Everest Re Group, Ltd. Q2 FY2025 earnings call

Everest delivered strong second quarter with net operating income $734 million and annualized operating ROE nearly 20%. Underwriting profit $385 million with combined ratio 90.4%. Reinsurance had $436 million underwriting profit, combined ratio 85.6%. Insurance had $18 million underwriting loss. Net investment income $532 million. Gross written premium: Reinsurance GWP rose 1.1%, Insurance declined 3.1%. Growth excluding deliberate U.S. casualty portfolio actions in both divisions was 11% and 7% respectively. In capital management, repurchased $200 million worth of shares in second quarter, year-to-date returned $400 million to shareholders.

Reinsurance: Delivered an excellent quarter, generating $436 million in underwriting profit, up $133 million from prior year. Combined ratio was 85.6%. Gross written premiums increased 1.6% in constant dollars. Property premiums up about 8%, Property Cat XOL grew over 15%, Property pro rata north of 8%. Casualty premiums declined 7.3%. Insurance: Gross premiums written decreased 3.3% in constant dollars. Strong growth in Other Specialty and Accident & Health was offset by aggressive actions in U.S. casualty lines. Specialty Casualty gross written premiums fell to 22.2% of the Insurance segment mix. Attritional loss ratio increased to 68.7%. Gross written premium of Reinsurance rose 1.1% contributing to 4.36 billion underwriting profit, while Insurance GWP declined 3.1% with $18 million underwriting loss.

Expect to take a tempered approach in third quarter given wind season. All other things being equal, expect to resume the pace of share repurchases in fourth quarter and into 2026. Property Cat risk-adjusted returns remain attractive. International Insurance business has 23% growth rate this quarter and improving margins.

Aviation-related losses associated with U.K. court ruling contributed to combined ratio. Persistent level of ceding commissions and continued legal system abuse in U.S. casualty. Uncertainty of external environment affecting international business such as impact of U.S. tariffs on premiums and losses.

Q: The underlying loss ratio insurance about 69% and if we look at year-over-year about 6-point increase which is essentially the risk margin put in place. Over the next kind of 1 to 2 years, should we think of that 6% staying in place, but perhaps there's some benefit on mix shift to international and short tail?

A: Mark Kociancic said the approach has a few pieces to unpack. 2025 is a little heavier than future, mix of business will impact loss ratio, international business and short tail lines are principal drivers, percentage of casualty has been reduced.

Q: And then on the expense, I think I heard you say some international investments. Were they maybe a little bit lumpier this quarter? And perhaps you could just talk about how you're thinking about the pace of international investments in insurance?

A: Mark Kociancic said international is growing faster than North America, proportionately becomes larger component of combined ratio, key is leverage infrastructure and scale premium to reduce expense ratio over time