Everest Re books 20% reinsurance growth citing flight to quality

Global insurance and reinsurance group Everest Re has reported impressive growth of its reinsurance book in the third-quarter of 2020, as premiums written grew 20% and the company’s CEO said it is benefiting from a “flight to quality” in current “underwriter’s market” conditions.

Everest Re looks likely to be one of the most expansive of the third-quarter, growing its reinsurance business by one fifth and also adding 6% to its insurance book as well.

With overall gross written premiums reaching $2.8 billion, representing 16% year-on-year growth, Everest Re is clearly looking to take advantage of rate firming and market conditions.

The company feels it is well-placed to benefit from the state of the insurance and reinsurance market at this time, citing growth drivers as being the continued rate acceleration, new business opportunities it has sourced, as well as increasing shares with existing customers.

President & CEO Juan C. Andrade commented, “Everest is benefitting from a flight to quality and strength in the reinsurance and insurance markets. This is an underwriter’s market. Our broadly diversified reinsurance and insurance franchises, our financial strength, deep distribution relationships, and our focus on providing solutions to our customers position us well for this environment. Everest’s core strength is evidenced by our third quarter 2020 results where we achieved 16% growth in gross written premium, an improved attritional combined ratio of 85.8% and net income of $243 million.”

The results bode well for investors in Everest Re’s third-party capitalised collateralized reinsurance vehicle Mt. Logan Re.

Providing sidecar-like benefits, while offering investors different return seeking strategies, the Mt. Logan Re vehicle writes both for and alongside Everest Re, so benefits from similar access to business and these flight to quality market factors.

As Everest Re grows its reinsurance book in particular, Mt. Logan Re will be assisting on the property catastrophe side and also benefiting from the increased rates and enhanced access to business its parent is seeing.

Everest Re cited strong reinsurance growth in facultative and treaty reinsurance across the US, Canada, and Latin America during the quarter.

With an attritional combined ratio excluding catastrophes and COVID-19 pandemic impacts that actually bettered the previous year at 83%.

The overall combined ratio was 105.4%, which included catastrophe losses of 16.3% and Pandemic losses of 6.7%.

Everest Re reported $300 million of catastrophe losses for the quarter, after reinsurance and reinstatement premiums, with another $125 million of net pre-tax losses related to the COVID-19 pandemic.

Including the third-quarter, Everest Re has incurred $435 million of losses related to the pandemic so far, across reinsurance and insurance books.

The collateralized Mt. Logan Re vehicle and its investors will likely have taken some attritional impacts from the recent catastrophe losses, given its property catastrophe perils focus, as too will might some of Everest Re’s retrocessionaires.