Despite revenue growth, Everest Re Group Ltd. reported Monday a drop in third-quarter profit. The earnings decline primarily reflects higher expenses, especially a sharp rise in incurred losses and loss adjustments and a decrease in investment income.
For the third quarter, net income declined to $174.20 million or $3.11 per share from $228.62 million or $3.75 per share in the previous year. The results of the latest quarter included net after-tax realized capital gains of $24.9 million, resulting mainly from fair value adjustments on the equity portfolio. The prior-year results included net after-tax realized capital gains of $19.3 million.
Excluding items, after-tax operating income increased to $149.27 million or $2.67 a share from $209.36 million or $3.43 a share in the year-ago period. Comprehensive income for the quarter declined to $366.925 million from $605.06 million in the prior year.
Total revenues for the quarter grew to $1.18 billion from $1.16 billion. Premium earned increased to $997.26 million from $975.38 million. Five analysts were expecting revenue of $1.07 billion in the third quarter.
Everest Re noted that gross written premiums increased 3% to $1.16 million from the same period last year. Net investment income declined 15% to $141.37 million from $165.38 million.
For the three-month, period, incurred losses and loss adjustment expenses swelled to $674.78 million from $587.25 million in the corresponding quarter of the previous year. Combined ratio, measure of amount spent for claims and expenses for every dollar of premium written, was 95.9%, up from 88.3% for the prior-year period.
For the nine-month period, net income plunged to $308.22 million or $5.33 per share from $609.76 million or $9.94 per share in 2009. After-tax operating income was $260.29 million, or $4.50 per share, compared to $571.75 million, or $9.32 per share, for the first nine months of 2009. Total revenue improved year-over-year to $3.45 billion from $3.32 billion.