The first paragraph details the introduction and setup of Everest Group Limited's Third Quarter 2024 Earnings Conference Call. Matthew Rohrmann, SVP and Head of Investor Relations, introduces the call participants, including company executives Juan Andrade (President and CEO) and Mark Kociancic (Executive VP and CFO). The call will present forward-looking statements with standard caution about potential variations in actual performance and legal disclaimers regarding non-GAAP financial measures. Juan Andrade then summarizes the company's strong financial performance for the quarter, highlighting robust operating income, solid underwriting results, and investment income, resulting in significant shareholder and operating return metrics, despite industry challenges from higher-than-normal catastrophe losses.

The article discusses the impact of recent global natural catastrophes on the company's performance, particularly highlighting success in their reinsurance and insurance segments. The firm is benefiting from favorable market conditions and has improved its portfolio by focusing on profitable lines and pulling back from less attractive ones. The investment portfolio also performed well, generating significant income. Overall, disciplined management has led to improved loss ratios despite catastrophe-related losses, positioning the company well for future growth.

The paragraph discusses the company's strategic actions over the past few years to reduce exposure to high-risk areas in Florida and US accounts prone to secondary perils like flooding. These efforts have enabled them to grow their property catastrophe portfolio with higher expected profitability, as evidenced by a $78 million loss from Helene. They estimate losses from Hurricane Milton to be between $300 million and $400 million, with an industry loss projection of $25 billion to $35 billion. This highlights the importance of managing natural catastrophe volatility. The company also reports excellent third-quarter results in its reinsurance business, with growth driven by property catastrophe products, while being cautious with casualty lines, resulting in more moderate growth.

The company has reduced over $400 million in casualty renewal premiums due to unfavorable conditions, while focusing on expanding in more profitable lines like property and specialty, resulting in $245 million of underwriting profit despite $239 million in catastrophe losses. The strategy to focus on top-tier cedents has been successful, enhancing resilience and enabling consistent returns. In light of recent catastrophes, property catastrophe pricing in North America and Europe is expected to strengthen. The reinsurance segment is well-positioned for strong margins, aided by meaningful embedded margin in reserves. In insurance, the company's diversified platform allows for strategic growth in favorable areas, like short tail and specialty lines, while being cautious in challenging US casualty lines. This balance enables the pursuit of the most attractive economic opportunities.

The paragraph highlights Everest's financial performance in North America, emphasizing an 11% average rate increase in their portfolio, excluding certain categories. In casualty lines, rates rose significantly to address industry-wide elevated loss activity. Everest is proactively managing challenges like social inflation by focusing on selective underwriting, particularly in real estate and leisure sectors, to ensure adequate pricing and profitability. The company is committed to maintaining a high margin through disciplined underwriting and regular reserve reviews, including comprehensive studies in the insurance segment. Overall, Everest's reinsurance business is performing well globally, and its specialty underwriting in the US remains strong.

The article discusses Everest's strong performance, highlighting talent upgrades, investment in people and automation, and successful international insurance expansion driven by top industry leaders. The company is addressing challenges in its US insurance casualty book due to legal system issues while remaining disciplined in underwriting. Everest's diversified businesses, strong investment portfolio, and robust capital position allow for flexibility and long-term planning. Mark Kociancic reports solid growth in operating and net investment income, with strong performance in reinsurance and international insurance, focusing on profitability in North American casualty lines.

Everest reported $4.4 billion in gross written premiums, representing roughly 1% growth when adjusted for constant dollars and excluding reinstatement premiums. The combined ratio for the quarter was 93.1%, driven by improvements in attritional loss ratios but offset by increased CAT losses of $279 million due to global events like Hurricanes Helene, Beryl, and Debby, and weather events in Europe and Canada. The attritional loss ratio improved to 58.5%, and the commission ratio decreased to 21.1%, while the expense ratio was reduced to 6% amid ongoing investments in talent and systems. In reinsurance, property and specialty lines drove 1.7% growth, with Property Pro Rata and Property Cat XOL seeing significant increases. However, casualty lines saw a decline. The premium mix shifted towards property and short-tail lines, now constituting 56% property and 44% casualty, reflecting a strategic focus ahead of expected pricing improvements.

In the quarter, growth favored short-tail line businesses, improving the attritional loss and combined ratios to 56.9% and 83.5%, respectively. The commission ratio improved to 23.9% while the underwriting expense ratio remained constant at 2.5%. The overall combined ratio was 91.8%, including 9.1 points from catastrophe losses. Gross written premiums declined by approximately 2% to $1.2 billion as the portfolio shifted towards more profitable lines. While growth in North America was down overall, retail property and specialty lines saw double-digit growth. The international business also experienced strong growth. There were intentional reductions in North American casualty lines and conservative positions were maintained in monoline workers' comp and medical stop-loss. The runoff of the A&H medical stop-loss business is expected to end this year. Additionally, Ryan Specialty will acquire the EverSports and Entertainment Insurance business.

The article discusses a financial transaction aligned with the strategic objectives of both parties, to be accounted for in the fourth quarter. It reports an attritional loss ratio of 63.3%, consistent with the previous year, and a commission ratio increase to 12.2%. The underwriting expense ratio rose by 80 basis points due to investments in global platforms and operations scaling. The segment combined ratio reached 97.1%, including 4.2% in catastrophe losses. Net investment income increased to $496 million, driven by higher assets under management and yields. Alternative asset income slightly decreased, while the book yield improved from 4.2% to 4.8%. The firm maintains a short asset duration of 3.1 years, with a strong fixed income portfolio rated AA-. The third quarter operating income tax rate was 10.7%. Capital strength supports growth and share repurchases, with 272,000 shares repurchased at an average price of $367.3 each, totaling $100 million.

The paragraph reports on a company's financial performance, highlighting several key metrics. Year-to-date, the company repurchased 536,000 shares for $200 million and plans to continue opportunistic buybacks. Shareholders' equity at the quarter's end was $15.3 billion or $15.6 billion, excluding net unrealized depreciation on available-for-sale fixed-income securities. Net after-tax unrealized losses on these securities decreased by $716 million during the quarter, due to lower interest rates, closing at $220 million. Cash flow from operations was $1.7 billion, and book value per share was $356.77, a 19.1% increase from year-end 2023 when adjusted for dividends. Excluding depreciation, book value per share was $361.87, up 12.7% from year-end 2023. Net debt leverage was 14.3%, slightly lower than previous periods. The company had a strong quarter with a total shareholder return exceeding its target, supported by diverse franchises, a robust investment portfolio, and excess capital. The paragraph concludes with a transition to the Q&A session, beginning with a question from Yaron Kinar of Jefferies.

In response to concerns about potential cuts in casualty premiums indicating future losses or reserve strengthening needs, Juan Andrade emphasizes the company's strategic focus on diversification and opportunism. He highlights their successful cycle and portfolio management, pointing to past adjustments in various insurance lines. Andrade mentions their current preference for property and specialty lines due to favorable conditions, while remaining cautious with certain casualty lines due to an elevated environment. The company aims for a balanced portfolio, particularly skewed towards property catastrophe in reinsurance, acknowledging ongoing elevated loss trends in casualty lines.

The discussion revolves around insurance strategies and expectations. The company anticipates that social inflation will continue to be an issue, prompting caution in certain business lines and a shift in their portfolio towards more profitable areas. They aim to consistently enhance their portfolio for quality. In response to Yaron Kinar's inquiry, Mark Kociancic addresses expectations for achieving a 93% to 94% combined ratio for insurance, indicating it largely depends on catastrophe (CAT) events. He emphasizes a long-term goal of reaching a 92% ratio by the end of 2025 through increased premium scaling, favorable business mix, and expense leverage. Gregory Peters then seeks more details on future insurance segment expenses, specifically commissions and underwriting costs for 2025 and 2026, but the paragraph ends before these details are provided.

The paragraph discusses the company's financial outlook and strategic decisions related to commission and expense ratios. The commission ratio is expected to remain stable, slightly elevated due to the shedding of A&H business. Investment in franchises in North America and internationally leads to elevated expenses, but the expected earned premium should eventually lower the expense ratio. Additionally, Gregory Peters discusses the property CAT reinsurance market, noting that pricing trends have been downward but may stabilize following recent events like Hurricane Milton. Overall, despite a downward pricing trend, there is an expectation of stability in the near future.

In the paragraph, Juan Andrade discusses the expectations for pricing and reinsurance as the January 1st renewals approach. Initially, there was talk of potential pricing decreases for US property CAT and European markets, with estimates suggesting a reduction of about 5-10%. However, recent developments, including major storms in the US and flooding and storms in Europe, have shifted expectations towards potential price increases of 5-10%. Andrade mentions that their teams are actively engaged in the renewal process, indicating ongoing negotiations. Josh Shanker from Bank of America then questions the negotiation dynamics, noting that some brokers believe pricing should decrease by 5%.

In the paragraph, Jim Williamson discusses the ongoing negotiation process regarding pricing, noting that firm orders have not yet been reached. He highlights key factors, including a very active catastrophe (CAT) quarter with significant losses due to hurricanes, and the potential impact if such events had hit more densely populated areas. These concerns, along with elevated losses, climate change, and capital management issues, have led to rising demand for additional capacity from clients, particularly from Everest, which is recognized for high-quality capacity. About one-third of their North America CAT deals have nonconcurrent terms, which could benefit them. Overall, Williamson expects firming rates and strong expected returns. Josh Shanker briefly mentioned a potential loss that Milton addressed.

The paragraph discusses the impact of intensified hurricane activity on insurance pricing, particularly focusing on U.S. CAT programs which have diverse Southeast exposures. Jim Williamson believes this has a significant impact on pricing, especially compared to Europe. The discussion then shifts to reinsurance business changes, with Mark Kociancic agreeing that a shift from longer-term to short-tail lines should lead to a year-over-year decline in loss ratios, albeit with caution due to elevated loss trends. Josh Shanker and others clarify these points before moving on to a related topic about a reserve study in Q4.

The paragraph discusses the financial outlook and strategic considerations of a company. Mark Kociancic reassures that despite changing loss trends, there will be no impact on share buybacks or the company's capital strength. The company is focusing on maintaining a diversified business, with strong margins in property and shorter tail lines, while North American casualty remains a higher risk factor. Taylor Scott points out that while there has been intense competition in the property sector, especially following recent storms, Jim Williamson notes that in the U.S., many commercial properties are still experiencing rate increases.

The paragraph discusses the competitive nature of various insurance markets. The wholesale market has seen significant rate increases and is now more competitive, with risks priced adequately and attractive opportunities leading to increased competition. Similarly, large shared and layered programs for high-quality, globally-engineered accounts have also experienced rate hikes, drawing heightened competition that might lower headline rates but remain attractive. There is also increased competitiveness in the London market. Despite this, recent events may stabilize pricing levels, preventing sudden rate increases in competitive areas. Additionally, there are concerns about higher risk environments in North American casualty lines, affecting confidence in reserve adequacy between reinsurance and insurance segments, particularly with US casualty exhibiting elevated loss activity.

The paragraph discusses the complexities and risks associated with managing a reinsurance and insurance portfolio, particularly focusing on US casualty lines. The reinsurance portfolio is described as well-diversified and mature, with careful management of casualty risk through cautious ceding and pricing strategies. In contrast, the insurance portfolio is less diversified, being disproportionately weighted in US casualty. Efforts are underway to diversify the insurance portfolio and address elevated loss activity in US casualty lines. Overall, the property and shorter-tail lines are performing well, but adjustments are being made to manage casualty risks effectively.

The article paragraph discusses price adequacy and risk management in the context of insurance, emphasizing the importance of shifting resources towards more attractive lines to manage volatility from macro factors like social inflation. Juan Andrade adds that reinsurance teams have their own pricing mechanisms, which might differ from client projections, meaning adverse developments in a client's book may not affect their reinsurance book. Furthermore, Juan updates Meyer Shields on the status of their insurance operations, confirming that after some previous delays, they are now up and running across multiple continents.

In the paragraph, Jim Williamson and Mark Kociancic address a question from Brian Meredith regarding the impact of the shift towards more property from casualty on cat (catastrophe) losses. Jim explains that their strategy of maintaining a diversified property portfolio and avoiding overexposure in peak zones helps manage cat exposure effectively. They focus on insuring larger, highly engineered properties, which are less susceptible to cat volatility. Mark adds that their hedging and capital shield programs aim to enhance returns and minimize risk, leading to better performance relative to peers, as evidenced by more favorable cat loss ratios, including the recent Helene loss.

In the paragraph, Juan Andrade discusses the international expansion of the insurance business, addressing the impact on operating expenses and premium growth. He acknowledges a J-curve effect due to investments in international markets but notes that earned premiums are exceeding expectations. Focusing on deepening investments in countries they've already entered is planned for 2025, which should bolster growth. While the international business is mainly comprised of short-tail property insurance, it also includes specialty lines like marine, as well as some international casualty and financial lines, although these are less prominent depending on the region.

In the paragraph, Mark Kociancic and Brian Meredith discuss potential improvements in financial ratios and scalability for the business by the second half of 2025. They expect the benefits from a mix shift towards property and less exposure to catastrophic risks to improve loss ratios. Mark acknowledges some short-term challenges but anticipates the premium side to eventually outpace expense growth, leading to better figures. Michael Zaremski questions the transparency of global reserve disclosures, specifically in casualty lines, and requests more detailed, statutory-type data. Mark responds that efforts have been made to improve disclosure granularity and transparency, with further enhancements expected in 2025.

The paragraph discusses a conversation between Michael Zaremski, Mark Kociancic, and an operator. They address factors influencing the insurance segment's performance and loss activity. Michael seeks clarification on whether the 2025 guidance for the insurance segment includes a catastrophe (CAT) load, despite lower catastrophe expectations. Mark confirms it does. Another question, from David Motemaden, asks about the reserves for casualty insurance, noting changes in the third quarter. Mark acknowledges elevated loss activity in U.S. casualty lines, particularly in excess casualty and commercial auto, during Q3. However, he mentions favorable loss activity in other lines, such as property and workers' compensation.

The paragraph is a discussion between David Motemaden and Mark Kociancic regarding the insurance book's shift towards short-tail business, which should have benefited the attritional loss ratio. However, the loss ratio remained flat due to higher loss ratios on the casualty side. Kociancic explains that the intentional shift in business mix is aimed at enhancing the economic attractiveness and diversification of their portfolio, both in North America and internationally. This shift includes a reduction in the A&H portfolio. Despite this strategic change, the impact on the combined ratio is minimal due to expected losses in the casualty segment. The paragraph ends with Hristian Getsov from Wells Fargo Securities asking about the timeline for the casualty reinsurance market to stabilize for a more constructive outlook.

In the paragraph, Jim Williamson discusses factors influencing reinsurance casualty growth, including client rate achievements, portfolio compositions, and ceding commissions. He notes that while some deals have been expanded in 2024, overall portfolio composition has slightly declined. To foster growth, an improvement in underlying economics, such as increased rates and better ceding commissions, is needed. Additionally, while property catastrophe (prop CAT) pricing in both the US and Europe is expected to rise by 5-10% at the start of the year, the US is anticipated to see slightly higher increases due to severe weather events in Europe, necessitating pricing corrections.

The paragraph discusses the mixed conditions in international property markets, highlighting Australia and Japan as stable, while markets that have experienced losses are expected to improve. The global property CAT market is considered well-priced and attractive. The conversation shifts to Everest's reinsurance portfolio, with a focus on property CAT excess of loss (XOL) as a core component with its own competitive dynamics. Other key segments include property pro rata and insurance property books, with a strategic emphasis on the U.S. market's core casualty and excess & surplus lines where pricing remains strong.

The paragraph discusses the insurance and reinsurance business portfolio, emphasizing that the current portfolio mix is appropriate. In the property insurance sector, although there's some price pressure, especially in highly engineered shared and layer deals, the company ensures pricing adequacy for profitability. Cyber insurance pricing is decreasing, with more competition seen on the insurance side, but it remains a small and attractive part of their reinsurance portfolio due to favorable terms and conditions. The company is cautious about expanding its cyber insurance business.

The paragraph indicates that Juan Andrade is concluding the conference, expressing gratitude for the discussion, and looking forward to future meetings about fourth quarter results. The operator then announces the end of the conference and invites participants to disconnect.

This summary was generated with AI and may contain some inaccuracies.