Bermuda-based insurer and reinsurer, Everest Re Group, Ltd., has announced estimated pre-tax net catastrophe losses of $70 million for the fourth-quarter of 2020, alongside an additional $76 million of losses related to the COVID-19 pandemic and a $400 million reserve charge.
Despite these losses, of which the majority is within the company’s reinsurance segment, Everest Re still expects to report net income of between $475 million and $525 million for the full-year 2020, while operating income is projected to hit between $275 million to $325 million.
The $70 million catastrophe loss estimate is net of reinsurance and reinstatement premiums, and includes the impacts of Hurricanes Delta, Zeta, Eta, and Iota, and the Queensland Australia Hailstorm. Of this total, Everest Re states that $60 million is in its reinsurance segment and $10 million in its insurance segment.
The $76 million of COVID-19 losses is split $56 million in reinsurance and $20 million in insurance; and is in addition to the $435 million of pandemic losses the re/insurer announced in the first nine months of 2020. For the full-year, Everest Re has announced a COVID-19 loss provision of $511 million, of which more than 80% is incurred but not reported (IBNR).
The Bermudian has also revealed that following a review of its reinsurance and insurance reserves, it has decided to raise prior year loss reserves by $400 million. The firm notes that this strengthening is equal to 3% of net loss reserves as at the end of Q3 2020, and is all within its reinsurance segment and primarily long-tail classes of business for the 2015-2018 accident years; notably general liability, professional lines, and auto liability.
The $400 million reserve charge also includes actions on non-catastrophe property lines of business, primarily for the 2017-2019 accident years and driven by a few large losses to aggregate programs, explains the firm.
Juan Andrade, the company’s President and Chief Executive Officer (CEO), commented: “We remain focused on the relentless execution of our strategies to create a diversified portfolio that achieves superior risk adjusted returns and value to our shareholders and customers. The decisive reserving actions we are announcing today recognize the social inflation trends affecting the overall U.S. Casualty market and enhance our already strong balance sheet. We have proactively acted on the affected portfolios and we have confidence in our in-force book. We are bullish about our future and the earnings generating power of our franchise.
“Everest continues to benefit from excellent financial strength and strong enterprise risk management. The fundamentals of our business are strong. Our Company is well positioned to succeed in any market conditions, as evidenced by our growth and our improved underlying results despite the many global challenges in 2020. Our strong management team, employees, global platform, and excellent capabilities continue to provide superior solutions to our business partners and customers.”