Prior year cat losses hit Everest Re in Q2

Bermuda-based Everest Re reported a sharp drop in earnings for the second quarter of 2018 compared to the previous year primarily driven by the 2017 hurricane events – Harvey, Irma and Maria.

Catastrophe losses, net of reinsurance and reinstatement premiums, amounted to $464.8 million in the quarter, with $399.8 million primarily related to the 2017 storm events and $65.0 million of current year catastrophe losses from cyclone Mekunu in Oman and Yemen and late winter storms in the US.

Earlier in July, Everest Re had already warned of a charge for net reserve adjustments of approximately $250 million, after tax, for the second quarter of 2018 related to prior year catastrophe events and including a partial offset from favourable prior year development of non-catastrophe reserves.

Overall, the group reported net income of $69.9 million for the second quarter of 2018 compared to net income of $245.7 million in the same period a year ago.

The combined ratio was 105.1 percent for the quarter compared to 90.5 percent in the second quarter of 2017.

For the six months ended June 30, 2018, net income fell to $280.2 million compared to net income of $537.3 million in the same period of 2017.

“Everest generated an annualized, net income return on equity of 7 percent, despite the previously announced charge for net reserve adjustments,” said CEO Dominic Addesso. “The underlying results were quite strong with an attritional combined ratio of 85.3 percent year to date. We continue to see positive momentum across the underwriting operations, with profitable growth opportunities materializing for both our insurance and reinsurance segments.”

Everest Re grew gross written premiums by 29 percent year on year to $2.1 billion in the second quarter of 2018.

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