Everest Re gets $85m of Q2 cat losses, reduces property cat at renewals

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Global insurance and reinsurance firm Everest Re reported a 15.3% annualised return on equity (ROE) for the second-quarter, despite suffering $85 million of catastrophe losses, all while further reducing its cat exposure at the renewal season.

Everest Re logoEverest Re, like many other globally and line of business diverse re/insurers, is taking steps to reduce volatility in its results, by pulling-back on property cat risks.

The effects of this are not yet fully-evident across the market, as the reductions appear to have accelerated in some cases at the recent mid-year reinsurance renewals, with SCOR evidencing this in its results after a significant US cat risk pull-back.

Everest Re said that, “The June 1 and July 1 renewals were successful as we continue to write a stronger, less volatile, more diversified, and more profitable book of business.”

But also explained that its continued growth was, “partially offset by our continued focus to reduce exposure in property CAT.”

Everest Re reported $386 Million of Net Operating Income, which drove Net Income of $123 Million for the second-quarter.

Gross premiums written increased 8.1% to $3.4 billion, but Everest continues to grow more on the insurance side (at 19.6%) compared to reinsurance (at 2.5%).

The company delivered a 91.8% Group combined ratio, which broke down to 91.8% for Reinsurance and 91.5% for Insurance.

Global catastrophe events took a toll though, as pre-tax underwriting income of $240 million factored in $85 million of catastrophe losses net of retro or reinsurance recoveries and reinstatement premiums.

Everest Re said that catastrophe events were largely from South Africa flood losses, Canadian and European storms, and 2Q events in the United States, which likely implies convective weather loss activity in the US.

Pretty much every player is looking to reduce volatility right now, with property cat and climate exposed weather seen as targeted areas to reduce.

It does begin to beg the question, who will write these exposures if the world’s largest insurance and reinsurance companies continue to shy away?

Everest Re Group President & CEO Juan C. Andrade commented on the firms results, “Everest’s solid second quarter results reflect the successful execution of our strategy with strong momentum across our key performance objectives. Our focus on underwriting profitability and operational efficiency, supported by our investment portfolio delivered $386 million in net operating income and a $15.3% operating ROE. We expanded margins across our insurance and reinsurance businesses with disciplined growth, continued to scale our insurance platform and in reinsurance capitalized on strategic market opportunities that improved the diversity and economics of our book, while reducing volatility.

“Everest’s breadth of global talent, disciplined underwriting and market leadership provide strength and stability to our customers in the increasingly complex environment. Entering the second half of the year, we are well-positioned to continue executing our strategy and providing attractive shareholder returns.”

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