While Everest Re Group reported only a 2.2 percent jump in net written premiums in its second-quarter earnings report, an analyst and the group's chief executive saw some positive signs about the market buried beneath the meager growth figure.
In particular, Analyst William Wilt of New York-based Morgan Stanley, highlighted 18 percent premium growth in Everest's U.S. reinsurance book, contrasting it with declines reported by other reinsurers.
"That market is proving to be a more reasonable market than I would have guessed," said Everest Chairman and Chief Executive Officer, Joseph V. Taranto, during a conference call this morning.
In particular, Mr. Taranto said the company saw reinsurance opportunities emerging in the catastrophe reinsurance segment as Florida homeowners, commercial property and cat reinsurance rates all climbed at July 1.
"Finally, we saw a response to the four hurricanes that happened last year," he said.
U.S. reinsurance premiums, at $318.2 million, represents roughly 30 percent of Everest's overall $1.1 billion net premium total.
Countering the growth in the U.S. reinsurance sector, Everest reported double-digit premium declines for its U.S. insurance and specialty segments–representing $330 million in net premiums together.
Executives explained that the specialty premium decline of 12 percent resulted from a retrenchment from medical stop loss business. For U.S. insurance other than specialty, premiums fell nearly 14 percent, but actually jumped 25 percent excluding the group's California workers' compensation book.
In California, workers' comp "legislative reforms seem to be working quite well, reducing costs to the point where you can justify lower rates," Mr. Taranto said, adding, however, that good results in recent years have drawn competition to the market.
He also said that even companies writing the same amount of business they wrote last year in California comp would see a 30 percent or greater decline in premiums on rate alone this year. "That market has gone from what was a terrific market to…an OK market. We'll do some of that business," but less this year, and less in 2006, he said.
Turning to discuss the property-casualty market overall, he said: "It's pretty good."
"It's an underwriters' market," he said, contrasting the market a few years back, when "you didn't have to be that sharp as an underwriter and you still would have made a buck" on most lines of business.
Today's market "is more realistic," he said. "If it stayed this way forever, I'd be thrilled," he said, suggesting that focused underwriters who pick and choose deals correctly can still have reasonable top line growth.
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