Reinsurance News

Everest Re strengthens combined ratio as GWP rises 25%

10th February 2022 - Author: Luke Gallin

Bermuda-based Everest Re has reported underwriting income of $228 million for the fourth quarter of 2021, alongside a 25% rise in gross written premiums (GWP) across the Group driven by growth in both its insurance and reinsurance segments.

everest insuranceIn the quarter, Everest Re achieved a solid underwriting gain in spite of pre-tax catastrophe losses, net of reinsurance and reinstatement premiums, of $125 million.

While catastrophe losses fell, year-on-year, the final quarter of last year did include some COVID-19 losses and as such, across the Group, the combined ratio strengthened from 109.1% in Q4 2020 to 91.9% in Q4 2021.

GWP was strong in the period, increasing by 25% to more than $3.4 billion as net written premiums (NWP) also jumped by 25% to over 3 billion.

Everest Re highlights the performance of its Reinsurance business in Q4 2021, which achieved growth of 26% to roughly $2.4 billion, while NWP spiked by 27% to $2.3 billion.

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The reinsurance segment took the majority of the cat losses in Q4, at $110 million compared with $60 million last year. But again, the fact no additional COVID-19 losses were booked in the quarter, means the segment’s combined ratio fell from 112.4% in Q4 2020 to 91.5% in Q4 2021.

In its Insurance segment, the company has reported GWP growth of 21% to more than $1 billion, and NWP growth of almost 20% to $786 million. In this part of the business, catastrophe losses amounted to just $15 million, as the segment’s combined ratio strengthened by 6.1 percentage points to 92.8%.

Overall, Everest Re has reported net income of $431 million for the final quarter of 2021, compared with $67 million in the prior year period. At the same time, the net operating result improved from a loss of $44 million in Q4 2020, to a gain of $359 million in Q4 2021.

“2021 was a pivotal year of continued profitable growth and momentum for Everest. We finished the year with a strong quarter and achieved record growth in both our underwriting businesses, drove expanding margins, solid underwriting profitability in an elevated natural catastrophe year, and generated exceptional investment income,” said Juan Andrade, the firm’s President and Chief Executive Officer (CEO).

“These results led to $1.4 billion in net income for the year, and a milestone 14.7% total shareholder return. 2021 demonstrated the strong earnings power of our diversified franchises to create value for our shareholders. With a more profitable book of business coming out of a well-executed January 1 reinsurance renewal season, an expanding global value proposition, a strong balance sheet, and exceptional talent, we enter 2022 well-positioned to deliver on our long-term strategic objectives,” he added.”

Taking a look at the reinsurer’s full-year 2021 result, and net income across the Group improved dramatically to $1.38 billion. The operating result also improved from $300 million in 2020 to more than $1.15 billion in 2021.

For the year, GWP grew by 25% when compared with 2021 to over $13 billion, while NWP spiked by 25% to $11.5 billion. Again, this growth was driven by a strong performance in both Insurance and Reinsurance during period.

In 2021, the Reinsurance segment’s GWP increased by 25% and NWP by 26% to $9.1 billion and $8.5 billion, respectively. In Insurance, GWP jumped 24% to almost $4 billion and NWP by 24% to $2.9 billion.

Across the Group, Everest Re has reported pre-tax catastrophe losses, net of reinsurance and reinstatement premiums, of $1.065 billion, compared with losses of $415 million a year earlier. However, in 2020, the reinsurer also booked COVID-19 related losses of $511.1 million, which remains unchanged at this time.

So, despite a rise in nat cat losses, Everest Re has reported an underwriting gain of $224 million for 2021, as the company’s combined ratio strengthened by 5.1 percentage points, year-on-year, to 97.8%.

During the year, the large majority, or $912.5 million of the firm’s catastrophe losses fell to its reinsurance arm, although the segment still produced a combined ratio of 98.1%, compared with 103% in 2020.

On the asset side of the balance sheet, Everest Re has reported pre-tax net investment income of $205 million for the fourth quarter and of $1.165 billion for the full year 2021.

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