Everest Reports Third Quarter 2023 Results

Everest Group, Ltd. (NYSE: EG), a global underwriting leader providing best-in-class property, casualty, and specialty reinsurance and insurance solutions, today reported its third quarter 2023 results.

Third Quarter 2023 Highlights

• Net Income of $678 million; Operating Income of $613 million driven by continued underwriting margin improvement and strong net investment income generation
• 21.2% Net Income ROE and 19.2% Operating Income ROE; Total Shareholder Return of 24.5% annualized
• $4.4 billion in gross written premium with year-over-year growth of 23.4% in constant dollars as reported for the Group, 32.7% in constant dollars when adjusting for reinstatement premiums for Reinsurance and 3.5% in constant dollars for Insurance
• Combined ratios of 91.4% for the Group, 91.0% for Reinsurance and 92.6% for Insurance driven by improved pricing and lower catastrophe losses year-over-year
• Attritional combined ratios of 86.5% for the Group, 84.9% for Reinsurance and 91.0% for Insurance
• Pre-tax underwriting income of $301 million versus a pre-tax underwriting loss of $367 million in the prior year
• $170 million of pre-tax catastrophe losses net of recoveries and reinstatement premiums, driven by a number of mid-sized events globally, versus $730 million in the prior year
• Net investment income improved to $406 million versus $151 million in the prior year third quarter, driven by strong fixed income and alternative investment returns
• Strong operating cashflow for the quarter of $1.4 billion, a company record, versus $1.1 billion in the third quarter 2022

Footnote 1 in header denotes constant currency figure.
Footnote 2 in header denotes gross written premium (“GWP”).

“Everest’s third quarter performance was excellent. We delivered outstanding returns including a near 20% operating return on equity and an annualized 25% total shareholder return,” said Everest President & CEO Juan C. Andrade. "We are leaning into the hard reinsurance market, where favorable conditions and the global flight to quality persist. As a lead market and preferred partner, we are well-positioned for the upcoming January renewals. We continue to expand our global reinsurance portfolio at significantly improved risk adjusted returns. In addition, our primary insurance business continues to generate strong and consistent underwriting income, with a significant year-over-year improvement. Supporting the strong underwriting performance of our two businesses, our high-quality investment portfolio continues to deliver outstanding returns, generating over $400 million in net investment income in the quarter, and over $1 billion year-to-date. We have significant momentum heading into the final quarter of the year, with strong tailwinds and exceptional talent powering our disciplined execution and industry-leading shareholder returns."

Summary of Third Quarter 2023 Net Income and Other Items

• Net Income of $678 million, equal to $15.63 per diluted share versus third quarter 2022 net loss of $319 million, equal to $(8.22) per diluted share
• Operating income of $613 million, equal to $14.14 per diluted share versus third quarter 2022 net operating loss of $205 million, equal to $(5.28) per diluted share
• GAAP combined ratio of 91.4%, including 5.0 points of catastrophe losses versus the third quarter 2022 figure of 112.0%, including 27.4 points of catastrophe losses

The following table summarizes the Company’s Net Income and related financial metrics.

The following information summarizes the Company’s underwriting results, on a consolidated basis and by segment – Reinsurance and Insurance, with selected commentary on results by segment.

Reinsurance Segment – Quarterly Highlights

• Gross written premiums grew 32.7% on a constant dollar basis, when adjusting for reinstatement premiums, to approximately $3.2 billion, a new quarterly premium record for the segment. Growth was broad-based across geographies and lines.
• Growth was driven by 43.9% growth in Property Pro-Rata, 41.2% in Property Catastrophe XOL, 28.8% growth in Casualty XOL, and 19.9% growth in Casualty Pro-Rata, when adjusting for reinstatement premiums, as pricing increases and a flight to quality continue globally.
• Robust pricing momentum continued in the third quarter, with Cat pricing up over 30% with improved terms/conditions.
• Attritional loss ratio improved 160-basis points over last year to 57.5%, and the attritional combined ratio improved to 84.9% versus 86.8% a year ago.
• Pre-tax catastrophe losses fell to $160 million net of estimated recoveries and reinstatement premiums, from $620 million a year ago.

Insurance Segment – Quarterly Highlights

• Gross written premiums rose to $1.2 billion, a 3.5% increase year-over-year in constant dollars, driven by a diversified mix of property and specialty lines, partially offset by lower written premiums in monoline workers' compensation and financial lines.
• Strong underwriting profit of $66 million for the quarter, $196 million year-to-date.
• Pre-tax catastrophe losses were $10 million, net of estimated recoveries and reinstatement premiums, in the quarter versus $110 million in the prior year.
• Expense ratio of 28.2% with continued investment in systems, talent, and our global platform.
• Pricing continues to exceed loss trend.

Investments and Shareholders’ Equity as of September 30, 2023

• Total invested assets and cash of $34.6 billion versus $29.9 billion on December 31, 2022
• Shareholders’ equity of $11.2 billion vs. $8.4 billion on December 31, 2022, including $1.9 billion of unrealized net losses on AFS fixed maturity investments
• Shareholders’ equity excluding unrealized gains (losses) on AFS fixed maturity investments of $13.1 billion versus $10.1 billion on December 31, 2022
• Book value per share of $258.71 versus $215.54 at December 31, 2022
• Book value per share excluding unrealized gains (losses) on AFS fixed maturity investments of $301.76 versus $259.18 at December 31, 2022
• Common share dividends declared and paid in the quarter of $1.75 per share equal to $76 million

This news release contains forward-looking statements within the meaning of the U.S. federal securities laws. We intend these forward-looking statements to be covered by the safe harbor provisions for forward-looking statements in the U.S. Federal securities laws. These statements involve risks and uncertainties that could cause actual results to differ materially from those contained in forward-looking statements made on behalf of the Company. These risks and uncertainties include the impact of general economic conditions and conditions affecting the insurance and reinsurance industry, the adequacy of our reserves, our ability to assess underwriting risk, trends in rates for property and casualty insurance and reinsurance, competition, investment market and investment income fluctuations, trends in insured and paid losses, catastrophes, pandemic, regulatory and legal uncertainties and other factors described in our latest Annual Report on Form 10-K. The Company undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

About Everest

Everest Group, Ltd. (Everest) is a global underwriting leader providing best-in-class property, casualty, and specialty reinsurance and insurance solutions that address customers’ most pressing challenges. Known for a 50-year track record of disciplined underwriting, capital and risk management, Everest, through its global operating affiliates, is committed to underwriting opportunity for colleagues, customers, shareholders, and communities worldwide.

Everest common stock (NYSE: EG) is a component of the S&P 500 index.

Additional information about Everest, our people, and our products can be found on our website at www.everestglobal.com.

A conference call discussing the results will be held at 8:00 a.m. Eastern Time on October 26, 2023. The call will be available on the Internet through the Company’s website at https://www.everestglobal.com/investor-relations.

Recipients are encouraged to visit the Company’s website to view supplemental financial information on the Company’s results. The supplemental information is located at www.everestglobal.com in the “Investors/Financials/Quarterly Results” section of the website. The supplemental financial information may also be obtained by contacting the Company directly.

Everest will host its 2023 Investor Day on Tuesday, November 14, 2023, from 9:30 am to 1:00 pm Eastern Time. A live, listen-only webcast will be available for interested parties at https://vimeo.com/webinars/events/17b74702-5109-4c76-b8d7-4ca9b583d8b6.

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The Company generally uses after-tax operating income (loss), a non-GAAP financial measure, to evaluate its performance. After-tax operating income (loss) consists of net income (loss) excluding after-tax net gains (losses) on investments and after-tax net foreign exchange income (expense) as the following reconciliation displays:

Although net gains (losses) on investments and net foreign exchange income (expense) are an integral part of the Company’s insurance operations, the determination of net gains (losses) on investments and foreign exchange income (expense) is independent of the insurance underwriting process. The Company believes that the level of net gains (losses) on investments and net foreign exchange income (expense) for any particular period is not indicative of the performance of the underlying business in that particular period. Providing only a GAAP presentation of net income (loss) makes it more difficult for users of the financial information to evaluate the Company’s success or failure in its basic business and may lead to incorrect or misleading assumptions and conclusions. The Company understands that the equity analysts who follow the Company focus on after-tax operating income (loss) in their analyses for the reasons discussed above. The Company provides after-tax operating income (loss) to investors so that they have what management believes to be a useful supplement to GAAP information concerning the Company’s performance.

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