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Everest Reports Fourth Quarter and Full-Year 2023 Results

Record Annual Net Income of $2.5 billion and Operating Income of $2.8 billion

Annual 20.9% Net Income ROE and 23.1% Operating Income ROE; TSR1 of 26.5%

Fourth Quarter Net Income of $804 million and Operating Income of $1.1 billion

Well Positioned in 2024 Following Outstanding 1/1 Renewals

Everest Group, Ltd. (NYSE: EG), a global underwriting leader providing best-in-class property, casualty, and specialty reinsurance and insurance solutions, today reported its fourth quarter 2023 results.

Full Year 2023 Highlights

  • 20.9% Net Income ROE and 23.1% Operating Income ROE; Total Shareholder Return of 26.5%1
  • $16.6 billion in gross written premium with year-over-year growth of 20.9%2 as reported for the Group, 26.4%2 for Reinsurance, and 10.3%2 for Insurance
  • Combined ratios of 90.9% for the Group, 86.4% for Reinsurance and 103.0% for Insurance
  • Group attritional combined ratio of 86.9% when excluding the impact of 0.7 points from profit commissions associated with net favorable loss reserve development versus 87.4% in the prior year
  • $451 million of pre-tax catastrophe losses net of recoveries and reinstatement premiums, versus $945 million in the prior year
  • Net investment income increased over $600 million to $1.4 billion, a company record
  • Book value per share excluding unrealized gains (losses) on AFS fixed maturity investments increased 23.8% to $320.95 versus $259.18 at December 31, 2022
  • Strong operating cashflow for the year of $4.6 billion, a company record

Fourth Quarter 2023 Highlights

  • 23.8% Net Income ROE and 32.4% Operating Income ROE
  • $4.3 billion in gross written premium with year-over-year growth of 18.3%2 for the Group, 21.9%2 for Reinsurance, and 11.6%2 for Insurance
  • Combined ratios of 93.2% for the Group, 78.8% for Reinsurance and 132.4% for Insurance
  • Group attritional combined ratio of 86.7% when excluding the impact of 2.6 points from profit commissions associated with favorable loss reserve development versus 87.3% in the prior year
  • Net favorable development of approximately $5 million in prior year loss reserves, resulting in a decrease of 0.1 points on the combined ratio for the Group. Reinsurance benefited from favorable development of $397 million, largely from mortgage and short-tail lines. Insurance reserves were strengthened by $392 million to address the impact of social inflation for long-tail lines, focused on the 2016 to 2019 accident years.
  • $143 million of pre-tax catastrophe losses net of recoveries and reinstatement premiums, primarily driven by Hurricane Otis, versus $15 million in the prior year
  • Net investment income improved to $411 million versus $210 million in the prior year fourth quarter, a company record, driven by strong fixed income and alternative investment returns
  • Successful execution of our strategy to sell $3.3 billion of lower yielding bonds in the quarter, reinvesting the proceeds into higher-yielding securities with enhanced overall credit quality, contributing to after-tax net realized losses of approximately $211 million and extending duration from 2.7 to 3.3 years sequentially. This is expected to add significant additional interest income in 2024 and beyond.
  • Recognized a $578 million tax benefit from realized deferred taxes accrued driven by the change in Bermuda tax law. This is a preliminary estimate and subject to change.
  • Strong operating cashflow for the quarter of $1.0 billion, in-line with the prior year quarter
  • With the successful completion of January 1 renewals, we were able to fully deploy the remaining capital raised in May, as well as optimize our hedging strategy

Footnote 1 denotes annualized figure; represents Total Shareholder Return or "TSR"

Footnote 2 denotes constant currency figure and excludes reinstatement premiums

“Everest's strong fourth quarter performance capped off an exceptional 2023, delivering record annual results in underwriting income, net investment income, operating income, net income, and cash flow from operations. We executed on our strategic objectives, while delivering an operating ROE of over 23% and a Total Shareholder Return of over 26% for the full year," said Juan C. Andrade, Everest President and CEO. "2023 was the most profitable year in our history. The Everest of today is a stronger and more sophisticated company. We are delivering leading financial returns and we are on track to achieve the targets we set out at our most recent Investor Day. The strength and flexibility of our business was apparent in the fourth quarter as we continued to generate leading returns and further solidified our balance sheet. Everest has entered 2024 stronger and better positioned to take advantage of market opportunities in both franchises. This is evidenced by another well-executed and outstanding January 1 reinsurance renewal and improved primary pricing, generating excellent outcomes for our global portfolio. Looking ahead, we remain focused on achieving our strategic plan goals, with significant momentum across both businesses, and an exceptional team driving even greater value for our shareholders."

Summary of Fourth Quarter 2023 Net Income and Other Items

  • Net Income of $804 million, equal to $18.53 per diluted share versus fourth quarter 2022 net income of $496 million, equal to $12.66 per diluted share
  • Operating income of $1.1 billion, equal to $25.18 per diluted share versus fourth quarter 2022 net operating income of $478 million, equal to $12.21 per diluted share
  • GAAP combined ratio of 93.2%, including 4.3 points of catastrophe losses versus the fourth quarter 2022 figure of 87.8%, including 0.5 points of catastrophe losses

The following table summarizes the Company’s Net Income and related financial metrics.

Net income and operating income

Q4

 

Year to Date

 

Q4

 

Year to Date

All values in USD millions except for per share amounts and percentages

2023

 

2023

 

2022

 

2022

Everest Group

 

 

 

 

 

 

 

Net income (loss)

804

 

2,517

 

496

 

597

Operating income (loss) (1)

1,093

 

2,776

 

478

 

1,065

 

 

 

 

 

 

 

 

Net income (loss) per diluted common share

18.53

 

60.19

 

12.66

 

15.19

Net operating income (loss) per diluted common share

25.18

 

66.39

 

12.21

 

27.08

 

 

 

 

 

 

 

 

Net income (loss) return on average equity (annualized)

23.8%

 

20.9%

 

20.1%

 

6.0%

After-tax operating income (loss) return on average equity (annualized)

32.4%

 

23.1%

 

19.4%

 

10.6%

Notes

(1)

Refer to the reconciliation of net income to net operating income found on page 8 of this press release

Shareholders' Equity and Book Value per Share

Q4

 

Year to Date

 

Q4

 

Year to Date

All values in USD millions except for per share amounts and percentages

2023

 

2023

 

2022

 

2022

Beginning shareholders' equity

11,226

 

8,441

 

7,649

 

10,139

Net income (loss)

804

 

2,517

 

496

 

597

Change - unrealized gains (losses) - Fixed inc. investments

1,146

 

986

 

250

 

(1,948)

Dividends to shareholders

(76)

 

(288)

 

(65)

 

(255)

Purchase of treasury shares

 

 

(1)

 

(61)

Public equity offering of shares

 

1,445

 

 

Other

103

 

102

 

110

 

(31)

Ending shareholders' equity

13,202

 

13,202

 

8,441

 

8,441

 

 

 

 

 

 

 

 

Common shares outstanding

 

 

43.4

 

 

 

39.2

Book value per common share outstanding

 

 

304.29

 

 

 

215.54

Less: Unrealized appreciation/depreciation of fixed maturity investments ("URAD")

 

 

(16.65)

 

 

 

(43.64)

Adjusted book value per common share outstanding excluding URAD

 

 

320.95

 

 

 

259.18

 

 

 

 

 

 

 

 

Change in BVPS adjusted for dividends

 

 

44.3 %

 

 

 

(14.0) %

Total Shareholder Return ("TSR") - Annualized

 

 

26.5 %

 

 

 

5.4 %

Common share dividends paid - last 12 months

 

 

6.80

 

 

 

6.50

The following information summarizes the Company’s underwriting results, on a consolidated basis and by segment – Reinsurance and Insurance, with selected commentary on results by segment.

Underwriting information - Everest Group

Q4

 

Year to Date

 

Q4

 

Year to Date

 

Year on Year Change

All values in USD millions except for percentages

2023

 

2023

 

2022

 

2022

 

Q4

 

Year to Date

Gross written premium

4,323

 

16,637

 

3,639

 

13,952

 

18.8 %

 

19.2 %

Net written premium

3,861

 

14,730

 

3,188

 

12,344

 

21.1 %

 

19.3 %

 

 

 

 

 

 

 

 

 

 

 

 

Loss Ratio:

 

 

 

 

 

 

 

 

 

 

 

Current year

58.9 %

 

59.2 %

 

59.6 %

 

59.8 %

 

(0.7) pts

 

(0.6) pts

Prior year

(0.1) %

 

— %

 

— %

 

— %

 

(0.1) pts

 

— pts

Catastrophe

4.3 %

 

3.5 %

 

0.5 %

 

9.0 %

 

3.8 pts

 

(5.5) pts

Total Loss ratio

63.0 %

 

62.7 %

 

60.1 %

 

68.7 %

 

2.9 pts

 

(6.0) pts

Commission and brokerage ratio

23.8 %

 

22.0 %

 

21.6 %

 

21.4 %

 

2.2 pts

 

0.6 pts

Other underwriting expenses

6.3 %

 

6.3 %

 

6.0 %

 

5.8 %

 

0.3 pts

 

0.5 pts

Combined ratio

93.2 %

 

90.9 %

 

87.8 %

 

96.0 %

 

5.4 pts

 

(5.1) pts

Attritional combined ratio (1), (3)

89.3 %

 

87.6 %

 

87.3 %

 

87.4 %

 

2.0 pts

 

0.2 pts

 

 

 

 

 

 

 

 

 

 

 

 

Pre-tax net catastrophe losses (2)

143

 

451

 

15

 

945

 

 

 

 

Pre-tax net unfavorable (favorable) prior year reserve development

(5)

 

(5)

 

 

(1)

 

 

 

 

Notes

(1)

Attritional ratios exclude catastrophe losses, net CAT reinstatement premiums earned, prior year development, COVID-19 losses and losses from the Russia/Ukraine war.

(2)

Pre-tax net catastrophe losses are net of reinsurance and reinstatement premiums

(3)

The attritional combined ratio for quarter and year ended December 31, 2023 included approximately $94m of profit commission related to loss reserves releases. Excluding this profit commission, the Group’s attritional combined ratio would have been 86.7% and 86.9% for the quarter and year ended December 31, 2023, respectively.

Reinsurance Segment – Quarterly Highlights

  • Gross written premiums grew 21.9% on a constant dollar basis and excluding reinstatement premiums, to approximately $2.9 billion. Growth was broad-based across geographies and lines.
  • Growth was driven by 39.2% growth in Property Pro-Rata, 23.3% growth in Property Catastrophe XOL, and 45.2% growth in Property Non-Catastrophe XOL, when adjusting for reinstatement premiums, as pricing increases and a flight to quality continue globally.
  • Robust pricing momentum continued in the fourth quarter, with Cat pricing up over 45% with improved terms/conditions.
  • Attritional loss ratio improved 40-basis points over last year to 57.8%, while the attritional combined ratio improved 90-basis points to 85.1%, when excluding the impact of 3.6 points from profit commissions associated with favorable loss reserve development.
  • Net favorable prior year development of $397 million, primarily driven by a combination of well-seasoned mortgage and short-tail lines.
  • Pre-tax catastrophe losses were $135 million net of estimated recoveries and reinstatement premiums, driven by Hurricane Otis as well as a number of mid-sized events globally.

Underwriting information - Reinsurance segment

Q4

 

Year to Date

 

Q4

 

Year to Date

 

Year on Year Change

All values in USD millions except for percentages

2023

 

2023

 

2022

 

2022

 

Q4

 

Year to Date

Gross written premium

2,894

 

11,460

 

2,360

 

9,248

 

22.6 %

 

23.9 %

Net written premium

2,754

 

10,802

 

2,301

 

8,919

 

19.7 %

 

21.1 %

 

 

 

 

 

 

 

 

 

 

 

 

Loss Ratio:

 

 

 

 

 

 

 

 

 

 

 

Current year

57.6 %

 

57.6 %

 

58.2 %

 

58.5 %

 

(0.6) pts

 

(0.9) pts

Prior year

(15.2) %

 

(4.1) %

 

0.3 %

 

0.1 %

 

(15.5) pts

 

(4.2) pts

Catastrophe

5.5 %

 

4.6 %

 

0.5 %

 

10.8 %

 

5.0 pts

 

(6.2) pts

Total Loss ratio

47.9 %

 

58.1 %

 

59.0 %

 

69.4 %

 

(11.1) pts

 

(11.3) pts

Commission and brokerage ratio

28.4 %

 

25.7 %

 

24.9 %

 

24.6 %

 

3.5 pts

 

1.1 pts

Other underwriting expenses

2.5 %

 

2.6 %

 

2.8 %

 

2.5 %

 

(0.3) pts

 

0.1 pts

Combined ratio

78.8 %

 

86.4 %

 

86.8 %

 

96.5 %

 

(8.0) pts

 

(10.1) pts

Attritional combined ratio (1), (3)

88.7 %

 

86.1 %

 

86.0 %

 

86.2 %

 

2.7 pts

 

(0.1) pts

 

 

 

 

 

 

 

 

 

 

 

 

Pre-tax net catastrophe losses (2)

135

 

430

 

10

 

820

 

 

 

 

Pre-tax net unfavorable (favorable) prior year reserve development

(397)

 

(397)

 

7

 

5

 

 

 

 

Notes

(1)

Attritional ratios exclude catastrophe losses, net CAT reinstatement premiums earned, prior year development, COVID-19 losses and losses from the Russia/Ukraine war.

(2)

Pre-tax net catastrophe losses are net of reinsurance and reinstatement premiums

(3)

The attritional combined ratio for quarter and year ended December 31, 2023 included approximately $94m of profit commission related to loss reserves releases. Excluding this profit commission, the Reinsurance Segment’s attritional combined ratio would have been 85.1% for the quarter and year ended December 31, 2023, respectively.

Insurance Segment – Quarterly Highlights

  • Gross written premiums rose to $1.4 billion, a 11.6% increase year-over-year in constant dollars, driven by a diversified mix of property and specialty lines, partially offset by lower written premiums in monoline workers' compensation and financial lines.
  • Pre-tax catastrophe losses were $8 million, net of estimated recoveries and reinstatement premiums, relatively in-line with the prior year.
  • Net reserve strengthening of $392 million, reflecting our proactive approach to casualty line reserves, which are impacted by well-defined social inflation factors, focused on accident years 2016 to 2019.
  • Attritional loss ratio improved 70-basis points over last year to 62.6%, driven by favorable current year loss experience and business mix.
  • Expense ratio of 28.2% with continued investment in systems, talent, and our global platform.
  • Pricing continues to exceed loss trend.

Underwriting information - Insurance segment

Q4

 

Year to Date

 

Q4

 

Year to Date

 

Year on Year Change

All values in USD millions except for percentages

2023

 

2023

 

2022

 

2022

 

Q4

 

Year to Date

Gross written premium

1,428

 

5,177

 

1,278

 

4,704

 

11.7 %

 

10.0 %

Net written premium

1,107

 

3,929

 

887

 

3,426

 

24.8 %

 

14.7 %

 

 

 

 

 

 

 

 

 

 

 

 

Loss Ratio:

 

 

 

 

 

 

 

 

 

 

 

Current year

62.5 %

 

63.6 %

 

63.3 %

 

63.2 %

 

(0.8) pts

 

0.4 pts

Prior year

40.8 %

 

10.8 %

 

(0.9) %

 

(0.2) %

 

41.7 pts

 

11.0 pts

Catastrophe

0.9 %

 

0.6 %

 

0.6 %

 

3.9 %

 

0.3 pts

 

(3.3) pts

Total Loss ratio

104.2 %

 

75.0 %

 

63.1 %

 

66.9 %

 

41.1 pts

 

8.1 pts

Commission and brokerage ratio

11.6 %

 

11.8 %

 

12.7 %

 

12.9 %

 

(1.1) pts

 

(1.1) pts

Other underwriting expenses

16.6 %

 

16.2 %

 

14.7 %

 

14.6 %

 

1.9 pts

 

1.6 pts

Combined ratio

132.4 %

 

103.0 %

 

90.5 %

 

94.4 %

 

41.8 pts

 

8.6 pts

Attritional combined ratio (1)

90.8 %

 

91.7 %

 

90.7 %

 

90.7 %

 

0.1 pts

 

1.0 pts

 

 

 

 

 

 

 

 

 

 

 

 

Pre-tax net catastrophe losses (2)

8

 

20

 

5

 

125

 

 

 

 

Pre-tax net unfavorable (favorable) prior year reserve development

392

 

392

 

(7)

 

(7)

 

 

 

 

Notes

(1)

Attritional ratios exclude catastrophe losses, net CAT reinstatement premiums earned, prior year development, COVID-19 losses and losses from the Russia/Ukraine war.

(2)

Pre-tax net catastrophe losses are net of reinsurance and reinstatement premiums

Investments and Shareholders’ Equity as of December 31, 2023

  • Total invested assets and cash of $37.1 billion versus $29.9 billion on December 31, 2022
  • Shareholders’ equity of $13.2 billion vs. $8.4 billion on December 31, 2022, including $723 million of unrealized net losses on AFS fixed maturity investments
  • Shareholders’ equity excluding unrealized gains (losses) on AFS fixed maturity investments of $13.9 billion versus $10.1 billion on December 31, 2022
  • Book value per share of $304.29 versus $215.54 at December 31, 2022
  • Book value per share excluding unrealized gains (losses) on AFS fixed maturity investments of $320.95 versus $259.18 at December 31, 2022
  • Common share dividends declared and paid in the quarter of $1.75 per share equal to $76 million

This news release contains forward-looking statements within the meaning of the U.S. federal securities laws. We intend these forward-looking statements to be covered by the safe harbor provisions for forward-looking statements in the U.S. Federal securities laws. These statements involve risks and uncertainties that could cause actual results to differ materially from those contained in forward-looking statements made on behalf of the Company. These risks and uncertainties include the impact of general economic conditions and conditions affecting the insurance and reinsurance industry, the adequacy of our reserves, our ability to assess underwriting risk, trends in rates for property and casualty insurance and reinsurance, competition, investment market and investment income fluctuations, trends in insured and paid losses, catastrophes, pandemic, regulatory and legal uncertainties and other factors described in our latest Annual Report on Form 10-K. The Company undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

About Everest

Everest Group, Ltd. (Everest) is a global underwriting leader providing best-in-class property, casualty, and specialty reinsurance and insurance solutions that address customers’ most pressing challenges. Known for a 50-year track record of disciplined underwriting, capital and risk management, Everest, through its global operating affiliates, is committed to underwriting opportunity for colleagues, customers, shareholders, and communities worldwide.

Everest common stock (NYSE: EG) is a component of the S&P 500 index.

Additional information about Everest, our people, and our products can be found on our website at www.everestglobal.com.

A conference call discussing the results will be held at 8:00 a.m. Eastern Time on February 8, 2024. The call will be available on the Internet through the Company’s website at https://www.everestglobal.com/investor-relations.

Recipients are encouraged to visit the Company’s website to view supplemental financial information on the Company’s results. The supplemental information is located at www.everestglobal.com in the “Investors/Financials/Quarterly Results” section of the website. The supplemental financial information may also be obtained by contacting the Company directly.

_______________________________________________

The Company generally uses after-tax operating income (loss), a non-GAAP financial measure, to evaluate its performance. After-tax operating income (loss) consists of net income (loss) excluding after-tax net gains (losses) on investments and after-tax net foreign exchange income (expense) as the following reconciliation displays:

(Dollars in millions, except per share amounts)

Three Months Ended December 31,

 

Twelve Months Ended December 31,

 

2023

 

 

 

2022

 

 

 

2023

 

 

 

2022

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(unaudited)

 

(unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Amount

 

Per Diluted Share

 

Amount

 

Per Diluted Share

 

Amount

 

Per Diluted Share

 

Amount

 

Per Diluted Share

After-tax operating income (loss)

$

1,093

 

 

$

25.18

 

 

$

478

 

 

$

12.21

 

 

$

2,776

 

 

$

66.39

 

 

$

1,065

 

 

$

27.08

 

After-tax net gains (losses) on investments

 

(220

)

 

 

(5.06

)

 

 

49

 

 

 

1.25

 

 

 

(236

)

 

 

(5.65

)

 

 

(366

)

 

 

(9.30

)

After-tax net foreign exchange income (expense)

 

(69

)

 

 

(1.60

)

 

 

(31

)

 

 

(0.80

)

 

 

(23

)

 

 

(0.55

)

 

 

(102

)

 

 

(2.60

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income (loss)

$

804

 

 

$

18.53

 

 

$

496

 

 

$

12.66

 

 

$

2,517

 

 

$

60.19

 

 

$

597

 

 

$

15.19

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(Some amounts may not reconcile due to rounding.)

Although net gains (losses) on investments and net foreign exchange income (expense) are an integral part of the Company’s insurance operations, the determination of net gains (losses) on investments and foreign exchange income (expense) is independent of the insurance underwriting process. The Company believes that the level of net gains (losses) on investments and net foreign exchange income (expense) for any particular period are not indicative of the performance of the underlying business in that particular period. Providing only a GAAP presentation of net income (loss) makes it more difficult for users of the financial information to evaluate the Company’s success or failure in its basic business and may lead to incorrect or misleading assumptions and conclusions. The Company understands that the equity analysts who follow the Company focus on after-tax operating income (loss) in their analyses for the reasons discussed above. The Company provides after-tax operating income (loss) to investors so that they have what management believes to be a useful supplement to GAAP information concerning the Company’s performance.

--Financial Details Follow--

EVEREST GROUP, LTD.

CONSOLIDATED STATEMENTS OF OPERATIONS

AND COMPREHENSIVE INCOME (LOSS)

 

Three Months Ended

 

Twelve Months Ended

 

December 31

 

December 31

(Dollars in millions, except per share amounts)

 

2023

 

 

 

2022

 

 

 

2023

 

 

 

2022

 

 

(unaudited)

 

(unaudited

 

 

REVENUES:

 

 

 

 

 

 

 

Premiums earned

$

3,578

 

 

$

3,012

 

 

$

13,443

 

 

$

11,787

 

Net investment income

 

411

 

 

 

210

 

 

 

1,434

 

 

 

830

 

Total net gains (losses) on investments

 

(255

)

 

 

64

 

 

 

(276

)

 

 

(455

)

Other income (expense)

 

(75

)

 

 

(30

)

 

 

(14

)

 

 

(102

)

Total revenues

 

3,659

 

 

 

3,256

 

 

 

14,587

 

 

 

12,060

 

 

 

 

 

 

 

 

 

CLAIMS AND EXPENSES:

 

 

 

 

 

 

 

Incurred losses and loss adjustment expenses

 

2,254

 

 

 

1,811

 

 

 

8,427

 

 

 

8,100

 

Commission, brokerage, taxes and fees

 

853

 

 

 

651

 

 

 

2,952

 

 

 

2,528

 

Other underwriting expenses

 

226

 

 

 

182

 

 

 

846

 

 

 

682

 

Corporate expenses

 

18

 

 

 

16

 

 

 

73

 

 

 

61

 

Interest, fees and bond issue cost amortization expense

 

36

 

 

 

27

 

 

 

134

 

 

 

101

 

Total claims and expenses

 

3,387

 

 

 

2,687

 

 

 

12,432

 

 

 

11,472

 

 

 

 

 

 

 

 

 

INCOME (LOSS) BEFORE TAXES

 

272

 

 

 

568

 

 

 

2,154

 

 

 

588

 

Income tax expense (benefit)

 

(532

)

 

 

72

 

 

 

(363

)

 

 

(9

)

 

 

 

 

 

 

 

 

NET INCOME (LOSS)

$

804

 

 

$

496

 

 

$

2,517

 

 

$

597

 

 

 

 

 

 

 

 

 

Other comprehensive income (loss), net of tax:

 

 

 

 

 

 

 

Unrealized appreciation (depreciation) ("URA(D)") on securities arising during the period

 

923

 

 

 

223

 

 

 

743

 

 

 

(2,037

)

Reclassification adjustment for realized losses (gains) included in net income (loss)

 

223

 

 

 

28

 

 

 

244

 

 

 

89

 

Total URA(D) on securities arising during the period

 

1,146

 

 

 

251

 

 

 

986

 

 

 

(1,948

)

 

 

 

 

 

 

 

 

Foreign currency translation and other adjustments

 

76

 

 

 

86

 

 

 

59

 

 

 

(77

)

 

 

 

 

 

 

 

 

Benefit plan actuarial net gain (loss) for the period

 

15

 

 

 

15

 

 

 

15

 

 

 

15

 

Reclassification adjustment for amortization of net (gain) loss included in net income

 

 

 

 

 

 

 

2

 

 

 

2

 

Total benefit plan net gain (loss) for the period

 

16

 

 

 

15

 

 

 

17

 

 

 

17

 

Total other comprehensive income (loss), net of tax

 

1,238

 

 

 

352

 

 

 

1,063

 

 

 

(2,008

)

 

 

 

 

 

 

 

 

COMPREHENSIVE INCOME (LOSS)

$

2,041

 

 

$

848

 

 

$

3,580

 

 

$

(1,411

)

 

 

 

 

 

 

 

 

EARNINGS PER COMMON SHARE:

 

 

 

 

 

 

 

Basic

$

18.53

 

 

$

12.66

 

 

$

60.19

 

 

$

15.19

 

Diluted

 

18.53

 

 

 

12.66

 

 

 

60.19

 

 

 

15.19

 

EVEREST GROUP, LTD.

CONSOLIDATED BALANCE SHEETS

 

December 31,

(Dollars and share amounts in millions, except par value per share)

 

2023

 

 

 

2022

 

 

(unaudited)

 

 

ASSETS:

 

 

 

Fixed maturities - available for sale, at fair value

$

27,740

 

 

$

22,236

 

(amortized cost: 2023, $28,568; 2022, $24,191, credit allowances: 2023, $(48); 2022, $(54))

 

 

 

Fixed maturities - held to maturity, at amortized cost

 

 

 

(fair value: 2023, $854; 2022, $821, net of credit allowances: 2023, $(8); 2022, $(9))

 

855

 

 

 

839

 

Equity securities, at fair value

 

188

 

 

 

281

 

Other invested assets

 

4,794

 

 

 

4,085

 

Short-term investments

 

2,127

 

 

 

1,032

 

Cash

 

1,437

 

 

 

1,398

 

Total investments and cash

 

37,142

 

 

 

29,872

 

Accrued investment income

 

324

 

 

 

217

 

Premiums receivable (net of credit allowances: 2023, $(41); 2022, $(29))

 

4,768

 

 

 

3,619

 

Reinsurance paid loss recoverables (net of credit allowances: 2023, $(26); 2022, $(23))

 

164

 

 

 

136

 

Reinsurance unpaid loss recoverables

 

2,098

 

 

 

2,105

 

Funds held by reinsureds

 

1,135

 

 

 

1,056

 

Deferred acquisition costs

 

1,247

 

 

 

962

 

Prepaid reinsurance premiums

 

713

 

 

 

610

 

Income tax asset, net

 

868

 

 

 

459

 

Other assets (net of credit allowances: 2023, $(9); 2022, $(5))

 

941

 

 

 

930

 

TOTAL ASSETS

$

49,399

 

 

$

39,966

 

 

 

 

 

LIABILITIES:

 

 

 

Reserve for losses and loss adjustment expenses

 

24,604

 

 

 

22,065

 

Unearned premium reserve

 

6,622

 

 

 

5,147

 

Funds held under reinsurance treaties

 

24

 

 

 

13

 

Amounts due to reinsurers

 

650

 

 

 

567

 

Losses in course of payment

 

171

 

 

 

74

 

Senior notes

 

2,349

 

 

 

2,347

 

Long-term notes

 

218

 

 

 

218

 

Borrowings from FHLB

 

819

 

 

 

519

 

Accrued interest on debt and borrowings

 

22

 

 

 

19

 

Unsettled securities payable

 

137

 

 

 

1

 

Other liabilities

 

582

 

 

 

555

 

TOTAL LIABILITIES

 

36,197

 

 

 

31,525

 

 

 

 

 

SHAREHOLDERS' EQUITY:

 

 

 

Preferred shares, par value: $0.01; 50.0 shares authorized; no shares issued and outstanding

 

 

 

 

 

Common shares, par value: $0.01; 200.0 shares authorized; (2023) 74.2 and (2022) 69.9

 

 

 

outstanding before treasury shares

 

1

 

 

 

1

 

Additional paid-in capital

 

3,773

 

 

 

2,302

 

Accumulated other comprehensive income (loss), net of deferred income tax expense (benefit)

 

 

 

of $(99) at 2023 and $(250) at 2022

 

(934

)

 

 

(1,996

)

Treasury shares, at cost: 30.8 shares (2023) and 30.8 shares (2022)

 

(3,908

)

 

 

(3,908

)

Retained earnings

 

14,270

 

 

 

12,042

 

Total shareholders' equity

 

13,202

 

 

 

8,441

 

TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY

$

49,399

 

 

$

39,966

 

EVEREST GROUP, LTD.

CONSOLIDATED STATEMENTS OF CASH FLOWS

 

Twelve Months Ended

 

December 31

(Dollars in millions)

 

2023

 

 

 

2022

 

 

(unaudited)

CASH FLOWS FROM OPERATING ACTIVITIES:

 

 

 

Net income (loss)

$

2,517

 

 

$

597

 

Adjustments to reconcile net income to net cash provided by operating activities:

 

 

 

Decrease (increase) in premiums receivable

 

(1,064

)

 

 

(435

)

Decrease (increase) in funds held by reinsureds, net

 

(66

)

 

 

(197

)

Decrease (increase) in reinsurance recoverables

 

143

 

 

 

(413

)

Decrease (increase) in income taxes

 

(559

)

 

 

(181

)

Decrease (increase) in prepaid reinsurance premiums

 

(46

)

 

 

(166

)

Increase (decrease) in reserve for losses and loss adjustment expenses

 

2,256

 

 

 

3,477

 

Increase (decrease) in unearned premiums

 

1,387

 

 

 

655

 

Increase (decrease) in amounts due to reinsurers

 

18

 

 

 

201

 

Increase (decrease) in losses in course of payment

 

93

 

 

 

(186

)

Change in equity adjustments in limited partnerships

 

(168

)

 

 

(94

)

Distribution of limited partnership income

 

120

 

 

 

180

 

Change in other assets and liabilities, net

 

(339

)

 

 

(297

)

Non-cash compensation expense

 

49

 

 

 

45

 

Amortization of bond premium (accrual of bond discount)

 

(64

)

 

 

55

 

Net (gains) losses on investments

 

276

 

 

 

455

 

Net cash provided by (used in) operating activities

 

4,553

 

 

 

3,695

 

 

 

 

 

CASH FLOWS FROM INVESTING ACTIVITIES:

 

 

 

Proceeds from fixed maturities matured/called/repaid - available for sale

 

2,310

 

 

 

2,626

 

Proceeds from fixed maturities sold - available for sale

 

3,849

 

 

 

1,403

 

Proceeds from fixed maturities matured/called/repaid - held to maturity

 

105

 

 

 

39

 

Proceeds from equity securities sold

 

126

 

 

 

2,217

 

Distributions from other invested assets

 

245

 

 

 

266

 

Cost of fixed maturities acquired - available for sale

 

(10,653

)

 

 

(7,344

)

Cost of fixed maturities acquired - held to maturity

 

(112

)

 

 

(153

)

Cost of equity securities acquired

 

(17

)

 

 

(1,003

)

Cost of other invested assets acquired

 

(902

)

 

 

(1,547

)

Net change in short-term investments

 

(1,034

)

 

 

149

 

Net change in unsettled securities transactions

 

181

 

 

 

(71

)

Net cash provided by (used in) investing activities

 

(5,902

)

 

 

(3,418

)

 

 

 

 

CASH FLOWS FROM FINANCING ACTIVITIES:

 

 

 

Common shares issued (redeemed) during the period for share-based compensation, net of expense

 

(23

)

 

 

(17

)

Proceeds from public offering of common shares

 

1,445

 

 

 

 

Purchase of treasury shares

 

 

 

 

(61

)

Dividends paid to shareholders

 

(288

)

 

 

(255

)

Cost of debt repurchase

 

 

 

 

(6

)

Net FHLB borrowings (repayments)

 

300

 

 

 

 

Cost of shares withheld on settlements of share-based compensation awards

 

(24

)

 

 

(20

)

Net cash provided by (used in) financing activities

 

1,409

 

 

 

(359

)

 

 

 

 

EFFECT OF EXCHANGE RATE CHANGES ON CASH

 

(23

)

 

 

39

 

 

 

 

 

Net increase (decrease) in cash

 

38

 

 

 

(42

)

Cash, beginning of period

 

1,398

 

 

 

1,441

 

Cash, end of period

$

1,437

 

 

$

1,398

 

 

 

 

 

SUPPLEMENTAL CASH FLOW INFORMATION:

 

 

 

Income taxes paid (recovered)

$

196

 

 

$

171

 

Interest paid

 

130

 

 

 

98

 

 

 

 

 

NON-CASH TRANSACTIONS:

 

 

 

Reclassification of specific investments from fixed maturity securities, available for sale at fair value

 

 

 

to fixed maturity securities, held to maturity at amortized cost net of credit allowances

 

 

 

 

722

 

On December 27, 2023, the Government of Bermuda enacted the Corporate Income Tax Act 2023, which will apply a 15% corporate income tax to certain Bermuda businesses in fiscal years beginning on or after January 1, 2025. The act includes a provision referred to as the economic transition adjustment, which is intended to provide a fair and equitable transition into the tax regime, and results in a deferred tax benefit for the Company. Pursuant to this legislation, the Company has estimated a $578 million net deferred tax asset as of December 31, 2023. This amount could be subject to change. Any changes will be reflected in the 4th quarter of 2023 as presented in the Company's 2023 Form 10-K filing. Net income (loss), after-tax operating income (loss), net income (loss) per diluted common share, after-tax operating income (loss) per diluted common share, net income ROE, operating income ROE, total shareholder return, book value per common share, and adjusted book value per common share excluding URAD excluding the benefit associated with the net deferred tax asset is displayed in the following reconciliation:

 

Three Months Ended December 31,

 

Twelve Months Ended December 31,

 

2023

 

2023

 

 

 

Excl.

 

Bermuda CIT

 

 

 

Excl.

 

Bermuda CIT

 

As Reported

 

Bermuda Tax

 

impact

 

As Reported

 

Bermuda Tax

 

impact

Net income (loss)

$

804

 

 

$

226

 

 

$

578

 

$

2,517

 

 

$

1,939

 

 

$

578

Operating income (loss)

$

1,093

 

 

$

515

 

 

$

578

 

$

2,776

 

 

$

2,198

 

 

$

578

 

 

 

 

 

 

 

 

 

 

 

 

Per common share diluted net income (loss)

$

18.53

 

 

$

5.21

 

 

$

13.31

 

$

60.19

 

 

$

46.38

 

 

$

13.81

Per common share diluted operating income (loss)

$

25.18

 

 

$

11.87

 

 

$

13.31

 

$

66.39

 

 

$

52.58

 

 

$

13.81

 

 

 

 

 

 

 

 

 

 

 

 

Return on equity (annualized)

 

 

 

 

 

 

 

 

 

 

 

After-tax operating income (loss)

 

32.4

%

 

 

15.6

%

 

16.8 pts

 

 

23.1

%

 

 

18.7

%

 

4.4 pts

After-tax net gains (losses) on investments

 

-6.5

%

 

 

-6.6

%

 

0.1 pts

 

 

-2.0

%

 

 

-2.0

%

 

— pts

After-tax foreign exchange income (expense)

 

-2.1

%

 

 

-2.1

%

 

— pts

 

 

-0.2

%

 

 

-0.2

%

 

— pts

Net income (loss)

 

23.8

%

 

 

6.9

%

 

16.9 pts

 

 

20.9

%

 

 

16.5

%

 

4.4 pts

 

 

 

 

 

 

 

 

 

 

 

 

Total Shareholder Return (TSR)

 

 

 

 

 

 

 

26.5

%

 

 

21.3

%

 

5.2 pts

Book value per common share outstanding

$

304.29

 

 

$

290.98

 

 

$

13.31

 

$

304.29

 

 

$

290.98

 

 

$

13.31

Adjusted book value per common share outstanding excluding ("URAD")

$

320.95

 

 

$

307.63

 

 

$

13.32

 

$

320.95

 

 

$

307.63

 

 

$

13.32

(Some amounts may not reconcile due to rounding.)

 

Contacts

Media: Dawn Lauer

Chief Communications Officer

908.300.7670

Investors: Matt Rohrmann

Head of Investor Relations

908.604.7343

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