Everest Group Ltd. Q4 FY2024 earnings call

• Addressed wildfires in California and plane crash in Washington, D.C., with thoughts and prayers for affected. Expected pre-tax net loss for LA wildfires between $350M - $450M, impacting reinsurance division. Aviation tragedy loss estimate not yet available but expected in Q1. - Fourth quarter results: $1.7 billion added to net reserves, $1.3 billion operating income for the year, 9% operating return on equity. - Reinsurance: Excellent results despite elevated cat year, $286M underwriting income in Q4, 12.6% premium growth excluding reinstatement. Disciplined in U.S. exposed treaty casualty, walked away from $750M in North American casualty quota share. - Insurance: Gross written premium marginally down, but short tail and specialty lines grew. International insurance business earned underwriting profit in 2024. North American insurance business remediating casualty portfolio. - Investment income: Net investment income $473M in Q4, book yield stable at 4.7%, reinvestment rate just north of 5%.

Reinsurance: Earned $286 million underwriting income in Q4 and $1.2 billion for the year. Premium growth of 12.6% excluding reinstatement premiums. Combined ratio for Q4 was 91.5%. Insurance: Gross written premium marginally down due to casualty remediation, but short tail and specialty lines grew. Combined ratio for 2024 was 100.7%. Other segment: Formed to enhance disclosure, strengthened reserves by $425 million in Q4, including $22 million to current accident year losses, with $1.1 billion of net reserves.

• Mid-teens total shareholder return over the cycle. - Expect to be active in share repurchase this quarter. - Focus on strategic capital management, considering growth rate, financial position, and share price attractiveness.

• Wildfires in California and plane crash in Washington, D.C. impact on loss assessment. - Casualty reinsurance market conditions leading to non-renewal of $750M in business. - S&P's negative outlook on ratings, though financial strength is solid.

Q: Focus on insurance segment volatility management.

A: Diligent in P&L management, use outbound reinsurance to manage volatility, short-tail book growing nicely.

Q: Capital management budget.

A: Factors include financial position, earnings engine, growth rate, and share price attractiveness, expect active share repurchases.

Q: Insurance segment loss ratio progress.

A: Prudence in reserve actions, mix moving quickly towards better portfolio, rate achievement in some lines.

Q: Medical stop loss business exit.

A: Non-renewed major block, full impact through financials in 2024.

Q: Wildfire impact on reinsurance pricing.

A: Expected positive impact on prices, clients looking to buy more cover, selective in deals.

Q: Focus on Schedule P disclosures.

A: Metrics on IBNR, ultimate loss ratios, global loss triangles, commentary on portfolio remediation.

Q: Cat load with shift to property and short-tail.

A: Cat load broadly consistent, reduced reliance on cat bonds, focus on building high-margin, resilient cat book.

Q: Casualty reinsurance data engagement with cedents.

A: Consistent discipline in data sharing, direct actuary discussions, only deploying capacity to clients with good portfolio management.

Q: 2025 tax rate.

A: Estimated 17%-18% effective tax rate.

Q: Cash flow in 2025.

A: Similar range to 2024, natural catastrophes a key factor.

Q: California fire loss estimate discrepancy.

A: Quality underwriting led to lower loss estimate, passed up on deals clobbered in event.

Q: Reinsurance vs insurance casualty book difference.

A: Reinsurance cedents top quartile underwriters, insurance business not top quartile, different portfolios.

Q: Insurance loss ratio non-renewed vs retained.

A: Varies by line, other segment had triple-digit loss ratio, other classes have varying loss ratios.

Q: $750M non-renewed reinsurance casualty.

A: Varies, not characterized by number, based on underwriting assessment.

Q: Top line growth forward.

A: Disciplined in casualty shedding, property attractive, international insurance business growing double digits.

Q: S&P negative outlook on ratings.

A: Respect outlook, financial strength solid, manage accordingly.