Everest Re makes Q4 2017 profit
Everest Re Group made a fourth quarter 2017 profit of $571.0 million, a 52.8 percent rise on the $373.6 million it made on the same quarter of 2016.
According to the company after-tax operating income, excluding realised capital gains and losses and the tax charge related to the enactment of the Tax Cuts and Jobs Act of 2017 (TCJA), came to $556.0 million for the fourth quarter of 2017, compared to after-tax operating income of $363.4 million for the same period last year.
The figures take Everest Re to a profit of $469.0 million for full year 2017, down on the $996.3 million it made in 2016. After-tax operating income, excluding realized capital gains and losses and a tax charge related to the enactment of the Tax Cuts and Jobs Act of 2017 (TCJA), was $375.4 million for the full year 2017, compared to $993.5 million for 2016.
“Everest experienced an exceptional quarter with $556 million of net operating income, giving rise to a respectable year of earnings, despite 2017 being one of the most costly catastrophe loss years on record,” said president and chief executive officer, Dominic J. Addesso. “The underlying results were quite strong with an attritional combined ratio for the year of 85.0 percent. More importantly is that all segments contributed to these positive results. For the full year, Everest generated a 6 percent ROE and reached a new milestone with premium of $7.2 billion.”
According to Everest Re gross written premiums for the quarter were $1.9 billion, an increase of 26 percent compared to the fourth quarter of 2016. For the full year, gross written premiums grew 19 percent to $7.2 billion. Eliminating reinstatement premiums and the effects of foreign currency fluctuations, total premiums were actually up 16 percent for the year. Worldwide reinsurance premiums were up 17 percent, on this same basis, while direct insurance premiums were up 15 percent for the year.
The combined ratio was 103.5 percent for the year, compared to 87.0 percent for 2016. The fourth quarter benefited from net prior year reserve releases of $262.1 million and a net reduction to prior period catastrophe loss estimates of $132.7 million, including a $102.7 million reduction in the catastrophe loss estimates for the third quarter 2017 events. This was offset by $161.5 million for catastrophe losses that occurred in the quarter, including both the Northern and Southern California wildfires. For the full year, catastrophe losses, net of reinstatement premiums, totaled $1.3 billion.
Net investment income amounted to $149.1 million for the quarter and $542.9 million for the full year 2017, up 15 percent over the full year 2016 results.
Everest Re said that the enactment of the TCJA resulted in a charge of $8.2 million in the quarter. Additionally, the Financial Accounting Standards Board (FASB) has proposed a change in accounting standards that, if adopted, would require certain income tax effects of the TCJA to be reclassified from other comprehensive income (OCI) to retained earnings. If the FASB adopts that proposal prior to the filing of the Company’s Form 10-K, the Company intends to “early adopt” the updated accounting standard and reflect it in the financial statements filed with its Form 10-K, resulting in an estimated $1.3 million decline in OCI with a corresponding increase in retained earnings. Further information about this proposed change in accounting standards is available in the Company’s Form 8-K filed in connection with this news release.
