Juan Andrade
President & Chief Executive Officer at Everest Re Group
Thank you, Jon. Good morning everyone and thank you for joining us today. 2021 was a pivotal year of profitable growth and continued momentum for Everest. We finished the year with a strong quarter and achieved record growth in both our franchises, drove expanding margins and solid underwriting profitability and generated exceptional investment income. This led to a $1.4 billion in net income for the year and a milestone 14.7% total shareholder return against the 13% target. These results reflect the strong earnings power of our diversified businesses to create value for our shareholders, even in years of elevated natural catastrophes.
With a more profitable book of business coming out of a well-executed January 1 reinsurance renewal season and expanding global value proposition, a strong balance sheet and exceptional talent, we entered 2022 well positioned to deliver on our strategic objectives. Before I provide details about our results, I want to acknowledge the contributions of my global colleagues this year. 2021 was challenging for our industry. Despite the continued global pandemic and significant climate-driven catastrophes, we advanced our strategic priorities with disciplined execution and delivered first class products and solutions to our customers.
In 2021, we accelerated many of our strategic priorities, building on a discipline foundation that drives greater profitability and less volatility in our business. We make key investments in the people, technology and infrastructure that are optimizing all three of our core earnings drivers; reinsurance, insurance, and investments for superior performance.
First, our underwriting franchises. We continue to build on our market leading position in global P&C reinsurance. As a preferred provider with diverse product offerings and relevant client driven solutions, our insurance franchise is scaling and diversifying, increasing margins, and driving relevance in more markets through a focus underwriting and distribution strategy and an expanding footprint. And the market is responding with increased demand for our products, evidenced by strong growth in both franchises and consecutive quarterly top line records in insurance this year.
Focused execution in 2021 led to a solid underwriting outcome that is particularly meaningful in the context of a $130 billion catastrophe year. Our continued diversification, volatility reduction and disciplined underwriting are yielding profitable returns. A recent example is our success executing a clearly defined and measured strategy into January 1 renewal Everest this year to a focus plan. This resulted in our current portfolio being stronger, more diversified and more profitable. Our commitment to operational excellence and an entrepreneurial model that keeps us agile and responsive to our clients ready to pivot with rapidly changing market conditions is a big part of how we accomplish this.
To this end, we made material inroads in 2021 on our path to becoming a digitally enabled organization through superior data, analytics and technology that are bringing more depth and dimension to how we manage segment and model risk with greater speed and precision.
With regard to investments, performance was excellent in 2021 driven by a prudent approach to optimizing a well-balanced, high credit quality investment portfolio that supports our franchises and helps to drive meaningful returns.
Reflecting on Everest accomplishments in the past year, I am proud of the diverse, inclusive and purpose driven culture that supports everything we do. Our continued emphasis of ESG as a core pillar of our long term strategy was most recently reflected by our decision to become a signatory to the UN principles for sustainable insurance.
Finally, talent drives our performance. Everest is proud to be an employer of choice in our industry and throughout the year we attracted and advanced exceptional talents across the global organization who will help us to drive this next chapter of profitable growth and bring our offering to more customers around the globe.
Let's turn to our financial results for the fourth quarter and the full year 2021. Beginning with our group results. In the quarter, we grew gross written premiums by 25%. Growth was broad and diversified across both segments. In the fourth quarter, we generated $228 million in underwriting profit with a combined ratio of 91.1 and an attritional combined ratio of 87.4 reflecting continued margin expansion in our insurance division.
Turning to the full year 2021, Everest grew gross written premiums 25% setting a new record for our company of over $13 billion. Net written premiums grew 26% year-over-year. The group combined ratio was 97.8% including 1.1 billion in catastrophe losses which is less than 1% of the industry's estimated $130 billion loss in 2021, reflecting our disciplined underwriting and reduced volatility.
The group attritional combined ratio was 87.6 for the year. These results demonstrate the progress against our strategic priorities to continue to optimize the portfolio to drive margin, prudently manage expenses and enhance operational efficiencies.
Let's turn to our reinsurance results. Our reinsurance division had a strong fourth quarter and finished the year solidly with gross written premium exceeding 9 billion, a 25% increase over 2020. Gross written premium growth in the fourth quarter was excellent, up 26%. This growth was broad based and supported by underlying rate increases and the economic growth, increased opportunities with our core trading partners targeted growth on profitable property and casualty programs.
The division generated a $176 million of underwriting profit in the fourth quarter with a combined ratio of 91.5. The attritional combined ratio for the quarter was 86.4 reflecting the continued performance of our portfolio, the successful execution of our strategy to participate in growth and margin improvement in the casualty market and on-going expense discipline.
We ended 2021 with a 98.1 combined ratio and an attritional combined ratio of 86.3. These results reflect our progress in reshaping our risk profile to achieve superior returns. We continue to actively diversify our reinsurance portfolio with an improved balance of property and casualty exposures. We are disciplined and focused about getting paid appropriately for risk. We made meaningful progress advancing these priorities to the January 1, 2022 renewal period that started with a clear and focused strategy with three key objectives.
One, continue reducing volatility in our overall book by decreasing cat exposure and growing less volatile non-catastrophe lines. Two, optimize our property portfolio to maximized returns and three, focused capacity with top underwriters. The breadth of average preferred market position built over decades and strong trading relationships combined with our size and capital gave us a distinct advantage. Our team was precise above where we deployed capital and focused on improving the economics in our property book. We maintain discipline where pricing did not meet our required threshold.
Rate increases were favorable across most property and casualty lines with financial lines and loss effective property lines seeing the highest uptake. For example, loss effective programs in Europe particularly in Germany. Many catastrophe programs were restructured to ensure participation on higher layers.
Despite how late the property renewals came together, there was ample capacity available for most seasons outside of retro and loss impacted aggregate covers. While the casualty market was competitive with upward pressure on ceding commissions, continued underlying rate improvements helped drive better overall economics, notably in casualty quota share.
We successfully achieved targeted growth in our Retail Continental European portfolio across P&C lines as well as our UK excessive loss portfolio. Within property, we reduced our exposure to property retro, lower margin property, pro rata business and working catastrophe layers, while at the same time growing targeted clients at excellent terms. Overall, we meaningfully reduce catastrophe loss potential in our book and achieve gross PML reductions in key peak zones. We have a more profitable and higher margin book. I'm proud of the teams discipline during a dynamic renewable season.
Now a few comments about Mt. Logan. Mt. Logan plays an important role in our long term growth aspirations, and is uniquely positioned given its excellent alignment with the Everest property portfolio. We have a strong pipeline of prospective investors. We remain optimistic about the prospects for Logan and we continue investing in the platform with new products customized to meet investor's objectives.
During the year, we also strengthened our leadership bench and key promotions and hires, in North America, Latin America and elsewhere internationally and in Mt. Logan. These talents, positions and promotions were part of a successful effort to optimize and streamline our structure, which is already benefiting the organization.
In summary, our reinsurance business is better positioned today to support strong underwriting income results, capitalize on market opportunities and further expand our market leadership.
Now lets turn to the insurance division. Insurance had an excellent fourth quarter, delivering both top line growth and bottom line profitability, supported by continued strong underlying performance and progress in the long-term targets outlined in our strategic plan. Insurance growth in the fourth quarter was 21%. We achieved over $1 billion in gross written premium for the third consecutive quarter. This resulted in a record $4 billion in gross written premiums for the year or up 24% over 2020.
The growth in the fourth quarter was influenced by a few factors. First, we continue to benefit from increasing exposures as the economy rebounds. Second, strong renewal retention, favorable market conditions and double digit rate increases across all of our target classes excluding workers compensation where rates are slightly down. Third, sales execution. We deepened and diversified our distribution network and we sharpened our execution with a quantitative and metrics based approach to sales. As a result, we improved our hit ratios by 24% and 32% year-over-year in our retail and wholesale channels respectively. Four, strong new business growth in both retail and wholesale channels, primarily in casualty, professional, and transactional liability along with accidents and health. Partially offsetting the growth was targeted portfolio repositioning in our US property and catastrophe exposed business where we continue to reduce overall volatility and improve margins. This includes on-going portfolio management related to Monoline Workers Compensation, which is now only about 7% of global gross written premiums. We delivered another strong underwriting result with a quarterly combined ratio of 92.8 and an underwriting profit of $52 million.
Our underlying performance was also outstanding. The 90.4 attritional combined ratio is a 3.4 point improvement, compared to the fourth quarter of 2020 and an almost 8 point improvement since 2019. Our loss ratio, commission ratio and operating expense ratios all improved, including a 3.8 point loss ratio improvement for the fourth quarter. We are committed to sustaining this positive momentum and we are sharpening our focus in two key areas to achieve it. First, is proactive cycle management. We are building a diversified business. As I mentioned, we continue to see growth in a number of our specialty lines, and we will grow more profitable classes of business over time. Our diversified product offering and relevance in both the E&S and Retail channels allow us to seize new opportunities in the evolving market.
Second is increased efficiency and scale. For instance we are increasing efficiency by enhancing our claims process to improve productivity, speed and accuracy, resulting in better claims outcomes and higher customer satisfaction. An important part of this our continued investment in advanced tools, such as robotic process automation, artificial intelligence, and natural language processing, which creates greater operational efficiencies and delivers better insights, enabling fact-based decisions and best-in-class customer experiences.
As to scale, we also expanded our footprint in Latin America, Asia, and Europe, where we see opportunity to profitably grow across the $800 billion plus global commercial P&C industry. We have a thoughtful expansion plan outside of North America that brings together existing capabilities, expertise and knowledge to a broader and more global customer base in places where we can grow profitably. Building our company for the future is a marathon, it's not a sprint. I'm very encouraged by the ambition, the tenacity, and the hard work this team consistently demonstrates.
I'm proud of our results but we remain hyper focused on daily execution as we position our company for the future, an agile global company focused on providing exceptional service and risk solutions to our clients, a company that is respected for its influence and impact in the marketplace, that follows a strong risk management framework, that delivers consistent and leading returns with a world class global team united by the passion to win.
Now I will turn it over to Mark Kociancic to take us through the numbers in more details.