Everest (US:EG)2025-07-31 13:00Financial Data and Key Metrics Changes - The company reported net operating income of $734 million and an annualized operating return on equity (ROE) of nearly 20% for the second quarter of 2025 [5][21] - The combined ratio was 90.4%, reflecting strong underwriting performance and light catastrophe losses [21][22] - Net investment income was strong at $532 million, supported by favorable private equity performance [5][27] Business Line Data and Key Metrics Changes - Underwriting profit totaled $385 million with a combined ratio of 90.4% [5] - Reinsurance generated a profit of $436 million, up $133 million from the prior year, with a combined ratio of 85.6% [7][23] - Insurance recorded an underwriting loss of $18 million with a combined ratio of 102% [13][24] - Gross written premiums for reinsurance increased by 1.6% in constant dollars, while insurance gross written premiums decreased by 3.3% [21][24] Market Data and Key Metrics Changes - The company experienced a 1.1% increase in reinsurance gross written premiums, while insurance premiums declined by 3.3% [21][24] - International insurance business grew at a rate of 23% this quarter, with improving margins [17] - Property premiums increased by 5% globally, with 21% growth internationally, offsetting a 2% decline in North America [16] Company Strategy and Development Direction - The company is focused on reshaping its portfolio, particularly in the U.S. casualty business, and is committed to disciplined growth [12][19] - The strategy includes expanding in U.S. property, Asia, and Latin America while reducing exposure in U.S. casualty [12][19] - The company aims to optimize its share in attractive programs with core clients, leveraging its strong relationships [12][19] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the reinsurance business's ability to deliver strong results regardless of external conditions [13] - The company is optimistic about the quality of its casualty portfolio improving, which is expected to lead to more consistent profitability over time [19] - Management noted that the current market conditions are favorable for deploying capital into well-structured accounts [58][59] Other Important Information - The company repurchased $200 million worth of shares in the second quarter, totaling $400 million year-to-date [18][28] - The operating income tax rate for 2025 was 16.4%, slightly below the working assumption of 17% to 18% [27][28] Q&A Session Summary Question: What is the outlook for the underlying loss ratio in insurance? - Management indicated that the risk margin is necessary due to legal uncertainties, and the mix of business will impact the overall loss ratio positively over time [31][32] Question: How is the company approaching international investments? - Management acknowledged that international growth is lumpier but emphasized leveraging existing infrastructure to improve the expense ratio over time [34] Question: What are the dynamics in the accident and health market? - The company is focusing on accident coverage rather than health, with strong growth in accident business both domestically and internationally [37][38] Question: Can you elaborate on the reinsurance renewals and competitive environment? - Management noted that pricing was flat during renewals, with terms and conditions holding steady, indicating discipline in the market [40][41] Question: How does the company view the current pricing environment? - Management clarified that while rates have softened slightly, the market remains strong, and they are comfortable deploying capital at current pricing levels [58][59] Question: What is the company's strategy regarding PMLs? - Management stated that they are increasing net PMLs due to favorable pricing dynamics and are confident in the risk-reward trade-off [59][60] Question: What is the status of the London court decision? - Management believes the issue is resolved barring any unexpected legal shifts, and it does not relate to previous reserve actions [95][96]