securities registered pursuant to Section 12(b) of the Act:

Class

Trading Symbol

Name of Exchange where

Registered

Number of Shares Outstanding

At November 1, 2021

Common Shares, $0.01 par value

New York Stock Exchange

39,369,026

EVEREST RE GROUP, LTD

Table of Contents

Form 10-Q

Page

PART I

FINANCIAL INFORMATION

Item 1.	Financial Statements

	Consolidated Balance Sheets as of September 30, 2021 (unaudited)
	and December 31, 2020	1

	Consolidated Statements of Operations and Comprehensive Income (Loss) for the
	three and nine months ended September 30, 2021 and 2020 (unaudited)	2

	Consolidated Statements of Changes in Shareholders’ Equity for the nine
	months ended September 30, 2021 and 2020 (unaudited)	3

	Consolidated Statements of Cash Flows for the nine months ended
	September 30, 2021 and 2020 (unaudited)	4

	Notes to Consolidated Interim Financial Statements (unaudited)	5

Item 2.	Management’s Discussion and Analysis of Financial Condition and
	Results of Operation	31

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	53

Item 4.	Controls and Procedures	53

PART II

OTHER INFORMATION

Item 1.	Legal Proceedings	54

Item 1A.	Risk Factors	54

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	54

Item 3.	Defaults Upon Senior Securities	54

Item 4.	Mine Safety Disclosures	54

Item 5.	Other Information	55

Item 6.	Exhibits	55

EVEREST RE GROUP, LTD.

CONSOLIDATED BALANCE SHEETS

	September 30,		December 31,
(Dollars and share amounts in thousands, except par value per share)	2021		2020
	(unaudited)
ASSETS:
Fixed maturities - available for sale, at market value	$	21,623,119	$	20,040,173
(amortized cost: 2021, $21,182,756; 2020, $19,225,067, credit allowances: 2021, $(31,980); 2020, $(1,745))
Equity securities, at fair value		1,523,595		1,472,236
Short-term investments (cost: 2021, $713,144; 2020, $1,135,088)		713,144		1,134,950
Other invested assets		2,855,372		2,012,581
Cash		1,068,441		801,651
Total investments and cash		27,783,671		25,461,591
Accrued investment income		170,364		141,304
Premiums receivable		3,408,338		2,680,562
Reinsurance recoverables		2,215,380		1,994,555
Funds held by reinsureds		811,269		716,655
Deferred acquisition costs		797,735		622,053
Prepaid reinsurance premiums		552,468		412,015
Income taxes net recoverable		-		17,253
Other assets		866,872		742,369
TOTAL ASSETS	$	36,606,097	$	32,788,357

LIABILITIES:
Reserve for losses and loss adjustment expenses	$	18,956,953	$	16,398,997
Future policy benefit reserve		36,533		37,723
Unearned premium reserve		4,421,098		3,501,359
Funds held under reinsurance treaties		18,279		15,807
Other net payable to reinsurers		485,682		294,347
Losses in course of payment		150,784		127,971
Senior notes due 6/1/2044		397,284		397,194
Senior notes due 10/15/2050		979,915		979,524
Long term notes due 5/1/2067		223,749		223,674
Borrowings from FHLB		310,000		310,000
Accrued interest on debt and borrowings		23,267		10,460
Unsettled securities payable		83,626		206,693
Income taxes net payable		4,074		-
Other liabilities		536,218		558,432
Total liabilities		26,627,462		23,062,181

Commitments and contingencies (Note 7)		(nil)		(nil)

SHAREHOLDERS' EQUITY:
Preferred shares, par value: $0.01; 50,000 shares authorized;
no shares issued and outstanding		-		-
Common shares, par value: $0.01; 200,000 shares authorized; (2021) 69,806
and (2020) 69,620 outstanding before treasury shares		698		696
Additional paid-in capital		2,266,342		2,245,301
Accumulated other comprehensive income (loss), net of deferred income
tax expense (benefit) of $44,338 at 2021 and $80,451 at 2020		203,733		534,899
Treasury shares, at cost; 30,427 shares (2021) and 29,636 shares (2020)		(3,822,235)		(3,622,172)
Retained earnings		11,330,097		10,567,452
Total shareholders' equity		9,978,635		9,726,176
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY	$	36,606,097	$	32,788,357

The accompanying notes are an integral part of the consolidated financial statements.

EVEREST RE GROUP, LTD.

CONSOLIDATED STATEMENTS OF OPERATIONS

AND COMPREHENSIVE INCOME (LOSS)

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
(Dollars in thousands, except per share amounts)	2021		2020		2021		2020
	(unaudited)				(unaudited)
REVENUES:
Premiums earned	$	2,656,403	$	2,205,811	$	7,602,640	$	6,285,030
Net investment income		292,759		234,233		960,267		420,116
Net realized capital gains (losses):
Credit allowances on fixed maturity securities		(7,329)		6,196		(30,234)		(19,641)
Other net realized capital gains (losses)		3,107		104,007		169,023		103,904
Total net realized capital gains (losses)		(4,222)		110,203		138,789		84,263
Other income (expense)		(19,517)		59,937		44,190		47,306
Total revenues		2,925,423		2,610,184		8,745,886		6,836,715

CLAIMS AND EXPENSES:
Incurred losses and loss adjustment expenses		2,274,301		1,736,210		5,571,861		4,574,066
Commission, brokerage, taxes and fees		564,335		445,332		1,611,095		1,360,170
Other underwriting expenses		141,150		138,875		424,225		385,865
Corporate expenses		17,817		10,618		46,363		29,184
Interest, fees and bond issue cost amortization expense		15,539		6,641		46,785		21,477
Total claims and expenses		3,013,142		2,337,676		7,700,329		6,370,762

INCOME (LOSS) BEFORE TAXES		(87,719)		272,508		1,045,557		465,953
Income tax expense (benefit)		(14,251)		29,451		97,181		15,404

NET INCOME (LOSS)	$	(73,468)	$	243,057	$	948,376	$	450,549

Other comprehensive income (loss), net of tax:
Unrealized appreciation (depreciation) ("URA(D)") on securities arising during the period		(100,021)		63,480		(304,465)		335,835
Reclassification adjustment for realized losses (gains) included in net income (loss)		(1,388)		(11,453)		(3,464)		12,689
Total URA(D) on securities arising during the period		(101,409)		52,027		(307,929)		348,524

Foreign currency translation adjustments		(53,599)		60,628		(28,886)		30,390

Reclassification adjustment for amortization of net (gain) loss included in net income (loss)		1,563		1,806		5,649		4,532
Total benefit plan net gain (loss) for the period		1,563		1,806		5,649		4,532
Total other comprehensive income (loss), net of tax		(153,445)		114,461		(331,166)		383,446

COMPREHENSIVE INCOME (LOSS)	$	(226,913)	$	357,518	$	617,210	$	833,995

EARNINGS PER COMMON SHARE:
Basic	$	(1.88)	$	6.08	$	23.74	$	11.20
Diluted		(1.88)		6.07		23.72		11.18

The accompanying notes are an integral part of the consolidated financial statements.

EVEREST RE GROUP, LTD.

CONSOLIDATED STATEMENTS OF

CHANGES IN SHAREHOLDERS’ EQUITY

(Dollars in thousands, except share and dividends per share amounts)	2021		2020
	(unaudited)
COMMON SHARES (shares outstanding):
Balance, January 1		39,983,481		40,798,963
Issued during the period, net		196,481		159,423
Treasury shares acquired		(97,462)		(970,892)
Balance, March 31		40,082,500		39,987,494
Issued during the period, net		940		(15,849)
Treasury shares acquired		(68,100)		-
Balance, June 30		40,015,340		39,971,645
Issued during the period, net		(10,721)		(5,129)
Treasury shares acquired		(625,358)		-
Balance, September 30		39,379,261		39,966,516

COMMON SHARES (par value):
Balance, January 1	$	696	$	694
Issued during the period, net		2		2
Balance, March 31		698		696
Issued during the period, net		-		-
Balance, June 30		698		696
Issued during the period, net		-		-
Balance, September 30		698		696

ADDITIONAL PAID-IN CAPITAL:
Balance, January 1		2,245,301		2,219,660
Share-based compensation plans		436		(3,181)
Balance, March 31		2,245,737		2,216,479
Share-based compensation plans		10,653		9,514
Balance, June 30		2,256,390		2,225,993
Share-based compensation plans		9,952		9,385
Balance, September 30		2,266,342		2,235,378

ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS),
NET OF DEFERRED INCOME TAXES:
Balance, January 1		534,899		28,152
Net increase (decrease) during the period		(299,820)		(297,903)
Balance, March 31		235,079		(269,751)
Net increase (decrease) during the period		122,099		566,888
Balance, June 30		357,178		297,137
Net increase (decrease) during the period		(153,445)		114,461
Balance, September 30		203,733		411,598

RETAINED EARNINGS:
Balance, January 1		10,567,452		10,306,571
Change to beginning balance due to adoption of Accounting Standards Update 2016-13		-		(4,214)
Net income (loss)		341,862		16,612
Dividends declared ($1.55 per share 2021 and $1.55 per share 2020)		(62,228)		(63,277)
Balance, March 31		10,847,086		10,255,692
Net income (loss)		679,982		190,880
Dividends declared ($1.55 per share 2021 and $1.55 per share 2020)		(62,046)		(61,927)
Balance, June 30		11,465,022		10,384,645
Net income (loss)		(73,468)		243,057
Dividends declared ($1.55 per share 2021 and $1.55 per share 2020)		(61,457)		(61,910)
Balance, September 30		11,330,097		10,565,792

TREASURY SHARES AT COST:
Balance, January 1		(3,622,172)		(3,422,152)
Purchase of treasury shares		(23,545)		(200,020)
Balance, March 31		(3,645,717)		(3,622,172)
Purchase of treasury shares		(16,782)		-
Balance, June 30		(3,662,499)		(3,622,172)
Purchase of treasury shares		(159,736)		-
Balance, September 30		(3,822,235)		(3,622,172)

TOTAL SHAREHOLDERS' EQUITY, September 30	$	9,978,635	$	9,591,292

The accompanying notes are an integral part of the consolidated financial statements.

EVEREST RE GROUP, LTD.

CONSOLIDATED STATEMENTS OF CASH FLOWS

	Nine Months Ended
	September 30,
(Dollars in thousands)	2021		2020
	(unaudited)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss)	$	948,376	$	450,549
Adjustments to reconcile net income to net cash provided by operating activities:
Decrease (increase) in premiums receivable		(736,614)		(357,162)
Decrease (increase) in funds held by reinsureds, net		(92,512)		(53,878)
Decrease (increase) in reinsurance recoverables		(230,593)		(172,454)
Decrease (increase) in income taxes		57,270		184,311
Decrease (increase) in prepaid reinsurance premiums		(146,639)		(7,963)
Increase (decrease) in reserve for losses and loss adjustment expenses		2,576,049		1,665,982
Increase (decrease) in future policy benefit reserve		(1,189)		(2,218)
Increase (decrease) in unearned premiums		927,524		392,904
Increase (decrease) in other net payable to reinsurers		198,954		68,784
Increase (decrease) in losses in course of payment		23,661		132,208
Change in equity adjustments in limited partnerships		(543,401)		(12,475)
Distribution of limited partnership income		105,571		55,576
Change in other assets and liabilities, net		(247,615)		(131,224)
Non-cash compensation expense		33,199		29,337
Amortization of bond premium (accrual of bond discount)		57,289		32,594
Net realized capital (gains) losses		(138,789)		(84,263)
Net cash provided by (used in) operating activities		2,790,541		2,190,608

CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from fixed maturities matured/called - available for sale, at market value		2,756,963		1,781,821
Proceeds from fixed maturities sold - available for sale, at market value		883,149		1,390,747
Proceeds from fixed maturities sold - available for sale, at fair value		-		2,054
Proceeds from equity securities sold, at fair value		578,894		329,750
Distributions from other invested assets		216,573		210,527
Cost of fixed maturities acquired - available for sale, at market value		(5,670,636)		(3,874,890)
Cost of equity securities acquired, at fair value		(507,862)		(460,953)
Cost of other invested assets acquired		(604,180)

EVEREST RE GROUP LTD [RE] Filings
10-Q	[2021-11-04]
10-Q	[2021-08-05]
10-Q	[2021-05-10]
10-K	[2021-03-01]
10-Q	[2020-11-09]
10-Q	[2020-08-10]
10-Q	[2020-05-11]
10-K	[2020-03-02]
10-Q	[2019-11-12]
10-Q	[2019-08-09]
10-Q	[2019-05-10]
10-K	[2019-03-01]
10-Q	[2018-11-09]
10-Q	[2018-08-09]
10-Q	[2018-05-10]
10-K	[2018-03-01]
10-Q	[2017-11-09]
10-Q	[2017-08-09]
10-Q	[2017-05-10]
10-K	[2017-03-01]
10-Q	[2016-11-09]
10-Q	[2016-08-09]
10-Q	[2016-05-10]
10-K	[2016-02-29]
10-Q	[2015-11-09]
10-Q	[2015-08-10]
10-Q	[2015-05-11]
10-K	[2015-03-02]
10-Q	[2014-11-10]
10-Q	[2014-08-11]
10-Q	[2014-05-12]
10-K	[2014-03-03]
10-Q	[2013-11-12]
10-Q	[2013-08-09]
10-Q	[2013-05-10]
10-K	[2013-03-01]
10-Q	[2012-11-09]
10-Q	[2012-08-09]
10-Q	[2012-05-10]
10-K	[2012-02-29]