Business Context and Reporting Period
Company: EVEREST GROUP, LTD. (NYSE: EG)
Filing Type: Form 10-K (Annual Report)
Reporting Period: Fiscal year ended December 31, 2024
Business Overview: Everest is a Bermuda-based global reinsurance and insurance organization operating through two primary reportable segments: Reinsurance and Insurance. In Q4 2024, the Company established a new "Other" segment to house run-off business, including the sold sports and leisure business and asbestos/environmental (A&E) exposures. The Company maintains strong financial strength ratings (A+ from A.M. Best and S&P) across its operating subsidiaries.
Key Financial Metrics
| Metric (in millions, except ratios) | 2024 | 2023 |
|---|---|---|
| Gross Written Premiums | $18,232 | $16,637 |
| Premiums Earned | $15,187 | $13,443 |
| Net Investment Income | $1,954 | $1,434 |
| Incurred Losses & LAE | $11,305 | $8,427 |
| Net Income | $1,373 | $2,517 |
| Combined Ratio | 102.3% | 90.9% |
| Total Assets | $56,341 | $49,399 |
| Shareholders' Equity | $13,875 | $13,202 |
| Total Debt | $3,587 | $3,385 |
Material Changes vs. Prior Period
- Net Income Decline: Net income decreased 45.4% to $1.4 billion from $2.5 billion in 2023. This decline was primarily driven by a $1.6 billion decrease in underwriting income due to unfavorable prior-year loss reserve development, partially offset by a $520 million increase in net investment income.
- Loss Reserve Strengthening: The Company recorded $1.5 billion in unfavorable development on prior-year attritional losses. This was driven by social inflation and portfolio concentrations in U.S. casualty lines ($1.1 billion in the Insurance segment) and unfavorable development in the Reinsurance segment ($684 million).
- Catastrophe Losses: Current-year catastrophe losses increased to $893 million in 2024 (5.9% of earned premium) from $470 million in 2023. Major events included Hurricane Milton ($320 million), Hurricane Helene ($94 million), and the 2024 European flood Boris ($56 million).
- Premium Growth: Gross written premiums grew 9.6% to $18.2 billion, with Reinsurance premiums up 12.9% and Insurance premiums up 3.9%.
- Investment Performance: Net investment income rose 36.3% to $2.0 billion, driven by higher yields on fixed maturities and increased income from limited partnerships.
Guidance, Outlook, and Risks
- Management Commentary: Management has significantly fortified U.S. casualty reserves and taken aggressive underwriting action in classes exposed to social inflation. The Company is bolstering talent and investing in its platform heading into 2025.
- Segment Outlook: The Reinsurance segment remains profitable with a combined ratio of 89.7%. The Insurance segment recorded an underwriting loss of $1.1 billion (combined ratio 130.7%) due to the aforementioned reserve strengthening.
- Key Risks:
- Catastrophe Exposure: The Company estimates a 1-in-100-year probable maximum loss (PML) of $2.2 billion (net of reinsurance) for a wind event in the Southeast U.S., representing approximately 11% of shareholders' equity.
- Social Inflation: Continued uncertainty regarding legal system outcomes and third-party litigation funding in U.S. casualty lines.
- Taxation: Bermuda enacted a 15% corporate income tax effective January 1, 2025. Recent OECD guidance may restrict the utilization of deferred tax assets related to the transition adjustment, potentially reducing the Company's deferred tax assets.
- Leadership Transition: James Williamson was appointed President and CEO in January 2025 following the departure of Juan Andrade.
- Subsequent Event: Wildfires in Southern California in January 2025 are estimated to result in pre-tax net catastrophe losses of $350 million to $450 million for Q1 2025.
Investor Verification Checklist
- Reserve Adequacy: Verify the sustainability of the $1.5 billion reserve strengthening in U.S. casualty lines and monitor future development trends.
- Catastrophe Modeling: Review the Company's PML exposure limits and the adequacy of reinsurance coverage for the Southeast U.S. wind peril.
- Tax Impact: Assess the final impact of the new Bermuda corporate income tax and OECD Pillar Two guidance on future effective tax rates and deferred tax assets.
- Insurance Segment Turnaround: Monitor the Insurance segment's ability to return to underwriting profitability following the significant reserve adjustments.
- Liquidity Position: Confirm the Company's ability to meet near-term obligations given the $350-$450 million subsequent loss estimate and ongoing claim payments.