Everest Group's Q4 2024: Navigating Contradictions in Casualty Strategy, Premiums, and Loss Ratios

These are the key contradictions discussed in Everest Group's latest 2024Q4 earnings call, specifically including: Casualty Business Strategy and Capital Management, Casualty business strategy and premium reductions, and the impact of non-renewals on business mix, and Insurance segment loss ratio progress and business mix changes:



Financial Impact of Reserve Actions:
- Everest Group reported a net reserve increase of $1.7 billion, including over $200 million for 2024 loss picks, which impacted their financial results.
- The company's operating income for the year was $1.3 billion, with a 9% operating return on equity, despite these reserve adjustments.

Reinsurance Performance:
- In the fourth quarter, Everest's reinsurance division earned $286 million and $1.2 billion for the year in underwriting income.
- The all-in combined ratio excluding prior year favorable cat development was 91.5%, showing resilience in the face of significant cat activity.

Casualty Portfolio Remediation:
- Everest walked away from nearly $750 million in North American casualty quota share business since January 1, 2024, due to disciplined underwriting and cedent selection.
- In Q4, 40% of casualty premiums were not renewed, leading to a reduction in U.S. specialty casualty business by approximately 23%.

California Wildfires Loss Estimate:
- Everest expects to take a pre-tax net loss of between $350 million and $450 million for the California wildfires, equating to a 1% market share.
- The loss estimate remains a broad range based on industry figures, reflecting careful client selection and underwriting standards.