Everest Reinforces Underwriting Discipline with 89% CR as European Perils Drive Re-evaluation of Cat Models
By The Reinsurance Daily Editorial ·
Everest Reinforces Underwriting Discipline with 89% CR as European Perils Drive Re-evaluation of Cat Models
Everest CEO Affirms Underwriting Discipline Independent of Third-Party Capital
Everest disclosed strong Q2 2026 performance, with its reinsurance division posting $3.4 billion in gross written premium. The group’s combined ratio was a profitable 89%, even after absorbing approximately $200 million in catastrophe losses. During the earnings call, CEO Juan Andrade stated that the company’s underwriting strategy and risk appetite are not influenced by the availability of third-party capital. Instead, vehicles like Mt. Logan Re are deployed tactically to manage volatility and offer clients broader solutions, rather than to alter the fundamental economics of the portfolio. This "own the risk" philosophy is presented as a core tenet, ensuring that Everest's balance sheet, not transient capital, dictates its underwriting logic.
We don't change our underwriting logic or our risk appetite, depending on the availability or non-availability of third-party capital.
European Carriers Re-evaluate Wildfire, Secondary Peril Models Amidst Record Heat
Intense and widespread heatwaves across Southern Europe are compelling carriers to reassess their exposure to secondary perils, particularly wildfire. Previously viewed as a peril primarily associated with North America and Australia, wildfire is now a material threat to continental European portfolios. Early industry loss estimates for recent events are circulating in the range of $4 billion to $5 billion. Underwriters and model vendors are scrambling to update their analytics; some carriers have reported that updated climate assumptions have driven a 46% increase in modeled average annual losses for specific Mediterranean regions. This is triggering urgent reviews of pricing, aggregate deductibles, and hours clauses for property cat treaties renewing at January 1.
GlobalData Identifies Supply Chain Cover as Critical Amid Geopolitical Strain
Demand for supply chain insurance is accelerating as geopolitical instability and climate events expose critical economic vulnerabilities. A new analysis from GlobalData projects the market will exceed $5 billion in GWP by 2030, driven by a fundamental shift in perception from a niche coverage to a balance sheet necessity. Insurers have seen a 20.6% increase in inquiries for this cover over the last twelve months. Underwriting performance is improving, with aggregate loss ratios tightening to 41.1% as carriers refine policy language and leverage better data. Capacity is being deployed with caution, favoring named-peril structures and specific contingent business interruption (CBI) extensions over broad, all-risk forms that have proven volatile in the past.
Agent Sentenced in $88,000 Commission Fraud Scheme
A former insurance agent in the Eastern US has been sentenced to jail and ordered to pay $36,500 in restitution for a premium fraud scheme. The agent fabricated policies to generate more than $88,000 in unearned commissions. While the scale of this specific case is small, it reflects a persistent source of leakage for carriers that rely on delegated authority. Industry associations estimate that producer and agent fraud costs the regional P&C market upwards of $43 million annually. The case underscores the need for robust validation and clawback mechanisms within MGA and broker compensation agreements, particularly as carriers seek to grow through these channels.
Key Takeaways
- With European models showing a potential 46% increase in wildfire losses for some zones, underwriters should challenge cedent pricing adequacy on low-attaching cat layers, mirroring Everest's disciplined approach of not using third-party capital to subsidize under-priced risk.
- The convergence of European secondary peril losses (approaching $5 billion) and heightened supply chain risk (a market growing at 20.6%) demands a portfolio-level review of contingent business interruption (CBI) accumulations, especially for clients with hubs in newly identified European wildfire zones.
- The growth of the supply chain market to a projected $5 billion in GWP offers a prime opportunity to deploy third-party capital, allowing carriers to offer meaningful capacity on this volatile line while protecting their own balance sheets, consistent with the strategy outlined by Everest's CEO.
- The struggle to accurately price European wildfire risk, with industry losses now potentially hitting $5 billion, flags a significant model failure risk. ILS capacity will likely remain constrained for this specific peril until model output becomes credible and transparent, creating a potential capacity and pricing dislocation for European property cat programs.
Sources
We don’t change our underwriting logic based on availability of third-party capital: Everest CEO — artemis.bm
Insurers Are ‘Actively Evaluating’ New Catastrophe Risks as Europe Burns — insurancejournal.com
Supply Chain Insurance Is ‘Must-Have’ Cover During Geopolitical Tensions: GlobalData — insurancejournal.com
Former Insurance Agent Sentenced to Jail for Fraud, Again — insurancejournal.com