RE - Earnings call transcript Q2 2018 | Everest Re Group, Ltd.

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Operator

Good morning and welcome to Everest Re Group Second Quarter 2018 Earnings Conference Call.

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

Before we begin, please note that the company’s SEC filings include extensive disclosures with respect to forward-looking statements. In that regard, statements made during today’s call which are forward-looking in nature, such as statements about projections, estimates, expectations and the like are subject to various risks. Actual results could differ materially from current projections or expectations. full connection the with have should that filings in consider such SEC listing risks of investors The statements.

Now, over let to call Dom Addesso. me turn the

Dom Addesso

Thank our for and you. morning. this joining Good morning call thanks

Surely, had to of of Nonetheless, quarter We it we our lot not decidedly for results was The the by success of executing the wanted the strategy. second in line them XXXX bottom we pre-announced. quarter the successful driven of mixed execution was a the been a quarter another Everest. be that opportunities where presented charge were reserve us market. to on have

improvements We profit in our both in our loss have ratio Plus margin both portfolio. and in growth segments, business. strong seen insurance our embedded and driven re-underwriting in the and premium attritional the reinsurance underwriting have actions

to know to two strategic course, the trends. reserve And was is at objectives masked improve towards by it these changes recognize of adjustment to trends while on progress reflects cause not underlying underlying Of end. The reserve this we disappointing. No in broader can us reality will were apparent going the which doubt, our be charge. year the market, attributed shortfall require some factors, and to make it us the in

second to AOB claims the what in quarter. initially impacted positive. sound vulnerable clients conceivably clients originally these we our were for this by that The closed that our very quickly losses, what Florida. we claims lesser we were was left driving in now reasons, threat Ceding closed the Rico encouraged which than received their of bills repair is the the Maria a from we reality claims know Settling claim false came the reports. clearly well loss are after extent, a showed closed claim. settle in up but companies higher The from but same claims percentage a when high the reports a strategy, claims these First, seeing reopening, as To trying and quickly they stemming statistics clients a reopened actual large was Puerto AOB of largely were to has crystallized issue. number were seeing approach mitigate

factor second events we to The numbers expenses. loss are expense above the extraordinary seeing our significantly are was rise data. past relative The historical in adjustment

even factors reports. began higher in In numbers saw and increases overwhelming reopened XX% fact for these LAE the these high emerge we treaties were we Both saw. and loads. to of claims a some reasons claim the quarter second only experience Again, expected much XXs expense the than

surge, at reserves anything core Our these end developments contemplated beyond portfolio but before. our reinsurance cat year for demand seen were

leveraged retro in had wildfires, In words, addition, a some the coupled it the book. In as accounts with our California would on had when are analysis aggregate refer of attaching, now retro I not our cliff to other many previous clients’ factor. this very money. our much impact the

maybe what are the demands it So that to new respond the while these observations, normal. we

higher loss cat adjustment forward, for of that reflect adjustment Going accounts need particularly third-party services. heavily pricing a those will on rely to level expenses,

by almost LAE simultaneous to due of was due by Hurricane the to standard citizens resources level fees doubled of driven the adjusted Harvey. some While for scarcity multiple, their events, created example, shortage

appropriately need recognition XXXX. seen market going new have that and the be reserving to multiple when pricing factors respond to plus needs reality, circumstances changing just consider gone This these hopefully process to conditions. as forward refined in our there events this through I commentary better Our clarifies to needs are to our we consider

continue at a to the we do are we However, will playing so. mistake no get level make wrong while game scorekeeping that temporarily the we and did high

is profits $X.X our reward cat volatility, were the business but the from risk This X appropriate comes for with over Our last the evident. billion years. portfolio

versus extraordinary our in adequacy reserves across Finally, our circumstances reserves use the review our reserves, separate of XXXX of given read non-cat current reserves. the process finds cats no and of on cat setting the the non-cat we

We record comfortable of that are reserves conservatively non-cat our setting very track our continues.

adding quarter. the catastrophes It noted the these attritional portfolio mortgage are we encouraging other ratio $X.X The first has as of more parts in half growth half reinsurance the year XX.X%. combined is portfolio. other with an our in I business credit to risen continues us The of trajectory, result XX% This first book, the reinsurance billion, attritional pricing number of earned is continued portfolio. that as entertain the obviously understated certain move While reflect increased premiums XX%. attritional results earned is the in and This improved the profitable of to reflective due related critical. to the and premiums revival parts of conversation, where trend legacy the into the the cancellation half. considerably as in first that where has dominate allowing of Overall, have growth would our an improvement The almost that. and are its The by improvements organization in insurance have second casualty we excellent continued a re-underwriting of results key reiterate to is seen diversification business growth well deals. doing

the XX% go-forward have In or fact, initiatives, million. $XXX existing business grown along portfolios, with almost the new

deck. in and is the now new the As the a demonstrating is investor re-underwriting of more book improving The growth consistent profitability. attritional result in areas, illustrated trend

will should Our which you improve to by new written, continue to in premium our as comparing products margins. earned now note are earning

to my Craig? your good second colleagues half. you. will they further end. of well-positioned And a elaborate and produce questions are Thank We the welcome at course

Craig Howie

million compared casualty related and the income property and quarter late the but $XX determined compared United to year-to-date underwriting overall reinsurance. of $XXX redundancies the to half for reserve reported realized quarter The magnitude of basis, $XXX given million was million $XX for Dom storms second million in of catastrophe the compared the identified XXXX. on net reserve In the X million to second $XXX reserves first of million the the you, million was catastrophe million in This results impact of reserve first income the we its reinsurance Partially net included to $XX increase $XXX other company $XX reinstatement quarter adjustments losses. gains million million was year last the good On compared second in was prior internationally. of to XXXX. in first same favorable primarily of losses, XXXX. United compared the related losses These $XX studies and premium. have of coming related million of in had time, to a one-third the from of year-to-date the year. half saw prior during $X offsetting reinsurance of morning Thank the current business $XX coming of a half second of position events, net the catastrophes by half to first XX.X% capital and to period States also change pre-tax year The for $XXX was of from expenses the combined results reported related first XXXX the was million group The retro The reported storm $XX year in about the public States. in compared in covers. The and and the both the first of of capital on income net claims quarter, million the million until underwriting related XXXX, The indications. don’t income third was compares compares the year-to-date Cyclone second the for related the in The second increase XXXX. mature. quarter Of gain higher in quarter studies attributable the XXXX. million impacted year was half months Yemen completed quarter primarily from of of the $XX the higher to loss fair Mekunu to the to $XX Everest the million about reserves. income ratio for impacted was more XX.X% reflected becomes portfolio. XXXX. XXXX development and the losses a an overall of of catastrophe after-tax operating adjustment second redundancy capital value to $XXX of The XXXX. These to non-catastrophe of development primarily Operating XXXX. the second compared the in development prior were group to year was during million favorable one-third events, to income everyone. XXXX for catastrophe million quarter current prior reopened losses from group and quarter and the in over the gain XXXX. On million by This net $XX $XXX of to Oman catastrophe winter million year-to-date were Net react net developed total, basis, year-to-date recognized for aggregate for XXXX. catastrophe losses equity After-tax for $XXX $XXX estimates

recent more unchanged. continue loss our years estimates the for We maintain to reserve

Excluding was half for losses attritional favorable ratio the the to and underlying perform continues first combined book first catastrophe well. X the the XX.X% compared development, reserve The year in XX.X% prior XXXX. overall of to months

XX% million the of to for profit X XXXX. combined first ratio the an by attritional same the attritional basis and has improved growth improvement the $XXX premium, than more the compared With XXXX in the in months earned in on period underwriting

ratio XXXX period year. from same two the low for X.X% last quarters remains expense at X.X% of the down first for Our slightly

loss the increase half yield to flows associated was impact to $XX that expected the the for year-to-date was toward year. and the billion of losses the would Positive The million dividends pre-tax by of is investment as is and X%. decline operating of the XXXX. continues portfolio in year flow $X.X of be quarter quarter. to On investments, remains on limited the ago the grade to portfolio with X of for on to as just of the on $XX of cash buybacks billion X.X% the $XXX the of tax to attributable up up year $XXX was alternative million X.X% of catastrophe returned partnership $XXX and million rate investment The first reflects a which from income, both the X the is taxes, at returned result tax primarily net Lower over cash calculation compared of $XXX and the of the range. income catastrophe associated mark-to-market planned annualized the The end of for are was half and XX% paid includes end benefit company years. the the region duration in The compared the fixed range the amount catastrophes X catastrophe losses trend This our first income as in fixed For million of driven to the with reserve in in year-over-year. the the tax ago. portfolio. by the continues from equity income. was XXXX end portfolios offset for shareholders’ to up second The rate this group XXXX decline XXXX. shareholders. higher X% equity cause releases $X.X overall than paid remainder compared income pre-tax investment was well $XXX portfolio and an the full The portfolio. income in net losses year income geographic expected capital investment $XXX million through effective first with billion compared $XX losses The X% to half of million for quarter XXXX. income million level million the million million XXXX result Shareholders’ year at the at Investment of or XXXX income $XX now higher $XXX share

John Doucette a Our operations. capital position review now, provide remains you. of the very strong. And will reinsurance Thank

John Doucette

and XXXX catastrophes Thank the loss Good markets macro the X for first they renewal QX following as rate Florida from the X. well April on And varied as at Overall, based a season you, June demand Rico some the loss and Puerto Caribbean as notably supply factors. were areas, activity well in morning. Craig. mixed. local of at affected some was perspective, as

our Rican provided our capturing with We Caribbean QX reallocating rate clients, in and improved adjusted portfolio renewals better affected Puerto our with other risk achieving on by underwriters capacity an layers. by loss reshape priced Florida and some growing points accounts, portfolio attachment these different However, share increases, particularly opportunity rewards. to key and higher to

and position re-insurer to the also we equity even market for all on scaled the advantages signings year’s and risk more attractively preferred We deals market using priced to match of results. excess in capital and renewals benefit capital growth. we These where decreased efficiently capital treaties alternative our drive are capacity on help as layers position programs saw both flat premium shares book to get the most better price more utilizing poorly some this paid us loss and for priced opportunities. than us leading turnover in our to Shifting best proportional up declined or from and risk-adjusted capacity of

premium billion over growth year-to-date, Our is XX% and reinsurance segments. premium billion year-to-date by reinsurance gross $X.X a $X.X our of was in XXXX in written driven all for which growth QX

Some XXXX quota of on share improved share the our treaties following losses. reinsurance participation new cat growth loss to due treaties also in with increased and quota existing and excess was profitability of

of to achieved impactful with world. multiple reinsurance re-insurers trade as want clients lines across with global we Re global business Everest addition, successes some several the key around In such more who leading broadly

several profitability Consequently, and resources risk these the clients risk meaningfully strategic opportunities Over global our in-force years, them. several the our have last responsive and future we increased with to and continually relationships needs global deployed and have with to of of we our significant expand thus understand clients. financing transfer be

long and believe our benefited more lines. it than portfolio in also We a certain been has from property professional loss lines, rate casualty is affected and stronger improvement current for especially We select overall resilient lines time. and

a from events The As within weeks from predominantly loss XXXX X did development three adjusters, for loss our surge Dom and Irma exceptional suffer to results demand of expenses stated, caused on losses inflating Maria. confluence adjustment in the catastrophe significant level.

in Florida Rico reopening both were and addition, claim frequency expected. than Puerto In higher

earlier, to California aggregate for increasing combined on the the expenses, with to a emergence, As loss quarter. noted Including reopen severe loss wrote. had combination due of which losses covers the adjustment wildfires, coupled estimates the ratio and reinsurance more XXXX the loss we XXX% impact produced

XX.X% ratio to XX.X% in combined was the year However, for periods. quarter respectively prior our attritional and compared XX.X% the year-to-date and XX.X%

deals, corresponding mortgage rata combined to almost combined writings. loss and for This mainly expected business points are ratio. typically premiums X personal writings, quarter’s ratio was the pro business, benefited rata loss and lower on commercial year. excess ratio than covers. both additional from pro reinsurance a of events the included segment, XX% by same of property writings, opportunities and casualty $X.X U.S. and XX facultative increased last share combined of weather XXX.X%. increased and loss and reinstatement non-cat losses ratios impact In points saw of given ratio from loss a loss year-to-date new attritional lines. which The Maria new that better period The QX versus We proportional property the additional attritional combined losses, these had and more was higher casualty broad-based excess ratio some premium and development of year-to-date the aggregate elevated improved losses which noteworthy our hurricanes with Irma other on XXXX The billion written cat run portfolio. Growth across dominated was a grew gross

expansion growth our grew and improved increased in loss attritional $XXX to fac post-loss America larger capacity growth Maria. and had excess This business. is included in predominantly gross multinational XX.X% Latin included premium an The mix, and London, lines and year-to-date year-to-date the written million, international as and year-to-date loss XX%. This loss writings and decreased in of period. business new X XX% The rata rate by the attritional with with points included credit, this points treaty Cyclone point our was by new Hurricane segment The X opportunities various pro pro lines risk in during insurers XX.X%. Oman, about on with the on as half with million first deals of Singapore in The both gross participations, operations loss segment post or political up the from ratio segment, in office Bermuda continued for However, including surety various which deployed international written XX.X%. additional at premium. from opportunities environment in such in ratio The was new writings. months capabilities ratio from out of than The of the ratio flat rata well rest X combined lines growth losses, was business less with an covering and XX Zurich loss and and of territories affected Bermuda of large month crop ratio million around the combined some growth $XXX about included X The impacted achieved half, first business first as of to our Mekunu running loss Canadian XX%. world trade $XX attritional additional in out and ratio catastrophe reinsurance premium the products writings operations. ratio by Indian of contributions XX%

structured as representing lines renewal. a our a property did less on and and X/X market this expected environment for and exposed or our competitive process, this market, casualty. last this property rate with Overall, in post-loss less global modest more better rate the increases X/X allocating wind larger than follow profit just deals portfolio proactively the maximize under-priced Through risk year. we to for returns more by head Accordingly, turning not portfolio Now, into the offered season, both but declining improved we limit, and return more premium adjusted deals. we PML, season reducing renewal attractive to our

increase With property with capacity increases market increased premium down improvement casualty while the deals casualty share, return value as and reinsurance on the on competition to flat Modest continued years. stabilized commissions. recognize to some proposition. respect clients territory rata recent considerably cat In we terms sought deployment or that we increased achieved stock our accretive the core ceding is with our some rate reinsurance capped our of period. to While portfolio, particularly the end, the exposure and in treaties, has lower Everest materially we market side our the from depending long-term pro from

included we we a a new opportunities. muted to offered of in play addition, select client added the book In a superior in loss the crisis, reinsurance the clients in-force much markets, market. and In around and often broker our programs ratings, to lines business, lead future profitable or to significant we the the P&C loan was mortgage not relationships, remain group in casualty the balance strength unique sheet which re-insurers to reinsurance financial underwriting since are for near-term. long-term expectations mortgage ability lenders on world, leader by With Whether opportunities. practices of due reinsurance market invited remain with robust improved all

However, we destabilizing portfolio manage will of heightened forces our and and/or potentially macroeconomic competition remained watchful accordingly.

I change and consolidation, differentiate of market at customized evolving by at for through across that flat allowing non-traditional allowing whether bonds, relevant meaningfully risk and rapid in structures, and third-party our a you. progress and expense to continue We to or maximize organization, Re turn P&C disruption. backdrop customers will supported portfolio. of to pleased capital, breadth We lines, our and shareholders, product and most remain a lean And efficiency all proposition capital it traditional and to confident capacity global our capabilities channels meaningful risk via fast-paced returns than an execution Thank clients, of reinsurance change, Zaffino value financing larger is innovative the Mt. be alternative of that Everest deliver each all us to to with creative and solutions enhancing global nimble operations. accelerated transfer Everest technology rate, that cat more our over With margin hedges, it transforming our review for capital capture while can our distribution itself more to better evolving Jon now execute of us we Logan, will diversified and are to M&A insurance premium with positioned, building from competitors. dollar dollars structuring

Jon Zaffino

good and John morning. Thanks,

a Our solid global of specialty operations delivered performance. quarter insurance

key and We goals. are encouraged and in-force diversified and progress goals operating the portfolios increased platforms. our Prominent resilience we improvement are by these among growth steady our our and profitable making are across toward

outstanding has past done in place on building Our the upon plan put job executing an we the foundational over and pieces team years. X the many have

highlights business. realized year-over-year in written The growing quarterly net gross XXth speaks brought premium This specialty notable our and It some across market. and history. our performance and premium, also achievement It level the quarter is insurance operations, the increasing the second result our property quarter of marks highly consistently growth health beginning in further accident and evolving highest insurance net within earned our capabilities. diversified the product our with casualty relevance of our consecutive to geographic and written of growth operation premium reach

and the experienced deliberate production quarter’s our are This divisions notable due largest Everest group to considering declines Partners actions. in U.S. premium by in two written our Underwriting property also underwriting underwriting quarter. their gross premium results various encouraging

than upon the prior builds increase of more quarter the to underwriting our half. $XX brings this over profit year this twofold profitability first year million, quarter a achieved first and Importantly, underwriting in year-to-date

exception of being Our quarter with the along XXXX, second activity. of we where second felt produced XXXX than the cat of rest is unprecedented underwriting five of $XX profit, XXXX performance. Further, impact quarter a the $X.X Xx the XQ and million, profit quarter the underwriting million an third the our six more increase quarters last have industry lone over

operation our continued across a talent our talented we An surprised Insurance We expanding focus expand along range of are the global platform. is leading insurance with increasing our for profitability writings to highly of remains the Everest line not as professionals but a desirable top home across see of specialty our industry area attraction premium for encouraged, results. product disciplines.

leisure operations. In space, of XXX Notable top-flight there we and the a of a E&S But Everest our our is underlying and year taken the these have head growth of is of Insurance bench Insurance the leaders include colleagues are a Insurance there themselves fact, new and that our deep The of These Casualty the already over since years. operation, evidence professionals organization. have people support our is strengthens hold Everest our to join leader Company denying in Canadian Each the improvement. for X our more and many of talent to right place evolution beginning efforts continue representative to strategic Everest we our to while talent chosen our ensuring than acquisition take long-term expanding have past fuel Group, room of in entertainment are results. a this new hires dedicated books and sports, no CEO in actions the of Insurance joining Specialty Canada, XXXX business. effort, further of platform new

produced XX our the results financial rights for XX% a $XX of first quarter gross over the at of premium renewal premium or in gain premium renewal quarter million XXXX, transformation to existing ago. history of XX%. growth written The half, just and global performance increase from deal, roughly doubling line showed written that coupled gross product same for increase scale, the written growth line. XXXX. second mix casualty of our premium, written represents our short of the from our a X XX% significant deal XXXX major year-over-year the our gross for in Again, which remainder to XX%. new half many platform, our excellent to Turning strong X gross addition in Adjusting with of when rights XQ also billion, and quarter gross period rose second second to years written million million areas, stable, in nearly we second growth improves segments our the property classes enhanced short-tail XX% quarter largest contributed or of to over comes Year-to-date, products, the premium with first premium our production this XXXX. quarter remained the business an a wholesale generally in of XXXX, and insurance in $XXX Adjusting result. for this $XXX operations the started over XX% showed specialty written while increase business single production $X.X continue

written net impacted items. over a the X% of XXXX Our notable while growth, healthy premium still two year-to-date comparable by was period

incepted First related of ‘XX have that premium written been Year-to-date, $XXX Further an period for premium million transfer half. one-time was growth placement to we prior net item, year. new over earned are or included first cession April $XXX million, or earned by share XX% to previously one-time Net the net this a increase the as XX%. hedges XQ renewal which was over and portfolios, rights quota our premium of growth If past premium the deal, additional impacting P&L the net implemented unearned various on incepted a anticipated begin wholesale to retail growth the the discussed property $XX premium rate. increased in quarter which a in for included premium years of improves a exclude quarter. million at has written earned greater we this one-time X% X ventures new to business $XXX The through million. in earn

prior quarter XXXX. the basis Year-to-date, to the was XXX comparable from year quarter, point a ratio second XXX XX.X%, Turning GAAP period. of the GAAP the a XX.X%, improvement improvement was the ratio combined ratio for combined over combined the basis point

adjustment accounts which from one-time the for year’s combined over represents point combined benefit the for basis ratio. XX.X% XX.X%, attritional respectively. attritional quarter XX Last of and in XX and This year-to-date are majority A&H increase a XX.X% ratio portfolio, the and Our an of combined of over a increase period, attritional had to second XX.X%. XXXX’s X.X% quarter XXXX’s quarter ratio year-to-date result a our year-to-date second increase the basis point

X.X% current related the includes compares storms activity from improved from points the of late the to winter This activity the points expense quarter’s in to period ratio loss prior and favorably cat of X.X This to cat in loss XX.X% U.S. This quarter adjustment X.X ‘XX. XX.X%. year XQ in

The in second from XQ XX.X% to ‘XX. ratio increased X.X% loss quarter ‘XX attritional XX.X%

year-to-date XXXX compared of stable a of flat XX.X% to very the on and, half remains However, is the ratio in attritional it loss fact, ‘XX. first basis,

Our and expense people in our our scale advantage take technology. continue in was as the ratio we to quarter improved stable investment of

of essentially quarter second Our expense in XX.X% was first flat quarter and the from down ratio XX%, from XQ result the XXXX.

period, year-to-date was earned of ratio XXXX. basis expense half and to as comparable growth in in expense we continues continue the come path up XX.X% the anticipate the period through from our the as the ratio second of year. premium Again, stabilize we the XX.X%, the a XXX to on points For

an in minutes in pricing. few very break competitive environment remains prior As will stated we’ve a calls, share X the segment. specialty this XX% ratio I regards on expense spend to areas. with down to insurance rate observations Overall, into some I of want roughly and the

books, in parts property First, for of example. U.S. and we see some our encouraging trends commercial auto

namely some will of lines. strongest quarter, began is continues in such and Further, business change of encouraged of And since Overall, primary this are Second, rate change non-workers’ the monitor. workers’ excluding Everest rate in quarter closely high. in lines X-year degree the aggregate under which third liability the XXXX, a general X.X% an we an produced change compensation, remains the as trend XXXX. that plus compensation rate pressure, have second areas of various a compensation, Insurance upward we of by beginning gradually seen workers’ second higher rate there we professional to some improving which continue U.S.

As fourth rates increased encouraging for quarter and XX.X% the commercial XX.X% quarter auto growing a XX% quarters, and upward for areas, an for over Property auto increases. was quarter year-to-date. the in was and year-to-date. for Commercial the of rate been the row up trend XX.X% the on property, many second has

for second the quarter double last in liability gaining year. the than this As positive X.X% for line. quarter’s rate marks change steady showing the in lines of the momentum experienced general quarter primary rate is plus territory rate change the quarter more first sixth X improvement, the this increase Further, of we is and

to rate pressure, despite overall coming rates various coming well moderate out, Workers’ the persistent continue loss appear perform bottoming line with continues As across be our experience we in lines, in to to under and portfolio. flat quarter. although with of near to rate respect professional compensation, pressure, our for view experience

by As in quarters. rate the business, the trends of this profitability cost of encouraged and we’ll and coming stated monitor we previously, carefully loss remain line

profitability Some Stated achieved concluding continues. continued are in our momentum operating across alongside and being and premium specialty Strong growth insurance technology investments the global platforms. talent, increasing comments. simply, operation

growth. adaptive, you an one sustainable reporting look that resilient built profitable, relevant and grow, back to continue have and forward We by priority next of guided specialty We quarter. number our continuing organization momentum we insurance to our to

turn the call Todd for Q&A. Now I’ll back over to

Operator

[Operator Instructions] comes Deutsche first question Our Josh Bank. from Shanker with

Josh Shanker

under-priced you your loss you you prepared about on got and spoke you. expenses. adjustment last have have In cat what you losses Thank suggesting remarks, year wrong the

you have X? in should So, is business to priced you of relative what at under-priced cat January the have today that book

John Doucette

way the it that trends It’s that into our would we our not morning, loss and really, have it function question. season happened, modified to are the always going totality the characterize And going adjustment when Good evaluate I for we happened pricing. and at at in we go forward expenses adjustment expenses look into loss loss of renewal did multiple that was events do this X/X. Thanks factors and but a continuing Josh. and John.

Josh Shanker

change except the you X/X? better that about than competitiveness Did X/X that business at participate? find for you was Did could your that how

John Doucette

lot a market. is there at lot I of Florida more happening. more is a and at different think a territories of And X/X are that’s is X/X. X/X, occurrence that countervailing there

are there some lot think I including capital. So a of parts, moving the of

a there liked my I wrote think some that into X/X. – didn’t headed there. and that more declined moving and was overarching price the to happened should for a for losses pricing, With that parts or did, the a of the what on in disagreement equilibrium remarks, equilibrium by price what agreement or be be layers, was either as that I we to we we supply we more several demand kind deals losses right or of was write to as and is lot that particular share an that. of thought that of are did prepared on what There deals client we of should reduced region we deals the so some or either like macro or thought layer mentioned

deploy in So, our end with the ability than portfolio pleased the had support. to we the we Florida we capital, clients to the it was season supporting more churn in seen, that than usual wanted were this but

as in more wrote we in property. indicated also casualty We both business proportional and

Dom Addesso

also multiple X back retro that impact less the had Go did book. as actually we events, because have a than there year. had events multiple had – these a in disproportionate on pricing January we result we in our exposure demand they of Josh, were previous And add ahead.

Josh Shanker

Yes.

didn’t reinsurance outwards into in had around of befell you with that certain carry well same If in XXXX? outwards it you that reinsurance your think book, that you you about I on this kinds this particularly feel coming you the does Do book have your retrospect, protection, you think risks protected year wish or LAE year.

Dom Addesso

First is are of specific well which Logan, facultative outwards deals, as most part through the of again which is big Mt. all, proportional. some as book portion for proportional our

those are So, affected. not

which up intended earnings the protections not are our frankly capital beyond Logan, Our cat bonds, protected Mt. be of against make events, events. really bulk to

profess or under to same with our comfortable be are we protections that the very that load feel cat better. still our and we X% So,

Josh Shanker

other floor Well, questions. to will I Alright. see the

Dom Addesso

Thank you.

John Doucette

Josh. Thanks,

Operator

Thank you.

question comes from next Greenspan Our with Elyse Fargo. Wells

Elyse Greenspan

Hi, good morning.

the increase losses bit to So my on more to XXXX. for color get just first a trying question

was of related So, in you the Florida. it part to AOB mentioned guys issue

a state that sometime. homeowner seen on in with have insurers the bunch We for the of going

So less can just other mean, a for or don’t little are how metric then question happened, in some IBNR events these are that you it’s in retrospect, disclose this a And you be, surprised more if know, that would I to bit maybe there? carrying color you relation I my second bit little I guess.

can So this fully number we of kind from look and expect we don’t has any would here? and additional to a been expect movement say we addressed

Dom Addesso

the reopens. Craig think was se, AOB, to issue the of was the it the AOB the ask IBNR will driving threat not AOB relative address question, was but per that I AOB the of we number to

to again relates were as due not be specifically IBNR it seeing as we to increases clear AOB. So were to what reopens Craig, the question? on

Craig Howie

and that this IBNR, was up these IBNR issue the catastrophe we to have through believe events, behind on these put us. goal put we calculations for went when we our Elyse, adequate

IBNR that any non-catastrophe so prior cat our hold all And for separate events and that’s to adequate believe our the we we and reserves in all is from cat. cover year

Elyse Greenspan

this losses question little ties Okay. following a then what but bit your And to we this Josh your maybe on if increase above you of equity, as percent peers a look was asking, back second of following my increase. at do this quarter’s stand

were So much in to think you you guess have year. retrospect, writing you three as I risk, storms? And carrying back this mention retro aggregate too you as two did less

that midyear think taking think of to do see are So were place, able into renewals the adjustments in increase wind this to kind year’s book you happened the enough right around you season? carrying it that time make do you the given to kind you of were

Dom Addesso

Right.

some of take above disagree that most peers. the in on I our many others, others your Bermuda, in structure being – first exposure we I from bit do little It’s an in as do. will characterizing more basis as We question, as same line. advantages slightly but response So you our after-tax know our to don’t frankly of manage aren’t it have tax a with cat

profits extremely given at So script, mentioned on time there think our operating was in that overall again you if generating as think portfolio over that our again look the I frankly, find profitable I last as cat peers, well our lead X-year our years, of you it well. And we billion my group capital in at will to $X.X that basis. period I we position, consider that what given compared ROE the over X been has as

it’s relative to manage or on XX number. an expected question around So, And frankly less years, is than in annual actually ratio your come cat the to to our X years answer the exposure right proven at points of points we over X that combined last tax basis. in

come So your we bit size our think lot a kind we participants of ag again that if The have the scale can with little than volatility, that’s retro retro don’t appropriate but lead our that our we but... most know optimized think more portfolio. because returns. and answers again more write a and other of to we I question, fact that

Elyse Greenspan

the accident pretty believe cat I does. X strong that were said the the the one points And away moving question prepared in reinsurance from current results Yes, then last was weather. from remarks in In year increase, non-cat quarter. you

ratio You shift as a in year showed out and in the X which about to point given in quarter, did accident business. rata improvement the casualty just reinsurance your you loss commented stand pro

just see? look the forward improvement a or could should So to that margin or quarter there as we that going underlying were can is some of other as improvement level sustained you the the in is representative we year of be one-timers think number that half

Dom Addesso

quarter volatility number a it, of what impacted year not it look one think fairly we the course to of non-cat positively was half fair half a any frankly which for has of reflective kind always a prefer because the in I – events, expect years. at number, recognizing have of but can going that I occurred year of bit forward scarcity number is the of by cat is non-cat

more how depending of we non-cat recognizing cats. account for recall in reach was didn’t million them per models level re-insurers, how that the the portfolio. of would $XX year on call event, in of X of, like we numbers your to so again storm be the in month might the you reflective case, would it was year, that both You difference, first But see for the primary there a half last that companies lot our activity in and

John Doucette

position of some the there looking hoping for add did is the the a we we prepared good were parts run believe see talked so there just the to much credit run color and at that in a to of time portfolio our better it’s those, but as we but lot the U.S. at so today ratio international and really structured numbers some mortgage, able increases is lot season to is on this the X/X, we’ve but positioned now our to combined property, to impacted attractive about and been of with get X/X impact stronger strategic see rate the we in continue relationship places renewal rate it Elyse, I that clients did an that as and our comments, I’d And post also portfolio, talked some that professional, impact John. increases X/X, events more we a different was X/X, attritional portfolio building other it morning, has that just build also as moving rate again, global we build has in from we X/X about has combined at the have at some overall are portfolio, casualty, is we you’re overall portfolio points things little that ratio. favorably will reiterate mortgage going and also again, out and

Dom Addesso

a a of that the notwithstanding not John cat portfolio well, that’s, achieved higher historically think growth driving a risk X%, we I to not was in we’ve in prepared fact that retrospect, retro annual what underlying about, been metrics, a in we yes, in that quarters only class was the product expected that, ratio line down that surprising expansion you’ll not look book much it his in that, the events and that, comments add find have driving below as effort. had trade a and lot business in combined down geographically our surety given if or number load, diversify political further success low over credit mentioned of that of what’s we part, but also ‘XX, fact to a you again, To these and now, hard worked at and by but again, have have, –

Elyse Greenspan

Okay, all the for thank very color. much you

Dom Addesso

you. Thank

Operator

you. Thank

Sachs. with comes Goldman question from Kinar next Our Yaron

Yaron Kinar

and that an is in outlier Good everybody. this terms growth said you so quarter has I I’d relatively front, that curious premiums bit net know or any of the you probably deals of written morning, and say question drove that the this in seen ceding little stable? particularly growth we first commissions Everest, are reinsurance was but growth seeing particular notable I rates on are there am that broad, quarter. growth strong John, the just My strong ceding this accelerated a this have the

John Doucette

Thanks Yaron. morning, Good for the question.

are So, we couple of things. – so a

want all do business, multinational were and so commissions on subsidize and long So to favorable coming we all that that, pendulum casualty the it with they continue portfolio see space this that advantage some well are to locally worked not way I in of in other driving business. lines re-globalizing clients, and of for be holistically ceding cases, a we last opportunities ceded, forma casualty that and have we sometimes relationships level are the some the classes wanted of can’t and talked mortgage or is about and we world tail do stand to on opportunities for many more business, reinsurance haven’t there, years the trade coming direction underwriters major our some little that a ahead ceding we property retaining lines have have again, will type very the the hubs as are to are professional own that or if of they when had do commissions a that moving that with other situated strategic pendulum large, much so in where couple to so And global a world, we calls went and we treaties lot to clients the and bit more, with trade business, in positioning we us of clients and pleased the the that commissions the book just disproportionate commissions and the reinsurance other to casualty on with so some property other some and peers we insurers, seems at be talk to the corporate there’s maybe driving around ceding basically the top global as the to they our they have allow the security it’s increasing I of Everest, decreasing our with business because treaties years markets, meaningful on lines been is that they as well favorable trade and see as are our frankly, resulting across them at are it seeing, mentioned with on we in directionally as they and we not in the space as the space trade seen we that they the also to market in people re-insurers were broad with seeing of been about of up, continued see with a we seems years, potentially not bearish X/X, see seeing as like trade their their movement in some are over lines volatility experienced strong to down support ceding the for that asked the global of more. work us premium of didn’t a on professional committees strategic business would moving want all capacity ability some you around we dynamics about coming or there that and that XX all, them last but given them pro have and the and more back, just the to ceding the of that, we didn’t want say, and re-insurers of of – their treaties to didn’t maybe earnings basis centralizing sometimes, several it

Yaron Kinar

of is just clients? your from a that’s concentrated clarify the your number That’s services increased that’s to broad based by helpful. coming and or sheet And the clients, coming of use it balance global

John Doucette

do part thought with the are lot varies, it so a where XX, and their them, strategy trade part top of we that but our is we and of of re-insurers, of is there won’t part of is strategy, impacting where that’s that trade they but talk diversify them, of them them, it our come to them where on but in they necessarily to all they they that with XX, but and Everest trade talk ability that some the of ability lot we’ve the other we they’re situated all favorably we and XX and when cession of is reinsurance book. are panel to seeing what with again, relationships how market, a few broad moving a it is their a will So, long-term more parts, developed process come basically they the grow to disproportionately reinsurance book come to global large talk would

Dom Addesso

grown total there not the the relationships, we of it’s growth so these those small handful, no. across volume global has but trying to Our you’re with get for can’t all, most is are clients, to if spectrum,

Yaron Kinar

over year-over-year? would why And helpful. XX% then half net up given that’s of that Okay, expense side, insurance the earned guess in the premiums ratio first on are year, I the deteriorate the

Jon Zaffino

Good morning. This is Jon.

of prepared XX% think lot my I remarks said I quarter timing for effort, and of but of some the movement first XX-month in we the is a at trending quarter, there’s investments to various technology discrete I timing moving we going aiming lines it’s investments so in are the of that business what parts and we it trailing you it as on improvement. a based as we continue looked are any quite of also to level various think part basis, in nice a at is obviously to see expand our again geographically on hiring right which was look the in compared way make various competitive that’s

we pretty been. with where are that’s So comfortable

Yaron Kinar

Great. Thank very much. you

Dom Addesso

you. Thank

Operator

Thank you.

Kumar Research Our The next Group. Amit with question Buckingham comes from

Amit Kumar

loss just loss the which in universe the and XXXX an your released they the reserves and three remarks, one, to for two development development yet for talked discussion. opening color. thanks Everest have you Number in reconcile from two same our in morning outlined companies can these good guess actually other questions I reasons how back outsiders the two about outlier? events going I things as follow-up we Thanks is reasons

Dom Addesso

the way suggested at can’t circumstances I to have these point I retro the by and back the in speak losses mean, and think I’ve make I in look we we them were which, what and two supported changes side and to already to process that the to I is, I’ll Well, what their things from can’t we speak didn’t may until quarter. the some companies, way, have see second on these of some

mistake, still large for that were our than some event that had a for still was and to ‘XX, that’s So know we so all that our within of not recall to you retrospect, the better by be market our back events, record contained admitted I to you claims following these submit kind press months might address of as the is itself the point our to can’t us closed, in and you overall, back forward changes was going they’ve widespread certainly returns the our what intact the track interesting being following we also as earnings will, but an and setting in disproportionately sidebar, that and you make definition is alarm to we capabilities, by versus is have events long-term any bells that these when weeks I expected were late readily go sure, of done push ag and clearly, into if chatter, which I we’ve done, will but multiple off I wasn’t there peers. how were events within and going think operating fact reports was that book, impacted but speak our we retro loss what record that this we to

Amit Kumar

guess relating this is comfort which point. that left have development? much just referring answer or this how in is to Fair some respond I there to it’s limit and will cover, we how can if any additional you were

Dom Addesso

Craig or ask to. John I’ll

Craig Howie

limits as did that covers from are had Amit, remain we went at and losses we going and on to really aggregate to these the the this what’s those what that’s modeling our and in selection are across extrapolate underwriters the a did trying on from up, find to standpoint them, underlying ground that was included a those where our have but for through yet, we that covers what look loss we submitted what haven’t aggregate seen know additional try written we events. loss out we other so portfolio covers we estimate So

Amit Kumar

Got it.

cost a efficacy an using the AIR third we and AIR that any have The of years RMS question since have Thank the it’s you you. models and discussed final past, in model thoughts I versus changing know models you use? few I their even on been think and any mentioned

John Doucette

Amit, Hi, good morning it’s John.

we reserve book these tools there who underwrite, well underwriting, think just and the as how the we and we are the we of at what many way, price during principles to XXXX prior model how what clients want including rely multiple are the our to vendors, we into be and you are do well we we with around that events as that a they that things with need we were look, and we of the the do how during we missed the us go rely the and/or that So we but aware orders as but have think times, franchise that to of build a and allows first and agree not writers reinsurance build with one of them, models, sustainable, showed of profitable competitive we so positioning treat limitations both of trade think of events, XXXX events world. that models support, that we from and they clients look business how thought on are as the underwriting major how misses happened a to forward, that, their so magnitude well that examples models retro and with tool

Amit Kumar

use right? AIR still the model, you But

John Doucette

AIR. use we Yes,

all at We all data RMS AIR we models some lot is looked can determine Everest more at and other we at developed think look try all RMS. a a to haven’t to countries, of to look in we developed look sources, also that the modeling, local we of what We and developing models at risk. vendor

Amit Kumar

you. Thank

Dom Addesso

I Thank you, queue. Amit. to have got I think have stay in happy we a people because over got – number than of we on, and running other are we are more

So, next caller?

Operator

you. Thank

with comes Morgan Kai question Pan Our next from Stanley.

Kai Pan

just losses to you be Good second morning. $XX for Thank first me X quarter, higher My is ago, your want that? the pre-announcement question in. weeks current than clarify on million quarter seems fitting to catastrophe

Craig Howie

about, We in the selection first So of that’s us lower were us indicating Kai, lower year tax losses for exposure weather after-tax $XX number and year many net after that losses, to the pre-release. so offsetting the heard we Craig. so we because million of is you rest we were $XX have to what was that didn’t related to the the able pre-announced is that half get were during current events reinsurance if loss loss million selection then able was below and non-cat million, side talk reinsurance our this other was that $XX to that you a number, on as the net anything will,

Kai Pan

Okay.

operations? core loss benefits So your reinsurance in your that ratio underlying portion

Craig Howie

attritional it reinsurance ratio. It the a not correct. was That’s event loss cat was underlying

Kai Pan

combined insurance out you still so think get quickly to and ratio side ago, flat business question, goal probably adjustments it’s there? second it not year goal of a take given in the the yet, if like and My combined on the pretty Great. ratio, underlying ratio combined there’s you looks of how terms you can mid-XXs improvement for growing that up towards further room do

Jon Zaffino

of deliberate A&H it’s mentioned, the on which some secondly our an first, Kai, attritional for actually, me Yes, considering comparative deal, throughout for movements overall, both in each adjustment the achieving through, like of we as the again on so think various first the have might year of half momentum all-time writings going which and you expect that improvement. was there’s any we around very, that our Jon. do the second we the is candidly, to but Good remember, underwriting risk-return flat some for discrete couple for in let were moved we earn Hi, from we quarter directionally in have the the quarter further third movement high our book, renewal book of the characteristics, premium that’s loss continues get rights of way room of inception a morning. prior an still there on was improvement of continue two combined so things onetime as across some quarter right actions and the very favorable the that I instance, basis, these about we some think moving we’re based took things to businesses, years feels the expect newer

Dom Addesso

to to add is our To beginning Kai, whether transaction and are credit, that, low those ratio we and political build, combined some periods, risk, risks earning trade are those very have of earned growing surety, of proportionally premium business, lines longer newer the it’s portfolios and there classes.

Kai Pan

Okay, great. may. if Last one, I

revision On season? shares you it assume quarter your million that’s Will thought behind your you’ve loss like the just and you what’s wonder the book. XXXX the and back it more started buyback, this know trading I in in process in own events aggressive I below buying before X.Xx resumed even wind now buybacks looks you be $XX during

Dom Addesso

a It very was attractive price.

Kai Pan

Thank you.

Dom Addesso

Thank you, Kai.

Operator

Thank you.

will with question Shields take We our last from Meyer KBW.

Meyer Shields

Thanks. ones. Two quick

think was for year the lines pick the reinsurance, I second the to casualty loss accident there in in and all quarter? first quarter from first any specialty of change

Craig Howie

in down, is in but that constantly ratios look hold loss always that given look of we we go change rate the as quarter cost that loss respect look insurance the but of up through reserve any process, movement movements look was side, there end everything, expected or movements we quarter at the throughout those reinsurance trend on is as this up process, answer we at, at at where do at The the only. part we and quarter. movement, down, loss slight we or quarter yes, the to side constant we There picks each committees with Meyer, both

Dom Addesso

that and but newer been business reflect line has the some be we of coming pretty stable. material, fact generally, nothing of the books we’re reflective on the to that so But some had to that it it’s that has into business now putting

Meyer Shields

very helpful. that’s Okay,

conservative the we So quarter came unrealistic have the few a an the reserve fourth concentrated years, normally this that reserve quarter reserving? as had of what of development in see phenomenal aggregate function assume should of of out second sort in question, some the generally past quarter releases would know in but I fourth you is we

Dom Addesso

of question the this they and are done part the they do not studies are studies, studies and then therefore reserve that this are of had those smaller same it’s we lines therefore And of they they that fourth for year that every we to question, results, – a are the ridiculous of which reserve businesses, kind don’t for we time because wait If answer typically, material. material, reserve Well, sometimes the get quarter. are not material, produce these booked. kinds not if they time

smaller or favorable number obviously. pretty produced So this have classes business relatively business time of around, lines of that some we

to lines because the from lines year have year of of of studies you businesses done that obviously we helpful contributed the expect reserve releases. wouldn’t were that wouldn’t therefore under but your to review you reserve all? yet, typically that so the Is much answer end know expect I business and to these at question, this And the releases end level don’t haven’t

Meyer Shields

the – so. reserve of any I sense to Mt. losses is, a final much It Very the the follow-up, because of of And quantification yes. change or is shift? just guess Logan there ceded any in

Craig Howie

Could that? you was say again? What that

Meyer Shields

sorry. to change am the Yes, free I Logan? Mt. tax that The ceded in XXXX of losses were magnitude

John Doucette

Yes.

this is John. So,

is So, yes. the short answer

As – writes loss cession the shares quota and indicated forth. particularly participates and of accordingly grew Logan that previously, put to consequently, Logan picks Mt. with Everest business Everest Mt. on portfolios basically grew that in the the increase layers of

Meyer Shields

Okay, perfect. much. so Thank you

John Doucette

You are welcome.

Operator

questions for today. you gentlemen. That our ends and Thank ladies

Dom Addesso

the current mentioned, confident continue cat along our remain as strategy of our business. by years, business resurgence organic now has the a model, for which John adjustment business I as is succeeded I in operation think previously, by than of in is the build portfolio we losses today. diversifying each came portfolio model. This to profitable underwriting ratio But talked have consequence, our very evidenced what X But think exposure hope average a our Thank back our nevertheless, those credit, we as average circumstances of through lines X-year and pointed understanding operating classes and Furthermore, after it’s And with look less X from change. attrition $X casualty is I is that away a years. as profitable our can We the of entire the lessening be our it’s more breadth you, reinsurance our other I combined of thanks you leave the find noteworthy. XXXX, with sometimes than through I couple as if our the the and of get have what all specialty to I we and cycle that ROE business on the And it’s over natural results solid. last cat about, will improve. years it you And recognized insurance Todd our look reserve I it’s you with been operation again That’s – in XX.X%. want results of misleading. premium. this and your for better the billion at questions understanding of specialty the really in insurance mentioned examine And and at short-term that the I to future the regarding think emphasizing. very double Cat in Everest. we sense message business the X metrics, I But group expected holds better for points to ago. closely same underlying to companies better as worth exceed out, volatile. peer the over through you in the the maybe was

very for believe one. Thank we bright you morning. this So, much a your interest it’s

Operator

and This today’s ladies gentlemen. concludes conference. you, Thank

of now day. You great disconnect the may your lines and a phone have rest

Everest Re (EG) 1 Aug 182018 Q2 Earnings call transcript