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Everest Re's Q1 2025: Navigating Contradictions in Reinsurance Pricing, Capital Strategy, and Market Appetite
Generated by AI AgentEarnings Decrypt
Friday, May 2, 2025 7:28 pm ET1min read
Property reinsurance pricing pressure and demand, capital management and share repurchases, growth and capital capacity, competitive market in reinsurance, reinsurance appetite and market conditions are the key contradictions discussed in Everest Re's latest 2025Q1 earnings call.
Catastrophe and Loss Activity:
- reported a combined ratio of 102.7% for Q1 2025, reflecting an elevated ratio due to significant catastrophe losses, particularly from California wildfires.
- The company's attritional loss ratio increased by 330 basis points over the prior year's quarter.
- This was attributed to anticipated losses from California wildfires and aviation losses, which were consistent with expected ranges.
Casualty Portfolio Remediation and Shrinkage:
- Total group written premium was $4.4 billion, similar to Q1 2024, with shrinking deliberate in specific areas.
- Casualty premiums were down almost 22%, driven by portfolio actions and capacity reduction in the casualty quota share market.
- The remediation is due to unprofitable risks and unjustifiably sticky commissions, aiming to reach target profitability in one renewal cycle.
Property Catastrophe Market and Pricing:
- Everest Group's reinsurance premiums increased, with a 16% growth in property lines or 8% excluding reinstatement premiums.
- Despite modest cat pricing pressure, the company anticipates opportunities to deploy capital at attractive expected returns.
- The return expectations are high, driven by strong performance in property cat reinsurance, despite correction from previous highs.
Share Repurchase and Capital Management:
- Everest Group repurchased $200 million of shares in Q1 at an average price of over $348 per share.
- Share buybacks are a priority due to the company's excess capital position, growth rate, and valuation.
- The repurchases are part of the company's strategy to deliver value to shareholders, with plans to continue if conditions persist.
Catastrophe and Loss Activity:
- reported a combined ratio of 102.7% for Q1 2025, reflecting an elevated ratio due to significant catastrophe losses, particularly from California wildfires.
- The company's attritional loss ratio increased by 330 basis points over the prior year's quarter.
- This was attributed to anticipated losses from California wildfires and aviation losses, which were consistent with expected ranges.
Casualty Portfolio Remediation and Shrinkage:
- Total group written premium was $4.4 billion, similar to Q1 2024, with shrinking deliberate in specific areas.
- Casualty premiums were down almost 22%, driven by portfolio actions and capacity reduction in the casualty quota share market.
- The remediation is due to unprofitable risks and unjustifiably sticky commissions, aiming to reach target profitability in one renewal cycle.
Property Catastrophe Market and Pricing:
- Everest Group's reinsurance premiums increased, with a 16% growth in property lines or 8% excluding reinstatement premiums.
- Despite modest cat pricing pressure, the company anticipates opportunities to deploy capital at attractive expected returns.
- The return expectations are high, driven by strong performance in property cat reinsurance, despite correction from previous highs.
Share Repurchase and Capital Management:
- Everest Group repurchased $200 million of shares in Q1 at an average price of over $348 per share.
- Share buybacks are a priority due to the company's excess capital position, growth rate, and valuation.
- The repurchases are part of the company's strategy to deliver value to shareholders, with plans to continue if conditions persist.
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