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Everest Re falls to Q4 underwriting loss but operating income up

11th February 2020 - Author: Luke Gallin

Bermudian reinsurer Everest Re Group, Ltd. has reported net income of $217.6 million and a combined ratio of 101.5% for the fourth-quarter of 2019, while premiums jumped 7% to $2.4 billion.

Everest Re GroupNet income of $217.6 million is a significant improvement on the $385.3 million loss reported in the fourth-quarter of 2018, while the combined ratio strengthened dramatically from the 134.1% posted in Q4 2018.

After-tax operating income reached $130.8 million in Q4 2019, against an after-tax operating loss of $236.9 million in the fourth-quarter of 2018.

The reinsurer’s Q4 2019 results were hit by roughly $215 million of catastrophe losses, net of reinsurance and reinstatement premiums, primarily related to losses from Typhoon Hagibis in Japan in the amount of $190 million, and Tornadoes in Dallas, Texas in the amount of $25 million.

Gross premiums written increased by 7% when compared with the prior year quarter to $2.4 billion, driven by 4% growth in reinsurance premiums, mostly as a result of growth in treaty casualty. Insurance premiums increased by a huge 30% in Q4 2019 to $758.7 million, with Everest Re noting balanced growth across all major business lines.

Everest Re also recorded $19.2 million of favourable prior year reserve development in Q4 2019. Net investment income, at $146.1 million, included limited partnership income in the amount of $5.5 million. Net after-tax realised gains totalled $61.1 million for the quarter, while net after-tax unrealised capital losses amounted to $36.6 million.

Turning to the full year 2019, and Everest Re’s net income of more than $1 billion is the best the firm has produced since 2014, and compares with net income of $89 million in 2018. After-tax operating income reached $872.4 million in 2019, compared with $190.7 million a year earlier.

Commenting on the reinsurer’s Q4 and full year 2019 performance, President and Chief Executive Officer (CEO), Juan Andrade, said: “For the full year 2019, Everest produced net income of over $1 billion, the best result since 2014. On an ROE basis, this equates to a 12% return on average equity.

“These numbers speak to the strength and diversification of our business, and the strength of our underwriting and investment operations. Everest has a great franchise, a well-diversified platform and top talent. We are well positioned for the future.”

Gross written premiums jumped by 8% in 2019 to $9.1 billion. This was driven by 2% growth in reinsurance premiums to $6.4 billion as growth in treaty casualty offset reductions in treaty property premium and reinstatement premiums.

In its insurance segment, Everest Re reports that gross written premiums increased by 23% to $2.8 billion, with balanced growth recorded across all major business lines.

Catastrophe losses for the full year, net of reinsurance and reinstatement premiums, amounted to $550 million, primarily related to losses from Hurricane Dorian of $166.4 million, Typhoon Faxai of $113.3 million, and Typhoon Hagibis of $190 million.

The full year 2019 combined ratio totalled 95.5% versus 108.8% a year earlier.

Prior year reserve development was favourable for the full year 2019 in the amount of $93.6 million. Net investment income reached $647.1 million, which is up 11% year-on-year, and which includes limited partnership income of $105.8 million.

For the full year 2019, net after-tax realised gains reached $150.8 million, while net after-tax unrealised capital gains were $438.8 million.

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