Everest bemoans challenging market; XL Catlin hit by integration costs
Some of the first sets of third quarter results have started to roll in from re/insurers.
Everest Re made a net profit of $88.6 million in the quarter, a big drop on the $274.9 million it made in the same period a year earlier.
The company’s gross written premiums were $1.7 billion in the quarter, an increase of 3 percent compared to the third quarter of 2014. Eliminating the effects of foreign currency fluctuations, total premiums were actually up 6 percent, the company said.
The reinsurer’s combined ratio for the quarter was 89 percent, compared with 85.7 percent in the third quarter of 2014, an increase the company blamed on incurred losses of $40 million for the Chile earthquake and $60 million for the explosion in the port of Tianjin, China.
Dominic Addesso, chief executive of Everest Re, said: “We are pleased with the results that Everest has achieved thus far this year considering the challenging market dynamics—on both the underwriting and the investment fronts.
“After-tax operating income totalled $755 million through the first nine months of the year, despite a number of industry events, leading to a 14 percent annualised operating return on equity and a 4 percent growth in book value per share. Premium, on a constant dollar basis, was up 4 percent for the year, as we continue to seek out opportunities for profitable growth.”
Meanwhile, XL Catlin also saw a drop in profits, largely due to integration costs associated with its merger with Catlin earlier this year. Its operating net income was $70.8 million for the quarter, a big decrease compared with operating net income of $187.1 million in the prior year quarter. The current quarter includes approximately $55.2 million in integration costs as well as $30.8 million in natural catastrophe losses compared to $29.8 million in natural catastrophe losses in the prior year quarter.
Its overall net income was $27.3 million for the quarter, compared with $72.4 million in the prior year quarter. The combined ratio of its P&C book also deteriorated to 95.3 percent compared with 90.1 percent a year earlier.
Mike McGavick, chief executive of XL Catlin, sai d: “In its first full quarter of combined operations, XL Catlin produced solid results including a 95.3 percent combined ratio, gross written premiums of $2.7 billion and a P&C underwriting profit of $114.1 million. At the same time, our bottom-line results in the quarter were particularly impacted by market events and ongoing expenses related to our integration.
“Our colleagues’ effort to move quickly through our integration continues to be recognised by positive reaction from clients and brokers and the new opportunities we are seeing. We have absolute confidence in the fundamentals of the new company we are building and remain focused on creating value by becoming the most innovative and admired re/insurance company in our industry and feel we are well on our way.”
