Underwriting opportunity is a “commitment”, Everest CEO

As Everest Re Group rebrands itself, by removing the “Re” from its name to transition to be known as just Everest Group, the CEO of the global insurance and reinsurance firm has underscored a “commitment” to the underwriting opportunity.

That’s something the firm has underscored in more than just words in recent days, becoming the sole reinsurance underwriter to announce a significant capital raise in advance of the all-important mid-year renewal season.

As a reminder, Everest launched an equity capital raise this week, initially targeting $1.2 billion of capital, but that was quickly upsized and is now set to provide the firm close to $1.5 billion in new firepower.

The goal with the capital raise is to expand in the existing lines of business Everest underwrites in, which as we reported at the time implies a desire to maximise the mid-year reinsurance renewal underwriting opportunity, while pricing remains hard.

Which reflects a clear commitment at Everest, to take advantage of the underwriting opportunity to the benefit of its shareholders and stakeholders.

Everest is now the company with the clearest commitment to the current underwriting opportunity, having evidenced this through the capital raise.

While we’ve heard of a number of new reinsurance sidecar capital raises that are ongoing, these won’t come close to providing a company the firepower Everest is set to secure.

As we also stated when we reported on Everest’s new capital raise, there is every possibility we see some other capital raises come to light before the mid-year renewals are completed, as others seek to demonstrate a commitment to securing the underwriting opportunity before it wanes.

Because it seems destined to wane, at least to a degree, with the lowering of spreads in the cat bond market and anecdotal commentary on the Florida reinsurance renewals all beginning to imply the market has may already peaked.

While rates are set to rise again in Florida and elsewhere at the June and July reinsurance renewals, it does seem they aren’t rising as much as some had hoped or forecast a few months back.

Which means, if you are going to commit to maximising your participation in what could be one of the best underwriting opportunities in history, given the greatly improved reinsurance rates and terms, it could be now or never.

That’s a bit of an exaggeration, of course, as the opportunity will still be very good later this year. But these mid-years could be the key opportunity, for maximising returns from property reinsurance business at the highest possible rates and with the best terms seen in over a decade.

Of course, for many major reinsurance players the firepower was already there. But for the mid-sized and smaller re/insurers that are always active at mid-year, expanding with capital raises, or third-party capital vehicles right now would be a great way to demonstrate a commitment to the underwriting opportunity, just like Everest has.

Who else is demonstrating a clear commitment to the underwriting opportunity available at this time? We’d say the catastrophe bond market, which has helped sponsors secure more capacity than originally targeted in many cases, while also providing strong price execution, but still securing returns that are higher than any year in at least the last decade.

Everest CEO Juan Andrade said today, in announcing his firm’s rebranding, “At Everest, underwriting opportunity is more than an ideal – it’s the commitment that inspires excellence in everything we do. We continue to advance our strategic objectives as ‘One Everest,’ with the discipline, expertise and agility to create lasting value for all our stakeholders.

“Everest’s new name and stock ticker reflect the evolution of our value proposition, built on five decades of reinsurance leadership and an expanding presence in the global primary insurance market. In today’s heightened risk environment, our hybrid business model, breadth of global capabilities and outstanding talent are more vital than ever.”

It’s going to be intriguing, over the coming weeks and months, to see how other firm’s demonstrate their commitment to this perhaps historic underwriting opportunity, in order to secure a share of the higher returns available for their shareholders and capital providers.