Everest Re Group has announced that for the second quarter of 2018 it expects to report a charge for net reserve adjustments of approximately $250 million, after tax.
Everest Re said that these reserve adjustments are connected to prior year catastrophe events and include a partial offset from favourable prior year development of non-catastrophe reserves.
The increase in estimates was mostly driven by 2017 hurricane events, specifically Harvey, Irma and Maria and re-opened claims reported in the second quarter and loss inflation from higher than expected loss adjustment expenses and, in particular, their impact on aggregate covers.
Everest Re said that it expects to report net income for the second quarter of 2018. In addition, current year weather related events are expected to result in a second quarter charge of approximately $25 million, after tax.
“Losses from events like the industry experienced in 2017 are difficult to estimate,” said Dom Addesso, president and chief executive officer of Everest Re Group. “The number of re-opened claims and the extraordinary surge in LAE were well above the market expectation. Nevertheless, it is helpful to keep this loss development in context. We are in the business of absorbing volatility and over the last five years we have generated over $3.5 billion in profits from our property catastrophe portfolio.
“Our portfolio in 2018 is positioned to deliver even better margins. Additionally, the non-cat reinsurance portfolio and the insurance book continue their favourable trends and should produce an excellent result in the second half of the year.”
Everest Re, reserve, adjustments, report, charge, second quarter, Maria, Harvey, Irma, hurricane, non-catastrophe