Swiss Re Insurance-Linked Fund Management

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Everest Re cedes more premiums, fewer losses to Mt. Logan Re


The amount of losses that insurance and reinsurance group Everest Re ceded to its Mt. Logan Re Ltd. collateralized reinsurance sidecar-like vehicle have almost halved so far in 2019.

Mt Logan ReReflecting the continued recovery from the major catastrophe losses of 2017 and 2018, Bermuda headquartered Everest Re has not needed to pass on so many losses through its retrocessional agreements with the third-party capitalised Mt. Logan Re during the first-half of 2019.

But at the same time the reinsurance firm has ceded an increased level of premiums to Mt. Logan Re, which is encouraging for the vehicles investors as it shows the platform remains poised to play an increasingly key role within Everest Re’s capital arrangements, which should result in the flow of premiums continuing to grow as the vehicles asset base recovers as well.

During the second-quarter of 2019, Everest Re ceded almost $58.9 million of gross written premiums to Mt. Logan Re, up considerably from the $46.6 million ceded in Q2 2018.

For the year-to-date, Everest Re has now ceded $140.5 million of written premiums to its collateralized reinsurance venture Mt. Logan Re, up from $130.4 million in the prior year period.

This growth in premiums ceded will benefit investors in Mt. Logan Re, as it suggests the 2019 risk portfolio features a larger share of newly underwritten business that may benefit from the improved catastrophe reinsurance rate environment seen at renewals so far this year.

At the same time, losses ceded to Mt. Logan Re in the first-half have almost halved year-on-year, reflecting the relatively benign catastrophe loss environment so far this year as well as a slowdown in loss creep as well, it seems.

For Q2 2019, Everest Re only ceded Mt. Logan Re $39.4 million of losses and loss adjustment expenses, down significantly from over $135 million in Q2 of 2018.

For the first-half, losses ceded to Mt. Logan Re from parent Everest Re reduced by almost half to $85.4 million, down from $160.5 million in the prior year.

It’s also worth noting that Everest Re did not assume any losses or LAE back from Mt. Logan Re in the first-half, despite the reinsurers own investment stake in the vehicle. This likely reflects the fact there has been much less fresh loss activity during the period.

The fact premiums written ceded to Mt. Logan Re have continued to grow bodes well for the year ahead, while the reduction in losses ceded is a clear reflection of the fact that prior year losses are increasingly being dealt with and settled, putting collateralized reinsurance vehicles like this on a better footing moving forwards.

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