Reinsurance News

Everest Re reports stronger re/insurance underwriting result as cat load falls

28th April 2022 - Author: Luke Gallin

Bermuda domiciled insurer and reinsurer, Everest Re Group, has reported a strong start to 2022 with net income of $298 million and an improved combined ratio of 91.4%, while premiums across the group spiked by 9%.

everest insuranceWhile positive, net income did fall from the $342 million posted a year earlier, while operating income increased from $260 million in Q1 2021 to $406 million in Q1 2022.

Across both insurance and reinsurance, Everest Re has reported gross written premium (GWP) of $3.2 billion and net written premium (NWP) of $2.8 billion, representing year-on-year growth of 8.7% and 10.1%, respectively.

Pre-tax underwriting income reached $235 million in Q1 2022 and included $115 million of catastrophe losses, net of recoveries and reinstatement premiums, primarily from Australian floods, European storms, and March 2022 events in the US. In Q1 2021, the firm reported pre-tax net catastrophe losses of $260 million.

On COVID-19, Everest Re says that its ultimate loss estimate of $511 million is unchanged. The company also notes that it has limited exposure to the ongoing war in Ukraine, and is yet to set a loss provision given the high uncertainty around both exposure and coverage.

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Year-on-year, Everest Re’s loss ratio improved, while its commission and brokerage ratio increased slightly, and the other underwriting expenses ratio strengthened a tad. This has seen the re/insurer report a combined ratio of 91.6% in Q1 2022, compared with 98.1% a year earlier.

Within its reinsurance business, GWP increased by 6.1% to $2.2 billion, as NWP spiked by almost 9% to more than $2 billion. Everest Re attributes the premium growth to a “highly successful January 1 renewal where Everest achieved growth in targeted classes notably casualty pro rata and international treaty, while optimizing the property portfolio to reduce catastrophe volatility and maximize returns.”

Catastrophe losses within reinsurance amounted to $110 million in Q1 2022, which is down considerably from the $212.5 million posted a year earlier.

All in all, the reinsurance segment’s combined ratio strengthened by 6.1 percentage points, year-on-year, to 91.4% in Q1 2022.

Turning to the firm’s primary insurance operation, GWP increased by almost 15% to over $1 billion, as NWP spiked by 14% to $731 million.

The segment recorded net catastrophe losses of just $5 million in Q1 2022, compared with $47.5 million a year earlier. The insurance segment’s combined ratio hit 91.9% in Q1 2022, against 99.9% in Q1 2021.

On its investments, Everest Re has announced total invested assets and cash of $29.3 billion at the end of Q1 2022, compared with $29.7 billion at the end of 2021.

Shareholders’ equity reached $9.5 billion against $10.1 billion at year end 2021, largely driven by $811 million of unrealized net losses on fixed income investments.

Juan Andrade, the company’s President and Chief Executive Officer (CEO), commented: “Everest is off to a strong start in 2022 with first quarter results that reflect our relentless focus on profitability and margin expansion. Excellent performance across our underwriting businesses, as well as investments, contributed to $406 million in net operating income and a 16.2% annualized operating return on equity.

“Our discipline, strength and resilience stand out in the increasingly volatile external environment, which is compounded by a web of macroeconomic, geopolitical and societal issues. As underwriters, the protection and stability we provide has never been more important, and we continue to be a source of strength in the face of global uncertainty.”

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