Amid an expectation of a continuation of the robust pricing environment and favourable reinsurance market conditions, executives at Bermuda-based Everest Group are confident of the firm’s ability to fully deploy the equity capital it raised back in May by the key January 1st, 2024, reinsurance renewals.
The global re/insurer raised $1.5 billion of capital earlier in the year in order to capitalise on the hard reinsurance market opportunity ahead of the mid-year 2023 and January 2024 renewals.
Speaking recently during the company’s Q3 2023 earnings call, leaders at Everest expressed confidence in its ability to deploy by 1/1 in what President and Chief Executive Officer (CEO), Juan Andrade, described as a “generational market opportunity.”
“We are positioned for success as we head into the January renewals. We also remain on track for January 2024 for the full deployment of the equity capital raised in May,” said Andrade.
Expanding on this, Jim Williamson, EVP, Group Chief Operating Officer, and Head of Reinsurance, explained that when Everest did the raise, the expectation was that deployment would begin at the July 2023 renewals, with incremental opportunities through the backend of 2023, with complete deployment anticipated at the January 2024 renewal.
“We have done exactly that,” said Williamson. “We’ve begun the process of deployment. We had a really strong 7/1, the back half of the year after 7/1 gets quieter, but there’s been some nice deal activity, both at the renewal periods as well as on a private placement basis. And based on the conversations we’ve had with our cedents, we see a very strong path to completing the deployment. We really have no concerns around that.”
The carrier’s Chief Financial Officer, Mark Kociancic, reiterated Everest’s confidence in its ability to deploy by 1/1 2024 and explained that it’s ultimately deploying it where it sees fit.
“From an investment point of view, it’s fully deployed the way we would like it for the time being. No issue for us to carry a little bit of excess capital. That’s going to get remunerated to some extent, but will be, like I said, fully deployed by 1/1.
“And there’s no benefit to rushing any kind of deployment. We want to stay disciplined and focused, just as our initial plan back in May for the equity raise indicated,” said Kociancic.
Of course, market conditions, notably in the property space, remain favourable for reinsurers ahead of 1/1, and with insured losses almost certainly set to exceed the $100 billion mark once again, CEO Andrade highlighted the need for both continued underwriting discipline and additional price increases across all lines.
“Rates are still improving in property, and we also got paid a lot more for the risk that we took. And so, that’s part of the confidence that we have in being able to deploy this fully by the 1/1 renewal,” said Andrade.
In light of market conditions, Williamson explained that Everest expects to grow its property cat writings with core clients “very nicely” at 1/1 2024.
“We see significant demand. Our expectation is that risk-adjusted rates will increase at the 1/1 renewal, so lots of opportunity in the environment,” he added.
Everest reported a strong set of third quarter results, with underwriting improving significantly on the back of improved pricing and lower catastrophe losses. Within reinsurance, gross written premiums hit a new quarterly premium record, and the comments from the firm today suggest that the robust growth trend will persist in 2024 as Everest takes advantage of the market opportunity.
