Everest Re cites social inflation for a reserve charge of $ 400 million in the previous year


Everest Re is the most recent insurance and reinsurance company to report disaster and COVID losses ahead of fourth quarter results, but Everest’s disclosure on Monday also touched on an increase in damage reserves from the previous year.

“The decisive reserve measures we are announcing today recognize social inflation trends that are affecting the entire US accident market and improve our already strong balance sheet,” said Juan Andrade, President and CEO of ‘Everest Re Group, in a statement announcing that Everest is increasing reserves. of $ 400 million.

The action follows an annual review of all reinsurance and insurance reserves, Everest said, noting that the addition of reserves – which is entirely in the company’s reinsurance segment – represents 3.0% of reserves for net losses as of September 30, 2020.

The strengthening of reserves mainly concerns the long-tail classes for the 2015-2018 accident years, in particular general civil liability, professional lines and automobile liability.

The charge also includes actions on non-disaster real estate lines, mainly for the 2017-2019 accident years and driven by some significant losses on global programs, according to Everest Re’s announcement.

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“We have acted proactively on the portfolios concerned and we have confidence in our portfolio in force. We are optimistic about our future and the profit-making power of our franchise, ”said Andrade.

Everest also announced an estimate of $ 70 million of net disaster losses before tax for the fourth quarter of 2020, net of reinsurance and reinstatement premiums, related to the impact of hurricanes Delta, Zeta, Eta, Iota and the storm. hail from Queensland in Australia. While $ 60 million of that figure falls into the reinsurance segment, the remaining $ 10 million is for insurance.

Everest also estimates the pre-tax net losses from COVID-19 for the fourth quarter of 2020 of $ 76 million primarily for third party lines – $ 56 million in Everest’s reinsurance segment and $ 20 million in the reinsurance segment. insurance.

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In the first nine months of 2020, Everest estimated losses from COVID at $ 435 million.

Everest said 80% of the total COVID supply of $ 511 million was IBNR.

Putting everything together, Everest said net profit for the full year 2020 is expected to be between $ 475 million and $ 525 million, with operating income of $ 275 million to $ 325 million.

Other recent COVID disaster and loss announcements come from Arch Capital and RenaissanceRe.

In an announcement last week, Arch said pre-tax fourth quarter 2020 net catastrophe losses for all of its property and casualty and reinsurance segments would likely drop from $ 155 million to $ 165 million, for hurricanes Delta. and Zeta and other minor global events, such as as well as updated loss estimates for disasters that occurred in the third quarter of 2020. Arch’s COVID estimates are unchanged from the third quarter.

A week earlier, RenaissanceRe estimated that losses due to weather catastrophes in the third and fourth quarters of 2020 would have a net negative impact of approximately $ 170 million on fourth quarter operating results, and that losses related to the COVID-19 pandemic are said to have an estimated net negative impact in the fourth quarter of around $ 175 million.

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RenRe’s COVID estimate primarily relates to $ 165 million in losses in the real estate sector, primarily IBNR for business interruption coverage, with the balance relating to the accident and specialties sector.

RenaissanceRe was due to report on Tuesday.

Travelers, who last Thursday reported a 50% increase in fourth quarter net income to $ 1.3 billion, said its fourth quarter results actually benefited from lower net losses from catastrophes ($ 29 million compared to $ 85 million for the fourth quarter of 2019) and more. net favorable trend in losses the previous year ($ 180 million compared to $ 60 million).

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