RE - Earnings call transcript Q3 2017 | Everest Re Group, Ltd.

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Operator

Good day everyone. Welcome to the Third Quarter 2017 Earnings Call of Everest Re Group Limited. Today's conference is being recorded. At this time for opening remarks and introductions, I'd like to turn the conference over to Ms. Beth Farrell, Vice President of Investor Relations. ahead. go Please

Elizabeth Farrell

Good third Jennifer. welcome Everest to Thank XXXX morning earnings Group's quarter conference Re you, and call.

Chief Officer; On the company's Howie, President Executive the of of Zaffino, Reinsurance American Dom are John Operations; our and Craig and CEO call with President Insurance me and Operations. today Financial Doucette, Officer; President Jon Addesso, North Chief

that that with Before subject SEC filings our made by noting respect forward-looking call, forward-looking we to that which begin, note like projections, risks. I as in will preface expectations regard, statements. today's during nature, are In extensive and various the statements statements our disclosures I estimates, comments are to include about such

actual materially could differ know, or from you expectations. results projections As current

that in with Our SEC filings have a risks should such connection investors full statements. the listing consider of

the turn over call to me let Now, Dom.

Dominic James Addesso

Beth, morning. Thanks, good and

Let those by the be large efforts, organization all responded that is both our affected Community on way has sympathies responded more personal by but to me to at first and proud of events. relief I'm especially business the there has recent begin front. our extending still done. the the can

We have they with turn start so insurers, Reinsurance advanced our settle and to rebuilding quickly the to allowing them of our clients, their process can lives in sooner. moneys businesses

morning. is the softening impact that course, and this will industry like and strong therefore insurance also but our the volatility system, the there and activity, of we also stories, limited be bring that market in we of personal diligently and periodic This industry's claimed On of pricing, These years our able that as needs $XXX to means, value We loss we had means to us catastrophe the can risk-adjusted results. on staff that this. the returns. many with events produce against during working a has should remind claim the front, do be the expect of teared conditions, to reset from discuss recent that protect events the same. company during a the times reevaluate series billion loss It after terms times us

we all market price territory. a affected these For awareness achieve will over and that create be events like In a across of areas, risk. market the firming around of reason, believe adequate will the these return general greater lines the to Events capital non-loss lead reasonable this push recent and a in the to cost timeframe. levels

spectrum. beneficial retro more drive This the those capacity impact out opportunities This the may well up. rest conditions by for capital collateralized well of firming pronounced. For across affected other regions better price The on have rated large in with also is be events. well push these us, and create coming some our supported very market, and heavily a the may will retro and capital market the start loss, since demand, position of the market, locked will terms of be it lines. downstream given part the very will anticipate reaction in market that the We property this is especially whose rates, will unique will into catastrophe by

is overlooked reinsurance well practices, of events net management recoveries expectations. PMLs. excellent the and a losses is these profit cap loss. scenarios and be often $XXX catastrophe many PML nine Considering net our manage despite fourth of there success the our the against highlight our types only to measure that protection within quarter, on mechanisms, cat reinsurance operating meaning normal tax basis, our We third factor, tax losses. an from managed We hedges, quarter that volatility. laddered over could events, a net is our year full tax a publications gross operating to a the periods This and used risk important the strong our in result of suggests the million. remained One the outcome of that these recognize This offset Given our level inclusive for as stands achieve be and for year. will with we of loss months unprecedented the at benefit an the load, would with in that long we term,

we reinsurance the consider so industry. is to average far long-term the to in our other and market third-party the respond XX%, is new Mt. demand. five our with equity cap including XXXX, events years, And on regions. facility, ample these This a capital a exceptional from growing strategy. are of Over multi-year strong to results testament last the return Logan The relative with value emerge our which therefore to capacity and base bonds ready

that events focus. recognize, I the While deservedly getting cat the are

trends, Let business underlying me success. your now turn support to that the attention our long-term

grow U.S. the cat book low one of On use years yet during allowed profits has the our capital reinsurance highest active. front, and to of effective during of us the other capital periods in as allowed cat third-party recent But as times cat Using regions year full contained the for well loss other of lines expansion has for exposure and earnings. business. within alternative diversification to

our insurance we leverage expanded opportunity expansion base with Another business. this have capital essentially is

attritional come fashion. in growing, brings the The growth the that an ratings balanced underpinnings annual needs market that premium stronger. and repositioning XX% collective past commercial experienced in organization capacity our marketplace. in A specialty With billion the and a years, of has never known two For to we and and a meet have now well-diversified and of the of of are ratios. been underlying improvement $X we over have growth

cycle. perspective cat within are year challenge people, our But we'll to our through promised, we so. we never remind now with we an delivering ROEs losses have income Thank far the and the that report. and I we'll average outcomes. on is ROE industry long-term what over higher from continually goal business. are Craig expected for The expense this there that And have don't we believe we disciplined above you. the model an any While are losses And than an do produce the financial continue thus to average a have is delivered

Craig Howie

you, morning good a for year income This share Everest everyone. third net $XXX $X.X common loss dollars or for or of million compares Thank the per to million $XX.XX had losses loss realized loss the capital third per last of share, $X XXXX. for The in was difference $XXX reflecting operating which and over quarter gains foreign share net operating consensus. common of per is and losses. diluted of the from quarter losses the the share. excludes the and $XX.XX per quarter quarter exchange The the primary catastrophe the Dom

XXXX. year-to-date note share shares The utilized a due loss will per impacted of shares, In that earnings and on driving income basic that by major of XXXX a results year-to-date to quarter the the You loss $XXX the of million both are were XXXX, net common third of million series a had catastrophe on diluted quarter compared basis in a These calculations instead net is million, was figures. is the quarter group million Irma impact to on year-to-date a pre-tax pre-tax $XXX losses, group $XXX events by basis. in it the breakdown months $XXX as clarity and in of with the event will we Hurricane million. taxes. million, in considerable relative Maria these follows. $X.X $XXX was uncertainty after multiple catastrophe was emerges before expect the billion $XXX Hurricane Hurricane and the Harvey earthquakes net The take several the events. of net Mexico million, estimates, loss economic There saw of from were $XX and

year-to-date capacity, basis, retrocessional net unused these significant has which of provide to billion including company catastrophe in results the XXXX. the XXXX compared would reflected above coverage However, On aggregate in levels. pre-tax million a losses protections, $XXX $X.X estimated

well an XXXX. ratio book of to the overall period current the continues through to for events, catastrophe year first XX.X% combined with nine same the X.XX% in months perform Excluding underlying the compared attritional

due earned premiums year-to-date ratio this premium, remains to reinstatement X.X% Our low catastrophe including quarter. event higher at the after expense

the The and maintain investment a shift For in portfolio. yield overall was was billion result for for over Year-to-date partnership income ago. nine XXXX. quarter on $XX million months income million one up of million income, year increase primarily investment limited our was first XX% investments, We've was year-to-date our portfolio. up in investment pre-tax investment without to $XXX from the able by driven which $XX investment the been $XXX

by However, high yield all investments we have exposure to years. our duration overall just while bucket debt gradually the on bond high-yield The partnership three reducing well-diversified pre-tax committing and at over portfolio. shifted equity the public investment X% and portfolio a alternative remained allocations conservative credit quality limited within towards while more was maintaining

exchange is reported income. other in Foreign

actual tax XXXX. Re $XX share. taxes, losses represents the We of months losses tax period mismatch million about equity not $XX were date-loss, $X effective Year-to-date year-to dollars Foreign for shareholders' losses Logan of over at be world The were exchange impact of flows million effective compared exchange cash major based offset compared in foreign in in $XX million effectively Overall, fourth the quarter XXXX. benefit months to million is to $X operating the rate the in currencies. per the $X foreign year. first XXXX, essentially billion of foreign exchange accounting of loss on income its income continues an third an offset to level $XX in quarter any nine losses liabilities assets cash to higher over exchange of XX%. The during its adjustments. mismatch of nine expect first same respect XXXX. through of in or $XXX compared earnings months the exchange nine with equity billion an Stable Other million would to included decline Mt. with neutral rate. we first most XXXX, economic since the foreign position in is income also the with income taxed maintain translation a flow last from in of since annualized the catastrophe On matching shareholders

the decline will take billion this quarter equity catastrophe positive of as group well-positioned third the the events, you. leaving expect Shareholders $X the pay remain still recent was Thank claims year. of to for end the at business advantage us for We we but opportunities. dollars for

a Now, operations. will provide John review Doucette the reinsurance of

John Doucette

Thank you, Craig. morning. Good

ability to unusual achieved catastrophe loss periods strategies true is major several reinsurer, a But industry-leading demonstrate or with losses. a resilience catastrophe As business large we year shock with quarter and our leading franchise losses low consistently in in our test in of results any other activity. have the global

comprehensive Australia the years Katrina losses recent well and and management in and severe of XXXX, unusual, a loss in While sharp and and some other XXXX Crisis magnitude owing expectations, activity Global Center, Trade property losses was our proactive characteristics efforts. of catastrophe risk New of and such World large insured and XXXX Japan to were in Rita our loss Zealand, from string the Learning floods Financial earthquakes hurricanes, storms XXXX U.S. convective as Thailand the Wilma within including

underwriting continues retro. just This We risks well-positioned stand not capital, unique. benefit losses activity. risk to to enterprise ultimately, from understand Black pride to have and Swan losses access group-wide value the both unprecedented it varying in of We each our risk is efficiently, on risk for to every such business. tailored an resilient spectrum, refined property proportional Everest lines across other catastrophe a that its farsighted condition. catastrophe across and to strategy protecting strategy, continually essential from property and solutions our business to to areas are maintaining is of Truly the within This insurance and to includes financial post market our catastrophe comprehensive insurer, framework. franchise. enhanced now, applies facultative, the global avarice. clients accumulation specialty large of us to paying our to enduring critical a approach loss reinsurer is treaty, and We bring industry leading allows Expect and an loss across believe quickly and of and reinsurance insurance and And multiple expected This a clients. and strength includes our develop watch be also all as but with treaty loss our different company. reinsurance clients, ourselves management quarter the that portfolios, preparation relentless as tail underwriting our proactive, continuity for investors with our events a unexpected, our while

business clients when the and needed provide diversification capacity and continuity global to offense of providing going power portfolio, substantial More our earnings additional most. and our on our and underwriting support it strong With geographic is importantly, capital resources. across line we

as demonstrated those We our have from business which the success once events again just such the balance larger experienced. sheet insulate strategies, of

to remain renewals XX capital as unrated and last have and release whether still evergreen capital. traditional X/X growing traditional Mt. bonds, and complexities our which into capital that lock-up Accordion-like clients equity form positioned commensurate other around clients, promise nontraditional forms with bond existing coupled debt, provide one-one collateral, manage the substantially into cat of and of globe to As net the years. catastrophe reinsurers, highly Across the deploy pay balance spectrum, manage help with or Kilimanjaro our we onward delivering Logan very continue our capital XXXX, market we reinsurance harness sheet appetite. the of our the powder head from our today Mt. a majority well structure of hedges – mechanism with unexhausted, $X.X Logan to of and force we and we Everest over will vast from dry believes structures risk and intact overall ample in our remain opportunities. from proven We the efficiently million fashion alternative while our Uniquely, structural the capital to weaknesses of its in a rated both in

business as our loss from territories cat in entire line opportunity have losses volatility activity. other global and Caribbean. the diversifying Thus, books P&C and these throughout lines the experienced property, Additionally, across U.S. liability, structured recently a reinsurance, of diversification unaffected mortgage, the of business. casualty, recent business portfolios line professional that international world and meaningful offset in significant from including by one and any geographic decreases Profits those lines business such we have specialty, tail short been of set,

for Going are we that value shareholders. market opportunities capture forward, our and to our we ready returns to in eager convert the provide the clients

and U.S. we headed the whether affected pleased clients, meet clients that immediately loss renewal all with our are reinsurance large they covers as open needs for We clients, financial to is were one quoted reinsurers retro backup resilience, Lloyd's of clients, business. regional we are U.S. that January post-event the message deploying especially into the clear actively clients, will few the strength in areas of national Caribbean or syndicate we with Everest capital

does not will at reinsurance any business price. we However, mean write that

supported cycle, have the core As deliver. hard our market reminder through losses we recent clients of soft the that value we are and

our value pricing terms on is As where most business in the we less past, will recognized while capital reducing with deploy our attractive that conditions. positions and

on or as a that rely of our on reinsurance industry. cost same can capacity of as meets amount clients the the to Our gone capacity capital, offer higher capital and needed return up us it whether with long the has an appropriate

Now turning our results. to specifics on

lower [indiscernible] premiums, and year-to-date by our for property reinsurance broad-based operations This business, Growth increased not international expand diversifying underscores growth our mortgage, operation only to seize continue the lines quota surety client. Bermuda offset reinsurance, our from their in U.S. crop XX% deal premium reinstatement premiums international reinsurance. XX% in the cap slightly gross-written of for in structured the strategic business, with quarter due shares, but ability (XX:XX:XX) volume Excluding and and and was value-added our write property to structured in course. opportunity quarter our ran for franchise certain renewal third that and to to and

our This trends due and higher year-to-date against both period comparable was businesses offset ratios, this the some reinsurance quarter. these overall underwriting attritional a international up operations. quarter's impacted catastrophe on by loss XXXX. in in The in naturally were pro ratio basis was reinsurance points While trends the loss The underlying the business, of favorable with solid. operations crop results rata in loss losses growth remain by heavily X.X to

mix future. to reinsurance expense activity, operational very long-term, both lower this towards scale with Despite Our management we naturally the into and believe dropped capital efficient and benefiting from the now We continue ratio in two will management. better points are a loss the commissions. market year's year-to-date well expense and business over attritional more with trend positioned

key our drivers these execute and both in hard value clients to our ability markets. to Our on soft shareholders provides and

turn strategy to Thank over and our Zaffino dynamic, now, market. enables in it I'll to you. to Jon Our thrive ever-changing And nimble and insurance us remains this operations. review

Jonathan Zaffino

morning. you, John, and Thank good

As resulted quarter, quite scale been North at has of catastrophic America, the insurance predictably particularly the in impact the market third events unfolded across the to magnitude significant. occurred primary that

continued of Global to Further, were pleased and Insurance impact our of the our we widespread devastation, with the property global of While line our Everest operations in the business, this with immune platform. were notably the development not expectations. performance our are books of U.S. growth insurance various portfolio

within realized. build P&C our relevant We are specialty being confident world-class global insurance diversified organization that a industry is the to organically increasingly that vision is

Our solidly from in quarter, receive operating to of This an a Ireland journey Everest our growing by we talent our another group with Ireland. underlying global new also example and many testament the were platform Bank operation. acquisition the the on for product is organic was operating trading the for the which conditional increasingly build franchise platform, our strategies combined the partners our Progress approval Central of to our leading is European a ratio, enhanced launches, pleased of quarter. our profitable successful approach. Notably fairly gross our this again of written premiums, of relationship and expansion underwriting Insurance thoughtful newest resilient diverse is measured

operating the I'll cat complement highlights following strategy, North operating an companies within our component in turn our and to environment insurance along will the quarter, financial the now Irish Our provide American both and on the operations of our operation. is experienced overall be important forward. views comments some activity an the I'll excellent international to insurance of Lloyd's this with

third I will our discuss to the Heartland results prior business. of As in quarter quarters, XXXX, late excluding this comparative divestiture in of due

written $XXX gross XXXX, an in quarter insurance operations of increase global of produced quarter XX% or third the over third million $XXX million premium, the XXXX. For

and of a in we basis, tremendous premium, growth again P&C growing $X.X result XX% On over $XXX or recognition comparable the our XXXX. achieved billion specialty year-to-date Another another a in period represents performance. market. This gross of written solid the relevance in

XXth in operation. divisions represents underwriting prior underlying global This of As balanced growth global quarters, insurance – of the our platform. quarter remain Everest insurance across the within also the contributions diverse for group consecutive

position marginally Turning Net to was of divisions. underwriting premium to support Net the past. million, premium net growth, slightly our conservative growth more as reinsurance earned shared have the lagged the XX%. the increase gross or have in premium, across written in taken we premium due an to $XXX we $XX million quarter

the the For over XX premium earned net excuse of year-to-date period by or prior billion, or $X.X $XXX year period. increased XX% me million

for Our the combined catastrophe contributed third which from The was producing quarter's business, however the the benefits to new X.X quarter, in clearly the this XXXX. in drift actions is points period are global favorably we the of for ratio attritional improved is Again ratio the combined GAAP XXX.X%, operation attritional the XX.X insurance year-to-date two businesses activity many launch The quarter XX by This mix a result. The improvement the in also was result a in impacting points on the was attritional quarter, at points to combined XXX.X, XX% to compares improvement of of strategic underlying of which year-to-date past XX.X% for XX.X. basis, the ratio this Year-over-year, years. cat in compares XX downward ratio the ratio. a coming On result. loss again year's X.X XX.X%. included year prior the loss year was basis GAAP of for from quarter over and a loss seeing the this combined shows was third nearly XX.X%, ratio of which last point the XX.X%. favorably underwriting of year-to-date underlying XX% the comparable a attritional ratio the XX.X%, in

last was Our quarter XX.X% period from expense ratio year. in flat XX.X% the the third essentially the from same

the For period from remains up expense of XXXX. comparable ratio XX.X% the the year-to-date in XX.X%, the slightly period,

an specialty the competitive in calls, stated in ratio remains segment. prior XX% expense have of we As insurance roughly very

Turning picture quarter. the cat for the now to

insurance a in and the As as Everest to views organization an and hence proactive you ingrained the deploys of multifaceted adopt same heard approach and is risk deeply same from organization management. Dom and many The John, strategies. processes

and our operations our of third certainly XXXX the of results within and well efficacy The insurance tolerances. strategies tested were expectations these the consistent with quarter

outliers industry course modeled for In to pre-tax addition perspective, we our against roughly view and from of view various consistent a assumptions, emerge and of again and anticipated focus and measures, market Irma with large also has underwriting our well and Harvey, performed fundamental underwriting these of net Again, we $XXX And share assumptions. these loss decisions books a of events any may our that measuring performance the against of further from with this analysis, strategies business Everest. from keen in the of gauge all of bottom-up performance to estimate million our put Maria. and in global three cat losses on

Marine concentration U.S. in the was of in within overall With of some division, our Harvey of we on wholesale, our loss suggest and minor from expectations. proportion a $XXX to and It cat that property Irma. in roughly The $X these and billion again annualized within to annualized final loss in originated our significant Together insurance are roughly remember innings of the the million platform. the is emanating insurance our from exposure worldwide this are transformation and the with that side. of covering One premium these our events property data contributions platform. against important This similarly models is Lloyd's the points of portfolio, operation. majority premium, middle retail insurance markets, for comment underwriting various

our underwriting have of to temporary our As mass. premium yet achieve and caused new divisions we critical this in previously, have stated has a earned lag several

units to are quarter-after-quarter. grow, new as these demonstrating we continue As

combined been even drive will balanced tail experiencing will exposure more in allow non-property base. more our ratios. against expect larger recently We This to us that the property our be we consistent results, have attritional further the short profitable

is months it take on very situation a view. conditions, will market find and balanced As a to some for the question fluid

amount fact, of evidencing fair market lines. volatility a is the across pricing In current

focus. persist in value where to momentum each our pricing process. the we As to specialty need different our business The performance loss is mainly all Certainly we well-positioned on property ahead. evolving to making line the are believe that adjust constituents and look the rate that our are in and all establishment need other the books degrees and experience casualty likely been each of our work and sense non-cat we rate and It encouraging a pricing. to In and impact are progress through we proper there are will business our have lines for that that cost positive the continuing increase underlying continue the back cat of and adequate levels. do remain next different; quarter. to certain progress underlying I in of line below our of this property we are across reporting environment lines however, within adjustment likewise farming many forward world-class market, in you and levels of of of we event and movement. feel insurer. quarter, like lines major business rate believe other diverse these We to commercial perpetuate market create as trends, an general technical the auto stated is the conclusion, firming. technical based of for Overall to also each universal, despite with business a can of need we market occur geography business remains continued markets. to industry Again Remember technical on pricing we cat for And experiencing quarters to at they continue. Other understands need achieve pleased is

back to Beth for Q&A. Now,

Elizabeth Farrell

Thank time. you, this for questions at are Jon. Jennifer, open we

Operator

[Operator Instructions] We'll Greenspan Elyse have Fargo. our with first through Wells

Elyse Greenspan

comments, reloading Hi, to first reloading following I get to going do just, if mean, events, X alternative the I the good is color how depending marking question on market the get not across all we I can lines we your capital, pointed My see introductory guess, firming to more January – the this just dynamics farming if closer renewals? underlying you you territories. in as know, or on when you back morning.

Dominic James Addesso

a an (XX:XX). there's to is that factors, Well, market opening us that [ph] number of there lead believe Elyse,

industry Carlo with of Baden various of First of all, past month (XX:XX). [ph] its brokers, the The and (XX:XX) assessment events strength the starting attending terms [ph] and clearly markets customers, and PCI the Monte CIAB. based other throughout various with increase moving market and have that on starting the and on continue our we in been resolve with to talking to

activity. in So, been been of has some types low no saying mid is times has all a that to therefore, what the in ROEs period of know, that's the are single-digit returns on been one. cat time. as for all single-digit And industry capital, And these of events number unsustainable of mid return for underpinning with I've equity time the that on general, in you

technical market So, has adequacy. below been the pricing clearly,

to will in, So, not the come that is that at some capital a move some to back that's yet of that, belief not significant back good new term, improvement. in. back XXX% And portion, short clear going it price it's portion alternative back frankly, with least capital number in in sees up. but capital And one. our alternative a ready unless it's certainly to in, With capital coming is start respect is come alternative off of locked

reassessment technical needs been fundamental capital across dependent many think of a a market of of There's firming. [indiscernible] capital. it's think my just business, be cost of pricing don't belief (XX:XX) that's not will alternative there as to I on lines why there has our So, I property, and

Elyse Greenspan

loss both accounts? think could on see What non-loss we level do of rate impacted you and potentially

Dominic James Addesso

I say question, this not I'm and that going we that timeframe. X would to we're knew expecting eventually percent by necessarily get to

the a we on very waterfall the That I pricing that property a firm but and will believe – perhaps double-digit to into period on a you will think primary strong we be side. the impact as rate rest a retro renewal on, upward, days, longer cat. second increases price that know, time early of to We're very, alluded we with would early last already, market as It's Jonathan what has some see will retro see seeing take adequacy. movement in to, but to get that somewhat beginning are rate mixed, season. of of course,

play primary the So, early that it's days, several but really ultimately, it's take might months at level, high in the single-digit, to out.

On years don't that we it perhaps that again the – start in cat, with is multiple the and going for are rates are clearly, X in front, will to sure, reinsurance will but renewals know property we the affected I straight anticipation take the But up loss up. approaching play think teens, January areas out.

Elyse Greenspan

Okay. then, talk color. [ph] is also side could reform? included the tax I NIL you tax the potential if the (XX:XX) implications within appreciate Great. if And on the bill about

Dominic James Addesso

where the... implications the Potential industry us? to – What to is is

Elyse Greenspan

For Everest, sorry.

For you guys specifically.

Dominic James Addesso

There is many derivations of that.

in companies and obviously most Bermuda, are the U.S., have other in capital in various we have that in in jurisdictions Ireland, place We those in locations. of

where of on. we and position is, the our dictate what business So, on depending final will shape be we that capital bill companies what we'll running

Elyse Greenspan

Okay. appreciate very the I much. Thank you color.

Dominic James Addesso

Thank you.

Operator

Stanley. Pan to Morgan Kai We'll go next with

Kai Pan

Thank morning. you, and good

what's losses question and Elyse's risk sort alternative events? the was those First appetite for question, of on follow-up Logan your on total investors capital. a much after How just Mt.

Dominic James Addesso

the Craig for Logan. ask me Let Mt. total loss

Craig Howie

$XXX The almost total [indiscernible] course loss for Mt. (XX:XX) was income as Logan of And well. then, million.

there, about AUM for the is quarter. So, down you'll $XXX million see that

Dominic James Addesso

that, was? Kai, sorry the follow-on And second then, to I'm

Kai Pan

are sort Mt. your risk following investors the the their appetite events? these of What what's Logan, in –

Dominic James Addesso

events, have put the have actually events and after capital We the investors before but ready have that had are in. we to even

with kind up. are earlier Some of going the an Logan that rates interested my are all reload, some that That investors new to forward Elyse. relates to with back response expectation going in platform,

Kai Pan

question is insurance of My about growth if [ph] your some (XX:XX) you rates [ph] of your of at wonder that how sit about second reinsurance strategy reinsurance going that net XX% premiums, impact retro up [ph] (XX:XX) term sort would underwriting or I your Okay. XX% (XX:XX)? of double-digits, just the premiums. in

Dominic James Addesso

John?

John Doucette

Kai. morning, It's Good John.

look think there's of we of at rate that both absolute in a I So, relative dials lot and adequacy. terms

going we're in territory, the side to want capital and deploy then on line, the both terms deploy. it we how area, at look how to we'll growth which much to which of product which So,

that think to want then, will of to is. as overall have additional mentioned, we later. different the catastrophe well lot be of multi-year retain, $X.X vast reinsurance is from and we it's on as have most we risk Everest to X bonds a different to turn rate turn the January with retro. be still will majority and much manage remember, the where those net bond, retro. different exposure. stand lot how terms have [indiscernible] we yes, on intact want look the And of and a how of hedges and all forward that much whether hedges (XX:XX) But risk to have insurance, I a we of are as how And business, into aggregate we we of catastrophe of and how we of pools So, our way to dials get, we function appetite And deploy of in what Mt. whatever that dials that risk the net would and we adequacy shares we that billion of Logan get reinsurance, going takes which rates include

Dominic James Addesso

where up returns. on we increase doing capital. perhaps deploying to capital over mind our the what will that that best that, felt to is that again forward, softening been and where the To be the alluded market we and add are of where appropriate going getting the cycle we've is will have risk-adjusted pick the here there, deploying has been John we the in market is be couple attachment past points, our had rate keep the that years, moving so returns through something been risk-adjusted to we And we'll was to where where changing be best market

So, that could next over months. XX change the

Kai Pan

I the a If the may, question Okay. one tax on rates. quick is last

tax it So, the rate XX%? what's the XX%, for like quarter, first normalized will expected be

Dominic James Addesso

income I the effective rate earned should be mentioned in fourth quarter the my in quarter, script, rate believe XX%. any tax Kai fourth about for of at an that I the

Kai Pan

so Great. you thank Well, much.

Dominic James Addesso

Kai. Thank you,

Operator

Jay to Gelb with next go Barclays. We'll

Jay Gelb

coming you reports third that back were looking the third quarter on your risk there after catastrophe view anything accident the Was ever within in better, I much. possibly very Thanks parameters. have or different the know mentioned catastrophe – these out that your of could quarter done losses losses?

Dominic James Addesso

the There's portfolio but of the that on, has – writings and managed There returns very That's to been has market, our diminishing frankly, been with the capital. I maintain no absurd, you material, we our improve good not the honest come cat. realistic and out. our very, way over And the again us I capital markets, while you have think last things can our very pretty property on the in on much is leveraging been nothing been know, around spot as loss, stands what returns think scenario. the have I be well couple earning within upon. extreme capital. guess as we've out We've parameters. always the a years, done you, edges allowed the and we've not our could obviously during have retro I to

we really So, our only again other – would from make buy portfolio. could we point, looking for it have reinsurance done there's the But same certain decisions. that morning this the quarterback, I'm suppose vantage insurance not thing at more Monday I is

Jay Gelb

in starting kind ratio point using your in business? year The as XXXX, the quarter is combined is question. for the third the not (XX:XX) calendar this beyond, of account in Dom. – Thanks, to done business, of but and be a combined there the what bring bring differently profit in underwriting this [ph] And to over XXX%, to a obviously insurance that the can – for next XXXX

Dominic James Addesso

you that catastrophe cite ratio combined includes losses. that mean I the Well,

talking are all-in? are you you attritional, talking So,

Jay Gelb

think underwriting All-in. since I it's a looking I into of profit. generated business mean, the year, years insurance out been number has next

Dominic James Addesso

profit improvement attritional is in an the it we on an see Well, generating combined basis, and underwriting year-over-year. ratio attritional the

moving view We our we a view So, or are book, global we on basis. cat proper in corporate the direction.

at and our corporately. say looking cat capacity, I So, globally looking when at when we're should we allocating are the we're exposure marketplace,

our well So, But pleased that to describing. attritional performance very we is, within with effect, intercompany some ratio opportunities overall, confident was point manage certainly our risk entertain it the are very would, book. then perhaps appetite. could To of that you're reinsurance in the the that and we that that combined extent

Jay Gelb

on exposure final in That's the wildfires? into in the the two California helpful. deploying since share kind of And separately, next for year? then And the from company ones. then should fourth quick zero quarter is potential any buybacks capital the One, business, out perspectives going more on we focused

Dominic James Addesso

– within point, first. modeled know, the well quarterly what we're from we've don't answer it's me question and the load. is we fairly let this but As customers normal still our early, At underwriters it it and wildfire you is losses cat that hearing

share know, we're concerned as that least don't what give this you to buybacks, point. at of indication at an not is. our So, event about Relative we appetite

of we'll the our We will, on are in say months reformulating, the more in that and you just year ahead. if weeks plans for process have and perhaps next to

Jay Gelb

Appreciate it. Thank you.

Dominic James Addesso

Thank you, Jay.

Operator

to We'll Josh Shanker go Bank. next with Deutsche

Josh Shanker

Good morning, Yes. everybody.

Dominic James Addesso

Good morning, Josh.

Josh Shanker

to marketplace attractive or if doesn't growth. do I nicely have many those very things? talks your to of for where If there's in haven't found prices Compared to maybe two others square go look, pricing quarter as was you well. you improving in someone if up I need square about want third peers, appetite grew opportunities, So, your also how this says and opportunities this

Dominic James Addesso

is your question the the front on Well, or reinsurance insurance front?

Josh Shanker

– I not guys I'm work not But maybe reading and or are up. finding whatnot, faster, book [ph] Everest lines, clearly, very you the you opportunities (XX:XX) But financial to pricing in is a I just guess [indiscernible] not reinsurance there's and here's of which obviously found I is can your mean, correctly. both you're and you Well, lot I growing respect but also has insurance go finding (XX:XX) opportunities in think, you helpfully, it property. talk obviously

Dominic James Addesso

No.

is as in the part, property crop added that. that deals growing been – on few few pro-rata growth is Mortgage well. coming from a took so remember then, reinsurance the reinsurance And So, as growth portfolio, to have has – we well. or

our And been there, products well. group some some structured structured adding our premium as has solutions

much have property things risk, capped the in straight softening appetite property frankly market, business cat attachment all really of Our mix and has not that's of kind that cat year-over-year kind moving grown of those all up points, out because risk. on our

Josh Shanker

Yes. Yes.

Dominic James Addesso

– that know don't I that... Does if

Josh Shanker

in And on you're that on the reinsurance there? to so, dependent as allow you cheap on side having the business the book, property is industry insurance primary business grow adding to

Dominic James Addesso

grow non-property a Jonathan pointed in coming we as not. expect Absolutely little in out opening faster his And comments, quarters. the actually the to lines

property non-property. So, you'll and see even balance between a better

Josh Shanker

try I on And, will a little and that. okay, dig deeper

really of give PMLs, throughout now The never the guys color stand that. where year? lowering we other protection question, PMLs us stood at got where to you can they bought your on your any more obviously numbers the year, there versus any you this but beginning Is

John Doucette

to a overall and shaping But risk Josh, of that due basically third as to time to I part similar. Yeah. that, way March bonds we the use period. it's a we the continue think John. managing capital and was appetite, were issued April I mean, decrease There party about they think in our cat portfolio, materially it. the managing

some as we in us catastrophe that helped and Rico to the with. terms position we comfortable Puerto of that bonds that covered capacity terms in other were then Texas, and that areas, we July purchased additional among And period net to of through aggregate a had maintain X that June we extent into so X the the PML went Florida, renewal

Josh Shanker

season. color luck thank Well the all renewal this Okay. you for good and with

Dominic James Addesso

Thank you, Josh. Thank you.

Operator

next Kumar Buckingham to Amit go Research We'll with Group.

Amit Kumar

good and and Thanks questions. the morning, thanks for

two Just questions.

what Can have remind attachment us, I to bonds the losses is was discussion all question bonds, I first do to the think they kick in. different cat what didn't catastrophe for you need heard know trigger? industrial The get points, and I the on to and your they

John Doucette

Good morning.

as basis of billion covers. there then So $X.X several all occurrence the layers, They the Rico, are the some in and several as bonds, purchased, across $X.XX on some (XX:XX) some America them was recent North the an And them. billion on cover we catastrophe so Puerto of an and most of some them aggregate are well previous [ph] basis. parallel different ones of fashion including

based losses, industry then tied answer exposed, market as really is done applied that purchased are territories there's on bonds bond. shares these There different that simple so to market are there are and are the question. different that that per typically to a shares we So not

the then of hedge bond in as to shares the bonds best our each vary shape of market portfolio. the the try to in So each territories overall will we

is penetrated So of own your the that $X.XX on not. such whether people done bonds There billion had end or some so expected potential can been really you be research some up losses markdowns basis that ultimately may are reflected in latest being the think layer, what the the penetration to do they're to the industry to on be most industry to up to that lowest final going be. that they going bonds yourself are but catastrophe there as an we issued,

Amit Kumar

point. attachment. a fair a That's with the Yeah, it's bit to out index it. weighted tough Got figure

metric the losses. a Can the addition to downwards, understand I us second of bit industry of how current help raised the this just topic disclosed I versus up? discussion were The move we the question billion-plus as had If a move calls sort loss better? to do net $XXX you missing guess, the of on does other industry your and was, losses, get loss industry on loss to that we've

Dominic James Addesso

No.

you're the you loss As moves asked? industry up? expecting our loss to Is down, go that what

Amit Kumar

trigger they at was No, I asking, level sorry. was what thinking I in. what about the That's recoveries,

Dominic James Addesso

Our the John a our Which that does that down, recoveries really loss of industry has mean heck doesn't of from outlined. net contemplates kind various lot. position if instruments whole change net goes the loss just a loss

Amit Kumar

it. Got

Dominic James Addesso

coming some it on from, depends are. the the is could industry There occur, all is loss, movement where loss what that weightings but

whole loss answer really... So be a precise of our doesn't point it's a lot. position shouldn't is that my heck there net within little but a It's change band, to give – a that, difficult a to

Amit Kumar

just your point... to Dom, And,

John Doucette

the change aggregate I was the bonds also catastrophe the layer, retention slightly then the And including first position go very it staying protections, on losses up the or the our talking that are if about which because to materially. won't into is industry various of aggregate the exhausted just go close other net side, if loss up being means losses which

Amit Kumar

rate point. the missing losses. Dom, industry we're Fair mean, of I And billions any view talking this, about firming. guess, I on obviously

the [indiscernible] (XX:XX)... scenario. on positive quite You're market

Dominic James Addesso

simple if I man expectation folks Now it, there this have the been the capital a have in for would out like are. my me you figure you. know the at for it find expect and piece. us, calls all smart managements how a been looking exploring don't and on place asking to was can't and That's numbers all you you markets But of where that I look to missing look, of kind weeks

Amit Kumar

Yeah, Thanks and that's for That's have. good luck fair for answers all point. I the the a future.

Dominic James Addesso

Thank you, Amit.

Operator

with We'll go Shields Meyer next KBW. to

Meyer Shields

and picture Thanks. then to one questions big more number-specific. two I had

sense So third affect it in based of changes you secondly, third And your party in the hold might Dom, changes XXXX? give from of levels party anticipation X/X to could rate investor makes supply of I some was experience rate one, later in a renewals capital back wondering, words if various better on whether capital us sense elasticity, of other how

Dominic James Addesso

great Two questions.

company, can level come meaningful it by Third see it firming? Do capital the reload market to back meaningful call in I of we I vary I and vary material can a do increases, by capital get can what definition party the of if space looking if investor. party is where into rate have some increase would third not.

implying your increase material equation what the the was the is from to there that The heard side see materially in party there third their some think be more so pricing. of in capital interest to always interested some I opposed think increased we've paper I a reloaded, increase potentially in We and be that whole think to seem purchases of from yet. to has other first, increasing is the I problem as capital. is don't and going paper. that, question clients, they're is rated if what there, and are reinstates issue an also that just capital party rated third does was

clients third way and that increase. which expand ourselves, to the mean an as like opposed extent that opportunity medium-term. But represent base, the from that reinsurers capital capital, the increase that see Now, third it certainly doesn't an it by think as does wouldn't of directly to party party utilize might have to those in to participations perhaps reinsurers allow our capital buy opportunity the clients we

marketplace. holding we're of terms In in capital, a back

customers capital capital can We even the and and/or forward more or sufficient have way access are if trade into bigger have trade we year. well, to that, rates a we in firming

we even, back our that it first the probably deploy is hurdles, need capital test. meets hurdles, unless your we won't meets and hurdles, our the some a think if that's Does And and risk-adjusted question exceed deploying our would isn't that capital, hold in two to answer it so would it circumstances, we the capital would fundamental questions? there I that anticipate then return in regard. be

Meyer Shields

certainly the was was does, ratio just Follow-up, year the or the is well. within preceding insurance wondering that you. last but element than the loss is not follow-up, both seasonality higher to two. and guess, segment, Thank It I in a this or And I was draw? year attritional there third quarter it in lucky some

Dominic James Addesso

adjustments there's In any ratios. to loss we're quarter, one particular pick making

quarter. that predominantly, a one manner. is what in in improving pegging we're and loss adjustments year-to-date has look the particular to Our where make quarterly by some growing been at more makes We year-to-date business appropriate bit business for of the in it's we number that's year-over-year. look it's any – which, those a what That's anomalies definition, example attritional think takes think the little But A&H higher loss at really carries we performance it ratio. quarter, we which book and since right of trending out ratios the

Meyer Shields

you Yeah. very much. Thank Absolutely.

Meyer Shields

Thank you, Meyer.

Operator

to go Brian we'll from Meredith And our UBS. final of question

Brian Meredith

couple you, A here Thanks. Yeah. of Dom. for questions quick

curious. how just the money new on that Mt. and at first, tied you renewals that? X/X collateral do kind be do to replenishing At of Logan, plan up you on with The I'm much expect here

Dominic James Addesso

Do John. it,

John Doucette

It's Yeah. John.

a process talking of there or new And up would expect final and we would expected ceded what the don't but both we and that existing much the number would up. in amount that be be then consistent investors, the terms know would Logan So will how the losses with be would of redeploy, plus buffer – top ones, look that we it we're the in be, to on tied raise would expect we to to that are against be of losses.

Brian Meredith

Got you.

Dominic James Addesso

to up, to also and capital looking And a not it for they're be make deploy market. to flat are those down investors, rates looking clear, to in

John Doucette

is allows, it in retro it's structural earlier, paper in looking play going both Dom to real market there collateralized for in because buyers as And out a rated trend products. Right. clearly the some reinsurance we're problems are because and the the with to going said there which time see fundamental

year forced trapped. In don't realize they may release, next mechanisms, terms then as as cover collateral one have collateral collateral thought the from continuity much they cover or and had people they gets of to cover don't they have release they of thought as

the around world, be our expect the our on So demand XX-year a and of capitalize our clear that. a to balance And there's good paper. kind in relationship for sheet, position rated trading with clients with ratings, to

And the Mt. help. so from to part right stand gets sure different structures, risk capital of passu But that to be make raised, investors get them. if to position able such would net our that pari with basically, the will we Mt. so Logan, Everest be benefit to Logan that, as we use

Brian Meredith

then And I'm curious. great. just That's Right.

cat you property that potentially manage expect you Not tend or Logan to facility would capital to that, Given that be more the expect time increases risk? rate of But that shown kind to soft fairly disproportionally type some Mt. around. given on short-lived. history line has help kind sure put of a if this into of

Dominic James Addesso

years deploy risk-adjusted we over in I the think, we capital last areas. have couple of the our demonstrated that best

We capital. used third party have

best the we is write the efficient the organization business that's basis on will manner think the use and for highly We capital that possible. most in the there out

as that I what we precisely, And we that be move is if will what would difficult to forward be our ranges, to we firming we're is do and tend within suggesting opportunistic, the but you're short-lived. we trade question continue So it's around. that capacity answer flexible we've think and to demonstrated that

Brian Meredith

one. Great. I'm That's one curious. last great. And then just

of kind to for of do rise and going Dom, So going do rate not reinsurance the cost industry, capital you I models point this of here. appreciate about some to here see based John sold to stuff of or property your goods drive But activity you cost it's happening? up upon is also the kind cat think and and that going that

Dominic James Addesso

John ask address that. to I'll

John Doucette

Yeah.

years a adjust from, think time it. through different of always events happens the to that something typically as fit to happen. every the the historical something a times than – set I and So That they lot they update their before learn the events few system loss a ripple vendors different models takes there's that or kind different of

upward be Zealand certainly, we Maria, And catastrophe that a hit, board and in and different of It's zones Certainly, demand their So think earthquake what storm people. a different risk modeling is their potentially about they it about with different vendor that usually the of the hitting earthquake. Houston, with – may take about of reinsurance. New – the of both more in think as to happened I that But at people to of time this how a were of change what risk for had earthquakes, will I little takes long they in to the lot X I on looking a that well the put be think while think as models think true in some what think net, awareness go customer about it a as the a modeling possibilities heightened there's little there, whether tracks. flooding want But is the views the bit views been Cat think customers' ways the clients going some before. will management directors since system. much our was than on the happen vendor that Japanese the But risk thought it through time a takes some may keep some that agencies, and some or with for size to change position as a the of agencies think and through. four real terms models of I Miami,

Brian Meredith

Great. And then...

Dominic James Addesso

some as well. are this models I on on caused take some great. will salt and of a impact with Everyone line, bit Events have will to think grain the Bottom the industry pricing, and in is uses buying behavior little I them. all is that recognize in managements Brian, have think the like them through evidenced that there that models, risk impact fact not of

Brian Meredith

And line, Great. kind just then of let In comp question of maybe happened? do talking that kind him any reversal of quick the Craig, was for expense variable here. numbers some one there operating incentive

Craig Howie

we that Yes. be in that'll the this a determined with stand fourth events. quarter. fourth But with on quarter just of because the income did respect quarter in to again well, We matching as the where Brian, depending

Brian Meredith

Great. Thank you.

Brian Meredith

be was I'm able glad Craig able to to respond.

Craig Howie

That's right.

Dominic James Addesso

That's it.

Okay.

that this I are our fully general that in before, and morning but kind and firming. for think capital highly be which, thanks think because will summary, believe, as some trade risk what think only ours. We as saying have believes, there also what the In So benefit because and will this true of not heard our I market within is contained of such we've rated will management we to had said the markets there and dislocation be us you permits all losses expectations, practices questions, forward those. in participate what our is of I papers

forward. So continued dialog. the for on for Happy to this Halloween. thank look going us your but in the does business this is opportunity forward our some call participation we're Well I you and create

Operator

conference. thank participation. We today's conclude for does you your This

Everest Re (EG) 31 Oct 172017 Q3 Earnings call transcript