Everest Re puts Q4 catastrophe loss at $695m, suggests industry toll may rise

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Bermuda headquartered global insurance and reinsurance firm Everest Re Group said that it expects the impacts of fourth-quarter 2018 catastrophe events will cost the firm $695 million in losses, after accounting for reinsurance and retrocession.

Everest Re’s losses in Q4 were driven by the same events that affected almost every other major re/insurer, the Camp and Woolsey California wildfires providing the largest impact to the firm, followed by hurricane Michael next and then the December severe hailstorm event in Australia.

Everest Re expects insurance and reinsurance industry losses from these three loss events alone could reach a huge $30 billion, which is a significant number given the latest estimate for the combined impact of the California wildfires is around $17 billion, hurricane Michael another $10 billion and the Sydney area hailstorm currently up to $1 billion.

Data on major catastrophe industry losses can be found over at our sister publication Reinsurance News.

That suggests loss creep for some of these events, likely the wildfires and perhaps Michael, as well as an expectation at Everest Re that the Sydney hailstorm loss bill will rise further.

Everest Re said that the impact to it from these catastrophe events is primarily from losses in its reinsurance operations and as a result the full extent of the impact is dependent on loss reporting received from ceding insurers across numerous underlying insurance policies.

A share of the losses will fall to third-party investors in its sidecar-like collateralized reinsurance vehicle Mt. Logan Re Ltd.

The industry loss estimate, of up to $30 billion of impacts to the sector from these three catastrophe events, will perhaps make others wary of potential loss creep and rising estimates from ceding companies and also suggests an enlarged share being passed to third-party capital through ILS funds and reinsurers sidecar vehicles.

Everest Re’s estimate for a $695 million Q4 catastrophe loss bill is net of reinsurance, reinstatement premiums and taxes.

Analysts said the loss estimate was higher than they expected, on a pre-tax basis the impact could have been as high as $850m-$875m some suggested.

But given the severity of the wildfires, the potential for loss creep from hurricane Michael in Florida and the fact the Sydney hail loss is likely to rise, Everest Re’s losses are likely aligned with its share of the market.

Dom Addesso, Everest Re’s President and Chief Executive Officer, commented, “These losses reflect another year in which there has been an extraordinary level of industry catastrophes and are reflective of our market share. With $8 billion in shareholders equity and over 40 years of experience, Everest is well prepared to respond to the needs of our clients and the affected communities as they manage the impact of these recent events.”

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