Everest Re braces for $400m reserve and $146m COVID-19 & cat hit

Bermuda-based re/insurer Everest Re is taking "decisive reserving actions" citing social inflation trends in casualty lines, and bracing for $146 million catastrophe and COVID-19 losses in the fourth quarter of 2020.

Everest Re expects to report full year net profit of $475-$525 million for 2020, when it makes its full quarterly and full year earnings on February 8, 2021.

The company has estimated pre-tax net catastrophe losses for Q4 2020 of $70 million, including $60 million in its reinsurance segment and $10 million in the insurance segment. The estimates are net of reinsurance and reinstatement premiums, and include the impact of Hurricanes Delta, Zeta, Eta, Iota, and the Queensland Australia Hailstorm.

Meanwhile, it expects pre-tax net COVID-19 pandemic losses of $76 million in Q4 2020, primarily for third-party lines. This includes $56 million in the reinsurance business and $20 million in the insurance business. The loss will be in addition to the $435 million of pandemic losses estimated in the first nine months of 2020.

For the full year 2020, the total pandemic loss provision is $511 million, and over 80 percent is incurred but not reported.

Everest is also increasing its prior year loss reserves by $400 million, or 3 percent of net loss reserves as of September 30, 2020, all in the reinsurance segment. The increase covers predominantly long-tail classes for the 2015-2018 accident years, notably general liability, professional lines, and auto liability. It also includes actions on non-CAT property lines, primarily for the 2017-2019 accident years, driven by a few large losses to aggregate programmes.

Everest Re Group president & CEO Juan Andrade said: “We remain focused on the relentless execution of our strategies to create a diversified portfolio that achieves superior risk adjusted returns and value to our shareholders and customers.

"The decisive reserving actions we are announcing today recognize the social inflation trends affecting the overall U.S. Casualty market and enhance our already strong balance sheet. We have proactively acted on the affected portfolios and we have confidence in our in-force book. We are bullish about our future and the earnings generating power of our franchise."

He added: "Everest continues to benefit from excellent financial strength and strong enterprise risk management. The fundamentals of our business are strong. Our Company is well positioned to succeed in any market conditions, as evidenced by our growth and our improved underlying results despite the many global challenges in 2020. Our strong management team, employees, global platform, and excellent capabilities continue to provide superior solutions to our business partners and customers.”

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