Record reinsurance growth drives Everest to $670m Q2 profit

Bermuda-based Everest Group said net income soared more than 400% to $670 million in the second quarter as gross written premiums jumped 22.7% to $4.2 billion.

Everest beat analysts’ earnings per share estimates of $11.64 for the three months to June 30, turning in earnings of $16.26, leading shares up $8.25 to $323 in after-hours trading.

Everest, which has rebranded from Everest Re to Everest Group, said net income rose 444 percent to $670 million from $123 million in 2022. 

Everest also reported record quarterly operating income of $627 million and attributed the strong performance to continued underwriting margin improvement.

“Everest’s second quarter performance was outstanding as we leaned into the hard reinsurance market. We continued to grow premiums, while expanding margins, resulting in strong increases in quarterly underwriting profits, net income, and record operating income,” said Everest chief executive officer Juan Andrade (pictured).

"We delivered an operating ROE of 21.8% and a record annualised total shareholder return in excess of 25%.

“We also continued to advance our diversified and disciplined global primary insurance franchise, which is benefiting from firming rates. In addition to the excellent underwriting profit in the quarter, we generated nearly $360 million in net investment income with our well-positioned portfolio.

"Our exceptional talent, diversified platform and underwriting discipline give us significant firepower to continue delivering on our objectives and capitalising on abundant market opportunities, which are expected to continue well into 2024.”

Everest’s group combined ratio fell to 87.7% from 91.8% while its reinsurance combined ratio dropped 2.3 percentage points to 85.9% as a result of improved pricing and lower catastrophe losses, which dropped to $27 million from $85 million.  

Net investment income rose 57.6% to $357 million while losses rose 4.4% to $1.96 billion.

In the company’s reinsurance segment, gross written premium rose 26.9% on a constant dollar basis to $2.8 billion and the combined ratio fell to 85.9% from 88.2%. Net catastrophe losses fell from $135 million to $27 million while the segment did not incur any losses as a result of the Russian invasion of Ukraine compared to $45 million in losses in 2022.

Everest said: “Growth was driven by 34.7% growth in property pro-rata, 29.6% in property cat and 16.2% in casualty pro-rata as pricing increases  and a flight to quality continues globally.

“Robust pricing momentum continued in the second quarter, with catastrophe pricing up 47.5% in North America and 29.2% internationally with improved terms and conditions.”  

In Everest’s insurance segment, gross written premiums rose 14.1% on a constant dollar basis from $1.25 billion to $1.4 billion and the combined ration edged up to 92.7% from 91.9%.

Everest said: “Strong cycle management delivered an underwriting profit of $64 million. Catastrophe losses were benign in the quarter, demonstrating our de-risking actions on the portfolio.”