Everest Re Group, Ltd. Q1 FY2026 earnings call

• First quarter reporting under new segment structure, core businesses contributed meaningful underwriting income, investment income durable. Group operating income $648 million, net operating return on equity 16.7%, annualized total shareholder return 16.1%. • Treaty Reinsurance had excellent quarter, combined ratio 87.2. Reduced casualty premium by over $1.2 billion since Jan 2024, rotated portfolio toward short tail and specialty. April 1 renewal reflected market conditions, mid-year renewals see continued competitive conditions with Florida having interesting dynamic. Mount Logan continues to build momentum with assets under management over $2.6 billion. • Global Wholesale and Specialty: First quarter results for Go Forward platform, mix repositioned to higher margin lines, underwriting improvements. Team executing plan to sharpen underwriting, drive operating leverage. Transition of retail business to AIG progressing as planned, expected capital release visible in back half of 2026. • Reserves: Overall reserve position robust, especially in reinsurance with favorable development of $33 million in quarter. Prudent loss picks across businesses and lines, particularly in U.S. Casualty. • Capital: Repurchased $331 million of shares in quarter, raised quarterly floor on share repurchases from $200 million to $300 million. Confidence in company's position with focused businesses, disciplined underwriting, strong balance sheet, growing third-party capital base, clear capital return trajectory.

Treaty Reinsurance: Generated $315 million of underwriting income on an 87.2 combined ratio. Gross written premium was $2.7 billion, down 8.9% year-over-year. Reduced casualty premium by over $1.2 billion since Jan 2024, rotated portfolio toward short tail and specialty. Property catastrophe pricing softened with rate down 13% globally but terms and conditions held. Bound premium at 4.1 decreased 14.6% versus expiring. Mid-year renewals see continued competitive conditions with Florida having interesting dynamic. Mount Logan has assets under management exceeding $2.6 billion. Global Wholesale and Specialty: First quarter printed results for the Go Forward platform with 96.8% combined ratio on $793 million of gross written premium, producing $23 million of underwriting income. Premium up modestly year over year driven by specialty lines and accident and health, partially offset by reductions in U.S. casualty. Underlying attritional loss performance improved 3.8 points to 58.9. Operating expense ratio at 12.6% reflects drag tied to mix and lower underwriting leverage. Legacy Segment: Generated modest drag to group results, largely due to higher seeded premiums and modest increase in property loss activity. Expected to run at combined ratio above 110% for fiscal year 2026.

• Raising quarterly floor on share repurchases from $200 million to $300 million, absent major external dislocation. • Expect elevated payout ratio for 2026 assuming relatively normal level of catastrophe activity and other risk factors. • For mid-year renewals, continue to deploy capacity where math works and pull back where it does not. • Regarding Florida renewals, expect to be consistent in capacity deployment assuming rates move in reasonable direction. • On casualty reinsurance, prepared to pivot when conditions warm but currently see need for seating commissions on casualty pro rata to decrease and U.S. legal environment to normalize for trend line to reverse.

• More challenging market environment. • Legal environment in U.S. remains hostile. • Uncertainty in loss cost trends in U.S. casualty lines. • Uncertainty around the conflict in Iran impacting premiums and losses. • Competitive conditions in reinsurance renewals. • Potential impact of catastrophe activity on results. • Uncertainty in the trajectory of property catastrophe pricing and terms and conditions.

Q: Into Florida renewals, how much incremental demand are you seeing at an industry level, and how are you considering Everest deployment there?

A: Not quantifying demand forecast but seeing strong tailwinds in clients looking to procure more limit. Have preferred position in Florida, renewal still in flight, reasonably optimistic, expect consistent capacity deployment assuming rates move in reasonable direction, seeing strong statistical evidence tort reforms have worked.

Q: On casualty reinsurance, still seeing some premium declines there, but are you seeing any improvement in terms that could warrant re-engagement down the line, or is that line still not at the return hurdle as you would like to see?

A: View of casualty pro rata is to continue partnering with best cedents with firm bead on underwriting in adverse environment. Need seating commissions on casualty pro rata to decrease and U.S. legal environment to normalize for trend line to reverse. Currently feel good about positioning.

Q: On the global wholesale and specialty segment, the attritional was a 92.6 in the quarter. My question is would you highlight anything one-off in the quarter just when we think about the margin profile of that segment from here?

A: No one-offs in the quarter. Drag in expense ratio but starting from decent spot, strategies in place to manage. Team has done excellent job positioning portfolio mix, underwriting quality strong. Complex primary insurance market with rate movement in multiple directions, will navigate carefully and print prudent loss picks.

Q: We've seen industry losses come up for the Baltimore Bridge event. I just wanted to get a sense of your thoughts there and just how you're thinking about Everest exposure.

A: Put up prudent initial reserve of $70 million, gathering information on settlements, early indications suggest may need a few tens of millions of dollars of incremental loss reserve needed, will flow through in future quarter.

Q: On global wholesale and specialty, can you update us on the amount of casualty talents that you have relative to what you would want, I understand that the market is challenging for all the reasons that you laid out, but I just want to get a sense as to your assessment of whether the current underwriting team is all intact or whether we should anticipate incremental hires?

A: Feel good about quality of talent across global wholesale and specialty. Made significant changes and upgrades to North America Casualty team a couple years ago, continue to do so. Investing in wholesale and specialty across technology and selectively hiring, view as augmentation not rebuilding teams, in good spot talent-wise.

Q: For some specialty lines exposed to the Iran conflict, there have been meaningful rate increases. I was hoping you could talk to how Everest is responding to that.

A: Active underwriter in region, have robust reinsurance operation centered on Middle East, also underwrite specialty coverages out of London market. Teams are nimble, will lean in where see appropriate risk-adjusted returns to secure rate increases and potentially deploy more capacity, being judicious given uncertainty around conflict but expect to inure to benefit of portfolios in terms of rate movement.

Q: Quickly, you have a new floor setting of a minimum of $300 million repurchase per quarter. Historically, we've seen reinsurance companies slow the roll a little bit around the early summer period in anticipation of the outcome of the hurricane season. Do you expect a programmatic purchase or will you just be continuing to buy at the same pace regardless of where we are in the calendar?

A: Expect a more programmatic approach throughout the year and with possible augmentation later in the year, just depending on how cat season plays out and development of release of capital stemming from legacy operation reserve runoff.

Q: There was $33 million of favorable development in the quarter on the going forward businesses. With the portfolio throwing off PYD in this quarter, does it signal a change in how you're thinking about conveying what new information comes into the actuaries? And also, given Mark's retirement and Elias not having joined yet, why is this happening now?

A: Started last year, in second quarter had some favorable PYD also offset a bit through Russia, Ukraine adjustments. Made point a year ago that reserves in property are well-seasoned and significant enough to start releasing it, feel good about embedded margin in reinsurance property reserves, be prudent in casualty given loss trend uncertainty. Legacy segment will still be present but P&L will be smaller.

Q: Just curious on the move, kind of increased PMLs and kind of move into short tail lines. Is it fair for us to kind of bump up our cat loads a bit as we think about 26th?

A: Cat load percentage approximately 7%-ish, same zip code today. Higher load for reinsurance segment and lower for global wholesale and specialty segment. Mechanically potentially increase a bit as legacy premium diminishes and depending on growth environment, given premium reductions year over year in some lines. Net PMLs across peak zones coming down now given portfolio management.

Q: Switching gears to capital management, Mark, you mentioned capital expect maybe a higher capital management in the back of the year, but I think you just mentioned the AIG transaction, but I believe you also sold the Canadian property for a very nice multiple, so I think, you know, is it fair for us to kind of put a small placeholder for some capital return from that transaction as well in the back half of the year if that closes this year?

A: Transaction still has to settle, probably six months away, will see how handled at end of the year, will be accretive to discussion.

Q: Hey, thanks. First one I have is on the reinsurance reserves. It sounded like Valbo was not favorable this quarter. I just wanted to check to see if you could give us any color on, you know, was there any unfavorable if you look specifically at casualty and I mean, from the commentary in the presentation, it sounded like short tail is doing well. So I'm just trying to understand if there's some level of offset to the positive commentary being made about short tails or the property comments you made on the call that we need to consider.

A: No problem in Q1, feel good about loss picks, took even more prudent approach with 2026 loss picks for Casualty Pro Rata, roll forwards continue every quarter, reserve studies coming in summer, seed and data in line with expectations, seeing good strength from other lines of business outside of Casualty Pro Rata.

Q: Just on the investment portfolio, can you talk at all about any, you know, exposure you have to private credit, whether it's in your all portfolio or your fixed maturities?

A: Do have private credit exposure, roughly 7% of assets under management, diversified holdings, direct lending slightly more than half, first lien secured loans, software on smaller side, performing well, not seeing meaningful impairments or watch list exposure, not adding to it but comfortable.

Q: Good morning. You said you were in your early days with respect to the Florida renewal season, and I heard yesterday from one of your competitors that they placed half so far. I just want to talk about the cadence of this renewal season. If tort reform is making the market more attractive, do you think renewal discussions will wrap up earlier, this go-around that you typically see? What does that mean for pricing trajectory? Is it better to get in sooner?

A: Every renewal season hope to get things done earlier, renewal well underway, conditions overall fairly strong with tort reform making it more attractive but increased demand. Underwriters attuned to risks, north of 80% of deals in Florida market are with non-concurrent terms, putting in terrific position.

Q: Thank you. Good morning. And first, congratulations, Mark, on the retirement. A couple of questions. One, and I apologize for asking you, Jim, to pull out the crystal ball here, but I think you said that, that property cap rates remain above adequate at this point. So assuming that we have a normal hurricane season this year, at what point would you think that the industry inflects flat or even property cap rates increasing?

A: Rates coming down but underlying floor of discipline in terms and conditions, attachment points strong. View pricing shouldn't continue to fall, lead markets taking chips off the table is good sign market will find reasonable resting place.

Q: Can you size the earned premium base associated with the Iran loss provision? The reason I ask this is I just want to make sure that as we think about underlying loss ratios that we have the right base here to model into the future.

A: Middle East reinsurance business in neighborhood of $300 million a year in gross premium, reinsurance loss pegged for Iran is $40 million, $57 million provision is prudent given global diversified business.

Q: Thanks. First off, congrats to Mark. Jim, I wanted to go back to the attritional loss ratio and global specialty, the 58-9, and make sure我正在优化回答内容，以下是修正后的完整JSON：{