Growth in specialty, casualty challenging if margins don’t improve

Further improvement to pricing is needed by the January 1, 2025 renewals to avoid more drastic measures in casualty and professional lines, Jill Beggs, Everest Re’s reinsurance executive vice president and reinsurance chief operating officer, told Monte Carlo Today. Everest has reduced its exposure to these classes in 2024 as it seeks better margins.

“We’re seeing very challenging market conditions on the US casualty side,” explained Beggs. “Ceding commissions are unsustainably high and even though they are continuing to reduce, it is not enough, and more is needed for better risk alignment.”

As social inflation and legal system abuse continue to drive claims costs upward, Everest is maintaining a sharp focus on underwriting discipline. Beggs added that the company expects casualty rates to keep rising as concerns over elevated loss trends persist. “There needs to be a push for sustained improvement on the primary and the reinsurance side,” she said.

Everest reduced its exposure to US casualty and professional liability lines in 2024 to improve margins. However, Beggs noted, this reduction may not be enough. “As we look ahead to 1/1 2025, underlying margins will need to continue improving, otherwise we will need to take more severe actions,” she cautioned.

The risk environment

Data quality is a growing focus for the company, especially as renewals approach. “We will be having more detailed discussions with underwriting teams at our clients and asking for more granular information,” said Beggs. “Heading into renewals, we will continue to maintain a disciplined approach to casualty and professional lines . Given the challenging market conditions, we will reduce exposures that do not meet our underwriting thresholds.”

Beggs said that in 2024 underlying rates for casualty lines (auto, general liability, excess/umbrella) have strengthened due to elevated claims, “a trend we expect to continue into 2025”.

On the property side, Everest is more optimistic. “We’re at the point where we see discipline in the market and recognition of the elevated risk environment across the board,” Beggs said. As loss trends in property insurance remain high, Everest sees additional demand coming into the market. 

“We’re in a disciplined underwriting cycle and expect it to continue.” 

“We expect that market to continue as expected. I don’t anticipate any surprises there, barring a major event,” she added.

Everest expects risk-adjusted returns in the property sector to remain stable as attachment points, terms, and conditions hold firm. “We’re in a disciplined underwriting cycle and expect it to continue. We have reached a new baseline in this elevated risk environment,” Beggs noted, adding that property lines are set to remain a key area of focus through 2025.

Growth in property

While US casualty remains challenging, Everest is “pretty bullish” about the outlook for the market and its growth in specialty lines, including marine, aviation, engineering, financial lines, cyber, and parametric solutions.

“There are opportunities for us across all lines of business, and the market's always going to fluctuate,” Beggs claimed.

“We’ve realigned our global resources around these areas, and we’re already seeing opportunities that were a bit of a white space for us before,” Beggs explained. Everest is particularly enthusiastic about previously “untapped areas” such as parametric solutions.

Geographically, Everest has made substantial inroads in Asia, with significant growth in accident, health, and property lines. “We were under-represented in Asia, and we grew quite a bit in 2024. We believe there are further opportunities in lines such as accident and health,” Beggs said. The company also plans to deploy additional capital in key markets such as the US, Canada, and Latin America.

“We’ve grown quite a bit in Europe on the property side,” she added. “Property is an area of growth for us, as well as specialty lines.”

Beyond growth in traditional lines, Everest is looking to artificial intelligence (AI) to transform its operations. “AI has the power to transform the insurance industry and unlock substantial value,” said Beggs. Everest is currently integrating AI tools across all functions, from underwriting to claims, with a focus on driving profitability and efficiency.

“We’re very excited about the possibilities that AI brings for us,” she concluded.

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