Everest Announces Preliminary Commentary on Full-Year and Fourth Quarter 2024 Results

Rhea-AI Summary

Everest Group (NYSE: EG) has released preliminary financial results for 2024, expecting full-year net income between $1.3-1.4 billion and non-GAAP net operating income of $1.2-1.3 billion. The company reported significant reserve adjustments, including $1.5 billion in unfavorable development of prior-year loss reserves and $229 million in current accident year strengthening, totaling $1.7 billion for 2024.

The Reinsurance segment saw $684 million strengthening in U.S. casualty reserves, offset by favorable property and mortgage lines development. The Insurance segment required $1.1 billion in prior year U.S. casualty reserves strengthening and $206 million in current accident year losses. A new 'Other' segment reported $425 million in unfavorable development. The company announced a new target for mid-teens total shareholder return over the cycle, discontinuing detailed forward guidance.

Positive

• Expected full-year net income of $1.3-1.4 billion
• Favorable development in property and mortgage lines offsetting some losses
• Proactive strengthening of casualty reserves above actuarial central estimate

Negative

• Total reserve strengthening of $1.7 billion for 2024
• $1.1 billion strengthening required in Insurance segment U.S. casualty reserves
• $425 million unfavorable development in new 'Other' segment
• Discontinuation of detailed forward guidance

Insights

Financial Analyst

Everest Group's substantial $1.7 billion reserve strengthening signals a critical turning point in its risk management strategy. The magnitude of this action, particularly the $1.1 billion strengthening in U.S. casualty reserves within the Insurance segment, represents one of the largest recent reserve actions in the property & casualty sector.

Several key implications emerge from this announcement:

• The decision to position casualty reserves above the actuarial central estimate demonstrates a conservative approach that could provide earnings stability in future periods, though at the cost of near-term profitability.
• The formation of the new 'Other' segment, isolating sports and leisure lines along with run-off exposures, indicates a strategic portfolio realignment to reduce exposure to volatile business lines.
• The shift away from detailed forward guidance, coupled with a new mid-teens total shareholder return target, suggests a more flexible approach to capital management and potentially signals reduced predictability in quarterly performance.

Despite the significant reserve charges, the company's ability to maintain $1.3-1.4 billion in net income demonstrates robust underlying business performance and diversification benefits. The offsetting favorable development in property and mortgage lines highlights the portfolio's balanced nature.

The social inflation impact cited as a driver for reserve strengthening reflects an industry-wide challenge, particularly in U.S. casualty lines. This proactive response, while painful, positions Everest more conservatively than many peers who may face similar pressures in coming quarters.

HAMILTON, Bermuda--(BUSINESS WIRE)-- Everest Group, Ltd. (NYSE: EG), a global underwriting leader providing best-in-class property, casualty, and specialty reinsurance and insurance solutions, today announced preliminary financial results in advance of its full year and quarterly earnings to be released on February 3, 2025.

The Company expects to report full-year 2024 net income in the range of $1.3 billion to $1.4 billion and non-GAAP net operating income in the range of $1.2 billion to $1.3 billion.

The above results are inclusive of unfavorable development of prior-year loss reserves of $1.5 billion. After current accident year strengthening of $229 million, total strengthening is $1.7 billion for the full-year and fourth quarter 2024.

• In Everest’s Reinsurance segment, the Company strengthened prior year U.S. casualty reserves by $684 million for the full-year and fourth quarter 2024. The reserve strengthening was fully offset by favorable development of well-seasoned reserves in property and mortgage lines.

• In the Company’s Insurance segment, Everest strengthened prior year U.S. casualty reserves by $1.1 billion and increased current accident year losses in U.S. casualty lines by $206 million, totaling $1.3 billion for the full-year and fourth quarter 2024. The reserve strengthening was driven by a combination of social inflation and portfolio concentrations in certain U.S. casualty lines classes.

• As disclosed in an 8-K filed with the SEC after the market close on January 27, 2025, Everest formed a new “Other” segment, primarily comprised of certain sports and leisure lines after giving effect to the sale of the business in October 2024, run-off asbestos and environmental exposures, and certain discontinued insurance programs and coverage classes. Unfavorable development in the Company’s Other segment amounted to $425 million for both the full-year and fourth quarter 2024.

• The Company also announced its new target objective to deliver a mid-teens total shareholder return over the cycle. It will no longer be providing detailed forward guidance.

“Our decisive actions this quarter follow a comprehensive reserve review. As a result of these actions, our casualty reserves are positioned with a risk margin above the actuarial central estimate,” said Jim Williamson, Everest President and CEO. “The Company has significantly fortified its U.S. casualty reserves, while taking aggressive underwriting action in certain classes exposed to social inflation, bolstering talent, and investing in our platform. We believe these actions strengthen our balance sheet and put Everest on a clear trajectory towards generating attractive returns throughout the cycle.”

We will host a conference call on Tuesday, January 28, 2025, beginning at 8:30 am Eastern Time to discuss our preliminary 2024 results. Dial in details can be obtained by completing the registration form available at: https://dpregister.com/sreg/10196536/fe6a16fa20

About Everest

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.

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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:

		Range
($ in billions)		Low end			High end
After-tax net operating income (loss)		$	1.2		$	1.3
After-tax net gains (losses) on investments			-			-
After-tax net foreign exchange income (expense)			0.1			0.1
Net income (loss)		$	1.3		$	1.4

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 are 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.

View source version on businesswire.com: https://www.businesswire.com/news/home/20250127681911/en/

Media: Dawn Lauer

Chief Communications Officer

908.300.7670

Investors: Matt Rohrmann

Head of Investor Relations

908.604.7343

Source: Everest Group, Ltd.

FAQ

What is Everest Group's (EG) expected net income for full-year 2024?

Everest Group expects to report full-year 2024 net income between $1.3 billion and $1.4 billion.

How much reserve strengthening did Everest (EG) report for 2024?

Everest reported total reserve strengthening of $1.7 billion for 2024, including $1.5 billion in unfavorable prior-year development and $229 million in current accident year strengthening.

What caused Everest's (EG) reserve strengthening in the Insurance segment for 2024?

The reserve strengthening was driven by social inflation and portfolio concentrations in certain U.S. casualty lines classes, requiring $1.1 billion in prior year reserves and $206 million in current accident year losses.

What is Everest's (EG) new shareholder return target announced in 2024?

Everest announced a new target objective to deliver mid-teens total shareholder return over the cycle, while discontinuing detailed forward guidance.