Bermuda-based Everest Re has been expanding its casualty book of business as it further diversifies in reinsurance, but despite the evolving business mix, the carrier remains a leader in the property catastrophe market, according to Chief Operating Officer (COO), Jim Williamson.
The composition of Everest Re’s P&C portfolio ended the first quarter of 2022 closer to a 50/50 split across property and casualty business, compared with a roughly 60/40 split in favour of property a year earlier.
Last week, the global re/insurer announced a solid start to the year, with an improved underwriting result in both its insurance and reinsurance operations, aided by a year-on-year decrease in catastrophe losses.
Speaking on the carrier’s Q1 2022 earnings call, President and Chief Executive Officer (CEO), Juan Andrade, noted that the company continues to expand its casualty book and further diversify in the reinsurance space.
“In reinsurance, we strengthened our global leadership position and maintained a laser-focus on diversification, reducing volatility and maximising profit,” said Andrade. “This deliberate honing of our portfolio is an ongoing strategy that we successfully applied to the April 1st renewal.”
He went on to explain how Everest Re continues to be both measured and selective in its property and specifically in catastrophe-exposed property.
“In the quarter, those lines decreased year-over-year and we further honed our portfolio to maximise expected profit, while reducing volatility. We continued this strategy during the 4/1 renewal. In property, total written premium, limits exposed, AAL, and our PMLs, were all reduced and expected profit and dollars increased. This resulted in more profit for less exposure. By any account, that’s an outstanding trade,” said Andrade.
Importantly, however, while the shift in business mix has served to lower the volatility of Everest’s P&C reinsurance book, management explained that Everest Re continues to take meaningful lines in the property cat space.
“This is particularly important, I think, as we roll through the summer, we’re still very much a leader in the property cat market,” said COO Williamson. “We take meaningful lines and we’ve been doing that in improved economics. At 4/1, as Juan indicated in his opening remarks, we were able to take less risk by any measure, whether it’s PML, AAL, etc. But we’re getting paid more profit dollars, more expected profit dollars will flow to the bottom-line, and that will certainly have an impact on our attritional and ultimate combined ratio.”
Looking ahead, Williamson said that Everest sees good opportunities through the remainder of 2022 to continue to execute that strategy.
“So, I think all of that comes together to give us a lot of confidence in the targets we set out,” he said.
