Reinsurance rates remain strong in ‘very hard’ property cat market: Everest CEO

Jim Williamson, CEO of Bermuda-based insurance and reinsurance company Everest, has disregarded talk of a soft property cat market, describing rates as very strong and the market as very hard while discipline has been maintained.

During earnings call, Williamson firmly pushed back against suggestions that the current property catastrophe market is soft, noting that while rates may be softer than they were a year ago, they remain significantly elevated compared to the pre-2020 period.

“One of the things I like to remind folks about is that if we were sitting at a price level that this industry experienced in 2017, 18, 19, and then suddenly rates corrected to where they are now, we would call it one of the greatest hard markets in living memory,” he said.

“I think anyone that’s describing the current cat environment as soft is not well informed…This remains a very hard market,” noted Williamson.

Williamson noted that Everest is comfortable deploying additional capacity for preferred clients, citing the strength of pricing and the quality of structures.

“Rates are very strong in property cat and I have absolutely no problem deploying incremental capacity for our best clients on well-structured accounts at the rates that we’re receiving today. And the rates, frankly, that I expect to be receiving next year. These accounts are simply very, very well priced,” he said.

On the topic of net probable maximum losses (PMLs), Williamson explained that Everest has increased its net PMLs in response to favourable pricing dynamics and the attractive return profile currently available.

He stated, “It makes sense to take the risks we’re taking, and we still remain well within the risk guidelines that we’ve talked about every quarter with respect to earnings and capital at risk. So, we’re feeling good about that.”

Williamson continued, “Just to break down the PML increase, some of that is certainly growth in our gross book, in both divisions. And then we continue to optimise our hedging in terms of where we’re purchasing our cat bonds, really focusing on managing tail exposures, offset somewhat by growth in assets under management in our Mt. Logan platform, which is doing a terrific job of raising funds.”

He noted that when all of that is balanced out, Everest is making an excellent trade — one he expects to continue into the coming Jan 2026 renewal period.

In addition to strong rates, Williamson emphasised that discipline continued to hold across the property catastrophe market at the mid-year reinsurance renewals.

“Turning to mid-year renewals, property cat rate change met our expectations and risk-adjusted returns for our cat portfolio remain attractive. Importantly, terms and conditions are holding,” he said.

“If you look at both the June 1 and July 1 renewals, our big mid-year renewals, I think it’s a pretty consistent story. At June 1, we obviously had the Florida renewal. Overall, pricing was flat, and generally terms and conditions are not moving, which I think is a terrific sign, and speaks to the underlying discipline in the property cat market. And I think my expectation is certainly that that’s going to sustain itself.”

At July 1, where renewals span a broader mix of global markets, Williamson noted that rates dipped slightly but again stressed that terms and conditions held.

“So, you just see this very consistent view that says that discipline in the market is going to be sustained, and again, it informs our expectations as we go forward. And that’s why we grew at the 6.1 renewal. And in the pockets of the 7.1 renewal that we really liked, we also were able to deploy more capacity at really attractive margins,” he said.

On the trade-off between capital return and growth in the property cat market, Williamson said Everest is doing both, and has the capital strength to do so.

“I will say, though, that if you look at the expected return from property cat, pretty much everywhere in the world, and certainly in our peak zones like southeast wind storm or California earthquake, and Japan, etc, the ROEs are still very, very strong, and I think would even exceed the attractiveness of repurchase. So, that’s why we’re continuing the strategy of pursuing both actions.”