Everest Group NYSE: EG reported third-quarter operating earnings of $7.62 per share, supported by attritional underwriting income, record investment income and accelerated share repurchases, while the insurer also strengthened casualty reserves and retained much of the favorable development in short-tail lines.
President and CEO Jim Williamson said the company generated a year-to-date annualized total shareholder return of 14.2% and continued to prioritize underwriting margins and balance-sheet strength over premium growth. Gross written premium across Everest’s core businesses totaled $3.7 billion, down about 4% year over year on a comparable basis, reflecting reduced exposure in casualty lines.
“Prioritizing bottom-line results over top-line production is imperative,” Williamson said, citing what he described as increasing signs of irresponsible behavior in some insurance and reinsurance markets.
Reserve strengthening increases conservatism
Everest reported $268 million of net unfavorable reserve development in the quarter, driven largely by casualty reinsurance reserve strengthening. The company added approximately $600 million to gross casualty reserves in its reinsurance treaty business during the period, following $200 million of strengthening in U.S. casualty during the second quarter.
Chief Financial Officer Elias Habayeb said the majority of the third-quarter casualty strengthening related to underwriting years 2022 and earlier, though Everest also carried its updated assumptions into more recent underwriting years. About two-thirds of the $600 million increase was tied to North American casualty, with a concentration in traditional casualty quota-share business and some casualty excess-of-loss business, he said.
Management said its reserve position was more than $850 million above actuarial central estimates as of Sept. 30. Habayeb said Everest increased both its actuarial central estimate and the margin above that estimate, with the central estimate rising by a few hundred million dollars during the quarter.
The company said it did not give explicit reserve credit for underwriting actions unless they were evident in the data. It also did not adjust for indications of faster case reserving in casualty business, despite enhanced claims analytics showing evidence of that trend. Favorable development in short-tail lines was largely retained rather than released.
“Our philosophy is to book our loss picks conservatively and allow the lines to mature,” Habayeb said. He added that the company expects this approach to position it to release reserves as business matures, though he did not project near-term favorable development.
Reinsurance premiums decline as Everest pulls back in casualty
Reinsurance treaty gross written premium was $2.7 billion, down approximately 6% year over year on a comparable basis. Casualty premiums fell 18%, while property premium declined slightly as growth in property proportional business was offset by lower catastrophe and non-catastrophe excess-of-loss writings.
The reinsurance treaty combined ratio included 11.3 points of adverse prior-year development and 12.8 points of catastrophe losses. Pre-tax catastrophe losses in the segment totaled $277 million, net of estimated recoveries and reinstatement premiums, primarily tied to the Colombia earthquake, Middle East events and smaller European and Canadian losses.
Despite those items, the reinsurance treaty attritional loss ratio improved to 56.3% in the quarter. Williamson said the company continues to find opportunities in global specialty and financial-risk portfolios, where it sees attractive risk-adjusted returns.
Looking toward the Jan. 1, 2027 renewals, Williamson said Everest expects continued competition, particularly in catastrophe reinsurance and peak zones. He said current catastrophe rate levels still support strong expected returns, but Everest may become more selective as pricing compresses.
On casualty reinsurance, Williamson described the company’s view as “fairly bearish,” citing social inflation, legal system abuse in the U.S., increasing competition and persistently high ceding commissions. He said Everest does not plan to pursue growth in that portfolio until conditions improve materially.
Wholesale and specialty business posts margin improvement
Everest’s Global Wholesale & Specialty segment recorded gross written premium growth of more than 3% from a year earlier. International premium grew at a double-digit rate, led by financial lines, marine and other specialty classes, partly offset by aviation.
The segment’s attritional loss ratio improved by 90 basis points to 60%, which management attributed to risk selection, underwriting actions and business mix. Its combined ratio was 97.3%, including $25 million of pre-tax catastrophe losses related primarily to the Colombia earthquake and mid-sized Middle East losses.
Williamson said the company is targeting growth in markets and product categories where it has specialized capabilities, including construction-related risks associated with data centers and manufacturing, renewable energy, engineering and parametric products. He said the company’s focus remains on margin rather than top-line expansion.
Everest expects Global Wholesale & Specialty to produce combined ratios in the mid- to high-90s in the near term, Habayeb said.
Record investment income and increased shareholder returns
Net investment income reached a quarterly record of $634 million, including $144 million of income from the private-equity portfolio. Everest’s book yield increased to 4.6%, below its approximate 5.1% new-money yield, while the investment portfolio’s average credit quality remained AA-.
Book value per share excluding unrealized gains and losses on available-for-sale fixed maturities rose to $414, increasing both sequentially and from the prior year.
Everest repurchased approximately 1.3 million shares for $474 million during the quarter at an average price of $374 per share. Including dividends, the company returned about $550 million to shareholders in the quarter and more than $1.4 billion year to date. Since the beginning of 2025, its share count has declined approximately 13%.
Habayeb said Everest views $300 million of quarterly share repurchases as a floor and expects to exceed that amount when warranted by balance-sheet strength and earnings generation. The company’s payout ratio over the past four quarters was approximately 92%.
Management also said the transition of its commercial and retail insurance business to AIG remains on track. The legacy segment created a modest underwriting earnings drag in the third quarter, while the overall portfolio continues to run off with an average duration of roughly three to four years. Habayeb noted that a $30 million quarterly transition-services payment from AIG expired at the end of the third quarter.
About Everest Group (NYSE:EG)
Everest Group, Ltd. is a global insurance and reinsurance company that provides property and casualty coverage to businesses, institutions, and other insurers. Its operations focus on assuming and managing risks through reinsurance, as well as offering insurance products in selected specialty and commercial markets.
The company's reinsurance business supports insurers across lines such as property, casualty, specialty, and other risks. Through its insurance platform, Everest provides coverage for commercial customers and specialty exposures, including property, casualty, professional liability, and other products that may vary by market.
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