Everest Re estimates $240m Q3 cat losses, below analyst expectations

Bermuda headquartered reinsurance and insurance firm Everest Re has pre-announced an estimate for third-quarter catastrophe losses, saying that it expects events including hurricane Florence, the California wildfires, typhoon Jebi, typhoon Trami and the Japan floods to cost $240 million.

Everest Re’s estimate has come in below analyst expectations, with both Keefe, Bruyette & Woods and J.P. Morgan saying that they had expected the company to suffer higher losses than that.

The estimate is net of reinsurance, so it is possible that Everest Re has passed on a greater share of its losses to retrocession, reinsurance and perhaps also to its third-party capital vehicle Mt. Logan Re, than the analysts had anticipated.

Dom Addesso, Everest Re’s President and Chief Executive Officer, commented on the loss activity, “Our thoughts are with those affected by these devastating catastrophe events. Everest’s priority is supporting the needs of our clients and business partners; delivering when it matters most. Due to our diversified Reinsurance and Insurance portfolios, we expect to report a breakeven underwriting result and an operating profit for the third quarter.”

It is likely that Mt. Logan Re will have been exposed to some level of losses from some of the catastrophe activity in the third-quarter, likely with typhoon Jebi the largest event in the period and so driving the majority of any impact for investors in the vehicle.

It is interesting that Everest Re’s losses have come in lower than expected, as the majority of companies who have pre-announced their Q3 catastrophe losses have surprised analysts with estimates much higher than anticipated.

Whether this is down to Everest Re’s reinsurance and retrocession strategy paying off, or more simply due to the types of risks it underwrites and the geographic spread of its exposure is uncertain. But at around 3% of book value (according to analysts), the $240 million of losses is lower than other firms have reported and clearly Everest is doing something right to have avoided a larger hit.