The paragraph introduces the Everest Group Limited's Fourth Quarter 2024 Earnings Conference Call, led by Jim Williamson, President and CEO, and Mark Kociancic, EVP and CFO, facilitated by Matt Rohrmann. It includes forward-looking statements and mentions potential risks and uncertainties highlighted in SEC filings. Jim Williamson begins by expressing condolences for recent tragedies, specifically the California wildfires and a plane crash in Washington, D.C., acknowledging the impact on affected individuals and praising the efforts of first responders.

Everest is prepared to use its financial resources to aid recovery efforts. The company expects a pre-tax net loss of $350 million to $450 million from the L.A. wildfires, predominantly affecting its Reinsurance division. The estimated loss remains broad due to limited expected loss ranges from cedents. Regarding an aviation tragedy, a loss estimate is not yet available, but it is expected to be well managed in Q1 results. In the fourth quarter, Everest strengthened its reserves by $1.7 billion, impacting its U.S. casualty lines, but still achieved $1.3 billion in operating income and a 9% return on equity, demonstrating the resilience of its business. The reinsurance segment performed well with $286 million and $1.2 billion in underwriting income for the quarter and year, respectively, despite challenges from a major hurricane and other catastrophes.

In the fourth quarter, Everest demonstrated strong financial performance with a 91.5% combined ratio, despite significant catastrophe activity, and achieved a 12.6% premium growth driven by property lines and specialty underwriting. However, this was offset by disciplined actions in the U.S. treaty casualty market, leading to a 7% decrease in their casualty pro rata book. Everest emphasized the need for changes in the U.S. casualty quota share market, walking away from $750 million in North American business due to high ceding commissions and excess capacity. For the January 2025 renewal, their reinsurance division saw a 3% decline in total bound premium, primarily due to their disciplined approach in the casualty sector, balanced by growth in property and specialty lines.

The paragraph discusses the current state of the property catastrophe (cat) reinsurance market, noting that while property cat prices have generally decreased, rate levels remain high enough to justify capacity deployment in most markets. The exception is Continental Europe, where increased cat activity such as storms and flooding has led to higher loss costs, prompting a need for increased charges on European cat exposure. Everest exited over 20 deals and reduced participation in others, but remains attracted to the global property cat reinsurance market. The company sees potential in California wildfires to further influence pricing discipline. In the insurance sector, Everest's gross written premium has slightly decreased due to casualty remediation but has grown in short-tail and specialty lines. Despite unacceptable published combined ratios, the company sees potential for improvement in its portfolio. Internationally, Everest observes strong growth in key lines.

In 2024, the international insurance business achieved an underwriting profit, thanks to investments in people and infrastructure, alongside an excellent loss ratio. While focusing on increasing scale in 12 existing markets, no new markets will be entered in 2025, allowing better premium leverage against expenses. The North American insurance arm is successfully restructuring its casualty portfolio, with 40% of its casualty premiums not renewed in Q4, leading to a 23% premium reduction in the U.S. specialty casualty business despite achieving rate increases. Loss cost inflation remains high, and the medical stop-loss business runoff impacted the quarter by $75 million. The team has secured large risk management accounts with sophisticated clients, including a multiline solution for a global firm, a property cross-sell in public advocacy, and a large deductible casualty program for a consumer products company.

The paragraph discusses Everest's financial performance and strategic actions in 2024. It highlights the company's efforts in portfolio remediation and the impact on their Specialty Casualty business, which saw a decrease in global insurance premiums but improved account quality. Everest reported $4.7 billion in gross written premiums, a 7.2% growth. The combined ratio was high at 135.5% due to prior year loss reserves and current accident year losses, with significant impacts from Hurricane Milton. Despite releases from previous events like Hurricane Ian, the group faced increased attritional loss ratios compared to the prior year.

The paragraph outlines the financial performance and developments within the company's insurance and reinsurance segments. It highlights a 12.6% growth in reinsurance gross premiums, driven by increases in property pro rata and property cat XOL, despite challenges in casualty lines. The full-year growth for property cat XOL was 26.2%. The combined ratio for the fourth quarter was 90.4%, impacted by Hurricane Milton losses, which were partially offset by releases from prior events like Hurricane Ian. An improvement in the attritional loss ratio was due to a strategic shift towards property cat XOL and a reduction in casualty pro rata business. Additionally, favorable reserve developments in the mortgage line helped offset reserve strengthening in U.S. casualty lines. Overall, the group's expense ratio was 6.2%, with continued investment in talent and systems.

In the latest quarter, gross premiums in the insurance segment decreased by 1.6% to $1.4 billion due to efforts to eliminate underperforming U.S. casualty business. Despite this decrease, property and specialty lines saw significant growth of over 30%. The company strengthened U.S. casualty prior year reserves by $1.1 billion and increased current accident year losses by $206 million, resulting in an attritional loss ratio of 84% for the quarter. Catastrophe losses, mainly from Hurricane Milton, added 5.3 points to the combined ratio. The commission ratio rose by 100 basis points due to business mix changes, and the underwriting expense ratio increased to 17.9% due to global platform investments and slower premium growth.

In the recent quarter, the company formed a new segment for better disclosure of non-core business lines and strengthened reserves by $425 million. Net investment income increased to $473 million, aided by higher assets under management and a stable book yield of 4.7%. The company's investment portfolio is performing well with a short asset duration and strong credit rating. The operating income tax rate for the fourth quarter was unusually low at -16.6% due to a net operating loss, but the full-year tax rate was 9%. Shareholders' equity ended the quarter at $14.7 billion, excluding significant unrealized losses in the fixed income portfolio, mainly due to changes in treasury yield. Cash flow from operations for the quarter was $780 million, contributing to $5 billion for the full year. The book value per share increased by 8.7% from year-end 2023, after accounting for dividends.

The paragraph discusses Everest's financial performance and strategic outlook. At the end of the year, the company's book value per share rose by 6.8% compared to year-end 2023, and the total shareholder return for 2024 was 9.2%. Net debt leverage slightly decreased to 15.6%. Everest aims to achieve mid-teens shareholder return and plans to strategically repurchase shares. During a Q&A session, Gregory Peters from Raymond James inquires about Everest's strategy to manage volatility amid changes in their insurance segment. Jim Williamson responds by emphasizing their careful P&L management, capital deployment, and reinsurance strategies to handle risks and control volatility.

The paragraph discusses the insurance division's growth, specifically in the short-tail book, and how it aligns with the company's overall risk management framework. Although the division is expanding and maintaining favorable pricing and account quality, it hasn't significantly altered the group's risk profile. Gregory Peters inquires about the company's capital management strategy, particularly regarding stock repurchases. Mark Kociancic responds, highlighting the company's strong financial position, earnings capability, and focus on mid-teens shareholder returns by 2025 despite a reserve charge. He notes the growth rate is important, with a cautious approach to casualty reinsurance and disciplined strategies in insurance and property lines, suggesting more modest growth compared to previous years.

The paragraph discusses a financial strategy relating to capital management and share buybacks, expressing a strong intention to be active in these areas in the current quarter. Meyer Shields questions Jim Williamson about expectations for improvement in the Insurance segment loss ratio, particularly regarding casualty lines and business mix changes. Jim Williamson explains that they've taken prudent reserve actions and plan to continue this prudence into 2025, anticipating positive effects on the loss ratio due to a favorable shift in business mix. Mark Kociancic adds that the financial supplement reflects a current year attritional loss ratio of 68.3%, accounting for the current year strengthening for 2024.

The paragraph discusses the current state and future outlook of a business's casualty segment. Despite undergoing remediation and shifting towards a more balanced portfolio, there are still unearned premiums from older casualty business that could negatively impact earnings in 2025. However, the company anticipates this and highlights favorable factors, such as a strategic business mix and cautious management of casualty account renewals, which are expected to improve loss ratios over time. The firm is also investing thoughtfully to ensure eventual profitability, while maintaining prudent expense management, despite current elevated insurance expenses due to ongoing investments and remediation efforts.

In the paragraph, a discussion takes place during a conference call where Jim Williamson addresses questions from Josh Shanker regarding business strategies. Williamson explains that the company has decided to exit the medical stop-loss business by non-renewing a problematic block of business, which will fully impact financials by the end of 2024. He also touches on the company's approach to handling exposure to major global events, like California wildfires, suggesting that they conduct a ground-up analysis to manage their market share and exposure effectively.

The paragraph discusses Everest's approach to underwriting, highlighting their decision to avoid certain risky clients that contributed to industry losses estimated between 35% and 45%. Their strategy of declining inadequate risk-adjusted return programs resulted in a smaller market share for the event. The speaker emphasizes their focus on pursuing quality deals across various risks and geographies, as opposed to spreading risk evenly without assessing profitability. The discussion transitions to an audience question about the impact of wildfires on reinsurance pricing, with Jim Williamson acknowledging the scale of the event and indicating expectations of increased pricing due to its significant impact.

The paragraph discusses the dynamics of managing insurance rates, highlighting an opportunity for Everest to be selective in its deals due to increased demand for coverage. The speaker suggests potential benefits from decreasing rates, as clients prefer to buy more coverage with Everest. Despite not typically writing aggregate covers, Everest is prepared to increase capacity if pricing conditions are favorable. The conversation then shifts to Schedule P disclosures and reserve actions, with a focus on key factors beyond just basic metrics, as emphasized by Mark Kociancic in response to Alex Scott's inquiry.

The paragraph discusses insights from a company's pre-call presentation regarding metrics like IBNR and ultimate loss ratios, with emphasis on global loss triangles for data comparison. The commentary highlights the company's approach to shaping its portfolio and executing its remediation plan, aiming to build confidence through quarterly and annual measurements. Following this, a question from David Motemaden of Evercore ISI addresses market conditions affecting the company's decisions in casualty reinsurance, noting a shift towards property and short-tail lines. Mark Kociancic responds, indicating that the company's approach to cat load remains consistent with its strategy since 2020.

The paragraph discusses the company's strategic shift in managing its catastrophe (cat) bonds and exposure. Previously reliant on cat bonds, the company has reduced this reliance, taking more gross exposure on a net basis due to attractive expected returns. Jim Williamson notes that their approach to the cat book is focused on creating a high-margin, resilient portfolio capable of absorbing substantial losses, such as unexpected large-scale events like a California wildfire, while still remaining profitable. Despite extreme industry losses in certain years, like the year of Hurricane Ian, the company managed to break even with their cat book. The strategy emphasizes effective cat management to achieve desired financial outcomes. David Motemaden acknowledges the explanation and shifts the focus to the casualty reinsurance book.

The paragraph is a part of an interview discussion where Jim Williamson talks about efforts to improve data flow and capture quality from cedents. His company has consistently prioritized ensuring high-quality data, going beyond just renewal submissions. This involves direct actuarial discussions and claims management insights to understand trends affecting cedents' portfolios. They rigorously analyze publicly available data and only commit to clients who manage their portfolios well, moving away from those with poor or nonexistent data. The focus is on enhancing overall data quality and availability. The operator then introduces a question from Brian Meredith about expected tax rates in 2025, to which Mark Kociancic responds by indicating an expectation of a higher rate than the current 11% to 12%, with a new 15% rate in Bermuda.

In the paragraph, a discussion takes place about the company's expected effective tax rate, estimated to be between 17% to 18%, assuming a normal geographic income distribution. The impact of large loss types like natural catastrophes could affect this rate. Brian Meredith asks about cash flow expectations for the year, and Mark Kociancic responds that cash flow should be similar to past years, with considerations of natural catastrophes influencing outcomes. Elyse Greenspan from Wells Fargo queries about the discrepancy between the company's insured loss estimates for California fire losses, which are lower than other estimates that go up to $50 billion. Jim Williamson responds that he can't account for how others calculated their numbers.

The paragraph discusses the company's position in relation to industry loss estimates, suggesting that they are at the higher end of the spectrum with an anticipated loss of about $500 million out of a possible $50 billion industry loss. The speaker attributes their confidence to high-quality underwriting and strategically passing on certain deals that ended up being heavily impacted. They express pride in their team's performance and acknowledge the difficulty in loss adjusting due to public access issues, which leads to using a range rather than a point estimate. Elyse Greenspan then inquires about differences in casualty reserves between reinsurance and insurance, noting that reinsurance loss picks appear to be better, and seeks clarification on the loss cost assumptions for their casualty reinsurance book. Jim Williamson responds, acknowledging the inquiry.

The paragraph discusses the company's reinsurance and insurance portfolios, emphasizing their selective approach to choosing cedents for their reinsurance portfolio. Their clients are top quartile underwriters of casualty and consistently outperform the market average loss ratio, leading the company to move away from $750 million of underperforming business. In contrast, the insurance portfolio was not top quartile and was overconcentrated in certain classes, resulting in worse outcomes. Despite differences between the two portfolios, the company maintains a consistent and prudent approach based on data and conservative views of the casualty market. A figure of roughly 12% average loss trend was noted for excess umbrella, GL, and commercial auto, which applies to both reinsurance and insurance.

In this discussion, Mark Kociancic highlights the varying loss ratios between non-renewed and retained business, emphasizing that it changes based on the line of business. The most concerning was the sports and leisure book with a triple-digit loss ratio, mainly in excess and general liability lines. Other casualty classes range between 100 and 120 in loss ratios, but some perform better. The focus is on ensuring renewals come with adequate rates. Jim Williamson adds that while they maintain a high-quality reinsurance casualty portfolio, they are cautious about cedents not keeping up with trends or having inadequate claims processes amidst social inflation challenges.

In the paragraph, Mark Kociancic discusses the company's approach to capital management, indicating they are not providing specific guidance but are maintaining a disciplined approach in managing their casualty and reinsurance segments. While they are shedding some parts of the business, they continue to pursue growth where conditions are favorable, particularly in property, which currently has good rate adequacy. While there isn’t expected to be the same growth as seen in previous years, Mark highlights that their international insurance business has been growing at a double-digit rate, largely due to a successful short-tail book, and anticipates this trend to continue positively into 2025.

In the paragraph, Wes Carmichael inquires about the strategic importance of maintaining the current ratings for Everest, mentioning that S&P changed its outlook to negative. Mark Kociancic responds by emphasizing that maintaining an A+ financial strength rating is fundamental and secure for Everest. While they respect and must manage the S&P negative outlook, it's not a significant concern. He reassures that Everest's overall financial strength remains solid. The session then concludes.

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