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Everest Re Group (RE) Unveils Q3 Catastrophe Loss Estimates

Everest Re Group Ltd. RE estimates third-quarter preliminary catastrophe loss of $730 million pre-tax, primarily due to Hurricane Ian and other global catastrophe events. The estimated losses are net of estimated recoveries and reinstatement premiums.

The property and casualty insurer anticipates insured industry losses of around $55 billion for Hurricane Ian and nearly $15 billion for all other global catastrophe incidents.

Everest Re’s Reinsurance segment is estimated to absorb $500 million cat loss from Hurricane Ian and $120 million from all other catastrophe incidents. The Insurance segment is estimated to absorb $100 million cat loss from Hurricane Ian and $10 million loss from other catastrophe events.

The Zacks Consensus Estimate for Everest Re’s third-quarter earnings is currently pegged at a loss of $6.38, indicating a decline of 376.1% from the year-ago quarter reported figure.  We expect estimates to move south once analysts start incorporating loss estimates into their numbers.

Risk Management Solutions (RMS), a world-leading risk modeling and solutions firm, projects total private market insured losses from Hurricane Ian in the range of $53 billion to $74 billion. RMS also anticipates $10 billion losses to the National Flood Insurance Program, stemming from storm tide and inland flooding as a result of the catastrophe event.

Per Verisk, insured losses for Hurricane Ian are projected in the range of $42 billion to $57 billion.

Everest Re remains exposed to catastrophe losses, which cause earnings to fluctuate.  In the first half of 2022, RE incurred $200 million of pre-tax catastrophe losses net of reinsurance and reinstatement premiums. The catastrophe events in the first half of 2022 comprised South Africa flood losses, Canadian and European storms, and second-quarter events in the United States. The combined ratio was 91.7 in the first half of 2022.

The property and casualty insurer targets low 90s combined ratio over the long term. Everest Re reconfirmed the group combined ratio in the range of 91% to 93% for 2022 as well as for 2023.

Everest Re’s active catastrophe management process that deploys modeling and establishes risk limits to control catastrophic exposure on both a probable maximum loss and aggregate basis is expected to provide some respite.

Shares of this Zacks Rank #4 (Sell) property and casualty insurer have rallied 2.1% year to date against the industry’s decline of 5.2%. Continued solid performance of Reinsurance and Insurance segments, traditional risk management capabilities coupled with a well-balanced portfolio mix and capital adequacy should help the stock retain the momentum.

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Zacks Investment Research


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You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Q3 Catastrophe Loss Estimates of Other P&C Insurers

Several property and casualty insurers are also coming up with their third-quarter catastrophe loss estimates.

Arch Capital Group Ltd. ACGL estimates pre-tax catastrophe losses in the range of $530 million to $560 million, stemming from Hurricane Ian, U.S. convective storms, Typhoon Nanmadol and the June French hailstorms.

The Zacks Consensus Estimate for Arch Capital’s third-quarter earnings is currently pegged at 91 cents, indicating an increase of 22.9% from the year-ago quarter reported figure.

RenaissanceRe Holdings Ltd. RNR projects losses from certain catastrophe incidents to have a net negative impact of around $650 million. The loss estimate is primarily due to the net negative impact of nearly $540 million from Hurricane Ian.

The Zacks Consensus Estimate for RenaissanceRe’s third-quarter earnings is currently pegged at a loss of $4.18, indicating an increase of 53.4% from the year-ago quarter reported figure.

The Allstate Corporation ALL estimates catastrophe losses, net of reinsurance, to be $763 million, pre-tax.

The Zacks Consensus Estimate for Allstate’s third-quarter earnings is currently pegged at 25 cents, indicating a decline of 66.7% from the year-ago quarter reported figure.


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