Everest (US:EG)2025-10-28 13:00Financial Data and Key Metrics Changes - The group gross written premium was $4.4 billion, down 1% from last year, reflecting targeted re-underwriting in insurance and careful portfolio mix management in reinsurance [5][13] - The combined ratio for the quarter was 103.4%, with an attritional combined ratio of 89.6%, demonstrating the strength of the underlying book [5][13] - Operating income was $316 million compared to $630 million last year, primarily due to reserve adjustments [5][13] - Net investment income increased to $540 million for the quarter, driven by higher assets under management and strong alternative asset returns [18][19] Business Line Data and Key Metrics Changes - The reinsurance business reported gross written premium of $3.2 billion, down 2% year over year, with a combined ratio of 87%, improving year over year due to lower CAT losses and favorable prior year development [5][15] - The global specialties business produced almost $500 million of gross written premium and over $100 million of underwriting income in the quarter [6][7] - In the insurance segment, gross premiums written increased 2.7% in constant dollars to $1.1 billion, with strong growth in specialty and accident and health lines offset by actions in U.S. casualty lines [16][17] Market Data and Key Metrics Changes - Market conditions in the reinsurance business, particularly in CAT-exposed lines, are expected to remain favorable through the January 1, 2026 renewal [7] - The company is a preferred partner in the reinsurance market, with no barriers to continued attractive capital deployment [7] Company Strategy and Development Direction - The company is exiting global retail insurance to focus on core reinsurance and specialty insurance businesses, which are expected to yield improved returns on capital [3][11] - A comprehensive adverse development cover has been established for the North America insurance division, covering reserves for accident years 2024 and prior, to ensure past underwriting decisions do not overshadow current performance [4][12] - The company aims to operate in businesses with clear competitive advantages and strong economics, applying a standard for capital deployment [4][9] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the long-term prospects of core reinsurance and wholesale specialty operations, emphasizing a disciplined approach to capital allocation and risk management [4][9] - The management team is focused on creating a more agile and profitable company, with a strong balance sheet and significant excess capital to deploy [9][10] Other Important Information - The company expects to take a pre-tax non-operating charge in the range of $250 million to $350 million associated with the transaction of selling renewal rights to AIG, recognized over 2025 and 2026 [11][12] - Share repurchases are viewed as an attractive opportunity, with plans to resume meaningful buybacks going forward [20] Q&A Session Summary Question: What is the CAT load for the specialty business? - Management indicated that the CAT load is quite modest and very low relative to the overall insurance division burden [26][27] Question: What does the $2 billion of insurance gross written premiums mean in terms of capital liberation? - Management expects substantial capital release over time, with the renewal process taking place over the next 12 months [28][34] Question: What is the plan for returning capital to shareholders? - Management views capital repatriation and share buybacks attractively, especially given the stock's trading below book value [37] Question: How confident is management about the casualty reserves in the reinsurance business? - Management expressed confidence that the casualty reserves in the reinsurance business will hold up, noting the distinction between the performance of the insurance and reinsurance portfolios [48][50] Question: What are the pricing conditions for property reinsurance going forward? - Management characterized the environment as still favorable, despite potential pricing pressure, and emphasized a disciplined approach to underwriting [54][56]