Everest Re: Q4 Net Income $206 Million; $840.8 Million Full Year

Bermuda’s Everest Re Group, Ltd. recovered strongly from 2005 losses, posting fourth quarter 2006 after-tax operating income (which excludes realized capital gains and losses) of $201.2 million, or $3.07 per diluted share, compared to an after-tax operating loss of $185.8 million, or ($3.01) per share, in the fourth quarter of 2005. Net income for the fourth quarter 2006 was $206.4 million, or $3.15 per diluted share, which also compares favorably to the fourth quarter of 2005 when the Company reported a net loss of $162.2 million, or ($2.63) per share.

For the year ended December 31, 2006, after-tax operating income was $817.9 million, or $12.52 per diluted share, compared to an after-tax operating loss of $286.1 million, or ($4.96) per share, in 2005. Net income for the full year 2006 was $840.8 million, or $12.87 per diluted share, in contrast to the net loss of $218.7 million, or ($3.79) per share, in 2005. The report gave the following “operating highlights:”

— The GAAP combined ratio in the fourth quarter was 92.9 percent compared to 142.8 percent in the same period last year. Significant catastrophic loss activity due to Hurricanes Katrina, Rita, and Wilma impacted 2005 while 2006 was a relatively benign period for such losses. The lack of catastrophe losses coupled with a firmer rate environment contributed to strong accident year results in 2006.

— The Company incurred $44 million of net adverse loss reserve development in the quarter largely arising from the 2005 hurricane losses and pre-1995 asbestos liabilities, partially offset by favorable development on attritional loss reserves. The Company also incurred a pre-tax charge in the quarter of $23 million from 2006 accident year loss ratio reassessments. This charge included $80 million of losses related to a credit program in runoff, offset by $57 million of favorable experience in other lines of business, primarily in the U.S. Insurance segment.

— Gross premiums written were $987.3 million, a 13.4 percent increase compared to $871.0 million in the fourth quarter of 2005. The ramp up of new programs in the U.S. Insurance segment, which grew by 15 percent compared to the fourth quarter of 2005, was an important factor in the overall growth.

— Net investment income increased by 36 percent to $183.5 million as compared to $135.0 million for the fourth quarter of 2005. Income generated by several limited partnership investments and strong overall growth in the investment portfolio contributed to these favorable results.

— Cash flow from operations was $142.1 million for the period compared to $74.9 million for the fourth quarter of 2005. Catastrophe loss payouts were $188.4 million and $240.2 million, respectively, for the three months ended December 31, 2006 and 2005.

— The annualized return on average shareholders’ equity was 17.1 percent for the quarter and 18.7 percent for the full year 2006; and

— Shareholders’ equity reached $5.11 billion, or $78.53 per outstanding share, representing a 23.4 percent increase from shareholders’ equity of $4.14 billion, or $64.04 per outstanding share, at December 31, 2005.

Chairman and CEO Joseph V. Taranto commented: “With more than $5 billion in shareholders’ equity, we have reached yet another milestone in Everest’s history. This accomplishment is a testament to the strength of our operating platform and focused market strategy, which emphasizes profitability over growth. Year over year premium was down modestly but our financial results, and underlying accident year trends remain strong.”

The complete report, additional comments and a transcription of the earnings conference call may be obtained on the Company’s web site at: http://www.everestregroup.com, under the “Financial Reports” section of the “Investor Center”.