Everest reports total reserve strengthening of $1.7bn for 2024

Global re/insurer Everest Group, Ltd. has revealed that it expects to record full year 2024 net income of between $1.3 billion and $1.4 billion, despite total reserve strengthening across the business of $1.7 billion for the year.

Alongside the net income range, Everest expects to generate non-GAAP net operating income in the range of $1.2 billion to $1.3 billion.

The profit ranges provided are inclusive of unfavourable development of prior-year loss reserves of $1.5 billion. Everest also strengthened its current accident year reserves by $229 million, taking total strengthening to $1.7 billion for the full year and fourth quarter 2024.

Within the company’s Reinsurance business, prior-year U.S. casualty reserves were strengthened by $684 million for full year and Q4 2024. Although, Everest confirms that this was fully offset by favorable development of “well-seasoned reserves” in the property and mortgage lines of business.

In the Insurance arm, Everest strengthened prior-year U.S. casualty reserves by $1.1 billion and increased current accident year losses in U.S. casualty lines by $206 million, amounting to $1.3 billion for the full year and Q4 2024.

The re/insurer notes that the reserve strengthening was driven by social inflation and portfolio concentrations in certain U.S. casualty lines classes.

Additionally, Everest has reported unfavourable development in its newly formed Other segment of $425 million for both the full year and Q4 2024. This segment is primarily comprised of certain sports and leisure lines after giving effect to the sale of the business in October 2024, run-off asbestos and environmental exposures, and certain discontinued insurance programs and coverage classes, explains Everest.

“Our decisive actions this quarter follow a comprehensive reserve review. As a result of these actions, our casualty reserves are positioned with a risk margin above the actuarial central estimate,” said Jim Williamson, Everest President and CEO.

“The Company has significantly fortified its U.S. casualty reserves, while taking aggressive underwriting action in certain classes exposed to social inflation, bolstering talent, and investing in our platform. We believe these actions strengthen our balance sheet and put Everest on a clear trajectory towards generating attractive returns throughout the cycle,” he added.

Lastly, Everest has announced a new target objective to produce a mid-teens total shareholder return over the cycle, but states that it will no longer be providing detailed forward guidance.

Following Everest’s announcement, some analysts have said that these casualty reserve charges are as much as 50% larger than they have been anticipating Everest would announce.

Everest is scheduled to release its fourth quarter and full year 2024 results on February 3rd, 2025.

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