Q2 2024 Everest Group Ltd Earnings Call

Good day, and what kinds of Everest Group limited second quarter 'twenty to 'twenty four earnings conference call all participants will be in listen only mode.

Operator: Good day, and welcome to Everest Group Limited, 2nd quarter, 2024, our names conference call. All participants will be in listen-only mode. Should you need assistance, please signal conference specialists for pressing the star key, followed by zero.

Speaker Change: You need assistance. Please signal conference specialist by pressing the star can you followed by zero.

Operator: After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star, then one on your telephone keypad. To withdraw your question, please press star, then two. Please note, this event is being recorded.

Speaker Change: After todays presentation, there will be an opportunity to ask questions to ask a question you May Press Star then one on your telephone keypad to withdraw your question. Please press Star then two please.

Speaker Change: Please note this event is being recorded.

Matthew Rohrmann: Oh, no, I just want to comment over Matthew Rohrmann, Senior Vice President and Head of Investor Relations. Please go ahead, sir.

Matthew <unk>: The conference over to Matthew <unk>, Senior Vice President and head of Investor Relations. Please go ahead Sir.

Juan Andrade: Good morning, everyone, and welcome to the Everest Group Limited, 2nd quarter of 2024, our names conference call.

Unknown Executive: All participants will be in listen-only mode. Thank you to all conference specialists for pressing this star. After today's presentation, there will be an opportunity to ask questions. Good morning, everyone, and welcome to the Everest Group Limited second quarter of 2024 earnings conference call. The Everest executives leading today's call are Juan Andrade, President and CEO, and Mark Kociancic, Executive Vice President and CFO. Thank you, Matt. Good morning, everyone.

Speaker Change: Good morning, everyone and welcome to Everest Group Limited second quarter of 2024 earnings Conference call do you ever see executive leading today's call are one driving president and CEO and Mark <unk> Executive Vice President and CFO.

Juan Andrade: The Everest Executive is leading today's call, our Juan Andrade, President NCEO, and Mark Kociancic, Executive Vice President NCEFO. We are also joined by other members of the Everest Management Team.

Speaker Change: We are also joined by other members of the Everest mentioned.

Matthew Rohrmann: Before we begin, I'll preface the comments by noting that today's call will include forward-looking statements. Actual results may differ materially. Management comments regarding estimates, projections, and similar are subject to the risk of certain needs and assumptions, as noted in Everest SEC filings. Management may also refer to certain on-gap financial measures.

Speaker Change: Before we begin I'll preface our comments by noting that today's call will include forward looking statements actual results may differ materially, Missouri comments regarding estimates projections and similar are.

Speaker Change: Our subject to the risks uncertainties and assumptions as noted in ever SEC filings.

Juan: You may also refer certain non-GAAP financial measures. These items are reconciled in the earnings release and financial supplement available on our website with that I'll turn the call over to Juan.

Juan Andrade: These items are reconciled in the earnings release and financial supplement available on our website. With that, I'll turn the call over to one.

Juan Andrade: Thank you, Matt.

Juan: Thank you Matt Good morning, everyone. Thank you for joining us.

Juan Andrade: Good morning, everyone. Thank you for joining us. Everest had another strong quarter and an excellent first half of the year. We delivered solid 2nd quarter underwriting and net investment income, resulting in both an annualized total shareholder return and operating return on equity of 20%. We grew in lines of business and geographies, with superior profit trajectories, while remaining focused on disciplined risk selection. We continued to build a well-diversified portfolio designed to produce leading financial returns. Our reinsurance business continued to generate strong results, and expected risk-adjusted returns remained very attractive. Our preferred lead market position continues to be a differentiator for Everest.

Juan C. Andrade: Thank you for joining us for another strong quarter and an excellent first half of the year. We've delivered solid second quarter underwriting and net investment in, with Superior Profit Trajectory while remaining focused on disciplined risk selection, and expected risk-adjusted returns remain very attractive, with investments in talent and capabilities to scale the platform globally. We open new operations in Mexico, Colombia, and Australia.

Juan: Everest had another strong quarter and an excellent first half of the year.

Juan: We delivered solid second quarter underwriting and net investment income.

Juan: Resulting in both an annualized total shareholder return and operating return on equity of 20%.

Juan: We grew in lines of business and geographies with superior profit trajectories, while remaining focused on disciplined risk selection.

Juan: We continue to build a well diversified portfolio designed to produce leading financial returns.

Juan: Our reinsurance business continues to generate strong results and expected risk adjusted returns remain very attractive.

Speaker Change: Our preferred lease market position.

Speaker Change: To be a differentiator for Everest.

Juan Andrade: This was once again evident through the mid-year renewals, as there was strong demand for our participation on treaties from a broad array of top-tier customers. We also made progress expanding our primary insurance franchise, with investments in talent and capabilities to scale the platform globally. We opened new operations in Mexico, Colombia, and Australia. Both of our underwriting businesses are capitalizing on opportunities where market conditions are most attractive and where we can achieve sustained, profitable growth. At the same time, our investment portfolio is delivering strong and consistent earnings. We are executing on our strategy with significant momentum heading into the second half of the year.

Speaker Change: This was once again evidenced with the midyear renewals as there was strong demand for our participation on treaties from a broad array of talk to your customers.

Speaker Change: We also made progress expanding our primary insurance franchise.

Speaker Change: With investments in talent and capabilities to scale the platform globally.

Speaker Change: We opened new operations in Mexico, Colombia, and Australia.

Juan C. Andrade: Both of our underwriting businesses are capitalizing on opportunities where market conditions are most attractive and where we can achieve sustained, profitable growth. We are executing on our strategy with significant momentum heading into the second half of the year. Most importantly, we are delivering on our primary objective of generating industry-leading financial returns, as measured by total shareholder return. Our strategy provides significant operating flexibility with multiple paths to achieving our primary objective. We grew gross written premiums by 13% in constant dollars and excluding reinstatement. We generated $358 million in underwriting profit from several mid-sized international and U.S. events.

Speaker Change: Most of our underwriting businesses are capitalizing on opportunities where market conditions are most attractive and where we can achieve sustained profitable growth.

Speaker Change: At the same time, our investment portfolio is delivering strong and consistent earnings.

Speaker Change: We are executing on our strategy with significant momentum heading into the second half of the year.

Juan Andrade: Most importantly, we are delivering on our primary objective of generating industry-leading financial returns that's measured by total shareholder return. Our strategy provides significant operating flexibility with multiple paths to achieving our primary objective in 2024, 2025, and 2026, as outlined at our last investment. today.

Speaker Change: Most importantly, we are delivering on our primary objective of generating industry, leading financial returns as measured by total shareholder return.

Speaker Change: Our strategy provides significant operating flexibility with multiple paths to achieving our primary objective in 2020 for 2025 and 2026 as outlined at our last Investor day.

Juan Andrade: With that backdrop, I will now turn to our second quarter financial highlights, beginning at the group level. Everest's second quarter performance resulted in an annualized total shareholder return of 20% and net operating income of $730 million, an increase of more than $100 million year over year. We grew growth-written premiums by 13% in constant dollars and excluding reinstatement premiums, while remaining disciplined in casualty lines, particularly in North America. We generated $358 million in underwriting profit in the quarter, and $767 million year to date, an increase of $94 million has compared to the first half of 2023.

Speaker Change: With that backdrop, I will now turn to our second quarter financial highlights beginning at the group level.

Speaker Change: <unk> second quarter performance resulted in an annualized total shareholder return of 20%.

Speaker Change: Net operating income of $730 million, an increase of more than 100 million year over year.

Speaker Change: We grew gross written premiums by 13% in constant dollars and excluding reinstatement pretty well.

Speaker Change: While remaining disciplined in casualty lines, particularly in North America.

Speaker Change: We generated 358 million in underwriting profit in the quarter.

Speaker Change: 767 million year to date, an increase of 94 million as compared to the first half of 2023.

Juan Andrade: The group combined ratio of 90.3% included $135 million of pre-tax catastrophe losses, net of recoveries and reinstatement premiums, from several mid-sized international and U.S. events. This is a good result, particularly given that the elevated level of global industry catastrophe losses is now estimated at approximately $60 billion year to date. In the quarter, we improved our traditional loss ratio by 70 basis points year over year, driven primarily by mixed contributions from both segments, sustained pricing momentum, and disciplined underwriting. Terms and conditions also remained favorable. As I mentioned earlier, our investment portfolio continued to perform well, producing over half a billion dollars of net investment income in the quarter, and nearly $1 billion year to date. Turning now to our reinsurance business.

Speaker Change: The group combined ratio of 93%, including 135 million of pre tax catastrophe losses net of recoveries and reinstatement premiums.

Speaker Change: From several mid sized international and U S events.

Speaker Change: This is a good result, particularly given that the elevated level of global industry catastrophe losses.

Speaker Change: Now estimated at approximately 60 billion.

Speaker Change: Date.

Juan C. Andrade: In the quarter, we improved our attritional loss ratio by 70 basis points year over year, driven primarily by mixed contributions from both sects. As I mentioned earlier, our investment portfolio continued to perform well, producing over half a billion dollars of net investment income in the quarter and nearly one billion dollars here to date, as we continue to proactively shape the portfolio. Consistent with our execution at the January and April renewals, Everest had excellent mid-year renewals.

Speaker Change: In the quarter, we improved our attritional loss ratio by 70 basis points year over year.

Speaker Change: Driven primarily by mix contributions from both segments sustained pricing momentum and disciplined underwriting.

Speaker Change: Terms and conditions also remained favorable.

Speaker Change: As I mentioned earlier, our investment portfolio continued to perform well.

Speaker Change: Leasing over half a billion dollars of net investment income in the quarter and nearly $1 billion year to date.

Speaker Change: Turning now to our reinsurance business.

Juan Andrade: Second quarter reinsurance results were excellent. The business delivered underwriting profits of more than $300 million. The nutritional loss ratio and nutritional combined ratio improved to 57% and 84.4%, respectively, as we continue to proactively shape the portfolio. Consistent with our execution at the January and April renewals, average at excellent mid-year renewals. We expanded our portfolio with top-tier seedings, growing across property and specialty lines, including marine, aviation, and engineering at excellent expected margins. As the June 1 renewal progressed, an overall reinsurance capacity became scarce in the final days; every security number of shortfall covers at superior terms. On many Florida deals, we successfully negotiated non-conparent terms, including higher minimum premiums and lower seeding commissions.

Speaker Change: Second quarter reinsurance results were excellent.

Speaker Change: The business delivered underwriting profits up more than 300 million.

Speaker Change: The attritional loss ratio and Attritional combined ratio improved to 57% and 84, 4% respectively.

Speaker Change: We continue to proactively shape the portfolio.

Speaker Change: Consistent with our execution at the January and April renewals.

Speaker Change: <unk> had excellent midyear renewals.

Juan C. Andrade: We expanded our portfolio with top-tier seed, growing across property and specialty lines, including marine, aviation, and engineering, at excellent expected margins. As the June 1 renewal progressed, and overall reinsurance capacity became scarce in the final days, Everest secured a number of shortfall covers at superior terms on many Florida policies. We successfully negotiated non-concurrent terms, including higher minimum premiums and lower seating commissions. Our property book grew more than 25% at June 1, with higher expected margins compared to last year. Importantly, across Mid-Europe, we achieved preferential signing, and drove differentiated terms and conditions on a number of property catastrophes.

Speaker Change: We expanded our portfolio with top tier seasons growing across property and specialty lines.

Speaker Change: Marine Aviation and engineering excellence expected margins.

Speaker Change: As the June one renewal and progressed and overall reinsurance capacity became scarce in the final days ever secured a number of shortfall covers and superior returns.

Speaker Change: On many Florida diesel we successfully negotiated non concurrent terms, including higher minimum premiums and lower ceding commissions.

Juan Andrade: Our property book grew more than 25% at the June 1 renewal. In addition, CaddxPose Premium continued with a double-digit growth trajectory at the July renewal, with higher expected margins compared to last year. Importantly, across the mid-year renewals, we achieved preferential signings throughout differentiated terms and conditions on a number of property catastrophes. David deals, and we were signed in full on virtually every transaction we chose to participate on. Overall, we grew the business by 17% on a constant dollar basis, excluding reinstatement premiums in the second quarter. Growth in our property pro-rata book increased significantly, up to 31% from last year, as we took advantage of the strong underlying property market, particularly in commercially in S.

Speaker Change: Our property book grew more than 25% at the June one renewal.

Speaker Change: In addition, cat exposed premium continued with a double digit growth trajectory as the July renewed with higher expected margins compared to last year.

Speaker Change: Importantly across the major renewals, we achieved preferential signings drove differentiated terms and conditions on a number of property catastrophe deals and we were signed in full on virtually every transaction we chose to participate on.

Juan C. Andrade: Overall, we grew the business by 17% on a constant dollar basis, excluding reinstatement. Property market conditions continue to, Rates have persisted at attractive levels, and terms and conditions and attachment points have not wavered from the significant improvement made over the past two years in lines that did not meet our underwriting criteria. While casualty pro rata premiums grew in the second quarter, this was primarily driven by strong rate increases as opposed to exposure. We have lost over $300 million in casualty renewal premiums so far this year, as a number of programs did not meet our underwriting standards.

Speaker Change: Overall, we grew the business by 17% on a constant dollar basis, excluding reinstatement premiums in the second quarter.

Speaker Change: Growth in our property pro rata book increased significantly up 31% from last year as we took advantage of the strong underlying property market, particularly in commercial E&S.

Juan Andrade: Property market conditions continue to be favorable. Rates have persisted at attractive levels, and terms and conditions in attachment points have not wavered from the significant improvement made over the past two years. In casualty, we remained disciplined in lines that did not meet our underwriting criteria. While casualty pro-rata premiums grew in the second quarter, this was primarily driven by strong rate increases as opposed to exposure growth. We have shed over 300 million in casualty renewal premiums so far this year, as a number of programs did not meet our underwriting standards. The quality of our book is excellent, and the strength of our franchise continues to set the business apart.

Speaker Change: Property market conditions continue to be favorable.

Speaker Change: Rates have persistent at attractive levels.

Speaker Change: In terms and conditions and attachment points have not wavered from the significant improvements made over the past two years.

Speaker Change: In casualty, we remain disciplined in lines that did not meet our underwriting criteria.

Speaker Change: While casualty pro rata premiums grew in the second quarter. This was primarily driven by strong rate increases as opposed to exposure growth.

Speaker Change: We have shed over $300 million in casualty renewal premiums. So far this year as a number of programs did not meet our underwriting standards.

Juan C. Andrade: The quality of our book is excellent, and the strength of our franchise continues to set the business apart. We expect risk-adjusted returns to remain very attractive. Generating $1.5 billion in premiums in the second quarter, overall growth was driven by a 31% increase in property short tail. 26% in specialty lines. The overall growth in the quarter was partially offset by the continued caution around cash, as well as the previously announced medical stop-loss business.

Speaker Change: The quality of our book is excellent and the strength of our franchise continues to set the business apart.

Juan Andrade: We expect risk-adjusted returns to remain very attractive. Our outlook for 2025 remains bullish.

Speaker Change: We expect risk adjusted returns to remain very attractive.

Speaker Change: Our outlook for 2025 remains bullish.

Juan Andrade: Not turning to insurance. We grew the insurance business by 6% in constant dollars, generating 1.5 billion in premiums in the second quarter. As we continue to optimize our mix of business, overall growth was driven by a 31% increase in property short tail and 26% in specialty lines. Our international business continued to gain traction as we rapidly becoming a go-to market for our distribution partners. The overall growth in the quarter was partially offset by the continued caution around casualty, as well as the previously announced medical stop loss business exit, which started in 2023 and will be completed by the end of this year.

Speaker Change: Now turning to insurance.

Speaker Change: We grew the insurance business by 6% in constant dollars.

Speaker Change: Generating $1 5 billion in premiums in the second quarter.

Speaker Change: As we continue to optimize our mix of business overall growth was driven by 31% increase in property short tail and 26% and specialty lines.

Speaker Change: Our international business continued to gain traction as we are rapidly becoming a go to market for our distribution partners.

Speaker Change: The overall growth in the quarter was partially offset by the continued caution around casualty.

Speaker Change: As well as the previously announced medical stop loss business exit, which started in 2023 and will be completed by the end of this year.

Juan Andrade: Consistent with prior quarters, we were prudent in less attractive lines, such as directors and officers liability, workers' compensation, and other casualty lines exposed to social inflation. We gained additional momentum and achieved rate acceleration in excess of loss strength across a wide array of casualty lines in the quarter, as increases in commercial auto liability, general liability, and excess casualty lines averaged in the mid to high teens. Looking across the portfolio, we achieved an average rate increase of over 10%, excluding workers compensation and financial lines. The combined ratio benefited from a 70 basis point improvement in the attritional loss ratio.

Juan C. Andrade: Consistent with prior quarters, we were prudent in less attractive lines, such as directors and officers' liability, workers' compensation, and other casualty lines exposed to social inflation across a wide array of casualty lines in the quarter. Looking across the portfolio, we achieved an average rate increase of over 10%, excluding workers' compensation and financial lines. The combined ratio benefited from a 70 basis point improvement in the attritional loss ratio.

Speaker Change: Consistent with prior quarters, we were prudent and less attractive lines, such as directors and officers liability workers' compensation and other casualty lines exposed to social inflation.

Speaker Change: We gained additional momentum and achieved rate acceleration and excess of loss trend across a wide array of casualty lines in the quarter.

Speaker Change: As increases in commercial auto liability general liability and excess casualty lines averaged in the mid to high teens.

Speaker Change: Looking across the portfolio, we achieved an average rate increase of over 10%, excluding workers' compensation and financial lines.

Speaker Change: The combined ratio benefited from a 70 basis point improvement in the Attritional loss ratio.

Juan Andrade: This was offset by higher cat losses, as last year's quarter was benign, and lower than expected earned premium, resulting from the underwriting actions I have already described.

Speaker Change: This was offset by higher cat losses, as last year's quarter was benign and lower than expected earned premium resulting from the underwriting actions I have already described.

Juan C. Andrade: This was offset by higher catastrophe losses, as last year's quarter was benign, and lower than expected earned premium resulting from the underwriting actions I have already described. At our Investor Day last November, we set a goal of hitting a 90 to 92% combined ratio for insurance. We are confident in achieving our objectives, but the timing for getting to our target combined ratio run rate is now 2025. We will not be satisfied until we achieve this goal, and three, we continue to prudently navigate the underwriting environment.

Juan Andrade: On our Investor Day last November, we set a goal of hitting a 90-92% combined ratio for insurance. We are confident in achieving our objective, but the timing for getting to our target combined ratio run rate is now 2025, and we will not be satisfied until we achieve this goal. In order to achieve our target, we must one, create a more balanced mix of business, including more short-tail premium, to continue to increase scale, particularly in our. We are making good progress on all of these. First on mix, as I said, we grew short-tailed lines in the quarter by over 30% in our specialty business by 26%.

Speaker Change: At our Investor Day last November we set a goal of hitting a 90% to 92% combined ratio for insurance.

Speaker Change: We are confident in achieving our objective, but the timing for getting to our target combined ratio run rate is now 2025.

Speaker Change: And we will not be satisfied until we achieve this goal.

Speaker Change: In order to achieve our target we must one create a more balanced mix of business, including more short tail premium.

Speaker Change: To continue to increase scale, particularly in our international businesses.

Speaker Change: And three continuing to prudently navigate the underwriting environment.

Juan C. Andrade: We're making good progress on all of these. These are good results, but there's more work to be done, particularly in North America. There were also some jurisdiction-specific regulatory approval delays in new international markets that have now been resolved.

Speaker Change: We're making good progress on all of these.

Speaker Change: First on mix as I said, we grew short tail lines in the quarter by over 30% and our specialty business by 26%.

Juan Andrade: These are good results, but there is more work to be done, particularly in North America. There were also some jurisdiction-specific regulatory approval delays in new international markets that have now been granted. Those operations are ramping up in the second half of the year. Second, scale improved into quarter as we did achieve strong growth with very attractive loss ratios in our international businesses, where we have continued to invest in people, products, technology, and infrastructure. Earn premium will start to catch up. Some of this progress was offset by our underwriting discipline actions, such as the ongoing runoff of our North America medical stop-loss business, which I mentioned earlier.

Speaker Change: These are good results, but there's more work to be done, particularly in North America.

Speaker Change: There were also some jurisdiction specific regulatory approval delays in new international markets that have now been grant.

Juan C. Andrade: Those operations are ramping up in the second half of the year. Second, scale improved in the quarter as we did achieve strong growth with very attractive loss ratios in our international business. This reduced earned premium in the quarter by approximately $70 million. Finally, regarding our work to navigate the complex risk environment, we are keenly focused on the effect of social inflation on casualty loss costs. We are booking our casualty business at Pruden Law Specs. And while we're achieving increased rates in excess of observed losses... We are reducing writings in certain lines, classes, and jurisdictions. As a result, casualty premiums were slightly down in the quarter.

Speaker Change: Those operations are ramping up in the second half of the year.

Speaker Change: Second scale improved in the quarter as we did achieve strong growth with very attractive loss ratios and our international businesses, where we have continued to invest in people products technology and infrastructure.

Speaker Change: Earned premium will start to catch up.

Speaker Change: Some of this progress was offset by our underwriting discipline actions such as the ongoing runoff of our North America medical stop loss business, which I mentioned earlier.

Juan Andrade: This reduced earned premium in the quarter by approximately 70 million. Finally, regarding our work to navigate the complex risk environment, we are keenly focused on the effect of social inflation on casualty loss costs. We are booking our casualty business at prudent loss picks, and while we are achieving increased rate in excess of observed loss trend, we are reducing writings in certain lines, classes, and jurisdictions. As a result, casualty premiums were slightly down in the quarter. We are focused on underwriting margin, and we walk away from business that does not meet our standards. We are pulling all of these levers and making progress to reach our target combined ratio for insurance.

Speaker Change: This reduced earned premium in the quarter by approximately $70 million.

Speaker Change: Finally regarding our work to navigate the complex risk environment. We are keenly focused on the effect of social inflation on casualty loss costs were.

Speaker Change: We are booking our casualty business and prudent loss picks and.

Speaker Change: And while we're achieving increased rate in excess of observed loss trend, we are reducing writings in certain lines classics and jurisdictions.

Speaker Change: Result, casualty premiums were slightly down in the quarter.

Juan C. Andrade: We are focused on underwriting margin, and we walk away from business. We are pulling all of these levers and making progress to reach our target combined ratio for insurance. This is our immediate focus for this segment.

Speaker Change: We are focused on underwriting margin and we walk away from business that does not.

Speaker Change: Meet our standards.

Speaker Change: We are pulling all of these levers and making progress to reach our targeted combined ratio for insurance.

Juan Andrade: This is our immediate focus for the segment.

Speaker Change: This is our immediate focus for the segment.

Juan Andrade: And in conclusion, I am proud of what we have accomplished thus far. We have a clear strategy. We are focused on executing our plan, and we are delivering above our target total shareholder return. We are focused on making Everest even stronger. Our reinsurance segment continued to exceed expectations. We are strengthening our insurance platform as we position ourselves as a go-to global market and continue to solidify our value proposition. With a market environment setting the stage for continued opportunity, Everest is well positioned to continue building momentum.

Speaker Change: And in conclusion I am proud of what we have accomplished thus far we have a clear strategy.

Mark Kociancic: We are focused on executing our plan, and we are delivering above our target total shareholder return. Our reinsurance segment continued to exceed expectations. We are strengthening our insurance platform. With that, I'll turn it over to Mark to review the financials in more detail. Our Reinsurance Division delivered another strong quarter with successful execution at recent renewals with strong top and bottom line results. The insurance division continued to gain traction in key international markets. Looking at the group results, Everest reported gross written premiums of $4.7 billion, representing 12.8% growth in constant dollars and excluding reinstatement premiums. The combined ratio was 90.3% for the quarter, driven by an improvement in the attritional loss ratio offset by higher cat losses when compared The losses counted in the quarter were primarily driven by mid-size international events, including several global flooding events and the Taiwan earthquake, as well as the U.S. convective storm.

Speaker Change: We are focused on executing our plan and we are delivering above our targeted total shareholder return.

Speaker Change: We're focused on making Everest even stronger.

Speaker Change: Our reinsurance segment continued to exceed expectations.

Speaker Change: We are strengthening our insurance platform as we position ourselves as a go to global market and continued to solidify our value proposition.

Speaker Change: With the market environment setting the stage for continued opportunity.

Speaker Change: <unk> is well positioned to continue building momentum.

Mark Kociancic: With that, I will turn it over to Mark to review the financials in more detail. Thank you, Juan, and good morning, everyone. Everest had another strong quarter, rounding out an excellent first half of 2024. We delivered significant growth in operating income, net income, and net investment income for the second quarter. The strove operating earnings per share of $16.85 and both an operating ROE and annualized total shareholder return of approximately 20%. Our re-insurance division delivered another strong quarter with successful execution at recent renewals, with strong top and bottom line results. The insurance division continued to gain traction in key markets internationally.

Speaker Change: With that I'll turn it over to Mark to review the financials in more detail.

Mark: Thank you Juan and good morning, everyone Everest had another strong quarter rounding out an excellent first half of 2024, we delivered significant growth in operating income net income and net investment income for the second quarter. This drove operating earnings per share of $16 84.

Speaker Change: Five cents and both in operating ROE and annualized total shareholder return of approximately 20%.

Speaker Change: Our reinsurance division delivered another strong quarter with successful execution at recent renewals with strong top and bottom line results.

Speaker Change: Insurance Division continued to gain traction in key markets internationally.

Mark Kociancic: We have strong momentum across our business heading into the second half of the year. Looking at the group results, Everest reported gross written premiums of 4.7 billion, representing 12.8% growth in constant dollars and excluding reinstatement premiums. The combined ratio was 90.3% for the quarter, driven by an improvement in the attritional loss ratio, offset by higher cat losses when compared to the prior year's relatively benign second quarter. The cat losses in the quarter were primarily driven by mid-size international events, including several global flooding events and the Taiwan earthquake, as well as the US convective storms. The group's nutritional loss ratio was 58.8%, a 70 basis point improvement over the prior year's quarter, with both segments contributing to the improvement, which I'll discuss in more detail in just a moment.

Mark Kociancic: The group's commission ratio modestly increased to 21.4%; a group expense ratio was in line with the prior year at 6.3%, while at the same time we continue to invest in talent and systems within both franchises. Moving to the segment results and starting with reinsurance, gross written premiums grew 16.5% in constant dollars, one adjusting for reinstatement premiums during the quarter. Growth in the quarter was consistent with the trend seen throughout the prior year, with strong and broad-based growth in property and specialty lines, while we continue to remain disciplined in casualty lines. Property lines grew approximately 30% in the quarter, with property pro-rata and property cat XOL, both contributing to the strong growth.

Speaker Change: Group expense ratio was in line with the prior year at six 3% while at the same time, we continue to invest in talent and systems within both franchises.

Mark Kociancic: The group attritional loss ratio was 58.8 percent, a 70 basis point improvement over the prior year's quarter, with both segments contributing to the improvement within both franchises. Moving to the segment results, and starting with reinsurance, gross written premiums grew 16.5% in constant dollars when adjusting for reinstatement premiums during the quarter.

Speaker Change: Moving to the segment results and starting with reinsurance gross written premiums grew 16, 5% in constant dollars when adjusting for reinstatement premiums during the quarter.

Mark Kociancic: Growth in the quarter was consistent with the trends seen throughout the prior year, with strong and broad-based growth in property and specialty lines, while we continue to remain disciplined in casualty lines. We continue to see the written premium mix shift towards property and short tail lines, which now stands at 56% property and 44% casualty.

Speaker Change: Growth in the quarter was consistent with the trends seen throughout the prior year with strong and broad based growth in property and specialty lines. While we continue to remain disciplined in casualty lines.

Speaker Change: Property lines grew approximately 30% in the quarter with property pro rata and property cat ex ol, both contributing to the strong growth.

Mark Kociancic: We continue to see the written premium mix shift towards property and short-tail lines, which now stands at 56% property and 44% casualty, a four-point shift from the prior year. The netter and premium mix stands at approximately 51% property and 49% casualty. Consistent with prior quarters, growth will continue to favor short-tail business as we trend throughout the year, which will become more pronounced on an earned basis. The attritional combined ratio improved 30 basis points to 84.4% during the quarter. The attritional loss ratio improved 60 basis points to 57%, as we continue to achieve more favorable rate and terms while building higher expected margins, particularly in property and specialty lines.

Speaker Change: We continue to see the written premium mix shift towards property and short tail lines, which now stands at 56% property and.

Speaker Change: 44% casualty.

Speaker Change: Four point shift from the prior year.

Mark Kociancic: In addition to the business mix, I mentioned earlier, the combined ratio was 88.9%, as the prior year benefited from a relatively benign level of cat loss. Francis, both the commission ratio and underwriting expense ratio are relatively in line with the prior year at 24.6% and 2.6%, respectively. Moving to insurance, gross written premiums grew approximately 6% in constant dollars to 1.5 billion. We continued to methodically scale our primary franchise globally while proactively focusing our North American portfolio towards the most accretive lines of business led by retail property and short tail specialty lines. We're maintaining a conservative underwriting approach in casualty lines, model line workers' comp, medical stop loss, and public company D&O.

Mark Kociancic: In addition to the business mix I mentioned earlier, the combined ratio was 88.9% as the prior year benefited from a relatively benign level of catastrophe losses, both the commission ratio and underwriting expense ratio were relatively in line with the prior year at 24.6% and 2.6%, respectively. Moving to insurance, gross written premiums grew approximately 6% in constant dollars to $1.5 billion. We continue to methodically scale our primary franchise globally while proactively focusing our North American portfolio on the most accretive lines of business.

Mark Kociancic: We're maintaining a conservative underwriting approach in casualty lines, model line workers' comp, medical stop loss, and public company DNO. Our North American casualty growth is being driven predominantly by meaningful rate increases. And we began reducing certain lines, such as medical stop loss, starting in 2023, and we expect the drag to be completed by year end. The commission ratio was relatively consistent with the prior year, while the underwriting-related expense ratio increased to 16.9%.

Mark Kociancic: Our North American casualty growth is being driven predominantly by meaningful rate increases. And we began reducing certain lines, such as medical stop loss, starting in 2023, and we expect the drag to be completed by year end. While a number of casualty lines are continued, price acceleration in the mid to high teens, gross written premiums were down slightly as we are focused upon risk selection, which meet our underwriting standards. Casually, rate increases remain above loss trend. We will continue to practice prudent cycle and portfolio management, drive rate, and hold the line on terms and conditions. We are starting to see the benefits of these actions and the results as the mid shift contributed to a 70 basis point improvement year over year in the attritional loss ratio to 63.7%.

Speaker Change: Starting in 2023, and we expect the drag to be completed by year end.

Speaker Change: While a number of casualty lines saw continued price acceleration in the mid to high teens gross written premiums were down slightly as we are focused upon risk selection, which meet our underwriting standards.

Speaker Change: The rate increases remain above loss trend.

Speaker Change: We will continue to practice prudent cycle and portfolio management drive rate and hold the line on terms and conditions.

Speaker Change: We are starting to see the benefits of these actions and the results as the mix shift contributed to a 70 basis point improvement year over year in the Attritional loss ratio to 63, 7% at the same time, we remain prudent with our loss picks to reflect the elevated risk environment.

Mark Kociancic: At the same time, we remain prudent with our loss picks to reflect the elevated risk environment. The commission ratio was relatively consistent with the prior year, while the underwriting related expense ratio increased to 16.9%. The increase was a function of higher expenses due to accelerated investments in our global platform and the lag in earned premium from both underwriting discipline actions in North America and some temporary regulatory delays in new geographies that one mentioned earlier. We expect the expense ratio will start trending downward in 2025 and approach a more normalized level of 15% over time as our international footprint scales.

Speaker Change: The commission ratio was relatively consistent with the prior year, while the underwriting related expense ratio increased to 16, 9%.

Mark Kociancic: The increase was a function of higher expenses due to accelerated investments in our global platform and the lag in earned premium from both underwriting discipline actions in North America and some temporary regulatory delays in new geographies that Juan mentioned earlier. As Juan mentioned, it will take us a little more time to get within the target insurance combined ratio range introduced at our investor day. We have a clear and well-defined path to achieve our insurance combined ratio objective by 2025.

Mark Kociancic: Aside from cats, the lag in expected earned premium was the primary driver of the year-over-year increase in the segment combined ratio to 94.4% in the quarter. As Juan mentioned, while it will take us a little more time to get within the target insurance combined ratio range introduced in our Investor Day, we have a clear and well-defined path to achieve our insurance combined ratio objective during 2025. We do expect to have a 93 to 94% insurance combined ratio quarterly run rate for the rest of 2024. Given the overall strength of our franchise, we have significant momentum heading into the back half of the year.

Mark Kociancic: We are well positioned with multiple paths to achieving our TSR objective. Our re-insurance segment continues to perform strongly, and market conditions remain attractive. and, as I just stated, we're on our way to improving our insurance combined ratio. Moving on to investments, net investment income increased over 170 million year over year to 528 million for the quarter, driven primarily by higher assets under management, higher new money yields versus maturing assets, and strong performance from alternative assets. Alternative assets generated 124 million of net investment income, an improvement from the prior year as equity markets have continued to accelerate.

Mark Kociancic: Our reinsurance segment continues to perform strongly, and market conditions remain attractive, as does strong performance from alternative assets. Overall, our book yield improved from 3.9% to 4.8% year over year, and our reinvestment rate remains well north of 5%. We continue to have a short asset duration of approximately 3.4 years, given the attractive level of short rates. The investment portfolio remains well positioned for the current environment and is built to generate strong returns on a consistent basis.

Speaker Change: Third and 24 million of net investment income an improvement from the prior year as equity markets have continued to accelerate.

Mark Kociancic: Overall, our book yield improved from 3.9% to 4.8% year over year, and our reinvestment rate remains well north of 5%, which is an excess of maturing security yields. We continue to have a short asset duration of approximately 3.4 years, given the attractive level of short rates. The investment portfolio remains well positioned for the current environment and is built to generate strong returns on a consistent basis. For the second quarter of 2024, our operating income tax rate was 13%. Modestly higher, driven by the mix of jurisdictional profits in the quarter. Our capital strength gives us ample capacity for 2024 and positions us well for profitable organic growth and to opportunistically repurchase shares.

Speaker Change: Overall, our book yield improved from three 9% to four 8% year over year, and our reinvestment rate remains well north of 5%.

Speaker Change: Which is in excess of maturing security yields we continue to have a shorter asset duration of approximately three four years, given the attractive level of short rates.

Speaker Change: The investment portfolio remains well positioned for the current environment and is built to generate strong returns on a consistent basis.

Speaker Change: For the second quarter of 2024, our operating income tax rate was 13%.

Speaker Change: Modestly higher driven by the mix of jurisdictional profit in the quarter or.

Speaker Change: Our capital strength gives us ample capacity for 2024 and positions us well for profitable organic growth and to Opportunistically repurchase shares.

Mark Kociancic: We repurchased 174,000 shares in the quarter, amounting to 65 million, or an average of $374.17 per share. Here today, we've repurchased 264,000 shares, amounting to 100 million, and we will continue to look opportunistically to repurchase shares in the back half of the year. Shareholders' equity ended the quarter at 14.2 billion, or 15.1 billion, excluding net unrealized depreciation on available-for-sale fixed income securities. At the end of the quarter, net aftertax unrealized losses on available-for-sale fixed income portfolio equates to approximately 936 million, and an increase of 60 million, as compared to the end of the first quarter, resulting from interest rate increases.

Mark Kociancic: At the end of the quarter, net after-tax unrealized losses on the available-for-sale fixed-income portfolio equated to approximately $936 million, an increase of $60 million as compared to the end of the first quarter, resulting from interest rate increases. Cash flow from operations was $1.3 billion during the quarter. Book value per share ended the quarter at $327.68.

Mark Kociancic: Cash flow from operations was 1.3 billion during the quarter. Book value per share ended the quarter at $327.68, an improvement of 8.9% from year-end 2023. When adjusted for dividends of $3.75 per share a year today. Book value per share, excluding net unrealized depreciation on available-for-sale fixed income securities, stood at $349.30, versus $320.95 per share in year-end 2023, representing an increase of almost 8.8%. Net death leverage at quarter ends stood at 15.3%. Modestly lower on a sequential and year-over-year basis.

Mark Kociancic: When Adjusted for Dividends. Book value per share excluding net unrealized depreciation on available for sale fixed income securities stood at $349.30, versus $320.95 per share at year end 2023, representing an increase of almost 8.8%. In conclusion, Everest had an excellent first half of the year. Thank you. We will now begin the question and answer session. Yeah, Yaron. This is Jim Williamson.

Mark Kociancic: In conclusion, Everest had an excellent first half of the year. We have substantial flexibility, and the fundamentals of our globally diversified businesses remain strong. Our investment strategy is well positioned, and our capital structure is very efficient, providing ample capacity to execute our strategic plan. All of this positions us well to achieve our primary objective of consistently generating industry-leading financial returns.

Matthew Rohrmann: And with that, I'll turn the call back over to Matt.

Speaker Change: Yeah.

Matthew Rohrmann: Thanks, Mark. Operator, we're now ready to open the line for questions. We do ask you, please lend me your questions to one question, plus one font, and rejoin the queue if you have additional questions. Thank you.

Speaker Change: Thanks, Mark operator, we're now ready to open the line for questions. We do ask you. Please limit your questions to one question plus one follow up and rejoin the queue. If you have additional questions.

Speaker Change: Thank you we will now begin the question and answer session to ask a question you May Press Star then one on your telephone keypad, if youre using a speakerphone. Please pick up your handset before pressing the keys. So anytime a your question has been addressed and you would like to withdraw it. Please press Star then two.

Operator: We will now begin the question and answer session. To ask a question, you may press star, then want on your telephone keypad. If you're using a speaker phone, please cut your hands up before pressing the keys.

Operator: I think how your question has been addressed, and you'd like to withdraw it. Please press star, then to this time we'll pause momentarily to assemble the roster.

Speaker Change: This time, we will pause momentarily to assemble the roster.

Gregory Peters: And the first question today comes from your own kind of our with Jeffries. Thank you. Good morning. My first question goes to the pushback of the report of Black ratio target and insurance to 2025. Is that mostly driven by the expense ratio? Or is the loss ratio also a bit more elevated than you expected it to be for the year?

Yaron Nir: And the first question today comes from your own Qunar with Jefferies.

Yaron Kinar: Thank you good morning.

Yaron Kinar: My first question goes to the pushback of the reported combined ratio target and insurance to 2025 is that mostly driven by the expense ratio or is the loss ratio also a bit more elevated than you expected it to be for the year.

James Williamson: Yeah, you're wrong. This is Jim Williamson. Thanks for the question. There are really two factors that we are focused on driving to get ourselves to the 90 to 92 performance level. The first is related to mix, and you heard one address that is prepared remarks. We are focused and need to continue to focus on balancing our portfolio and writing more short-tailed lines. We are making excellent progress. We grew our first party business in insurance in a quarter by over 30%. We grew our specialty business by over 25. And third party, which is mostly liability, was essentially flat.

Yaron Kinar: Yes your own this is Jim Williams and thanks for the question. There are really two factors that we are focused on driving.

James Allan Williamson: Thanks for the question. There are really two factors that we are focused on driving to get ourselves to the 90 to 92 performance level. The first is related to mix, and you heard Juan address that in his prepared remarks. We are focused on and need to continue to focus on balancing our portfolio and writing more short-tailed lines. We are making excellent progress, and third-party, which is mostly liability, was essentially flat. So we are moving the mix in the right direction. We need to continue to do that. They're now online, and they're producing premium quality.

Don: To get ourselves to the 90% to 92 performance level. The first is related to mix and you've heard one address that in his prepared remarks.

James Williamson: So we are moving the mix in the right direction. We need to continue to do that. I would also add that our international business, which is growing very strongly, contributes mightily to that portfolio shift. And then the second factor is related to scale. So it's growth in all the areas I just described and continuing to drive that as we go forward, and we do see excellent opportunities to do that. And then allowing our international business to fully mature. I mean we've opened a number of international offices. In most cases, you need to front-load investments in people and technology and process in each of those offices.

James Williamson: They're now online. They're producing premium. And as the earn premium catches up, you'll see more scale relative to our expense space. So I don't really think it's an issue of the expense space being too high. We just needed to plan some seeds that we are now going to be reaping the food from.

James Allan Williamson: And as the earned premium catches up, you'll see more scale relative to our expense base. So I don't really think it's an issue of the expense base being too high. We just needed to plant some seeds that we are now gonna be reaping the fruit from.

James Allan Williamson: So those are the factors that get us. Okay, so maybe if I try to translate that into an expense ratio and a loss ratio, it sounds like the mix issue would also drive the loss ratio down over time. But at the same time, also maybe lower the expense ratio. And then obviously, the platform investments with slow revenues ramping up would be an expense ratio impact, right? Yeah, you're wrong.

James Williamson: So those are the factors that get us there. Okay. So maybe if I try to translate that into expense ratio and loss ratio, sounds like the mix issue would also drive the loss ratio down over time. But at the same time, also maybe lower the expense ratio and then the obviously the platform investments with slow revenues ramping up would be an expense ratio and back. Yeah, you're right. You're exactly right in that. The actions we're taking; they affect both of those dimensions. Simul Painiously, so as you're growing into short tail, you get a mixed benefit on your loss ratio, even while we're holding prudent and continue to hold prudent loss picks in all our lines, but especially in casualty.

James Allan Williamson: You're exactly right in that, you know, the actions we're taking affect both of those dimensions simultaneously. So as you're growing into the short tail, you get a mixed benefit on your loss ratio, even while we're holding prudent and continue to hold prudent loss picks in all our lines, but especially in casualty, for U.S. Casualty. But the real key is what we've emphasized previously, which is that we've been able to build, you know, significant rates, limit reductions, and underwriting actions.

James Williamson: And then, as the earned premium catches up, particularly in international, that scale benefit will drive down our expense ratio. So it's really, you get the benefit in both directions. Got it.

Unknown Executive: And then my second question, obviously there's been a lot of folks who focus this last quarter on liability reserves for 2020 through 2023's accident here as well.

Mark Kociancic: And just given the reserve actions that you took at the end of last year, you maybe give us an update on how you're looking at those reserves today, specifically liability reserves for 2023. Yeah, good morning, Aaron. It's Mark. Sure. So let me, let me start with look. We review our reserves quarterly, and we do it on a comprehensive basis, and that process hasn't changed. It's what we've done for numerous quarters in a row. We've set prudent loss picks, and particularly for casualty, we plan to hold those loss picks. We've mentioned in previous quarters, and we'll state it again today that we've got broadly stable and elevated loss trend in US casualty.

Speaker Change: I will state it again today that we've got you know broadly stable and elevated loss trend in U S casualty.

Mark Kociancic: And that's what we expect in this kind of heightened risk environment that we've seen for quite a few quarters, led by social inflation. We feel good about the loss trend that we're posting in our assumptions. It's a high single digit for US casually. But the real key is what we've emphasized previously, which is we've been able to build significant rate limit reductions underwriting actions. We've been able to diversify the book significantly since 2020, and it's matured into something that's much larger and diversified than pre-2020. And we're also benefiting from the international expansion we're having on the primary side as it further diversifies long tail, short tail lines, and the long tail international lines come with a different type of risk profile, which is, I would argue, more favorable.

Speaker Change: And that's what we expect in this kind of a heightened risk environment that we've seen for for quite a few quarters led by Soc.

Speaker Change: Social inflation.

Speaker Change: We feel good about the loss trend that we're posting in our assumptions, it's a high single digit for free.

Speaker Change: For U S casualty.

Speaker Change: But the real key is what we've emphasized previously which is we've been able to build you know significant rate limit.

Speaker Change: Limit reductions underwriting actions, we've been able to diversify the book significantly since 2020, and its matured into something that's a much larger and diversified than pre 2020, and we're also benefiting from the international expansion, we're having on the primary side.

James Allan Williamson: We've been able to diversify the book significantly since 2020, and it's matured into something that's much larger and diversified than pre-2020. And we're also benefiting from the international expansion we're having on the primary side as it further diversifies long-tail, short-tail lines. And the long-tail international lines come with a different type of risk profile, which is, I would argue, more favorable. So in terms of where we are today, our picks are holding.

Speaker Change: As it further diversifies, our long tail short tail lines and the long tail international lines come with a different type of risk profile, which is I would argue more more favorable.

Mark Kociancic: So, in terms of, you know, where we are today, our picks are holding; you know, we have various puts and takes for the first half of the year, but nothing material overall. So we're, we're standing pod. Thank you.

Speaker Change: So in terms of you know where we are today are our picks are holding we have various.

Gregory Peters: And the next question comes in from Gregory Peters with Raymond James.

Gregory Peters: Good morning, everyone. So from my first question, you mentioned in the call in your prepared remarks about shaping the portfolio and steering it more towards shorter term or short-tailed businesses, including more cat property exposures. And so I guess I'm curious is how does that, how does that change the cat assumptions that you guys are thinking about as it relates both to the reinsurance and insurance.

Juan C. Andrade: We have various, short-tailed businesses, including, you know, more cat property exposures. And so I guess what I'm curious about is how that changes the cat assumptions that you guys are thinking about as it relates both to the reinsurance and the insurance segment? Yeah, thanks, Greg. This is Juan.

Juan Andrade: Yes. Thanks, Greg.

Juan C. Andrade: Good to hear from you. Look, I think there are a couple of things here that are important to keep in mind. One is how nimble and opportunistic we can be as a culture and as a company; we're very focused on always trying to identify the highest economic return opportunities. And that's what you see us doing in both sections, both in reinsurance, as well as primary insurance at this point in time. You know, while there has been a moderation in property prices, property is still very affordable.

Juan Andrade: This is Juan. Good to hear from you. Look, I think there's a couple of things here that are important to keep in mind. One is how nimble and opportunistic we can't be as a culture in as a company, which we're very focused but always trying to identify the highest economic return opportunities. And that's what you see us doing in both sectors, both in re-insurance as well as primary insurance at this point in time. And while there has been a moderation in pricing in property, property is still very adequate. And we continue to be very much attracted to those lines of business, and the expected returns in those lines of business continue to be quite strong for us.

Juan C. Andrade: And we continue to be very much attracted to those lines of business, and the expected returns on those lines of business continue to be quite strong for us. You know, from a cat appetite standpoint, that really is not having an impact as far as how we view our underwriting cat appetite.

Juan Andrade: You know, from a cat appetite standpoint, that really is not having an impact as far as how we view our underwriting cat appetite. And we continue to be in the box that we've put out for you in our investor presentation, really not going on for about three or four years. So we feel quite good about where we are. But the bigger picture in all of this is really skewing the portfolio to where we see the biggest margin opportunities around the world.

Juan C. Andrade: And we continue to be in the box that we put out for you in our investor presentation, really now going on for about three or four years. So we feel quite good about where we are. But the bigger picture in all of this is really skewing the portfolio to where we see the biggest margin opportunities around the world. But I'll ask Jim to maybe add a little bit of context as well. Yeah, sure, Greg. It's Jim Williamson.

James Williamson: But I'll ask Jim to maybe add a little bit of context as well. Yeah, sure, Greg. It's Jim Williams. And so the one thing I would emphasize that one has already said because I do think it's very important is if you look at our risk metrics, you know, we've talked about earnings and capital at risk, we are well, well within the stated group appetite. And so that gives us the flexibility where we see great opportunities to some deploy some more capacity. And you certainly saw us do that in the second quarter, driven mostly by reinsurance, but also by insurance.

James Allan Williamson: So the one thing I would emphasize that Juan has already said, because I do think it's very important, is if you look at our risk metrics, you know, we've talked about earnings and capital at risk, we are well, well within the stated group appetite. And so that gives us the flexibility where we see great opportunities to deploy some more capacity. And you certainly saw us do that, growing from there and driving the scale that we'll need to, you know, to get to the 90 to 92 combined ratio and all the other things we talked about. It's really continuing the things that we said. So in this quarter, you know, again, first party up over 30, specialty over 25.

James Williamson: The other thing that I think is is a really telling item is the fact that our insurance division, while we have had such strong growth in first party lines, we haven't really had outside cat loss, even though there's been a lot of activity. We certainly in the US and around the world, and that's because we've been careful to grow our business, particularly in non-peak zones. And we've also been very thoughtful about where we're participating in large program shared and layered programs about selecting our attachment points, thoughtfully to get the best economics. And it also keeps us away from a lot of the official cat activity we've seen.

James Williamson: So nothing in our growth trajectory that we see right now would change our assumptions around the cat load. For example, feeling very good about things.

Gregory Peters: Fair enough, I'm going to pivot to the top line result in the insurance segment for my second question.

Gregory Peters: If I look at the year-over-year comparison on a net written basis, not a lot of growth.

Gregory Peters: As you continue to adjust the portfolio, mention the medical stop loss is one point when you think about how you talked about the target combined ratio moving it to 2025.

Gregory Peters: How should we think about consolidating top line growth inside the insurance segment as you continue to restrict the portfolio trying to get your target combined ratio?

James Williamson: Yeah, Greg, it's Jim again. Good question. So a couple points: one where you started on net written premium. You'll see, obviously, you know, that's a different number than the growth rate you're seeing on growth written really two factors there. First is the geography of our gross written premium growth has changed as we've focused on reshaping the portfolio. And so we've been growing more top line in lines of business with a lower net to gross retention. So you will see for the next couple of quarters just a slight drag on net written premium as a result of that.

James Williamson: And then lastly, there was just a change related to our hedging strategy in some of our short tail lines in North America that creates a little bit of a drag on that written premium as well. So, we'll work through that on a year-over-year basis over the next couple of quarters, and then it won't be a factor as we go forward.

Speaker Change: Change related to our hedging strategy.

Speaker Change: Some of our short tail lines in North America that creates a little bit of a drag on net written premium as well. So we'll work through that on a year over year basis over the next couple of quarters, and then and then it won't be a factor as we go forward.

James Williamson: In terms of growing from there and driving the scale that will need to get to the 1992 combined ratio and all the other things we talked about, it's really continuing the things that we said. So, in this quarter, again, first party up over 30, specialty over 25. Now, that's offset by the fact that third party lines, despite all the rate we're taking, were essentially flat. But the growth in those shorter tail lines, the expansion of our international business is really picking up speed; it's becoming a larger part of our overall business across all those dimensions.

Speaker Change: In terms of.

Speaker Change: Growing from there and.

Speaker Change: Driving the scale that will need to you know to.

Speaker Change: To get to the 90 to 92 combined ratio in all the other things we've talked about it's really continuing the things that we said so in this quarter you know again first party over 30 specialty over 25 now that's offset by the fact that third party lines. Despite all the rate we're taking we're essentially flat.

James Allan Williamson: Now that's offset by the fact that third party lines, despite all the rate we're taking, we're essentially flat. But the growth in those shorter tail lines, and the expansion of our international business is really picking up speed. It's becoming a larger part of our overall business across all those dimensions, and so I think it'll overcome this cautious approach we have on casualty as we move forward. Which is why, you know, although we are not at the level of performance that we want to see yet, we remain very confident that we'll get there, because all the levers that we need to pull are right in front of us. I got it.

Speaker Change: But the growth in those shorter tail lines. The expansion of our international business is really picking up speed is becoming a larger part of our overall business on across all those dimensions and so I think it will overcome.

James Williamson: And so, I think it'll overcome this cautious approach we have on casualty as we move forward, which is why, you know, although we are not at the level of performance that we want to see yet, we remain very confident that we'll get there because all the levers that we need to pull are right in front of us. Got it.

Speaker Change: This cautious approach we have on casualty as we move forward, which is why you know.

Mark Kociancic: Thanks for the detail. Thank you. Good morning, Elyse.

Gregory Peters: Thanks for the detail.

Gregory Peters: Thank you.

Elyse Greenspan: The next question comes from at least Greenspan with World's Hard O. Hi, thanks. Good morning. My first question is on the insurance 90 to 92% target. So, you guys said 93 to 94 this year and then going within that range next year, is that something that we should think about? You'll be within the 90 to 92 in the first quarter of 25, or is it something that you'll feel too throughout the year?

Mark Kociancic: Good morning, Elise. It's Mark. So, yeah, expect us to be 93 to 94 for the remainder of the next two quarters, largely driven by the two features that we've discussed. So, one, you've got an elevated expense ratio as we're ramping up, and then this mix of business earn premium dynamic will likely persist for a few more quarters.

Juan C. Andrade: It's Mark. So yeah, I expect this to be 93 to 94 for the remainder of the next two quarters. Thanks. And then my second question is also about the insurance business. You guys said that rate was 10% X workers' comp and financial lines. So what loss costs would compare to that 10%? And then can you also provide the all-in rate that you're seeing across the insurance book, including workers' comp and financial lines? Yeah, Elyse. This is Juan.

Mark Kociancic: I do see us getting into that 92 90 to 92 range in the back half of 2025. So, it'll be a gradual transition over the coming quarters.

Elyse Greenspan: Thanks.

Elyse Greenspan: And then my second question is also keeping on the insurance business. You guys said that rate was 10% x Workers Comp in financial lines. So, what loss cost would compare to that 10, and then can you also provide the all-in rate that you're seeing across the insurance book, including workers comp and financial lines?

Juan Andrade: Yeah, Elise, this is one. So, the loss trend that we're seeing is roughly high single digits. So, the 10% obviously compares well to that. And remember what we said about the long tail lines about commercial auto liability, general liability, and excess that are running into the mid to high teens, and that's been accelerating. So, we feel pretty good about where we are as far as being rate ahead of loss trend and all of that. If you include sort of where we are, including workers' compensation, it's roughly pretty stable to what we've seen over the last three or four quarters, which is right around six or seven percent, including workers' compensation.

Juan C. Andrade: So the last trend that we're seeing is roughly high single digits. So the 10% obviously compares well to that. And remember what we said about the long tail lines, about commercial auto liability, general liability, and excess that are running into the mid to high teens, and that's been accelerating. So we feel pretty good about where we are as far as being rate ahead of loss trend and all of that. If you include sort of where we are, including workers' compensation, it's roughly pretty stable to what we've seen over the last three or four quarters, which is right around six or seven percent, including workers' compensation.

Juan Andrade: And then what about if you also include financial lines? That's all included.

Elyse Greenspan: So, if we include everything together, it's about six to seven percent. Thank you.

Unknown Executive: Yes, question custom.

Michael Zaremski: Michael Zaremski with BMO. It's actually Dan on from Mike. Thanks. Good morning.

Dan: First one, just to follow up on the insurance combined ratio target. Your answer on the mix that they're just seeing one of the reasons that apply your views on the loss ratio is worse in the last quarter.

James Williamson: Is the business mix has been changing or is it a more prudent view on the capacity of loss ratio which would make sense given the inflation levels or is it that the mix maybe hasn't shifted as much as you expected. Thanks. Yeah, Dan, it's Jim Williamson. So, you know, it really comes down to the speed at which that mix is adjusting because we have sustained very prudent loss picks on the casualty lines. Our view on that hasn't changed, and we really haven't had anything that's affected the short tail loss picks either. So, it's all about mix. While we have had terrific results in the mix shift and the growth and the short tail and specialty lines that I described.

James Williamson: We had hoped to be a little further along. A couple of things are going on under the covers. Mainly, it took us a little longer than expected to get some of our international offices approved for operation. Those are now all up and running, and we'll see the benefits of that over the back half. And I would just say generally, as we've started this mix shift, you see it in the written premium first, and when I'm citing like a 30 plus percent first party growth rate, that's on a grocery premium basis. Now that the net written premium is catching up, that'll begin to have that gearing effect on our ratios as we move forward.

James Williamson: And that's again both loss ratio and then with the scale comes a better expense ratio. And the other thing I would add, and this is why it's really going back to Aaron's question and what I said in my prepared remarks, that the international business is growing quite well. And it's growing with very attractive loss ratios, right? This is something that we've talked about in prior calls. You know those loss ratios are well in the 50s, and so as that business continues to be a bigger portion of the overall insurance business, you should get a positive mix benefit happening there.

James Williamson: Great, thanks. And then maybe just following up on the international growth and ever strategy growing internationally.

Juan Andrade: Just wondering about what kind of social inflation level you're seeing internationally and how that's impacting your loss assumptions and growth appetite maybe in certain geographies. Yeah, that's a great question. Frankly, it's one of the reasons why we strategically decided to do this now a few years ago. So look, social inflation is largely a US phenomena because of the toward system and the way our legal system works in the United States. Outside of the US, there's very few restrictions that have anywhere near the same level of inflation, you know, legal system and abuse that you have in the United States of America.

Juan Andrade: So from that perspective, growing overseas is one of the reasons why produces a lower loss ratio overall. In addition to that, most of these markets tend to be more first party oriented towards property, marine, those kinds of lines, which carry better loss ratios to begin with. So I would highlight that listen outside of the US, you know, there's very few restrictions that have similar issues and frankly nowhere even close to what you see in the United States from a legal system abuse perspective.

Unknown Executive: Thank you.

Ryan Meredith: And then ask questions for some Ryan Meredith, UBS. Yes, thanks. Two of them here for your first one.

unknown: And then what about if you also include financial? Yeah, thanks. Two of them here for your first one, a numbers question on the 93 to 94 in insurance for the remainder of the year. I'm assuming, and maybe I'm wrong here, that you would have a higher cap load in the third quarter than the fourth quarter. So is that kind of an average of thinking over the remainder of the year? Or am I wrong there?

Mark Kociancic: More of a numbers question on the 93 to 94 in insurance for the remainder of the year. I'm assuming, and maybe I'm wrong here, that you would have a higher cap load in the third quarter than the fourth quarter. So is that kind of an average of thinking over the remainder of the year, or am I wrong there?

Mark Kociancic: Brian, it's smart. You'd be right.

Mark Kociancic: But Canada is a much smaller proportion of the primary segment than of the reinsurance segment. And we've done a pretty nice job. I think of managing cap risk in general. So that's, that is included in our run rate 93 to 94 figure. That makes sense.

unknown: Gotcha, that makes sense. Thank you. And then second question, Jim, the expansion internationally, obviously, a lot of, you know, you've got a little bit of expense coming through. But I guess, is there any contemplation of adverse selection as you kind of move into these newer markets that, you know, a lot of them are kind of entrenched with, you know, legacy carriers have been there for a long, long, long time? Maybe tell me about how you're going to kind of approach this and kind of get into these new markets. Yeah, no, that's a great question, Brian.

Jim Williams: Got it that makes sense. Thank you and then second question one I'm just curious Jim the expansion internationally.

James Williamson: Thank you. And then second question, I'm just curious, Jim, the expansion internationally, obviously a lot of you got a little bit of expense coming through. But I guess is there any contemplation of adverse selection as you kind of move into these newer markets that a lot of them are kind of entrenched with, you know, legacy carriers have been there for a long, long, long time. Maybe tell me about how you're going to kind of approach this and kind of getting into these new markets.

Speaker Change: Obviously, a lot of you know you've got a little bit of expense coming through.

Speaker Change: But I guess is there any contemplation of adverse selection as you kind of move into these newer markets that you know a lot of them are kind of entrenched with you know legacy carriers had been there for a long long long time, maybe tell me about how youre going to kind of approaching this and kind of getting into these new markets.

James Williamson: Yeah, no, that's a great question, Brian. Look, really what we're after is upper middle market and large account business, where there's significant competitive gaps among the other players in that space. So remember, we're not playing in small commercial or consumer lines in any of these markets, where you would have the more local or regional companies that are entrenched in this. We are dealing with risks that have sophisticated risk managers, sophisticated risk needs, et cetera. And frankly, where a lot of the competition is not focused on the space right now. So for us, it's really about competitive advantage that is based on service, is based on risk expertise, things like loss control, loss engineering, claims, et cetera, et cetera.

Juan C. Andrade: Look, really what we're after is upper middle market and large account business, where there are significant competitive gaps among the other players in that space. So remember, we're not playing in small commercial or consumer lines in any of these markets, where you would have the more local or regional companies that are entrenched in this. We are dealing with risks that have sophisticated risk managers, sophisticated risk needs, etc., and frankly, a lot of the competition is not focused on the space right now.

Speaker Change: Yes.

Speaker Change: Great question, Brian look really what we're after.

Juan C. Andrade: So for us, it's really about a competitive advantage that is based on service and risk expertise, things like loss control, loss engineering, claims, etc., etc. So it's a very different risk mindset than you would run into in a typical small commercial middle market type environment. It's really a segment where the risk manager really values the underwriting acumen and the expertise of our team. Sorry, I just wanted to add two quick things.

James Williamson: So it's a very different risk mindset than you would run into in a sort of typical small commercial middle market type environment. It's really a segment where the risk manager really values the underwriting acumen and the expertise of our team, essentially.

James Williamson: Yeah, Brian, thank you. Sorry, I just wanted to add just two quick things, two more things that I think are also very important there. The first is we have been able to attract really the best people in each of the markets that we've chosen to launch our operations in, which I think gives us a line of sight into risk quality locally that you can't get if you try to run these businesses with expats. And then I would also say that, you know, we monitor the results of that business very closely. And, as we said, it's used much shorter tail.

James Allan Williamson: Jim Williamson, two quick things that I think are also very important there. The first is that we have been able to attract really the best people in each of the markets that we've chosen. And then I would also say that, you know, we monitor the results of that business very closely. And as we said, it skews a much shorter tail.

James Allan Williamson: So we're getting a quick read, an early read on the performance of that business, and all results so far indicate that we have excellent performance in our risk selection. Hi, I wanted to dig a bit into the attritional loss ratio within insurance. Of that, you know, 70 basis points of year over year improvement. Is there any way to sort of quantify the positive makeshift benefits there? And also, I was wondering if that loss pick assumes higher casualty loss? Yes, sir, Dean. It's Jim Williamson.

Mark Kociancic: So we're getting a quick read, an early read on performance of that business. And all results so far indicate that we have excellent performance in our risk selection. Great.

Mark Kociancic: Thank you. All right.

Dean: Thank you. And the next question comes on the increases out with KBW. Hi, I wanted to dig a bit into the additional loss ratio within insurance of that, you know, 70 basis points of year-over-year improvement. Is there any way to sort of quantify like the positive makeshift benefits there and also was wondering if that loss thick assumes higher casualty loss?

Mark Kociancic: Good morning, Dean. It's Mark. So we've had a couple of things. First of all, we've said prudent loss pecs across the board, so whether it's property or casually taking into account market conditions at the beginning of the year from last year's planning cycle and then thoroughly reviewed every quarter. There is a shift in mixed generally, so broadly speaking, you heard us talk about significant growth in property. I think the figures were roughly 31%, specialty line growth, north of 20, and then more modest movement on the US casualty side in particular. So what you're seeing in general is, I think the figures are roughly 62%, long tail line composition of our premium mix in Q4 of last year, diminishing to something closer to 55, 56 at this point.

Mark Kociancic: So you've got a swing in the mix from longer tail to shorter tail. And in conjunction with that, you've got an increase in premium composition coming from the international markets relative to what we're doing in North America. So that's going to swing some of those; that's going to swing the overall nutritional loss ratio mechanically. I think most of the swing year over year will be a function of mix and a lesser function of the loss pecs election. Thank you with that.

Dean: I want to do it next shift to the casualty reinsurance.

James Williamson: I was just curious about how the market conditions, competition rate dynamics are different between the pro router book and the excess of loss book. Yes, Dean, it's Jim Williamson. I mean, those are, in many ways, very, very different businesses, even though they're both casualty. You know, what we've seen in casualty pro router is, you know, just an abundance of capacity in the market. It's been more competitive than we think, Frank will once. And one of the key dynamics that we think needs to play out is a reduction in seating commissions on that line. There has been some progress, but it's been in the neighborhood of about a point on average as we've moved through our renewals.

James Allan Williamson: I mean, those are, in many ways, very, very different businesses, even though they're both casualty. You know, what we've seen in casualty pro rata. Yeah, okay, great. Thank you.

James Williamson: We think more is needed, and that's one of the reasons. In addition, just to some caution around the heightened risk environment, that we've shed over $300 million in casualty pro router renewals this year. And so that it's a pretty competitive market, and we pick our spots carefully. We think the book performs well, but we are cautious.

James Williamson: Casualty XOL is a very different market. It's quite a small portion of our portfolio while we did see, you know, a lot of, we've seen growth at times in the quarter. We were actually down slightly. The issue that we have there is not so much related to commission levels. It's really just making sure that our seedings are carefully managing social inflation. That is a line where we've seen some of that activity. And that's why we keep it as a relatively small share of our business.

Speaker Change: It's really just making sure that our seasons are carefully managing social inflation that is a line where we've seen some of that some of that activity and and that's why we keep it it's a relatively small share of our business.

James Williamson: Thank you.

Speaker Change: Thank you.

Speaker Change: Thank you.

Peter Kinnitson: Christian Kahn, Peter Kinnitson, with Evercourt, RISI. Hi, good morning. So I'm curious on the PROCAT regrowth number. I know last quarter that 4% growth had some impact by the, you know, recognition timing of Florida from 2Q23 and I think X that it was really up 24% on a clean basis. I'm wondering, is that 25 reported number a clean number, or is there any sort of timing impact in this quarter as well that you could help me remove a fossil?

Speaker Change: Question on console, Peter Collinson with Evercore ISI.

Peter Collinson: Hi, good morning.

Peter Collinson: So I'm curious on the prop cat re growth number I know last quarter that 4% growth had some impact by the recognition timing.

Mark Kociancic: So Peter, it's Mark here. So, in terms of the re-insurance property that X so well growth, we've got, you know, 30% growth year over year on a quarterly basis. So Q2 this year versus Q2 last year. We talked about the dynamics last quarter, about the methodology of booking it on a quarterly basis versus the almost what I would call a cash basis, which was really the deposit premiums on Q1 and Q3. And so that's been working its way through the system. The way I would look at it is if you take a look at the four quarters trailing, you're right in the 20% range or slightly above.

Peter Kinnitson: So this will normalize out by the end of the year, this accounting phenomenon. So it's really 30% year over year on the quarter and a 28% north of 20% run rate on a rolling 12-month basis. Yeah, okay, great. Thank you.

Juan C. Andrade: And just following up on that growth, you know, pretty solid result, you know, amidst a time where we've maybe seen some others pull back a little bit. And so I guess I'm just wondering if you could maybe talk more about, you know, what Everest is seeing there that might be different, or what Everest is, you know, doing differently, that's allowing you guys to, you know, really lean in right. In many instances, we're able to achieve non-concurrent terms because our customers want us on their programs, and that can benefit us in terms of pricing, in terms of Yeah, sure. Thanks.

James Williamson: And just following up on that growth, you know, pretty solid result, you know, amidst a time where we've maybe seen some others pull back a little bit.

James Williamson: And so I guess I'm just wondering if you could maybe talk more about, you know, whatever else is seeing there, that might be different or whatever else is, you know, doing differently that's allowing you guys to, you know, really lean in right now. Sure, Peter, this is Jim Williamson. We have enjoyed a really terrific set of circumstances and opportunities in property cat. And I would really point to a couple of things. First, we've really achieved a lead market position in this generational hard market. And it began really at the end of 2022 where you had a dislocated property cat market post hurricane in.

Speaker Change: Or whatever is doing differently, that's allowing you guys to.

Speaker Change: No really lean in right now.

Speaker Change: Sure. Peter This is Jim Williams, and we have enjoyed a really terrific set of circumstances and opportunities in property cat.

Peter Collinson: And I would really point to a couple of things first we've really achieved our lead market position in this generational heart market in it and it began really at the end of 2022, where you had a dislocated property cat market post hurricane in there was a lot of uncertainty in the market and frankly, a lot of bad behavior.

James Williamson: There was a lot of uncertainty in the market. And frankly, a lot of bad behavior on the part of a number of reinsures in terms of how they were treating their customers. I think Everest got high marks for being constructive for being willing to create price discovery and for putting capacity to work. And the benefit of that, and the reputational impact of that, I think will be very long lived. And because we've been so consistent since that point in terms of how we manage our customers getting out early ahead of renewals, you know, feeding capacity where it makes sense into their programs, taking up shortfalls, etc.

Speaker Change: On the part of a number of reinsurers in terms of how they were treating their customers I think have risked got high marks for being constructive.

James Williamson: We now are really in that lead market position. And what that brings to us is the opportunity to be the first carrier they call when they're looking to fill out new capacity. And there's been a lot of new capacity buying. So that's been a boon to us. In many instances, we're able to achieve non-concurrent terms because our customers want us on their programs, and that can benefit us in terms of pricing in terms of terms and conditions. In on the pro rata side, it can benefit us in seeding commissions. So you revolve all kinds of benefits.

James Williamson: And that's been a very attractive part of this.

James Williamson: And then I would just say it's also yielded benefits outside of property cat. So we get a first look at new, new programs or attractive non-cat line of business that we want to write. So those are the things that I think are driving differentiated results for us. Now what we see in the market, whether it was the 6-1 renewal, 7-1, or frankly, our expectations for January 1st of 2025, is that the expected economics of these deals remain excellent. So as we model these transactions, expected return on our capital is just exceptional. And we're continuing to lean into that.

James Williamson: Terms and conditions which improve strongly at January 123 have stayed strong. There's been no give back that we've seen, no material give back in terms and conditions, which is significant. And then lastly, attachment points are not moving. And we like that because it takes us out of this attritional, these attritional cat losses, if you will. So really, it's our execution plus a market opportunity that remains excellent that allows us to drive the results you're seeing. Thank you.

Speaker Change: Clearly.

Speaker Change: It's our execution plus a market opportunity that remains excellent that allows us to drive the results you're seeing.

Speaker Change: Thank you.

Speaker Change: Thank you.

Unknown Executive: And then ask questions on tri-letter or with Citigroup? I think you mentioned shedding some casualty programs business in your remarks, Juan, I guess. Was that a new termination, or was it related to some of the issues from last year, and can you help us better understand what you're shedding? Yeah, sure, thanks. So I mentioned two things. So I mentioned that in the re-insurance segment, we have shed about 300 million of casualty pro-rata renewals so far in the first six months of the year. And I think Jim did a nice job expanding on that a few minutes ago.

Speaker Change: Next question comes from trying to let her with Citigroup.

Trinnette: Hi, Thank you.

Speaker Change: I think you mentioned shedding some casualty programs business in your remarks, one I guess was that a new termination or was it related to some of the issues from last year and can you help us better understand what you're shedding.

Juan C. Andrade: I mentioned two things. I mentioned that in the reinsurance segment, we have shed about $300 million of casualty pro rata renewals so far in the first six months of the year. And I think Jim did a nice job expanding on that a few minutes ago. Those were basically pro rata deals that we didn't like the economics on, you know, we're being cautious in casualties, I stated, and so we moved on.

Speaker Change: Yeah sure. Thanks, So I've mentioned two things so I mentioned that in the reinsurance segment.

Speaker Change: We have shed about a $300 million of casualty pro rata renewables so far in the first six months of the year.

Speaker Change: And I think Jim did a nice job.

Juan Andrade: Those were basically pro-rata deals that we didn't like the economics. We're being cautious in casualty, as I stated, and so we moved on, but you still saw the growth of the book in general. And even in the casualty line, you saw growth. But, as I said in my remarks, it was all rate-driven, as opposed to exposure-driven. So I think that's the first part of that. And then, on the insurance side of things, it's a similar story where we are being cautious. And I said that we had rate in excess of loss trend for the long-tailed lines in excess of mid to high teens, which is excellent.

Juan C. Andrade: But you still saw growth in the book in general, and even in the casualty line, you saw growth. But as I said in my remarks, it was all rate-driven, as opposed to exposure-driven. So I think that's the first part of that. And then on the insurance side of things, it's a similar story, right, where we are being cautious. And you know, I said that we had rates in excess of loss trend for the long tail lines in excess of mid to high teens, which is excellent.

Juan Andrade: But you also saw the top line for the casualty lines be slightly down. And so that gives you a little bit of the sense of the discipline. And where we're looking at certain classes, jurisdictions, lines of business, very carefully. And frankly, we're choosing to grow in areas where there's better margins, more certain margins, which are certainly the specialty lines and the short-tailed property lines right now.

Juan C. Andrade: But you also saw the top line for the casualty lines be slightly down. And so that gives you a little bit of a sense of the discipline where, you know, we're looking at certain classes, jurisdictions, and lines of business very carefully.

Juan C. Andrade: And frankly, we're choosing to grow in areas where there are better margins, more certain margins, which are certainly the specialty lines in the short-tail property lines right now. Thanks. And I don't think you touched on this, but I'm sorry to get to be on the three geographies you detailed for, you know, new entrance or new entries internationally. Are there other major markets, you know, that you're looking to enter and scale in the near term in insurance?

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Juan Andrade: Got it. Thanks. And I don't think you touched on this, but I'm sorry to get to be on the three geographies you detailed for, you know, new insurance or new entries internationally. Are there other major markets that you're looking to enter and scale near term in insurance? We have one more that we have on tap before the end of the year, and that's basically Italy in Europe. And I think at that point, we're on pause for a period of time and really starting to dig deeper into the geographies that we've already opened. Thank you. Sure.

Unknown Executive: Thank you.

Juan Andrade: And this concludes our question-and-answer session.

Juan Andrade: I would like to turn the conference over to one on dry day for any closing comments. Right. Thank you. Thank you all for the questions and the excellent discussion today. I look forward to meeting again and discussing our third quarter results. Thank you for your support of Everest. Thank you.

Bruce: Thank you Bruce part of Everest.

Speaker Change: Thank you. The conference has now concluded. Thank you for attending today's presentation. You may now disconnect your lines.

Operator: The conference is all concluded. Thank you for today's presentation. I mean, I'll just count your lines. Thank you. .

Speaker Change: [music].

James Karmilowicz: Karmilowicz, James Karmilowicz, James Karmilowicz, James Karmilowicz,