Having now finished the June and July renewals, Everest Re has observed a continued flight to quality by reinsurance buyers, according to John Doucette, EVP, President and CEO of Everest Insurance Division.
Speaking during an earnings call alongside the release of Everest Re’s Q2 results, Doucette said the expanded opportunity set had allowed the reinsurer to improve its portfolio across virtually all geographies and classes of business.
Everest Re reported underwriting income of $50.9 million for the second-quarter of 2020, despite incurring $160 million in net pre-tax losses related to the ongoing COVID-19 pandemic.
The reinsurer wrote almost $2.4 billion in gross written premium for Q2 2020, up 9.4% on the same period in 2019, including growth of 9.1% in the firm’s reinsurance segment and 9.8% in its primary insurance segment.
“Overall, we have a larger and more profitable portfolio than we did last year,” said Doucette. “By many measures of risk and return, the expected performance of writings this year is improved versus the expected performance of the last underwriting year.”
“Our portfolio’s growth has been broad-based with significant contributions from our global facultative operations, which are seeing large increases in submission activity and strong pricing trends,” he explained. “Encouragingly, rates are increasing strongly even in markets with sufficient capacity.”
In terms of property cat, Everest Re felt that market conditions overall remained strong, particularly in peak zones and recently loss-affected areas.
The company’s cat renewals in Florida and the US generally experienced double-digit rate increases with higher increases on loss-affected business, leading to higher expected margins and profits.
The casualty reinsurance markets are similarly improving directly from increased excess rates or indirectly as original business rates benefit pro rata deals, Doucette noted.
“While the casualty market improved, we still walked away from some large renewals priced below our return requirements,” he added.
In Australia and Asia, market firming continued throughout the year with earlier renewal rates increasing less than later renewal rates.
“Our long-term relationships in Asia cultivated over the last 30-plus years allowed us to capture better opportunities and in times like these, those situations become more pronounced,” Doucette went on.
“Likewise, quality underwriting opportunities presented themselves in Canada as rate increases were achieved across several different lines of business in both fac and treaty. Therefore, we have been increasing our shares on several Canadian programs.”