Everest (US:EG)2025-05-01 12:00Financial Data and Key Metrics Changes - The combined ratio for the quarter was 102.7%, elevated due to catastrophe losses, particularly from California wildfires [5][20] - Total group written premium was $4.4 billion, similar to Q1 2024, with a gross written premium decrease of 2% in constant dollars [6][20] - Operating income for the quarter was $276 million, despite significant catastrophe loss activity [19][20] - The attritional loss ratio increased to 62.2%, a 330 basis point increase year-over-year, driven by aviation losses [21][29] - Shareholders' equity ended the quarter at $14.1 billion, with book value per share at $332.39, reflecting a 3.5% improvement from year-end 2024 [30][31] Business Line Data and Key Metrics Changes - In reinsurance, gross premiums decreased by 1.1% in constant dollars, with property lines showing double-digit increases offset by discipline in casualty lines [22] - Written premium in the insurance segment was down 1.3% year-over-year, with property lines growing 19% and specialty businesses growing 16% [11][24] - The attritional loss ratio in the insurance business was 68.8%, with aviation losses contributing 0.9 points to the ratio [26][29] Market Data and Key Metrics Changes - The reinsurance book shrank marginally at the January 1, 2025 renewal, reflecting 6% property growth offset by cutbacks in casualty [8] - The international insurance business turned a modest profit in the quarter, with strong growth in key markets [14] - Casualty rate increases averaged approximately 20% across commercial auto, general liability, and excess umbrella [13] Company Strategy and Development Direction - The company is focused on growing where risk-adjusted returns meet or exceed thresholds, intentionally shrinking in areas with weak pricing relative to risk [7] - The strategy includes a one-year, one-renewal approach to improve the casualty lines within the insurance division [19] - The company expects to continue repurchasing shares throughout 2025, prioritizing shareholder value [17][32] Management's Comments on Operating Environment and Future Outlook - Management acknowledged the significant impact of catastrophic events on financials but emphasized the importance of supporting communities [5] - The company anticipates moderate catastrophe pricing pressure for the remainder of 2025 but sees ample opportunities for capital deployment at attractive expected returns [8] - Management expressed confidence in the reserve position and the ability to respond to inflationary pressures [16][30] Other Important Information - The company repurchased $200 million of shares in the quarter at an average price of $348 per share [17][32] - Net investment income increased to $491 million for the quarter, driven by higher assets under management [29] - The company has completed a thorough assessment of exposure to new tariff regimes, expecting modest upward pressure on loss cost trends [17] Q&A Session Summary Question: Discussion on growth opportunities in Florida - Management expects the June 1 renewal to be attractive, with potential growth opportunities across both domestic and nationwide carriers [35][36] Question: Competitive market dynamics in specialty lines - Management noted that while competition has increased, there are still significant opportunities in specialty underwriting areas [38][39] Question: Capital capacity for growth and buybacks - Management indicated that there is sufficient capacity to support both growth initiatives and share repurchases [42][43] Question: Pricing actions from underlying primaries - Management confirmed that pricing remains strong, and they are focused on portfolio management and claims handling to ensure expected results [45][46] Question: Clarification on moderate pricing pressure in the market - Management explained that while pricing is moderating, expected returns remain attractive, allowing for continued capital deployment [50][54] Question: Impact of California wildfire losses on financials - Management stated that the majority of wildfire losses are in reinsurance, and any recoveries would benefit the company, although they are taking a cautious approach [57][58] Question: Aviation loss details and industry impact - Management estimated industry losses around $1 billion, with their portfolio performing well despite the significant loss [84][85] Question: Reserve review process and expectations - Management clarified that while reserve reviews occur annually, they have increased the frequency of assessing loss trend assumptions [101][102]