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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 | |
---|---|---|---|---|---|---|---|---|
1.37 | 0.38% | 359.71 | 468 | 11:46:30 |
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
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
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
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
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
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
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
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