Executive Summary / Key Takeaways

• Strategic Transformation Underway: Everest Group ($EG) is undergoing a significant strategic transformation, divesting its global retail insurance business and securing a substantial adverse development cover (ADC) to sharpen its focus on core global Reinsurance and Global Wholesale & Specialty Insurance operations.
• Fortified Balance Sheet and Reserves: The company has taken decisive actions to strengthen its U.S. casualty reserves, including a $478 million net increase in Q3 2025 and a $1.2 billion gross limit ADC, aiming to provide finality to legacy issues and enhance financial certainty.
• Robust Reinsurance Performance: The Reinsurance segment continues to deliver strong results, with a Q3 2025 combined ratio of 87% and favorable portfolio mix shifts towards property and short-tail lines, demonstrating disciplined underwriting and attractive risk-adjusted returns.
• Capital Flexibility and Shareholder Returns: Strategic divestitures and remediation efforts are expected to unlock significant capital, supporting management's commitment to share repurchases and aiming for a mid-teens total shareholder return over the cycle.
• Technological and Underwriting Edge: Everest leverages proprietary risk assessment and modeling capabilities, alongside platforms like Everest Evolution, to drive superior underwriting, efficient claims handling, and competitive differentiation in a dynamic market.

A Refocused Vision for Global Underwriting Leadership

Everest Group, Ltd. ($EG), a global underwriting leader founded in 1973, is strategically repositioning itself within the dynamic reinsurance and insurance landscape. Historically, Everest has built a diversified presence across the U.S., Bermuda, and international markets, evolving from Everest Re Group, Ltd. to its current identity in July 2023. This journey has been marked by periods of robust organic growth, particularly in its International Insurance business, which rapidly scaled to nearly $2 billion in premium and achieved underwriting profitability by 2024. The company's core strategy has consistently centered on disciplined underwriting, strategic capital deployment, and a commitment to long-term value creation for its shareholders.

The company operates primarily through two active reportable segments: Reinsurance and Insurance. The Reinsurance segment provides worldwide property, casualty, and specialty lines on both treaty and facultative bases, while the Insurance segment writes property and casualty insurance directly and through various broker channels globally. This dual-segment structure, supported by a global operational network and regulatory licenses across multiple regions, forms a foundational strength for Everest.

Everest's competitive advantage is significantly bolstered by its technological capabilities, particularly its proprietary risk assessment and modeling capabilities. The company maintains a "robust internal and proprietary modeling capability" to accurately assess loss costs and expected losses, especially in volatile areas like property catastrophe. This allows for more precise pricing and better risk selection. Management has also "increased the frequency with which we assess our loss trend assumptions," moving to a quarterly and sometimes intra-quarterly review, enabling rapid responses to market shifts and inflationary pressures.

Furthermore, Everest invests in digital platforms and systems. Its "Everest Evolution" wholesale platform is designed to capitalize on opportunities in the Excess & Surplus (E&S) market, driving growth in targeted, higher-margin segments. These "long-term investments in talent and systems" across both its Reinsurance and Insurance franchises are critical for enhancing operational efficiency, supporting disciplined growth, and improving claims handling. While direct quantitative metrics for the superiority of these technologies over alternatives are not explicitly detailed, the strategic intent is clear: to foster superior underwriting, achieve efficient claims processing, and maintain a competitive edge. This technological foundation contributes directly to Everest's competitive moat, enabling more informed underwriting decisions and supporting its long-term growth strategy by allowing it to adapt to emerging risks and market dynamics.

Strategic Realignment and Financial Resilience

The company's strategic journey has not been without its challenges. Everest has confronted significant legacy issues within its U.S. insurance casualty book, which management candidly characterized as having historically performed "squarely in the bottom quartile of performance in our industry." This led to a decisive reserve action in Q4 2024, with a $1.7 billion addition to net reserves, including over $200 million for 2024 loss picks. This was followed by an additional $478 million net strengthening of U.S. casualty reserves in Q3 2025, primarily driven by elevated loss experience in excess casualty and U.S. liability lines from accident years 2022-2024.

In response, Everest initiated a "1-Renewal Strategy" in January 2024 to remediate its North American casualty portfolio, a process largely completed by Q3 2025. This aggressive re-underwriting led to the non-renewal of approximately $750 million in North American casualty quota share business by the end of 2024, and 45% of U.S. casualty business in Q3 2025. Management noted that 80% of the 2025 U.S. casualty development stemmed from policies eliminated during this remediation, indicating the strategy's effectiveness.

A pivotal move in October 2025 was the agreement to sell the renewal rights for Everest's global retail commercial insurance business to American International Group, Inc. , encompassing approximately $2 billion in gross written premiums. This divestiture is a "strategic move that directly aligns Everest with the evolving needs of the market," allowing the company to "sharpen Everest's focus on its core global Reinsurance business as well as its Global Wholesale and Specialty Insurance businesses." To further address legacy casualty exposures, Everest secured a $1.2 billion Adverse Development Cover (ADC) effective October 1, 2025, for its North America insurance division's liabilities from accident years 2024 and prior. This ADC, described as "$1.2 billion of reserve margin," provides substantial protection against future adverse reserve development with "no loss corridor," aiming to create "finality around those issues."

Segment Performance and Outlook

Everest's Reinsurance segment has consistently demonstrated strong performance. In Q3 2025, it reported a combined ratio of 87%, a notable improvement from the prior year, driven by lower catastrophe losses and favorable prior year development. The segment's underwriting gain increased by 53.90% to $376 million in Q3 2025. For the nine months ended September 30, 2025, gross written premiums increased by 0.20% to $9,668 million, while premiums earned rose by 4.80% to $8,835 million.

The portfolio mix is favorably shifting, with property and other short-tail lines increasing by almost 5% year-over-year, while casualty and financial lines decreased by over 10%, reflecting a deliberate strategy to reduce U.S. casualty exposure. The Global Specialties business within Reinsurance is a standout, generating nearly $500 million in gross written premium and over $100 million in underwriting income in Q3 2025, with expectations for continued growth.

Management anticipates "market conditions in the Reinsurance business, particularly in our cat-exposed lines, should remain favorable through the January 1, 2026, renewal." While property cat prices may "likely come down" by about 10% at 1/1/26, the market is still considered "well priced," with Property Cat ROEs "north of 25%." Everest plans to be "very selective" rather than pursuing significant growth in a moderating pricing environment. Reinsurance casualty reserves are viewed as distinct from the historical insurance casualty book, with confidence in their adequacy due to consistent top-quartile underwriting by their clients.

The Insurance segment, post-remediation and divestiture, is reorganizing to focus on "global wholesale and specialty insurance capabilities and expertise." This retained business historically outperformed the retail segment by approximately 10 combined ratio points. For the nine months ended September 30, 2025, the Insurance segment's gross written premiums decreased by 0.60% to $3,706 million, while premiums earned increased by 3.50% to $2,772 million. The segment recorded an underwriting loss of $(381) million for the nine-month period, reflecting the impact of reserve strengthening and remediation efforts. The attritional loss ratio in Q3 2025 was 67%, reflecting prudent loss picks in U.S. casualty lines due to elevated social inflation risks. Management suggests a combined ratio in the "lower half of the 90s" as a reasonable, conservative approach for the go-forward Wholesale & Specialty Insurance business. The International Insurance business, despite the retail divestiture, is expected to continue its strong growth trajectory in key markets.

Financial Health and Capital Management

Everest's financial position remains robust despite the significant reserve actions. Total investments and cash increased by 10.40% to $45,831 million at September 30, 2025, from $41,531 million at December 31, 2024. Net investment income grew by 8.80% to $540 million in Q3 2025, driven by higher assets under management and strong alternative asset returns. The company's fixed income portfolio benefits from a short asset duration of approximately 3.4 years and an average credit rating of AA-.

Shareholders' equity increased by $1.5 billion to $15.4 billion at September 30, 2025, from $13.9 billion at December 31, 2024. Book value per share stood at $366.22, a 15.2% improvement from year-end 2024 when adjusted for dividends. Everest's liquidity is strong, with cash flow from operations at $3.5 billion for the nine months ended September 30, 2025, and $5.4 billion in cash and short-term investments. The company also has significant borrowing capacity from the FHLBNY, with $1 billion outstanding against a $3.3 billion capacity.

Capital management is a strategic priority. Everest repurchased $200 million of shares in Q2 2025, totaling $400 million year-to-date. Management views share repurchases as an attractive opportunity, especially with the stock trading at a discount to book value (P/B Ratio of 0.85). They expect to resume meaningful repurchases in Q4 2025 and into 2026, as the strategic divestitures and remediation efforts are anticipated to "unlock more capital." The company aims for a "mid-teens total shareholder return over the cycle."

Competitive Dynamics and Risks

Everest operates in a highly competitive global market. Compared to larger, more diversified players like Berkshire Hathaway (BRK.B), Everest's specialized underwriting expertise and global network allow it to target niche markets effectively, potentially leading to stronger customer loyalty and more robust growth in specialized segments. However, Berkshire's immense scale may afford it lower operating costs and greater financial resilience. Against American International Group, Inc. (AIG), Everest's focused operational segments and direct/broker-based distribution could offer greater agility in specialty lines, though AIG's investments in digital innovation might provide an edge in processing speed. Chubb Limited (CB), a strong property and casualty insurer, presents competition in shared markets, where Everest's comprehensive reinsurance offerings differentiate it, but Chubb's established brand and financial health could lead to superior ROE and margins.

Everest's competitive advantages lie in its disciplined underwriting, proprietary modeling, and strong client relationships, particularly in reinsurance where it is a "preferred partner." However, vulnerabilities include potential overexposure to catastrophe risks, as evidenced by the $350 million to $450 million pre-tax net loss from California wildfires in Q1 2025, and dependencies on reinsurance brokers, which could impact customer acquisition costs.

Key risks include the ongoing impact of social inflation on U.S. casualty lines, which necessitates continued prudent loss picks. Regulatory changes, such as the Bermuda Corporate Income Tax Act 2023 and subsequent OECD guidance, could affect Everest's deferred tax assets. Interest rate fluctuations pose a risk to the fixed maturity portfolio, and foreign currency exchange rate changes can impact financial results, though Everest mitigates this by matching assets and liabilities. The new tariff regime is also being monitored for potential "modest upward pressure on loss cost trend."

Conclusion

Everest Group is in the midst of a profound strategic transformation, decisively addressing legacy challenges while sharpening its focus on its high-performing global Reinsurance and emerging Wholesale & Specialty Insurance businesses. The divestiture of its retail insurance operations and the securing of a substantial adverse development cover are clear signals of management's commitment to enhancing financial certainty and optimizing capital allocation. This strategic realignment, underpinned by Everest's robust proprietary modeling and underwriting expertise, positions the company to leverage its competitive strengths in specialized markets.

While the path forward involves diligent execution and navigating dynamic market conditions, the company's strong capital position, consistent investment income, and disciplined approach to underwriting suggest a compelling investment thesis. Investors should monitor the realization of capital relief from recent transactions, the sustained profitability of the core Reinsurance segment, and the growth trajectory of the refocused Wholesale & Specialty Insurance operations, all of which are critical indicators of Everest Group's ability to deliver on its promise of enhanced shareholder value.