Everest Group, Ltd. · NYSE:EG
Everest — Q3 2021 Earnings Presentation
32 slides from Everest's earnings presentation, Oct 28, 2021
Slide 1: Investor Presentation Third Quarter 2021
Investor Presentation Third 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 Q3 2021
Quarterly Results Q3 2021
Slide 4: Quarterly Highlights and Year to Date Performance
Everest Group Quarterly Highlights and Year to Date Performance CURRENT QUARTER HIGHLIGHTS TOTAL SHAREHOLDER RETURN (annualized) 12.4% 13.2% Gross written premium of 7.3% $3.5 billion, 25% growth year over year 3Q19 YTD 3Q20 YTD 3Q21 YTD • Total Shareholder Return (“TSR”) is defined as annual Group
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 • Outstanding premium growth to over $1.0 billion, representing record growth of 43% $2,924 $2,329 $2,019 • Growth driven by rebounding economic conditions, new business growth
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 • Excellent 19% growth in gross written premiums $6,696 $5,403 for the quarter $4,678 • Premium growth driven by continued partnership with our core clients and Everest’s posi
Slide 7: Everest Balance Sheet and Investment Portfolio
Everest Balance Sheet and Investment Portfolio EVEREST BALANCE SHEET HIGHLIGHTS INVESTMENT PORTFOLIO HIGHLIGHTS $293 million in net investment $10.0 billion in income for 3Q21, including $170 shareholders’ equity million from alternative investments Efficient financial structure 4.29% quarter to dat
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 $9.1 $8.5 $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 Dawn Lauer Chris Downey Gail Van Beveren Sanjoy Mukherjee EVP and President & Chief Operating Chief Communications CUO of EVP and Chief Human EVP and General Counsel, CEO of Insurance Officer of Insurance Officer R
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 Increased expected earnings despite significant reduction in Risk / Reward Economics • 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 Outstanding Debt: L+2.385% Sub Notes due 2037 NYSE: RE 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) 3Q21 3Q21 YTD 2020 2019 2018 2017 2016 BALANCE SHEET Cash and Investments $27,783.7 $27,783.7 $25,461.6 $20,748.5 $18,433.1 $18,626.5 $17,483.1 Shareholders’ equity $9,978.6 $9,978.6 $
Slide 32: Tracking Total Shareholder Return
Tracking Total Shareholder Return EVEREST FINANCIAL RETURN OBJECTIVE 3Q19 YTD 3Q20 YTD 3Q21 YTD Reported Shareholders' Equity 8,983,258 9,591,292 9,978,635 Total Shareholder Return (“TSR”): Annual growth in Net unrealized gains / (losses) 340,977 652,949 416,231 Book Value per Share, excluding Unrea