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    EG
    Earnings call· Jun 2026(Q2 FY26)

    EVEREST GROUP Q2 FY26 earnings call EG

    Jul 30, 2026 Source

    Executive summary

    Everest Group Q2 FY26 — Strong Underwriting and Capital Generation, Increased Share Repurchases

    Everest Group delivered a strong Q2 FY26, driven by robust underwriting and investment income, leading to a 14.9% operating ROE and 12% YoY book value per share growth (ex-AOCI). The company continued its disciplined capital management, repurchasing $395 million in shares, while navigating a softening property market and addressing elevated casualty loss trends with reserve strengthening. Management remains focused on portfolio quality and capital allocation to maximize shareholder returns.

    Highlights

    5

    • Operating income reached $585 million, contributing to an annualized after-tax net operating ROE of 14.9%.

    • Book value per share, excluding unrealized gains and losses, grew 12% year-over-year to $408.

    • Core businesses (Reinsurance Treaty and Global Wholesale & Specialty) generated underwriting income of $317 million on a combined ratio of 90%.

    • The company repurchased 1.2 million shares for $395 million at an average price of $342/share in Q2, contributing to $1.5 billion in repurchases since January 2025, reducing shares outstanding by over 10%.

    • Net investment income was strong at $523 million, with a book yield of 4.5% and new money yield closer to 5%.

    Concerns

    4

    • Market property pricing was down 15-20% at the 6/1 and 7/1 renewals, though Everest's portfolio saw a more limited 10% decline.

    • Casualty lines in Reinsurance Treaty experienced a 19% decrease in gross written premium year-over-year.

    • The industry loss estimate for the Baltimore bridge collapse increased by $55 million, and North America casualty reserves were strengthened by just under $200 million.

    • The core businesses' expense ratio increased to 5.1%, and Global Wholesale & Specialty's underwriting-related expense ratio rose to 12.6%.

    Guidance & targets

    12
    CategoryTargetConfidence
    1/1/27 renewals conditions
    remain competitive absent large cat losses or other external shocks
    medium materiality
    Medium
    Annapurna Re ceded premium
    roughly $200 million of premium a quarter
    medium materiality
    High
    Annapurna Re financial impact
    modestly accretive to overall underwriting income and ROE over time while resulting in lower net investment income
    medium materiality
    Medium
    Global Wholesale & Specialty combined ratio
    mid to high 90s
    medium materiality
    Medium
    Legacy segment net premiums earned
    roughly $250 million
    medium materiality
    High
    Global loss triangles disclosure
    publish our global loss triangles during this upcoming month
    low materiality
    High
    Share repurchases
    exceed that amount when appropriate
    high materiality
    High
    Payout ratio discipline
    maintain that same discipline going forward
    high materiality
    High
    Reinsurance Treaty attritional loss ratio
    mid-50s
    medium materiality
    Medium
    Global Wholesale & Specialty attritional loss ratio
    in the same neighborhood as where we were this quarter
    medium materiality
    Medium
    Reinsurance Treaty cat loading
    roughly 8 points
    medium materiality
    High
    Global Wholesale & Specialty cat loading
    roughly about 4 points
    medium materiality
    High

    Segment performance

    4
    SegmentRevenueYoYQoQMargin
    Core Businesses (Consolidated)
    Represents the combined results of Reinsurance Treaty and Global Wholesale & Specialty. Gross premiums were lower year-over-year reflecting underwriting discipline and portfolio mix improvement. Catastrophe losses were largely driven by the Middle East conflict and global weather events. No net prior year loss development.
    Combined ratio: 90%Catastrophe losses (net of recoveries/reinstatement): $85 millionAttritional loss ratio: 57.8%Expense ratio: 5.1%
    		$3.7 billiondown 7%—$317 million underwriting income
    Reinsurance Treaty
    Delivered excellent results by leveraging platform depth to navigate a softening property market. Gross written premium decline was on a constant dollar basis, excluding reinstatement premiums, driven by deliberate underwriting choices. Growth in property pro rata was offset by decreases in the cat book. Combined ratio increase mostly due to higher catastrophe losses. Attritional loss ratio increase largely due to higher weather-related non-cat losses.
    Combined ratio: 88.5%Combined ratio YoY increase: 360 bpsCasualty lines GWP decrease: 19%Property premiums: relatively flatProperty cat pricing (Everest portfolio): down 10%Property cat pricing (market): down 15-20%Attritional loss ratio: 57.1%Attritional loss ratio YoY increase: 140 bpsAttritional loss ratio (ex-weather non-cat): 54.4%
    		—down 9%—$283 million underwriting income
    Global Wholesale & Specialty
    Strong results with momentum in expanding specialty lines and targeted international markets. Growth in niche specialty lines and international business was offset by deliberate reductions in U.S. property and casualty. Double-digit rate declines in property were offset by rate increases in casualty lines. Attritional loss ratio improvement is a result of disciplined risk selection and portfolio management. Underwriting-related expense ratio increased due to timing, mix, and investments in platforms. Expects combined ratios in the mid to high 90s in the near term.
    International growth: double digitsRate across portfolio: flatCombined ratio: 95.2%Attritional loss ratio: 60.6%Attritional loss ratio YoY improvement: 390 bpsCatastrophe losses contribution to combined ratio: 1.4 pointsUnderwriting-related expense ratio: 12.6%
    		—roughly flat——
    Legacy segment
    Transition of commercial retail insurance business to AIG remains on track. Focused on proactively managing the runoff book through claims optimizations and expense discipline to unlock capital.
    Net premiums left to be earned (H2 FY26): $250 million
    		———modest drag on Group underwriting results

    Operational metrics

    17
    Operating income
    $585 million
    Q2 FY26

    Meaningful contributions from underwriting and investment income.

    Annualized after-tax net operating ROE
    14.9%
    Q2 FY26
    Annualized total shareholder return
    16.8%
    Q2 FY26
    Net investment income
    $523 millionmodestly lower year-over-year
    Q2 FY26

    Due to lower alternative investment returns.

    Book yield
    4.5%stable
    Q2 FY26
    New money yield
    ~5%
    Q2 FY26

    Current new money yield.

    Asset duration
    ~3.5 years
    Q2 FY26

    Maintained as part of liability-driven investment strategy.

    Share repurchases
    $395 million
    Q2 FY26

    Part of capital management strategy, exceeding the $300 million quarterly floor.

    Total share repurchases
    $1.5 billion
    since Jan 2025

    Resulted in a reduction of over 10% of shares outstanding.

    Total capital returned
    over $470 million
    Q2 FY26

    Between share repurchases and dividends.

    Payout rate
    81%
    Q2 FY26

    Reflects capital returned to shareholders.

    Payout rate
    ~77%
    past 3 quarters

    Reflects consistent capital return strategy.

    Capital behind legacy
    over $1 billion
    Q2 FY26

    Amount of capital expected to free up over time as legacy reserves run off.

    Baltimore bridge collapse reserve increase
    $55 million
    Q2 FY26

    Bringing total to industry loss estimate of $2.8 billion to $3 billion.

    North America casualty reserve strengthening
    just under $200 million
    Q2 FY26

    Driven by elevated loss trends and loss emergence in older accident years, spread across most accident years.

    Casualty loss trends
    high single digits to low double digitsrelatively stable since last reserve study
    Q2 FY26

    Varies by line within casualty.

    Mt. Logan Capital Management AUM
    $3.4 billionup 89% from beginning of 2025
    July 1, 2026

    Major contributor to growth is the launch of Annapurna Re.

    Industry KPIs

    9
    MetricValueDetails
    Combined ratio90%%
    Capital returns$395 millionUSD
    ROE operating ROE14.9%%
    Catastrophe losses$85 millionUSD
    Book value per share$408USD
    Net investment income$523 millionUSD
    Net premiums written earned$3.7 billionUSD
    Renewal rate change pricingdown 15-20%%
    Prior year reserve developmentno net prior year loss development

    Product announcements

    1
    ProductTypeDetails
    Annapurna Relaunch

    Deals & partnerships

    1
    Capital partnersCasualty and specialty reinsurance sidecar3 years

    Launch of Annapurna Re, a sidecar that will receive approximately $200 million of premium per quarter from Everest over the next three years. It is structured as a quota share to ensure alignment of interest with capital partners.

    Risks & headwinds

    5
    Softening Property MarketCurrent

    Property pricing down 15-20% in the market at 6/1 and 7/1 renewals.

    Mitigation: Everest's disciplined underwriting, strategic capacity deployment, and higher attachment points limited its portfolio decline to 10%. Terms and conditions largely holding, and attachment points relatively stable.

    U.S. Tort EnvironmentOngoing

    Corrosive to a well-functioning economy, putting pressure on industry reserves.

    Mitigation: Careful management of long-tail lines, conservative approach to business, and proactive reserve reviews. No credit taken for tort reforms yet.

    Elevated Casualty Loss TrendsCurrent

    Continued elevated loss trends and emergence in older accident years, leading to just under $200 million reserve strengthening in North America casualty.

    Mitigation: Proactive quarterly reserving review, embedding conservatism in loss picks, and reflecting observed trends across most accident years. Current year loss picks for 2026 are considered prudent.

    Increased Competition in ReinsuranceOngoing

    Supply of capital goes up, leading to marginal competitive pressure.

    Mitigation: Focus on discipline, strong underwriting capabilities, product differentiation, and leveraging a highly diversified underwriting platform to manage market cycles and deploy capital strategically.

    Middle East Conflict Catastrophe LossesQ2 FY26

    Contributed to $85 million in catastrophe losses for core businesses.

    Mitigation: Conservative approach during the conflict; viewed as a potential opportunity for rate increases in political violence and marine lines.

    What to watch in Q3 FY26

    5

    Annual reserve studies for long-tail lines

    Q3 FY26
    CurrentOngoing
    TargetCompletion and results

    Why it matters

    Will provide a comprehensive view of reserve adequacy and potential further adjustments, especially for casualty lines, impacting future profitability.

    Finally, the annual reserve studies for most of our long-tail lines, including Reinsurance Treaty business, are scheduled to be completed later in the third quarter, and Katie and I will be heavily involved in that process.

    Q&A highlights

    7

    Given new leadership in finance and actuarial, what gives confidence in the balance sheet strength ahead of the full reserve review?

    Elias Habayeb affirmed the balance sheet is strong, citing capital adequacy, liquidity, leverage, and overall risk profile, which supports exceeding the $300 million quarterly share repurchase floor. He noted proactive adjustments to reserves based on current data, rather than waiting for the Q3 annual studies.

    “I believe our balance sheet is strong. I look at the strength of the balance sheet, looking at capital adequacy, liquidity, leverage, the overall risk profile of the balance sheet. So looking at all that, I believe we've got a strong balance sheet that gives me conviction that we would be able to deliver on share repurchases in excess of $300 million going forward.”

    asked by Taylor Scott · answered by Elias Habayeb

    2 min read7 chapters

    Detailed Narrative

    01

    Strategic Focus and Portfolio Optimization

    Everest is focused on developing core businesses, improving portfolio quality, strengthening underwriting, and optimizing the balance sheet. This includes reducing exposure to U.S. casualty lines and selectively reducing business where pricing or structure did not meet return thresholds, leading to a 9% decrease in gross written premium year-over-year on a constant dollar basis in Reinsurance Treaty. The company prioritizes bottom-line results over top-line production, especially in the current market environment.

    02

    Third-Party Capital Platform Growth

    Mt. Logan Capital Management's AUM grew 89% from the beginning of 2025 to $3.4 billion as of July 1. This growth was significantly boosted by the launch of Annapurna Re, a casualty and specialty reinsurance sidecar, which provides an additional lever to facilitate opportunistic growth, generate fee income, and enhance capital flexibility. This platform is a key component of optimizing the balance sheet and enhancing ROE potential.

    03

    Underwriting Discipline in Property Cat

    Despite market property pricing being down 15-20% at 6/1 and 7/1 renewals, Everest achieved only a 10% reduction in pricing on its property cat portfolio. This was accomplished by strategically adjusting participation, moving to higher attachment points, and deploying capacity to attractive deals. Terms and conditions largely held, and attachment points remained relatively stable, allowing the company to maintain returns above its threshold.

    04

    Global Wholesale & Specialty Expansion

    This segment is expanding in niche specialty lines and targeted international markets, with double-digit international growth across financial lines, marine, political violence, and select specialty property markets. This growth offsets deliberate reductions in U.S. property and casualty, leading to flat overall gross written premium. The segment's attritional loss ratio improved by 390 basis points to 60.6% due to disciplined risk selection and portfolio management.

    05

    Reserve Philosophy and Process

    New CFO Elias Habayeb and Group Chief Actuary Katie Bradica outlined a prudent quarterly reserving review process, reacting proactively to emerging data. Their philosophy is to maintain management's best estimates above the actuarial central estimate and embed conservatism in loss picks. Annual reserve studies for most long-tail lines, including Reinsurance Treaty, are scheduled for completion in Q3, with enhanced disclosure on global loss triangles expected next month.

    06

    Investment Portfolio Stability

    The company maintains a high-quality, diversified investment portfolio. Net investment income was $523 million for the quarter, with a stable book yield of 4.5%, below the current new money yield of approximately 5%. The investment strategy is liability-driven, maintaining an asset duration of about 3.5 years, aligning with the liability side.

    07

    Reporting Changes

    Beginning this quarter, Everest will provide consolidated financial results for its core businesses (Reinsurance Treaty and Global Wholesale & Specialty) to increase transparency. Starting in Q3, the definition of after-tax net operating income will be revised to better align with industry peers, excluding one-time📎 expenses, acquisition/divestiture/restructuring gains/losses, and asymmetric accounting for ADC. Preliminary recast historical results are provided in the financial supplement.

    AI-generated summary of the company’s earnings call. Not investment advice.