Everest (US:EG)2025-07-31 13:02Financial 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% [5][20] - The combined ratio was 90.4%, reflecting strong underwriting profit of $385 million [5][20] - Net investment income was robust at $532 million, supported by favorable private equity performance [7][26] Business Line Data and Key Metrics Changes - Reinsurance generated a profit of $436 million, up $133 million from the prior year, with a combined ratio of 85.6% [7][22] - Insurance recorded an underwriting loss of $18 million with a combined ratio of 102% and an attritional loss ratio of 68.7% [12][24] - Gross written premiums for reinsurance increased by 1.6% in constant dollars, while insurance premiums decreased by 3.3% [20][23] Market Data and Key Metrics Changes - Casualty premiums declined by 7.3%, while primary casualty rates are rising [9][13] - International insurance business grew at a rate of 23% this quarter, with improving margins [16] - Property premiums increased by approximately 8% year over year, with property cat XOL growing over 15% [8][15] Company Strategy and Development Direction - The company is focused on reshaping its portfolio, particularly in the U.S. casualty business, while expanding in property, Asia, and Latin America [10][11] - The strategy includes a one renewal approach in U.S. casualty to improve portfolio quality and profitability [12][19] - The company aims to optimize its share in attractive programs with core seeds, leveraging deep relationships [11][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 [12][18] - The company is optimistic about the future, focusing on executing across both businesses and managing the cycle with discipline [19] - Management noted that the current pricing environment remains favorable, with strong returns expected from property cat [44][62] Other Important Information - The company repurchased $200 million worth of shares in the second quarter, returning $400 million to shareholders year to date [17][28] - The operating income tax rate was 16.4%, slightly below the working assumption of 17% to 18% for the year [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 [32][33] Question: Can you provide insights on accident and health growth? - The company is focusing on accident business growth, particularly in business travel and participant accident coverage, which has shown strong performance [39][41] Question: What are the competitive dynamics in the reinsurance renewals? - Management noted that pricing was flat in June renewals and slightly down in July, but terms and conditions remained stable, indicating discipline in the market [42][43] Question: How is the company managing its expense ratio? - Management expects the expense ratio to improve post-remediation of the casualty book, with a focus on scaling the international business [120][121] Question: What is the company's stance on PMLs and capital deployment? - Management believes the current market is still hard, and they are comfortable deploying capital at attractive rates while remaining within risk guidelines [62][63] Question: How is the company addressing the California workers' comp market? - The company has reduced its exposure in California and is only writing comp when part of a broader portfolio, focusing on overall market recovery [112][113]