HAMILTON, Bermuda--(BUSINESS WIRE)--Everest Group, Ltd. (NYSE: EG), a global underwriting leader providing best-in-class property, casualty, and specialty reinsurance and insurance solutions, today reported its fourth quarter 2023 results.
Full Year 2023 Highlights
- 20.9% Net Income ROE and 23.1% Operating Income ROE; Total Shareholder Return of 26.5%1
- $16.6 billion in gross written premium with year-over-year growth of 20.9%2 as reported for the Group, 26.4%2 for Reinsurance, and 10.3%2 for Insurance
- Combined ratios of 90.9% for the Group, 86.4% for Reinsurance and 103.0% for Insurance
- Group attritional combined ratio of 86.9% when excluding the impact of 0.7 points from profit commissions associated with net favorable loss reserve development versus 87.4% in the prior year
- $451 million of pre-tax catastrophe losses net of recoveries and reinstatement premiums, versus $945 million in the prior year
- Net investment income increased over $600 million to $1.4 billion, a company record
- Book value per share excluding unrealized gains (losses) on AFS fixed maturity investments increased 23.8% to $320.95 versus $259.18 at December 31, 2022
- Strong operating cashflow for the year of $4.6 billion, a company record
Fourth Quarter 2023 Highlights
- 23.8% Net Income ROE and 32.4% Operating Income ROE
- $4.3 billion in gross written premium with year-over-year growth of 18.3%2 for the Group, 21.9%2 for Reinsurance, and 11.6%2 for Insurance
- Combined ratios of 93.2% for the Group, 78.8% for Reinsurance and 132.4% for Insurance
- Group attritional combined ratio of 86.7% when excluding the impact of 2.6 points from profit commissions associated with favorable loss reserve development versus 87.3% in the prior year
- Net favorable development of approximately $5 million in prior year loss reserves, resulting in a decrease of 0.1 points on the combined ratio for the Group. Reinsurance benefited from favorable development of $397 million, largely from mortgage and short-tail lines. Insurance reserves were strengthened by $392 million to address the impact of social inflation for long-tail lines, focused on the 2016 to 2019 accident years.
- $143 million of pre-tax catastrophe losses net of recoveries and reinstatement premiums, primarily driven by Hurricane Otis, versus $15 million in the prior year
- Net investment income improved to $411 million versus $210 million in the prior year fourth quarter, a company record, driven by strong fixed income and alternative investment returns
- Successful execution of our strategy to sell $3.3 billion of lower yielding bonds in the quarter, reinvesting the proceeds into higher-yielding securities with enhanced overall credit quality, contributing to after-tax net realized losses of approximately $211 million and extending duration from 2.7 to 3.3 years sequentially. This is expected to add significant additional interest income in 2024 and beyond.
- Recognized a $578 million tax benefit from realized deferred taxes accrued driven by the change in Bermuda tax law. This is a preliminary estimate and subject to change.
- Strong operating cashflow for the quarter of $1.0 billion, in-line with the prior year quarter
- With the successful completion of January 1 renewals, we were able to fully deploy the remaining capital raised in May, as well as optimize our hedging strategy
Footnote 1 denotes annualized figure; represents Total Shareholder Return or "TSR" |
||
Footnote 2 denotes constant currency figure and excludes reinstatement premiums |
“Everest's strong fourth quarter performance capped off an exceptional 2023, delivering record annual results in underwriting income, net investment income, operating income, net income, and cash flow from operations. We executed on our strategic objectives, while delivering an operating ROE of over 23% and a Total Shareholder Return of over 26% for the full year," said Juan C. Andrade, Everest President and CEO. "2023 was the most profitable year in our history. The Everest of today is a stronger and more sophisticated company. We are delivering leading financial returns and we are on track to achieve the targets we set out at our most recent Investor Day. The strength and flexibility of our business was apparent in the fourth quarter as we continued to generate leading returns and further solidified our balance sheet. Everest has entered 2024 stronger and better positioned to take advantage of market opportunities in both franchises. This is evidenced by another well-executed and outstanding January 1 reinsurance renewal and improved primary pricing, generating excellent outcomes for our global portfolio. Looking ahead, we remain focused on achieving our strategic plan goals, with significant momentum across both businesses, and an exceptional team driving even greater value for our shareholders."
Summary of Fourth Quarter 2023 Net Income and Other Items
- Net Income of $804 million, equal to $18.53 per diluted share versus fourth quarter 2022 net income of $496 million, equal to $12.66 per diluted share
- Operating income of $1.1 billion, equal to $25.18 per diluted share versus fourth quarter 2022 net operating income of $478 million, equal to $12.21 per diluted share
- GAAP combined ratio of 93.2%, including 4.3 points of catastrophe losses versus the fourth quarter 2022 figure of 87.8%, including 0.5 points of catastrophe losses
The following table summarizes the Company’s Net Income and related financial metrics.
Net income and operating income |
Q4 |
|
Year to Date |
|
Q4 |
|
Year to Date |
All values in USD millions except for per share amounts and percentages |
2023 |
|
2023 |
|
2022 |
|
2022 |
Everest Group |
|
|
|
|
|
|
|
Net income (loss) |
804 |
|
2,517 |
|
496 |
|
597 |
Operating income (loss) (1) |
1,093 |
|
2,776 |
|
478 |
|
1,065 |
|
|
|
|
|
|
|
|
Net income (loss) per diluted common share |
18.53 |
|
60.19 |
|
12.66 |
|
15.19 |
Net operating income (loss) per diluted common share |
25.18 |
|
66.39 |
|
12.21 |
|
27.08 |
|
|
|
|
|
|
|
|
Net income (loss) return on average equity (annualized) |
23.8% |
|
20.9% |
|
20.1% |
|
6.0% |
After-tax operating income (loss) return on average equity (annualized) |
32.4% |
|
23.1% |
|
19.4% |
|
10.6% |
Notes |
||
(1) |
Refer to the reconciliation of net income to net operating income found on page 8 of this press release |
|
Shareholders' Equity and Book Value per Share |
Q4 |
|
Year to Date |
|
Q4 |
|
Year to Date |
All values in USD millions except for per share amounts and percentages |
2023 |
|
2023 |
|
2022 |
|
2022 |
Beginning shareholders' equity |
11,226 |
|
8,441 |
|
7,649 |
|
10,139 |
Net income (loss) |
804 |
|
2,517 |
|
496 |
|
597 |
Change - unrealized gains (losses) - Fixed inc. investments |
1,146 |
|
986 |
|
250 |
|
(1,948) |
Dividends to shareholders |
(76) |
|
(288) |
|
(65) |
|
(255) |
Purchase of treasury shares |
— |
|
— |
|
(1) |
|
(61) |
Public equity offering of shares |
— |
|
1,445 |
|
— |
|
— |
Other |
103 |
|
102 |
|
110 |
|
(31) |
Ending shareholders' equity |
13,202 |
|
13,202 |
|
8,441 |
|
8,441 |
|
|
|
|
|
|
|
|
Common shares outstanding |
|
|
43.4 |
|
|
|
39.2 |
Book value per common share outstanding |
|
|
304.29 |
|
|
|
215.54 |
Less: Unrealized appreciation/depreciation of fixed maturity investments ("URAD") |
|
|
(16.65) |
|
|
|
(43.64) |
Adjusted book value per common share outstanding excluding URAD |
|
|
320.95 |
|
|
|
259.18 |
|
|
|
|
|
|
|
|
Change in BVPS adjusted for dividends |
|
|
44.3 % |
|
|
|
(14.0) % |
Total Shareholder Return ("TSR") - Annualized |
|
|
26.5 % |
|
|
|
5.4 % |
Common share dividends paid - last 12 months |
|
|
6.80 |
|
|
|
6.50 |
The following information summarizes the Company’s underwriting results, on a consolidated basis and by segment – Reinsurance and Insurance, with selected commentary on results by segment.
Underwriting information - Everest Group |
Q4 |
|
Year to Date |
|
Q4 |
|
Year to Date |
|
Year on Year Change |
||
All values in USD millions except for percentages |
2023 |
|
2023 |
|
2022 |
|
2022 |
|
Q4 |
|
Year to Date |
Gross written premium |
4,323 |
|
16,637 |
|
3,639 |
|
13,952 |
|
18.8 % |
|
19.2 % |
Net written premium |
3,861 |
|
14,730 |
|
3,188 |
|
12,344 |
|
21.1 % |
|
19.3 % |
|
|
|
|
|
|
|
|
|
|
|
|
Loss Ratio: |
|
|
|
|
|
|
|
|
|
|
|
Current year |
58.9 % |
|
59.2 % |
|
59.6 % |
|
59.8 % |
|
(0.7) pts |
|
(0.6) pts |
Prior year |
(0.1) % |
|
— % |
|
— % |
|
— % |
|
(0.1) pts |
|
— pts |
Catastrophe |
4.3 % |
|
3.5 % |
|
0.5 % |
|
9.0 % |
|
3.8 pts |
|
(5.5) pts |
Total Loss ratio |
63.0 % |
|
62.7 % |
|
60.1 % |
|
68.7 % |
|
2.9 pts |
|
(6.0) pts |
Commission and brokerage ratio |
23.8 % |
|
22.0 % |
|
21.6 % |
|
21.4 % |
|
2.2 pts |
|
0.6 pts |
Other underwriting expenses |
6.3 % |
|
6.3 % |
|
6.0 % |
|
5.8 % |
|
0.3 pts |
|
0.5 pts |
Combined ratio |
93.2 % |
|
90.9 % |
|
87.8 % |
|
96.0 % |
|
5.4 pts |
|
(5.1) pts |
Attritional combined ratio (1), (3) |
89.3 % |
|
87.6 % |
|
87.3 % |
|
87.4 % |
|
2.0 pts |
|
0.2 pts |
|
|
|
|
|
|
|
|
|
|
|
|
Pre-tax net catastrophe losses (2) |
143 |
|
451 |
|
15 |
|
945 |
|
|
|
|
Pre-tax net unfavorable (favorable) prior year reserve development |
(5) |
|
(5) |
|
— |
|
(1) |
|
|
|
|
Notes |
||
(1) |
Attritional ratios exclude catastrophe losses, net CAT reinstatement premiums earned, prior year development, COVID-19 losses and losses from the Russia/Ukraine war. |
|
(2) |
Pre-tax net catastrophe losses are net of reinsurance and reinstatement premiums |
|
(3) |
The attritional combined ratio for quarter and year ended December 31, 2023 included approximately $94m of profit commission related to loss reserves releases. Excluding this profit commission, the Group’s attritional combined ratio would have been 86.7% and 86.9% for the quarter and year ended December 31, 2023, respectively. |
|
Reinsurance Segment – Quarterly Highlights
- Gross written premiums grew 21.9% on a constant dollar basis and excluding reinstatement premiums, to approximately $2.9 billion. Growth was broad-based across geographies and lines.
- Growth was driven by 39.2% growth in Property Pro-Rata, 23.3% growth in Property Catastrophe XOL, and 45.2% growth in Property Non-Catastrophe XOL, when adjusting for reinstatement premiums, as pricing increases and a flight to quality continue globally.
- Robust pricing momentum continued in the fourth quarter, with Cat pricing up over 45% with improved terms/conditions.
- Attritional loss ratio improved 40-basis points over last year to 57.8%, while the attritional combined ratio improved 90-basis points to 85.1%, when excluding the impact of 3.6 points from profit commissions associated with favorable loss reserve development.
- Net favorable prior year development of $397 million, primarily driven by a combination of well-seasoned mortgage and short-tail lines.
- Pre-tax catastrophe losses were $135 million net of estimated recoveries and reinstatement premiums, driven by Hurricane Otis as well as a number of mid-sized events globally.
Underwriting information - Reinsurance segment |
Q4 |
|
Year to Date |
|
Q4 |
|
Year to Date |
|
Year on Year Change |
||
All values in USD millions except for percentages |
2023 |
|
2023 |
|
2022 |
|
2022 |
|
Q4 |
|
Year to Date |
Gross written premium |
2,894 |
|
11,460 |
|
2,360 |
|
9,248 |
|
22.6 % |
|
23.9 % |
Net written premium |
2,754 |
|
10,802 |
|
2,301 |
|
8,919 |
|
19.7 % |
|
21.1 % |
|
|
|
|
|
|
|
|
|
|
|
|
Loss Ratio: |
|
|
|
|
|
|
|
|
|
|
|
Current year |
57.6 % |
|
57.6 % |
|
58.2 % |
|
58.5 % |
|
(0.6) pts |
|
(0.9) pts |
Prior year |
(15.2) % |
|
(4.1) % |
|
0.3 % |
|
0.1 % |
|
(15.5) pts |
|
(4.2) pts |
Catastrophe |
5.5 % |
|
4.6 % |
|
0.5 % |
|
10.8 % |
|
5.0 pts |
|
(6.2) pts |
Total Loss ratio |
47.9 % |
|
58.1 % |
|
59.0 % |
|
69.4 % |
|
(11.1) pts |
|
(11.3) pts |
Commission and brokerage ratio |
28.4 % |
|
25.7 % |
|
24.9 % |
|
24.6 % |
|
3.5 pts |
|
1.1 pts |
Other underwriting expenses |
2.5 % |
|
2.6 % |
|
2.8 % |
|
2.5 % |
|
(0.3) pts |
|
0.1 pts |
Combined ratio |
78.8 % |
|
86.4 % |
|
86.8 % |
|
96.5 % |
|
(8.0) pts |
|
(10.1) pts |
Attritional combined ratio (1), (3) |
88.7 % |
|
86.1 % |
|
86.0 % |
|
86.2 % |
|
2.7 pts |
|
(0.1) pts |
|
|
|
|
|
|
|
|
|
|
|
|
Pre-tax net catastrophe losses (2) |
135 |
|
430 |
|
10 |
|
820 |
|
|
|
|
Pre-tax net unfavorable (favorable) prior year reserve development |
(397) |
|
(397) |
|
7 |
|
5 |
|
|
|
|
Notes |
||
(1) |
Attritional ratios exclude catastrophe losses, net CAT reinstatement premiums earned, prior year development, COVID-19 losses and losses from the Russia/Ukraine war. |
|
(2) |
Pre-tax net catastrophe losses are net of reinsurance and reinstatement premiums |
|
(3) |
The attritional combined ratio for quarter and year ended December 31, 2023 included approximately $94m of profit commission related to loss reserves releases. Excluding this profit commission, the Reinsurance Segment’s attritional combined ratio would have been 85.1% for the quarter and year ended December 31, 2023, respectively. |
|
Insurance Segment – Quarterly Highlights
- Gross written premiums rose to $1.4 billion, a 11.6% increase year-over-year in constant dollars, driven by a diversified mix of property and specialty lines, partially offset by lower written premiums in monoline workers' compensation and financial lines.
- Pre-tax catastrophe losses were $8 million, net of estimated recoveries and reinstatement premiums, relatively in-line with the prior year.
- Net reserve strengthening of $392 million, reflecting our proactive approach to casualty line reserves, which are impacted by well-defined social inflation factors, focused on accident years 2016 to 2019.
- Attritional loss ratio improved 70-basis points over last year to 62.6%, driven by favorable current year loss experience and business mix.
- Expense ratio of 28.2% with continued investment in systems, talent, and our global platform.
- Pricing continues to exceed loss trend.
Underwriting information - Insurance segment |
Q4 |
|
Year to Date |
|
Q4 |
|
Year to Date |
|
Year on Year Change |
||
All values in USD millions except for percentages |
2023 |
|
2023 |
|
2022 |
|
2022 |
|
Q4 |
|
Year to Date |
Gross written premium |
1,428 |
|
5,177 |
|
1,278 |
|
4,704 |
|
11.7 % |
|
10.0 % |
Net written premium |
1,107 |
|
3,929 |
|
887 |
|
3,426 |
|
24.8 % |
|
14.7 % |
|
|
|
|
|
|
|
|
|
|
|
|
Loss Ratio: |
|
|
|
|
|
|
|
|
|
|
|
Current year |
62.5 % |
|
63.6 % |
|
63.3 % |
|
63.2 % |
|
(0.8) pts |
|
0.4 pts |
Prior year |
40.8 % |
|
10.8 % |
|
(0.9) % |
|
(0.2) % |
|
41.7 pts |
|
11.0 pts |
Catastrophe |
0.9 % |
|
0.6 % |
|
0.6 % |
|
3.9 % |
|
0.3 pts |
|
(3.3) pts |
Total Loss ratio |
104.2 % |
|
75.0 % |
|
63.1 % |
|
66.9 % |
|
41.1 pts |
|
8.1 pts |
Commission and brokerage ratio |
11.6 % |
|
11.8 % |
|
12.7 % |
|
12.9 % |
|
(1.1) pts |
|
(1.1) pts |
Other underwriting expenses |
16.6 % |
|
16.2 % |
|
14.7 % |
|
14.6 % |
|
1.9 pts |
|
1.6 pts |
Combined ratio |
132.4 % |
|
103.0 % |
|
90.5 % |
|
94.4 % |
|
41.8 pts |
|
8.6 pts |
Attritional combined ratio (1) |
90.8 % |
|
91.7 % |
|
90.7 % |
|
90.7 % |
|
0.1 pts |
|
1.0 pts |
|
|
|
|
|
|
|
|
|
|
|
|
Pre-tax net catastrophe losses (2) |
8 |
|
20 |
|
5 |
|
125 |
|
|
|
|
Pre-tax net unfavorable (favorable) prior year reserve development |
392 |
|
392 |
|
(7) |
|
(7) |
|
|
|
|
Notes |
||
(1) |
Attritional ratios exclude catastrophe losses, net CAT reinstatement premiums earned, prior year development, COVID-19 losses and losses from the Russia/Ukraine war. |
|
(2) |
Pre-tax net catastrophe losses are net of reinsurance and reinstatement premiums |
|
Investments and Shareholders’ Equity as of December 31, 2023
- Total invested assets and cash of $37.1 billion versus $29.9 billion on December 31, 2022
- Shareholders’ equity of $13.2 billion vs. $8.4 billion on December 31, 2022, including $723 million of unrealized net losses on AFS fixed maturity investments
- Shareholders’ equity excluding unrealized gains (losses) on AFS fixed maturity investments of $13.9 billion versus $10.1 billion on December 31, 2022
- Book value per share of $304.29 versus $215.54 at December 31, 2022
- Book value per share excluding unrealized gains (losses) on AFS fixed maturity investments of $320.95 versus $259.18 at December 31, 2022
- Common share dividends declared and paid in the quarter of $1.75 per share equal to $76 million
This news release contains forward-looking statements within the meaning of the U.S. federal securities laws. We intend these forward-looking statements to be covered by the safe harbor provisions for forward-looking statements in the U.S. Federal securities laws. These statements involve risks and uncertainties that could cause actual results to differ materially from those contained in forward-looking statements made on behalf of the Company. These risks and uncertainties include the impact of general economic conditions and conditions affecting the insurance and reinsurance industry, the adequacy of our reserves, our ability to assess underwriting risk, trends in rates for property and casualty insurance and reinsurance, competition, investment market and investment income fluctuations, trends in insured and paid losses, catastrophes, pandemic, regulatory and legal uncertainties and other factors described in our latest Annual Report on Form 10-K. The Company undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.
About Everest
Everest Group, Ltd. (Everest) is a global underwriting leader providing best-in-class property, casualty, and specialty reinsurance and insurance solutions that address customers’ most pressing challenges. Known for a 50-year track record of disciplined underwriting, capital and risk management, Everest, through its global operating affiliates, is committed to underwriting opportunity for colleagues, customers, shareholders, and communities worldwide.
Everest common stock (NYSE: EG) is a component of the S&P 500 index.
Additional information about Everest, our people, and our products can be found on our website at www.everestglobal.com.
A conference call discussing the results will be held at 8:00 a.m. Eastern Time on February 8, 2024. The call will be available on the Internet through the Company’s website at https://www.everestglobal.com/investor-relations.
Recipients are encouraged to visit the Company’s website to view supplemental financial information on the Company’s results. The supplemental information is located at www.everestglobal.com in the “Investors/Financials/Quarterly Results” section of the website. The supplemental financial information may also be obtained by contacting the Company directly.
_______________________________________________
The Company generally uses after-tax operating income (loss), a non-GAAP financial measure, to evaluate its performance. After-tax operating income (loss) consists of net income (loss) excluding after-tax net gains (losses) on investments and after-tax net foreign exchange income (expense) as the following reconciliation displays:
(Dollars in millions, except per share amounts) |
Three Months Ended December 31, |
|
Twelve Months Ended December 31, |
||||||||||||||||||||||||||||
|
2023 |
|
|
|
2022 |
|
|
|
2023 |
|
|
|
2022 |
|
|||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
|
(unaudited) |
|
(unaudited) |
||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
|
Amount |
|
Per Diluted Share |
|
Amount |
|
Per Diluted Share |
|
Amount |
|
Per Diluted Share |
|
Amount |
|
Per Diluted Share |
||||||||||||||||
After-tax operating income (loss) |
$ |
1,093 |
|
|
$ |
25.18 |
|
|
$ |
478 |
|
|
$ |
12.21 |
|
|
$ |
2,776 |
|
|
$ |
66.39 |
|
|
$ |
1,065 |
|
|
$ |
27.08 |
|
After-tax net gains (losses) on investments |
|
(220 |
) |
|
|
(5.06 |
) |
|
|
49 |
|
|
|
1.25 |
|
|
|
(236 |
) |
|
|
(5.65 |
) |
|
|
(366 |
) |
|
|
(9.30 |
) |
After-tax net foreign exchange income (expense) |
|
(69 |
) |
|
|
(1.60 |
) |
|
|
(31 |
) |
|
|
(0.80 |
) |
|
|
(23 |
) |
|
|
(0.55 |
) |
|
|
(102 |
) |
|
|
(2.60 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Net income (loss) |
$ |
804 |
|
|
$ |
18.53 |
|
|
$ |
496 |
|
|
$ |
12.66 |
|
|
$ |
2,517 |
|
|
$ |
60.19 |
|
|
$ |
597 |
|
|
$ |
15.19 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
(Some amounts may not reconcile due to rounding.) |
|||||||||||||||||||||||||||||||
Although net gains (losses) on investments and net foreign exchange income (expense) are an integral part of the Company’s insurance operations, the determination of net gains (losses) on investments and foreign exchange income (expense) is independent of the insurance underwriting process. The Company believes that the level of net gains (losses) on investments and net foreign exchange income (expense) for any particular period are not indicative of the performance of the underlying business in that particular period. Providing only a GAAP presentation of net income (loss) makes it more difficult for users of the financial information to evaluate the Company’s success or failure in its basic business and may lead to incorrect or misleading assumptions and conclusions. The Company understands that the equity analysts who follow the Company focus on after-tax operating income (loss) in their analyses for the reasons discussed above. The Company provides after-tax operating income (loss) to investors so that they have what management believes to be a useful supplement to GAAP information concerning the Company’s performance.
--Financial Details Follow--
EVEREST GROUP, LTD.
CONSOLIDATED STATEMENTS OF OPERATIONS
AND COMPREHENSIVE INCOME (LOSS)
|
Three Months Ended |
|
Twelve Months Ended |
||||||||||||
|
December 31 |
|
December 31 |
||||||||||||
(Dollars in millions, except per share amounts) |
|
2023 |
|
|
|
2022 |
|
|
|
2023 |
|
|
|
2022 |
|
|
(unaudited) |
|
(unaudited |
|
|
||||||||||
REVENUES: |
|
|
|
|
|
|
|
||||||||
Premiums earned |
$ |
3,578 |
|
|
$ |
3,012 |
|
|
$ |
13,443 |
|
|
$ |
11,787 |
|
Net investment income |
|
411 |
|
|
|
210 |
|
|
|
1,434 |
|
|
|
830 |
|
Total net gains (losses) on investments |
|
(255 |
) |
|
|
64 |
|
|
|
(276 |
) |
|
|
(455 |
) |
Other income (expense) |
|
(75 |
) |
|
|
(30 |
) |
|
|
(14 |
) |
|
|
(102 |
) |
Total revenues |
|
3,659 |
|
|
|
3,256 |
|
|
|
14,587 |
|
|
|
12,060 |
|
|
|
|
|
|
|
|
|
||||||||
CLAIMS AND EXPENSES: |
|
|
|
|
|
|
|
||||||||
Incurred losses and loss adjustment expenses |
|
2,254 |
|
|
|
1,811 |
|
|
|
8,427 |
|
|
|
8,100 |
|
Commission, brokerage, taxes and fees |
|
853 |
|
|
|
651 |
|
|
|
2,952 |
|
|
|
2,528 |
|
Other underwriting expenses |
|
226 |
|
|
|
182 |
|
|
|
846 |
|
|
|
682 |
|
Corporate expenses |
|
18 |
|
|
|
16 |
|
|
|
73 |
|
|
|
61 |
|
Interest, fees and bond issue cost amortization expense |
|
36 |
|
|
|
27 |
|
|
|
134 |
|
|
|
101 |
|
Total claims and expenses |
|
3,387 |
|
|
|
2,687 |
|
|
|
12,432 |
|
|
|
11,472 |
|
|
|
|
|
|
|
|
|
||||||||
INCOME (LOSS) BEFORE TAXES |
|
272 |
|
|
|
568 |
|
|
|
2,154 |
|
|
|
588 |
|
Income tax expense (benefit) |
|
(532 |
) |
|
|
72 |
|
|
|
(363 |
) |
|
|
(9 |
) |
|
|
|
|
|
|
|
|
||||||||
NET INCOME (LOSS) |
$ |
804 |
|
|
$ |
496 |
|
|
$ |
2,517 |
|
|
$ |
597 |
|
|
|
|
|
|
|
|
|
||||||||
Other comprehensive income (loss), net of tax: |
|
|
|
|
|
|
|
||||||||
Unrealized appreciation (depreciation) ("URA(D)") on securities arising during the period |
|
923 |
|
|
|
223 |
|
|
|
743 |
|
|
|
(2,037 |
) |
Reclassification adjustment for realized losses (gains) included in net income (loss) |
|
223 |
|
|
|
28 |
|
|
|
244 |
|
|
|
89 |
|
Total URA(D) on securities arising during the period |
|
1,146 |
|
|
|
251 |
|
|
|
986 |
|
|
|
(1,948 |
) |
|
|
|
|
|
|
|
|
||||||||
Foreign currency translation and other adjustments |
|
76 |
|
|
|
86 |
|
|
|
59 |
|
|
|
(77 |
) |
|
|
|
|
|
|
|
|
||||||||
Benefit plan actuarial net gain (loss) for the period |
|
15 |
|
|
|
15 |
|
|
|
15 |
|
|
|
15 |
|
Reclassification adjustment for amortization of net (gain) loss included in net income |
|
— |
|
|
|
— |
|
|
|
2 |
|
|
|
2 |
|
Total benefit plan net gain (loss) for the period |
|
16 |
|
|
|
15 |
|
|
|
17 |
|
|
|
17 |
|
Total other comprehensive income (loss), net of tax |
|
1,238 |
|
|
|
352 |
|
|
|
1,063 |
|
|
|
(2,008 |
) |
|
|
|
|
|
|
|
|
||||||||
COMPREHENSIVE INCOME (LOSS) |
$ |
2,041 |
|
|
$ |
848 |
|
|
$ |
3,580 |
|
|
$ |
(1,411 |
) |
|
|
|
|
|
|
|
|
||||||||
EARNINGS PER COMMON SHARE: |
|
|
|
|
|
|
|
||||||||
Basic |
$ |
18.53 |
|
|
$ |
12.66 |
|
|
$ |
60.19 |
|
|
$ |
15.19 |
|
Diluted |
|
18.53 |
|
|
|
12.66 |
|
|
|
60.19 |
|
|
|
15.19 |
|
EVEREST GROUP, LTD.
CONSOLIDATED BALANCE SHEETS
|
December 31, |
||||||
(Dollars and share amounts in millions, except par value per share) |
|
2023 |
|
|
|
2022 |
|
|
(unaudited) |
|
|
||||
ASSETS: |
|
|
|
||||
Fixed maturities - available for sale, at fair value |
$ |
27,740 |
|
|
$ |
22,236 |
|
(amortized cost: 2023, $28,568; 2022, $24,191, credit allowances: 2023, $(48); 2022, $(54)) |
|
|
|
||||
Fixed maturities - held to maturity, at amortized cost |
|
|
|
||||
(fair value: 2023, $854; 2022, $821, net of credit allowances: 2023, $(8); 2022, $(9)) |
|
855 |
|
|
|
839 |
|
Equity securities, at fair value |
|
188 |
|
|
|
281 |
|
Other invested assets |
|
4,794 |
|
|
|
4,085 |
|
Short-term investments |
|
2,127 |
|
|
|
1,032 |
|
Cash |
|
1,437 |
|
|
|
1,398 |
|
Total investments and cash |
|
37,142 |
|
|
|
29,872 |
|
Accrued investment income |
|
324 |
|
|
|
217 |
|
Premiums receivable (net of credit allowances: 2023, $(41); 2022, $(29)) |
|
4,768 |
|
|
|
3,619 |
|
Reinsurance paid loss recoverables (net of credit allowances: 2023, $(26); 2022, $(23)) |
|
164 |
|
|
|
136 |
|
Reinsurance unpaid loss recoverables |
|
2,098 |
|
|
|
2,105 |
|
Funds held by reinsureds |
|
1,135 |
|
|
|
1,056 |
|
Deferred acquisition costs |
|
1,247 |
|
|
|
962 |
|
Prepaid reinsurance premiums |
|
713 |
|
|
|
610 |
|
Income tax asset, net |
|
868 |
|
|
|
459 |
|
Other assets (net of credit allowances: 2023, $(9); 2022, $(5)) |
|
941 |
|
|
|
930 |
|
TOTAL ASSETS |
$ |
49,399 |
|
|
$ |
39,966 |
|
|
|
|
|
||||
LIABILITIES: |
|
|
|
||||
Reserve for losses and loss adjustment expenses |
|
24,604 |
|
|
|
22,065 |
|
Unearned premium reserve |
|
6,622 |
|
|
|
5,147 |
|
Funds held under reinsurance treaties |
|
24 |
|
|
|
13 |
|
Amounts due to reinsurers |
|
650 |
|
|
|
567 |
|
Losses in course of payment |
|
171 |
|
|
|
74 |
|
Senior notes |
|
2,349 |
|
|
|
2,347 |
|
Long-term notes |
|
218 |
|
|
|
218 |
|
Borrowings from FHLB |
|
819 |
|
|
|
519 |
|
Accrued interest on debt and borrowings |
|
22 |
|
|
|
19 |
|
Unsettled securities payable |
|
137 |
|
|
|
1 |
|
Other liabilities |
|
582 |
|
|
|
555 |
|
TOTAL LIABILITIES |
|
36,197 |
|
|
|
31,525 |
|
|
|
|
|
||||
SHAREHOLDERS' EQUITY: |
|
|
|
||||
Preferred shares, par value: $0.01; 50.0 shares authorized; no shares issued and outstanding |
|
— |
|
|
|
— |
|
Common shares, par value: $0.01; 200.0 shares authorized; (2023) 74.2 and (2022) 69.9 |
|
|
|
||||
outstanding before treasury shares |
|
1 |
|
|
|
1 |
|
Additional paid-in capital |
|
3,773 |
|
|
|
2,302 |
|
Accumulated other comprehensive income (loss), net of deferred income tax expense (benefit) |
|
|
|
||||
of $(99) at 2023 and $(250) at 2022 |
|
(934 |
) |
|
|
(1,996 |
) |
Treasury shares, at cost: 30.8 shares (2023) and 30.8 shares (2022) |
|
(3,908 |
) |
|
|
(3,908 |
) |
Retained earnings |
|
14,270 |
|
|
|
12,042 |
|
Total shareholders' equity |
|
13,202 |
|
|
|
8,441 |
|
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY |
$ |
49,399 |
|
|
$ |
39,966 |
|
EVEREST GROUP, LTD.
CONSOLIDATED STATEMENTS OF CASH FLOWS
|
Twelve Months Ended |
||||||
|
December 31 |
||||||
(Dollars in millions) |
|
2023 |
|
|
|
2022 |
|
|
(unaudited) |
||||||
CASH FLOWS FROM OPERATING ACTIVITIES: |
|
|
|
||||
Net income (loss) |
$ |
2,517 |
|
|
$ |
597 |
|
Adjustments to reconcile net income to net cash provided by operating activities: |
|
|
|
||||
Decrease (increase) in premiums receivable |
|
(1,064 |
) |
|
|
(435 |
) |
Decrease (increase) in funds held by reinsureds, net |
|
(66 |
) |
|
|
(197 |
) |
Decrease (increase) in reinsurance recoverables |
|
143 |
|
|
|
(413 |
) |
Decrease (increase) in income taxes |
|
(559 |
) |
|
|
(181 |
) |
Decrease (increase) in prepaid reinsurance premiums |
|
(46 |
) |
|
|
(166 |
) |
Increase (decrease) in reserve for losses and loss adjustment expenses |
|
2,256 |
|
|
|
3,477 |
|
Increase (decrease) in unearned premiums |
|
1,387 |
|
|
|
655 |
|
Increase (decrease) in amounts due to reinsurers |
|
18 |
|
|
|
201 |
|
Increase (decrease) in losses in course of payment |
|
93 |
|
|
|
(186 |
) |
Change in equity adjustments in limited partnerships |
|
(168 |
) |
|
|
(94 |
) |
Distribution of limited partnership income |
|
120 |
|
|
|
180 |
|
Change in other assets and liabilities, net |
|
(339 |
) |
|
|
(297 |
) |
Non-cash compensation expense |
|
49 |
|
|
|
45 |
|
Amortization of bond premium (accrual of bond discount) |
|
(64 |
) |
|
|
55 |
|
Net (gains) losses on investments |
|
276 |
|
|
|
455 |
|
Net cash provided by (used in) operating activities |
|
4,553 |
|
|
|
3,695 |
|
|
|
|
|
||||
CASH FLOWS FROM INVESTING ACTIVITIES: |
|
|
|
||||
Proceeds from fixed maturities matured/called/repaid - available for sale |
|
2,310 |
|
|
|
2,626 |
|
Proceeds from fixed maturities sold - available for sale |
|
3,849 |
|
|
|
1,403 |
|
Proceeds from fixed maturities matured/called/repaid - held to maturity |
|
105 |
|
|
|
39 |
|
Proceeds from equity securities sold |
|
126 |
|
|
|
2,217 |
|
Distributions from other invested assets |
|
245 |
|
|
|
266 |
|
Cost of fixed maturities acquired - available for sale |
|
(10,653 |
) |
|
|
(7,344 |
) |
Cost of fixed maturities acquired - held to maturity |
|
(112 |
) |
|
|
(153 |
) |
Cost of equity securities acquired |
|
(17 |
) |
|
|
(1,003 |
) |
Cost of other invested assets acquired |
|
(902 |
) |
|
|
(1,547 |
) |
Net change in short-term investments |
|
(1,034 |
) |
|
|
149 |
|
Net change in unsettled securities transactions |
|
181 |
|
|
|
(71 |
) |
Net cash provided by (used in) investing activities |
|
(5,902 |
) |
|
|
(3,418 |
) |
|
|
|
|
||||
CASH FLOWS FROM FINANCING ACTIVITIES: |
|
|
|
||||
Common shares issued (redeemed) during the period for share-based compensation, net of expense |
|
(23 |
) |
|
|
(17 |
) |
Proceeds from public offering of common shares |
|
1,445 |
|
|
|
— |
|
Purchase of treasury shares |
|
— |
|
|
|
(61 |
) |
Dividends paid to shareholders |
|
(288 |
) |
|
|
(255 |
) |
Cost of debt repurchase |
|
— |
|
|
|
(6 |
) |
Net FHLB borrowings (repayments) |
|
300 |
|
|
|
— |
|
Cost of shares withheld on settlements of share-based compensation awards |
|
(24 |
) |
|
|
(20 |
) |
Net cash provided by (used in) financing activities |
|
1,409 |
|
|
|
(359 |
) |
|
|
|
|
||||
EFFECT OF EXCHANGE RATE CHANGES ON CASH |
|
(23 |
) |
|
|
39 |
|
|
|
|
|
||||
Net increase (decrease) in cash |
|
38 |
|
|
|
(42 |
) |
Cash, beginning of period |
|
1,398 |
|
|
|
1,441 |
|
Cash, end of period |
$ |
1,437 |
|
|
$ |
1,398 |
|
|
|
|
|
||||
SUPPLEMENTAL CASH FLOW INFORMATION: |
|
|
|
||||
Income taxes paid (recovered) |
$ |
196 |
|
|
$ |
171 |
|
Interest paid |
|
130 |
|
|
|
98 |
|
|
|
|
|
||||
NON-CASH TRANSACTIONS: |
|
|
|
||||
Reclassification of specific investments from fixed maturity securities, available for sale at fair value |
|
|
|
||||
to fixed maturity securities, held to maturity at amortized cost net of credit allowances |
|
— |
|
|
|
722 |
|
On December 27, 2023, the Government of Bermuda enacted the Corporate Income Tax Act 2023, which will apply a 15% corporate income tax to certain Bermuda businesses in fiscal years beginning on or after January 1, 2025. The act includes a provision referred to as the economic transition adjustment, which is intended to provide a fair and equitable transition into the tax regime, and results in a deferred tax benefit for the Company. Pursuant to this legislation, the Company has estimated a $578 million net deferred tax asset as of December 31, 2023. This amount could be subject to change. Any changes will be reflected in the 4th quarter of 2023 as presented in the Company's 2023 Form 10-K filing. Net income (loss), after-tax operating income (loss), net income (loss) per diluted common share, after-tax operating income (loss) per diluted common share, net income ROE, operating income ROE, total shareholder return, book value per common share, and adjusted book value per common share excluding URAD excluding the benefit associated with the net deferred tax asset is displayed in the following reconciliation:
|
Three Months Ended December 31, |
|
Twelve Months Ended December 31, |
||||||||||||||||||
|
2023 |
|
2023 |
||||||||||||||||||
|
|
|
Excl. |
|
Bermuda CIT |
|
|
|
Excl. |
|
Bermuda CIT |
||||||||||
|
As Reported |
|
Bermuda Tax |
|
impact |
|
As Reported |
|
Bermuda Tax |
|
impact |
||||||||||
Net income (loss) |
$ |
804 |
|
|
$ |
226 |
|
|
$ |
578 |
|
$ |
2,517 |
|
|
$ |
1,939 |
|
|
$ |
578 |
Operating income (loss) |
$ |
1,093 |
|
|
$ |
515 |
|
|
$ |
578 |
|
$ |
2,776 |
|
|
$ |
2,198 |
|
|
$ |
578 |
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Per common share diluted net income (loss) |
$ |
18.53 |
|
|
$ |
5.21 |
|
|
$ |
13.31 |
|
$ |
60.19 |
|
|
$ |
46.38 |
|
|
$ |
13.81 |
Per common share diluted operating income (loss) |
$ |
25.18 |
|
|
$ |
11.87 |
|
|
$ |
13.31 |
|
$ |
66.39 |
|
|
$ |
52.58 |
|
|
$ |
13.81 |
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Return on equity (annualized) |
|
|
|
|
|
|
|
|
|
|
|
||||||||||
After-tax operating income (loss) |
|
32.4 |
% |
|
|
15.6 |
% |
|
16.8 pts |
|
|
23.1 |
% |
|
|
18.7 |
% |
|
4.4 pts |
||
After-tax net gains (losses) on investments |
|
-6.5 |
% |
|
|
-6.6 |
% |
|
0.1 pts |
|
|
-2.0 |
% |
|
|
-2.0 |
% |
|
— pts |
||
After-tax foreign exchange income (expense) |
|
-2.1 |
% |
|
|
-2.1 |
% |
|
— pts |
|
|
-0.2 |
% |
|
|
-0.2 |
% |
|
— pts |
||
Net income (loss) |
|
23.8 |
% |
|
|
6.9 |
% |
|
16.9 pts |
|
|
20.9 |
% |
|
|
16.5 |
% |
|
4.4 pts |
||
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Total Shareholder Return (TSR) |
|
|
|
|
|
|
|
26.5 |
% |
|
|
21.3 |
% |
|
5.2 pts |
||||||
Book value per common share outstanding |
$ |
304.29 |
|
|
$ |
290.98 |
|
|
$ |
13.31 |
|
$ |
304.29 |
|
|
$ |
290.98 |
|
|
$ |
13.31 |
Adjusted book value per common share outstanding excluding ("URAD") |
$ |
320.95 |
|
|
$ |
307.63 |
|
|
$ |
13.32 |
|
$ |
320.95 |
|
|
$ |
307.63 |
|
|
$ |
13.32 |
(Some amounts may not reconcile due to rounding.) |
