Soft reinsurance rates hit Everest Re bottom line

Everest Re Group Ltd. reported a 46.8% drop in first-quarter net income, as foreign currency rates and declining reinsurance rates overshadowed improvement in the Hamilton, Bermuda-based company's insurance business.

The reinsurer on Monday reported first-quarter net income of $171.7 million, a 46.8% drop from the same quarter last year. Total revenue dropped 13.5% to $1.24 billion. Everest Re's earned premiums slid 4.2% to $1.22 billion.

The reinsurer also said its combined ratio deteriorated to 86% from 83.1% in the year-earlier period.

“Against the backdrop of what continues to be significant challenges affecting both investment and underwriting activities, Everest produced strong results with an annualized operating return on equity of 12% for the quarter,” President and CEO Dominic Addesso said in a statement. “While foreign currency headwinds and declining rates are hampering growth in our reinsurance book, we are seeing strong and profitable growth in our insurance book as new initiatives take hold.”

Net investment income for the quarter was $102.5 million, including a $6.2 million loss on limited partnership investments, compared with $122.5 million a year ago.

On a constant dollar basis, Everest Re said its worldwide reinsurance premiums fell 8% during the first quarter, but its insurance premiums increased 11%. A spokesman said the company had $1.35 billion in gross written premiums for the quarter — $977 million in reinsurance and $376 million in insurance.