Everest (EG) - 2025 Q1 - Quarterly Report

PART I FINANCIAL INFORMATION Financial Statements This section presents the unaudited consolidated financial statements for Q1 2025, highlighting a significant decrease in net income and growth in total assets and shareholders' equity Consolidated Financial Statements The consolidated financial statements for Q1 2025 show a significant decline in net income and diluted EPS, driven by increased losses, despite growth in total assets and shareholders' equity Consolidated Balance Sheet Data | Financial Metric | March 31, 2025 (in million USD) | December 31, 2024 (in million USD) | | :--- | :--- | :--- | | Total Assets | $58,132 million | $56,341 million | | Total Liabilities | $43,993 million | $42,466 million | | Total Shareholders' Equity | $14,140 million | $13,875 million | Consolidated Statements of Operations Data | Income Statement Item | Q1 2025 (in million USD) | Q1 2024 (in million USD) | | :--- | :--- | :--- | | Premiums Earned | $3,852 million | $3,652 million | | Total Revenues | $4,263 million | $4,133 million | | Incurred Losses and LAE | $2,893 million | $2,237 million | | Net Income | $210 million | $733 million | | Diluted EPS | $4.90 (in USD) | $16.87 (in USD) | - Net cash provided by operating activities decreased to $928 million in Q1 2025 from $1.1 billion in Q1 2024[14] - The company declared dividends of $2.00 per share in Q1 2025, up from $1.75 per share in Q1 2024 It also purchased $200 million of treasury shares in Q1 2025, compared to $35 million in the prior-year period[12] Notes to Consolidated Interim Financial Statements These notes provide detailed disclosures on the investment portfolio, loss reserves, segment performance, and the impact of the new Bermuda corporate income tax - The fair value of fixed maturity securities available for sale increased to $31.8 billion as of March 31, 2025, from $28.9 billion at year-end 2024[27] - Net investment income for Q1 2025 was $491 million, an increase from $457 million in Q1 2024, primarily driven by higher income from fixed maturities[39] - Gross reserves for losses and LAE grew to $31.5 billion at the end of Q1 2025 from $29.9 billion at year-end 2024 The increase was attributed to earned premium growth and $449 million more in current year catastrophe losses compared to Q1 2024[69] - The Bermuda government enacted a 15% corporate income tax effective January 1, 2025 However, recent OECD guidance may restrict the utilization of certain deferred tax benefits, creating uncertainty about the impact on the Company's deferred tax assets[121] Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses the Q1 2025 financial performance, attributing the decline in net income to increased catastrophe and attritional losses, despite a strong financial condition and capital returns Financial Summary The Q1 2025 financial summary highlights a sharp decline in net income and a deteriorated combined ratio due to higher losses, despite a slight increase in shareholders' equity Key Financial Metrics | Metric | Q1 2025 (in million USD) | Q1 2024 (in million USD) | % Change | | :--- | :--- | :--- | :--- | | Gross Written Premiums | $4,391 M | $4,411 M | (0.5)% | | Net Income | $210 M | $733 M | (71.4)% | | Combined Ratio | 102.7% | 88.8% | +13.9 pts | - The increase in incurred losses was primarily due to a $449 million rise in current year catastrophe losses and a $208 million increase in current year attritional losses[139] - Catastrophe losses in Q1 2025 totaled $534 million, mainly from the Southern California wildfires ($512 million) and the Myanmar earthquake ($22 million) This compares to $85 million in Q1 2024, which was related to the Baltimore bridge collapse and U.S. storms[139] - Shareholders' equity increased by $264 million from year-end 2024, driven by net income, unrealized appreciation on investments, and foreign currency adjustments, partially offset by $200 million in share repurchases and $85 million in dividends[152] Segment Results Both the Reinsurance and Insurance segments reported underwriting losses in Q1 2025, driven by increased catastrophe and attritional losses, leading to higher combined ratios Reinsurance Segment Performance | Reinsurance Segment | Q1 2025 (in million USD) | Q1 2024 (in million USD) | | :--- | :--- | :--- | | Underwriting Gain (Loss) | ($96 million) | $347 million | | Combined Ratio | 103.3% | 87.3% | - The Reinsurance segment's performance was heavily impacted by $523 million in catastrophe losses, primarily from the Southern California wildfires and the Myanmar earthquake[163] Insurance Segment Performance | Insurance Segment | Q1 2025 (in million USD) | Q1 2024 (in million USD) | | :--- | :--- | :--- | | Underwriting Gain (Loss) | ($5 million) | $71 million | | Combined Ratio | 100.5% | 91.9% | - The Insurance segment's higher attritional losses were primarily due to higher loss selections in casualty lines, partially offset by changes in the mix of business[169] Financial Condition, Liquidity and Capital Resources The company maintains a robust financial condition with increased investments and loss reserves, strong capital levels, and active capital management despite underwriting losses - Gross loss and LAE reserves increased to $31.5 billion at March 31, 2025, from $29.9 billion at year-end 2024[179] - The company's capital levels for its main operating subsidiaries, Bermuda Re and Everest Re, significantly exceeded regulatory targeted capital as of December 31, 2024[190] - In Q1 2025, the company repurchased 574,000 common shares for $200 million and paid $85 million in dividends[192] - Net cash flow from operating activities was $928 million for Q1 2025, down from $1.1 billion in Q1 2024[194] Quantitative and Qualitative Disclosures About Market Risk The company's primary market risks are interest rate risk and foreign currency risk, with sensitivity analysis showing potential impacts on unrealized appreciation Interest Rate Sensitivity Analysis | Interest Rate Shift | Fair Value Change from Base (%) | Change in After-tax Unrealized Appreciation (in million USD) | | :--- | :--- | :--- | | +100 bps | (3.3)% | ($962 million) | | -100 bps | 3.3% | $962 million | - The company's primary foreign currency exposures are to the Canadian Dollar, Singapore Dollar, British Pound Sterling, and the Euro[208] Controls and Procedures Management concluded that the company's disclosure controls and procedures are effective, with no material changes to internal control over financial reporting during the period - The Chief Executive Officer and Chief Financial Officer concluded that the company's disclosure controls and procedures are effective as of March 31, 2025[210] PART II OTHER INFORMATION Legal Proceedings The company is involved in various lawsuits and arbitrations in the ordinary course of its business, with no other material litigation reported - The Company is not a party to any material litigation or arbitration outside of the ordinary course of business related to its insurance and reinsurance agreements[211][212] Risk Factors No material changes to the risk factors from the most recent Form 10-K were reported - No material changes to the risk factors from the most recent Form 10-K were reported[213] Unregistered Sales of Equity Securities and Use of Proceeds This section details the company's share repurchase activity during Q1 2025, including shares purchased under the publicly announced program Share Repurchase Activity | Period | Total Shares Purchased | Average Price Paid (in USD) | Shares Purchased Under Plan | | :--- | :--- | :--- | :--- | | Jan 2025 | — | — | — | | Feb 2025 | 276,667 | $336.77 | 247,128 | | Mar 2025 | 352,698 | $357.56 | 326,872 | | Total Q1 | 629,365 | — | 574,000 | Other Information The company disclosed the termination of CEO James Williamson's Rule 10b5-1 trading plan in February 2025 - On February 13, 2025, CEO James Williamson terminated his Rule 10b5-1 trading plan, which was originally set to expire in August 2025[218] Exhibits This section lists the exhibits filed with the Form 10-Q, including employment agreements, certifications, and XBRL data files - Exhibits filed include an employment agreement for CEO James Williamson, Section 302 and 906 certifications, and XBRL data files[220]