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Everest Re Group Ltd. reported a fourth-quarter profit of $373.6 million on Tuesday, up 4.6% compared with the same period last year, as the Bermuda-based insurer and reinsurer released reserves of more than $200 million.
For the fourth quarter, premiums earned were $1.44 billion, up 5% compared with the same period in 2015. The combined ratio deteriorated to 82.1% from 78.9% for the quarter.
During the quarter, Everest released $204.9 million in prior year reserves and reduced prior year catastrophe loss estimates by $18.4 million, which was partially offset by $168.6 million in catastrophe losses in the quarter. Most of the reserve releases related to reinsurance business. Everest increased asbestos reserves and reserves for insurance construction defect claims.
For the year, Everest’s profit increased 1.9% to $996.3 million. Premiums earned inched up less than 1% to $5.32 billion and its combined ratio deteriorated to 87% from 85.1%.
Everest has aggressively expanded its insurance business over the past couple of years as reinsurance rates continue to fall. During a conference call with analysts, John Zaffino, president of Everest’s North America insurance division, said “2016 was a transformative year for the Everest global insurance operations.”
Global insurance gross written premiums increased 21% to nearly $1.6 billion for 2016, excluding Heartland Crop Insurance Inc., which Everest sold in August.
“Further contributing to the strong top-line performance were nearly a dozen new underwriting divisions that steadily contributed throughout the year. For the full year, these new divisions … contributed nearly 7% of total 2016 gross written premiums,” he said.
However, the combined ratio for insurance operations for the year was 116%, excluding Heartland, due to prior year development of run-off books, principally related to construction defect insurance business, and significant catastrophe events, Mr. Zaffino said.
The insurance market remains challenging for insurers as most lines of coverage see decreases or only small increases, but there are signs that the property insurance market in particular may be bottoming out, he said.
“The elevated frequency of natural catastrophe losses are acting as a resistance to continued large decreases,” Mr. Zaffino said.
Everest Re Group Ltd. named New York-based Marty Scherzer head of its structured solutions unit, Everest said in a Tuesday statement.