As market conditions remain strong, and with no meaningful new capacity entering the market, Everest Group expects conditions for upcoming renewals to remain excellent, according to Juan Andrade, President and Chief Executive Officer of the Bermuda-based re/insurer.
At the 1.1 2024 renewals, Everest achieved “outstanding results”, Andrade highlighted during the firm’s fourth quarter 2023 earnings conference call, stating: “We leveraged deep client and broker relationships and our strong balance sheet to build a more profitable and higher margin book, which culminated in outstanding results at January 2024 renewals.
“We grew our total property catastrophe portfolio by over 25% compared to expiring premium. Following the significant increases in 2023, we saw further property catastrophe rate increases at 1.1, broadly across geographies. In North America, the property XoL risk-adjusted rate change was approximately 7%. Internationally, rates on our portfolio were up 14%.
“This trend also continued in specialty lines, particularly marine and aviation. The flight to quality in the reinsurance market continued. Our leading market position allowed Everest to grow market share on oversubscribed deals with leading clients on the best quality property cat, cyber and specialty lines treaties, and in geographies around the world.”
The favourable terms and conditions achieved during the 2023 renewals held, Andrade also noted, while attachment points, which increased significantly last year, were maintained.
Regarding casualty lines at 1.1 2024, Everest non-renewed 16% of its casualty and professional liability pro-rata business, taking action when ceding commissions did not meet the re/insurer’s thresholds.
These targeted actions, however, were partially offset by expanding shares on attractive casualty programmes with select top clients, the CEO explained
“We achieved our objectives at 1.1, executing with the same discipline and focus Everest has consistently applied to shaping and diversifying the portfolio. We do not write the market, we selectively underwrite risks that meet our requirements. Our priority is growing the bottom line to deliver leading financial returns. Coming out of the 1.1 renewal, the quality of our book is excellent. We are positioned to drive sustainable margin expansion, while continuing to distinguish ourselves as the preferred lead market platform,” said Andrade.
Jim Williamson, Group Chief Operating Officer and Head of Reinsurance at Everest, also highlighted Everest’s “excellent” January 1, 2024, renewals as well as the “ terrific” market conditions that drove their results, noting that these will continue past January 1, 2025, renewals.
He said: “Everest did have another excellent Jan 1 renewals. We were able to deploy incremental capital at really exceptional economics. We did grow the cat book, including leading or participating in many of the new top off programmes that you would have heard about, as well as executing on a number of non-cat opportunities in engineering, cyber, aviation, marine.
“In terms of the dynamics of the sustainability of the market, on the property cat side, I would really point to three critical factors in terms of what is driving or what drove the market correction that started in the back half of 2022, and then obviously reached a peak and sustained itself through 2023.”
These factors include the gap between supply and demand, underwriting psychology, and an elevated catastrophe world.
He explained: “The first is there’s been this persistent gap between supply and demand in terms of available capital. Clearly some of that ameliorates as the industry earns good returns in 2023. But there’s really fundamentally been no formation of new capital in the industry other than our equity raise. There’s also rising demand from our cedents to buy more limit, which we saw again in some of those new deals that came out.
“The second key factor, which I think is critical, is underwriting psychology. The fact is the industry has been affected by multiple years of elevated loss activity that’s hurt underwriters across the business. And I think they understand that we need to sustain rate momentum to earn good returns.
“The last thing is, if you look at the underlying loss trends, climate change, the impacts of development patterns, we’re in an elevated cat world, it’s the new normal and we saw it again this year, we had an elevated 2023 cat year. So, our view is that all these put legs on this market and our expectation remains that these terrific conditions will persist past the January 1 2025 renewals.”
