Good day, everyone, welcome to the Fourth Quarter 2014 earnings call of Everest Re Group Limited. Today's conference is being recorded. At this time, for opening remarks and introductions, I would like to turn the conference over Ms. Beth Farrell, Vice President of Investor Relations. Please go ahead.

Thank you, Kelly. Good morning, and welcome to Everest Re Group's Fourth Quarter and Full Year 2014 Earnings Conference Call. On the call with me today are Dom Addesso, the company's President and Chief Executive Officer; John Doucette, our Chief Underwriting Officer; and Craig Howie, our Chief Financial Officer. Before we begin, I will preface our comments by noting that our SEC filings include extensive disclosures with respect to forward-looking statements. In that regard, I note that statements made during today's call, which are forward-looking in nature, such as statements about projections, estimates, expectations and alike are subject to various risks. As you know, actual results could differ materially from current projections or expectations. Our SEC filings have a full listing of the risks that investors should consider in connection with such statements. Now, let me turn the call over to Dom.

Thanks, Beth. Good morning. We are very pleased to report record operating earnings for the year and quarter. Net income was slightly below that in 2013 due mainly to less realized gains on investments. However, as a result of share buybacks net income on an earnings per share basis was higher year-over-year at just under $26 per share. Most of our areas of our operations had excellent results which contributed to the overall result. The reinsurance segments continue to be the main engine and another good year was posted with the absence of many cats. The underwriting result was flatting year-over-year and while the combined ratio slipped two points, the portfolio was still generating above average returns. This slippage and combined ratio points will be discussed in great detail by Craig and John but a couple of general factors accounted for this increase. These would include the business mix shift and in our international operations a higher attritional loss ratio due to shock losses and storm losses not classified as cats. Declining rates overall are also a factor but we have muted much of that by moving attachment points to more attractively priced layers and buying external reinsurance in the capital markets and from traditional providers. The flexibility and adaptability to the market has been one of our point, in fact in many cases due to our capital structure which effectively includes Mount Logan and our sponsored [indiscernible]. We have the ability to put out more capacity with the same or less net peak zone P&L exposure and better risk-adjusted returns. Overall, the net returns on the cap portfolio in 2-14 were higher than the gross returns due to efficient capital management with the purchase of third-party reinsurance. As a result, the absolute margins on our property portfolio on an…

Thank you, Dom and good morning, everyone. Everest start another strong quarter earning with net income of $340 million or $7.47 per diluted common share. This compares to net income of $365 million dollars or $7.54 per share for the fourth quarter of 2014. Net income includes realized capital gains and losses. For the year, Everest had net income of $1.2 billion dollars or $25.91 per share compared to $1.3 billion or $25.44 per share in 2013. The 2014 result represents a return on equity of 17%. Operating income for the year was $1.1 billion or $24.71 per share. This represents a 15% increase over operating income of $21.47 per share last year. These record operating results were driven by a strong underwriting result, foreign exchange gains and lower income taxes compared to 2013. The increase in underwriting income was partially offset by a lower derivative result and lower net investment income compared to 2013. The results reflect a slight increase in the overall current year attritional combined ratio of 82%, up from 81% last year. This measure excludes the impact of catastrophes, reinstatement premiums and prior-period loss developments. All reinsurance segments reported underwriting gains for the quarter and for the year. Total reinsurance reported in underwriting gain of $275 million for the quarter compared to $390 million dollars underwriting gain last year. For the year, total reinsurance reported in underwriting gain of $862 million compared to an $877 million gain last year. The insurance segment reported an underwriting loss of $36 million for the quarter compared to a loss of $156 [ph] million last year. For the year, the insurance segment reported an underwriting loss of $49 million compared to a loss of $147 million in 2013. The 2014 results reflected a crop loss of $64 million for the…

Thank you, Greg. Good morning. As Dom highlighted we had a strong Q4 finishing a very successfully year. Our group gross written premium for Q4 was 1.4 billion up 7% from Q4 in 2013 with the growth coming from all reinsurance segments. Our group net written premium was $1.3 billion which was up $40 million or 3% over Q4 2013. For the full year, our group wide 2014 premium was 5.75 billion up 530 million of 10% from 2013. Our group net written premium was 5.26 billion up 250 million or 5%. Let me start with our reinsurance segment. I will focus more on the full year results for 2014 then turned to our January first renewals to give you some color on what we are seeing in the market and some themes as to how we are navigating it. For our global reinsurance segments including both Total Reinsurance and Logan, gross premium was $4.5 billion up 15% with growth coming predominantly from our U.S. and international reinsurance segments. Net premiums were $4.2 billion up 7% as we continue to pursue our retrocession strategy to lay off some of our catastrophe exposure and lower our cost of capital. Our reinsurance book including Mt. Logan generated $935 million of underwriting profit, a 5% improvement compared to 2013. These results highlight the success of the initiatives we have put in place over the last couple of years to achieve profitable, reinsurance growth, including the introduction of several new reinsurance products such as Purple Everest Color Product. Deploying increased capacity to pro-rata deal where we saw attractive original pricing terms and conditions. Pursuing new credit related opportunities to various territory, developing new strategic relationships across the globe with several key reinsurance clients, increasing line capacity on several attractively priced property catastrophe treaties aided…

Yes Kelly, we are open now for questions.

[Operator Instructions] we have our first question from Amit Kumar from Macquarie. Your line is open. Please go ahead.

Congrats on the quarter. Just a few clarification type of questions. Number one, just going back to the discussion on Mount McKinley. How much -- what's the size of the reserve status being shipped off from that?

Now McKinley is about $150 million in reserves that would be transfer.

And that’s in Q1?

Well, we don't know when the transaction will close. We have to go through all the regulatory approvals and things like that but I would suggest that it probably would be the beginning of Q2.

Okay, that's helpful. The other question I had was on, this goes back to the discussion on renewals, and thank you for the expanded commentary this quarter. In terms of some of the new opportunities which you talk but I think you mentioned a motor quota share and a large international account, do you have some sense of, why was it shifted to you and how did it perform previously. I am just trying to get a sense why it was non-renewed by the previous reinsurer.

I am not sure Amit that we can really get into that level of detail relative to prior are reinsurance, in some cases it might not be into the transaction that it had been in the market. A number of these deals that John has went through, are surplus driven or financially driven transactions and probably they do have transferring them of course but it's capital relief type products in some cases and in another cases it is helpful companies as they have managed their capital at various subsidiaries around the world. So they are all different. Why is Everest the company of choice? Some of things that John mentioned, I think are important to us. I think in community at large, I think we hope that we're viewed as an innovative market and the market that is quick to respond, flat organizational structure so that any significant transaction can quickly get to John's desk or my desk if it needs that level of approval and strong writing and the global footprint. Now those are all reasons that we have been emphasizing and that's what we found as why are a market of choice in many of these unique transactions.

I guess what I was trying to figure out is and I am just a bit surprised that you have had these opportunities for few quarters. And I'm just trying to figure out if it's a size issue why some of your peer companies have not been able to capitalize and find similar opportunities.

It's hard to generalize. I do think in parts, it’s the size issue, it could be a ratings issue, it could be the fact that these are not the types of transactions that this company has shown an interest and had a risk appetite for. It's hard for me to explain what the reason might be.

Okay. And just finally, any change in the buyback philosophy versus as it relates to your discussion on premiums, should we anticipate that to be any different versus what we've seen in the past. Thank you.

I think what I've tried to emphasize in my comments was that we bought back a significant return to significant amount of capital in the several years. I would anticipate that we continue to do that given the current market conditions but obviously if the market changes, then change direction on how much capital would it return. So I don’t anticipate any major change at this point. This is what I think be the short answer to your question.

Got it, thanks for the answer and good luck for the future.

Thank you, Amit.

Our next question comes from Michael Nannizzi from Goldman Sachs. Your line is open please go ahead.

Thanks, just a couple of here if I could. The expense ratio in international reinsurance in Bermuda in particular lifted in the fourth quarter. Was there something that happened that was kind of fourth quarter-specific in particular in Bermuda, or maybe there was some other driver. Thanks.

In the fourth quarter, we typically had compensation related accruals at year-end and I hope you recall. Again, we had a record quarter of results in the fourth quarter as well.

Okay but even with the year-over-year comps and the fourth quarter of the last year was pretty good too. So that's all just incremental comp that we should be thinking about, and it's just specifically in Bermuda?

No, the majority of it is, where you are seeing it may be even in total segments, compared to third quarter into fourth quarter.

Michael I wouldn’t look too much into individual segments because each of those are subject to individual accruals and year-end adjustments. I think the main topic is the overall group and the difference in the fourth quarter was what Craig specified which was predominantly compensation adjustments as relates to putting them on with our year-end results. So the individual segments can be, [indiscernible] of factors that are local.

Okay, great. Thanks. And then, Dom, you mentioned the net ROE versus the, I am sorry John mentioned the net versus gross ROE. Just trying to understand, I imagine that includes the difference is in part Mt. Logan because you seed some business to Mt. Logan. So just trying to understand the relationship over the ROE at Mt. Logan versus the ROE at Everest

Good morning, Michael this is John. We have talking about this for several quarters that there is difference by having rated and unrated capacity, there is different constraints to different capital requirements and it is not just cost to capital but it is also that there is different ROE for a rated company is impacted by how rating agency think of the capital that you need to hold to support the businesses and so it gives us the ability to find right fit for business but dealing across the portfolio, Logan is very critical for that but it is also part of a broader strategy than involved the cap on and other traditional sessions that we have and it allows us to kind of and also within Mt. Logan we have different investor appetites, low-risk, medium risk, high risk that results and lower return, medium return and high return and having that combination gives us a lot more flexibility to be able to deliver the most value for our client and have the best in that position for Everest.

Okay and then Dom, I think you had mentioned, in your opening remarks that cat business represents about half of the underlying profit or of the profit on a run-rate basis, I guess, when you adjust for model cats. Can you share what was that percentage in 2014 on an actual basis? Do we have that?

The number is probably somewhere between $300 million and $400 million of underwriting profit, non-cat.

Okay, got it. Great. Thanks. And then last one if I could sneak one more in. I think John, you mentioned last quarter that you were seeing some 20% return opportunities in, I think, somewhere more on the financial side in terms of those types of transactions. Just would love an update on that, is there still an opportunity to generate that level of return in that part of the portfolio? And thanks so much for all the answers.

The short answer is yes. We continue to see you and again we have been talking about this for a while, not just do we have a large balance sheet and high rating but we also a have a lot of underwriting expertise bringing, underwriting, accounting tax, legal contract wording and an actuarial and brining that all to the mix and solving client’s client need and creating some run-off structures and we continue to look for those and I think in general we think the more, it's less commodity with plain vanilla that seems to be under more pricing pressure to having the ability to execute kind of multijurisdictional insurance, reinsurance combination deal give us the ability to really solve client’s problems and use a lot of the different competitive advantage that we have and we continue to think that there's a lot of our runway for that.

Great. Thank you so much.

Our next question comes from Vinay Misquith from Evercore. Your line is open, please go ahead.

Good morning, the first question is on the increase of the combined ratio for next year, that's 2015. You talked about, I think, a couple of points increasing the combined ratio from the cat business. So was just curious as to -- so when you shake it all together for the other lines of business because pricing is down. Where do you see it sort of coming out to?

What was the last part of that...

So for the cat business, I believe you said that the combined ratio would increase maybe about a couple of points for the cat business. I was wondering also for the non-cat business. So if we shake it all together for the Company as a whole on the reinsurance side, how many points of an increase on the combined ratio do you think you got of the January 1 renewals?

you are really leaning us more towards giving earnings areas guidance which we really try not to do. I think, we expect, let me say this way, we expect our insurance operations combined ratio to improve, I am not really going to give any guidance on what that expected combined ratios would be in the insurance portfolio. On the reinsurance portfolio, a lot of that is dependent upon the types of transactions that we see. Certainly we will strive to maintain the combined ratio targets that we have been accustom to. And that will likely mean that some of the transactions that we were on in ’14 will probably not renew and they will look for other types of transactions. As John mentioned, we are doing some new product -- expanded our capabilities into the credit area and a lot of that reinsurance we expect to run it better combined ratios than are traditional reinsurance book. So part of it is dependent upon the mix of and that's the best answer that I can give you at this point.

Sure. Fair enough. And on the cat business, you said that it's going to be about a couple of points higher, but pricing seems to be a lot lower. I was just wondering what the difference is -- the difference, the retro that you guys are buying.

No the retro really is the capital issue. The combined ratio on a gross – those were gross basis comments and what it did, a lot of that again and we keep trying to articulate as to the ability to move between product between layers, between clients to redeploy capacity from one product segment to another as we try to utilize the cat capacity that we are willing to deploy at any renewal and really be able to move seamlessly between that and one example is within our treaty property department. it's the same team that writes so lot of risk, cat and retro and that having the ability to dynamically allocate capacity to help where the client needs are and where we think the best pricing is as well as moving up and down attachment points within the layer and ask again, we think because of our market position we have the ability to get more defining in the layers want and that really helps drive what you're seeing.

Sure. So it's a mix issue besides the pricing...

The mix influences the combined ratio of them.

Sure, sure. Fair enough. Then just the 50,000-foot view, we've seen a lot of M&A in the industry. You guys are about an $8 billion market cap Company. Curious about your thoughts on M&A.

What thoughts and what regard?

Are you interested in combining with others, do you think your size is large enough that you don't need to and also, do you think you're going to get some more opportunities if you guys don't combine and the others do. Do you see some more opportunities within the industry for your premiums?

I think we have emphasizing our scale and diversity for some time. So obviously I think it has been communicating that we think we have sufficient scale, so we don’t really see that necessity, urgency for combinations. Others, others may view it differently but I think in essence what you're seeing in the marketplace in that regard somewhat validates one what would be have been the adverse advantage. So that's what I will say about that. In terms of the combinations and what it needs to the marketplace in general, it all depends on execution. Many times these combinations can be disruptive. Maybe they won't be. We will see, they can affect market, they can affect shares of programs with the teams of people. There's always some churn that will occur as the result of any kind of merger in any industry so time will tell and we will see how that will evolve over the months ahead. Perhaps it creates opportunities, perhaps not. But I will say is that in some regards, this could be good for the industry in the sense that perhaps some of the capital does come out of the business and creates further discipline. So that could be a good outcome, some of these combinations.

Fair enough. And then just really on Mt. Logan Re, so it appears you guys have increased capital by maybe 60% because you raised about $270 million more. Correct? So would it be fair to assume that the premiums also would be up a similar amount because you've already deployed all the capital as of 1/1?

Yes, we would expect there to be a some increase in the [indiscernible] to Logan.

Okay, alright. Thank you.

Vinay, one more thought relative to your side question. Keep in mind as you mentioned $8 million market cap company, we are also adding the Logan piece and the sponsor cat also we have, so essentially you can almost argue that they were operating more like $10 billion capitalized company.

Fair enough, thank you.

Our next question comes from Josh Shanker from Deutsche Bank

Good morning, everyone. I think you made a very compelling case about your expense advantage compared to your competitors on this call this morning. I don't know if that translates necessarily to the insurance business, though. Why is Everest better in the insurance businesses than their peers? And we've seen some variable results from different reporters of crop insurance. Why have your results been weak this year while some others haven't seen such weakness?

I will let John talk about the crop piece because I think he include some of those points in his prepared remarks but let me just perhaps admit that I don't know that we are better than the industry on the insurance side. Our comment about the expense ratio was a reinsurance company and why were they getting superior returns, there.

Okay, go ahead Dom and then we will come back.

So in terms of crop insurance, we have a great team at Heartland but we know that we need to grow that book, we need to diversify the book. A lot of it is fixed expenses, those high fixed expenses and if infrastructure and systems. And so we know that—so in all a lot of things we are talking about what were going on. The reinsurance side. We are trying to do that with various books including the Heartland Corp Book. And we would expect that with the better geographic footprint than we have a bigger and better geographic footprint will give us more diversification, more better risk-adjusted returns, that allows to economics to scale and I think some of the competitors may buy quota shares, we do not and bipolar shares as then they get an override from the reinsurers and that may be impacting their expense ratio as well.

We have some work to do there but again to remind you that significant portion of the crop lost from Crop Hill and they are not just NPCI.

That's a great answer. And then coming back, if you are not necessarily better than your peers in the insurance business, does it make sense to you to continue in that business? I'm not telling you have to sell it or anything. But when you think longer-term, might it be worth more to somebody else than it is to you?

Right now, we think it is a good diversifier for a platform, you have the ability to deliver we think again because of the diversification fact, he greater ROE is also a source of business and for us into any capital markets that we talked about earlier as well, so we do hear again when we talk about our net ROE being the gross ROE. There is an opportunity to leverage that as well. So for the time being we think that the diversification and access to risk being able to build out that platform is important to the future of the Everest.

We spent a lot of time looking at the trends and we know buy each other business units that we have in the trends available. We've been growing up footprint whether it’s A&H operation, the safe operation, our property facilities around the group, the workers comp, BFI and professional teams the casual and environmental teams. The trends have been favorable and we are going to continue to extract to keep those teams support and capacity and help them grow their footprint and help them get an economy as the scale. Additional we can commonly use the scale and leverage again, the financial strength rating and an ability to execute that Everest pride itself there.

The enforced portfolio, is a little bit great results for us now we recognize what have had over the last couple of years and drag from discontinued books of business and obviously as you can tell from this year been, that has been greatly diminished and so we think it’s a bright future there.

Well, congratulations. Certainly a great year overall.

Thank you, Josh.

At this time I would like to turn the call back over to Mrs. Beth Farrell for closing remarks. I will turn the call over to Dom Addesso for closing remarks.

Thank you and thank you from participating in today’s call. Now we talk, today we continue to emphasize about our competitive advantages which have yielded above market returns. These are a competitive manager of global franchise and scale, diversified portfolio, we have talented staff and as we mentioned very competitive expense ratio. Market conditions are difficult to trend is difficult but we have proven our ability to deliver superior results. They are certainly many areas to be cautious about but also there is lot more to do. And we thank you for your continued interest. Have a good day.

This conclude your teleconference. Thank you for your participation. You may now disconnect.