Bermuda-based reinsurer Everest Re Group has reported a 4.1 percentage point improvement in its combined ratio in the fourth quarter of 2022 to 87.8%, as net income and operating income increased to $496 million and $478 million, respectively.
The company’s Q4 net income rose from the $431 million a year earlier, while operating income jumped from $359 million in Q4 2021.
For the full year 2022, net income fell from $1.4 billion to $579 million, while operating income came down to $1.065 billion, against $1.153 billion in 2021.
Across the group, gross written premiums (GWP) expanded in Q4, year-on-year, by 6.1% to $3.6 billion, with 19% growth in the insurance segment to GWP of $1.3 billion, and 0.3% growth in reinsurance GWP to $2.38 billion.
Net written premiums (NWP) across the group amounted to $3.2 billion in Q4 2022 compared with just over $3 billion in Q4 2021, with growth again witnessed in both the insurance segment, to $869 million, and the reinsurance segment, to $2.3 billion.
For the full year, GWP increased 6.9% to $13.9 billion and NWP by 7.9% to $12.3 billion. The insurance segment has reported GWP growth of 16.4% for the year to $4.6 billion, and NWP growth of 15.5% to $3.4 billion, while the reinsurance GWP jumped 2.7% in 2022 to $9.3 billion, as NWP increased 5.2% to $8.9 billion.
When compared with the prior year Q4, Everest Re’s loss ratio has decreased by 4.8 percentage points to 60.1% somewhat offset by a slightly higher commission and brokerage ratio of 21.6%, and a higher other underwriting expenses ratio of 6%.
Catastrophe losses totalled just $15 million, net of estimated recoveries and reinstatement premiums, in Q4 202, and were related to Winter Storm Elliott. This compares with cat losses of $125 million a year earlier.
All in all, Everest Re has reported pre-tax underwriting income of $368 million for the fourth quarter of 2022.
For the full-year 2022, Everest Re’s cat load has been pegged at $945 million, which includes $45 million of pre-tax net Russia / Ukraine losses, compared with overall cat losses of $1.065 billion in 2021.
The reinsurance division assumed $10 million of the group’s catastrophe losses in Q4, and $820 million of the full-year total, including the entirety of the Ukraine war loss.
In this part of the business, the firm notes the improved profitability of the portfolio driven by targeted underwriting action. The reinsurance combined ratio strengthened by 5.1 percentage points in Q4 to 86.4%, and by 1.7 percentage points for the full year to 96.4%.
Within reinsurance, the firm says that “execution for the January 1 renewals was precise and well-orchestrated achieving an excellent outcome.”
Turning to the insurance arm, and cat losses amounted to just $5 million for Q4 and $125 million for the full year, which is down on the prior year for both periods.
Everest Re also notes strong profitability in this part of its operations, with a Q4 2022 combined ratio of 91.4% compared with 92.8% a year earlier, and a full year 2022 combined ratio of 94.8%, compared with 97.1% in 2021.
On the asset side of the balance sheet, the reinsurer has reported total invested assets and cash of $29.9 billion versus the year end 2021 value of $29.7 billion. Shareholders’ equity of $8.4 billion compared with $10.1 billion at the end of 2021, largely driven by $1.7 billion of unrealized net losses on fixed maturity investments.
Juan Andrade, Everest President and Chief Executive Officer (CEO), commented: “Everest’s fourth quarter results capped a strong year of consistent execution and positive momentum for the company.
“We grew both underwriting franchises with improved margins, significantly reduced volatility and generated solid returns despite ongoing market uncertainty and another elevated catastrophe year. This led to over $1 billion in operating income, and a double-digit operating return on equity for both the quarter and the full year.
“We had a successful January 1 reinsurance renewal executing a precise and well-orchestrated strategy. We leveraged Everest’s global leadership position to capitalize on the robust property market and the flight to quality was evident across virtually all lines and geographies. We drove improved pricing, terms and conditions and deepened relationships with new and existing core clients throughout the world, which significantly improved risk adjusted returns across the entire portfolio.
“We are well positioned with the talent and the platform to continue this momentum in 2023.”
