Everest Group, Ltd. (EG) 2024 Q2 Earnings Call Summary

Optimistic Highlights

• Strong Quarter and First Half Performance

  Everest delivered solid underwriting and net investment income, achieving an annualized total shareholder return and operating return on equity of 20%.

• Growth in Business Lines and Geographies

  The company grew in profitable lines of business and geographies, focusing on disciplined risk selection and building a well-diversified portfolio.

• Reinsurance Business Success

  The reinsurance business generated strong results with expected risk-adjusted returns remaining very attractive, benefiting from a preferred lead market position.

• Expansion of Primary Insurance Franchise

  Everest expanded its primary insurance franchise by opening new operations in Mexico, Colombia, and Australia, aiming for global scale and sustained profitable growth.

• Strong Investment Portfolio Performance

  The investment portfolio continued to perform well, producing over $0.5 billion of net investment income in the quarter.

Pessimistic Highlights

• Delay in Achieving Insurance Combined Ratio Target

  The target combined ratio for insurance is now expected to be achieved in 2025, delayed from previous expectations due to the need for a more balanced mix of business and increased scale.

• Cautious Approach in Casualty Lines

  Everest remains disciplined in casualty lines, shedding over $300 million in casualty renewal premiums that did not meet underwriting standards.

• Regulatory Approval Delays

  There were jurisdiction-specific regulatory approval delays in new international markets, affecting the speed of international expansion.

Company Outlook

• Bullish Outlook for 2025

  Everest remains bullish for 2025, expecting risk-adjusted returns to remain very attractive and confident in achieving the insurance combined ratio target in 2025.

• Focus on Strategic Execution

  The company is focused on executing its strategy, aiming for industry-leading financial returns and strengthening its insurance platform for global market positioning.

Q & A Highlights

• Q: Can you elaborate on the factors delaying the insurance combined ratio target to 2025? (Yaron Kinar, Jefferies)

  A: The delay is primarily due to the need for a more balanced mix of business and increased scale, particularly in international businesses. The mix shift and scale improvement are expected to benefit both the expense and loss ratios. (Jim Williamson)

• Q: How are you managing the increased property cat exposure in terms of cat assumptions? (Gregory Peters, Raymond James)

  A: Everest's cat appetite and assumptions remain within the stated Group appetite, with a focus on non-peak zones and careful selection of attachment points to manage cat losses effectively. (Juan Andrade and Jim Williamson)

• Q: What is driving the strong growth in property catastrophe reinsurance, and how is Everest differentiating itself in this market? (Unidentified Analyst, Evercore ISI)

  A: Everest's lead market position, consistent execution, and ability to secure non-concurrent terms have driven strong growth. The expected economics of deals remain excellent, with no material giveback in terms and conditions. (Jim Williamson)