Everest Group, Ltd. · NYSE:EG
Everest — Q2 2021 Earnings Presentation
32 slides from Everest's earnings presentation, Jul 29, 2021
Slide 1: Investor Presentation Second Quarter 2021
Investor Presentation Second Quarter 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 secur
Slide 3: Quarterly Results Q2 2021
Quarterly Results Q2 2021
Slide 4: Quarterly and Year to Date Highlights
Everest Group Quarterly and Year to Date Highlights TOTAL SHAREHOLDER RETURN ( an n ual i zed) CURRENT QUARTER HIGHLIGHTS Gross written premium of $3.2 22.5% 16.0% 3.7% billion, 35% growth year over year 2Q19 YTD 2Q20 YTD 2Q21 YTD • Total Shareholder Return (“TSR”) is defined as annual growth in Com
Slide 5: Everest Insurance Division Quarterly and Year to Date Highlights
Everest Insurance® Division Quarterly and Year to Date Highlights QUARTERLY HIGHLIGHTS GROSS WRITTEN PREMIUM – USD MILLIONS • Record-setting quarter with over $1 billion in gross written premium, reflecting 25% in top line $1,352 $1,624 $1,914 growth year over year. • New business growth across nume
Slide 6: Everest Reinsurance Division Quarterly and Year to Date Highlights
Everest Reinsurance Division Quarterly and Year to Date Highlights QUARTERLY HIGHLIGHTS GROSS WRITTEN PREMIUM – USD MILLIONS • 40% growth in gross written premiums for the $4,207 quarter, reflecting the strength of the Everest $2,942 $3,316 global franchise • Broad demand for reinsurance in the US a
Slide 7: Everest Investment Portfolio
Everest Investment Portfolio INVESTMENT PORTFOLIO GUIDING PRINCIPLES QUARTERLY AND YEAR TO DATE HIGHLIGHTS • Portfolio diversification $27.1B total invested assets, of • High degree of liquidity which 85% are in fixed income • Strong credit quality and cash/short-term securities • Asset/liability du
Slide 8: Everest Strategic Overview
Everest Strategic Overview
Slide 9: Forging a New Path Forward
Forging a New Path Forward Building on a Operating from a • Top Tier Management Team 50-year legacy position of strength • Operational Excellence • Margin Expansion • Enhanced Investment Performance • Effective Capital Management • Global and Diverse Talent and Culture
Slide 10: A Unique Global Platform
A Unique Global Platform STRONG GROSS WRITTEN PREMIUM GROWTH EVEREST: A MARKET LEADER $10.5 • Growth company with competitive $8.5 $9.1 $3.2 advantage in key markets $7.2 $2.3 $2.8 $6.0 $2.1 • Broadly diversified income streams $1.8 $6.2 $6.4 $7.3 • Strong underlying underwriting $5.1 $4.2 performan
Slide 11: Everest Leadership: Extensive Global Industry Experience
Everest Leadership: Extensive Global Industry Experience Mike Karmilowicz Mike Mulray Chris Downey Gail Van Beveren Sanjoy Mukherjee EVP and President & Chief Operating CUO of EVP and Chief Human EVP and General Counsel, CEO of Insurance Officer of Insurance Reinsurance Resources Officer CCO and Sec
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 WINNING BEHAVIORS OPERATIONAL EXCELLENCE Focused Underwriting Disciplin
Slide 13: Winning Behaviors – Talent and Culture
Winning Behaviors – Talent and Culture People, Talent and Reinforcing Our Culture Culture Consistently Recognized by Business Insurance as a “Best Place to Work” • Invest in our People and in new Talent Across Organization Promoting Diversity, Equity and Inclusion TALENT THOUGHTFUL ASSUMPTION OF RIS
Slide 14: Everest - Financial Return Objective
Everest - Financial Return Objective Total Shareholder Return (“TSR”) uplift driven by three core drivers Total Shareholder Return* Total Capital Shareholder Management Return* Ambition: Leading Investment Income 2023 Financial Returns Underwriting >13% Income NEAR-TERM TOTAL SHAREHOLDER RETURN* ~11
Slide 15: 3-Year Strategic Plan Financial Target Assumptions
3-Year Strategic Plan Financial Target Assumptions Underwriting GWP Growth Rate Key Ratios Income 2023 • Group: 10 – 15% CAGR • 91% - 93% CR (Group and Divisions) • Reinsurance: 8 – 12% CAGR • 6 – 7% Cat load (included in CR) Total • Insurance: 18 – 22% CAGR • ~6% Group general expense ratio Shareho
Slide 16: Delivering Financial Performance - Underwriting Income
Delivering Financial Performance - Underwriting Income Premium Growth Technology Underwriting and & Scale Enhancements Portfolio Optimization • Strong gross written premium growth • Investment in data & analytics • Thoughtful cycle management creates operating leverage • Improved claims outcomes • D
Slide 17: Delivering Financial Performance - Investments
Delivering Financial Performance - Investments Core Portfolio Strategy Total Return Strategy STABILITY AND LIQUIDITY ENHANCED PERFORMANCE • Investment grade assets cover reserves • Maximize risk adjusted returns • Match asset / liability duration • Ensure capital efficiency • High degree of liquidit
Slide 18: 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 pos
Slide 19: 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 • Go-forward appetite defined by clear trading range • Strong market conditions mean a nimble deployment o
Slide 20: Everest Insurance: A Leading Specialty Insurance Platform
Everest Insurance A Leading Specialty Insurance Platform BUILT FROM THE GROUND UP – HISTORY OF GWP GROWTH Specialty Commercial P&C Insurer $ in billions $3.2 $2.8 • Seasoned leadership team delivering on exceptional $2.3 growth while reducing attritional combined ratios $2.1 through effective portfo
Slide 21: Diverse Product Set Appeals to Broad Spectrum of Customers
Diverse Product Set Appeals to Broad Spectrum of Customers Customer Segment Everest Offerings Small Commercial & Tech-supported Standardized Products Niche Industry Solutions Digital Partnerships Underwriting Middle Market & Empowered Specialized Terms & Speed to Market Wholesale Solutions Decision-
Slide 22: Everest Insurance - Scale Creates Margin Opportunity
Everest Insurance - Scale Creates Margin Opportunity Operating leverage Portfolio management flexibility Low 90s Combined Focused investment in technology Ratio Target Skilled Cycle Management E V E R EST R E G R O U P, LT D . 22
Slide 23: Everest Reinsurance Division: A Leading Global Reinsurance Platform
Everest Reinsurance Division A 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 • Agile and scalable platform to pursue attractive $4.3 opportunities • Broadly diversified around the wor
Slide 24: Local Leaders Drive Superior Execution
Local Leaders Drive Superior Execution Think Globally, Trade Locally LOCAL STRATEGY IN ACTION • Offices in all key global reinsurance centers – local decision makers empowered to transact • Ceding clients in 115 countries • Dynamically allocating capital across markets 52% 48% United States Internat
Slide 25: Everest Reinsurance: Drivers to Enhance Underwriting Profit
Everest Reinsurance Drivers to Enhance Underwriting Profit Ongoing Portfolio Management Focus on Accretive Growth Low 90s Nimble UW Cycle Management Combined Ratio Target Sustain Volatility Management Best-in-Class Expense Ratio E V E R EST R E G R O U P, LT D . 25
Slide 26: Investment Portfolio Guiding Principles
Investment Portfolio Guiding Principles 1 ENGINES OF EARNINGS POWER 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 Return and Capital Efficiency E V E R
Slide 27: Strategic Asset Allocation
Strategic Asset Allocation STRATEGIC ASSET ALLOCATION WITHIN RISK TOLERANCE Asset Allocation Target Strategic Direction 4Q 2020 Min Max Cash 4% 2% 10% SHIFT IN PORTFOLIO CONSTRUCTION Fixed Income 84% 70% 90% • Reduction in Corporate Bonds by 3-4% allocation • Commensurate increase in Private Equity
Slide 28: Conclusion - Investing In Everest
Conclusion - 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
Slide 29: Appendix
Appendix
Slide 30: Notes and Definitions
Notes and Definitions Reference Information Current ESG Rankings NYSE: RE Outstanding Debt: L+2.385% Sub Notes due 2037 4.868% Sr Notes due 2044 Environmental: 6 * 3.500% Sr Notes due 2050 Social: 5 BB Governance: 4 FINANCIAL STRENGTH A+ A+ A1 Low Risk RATINGS A.M. Best S&P Global Moody’s Investors
Slide 31: Financial Highlights: Current and Historical
Financial Highlights Current and Historical For the year ended December 31, ($ in millions, except per share data) Q2 2021 2021 YTD 2020 2019 2018 2017 2016 BALANCE SHEET Cash and Investments $27,056.0 $27,056.0 $25,461.6 $20,748.5 $18,433.1 $18,626.5 $17,483.1 Shareholders’ equity $10,416.8 $10,416
Slide 32: Tracking Total Shareholder Return
Tracking Total Shareholder Return EVEREST FINANCIAL RETURN OBJECTIVE 2Q19 YTD 2Q20 YTD 2Q21 YTD Reported Shareholders' Equity 8,836,817 9,286,299 10,416,789 Total Shareholder Return (“TSR”): Annual growth in Net unrealized gains / (losses) 247,740 600,921 517,640 Book Value per Share, excluding Unre