Everest Re Group Ltd. massively outperformed analysts' expectations as it reported first-quarter net income of $297.6 million — up almost 77 percent on the same period a year earlier.

Operating income, which excludes realised capital gains and losses, was a record $267.9 million, or $4.13 a share, the company reported.

According to the average estimate of 13 analysts in a Thomson Financial survey, the Bermuda reinsurer was expected to make only $3.07 a share.

Lower catastrophe loss pay-outs were a major factor in the improved results, with Everest shouldering pre-tax catastrophe losses of $34.0m for the quarter compared to $68.4m in the first quarter of last year, when the company was dealing with claims arising from the devastating 2005 hurricane season.

The combined ratio, a measure of underwriting profitability, was 82.4 percent in the quarter, a significant improvement on the 94.5 percent ratio recorded in the same period in 2006.

In its results statement last night, Everest added that gross premiums for the quarter had slumped 3.6 percent from a year earlier.

This was put down to reduced writings in the US casualty and specialty reinsurance classes of business, mitigated somewhat by continued growth in the US property reinsurance book.

Everest's chief executive officer Joseph Taranto said: "We are extremely pleased with the results we have achieved thus far this year.

"The strength of our operations affords us the flexibility to sustain the financial strength of the organisation while also returning cash to our shareholders in the form of increased dividends and share repurchases.

"During the quarter, we repurchased 3 percent of our outstanding shares, underscoring our commitment to increasing shareholder value."

Last year, Everest enjoyed record full-year net income of $840.8m. So far this year the company has repurchased 2.1 million shares at an average price of $95.32.

The total cost of the repurchased shares is $200m, $19 million of which was purchased after the close of the quarter. The repurchases were made pursuant to a 5 million share repurchase authorisation provided by the Everest board, leaving 2.9 million shares available under the authorisation.

Despite the $181m worth of share repurchases during the first three months of the year, shareholders' equity rose from $5.1 billion to $5.2 billion during the quarter.

Net investment income increased by 7.4 percent to $155.8m as compared to $145.0m in 2006.