Everest Re Group, Ltd.’s full-year 2020 earnings will be able to absorb the $546 million of previously announced fourth-quarter charges, according to analysis by S&P Global Ratings.
Earlier this week, the Bermuda-based re/insurer announced estimated pre-tax net catastrophe losses of $70 million for Q4, alongside an additional $76 million of losses related to the COVID-19 pandemic and a $400 million reserve charge.
The reserve strengthening recognizes unfavourable trends in the firm’s reinsurance segment long-tail lines for the 2015-2018 accident years, notably general liability, professional lines, and auto liability.
Additionally, the charge includes actions on non-catastrophe property lines, primarily for the 2017-2019 accident years.
“We believe that this is a one-time charge by the new management team, and we don’t expect any further material reserve strengthening,” explains S&P.
Despite these charges, Everest Re still expects to report net income of between $475 million and $525 million for the full-year 2020, while operating income is projected to hit between $275 million to $325 million.
“S&P Global Ratings said today that its ratings on Everest Re Group Ltd. (NYSE:RE; A-/Stable/–) are unaffected by the fourth-quarter charges of $546 million, which can be absorbed by the company’s 2020 full-year earnings,” says the ratings agency.
Ultimately, analysts feel that the re/insurer will maintain its excellent capitalisation that S&P forecast will be redundant at the ‘AAA’ confidence level in 2020 and will remain so through 2022.
