Global reinsurance firm Everest Re is the first of the majors to report second-quarter 2017 earnings and the statement shows that the expansive underwriter continues to find opportunities for growth, with premiums written up 17%, helping to drive profits higher, with after-tax income rising almost 70% to $227.5 million.
President and Chief Executive Officer, Dominic J. Addesso, commented on the reinsurers Q2 results; “Everest continues to generate double digit ROE’s, while steadily growing its capital base. Strong underwriting results, with an attritional combined ratio of 86.7% for the quarter, coupled with stable investment income are providing for solid growth in book value per share.
“We seek out opportunities for profitable growth in both our reinsurance and insurance books and have been successful as borne out by these excellent results.”
Despite the challenging nature of the soft reinsurance market, Everest Re has managed to find growth in its reinsurance underwriting hubs as well as in its insurance business.
Global reinsurance premiums were up 14% year-on-year, helped by a major crop reinsurance arrangement, as well as increased shares on property pro-rata treaties, and growth in financial lines business.
Meanwhile the Everest Re insurance segment saw 25% growth, with new initiatives continuing to drive expansion of this segment for the firm.
Taking out the sale of the HCI crop insurance business, which Everest Re disposed of in 2016, the growth in insurance premiums underwritten was actually an impressive 41%.
Helping profitability, the combined ratio fell in the quarter to 90.5% compared to 95.1% in the second quarter of 2016. The current quarter attritional combined ratio was 86.7% compared to 86.1% in the same period last year, as higher attritional losses, likely due to U.S. severe weather, have driven some impact during the quarter.
Catastrophe losses during the quarter, net of reinsurance, amounted to $53.5 million, from events including the South African (Knysna) fires, Colorado hailstorms, and Peru flooding. These losses had a net impact of $46.6 million.
Everest Re also managed to increase its investment income by 1% during the quarter, to $134.5 million, helping to boost profits.
Return-on-equity is measured on an annualised basis as 13%, which in the current market climate is more than adequate.
A solid quarter of growth and profit for Everest Re, with its expanded platform driving a solid return under challenging market conditions.
The higher attrition from U.S. non-catastrophe losses is a sign of things to come through this results season and we should expect some read-across to other insurers and reinsurers with exposure to U.S. property losses.