Everest Re sees slight rise in profits despite challenging year
Everest Re has reported a slight increase in its 2016 profits, when compared to the previous year, but with the caveat that this increase was driven by its primary business, as its reinsurance book of business remained quite flat.
Despite what its CEO called very challenging market conditions the company made a net profit of $996.3 million last year compared with $977.9 million in 2015. Its after-tax operating income was $993.5 million compared with $1.1 billion for 2015.
Everest Re’s gross written premiums grew by 2 percent to $6 billion in 2016, though the company said that total premiums were actually up 4 percent for the year after eliminating the unfavourable effects of foreign currency fluctuations. Worldwide reinsurance premiums were essentially flat while direct insurance premiums were up 17 percent for the year.
Everest Re’s combined ratio was 87 percent for the year, a slight rise on the figure of 85.1 percent that it reported in 2015.
The fourth quarter benefitted from net prior year reserve releases of $204.9 million and a net reduction to prior year catastrophe loss estimates of $18.4 million. This was offset by $168.6 million for catastrophe losses that occurred in the quarter, including Hurricane Matthew, the New Zealand earthquake, and the Tennessee wildfires.
The company’s full year net investment income amounted to $473.1 million for the full year 2016, essentially flat to 2015.
Dominic Addesso, chief executive of Everest Re, said: “Everest had another record quarter and an outstanding year, generating 13 percent ROE and strong growth in book value per share, despite what continues to be a very challenging market. Our reinsurance book remains quite strong with a 77.6 percent combined ratio, which is remarkable when considering the string of global natural catastrophe events for the year.
“While our insurance operations’ results were mostly impacted by charges on discontinued books of business, the underlying fundamentals of this book continue to improve. We are confident in the future and expect Everest to continue to generate above average returns for its shareholders.”
