Everest (US:EG)2025-10-28 13:02Financial 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 [7][15] - Operating income was $316 million compared to $630 million last year, primarily due to reserve adjustments [7][15] - The combined ratio for the quarter was 103.4%, with an attritional combined ratio of 89.6%, indicating strong underlying performance [7][15] Business Line Data and Key Metrics Changes - The reinsurance business reported gross written premiums 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 [7][8] - The global specialties business produced almost $500 million of gross written premium and over $100 million of underwriting income in the quarter, with expectations for continued growth [8][10] - In the insurance segment, gross premiums written increased 2.7% in constant dollars to $1.1 billion, driven by strong growth in specialty lines, offset by actions taken in U.S. casualty lines [17][18] 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 [8][10] - The company is seeing increased competition in the property CAT market, but believes pricing remains attractive despite potential decreases [56][58] 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 better returns on capital [4][12] - A comprehensive adverse development cover has been established for the North America insurance division, covering reserves for accident years 2024 and prior, to enhance capital flexibility [5][14] - The company aims to operate in businesses with clear competitive advantages and strong economics, while continuing to evaluate opportunities for diversification [6][10] Management Comments on Operating Environment and Future Outlook - Management expressed confidence in the long-term prospects of the core reinsurance business and wholesale/specialty insurance operations, despite challenges in the U.S. casualty market [5][10] - The management team emphasized a disciplined approach to capital deployment and risk management, particularly in light of social inflation and legal system challenges [9][18] - The company expects to unlock more capital for shareholder returns over time, particularly through the recent strategic transactions [39][40] Other Important Information - The company reported net investment income of $540 million for the quarter, driven by higher assets under management and strong alternative asset returns [19][20] - Shareholders' equity ended the quarter at $15.4 billion, with a book value per share of $366.22, reflecting a 15.2% improvement from year-end 2024 [21][22] Q&A Session Summary Question: What is the CAT load for the specialty business? - Management indicated that the CAT load for the specialty business is quite modest and low relative to the overall insurance division burden [29] Question: What is the expected capital release from the $2 billion retail business transferred to AIG? - Management expects substantial capital release over time, with benefits from non-renewing premium and enhanced reserves contributing to capital relief becoming visible in the latter half of 2026 [35] Question: How does the company view capital repatriation and share buybacks? - Management views share buybacks as attractive, especially given the stock's trading below book value, and expects to resume meaningful repurchases going forward [39] Question: What is the confidence level regarding casualty reserves in the reinsurance business? - Management expressed confidence that the casualty reserves in the reinsurance business will hold up, emphasizing the distinction between the performance of the insurance and reinsurance portfolios [51][52] Question: How does the company plan to diversify its operations? - Management stated that diversification opportunities will be evaluated carefully, focusing on businesses with clear competitive advantages and strong economics [81]