Everest Re posted strong growth but a decline in net profits in its first quarter results, as alternative capacity becomes an increasing part of its reinsurance offering.
Its chief executive warned that the market faces challenging conditions, but noted that Everest is looking to ramp up its alternative reinsurance capacity.
Commenting on its strategic approach, Dominic Addesso, Everest Re’s CEO says: “We expect to close shortly on our first catastrophe bonds that will provide $450 million of property-catastrophe risk coverage at very optimal pricing and terms and conditions.”
“Alternative reinsurance capacity is increasingly part of our strategy, coming into play both offensively and defensively, as we seek ways to optimize our returns.”
The reinsurer increased gross written premiums by 7 percent to $1.3 billion during the quarter, compared with the first quarter of 2013. Worldwide, its reinsurance premiums, including its Mt. Logan Re sidecar, grew 12 percent, primarily thanks to growth opportunities at the January renewals.
Insurance premiums dropped by 9 percent for the quarter, largely due to a premium adjustment for its crop business on lower than expected premium for the winter crop season, said Everest.
The company made a net profit of $293.9 million for the quarter, a 23.5 percent drop on the $384.3 million it made in the first quarter of 2013. While its combined ratio for the period was 80 percent compared to 80.7 percent in the first quarter of 2013.
Addesso says he is pleased with the results in what he described as a challenging market.
“Everest had another excellent quarter producing $281 million of after-tax operating income and a net income return on equity of 17 percent, driven by strong underwriting results with a combined ratio of 80 percent.”
“The market is always challenging but we are continuing to find opportunities to grow premium and risk-adjusted returns, demonstrating the strength of our franchise and operating strategies,” he concludes.
Everest Re, reinsurance, sidecar, alternative capital, convergence, Bermuda