EVEREST GROUP LTD
For the period ended Dec 31, 2024. Filed Feb 27, 2025.
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A company's yearly report to the SEC, with audited financial statements. It is the fullest account a company gives of its business, its finances and the risks it sees.
FY2024 · Filed Feb 27, 2025
EG$411.11-1.6%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-K
Period ended 2023-12-31; filed 2024-02-28.
0001095073-24-000009
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-K
Period ended 2024-12-31; filed 2025-02-27.
0001095073-25-000015
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 164 previous paragraphs and 194 current paragraphs.
73 unchanged; 75 reworded; 44 added; 15 removed; 1 previous and 2 current paragraphs rearranged.
Tables are not compared: 24 previous and 27 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (44)
Current report
Overview.
Current report
Everest is a global underwriting leader providing best-in-class property, casualty and specialty reinsurance and insurance solutions. As part of the Standard & Poor’s (“S&P”) 500 Index, we are a leading financial services institution focused on value creation for our shareholders while diversifying our portfolio and geographic presence. Through our direct and indirect subsidiaries operating in the U.S. and internationally, we serve a diverse group of clients worldwide, providing what we believe are extensive product and distribution capabilities, a strong balance sheet, an innovative culture and access to world-class talent.
Current report
As a global leader with a 50-year track record, we are a preferred Reinsurance partner in the markets we serve, and with
Current report
our growing Insurance franchise we strive to deliver consistent value to all our stakeholders. We continue to grow and develop our Insurance business, investing in our global platform and strengthening our portfolio and its potential to deliver on our customer promise.
Current report
During 2024, we formed a new “Other” segment, primarily comprised of the results of our sports and leisure business sold in October 2024, consisting of policies written prior to the sale and polices renewed and certain new business written on the Company’s paper post-sale. It also includes run-off asbestos and environmental (“A&E”) exposures, certain discontinued insurance programs primarily written prior to 2012 and certain discontinued insurance and reinsurance coverage classes. The Other segment does not generally sell insurance or reinsurance products but is responsible for the management of existing policies and settlement of related losses. These segment presentation changes have been reflected retrospectively. The Company will continue to have two reportable segments that actively sell products, Reinsurance and Insurance, consistent with how the on-going business is managed. See Note 6 of the Notes to the Consolidated Financial Statements for a summary of segment results.
Current report
Our current year net income of $1.4 billion is inclusive of unfavorable development of prior-year loss reserves of $1.5 billion. Following a comprehensive reserve review, we have significantly fortified our U.S. casualty reserves, while taking aggressive underwriting action in certain classes exposed to social inflation, bolstering talent and investing in our platform as we head into 2025. Refer to management’s discussion of consolidated and segment results below.
Current report
Net written premiums increased by 7.4% to $15.8 billion in 2024, compared to $14.7 billion in 2023. The current year over prior year increase remained relatively consistent with the percentage increase in gross written premiums.
Current report
Incurred losses and LAE increased by 34.1% to $11.3 billion in 2024, compared to $8.4 billion in 2023, primarily due to an increase of $1.1 billion in current year attritional losses, an increase of $423 million in current year catastrophe losses and unfavorable development on prior year attritional losses of $1.5 billion, partially offset by favorable development on prior year catastrophe losses of $138 million.
Current report
Unfavorable development on prior year attritional losses was $1.5 billion in 2024 compared to favorable development of $5 million in 2023. The net unfavorable development on prior year attritional reserves of $1.5 billion in 2024 is comprised of $1.1 billion of unfavorable development on prior years attritional losses from the Insurance segment, mainly driven by a combination of social inflation and portfolio concentrations in certain U.S. casualty lines and $403 million of unfavorable development on prior years attritional losses from the Other segment, mainly related to certain sports and leisure lines for accident years 2019 through 2023, including A&E reserve strengthening of $54 million. In addition, the Reinsurance segment recorded $684 million of unfavorable development on prior year casualty reserves. This unfavorable development in the Reinsurance segment was largely offset by favorable development booked on well-seasoned reserves in the property and mortgage lines.
Current report
Refer to the “Ratios” section for loss ratio analysis discussion.
Current report
On December 27, 2023, the Government of Bermuda enacted the Corporate Income Tax Act 2023 (“The 2023 Act”), which will apply a 15% corporate income tax to certain Bermuda businesses in fiscal years beginning on or after January 1, 2025. The 2023 Act includes a provision referred to as “The Economic Transition Adjustment” (the “ETA”), which is intended to provide a fair and equitable transition into the new tax regime, and results in a deferred tax benefit for the Company. However, on January 15, 2025, the OECD issued Guidance related to “deferred tax assets arising from tax benefits provided by General Government” whereby it has restricted the utilization of those deferred tax benefits against the computation of its Pillar Two Global Minimum Taxes to approximately 20% of the originally calculated amounts and only for a grace period of two years through 2026. If the Bermuda Ministry of Finance amends The 2023 Act in response to this Guidance, the exact impact of any such amendments is uncertain but there is a risk that it results in a reduction in the Company's Deferred Tax Assets.
Current report
Our net income was $1.4 billion and $2.5 billion in 2024 and 2023, respectively. The decline was primarily driven by a decrease in underwriting income of $1.6 billion resulting from the unfavorable prior year development recognized in 2024, partially offset by an increase of $520 million in net investment income.
Current report
Our combined ratio increased by 11.4 points to 102.3% in 2024, compared to 90.9% in 2023. The current year increase is primarily due to prior year development on attritional losses and higher current year catastrophe losses.
Current report
The commission and brokerage ratio components decreased to 21.7% in 2024, compared to 22.0% in 2023. The decrease was mainly due to changes in the mix of business.
Current report
The other underwriting expense ratio decreased to 6.2% in 2024, compared to 6.3% in 2023. The decrease was mainly due to Reinsurance segment continued leverage against its premium base, offset by Insurance segment expenses driven by continued international growth.
Current report
Invested Assets.
Current report
The Company’s cash and invested assets totaled $41.5 billion at December 31, 2024, which consisted of 86.5% fixed maturities, short term investments and cash and 13.5% of other invested assets and equity securities. Of the total fixed maturities, 96.4% were investment grade. Additionally, the average maturity of fixed maturity securities was 4.9 years at December 31, 2024, and their overall average duration was 3.1 years.
Current report
As of December 31, 2024, the Company did not have any direct investments in commercial real estate, direct commercial mortgages or securities of issuers that are experiencing cash flow difficulty to an extent that the Company’s management believes that the issuer’s ability to meet debt service payments, except where an allowance for credit losses has been recognized, is threatened.
Current report
The Company’s investment portfolio includes structured commercial mortgage-backed securities (“CMBS”) with a book value of $985 million and a fair value of $921 million. As of December 31, 2024, 85.2% of CMBS securities in our investment portfolio are rated AAA by nationally recognized rating agencies. The remainder of CMBS securities in our investment portfolio are rated investment grade by nationally recognized rating agencies.
Current report
The following table represents the credit quality distribution of the Company’s fixed maturities for the periods indicated:
Current report
(1)Fixed maturities-available for sale are at fair value and fixed maturities-held to maturity are at amortized cost, net of allowances for credit losses.
Current report
The following table summarizes fixed maturities by contractual maturity for the periods indicated:
Current report
(1) Fixed maturities-available for sale are at fair value and fixed maturities-held to maturity are at amortized cost, net of allowances for credit losses.
Current report
(2)The amortized cost and fair value of fixed maturity securities are shown by contractual maturity. Mortgage-backed securities are generally more likely to be prepaid than other fixed maturity securities. As the stated maturity of such securities may not be indicative of actual maturities, the totals for mortgage-backed and asset-backed securities are shown separately.
Current report
Premiums. Gross written premiums increased by 12.9% to $12.9 billion in 2024 from $11.5 billion in 2023. The increase in gross written premiums reflects growth across multiple lines of business, particularly property and casualty pro rata business and property catastrophe excess of loss business.
Current report
Net written premiums increased by 10.8% to $12.0 billion in 2024, compared to $10.8 billion in 2023. The current year over prior year increase remained relatively consistent with the percentage increase in gross written premiums.
Current report
Incurred losses increased by 24.8% to $7.1 billion in 2024, compared to $5.7 billion in 2023. The increase was primarily due to an increase of $815 million in current year attritional losses, an increase of $322 million in current year catastrophe losses and a decrease of favorable development on prior year attritional reserves ($0 million in 2024 and $401 million in 2023), partially offset by favorable development on prior year catastrophe losses of $125 million. The increase in current year attritional losses was mainly related to the impact of the increase in premiums earned. During the current year, prior year U.S. casualty reserves were strengthened by $684 million. This reserve strengthening was fully offset by favorable development on well-seasoned reserves in property and mortgage lines.
Current report
Premiums. Gross written premiums increased by 3.9% to $5.1 billion in 2024, compared to $4.9 billion in 2023. The increase in insurance premiums reflects growth property/short tail business and other specialty business, partially offset by portfolio actions taken on accident and health, workers’ compensation and casualty lines of business.
Current report
Net written premiums decreased by 0.7% to $3.7 billion in 2024, compared to $3.7 billion in 2023. The decrease in net written premiums compared to the increase in gross written premiums was mainly due to lower net retention resulting from changes in the mix of business.
Current report
Incurred losses and LAE increased by 46.5% to $3.6 billion in 2024, compared to $2.5 billion in 2023. The increase was mainly due to unfavorable development on prior years attritional losses of $787 million, an increase of $277 million in current year attritional losses and an increase in current year catastrophe losses of $100 million, partially offset by favorable development on prior years catastrophe losses of $14 million. During 2024, prior year U.S. casualty reserves were strengthened by $1.1 billion. The reserve strengthening was driven by a combination of social inflation and portfolio concentrations in certain U.S. casualty lines classes. The increase in current year attritional losses was primarily due to the impact of the increase in premiums earned and strengthening of current accident year U.S. casualty reserves by $206 million.
Current report
Other.
Current report
The Other segment includes the results of our sports and leisure business sold in October 2024, consisting of policies written prior to the sale and polices renewed and certain new business written on the Company’s paper post-sale. It also includes run-off A&E exposures, certain discontinued insurance programs primarily written prior to 2012 and certain discontinued insurance and reinsurance coverage classes. The Other segment does not generally sell insurance or reinsurance products but is responsible for the management of existing policies and settlement of related losses.
Current report
The following table presents the underwriting results and ratios for the Other segment for the periods indicated:
Current report
Premiums. Gross written premiums decreased from $289 million in 2023 to $212 million in 2024. Net written premiums decreased from $225 million in 2023 to $167 million in 2024. Gross written premium is primarily coming from the sports and leisure business. Premiums earned decreased from $225 million in 2023 to $197 million in 2024. The decreases in gross written premiums, net written premiums and premiums earned are due to the lines of business included in this segment primarily being in run-off, except for a limited number of renewed and new policies written on the Company's paper by the purchaser of the sports and leisure business sold in October 2024, for a finite period of time post-closing.
Current report
Incurred Losses and LAE. Incurred losses and LAE increased to $580 million in 2024, compared to $266 million in 2023. The increase was mainly due to unfavorable development on prior years attritional losses of $293 million. During 2024, the unfavorable development on prior year attritional losses for the Company’s Other segment of $403 million was mainly related to North America casualty lines for accident years 2019 through 2023 that were impacted by social inflation, including A&E reserve strengthening of $54 million resulting in a 3-year net asbestos survival ratio of 7 years.
Current report
Segment Expenses. Commission and brokerage and other underwriting expenses remained relatively flat year over year.
Current report
Certain reserves, including losses from widespread catastrophic events and COVID-19 related losses, cannot be estimated using traditional actuarial method. Rather, loss and LAE reserves are estimated by completing an in-depth analysis of the individual contracts which may potentially be impacted by the loss. The analysis uses inputs from various sources and methodology, to build up a comprehensive perspective. Such analysis generally involves: 1) estimating the size of insured industry losses; 2) reviewing portfolios to identify contracts which are exposed; 3) reviewing information reported or otherwise provided by customers and brokers; 4) discussing the loss with customers and brokers; and 5) estimating the ultimate expected cost to settle all claims and administrative costs arising from the loss on a contract-by-contract basis and in aggregate for the event. Due to the inherent uniqueness or specific nature of a catastrophic event, each event has its own unique assessment, and different weights may be applied to various inputs based on our judgment. Once a loss has occurred, during the then current reporting period, we record our best estimate of the ultimate expected cost to settle all claims arising from the loss. Our estimate of loss and LAE reserves is then determined by deducting cumulative paid losses from its estimate of the ultimate expected loss. Our estimate of incurred but not reported (“IBNR”) is determined by deducting cumulative paid losses, case reserves and additional case reserves from its estimate of the ultimate expected loss.
Current report
Because catastrophe losses are typically due to prominent, public events such as hurricanes and earthquakes, we are often able to use independent reports as part of our loss reserve estimation process. We also review catastrophe bulletins published by various statistical modeling agencies to assist in determining the size of the industry loss, although these reports may not be available for some time after an event. For smaller events including localized severe weather events such as windstorms, hail, ice, snow, flooding, freezing and tornadoes, which are not necessarily prominent, public occurrences, we initially place greater reliance on catastrophe bulletins published by statistical modeling agencies to assist in determining what events occurred during the reporting period than we do for large events. This includes reviewing catastrophe bulletins published by Property Claim Services for U.S. catastrophes. We set our initial estimates of reserves for loss and LAE for these smaller events based on a combination of its historical market share for these types of losses and the estimate of the total insured industry property losses as reported by statistical modeling agencies, although we may make significant adjustments based on our current exposure to the geographic region involved as well as the size of the loss and the peril involved.
Current report
In general, reserves for more recent large losses are subject to greater uncertainty and, therefore, greater potential variability, and are likely to experience material changes from one period to the next. This is due to the uncertainty as to the size of the industry losses, uncertainty as to which contracts have been exposed, uncertainty due to complex legal and coverage issues that can arise out of large or complex losses, and uncertainty as to the magnitude of claims incurred by our customers. As our losses age, more information becomes available, and we believe our estimates become more certain.
Current report
Tax. On December 27, 2023, the Government of Bermuda enacted the Corporate Income Tax Act 2023 (“The 2023 Act”), which will apply a 15% corporate income tax to certain Bermuda businesses in fiscal years beginning on or after January 1, 2025. The 2023 Act includes a provision referred to as “The Economic Transition Adjustment” (the “ETA”), which is intended to provide a fair and equitable transition into the new tax regime, and results in a deferred tax benefit for the Company. However, on January 15, 2025, the OECD issued Guidance related to “deferred tax assets arising from tax benefits provided by General Government” whereby it has restricted the utilization of those deferred tax benefits against the computation of its Pillar Two Global Minimum Taxes to approximately 20% of the originally calculated amounts and only for a grace period of two years through 2026. If the Bermuda Ministry of Finance amends The 2023 Act in response to this Guidance, the exact impact of any such amendments is uncertain but there is a risk that it results in a reduction in the Company's Deferred Tax Assets.
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Removed paragraphs (15)
Previous report
Industry Conditions.
Previous report
The worldwide insurance and reinsurance businesses are highly competitive, as well as cyclical by product and market. As a result, financial results tend to fluctuate with periods of constrained availability, higher rates and stronger profits followed by periods of abundant capacity, lower rates and constrained profitability. Competition in the types of insurance and reinsurance business that we underwrite is based on many factors, including the perceived overall financial strength of the reinsurer or insurer, ratings of the reinsurer or insurer by A.M. Best and/or Standard & Poor’s, underwriting expertise, the jurisdictions where the reinsurer or insurer is licensed or otherwise authorized, capacity and coverages offered, premiums charged, other terms and conditions of the insurance and reinsurance business offered, services offered, speed of claims payment and reputation and experience in lines written. Furthermore, the market impact from these competitive factors related to insurance and reinsurance is generally not consistent across lines of business, domestic and international geographical areas and distribution channels.
Previous report
Financial instruments such as side cars, catastrophe bonds and collateralized reinsurance funds, provided capital markets with access to insurance and reinsurance risk exposure. The capital markets demand for these products is primarily driven by the desire to achieve greater risk diversification and potentially higher returns on their investments. This competition generally has a negative impact on rates, terms and conditions; however, the impact varies widely by market and coverage. Based on recent competitive behaviors in the insurance and reinsurance industry, natural catastrophe events and the macroeconomic backdrop, there has been dislocation in the market which has had a positive impact on rates and terms and conditions, generally, though specifics in local markets can vary.
Previous report
Specifically, recent market conditions in property, particularly catastrophe excess of loss, have resulted in rate increases. As a result of the rate increases, most of the lines within property have been affected. Other casualty lines have been experiencing modest rate increases, while some lines such as workers’ compensation and directors and officers liability have been experiencing softer market conditions. The impact on pricing conditions is likely to change depending on the line of business and geography.
Previous report
Our capital position remains a source of strength, with high quality invested assets, significant liquidity and a low operating expense ratio. Our diversified global platform with its broad mix of products, distribution and geography is resilient.
Previous report
Therecent emergence of the Middle East war and the ongoing war in the Ukraine are evolving events. Economic and legal sanctions have been levied against Russia, specific named individuals and entities connected to the Russian government, as well as businesses located in the Russian Federation and/or owned by Russian nationals in numerous countries, including the United States. The significant political and economic uncertainty surrounding these wars and associated sanctions have impacted economic and investment markets both within Russia, Ukraine, the Middle East region, and around the world.
Previous report
With the assent of the governor on December 27, 2023, the Bermuda Corporate Income Tax Act of 2023 (“The 2023 Act”) became law. Beginning in 2025, a 15% corporate income tax will be applicable to Bermuda businesses that are part of multinational enterprise groups with annual revenue of €750 million or more. Group’s Bermuda entities will be subject to the new corporate income tax. The Company has evaluated The 2023 Act and has recorded $578 million of net deferred income tax benefits in 2023 related to it. The net deferred income tax benefits relate primarily to a default provision in the law which allows for what is called an “Economic Transition Adjustment” (“ETA”). The ETA allows companies to establish deferred tax assets or liabilities related to the revaluation of intangible assets, excluding goodwill, and their other assets and liabilities, based on fair value as of September 30, 2023. The deferred tax assets or liabilities are then amortized in accordance with The 2023 Act.
Previous report
Our net income was $2.5 billion and $597 million in 2023 and 2022, respectively. The change was primarily driven by underwriting income of $1.2 billion and net investment income of $1.4 billion, partially offset by realized loss on investments of $276 million. Additionally, there was an income tax benefit of $363 million primarily driven by the 2023 Act further discussed within Income Tax Expense (Benefit) section above.
Previous report
The Company operates through two operating segments. The Reinsurance operation writes worldwide property and casualty reinsurance and specialty lines of business, on both a treaty and facultative basis, through reinsurance brokers, as well as directly with ceding companies. Business is written in the U.S., Bermuda, and Ireland offices, as well as, through branches in Canada, Singapore, the UK and Switzerland. The Insurance operation writes property and casualty insurance directly and through brokers, including for surplus lines, and general agents within the U.S., Bermuda, Canada, Europe, Singapore and South America through its offices in the U.S., Bermuda, Canada, Chile, Singapore, the UK, Ireland, and branches located in the UK, the Netherlands, France, Germany and Spain. The two segments are managed independently, but conform with corporate guidelines with respect to pricing, risk management, control of aggregate catastrophe exposures, capital, investments and support operations.
Previous report
Our key actuarial assumptions contain no explicit provisions for reserve uncertainty, nor do we supplement the actuarially determined reserves for uncertainty.
Previous report
Tax. With the assent of the governor on December 27, 2023, the Bermuda Corporate Income Tax Act of 2023 (“The 2023 Act”) became law. Beginning in 2025, a 15% corporate income tax will be applicable to Bermuda businesses that are part of multinational enterprise groups with annual revenue of €750 million or more. Group’s Bermuda entities will be subject to the new corporate income tax. The Company has evaluated The 2023 Act and has recorded $578 million of net deferred income tax benefits in 2023 related to it. The net deferred income tax benefits relate primarily to a default provision in the law which allows for what is called an “Economic Transition Adjustment” (“ETA”). The ETA allows companies to establish deferred tax assets or liabilities related to the revaluation of intangible assets, excluding goodwill, and their other assets and liabilities, based on fair value as of September 30, 2023. The deferred tax assets or liabilities are then amortized in accordance with The 2023 Act.
Previous report
Investments. Total investments were $35.7 billion at December 31, 2023, an increase of $7.2 billion compared to $28.5 billion at December 31, 2022. The rise in investments was primarily related to an increase in fixed maturity securities, short-term investments and other invested assets. The increases in fixed maturity securities and short-term investments were primarily driven by reinvestment of the Company’s operating cash flow of $4.6 billion in 2023.
Previous report
We repurchased $6 million of our long-term subordinated notes during the third quarter of 2022 and recognized a gain of $1 million on the repurchase. We may continue, from time to time, to seek to retire portions of our outstanding debt securities through cash repurchases, in open-market purchases, privately negotiated transactions or otherwise. Such repurchases, if any, will be subject to and depend on prevailing market conditions, our liquidity requirements, contractual restrictions and other factors. The amounts involved in any such transactions, individually or in the aggregate, may be material.
Previous report
On October 4, 2021, we issued an additional $1.0 billion of 31 year senior notes with an interest coupon rate of 3.125%. These senior notes will mature on October 15, 2052 and will pay interest semi-annually.
Previous report
In addition to our cash flows from operations and liquid investments, we also have multiple active credit facilities that provide commitments of up to $1.7 billion of collateralized standby letters of credit to support business written by our Bermuda operating subsidiaries. In addition, the Company has the ability to request access to an additional $240 million of uncommitted credit facilities, which would require approval from the applicable lender. There is no guarantee the uncommitted capacity will be available to us on a future date. See Note 7 - Credit Facilities for further details.
Reworded paragraphs (75)
Previous wording
The following is a discussion and analysis of our results of operations and financial condition for the years ended December 31, 2023 and 2022. This discussion should be read in conjunction with the Consolidated Financial Statements and related Notes, under ITEM 8 of this Form 10-K. Pursuant to the FAST Act Modernization and Simplification of Regulation S-K, comparisons between 2022 and 2021 have been omitted from this Form 10-K but can be found in "Management's Discussion and Analysis of Financial Condition and Results of Operations" in Part II, Item 7 of our Form 10-K for the year ended December 31, 2022.
Current wording
The following is a discussion and analysis of our results of operations, financial condition and liquidity and capital resources for the years ended December 31, 2024 and 2023. This discussion should be read in conjunction with the consolidated financial statements and related notes, under ITEM 8 of this Form 10-K. Pursuant to the Fixing America’s Surface Transportation Act Modernization and Simplification of Regulation S-K, comparisons between 2023 and 2022 have been omitted from this Form 10-K but can be found in "Management's Discussion and Analysis of Financial Condition and Results of Operations" in Part II, Item 7 of our Form 10-K for the year ended December 31, 2023.
Previous wording
Premiums. Gross written premiums increased by 19.2% to $16.6 billion in 2023, compared to $14.0 billion in 2022, reflecting a $2.2 billion, or 23.9% increase in our reinsurance business and a $473 million, or 10.0%, increase in our insurance business. The increase in reinsurance premiums reflects growth across all lines of business, particularly property pro rata, and property excess of loss business. The increase in insurance premiums reflects growth across multiple lines of business, particularly specialty casualty business, property/short tail business and other specialty business, driven by positive rate and exposure increases, new business and strong renewal retention. Net written premiums increased by 19.3% to $14.7 billion in 2023, compared to $12.3 billion in 2022. Premiums earned increased by 14.0% to $13.4 billion in 2023, compared to $11.8 billion in 2022, which is consistent with the percentage changes in gross written premiums. The change in premiums earned relative to net written premiums was primarily the result of timing; premiums are earned ratably over the coverage period whereas written premiums are generally recorded at the initiation of the coverage period.
Current wording
Premiums. Gross written premiums increased by 9.6% to $18.2 billion in 2024, compared to $16.6 billion in 2023, reflecting a $1.5 billion, or 12.9% increase in our reinsurance business and a $191 million, or 3.9%, increase in our insurance business. The increase in reinsurance premiums reflects growth across multiple lines of business, particularly property and casualty pro rata business and property catastrophe excess of loss business. The increase in insurance premiums reflects growth in property/short tail business and other specialty business, partially offset by portfolio actions taken on accident and health, workers’ compensation and specialty casualty lines of business.
Previous wording
Other Income (Expense). We recorded other expense of $14 million and other expense of $102 million in 2023 and 2022, respectively. The change was primarily the result of fluctuations in foreign currency exchange rates. We recognized foreign currency exchange expense of $24 million in 2023, partially offset by $8 million of income from Everest Group’s share of investment in the Mt. Logan segregated cells. We recognized foreign currency exchange expense of $103 million in 2022.
Current wording
Other Income (Expense). We recorded other income of $121 million and other expense of $14 million in 2024 and 2023, respectively. The change was primarily the result of fluctuations in foreign currency exchange rates, gain from the sale of the sports and leisure business and gain from pension plan curtailment. We recognized foreign currency exchange income of $58 million in 2024 and foreign currency exchange expense of $24 million in 2023. Additionally, we recognized a $40 million gain on sale of our sports and leisure business, including renewal rights, sold during the fourth quarter and a $9 million pension plan curtailment gain.
Previous wording
Incurred Losses and Loss Adjustment Expenses. The following table presents our incurred losses and loss adjustment expenses (“LAE”) for the periods indicated:
Current wording
Incurred Losses and Loss Adjustment Expenses (“LAE”). The following table presents our incurred losses and LAE for the periods indicated:
Previous wording
Incurred losses and LAE increased by 4.0% to $8.4 billion in 2023, compared to $8.1 billion in 2022, primarily due to an increase of $916 million in current year attritional losses, partially offset by a decrease of $585 million in current year catastrophe losses. The increase in current year attritional losses was mainly due to the impact of the increase in premiums earned and changes in the mix of business. The current year catastrophe losses of $470 million in 2023 related primarily to the 2023 Turkey earthquakes ($103 million), Hurricane Otis ($100 million), the 2023 Italy convective storm ($57 million), the 2023 New Zealand storms ($45 million), the 2023 Morocco earthquake ($40 million), the 2023 Hawaii wildfire ($32 million), and Hurricane Idalia ($23 million), with the remaining losses resulting from various storm events. The $1.1 billion of current year catastrophe losses in 2022 related primarily to Hurricane Ian ($699 million), the 2022 Australia floods ($88 million), the 2022 Western Europe hailstorms ($69 million), the 2022 South Africa flood ($50 million), the 2022 and the Western Europe Convective Storm ($35 million), with the remaining losses resulting from various storm events.
Current wording
The increase in current year attritional losses was mainly due to the impact of the increase in premiums earned, changes in the mix of business and strengthening of current accident year U.S. casualty reserves by $206 million in the Insurance segment. The current year catastrophe losses of $893 million in 2024 related primarily to Hurricane Milton ($320 million), Hurricane Helene ($94 million), Hurricane Beryl ($64 million), Hurricane Debby ($56 million), the 2024 European flood Boris ($56 million), the 2024 Baltimore bridge collapse ($55 million), the third quarter 2024 Calgary Alberta storms ($54 million), the 2024 Brazil Floods ($41 million), the 2024 Dubai floods ($32 million), the 2024 Germany floods ($31 million), the 2024 New Caledonia Riots ($31 million) and the 2024 Taiwan earthquake ($27 million), with the remaining losses resulting from various events. The $470 million of current year catastrophe losses in 2023 related primarily to the 2023 Turkey earthquakes ($103 million), Hurricane Otis ($100 million), the 2023 Italy convective storm ($57 million), the 2023 New Zealand storms ($45 million), the 2023 Morocco earthquake ($40 million), the 2023 Hawaii wildfire ($32 million) and Hurricane Idalia ($23 million), with the remaining losses resulting from various storm events.
Previous wording
Catastrophe losses and loss expenses typically have a material effect on our incurred losses and loss adjustment expense results and can vary significantly from period to period. Losses from natural catastrophes contributed 3.5 percentage points to the combined ratio in 2023, compared with 9.0 percentage points in 2022. The Company has up to $350 million of catastrophe bond protection (“CAT Bond”) that attaches at a $48.1 billion Property Claims Services (“PCS”) Industry loss threshold. This recovery would be recognized on a pro-rata basis up to a $63.8 billion PCS Industry loss level. As a result of Hurricane Ian, PCS’s current industry estimate of $48.2 billion issued in February 2024 exceeds the attachment point. The potential recovery under the CAT Bond is not expected to be material. As a result, no portion of the potential CAT bond recovery has been included in the Company’s current financial results.
Current wording
Catastrophe losses and loss expenses typically have a material effect on our incurred losses and LAE results and can vary significantly from period to period. Losses from natural catastrophes contributed 5.9 percentage points to the combined ratio in 2024, compared with 3.5 percentage points in 2023.
Previous wording
Commission, Brokerage, Taxes and Fees. Commission, brokerage, taxes and fees increased by 16.7% to $3.0 billion for the year ended December 31, 2023 compared to $2.5 billion for the year ended December 31, 2022. The increase was primarily due to the impact of the increase in premiums earned, changes in the mix of business and $94 million of profit commission expense incurred in 2023 related to prior year loss reserves releases recorded within the Reinsurance segment.
Current wording
Commission, Brokerage, Taxes and Fees. Commission, brokerage, taxes and fees increased by 11.8% to $3.3 billion for the year ended December 31, 2024 compared to $3.0 billion for the year ended December 31, 2023. The increase was primarily due to the impact of the increase in premiums earned and changes in the mix of business. Refer to the “Ratios” section for commission and brokerage ratio analysis discussion.
Previous wording
Other Underwriting Expenses. Other underwriting expenses were $846 million and $682 million in 2023 and 2022, respectively. The increase in other underwriting expenses was mainly due to the impact of the increase in premiums earned as well as the continued build out of our insurance operations, including an expansion of the international insurance platform.
Current wording
Other Underwriting Expenses. Other underwriting expenses were $938 million and $846 million in 2024 and 2023, respectively. The increase in other underwriting expenses was mainly due to the impact of the increase in premiums earned as well as the continued build out of our insurance operations, including an expansion of the international insurance platform. Refer to the “Ratios” section for other underwriting expense ratio analysis discussion.
Previous wording
Corporate Expenses. Corporate expenses, which are general operating expenses that are not allocated to segments, were $73 million and $61 million for the years ended December 31, 2023 and 2022, respectively. The increase in 2023 compared to 2022 was mainly due to higher variable incentive compensation.
Current wording
Corporate Expenses. Corporate expenses, which are general operating expenses that are not allocated to segments, were $95 million and $73 million for the years ended December 31, 2024 and 2023, respectively. The increase in 2024 compared to 2023 was primarily due to information management related costs, including the acceleration of cybersecurity, corporate applications and infrastructure investments as well as an increase in compensation costs due to increased headcount from the prior year.
Previous wording
Interest, Fees and Bond Issue Cost Amortization Expense. Interest, fees and other bond amortization expense was $134 million and $101 million in 2023 and 2022, respectively. The increase was primarily due to movements in the floating interest rate related to the long-term subordinated notes, which is reset quarterly per the note agreement. The floating rate was 8.03% as of December 31, 2023 compared to 6.99% as of December 31, 2022.
Current wording
Interest, Fees and Bond Issue Cost Amortization Expense. Interest, fees and other bond amortization expense was $149 million and $134 million in 2024 and 2023, respectively. The increase was primarily driven by higher interest costs resulting from additional borrowings from the Federal Home Loan Bank of New York (“FHLBNY”), offset by the change in the floating interest rate related to the Company’s outstanding fixed to floating rate long-term subordinated notes, which is reset quarterly per the note agreement. The floating rate was 7.17% as of December 31, 2024, compared to 8.03% as of December 31, 2023.
Previous wording
Income Tax Expense (Benefit). Everest had an income tax benefit of $363 million and income tax benefit of $9 million in 2023 and 2022, respectively. An income tax benefit is primarily a function of the geographic location of the Company’s pre-tax income and the statutory tax rates in those jurisdictions. The effective tax rate (“ETR”) is primarily affected by tax-exempt investment income, foreign tax credits and dividends. Variations in the ETR generally result from changes in the relative levels of pre-tax income, including the impact of catastrophe losses and net capital gains (losses), among jurisdictions with different tax rates.
Current wording
Income Tax Expense (Benefit). Everest had an income tax expense of $120 million and income tax benefit of $363 million in 2024 and 2023, respectively. An income tax expense/benefit is primarily a function of the geographic location of the Company’s pre-tax income and the statutory tax rates in those jurisdictions. The effective tax rate (“ETR”) is primarily affected by tax-exempt investment income, foreign tax credits and dividends. Variations in the ETR generally result from changes in the relative levels of pre-tax income, including the impact of catastrophe losses and net capital gains (losses), among jurisdictions with different tax rates. The tax benefit in 2023 was primarily due to the implementation of the provisions of the Bermuda Corporate Income Tax Act of 2023 (“The 2023 Act”).
Previous wording
Our combined ratio decreased by 5.1 points to 90.9% in 2023, compared to 96.0% in 2022. The loss ratio component decreased by 6.0 points in 2023 over the same period last year mainly due to a decline of $585 million in catastrophe losses. The commission and brokerage ratio components increased to 22.0% in 2023 compared to 21.4% in 2022. The increase was mainly due to changes in the mix of business and profit commission expense related to prior year loss reserve releases within the Reinsurance segment. The profit commission increased the 2023 commission ratio by 70 basis points. The other underwriting expense ratio increased to 6.3% in 2023 compared to 5.8% in 2022. The increase was mainly due to higher insurance operations costs.
Current wording
The loss ratio component increased by 11.7 points in 2024 over the same period last year mainly due to an increase of $423 million in catastrophe losses and prior year development on attritional losses.
Previous wording
Shareholders’ equity increased by $4.8 billion to $13.2 billion at December 31, 2023 from $8.4 billion at December 31, 2022, principally as a result of $2.5 billion of net income, $1.4 billion from a public equity offering of shares, $1.0 billion of unrealized appreciation on available for sale fixed maturity portfolio net of tax and $59 million of net foreign currency translation adjustments, partially offset by $288 million of shareholder dividends.
Current wording
Shareholders’ equity increased by $673 million to $13.9 billion at December 31, 2024 from $13.2 billion at December 31, 2023, principally as a result of $1.4 billion of net income, partially offset by $334 million of shareholder dividends, $200 million of share repurchases, $128 million of net foreign currency translation adjustments and $127 million of unrealized depreciation on fixed income available for sale securities, net of tax.
Previous wording
Net investment income increased by 72.7% to $1.4 billion in 2023 compared with net investment income of $830 million in 2022. The increase was primarily the result of an additional $523 million of income from fixed maturity and short-term investments and an increase of $47 million in limited partnership income. The limited partnership income primarily reflects changes in their reported net asset values. As such, until these asset values are monetized and the resultant income is distributed, they are subject to future increases or decreases in the asset value, and the results may be volatile.
Current wording
Net investment income increased by 36.3% to $2.0 billion in 2024, compared with net investment income of $1.4 billion in 2023. The increase was primarily the result of an additional $382 million of income from fixed maturity and short-term investments, an increase of $84 million in income from limited partnerships and an increase of $45 million in income from other alternative investments. The limited partnership income primarily reflects changes in their reported net asset values. As such, until these asset values are monetized and the resultant income is distributed, they are subject to volatile results of future increases or decreases in the asset value.
Previous wording
The pre-tax equivalent total return for the bond portfolio was approximately 6.8% and (5.9)%, respectively, in 2023 and 2022. The pre-tax equivalent return adjusts the yield on tax-exempt bonds to the fully taxable equivalent.
Current wording
The pre-tax equivalent total return for the bond portfolio was approximately 4.0% and 6.8%, respectively, in 2024 and 2023. The pre-tax equivalent return adjusts the yield on tax-exempt bonds to the fully taxable equivalent.
Previous wording
Net gains (losses) on investments in 2023 primarily consist of $283 million of losses due to the disposition of investments, partially offset by a decrease to the allowance for credit losses of $7 million. The realized losses from dispositions of investments mainly related to the execution of a Company strategy to sell lower yielding investments in order to reinvest the proceeds at higher interest rates.
Current wording
Total net gains (losses) on invest ments in 2024 primarily consist of $7 million of net gains due to the disposition of investments and a decrease to the allowance for credit losses of $13 million. The realized gains from dispositions of investments mainly related to the execution of a Company strategy to sell lower yielding investments in order to reinvest the proceeds at higher interest rates.
Previous wording
Our two operating segments each have executive leadership who are responsible for the overall performance of their respective segments and who are directly accountable to our chief operating decision maker (“CODM”), the Chief Executive Officer of Everest Group, Ltd., who is ultimately responsible for reviewing the business to assess performance, make operating decisions and allocate resources. We report the results of our operations consistent with the manner in which our CODM reviews the business.
Current wording
Our two reportable segments, Reinsurance and Insurance, each have executive leadership who are responsible for the overall performance of their respective segments and who are directly accountable to our chief operating decision maker (“CODM”), the Chief Executive Officer of Everest Group, Ltd., who is ultimately responsible for reviewing the business to assess performance, make operating decisions and allocate resources. We report the results of our operations consistent with the manner in which our CODM reviews the business.
Previous wording
During the fourth quarter of 2023, the Company revised the classification and presentation of certain products related to its accident and health business within the segment groupings. These products have been realigned from within the Reinsurance segment to the Insurance segment to appropriately reflect how the business segments are managed. These changes have been reflected retrospectively.
Current wording
During the fourth quarter of 2024, the Company revised its classification and presentation of certain run-off business, previously included within the Reinsurance and Insurance reportable segments, as part of a new segment called "Other". The new Other segment includes the results of our sports and leisure business sold in October 2024, consisting of policies written prior to the sale and polices renewed and certain new business written on the Company’s paper post-sale. It also includes run-off A&E exposures, certain discontinued insurance programs primarily written prior to 2012 and certain discontinued insurance and reinsurance coverage classes. The Other segment does not generally sell insurance or reinsurance products but is responsible for the management of existing policies and settlement of related losses. Additionally, during the fourth quarter of 2023, the Company revised the classification and presentation of certain products related to its accident and health business within the reportable segment groupings. These products have been realigned from within the Reinsurance segment to the Insurance segment to appropriately reflect how the business segments are managed due to changes in management implemented during the fourth quarter of 2023. These segment presentation changes have been reflected retrospectively. The Company will continue to have two reportable segments that actively sell products, Reinsurance and Insurance, consistent with how the on-going business is managed.
Previous wording
The Company does not review and evaluate the financial results of its operating segments based upon balance sheet data. Management generally monitors and evaluates the financial performance of these operating segments based upon their underwriting results. Underwriting results include earned premium less losses and loss adjustment expenses (“LAE”) incurred, commission and brokerage expenses and other underwriting expenses. The Company measures its underwriting results using ratios, in particular, loss, commission and brokerage and other underwriting expense ratios, which, respectively, divide incurred losses, commissions and brokerage and other underwriting expenses by premiums earned. Management has determined that these measures are appropriate and align with how the business is managed. We continue to evaluate our segments as our business evolves and may further refine our segments and financial performance measures.
Current wording
The Company does not review and evaluate the financial results of its segments based upon balance sheet data. Management generally monitors and evaluates the financial performance of these segments based upon their underwriting results. Underwriting results include earned premium less losses and LAE incurred, commission and brokerage expenses and other underwriting expenses. The Company measures its underwriting results using ratios, in particular, loss, commission and brokerage and other underwriting expense ratios, which, respectively, divide incurred losses, commissions and brokerage and other underwriting expenses by premiums earned. Management has determined that these measures are appropriate and align with how the business is managed. We continue to evaluate our segments as our business evolves and may further refine our segments and financial performance measures.
Previous wording
Premiums. Gross written premiums increased by 23.9% to $11.5 billion in 2023 from $9.2 billion in 2022. The increase in gross written premiums reflects growth across all lines of business, particularly property pro rata, and property excess of loss business. Net written premiums increased by 21.1% to $10.8 billion in 2023 compared to $8.9 billion in 2022. Premiums earned increased by 14.0% to $9.8 billion in 2023, compared to $8.6 billion in 2022. The change in premiums earned relative to net written premiums is primarily the result of timing; premiums are earned ratably over the coverage period whereas written premiums are generally recorded at the initiation of the coverage period.
Current wording
Premiums earned increased by 16.5% to $11.4 billion in 2024, compared to $9.8 billion in 2023. The change in premiums earned relative to net written premiums is primarily the result of timing; premiums are earned ratably over the coverage period whereas written premiums are generally recorded at the initiation of the coverage period.
Previous wording
During 2023, the Company refined its premium estimation methodology for its risk attaching reinsurance contracts within its Reinsurance Segment to continue to recognize gross written premium over the term of the treaty, albeit over a different pattern than what was previously used. The refined estimate resulted in an increase of gross written premium for the twelve months ended December 31, 2023 period and has further aligned the estimation methodology across the reinsurance division globally. This change had no impact on the total written premium to be recognized over the term of the treaty. There was no impact on net earned premium and therefore, no impact on income from continuing operations, net income, or any related per-share amounts.
Current wording
During 2023, the Company refined its premium estimation methodology for its risk attaching reinsurance contracts within its Reinsurance segment to continue to recognize gross written premium over the term of the treaty, albeit over a different pattern than what was previously used. The refined estimate resulted in an increase of gross written premium for the twelve months ended December 31, 2023, and has further aligned the estimation methodology across the reinsurance division globally. This change had no impact on the total written premium to be recognized over the term of the treaties. There was no impact on net earned premium and therefore, no impact on income from continuing operations, net income or any related per-share amounts.
Previous wording
Incurred losses decreased by 4.5% to $5.7 billion in 2023, compared to $6.0 billion in 2022. The decrease was primarily due to $397 million of favorable development on prior year attritional losses in 2023 and a decrease of $481 million in current year catastrophe losses, partially offset by an increase of $613 million in current year attritional losses. The favorable development mainly related to a combination of well seasoned mortgage and short-tail business. The increase in current year attritional losses was mainly related to the impact of the increase in premiums earned. The current year catastrophe losses of $449 million in 2023 related primarily to the 2023 Turkey earthquakes ($103 million), Hurricane Otis ($100 million), the 2023 Italy convective storm ($57 million), the 2023 New Zealand storms ($43 million), the 2023 Morocco earthquake ($40 million), the 2023 Hawaii wildfire ($27 million), and Hurricane Idalia ($23 million), with the remaining losses resulting from various storm events. The $930 million of current year catastrophe losses in 2022 related primarily to Hurricane Ian ($599 million), the 2022 Australia floods ($88 million), the Western Europe hailstorms ($69 million), the 2022 South Africa flood ($50 million), and the 2022 Western Europe Convective storm ($29 million), with the remaining losses resulting from various storm events.
Current wording
The current year catastrophe losses of $772 million in 2024 related primarily to Hurricane Milton ($275 million), Hurricane Helene ($64 million), Hurricane Debby ($55 million), Hurricane Beryl ($54 million), the 2024 European flood Boris ($50 million), the 2024 Baltimore bridge collapse ($50 million), the third quarter 2024 Calgary Alberta storms ($45 million) and the 2024 Brazil Floods ($41 million), the 2024 Dubai floods ($32 million), the 2024 New Caledonia Riots ($31 million), the 2024 Germany floods ($28 million) and the 2024 Taiwan earthquake ($25 million), with the remaining losses resulting from various events. The $449 million of current year catastrophe losses in 2023 related primarily to the 2023 Turkey earthquakes ($103 million), Hurricane Otis ($100 million), the 2023 Italy convective storm ($57 million), the 2023 New Zealand storms ($43 million), the 2023 Morocco earthquake ($40 million), the 2023 Hawaii wildfire ($27 million) and Hurricane Idalia ($23 million), with the remaining losses resulting from various storm events.
Previous wording
Segment Expenses. Commission and brokerage expense increased by 19.1% to $2.5 billion in 2023 compared to $2.1 billion in 2022. The increase was mainly due to the impact of the increase in premiums earned and changes in the mix of business. 2023 commissions include approximately $94 million of profit commission expense related to the release of prior year reserves. Segment other underwriting expenses increased to $255 million in 2023 from $217 million in 2022. The increase was in line with the increase in written premium attributable to the planned expansion of the business.
Current wording
Segment Expenses. Commission and brokerage expense increased by 12.6% to $2.8 billion in 2024, compared to $2.5 billion in 2023. The increase was mainly due to the impact of the increase in premiums earned and changes in the mix of business. Segment other underwriting expenses increased to $290 million in 2024 from $254 million in 2023. The increase was in line with growth in the business and necessary support functions.
Previous wording
Premiums. Gross written premiums increased by 10.0% to $5.2 billion in 2023 compared to $4.7 billion in 2022. The increase in insurance premiums reflects growth across multiple lines of business, particularly specialty casualty, property/short tail business and other specialty business, driven by positive rate and exposure increases, new business and strong renewal retention. Net written premiums increased by 14.7% to $3.9 billion in 2023 compared to $3.4 billion in 2022. The higher percentage increase in net written premiums compared to gross written premiums was mainly due to higher net retention resulting from changes in the mix of business. Premiums earned increased 14.3% to $3.6 billion in 2023 compared to $3.2 billion in 2022. The change in premiums earned relative to net written premiums is primarily the result of timing; premiums are earned ratably over the coverage period whereas written premiums are generally recorded at the initiation of the coverage period.
Current wording
Premiums earned increased by 4.6% to $3.6 billion in 2024, compared to $3.4 billion in 2023. The change in premiums earned relative to net written premiums is primarily the result of timing; premiums are earned ratably over the coverage period whereas written premiums are generally recorded at the initiation of the coverage period.
Previous wording
Incurred losses and LAE increased by 28.0% to $2.7 billion in 2023 compared to $2.1 billion in 2022. The increase was mainly due to unfavorable development on prior years attritional losses of $392 million in 2023, mainly related to casualty lines in accident years 2016 through 2019 that were impacted by social inflation and an increase of $303 million in current year attritional losses, partially offset by a decrease in current year catastrophe losses of $105 million. The increase in current year attritional losses was primarily due to the impact of the increase in premiums earned. The current year catastrophe losses of $20 million primarily related to the 2023 third quarter U.S. storms ($5 million), the 2023 Hawaii wildfire ($5 million) and the 2023 December U.S. East Coast flooding ($5 million), with the remaining losses resulting from various storm events. The $125 million of current year catastrophe losses in 2022 primarily related to Hurricane Ian ($99 million), with the remaining losses resulting from various storm events.
Current wording
The current year catastrophe losses of $120 million primarily related to Hurricane Milton ($44 million), Hurricane Helene ($29 million), Hurricane Beryl ($10 million) and the third quarter 2024 Calgary Alberta storms ($9 million), with the remaining losses resulting from various events. The $20 million of current year catastrophe losses in 2023 primarily related to the 2023 third quarter U.S. storms ($5 million), the 2023 Hawaii wildfire ($5 million) and the 2023 December U.S. East Coast flooding ($5 million), with the remaining losses resulting from various storm events.
Previous wording
Segment Expenses. Commission and brokerage increased by 4.6% to $432 million in 2023 compared to $413 million in 2022. Segment other underwriting expenses increased to $591 million in 2023 compared to $464 million in 2022. These increases were mainly due to the impact of the increase in premiums earned and increased expenses related to the continued build out of the insurance business, including an expansion of the international insurance platform.
Current wording
Segment Expenses. Commission and brokerage increased by 7.0% to $439 million in 2024, compared to $410 million in 2023. Segment other underwriting expenses increased to $615 million in 2024, compared to $556 million in 2023. These increases were mainly due to the impact of the increase in premiums earned and increased expenses related to the continued build out of the insurance business, including an expansion of the international insurance platform.
Previous wording
Loss and LAE Reserves. Our most critical accounting estimate is the determination of our loss and LAE reserves. We maintain reserves equal to our estimated ultimate liability for losses and LAE for reported and unreported claims for our insurance and reinsurance businesses. Because reserves are based on estimates of ultimate losses and LAE by underwriting or accident year, we use a variety of statistical and actuarial techniques to monitor reserve adequacy over time, evaluate new information as it becomes known and adjust reserves whenever an adjustment appears warranted. We consider many factors when setting reserves including: (1) our exposure base and projected ultimate premiums earned; (2) our expected loss ratios by product and class of business, which are developed collaboratively by underwriters and actuaries; (3) actuarial methodologies and assumptions which analyze our loss reporting and payment experience, reports from ceding companies and historical trends, such as reserving patterns, loss payments and product mix; (4) current legal interpretations of coverage and liability; and (5) economic conditions. Our insurance and reinsurance loss and LAE reserves represent management’s best estimate of our ultimate liability. Actual losses and LAE ultimately paid may deviate, perhaps substantially, from such reserves. Our net income (loss) will be impacted in a period in which the change in estimated ultimate losses and LAE is recorded. See also ITEM 8, “Financial Statements and Supplementary Data” - Note 1 of Notes to the Consolidated Financial Statements.
Current wording
Loss and LAE Reserves. Our most critical accounting estimate is the determination of our loss and LAE reserves. We maintain reserves equal to management’s estimated ultimate liability for losses and LAE for reported and unreported claims for our insurance and reinsurance businesses. Because reserves are based on estimates of ultimate losses and LAE by underwriting or accident year, we use a variety of statistical and actuarial techniques to monitor reserve adequacy over time, evaluate new information as it becomes known and adjust reserves whenever an adjustment appears warranted. We consider many factors when setting reserves including: (1) our exposure base and projected ultimate premiums earned; (2) our expected loss ratios by product and class of business, which are developed collaboratively by underwriters and actuaries; (3) actuarial methodologies and assumptions which analyze our loss reporting and payment experience, reports from ceding companies and historical trends, such as reserving patterns, loss payments and product mix; (4) current legal interpretations of coverage and liability; and (5) economic conditions. Management’s best estimate is developed through collaboration with actuarial, underwriting, claims, legal and finance departments and culminates with the input of reserve committees. Each segment reserve committee includes the participation of the relevant parties from actuarial, finance, claims and segment senior management. Reserves are further reviewed by Everest’s Chief Reserving Actuary and senior management. The objective of such process is to determine a single best estimate viewed by management to be the best estimate of its ultimate loss liability. Our insurance and reinsurance loss and LAE reserves represent management’s best estimate of our ultimate liability. Actual losses and LAE ultimately paid may deviate, perhaps substantially, from such reserves. Net income (loss) will be impacted in a period in which the change in estimated ultimate losses and LAE is recorded. See also ITEM 8, “Financial Statements and Supplementary Data” - Note 1 of Notes to the Consolidated Financial Statements.
Previous wording
It is more difficult to accurately estimate loss reserves for reinsurance liabilities than for insurance liabilities. At December 31, 2023, we had reinsurance loss reserves of $17.4 billion, of which $246 million were loss reserves for A&E liabilities, and insurance loss reserves of $7.0 billion. A detailed discussion of additional considerations related to A&E exposures follows later in this section.
Current wording
It is more difficult to accurately estimate loss reserves for reinsurance liabilities than for insurance liabilities. At December 31, 2024, we had reinsurance loss reserves of $19.7 billion, insurance loss reserves of $8.8 billion and other loss reserves of $1.3 billion, of which $260 million were loss reserves for A&E liabilities. A detailed discussion of additional considerations related to A&E exposures follows later in this section.
Previous wording
The detailed data required to evaluate ultimate losses for our insurance business is accumulated from our underwriting and claim systems. Reserving for reinsurance requires evaluation of loss information received from ceding companies. Ceding companies report losses to us in many ways depending on the type of contract and the agreed or contractual reporting requirements. Generally, proportional/quota share contracts require the submission of a monthly/quarterly account, which includes premium and loss activity for the period with corresponding reserves as established by the ceding company. This information is recorded into our records. For certain proportional contracts, we may require a detailed loss report for claims that exceed a certain dollar threshold or relate to a particular type of loss. Excess of loss and facultative contracts generally require individual loss reporting with precautionary notices provided when a loss reaches a significant percentage of the attachment point of the contract or when certain causes of loss or types of injury occur. Our experienced Claims staff handles individual loss reports and supporting claim information. Based on our evaluation of a claim, we may establish additional case reserves (ACRs) in addition to the case reserves reported by the ceding company. To ensure ceding companies are submitting required and accurate data, the Underwriting, Claim, Reinsurance Accounting and Internal Audit departments of the Company perform various reviews of our ceding companies, particularly larger ceding companies, including on-site audits of domestic ceding companies.
Current wording
The detailed data required to evaluate ultimate losses for our insurance business is accumulated from our underwriting and claim systems. Reserving for reinsurance requires evaluation of loss information received from ceding companies. Ceding companies report losses to us in many ways depending on the type of contract and the agreed or contractual reporting requirements. Generally, proportional/quota share contracts require the submission of a monthly/quarterly account, which includes premium and loss activity for the period with corresponding reserves as established by the ceding company. This information is recorded into our records. For certain proportional contracts, we may require a detailed loss report for claims that exceed a certain dollar threshold or relate to a particular type of loss. Excess of loss and facultative contracts generally require individual loss reporting with precautionary notices provided when a loss reaches a significant percentage of the attachment point of the contract or when certain causes of loss or types of injury occur. Our experienced Claims staff handles individual loss reports and supporting claim information. Based on our evaluation of a claim, we may establish additional case reserves in addition to the case reserves reported by the ceding company. To ensure ceding companies are submitting required and accurate data, the Underwriting, Claim, Reinsurance Accounting and Internal Audit departments of the Company perform various reviews of our ceding companies, particularly larger ceding companies, including on-site audits of domestic ceding companies.
Previous wording
We sort both our reinsurance and insurance reserves into exposure groupings for actuarial analysis. We assign our business to exposure groupings so that the underlying exposures have reasonably homogeneous loss development characteristics and are large enough to facilitate credible estimation of ultimate losses. We periodically review our exposure groupings, and we may change our groupings over time as our business changes. We currently use over 200 exposure groupings to develop our reserve estimates. One of the key selection characteristics for the exposure groupings is the historical duration of the claims settlement process. Business in which claims are reported and settled relatively quickly are commonly referred to as short tail lines, principally property lines. Casualty claims tend to take longer to be reported and settled and casualty lines are generally referred to as long tail lines. Our estimates of ultimate losses for shorter tail lines, with the exception of loss estimates for large catastrophic events, generally exhibit less volatility than those for the longer tail lines.
Current wording
We sort our reserves by segment into exposure groupings for actuarial analysis. We assign our business to exposure groupings so that the underlying exposures have reasonably homogeneous loss development characteristics and are large enough to facilitate credible estimation of ultimate losses. We periodically review our exposure groupings, and we may change our groupings over time as our business changes. We currently use approximately 250 exposure groupings to develop our reserve estimates. One of the key selection characteristics for the exposure groupings is the historical duration of the claims settlement process. Business in which claims are reported and settled relatively quickly are commonly referred to as short tail lines, principally property lines. Casualty claims tend to take longer to be reported and settled and casualty lines are generally referred to as long tail lines. Our estimates of ultimate losses for shorter tail lines, with the exception of loss estimates for large catastrophic events, generally exhibit less uncertainty than those for the longer tail lines.
Previous wording
We use similar actuarial methodologies, such as expected loss ratio, chain ladder reserving methods and Bornhuetter-Ferguson, supplemented by judgment where appropriate, to estimate our ultimate losses and LAE for each exposure group. Although we use similar actuarial methodologies for both short tail and long tail lines, the faster reporting of experience for the short tail lines allows us to have greater confidence in our estimates of ultimate losses for short tail lines at an earlier stage than for long tail lines. As a result, we utilize, as well, exposure-based methods to estimate our ultimate losses for longer tail lines, especially for immature accident years. For both short and long tail lines, we supplement these general approaches with analytically based judgments. We cannot estimate losses from widespread catastrophic events, such as hurricanes and earthquakes, using traditional actuarial methods. We estimate losses for these types of events based on information derived from catastrophe models, quantitative and qualitative exposure analyses, reports and communications from ceding companies and development patterns for historically similar events. Due to the inherent uncertainty in estimating such losses, these estimates are subject to variability, which increases with the severity and complexity of the underlying event.
Current wording
We use a variety of actuarial methodologies, such as expected loss ratio, chain ladder reserving methods and Bornhuetter-Ferguson, supplemented by judgment where appropriate, to estimate our ultimate losses and LAE for each exposure group. Although we use similar actuarial methodologies for both short tail and long tail lines, the faster reporting of experience for the short tail lines allows us to have greater confidence in our estimates of ultimate losses at an earlier stage than for long tail lines. For immature underwriting or accident years, the initial expected loss ratios are key inputs that involve management judgment and are based on a variety of factors, including: (1) expected loss ratios developed during our pricing process; (2) historical loss ratios adjusted for rate change and trend; and (3) industry benchmarks for similar business. These judgments take into account our view of past, current and future factors that may influence ultimate losses, including: (1) market conditions; (2) changes in the business underwritten; (3) changes in timing of the emergence of claims; and (4) other factors. The determination of when reported losses are sufficient and credible to warrant selection of an ultimate loss ratio different from the initial expected loss ratio also requires judgment.
Previous wording
Our carried reserves at each reporting date are management’s best estimate of ultimate unpaid losses and LAE at that date. We complete detailed reserve studies for each exposure group annually for our reinsurance and insurance operations. The completed annual reinsurance reserve studies are “rolled forward” for each accounting period until the subsequent reserve study is completed. Analyzing the roll-forward process involves comparing actual reported losses to expected losses based on the most recent reserve study. We analyze significant variances between actual and expected losses and also consider recent market, underwriting and management criteria to determine management’s best estimate of ultimate unpaid losses and LAE. Management’s best estimate is developed through collaboration with actuarial, underwriting, claims, legal and finance departments and culminates with the input of reserve committees. Each segment reserve committee includes the participation of the relevant parties from actuarial, finance, claims and segment senior management and has the responsibility for recommending and approving management’s best estimate. Reserves are further reviewed by Everest’s Chief Reserving Actuary and senior management. The objective of such process is to determine a single best estimate viewed by management to be the best estimate of its ultimate loss liability. As a result of these additional factors, in some instances the selected reserve level may be higher or lower than the actuarial indicated estimate.
Current wording
Our carried reserves at each reporting date are management’s best estimate of ultimate unpaid losses and LAE at that date. We complete detailed reserve studies for each exposure group annually for our reinsurance and insurance operations. The completed annual reserve studies are “rolled forward” for each accounting period until the subsequent reserve study is completed. Analyzing the roll-forward process involves comparing actual reported losses to expected losses based on the most recent reserve study. The Company analyzes significant variances between actual and expected losses and also considers recent market, underwriting and management criteria to determine management’s best estimate of ultimate unpaid losses and LAE.
Previous wording
Given the inherent variability in our loss reserves, we have developed an estimated range of possible gross reserve levels. A table of ranges by segment, accompanied by commentary on potential and historical variability, is included in “Financial Condition - Loss and LAE Reserves”. The ranges are developed using the exposure groups used in the published global loss triangles. For each exposure group, our actuaries calculate a range of possible ultimate losses for each accident year. These ranges are calculated by applying a variety of different acceptable actuarial methods, and varying the parameter selections withing a reasonable set of possibilities. Our estimates of our reserve variability may not be comparable to those of other companies because there are no consistently applied actuarial or accounting standards governing such presentations. Our recorded reserves reflect our best point estimate of our liabilities and our actuarial methodologies focus on developing such point estimates. We calculate the ranges subsequently, based on the historical variability of such reserves.
Current wording
Given the inherent variability in our loss reserves, we have developed an estimated range of possible gross reserve levels. A table of ranges by segment, accompanied by commentary on potential and historical variability, is included in “Financial Condition - Loss and LAE Reserves”. The ranges are developed using the exposure groups used in the published global loss triangles. For each exposure group, our actuaries calculate a range of possible ultimate losses for each accident year. These ranges are calculated by applying a variety of different acceptable actuarial methods, and varying the parameter selections within a reasonable set of possibilities. Our estimates of our reserve variability may not be comparable to those of other companies because there are no consistently applied actuarial or accounting standards governing such presentations. Our recorded reserves reflect our best point estimate of our liabilities, and our actuarial methodologies focus on developing such point estimates. We calculate the ranges subsequently, based on the historical variability of such reserves.
Previous wording
Asbestos and Environmental Exposures. We continue to receive claims under expired insurance and reinsurance contracts asserting injuries and/or damages relating to or resulting from environmental pollution and hazardous substances, including asbestos. Environmental claims typically assert liability for (a) the mitigation or remediation of environmental contamination or (b) bodily injury or property damage caused by the release of hazardous substances into the land, air or water. Asbestos claims typically assert liability for bodily injury from exposure to asbestos or for property damage resulting from asbestos or products containing asbestos.
Current wording
A&E Exposures. We continue to receive claims under expired insurance and reinsurance contracts asserting injuries and/or damages relating to or resulting from environmental pollution and hazardous substances, including asbestos. Environmental claims typically assert liability for (a) the mitigation or remediation of environmental contamination or (b) bodily injury or property damage caused by the release of hazardous substances into the land, air or water. Asbestos claims typically assert liability for bodily injury from exposure to asbestos or for property damage resulting from asbestos or products containing asbestos. The results of run-off A&E exposures are included within the Company’s Other segment.
Previous wording
The Company records credit loss expenses related to reinsurance recoverable in Incurred losses and loss adjustment expenses in the Company’s consolidated statements of operations and comprehensive income (loss). Write-offs of reinsurance recoverable and any related allowance are recorded in the period in which the balance is deemed uncollectible.
Current wording
The Company records credit loss expenses related to reinsurance recoverable in incurred losses and LAE in the Company’s consolidated statements of operations and comprehensive income (loss). Write-offs of reinsurance recoverable and any related allowance are recorded in the period in which the balance is deemed uncollectible.
Previous wording
Premiums Written and Earned. Premiums written by us are earned ratably over the coverage periods of the related insurance and reinsurance contracts. We establish unearned premium reserves to cover the unexpired portion of each contract. Such reserves, for assumed reinsurance, are computed using pro rata methods based on statistical data received from ceding companies. Premiums earned, and the related costs, which have not yet been reported to us, are estimated and accrued. Because of the inherent lag in the reporting of written and earned premiums by our ceding companies, we use standard accepted actuarial methodologies to estimate earned but not reported premium at each financial reporting date. These earned but not reported premiums are combined with reported earned premiums to comprise our total premiums earned for determination of our incurred losses and loss and LAE reserves. Commission expense and incurred losses related to the change in earned but not reported premium are included in current period company and segment financial results. See also ITEM 8, “Financial Statements and Supplementary Data” - Note 1 of Notes to the Consolidated Financial Statements.
Current wording
Premiums Written and Earned. Premiums written by us are earned ratably over the coverage periods of the related insurance and reinsurance contracts. We establish unearned premium reserves to cover the unexpired portion of each contract. Such reserves, for assumed reinsurance, are computed using pro rata methods based on statistical data received from ceding companies. Premiums earned, and the related costs, which have not yet been reported to us, are estimated and accrued. Premiums written are based on contract and policy terms and include estimates based on information received from both insureds and ceding companies. Differences between such estimates and actual amounts are recorded in the period in which the estimates are changed, or the actual amounts are determined. These earned but not reported premiums are combined with reported earned premiums to comprise our total premiums earned for determination of our incurred losses and loss and LAE reserves. Commission expense and incurred losses related to the change in earned but not reported premium are included in current period company and segment financial results. See also ITEM 8, “Financial Statements and Supplementary Data” - Note 1 of Notes to the Consolidated Financial Statements.
Previous wording
Investment Valuation. Our fixed income investments are classified for accounting purposes as either available for sale or held to maturity. The available for sale fixed maturity securities are carried at fair value and the held to maturity fixed maturity portfolio is carried at amortized cost, net of current expected credit allowance on our consolidated balance sheets. Our equity securities are all carried at fair value. Most securities we own are traded on national exchanges where market values are readily available. Some of our CMBS are valued using cash flow models and risk-adjusted discount rates. We hold some privately placed securities, less than 10% of the portfolio, which are either valued by investment advisors or the Company. In some instances, values provided by an investment advisor are supported with opinions from qualified independent third parties. The Company has procedures in place to review the values received from its investment advisors. At December 31, 2023 and 2022, our investment portfolio included a total of $4.5 billion and $3.8 billion of limited partnership investments, whose values are reported pursuant to the equity method of accounting, and Company Owned Life Insurance (“COLI”) policies, whose values are reported at cash surrender value. We carry the limited partnership investments at values provided by the managements of the limited partnerships and due to inherent reporting lags, the carrying values are based on values with “as of” dates from one month to one quarter prior to our financial statement date.
Current wording
Investment Valuation. Our fixed income securities are classified for accounting purposes as either available for sale or held to maturity. The available for sale fixed maturity securities are carried at fair value and the held to maturity fixed maturity portfolio is carried at amortized cost, net of current expected credit allowance on our consolidated balance sheets. Our equity securities are all carried at fair value. Some of our CMBS are valued using cash flow models and risk-adjusted discount rates. We hold privately placed securities, less than 10% of the portfolio, which are either valued by investment advisors or the Company. In some instances, values provided by an investment advisor are supported with opinions from qualified independent third parties. The Company has procedures in place to review the values received from its investment advisors. At December 31, 2024 and 2023, our investment portfolio included a total of $5.1 billion and $4.5 billion of limited partnership investments, whose values are reported pursuant to the equity method of accounting, and corporate-owned life insurance (“COLI”) policies, whose values are reported at cash surrender value. We carry the limited partnership investments at values provided by the managements of the limited partnerships and due to inherent reporting lags, the carrying values are based on values with “as of” dates from generally one month to one quarter prior to our financial statement date.
Previous wording
December 31, 2022. Gains (losses) from market fluctuations on available for sale fixed maturity securities at fair value are reflected as accumulated other comprehensive income (loss) in the consolidated balance sheets. Market value declines for available for sale fixed income portfolio, which are considered credit related, are reflected in our consolidated statements of operations and comprehensive income (loss), as realized capital losses. We consider many factors when determining whether a market value decline is credit related, including: (1) we have no intent to sell and, more likely than not, will not be required to sell prior to recovery, (2) the credit strength of the issuer, (3) the issuer’s market sector, (4) the length of time to maturity and (5) for asset-backed securities, changes in prepayments, credit enhancements and underlying default rates. If management’s assessments change in the future, we may ultimately record a realized loss after management originally concluded that the decline in value was not attributed to credit related factors.
Current wording
At December 31, 2024, we had net unrealized losses on our available for sale fixed maturity securities, net of tax, of $849 million, compared to net unrealized losses on our available for sale fixed maturity securities, net of tax, of $723 million at December 31, 2023. Gains (losses) from fair value fluctuations on available for sale fixed maturity securities are reflected as accumulated other comprehensive income (loss) in the consolidated balance sheets. Fair value declines for the available for sale fixed income portfolio, which are considered credit related, are reflected in our consolidated statements of operations and comprehensive income (loss), as realized losses on investments. We consider many factors when determining whether a fair value decline is credit related, including: (1) we have no intent to sell and, more likely than not, will not be required to sell prior to recovery, (2) the credit strength of the issuer, (3) the issuer’s market sector, (4) the length of time to maturity and (5) for asset-backed securities, changes in prepayments, credit enhancements and underlying default rates. If management’s assessments change in the future, we may ultimately record a realized loss after management originally concluded that the decline in value was not attributed to credit related factors.
Previous wording
The Company’s limited partnership investments are comprised of limited partnerships that invest in private equity, private credit and private real estate. Generally, the limited partnerships are reported on a month or quarter lag. We receive annual audited financial statements for all of the limited partnerships which are mostly prepared using fair value accounting in accordance with US GAAP guidance. For the quarterly reports, the Company reviews the financial reports for any unusual changes in carrying value. If the Company becomes aware of a significant decline in value during the lag reporting period, the loss will be recorded in the period in which the Company identifies the decline.
Current wording
The Company’s limited partnership investments are comprised of limited partnerships that invest in private equity, private credit and private real estate. Generally, the limited partnerships are reported on a month or quarter lag. We receive annual audited financial statements for all of the limited partnerships which are primarily prepared using fair value accounting in accordance with GAAP guidance. For the quarterly reports, the Company reviews the financial reports for any unusual changes in carrying value. If the Company becomes aware of a significant decline in value during the lag reporting period, the loss will be recorded in the period in which the Company identifies the decline.
Previous wording
Reinsurance Recoverables. Reinsurance recoverables for both paid and unpaid losses totaled $2.3 billion at December 31, 2023 and $2.2 billion at December 31, 2022. At December 31, 2023, $413 million, or 18.3%, was recoverable from Mt. Logan Re collateralized segregated accounts; $266 million, or 11.8%, was recoverable from Munich Reinsurance America, Inc.; $185 million, or 8.2%, was recoverable from Associated Electric and Gas Insurance Services Limited; $163 million, or 7.2%, was recoverable from Endurance Assurance Corporation of America and $120 million or 5.3% was recoverable from Hannover Rueckversicherung Se. No other retrocessionaire accounted for more than 5% of our recoverables.
Current wording
Reinsurance Recoverables. Reinsurance recoverables for both paid and unpaid losses totaled $3.1 billion at December 31, 2024 and $2.3 billion at December 31, 2023. At December 31, 2024, $395 million, or 12.6%, was recoverable from Mt. Logan Re, Ltd. (“Mt. Logan Re”) collateralized segregated accounts; $316 million, or 10.1%, was recoverable from Munich Reinsurance America, Inc. and $187 million, or 6.0%, was recoverable from Endurance Assurance Corporation of America. No other retrocessionaire accounted for more than 5% of our recoverables.
Showing the first 40 of 75 pairs. Open the source sections for the rest.
Rearranged current paragraphs (2)
Current report — wording carried from elsewhere
Premiums earned increased by 13.0% to $15.2 billion in 2024, compared to $13.4 billion in 2023, which is consistent with the percentage changes in gross written premiums. The change in premiums earned relative to net written premiums was primarily the result of timing; premiums are earned ratably over the coverage period whereas written premiums are generally recorded at the initiation of the coverage period.
Current report — wording carried from elsewhere
Common account retrocessional arrangements reduce the effect of individual or aggregate losses to all participating companies, including the ceding company, with respect to the involved treaties.
Rearranged previous paragraphs (1)
Previous report — wording carried elsewhere
At December 31, 2023, we had net unrealized losses on our available for sale fixed maturity securities, net of tax, of $723 million compared to net unrealized losses on our available for sale fixed maturity securities, net of tax, of $1.7 billion at