Everest reports $70 million Q1 net aviation loss from DC crash

By Michael Loney

May 1 - (The Insurer) - Everest Group has reported $70 million of net aviation insurance losses in the first quarter as a result of the American Airlines jet crash in January.

Everest in its first quarter results reported attritional combined ratios of 90.2% for the group (up from 86.5% in Q1 2024), 87.1% for reinsurance and 99.1% for insurance.

The Washington, D.C. aviation losses, net of recoveries and reinstatement premiums, contributed 2.0 points, 2.4 points and 0.9 points to the group, reinsurance and insurance attritional loss ratios, respectively.

The American Airlines crash on January 29 killed 60 passengers and four crew members after a mid-air collision with a U.S. military helicopter near Ronald Reagan Washington National Airport.

On an investor call on Thursday, Everest president and CEO Jim Williamson said aviation losses in the quarter were consistent with the (re)insurer’s expectations.

“Out of prudence, we added 2.4 points to our overall reinsurance division loss ratio in the quarter to account for our full expected loss,” he said.

Chief financial officer Mark Kociancic said the group attritional loss ratio was 62.2% in Q1, a 330 basis point increase over the prior year's quarter.

He said the increase was largely driven by aviation losses of $70 million, net of recoveries and reinstatement premiums, which contributed 2 points to the attritional loss ratio, as well as its conservative approach to setting initial loss picks in U.S. casualty lines.

When asked by an analyst about industry aviation losses in the first quarter, Williamson said: “Most of the industry loss estimates that I've seen are sort of in the neighborhood of $1 billion. It's not like a major hurricane where you have multiple companies modeling it, et cetera. That's more of a ground-up analysis.”

Williamson said the reinsurance book took the vast majority of that loss but highlighted that this book has “performed extremely well for us over the last several years post the Boeing losses, which is really when we started growing as the market corrected sharply.”

“And knocking wood here, I think we still have a path to turning a profit for that portfolio in 2025 despite the fact that we had this pretty meaningful loss at the beginning of the year,” he said.

Williamson reiterated that Everest’s aviation reinsurance book written out of London was not overexposed to the event.

“We've been very careful to build mainly an excess of loss book… And we are a relatively leading reinsurer in a market that is heavily reinsured. So when you have a catastrophic aviation loss, an airline crash with 60-plus passengers killed, that is going to be a reinsurance event, and it's going to be an excess of loss event.”

He added that there is nothing about the loss that would lead Everest to rewrite its book or approach things differently.

The Insurer was first to report in January that Chubb leads the London placement for the American Airlines all-risk cover and Starr Insurance is the lead on the North American placement.