Everest Group Ltd. Q1 FY2025 earnings call

• Acknowledged significant catastrophic events in Q1, combined ratio at 102.7% due to California wildfire and aviation losses.
• Reinsurance: Property lines growing, casualty book shrinking, moderate cat pricing pressure expected for 2025 with ample capital deployment opportunities.
• Insurance: Remediation of U.S. casualty portfolio ongoing, property and specialty lines growing, international business developing well.
• Reserves: Overall reserve position improved, international business strong, North America in line with actuarial estimates, 2025 loss picks include robust risk margin.
• Capital Management: Repurchased $200 million of shares, excess capital supports share buybacks.
• External Environment: Assessed tariff regime impact on loss cost trend, will respond quickly to inflation creep.

Reinsurance: Total premiums increased, with ~16% growth in property lines (8% excluding reinstatement premiums), offset by casualty book cutbacks. Combined ratio was 103.3% in Q1 2025, attritional loss ratio 59.8%. Gross premiums decreased 1.1% in constant dollars. Insurance: Written premium down 1.3% y-o-y. Property lines grew 19%, specialty businesses 16%, while third-party book down 15% due to U.S. casualty portfolio remediation. Attritional loss ratio 68.8% in Q1. Gross premiums written flat at $1.1 billion. Other Segment: Performing in line with expectations, contribution de minimis.

• Moderate cat pricing pressure expected in 2025, but ample opportunities to deploy capital at attractive returns.
• Expect to continue meaningful share repurchases throughout 2025 assuming normal catastrophe activity.
• Mid-year renewals in Florida expected to be attractive, potential growth in demo tech and nationwide partners.

• Catastrophic events (e.g., California wildfires, aviation losses) impact combined ratio.
• Weak pricing relative to risk leads to intentional shrinkage of certain segments.
• Potential inflationary pressure from tariffs or other factors affecting loss cost trend.

Q: Andrew Andersen from Jefferies asked about midyear growth in Florida and competitive reinsurance market.

A: Jim Williamson responded that 06/01 renewal in Florida should be attractive, with potential growth in demo tech and nationwide partners; reinsurance market is becoming incrementally competitive but still has opportunities in specialty areas like engineering, parametric, marine, and aviation.

Q: Alex Scott from Barclays inquired about casualty reinsurance pricing flow-through and share buyback capacity.

A: Mark Kociancic said they have capacity for growth and buybacks; Jim Williamson stated underlying market pricing is strong, but portfolio management, claims handling, and distribution strategy also contribute to expected results in casualty reinsurance.

Q: Gregory Peters from Raymond James asked about reconciling cat pricing pressure with growth and wildfire loss reimbursements.

A: Jim Williamson explained property cat reinsurance still has attractive ROEs, insurance market has attractive opportunities despite rate decreases; wildfire loss reimbursements flow back to Everest but subrogations are long-term.

Q: Josh Shanker from Bank of America asked about insurance segment premium mix and share repurchase funding.

A: Jim Williamson said insurance segment mix has shrinking U.S. casualty but growth in other areas; Mark Kociancic stated share buybacks are funded by excess capital, not FHLB borrowings.

Q: Meyer Shields from Keefe, Bruyette & Woods asked about tariffs and mid-year renewal demand.

A: Jim Williamson said they assess loss trend assumptions quarterly; mid-year renewal demand is influenced by pricing, more likely in top-end due to lower level pricing issues.

Q: Elyse Greenspan from Wells Fargo asked about aviation loss industry context and attritional loss ratios.

A: Jim Williamson said industry aviation loss is ~$1 billion, Everest's portfolio is a few hundred million; Mark Kociancic explained reinsurance attritional loss ratio is affected by risk margin on casualty side.

Q: David Motemaden from Evercore ISI asked about reinsurance attritional loss ratio and property cat return tolerance.

A: Mark Kociancic said attritional loss ratio issue is mainly casualty risk margin; Jim Williamson stated property cat business remains attractive with reasonable pricing sustaining the market.

Q: Michael Zaremski from BMO Capital Markets asked about reserve review cadence and FHLB borrowings for buybacks.

A: Jim Williamson clarified reserve reviews are annual with quarterly updates; Mark Kociancic said FHLB borrowings are for spread trade, not buyback funding.

Q: Katie Sakys from Autonomous Research asked about property cat portfolio loss trend assumptions and reserve charge holding.

A: Jim Williamson said European cat had specific changes, no dramatic changes elsewhere; Mark Kociancic stated reserve charges from 2024 are holding well, with other lines building margin.

Q: Brian Meredith from UBS asked about mid-year renewal terms and capital returns.

A: Jim Williamson said no anticipated changes in terms and conditions; expects return on capital to improve due to market fundamentals and mix.