Good day everyone, and welcome to the Third Quarter 2016 Earnings Call of Everest Re Group. 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 Keith. Good morning and welcome to Everest Re Group’s third quarter earnings conference call. On the call with me today are Dom Addesso, the Company’s President and Chief Executive Officer; Craig Howie, our Chief Financial Officer; John Doucette, the President and CEO of our Reinsurance Operations; and Jon Zaffino, President of our North American Insurance Operations. 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 risks that investors should consider in connection with such statements. Now, let me turn the call over to Dom.

Thanks, Beth. Good morning and welcome to our third quarter earnings call. This morning we have very positive results to report, although many are probably already more interested in next quarter as a consequence of Hurricane Matthew, we will get to that but first a bit about the third quarter. As you have seen the operating earnings per share were $6.53 which translates to a 14% annualized operating ROE, this of course leads expectations impart due to another light cat core, however that is only part of the story. Overall, the attritional combined ratio has improved year-over-year and I believe represents the more relevant part of the message. In both the reinsurance and insurance segments, there is positive movement. Reinsurance for example on a year-to-date basis has improved the attritional combined ration from 82.7 to 80.7, this is partially due to a lower frequency large risk losses, but also a result of continuing to modify our portfolio in the phase of a declining rate environment to achieve the best risk adjusted return. In addition and perhaps more impactful are the newer lines of business we are taking on, which in general include mortgage and credit exposure as well as structured products, John Doucette will give some detail on these individual reports. On the insurance side, the story is also favorable after excluding Heartland, as you know was our crop operation that was sold during the quarter. Excluding crop, the North American insurance operation reported a year-to-date attrition combined ratio of 96.4%. This is higher than our longer term objective partly due to an increased expense ratio, as we are currently ramping up and investing heavily in this segment, both domestically and internationally. This is consistent with the strategy we have discussed in the past. Build versus buy strategy has been…

Thank you, Dom and good morning everyone. Everest had a solid quarter of earnings with net income of $295 million, this compares to net income of $89 million for the third quarter of 2015. Net income includes realized capital gains and losses. On a year-to-date basis, net income was $623 million compared to $621 million in 2015. After-tax operating income for the third quarter was $273 million compared to $200 million in 2015. Operating income year-to-date was $630 million compared to $755 million in 2015, a primary differences were catastrophe losses and foreign exchange. The overall underwriting gain for the Group was $432 million for the first nine-months compared to an underwriting gain of $498 million for the same period last year. On a year-to-date basis, the overall results reflected gross catastrophe losses of $151 million in 2016 compared to $61 million in 2015. In the third quarter of 2016, the Group saw $18 million of catastrophe losses, these losses primarily related to the Hurricane Hermine in Florida, this compares to $34 million of catastrophes during the third quarter of 2015. The overall current year attritional combined ratio for the first nine-months was 85.2%, down from 85.8% for the same period in 2015. The 2015 attritional ratio included $60 million loss estimate for the explosions at the Chinese port of Tianjin. Our year-to-date expense ratio was 5.8% as we anticipated with the build out of our insurance platform and our Lloyd's Syndicate. For investment, pre-tax investment income was $123 million for the quarter and $358 million year-to-date on our $17.5 billion investment portfolio. Investment income year-to-date declined only $5 million from one year ago. We have been able to maintain investment yield without a dramatic shift in our overall investment portfolio. However, as Dom mentioned, we have gradually shifted allocations…

Thank you Craig, good morning. We are pleased to report another strong quarter for our reinsurance operation, delivering $203 million of underwriting profit to the bottom line. This compares very favorably to Q3 last year, with profits up $87 million quarter-over-quarter. The difference is predominantly driven by higher cats and the loss of the Chinese port Tianjin last year, ultimately resulting in about an eight point improvement to the combined ratio to 80.1% this quarter. The attritional combined ratio also dropped from 85.2% to 78.9% as the Tianjin losses added six points to the third quarter attritional loss ratio last year. Despite the soft market conditions, we successfully executed our reinsurance strategy with our global reach, long standing client and broker relationship, responsiveness, strong and sizeable balance sheet and innovative capital structures, sustaining and even modestly growing our premium writing. For the quarter, our total reinsurance segment gross written premium was $1.25 billion, up 1% from Q3 last year, on a constant currency basis premiums grew 2%. Our total reinsurance net written premium was $1.22 billion for Q3, up 13% from last Q3. The net premium result was affected by the Heartland sale and the assumption of this crop portfolio out of the insurance segment and into the U.S. reinsurance segment. Year-to-date, our gross reinsurance premium was down 3% but down only 1% on adjusted for currency movement. On a net basis year-to-date reinsurance premium were up 1%. The U.S. reinsurance premium growth was strong in the quarter, up 9%, due to growth in structured reinsurance transaction in particular in the mortgage and credit space. In addition, the increased premium on facultative casualty and crop reinsurance business. This was offset by lower premium on weather, Marine, surety and property pro rata business. Notably the structured reinsurance deals required broad expertise…

Thanks John and good morning. I’m pleased to share with you third quarter results for the Everest Global Insurance Operations, similar to last quarter and a consideration of the divestiture of Heartland on August 24th. I will be discussing our quarterly results excluding this business. The full results of the insurance segment inclusive of Heartland are covered in our financial supplement released yesterday. As respect premium production overall, our many strategic initiatives align towards a singular objective of building a world-class specialty diversified insurance organization continue to gain momentum. Many of the new underwriting divisions incepted over the past several months are showing increased contributions to our growth and ultimately to profitability. Third quarter marks the seventh consecutive quarter of underlying growth for our global insurance business again excluding Heartland. As a result of these efforts, gross written premium in the quarter expanded 25% over the prior year quarter to $371 million. This is reflective of the continued investments we have made in our U.S. and London platforms along with the continued strong contributions from our Canadian and Accident and Health operations. Net written premiums for the quarter increased 23% compared to third quarter of 2015 to $318 million, which is in line with our net-to-gross ratio for the second quarter. On a year-to-date basis, gross written premiums increased by $185 million or 19% over the prior year period to $1.1 billion. Likewise, net written premiums increased a $129 million or 15% to $970 million which again was in line with our expectation. Turning to the combined ratio, the GAAP combined ratio for the quarter was a 101%, which improves to 99.5% on an attritional basis. Year-to-date the GAAP combined ratio was 102.2 again on an attritional basis excluding the impact from previously announced cat events and prior year development,…

Thank you, Jon. Keith, we are open now to take questions from the audience.

[Operator Instructions] and we will take our first question Kai Pan with Morgan Stanley. Please go ahead, your line is open. Kai, please check the mute button on your phone. Okay we will go next to Elyse Greenspan with Wells Fargo. Please go ahead.

Yes, good morning. First off, I was hoping to in terms of your premium outlook, and it was the commentary on marketing systems Re. But as we think about going forward, do you think the reinsurance growth will kind of stay at about 2% or so ex-currency and the insurance growth kind of stay in-line with them the Q3 level as we think about the Q4 in 2017?

Elyse, we don’t really try to give guidance on where we think our premium growth will come from. We do of course think that directionally on the insurance side is that will be the side of our business that will grow at an increased pace relative to reinsurance. It's hard to say at this point until we get a little further long into renewal season, depending on where rates are and depending on what the opportunities that are presented to us. So, I think a conservative view like you are describing is not unreasonable, but there is a lot of variability around that numbers.

Okay great. And then in terms of the international reinsurance segment, the underlying loss ratio in that segment was pretty strong about a 47% in the quarter, was there anything one-time impacting that number?

Else, this is Craig. What happened this quarter was in the past we had seen a number of one-off type losses that were non-catastrophe type losses that held up the attritional ratio in that segment. We were able to bring that loss ratio down more in-line with where it should be absent those losses.

Okay, great. And then in terms of the insurance business, now that the crop sale has been completed, do you think we are at a point where on a go forward basis that segment maybe running a little bit off of your long-term goals, but the margins stabilize on a profitable level from here? And then combined with that at what timeframe do you think we will see the expense ratio normalize there for some of the hiring that you have done in that business?

Well certainly for the next several quarters I think we will see the expense ratio remain where it is. Remembering that we will continue to pursue growth, so there will be quite a few quarters frankly where the written and the earned will be at a line so to speak, in other words the written will be well above we earned. Our expense growth through the nine-months have actually been consistent with our top-line growth. So the raise in the expense ratio is explained purely by that. I would also add, if you compare our expense ratio to many of our competitors or peer companies, we are well below industry average from the expense ratio point of view. So we are not discouraged by the amount of the investment we have make in order to grow this business. And as far as the overall combined ratio, we should expect that given the fact that crop is now out of the picture, we should expect that to be more stable and frankly even improve overtime, particularly as we grow some more of the specialty lines of business that we are focused on.

Okay, great thank you. And then one other thing, is at all possible in the supplement in the future, maybe you could include the insurance results the prior year, quarter just on a pro forma basis including the crop business to help with the comparables that would be pretty helpful. Thanks very much.

We appreciate the suggestion and we will certainly talk about that. The other thing I want to add at least to your question is that - not to add to your question but to add in response to your question is that the other thing keep in mind that affects reinsurance premium growth, we have a fair bit of pro rata business, so depending on what happens with some of those accounts that can have an impact on the percentage growth. So you have to keep that in mind as well.

Okay. Thanks very much.

Thank you.

And next we'll try to go back to Kai Pan with Morgan Stanley. Please go ahead.

Thank you, can you hear me now?

Yes, Kai.

That's good. Thank you. Sorry for the earlier trouble. Maybe expense control on my side. So, just to follow up on Hurricane Matthew losses, $75 million to $200 million in net losses. I just wonder, could you give a little bit more detail in terms of in Florida or North Carolina? Is it wind or flooding? And how does that compare with your expectation? Because you have been pretty proactively shaping your portfolio in that part of the region.

Well I'm going to make a few comments and then ask John Doucette to jump in here. But I think frankly it's a little early to maybe get into the specifics that you are after. The estimates that were used were based on modeled output as I said the industry range we frankly use greater but $9 billion I know there is a number lower than that on both the low side and the high side, we just rounded it as three to nine so that you had the full range of what the outcomes might be. I don't think the loss here is outside our expectations, frankly, our market share numbers again on this net basis that we are describing here is somewhere between 2% and 3%, probably middle of that would be a good estimate to use. So that's kind of the range of the outcome and that's not outside of our expectation. John, do you have anything further to add to that?

Thanks Dom, good morning Kai, just a little bit more on the loss. Most of the loss would be a reinsurance loss to us most likely, although we would have potentially some insurance losses, potentially in South Carolina and in terms of the overall split of the of the loss. We would point you that some of it would be coming from the Bahamas, where Everest is one of the larger reinsurers and have been for a long time in the Caribbean. So maybe about 25% of the loss and again that number will move around, but I'm just trying to give some directional guidance, but the majority of the loss would be a reinsurance loss coming from our Florida clients.

Okay, that's great. And then given we had some sizable losses this year, it looks like January 1 renewal rates probably further stabilize. I just wonder, given the current market environment, basically flat pricing, would you expect to keep your reinsurance attritional combined ratio stable going forward? Or it will continue to have some pressure on the core margin side?

I would think that it would be relatively stable and again keep in mind that I think in large part that’s a question about property cat. And things can change a lot based on other lines of business growing the casualty portfolio, growing mortgage, credit. All those things have an impact on the reinsurance attritional combined loss ratio and result to combined ratio. So a mix can play a big factor as well as what I mentioned to at least pro rata, some of those accounts go away or get reduced that has the favorable impact as well.

Okay, that's great. My last question, and we have seen recently some tick up in terms of the merger acquisition activities in the space, and also in the press. There's a specialty insurance business, like a potential looking for sale. I just wonder, looking at your strategy, build-versus buy, are you interested in some of the -- like a potential business out there, you might be interested, as through acquisitions as well? Or any particular platform you would like to look into, to grow?

Well, of course it's hypothetical, because it all depends on what is out there. Generally, I would have to say that most if not all properties that where companies are seeking strategic options, given Everest size and scale we get an opportunity to look at. And obviously we've made a decision to continue on the path that we are on. In most cases or in many cases it can be result of price, it can be cultural fit, integration is a challenge, and in many cases in acquisition you have to look not only to what you can combine but what you have to eliminate and what we prefer to stay focused on is what we can add to our existing portfolio. In addition, over the last 18 months or so the market has presented many opportunities to hire some great talent. We are very pleased with that and frankly that’s a more cost effective alternative, without having to put on a goodwill on the book.

Okay, thank you. Yes, thank you so much. And if I may, just quick last one, is that your survival ratio on asbestos has dropped to 5.1 in the quarter. I just wonder, what do you see the trends here, and when do you do your annual reserve study? Thanks..

For asbestos, we always look at asbestos on a quarterly basis Kai. We do the annual review during the fourth quarter, we always continue to look any and all trends that are out there, as well as any clients that are taking charges that we would have exposure too, but again we will look at that in the fourth quarter.

And anything material as Craig says during any particular quarter we would have to put something there. But again it is subject to the yearend reserve reviews as well.

Thank you so much.

Thank you.

And our next question comes from Michael Nannizzi with Goldman Sachs. Please go ahead.

Thank you so much. Just a couple of numbers once if I could Craig you mentioned the tax rate would be in that sort of 13% to 15% range. If there are more losses in the U.S. proportionally than any typical fourth quarter, I would think the tax would be lower or is there something else that would cause the tax rate in the fourth quarter.

Michael that’s correct, if there are more losses or higher end of the catastrophe losses, we would be at the lower end of that late that I said 13% to 15%.

Got it. The year-to-date is around 13, right so it wouldn’t be lower than what you experience through the year-to-date, it would just be at that same level?

It really depends on how high it is and with respect to our planned losses in the fourth quarter. So again, that’s a annualized effective rates. So guidance that I gave was 13% to 15%, would be on the lower end if we had higher catastrophe loss.

Got you, okay thanks. And then we don’t see Mt. Logan on a standalone base anymore, but can you give us some color on sort of what the performance was in that portfolio in third quarter and whether you would expect the fourth quarter and the impact of Matthew to be similar there as it is in your on balance sheet book?

So what we take through are the earnings and fees that we take are through other income. So far, year-to-date we've taken for $10 million compared to $15 million last year, the reason that it's lower this year is because the anticipated estimates for losses in the Logan book will remaining fees that we get until those losses are settled. So essentially that’s what you are seeing for Logan so far this year.

Got it. And then any change to 4Q deployment expectations given your sort of early read on Matthew or is that within your sort of load enough that it doesn’t change your perspective on deployment?

I am not sure, the deployment you mean…

Sorry, a buyback capital share repurchase?

No, I think what my comments and my remarks related to really the annual earnings, so quarter only as it impacts the annual earnings. So again, we look at the entire year, not just a quarter.

Okay. And then just one last if I could, just following up on Elyse's question on the international segment. The losses look like it was mid-40s pretty low by historical standards even going back to like hard market years. Was it that losses there were sort of more normal relative to higher losses in that linked quarter last year or were they actually sort of even lower than a more normal year, more normal environment?

Yes, so in the past, we had elevated losses including losses all around the world, Latin America as well as you know floods in Middle East and North Africa as well. So in essence what has happened is we have seen lower levels of those losses as well as a different mix of business that’s coming through those books and what you are seeing is ratio that’s more in-line with where it should have been in the past.

Got it, great. Thank you so much for the answers.

Thank you, Michael.

Next question will come from Jay Gelb with Barclays. Please go ahead.

My only question is Baden Baden, in terms of the Continental European Reinsurance Conference, is ongoing. Any live feedback you can provide us in terms of what the expectations are coming out of there?

Well, good morning Jay, it's Jon. So it's going on right now, so we haven't had too much feedback from our team to build there. But we do send a meaningful team from recovering both Continental Europe plus Middle Eastern African clients and others that make their way there as well. So I think one of the messages that we have is the continued build out of our capabilities, we've added various people in our European operation and with that have added product lines that we can support. So I think the larger buyers are continuing to consolidate their placement which we are a net beneficiary of and the fact that we have meaningful capacity to deploy with Mt. Logan and Everest also helps us be even more relevant to the client. And as I said we have been viewed as a stable partner and with the increase in our capabilities we expect to have more trading opportunity with our European and Middle East, Africa clients.

That's helpful. Thank you.

Thanks Jay.

And we'll go next to Josh Shanker with Deutsche Bank. Please go ahead.

Thank you for taking my question, if we think about 2017 and beyond, as we look at the expense ratio in insurance, how much of a drag is there from the significant growth going on, and so where do you think next year as Heartland changing into whatnot, where does that shake out.

Well, as I mentioned before currently and I don't know that I would describe it as a drag, given the fact that as I pointed out we have even on the insurance side, one of the lowest expense ratios in the business. So our expense ratio insurance wise year-over-year is elevated by two points. I would expect that differential to remain there for few quarters if not several quarters, because we certainly would expect the written premium growth to far outpace the earned premium growth and our actual expenses are growing consistent with the written premium growth. So when the earned premium starts to stabilize relative to the written, then you will start to see that expense ratio come in a bit.

Given the current size of the book at 200 basis points sort of build out expense on top, is that the right way to think about it.

That's how we're thinking about it right now, correct. And by the way my point though is that you are calling it a build out, but in one word you could use is investment, the reality is, is that those expenses will be covered once the earned premium comes in to match it. or said a different way our expense growth is consistent with our written premium growth.

And I think there is I have to go review the last quarter as well, but as Heartland comes out, as I'm looking back trying to compare 3Q 2017 to 3Q 2016 on the expense ratio how is that going to direct it.

The expense ratio, maybe I'll answer it by a combined ratio basis, because I think this is what you were getting at, if not come back again. But right now our attritional combined ratio is in the mid 90s, 95, 96 somewhere in there.

You need a 101 for the quarter.

But I'm talking about ex cats and et cetera. So we think that our base book is running right now in the mid 90s, we would expect overtime frankly that number to improve more dramatically from improvements in the book of business and affecting the loss ratio, because that I think is where we see the major benefit coming from.

And the quarter’s share relationship with Heartland incepts on 1/1 that's right?

The new quarter share in our business, in other words the Heartland was actually sold on August 24, so essentially what happens at that date is that insurance business then transfers over to be reinsurance business on the Everest books. And then we have quarter share with the new company to take in certain percentage of their overall book going forward in 2017.

On the first debut?

Right.

Will that be a considerable thing; are we going to notice that in a large way? I mean I don’t know how to model that exactly. In this relation besides of Heartland how big this new crop business is?

This is Jon. I think for the next year or so we would expect it to be about the same size maybe a little bit larger than what the Heartland book was.

Okay. Thank you for the answer, I appreciate it.

Thank you, Josh.

And we will take our next question from Quentin McMillan with KBW. Please go ahead.

Thanks very much guys. Sorry to beat the dead horse in terms of the expense ratio question and the insurance segment, but I’m just thinking about it on an absolute dollar basis. The dollar that you spent were about $44.5 million in the third quarter. Is the dollar value a better maybe run rate basis of a way for us to think about it, because obviously you have been very active in hiring. Just not sure if there was also any incentive bonuses that were paid that maybe gets stripped out next year or anything else in there that we should think about outside of the ratio, but just on an absolute dollar basis to help?

By the way Quentin thanks for referencing to us as a dead horse. Quentin $44 million that Quentin is referencing, I think includes our - rate so we have to carve that out. But as we carve that out back to the point yes you are right, expense dollars or definitely up, as Dom said expense dollars are going to be up as net written premium is up as well, because we are growing that book. I don’t think you are seeing in outsized increase and expenses with respect to the increase in net premium. So from a percentage basis the overall ratio, the expense ratio has gone up just over two points. And that’s the way we are looking at it for now that it will stay at that level until we build out this book and then as you see the build out of this book in some of these new programs that business will earn in overtime. And as it earns in that’s when you will see that expense ratio start to moderate.

And the other way that you might want to think about Quentin is in terms of building models, you might want to also consider modeling the expenses or looking at our expense ratio relative to written as oppose to earned.

That’s a good thought. Thank you and then just in terms of coming back to 1/1, it sounds like Jon your expectations sounds like its four or flattish, renewal which will be better than we have obviously seen recently. Can you just talk about any change in sentiment or perception, obviously Matthew was on a crash course to a lot more damage than what ultimately happened when it turned East. Do you think that there is psychological impact from that that we are going to feel at 1/1 where when you go to clients you will be able to have a more honest conversation that the risk is real and that there is more ability to give more in pricing. I mean just should I talk about that dynamic at the 1/1 renewal please.

Sure, I think it is something that’s real. Remember this is the first real land fall in 10 years, so I think that’s factoring into the psychology of the conversations and psychology of the buys of some of the clients. I mean look there is a lot of capital out there and we ultimately don’t know how we will go, but there will be profits we think we will better than others. We do think that U.S. is stabilizing particularly in the property and on the casualty as per the by our conversations about exceeding commissions on casualty rates and push back we have seen. So I mean we saw some of that as 6/1 and 7/1 on both the property and the casualty side. So international, it really depends on the geographic territory or where do we think rates are going to be flat or not. So but as you think to your point, I do think that it's not just the Matthew, but it's also risk losses, we have seen some large risk losses that can do some real damage to reinsurers as a quarterly income, and I think that also is starting to factor into the conversation.

Thanks guys, and if I could just speak one last one on the mortgage insurance opportunity. You guys have sort of indicated in the past that you would preferred to play it on the reinsurance side I believe, because you can be a little bit more nimble to enter and exit the market as you see opportunistic options available to you. But can you just sort of give us a sense of what size you are and potential sort of what you might look to grow that book of business over the next couple of years?

So, we have written a couple of these deals and multi-years deals and so they earn in over seven year period or longer. And so earned premium certainly from the GSEs has not been that high, but from the deals we have already executed we expect to see in future premium is coming in from those, from some of the MIs. They spend been more on quota share basis, those have been larger to date. And it really depends on what their capital needs are going forward as to whether those are going to be a growth opportunity or not, it really depend on a lot of different things. Certainly the regulations have caused them to delever from 25 to one to about 18 to one and they are using reinsurance to buffer that capital support, we like that. So to answer your question about opportunity in capacity, we see a lot of run rate there on the reinsurance side, and we expect to continue to put forth capacity at the appropriate price.

Great. Thank you so much guys.

And it appears we have no further questions. I’ll return the program to our presenters for any closing remarks.

Thank you to all that participating in the call. And kind of in summary, let just say that we are very obviously pleased with the quarter. Notwithstanding that to these challenges remaining at there as you all know. Certainly, market pricing is to top of the list and insurance growth for us is a journey that requires a lot of lot of hard work. We remain confident however that as far as cycles are concern, we had proven that we can effectively manage through these cycles, managing our exposures and our P&Ls and taking advantage of the opportunities that the market is giving us. On the insurance side, we remain focused on specialty areas in particular because this gives us better opportunity to avoid commodity type pricing. Ratings and scale make a difference and give us an opportunity to grow our insurance book, and while, as evident by the questions, expenses are up; but the growth there as I said is consistent with our written premium growth as it should be, the earns just has to catch up. And again, I want to emphasis that we are still best-in-class on the expense ratio side. So that’s something organizationally we pay attention to in both businesses. Overall, our flexibility allows us to commit our capital and resources to the best opportunity and our plan is to just continue this approach which has been successful for us in the past. Thanks for your interest in Everest and have a great day.

And ladies and gentlemen this will continue today's program. Thanks for your participation. You may now disconnect and have a great day.