Everest continues expansion into primary market

Bermuda-based specialty insurer and reinsurer Everest Group said that it made progress in its ongoing expansion into the primary insurance segment globally in the first half of this year and benefited from pricing that continues to exceed loss trend in aggregate.

The group reported net income of $724m for the second quarter up from $624m at the same point last year and operating income of $730m up from $627m that it said was driven by attritional underwriting margin improvement and strong net investment income generation.

Everest recorded $4.7bn in gross written premium with year-over-year growth of 12.8%, 16.5% for reinsurance, and 5.8% for insurance. It reported combined ratios of 90.3% for the group, 88.9% for reinsurance and 94.4% for insurance.

The expansion into the primary segment continues. Gross written premiums rose to $1.5bn.

“Our International business continued to gain traction, and we received regulatory approval for new operations in Australia, Colombia and Mexico. As we continue to proactively change our mix of business, growth was driven by a 31.1% increase in property/short tail and 26.0% in other specialty, led by growth in aviation, energy, surety and construction,” explained Juan Andrade, president and CEO.

“Growth was partially offset by a decrease of 37.4% in accident and health and 18.0% in workers’ compensation as we continue to focus on lines of business with better expected margins,” he added.

Pre-tax catastrophe losses were $15m, net of estimated recoveries and reinstatement premiums, a “modest” increase over the prior year quarter, which benefited from benign catastrophe losses, said Andrade.

“Pricing continues to exceed loss trend in aggregate. There was a meaningful acceleration in pricing across North American long-tail lines (excluding financial lines),” he added.

Gross written reinsurance premiums grew 16.5% on a constant dollar basis and excluding reinstatement premiums, to approximately $3.2bn.

Reinsurance growth was driven by a 31.4% increase in property pro-rata, 25% in property catastrophe XOL, and 19.6% in casualty pro-rata that Andrade said was driven by increased rate, when adjusting for reinstatement premiums.

The reinsurance attritional loss ratio improved 60 basis points over last year to 57%, while the attritional combined ratio improved 30 basis points to 84.4% versus a year ago.

Pre-tax catastrophe losses were $120m net of estimated recoveries and reinstatement premiums, driven primarily by a number of mid-sized international events, he said. “Risk-adjusted returns remain very attractive, particularly in property and specialty lines,” said Andrade.

The Everest boss was clearly in a buoyant mood as the firm market continues in most lines in both primary and reinsurance segments despite rising competition in recent times. The hard market is not over yet and corporate risk and insurance managers can clearly expect to see more of Everest in coming renewals.

“The fundamentals of our business are robust, creating significant momentum as we expand in areas with the strongest profit trajectory, while remaining focused on disciplined underwriting and risk selection,” said Andrade.

“Our leading reinsurance business continues to achieve excellent risk adjusted returns, again evidenced by our success through the most recent renewals. We made progress advancing our primary insurance strategy in key global markets, investing in, and expanding our platform with exceptional talent and capabilities to capitalise on market opportunities. As we move through the second half of 2024, we are capitalising on this momentum, focused on achieving our primary objective of consistently generating industry leading returns.”