Everest CEO hails ‘excellent’ mid-year renewal outcome as T&Cs and attachment points hold

Bermuda domiciled Everest Group’s reinsurance business delivered a strong underwriting result in the second quarter of 2024, and amid still favourable property market conditions, characterised by persistently attractive rates and unwavering terms and conditions (T&Cs) and attachment points, the firm had an excellent outcome at the mid-year renewals.

This is according to the re/insurer’s Chief Executive Officer (CEO), Juan Andrade, who commented on Everest’s reinsurance business and mid-year renewals experience during the firm’s recently held Q2’24 earnings call.

“The (reinsurance) business delivered underwriting profits of more than $300 million. The attritional loss ratio and attritional combined ratio improved to 57% and 84.4%, respectively, as we continue to proactively shape the portfolio,” said Andrade.

Overall, Everest grew its reinsurance business by 17% on a constant dollar business in the second quarter, with notably strong growth of 31% in property pro rata as the company took advantage of the strong underlying property market, particularly in commercial E&S.

“Property market conditions continue to be favorable. Rates have persisted at attractive levels, and terms and conditions and attachment points have not wavered from the significant improvement made over the past two years,” continued Andrade.

Turning to the renewals, the CEO stated that consistent with the firm’s execution at both January and April, Everest had an “excellent” mid-year renewals.

“We expanded our portfolio with top tier cedents, growing across property and specialty lines, including marine, aviation, and engineering at excellent expected margins.

“As the June 1 renewals progressed, and overall reinsurance capacity became scarce in the final days, Everest secured a number of shortfall covers at superior terms. On many Florida deals, we successfully negotiated non concurrent terms, including higher minimum premiums and lower ceding commissions,” said Andrade.

At the June 1 renewal, Everest grew its property book more than 25%, and Andrade revealed that cat exposed premium continued with a double digit growth trajectory at the July renewal, with higher expected margins compared to last year.

“Importantly, across the mid-year renewals, we achieved preferential signings, drove differentiated terms and conditions on a number of property catastrophe deals, and we were signed in full on virtually every transaction we chose to participate on,” he continued.

Later in the call, Jim Williamson, Executive Vice President (EVP) and Group Chief Operating Officer (COO), provided some more colour on the carrier’s growth in property catastrophe reinsurance, highlighting a “really terrific set of circumstances and opportunities” driven by numerous forces.

“First, we’ve really achieved a lead market position in this generational hard market, and it began really at the end of 2022 where you had a dislocated property cat market, post hurricane Ian. There was a lot of uncertainty in the market, and frankly, a lot of bad behaviour on the part of a number of reinsurers in terms of how they were treating their customers.

“I think Everest got high marks for being constructive, for being willing to create price discovery, and for putting capacity to work. And the benefit of that and the reputational impact, I think, will be very long lived. And because we’ve been so consistent since that point, in terms of how we manage our customers, getting out early ahead of renewals, feeding capacity where it makes sense into their programs, taking up shortfalls, etc, we now are really in that lead market position. And what that brings to us is the opportunity to be the first carrier they call when they’re looking to fill out new capacity, and there’s been a lot of new capacity buying. So, that’s been a boon to us,” said Williamson.

In many instances, continued Williamson, Everest was able to achieve non-concurrent terms because customers want the firm on their programs, and this can benefit pricing and terms and conditions.

“And then, I would just say it’s also yielded benefits outside of property cat. So, we get a first look at new programs or attractive non-cat lines of business that we want to write,” added Williamson.

All of this, according to Williamson, is what’s been driving differentiated results for the re/insurer, and importantly, the expectation is that heading into the January 1st, 2025, reinsurance renewals, the favourable economics witnessed through the 2024 renewals will persist.

“So, as we model these transactions, expected return on our capital is just exceptional, and we’re continuing to lean into that,” said Williamson.

“Terms and conditions, which improved strongly at January 1, 2023, have stayed strong. There’s been no give back that we’ve seen, no material give back in terms and conditions, which is significant. And then lastly, attachment points are not moving and we like that, because it takes us out of these attritional cat losses, if you will. So, really, it’s our execution, plus a market opportunity that remains excellent, that allows us to drive the results you’re seeing,” he concluded.

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