Reinsurance firm Everest Re has achieved further growth worldwide across both sides of its business in the third-quarter of 2018, as it turned an impressive profit despite the impacts of previously announced catastrophe losses during the period.
Everest Re had previously announced third-quarter 2018 catastrophe losses amounting to $240 million and these dented its profits during the period, but a growing portfolio of underwriting business and strong investment returns meant the re/insurer turned a profit during the period.
For Q3 2018 Everest Re reported net income of $205.6 million, so much better than a net loss of $639.4 million in Q3 2017.
For the year-to-date, Everest Re reported net income of $485.8 million, again considerably better than a net loss of $102.1 million in the prior year first nine months.
President and Chief Executive Officer, Dominic J. Addesso commented on the results, “Everest generated an annualized, net income return on equity for the quarter of 10%, despite the previously announced catastrophe losses. The underlying results were quite strong with an attritional combined ratio of 85.8% year to date as a result of our diversified portfolio.”
The results were assisted by strong investment returns, with Everest Re reporting an increase in net investment income of 8% to reach $161.4 million for the quarter.
The firms catastrophe loss estimate proved accurate, as net of reinsurance the firm reported the same $240 million of losses largely related to Hurricane Florence, Typhoon Jebi, Typhoon Trami, California wildfires and the Japan floods.
That led to a combined ratio of 100% for the quarter, much better than Q3 2017’s 163.6%. But excluding the major catastrophe losses, reinstatement premiums and any favorable prior period loss development, the current quarter attritional combined ratio came in at 86.8% , close to the 85.5% from the same period last year.
But driving analysts enthusiasm for the stock, Everest Re has also reported continued solid growth across its business during the third-quarter, as its gross premiums written rose 8% to $2.2 billion.
Worldwide reinsurance premiums rose by 7% to $1.7 billion at Everest Re during the period, as the firm achieved growth across every segment, primarily driven by growth in casualty and property pro-rata premium, as well as rate improvement, achieving increased shares on existing business and making the most of profitable new opportunities.
Everest Re’s direct insurance business also expanded during the quarter, with premiums rising by 8%, which the firm said continues its diversified growth trend.
The one factor that analysts have pointed out is a decline in margins, but this is likely due to the changing business mix and where capacity has been deployed during the quarter, with a longer period needed to make decent comparisons.
However there will be some effect from lower pricing eating into margins as well, as seen at all other re/insurers.
