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Everest Group, Ltd. is a Bermuda-based reinsurance and insurance organization with a global presence, serving clients across more than 100 countries . The company operates through two main segments: Reinsurance and Insurance, with the Reinsurance segment being the larger contributor to the company's gross written premiums . Everest Group offers a wide range of reinsurance and insurance products, including treaty and facultative reinsurance, as well as accident and health, specialty casualty, and professional liability insurance . The company's strategic focus is on maintaining a diversified portfolio and leveraging its financial strength to sustain its leadership position in targeted markets .
- Reinsurance - Provides treaty and facultative reinsurance on a pro rata or excess of loss basis, covering lines such as property, catastrophe, casualty, marine, aviation, engineering, professional lines, credit and surety, motor, agriculture/crop, and political violence.
- Insurance - Offers a broad suite of products, including accident and health, specialty casualty, other specialty, professional liability, property/short-tail, and workers' compensation, with specialty casualty being the largest contributor.
What went well
- Everest is achieving strong growth and profitability in property catastrophe reinsurance, becoming a preferred lead market, securing preferential terms, and growing their property book by over 25% at the June 1 renewal , .
- Strategic international expansion into markets with lower social inflation risk is allowing Everest to target upper middle market and large account business, focusing on lines with better loss ratios and less competition , .
- Disciplined underwriting and rate increases ahead of loss trends in casualty lines, with rate increases in commercial auto liability, general liability, and excess casualty averaging the mid- to high-teens, and an overall rate increase of over 10%, excluding workers' compensation and financial lines , .
What went wrong
- Increased exposure to property catastrophe risks: Everest is shifting its portfolio towards short-tailed businesses, including more CAT property exposures, which could heighten the company's risk profile and potentially lead to significant losses in the event of major catastrophes.
- Rapid international expansion may expose the company to execution risks and adverse selection: Everest is entering new markets internationally, including Italy, and there are concerns about adverse selection as they compete with entrenched legacy carriers, which could lead to higher than expected losses.
- Reduction in casualty premiums may impact diversification and future growth: The company is shedding $300 million of casualty business in the reinsurance segment, which might suggest challenges in this area and could impact their diversification and future profitability.
Q&A Summary
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Insurance Combined Ratio Delay
Q: Is the combined ratio target delayed to 2025?
A: Management confirmed that the 90% to 92% combined ratio target in the Insurance segment is now expected in the back half of 2025, with gradual improvement over the coming quarters. The delay is due to the pace of shifting the business mix towards short-tail lines and scaling up international operations. -
Liability Reserves Adequacy
Q: How are liability reserves for 2020-2023?
A: The company reviews reserves quarterly and maintains prudent loss picks, particularly for U.S. casualty lines experiencing high single-digit loss trends due to social inflation. Management feels comfortable with current reserves, noting no material changes in the first half of the year. -
Business Mix Impact on Ratios
Q: Is mix shift affecting loss and expense ratios?
A: The shift towards short-tail and specialty lines—with first-party business growing over 30% and specialty over 25%—is expected to lower both the loss and expense ratios over time as earned premium catches up, especially from international operations. -
International Expansion Strategy
Q: How is international growth progressing?
A: International business is growing strongly with loss ratios in the 50s, benefiting from lower social inflation compared to the U.S. The company focuses on upper middle market and large accounts, avoiding adverse selection by hiring top local talent and targeting underserved segments. -
Property CAT Reinsurance Growth
Q: Why is property CAT reinsurance growing?
A: The company achieved a lead market position in a hard market, with property CAT XOL reinsurance premiums growing 30% year-over-year. By being constructive and providing capacity when others pulled back, they secured favorable terms, strong pricing, and benefited from clients seeking stable partners. -
Casualty Reinsurance Strategy
Q: Why shed $300 million in casualty renewals?
A: Due to competitive market conditions and inadequate ceding commissions in casualty pro rata reinsurance, the company reduced exposure by over $300 million in the first half of the year, focusing on more profitable areas and maintaining disciplined underwriting. -
Rate Increases vs Loss Trends
Q: Are rates keeping up with loss costs?
A: Excluding workers' comp and financial lines, rates increased 10%, outpacing high single-digit loss trends. Including all lines, rates are up 6%-7%, consistent with past quarters, ensuring rate adequacy amid rising loss costs. -
Attritional Loss Ratio Improvement
Q: What's driving loss ratio improvement?
A: The 70 basis points year-over-year improvement in the attritional loss ratio is primarily due to the shift in business mix towards short-tail lines and increased international premium, rather than changes in loss picks. -
Timing of Combined Ratio Improvement
Q: When will the combined ratio improve?
A: The Insurance segment is expected to maintain a combined ratio of 93%-94% for the remainder of the year, with gradual improvement leading to the 90%-92% target in the second half of 2025. -
Capital Exposure to Catastrophe Risks
Q: Has CAT risk appetite changed?
A: Despite growth in property exposures, the company's CAT risk appetite remains unchanged, staying within their stated risk limits. They are carefully managing exposures, focusing on non-peak zones and thoughtful attachment points to avoid attritional CAT losses.
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You have delayed your target combined ratio of 90%-92% for the Insurance segment to 2025; what specific challenges have caused this postponement, and what measures are you implementing to ensure you meet this goal on the new timeline? ,
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After shedding over $300 million in casualty pro rata renewals due to competitive market conditions and concerns about social inflation, how do you plan to compensate for this reduction in premiums, and what impact do you expect on your overall growth and profitability? , , ,
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As you expand into new international markets where established local carriers dominate, how are you addressing the potential risks of adverse selection, and what strategies are in place to ensure profitable growth in these regions? ,
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Considering the higher catastrophe losses this quarter compared to last year's period, what steps are you taking to strengthen your risk management practices to mitigate the financial impact of such events in the future? ,
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Despite achieving rate increases exceeding loss trends in casualty lines, the Insurance segment's overall growth remains modest at 6%; what factors are limiting growth in this segment, and how do you plan to accelerate it while maintaining underwriting discipline? ,
Q2 2024 Earnings Call
- Issued Period: Q2 2024
- Guided Period: Remainder of 2024 and into 2025
- Guidance:
- Insurance Combined Ratio: Expected to be in the range of 93% to 94% for the remainder of 2024. Aim to achieve a combined ratio of 90% to 92% in the back half of 2025 .
- Total Shareholder Return (TSR): Focused on achieving industry-leading financial returns with a target TSR objective for 2024, 2025, and 2026 .
- Expense Ratio: Expected to trend downward in 2025 and approach a more normalized level of 15% over time .
- Insurance Growth: Plan to optimize the mix of business, focusing on short-tail and specialty lines, with a 93% to 94% insurance combined ratio quarterly run rate for the rest of 2024 .
- Investment Income: Expect continued strong performance from the investment portfolio, with a reinvestment rate well above 5% .
Q1 2024 Earnings Call
- Issued Period: Q1 2024
- Guided Period: FY 2024
- Guidance:
- Combined Ratio for the Insurance Segment: Guided for a reported combined ratio of 90% to 92% for the full year 2024 .
- Total Shareholder Return (TSR): Confidence in generating a TSR in excess of 17% on an ongoing basis as part of their 3-year plan .
Q4 2023 Earnings Call
- Issued Period: Q4 2023
- Guided Period: FY 2024 to FY 2026
- Guidance:
- Operating Return on Equity (ROE): Achieved an operating ROE of 23.1% for 2023, with confidence in maintaining strong returns .
- Total Shareholder Return (TSR): Annualized TSR was 26.5% for 2023, aiming to continue delivering strong shareholder returns .
- Market Conditions and Growth: Expect strong market conditions with excellent growth opportunities in Reinsurance and Insurance segments .
- Underwriting and Investment Strategy: Plan to leverage market position to grow in attractive lines of business and enhance the investment portfolio .
- Reserve Management: Actions taken to strengthen reserve position .
- Portfolio Management: Focus on maintaining a high-quality, diversified book of business .
Q3 2024 Earnings Call
- Issued Period: Q3 2024
- Guided Period: N/A
- Guidance: The documents do not contain information from the Q3 2024 earnings call for Everest Group Limited, so specific guidance metrics are unavailable.
Recent developments and announcements about EG.
Corporate Leadership
CEO Change
Jim Williamson has been appointed as the permanent CEO of Everest Group, effective January 22, 2025. He was previously the Acting CEO and has held senior roles within the company since 2020, including EVP and Group COO. The Board of Directors expressed confidence in his leadership to guide the company forward.
Board Change
Everest Group, Ltd. has announced the appointment of Jim Williamson as President and Chief Executive Officer, effective immediately. This decision was made by the company's Board of Directors.
Leadership Change
Jim Williamson has been appointed as the Acting Chief Executive Officer (CEO) of Everest Group, Ltd. ("Everest") and has also joined the Board of Directors. This change was disclosed in a filing on January 8, 2025. Williamson will receive an additional stipend of $25,000 per month during his tenure as Acting CEO, effective January 13, 2025.
Leadership Change
Who is leaving? Juan C. Andrade, President and CEO of Everest Group, is stepping down to pursue a new role as CEO of a financial services firm.
Why? Andrade is leaving to take on a new opportunity in the financial services sector.
Who is stepping up? Jim Williamson, previously Executive Vice President and COO, has been appointed Acting CEO and a member of the Board of Directors, effective January 8, 2025.
CEO Change
Juan C. Andrade, the President and CEO of Everest Group, Ltd., has resigned to pursue another opportunity. Jim Williamson has been appointed as the Acting CEO effective immediately as of January 5, 2025. Williamson, who joined Everest in 2020, has extensive experience in the insurance industry and has held various senior positions at Everest and other companies.
Board Change
Key Update: On January 8, 2025, Jim Williamson was appointed to the Board of Directors of Everest Group, Ltd. (EG) as part of his promotion to Acting Chief Executive Officer. He replaces Juan C. Andrade, who resigned to pursue another opportunity.
Board Change
Mike Karmilowicz has resigned from his role as Chairman of Everest Global Insurance, effective December 2, 2024 .
Financial Reporting
Auditor Changes
Everest Re Group, Ltd. Auditor Change
On June 2, 2023, Everest Re Group, Ltd. announced a change in its independent registered public accounting firm. The company dismissed PricewaterhouseCoopers LLP (PwC) and appointed KPMG LLP as the new auditor for the fiscal year ending December 31, 2024. PwC will continue to serve as the auditor for the fiscal year ending December 31, 2023. The change followed a competitive selection process and is subject to shareholder approval at the 2024 annual general meeting .