Transcript: Everest Group Q2 2026 Earnings Conference Call

On Thursday, Everest Group (NYSE: EG ) discussed second-quarter financial results during its earnings call. The full transcript is provided below. This transcript is brought to you APIs. For real-time access to our entire catalog, please visit for a consultation.

9%. The company grew book value per share by 12% year over year. Strategic initiatives include focusing on core businesses like Treaty Reinsurance and Global Wholesale and Specialty, improving portfolio quality, and enhancing underwriting performance. The company also launched Annapurna Re, a casualty and specialty reinsurance sidecar to boost growth and capital flexibility.

Future outlook remains cautiously optimistic despite competitive market conditions, with expectations of maintaining positive shareholder returns. Management highlighted the importance of disciplined underwriting and capital management, committing to share repurchases as a key capital allocation strategy. The company reported significant underwriting actions, resulting in reduced exposure to US casualty lines and selective business reductions. Gross written premium saw a decline due to these deliberate choices.

Management expressed confidence in the strength of the balance sheet and the prudence of loss picks, despite elevated loss trends and reserve adjustments in the North American casualty book. Full Transcript OPERATOR Good day and welcome to the Everest Group Limited second quarter 2026 earnings conference call. Today, all participants will be in a listen-only mode. Should you need assistance during today's call, please signal for a conference specialist by pressing the star key followed by zero.

After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one on your touchtone phone. To withdraw your question, please press star then two. Please note that today's event is being recorded.

I would now like to turn the conference over to Matt Rohrman, Senior Vice President, Head of Investor Relations. Please go ahead. Matt Rohrman, Senior Vice President, Head of Investor Relations Thank you, Chris. Good morning everyone and welcome to Everest Group Limited second quarter 2026 earnings conference call.

The Everest executives leading today's call are Jim Wilson, President and CEO, and Elias, Executive Vice President and CFO. We are also joined by other members of the Everest management team. Before we begin, I will preface the comments by noting that today's call will include forward-looking statements. Actual results may differ materially and we undertake no obligation to publicly update forward-looking statements.

Please note that forward-looking statements include estimates, projections and forecasts of future results and are subject to the risks, uncertainties and assumptions noted in Everest SEC filings. Management will also be referring to certain non-GAAP financial measures. Available explanations and reconciliations to GAAP can be found in the earnings release, investor presentation and financial supplement on our investor relations website. With that, I'll turn the call over to Jim.

Jim Wilson, President and CEO Thank you, Matt. Good morning everyone. Everest posted another strong quarter with significant earnings and capital generation. Meaningful contributions from underwriting and investment income produced operating income of $585 million annualized after tax.

8% and we grew book value per share excluding unrealized gains and losses by 12% year over year. The results in this quarter further show the strength of the more focused Everest we have built. The benefits of the actions we are taking to improve portfolio quality, strengthen underwriting performance and allocate capital to the most attractive opportunities available to us are emerging in our numbers. Our strategy is built around developing our core businesses while managing the cycle with relentless discipline.

We are upgrading critical capabilities, optimizing the balance sheet and accelerating the return of capital to shareholders. This quarter's results are further proof that the execution of this strategy is working. Our core businesses, Treaty Reinsurance and Global Wholesale and Specialty generated underwriting income of $317 million on a combined ratio of 90%. As I have said before, we continue to focus on underwriting discipline and rate adequacy while prioritizing bottom line results over top line production, especially in this environment.

7 billion in gross written premium, a modest year over year decline driven by deliberate underwriting choices. Our reinsurance treaty team delivered another excellent quarter, leveraging the depth and breadth of our platform as competitive advantages to effectively navigate a softening property market. 5% and underwriting income of $283 million. As we decisively manage the cycle, we have continued to decrease our exposure to US casualty lines and selectively reduce business where pricing or structure decreases did not meet our return thresholds.

This resulted in approximately a 9% decrease in gross written premium year over year on a constant dollar basis and excluding reinstatement premiums, casualty lines were down by 19% while property premiums were relatively flat. As growth in property pro rata was offset by decreases in our CAT book, we continued our targeted expansion in specialty lines globally where risk adjusted returns remain attractive. Our strategy of building deep underwriting capabilities in specific segments allows us to capture emerging opportunities like data centers as well as new markets within construction and renewable energy.

In each of the 2026 renewals, the Everest team has been able to maximize shares on the most attractive deals while reducing or exiting programs below our return thresholds. This is only possible because of the strength of our global underwriting platform and our well-honed distribution management capabilities. While property pricing in the market was down in the range of 15 to 20% at both 6/1 and 7/1, pricing on our property CAT portfolio between both renewal periods finished down approximately 10%. Despite rate pressure, terms and conditions are largely holding and attachment points remain relatively stable.

Looking ahead to the 1127 renewals, we expect market conditions to remain competitive absent large CAT losses or other external shocks. 4 billion of AUM as of July 1, up 89% from the beginning of 2025. A major contributor to this growth is the launch of our casualty and specialty reinsurance sidecar Annapurna Re. Annapurna provides Everest with an additional lever to facilitate opportunistic growth, generate fee income and enhance capital flexibility.

This is just another example of the work we are doing to optimize our balance sheet and at the same time enhance ROE potential over time. Turning to the Global Wholesale and Specialty segment, results were strong. Our strategy to expand the portfolio in specialty lines and targeted international markets while delivering margin expansion continues to gain momentum. Gross written premium was roughly flat year over year as growth in niche specialty lines and international business was offset by deliberate reductions in US property and casualty.

We grew double digits internationally with broad based growth across financial lines, marine political violence as well as in select specialty property markets. Rate across our portfolio was flat as double digit rate declines in property were offset by rate increases in casualty lines. More importantly, the areas of our business we're expanding continue to be rate adequate. The significant underwriting actions we have taken in recent years continue to pay dividends with both the attritional loss and combined ratios improving year over year.

This is a result of the team's disciplined risk selection and portfolio management. Now a word on capital management. 5 billion towards share repurchases, resulting in a reduction of over 10% of our shares outstanding. Share repurchases remain a top priority for capital allocation and our commitment to disciplined capital management was again evident in this quarter's results.

This speaks to our continued conviction in the strength of our balance sheet and that Everest share price does not accurately represent the true value and earnings power of the company. Our goal is simple: to grow book value per share consistently. We're doing that through disciplined underwriting and capital stewardship and this quarter provides convincing evidence of our approach. We are not, however, declaring victory.

I am seeing more signs of irresponsible underwriting in the market. The US tort environment, despite some recent reforms, is corrosive to a well-functioning economy and is putting pressure on industry reserves. And the world is experiencing unprecedented levels of risk across multiple domains with little sign of that risk being reflected in insurance and reinsurance prices. But today's Everest is up to these challenges.

We have a deep bench of talented people across our organization, robust and growing analytical and technology capabilities, and superb relationships and distribution. Our intent is to strengthen our company no matter what part of the cycle we're facing. Let me end by welcoming Elias to the team as our new CFO. Elias is a seasoned finance executive with over 30 years of experience leading several global finance organizations in the insurance and financial services industry.

We're excited to have him on board and with that, I'll turn the call over to Elias. Elias, Chief Financial Officer Thank you, Jim, and good morning, everyone. The second quarter results reflect the momentum we're creating by executing on our strategic priorities to create shareholder value. We believe the combination of delivering compounding book value per share growth driven by disciplined underwriting and prudent capital management is the best way to generate that value.

Before unpacking this quarter's results, I'd like to highlight two changes we're making to our external reporting. First, beginning with this quarter, we will be providing consolidated financial results for what we will now refer to as our core businesses, consisting of Reinsurance Treaty and Global Wholesale and Specialty. These businesses represent the future of Everest, and with this additional disclosure we're providing you with added transparency into the earnings power of the go-forward business. This excludes the legacy segment which, as we have noted in previous quarters, will become an immaterial contributor to earnings as the portfolio runs off.

Second, beginning in the third quarter we will make some revisions to our definition of after-tax net operating income to better align our definition with industry peers. We will exclude one-time expenses as well as gains and losses associated with acquisition, divestiture, and restructuring activities, as well as the asymmetric accounting for the ADC. These refinements will improve transparency and period-over-period comparability of Everest's operating results. We're previewing these changes this quarter and have provided the preliminary recast of the historical results under the revised definition in the back of our financial supplement.

85 by delivering an underwriting profit of approximately 300 million and net investment income of over 500 million while returning over 470 million to shareholders between share repurchases and dividends. Moving to our core businesses, we are focused on producing consistent underwriting profitability supported by a strong balance sheet to deliver on our total shareholder return goals. The core businesses delivered strong underwriting profits in the quarter of $317 million. 7 billion, lower than the prior year quarter by approximately 7% on a comparable basis, reflecting our underwriting discipline and actions to improve the portfolio mix.

The core combined ratio was 90%, inclusive of 85 million in catastrophe losses net of estimated recoveries and reinstatement premiums, largely driven by the conflict in the Middle East and several weather-related events globally. There was no net prior-year loss development. 8%, relatively consistent with the prior year. 1%, reflecting the impact of lower net earned premium as well as modestly higher expenses, driven in part by timing as well as investments we're making in the business to improve our competitive positioning and operating efficiency.

In our Reinsurance Treaty business, we continue to capitalize on our lead market position to achieve differentiated rate and terms as we proactively improve the mix and shorten the duration of the portfolio while navigating the current market cycle. 5%, a year-over-year increase of 360 basis points, mostly driven by higher catastrophe losses. 1%, largely due to higher weather-related non-cat losses. 4%, a 130 basis points year-over-year improvement driven by mix and improved loss experience.

Turning to Annapurna Re, our recently announced casualty and specialty sidecar, Annapurna Re provides Everest with additional portfolio management and financial optionality. We expect to cede roughly 200 million of premium a quarter over the next three years to Annapurna Re. We also expect the transaction to be modestly accretive to overall underwriting income and ROE over time while resulting in lower net investment income. Now moving to our Global Wholesale and Specialty business where we are focused on improving underwriting margins as we pursue profitable growth in targeted lines and geographies.

6% as a result of the underwriting actions we've been taking and an improving business mix. 4 points to the combined ratio, while the prior-year quarter's experience was de minimis. 6%, largely driven by timing, mix, and investments in the underwriting platforms. While underwriting profitability was strong this quarter, we continue to expect this business to deliver combined ratios in the middle to high 90s in the near term.

Now moving to our legacy segment, we continue to manage the transition of our commercial retail insurance business to AIG, which remains on track with roughly 250 million of net premiums left to be earned in the second half of the year. We're also focused on proactively managing the runoff book through claims optimizations and expense discipline that will unlock the capital that supports the portfolio. As expected, in the second quarter, the segment generated a modest drag on the group underwriting results. Turning to reserves, as Jim noted, I recently joined the company along with our new Group Chief Actuary, Katie Bradica.

Katie and I worked together in the past, and I think very highly of her skills. I'd like to touch on our process and philosophy before providing the highlights of the quarter. On process, we follow a prudent quarterly reserving review where we respond proactively to emerging credible data even if the annual studies have not been completed. Our philosophy is to maintain management's best estimates above the actuarial central estimate and embed conservatism in our loss specs.

Finally, the annual reserve studies for most of our long-tail lines, including Reinsurance Treaty business, are scheduled to be completed later in the third quarter, and Katie and I will be heavily involved in that process. Now turning to the results for this quarter, we had no net development on prior-year loss reserves. Short-tail lines continued to develop favorably. This was offset by the increase in the industry loss estimate on the Baltimore Bridge collapse matter, as well as some strengthening in casualty reflecting our cautious outlook.

Lastly, we expect to publish our global loss triangles during this upcoming month. You will see enhanced disclosure like additional lines-of-business triangles and more commentary within each of our three reporting segments. Moving on to investments, we continue to maintain a high-quality and diversified investment portfolio. Net investment income was 523 million for the quarter, modestly lower year over year due to lower alternative investment returns.

5%, which is below our current new-money yield which is closer to 5%. Turning to capital management, our philosophy is to deploy capital towards opportunities that maximize shareholder returns, balancing growing the franchise value of the company while providing an attractive return to our shareholders. Given current market conditions and our attractive valuation, repurchasing shares is the top allocation priority.