Exclusive: Everest Re planning on doubling insurance business
Everest’s insurance business could double in size over the course of three to five years, Dominic Addesso, president and chief executive officer (CEO) of Everest Re Group, said during the company’s second-quarter results meeting.
Everest’s insurance operations reported $1.53 billion in gross written premiums in 2015, according to its second quarter 2016 investor presentation. Its combined ratio was 106.3 percent.
“We continue to capitalise on the dislocation within the commercial market to build out our global specialty insurance capabilities with newer and enhanced products, additional leadership and underwriting depth and expanded geographic reach,” explained Jonathan Zaffino, senior vice president and president of the North America insurance division.
“Each of our operations are making excellent progress on their 2016 goals and we anticipate increased momentum from actions executed over the past year.”
The rise in the insurance book is starting to take hold as growth premiums have increased by 32 percent in the second quarter compared with the previous quarter, noted Addesso.
“On the other hand somewhat offsetting this is the decline in the reinsurance segment. Rate levels and foreign exchange movements continue to affect the sector,” he added.
John Doucette, executive vice president, president and CEO of the reinsurance division, said: “We continue to find pockets of attractive long-tail reinsurance including auto liability business and we also continue to provide meaningful capacity in the mortgage space where there remains a robust pipeline of attractive business.”
Everest sees opportunities to increase its reinsurance business due to macro issues including capital and Solvency requirements created by the market turmoil including Brexit, Solvency II, Dodd Frank and related regulatory changes worldwide, Doucette said.
Profit and expense pressures at large clients were now motivating them to buy more reinsurance, he added.
In addition, rates in some markets are increasing in regions that were affected by catastrophe losses, which were up in the second quarter, impacting profitability of the re/insurance sector.
For Everest, catastrophe losses, net of reinsurance, amounted to $123.8 million in the second quarter.
“In Canada, the Fort McMurray wildfires loss is the largest insured loss in Canadian history and reinsurance rates were up substantially. We seize the opportunity to deploy more capacity at higher pricing,” Doucette said.
Other areas have also shown increased rates on July 1, after suffering catastrophe losses, including an earthquake in Ecuador and hailstorms in Texas, Doucette noted.
He concluded by saying that market reports suggest that brokers are now shifting to managing client expectations on renewal pricing terms and conditions.