Everest Group, Ltd. · NYSE:EG
Everest — Everest RE Group — Investor Day (June 2021)
73 slides from Everest's investor day presentation, Jun 23, 2021
Slide 1: Investor Day June 23, 2021
25 YEAR EVEREST 25 YEARS PUBLIC, NEARLY SO YEARS OF HISTORY ANNIVERSARY Investor Day June 23, 2021
Slide 2: Cautionary Note On Forward-looking Statements
Cautionary Note On Forward-looking Statements This presentation 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 securi
Slide 3: Today's Agenda
Today's Agenda OPENING Jon Levenson Head of Investor Relations CHAIRMAN'S REMARKS Joseph Taranto Chairman, Board of Directors INTRODUCTION & STRATEGIC OVERVIEW Juan C. Andrade President and Chief Executive Officer FINANCIAL OVERVIEW Mark Kociancic Group Chief Financial Officer GROUP RISK Jim William
Slide 4: Introduction & Strategic Overview
Introduction & Strategic Overview EVEREST RE GROUP, LTD. 4
Slide 5: Everest's Investment Thesis
Everest's Investment Thesis BUILDING ON STRENGTH OPERATIONAL EXCELLENCE SCALABLE GLOBAL FRANCHISES EVEREST DISCIPLINED UNDERWRITING FINANCIAL POWER SEASONED LEADERSHIP TEAM EVEREST RE GROUP, LTD. 5
Slide 6: Our Guiding Principles
Our Guiding Principles 1. Our objective is to deliver leading financial performance 2. We are an underwriting company whose core competency is the assessment, underwriting, pricing and management of risk 3. We are committed to building a broadly diversified company built upon competitive advantage a
Slide 7: Forging a New Path Forward
Forging a New Path Forward Building on a 50-year legacy Operating from aposition of strength Top Tier Management Team Operational Excellence Margin Expansion Enhanced Investment Performance Effective Capital Management Global and Diverse Talent and Culture EVEREST RE GROUP, LTD. 7
Slide 8: Delivering For Our Stakeholders
Delivering For Our Stakeholders Building on Strength Accelerating profitable insurance growth / Capitalizing on leading global reinsurance franchise Path forward is Clear Defined strategic priorities Delivering superior Results Attractive shareholder returns EVEREST RE GROUP, LTD. 8
Slide 9: A Unique Global Platform
A Unique Global Platform STRONG GROSS WRITTEN PREMIUM GROWTH EVEREST: A MARKET LEADER $10.5 $9.1 $8.5 Growth company with competitive advantage in key markets $7.2 $3.2 $6.0 $2.3 $2.8 $2.1 $1.8 Broadly diversified income streams $6.2 $6.4 $7.3 $4.2 $5.1 Strong underlying underwriting performance wit
Slide 10: Everest Re: Our Divisions
Everest Re: Our Divisions POSITIONING Everest Reinsurance Division Everest Insurance® Division · Entrepreneurial and responsive problem solvers 2020 GROSS WRITTEN PREMIUM BUSINESS MIX 2020 GROSS WRITTEN PREMIUM BUSINESS MIX 9% Property Pro Rata 12% 16% Accident & Health · Rigorous centralized busine
Slide 11: Everest Leadership: Extensive Global Industry Experience
Everest Leadership: Extensive Global Industry Experience Mike Karmilowicz EVP and President & CEO of Insurance Mike Mulray Chief Operating Officer of Insurance Chris Downey CUO of Reinsurance Gail Van Beveren EP and Chief Human Resources Officer Sanjoy Mukherjee EVP and General Counsel, CCO and Secr
Slide 12: Strategic Building Blocks
Strategic Building Blocks BUILDING OUR FRANCHISES · Grow the Specialty P&C Insurance Platform with Expanded Margins · Capitalize on and Grow Leading P&C Reinsurance Franchise · Sharpen Investment Strategy CONTINUOUS PURSUIT OF OPERATIONAL EXCELLENCE · Focused Underwriting Discipline · Dynamic Capita
Slide 13: Building Our Franchises
Building Our Franchises Insurance · Fully Embed Data Analytics Across · Improve Claims Outcomes · Enhance Distribution · Expand Global Footprint · Scalable Operating Model Reinsurance · Continue Local Execution Supported by Strong Core · Targeted Diversification Globally and by Product · Grow Altern
Slide 14: Continuous Pursuit of Operational Excellence
Continuous Pursuit of Operational Excellence Underwriting Discipline · Build on Culture of Risk Management · Increase Feedback Loops · Instill a Holistic View of Risk · Develop Next Generation ERM Capabilities Operating Model · Use Enhanced Underwriting Analytics · Enhance Process Efficiency · Unlea
Slide 15: Winning Behaviors
Winning Behaviors People, Talent and Culture · Invest in our People and in new Talent Across Organization Promoting Diversity, Equity and Inclusion · Commitment to an inclusive organization Pursue ESG Excellence · Focus on Environmental Impact / Climate Change · Best-in-class Governance Reinforcing
Slide 16: Single Focus to Create Shareholder Value
Single Focus to Create Shareholder Value Underwriting Income Investment Income Capital Management Total Shareholder Return(1) 2023 Objective > 13% Ambition: Leading Financial Returns (1)Total Shareholder Return is annual growth in Book Value Per Share excluding Unrealized Gains and Losses on Fixed M
Slide 17: Clear Strategic Direction to Drive Exceptional Outcomes
Clear Strategic Direction to Drive Exceptional Outcomes Seasoned management team forging a new path forward Building on strengths to accelerate the growth of our franchises Focusing on continuous operational excellence to drive margin expansion Investing in our people and the communities we serve Re
Slide 18: Group Finance Overview
Group Finance Overview
Slide 19: Raising the Financial Return Objective
Raising the Financial Return Objective Significant uplift driven by three core drivers NEAR-TERM TOTAL SHAREHOLDER RETURN* ~11% Underwriting Income Investment Income Capital Management Total Shareholder Return* 2023 > 13% Total Shareholder Return* Ambition: Leading Financial Returns Underwriting Inc
Slide 20: 3-Year (2021 – 2023) Strategic Plan
3-Year (2021 – 2023) Strategic Plan Financial Target Assumptions GWP Growth Rate Key Ratios Underwriting Income 2023 Group: 10 - 15% CAGR • 91% - 93% CR (Group and Divisions) . Reinsurance: 8 - 12% CAGR 6 - 7% Cat load (included in CR) Insurance: 18-22% CAGR ~6% Group general expense ratio Total Sha
Slide 21: Delivering Financial Performance: Underwriting Income
Delivering Financial Performance: Underwriting Income Premium Growth & Scale · Strong gross written premium growth creates operating leverage · Scalable platforms Technology Enhancements · Investment in data & analytics · Improved claims outcomes · Transitioning manual processes to automated solutio
Slide 22: Delivering Financial Performance: Investment Income
Delivering Financial Performance: Investment Income Core Portfolio Strategy · Assets backing reserves · High quality and liquid with matched duration while maximizing yield Total Return Strategy · Assets backing capital · Enhanced investment returns with larger allocation to Alternative Fixed Income
Slide 23: Delivering Financial Performance: Capital Management
Delivering Financial Performance: Capital Management CAPITAL MANAGEMENT OBJECTIVES CAPITAL MANAGEMENT FRAMEWORK · Capital management evaluated over a long-term horizon 1 Financial Strength Commitment to an A+ equivalent Financial Strength Rating (FSR) . · Optimize operating and financial leverage po
Slide 24: Dynamic Resource Allocation Process
Dynamic Resource Allocation Process Strategic Planning · Long-term strategy and operating plan setting vision for the business · Core strategy is updated to reflect annual planning process Annual Planning Process · One-year operating plan and multi-year plan update · Deployment of capital for accret
Slide 25: Breadth of Underwriting Capacity
Breadth of Underwriting Capacity UNDERWRITING CAPITAL STRATEGY EXPANDING SOURCES OF UNDERWRITING CAPITAL $ in millions · Multiple forms of underwriting capital Cat Bonds $15,329 ILWs · Utilizing capital that is most relevant for each underlying risk $2,625 Cat Bonds Mt Logan AUM · Strategic growth i
Slide 26: Strong and Flexible Capital Position
Strong and Flexible Capital Position · A1 / A+ Financial Strength Ratings Attractive Debt Maturity Profile · 14.1%(1) LT debt / capital at 12/31/20 · Low-cost debt (3.7% weighted average coupon) $ in millions $1,000 Debt Issuance Principles . · Long-dated tenors and laddered maturities · Regulatory
Slide 27: Strong and Consistent Operating Cash Flow Generation
Strong and Consistent Operating Cash Flow Generation CONSISTENTLY POSITIVE OPERATING CASH FLOW $ in billions 2018 CA Fires; Hurricanes Michael & Florence; Asia Pac/Aus Events 2020 Hurricanes Sally, Laura, Zeta; Aus /NoCal Wildfires; Other2 $2.9 2011 Japan EQ; Thai Floods 2012 Hurricane Sandy 2017 Hu
Slide 28: Prudent Liquidity Management
Prudent Liquidity Management STRONG LIQUIDITY PROFILE · U.S. platform minimizes collateral requirements • $1.6B FHLB* Facility · Strong operating cash flows . · Conservative PML's Liquidity Facility · Quality reinsurance with significant available collateral · Low debt leverage Everest's Liquidity P
Slide 29: Efficient Global Platform
Efficient Global Platform Key Centers of Operation Total Assets by Currency Allocation · United States 1% 1% · Bermuda USD · United Kingdom 4% · Switzerland CAD 11% · Canada GBP · Ireland EUR 76% 7% . · Belgium I AUD O · Netherlands Other* · Brazil · Singapore *Other currencies include DKK, THB, CHF
Slide 30: Financial Strategy Supports Shareholder Value Creation
Financial Strategy Supports Shareholder Value Creation 2023 Total Shareholder Return target >13%; Ambition for leading financial returns 10 - 15% gross written premium CAGR Low 90's combined ratio assumption Enhancing investment returns with greater focus on Alternative FI / PE Capital structure evo
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Slide 32: Underwriting Governance Framework
Underwriting Governance Framework Group Risk Tolerance Enterprise Risk Framework Underwriting Risk Governance EVEREST RE GROUP. LTD. 32
Slide 33: Transforming Everest's Risk Profile
Transforming Everest's Risk Profile ENTERPRISE RISK STRATEGY Risk Profile Managed to Superior Risk / Reward Economics · Increased expected earnings despite significant reduction in risk profile 2017 · Go-forward appetite defined by clear trading range · Strong market conditions mean a nimble deploym
Slide 34: Everest's Approach to Climate Change Risk
Everest's Approach to Climate Change Risk Science · Academic research · Meteorological agencies · Live-tracking process Modeling · Internal models · Vendor models Experience · 3rd party industry loss estimates · Cedant data · Internal claims Our Climate Change Perspective · Higher global average tem
Slide 35: Governance Process to Effectively Manage Risk
Governance Process to Effectively Manage Risk Pervasive culture of rigorous risk analysis Clear, observed appetites for all lines of business Reduced volatility and increasing underwriting income Robust risk management feedback loops and metrics EVEREST RE GROUP, LTD. 35
Slide 36: Q&A
Q&A
Slide 37: Everest Insurance
Everest Insurance z
Slide 38: Our Mission
Our Mission To be a World-Class Specialty Diversified Global Insurance Company EVEREST RE GROUP, LTD. 38
Slide 39: Leading Specialty Insurance Platform
Leading Specialty Insurance Platform BUILT FROM THE GROUND UP - HISTORY OF GWP GROWTH Specialty Commercial P&C Insurer $ in billions $3.2 $2.8 $2.3 · Seasoned leadership team delivering on exceptional growth while reducing attritional combined ratios through effective portfolio management $2.1 $1.8
Slide 40: Positioned For Opportunity
Positioned For Opportunity Deliver top tier results through the cycle Deliver underwriting profitability with Combined Ratios in the low 90s Scale enterprise through continued investment in automation, shared services, data, and claims EVEREST RE GROUP, LTD. 40
Slide 41: A Value Proposition that Attracts and Retains Clients
A Value Proposition that Attracts and Retains Clients Collaborative Culture A Culture rooted in collaboration, Execution, Thoughtful Assumption of Risk, Leadership, and Humility, that values and prioritizes Diversity, Equity & Inclusion Innovation and Solutions Focus Expertise and innovation in all
Slide 42: Industry Leading Management Team
Industry Leading Management Team EXECUTIVE LEADERSHIP MIKE KARMILOWICZ President & CEO MIKE MULRAY Chief Operating Officer DANA LODGE Chief Financial Officer PATRICIA MCMAHON Chief Claims Officer MARCUS COOPER Senior Vice President Head of North American Distribution, Insurance OWEN WILLIAMS Senior
Slide 43: Building on a Track Record of success
Building on a Track Record of success Relevance Diversification Growth Profitability & Margin Improvement Disciplined Product Launches Shifting Business Mix Accelerating GWP Growth Improved Attritional Combined Ratio 17 segments launched since 2016 Shift away from heavy Workers' Comp exposure to div
Slide 44: Massive Market Opportunity
Massive Market Opportunity Property & Casualty Market Opportunity Size* $820 BILLION 0.4% Estimated size of Global insurance market* Everest's estimated share of the global insurance market* Insurance Opportunity While Everest's relevance has continued to grow based on share of global commercial ins
Slide 45: Diverse Product Set Appeals to Broad Spectrum of Customers
Diverse Product Set Appeals to Broad Spectrum of Customers Customer Segment Everest Offerings Small Commercial & Digital Partnerships Standardized Products Tech-supported Underwriting Niche Industry Solutions Middle Market & Wholesale Solutions Speed to Market Empowered Decision- Making Specialized
Slide 46: Diversifying and Deepening the Distribution Landscape
Diversifying and Deepening the Distribution Landscape STRATEGIC RESPONSES TO EMERGING TRENDS Trend Strategy Consolidation Ongoing mergers & acquisition in the wholesale & retail space · Enterprise level engagement · Intimate specialization · Deepen partnerships . Segmentation Increased delineation b
Slide 47: Scale Creates Margin Opportunity
Scale Creates Margin Opportunity Operating leverage Portfolio management flexibility Focused investment in technology Skilled Cycle Management Low 90s Combined Ratio EVEREST RE GROUP, LTD. 47
Slide 48: Positioned to Deliver Differentiated Value Proposition
Positioned to Deliver Differentiated Value Proposition grounded in Strong Culture Right Leadership, Right Vision Size of Global Market Opportunity Focused Strategy, Aligned Capabilities Delivering Top Tier Performance EVEREST RE GROUP, LTD. 48
Slide 49: Everest Reinsurance
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Slide 50: Leading Global Reinsurance Platform
Leading Global Reinsurance Platform HISTORY OF CONSISTENT GWP GROWTH Leading Reinsurance Platform $ in billions $7.3 $6.2 $6.4 · Leading global P&C reinsurer $5.1 $4.3 · Agile and scalable platform to pursue attractive opportunities I · Broadly diversified around the world · Industry leading expense
Slide 51: Everest Reinsurance is the Preferred Partner
Everest Reinsurance is the Preferred Partner Local · Senior leaders in key local markets empowered to make decisions · Entrepreneurial culture Capability Breadth · Broad capabilities across lines of business and products · Actively marketing over 250 products Financial Strength · Financial strength
Slide 52: Industry Leading Reinsurance Management Team
Industry Leading Reinsurance Management Team EXPERIENCED GLOBAL LEADERSHIP TEAM Marty Scherzer SVP Head of Structured Solutions Russ Lewis SVP & Chief Agent, Canada Paul Tester SVP & CUO London Artur Klinger Managing Director, Continental Europe Dennis Alba SVP U.S. Casualty & Surety Ron Diaz EVP In
Slide 53: Local Leaders Drive Superior Execution
Local Leaders Drive Superior Execution LOCAL STRATEGY IN ACTION Think Globally, Trade Locally · Offices in all key global reinsurance centers – local decision makers empowered to transact · Ceding clients in 115 countries · Dynamically allocating capital across markets 52% United States 48% Internat
Slide 54: Existing Product Capabilities Supports Reinsurance Strategy
Existing Product Capabilities Supports Reinsurance Strategy FLEXIBLE PRODUCTS TO HELP COMPANIES AND COMMUNITIES GET BACK TO NORMAL AFTER LOSS Reinsurance Strategy Drivers Growth in Favorable Markets Aviation Liability Marine Technology, Data and Analytics 3rd Party Capital Natural Catastrophes Profe
Slide 55: Market Dynamics Favorable For Everest Reinsurance
Market Dynamics Favorable For Everest Reinsurance Everest Reinsurance Current Market View Market Drivers Recent loss trends have been challenging (COVID, Cat Frequency/Severity, Social Inflation, etc.) Treaty XOL QS Fac Other Treaty Property Aviation Marine Property Cat Mortgage Credit . · Underlyin
Slide 56: Partnership with Capital Markets Investors
Partnership with Capital Markets Investors Leading ILS Manager Leading Issuer of Cat Bonds KILIMANJARO RE LADDERED CAT BOND ISSUANCE STRATEGY · Mt Logan investors are strategically aligned with Everest: win/win lose/lose relationship Mt. Logan Re. · Largest global sponsor of cat bonds • Flexibility
Slide 57: Technology Augmenting Competitive Position and Margins
Technology Augmenting Competitive Position and Margins RECOGNIZED TECHNOLOGY LEADER 1 Core Systems Build on core systems strategy CIO 100 2. Enhanced Automation Focus on analytics, automation and customer experience CAT PRICING TEAM WIN AWARD WINNER 3 Focus on Innovation Data analytics enables data-
Slide 58: Build on Industry Leading Position to Enhance Underwriting Profit
Build on Industry Leading Position to Enhance Underwriting Profit Ongoing Portfolio Management Focus on Accretive Growth Nimble UW Cycle Management Sustain Volatility Management Best-in-Class Expense Ratio Low 90s Combined Ratio EVEREST RE GROUP, LTD. 58
Slide 59: Everest: A Leading Global Reinsurer
Everest: A Leading Global Reinsurer Preferred global trading partner for brokers and ceding clients Industry leading talent, bench strength and product expertise Trade globally in local markets while maintaining strong group controls Product capabilities enable outperformance in all market condition
Slide 60: Investments
Investments
Slide 61: Investment Portfolio Guiding Principles
Investment Portfolio Guiding Principles ENGINES OF EARNINGS POWER REINSURANCE PRIVESTIMENTO INSURANCE 1 Portfolio Diversification 2 High Degree of Liquidity 3 Strong Credit Quality 4 Match Asset / Liability Duration 5 Dual Strategy Approach: Stable Income and Total Return 6 Optimize Risk-Adjusted Re
Slide 62: Everest's Responsible ESG Investing
Everest's Responsible ESG Investing 2019 · Signatory to United Nations' Principles for Responsible Investment (UN-PRI) · Restrict future purchase of bonds issued by companies that derive >= 25% of revenue from coal* 2020 · 79% of total assets and 94% of fixed income assets managed by other UN-PRI si
Slide 63: One Portfolio: Two Investment Strategies
One Portfolio: Two Investment Strategies Core Portfolio Strategy STABILITY AND LIQUIDITY · Investment grade assets cover reserves · Match asset / liability duration · High degree of liquidity · Solid credit quality · Consistent stable income Total Return Strategy ENHANCED PERFORMANCE · Maximize risk
Slide 64: Asset Allocation Strategy
Asset Allocation Strategy STRATEGIC ASSET ALLOCATION WITHIN RISK TOLERANCE 1. Target 4Q 2020 Min Max Asset Allocation Strategic Direction Cash 4% 2% 10% SHIFT IN PORTFOLIO CONSTRUCTION Fixed Income 84% 70% 90% Reduction in Corporate Bonds by 3-4% allocation Short-term 5% 0% 10% Commensurate increase
Slide 65: Investment Portfolio Provides Exceptional Liquidity
Investment Portfolio Provides Exceptional Liquidity INVESTMENT PORTFOLIO LIQUIDITY PROFILE: 4Q 2020 Private Equity Credit Cash Short-term Multiple Sources of Cash Generation 7% 4% 5% Agency Diversification is a key tenet of the investment portfolio construction Corporate Bonds Less Liquid 9% 7% High
Slide 66: Enhancing Yield Utilizing Alternative Fixed Income
Enhancing Yield Utilizing Alternative Fixed Income Enhanced Yield Opportunities · Alt Fl portfolio not matched against reserves providing more latitude for targeted risk-adjusted return maximization · Floating rate product reduces duration while also providing some inflation protection · Well unders
Slide 67: Total Return Strategy Enhances Portfolio Performance
Total Return Strategy Enhances Portfolio Performance Everest's Private Equity Strategy Tactical Approach to Public Equity RATIONALE FOR PRIVATE EQUITY PRIVATE EQUITY PORTFOLIO MIX OBJECTIVES Total return opportunity with rapid liquidity for redeployment . · Outperformed public equity over last 15 ye
Slide 68: Investments: A Core Earnings Engine
Investments: A Core Earnings Engine Single portfolio with two strategies: Core and Total Return Continued focus on responsible investing Core strategy provides liquidity, stability and current income Shift towards PE will improve performance Investment performance is key to Everest's shareholder ret
Slide 69: Investing in Everest
Investing in Everest
Slide 70: Investing In Everest
Investing In Everest Everest is a growing leading global reinsurance and insurance franchise Seasoned leadership team in place forging a new path forward Broadly diversified earnings power: Reinsurance, Insurance and Investments Franchises are well positioned to drive growth and expand margins with
Slide 71: Q&A
Q&A
Slide 72: Thank you for joining Everest's 2021 Investor Day
EVEREST YEAR Thank you for joining Everest's 2021 Investor Day
Slide 73: Appendix: Reference Information
Appendix Reference Information 2020/21 ESG Rankings NYSE: RE Outstanding Debt: L+2.385% Sub Notes due 2037 Environmental: 6 4.868% Sr Notes due 2044 ISS * Social: 5 MSCI BB 3.500% Sr Notes due 2050 Governance: 4 FINANCIAL STRENGTH RATINGS A+ A+ A1 (SAM 44th percentile SUSTAINALYTICS Low Risk #23 of