Q4 2021 Everest Re Group Ltd Earnings Call

Speaker 2: Mark Kosiansic, Executive Vice President and Chief Financial Officer. We are also joined by other members.

Speaker 2: Before we begin, I will preface the comments on today's call by noting that Everest SEC filings include extensive disclosures with respect to forward-looking statements.

Speaker 2: Management comments regarding estimates, projections, and similar are subject to the risks, uncertainties, and assumptions as noted in these filings. Management may also refer to certain non-GAAP financial measures. These items are reconciled on our earnings release and financial supplement. With that, I turn the call over to...

Okay.

Speaker 3: Thank you, John . Good morning everyone and thank you for joining us today.

Good day, and thank you for standing by.

To the every fourth quarter 2021 earnings call.

Speaker 3: 2021 was a pivotal year of profitable growth and continued momentum for our

At this time all participants are in a listen only mode.

Speaker 3: We finished the year with a strong quarter and achieved record growth in both our franchises.

After the speaker's presentation, there will be a question and answer session.

Speaker 3: drove expanding margins and solid underwriting profitability and generated

I'll ask a question. During this time, you will need to press star one on your telephone keypad.

Speaker 3: This led to a $1.4 billion in net income for the year and a milestone 14.7% total shareholder return against the 13% target.

I would not now like to hand, the call Jon Levenson with every.

Good morning, and welcome to the Everest re group limited 2021, and fourth quarter and year end earnings Conference call.

Speaker 3: These results reflect the strong earnings power of our diversified businesses to create value for our shareholders.

Everest executives, leading today's call are one undrawn <unk>, President and Chief Executive Officer, Mark Cushy, Ancic Executive Vice President and Chief Financial Officer.

Speaker 3: With a more profitable book of business coming out of a well-executed January 1 reinsurance renewal season and expanding global value...

We are also joined by other members of the Everest management team.

Before we begin I will preface the comments on today's call by noting that everest's SEC filings include extensive disclosures with respect to forward looking statements management comments regarding estimates projections and similar are subject to the risks uncertainties and assumptions as noted in these filings management may also refer to certain non-GAAP financial measure.

Speaker 3: exceptional talent. We enter 2022 well positioned to deliver on our strategic objectives.

Speaker 3: Before I provide details about our results, I want to acknowledge the contributions of my global colleagues this year.

These items are reconciled in our earnings release and financial supplement with that I turn the call over to Juan Andre.

Speaker 3: Despite the continued global pandemic and significant climate driven catastrophe,

Thank you John good morning, everyone.

Speaker 3: We advanced our strategic priorities with disciplined execution and delivered first-class products and solutions.

Thank you for joining us today.

2021 was a pivotal year for profitable growth and continued momentum breakfast.

Speaker 3: In 2021, we accelerated many of our strategic priorities.

We finished the year with a strong quarter and achieved record growth in both our franchises.

Speaker 3: building on a disciplined foundation that drives greater profitability and less volatility in our business.

With expanding margins and solid underwriting profitability and generated exceptional investment income.

Speaker 3: We make key investments in the people, technology, and infrastructure that are optimizing all three of our core earnings drivers, reinsurance, insurance, and investments for superior performance.

This led to a $1 4 billion and net income for the year and the milestone 14, 7% total shareholder return against the 13% target.

These results reflect the strong earnings power of our diversified businesses to create value for our shareholders even in years of elevated natural catastrophes.

Speaker 3: as a preferred provider with diverse product offerings and relevant client driven...

With a more profitable book of business coming out of a well executed January one reinsurance renewal season.

Speaker 3: Our insurance franchise is scaling and diversifying, increasing margins and driving relevance in more markets through a focused underwriting and distribution strategy and an expanding footprint.

And expanding global value proposition.

A strong balance sheet and exceptional talent, we entered 2022 well position to deliver on our strategic objectives.

Before I provide details about our results.

Speaker 3: And the market is responding with increased demand for our products, evidenced by strong growth in both franchises and consecutive quarterly top line records in insurance.

Want to acknowledge the contributions of my global colleagues this year.

2021 was challenging for our industry.

Fight the continued global pandemic and significant climate driven catastrophes, we advanced our strategic priorities with disciplined execution and delivered first glass products and solutions to our customers.

Speaker 3: Focused execution in 2021 led to a solid underwriting outcome that is particularly meaningful in the context of a $130 billion catastrophe.

Speaker 3: Our continued diversification, volatility.

In 2021, we accelerated many of our strategic priorities building on a disciplined foundation that drives greater profitability and less volatility in our business.

Speaker 3: and disciplined underwriting are yielding profitable returns.

Speaker 3: A recent example is our success executing a clearly defined and measured strategy in the January 1 renewal.

We made key investments in people technology and infrastructure that are optimizing all three of our core earnings drivers reinsurance insurance and investments for superior performance.

Speaker 3: This resulted in our current portfolio being stronger, more diversified, and more profitable.

Speaker 3: Our commitment to operational excellence in an entrepreneurial model that keeps us agile and responsive to our clients, ready to pivot with rapidly changing market conditions, is

First our underwriting franchise.

We continue to build on our market leading position in global P&C reinsurance I'd.

As a preferred provider with diverse product offerings and relevant client driven solutions.

Speaker 3: To this end, we made Material Inroads in 2021 on our path to becoming a digitally enabled organization.

Our insurance franchise, scaling and diversifying increasing margins and driving relevance and more markets through a focused underwriting and distribution strategy and an expanding footprint.

Speaker 3: through superior data, analytics, and technology that are bringing more depth and dimension to how we manage, segment, and model risk with greater speed and precision.

And the market is responding with increased demand for our products evidenced by strong growth in both franchises and consecutive quarterly topline records and insurance issue.

Speaker 3: With regard to investments, performance was excellent in 2021, driven by our prudent approach to optimizing a well-balanced, high-credit quality investment portfolio that supports our franchises and helps to drive meaningful returns.

Focused execution in 2021 led to a solid underwriting outcome that is particularly meaningful in the context of a $130 billion catastrophe year.

Speaker 3: Reflecting on Everest accomplishments in the past year, I am proud of the diverse, inclusive, and purpose-driven culture that supports everything we do.

Our continued diversification volatility reduction and disciplined underwriting are yielding profitable returns.

Speaker 3: Our continued emphasis of ESG as a core pillar of our long-term strategy was most recently reflected by our decision to become a signatory to the UN principles for sustainable insurance.

A recent example is our success executing a clearly defined and measured strategy in the January one renewal.

Everest adhere to a focused plan.

Speaker 3: Talent drives our performance. Everest is proud to be an employer of choice in our industry, and throughout the year, we attracted and advanced exceptional talent across the global organization who will help us to drive this next chapter of profitable growth and bring our offering to more customers around the globe.

This resulted in our current portfolio being stronger more diversified and more profitable.

Our commitment to operational excellence and an entrepreneurial model that keeps us agile and responsive to our clients ready to pivot with rapidly changing market conditions is a big part of how we accomplish this.

Speaker 3: Let's turn to our financial results for the fourth quarter and the full year 2021.

Does this and we've made material inroads in 2021 on our path to becoming a digitally enabled organization through superior data analytics and technology that are bringing more depth and dimension to how we manage segment and model risk with greater speed and precision.

Speaker 3: In the quarter, we grew gross written premiums by 25%. Growth was broad and diversified.

Speaker 3: In the fourth quarter, we generated $228 million in underwriting profit with a combined ratio of 91.9.

With regard to investments performance was excellent in 2021.

Speaker 3: and then a nutritional combined ratio of 87.4, reflecting continued margin expansion in our insurance division. Turning to the full year 2021, Everest grew gross written premiums 25%.

Driven by our prudent approach to optimizing our well balanced high credit quality investment portfolio.

That supports our franchises and helps to drive meaningful returns.

Reflecting on Everest accomplishments in the past year I am proud of the diverse inclusive and purpose driven culture that supports everything we do.

Speaker 3: Net written premiums grew 26% year over year. The group combined ratio.

Our continued emphasis of ESG as a core pillar of our long term strategy was most recently reflected by our decision to become a signatory to the UN principles for sustainable insurance.

Speaker 3: including $1.1 billion in catastrophe losses, which is less than 1% of the industry's estimated $130 billion loss in 2021.

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Talent drives our performance adverse is proud to be an employer of choice in our industry and throughout the year, we attracted and advanced exceptional talent across the global organization, who will help us to drive this next chapter of profitable growth.

Speaker 3: reflecting our discipline underwriting and reduce volatility.

Speaker 3: The group attritional combined ratio was 87.6 for the year.

Speaker 3: These results demonstrate the progress against our strategic priorities to continue to optimize the portfolio.

Bring our offerings to more customers around the globe.

Speaker 3: prudently manage expenses, and enhance operational efficiencies.

Let's turn to our financial results for the fourth quarter and full year 2021.

Beginning with our group results in the quarter, we grew gross written premiums by 25%.

Speaker 3: Our Reinsurance Division had a strong fourth quarter and finished the year solidly, with gross written premium exceeding $9 billion at $25 percent.

Growth was broad and diversified across both segments.

In the fourth quarter, we generated $228 million, an underwriting profit with a combined ratio of $91 nine.

Speaker 3: Gross written premium growth in the fourth quarter was excellent, up 26%.

Speaker 3: This growth was broad-based and supported by underlying rate increases and economic growth, increased opportunities with our core trading partners,

And then on Attritional combined ratio of $87, four reflecting continued margin expansion and our insurance division.

Turning to the full year 2021.

<unk> grew gross written premiums of 25%.

Setting a new record for our company of over $13 billion.

Speaker 3: The division generated $176 million of underwriting profit in the fourth quarter, with a combined ratio of $91 million.

Net written premiums grew 26% year over year.

The group combined ratio was 97 eight.

Speaker 3: The additional combined ratio for the quarter was 86.4, reflecting the continued performance

Including $1 1 billion in catastrophe losses, which is less than 1% of the industries estimated $130 billion loss in 2021.

Speaker 3: successful execution of our strategy to participate in growth and margin improvement in the casualty market and

Reflecting our disciplined underwriting and reduce volatility.

The group Attritional combined ratio was 87 six for the year.

Speaker 3: We ended 2021 with a 98.1 combined ratio and an attritional combined ratio of 86.3.

These results demonstrate the progress against our strategic priorities.

Speaker 3: These results reflect our progress in reshaping our risk profile to achieve superior returns.

We continue to optimize the portfolio to drive margin.

Prudently manage expenses and enhance operational efficiencies.

Speaker 3: We continue to actively diversify our reinsurance portfolio with an improved balance of property and casualty.

Let's turn to our reinsurance results.

Our reinsurance division had a strong fourth quarter and finished the year with.

Speaker 3: We are disciplined and focused about getting paid appropriately for risk.

With gross written premium exceeding 9 billion.

Speaker 3: We made meaningful progress advancing these priorities through the January 1, 2022 renewal period that started with a cleared and focused strategy

At 25% increase over 2020.

Gross written premium growth in the fourth quarter was excellent up 26%. This growth was broad based and supported by underlying rate increases and economic growth.

Speaker 3: 1. Continue reducing volatility in our overall book by decreasing cat exposure and growing less volatile non-catastrophic species.

Increased opportunities with our core trading partners.

Speaker 3: Two, optimize our property portfolio to maximize returns. And three, focus capacity with top underwriters. The breadth of Everest for.

Targeted growth on profitable property and casualty programs.

The division generated $176 million of underwriting profit in the fourth quarter.

With a combined ratio of 91 five.

The Attritional combined ratio for the quarter was $86 four.

Speaker 3: combined with our size and capital gave us a distinct advantage.

Reflecting the continued performance of our portfolio.

Speaker 3: Our team was precise about where we deployed capital and focused on improving the economics in our profit.

The successful execution of our strategy to participate in growth and margin improvement in the casualty market.

Speaker 3: We maintain discipline where pricing did not meet our return threshold.

And ongoing expense discipline.

We ended 2021 with a 98, one combined ratio and then Attritional combined ratio of 86 three.

Speaker 3: Rate increases were favorable across most property and casualty.

Speaker 3: financial lines and loss-affected property lines seeing the highest uptake.

These results reflect our progress in reshaping our risk profile to achieve superior returns.

Speaker 3: For example, loss-effective programs in Europe , particularly in Germany.

We continued to actively diversify our reinsurance portfolio with an improved balance of property and casualty exposures.

Speaker 3: Many catastrophe programs were restructured to ensure participation on higher layers.

Speaker 3: Despite how late the property renewals came together, there was ample capacity available for most seedings, outside of retro, and loss-impacted aggregate covers. While the casualty

We are disciplined and focused about getting paid appropriately for risk.

We made meaningful progress advancing these priorities through the January one 2022 renewal period that started with a clear and focused strategy with three key objectives.

Speaker 3: Continued underlying rate improvements help drive better overall economics.

One continue reducing volatility in our overall book by decreasing the cat exposure and growing less volatile non catastrophe losses.

Speaker 3: We successfully achieved targeted growth in our regional continental European portfolio across P&C lines, as well as our UK excess of loss portfolio.

To optimize our property portfolio to maximize returns and three focused capacity with top underwriters.

Speaker 3: within property, we reduced our exposure to property retro. Lower margin property pro rata.

The breadth of that preferred market decision.

Over decades, and strong trading relationships combined with our size and capital gave us a distinct advantage.

Speaker 3: while at the same time growing targeted clients at excellent terms.

Our team was precise about where we deploy capital and focused on improving the economics in our property book.

Speaker 3: Overall, we meaningfully reduced catastrophe loss potential in our book and achieved gross PML reductions in key peak zones. We have a more profitable and higher margin book. I'm proud of the team's discipline during a dynamic renewal season.

We maintained discipline, where pricing did not meet our return thresholds.

Rate increases were favorable across most property and casualty lines with financial lines and loss affected property lines seem to highest uptick.

For example loss affected programs in Europe , particularly in Germany.

Speaker 3: and is uniquely positioned given its excellent alignment with the Everest Property Portfolio.

Many catastrophe programs were restructured to ensure participation on higher layers.

Despite how late the property renewals came together there was ample capacity available for most seasons outside of retro and loss impacted aggregate covers.

Speaker 3: We remain optimistic about the prospects for Logan, and we continue investing in the platform with new products customized to meet investors' objectives.

While the casualty market was competitive.

Speaker 3: During the year, we also strengthen our leadership bench through key promotions and hires in North America, Latin America, and elsewhere internationally, and in Mount Logan.

With upward pressure on ceding commissions continued underlying rate improvements helped drive better overall economics.

Notably in casualty quota share.

We successfully achieved targeted growth in our regional continental European portfolio across P&C lines, as well as our UK excess of loss portfolio.

Speaker 3: These talent additions and promotions were part of a successful effort to optimize and streamline our structure, which has already benefitted us.

Speaker 3: In summary, our reinsurance business is better positioned today to support strong underwriting and

Within property, we have reduced our exposure to property retro.

Lower margin property pro rata business and working catastrophe layers.

Speaker 3: capitalize on market opportunities, and further expand our market leadership. Now let's turn to the insurance.

While at the same time growing targeted clients at excellent terms.

Overall, we meaningfully reduced catastrophe loss potential in our book and achieved gross PMO reductions in key peak zones.

Speaker 3: delivering both top-line growth and bottom-line profitability.

Speaker 3: supported by continued strong underlying performance and progress in the long-term targets outlined in our strategic plan.

We have a more profitable and higher margin book.

I'm proud of the team's discipline during a dynamic renewal season.

Now a few comments about Mount Logan.

Speaker 3: We achieved over $1 billion in gross written premium for the third consecutive quarter.

Mount Logan plays an important role in our long term growth aspirations and is uniquely positioned given its excellent alignment with the average property portfolio.

Speaker 3: This resulted in a record $4 billion in gross written premiums for the year, or up 24% over 2020.

We have a strong pipeline of prospective investors.

We remain optimistic about the prospects for Logan and we continue investing in the platform with new products customized to meet investors objectives.

Speaker 3: First, we continue to benefit from increasing exposures as the economy rebounds. Second, strong...

During the year, we also strengthened our leadership bench and key promotions and hires in North America.

Speaker 3: and double-digit rate increases across all of our target classes, excluding workers' compensation, where rates are slightly down.

And America and elsewhere internationally and in Mount Logan.

These talent additions and promotions were part of a successful effort to optimize and streamline our structure, which is already benefiting the organization.

Speaker 3: deepened and diversified our distribution network, and we sharpened our execution with a quantitative and metrics-based approach to sales.

In summary.

Our reinsurance business is better positioned today to support strong underwriting income results capitalize on market opportunities and further expand our market leadership.

Speaker 3: That's a result, we improve our hit ratios by 24% and 32% year over year in our retail and wholesale channels respectively.

Now, let's turn to the insurance Division.

Speaker 3: Fourth, strong new business growth in both retail and wholesale.

Insurance had an excellent fourth quarter deliver.

Speaker 3: primarily in casualty, professional, and transactional liability, along with accidents and health.

Delivering both top line growth and bottom line profitability supported by continued strong underlying performance and progress and the long term targets outlined in our strategic plan.

Speaker 3: Partially offsetting the growth was targeted portfolio repositioning in our U.S. property and catastrophe exposed business.

Insurance growth in the fourth quarter was 21%.

Speaker 3: where we continue to reduce overall volatility and improve margins. This includes ongoing portfolio management.

We achieved over 1 billion in gross written premium for the third consecutive quarter.

This resulted in a record $4 billion in gross written premiums for the year or up 24% over 2020.

Speaker 3: which is now only about 7% of global gross written premium.

Speaker 3: We delivered another strong underwriting result with a quarterly combined ratio of 92.8 and an underwriting profit of $2.5 million.

The growth in the fourth quarter was influenced by a few factors first we continued to benefit from increasing exposures as the economy rebounds.

Speaker 3: Our underlying performance was also outstanding. The 90.4 attritional combined ratio is a 3.4 point improvement compared to the fourth quarter of 2020 and an almost eight point improvement since 2019.

Second strong renewal retention.

Favorable market conditions, and double digit rate increases across all of our target classes, excluding workers' compensation, where rates are slightly down.

Third sales execution.

Speaker 3: Our loss ratio, commission ratio, and operating expense ratio is all...

We deepened and diversified our distribution network and we sharpened our execution with a quantitative and metrics based approach to six.

Speaker 3: including a 3.8-point loss ratio improvement for the fourth quarter. We are committed to sustaining this positive momentum, and we are sharpening our focus in two key areas to achieve it.

A result, we improve our hit ratios by 24% and 32% year over year in our retail and wholesale channels respectively.

Fourth strong new business growth in both retail and wholesale channels, primarily in casualty professional and transactional liability along with accident and health.

Speaker 3: As I mentioned, we continue to see growth in a number of our special

Partially offsetting the growth, which targeted portfolio repositioning in our U S property and catastrophe exposed business, where we continue to reduce overall volatility and improve margins.

Speaker 3: and we will grow more profitable classes of business over time.

Speaker 3: Our diversified product offering and relevance in both the E&S and retail channels allows us to seize new opportunities in the evolving market.

This includes ongoing portfolio management.

To mono line workers' compensation, which is not only about 7% of global gross written premiums.

Speaker 3: For instance, we're increasing efficiency by enhancing our claims process to improve productivity, speed, and accuracy.

We delivered another strong underwriting results with a quarterly combined ratio of 92, eight and an underwriting profit of $52 million.

Speaker 3: resulting in better claims outcomes and higher customer satisfaction.

Speaker 3: An important part of this are continued investment in advanced tools, such as robotic process automation.

Our underlying performance was also outstanding the 94 Attritional combined ratio is a three four point improvement compared to the fourth quarter of 2020, and then almost eight point improvement since 2019.

Speaker 3: artificial intelligence, and natural language processing, which creates greater operational efficiencies and delivers better insights, enabling fact-based decisions and best-in-class customer experiences.

Our loss ratio commission ratio and operating expense ratios all improved.

Speaker 3: We also expanded our footprint in Latin America, Asia, and Europe , where we see opportunity to profitably grow across the 800 billion plus global commercial PNC.

Including a 3.8 point loss ratio improvement for the fourth quarter.

We are committed to sustaining this positive momentum and we are sharpening our focus in two key areas to achieve it.

Speaker 3: We have a thoughtful expansion plan outside of North America that brings together existing capabilities, expertise, and knowledge to a broader and more global customer base in places where we can grow profit.

First proactive cycle management.

We are building a diversified business.

As I mentioned, we continue to see growth in a number of our specialty lines and we will grow more profitable classes of business overtime.

Speaker 3: Building our company for the future is a marathon, it's not a sprint.

Speaker 3: I'm very encouraged by the ambition, the tenacity, and the hard work this team consistently demonstrates.

Our diversified product offering and relevance in both the E&S and retail channels allow us to seize new opportunities and evolving market.

Speaker 3: but we remain hyper focused on daily execution as we position our company for the future.

Second this increased efficiency and scale.

For instance, we're increasing efficiency by enhancing our claims process to improve productivity speed and accuracy.

Speaker 3: an Agile global company focused on providing exceptional service and risk solutions to our clients.

Speaker 3: A company that is respected for its influence and impact in the marketplace. That follows a strong risk management framework.

Resulting in better claims outcomes and higher customer satisfaction.

An important part of this our continued investment in advanced tools, such as robotic process automation.

Speaker 3: with a world-class global team united by the passion to win.

Artificial intelligence and natural language processing, which creates greater operational efficiencies and delivers better insights, enabling fact based decisions and best in class customer experiences.

Speaker 3: Now I will turn it over to Mark Koscianski to take us through the numbers in more detail.

Speaker 4: Thank you, Juan, and good morning, everyone. Everest continued to make excellent progress executing its strategic plan during the quarter and the full year 2021, as we remain well on track to achieve our Investor Day strategic plan objective.

As the scale.

We also expanded our footprint in Latin America, Asia, and Europe , where we see opportunity to profitably grow across the 800 billion plus global commercial P&C industry.

Speaker 4: notably the full year 13% or greater total shareholder return or TSR.

We have a thoughtful expansion plan outside of North America that brings together existing capabilities expertise and knowledge to a broader and more global customer base in places, where we can grow profitably.

Speaker 4: I'll spend some time providing additional context on the underlying assumptions, but first, let's review the fourth quarter and fully

Building our company for the future is a marathon not a sprint.

Speaker 4: For the fourth quarter of 2021, Everest reported gross written premium of $3.4 billion, representing 25% growth over the same quarter a year ago. By segment, reinsurance grew 26% to $2.4 billion, and insurance once again reported gross written premium of $1 billion in the quarter, representing 21% year-over-year growth.

I am very encouraged by the ambition.

Tenacity and the hard work this team consistently demonstrates.

I'm proud of our results, but we remain hyper focused on daily execution as we position our company for the future.

And agile global company focused on providing exceptional service and risk solutions to our clients.

Speaker 4: For the full year 2021, Everest achieved $13 billion in total gross written premium, $9 billion for reinsurance, and $4 billion for insurance.

A company that is respected for its influence and impact in the marketplace.

That follows a strong risk management framework.

That delivers consistent and leading returns.

Speaker 4: Turning to net income, for the fourth quarter of 2021, Everest delivered strong net income of $431 million, equal to $10.94 per diluted share, and an annualized return on equity of 17.7%. On an operating income basis,

With a world class global team United by the passion to win.

Now I will turn it over to Mark <unk> to take us through the numbers in more details.

Thank you Juan and good morning, everyone Everest continued to make excellent progress executing its strategic plan during the quarter and the full year 2021, as we remain well on track to achieve our Investor day strategic plan objectives, notably the full year, 13% or greater total shareholder return.

Speaker 4: The numbers are $359 million for the quarter and $9.12 per diluted share, with an annualized operating return on equity of 14.8%.

Speaker 4: For the full year 2021, net income was $1.38 billion, equal to $34.62 per diluted share, and a full year return on equity of 14.6%. Operating income for the year was $1.15 billion, or $28.97 per diluted share, equal to an operating ROE of 12.2%.

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I'll spend some time, providing additional context on the underlying assumptions, but first let's review the fourth quarter and full year results.

For the fourth quarter of 2021 Everest reported gross written premium of $3 4 billion, representing 25% growth over the same quarter a year ago.

Speaker 4: Book value per share entered the year at $258.21, an increase of 8.7% for the year adjusted for dividends.

By segment right.

Insurance grew 26% to $2 4 billion in insurance once again reported gross written premium of 1 billion in the quarter, representing 21% year over year growth.

Speaker 4: The TSR for the year stands at 14.7%, which is one noted, exceeds our 2023 full year target and reflects the robust and well diversified earnings power of Everest.

For the full year of 2021 Everest achieved 13 billion in total gross written premium 9 billion for reinsurance and 4 billion for insurance.

Speaker 4: Let me focus on several key financial highlights of the fourth quarter.

Turning to net income for the fourth quarter of 2021 efforts delivered strong net income of $431 million equal to $10.94 per diluted share and an annualized return on equity of 17, 7%.

Speaker 4: We incurred $125 million of pre-tax CAT losses, net of reinsurance and reinstatement premiums in the quarter, with the primary event being the Canadian crop loss in the amount of $80 million.

Speaker 4: we've profitably underwritten the canadian crop market for a number of years and view this as an attractive long-term business

On an operating income basis.

The numbers are $359 million for the quarter and $9 12 per diluted share with an annualized operating return on equity of 14, 8% for the full year 2021, net income was 1.38 billion equal to $34 62 per diluted share.

Speaker 4: The crop loss event is one of the largest property casualty losses in Canadian history at nearly $6 billion.

Speaker 4: with the underlying drug conditions unseen for 60 years.

Speaker 4: The other significant pre-tax cap loss, net of reinsurance and reinstatement premiums in the quarter was from the Quad State Tornadoes, which took place in December .

And our full year return on equity of 14, 6%.

Operating income for the year was 1.15 billion or $28 97 per diluted share equal to an operating ROE of 12, 2%.

Speaker 4: $45 million in total, $30 million in our reinsurance segment, and $15 million in insurance.

Book value per share ended the year at $258 in 'twenty, one and.

Speaker 4: We also note that there was not any unfavorable prior period or prior year development in the cat losses this quarter.

An increase of eight 7% for the year adjusted for dividends the Tia Saar for the year stands at 14, 7%, which was one noted exceeds our 2023 full year target and reflects the robust and well diversified earnings power of Everest.

Speaker 4: For 2022, Everest expects a catalog of less than 6%.

Speaker 4: in line with our 67% investor day guidance.

Speaker 4: and driven by a combination of reduced volatility from our cap portfolio and expanding into other lines with higher risk-adjusted margins.

Let me focus on several key financial highlights of the fourth quarter.

We incurred $125 million of pre tax cat losses, net of reinsurance and reinstatement premiums in the quarter with the primary event being the Canadian crop loss in the amount of $80 million we.

Speaker 4: Consistent with prior quarters, we remain confident in Everest's overall reserve position.

Speaker 4: Starting with Juan's arrival at Everest, we've continued to strengthen and improve our reserve processes in a number of ways.

We have profitably underwritten the Canadian crop market for a number of years and view this as an attractive long term business.

Speaker 4: in the establishment of prudent initial loss picks, a balanced and timely schedule during the year to review our reserves, and taking decisive action when needed.

Crop loss event is one of the largest property casualty losses in Canadian history.

Speaker 4: All of this is driven by improved processes and analysis tools to allow our actuaries to focus on interpreting the numbers and making the most informed decisions.

Nearly $6 billion.

With the underlying drove conditions unseen for 60 years the.

The other significant pre tax cap loss.

Speaker 4: Our COVID-19 incurred loss provision remains consistent at $511 million total incurred. This number is unchanged since year-end 2020. The majority of this reserve remains as IB&R, and we remain confident in our overall COVID reserve position.

Net of reinsurance and reinstatement premiums in the quarter was from the Quad State tornadoes, which took place in December $45 million in total $30 million in our reinsurance segment and $15 million in insurance.

We also note that there was not any unfavorable prior period or prior year development in the cat losses this quarter.

Speaker 4: We reconfirm our strategic plan assumption for combined ratio with the range of 91 to 93% for the group for the full year 2022. Our overall 2021 combined ratio stood at 97.8% driven by cat losses ending the year at 10.9 points. The disciplined cat book underwriting achieved at January 1st is meaningful and will reduce volatility on an expected basis.

For 2022.

<unk> expects a cat load of less than 6%.

In line with our 6% to 7% Investor day guidance.

Driven by a combination of reduced volatility from our cap portfolio and expanding into other lines with higher risk adjusted margin.

Consistent with prior quarters, we remain confident and Everest overall reserve position.

Speaker 4: thus further insulating Everest from outside cat loss.

Starting with one's arrival at Everest, we've continued to strengthen and improve our reserve processes in a number of ways.

Speaker 4: Our attritional combined ratio stood at 87.6%, broadly stable versus 2020.

The establishment of prudent initial loss picks.

Speaker 4: Everest continues to have a very competitive expense ratio, 5.7% for the quarter and 5.6% for the year, below our working assumption of approximately 6% for the group, as shared in our strategic plan.

<unk> and timely schedule during the year to review, our reserves and taking decisive action when needed.

All of this is driven by improved processes and analysis tools to allow our actuaries to focus on interpreting the numbers and making the most informed decisions.

Speaker 4: Specific to this quarter, other underwriting expenses and reinsurance reflect some non-recurring charges, and I expect the reinsurance expense ratio to remain under 3% for 2022.

COVID-19 incurred loss provision remains consistent at 511 million total incurred this number is unchanged since year end 2020. The majority of this reserve remains as <unk> and we remain confident in our overall Covid reserve position.

Speaker 4: Investment income for the quarter was $205 million, ending an exceptional year with $1.16 billion in pre-tax net investment income.

We reconfirm, our strategic plan assumption for combined ratio with the range of 91% to 93% for the group for the full year of 2022.

Speaker 4: The Everest Investment Portfolio continues to be refined within the tolerances detailed in our June Investor Day with a focus on asset liability duration matching.

Our overall 2021 combined ratio stood at 97, 8% driven by cat losses, ending the year at 10 nine points. The disciplined cat book underwriting achieved January 1st is meaningful and will reduce volatility on an expected basis. Thus further.

Speaker 4: strong credit quality and liquidity, and improving capital efficiency, all while enhancing yield for our core portfolio, which are assets backing reserves.

Speaker 4: private equity focused, we see good opportunities for continued investment.

Leading everest from outsized cat losses, or Attritional combined ratio stood at 87, 6% broadly stable versus 2020.

Speaker 4: And within our core portfolio, we have nearly 20% of our fixed income investments.

Speaker 4: floating rate investments, which affords Everest good insulation from a rising interest rate environment.

Everest continues to have a very competitive expense ratio five 7% for the quarter and five 6% for the year below our working assumption of approximately 6% for the group.

Speaker 4: We also continue to run duration at 3.2 years, somewhat shorter than our liability duration of approximately four years. Specific to our limited

As shared in our strategic plan.

Specific to this quarter other underwriting expenses and reinsurance reflect some nonrecurring charges and I expect the reinsurance expense ratio to remain under 3% for 2022.

Speaker 4: The excellent contribution during 2021 is from a well-diversified portfolio, and we see continued room to add to this asset class under our strategic plan target.

Speaker 4: Finally, to conclude on investments, we reaffirm our 2022 expected return on invested assets in the range of 2.75% to 3.25%.

Investment income for the quarter was $205 million ending an exceptional year with 1.1 dollars 6 billion and pre tax net investment income.

The investment portfolio continues to be refined within the tolerance as detailed in our June investor day, with a focus on asset liability duration matching.

Speaker 4: For the full year 2021, Everest generated an exceptional $3.8 billion in operating cash flow, driven by strong premium growth. This cash flow and our $1 billion debt offering fueled our investment portfolio, which ended the year at $29.7 billion of assets under management.

Strong credit quality and liquidity and improving capital efficiency, all while enhancing yield for our core portfolio.

Our assets backing reserves.

For our total return portfolio, which is private equity focused we see good opportunities for continued investment and within our core portfolio. We have nearly 20% of our fixed income investments and floating rate investments, which affords everest good installation from a rise.

Speaker 4: The Everest Balance Sheet ended 2021 in an excellent position. Shareholders' equity was $10.1 billion at year-end 2021, and we continue to optimize our capital structure with the $1 billion Senior Notes Offering completed in early October .

Speaker 4: At a three-and-an-eighth coupon, this 31-year offering further lowers our overall cost of capital while expanding our underwriting firepower. Our financial leverage at year-end was 20.2 percent, and we see that ratio within our 15 to 20 percent strategic plan assumption range by the end of 2023.

<unk> interest rate environment.

We also continue to run duration of three two years somewhat shorter than our liability duration of approximately four years spin.

Specific to our limited partnership investments.

Excellent contribution during 2021, just from a well diversified portfolio and we see continued room to add to this asset class under our strategic plan targets.

Speaker 4: As part of our capital management strategy, we also repurchased $25 million in Everest common shares during the quarter, bringing the full year total to $225 million.

Finally to conclude on investments, we reaffirm our 2022 expected return on invested assets in the range of 275% to $3 two 5%.

Speaker 4: For the full year, our net income tax rate was 10.8 percent, and we see 11 to 12 percent as a good estimate for our net income tax rate in 2022.

For the full year 2021, Everest generated an exceptional $3 8 billion in operating cash flow driven by strong premium growth this cash flow and our $1 billion debt offering fuelled our investment portfolio, which ended the year at $29 7 billion of Ash.

Speaker 4: 2021 validated the progress Everest has made towards our 2023 strategic plan objective.

Speaker 4: Our underwriting businesses are vibrant and profitable. Our investment portfolio is well optimized for the current market environment. And our balance sheet and franchise provide us with the optionality to grow into classes and territories where we see the highest return.

<unk> under management.

The Everest balance sheet ended 2021 in an excellent position shareholders' equity was $10 1 billion at year end 2021, and we continue to optimize our capital structure with the $1 billion senior notes offering completed in early October .

Speaker 4: Everest is well-positioned to seize market opportunities and navigate the current macroeconomic environment.

At a three <unk> coupon this 31 year offering further lowers our overall cost of capital, while expanding our underwriting firepower, our financial leverage at year end was 22% and we see that ratio within our 15% to 20% strategic plan assumption range.

Speaker 2: Thanks, Mark. Operator, we are now ready to open the line for questions. We do ask that you please limit your questions to two or one question plus one follow-up, and then rejoin the queue if you have any remaining questions.

Speaker 1: Ladies and gentlemen, if you would like to ask a question, please press star 1 on your telephone keypad. We'll pause for just a moment to...

By the end of 2023.

As part of our capital management strategy, we also repurchased $25 million in everest's common shares during the quarter, bringing the full year total to $225 million.

Speaker 1: And the first question comes from Josh Shanker with Bank of America.

For the full year, our net income tax rate was 10, 8% and we see 11% to 12% is a good estimate for net income tax rate in 2022.

Speaker 4: Thank you very much. It's a good quarter and great outlook, and I'm seeing 25 million of shares repurchased in 4Q, and I'm trying to figure out what the ROI on incremental capital use is for insurance versus reinsurance versus plowing it into your stock at this price.

2021 validated the progress Everest has made towards our 2023 strategic plan objectives, our underwriting businesses are vibrant and profitable our investment portfolio is well optimized for the current market environment and our balance sheet and franchise provides us with the <unk>.

Speaker 4: reporting and and thanks for the uh... compliments on the on the results so

Speaker 4: Let me split this into a few buckets. So when we allocate capital, we're certainly privileging organic growth.

<unk> to grow into classes and territories, where we see the highest returns.

<unk> is well positioned to seize market opportunities and navigate the current macroeconomic environment.

Speaker 4: And different opportunities compete against each other, whether it's the capital management aspect or expanding the franchises in reinsurance or insurance. And so our TSR objective of at least 13 percent is really the cornerstone on a risk-adjusted basis when we look at these different opportunities.

And with that I'll now turn it back to John .

Thanks, Mark operator, we are now ready to open the line for questions. We do ask that you. Please limit your questions to two or one question plus one follow up and then rejoin the queue. If you have.

Speaker 4: And so we have ample capital to deploy in both businesses and also for capital management actions like share buybacks, we're unconstrained in that aspect.

Any remaining questions.

Ladies and gentlemen, if you would like to ask a question. Please press star one on your telephone keypad.

We'll pause for just a moment to compile the Q&A roster.

Speaker 4: And so I think in 2022, you'll see this philosophy continued.

And the first question comes from Josh Shanker with Bank of America.

Speaker 4: Are all options almost equal at these prices, or is there a difference in where you'd prefer to put capital if you can only make one choice?

And thank you very much good quarter, and great outlook, and I'm seeing $25 million of shares repurchased in four Q and I'm trying to figure out what the.

Speaker 4: Well, we definitely privilege the organic growth, because I think that expands the franchise and we're going to create more long-term value for shareholders. So I would definitely put that one. Within that, you've got three buckets, insurance, reinsurance, and investments, which are equally competing for capital and for opportunities. I think the share buybacks are certainly on the table at the same time, and we're looking at it opportunistically during the year.

Our ROI on incremental capital use is for insurance versus reinsurance versus plowing into your stock at this price.

Josh it's mark.

Good morning, and thanks for the compliments on the on the results so.

Let me split this into a few buckets. So when we allocate capital, we're certainly prevalent jing organic growth and different opportunities compete each against each other whether it's the capital management aspect or expanding the franchises and reinsurance or insurance.

Speaker 4: And in that regard, in re-insurance, with the renewals and trending, what's happening with seeding commissions? How is it impacting the returns in that business? And do you have an outlook for where that's going to impact numbers in the future?

Our <unk> objective of at least 13% is really the cornerstone on a risk adjusted basis. When we look at these different opportunities.

Speaker 3: Sure. Hey, Josh, this is Jim Williamson. Yeah, just to give you a little bit of perspective, particularly around what we saw at 1.1, you know, we've been pursuing in a very deliberate fashion a strategy of growing with our core teams, particularly in casualty lines and particularly on a pro rata basis. And we've had a great deal of success through 1.1 with that strategy and feel really good about the results that we're seeing.

And so we have ample capital to deploy in both businesses and also for.

Capital management actions like share buybacks, we're unconstrained in that aspect.

And so I think in 2022, you'll you'll see this philosophy.

<unk>.

Our all options almost equal at these prices or is there a difference in where you'd prefer to put capital. If you can only make one short.

Speaker 3: Look, there's no question that there is a significant change taking place in the underlying insurance markets. Margins are expanding very quickly. We see rate well ahead of loss trend. Limits are being reduced. Coverage grants are being narrowed. And so all of those things add up to a creating margin for our students and then for us as we participate in those programs.

Well.

We definitely privilege the organic growth because I think that expense for franchise and we're going to create more long term value for shareholders. So I would definitely put that one within that you've got three buckets insurance reinsurance and investments which are equally competing for.

Speaker 3: And as you can imagine, there's going to be some trade around that with respect to seating commissions. And so we have seen over the last couple of years, and we certainly saw a little bit at 1-1.

For capital and for opportunities I think the share buybacks are certainly on the table at the same time and we're looking at it opportunistically during the year.

Speaker 3: some upward pressure on seeding commissions in the casualty market. We think they remain reasonable for the most part. There were definitely programs that were beyond reasonable and we don't participate in those programs. But mostly reasonable and I think the bottom line is the margin that's being created plus a little extra seed still results in improving economics for us.

And in that regard and reinsurance.

Renewals and trending what's happening with <unk>.

Ceding commissions, how is it impacting the returns in that business and do you have.

Outlook for where that's going.

Speaker 3: on the property side uh... it was much more flat uh... as you can imagine as people are seeking capacity and seeking to fill out their programs uh... we do see some improving economics in our book there uh... andy seating commissions are not uh... moving the same way they are casualty

To impact numbers in the future.

Sure Hey, Josh This is Jim Williamson.

Yes, just to give you a little bit of perspective, particularly around what we saw at one one we've been pursuing in a very deliberate fashion a strategy of growing with our core seasons, particularly in casualty lines and particularly on a pro rata basis, and we've had a great deal of success through one one with that strategy and feel really good about the results.

Speaker 1: And your next question comes from the line of Michael Phillips with Morgan Stanley .

<unk> that we're seeing.

Look there's no question that there is a significant change taking place in the underlying insurance markets margins are expanding very quickly we see rate well ahead of loss trend limits are being reduced coverage grants are being narrowed and so all of those things add up to a creating margin for our <unk>.

Speaker 5: Thanks. Good morning. Kind of related question on on reinsurance from the last one on on seating commissions. I guess on that, you know, and Jimmy, you just mentioned a bit of the profitability of the seasons, I guess I want to take that to, you know, as the seasons kind of hold on to more risk and and increase their own retentions.

And then for US as we participate in those programs and as you can imagine there's going to be some trade around that with respect to ceding commissions and so we have seen over the last couple of years and we certainly saw a little bit at one one some upward pressure on ceding commissions in the casualty market. We think they remain reasonable for the most part there were definite.

Speaker 5: What does that mean for your outlook for, how much of that was influencing growth this quarter? What does that mean for your outlook for reinsurance growth in the near ahead?

Speaker 3: Yeah, sure Mike, this is Jim again. To provide a little bit of perspective in terms of the fourth quarter growth rate for casualty.

Programs that were beyond reasonable and we don't participate in those programs, but mostly reasonable and I think the bottom line is the margin that is being created plus a little extra seats still results in improving economics for us.

Speaker 3: both on a pro-rata and XOL basis, we achieved record levels of written premium at what we view as very attractive margins.

Speaker 3: those lines were essentially our fastest growing lines in the quarter.

On the property side. It was much more flat as you can imagine as people are seeking capacity and seeking to fill out their programs. We do see some improving economics in our book there and the ceding commissions are not moving the same way they are in casualty.

Speaker 3: So, I think that's an important fact. And look, at the end of the day, there are definitely sedans who think about how...

Speaker 3: of their own business they want to see to their reinsurers, particularly in the pro-rata line.

Speaker 3: And we did see around the margins some movement away from pro-rata structures, people shifting into access.

Thank you very much for the precise answers.

Thanks, Josh.

Speaker 3: However, one area that we focus very closely on is seed and selection. And what we're looking for when we choose to partner with a seed and with one of our coursing in particular.

And your next question comes from the line of Michael Phillips with Morgan Stanley .

Thanks, Good morning kind of a related question on reinsurance.

Speaker 3: are folks that consistently manage their reinsurance placements. And so we're trying to avoid scenes who are

From the last one was on ceding commissions.

I guess on that.

And Jim you just mentioned a bit of the profitability of it seems I guess I want to take that too.

Speaker 3: you know, shifting quarter to quarter in terms of their participation. And we saw a lot of consistency.

As the seasons kind of hold on to more risk.

Speaker 3: among our seed and I think the other piece that we benefit from given the strength of our franchise and our local trading relationships is in even in areas where maybe the total value of the session came down there were areas where we were able to increase share and so sustain our revenue stream from our core clients.

And increase their own retentions.

What does that mean for your outlook for how much of that was influencing growth this quarter and what does that mean for your outlook for reinsurance growth in the year.

<unk>.

Yes sure Mike This is Jim again.

Speaker 3: All in all, I think a very successful fourth quarter and a very successful 1-1 from that perspective.

To provide a little bit of perspective in terms of the fourth quarter growth rate for for casualty.

Both on a pro rata and ex ol basis, we achieved record levels of written premium at what we view as very attractive margins those lines were essentially our fastest growing lines in the quarter.

Speaker 5: Okay, Jim, thank you. Maybe a little higher level question, maybe an industry question, I guess as well. We've seen recently a lot of activity in the Florida market where some pretty big players are pulling out of the market. And one I'm curious what you think that might mean for the industry, what we think that we think that means for maybe the next year or two for the industry, and maybe even specifically any implications for your own business in Mount Logan. Thanks.

So I think that's an important fact and look at the end of the day. There are definitely seedings, who think about how much of their own business. They want to see to their reinsurers, particularly in the pro rata lines and we did see around the margin some movement away from pro rata structures people shifting into <unk>. However.

Speaker 3: Yeah, Mike, so this is Juan Andrade and I'll start. Look, I think certainly what you saw take place in the industry in 1-1 and really in the latter part of the fourth quarter was frankly a lot of companies catching up on what we've been doing really over the last couple of years, which is.

One area that we focus very closely on his seat and selection and what we're looking for when we choose to partner with a season with one of our core seats in particular.

Our folks that consistently manage their reinsurance placements and so we're trying to avoid seasons who are.

Speaker 2: looking at the volatility in their book of business and making trade-offs and decisions on that. And again, this is something that we're ahead of the curve as you've seen in our numbers, as you've seen in our calls and the dialogue that we've had.

Shifting.

Quarter to quarter in terms of their participation and we saw a lot of consistency among our seed and so I think the other piece that we benefit from given the strength of our franchise and our local trading relationships is an EBIT even in areas, where maybe the total value of the session came down there were areas, where we were able to increase share in <unk>.

Speaker 3: Look, the reality is that, you know, pricing in PropertyCat has improved some, but it hasn't improved meaningfully enough.

Speaker 6: be able to justify and pay for the catastrophe exposure that we see that is really being driven by climate.

Speaker 6: And so that has driven underwriters to be, I think, a lot more prudent, particularly in an environment like Florida and southeast wind in general.

Dane or revenue stream from our core clients. So all in all I think a very successful fourth quarter and a very successful one one from that perspective.

Speaker 6: so i think the the issue there becomes more of a public policy issue going forward about capacity uh... the ability to ensure public policy questions with regard to

Okay. Thank you maybe a little higher level question, maybe an industry question I guess as well.

We've seen.

Speaker 3: zoning with regard to construction to essentially how we deal with a problem that we all have as a society that is related to the warming of the seas, rising sea levels, etc. But I would invite Jim also to add maybe some commentary on that. Yeah, Mike, this is Jim. I'll just add a little bit more detail. I think one of the things that we clearly saw during the 1-1 renewal was some meaningful dislocation in the retro market. And our expectation.

Recently, a lot of activity in the Florida market, where some pretty big players are pulling out of the market and one I'm curious what you think that might mean for the industry. We think that we think that means for maybe the next year or two for the industry and maybe even specifically any implications for your own business.

And Mount Logan Thanks.

Yes, Mike. So this is one of driving and I'll start look I think certainly what what.

You saw that take place in the industry in one one and really in the latter part of the fourth quarter was frankly, a lot of companies catching up of what we've been doing really over the last couple of years, which is looking at the volatility in their book of business, and making tradeoffs and decisions on that.

Speaker 3: is that will play through into the Florida renewals in a very meaningful way. And so I do think there's going to be challenges.

Speaker 3: as those renewals come up over the summer. And I think we're reasonably bullish that that could result in some significant rate increases, changes to programs, et cetera. That could present opportunity for us in a very selective way. You know, over time, we've right-sized our Florida or Southeast Wind portfolio. We are taking a level of risk that we're very comfortable with.

And again this is something that we're ahead of the curve as you've seen in our numbers as you've seen in our calls in the dialogue that we've had look the reality is that.

Pricing in property Cat has improved some but it hasnt improved meaningfully enough to be able to justify and pay for the catastrophe exposure that we see that as really being driven by climate change and so that has driven underwriters to be I think a lot more prudent, particularly in an environment like Florida and southeast wind in general so.

Speaker 3: And coming out of 1.1, we do have dry powder that we can deploy selectively when we see great opportunities. And so if the sorts of trends that we're discussing here and the implication of your question come to pass...

Speaker 3: and there's a lot of dislocation the Florida market we might use it as an opportunity to you know selectively and in a very targeted fashion pursue some incremental opportunity at great returns.

I think the issue there becomes more of a public policy issue going forward about capacity the ability to ensure there's public policy questions with regard to.

Zoning with regard to construction.

Speaker 1: Thanks thanks M. your next question comes from ele green span with well farark.

Essentially how we deal with a problem that we all have as a society that is related to the warming of the ceased rising sea levels et cetera, but that would imply I would invite Jim also to add maybe some commentary on that yes. Mike. This is Jim I'll, just add a little bit more detail I think one of the things that we clearly saw during the one one renewal.

Speaker 7: Hi, thanks. Good morning. My first question, you guys provided a 6% catload guidance for 22, which Jack again talked about in our brain.

There was some meaningful dislocation in the retro market and our expectation is that will play through into the Florida renewals in a very meaningful way and so I do think theres going to be challenges.

Speaker 7: towards casualty in a way from some property cat related businesses really probably within your reinsurance business. So how do we think about this mix shift impacting the underlying margin and particularly the underlying loss ratio in reinsurance because I know you reaffirmed your overall guidance for 2022 but if the cat load is lower does that mean the underlying margin itself or the underlying combined ratio is a little bit higher due just to the mix shift going on? Yeah at least this is one and thank you for the question. So let me break it up in a couple of points and then I'll ask Marcos Jancic to jump in as well.

As those renewals come up over the summer and I think we're reasonably bullish that that could result in some significant rate increases changes to programs et cetera that could present opportunity for us in a very selective way over time, we've right sized our Florida or southeast wind portfolio, we are taking a level of risk that we're very.

Comparable with and coming out of one one we do have dry powder that we can deploy selectively when we see great opportunities and so if the sorts of trends that we are discussing here and the implication of your question come to pass and Theres a lot of dislocation in the Florida market, we might use it as an opportunity to selectively and in a very targeted fashion.

Speaker 6: Yeah, Elise, this is Juan, and thank you for the question. So let me break it up in a couple of points, and then I'll ask Mark Koscianski to jump in as well. You know, with regard to the guidance that Mark gave on the GATT loss ratio, he said less than 6%. And that's basically related to a lot of the de-risking action.

Pursue some incremental opportunity at great returns.

Speaker 6: that I spoke to in my prepared remarks earlier in this call. The reality is we have meaningfully reduced catastrophe loss potential in our book.

Thank you guys for the detail appreciate it congrats on the quarter.

Thanks, Mike.

Your next question comes from Elyse Greenspan with Wells Fargo.

Speaker 6: We've achieved PML reductions in key peak zones, and we've improved their overall portfolio economics.

Hi, Thanks, good morning.

Speaker 6: Catastrophe limits deployed have been reduced with a favorable reduction in expected average annual loss. So that is the key driver of the cat loss ratio coming down from our perspective. The other part of that is the fact that we are diversifying the book into non-cat lines of business.

The first question.

You guys provided a 6% cat load guidance for 'twenty, two which is at the low end.

The target you laid out at Investor day, So I'm, assuming that this implies that there's some mix shift going on as you've discussed skew towards casualty and away from some property cat related business is really probably within your reinsurance business. So how do we think about this mix shift.

Speaker 6: But as far as we're concerned, the margin that we expect to generate from the reinsurance division, if anything, will improve in 2022 because of the actions that we have taken. But I'll invite Mark to add some additional...

Impacting the underlying margin and particularly the underlying loss ratio in reinsurance because.

Speaker 4: Yeah, good morning, Elise. Not too much more to add to Juan's comments because I think he was quite complete. But we're definitely seeing somewhat of a mixed shift.

Because I know you reaffirmed our overall guidance for 2022, but if the cat load is about where does that mean.

Your line margin itself or the underlying combined ratio was a little bit higher due to the mix shift going on.

Speaker 4: the growth of CAT and the growth of other non-CAT lines. We're firmly in the 91 to 93. I think we have pretty good confidence on that going forward, so I don't expect that to impact the underlying profitability on the reinsurance side very much, and on a risk-adjusted basis I think this makes the most sense given where we are with market opportunities.

Yeah at least this is one and thank you for the question. So let me break it up in a couple of points and then I'll ask Mark <unk> to jump in as well.

With regard to the guidance that Mark gave on the cat loss ratio.

You said less than 6% and.

That's basically related to a lot of the Derisking actions that I spoke to in my prepared remarks earlier in this call. The reality is we have meaningfully reduced catastrophe loss potential in our book, we've achieved PMO reductions in key peak zones, and we've improved our overall portfolio economics.

Speaker 7: Thanks. And then my follow-up question, S&P is, you know, in the process of collecting comments on its revised capital model that it's looking to put out there. We're just hoping to get some comments on how this could impact Everest.

Fee limits deployed have been reduced with a favorable reduction in expected average annual loss. So that is the key driver of the cat loss ratio coming down from our perspective. The other part of that is the fact that we are diversifying the book into non cat lines of business, but as far as we're concerned the margins that we expect.

Speaker 7: I know since you guys, you know, have the U.S. based, I think that that would impact you less than some of the Bermuda peers. But if you could just give us a sense of how you're thinking through the impact of the capital model on Everest.

Speaker 4: Yeah, it's Mark again, Elise. So we're we're watching this as it as it develops. There's only been kind of high level proposals that have been shared with the industry. And we've obviously been very engaged in terms of direct discussion.

To generate from the reinsurance division if anything will improve in 2022 because of the actions that we have taken but I'll invite mark to up to add some additional color.

Yeah, good morning, a loose.

Not too much more to add to <unk> comments, because I think he was quite complete but we're definitely seeing somewhat of a mix shift between the growth of cat in the growth of other non cat lines.

Speaker 4: industry discussions on it. I really don't see that much of an impact based on what we know today. S&P is definitely extending their timetable for industry feedback and will provide I think more detailed proposals thereafter. I think the biggest thing, and you've highlighted it in your question, is really the debt issuance capabilities of Bermuda-regulated

We're firmly in the 91 to 93 I think we have pretty good confidence on that going forward. So I don't expect that to impact the underlying profitability on the reinsurance side very much.

On a risk adjusted basis I think this makes the most sense given where we are with market opportunities.

Speaker 4: companies and it's an important factor to distinguish that Everest has a U.S. hold code.

Speaker 4: uh... that issues uh... art has issued our debt and the past and we expected to continue to be the main issuing uh... legal entity for everest going forward that is within a regulatory domicile of the u s as opposed to bermuda so it should be unaffected uh... and therefore we would avoid some of the uh... concerns that have been out elevated with without aspect

Thanks, and then my follow up question on S&P.

Is in the process of collecting comments on it.

Our revised capital model that is looking to put out there.

Hoping to get some comments on how this could impact Everest.

I know since you guys are.

The U S based on I think that that would impact us less than some of the Bermuda peers, but if you could just give us a sense of how you're thinking through the impact of the capital model on Everest. Thank you.

Speaker 4: The other parts that they've come out with, loss development factor charges that are somewhat higher with corresponding diversification benefits, you know, we'll see how that impacts the industry as long as they're based on sound economics, I think we'll be fine. The cat loss adjustments that they're making into a broader timescale, one in 200 to one in 500 years, I think makes a lot of sense.

Yeah, It's mark again the lease so we're watching this.

As it develops.

Only been kind of high level.

Proposals that have been shared with the industry and we've obviously been very engaged in terms of direct discussion.

Industry discussions on it I really don't see that much of an impact based on what we know today S&P is definitely <unk>.

Speaker 4: And we're very careful on tail risk nonetheless, so I think we'll be fine there. The last piece is really more on the investment side. We've got some comments to make there, but we've got to.

Standing there timetable for industry feedback and we'll provide I think more detailed proposals thereafter, I think the biggest thing and you've highlighted it in your question is really the debt issuance capabilities of Bermuda regulated come.

Speaker 4: broadly diversified uh... portfolio that uh... high credit quality so not too concerned but uh... s and p is uh... very well respected and they have a big impact

Speaker 4: on the industry, so you're going to see, I'm sure, many companies comment on these proposals as time goes on, but for us, I think it's, we don't expect it to be very impactful.

Companies and it's an important factor to distinguish that Everest has a U S holdco.

That issue was art.

Has issued our debt in the past and we expect it to continue to be the main issuing.

Legal entity for Everest going forward that is within a regulatory domicile of the U S as opposed to Bermuda, So it should be unaffected.

Speaker 1: Your next question comes from Brian Meredith with UBS.

Speaker 8: Yeah, thanks. A couple of them for you here. First, Mark, I'm just curious, as an outsider, what's the best way for us to evaluate your excess capital position? I mean, I look at your operating leverages moving up, and that makes sense given the reductions in your PMLs and kind of movement more towards insurance,

And therefore, we would avoid some of the concerns that have been elevated with without aspect.

The other parts that they've come out with loss development factor charges that are somewhat higher with corresponding diversification benefits, we'll see how that impacts the industry as long as they are based on sound economics, I think we'll be fine.

Speaker 8: How should we think about that? Maybe should we continue to think about that operating leverage?

Speaker 4: Well, we're in a we're in an excess capital position. You know that we had the two debt raises and I think we gave you pretty good guidance on the investor day in terms of our

The cat loss adjustments that they're making.

Into a broader time scale 201 to one in 200 to one in 500 years I think it makes a lot of sense and we're very careful on tail risk. Nonetheless, so I think we'll be fine there. The last piece is really more on the investment side, we've got some comments to make there, but we've got a.

Speaker 4: growth ambitions and so for able to execute the uh... strategic plan i think we're going to be in good shape in terms of uh... funding it uh... but we do have uh... flexibility to grow more rapidly as you saw last year particularly in reinsurance where you saw uh... approximately a twenty five percent growth rate print

Broadly diversified portfolio of high credit quality, so not too concerned, but S&P is very well respected and they have a big impact on the industry. So youre going to see I'm sure many companies comment.

Speaker 4: and we gave per annum guidance of eight to twelve so there are times where we can really seize what the market uh... gives us

On these proposals as time goes on but for US I think it's a.

Speaker 4: uh... and then similarly on insurance i think we're getting very strong growth there

We don't expect it to be very impactful.

Speaker 4: last year, well over 20%, and I think we've got a very good trajectory this year. I think that level of growth is probably the primary factor on how the excess capital develops in conjunction with the overall profitability of the group.

Thank you.

Thanks Elyse.

Your next question comes from Brian Meredith with UBS.

Yes, Thanks, a couple of them for you here first.

Mark I'm, just curious as an outsider what is the best way for us to evaluate your excess capital position I mean, I look at your operating leverage is moving up and that makes sense given the reductions in your P. M ALS and kind of moving more towards insurance, but how.

Speaker 4: So now we're in, I think, a very good situation.

Speaker 4: with excess capital, so no constraints on growing the group.

Speaker 4: And then we look at how the profitability evolves as we take into account future capital management actions, whether we're talking about buybacks or funding more organic growth.

How should we think about that and maybe should we continue to think about that operating leverage moving up.

Well, we're in a we're in an excess capital position.

Speaker 4: I did mention last year, I think it might have even been Q4 in 2020, that I did see a lot of potential to improve the efficiency of the...

You know that we have.

Two debt raises and I think we gave you.

Pretty good guidance on the Investor day in terms of our growth ambitions and so if we're able to execute the strategic plan.

Speaker 4: capital allocation in the group and you're getting to this point on operating leverage there's probably some more that we can achieve

We're gonna be in good shape in terms of funding it but we do have flexibility to grow more rapidly as you saw last year, particularly in reinsurance where you saw.

Speaker 4: uh... and still be uh... very capital efficient and that's really kind of an all three pockets investment

Speaker 4: and the two divisions as well. So there is a bit more efficiency on that aspect that I would expect us to achieve in 2022. Thereafter, you're really talking about optimizing, but I like our position as it stands right now.

Approximately 25% growth rate print and we gave per annum guidance of eight to 12. So there are times, where we can really sees what the market gives us.

And then similarly on insurance I think we're getting very strong growth there.

Last year, well over 20% and I think we've got a very good trajectory. This year I think that level of growth is probably the primary factor on how the excess capital.

Speaker 8: Great. Thanks for the answer. And then the second question, just on the 13% TSR that you guys have laid out, what does that contemplate with respect to the interest rate environment? We obviously have to have interest rates that have moved up subsequent to when you laid that out, and that's an important part, obviously, of your TSR here because it's extra unrealized gains and losses on your book value. So how should we think about that?

<unk> in conjunction with the overall profitability of the group. So now we're in a I think a very good situation with.

With excess capital so no constraints on growing the group.

And then we look at how the profitability evolves as we take into account future capital management actions, whether we're talking about buybacks or funding more organic growth.

Speaker 4: When we set up the plan last year, we took the base forecast.

Speaker 4: for uh... forward curves on interest rates and that served as uh...

Speaker 4: underlying assumption, primarily, you know, in the investment portfolio, and so I've reaffirmed, for example, the investment returns. It's a factor that we have to manage in the execution of the plan, so whether it's underwriting or investments, and we're fine with whatever, you know, direction it goes. Obviously, if rates are rising, I think we've got some more.

I'd mentioned last year.

It might have even been in Q4, and 2020 that I did see a lot of potential to improve the efficiency of the.

Capital allocation in the group and Youre getting to this point on operating leverage there is probably some more that we can achieve.

And still be very capital efficient and that's really kind of in all three buckets investments and the two divisions as well. So there is a bit more efficiency on that aspect that I would expect us to achieve in 2022.

Speaker 4: tailwind uh... behind us but it's one of the reasons when we went through the definition of the p s are that we excluded the volatility that comes from unrealized gains and losses on the fixed income uh... portfolio and so that is where we expect uh... you know not not to be uh... we're creating real economic value despite some of the macroeconomic volatility that can come from rates

Thereafter, you're really talking about optimizing but I like our position as it stands right now.

Great. Thanks, Thanks for the answer and then second question.

Speaker 4: Uh, and so that's why we set the PSR up the way, uh, the way it is.

Just on the 13% <unk>, but you guys have laid out.

What does that contemplate with respect to the interest rate environment and we obviously have interest rates that have moved up subsequent to when you.

Speaker 1: Your next question comes from the line of Ryan Tunis with Autonomous Research.

Laid that out and that's an important part obviously of your T O Saar here.

Because it's extra unrealized gains and losses on your on your book value. So how should we think about that.

Speaker 9: So you gave us the targets of Investor Day, and since then, interest rates have gone in our favor. You've lowered your cat load. You're exceeding the TSR goals, even in a tough 2021 cat year.

When we set up the plan.

Last year, we took the base forecast.

For forward curves on interest rates and that served as the underlying assumption primarily in the investment portfolio.

Speaker 9: ROE on a normalized basis looks in excess of 13% due. So, could you just give us some context on why you haven't revisited those targets?

And so I've reaffirmed for example, the investment returns it's a factor that we have to manage in the execution of the plan, so whether it's underwriting or investments and we're fine.

Speaker 6: Yeah, Ryan, thank you. Thank you for the question. Thank you for recognizing the accomplishments, too, by the way. Look, what we said at Investor Day back in June is that 13% essentially was the floor. And what we actually said, it's greater than 13%.

With whatever direction. It goes obviously if rates are rising it's I think we got some more.

Tailwind behind us, but it's one of the reasons when we went through the definition of the TSA that we excluded the volatility that comes from unrealized gains and losses on the fixed income portfolio and so that is where we expect.

Speaker 6: Now obviously we can't predict the future, but what we are very much focused on are the drivers.

Speaker 6: and aligning those drivers to be able to drive that 13% or better from that standpoint. We had a good start in 2021 with being able to do that.

You know not not to be where.

Speaker 6: And we're very focused with the actions that we've been talking about on this call on the underwriting of the cap portfolio Some of the actions that we continue to take on the insurance side to improve the the profitability of the book To seek profitable growth and all of that is aimed for leading returns, right? That's that's really the focus on here And so again, I go back to what we said is we'd like to achieve at least a 13 TSR over that period of time and we're off to a good start

We're creating real economic value. Despite some of the macroeconomic volatility that can come from rates.

And so that's why we set the <unk> up the way.

The way it is.

Great. Thank you.

Yeah.

Your next question comes from the line of Ryan Tunis with Autonomous research.

Hey, Thanks, Good morning question for one.

So you gave us the targets at Investor Day, and since then interest rates have gone in our favor.

Speaker 9: Thanks. And then I guess just on the loss ratio of reinsurance.

You've lowered your cat load you are exceeding the TSA our goals even in a tough 2021 cat year.

Speaker 9: Obviously, there's a reserve charge a year ago, and yeah, I guess it seems somewhat prudent to be, to reserve with a level of conservatism in 2021. Is there some aspect of 2022?

Ro.

Realized basis looks in excess of 13% to so could you just give us some context on why you're having to revisit those targets.

Speaker 9: It's potentially maybe less of a...

Yeah, Ryan. Thank you. Thank you for the question and thank you for recognizing the accomplishments too by the way look what we said at Investor Day back in June is that 13% essentially was the floor and what we actually said, it's greater than 13% now obviously, we can't predict the future, but what we are very much focused on are the.

Speaker 9: margin of conservatism that you might need that could give us a little bit more confidence and loss ratio improvement relative to this year.

Speaker 6: Yeah, so let me start and then I'll ask Jim Williamson to add more color. So look, I think we have been prudent in setting our loss fix. I think we have been prudent in how we analyze the reserves, the process that we put in place. We've got a lot more insight.

Drivers and aligning those drivers to be able to drive the 13% or better from that standpoint, we had a good start in 2021.

Speaker 6: more granularity into the data and to the numbers to allow us to react. So I feel pretty good about that.

Being able to do that.

And we're very focused with the actions that we've been talking about on this call on the underwriting of the portfolio. Some of the actions that we continue to take on the insurance side to improve the profitability of the book to seek profitable growth and all of that is aimed for leading returns right that that's really the focus on here and so.

Speaker 6: You know, when you look at the external environment, you know, there's obviously things that as an industry, we all keep an eye on, right, you definitely keep an eye on on social inflation, you know, in the 2020 2021 period, we definitely saw a drop in frequency.

Speaker 6: and a slowdown in the courts. I'm not sure we have seen the courts completely open back up to full efficiency at this point in time, so you do keep an eye on some of the social inflation factors that are there, particularly as you're riding long tail lines, so that's an important component of that.

Again I go back to what we said, we'd like to achieve at least the 13% CSR over that period of time and we're off to a good start.

Thanks, and then I guess, just on the loss ratio and reinsurance.

Speaker 6: You know, the other component that you keep an eye on is real inflation, right, material inflation, supply chain disruptions, all of these kinds of things, and the impact that that could have on trend. So from our perspective, what we have done is we certainly have adapted our loss trend selects for 2021-2022 to make sure that we are continuing to select prudent loss picks, given all those macroeconomic factors that are there.

Obviously, there was a reserve charge a year ago.

I guess, it seems somewhat prudent to be reserved for the level of conservatism.

In 2021.

Is there some aspect of 2022.

It's potentially maybe less of a.

No.

Margin of conservatism that you might need that could give us a little bit more confidence in the loss ratio improvement relative to this year.

Speaker 6: But in addition to that, you know, we have continued to do a number of actions on the portfolio to ensure that the business that we're putting on the book

Yeah. So let me start and then I'll ask Jim Williams and dads more color.

So look I think we have been prudent in setting our loss picks.

Speaker 6: meets our margin standards and it's very profitable, right? So you have heard from me, you have heard from Jim earlier in the discussion, some of the approach that we took throughout 2021, that we took through the 1-1 renewal.

I think we have been prudent in how we analyze the reserves the process that we've put in place we've got a lot more insight and more granularity into the data to the numbers to allow us to react so I feel pretty good about that.

Speaker 6: that Mike Karmilovic and his team has done also on the insurance side. So that ongoing portfolio management.

When you look at the external environment.

Speaker 3: that is just good underwriting is a key hallmark of all of this to ensure that we can meet the targets that we've set out. But with that, let me ask Jim to talk specifically about the loss ratio and reinsurance. Yeah, sure. Sure, Ryan. This is Jim. I'll just add a little bit more detail to give you a sense of the discussion we're having each quarter as we look at our loss picks. You know, as you can imagine, we set those picks on the basis of assumptions.

Theres, obviously things that as an industry, we all keep an eye on you definitely keep an eye on social inflation.

In 2000, 22021 period, we definitely saw a drop in frequency and a slowdown in the courts I'm not sure. We have seen the courts completely open back up to full efficiency at this point in time. So you do keep an eye on some of the social inflation factors that are there particular as you're writing long.

Speaker 3: rate change, as well as assumptions around loss costs. And as Juan indicated amply in his comments...

Long tail lines. So that's an important component of that the.

The other component that you keep an eye on is real inflation right.

Material inflation.

Speaker 3: You know, it's really that lost cost uncertainty, given the risk environment we're in, that gives us pause around how quickly to react to good news on the other side of the equation, on the rate side, and the underwriting actions that our students are taking. And what we have seen consistently, quarter over quarter, is the rate component of that equation has come in better than we've expected, better than we planned for.

Supply chain disruptions all of these kinds of things and the impact that that could have on trend. So from our perspective, what we have done is we certainly have adapted our loss trend selects for 2021 2022 to make sure that we are continuing to select prudent loss picks given all those macroeconomic factors that are there.

But in addition to that we have continued to do a number of actions on the portfolio to ensure that the business that we're putting on the books meets our margin standards and it's very profitable right. So you have heard from for me you have heard from Jim earlier in the discussion some of the approach that we took throughout 2021 that we took through the <unk>.

Speaker 3: We also believe that the underwriting actions and the re-underwriting and the segmentation and all the work our scenes are doing is ahead of our expectations.

Speaker 3: And so what we're looking for is the emergence of proof.

Speaker 3: in our loss costs as those lines mature, particularly on the longer tail lines.

One one renewal season that Mike <unk> and his team has done also on the insurance side. So that ongoing portfolio management that is just good underwriting is a key hallmark of all of this to ensure that we can meet the targets that we've set out but with that let me ask Jim to talk specifically about the loss ratio and reinsurance yes sure sure. Brian . This is Jim I'll just I'll just.

Speaker 3: that would allow us to begin reflecting uh... that uh... that that good news and uh... you know it's still very early i know uh... obviously we all want to see it emerge but when we talk long tail you know it it does take years i would say there are indications that would suggest

Speaker 3: uh... we're seeing some of that and i think uh... you know certainly my expectation is that will begin to see some improvement in the underlying attritional loss ratio for reinsurance

Add a little bit more detail to give you a sense of the discussion we're having each quarter as we look at our loss picks as you can imagine we set those picks on the basis of assumptions around rate change.

Speaker 3: on the casualty side as a result of that and then certainly the underwriting actions we've taken on property particularly what we did at one one i mean all of those things ladder up to improving economic

As well assumptions around loss costs and as Juan indicated amply in his comments.

Speaker 3: which, you know, show up primarily, obviously, in the cat loss ratio, but I think will also benefit our attritional loss ratio and property. So, a lot of good momentum, but we do have to be very prudent in terms of the timeline on when we recognize these things.

It's really that loss cost uncertainty given the risk environment, where in that that gives us pause around how quickly to react to good news on the other side of the equation on the rate side and the underwriting actions that our seasons are taking and what we have seen consistently quarter over quarter is the right component of that equation has come in better than.

Speaker 1: And your next question comes from Yaron Kinar with Jeffreys.

Speaker 9: Thank you. Good morning. I guess maybe tagging on to Ryan's last question and to Lisa's question earlier. So, you ended 2021 with a consolidated purported combined ratio of just under 98% and an 11% cat load. You're targeting a 6% cat load for 2022, so that essentially already gets you to that 91% and 93%.

We've expected better than we planned for.

We also believe that the underwriting actions and the re underwriting in the segmentation and all the work. Our seasons are doing is ahead of our expectations and so what we're looking for is the emergence of proof.

Our loss costs as those lines mature, particularly on the longer tail lines that would allow us to begin reflecting.

Speaker 9: combined ratio target range. So I guess my question is, why wouldn't we see further improvement or see that target move down from 91 and 93, unless you see some headwinds coming on the other side?

That that good news and it is.

Very early I know, obviously, we all want to see it emerge, but when we talk long tail.

It does take years I would say there are indications that would suggest we're seeing some of that and I think certainly my expectation is that we'll begin to see some improvement in the underlying attritional loss ratio for reinsurance on the casualty side as a result of that and then certainly the underwriting actions we've taken on property, particularly what we did at <unk>.

Speaker 6: Well, let me start with that. I don't think we see any specific headwinds other than what we've already discussed sort of in the macro environment, right? And, you know, we are essentially working our book of business, working or underwriting, working essentially all the levers that we have to be able to meet and exceed on all those targets. And you clearly saw that in in 2021 with the 14.7% on the total shareholder return.

One I mean, all of those things ladder up to improving economics.

<unk>, which show up primarily obviously in the cat loss ratio, but I think we will also benefit our attritional loss ratio on property. So a lot of good momentum, but we do have to be very prudent in terms of the timeline on when we recognize these things.

Speaker 6: You know, but we are doing, I think, a very good job in shaping this book of business to drive very sustainable results over time. And a key component of that is what we've done on the catastrophe portfolio over the last two years. You saw the benefit of that in 2021 .

Thank you.

Thanks Ryan.

And your next question comes from Juran Qunar with Jefferies.

Speaker 6: saw the actions that we have been describing that we took at 1.1.22, and I think all of that is a positive. So I'm not necessarily seeing any headwind per se, other than just a macroeconomic environment being able to react to that. But what we control, I feel pretty good about

Thank you good morning.

I guess, maybe tagging on to Ryans last question until leases question earlier.

So you ended 2021 with a consolidated reported combined ratio of just under 98 and had an 11% cat load.

Target in a 6% cat load for 'twenty, two so that essentially already gets you to that 91% 93 combined ratio target range.

Speaker 9: Right. Okay. And then I just want to further

Speaker 9: maybe clarify or try to better understand the guidance around the reinsurance top-line growth. So, 8% to 12% KGIRR through 2023 was the target. Clearly, you're well in excess of that as of the end of 2021.

So I guess my question is why Wouldnt, we see further improvement or see that target move down from 91 to 93.

Unless you see some headwinds coming on the other side.

Well, let me start with that I don't think we see any specific headwinds other than what we've already discussed sort of in the macro environment right.

Speaker 9: Is what you're saying ultimately that the base is 8% to 12%, but if you see the opportunity to grow beyond that, you'll take it? Or do you see maybe significant slowing over the next two years because market conditions potentially...

And we are essentially working our book of business working our underwriting working essentially all of the levers that we have to be able to meet and exceed on all of those targets and you clearly saw that in 2021 with a 14, 7% on the total shareholder return.

Speaker 6: Yeah, let me give you maybe a broader perspective and then I'll bring it down to reinsurance and I'll ask Jim to jump in as well. But give you a few thoughts on growth and how we're looking at 2022. You know, number one, I would start by saying that we do remain very comfortable with the growth targets that we set out on Investor Day last

But we are doing I think a very good job in shaping this book of business to drive very sustainable results over time and a key component of that is what we've done on the catastrophe portfolio over the last two years you saw the benefit of that in 2021.

Speaker 6: And as you pointed out, we're well on our way to achieving them given the growth that we had in 2021.

All the actions that we have been describing that we took at $1 22.

Speaker 6: You know, the second thing I would say is you've also seen us respond to opportunities in the market in both our underwriting divisions.

All of that is a positive so I'm not necessarily seeing any headwind per se other than just the macroeconomic environment being able to react to that but what we control I feel pretty good about.

Speaker 6: grow our company and expand margin. So if the opportunity is there, we're able to take it. And the reason for that is pretty straightforward, right? We're nimble, we're agile, we have the relationships to products, to platform, to capital, and to people to continue to be able to do that. So that gives us, I think, a pretty good competitive advantage in a pretty dynamic environment to be able to do that.

Right Okay.

And then I just wanted to further maybe clarify or try to better understand the guidance around the reinsurance topline growth.

Speaker 6: You know, a third point I would give you is that, and this goes back to the capital allocation discussion we were having earlier. You know, we do have a diversified franchise that really works to our advantage. And the way we think about allocating capital is really who can give us the best economic return, as Mark said. Is it insurance, reinsurance, or investments within the company? But keep in mind that our focus is always the same one. It's underwriting results. That's the core focus. That's what we really are driving, and it goes to also Ryan's question earlier about the margins.

So 8% to 12% CAGR through 2023 was the target clearly are well in excess of that as of the end of 'twenty one.

Is what youre, saying ultimately that the base is 8% to 12%, but if you see opportunistic.

If you see the opportunity to grow beyond that you'll take it or do you see maybe significant slowing over the next two years because market conditions potentially change.

Yes, let me give you maybe a broader perspective, and then I'll bring it down to reinsurance and I'll ask Jeff to jump in as well.

Speaker 6: And so that brings us to the specific landscape of 2022.

Speaker 6: And so as I look at the landscape, I continue to see excellent opportunities for growth in primary insurance, both in the U.S. as well as internationally. And when we think about reinsurance, I see more selective, more targeted opportunities in that area, and we're going to pick our spots, frankly. That's the bottom line. But I think what you're hearing from us is, look, we have traction in 21 going into 20.

You a few thoughts on growth and how we're looking at 2022.

Number one I would start by saying that we do remain very comfortable with the growth targets that we set out on Investor Day last June and as you pointed out we're well on our way to achieving them given the growth that we had in 2021.

The second thing I would say as you've also seen us respond to opportunities in the market in both of our underwriting divisions to grow our company and expand margins. So obviously opportunities there we're able to take and the reason for that is pretty straightforward right. We're nimble agile we have the relationships to products to platform to capital and the people to.

Speaker 6: We have dry powder, as Jim mentioned earlier, and we intend to capitalize on the opportunities that we see. But at the end of the day, it's about underwriting income and underwriting.

Speaker 3: But, Jim, I don't know if you'd like to add anything. Yeah, Yaron, I'll just provide a little bit more detail around how we're executing within reinsurance to give you some flavor for this. You know, we've, as Juan has indicated, we've been pursuing a strategy that's very deliberate around what parts of the market we want to capitalize on, and in 2021.

To be able to do that so that gives us I think a pretty good competitive advantage in a pretty dynamic environment to be able to do that.

Third point I would give you is that and this goes back to the capital allocation discussion we were having earlier, we do have a diversified franchise that really works to our advantage and the way we think about allocating capital is really who can give us the best economic return as Mark said is it insurance reinsurance our investments within the company.

Speaker 3: uh... in really in twenty twenty as well we saw an opportunity with the significant shifts happening in the primary casualty market

Speaker 3: to participate alongside some of the best underwriters in the business.

Speaker 3: in a really meaningful way and so we've grown our in particular casualty pro rata business will end you know the fourth quarter that's almost three-quarters of a billion dollars in premium it's very meaningful for us

Keep in mind that our focus is always the same one it's underwriting results. That's the core focus that's what we really are driving and it goes to also ryans question earlier about the margin.

Speaker 3: And that allows us to participate in all those economic improvements that we've been talking about today. So that clearly drove a lot of significant growth. So if we translate that then into how we executed in 1.1, the strategy is very consistent.

And so that brings us to the specific landscape.

'twenty two.

And so as I look at the landscape I continue to see excellent opportunities for growth in primary insurance both in the U S as well as internationally and when we think about reinsurance I've seen more selective more targeted opportunities in that area and we're going to pick our spots frankly that that's the bottom line, but I think what you're hearing.

Speaker 3: We saw an opportunity to be thoughtful about where we're deploying cat capacity.

Speaker 3: That will result in an improvement, obviously, in the cat loss ratio, which we view as a very good thing. We were very focused on where we deployed our cat capacity. We absolutely moved away from retro and aggregate structures, moved away from working layers, continued to support our core seedings, optimized the portfolio, particularly in the pro rata space, and also target some selective growth in cat with key customers.

From US is look we have traction in 'twenty, one going into 'twenty, two we have dry powder as Jim mentioned earlier, and we intend to capitalize on the opportunities that we see but at the end of the day, it's about underwriting income and underwriting results, but Jim I don't know if you'd like to add anything yeah yarn I'll just.

Speaker 3: And then on the casualty side, we continue to see some really nice opportunities for growth in a very targeted way.

Provide a little bit more detail around how we are executing within reinsurance to give you some flavor for this.

Speaker 3: with our core seedings on some programs that are new or emerging in the market, and we certainly react to those opportunities as well. So it's going to be very consistent, it's going to be targeted, and it's going to be sort of scaled relative to the market opportunity that exists. And as Juan said, we have dry powder, we've created nice margins, and we can react if new opportunities emerge during the renewal seasons for the rest of the year.

<unk> is one as indicated we've been pursuing a strategy that's very deliberate around what parts of the market, we want to capitalize on and in 2021.

And really in 2020 as well we saw an opportunity with the significant shifts happening in the primary casualty markets to participate alongside some of the best underwriters in the business in a really meaningful way and so we've grown our in particular, our casualty pro rata business will end in the fourth quarter, that's almost three quarters of $1 billion in pre.

It's very meaningful for us and that allows us to participate in all those economic improvements that we've been talking about today. So that clearly drove a lot of significant growth. So if we translate that into how we executed in one one the strategy is very consistent we saw an opportunity to be thoughtful.

Speaker 1: Your next question comes from Mike Zaremski with Wolf Research.

Speaker 5: Your first question on the prepared remarks one, you talked about in the primary insurance segment, I believe you talked about improving your analytics and improving your hit ratios on sales by a meaningful amount. Maybe you can kind of elaborate because it seemed like a meaningful increase in the hit ratio driving sales and is that new business since you're tweaking the underwriting algos, are you booking that maybe more conservatively too in the onset?

Where we're deploying cat capacity.

That will result in an improvement obviously in the cat loss ratio, which we view as a very good thing we were very focused on where we deploy our cat capacity, we absolutely moved away from retro in aggregate structures moved away from working layers continue to support our core seasons optimize the portfolio, particularly in the pro rata space and also target some selective.

Speaker 6: Yeah, Mike, thanks. That's actually a very important thing you've highlighted, because I think that also goes to the question that Yaron was asking a little bit ago about how we see the growth momentum into 2022.

Growth in cat with key customers and then on the casualty side, we continue to see some really nice opportunities for growth in a very targeted way with our core seasons on some programs that are that are new or emerging in the market and we certainly react to those opportunities as well so it's going to be very consistent it's going to be tough.

Speaker 6: Look, I've said this before, those who execute best win, and distribution is a key component of all of that. So we're doing a number of things on the distribution area to be a lot more productive and be a lot more efficient. Number one, one of the things that we have done, particularly in the US, is really expand our regional structure in the field to be able to have more people on the ground, closer to our distribution, closer to our brokers.

<unk> and its going to be sort of scaled relative to the market opportunity that exists and as Juan said, we have dry powder, we've created nice margins and we can react if new opportunities emerge during the renewal season for the rest of the year.

Alright, thanks for the helpful answers.

Speaker 6: be able to explain our product offering and just be a lot more thoughtful about the solutions that we can sell, the solutions that are needed by them, etc.

Sure sure thing.

Your next question comes from Mike <unk> with Wolfe Research.

Speaker 6: But backing all of that is essentially a shift into a much more quantitative approach to sales.

Hey, great good morning.

First question on <unk>.

In the prepared remarks, one you talked about.

Speaker 6: where we now have very good data, very good intelligence, at the underwriter level, at the broker level, on what submissions we're getting, how we're looking at those submissions, how we triage those submissions, et cetera, et cetera. So the bottom line is now we're being much more effective at asking for what we want, what's within our risk.

And the primary insurance segment I believe you talked about improving your analytics in an improving your hit ratios on sales by a meaningful amount. Maybe you can kind of elaborate is it seemed like a meaningful increase in.

The hit ratio is driving sales and as that new business since you're tweaking the underwriting.

Speaker 6: and then being able to be much more efficient about what we bind based on what's coming into the funnel and the pipeline. And that's what you're seeing those hit ratios basically go up. So it's making us a lot more productive within our risk appetite. But I'll ask Mike Karbalovich to add a little bit to that as well.

Underwriting algo is it are you booking that maybe more conservatively to the onset.

Yeah, Mike.

That's actually a very important thing you've highlighted because I think that also goes to the question that you Aaron was asking a little bit ago about how we see the growth momentum into 2022.

Speaker 3: Sure. This is Mike Carmelovich. Thank you for the question. I would just add a couple of things to that. Besides in distribution, we've been adding talent, in addition to that, and changing the culture from more of a sales focus and customer mindset. So with that, the data analytics that Juan's talking about, we've been very much focused on simplifying our structure,

Look I've said this before those who execute best win and distribution as a key component of all of that so we're doing a number of things on the distribution area to be a lot more productive it would be a lot more efficient.

Number one one of the things that we have done, particularly in the U S is really expand our regional structure in the field to be able to have more people on the ground closer to our distribution closer to our brokers to be able to explain our product offering and just be a lot more thoughtful about.

Speaker 3: So we can be a lot more efficient how we go to market and our offering is so we can bring it together and coordinate it more effectively as an example and what that's doing is we've developed sales pipelines and we're being much more tactical with our distribution partners which is allowing us to increase our hit ratio and actually continue to improve again our success with a lot of our trading partners. So I think you'll see that as a continuation, some of this is early days but we're making a lot of progress and 2021 was an example of that.

The solutions that we can sell the solutions that are needed by them et cetera.

But backing all of that is essentially a shift into a much more quantitative approach to sales.

Speaker 5: Okay, that's a great call. My follow-up is just an update. I'm curious on inorganic growth. Is Everest still open to any potentially sizable deals in strategic lines of business that could aid the long-term ROE profile?

We now have very good data very good intelligence at the underwriter level at the broker level on what submissions were getting how we're looking at those submissions, how we triage those submissions et cetera et cetera. So the bottom line is that we're being much more effective at asking for what we want.

Our risk appetite and then being able to be much more efficient about what we bind based on what's coming into the funnel and the pipeline and Thats, what youre seeing those hit ratios basically go up so it's making us a lot more productive within our risk appetite, but I'll ask Mike Carnival of its to add a little bit to that as well sure.

Speaker 6: Yeah, Mike, it's Juan. And again, thanks for the question on that. Look, I'm pretty consistent on this theme. And you've heard me say this before, which is our strategy is organic, right? That's what we can plan for. That's what we're executing.

Speaker 6: And that is in insurance, and that is in reinsurance at this point in time.

This is my current leverage thank you for the question I would just add a couple of things to that.

Speaker 6: Now, that being said, as Mark pointed out, we do have excess capital, and if we do see an opportunity along the way that's interesting, obviously it's something that we will consider, but I'm not considering or looking at sort of transformative type things, et cetera. This would be more a bolt-on, does it help us in a particular geography, a particular product line, et cetera, et cetera, but the strategy remains an organic focus strategy.

Besides in distribution, we've been adding talent in addition that and changing the culture from more of a sales focus and customer mindset. So with that the data analytics that one's talking about we've been very much focused on simplifying our structure. So we can be a lot more efficient how we go to market and our offering is so we can bring them together in a coordinated more effectively as an example.

And what that's doing is we developed sales pipelines and we're being much more tactical with our distribution partners, which is allowing us to increase our hit ratio and actually continue to improve again, our success with a lot of our trading partners. So I think you'll see that as a continuation. Some of this is early days, but we're making a lot of progress in 2021 was an example of that.

Speaker 1: And your final question comes from Mayor Shields with KBW.

Speaker 5: Thanks. Good morning. I appreciate you putting me in. Juan, in your comments, you talked about a specific growth strategy for outside of North America. I was hoping you can get a little bit more color about the, I guess, regions, lines, and specifically, like the sort of risks that could hinder underwriting profitability in that new market as you penetrate those markets.

Okay.

Colored my my follow up is just a update curious on inorganic growth are.

Still open to.

Potentially sizable deals and strategic lines of business that could have a long term early profile.

Speaker 6: Yeah, Meijer, thank you. It's good to hear from you. Let me expand on that a little bit. So basically, we have been talking about really since the past year about a pretty thoughtful and disciplined strategy.

Yes, Mike it's one and again thanks for the question on that look at I'm pretty consistent on this thing and you've heard me say this before which is our strategies organic right. That's what we can plan for that's what we're executing.

Speaker 6: essentially be the next phase of our development on the primary insurance side outside of North America.

Speaker 6: So we already have a presence in the UK. We participate both in the retail and the wholesale market. We have a company out of Ireland as well. And what we're thinking about doing, and already are doing, is basically extending our Irish company essentially into the continent of Europe , but only into a very limited handful of countries where we can add value and where we can believe can make a difference given our value prophecy.

That is an insurance and Edison and reinsurance at this point in time now that being said as Mark pointed out we do have excess capital and if we do see an opportunity along the way that's interesting obviously, it's something that we will consider but I'm not considering or looking at sort of transformative type things et cetera. This would be more.

Bolt ons does it help us in a particular geography, or particular product line et cetera, et cetera, but the strategy remains an organic focus strategy.

Speaker 6: In Latin America, we have now a small operation out of Chile and similar sort of thought process on that. Thoughtful, disciplined, we think we can add value. And we now have a base of operations in Singapore at the same time.

Understood. Thank you.

Thanks, Mike.

And your final question comes from Mayor Shields with K B W.

Thanks, Good morning, I appreciate you putting me in.

Speaker 6: And the idea for us is not to go around the world planting flags, it's really to select a few geographies around the world where we see a need for our product given either market dislocation, competitor dislocation, and where we can add value. And that's effectively what we're trying to do. From the perspective of what products we're targeting, you know, essentially it's an upper middle market play, more so than anything else, depending on the geography, that will dictate.

One in your comments you talked about a specific growth strategy for outside of North America, I was hoping to get a little bit more color.

The region's lines and specifically like the sort of risks that.

Good.

Hinder underwriting profitability in that Newark, as you penetrate those markets.

Yeah Meyer. Thank you good to hear from you, let me expand on that a little bit.

So basically we.

Speaker 6: you know, sort of the product range. You know, if you're looking at the emerging markets in Asia and Latin America, it's going to be more of a first-party play, non-CAT. If you're looking at the more sophisticated markets in Europe , it's going to be a blend of first-party lines and third-party lines at the same time. But again, this is all a logical expansion from what we're doing in North America and, frankly, the success that we've had.

<unk> been talking about really since the past year about a pretty thoughtful and disciplined strategy to essentially be the next phase of our development on the primary insurance side outside of North America.

So we already have a presence in the U K, we participate both in the retail and the wholesale market, we have a company out.

Out of Ireland, as well and what we're thinking about doing already are doing is basically extending our Irish company essentially into the continent of Europe , but only into a very limited handful of countries, where we can add value and where we can believe can make a difference given our value proposition.

Speaker 5: Okay, thank you. That's very helpful. One quick question, if I can. We're seeing across the industry a lot of growth in, I guess, what people would term financial lines, and usually they mean cyber. Growth re-insurance premiums actually went down for the quarter in a year. I was wondering if you could talk about maybe a strategy for cyber or other factors that are driving that decline?

In Latin America, we have now a small operation out of Chile, and similar sort of thought process on that thoughtful disciplined we think we can add value and we now have a base of operations in Singapore at the same time and the idea for US is not to go around the world planting flags. It is really to select a few geographies around the <unk>.

Speaker 6: Yeah, let me ask Mike Karmovich to provide some color on that.

Speaker 3: Sure. Thanks for the question. This is Mike Karmalevich again here, but Cyber for us is a portfolio we entered about a couple years ago. It's a very small portfolio, but we've been very diligent on our focus. It's more middle-market driven, and the opportunity that we've been able to accomplish is really focusing on two key things from our perspective. One is really making sure the requirements, whether it's MFA or whether the risk profiles have all the hygiene and things that are necessary to make sure it's –

World, where we see a need for our product given either market dislocation competitive dislocation and we can add value and that's effectively what we're trying to do from the perspective of what products. We're targeting essentially it's a it's an upper middle market play more so than anything else.

Speaker 3: a required suitable uh... risk is one thing we've been very focused so the market itself because with all the different rate increases we've seen have allowed us to sit there and really focused on just the things that we we want to after so it's a very small portfolio we're not where we're just taking the rate and looking for opportunities but um... i don't see that market is slowing down anytime soon and we can you look for the right risk profile with the right requirements around cyber hygiene and if they don't make that will continue to kind of just move forward and manage it effectively

Pending on the geography that will dictate.

Sort of the product range, if you're looking at the emerging markets in Asia, and Latin America is going to be more of a first party play non cat.

If youre looking at the more sophisticated markets in Europe , it's going to be a blend of first party lines and third party lines at the same time, but again. This is all a logical expansion from what we're doing in North America and frankly, the success that we've had here.

Okay. Thank you that's very helpful. One quick question if I can we're.

Speaker 1: I would now like to turn the conference over back to management for closing comments.

We're seeing across the industry a lot of growth and I guess, what people would term financial lines and usually that means cyber.

Speaker 6: Great. Thank you for all the questions and the excellent discussion today. As you can hear from our tone, we're optimistic about the opportunities before us, and we continue to build our company, accelerate progress, and create value for our investors, clients, and the markets that we serve. Thank you for your time for us today, and thank you for your continued support of our company, and we look forward to talking to you next in our Q1 results.

Gross reinsurance premium was actually went down for the quarter and the year. Just wondering if you could talk about maybe your strategy for cyber or other factors that are driving that decrease.

Let me ask Mike <unk> to provide some color on that.

Sure.

Thanks for the question. This is my comment love scan here, but.

Ciber for us as a portfolio we entered about a couple of years ago. It's a very small portfolio, but we've been very diligent on our focus it's more middle market driven and the opportunity that we've been able to accomplish is really focusing on two key things from our perspective, one is really making sure the requirements, whether it's MSA or whether the risk profiles have all of the hygiene.

Speaker 1: Ladies and gentlemen, this does conclude today's conference call. Thank you for your participation. You may now disconnect your line.

Speaker 10: The the the.

Things that are necessary to make sure. It's a required suitable risk is one thing we've been very focused so the market itself with all the different rate increases. We've seen has allowed us to sit there and really focus on just the things that we want to go after so it's a very small portfolio. We're not we're just taking the rate and looking for opportunities.

But I don't see that market is slowing down anytime soon and we continue to look for the right risk profile with the REIT requirements around cyber hygiene and if they don't make that we will continue to kind of just move forward to manage it effectively.

Okay fantastic. Thank you.

I would now like to turn the conference over back to management for closing comments.

Great. Thank you for all the questions and the excellent discussion today as you can hear from our tone, we're optimistic about the opportunities before us and we continue to build our company accelerate progress and create value for our investors clients and the markets that we serve.

Thank you for your time for US today and thank you for your continued support of our company and we look forward to talking to you next in our Q1 results.

Have great day.

Ladies and gentlemen, this does conclude today's conference call. Thank you for your participation you may now disconnect your lines.

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