Executive Summary

Everest took decisive reserve strengthening actions in Q4 2024 totaling $1.7B pre-tax, primarily in U.S. casualty across Insurance and Reinsurance, and formed a new “Other” segment to isolate non-core/run-off exposures .
Management withdrew detailed forward guidance and introduced a new target objective to deliver mid-teens total shareholder return over the cycle; they emphasized prudence via added risk margins above actuarial central estimates .
Reinsurance favorable development in well-seasoned property and mortgage largely offset U.S. casualty reserve strengthening in that segment, underscoring embedded margin and portfolio construction quality .
The Insurance division is undergoing aggressive remediation of U.S. casualty, with management targeting completion by end-2025 and acknowledging a “just over 100” accident-year combined ratio starting point for 2024; mix shift toward short-tail and international is expected to be a tailwind .

What Went Well and What Went Wrong

What Went Well

Favorable reserve development in Reinsurance property and mortgage lines (~70/30 split) fully offset U.S. casualty reserve strengthening, reflecting embedded margin and strong cedent quality; management added $180M risk margin on top of actuarial estimates for conservatism .
International insurance expansion performing “at an exceptional level,” with excellent technical margins and improving expense ratios as scale builds; leadership highlighted strong broker/client demand across Europe, LatAm, and APAC .
Clear, decisive pivot in U.S. casualty underwriting: non-renewed 33% of U.S. casualty GWP in 2024, aiming to remediate each account in one renewal or exit; management reported strong rate gains (e.g., auto low-20s, GL/excess mid-teens in Q3) and a pipeline of marquee loss-sensitive accounts .

What Went Wrong

Elevated social inflation drove higher loss emergence in U.S. casualty lines, necessitating $1.278B adverse development in Insurance and $684M strengthening in Reinsurance U.S. casualty; “Other” segment added $425M adverse development tied to sports & leisure, A&E, and discontinued lines .
Management cited increased frequency of high-severity claims, litigation funding, plaintiff tactics, and erosion of tort reform as structural drivers of social inflation; underwriting choices (large guaranteed-cost programs, exposure to habitational/sports) magnified impact .
Expense ratio expected to be “stickier” in 2025 as casualty premiums shrink during remediation and growth in other areas offsets; near-term mixed growth dynamics may pressure premium scale and expense leverage .

Financial Results

Note: The preliminary 8-K did not disclose Q4 2024 revenue or GAAP EPS; Wall Street consensus from S&P Global was unavailable due to API limits. Use prior-quarter operational metrics for trajectory. Q4 comments include accident-year insurance combined “just over 100” as a starting point .

Metric	Q2 2024	Q3 2024	Q4 2024
Gross Written Premiums ($USD Billions)	$4.7	$4.4	Not disclosed
Group Combined Ratio (%)	90.3%	93.1%	Not disclosed
Reinsurance Combined Ratio (%)	88.9%	91.8%	Not disclosed
Insurance Combined Ratio (%)	94.4%	97.1%	Not disclosed; mgmt indicated Insurance accident-year combined “just over 100”
Net Investment Income ($USD Millions)	$528	$496	Not disclosed
Operating EPS ($USD)	$16.85	$14.62	Not disclosed

Q4 2024 Reserve Action Details (pre-tax):

Segment	Item	Q4 2024 Impact ($USD Millions)
Reinsurance	U.S. Casualty reserve strengthening	$684 adverse
Reinsurance	Property and Mortgage favorable development	$684 favorable
Insurance	U.S. Casualty PYD strengthening	$1,072 adverse
Insurance	U.S. Casualty 2024 Accident Year	$206 adverse
Other	Sports and Leisure	$315 adverse
Other	Asbestos & Environmental	$54 adverse
Other	Other (run-off excess/umbrella)	$35 adverse
Other	U.S. Casualty 2024 Accident Year	$22 adverse
Group Total	Pre-tax reserve actions	$1,704 adverse

Preliminary FY 2024 Results:

Metric	FY 2024 Range
Net Income ($USD Billions)	$1.3 – $1.4
After-tax Operating Income ($USD Billions, non-GAAP)	$1.2 – $1.3
Net FX income (expense) ($USD Billions)	$0.1

KPIs and Rate Environment (trend context):

KPI	Q2 2024	Q3 2024	Q4 2024
Insurance average rate increase ex WC & fin lines	~10%	11%	Not disclosed
Casualty rate acceleration (GL / excess / auto)	Mid- to high-teens	Auto low-20s; GL & excess mid-teens	Not disclosed
Group attritional loss ratio	58.8%	58.5%	Not disclosed

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Insurance Combined Ratio run-rate	H2 2024	93–94% run-rate	Company will no longer provide detailed forward guidance	Withdrawn
Insurance Combined Ratio target	H2 2025	90–92% target	No detailed guidance; focus on TSR target	Withdrawn
Total Shareholder Return objective	Over the cycle	Not previously specified	Mid-teens TSR target	Introduced
Segment reporting	Q4 2024 onward	Two segments: Reinsurance & Insurance	Added “Other” segment, recast prior periods in financial supplement	Reclassified

Earnings Call Themes & Trends

Topic	Q2 2024 (Previous Mentions)	Q3 2024 (Previous Mentions)	Q4 2024 (Current Period)	Trend
Social inflation / U.S. casualty	Elevated loss trend; prudent loss picks; cautious in certain lines	Rate acceleration; shedding underperforming casualty; reserve deep dive planned	$1.7B reserve actions; explicit social inflation drivers; risk margins added	Intensifying prudence and remediation
Reinsurance property/mortgage	Strong growth and margins; improved terms/attachments	Property/mortgage favorable development; firming expected post storms	Favorable development offsets casualty; embedded margin cited	Positive, resilient
International insurance build-out	New operations (MX/CO/AU); short-tail growth	Double-digit growth; licenses all up and running	Performing exceptionally; scale lowering expense ratios	Scaling well
Guidance policy	Combined ratio targets (Insurance)	93–94% run-rate H2; 90–92% back-half 2025	Withdraw detailed guidance; mid-teens TSR over cycle	Strategic pivot
Expense ratio / scale	Investment phase elevating Insurance expense ratio	Expense ratio elevated near term; scale to reduce	“Stickier” expense ratio in 2025 during remediation	Near-term headwind
CAT exposure/pricing	Adequate pricing; within risk appetite	Firming expected post Milton/Helene; demand up	Reinsurance team execution highlighted; January 1 renewal bullish tone	Supportive backdrop

Management Commentary

“Our decisive actions this quarter follow a comprehensive reserve review… our casualty reserves are positioned with a risk margin above the actuarial central estimate.” – Jim Williamson, President & CEO .
“We will no longer be providing detailed forward guidance… Our target objective is to deliver a mid-teens total shareholder return over the cycle.” – Jim Williamson .
“In reinsurance, we strengthened our U.S. casualty reserves… $504 million related to the actuarial central estimate… plus an additional $180 million of risk margin… We also recorded approximately $684 million of net favorable reserve development, primarily from well-seasoned property and mortgage reserves.” – Mark Kociancic, CFO .
“Reserve strengthening of $425 million [Other segment]… $315 million from the sports and leisure business… $54 million from asbestos and environmental… Consistent with our approach… risk margin of approximately $119 million above the actuarial central estimate.” – Mark Kociancic .
“International insurance… technical margins… excellent and growing scale is bringing down expense ratios.” – Jim Williamson .

Q&A Highlights

Insurance accident-year combined ratio: Management framed the 2024 Insurance accident-year combined ratio starting point as “somewhere around 100, a little over 100,” with sustained casualty loss picks until underwriting actions flow through reserves; mix shift to short-tail provides tailwind .
Expense ratio outlook: Expect a “stickier” Insurance expense ratio in 2025 as casualty premiums run off, offset by growth elsewhere; remediation to complete in 2025 improving book composition .
Risk margin methodology: Claims liabilities booked at management’s best estimate above actuarial central estimates to reflect prudence given casualty risk environment; insurance margins “high end,” reinsurance “upper part” of actuarial spectrum .
Reinsurance favorable development: Material favorable development in property/mortgage (well-seasoned) offset U.S. casualty charge; risk margin added in reinsurance U.S. casualty to decisively address risk environment .
Strategy execution: One-renewal remediation standard, willingness to exit unprofitable accounts, focus on loss-sensitive programs and rounded account solutions; strong broker support despite tough asks .

Estimates Context

S&P Global consensus for Q4 2024 EPS and revenue was unavailable to us due to API limits; therefore, we cannot provide an estimates comparison at this time (Wall Street consensus via S&P Global data unavailable).
Implications: Sell-side models will need to incorporate the $1.7B pre-tax reserve actions (with explicit risk margins) and the formation of the “Other” segment for recast segment disclosures; management’s withdrawal of detailed guidance shifts focus to demonstrated TSR trajectory and segment execution .

Key Takeaways for Investors

The $1.7B reserve fortification decisively addresses U.S. casualty risk, with added risk margins signaling conservative posture; Reinsurance’s embedded margin in property/mortgage provides ballast .
Insurance remediation is aggressive and near-term margin headwinds (expense ratio, accidental-year combined “just over 100”) should improve as mix shifts to short-tail/international and legacy casualty runs off through 2025 .
Withdrawal of detailed guidance is a notable narrative shift; the new mid-teens TSR target over the cycle becomes the north star for performance assessment .
Segment reclassification adds transparency: “Other” isolates sports & leisure run-off, A&E, and discontinued programs; investors should monitor reserve development cadence there (average tail 3–4 years) .
Reinsurance franchise remains a strength with lead market positioning, favorable development, and expected firming into renewals; supports capital generation and optionality .
Social inflation remains structurally elevated; underwriting discipline (loss-sensitive programs, pricing above trend, attachment management) and risk margins are central to sustaining profitability .
Near-term trading: Reserve actions and guidance withdrawal are key catalysts; medium-term thesis hinges on execution of casualty remediation, continued property/specialty/international growth, and investment income supporting TSR .

EVEREST GROUP, LTD. (EG)·Q4 2024 Earnings Summary