Everest Re Group has reported that it made a second quarter 2018 profit of $69.9 million, down sharply on the $245.7 million profit it reported for the second quarter of 2017.
After-tax operating income was $40.4 million for the second quarter of 2018, compared to after-tax operating income of $233.7 million for the same period last year.
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 United States.
For the six months ended June 30, 2018, net income was $280.2 million, again down on the previous year’s figure of $537.3 million for the six months ended June 30, 2017. After-tax operating income was $260.1 million, compared to after-tax operating income of $500.8 million for the same period in 2017.
The combined ratio was 105.1 percent for the quarter compared to 90.5 percent in the second quarter of 2017. Excluding catastrophe losses, reinstatement premiums and the favourable prior period loss development, the current quarter attritional combined ratio was 83.5 percent compared to 86.7 percent in the same period last year.
“Everest generated an annualised, net income return on equity of 7 percent, despite the previously announced charge for net reserve adjustments,” said president and chief executive officer, 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 materialising for both our insurance and reinsurance segments.”
Everest Re said that as of this year it has changed its reporting of operating income, a non-GAAP financial measure. Historically operating income represented net income, excluding realised capital gains and losses and the tax impact related to the enactment of the Tax Cuts and Jobs Act in 2017. Starting in first quarter 2018, the company further adjusted operating income to exclude foreign exchange gains and losses as it believes the impact of foreign currency movements on income is not indicative of the performance of the underlying business in a particular period.
Gross written premiums for the quarter were $2.1 billion, an increase of 29 percent compared to the second quarter of 2017. Worldwide reinsurance premiums were up 38 percent to $1.4 billion, with growth across each segment primarily driven by increased casualty and property pro-rata premium, rate improvement, increased shares on existing business and profitable new opportunities. Direct insurance premiums were up 13 percent, from second quarter 2017, to $645.9 million, continuing with the growth trends noted in recent years.
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