Everest Re happily accepts ILS drought to keep newly attained margin

Everest Re won’t lament difficulties in bringing in third party capital to its ILS vehicle Mt. Logan as it is more than happy to keep the reinsurance market’s latest pricing and conditions squarely on its own balance sheet to pad future profits, a key company official said.

“We’ll take that trade all day long, driving return in our reinsurance business,” group COO and head of reinsurance Jim Williamson told his company’s Q4 earnings call. The broad-market shortfall in reinsurance capacity has been a boon at the 1.12 renewals and moving forward, officials have claimed.

Mt. Logan has suffered the same difficulties in raising third party capital as has been seen throughout the ILS industry, and Williamson blames the standard set of difficulties: a multi-year string of heavy nat cat and resulting meagre reinsurance returns plus the plague of trapped capital following major events.

“It’s made it more challenging for us to raise funds at Mt. Logan,” he said.

But assets at Mt. Logan did increase in the fourth quarter, a fact to which management attributed some of the group's ability to hold PMLs steady despite the increase in gross capacity deployment.

The ability to grab the recently padded reinsurance margin will not spell the end of Everest attempts to court investors. Williamson likes his group’s chances on capital markets on account of the proportional/even split in returns Everest takes vis-à-vis its investor partners.

“Our expectation is that Mt. Logan will grow over time,” Williamson added. “That is a key priority for us.”

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