Everest Re cedes fewer premiums to Mt. Logan Re, but also fewer losses despite Ian

Global insurance and reinsurance company Everest Re ceded less in the way of premiums written to its Mt. Logan Re Ltd. collateralized reinsurance sidecar-like vehicle in the third-quarter and first nine months of 2022, likely reflecting lower available capital under management.

Mt. Logan Re Ltd., which is Everest Re’s main third-party capital management play and a key source of retrocessional flexibility for the company, remains core to its business.

In the last year, Mt. Logan Re has had less in the way of available assets under management available to deploy into fresh transactions, which has reduced the amount of premiums it has been able to assume from its parent, as we reported after the first-half of the year.

The company has an appetite to grow Mt. Logan Re, while at the same time the third-party capital venture is a core component of the firm’s ongoing efforts to lower its catastrophe exposures, so we expect it will continue to build-out as deployable capital rises again and Mt. Logan could play an important role for the company moving into 2023.

Over the three-months ended September 30th 2022, Everest Re ceded $60 million in premiums to Mt. Logan Re, down from $98 million in the prior year period.

For the first nine months of 2022 the written premium figure is reported as $122 million ceded to Mt. Logan Re segregated accounts, down from $226 million in the previous year.

Everest Re explained that, “The higher percentage increases in net written premiums compared to gross written premiums were primarily due to a reduction in business ceded to the segregated accounts of Mt. Logan Re during the three and nine months ended September 30, 2022 compared to the three and nine months ended September 30, 2021.”

While this implies less fresh premium flow into Mt. Logan Re, importantly for its third-party investors Everest Re has also been ceding fewer losses to the vehicle as well.

Everest Re ceded some $82 million of losses and loss adjustment expenses (LAE) to Mt. Logan Re segregated accounts in the third-quarter of 2022, and despite the significant catastrophe losses from hurricane Ian this is lower than the $97 million of losses and LAE ceded to Mt. Logan Re in the prior year.

For the first nine months, the figure rises to $142 million of losses and LAE ceded, again down on 2021’s $192 million.

Again, the reduction in losses ceded will also be related to the lower assets managed, but the fact it’s stayed down even after hurricane Ian is perhaps evidence of an adjusted risk profile in 2022 as well.

Everest Re has been working to reduce and remodel its own catastrophe exposure, a process that over time could see Mt. Logan Re becoming even more important to the company, as the third-party reinsurance capital it can provide could be critical in enabling Everest Re to keep a more significant role in global property cat markets without over-exposing its own balance-sheet capital. Perhaps more so than ever around the coming renewals and into 2023.

Also read: Everest Re expanding use of ILS investor capital: Mt. Logan President Modin.