Everest Re Group Ltd. saw its fourth quarter earnings fall 23.4 percent on the same period in 2003 on fewer premiums written and higher than usual catastrophe losses.

The Bermuda-based reinsurer earned $93.3 million, or $1.64 per share in the 2004 quarter, down from $121.8 million, or $2.15 per share, in the year ago quarter. Fourth quarter operating income, which excludes realised gains and losses, fell 20.2 percent to $94.7 million, or $1.66 per share, compared to $118.6 million or $2.09 per diluted share in the fourth quarter of 2003.

After-tax operating income at the end of 2004 fell 6.7 percent to $425.3 million or $7.48 per diluted share from $456 million or $8.29 per diluted share in 2003. Net income increased 16.2 percent in 2004 to $494.9 million or $8.7 per diluted share compared to 2003 $426 million or $7.74 per diluted share in 2003.

Net premiums written were $1.12 billion, a decrease of 5.7 percent from $1.19 billion in the fourth quarter of 2003. The company?s combined ratio ? the percentage of revenue that went to pay losses, expenses and commissions ? worsened, increasing to 102.8 percent from 96.4 percent. The company also said catastrophe losses were ?unusually high?.

In Everest?s earnings call yesterday, CFO Stephen Limauro said: ?The fourth quarter reflected a combined ratio of 102.8 percent bringing our full year combined ratio to 98.8 percent, increases of 6.4 points and 3.6 points respectively. Catastrophe losses including pre-tax losses of $138 million for the Florida hurricanes, $14 million for Typhoon Songda and $16 million for the east Asian tsunami accounted for 14 loss and combined ratio points in the quarter and a $133 million after tax or $2.32 cents per diluted share charge.?

Mr. Limauro said these were partially mitigated on a composite basis by normal year end reserve adjustment. Reserve strengthening was centred around a $30 million increase in asbestos which the company said mainly reflects continued heavy settlement on Mt. McKinley Insurance Company exposures which heavily impacted asbestos paid losses this quarter, totalling $111 million.

Mr. Limauro said: ?Regarding asbestos, Mt McKinley settled several additional high profile claims and completed coverage and placed payments on two others in the quarter brining the total to 9 for the year and 12 over past 15 months.?

Looking forward to 2005, the company expects more asbestos settlements and when asked, chairman and CEO Joseph Taranto was optimistic about possible movement on asbestos reform in Washington.

?With regard to asbestos I think legislation will be at least put on table, and it has a better chance this year than ever before. I don?t know if that means it has good chance at the end of the day in the sense that there are still a lot of details to be worked out and a lot of people to be brought into agreement. With regard to national tort reform - product liability medical malpractice, class actions - I really do think you will see some meaningful reform accomplished this year in Washington.?

In regard to January 1 renewals, Mr. Taranto said that the insurance and reinsurance markets continue to normalise from the peaks achieved in 2003.

?At this point we see the market as reasonable still offering many opportunities for Everest,? he said.?Having said that disciplined underwriting has become increasingly important as there are pockets to be avoided and areas where margins have reduced. We see the market as one where Everest can continue to do well given our superior existing portfolio, our ratings and our diversified platform our people and our culture. We expect to deliver quality earnings in 2005 as we remain focused on underwriting profit and not volume.?