Juan C. Andrade
President and Chief Executive Officer at Everest Re Group
Thank you, Jon, and good morning, everyone. Thank you for joining us today.
During the third quarter, Everest continued to make progress towards the strategic plan objectives detailed in the June Investor Day presentation. We achieved outstanding top-line growth across both our insurance and reinsurance businesses, continued to improve underlying profitability for our insurance segment, continued diversification of our reinsurance franchise, demonstrated strong expense discipline, delivered excellent investment income results, opportunistically reduced our cost of capital, and returned capital to our shareholders. We continued to execute our plans regardless of the external environment.
Before I get into the results, I want to first acknowledge the human cost of the catastrophes in the quarter. For those people whose lives have been affected around the world by the wind, fire, flood, and earthquake experienced in the quarter, these are life-changing events, and this is always top of mind for us at Everest. As insurers and reinsurers, we are here as these communities work to rebuild, recover and hopefully emerge even stronger. And for Everest, this is when our ability to execute really matters. Turning to the results for the third quarter. The strength and resilience of our fundamentals continues to prove our strategy is working and our execution is on pace.
As we shared during the June Investor Day, we measure our success against the three-year strategic plan with a simple goal: create value and drive meaningful shareholder returns over time. This starts by ensuring that our reinsurance and insurance businesses supported by our investment portfolio are doing exactly what we said they would do, drive forward momentum to fuel profitable growth. At our core, Everest is a growth company, focused on sustained profitability with a well-diversified earnings stream.
Beginning with our Insurance division, which delivered record-high quarterly top-line growth, marking the second consecutive quarter of over $1 billion in gross written premium and the lowest attritional combined ratio to date. We continue to prove our relevance in the market and our ability to execute. There's significant runway ahead of us to grow profitably, and we're capitalizing on it. We're well on our way to growing into the world-class specialty global insurer we've set out to be.
Reinsurance delivered double-digit growth, and we continued to further diversify our book across lines and geographies around the world, a key part of our disciplined strategy to reduce volatility. This discipline was evident in the previously announced third-quarter pretax net catastrophe losses of $635 million from Hurricane Ida and the July European floods, events totaling over $40 billion in industry-insured losses. Everest does not immune to the cat losses, but the cumulative, deliberate and purposeful actions we have taken to reduce volatility have changed our company's risk profile.
We have taken a disciplined approach to diversifying our book and reducing reliance on a single peak cat zone. For example, we have reduced our PMLs for Southeast wind to almost half of what they were in 2017 from 11% to 5.9% of equity. We have scaled back our total property cat XOL premium, which comprises 17% of our total reinsurance premium today versus 26% at the end of 2017. Our book is better positioned and less volatile today than it was two years ago. We will continue to thoughtfully manage our risk profile to maximize returns.
Turning to investments, performance here was excellent. We continued to optimize our portfolio and its earnings power as a key diversifier of our earnings. Prudent capital management is another important part of our strategy. Just after quarter-end, we completed an opportunistic $1 billion debt raise at a 3.125 coupon. This is very efficient long-term capital. In addition, we continue to opportunistically repurchase shares throughout the quarter for a total of $200 million year-to-date. If the engines of our strategy, our core underwriting platforms supported by our investment portfolio, our transformation efforts focused on operational excellence and underwriting discipline are the fuel for those engines. During a quarter when the industry sustained meaningful losses from catastrophes, this discipline made a material difference in our financial outcome. It is about commitment to consistent execution and building a company for the long term.
Throughout the third quarter, we saw the benefit of this commitment manifest in several ways. We continue to prove we can play offense in a favorable market to pivot and respond to changing market conditions. We're executing on a value proposition that continues to be well received by our customer and broker partners. We have the talent and capabilities to deepen distribution relationships and diversify our presence in key markets around the world. We have established our purpose-driven culture as a differentiator. We also see it in the top industry talent who have joined the Everest and who viewed the company as a great environment for development and opportunity. With that, let's dive into more detail around our results this quarter at the group and segment level.
Beginning with our group results. Growth in the third quarter continued to be strong and diversified across both of our businesses. We grew gross written premiums by 25%, a barometer of our market relevance. The increase in premiums was a product of our ability to capitalize on improving economic conditions, driving exposure growth and new business opportunities, the favorable double-digit rate environment, and high renewal retention. The combined ratio of 112 includes $635 million of pretax net catastrophe losses from Hurricane Ida and the European floods during the quarter. The group attritional combined ratio of 87.9 reflects strong underlying profitability in insurance and our continued diversification in reinsurance, coupled with ongoing prudence in loss pick selection.
Catastrophe losses during the third quarter resulted in an underwriting loss of $323 million. Net investment income for the quarter was again outstanding, up 25% to $293 million, and the expense ratio also improved this quarter. The meaningful progress this quarter is not a sprint, it's about consistency day by day, quarter by quarter, being thoughtful and strategic about developing the portfolio, prudently managing expenses, and pursuing overall operational excellence. These actions all add up. The cumulative effect is evident in our year-to-date results and a few are worth highlighting now. Year-to-date gross written premiums are up 24%.
Our businesses continued to drive strong growth and momentum. We generated close to $1 billion in net income year-to-date. This is a testament to the earnings power of the company. Net investment income year-to-date has more than doubled from $420 million for the period last year to close to $1 billion today. Our expenses continued to improve and the group attritional combined ratio is also trending better year-to-date. Finally, for the nine months, year-to-date, annualized total shareholder return on equity is over 13%.
With that, I'd like to turn to the results in our reinsurance business. We had another excellent growth quarter in our Reinsurance division with gross written premiums up 19%. We strengthened the franchise through underwriting actions to create a more diversified, resilient, and lower volatility business. The growth was broad and diversified. Every geography and targeted line saw continued expansion in the quarter. The combined ratio of 115 includes the impact of third-quarter pretax net catastrophe losses of $555 million from Hurricane Ida and the European floods. Our focused actions to derisk our portfolio are reflected in these results. The share of our book exposed to cat losses has declined.
Diversification is key because the severity and frequency of these events are a reality. We see the impact of climate change in our data, and we take a proactive and scientific approach to how we model and underwrite for it. Our dedicated team of experts continuously assess the signs and integrate its effect on loss cost into our models. This focus will continue to be a key part of our strategy.
Our attritional combined ratio for the quarter was 87%, including an attritional loss ratio of 60. Our attritional loss pick reflects our deliberate and targeted shaping of our portfolio to maximize results. This includes a higher mix of pro-rata structures and an improved balance of property and casualty exposures. These underwriting actions positioned Everest to benefit from the underlying rate increases and improving terms and conditions achieved by our core cedent in the primary market. Combined with continued prudent loss picks, this results in a relatively higher attritional loss ratio but with better long-term risk-adjusted returns on capital.
As you know, the primary market has benefited from multiple quarters of strong rate improvement, a reduction in limits, and the strengthening of terms and conditions. Our strategy of focusing growth on core trading partners means we're benefiting from these effects alongside some of the industry's best underwriters, and we expect strong portfolio economics to emerge.
Risk-adjusted return expectations are improving in every line, in every geography. At the same time, we remain vigilant regarding market trends, including climate change, supply constraints, and social and material inflation. As a result, we continue to hold prudent loss picks.
Finally, Mt. Logan continues to be an important part of our strategy, and we are thrilled to have brought in John Modin as its new leader. Jim Williamson is available to provide additional details during the Q&A.
Now, for our Insurance division, performance continued to be strong with exceptional growth in expanding underlying margins. In the third quarter, we wrote over $1 billion in gross written premium for the second quarter in a row and achieved the highest quarterly growth rate to date at 43%. The growth in Insurance was fueled by a few factors. Number one, we continue to seize opportunities from increasingly favorable economic conditions. Second, we continue to grow through new business and demonstrate our relevance to customers and brokers. Third, we're benefiting from strong retention rates. This coupled with continued favorable, double-digit rate increases is creating the kind of opportunity Everest was built for and that we're poised to capitalize on.
We maintain a strong focus on portfolio management as an important part of our strategy and driver of long-term profitability. We continue to proactively position the company to play offense and react nimbly to market conditions by driving our business mix stores product lines with better rate adequacy and higher long-term margins. Renewal rate increases continued to exceed our expectations for loss trend, up 12% in the quarter, excluding workers' compensation, and up 8%, including workers' compensation, which now represents 12% of our overall portfolio with monoline comp down to only 7%. Rate increases were led by excess casualty, up 17%; and financial lines, up 14%. I've said it before, those who execute best in this business win, and the quality of growth in Insurance and our focused discipline comes down to simply excellent execution.
During the third quarter, we expanded attritional underwriting margins with improvements in loss and expense ratios. This includes a two percentage point improvement in our attritional loss ratio of 62.9% and an improvement to 14 in the operating expense ratio. This resulted in the division's lowest attritional combined ratio to date at 90.3, an almost four-point improvement over the same period last year. The underwriting loss of $17.2 million in the quarter was a result of the impact of pretax net catastrophe losses, including $80 million for Hurricane Ida. However, the year-to-date underwriting profitability shows the indicative strength of our portfolio and ability to execute. We have a long runway in front of us, and we're investing in the talent, the systems, and our worldwide capabilities to make us better, more efficient, and more relevant in the market. Mike Karmilowicz is available to provide additional details during the Q&A.
Reflecting on the progress we made against our long-term objectives, it is evident we're working with the right formula for success. Everest management team has the level of focus, deep expertise, an entrepreneurial approach to take us on our path forward and bring this even further. I am proud of the work we're doing, building on a strong inclusive culture that is constantly delivering for our clients and for our partners, pushing the envelope in digital innovation and our commitments as good corporate citizens. The opportunities are there, and Everest is well-positioned to seize them.
Now I will turn it over to Mark Kociancic to take us through the numbers in more detail. Mark?