By Michael Loney

Feb 3 - (The Insurer) - Everest Group has estimated its Q1 California wildfire loss in the $350mn to $450mn range, and reported that its pre-announced $1.5bn of prior year reserve strengthening pushed its combined ratio for the fourth quarter of 2024 to 135.5 percent.

After markets closed on Monday, Everest said that its pre-tax net catastrophe loss for the California wildfires is estimated to be in the range of $350mn to $450mn for Q1 2025, net of estimated recoveries and reinstatement premiums.

Everest's loss estimate is based on an insured industry loss range of $35bn to $45bn.

The disclosure was made along with the release of the Bermuda-based company’s fourth-quarter results.

Everest reported a net operating loss of $780mn for the quarter compared with net operating income of $1.09bn for the fourth quarter of 2023.

The loss was driven by the $1.5bn net unfavourable development of prior year loss reserves in US casualty lines that was pre-announced by Everest last week.

Everest had also pre-announced it would increase current accident year losses by $229mn in Q4 for the group, comprised of $206mn in insurance and $22mn in “other”.

The operating loss of $18.39 per diluted share for the fourth quarter of 2024 missed the $14.27 loss per share consensus estimate of 15 analysts as per MarketWatch, and compared with operating income per share of $25.18 in Q4 2023.

The pre-tax underwriting loss of $1.39bn for the group compared with underwriting income of $245mn in Q4 2023.

This included underwriting income of $286mn for reinsurance compared with income of $559mn in the prior-year period, and an underwriting loss of $1.3bn for insurance compared with a loss of $216mn in Q3 2023.

Everest’s Gaap combined ratio of 135.5 percent for Q4 2024 included 37.6 points of unfavourable prior year reserve development, 5.8 points of 2024 accident year strengthening, and 5.3 points of catastrophe losses.

This was a 42.3 point deterioration from the combined ratio of 93.2 percent in Q4 2023, which included 4.3 points of catastrophe losses

Q4 2024 included $173mn of pre-tax net catastrophe losses, compared with $143mn in the prior year period.

The combined ratio of 90.4 percent for reinsurance was up 11.8 points from Q4 2023, while the 239.2 percent combined ratio for insurance was up 115.4 points.

The group's attritional combined ratio of 91.6 percent compared with 86.6 percent in Q4 2023, both excluding the impact of profit commissions associated with favourable loss reserve development on mortgage business. Q4 2024 included 5.8 points of 2024 accident year loss reserve strengthening.

Gross written premium (GWP) increased 8.0 percent to $4.67bn in the quarter, compared with $4.32bn in the fourth quarter of 2023.

Reinsurance GWP grew 12.6 percent on a comparable basis - on a constant dollar basis and excluding reinstatement premiums - to $3.29bn, while insurance GWP was down 1.5 percent on a comparable basis to $1.35bn.

“Strong double-digit growth in property and specialty lines across both segments was partially offset by reductions in certain casualty lines,” Everest said.

For the full year 2024, the combined ratio was 102.3 percent, an 11.4 point deterioration from 90.9 percent in 2023.

The attritional combined ratio of 87.6 percent compared with 86.9 percent in 2023, both excluding the impact of profit commissions associated with favourable loss reserve development on mortgage business.

Pre-tax cat losses for the year were $672mn, up from $451mn in 2023.

GWP of $18.23bn for 2024 was up 9.6 percent from $16.64bn in 2023. Reinsurance GWP increased 12.2 percent to $12.94bn while insurance GWP increased 4.0 percent to $5.08bn, both on a comparable basis.

“This was a pivotal year for Everest as we took decisive action to fortify our US casualty reserves, solidify our franchise value, and raise the bar across all facets of the company,” said Jim Williamson, Everest president and CEO.

“Our lead market reinsurance franchise continues to demonstrate its value in the market, as evidenced by another well-executed January 1 renewal. In our insurance business, the significant transformation of our North America insurance platform is well underway.

“We made meaningful progress improving our portfolio, all while taking aggressive underwriting action in US casualty lines,” continued Williamson, who took over as CEO of Everest last month following the departure of Juan Andrade.