Everest Group Earnings Call: Buybacks Amid Transition

Everest Group, Ltd. ((EG)) has held its Q4 earnings call. Read on for the main highlights of the call.

Everest Group’s latest earnings call struck a cautiously optimistic tone, as management balanced solid core performance and capital strength against near‑term volatility from portfolio reshaping. Executives highlighted stronger book value, robust investment income and firm reinsurance results, while stressing that weaker premiums, higher expenses and cash outflows are largely transitional.

Robust Buybacks Underscore Confidence in Valuation

Everest doubled down on capital returns, repurchasing $400 million of stock in Q4 2025 and another $100 million in January 2026, bringing 2025 total buybacks to about $800 million. Management set a quarterly buyback floor of $200 million and signaled they are willing to exceed it, arguing the current share price understates intrinsic value.

Book Value and Equity Show Strong Rebound

Shareholders’ equity ended the quarter at $15.5 billion, underlining the balance sheet’s resilience after a year of restructuring and risk transfer. Book value per share rose to $379.83, up 20.1% from year‑end 2024 after adjusting for $8 per share of dividends already paid out.

Profitability Metrics Highlight Solid Core Returns

Everest reported $549 million in net operating income for Q4, reflecting strong earning power despite one‑off headwinds. The company delivered a 14.2% operating ROE for the quarter and 12.4% for the full year, translating into an annualized total shareholder return of roughly 13.1%.

Investment Income Provides a Durable Earnings Engine

Net investment income climbed to $562 million in Q4, supported by higher assets under management and improved performance in alternatives. Alternative investments generated $125 million of income versus $41 million a year earlier, with the fixed‑income portfolio producing a book yield around 4.5% and new money deployed at about 4.7%.

Reinsurance Underwriting Remains a Profit Center

The reinsurance division delivered $255 million of underwriting income in Q4, confirming disciplined risk selection across regions. Segment gross written premiums slipped only 3.6% in constant currency excluding reinstatements, while the reinsurance combined ratio came in at a healthy 91.2%.

Underlying Attritional Margins Improve Despite Cat Losses

The group combined ratio was 98.4% in Q4, inflated by catastrophe losses and adverse development cover costs. Excluding $216 million of cat losses and $122 million of ADC premium, the attritional combined ratio improved to 89.9%, with the attritional loss ratio better by about 3.7 points at 60.2%.

Specialty Reinsurance and Third‑Party Capital Expand

Everest’s specialty reinsurance portfolio now totals about $2 billion of premium and runs with an attritional loss ratio in the mid‑80s, offering attractive risk‑adjusted returns. Its Mt. Logan third‑party capital platform has grown to over $2.5 billion of AUM as of January 1, 2026, backed by a strong investor pipeline.

Strategic Reshaping and Leadership Bolster Long‑Term Profile

In 2025 the group simplified its portfolio and reduced reserve risk, including a $1.2 billion adverse development cover that protects against legacy losses. It also sold commercial retail renewal rights to AIG for $426 million and bolstered its senior leadership team, laying the groundwork for more focused and less volatile earnings.

Premium Volume Declines as Casualty and Retail Shrink

Group gross written premiums fell to $4.3 billion in Q4, an 8.6% year‑over‑year decline in constant currency excluding reinstatements. The insurance segment was most affected, with GWP down 20.1% to $1.1 billion, reflecting the retail divestiture and deliberate cutbacks in U.S. casualty.

Retail Exit Triggers Restructuring and Near‑Term Cost Burden

Management expects about $150 million of restructuring charges in 2026 linked to the commercial retail exit, including roughly $80 million of real‑estate costs in Q4 2026. These items will be recorded in other income and expense, weighing on reported earnings even as they support a leaner, more profitable franchise over time.

ADC and Catastrophes Inflate the Reported Combined Ratio

The Q4 combined ratio of 98.4% was pushed higher by the second layer of the adverse development cover, which added roughly 3.2 points through $122 million of premium consideration. Catastrophe losses contributed another $216 million, or about 5.6 points, obscuring the improvement in underlying attritional performance.

Transitioning ‘Other’ Segment Faces Elevated Loss Ratios

As commercial retail business runs off and transitions to AIG, the Other segment is expected to post a combined ratio above 110% in 2026. Earned premium from this book will decline through the year, leading to combined‑ratio volatility as fixed transition costs are spread over a shrinking base.

Operating Cash Flow Hit by One‑Time ADC Payments

Operating cash flow was negative $398 million for the quarter, compared with a positive $780 million in the prior‑year period. Management attributed this swing mainly to the upfront consideration paid for the adverse development cover, emphasizing that the transaction protects the balance sheet while distorting near‑term cash metrics.

Higher Expense Ratios Reflect Mix Shift and One‑Offs

The insurance segment’s underwriting expense ratio rose to 21.5%, while the group’s underwriting‑related expense ratio increased about one point to 7.2%. Management cited lower casualty earned premium, plus one‑time items like accelerated IT depreciation and restructuring costs, as key drivers of the temporary expense pressure.

Deliberate Casualty Pullback Reduces Scale but De‑Risks

Since January 2024 Everest has cut more than $1.2 billion of casualty premium, trading volume for better risk‑adjusted returns. This strategy has contributed to the decline in overall GWP, but management argues it enhances long‑term profitability by exiting business where pricing no longer compensates for liability trends.

Timing of Capital Release to Drive Earnings Volatility

Capital and reserve dynamics tied to the renewal‑rights deal and runoff will delay the full benefit of de‑risking. Management expects a meaningful release of capital beginning in the second half of 2026 and continuing into 2027, implying some variability in excess capital and buyback capacity before those reserves run down.

Guidance Points to Discipline, Transition Costs and Buybacks

For 2026, Everest guided to group underwriting expenses of about 6%–7%, trending toward roughly 6% by 2027, and flagged that the Other segment will run at a combined ratio above 110% while receiving a modest monthly net benefit from AIG. They plan roughly $150 million of restructuring charges, will keep elevated loss picks for U.S. liability, target a mid‑90s combined ratio for Global Wholesale & Specialty as it scales, and maintain a $200 million quarterly repurchase floor supported by expected capital releases and a high‑quality, short‑duration fixed‑income portfolio.

Everest’s call painted a picture of a company in mid‑transition, absorbing short‑term pain to sharpen its portfolio and improve long‑term returns. For investors, the key messages were strengthening underlying margins, aggressive buybacks and a solid investment engine, offset by near‑term earnings noise as retail business exits and reserves run off.