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Share Name | Share Symbol | Market | Type |
---|---|---|---|
Everest Group Ltd | NYSE:EG | NYSE | Common Stock |
Price Change | % Change | Share Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|
0.00 | 0.00% | 369.67 | 0 | 12:06:14 |
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
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
The following table summarizes the Company’s Net Income and related financial metrics.
Net income and operating incomeQ2
Year to Date
Q2
Year to Date
All values in USD millions except for per share amounts and percentages2023
2023
2022
2022
Everest Group Net income (loss)670
1,035
123
420
Operating income (loss) (1)627
1,070
386
792
Net income (loss) per diluted common share16.26
25.74
3.11
10.67
Net operating income (loss) per diluted common share15.21
26.61
9.79
20.10
Net income (loss) return on average equity (annualized)23.3%
18.3%
4.8%
8.4%
After-tax operating income (loss) return on average equity (annualized)21.8%
18.9%
15.3%
15.8%
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 Q2 Year to Date Q2 Year to Date All values in USD millions except for per share amounts and percentages2023
2023
2022
2022
Beginning shareholders' equity9,014
8,441
9,528
10,139
Net income (loss)670
1,035
123
420
Change - unrealized gains (losses) - Fixed inc. investments(167)
82
(717)
(1,528)
Dividends to shareholders(72)
(136)
(65)
(126)
Purchase of treasury shares—
—
—
(1)
Public equity offering of shares1,445
1,445
—
—
Other11
36
(16)
(51)
Ending shareholders' equity10,902
10,902
8,853
8,853
Common shares outstanding43.4
39.4
Book value per common share outstanding251.17
224.59
Less: Unrealized appreciation/depreciation of fixed maturity investments ("URAD")(37.47)
(32.68)
Adjusted book value per common share outstanding excluding URAD288.64
257.27
Change in BVPS adjusted for dividends18.1%
(11.8)%
Total Shareholder Return ("TSR") - Annualized25.3%
6.6%
Common share dividends paid - last 12 months6.60
6.30
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 Q2 Year to Date Q2 Year to Date Year on Year Change All values in USD millions except for percentages2023
2023
2022
2022
Q2 Year to Date Gross written premium4,180
7,923
3,447
6,633
21.3 %
19.4 %
Net written premium3,674
7,003
3,021
5,833
21.6 %
20.1 %
Loss ratio60.3%
61.8%
64.3%
64.2%
(4.0)% pts (2.4)% pts Commission and brokerage ratio21.1%
21.2%
21.6%
21.6%
(0.5)% pts (0.4)% pts Other underwriting expenses6.3%
6.4%
5.8%
5.8%
0.5 % pts 0.6 % pts Combined ratio87.7%
89.4%
91.8%
91.7%
(4.1)% pts (2.3)% pts Attritional combined ratio (1)86.7%
87.1%
87.2%
87.3%
(0.5)% pts (0.2)% pts Pre-tax net catastrophe losses (2)27
137
85
200
Pre-tax net Russia/Ukraine losses—
—
45
45
Pre-tax net prior year reserve development0
0
(1)
(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 premiumsReinsurance Segment – Quarterly Highlights
2023
2023
2022
2022
Q2 Year to Date Gross written premium2,766
5,403
2,201
4,387
25.7 %
23.2 %
Net written premium2,639
5,093
2,122
4,204
24.4 %
21.2 %
Loss ratio58.8%
60.8%
64.6%
64.4%
(5.8)% pts (3.6)% pts Commission and brokerage ratio24.5%
24.7%
24.8%
24.8%
(0.3)% pts (0.1)% pts Other underwriting expenses2.6%
2.7%
2.4%
2.4%
0.2 % pts 0.3 % pts Combined ratio85.9%
88.2%
91.8%
91.6%
(5.9)% pts (3.4)% pts Attritional combined ratio (1)84.7%
85.3%
86.0%
86.1%
(1.3)% pts (0.8)% pts Pre-tax net catastrophe losses (2)27
135
80
190
Pre-tax net Russia/Ukraine losses—
—
45
45
Pre-tax net prior year reserve development0
0
(1)
(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 premiumsInsurance Segment – Quarterly Highlights
2023
2023
2022
2022
Q2 Year to Date Gross written premium1,414
2,520
1,246
2,247
13.5 %
12.2 %
Net written premium1,035
1,910
899
1,630
15.0 %
17.2 %
Loss ratio64.4%
64.6%
63.6%
63.9%
0.8 % pts 0.7 % pts Commission and brokerage ratio11.8%
11.8%
12.8%
12.7%
(1.0)% pts (0.9)% pts Other underwriting expenses16.5%
16.2%
15.1%
15.2%
1.4 % pts 1.0 % pts Combined ratio92.7%
92.5%
91.5%
91.7%
1.2 % pts 0.8 % pts Attritional combined ratio (1)92.1%
91.9%
90.2%
90.6%
1.9 % pts 1.3 % pts Pre-tax net catastrophe losses (2)—
2
5
10
Pre-tax net Russia/Ukraine losses—
—
—
—
Pre-tax net prior year reserve development—
—
—
1
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 premiumsInvestments and Shareholders’ Equity as of June 30, 2023
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:
(Dollars in millions, except per share amounts) Three Months Ended June 30, Six Months Ended June 30,2023
2022
2023
2022
(unaudited) (unaudited) Amount Per DilutedShare Amount Per DilutedShare Amount Per DilutedShare Amount Per DilutedShare After-tax operating income (loss)$
627
$
15.21
$
386
$
9.79
$
1,070
$
26.61
$
792
$
20.10
After-tax net gains (losses) on investments
4
0.11
(189)
(4.79)
10
0.25
(312)
(7.93)
After-tax net foreign exchange income (expense)
39
0.94
(74)
(1.88)
(45)
(1.12)
(59)
(1.49)
Net income (loss)$
670
$
16.26
$
123
$
3.11
$
1,035
$
25.74
$
420
$
10.67
(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 Six Months Ended June 30, June 30, (Dollars in millions, except per share amounts)2023
2022
2023
2022
(unaudited) (unaudited) REVENUES: Premiums earned$
3,251
$
2,916
$
6,352
$
5,708
Net investment income
357
226
617
469
Total net gains (losses) on investments
5
(236)
10
(390)
Other income (expense)
38
(71)
(42)
(56)
Total revenues
3,650
2,835
6,936
5,731
CLAIMS AND EXPENSES: Incurred losses and loss adjustment expenses
1,960
1,876
3,927
3,666
Commission, brokerage, taxes and fees
686
630
1,347
1,236
Other underwriting expenses
205
170
405
331
Corporate expenses
17
15
36
29
Interest, fees and bond issue cost amortization expense
33
24
65
48
Total claims and expenses
2,901
2,715
5,779
5,310
INCOME (LOSS) BEFORE TAXES
750
119
1,157
421
Income tax expense (benefit)
80
(4)
122
1
NET INCOME (LOSS)$
670
$
123
$
1,035
420
Other comprehensive income (loss), net of tax: Unrealized appreciation (depreciation) ("URA(D)") on securities arising during the period
(169)
(732)
77
(1,548)
Reclassification adjustment for realized losses (gains) included in net income (loss)
2
16
5
20
Total URA(D) on securities arising during the period
(167)
(717)
82
(1,528)
Foreign currency translation adjustments
(1)
(28)
30
(62)
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
(168)
(744)
113
(1,588)
COMPREHENSIVE INCOME (LOSS)$
502
$
(621)
$
1,148
$
(1,168)
EARNINGS PER COMMON SHARE: Basic$
16.26
$
3.11
$
25.74
$
10.67
Diluted
16.26
3.11
25.74
10.67
EVEREST GROUP, LTD. CONSOLIDATED BALANCE SHEETS June 30, December 31, (Dollars 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, $26,372; 2022, $24,191, credit allowances: 2023, ($63); 2022, ($54))$
24,489
$
22,236
Fixed maturities - held to maturity, at amortized cost (fair value: 2023, $781; 2022, $821, net of credit allowances: 2023 ($8); 2022, ($9))
798
839
Equity securities, at fair value
259
281
Other invested assets
4,262
4,085
Short-term investments
1,675
1,032
Cash
2,067
1,398
Total investments and cash
33,550
29,872
Accrued investment income
266
217
Premiums receivable (net of credit allowances: 2023, ($34); 2022, ($29))
4,263
3,619
Reinsurance paid loss recoverables (net of credit allowances: 2023, ($24); 2022, ($23))
201
136
Reinsurance unpaid loss recoverables
2,175
2,105
Funds held by reinsureds
1,075
1,056
Deferred acquisition costs
1,086
962
Prepaid reinsurance premiums
692
610
Income tax asset, net
399
459
Other assets (net of credit allowances: 2023, ($7); 2022, ($5))
961
930
TOTAL ASSETS$
44,668
$
39,966
LIABILITIES: Reserve for losses and loss adjustment expenses
23,405
$
22,065
Future policy benefit reserve
28
29
Unearned premium reserve
5,943
5,147
Funds held under reinsurance treaties
25
13
Amounts due to reinsurers
678
567
Losses in course of payment
150
74
Senior notes
2,348
2,347
Long-term notes
218
218
Borrowings from FHLB
519
519
Accrued interest on debt and borrowings
19
19
Unsettled securities payable
21
1
Other liabilities
412
526
Total liabilities
33,766
31,525
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
3,753
2,302
Accumulated other comprehensive income (loss), net of deferred income tax expense (benefit) of ($247) at 2023 and ($250) at 2022
(1,883)
(1,996)
Treasury shares, at cost; 30.8 (2023) and 30.8 shares (2022)
(3,908)
(3,908)
Retained earnings
12,940
12,042
Total shareholders' equity
10,902
8,441
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY$
44,668
$
39,966
EVEREST GROUP, LTD. CONSOLIDATED STATEMENTS OF CASH FLOWS Six Months Ended June 30, (Dollars in millions)2023
2022
(unaudited) CASH FLOWS FROM OPERATING ACTIVITIES: Net income (loss)$
1,035
$
420
Adjustments to reconcile net income to net cash provided by operating activities: Decrease (increase) in premiums receivable
(584)
(223)
Decrease (increase) in funds held by reinsureds, net
(5)
(51)
Decrease (increase) in reinsurance recoverables
(21)
(237)
Decrease (increase) in income taxes
56
(100)
Decrease (increase) in prepaid reinsurance premiums
(40)
(110)
Increase (decrease) in reserve for losses and loss adjustment expenses
1,142
1,360
Increase (decrease) in future policy benefit reserve
(1)
(2)
Increase (decrease) in unearned premiums
732
177
Increase (decrease) in amounts due to reinsurers
63
120
Increase (decrease) in losses in course of payment
75
(178)
Change in equity adjustments in limited partnerships
(56)
(157)
Distribution of limited partnership income
49
105
Change in other assets and liabilities, net
(292)
(11)
Non-cash compensation expense
25
24
Amortization of bond premium (accrual of bond discount)
(11)
35
Net (gains) losses on investments
(10)
390
Net cash provided by (used in) operating activities
2,158
1,562
CASH FLOWS FROM INVESTING ACTIVITIES: Proceeds from fixed maturities matured/called/repaid - available for sale
1,137
1,661
Proceeds from fixed maturities sold - available for sale
168
772
Proceeds from fixed maturities matured/called/repaid - held to maturity
61
—
Proceeds from equity securities sold
46
438
Distributions from other invested assets
133
205
Cost of fixed maturities acquired - available for sale
(3,396)
(4,071)
Cost of fixed maturities acquired - held to maturity
(15)
(72)
Cost of equity securities acquired
(3)
(283)
Cost of other invested assets acquired
(298)
(308)
Net change in short-term investments
(625)
878
Net change in unsettled securities transactions
41
23
Net cash provided by (used in) investing activities
(2,752)
(757)
CASH FLOWS FROM FINANCING ACTIVITIES: Common shares issued (redeemed) during the period for share-based compensation, net of expense
(19)
(15)
Proceeds from public offering of common shares
1,445
—
Purchase of treasury shares
—
(1)
Dividends paid to shareholders
(136)
(126)
Cost of shares withheld on settlements of share-based compensation awards
(20)
(17)
Net cash provided by (used in) financing activities
1,269
(159)
EFFECT OF EXCHANGE RATE CHANGES ON CASH
(7)
30
Net increase (decrease) in cash
668
675
Cash, beginning of period
1,398
1,441
Cash, end of period$
2,067
2,116
SUPPLEMENTAL CASH FLOW INFORMATION: Income taxes paid (recovered)$
73
$
101
Interest paid
64
48
View source version on businesswire.com: https://www.businesswire.com/news/home/20230726044967/en/
Media: Dawn Lauer Chief Communications Officer 908.300.7670
Investors: Matt Rohrmann Head of Investor Relations 908.604.7343
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