Everest Reports Second Quarter 2023 Results

Net Income of $670 million and Record Operating Income of $627 million

22.3%¹ GWP² Growth, Led by Record Reinsurance Growth of 26.9%¹ and Strong Pricing Momentum

87.7% Combined Ratio Improved 410 Basis Points Year-Over-Year

Everest Group, Ltd. (NYSE: EG), a global underwriting leader providing best-in-class property, casualty, and specialty reinsurance and insurance solutions, today reported its second quarter 2023 results.

Second Quarter 2023 Highlights

• Record Operating Income of $627 million; Net Income of $670 million driven by continued underwriting margin improvement
• 23.3% Net Income ROE and 21.8% Operating Income ROE; Record Total Shareholder Return of 25.3% annualized
• $4.2 billion in gross written premium with year-over-year growth of 22.3% in constant dollars as reported for the Group, 26.9% in constant dollars for Reinsurance and 14.1% in constant dollars for Insurance
• Combined ratios of 87.7% for the Group, 85.9% for Reinsurance and 92.7% for Insurance driven by improved pricing and lower catastrophe losses year-over-year
• Attritional combined ratios of 86.7% for the Group, 84.7% for Reinsurance and 92.1% for Insurance
• Pre-tax underwriting income of $401 million versus $240 million in the prior year
• $27 million of pre-tax catastrophe losses net of recoveries and reinstatement premiums versus $85 million in the prior year
• Net investment income improved to $357 million versus $226 million in the prior year second quarter, driven by strong fixed income and alternative investment returns
• Completed successful $1.5 billion public equity offering in May 2023
• Strong operating cashflow for the quarter of $1.1 billion versus $715 million in the second quarter 2022

Footnote 1 in header denotes constant currency figure.

Footnote 2 in header denotes gross written premium (“GWP”).

“Everest’s second quarter performance was outstanding as we leaned into the hard reinsurance market. We continued to grow premiums, while expanding margins, resulting in strong increases in quarterly underwriting profits, net income, and record operating income. We delivered an operating ROE of 21.8% and a record annualized Total Shareholder Return in excess of 25%,” said Juan C. Andrade, Everest President & CEO. “Our lead market position in reinsurance, combined with best-in-class execution and dynamic capital deployment, enabled us to take advantage of favorable market conditions and drive significantly higher risk adjusted returns. We also continued to advance our diversified and disciplined global primary insurance franchise, which is benefiting from firming rates. In addition to the excellent underwriting profit in the quarter, we generated nearly $360 million in net investment income with our well positioned portfolio. Our exceptional talent, diversified platform and underwriting discipline give us significant firepower to continue delivering on our objectives and capitalizing on abundant market opportunities, which are expected to continue well into 2024.”

Summary of Second Quarter 2023 Net Income and Other Items

• Net Income of $670 million, equal to $16.26 per diluted share versus second quarter 2022 net income of $123 million, equal to $3.11 per diluted share
• Operating income of $627 million, equal to $15.21 per diluted share versus second quarter 2022 net operating income of $386 million, equal to $9.79 per diluted share
• GAAP combined ratio of 87.7%, including 0.8 points of catastrophe losses, versus the second quarter 2022 figure of 91.8%, including 2.9 points of catastrophe losses

The following table summarizes the Company’s Net Income and related financial metrics.

The following information summarizes the Company’s underwriting results, on a consolidated basis and by segment – Reinsurance and Insurance – with selected commentary on results by segment.

Reinsurance Segment – Quarterly Highlights

• Gross written premiums grew 26.9% on a constant dollar basis to approximately $2.8 billion, a new quarterly premium record for the segment. Growth was broad-based across geographies and lines.
• Growth was driven by 34.7% growth in property pro-rata, 29.6% growth in property Cat, and 16.2% in Casualty pro-rata as pricing increases and a flight to quality continues globally.
• Robust pricing momentum continued in the second quarter, with Cat pricing up 47.5% in North America and 29.2% Internationally, with improved terms/conditions.
• Attritional loss ratio improved 120 basis points over last year to 57.6%, and the attritional combined ratio improved to 84.7% vs 86.0% a year ago.
• Pre-tax catastrophe losses fell to $27 million net of estimated recoveries and reinstatement premiums, from $80 million a year ago. Catastrophe losses in the quarter were partially offset by $30 million of catastrophe bond recoveries related to Hurricane Ian.

Insurance Segment – Quarterly Highlights

• Gross written premiums rose to $1.4 billion, a 14.1% increase year-over-year in constant dollars, a new quarterly record, led by a diversified mix of property, marine, aviation, energy and other specialty lines
• Strong cycle management delivered an underwriting profit of $64 million.
• Catastrophe losses were benign in the quarter demonstrating our de-risking actions on the portfolio.
• Disciplined expense management drove a total expense ratio of 28.3% with continued investment in global systems and our platform.
• Pricing continues to exceed loss trend.

Investments and Shareholders’ Equity as of June 30, 2023

• Total invested assets and cash of $33.6 billion versus $29.9 billion on December 31, 2022
• Shareholders’ equity of $10.9 billion vs. $8.4 billion on December 31, 2022, including $1.6 billion of unrealized net losses on AFS fixed maturity investments
• Shareholders’ equity excluding unrealized gains (losses) on AFS fixed maturity investments of $12.5 billion versus $10.1 billion on December 31, 2022
• Book value per share of $251.17 versus $215.54 at December 31, 2022
• Book value per share excluding unrealized gains (losses) on AFS fixed maturity investments of $288.64, versus $259.18 at December 31, 2022
• Common share dividends declared and paid in the quarter of $1.65 per share equal to $72 million

This news release contains forward-looking statements within the meaning of the U.S. federal securities laws. We intend these forward-looking statements to be covered by the safe harbor provisions for forward-looking statements in the U.S. Federal securities laws. These statements involve risks and uncertainties that could cause actual results to differ materially from those contained in forward-looking statements made on behalf of the Company. These risks and uncertainties include the impact of general economic conditions and conditions affecting the insurance and reinsurance industry, the adequacy of our reserves, our ability to assess underwriting risk, trends in rates for property and casualty insurance and reinsurance, competition, investment market and investment income fluctuations, trends in insured and paid losses, catastrophes, pandemic, regulatory and legal uncertainties and other factors described in our latest Annual Report on Form 10-K. The Company undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

About Everest

Everest Group, Ltd. (Everest) is a global underwriting leader providing best-in-class property, casualty, and specialty reinsurance and insurance solutions that address customers’ most pressing challenges. Known for a 50-year track record of disciplined underwriting, capital and risk management, Everest, through its global operating affiliates, is committed to underwriting opportunity for colleagues, customers, shareholders, and communities worldwide.

Everest common stock (NYSE: EG) is a component of the S&P 500 index.

Additional information about Everest, our people, and our products can be found on our website at www.everestglobal.com.

A conference call discussing the results will be held at 8:00 a.m. Eastern Time on July 27, 2023. The call will be available on the Internet through the Company’s website at https://www.everestglobal.com/investor-relations.

Recipients are encouraged to visit the Company’s website to view supplemental financial information on the Company’s results. The supplemental information is located at www.everestglobal.com in the “Investors/Financials/Quarterly Results” section of the website. The supplemental financial information may also be obtained by contacting the Company directly.

_______________________________________________

The Company generally uses after-tax operating income (loss), a non-GAAP financial measure, to evaluate its performance. After-tax operating income (loss) consists of net income (loss) excluding after-tax net gains (losses) on investments and after-tax net foreign exchange income (expense) as the following reconciliation displays:

Although net gains (losses) on investments and net foreign exchange income (expense) are an integral part of the Company’s insurance operations, the determination of net gains (losses) on investments and foreign exchange income (expense) is independent of the insurance underwriting process. The Company believes that the level of net gains (losses) on investments and net foreign exchange income (expense) for any particular period is not indicative of the performance of the underlying business in that particular period. Providing only a GAAP presentation of net income (loss) makes it more difficult for users of the financial information to evaluate the Company’s success or failure in its basic business and may lead to incorrect or misleading assumptions and conclusions. The Company understands that the equity analysts who follow the Company focus on after-tax operating income (loss) in their analyses for the reasons discussed above. The Company provides after-tax operating income (loss) to investors so that they have what management believes to be a useful supplement to GAAP information concerning the Company’s performance.

--Financial Details Follow--

View source version on businesswire.com: https://www.businesswire.com/news/home/20230726044967/en/