Fitch Ratings has affirmed all ratings related to
Everest Re Group, Ltd. (Everest Group), including the 'A+' Issuer
Default Rating (IDR) and 'A' senior debt rating of intermediate
holding company, Everest Reinsurance Holdings, Inc. (Everest
Holdings), the 'A-' trust preferred securities rating of Everest Re
Capital Trusts, and the 'AA-' Insurer Financial Strength (IFS) rating
of the insurance subsidiaries. The Rating Outlook is Stable. (See full
list of ratings below.)
The ratings continue to be based on the company's strong franchise and competitive position in chosen markets, diversified underwriting portfolio in primary insurance and reinsurance markets, and favorable operating performance and good capital position. Everest Group, through its subsidiaries, provides a wide range of property and casualty reinsurance and insurance coverage in the U.S., Bermuda, and certain international markets. Fitch believes that Everest Group's strong balance sheet, demonstrated financial flexibility, and diverse geographic and business portfolio will continue to fuel profitable growth in an increasingly complex and competitive environment.
Everest Group has reported estimated pretax losses of approximately $1.27 billion related to the 2005 Hurricanes Katrina, Rita, and Wilma. This level of catastrophe and operating losses represented a significant departure for Everest Group compared to prior historical performance. Everest Group experienced its first-ever net loss in 2005. To offset these losses, the company issued over $700 million of new common equity. Shareholders' equity was over $4 billion at March 31, 2006.
While Everest Group's 2005 losses were higher than expected, Fitch believes the company has taken steps to reduce its catastrophe exposure and improve profitability. While Fitch expects a certain amount of earnings volatility inherent in Everest's business profile, future large losses of similar magnitude to 2005 would be considered outside the norm.
Fitch will continue to monitor Everest Group's loss experience related to these events as some amount of industry-wide uncertainty still remains regarding ultimate losses.
Following several years of strong premium growth, Everest Group's growth has moderated. Everest Group's gross premium volume was up modestly in the first quarter of 2006 and declined 15% in 2005, primarily reflecting reduced premiums from its credit business and California workers' compensation business as a result of the 2004 termination of the company's largest agency relationship. While an improvement in Everest Group's operating leverage has been a favorable outcome of this growth moderation, Fitch believes that, more importantly, Everest Group will be challenged to find new growth opportunities in the near term.
Following repayment of $250 million in senior debt that matured in 2005, Everest Group's ratio of debt and trust-preferred securities to total capital is approximately 19%. Fitch expects this ratio to remain stable going forward. Excluding 2005 hurricane losses, interest coverage for Everest Group has been favorable, averaging over 7 times.
The following ratings are affirmed by Fitch with a Stable Rating Outlook:
Everest Reinsurance Holdings, Inc.
-- Issuer default rating (IDR) at 'A+';
-- 5.4% senior notes due 2014 at 'A';
-- 8.75% senior notes due March 15, 2010 at 'A'.
Everest Re Capital Trust
-- 7.85% trust preferred securities due Nov. 15, 2032 at 'A-'.
Everest Re Capital Trust II
-- 6.2% trust preferred securities due March 29, 2034 at 'A-'.
The following Insurer Financial Strength ratings are affirmed at 'AA-' with a Stable Rating Outlook:
-- Everest Reinsurance Company;
-- Everest National Insurance Company;
-- Everest Indemnity Insurance Company;
-- Everest Security Insurance Company;
-- Everest Reinsurance (Bermuda) Ltd.
Fitch's rating definitions and the terms of use of such ratings are available on the agency's public site, www.fitchratings.com. Published ratings, criteria and methodologies are available from this site, at all times. Fitch's code of conduct, confidentiality, conflicts of interest, affiliate firewall, compliance and other relevant policies and procedures are also available from the 'Code of Conduct' section of this site.
The ratings continue to be based on the company's strong franchise and competitive position in chosen markets, diversified underwriting portfolio in primary insurance and reinsurance markets, and favorable operating performance and good capital position. Everest Group, through its subsidiaries, provides a wide range of property and casualty reinsurance and insurance coverage in the U.S., Bermuda, and certain international markets. Fitch believes that Everest Group's strong balance sheet, demonstrated financial flexibility, and diverse geographic and business portfolio will continue to fuel profitable growth in an increasingly complex and competitive environment.
Everest Group has reported estimated pretax losses of approximately $1.27 billion related to the 2005 Hurricanes Katrina, Rita, and Wilma. This level of catastrophe and operating losses represented a significant departure for Everest Group compared to prior historical performance. Everest Group experienced its first-ever net loss in 2005. To offset these losses, the company issued over $700 million of new common equity. Shareholders' equity was over $4 billion at March 31, 2006.
While Everest Group's 2005 losses were higher than expected, Fitch believes the company has taken steps to reduce its catastrophe exposure and improve profitability. While Fitch expects a certain amount of earnings volatility inherent in Everest's business profile, future large losses of similar magnitude to 2005 would be considered outside the norm.
Fitch will continue to monitor Everest Group's loss experience related to these events as some amount of industry-wide uncertainty still remains regarding ultimate losses.
Following several years of strong premium growth, Everest Group's growth has moderated. Everest Group's gross premium volume was up modestly in the first quarter of 2006 and declined 15% in 2005, primarily reflecting reduced premiums from its credit business and California workers' compensation business as a result of the 2004 termination of the company's largest agency relationship. While an improvement in Everest Group's operating leverage has been a favorable outcome of this growth moderation, Fitch believes that, more importantly, Everest Group will be challenged to find new growth opportunities in the near term.
Following repayment of $250 million in senior debt that matured in 2005, Everest Group's ratio of debt and trust-preferred securities to total capital is approximately 19%. Fitch expects this ratio to remain stable going forward. Excluding 2005 hurricane losses, interest coverage for Everest Group has been favorable, averaging over 7 times.
The following ratings are affirmed by Fitch with a Stable Rating Outlook:
Everest Reinsurance Holdings, Inc.
-- Issuer default rating (IDR) at 'A+';
-- 5.4% senior notes due 2014 at 'A';
-- 8.75% senior notes due March 15, 2010 at 'A'.
Everest Re Capital Trust
-- 7.85% trust preferred securities due Nov. 15, 2032 at 'A-'.
Everest Re Capital Trust II
-- 6.2% trust preferred securities due March 29, 2034 at 'A-'.
The following Insurer Financial Strength ratings are affirmed at 'AA-' with a Stable Rating Outlook:
-- Everest Reinsurance Company;
-- Everest National Insurance Company;
-- Everest Indemnity Insurance Company;
-- Everest Security Insurance Company;
-- Everest Reinsurance (Bermuda) Ltd.
Fitch's rating definitions and the terms of use of such ratings are available on the agency's public site, www.fitchratings.com. Published ratings, criteria and methodologies are available from this site, at all times. Fitch's code of conduct, confidentiality, conflicts of interest, affiliate firewall, compliance and other relevant policies and procedures are also available from the 'Code of Conduct' section of this site.