Bermudian reinsurer Everest Re Group, Ltd. has reported its second-quarter 2018 results, which reveals large growth in its reinsurance segment, as well as catastrophe losses related to 2017 storm events of almost $400 million.
Everest Re’s reinsurance segment expanded in the quarter by quite some margin. When compared with Q2 2017, worldwide reinsurance premiums were up 38% to $1.4 billion, with growth primarily driven by increased casualty and property pro-rata premium, rate improvements, and also increased shares on existing business alongside profitable new opportunities.
Overall, gross written premiums for Q2 were up by 29% when compared with the same period last year, to $2.1 billion.
In light of the increase in premiums underwritten, the Bermudian reinsurer is on track to write its largest ever full-year book of business, with the volume underwritten so far this year suggesting the firm should overtake the $7.2 billion it underwrote last year.
The reinsurer’s Q2 net income declined from $245.7 million in 2017 to just $69.9 million this year, while after-tax operating income fell from $233.7 million, to $40.4 million in Q2 2018.
The company announced earlier in July that it expected to report a charge for net reserve adjustments of approximately $250 million for Q2 2018, in relation to 2017 storm events, and also a $25 million charge, in relation to current year weather events.
However, this had been reported after-tax, and Everest Re’s Q2 2018 earnings announcement reports that catastrophe losses, net of reinsurance and reinstatement premiums, totalled $464.8 million in Q2, which is a significantly higher figure.
Of this, $399.8 million primarily relates to hurricanes Harvey, Irma, and Maria, while $65 million relates to current year cat losses from Cyclone Mekunu and late winter storms in the U.S.
Some investment analysts have been surprised by the higher figures, but it appears that once tax has been taken into account, the figures remain largely in line with expected totals.
As a result, the company reported a Q2 combined ratio of 105.1%, compared with 90.5% a year earlier. Although, the reinsurer does add that excluding cat losses, reinstatement premiums and the favourable prior period loss development, the Q2 attritional combined ratio was 83.5%, compared with 86.7% a year earlier.
“Everest generated an annualized, net income return on equity of 7%, despite the previously announced charge for net reserve adjustments. The underlying results were quite strong with an attritional combined ratio of 85.3% year to date.
“We continue to see positive momentum across the underwriting operations, with profitable growth opportunities materializing for both our insurance and reinsurance segments,” said Dominic Addesso, the firm’s President and Chief Executive Officer (CEO).
