Everest Reports Third Quarter 2024 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 2024 results.

Third Quarter 2024 Highlights

• Total Shareholder Return of 19.4% annualized; Annualized year-to-date 17.8% Net Income ROE and 18.7% Net Operating Income ROE
• Net Income of $509 million; Net Operating Income of $630 million driven by attritional underwriting margin improvement and solid net investment income generation
• $4.4 billion in gross written premium with year-over-year growth of 0.6% for the Group, 1.7% for Reinsurance, and -2.1% for Insurance on a comparable basis; Strong double-digit growth in property and specialty lines across both segments was partially offset by reductions in certain casualty lines
• Combined ratios of 93.1% for the Group, 91.8% for Reinsurance and 97.1% for Insurance
• Attritional combined ratios of 85.8% for the Group, 83.5% for Reinsurance and 92.6% for Insurance
• Pre-tax underwriting income of $272 million for the Group, $245 million for Reinsurance, and $27 million for Insurance
• $279 million of pre-tax catastrophe losses net of recoveries and reinstatement premiums versus $170 million in Q3 2023
• Net investment income improved to $496 million versus $406 million in the prior year third quarter, driven by a larger asset base as well as strong core fixed income investment returns
• Strong operating cashflow for the quarter of $1.7 billion versus $1.4 billion in the third quarter 2023

“Everest delivered another successful quarter with strong operating income driven by solid underwriting results and healthy investment income. These results reflect our underwriting discipline and prudent risk management, which position the Company to generate leading returns despite another above-average catastrophe year for the industry. We are delivering an annualized total shareholder return and operating return on equity of approximately 19%,” said Juan C. Andrade, Everest President and CEO. “As a lead reinsurance market, we grew in attractive lines of business with the highest expected returns. We are leveraging our franchise value in the continuing favorable property market conditions heading into the January 1 renewals. Additionally, we continued to shape our global primary insurance portfolio by growing strong double-digits in more attractive property and specialty lines, while remaining conservative across certain casualty lines in North America. As we approach the final stretch of the year, we remain focused on executing our strategy.”

Summary of Third Quarter 2024 Net Income and Other Items

• Net income of $509 million, equal to $11.80 per diluted share versus third quarter 2023 net income of $678 million, equal to $15.63 per diluted share
• Net operating income of $630 million, equal to $14.62 per diluted share versus third quarter 2023 net operating income of $613 million, equal to $14.14 per diluted share
• GAAP combined ratio of 93.1%, including 7.9 points of catastrophe losses, versus 91.4% in the third quarter 2023, including 5.0 points of catastrophe losses; Everest continues to successfully manage volatility against the backdrop of another year of above-average industry catastrophes

Hurricane Milton

• Pre-tax net catastrophe loss estimated to be in the range of $300 to $400 million for the fourth quarter 2024, net of estimated recoveries and reinstatement premiums
• Everest's loss estimate is based on an insured industry loss range of $25 to $35 billion

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 1.7% on a comparable basis (constant dollar basis and excluding reinstatement premiums)², to approximately $3.3 billion. We continue to execute with precision, leveraging our market leading franchise to drive growth in lines with the best expected risk-adjusted returns.
• Growth was led by a 19.2% increase in Property Pro-Rata and 9.3% in Property Catastrophe XOL, partially offset by a 7.2% decrease in Casualty Pro-Rata, a 5.9% decrease in Casualty XOL, and a 28.6% decrease in Financial Lines, when adjusting for reinstatement premiums.
• Attritional loss ratio improved 60 basis points over last year to 56.9%, while the attritional combined ratio improved 140 basis points to 83.5% versus a year ago⁴.
• Pre-tax catastrophe losses were $239 million net of estimated recoveries and reinstatement premiums, driven primarily by several Atlantic hurricanes and other international weather-related events. Hurricane Helene accounted for $63 million of catastrophe losses, net of estimated recoveries and reinstatement premiums, in the quarter.
• Risk-adjusted returns remain excellent, particularly in property and specialty lines.

Insurance Segment – Quarterly Highlights

• Gross written premiums decreased to $1.2 billion on a comparable basis (constant dollar basis and excluding reinstatement premiums)², a 2.1% decrease year-over-year as we continued to strategically shape the portfolio. Our International business continued its strong growth trajectory as it gained further traction.
• Everest Insurance grew by 21.0% in Property/Short Tail and 17.7% in Other Specialty lines. Growth was offset by a decrease of 27.6% in Accident and Health, as we exit the medical stop loss business, and 10.3% in Specialty Casualty, primarily in North America, reflecting our focus on lines of business with better expected margins.
• Pre-tax catastrophe losses were $40 million, net of estimated recoveries and reinstatement premiums, an increase over the prior year quarter, which benefited from benign catastrophe losses.
• Pricing continues to exceed loss trend in the aggregate and there was a meaningful acceleration in pricing across North American long-tail lines (excluding financial lines).

Investments and Shareholders’ Equity as of September 30, 2024

• Total invested assets and cash of $42.1 billion versus $37.1 billion on December 31, 2023
• Shareholders’ equity of $15.3 billion vs. $13.2 billion on December 31, 2023, including $220 million of unrealized net losses on fixed maturity, available for sale securities
• Shareholders’ equity excluding unrealized gains (losses) on fixed maturity, available for sale securities of $15.6 billion versus $13.9 billion on December 31, 2023
• Book value per share of $356.77 versus $304.29 at December 31, 2023
• Book value per share excluding unrealized gains (losses) on fixed maturity, available for sale securities of $361.87 versus $320.95 at December 31, 2023
• Common share repurchases of $100.0 million during the quarter, representing 272,460 shares at an average price of $367.03 per share. We have now repurchased $199.9 million year-to-date.
• Common share dividends declared and paid in the quarter of $2.00 per common share equal to $86 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 reflect management’s current expectations based on assumptions we believe are reasonable but are not guarantees of performance. Actual results may differ materially from those contained in forward-looking statements made on behalf of the Company. The forward-looking statements involve risks and uncertainties that include, but are not limited to, 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, pandemics, regulatory and legal uncertainties and other factors described in our SEC filings, including 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 31, 2024. The call will be available on the Internet through the Company’s website at https://investors.everestglobal.com/overview.

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.

Comments on Non-GAAP Financial Measures

In this Press Release, the Company has included certain non-GAAP financial measures, including after-tax net operating income (loss), after-tax net operating income (loss) per diluted share, attritional combined ratio, gross written premiums presented on a comparable basis, net operating income return on equity ("ROE"), underwriting income, and book value per common share outstanding excluding net unrealized appreciation (depreciation) on fixed maturity, available for sale securities ("URA(D)"). The Company presents these non-GAAP financial measures to facilitate a deeper understanding of the profitability drivers of our business, results of operations, financial condition and liquidity. The Company believes that such measures are important to investors and other interested persons, and that these measures are a useful supplement to GAAP information concerning the Company’s performance. These measures may not, however, be comparable to similarly titled measures used by companies within or outside of the insurance industry. Non-GAAP financial measures should be viewed in addition to, and not as an alternative for, or superior to, the Company’s financial measures prepared in accordance with generally accepted accounting principles ("GAAP").

A reconciliation non-GAAP financial measures to the most comparable corresponding GAAP financial measure is included below.

After-tax net operating income (loss) and after-tax net operating income (loss) per diluted share

After-tax net operating income (loss) (also referred to in this release as net operating income) consists of net income (loss) excluding after-tax net gains (losses) on investments and after-tax net foreign exchange income (expense), as shown below:

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 are 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 net operating income (loss) in their analyses for the reasons discussed above. The Company provides after-tax net 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.

Attritional Loss Ratio and Attritional Combined Ratio

The loss ratio is calculated as the sum of total incurred losses and loss adjustment expenses, divided by net premiums earned. The combined ratio is calculated as the sum of total incurred losses and loss adjustment expenses, commission and brokerage expenses, and other underwriting expenses, divided by net premiums earned. The attritional loss ratio and attritional combined ratio are defined as the loss ratio and the combined ratio, respectively, adjusted to exclude catastrophe losses, net catastrophe reinstatement premiums, prior year development, COVID-19 losses and losses from the Russia/Ukraine war. The Company believes the attritional ratios are useful to management and investors because the adjusted ratios provide for better comparability and more accurately measure the Company’s underlying underwriting performance. The following tables are a reconciliation of the loss ratio and attritional loss ratio, and the combined ratio and attritional combined ratio for the periods noted:

Gross Written Premium on a Comparable Basis

The Company has included in this Press Release certain changes in gross written premium on a comparable basis, reflecting constant currency basis and excluding reinstatement premiums. Constant currency basis excludes the impact of foreign exchange rates. The Company provides change in gross written premium on a comparable basis to investors so that they have what management believes to be a useful supplement to GAAP information concerning the Company’s performance. The following tables are a reconciliation of gross written premium and period-over-period changes on a GAAP basis to the non-GAAP comparable basis for the periods noted:

Net Operating Income Return On Equity ("ROE")

Net Operating income ROE is calculated by dividing after-tax net operating income (loss) by average shareholders' equity, adjusted for average net unrealized depreciation (appreciation) of fixed maturity, available for sale securities. A reconciliation of net income, the most comparable GAAP measure, to net operating income is presented above. The Company believes net operating income ROE is a useful measure for management and investors as it allows for better comparability and removes variability when assessing the results of operations. A reconciliation of Net Operating Income ROE and Net Income ROE is shown below.

Underwriting Income

Underwriting income is calculated as net premiums earned, less (1) incurred losses and loss adjustment expenses, (2) commission, brokerage, taxes and fees, and (3) other underwriting expenses. Net income (loss) is the most comparable GAAP measure. The Company believes underwriting income is a useful measure for management and investors when assessing the performance of the Company's reinsurance and insurance business segments. Group underwriting income is allocated to our Reinsurance and Insurance reportable segments. A reconciliation of Underwriting Income and Net Income is shown below.

Book value per common share outstanding excluding URA(D)

Book value per common share outstanding excluding net unrealized appreciation (depreciation) of fixed maturity, available for sale securities ("URA(D)") is calculated as reported shareholders' equity less URA(D), divided by common shares outstanding. Book value per share is the most comparable GAAP measure. The Company believes this metric is useful to management and investors as it shows the value of shareholder returns on a per share basis after eliminating the variability of investments held at fair value. Please see the table on page 3 for a reconciliation of book value per common share outstanding (excluding URA(D)) and book value per share.

Annualized Total Shareholder Return

Annualized TSR ("TSR") is calculated as year-to-date growth in book value per common share outstanding (excluding URA(D)) plus year-to-date dividends per share. As further discussed above, book value per common share outstanding (excluding URA(D)) is a non-GAAP measure. Please see the table on page 3 for a reconciliation of book value per common share outstanding (excluding URA(D)) and book value per share.

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