Everest’s loss triangle reserves increase 24% in 2020
Everest Group has reported a $12.6 billion consolidated net loss and allocated loss adjustment expense (ALAE) reserves for the end of 2020, up from $10.2 billion in the previous year.
The percent of total reserves this represents increased from 85% in 2019 to 87% in 2020, according to the global provider of reinsurance and insurance which specialises in property, casualty, and specialty products.
Excluding reserves for catastrophes and asbestos and environmental exposures, the nine classes in the triangles cover 97% of Everest’s reserves, down from 99.6% in 2019.
The loss and ALAE development triangles are provided for nine classes, four for reinsurance business and five for insurance business. The reserves included in the triangles increased from $10.2 billion as of 31 December 2019 to $12.6 billion on 31 December 2020.
Everest had $14.6 billion in net reserves for loss and LAE as of the end of December 2020, and allocated loss adjustment expense (ULAE) reserves of $194.1 million.
The company said that losses from the COVID-19 pandemic have been removed from the reinsurance and insurance triangles, because “similar to catastrophe events, ultimate losses from the pandemic cannot be estimated using traditional actuarial methods.”
It comes as Everest’s full-year report revealed the company had a “solid year”, considering the pandemic, record catastrophes, and economic, social, and political upheaval. The company recorded 15% gross written premium growth and 17% in net written premiums.
Despite the $511 million COVID-19 loss provision, and a $400 million prior accident year reserve strengthening, the insurer delivered $514 million in net income and $300 million in operating income.
Its book value per share grew 11% from year end 2019 on a dividend adjusted basis. While its combined ratio for the year was above 100% due to COVID-19 losses, the report said “an active CAT year, and our reserve strengthening, the underlying underwriting profitability, as measured by the attritional combined ratio, improved almost a full point from 2019 to 87.5%, with our insurance segment improving 2.3 points to 94.2%”.
Everest’s board of directors also declared a dividend of $1.55 per share payable on or before 15 September 2021 to all shareholders of record as of 25 August 2021.
