(Reuters) -Everest Group ( EG ) on Wednesday reported a 71% drop in first-quarter profit, hit by underwriting losses tied to California wildfires and other catastrophe-related claims.

California, whose stringent insurance regulation has long frustrated insurers, experienced a series of wildfires earlier this year, resulting in several fatalities and causing estimated economic damage as high as $250 billion.

Reinsurers have benefited from a favorable environment owing to increased pricing, boosting both premium growth and margins. 

Factors such as elevated natural catastrophe losses, social inflationary concerns and climate change have led to sustainable profit margins, enhanced profitability and stronger financial positions, improving overall market stability and resilience for reinsurers such as Everest.

However, over the past year, hurricanes, wildfires and other large-scale U.S. natural disasters have weighed on earnings for P&C insurers, including Everest, which is considered one of the world's largest P&C reinsurers.

The insurer reported a pre-tax catastrophe loss of $472 million, primarily due to the California wildfires. This loss is net of reinsurance and reinstatement premiums.

The results mirror those of peers Arch Capital and Chubb, who also reported a drop in first-quarter profit this month as industry-wide catastrophe losses offset operational gains.

Everest Group ( EG ) reported a combined ratio of 102.7% for the quarter, up from 88.8% a year earlier, indicating the insurer paid out more in claims than it earned in premiums.

The company's net written premiums in its reinsurance segment fell 4.5% to $2.81 billion for the quarter.

A significant portion of the company's investment portfolio consists of bonds, which return better yields in a high-interest rate environment.

The Bermuda-based company's investment income rose to $491 million from $457 million in the prior year.

Net income fell to $210 million, or $4.90 per share, in the three months ended March 31, from $733 million, or $16.87 per share, a year earlier.

Shares of the company are down 1% so far this year, compared to a fall of 5.1% in the benchmark S&P 500 index.