Q1 combined ratio will be below 100%, says Everest Re

Everest Re Group expects to report a combined ratio below 100 percent for its consolidated reinsurance and insurance operations in Q1 2020, with net investment income of $148 million.
The re/insurer was estimating the impact from the COVID-19 pandemic on its Q1 2020 results, ahead of their formal announcement on May 6.

Its combined ratio will be influenced by an incurred but not reported (IBNR) provision for an estimate of $150 million in pre-tax net first party losses for expected claims related to the pandemic, predominantly in the reinsurance business.

“This estimate is consistent with our philosophy of recognising and reacting to expected losses on a timely basis,” Everest said in a statement. “As a result, this IBNR estimate is being recognised in the current quarter. Pandemic losses will be tracked separately and as an ongoing event.”
Everst also noted that, due to a typical reporting lag, the real impact of COVID-19 will not be felt in investment income until the Q2 numbers, but stressed its portfolio is well diversified, with a focus on high quality fixed income.

Juan Andrade, president and CEO at Everest, said: “Our capital position remains a source of strength, with high quality invested assets, significant liquidity, low financial leverage, and a low operating expense ratio. Our diversified global platform with its broad mix of products, distribution and geography is resilient.”