Everest Re can lean into pending renewals to better its book

Everest RE took a “significantly stronger portfolio” out of the 1.1 renewals and can lean into pending renewal periods in 2023 to further improve its risk-return profile without any deeper diver into risk, top company officials have said.

The 1.1 2023 renewals brought “significant pricing improvements,” with “substantially improved terms and conditions” including major reductions to secondary perils and hikes in retentions sufficient to “significantly reduce written exposure,” CEO Juan Andrade (pictured) claimed.

“We expect reinsurance pricing momentum to continue,” Andrade said. “We see abundant opportunity to continue growing.” All markets are a go, with continuing opportunity to capitalise on dislocation in property, he said.

“All signs point to significantly improved risk adjusted return across the portfolio,” he said. “We expect that steady improvement to continue.”

Management spoke to the 1.1 dealing in all superlatives. “We improved every metric we use to measure our US portfolio,” group COO and head of reinsurance Jim Williamson said, and “similar factors played out in our international markets.”

Everest Re claimed a 50% risk adjusted pricing increase on its North America cat excess of loss deals and managed to tighten structures and terms & conditions notably.

Everest hacked down on aggregate deals, increased attachment points, moved wholesale into defined perils and reallocated moneys freed from bottom tiers to top tiers “at significant rate increasers,” Williamson said.

“There was a significant movement in terms and conditions,” he said. “In the US, a significant portion of our deals are now on a named perils-only basis.”

Everest Re additionally reduced exposure for higher-frequency PMLs. Officials called out major reductions at the 1-in-3 level, versus a more stable appetite for risks between the 1-in-20 and 1-in-250 ranges.

The newly selected risk position is likely to hold. “We are able to get rate that improves the economics and do it while maintaining a risk position in a pretty stable manner,” Williamson said.

Everest Re claims to have been able to bring capacity to 1.1 on account of having backed off somewhat in less favourable 2022 renewals and as an early move to adjust rate upwards in late 2022 in primary insurance freed some capacity for the reinsurance side.

“We are very nimble that way,” Williamson said of what the company calls “dynamic capital allocation.”

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