Everest Reports Third Quarter 2023 Results

Rhea-AI Summary

Everest Group, Ltd. reports strong Q3 2023 results with net income of $678 million and operating income of $613 million. Net income ROE at 21.2% and operating income ROE at 19.2%. Gross written premium grew by 23.4% in constant dollars. Attritional combined ratio improved by 110 basis points YoY.

Positive

• Net income of $678 million and operating income of $613 million
• Gross written premium growth of 23.4% in constant dollars
• Attritional combined ratio improvement of 110 basis points YoY

Negative

• None.

Net Income of $678 million and Operating Income of $613 million

21.2% Net Income ROE and 19.2% Operating Income ROE

23.4%¹ GWP² Growth, Led by Record Reinsurance Growth of 32.7%¹

86.5% Attritional Combined Ratio Improved 110 Basis Points Year-Over-Year

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 reported its third quarter 2023 results.

Third Quarter 2023 Highlights

• Net Income of $678 million; Operating Income of $613 million driven by continued underwriting margin improvement and strong net investment income generation
• 21.2% Net Income ROE and 19.2% Operating Income ROE; Total Shareholder Return of 24.5% annualized
• $4.4 billion in gross written premium with year-over-year growth of 23.4% in constant dollars as reported for the Group, 32.7% in constant dollars when adjusting for reinstatement premiums for Reinsurance and 3.5% in constant dollars for Insurance
• Combined ratios of 91.4% for the Group, 91.0% for Reinsurance and 92.6% for Insurance driven by improved pricing and lower catastrophe losses year-over-year
• Attritional combined ratios of 86.5% for the Group, 84.9% for Reinsurance and 91.0% for Insurance
• Pre-tax underwriting income of $301 million versus a pre-tax underwriting loss of $367 million in the prior year
• $170 million of pre-tax catastrophe losses net of recoveries and reinstatement premiums, driven by a number of mid-sized events globally, versus $730 million in the prior year
• Net investment income improved to $406 million versus $151 million in the prior year third quarter, driven by strong fixed income and alternative investment returns
• Strong operating cashflow for the quarter of $1.4 billion, a company record, versus $1.1 billion in the third quarter 2022

Footnote 1 in header denotes constant currency figure.
Footnote 2 in header denotes gross written premium (“GWP”).

“Everest’s third quarter performance was excellent. We delivered outstanding returns including a near 20% operating return on equity and an annualized 25% total shareholder return,” said Everest President & CEO Juan C. Andrade. "We are leaning into the hard reinsurance market, where favorable conditions and the global flight to quality persist. As a lead market and preferred partner, we are well-positioned for the upcoming January renewals. We continue to expand our global reinsurance portfolio at significantly improved risk adjusted returns. In addition, our primary insurance business continues to generate strong and consistent underwriting income, with a significant year-over-year improvement. Supporting the strong underwriting performance of our two businesses, our high-quality investment portfolio continues to deliver outstanding returns, generating over $400 million in net investment income in the quarter, and over $1 billion year-to-date. We have significant momentum heading into the final quarter of the year, with strong tailwinds and exceptional talent powering our disciplined execution and industry-leading shareholder returns."

Summary of Third Quarter 2023 Net Income and Other Items

• Net Income of $678 million, equal to $15.63 per diluted share versus third quarter 2022 net loss of $319 million, equal to $(8.22) per diluted share
• Operating income of $613 million, equal to $14.14 per diluted share versus third quarter 2022 net operating loss of $205 million, equal to $(5.28) per diluted share
• GAAP combined ratio of 91.4%, including 5.0 points of catastrophe losses versus the third quarter 2022 figure of 112.0%, including 27.4 points of catastrophe losses

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

Net income and operating income	Q3		Year to Date		Q3		Year to Date
All values in USD millions except for per share amounts and percentages	2023		2023		2022		2022
Everest Group
Net income (loss)	678		1,713		(319)		101
Operating income (loss) (1)	613		1,684		(205)		587
Net income (loss) per diluted common share	15.63		41.49		(8.22)		2.57
Net operating income (loss) per diluted common share	14.14		40.77		(5.28)		14.91
Net income (loss) return on average equity (annualized)	21.2%		19.7%		(12.9%)		1.4%
After-tax operating income (loss) return on average equity (annualized)	19.2%		19.3%		(8.3%)		8.0%
Notes
(1) Refer to the reconciliation of net income to net operating income found on page 6 of this press release

Shareholders' Equity and Book Value per Share	Q3		Year to Date		Q3		Year to Date
All values in USD millions except for per share amounts and percentages	2023		2023		2022		2022
Beginning shareholders' equity	10,902		8,441		8,853		10,139
Net income (loss)	678		1,713		(319)		101
Change - unrealized gains (losses) - Fixed inc. investments	(242)		(159)		(671)		(2,199)
Dividends to shareholders	(76)		(212)		(65)		(191)
Purchase of treasury shares	—		—		(58)		(60)
Public equity offering of shares	—		1,445		—		—
Other	(37)		(1)		(91)		(141)
Ending shareholders' equity	11,226		11,226		7,649		7,649
Common shares outstanding			43.4				39.2
Book value per common share outstanding			258.71				195.27
Less: Unrealized appreciation/depreciation of fixed maturity investments ("URAD")			(43.06)				(50.02)
Adjusted book value per common share outstanding excluding URAD			301.76				245.29
Change in BVPS adjusted for dividends			22.4%				(22.5)%
Total Shareholder Return ("TSR") - Annualized			24.5%				-1.0%
Common share dividends paid - last 12 months			6.70				6.40

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.

Underwriting information - Everest Group	Q3		Year to Date		Q3		Year to Date		Year on Year Change
All values in USD millions except for percentages	2023		2023		2022		2022		Q3		Year to Date
Gross written premium	4,391		12,314		3,680		10,313		19.3%		19.4%
Net written premium	3,866		10,870		3,323		9,156		16.4%		18.7%
Loss ratio	63.9%		62.6%		85.5%		71.7%		(21.6) pts		(9.1) pts
Commission and brokerage ratio	21.4%		21.3%		20.9%		21.4%		0.5 pts		(0.1) pts
Other underwriting expenses	6.1%		6.3%		5.5%		5.7%		0.6 pts		0.6 pts
Combined ratio	91.4%		90.1%		112.0%		98.8%		(20.5) pts		(8.6) pts
Attritional combined ratio (1)	86.5%		86.9%		87.6%		87.4%		(1.1) pts		(0.5) pts
Pre-tax net catastrophe losses (2)	170		307		730		930
Pre-tax net Russia/Ukraine losses	—		—		—		45
Pre-tax net prior year reserve development	—		—		—		(2)
Notes
(1) Attritional ratios exclude catastrophe losses, net CAT reinstatement premiums earned, prior year development, COVID-19 losses, CECL, and losses from the Russia/Ukraine war
(2) Pre-tax net catastrophe losses are net of reinsurance and reinstatement premiums

Reinsurance Segment – Quarterly Highlights

• Gross written premiums grew 32.7% on a constant dollar basis, when adjusting for reinstatement premiums, to approximately $3.2 billion, a new quarterly premium record for the segment. Growth was broad-based across geographies and lines.
• Growth was driven by 43.9% growth in Property Pro-Rata, 41.2% in Property Catastrophe XOL, 28.8% growth in Casualty XOL, and 19.9% growth in Casualty Pro-Rata, when adjusting for reinstatement premiums, as pricing increases and a flight to quality continue globally.
• Robust pricing momentum continued in the third quarter, with Cat pricing up over 30% with improved terms/conditions.
• Attritional loss ratio improved 160-basis points over last year to 57.5%, and the attritional combined ratio improved to 84.9% versus 86.8% a year ago.
• Pre-tax catastrophe losses fell to $160 million net of estimated recoveries and reinstatement premiums, from $620 million a year ago.

Underwriting information - Reinsurance segment	Q3		Year to Date		Q3		Year to Date		Year on Year Change
All values in USD millions except for percentages	2023		2023		2022		2022		Q3		Year to Date
Gross written premium	3,219		8,622		2,551		6,938		26.2%		24.3%
Net written premium	3,008		8,101		2,460		6,664		22.3%		21.6%
Loss ratio	63.7%		61.9%		88.7%		72.8%		(25.0) pts		(10.9) pts
Commission and brokerage ratio	24.8%		24.8%		23.9%		24.5%		0.9 pts		0.3 pts
Other underwriting expenses	2.5%		2.6%		2.4%		2.4%		0.1 pts		0.2 pts
Combined ratio	91.0%		89.2%		115.0%		99.8%		(24.0) pts		(10.6) pts
Attritional combined ratio (1)	84.9%		85.1%		86.8%		86.3%		(1.9) pts		(1.2) pts
Pre-tax net catastrophe losses (2)	160		295		620		810
Pre-tax net Russia/Ukraine losses	—		—		—		45
Pre-tax net prior year reserve development	—		—		—		(2)
Notes
(1) Attritional ratios exclude catastrophe losses, net CAT reinstatement premiums earned, prior year development, COVID-19 losses, CECL, and losses from the Russia/Ukraine war
(2) Pre-tax net catastrophe losses are net of reinsurance and reinstatement premiums

Insurance Segment – Quarterly Highlights

• Gross written premiums rose to $1.2 billion, a 3.5% increase year-over-year in constant dollars, driven by a diversified mix of property and specialty lines, partially offset by lower written premiums in monoline workers' compensation and financial lines.
• Strong underwriting profit of $66 million for the quarter, $196 million year-to-date.
• Pre-tax catastrophe losses were $10 million, net of estimated recoveries and reinstatement premiums, in the quarter versus $110 million in the prior year.
• Expense ratio of 28.2% with continued investment in systems, talent, and our global platform.
• Pricing continues to exceed loss trend.

Underwriting information - Insurance segment	Q3		Year to Date		Q3		Year to Date		Year on Year Change
All values in USD millions except for percentages	2023		2023		2022		2022		Q3		Year to Date
Gross written premium	1,172		3,692		1,129		3,376		3.8%		9.4%
Net written premium	858		2,768		862		2,492		(0.4) %		11.1%
Loss ratio	64.4%		64.5%		76.8%		68.4%		(12.4) pts		(3.9) pts
Commission and brokerage ratio	11.5%		11.7%		12.7%		12.7%		(1.2) pts		(1.0) pts
Other underwriting expenses	16.7%		16.3%		14.0%		14.8%		2.7 pts		1.5 pts
Combined ratio	92.6%		92.6%		103.5%		95.9%		(10.9) pts		(3.3) pts
Attritional combined ratio (1)	91.0%		91.6%		89.8%		90.3%		1.2 pts		1.3 pts
Pre-tax net catastrophe losses (2)	10		12		110		120
Pre-tax net Russia/Ukraine losses	—		—		—		—
Pre-tax net prior year reserve development	—		—		—		1
Notes
(1) Attritional combined ratio excludes catastrophe losses, reinstatement premiums, prior year development, Covid-19 losses, CECL, and losses from the Russian/Ukraine war.
(2) Pre-tax net catastrophe losses are net of reinsurance and reinstatement premiums

Investments and Shareholders’ Equity as of September 30, 2023

• Total invested assets and cash of $34.6 billion versus $29.9 billion on December 31, 2022
• Shareholders’ equity of $11.2 billion vs. $8.4 billion on December 31, 2022, including $1.9 billion of unrealized net losses on AFS fixed maturity investments
• Shareholders’ equity excluding unrealized gains (losses) on AFS fixed maturity investments of $13.1 billion versus $10.1 billion on December 31, 2022
• Book value per share of $258.71 versus $215.54 at December 31, 2022
• Book value per share excluding unrealized gains (losses) on AFS fixed maturity investments of $301.76 versus $259.18 at December 31, 2022
• Common share dividends declared and paid in the quarter of $1.75 per share equal to $76 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 October 26, 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.

Everest will host its 2023 Investor Day on Tuesday, November 14, 2023, from 9:30 am to 1:00 pm Eastern Time. A live, listen-only webcast will be available for interested parties at https://vimeo.com/webinars/events/17b74702-5109-4c76-b8d7-4ca9b583d8b6.

_______________________________________________

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:

(Dollars in millions, except per share amounts)	Three Months Ended September 30,																Nine Months Ended September 30,
	2023								2022								2023								2022
	(unaudited)																(unaudited)
	Amount				Per Diluted Share				Amount				Per Diluted Share				Amount				Per Diluted Share				Amount				Per Diluted Share
After-tax operating income (loss)	$	613			$	14.14			$	(205	)		$	(5.28	)		$	1,684			$	40.77			$	587			$	14.91
After-tax net gains (losses) on investments		(27	)			(0.61	)			(102	)			(2.63	)			(17	)			(0.40	)			(415	)			(10.53	)
After-tax net foreign exchange income (expense)		91				2.10				(12	)			(0.31	)			46				1.12				(71	)			(1.80	)
Net income (loss)	$	678			$	15.63			$	(319	)		$	(8.22	)		$	1,713			$	41.49			$	101			$	2.57
(Some amounts may not reconcile due to rounding.)

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--

EVEREST GROUP, LTD.
CONSOLIDATED STATEMENTS OF OPERATIONS
AND COMPREHENSIVE INCOME (LOSS)
	Three Months Ended September 30,								Nine Months Ended September 30,
(Dollars in millions, except per share amounts)	2023				2022				2023				2022
	(unaudited)								(unaudited)
REVENUES:
Premiums earned	$	3,513			$	3,067			$	9,865			$	8,775
Net investment income		406				151				1,023				620
Total net gains (losses) on investments		(31	)			(129	)			(21	)			(519	)
Other income (expense)		103				(16	)			61				(71	)
Total revenues		3,991				3,073				10,927				8,805
CLAIMS AND EXPENSES:
Incurred losses and loss adjustment expenses		2,246				2,623				6,173				6,289
Commission, brokerage, taxes and fees		752				641				2,099				1,877
Other underwriting expenses		215				169				620				500
Corporate expenses		19				16				55				45
Interest, fees and bond issue cost amortization expense		34				25				99				74
Total claims and expenses		3,266				3,474				9,045				8,785
INCOME (LOSS) BEFORE TAXES		725				(401	)			1,883				20
Income tax expense (benefit)		47				(82	)			169				(81	)
NET INCOME (LOSS)	$	678			$	(319	)		$	1,713			$	101
Other comprehensive income (loss), net of tax:
Unrealized appreciation (depreciation) ("URA(D)") on securities arising during the period		(257	)			(712	)			(180	)			(2,260	)
Reclassification adjustment for realized losses (gains) included in net income (loss)		15				41				21				61
Total URA(D) on securities arising during the period		(242	)			(671	)			(159	)			(2,199	)
Foreign currency translation adjustments		(47	)			(101	)			(17	)			(163	)
Reclassification adjustment for amortization of net (gain) loss included in net income (loss)		—				1				1				2
Total benefit plan net gain (loss) for the period		—				1				1				2
Total other comprehensive income (loss), net of tax		(288	)			(771	)			(175	)			(2,360	)
COMPREHENSIVE INCOME (LOSS)	$	390			$	(1,090	)		$	1,538			$	(2,259	)
EARNINGS PER COMMON SHARE:
Basic	$	15.63			$	(8.22	)		$	41.49			$	2.57
Diluted		15.63				(8.22	)			41.49				2.57

EVEREST GROUP, LTD.
CONSOLIDATED BALANCE SHEETS
	September 30,				December 31,
(Dollar and share amounts in millions, except par value per share)	2023				2022
	(unaudited)
ASSETS:
Fixed maturities - available for sale, at fair value
(amortized cost: 2023, $27,305; 2022, $24,191, credit allowances: 2023, $(60); 2022, $(54))	$	25,159			$	22,236
Fixed maturities - held to maturity, at amortized cost
(fair value: 2023, $766; 2022, $821, net of credit allowances: 2023, $(8); 2022, $(9))		789				839
Equity securities, at fair value		166				281
Other invested assets		4,353				4,085
Short-term investments		2,403				1,032
Cash		1,765				1,398
Total investments and cash		34,635				29,872
Accrued investment income		298				217
Premiums receivable (net of credit allowances: 2023, $(36); 2022, $(29))		4,426				3,619
Reinsurance paid loss recoverables (net of credit allowances: 2023, $(25); 2022, $(23))		226				136
Reinsurance unpaid loss recoverables		2,196				2,105
Funds held by reinsureds		1,097				1,056
Deferred acquisition costs		1,156				962
Prepaid reinsurance premiums		756				610
Income tax asset, net		500				459
Other assets (net of credit allowances: 2023, $(8); 2022, $(5))		1,029				930
TOTAL ASSETS	$	46,318			$	39,966
LIABILITIES:
Reserve for losses and loss adjustment expenses		23,833			$	22,065
Future policy benefit reserve		27				29
Unearned premium reserve		6,295				5,147
Funds held under reinsurance treaties		28				13
Amounts due to reinsurers		795				567
Losses in course of payment		330				74
Senior notes		2,348				2,347
Long-term notes		218				218
Borrowings from FHLB		519				519
Accrued interest on debt and borrowings		41				19
Unsettled securities payable		200				1
Other liabilities		459				526
Total liabilities		35,092				31,526
SHAREHOLDERS' EQUITY:
Preferred shares, par value: $0.01; 50.0 shares authorized; no shares issued and outstanding		—				—
Common shares, par value: $0.01; 200.0 shares authorized; (2023) 74.2 and (2022) 69.9 outstanding before treasury shares		1				1
Additional paid-in capital		3,762				2,302
Accumulated other comprehensive income (loss), net of deferred income tax expense (benefit) of $(272) at 2023 and $(250) at 2022		(2,171	)			(1,996	)
Treasury shares, at cost; 30.8 shares (2023) and 30.8 shares (2022)		(3,908	)			(3,908	)
Retained earnings		13,542				12,042
Total shareholders' equity		11,226				8,441
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY	$	46,318			$	39,966

EVEREST GROUP, LTD.
CONSOLIDATED STATEMENTS OF CASH FLOWS
	Nine Months Ended September 30,
(Dollars in millions)	2023				2022
	(unaudited)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss)	$	1,713			$	101
Adjustments to reconcile net income to net cash provided by operating activities:
Decrease (increase) in premiums receivable		(812	)			(405	)
Decrease (increase) in funds held by reinsureds, net		(26	)			(35	)
Decrease (increase) in reinsurance recoverables		(186	)			(662	)
Decrease (increase) in income taxes		(18	)			(249	)
Decrease (increase) in prepaid reinsurance premiums		(153	)			(194	)
Increase (decrease) in reserve for losses and loss adjustment expenses		1,768				3,117
Increase (decrease) in future policy benefit reserve		(2	)			(2	)
Increase (decrease) in unearned premiums		1,157				435
Increase (decrease) in amounts due to reinsurers		233				242
Increase (decrease) in losses in course of payment		258				(150	)
Change in equity adjustments in limited partnerships		(124	)			(126	)
Distribution of limited partnership income		81				139
Change in other assets and liabilities, net		(375	)			(134	)
Non-cash compensation expense		37				35
Amortization of bond premium (accrual of bond discount)		(35	)			49
Net (gains) losses on investments		21				519
Net cash provided by (used in) operating activities		3,536				2,680
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from fixed maturities matured/called/repaid - available for sale		1,686				2,171
Proceeds from fixed maturities sold - available for sale		468				1,177
Proceeds from fixed maturities matured/called/repaid - held to maturity		81				18
Proceeds from equity securities sold		126				1,030
Distributions from other invested assets		189				244
Cost of fixed maturities acquired - available for sale		(5,311	)			(5,958	)
Cost of fixed maturities acquired - held to maturity		(23	)			(133	)
Cost of equity securities acquired		(3	)			(960	)
Cost of other invested assets acquired		(422	)			(455	)
Net change in short-term investments		(1,338	)			568
Net change in unsettled securities transactions		202				102
Net cash provided by (used in) investing activities		(4,346	)			(2,196	)
CASH FLOWS FROM FINANCING ACTIVITIES:
Common shares issued (redeemed) during the period for share-based compensation, net of expense		(22	)			(16	)
Proceeds from public offering of common shares		1,445				—
Purchase of treasury shares		—				(60	)
Dividends paid to shareholders		(212	)			(191	)
Cost of debt repurchase		—				(6	)
Cost of shares withheld on settlements of share-based compensation awards		(22	)			(19	)
Net cash provided by (used in) financing activities		1,188				(292	)
EFFECT OF EXCHANGE RATE CHANGES ON CASH		(12	)			46
Net increase (decrease) in cash		367				238
Cash, beginning of period		1,398				1,441
Cash, end of period	$	1,765			$	1,679
SUPPLEMENTAL CASH FLOW INFORMATION:
Income taxes paid (recovered)	$	185			$	167
Interest paid		75				51
NON-CASH TRANSACTIONS:
Reclassification of specific investments from fixed maturity securities, available for sale at fair value to fixed maturity securities, held to maturity at amortized cost net of credit allowances	$	—			$	722

 

View source version on businesswire.com: https://www.businesswire.com/news/home/20231025504199/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 were the net income and operating income for Q3 2023?

Net income for Q3 2023 was $678 million and operating income was $613 million.

What was the growth in gross written premium?

Gross written premium grew by 23.4% in constant dollars.

How much did the attritional combined ratio improve?

The attritional combined ratio improved by 110 basis points YoY.