Q2 2025 Everest Group Ltd Earnings Call
Matthew Rohrmann: Good day, and welcome to the EVEREST GROUP, LTD.'s second quarter 2025 earnings conference call. All participants will be in listen-only mode. If you need assistance, please know our conference specialists are pressing the star key followed by zero. 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. Now, I would like to turn the conference over to your host today, Matthew Rohrmann, Senior Vice President and Head of HR. Please go ahead.
Good day and welcome to the Everest group, limited second quarter, 2025 earnings conference call.
All participants will be in the salon mode.
You need assistance, please send your conference specialist pressing the star key Follow by zero.
After today's presentation, there will be an opportunity to ask questions.
to ask a question, you may press star then 1 on your telephone keypad,
Withdraw your question, please. Press star then 2
Please note this event is being recorded.
Now, I would like to conference over your host today. Matthew Ormond, senior vice president and head of HR.
Jim Williamson: Thank you, Keith. Good morning, everyone, and welcome to the EVEREST GROUP, LTD.'s second quarter of 2025 earnings conference call. The EVEREST executives leading today's call are Jim Williamson, President, CEO, and Mark Kociancic, Executive Vice President and CFO. We are also joined by other members of the EVEREST management team. Before we begin, I will preface the comments by noting that today's call will include forward-looking statements. Actual results may differ materially, and we undertake no obligation to publicly update forward-looking statements. Management comments regarding estimates, projections, and similar are subject to the risk, uncertainties, and assumptions as noted in EVEREST's SEC filings. Management may also refer to certain non-GAAP financial measures. Available explanations and reconciliations to GAAP can be found in the earnings press release, investor presentation, and financial supplement on our website. With that, I will turn the call over to Jim.
Thank you, Keith. Good morning, everyone and welcome to Everest group limited second quarter of 2025 earnings conference call. Debits Executives leading, today's call are Jim Williamson, president CEO and Marco Sanic s vice president and CFO. We also joined by the members of the Everest management team. Before we begin, I'll preface the comments by noting that today's call will include forward-looking statements actual results. May differ materially, and we undertake no obligation to publicly update forward-looking statements
Matthew Rohrmann: Thanks, Matt, and good morning, everyone. EVEREST delivered a strong second quarter. Contributions from underwriting and investments drove net operating income of $734 million and an annualized operating ROE of nearly 20%. Our results underscore the strength and resilience of our platform. Underwriting profit totaled $385 million on a combined ratio of 90.4%. This reflected light CAT experience and $39 million of favorable prior-year development in our reinsurance attritional property book. We maintain prudent loss picks across our portfolio with a 60.1% loss ratio. Gross written premium declined slightly year over year. Reinsurance GWP rose 1.1%, while insurance declined 3.1%. Growth excluding deliberate U.S. casualty portfolio actions in both divisions was 11% and 7% respectively. Net investment income was strong at $532 million, supported by favorable private equity performance. Moving on to reinsurance, which delivered an excellent quarter, generating $436 million in underwriting profit, up $133 million from prior year.
Management comments regarding estimates, projections, and similar subjects, as well as the risks, uncertainties, and assumptions, are noted in Everest's SEC filings. Management may also refer to certain non-GAAP financial measures; explanations and reconciliations to GAAP can be found in the earnings press release, investor presentation, and financial supplement on our website. With that, I'll turn the call over to Jim.
Thanks, Matt, and good morning everyone. Everest delivered, a strong second quarter contributions from underwriting and Investments drove net. Operating income of 734 million, and an annualized, operating Roe of nearly 20%.
Our results underscore the strength and resilience of our platform.
Underwriting profit totaled. 385 million on a combined ratio of 90.4.
this reflected light cat experience and 39 million of favorable prior year development in our reinsurance attritional property book
We maintain prudent loss. Picks across our portfolio with a 60.1% loss ratio.
gross written premium declined, slightly year-over-year
is 1.1% while Insurance decline 3.1%
Growth, excluding deliberate us casualty portfolio, actions in both divisions was 11% and 7% respectively.
Net investment income was strong at 532 million supported by favorable private Equity performance.
Matthew Rohrmann: The combined ratio was 85.6, reflecting improvements in our business mix and minimal catastrophe losses. Reserve releases improved the combined ratio by 1.3 points in the quarter, while losses associated with the recent U.K. court aviation ruling added 3.2 points. Improved mix drove a 30 basis point reduction in both the attritional loss ratio and attritional combined ratio to 56.7 and 84.1 respectively. We continued to grow in property with premiums up about 8% over prior year. Property CAT XOL grew over 15% and property pro rata north of 8% as risk-adjusted returns remain attractive. Our differentiated access to clients affords EVEREST high-quality opportunities despite rising competition. Casualty premiums declined 7.3%, while our casualty pro rata book was down 15% as we reduced targeted exposures. Primary casualty rates are rising, but the persistent level of seating commissions and continued legal system abuse inform our conservative approach.
Moving on to reinsurance which delivered, an excellent quarter, generating 436 million in underwriting profit up 133, million from prior year.
The combined ratio was 85.6, reflecting improvements in our business, mix, and minimal catastrophe losses.
Reserve releases improve the combined ratio by 1.3 points in the quarter, while losses associated with the recent UK Court, Aviation ruling added 3.2 points.
Improved mix. Drove a 30 basis, point reduction in both the attritional loss ratio and attritional combined ratio.
To 567 and 84.1 respectively.
We continue to grow in property with premiums up about 8% over prior year.
Property category Xol grew over 15%, and property Prada grew north of 8% as risk-adjusted returns remain attractive.
Our differentiated access to clients Everest, high quality opportunities despite Rising competition.
Casualty premiums declined, 7.3% while our casualty Pro rata book was down. 15%, it was a we reduced targeted exposures.
Primary casualty rates are rising, but the persistent level of seating commissions, and continued legal system, abuse inform our conservative approach.
Matthew Rohrmann: We continue to see attractive opportunities in our global specialty platform, particularly in engineering, renewable energy, and our world-class parametric business. Turning to mid-year renewals, property CAT rate change met our expectations, and risk-adjusted returns for our CAT portfolio remain attractive. Importantly, terms and conditions are holding. Property CAT rate for our portfolio was essentially flat at 6.1%, as the vast majority of our signings were done at preferential rate and terms. We are also beginning to see the benefits of tort reform, which has not been factored into our pricing. Market conditions at 7.1% largely followed the trends seen throughout the year. We continue to reshape the portfolio, expanding in U.S. property, in Asia, and in Latin America, while reducing our U.S. exposed casualty business. We have shed approximately $800 million of casualty pro rata business since the beginning of 2024.
We continue to see attractive opportunities in our Global specialty platform particularly in engineering renewable energy and our world-class parametric business.
Turning to mid-year renewals.
Our expectations and risk, adjusted returns for our cap. Portfolio remain attractive.
importantly, terms and conditions are holding
property cat rate for our portfolio was essentially flat at 61 as the vast majority of our signings were done at preferential rate and terms
We're also beginning to see the benefits of Florida tort reform reform, which has not been factored into our pricing.
Market conditions, at 71, largely followed the trend seen throughout the year.
We continue to reshape the portfolio, expanding in U.S. property in Asia and in Latin America, while reducing our U.S.-exposed casualty business.
We have shed approximately 800 million dollars of casualty prorata business since the beginning of 2024.
Matthew Rohrmann: Our superior execution and deep relationships position EVEREST to optimize our share in attractive programs with core seats, in many cases with favorable economics. In short, our reinsurance business is well positioned to deliver regardless of the external environment. Moving on to insurance, where we are rapidly reshaping our portfolio. The division recorded an underwriting loss of $18 million with a combined ratio of 102% and an attritional loss ratio of 68.7%. Results reflect ongoing prudent loss picks, particularly in casualty, as we continue to build our risk margin. Lower earned premium, coupled with investments in our global platform, led to a higher expense ratio. Gross written premium declined approximately 3% year over year, driven by our one renewal strategy in North American casualty, which will be completed in the third quarter. Casualty premiums decreased 27% in the quarter. 47% of casualty business in the quarter was not renewed.
our Superior execution and deep relationships position Everest to optimize our share and attracted programs with core scenes in many cases with favorable economics,
In short, our reinsurance business is well positioned to deliver, regardless of the external environment.
Moving on to Insurance where we are, rapidly reshaping our portfolio.
The division recorded an underwriting loss of 18 million with a combined ratio of 102% and a nutritional loss ratio of 687.
results reflect ongoing, prudent loss picks, particularly and Casualty, as we continue to build our risk margin,
Lower earned premium coupled, with investments in our Global platform. Led to a higher expense ratio
Gross written premium declined, approximately 3% year-over-year driven by our 1 renewal strategy in North American casualties which will be completed in the third quarter.
Casualty premiums decreased 27% in the quarter.
Matthew Rohrmann: This was partially offset by strong rate increases, which averaged 16% for the casualty business we retained, led by excess umbrella and commercial auto, each increasing in the high teens. Importantly, rate exceeded expected loss trend across commercial auto, general liability, and umbrella lines. It is early, but we are already seeing results from our actions to improve the quality of our casualty portfolio. In the quarter, 88% of retail casualty gross written premium had loss-sensitive structures, and 86% was in our best classes of business. Make no mistake, EVEREST Insurance is open for business to write well-priced and well-structured casualty accounts. Premium growth across all lines, excluding casualty, was 7% globally, with strength in specialty, accident health, and across our international business. Specialty and A&H grew 40% and 24% year over year, respectively.
47% of casualty business in the quarter was not renewed.
This was partially offset by strong rating increases, which averaged 16% for the casualty business. We retained.
Led by excess umbrella and Commercial Auto each increasing in the High Teens.
Importantly, rate, exceeded expected loss Trend across Commercial Auto, general liability and umbrella lines.
Lost sensitive structures, and 86% was in our best classes of business.
Make no mistake, Everest insurance is open for business to write well priced and well, structured casualty accounts.
Premium growth across all lines. Excluding casualty was 7% globally with strength and Specialty accident health and across our international business.
Specialty and ANH grew 40% and 24% year-over-year respectively.
Matthew Rohrmann: In property, global premiums increased 5%, with 21% international growth, offsetting a 2% decline in North America. While still attractive, the primary property market is increasingly competitive, especially in North America large accounts. Nonetheless, our long-term investments in talent and systems give us runway for discipline growth. Our wholesale platform, EVEREST Evolution, continues to capitalize on opportunities in the E&S market. We have expanded industry specialization and new offerings, driving growth in targeted higher margin segments of the market. Our international insurance business is progressing well, with a 23% growth rate this quarter and improving margins. We are making investments in key capabilities to support the business at scale. International is profitable, with the more mature operations like UK wholesale and European retail achieving low 90s combined ratios this quarter. Moving to reserves, we continue to build risk margin in the current accident year.
In property, global premiums increased 5%, with 21% international growth, offsetting a 2% decline in North America.
While still attractive, the primary pro is that the primary property market is increasingly competitive, especially in North America, large accounts.
Nonetheless, our long-term investments in talent and systems, give us runway for discipline growth.
Our wholesale platform Everest Evolution continues to capitalize on opportunities in the ens Market.
We have expanded industry, specialization and new offerings driving growth and targeted higher margin segments of the market.
Our International Insurance business is progressing well with a 23% growth rate this quarter and improving margins.
We're making investments in key capabilities to support the business at scale.
International is profitable with the more mature operations, like, UK, wholesale, and European retail, achieving low 90s combined ratios this quarter.
Matthew Rohrmann: In reinsurance, we recognize favorable development in well-seasoned property lines. In insurance, we remain consistent with our booked position. Mark will provide additional commentary on reserves and our recently published global loss triangles. Turning to capital management, which remains a strategic priority for EVEREST. In the second quarter, we repurchased $200 million worth of shares. Year to date, we have returned $400 million to shareholders in the form of buybacks, repurchasing approximately 1.2 million shares. In closing, I am encouraged by our progress and strong performance this quarter. Reinsurance continues to produce excellent results. In insurance, the expertise and capabilities we have built in property and specialty lines globally are proving beneficial. Our one renewal strategy in U.S. casualty has already improved the quality of the portfolio, which we believe will result in more consistent profitability over time.
Moving to reserves, we continue to build risk margins in the current accident year.
And reinsurance, we recognize favorable development in well-seasoned property lines.
In insurance. We remain consistent with our booked position.
Mark will provide additional commentary on reserves and our recently published global loss triangles.
Now turning to Capital Management, which remains a strategic priority for Everest.
In the second quarter, we repurchased $200 million worth of shares.
Year to date, we have returned $400 million to shareholders in the form of buybacks. We are purchasing approximately 1.2 million shares.
In closing, I'm encouraged by our progress and strong performance this quarter.
Reinsurance continues to produce. Excellent results in Insurance, the expertise and capabilities. We've built in property and Specialty lines globally are proving beneficial.
Our 1 renewal strategy in US casualty has already improved the quality of the portfolio, which we which we believe will result in more consistent profitability over time.
Matthew Rohrmann: Looking ahead, we remain focused on executing across both businesses, managing the cycle with discipline, and building long-term value for shareholders. With that, I will turn the call over to Mark.
Looking ahead. We remain focused on executing across both businesses, managing the cycle with discipline and building long-term value for shareholders with that. I'll turn the call over to mark.
Mark Kociancic: Thank you, Jim, and good morning, everyone. EVEREST delivered a strong Q2, generating $734 million of net operating income, an operating return on equity of 19.6%, and an annualized total shareholder return of 14.8%. Our results this quarter reflect strong contributions from both underwriting and our investment portfolio. Starting with group results, EVEREST reported gross written premiums of $4.7 billion, representing a 0.7% decrease in constant dollars and excluding reinstatement premiums. As Jim mentioned, the combined ratio was 90.4% for the quarter, and these strong results were driven by relatively light catastrophe losses and favorable prior-year reserve development from well-seasoned attritional property reinsurance reserves, representing a one-point benefit to the combined ratio. This was partially offset by aviation-related losses associated with the U.K. court ruling, which contributed 2.5 points to the group combined ratio. The group attritional loss ratio increased 1.3 points to 60.1% in the quarter.
Thank you, Jim and good morning. Everyone ever is delivered a strong second, quarter generating, 734 million of net operating income, an operating return on Equity of 19.6%.
And an annualized total shareholder return of 14.8%.
Our results, this quarter reflects strong contributions from both underwriting and our Investment Portfolio.
Starting with group results, Everest reported gross written premiums of $4.7 billion, representing a 0.7% decrease in constant dollars and excluding reinstatement premiums.
As Jim mentioned, the combined ratio was 90.4% for the quarter, and these strong results were driven by relatively light catastrophe losses and favorable prior year reserve development from well-seasoned nutritional property. Reinsurance reserves represented a 1-point benefit to the combined ratio. This was partially offset by aviation-related losses associated with the UK court ruling.
Which contributed 2.5 points to the group combined ratio.
The group attritional loss ratio increased 1.3 points to 60.1% in the quarter.
Mark Kociancic: Moving to reinsurance, gross written premiums increased 1.6% in constant dollars when adjusting for reinstatement premiums during the quarter. Consistent with prior quarters, solid growth in property and specialty lines were partially offset by continued discipline in casualty lines. The combined ratio was 85.6%, an improvement of 3.3 points from the prior year. Favorable prior-year development contributed 1.3 points to the improvement. Catastrophe losses were de minimis this quarter, while the prior-year quarter included $120 million, or 5 points on the combined ratio. The aviation losses associated with the Russia-Ukraine war of $98 million added 3.2 points to the reinsurance combined ratio. We included these in a separate line item, as you would have seen in our earnings release and financial supplement. There were $14 million of reinstatement premiums associated with the aviation losses, bringing the net loss to $84 million.
Moving to reinsurance, gross written premiums increased 1.6% in constant dollars when adjusting for reinstatement premiums during the quarter.
Consistent with prior quarters solid growth and property and Specialty lines were partially offset by continued discipline.
And Casualty lines.
The combined ratio was 85.6%, an improvement of 3.3 points from the prior year.
Favorable prior year development contributed 1.3 points to the Improvement.
the catastrophe losses were diminished this quarter, while the prior year quarter included, 120 million, or
The aviation losses associated with the Russia, Ukraine war of 98 million added 3.2 points to the reinsurance combined ratio.
And we included these in a separate line item, as you would have seen in our earnings release and financial supplement.
There were 14 million of reinstatement, premiums associated with the aviation losses, bringing the net loss to 84 million.
Mark Kociancic: Moving to insurance, gross premiums written decreased 3.3% in constant dollars to $1.4 billion. Strong growth in other specialty and accident and health was more than offset by the aggressive actions we are taking in U.S. casualty lines, centered around our one renewal strategy. As a result, specialty casualty gross written premiums fell to 22.2% of the insurance segment mix, a decrease of over 7 points from the prior-year quarter. The attritional loss ratio increased to 68.7% this quarter, reflecting our disciplined approach to setting and sustaining prudent loss picks as we build risk margin in our U.S. casualty lines, given the elevated risk environment. The 2024 global loss triangles we posted to our website in late June reflect the decisive reserving actions taken at year-end. We also enhanced the level of disclosure by adding detail and commentary to each line of business.
Moving to Insurance gross premiums, written, decreased 3.3%, in constant dollars to 1.4 billion.
Strong growth in other specialty and accident. And health was more than offset by the aggressive actions. We are taking in US casualty lines centered around our 1 renewal strategy as a result specialty, casualty gross, written premiums fell to 22.2% of the insurance segment. Mix a decrease of over 7 points from the prior year quarter.
The attritional loss ratio increased to 68.7% this quarter reflecting our disciplined approach to setting and sustaining the elevated risk environment.
The 2024 Global loss triangles we posted to our website. In late, June reflect the decisive reserving actions taken a year end.
Mark Kociancic: We plan to continue enhancing our disclosures moving forward and provide additional information around our reserve position. Our Q2 U.S. casualty loss development is consistent with our expectations, and social inflation dynamics persist at levels that are within our assumptions. While it is still early, we believe the conservatism we are applying to our loss picks in conjunction with our underwriting actions and improved portfolio quality is building risk margin in our portfolio. Overall, the reserve position of our insurance division is adequate. The underwriting-related expense ratio was 18.9%, with the increase driven by slower casualty earned premium growth from our one renewal strategy, as well as the continued investment in our global platform. In the other segment, the quarter includes a $20 million loss provision for our intellectual property business, which is in runoff. The segment's combined ratio was also impacted by catastrophe losses of $10 million.
And we also enhanced the level of Disclosure by adding detail and commentary to each line of business. And we plan to continue enhancing our disclosures moving forwards and provide additional information around our Reserve position.
Our Q2 us casualty loss, development is consistent with our expectations and social inflation Dynamics. Persist at levels that are within our assumptions,
while it is still early, we believe the conservatism we are applying to our lost picks in conjunction with our underwriting actions and improved portfolio. Quality is building risk margin in our portfolio.
Overall, the reserve position of our insurance division is adequate.
The underwriting related expense ratio was 18.9% with the increased driven by slower casualty earned premium growth from our 1 renewal strategy.
As well as the continued investment in our global platform.
In the other segment, the quarter includes a $20 million loss provision for the intellectual property business, which is in runoff. The segment's combined ratio was also impacted by catastrophe losses of $10 million.
Mark Kociancic: Moving on, net investment income increased to $532 million for the quarter, driven by higher assets under management. Alternative assets generated $110 million of net investment income in the quarter and benefited from strong returns in private equity investments. Overall, our book yield decreased slightly to 4.6%, as foreign currency bonds with lower yields become a larger proportion of our portfolio. While our reinvestment rate remains north of 5%, we continue to have a short asset duration of approximately 3.4 years, and the fixed income portfolio benefits from an average credit rating of AA minus. For the second quarter of 2025, our operating income tax rate was 16.4%, which was just below our working assumption of 17% to 18% for the year. Shareholders' equity ended the quarter at $15 billion, or $15.3 billion when excluding $252 million of net unrealized depreciation unavailable for sale fixed income securities.
Moving on not investment income, increased to 532 million for the quarter driven by higher assets under management.
An alternative asset generated $110 million of net investment income in the quarter and benefited from strong returns in private equity investments.
Overall our book yield decreased slightly to 4.6% as foreign currency bonds with lower yields become a larger proportion of our portfolio.
While our reinvestment rate remains north of 5%, we continue to have a short asset duration of approximately 3.4 years and the fixed income portfolio. Benefits from an average credit rating of double A minus.
For the second quarter of 2025 are operating income tax rate with 16.4%, which was just below our working, Assumption of 17, to 18% for the year.
Mark Kociancic: Book value per share ended the quarter at $358.08, an improvement of 12.1% from year-end 2024, when adjusted for dividends of $4 per share year to date. We continue to view share repurchases attractively, as we repurchased 581,000 shares in the quarter, amounting to $200 million, or an average of $344.30 per share. We expect to take a tempered approach in the third quarter, given wind season. All other things being equal, we expect to look to resume the pace of share repurchases in the fourth quarter and into 2026. With that, I will turn the call back over to Matt.
Book value per share entered the quarter at $358.8, an improvement of 12.1% from Q1 2024, adjusted for dividends of $4 per share year to date.
We continue to view share repurchases attractively. As we repurchased 581,000 shares in the quarter, amounting to $200 million, or an average of 344.30 cents per share.
And we expect to take a temporary approach in the third quarter, given wind season.
Jim Williamson: Thanks, Mark. Operator, we are now ready to open the line for questions. We do ask that you limit your questions to one question plus one follow-up, then rejoin the queue for any additional questions. Keith, over to you.
And all other things being equal. We expect to look to resume the pace of share repurchases in the fourth quarter and into 2026. And with that, I'll turn the call back over to Matt.
Matthew Rohrmann: Yes, thank you. As mentioned, we will now begin the question and answer session. To ask a question, you may press star then one on your telephone keypad. If you are using a speakerphone, please pick up your handset before pressing the keys. If at any time your question has been addressed and you would like to withdraw it, please press star then two. At this time, we will pause momentarily to assemble the roster. The first question comes from Andrew Anderson with Jeffries.
Thanks. Mark operator. We're now ready to open the line for questions. We do, ask the limit your questions to 1. Question plus 1, follow up and read you on the queue for any additional questions. Keith over to you.
Yes. Thank you, as mentioned. We will now begin the question and answer session. If you have a question, you may press star then 1 on your telephone keypad. If you are using a speakerphone, please pick up your handset before pressing the keys. If at any time your question has been addressed and you would like to withdraw it, please press star then 2.
At this time, we will pause momentarily to assemble the roster.
And the first question comes from Andrew Anderson with Jefferies.
Andrew Anderson: Hey, thanks. Good morning. The underlying loss ratio insurance is about 69%. If we look at year over year, about a six-point increase, which is essentially the risk margin put in place. Over the next kind of one to two years, should we think of that 6% staying in place, but perhaps there is some benefit on mixed shift to international and short tail?
Hey thanks. Good morning. Um, the underlying loss ratio Insurance about 69, and you know, if we look at year-over-year about 6 point increase, which is essentially the risk margin put in place, you know, over the next kind of 1 to 2 years. Should we think of that 6% staying in place but perhaps, there's some benefit on mixed shift to International and short tail.
Mark Kociancic: Andrew, it's Mark. I think the approach that we want to take on this, there's a few pieces to unpack here. Obviously, we're committed to a risk margin given the uncertainty of the long. I think 2025 is a little heavier than you know we might see in the future, given the runoff of the older unremediated portfolio stemming from essentially Q3 last year. Having said that, we're going to make sure that the data is supporting any conclusions that lead us to reduce the need for elevated loss picks, including that risk margin. I do think the mix of business will provide a meaningful impact in the overall loss ratio as it evolves and the net earned premium begins to grow.
Andrew, it's Mark. Um, I think
approach that we want to take on this. Uh, there's a few pieces to unpack here. So, obviously we're committed to a risk margin, given the uncertainty of the law.
Mark Kociancic: To your point, the combination of the international business that we're writing and the increase in short tail lines here in North America are going to be the principal drivers of that. I would also point to the fact that the percentage of casualty has been reduced almost 7 points to a little over 22% in the second quarter's composition. You can see that trend starting in place. The earned will take a while to catch up, but that's kind of the overall view.
Any conclusions that lead us to reduce the need for elevated, loss picks including that. That risk margin. I do think the mix of business will provide a, um, meaningful impact in the overall loss ratio as it evolves and the net earned premium. Uh, begins to grow in and to your point uh the the combination of the international business that we're writing and the increase in short tail lines. Here in North America are going to be the, the principal drivers of that. And I would also point to the fact that the percentage of, uh, of casualty is, uh, has been reduced, you know, almost 7 points to a little over 22% in the second quarter is composition so you can see that Trend, uh, starting in place. The earned will take a while to catch up. Um, but that's that's kind of the overall View.
Andrew Anderson: Thanks. On the expense, I think I heard you say some international investments. Were they maybe a little bit lumpier this quarter? Perhaps you could just talk about how you're thinking about the pace of international investments in insurance.
Thanks. And then on the expense I I think I heard you say some International Investments where they may be a little bit lumpier this quarter. And perhaps you could just talk about how you're thinking about the the pace of international Investments and insurance.
Mark Kociancic: Yeah, it's a bit lumpier. International is growing at a faster pace than North America, so proportionately becomes a larger component of the combined ratio. I think the key thing to look at with the expense ratio evolution in insurance is really our ability to leverage the infrastructure that we've built and continue to build in terms of premium evolution. It's really scaling that premium and the commensurate net earned premium that is going to cause that ratio to diminish over time.
Yeah, it's a bit lumpier. International is growing at a faster pace than North America, so proportionately it becomes a larger component of the combined ratio. I think the key thing to look at with the expense ratio evolution in insurance is really our ability to leverage the infrastructure that we've built and continue to build in terms of premium evolution. It's really about scaling that premium.
And the commensurate net earned premium uh that is going to cause that uh ratio to diminish over time.
Andrew Anderson: Thank you.
Thank you.
Jim Williamson: Thank you. The next question comes from Alex Scott with Barclays.
Thank you. And the next question comes from Alex Scott with Barclays.
Andrew Anderson: Hey, good morning. I wanted to ask about the accident and health growth. You know, certainly in some areas of A&H, like stop loss, I think it's a harder market. So maybe there's a good opportunity there. On the other hand, I think some of the health insurers have been experiencing medical cost inflation and pressure in their businesses. So I'm just interested if you could provide a little more color on what you're doing there. You know, any nuances to the way you're approaching that market and growing, just given a little more uncertainty for the loss cost trend?
Hey, good morning. Uh, I wanted to ask about the accident and health growth. Um, you know, certainly in some areas of A&H, I stop-loss. I think it's a harder Market, um, and so maybe there's a good opportunity there on the other hand. I think some of the health insurers have been experiencing medical costs inflation and pressuring their businesses. So I'm just interested. If you could provide a little more color on on what you're doing there, um,
You know, the any nuances to the way you're approaching that market, uh and growing just giving a little more uncertainty for loss cost trend.
Jim Williamson: Sure, Alex Scott. Good question. Look, we like the accident and health business. We have significantly diminished the health portion of A&H for us. We really should say accident. We are growing our accident business both in the U.S. and in our international business at a strong clip. The type of business we're writing, things like business travel accident, where companies are procuring coverage for executives who are traveling around the world. Participant accident, where you have various groups who want accident cover for, you know, it could be things like sports participation, nonprofit organizations, et cetera. That's the kind of premium we're putting on the books. That tends to be very consistent performing. You're talking about very low severity, more of a frequency business. The performance of that portfolio for us has been strong, which is why we're leaning into it.
Sure Alex uh good question look. Um we we like the accident Health business. We we have significantly diminished the health portion of ANH for us
Uh, we really should say "accidents," and we are growing our accident business both in the U.S. and in our international business at a strong clip.
Uh, the type of business, we're writing things like business travel accidents, where companies are perturbing coverage for executives who are uh, traveling around the world participant accident where you have, uh, various groups who want accident cover for, you know, could be uh, things like sports participation, nonprofit, organizations, Etc. And so that's the kind of uh, kind of Premium, we're putting on the books that tends to be. Um, very consistent performing. You know, you're talking about very low severity, more of a frequency business, um, and the performance of that portfolio for us has been strong, which is why we're leaning into it.
Andrew Anderson: Got it. Follow-up question, I guess, just on reinsurance and the renewals. Can you talk a bit more about what you saw in terms of the terms and conditions and the competitive environment on that front? And just how you're seeing the trade-off between the growth and returns you can get versus capital return and a pretty attractive stock price to be buying at?
Got it. Uh, follow-up question, I guess just on reinsurance and the renewals. Can you talk a bit more about what you saw in terms of the terms and conditions and the competitive environment on that front? Uh, and just, you know, how you're seeing the trade-off between the growth and returns you can get versus, you know, capital return and, you know, a pretty attractive stock price to be buying up.
Jim Williamson: Sure. If you look at both the June 1 and July 1 renewals, our big mid-year renewals, I think it is a pretty consistent story. At June 1, we had obviously the Florida renewal. As I indicated in my prepared remarks, overall pricing was flat. Generally, terms and conditions are not moving, which I think is a terrific sign and speaks to the underlying discipline in the property CAT market. I think my expectation is certainly that that is going to sustain itself. With respect to 7.1, obviously, you have a much more diverse renewal with a number of markets around the world having significant renewal dates. Their rate is down slightly, but again, terms and conditions hold. You just see this very consistent view that says that discipline in the market is going to be sustained. Again, it informs our expectations as we go forward.
Midyear renewals, I think it's a pretty consistent story, so it at June 1st the Florida renewal as I indicated in my prepared remarks.
Jim Williamson: That is why we grew at the 6.1 renewal. In the pockets of the 7.1 renewal that we really liked, we also were able to deploy more capacity at really attractive margins. In terms of the trade-off between capital return and growth into the property CAT market, the most important thing to note is we are doing both. We have the capital strength to do both. I will say, though, that if you look at the expected return from property CAT pretty much everywhere in the world, and certainly in our peak zones like Southeast windstorm or California earthquake and a bunch of the Japan, et cetera, the ROEs are still very, very strong. I think it would even exceed the attractiveness of repurchase. That is why we are continuing this strategy of pursuing both actions.
Overall pricing was flat. And, uh, generally terms and conditions are not moving, uh, which I think is a terrific sign and speaks to the underlying discipline in the property cap Market. Um, and I think, uh, my expectation is certainly that that's going to sustain itself. Um, and then with respect to 71, obviously you have a much more diverse renewal uh, with a number of markets around the world. Uh, having significant renew renewal dates, uh, their, uh, rates down slightly. But again, terms and conditions. Hold. So you just see this very consistent view that says that discipline in the market is going to be sustained. And again, it informs our expectations as we um as we go forward. And that's why you know we grew at uh at this at the 61 renewal and uh in the pockets of the 71 renewal that we really liked. We also were able to deploy more capacity of really attractive margins. In terms of the trade-off between Capital return and uh growth into
Um, into the property cat market. I mean, the most important thing to note is we're doing both, and we have the capital strength to do both.
I will say though, that if you look at the expected return from property cat, pretty much everywhere in the world and certainly in our Peak zones, like, Southeast Windstorm, uh, or California earthquake and a bunch of the, uh, you know, Japan Etc. Uh, the Roe's are still very, very strong and I think would even exceed the attractiveness of uh, repurchase. So that's why we're continuing this strategy of pursuing both, uh, both actions.
Andrew Anderson: Got it. That's helpful. Thank you.
Got it. That's helpful. Thank you.
Jim Williamson: You're welcome.
You're welcome.
Matthew Rohrmann: Thank you. The next question comes from Gregory Peters with Raymond James.
Thank you. And the next question comes from Gregory Peters with Raymond James.
Gregory Peters: Yeah, good morning, everyone. I am going to focus my first question on just the continuation on the pricing commentary. Listening to the broker calls and some of the other companies that have reported so far, we are hearing of more pricing pressure than it seems to be that you are conveying that happened in your renewal. Maybe it is more focused on the facultative market as opposed to the treaty market, but maybe you can just unpack why we are hearing about more pricing pressure specifically on the Q1 renewals than maybe you are talking to us about.
Uh, yeah, good morning everyone. Um, I'm going to focus. Um, my first question, on just the continuation on the pricing commentary.
um,
you know, listening to the broker calls and some of the other companies that have reported so far. You know, we're hearing of pricing more pricing pressure than it seems to be that you're conveying that happened in your renewal, maybe, maybe it's more um, maybe it's more.
focused on the facultative market as opposed to the treaty market, but maybe you can just.
Unpack. Why, you know, we're hearing about more pricing pressure specifically on the 71 renewals.
um, than maybe your your, your talking to us about
Jim Williamson: Sure, Greg. First of all, just to sort of contrast the 6.1 and the 7.1 renewal, I would say rate at the 6.1 renewal for EVEREST's book was flat. The July renewal was down marginally, so call it in the 5% to 10% range. Again, you have a much more diverse set of renewals that are happening at 7.1 than you do at 6.1, which is so Florida-focused. I think that's pretty consistent with what we've seen. The fact that the 6.1 renewal, the fact that we write the vast majority of our programs at non-concurrent terms, whether that's pricing, terms, conditions, et cetera, certainly speaks to part of that. I think it also has a lot to do with the choices that individual underwriters are making.
Uh, sure Greg. I mean, for well, first of all just, um,
To sort of contrast, the 61 and the 71 renewal, I would say, rate at the 61 renewal for Everest book.
Uh, it was flat. Um, the July renewal was down marginally, so call it in the 5% to 10% range. Um, and again, you have a much more diverse set of renewals that are happening at 71 than you do at 61, which is so Florida-focused. Um, and so, and again, I think that's pretty consistent with what we've seen. The fact that, uh, the 61 renewal of the fact that we.
Jim Williamson: If you're trying to position your CAT portfolio at the very high layers, which is more risk remote, where you're competing with CAT bond capacity, you probably are seeing more price pressure. We feel like we're in a sweet spot. We're away from the attritional losses. We're a lead market, so we're getting to drive a lot of the underwriting action that's happening on the programs we're participating in. We're not feeling the degree of price competition that maybe some brokers are speaking to. Lastly, I think your instinct is right, which is, they're dealing with a very broad set of data. It crosses treaty. They could absolutely be speaking about facultative. Individual risk is more competitive than treaty, in my view. Of course, retail insurance is more competitive still. That, I would imagine, explains some of the difference.
Uh, write the vast majority of our programs at non-concurrent terms, whether that's pricing terms conditions, Etc. Certainly speaks to part of that. I think it's it also has a lot to do with the choices that individual Underwriters are making. Um you know if you're if if you're trying to position your cap portfolio at the very high layers, which is, you know, more risk remote, um, where you're competing with cat Bond capacity, you probably are seeing more price pressure.
Gregory Peters: Yeah, thanks for the color. Just using the same format on the insurance segment, I think your business excuses to the larger side of the market versus the small and mid-sized market. In insurance, we are hearing and seeing some pressure on rate there. I understand your one renewal position on casualty. I have seen the growth in accident health. Just trying to help, if you could just help us sort of understand the moving pieces against what we feel like is increasing price competition in the larger end of the insurance segment.
Um, we we feel like we're in a Sweet Spot. We're away from the attritional losses, we're a lead market. And so we're getting to drive a lot of the uh, a lot of the underwriting action that's happening on the programs, we're participating in. And so we're not, we're not feeling the degree of price competition and maybe some Brokers are speaking to. And then, lastly, I think your instinct is Right. Which is, you know, they're dealing with a very broad set of data. It crosses treaty. Uh, they could absolutely be speaking about, um, facultative individual risk is more competitive than treating, uh, in my view. And then, of course, retail insurance is, uh, more competitive still so that, that I I would imagine explain some of the difference.
Yeah, that thanks for that color. Um, just using the same same um
Just trying to help. Um, if you could just help us sort of understand the moving pieces against what we feel like is, uh, increasing price competition in the larger end of the insurance segment.
Jim Williamson: First of all, that is right. The larger end of the market in retail insurance for property is definitely more competitive. Similar to comments I would make about treaty property on the reinsurance side, one of the reasons it is more competitive is because it corrected so strongly to the upside over the last several years that you have significant embedded margin in those programs. That is going to attract competition. It is important, in my mind, to distinguish between what rate change is doing and then where you think you are relative to adequacy. We still feel like a lot of these programs are above what we consider adequate pricing to take risk. We are growing more selective.
Yeah, well, first of all, that's right. The larger end of the of the market in retail insurance. For property is definitely more competitive. Um, now Sim similar to comments, I would make about, um, treaty property and the reinsurance side, 1 of the reasons. It's more competitive is because it corrected so strongly to the upside over the last several years that you've got significant embedded margin in those programs and that's going to attract competition. So it's important in my mind to distinguish
Between what rate changes are happening and where you think you are relative to adequacy, we still feel like a lot of these programs are above what we consider adequate pricing to take risk.
Jim Williamson: You saw in the numbers that I described in my prepared remarks, our North America property insurance business is more in a flat to down slightly mode at this point as we grow more selective. When you look globally, and particularly in the international markets, it is a slightly different competitive dynamic and also more of what I would call sort of upper middle market accounts. We are seeing, again, very adequate pricing. We are leaning into that and growing. We continue to feel like the property market is very attractive. To your broader point, there are a lot of other parts of this market where we see attractive opportunities. We certainly talked about accident and health.
Um, but we are growing more selective and you saw in the numbers that I described in my prepared remarks are North America Insurance, uh, property insurance business. Um, you know, is more in a flat to down slightly, uh, mode at this point, as we grow more selective. Now you look globally, um, and particularly in the international markets, slightly different competitive Dynamic, and also, more of what I would call sort of upper middle market accounts. And uh, we're seeing again, very adequate pricing and we're leaning into that and growing. And so, um, so we continue to to feel like the property Market.
Jim Williamson: I think our global specialties, and this is both a reinsurance and insurance comment, we are growing strongly in areas like engineering and marine in our parametric book. There is an energy transition taking place that we all know about that is providing terrific opportunities. There are plenty of things for us to do in terms of deploying capital at very attractive returns.
Know about that's providing terrific opportunities. So plenty of things for us to uh to do in terms of deploying Capital at very attractive returns.
Gregory Peters: Thanks for the additional detail.
Thanks for the additional detail.
Jim Williamson: Thank you, Greg.
Thank you, Greg.
Matthew Rohrmann: Thank you. The next question comes from Josh Shanker with Bank of America.
Thank you. And the next question comes from, Josh chancre with Bank of America,
Brian Meredith: Yeah, thank you. I want to continue on the theme of, I guess, maybe not really pricing, but get CAT a little bit. PMLs were up in the quarter. They are up year over year. You know, I think that is possible to say that maybe you could have and should have deployed more capital at risk a year ago, but hindsight is 50/50 or 20/20. Can you talk a little about your desire to increase your PMLs into what some people are describing as softening markets?
Yeah, thank you. I want to continue on the the, uh, theme of I guess. Maybe not like pricing, but get cat a little bit. Uh, so pmls were up in the quarter. They're up year-over-year.
It's possible to say that maybe you could have and should have deployed more Capital At Risk a year ago but hindsight's 5050 or 2020 uh can uh you talk a little about about your desire to increase your pmls into what some people are describing as softening markets?
Jim Williamson: Yeah, Josh. Look, I think the first thing, just in terms of the premise of your question, we talk about softening. One of the things I like to remind folks about is that if we were sitting at a price level that we experienced, that this industry experienced in 2017, 2018, 2019, and then suddenly rates corrected to where they are now, we would call it one of the greatest hard markets in living memory. Rates are very strong in property CAT. I have absolutely no problem deploying incremental capacity for our best clients on well-structured accounts at the rates that we are receiving today and the rates, frankly, that I expect to be receiving next year. These accounts are simply very, very well priced. In terms of the specific PMLs, it is always about risk and reward.
Yeah, Josh um look look I think the first thing just in terms of the premise of your question, we talked about softening, you know, 1 of the things I like to remind. Uh, folks about is that, if
If we were sitting at a price level, uh, that we experience that this industry experience in 2017189 and then suddenly rates corrected to where they are now, we would call it 1 of the greatest hard markets. In living memory rates are very strong in property cap and I have absolutely no, no problem deploying incremental capacity. Um, for our best clients on, well, structured Accounts at the rates that we're receiving today. And the rates rates, frankly that
That I expect to be receiving, uh, next year. Uh, it's just simply, you know, these accounts are simply very, very well priced.
Jim Williamson: Yes, we have increased net PMLs, but that is because of the pricing dynamics that I described and the attractive return profile that is available to us. It makes sense to take the risks we are taking. We still remain well within the sort of risk guidelines that we have talked about every quarter with respect to earnings and capital at risk. We are feeling good about that. Just to break down the PML increase, some of that is certainly growth in our gross book in both divisions. We continue to optimize our hedging in terms of where we are purchasing our CAT bonds, really focusing on managing tail exposures, offset somewhat by growth in assets under management in our Mount Logan platform, which is doing a terrific job of raising funds.
Jim Williamson: When you balance all that out, I think we are making an excellent trade, and it is one that I expect to continue to play out in the coming renewal periods.
Brian Meredith: Well, by extension, is it wrong to say that, you know, maybe last year you should have put more capital to work in PMLs? You are leaning into something that you have identified as an opportunity that was actually there last year. The only other thing I would add on the PML is the PMLs currently are higher, I think, than they were after the Katrina peak. I am just wondering, you know, look, the system is very different at EVEREST. When you are talking about how hard the market is, maybe scale and say, this is the real opportunity because a lot of people say, oh, things are soft at this point in time right now. You are actually deploying more capital, it looks like, than you would have as a percentage of equity than 15 years ago.
In terms of the specific pmls, um, it's always about risk and reward and yes, we, we have increased net pmls, but that's because of the pricing dynamics that I described and the attractive return profile that's available to us. It makes sense to take the risks we're taking and we still remain. Well within the sort of risk guidelines that we've talked about every quarter with respect to earnings and capital risk. So feeling good about that, uh, just to break down the PML increase. You know, some of that is certainly um, growth in our gross book in both divisions and then we continue to optimize our hedging. Um, in terms of where we're purchasing our cap, bonds really focusing on managing tail, exposures offset, uh, somewhat by growth in assets under management in our Mount Logan platform, which is doing a terrific job of of raising funds. So, when you balance all that out, I think we're making an excellent trade and it's 1 that I expect to continue to play out in the coming renewal periods.
Well by extension is it wrong to say that? You know, maybe last year you should have put more Capital to work in in in pmls and and and your your leaning into something that you you you've identified as as, as an opportunity that was actually their last year and 2, the only other thing and then the PML the PML is currently are higher. I think, than they were after the Katrina Peak, I'm just wondering
Wondering, you know, look the systems might be different in Everest but, uh, we, you know, you're talking about how hard the market is, maybe Scout and say this is the real opportunity. Because a lot of people say, oh, things are soft at this point in time right now, and, uh, you're actually deploying more Capital. Looks like than you would have as a percentage of equity than 15 years ago.
Jim Williamson: Yeah, Josh, I hate to repeat myself, but I think anyone that is describing the current CAT environment as soft is not well informed. It is not soft. It may be softer than it was a year ago. Rates have come down, whether that is 5, 10 points. But again, compared to where rates would have been, and you can look at any of the broker rate indexes to prove this point out, they are up massively over where they were in the 20 teens. This remains a very hard market. I am not going to do the forensic accounting on where we were back in 2005, et cetera, but we think the risk-reward trade-off that is available to us today is pretty clear. It speaks to the idea that we can deploy this capital and get rewarded for it.
Yeah, Josh I I hate to repeat myself but but I I think anyone that's describing, the current cat environment is soft is not. Well informed, it is not soft, it may be softer than it was.
A year ago rates have come down, uh, whether that's 5 10 points.
Um, but again, compared to where rates would have been, uh, and, and you can look at any of the broker rate, indexes to, to prove this point out, they're up massively over where they were in the 20 teams. This is this remains a very hard Market.
Jim Williamson: In terms of what we did last year, I mean, you know, I do not see a lot of value in the retrospective other than to say we are looking to where we want to grow on programs. We do it in a very disciplined fashion. You also have to reflect on the fact that clients, they do not always accept their markets doubling or tripling their line size in any given renewal. Some of these things you do have to work up over time. We are certainly seeing that play out.
Um I'm not going to do the forensic accounting on you know, where we were back in 2005, Etc. But um, we think the risk reward trade-off that's available to us today is is is pretty clear and it speaks to the idea that we can deploy this capital and and get rewarded for it.
Um, in terms of what we did last year, I mean, you know, I I don't see a lot of value in in the in the retrospective other than to say, um, we're looking to where we want to grow on programs, we do it in a very disciplined fashion. You also have to reflect on the fact that clients, they they don't always accept, um, their markets doubling or tripling. Uh, their line size in any given, renewal some of these things you do have to work up over time and we're
Brian Meredith: Thank you very much.
Are certainly seeing that play out?
Jim Williamson: Thanks, Josh.
Thank you very much.
Thanks Josh.
Matthew Rohrmann: Thank you. The next question comes from Brian Meredith with UBS.
Thank you. And the next question comes from Ryan Meredith with UBS.
Meyer Shields: Yes, thanks. Just two of them here. One, just following on the PMLs a little bit here, Jim. It looks like where you did see some meaningful increase in exposure was playing at the 120 and 150 year, particularly further southeast. Is it that you were kind of writing below the FHCF? Is that where the opportunities were? Is that also why maybe your rate that you got was maybe better than the market because it is clearly where rate is probably better, down low? Also, should we expect potentially more susceptibility to call it lower size hurricanes here this season?
Year particularly for the southeast is it that you were kind of writing below the fhcf is that where the opportunities were and? Is that also why maybe your rate that you got was maybe better than the market because it's clearly where rage probably better down down low and then also should we expect potentially more susceptibility to co-op lower size hurricanes. Here this season
Jim Williamson: Sure, Brian. Look, the first thing I really just have to sort of reset the question a little bit insofar as I don't consider 120 or 150 down low. If you go back to the pre-2023 rate correction, down low would have been a 103, 104, maybe 105. So I feel like when you're trading at a 120 to 150, you're in the heart of these CAT programs. I do think that the fact that that's where we've been very consistently playing, by the way, over the last couple of years, the fact that that's our sweet spot certainly helped a bit on the rate change side because you're really seeing maximum competition in the more risk-remote layers, especially where you start talking about competing with the CAT bond players. I just really don't see that as down low. It's really consistent.
Sure. Brian. Look, I the
Have to sort of reset the question a little bit in so far as I don't consider, 1, 1, in 20, or 1 in 50 down low, uh, and if you go back, uh, to the pre 2000, uh, 32023, uh, rate correction download would have been a 1 in 3, 1 and 4, 1 in, maybe 1 in 5. Um, so I feel like when you're, when you're trading at a 1 in 20 to 1 in 50, you're at you're in the heart of these cap programs.
And um I do think it you know the fact that that's where we've been very consistently playing by the way, over the last couple years, the fact that that's our sweet spot. Uh certainly helped to bid on the rate change side um because you're really seeing maximum competition in the more risk remote layers and especially where you start talking about competing with
Jim Williamson: It has nothing to do with sort of external factors. It's where we see the best risk-adjusted returns for these programs that we're participating on.
Uh, the cap Bond, uh, cap on players. So I just, I, I really don't see that as, um, as down low and it's really consistent. It's, it has nothing to do with, um, sort of external factors. It's where we see the best, uh, risk adjusted returns for, uh, for these programs that were, uh, participating on
Meyer Shields: Makes sense. Thanks. Just pivot over to the insurance segment. Curious, Jim, were there any changes or have you made any changes as far as the build-out of the, call it, European or international insurance kind of business? We are still seeing it, obviously. Any changes under your leadership? What are you thinking? Where are we in that process? I know that can be quite expensive to build out an international insurance operation.
Makes sense. Thanks, and then just pivot over to the insurance, uh, segment just Tracy.
Were there any changes or have you made any changes as far as the build-out of the call it European or International insurance kind of business? I mean, we're still seeing it obviously, but any changes under your leadership and going, you thinking, where are we in that process? I know that can be quite expensive to build out an international insurance operation.
Jim Williamson: So, the first comment I would make, Brian, is I really, I'm just so incredibly proud of the team that's building that business. If you think about an organic build over a period of really just sort of three to four years and getting a business to well north of a billion dollars in premium, rapidly pushing $2 billion, and now turning an underwriting profit, I think that's a remarkable achievement. Many have tried, very few have succeeded, and we have certainly done that. In terms of the approach, there's consistency. I think one of the changes that we did make after I became CEO was to really just double down on the markets where we were already competing.
Yeah. So
and I would make
um, Brian is, um,
incredibly proud of the team that's building that business. And if you think about an organic build,
Jim Williamson: I think we are now represented, whether it's in continental Europe, in the UK market, in a couple of key markets in Latin America, or in the major broking centers in Asia. We have the geographic footprint that we need, and we're really just, let's really focus on going deeper where we already have market access. That's beginning to really pay off. You'll start to see it as the expense leverage gets into a better spot as the earned premium sort of catches up to the growth that we've been seeing. But the strategy, which is to be a lead market, to be a multinational market, to focus on large and specialty commercial risk, that has remained consistent, and it's producing for us.
Over a period of really just sort of 3 to 4 years and getting a business to, well, north of a billion dollars in premium. Uh, rapidly pushing 2 billion. And now turning an underwriting profit, I think that's a remarkable achievement. Many have tried, uh, very few of succeeded and we have certainly done that in terms of the approach. Um, there's consistency, I think, 1 of the changes that we did make um after I um uh became CEO was to really just double down on the markets where we were already competing.
And I think we are now represented, whether it's in Continental Europe or in the UK market.
In a couple of key markets in Latin America or in the major broken centers in Asia. We have the geographic footprint that we need and we're really just let's, you know, really focus on going deeper where we already have uh Market access and that's beginning to really pay off and you'll start to see it as the expense leverage gets into a better spot as the earn premium sort of catches up uh to the growth that we've been seeing. Um, but the strategy which is to be a lead Market uh to be a multinational Market uh to focus on large and Specialty commercial risks, that has remained consistent and it's producing for us.
Meyer Shields: Makes sense. Thank you.
Makes sense. Thank you.
Jim Williamson: Thanks, Brian.
Thanks Brian.
Matthew Rohrmann: Thank you. The next question comes from Meyer Shields with Keefe, Bruyette & Woods.
Thank you. And the next question comes from Myer, shows with Keith Boyette and woods.
Gregory Peters: Thanks, and good morning. I want to start with the reinsurance segment, specifically of the reserve releases. You talked about the book of business being well-seasoned property. Given the tail typically associated with property, is it reasonable to assume that unless there's some sort of inflection in loss trends, that this sort of reserve release is sustainable as more of your reserves enter that well-seasoned stage?
Um, thanks and good morning. Uh, I want to start with the reinsurance segment specifically of the reserve releases. Um, you talked about the book of business being well seasoned property, uh, and giving the tail typically associated with property, is it reasonable to assume that unless there's some sort of inflection and lost trends that this sort of Reserve release is sustainable as more of your reserves enter that wealth season stage?
Brian Meredith: Meyer, I think your premise is correct. Obviously, we've got to see that play out, but we're taking the approach of making sure that those reserves are well-seasoned. We're obviously just taking a fraction. We do think we've got very significant embedded margin in the reinsurance division as a whole. I think you've seen that demonstrated the last couple of years with meaningful reserve releases and multiple lines led by property. So right now, we feel very confident. It's been a consistent driver of margin in the business, and it's something that we see, all things being equal, after its seasons being released into the quarterly PMLs.
Um, Myer, I think your premise is is correct. Obviously, we've got to see that play out, but we're taking the approach of making sure that
All things being equal uh after its Seasons being released into the uh into the quarterly p&ls.
Gregory Peters: Okay, fantastic. That is good to hear. On the international segment, can you talk about the book's exposure to deflation outside of the United States as a result of U.S. tariffs? I mean, on the premiums and on the loss side.
Okay, fantastic. That's good to hear.
Um, on the international segment, if you can, you talk about, I guess the books exposure to deflation outside of the United States as a result of us tariffs.
I mean, on the premiums and on the law side,
Jim Williamson: Yeah, Meyer, it is a fair question. Deflation on the loss side, living in a highly inflationary environment, particularly here in U.S. casualty, I would almost welcome some deflation. It would be a pleasant alternative. In terms of tariff activity and their impact on the business, obviously, we monitor it. At the end of the day, if you look at where we are international, we are barely beginning to scratch the surface of the markets we are competing in. In terms of a headwind and opportunity and revenue, it is not on my radar, really. We are focused on delivering a better value proposition to clients that resonates with them. If we do that, we gain market share irrespective of any kind of turbulence in the external environment. The piece when it comes to tariffs, the piece we do watch closely is loss cost trend here in the U.S.
Jim Williamson: We have seen no indication that, at least so far, the tariffs have contributed to any sort of uptick in loss costs.
Yeah, my it's I mean it's a it's a fair question. I mean, deaf deflation on the law side. I I, you know, living in a highly inflationary environment, particularly here in US casualty. I, I almost welcome some deflation. It would be a it would be a pleasant, uh, alternative. Um, in in terms of tariff, activity in the impact, on the business, I mean, obviously we monitor it. Um but at the end of the day, if you look at where we are international, we are barely beginning to scratch the surface of the markets. We're competing in. And so in terms of a headwind and you know, in opportunity and revenue it it's not on my radar really. I mean, we are, we're focused on um, you know, delivering a better value, proposition to clients that resonates with them. And if we do that we gain market share irrespective of any kind of turbulence in the external environment. Um, and then obviously the piece, you know, when it comes to tariffs the piece, we do watch closely uh, is lost cost Trend here in the US. And we've seen no indication that uh at least uh
So far that the tariffs have contributed to any sort of uptick in loss costs.
Gregory Peters: Okay, fantastic. Thank you so much.
Jim Williamson: You got it.
Okay. Fantastic. Thank you so much.
Matthew Rohrmann: Thank you. The next question comes from Meyer Shields with Keefe, Bruyette & Woods, Inc.
Thank you. The next question comes from Michael drumski, with BMO Capital markets.
Gregory Peters: Hey, good morning. Follow-up on the expense ratio tick-up. I believe the commentary from Mark Kociancic and you all has been that we should be thinking about operating leverage. So once the one renewal strategy concludes, we should start seeing some improvement. In terms of the casualty growth, non-renewal strategy, once that's over, would that book start growing at kind of low doubles because that's where pricing is? Or how do we think about kind of juxtaposing the growth versus the expense ratio over the coming year?
Hey morning. Um, follow up on the uh, expense ratio kick up. Um, I believe the, the commentary, um, from Mark and, and, and you all has been that, you know, we should be thinking about operating leverage. So once I guess the
The 1 renewable.
uh, in terms of the casualty growth, um, you know, non-renewal strategy, you know, once that's over
All right, is it that book will start growing at kind of, um,
Low doubles because that's where pricing is, or how do we think about? Um,
about kind of, um,
Juxtaposing the, the growth versus the expense ratio uh, over the the coming year.
Jim Williamson: Sure, Mike. First of all, just in terms of where the casualty book is going to go and the opportunities we see in insurance, as we indicated, we will complete the casualty remediation in the third quarter. I will just comment, I have done a number of book cleanup activities in my career, and I have never seen a remediation process executed this aggressively or with this much precision. We literally, and I do not want to replay the whole history because I know you guys have been following it closely, but we literally developed action plans for each and every one of our casualty accounts. In the entire year that we have been working away at this, I can count on one hand the number of times that our planned activity or planned actions did not take place. It is just exceptional, and we will wrap up very shortly.
Shure mic. Well, first of all, just in terms of where the casualty book is going to go and the opportunities we see in Insurance. Um, as we indicated we we will complete the casualty remediation uh in the third quarter. And I will just comment. I've I've done a number of book cleanup um activities in my career and I have never seen.
uh, a remediation process executed this aggressively or with this much precision,
Jim Williamson: After remediation is done, if you think about the other parts of the book, I talked a lot about them in my prepared remarks. Whether it is our specialty businesses, and that is a North America and an international comment, accident and health, really accident as the prior questions as we discussed, property short tail lines, marine, all growing very strongly. Casualty in international markets is growing today. It is not offsetting the actions we are taking in North America, but it is growing very nicely. I expect all of those things to continue. Then, as I said in my prepared remarks, we are open for business and casualty. We spend a lot of time engaging risk managers from some of the leading companies here in the U.S. on their casualty programs. We want to write those deals when they are well priced and well structured.
uh, we, we literally, and, and I don't want to replay the whole history because I know you guys have been following it closely, but we literally developed action plans for each and every 1 of our casualty accounts. And in the entire year, that we've been working away at this, um, I can count on 1 hand. The number of times that our planned activity, our planned, uh, actions, uh, did not take place, so it's just, it's just exceptional and we'll and we'll wrap up, uh, very shortly. Um, so, so look after remediation is done. If you think about the other parts of the book, I talked a lot about them in my prepared remarks, whether it's our specialty businesses, uh, and that's a North America and an international comment.
accident and health, really accident as as the prior questions, uh, as we discussed,
Um, property short tail lines Marine all growing very strongly uh casualty in international markets is growing today. Uh, it's not offsetting.
The uh actions we're taking in North America but it's growing very nicely. And I expect all of those things to continue.
Jim Williamson: I would not be opposed to the idea that at some point the casualty book starts growing again. It obviously also has a lot of rate momentum. We are only going to do that where the pricing, the terms, the conditions, the quality of the underwriting, and the underlying risk meet our conditions. We are not here focused on producing a top-line growth outcome. It is about building the right portfolio that is sustainable and profitable. I see an awful lot of things happening in the business that indicate we will be able to do that.
And then, as I again, as I said, in my prepared remarks, we're open for business and Casualty, we spend a lot of time engaging Risk Managers from some of the leading companies, uh, here in the US on their casualty programs. Uh, we want to write those deals when they're well priced and well structured.
And so I would not be opposed to the idea that at some point, the casualty book uh starts growing again, it obviously also has a lot of rate momentum but we're only going to do that.
Where the pricing, the terms, the conditions, the quality of the underwriting and the underlying risk meets our conditions. It's, you know, we're not here focused on producing a Topline growth outcome, it's about building the right portfolio, that's sustainable and profitable.
And I see an awful lot of things happening in the business.
That indicate will be able to do that.
Gregory Peters: Okay, got it. That's helpful. My follow-up is just on the London court decision. Is this now behind us, or is there still some limit or, I guess, potential for movement there? I guess also just, you guys added a lot of risk margin on the casualty side. Was this kind of not contemplated when you took the actions earlier this year to kind of add to the air lesser issue? Thanks.
Okay, got it. Um,
you know, is this is this now
Behind us. Or is there still some?
Some limit or or I guess um potential for movement there. Um, and I guess also just you know, um, you know, you guys added a lot of risk margin on the casualty side, you know, was was, it was just kind of not contemplated. Um, when you took the actions, um, earlier this year to kind of add to the uh, the the are lesser issue. Thanks.
Jim Williamson: With respect to the first part of your question, our view is barring any totally unexpected shift in future legal decisions, this is done and dusted for us. We took a very conservative approach to selecting the number that we posted in the quarter. Now it is behind us as far as I am concerned. As we said, when the Russian invasion of the Ukraine took place and Russia seized these aircraft, we did not have enough information at that point to make an informed decision about the ultimate loss from the aviation seizure because there were so many legal issues related to it and in terms of the coverage that would ultimately be applied. That is why we have not posted a reserve for it until we got that clarity through this court decision.
Yes. So with respect to the first part of your question, you know, our view is is barring any, you know, totally unexpected shift in in future legal decisions.
This is done and dusted for us. Um, we took a very conservative approach to, uh, selecting the number that we posted in the quarter, and now it's, uh, it's behind us as far as I'm concerned.
Jim Williamson: So it really bears no relation to any of the reserve actions that we took last year.
Um, look, as we said when the, uh, Russian invasion of Ukraine took place and Russia seized these aircraft, um, you know, we did not have enough information at that point, uh, to make an informed decision about the ultimate loss from the aviation seizure because there were so many legal issues related to it and in terms of the coverage that would ultimately be applied. And that's why we have not, uh, posted a reserve for it until we got that clarity through this court decision. So it really bears no relation to any of the, uh, reserve actions that we...
We we took last year.
Gregory Peters: Understood. Thank you.
Understood, thank you.
Matthew Rohrmann: Thank you. The next question comes from David Motemaden with Evercore ISI.
Thank you. And the next question comes from David with the evercore isi.
Andrew Anderson: Hey, thanks. Good morning. Just had a question on the attritional loss ratio in the reinsurance business. I did see, obviously, the releases there on the property side. You mentioned mixed shift, and that was driving the 30 bps improvement there. Did you make any changes to your forward view of loss picks on that property business as well as the, you know, just given the releases that you experienced?
Hey, thanks. Good morning. Um, just had a question on the attritional loss ratio in the reinsurance business. So I, you know, I did see, um, obviously the, the releases their, uh, on the property side, you mentioned mix shift, uh, and that was driving the 30 basis points Improvement there. Um, did you make any changes, uh, to your forward view of lost picks on that property business, um, as well as the, you know, just giving the releases that you experience.
Jim Williamson: No, David, we have been pretty consistent in our view on property. When we talk about property loss picks, particularly in property CAT, we take a very prudent perspective and prudent approach in terms of selecting an attritional loss ratio that can sustain, you know, sort of any movement in loss activity. So that has been really a consistent approach for us over time. In terms of the loss pick in the quarter, the other thing I would point out, because you did see that 30 basis point improvement related to mix, is, you know, the earned premium mix of reinsurance will take some time to catch up to the written mix, net written mix between property and casualty. So I still think there is some juice in terms of the mixed dynamic with our attritional loss pick.
No, David. It
Pretty consistent.
In our view on property, and when we talk about property loss, picks and particularly in property cat. We take a very, uh, prudent uh, perspective and and prudent approach in terms of selecting a nutritional
uh, loss ratio that can um,
Uh, that can sustain, you know, sort of any movement in uh in in Los activities. So that that's been, uh, really a consistent approach for us over time. Um, in terms of the, you know, the the loss pick in the quarter. The other thing I would point out, um, because you did see that 30 basis per Point Improvement related to mix is, um,
You know, the earned premium, uh, mix of, uh, reinsurance will will take some time to catch up to the written mix. Uh, net written mix, uh, between Property and Casualty. So I still, I still think there's some juice in terms of, um,
uh, the mixed Dynamic with our attritional loss pick.
Andrew Anderson: Got it. Yep, understood on that. Just another question on the growth in property on the reinsurance side. We are hearing a little bit more from some broker reports, a little bit more appetite to write aggregates. Just wondering what your view is on that and if you guys deployed any capacity in aggregate covers more so at mid-year than you did in the past.
Got it. Yep, understood on that. And, and, and then just another question, just on, um, the growth, um, in in property on the reinsurance side, you know, we're we're hearing a little bit more on, um,
You know, from some broker reports, there's a little bit more appetite to write aggregates. I'm just wondering what your view is on that, and if you guys deployed any capacity in aggregate covers, more so at mid-year than you did in the past.
Jim Williamson: We are not really deploying capacity around aggregates. I think, look, first of all, some people are going to do that, and that's their choice. I still think there's a bid-ask spread between what clients would be willing to pay for most aggregate structures and what responsible reinsurers would charge for those structures. I just don't see there being a lot of trading that makes any sense. I do think over time, there's obviously a lot of thought going into how you create, how you start solving some of the risk management problems of our clients. In my view, it's not going to look anything like the aggregates of old where you could just have this runaway sideways loss activity. We are certainly very open to working with our clients to try to solve their problems.
So we we we're not really deploying capacity around Aggregates, I think. Um look first of all some people are going to do that and that's their choice. Um I still think there's a bit ass spread between what clients would be willing to pay for most aggregate structures and that what responsible reinsurers would charge for those structures. So I just don't see their being a lot of trading that that makes any sense. I do think over time um,
You know, there there's obviously a lot of thought going into. How do you create, how do you start solving some of the risk management problems of our clients?
In my view, it's not going to look anything like the Aggregates of old where you could just have this runaway sideways loss activity. Um, but we're certainly very open to working with our clients to try to solve, uh, you know, solve their problems.
Andrew Anderson: Understood. Thank you.
Jim Williamson: Thanks, David.
Understood, thank you.
Thanks David.
Matthew Rohrmann: Thank you. The next question comes from Elyse Greenspan with Wells Fargo Securities.
Thank you and the next question customer lease. Greenspan with Wells Fargo.
Elyse Greenspan: Hi, thanks. Good morning. My first question is on workers' comp. I was hoping to get more color on what you're seeing in the comp market in California. I know another insurer had flagged a huge uptick in cumulative trauma comp claims in the state. Also, can you confirm how much of your workers' comp book is in California today? Do you intend to keep pulling back there?
Claims in the state. And then also, um, can you confirm how much of your book your worker's comp book is in California today? And do you, do you attend intend to keep pulling back there?
Jim Williamson: Sure, Elyse. First of all, before I get to California, just a broader comment. I mean, we are all waiting for the workers' comp market to begin recovering. I think there is enough indication that it needs to start doing that in terms of, you know, the fact that rates have come off so consistently. We did see actually a rate uptick in our own portfolio in the quarter, which is certainly a positive thing to be seeing. In terms of California, it is a much smaller portion of our book than it was, you know, a year ago. It is something where we did have a specialized underwriting unit that was focused on California comp. You know, essentially, we have stopped really, really focusing on that. With that specialized unit, we have run that piece down.
Sure Elise um a couple first of all before I get to California just a broader.
Comment. I mean, we're all waiting for the workers comp Market to begin recovering and I think there's enough indication that it needs to start doing that in terms of. Um, you know, the fact that rates have come off. Uh, so consistently, we did see actually a rate uptick in our own portfolio
Uh, in the quarter, which is uh, which is certainly a positive thing to be seeing in terms of work, uh, in terms of California, it it is a much smaller portion of our book than it was, you know, a year ago. Um, and it it's something where we we did have a specialized underwriting unit that was focused on
Jim Williamson: We are only writing California comp when it is part of a broader portfolio. I do not expect that to change.
Um, on California comp. And uh, you know, essentially we've we've uh, We've stopped uh, really, really focusing on that. Uh, with that specialized unit we've we've run that piece, uh, down, uh, and so we're only writing in California comp when it's part of a broader, uh, portfolio. And um, and I don't expect that to change.
Elyse Greenspan: Okay, thanks. My second question is a clarification going back to the Russia-Ukraine increase you guys took in the quarter. What percent of your seed-ins have notified you of their losses at this point? How many have made private settlements? I believe brokers have noted that a lot of the claims are resolved with private settlements.
Okay, thanks and then my um, second question. Um, is a, a clarification, going back to just the Russia Ukraine. Um, you know, increase you guys took in the quarter, what percent, um, you know, of your seed in, um, you know, have notified you of their losses at this point. And and how many have made, um, private settlements. Because I, I believe Brokers have noted that, you know, a lot, a lot of the claims are resolved with private settlements.
Jim Williamson: Yeah, I mean, that's certainly been a widespread reality. I think, look, the key thing for us is we've been in direct contact with our seed-ins over the course of this process, which by the time we finally got legal clarity around how losses would be adjudicated, you know, we have plenty of information to develop a loss that we have a high degree of confidence in. So whether they've actually tendered the loss or not, we have a bead on where this thing is going, which is why I feel really comfortable with the number we put up.
Yeah, I mean that's that's certainly uh, been a wide spread uh, reality. I think. Look the the key thing for us is we've been in direct contact with our seeds over the course of this process. Which by the time we finally got legal Clarity around, um, how losses would be um, adjudicated. You know, we have plenty of information to uh, develop a, you know, a loss that we have a high degree of confidence in so whether whether they've actually tendered loss or not, we we have a beat on where this thing is going, which is why I I feel really comfortable with the number. We put up.
Elyse Greenspan: Thank you.
Jim Williamson: Thanks, Elise.
Thank you.
Thanks Elise.
Matthew Rohrmann: Thank you. The next question comes from Andrew Cleveland with TD Cowan.
Thank you. And the next question comes from Andrew cleman with TD Cowen.
Andrew Cleveland: Hey, good morning. A few clarifications. I am looking at your insurance segment, other underwriting expenses at 18.5% year-to-date versus 16.8% in the prior period. Jim Williamson, you talked a little bit about going deeper in the international regions where you are. I look at that 18.5% versus your peers, and it looks like there might be two, maybe four or five points of potential improvement there. Maybe you could help frame the outlook for that as that business, as you get through one renewal and potentially start growing. Where could that ratio go?
Hey, good morning. So uh if you clarifications I'm looking at your uh Insurance segment, other underwriting expenses.
That uh, 18.5% year to date versus 168 in the uh in the prior period and Jim, you talked a little bit about going deeper in the international regions where you are. Um, you know, I I look at that 185 and it, you know, versus your peers and it looks like there might be 2, maybe 4 or 5 Points of potential Improvement there. Um, maybe you could help frame. You know, the outlook for that as as that business as you get through 1 renewal and and potentially start growing, um, you know, where where could that ratio go?
Jim Williamson: Yeah, Andrew, I agree with the idea that, as we reach scale in these markets, we should certainly be in a much better spot than 18.5% year-to-date or 18.9% in the quarter. The one thing I do want to table set for you a little bit in terms of how I think about this. Obviously, expenses are important. Our overall group expense ratio, I think, is best in class. Our reinsurance expense ratio is world-leading. So clearly, we understand how to be thoughtful about expenses and manage that line item very carefully. At the same time, there are two really important things happening that are driving what you are seeing printed.
Yeah, Andrew. I I agree with the idea that um you know, as we reach scale in these markets we should certainly be in a much better spot than uh 18 uh 5 year to date or 189 in the quarter. Just just the 1 thing. I I do want to
Jim Williamson: Number one, when it comes to the North America remediation, as I have articulated a number of times, we are not slowing down. I am not worrying about top line, where, if it makes sense to run off an account, we do it. We do not sit there and think, well, this is going to pressure the expense ratio. As I said, that is going to complete in the third quarter. To your point, we will become less of a headwind relative to expense rate as we put that behind us. The other, and very much the other side of this coin, our international business is performing extremely well. It has a world-class loss ratio. We want to fuel the growth of that business.
Table set for you a little bit. In terms of how I think about this, obviously, expenses are important. You know, our overall group expense ratio, I think is best-in-class. Our reinsurance expense ratio, um, is world-leading. So clearly, we understand how to, um, be thoughtful about expenses and manage that, uh, that line that I'm very carefully at the same time, there are 2 really important things happening, um, that are driving, uh, what what you're seeing printed number 1,
You know, when it comes to the North America remediation, you know, as I've articulated, the number of times, we are not slowing down, I'm not worrying about Top Line where, you know, if it makes sense to run off an account, we do it. We don't, you know, sit there and think, well, this is going to pressure the expense ratio. And uh, and as I said, uh, you know, that's going to complete in the third quarter and to your to your point will become less of a of a headwind relative to expense rate as as as we put that behind us,
And and very much the other side of this coin, our international business is performing extremely well.
It has a world-class loss ratio.
Jim Williamson: Yes, we are going deeper in the markets where we already are, and that will help us in terms of expenses because we do not have to open new operations in lots of different countries. But we are still hiring a lot of people. We are still investing in technology. We are still out there marketing ourselves to drive that growth. So you have got two, to me, really, really sensible courses of action that both will tend in the short term to put upward pressure on the expense ratio. But then over time, as Mark Kociancic had indicated earlier, we are very confident that we are going to get into a better spot as we go forward. Hopefully, that helps.
But we're still hiring a lot of people. We're still investing in technology. Uh we're still out there marketing ourselves to drive that growth. So you've got 2 to me really really sensible courses of action.
Andrew Cleveland: Yeah, that helped. Thank you. Then maybe just two follow-up clarifications, A&H and insurance and your property CAT business, just the returns. Curious with the A&H book, what particular regions you are big in right now and what type of return on capital you are seeing there. Jim, by one of your comments earlier on the property CAT business, saying it was more attractive than repurchasing shares, I would think that implies north of a 25% return on capital. Is that right for the property CAT reinsurance?
That both will tend in the short term to put upward pressure on the expense ratio. But then, over time, as Market indicated earlier, you know, we're very confident um, that we're going to get into a better spot as we go forward. Hopefully that helps
Yeah, that that helps thank you and and then maybe just 2 just follow up clarifications um ANH and insurance and your property cat business, just just the returns. Um, you know, just just curious with the A and H book, you know, what particular reasons you're you're, you're big in right now and and what type of return on Capital you're seeing there and Jim? Bye. Bye by 1 of your comments earlier. On the, uh, the property CAD business saying it, it was more more attractive than, um,
Return, you know, repurchasing shares. I I would think that implies like north of the 25% return on capital is, is that right for the, the property cat reinsurance,
Jim Williamson: Yeah, so let me start where you ended. Absolutely, it means north of 25% for property CAT. I think in some of the peak zones, whether it is southeast wind or Cal quake, et cetera, you are looking well higher than that. I think, by the way, that is true of just about every CAT market around the world. I am a little more thoughtful or careful about European wind, but pretty much everything else is well north of that kind of number. Hence our interest in continuing to write the business. It is also why a number of times during today's call, you have heard me push back on any notion that this is a soft market. Yes, rates are going down, but it is still outstanding.
yes, so let me um,
Jim Williamson: In terms of accident and health, and really all of our businesses, I think one thing that I can assure you is if we are growing something, it means the expected return meets or exceeds our threshold, which, for the group, we have talked about mid-teens, total shareholder return over the cycle, et cetera. So I expect the accident business to be healthily above that. We write that business. It is still mainly a North America business, but we have a terrific emerging international business that is led out of London. The team there is doing a great job, a lot of growth, particularly in Europe and increasingly in Asia. So I think there is tons of headroom in that business.
Let me start where you ended. Uh, absolutely. It means north of 25 for property cat. Um, and I think in some of the peak zones of whether it's Southeast, wind or cal-quake, Etc, you're looking well higher than that. Um, and I think, by the way, that's true of just about every cat market around the world. Um, I'm a, I'm a little more thoughtful or careful about, uh, European wind but pretty much everything else is well, north of that kind of number and, uh, hence, our interest in continuing the right the business. And it's also why a number of times during today's call, you've heard me push back on any notion that this is a soft Market. Uh, yes, rates are going down, but it's still outstanding.
Jim Williamson: Again, it is a business I know well from multiple carriers, and it is a low volatility business that can just deliver some really excellent returns as it gains scale.
Um, in terms of accident and health and really all of our businesses. I think, 1 thing that I can assure you is if we're growing something, it means the expected return, uh, meets or exceeds our threshold, um, which you know, for the group. We've talked about mid teens, total shareholder return over the cycle, Etc. Um, so I expect the accident business to be healthily above that and we write that business. It's still mainly in North America business, but we have a terrific, uh, emerging international business that's LED out of London team. There is doing a great job, a lot of growth, um, particularly in Europe, uh, and increasingly in Asia. So I think there's tons of Headroom in that business and again, it's a business. I I know well from multiple carriers and, uh, it's a low volatility business that can just deliver some
Really excellent returns as a game scale.
Andrew Cleveland: Thanks for the helpful insights.
Jim Williamson: Thanks, Andrew.
Thanks for the helpful insight.
Thanks Andrew.
Matthew Rohrmann: Thank you. The next question comes from Katie Sykes with Autonomous Research.
Thank you, and the next president Council on Katie sakis with autonomous research.
Katie Sykes: Hi, thank you. Good morning. I wanted to follow up on the discussion of the reserve release in the reinsurance segment. I think, at least in recent years, we have become accustomed to really only seeing changes in your reserve assumptions at the end of the year. I guess I was curious as to whether we can expect to see a more common cadence to attritional property reserve releases. Then sort of tagging on to that, interesting to see that the reserve release on the reinsurance property lines wasn't quite enough to offset the charge on the Russian aviation losses. Any additional color that you can give for us on that?
Hey, thank you. Good morning. Um I I wanted to follow up on the discussion of the reserve release in the reinsurance segment. I think at least in in recent years we have become accustomed to really only seeing changes in your reserve assumptions of the end of the year. Um so I guess I was, you know, curious as to whether we can expect to see
no.
a a more common Cadence to attritional property, Reserve releases and then sort of tagging on to that um,
Interesting to see that, um, you know, the, the reserve release on the reinsurance property lines, wasn't quite enough to offset the, the charge on the the Russian, Aviation losses, any additional color that you can give for us on that?
Brian Meredith: I think, as I said before, we do want to get into a quarterly cadence on development, obviously, where we can. Clearly, the data has to be there to support it. We feel real good about the margins that we have and the expected margins within the reinsurance segment as a whole. So very confident about it. In the past, we've waited somewhat to be a little more conservative in terms of the emergence, but we're just taking a portion here of older property that, you know, well-seasoned. Russia-Ukraine, that's totally independent. That's something that we said back in 2022 when it was originally set up, that it was undefined. We didn't have the ability to make a provision for it given the uncertainties associated with it. So the concept of offsetting the two just doesn't enter the equation. We really look at these things independently.
I, I think, um, as I said before,
We do want to get into a quarterly Cadence um, on on development, obviously where we can clearly the data has to be there to support it. We feel real good about, um,
The margins that we have and the expected margins, uh, within the reinsurance segment as a whole. So, very confident about it. In, in the past we've, we've waited somewhat to be a little more conservative in terms of the emergence, but we're just taking a portion here of, uh, older property that, you know, well, seasoned now Russia Ukraine. That's totally independent. That's, uh,
Something that we said back in 2022, when it was originally set up, um, that it was undefined. We didn't have, uh, the ability to make a provision for it, given the uncertainties associated with it.
Brian Meredith: Having said that, and I'll reiterate a comment I made earlier, we do feel very confident in the embedded margin that we foresee in the reinsurance segment. So this is, I think, the beginning of a more normal cadence to your point.
Independently.
Having said that, um, and I'll reiterate a comment I made earlier. We do feel very confident in the embedded margin, uh, that we foresee in the reinsurance uh, segment. So this this is
I think uh, the beginning of a more normal uh, Cadence to your point.
Katie Sykes: Got it. Thank you. Shifting to some of the premium growth figures, a very significant reacceleration in financial lines reinsurance growth this quarter. Great to see. Could you give us a little bit more detail on your outlook for the line going forward over the next 12 to 18 months, and if you expect to continue to grow at a similar clip?
Got it. Thank you. And then um, shifting to some of
Years.
Of very significant reaching and financial lines, reinsurance growth, this quarter um great to see. Could you give us a little bit more detail on your outlook for the line going forward over the next 12 to 18 months. And you know if you expect to continue to grow at a a similar clip,
Jim Williamson: Sure, Katie. Just in terms of maybe a little reminder for everybody on what is in there, for the most part, it is not financial lines the way you might think of the insurance business, D&O, you know, et cetera. It is credit exposed lines for the most part. In particular, our mortgage business is in that segment. You had a couple of meaningful mortgage transactions that contributed to that growth in the quarter. In terms of where we see the mortgage business right now, rate levels in the mortgage reinsurance market have been under quite a bit of pressure. We are being very cautious in that particular line. I am not going to give you any forward guidance, but I would not necessarily expect that what you saw this quarter in the financial line segment and reinsurance would be a normal pace for the foreseeable future.
Sure, Katie, um, just in terms of uh, maybe a little, uh, reminder for everybody on what's in there. Um, for the most, it's not Financial lines. The way you might think of the insurance business, uh, dno, you know, Etc. It's it's credit exposed lines for the most part and in particular, our our mortgage business is in that uh segment. Um, and and you had a couple of uh, meaningful mortgage transactions that contributed to that growth in the quarter. Um, in terms of where we see the mortgage business right now, um, rate levels in um, in the mortgage, uh, reinsurance Market
Have been under quite a bit of pressure and we're so we're being very cautious in that. Um,
In that particular line, I'm not going to give you any forward guidance, but I wouldn't necessarily expect that what you saw this quarter in the financial segments and reinsurance would be a normal pace for the foreseeable future.
Katie Sykes: Got it. Thank you.
Got it. Thank you.
Matthew Rohrmann: Thank you. That concludes the question and answer session as well as the event. Thank you so much for attending today's presentation. We now disconnect your lines.
Thank you. And that concludes the question and answer session as well as the event. Thank you so much for attending. Today's presentation. May now disconnect your lines.