Good day, everyone and welcome to this Everest Reinsurance First Quarter 2008 Earnings Release Conference Call. Today's conference is being recorded. At this time for opening remarks and introductions I would like to turn the conference over to Ms. Beth Farrell, Vice President of Investor Relations. Please go ahead, ma'am.

Thank you. Good morning and welcome to Everest Re's first quarter 2008 earnings conference call. With me this morning are Joe Taranto, our CEO; Tom Gallaghar, our President; and Craig Eisenacher, our CFO. 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 the like 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 risk that investor should consider in connection with such statements. Now let me turn the call over to Joe Taranto.

Good morning. In first quarter the turbulence in the financial markets continued unabated. The credit markets debacle added to its victims, while concerns over the worldwide economic futures grew and the stock market dropped significantly in response. Meanwhile in our own insurance and reinsurance marketplace we continued to see market trends of reduced rates in virtually all P&C product lines and in virtually all countries. Concerns have continued to grow as to what these economic woes will pose for the insurance industry. We, at Everest are pleased to report that despite these challenges we had a 190 million in operating earnings or $3.03 per share. We modestly increased book value per share in the quarter while giving back a $130 million to shareholders through $100 million worth of stock buyback and $30 million worth of dividends. Worldwide gross premiums were down 14% as we remained disciplined underwriters and only accepted business that we have evaluated to produce an acceptable return. Last quarter we guessed that we'd be down top line 5% to 10% in 2008. Whereas the first quarter reduction was beyond that range, I believe it contained some booking anomalies and we continue to guess that future 2008 quarters will be off 5% to 10%. Premiums for our international book, our specialty book and our insurance operations were essentially level in the aggregate. Our international book continues to benefit from our ratings, reputation and relationships. Continuing to expand on our already extensive reach we plan to open a new office in Brazil to capitalize on the legal changes in that insurance marketplace and to capitalize on the economic growth expected from Brazil in the future. Our overall worldwide decline was driven by U.S reinsurance. We have reported for a number of quarters that most of all casualty classes are seeing continued rate decline at the insurance level, coupled with many ceding companies keeping more business net. Property insurance rates were also falling and competition among reinsurers has increased. Some dumb deals are now on landscape. Competition and rate reduction is higher in the U.S. than has taken place internationally. The combined ratio for the quarter was 89 and cash flow remained strong, reflecting the quality of the existing portfolio. With disciplined underwriting we look to continue to maintain the high quality of our portfolio. In summary, despite some serious drag from the financial markets we moved ahead. We expect to continue to move ahead and hope for less future head winds from the financial markets. Craig will now give the financial report.

Thanks, John. Good morning everybody. Operating earnings were $191 million or $3.03 per diluted share for the quarter. Net income after realized capital loses was $78 million or $1.24 per share. Our annualized operating ROE was 13.6% for the quarter, quite respectable we think given the environment. Our GAAP equity finished the quarter at $5.6 billion, lower than at year end by $51.8 million. In the quarter we repurchased $101 million of common stock and I'll talk a little bit about that in a moment, and paid $30 million in dividends, so we generated $79 million of increased equity prior to the amounts we returned to shareholders. The taxable equivalent total return on our fixed income portfolios was 1.1% compared to 2.2% for the Lehman aggregate. The total return on our public equities was a negative 9% compared to a negative 9.9% for the S&P 500. So we did a little bit in stocks and a little worse on the fixed side. Share market and mark-to-market adjustments for the portfolio as a whole resulted in a reduction to our GAAP equity of $114 million in the quarter. Not too bad we think given the adverse performance of the financial markets Since quarter end through this past Friday, our portfolios have rebounded by about $66 million basically driven by appreciation in the equity portfolio. We repurchased 1,000,052,000 shares in the quarter for an aggregate consideration of $101 million or an average price of $95.85 per share. Book value per share stood at $91.01 at quarter end compared to $90.43 at year end and that's an increase of $0.58. Overall, a reasonable performance given the competitive nature of the insurance and reinsurance markets and the rather dismal performance of the financial markets during the quarter. Our gross written premium at $878 million…

[Operator Instructions]. We will take the first question from Tom. Cholnoky from Goldman Sachs. Thomas V. Cholnoky - Goldman Sachs & Co: Good morning, I have got three questions, if I can. Number one, just on the U.S. reinsurance business Craig you indicated, that you lost a large, I guess some sought of retro cover, of $33 million, but that would - - I guess that would account for most of the prior year strengthening, if you look back on the fourth quarter of 2007, you were releasing reserves at the rate of about $35 million a quarter, which would suggest that there was perhaps $35 million less of something else their, I was - - is there anything else going on with reserve prior year development other than this loss, this arbitration loss?

I mean, in terms of US reinsurance. Thomas V. Cholnoky - Goldman Sachs & Co: Yes, yes

No, I think, the reserves continue to look strong, we look at our margins every quarter and things continue to look quite favorable Thomas V. Cholnoky - Goldman Sachs & Co: Okay, so there is no other strengthening, there then?

No Thomas V. Cholnoky - Goldman Sachs & Co: Okay.

No, U.S., the U.S. reinsurance in total was favorable ex that. Thomas V. Cholnoky - Goldman Sachs & Co: Okay, I guess, second I just want to clarify your views on the premium outlook because Joe seemed to say one thing and you seemed to say another thing which was that gross premium's down 14% and you still and Joe said, I thought he said he still believes that future quarters will be down 5% to 10% per quarter which would imply that for the year you will be down more than the 5% to 10% in the year and yet I thought Craig you said you are still comfortable with 5% to 10% for the whole year?

I think we just said the same thing different ways, I think we still believe we'll down 5% to 10% for the year. Thomas V. Cholnoky - Goldman Sachs & Co: Despite the hole that you have in the first quarter?

Correct. Thomas V. Cholnoky - Goldman Sachs & Co: So, you are actually... you are more optimistic now about the future quarters than you may have been relative to the year when you provided the initial guidance.

Well I think... I think you are splitting hairs their a little... Thomas V. Cholnoky - Goldman Sachs & Co: Well, I maybe but I am just trying to...

We are still faced with competitive marketplace, we still expect to be down, we are still guessing at the next nine months, we still have to write the business yet, we still have to see what Florida brings in June and July. But we are just trying to give you our sense that what you saw on the first quarter was probably not indicative of Craig used the word seasonality, I guess I used some booking anomalies but when we look back it just seems that, anyhow there is always a certain amount of lumpiness to a quarter we just thought that that the lumpiness kind off worked against the first quarter this year and probably worked in favor of the first quarter last year. Thomas V. Cholnoky - Goldman Sachs & Co: Okay, and I just... my final question just on these public equities, can you give us some idea of how much you have invested in these public equities that resulted in these $15.6 million loss?

In the... in the partnerships? Thomas V. Cholnoky - Goldman Sachs & Co: Yes.

We have a total of about $650 million on the balance sheet, invested in limited partnerships. The public equity portion, what I would... what I would classify as the public equity portion, of the portfolio is about 25% of that about a $150 million and then the project toward the added about a third and they are generally real estate, health care, energy, specific types of partnerships and the mezzanine and others about 40% of the total. Thomas V. Cholnoky - Goldman Sachs & Co: Okay, great thank you.

We will now take the next question from Joshua Shanker from Citi.

Hi, good morning.

Good morning.

A few of quick questions, one is Centrix, the credit insurance that's performing adequately at this point?

Yes, we put up a little more reserves in the quarter. We are not... I guess our borrowers are not immune to general economic conditions. So it continues to develop a little adversely. Overall though, the insurance segment was just about flat in terms of its development. So we are nearing the end of the road on this thing and there is not much more exposure to go.

Very good, second, you mentioned weakening of terms and conditions generally, your competitors have consistently been saying that despite pricing coming out, terms and conditions have been holding up pretty well. I'm wondering if you can speak to some examples what you are seeing there.

Well, I think, people talk about terms and conditions you really need to kind of slice it into two sectors. One is what's happening at the insurance level and I do believe that there is not a tremendous change in terms and conditions. We do see some shifting in deductibles on the property side that works against insurers and in turn works against reinsurers. What we were more referring to is on the reinsurance we have entered into more debate in terms of terms and conditions then we had a couple of years ago. A lot the issues get into things like should there be disagreement and arbitration, what rights does the reinsurer have, what rights does the insurer have? There are also more and more debates about if there is changes in ratings. What does a re-insurer have to do? In any event there's certainly is a movement to weaken the terms and conditions that a reinsurer has. And we are in a position where we look to maintain the strengths that we currently have. So there's more debate on that front today than there was a couple of years ago.

Okay, very good. And finally related in terms of where we are in the cycle at this point right now. If you had a handicap do you think the industry is writing at levels of underwriting profit right now as a whole and where do you see it sort on a cyclical basis. Where do we stand in the traditional cycle if you can be so reductive as to make it that easy for me?

Well of course it is not easy, but I put us into the normal part if you will, and not either extreme. I think certainly most companies, including us, believe what we've written. We've written at terms, at rates that we believe will make a profit. You'll still see the combined ratio from us and from many others that are quite good, quite profitable combined ratios, number of things we didn't see five and six years ago. Now it's been helped by good property losses, or benign losses. But I think we are at a point where you can still get adequate margin on most of the business that you are presented with, most of your renewals certainly. More and more of the new business that we seem be to looking at people or shopping around, and its not rated quite as adequately as most of what we see in terms of our renewal base. So it's not easy, but there are certainly adequate rated business out there. So I kind of put it into that normal part of the cycle where you have to work hard to get the proper margins, but it is doable.

Okay, I appreciate the candidness. Thanks you very much.

Now Jay Gelb with Lehman Brothers will take the next question.

Thanks and good morning. I was hoping to touch base on the margins. Joe, the accident year loss ratio pre-cat in the first quarter of '08, was around 84% or 85%. What kind of a drag do you anticipate on that going forward based on lower pricing, reduced premium volume and what's the terms and conditions?

We are trying to resist any drag on that. We are trying to maintain that. Whereas we did get a good cat quarter. We had some other items that went against us in the quarter, so from that point of view on balance I looked at it like it was kind of a normal overall cat quarter. Property side, I think we can still maintain the accuracy that we currently have. Casualty, you see that we're reducing because we couldn't write as much business and maintain the combined ratios that we had. The international front looks a little bit more favorable. I'll ask Tom to comment on the international front.

Well, on the international side, we see some changes in price, but nowhere near what's happened in the U.S. It's a 5% to 10% reduction across the board and most jurisdictions in the world and the overall combined ratio still seems to be very good and there's adequate not only towards the traditional losses, but also for the cat element.

Okay, and separate issue. Can you touch base on the realized losses that ran through the quarter. Was that reflecting a change in accounting?

Well that's almost all mark-to-market. Our equity securities are fair valued, and we started doing that in the first quarter of last year. So the bulk of that is actually unrealized. Actually almost all of it is unrealized, in the old sets of unrealized.

Yes, that's a change on our billion and half of equities and as Craig noted in the opening about $65 million of that has already come back in the effective quarter.

I see okay, and then can you talk about the potential opportunity for the state of Florida and the other wind pools with the reinsurance demand at mid year?

Well I said the insurance demand is largely equal to what it was last year there is a lot of dynamics going on in the market place from the governmental bodies and the pressure is obviously to keep the rates down not only for the primary sector but for the excess. There is some talk right now about them opening up more cat capacity so the market could fill in. It is not finalized yet. I believe we are in a very good position in that market, have been now for over two years with a well established position with a numbers of carriers there, and the overall results have continued to be quite good. The rate structures though that have been somewhat subdued in last year still have produced a very, very good combined ratio.

Right, so what kind of market opportunity could that be if Citizens opens up more to the private market the cat funds some of the other Gulf wind pools?

Well, first of all I would say that its far from clear that the legislature is going to make any changes whereby the State of Florida takes a lesser position and opens up more to the professional range, so that will be decided in the next month or so. Obviously if more is put on the table for professional reinsurers to write in the form of excess of loss, we can participate in that and clearly should Citizens decide to buy something as well from the professional market, we would have the ability to participate in that as well. Having said that, the majority of our writings and our profits have really come from participating in quota shares with few select primary insurers in the market place. We continue to have very good relations with this group. And we continue to believe that business will probably renew itself June and July and it looks somewhat same that it did in the last couple of years, but its looks very good and performed very well.

Great. Thanks for the answers.

And now we will take a question from Susan Spivak of Wachovia. Go ahead.

Good morning. Joe and Craig and Tom, I was hoping you could answer a couple of questions. First, are you exploring any changes to your investment strategy in terms in trying to take advantage of some of the widening spreads? And then second, historically it just seems that you have been aggressive on the share buy back plan when your stock has been at these price levels, and so what could we expect before the end of the year? I believe last year you repurchased 4% if I'm correct. And then Joe, just an industry question. It doesn't seem as if this pressure on investment income will be enough to change pricing. So in your...in your view what do you think needs to happen? Are we still in a situation where overall results are too good, the industry is too flush in capital so we could live like this for a few more years?

Okay, Craig will start and I will finish.

On the portfolio, we are not really significant in managing our portfolio strategy. We are looking for pockets of opportunities, for example in the first quarter, we bought a lot of Fannie Mae and Freddie Mac. In this quarter we've been buying munis as the spreads have been quite wide. So we've been selectively deploying funds in pockets of opportunity as we see them now. I have got to say about as soon as a pocket of opportunities appears, it disappears because I guess there is a lot of it out there that's has significant liquidity and are looking for opportunistic places or places where we think we see opportunities for longer term gains to deploy the funds. But basically we continue to be a conservative investor. We have a lot of liquidity. We have significant short term investments. Our portfolio is higher quality, relatively short duration and I would expect to see it continue in that vein. In term of the buy backs--

Yes, I will tend to it. But yes, just to kind of later on to the investment, as Craig noted, we don't have any major shifts, but we are happy with the overall strategy. but when munis did strike a few weeks ago and the levels at that time really had nothing [ph] seen before. I guess we did shift the $250 million into these better yielding munis Now since then we've seen them correct largely and so we're starting to probably level out in terms of the shift that we made, but we are happy with shift that we did make a few weeks ago, so we'll always be moving to take on current opportunities. Buyback, yes you are right Susan it was 4% last year, $250 million and it was another $100 million in the first quarter so, we're making a very clear statement. That's part of the mix, that's part of the strategy, and certainly stock price figures into those calculations, as well. We continue to not provide estimates and guidance in terms of we'll do into the future, just to maintain flexibility but it is pretty clear what we've been doing. Pricing, I am sorry to say that I do believe the world is pretty much as you've described it, flush with capital, still posting some very good earnings and it's not a scenario that is going to begin an uptick in pricing. Now what would do that, people are speculating and they usually some up with the big bang theory and we are not hoping for the big bang, so I am not exactly rooting for that, but in the short term and I don't know for how long you can probably expect an overall rate decline to continue.

Okay, and thank you very much for your answers.

We will now take a question from David Small of Bear Stearns.

Good morning, can we just talk about the insurance book for a second. Could you just let us know, you talked last year about the renewed programs that are now, should be fully online for Q1. How much premium did those three programs generate in the first quarter?

In the first quarter I don't recall exactly how much they have but let me quickly go through the three programs. One is the brownstone program, the other one is Manny, and the last one is chips. As it stands right now the premium volume as Craig has indicated in the insurance side has been offset. We had some declines in some of the lines of business, contracting being one of them, and the fact that we had these new programs has really filled the gap. The one that has performed right now, the best has been the brownstone. I think we're doing in the first quarter probably $50 or $60 million there. The other two programs, Manny is a little bit behind what we projected, and chips I'm not sure exactly what the number are right now. But their expectation is that they will perform as we originally indicated and give us approximately about a $150 million of new business this year.

Okay, and then just from your guidance should we assume that there are some new programs out on the horizon that you haven't talked about?

There is nothing that we are so close to closing on that we can put it out as a done deal. So, there are always opportunities that we are working on, but really nothing big and close to finalizing that we can report to you. But we still a lot of activity and have so since the beginning at the year. Nothing has come close to getting to where we think it is a good opportunity for us. But tremendous amount of activity in the market place right now.

And then just on the reinsurance book, given how much, I guess given how much premiums are off in the quarter, may be just help us think about for the year. How much of that book do you think would be Florida exposed by the end of the year?

Well, I guess the Florida business is probably $400 million worth of business, call it $100 million per quarter. And at this stage of the game, I don't really see... I don't envision a big change one way or the other on that. Its yet to be done that's June, and July, but based on conversations to date, I don't see that number changing significantly one way, or the other for us.

And my last question is just in terms of Florida, do you have any appetite there to be more aggressive right in primary either on the commercial or the residential side?

No, we've done some commercial. If you are talking about home owners business, we are not looking to get into that market. Its too much of a political game. You have to wait every year to be told by the politicians, what kind of profit you can make? What kind of rates you can charge? What you can write and what you can't? Its a very difficult way to run a business. As a reinsurer you can decide if things are wrong to get out, but as an insurer rate you kind of stuck in this state, and you are stuck with the politicians.

Hey, great. Thank you.

And Matthew Heimermann of J.P. Morgan will have the next question.

Hi, good morning everyone. Craig, maybe opening question for you on the...it looks like you sold some equity securities in the quarter and I just was wondering if you quantify that and in building on that I was just curious whether, or not the equity portfolio was a constraint with respect to how much stock you could buy back?

Okay, Matt we've bought back or sold rather about $250 million of equity securities early in the first quarter. We just... and we looked at the equity markets, and its just looked like it was more downside risk than upside potential, and I do not know if that's changed a lot at this point, but it seems to be bumping along in the range at least at this point. In terms of our buy backs at some point if we were to buy back enough stock then we wind up with the a ratio of equity investments to our GAAP equity there might be a issue from a rating perspective, but given that our operating leverages is low, given where we are at this point. I think its very easily manageable.

How far away are you from that threshold?

We're fine. We look at it as we probably maxed at 50% equities to GAAP equity given our operating leverage etc, but we don't really want to go there.

Okay.

We are running closer to 40% at this point.

And then on the buyback Joe, I guess you have I think 1.4 million share left on the authorization. And I'm just curious as to whether or not that gives you sufficient flexibility to do up if you really felt the stock was in an attractive price and there was nothing else going if that enough power or so to speak or the right?

That's $150 million worth of buy back. The Board meet quarterly, the Board meets next month. If we think we need more we would chat about it and I have no doubt that we would agree on it, and just authorize more? So that's easily changed the techniques [ph] today.

And then the last question just on lost trends in general. Have you noticed any changes with respect to loss trends recently and just as important have you made any changes with respect to how you are booking the business today versus the past?

We haven't really, I mean there is always the spike that comes with things like the credit crunch, But if you are talking about more normal medical inflation, I guess we've seen a bit that may affect our workers comp business but nothing too severe. We have read, some analyst are seeing some uptick here and there and I've been asking our actuaries and surveying our business to make sure that if there is any uptick that we are putting it into our numbers, but really most of our business is unaffected by any severity increase at this stage.

Okay, and then may be, you can tell me if I am reading too much into your opening comment with respect to that question where you said, with not really but for, there is obviously pressure with the equity markets. Is that a signal that you're perhaps holding IBNR, and other things longer than you might have been in the past on old business?

No, I think we are doing what we have always done, which is to release reserves when we get to the point where we are confident that we can do so. So I think it's always the same as it has always been.

Okay, alright thank you.

And now moving onto Vinay Misquith with Credit Suisse.

Hi, good morning.

Good morning.

On your Florida business, how do you think the margins of that business will be impacted if the HFCF provides less cheap reinsurance? Wouldn't they then have to go out and buy it from the private reinsurance market, thereby negatively impacting the margins there?

Well the answer to that is probably it would in the following sense you're right that the foreigner markets provides reinsurance at costs that are way below what professional reinsurers are charging. So, if they provide at less and professional reinsurers were providing more, one would believe that the charges to the insurance companies would go up. Now having said that, in their rate making that get approved by the state their underlying insurance rates they put in what they are being costed for reinsurance. So they would now have an argument that they have to present to the state that they could ensure raise their rates, which should presumably offset that. But going back to the beginning, it has not been decided yet whether the state will change what it did last year, but if it does that's the way it should shake out.

Fair enough. And on your exposure to D&O and E&O, do you have you update to that? Have you seen any more claims on that business?

We constantly do a review of all the activities as respect to the subprime and we have kept the concept with our ceding companies not only directly, but also we have done on side audits, and we haven't seen much development whatsoever, but it's early times. There is a lot of discussion out there. There's still lot of activity in those markets, but at this point in time we don't see it to be a material thing for us.

Okay, fair enough and one last question on the combine. You combined the state pretty steady over the last few quarters, no significant uptick. I'm just curious, is your business mix more towards property and less towards casualty? Is that benefiting the combines, in light of the fact that pricing is declining 10% sometimes even higher than that?

Well there has been a trend and probably for the last couple of years, particularly in the U.S. reinsurance where we were doing more and more property and less and less casualty. So the percentage of the overall mix that is property has been steadily growing now. Now I would tell that has probably benefited the combines, because property results have been very, very good. And in part because worldwide losses have been relatively low.

All right, thank you

And now the next question will come from Ian Gutterman with Adage Capital.

Hi, Joe. Just a couple, first that $32 million arbitration loss, was that related to the World Trade Center decision that came down in the quarter?

No, it was something else.

Well that's okay. And then just to go a bit more into Florida, your mix I get is pretty biased towards the takeout companies and I guess from what I understand that they going to be needing to buy more... did they see that because of all these new takeouts being formed, that there is going to be a lot of demand from them for more reinsurance and I guess you guys probably haven't heard it yet but Platinum said on their call that rates might actually be up a little bit in June. I would assume they are probably referring to that takeout space. So I was just wondering if you think rates and/or margins in the takeout space will be more favorably impacted in the rest of the Florida market and if that works to your favor?

That's unclear, I don't know... I didn't hear what Platinum said, so I don't know exactly what they are referring to. If they are referring to reinsurers rates on excess of loss of business in June, honestly I don't think that will be up versus last year. We had dinner with a client last night to discuss some excessive loss quotes for this June and they were talking 10% down as to the consensus of those quotes. So that's the story at least with regard to reinsurance. Whether or not we take out companies or will really be taking on other additional large blocks is unclear. Most of the guys we've been talking to, we really haven't been hearing much about them doing big take outs. So I don't see that affecting our book.

Okay, the fact that they can now assuming the legation goes through, can now write at higher gross premiums and therefore they need to obviously buy more reinsurance to get to the net requirements, that won't be a benefit?

Well, it could be a benefit based on the ratio of writing surplus you are referring to.

Right, that's what I am thinking about.

Well it could be a benefit based on the ratio of writing surplus you are referring to.

Right that what I was thinking about.

Yes, there could be some benefit. We have a very selective group of clients we have done business with down in Florida when we made decision to go in to that market. And unless something changes we will stick with those guys and look at some of the newer opportunities but we have been pretty comfortable with the clients we have right now and some of the new things we have seen and we do so see some new ones, they haven't been as good as we have had with these other clients.

Okay, that makes sense, thanks so much.

I think we have time for one final question. That question will come from William Wilt, Morgan Stanley.

Hi, good morning a couple and I will make them quick questions, the strong losses in the U.S, did they contribute to your account losses in the quarter or were they typically below the reinsurance layers?

No, we saw virtually nothing from U.S losses in the quarter.

Okay, thanks and the arbitration ruling was Everest acting alone in that... that dispute or was Everest part of... part of a syndication that was addressing issues with Retrocession if I understood it correctly?

No, I had only to do with us.

That's all I had, thanks very much.

Thank you.

With that, I will turn the call back over to your host for closing remarks.

Thank you for participating on the call. Certainly if you have any further questions you can reach out to Craig Eisenacher or myself. Again, thank you.

Once again, that completes your conference for today. Thank you for participation. Everyone have a wonderful day