Everest Group (EG) Q2 FY26 earnings call: guidance and Q&A

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

Is the company interested in potential loss transfers or ADCs for the reinsurance business, similar to past primary legacy transactions?

Jim Williamson stated that the primary method for risk transfer is the third-party capital platform (Mt. Logan). He confirmed openness to opportunistic strategies like the prior ADC for the legacy business to enhance capital and manage risk, with a focus on accelerating capital realization from the legacy portfolio.

“I think our focus there is really more on the legacy business and how we accelerate the realization of capital from that portfolio. That would be the area of most focus for us.”

asked by Taylor Scott · answered by James Williamson

Could management provide more detail on pricing trends in various lines of business within Reinsurance Treaty?

Jim Williamson explained that while market property cat pricing was down 15-20% at recent renewals, Everest's portfolio saw only a 10% reduction due to strategic capacity deployment, higher attachment points, and strong client relationships. He noted that property pro rata growth was selective and international, and long-tail lines require conservative management despite consistent rate increases due to loss trend uncertainty.

“My view of property cat rates at this point is they're still in such a place that it allows us to get a return, an expected return that's above sort of our threshold for continuing to write that business.”

asked by Charles Peters · answered by James Williamson

How will the new Annapurna Re sidecar affect the underlying reinsurance accident year loss ratio, and will capacity be redeployed?

Jim Williamson indicated that Annapurna Re will benefit the Reinsurance division's attritional loss ratio. He emphasized that Everest maintains prudence in its loss picks and manages market pressures through strong portfolio management, shifting mix to high-margin specialty areas, and leveraging its diversified underwriting capabilities to sustain profitability.

“And so yes, you might see, obviously, that will deliver a benefit to the Reinsurance division in terms of its attritional, and we'll be thoughtful about that. And it gives you an opportunity both to sustained margin as markets soften, but also build up your prudence in your loss picks.”

asked by Andrew Andersen · answered by James Williamson

Could Elias provide more color on the casualty reserve strengthening in Q2, including segment, accident years, and the specific drivers?

Elias Habayeb detailed a $55 million increase for the Baltimore bridge collapse and just under $200 million in strengthening for North America casualty (Treaty side). This was driven by elevated loss trends and loss emergence in older accident years, which was reflected across most accident years. No credit was taken for underwriting actions or tort reforms in this quarter's adjustments.

“The bulk of it was in the North America casualty book on the Treaty side. And we feel like we reacted to what we know now. The reserve studies are ongoing and will be done next quarter.”

asked by Meyer Shields · answered by Elias Habayeb

What is the impact of increased alternative capital in the reinsurance market, particularly for casualty, on renewals and future returns?

Jim Williamson noted that while total third-party capital is increasing marginally, the current competitive pricing reflects underwriters deploying capital from recent profitable years. He expressed hope that the industry has learned from past experiences with third-party capital, expecting marginal competitive pressure but not a major dislocation due to increased sophistication and discipline.

“My hope is that people have learned from the last time that third-party capital really leaned into reinsurance. And I do think that's a fair hope to have. I think we're seeing a lot of increased sophistication from third-party capital providers.”

asked by Brian Meredith · answered by James Williamson

What are the current casualty loss trends, and why were current year loss trend assumptions not moved this quarter?

Elias Habayeb stated that casualty loss trends have been relatively stable since the last reserve study, ranging from high single digits to low double digits by line. He confirmed that the 2026 current year loss picks for casualty are considered prudent and did not require adjustments this quarter, given the proactive reserve strengthening for prior years.

“And our loss trends on casualty have been relatively stable since the last reserve study. And it varies by line within casualty between high single digits to low double digits, is where our trends are.”

asked by Elyse Greenspan · answered by Elias Habayeb